National Credit and Commerce Bank Ltd., popularly known as NCC Bank Ltd.

Started banking operations on 17 May 1993 with an authorized capital of Tk 750 million
divided into 7.5 million ordinary shares of Tk 100 each and paid up capital of Tk 195
million. The paid up capital was enhanced to Tk 390 million in 2000. NCCBL is the
restructured form of the first investment company in the country, the National Credit
Limited (NCL), which started business with a paid up capital of Tk 50 million and
survived 8 years before its normal operations were suspended.

 Mission, Vision, Objectives

=> Mission:
Mobilize financial resources within home and abroad to contribute to Agricultures,
Industry & Socio-economic development of the country and to pay a catalytic role
in the formation of capital market.

=>Vision:
To become the Bank of choice in serving the Nation as a progressive and Socially
Responsible financial institution by bringing credit & commerce together for profit
and sustainable growth.

=>Objectives:
● Customer driven focusing
● Total commitment of quality of services.
● Ensure quality human resources inside of the organization.
● Socio economic change through integration of credit and commerce
Financial Ratio Analysis of the NCC Bank Ltd.
Financial ratio analysis is the calculation and comparison of ratios which are derived
from the information in a bank's financial statements. The level and historical trends of
these ratios can be used to make inferences about a bank's financial condition, its
operations and attractiveness as an investment.

For this assignment I select NCC Bank to calculate and compare between 2008 and 2009
financial year performance.

# Key Profitability Ratios in Banking:

NIAT
1. Return on Equity = ---------------------------- * 100
Total Equity Capital

1719.50
For 2009 ROE = ------------ *100 = 28.49%
6034.44

882.27
For 2008 ROE = ------------ *100 = 21.75%
4055.29

Interpretation: Usually ratios over 20% are considered attractive. If a company can
return its shareholders twenty paisa or more for every taka invested, investors can be
reassured that the company is returning wealth to its shareholders. Here, In 2009 & 2008
both ROE more then 20.

In 2009 the ROE is 7 paisa greater then the 2008. That mean the bank is doing well. They
earn more in 2009 in contrast their equity capital.
 NIAT
2. Return on Asset = ---------------------------- * 100
Total Asset

1719.50
For 2009 = ------------ *100 = 2.60%
65937.49

882.27
For 2008 = ------------ *100 = 1.53%
57365.52

Interpretation: The ROA figure gives investors an idea of how effectively the bank is
converting the money it has to invest into net income. The higher the ROA number, the
better, because the company is earning more money on less investment.

From here we can say that the NCC Bank has more ROA in 2009 then the 2008. So, the
bank is earning more money by investing less money in 2009.

Interest income from loans & securities investment –

Interest expense on deposit & other debts
3. Net Interest Margin = ----------------------------------------------------------------- * 100
Total Asset

1527.02
For 2009 = ------------ *100 = 2.31%
65937.49

1349.74
For 2008 = ------------ *100 = 2.35%
57365.52

Interpretation: Net Interest Margin (NIM) is a measure of the difference between the
interest income generated by banks and the amount of interest paid out to their lenders
(for example, deposits), relative to the amount of their assets.

Here we saw that, in 2008 the NIM is higher then the 2009. So, Bank’s NIM is going
lower because of high competition in the market and the fluctuation of interest rate.
 Non Interest Revenue – Non Interest Expense
4. Net Non-Interest Margin = --------------------------------------------------------------- * 100
Total Asset

1610.67
For 2009 = ------------ *100 = 2.44%
65937.49

1013.74
For 2008 = ------------ *100 = 1.76%
57365.52

Interpretation: In case of NNIM the NCC Bank is performing well rather then the
previous year. Because bank provide different types of service to their clients. For this
their non interest margin is increasing day by day.

Total Operating Revenue – Total Operating Expense

5. Net Bank Operating Margin = -------------------------------------------------------------* 100
Total Asset

3137.69
For 2009 = ------------ *100 = 4.75%
65937.49

2363.48
For 2008 = ------------ *100 = 4.12%
57365.52

Interpretation: Net Bank Operating Margin is the combination of both interest & non-
interest income. It is shows the total operating income against the total asset. Here in
2009 the NCC Bank’s NBOM is increasing slightly then the 2008. the reason is their non-
interest income is much more higher then the year 2008 but the interest income is slightly
less in year 2009 then the previous year.
 NIAT
6. Earning Per Share = ------------------------------------------------
Common Equity Share Outstanding

1719.50
For 2009 = ------------ = 75.26
22.84

882.27
For 2008 = ------------ = 38.61
22.84

Interpretation: The portion of a bank's profit allocated to each outstanding share of

common stock. Earnings per share serve as an indicator of a bank's profitability. As a
bank's earnings increase, Earnings per share will look better.

Here, the share is remaining same for the both year but the EPS is going to double in
2009 then the 2008. That mean the bank’s profit is increased dramatically and the price of
the share will be more attractive in 2009.

