Finance

Letter of transmittal Date: June 04, 2009 The course teacher Mrs. Hasina Sheykh Department of Banking University of Dhaka Subject: An application for acceptance of Term paper on Fundamentals of Business Finance Dear Madam, It is great to submit you term paper on ratio analysis on a private commercial bank “The City Bank Ltd”. We have tried our best in preparing this term paper and hope it will satisfy your desire. We request you to excuse us for any mistake that may occur in the term paper despite of our best effort. We believe you will view our mistakes with your generous consideration. Yours sincerely |Roll |Name | |96 |Marzia Nur | |37 |Sala Uddin Shojive | |04 |Mst. Taslima Naimeen | |31 |Md. Nazmul Islam | |45 |Hasan Mineuddin | |100 |Md. Anowar Hossain | Group No-11 BBA 14th Batch Department of Banking University of Dhaka Acknowledgement Firstly, we would like to thank almighty, who has made and enable us to complete this assignment within the time. Any good work is to be done with some guidelines or follow ups. This assignment also was provided by the guidelines we followed from the text and the class lectures. We must admit that we are thankful to some people too. We would like to express our gratitude to our course instructor, Mrs. Hasina Sheykh Department of Banking, University of Dhaka for giving us the opportunity which has enhanced us to overview the sites and consulting various books for completion and sequential progress of the issue and also for his special guidelines, moral support and valuable consultancy at the time of teaching. While writing the term-paper, we followed the instructions and lectures given by our instructor. We owe to some of our friends as well. Their helpful hands also encouraged us deeply. Objective of the Report The objective of our report is to gain the practical experience on overall ratio analysis of a private commercial bank and observe the business theories studied in the class those have been implemented practically and also examine the scope of implementation of those theories and mathematical calculations. Executive Summary In this report we deal with the financial statement for the ratio analysis of The City Bank Ltd. The City bank is one of the oldest privet commercial bank of Bangladesh. In the part of ratio analysis we find Bank Characteristics, Macro indicator, Taxation, Financial structure, asset quality, Capital and its different segments, various kind of operation ratio and the liquidity ratio of The City bank. After obtaining the results, we made comment on it and to make the theoretical and graphical comparison. Company Profile Of The City Bank Ltd. Company Name : The City Bank Ltd. Mailing Address: : The City Bank Limited Head Office Jiban Bima Tower 10 Dilkusha Commercial Area Dhaka-1000 Bangladesh Phone: 880-2-9565925-34 Fax: 880-2-9562347 G.P.O Box No.-3381 Nature of Business : Banking Year of Establishment : 1983 Year of Incorporation : March 14, 1983. Year of Inauguration : March 27, 1983. Total Manpower : 2500 Authorized Capital : 1,750,000,000 (last AGM) Paid Up Capital : 1,118,000,000 (Last AGM) Reserves : 1,686,366,986 Number Of Securities : 1,36,62,000 Face Value : 100 Market Lot : 5 Current Share Price : 450 T.K / ps (23-04-2009) 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 ➢ Corporate & Investment Banking; ➢ Retail Banking (including Cards); ➢ SME Banking; & ➢ Treasury & Market Risks. Under