Ratio Analysis Uttara Bank VS City Bank

Running head: RATIO ANALYSIS 1
An Analysis of Financial Ratios

(Group one)
Zarin Tasnim Chowdhury
Ayesha Begum Tasnim
Taznina Nur Muntaha
Syed Md Abdullah Al Mubin
Army Institute of Business Administration
RATIO ANALYSIS 2
Abstract
This research paper discusses various financial ratios of City Bank Ltd And Uttara Bank Ltd
for consecutive three years (2018-2020). The paper is divided into three major section.
Firstly, the paper gives brief review of these two banks (City Bank And Uttara Bank). In the
second portion, it discusses various financial ratios such as- Liquidity, Financial risk,
Profitability, Efficiency and Marker position. Moreover, interpretation, comparison and
graphical representation for better understanding of these two banks are also mentioned in
this paper. Furthermore, detailed discussion regarding CAMEL’s rating and Capital adequacy
ratio and credit rating of City bank and Uttara Bank is also narrated thoroughly. And lastly,
the paper is concluded by highlighting findings from the overall analysis and provides major
recommendations for these banks to improve their performance for future growth.
RATIO ANALYSIS 3
Overview of the banks

City Bank Limited history-
The City Bank Ltd. was incorporated as a public limited company with limited liability on the
14th march 1983 (formal inauguration march 28,1983) under companies act 1913 in
Bangladesh with the primary objective to carry on all kinds of banking activities. The bank is
listed in Dhaka Stock Exchange and Chittagong Stock Exchange Limited. Functioning as a
conventional bank in the country since 1983, it has been able to consolidate its position in the
banking sector. The bank has been able to establish a solid presence with the customers and
general public, through its improved services, value addition in the economy and increasing
shareholders value. At present it is also conducting Islamic banking facilities.
The bank started its journey with only BDT 34 Million worth of Capital, which now is a
respectable BDT 3.3 Billion as capital & reserve. City Bank has gone international by
establishing 10 branches and 1 representative office in Malaysia in 2013 and one subsidiary
office in Hong Kong in 2019. International Finance Corporation solely has invested BDT
1.31 Billion, attaining a 5% share of City Bank.
At present, the bank is operating through 132 Branches at most key points of the country.
They have over 4,356 employees, over 17, 00,000 customers, 395 ATM + CDM, 7 priority
centers, 2 airport lounges, over 13,90,000 cards issued, over 29,000 POS machines, over 17,500
merchants onboard.
It carries out all banking activities through its branches in Bangladesh. The principal place of
business is the registered office which is situated at JibanBimaTower, 10, Dilkusha
Commercial area, Dhaka-1000. (Assignment point, 2021) (City Bank, 2021)
RATIO ANALYSIS 4
Vision: To be the leading bank in the country with best practices and highest social
commitment.
Mission:
• To contribute to the socio economic development of the country.
• To attain highest level of customer satisfaction through extension of services,
dedicated and motivated team of professionals.
• To maintain continuous growth of market share ensuring its steady growth.
• To maximize bank’s profits by ensuring its steady growth.
• To maintain the high moral and ethical standards.
• To ensure participative management system and empowerment of human resources.
Company Services:
The City Bank Ltd. also concentrates the following categories of banking services.
• General Banking.
• Loan and Advance.
• International Trade and Foreign Exchange.
Customer Services:
The City Bank Ltd. is committed to serve the clients in a better way and for this it has been
introduced some new innovative things.
Online Bill Collection:
Online bill collection service with Grameen Phone.
Financing Services Provided in Different Business Sectors:
• Hospital project at Kustia.
• Pharmaceutical project.
• Re-rolling mill.
• Garment industry.
• Poultry project.
• Hotel project at Bogra.
Products of the City Bank Ltd
City Credit Card:
This is one kind of credit card, which is totally different from service of the bank. This is the
only dwell card in credit card service that one can use it at home and abroad.
(a) Kinds of City Card-
• Dual City card.
RATIO ANALYSIS 5
• Local City card.

• International City card.
• Co brand city card.
(b) Type of Credit card-
• Visa Classic Gold / Local.
• Visa Classic Dual /Local.
• The American Express (Credit Card).
Characteristics of City Card:
• Yearly fee and renew fees are least.
• It is free of cost for the local part of Dual City card.
• Advantage of large POS (Point of Sell) and ATM Network.
• Community preference for 1st class government officer, businessmen, etc.
• Monthly fee is only 5% of total cost.
(Assignment point, 2021)
Uttara Bank Limited history-

Uttara Bank Limited (UBL) was established in 1965 with the head office located at Motijheel
in Dhaka, East Pakistan as a scheduled bank of the Eastern Banking Corporation. After the
liberation war of Bangladesh, the bank was nationalized under Bangladesh Banks
(Nationalization) Order 1972 and renamed it Uttara Bank. In 1983, it became the first
privatized bank of Bangladesh.
The Bank has been carrying out business through its 241 branches, 11 sub-branches and 27
ATM booths spreading all over the country. The Management of the Bank consists of a team
led by senior bankers with vast experience in national and international markets. The bank's
RATIO ANALYSIS 6
internal and external operational activities is operated by twelve zones in different regions of
the country. It is also affiliated with nearly 600 financial institutions worldwide. The Board of
Directors consists of 13 members and total number of employees are 3509. Uttara Bank is the
first local commercial banks that has provided online banking service to its customers from
the very beginning of its starts. (Assignment point, 2021)
Vision:
Continuous improvement, problem solution, excellence in service, business prudence,
efficiency and adding value will be the operative words of the organization. Uttara Bank will
serve its customers with respect and will work very hard to build a strong customer service
culture throughout the bank.
Mission:
• To provide high quality financial service.
• To provide excellent quality customer service.
• To maintain corporate and business ethics.
• To become a trusted repository of customers money and their financial advisor.
• To display team sprite and professionalism.
• To have a sound capital base.
Services:
As a financial institution, UBL provides the following services to its clients-
• Personal Banking.
• Corporate Banking.
• Capital market services.
• SME services.
• Online banking services.
• Internet banking services.
Corporate Banking Products:
• Securitization of assets.
• Corporate finance and advisory services
• Syndication of funds.
Uttaran Consumer-Credit Scheme:
UBL started Uttaran Consumers Credit Scheme from 1996.UBL offers opportunity of
financial assistance for –
• Motor cycle/car- New or re-conditioned.
(Uttara Bank, 2021)
RATIO ANALYSIS 7
Financial Ratio Analysis

