The City Bank Limited

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					Introduction
This is a term paper of performance analysis of the company entitled The City
Bank. The ratio analysis will help to compare the financial performance of the
company. The period of analysis is from 2006 to 2009. The performance of The
City Bank has been analyze in terms of


    Liquidity

    Leverage

    Activity (Efficiency)

    Profitability

    Market Position



The City Bank Ltd is one of the modern and leading banks in the banking
industry of Bangladesh. It has always given priority to its customers and has
served them with various customized products & services. It provides its
customer’s corporate banking, Islamic banking & also retail banking.




Origin of the Report


Mr. M. Morshed, course instructor of the Bank Management course at North
South University, authorized to prepare a term paper on the ratio analysis of The
City Bank Ltd for the year 2006 to 2009.




                                         1
Objectives
The objectives of this report is to

    Analyze the performance of The City Bank Ltd using ratios to judge the
      liquidity, leverage, activity, profitability and market position (from the
      perspective of current and potential investor’s view point).


    Come up with my own conclusion and see if the companies current share
      prices truly reflect the bank’s real picture and performance.


    Provide some suggestions for The City Bank Ltd in order to improve their
      performance.



Methodology


Data Collection

This term paper is based on Secondary Data. The main sources in conducting
this research are the bank’s annual report, selected reference books, local texts
books about bank management.

Analysis

I have conducted a Quantitative Analysis. I have used various types and classes
of ratios to evaluate the performance of The City Bank Ltd.

Application Software used

Microsoft Excel & Microsoft Office.




                                         2
Limitations
Although I have tried my level best to provide the most up to date and accurate
information about the banks in this term paper but there were a few limitations.
Because of which I was unable to present the report to the level of accuracy
which I wanted to obtain. The limitations were-

    The information that I have used in this report were gathered from
     secondary source which included financial statements of the bank from
     2006 - 2009 and also information provided from the bank’s website.

    The time frame for writing this report was restricted to 3 months or a single
     semester. If I was allowed more time, I would surely be able to present the
     information more descriptively.


Overview of the Bank

City Bank is one of the oldest private Commercial Banks operating in
Bangladesh. It is a top bank among the oldest five Commercial Banks in the
country which started their operations in 1983. The Bank started its journey
on 27th March 1983 through opening its first branch at B. B. Avenue Branch
in the capital, Dhaka city. It was the visionary entrepreneurship of around 13
local businessmen who braved the immense uncertainties and risks with
courage and zeal that made the establishment & forward march of the bank
possible. Those sponsor directors commenced the journey with only Taka 3.4
crore worth of Capital, which now is a respectable Taka 330.77 crore as
capital & reserve.




                                        3
City Bank is among the very few local banks which do not follow the
traditional, decentralized, geographically managed, branch based business or
profit model. Instead the bank manages its business and operation vertically
from the head office through 4 distinct business divisions namely
          Corporate & Investment Banking;
          Retail Banking (including Cards);
          SME Banking; &
          Treasury & Market Risks.


Under a real-time online banking platform, these 4 business divisions are
supported at the back by a robust service delivery or operations setup and
also a smart IT Backbone. Such centralized business segment based
business & operating model ensure specialized treatment and services to the
bank's different customer segments.


The bank currently has 87 online branches and 10 SME service centers
spread across the length & breadth of the country that include a full fledged
Islamic Banking branch. Besides these traditional delivery points, the bank is
also very active in the alternative delivery area. It currently has 46 ATMs of its
own; and ATM sharing arrangement with a partner bank that has more than
550 ATMs in place; SMS Banking; Interest Banking and so on. It already
started its Customer Call Center operation. The bank has a plan to end the
current year with 100 own ATMs.


City Bank is the first bank in Bangladesh to have issued Dual Currency Credit
Card. The bank is a principal member of VISA international and it issues both




                                        4
Local Currency (Taka) & Foreign Currency (US Dollar) card limits in a single
plastic.


City Bank has launched American Express Credit Card and American Express
Gold Credit card in November 2009. City Bank is the local caretaker of the brand
and is responsible for all operations supporting the issuing of the new credit
cards, including billing and accounting, customer service, credit management
and charge authorizations, as well as marketing the cards in Bangladesh. Both
cards are international cards and accepted by the millions of merchants
operating on the American Express global merchant network in over 200
countries and territories including Bangladesh.


