PERFORMANCE ANALYSIS & COMPARISON ON UCBL AND

EBL
Course: FIN 464 (Bank Management)
Section: 3
Prepared by: Group 2
Members:
Amir Hasan Khan

1110804030

Sanjay Kumar Banik

1310730030

Ziauddin Ahmed Shourob

1020315020

Nafis Ashfaqul Hoq

1410030030

Submitted to: Ms. Trisha Ahmed (TsA)

Date of Submission: 20/8/2015

1 | Page

TABLE OF CONTENTS
Executive Summary

Introduction

Overview of the Banks

Credit Ratings

Ratio Analysis (Graphs, results &

interpretations)
Capital Adequacy

9
28

Conclusion

29

Appendix

30

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Executive Summary
The purpose of the report is to show the analysis on Eastern Bank Limited and United
commercial Bank Limited by using several ratios such as profitability ratios, market position
ratios, leverage ratios, liquidity ratios, Credit Ratings, Capital Adequacy Ratio (CAR) etc. has
been done in this project. Both time series, and cross sectional analysis had been done to
determine the performance of the banks for the years 2010 to 2014. Data had been primarily
collected from the annual reports of Eastern Bank Limited and United commercial Bank Limited.
Certain items such as share price were found out from the DSE General Index for Share Prices
from 2010-2014. Moreover, the overview and background of both the banks are also included in
the report. Finally, we conclude with some recommendations and the bibliography. An appendix
is provided which provides a breakdown of the calculation and sources used on which we have
based our research on.
The report has been prepared by the members of the group as a group project for the Bank
Management (FIN 464) course in North South University, as per the instruction of honourable
faculty member, Ms. Trisha Ahmed. The deadline for submission of this report was on 20th
August 2015.

Methodology
The methodology of this report required developing an analysis by doing the ratio calculation of
two competitor banks. The ratios were calculated by using the data collected from the annual
reports of two competitor banks. Interpretation and recommendation was based on the ratio
analysis and the theory of ratios.
Objectives
To present an organizational overview of both the banks
To Analyze the performance of Eastern Bank Limited and United commercial Bank Limited

using ratios to judge the liquidity, leverage, activity, profitability and market position along with
the perspective of current and potential investors view point.
Compare the performance between Eastern Bank Limited and United commercial Bank
Limited.
Analyzing the total risk of both the banks along with financial, credit, price and interest rate
risk.
Providing some suggestions for both the banks in order to improve their performance.

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Limitations
We have tried our best to provide the most up to date and accurate information about the banks in
this report but there were few limitations. Because of these limitations we were unable to present
the report to the level of accuracy which we wanted to obtain. The limitations were:

The information that we have used in this report were gathered from secondary source which

included financial statements of the bank from 2010-2014 and also information provided from
the banks websites.
Some financial terms that Bank used in its financial report doesnt match with our knowledge
from the course, so in calculating ratios and risks some mistakes might have occurred which we
are unaware of.
We were unable to calculate ratios which measures such as interest risk, price risk and etc. as
adequate information was not provided in the annual reports of the banks.
One of the major flaws is that the Ratio Analysis does not take macroeconomic factors into
account, of the particular country or nation.

Introduction
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The banking industry of Bangladesh is considered as one it of the most fruitful industries as the
returns that are derived from the banking industry seem to be quite high. However, the banks are
very highly leveraged and have, associated with them several form of risk investors and internal
managers of the banks should be well aware of in order to determine the potentials and
performance of each of the banks.
Bangladesh Government owned, controlled and directed financial system with the purpose of
allocating funds to priority sectors until the early 1980s. Bangladesh had virtually no private
banking and role of the private sector was considered secondary. In the early 1980s, the
Government began to reform the financial sector. This step initiated the change in our banking
sector. With time this private banking sector revolved and became one of the most successful
private sectors of our country. Bangladesh Bank has created a favorable environment for the
private banking sector, which attracts many investors to invest in the financial market.
Bangladesh has been doing very well in private sectors in recent years. Previously only
government banks were here to serve the financial needs of consumers, but now varieties of
services are offered by commercial banks which were not possible before. Financial assistance is
very necessary to develop all the sectors of a country. Central bank boosts commercial banks to
finance more and more in the agricultural sectors, pharmaceuticals sectors. Government puts
pressure on these banks to provide loans to SMEs and individuals.
Rules and regulations are implemented by the Government for the safety of the public funds, to
ensure accountability of the banks and to help the public by providing various types of financial
services.

