National Credit and

Commerce Bank
TIME-SERIES ANALYSIS

FIN 464
(SECTION # 2)

PREPARED BY:
MOBASHRA ATHER
ID # 073-459-030
KASHFIA MAHBUB
ID # 071-435-030

PREPARED FOR:
MR M. MORSHED
Senior Lecturer, BBA Department
 TABLE OF CONTENT

1. EXECUTIVE SUMMARY…………………………………………………………..3
2. INTRODUCTION
2.1. ORIGIN……………………………..………………………………………….5
2.2. OBJECTIVE……………………………………………………………………5
2.3. METHODOLOGY…………………………………………………………..5
2.4. LIMITATION…………………..…………………………………………….6
3. OVERVIEW OF NCC BANK…….…………………………………………….....7
3.1. MISSION AND VISION OF NCC BANK…………………………..10
4. LITERATURE REVIEW …….………………………………………………….....11
5. FINDINGS AND ANALYSIS………………………………………………………21
6. RECOMMENDATIONS……….…………………………………………………..49
7. CONCLUSIONS……………………………………………………………………….51
8. BIBLIOGRAPHY………………………………………………………………………53
9. APPENDIX………………..……………………………………………………………54
 TABLE OF CONTENT
EXECUTIVE SUMMARY

The quantitative analysis concentrates in financial positions of National Credit and Commerce
Bank, such as the sound and stable profitability level, operating efficiency, degree of leverage,
and good liquidity position. A brief highlight of our performance evaluation of NCC Bank is given
below.

LIQUIDITY: The bank has been able to maintain a sound liquidity position. However, in the
recent years the bank has increased its demand deposits and reduced its marketable securities,
so the bank can face liquidity crisis in the near future.

EFFICIENCY: NCC bank has also concentrated on increasing the efficiency of the bank to
increase profitability and the value of the shareholder’s investment. The analysis of efficiency
ratio has revealed that the bank has been successful in covering its operating expenses and
increasing the productivity of their employees.

PROFITABILITY: The overall trend of profitability of the bank has been volatile over the
past six year period especially in terms of its, Return on equity. To increase the return on
equity, a bank should increase its management efficiency on tax, expense, asset and fund. But
NCC bank has failed to maintain a positive relation with all these factors, due to which its ROE
has fluctuated a lot throughout the years. The operating margin has been rising and falling in
every alternate year which shows that the management and stuffs have not been able to keep
the growth rate of revenue consistent ahead of its rising cost. On the other hand, the bank has
a decreasing trend in Interest margin and non-interest margin for the last 3 years. It has a
general trend in improvement on ROA over the years. NCC Bank has reduced the capital risk
exposure throughout the years.

LEVERAGE: The bank is taking huge deposits in the recent years for which their interest
expense is increasing. That is why their interest covering ratio is falling. Although NCC Bank has
lower credit risk probability because it always maintained higher amount of provision annually
relative to shareholder’s equity and asset which primarily can absorb the risk if there was any
chance of affecting bank’s asset or equity capital.

MARKET POSITION: The EPS has largely influenced the current market price. When the
EPS was high the investors showed high confidence in the bank which resulted in a high market
price. The high market price has in turn reflected a positive relationship with P/E and M/B ratio.
The rising dividend yield in the last two years showed that the investors are getting more
dividends per share.
 INTRODUCTION

The report of time-series analysis of National Credit and Commerce Bank is a part of the course
Bank Management (Fin 464) and it was assigned by our respective course instructor, M.
Morshed (MdM).

METHODOLOGY

All the resources that were used to make this report were secondary data. This report has been
prepared with the help of 6 years’ annual report book of NCC Bank. The course book, ‘Bank
Management and Financial Services’ by Rose Hudgins have also assisted us with the ratios and
interpretation. Furthermore, some information about the bank has been collected from NCC
Bank’s web site.

OBJECTIVES

The objective of this term paper is to find out the performance level of consecutive six years of
NCC Bank. After finding out the performance level there will be an evaluation, stating the
overall performance of the bank’s current position and in terms of investors’ point of view.
 LIMITATIONS
 Lack of adequate information to study the analysis.
 Due to lack of industry average the measurement of performance level is somewhat difficult.
 Each bank has their individual method to calculate their performance ratio. As we have
followed the course book to compute the ratio, some of the ratios have not matched as per the
bank’s ratio. Due to which some discrepancies have been noticed in the analysis and evaluation.
 The bank has not clearly mentioned its long term liability in the end notes, as a result it was
quite difficult to find long term loan.
 OVERVIEW OF NATIONAL CREDIT &
COMMERCIAL BANK

National Credit and Commerce Bank Ltd, formerly the National Credit Limited, was primarily
established as an Investment Company in November 1985. The company operated up to 1992
with 16 branches and thereafter with the permission of the Central Bank converted in to a full-
fledged private commercial Bank in 17 May 1993 to serve the nation from a broader platform.

Restructured form of the FIRST investment company

NCCBL is the restructured form of the first investment company in the country, the National
Credit Limited (NCL), which started business with a paid up capital of Tk 50 million and survived
8 years before its normal operations were suspended. A 23-member board of directors,
including the chairman and a vice-chairman oversees the affairs of the bank. The managing
director is its chief executive. Today, the bank has 63 branches and its registered head office is
at Dhaka.

Active in both capital and money market

The bank started its operations in treasury dealing at local money market and in foreign
currencies at its head office in Dhaka in 1999. Now as a member of both Dhaka and Chittagong
Stock Exchanges it is active in Capital Market. Through the Primary Dealership of Govt and
Securities NCC Bank is also active in the Money Market.
First ever trading house, NCC Bank Brokerage House
NCC Bank has the unique opportunity to have country’s first ever trading house titled, “NCC
Brokerage House”. It operates in the Capital market as well as facilitates trading in a free and
automated system. During the last few years the ‘House’ could inspire potential traders to avail
of the opportunity of trading without going to Stock Exchange. NCC Bank Brokerage House and
its branches are extending service to the share traders.
In corporation with MoneyGram

It commenced the operations of Money Gram, a worldwide renowned quickest mode of

transfer of fund from one country to another, in November 1998. MoneyGram has
consecutively awarded NCC Bank with various trophies and it has been nominated as ‘Super
Agent’ of exchange company MoneyGram.

Provide customized service to its customers

Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere
personalized service to its customers in a technology based environment. The bank conducts
traditional commercial banking functions as well as foreign exchange business and provision of
other financial services. At present, the bank's main focus is on the delivery of customized
customer services and expansion of its clientele base.

Accomplished Trade Finance Bank

Ever since its conversion into a full-fledged bank in 1993, NCC Bank has been an accomplished
“Trade Finance” bank with a highly professional team experienced and competent
professionals. They are able to provide a wide range of services to companies engaged in
international trade. The Bank has set up a new standard in financing in the Industrial, Trade and
Foreign exchange business. Its various deposit & credit products have also attracted the clients-
both corporate and individuals who feel comfort in doing business with the Bank.
A Corporate Socially Responsible Bank

NCC Bank has a long and mention worthy record of discharging its duty to the society. In order
to institutionalize the activities, the Board of Directors has established NCC bank Foundation in
2007 and has taken a number of programs under its banner.

