Chapter-1

Background of the study

Bangladesh is a developing country of the third world. The economic condition of this country is not
enough. The country is not yet been industrialized. The banking sector of our country is still emerging.
Bank is the protection of people against specific currency or money in exchange for regular transaction,
payment proportionate to the likelihood and cost of the risks involved. Brac Bank Ltd. companies have
become very popular in Bangladesh. Brac bank Ltd, as Bangladesh commercial bank Ltd, has been
started its operations in 2001 and in just. It is operating its activity successfully in Bangladesh in
recent years. They provide acceptance of loan facility, advancing loan facility, creation of credit facility,
clearing of cheque facility, financing foreign trade facility and remaining of funds facility which help to
trigger our business sectors. This study will help us to understand the current scenario of united
commercial bank (UCBL) in Bangladesh.

Objective of the study

The broad objective of the study is to analyze the productivity analysis, financial performances
of united commercial bank and to analyze the coverage and other aspects of the united
commercial bank products. To achieve this goal the following specific objectives are looked into:

An overview of united commercial bank(UCB)

Ratio analysis of united commercial bank.

Financial performances of united commercial bank.

Rational of the study

This report is prepared to give a concrete idea about the performance and the condition of UCBL
over last 8 years from 2007-2014.We believe that our report will help a lot those who want to get
an overall idea of UCBL as well as its financial statement. Bank management also can be using
the information of our observation for their managerial decision if needed.

Scope of the study

Inordertomaintainthespeedofdevelopmentnowbanksmustcompeteinthemarketplacebothwith

1
localinstitutionaswellasforeignones.Thepresentationoftheorganizationalstructureandpolicy
unitedcommercialBankLimitedandinvestigatingthestrategiesappliedbythemprovidethescopeof
thisreport.Thescopeofthisreportislimitedtotheoveralldescriptionofthebanks,theirservices,their
position in the industry, their financial performance and analysis of the practical progress of their
operation.Thescopeofthestudyislimitedtoorganizationalsetup,functionsandperformances.

Recent performance of UCBL in terms of deposit, investment and foreign exchange.

To analyze the banks current financial flows performed by UCBL

To obtain practical experience about banking activities by involving such type of program.

To build professional carrier in the banking sector as well as any credit providing institution.

Limitation of the study

a) The lack of experience in the survey field was a limitation factor.

b) Lack of time and resource constraint has also limited the scope to conduct the survey smoothly and
prepare the report.
c) Sufficient report and publications as well as up to date information are not reading available.
d) There is possibility that the information might not provide the actual data due to unconsciousness
and conventional thinking.
e) There was problem of communication as the study area is big.
f) Financial support is essential to conduct a comprehensive study and as student we dont have that
ability to conduct the study in large scale.
g) There is problem of experience as we are not much experience in this type of

Chapter-2
Methodology of the study
This report is the combination of a graphical, numerical & descriptive which is based on just secondary
data. To study and shape the report as the final format the following one main aspect are considered:

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 Data
Data Analysis

Figure: 01 Data

Data Collection

For the task we have been assigned to work on General profited business in Bangladesh . In preparing
report, a reliable source of collecting data is a vital measurement. In this report, just secondary sources of
information have been used. The work progressed through collection of annual report.

Primary data are observed and recorded as part of an original study but we did not use any
primary source.
Secondary data are collected through the following sources:

Office Record;

Annual Reports;

Internet;

Different books etc.

Data Analyze:

Our main objective is to analyze the productivity of united commercial bank, financial performances of
(UCBL) in Bangladesh. To do so we have done Trend analysis of current ratio, Net working capital, quick
ratio, debt to total asset, debt to equity capital, gross profit margin, net operating margin, net interest
margin, net non interest margin, the net profit margin, time interest earning ratio, the degree of asset
utilization total asset turnover ratio, total equity multiplier, EPS, earning spread, cost income ratio etc We
have also shown ROA, ROE, and ROI through:

MS-Excel
MS-Word

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Data Presentation
To analyze the united commercial bank we have used some graphical analysis. However, the flowchart for
preparing the report is:

Topic selection &selecting

a site

Data collection Secondary

data

Data Presentation

Submission of
FinalReport

Chapter- 3

Company overview

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An overview of banking sector in Bangladesh, where we discus about the banks mission, vision, and
functions.

