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Financial condition of Banks

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									Financial analysis
       Of
     Banks
                               Acknowledgement


We are thankful Tasneema afrin, Brac Business School, for the freedom she gave us in
choosing our report topic and her continuous guidance henceforth. Her lectures and guidance
have been of extreme help to us. We are also thankful for all the times we consulted her and she
answered with the utmost patience and perseverance. In addition to this, her requirements for the
assignment made it mandatory for us to seek contacts external to the classroom, which proved to
be very gratifying.
EASTERN BANK LIIMIITED (EBL)
EASTERN BANK L M TED (EBL)      PRIIME BANK LIIMIITED
                                PR ME BANK L M TED




Bank Asiia Liimiited
Bank As a L m ted              Trust Bank Liimiited
                               Trust Bank L m ted
                           BANKS OVERVIEW

EASTERN BANK LIMITED (EBL): Eastern bank in one of the leading bank in
EASTERN BANK LIMITED (EBL)
Bangladesh. The main vision is become the bank of a choice by transforming the way we do
business and developing a truly unique financial institution that delivers superior growth and
financial   performance and be the most recognizable brand in the financial service in
Bangladesh.


PRIME BANK LIMITED: In the backdrop of economic liberalization and financial
PRIME BANK LIMITED:
sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a
commercial bank with different outlook. For them, it was competence, excellence and consistent
delivery of reliable service with superior value products. Accordingly, Prime Bank was created
and commencement of business started on 17th April 1995.The sponsors are reputed
personalities in the field of trade and commerce and their stake ranges from shipping to textile
and finance to energy.


Bank Asiia Liimiited: Bank Asia has been launched by a group of successful
Bank As a L m ted:
entrepreneurs with recognized standing in the society. The management of the Bank consists of a
team led by senior bankers with decades of experience in national and international markets. The
senior management team is ably supported by a group of professionals many of whom have
exposure in the international market.


Trust Bank Liimiited: Trust Bank Limited is one of the leading private commercial
Trust Bank L m ted:
banks having a spread network of 52 branches, 7 SME centers, 28 ATM Booths and 48 Branch
POS across Bangladesh and plans to open more branches to cover the important commercial
areas in Dhaka, Chittagong, Sylhet and other areas in 2011. The bank, sponsored by the Army
Welfare Trust (AWT), is first of its kind in the country. With a wide range of modern corporate
and consumer financial products Trust Bank has been operating in Bangladesh since 1999 and
has achieved public confidence as a sound and stable bank.
                                  Interpretations

  Eastern Bank Limited (EBL), Prime Bank Limited, Bank Asia and Trust Bank for
the year 2006, 2007, 2008, 2008, 2009and 2010.



                                1. ROA (Return on asset)

Return on asset is the proper utilization of bank asset. Return on asset of banks shows banks net
after tax income divided by its total asset. If return of asset increase than its good for bank, its
means its increase the asset utilization of bank. Here comparison between Eastern Bank Limited
(EBL), Prime Bank Limited, Bank Asia and Trust Bank. From these comparisons can see that,

In year 2006: Bank Asia has highest ROA because in this year bank Asia interest income and
non-interest income is higher than trust bank because trust bank non-interest income and special
income is lower than bank Asia.

In year 2007: Prime bank has highest return of asset because of special income rather than other
three banks, on the other hand eastern bank has second highest ratio because of special income
compare to the bank Asia and trust bank because both of these bank has lowest ROA because
there non interest income and special income.

In year 2008: Prime bank has highest return of asset compared to the other three banks because
these bank non interest income and special income is higher than other three banks. On the other
hand trust bank has second highest ROA compared to the prime bank because trust bank non
interest income and special income lower than prime bank but higher than bank Asia and eastern
bank, because of lower non- interest income and special income .

In year 2009: Prime bank has highest ROA this year also compared other three banks because of
highest interest income and non- interest income is higher than other three banks, on the other
hand eastern bank has second highest ROA compared to the prime bank because eastern bank
special income and non- interest income but it’s also higher than bank Asia and trust bank, trust
bank ROA is lowest because of their lower non interest income and interest income.

In year 2010: In year 2010 Trust bank has highest ROA compared to Eastern Bank because
eastern bank has lower interest income and special income compared to the Trust bank because
has higher special income and interest income which indicated higher ROA of trust bank.




                               2. ROE (Return o Equity)

ROE is profitability for a bank or organization. Return on equity Come from net income and
total equity, if profitability increases than it’s good for the bank. From the roe (return on equity)
bank can identify their profitability and how they use their equity for profits




In year 2006: Bank Asia has highest ROE compared to the trust bank because bank Asia tax
management and asset turnover is higher than trust bank; on the other hand trust bank has lower
because of lower asset turnover and net margin. This indicated that assets are not utilized
properly in trust bank.

In year 2007: Bank Asia has highest ROE in this year because of equity multiplier ratio and
expense control efficiency on the other hand eastern bank has second highest ROE because of
tax management and asset turnover but those are lower than bank Asia but higher than prime
bank and trust bank .prime bank has lowest ROE because of equity turnover, asset turnover, tax
management those are lower than other three bank. Trust bank equity turnover are lower than
eastern bank and bank Asia but higher than prime bank.