Active member of S.W.I.F.T

NCC Bank Limited is a member of the Society for Worldwide Inter Bank Financial
Telecommunication (S.W.I.F.T). Through this fast, reliable and secure global communication
NCC Bank has gained 24 hours connectivity with over 7000 financial institutions in 200
countries for transmission of LCs, Guarantees, funds transfers, payments, etc.

Established Correspondent Bank

NCC Bank has also positioned itself as an established Correspondent Bank. Through a
worldwide network of many correspondent banks NCC Bank is present in all key areas of the
globe. Their ambit of correspondents includes top ranking international banks with a global
reach.
 MISSION
MISSION AND VISION
To mobilize financial
resources from within and
abroad to contribute to
Agricultures, Industry &
Socio-economic development
of the country and to pay a
catalytic role in the formation
of capital market.

VISION
To become the Bank of
choice in serving the Nation
as a progressive and Socially
Responsible financial
institution by bringing
credit & commerce together
for profit and sustainable
growth.
 Before starting off with our analysis regarding the findings, let us take a look at the various
ratios that are taken into consideration for doing the analysis:

PROFITABILITY RATIO

 Return on Assets (ROA): It is a measure of a bank's profitability. It shows how profitable

a company's assets are in generating revenue. It equal to a fiscal year's earnings divided by its
total assets, expressed as a percentage.

Return on Assets = Net Income after Tax

Total Assets

 Net Interest Margin: It is a measure of the difference between interest income generated
by banks or other financial institutions by lending and interest paid on borrowings (for
example, deposits). It is considered analogous to the gross margin of non-financial companies.

Net Interest Margin = Interest income from loans and security investments –
Interest Expense on deposits and on other debt issued
Total Assets

 Net Non-Interest Margin: This measure the amount of non-interest revenues stemming
from deposit service charges and other service fees the financial firm has been able to collect
 (fee income) relative to the amount of non-interest costs incurred (including salaries and
wages, repairs and maintenance cost of facilities and loan loss expenses). For most of the banks
the net non-interest margin is usually negative. This is mainly because of the fact that non-
interest costs generally outstrip the fee income.

Net Non-interest Margin = (Non-interest Revenues – Non-interest Expenses)

Total Assets

 Return on Equity (ROE): it measures the rate of return on the ownership interest
(shareholders' equity) of the common stock owners. ROE is viewed as one of the most
important financial ratios. It measures a firm's efficiency at generating profits from every
rupee of net assets (assets minus liabilities), and shows how well an organization uses
investment rupees to generate earnings growth. ROE is equal to a fiscal year's net income
(after preferred stock dividends but before common stock dividends) divided by total
equity (excluding preferred shares), expressed as a percentage.

Return on equity = Net income after taxes

Total equity capital

ROE ratio can further be categorized in the following way .

 return on equity

net profit margin asset utilization equity multiplier

tax management expense control

efficiency efficiency

 Net Profit Margin (NPM): It is a measure of profitability. It is calculated using a formula

and written as a percentage or a number. Margin is mostly used for internal comparison.

Net Profit Margin (NPM) = Net Income

Total Operating revenues

 Asset Utilization (AU): it is measures the value of the sales that a company generates for
each rupee invested in assets. If the assets are not worked hard, if inventory sits, if new books
take too long to reach market, or if accounts receivable remain unpaid, cash flow suffers as a
result asset utilization reduces. It is a bank’s total operating revenues divided by its total assets
as detailed below:

Asset utilization (AU) = Total operating revenues

Total assets

 Equity Multiplier (EM): Total assets divided by common stockholder's equity. This is a
measure of leverage. The higher the ratio is, the more the company is relying on debt to
finance its asset base. Like all debt management ratios, the equity multiplier is a way of
 examining how a company uses debt to finance its assets. Also known as the financial leverage
ratio or leverage ratio. In other words, this ratio shows a company's total assets per rupee of
stockholders' equity.

The Bank’s Equity Multiplier (EM) = Total Asset

Total Equity Capital

 Tax Management Efficiency: This is related to the amount of tax paid by the bank.
When the tax rate is lower the net profit after tax will be higher and vice versa. The higher the
tax management efficiency the better is for NCC Bank.

Tax Management Efficiency = Net Income after Tax

Net Income before taxes & securities gains (or losses)

 Expense Control Efficiency: This ratio signifies the reliance of the bank on the operating
revenue. The less reliant the bank is on its operating revenue the better it will be as it means
that the bank is generating more income without being very dependent on the operating
revenue.

Expense Control Efficiency = Net Income before taxes & securities gains (or losses)

Total Operating Revenues

 Asset Management efficiency : This emphasizes on the contribution of the bank’s assets
towards generating total operating revenues.

Asset Management Efficiency = Total Operating Revenues

 Total Assets

 Funds Management efficiency : Funds management efficiency shows how effectively the
management has utilized the shareholders’ equity towards investing in assets.

Funds Management Efficiency = Total Assets

Total Equity Capital

ROE = Tax management efficiency X Expense management efficiency X Asset

management efficiency X Funds management efficiency.

 Net Bank Operating Margin : This ratio shows how efficiently the assets of a firm are
utilized to enlarge the spread/margin between operating revenues and operating expenses

Net Bank Operating Margin = (Total Operating Revenues – Total Operating Expenses)
Total Assets
 LEVERAGE RATIO

 Interest Coverage (TIE): Interest coverage ratio measures a firm’s ability to make
contractual interest payments. The higher its value, the better able the firm is to fulfill its
interest obligations.

Interest Coverage (Times Interest Earned) = Earnings before Interest & Tax
Interest Expense

 Debt to equity Ratio: it is the most popular leverage ratio and it provides detail around the
amount of leverage (liabilities assumed) that a company has in relation to the monies provided
by shareholders. As you can see through the formula below, the lower the number, the less
leverage that a company is using. The debt to equity ratio gives the proportion of a company (or
person's) assets that are financed by debt versus equity. It is a common measure of the long-
term viability of a company's business and, along with current ratio, a measure of its liquidity,
or its ability to cover its expenses. As a result, debt to equity calculations often only includes
long-term debt rather than a company's total liabilities.

Debt Equity Ratio = Long term Loan

Shareholders’ Equity
 EFFICIENCY RATIO
 Operating Ratio: Its purpose is to evaluate the overhead structure of a financial institution.
Banking is no different from any mature industry - the surviving companies are those that keep
costs down. The efficiency ratio gives us a measure of how effectively a bank is operating. It is
also referred to as the "overhead burden" or "overhead efficiency ratio".

Operating Efficiency Ratio = Total Operating Expenses

Total Operating Revenues

 Employee Productivity Ratio: This ratio shows how much each full-time employee is
contributing to the net operating income of the company.

Employee Productivity Ratio = Net Operating Income

Number of Full-time Employee
 MARKET POSITION RATIO

 Price/ Earning (P/E) ratio: This ratio measures the amount that investors are willing to
pay for each dollar of a firm’s earnings. The level of price/earnings ratio indicates the degree of
confidence that investors have in the firm’s future performance

Price/Earnings (P/E) Ratio = Current market price of the share

Earnings per share (EPS)

 Earnings Per Share: It represents the number the number of dollars earned during the
period on behalf of each outstanding share of common stock.

