Needs Improvement

There are many mistakes highlighted in your report. You are required to review the marked file
and read the instructions given below the highlighted part.
Interpretation part is very weak, you are required to view the evaluated file and view comments
and instructions given there. .

RATIO ANALYSIS
Here you are required to mention the companies and period under study, and other related
discussion regarding ratio and trend analysis
The same mistake was highlighted in previous submission. No change have been made.

1. Net Profit Margin

It is the percentage of revenue left after all expenses have been deducted from sales. In other
words, it can be defined that the amount of profit that a business can extract from its total
sales

Formula
𝑁𝑒𝑡𝑃𝑟𝑜𝑓𝑖𝑡𝐴𝑓𝑡𝑒𝑟𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛
= × 100
𝑁𝑒𝑡𝑆𝑎𝑙𝑒
2014 2015 2016
HBL (31,112,000/135,928,93) (35,470,458/139,360,273 (31,820,219/137,807,927
*100 )*100 )*100
= 22.80% = 25.45% = 23.09%
UBL (21,929,561/82,735,467) (25,727,149/94,352,931) (27,730,112/98,219,214)
*100 *100 *100
=26% =27% =28.23%

ABL (15,015,092/67,001,497) (15,120,307/72,116,230) (14,427,050/64,606,019)

*100 *100 *100
=22% = 21% = 22%
Graphical Representation
30

28.23
25 27
26 25.45
22.8 23.09
20 22 22
21

15

10

0
2014 2015 2016

ABL UBL HBL

Result Understanding
This step explains the process of converting bank’s sales into income. In other words, it explains
that how bank is managing its expenses.
Trend Analysis

In 2014 and 2016, ABL bank shows that Its income was good in these years. However, in 2015
the ratio of the bank lowers down.
From 2014 to 2016, UBL banks shows that tts income was increasing continuously.
From 2014 to 2015 shows that is banking is earning good income in these years however, in
2016 it was again decreased.
2. Gross Spread Ratio

The gross spread ratio refers to the underwriters' cut of the money raised in the offering.
It is an identifier to bank to increase or decrease the interest rate. Commented [AS1]:
Wrong description

Gross spread ratio will explain that how much direct cost will be
Formula deducted by banks from its total revenue. In case of banking
𝑁𝑒𝑡𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡𝑀𝑎𝑟𝑔𝑖𝑛 company direct cost always includes interest paid to the depositors.
= × 100 Higher the value of interest paid, lower will be the ratio of gross
𝑀𝑎𝑟𝑘 − 𝑢𝑝𝐸𝑎𝑟𝑛𝑒𝑑 spread.

It also implies that how much incomes is left after deducting the
direct expenses from the total revenue (Interest income).
 𝑁𝑒𝑡𝑃𝑟𝑜𝑓𝑖𝑡𝐴𝑓𝑡𝑒𝑟𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛
= × 100
𝑁𝑒𝑡𝑆𝑎𝑙𝑒
2014 2015 2016

44,001,196/24,936,885 76,761,401/142,491,463 79,713,711/137,807,927

HBL *100 *100 *100
=51.86% =53.87% =57.86%
UBL (44,966,921/ (55,841,770/94,352,931) (57,042,528/98,219,214)
82,735,467) *100 *100
* 100 =59.18% =58.07%
=54.35%

ABL 28186155/67001497 36139490/72116230 33,260,672 /64,606,019

*100 *100 *100
=42.06% =50.11% =51.48%

Graphical Representation
70

60
59.18 58.07
50 53.87 54.35
51.86 50.11 51.48

40
42.06
39.96
30

20

10

0
2014 2015 2016

ABL UBL HBL

Result Understanding
This ratio explains the spread of interest between borrowing and lending. Banks try to borrow the
money from depositors and then using these funds to make long-term loans to business.
Trend Analysis
From 2014 to 2016, ABL bank shows that its income was good in these years.
In 2014 and 2016, UBL banks shows that this ratio value decreased however in 2015 it increased
in 2015.
From 2014 to 2015 showing good status of HBL bank, It shows that is banking is earning good
income in these years however, in 2016 it was again decreased.
3: Spread ratio:
Spread ratio is an indicator to check that how the bank is able to pay its interest, in
contrast, to recover interest from the market.
Formula
Commented [AS2]:
How can you say that profitability of UBL decreases from 2014 to
2015. While the gross spread ratio shows that UBL gross profit is
increased from 53.87 % to 59.18. It can easily be analyzed that there
is an increasing trend in the gross spread margin.
Commented [AS3]:
Your interpretation and analysis part is very weak. You need to
mention the logical points regarding calculated values. For example,
low gross spread ratio shows that there direct expenses of banks in
form of interest paid to the depositors is quite high. Like in case of
HBL, interest paid to the depositors in 2016 is quite larger as
compared to 2015 and 2014. That is why the gross spread ratio
declined for the year 2016.

