Professional Documents
Culture Documents
1.2 Methodology:
All the resources that were used to make this report was secondary data. That is the report
was made with the help of annual report book of 3 years of EXIM Banl Ltd. There was
also some assistance from the relevant text book.
1.6 Scope:
The report will help me for further study and also broaden my knowledge and will
facilitate for doing this kind of analysis in future.
1.7 Limitations:
1. Lack of adequate information to study the analysis.
2. Due to lack of industry average the measurement of performance level is somewhat
difficult.
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Ratio Analysis
Net interest margin ration measures total interest earning to total asset. It indicates the
interest generating capacity of the Bank with its total asset.
Here we can see that EXIM Banl Ltd. has fluctuating interest earning. It’s highest interest
earning was in 2004 which was 3.8% that is higher than in 2003 and 2005. From the
result we find that the bank has deteriorated its position regarding earning interest from
the previous years.
Net non interest margin indicates the non interest earning compare to it total asset.
Non interest revenue – Non interest expense/ Total asset. (In Taka)
This ratio indicates the bank able to manage few non interests earning compare to its non
operating income. In 2005 its non interest expense was more than in 2004 but less than in
2003. But it is not adequate from the banking perspective. Therefore the bank should
increase more non interest revenue from additional sources
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3. Earning Per Share
EPS indicates the average earnings that stockholders get per share. A bank’s goodwill
and its loyalty to its stockholder as well as overall performance is reflected by the EPS of
that bank.
From the above data we see that EXIM Banl Ltd. is gradually improve regarding earning
per share. In 2003 the bank’s EPS was lower than 2004 and 2005 because of their poor
after tax net income in 2003. But it gradually increase its EPS and has indication to earn
further EPS for the upcoming years.
. (In Taka)
This data shows in 2003 EXIM Banl Ltd. spent a slightly greater in operating or tax
purpose and the following next two years it was able to minimize its operating expense
which ensures greater EPS for its stockholders.
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5. Efficiency Ratio
For calculating efficiency ratio I used Total asset to number of full time employee ratio.
This ratio indicates how much each employee contributes to total asset of the bank. This
also show how much assets each employee bear in this Bank.
This data shows number of employees fluctuates year to year. The above data reflects the
increase in total asset as well as the number of employees. Therefore the efficiency ratio
increases gradually in 2005 than in 2004 and 2003.
Operating efficiency ratio gives idea about comparison between total operating revenue
and total operating expense. It also implicitly indicates about profitability of the bank.
The above data shows that EXIM Banl Ltd. had greater total operating expense from the
previous year and the total operating revenue was also greater from the previous year and
that result in increase in profitability of the bank because operating efficiency ratio in
2005 was greater than 2004 and operating efficiency ration in 2004 was greater than in
2003
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7. Employee Productivity ratio
Employee Productivity measures the productivity capacity of the employees of the bank.
In another word how much each employee contributes to total operating income.
From the above data the number of employees and net operating income fluctuated from
year to year which results employee productivity ratio increase from the previous year
that means the productivity capacity of the employees of the bank is improving.
Cost of funding means the amount banks need to incur for raise its fund. Banks have to
carefully monitor their expenses for collecting funds because it has direct impact on the
total income of the bank. If bank have to incur too much cost for its funding then its
income will be minimized.
From the above data we see that the bank was able to reduce its costing of fund in 2004
from 2003 but in the year 2005 its costing of fund increased surpassing the costing of
fund in 2004. Therefore banks total income was reduced in 2005 because it bears greater
cost of raising funds than in 2004.
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9. Average Interest expense on deposit
This ratio measures the cost of raising deposit comparing with total deposit and non
deposit borrowing. The lower part also indicates the part of total liability of the bank.
Total deposit interest expense/ total time and savings deposit +non deposit
borrowing
(In Taka)
The figure shows that Standard Bank Ltd was able to minimize its interest expense on
deposits in 2004 but in the next year its interest expense on deposits increased in a greater
amount in 2005 which is highest among three years. Therefore in 2005 the bank’s cost of
raising deposit was increased comparing with total deposit and non deposit borrowing.
.
EXIM Banl Ltd. had fluctuated deposit of operating expense ratio. In 2005 the ratio was
highest that indicates the bank had greater interest on deposits than total operating
expense from both 2004 and 2003.
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11. Pay roll total cost ratio
This ratio shows how much pay roll bears from total operating expenses. Here payrolls
include all the salaries and allowances that bank have to pay to employees. This pay roll
cost usually cut a significant portion total operating expenses.
(In Taka)
Year Pay roll cost (A) Total operating A/B
expenses(B)
2005 106890794 232828641 45.91%
These figures indicate how much EXIM Banl Ltd. pays to its employees compare to its
total operating expenses. We see Bank spend more money as salaries and allowances in
2005 compare to in 2003 and 2004.
Here w e can see EXIM Banl Ltd. is able to maintain the necessary amount of capital to
its risk weighted asset according to central bank. Though capital adequacy ratio decrease
in 2005 from previous two years the bank is still able to hold more capital to make this
ratio healthy in order to gain public confidence.
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13. Return on Equity;
From the above data we can find that EXIM Banl Ltd. holds significant amount in ROE
which indicates better performance. The ROE gradually increased year after year which
results in better position as well as the higher income generated which is beneficial for
the stockholders.
Return on asset is another important indicator of bank health. It measures the net income
to total asset of the bank.
These ROA ratios also show the better performance of Standard Bank Ltd in all three
years (2003,2004 and2005). Though there was some fluctuation the results indicate that
the management was more careful and responsible.
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Conclusion
From analyzing all the ratios of EXIM Banl Ltd. we find that the activities and its
associated requirements and results are significant comparing the certain standard level
that means the bank is able to maintain the requirements of a good bank. Its EPS is
increasing gradually year after year and the amount of EPS is significant with the
standard average. EXIM Banl Ltd. is adequately capitalized because it holds required
amount of capital against various risk weighted assets. The bank’s net income is also in
significant level because ROA and ROE of the bank which are the major indicators of
earning of a bank are up to the mark. The other ratios are also well associated with the
standard of industry average. In totally EXIM Banl Ltd. is performing its activities
maintaining all the standard average which will be able to retain all its clients,
shareholders, stockholders and will encourage them to invest in the bank.
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Bibliography
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