Introduction to the Banks

EBL: Eastern Bank Limited is among the first generation banks in Bangladesh. It was
incorporated in Bangladesh on 31st December, 1981 as Eastern Bank Limited and started its
operations with effect from April 12, 1982. EBL Bank is known as on the leading banks of the
country since its commencement 32 years ago. It continues to remain updated with the latest
products, services, considering consumer and client perspectives. EBL has thus been able to keep
their consumers and clients trust while upholding their reliability, across time.
UCBL: United commercial Bank Limited is one of the largest and oldest private-sector
commercial bank in Bangladesh, with numerous years of experience. Started in mid 1983 with
100 million capital and 1 million ordinary shares of BDT 100 each (Registering in Companys
act). Adaptation of modern technology both in terms of equipment and banking practice ensures
efficient service to clients. 211 branches at home and 600 affiliates worldwide create efficient
networking and reach capability. UCBL is a bank that serves both clients and the country.

Overview of the Banks

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UCBL:
Mission and Vision:
United commercial Bank Limiteds Mission is to provide service to their clients with the help of
a skilled and dedicated workforce whose creative talents, innovative actions and competitive
edge make their position unique in giving quality service to all institutions and individuals that
they care for. They are committed to the welfare and economic prosperity of the people and the
community, for they derive from their inspiration and drive for onward progress to prosperity.
They want to be the leader among banks in Bangladesh and make themselves indelible mark as
an active partner in regional banking operating beyond the national boundary. In an intensely
competitive and complex financial and business environment, they particularly focus on growth
and profitability of all concerned.
Functions of the United Commercial Bank
a. The main task of the United Commercial Bank Ltd is to accept deposited from various
customers through various accounts.
b. Provides loans on easy terms and condition.
c. It creates loan deposit.
d. The bank invest it fund into profitable sector
e. It transfers money by Demand Draft (DD), Pay Order (PO) and Telegraphic Transfer etc.
f. The bank is doing the transaction of bill of exchange, Cheque etc. on behalf of the clients.
g. United Commercial Bank Ltd assists in the Foreign Exchange by issuing Letter of Credit.
h. The bank insures the securities of valuable documents of clients.
i. It brings the increasing power of dimension of transaction.
j. Above all, United Commercial Bank Ltd helps the businessmen financially by giving
discount facility for bill of exchange and by providing the facility of Letter of Guarantee.
Core Values:

Put customers first

Emphasize professional ethics

Maintain quality at all levels

Believe in being a responsible corporate citizen

They foster participative management

EBL:
Mission:
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 To be the trendsetter for innovative banking with excellence & perfection.

To maximize Shareholder value
Challenging and maintaining cohesive & professional team to maintain service
Excellency
Vision:
To be the best performing bank in the country creating a long lasting valuable brand
Functions (The services it provides):
>Student Banking
> Priority Banking
> Platinum Card
> Savings & Current Account
> Foreign exchange services
> Investment in profitable funds
> Investor relation
> VISA corporate cards, remittance card and mobilebased remittance solution
> Personal Loans
> Debit & Credit card
> Network customers through 365 Branches Countrywide
> Various types of Loans
> Corporate Banking
> Online and Mobile Banking
Core values:

Service excellence
Openness
Trust
Commitment
Integrity
Responsible Corporate Citizen

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Credit Ratings
EBL:
The bank received the following Ratings, according to Crislbd.com.
Entity rating, 2011
Entity rating 2010
Outlook
Date of Rating

