Financial Ratio Analysis: A comparison of five selected Private Banks INTRODUCTION 1.1 Origin of the Report: Bank is a financial institution which has its ultimate objective to make profit .Making satisfactory level of profit depends on the financial strength of the bank and a bank’s financial strength depends on its better financial performance. To achieve better financial performance bank’s have to be identify what is their weaknesses which is possible through details analysis of important financial ratios. For that reason I’m choosing “Financial Ratio Analysis: A comparison of five selected Private Banks” as my internship topics 1.2 Background of the Study: Analyzing financial statement involves evaluating three characteristics of a company: its liquidity, its profitability, and its solvency. Short term creditor, such as a bank, are primarily interested in the ability of the borrower to pay obligations when they come due. The liquidity of the borrower is extremely important in evaluating the safety of a loan. A long term creditor, such as a bondholder, however, looks to profitability and solvency measures that indicate the company’s ability to survive over a long period of time. Long term creditors consider such measures as the amount of debt in the company’s capital structure and its ability to meets interest payments.Similarly; stockholders are interested in the profitability and solvency of the company. They want to asses the likelihood of dividends and the growth potential of stock. All the three characteristics can be evaluated by an in-depth analysis of key financial ratios. Considering the overall scenario, the topic “Financial Ratio Analysis: A comparison of five selected commercial Banks” has been taken to study in depth. 1.3 Objectives of the Study: The objectives of this report are 1. to explore different financial ratios and their nature. 2. analyze the nature of the ratios. 3. compare the ratios of different banks 4. make some important recommendations about the way of improving ratio trend. 1.5 Methodology of the Study: In methodology part, a highlight regarding how the study has been conducted is given. The sequential steps of the methodology are a) Determining the sources of information: Secondary data has been used for the study. Secondary data: The secondary data are those which are already collected by some one else and which have already been passed through the statistical process. b) Collection of Data: Secondary data are collected from the Library of Dhaka Stock exchange and the share department of assigned banks. The study is conducted by extensive review of literature available collections such as various book, publications, periodicals and journals. The help of electronic media like Internet will also be taken as per need of the study c) Analysis of data:
Data has been analyzed both manually and with the aid of computers. Microsoft Office Excel 2007 has been utilized to analyze the data for the study. 1.6 Scope of the Study: Financial ratio analysis is very important to evaluate the financial condition of the bank. This study will give a clear cut picture about the financial condition of all selected banks. 1.7 Limitation of the study: Some required data are not readily available, as they are not presented clearly in the journals/bulletins. In some cases, inconsistencies of data in different bulletins/journals have been found. Time constraint is another problem. LITERATURE RIVEW 2.1 Financial Ratios In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values taken from an enterprise's financial statements. There are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. Security analysts use financial ratios to compare the strengths and weaknesses in various companies. If shares in a company are traded in a financial market, the market price of the shares is used in certain financial ratios. Values used in calculating financial ratios may be taken from the balance sheet, income statement, cash flow statement and statement of retained earnings. These comprise the firm's "accounting statements" or financial statements. Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy. Financial ratios can be classified into five groups Liquidity ratio Activity ratio Leverage ratio Profitability ratio Market value ratio 2.2 Liquidity Ratio Liquidity ratios provide information about a firm's ability to meet its short-term financial obligations. They are of particular interest to those extending short-term credit to the firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio. The current ratio is the ratio of current assets to current liabilities: Current Ratio =
Current assets Current Liabilities
Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business. Typical values for the current ratio vary by firm and industry. For example, firms in cyclical industries may maintain a higher current ratio in order to remain solvent during downturns. One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation values. The quick ratio is an
alternative measure of liquidity that does not include inventory in the current assets. The quick ratio is defined as follows: Current assets - Inventories Current Liabilities
Quick Ratio =
The current assets used in the quick ratio are cash, accounts receivable, and notes receivable. These assets essentially are current assets less inventory. The quick ratio often is referred to as the acid test. 2.3 Leverage Ratios Financial leverage ratios provide an indication of the long-term solvency of the firm. Unlike liquidity ratios that are concerned with short-term assets and liabilities, financial leverage ratios measure the extent to which the firm is using long term debt. The debt ratio is defined as total debt divided by total assets: Debt Ratio =
Total Liabilities Total assets
The debt-to-equity ratio is total debt divided by total equity: Total debt
Debt to Equity Ratio = Total Equity Debt ratios depend on the classification of long-term leases and on the classification of some items as long-term debt or equity. 2.4 Profitability Ratios Profitability ratios offer several different measures of the success of the firm at generating profits. The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm's cost of goods sold, but does not include other costs. It is defined as follows: Gross Profit Margin =
Sales - Cost of Goods sold Net Sales
The ratio of net income to net sales is called the profit margin. It indicates the profitability generated from revenue and hence is an important measure of operating performance. It also provides clues to a company’s pricing, cost structure, and production efficiency. Profit margin =
net income net sales
Return on assets is a measure of how effectively the firm's assets are being used to generate profits. It is defined as: Return on Assets =
Net Income Total Assets
Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firm's stock. Return on equity is defined as follows: Net income
Return on Equity = Stockholder' s Equity 2.5 Market value Ratio Earnings per share indicate the amount of earnings for each common share held. net income - preferred dividends
Earnings per share = number of common stock outstanding The price/earning ratio evaluates the enterprise’s relationship with its shareholders.
Price/earning ratio =
market price per share earnings per share
Book value per share is net assets available to common stockholders divided by shares outstanding. Comparing book value per share with market price per share gives another indication of how investors regard the firm. Book value per share =
stockholders equity - preferred stock common stock outstanding
The dividend yield is calculated as, dividends per share
Dividend yield = market price per share The dividend payout is calculated as, dividends per share
Dividend payout = earnings per share DATA ANALYSIS 3.1 Calculation and analysis of Liquidity Ratios: 3.1.1 Calculation and analysis Networking Capital
•
2005
Net Working Capital of Prime Bank Limited: Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 26996700200
Tk 3350640854 Tk 403023839 Tk 1180000000 Tk 694449059 Tk 21368586448
2005
Current liabilities: i) Borrowing from other banks Tk 945369978 ii) Deposit with other banks Tk 25953358081 ∴ Total current liabilities = Tk 26898728059 ∴ Net working capital = total current assets – total current liabilities = Tk 26996700200 – Tk 26898728059 = Tk 97972141
2006
Current assets:
2006
i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 20867413214 Current liabilities: i) Borrowing from other banks ii) Deposit with other banks
Tk 1646850653 Tk 959529891 Tk 970000000 Tk 1479298342 Tk 15811734328 Tk 0 Tk 19586203300
∴ Total current liabilities = Tk 19586203300
∴ Net working capital = total current assets – total current liabilities = Tk 20867413214 – Tk 19586203300 = Tk 1281210014
2007
Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets =Tk 49732514919
2007
Tk 5418817061 Tk 2417468479 Tk 0 Tk 5896302890 Tk 35999926489
Current liabilities: i) Borrowing from other banks Tk 357331990 ii) Deposit with other banks Tk 47891827023 ∴ Total current liabilities = Tk 48249159013 ∴ Net working capital = total current assets – total current liabilities = Tk 49732514919– Tk 48249159013 = Tk 1483355906
Figure 1: Net working capital of Prime Prime Bank Prime Bank Year
Table 1: Net working capital of (In Million Taka) 2005 2006 2007