City Bank is one of the largest corporate banks in the country with a current
business model that heavily encourages and supports the growth of the bank in
Retail and SME Banking. The bank is very much on its way to opening many
independent SME centers across the country within a short time. The bank is
also very active in the workers' foreign remittance business. It has strong tie-ups
with major exchange companies in the Middle East, Europe, Far East & USA,
from where thousands of individual remittances come to the country every month
for disbursements through the bank's large network of 97 online branches and
SME service centers.




                                         5
Vision and mission statement


Vision Statement
"To be the leading bank in the country with best practices and highest social
commitments"


Mission Statement

       To contribute to the socio-economic development of the country
       To attain highest level of satisfaction through extension of services by

         dedicated and motivated team of professionals

       To maintain continuous growth of market share ensuring quality

       To maximize bank’s profits by ensuring its steady growth

       To maintain the high moral and ethical standards

       To ensure participative management system and empowerment of

         Human Resources




                                        6
Literature Review


Ratio Analysis:

Ratio Analysis is the starting point in developing the information desired by the
analyst. Ratio analysis provides only a single snapshot, the analysis being for
one given point or period in time. In the ratio analysis it is possible to define the
company ratio with a standard one. For this term paper I have gone through Time
Series Analysis.

Time series Analysis:

Evaluation of the banks’ financial performance over time using financial ratios.



Liquidity

   (1) Cash Position Indicator:

The amount of cash that a company, investment fund or bank has on its books at
a specific point in time. The cash position is a sign of financial strength and
liquidity. In addition to cash itself, it will often take into consideration highly liquid
assets such as certificates of deposit, short-term government debt and other
cash equivalents.

                          cash and deposits due from other banks
                      =

   (2) Liquid Securities indicator:

It indicates ratio between government securities and total assets which means
how much marketable security a company can hold. The greater the value the
more liquid the depository institution’s position tends to be.

                              =




                                            7
   (3) Capacity Ratio:

This ratio show negative liquidity. That means the more the ratio the less liquid
the depositary institution is.



                                              &
                               =




Leverage

(1)Debt Ratio: Debt Ratio is a ratio that indicates what proportion of debt a
company has relative to its assets. The measure gives an idea to the leverage of
the company along with the potential risks the company faces in terms of its
debt-load. And the equation is

                                   =



(2)Debt to equity capital ratio:

A ratio used to help determine how much shareholders would receive in the
event of a company-wide liquidation. The ratio, expressed as a percentage, is
calculated by dividing total shareholders' equity by total assets of the firm, and it
represents the amount of assets on which shareholders have a residual claim.
The figures used to calculate the ratio are taken from the company's balance
sheet. The equation is


                                   =


                                          8
   (4) Interest Coverage Ratio:


A ratio used to determine how easily a company can pay interest on outstanding
debt. The interest coverage ratio is calculated by dividing a company's earnings
before interest and taxes (EBIT) of one period by the company's interest
expenses of the same period:




Activity (Efficiency)



   (1) Tax Management ratio:

It reflects the use of security gains or loss to minimize tax exposure. It indicates
what portion of operating income generates net income after tax. The equation is
                                  Net Income after Tax
                              =
                                  Net income before Tax


   (2) Expense Control Efficiency:

It indicates the portion of revenue after the operating expense is deducted. It’s a
measure of operating efficiency and expense control. The equation is
                              Pretax net operating income
                          =
                                Total operating revenue

                                          9
   (3) Asset Utilization Ratio:

It measures the speed at which a business is able to turn assets into sales, and
hence cash. The higher the ratio, the more effectively assets are used to
generate revenue. The equation is
                                 Total operating revenues
                             =
                                        Total Assets


   (4) Funds Management Efficiency:

The ratio shows a company's total assets per dollar of stockholders' equity. A
higher Funds Management Efficiency indicates higher financial leverage, which
means the company is relying more on debt to finance its assets. The equation is
                                         Total asset
                                 =
                                     Total Equity Capital



   (5) Operating Efficiency ratio:

The efficiency ratio gives us a measure of how effectively a bank is operating. It
is the cost required to generate each dollar of revenue. The equation is
                                 Total Operating Expense
                            =

An increase means the company is losing a larger percentage of its income to
expenses. If it is getting lower, it is good for the bank and its shareholders. This
measures non-interest expenses as a proportion of operating revenue. Costs
include salaries, technology, buildings, supplies, and administrative expenses.
Revenue includes net interest income (interest revenue less interest expenses)
plus fee income.