In year 2008: In this year Bank Asia has highest ROE because this bank has highest equity
multiplier compared to other 3 banks, on the other hand prime bank has second highest ROE
because of highest equity multiplier which is higher than eastern bank and trust bank. Eastern
bank ROE is lower than prime bank and bank Asia because of lower asset turnover and tax
management and trust has total lowest ROE compared to other three banks because of asset
turnover.




In year 2009: Eastern bank has huge ROE in this year because of highest asset turnover and tax
management other than three banks. Bank Asia has second highest ROE which increase because
of equity multiplier but its asset turnover is lower than eastern bank but it’s higher than prime
bank and trust bank. Prime bank ROE is higher than trust bank because of equity multiplier but
lower than eastern bank and bank Asia because prime bank has lower asset turnover and tax
management, on the other hand trust bank has lowest ROE because this bank has lowest tax
management, asset turnover and equity multiplier.

In year 2010: Eastern bank has highest ROE compared to the trust bank because of equity
multiplier and asset turnover which is higher than trust bank. On the other hand trust bank tax
management and asset turnover is lower than eastern bank that why this bank has lower ROE.




                            3. Net interest margin

Net interest margin is the output of interest income and interest expense. When subtracts interest
expense from income interest income, can find a net interest margin.




In year 2006: Trust bank has highest interest margin because the interest income is much more
than interest expense compared to the bank Asia net interest margin because the difference
between interest income and interest expense lower than trust bank.

In year 2007: In year Bank Asia has highest net interest margin which means highest interest
income compared to the other three banks because bank Asia earn highest interest income which
is much higher than interest expense. Prime bank has second highest net interest income
compared to the trust bank and eastern bank because this bank interest income in not higher than
bank Asia but higher than eastern bank and trust bank. Eastern bank net interest income is not
that much higher than this bank interest expense and trust bank has lower net interest income
because this bank has lowest difference between income and expense.




In year 2008: Prime bank has highest net interest margin because this year prime interest
income is much more than interest expense compared to the other three banks and Trust bank has
second highest margin compared to the other two banks but lower than prime bank which mean
Trust bank interest income not much higher than interest expense. Bank Asia and eastern bank
net interest margin is lower than prime bank and Trust bank. Eastern bank has lowest net interest
margin because this bank difference between interest income and interest expense lowest than
other three banks.

In year 2009: Prime bank again has highest net interest margin because of this bank interest
income is much higher than interest expense compared to the other three banks on the other hand
eastern bank has second highest net interest margin which is lower than prime bank and higher
than trust bank and bank asia.Bank Asia net interest margin is lower than eastern bank and prime
bank because this bank difference between interest income and interest expense not that much
higher than other two bank ,trust bank has lowest net interest margin because the interest income
is not that much higher than interest expense which decrease the net interest margin and make
lowest net interest margin compared to the other three banks

In year 2010: Eastern bank has highest net interest margin because this bank interest income is
more than interest expense compared to the trust bank because trust bank difference between
interest income and interest expense lower than eastern bank difference between interest income
and interest expense which indicate lower net interest margin.
   4. Net Interest Margin as % of total Revenue generating assets



Net interest margin provide information about interest income of eastern bank, which means
from net interest margin eastern bank can know about net interest margin in a percentage.

In year 2006: Trust bank has highest net interest margin as % of total Revenue generating assets
compared to bank Asia because the revenue generating assets lower than bank Asia but
difference between interest income and interest expense is much more than bank Asia that why
net interest margin as % total revenue generating asset of trust bank higher than bank Asia.

In year 2007: Eastern Bank has highest Net Interest Margin as % of total Revenue generating
assets compared to other three banks because interest income higher than other banks and
revenue generating asset is lower than other three banks. On the other hand trust bank has second
highest revenue generating asset because this bank interest margin is higher than bank Asia and
prime bank and lower than eastern bank. Bank Asia Net Interest Margin as % of total Revenue
generating assets is lower than eastern bank and trust bank and higher than prime bank because
prime bank has lowest interest margin compared to the other three banks and bank Asia interest
margin is higher that prime bank and lower than other two banks.

In year 2008: Eastern bank has highest Net Interest Margin as % of total Revenue generating
assets compared to the other three banks because eastern bank interest income is higher and
interest expense is lower which indicate proper utilization of property. In this year trust bank has
in second position because interest margin higher than bank Asia and prime bank but lower than
eastern which indicated that second highest Net Interest Margin as % of total Revenue generating
assets. Bank Asia has higher interest margin than prime bank but lower than other two banks.
This is the reason Bank Asia Net Interest Margin as % of total Revenue generating assets more
than prime bank. Prime bank has lowest interest margin because of that reason this bank has
lowest Net Interest Margin as % of total Revenue generating assets.
In year 2009: In this year eastern bank has highest Net Interest Margin as % of total Revenue
generating assets because this year interest margin is higher than other three banks, on the other
hand bank Asia has in second position which means this bank interest margin is lower than
eastern bank but higher than trust bank and prime bank. Bank Asia Net Interest Margin as % of
total Revenue generating assets lower than prime bank and eastern bank but higher than trust
bank because trust bank has lowest interest margin compared to the other three banks which
indicated bank utilization of property not using properly.

In year 2010: Easter bank has highest Net Interest Margin as % of total Revenue generating
assets because this bank interest margin is higher than trust bank. Which indicated that trust bank
does not utilize their property properly.