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡𝐸𝑎𝑟𝑛𝑒𝑑
=
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡𝐸𝑥𝑝𝑒𝑛𝑠𝑒

2014 2015 2016

HBL 135,928,939/68,498,443 142,491,463/65,730,062 137,807,927/58,490,216

= 1.98 times =2.16 times =2.35 times
UBL 82,735,467/37,768,546 94,352,931/38,511,161 98,219,214/41,176,686
=2.19 times =2.45 times =2.38 times
ABL 67,003,172/38,830,336 72116230/35976740 64,606,019/31,345,347
=1.72 times =2 times =2 times

Graphical Representation
 3

2.5
2.45 2.38 2.35
2 2.19 2.16
1.98 2 2

1.5 1.72

0.5

0
2014 2015 2016

ABL UBL HBL

Interpretation

Result understanding
This explains that interest in earned by a bank and how much paid to people.
Trend Analysis
From 2014 to 2016, ABL bank shows that it has earned good interest and used less expenses.
In 2014 and 2015, UBL banks shows that this ratio value decreased however in 2016. It means
that its expenses were less till 2015.
From 2014 to 2016 shows that HBL bank, It shows that this bank is using less expenses from
2014 to 2016. It is the good sign of this bank. Commented [AS4]:
Wrong interpretation

You are required to explain what these values actually means in

4 Non-interest income to total income ratio context to banking companies.

It explains that how much amount of income a bank is earning from market sale and how much Like in case of HBL: 1.98 times, 2.16 and 2.35 times. What these
numbers actually represent to the investor or a customer of
from interest. bank???????

Commented [AS5]:
Formula Wrong description
𝑁𝑜𝑛𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡𝐼𝑛𝑐𝑜𝑚𝑒 It shows that how much a bank is earning from Non interest
= × 100
𝑇𝑜𝑡𝑎𝑙𝐼𝑛𝑐𝑜𝑚𝑒 activities. Like service charges, other incomes etc. It shows that
Interest income is not only the source of income for banks rather
bank can generate income from other sources as well. Higher value
of this ratio would be better for any bank
 Working

Total Income ABL = Non Interest Income + Interest Income

2014 = 12,735,754+ 76,001,497

= Rs. 88,737,251
Total Income ABL = Non Interest Income + Interest Income
2015 = 9,755,138 + 72,116,230
= Rs.81,871,368
Total Income ABL = Non Interest Income + Interest Income
2016 = 11,210,491+ 64,606,019
= Rs. 75,816,510
UBL
Total Income UBL = Non Interest Income + Interest Income
2014 = 19,296,047 + 82,735,467
= Rs. 102,031,514
Total Income UBL = Non Interest Income + Interest Income
2015 = 21,987,007 + 94,352,931
= Rs. 116,339,938
Total Income UBL = Non Interest Income + Interest Income
2016 = 23,608,642 + 98,219,214
= Rs. 121,827,856
HBL

Total Income HBL = Non Interest Income + Interest Income

2014 = 19,674,789 + 135,928,939
= Rs. 155,603,728

Total Income HBL = Non Interest Income + Interest Income

2015 = 32,266,316 + 139,360,273
= Rs. 171,626,589

Total Income HBL = Non Interest Income + Interest Income

 2016 = 25,485,586 + 137,807,927
= Rs. 163,293,513

2014 2015 2016

HBL (19,674,789/155,603,728) 32,266,316/171,626,589 25,485,586/163,293,513

* 100 *100 *100
=12.6% =18.8% =15.6%

UBL (19,296,047/102,031,514) 21,987,007/116,339,938 23,608,642/121,827,856

* 100 *100 *100
=18.9% =18.8% 19.37%

ABL 12,735,754/88,737,251 9,755,138/81,871,368 11,210,491/75,816,510

*100 *100 *100
=14.35% =11.9% =14.78%

Graphical Representation
25

20
18.9 18.8 18.8 19.37

15
15.6
14.35 14.78
12.6
10 11.9

0
2014 2015 2016

ABL UBL HBL

Interpretation
Result Understanding
This explains that the amount of income a bank is earning from market sale and how much from
interest.
Trend Analysis

In 2014 and 2016, It show that it has good income from interest however it shows that its income
decreased in 2015.
From 2014 to 2016, UBL banks showed good status. This bank is making progress continuously.
In 2014 and 2016 shows that it is progressing HBL bank but it show negative status in 2015. Commented [AS6]:

Wrong interpretation,

You are required to explain what these values actually means??