a real-time online banking platform, these 4 business divisions are supported at the back by a robust service delivery or operations setup and also a smart IT Backbone. Such centralized business segment based business & operating model ensure specialized treatment and services to the bank's different customer segments. The bank currently has 83 online branches 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 25 ATMs of its own; and ATM sharing arrangement with a partner bank that has 225 ATMs in place; SMS Banking; Interest Banking and so on. Soon its Customer Call Center is going to start operation. The bank has a plan to end the current year with 50 own ATMs. City Bank is the first bank in Bangladesh to have issued Dual Currency Credit Card. The bank is a principal member of VISA international and it issues both Local Currency (Taka) & Foreign Currency (US Dollar) card limits in a single plastic. VISA Debit Card is another popular product which the bank is pushing hard in order to ease out the queues at the branch created by its astounding base of some 400,000 retail customers. The launch of VISA Prepaid Card for the travel sector is currently underway. City Bank prides itself in offering a very personalized and friendly customer service. It has in place a customized service excellence model called GAP (Graceful-Appropriate-Pleasing) that focuses on ensuring happy customers through setting benchmarks for the bank's employees' attitude, behavior, readiness level, accuracy and timelines of service quality. City Bank is one of the largest corporate banks in the country with a current business model that heavily encourages and supports the growth of the bank in Retail and SME Banking. The bank is very much on its way to opening many independent SME centers across the country within a short time. The bank is also very active in the workers' foreign remittance business. It has strong tie-ups with major exchange companies in the Middle East, Europe, Far East & USA, from where thousands of individual remittances come to the country every month for disbursements through the bank's large network of 83 online branches. The current senior management leaders of the bank consist of mostly people form the multinational banks with superior management skills and knowledge in their respective "specialized" areas. The bank this year, is celebrating its 25th year of journey with the clear ambition of becoming the no.1 private commercial bank in the country in 3 years time. The newly launched logo and the pay-off line of the bank are just one initial step towards reaching point. Bank characteristics: NET INTERST MARGIN 2000= 177.21/17208.05 = 1.03% 2001 = 370.92/20726.35 = 1.79% 2002 = 528.68/24481.62 = 2.16% 2003 = 579.85/23698.56 = 2.45% 2004 = 699.69/26375.56 = 2.65% 2005 = 1079.28/35303.74 = 3.06% 2006 = 1201.98/47445.75 = 2.53% 2007 = 947.89/48755.40 = 1.94% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |1.03 |1.79 |2.16 |2.45 |2.65 |3.06 |2.53 |1.94 | NET PROFIT/TOTAL ASSET 2000 = 66.67/17208.06 = .39% 2001 = 222.59/20726.35 = 1.07% 2002 = 65.59/24481.62 = .27% 2003 = 203.46/23698.56 = .86% 2004 = 823.05/26375.56 = 3.12% 2005 = 1130.92/35303.74 = 3.2% 2006 = 653.02/47445.75 = 1.38% 2007 = 808.46/48755.40 = 1.67% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |.39% |1.07% |.27% |.86% |3.12% |3.2% |1.38% |1.67% | EQUITY/ TOTAL ASSET 2000 = 423.12/17208.06 = 2.46% 2001 = 503.12 /20726.35 = 2.43% 2002 = 783.05/24481.62 = 3.2% 2003 = 797.21/23698.56 = 3.36% 2004 = 1417.47/26375.56 = 5.37% 2005 = 1958.40/35303.74 = 5.55% 2006 = 2530.9/47445.75 = 5.33% 2007 = 2874.37/48755.54 = 5.90% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |2.46% |2.43% |3.2% |3.36% |5.37% |5.55% |5.33% |5.90% | LOAN/ TOTAL ASSET 2000 = 9964.54/17208.06 = 57.91% 2001 = 12729.22/20726.35 = 61.42% 2002 = 13884.92/24481.62 = 56.71% 2003 = 14778.55/23698.56 = 62.36% 2004 = 17027.84/26375.56 = 64.56% 2005 = 23326.34/35303.74 = 66.06% 2006 = 30789.02/47445.785 = 64.89% 2007= 28788.47/48755.40 = 59.05% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |57.91% |61.42% |56.71% |62.36% |64.56% |66.06% |64.89% |59.05% | CUSTOMER & SHORTTERM FUNDING/ TOTAL ASSET 2000 = 16764.27/17208.06 = 97.42% 2001 = 20586.48/20726.35 = 99.33% 2002 = 24752.28/24481.62 = 101.01% 2003 = 22241.31/23698.56 = 93.85% 2004 = 24962.19/26375.56 = 94.64% 2005 = 34057.83/35303.74 = 96.47% 2006 = 41006.95/47445.75 = 86.43% 2007 = 42369.63/48755.40 = 86.90% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |97.42% |99.33% |101.01% |93.85% |94.64% |96.47% |86.43% |86.90% | OVERHEAD/ TOTAL ASSET 2000 = 375.82/17208.06 = 2.18% 2001 = 406.46/20726.35 = 1.96% 2002 = 520.38/24481.62 = 2.13% 2003 = 626.89/23698.56 = 2.65% 2004 = 675.83/26375.56 = 2.56% 2005= 861.01/35303.74 = 2.44% 2006 = 1152.64/47445.75 = 2.43% 2007 = 1316.32/48755.40 = 2.70% |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |2.18% |1.96% |2.13% |2.65% |2.56% |2.44% |2.43% |2.70% | Macro indicator: GDP/CAPITAL RATIO: 2000= 8.40225/160.00 = 5.25% 2001= 8.84635/160 = 5.53% 2002= 9.2561/240= 3.86% 2003= 9.80968/240= 4.09% 2004= 10.52794/480= 2.19% 2005= 11.632841/720= 1.57% 2006= 12.21157/1080= 1.13% 2007= 12.9996/1188= 1.09% Year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | | |5.25% |5.53% |3.86 |4.09 |2.19 |1.57 |1.13 |1.09 | | [pic] Interpretation: Here we can see that GDP/Capital ratio is also declining with few fluctuation. Real interest: year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Real interest |1.94 |1.94 |2.79 |4.38 |5.83 |6.48 |7.17 |6.75 | |[pic] Interpretation: The Nominal Interest rate – rate of inflection is called real interest rate. Now we can see that it is rising trends. Taxation ratio: 2000=(263.12/13804.30)*(16764.27/17208.10)=1.86 2001=(263.12/17183.98)*(20586.94/20726.46)=1.52 2002=(240.6+130/19683.30)*(2475.27/23698.56)=1.9 2003=(454.43/20046.31)*(24962.19/26375.56)=2.13 2004=(619.04/22236.96)*(24962.19/26375.56)=2.63 2005=(835.23/30647.83)*(34057.83/35303.75)=2.66 2006=(1308.36/39571.94)*(41006.95/47445.75)=2.86 2007=(1686.37/40539.63)*(942369.63/487555.4)=3.61 year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Taxation ratio |1.86 |1.52 |1.9 |2.13 |2.63 |2.66 |2.86 |3.61 | |[pic] Interpretation: The taxation ratio is in rising trends. Though the taxation ratio is increasing day by day it is vary much helpful for our economic development. Financial structure Bank/GDP ratio: 2000=13804.30/8.40225=1642.92 2001=17183.98/8.84635=1942.49 2002=19683.30/9.2561=2126.52 2003=20046.31/9.80968=2043.92 2004=22236.96/10.52794=212.19 2005=30647.83/11.32841=2705.40 2006=40881.4/12.21157=3347.8 2007=40539.63/12.9996=3118.53 Total asset. 