5. Net Non-Interest Margin as % of total Revenue generating assets

Non interest margin provide information about no- interest income which may come from
commission, misilinias assets. It’s come from after subtract no- interest expense from non
interest income and divided by revenue generating asset. When non-interest income is higher
than its means proper utilization of non interest property. It’s good for the bank Future non
interest margin.

In year 2006: Bank Asia has highest non interest margin as % of total revenue generating asset
because this bank non-interest margin is higher than trust bank because this bank non-interest
margin is lower than bank Asia which indicated trust bank do not use their non interest property
properly.

In year 2007: Prime bank has highest Net Non-Interest Margin as % of total Revenue generating
assets compared to the other three banks because this bank non-interest margin is higher than
other banks which indicated that this bank use their non-interest property properly. Eastern bank
has in a second position because this bank non-interest margin is lower than prime bank but
higher than trust bank and bans Asia. Banks Asia has in third position compared to the three
banks because this bank non-interest margin is lower than prime and eastern bank and higher
than trust bank because trust bank no- interest income is lower than no interest expense.

In year 2008: In year 2008 prime bank has highest Net Non-Interest Margin as % of total
Revenue generating assets because this year prime bank non-interest margin is much more
compared to the other banks.Easten bank has in second position because eastern bank non-
interest margin is lower than prime bank and higher than bank Asia and trust bank. Bank Asia
non-interest margin is more than trust bank but lower than prime bank and eastern bank the
reason behind this is trust bank non-interest margin is negative and lower than other three banks.

In year 2009: Prime bank has highest Net Non-Interest Margin as % of total Revenue generating
assets compared to the other three banks. This bank maintains highest non-interest margin
compared to the other three banks. Other three banks maintain negative ration because these
banks non-interest margin is negative, till Trust bank maintain second highest Net Non-Interest
Margin as % of total Revenue generating assets compared to the other two banks. Bank Asia is
second last position and eastern bank is in last position compared to the other banks.

In year 2010: Both banks maintain negative ratio, Trust bank has highest Net Non-Interest
Margin as % of total Revenue generating assets compared to the eastern bank because this bank
non-interest margin much lower than trust bank.
                         6. Earnings per share (ESP)

Earnings per share (EPS) are the amount of earnings per each outstanding share of a company's
stock. Earnings per share present that amount of share that a bank or organization provide for
their shareholder. From this earning per share ratio bank can come up whit the solution that how
much share they provide to the shareholder and earning profit from that share.

In year 2006: Trust bank has Earnings per share (EPS) compared to the bank Asia. Which
indicates that trust bank provide share with this amount. Bank Asia provides within a low price
because this bank provide with huge amount of share, means number of share is much more than
trust bank. This means bank Asia better known than trust bank and increase their owner.

In year 2007: Trust bank has lowest earning per share which indicates this bank provide share
with low price and this bank total share more than other three banks. On the other hand Eastern
bank has in second place which provide share which price is lower than bank Asia and prime
bank but higher than trust bank. Bank Asia ERS lower than prime bank and higher than other
two banks and prime bank has highest compared to the other three bank which indicate that
prime bank is not that much well known compared to the other bank.

In year 2008: Eastern bank has lowest earning per share which indicates this bank provide share
with low price and this bank total share more than other three banks. On the other hand Trust
bank has in second place which provide share which price is lower than bank Asia and prime
bank but higher than eastern bank. Bank Asia ERS lower than prime bank and higher than other
two banks and prime bank has highest compared to the other three bank which indicate that
prime bank is not that much well known compared to the other bank.
In year 2009: Trust has lowest EPS which means this bank share outstanding is much higher
than other three banks and much well known than other three banks. . On the other hand Eastern
bank has in second place which provide share which price is lower than bank Asia and prime
bank but higher than trust bank. . Bank Asia ERS lower than prime bank and higher than other
two banks and prime bank has highest compared to the other three bank which indicate that
prime bank is not that much well known compared to the other bank.




In year 2010: This year eastern bank has lowest EPS compared to the trust bank .trust bank has
huge EPS which indicate trust bank has lowest share outstanding and eastern bank has highest
share outstanding for their owner.




                                      Liquidity Indicators
Cash Position Indicators for the year 2006: In the year 2006, Bank Asia’s cash position
indicator is 0.7976 and Trust Bank’s cash position indicator is 0.8044. So, in this case Trust Bank is
in higher position than Bank Asia. Although the amount of cash and long term deposit of Bank Asia is
higher than Trust Bank but as Trust Bank has lower total assets comparing to Bank Asia so it’s Cash
position Indicator is higher than Bank Asia because as much portion of total asset is in cash and deposit
as much higher cash position indicator. It indicates that Trust bank has enough cash to back up their
liquidity crisis compare to Bank Asia.

Cash Position Indicator for the Year 2007: In the year 2007, the cash position indicator of Bank Asia,
Trust Bank, Eastern Bank and Prime Bank is 0.7806, 0.6079, 0.6251 and 0.8066 respectively. So, here we
can see that the highest cash position indicator is generated by the Prime Bank. Because Prime Bank has
the highest amount of cash and long term deposits comparing to others. It indicates that the Prime Bank
is best at handling liquidity crisis among the four banks. Then the Bank Asia is in second position, so they
are also good but the Trust Bank is in the weakest position in this year.

