Performance of Eastern Bank Limited ORIGINIAL

THESIS ON ‘PERFORMANC EVALUATION OF EASTERN BANK LTD.(EBL)’ (The dissertation report is submitted for the partial fulfillment of the degree of Master of Business Administration) Prepared by MD. SHAFIQUL ISLAM I.D.NO:- 0272930 Program: - MBA Semester: - summer -2011 Supervised by KAMRUL HASAN Assistant professor Department of business administration Southern university Bangladesh. Department of business administration Faculty of business administration Southern university Bangladesh Submission date: / 01/2012 1 Letter of Submission To, The Dean Faculty of Business Administration. Southern university Bangladesh Chittagong. Sub: - submission of dissertation report. Dear Sir, In the processing pages, I have presented a report titled as “performance Evaluation of Eastern bank ltd” This is the most important requirement of MBA program. It has been a very positive and uplifting experience, as I have learnt a lot that would not have been possible otherwise. Finally, I would like to express my sincere administration and thanks for your help while preparing the report. I will be glad to answer any queries that you may have in this regard. Sincerely Yours Md.Shafiqul Islam ID No: 027-29-30 Program: MBA Semester: Summer-2011 Department Of Business Administration. Southern University Bangladesh. 2 Student’s Declaration This thesis on “performance Evaluation of Eastern Bank Ltd” Has been prepared by me, under the direct supervision of Kamrul Hasan, Assistant Professor, Department of BusinessAdministration, Southern University Bangladesh. I have tried to put my utmost sincerity in preparing this report. I would like to declare that it has not been submitted to any University or any institute for acquiring any degree or not submitted for publication. Md.Shafiqul Islam ID No: 027-29-30 Program: MBA Semester: Summer-2011 Department Of Business Administration. Southern University Bangladesh 3 027-29-30 under my direct supervision and guidance. MR. bearing ID no: . I would also like to add that the student made hard work while preparing the dissertation. As per my knowledge goes it was not submitted to any other university or institute. Shafiqul Islam. Acknowledgement 4 . Southern University Bangladesh. has been prepared by MD. a student of MBA. I wish him every success in life.Supervisor’s declaration This is to certify that the thesis on “financial performance analysis through ratio” – a study on eastern bank ltd.Kamrul Hasan Assistant professor Department of Business Administration. who gave me support to finish this report.First of all I pay a special thanks to my almighty that made me able to complete this report. Chittagong. lipi gosh (class fellow). department of business administration. Assistant professor.027-29-30 Program: .MBA 5 . MD. Amran Chy (my class fellow). I pay honor to the teachers for their contribution. But I think there are no other words except thanks. Kamrul Hassan. I acknowledge with deep gratitude to the department of business administration of Southern university Bangladesh. Southern university Bangladesh. I pay gratitude to the supervisor of the report Mr. It is very difficult to express my feelings that helped in completion of this report. Shafiqul Islam ID no: . I also want to give another special thanks to Mr. Chittagong. which can compliment my sentiments. 8th chapter covers the profitability of EBL . forth chapter provides the authority who are responsible for performance evaluation of EBL. 10th chapter shows the overall performance of EBL under balanced score card model and 11th chapter shows the findings .its a good sing for the bank.conclusion and bibliography. 6th chapter shows the long term solvency of EBL . But now they are trying to remove the problem by recruiting more skilled person and efficient management.first chapter covers the Introductory topic of the respective report .Executive summery This report name “financial performance analysis through ratio” – A study on eastern bank ltd is an out come of my knowledge. 5th chapter covers the short term position of EBL during the period (2006-2010). the deposit trend of EBL is going up . There are lots of facilities in EBL as well as there are also some problems in EBL.here we see that. 7th chapter shows the efficiency position of EBL. which I have acquired from this university in MBA program since last two years . The findings of the study are as follows:i) Deposit trend of EBL Particular 2010 2009 2008 2007 2006 deposit 56425 49190 41573 30092 25734 Source: . The report consist of eleven chapters . chart:-33-deposit trend of EBL 60000 56425 49190 50000 41573 40000 30092 30000 25734 20000 10000 0 2010 2008 2006 deposit trend of EBL 6 .second chapter covers the overview of EBL .It has been prepared for the partial fulfillment of master of business administration (MBA) program.recommendation .third chapter covers the different types of techniques of performance evaluation.9th chapter shows the market position of EBL .data have been compiled from annual report of EBL Comment: . this table is also showing an upward trend of deposit utilization or loan and advance of EBL. we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. it is known that every listed commercial bank has to maintain a legal reserve. but we see that EBL does not maintain the requirement of central bank. iv) According to the rules of central bank.data have been compiled from annual report of EBL Comment: .deposit utilization of EBL 60000 58607 50000 40000 30000 20000 10000 0 2010 2009 2008 2007 2006 47668 39662 30962 26008 deposit utilization of EBL iii) According to the calculation of standard deviation of ROA and ROE. because the bank issues more loan than deposit. so it shows inconsistent view. Although the bank is doing well. 7 .ii) Deposit utilization of EBL particular 2010 2009 2008 2007 2006 Deposit 58607 47668 39662 30962 26008 utilization or loan and advance of EBL Source: . which is consist of cash reserve ratio (5.5%) and statutory liquidity ratio (19%) for meeting the liquidity needs and other unexpected crisis faced by the bank. chart:-34. but it has to try minimize the variability of that case. HRM department of EBL also arranges different types of training program to upgrade the efficiency of the employ 8 .data have been compiled from annual report of EBL and calculated by the researcher.82% during the period.025 =54. xi). the overall market position of EBL is showing a fluctuating trend it implies the lacking of condense of the investors.05 40 30 20 10 0 2010 2009 2008 2007 2006 deposit per employee vi). ix). vii).990 =56. xiv).049 deposit/no of employee Source: . Their innovation side of product and services is time befitting. the bank is more depend upon debt in building their capital structure. because the average of loan recovery of EBL is 96. the ROE and ROA of EBL exists a satisfactory level.deposit per employee 60 57.025 54. xiii).61 42.611 =42.486 50 43.486 =43.by this table we also see that the productivity of EBL is showing upward trend. the non –financial performance of EBL is mentionable. deposit per employee:Formula 2010 2009 2008 2007 2006 Deposit per 56425 49190 41573 30092 25734 employee= 973 878 763 690 612 Total =57. chart:-35. the earning spread of EBL is also positive. the loan recovery position of EBL during the period is outstanding. the difference between non –performing loans and the provision of loan losses is large. Comment: . xii). it implies that the bank carries more risk.v). xv. the RWA to deposit is showing lower liquidity position. viii).99 56. the bank issues more loan than deposit. x). besides. EBL has to keep more marketable securities as liquid asset for ensuring both liquidity and profitability. EBL has to give more dividends to the investors for encouraging their investment. 2. 7. The bank has to keep balance between interest sensitive asset and interest sensitive liabilities. The bank has to keep more provision against the loan losses. Although the bank is doing well. The bank to maintain legal liquidity requirement of central bank keep up with their profitability. According to the calculation of standard deviation of ROA and ROE. but it has to try minimize the variability of that case. 4. 9 .Recommendations of the study are as follows:1. 8. First of all. The bank has to give focus on issuing loan by considering the deposit amount. we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. the bank has to raise the equity capital instead of debt for building capital structure. 3. 5. 6. 7 2.9 Introduction Statement of the problem Literature review Objective of the study Scope of the study Methodology of the study Importance of the study Limitation of the study Plan of the study Chapter –two Overview of Eastern bank ltd Company milestones Corporate directory Strategic priority Norms Mission Vision Five years progression report of EBL(2006-2010) Structure of fund collection of EBL for the period (20062010) Structure of fund employment of EBL for the period (20062010) Chapter –three Performance evaluation techniques and procedures Short term solvency ratios Long term solvency ratios Asset management or efficiency measurement ratios Profitability measurement ratios Market position measurement ratios Chapter -four Authorities involved in performance evaluation of EBL Introduction 14-15 16 16-17 18 18 19 19 20 20 Page no 01 02 03 04 05-09 10-12 13 2.5 1.7 1.4 2.6 1.3 3.6 2.9 21-22 23 24 25 26 26 27 28 3.5 29-30 30-31 31-32 32-33 32-33 4.3 1.4 3.2 1.2 2.TABLE OF CONTENTS SL no particular Preliminaries: Letter of submission Student’s declaration Supervisor’s declaration Acknowledgement Executive summery Table of contents List of table and bar diagram Chapter one Introductory note 1.8 1.5 2.8 2.1 1.4 1.2 3.1 3.3 2.1 2.1 34 10 . 2 4.3 5.1 5.5 Top-level management committee structure and their responsibility Executive –level management structure Audit committee of EBL and their responsibility Chapter .3 10.five Liquidity position of EBL Cash position indicator Liquid security indicator Deposit composition ratio Liquid asset to deposit ratio RWA to deposit ratio Credit to deposit ratio Investment to deposit ratio Chapter -six Long term solvency of EBL Debt to asset ratio Debt to equity ratio Time –interest earned or cash coverage ratio Chapter –seven Efficiency position of EBL Operating efficiency ratio Employee productivity ratio Credit to deposit ratio Loan recovery position of EBL Chapter –Eight Profitability position of EBL Return on equity (ROE) Return on asset (ROA) Net interest margin Net operating margin Cost to income ratio Profit to expenditure ratio Chapter -NINE Market position of EBL Earning per share (EPS) ratio Price earning ratio Market –book ratio Chapter –TEN Balanced score card .2 10.1 7.4 8.7 6.2 8.5 8.3 7.3 10.2 6.5 5.4 10.3 4.6 9.1 6.2 9.3 8.3 7.4.Risk measurement and SWOT analysis of EBL Introduction Distinctive features of balanced score card Structure of balanced score card Performance evaluation of EBL based on balanced score card Different types of risk management procedure of EBL 34 34 35 36 37 37-38 38-39 39-40 40 40-41 42 43 44 45 45-46 46 46-47 48 48-49 49-50 50-51 51-52 52 53 54 55 56 56-57 57 58-65 65-68 11 .1 9.4 5.6 5.2 7.1 8.4 5.4 8.2 5.1 10. 