Financial ratios analysis:

2012 2011
Return on equity (ROE) -94.38% -21.69%
Return on assets (ROA) -2.03% -1.01%
Profit / (Loss) before tax ratio -24.60% -33.59%
Gross spread ratio 1.24% 5.56%
Advances to deposits ratio 54.22% 62.45%
Income to expenses ratio (times) 0.82 0.76
Cost to revenue ratio 121.41% 125.36%
Total assets to shareholders'
funds (times)
46.39 21.40
NPL ratio 34.39% 16.66%
Capital adequacy ratio 4.42% 7.52%
Earning/ (Loss) per share (Rupee) (2.54) (1.17)
Book value per share 2.84 2.84

Return on equity (ROE)
Return on equity or return on capital is the ratio of net income of a business during a year to
its stockholders' equity during that year. It is a measure of profitability of stockholders' investments.
It shows net income as percentage of shareholder equity.
The formula to calculate return on equity is:
ROE =
Annual Net Income
Average Stockholders' Equity
the return on equity ratio of summit bank has decrease from -21.69% to -94.38% in year 2012 due to
increase in net loss
Return on assets (ROA)
Return on assets is the ratio of annual net income to average total assets of a business during
a financial year. It measures efficiency of the business in using its assets to generate net income. It is
a profitability ratio. The formula to calculate return on assets is:
ROA =
Annual Net Income
Average Total Assets

The return on assets of summit bank limited has decreased -2.03% from -1.01%. This is due to the
increase In net loss of the bank
Profit / (Loss) before tax ratio:
A company's earnings before tax as a percentage of total sales or revenues. The higher the pre-
tax profit margin, the more profitable the company. The trend of the pretax profit margin is as
important as the figure itself, since it provides an indication of which way the company's profitability is
headed.
Summit banks loss before tax ratio has decreased to -24.60% from-33.59% due to increase in
total income (both mark up an non markup interest income).
Gross spread ratio
Gross spread ratio looks at the spread of interest between borrowing and lending. Banks make
money by borrowing short-term money from depositors and then using these funds to make long-term
loans to businesses, consumers and homeowners. One way to analyze gross profit rates of banks is to
look at the spread between the loan rates and deposit rates. Further, through ratio analysis, you can use
the gross spread ratio to determine the profitability, liquidity and leverage of a bank.
Gross Spread ratio = (Net Markup Income/Gross Income)*100
The gross spread ratio of summit bank has decreased from 1.24% to 5.56% it means its idle
funds have increased
Advances to deposits ratio
A commonly used statistic for assessing a bank's liquidity by dividing the banks total loans by its
total deposits. This number, also known as the LTD ratio, is expressed as a percentage The higher the
Loan-to-deposit ratio, the more the bank is relying on borrowed funds.
The summit banks Advances to deposits ratio is decreased to 54.22% from 62.45% as as
deposits have increased during 2012
Cost to revenue ratio:
The cost-to-revenue ratio measures operation efficiency by comparing operating costs as a
proportion of the total revenue. In other words, dividing costs by the amount of revenue, the cost-to-
revenue ratio shows the level of resources required to generate every dollar of revenue As an efficiency
measurement, the lower the cost-to-revenue ratio, the higher the operating efficiency.
Summit banks cost to revenue ratio has decreased to 121.41% from 125.36% resulting due to
operating efficiency
Assets to Equity ratio:
The asset-to-equity ratio is a financial ratio that takes the entity's total assets and divides them
by its total equity. This ratio is used to measure an entity's leverage. This is a measure of the total debt a
company takes to acquire assets
Total assets to shareholders equity has increased to 46.39 times from 21.40 times due to
increase in deposits and advances in the year 2012
Npl Ratio:
The amount of non-performing loans over total loans, expressed as a percentage. The more the
Npl ratio the more non-performing loans bank has.
NPL ratio of summit bank for 2012 have increased to 34.39% from 16.66%
Capital adequacy ratio
Capital Adequacy Ratio (CAR) or Total Capital Ratio measures a bank's capital position and is
expressed as a ratio of its capital to its assets.
It determines the capacity of the bank in terms of meeting the time liabilities and other risks
such as credit risk, operational risk, etc. CAR below the minimum statutory level indicates that the bank
is not adequately capitalized to expand its operations. The ratio ensures that the banks do not expand
their business without having adequate capita
The Capital adequacy ratio of summit bank is decreased to 4.42% from 7.52%