Very weak analysis.

5 Return on Total Equity

Return on total equity ratio shows that how efficiently a company is working to manage the
funds of its shareholders. The return on total equity ratio of ABL is showing that bank has not
the funds of his shareholders effectively.

Formula
𝑁𝑒𝑡𝐼𝑛𝑐𝑜𝑚𝑒
= × 100
𝑇𝑜𝑡𝑎𝑙𝐸𝑞𝑢𝑖𝑡𝑦
2014 2015 2016

HBL 31,112,000/137,081,200 35,470,458/149,156,407*1 31,820,219/159,261,511

*100 00 *100
= 22.6% = 23.7% = 19.97%
UBL 21,929,561/94,589,280 25,727,149/105,867,061 27,730,112/116,942,573
* 100 *100 * 100
=23.18% =24.30% =23.71%
ABL 15,015,092/80890325 15120307/89256457 14,427,050/100,673,828
*100 *100 *100
=18.56% =16.94% =14.33%

Graphical Representation
 30

25
24.3 23.7 23.71
23.18 22.6
20
19.97
18.56
15 16.94
14.33
10

0
2014 2015 2016

ABL UBL HBL

Interpretation
Result Understanding
This ratio explains the status of the bank to manage the funds of its shareholders.
Trend Analysis

From 2014 to 2016, It shows the bad results of this bank ABL.
From 2014 to 2016, UBL bank show good progress. This bank is making progress continuously.
From 2014 to 2016 shows that HBL bank is also progressing. Commented [AS7]:
Poor write up.

You are require to explain in detail about the efficiency of the banks.
How efficiently these banks are utilizing its equity?
6 Debt Ratio

The debt ratio is one of the gearing ratios which indicates the bank’s liabilities in contrast
with its assets or shows that how able company is to pay its debts from its assets.

Formula
𝑇𝑜𝑡𝑎𝑙𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
= *100
𝑇𝑜𝑡𝑎𝑙𝐴𝑠𝑠𝑒𝑡𝑠
 2014 2015 2016

HBL 1,611,328,609/1,769,196,254*100 (1,953,058,056/2,124,899,508)* 2,211,716,399/2,393,783,379*100

100
= 91.07 % = 91.91% = 92.39%
UBL 985,897,655/1,111,414,107 1,258,515,368/1,400,650,843 1,425,764,162/1,577,551,023

*100 *100 *100

=88.70 % =89.85% =90.37%

ABL 761,532,751/843,097,566 902409055/991665512 968,940,580/1,069,614,408*100
*100 *100 =90.58%
=90.32 % =90.99%

Graphical Representation
93

92 92.39
91.91
91
91.07 90.99
90 90.58
90.32 90.37
89.85
89
88.7
88

87

86
2014 2015 2016

ABL UBL HBL

Interpretation

Result Understanding
In this step, It explains the bank’s liabilities in contrast with its assets or shows that how able
company is to pay its debts from its assets.
Trend Analysis
From 2014 to 2015, It shows the good results of this bank ABL but again decreased in 2016. Commented [AS8]:
In 2014 and 2016, UBL banks shows that his bank is making progress in these years but it
decreased in 2015. Commented [AS9]:

HBL bank is also progressing from 2014 to 2015 but again decreased in 2016.
7: Debt / Equity Ratio
Debt to equity ratios is the ratio which falls under the category of gearing ratio. This ratio
indicates that how much amount of entity’s capital is financed from debt and how much amount
is financed from equity.
Your write up needs major improvements, interpretation part must
present a clear understanding about the ratios calculated above. It
should explain the reader about what the ratios actually means. You
are required to mention detailed description of the results in this
part.
Commented [AS10]:

Wrong description

Formula
𝑇𝑜𝑡𝑎𝑙𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
=
𝑇𝑜𝑡𝑎𝑙𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝐸𝑞𝑢𝑖𝑡𝑦

2014 2015 2016

HBL 1,611,328,609/137,081,200 (1,953,058,056/149,156,407) 2,211,716,399/159,261,511

= 13 times
= 11.75 Times = 13.88 times
UBL 985,897,655/94,589,280 1,258,515,368/105,867,061 1,425,764,162/116,942,573

=10.42 Times =11.88 times =12.19 times

ABL 761,532,751/62,053,785 902409055/67,968,647 968,940,580/74,474,468
=12.27 =13.27 Times =13 Times

