Financial calculation of EBL

8/10/2019 Financial calculation of EBL

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Executive Summary

The goal of Eastern Bank Limited was to reach banking system more closely to the general people. In addition, this made this bank up to this time. Now Eastern Bank Limited is animproved and modernized bank where the banking system has been easier than the continuing

banking system.

First, i looked at the overview of the bank.

Then, in the literature review section, i look at some financial data regarding the performance ofEastern Bank and some of the most common terminologies of banking sector.

Next, i look into the analysis part. In this section, i use ratio analysis to evaluate the performanceand compare it with another competitor bank named United Commercial Bank Limited (UCBL).

Here i use some common ratio reflecting banking performance observation for evaluation overthe period of 2008-2010. The analysis is done through interpretation of the ratios found.

The next part consists of some recommendations about how to improve the conditions of the bank in terms of profitability, liquidity, solvency, market to book and efficiency.

At last, i conclude by discussing the overall performance evaluation of the bank.


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Introduction

Objectives

The main objective of the report is to evaluate the performance of Eastern Bank Limited (EBL)

in comparison with the United Commercial Bank Limited (UCBL). In order to evaluate the

performance i conduct the basic ratio analysis. Then i conduct the interpretation of those ratios to

find out whether the bank is in a good position or in a worse position. The ratios that i conduct is

mainly divided into five basic grounds which are liquidity ratios, solvency ratios, profitability

ratios, market to book value ratios, and efficiency ratios. After conducting the research I interpret

and get the desired results and i also have included some recommendations to improve the

situation.

Origin of the Report

M. Morshed, (Senior Lecturer) the honorable course instructor of Bank Management assigned

me to prepare a report on September 2011. The date of the submission of the report is December

19, 2011.

Purpose of the Report

I am very much passionate to be an executive of the coming days. So, i have to gather more

experience beside our study. I do not want to concentrate my lessons only in classroom but to

implement it in my practical life that will help me in my professional life. The purposes of

preparing of this report are-

To relate my theoretical report writing knowledge with the practical working experience. To know about the functions played by the bank.


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Scope of the Report

I have collected data from the local branch of EBL; I have mainly tried to cover all the

information needed to know about the functions played by the bank. The entire interviews are

taken from the Managers or various upper level officers of the bank.

Methodology

Source of Collecting Data

The report is based on data & information, which have been collected from various sources.They are stated below:

a) Primary source

Interview Search through the internet Website of the Bank

b) Secondary sources

- Various books related to banking.

Method of Collecting Data

To do this report first i have gone to the local branch of the bank. I have also collected

information about the banks past history on the internet. Then we have related all those

information with the currently studying course Bank Management.

Limitation of the Report

However, I am lucky to get the chance to prepare this report but unfortunately i have faced some

difficulties. I tried to overcome the difficulties and gave my best effort. When preparing this

report, some difficulties i faced:


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1. Branch ProblemSome employees of the bank told me that they are not authorized to tell anything about the

matter. They also told that only the head office could provide information about this. Therefore,

it becomes a problem working within branch office. However, beside that the branch manager

helps me as much as he could.

2. Time Shortages

This extensive type of report needs too much time to prepare it. However, we had to preparethis

report within a very short span of time. The managers are also very busy, so it washard to bring

their concentration on the matter.

3. Inconsistent terminologies

Sometimes it is very difficult to get the terminologies correct because there are many

inconsistent terminologies that bank are following now a day. There are many terminologies,

which are not consistent with the Generally Acceptable Accounting Principle (GAAP). So, I

need to closely look at those to find out the actual data from the financial statements.

4. Qualitative factors are ignored

Ratio analysis is a technique of quantitative analysis and thus, ignores qualitative factors, which

may be important in decision making. For example, average collection period may be equal to

standard credit period, but some debtors may be in the list of doubtful debts, which is not

disclosed by ratio analysis.