                                            10
   (6) Employee productivity Ratio:

The equation is
                                 Net Operating Income
                       =

The ratio measures the level of income that each employee generates. It helps to
determine the efficiency of a bank in terms of employees



Profitability

   (1) Return on Equity (ROE):

Return on equity measures a Bank's profitability by revealing how much profit a
bank generates with the money shareholders have invested. The equation for
ROE is
                                 Net income (after tax)
                             =
                                  ℎ    ℎ

It measures the return on the money the investors have put into the company.
This is the ratio potential investors look at when deciding whether or not to invest
in the company. Net income comes from the income statement and stockholder’s
equity comes from the balance sheet. In general, the higher the percentage is the
better.

   (2) Return on Assets (ROA):

ROA measures the efficiency with which the company is managing its investment
in assets and using them to generate profit. It measures the amount of profit
earned relative to the firm’s level of investment in total assets. Net Income is
taken from the income statement, and total asset is taken from the balance
sheet. The higher the percentage is better, because that means the company is
doing a good job using its assets to generate sales. The equation for ROA is



                                         11
                                  Net income (after tax)
                              =

   (3) Net interest Margin:

Net Interest Margin (NIM) is a measurement of the difference between the
interest income generated by banks or other financial institutions and the amount
of interest paid out to their lenders. It is expressed as a percentage of what the
financial institutions are earning minus the interest that it pays on borrowed funds
to its investors. It examines how successful a firm's investment decisions are
compared to its debt situations. A negative value denotes that the firm did not
make an optimal decision, because interest expenses were greater than the
amount of returns generated by investments. The equation for NIM is
                           Interest revenue − Interest expense
                       =

   (4) Net Non Interest Margin:

We calculate net non-interest margin in this way:
                      Non Interest revenue − Non Interest expense
                  =

 It is expressed as a percentage of how much noninterest revenue the financial
institutions are earning minus the non-interest expense. Non-interest income
includes revenues earned from loan and investments or fee income from
fiduciary activities, services charges on deposit accounts, trading account gains
and fees, revenues income from investment banking, security brokerage and
insurance services. Non-interest expenses include salaries, wages and
employee benefits.

   (5) Net Operating Margin:

A measure of how profitably the firm is operating. The ratio tells how well a
company converts revenue from core operations into actual profit - how many
cents of profit it gets from every dollar of sales. The operating margin shows how
well the company controls costs. The equation is



                                          12
                                           −
           =




   (6) Earning Per share (EPS):

The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's profitability. It
tells an investor how much of the company's profit belongs to each share of
stock. The equation is

                    =



Market Position



   (1) Price Earning Ratio (P/E):

It is a measure of the price paid for a share relative to the annual profit earned by
the firm per share. A high P/E suggests that investors are expecting higher
earnings growth in the future compared to companies with a lower P/E. It gives
us an indication of the confidence that investors have in the future prosperity of
the business. The equation is

                            =

   (2) Market-Book Ratio:

It measures how much a company is worth at present, in comparison with the
amount of capital invested by current and past shareholders into it. This ratio is
used by some investors or analysts as an indicator of over or undervaluation. If
the balance sheet assets per share are much larger than the share price, this is
taken to be a buy signal. The equation is


                                         13
                                  Market Value Per share
                              =
                                    Earning per share

   (3) Dividend Yield:


This ratio shows how much a company pays out in dividends each year relative
to its share price. In the absence of any capital gains, the dividend yield is the
return on investment for a stock. Dividend yield is calculated as follows:




Performance Analysis

I have analyzed the performance of The City Bank Ltd

         Liquidity Position
         Leverage Position
         Activity (Efficiency)
         Profitability
         Market Position




                                          14
Liquidity


   (1) Cash Position Indicator:

                             2006                 2007            2008             2009
        City Bank            0.059                0.071           0.055            0.067



                                     Cash Position Indicator
             0.08
                                         0.071
             0.07
                                                                       0.067
             0.06            0.059
             0.05                                       0.055
             0.04
                                                                               City Bank
             0.03
             0.02
             0.01
                0
                      2006             2007           2008      2009




Comment:
There are fluctuations in the Cash Position Indicator ratio of The City Bank Ltd. In
2006, their cash position indicator was 0.059 which in the year 2009 increased to
0.067. Which implies, during 2009 the bank has increased its cash and deposit.
A large cash position is often a powerful signal of a bank’s liquidity, while a small
cash position is a potential warning sign.