1 11.10.Eleven Problems.3 Risk measurement of EBL through relevant ratios SWOT analysis of EBL Chapter.7 11.6 10. Recommendations and conclusion Problems Recommendation Conclusion Bibliography 69 70 71 71-73 74 75 12 .2 11. LIST OF TABLE AND BAR DIAGRAM SL NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 PARTICULAR Structure of fund collection of EBL Structure of fund employment of EBL Cash position indicator Liquid security indicator Deposit composition ratio Liquid asset to deposit ratio RWA to deposit ratio Credit to deposit ratio Investment to deposit ratio Debt to asset ratio Debt to equity ratio Time –interest earned ratio Operating efficiency ratio Employee productivity ratio Credit to deposit ratio Loan recovery position of EBL Return on equity Return on asset Net interest margin Net operating margin Cost to income ratio Profit to expenditure ratio Earning per share Price earning ratio Market –book ratio Non –performing loans to total loans ratio Annual provision for loan losses to total loan ratio Total loan to total deposit ratio Loans to total asset ratio Cash and deposit to total asset ratio Interest sensitive asset to interest sensitive liability ratio Book value of equity to market value of equity ratio Standard deviation of ROE Standard deviation of ROA Deposit trend of EBL Deposit utilization of EBL Deposit per employee 13 . finance.p. (1) SWOT analysis (10) Conclusions (9) Investment (2) Consideration of major features (3) Profitability Performance review (8) Management of financial risk (5) Growth (7) Financial (6) Liquidity (4) Efficiency Figure-1: The stages of performance review Source: Davies and Boczko (2005) 14 . engineering.1. and. research and development. design. The stages of performance review are shown in the following figure. human resources management (Davies & Boczko.1: INTRODUCTION The main aim of a performance review is to provide an understanding of the business. logistics. The most effective performance review is provided from a balanced view of each of the activities of the organization. manufacturing.Chapter -01 Introductory Note 1. which necessarily involves the close cooperation of each role : marketing.149). sales. together with an analysis of the relevant information. 2005. provide an interpretation of the results. The aim of preparing the dissertation report is to connect practical knowledge with the critical aspects. As I have been working under this topic. recording and analyzing of data about the topic that a student goes to learn on the program. Now the world is very competitive. A well designed and implemented financial management is expected to contribute positively to the creation of a firm’s value. solvency and profitability. Further also act as a restrain in financial performance. beside this I come across many others findings which are reflected through this dissertation report. profitability and market position of EBL. Eventually. To make the dissertation report is a significant aspect in the direction of accomplishing the god. During my work I have faced various obstacles by the grace of almighty Allah and by the help of some related person I have overcome some problems successfully. I want to say that the study will help investors and the students who will be interested to know the performance of EBL during the study period this report will help them partially. 15 . long term solvency. Dilemma in financial management is to achieve desired trade off between liquidity. since it does not contribute to return on equity.Finance always being disregarded in financial decision making since it involves investment and financing in short-term period. I have tried my best to use the opportunity to enrich my knowledge on financial performance analyzing system on the bank. Management of working capital in terms of liquidity and profitability management in essential for sound financial recital as it have a direct effect on the profitability of the company. Being a student of MBA during my report preparing period. My findings were mostly related to evaluation of liquidity. MGT efficiency. It is a systematic process for gathering. In this thesis I want to know about the financial performance of eastern bank limited. So everybody has to be expert in both practical knowledge and theoretical knowledge. solidity and fertility of a business. the financial performance of banks has been measured using a combination of financial ratio analysis. the changes over 16 . bench marking. There is a generally accepted relationship between risk and return that is the higher the risk the higher the expected return. Southern university Bangladesh. The analysis attempt to measure the firm’s liquidity. Financial performance analysis is a process of determining the operating and financial character of a firm from accounting and financial statement. which is belonged further (6) credit hours.1. Financial performance analysis is an appraisal of the feasibility. profitability and other indicators that the business is conducted in a rational and normal way.2 STATEMENT OF THE PROBLEM A thesis is highly needed to gain idea. The increasing competition in the national and international banking markets. This report has been prepared as a requirement for the “master of business administration” (MBA) program of southern university Bangladesh. One student needs to go completion a thesis paper. 1. knowledge and experience. Chittagong one of the reputed private university in Bangladesh has international designed the curriculum of the (MBA) course such a way that the international standard semester will be produced. Generally. After completing 57 credit hours. Chittagong. The goal of such analysis is to determine the efficiency and performance of the firm’s management as reflected in the financial records and reports. Simply stated much of the current bank performance literature describes the objective of financial organizations that of earning acceptable returns and minimizing the risk taken to earn this return. Therefore the traditional measures of bank performance have measured both risk and return.3 Literature review Financial performance analysis is vital for triumph of an enterprise. ensuring enough return s to the shareholders to maintain at least its market value. measuring performance against budget or a mix of the methodologies. This report is an Endeavour to evaluate the financial performance of Eastern bank ltd. It is necessary to find out the knowledge gap in the field of the study. Review of literature is an integral part of conducting a research. return on asset and return on equity for profitability performance. All studies are mostly focused on liquidity.Have analyzed the performance of PCB’s vis-à-vis banking sector as a whole. city bank ltd. and the study covered a period of 5years from 1987 to 1991. I have emphasized on the financial performance analysis through ratio of EBL for the period of (2006-2010). Hoque and khan (2001):.a statistical analysis :the authors argued that nationalized banks are very much desirable from social point of view . But no such study has been on specifically Eastern bank ltd. Basically. For credit MGT. They examined the quantum and a growth of total asset. composition of earning asset. Choudhuri and Chowdhury (1993):.towards monetary unions and the new technological innovations herald major changes in banking environment and challenges all banks to make timely preparations in order to enter into new competitive financial environment. during my study period. united commercial bank ltd. students and to those who take interest in this area. solvency and profitability of different types of commercial bank with their dependent and independent variable.have made research on “financial performance of the bank . 17 . The detailed review of the aforesaid research studies reveals that many of the studies have been done on banks financial performance. quantum and classification of asset. Which are pubali bank ltd. national bank ltd. The study was limited to five private commercial banks. credit advanced to economic purpose etc. They expressed that the results of denationalized and privatization in the banking sector of Bangladesh did not indicate clear cut improvement in the efficiency of the banking system. keeping that research gap in mind the present study is planned and it would be of immense help to the policy makers and other decision makers. they assessed the performance of banks in terms of credit – deposit ratio. Ahmed and uddin (1994):. liquid asset to total asset for liquid asset MGT. despite the constraint that these banks can not be as profitable as foreign banks or private commercial banks due to profit seeking motives of letter.Have made a study on “asset structure and aspects of its management in the private commercial banks in Bangladesh. uttara bank ltd. From five point of view this are1. asset-mgt position 4. Z-score model based position. Profitability position 5. Liquidity position 2. To examine the balanced score card.4 OBJECTIVE OF THE STUDY The main objective of this study is to evaluate the over all performance of eastern bank limited. milestone functions and financial performance evaluation. H. To find out problem and recommendation in performance evaluation of EBL. Risk measurement of EBL. 18 . background. To know the performance education techniques and procedures. G. To achieve this main objective the study covers the following objectivesA. C. To examine the short-term solvency/liquidity position of EBL.5 SCOPE OF THE STUDY: Eastern bank ltd is one of the modern and digitalized commercial bank in Bangladesh. To examine the efficiency/asset-MGT ratio of EBL. E.1. F. To examine the profitability of EBL. D. The report covers the organization structure. Long term solvency 3. To work with these five sections I have acquired the knowledge about the financial activities execution done by the bank. B. To examine the long-term solvency of EBL. 1. I. To examine the market value position of EBL. To know the authorities involve in performance evaluation. 1. it will help some related parties and various point of view. c. These are depicted below a.1. 2. First of all. will be beneficial by this report. lender. f. e. Company will also be informed about their strength and weakness. different types of ratios diagram have been used. Such as1. 5. Different books about financial institutes and banks. Finally the employee of the bank also benefited by the report. b. 19 . 4. It has an importance also.6 METHODOLOGY OF THE STUDY: The data needed for conducting the study has been collected from the secondary sources. Foreign investment is influenced by this report. Websites. Financial study of the bank.7 IMPORTANCE OF THE STUDY After completion of the study. investor. this analysis will help the top level mgt and decision making. Previous case study and journal. Bulletin published by the bank. 3. Borrower. The collected data are properly scrutinized and for analyzing the data different techniques like z-score. By this report we the market position of the bank. d. Risk Measurement and SWOT analysis Chapter-11: Problems. 