Cash Portion Indicator for the Year 2008: In the year 2008, the cash portion indicator of Bank Asia, Trust
Bank, Eastern Bank and Prime Bank is 0.7763, 0.0346, 0.5921, and 0.7429 respectively. So, in the year
2008 the Bank Asia is in highest position where as it was in the second position in 2007. So, the
performance of Bank Asia is impressive. On the other hand, Prime Bank is in second position and
although their performance is good and very near to Bank Asia but their cash portion indicator has
decreased than previous year. Trust bank is still in the weakest position as like 2007.Eastern Bank is also
in the 3rd position like 2007 but the ratio is not like before, it has decreased than 2007.
 Cash Portion Indicator for the Year 2009: In the year 2009, the cash portion indicator of Bank Asia,
Trust Bank, Eastern Bank and Prime Bank is 0.7652, 9.1037, 0.6649 and 0.7984 respectively. So, in this
year the Trust Bank is in the highest position and of course it’s a very impressive performance by Trust
Bank as it was in the weakest position in the last year. On the other hand Bank Asia’s and Prime Bank’s
performance is almost same as before so it is a good sign that they are in a good and stable situation.
Although Eastern Bank is in last position but its performance has also increased in this year.

Cash Portion Indicator for the Year 2010:

In the year 2010, the cash portion indicator of Trust Bank and Eastern Bank is 0.824122256 and
0.644514302. So here Trust Bank is in the highest position but its cash portion ratio has decreased than
last year where as Eastern Bank’s cash portion ratio is almost same like last year so Eastern Bank’s ability
of backing up the liquidity crisis is stable comparing to Trust Bank.

So, we can see over the five years The Bank Asia and The Prime bank have most impressive performance
and their cash portion indicator was very close to each other in the five years. Eastern Bank is also good
in Cash Portion Indicator and their performance is increasing also but in 2008 there was a fall in their
performance. On the other hand, prime bank and Bank Asia’s condition is less fluctuating than Eastern
Bank. Over the five years the Trust Bank was showing once very high performance and once very low.
But in the last two years, its performance was impressive so it should maintain this condition but the
fluctuating condition of Trust Bank may also rely on its liquidity need.



Liquid Securities Indicator for the year 2006: In the year 2006 the Liquid Securities Indicator of Bank
Asia and Trust Bank is 0.101705126 and 0.021315836. So, in case of liquid securities Indicator The Bank
Asia is in highest position and Trust Bank’s position is weak than Bank Asia as Bank Asia’s Liquid
Securities indicator is 8% higher than Trust Bank. So, the Bank Asia has enough short term securities
which can be converted into cash quickly in order to meet up the liquidity crisis.

Liquid Securities Indicator for the year 2007: In the year 2007, the Liquid Securities Indicator of Bank
Asia, Trust Bank, Eastern Bank and Prime Bank are 1.076853276, 0.122068533, 0.027524862, and
0.081544547. So, we can see that in terms of liquid securities indicator of 2007 the Bank Asia is in the
highest position and it has also increased than previous year. Eastern Bank is in the lowest position.
Prime Bank’s position is 3rd but it is also much weak comparing to Bank Asia. Second position holder is
the Trust Bank and it has improved much than previous year as its liquid securities indicator has
increased by 10.1%.

Liquid Securities Indicator for the year 2008: In the year 2008, the Liquid Securities Indicator of Bank
Asia, Trust Bank, Eastern Bank and Prime Bank is 0.106236123, 0.117689844, 0.007276684 and
0.009564404. The Bank Asia is again in the first position but it’s ratio has decreased than last year and
there are possible two reasons behind it, either the bank’s liquidity facing ability through short term
securities has decreased or the bank has found that it has enough short term securities to meet up the
liquidity crisis and that’s why it did not make extra investment. The second position holder is the Trust
Bank and their performance is almost same as before, only .5% decrease occurred which is not any
major fact. Eastern Bank is in the 3rd and Prime Bank is in the lowest position and both of their ratios
have decreased but it may be an indication that they do not have much liquidity crisis.

Liquid Securities Indicator for the year 2009: In the year 2009, the Liquid Securities Indicator of Bank
Asia, Trust Bank, Eastern Bank and Prime Bank is 0.129658748, 0.123859481, 0.049471202 and
0.152157322. So, in this year also the Bank Asia is in the leading position. All of the other three banks’
ratios have increased and Eastern Bank’s and Prime Bank’s ratio have increased by 4.2% and 14.3%
respectively. So, a large rise in Prime Bank’s ratio and it’s because maybe they forecasted that they
would have much liquidity demand in this year.

Liquid Securities Indicator for the year 2010: In the year 2010 the liquid securities indicator of Trust
Bank and Eastern Bank is 0.123499053 and 0.082776818. So, in this year also the Trust Bank has many
liquid securities than Eastern Bank but the Eastern Bank’s ratio has increased than last year which
indicates their liquidity demand was more than last year.

We can see over the 5 years the liquid securities indicator ratio is sometime decreasing and some time
increasing but among the all banks the Bank Asia has remain most liquid securities holder.

Capacity ratio for the year 2006: In the year 2006, the capacity ratio of Bank Asia and Trust Bank is
0.730209348 and 0.622150514. Here Bank Asia’s ratio is 11% higher than Trust bank which indicates
that Bank Asia invested much in loan and lease than Trust Bank. So, here Trust Bank is in better position
than Bank Asia as low capacity ratio is a sign of enough liquid position.