Vision
To be the bank of first choice through maximizing value of our clients, shareholder and employees and
contributing to the national economy with social commitments

Mission
To offer financial solutions that create manage and increase our clients wealth while improving the
quality of life in the communities we serve.

Objective

We put our customers first

We emphasize on professional ethics
We maintain quality at all levels
We believe in being a responsible corporate citizen
We say what we believe in

Board of Directors
1. M. A. Hashem-(chairmen)

2. Sharif Zahir (Vice chairmen)

3. Anisuzzaman Chowdhury (Director & Chairman, Executive Committee)

4. Lt. Gen. Abu Tayeb Muhammad Zahirul Alam, rcds, psc (Retd.)
Independent Director & Chairman, Audit Committee

5. M. A. Sabur
Director & Chairman, Risk Management Committee

6. Showkat Aziz Russell

Director

7. Md. Jahangir Alam Khan

Director

8. Hajee Vunus Ahmed

Director

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9. Mr.Showkat Aziz Russell-Doctor

10. Mr. Md Jahangir Alam Khan

11. Hajee Younus

12. HajeeMA Kalam

13. MrsNurNaharZaman

14. MrTanvir Khan.

15. Mrs Sultana Rezia Begum

16. Mr Shabbir Ahmed

Chapter 4
Theoretical aspect
Theoretical aspect discuss about financial performance analysis, objectives, Ratio, advantage of ratio
analysis, limitation of ratio analysis and groups of ratio.

Ratio analysis advantage

Financial ratio analysis is a useful tool for users of financial statement. It has following advantages:

1. It simplifies the financial statements.

2. It helps in comparing companies of different size with each other.

3. It helps in trend analysis which involves comparing a single company over a period.

4. It highlights important information in simple form quickly. A user can judge a company by just
looking at few numbers instead of reading the whole financial statements .

Limitation of ratio analysis

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Despite usefulness, financial ratio analysis has some disadvantages. Some key demerits of financial ratio
analysis are:

1. Different companies operate in different industries each having different environmental

conditions such as regulation, market structure, etc. Such factors are so significant that a
comparison of two companies from different industries might be misleading.

2. Financial accounting information is affected by estimates and assumptions. Accounting standards

allow different accounting policies, which impairs comparability and hence ratio analysis is less
useful in such situations.

3. Ratio analysis explains relationships between past information while users are more concerned
about current and future information.

Chapter-5

RATIO ANALYSIS AND DECISION MAKING:

2007 2008 2009 2010

current asset 48682930 59322237 80461643 12170609
current liabilities 42617834 54485725 77730401 11297078
1.1423135 1.0887665 1.0351373 1.0773236
current ratio
68 9 72 23
Net working capital 6065096 4836512 2731242 873531
inventories 37988301 45445518 62998028 9552705
0.2509425 0.2546854 0.2246690 0.2317328
Quick ratio
75 06 46 43
47043360 60410621 84778315 12195979
total liabilities
122 388 078 725
50180583 64794864 90483781 12977442
total asset
526 487 843 967
0.9374813 0.9323365 0.9369448 0.9397829
Debt to total asset
29 65 68 57
31372234 43842430 57054667 78146323
total equity
04 99 65 2