20 .1. 4. Lack of more practical and contemporary data was another short coming.04: Authority involved in performance evaluation of EBL Chapter. 2. Accuracy of analysis: . Time: .9 plan of the study:Chapter. Under the above discussion the next chapter -02 will discuss with the Overview of EBL. All of the data had to be taken from the secondary sources (annual report and internet). Recommendations and conclusion.05: Liquidity position of EBL Chapter.the execution period of the study was quite short to carryout intensive report.03: performance evaluation techniques and procedures Chapter.02: Overview of EBL Chapter. such and 1. 3. the most important thing that the lack of my knowledge and efficiency is the prime limitation of the study.8 limitation of the study This report’s accuracy is minimized due to some limitation. The unavoidable limitations are as follow:1.01: Introductory Note Chapter.the quality of data in this study is limited as the basic of data is taken from delicate source.06: Long term solvency of EBL Chapter-07: Efficiency position of EBL Chapter-08: Profitability position of EBL Chapter-09: market position of EBL Chapter-10: Balanced score card. signed agreement with ADB to become ADB’s partner bank under their trade finance facilitation program supporting guarantee and revolving credit facility.launched own managed cards software and production system. 2006:. 2002:.Chapter -02 Overview of EBL 2.1: company milestones:August 8. 1998:. 1993:.listed with Dhaka stock exchange ltd. 2005:. May 19. November 30.listed with Chittagong stock exchange ltd.obtained permission from Bangladesh bank for offshore banking unit. December 2009:.first “right issue” declared @ 2:1 at par. January 19. June 27. January 25. May 25. 2007:. Bangladesh.established “EBL investment limited” a 99.first online banking operations across all the branches. 2009:. 2004:. to do merchant banking operations. 2009:. Bangladesh.launching of SME banking division. 2005:. for the period 2009-2011.centralization of liability product processes functions at service delivery. July 17. April 2009:.first dividend declared for income year 1997. February 13. March 20.date of commencement of banking operations.commencement of investment banks operations. 1992:.launched “priority banking” for premium customer segment.commencement of operation of offshore banking unit. June 6. 2003:. 21 . September 11. August 16. 2009:. 2006:. March 5. 2004:. July 1.centralization of trade services.99% owned subsidiary. 2004:. November 9. November 12.awarded “super brand” by super brand inc. 2008:.date of incorporation. April 19. 2006:. April 26.became partner bank of IFC under global trade finance program to support EBL handle complex trade transactions.registration of EBL 1st mutual fund with Securities and Exchange Commission.3 billion.authorized share capital increased to BDT 3. 1992:. awarded “most active GTFP issuing bank in south Asia” by IFC of World Bank group. 2.awarded 2nd position for annual report 2009 in the “best published accounts” by ICAB and conferred a “certificate of merit “award for “best presented accounts and corporate governance disclosures awards 2009” by SAFA. world one of the renowned core banking solution.EBL shares denominated to Tk10 per share with market lot of 200 shares first traded in the DSE.March 1. August 29. 2010:. April 2010:.first bank in Bangladesh to launch universal banking system.2 corporate directory:- 22 . 2010:.acquired 60% shares of a brokerage house “LRK securities limited” which was renamed afterwards as “EBL security limited”. April 4. 2010:. December 2010:. Date of incorporate of EBL is august 8. Paid up capital: TK 2920811400(292081140 ordinary shares of TK 10 each).market lot is 200 each and stock symbol is EBL. 2010) Authorized capital: TK 1200000000(1200000000 ordinary shares of Tk 10 each). liability and losses of erstwhile bank of credit and commerce international limited as per BCCI reconstruction scheme 1992 of Bangladesh bank. 1992 and commencement date of banking operation is august 16.3 strategic priority:- 23 . Registered and head office Jiban bima bhaban 10. Company registration number C-22554(961)/92 Bangladesh bank license number BL/DA/5926/92 Capital (December 31.Name of the company Eastern bank limited.com. Stock exchange listing Ordinary share of the bank is listed with both Dhaka stock exchange and chittagong stock exchange limited .ebl. Accounting year end December 31.com Web. cable: Eastbank e-mail:info@ebl-bd. asset. Bangladesh Telephone: 880-2-9556360 Swift: EBLDBDDH. www.shares of EBL are categorized as A in the stock exchange . 1992. Legal form A public limited company incorporate in Bangladesh with primary objective to carry out all kinds of banking business in and outside Bangladesh after taking over the business.bd 2. dilkusha commercial area Dhaka -1000. 4 Norms:- 24 . Cost championship. Careful penetration in the capital market. Improve quality of human capital by strengthening their competencies. and processes. Focus on creating sustainable enterprise value not just making profits.Put all out emphasis on deposit growth Maintain asset quality with strengthened risk management facing above average growth projections. procedures. Increased focus on corporate social responsibility. 2. Pursue inorganic growth M&A. Increase intrinsic value of the company by strengthening internal controls through installation of clearly laid down policies. Lower cost of deposit by strategizing mix and offering innovation products. Increase non funded business to further improve return on investment. Diversify corporate business by leading participation in PPPs. Continue to maintain world class IT infrastructure to deliver superior service to our customer. norms. We do not abuse information power. We respect every relationship. We conform to all laws.5: Mission:- 25 . We encourage two way communications. celebrate results. Integrity we say what we believe in. We use customer satisfaction to accelerate growth. Responsible Corporate citizen we are tax-abiding citizen. Commitment we know our roadmap. We believe in continuous improvement. We promote protection of the environment for our Children. We recognize achievements. rules. sentiments and Values of the land. We believe in change to bring in timely solution. We empower our people. Openness we share the business plan. We do not wait to be told. 2.Service excellence we passionately drive customer delight. Trust we care for each other We share learning /knowledge. We will deliver service excellence to all our customers. We will ensure to maximize shareholders value. 2.8 structure of fund collection of EBL Table:-01 26 . procedures And training to maintain a cohesive and professional Team in order to achieve service excellence. 2.6 Vision:To became the bank of 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 Services in Bangladesh. We will create an enabling environment and embrace a Team based culture where people will excel. both internal and external. We will constantly challenge our systems. 389 8.766 5.29 Investment 16.data have been compiled from annual report (2006-2010) Comment: .51 6.Source fund Equity Borrowing s Deposit Others total Fund collection of EBL for the period (2006-2010) of 2006(%) 2007(%) 2008(%) 2009(5) 2010(%) 9.976 11.319 6.28 100 average 10.54 9. borrowings and others.331 14.22 71.fund collection of EBL 80 60 40 20 0 equity borrowings deposit others 2.28 76.9 structure of fund employment of EBL Table:-02 Fund employee of EBL for the period (2006-2010) Uses of 2006(%) 2007(%) 2008(%) 2009(%) 2010(%) average fund Loans 72.644 70.99 100 9.287 74.IT is revealed from the table that deposit variable consumes highest percentage of fund followed by equity.data have been compiled from annual report (2006-2010) Comment: .18 16.45 6.087 100 Source: . chart:-01 .599 15.425 72.85 10.15 100 12.25 12.834 asset total 100 100 100 100 100 100 Source: .815 72.47 6.71 8.it is revealed that loan variable consumes the highest percentage of fund followed by others assets and investment.063 12.98 72.663 19.614 9.723 100 8.40 4.796 12.892 100 14. 27 .60 11.25 71.67 76.726 11.54 68.399 17.875 Others 11.288 68. 28 .chart:-02-structure of fund employment o EBL 80 60 40 20 0 loans investment others Under the above discussion the next chapter-03 will discuss with the performance evaluation techniques and procedures. The ratio is defined as Current ratio = current asset/current liability B. Some of the inventory may later turn out to be damaged. liquidity ratios are particularly interesting to short term creditors.a very short term creditor might be interested in the cash ratio. every category is discussed briefly:3. Basically this study is going to try the evaluation of the financial performance of EBL through ratio. The formula is Cash ratio= cash /current liability 29 . These financial ratios are traditionally grouped into following categories – 1. Consequently these ratios focus on current asset and liabilities.inventory is often the least liquid current asset. The primary concern is the firm’s ability to pay its bills over the short run without undue stress. For obvious reasons. It’s also the one for which the book values are least reliable as measures of market value. we will discuss the various financial ratio. Quick ratio: =current asset –inventory/current liability C. cash ratio: .1 short term solvency ratios: . Profitability ratio 5. Efficiency management ratio 4. A. which are used in evaluating financial performance of a firm. those are used in evaluating the performance. current ratio: .Chapter -03 Performance evaluation techniques and procedures Prelude: .short term solvency ratios as a group are intended to provide information about a firm’s liquidity. So in this chapter. Short term solvency ratio 2. Market value ratio Now.generally there are some techniques. Long term solvency ratio 3. quick or acid test ratio: . Because the quality of the inventory isn’t considered.one of the best known and most widely used ratios is the current ratio. 