UNIVERSITY OF DHAKA

FACULTY OF BUSINESS STUDIES

COURSE CODE: FB-509

COURSE TITLE: Managerial Finance

Submitted By :
Name :
Maksuda Parvin ID-51732019
Sazia Afrin ID-15162053
Monir Hossain ID-
Farida Parvin Id-51732033
 Financial Statement Analysis
of
National Bank Ltd

INTRODUCTION
National Bank Limited has its prosperous past, glorious present, prospective future
and under processing projects and activities. Established on March 28, 1983 as the
first private sector bank fully owned by Bangladeshi entrepreneurs, From the very
inception, it was the firm determination of National Bank Limited to play a vital
role in the national economy. NBL has been carrying on business through its 191
branches & Agri Branches spread all over the country. Since the very beginning,
the bank has exerted much emphasis on overseas operations and handled a
sizable quantum of home bound foreign remittance. It has drawing arrangements
with 415 correspondents in 75 countries of the world, as well as with 37 overseas
Exchange Companies located in 13 countries.
 Financial Statement Analysis
Financial Statement Analysis is defined as the process of
identifying financial strengths and weaknesses of the firm
by properly establishing relationship between the items
of the balance sheet and the profit and loss account.
Techniques of Financial Statement Analysis:

Ratio analysis
Trend percentage analysis
Common-size or vertical analysis
Indexing or Horizontal analysis
 RATIO ANALYSIS

Ratio analysis is a quantitative analysis of information

contained in a companys financial statement like balance
sheet, income statement and cash flow statement. It is an
index that relates TWO accounting numbers and it obtained
by dividing one number by the another.
Single most important technique of financial analysis in
which, quantities are converted into ratios for meaningful
comparisons, with past ratios and ratios of other firms in
the same or different industries. Ratio analysis determines
trends and exposes strengths or weaknesses of a firm.
 Current Ratio = Current Assets / Current Liabilities
Current Ratio(Year) Current Assets Current Liabilities Current Ratio(Times)

2014 19888,84,18,537 1550,10,08,024 12.83

2015 21916,24,21,708 2072,05,41,469 10.57
2016 24178,51,84,947 2399,96,69,691 10.07

Findings: It is observed that current liabilities of the bank has been increased
remarkably comparing to the increase in the current assets.

As a result Current Ratio shows decreasing trends.

NBL stills maintain a healthy matching between Current Assets and Current Liabilities
 Total Debt to Equity Ratio = Total Debt / Total Equity
Total Debt to Total Debt Total Equity Total Debt to
Equity Ratio Equity Ratio
(Year) (%)
2014 22957,35,13,863 2696,39,48,574 8.51

2015 24801,12,40,594 3355,79,64,916 7.39

2016 26941,38,89,139 3620,28,74,856 7.44

8.60
8.40
8.20
8.00
7.80
7.60 8.51 Series1

7.40
7.20
7.39 7.44
7.00
6.80
2014 2015 2016

Findings: In year 2016, 2015 and 2014 the ratio was 7.44, 7.39 and 8.51 consequently.

It indicates that total debt to equity ratio of the bank has been increased slightly comparing to
the previous year.

This higher outcome over years not only increases the risk but also increases the profit.
Total Equity to Total Asset Ratio = Total Equity / Total Asset

Total Debt to Equity Total Equity Total Asset Total Equity to Asset
Ratio (Year) Ratio (%)
2014 2696,39,48,574 25653,74,62,437 0.11

2015 3355,79,64,916 28156,92,05,510 0.12

2016 3620,28,74,856 30561,67,63,995 0.12

0.12
0.12
0.12
0.11
0.12 0.12
0.11
0.11
0.11 0.11
0.11
0.10
2014 2015 2016

Findings: The Equity-To-Asset ratio is a measure of Solvency .

we have seen that in the year 2014 to 2016 the equity to total asset ratio
is between the 11% to 12%. Which means that bank total assets are
financed through very low equity financing.
 Net Profit Margin = Net Profit after Taxation / Net interest
Net Profit Margin (Year) Net Profit after Taxation Net interest Income Net Profit Margin

2014 266,02,93,483 2902,72,99,648 18%

2015 385,40,33,381 2964,83,48,275 21%

2016 556,78,71,854 3119,18,79,279 27%

Findings: The greater the outcome the better the NBLs performance is good.