Net 9.797214 Working 1 Capital
•
2005
1483.355906
Net Working Capital of Mutual Trust Bank: Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 15096352312
2005
511.043945 4
Tk 988720294 Tk 420567037 Tk 130000000 Tk 1242692000 Tk 12314372981
Current liabilities: i) Borrowing from other banks ii) Deposit with other banks ∴ Total current liabilities = Tk 14319983668
Tk 0 Tk 14319983668
∴ Net working capital = total current assets – total current liabilities = Tk 15096352312– Tk 14319983668 = Tk776368644
2006
Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 20867413214
2006
2007
2007
Tk 1646850653 Tk 959529891 Tk 970000000 Tk 1479298342 Tk 15811734328
Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 19586203300 ∴ Total current liabilities = Tk 19586203300 ∴ Net working capital = total current assets – total current liabilities = Tk 20867413214– Tk 19586203300 = Tk 1281210014 Current assets: i) Cash Tk 229610768 ii) Balances with other banks Tk1832356768 iii) Money at call Tk 0 iv) Investment Tk 2554683746 v) Loans & advances Tk 18853581607 ∴ Total current assets = Tk 23470232889 Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 22221856120 ∴ Total current liabilities = Tk 22221856120 ∴ Net working capital = total current assets – total current liabilities = Tk 23470232889 – Tk 22221856120 = Tk 1281210014
Figure 2: Net working capital of Mutual Table 2: Net working capital of Mutual Trust Bank Trust Bank (In Million Taka) Year
•
2005
2005
2006
Net 77.636864 128.121001 Working 4 4 Capital Net Working Capital of Shahjalal Islami Bank Limited:
2007 124.8376769
Current assets: i) Cash ii) Balances with other banks iii) Money at call
Tk 876979073 Tk 2276426897 Tk 0
2005
2006
2006
2007
2007
iv) Investment Tk 200000000 v) Loans & advances Tk 6584627955 ∴ Total current assets = Tk 9938033925 Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 9068836249 ∴ Total current liabilities = Tk 9068836249 ∴ Net working capital = total current assets – total current liabilities = Tk 9938033925– Tk 9068836249 = Tk 869197676 Current assets: i) Cash Tk 1169060663 ii) Balances with other banks Tk 3789935214 iii) Money at call Tk 0 iv) Investment Tk 500000000 v) Loans & advances Tk 9647129011 ∴ Total current assets = Tk 15106124888 Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 128164202333 ∴ Total current liabilities = Tk 128164202333 ∴ Net working capital = total current assets – total current liabilities = Tk 15106124888 – Tk 128164202333 = Tk 2289704655 Current assets: i) Cash Tk 1902514472 ii) Balances with other banks Tk 4128054920 iii) Money at call Tk 0 iv) Investment Tk 800000000 v) Loans & advances Tk 13141747231 ∴ Total current assets = Tk 19972316623 Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 16023981195 ∴ Total current liabilities = Tk 16023981195 ∴ Net working capital = total current assets – total current liabilities = Tk 19972316623 – Tk 16023981195 = Tk 3948335428
Figure 3: Net working capital of Shahjalal Shahjalal Islami Bank Islami Bank
Table 3: Net working capital of (In Million Taka)
Year
NET WORKING CAPITAL 500 400
Tk n ilo M
300 200
2005
100
2006
0
2007
2005
Net 86.919767 Working 6 Capital
2006
2007
228.970465 5
394.8335428
Shahjalal Islami Bank Year
•
2005
2005
2006
2006
2007
Net Working Capital of Mercantile Bank: Current assets: i) Cash Tk 1878414994 ii) Balances with other banks Tk 118193803 iii) Money at call Tk 625000000 iv) Investment Tk 250104500 v) Loans & advances Tk 13795700328 ∴ Total current assets = Tk 16667413625 Current liabilities: i) Borrowing from other banks Tk 550000000 ii) Deposit with other banks Tk 16515567357 ∴ Total current liabilities = Tk 17065567357 ∴ Net working capital = total current assets – total current liabilities = Tk 16667413625 – Tk 17065567357 = -Tk 398153732 Current assets: i) Cash Tk 2943547098 ii) Balances with other banks Tk 237956604 iii) Money at call Tk 395000000 iv) Investment Tk 439275283 v) Loans & advances Tk 16671388591 ∴ Total current assets = Tk 20687167576 Current liabilities: i) Borrowing from other banks Tk 0 ii) Deposit with other banks Tk 22676911114 ∴ Total current liabilities = Tk 22676911114 ∴ Net working capital = total current assets – total current liabilities = Tk 20687167576 – Tk 22676911114 = -Tk 1989743538 Current assets: i) Cash Tk 3717354095 ii) Balances with other banks Tk 209201299 iii) Money at call Tk 520000000 iv) Investment Tk 1031900298 v) Loans & advances Tk 18618654837 ∴ Total current assets = Tk 24097110529
2007
Current liabilities: i) Borrowing from other banks Tk 240000000 ii) Deposit with other banks Tk 26464664630 ∴ Total current liabilities = Tk 26704664630 ∴ Net working capital = total current assets – total current liabilities = Tk 24097110529 – Tk 26704664630 = -Tk 2607554101
Figure 4: Net working capital of Mercantile Mercantile Bank
Table 4: Net working capital of Bank (In Million Taka) Year
•
2005
Net Working Capital Net Working Capital of BRAC Bank:
2005
2006
2007
39.8153732 198.9743538 260.7554101
Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 7154210340
Tk 1011470878 Tk 1162526288 Tk 80000000 Tk513314600 Tk 4386898574
2005
Current liabilities: i) Borrowing from other banks Tk 710000000 ii) Deposit with other banks Tk 11559861905 ∴ Total current liabilities = Tk 12269861905 ∴ Net working capital = total current assets – total current liabilities = Tk 7154210340 – Tk 12269861905 = -Tk 5115651565
2006
Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 8883834751
2006
Tk 2172387439 Tk 2335200830 Tk 60000000 Tk 1262626284 Tk 2513620198
Current liabilities: i) Borrowing from other banks Tk 954574000 ii) Deposit with other banks Tk 21300819369 ∴ Total current liabilities = Tk 22255393369 ∴ Net working capital = total current assets – total current liabilities = Tk 8883834751 – Tk 22255393369 = -Tk 13371558618
2007
Current assets: i) Cash ii) Balances with other banks iii) Money at call iv) Investment v) Loans & advances ∴ Total current assets = Tk 29120407801
2007
Tk 3093061164 Tk 2986072906 Tk 100000000 Tk 881640082 Tk 22059633667
Current liabilities: i) Borrowing from other banks Tk 2240000000 ii) Deposit with other banks Tk 29542625752 ∴ Total current liabilities = Tk 31782625752 ∴ Net working capital = total current assets – total current liabilities = Tk 29120407801 – Tk 31782625752 = -Tk 2662217951
Figure 5: Net working capital of BRAC BRAC Bank Bank Million Taka)
Table 5: Net working capital of (In Year
2005
2006
2007
Net Working Capital
511.565156 5
1337.15586 2
266.2217951
Table 6: Summary of Net Working Capital Year
2005
2006
2007
Evaluation Trend
Prime Bank
9.7972141
511.043945
1483.355906
Improved
Mutual Trust Bank
77.636864
128.121001
124.8376769
Fluctuated
Shahjalal Islami Bank
86.919768
228.970466
394.8335428
Improved
Mercantile Bank
-39.815373
-198.974354
-260.75541
Deteriorated
of
BRAC Bank
-511.56516
-1337.15586
-266.221795
Deteriorated
Figure 6: Summary of Net Working Capital
Net Working Capital
2000 1500 1000
2005
500
2006
Tak ilo M In
0 -500 -1000
Prime Bank
Mutual Shahjalal Mercantile BRAC Bank Trust Bank Islami Bank Bank
-1500
•
2007
Year
Analysis of Net Working capital:
Both Prime bank and Shahjalal Islami bank shows favorable trend. Mercantile and BRAC bank shows unfavorable trend as the net working capital decreases year by year. BRAC bank shows the worse liquidity condition in the year 2006 but the deteriorated condition improved in the next year though it cannot be considered good for the bank as it still in negative liquidity condition. Prime bank can show the best networking capital trend amongst the all. 3.1.2 Calculation and analysis of Current ratio: •
2005
Current ratio of Prime bank: Current assets = Tk 26996700200 Current liabilities = Tk 26898728059 current assets current liabilities Tk 26996700200 = Tk 26898728059
∴ Current Ratio =
=1 2006
Current assets = Tk 44780137703 Current liabilities = Tk 39669698249 current assets current liabilities Tk 44780137703 = Tk 39669698249
∴ Current Ratio =
= 1.12 2007
Current assets = Tk 47978074629 Current liabilities = Tk 48249159013
current assets current liabilities Tk 47978074629 = Tk 48249159013
∴ Current Ratio =
= 0.99
Figure 7: Current Ratio of Prime Bank Bank
Current Ratio 1.15
2005
1.1
2006
s e Tim
1.05
Table 7: Current Ratio of Prime Year
2005
2006
2007
Current Ratio
1 Times
1.12 Times
0.99 Times
2007
1 0.95 0.9 Prime Bank Year
•
2005
Current ratio of Mutual Trust bank: Current assets = Tk 15096352312 Current liabilities = Tk 14319983668 current assets current liabilities Tk 15096352312 = Tk 14319983668
∴ Current Ratio =
2006
= 1.05 Current assets = Tk 20867413214 Current liabilities = Tk 19586203300 current assets current liabilities Tk 20867413214 = Tk 19586203300
∴ Current Ratio =
2007
= 1.06 Current assets = Tk 23470232889 Current liabilities = Tk 22221856120 current assets current liabilities Tk 23470232889 = Tk 22221856120
∴ Current Ratio =
= 1.07
Figure 8: Current Ratio of Mutual Trust Bank
Table 8: Current Ratio of Mutual Trust Bank Year
2005
2006
2007
Current Ratio
1.05 Times
1.06 Times
1.07 Times
Current Ratio
s e Tim
1.075 1.07 1.065 1.06
2005
1.055
2006
1.05
2007
1.045 1.04 Mutual Trust Bank Year •
2005
Current ratio of Shahjalal Islami bank: Current assets = Tk 9938033925 Current liabilities = Tk 9068836249 current assets current liabilities Tk 9938033925 = Tk 9068836249
∴ Current Ratio =
