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Objective of the Study:

The objective of preparing this paper is to find out the best performing commercial banks of Bangladesh. For find out the best performing commercials banks primarily banks with higher credit rating, at least AA3, are selected. Througho ut the paper these banks are analyzed based on some key financial ratios, like Credit Deposit Ratio (CDR), Ratio of Classified Loan against Total Loan, Cost of Fund (COF), Return on Investment (ROI), Return on Asset (ROA), Return on Equity (ROE), Earnings per Share (EPS), Net Income (NI) Ratio and Credit Rating (CR). Based on the performance on the each ratios banks are scored. Finally the raking of the banks is done by adding all the score on each ratio.

Methodology:
For preparing this paper information are mainly collected from the annual report of the respective banks, credit rating report, banks website. The various ratio analysis that is used in the paper are collected from the banks annual reports and financial statements and the ratios that are not found in the annual report directly are calculated from the information provided in the annual reports. Eight ratios are selected to judged the various aspects of efficiency of the banks, like Credit Deposit Ratio to judge the efficiency of using money, Ratio of Classified Loan against Total Loan to judge the efficiency of loan collection, Cost of Fund to measure the efficiency of marinating fund cost, Return on Investment (ROI) to measure the investment efficiency, Return on Asset (ROA) to measure the efficiency of using banks assets, Return on Equity (ROE) to measure the efficiency of using equity, Earnings per Share (EPS) to measure the earnings per share capital and Net Income Ratio to measure the efficiency of operating cost to generate revenue. Another thing also counted that is credit rating. For ranking the banks score are provided according to the performance of the banks in the above mentioned ratio. The information counted for the ranking is of last five years. But the emphases are given more on the current year performance by multiplying the score with the year.

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Introduction:
The bloodstream of any country is its economy. And the commercial banks are one of the main players of the economy. In Bangladesh there are 43 commercial banks where 4 are governmentally owned, 30 are privately owned and others are foreign commercial banks. Out of the 30 privately owned Bangladeshi commercial banks AB Bank Limited, BRAC Bank Limited, Dutch Bangla Bank Limited (DBBL) and Bank Asia Limited are hold credit rating of AA3 or higher according to the Credit Rating Agency of Bangladesh (CRAB). For financial year 2009 credit rating of AB Bank Limited and Dutch Bangla Bank Limited was AA3 and BRAC Bank Limited and Bank Asia hold AA2.

AB Bank Limited
AB Bank Limited is the pioneer in commercial banking under private ownership in Bangladesh. It started functioning as Arab Bangladesh Bank Ltd. on 12 April, 1982. To be the trendsetter for innovative banking with excellence and perfection was pronounced as the banks vision. Side by side it spoke out about its mission, To be the best performing bank in the country. Since inception AB Bank Limited has spread over the country through 82 branches at all economically potential locations. ABBL has established a foreign branch in Mumbai, India and a subsidiary finance company in Hongkong. AB Bank Limited provides all commercial banking services like Current and Savings accounts, fund transfer, and utility bills receiving. In addition it presents a good number of deposit and credit schemes for the clients. All its services may be classified as follows:

Retail Banking Corporate Banking SME Banking NRB Banking Islami Banking

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Retail Banking
Under Retail Banking head AB Bank offers some attractive deposit schemes mainly for limited income groups of the society. These schemes are Family Savings Plan, Special Notice Deposit, Security Deposit Receipt, Fixed Deposit, Monthly Savings Deposit, Monthly Income Deposit, Deposit Double Scheme and Foreign Currency Deposit

Corporate Banking
AB Bank manages a complete solution for your corporate business issues, whether you are a local trader or engaged in export and import businesses or you are an entrepreneur in industrial sector. The products and service available at ABBL for corporate people are numerous. Some of the major products are: Project Finance, Working Capital Finance, Trade Finance, Cash Management, Syndicated Finance, both onshore & off-shore, Equity Finance, both on-shore & off-shore, Corporate Advisory Service

SME Banking
The contribution of SMEs in national GDP growth and employment generation during last 20 years is huge. Taking the facts in consideration AB Bank has rightly converged 54% of its total credit volume to this sector. The bank addresses multi disciplined small and medium scale enterprises of the country. It provides different types of programs for SMEs. The major fields of investment are Agro machinery, Poultry, Animal Feed, Dairy Product, Fruit Preservation, Hotel & Restaurant, Garment Accessories, Leather Product, Plastic Product, Furniture, Wood & Metal, Ink, Paint, Printing & Packaging, Wire & Cable, Aluminum, Cement & Lime Plaster, Clinics & Hospitals, Engineering & Scientific Instruments

NRB Banking
A nonresident Bangladeshi may have a FC account at AB Bank. If you are one of them you may have a fixed deposit in foreign exchange also. Different foreign currency bonds are issued by the bank. This bank maintains a wide spread network with foreign banks and money exchanges for easy transfer of home coming remittances.