3 Asset management measures: . Because interest is most definitely a cash outflow. time interest earned:-another common measure of long term solvency is the time interest earned ratio.D. Inventory turnover = cost of goods sold /inventory B.our inventory measures give some indication of how fast we can sell product. cash coverage ratio: . divided by 365days. For these reasons the long term debt ratio is often calculated as:Long term debt ratio = long term debt /long term debt+total equity C. Because the short term will constantly be changing. The formula is:- 30 . The reason is that deprecation. Net working capital to total asset ratio =net working capital /total asset E. A. a.total debt ratio takes into account all debts of all maturities to all creditors.frequently. a non cash expense has been deducted out. One way to define the cash coverage ratio is Cash coverage ratio = EBIT+depreciation /interest 3. receivable turnover: . interval measure ratio= current asset /average daily operating cost Average daily operating cost is measured by total cost excluding depreciation and interest. The formula is:Time interest earned = EBIT /interest D.net working capital is frequently viewed as the amount of short term liquidity a firm has. This is not really a measure of cash available to pay interest. We now look at how fast we collect on those sales.long term solvency ratios are intended to address the firm’s long run ability to meet its obligation.a problem with (tie) ratio is that it is based on (EBIT). The formula is:Total debt ratio = total asset –total equity /total asset Debt-equity ratio = total debt/total equity B. 3. total debt ratio: .2 long term solvency: . long term debt ratio: . net working capital to total asset ratio: . We consider three commonly used measure and some variations. financial analysis are more concerned with the firm’s long term debt than its short term debt.these are intended to describe is how efficiently a firm uses its assets to generate sales. Receivable turnover = sales /account receivable c. Asset turnover ratio: . If it is getting lower.ROE measures banks profitability by revealing how much profit a bank generates with the shareholders investment.the formula is ROA= net income /total asset C. Total asset turnover = sales /total assets D.4 Profitability ratio:A. operating efficiency ratio: . It helps to determine the efficiency of a bank in terms of employees. It is the cost required to generate each dollar of revenue. B. It is good for the bank and its shareholder’s. Because interest expenses were greater than the amount of returns generated by investment. An increase means the company is losing a large percentage of its income to expense. The equation is Employee productivity ratio = operating profit /no of employee 3.the ratio measures the level of income that each employee generates. A negative value denotes that the firm did not make an optimal decision. The higher the percentage is better. employee productivity ratio: .the efficiency ratio gives us a measure of how effectively a bank is operating. return on asset: . This is the ratio potential investors may look at when deciding whether or not to invest in the company.it examines how successfully a firm’s investment decision is compared to its debt situations.Net interest margin: .ROA measures the efficiency with which the company is managing its investment in asset and utilizing them to generate profit. return on equity: . The equation is Operating efficiency ratio = operating expense / total revenue E. because that means the company is doing a good job using its assets to generate sales . The equation is 31 .there are two formulas for fixed asset and total asset.is a measurement of the difference between the interest incomes generated by banks and the amount of interest paid out to their lenders . The formula is ROE = net income /total equity It measures the return on the money the investors have put into the company. NOM= total operating revenue –total operating expenses /total asset F. (AU)= total operating revenue /total assets k. net income after tax. earning per share: . A higher equity multiplier indicates higher financial leverage . EM= total asset/total equity capital 32 .the ratio shows a bank total asset per dollar of stockholders equity. EPS= net income after taxes /no of share outstanding g. EPS serve as an indicator of company profitability. Tax management ratio: . Equity multiplier: .NIM= interest income from loan –interest expense on deposit /total asset d. The higher the net profit margin is the more effective the company is at converting revenue into actual profit. NPM= net income /sales h.it tells investors the percentage of money a company actually earns per dollar of sales.the portion of a company’s profit allocated to each outstanding share of common stock. Expense control efficiency: . Net operating margin: .its a measure of operating efficiency and expense control.it is expressed as a percentage of how much non interest revenue the bank are earning minus the non interest expense NNIM= non interest revenue –non interest expenses/total asset e. j. Net non interest margin: .a measure of how profitability the bank is operating. . And hence cash. Asset utilization ratio: .it indicates the portion of revenue after the operating expense is deducted . It indicates what portion of operating income generates minimize i. The higher the ratio the more effectively assets are used to generate revenue. The ratio tells how well a company converts revenue from core operation into actual profit.it reflects the use of security gains or loss to tax exposure.which means the bank is relying more on debt to finance its assets. It tells an investor how much of the company’s profit belongs to each share of stock.it measures the rate at which a business is able to turn assets into sales. Net profit margin: . it is a measure of the price paid for a share relative to the Annual profit earned by the firm per share.3. If the balance sheet assets per share are much larger than the share price. It gives us an indication of the confidence that investors have in the future prosperity of the business. which is used in evaluating the performance. this is taken to be a buy signal. market –book ratio: . Under the above discussion the next chapter -04 will discuss with the Authorities involved in performance evaluation of EB 33 . price earning ratio: . Market –book ratio = market value per share/book value per share All of these are the ratios.it measures how much a bank is worth at present in comparison with the amount of capital invested by current and past stockholders into it. P/E= price per share/earning per share B.5 Market value ratio:A. mid level.PRESIDENTS ASST. who are responsible for evaluating the performance of their respective area. strategy. determining goal. or manual. Execution level is the main mechanism of a bank.Chapter -04 Authorities involved in performance evaluation of EBL 4. Basically these manual are divided into top level or decision making level. different types of committee are existing here in EBL. budget etc for future of the bank. Because this level directly related to implementation of the plan.2 top levels MGT committee structure of EBL is shown below:- MANAGEMENT COMMITTEES ALMC BORC MANCOM EMT BRMC IC PC BIU From the table we can see that.1: Introduction:. Mid level MGT involves in executing and monitoring of the activities to ensure the fulfillment of the demand of high command. Top level MGT is responsible for taking decision. 4. 4. all of these parties are involved in performance evaluation from their respective point of view.3 EXECUTIVE AUTHORITY STRUCTURE:- EXECUTIVE COMMITTEE EXECUTIVE PRESIDENTS DEPUTY EX.every bank has specific organizational structure. Regarding this study.PRESIDENTS EXECUTIVE VICE PRESIDENTS SENIOR VICE PRESIDENTS VICE. and execution level. VICE –PRESIDENTS PRENCIPAL 34 . a. Review the status of classified SME and consumer’s loan. the audit committee of the board of EBL was formed by the board of directors and was last reconstituted in April 2010. chartered accountants. c. To review the activities and organizational structure of the internal audit function and ensure that no unjustified restrictions are made. If any detected are duly acted upon by the MGT in running the affairs of the bank.SEC/CMRRCD/2006158/ADMIN/02-08 dated 20.in compliance with the BRPD circular no. Review the annual report and overall financial health of the bank. 35 . The united Endeavour of these parties is ensured the performance evaluation of EBL. Review the compliance and related risk level of branches and various departments. d. 12 dated 23 December 2002 of Bangladesh bank and sec notification . Review the efficiency and effectiveness of internal audit function.4 AUDIT COMMITTEE OF EBL:Composition and qualification: . Review the performance of auditing and their audit and MGT reports by the external auditors. Review the status of the pending guarantee files. on the issues related to MGT of loan documentation etc. b. h.STAFF 4. i. e. Review the status of report findings of SF Ahmed and co. February 2006. Following are the major responsibilities of the audit committee of EBL. f. g. Review that findings and recommendations made by the internal auditors for removing the irregularities. The bank must ensure adequate amount of liquidity in the banks asset so as to meet any claims up it in cash on demand. their management and position in the bank.03% 2009 2008 2007 2006 average 1018 69870 =14. Evaluation: . Generally.data have been compiled from annual report of EBL.this chapter covers the liquidity position of EBL.from this table. Liquidity management is a very important to a bank for its smooth running.70% 3094 35934 =8.Under the above discussion the next chapter -05 will discuss with the Liquidity position of EBL. Liquidity management refers to the maintenance of adequate degree of liquidity for all the time it faces obvious difficulties. Here we discuss the different types of liquid assets. Now we will try to expose the liquidity position of EBL by using some relevant ratios during the study period.the calculations have been made by the researcher. Chapter-05 Liquidity position of EBL Introduction: . The reason behind this trend is the interest rates on deposit in other institutions are moving up and down.74% 3894 40131 =9. Note: . 36 .1 cash position indicator:Table:-03 Cash position indicator of EBL for the period (2010-2006) In million BDT formula 2010 Cash position = Cash +deposit/total 8234 assets 82053 =10. 5. then the bank is interested to deposit his cash in depository institution and vice-versa. liquidity refers to the ability of a bank to raise a certain amount of fund at a certain cost with in a certain period of time (Burns. It implies that when interest rate is increased.57% 6924 54351 =12.61% 11. 1962). it is clear that the cash position of EBL is showing a fluctuating trend.13% Source: . 74 9.2 liquid security indicators:Table -04 Liquid security indicator of EBL for the period (2010-2006) In million BDT formula 2010 Liquid security=govt.the calculations have been made by the researcher.06% =8.7 8.04 8. Note: .security/total asset 6828 2009 7716 2008 4923 2007 3312 2006 5620 average 82053 69870 54351 40131 35934 =8.04% =9.64 5.25 15.25% =15.3 deposit composition ratio:Table -05 Deposit composition ratio of EBL for the period (2010-2006) In million BDT Formula 2010 Deposit composition= Demand deposit /time 5522 deposit 2009 2008 2007 2006 average 4917 4393 3280 3257 37 . Basically it is depend upon the return of the investment. Evaluation: .32 9.from the table.chart:-03.06 8.64% =10. chart:-04-liquid security indicator 20 15 10 5 0 2010 2009 2009 2007 2006 11.data have been compiled from annual report of EBL.46% Source: .cash position indicator 15 10 10.32% =11.61 5.03 5 0 2010 2009 2008 2007 2006 14.57 12. it is clear that the liquid security indicator ratio shows a fluctuating trend. from the table.95% average =32.95% =14.data have been compiled from annual report of EBL. It implies that the bank is having greater deposit stability and a lesser demand for liquidity chart:-05-deposit composition ratio 20 19.27% 2008 1294 41564 =31.05 14.95 10 5 0 5. =16. 