RATIO ANALYSIS OF THE ANNUAL REPORT ON STANDARD BANK, CITY BANK AND BRAC BANK.

COURSE: FIN-231

PREPARED FOR:
S.M.ABDUS SHAKUR (ZAMAN) FACULTY

PREPARED BY:
1. FARAH HASAN SARAH- 101 192 025 2. HOMAYRA BINTE WALI- 101 185 025 3. FARZANA HAQUE BITHI- 101 194 025 Students, M.H. school of Business Presidency University

DATE OF SUBMISSION: 15.7.2011

LETTER OF TRANSMITTAL

Dated: 15th July, 2011 Abdus Shakur Zaman Faculty M.H.School of Business Presidency University Subject: Submission of the report Here is the report which is due on 15th July 2011 as a requirement for completing the course on Introduction to Finance (FIN-231). To prepare this report we have collected the information about Standard bank, City Bank and BRAC Bank using the Internet. Ratio analysis is used in much of our daily life. We buy cars based on miles per gallon; we evaluate baseball players by earned run and batting average, and so on. These all are ratios constructed to judge comparative performance. Financial ratios are used to weight and evaluate the operating performance of the firm. Through is calculation, we will use to evaluate various measures such as net income to sales and current assets to current liabilities will be computed for a hypothetical company and examined in light of industry and norms and past trends. Thats why we are making this report so that we can learn how to evaluate the ratio analysis of a company and then compare it with one another. We thank for giving us an opportunity to work on this area. It has developed our knowledge base on financial sectors in Bangladesh. If you find any difficulty regarding understanding any part of this report, please feel free to contact the undersigned.

Regards

Farah Hasan Sarah Group Leader

TOPICS

TOPICS:

1. Introduction 2. Company Profile of Standard Bank, City Bank and BRAC Bank 3. Analysis and Comments 4. Ratio analysis 5. Graphic charts 6. Financial Statements.

1. INTRODUCTION:
1.1 ORIGIN: This report has been assigned by our course instructor Abdus Shakur Zaman, faculty, M.H.School of Business, Presidency University as a requirement for fulfill of the course on Introduction to Finance ( FIN-231). This report is due on 15th July 2011.

1.2 SCOPE:

This report is basically based on to compare the ratio analysis with one company to other. Through this report we are comparing three banks ratios of Standard bank, City Bank and BRAC bank.

1.3 SOURCES:

To prepare this report, we used secondary information from websites, the annual report books and journals.

1.4 REPORT PREVIEW: In this report, we are covering the company profile of Standard Bank, City bank and BRAC bank, analysis of banking industries, ratio analysis of the banks, and finally the graphic chart for evaluation of the banks.

2. COMPANY PROFILE:

2.1 STANDARD BANK:

Standard Bank Limited (SBL) was incorporated as a Public Limited Company on May 11, 1999 under the Companies Act, 1994 and the Bank achieved satisfactory progress from its commercial operations on June 03, 1999. SBL has introduced several new products on credit and deposit schemes. It also goes for Corporate and Retail Banking etc. The Bank also participated in fund Syndication with other Banks. Through all these myriad activities SBL has created a positive impact in the Market.

Objectives

To be a dynamic leader in the financial market in innovating new products as to the needs of the society. To earn positive economic value addition (EVA) each year to come. To top the list in respect of cost efficiency of all the commercial Banks. To become one of the best financial institutions in Bangladesh economy participating in the most significant segments of business market that we serve.

Core Values

Our Shareholders: By ensuring fair return on their investment through generating stable profit. Our customer: To become most caring bank by providing the most courteous and efficient service in every area of our business. Our employee: By promoting the well being of the members of the staff. Community: Assuring our socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives.

2.2

City Bank:

City Bank is one of the oldest private Commercial Banks operating in Bangladesh. It is a top bank among the oldest five Commercial Banks in the country which started their operations in 1983. The Bank started its journey on 27th March 1983 through opening its first branch at B. B. Avenue Branch in the capital, Dhaka city. It was the visionary entrepreneurship of around 13 local businessmen who braved the immense uncertainties and risks with courage and zeal that made the establishment & forward march of the bank possible. Those sponsor directors commenced the journey with only Taka 3.4 crore worth of Capital, which now is a respectable Taka 330.77 crore as capital & reserve. City Bank is among the very few local banks which do not follow the traditional, decentralized, geographically managed, branch based business or profit model. Instead the bank manages its business and operation vertically from the head office through 4 distinct business divisions namely

I. II. III. IV.

Corporate & Investment Banking; Retail Banking (including Cards); SME Banking; & Treasury & Market Risks The bank currently has 88 online branches and 10 SME service centers and 1 SME Agro center spread across the length & breadth of the country that include a full fledged Islami Banking branch. Besides these traditional delivery points, the bank is also very active in the alternative delivery area. It currently has 83 ATMs of its own; and ATM sharing arrangement with a partner bank that has more than 550 ATMs in place; SMS Banking; Interest Banking and so on. It already started its Customer Call Center operation. The bank has a plan to end the current year with 100 own ATMs.

2.3

BRAC Bank:

BRAC Bank is the last organization to have received a commercial banking license from Bangladesh Bank, making it the youngest private commercial bank in Bangladesh. Its headquarters are based in the capital Dhaka. The bank is partially owned by BRAC, the largest non-government organization in the world, International Finance Corporation, the private sector arm of The World Bank Group and Shore Cap International. Though BRAC Bank was formed with the aim to serve the millions of small and medium enterprises (SMEs) in the country. Having pioneered the concept of SME financing in Bangladesh, it is the fourth largest SME bank globally. The company also provides services within corporate and institutional banking, retail banking, as well as probashi banking, which specifically caters to non-resident Bangladeshis abroad. Other areas include customized treasury and foreign exchange solutions, and custody services. It ranks amongst the top banks nationally that processes remittances from abroad.