= 1.09 2006
Current assets = Tk 15106124888 Current liabilities = Tk 12816420233 current assets current liabilities Tk15106124888 = Tk 12816420233
∴ Current Ratio =
2007
= 1.18 Current assets = Tk 19972316623 Current liabilities = Tk16023981195 current assets current liabilities Tk 19972316623 = Tk 16023981195
∴ Current Ratio =
= 1.25 Figure 9: Current Ratio of Shahjalal Islami Islami Bank Bank
Table 9: Current Ratio of Shahjalal
Year
2005
2006
2007
Current Ratio
1.09
1.18
1.25
Current Ratio 1.3 1.25
s e Tim
1.2 1.15
2005
1.1
2006
1.05
2007
1 Shahjalal Islami Bank Year •
2005
Current ratio of mercantile bank: Current assets = Tk 16667413625 Current liabilities = Tk 17065567357 current assets current liabilities Tk 16667413625 = Tk 17065567357
∴ Current Ratio =
2006
= 0.97 Current assets = Tk 20687167576 Current liabilities = Tk 22676911114 current assets current liabilities Tk 20687167576 = Tk 22676911114
∴ Current Ratio =
= 0.91 2007
Current assets = Tk 24097110529 Current liabilities = Tk 26704664630 current assets current liabilities Tk 24097110529 = Tk 26704664630
∴ Current Ratio =
= 0.90 Figure 10: Current Ratio of Mercantile Bank Mercantile Bank
Table 10: Current Ratio of
Year
Current Ratio 0.98
2006
2007
Current 0.97Times 0.91Times 0.90Times Ratio
0.96 0.94
s e Tim
2005
0.92
2005
0.9
2006
0.88
2007
0.86 Mercantile Bank Year •
2005
Current ratio of BRAC bank: Current assets = Tk 7154210340 Current liabilities = Tk 12269861905 current assets current liabilities Tk 7154210340 = Tk12269861905
∴ Current Ratio =
= 0.58 2006
Current assets = Tk 8883834751 Current liabilities = Tk 22255393369
∴ Current Ratio = =
current assets current liabilities
Tk8883834751 Tk 22255393369
= 0.39 2007
Current assets = Tk 29120407801 Current liabilities = Tk 31782625752
∴ Current Ratio = =
current assets current liabilities
Tk 29120407801 Tk 31782625752
= 0.91 Figure 11: Current Ratio of BRAC Bank
Table 11: Current Ratio of BRAC Bank
Year
2005
2006
2007
Current Ratio
0.58
0.39
0.91
Current Ratio 1
2005
0.8
2006
s e Tim
0.6
2007
0.4 0.2 0 BRAC Bank Year
Table 12: Summary of Current Ratios Year
2005
2006
2007
Prime Bank
1
1.12
0.99
Evaluation Trend Fluctuated
Mutual Trust Bank
1.05
1.06
1.07
Improved
Shahjalal Islami Bank
1.09
1.17
1.24
Improved
Mercantile Bank
0.97
0.91
0.9
Deteriorated
BRAC Bank
0.58
0.39
0.91
Fluctuated
Figure 12: Summary of Current Ratios
Current Ratio
1.4
2005 2006 2007
1.2 1
s e Tim
0.8 0.6 0.4 0.2 0 Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank Year
Mercantile Bank
BRAC Bank
of
Analysis of Current ratio: Amongst the five banks, Shahjalal Islami bank has good current ratio trend. Mutual trust bank has also favorable trend but compare to Shahjalal Islami bank it is lower. Both Prime bank and BRAC bank has fluctuating trend .Mercantile bank shows decreasing trend which is worst among the five banks •
3.2 Calculation and analysis of Leverage Ratios 3.2.1 Calculation and Analysis of Debt Ratio: •
2005
Debt ratio of Prime Bank: Total liabilities = Tk 38698290569 Total assets = Tk 41506288767 total liabilities total assets Tk 38698290569 = Tk 41506288767
∴ Debt ratio =
2006
= 0.93 Total liabilities = Tk 57039587069 Total assets = Tk 60899475793 total liabilities total assets Tk 57039587069 = Tk 60899475793
∴ Debt ratio =
2007
= 0.94 Total liabilities = Tk 74315153436 Total assets = Tk 79588430798 total liabilities total assets Tk 74315153436 = Tk 79588730798
∴ Debt ratio =
= 0.93 Figure 13: Debt Ratio of Prime Bank Bank
Table 13: Debt Ratio of Prime Year
2005
2006
2007
Debt Ratio
0.93 Times
0.94 Times
0.93Times
Debt Ratio 0.945
s e Tim
0.94 2005
0.935
2006
0.93
2007
0.925 Prime Bank Year •
2005
Debt ratio of Mutual Trust Bank: Total liabilities = Tk 17759505744 Total assets = Tk 19306990566 total liabilities total assets Tk 17759505744 = Tk 19306990566
∴ Debt ratio =
2006
= 0.91 Total liabilities = Tk 24313181376 Total assets = Tk 26217985597 total liabilities total assets Tk 24313181376 = Tk 26217985597
∴ Debt ratio =
2007
= 0.92 Total liabilities = Tk 30137599048 Total assets = Tk 32181896220 total liabilities total assets Tk 30137599048 = Tk 32181896220
∴ Debt ratio =
= 0.94 Figure 14: Debt Ratio of Mutual Trust Bank Bank
Table 14: Debt Ratio of Mutual Trust
Year
2005
2006
2007
Debt Ratio
0.91 Times
0.92 Times
0.94 Times
Debt Ratio 0.95 0.94
s e Tim
0.93 0.92
2005
0.91
2006
0.9
2007
0.89 Mutual Trust Bank Year •
2005
Debt ratio of Shahjalal Islami Bank: Total liabilities = Tk 13706024693 Total assets = Tk 14447721431 total liabilities total assets Tk 13706024693 = Tk 14447721431
∴ Debt ratio =
2006
= 0.95 Total liabilities = Tk 20137641488 Total assets = Tk 21342554938 total liabilities total assets Tk 20137641488 = Tk 21342554938
∴ Debt ratio =
2007
= 0.94 Total liabilities = Tk 25559265254 Total assets = Tk 28346996395 total liabilities total assets Tk 25559265254 = Tk 28346996395
∴ Debt ratio =
= 0.90 Figure 15: Debt Ratio of Mutual Trust Bank Islami Bank
Table 15: Debt Ratio of Shahjalal
s e Tim
Debt Ratio 0.96 0.95 0.94 0.93 0.92 0.91 0.9 0.89 0.88 0.87
Year
2005
2006
2007
Debt Ratio
0.95 Times
0.94 Times
0.90 Times
2005 2006 2007
Shahjalal Islami Bank Year
•
2005
Debt ratio of Mercantile Bank: Total liabilities = Tk 27061298342 Total assets = Tk 28890483744 total liabilities total assets Tk 27061298342 = Tk 28890483744
∴ Debt ratio =
= 0.94 2006
Total liabilities = Tk 34907019322 Total assets = Tk 37159650006 total liabilities total assets Tk 34907019322 = Tk 37159650006
∴ Debt ratio =
= 0.94 2007
Total liabilities = Tk 42011233229 Total assets = Tk 44940537108 total liabilities total assets Tk 42011233229 = Tk 44940537108
∴ Debt ratio =
= 0.93 Figure 16: Debt Ratio of Mercantile Bank Bank
Table 16: Debt Ratio of Mercantile
Year
2005
2006
Debt Ratio
0. 94Times
0.94Times 0.93 Times
s e Tim
Debt Ratio 0.942 0.94 0.938 0.936 0.934 0.932 0.93 0.928 0.926 0.924
2005 2006 2007
Mercantile Bank Year
•
2005
Debt ratio of BRAC Bank: Total liabilities = Tk 16093077229 Total assets = Tk 16876009139 total liabilities total assets Tk 16093077229 = Tk 16876009139
∴ Debt ratio =
= 0.95 2006
Total liabilities = Tk 27894622036 Total assets = Tk 30011815073 total liabilities total assets Tk27894622036 = Tk 30011815073
∴ Debt ratio =
= 0.93 2007
Total liabilities = Tk 43310566744 Total assets = Tk 46382595418 total liabilities total assets Tk 43310566744 = Tk 46382595418
∴ Debt ratio =
2007
= 0.93 Figure 17: Debt Ratio of BRAC Bank Bank
0.955
Table 17: Debt Ratio of BRAC Year
2005
2006
2007
Debt Ratio
0. 95Times
0.93Times 0.93 Times
Debt Ratio
0.95 0.945
s e Tim
0.94
2005
0.935 0.93
2006
0.925
2007
0.92 BRAC Bank Year
Table 18: Summary of Debt Ratios Year Prime Bank
2005 0.93
2006 0.94
2007 0.93
Mutual Trust Bank
0.91
0.92
0.94
Shahjalal Bank
0.95
0.94
0.90
Mercantile Bank
0.94
0.94
0.93
BRAC Bank
0.95
0.93
0.93
Evaluation of Trend Fluctuated Deteriorated
Islami
Figure 18: Summary of Debt Ratios
Improved Improved Improved
s e Tim
Debt Ratio
0.96 0.95 0.94 0.93 0.92 0.91 0.9 0.89 0.88 0.87
2005 2006 2007
Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank
Mercantile Bank
BRAC Bank
Year •
Analysis of Debt ratio
Shahjalal Islami bank shows favorable trend as the debt ratio decreases year by year. Mutual trust bank shows worst trend.Mercantiloe bank has steady trend from year 2005 to 2006 and it decreases in the year 2007 which can be considered favorable for the bank.BRAC bank has also favorable trend. Prime bank shows fluctuating trend 3.2.2 Calculation and analysis of Deb-to-equity ratio •
2005
Deb-to-equity ratio of Prime Bank: Total liabilities = Tk 38698290569 Stockholder’s equity = Tk 2807998198
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 38698290569 Tk 2807998198
= 13.78 2006
Total liabilities = Tk 57039587069 Stockholder’s equity = Tk 3859888724
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 57039587069 Tk3859888724
= 14.78 2007
Total liabilities = Tk 74315153436
Stockholder’s equity = Tk 5273277362
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 74315153436 Tk 5273277362
= 14.09 Figure 19: Debt-to-Equity Ratio of Prime Prime Bank Bank
s e Tim
Debt-to-Equity Ratio 15 14.8 14.6 14.4 14.2 14 13.8 13.6 13.4 13.2
2005 2006 2007
Table 19: Debt-to-Equity Ratio of
Year
2005
2006
2007
Debt-toEquity Ratio
13.78
14.78
14.09
Prime Bank Year
•
2005
Deb-to-equity ratio of Mutual Trust Bank: Total liabilities = Tk 177595056744 Stockholder’s equity = Tk 1547484822
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 177595056744 Tk 1547484822
= 11.48 2006,
Total liabilities = Tk 24313181376 Stockholder’s equity = Tk 1904804221
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 24313181376 Tk1904804221
= 12.76 2007
Total liabilities = Tk 30137599048 Stockholder’s equity = Tk 2044297172
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 730137599048 Tk 2044297172
= 14.74 Figure 20: Debt-to-Equity Ratio of Mutual Mutual Trust Bank
Table 20: Debt-to-Equity Ratio of Bank
Year
2005
2006
2007
Debt-toEquity Ratio
13
14.78
14.09
s e Tim
Debt-to-Equity Ratio 16 14 12 10 8 6 4 2 0
2005 2006 2007 Mutual Trust Bank Year
•
2005
Deb-to-equity ratio of Shahjalal Islami Bank: Total liabilities = Tk 13706024693 Stockholder’s equity = Tk 741696738
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 13706024693 Tk 741696738
= 18.48 2006
Total liabilities = Tk 20137641488 Stockholder’s equity = Tk 1204913450