Capacity ratio for the year 2007: In the year 2007, the capacity ratio of Bank Asia, Trust Bank, Eastern
Bank and Prime Bank is 0.723073106, 0.614904482, 0.616079373 and 0.724766413. So, here lowest
capacity ratio holder is the Trust Bank. Eastern Bank is in 2nd position and its position is almost similar to
Trust Bank. So, these two banks are in more liquid position than other two banks.

Capacity ratio for the year 2008: In the year 2008, the capacity ratio of Bank Asia, Trust Bank, Eastern
Bank and Prime Bank is 0.748998774, 0.492197967, 0.583491119 and 0.684082661. So, again the Trust
Bank is the lowest capacity ratio holder and Bank Asia is the highest ratio holder. So, it indicates in terms
of controlling loan and lease Trust Bank is better than others. Eastern Bank and Prime Bank are
respectively in 2nd and 3rd liquid position.

Capacity ratio for the year 2009: In the year 2009, the capacity ratio of Bank Asia, Trust Bank, Eastern
Bank and Prime Bank is 0.73209401, 0.602566449, 0.61624196 and 0.719655967. So, in this year Trust
Bank is in most liquid position as it has the lowest capacity ratio and Eastern Bank’s ratio is almost
similar to Trust Bank. Bank Asia is again worst liquid through controlling loan and lease.

Capacity ratio for the year 2010: in the year 2010, the capacity ratio of Trust Bank Eastern Bank is
0.732692586 and 0.710487299 and we can see that these two banks’ position is almost same. Trust
Bank is 1% more liquid than Eastern Bank but its ratio has decreased than previous year.
So, over the 5 years, the Trust Bank has remained most liquid in terms of capacity ratio and Bank Asia is
in the least position. Eastern Bank and Prime Bank’s Performance is not bad.

Hot Money Ratio For the year 2006: In the year 2006, the Hot money ratio of the Bank Asia and the
Trust Bank is 1.054484407 and 0.996218925. So, here Bank Asia is in the highest position and if the ratio
is high then it indicates that the bank is in well position as it means that the money market asset of the
bank is higher than the money market liabilities.

HOT Money Ratio for the Year 2007: In the year 2007, the hot money ratio of Bank Asia, Trust Bank,
Eastern Bank and Prime Bank is 1.081685009, 1.012098521, 0.545002299 and 1.026730317. So, here
also Bank Asia is in the highest position and the ratio of Trust Bank is very close to Bank Asia’s ratio.
Prime Bank is in the 3rd and Eastern Bank is in the lowest position which is not a good sign as money
market assets should be much higher than money market liabilities in order to backing up the liquidity
crisis.

For HOT Money Ratio the Year 2008: the In year 2008, the hot money ratio of Bank Asia, Trust Bank,
Eastern Bank and Prime Bank was 1.078605897, 0.214595685, 1.064323627 and 1.012738123. Highest
position is Bank Asia’s where as Prime Bank and Eastern Bank’s ratio is very close to it and Eastern Bank
has improved much than last year. Trust Bank is the lowest performer in this year.

Hot Money Ratio For the year 2009: In the In year 2009, the hot money ratio of Bank Asia, Trust Bank,
Eastern Bank and Prime Bank was 1.074830518, 1.007963232, 1.095810502 and 1.033126446. So, this
year the Eastern bank is the highest performer and all have done well, especially Trust Bank as it has
increased the ratio than last year.

Hot Money Ratio For the year 2010: In the year 2010, the hot money ratio of Trust Bank and Eastern
Bank is 1.024412863 and 1.303291466. So, here the Eastern Bank is in the highest position and its ratio
is 28% higher than Trust Bank, so Eastern Bank has enough money market assets comparing to Trust
Bank.

We can see that, the Bank Asia has maintained quite similar and sufficient ratio than other banks but the
other banks have increased their ratios over these year.

 Deposit Composition Ratio For the year 2006: In 2006, the deposit composition ratio Bank Asia and
Trust Bank is 0.010160784 and 0.008559026. Bank Asia’s ratio is highest and deposit composition ratio
higher is not a good indicator, lower deposit composition ratio is a good indicator. So, here Trust Bank is
in a better position than Bank Asia.

Deposit Composition Ratio For the year 2007: In 2007, the deposit composite, on ratio of Bank Asia,
Trust Bank, Eastern Bank and Prime Bank is 0.021025552, 0.000961951, 0.024307155 and 0.021697414.
So, the lowest ratio is obtained by the Trust Bank. So, the Trust Bank’s position good than other banks in
this year. All of the other three banks are in a bad position than Trust Bank.

Deposit Composition Ratio For the year 2008: In 2008, the deposit composition ratio of Bank Asia,
Trust Bank, Eastern Bank and Prime Bank is 0.089580568, 0.001758091, 0.024011614 and 0.018199028.
So, this year again the Trust Bank has the lowest ratio so again it is the best performer in terms of
deposit composition ratio. The Bank Asia is the lowest performer as it has the highest ratio.

Deposit Composition Ratio For the year 2009: In 2008, the deposit composition ratio of Bank Asia,
Trust Bank, Eastern Bank and Prime Bank is 0.134342902, 0.015548284, 0.035864581 and 0.020754292.
So, again the Trust Bank is the highest performer and the Bank Asia is the lowest. Eastern Bank and
Prime Bank’s ratio is quite close to each other.

