RATIO ANALYSIS:

RATIO ANALYSIS 2021 2020 2019 2018 2017

Profitability Ratios
Profit before tax Ratio % 21% 24% 18% 25% 28%
Gross yield on earning assets % 7% 8% 10% 6% 6%
Gross spread ratio % 38% 44% 34% 44% 48%
Cost to Income ratio % 55% 50% 53% 54% 54%
Return on Equity % 16% 19% 16% 16% 17%
Return on capital employed % 2% 2% 2% 2% 2%
Shareholders' Funds Rs. Mn
127,245 131,560 115,351 107,304 106,716
Return on Shareholders' Funds % 14% 14% 12% 12% 12%
Liquidity Ratios
Advances to deposits ratio % 47% 42% 48% 46% 44%
Current, Quick or Acid test ratio Times 0.80 1.06 1.24 1.35 1.22
Cash to current liabilities % 12% 18% 17% 15% 14%
Net interest income as a
percentage of working
funds % 2% 3% 3% 3% 3%
Operating cost - Efficiency ratio
Liquid Asset ratio - LCR % 186% 179% 168% 152% 142%
Gross Non-Performing assets to % 2% 4% 4% 6% 5%
gross advances
Non-Performing loans to gross % 2% 3% 3% 4% 5%
loan
Investment Ratios
Earnings per share Rs. 15.12 15.75 12.32 11.25 11.12
Price earnings ratio Times 5.44 5.42 7.76 9.55 7.64
Price to book ratio Times 0.74 0.74 0.95 1.15 0.91
Dividend yield ratio % 10% 9% 8% 7% 8%
Dividend payout ratio % 53% 51% 65% 71% 63%
Cash dividend per share % 80% 80% 80% 80% 70%
Market value per share at the end Rs. 82.27 85.37 95.6 107.47 84.98
of year
Break-up value per share without Rs. 94.06 89.71 78.20 73.56 68.68
surplus
Break-up value per share with Rs. 111.12 114.89 100.74 93.71 93.20
surplus
Breakup value per share including Rs. 112% 115% 101% 94% 94%
investment in
related party at fair value with
surplus
 Capital Structure
Capital Adequacy ratio % 22% 25% 22% 22% 22%
Earnings assets to total assets % 88% 85% 85% 86% 86%
Cost of deposit % 3% 4% 6% 3% 3%
Net asset per share Rs. 111.12 114.89 100.74 93.71 93.20

Explanation of the Ratios:

PROFITABILITY RATIOS:

Profit before Tax:

A measure called "profit before tax" examines a corporation's earnings before the company is
required to pay income tax. In general, it is all of a company's profits before taking any taxes into
account. Operating profit less interest appears on the income statement as profit before taxes. A
greater percentage indicates that a larger portion of the total revenue can be turned into profit and
vice versa.

Gross yield on earning assets:

A measure of banks profitability that approximates the return a bank is receiving as interest on its
investments is the gross yield on earning assets. You can calculate the gross yield by comparing
interest and investment returns to assets that generate income. A business is using its assets
effectively if there is a greater yield on earning assets. It also suggests that an entity is able to
satisfy its short-term debt commitments and is not in danger of defaulting or going bankrupt if it
has a high yield on earning assets.

Gross Spread Ratio:

The underwriters' percentage of the revenue generated in the Initial Public offering is referred to
as the gross spread ratio. More of the IPO proceeds go to the investments group when the gross
spread ratio is greater.

Cost to Income ratio:

An important financial indicator that is primarily used when evaluating banks is the cost-to-
income ratio. It displays the cost to revenue ratio for a business. In short, it displays the amount
of input (cost) needed by the bank to produce one pound (or, say, dollar or euro) of output
(profit). The bank will be more profitable, efficient, and competing if the ratio is lower.
Return on Equity:

The ratio of a company's net income to the equity of its investors is known as return on equity
(ROE). A company's profitability and the effectiveness of its revenue generation are measured by
its return on equity (ROE). A corporation is better at turning its equity financing into profits if
its ROE is higher.

Return on Capital Employed:

The return on capital employed measures the operating profit produced per dollar of invested
capital. A higher ROCE is usually preferable because it shows that more profits are made for
every dollar of invested capital.

Return on Shareholders' Funds:

It is computed by dividing a company's profits after taxes (EAT) by its entire shareholders'

equity and then multiplied by 100. The greater the ratio, the greater the return on investment for
investors. This ratio aids in assessing a company's financial stability for business owners and
finance experts.

LIQUIDITY RATIOS:

Advances to Deposits Ratio:

The loans to deposits ratio determines the percentage of advances (loans) compared to
bank's deposits. When the ratio is at or below 100%, it shows that the bank is financing all of its
loans from deposits as opposed to using wholesale funding (funding from the capital markets or
other banks).