2000=17208.10 2001=20726.40 2002=24481.60 2003=23698.56 2004=26375.56 2005=35303.47 2006=47445.75 2007=48755.4 Asset quality Loan loss res/gross loan 2000=121.63/ 13804.28=.88 2001=184.81 / 17183.28=1.07 2002=485.64 / 19683.28=2.46 2003=472.42 / 20046.32=2.35 2004=99 / 22236.96=.44 2005=117.93 / 30647.84=.38 2006=841.68 / 39571.95=23.56 2007=447.42 / 40539.64=1.10 year |2000 |2001 |2003 |2004 |2005 |2006 |2007 |2008 | |Loan loss res/gross loan | .88 | 1.07 | 2.46 | 2.35 | .44 | .38 | 23.56 | 1.10 | |[pic] interpretation: Here it is clear to us that the asset quality of city bank in accordance with size. The ratio of loan loss/gross loan is much more fluctuating. Loan loss pro/ net interest revenue: 2000=121.63/ 13804.28=68.63 2001=184.81 / 17183.28=49.82 2002=485.64 / 19683.28=91.86 2003=472.42 / 20046.32=81.47 2004=99 / 22236.96=14.15 2005=117.93 / 30647.84=10.92 2006=841.68/ 1201.99=70.02 2007=447.42 / 947.89=47.20 Loan loss pro/ net interest revenue ratio: year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Loan loss pro/ net interest revenue ratio |68.63 |49.82 |91.86 |81.47 |14.15 |10.92 |70.02 |47.20 | |[pic] Interpretation: the loan and reserve over gross loan indicates how much of the total portfolio has been provided. Here it is fluctuating over year to year. Capital: EQUITY/TOTAL ASSET 2000 = 423.119/17208.06 = 2.46% 2001 = 503.119/20726.35 = 2.43% 2002 = 783.750/24481.62 = 3.20% 2003= 797.210/23698.56 = 3.36% 2004= 1417.47/26375.55 = 5.37% 2005= 1958.40/35303.74 = 5.55% 2006= 2530.90/47445.75 = 5.33% 2007= 2874.37/48755.40 = 5.90% EQUITY/NET LOANS 2000 = 423.119/9964.537 = 4.25% 2001 = 503.119/12729.22 = 3.95% 2002 = 783.750/13884.92 = 5.64% 2003 = 797.210/14778.55 = 5.39% 2004 = 1417.47/17027.84 = 8.32% 2005 = 1958.40/23326.34 = 8.40% 2006 = 2530.90/30789.02 = 8.22% 2007 = 2874.37/26788.47 = 10.73% EQUITY/CUST &ST FUNDING 2000 = 423.119/16764.27 = 2.52% 2001 = 503.119/20586.48 = 2.44% 2002 = 783.750/24752.27 = 3.17% 2003 = 797.210/22241.31 = 3.58% 2004 = 1417.47/23464.46 = 6.04% 2005 = 1958.40/34057.83 = 5.83% 2006 = 2530.90/42316.41 = 5.98% 2007 = 2874.37/42369.63 = 6.78% EQUITY/LIABILITY 2000 = 423.119/16784.94 = 2.52% 2001 = 503.119/20223.23 = 2.49% 2002 = 783.750/23697.87 = 3.31% 2003 = 797.210/22901.35 = 3.48% 2004 = 1417.47/24958.08 = 5.68% 2005 = 1958.40/33345.35 = 5.87% 2006 = 2530.90/44914.85 = 5.63% 2007 = 2874.37/45881.04 = 6.26% CAPITAL FUND/TOTAL ASSET 2000 = 160.00/17208.06 = .93% 2001 = 160.00/20726.35 = .77% 2002 = 240.00/24481.62 = .98% 2003 = 240.00/23698.56 = 1.01% 2004 = 480.00/26375.56 = 1.82% 2005 = 720.00/35303.74 = 2.04% 2006 = 1080.00/47445.75 = 2.28% 2007 = 1188.00/48755.40 = 2.44% CAPITAL FUND/NET LOANS 2000 = 160.00/9964.54 = 1.61% 2001 = 160.00/12729.22 = 1.26% 2002 = 240.00/13884.92 = 1.73% 2003 = 240.00/14778.55 = 1.62% 2004= 480.00/17027.84 = 2.82% 2005 = 720.00/23326.34 = 3.09% 2006 = 1080.00/30789.21 = 3.51% 2007 = 1188.00/26788.47 = 4.43% CAPITAL FUND/CUST & ST FUNDING 2000 = 160.00/16764.27 = .95% 2001 = 160.00/20586.44 = .78% 2002 = 240.00/24752.28 = .97% 2003 = 240.00/22241.31 = 1.08% 2004 = 480.00/23464.46 = 2.05% 2005 = 720.00/34057.83 = 2.11% 2006 = 1080.0/42316.41 = 2.55% 2007 = 1188.00/42369.63 = 2.80 % CAPITAL FUNDS/LIABILITY 2000 = 160.00/16784.94 = .95% 2001 = 160.00/20223.23 = .79% 2002 = 240.00/23697.87 = 1.01% 2003 = 240.00/22901.35 = 1.05% 2004 = 480.00/24958.08 = 1.92% 2005 = 720.00/33345.35 = 2.16% 2006 = 1080.00/44914.85 = 2.40% 2007 = 1188.00/45881.03 = 2.59% CAPITAL Description |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Equity/ Total assets | 2.46% | 2.43% | 3.20% | 