Performance Analysis

A. Bank Profitability Ratios:

1)      Return On Asset

Year 2005 2006 2007

City Bank 1.75% 0.58% 0.71%

During the period 2005-2007 average figures of ROA is 1.02%City Bank. It

means that the City Bank can make taka 1.02 per 100 taka employed. The
standard deviation calculated for City Bank is 0.64%. The range was 1.17% for
City Bank. The table shows that in the initial period the ROA of City Bank was
very optimistic but in the later period, ROA of City Bank is 0.71% which is
unexpected. Time trends suggest that the bank needs to increase their utilization
of assets to pile up the ratio.

2)      Return on Equity

Year 2005 2006 2007

City Bank 32.05% 10.69% 12.71%

 During the period 2005-2007 the average figures of ROE is 18.48%City Bank.
The table shows that in the initial period the ROE of City Bank was very
optimistic but in the later period, ROE of City Bank is 12.71% which is
unexpected. The standard deviation is 11.79% and the range is 21.35%. The City
bank is experiencing deteriorating positions in ROE.

3)      Profit Margin

Year 2005 2006 2007

City Bank 25.64% 9.06% 13.35%

During the period 2005-2007 the average figures of Profit Margin is 16.02% for
City Bank. The standard deviation is 8.61% and the range is 16.58%. A low profit
margin indicates a low margin of safety that a decline in revenue will erase profits
and result in a net loss. Time trends suggest that the bank needs to increase
their revenue to pile up the ratio.

4)      Return on Deposit
 Year 2005 2006 2007
City Bank 2.05% 0.67% 0.84%

During the period 2005-2007 the average figures of Return on Deposit is 1.19%
for City Bank. The standard deviation is 0.75% and the range is 1.37%. The
average indicate that bank can generate profit 1.19 Taka per 100 Taka using
deposit. The bank needs to increase their utilization of deposit for getting a good
amount of return.

5)      Return on Share Holders Capital

Year 2005 2006 2007

City Bank 75.13% 22.22% 28.91%

During the period 2005-2007 the average figures of Return on Shareholder

Capital is 42.09% for City Bank. The standard deviation is 28.81% and the range
is 52.90%. The average indicates that the return on shareholder capital is 42.09
Taka per 100 Taka. The inter firm comparison of this ratio determines whether
the investments in the firm are attractive or not as the investors would like to
invest only where the return is higher.

6)      Net Operating Margin

Year 2005 2006 2007

City Bank 86.25% 70.26% 61.49%

During the period 2005-2007 the average figures of Net Operating Margin is
72.66% for City Bank. The standard deviation is 12.55% and the range is
24.76%. The average indicates that 72.66% of a company’s revenue is left over,
before taxes and other indirect costs (such as rent, bonus, interest, etc.), after
paying for variable costs of production as wages, raw materials, etc. A good
operating margin is needed for a company to be able to pay for its fixed costs,
such as interest on debt.

Bank Efficiency Ratio:

1)      Interest Income To Expense (IEE)

Year 2005 2006 2007

City Bank 5.35% 4.45% 3.29%
During the period 2005-2007 the average figures of IEE is 4.36% for City Bank.
The standard deviation is 1.03% and the range is 2.06%. The average indicates
that the bank can make net interest income 4.36 Taka per 100 Taka lending. The
bank needs to decrease their interest expense or increase interest income to pile
up the ratio.

2)      Operating Expense to Asset (OEA)

Year 2005 2006 2007

City Bank 2.79% 2.79% 2.74%

During the period 2005-2007 the average figures of OEA is 2.77% for City Bank.
The standard deviation is 0.03% and the range is 0.06%. The average indicates
that the City Bank can spent for operating purpose taka 2.77 per 100 taka
employed. The bank stays in better position because of their less operating
expense.

3)      Operating Income to Asset (OIA)

Year 2005 2006 2007

City Bank 3.50% 2.91% 1.97%

During the period 2005-2007 the average figures of OIA is 2.79% for City Bank.
The standard deviation is 0.77% and the range is 1.53%. The average indicates
that the City Bank can earn operating income taka 2.79 per 100 taka employed.
The bank needs to increase operating income by decreasing their interest
expense or increasing interest income to pile up the ratio.

 4)      Operating Expense to Revenue (OER)

Year 2005 2006 2007

City Bank 40.81% 43.60% 51.17%

During the period 2005-2007 the average figures of OER is 45.19% for City
Bank. The standard deviation is 5.36% and the range is 10.37%. The average
indicates that the Bank spent for operating purpose Taka 0.45 for every Taka
they earned in operating revenue. The bank needs to decrease operating
expense or increase operating income to pile up the ratio.

5)      Asset Turnover (ATO)

 Year 2005 2006 2007
City Bank 12.12% 13.94% 14.53%

During the period 2005-2007 average figures of ATO is 13.53%City Bank. It

means that the City Bank can earn interest income taka 13.53 per 100 taka
employed. The standard deviation calculated for City Bank is 1.25%. The range
was 2.41% for City Bank. The table shows that in the initial period the ATO of
City Bank was much unexpected but in the later period, ATO of City Bank is
14.53% which is optimistic. Time trends suggest that the bank needs to increase
their utilization of assets to pile up the ratio.

