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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


comparision of 5 banks