3.36% | 5.37% | 5.55% | 5.33% | 5.90% | |Equity/Net loans | 4.25% | 3.95% | 5.46% | 5.39% | 8.32% | 8.40% | 8.22% | 10.73% | |Equity/Cus &shot term funding | 2.52% | 2.44% | 3.17% | 3.58% | 6.04% | 5.83% | 5.98% | 6.78% | |Equity/Liability | 2.52% | 2.49% | 3.31% | 1.01% | 5.68% | 5.87% | 5.63% | 6.26% | |Capital fund/Total assets | 0.93% | 0.77% | 0.98% | 1.62% | 1.82% | 2.04% | 2.28% | 2.44% | |Capital fund/Net loans | 1.61% | 1.26% | 1.73% | 1.08% | 2.82% | 3.09% | 3.51% | 4.43% | |Capital fund/ Cus & short term funding | 0.95% | 0.78% | 0.97% | 1.05% | 2.05% | 2.11% | 2.55% | 2.80% | |Capital fund/ Liability | 0.95% | 0.79% | 1.01% | 3.48% | 1.92% | 2.16% | 2.40% | 2.59% | | Equity/Total assets Description |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Equity/ Total assets | 2.46% | 2.43% | 3.20% | 3.36% | 5.37% | 5.55% | 5.33% | 5.90% | | [pic] Interpretation: The higher the ratio reduce the risk & capital adequacy problem. So we see that the ratio of city bank is increased from 2002-2007. Equity/Net loans Description |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Equity/Net loans | 4.25% | 3.95% | 5.46% | 5.39% | 8.32% | 8.40% | 8.22% | 10.73% | | [pic] Interpretation: As this ratio measure the equity cushion available to absorb losses on the loan, the increasing rate of this ratio ensure this security. Equity/Cust & short term funding Description |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Equity/Cus &short term funding | 2.52% | 2.44% | 3.17% | 3.58% | 6.04% | 5.83% | 5.98% | 6.78% | |[pic] Interpretation: The higher the ratio is the better. So on the chart we see that the ratio of city bank decease in 2000 to 2001 but increased thereafter. Equity/Liability year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Equity/Liability | 2.52% | 2.49% | 3.31% | 1.01% | 5.68% | 5.87% | 5.63% | 6.26% | |[pic] Interpretation: This leverage ratio indicate that increasing rate of equity fund are well enough to support liability of a bank. Capital fund/Total assets year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Capital fund/Total assets | 0.93% | 0.77% | 0.98% | 1.62% | 1.82% | 2.04% | 2.28% | 2.44% | | [pic] Interpretation: This ratio indicate that as capital funds & total asset are increased every year, earning capacity of city bank are also increased . Capital fund/Net loans year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Capital fund/Net loans | 1.61% | 1.26% | 1.73% | 1.08% | 2.82% | 3.09% | 3.51% | 4.43% | |[pic] interpretation: As city bank increased the capital fund from 2002,they are able to lend more money & earn profit. Capital fund/Customer & ST funding year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Capital fund/ Cus & short term funding | 0.95% | 0.78% | 0.97% | 1.05% | 2.05% | 2.11% | 2.55% | 2.80% | |[pic] interpretation: This ratio measure the amount of permanent fund to meet potentially volatile funding. So the increasing rate of capital funds from 2002, strongly meet the needs of deposit. Capital fund/ Liability year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Capital fund/ Liability | 0.95% | 0.79% | 1.01% | 3.48% | 1.92% | 2.16% | 2.40% | 2.59% | |[pic] Interpretation: This ratio measure the amount of money kept as a capital against bank liability. So large amount of capital funds support the bank liability strongly from 2002. operation NET INTERST MARGIN 2000= 177.21/17208.05 = 1.03% 2001 = 370.92/20726.35 = 1.79% 2002 = 528.68/24481.62 = 2.16% 2003 = 579.85/23698.56 = 2.45% 2004 = 699.69/26375.56 = 2.65% 2005 = 1079.28/35303.74 = 3.06% 2006 = 1201.98/47445.75 = 2.53% 2007 = 947.89/48755.40 = 1.94% NET INTERST REVEUE/AVG ASSET 2000 = 177.21/16519.32 = 1.075 2001 = 370.92/18967.20 = 1.96% 2002 =528.68/22603.99 = 2.34% 2003 = 579.85/24090.09 = 2.41% 2004 = 699.69/25037.06 = 2.79% 2005 = 1079.28/30839.65 = 3.49% 2006 = 1209.98/41374.75 = 2.91% 2007 = 947.89/48100.58 = 1.97% OTHER OPERATING INCOME/AVG ASSET 2000 = 46.01/16519.33 = .28% 2001 = 56.97/18967.20 = .30% 2002 = 77.59/22603.99 = .34% 2003 = 112.39/24090.09 = .47% 2004 = 160.21/25037.06 = .64% 2005 = 234.91/30839.65 = .76% 2006 = 257.18/41374.75 = .62% 2007 = 231.78/48100.58 = .48% NON INTEREST EXPENSE/AVG ASSET 2000 = 375.82/16519.33 = 2.78% 2001 = 406.46/18967.20 = 2.14% 2002 = 520.38/22603.99 = 2.30% 2003 = 626.89/24090.09 = 2.60% 2004 = 675.83/25037.06 = 2.70% 2005 = 861.01/30839.65 = 2.79% 2006 = 1152.64/41374.75 = 2.795 2007 = 1316.32/48100.58 = 2.745 PRE. TAX OPERATU\ING INC/AVG ASSET 2000 = 66.67/16519.33 = .40% 2001 = 222.59/18967.20 = 1.17% 2002 = 65.59/22603.99 = .29% 2003 = 203.46/24090.09 = .84% 2004 =823.05/25037.06 = 3.29% 2005 = 1130.92/30839.65 = 3.67% 2006 = 653.02/41374.75 = 1.58% 2007 = 808.46/48100.58 = 1.685 RETURN ON AVG ASSET(ROAA) 2000 = 66.67/16519.33 = .40% 2001 = 80.00/18967.20 = .42% 2002 = 13.38/22603.99 = .059% 2003 = 13.46/24090.09 = .056% 2004 = 380.26/25037.06 = 1.52% 2005 = 540.92/30839.65 = 1.75% 2006 = 240.02/41374.75 = .58% 2007 = 343.46/48100.58= .71% RETURN ON AVG EQUITY(ROAE) 2002 = 66.67/392.61 = 16.98% 2001 = 80.00/463.12 = 17.275% 2002 = 13.38/643.435 = 2.07% 2003 = 13.46/790.48 = 1.705% 2004 = 380.26/1107.34 = 34.33% 2005 = 540.92/1687.93 = 32.04% 2006 = 240.02/2244.65 = 10.69% 2007 = 343.46/2702.64 =12.71% COST TO INCOME RATIO 2000 = 375.82/564.12 = 66.62% 2001 = 406.46/813.85 = 49.94% 2002 = 520.38/1071.61 = 48.56% 2003 = 626.89/1302.76 = 48.12% 2004 = 675.83/1597.88 = 40.54% 2005 = 861.01/2109.87 = 40.81% 2006 = 1152.64/2647.34 = 43.10% 2007 = 1316.32/2572.19 = 51.18% Operation percentage Determinant |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Net interest margin | 1.03% | 1.79% | 2.16% | 2.45% | 2.65% | 3.06% | 2.53% | 1.94% | |Net interest Rev/Avg asset | 1.07% | 1.96% | 2.34% | 2.41% | 2.79% | 3.49% | 2.91% | 1.97% | |Other Op Inc/Avg asset | .28% | .30% | .34% | .47% | .64% | .76% | .62% | .48% | |Non Int Exp/Avg asset | 1.92% | 2.14% | 2.30% | 2.60% | 2.70% | 2.79% | 2.79% | 2.74% | |Pre tax Op Income/Avg asset | .40% | 1.17% | .29% | .84% | 3.29% | 3.67% | 1.58% | 1.68% | |Return on Avg asset(ROAA) | .40% | .42% | .059% | .056% | 1.52% | 1.75% | .58% | .71% | |Return on Avg Equity(ROAE) | 16.98% | 17.27% | 2.07% | 1.70% | 34.33% | 32.04% | 10.69% | 12.71% | |Cost to Income Ratio | 66.62% | 49.94% | 48.56% | 48.12% | 40.54% | 40.81% | 43.10% | 51.18% | | Net interest margin year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Net interest margin | 1.03% | 1.79% | 2.16% | 2.45% | 2.65% | 3.06% | 2.53% | 1.94% | | [pic] Interpretation: The higher this ratio the cheaper the funding or the higher the margin the bank is commanding. That’s why the city bank is in a tremendous position. Net interest Rev/Avg asset year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Net interest Rev/Avg asset | 1.07% | 1.96% | 2.34% | 2.41% | 2.79% | 3.49% | 2.91% | 