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Overview of the Bank (EBL)

With a vision to become the bank of choice and to be the most valuable financial brand in

Bangladesh, Eastern Bank Ltd. (EBL) began its journey in 1992. Over the years EBL has

established itself as a leading private commercial bank in the country with undisputed leadership

in Corporate Banking and a strong Consumer and SME growth engines. EBL's ambition is to be

the number one financial services provider, creating lasting value for its clientele, shareholder,

and employees and above all, for the community it operates in.

Vision

To become the most valuable brand in the financial services in Bangladesh creating long-lasting

value for our stakeholders and above all for the community we operate in by transforming the

way we do business and by sustainable growth.

Achievements

EBL believes in relationship building and focuses on sustainable and long-term growth both

for the bank, its clients and the community it operates in. Despite the constant threat of the global

economic recession and its subsequent effect on the Bangladesh market in 2010, EBL's Profit

after Tax grew by 66.70% from last year. The Non Performing Loan Ratio dropped to 1.99%

from 2.46%. The same year, Earning per Share (EPS) had decreased by around 66% and Cost toIncome ratio dropped to 32.10% from 35.62% which is one of the lowest in the industry. In

addition, in 2010 the bank's Credit Rating increased to AA from AA-, which was A+ in the year

before.

EBL knows its target customers and as such offers new products and services to cater to their

contemporary taste and need. In the past couple of years, the Bank came up with several exciting

products and service propositions: Some of them are a first in Bangladesh. Priority Banking,

Travel related products, life insurance covered DPS, Platinum Credit Card, SME Debit Card to

name a few. EBL is one of the first banks in Bangladesh to launch Mobile-based remittance

service marking a new era of banking services among the unbanked population of the country.

EBL SME Banking holds a strong foothold in the market and offers several specialized financial

solutions for the entrepreneurs. EBL introduced Invoice Factoring for the first time in


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Bangladesh and has dedicated Women Entrepreneur Cell to cater to the banking needs of the

particular segment. On the corporate banking front, EBL is a market leader in Syndication deals,

which demonstrates the banks financial capacity and strength. In the last five years EBL has

closed syndication deals worth more than Tk. 1500 Crore. EBL received its biggest recognition

when countrys national flag carrier Biman Bangladesh Airlines mandated pre -delivery purchase

deal to Eastern Bank Ltd. for two Boeing 777-300ER. In the Bangladesh banking history EBL is

the first local bank to handle such a mega project. In 2009 EBL launched Investment Banking

wing, which contributed significantly in the EBL revenue stream in the very first year of its

operation.

EBLs sincere efforts are well -appreciated by all and have gotten recognitions from local and

international institutions like Institute of Chartered Accountants in Bangladesh, SuperbrandsInc., South Asian Federation of Accountants.


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Literature Review

Liquidity Ratio: Formula UCBL(2010) UCBL(2009) UCBL(2008)

1.Cash Position Indicator

Cash and deposit due fromdepository institutions/TotalAssets 0.100361192 0.145720481 0.1274083

2.Liquid Security indicator GOVT security/Total asset 0.083215637 0.110445026 0.09058159

3.Capacity Ratio: Net Loan and leases/TotalAsset 0.664184363 0.653263284 0.71077841

Liquidity Ratio: Formula EBL(2010) EBL(2009) EBL(2008)

1.Cash Position Indicator

Cash and deposit due fromdepository institutions/TotalAssets 0.09175738 0.10414058 0.13881201

2.Liquid Security indicator GOVT security/Total asset 0.09553873 0.08675447 0.09493808

3.Capacity Ratio Net Loan and leases/Total Asset 0.70210921 0.6684854 0.65284326


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Graph Analysis of Cash Position Indicator

Findings and Analysis: The first ratio in Liquidity is cash position indicator. The amount of

cash that a company, investment fund or bank has on its books at a specific point in time.

The cash position is a sign of financial strength and liquidity. It often takes into considerationhighly liquid assets such as certificates of deposit, short-term government debt and other cash

equivalents. In Eastern Bank Limited (EBL) in 2010 cash position was 0.0918 or 9.18% of total

assets.0.1041 and 0.1388 in 2009 and 2008 respectively. Too much cash in hand is also not a

good sign that means idle cash in hands. It also may incur opportunity cost. EBLs direct

competitor United Commercial bank (UCB) had higher rate in 2010 and 2009.