Eps(earning per share):
The portion of a company's profit allocated to each outstanding share of common stock.
Earnings per share serve as an indicator of a company's profitability.
It is calculated by dividing earning available for common stock holders to no of outstanding
shares
Summit banks Loss per share is increased to (2.54) from (1.17) in 2012 it is due to increase in
administrative costs



Horizontal Analysis of Financial Statements
Horizontal analysis of financial statements involves comparison of a financial ratio, a benchmark,
or a line item over a number of accounting periods. This method of analysis is also known as trend
analysis. Horizontal analysis allows the assessment of relative changes in different items over time. It
also indicates the behavior of revenues, expenses, and other line items of financial statements over the
course of time.
Horizontal analysis of consolidated balance sheet of Summit bank limited
2011 to 2012

Assets
Cash and balances with treasury
banks
32.58%
Balances with other banks 151%
Lending to financial institutions 90.64%
Investments 37.89%
Advances -6.161%
Operating fixed assets -11.74%
Deferred tax assets - net -4.20%
Other assets 10.66%
Total Assets 12.59%
Liabilities
Bills payable 83.77%
Borrowings 55.69%
Deposits and other accounts 7.9%
Sub-ordinated loans -0.046%
Other liabilities -17.86%
Total liabilities 15.6%
Shareholders equity account
Net Share capital -48.38
Surplus on revaluation of assets -
net of deferred tax
-16.33%
Total equity -47.26%
Explanation:
The cash and balances with treasury banks have increased by32.58 % and the bank has
transactions of borrowings (re-purchase) from and lending (reverse re-purchase) to financial and
other institutions, have increased in 2012 than in 2011.
Investments made by summit bank limited have also increased. it has made investments in
Federal Government Securities, Fully paid-up Ordinary Shares of listed , non-listed and mutual
funds, Preference Shares, Term Finance Certificates and Bonds and Investments in associate.
Advances are decreased in 2012 because some advances are placed in non-performing loans
In operating fixed assets capital work in progress has increased while Property and equipment
and intangible assets has decreased resulting a net decrease in operating fixed assets
Deferred tax assets are reduced during 2012
o Other asset have increased during 2012 eg
o Income / mark-up accrued in local currency
o Income / mark-up accrued in foreign currency
o Advances, deposits, advance rent and other prepayments
o Non banking assets acquired in satisfaction of claims
o Advance taxation - net of provision
o Receivable from Arif Habib Investments Limited, a related party
o Receivable from Suroor Investments Limited,
o the parent company
o Stationery and stamps on hand
o Receivable against sale of property and equipment
o Commission receivable on guarantee
o Receivable from other banks against clearing and settlement
o Un realized gain on forward foreign exchange contracts
Overall total assets have increased by 12.59%
Bills payable have increased
Borrowing made by bank and deposits of customers and financial institutions have also
increased during 2012
Subordinated loans that include Term Finance Certificate( Unquoted, Unsecured) have
decreased
Other liabilities have also decreased that include
o Mark-up / return / interest payable in local currency
o Mark-up / return / interest payable in foreign currency
o Payable to Bangladesh Bank
o Payable to Rupali Bank - Bangladesh, a related party
o Payable to vendors / creditors
o Provision for compensated absences
o Payable to Bank of Ceylon, Colombo
o Retention money
o Branch adjustment account
o Security deposits
o Accrued expenses
o Payable to brokers
o Unrealised loss on forward exchange contracts
o Payable to defined benefit plan
o Withholding taxes and government levies payable
o Payable to other banks against clearing and settlement
o Unclaimed dividend
o Unearned income
o Commission payable on home remittances
Overall for the year 2012 total liabilities have increased
Net Share capital is decreased as compared to last year due to increase in the amount of losses
transferred to balance sheet during 2012
Horizontal analysis of consolidated profit and loss account of Summit
bank limited 2011 to 2012
Mark-Up / Interest Income
Net mark-up / interest income after provisions 408.6%
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage income 39.91%