                                                 15
   (2) Liquid Securities Indicator:

                               2006             2007                2008                2009
        City Bank              0.124            0.146               0.133               0.111



                             Liquid Securities Indicator
          0.16
                                       0.146
          0.14                                      0.133

          0.12             0.124
                                                                   0.111
           0.1
          0.08
                                                                            City Bank
          0.06
          0.04
          0.02
             0
                    2006           2007        2008         2009




Comment:
There are fluctuations in the Liquid Securities Indicator ratio of The City Bank Ltd.
In 2006, it was 0.124 and in 2007 it has increased to 0.146. But In the year 2008
& 2009, it has decreased to 0.133 and 0.111. The fluctuations occurred because
both total assets and government securities are not increasing at the same rate.
Government securities are the most marketable securities and serves as a
second line of defense after cash if any liquidity crisis arises. So reducing this
security affects the liquidity condition of the bank.




                                               16
   (3) Capacity Ratio:

                              2006                 2007             2008              2009
        City Bank             0.649                0.549            0.603             0.569




                                      Capacity Ratio
          0.66
                           0.649
          0.64
          0.62                                            0.603
           0.6
          0.58
                                                                         0.569
          0.56                                                                   City Bank
                                          0.549
          0.54
          0.52
           0.5
          0.48
                    2006           2007                2008       2009




Comment:

Capacity ratio, which is basically a negative liquidity indicator. We are observing
fluctuations in the Capacity Ratio of The City Bank Ltd. In 2006 Capacity ratio
was 0.649 to 0.569 from the year 2009. Loans and leases are the most illiquid
among all the assets. We know that the more a bank facilitates loans, the more
its earnings go up. But at the same time its liquidity position goes down. The
management should maintain a balance between the earnings and the liquidity




                                                  17
Leverage


   (1) Debt Ratio:

                            2006               2007            2008         2009
         City Bank          0.947              0.941           0.926        0.923



                                Debt to Total Assets
            0.95        0.947
           0.945
            0.94                       0.941

           0.935
            0.93                                       0.926
                                                                          City Bank
           0.925
                                                                  0.923
            0.92
           0.915
            0.91
                     2006           2007         2008          2009




Comment:
The City Bank Ltd has been able to maintain a decreasing debt ratio of 0.947 to
0.923 all through 2006 to 2009. Decreasing of debt ratio is not good from a risk
perspective, because higher leverage means higher earnings. But higher
leverage also implies that the bank is exposed to higher risk. During good times
when earnings are high, financial leverage is beneficial for a bank. But when the
economy goes through recessionary periods, high financial leverage can be very
risky.


                                           18
   (2) Debt to Equity Capital Ratio:

                           2006              2007             2008        2009
       City Bank          17.747            15.962           12.542      12.040



                               Debt to Equity Capital
           20
                      17.747
           18
                                   15.962
           16
           14                                       12.542
           12                                                   12.04
           10
                                                                        City Bank
            8
            6
            4
            2
            0
                   2006         2007             2008        2009




Comment:
The debt to equity capital ratio of the City Bank Ltd decreasing 17.747 to 12.04
all through 2006 to 2009. In 2006 the debt to equity ratio was 17.747 % which
means City bank held 17.75 times of total equity as a long term loan. In following
years it decreasing and ends up in 2009 by 12.04 times. This drop in the ratio
happened because of their equity increased at a higher rate than their total debt.




                                            19
   (3) Interest Coverage Ratio:

                           2006                2007            2008         2009
       City Bank           1.582               1.388           1.555        1.614



                               Interest Coverage Ratio
           1.65
            1.6                                                   1.614
                       1.582
           1.55                                        1.555
            1.5
           1.45
                                                                          City Bank
            1.4
                                      1.388
           1.35
            1.3
           1.25
                    2006           2007            2008        2009




Comment:
There are fluctuations in the Interest Coverage ratio of the City Bank Ltd. In 2006
the ratio was 1.582 times, which means City bank could cover their interest
expenses by 1.582 times with their current level of EBIT. Moreover, its ratio
managed to increase EBIT into 1.614 times over debt in 2009.




                                              20
Activity (Efficiency)



      (1) Tax Management Efficiency

                           2006              2007              2008              2009
        City Bank          0.368             0.425             0.393             0.589



                               Tax Management Efficiency
                0.7

                0.6                                                  0.589
                0.5                  0.425
                0.4                                   0.393
                0.3        0.368                                             City Bank
                0.2

                0.1

                  0
                        2006       2007        2008           2009




Comment:
We can see that from the year 2006 to 2009 the Tax Management ratio of City
Bank Ltd was fluctuating. In year 2004 ratio has 0.368 and then, it has increased
from 0.589 in 2009, which means it has increased its tax deductible investment.
Moreover, they tried to increase their ratio in following years


                                          21
      (2) Expense Control Efficiency

                           2006                    2007             2008              2009
        City Bank          0.246                   0.314            0.288             0.276



                                Expense Control Efficiency
                 0.35
                                           0.314
                  0.3
                                                                          0.276
                 0.25           0.246                      0.288
                  0.2

                 0.15                                                             City Bank
                  0.1
                 0.05

                   0
                         2006           2007          2008         2009




Comment:
City Bank Ltd has managed its expenses very nicely over times. Initially in 2006 it
had 0.246 of operating expenses over total assets. However at the end of 2009
they smartly hold that ratio into 0.276.