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Islami Banking
Islami Banking is the demand of many people in present days. AB Bank responded to the demand in right time. A Shariah Council is constituted by Islamic scholars and bankers to scrutinize each and every Islami banking product and service before presenting it to the clients. Almost all products of ABBL have an equivalent Islami Banking product. So the customers having this channel of service are not deprived of any thing. An individual branch of the bank is completely dedicated for Islami banking service. Further to the above products and services AB Bank presented Card service with both Debit and Credit cards. Wide spread network of POS and ATMs are all over the country to make your life easy and risk free. So its evident that ABBL is marching towards the visionary goals it set 30 years back.

BRAC Bank Limited

With the vision of "Building profitable and socially responsible financial institution focused on Market and Business with Growth potential, thereby assisting BRAC and stakeholders to build a just, enlightened, healthy democratic and poverty free Bangladesh, BRAC Bank Limited has started its journey in the Banking Sector of Bangladesh. Now, BRAC Bank Limited is one of the leading private bank in Bangladesh. BRAC Bank has received the commerical banking license from Bangladesh Bank in 2001. Since then it has established its name and branding with its quality of service and products. In a very short time BRAC Bank became one of the successful and fastest growing private bank in Bangladesh. BRAC Bank is owned partially by BRAC, the largest non-government organization in the world, International Finance Corporation (IFC), the private sector arm of The World Bank Group, and ShoreCap International. The head office of the bank is situated at Gulshan, Dhaka.

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BRAC Bank operates its busness in whole Bangladesh. BRAC Bank is expanding its branch network rapidly through out the country. Currently, BRAC Bank has 100 Branches, 60 SME Service Centers, 3 SME/Krishi Branches, more than 300 ATMs and 424 SME Unit offices across the country. It has disbursed over BDT10, 000 crores of SME loan and has over 500,000 individual customers who access online banking facilities. Its services cuts across all strata of clientele, be it corporate, retail or SME. BRAC Bank provides all sort of banking service to the mass people of Bangladesh. Among them, BRAC Bank is well known for its SME Banking in Bangladesh. Services Provided By BRAC Bank:
SME Banking Corporate & Institutional Banking Retail Banking Banking Services for Non-Resident Bangladeshi (NRB)

BRAC Bank quick overview:

Fastest growing bank in the country for the last two years Leader in SME financing through 350 offices Biggest suit of personal banking & SME products Large ATMs (Automated Teller Machine) & POS (Point of Sales) network

Retail Banking Products

BRAC Bank has a variety of retail banking products for consumers including Loans, Deposit Schemes, Accounts Service, Cards, and Other Services. BRAC bank has recently started e-commerce banking through their e-commerce gateway. BRAC Bank provides VISA local and international credit and debit cards to their consumers.

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ATM Network
BRAC Bank has one of the largest ATM network of its own in Bangladesh with more than 300 both. In addition to this BRAC Bank is the lead arranger of OMNIBUS shared ATM network.

Banking Awards & Achievement:

FT Sustainable Bank of the Year 2010 Award:

BRAC Bank has been awarded as the Sustainable Bank of the Year 2010 at the FT Sustainable Banking Awards 2010. The award was jointly announced by Financial Times newspaper and IFC at the award ceremony on 3rd June 2010 in London.

DHLDaily Star Bangladesh Business Awards 2008:

BRAC Bank received the prestigious Business Award styled DHL-Daily Star Bangladesh Business Awards 2008 as Best Financial Institution of the Year for its innovation in products, services, financial performance/ productivity, company management and contribution to Bangladeshs development. BRAC Bank is a full fledged commercial bank; yet, it has significantly contributed in the development of SME sector by creating a unique model of collateral free SME lending, which enabled the SME entrepreneurs (the missing middle) to get easy access to finance. Furthermore, with its wide distribution network, BRAC Bank reached the greater population even at the distant corners of Bangladesh.