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 20137641488 Tk1204913450
= 16.71 2007
Total liabilities = Tk 25559265254
Stockholder’s equity = Tk 2787731141
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 25559265254 Tk 2787731141
= 9.17 Figure 21: Debt-to-Equity Ratio of Shahjalal Shahjalal Islami Bank Islami Bank
Table21: Debt-to-Equity Ratio of
Debt-to-Equity Ratio 20
s e Tim
15 2005
10
2006 5
2007
0 Shahjalal Islami Bank Year •
2005
Deb-to-equity ratio of Mercantile Bank: Total liabilities = Tk 27061298342 Stockholder’s equity = Tk 27061298342
∴ Debt/equity ratio =
total liabilities stockholders' equity
Year
2005
2006
2007
Debt-toEquity Ratio
18.48
16.71
9.17
=
Tk 27061298342 Tk 27061298342
= 14.79 2006
Total liabilities = Tk 34907019322 Stockholder’s equity = Tk 2252630684
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 34907019322 Tk2252630684
= 15.50 2007
Total liabilities = Tk 42011233229 Stockholder’s equity = Tk 2929303879
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 42011233229 Tk 2929303879
= 14.34 Figure 22: Debt-to-Equity Ratio of Mercantile of Bank Bank
Table 22: Debt-to-Equity Ratio Mercantile
Debt-to-Equity Ratio 16 2005
15.5
2006
sT e im
15
2007
14.5 14 13.5 Mercantile Bank Year
•
2005
Debt-to-equity ratio of BRAC Bank: Total liabilities = Tk 16093077229 Stockholder’s equity = Tk 782931910
∴ Debt/equity ratio = =
Year
2005
2006
2007
Debt-toEquity Ratio
14.79
16.71
9.17
total liabilities stockholders' equity
Tk 16093077229 Tk 782931910
= 20.55 2006
Total liabilities = Tk 27894622036 Stockholder’s equity = Tk 2117193037
∴ Debt/equity ratio = =
total liabilities stockholders' equity
Tk 27894622036 Tk2117193037
= 13.17 2007
Total liabilities = Tk 43310566744 Stockholder’s equity = Tk 3072028674
total liabilities stockholders' equity
∴ Debt/equity ratio = =
Tk 43310566744 Tk 3072028674
= 14.10 Figure 23: Debt-to-Equity Ratio of BRAC BRAC Bank Bank 25
Debt-to-Equity Ratio
20
s e Tim
15
Table 23: Debt-to-Equity Ratio of
Year
2005
2006
2007
Debt-toEquity Ratio
20.55
13.17
14.10
2005
10
2006
5
2007
0 BRAC Bank Year
Table 24: Summary of Debt to Equity Ratio Year
2005
2006
2007
Prime Bank
13.78
14.78
14.09
Mutual Trust Bank
11.48
12.76
14.74
Shahjalal Bank
18.48
16.71
9.17
Islami
Mercantile Bank
14.79
15.50
14.34
BRAC Bank
20.55
13.17
14.10
Figure 24: Summary of Debt to Equity Ratio
Evaluation of Trend Fluctuated Deteriorated Improved Fluctuated Fluctuated
Debt-to-Equity Ratio 25 20
s e Tim
15 2005
10
2006
5
2007
0 Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank
Mercantile Bank
BRAC Bank
Year
•
Analysis of Debt-to-Equity ratio
Shahjalal Islami bank shows favorable trend as the debt ratio decreases year by year. Mutual trust bank shows unfavorable trend from 2005 to 2006 but it decrease sharply in the year 2007 which is good sign for the bank.Mercantiloe bank and Prime bank shows fluctuating trend.BRAC bank has favorable trend from year 2005 to 2006 but it slightly increase in 2007. 3.3 Calculation and analysis of Profitability Ratio: 3.3.1 Calculation and Analysis of Profit Margin •
2005
Profit Margin of Prime Bank: Net income = Tk 568196286 Net sales = Tk 3445519545
∴ Profit margin = =
net income net sales Tk 568196286 Tk 3445519545
= 16.49% 2006
Net income = Tk 1051890526 Net sales = Tk 5198790368
∴ Profit margin = =
net income net sales Tk 1051890526 Tk 5198790368
= 20.23%
2007
Net income = Tk 1400664725 Net sales = Tk 7170099616
∴ Profit margin = =
net income net sales Tk 1400664725 Tk 7170099616
= 19.53% Figure 25: Profit Margin of Prime Bank Bank
t rcn e P
25.00%
Profit Margin
20.00%
2005
15.00%
2006
Table 25: Profit Margin of Prime
Year
2005
2006
2007
Profit Margin
16.49%
20.23%
19.53%
2007
10.00% 5.00% 0.00% Prime Bank Year
•
2005
Profit Margin of Mutual Trust bank: Net income = Tk 336174698 Net sales = Tk 1688878029 net income net sales Tk336174698 = Tk 1688878029
∴ Profit margin =
= 19.91% 2006
Net income = Tk 478279399 Net sales = Tk 2340970021
∴ Profit margin = =
2007
net income net sales Tk 478279399 Tk 2340970021
= 20.43% Net income = Tk 210802117 Net sales = Tk 2846923194
∴ Profit margin =
net income net sales
=
Tk 210802117 Tk 2846923194
= 7.40% Figure 26: Profit Margin of Mutual Trust Bank Mutual Trust Bank
Profit Margin
t rcn e P
25.00% 20.00%
2005
15.00%
2006
10.00%
2007
Year
2005
2006
2007
Profit Margin
19.91%
20.43%
7.40%
5.00% 0.00% Mutual Trust Bank Year
•
2005
Profit Margin of Shahjalal Islami Bank: Net income = Tk 255587587 Net sales = Tk 1350879819 net income net sales Tk255587587 = Tk 1350879819
∴ Profit margin =
= 18.92% 2006
Net income = Tk 463216712 Net sales = Tk 2145494920
∴ Profit margin = =
net income net sales Tk 463216712 Tk 2145494920
= 21.59% 2007
Net income = Tk 646992691 Net sales = Tk 2973438485
∴ Profit margin =
Table 26: Profit Margin of
net income net sales
=
Tk 646992691 Tk 2973438485
= 21.76% Figure 27: Profit Margin of Shahjalal Islami Shahjalal Islami Bank
Table 27: Profit Margin of Bank
Year
2005
2006
2007
Profit Margin
18.92%
21.59%
21.76%
Profit Margin
n P te rc
22.00% 21.00%
2005
20.00%
2006
19.00%
2007
18.00% 17.00% Shahjalal Islami Bank Year
•
2005
Profit Margin of Mercantile Bank: Net income = Tk 386833645 Net sales = Tk 2405443584 net income net sales Tk 386833645 = Tk 2405443584
∴ Profit margin =
= 16.08% 2006
Net income = Tk 494224463 Net sales = Tk 3129553895 net income net sales Tk 494224463 = Tk 3129553895
∴ Profit margin =
= 15.79% 2007
Net income = Tk540499295 Net sales = Tk 3686414282 net income net sales Tk 540499295 = Tk 3686414282
∴ Profit margin =
= 14.66% Figure 28: Profit Margin of Mercantile Bank Mercantile Bank
t rcn e P
16.50%
Profit Margin
16.00%
2005
15.50%
2006
15.00%
2007
Table 28: Profit Margin of
Year
2005
2006
2007
Profit Margin
16.08%
15.79%
14.66%
14.50% 14.00% 13.50% Mercantile Bank Year
•
2005
Profit Margin of BRAC Bank: Net income = Tk 192680101 Net sales = Tk 1458060328 net income net sales Tk 192680101 = Tk 1458060328
∴ Profit margin =
= 13.21% 2006
Net income = Tk 334261127 Net sales = Tk 2792256259 net income net sales Tk 4334261127 = Tk 2792256259
∴ Profit margin =
= 11.97% 2007
Net income = Tk618335637 Net sales = Tk 4633346578 net income net sales Tk 618335637 = Tk 4633346578
∴ Profit margin =
= 13.35% Figure 29: Profit Margin of BRAC Bank of BRAC Bank
Table 29: Profit Margin
Year
2005
2006
2007
Profit Margin
16.08%
15.79%
14.66%
Profit Margin
t rcn e P
13.50% 13.00%
2005
12.50%
2006
12.00%
2007
11.50% 11.00% BRAC Bank Year
Table 30: Summary of Profit Margin Year Prime Bank Mutual Bank
Trust
Shahjalal Bank
Islami
Mercantile Bank BRAC Bank
2005
2006
2007
Evaluation Trend
16.49%
20.23%
19.53%
Fluctuated
19.91%
20.43%
7.40%
Fluctuated
18.92%
21.59%
21.76%
Improved
16.08%
15.79%
14.66%
Deteriorated
13.21%
11.97%
13.35%
Fluctuated
Figure 30: Summary of Profit Margin
of
Profit Margin 25.00% 20.00%
t rcn e P
15.00% 2005
10.00%
2006
5.00%
2007
0.00% Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank
Mercantile Bank
BRAC Bank
Year •
Analysis of Profit margin:
Shahjalal Islami bank sows favorable trend as the ratio increases from 2005to 2007.Prime bank, Mutual Trust bank, and BRAC bank shows fluctuating trend. Mercantile bank shows unfavorable trend as the profit margin decreases from 2005 to 2007.Most important factor about the trend of all the banks is mutual trust bank. In the year2007 the profit margin is decreased sharply. The reason behind this is the sharp decrease of net interest income in the year 2007. 3.3.2 Calculation and analysis of Return on total assets (ROA) •
2005
ROA of Prime Bank: Net income = Tk 568196286 Average total assets = Tk 36934144383.5
∴ Return on total assets = =
net income average total assets
Tk 568196286 Tk 36934144383.5
= 1.54% 2006
Net income = Tk 1051890526 Average total assets = Tk 51202882280
∴ Return on total assets = =
net income average total assets
Tk 1051890526 Tk 51202882280
= 2.05%
2007
Net income = Tk 1398792999 Average total assets = Tk 70258924210
∴ Return on total assets = =
net income average total assets
Tk1398792999 Tk 70258924210
= 1.99%
Figure 31: ROA of Prime Bank
2.50%
Year
2005
2006
2007
ROA
1.54%
2.05%
1.99%
Return On Assets 2005
2.00%
2006
1.50%
t rcn e P
Table 31: ROA of Prime Bank
2007
1.00% 0.50% 0.00% Prime Bank Year
•
2005
ROA of Mutual Trust Bank: Net income = Tk 336174698 Average total assets = Tk 17619010000
∴ Return on total assets = =
net income average total assets
Tk 336174698 Tk 17619010000
= 1.91% 2006
Net income = Tk 478279399 Average total assets = Tk 22762488081.15
∴ Return on total assets =
net income average total assets
=
Tk 1478279399 Tk 22762488081.15
= 2.10% 2007
Net income = Tk 210802117 Average total assets = Tk 29082906223.5
∴ Return on total assets = =
net income average total assets
Tk210802117 Tk 29082906223.5
= 0.73%
Figure 32: ROA of Mutual Trust Bank Bank
Table 32: ROA of Mutual Trust
Year
2005
2006
2007
ROA
1.91%
2.10%
0.73%
Return On Assets 2.50% 2005
2.00%
2006
1.50%
2007
t rcn e P
1.00% 0.50% 0.00% Mutual Trust Bank Year •
2005
ROA of Shahjalal Islami Bank: Net income = Tk 255587587 Average total assets = Tk 12094860715.5
∴ Return on total assets = =
net income average total assets
Tk 255587587 Tk 12094860715.5
= 2.11%
2006
Net income = Tk 463216712 Average total assets = Tk 17895138184.5
∴ Return on total assets = =
net income average total assets
Tk 463216712 Tk 17895138184.5
= 2.59% 2007