0.0918 0.1004

0.10410.1457

0.13880.1274

0.00000.05000.10000.15000.20000.25000.30000.35000.4000

EBL UCB

2008

2009

2010


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Findings and Analysis: Govt. securities / total asset, Liquid Security indicator can be

liquidized very short period of time. Banks holds Liquid Security to meet the short term

obligations. EBL has 9.6% of total assets in terms of GVT securities like debenture, Bond etc in

2010 where as UCB has 8.3% of Government Securities in their portfolio. Rate was increased

some portion compare to 2008-09 to 2010. Government Securities are almost risk free

investment and one of the major sources of liquidity. So its a lways good to have Governmentsecurities in the portfolio of EBL.

0.096 0.083

0.087 0.110

0.095 0.091

0.000

0.050

0.100

0.150

0.200

0.250

0.300

EBL UCB

20082009

2010


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Graph Analysis of Capacity Ratio:

Findings and Analysis: Capacity ratio is how much loan and leases uses in total asset. Capacity

ratio is negative liquidity indicator because loans and leases are often the most illiquid of

asset. EBL in 2008 capacity ratio was very low but EBL unable to maintain the low ratio over

next 2years. On the other hand UCB 2008 was very high ratio but they managed to reduce the

ratio for next 2 years.

0.702

0.6640.6680.6530.653

0.711

0.620

0.640

0.6600.680

0.700

0.720

EBL UCB

20102009

2008


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RECOMMENDATION:

1. To improve the Liquidity position EBL has to improve the primary and secondary source

of liquid asset.

2. EBL should increase money market securities instrument and capital market

3. EBL should provide short term lending scheme(if Interest rate are forecasted to be

decrease in near future)

4. Lowering the overhead cost if it is possible for EBL. Lowering overhead has a direct

impact on Liquidity.

5. Monitor the accounts receivables effectively to ensure that EBL clients paying the due

loans and payment on time.

6. Negotiate payment term with the vendors. It will help EBL to keep money longer and

improve liquidity positions.

Leverage Ratio: Formula EBL(2010) EBL(2009) EBL(2008)

1.Debt to Asset ratio: Total debt / total assets 0.91291256 0.87927 0.852064

2. Equity Multiplier

Total assets / shareholders

equity. 6.7905 7.2891 11.5356011

3. Financial leverage Ratio:Total debt / shareholdersequity. 5.7905 7.2891 9.82907247

4. Interest Coverage Ratio:(net income + interest) /interest. 1.23041474 1.13393465 1.15281203

Leverage Ratio: Formula UCBL(2010) UCBL(2009) UCBL(2008)

Debt to Asset ratio: Total debt / total assets 0.9398 0.9369 0.9323

2. Equity MultiplierTotal assets / shareholdersequity. 16.6157 15.85913 14.779

3. Financial leverageRatio: Total debt / shareholders equity. 15.6157 14.85913 13.7794. Interest CoverageRatio: (net income + interest) / interest. 1.003475672 1.233991635 1.13301557


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Graph Analysis of Debt to Asset ratio:

Findings and Analysis: This ratio measures the financial position or solvency of the farm by

comparing the farm liabilities (debts) to farm assets. It measures the portion of the farm assets

that have debt against them. In other words, it expresses what proportion of total farm assets is

owed to creditors. It is one way to express the risk exposure of the farm business. A higher ratio

is generally considered to be an indicator of greater financial risk and lower borrower capacity.

EBL had high amount debt which is very risky. EBL debt had increased significant portion in

2008-2010. Their competitor bank had the same position of higher debt compare to the total

asset.