Earnings per Share = Earnings available for common stockholders

Number of shares of common stock outstanding

 Market/ Book (M/B) ratio: This ratio provides an assessment of how investors view the
firm’s performance. It relates the market value of the firm’s share to their book value.

Market/Book (M/B) Ratio = Current market price of share

Book value per share

Book value per share = (Assets – Liabilities) / Number of shares

Outstanding
 Dividend Per share: This ratio implies how much dividend a shareholder is getting for
every share he/she has invested in.

Dividend Per Share = Total Dividend to ordinary shareholders

Number of shares outstanding

 Dividend Yield: This shows the current rate of return of the dividend for current investors.

Dividend Yield = Dividend per share

Current share price
 LIQUIDITY RATIO

 Current Ratio: This ratio indicates the extent to which current liabilities are covered by
those assets expected to be converted to cash in the near future.

Current ratio = Current Asset

Current Liabilities

 Cash Position Indicator: A greater proportion of cash implies the institution is in a

stronger position to handle immediate cash needs.

Cash position indicator = Cash and deposit due from depository institution
Total Asset

 Liquid Securities Indicator: It compares the most marketable securities an institution

can hold with the overall size of its asset portfolio.

Liquid security indicator = Government securities

Total Assets

 Deposit Composition Ratio: This ratio measures how stable a funding base each
institution possesses.

Demand composition ratio = Demand Deposit

Time Deposit (Certificate of Deposit)
 FINDINGS AND ANALYSIS
LIMITATIONS

RATIOS OF NCC BANK OVER THE PAST SIX YEARS (2003 – 2006)
RATIOS 2003 2004 2005 2006 2007 2008

ROE 8.38% 23.19% 21.24% 22.46% 22.89% 21.76%

Net profit
margin 8.38% 23.19% 21.24% 22.46% 22.89% 21.76%
Asset
utilization 5.44% 5.21% 5.62% 5.72% 5.96% 5.78%
Equity
P multiplier 19.16 17.46 15.76 15.28 14.36 14.15
R ROA 0.44% 1.33% 1.35% 1.47% 1.59% 1.54%
O Net interest
B margin 7.07% 2.03% 2.33% 2.99% 2.64% 2.35%
A Net noninterest
B margin -3.28% -1.62% -1.51% -2.53% -2.59% -3.17%
I
Net operating
L
margin 3.45% 3.36% 3.90% 3.89% 4.19% 4.12%
I
Tax
T
management
Y
efficiency 23.65% 64.01% 51.20% 45.39% 49.93% 49.32%
Expense
control
efficiency 34.01% 39.86% 46.83% 56.62% 53.60% 53.92%
Asset
management
efficiency 5.44% 5.21% 5.62% 5.72% 5.96% 5.78%
Funds
management
efficiency 19.16 17.46 15.76 15.28 14.36 14.15
TIE 76.93% 95.86% 100.29% 91.15% 92.41% 80.92%
LEVERAGE Debt equity 7.16 3.01 2.62 4.93 3.53 3.18
 Operating
EFFICIENCY efficiency 36.48% 35.53% 30.64% 32.07% 29.65% 28.76%
Employee 697475.0 778909. 1018342. 1133788. 1447352 168820
productivity 7 52 53 84 .18 7.12

EPS
MARKET P/E ratio 6.12 11.61 8.66 8.16 8.81 7.29
POSITION M/B ratio 0.51 2.69 1.84 1.83 2.02 1.59
DPS
10.00 30.00 11.21 12.50 30.00 30.00
Dividend yield 11.41% 5.51% 3.58% 3.84% 6.80% 8.20%
LIQUIDITY Current Ratio 1.17 1.32 1.20 1.15 1.20 1.21
Cash position
indicator 0.72% 2.23% 2.31% 4.36% 1.07% 0.55%
Liquid position
indicator 16.91% 19.75% 10.97% 10.46% 14.37% 10.80%
Deposit
composition
Indicator 12.28 18.89 25.12 29.34 114.53 157.19
 P ROFITABILITY R ATIOS

 Net Interest Margin

Net Interest Margin

2.99%
2.64%
2.32% 2.33% 2.35%
2.03%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Net interest 419,879,65 435,573,30 608,628,96 976,186,87 1,123,357, 1,349,743,

income/ 6 2 6 0 012 364

Total assets 18,093,253 21,469,023 26,114,129 32,615,007 42,471,641 57,365,523

,650 ,326 ,566 ,792 ,370 ,726

Net interest
2.32% 2.03% 2.33% 2.99% 2.64% 2.35%
margin

NCC Bank has an average trend in this ratio for over the last six years but with a fluctuating
interest earning. Its highest interest earning was in 2006 which was 2.99%. It is because during
the year 2006, both net interest income and total asset has increased at a higher rate than all
its previous years. But in the years 2007 and 2008, the ratio dropped due to a lower rise in both
the numerator and denominator compare with its preceding years. Therefore, the bank has
deteriorated its position regarding earning interest as even a .01% change from the previous
year means big changes in profits.
 Net Non-Interest Margin

Net Non-Interest Margin

200 200 200 200 200 200

-1.51%
-1.62%

-2.53% -2.59%

-3.17%
-3.28%

2003 2004 2005 2006 2007 2008

Net
- - - - - -
noninter
593,516,41 348,287,22 395,276,01 823,980,46 1,100,581,6 1,815,967,9
est
8 0 1 2 98 47
income/

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

assets 650 326 566 792 370 726

Net
noninter
-3.28% -1.62% -1.51% -2.53% -2.59% -3.17%
est
margin

We know that “Interest Income” is the major source of banking industry that’s why non-
interest income is very nominal which result in negative trend. For our bank the non-interest
margin are all negative over the years as non-interest costs outstripped fee income. The non-
interest margin was highest at 2005 which indicated a good position but afterwards the graph
plunges down to a negative 3.17. Therefore the bank should increase more non-interest
revenue from additional sources as the firms with higher fee-based revenue will typically earn a
higher return on assets than competitors
 Net Operating Margin

Net Operating Margin

4.19% 4.12%
3.90% 3.89%
3.45% 3.36%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Net
624,937,66 720,491,30 1,018,342, 1,267,575, 1,780,243, 2,363,489,
operating
4 9 526 926 182 965
revenue/

Total 18,093,253 21,469,023 26,114,12 32,615,007 42,471,641 57,365,52

assets ,650 ,326 9,566 ,792 ,370 3,726

Net
operating 3.45% 3.36% 3.90% 3.89% 4.19% 4.12%
margin

The net operating margin for NCC bank rises and falls in every alternate year by less
than 1% margin. Although bank has an increase in profit before tax throughout the six years but
it increases at a decreasing rate with its denominator causing the ratio to fall in one year. And
then again rise the next year when both the operating revenue and total asset increases at an
increasing rate. This shows an unstable trend in net operating margin which makes the bank
inconsistent in its operation. Bank is not utilizing its asset efficiently to enlarge the margin
between operating revenue and operating expenses which reduces its resources for earning
more return and alternate the betterment of the bank in competitive market.
 Tax Management Efficiency  Tax
Management
64.01%
Efficiency
51.20% 49.93% 49.32%
45.39%
2003 2004 2005 2006 2007 2008