National Award as the Highest VAT payer for the financial year 2007-2008:

BRAC Bank Limited has recently received the prestigious award for being the highest VAT paying organization in national level in service industry.

ICAB National Award:

BRAC Bank Limited has been awarded ICAB National Award from Institute of Chartered Accountants of Bangladesh (ICAB) for one of the Best Published Accounts & Reports 2007 recently.

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Corporate Social Responsibility (CSR) of BRAC Bank:

Since the inception as a responsible corporate body BRAC Bank Limited has undertaken various initiatives considering the interest of customers, employees, shareholders, communities and environment. These initiatives go beyond the statutory obligation/mandatory compliances to voluntary activities that promote sustainable development. BRAC Banks vision which focuses on double bottom line that it should make decisions based not only on profit but also based on social and environmental consequences is closely linked to the principles of CSR. BRAC bank "Green Banking" is one of the innovative CSR policy which aims to reduce the use of paper to again both environmental and economic benefit. Some other CSR initiatives taken by BRAC Bank during 2008 are: MoU with JCI for Health & Safety training initiatives for SMEs BRAC Bank supported Bangladesh Hockey Federation National Vitamin A plus Campaign 15th All Asians Inter Varsity Debate Championship BRAC Bank Sponsors National Career Fair BRAC Bank Sponsors Bangladesh Travel & Tourism Mart BRAC Bank Partnering with Dhaka Metropolitan Police

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Dutch-Bangla Bank Limited (DBBL)

Dutch-Bangla Bank Limited (DBBL) is a scheduled joint venture private commercial bank in Bangladesh. The bank is established jointly by local Bangladeshi parties spearheaded by M Sahabuddin Ahmed (Founder & Chairman) and the Dutch company FMO. DBBL was established under the Bank Companies Act 1991 and incorporated as a public limited company under the Companies Act 1994 in Bangladesh with the primary objective to carry on all kinds of banking business in Bangladesh. In June 1996, DBBL started its formal operation in banking sector. Since then DBBL gained its huge popularity because of its social welfare activities and affordable banking service.

Stock Exchange
DBBL is listed with both the stock exchanges in Bangladesh, the Dhaka Stock Exchange Limited (DSE) and the Chittagong Stock Exchange Limited (CSE). Dutch-Bangla Bank Limited is commonly referred as DBBL, Dutch-Bangla, Dutch Bangla and Dutch Bangla Bank among its employees and consumers. DBBL is most widely recognized for its donations to social causes and its IT investment (largest ATM network). However it has recently stated that it will stop expansion on its ATM network as the current numbers have exceeded demand and hence diminishing returns (if any). Although it is widely believed it is a loss-making/subsidized unit which DBBL rationalizes as quasi CSR. After instability and frequent management changes in its initial years, DBBL overcame these obstacles to establish rapid growth since the year 2000. The bank grew its reputation through social work rather than profits. The bank's conservative nature, long-term strategies, hefty social donations and technology investments have always led to modest but steady profits. DBBL has been known to be overly conservative in its banking practices. Much of the success and strategy has been attributed to the leadership of the founder chairman, M Sahabuddin Ahmed.

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Despite being the largest corporate donor in Bangladesh, investor confidence was unhindered. In March 2008, DBBL share prices reached Tk. 14325.80 in the Dhaka Stock Exchange, setting the record for the highest stock price in the history of Bangladesh. It is also one of the few banks that does not participate in merchant/investment banking (which can lead to sporadic growth).

ATM Networks
With more than 1000 of ATM booths all over the country, DBBL's has the largest ATM networks in Bangladesh. DBBL offering free access to its ATM network for its subscriber. This network helped DBBL gaining more popularity and confidence among subscriber and expanding banking opportunity to mass people. This entire network is being maintained by its own IT staff without any 3rd party dependency. With this vast number of ATMs installed, Dutch-Bangla Bank initiated a co-branded ATM initiative in Bangladesh where the bank would provide ATMs and networking free of charge to any bank's branches. Mutual Trust Bank was the first bank to take the advantage and the first co-branded ATM in Bangladesh started operation on 28 May 2008.