0.913 0.940

0.879 0.937

0.852 0.932

0%

20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010


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Graph Analysis of Equity Multiplier

Findings and Analysis: A measure of financial leverage calculated as Total Assets/Total

Stockholders' Equity. Like all debt management ratios, the equity multiplier is a way ofexamining how a company uses debt to finance its assets. This ratio shows a company's total

assets per dollar of stockholders' equity. A higher equity multiplier indicates higher financial

leverage, which means the company is relying more on debt to finance its assets. Eastern Bank

Limited had achieved a great success to reduce the ratio. In 2008 EM was 11.536 and 2009 was

7.289. The rate was also decreased in year 2010. So EBL moving towards lower financial

leverage risk. Comparing with EBL to UCB, UCB has higher financial leverage risk and the

leverage risk was increasing the period of 2008-2010.

6.79116.6167.289

15.85911.536

14.779

0.000

10.000

20.000

30.000

40.000

50.000

EBL UCB

2008

2009

2010


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Financial leverage Ratio:

Findings and Analysis : The financial leverage ratio is also referred to as the debt to equity

ratio. The financial leverage ratio indicates the extent to which the business relies on debt

financing. A high financial leverage ratio indicates possible difficulty in paying interest and

principal while obtaining more funding. Eastern bank Financial Leverage was 5.7905 in year

2010. This was very good comparing with other banks and industry. EBL has also achieved

efficient result to minimize the financial leverage in year 2008 to 2010. On the other hand

EBL direct competitor has more chance of financially default or leverage. The ratio was

15.6157 in year 2010 which was three times more than EBL Financial leverage ratio.

5.790515.6157

7.289114.8591

9.8291 13.7790

0%

20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010


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Interest Coverage Ratio:

Findings and analysis: A ratio used to determine how easily a company can pay interest on

outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings

before interest and taxes (EBIT) of one period by the company's interest expenses of the same

period. The lower the interest coverage ratio, the higher chance that company's debt burden and

the greater the possibility of bankruptcy or default. EBL current position is improving in last 2

years. In 2010 Interest coverage ratio was 1.23 on the other han d EBLs direct competitors hadonly 1. An interest coverage ratio below 1.0 indicates the business is having difficulties

generating the cash necessary to pay its interest obligations.

1.23 1.001.13 1.231.15 1.13

0.00

0.50

1.00

1.50

EBL UCB

2010

2009

2008


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RECOMMENDATIONs:

1. EBL should restructure their capital structure(reduce in debt)

2. Need to invest risk free investment like T-BILL, Government Securities.

3. Need to focus more on interest margin

4. Interest coverage should be increased.

Efficiency Ratio: Formula EBL(2010) EBL(2009) EBL(2008)

1.Bad Debt Ratio: Bad debts / accounts receivable. 0.00698525 0.006122 0.011717882. Tax ManagementEfficiency:

NI/Net Operating Income Beforetaxes 0.607349 0.53857 0.41353877

3. Asset ManagementEfficiency:

Total operating Revenues/TotalAssets 0.06047785 0.05738105 0.06810507

4. Credit to Deposit

Ratio Total loan/Deposit 96.58% 92.79% 95.40%5. Expense ControlEfficiency

Net Operating Income beforeTax/Total Operating Revenue 0.617951 0.5832 0.52153745

6.EmployeeProductivity Ratio

Net Operating Income/No. of FullTime employee 6600001 5273521 4851420


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Efficiency Ratio: Formula UCBL(2010) UCBL(2009) UCBL(2008)

1.Bad Debt Ratio: Bad debts/accounts receivable. 0.008902 0.0243622 0.0183882.Tax ManagementEfficiency:

NI/Net Operating IncomeBefore taxes 0.600703 0.60485 0.522397

3. AssetManagementEfficiency:

Total operating Revenues/TotalAssets 0.078737817 0.066267397 0.06810507

4.Credit to DepositRatio Total loan/Deposit 80.64% 77.81% 77.63%5. Expense ControlEfficiency

Net Operating Income beforeTax/Total Operating Revenue 0.4623 0.296966 0.35623

6.EmployeeProductivity Ratio

Net Operating Income/No. ofFull Time employee 2359650 1846153 1792950

Graph Analysis of Bad Debt Ratio


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Findings and Analysis: Bad debt ratio is how much of total debt will not be repaid or chance of

default by any loan or debtor. A high Bad debt ratio is not good for bank. EBL bad debt ratio was

quiet low and very impressive. The bad debt almost become half in year from 2008 to 2010. This

is good sign for EBL. EBLs direct competitor UCBs Bad debt rate was very high in year 2008

and 2009 but scenario changed significant portion in year 2010.