Net income = Tk 646992691 Average total assets = Tk 24844775666.5
∴ Return on total assets = =
net income average total assets
Tk646992691 Tk 24844775666.5
= 2.60%
Figure 33: ROA of Shahjalal Islami Bank Islami Bank
3.00%
Year
2005
2006
2007
ROA
2.11%
2.59%
2.60%
Return On Assets
2.50%
2005
2.00%
2006
1.50%
t rcn e P
Table 33: ROA of Shahjalal
2007
1.00% 0.50% 0.00% Shahjalal Islami Bank Year
•
2005
ROA of Mercantile Bank: Net income = Tk 386833645 Average total assets = Tk 26489785000
∴ Return on total assets = =
net income average total assets
Tk 386833645 Tk 26489785000
= 1.46% 2006
Net income = Tk 494224463 Average total assets = Tk 33025065000
∴ Return on total assets =
net income average total assets
Tk 494224463 Tk 33025065000
=
= 1.50% 2007
Net income = Tk 540499295 Average total assets = Tk 41050095000
∴ Return on total assets =
net income average total assets
Tk540499295 Tk 41050095000
=
= 1.32%
Figure 34: ROA of Mercantile Bank Bank
Table 34: ROA of Mercantile Year
2005
2006
2007
ROA
1.46%
1.50%
1.32%
t rcn e P
Return On Assets 1.55% 1.50% 1.45% 1.40% 1.35% 1.30% 1.25% 1.20%
2005 2006 2007
Mercantile Bank Year
•
2005
ROA of BRAC Bank: Net income = Tk 192680101 Average total assets = Tk 8938802000
∴ Return on total assets = =
net income average total assets
Tk 192680101 Tk8938802000
= 2.15% 2006
Net income = Tk 334261127 Average total assets = Tk 23443915000
∴ Return on total assets = =
net income average total assets
Tk 334261127 Tk 23443915000
= 1.42% 2007
Net income = Tk 618335637 Average total assets = Tk 31090139876.6
∴ Return on total assets = =
net income average total assets
Tk618335637 Tk 31090139876.6
= 1.98%
Figure 35: ROA of BRAC Bank Bank
Table 35: ROA of BRAC
Return On Assets
t rcn e P
2.50% 2.00%
2005
1.50%
2006
1.00%
2007
Year
2005
2006
2007
ROA
2.15%
1.42%
1.98%
0.50% 0.00% BRAC Bank Year
Table 36: Summary of Return on Asset Year
2005
2006
2007
Prime Bank
1.54%
2.05%
1.99%
Evaluation Trend Fluctuated
of
Mutual Bank
Trust 1.91%
2.10%
0.73%
Fluctuated
Shahjalal Bank
Islami 2.11%
2.59%
2.60%
Improved
Mercantile Bank
1.46%
1.50%
1.32%
Fluctuated
BRAC Bank
2.15%
1.42%
1.98%
Fluctuated
Table 36: Return on Asset Comparison Return on Total Assets 3.00% 2.50%
t rcn e P
2.00% 1.50%
2005
1.00%
2006 2007
0.50% 0.00% Prime Bank
•
Mutual Trust Bank
Shahjalal Islami Bank Year
Mercantile Bank
BRAC Bank
Analysis of ROA:
The percentage of the return on total assets of Shahjalal Islami bank increases from 2005 to 2007 which is favorable for the bank. Prime bank utilize its assets properly from year 2005 and 2006 and that’s why it shows increasing trend of ROA. But in year 207 it decrease slightly which is a negative sign.BRAC bank and Mercantile bank shows fluctuating trend of ROA.Mutual Trust bank shows worst condition in 2007.The bank’s poor utilization of assets negatively affects its return 3.3.3 Calculation and analysis of Return on Common Equity: •
2005
Return on Common Equity of Prime Bank: Earnings available to common shareholders = Tk 568196286 Average stockholders’ equity = Tk 2524000000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 568196286 Tk 2524000000
= 22.51% 2006
Earnings available to common shareholders = Tk 1051890526 Average stockholders’ equity = Tk 3334000000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 1051890526 Tk 3334000000
= 31.55% 2007
Earnings available to common shareholders = Tk 1398792999 Average stockholders’ equity = Tk 4566500000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 1398792999 Tk4566500000
= 30.68%
Figure 37: ROE of Prime Bank Bank
Table 37: ROE of Prime
t rcn e P
Return On Equity 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%
2005
Year
2005
2006
2007
ROE
22.51%
31.55%
30.68%
2006 2007
Prime Bank Year
•
2005
Return on Common Equity of Mutual Trust Bank: Earnings available to common shareholders = Tk 336174698 Average stockholders’ equity = Tk 1389245000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 336174698 Tk 1389245000
= 24.12%
2006
Earnings available to common shareholders = Tk 478279399 Average stockholders’ equity = Tk 1732870000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 478279399 Tk 1732870000
= 27.60% 2007
Earnings available to common shareholders = Tk 210802117 Average stockholders’ equity = Tk 1974550000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 210802117 Tk1974550000
= 10.67%
Figure 38: ROE of Mutual Trust Bank Bank
Table 38: ROE of Mutual Trust Year
2005
2006
2007
ROE
24.12%
27.60%
10.67%
Return On Equity 30.00% 25.00%
2005
20.00%
2006
t rcn e P
15.00%
2007
10.00% 5.00% 0.00% Mutual Trust Bank Year
•
2005
Return on Common Equity of Shahjalal Islami Bank: Earnings available to common shareholders = Tk 255587587 Average stockholders’ equity = Tk 594000000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 255587587 Tk 594000000
= 43.03% 2006
Earnings available to common shareholders = Tk 463216712 Average stockholders’ equity = Tk 1105500000
∴ Return on common equity =
earning available to common shareholders average stockholders equity
Tk 463216712 Tk 1105500000
=
= 41.90% 2007
Earnings available to common shareholders = Tk 646992691 Average stockholders’ equity = Tk 2202000000
∴ Return on common equity =
earning available to common shareholders average stockholders equity
Tk 646992691 Tk2202000000
=
= 29.38% Figure 39: ROE of Shahjalal Islami Bank Table 39: ROE of Shahjalal Islami Bank Year 2005 2006 2007 ROE
43.03%
41.90%
29.38%
Return On Equity
t rcn e P
50.00% 40.00%
2005
30.00%
2006
20.00%
2007
10.00% 0.00% Shahjalal Islami Bank Year
•
2005
Return on Common Equity of Mercantile Bank: Earnings available to common shareholders = Tk 386833645 Average stockholders’ equity = Tk 1831830000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 386833645 Tk 1831830000
= 21.12% Earnings available to common shareholders = Tk 494224463 Average stockholders’ equity = Tk 2300070000
2006
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 494224463 Tk 2300070000
= 21.48% 2007
Earnings available to common shareholders = Tk 540499295 Average stockholders’ equity = Tk 2970730000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 540499295 Tk2970730000
= 18.19% Figure 40: ROE of Mercantile Bank Bank
Table 40: ROE of Mercantile Year
2005
2006
2007
ROE
21.12%
21.48%
18.19%
Return On Equity 22.00% 21.00%
2005
20.00%
2006
t rcn e P
19.00%
2007
18.00% 17.00% 16.00% Mercantile Bank Year
•
2005
Return on Common Equity of BRAC Bank: Earnings available to common shareholders = Tk 192680101 Average stockholders’ equity = Tk 819590000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 192680101 Tk 819590000
= 23.51% 2006
Earnings available to common shareholders = Tk 334261127 Average stockholders’ equity = Tk 1742590000
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 334261127 Tk 1742590000
= 19.18% Earnings available to common shareholders = Tk 618335637 Average stockholders’ equity = Tk 1990717873.66
2007
∴ Return on common equity = =
earning available to common shareholders average stockholders equity
Tk 618335637 Tk1990717873.66
= 31.06%
Figure 41: ROE of BRAC Bank Bank
Table 41: ROE of BRAC
t rcn e P
Return On Equity 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%
2005
Year
2005
2006
2007
ROE
23.51%
19.18%
31.06%
2006 2007
BRAC Bank Year
Table 42: Summary of Return on Equity Year Prime Bank Mutual Trust Bank
2005
2006
2007
22.51%
31.55%
30.68%
24.12%
27.60%
10.67%
41.90%
29.38%
21.48%
18.19%
19.18%
31.06%
Shahjalal Islami 43.03% Bank Mercantile Bank 21.12% BRAC Bank
23.51%
Figure 42: Summary of Return on Equity
t rcn e P
Return on Equity 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%
2005 2006 2007 Prime Bank Mutual Trust Shahjalal Bank Islami Bank
Mercantile Bank
BRAC Bank
Year
•
Analysis of ROE:
The trend of return on equity of Prime bank is favorable from 2005 to 2006.Sligt decrease in 2007.Fluctuating trend of mutual trust bank, mercantile bank, and BRAC bank shows the banks are not making any constant return. But BRAC bank has made good return on equity in the year 2007 which is a positive sign for the bank. Shahjalal bank shows unfavorable trend 3.4 Calculation and Analysis of Market value Ratios: 3.4.1 Calculation and Analysis of Earnings per Share: •
2005
Earnings per Share of Prime Bank: Net income = Tk 568000000 Preferred dividends = Tk 0 Number of common stock outstanding = 14000000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 568000000 14000000
= Tk 40.57 2006
Net income = Tk 1052000000 Preferred dividends = Tk 0 Number of common stock outstanding = 17500000
∴ Earnings per share =
net income - preferred dividends number of common stock outstanding
=
Tk 1052000000 17500000
= Tk 60.11 2007
Net income = Tk 1401000000 Preferred dividends = Tk 0 Number of common stock outstanding = 22750000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 1401000000 22750000
= Tk 61.58 Figure 43: EPS of Prime Bank
Table 43: EPS of Prime Bank Year
2005
2006
2007
EPS
40.57
60.11
61.58
TB D
Earning Per Share 70 60 50 40 30 20 10 0
2005 2006 2007
Prime Bank Year
•
2005
Earnings per Share of Mutual Trust Bank: Net income = Tk 336174698 Preferred dividends = Tk 0 Number of common stock outstanding = 8640000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 336174698 8640000
= Tk 38.90 2006
Net income = Tk 478280000 Preferred dividends = Tk 0
Number of common stock outstanding = 9504000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 478280000 9504000