Fast Track
In 2010, Dutch Bangla Bank Limited (DBBL) introduced "Fast Track" in the country which is the first of its kind in the country that is like a mini branch. Along with the generic ATM withdrawal service, it lets the customer deposit small amounts of money to DBBL account with a limit of 20,000 BDT. Moreover, the Fast Track also provides some account opening service and loan information. By 2010, DBBL has installed 50 Fast Tracks in Dhaka, Chittagong and Sylhet cities.

Internet Payment Gateway

Dutch-Bangla Bank Limited (DBBL) introduced Internet Payment Gateway to facilitates E-commerce in Bangladesh. Any Visa/MasterCard card holder (local or overseas) can user their card to pay DBBL authorized e-Merchants against their purchase of goods and service. They can also pay DESCO electricity bills. DBBL is working with airlines, railways, Utility companies, educational institutions and Stock Exchanges for

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facilitating purchase of ticket, payment of bills/fees and IPO subscription through the Internet Payment Gateway. It is also working to make an interface with the renowned PayPal payment gateway. Once everything in operation, this will change the payment mechanism in Bangladesh and will reduce public suffering. It will also boost the E-commerce and open the door for freelancer and ICT company to earn more remittance for the country.

Mobile Banking
Dutch-Bangla Bank Limited (DBBL) is the first bank in Bangladesh, who introduced mobile banking service to bring poor people from remote area under smart banking service. Bangladesh Bank has already allowed 10 banks to initiate mobile banking with the aim to connect the deprived section of the society with the modern banking system, DBBL is the first runner among of them. DBBL is operating this new innovative banking service through Banglalink and Citycell mobile operator and their approved agents through out the country. One can create a bank account visiting any of the approved agents showing proper documents with a fee of Tk 10. Subscriber must own a mobile phone to get the service. Once the account is created, a 4 digit mobile banking PIN code will be provided to perform all sort of banking activities securely and secretly. Subscriber can withdraw and deposit cash amount from his mobile going to the agents and agents will guide and help the customers if there is any difficulty. Since, mobile network is extremely insecure and data are sent unencrypted, a customer can deposit or withdraw money five times a day and he can deposit or draw Tk 5,000 per day. One percent of the transaction amount or Tk 5, whichever is higher, will be taken as cash-in-charges. In case of cash out the charge will be 2 percent of the transaction amount or Tk 10. However, the registration fee, salary and remittance disbursement services will be provided free of cost.

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Bank Asia Limited

Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in the society. The management of the Bank consists of a team led by senior bankers with decades of experience in national and international markets. The senior management team is ably supported by a group of professionals many of whom have exposure in the international market. It set milestone by acquiring the business operations of the Bank of Nova Scotia in Dhaka, first in the banking history of Bangladesh. It again repeated the performance by acquiring the Bangladesh operations of Muslim Commercial Bank Ltd. (MCB), a Pakistani bank. In the year 2003 the Bank again came to the limelight with oversubscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market's history and its shares commands respectable premium. The asset and liability growth has been remarkable. Bank Asia has been actively participating in the local money market as well as foreign currency market without exposing the Bank to vulnerable positions. The Bank's investment in Treasury Bills and other securities went up noticeably opening up opportunities for enhancing income in the context of a regime of gradual interest rate decline. Bank Asia Limited started its service with a vision to serve people with modern and innovative banking products and services at affordable charge. Being parallel to the cutting edge technology the Bank is offering online banking with added delivery channels like ATM, Tele-banking, SMS and Net Banking. And as part of the bank's commitment to provide all modern and value added banking service in keeping with the very best standard in a globalize world. Product & Services: Mobile Banking ATM Services KIOSK Credit Card

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Internet Banking SMS Banking SME Banking Foreign Currency Account Others

Findings of Analysis of Financial Performance:

The analyses of the financial performance of the four selected Bangladeshi commercial banks of last 6 years and 5 years are presented below with their average performance.

Credit Deposit Ratio (CDR):

Credit Deposit Ratio (CDR) is an important ratio, especially for banks. By the CDR it is founded a bank could invest how much of the money that it collected form the depositors or peoples. The CDR of the selected four banks in the last 6 years is given in the following chart along with the average (AVG) CDR in those 6 years.