38 .16 deposit com position ratio 2010 2008 2006 16.71% Source: . Note: . it is evidenced that the liquid asset to deposit ratio of EBL during the study period is showing a fluctuating trend.from the table we are observing a slightly declining trend in the deposit composition ratio.data have been compiled from annual report of EBL. The better the ratio the better the liquidity position of a bank.the calculations have been made by the researcher. Note: .78% =15.24% =19. This is a positive liquidity indicator for the bank.01% 2009 1931 49189 =39.16% Source: .05% = 16.04% Evaluation: .4 liquid assets to deposit ratio:Table -06 Liquid assets to deposit ratio of EBL for the period (2010-2006) In million BDT Formula Liquid asset to deposit =liquid asset /total deposit 2010 1806 56425 =32. This ratio indicates that how much portion of deposit is occupied by liquid asset.the calculations have been made by the researcher.78 15 14.24 15.36947 33259 29192 20201 16992 =14.15% 2007 7821 29878 =26. Evaluation: .17% 2006 8984 25699 =34. 85 1.RWA to deposit ratio 2 1.85 =1.15 26.5 1 0.the calculations have been made by the researcher.01 0.17 liquid asset to deposit ratio 5.5 0 2010 2008 2006 1.data have been compiled from annual report of EBL.49 =0.5 RWA to deposit ratio:Table-7 RWA to deposit ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 2006 average RWA to deposit 10444 73316 41315 30687 25721 =RWA/total 56425 49190 41573 30092 25734 =1.99 =1.01 39. chart:-07.27 34. it is evidenced that the RWA to deposit ratio of EBL is increasing The greater the ratio indicates the lower amount of liquidity position of the bank.99 1.49 0.95 31.from the table. Evaluation: .01 =0.999 RWA to deposit ratio 39 .999 Source: .26 deposit =1. Note: .chart:-06-liquid asset to deposit ratio 40 30 20 10 0 2010 2008 2006 32. data have been compiled from annual report of EBL.the calculations have been made by the researcher.7 investments to deposit ratio:Table -9 Investment to deposit ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 2006 average Investment to 9827 8806 5324 3456 5889 deposit= 56425 49190 41573 30092 25734 Investment/total =17. we see that in 2010.41% =17.06% =100.data have been compiled from annual report of EBL.87% =96.:. but same time banks fall into the liquidity crisis.91% =95. 2007. here the amount of loan is greater than deposit. Note: .52% deposit Source: . Evaluation: .credit to deposit ratio 104 103.06 100 98 96.from the table. 40 . Note: .91 96 95. chart:-08. more loans ensure more profitability. We know that.40% =102.02% deposit Source: .the calculations have been made by the researcher.87 102.89 102 101. we see that in 2006 the investment is higher than other years .91% =16.89% =101.4 94 92 90 2010 2008 2006 credit to deposit ratio 5. Evaluation: .57% =22.6 credit to deposit ratio:Table -8 Credit to deposit ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 2006 average Credit to 58607 47668 39662 30962 26008 deposit=total 56425 49190 41573 30092 25734 credit /total =103.5.EBL constantly invested a little portion of his total deposit.90% =12.81% =11.from the table. 2006. These ratios are showing a declining liquidity position of EBL during the study period. Under the above discussion the next chapter-06 will discuss with the Long term solvency of EBL.9 15 12.91 20 17.chart:-09-investment to deposit ratio 25 22.4117. Their loan to deposit ratio is also showing an alarming trend. 41 .57 10 5 0 2010 2008 2006 investment to deposit ratio Conclusion: .81 11.after completion this chapter we have found some results. It implies that how much the bank is able to meet his debts by his assets.1 debts to asset ratio:Table -10 Debts to asset ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Debt to 69970 61441 49618 36303 asset 82053 69870 54351 40131 =total =85.29 90.this chapter covers the long term solvency of EBL.77% average =89.from the table. Long term solvency indicates the strength and weakness of a bank in long run.94 debt to asset ratio 86 85.77 87. we will try to find out the long term solvency of EBL by using some relevant ratios during the study period.the calculations have been made by the researcher.46% Debt/total asset Source: . Note. we see observing a very slight decreasing trend in this ratio.29% =90.27 84 82 2010 2008 2006 42 .data have been compiled from annual report of EBL. EBL has to try minimizing his risk by reducing his debt. Long term solvency refers to the ability of a bank to meet the obligation in long run. 2006 32620 35934 =90.4690. 6.27% =87.15% Evaluation: .94% =91. Now. chart:-10-debt to asset ratio 92 90 88 91.Chapter -06 Long term solvency of EBL Introduction: . 95 =2.83 times average =2. Note: .the calculations have been made by the researcher.the calculations have been made by the researcher. That means leverage and overall risk is decreasing for the bank.03 times times times times Source: .48 debt/ Total equity Source: .29 debt to equity ratio 10. It implies that the interest payment ability of the bank is increasing year to year.6.from the table.3 time –interest earned ratio:Table -12 Time –interest earned ratio of EBL for the period (2010-2006) In million BDT Formula Time – interest= EBIT/interest 2010 2009 2008 2007 10968 8916 7154 5093 4003 3899 3675 2498 =2.data have been compiled from annual report of EBL. 2006 3963 2160 =1.48 9.29 =10.48 =9. 2006 32620 3314 =9.from the table.79 =7.27 =1. the (TIE) ratio of EBL is showing an increasing trend.16 times Evaluation: .74 = 2.57 Evaluation: . chart:-11-debt to equity ratio 12 10 8 6 5.2 Debt to Equity ratio:Table -11 Debts to equity ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Debt to 69970 61441 49618 36303 equity 12083 8429 4733 3827 =total =5. Note: .48 9.data have been compiled from annual report of EBL. it is clear that the debt to equity ratio of EBL is showing a decreasing trend.84 6.79 4 2 0 2010 2008 2006 7. It’s a good sign for the bank. 43 .84 average =8. In the mean time the cash coverage ratio of EBL is not enough to fulfill his due.chart:-12-cash coverage ratio 3 2.74 2.83 cash coverage ratio 2010 2008 2006 Conclusion: . Under the above discussion the next chapter-07 will discuss with the Efficiency position of EBL.95 2. 44 .27 1.03 1.5 1 0.5 0 2.5 2 1. the bank is trying to reduce his debt by increasing his equity capital.after completion this chapter we see that. 72% cost/operating revenue Source: .10% =35. Here we are going to try disclosing the efficiency position of EBL by using some ratios during the study period.Chapter -07 Efficiency position of EBL Introduction: . actual results which is compared by the standard.operating efficiency ratio 36 35 34 33 32 32.13. efficiency means the ability of an individual.67% average =34.this chapter covers the efficiency position of EBL. or an organization how it treats with his work.60% =33. 7. Generally.6 35. Note: .54% during the study period. the operating efficiency ratio of EBL is showing a fluctuating trend.54% Evaluation: .62 35. chart:.62% =35. 2006 753 2110 =35.data have been compiled from annual report of EBL. it is shown that.from the table.the calculations have been made by the researcher.1 operIntroduction: ating efficiency ratio:Table -13 Operating efficiency ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Operating 2073 1649 1318 951 efficiency 6460 4630 3701 2820 =operating =32. this Also a good indicator of efficiency. Here the MGT has to give more attention to minimize the ratio as much as possible. An other hand we can also say that how properly an organization used his resources to generate the profit.1 31 30 2010 2008 2006 33. The average is 34.67 45 .72 operating efficiency ratio 35. its effort ness. 87% =96.39 =3.data have been compiled from annual report of EBL.22 million average =3.data have been compiled from annual report of EBL.02% 46 . chart:-14.12 3 2.22 2 1 0 2010 2008 2006 employee productivity ratio 7.the calculations have been made by the researcher. 2006 1358 612 =2.89% loans/total deposit Source: . Note. 2006 average 26008 25734 =101.06% =100.13 =2. we see that every year the number of employee is increasing.from the table.14 Employee productivity ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Employee 4410 2980 2386 1876 productivity 973 878 763 690 =operating =4.3 credit to deposit ratio:Table-15 Credit to deposit ratio of EBL for the period (2010-2006) In million BDT formula 2010 2009 2008 2007 Credit to 58607 47668 39662 30962 deposit= 56425 49190 41573 30092 total =103.7.2 employee productivity ratio:Table.53 4 3.91% =95.71 profit/no of million million million million employee Source: .40% =102.the calculations have been made by the researcher.13 3.employee productivity ratio 5 4. as well as the productivity of the employees is also increasing.393.53 =3. Note: .12 million Evaluation: .71 2. we see that .91 96 95.54% =96.69 96.data have been compiled from annual report of EBL.06 100 98 96.4 loan recovery position of EBL:Table -16 Loan recovery position of EBL for the period (2010-2006) In million BDT formula 2010 2009 2008 2007 Total 58607476683966230962loans-non 1169 1172 1309 1334 performing 58607 47668 39662 30962 loans/total =98.54 96.the calculations have been made by the researcher.it implies that their employees are more effective in expending their loans and advances activities.89 102 101.Evaluation: .credit to deposit ratio 104 103.69% =95.69 95.69% loans Source: . It implies that the strategy of loan recovery of EBL is very effective and strong.82% Evaluation: .from the table.from the table. the recovery position of EBL is outstanding. Note.2 loan recoery position of EBL 47 . chart:-16-loan recovery position of EBL 98 98 97 96 95 94 2010 2008 2006 97.00% =97.because their effort of selling loans is always greater than deposit .87 102. chart:-15.4 94 92 90 2010 2008 2006 credit to deposit ratio 7. 2006 26008986 26008 =96.the efficiency of EBL is outstanding .20% average =96. Strong earnings and profitability profiles reflects the banks capacity to absorb losses by building the capital bases and through financing expansion programs and paying adequate dividends to its shareholders. Chapter -08 Profitability position of EBL Introduction: .07% average =18.profitability is an important index of operational efficiency of an organization. 2006 513 3190 =16.64% =11.17 Return on equity of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Return on 2425 1455 798 419 equity=net 10257 6581 4281 3572 income/total =23.73% Average equity Source: .10% =18. the ROE ratio of EBL is showing an increasing trend. it is shown that. It implies that. 8.1 Return on equity:Table.from the table.the calculations have been made by the researcher. 