                                               22
      (3) Asset Management Efficiency

                           2006             2007                2008              2009
        City Bank          0.056            0.053               0.061             0.057




                             Asset Management Efficiency
                 0.062
                                                       0.061
                  0.06

                 0.058      0.056
                                                                      0.057
                 0.056

                 0.054                                                        City Bank
                 0.052                 0.053
                  0.05

                 0.048
                          2006      2007        2008           2009




Comment:

For The City Bank Ltd we are observing fluctuation in their Asset Utilization ratio
from 2006 to 2009. In year 2006 it has decreasing 0.056 to 0.053 from year
2007. Then it was increasing 2008 at 0.061. In this year bank was successful
enough to utilize their total assets efficiently to generate revenue. But in the year
2009 we are observing a fall in the AU ratio. This happened due to a substantial
increase in their total assets.




                                           23
      (4) Funds Management Efficiency

                         2006              2007             2008              2009
       City Bank         18.75             16.96            13.54             13.04



                         Funds Management Efficiency
               20
               18                  16.96
                        18.75
               16
                                                   13.54
               14
                                                                  13.04
               12
               10
                8                                                         City Bank
                6
                4
                2
                0
                      2006       2007        2008          2009




Comment:
The Funds Management Efficiency is an important factor for calculating ROE.
From the trend we see that the Funds Management Efficiency has decreasing all
through year 2006 to 2009. The reason behind this drop was that bank is not
more depend on borrowed funds rather than on equity capital.




                                        24
      (5) Operating Efficiency Ratio

                          2006                    2007           2008              2009
        City Bank         0.435                   0.512          0.500             0.484



                                 Operating Efficiency Ratio
                0.52

                 0.5                      0.512
                                                          0.5          0.484
                0.48

                0.46

                0.44                                                           City Bank
                                0.435
                0.42

                 0.4

                0.38
                         2006           2007         2008       2009




Comment:
There is a Fluctuation in the operating efficiency ratio of The City Bank from 2006
to 2009. In 2006 the ratio was 0.435. But in the 2007 the ratio was increasing to
0.512 and the following year’s 2008 to 2009 it was decreasing. The declining of
this ratio was because of a significant increase in their total operating expense.




                                               25
      (6) Employee Productivity Ratio

                         2006                2007               2008                  2009
       City Bank      751481.593          630777.069         822362.040            930542.752



                           Employee Productivity Ratio
                1000000
                 900000                                               930542.752
                 800000      751481.593
                 700000                                 822362.04
                 600000
                 500000                    630777.069
                 400000                                                            City Bank
                 300000
                 200000
                 100000
                      0
                          2006       2007         2008         2009




Comment:
In 2006 each employee generated operating income of TK 751481 on average.
In 2007 ratio was decreasing but from 2008 and 2009 the ratio was increasing.
The employee productivity increased because during the year operating income
almost doubled whereas number of employee didn’t increase in such proportion.
But we also have to keep in mind that the automation of various banking
processes also contributed to the increased efficiency of the bank




                                            26
Profitability

      (1) Return on Equity (ROE):

                            2006                2007        2008             2009
       City Bank            9.484              11.949       9.440           13.961



                                      Return on Equity
             16
             14                                                    13.961
                                      11.949
             12
             10
              8        9.484                         9.44
                                                                            City Bank
              6
              4
              2
              0
                     2006           2007           2008     2009




Comment:
The ROE of The City Bank Ltd shows that the share holders are receiving
inconsistent returns throughout the four years. In 2006 the share holder’s of this
bank has earned Tk 9.484 per Tk 100 worth of their investments. In 2007 the
share holder’s of City bank has earned Tk 11.949 per Tk 100 worth of their
investments. In 2008 and 2009, the share holder’s of this bank has earned Tk
9.44 and Tk 13.96 respectively, per Tk 100 worth of their investments. The ratio
has decreased significantly as total equity capital increased at higher proportion
compare to net income after tax.