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 14.995221 13.779030 14.859137 15.606594
debt to equity capital
59 96 49 43
16678374 14630138 15418644 36299635
gross profit
32 78 93 00
33244747 41094420 51920546 78557489
total operating revenue
95 39 16 78
50.168448 35.601277 29.696615 46.207732
Gross profit margin
7 84 44 84
16678343 14630138 31251694 78244933
net operating revenue
2 78 80 7
0.3323664 2.2579164 3.4538448 6.0293028
Net operating margin
66 1 95 37
16277055 20085279 26170887 38354139
Net interest income
00 66 73 8
3.2436958 3.0998258 2.8923291 2.9554466
Net interest margin
39 61 22 08
33244747 41094420 25749678 40203349
Noninterest revenue
95 39 43 90
Provision for loan and 22837840 81730700 15029640 35320527
losses 5 0 0 54
6.1699091 5.0808579 2.6796751 3.7625458
Net non-interest margin
01 74 79 05
81512348 76474557 93289789 21797958
Net income
7 0 0 5
18.609474 17.967798 2.7747778
Net profit margin 24.518865
54 09 81
16678374 14630138 15418644 36299635
EBIT
32 78 93 00
27270301 37407657 43482348 56329474
Interest charges
52 03 62 38
time interest earned 0.6115947 0.3911001 0.3545954 0.6444163
ratio 9 1 95 63
the degree of asset 0.0662502 0.0634223 0.0573810 0.6053387
utilization 22 42 52 4
0.0662502 0.0634223 0.0573810 0.6053387
total asset turnover
22 42 52 4
15.995221 14.779030 15.859137 16.606594
total equity multiplier
59 96 49 44
1.6243802 1.1802564 1.0310111 1.6796805
ROA
48 54 61 47
25.982322 17.443046 16.350947 27.893773
ROE
01 67 76 64
Common equity shares 17906930 22387165 29062239
29102748
outstanding 0 0 6
4.5520001 3.4160000 3.2099999 7.4900000
earnings per share
87 61 96 85
43547356 57492936 69653216 94683614
total interest income
52 69 35 24
27270301 37407657 43482348 56329474
total interest expense
52 03 62 36

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 50180583 64794864 26170867 38354139
total earning asset
526 487 73 88
total interest bearing 47043360 60410621 77730401 11307078
liabilities 122 388 057 250
earnings spread 22.12 20.05 21.46 19.63
price per share 21.35 25 32.83 61.49
earnings per share 45.52 34.16 3.21 7.49
0.4690246 0.7318501 10.227414 8.2096128
price earnings ratio
05 17 33 17
13066373 16595431 20668851 31252555
total operating expense
63 61 36 99
0.3930357 0.4038366 0.3980861 0.3978303
cost income ratio
26 15 7 8

2011 2012 2013 2014

current asset 15673396 19024675 89338564 59223345
current liabilities 13948474 17173055 73498705 54845725
1.1236638 1.1078212 1.2155120 1.0798169
current ratio
5 35 83 78
Net working capital 1724922 1851620 15839859 4377620
inventories 11879441 15412944 20789441 17414610
0.2719978 0.2103138 0.9326575 0.7622970
Quick ratio
54 32 62 61
15292536 18927737 20582816 24360919
total liabilities
42 50 54 45
36889117 20744183 22633311 36981178
total asset
821 623 28 21
0.0414554 0.0912435 0.9094036 0.6587383
Debt to total asset
14 88 79 27
15966412 18110116 90504966 22491541
total equity
24 13 7 5
0.9577941 1.0451472 2.2742195 10.831147
debt to equity capital
61 19 58 1
29458049 15861255 30654094 27194610
gross profit
75 17 5 1
59729145 57622166 12398579 15209390
total operating revenue
97 28 21 02
49.319388 27.526308 24.723876 17.880145
Gross profit margin
84 35 81 14
60723181 58761344
net operating revenue 71263697 61521688
2 9
Net operating margin 1.6461001 2.8326660 3.1486200 1.6635945