1977).64% =22. Note: . Analysis of profitability of an enterprise provides an insight in to effectiveness of utilization of funds in the enterprise and also managerial efficiency (srivastava.data have been compiled from annual report of EBL.Under the above discussion the next chapter-08 will discuss with the profitability position of EBL. the higher return on investment during the period of study.43% Evaluation: .this chapter covers the profitability position of EBL. 48 . return on equity 25 23. Evaluation: .1 18.68% =1.34% =1.5 0 2010 2008 2006 2006 513 31300 =1. chart:-18-return on asset 3. we see that the ROA ratio of EBL is showing an increasing trend.73 16.5 2.19 3 2.63 1.data have been compiled from annual report of EBL.chart:-17.3 net interest margin:Table -19 49 .988% return on asset 8.19% =2.5 3.1 1 0.5 1.07 return on equity 8.64 11. Note: .the calculations have been made by the researcher.2 return on asset:Table -18 Return on asset of EBL for the period (2010-2006) Formula 2010 2009 2008 2007 Return on 2425 1455 798 419 asset=net 75963 62235 47401 38087 income/total =3. It implies that the bank is properly utilizing assets and generating a good return during the study period.68 1.from the table.34 2 1.10% Average asset Source: .64 20 15 10 5 0 2010 2009 2008 2007 2006 22.63% In million BDT average =1. Note: .80% =3.data have been compiled from annual report of EBL.25 3.data have been compiled from annual report of EBL.25% =3.37% =4.the calculations have been made by the researcher.26% =4.74% Evaluation: .65% Operating income/total asset Source: .net interest margin 5 4 3 2 1 0 2010 2009 2008 2007 2006 4.the calculations have been made by the researcher.8 3.Net interest margin of EBL for the period (2010-2006) In million BDT formula 2010 2009 2008 2007 Net interest 2973 2317 1551 1312 Margin=net 66942 54478 40768 33728 interest =4.44 4.from the table.89 2. It means that the spread between the interest income and interest expense has been increasing compared to average earning assets.48% 50 .37% =4.4 net operating margin:Table -20 Net operating margin of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Net 4410 2980 2386 1870 operating 82053 69871 54598 40204 margin=net =5. 2006 670 29100 =2. the NIM ratio of EBL is showing an increasing trend. 2006 1358 35971 =3.3 net interest margin 8.44% =4.77% average =4. chart:-19.30% average =3. Note: .89% income/total Average earning asset Source: . 72% 2006 average 753 2110 =35.65 3. But in 2010 the ratio is better than other years. Note: .37 4.5 cost to income ratio:Table -21 Cost to income ratio of EBL for the period (2010-2006) In million BDT Formula Cost to income=operating Cost/total revenue 2010 2073 6460 =32. chart:-21. MGT has to try maximizing the ratio. Because the expenditure of the bank vary from year to year.67 33. Evaluation: .6 35. the cost to income ratio of EBL is showing a fluctuating trend.72 cost to income ratio 2010 2008 2006 51 . chart:-20-net operating margin 6 5 4 3 2 1 0 2010 2009 2008 2007 2006 5.37 4.1 31 30 35.cost to income ratio 36 35 34 33 32 32.26 4.from the table.62 35.from the table.67% =34.10% 2009 1649 4630 =35.62% 2008 1318 3701 =35.data have been compiled from annual report of EBL. the NOM ratio is showing a consistent trend during the study period.Evaluation: .54% Source: .the calculations have been made by the researcher.60% 2007 951 2820 =33.77 net operating margin 8. It implies that their profitability is going up.after completion this chapter we see that.12 profit to cost ratio Conclusion:. That’s a good sign for the bank.the calculations have been made by the researcher.8. the ratio is going up.05 68.12% average =75.NIM is showing upward trend and cost to income and profit to cost ratio are showing downward trend. 2006 513 753 =68.23 60.23% =60.54 44. Note: .6 profit to expenditure ratio:Table -22 Profit to expenditure ratio of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 Profit to 2425 1455 798 419 cost=net 2073 1649 1318 951 profit =116.ROA.05% after tax/total cost Source: .from the table.54% =44. chart:-22-profit to cost ratio 120 116.9 100 80 60 40 20 0 2010 2009 2008 2007 2006 88. So it’s a good sign for the bank.9% =88.data have been compiled from annual report of EBL. 52 .56% Evaluation: . their ROE. Under the above discussion the next chapter-09 will discuss with the Market position of EBL. it implies that the profit is exceeding the cost. in the mean time their cost trend is going down. this chapter covers the market position of EBL. the EPS ratio of EBL has grown at satisfactory level.3 5.18 earning pershare 53 .012 Evaluation: . chart:-23. share value and confidence of the investors on the company’s share is expressed the market position of a firm.18 average =6.02 share outstanding Source: .1 earning per share:Table -23 Earning per share of EBL for the period (2010-2006) In million BDT Formula 2010 2009 2008 2007 EPS=net 2425 1455 798 419 profit after 292 250 139 104 tax/no of =8.82 =5.82 5. 9. Note: .the calculations have been made by the researcher.from the table.Chapter -09 Market position of EBL Introduction: . Market position refers to the stability of a company in the market. Here we will try to uncover the market position of EBL by using some relevant ratios during the study period.earning per share 10 8 6 4 2 0 2010 2009 2008 2007 2006 8. Basically the increase of EPS is the result of raising the faith of shareholders of the bank. That means market value of equity of a company.02 6.30 =5.74 =4. 2006 513 83 =6.data have been compiled from annual report of EBL.74 4. chart:-24.02 =26. That time the investor’s confidence on the bank was very high.59 2009 64.76 =1.82 =11. But in 2008.price earning ratio 30 25 20 15 15.43 33.40 8.2 price earning ratio:Table -24 Price earning ratio of EBL for the period (2010-2006) In million BDT Formula P/E =price per share/earning Per share 2010 129.30 =15. the ratio was gone down.82 average =15. It means the investors were willing to pay 26.3 markets –book ratio:Table -25 Market –book ratio of EBL for the period (2010-2006) In million BDT Formula Market – book =market value per share/book value per 2010 129.18 =12.from the table.979 times average =2.90 times 2008 58.37 =3.26 10 5 0 2010 2008 2006 12.04 =1.27 Source: .63 9.93 5.07 2008 58.74 =10.08 36.99 =2. Eventually in 2010 the ratio is raised up.data have been compiled from annual report of EBL.726 times 2007 107.40 41.0710. Evaluation: .26 2007 107.82 price earning ratio 26.9. in 2007 the P/E ratio was highest.32 times 54 .63 taka for 1 taka return.43 5.59 11.127 times 2009 64.13 =1. 2009.25 40.25 6.08 4.93 34. we see that. Note: .the calculations have been made by the researcher.63 2006 79.894 times 2006 79. 127 3 2.9 1.726 1. which is indicates that the market position of EBL during the period is reasonable. In other hand their M/B ratio is also increased.data have been compiled from annual report of EBL. we see that.5 3. we have found some results. It’s not a good sign for the bank. there is a fluctuation from 2006 to 2010. but their P/E ratio is going down in that year.share Source: . Evaluation: . it implies that the demand for share of EBL is raised.from the table. But in 2010 the ratio is increased.after completion this chapter.5 1 0.5 0 2010 2009 2008 2007 2006 market book ratio Conclusion: . 55 .979 2 1.5 1. chart:-25-market book ratio 3. Their EPS is increased in current year.the calculations have been made by the researcher.894 2. Note: . the balanced score card is strategy driven. David Norton and others seeks to develop an integrated performance measurement system. The balanced score card approach pioneered by Robert Kaplan. non financial measures are employed mainly by operating managers to control short term operations.most companies have a performance measurement system that includes financial measures as well as non financial measures.1introduction: . combing in a single report the disparate elements of a company’s competitive agenda while attempting to present suboptimization by managers as they must consider all of their organization’s significant performance areas together. Risk measurement and SWOT analysis of EBL. internal business and learning and growth. the balanced score card covers four important perspectives in a business –financial. Balanced score card has been defined as a set of measures that gives top managers a fast but comprehensive view of the business . the balanced score card represents a linked series of objectives and measures. Till recently. Innovative companies are using the scorecard as a strategy mgt system to manage their strategy over long run. Risk measurement and SWOT analysis 10. The linkages capture cause effect relationship obtaining in a business. 56 . not much effort was made to combine financial and non financial measures in an integrated measurement framework. consumer.2 distinctive features: . Chapter -10 Balanced score card.Under the above discussion the next chapter-10 will discuss with the Balanced score card. It is a mechanism for implementing the strategy of a business unit into a comprehensive system of performance measurement and management as Robert kaplan and David norton say. Financial measures are used primarily by senior mangers to monitor the performance of the firm as a whole and its business units or divisions. the balanced score card is more than a tactical or an operational measurement system. C. 10. B.the balanced score card approach claim the following distinctive features:A. 4 performance evaluation of EBL based on balanced score card:-now we will try to present EBL’s balanced score card in terms of the four perspectives as follows:A. 57 .EBL SME banking has been from the start. 2. EBL also trying to add the new technology to ensure the quality of the service and for minimizing the delivery time of the service. innovative and learning perspective: .some of the specific measures as follows:1. This year they developed a new product “EBL uddom” main feature of which is 50% is EMI based and 50% is over draft facilities which partially secured.10. Besides.3 structure of a balanced score card:- FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE INTERNAL PERSPECTIVE INNOVATION AND LEARNING PERSPECTIVE Source:-financial Management: theory and practice. In 2010. EBL have opened (8) new SME centers including above (5) krishi branches. 10. EBL received the trustee license for mutual funds from SEC in March 2010. New product and services: . 3. 4. Introducing products that would suit the need of the market. 64% Return on asset 3. C. 3.as financial perspective this table represents the return on capital employed of EBL:particulars 2010 Return on equity 23. Besides.62% 12. customer perspective: . In 2010. In 2010.5.99% owned subsidiary titled “EBL ASSET MGT LTD” in January 2011.02 95.19% Yield on 12.45 96.34% 13. Very recently the bank also introduced pay roll banking with different companies. customer loyalty and confidence on EBL is showing upward trend. there are some other financial perspectives shown below:1. it is clear that.76% 3. credit to deposit ratio of EBL is increased by 6.73% 1.69% 2006 16. net interest margin ratio of EBL is increased by 0.96% which ensures the more profitability of the bank.72% 4.10% 2. 6.68% 13.75% advance 8. EBL also formed a 99. B.this table represents the customer loyalty on EBL during the study period. 