RATIO ANALYSIS OF

EASTERN BANK LTD.

BUS 635 (MANAGERIAL FINANCE)
Prepared by
Name

ID

Mohammad Sakib Sujaet

132 1591 660

Mohammad Murtoza Ali Quader

132 0778 660

Shaikh Sarfaraz Ahmad

Md Khaled Rabbani

101 0451 060

101 0326 560

RATIO ANALYSIS OF
EASTERN BANK LTD.
Financial performance evaluation of EBL
2011 - 2014

Return on Equity (ROE)

Return on Assets (ROA)
Profit Margin
Net Interest Margin

Asset Utilization

1. PROFIT RATIO

Capital

Equity Multiplier

Asset quality

Provision for Loan Loss Ratio

Loan Ratio

2. RISK RATIO

Interest Expense Ratio

Wages and Salaries Ratio
Occupancy Ratio

Other Expenses Ratio

3. OPERATING EFFICIENCY RATIO

Tax Rate
Dollar Gap Ratio

4. OTHER FINANCIAL RATIO

Return on Equity (ROE)

19.03%
14.48%

14.18%

10.93%

ROE %
Return on Equity (ROE)
=
Net Income After
Taxes/
Total Equity

2014
10.93%

2013
14.48%

2012
14.18%

2011
19.03%

Return on Equity (ROE)

The amount of net income returned as a percentage of shareholders equity.
ROE= (Net Income Total Equity) 100

Return on Assets (ROA)

2.52%

1.63%

1.60%
1.28%

ROA %
Return on Assets (ROA)
=
Net Income After Taxes/
Total Assets

2014
1.28%

2013
1.60%

2012
1.63%

2011
2.52%

Return on Assets (ROA)

An indicator of how profitable a company is relative to its total assets. ROA gives
an idea as to how efficient management is at using its assets to generate earnings.
ROA= (Net Income Total Asset) 100

Profit Margin %
32.28%
27.13%

26.46%
20.72%

Profit Margin %
Profit Margin
=
Net Income After
Taxes/
Total Operating Income

2014
20.72%

2013
26.46%

2012
27.13%

2011
32.28%

Profit Margin
A ratio of profitability calculated as net income divided by revenues, or
net profits divided by sales.
Profit Margin= (Net Income Operating Revenue) 100

Net Interest Margine%

25%

20%

27%

28%

2014
Net Interest Margin
=
(Total Interest Income Total Interest
Expense) /
Total Assets

2013

2014
2.374%

2012

2011

2013
3.13%

2012
3.32%

2011
2.87%

Net Interest Margin

A performance metric that examines how successful a firm's investment
decisions are compared to its debt situations.
Net Interest Margin = [(Total Interest Income - Total Interest Expense) /
Total Assets] x 100

Asset Utilization%
6.73%

6.00%

6.10%

5.99%
Asset Utilization%
Asset Utilization
=
Total Operating Income/
Total Assets

2014
5.993%

2013
6.06%

2012
6.00%

2011
6.73%

Asset Utilization
An assets utilization (activity, turnover) ratio reflects the way in which a
company uses its assets to obtain revenue and profit.
Asset Utilization = (Total Operating Income/ Total Assets) x 100

Equity Multiplier
8.72

8.71

8.51

8.06

Equity Multiplier
Equity Multiplier
=
Total Assets/
Total Equity

2014
8.51 times

2013
8.72 times

2012
8.71
times

2011
8.06
times

Equity Multiplier
The ratio of a companys total assets to its stockholders equity. The
equity multiplier is a measurement of a companys financial leverage.
Equity Multiplier = (Total Assets/ Total Equity)

Provision for Loan Loss Ratio%

32%

35%
17%

2014
Provision for Loan Loss
Ratio
=
Provision for Loan
Losses/
Leases
ProvisionTotal
for Loans
Loan and
Loss
Ratio

2013

2014
1.51%

16%

2012
2013
0.76%

2011
2012
0.78%

2011
1.67%

Banks use the loan-loss coverage ratio to define the quality of its assets and how
well it protects itself from losses caused by problematic loans. The higher this ratio
is, the better the bank is handling itself in regards to loans.
Provision for Loan Loss Ratio = (Provision for Loan Losses/ Total Loans and Leases) x
100

Loan Ratio%
69.72%

69.55%

65.89%

65.33%

Loan Ratio%
Loan Ratio
=
Total Loans and
Leases/
Total Asset

2014
69.72%

2013
65.33%

2012
65.89%

2011
69.55%

Loan Ratio
A commonly used statistic for assessing a bank's liquidity by dividing
the banks total loans by its total assets.
Loan Ratio = (Total Loans and Leases/ Total Asset) x 100

Interest Expense Ratio%

5.16%

6.26%
6.02%
5.42%

Interest Expense Ratio%

Interest Expense Ratio
=
Interest Expense/
Total Asset

2014
5.16%

2013
6.26%

2012
6.02%

2011
5.42%

Interest Expense Ratio

The proportion of assets required to pay annual interest expenses of a
bank is known as interest expense ratio. The lesser the ratio, the better is
for banks.
Interest Expense Ratio = (Interest Expense/ Total Asset) x 100

Wages and Salaries Ratio%

25%

23%

2014

Wages and Salaries

Ratio
=
Wages and Salaries/
Total Asset

2013

2014
1.39%

27%

25%

2012

2011

2013
1.26%

2012
1.20%

2011
1.26%

Wages and Salaries Ratio

In economics, the wage ratio refers to the ratio of the top salaries in a
group (company, city, country, etc.) to the bottom salaries.
Wages and Salaries Ratio = (Wages and Salaries/ Total Asset) x 100

Occupancy Ratio%
0.56%

0.53%

0.40%

0.37%

Occupancy Ratio%
Occupancy Ratio
=
Total Occupancy Cost/
Total Asset

2014
0.40%

2013
0.56%

2012
0.53%

2011
0.37%

Occupancy Ratio
The occupancy ratio is simply the sum of all operating expenses and
debt service, divided by total assets. This tells us what percentage of
the total asset is used to cover occupancy cost.
Occupancy Ratio = (Total Occupancy Cost/ Total Asset) x 100

Other Expenses Ratio%

0.55%

0.52%

0.33%
0.27%

Other Expenses Ratio%

Other Expenses Ratio
=
Other Expenses/
Total Asset

2014
0.33%

2013
0.55%

2012
0.52%

2011
0.27%

Other Expenses Ratio

The proportion of assets required to cover the operating expenses is
called other expenses ratio. The less is the ratio, the better is for banks.
Other Expenses Ratio = (Other Expenses/ Total Asset) x 100

Tax Rate%
39.22%
45.24%
47.62%
47.21%
Tax Rate%
Tax Rate
=
Total Tax Expenses/
Net Profit Before Taxes

2014
47.21%

2013
47.62%

2012
45.24%

2011
39.22%

Tax Rate
The tax rate describes the ratio (usually expressed as a percentage) at
which a business or person is taxed.
Tax Rate = (Total Tax Expenses/ Net Profit Before Taxes) x 100