Graph Analysis of Tax Management Efficiency

0.0070.009

0.006

0.024

0.012

0.018

0.000

0.005

0.010

0.015

0.020

0.025

0.030

EBL UCB

2010

2009

2008


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Findings and analysis: The tax management efficiency ratio of a fund measures what

percentage of a funds earnings is lost to taxation. It is extremely important to consider tax

portion. Capital gain and dividend which options bank takes they have consider about tax factor.

Above graphs shows that both EBL and UCB has almost same position to manage the tax. EBL

tax management ratio was in 2010 was 0.6073 on the other hand their direct competitor hadalmost same ratio of 0.6007 in year 2010.

Graph Analysis of Asset Management Efficiency:

0.6073 0.6007

0.5386 0.6049

0.4135 0.5224

0%

20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010


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Findings and Analysis: Total operating Revenues/Total Assets. It refers to proper utilization of

asset in generating revenues. Higher the ratio higher is the assets manage efficiency. EBL

performance was stable over the last 3 years but the performance of UCB was significant in last

3years. In 2010 UCB has managed the asset better than the EBL.

Graph Analysis of Credit to Deposit Ratio

0.060 0.079

0.0570.066

0.068

0.068

0.000

0.050

0.100

0.150

0.200

0.250

EBL UCB

20082009

2010


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Findings and Analysis: Total loan/Total Deposit. It represents the percentage of loan provided

to customer compare to deposit received by the bank. That means EBL has provided 96.59 taka

loan to the customer per 100 tk. deposits received. EBL has outperformed UCB in this ratio in

last three years and performance was very impressive for the Eastern Bank Limited (EBL).

96.59% 80.65%

92.79%77.82%

95.40%77.64%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

EBL UCB

2008

2009

2010


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Expense Control Efficiency

Findings and Analysis: it means how efficiently the bank is controlling their expenses. Bank

has significance in controlling unusual expenses. EBL failed to control the expenses over the last

3 periods. EBL had high expense during last 3 years. On the other hand their competitor bankUCB managed to control their expenses more efficiently.

Graph of Employee Productivity Ratio

0.6180 0.4623

0.5832

0.2970

0.5215

0.3562

0.0000

0.5000

1.0000

1.5000

2.0000

EBL UCB

2008

2009

2010


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Findings and Analysis: Net Operating Income/No. of Full Time employee. This ratio shows

that how much employee efficient to generating profit. It indicates productivity of full time

employee. Higher the ratio its good for the bank. EBLs per emp loyee generate 6600001 tk in

total operating income. Which is very good and the total employee of the bank were 973,878 and

763 in 2010, 2009 and 2008 respectively; the growth was very impressive in last three years for

EBL. EBLs direct competitors UCBs employee productivity is good but comparing with EBL it

was not satisfying for the UCB. United Commercial bank (UCB) per employee contribution tooperating profit is almost 1/3 of EBL. The total number employees were 2738, 2508 and 2292 in

2010, 2009 and 2008 respectively.

6600001 2359650

5273521 1846153

4851420 1792950

0%

20%

40%60%

80%

100%

EBL UCB

20082009

2010


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RECOMMENDATIONs:

1. Need to control the Expense of the bank

2. EBL should focus more on asset utilization

3. Bad debt must be reduced

4. EBL should focus more on retain earnings rather than Dividend to get tax exemption

5. Lower the non-Interest expenses

6. Focus in acquiring deposit rich customers. It will reduce non-interest expenses

7. Reschedule the loan maturity and interest rate if a client unable to pay loan amount or

interest.