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 18 6 19 9
89670227 76354139 10949542 26107887
Net interest income
7 8 3 7
2.4308043 3.6807493 4.8377995 7.0597771
Net interest margin
4 22 44 53
41439323 45639512 10985792 25479678
Noninterest revenue
54 53 11 43
Provision for loan and 30214651 34104425 10204422 25026941
losses 45 45 81 00
3.0428139 5.5606367 3.4522977 1.2242374
Net non-interest margin
12 98 67 42
51729145 37390611 11654094 10129789
Net income
9 4 5 0
8.6606203 6.4889284 9.3995403 6.6602204
Net profit margin
82 48 04 21
51729145 37390611 12398579 15468449
EBIT
97 40 211 3
50203212 55705211 15919861 43483248
Interest charges
15 23 508 62
time interest earned 1.0303951 0.6712228 0.7788120 0.0355733
ratio 43 64 02 52
the degree of asset 0.1619153 0.2777750 0.5478022 0.4112738
utilization 55 49 66 09
0.1619153 0.2777750 0.5478022 0.4112738
total asset turnover
55 49 66 09
23.104199 2.5007811 16.442260
total equity multiplier 11.454473
78 29 4
1.4022874 1.8024624 5.1490894 2.7391742
ROA
21 19 8 21
32.398728 20.646257 12.876745 45.038215
ROE
73 11 8 81
Common equity shares 12837162
69012472 70285621 32062239
outstanding 0
4.0296403 5.4179498 1.6581050 3.1594141
earnings per share
44 74 77 01
15351632 21318920 22999356 57492936
total interest income
098 218 931 67
10203211 14703210 15919861 37407657
total interest expense
476 208 508 03
51484173 66137100 22633313 64795263
total earning asset
37 10 220 387
total interest bearing 13948474 17053053 20582816 50410621
liabilities 593 781 547 388
earnings spread 20.22 22.02 21.3 20.9
price per share 35 22.6 36.45 32.44
earnings per share 3.52 1.9 3.66 3.15
9.9431818 11.894736 9.9590163 10.298412
price earnings ratio
18 84 93 7
total operating expense 88554563 92254985 82722094 10776651

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 1 5 7 36
0.1482602 0.1601032 0.6671901 0.7085525
cost income ratio
2 93 13 02

LIQUIDITY RATIOS:
These ratios are used to measure the short term solvency of an organization. These ratios show
the ability of the organization to convert quickly its assets into cash to pay its different types of
short term debts. The higher the ratio the company is more liquid and the lower the ratios, the
less liquid the company is which may experience the company financial distress to pay its short-
term debt.

Current Ratio: The ratio is considered to observe the liquidity status of an

organization.

The Formula:

Current Ratio: Total current assets/Total Current Liabilities.

Decision: UCBs current ratio is not balanced. The ratio was high in 2013 and low in
2014.The bank should reduce their current liability and increase current assets.

Net Working Capital: It measures a companys efficiency and its short term financial health.

The Formula: Net working Capital=Current assets-Current Liabilities

Decision: The bank should increase its working capital.

Quick Ratio: This ratio is also considered to observe the liquidity status of an organization.
This is an important ratio because sometimes a company may have heavy inventory as part of
its current assets which might be obsolete or slow moving. For those reasons eliminating
those inventories from current assets is doing the ratio. It expresses the true working capital
relationship which includes accounts receivables, prepaid and notes receivables available to
meet with the companys current obligations.

The Formula:

Quick Ratio: Current assets-Inventory/Current Liabilities

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Decision: The bank should eliminate some inventories that are time consuming to convert
into cash.

DEBT RATIOS:
Debt ratios are used to measure the extent of the companys with debt relative to equity and
its ability to cover interest and other fixed charges. These ratios address the companys long
term ability to meet its financial leverage. The higher the ratios the more indebtedness the
company owes. This higher results signal the possibility the company will be unable to earn
enough to satisfy its debt obligations.

Debt to Total Asset Ratio:

It tells the percentage of total assets that were defined by total debts. The lower the result of
the ratio the better off the company is.

The Formula: Debt To Total Asset Ratio=Total debt/Total asset

Decision: The bank should reduce its debts and increase its assets by making more
investments

Total Debt to Total Equity Ratio:

This ratio used to help how much shareholders capital can cover its liabilities.

The Formula: Total Debt to Total Asset Ratio=Total Debt/Total Equity

Decision: UCB used the debt most to earn revenues rather than the equity. It may increase
the risk of the bank .So to minimize the risk they should finance more equity.