= Tk 50.32 2007
Net income = Tk 210800000 Preferred dividends = Tk 0 Number of common stock outstanding = 9979200
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 210800000 9979200
= Tk 21.12 Figure 44: EPS of Mutual Trust Bank Bank
Table 44: EPS of Mutual Trust
Earning Per Share
Year
2005
2006
2007
EPS
38.90
50.32
21.12
T D B
60 50
2005
40
2006
30
2007
20 10 0 Mutual Trust Bank Year
•
2005
Earnings per Share of Shahjalal Islami Bank: Net income = Tk 255587587 Preferred dividends = Tk 0 Number of common stock outstanding = 9360000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 255587587 9360000
= Tk 27.30 2006
Net income = Tk 463216712 Preferred dividends = Tk 0 Number of common stock outstanding = 9358250
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 463216712 9358250
= Tk 49.50 2007
Net income = Tk 646992691 Preferred dividends = Tk 0 Number of common stock outstanding = 18716500
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk646992691 18716500
= Tk 34.57 Figure 45: EPS of Shahjalal Islami Bank
Earning Per Share 60
2005
50
Year
2005
2006
2007
EPS
27.30
49.50
34.57
2006
40
T D B
Table 45: EPS of Shahjalal Islami Bank
2007
30 20 10 0 Shahjalal Islami Bank Year
•
2005
Earnings per Share of Mercantile Bank: Net income = Tk 386833645 Preferred dividends = Tk 0 Number of common stock outstanding = 9992656
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 386833645 9992656
= Tk 38.71 2006
Net income = Tk 494224463 Preferred dividends = Tk 0 Number of common stock outstanding = 11991187
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 494224463 11991187
= Tk 41.22 2007
Net income = Tk 540499295
Preferred dividends = Tk 0 Number of common stock outstanding = 17986779 net income - preferred dividends number of common stock outstanding
∴ Earnings per share = =
Tk 540499295 17986779
= Tk 30.05 Figure 46: EPS of Mercantile Bank Bank
Table 46: EPS of Mercantile
Earning Per Share
T D B
50 40
2005
30
2006
20
2007
Year
2005
2006
2007
EPS
32.26
41.22
30.05
10 0 Mercantile Bank Year
•
2005
Earnings per Share of BRAC Bank: Net income = Tk 192680000 Preferred dividends = Tk 0 Number of common stock outstanding = 5000000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 192680000 5000000
= Tk 38.54 2006
Net income = Tk 334260000 Preferred dividends = Tk 0 Number of common stock outstanding = 10000000
∴ Earnings per share = =
net income - preferred dividends number of common stock outstanding
Tk 334260000 10000000
= Tk 33.43 2007
Net income = Tk 618335637 Preferred dividends = Tk 0 Number of common stock outstanding = 12000000
∴ Earnings per share =
net income - preferred dividends number of common stock outstanding
=
Tk 618335637 12000000
= Tk 51.53 Figure 47: EPS of BRAC Bank Bank
Table 47: EPS of BRAC Year
2005
2006
2007
EPS
38.54
33.43
51.53
Earning Per Share
T D B
60 50
2005
40
2006
30
2007
20 10 0 BRAC Bank Year
Table 48: Summary of Earning per Share Year Prime Bank Mutual Trust Bank Shahjalal Bank
2006
2007
Evaluation Trend
40.57
60.11
61.58
Improved
38.9
50.32
21.12
Fluctuated
27.30
49.5
34.57
Fluctuated
38.71
41.22
30.05
Fluctuated
38.54
33.43
51.53
Fluctuated
Islami
Mercantile Bank BRAC Bank
2005
Figure 48: Summary of Earning per Share
of
Earning Per Share(EPS)
70
2005
60
2006
50
2007
T D B
40 30 20 10 0 Prime Bank
•
Mutual Trust Bank
Shahjalal Islami Mercantile Bank Bank Year
BRAC Bank
Analysis of EPS:
The trend of EPS is favorable for prime bank .It increases from 2005 to 2006 sharply and increase slightly from 2006 to 2007.Mutual Trust bank, Shahjalal Islami bank, and Mercantile bank shows an increasing trend of EPS from 2005 to 2006 which are favorable for all the bank but the ratio decreases in the next year that is the year 2007 which is unfavorable. Mercantile bank shows fluctuating trend the trend of 2006 to 2007 is unfavorable for the bank 3.4.2 Calculation and analysis of Price/earning ratio •
2005
Price/Earning Ratio Prime Bank: Market price per share = Tk 682 Earnings per share = Tk 40.57
∴ Price/earning ratio = =
market price per share earnings per share
682 Tk 40.57
= 16.81 2006
Market price per share = Tk 529 Earnings per share = Tk 60.11
∴ Price/earning ratio = =
market price per share earnings per share
Tk 529 Tk 60.11
= 8.80
2007
Market price per share = Tk 924 Earnings per share = Tk 61.58
∴ Price/earning ratio = =
market price per share earnings per share
Tk 924 Tk 61.58
= 15.00 Figure 49: P/E Ratio of Prime Bank Bank
Table 49: P/E Ratio of Prime
Price Earning Ratio
s e Tim
20
2005
15
2006
10
2007
Year
2005
2006
2007
P/E Ratio
16.81
8.80
15.00
5 0 Prime Bank Year
•
2005
Price/earning ratio Mutual Trust bank: Market price per share = Tk 432.57 Earnings per share = Tk 38.90
∴ Price/earning ratio = =
market price per share earnings per share
432.57 Tk 38.90
= 11.12 2006
Market price per share = Tk 359.28 Earnings per share = Tk 50.32
∴ Price/earning ratio = =
market price per share earnings per share
Tk 359.28 Tk 50.32
= 7.14 2007
Market price per share = Tk 596.43 Earnings per share = Tk 21.12 market price per share earnings per share
∴ Price/earning ratio = =
Tk 596.43 Tk 21.12
= 28.24
Figure 50: P/E Ratio of Mutual Trust Bank Trust Bank
Table 50: P/E Ratio of Mutual Year
2005
2006
2007
P/E Ratio
11.12
7.14
28.24
Price Earning Ratio
s e Tim
30 25
2005
20
2006
15
2007
10 5 0 Mutual Trust Bank Year
•
2005
Price/earning ratio Shahjalal Islami Bank: Market price per share = Tk 0 Earnings per share = Tk 27.30 market price per share earnings per share
∴ Price/earning ratio = =
0 Tk 27.30
=0 2006
Market price per share = Tk 0 Earnings per share = Tk 49.50 market price per share earnings per share
∴ Price/earning ratio = =
Tk 0 Tk 49.50
=0
2007
Market price per share = Tk 670 Earnings per share = Tk 34.57
∴ Price/earning ratio = =
market price per share earnings per share
Tk 670 Tk 34.57
= 19.38
Figure 51: P/E Ratio of Shahjalal Islami Islami Bank Bank
Table 51: P/E Ratio of Shahjalal
Price Earning Ratio 25
2005
20
2005
2006
2007
P/E Ratio
0
0
19.38
2006
15
s e Tim
Year
2007
10 5 0 Shahjalal Islami Bank Year
•
2005
Price/earning ratio mercantile Bank: Market price per share = Tk 390.75 Earnings per share = Tk 32.26
∴ Price/earning ratio = =
market price per share earnings per share
390.75 Tk 38.71
= 10.09 2006
Market price per share = Tk 355.25 Earnings per share = Tk 41.22
∴ Price/earning ratio = =
market price per share earnings per share
Tk 355.25 Tk 41.22
= 8.62 2007
Market price per share = Tk 415.61 Earnings per share = Tk 30.05 market price per share earnings per share
∴ Price/earning ratio = =
Tk 415.61 Tk 30.05
= 13.83
Figure 52: P/E Ratio of Mercantile Mercantile Bank Bank
Table 52: P/E Ratio of
s e Tim
Price Earning Ratio 16 14 12 10 8 6 4 2 0
2005 2006
Year
2005
2006
2007
P/E Ratio
12.11
8.62
13.83
2007
Mercantile Bank Year •
2005
Price/earning ratio BRAC bank: Market price per share = Tk 0 Earnings per share = Tk 38.54 market price per share earnings per share
∴ Price/earning ratio = =
0 Tk 38.54
=0 2006
Market price per share = Tk 0 Earnings per share = Tk 33.43
∴ Price/earning ratio = =
market price per share earnings per share
Tk 0 Tk 33.43
=0 2007
Market price per share = Tk 683 Earnings per share = Tk 51.53 market price per share earnings per share
∴ Price/earning ratio = =
Tk 683 Tk 51.53
= 13.25
sTi e m
Figure 53: P/E Ratio Trend BRAC Bank BRAC Bank 14 12 10 8 6 4 2 0
Price Earning Ratio 2005 2006
Table 53: P/E Ratio of
Year
2005
2006
2007
P/E Ratio
0
0
13.25
2007
BRAC Bank Year
Table 54: Summary of Price Earning Ratio Year
2005
2006
2007
Prime Bank
16.81
8.8
15
Evaluation Treand Fluctuated
Mutual Trust Bank
11.12
7.14
28.24
Fluctuated
0
19.38
-
Shahjalal Bank
Islami 0
Mercantile Bank
10.09
8.62
13.83
Fluctuated
BRAC Bank
0
0
13.25
-
Figure 54: Price Earning Ratio Trend Comparison
of
Price-Earning Ratio 30 25
s e Tim
20 15
2005
10
2006
5
2007
0 Prime Bank
Mutual Trust Shahjalal Islami Bank Bank
Mercantile Bank
Brac Bank
Year
•
Analysis of Price/earning ratio
Price earning ratio of Prime, Mutual trust, and mercantile bank shows an increasing trend from year 2006 to 2007 but it shows decreasing trend from year 2005 to 2006. The reason behind the increasing trend is the substantial increase in the market price per share over the year 2006 to 2007.Shahjalal Islami bank and BRAC bank started their share trading from 2007. 3.4.3 Calculation and analysis of Dividend yield •
2005
Dividend yield of Prime Bank: Dividends per share = Tk 10.14 Market price per share = Tk 682
∴ Dividend yield = = 2006
Tk 10.14 Tk 682
= 1.49% Dividends per share = Tk 18.03 Market price per share = Tk 529
∴ Dividend yield = = 2007
dividends per share market price per share
dividends per share market price per share
Tk 18.03 Tk 529
= 3.40% Dividends per share = Tk 21.55 Market price per share = Tk 924
∴ Dividend yield =
dividends per share market price per share
=
Tk 21.55 Tk 924
= 2.33%
Figure 55: Dividend Yield Ratio of Prime of Prime Bank Bank
s e Tim
Dividend Yield 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
Table 55: Dividend Yield Ratio
Year
2005
Dividend 1.49% Yield
2005 2006 2007
Prime Bank Year
•
2005
Dividend yield of Mutual Trust bank: Dividends per share = Tk 9.34 Market price per share = Tk 432.57
∴ Dividend yield = =
dividends per share market price per share
Tk 9.34 Tk 432.57
= 2.16% 2006
Dividends per share = Tk 12.58 Market price per share = Tk 359.28