Current, quick or acid test ratio:

The current ratio is a measure of liquidity that reveals a company's ability to pay back short-term
loans that are due within the upcoming year.

Cash to Current Liabilities:

The cash to current liabilities ratio, or cash ratio, is a cash flow figure that contrasts the
company's most liquid assets with its short-term liabilities. This ratio enables an investor or
analyst to comprehend how well a company can pay its current liabilities, which are short-term
obligations, using its most liquid current assets. In general, a high or rising cash to current
liabilities ratio indicates that the company is not having trouble paying down its short-term loans,
and the opposite is also true.
Operating cost Ratio-Efficiency Ratio:

By comparing a company's total operating costs to its net sales, the operational ratio
demonstrates the managerial effectiveness of that business. A declining operational ratio is
considered a good indicator because it means that operating costs are taking up a less and smaller
share of net sale.

Liquid Asset Ratio:

The percentage of a bank's or other financial institution's total assets that can be quickly
converted into cash. With a ratio of 1, a business may fully cover all of its current liabilities with
its cash on hand. A ratio of less than 1 (for example, 0.75), would indicate that a business is
unable to pay its present obligations. A ratio higher than 1 (for example, 2.0) would indicate that
a business can pay its present obligations.

Gross Non-Performing assets to gross advances ratio:

We can determine how much of the total loans or advances are not recoverable using this ratio.
By discovering issues with asset values in the loan portfolio, it assesses the stability and
effectiveness of banks.

Non-Performing loans to gross loan ratio:

The ratio of non-performing loans to total gross loans is calculated using the total loan portfolio
value as the denominator and the value of non-performing loans (NPLs) as the numerator. A high
ratio indicates that the bank faces a higher chance of loss if it is unable to repay the outstanding
loan balances, whilst a low ratio indicates that the bank faces little risk from the outstanding
loans.

INVESTMENT RATIOS:
Earnings per share ratio:

EPS, a useful measure for determining corporate value, shows how much money a firm produces
for each share of its stock. Because investors would pay more for a firm's shares if they believe
the company has larger earnings comparative to its share price, a higher EPS denotes more value.

Price earnings ratio:

In general, based on previous or expected earnings, the P/E ratio reveals the price the market is
ready to pay for a company at the present time. A high P/E may indicate that a stock's price is
excessively high in relation to its earnings. On the other hand, a low P/E can suggest that the
present stock price is undervalued in comparison to earnings.
Price to book ratio:

The price-to-book ratio contrasts the market value and book value of a corporation. A higher
than one P/B ratio indicates that the share price is trading above the company's market price.

Dividend yield ratio:

The annual amount of a company's stock price that is paid out in dividends is shown by the
financial ratio known as the dividend yield. A lower dividend yield shows that there is some
room for future growth in dividend payments, while a higher dividend signifies that the business
gives out more than 100% of its profits in dividends.

Dividend payout ratio:

The percentage of a company's earnings after taxes (EAT) are distributed to shareholders is
shown by the dividend payout ratio. The riskier the number, as if something goes wrong, the
corporation won't be able to avoid having to reduce its dividend.

Cash dividend per share:

The total of the company's declared dividends issued for each outstanding share of its common
stock is the dividend per share. If a business gives out more comparative profits to investors it
means that the greater the dividend yield is.

Market value per share:

Market value ratio are employed to assess the current share price of the stock of a publicly traded
company. These ratios are used by both existing and future investors to assess the fair value of a
company's shares. 

Break-up value per share:

The worth of one share of stock in a corporation calculated solely on the basis of its assets is
known as the "break-up value."

Capital adequacy ratio:

A measurement of a bank's available capital as a percentage of its risk-weighted credit risks is

called the capital adequacy ratio. A bank is thought to be above the minimal requirements
necessary to indicate solvency if it has a high capital adequacy ratio.
Earnings assets to total assets:

Banks frequently employ the earning assets to total assets ratio as a measure to assess the
percentage of a company's assets that are actively producing income. It gives the bank or any
individual investor information about the probability that the business will turn a profit.

Cash to Deposits ratio:

The ability to pay loans entirely from deposits is indicated by the cash to deposits ratio. When
compared to deposit growth, a low CD ratio indicates comparatively poor credit growth. Strong
demand for credit in an environment of somewhat slower deposit growth would be indicated by a
high CD ratio.

The net asset value per share:

The net asset value per share (NAVPS), commonly referred to as the "net asset value," examines
the worth per each share of a firm or fund. Investors can and should also compare the firm
stock's worth to the industry benchmark or the net asset value per share of comparable,
comparably sized companies.