2009 22.20% different ratios whose are represent the financial position All of this figure are proofed that.00% share Loan recovery position From the table we see that. Net operating margin of EBL is also increased.07% 1.30 Earning per 98.69% 5.10% 13.00 97.69% 2007 11.19%. 2. and stability of EBL. 58 . as financial perspective of EBL during the study period is really satisfactory.90% 3.6% 1. financial perspective: .54% 2008 18. Particulars 2010 2009 2008 2007 2006 No of branches 49 39 34 28 25 No of 973 878 763 690 612 employees 194351 176080 159445 110321 90703 No of deposit 65656 35125 34324 21474 19016 a/c 74 55 36 19 12 No of loan a/c 33 23 18 16 12 ATM’s 10 8 5 5 3 SME centers No of bill pay machine From the table.96 96. Or to absorb unexpected losses arising from credit. EBL follows the best customer service policy. However risks are by their nature uncertain and the MGT of risk relies on judgments and predictions about the future. Capital adequacy risk: . Skill development of employee is a significant part of business. 4. 5. The principal risks and uncertainties faced by the bank in coming year are set out below:a.Besides. 2. The processing period of loan and other services is very short. In this regard in 2010. the employee’s behavior is more soft and cordial. SME and corporate banking.EBL focuses on strengthening and enhancing its risk MGT culture and internal control environment rather than increasing capital to cover up weak risk MGT and control practices. the bank’s capital 59 . Basically the total internal business of EBL is conducted by providing these product and service. 25 trainees were sent overseas and 1680 were coached and trained locally to upgrade their knowledge and enhancing the quality. 10.like any other commercial bank. 3. Capital adequacy risk is a risk where the bank does not have sufficient capital reserves to do the business. Their service charge is lower than other bank.5 different types of risk MGT procedures of EBL:- Introduction: . The environment of office is comfortable for customer. some other information is given below in favor of customer perspective:1.we can divide the internal business of a firm into two parts. 2. Eventually. and operational risks. Therefore. D. In EBL there are 4 types of product and services are existed. EBL is also in the business of taking risk and mitigate those risks within banks appetite and maximize return. These are loan product. internal business perspective: . HRM division of EBL arranged 165 training programs. market. To support incremental growth of risk weighted assets. EBL has been generating most of its incremental capital from retained profit. card product. another is employee oriented program .some is given below:1. 3. Such as – their existing service and product. deposit product. expectation about future macro variables and understanding the money market and debt market in which it operates.adequacy ratio remains consistently within the comfort zone since the parallel run from 1 Jan. and counterparty risk of the guarantor.the process of interest rate risk MGT by the bank involves determination of the business objective. The reliance that can be placed on these mitigates is carefully assessed in light of issues such as legal certainty and enforceability. 2009. EBL through its SRP team/ BRMC are taking active measures to identify. B. Presentation of loss. customer or portfolio are mitigated using a range of tools such as collateral. The approach is the traditional gap analysis of on balance sheet asset liability MGT. 60 . Interest rate risk: . The bank regularly monitors the duration gap of balance sheet and also the duration of investment portfolio. c. quantify. Risk MGT approaches: . These parameters are reviewed by the ALCO on a monthly basis.potential credit losses from any given account. EBL has special asset MGT division dedicated for MGT of problem credit . credit risk: . netting agreement. During the year 2010 the CAR ranges from 9. Risk governance: . Credit risk is managed through a framework set by policies and procedures established by the board.assessing regulatory capital in relation to overall risk exposures of a Bank is an integrated and comprehensive process.credit risk is the risk of loss that may occur from the failure of any counterparty to make required payment in accordance with agreed terms and conditions of credit worthiness. credit insurance. maximization of recoveries and restructuring . Risk governance: . market valuation.major responsibility of this department is to formulate strategy and action plans for minimization of risk.93% to 10.the bank uses the following approach to manage interest rate risk inherent in the balance sheet:1.29% against minimum requirement of 8% of RWA. 2. manage and monitor all risks to which the bank is exposed to.direct recovery and legal actions. and other guarantees. this involves careful balancing of asset and liability based on the interest rate view of the bank. these are as follows :1. d. operational risk: . E. while preparing the interest rate sensitive gap analysis . bank always square its position in cross currency. the primary categories of market risk for the bank are:1. Market risk MGT:. credit spread and implied volatilities on interest rate option. people and system. 3. Equity price risk arises from changes in the prices of equity. or from external event. ALCO regularly monitors various ratios and parameters. 2. 2. 4. bank takes into account the following matters :• volatile and core portions of savings deposit • • reprising character of CC and OD account Prepayment option of loan products. To manage exchange rate risk in cross currency. We seek to minimize exposure to operational risk. Market risk: . Our exposure to market risk arises principally from customer driven transactions.3. 3. equity indices. Interest rate risk arises from changes in yield curves. ALCO also regularly monitors the interest rate sensitive gap and duration gap of total portfolio.market risk is recognized as loss resulting from changes in market prices and rates. subject 61 .operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal process. To manage the interest rate risk. Commodity price risk arises from changes in commodity prices and implied volatilities on commodity options. To manage exchange rate risk. equity baskets and implied volatilities on related options. bank always keep its net open position within the limit set by central bank. Current exchange rate risk arises from changes in exchange rates and implied volatilities on foreign exchange options. 4.there are some steps are taken by EBL to manage the market risk . legal risk :.to cost trade –offs. 1. All of these are the risk faced by EBL and which they properly overcome by using the above policy and procedures. The policy of EBL is to maintain adequate liquidity at all times. regulations or codes applicable to the financial services industry. H. EBL always avoids potential brand damaging issue. 2. Bank operation risk MGT sits with all these reports and decides action plans to resolve risk issues by specific individual and group within an agreed timeline. The legal risk functions are responsibility of bank’s internal control and compliance division. And to leverage the negative correlation between liquidity and profitability without taking any excessive risk. 2. The set following statement to protect EBL’s reputation and brand value. The committee also escalates high level risk to MANCO and BRMC. reputation risk: . This unit is responsible for developing and maintaining an appropriate framework of regulatory compliance policy and procedures. In the medium term the bank focus is on ensuring the balance sheet remains structurally sound. 3. 62 . In the short term the bank’s focus is on ensuring that the cash flow demands can be met through asset maturities and customer deposits. F. liquidity risk:. Under no circumstance bank’s reputation to be compromised by revenue generating activities. 1.liquidity risk is the risk that we either do not have sufficient financial resources available to meet all our obligation and commitments as they fall due or can only access these financial resources at excessive cost. EBL shall avoid anti environment and anti social elements in its business.reputation risk is that we fail to meet the standards of performance or behaviors mandated by our board and expected by our stakeholders in the way in which business is conducted.legal risk includes the risk of loss arising from a failure to comply with the laws . g. 10.31 2006 986 26008 3. 1.the calculations have been made by the researcher. chart:-26-non performing loan to total loan ratio 5 4 3 2 1.79 non peforming loan to total loan ratio 2. Note: . credit risk measurement ratios: . The ratio of annual provision for loan losses to total loans:Table:-27 Annual provision for loan losses to total loan of EBL for (2010-2006) In million BDT Formula 2010 2009 2008 2007 Provision 611 756 692 660 for loan 58607 47668 39662 30962 losses/total =1.6 risk measurement of EBL through relevant ratios:. a bank faces six types of risk .the calculations have been made by the researcher.13% loans Source: . Note: .46 3.17% 3.74% =2.generally .31% loan Source: .46% =3.79% average =3. 2006 394 26008 =1.data have been compiled from annual report of EBL.now we are going to measure these risk of EBL by using some relevant ratios is given below:A.30% =4.99% =2.these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). The ratio of non performing loans to total loans and leases:Table-26 Non performing loan to total loan ratio of EBL for (2010-2006) In million BDT Formula 2010 2009 2008 2007 Non 1169 1172 1309 1334 performing 58607 47668 39662 30962 loan/total =1.04% =1.51% average =1.58% =1.data have been compiled from annual report of EBL.3 4.99 1 0 2010 2008 2006 2.60% 63 . 5 2 1.67 101.42% 2009 47668 69871 =68.51 annual provision for loan losses to total loan ratio 3. liquidity risk measurement ratios: .04 0.these ratios are calculated by using the numerical figure of EBL for the period (2010-2006).4 total loan to total deposit ratio 2006 2010 2008 B.91% 2008 39662 41573 =95.78 100 96.58 1.32% 64 .chart:-27. 1. Note: .30% average =72. Loans to total asset ratio:Table -29 Loans to total asset ratio of EBL for (2010-2006) In million BDT Formula Total loan/total asset 2010 58607 82053 =71.annual provision for loan losses to total loan ratio 2.the calculations have been made by the researcher.13 1.06 95.22% 2008 39662 54598 =72.02% Source: . chart:-28-total loan to total deposit ratio 105 103.74 2.data have been compiled from annual report of EBL.5 0 2010 2008 2006 1.78% 2009 47668 49190 =96.5 1 1.91 95 90 102.64% 2007 30962 40204 =77. The ratio of total loans to total deposit:Table -28 Total loan to total deposit ratio of EBL for (2010-2006) In million BDT Formula Total loan/total deposit 2010 58607 56425 =103.06% =100.01% 2006 26008 35971 =72.67% 2006 average 26008 25734 =101.40% 2007 30962 30092 =102. data have been compiled from annual report of EBL.61% average =11.data have been compiled from annual report of EBL.Source: .42 70 68.13% Source: .the calculations have been made by the researcher.74% 2007 3894 40131 =9.22 68 66 64 62 2010 2009 2008 2007 2006 loan to total asset ratio 2.01 76 74 72.74 9.03% 2009 1018 69871 =14. interest rate risk measurement ratio: . Note: . chart:-30.cash and deposit to total asset ratio 15 10 10.57 12.70% 2006 3094 35934 =8.these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). The ratio of cash and deposit held at other banks to total assets:Table -30 Cash and deposit held at others bank to loans ratio of EBL for (2010-2006) In million BDT Formula Cash and deposit/total assets 2010 8234 82053 =10.61 cash and deposit to total asset ratio 2010 2009 2008 2007 2006 C.03 5 0 14.64 72.3 72 71. 