∴ Dividend yield = =
dividends per share market price per share
Tk 12.58 Tk 359.28
= 3.50% 2007
Dividends per share = Tk 5.28 Market price per share = Tk 596.43
2006
2007
3.40%
2.33%
dividends per share market price per share
∴ Dividend yield = =
Tk 5.28 Tk 596.43
= 0.88%
Figure 56: Dividend Yield Ratio of Mutual Mutual Trust Bank 4.00%
Dividend Yield
2005
Dividend 2.16% Yield
2005
2.50%
Trust Bank Year
3.50% 3.00%
Table 56: Dividend Yield Ratio of
2006
s e Tim
2.00%
2007
1.50% 1.00% 0.50% 0.00% Mutual Trust Bank Year •
2005
Dividend yield of Shahjalal Islami Bank: Dividends per share = Tk 0 Market price per share = Tk 0
∴ Dividend yield = = 2006
dividends per share market price per share
Tk 0 Tk 0
= 0% Dividends per share = Tk 0 Market price per share = Tk 0
∴ Dividend yield = =
dividends per share market price per share
Tk 0 Tk 0
= 0% 2007
Dividends per share = Tk 6.91 Market price per share = Tk 670
∴ Dividend yield =
dividends per share market price per share
2006
2007
3.50%
0.88%
=
Tk 6.91 Tk 670
= 1.03%
Figure 57: Dividend Yield Ratio of Shahjalal Shahjalal Islami Bank
Table 57: Dividend Yield Ratio of Islami Bank Year
2005
Dividend 0.00% Yield
Dividend Yield 1.20% 1.00%
2005
s e Tim
0.80%
2006
0.60%
2007
0.40% 0.20% 0.00% Shahjalal Islami Bank Year
•
2005
Dividend yield of Mercantile bank: Dividends per share = Tk 9.68 Market price per share = Tk 390.75
∴ Dividend yield = = 2006
dividends per share market price per share
Tk 9.68 Tk390.75
= 2.47% Dividends per share = Tk 10.30 Market price per share = Tk 355.25
∴ Dividend yield = =
dividends per share market price per share
Tk 10.30 Tk 355.25
= 2.8% 2007
Dividends per share = Tk 6.01
2006
2007
0.00%
1.03%
Market price per share = Tk 415.61 dividends per share market price per share
∴ Dividend yield = =
Tk 6.01 Tk 415.61
= 1.44%
Figure 58: Dividend Yield Ratio of Mercantile Mercantile Bank
Table 58: Dividend Yield Ratio of Bank
Dividend Yield
Year
2005
2006
2007
2.8%
1.44%
3.00% 2.50% 2.00%
s e Tim
Dividend 2.47% Yield
2005 2006
1.50%
2007
1.00% 0.50% 0.00% Mercantile Bank Year
•
2005
Dividend yield of BRAC bank: Dividends per share = Tk 0 Market price per share = Tk 0
∴ Dividend yield = = 2006
dividends per share market price per share
Tk 0 Tk0
= 0% Dividends per share = Tk 0 Market price per share = Tk 0
∴ Dividend yield = =
dividends per share market price per share
Tk 0 Tk0
= 0% 2007
Dividends per share = Tk 15.46 Market price per share = Tk 683
dividends per share market price per share
∴ Dividend yield = =
Tk 15.46 Tk 683
= 2.26% Figure 59: Dividend Yield Ratio of BRAC BRAC Bank Bank Year
Table 59: Dividend Yield Ratio of
2005
Dividend 0.00% Yield
2006
2007
0.00%
2.26%
Dividend Yield 2.50% 2.00%
2005
s e Tim
1.50%
2006
1.00%
2007
0.50% 0.00% BRAC Bank Year
Table 60: Summary of Dividend Yield Year Prime Bank Mutual Trust Bank Shahjalal Bank
2006
2007
Evaluation of Trend
1.49%
3.40%
2.33%
Fluctuated
2.16%
3.50%
0.88%
Fluctuated
0%
0%
1.03%
-
2.47%
2.80%
1.44%
Fluctuated
0%
0%
2.26%
-
Islami
Mercantile Bank BRAC Bank
2005
Figure 60: Summary of Dividend Yield
tP n e rc
Dividend Yield 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
2005 2006 2007 Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank
Mercantile Bank
BRAC Bank
Year
•
Analysis of Dividend Yield
The trend of dividend yield of Prime, Mutual Trust, and Mercantile Bank of year 2005 to 2006 are increasing which is favorable for the banks but the trend of 2006 to 2007 is unfavorable as it is decreasing and investor are not take it positively as the recent trend of Dividend Yield is declining. Both Shahjalal Islami bank and BRAC bank shows no dividend yield in 2005 and 2006 because the bank paid no dividend for that two year. 3.4.4 Calculation and Analysis of Dividend payout: •
2005
Dividend payout Prime Bank: Dividends per share = Tk 10.14 Earnings per share = Tk 40.57
∴ Dividend payout = =
dividends per share earnings per share
Tk 10.14 Tk 40.57
= 0.2499 2006
Dividends per share = Tk 18.03 Earnings per share = Tk 60.11
∴ Dividend payout = = 2007
dividends per share earnings per share
Tk18.03 Tk 60.11
= 0.2999 Dividends per share = Tk 21.55 Earnings per share = Tk 61.58
∴ Dividend payout =
dividends per share earnings per share
=
Tk 21.55 Tk 61.58
= 0.3499
Figure 61: Dividend Payout Ratio of Ratio of Prime Bank
Table 61: Dividend payout Prime Bank
s e Tim
Dividend Payout 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0
Year
2005
Dividend 0.2499 Payout
2005
2006
2007
0.2999
0.3499
2006 2007
Prime Bank Year •
2005
Dividend payout of Mutual Trust bank: Dividends per share = Tk 9.34 Earnings per share = Tk 38.90
∴ Dividend payout = = 2006
dividends per share earnings per share
Tk 9.34 Tk 38.90
= 0.2401 Dividends per share = Tk 12.58 Earnings per share = Tk 50.32
∴ Dividend payout = =
dividends per share earnings per share
Tk12.58 Tk 50.32
= 0.2500 2007
Dividends per share = Tk 5.28 Earnings per share = Tk 21.12
∴ Dividend payout = =
dividends per share earnings per share
Tk 5.28 Tk 21.12
= 0.2500 Figure 62: Dividend payout Ratio of Mutual Trust Bank
Table 62: Dividend payout Ratio of Mutual Trust Bank
Year
2005
Dividend 0.2401 Payout
2006
2007
0.2500
0.2500
s e Tim
Dividend Payout 0.25002 0.25 0.24998 0.24996 0.24994 0.24992 0.2499 0.24988 0.24986 0.24984
2005 2006 2007
Mutual Trust Bank Year •
Dividend payout of t Shahjalal Islami Bank:
2005
Dividends per share = Tk 0 Earnings per share = Tk 27.30
∴ Dividend payout = = 2006
Tk 0 Tk 33.63
=0 Dividends per share = Tk 0 Earnings per share = Tk 49.50
∴ Dividend payout = = 2007
dividends per share earnings per share
dividends per share earnings per share
Tk0 Tk 49.50
=0 Dividends per share = Tk 6.91 Earnings per share = Tk 34.57
∴ Dividend payout = =
dividends per share earnings per share
Tk 6.91 Tk 34.57
= 0.1999 Figure 63: Dividend payout Ratio of Ratio of Shahjalal Islami Bank Bank
Table 63: Dividend payout Shahjalal Islami
Dividend Payout
Year
s e Tim
0.25 0.2
2005
0.15
2006
0.1
2007
2005
Dividend 0 Payout
2006
2007
0
0.1999
0.05 0 Shahjalal Islami Bank Year •
2005
Dividend payout Mercantile bank: Dividends per share = Tk 9.68 Earnings per share = Tk 38.71
∴ Dividend payout = =
dividends per share earnings per share
Tk 9.68 Tk 38.71
= 0.2500 2006
Dividends per share = Tk 10.30 Earnings per share = Tk 41.22
∴ Dividend payout = =
dividends per share earnings per share
Tk10.30 Tk 41.22
= 0.2498 2007
Dividends per share = Tk 6.01 Earnings per share = Tk 30.05
∴ Dividend payout = =
dividends per share earnings per share
Tk 6.01 Tk 30.05
= 0.20
Figure 64: Dividend Payout Ratio of Ratio of Mercantile Bank Bank
Table 64: Dividend payout Mercantile
Year
2005
Dividend 0.2500 Payout
2006
2007
0.2498
0.20
Dividend Payout 0.3 0.25
2005
s e Tim
0.2
2006
0.15
2007
0.1 0.05 0 Mercantile Bank Year
•
2005
Dividend payout BRAC bank: Dividends per share = Tk 0 Earnings per share = Tk 38.54 dividends per share earnings per share
∴ Dividend payout = =
Tk 0 Tk 38.54
=0 2006
Dividends per share = Tk 0 Earnings per share = Tk 33.43 dividends per share earnings per share
∴ Dividend payout = =
Tk 0 Tk 33.43
=0 2007
Dividends per share = Tk 15.46 Earnings per share = Tk 38.54
∴ Dividend payout = =
dividends per share earnings per share
Tk 15.46 Tk 38.54
= 0.4011
Figure 65: Dividend Payout Ratio of of
Table 65: Dividend payout Ratio
BRAC Bank
BRAC Bank Year
2005
Dividend 0 Payout
2006
2007
0
0.4011
Dividend Payout
s e Tim
0.5 0.4
2005
0.3
2006
0.2
2007
0.1 0 BRAC Bank Year
Table 66: Summary of Dividend Payout
Ratio Year Prime Bank Mutual Trust Bank Shahjalal Bank
2006
2007
Evaluation Trend
24.99%
29.99%
34.99%
Improved
24.01%
25.00%
25.00%
Improved
0
0
19.99%
-
25.%
24.98%
20%
Fluctuated
0
0
40.11%
-
Islami
Mercantile Bank BRAC Bank
2005
Figure 66: Summary of Dividend Payout Ratio
of
Dividend Payout 0.45 0.4 0.35 0.3
s e Tim
0.25 0.2
2005
0.15
2006
0.1
2007
0.05 0 Prime Bank
Mutual Trust Bank
Shahjalal Islami Bank
Mercantile Bank
BRAC Bank
Year
•
Analysis of Dividend payout:
Dividend payout of Prime and mutual trust bank shows improved trend. This is good for the existing shareholder because they are getting handsome amount in the form of dividend. Amongst the bank Mercantile bank paid the highest dividend in the year 2005 but it is decrease in the next year and follow a slight increasing trend. Both Shahjalal Islami bank and BRAC bank paid no dividend in 2005 and 2006. FINDINGS AND RECOMMENDATIONS 4.1 FINDINGS: 4.1.1 Findings regarding Net Working Capital: Prime bank shows the most favorable networking capital trend compare to all of the other banks. Year 2007 proved to be the most better as it shows the highest working capital. The better net working capital trend improved their liquidity conditions. Shahjalal Islami bank also shows favorable trend and it shows better liquidity condition but compare to Prime Bank it is not as much good. Mutual Trust Bank Also has positive networking capital but it shows deviation year by year, the bank can somehow manage to meet short term obligations. Both Mercantile Bank and BRAC Bank shows negative working capital trend but BRAC Bank shows the worse condition amongst the all Bank. The Bank can be in real trouble in near future if any immediate demand for withdrawal arises. Though the deteriorated condition improved in 2007 but still the Bank has not enough current assets to meet the short term obligation. Negative working capital trend of Mercantile Bank and BRAC bank shows they have poor management regarding current assets and current liabilities. 4.1.2 Findings regarding Current Ratio: Current ratio provides an indicator of the extent to which the claims of short term creditors are covered by assets that are expected to be converted to cash fairly quickly. The current ratio trend of both Mutual Trust Bank and Shahjalal Islami Bank shows increasing trend but compare to Mutual trust Bank, Shahjalal Islami Bank has more favorable trend infract it shows the best current ratio trend amongst the other entire Bank. The decreasing current ratio trend of Mercantile Bank is not shows better liquidity condition.BRAC Bank shows worse trend if we consider average current Ratio but if we consider recent current ratio condition