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100% 96.59% 88.00% 86.87% 85.02% 82.93% 80% 78.16% 74.07% 74.36% 70% 69.82% 71.74% AVG 60.10% 60% 2004 2005 2006 2007 2008 2009 BRAC 75.93% 76.66% 80.85% 80.83% 82.05% 82.71% 94.84% 94.20% 91.67% 90.81% 87.14% 85.28% 85.31% 83.50% Bank Asia DBBL 90% 88.04% 87.94% 86.41% AB Bank

Fig; CDR in Last 6 Years

From the above mentioned figure it is found that Bank Asia always on the top with 88.04%, 96.59%, 88%, 94.84%, 94.20% and 91.64% form 2004 to 2009 respectively. BRAC bank also performed above the average of these four banks where DBBL perform below average for the last 5 years and AB Bank perform below average in first 5 years and came above average in the last year. For this segment of analysis higher score will be provided to the banks with higher percentage in every year, as the higher percentage dictates higher efficiency in using money. And the detail score are presented at the following table

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 15 8 6 2 1 32 20 16 12 8 4 60 5 4 3 4 2 18 10 12 9 6 3 40

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Ratio of classified loan against total loan:

Ratio of classified loan against total loan dictates the percentage of bad loans to total loans. This ratio is very much useful to measure the efficiency in collecting money. Under this ratio higher the percentage, lower the efficiency of bank. This ratio for the selected banks in the last 6 years is as follows

Ratio of Classified Loan against Total Loan

12% 11.36% 10%

8% 7.33% 6%

8.21%

6.04% 4.02% 3.04% 3.00% 2.68% 2.27% 4.45% 4.31% 3.62% 3.26% 2.44% 4.69% 3.41% 3.27% 2.99% 2.68%

4%

3.30% 2.25%

3.70% 2.77%

2%

1.58% 0% 2004 AB Bank 2005 Bank Asia 2006 DBBL 2007 2008 BRAC

3.21% 2.75% 2.46% 1.58%

2009 AVG

This figure shows that bad loan of AB bank was very high with 11.36%, 8.21%, and 4.02% in 2004, 2005 and 2006 respectively. In 2008 and 2009 it came under the average. BRAC Bank has the highest bad loan in last three years with 4.45%, 4.69% and 6.04% respectively. And the Bank Asia and DBBL performed better and were under average. For this ratio higher score will be given to bank with lower percentage as lower percentage dictates higher efficiency.

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Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 10 12 6 2 1 31 20 16 12 8 2 58 15 8 9 6 4 42 5 4 3 4 3 19

Cost of Fund (COF):

Another ratio to judge the efficiency is the cost of fund. The percentage of this ratio indicate amount of cost required to incur by the bank to collect a certain amount of money, higher the cost of fund, lower the efficiency of the organization. The cost of collection of money of the selected four banks for the last 6 and 5 years are presented in the following chart

Cost of Fund
12% 11.09% 10.54% 10.04% 10% 8.90% 8.80% 8.47% 8.27% 7.66% 9.09% 8.91% 8.47% 8.44% 9.84% 9.51% 9.44% 10.34%

8.53% 8% 7.82%

8.60% 7.81% 7.58% 7.48% 7.58%

8.49% 8.38% 8.15%

7.11% 6.53% 6% 2004 AB Bank 2005 Bank Asia 2006 DBBL 2007 2008 BRAC 2009 AVG

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The above chart shows that the cost of fund of AB Bank was always higher with 8.53%, 8.60%, 10.04%, 11.09% and 10.34% from 2004 to 2009 respectively. The cost of BRAC Bank almost always with the average and cost of DBBL are always below the average where the cost of Bank Asia was sometime higher and sometime lower than the average. For this ratio higher score will be provided to the lower percentage holder. The sore of the banks under this ratio are as follows

2009 2008 2007 2006 2005 Total 5 4 3 2 1 15 15 8 9 8 2.5 42. 5 58 20 16 12 6 4 10 12 6 4 2.5 34. 5 Bank Asia and BRAC Bank are in the joint position in 2005. That why the score of 2nd and 3rd position are
equally divided among them by adding the two score.