                                           27
      (2) Return on Assets (ROA):

                          2006               2007             2008              2009
       City Bank          0.506              0.704            0.697             1.071




                                   Return on Assets
                1.2
                                                                    1.071
                   1

                0.8

                0.6                 0.704            0.697
                                                                            City Bank
                0.4       0.506

                0.2

                   0
                       2006       2007           2008        2009




Comment:

The ROA is also showing inconsistent result like the ROE. It shows the
fluctuation through these four years. In 2006 it has Tk 0.506. In 2007 return on
asset was slightly higher than in 2006 and it was Tk 0.704. In 2008, return on
asset was same as in 2007. In 2009 its ratio was Tk 1.071 by utilizing Tk 100
worth of Assets.




                                            28
      (3) Net Interest Margin (NIM):

                             2006               2007            2008           2009
        City Bank            2.533              1.944           2.638          2.708




                                     Net Interest Margin
               3
                        2.533                                          2.708
             2.5
                                                        2.638
               2
                                        1.944
             1.5
                                                                               City Bank
               1

             0.5

               0
                      2006           2007          2008         2009




Comment:
In 2006 the bank made a net interest income of Tk 2.533 by utilizing Tk 100
worth of Assets. In 2007 the company made a net interest income of Tk 1.94 by
utilizing Tk 100 worth of Assets. In 2008 the company made a net interest
income of Tk 2.64 by utilizing Tk 100 worth of Assets. But in year 2008 and 2009
it was increasing. The ratio increased because the difference between interest
income & interest expense was increased at a higher proportion compare to the
increase in total assets.




                                            29
      (4) Net Noninterest Margin (NNM):

                           2006               2007            2008       2009
       City Bank           0.617              0.632           0.435      0.242




                               Net Noninterest Margin
            0.7       0.617          0.632
            0.6

            0.5                                       0.435
            0.4

            0.3                                                  0.242   City Bank

            0.2

            0.1

             0
                    2006           2007           2008         2009




Comment:
Initially City bank had net interest margin of 0.617 times of its total asset.
Between several fluctuations finally bank able to decrease its net interest margin
in 2009. However in 2007 it had highest net interest margin with 0.632 times




                                             30
      (5) Net Operating Margin:

                            2006                2007            2008      2009
        City Bank           3.150               2.576           3.073     2.950



                                    Net Operating Margin
            3.5         3.15                            3.073
                                                                   2.95
              3

            2.5
                                       2.576
              2

            1.5                                                           City Bank

              1

            0.5

              0
                     2006            2007           2008        2009




Comment:

In 2006 City bank made a net operating profit of Tk 3.15 by utilizing Tk 100 worth
of assets. Over the year City bank almost maintain its net operating ratio but it
dropped to Tk 2.95 by utilizing Tk 100 worth of assets in 2009.




                                               31
      (6) Earnings Per Share:

                            2006              2007            2008            2009
       City Bank            20.2              25.14           25.34           52.11



                               Earnings per Share
            60

            50                                                       52.11

            40

            30                       25.14
                     20.2                                                    City Bank
            20                                        25.34

            10

             0
                    2006           2007           2008        2009




Comment:
In 2006 the common stockholder earning per share was Tk 20.2. In 2007 and
2008 EPS was Tk 25.14 and Tk 25.34 respectively. But 2009 earnings per share
rose due to increase in net income after tax and EPS was Tk 52.11




                                             32
Market Position

         (1) Price Earnings (P/E) Ratio:

                          2006                    2007               2008        2009
       City Bank         19.307                  28.848             17.818      14.009



                                        Price Earnings Ratio
                35

                30
                                               28.848
                25

                20                                         17.818
                               19.307
                                                                       14.009
                15                                                              City Bank

                10

                 5

                 0
                        2006            2007            2008         2009




Comment:
We are observing a Fluctuating trend in the P/E ratio of The City Bank Ltd. In
2006, the P/E ratio was 19.037.In year 2007 P/E ratio was 28.848 which were
good for the company. But in 2008 the ratio declined because price per share
decrease at a higher proportion compare to decrease in EPS and 2009 the ratio
also declined because the increase in EPS at a higher proportion compare to the
increase in price per share.