Graphical Representation
 16

14
13.88
12 13.27 13 13
12.27 11.88 12.19
11.75
10
10.42
8

0
2014 2015 2016

ABL UBL HBL

Interpretation

Result Understanding
It explains the amount of entity’s capital thatis financed from debt and how much amount is
financed from equity.
Trend Analysis

From 2014 to 2016, It shows the good results of this bank ABL.
From 2014 to 2016, UBL bank is also making progress in these years.
HBL bank is also progressing in 2014 and 2016 but in 2016 its progress decreased.
8 Advance / Deposit ratio
??????????????????
Commented [AS11]:
Your write up needs major improvements, interpretation part must
present a clear understanding about the ratios calculated above. It
should explain the reader about what the ratios actually means. You
are required to mention detailed description of the results in this
part.

Description about this ratio????

Formula
Total advances/ Total deposits
 𝐴𝑑𝑣𝑎𝑛𝑐𝑒𝑠
=
𝐷𝑒𝑝𝑜𝑠𝑖𝑡𝑠

2014 2015 2016

HBL 560,118,997/1,447,215,447 605,636,271/1,558,310,675 712,132,554/1,793,370,392

=0.38 times =0.38 times =0.39 times
UBL 434,264,050/895,083,053 455,413,880/1,051,235,170 510,110,924/1,179,887,048
=0.48 times =0.43times =0.43times
ABL 306014402/667877615 321605140/734596166 330,230,251/805,110,834
=0.45 times =0.43 times =0.41 times

Graphical Representation
0.6

0.5
0.48
0.4 0.45 0.45
0.43 0.43 0.43
0.41
0.38 0.39
0.3

0.2

0.1

0
2014 2015 2016

ABL UBL HBL

Interpretation
Result Understanding
This step shows that covering the amount of loan from the market that is issued to clients.
Trend Analysis
From 2014 to 2016, It shows that is this bank is not progressing. It is showing negative sign of
this company.
From 2014 to 2016, UBL bank is also showing about same status. It is not showing good results.
Commented [AS12]: Your write up needs major improvements,
HBL bank is making progressing from 2015 to 2016 but it decreased from 2014 to 2015. interpretation part must present a clear understanding about the
ratios calculated above. It should explain the reader about what the
ratios actually means. You are required to mention detailed
description of the results in this part.
9 Operating Cash Flow Ratio:
 Operating cash flow ratio is a ratio of cash flow from operations by current liabilities.
While current liabilities are the portion of liabilities due within one year

Formula
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔𝐶𝑎𝑠ℎ𝐹𝑙𝑜𝑤
= × 100
𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Working

Current Liabilities ABL = Upto 1 Month + Over 1 to 3 Months + Over 3 Month to 6

Months + Over 6 Months to 1 year

2014 = 597,129,297 + 58,878,111 + 69,664,675 + 18,397,115

= Rs. 744,069,198
2015 = 696,320,291 + 96,645,826 + 51,878,289 + 34,011,054
= Rs.878,855,460
2016 = 771,146,137 + 81,743,354 +54,247,606 + 38,994,178
= Rs. 946,131,275

UBL
Current Liabilities UBL = Upto 1 Month + Over 1 to 3 Months + Over 3 Month to 6
Months + Over 6 Months to 1 year

2014 = 430,525,060 +74,271,733 + 49,054, 860 +29,349,711

= Rs. 583,201,364
2015 = 288,745,459 +162,161,752 +102,526,921 +99,201,881
= Rs. 652,636,013
2016 = 682,091,719 + 88,923,808 + 55,776,653 + 18,656,145
= Rs. 845,448,325
HBL
Current Liabilities HBL = Upto 1 Month + Over 1 to 3 Months + Over 3 Month to 6
Months + Over 6 Months to 1 year
2014 = 376,690,190 + 147,242,568 +117,849,298 + 164,655,538
= Rs. 806,437,594
2015 = 500,148,926 + 128,574,807 + 142,747,879 + 156,954,813
= Rs. 928,426,425
2016 = 557,200,376 + 152,085,760 +149,442,568 + 181,125,562
= Rs. 1,039,854,266
Formula
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔𝐶𝑎𝑠ℎ𝐹𝑙𝑜𝑤
= × 100
𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2014 2015 2016