Long term
AAA+
Stable
April 9 2012

Rating Status
Surveillance rating 2013
Surveillance rating 2012
Outlook

Long term
AA
AA
Stable

Short term
ST-2
ST-2

Short term
ST-2
ST-2

The bank was rated Stable outlook

UCBL:
The Bank received the following ratings, according to Crislbd.com
Entry rating 2011
Entry rating 2010
Outlook,
Date of Rating

Also rated Stable Outlook

Findings and Analysis

Earnings per share:
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Long term
AAA+
Stable
April 9 2012

Short term
ST-2
ST-2

6
4

UCBL

EBL

0
2011

UCBL
EBL

2012

2013

2014

2011

2012

2013

2014

3.52
5.63791
3

1.9
3.91493
6

3.6
4.1478
7

4.42
3.49794
1

Time series analysis

UCBL: The EPS of UCBL has increased over the years. Even though the EPS in 2012 was
significantly lower in 2012, it is because the Net income after tax dropped compared of the
previous year.
EBL: The EPS of EBL has slightly dropped over the years. This is because the net income after
tax of EXL has gradually dropped over the years.
Cross sectional: As we can see that the EPS of UCBL has been lower over the years compared to
EBL. But in recent year 2014, the EPS of UCBL was greater than the EBL this is because; the
net income after tax is higher than the net income of UCBL.
Net profit Margin:

Net profit Margin

60%
40%
20%
0%

2011

2012
UCBL

2011
9 | Page

2013

2014

EBL

2012

2013

2014

UCBL
EBL

32%
26%

16%
48%

25%
52%

24%
16%

Net profit margin is the percentage of revenue remaining after all operating expenses, interest,
taxes and preferred stock dividends (but not common stock dividends) have been deducted from
a company's total revenue.
Time series analysis
UCBL: The Net profit margin of UCBL was highest in the year 2011. But over the years, the
margin has significantly decreased. Among the years the lowest net profit margin was the lowest
among the years. This is because in the year 2012 the net profit after tax became half (from 2500
million to 1500 million).
EBL: As we can see that the net profit margin had a sudden rise in the year in 2012 and 2013 but
in 2014 the margin went down. The main reason of the sudden decrease in the margin is because
the net profit after tax did no increase as of the total asset.
Cross sectional analysis
If we look at the net profit margins of UCBL and EBL over the last four years, we can see that
the net profit margin of the two banks have drastically changed over the years. Overall the net
profit margin of UCBL is more stable than that of the net profit margin of EBL. The reason for
having a relatively stable is because the net profit after margin and the total asset had the closer
ratio whereas EBLs asset to net profit ratio was unstable.

Tax Management:

UCBL
EBL

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2011

2012

2013

2014

57%
61%

42%
55%

52%
52%

54%
54%

70%
60%
50%
40%

UCBL

30%

EBL

20%
10%
0%
2011

2012

2013

2014

Time Series Analysis

UCBL: Here we can see that the Tax management efficiency ratio is on an average 50% for the
last four years. This is because for the last four years UCBL has been paying relatively same
amount of tax.
EBL: The Tax management efficiency of EBL is higher than UCBL. It is because EBL is
efficient in controlling the tax cost of the bank.

Cross sectional analysis

Here we can see that the tax management efficiency of UCBL is less than EBL. This is because
the proportion of before and after tax profit that UCBL gives out every year is lower than EBL.
Though UCBL pays more tax on their income, its efficiency is lower than EBL.
Expense Control Efficiency:
120%
100%
80%
60%

UCBL

40%

EBL

20%
0%
2011

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2012

2013

2014

The financial ratio known as the operating expense ratio, or OER, is considered a measurement
of management efficiency. Using information found on the income statement, this metric looks
at the ratio of operating expenses to net sales
2011