                                                33
         (2) Market Book Value Ratio (M/B):

                          2006              2007            2008           2009
       City Bank          1.831             3.447           1.682          1.956




                              Market Book Value Ratio
            4
                                   3.447
           3.5
            3
           2.5
                                                            1.956
            2
                                                                     City Bank
           1.5        1.831
                                                  1.682
            1
           0.5
            0
                   2006         2007            2008      2009




Comment:
The time series analysis reveals a mixed trend in the M/B ratio. In 2006 the ratio
was Tk 1.83. In 2007 the ratio increase as market share price increased at a
higher proportion where as the book value of the share decreased. The ratio was
found inconsistent. In 2009 it was Tk 1.96 for TK 1 book value of share.




                                           34
         (3) Dividend per Share:

                         2006              2007           2008         2009
       City Bank         10.00             15.00          15.00        25.00



                                   Dividend per Share
                30
                                                             25
                25

                20
                                    15              15
                15
                        10                                            City Bank
                10

                 5

                 0
                       2006        2007            2008     2009




Comment:
In 2006 the shareholder’s got TK 10 as dividend against each share they hold.
But In 2007 & 2008 the ratio was same to Tk 15 against each share they hold. In
2009 it was increased to Tk 25 as dividend against each share they hold.




                                          35
          (4) Dividend Yield:



                             2006           2007               2008          2009
        City Bank            2.564          2.068              3.322         3.425




                                     Dividend Yield
          4
                                                3.322     3.425
        3.5
          3          2.564
        2.5
          2
                                 2.068                                 City Bank
        1.5
          1
        0.5
          0
                    2006       2007        2008         2009




Comment:
Dividend Yield of the City bank Ltd was not consistent during these four years of
analysis. The dividend yield ratio shows the return that the share holder gets
against each taka of investment. It’s a comparison of dividend and market share
price. In 2009 dividend yield of City bank was higher than rest of the four years. .
It is very important ratio for the investor. So increase of this ratio motivate share
holder to invest.




                                           36
Recommendations



After observing all of the ratios I want to suggest investors to buy City Bank’s
share as its performance has been increasing every year. If we look very closely
to its ROA and ROE we come to know that even initially it performed well but in
the middle of the some years not so. Finally those mentioned ratios are some of
the most important indicator of performance, however if we observe every
individual ratios we end up with that City Bank have been improving. As future
expected return is always important to know before investment, based on which
City Bank was more lucrative.


Conclusions


From the overall analysis we see that the overall performance of City Bank is that
much of good. City Bank is generating profit at a good rate and is very attractive
for the investors. Because City Bank is enough capable management has been
in converting assets into net earnings that we see from ROA. On the other hand,
from this bank stockholders have received much net benefit from investing their
capital to this bank as because of bank improve its strong position in ROE in last
few years. Even though there were economic slowdown all over the world and
unstable political condition in Bangladesh but it showed an overall good
performance.




                                        37
Bibliography



  (1) www.thecitybank.com.
  (2) Annual Reports of City Bank
  (3) http://www.dsebd.org
  (4) http://www.investopedia.com

  (5) Peter S. Rose & Sylvia C. Hudgins, Bank Management & Financial Services, 7th
     edition, 2008, McGraw-Hill publications




                                        38
Appendix




   39
     Liquidity Ratios                       2006            2007          2008         2009
01    Cash Position         Cash &
        Indicator        Deposits due
                             from        2811081123      3477567051    3120173304   5142660562
                          depository
                          institutions
                         Total Assets    47445751884 48755403018 57114576058 76466801564
                                            0.059       0.071       0.055       0.067
02   Liquid Securities   Government
                                         5874006642      7094714100    7608214230   8468751198
         Indicator        Securities
                         Total Assets    47445,51884     48755403018 57114576058 76466801564
                                            0.124           0.146       0.133       0.111
03    Capacity Ratio      Net loans &
                                         30789021982 26788466138 34420944980 43486421803
                             leases
                          Total Assets   47445751884 48755403018 57114576058 76466801564
                                            0.649       0.549       0.603       0.569



     Leverage Ratios
                                         2006             2007           2008          2009
01     Debt Ratio         Total
                           Debt
                                     44914847924       45881036032    52897099529   70602567286
                          Total
                          Asset
                                     47445751884       48755403018    57114576058   76466801564
                                      0.94665689        0.94104516    0.926157615   0.923310062
02   Debt to equity       Total
      capital Ratio       Debt
                                     44914847924       45881036032    52897099529   70602567286
                           Total
                          Equity     2530903960        2874366986     4217476529    5864234278

                                     17.74656353       15.96213575    12.54235777   12.03952024
03      Interest
     Coverage Ratio         EBIT     4064785311        4491239799     4917805963    5927624733
                          Interest
                         Expenses
                                     2570088422        3235362655     3162,885370   3671989101
                                     1.581574111       1.388171985    1.554847991   1.614281679