# Risk Ratios:

Classified Loan
1. Credit Risk = ---------------------------- * 100
Total Loans & Lease

1420.56
For 2009 = ------------ = 2.81%
50387.68

1902.58
For 2008 = ------------ = 4.10%
46332.68

Interpretation: The credit risk ratio is the portion of default or classified loan of the total
loans & lease. The higher the portion the default loan is also higher. From the analysis we
can say that in 2009 the credit risk 2.81% that mean in 100 tk. 2.81 tk. Is the default loan.
In case of NCC Bank the credit risk ratio is much more lower then the 2009 from the
2008 financial year. That mean they minimize their classified loan in the recent year.
 Net Loans (Cash + Gov. Security)
2. Liquidity Security = ------------------------------------------ * 100
Total Asset

12837.43
For 2009 = ------------ *100 = 19.46%
65937.49

9034.82
For 2008 = ------------ *100 = 15.74%
57365.52

Interpretation: The liquidity security is the measure of the portion of loans among total
assets which have more liquidity. Such as, cash & Government security.

In case of NCC Bank, in 2009 they have 19.46% liquidity security and 15.74% in 2008.
That means they can easy liquid their 20% asset in anytime. In comparison of 2008 &
2009 they have more liquidity security in 2009 FY.
# Earning Efficiency:

Total Interest Income Total Interest Expense

1. Earning Spread = ----------------------------- - ----------------------------------------------
Total Earning Assets Total Interest Bearing Bank Liability

6487.76 4960.74
For 2009 = ------------ - -------------- = 0.0179
60059.21 55037.44

5449.72 4099.98
For 2008 = ------------ - -------------- = 0.0191
52859.50 48818.41

Interpretation: Earning spread measures the effectiveness of bank’s intermediation

funding and also the intensity of competition. The high the competition the less the
spread. In 2009 the spread was less then the 2008 that means the completion was higher
in 2009.

In 2009 the NCC Bank faced lots of competition to grave the market share. For this they
need to gave more interest to the depositor and took less interest from the borrowers.
# Analyzing Profitability:

NIAT Total Operating Rev.

1. Return On Asset = ------------------------ * -------------------------- *100
Total Operating Rev. Total Assets

NPM 2009 = 39.3% AU 2009 = 6.63%

NPM 2008 = 26.5% AU 2008 = 5.78%

For 2009 ROA = 2.60%

For 2008 ROA = 1.53%

Interpretation: Net profit margin ratio measures the relationship between the net profit
and the level of total operating revenue. This used to establish whether the bank has been
efficient in controlling its expenses. By comparing two consecutive year we saw that
NCC Bank has the more control over its expense in 2009 then the 2008 FY.

Asset Utilization ratio offers managers a measure of how well the bank is utilizing its
assets in order to generate sales revenue. An increasing AU would be an indication that
the firm is using its assets more productively. Here the AU is increased in 2009 then the
2008. Such change may be an indication of increased managerial effectiveness.

The increase in NPM & AU makes an increase in ROA.

Total Assets
2. Return On Equity = ROA * -------------------------- *100
Total Equity Capital

EM 2009 = 10.92 EM 2008 = 14.14

For 2009 ROE = 28.49%

For 2008 ROE = 21.75%

Interpretation: EM ratio shows a bank's total assets per tk. of stockholders' equity. A
higher equity multiplier indicates higher financial leverage, which means the bank is
relying more on debt to finance its assets. In case of NCC Bank they are less rely on debt
in 2009 then the previous year.
 Total Operating Expense
# Operating Efficiency = -------------------------------- * 100
Total Operating Revenue

1234.59
For 2009 = ------------ *100 = 28.23%
4372.28

954.169
For 2008 = ------------ *100 = 28.76%
3317.65

Interpretation: Operating efficiency measure the effectiveness of banks operation. The

higher the operation efficiency means the bank need to expense more for operating
revenue. In 2009 the NCC Bank expensed 28.23 tk. to earn 100 tk. revenue. In contrast
they expensed 28.76 tk. to earn 100 tk. operating revenue. Here the banks operating
efficiency more or less same for the both year.

Net Operating Income

# Employee Productivity = -------------------------------
No. of Employee

3137.69
For 2009 = ------------ = 2.097
1496

2363.48
For 2008 = ------------ = 1.688
1400

Interpretation: Employee productivity means the per employees average contribution in

the net operating income. In 2009 per employees contribution was 2.097 million tk. and
in 2008 it was 1.688 million tk. So we can easily say that the employee productivity is
increase dramatically in 2009 then the FY 2008.
 Conclusion
From the analyze and interpretation of the financial data of the NCC Bank Limited we
identified many ratios. From those ratios we can easily understand the performance of
the bank at a glance. By comparing those ratios we also saw that the bank is did well in
2009 then the FY 2008. The net profit as well as the EPS is also increased in 2009.

So finally we can say that the NCC Bank Ltd. Is doing great job in the banking sector
and they are doing well gradually.
 Assignment on
Financial Ratio Analysis of NCC Bank Ltd.

Course Title : Financial Market &

Institutions
Course Code : FIN- 553
Submitted to: : Dr. Sujit R. Saha
Professor
Business Administration
Eastern University
Dhanmondi, Dhaka.

Submitted By: ID:

Tanvir Ahmed 101600042

Submission Date: 05 August 2010