2012

2013

2014

UCBL

56%

37%

47%

45%

EBL

43%

88%

99%

30%

Cross sectional analysis

Here we can see that the Expense control efficiency of UCBL is less than EBL. Even though it is
lower, it is more stable than the Expense control ratio of EBL. The reason behind EBLs
fluctuating expense ratio is because their operating expense dropped drastically in the year 2012
and 2013. But over the course of two years the expense piled up and put pressure on the
operating expense of the year 2014.
Time Series Analysis
UCBL: The Expense control efficiency of UCBL over the last four years tell us that the bank was
able to efficiently manage its expenses by more than 40% over the four years.
EBL: The expense control efficiency of EBL has fluctuated over the last four years. For example,
in the year 2012 and 2013 the Expense ratio has been significantly increased. This is because the
operating expense of EBL was lower for EBL compared to previous year. But in the recent year
2014, the operating expense increased drastically thus decreased the expense control efficiency.
Degree of Asset Utilization:
10%
8%
6%

UCBL

4%

EBL

2%
0%
2011

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2012

2013

2014

2011
6%
8%

UCBL
EBL

2012
5%
3%

2013
6%
3%

2014
6%
8%

The asset utilization ratio calculates the total revenue earned for every dollar of assets a company
owns. This ratio is frequently used to compare a company's efficiency over time
Time series analysis
UCBL: The asset utilization ratio of UCBL tells us that every Bangladeshi Taka spent made them
to generate on an average of 5.7 BDT worth of revenue.
EBL: The asset utilization of EBL over the last four years shows us that in 2012 and 2013 the
asset utilization dramatically decreased. The ratio tells us the inefficiency of generating revenue.
Cross sectional analysis
IF we compare the latest ratios of the two banks we will find that the asset utilization of EBL is
far better than that of UCBL. But if we look at the performance of UCBL we will find that their
asset utilization is more stable than EBL
Fund Management Efficiency:
14
12
10
8

UCBL

EBL

4
2
0
2011

2012

2013

2014

The management of the cash flow of a financial institution. The fund manager ensures that the
maturity schedules of the deposits coincide with the demand for loans
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2011

2012

UCBL

10.56736

11.41644

EPL

8.056654

8.52454

2013

2014

11.00332 11.80435
8.52227
4 8.571654

Time series analysis

UCBL: The fund management efficiency ratio of UCBL is more stable for the last four years.
Its because they were able to balance the equity and the total asset.
EBL: The funds management ratio of EBL has been a little over 8. It means that the total asset of
EBL is eight times the total shareholders equity.
Cross sectional analysis

Operating Efficiency Ratio:

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

UCBL
EBL

2011

UCBL
EBL

2012

2013

2014

2011

2012

2013

2014

36%
28%

43%
67%

43%
77%

43%
33%

A ratio that shows the efficiency of a company's management by comparing operating expense to net
sales
Time Series Analysis:

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UCBL: Here the operating expense of UCBL is nearly 40% of the net sales for the last four
years. Though we can see that the trend is stable it indicates that the operating expense has been
fairly stable.
EBL: The operating efficiency ratio has drastically shifting for the last four years. For the year
2011, the ratio was pretty low (28%), But in 2012 and 2013, the ratio increased over 70%.
Meaning that at that period of time, their operating expense decreased heavily. But it increased
again in the last year 2014.
Cross sectional analysis
Here the operating efficiency of UCBL is shows more stability. On the other hand even though in
2012 and 2013 the efficiency was high for EBL, the recent record shows less efficiency in terms
of handling operating expenses. The trend shows that EBL is less efficient in terms of handling
the operating expenses.
P/E RATIO:
14
12
10
8

UCBL

EBL

4
2
0
2011

UCBL
EBL

2012

2013

2014

2011

2012

2013

2014

12.47159
11.77102

12.42105
8.521505

6.972222
6.928571

6.628959
7.884058

The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its
current share price relative to its per-share earnings
Time Series Analysis

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UCBL: The P/E Ratio of UCBL was 12 in the year 2011 and 2012. But in the year 2013 and
2014, the ratio dropped. It is because the market price of the share of UCBL decreased.
EBL: The P/E Ratio of EBL was 11 in the year 2011. But over the next two years the ratio
dropped over 3 points. This might be a result of a decreasing market price of the shares of EBL
Cross Sectional:

Debt Ratio:
0.92
0.91
0.9
0.89

UCBL

0.88

EBL

0.87
0.86
0.85
2011

UCBL
EBL

2012

2011
0.905368962
0.875878987

2013

2012
0.912407048
0.882691611

2014

2013
0.909116808
0.882660428

2014
0.915285435
0.883336401

It is the ratio measured to find out the proportion of debt against assets owned (total liabilities
divided by total debt).
Time series:
UCBL: between 2011 to 2012 and 2013 to 2014. UCBL experienced ups and downs in its ratio.
Both the total assets and total liabilities increased from 2011 to 2012.
EBL: the ratio from 2012 to 2014 remained somewhat constant despite increases in both current
Assets and liabilities. This could be due to the increase rate of assets being somewhat close to
liabilites.
Cross sectional:
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EBLs debt ratio seems better than UCBL. However, inner pictures could be different. Such as
liabilities & assets growths could be different.
Debt to Equity Ratio:
12
10
8
6

UCBL

EBL

2
0
2011

2012

UCBL
EBL

2011
9.567357414
7.056653544

2013

2014

2012
10.41644362
7.524539537

2013
10.00330097
7.522274158

2014
10.80434556
7.571653971

Ratio measured to find out the proportion of debt against the equity.
Time series:
UCBL had an increasing trend from 2011 to 2012, dropped to 10.03 in 2013 then again had a
bigger rise of 10.80 in 2014. Both liability and equity capital had rise from 2011 to 2014. The
liability rise is comparatively higher
EBL had a rise in its trend but the rate is lower. Yet again the difference in the rise between
liabilities and equity capital could be the reason.
Cross sectional:
EBL seems better than UCBL in it. However, both banks should try to reduce their liabilities
(Except reducing borrowings) or invest in more shares for increased owner capital.
Interest Coverage Ratio:
It is a ratio measured to find out the interest that could cover the interest payments by the banks
for borrowings based on the initial earnings. (EBIT/Interest expense).
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1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2011

UCBL
EBL

UCBL
EBL

2012

2011
0.585336285
1.528782679

2013

2014

2012
0.391848641
1.493319603

2013
0.447882876
1.541880644

2014
0.605817051
1.438120416

Time series:
The interest coverage ratio was highest for UCBL in 2011 and the lowest in 2012. While a good
figure appeared in 2014. On the other hand, EBL had a really good figure in 2013 compared to
other years.
Cross sectional: EBL seems better compared to UCBL in terms of interest coverage. UCBL
should generate more raw earnings (EBIT) such as by providing more loan services.

DPS (dividend per share):

2.5
2
1.5

UCBL

EBL

0.5
0
2011

UCBL
EBL

2012

2011
0.227257205
0

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2013

2012
1.043478261
0

2014

2013
1
2

2014
2
2

The amount to dividend paid to stockholders per share.

Time series:
UCBL had the highest dividend paid in 2011, followed by 2014 (2nd highest). On the other hand,
EBL didnt pay any dividend in the year 2011 and 2012.
Cross sectional:
UCBL had been better in stockholders since dividend was paid every year. EBL should pay
dividend every year to maintain good stockholder relations.

M/B RATIO:
7
6
5
4
3

EBL

2
1
0
2011

UCBL
EBL

2012

2013

2014

2011

2012

2013

2014

6.58

3.17

2.91

2.72

The book-to-market ratio attempts to identify undervalued or overvalued securities by taking the
book value and dividing it by market value.
UCBL: United Commercial Bank doesnt have any market to book value ratio as the data for
book value per share is not available.
EBL: Eastern Banks MB ratio has fallen by huge margin i.e. from 6.58 in 2011 to 2.72 in 2014
which is an indication that market perception about EBL might have been negatively impacted.
The more the ratio falls the worse it is for EBL.