than it will favorable than Mercantile Bank. Prime Bank shows fluctuating trend of current ratio 4.1.3 Findings regarding Debt Ratio: Any creditor prefer lower debt ratio because it is an indicator of the solvency of the bank. The increasing trend of debt ratio of mutual trust bank shows negative sign and the creditors may not fever the bank for this negative trend. Though average debt ratio of Prime and Shahjalal Islami bank is same but this is not meaningful as Mutual Trust bank shows increasing trend and Prime bank shows fluctuating trend. Shahjalal bank shows most favorable trend amongst the entire bank. The trend of Mercantile bank and BRAC bank shows also favorable trend but compare to BRAC bank Mercantile bank has more improved trend as the recent (2006-2007) trend is decreasing for Mercantile bank whereas the recent trend of BRAC bank is steady. 4.1.4 Findings regarding Debt to Equity Ratio: Debt to Equity ratio trend of Shahjalal Islami bank is most favorable. The continuous decrease of the ratio shows significant improvement. Mutual Trust bank is in real trouble because of its increasing ratio trend and shows worse condition in the entire bank. Both Prime and Mercantile bank has fluctuating trend but the noticeable factor is recent decreasing ratio of the two banks. In this case mercantile bank is in favorable position compare to Prime bank as the recent ratio decrease is higher than the decrease in Prime bank. 4.1.5 Findings regarding Profit margin: Profit margin indicates the profitability generated from revenue and hence is an important measure of operating performance. The increasing profit margin trend of Shahjalal islami bank is a good indication for the bank. It shows their operating performance is good. The other banks shows fluctuating trend. 4.1.6 Findings regarding Return on Assets (ROA): Shahjalal Islami bank shows significant improvement of their ROA trend. But other banks not maintain constant efficiency of generating income from their available resources. 4.1.7 Findings regarding Return on Equity (ROE) No bank shows constant improvement of their ROE trend. Shahjalal Islami bank shows declining trend. Prime, Mutual Trust, and Mercantile bank shows improved trend from 2005 to 2006 and decreasing trend from 2006 to 2007.BRAC bank also unfavorable trend from 2005 to 2006 but the bank shows better performance in recent(2007) as the ratio goes up.
4.1.8 Findings regarding Earning per Share (EPS): The increasing EPS trend of Prime bank shows the good operating performance of the bank. Except BRAC bank and Mercantile bank, recent trend of all the other banks are not favorable as the trends are decline. 4.1.9 Findings regarding Price- Earning ratio: The price earning ratio of Prime bank, Mutual Trust bank, and BRAC bank shows improved trend from 2006 to 2007.If the banks keep this trend it proves to be good for the bank because the investing public consider the company in a favorable light 4.1.10 Findings regarding Dividend Payout ratio: The payout ratio measures the percentage of earning distributed in the form of cash dividends. Companies that have high growth rate generally have low payout ratios because they reinvest most of their net income into the business. Dividend payout trend of Prime bank
is favorable. Mercantile bank shows unfavorable trend. Mutual Trust bank shows slightly steady trend 4.2 RECOMMENDATIONS Some important findings and recommendations regarding the financial ratio of all banks are given bellow • Liquidity management of the banks should have to be very accurate because it indicate how much capable of the bank is to meet its short term obligations. Trend of Mercantile Bank and BRAC Bank should have to be improved because both banks shows negative Liquidity ratio trend. Banks should give special attention to its liability management. Current assets and current liabilities items also affect the current ratio trend. To increase the current ratio trend Bank should have increase their current asset item at a higher rate than the increase in current liabilities item or reduce their current liabilities item at a higher rate than the reduce of current asset items. •
The trend of leverage ratios of Mutual Trust Bank is noticeable. The reason behind the increasing trend of leverage ratios of Mercantile Bank is the higher increasing rate of liabilities than the increasing rate of assets. Asset Liability management should have to be improved to overcome this negative trend.
•
Profitability ratios are affected by increases or decreases of net income .Profitability ratios of Mutual Trust Bank is noticeable. The reason behind the sharp decrease of profit margin ratios of Mutual Trust Bank is higher declining rate of net income.
•
Bank’s net income should have to be improved.
APPENDIX-1 Financial Data of Prime Bank Source: Annual Report, Prime Bank limited APPENDIX-2 Financial Data of Mutual Trust Bank Particulars Mutual Trust Bank Balance sheet
2005
2006
2007
Cash
988720294
1646850653
229610768
Balance with other banks
420567037
959529891
1832356768
Money at call and short notice
130000000
970000000
0
Investments
2495980000
3055687400
3956528943
Loans & advances
14373256533
18591520631
22683227657
Total Assets
19306990566
25983916227
32181896220
Assets
Liabilities and Capital
Borrowings from other banks
0
0
3100000000
Deposit and other accounts
16098541423
22264045989
24776924968
Common stock outstanding
8640000
9504000
9979200
Total Shareholders equity
1547484822
1904804221
2044297172
Interest Income(net Sales)
1688878029
2340970021
2846923194
Net profit after tax
336174698
478279399
210802117
Market Price per Share
432.57
359.28
596.43
Dividend
24%
25%
25%
Cash
14%
20%
0%
Bonus
10%
5%
25%
Income Statement
Share information
Source: Annual Report, Mutual Trust Bank Limited APPENDIX-3 Financial Data of Shahjalal Islami Bank Particulars Shahjalal Islami Bank Balance sheet
2005
2006
2007
Cash
876979073
1169060663
1902514472
Balance with other banks
2276426897
3789935214
4128054920
Money at call and short notice
0
0
0
Investments
10590270159
15515789683
20616605335
Loans & advances
10590270159
15515789683
20616605335
14447721431
21342554938
28346996395
Borrowings from other banks
1125000000
1360000000
1545000000
Deposit and other accounts
12204625169
18090647378
22618187303
Common stock outstanding
9360000
9358250
18716500
Assets
Total Assets Liabilities and Capital
Total Shareholders equity
741696738
1204913450
2787731141
Interest Income(net Sales)
1350879819
2145494920
2973438485
Net profit after tax
255587587
463216712
646992691
Market Price per Share
0
0
670
Dividend
0%
0%
20%
Cash
0%
0%
0%
Bonus
0%
0%
20%
Income Statement
Share information
Source: Annual Report, Shahjalal Islami Bank limited
APPENDIX-4 Financial Data of Mercantile Bank Particulars
Mercantile Bank
Balance sheet
2005
2006
2007
Cash
1878414994
2943547098
3717354095
Balance with other banks
118193803
237956604
209201299
Money at call and short notice
625000000
395000000
520000000
Investments
3517678890
5407898781
7099966878
Loans & advances
21857054328
26842139703
31877860104
Total Assets
28890483744
37159650006
44940537108
Borrowings from other banks
640000000
0
774250000
Deposit and other accounts
24661152142
32462491496
38139901767
Common stock outstanding
9992656
11991187
17986779
Total Shareholders equity
1829185402
2252630684
2929303879
Assets
Liabilities and Capital
Income Statement
Interest Income(net Sales)
2405443584
3129553895
3686414282
Net profit after tax
386833645
494224463
540499295
Market Price per Share
390.75
355.25
415.61
Dividend
25%
25%
20%
Cash
0%
0%
0%
Bonus
25%
25%
20%
Share information
Source: Annual Report, Mercantile Bank limited
APPENDIX-5 Financial Data of BRAC Bank Particulars Balance sheet
BRAC Bank 2005
2006
2007
Cash
1011470878
2172387439
3093061164
Balance with other banks
1162526288
2335200830
2986072906
Money at call and short notice
80000000
60000000
100000000
Investments
2163814600
3768012071
4996856717
Loans & advances
11791312522
19557165380
32461102180
Total Assets
16876009139
30011815073
46382595418
Borrowings from other banks
1473391667
1332974167
2240000000
Deposit and other accounts
13409010390
23001921689
37368407773
Common stock outstanding
5000000
10000000
12000000
Total Shareholders equity
782931910
2117193037
3072028674
Interest Income(net Sales)
1458060328
2792256259
4633346578
Net profit after tax
192680101
334261127
618335637
Assets
Liabilities and Capital
Income Statement
Share information Market Price per Share
0
0
683
Dividend
0%
0%
30%
Cash
0%
0%
10%
Bonus
0%
0%
20%
Source: Annual Report, BRAC Bank limited