Net Income 79,123,76 285,156,1 352,082,1

23.65% 479,532,021 677,176,546 882,277,833
After Tax/ 1 48 73

Net Income
Before 334,602,0 445,495,9 687,600,4 1,056,513,0 1,356,325,3 1,788,959,8
Taxes2003
and 96 2005
2004 202006 51
2007 2008 69 08 21
Securities

Tax
manageme
s23.65% 64.01% 51.20% 45.39% 49.93% 49.32%
nt
efficiency

The ratio was the lowest in 2003 due to a very low amount of after tax income which
indicates that in 2003 the bank has paid huge amount of tax. In 2004 the bank’s tax exposure
was most efficiently monitored and controlled as shown by the sharp rise in the ratio. the
 increase is almost 40% from that of 2003. However, from 2005 the bank’s tax management
efficiency started to fall as a result of rise in tax payment.

 Expense Control Efficiency

Expense Control Efficiency

56.62%
53.60% 53.92%
46.83%
39.86%
34.01%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

NIBT &
334,602,09 445,495,9 687,600,45 1,056,513,0 1,356,325,3 1,788,959,8
Securitie
6 20 1 69 08 21
s/

Total
Operatin 983,889,42 1,117,549, 1,468,144,2 1,866,047,4 2,530,576,1 3,317,659,8
g 0 515 37 08 72 42
Revenue

Expense
Control
34.01% 39.86% 46.83% 56.62% 53.60% 53.92%
Efficienc
y

Expense control efficiency is an indicator of how many dollars of revenue survived after
operating expenses are removed. For NCC bank, this ratio has increased till 2006 showing that
the bank has been able to control its expense efficiently. But it decreased in 2007 this is
because though both net income before tax and total operating revenue increased from 2006
to 2007 but the rate of increase in net income before tax was lower than total operating
 revenue. In other words, the expense was higher in 2007 which had offset the increase in total
operating income. The ratio increased in 2008 but by a very low margin. So the overall expense
control efficiency was satisfactory

 Asset Management Efficiency

Asset Management Efficiency

5.96%
5.78%
5.72%
5.62%

5.44%

5.21%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Total
Operating 983,889,42 1,117,549,5 1,468,144,2 1,866,047,4 2,530,576,1 3,317,659,8
Revenues 0 15 37 08 72 42
/

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

Assets 650 326 566 792 370 726

Asset
Managem
5.44% 5.21% 5.62% 5.72% 5.96% 5.78%
ent
Efficiency

This ratio is lowest in 2004 but then it started to increase till 2007. However, it again fell
by a small margin in 2008. In 2004 and 2008 total asset increased by a greater percentage but it
failed to contribute efficiently to yield higher revenue. In 2005, 2006 and 2007 assets had been
 successfully managed to earn higher revenue for the bank. Overall the bank has been
consistent in managing its asset portfolio policy over the years.

 Funds Management Efficiency

Funds Management Efficiency

19.16
17.46
15.76 15.28
14.36 14.15

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

Assets/ 650 326 566 792 370 726

Total
944,466,84 1,229,622,9 1,657,342,1 2,134,809,1 2,958,596,8 4,055,298,2
Equity
5 93 10 79 63 44
Capital

Funds
Managem
19.16 17.46 15.76 15.28 14.36 14.15
ent
Efficiency

The bank’s funds management efficiency has shown a downward trend throughout the
six years. It indicates that total assets are rising at a higher rate than their respective equity
capital. This decreasing trend shows that the dependence of bank on deposits was decreasing
during the period. The NCC bank is relying more on its equity to finance its assets, thereby using
less leverage.

Return on Equity Analysis of ROE based on

23.19%
22.46% 22.89%
Efficiency Ratios
21.24% 21.76%

2008

2007
8.38%

2006
asset management
expense control
2005 tax management

2003 2004 2005 2006 2007 2008 2004

2003

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

The ROE was lowest in 2003 but it

increased sharply on 2004. The FME and AME
both fell during 2004 but this was largely offset by a higher rate of increase in TME and ECM. In
2005 ROE primarily fell because of sharp decline in TME and FME. Though AME and ECM had
increased but failed to increase ROE. In 2006, both FME and TME fell but this was largely
compensated by large increase in ECM. In 2007 we see a rise in ROE because of an increase in
TME and AME. However the fall in FME and ECM has not much contributed to ROE. In 2008, out
of the four management efficiency only ECM has increased but the rest has fallen which has
reduced the ROE ratio in 2008.

After analyzing all the above ratios we found that the bank has inconsistent efficiency
behavior. A bank must always try to increase this entire ratio to increase its ROE, but we have
 rather seen an unusual pattern among these four ratios. When any of the ratios decreases
management needs to evaluate the bank’s efficiency in those areas. But the NCC bank has not
been able to keep a positive relationship between ROE and the four efficiency ratio.

 Net Profit Margin

Net Profit Margin

2003 2004 2005 2006 2007 2008
26.76% 26.59%
Net 25.52%
23.98%
25.70%

income 79,123,76
285,156,148 352,082,173 479,532,021 677,176,546 882,277,833
After 1
Tax/

Total 8.04%
operatin 983,889,4 1,117,549,5 1,468,144,2 1,866,047,4 2,530,576,1 3,317,659,8
g 20 15 37 08 72 42
revenue
2003 2004 2005 2006 2007 2008

Net
profit 8.04% 25.52% 23.98% 25.70% 26.76% 26.59%
margin
 The net profit margin of 2003 is very low due to lower net income after tax. It
experienced a sharp rise in 2004 by 25%. From then onwards it fluctuated but by a very small
difference. In 2004, 2006 and 2007, NCC has been able to control its expense and tax efficiently
which has increased the Net Profit Margin in those years as compared to 2003 and 2008. In
2003 and 2008, the bank was inefficient to control its expense and had a low service pricing
policy.

 Asset Utilization

Asset Utilization

5.96%
5.78%
5.72%
5.62%

5.44%

5.21%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Total
Operating 983,889,42 1,117,549,5 1,468,144,2 1,866,047,4 2,530,576,1 3,317,659,8
Revenues 0 15 37 08 72 42
/

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

Assets 650 326 566 792 370 726

Asset
Managem
5.44% 5.21% 5.62% 5.72% 5.96% 5.78%
ent
Efficiency
 The overall asset utilization ratio over the six years was quite consistent as all were over
5% margin. However, it fell in 2004 and 2008 by almost 0.05% with its preceding years.

The ratio was the lowest in 2004, although both total asset and operating revenue
increased but at a decreasing rate. Total asset increased the most in 2008 but yet its asset
utilization ratio is lower than 2007 indicating inefficient utilization of asset to earn operating
revenue. The degree of asset utilization reflected a moderate asset portfolio management
policy.