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CROSS SECTIONAL ANALYSIS: UCBL doesnt have any MB ratio. EBL can improve on their
ratio by changing the perception of the market. They can take steps in increasing their share
price.

Cash Position Indicator:

0.07
0.06
0.05
0.04

UCBL

0.03

EBL

0.02
0.01
0
2011

UCBL
EBL

2012
2011
0.015679784
0.04190865

2013
2012
0.006772769
0.065961265

2014
2013
0.025133341
0.04064239

2014
0.014759528
0.04955407

This ratio shows how easily a bank can meet its immediate cash need. It shows how liquid a
bank is in terms of cash, as it acts as the primary reserve of a bank.
UCBL: In 2011the cash position indicator was 0.015 which is very low & it went further down
in 2012. The ratio somehow revived to its previous position by 2014. More cash in hand implies
bank is sound in terms of liquidity position. The reason behind the sharp decrease in the year
2012 was because it was holding more cash compared to total assets.
EBL: The indicator shows that the ratio was 0.041 in 211 & went up to 0.0659 in the year 2012
but by 2014 it was slightly higher than 2011.
CROSS SECTIONAL ANALYSIS: It can be said that EBL is in a better position than UCBL is.
EBL is managing its liquidity position more efficiently.
Capacity Ratio:

UCBL

2011

2012

2013

2014

0.088036359

0.098060364

0.099342734

0.08230219

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EBL

0.675618963

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2011

0.595314121

0.598224173

0.648009874

UCBL
EBL

2012

2013

2014

This ratio shows the proportion of the banks total asset is Net Loan and Leases. This is
negatively correlated to the banks liquidity position as Loans and Leases are the most illiquid
asset
UCBL: Capacity ratio affects the liquidity position of a bank. In 2011 the ratio was 0.088 &
increased in 2012 i.e. 0.098 & 0.099 in 2013 & 0.082 in 2014. This figure indicates that the ratio
was not in a good state in the year 2012-2013. The management was not efficiently controlling
but it showed improvement in 2014 which is far better than 2011.
EBL: compared to the year 2011, 2014s ratio was much better. In between 2012-2013 they
managed liquidity position better. But overall they improved their efficiency.
CROSS SECTIONAL ANALYSIS: From the data & the graph it is evident that EBL is better
than UCBL in liquidity position. The lower the ratio the better it is for a bank. This also indicates
that their total asset proportion mostly depends on net loans & leases.

Liquid Security Indicator:

This ratio measures how much of the total asset is invested in government securities.

21 | P a g e

0.16
0.14
0.12
0.1
0.08

UCBL

0.06

EBL

0.04
0.02
0
2011

UCBL
EBL

2012

2013

2011
0.096646256
0.109227193

2014

2012
0.104380165
0.120978152

2013
0.138080691
0.136944361

2014
0.150972758
0.122370157

This ratio measures how much of the total asset is invested in government securities.
UCBL: the ratio is in a rising trend over the year. It has gone up from 0.0966 in 2011 to 0.1590
in 2014. This is an indication that more investment are made in risk free government securities.
EBL: EBL ratio is more or less constant over the 4 years that mean they have kept the investment
almost same. But compared to 3 years it was higher in 2013 i.e. 0.136944.
CROSS SECTIONAL ANALYSIS: UCBL is in a better position than EBL is which means they
have invested in government securities more. UCBL has reduced significant risk by investing in
risk free assets. In case of liquidity risk UCBL is in a more sound state than EBL is.

Dividend YIELD:
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2011

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UCBL
EBL

2012

2013

2014

This ratio shows how much a financial institution pays out in dividends each year relative to its
share price
UCBL: The organization paid very low dividend in 2011 but as time passed the dividend
increased from 0.0051 in 2011 to 0.0682 in 2014.
EBL: The dividend paid was almost negligible slightly a bit higher than zero & also decreased
over the years.
CROSS SECTIONAL ANALYSIS: UCBL dividend yield ratio is far better than EBL. So it can
be stated that UCBL is in a better position in satisfying its investors. It is also a good sign that
UCBL is incurring more profit, paying out more dividends & reducing their provision for loan
losses.