Dividend income 41%
Gain from dealing in foreign currencies 134.55%
Gain / (loss) on sale of securities - net 847.13%
Unrealized loss on revaluation of investments
classified as held-for-trading - net
-99.91%
Other income 0.83%
Total non-mark-up / interest income 86.51%
Total income 95.15%
NON MARK-UP / INTEREST EXPENSES
Administrative expenses 3.008%
Other provisions / write-offs -46.04%
Other charges -40.64%
Total non-mark-up / interest expenses 2.43%
Share of profit of associates 10.88%
LOSS BEFORE TAXATION -20.64%
Taxation -88.91%
LOSS AFTER TAXATION 129.86%
Explanation:
Net mark-up / interest income after provisions have increased by 408.6%. it includes Net mark-
up / interest income which has decreased from 533,127 to 129,424 but the provisions on
markup interest income has also decreased causing increase in net markup and interest income
after provisions as compared to last year
Fee, commission and brokerage income, Dividend income and Gain from dealing in foreign
currencies, Gain / (loss) on sale of securities net have increased
Unrealized loss on revaluation of investments in following companies is decreased to 99.91%
o D.G. Khan Cement Company Limited (17) (419)
o Engro Fertilizers Limited - (538)
o National Bank of Pakistan Limited - (2,673)
o Pakistan Telecommunication Company Limited 12 -
o Pakistan State Oil Company Limited - (1,284)
o United Bank Limited
Total markup and interest income has increased by 86.51%
Overall total income has increased
Total markup and interest expenses have increased due to increase in administrative expenses
Share of profits of associates have also increased
Loss before taxation have reduced but loss after taxation have increased due to increase in taxes
and deferred taxes
Vertical analysis of consolidated balance sheet of Summit bank limited of
2011 and 2012
Vertical analysis (also known as common-size analysis) is a popular method of financial
statement analysis that shows each item on a statement as a percentage of a base figure within the
statement.
To conduct a vertical analysis of balance sheet, the total of assets and the total of liabilities and
stockholders equity are generally used as base figures
2012 2012
Assets Rupees in 000 Rupees in 000
Cash and balances
with treasury banks
8,110,198 6.039% 6,117,998 5.12%
Balances with other
banks
3,601,183 2.68% 1,433,614 1.20%
Lending to financial
institutions
2,038,500 1.15% 1,069,757 0.896%
Investments 49,777,088 37.06% 36,098,644 30.26%
Advances 52,549,154 39.13% 55,999,664 46.95%
Operating fixed
assets
5,450,400 4.058% 6,175,011 5,177%
Deferred tax assets -
net
5,986,434 4.45% 6,249,658 2.3%
Other assets 6,776,109 5.04% 6,123,169 5.13%
Total assets 134,289,066 100% 119,267,515 100%
Liabilities Rupees in 000 Rupees in 000
Bills payable 1,654,302 1.23% 900,750 0.7546%
Borrowings 28,900,432 21.52% 18,562,616 15.56%
Deposits and other
accounts
96,815,372 72.09% 89,665,301 75.18%
Sub-ordinated loans 1,499,310 1.111% 1,500,000 1.25%
Other liabilities 2,413,595 1.79% 2,938,294 2.463%
Total liabilities 131,283,011 97.76% 113,566,96 94.98%
Shareholders equity (Rupees in 000) (Rupees in 000)
Net share capital 2,840,291 2.163% 5,502,434 4.6153
Surplus on
revaluation of assets -
net of deferred tax
165,764 0.1229% 198,120 0.166%
Total equity 3,006,055 2.238% 5,700,554 4.779%

Explanation:
In assets largest portion is occupied by Investments and Advances made by bank and least is
acquired by Lending to financial institutions
While liabilities of firm is far more than its equity portion
Vertical analysis of consolidated profit and loss account of Summit bank
limited 2011 to 2012
(Rupees in 000) 2012 (Rupees in
000)
2011
Total income 1,532,132 100% 785,732 100%
Administrative
expenses
(4,006,090) -261.48% (3,889,496) -495%
Other provisions /
write-offs
(14,924) -0.974% (27,658) -3.52%
Other charges (11,487) -0.7180 (19,354) -2.4%
Total non-mark-up /
interest expenses
(4,032,501) -263% (3,936,508) -519%
Share of profit of
associates
1,273 83.09% 1,148 146%
LOSS BEFORE
TAXATION
(2,499,096) 163.12% (3,149,628) 401%
Taxation (218,185) -14.22% 1,966,859 250.44%
Loss after Taxation (2,717,281) 177.35% (1,182,769) 150%

Explanation:
Administrative expenses of the bank exceeds its total income earned thats why firm has
suffered loss after taxation
In 2012 the firm has experience a tax saving due to loss occurred but in 2011 tax saving cannot
be availed due to deferred taxes