 Equity Multiplier

Equity Multiplier

19.16
17.46
15.76 15.28
14.36 14.15

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

asset/ 650 326 566 792 370 726

Total
944,466,84 1,229,622,9 1,657,342,1 2,134,809,1 2,958,596,8 4,055,298,2
equity
5 93 10 79 63 44
capital

Equity
multipli 19.16 17.46 15.76 15.28 14.36 14.15
er
 The equity multiplier in 2003 was very high but it started falling over the five years. The
NCC bank has decreased its debt financing over the years, in other words, it is relying more on
equity to finance its asset. The lower multiplier of NCC implies that the bank is using less
leverage and is, therefore, less exposed to risk and less potential for high returns for
stockholders
 Analysis of ROE based on Profitability Ratios:

Return On Equity

23.19% 22.89%
22.46%
21.24% 21.76%

8.38%

2003 2004 2005 2006 2007 2008

In 2003, though AU and EM were high but the ROE ratio was mainly smaller due to low
NPM. From 2005 to 2007 we see a inverse relationship between AU and EM. However there
was a positive relationship between AU and EM in 2004 and 2008. But NPM maintained a
positive relation with ROE throughout the six years, which shows that NPM has a greater
impact on ROE’s pattern. In 2008 the bank failed to increase any of the ratios for which ROE fell.
This shows a very poor performance of the bank as it should try to increase all of the ratios to
achieve a high ROE.
 Return On Assets

ROA 1.59%
1.54%
1.47%
1.33% 1.35%

0.44%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Net
inco
me 79,123,761 285,156,148 352,082,173 479,532,021 677,176,546 882,277,833
After
Tax/

Total
18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,
asset
650 326 566 792 370 726
s

ROA 0.44% 1.33% 1.35% 1.47% 1.59% 1.54%

ROA and NPM show the same trend all over the years except in 2005 i.e. (ROA rise and NPM
fell). A decrease in NPM means that the bank was more reliant on its operating revenues during
that period of time. But ROA is also dependent on AU. ROA and AU have also shown a same
trend except in 2004 i.e. (ROA rise and AU fell). However, NPM and AU falls significantly in 2008
and as a result the bank is now overly dependent on operating revenue, so it earn less from
loans and other assets.
 LEVERAGE RATIO
 Times Interest Earned

TIE

100.29%
95.86% 92.41%
91.15%
76.93% 80.92%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

EBIT/ 983,889,42 1,117,549, 1,468,144, 1,866,047, 2,530,576, 3,317,659,

0 515 237 408 172 842

Interest 1,278,966, 1,165,816, 1,463,857, 2,047,143, 2,738,449, 4,099,984,

Expense 212 990 337 589 472 694

TIE 76.93% 95.86% 100.29% 91.15% 92.41% 80.92%

Higher ratio of time interest earned means firm has higher ability to pay the interest
from their opportunity income. In this analysis we see that there is a mass movement of this
ratio over 6 years. There is a sharp incline of this ratio in 2004 from 2003 indicating that the
firm is paying less interest. Between 2003 and 2004 EBIT has increased 13.6% but interest
expense has decreased by 8.85%. TIE reached it peaks in 2005 and then fluctuated till 2008.
Bank had the maximum amount of interest expense in 2008 due to a huge amount of deposits.
A high level of deposit is not deficient for a bank as long as it gives out more loans in order to
earn interest income which can compensate the high interest expense.
 Debt Equity

7.16 Debt Equity

6.00

4.93 5.00

4.00
3.53
3.01 3.00 3.18
2.62
2.00

1.00

2003 2004 2005 2006 2007 2008

The debt equity ratio has been the highest in 2003. A high ratio implies that the bank
has been aggressively financing its activities through debt and therefore must pay interest on
this financing. The ratio declined significantly in 2004 because the bank has paid out most of its
long term loan. In 2005, though both long term loan and equity increased but the ratio was
lower as compared to 2004.

The debt equity ratio from the year 2007 has started to fall which means that the
company is using less leverage.
 EFFICIENCY RATIO
 Operating Efficiency Ratio

Operating Efficiency

36.48% 35.53%
30.64% 32.07%
29.65% 28.76%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Total Operating 358,951, 397,058,20 449,801,7 598,471,4 750,332,9 954,169,8

Expense/ 756 6 11 82 90 77

Total Operating 983,889, 1,117,549, 1,468,144, 1,866,047, 2,530,576, 3,317,659,

Revenues 420 515 237 408 172 842

Operating
36.48% 35.53% 30.64% 32.07% 29.65% 28.76%
Efficiency

We observe a moderately consistent behavior of operating efficiency ratio with few

downfalls in between the years. The most noticeable changes happened in 2005 with 5%
decrease and 2% rise the next year. But the ratio over the last 2 year has fallen below the 30%
range compared with rest of the years. When this ratio decreases, it is good for the bank and its
shareholders, as it indicates that the firm is able to cover its operating expenses with its
operating revenues. With the increase in expenses, revenue is also increasing. But the increase
in revenue is increasing at a lower rate than the expenses. There is a decreasing trend in
Operating Efficiency ratio since 2006. This trend is a good symbol for the bank as its shows that
the bank is losing a smaller percentage of its income to expenses
 Employee Productivity Ratio

Empoyee Productivity
1688207.12

1447352.18

1133788.84
1018342.53

778909.52
697475.07

2003 2004 2005 2006 2007 2008

1.00 2.00 3.00 4.00 5.00 6.00
Net
2003 2004 2005 720,491,3
2006 1,018,342,
2007 1,267,575,
2008 1,780,243, 2,363,489,
Operating 624,937,664
09 526 926 182 965
Income/

No of full-
time 896 925 1000 1118 1230 1400
employee

Employee 1018342.5 1133788.8 1447352.1 1688207.1

697475.07 778909.52
Productivity 3 4 8 2

We see an upward trend in the employee productivity ratio. The net operating income
and the number of full time employee has been increasing at an increasing rate. This also
indicated that the employee productivity capacity is getting better over the years.

MARKET POSITION RATIO

 Price/ Earning (P/E) ratio

P/E Ratio
11.61

8.66 8.81
8.16
7.29
6.12

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Current Market
87.6384 544.74 312.71 325.6 441.27 365.94
Price/

EPS 14.32 46.90 36.11 39.9 50.09 50.1974

P/E Ratio 6.12 11.61 8.66 8.16 8.81 7.29

The P/E Ratio indicates how much investors are willing to pay per dollar of current earnings.
As such, high P/E ratio which we observe in 2004 indicated that the investor were willing to pay
a high price for a taka of current earnings in order to get high returns. But the P/E ratio kept
falling for the next two years at an alarming rate. Although the bank managed to increase it’s
ratio in 2007 by almost 8% mainly because of the improvement in current market price but
failed to maintain this by the next year. It declined to about 5% in 2008 which is an alarming
signal for the potential investors as the current market price of its share is decreasing while the
EPS rose by few margin. Moreover, by seeing the lower ratio, current investors will also loose
their confidence on the bank.