Banks AB Bank Bank Asia DBBL BRAC

Return on Investment (ROI):

Return on Investment (ROI) is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. By this ratio we can measure the efficiency of the firms in investment decision making to earn the highest return. For this ratio, higher the return on investment, higher the efficiency of the organization on investment decision making. The ROI of the four selected banks are presented in the following figure

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Return on Investment (ROI)

25%
22.87% 23.89% 21.06% 18.81% 15.02% 18.61% 16.65% 13.88% 10.81% 11.64% 11.09% 9.69% 7.36% 5.87% 7.45% 7.30% 9.48% 12.61% 9.69% 14.64% 12.30% 13.77%

20%

15%
9.15% 6.26% 8.54% 5.88% 2.03%

10%

5%

4.15%

0% 2004 AB Bank 2005 Bank Asia 2006 DBBL 2007 2008 BRAC 2009 AVG

From the above mentioned chart it is found that AB Bank had the higher investment efficiency with 18.81%, 22.87%, 23.89% and 21.06% in the last four years respectively. And the other three banks were under the average for the maximum times, though Bank Asia performs above average in 2005 and 2009. For this ratio higher score will be provided to the organization with higher performance as higher percentage means higher efficiency of the organization on investment decision making. The score sheet of the banks are provided below

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 20 16 12 8 2 58 15 12 6 4 4 41 10 4 3 2 1 20 5 8 9 6 3 31

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Return on Assets (ROA):

The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue. Higher the percentage of return, higher the efficiency of assets. The ROA of the selected banks are as follows

Return on Assets (ROA)

4.00%
3.55%

3.50%
3.17% 3.17% 3.41% 2.58% 2.58% 2.40% 2.04% 2.22%

3.52%

3.00% 2.50% 2.00% 1.50% 1.00% 0.50%

0.39% 0.50% 1.49% 1.45% 1.43% 1.29%

2.18% 1.60% 1.56%

1.71% 1.43% 1.31%

1.62%

1.64%

1.87%

1.49% 1.01%

0.93%

0.00% 2004 AB Bank 2005 Bank Asia 2006 DBBL 2007 2008 BRAC 2009 AVG

Form the above chart it can be said that Bank Asia lost its efficiency in the recent year and the AB Bank gained efficiency in using assets in recent years. In 2004, 2005, 2006 and 2007 Bank Asia was in the highest position with 2.58%, 2.58%, 3.17% and 3.55% respectively where in 2008 and 2009 AB bank hold the highest position with 3.17% and 3.52% respectively. The efficiency of BRAC bank remained constant below average in these years and DBBL also in the same position of BRAC in recent years. For this ratio higher score will be provided to the organization with higher performance as higher percentage

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means higher efficiency of the organization in using assets. The score sheet of the banks are provided below

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 20 16 9 4 1 50 15 12 12 8 4 51 10 4 3 2 2 21 5 8 6 6 3 28

Earnings per Share (EPS):

Earning per Share (EPS), one of the major concern for investor, indicate the earnings of the firm against its each share or stock. This ratio usually used to find out the operating efficiency of the firm against its total number of share. The EPS of the banks in the last 6 years are as follows Earnings Per Share (EPS)
300
256.1

250
237.37

200
181.97 179.18 145.77 131.13 89.72 86.07 59.71 42.63 29.38 47.3 42.29 62.3 54.78 32.02 82.46 75.85 61.88 60.98

150 100
73.25 39.48 28.84 18.19 38.54 31.26 41.24 93.08

50

0 2004 2005 AB Bank 2006 Bank Asia DBBL 2007 BRAC 2008 AVG 2009

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The chart shows that AB Bank lead this ratio among four banks in 2007, 2008 and 2009 with tk. 256.10, tk. 89.72 and tk.131.13 respectively where in 2005 and 2006 it was leaded by DBBL with tk. 181.97 and tk. 179.18 respectively. And the EPS of BRAC Bank and Bank Asia were below average. For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization. The score sheet of the banks are provided below

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 20 16 12 6 1 55 10 4 6 4 3 27 15 8 9 8 4 44 5 12 3 2 2 24

Net Income (NI) Ratio:

Net Income Ratio measure the efficiency of the operating cost to generate profit or net income. The higher the percentage of net income higher the efficiency of the operating expenses. In this paper this ratio is calculated by dividing income after tax by total income. The net income ratio of the banks is as follows
60% 50% 40% 30%
21.42% 22.56% 20.08% 12.61% 10.30% 10.71% 6.99% 11.29% 7.54% 13.30% 12.76% 29.06% 23.74% 49.46%