Hot Money Ratio:

2
1.5
UCBL

EBL
0.5
0
2011

UCBL
EBL

2012

2011
0.019935108
0.90338493

2013

2012
0.018186433
0.698204172

2014

2013
0.146351914
1.847870545

2014
0.018051676
0.96718737

Times series analysis

UCBL: Here we can see that UCBLs Hot money ratio was nearly 15% in the year 2013. This
indicates that in the year 2013, UCBL was able to balance the liabilities.
EBL: The EBLs Hot money ratio has been on an average more than one for the last four years.

ROE:

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0.2
0.15
UCBL

0.1

EBL
0.05
0
2011

UCBL
EBL

2012

2011
0.184499811
0.174917302

2013

2014

2012
0.087288763
0.138712636

2013
0.149689843
0.136597821

2014
0.164264394
0.105654499

Time series analysis

UCBL: As we can see, after preferred dividends are removed from net income UCBL's ROE has been
over .16 for the last years This means that every dollar of common shareholder's equity earned about .16
this year. In other words, shareholders saw a 16% percent return on their investment.

EBL: Here, after preferred dividends are removed from net income EBL's ROE has been over .10 for the
last years This means that every dollar of common shareholder's equity earned about .10 this year. In
other words, shareholders saw a 10% percent return on their investment.

Cross sectional analysis

Here we can see that over the years the common stockholders of UCBL was getting more return
on their invested equity.
ROA:
UCBL
EBL

2011
0.017459409
0.021710913

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2012
0.00764588
0.016272156

2013
0.013604065
0.01602833

2014
0.013915587
0.012326034

0.03
0.02
0.02

UCBL

0.01

EBL

0.01
0
2011

2012

2013

2014

Time series analysis

UCBL: UCBL's ratio is 1.4% is the last year. In other words, every dollar that UCBL invested in assets
during the year produced 1.4 BDT of net income.
EBL: EBL's ratio is 1.3% is the last year. In other words, every dollar that UCBL invested in assets during
the year produced 1.3 BDT of net income.
Cross sectional analysis:
Here we can see that both banks Return on asset is quite similar. Meaning, both banks were able to
generate relatively same amount of money during the last year.

Net Interest Margin:

0.12
0.1
0.08
0.06

UCBL

0.04

EBL

0.02
0
2011

UCBL
EBL

2012

2011
0.030520255
0.082896028

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2013

2014

2012
0.031881232
0.100698517

2013
0.03216523
0.086608068

2014
0.03232631
0.075874656

Time series analysis

UCBL: The net interest income margin of UCBL was nearly 3% for the last four years. Meaning
the interest income was 3% of the total asset of UCBL
EBL: The net interest income margin of EBL was nearly 8% for the last four years. Meaning the
interest income was 8% of the total asset of EBL
Cross sectional analysis
Here the performance of EBL in terms of earning better interest income is better than UCBL.

Net operating Margin:

0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2011

UCBL
EBL

UCBL
EBL

2012

2011
0.035407945
0.059674723

2013

2012
0.027776629
0.011204611

2014

2013
0.03161062
0.007151264

2014
0.032964683
0.050743868

Time series analysis:

UCBL: The net operating margin of UCBL was nearly 2.5% for the last four years. Meaning the
operating income was 2.5% of the total asset of UCBL
EBL: The net operating income margin of EBL was nearly 5% for the last four years. Meaning
the operating income was 5% of the total asset of EBL
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Cross sectional analysis

Here the operating income generating ability of EBL is superior compared to UCBL. If we look
at the trend for the last four years the UCBLs performance is stable whereas the EBLs
performance has fluctuated and in the latest year the operating income was better.
Expense Control Efficiency:
1.5
1