 Earnings Per Share

 EPS

50.09 50.20
46.92
39.90
36.11

14.32

5.00 6.00
3.00 4.00
1.00 2.00

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Net Income 79,123,7 285,156,1 352,082,1 479,532,0 677,176,5 882,277,8

After tax/ 61 48 73 21 46 33

No of shares 5,525,52 12,017,88 13,520,12 17,576,15

6,078,072 9,750,398
outstanding 0 6 1 7

EPS 14.32 46.92 36.11 39.90 50.09 50.20

From the above data we see that NCC Bank Ltd, has gradually improve regarding earning
per share. In 2003 the bank’s EPS was lowest than all the rest of the years because of their poor
after tax net income in 2003. But the net income increased by over 250% in 2004. Though EPS
again decline in 2005 but since then the bank has increased to earn further EPS for the next
three years.

The bank has allocated its profit to each outstanding share of common stock quite well
among the last three years. EPS serve as an indicator of a bank’s profitability and are
considered to be the single most important variable in determining a share’s price. Therefore,
stockholder will now be more attracted to invest in NCC bank due to its increasing trend in EPS.

 Market/ Book (M/B) Ratio

 M/B Ratio

2.69

2.02
1.84 1.83
1.59

0.51

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Current Market
87.6384 544.74 312.71 325.6 441.27 365.94
Price/

Book value per share 170.93 202.3 169.98 177.64 218.83 230.73

M/B Ratio 0.51 2.69 1.84 1.83 2.02 1.59

As the current price of NCC’s share has varied over the years, its market/book ratios also
show a inconsistent pattern which is similar to its P/E ratio. Initially the ratio had a value of
around 0.51 but it jumped up to approximately 2.69 in the next financial year, i.e. 2004.
Between 2004 and 2005, M/B ratio fell but again gain a momentum increase in 2006 before
declining in 2008.

When comparing the market value to the book value we can identify whether or not the
stock in overvalued or undervalued. Therefore a low M/B ratio in 2008 means that the market
price of share has decreased at a higher rate compared to the rise in book value per share. So,
this reflects unfavorably on the bank’s performance.

 DPS and Dividend Yield

 DPS

2003 2004 2005 2006 2007 2008

Total 55,255,20 182,342,16 109,253,50 150,223,57 405,603,64 527,284,73

Dividend/ 0 0 6 0 1 3

No of
shares
5,525,520 6,078,072 9,750,398 12,017,886 13,520,121 17,576,157
outstandin
g

DPS 10.00 30.00 11.21 12.50 30.00 30.00

DIVIDEND YIELD

2003 2004 2005 2006 2007 2008

DPS/ 10.00 30.00 11.21 12.50 30.00 30.00

Current
87.6384 544.74 312.71 325.6 441.27 365.94
share price

Dividend
11.41% 5.51% 3.58% 3.84% 6.80% 8.20%
Yield

The maximum DPS for the bank has been on a 30% margin as the bank pays some
percentage of its bonus share as dividend to it shareholder. The range hasn’t crossed the 30%
margin in all these years. Though in 2003 the bank paid out a very low DPS but yet had the
highest dividend yield due to its low current market price. But then dividend yield fell sharply to
approximately 6% in 2004 and 4% in 2005. From then onwards, we can see an upward trend in
the dividend yield curve and in the DPS till 2008. This shows that there has been an increase in
dividend per share when compared to the current price of the share, which is favorable for
prospective investors.
 LIQUIDITY RATIO
 Current Ratio

Current Ratio
1.32

1.20 1.20 1.21

1.17 1.15

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Curren
t 17,792,842, 21,171,804, 25,805,992, 32,261,300, 41,949,645, 56,590,218,
Assets 136 321 433 735 769 232
/

Curren
t 15,153,898, 16,069,233, 21,478,216, 28,147,342, 34,901,774, 46,904,663,
liabiliti 220 980 386 335 203 162
es

Curren
1.17 1.32 1.20 1.15 1.20 1.21
t Ratio

Overall, the bank has managed to maintain a consistent ratio over the years with some
short downfalls in between by few margins. It has been able to cover its current liabilities with
its current asset quite well specially in the year 2004. In 2005, the ratio fell and sustained it
through the next year. But from 2007 onwards, there has been an upward trend in the ratio
which shows high short term liquidity efficiency.
 Cash Position Ratio

Cash position indicator

P

4.36%

2.23% 2.31%

0.72% 1.07% 0.55%

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Cash &
Deposits
due from
130,083,48 478,931,25 603,979,67 1,422,010,6 455,514,78 314,112,99
deposito
0 0 3 62 7 1
ry
Institutio
ns/

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

Asset 650 326 566 792 370 726

Cash
position 0.72% 2.23% 2.31% 4.36% 1.07% 0.55%
indicator

The cash position indicator increased from 2003 till 2006 which indicates that during this
period the bank has been able to maintain a stronger position to handle immediate cash needs.
But it started to decline from 2007. In 2008 the ratio was only 0.55% indicating that the bank’s
liquidity position was very risky in the last year.
 Liquid Securities Indicator

Liquid Securities Indicator

19.75%
16.91%
14.37%
10.97% 10.46% 10.80%

2003 2003 2004

2004 2005 2006
2005 2006
2007 2007
2008 2008

Govt
3,059,813,4 4,239,752,4 2,864,965,4 3,410,634,0 6,104,515,2 6,196,727,8
securiti
00 04 59 30 46 44
es/

Total 18,093,253, 21,469,023, 26,114,129, 32,615,007, 42,471,641, 57,365,523,

Asset 650 326 566 792 370 726

Liquid
securiti
es 16.91% 19.75% 10.97% 10.46% 14.37% 10.80%
indicato
r

Liquid securities were the highest in 2004 compared to other years. Then it fell in two
consecutive years (2005 and 2006) and increased again in 2006. However it again fell by almost
4% in 2008. The liquid position was very satisfactory in 2004 with greater portion of
government securities. The fall in ratio in 2005 and 2006 was mainly due to higher rate of
increase in total assets than government securities. In 2007, government securities rose almost
by 50% which pulled up the ratio from 10.46% to 14.37%. However, in the last year, the bank’s
government securities remained more or less stable but its total asset increased a lot which
again decreased the ratio. Since government securities are the most marketable securities,
NCC bank should hold more of this to keep the bank free from liquidity crisis.
 Deposit Composition Ratio

Deposit Composition ratio

157.19
114.53

25.12 29.34
12.28 18.89

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Demand 2,231,716, 2,882,857, 3,614,610, 4,232,154, 5,327,176 5,908,563

Deposit/ 402 290 728 532 ,118 ,861

Time deposit 181,786,20 152,604,00 143,914,00 144,239,00 46,514,00 37,589,00

7 0 0 0 0 0

Deposit
composition 12.28 18.89 25.12 29.34 114.53 157.19
ratio

The ratio has continuously risen over the six years. The last two years’ ratios are very
noteworthy because of high reliance on demand deposits than on time deposits which means
that in those years the bank was subject to immediate withdrawal of deposits. This is a very bad
indication for the bank as it suggests low deposit stability and higher need for liquidity.
 RECOMMENDATION

The bank’s competitive position is very weak compared to other banks, mainly in its
technological aspect. While other banks are competing to achieve greater market share by
acquiring more customers through offering variety of technological services, NCC bank has not
yet launched its debit card. Therefore the bank’s technological division needs to be enhanced
so that they can sustain their growth and profitability.