Net Income Ratio

54.51% 50.56% 40.88% 52.58% 51.18%

37.51% 31.28%

40.81% 34.22% 32.14%

20% 10% 0% 2004 AB Bank

15.73% 10.95% 6.17%

15.19%

2005 Bank Asia

2006 DBBL

2007 BRAC

2008

2009 Series 5

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Form the information it is found that BRAC Bank got the highest ratio in the last 5 years with 49.46%, 50.56%, 54.51%, 52.58% and 51.18% respectively and the AB Bank gain some better efficiency in the last 3 years where the ratio is quiet lower in case of Bank Asia and DBBL. Also For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization. The score sheet of the banks are provided below

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 15 12 9 6 1 43 10 8 6 4 3 31 5 4 3 2 2 16 20 16 12 8 4 60

Return on Equity (ROE):

Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. Higher percentage of ROE refers higher efficiency in using equity fund. The ROE of the banks are presented in the following chart

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Return on Equity (ROE)

45%
42.19%

40% 35%
31.01% 34.21% 33.43% 29.89% 24.40% 24.07% 24.47% 23.05% 20.61% 25.60% 24.02% 23.83% 22.88% 19.19% 30.28% 26.79%

30%
24.82% 28.06%

25% 20% 15% 10%

7.24% 10.64%

20.60%

5% 2004 2005 AB Bank 2006 Bank Asia 2007 DBBL 2008 BRAC 2009

The information shows that AB Banks ROE was much higher in the last three years with 42.19%, 34.21% and 33.43% respectively though it was the lowest in 2004, 2005 and 2006. In 2005 DBBL was in top with 31.01% and in 2006 Bank Asia was in top with 24.04%. And the other three banks ROE was much constant in the last 5 years. For this ratio higher score will be provided to the organization with higher percentage as higher percentage means higher efficiency of the organization. The score sheet of the banks are provided below

Banks AB Bank Bank Asia DBBL BRAC

2009 2008 2007 2006 2005 Total 20 16 12 2 1 51 10 4 9 8 2 33 15 12 6 6 4 43 5 8 3 4 3 23

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Credit Rating (CR):

The credit rating (CR) also needs to judge, because CR indicates the total financial health, capability and future prospects of the organization. The credit rating of the banks are presented in the following table

Banks AB Bank Bank Asia DBBL BRAC

CR in 2009 AA3 AA2 AA3 AA2

Score Given

7.5 17.5 7.5 17.5

Here, Bank Asia and BRAC Bank hold highest position with AA2 rating, so the score of 1st and 2nd position divided among them and so is done for AB Bank and DBBL.

Total Scoring and Ranking:

According to the analysis the total score of the each bank and ranking of the bank according to the score are provided in the following chart

Banks CD Classified COF RO RO EP NI RO CR Tota Ranki R 32 Loan AB Bank 31 15 I 58 A 50 S 55 Ratio E 51 7.5 l 342.5 ng 2 43 Bank Asia 60 58 42.5 41 51 27 31 33 17.5 361 1 DBBL 18 42 58 20 21 44 16 43 7.5 269.5 4 BRAC 40 19 34.5 31 28 24 60 23 17.5 277 3
According to the analysis it is found that Bank Asia Limited achieve the highest score and the best ranking followed by AB Bank Limited, BRAC Bank Limited and Dutch Bangla Bank Limited respectively.

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Conclusion:
The ranking of this paper are done based on the 8 key ratios and credit rating, but there are other factors that are also need to be considered to analysis the banks surveillance, like contingent liabilities, asset base analysis etc. but according to the analysis of key ratio and credit rating it is found that Bank Asia is the best bank among the Bangladeshi Commercials banks followed by AB Bank Limited, BRAC Bank Limited and Dutch Bangla Bank Limited respectively.

References:
1. Financial Statement of AB Bank Limited, 2009. 2. Financial Statement of AB Bank Limited, 2007. 3. Financial Statement of AB Bank Limited, 2005. 4. Credit rating report of AB Bank Limited, 2009. 5. Annual Report of Bank Asia Limited, 2009. 6. Annual Report of Bank Asia Limited, 2007. 7. Annual Report of Bank Asia Limited, 2005. 8. Credit rating report of Bank Asia Limited, 2009. 9. Annual Report of Dutch Bangla Bank Limited, 2009. 10. Credit Rating Report of Dutch Bangla Bank Limited, 2009. 11. Annual Report of BRAC Bank Limited, 2009. 12. Annual Report of BRAC Bank Limited, 2007. 13. Annual Report of BRAC Bank Limited, 2005.

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