8. EBL has to improve their employee productivity. For that they can hire new efficient

employee or trained the existing employee.

Profitability Ratio: Formula EBL(2010) EBL(2009) EBL(2008)

1. Gross Profit Margin Gross Profit Total Revenue 0.5722 0.4344 0.3695

2.Operating Margin EBIT/Sales 0.62882 0.4795 0.45617109

3.Return on asset(ROA) Net Income/Total Asset 2.955% 2.0181% 1.46866%4.Return on Equity(ROE) Net Income/Total Equity 0.200668 0.1712 0.168665275.Return onInvestment(ROI) Net profit / Total investment 0.246742 0.16517 0.14993228

6. Net Interest Margin Net Operating Profit/TotalAssets 0.07873782 0.0662674 0.06810507


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Graph of Gross Profit Margin

0.5722 0.3836

0.4344 0.2214

0.3695 0.2545

0%20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010

Profitability Ratio: Formula UCBL(2010) UCBL(2009) UCBL(2008)

1. Gross Profit Margin Gross Profit/Total Revenue 0.3836 0.2214 0.2545

2.Operating Margin EBIT/Sales 0.4998 0.44867 0.426123.Return onasset(ROA) Net Income/Total Asset 1.679% 1.031% 1.180%4.Return onEquity(ROE) Net Income/Total Equity 0.2791 0.1635 0.174435.Return onInvestment(ROI)

Net profit / Totalinvestment 0.14497 0.099813 0.106204

6. Net Interest Margin Net Operating Profit/TotalAssets 0.060477851 0.057381052 0.06342234


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Findings and Analysis: Gross profit/Total Revenue. Higher the number is good for the

company. EBL has outperformed UCB in this ratio over the last three years. EBL growth was

significantly higher in last 3 periods. On the other hand UCB growth was good in 2009 to 2010.

Graph Analysis of Operating Profit Margin

Findings and Analysis: EBIT/Sales. It represents how company is generating earnings from thesales activities. In the period of 2010 EBL has performed better than the UCB but in 2009 and

2008 performance of both the bank are almost similar.

0.6288 0.4998

0.4795 0.4487

0.4562 0.4261

0%

20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010


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Graph Analysis of Return on asset (ROA)

Findings and Analysis: ROA represent the return realized from the total asset of the company.

Higher the ratio that means more efficient the performance of the company is. From the above

analysis we can say that ROA of EBL is better than UCB over the period of 2008-2010. ROA

has increased almost double from 2008 to 2010 for Eastern Bank Limited. On the other hand the

performance of UCB was poor during year 2008 to 2009 but has increased in 2010.

2.96%

1.68%2.02%

1.03%1.47%

1.18%

0.00%

1.00%

2.00%

3.00%

4.00%

EBL UCB

2010

2009

2008


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Graph Analysis of Return on Equity (ROE)

Findings and Analysis: Net income/Total shareholders equity. ROE means return on

shareholders equity in the company represent how efficiently company is using equity of the

shareholders to generate profit. Higher the percentage higher is the efficiency of the company.

Eastern Bank Limited has increased at a significant rate during the year of 2008-2010. EBL is

showing that shareholders equity is being used efficiently. Eastern banks direct competitorUCBs 2010 performance was very impressive. The growth in ROE from 2009 to 2010 was

significantly higher than the EBL.

20.067% 27.910%

17.120% 16.350%

16.867% 17.443%

0%

20%

40%

60%

80%

100%

EBL UCB

2008

2009

2010


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Graph Analysis of Return on Investment (ROI)

Findings and Analysis: Net Income/Total Investment. ROI represent return on investment made

by the company. Performance of Eastern bank limited was good in the period of 2008-2010.

EBL managed to maintain a significant growth in ROI over the last three years. On the other

hand Growth rate and performance of UCB was not good as EBL.