NCC should also reduce their reliance on demand deposit since it is more subjected to
immediate withdrawal. Moreover, it should increase its time deposit (certificate of deposit) so
that it can avoid its liquidity crisis due to high demand deposit.

Persisting global economic recession has slowly affected the economy of Bangladesh. Since
country’s major sources of foreign currency are export proceeds and remittance which are
susceptible to adverse trend in global economies. As a crucial player in the financial market,
overall performance of banking industries in next few years might be under challenge.
Therefore, NCC bank should take internal precaution with policy support from the regulatory
agencies, as it may help to overcome the present crisis.

NCC bank’s performance is also based on qualitative indicators such as

1. Good corporate governance practice
2. Asset- liability management
3. Experienced top-level management
4. Diversified product line
5. Corporate social responsibility. Etc
NCC bank should try to enhance their performance on the above categories otherwise it will be
constrained by moderate asset quality, poor management, socially irresponsible etc. It should
also try to implement risk management practices in order to protect the quality of the portfolio.
 CONLCLUSION

The performance analysis of NCC bank has revealed that the bank can be considered to be a
strong bank through its good financial position and well maintained operating efficiency. These
indicate a strong capacity for timely payment of financial commitments, but are somewhat
more susceptible to the adverse effects of changes in economic conditions.

However, after the analysis, we have concerned about the increase of Bank’s non-performing
assets, limited market share and dependency on high cost fixed deposits. Due to these, we see
a fluctuation in the profit margin over the last six years and an unstable trend in the interest
and non-interest income. Bank has also failed to maintain a positive relationship of its asset
management efficiency, tax management efficiency, fund management efficiency and expense
control efficiency with its ROE. We have also observed a fantastic growth rate in bank’s
deposits, loans and advances and earning with low volatility. This indicates that the bank has a
satisfactory level of liquidity, capable of generating internal fund and can access to alternate
sources.

The area where the NCC bank has been the most proficient is its operating efficiency and
employee productivity. NCC has successfully been able to keep cover its operating expenses
with its operating revenues. It employee productivity has shown an upward trend over the past
six years. Although NCC bank is lagging behind it market position due to the up and downs of
market price.
After the deal with a leading micro-credit lender to reach remittances from expatriated to their
beneficiaries in remote areas of the country, NCC Bank Ltd has put more emphasis on
increasing foreign remittance and therefore in 2007, it has registered a thriving growth of
105%. Their SME and Agri sector is also continued to be profitable due to the set up of SME
Centres in different important points of the country. Therefore, the NCC Bank Ltd has the
prospect of strong growth in the future and become one of the market leaders of the
Bangladesh Commercial Banking Industry.
 BIBLIOGRAPHY

 Website of National Credit and Commerce Bank:

http://www.nccbank.com.bd/
 Hudgins, Rose. “Bank management and Financial Services” edt. 7.,pp 167-182, 362.

 Financial Statement and Annual reports of NCC bank (2006-2008)

Collected from Dhaka Stock Exchange

 Financial Statements and other relevant information of financial year 2004:

---- Retrieved from the NCC Bank Website:
 APPENDIX

FOLLOWING ARE THE BALANCE SHEET AND PROFIT AND LOSS A/C OF NCC BANK TAKEN FROM
THEIR ANNUAL REPORT
 APPENDIX

FOLLOWING ARE THE BALANCE SHEET AND PROFIT AND LOSS A/C OF NCC BANK TAKEN FROM
THEIR ANNUAL REPORT
 National Credit and Commerce Bank Limited
Balance Sheet as at 31 December 2006

 
2006 2005
PROPERTY AND ASSETS Taka Taka
Note
Cash:
In hand (including foreign currencies) 4 248,445,816 306,027,622
Balances with Bangladesh Bank and its agent bank
5
(s) 1,540,115,288 1,040,282,943
(including foreign
currencies)
Balances with other Banks and Financial
Institutions
In Bangladesh 6(a) 532,060,808
1,286,728,163
Outside Bangladesh 6(b) 135,282,499 71,918,865
603,979,673
1,422,010,662
Money at call and short notice 7 560,000,000 120,000,000
Investments 8
Government 3,410,634,030 2,864,965,459
Others 141,444,513 145,482,283
3,552,078,543 3,010,447,742
Loans and advances
Loans, cash credits, overdrafts, etc. 9.1 23,038,761,590 19,124,070,288
Bills purchased & discounted 9.2
1,639,594,703 1,409,058,841
24,678,356,293 20,533,129,129
Fixed assets including premises, furniture and
10 353,707,057 308,137,133
fixtures
Other assets 11 260,294,133 192,125,324
Non-banking assets - -
TOTAL ASSETS 32,615,007,792 26,114,129,566

LIABILITIES AND CAPITAL

Liabilities:
Borrowings from Other Banks, Financial
12 155,555,365
Institutions and agents 1,256,179,954
Deposits and other accounts: 13
Current deposits and other
3,603,928,441 3,070,684,540
accounts
Bills payable 13.1 371,294,841 333,013,172
Savings Bank Deposits 2,569,312,503 2,109,130,157
Fixed Deposits
17,534,252,160 12,923,329,890
Term deposits 3,924,315,390 2,898,144,627
Bearer Certificates of Deposits 144,239,000   143,914,000
28,147,342,335 21,478,216,386
Other liabilities 14 2,177,300,913 1,722,391,116
TOTAL LIABILITIES 30,480,198,613 24,456,787,456
Shareholders' Equity
Share Capital
Paid up capital 15.2 1,201,788,566 975,039,810
Bonus share 150,223,570 109,253,506
Statutory reserve 16 727,461,506 516,158,892
Other reserve 17 47,508,557 46,577,688
Profit and loss account-Retained
18 7,826,980 10,312,214
Earning
TOTAL SHAREHOLDERS' EQUITY 2,134,809,179
1,657,342,110
TOTAL LIABILITIES AND SHAREHOLDERS'
32,615,007,792 26,114,129,566
EQUITY
Less: Interest paid on 2,047,143,
21 1,463,857,337
deposits and borrowings 589
976,186,87
Net interest income 608,628,966
0
265,168,89
Income from investments 22 240,735,656
3
Commission, exchange 489,031,41
23 495,153,429
and brokerage 2
135,660,23
Other operating income 24 123,626,186
3
1,886,047,
Total operating income 1,468,144,237
408
367,663,79
Salary and allowances 25 258,782,718
3
Rent, taxes, insurance,
26 57,214,963 45,500,457
electricity etc.
Legal
27 4,025,901 4,048,205
expenses
Postage, stamp,
28 20,727,648 17,530,028
telecommunication etc.
Stationery, printing,
29 19,261,704 16,944,071
advertisement etc.
Managing Director's salary
30 2,730,000 2,260,000
and allowances
Director's fees 31 1,185,500 827,500
Audit fees 32 120,000 180,000
Depreciation and Repair of
33 63,733,131 50,059,352
Bank's assets
Other
34 61,808,842 53,669,380
expenses
598,471,48
Total operating expense 449,801,711
2
1,267,575,
Profit before provisions 1,018,342,526
926
Provision for loans and
advances
130,784,00
Specific Provision 14.5(a) 257,994,954
0
  
General Provision 14.5(b) 79,97,086
63,239,680
210,741,08
321,234,634
6
Provision for Investment 14.3 - 12,912,262
Fluctuation in Shares
Provision for Other
14.2 (3,404,821)
Assets 321,771

211,062,85
Total provisions 330,742,075
7
1,056,513,
Profit before tax 687,600,451
069
577,293,26
Provision for tax 335,518,278
2
512,809,65
For current year 261,086,173
7
For prior years 67,198,901
61,536,962
  
Deferred for tax   7,233,204
2,946,643
Profit after tax for the 479,219,80
352,082,173
year 7
Add: Balance of profit
brought forward from last 18 10,312,214 14,257,143
year.