Deposit Composition Ratio For the year 2010: In 2008, the deposit composition ratio of Trust Bank and
Eastern Bank is 0.017209708 and 0.029470364. So, still the Trust Bank’s performance is the best.

Over the 5 years, the Trust Bank has maintained quite good deposit composition ratio which means its
Demand Deposits are not much higher than Time Deposits. On the other hand these years’
performances indicate that Bank Asia is weak in deposit composition ratio than others.




                                           Earnings Spread
The spread measures the effectiveness of the bank’s intermediation function in borrowing and lending
money and also the intensity of competition in the market area.

Earning Spread for the year 2006: In 2006 the earning spread of Bank Asia and Trust Bank is .87 and .05.
So, the Bank Asia is in good position than Trust Bank. As earning spread indicate the competition
intensity so, as Bank Asia has the higher spread so it means in a competitive situation it’s also doing
good. On the other hand as this ratio also shows the difference between interest income and interest
expense so, if the ratio is high then it means the bank is in a strong position.

Earning Spread for the year 2007: In 2007, the earning spread of Bank Asia, Trust Bank, Eastern Bank
and Prime Bank was .0096, .0612, .0066 and .0275. So, the highest earning spreads holder is Trust Bank
and Eastern Bank is in the lowest position. So, among all the banks Trust Bank is in the highest position
in this year.

Earning Spread for the year 2008: In 2008, the earning spread of Bank Asia, Trust Bank, Eastern Bank
and Prime Bank was .0083, .068, 0002 and .0208. So, again Trust Bank is in the strongest position as it
has highest earning spread.

Earning Spread for the Year 2009: In 2009, the earning spread of Bank Asia, Trust Bank, Eastern Bank
and Prime Bank was - .4999, .0369, .0085, .0204. So, again Trust Bank is in the strongest position and
other banks’ earning spread is decreasing year by year which indicates tough competition. Although
Trust Bank’s earning spread has decreased than 2008 but it is still in the top position and it indicates its
better performance in this competitive market area.
Earning Spread For the year 2010: In 2010 the earning spread of Eastern Bank and Trust Bank is .0133
and .06. Here the Earning Spread of Trust Bank is 5% higher than Eastern Bank. So, again the Trust Bank
is in the top position.

Over the 4 years all banks’ earning spread has sometime decreased and some time increased and as the
ratio has decreased sometimes so it indicates that competition exists in the industry and the Trust Bank
is facing the competition more strongly rather than others and over these 4 years the worst performer is
Bank Asia as its ratio decreased severely in 2009.



                                          Interest Sensitive GAP
Interest Sensitive GAP for 2006: This ratio is the difference between Interest Sensitive Assets
and Interest Sensitive Liabilities. In 2006 the Interest Sensitive GAP of Bank Asia and Trust
Bank is 1767664974 and 4240860351. Both had positive GAP but as the Trust Bank’s GAP is higher so
it’s more stronger as its interest sensitive assets is higher than Bank Asia’s interest sensitive assets.



Interest Sensitive GAP for 2007: In the year 2007, the interest sensitive GAP of Bank Asia, Trust
Bank, Eastern Bank and Prime Bank is 2577822762, 438170488, 3710912939 and 1895266204.
So, the Eastern Bank is in the top position. Although each bank has positive gap but as Eastern
Bank’s GAP is highest so it indicates it has the highest interest sensitive assets than liabilities
comparing to other banks. The lowest position holder is Trust Bank in this year.

Interest Sensitive GAP for 2008: In the year 2008, the Interest Sensitive GAP of Bank Asia, Trust
Bank, Eastern Bank and Prime Bank was 3462667495, 7805718075, 3893438414 and
842924892. In this year the top position holder is Trust Bank and the lowest position holder is
Prime Bank.

Interest Sensitive GAP for 2009: In the year 2009, the Interest Sensitive GAP of Bank Asia, Trust
Bank, Eastern Bank and Prime Bank is 4266182613, 8539246478, 8434181805 and 2862258428.
Although all the banks have positive gap but here the Trust Bank is in the highest position as
higher interest sensitive gap indicates strong position.

Interest Sensitive GAP for 2010: In 2010, the sensitive gap of Eastern Bank and Trust Bank is
12518539823 and 13922590527. They both have maintained positive gap but as the Trust
Bank’s gap is higher than Eastern Bank so it means Trust Bank is in strong position than Eastern
Bank.
                               Relative IS GAP

For 2006: In 2006 the Relative IS GAP of Trust Bank and Bank Asia is .2 and .06. Although they
both have positive GAP but as Trust Bank’s gap are higher so the gap is more positive and Trust
Bank is stronger than Bank Asia.

For 2007: In 2007, the Relative IS GAP of Bank Asia, Trust Bank, Eastern Bank and Prime Bank is
.067, .014, .087 and .0238. So, the highest position holder is Eastern Bank.

For 2008: In 2008, the Relative IS GAP of Bank Asia, Trust Bank, Eastern Bank and Prime Bank is
.064, .2028, .083 and .0007. So, best performer is the Trust Bank.

For 2009: In 2009, the relative IS GAP of Bank Asia, Trust Bank, Eastern Bank and Prime Bank is
.062, .1573, .1234 and .0229. So, the best performer is the Trust Bank.