0.24670.1450

0.1652

0.0998

0.1499

0.1062

0.0000

0.1000

0.20000.3000

0.4000

0.5000

0.6000

EBL UCB

2008

20092010


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Graph Analysis of Net Interest Margin

Findings and Analysis: Net Operating Profit/Total Assets. It is Interest sensitive profit which is

realized by the bank. This ratio is the most important for the bank, because bank faces significant

interest rate risk. Spread between income and expense reduced due to interest rate risk. Interest

rate always fluctuates. Bank has to maintain a margin between maturity of asset and liability

especially in interest sensitive assets and liabilities. Higher the ratio higher is the banks margin.

EBL has maintained a stable net interest margin over the last three years especially in 2010. On

the other hand UCBs net interest margin grows slowly in 2010.

0.079

0.0600.066 0.0570.068 0.063

0.000

0.020

0.0400.060

0.080

0.100

EBL UCB

20102009

2008


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Graph of EPS

Findings and Analysis : 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. EBL

managed to maintain a very high growth in 2010. Their competitor UCB have not perform that

much well in EPS.

Graph of P/E Ratio

7.4971 8.3018

3.20595.8265

25.5593

5.7538

0.0000

5.0000

10.0000

15.0000

20.0000

25.0000

30.0000

35.0000

40.0000

EBL UCB

2008

2009

2010


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Findings and Analysis: A valuation ratio of a company's current share price compared to its

per-share earnings. EBL P/E ratio is very good in 2008 and 2009. It shows a fundamental share.

Investors will invest more on EBL. On the other hand UCB P/E ratio is too high. Potential

investor will not invest in UCB due to high P/E ratio.

Graph of Dividend per share (Bonus Share)

23.57

75.5712.94

0

12.29

93.74

0

20

40

60

80

100

120

140

160

180

EBL UCB

2008

2009

2010


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Findings and analysis: Total Dividend/Total shares. Both the bank did not given any cash

dividend for the last 3years. But they have given bonus share to the investors. EBL has given

55% Stock for their investors. That means investors who hold 100 shares they will get 55 shares

bonus. Some banks prefer Stock option over cash dividend due to cash position. EBL has given

55% stock for their investors which is very good comparing with last two years. EBL direct

competitor UCB Dividend rate was very low in last 3 years.

55%

17% 20%25%

30%25%

0%

10%

20%

30%

40%

50%

60%

2010 2009 2008

EBL

UCB


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RECOMMENDATIONs:

1. Need to improve operating and financial efficiency of the bank

2. have to be more efficient to make financial decisions and analysis

3. Net Asset value should be increased.

4. Management skills and reputations is the key factor to improve market position

5. EBL should engage more CSR (Corporate Social Responsibility). It will appreciate and

attract new investors.

6. EBLs Dividend payout should be consistent. Because it will improve EBL image in the

market.

Conclusion

Finally after comparing all the ratios above, we can conclude that the performance of EBL was

quite good in comparison with UCB but we also like to include that the performance could be

even better than the previous years. So we strongly recommend taking initiative discussed above

to improve the condition of the bank in future. EBL is one of the prominent banks in Bangladesh.

EBL should more engage in CSR activates in our country. EBL should help more in developing

financial and economic growth of the country. I have calculated 23 vital ratios which are very

important for the evaluation the performance of the bank. These ratios shows the position the

EBL is now in. it will help to any investors to identify basic information about EBL and potential

investors to invest in right place.


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Bibliography

1. Eastern Bank Limited. (2008). Annual Report 2008 . Retrieved on November10, 2011



4. Eastern Bank Limited. (n.d). Retrieved on November 11, 201. Retrievedfrom

Website: www.ebl-bd.com

5. United Commercial Bank Limited. (2008). Annual Report 2008 . Retrievedon November 11, 2011

6. United Commercial Bank Limited. (2009). Annual Report 2009 . Retrieved

on November 11, 2011

7. United Commercial Bank Limited. (2010). Annual Report 2010 . Retrievedon November 11, 2011


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8. United Commercial Bank Limited. (n.d). Retrieved on November 11, 2011.Retrieved

Website: www.ucbl.com

Appendix


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Documents

Financial calculation of EBL