In 2016 the result was 27% On the other hand in 2014 the net profit was 18% .
This ratio shows an increasing trends which means that the bank is making good profits from its
service business year by year.
Return on Assets = Net Profit after Taxation / Total Assets

Return on Assets (Year) Net Profit after Taxation Total Assets Return on Assets

2014 266,02,93,483 25653,74,62,437 2%

2015 385,40,33,381 28156,92,05,510 2%

2016 556,78,71,854 30561,67,63,995
3%

0.03

0.03

0.02
0.03 Series1
0.02
0.02 0.02
0.01

0.01

-
2014 2015 2016

Findings: ROA is the most used profitability ratio. NBL had high ROA in the
year of 2016. ROA of NBL gives an idea that the management of the bank is
highly efficient to generate profits using its assets.
Return on Equity = Net Profit after Taxation/ Equity

Return on Equity (Year) Net Profit after Taxation Total Equity Return on Equity

2014 26602,93,483 2696,39,48,574 0.19

2015 38540,33,381 3355,79,64,916 0.19

2016 55678,71,854 3620,28,74,856

0.23

0.25

0.20

0.15
0.23 Series1
0.10 0.19 0.19

0.05

-
2014 2015 2016

Findings: ROE is the most used profitability ratio. NBL had high ROE in
the year of 2016. the investors can get a higher profit from their
investment which will increase the value of shares of NBLs
 Assets Turnover = Net interest Income (Sales) / Total Assets

Assets Turnover Net interest Income Total Assets Assets Turnover

(Year) (Times)
2014 2902,72,99,648 25653,74,62,437 0.11

2015 2964,83,48,275 28156,92,05,510 0.11

2016 3119,18,79,279 30561,67,63,995
0.10

Findings: NBLs asset turnover ratio was almost same and too low.
To increase this ratio NBL had to better utilize its sources of fund on
those assets which may bring more revenue to the bank.
Advances to Deposit Ratio = Total Advances /Total Deposits

Advances to Deposit Total Advances Total Deposits Advances to Deposit

Ratio (Year) Ratio
2014 0.85
17296,47,21,444 20329,61,82,435
2015 18617,94,51,869 22211,29,05,248 0.84

2016 20992,90,74,511 24132,98,76,862

0.87

Findings: In year 2014 and 2016 the ratios of NBL was respectively 85%
and 87%. Analysis shows a decrease in 2015 because advances were also
increased sharply with the increase of deposits.
 Non-Performing Loans to Loans Ratio = Non-Performing Loans /Total Loans

Non-Performing Loans to Loans Ratio Non-Performing Loans Total Loans Non-Performing Loans to Loans Ratio
(Year)

2014 910,24,61,000 17296,47,21,444 0.05

2015 1304,60,00,000 18617,94,51,869 0.07

2016 2172,71,18,000 20992,90,74,511 0.10

Findings:
NPL (Non Performing Loan) of the bank has been increased remarkably over
the years. Specially in the year 2016 NPL has become more than double
comparing to the year 2014. Which indicates, the monitoring quality of
advances and its recovery measures of bad loans were not maintained
properly by NBL
 Rate of Return on Loans = Net Interest Income / Total Loans
Rate of Return on Loans (Year) Net Interest Income Total Loans Non-Performing Loans to Loans Ratio

2014 29027299648 0.17

17296,47,21,444
2015 29648348275 18617,94,51,869 0.16

2016 31191879279 20992,90,74,511

0.15

Findings: Net Interest Income has been increased over the period
But, the rate of increase of income is not satisfactory comparing to the increase
in total loan over the years. The increased NPL is also reason of decreasing trend
of Return on Loans ratio.
 Earnings Per Share= Net Income After Tax / No of Common Stock
Earnings Per Share (Year) Net Income After Tax No of Common Stock Earnings Per Share(TK)

2014 266,02,93,483 1.71

156,15,63,568
2015 385,40,33,381 171,77,19,924 2.24

2016 556,78,71,854 197,53,77,912

2.81

Findings: Net Income After Tax has been increased significantly over the years.
It indicates that management of the bank is highly efficient in running the bank
and generate good EPS for its shareholder. , EPS has become almost double in
2016 comparing the year 2014.
 Summary of Ratio Analyses

u Inventories are too high.

u May be paying off creditors (accounts
payable) too soon.
u COGS may be too high.
u Selling, general, and administrative
costs may be too high.
 Index Analyses

An analysis of percentage financial statements

where all balance sheet or income statement
figures for a base year equal 100.0 (percent)
and subsequent financial statement items are
expressed as percentages of their values in the
base year.
NBL Index Balance Sheet
NBL Indexed Balance Sheet

Regular Indexed (%)

Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016
Capital Structure/Equity
Paid up Capital 1562 1718 1975 100 109.9 126.4
Reserve & Surplus 1135 1638 1645 100 144.3 144.9
Total Equity 2696 3356 3620 100 124.4 134.3
Current Liabilities 1550 2072 2400 100 133.6 154.8
Non Current Liabilities
Long term secured loans
Long term un-secured loans
Deposits from customer 20330 22211 24133 100 109.2 118.7
Borrowings from other banks 918 390 306 100 42.4 33.3
Subordinated Bond 160 128 102 100 80 63.7
Total Non Current liabilities 21407 22729 24541 100 106.1 114.6
Total Liabilities 22957 24801 26941 100 108 117.3
Total Equity & liabilities 25654 28157 30562 100 109.7 119.1
 NBL Index Balance Sheet
NBL Indexed Balance Sheet
Regular Indexed (%)
Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016