UCBL

0.5

EBL

0
2011

UCBL
EBL

2012

2013

2011
0.55656417
0.430937119

2014

2012
0.367379392
0.881636968

2013
0.474321514
0.989812345

2014
0.45058465
0.30190497

Measured as the net operating income generated as a proportion of revenue. The higher it is, the
better.
Time series:
UCBL: The expense control was best of all in 2011 and the worst in 2012. However, in 2013 to
2014 it improved a bit. This could be due to operating income was less generated from 2012 to
2014. Expenses increased.
EBL: Relatively Best figures were made in 2012 and 2013. However in 2014, it resulted in a
very low figure.
Cross sectional:
UCBL seems better in the consistent. However for both banks to improve or maintain a standard
figure, they should generate more net income by providing better service or reduce expenses
such as downsizing or borrowing less expensive funds.
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Employee Productivity Ratio:

EBL

UCBL

7000000
6000000
5000000
4000000
3000000
2000000
1000000
0

3000000.000
2500000.000
2000000.000
1500000.000
1000000.000
500000.000
0.000
1

This Ratio shows the net operating income generated by the total number of Employees of the
whole bank.
EBL: Employee productivity was the lowest in 2011 and then gradually increased in 2012 until
2014 it remained more or less the same. According to the sources, number of employees
increased from 2011 to 2014 which means the bank was attractive in terms of recruitment. On
the other hand, Net operating income had a tremendous rise from 2011 to 2012 This shows
UCBL was doing better in terms of both service and human resource from 2012 to 2014.
UCBL: Employee Productivity dropped a bit from 2011 to 2012. But then again from 2013 to
2014 it had a rise. Possible reasons could be increase in recruitment for expansion or attractive
job offers and increase in net operating income.
Cross sectional:
EBL was better compared to UCBL in terms of employee productivity. Though EBL recruitment
ranges in the 4 years were lower compared to UCBL, it was doing tremendous in generating net
operating income. Which means EBL was so much better in terms of services while UCBL in
terms of recruitment. (UCBL might be making fast expansions alongside job attractiveness). For
UCBL to improve, it should improve its service hence more net operating income.
CAPITAL ADAQUECY RATIO:

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2011

2012

2013

2014

UCBL

10.87

10.37

11.53

10.56

EBL

10.18

12.05

11.95

13.22

14
12
10
8
6

UCBL
EBL

4
2
0
2011

2012

2013

2014

Ratio that shows Banks capital to the risk exposure. Calculated as Tier1 + Tier 2/ risk weighted
Assets.
Time series:
UCBL had a higher CAR in 2013 and the lowest in 2012 on the other hand EBL had the highest
CAR in 2014 and the lowest in 2011. This could be due to the difference in TIER1 & TIER 2
capital between both the banks.
Net non Interest Margin:
0.04
0.03
0.02
0.01
0
-0.01
-0.02
-0.03
-0.04

UCBL
2011

UCBL
EBL

2011
0.025
-0.0286

2012

2013

2012
0.017
0.00451

2014

2013
0.013
0.00687

EBL

2014
0.028
0.010183

Non-interest income earned as of total assets. Calculated as (non-interest margin/total assets)

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Time series:
EBL: EBL faced a loss in 2011. However from 2012 to 2014 it improved its earning
UCBL: had a really good figure in its earnings from 2011 to 2014. Highest gross made in 2014.
Cross analysis:
EBL should improve its figure by investing in more non interest sources to capture the UCBLs
record.

Conclusion
If we analyse all the data and ratios, we can see that over the years, UCBLs performance was
more stable and consistent. On the other hand EBL was unable to show any consistency in their
profit earning and cost efficiency. Based on the ratio analysis and the past four years data, we
believe that UCBL has a better chance of surviving in the long run

Appendix
www.UCB.com
www.EBL.com
http://www.crislbd.com/rating-reports/1535_1.pdf
http://www.crislbd.com/rating-reports/1384A_1.pdf
http://www.ucb.com.bd/reports/shareholder-reports/annual-report
http://www.ebl.com.bd/annual_report

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