So it is worthwhile to examine some critical ratios as an appropriate base for analyzing the bank performance. These ratios are grouped into the following classes. i.e.
· Bank Liquidity.
· Loan Portfolio Quality.
· Leverage & Capital Adequacy.
· Operating Efficiency Ratios.
· Business Efficiency Ratios.
The above mentioned each ratio contains several steps which are as follows:
Bank Liquidity (Rupees 000)
Liquidity refers to the ability of a firm to meet its current indebtedness and finance current operations. A person is interested in the liquidity of his client because he believes, and rightly so, that high earning power alone does not equate with organizational strength. There are three major liquidity ratios:
Cash & Bank Balances to Total Deposits:
= current asset Total deposits
| Year 2006 | 40591312 / 239509391 | 16.00% |
| Year 2007 | 47817116 / 273173841 | 17.00% |
INTERPRETATION:
Current ratio of the Bank has increase upto 17% in 2007 as compared to 16% in 2006. This shows that liquidity of the Bank has increase. Although it increase the liquidity but it is favorable in the sense that it increase the profitability.
Common size analysis
In common size analysis, for, a given time period, each item in the income statement is restated as percentage of revenue earned .And for the balance sheet, for a given point in time, each item in the balance sheet is restated as percentage of total assets.
COMMON SIZE ANALYSIS OF BALANCE SHEET
2007 2006
(Restated)
Rupees in '000
ASSETS
Cash and balances with treasury banks 8.95 10.10
Balances with other banks 5.59 4.61
Lendings to financial institutions 1.04 4.51
Investments 26.90 20.50
Advances 52.05 54.09
Other assets 1.83 2.04
Operating fixed assets 3.62 3.80
Deferred lax asset - -
100 100
LIABILITIES
Bills payable 1.32 1.17
Borrowings from financial institutions 6.79 3.18
Deposits and other accounts 87.37 90.91
Sub - ordinaled loans 1.03 1.22
Liabilities against assets subject to finance lease - -
Other liabilities 3.04 2.77
Deferred lax liabilities 0.44 0.72
TOTAL LIABILITIES
REPRESENTED BY
Share capital 2.07 1.89
Reserves 0.77 1.04
Unappropriated profit 1.55 1.07
Surplus on revaluation of assets 0.78 0.63
Total Owner’s Equity 5.18 4.64
COMMON SIZE ANALYSIS OF INCOME STATEMENTS
2007 2006
(Restated)
Rupees in '000
Mark-up / return / interest earned 100 100
Mark-up / return / interest expensed 64.46 71.88
Nel mark-up / interest income 35.53 28.11
Provision against non-performing loans and advances – n (9.19) (3.29)
Provision for diminution in the value of investments - -
Bad debts written off directly (0.02} (0.007)
(9.21) (3.29)
Net mark-up / interest income after provisions 26.31 24.81
NON MARK-UP/INTEREST INCOME
Fee, commission and brokerage income 9.42 8.51
Dividend income 0.25 0.18
Income from dealing in foreign currencies 1.84 1.82
Other income 4.00 3.97
Total noil- mark up / interest income 23.41 15.21
49.73 40.03
NON MARK-UP/INTEREST EXPENSES
Administrative expenses 32.08 27.72
Other provisions / write offs .02 -
Other charges 0.03 0.20
Total noil- mark up / interest expenses 32.14 27.92
Extraordinary / unusual items - -
PROFIT BEFORE TAXATION 17.59 12.10
Taxation
-current 6.69 2.25
-prior year - (0.47)
-Deferred (1.25) 2.02
5.45 3.79
PROFIT AFTER TAXATION 12.14 8.31
Unappropriated profit brought forward as previously reported 10.94 8.91
Transfer from surplus on revaluation of
fixed assets - Current year net of tax 0.095 0.12
Profit available for appropriation 23.18 17.34
APPROPRIATIONS
Transfer to statutory reserve (3.88) (10.52)
Bonus Shares (8.89) (24.79)
Final dividend paid for 2003 @ 25 percent (2002: 25 percent) (8.89) (6.19)
(21.67) (41.51)
Unappropriated profit carried forward 15.23
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