Non Current Assets/Long term Assets

Fixed Assets 276 275 317 100 99.6 114.8
Investments 5489 5966 6067 100 108.6 108.6
Total Fixed assets 5765 6241 6383 100 108.2 108.2
Current Assets
Inventories
Debortors 11 8 16 100 72.7 145.4
cash at bank 1927 2628 2461 100 136.3 127.7
cash in hand 218 230 257 100 105.5 117.8
other currents asset 437 432 452 100 98.8 103.4
Classified loan(NPL) 910 1305 2173 100 143.4 238.7
UN Classified loan 16386 17313 18820 100 105.6 114.8
loans and advances 17296 18618 20993 100 107.6 121.3
Total Current Assets 19889 21916 24179 100 110.1 121.5
Total Assets 25654 28157 30562 100 109.7 119.1
NBL Indexed Income Statement
NBL Indexed Income Statement
Regular Indexed (%)
Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016
Sales (Interest 2903 2965 3119 100 102.14 107.46
Income)
Interest expense 1651 1657 1487 100 100.36 90.07
Operating Expense 579 482 557 100 83.14 96.08
2230 2139 2044 100 95.89 91.63
Totat Expense/COGS (Interest paid
on deposit & borrowings)

Gross Profit (Profit 672 826 1075 100 122.88 159.96

before Provision)
Less Provision 159 192 233 100 120.94 147.00
Net Profit before Tax (NPBT) 514 634 842 100 123.47 163.96
Less Tax 248 249 286 100 100.49 115.27
Net Profit After Tax (NPAT) 266 385 557 100 144.87 209.30
 Common-size Analysis
An analysis of percentage financial
statements where all balance sheet items
are divided by total assets and all income
statement items are divided by net sales or
revenues.
NBL Common Size Balance Sheet
NBL Common-Size Balance Sheet
Regular Common-Size (%)
Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016
Capital Structure/Equity
Paid up Capital 1562 1718 1975 6.09 6.10 6.46
Reserve & Surplus 1135 1638 1645 4.42 5.82 5.38
Total Equity 2696 3356 3620 10.51 11.92 11.85
Current Liabilities 1550 2072 2400 6.04 7.36 7.85
Non Current Liabilities
Long term secured loans
Long term un-secured loans
Deposits from customer 20330 22211 24133 79.25 78.88 78.96
Borrowings from other banks 918 390 306 3.58 1.38 1.00
Subordinated Bond 160 128 102 0.62 0.45 0.34
Total Non Current liabilities 21407 22729 24541 83.45 80.72 80.30
Total Liabilities 22957 24801 26941 89.49 88.08 88.15
Total Equity & liabilities 25654 28157 30562 100.00 100.00 100.00
NBL Common Size Balance Sheet
NBL Common-Size Balance Sheet
Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016

Non Current Assets/Long term Assets

Fixed Assets 276 275 317 1.08 0.98 1.04
Investments 5489 5966 6067 21.39 21.19 19.85
Total Fixed assets 5765 6241 6383 22.47 22.16 20.89
Current Assets 0.00
Inventories 0.00
Debortors 11 8 16 0.04 0.03 0.05
cash at bank 1927 2628 2461 7.51 9.33 8.05
cash in hand 218 230 257 0.85 0.82 0.84
other currents asset 437 432 452 1.70 1.54 1.48
Classified loan(NPL) 910 1305 2173 3.55 4.63 7.11
UN Classified loan 16386 17313 18820 63.87 61.49 61.58
loans and advances 17296 18618 20993 67.42 66.12 68.69
Total Current Assets 19889 21916 24179 77.53 77.84 79.11
Total Assets 25654 28157 30562 100.00 100.00 100.00
NBL Common-Size Income Statement

NBL Common-Size Income Statement

Regular Indexed (%)

Particulars Year Year Year Year Year Year
2014 2015 2016 2014 2015 2016
Sales 2903 2965 3119 100.00 100.00 100.00
(Interest Income)
Interest expense 1651 1657 1487 56.88 55.89 47.68
Operating Expense 579 482 557 19.96 16.25 17.84
2230 2139 2044 76.84 72.14 65.53
Totat Expense/COGS
(Interest paid on deposit & borrowings)

Gross Profit 672 826 1075 23.16 27.86 34.47

(Profit before Provision)
Less Provision 159 192 233 5.46 6.47 7.47
Net Profit before Tax (NPBT) 514 634 842 17.70 21.39 27.00
Less Tax 248 249 286 8.53 8.40 9.15
Net Profit After Tax (NPAT) 266 385 557 9.16 13.00 17.85
 Summary of Common-Size Analyses

u Inventories are too high.

u May be paying off creditors (accounts
payable) too soon.
u COGS may be too high.
u Selling, general, and administrative
costs may be too high.