For 2010: In 2010, the Trust Bank and the Eastern Bank’s Relative IS GAP is .238 and .1517. So,
again in this year the Trust Bank is the best Performer.

                                    Interest Sensitive Ratio

For 2006: In 2006, the interest Sensitive ratio of Bank Asia and Trust Bank is 1.06 and 1.21 and
the both ratio is greater than 1 so, it indicates that they both have positive gala but as Trust
Bank’s ratio is higher than Bank Asia so Trust Bank is the Best performer.

For 2007: In 2007, the interest sensitive ratio of Bank Asia, Trust Bank, Eastern Bank and Prime
Bank is 1.08, 1.016, 1.095 and1.026. So, they both have positive gaps and although very close to
each other but here also the best performer is Trust Bank.

For 2008: In 2008, the interest sensitive ratio of Bank Asia, Trust Bank, Eastern Bank and Prime
Bank is 1.07, 1.22, 1.09 and 1.008. So all of them had positive GAP but the best performer is
Trust Bank.

For 2009: In 2009, the interest sensitive ratio of Bank Asia, Trust Bank, Eastern Bank and Prime
Bank is 1.074, 1.175, 1.14 and 1.02. So, all of them have positive gap but best performer is the
Trust Bank.

For 2010: In 2010, the interest sensitive ratio of Eastern Bank and Trust Bank is 1.17 and 1.27.
So, they both are positive but the best performer is Trust Bank.
                                  16. Leverage ratio

Leverage ratio is important to find out whether the bank is well capitalized or not. If the ratio
will be 5% or more we can conclude that the bank is well capitalized.




In Year 2006: In 2006 Bank Asia had 6.39% of leverage ratio and Trust bank had 8.44% of
leverage ratio. Both of the banks comply with the leverage standard which means the banks are
well capitalized. Also noticeable that the Trust bank has more core capital backing against the
total asset compare to the Bank Asia.

In Year 2007: In the year 2007 Trust bank was highest in leverage ratio with 6.88%.The Prime
bank and the Bank Asia is close to each other and both are well capitalized. On the other hand
Eastern bank is moderately capitalized.

In Year 2008:In this year Trust bank and the Eastern bank both are closely highest in leverage
ratio with a good backing of their core capital against the total asset .Bank Asia is also well
capitalized and at fourth position is the Prime bank but it also comply with the standard.

In Year 2009: In this year the Eastern bank is holding highest leverage ratio which implies the
bank is significantly well capitalize. Rest three banks has close ratio and they are also well
capitalize bank.
            17. Ratio of Tier 1 capital to total risk weighted assets
We need to calculate this ratio to see how the tier 1 capital or the core capital give the backing
against the total risk weighted assets.




In Year 2006: In 2006 Bank Asia has highest ratio than the Trust bank. And both the banks
comply with the standard ratio.

In Year 2007: In 2007 Trust bank is in first position, which implies they have a very good
capitalization of the tier1 capital against the risk weighted assets. The Trust bank holds the
second position and then comes the Prime bank. Eastern bank has low ratio compare to the
others but comply with the standard.

In Year 2008: In 2008 again trust bank holds the first position with a very good management of
tier 1 capital against its risk weighted assets. Prime bank is in the second position. Then Bank
Asia and the Eastern bank has close rate of ratio.

In Year 2009: In comparison of the recent year(2009) we can see that the Prime bank holds the
highest position, on the other hand whereas Trust bank was holding the first position from last
two years, in 2009 their tier 1 to total risk weighted assets ratio decreased at a significant rate.
Bank Asia and the Eastern bank maintained their same level of ratio.




In conclusion we saw that neither of the banks need to rise their tire 1 capital against their risk
weighted assets tocomply with standard of 4%.
            18. Ratio of tier1+tier 2 capitals to risk weighted assets
Both the tier 1 and the tier2 capital can be said as the total capital of any company. In this ratio
we will try to compare ,which bank is well capitalized against its risk weighted assets. The
standard rate of ratio is 8%. If the ratio will below the standard it means the bank needs to raise
their capital.



In Year 2006: In 2006 Bank Asia has more ratios then the standard rate. But the Trust bank need
to rise its supplementary capital(tier2) in order to comply with the capital standard.

In Year 2007: In this year Prime bank holds the highest position with good capitalization. Then
Trust bank and the Bank Asia becomes Second and third consecutively. Eastern bank although
comply with the standard but need to raise its total capital for better ratio.

In Year 2008: In this year Trust bank is in first position with highest rate of ratio. Prime bank as
well maintain their good capitalization. Bank Asia and Eastern bank has low ratio compare to
others but comply with the standard.

In Year 2009: In 2009 like the last two years Prime bank holds good capitalization both tier 1
and tier2 with highest ratio.Then we can see that Eastern bank has a good ratio compare to the
last years. Bank Asia and Trust bank are also well capitalized.
                   19. Internal capital growth rate




In Year 2006: The retain earnings of Trust bank is increasing 20.75% on an average over the
years as portion of equity capital. But the retain earnings as a portion of equity capital of Bank
Asia is increasing at a very low rate.

In Year 2007: In this year Prime bank holds the highest internal capital growth rate, which
means on an average their retain earning is increasing more as a portion of equity capital. Trust
bank maintained close growth rate as last year. But the capital growth rate of Bank Asia is very
low compare to the other banks.