3. ANALYSIS &COMMENTS:
3.1 Profit Margin: The industry average is 69.57% where the highest profit margin is in Standard Bank. The more higher the profit margin the highest the safety. 3.2 Return on assets The industry average is 1.66 percent but the minimum return on assets of the bank is standard bank of 1.57 percent. A satisfactory return on assets may be achieved through high profit margin.

3.3 Return on equity The industry average is 21.93 percent where the minimum highest ownership capital is in Standard bank of 18.27 percent. The owner of the Standard Bank is more amply rewarded than are other shareholders in the industry.

3.4 Receivable turnover The industry average is 3.60 but the highest receivable turnover is in City bank of 6.91. That means this is 2 times faster than industry norms.

3.5 Average credit period The industry average is 177.39where highest average collection period is 209.50 in Standard bank. That is 32 times faster than the industry norms.

3.6 Inventory turnover The industry average of Standard bank is 1.69 which is more than the industry inventory average of 0.94. That means the Standard Bank generates more sales per dollar inventory than the average company in the industry.

3.7 Fixed asset turnover The Standard Bank has quite more than fixed assets turnover of 6.26 than the industry average of 2.13.

3.8 Total assets turnover The industry average is 0.025 and the BRAC bank has 0.033, the Standard bank has 0.22, and City Bank has 0.27.

3.9 Current ratio The industry average is 0.44 and Standard Bank has 0.409, City bank has 0.29 and BRAC Bank has 0.35.

3.10 Quick ratio The industry average is 0.374 and the Standard bank has 0.341, City Bank has 0.19 and BRAC bank has 0.21.

3.11 Debts-to- assets The industry average is 91.6 percent where the city bank has 92 percent. That means the company debt was being well managed compared to debt management of the other firms of the industry.

4. RATIO ANALYSIS:

4.1 Ratio analysis

standard bank

City bank

BRAC bank

1. Profit margin 2. Return on assets 3. Return on equity 4. Receivable turnover 5. Average collection period 6. Inventory turnover 7. Fixed asset turnover 8. Total asset turnover 9. Current ratio 10. Quick ratio 11. Debt-to-assets

71.41% 1.57% 18.27% 1.71x 209.50 x 1.69x 6.26x 0.022x 0.409x 0.3411x 91.37%

39% 1.07% 13.96% 6.91x 52.98x 0.40x 0.74x 0.027x 0.29x 0.19x 92%

43.89% 1.45% 16.43% 2.41x 149.56x 0.55x 1.87x 0.033x 0.35x 0.21x 90%

4.2 RATIO ANALYSIS OF STANDARD BANK:

Profitability Ratio
1. Profit Margin 2. Return on assets 3. return on equity

2009
71.41% 1.57% 18.27%

Asset utilization Ratio

4. Receivable turnover 5. Average Collection Period 6. Inventory Turnover 7. Fixed Asset Turnover 8. Total Asset Ratio 1.71x 209.50x 1.69x 6.26x 0.022x

Liquidity Ratio
9. Current Ratio 10. Quick Ratio 0.409x 0.3411x

Debt Utilization Ratio

11. Debt to total assets 91.37%

4.3 RATIO ANALYSIS OF CITY BANK:

Profitability Ratio
1. Profit Margin 2. Return on assets 3. return on equity

2009 39% 1.07% 13.96%

Asset utilization Ratio

4. Receivable turnover 5. Average Collection Period 6. Inventory Turnover 7. Fixed Asset Turnover 8. Total Asset Ratio 6.91X 52.98X 0.40X 0.74X 0.027X

Liquidity Ratio
9. Current Ratio 10. Quick Ratio 0.29x 0.19x

Debt Utilization Ratio

11. Debt to total assets 92%

4.4 RATIO ANALYSIS OF BRAC BANK:

Profitability Ratio
1. Profit Margin 2. Return on assets 3. return on equity

2009 43.89% 1.45% 16.43%

Asset utilization Ratio

4. Receivable turnover 5. Average Collection Period 6. Inventory Turnover 7. Fixed Asset Turnover 8. Total Asset Ratio 2.41x 149.56x 0.55x 1.87x 0.033x

Liquidity Ratio
9. Current Ratio 10. Quick Ratio 0.35x 0.21x

Debt Utilization Ratio

11. Debt to total assets 90%

5.

GRAPHIC CHART ANALYSIS:

PROFITABILITY RATIO ANALYSIS
80.00% 70.00% 60.00% 50.00% Profit Margin 40.00% 30.00% 20.00% 10.00% 0.00% Standard Bank City Bank BRAC Bank Return on Assets Return on Equity

ASSETS UTILIZATION RATIO ANALYSIS

250

200 Receivable Turnover Average collection Period 100 Inventory Turnover Fixed assets turnover 50 Total assets turnover

150

0 STANDARD BANK CITY BANK BRAC BANK

LIQUIDITY RATIO ANALYSIS

0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 STANDARD BANK CITY BANK BRAC BANK Current ratio Quick ratio

DEBT UTILIZATION RATIO ANALYSIS

DEBT-TO-ASSETS
93% 92% 92% 91% 91% 90% 90% 89% STANDARD BANK CITY BANK BRAC BANK DEBT-TO-ASSETS