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ASSIGNMENT ON Annual Report 2010 Dhaka Bank

Prepare For:
Professor Dr. Sujit Saha

Course Teacher Course: FIN 553-FINANCIAL MARKETS AND INSTITUTION

Prepare By:
SREEKANTA BANIK ID: 101600013

Submitted on Aug14, 2011

Eastern University
Faculty of Business Administration

Financial Ratio Analysis of the Dhaka

Bank Ltd.
Key Profitability Ratios in Banking: (Taka in Million) Profitability Measures:
NIAT Return on Equity = ---------------------------- * 100 Total Equity Capital 1678 For 2010 ROE =------------ *100 = 25.51% 6579 957 For 2009 ROE = ------------ *100 = 19.27% 4965 Analysis: The bank performance, cash in local currency & foreign currency is being well. In 2010 the ROE is increase then the 2009.They earns more in 2010 in contrast their equity capital & shareholders equity. Total capital of the bank was taka 2659 million as at 31st December 2010 and Tk. 2127 million in 2009.

NIAT Return on Asset = ---------------------------- * 100 Total Asset 1678 For 2010 = ------------ *100 = 1.86% 90140 957 For 2009 = ------------ *100 = 1.23% 77767 Analysis: The Dhaka Bank has more ROA in 2010 between then the 2009. Here non-banking assets, loans, cash credits & overdrafts ratio is big difference. So, the bank is earning more money by investing less money in 2010 & primarily an indicator of managerial efficiency.

NIAT Earnings per Share = -----------------------------------------------Number of Common Equity Share Outstanding 1678 For 2010 = ------------ = 6.33 265 959 For 2009 = ------------ = 36.88

26 Analysis: The share is remaining same for the both year but the EPS is going to double^2 in 2010 than the 2009. That mean the banks profit is increased dramatically and the price of the share will be more attractive in 2010.

Net Interest Margin =

(Interest income from loans & securities investment Interest expense on deposit & other debts)

----------------------------------------------------------------* 100 Total Asset (7404-4944) For 2010 = -----------90140 (7466-5555) For 2009 = -----------77767 Analysis: In 2010 the NIM is high than the 2009. Interest revenue and Interest cost management has been able to achieve by close control over the banks earning assets. So, Banks NIM is going lower because of high competition in the market and the fluctuation of interest rate, inflation, national income.
Non Interest Revenue Non Interest Expense

*100 = 2.73%

*100 = 2.45%

Net Non-Interest Margin = --------------------------------------------------------------- * 100 Total Asset (3095-1715) For 2010 = -----------90140 (2175-1275) For 2009 = -----------77767 *100 = 1.16% *100 = 1.53%

Analysis: Non interest revenue stemming from deposit service charge and other service fees the bank has been able to collect relative to the amount of the non interest cost incurred. In 2010 the NNIM of Dhaka Bank provides different types of service to their clients. For this their non interest margin is increasing day by day. Free income has been rising sharply.
Total Operating Revenue Total Operating Expense

Net Bank Operating Margin = ------------------------------------------------------------* 100 Total Asset (5555- 1714) For 2010 = -----------90140 (4085-1275) *100 = 4.26%

For 2009 = -----------77767 Analysis:

*100 = 3.61%

In 2010 the Dhaka Banks NBOM is increasing lightly then the 2009. The reason is their non-interest income is much higher than the year 2009 but the interest income is slightly less in year 2010 then the previous year. Risk Ratios: Classified Loan Credit Risk = ---------------------------- * 100 Total Loans & Lease 1491 For 2010 = ------------*100 = 1.78% 83561 697 For 2009 = ------------*100 = 0.96% 72801 Analysis: I can say that in 2010 the credit risk 1.78% that mean in tk.100 tk. 1.78. Is the default loan. In case of Dhaka Bank the credit risk ratio is much lower than the 2010 from the 2009 financial year. That mean they minimize their classified loan in this year.

Net Loans (Cash + Gov. Security) Liquidity Risk = ------------------------------------------ * 100 Total Asset

(8769+7099) For 2010 = -----------------90140 (5035+8440) For 2009 = -----------------77767 Analysis: In Dhaka Bank, in 2010 they have 17.60% liquidity security and 17.32% in 2009. That means they can easy liquid their 20% asset in anytime. In comparison of 2009 & 2010 they have more liquidity security in 2010 FY. Another measure of Earning Efficiency: Total Interest Income Total Interest Expense Total Earning Assets Total
Interest Bearing Bank

*100 =17.60 %

*100 = 17.32%

Earning Spread = --------------------------------------------------------------------------

Liability

2460 1714 For 2010 = ------------ - -------------- = 0.73-0.39 =0.34 3387 4365 1910 1275 For 2009 = ------------ - -------------- = 0.85-0.37 =0.48

2243 3489

Analysis: Earning Spread measures the effectiveness of banks intermediation function and intensity of competition. If competition is downward earning spread moves upward. The completion was higher in 2009. In 2010 the Dhaka Bank faced lots of competition to grave the market share. For this they need to give more interest to the depositor and took less interest from the borrowers.

Analyzing Profitability Segments:

NIAT Return on Asset = -----------------------*100 Total Operating Revenue Total Operating Rev. * --------------------------

Total Assets

1678 For 2010

3095

= ---------------------------------------------------*100 3095 =1.86% 959 * 2175 * 90140

For 2009

= ---------------------------------------------------*100 2175 =1.23% Total Assets * 77767

EM

--------------------------

Total Equity Capital EM 2010 = 90140/6579 EM 2009 =77767/4965 Return on Asset= NPM*AU NPM 2009 = 0.187 AU 2009 = 0.057 NPM 2008 = 0.118 AU 2008 = 0.059 = = 14.46 15.66

For 2010 For 2009 Analysis:

= 0.010659 = 0.006962

By comparing two consecutive year we saw that Dhaka Bank has the more control over its expense in 20010 than the 2009 FY.

An increasing AU would be an indication that the firm is using its assets more productively. Here the AU is increased in 2010 than the 2009. Such change may be an indication of increased managerial effectiveness. The increase in NPM & AU makes an increase in ROA.

Total Assets Return on Equity = ROA * -------------------------Total Equity Capital For 2010 ROE = 1.86*14.46

=26.89 For 2009 ROE =1.23*15.66

=19.26 Return on Equity For 2010 ROE For 2009 ROE =NPM*AU*EM =0.154 =0.109

Analysis: EM ratio shows a bank's total assets per tk. 90140. of stockholders' equity. In case of Dhaka Bank they are less rely on debt in 2010 than the previous year. Total Operating Expense Operating Efficiency = -------------------------------- * 100 Total Operating Revenue 1714 For 2010 = ------------ *100 = 30.85% 5555 1275 For 2009 = ------------ *100 = 31.21%

4085 Analysis: In 2010 the Dhaka Bank expensed 30.85 tk. to earn tk.100 revenue. In contrast they expensed 30.85 tk. to earn tk.100 operating revenue. Here the banks operating efficiency more or less same for the both year. Net Operating Income Employee Productivity = ------------------------------No. of Employee 5555 For 2010 1109 4085 For 2009 = ------------ = 4.42 924 = ------------ = 5.00

Analysis: In 2010 per employees contribution was 5 million tk. and in 2009 it was 4.42 million tk. So we can easily say that the employee productivity is increase dramatically in 2010 then the FY 2009.

At the end analyze of the financial data of the Dhaka Bank Limited we identified many ratios. From those ratios we can easily understand the performance of the bank at a glance. By comparing those ratios we also saw that the bank is did well in 2010 then the FY 2009. The net profit as well as the EPS is also increased in 2010.