65 .57% 2008 6924 54351 =12.7 8.the calculations have been made by the researcher. chart:-29-loan to total asset ratio 78 77. Note: . 78% =34.070 =1.98% =52.024 sensitive liability Source: .086 average =1.093 1. market risk measurement ratios: . The ratio of book value of equity to market value of equity:Table -32 Book value of equity to market value of equity ratio of EBL for (2010-2006) In million BDT Formula 2010 2009 2008 2007 Book value 12084 8429 4733 3829 of 37785 16107 8191 11136 equity/market =31.95 2010 2008 2006 1.39% average =45.024 1. 2006 3315 6578 =50.086 interest sensitine asset to interest sensitive liability ratio 2006 32751 30139 =1. Note: . chart:-31-interest sensitive asset to interest sensitive liability ratio 1. Note: . 1.data have been compiled from annual report of EBL.1 1.the calculations have been made by the researcher.these ratios are calculated by using the numerical figure of EBL for the period (2010-2006).37% 66 .1. The ratio of interest sensitive asset to interest sensitive liability:Table-31 Interest sensitive asset to interest sensitive liability ratio of EBL for (2010-2006) In million BDT Formula 2010 2009 2008 2007 Interest 71759 62125 46831 34706 sensitive 65634 58025 46521 33885 asset/interest =1.38% value of equity Source: .006 D.32% =57.056 1.the calculations have been made by the researcher.093 =1.006 =1.071 1.data have been compiled from annual report of EBL.05 1 0. 00182308 = .1864-.2210 .these ratios are calculated by using the numerical figure of EBL for the period (2010-2006).16% Comment: .0021 (-.V of ROE is 23.1607 .2364-.1607-.2364 .V of (ROE) = (σ)/x ×100% = .1843=. 1.002714 2009 .98 30 20 10 0 2010 2008 2006 book value of equity to market value of equity ratio E.00135 2008 . earning risk measurement ratios: .1843=.0367)=.1173 .0367 (. which is less variable and it means ROE is more uniform and less earning risk. So.1843=-. 2.1864 . standard deviation of ROE= (σ) = √.1842 ×100% = 23.78 52.067)=.00449 2006 .16%. Year ROE(X1) X1-X (X1-X)2 2010 .data have been compiled from annual report of EBL.the C.1173-. Note: .the calculations have been made by the researcher.2210-.32 50.38 31.042697/.chart:-32-book value of equity to market value of equity ratio 60 57.000557 Σ(x-x)2 Σx = .0521)=.00182308 x = Σx/N =.9218 /N=.0521 (.0236)=.00000441 2007 .1843=-.0091154/5=.0236 (-. Standard deviation of ROA:Table -34 67 .0021)=.39 50 40 34. Standard deviation of ROE:Table -33 Standard deviation of ROE of EBL for the period (2010-2006).042697 And C.1843 Source: .067 (-.1843=-. X = ΣX/N= .Year 2010 2009 2008 2007 2006 Standard deviation of ROA of EBL for the period (2010-2006).00005174 = .0162-.0234 .0198=.0000129 .0036)=.32%.007193/.the C.0993/5 0002587/5 = .0036 (-.003 (-.0234-.0110 .00005174 =.0001464 . 68 .0319 . ROA(X1) (X1-X) (X1-X) .0162 .0088)=.007193 And (C.0198=. standard deviation of ROA= (σ) = √ .0036)=.0168-.0036 (. which is more variable than that of variable of ROE and it means ROA is insignificant risky. Note: .0198=-.0000129 ΣX1 = .0993 Σ(X1-X)2 = .000009 .0121 (.00007744 .32% Comment: .the calculations have been made by the researcher.0198 Source: .0319-.V of ROA is 36.003)=.0198=-.0198=-. The word is an acronym of strengths.7 SWOT ANALYSIS OF EBL:PRELUDE:-SWOT analysis provides a good overview of whether a firm’s business position is fundamentally healthy or unhealthy.data have been compiled from annual report of EBL. So.0121)=. 10.0088 (-.V) of ROA = σ/ X ×100% = .0198×100% = 36.0168 .0110-. SWOT analysis helps the bank to reconstruct different sorts of shortcoming of the bank. Internal factors. SWOT analysis of EBL has been exhibited overleaf. External factors. which are prevailing inside the concern that includes strength and weakness. and threats of a company. SWOT analysis of EBL 69 . which act as opportunity and threat. opportunities.weakness. From the SWOT analysis the present scenario of the bank can be exhibited. In the SWOT analysis two factors act as prime movers. Factors of SWOT Analysis Internal factors:• strength • weakness External factors:• opportunity • threat In this context. A common and continuous threat for bank is the entrance of new bank. Strong MGT and administration. Own managed cards software and product system. premium payment etc. Introducing loan for specially emigrated person. Have an opportunity to do business by using the new concept of opportunity government Like – public private partnership.Online banking operation across all the branches. Under the above discussion the next chapter-11 will discuss with the problems of EB Chapter-11 70 . different types of MLM company are also a threat for a bank. Partner of IFC under global trade finance program. Centralized trade service. Good financial position. To do business through mobile banking. More debt than that of equity. Member of DSE and CSE. Strength Being a huge number of SME banking division. such as –bill payment. The loan processing system is not easy and swift. Strong loan recovery position. weakness Imbalanced with liquidity requirement of central bank. The growth of deposit and loan is upward. threat because they give more return than that of bank. Have a risk for issuing more loan than that of deposit. Friendly working environment. Yet. Strong position in camel rating. Macro economic factors are also a threat for the bank. Well customer –employee relationship. deposit trend of EBL Particular 2010 2009 2008 2007 deposit 56425 49190 41573 30092 Source: . it implies that the bank carries more risk. because the bank issues more loan than deposit. the bank issues more loan than deposit. E. D.According to the rules of central bank.its a good sing for 71 . According to the calculation of standard deviation of ROA and ROE. the overall market position of EBL is showing a fluctuating trend it implies the lacking of condense of the investors. the deposit trend of EBL is going up .here we see that.1 Problems: - A. Recommendations and Conclusion 11. the difference between non –performing loans and the provision of loan losses is large.data have been compiled from annual report of EBL the bank. C. Now the bank has to try keeping it up. the RWA to deposit is showing lower liquidity position. which is consist of cash reserve ratio (5.Problems. B. so it shows inconsistent view. in million BDT 2006 25734 Comment: . Although the bank is doing well. but it has to try minimize the variability of that case. the bank is more depend upon debt in building their capital structure. we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. but we see that EBL does not maintain the requirement of central bank. it is known that every listed commercial bank has to maintain a legal reserve.5%) and statutory liquidity ratio (19%) for meeting the liquidity needs and other unexpected crisis faced by the bank. F. 11. G.2 Recommendations of the study are as follows:A. deposit utilization of EBL particular 2010 2009 2008 2007 Deposit 58607 47668 39662 30962 utilization or loan and advance of EBL Source: .data have been compiled from annual report of EBL and advance of EBL. deposit per employee:Formula 2010 2009 2008 2007 Deposit per 56425 49190 41573 30092 employee= 973 878 763 690 Total =57.049 72 .025 =54. Now the bank has to try keeping it up.chart:-33-deposit trend of EBL 60000 56425 49190 50000 41573 40000 30092 30000 25734 20000 10000 0 2010 2008 2006 deposit trend of EBL B.data have been compiled from annual report of EBL.deposit utilization of EBL 60000 58607 50000 40000 30000 20000 10000 0 2010 2009 2008 2007 2006 47668 39662 30962 deposit utilization of EBL in million BDT 2006 26008 Comment: .486 =43.611 deposit/no of employee Source: .this table is also showing an upward trend of deposit utilization or loan 26008 C.990 =56. chart:-34. in million BDT 2006 25734 612 =42. Comment: - by this table we also see that the productivity of EBL is showing upward trend. Now the bank has to try keeping it up. chart:-35- deposit per employee 60 57.99 56.025 54.486 50 43.61 42.05 40 30 20 10 0 2010 2009 2008 2007 2006 deposit per employee D. the loan recovery position of EBL during the period is outstanding, because the average of loan recovery of EBL is 96.82% during the period. The bank has to try going on it. E. the ROE and ROA of EBL exists a satisfactory level. F. the earning spread of EBL is also positive. G. besides, the non –financial performance of EBL is mentionable. Their innovation side of product and services is time befitting. H. HRM department of EBL also arranges different types of training program to upgrade the efficiency of the employee. I. First of all, the bank has to raise the equity capital instead of debt for building capital structure. J. The bank has to give focus on issuing loan by considering the deposit amount. K. EBL has to keep more marketable securities as liquid asset for ensuring both liquidity and profitability. L. EBL has to give more dividends to the investors for encouraging their investment. M. The bank has to keep more provision against the loan losses. N. O. The bank to maintain legal liquidity requirement of central bank keep up with The bank has to keep balance between interest sensitive asset and interest their profitability. sensitive liabilities. 73 11.3: Conclusion: - this report is most important for getting the (MBA) degree. I have learned a lot of thing by preparing this report. It was a great time for me when I prepared this report. Because I have never done this before. This report is prepared by using very common and traditional ratio. But at present many new model and formulas are used in analyzing a bank’s financial performance for getting an effective and accurate result. So, I can’t say that this report is 100% perfect in terms of evaluation. From my point of view, I just say that, I am not an expert in this field. I have just gathered data from the annual report of EBL and then put it into the various formulas and finally I have found some relevant outcome from the calculation. Based on this result, I have just given my opinion as the recommendation of the study. So, eventually, I want to say that it is a very little Endeavour of me as a student. 74 Bibliography 1. ANNUAL REPORT OF EBL 2. WEB SITE OF EBL-http://www.eblbd.com 3. Commercial bank MGT –peter.s. Rose 4. Fundamentals of corporate finance (sixth edition)-Stephen, westerfield, jordon. 5. Srivastava, R.M “Bank management” pragoti prakashani, meerut,pp.204. 6. Burns, j.E(1962). “Bank liquidity: a straight forward concept but hard to measure”, in john A .haslem (Ed), Bank fund Management, opcit pp .185. 75 76 . 77 . 78 .