6)      Net Interest Margin (NIM)

Year 2005 2006 2007

City Bank 3.50% 2.91% 1.97%

The average of net interest margin is 2.79% for City Bank with the standard
deviation and range are 0.77% and 1.53% respectively. The average indicates
that the bank can make net interest income 2.79 Taka per 100 Taka employed.
The bank needs to increase interest income or decreasing interest expense to
pile up the ratio.

Asset Quality Indicators:

1)      Provision to Earning Assets

Year 2005 2006 2007

City Bank 0.54% 3.11% 1.03%

 The average of provision to Earning Assets is 1.56% for City Bank with the
standard deviation and rang are 1.37% and 2.57% respectively. The ratio
indicates that an expense set aside as an allowance for bad loans such as
customer defaults, or terms of a loan have to be renegotiated

2)      Loan Ratio:

Year 2005 2006 2007

City Bank 65.43% 65.40% 59.85%

During the period 2005-2007 the average of loan ratio is 63.56% for City Bank
with the standard deviation and rang are 3.21% and 5.57% respectively. The
average ratios show that the utilization of total assets has been done extremely
well by the City Bank.

3)      Loans to Deposits

Year 2005 2006 2007

City Bank 76.31% 75.65% 70.72%

During the period 2005-2007 the average of loan to deposit ratio is 74.23% for
City Bank with the standard deviation and rang are 3.06% and 5.59%
respectively. The average indicates that the bank can provide loan 74.23 Taka
per 100 Taka of their deposit which shows the more the bank is relying on
borrowed funds, which are generally more costly than most types of deposits.

 Liquidity Ratios:

1)      Cash to Assets

Year 2005 2006 2007

City Bank 7.77% 6.83% 7.23%

During the period 2005-2007 the average of cash to asset ratio is 7.28% for City
Bank with the standard deviation and rang are 0.47% and 0.93% respectively.
The average indicates that the bank has ability to cover its current debt, but
ratios that is too high might indicate that a company is not allocating enough
resources to grow its business.

2)      Cash to Deposits

Year 2005 2006 2007

City Bank 9.06% 7.90% 8.54%

During the period 2005-2007 the average of cash to deposit ratio is 8.50% for
City Bank with the standard deviation and rang are 0.58% and 1.15%
respectively. The average indicates that the bank has available cash 0.085 Taka
per Taka of their deposit. That means the city bank invests maximum amount of
their deposit.

3)      Deposits to Assets
 Year 2005 2006 2007
City Bank 85.74% 86.44% 84.64%

During the period 2005-2007 the average of deposit to asset ratio is 85.61% for
City Bank with the standard deviation and rang are 0.91% and 1.80%
respectively. The average indicates that the bank has deposit 85.61 Taka per
100 Taka of their asset which shows that customer is highly satisfied & feel
secured to save their money to the city bank.

4)      Equity Multiplier

Year 2005 2006 2007

City Bank 1827.06% 1843.26% 1779.77%

 During the period 2005-2007 the average figures of equity multiplier is

1816.70%City Bank. The standard deviation is 32.99% and the range is 63.49%.
The average indicates that the bank’s total assets 1816.70 Taka per 100 Taka of
their shareholders’ equity which shows that higher financial leverage, which
means the bank is relying more on debt to finance its assets.

5)      Equity to Deposits

Year 2005 2006 2007

City Bank 6.38% 6.28% 6.64%

6)      Total Liabilities to Equity

Year 2005 2006 2007

City Bank 1827.06% 1843.26% 1779.77%

During the period 2005-2007 the average figures of liabilities to equity is

1816.70%City Bank. The standard deviation is 32.99% and the range is 63.49%.
The average indicates that the bank’s total liabilities/debt 1816.70 Taka per 100
Taka of their shareholders’ equity. The debt-equity ratio is another leverage ratio
that compares a bank’s total liabilities to its total shareholders’ equity. This is a
measurement of how much suppliers, lenders, creditors and obligors have
committed to the company versus what the shareholders have committed.

7)      Total Liabilities to Shareholder Capital

 Year 2005 2006 2007
City Bank 4283.28% 3831.00% 4048.87%

During the period 2005-2007 the average figures of liabilities to Shareholder

capital is 4054.38%City Bank. The standard deviation is 226.20% and the range
is 452.29%. The average indicates that the bank’s total liabilities/debt 4054.38
Taka per 100 Taka of their shareholders capital.

8)      Retained Earnings to Total Assets

Year 2005 2006 2007

City Bank 0.11% 0.08% 0.08%

During the period 2005-2007 the average figures of retained earnings to total
asset is 0.09%City Bank. The standard deviation is 0.02% and the range is
0.03%. The ratio indicates that growth has been financed through profits, not
increased debt. But the average indicates that the bank’s retained earnings is
0.09 Taka per 100 Taka of their total asset which shows that growth may not be
sustainable as it is financed from increasing debt, instead of reinvesting profits.