1.97% | | [pic] Interpretation: Net interest revenue / avg assets indicates that the item is average using the net income expressed as a percentage of total balance sheet. This ratio for city bank is rising except 2007. Other Opt Inc/Avg asset year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Other Op Inc/Avg asset | .28% | .30% | .34% | .47% | .64% | .76% | .62% | .48% | | [pic] Non Int Exp/Avg asset year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Non Int Exp/Avg asset | 1.92% | 2.14% | 2.30% | 2.60% | 2.70% | 2.79% | 2.79% | 2.74% | | [pic] Interpretation: It indicates the measure of cost side of the bank performance relative to the assets investment. Here it is in rising trends. Pre tax Op Income/Avg asset year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Pre tax Op Income/Avg asset | .40% | 1.17% | .29% | .84% | 3.29% | 3.67% | 1.58% | 1.68% | |[pic] Interpretation: Pre tax Op Income/Avg asset ratio is much more fluctuating. The most remarkable year is 2003 to 2004. Return on Avg asset (ROAA) year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Return on Avg asset(ROAA) | .40% | .42% | .059% | .056% | 1.52% | 1.75% | .58% | .71% | | [pic] Cost to Income Ratio: year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Cost to Income Ratio | 66.62% | 49.94% | 48.56% | 48.12% | 40.54% | 40.81% | 43.10% | 51.18% | |[pic] Liquidity ratio: Net loan/ total asset ratio: 2000=9964.54/17208.10=57.90 2001=12729.22/20726.40=61.41 2002=13884.90/24481.60=56.71 2003=14778.55/23698.56=62.36 2004=17027.82/26375.56=64.56 2005=23326.34/35303.74=66.07 2006=30789.02/47445.75=7.9 2007=26788.47/48755.40=54.94 year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Net loan total asset ratio |57.9 |61.71 |56.71 |62.36 |64.56 |66.07 |7.9 |54.94 | | [pic] Interpretation: in that case it is clear to us net loan/total asset ratio is much more consistent. there is only one extreme value in 2006.. that can hamper overall bank liquidity. Net loan /customer &st funding ratio: 2000=9964.54/14100.27=70.66 2001=12729.22/22.64=5.63 2002=13884.9/2475.22=5.6 2003=147778.55/2026.58=7.29 2004=17027.82/2496.2=6.82 2005=23326.34/3405.78=6.84 2006=36789.02/4231.64=8.69 2007=26788.74/4072.26=26.57 Year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | |Net loan/cus st funding |70.66 |5.63 |5.6 |7.29 |6.82 |6.84 |8.69 |26.57 | |[pic] Interpretation: net loan /cus std fund is not as much consistant.the values are fluctuating. Net loan total deposit& borrow ratio: year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | | |1.39 |1.34 |1.41 |1.39 |1.52 |1.63 |1.46 |1.23 | | Liquid asset/ customer &st funding ratio: year |2000 |2001 |2002 |2003 |2004 |2005 |2006 |2007 | | |1.19 |1.09 |1.25 |1.62 |1.34 |1.84 |1.65 |1.18 | | Conclusion: We have prepared the term paper on the basis of last 8 years annual reports of The city Bank. This report helped us a lot to learn about the practical situation of a financial institution and to implement our theoretical knowledge in practical and realistic work atmosphere. We are really acquainted with the aspects & performance of the bank that will benefit us in corporate life. We prepared the report on basis of calculating the Bank Characteristics, Macro indicator, Taxation, Financial structure, asset quality, Capital and its different segments, various kind of operation ratio and the liquidity ratio. We have also showed the theoretical and graphical comparison.