Gross Profit Margin: It measures how much of every dollar of revenues is left over after
paying cost of goods sold.

The Formula: (Total Revenue-Cost of Goods Sold)/Total revenue

Decision: The bank should reduce its overhead, loan loss and miscellaneous expenses.

Net Operating Margin: It measures the companys revenue proportion which is left over
after paying for costs.

The Formula: (Total Operating Revenue-Total Operating Expense)/Total Asset

Decision: The bank should reduce operating expenses, increase operating revenue.

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Net Interest Margin: It measures how successful a firm

The Formula: Net Interest margin=Net Interest Income/Total Asset

Decision: If the bank can invest more in loans and securities that bear interests it would be
helpful for the bank.

Net Non Interest Margin:

The Formula: Net Non Interest margin= (Net Non-Interest Income-PLL)/Total Asset

Decision: To increase noninterest income the bank can do more fiduciary activities, insurance
services.

Net Profit Margin: It measures the amount of profit that a business can extract from its total
operations.

The Formula: Net Profit Margin=Net Income/Total operating Revenue

Decision: The bank can increase its net income by increasing the net yield on each asset hold,
increase fees associated with various services.

Time Interest earned Ratio:

It measures the extent to which operating income can decline before firm is unable to meet its
annual interest costs.

The Formula: Time Interest Earned Ratio=EBIT/Interest Charges

Decision: The firm has to reduce its interest charges or it can increase earnings from that
services that do not bear interests or taxes like fees for managing and protecting customers
property, checking account maintenance fees, savings accounts overdraft fees etc.

Degree of Asset Utilization: Measures the total revenue earned for every dollar of assets a
company owns.

The Formula: Degree of Asset Utilization=Total Operating Revenue/Total Asset

Decision: Investments should be increased, some assets should be disposed or a combination

of these steps should be taken.

Total Asset Turnover Ratio:

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It measures the turnover of all the firms assets.

The Formula: Total Asset Turnover=Operating Income/Total Asset

The Equity Multiplier: It measures the extent to which a company finances its assets with
debts.

The formula: The equity Multiplier=Total Asset/Total Equity

Decision:

Return on Assets:

It determines its ability to utilize the assets employed in that company efficiently and
effectively to earn a good return. Return on assets measures the amount of profit that the
company generates as a percentage of its assets.

The Formula: ROA=Net Income/Total assets

Decision: The bank can either increase its income by more basic earnings or reducing high
interest costs resulting from above average use of debt.

Earnings per Share: It measures the amount of profit a company generates from each share.

The Formula: Earning Per Share=Net Income/Common Equity shares standing

Decision: To increase earnings per share the bank has to increase net income by following
the ways as stated before.

Earnings Spread: It measures the effectiveness of a financial firms intermediation function

in borrowing and lending money and also the intensity of competition in the firms market
area.

The Formula: Earnings Spread= (Total Interest Income/Total Earning Assets)-(Total Interest
Expense/Total Interest Bearing liabilities)

Decision: To increase earning spread the bank has to earn more revenues from investments,
loans, service fees and reduce costs of borrowings, employee salaries and benefits.

MARKET VALUE:

Price/ Earnings Ratio: It shows how much investors are willing to pay per amount of
current earnings.

The Formula: Price/Earnings Ratio=Price Per Share/Earnings Per Share.

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 Decision: To increase this ratio the bank has to increase the value of assets.

Cost Income Ratio: It measures how efficiently a company is being run. The lower the
ratio.it is better for the firm.

The Formula: cost Income Ratio=Total Operating Expense/Total Operating Income

Decision: To reduce this ratio the bank has to reduce its all types of expenses.

Conclusion:

A sustainable business and mission requires effective planning and financial management. Ratio
analysis is a useful management tool that will improve your understanding of financial results
and trend over time, and provides key indicators of organizational performance. Managers will
use ratio analysis to pinpoint strengths and weaknesses from which strategies and initiatives can
be formed. Funders may use ratio analysis to measure results against other organizations or make
judgments concerning management effectiveness and mission impact.

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