UBL (37,971,267/583,201,364) * (276,536,057/652,636,013)*100 (135,282,225/845,448,325)*100

100 =42.12% =16%
= 6.51%
HBL (99,607,284/806,437,594)* 346,701,985/928,426,425*100 164,417,580/1,039,854,266*100
100 = 37.34% = 15.81%
=12.35%
ABL 99,607,248/744,069,198*100 148,505,002/878,855,460*100 (63,803,312/946,131,275)*100
13.38% =16.89% =6.74%

Graphical Representation
45

40 42.12
35 37.34

30

25

20

15 16.89 16 15.81
10 13.38 12.35

5 6.51 6.74
0
2014 2015 2016

ABL UBL HBL

Result understanding
This ratio explains the operating cash flow.
Trend Analysis
Above results show that ABL progress was increasing trend from 2014 to 2015. After 2015, it
decreased in 2016.
For UBL, it shows that it is showing good operating activities in 2014 to 2015. But in 2016 the
performance goes down. The company has generated less cash in the period than it needs to pay
off its short-term liabilities.
Above results shows that HBL performed well in 2015. But it decreased in 2016. Commented [AS13]:

Your write up needs major improvements, interpretation part must

present a clear understanding about the ratios calculated above. It
10 Price to Earnings Ratio should explain the reader about what the ratios actually means. You
are required to mention detailed description of the results in this
The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its part.

current share price to its per-share earnings. This shows that how much times company’s share
price is increasing in contrast with earnings per share.

Formula
𝑀𝑎𝑟𝑘𝑒𝑡𝑉𝑎𝑙𝑢𝑒𝑝𝑒𝑟𝑆ℎ𝑎𝑟𝑒
=
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠𝑝𝑒𝑟𝑆ℎ𝑎𝑟𝑒

2014 2015 2016

HBL 233/21.56 200/24.18 214/21.69

= 10.74 times = 8.27 times = 9.86 times

UBL 174/17.91 176/21.02 188/22.65

= 9.71 times = 8.37 times = 8.30 times

ABL 105/13.11 98/13.20 97/12.60

=8 times =7.4 times =7.6 times

Graphical Representation
 12

10 10.74
9.71 9.86
8 8.5
8.37 8.27
8
7.4 7.6
6

0
2014 2015 2016

ABL UBL HBL

Result Understanding

Interpretation

Result Understanding
It is the step of the bank to measure its current share price about its per-share earnings.
Trend Analysis Formatted: Font: Times New Roman, Font color: Auto,
Highlight
From 2014 to 2015, It shows that price earnings ratio decreased due to increase in earnings per
Formatted: Highlight
share. However, It again increased in 2016 for ABL.
Formatted: Font: Times New Roman, Font color: Auto,
From 2014 to 2015, UBL bank is not showing good status. It is showing same results as ABL Highlight
bank. Formatted: Highlight
From 2014 to 2015, HBL bank is not showing good status. It is showing same results as UBL. Formatted: Font: Times New Roman, Font color: Auto,
Highlight
It value increased in 2016 which is satisfactory.
Formatted: Highlight
Formatted: Font: Times New Roman, Font color: Auto,
What do the result tell the investors regarding the pricing of stock? Poor interpretation. Highlight
Chapter No. 4: CONCLUSION AND RECOMMENMDATION. Formatted: Highlight
Formatted: Font: Times New Roman, Font color: Auto,
Highlight
4.1 : Conclusions.

This study has some objectives. After analyzing these objectives, the researcher studied that how
much of the companies’ assets are financed through external and internal debt. Researcher also Commented [AS14]:
Who is the researcher????
studied the banks to check procedure of maximizing their profits by controlling their interest
expenses. After analyzing the financial position of these banks, this research work has achieved
its objectives.
This study deals with checking of strengths and weakness of the given banks. Different
ratios were studied in this research work likeNet profit Margin, Operating Cash flow ratio, Gross
Spread ratio, Non-Interest income to total income ratio, Spread ratio, Advances/Deposits ratio,
Return on Equity ratio, Debit Ratio, Debit /Equity ratio and found very important results. the
researcher studied that how much of the companies’ assets are financed through external and
internal debt.
Findings show UBL and HBL are making good progress as compared to the ABL. UBL has
good value of net profit margin while HBL is showing good income. Interest earnings also show
that both banks, UBL and HBL have good results as compared to ABL. In some cases BAF and
HBL, both showing bad results in 2015 but overall result of both banks is good as compared to Commented [AS15]:
You are required to provide the overall conclusion of your findings.
ABL. These results are useful for management. The results show that HBL and UBL are Compare all the results and comment on the overall performance of
all banks selected for this analysis.
making good progress as compared to ABL. It is good sign for the HBL and UBL.