Total profit available for 489,532,02

366,339,316
distribution 1
Appropriations
Statutory reserve 20% of 211,302,61
137,520,090
net profit before tax 4
Proposed Cash Dividend @
10% for 2006 and 10% for 120,178,85 109,253,506
the year 2005 7
Proposed Stock dividend
@12.50% for 2006 & 10% 150,223,57 109,253,506
for 2005 0

481,705,04
356,027,102
1
Retained earnings carried
18 7,826,980 10,312,214
forward
Earning per share 39.88 36.11

These Financial Statements should be read in conjunction with the annexed notes.
 Managi
Direc
Chairman ng Managing Director
Director tor
Directo
r

Ata Khan & Co.

Dated: Dhaka, 12 March
Chartered Accountants
2007
 
 National Credit and Commerce Bank Limited
Balance Sheet as at 31 December 2005
                   
          2005   2004  
PROPERTY AND ASSETS        Taka     Taka   
Not
   
        e    
                  
Cash:               
In hand (including foreign currencies)   4        306,027,622          233,634,746  
    
Balances with Bangladesh Bank and its agent bank (s)  5        676,329,396
1,040,282,943    
  (including foreign
      
currencies)      
                
Balances with other Banks and Financial Institutions         
In Bangladesh       6(a)        532,060,808          407,984,582  
Outside Bangladesh     6(b)          71,918,865            70,946,668  
                 603,979,673          478,931,250  
                
Money at call and short notice   7        120,000,000            20,000,000  
                
Investments       8       
         
Government    
      2,864,965,459 4,239,752,404  
Others                145,482,283          145,482,283  
         
   
        3,010,447,742 4,385,234,687  
Loans and advances             
     
Loans, cash credits, overdrafts, etc. 9.1  
  19,124,070,288 14,246,564,951  
    
Bills purchased & discounted 9.2          964,587,274
  1,409,058,841  
     
   
        20,533,129,129 15,211,152,225  
                
Fixed assets including premises, furniture and fixtures  10        308,137,133          297,219,005  
Other assets       11        192,125,324          166,522,017  
Non-banking assets                            -                          -    
     
TOTAL ASSETS  
      26,114,129,566 21,469,023,326  
                
 LIABILITIES AND CAPITAL           
                  
Liabilities:               
                  
Borrowings from Other Banks, Financial Institutions and          
12  
agents   1,256,179,954 2,526,123,831  
                
Deposits and other accounts:     13       
         
     Current deposits and other accounts    
  3,070,684,540 2,458,003,542  
     Bills
13.1       333,013,172          240,919,015
payable        
         
     Savings Bank Deposits    
    2,109,130,157 1,839,347,327  
       
     Fixed Deposits    
    12,923,329,890 8,615,876,009  
         
     Term deposits    
    2,898,144,627 2,762,484,087  
     Bearer Certificates of Deposits            143,914,000          152,604,000  
     
   
        21,478,216,386 16,069,233,980  
         
Other liabilities 14  
      1,722,391,116 1,644,042,522  
     
 
TOTAL LIABILITIES       24,456,787,456 20,239,400,333  
Shareholders' Equity             
Share Capital               
Paid up capital       15.2        975,039,810          607,807,200  
Bonus share                 109,253,506          182,342,160  
Statutory reserve       16        516,158,892          378,638,802  
Other reserve-Assets revaluation Reserve 17          46,577,688            46,577,688  
Profit and loss account-Retained Earning   18          10,312,214            14,257,143  
         
TOTAL SHAREHOLDERS' EQUITY  
1,657,342,110   1,229,622,993  
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
26,114,129,566   21,469,023,326  
                
 National Credit and Commerce Bank Limited
  Profit and Loss Account 
  For the year ended 31 December 2005
                    
         Note   2005   2004   
             Taka     Taka    
                    
Interest income       20   2,072,486,303   1,601,390,292  
Less: Interest paid on deposits and borrowings 21   1,463,857,337   1,165,816,990  
Net interest income         608,628,966   435,573,302  
Income from investments     22   240,735,656   261,504,649  
Commission, exchange and brokerage   23   495,153,429   347,568,455  
Other operating income     24   123,626,186   72,903,109  
Total operating income         1,468,144,237   1,117,549,515  
Salary and allowances     25   258,782,718   221,571,279  
Rent, taxes, insurance, electricity etc.   26   45,500,457   42,425,341  
Legal expenses       27   4,048,205   5,927,439  
Postage, stamp, telecommunication etc.   28   17,530,028   16,750,135  
Stationery, printing, advertisement etc.   29   16,944,071   11,621,674  
Managing Director's salary and allowances   30   2,260,000   3,240,000  
Director's fees       31   827,500   1,140,000  
Audit fees       32                  180,000   120,000  
Depreciation and Repair of Bank's assets    33   50,059,352   49,283,922  
Other expenses       34   53,669,380   44,978,416  
 Total operating expense         449,801,711   397,058,206  
Profit before provisions         1,018,342,526   720,491,309  
Provision for loans and advances               
  Specific Provision      14.5(a)   257,994,954  271,977,365  
          
 
  General Provision     14.5(b) 63,239,680  20,552,497  
            321,234,634   292,529,862  
        
 
  Provision for Investment Fluctuation in Shares 14.3            12,912,262  (23,035,020)  
          
 
   Provision for Other Assets     14.2  (3,404,821)              5,500,547  
 Total provisions         330,742,075   274,995,389  
 Profit before tax         687,600,451   445,495,920  
        
 Provision for tax        335,518,278   160,339,772  
        
   For current year             
261,086,173 154,200,000
   For prior years                   67,198,901   6,139,772  
 Deferred Tax                       7,233,204                         -     
 Profit after tax for the year         352,082,173   285,156,148  
Add: Balance of profit brought forward from last
 year.   18  
14,257,143   542,339  
 Total profit available for distribution      
366,339,316   285,698,487  
Appropriations               
        
Statutory reserve 20% of net profit before tax       89,099,184  
137,520,090
        
 Proposed Bonus Share@ 10 % for 2005 & 30% for 2004      182,342,160  
109,253,506
        
Proposed Cash Dividend @ 10% for the year 2005                              -    
109,253,506
        
            356,027,102   271,441,344  
Retained earnings carried forward   18   10,312,214   14,257,143  
Earning per share          36.11   46.91  
                  
These Financial Statements should be read in conjunction with the annexed notes.