In Year 2008: In 2008 on an average retain earnings of the Trust Bank significantly increasing
as a portion of their equity capital. Prime bank and Bank Asia has a close growth rate.
Comparatively Eastern bank has a low growth rate.

In Year 2009: In 2009 Bank Asia on an average increased their retain earnings as apportion of
the equity capital. Eastern bank and Trust bank has close capital growth rate in this year. But the
capital growth rate of Prime bank significantly decreased compare to the last few years.




                                     Investment Strategies of Bank Asia




In 2006: In the year 2006 Bank Asia has adopted the Back-End-Load strategy as its 99.99% of
total securities has been invested in those securities which have a maturity period of 5 years or
more than 5 years. Only .01% was invested in short term securities. It means that Bank Asia has
forecasted that it will not face liquidity crisis and that’s why it is intending to raise more profit by
investing on long term securities.
In 2007: In the year 2007, Bank Asia’s investment strategy is also back-end-load and it
maintained 76.07% of long term securities among the total securities. So, it indicates in the year
2007 it was also well liquid that’s why it again selected the back-end policy but this year the
short term securities investments were 23.94%. So, for risk avoiding purpose it increased its
portion of short term securities. We can say that in this year also the Bank Asia is not liquidity
crisis.
In 2008: In the year 2008, Bank Asia’s investment Strategy is back-end-load strategy as like
previous 2 years and there is 91.86% long term securities among total securities. So, it indicates
that Bank Asia was consistently in well liquid position that’s why it choose to generate more
profit and of course it’s forecasting team is really doing a great job.
In 2009: In 2009 Bank Asia also took maximum part in long term securities. It invested 89.94%
of total securities in long term securities. So, as like previous three years it forecasted that it
would not face liquidity crisis. As its forecasting is being right and its liquidity position is well
enough and it’s generating much profits now so we can say that

Bank Asia knows that what investment strategy should be applied.
            Investment Strategies of Prime Bank




In 2005: Prime Bank adopted back-end strategy in 2005. It maintained 82.37% of its total
securities in long term securities which means it forecasted that it would not face liquidity crisis
in this year and it also well liquid in 2004. So, it generated much profit in 2005 by investing in
long term securities.
In 2007: In 2007 they selected BARBELL Investment Portfolio strategy because in this year
53.57% was in long term securities and 46.43% was in short term securities. Although it invested
more in long term securities but the difference is only 7%. So, we can consider it as BARBELL
as a major portion is in long term and another portion is in short term. So, here Prime Bank
became both profit seeker and risk avoider. To back up both liquidity and profitability crises, it
chooses BARBELL.
In 2008: In 2008 Prime Bank chooses Bank-End strategy again as it invested 63.4% in long term
and 36.6% in short term. So, it forecasted that in this year it will not face liquidity crisis and
that’s why it went for generating more profit.




In 2009: In 2009, it chooses Back-End strategy again. It invested 97.30% in long term and only
2.82% in short term. So, it means in 2008 it was in enough liquid position and that’s why it
invested almost full securities in long term. So, considering the four years’ strategies it can be
said that Prime Bank is not bad in forecasting but as it changed its strategy in 2007 so it indicates
may be it faced some liquidity crisis in 2006, so the decision of holding 82.37% long term
securities in 2005 was not fully right. But it is a good indication that at the end of 2007 it again
became enough liquid and that’s why went for profit increasing purpose and this time its
forecasting was right.




                         Investment Strategies of Eastern Bank
In 2010: Eastern Bank invested 86.83% in long term securities and 13.17% in short term
securities. So, it choose Back-End-Load strategy so it means it forecasted that in this year it
would not face liquidity crisis and also it is enough liquid so it went for generating higher profit.




In 2009: In 2009 it also chooses back-end strategy as it invested 73.63% in long term and
26.37% in short term. So, it is a good indicator that Eastern Bank is in a strong position and in
2008 it also did not face much liquidity crisis that’s why it choose Back-End for 2009 and as it
choose Back-End in 2010 also so it indicates it’s assumption of holding major long term
securities in 2009 was right.
In 2008: In 2008, the Eastern Bank went for Back-End-Strategy and invested 100% in the
securities with a maturity of 10 year.
In 2007: In 2007, Eastern Bank proffered Front-End Load strategy as they invested only in on-
demand securities.
                         Investment Strategy of Trust Bank




                                   2009




In 2009, Trust Bank invested 83.88% of its total securities long term securities. So, they
followed Back-End-load strategy.
                              2010




    In 2010, Trust Bank invested 88% on long term securities. So, they followed Back-End -
Load strategy.
                                    2008




In 2008, Trust Bank invested 17.35% on long term securities and 82.65% in short term
securities. So, here they used Front-End-Loan strategy
                                              2007




In 2007, Trust Bank invested 18.49% on long term securities and 81.51% in short term
securities. So, they used Front-End-Load strategy




Conclusion:        Banks play important role in economics of any country, bank financial
condition also important for the banks as well as the people shoes are related to the banks.From
this financial analysis of the banks can see the financial conditions of the banks and how this
ratio effects these banks and which bank have the better condition compared to the other banks.
From this analysis it’s easy to explain the total asset, liabilities, share out standings, core capital.
Market values capital and investments strategy etc.

								
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