                                                40
       Activity                    2006               2007          2008          2009
     (Efficiency)
        Ratios
01        Tax           Net
     Manageme        Income
           nt       after tax   240021913          343463026     398110184     818719600
      Efficiency        Net
                    Operating
                     Income
                      before
                       taxes    653021913          808463026     1014135297    1388056141
                                0.36755568         0.42483455    0.392561215   0.589831762
02    Expense           Net
      Control       Operating
     Efficiency      Income
                      before
                       taxes    653021913          808463026     1014135297    1388056141
                       Total
                    Operating
                    Revenues    2647337020         2572192720    3510266937    4367880343
                                0.246671242        0.31430885    0.28890546    0.27623029
03     Asset          Total
     Manageme       Operating
         nt         Revenues    2647337020         2572192720    3510266937    4367880343
     Efficiency       Total
                     Assets     47445751884        48755403018   57114576058   76466801564
                                0.055797135         0.05275708   0.061460089   0.057121264
04     Funds          Total
     Manageme        Assets     47445751884        48755403018   57114576058   76466801564
         nt           Total
     Efficiency      Equity
                     Capital    2530903960         2874366986    4217476529    5864234278
                                18.74656353        16.96213575   13.54235777   13.03952024
05   Operating        Total
     Efficiency     Operating
       Ratio        Expenses    1152640131         1316315576    1755346344    2112244711
                      Total
                    Operating
                    Revenues    2647337020         2572192720    3510266937    4367880343


                                              41
                               0.435396069        0.511748426   0.500060643   0.483585754
06   Employee          Net
     Productivit   Operating
       y Ratio      Income     1494696889         1255877144    1754920593    2255635632
                    Number
                    of Full-
                      time
                   Employee       1989               1991          2134          2424
                               751481.5933        630777.0688   822362.0398   930542.7525




                                             42
   Profitability                     2006           2007          2008          2009
      Ratios
01 Return on       Net Income
     Equity         after tax     240021913      343463026     398110184     818719600
      (ROE)        Total Equity
                     Capital      2530903960     2874366986    4,217476529   5864234278
                                  9.483643662    11.94917099   9.439535259   13.96123622
02   Return on     Net Income
      Assets        after tax      240021913   343463026   398110184   818719600
       (ROA)       Total Assets   47445751884 48755403018 57114576058 76466801564
                                  0.505887047 0.704461464 0.697037799 1.070686341
03 Net Interest     (Interest
     Margin          income-
     (NIM)           Interest
                    expense)       1201980897  947898057  1506485004 2070831986
                   Total Assets   47445751884 48755403018 57114576058 76466801564
                                  2.533379384 1.944190794 2.637654182 2.708145161
04     Net     (Noninterest
   Noninterest    income -
     Margin    Noninterest
     (NNM)        expense)   292715992   307979087   248435589   184803646
               Total Assets 47445751884 48755403018 57114576058 76466801564
                             0.61694879 0.631681963 0.434977559 0.241678274
05     Net      (Operating
    Operating    revenues-
     Margin      Operating
     (NOM)       expenses)   1494696889 1255877144 1754920593 2255635632
               Total Assets 47445751884 48755403018 57114576058 76466801564
                            3.150328174 2.575872757 3.072631742 2.949823434
06  Earnings    Net income
    Per Share     after tax  240021913   343463026   398110184   818719600
      (EPS)    Total equity
                   shares
               outstanding    11882273   13662014     15710741    15711372
                                20.2       25.14        25.34       52.11




                                            43
       Market                           2006         2007        2008       2009
   Position Ratios
01 Price Earnings      Price Per
     (P/E) Ratio        Share            390         725         452         730
                          EPS             20          25          25          52
                                     19.30693069 28.84844869 17.81767956 14.00882748
02   Market Book        Market
     Value (M/B)       price per
        Ratio            share          390           725        452         730
                      Book value
                       per share         213         210         268         373
                                     1.831000509 3.447150461 1.681906144 1.955805496
03   Dividend per      Dividend       118822729   204930206   235661119   392784302
     Share (DPS)      Total equity
                        shares
                      outstanding     11882273      13662014   15710741   15711372
                                         10            15         15         25
04   Dividend Yield      DPS             10            15         15         25
                        Current
                      Stock Price        390         725         452         730
                                     2.564102564 2.068252327 3.322259136 3.424657534




                                               44

				
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