Liquidity Ratios
I. Current Ratio: The current ratio is a liquidity ratio that measures whether a firm has
enough resources to meet its short-term obligations.
City Bank
Formula: Current Asset / Current Liabilities
Year 2018:
= (19 435 408 446 / 274 423 251 799)
=.070 Times
Year 2019:
= (349 013 541 253 / 300 071 966 097)
=1.16 Times
Year 2020:
= (377 005 522 011 / 325 150 117 596)
=1.15 Times
Graphical Representation
Current Ratio
1.4
1.16 1.15
1.2
1
TIMES
0.8
0.6
0.4
0.2 0.07
0
2018 2019 2020
YEAR
Figure 1: Current Ratio of CBL from year 2018-2020
Interpretation: The current ratio of City Bank except 2018, are more than 1. From 2018 to
2020, the current ratio is .070 times; 1.16 times and 1.15 times. In 2018, the current ratio is
less than the standard ratio which is means current liabilities are greater than current assets.
RATIO ANALYSIS 8
Just because of it the creditors will be more willing to extend their credit in the company who
can show that they have the enough resources to repay the debt. And in 2019 and 2020 the
current ratio of City bank is more than 1, which means they have enough resources to meet
their debt obligations. For which the creditor will have to give a thought whether they want to
extend the credit of their company.
Uttara Bank
Formula: Current Asset / Current Liabilities
Year 2018:
= 186 979 914 313 / 22 229 374 244
= 8.41 Times.
Year 2019:
= 349 013 541 253 / 300 071 966 097
= 1.16 Times.
Year 2020:
= 219 320 246 078 / 23 855 513 701
= 9.19 Times.
Current Ratio
9.4 9.24 9.19
9.2
9
8.8
TIMES
8.6 8.41
8.4
8.2
8
7.8
2018 2019 2020
YEAR
RATIO ANALYSIS 9
Figure 2: Current Ratio of UBL from year 2018-2020
Interpretation: When the current ratio is greater than 1 then it means the company has
satisfactory amount of current asset as a reserve to settles its current liabilities in time of
need. And it is a favorable sign for the company.
The current ratio of Uttara Bank for 3 consecutive year are more than 1. From year 2018 to
2020, the current ratio is 8.41 times, 9.24 times and 9.19 times. Just because of it, creditors
will be more willing to extend their credit in the company who can show that they have the
enough resources to repay the debt.
Comparison
Year 2018 2019 2020
City Bank (CA) .070 times 1.16 times 1.15 times
Uttara Bank (CA) 8.41 times 1.16 times 9.91 times
By comparing the 3 years of the banks, we have found that, the ratio of both banks are
fluctuating very frequently. Moreover, both of the banks have enough resources to meet their
short –term obligations but Uttara Bank has a very high current ratio compared to City Bank.
As the current ratio of Uttara Bank is too high it indicates that, the management may not
making good use of debt properly to add value for shareholders.
II. The Acid-Test Ratio: Commonly known as the quick ratio, uses a firm's balance
sheet data as an indicator of whether it has sufficient short-term assets to cover its
short-term liabilities.
City Bank
Formula: (Current Asset- inventory) / Current Liabilities
Year 2018:
= 321 270 901 225 / 274 423 251 799

RATIO ANALYSIS 10
=1.17 times
Year 2019:
= 349 013 541 253 / 300 071 966 097
=1.16 times.
Year 2020:
=377 005 522 011 / 325 150 117 596
=.068 times.
Acid Test Ratio

1.4 1.17 1.16
1.2
1
0.8
TIME
0.6
0.4
0.2 0.068
0
2018 2019 2020
YEAR
Figure 3: Acid-Test Ratio of CBL from year 2018-2020
Interpretation: From 2018 to 2020, the current ratio is1.17 times; 1.16 times and .068 times.
The ratio of 2018 and 2019 are more than 1 which is 1.17 and 1.16. So the company will be
able to convert the receivables for assets or cover the financial commitments. And the ratio of
2020 is less than 1 which is .068. It indicates, the bank cannot convert the receivables of the
assets for covering the growth of the company.

RATIO ANALYSIS 11
Uttara Bank
Formula: (Current Asset- inventory) / Current Liabilities
Year 2018:
= 186 979 914 313 / 22 229 374 244
= 8.41 Times.
Year 2019:
= 190 156 399 534 / 20 578 217 656
= 9.24 Times.
Year 2020:
= 219 320 246 078 / 23 855 513 701
= 9.19 Times.
Acid Test Ratio

9.4
9.2 9.24 9.19
9
8.8
TIMES
8.6
8.4 8.41
8.2
8
7.8
2018 2019 2020
YEAR
Figure 4: Acid-Test Ratio of UBL from year 2018-2020
Interpretation: The acid test ratio of Uttara Bank for 3 consecutive year are more than 1
which is a good sign for the company. From 2018 to 2020, the current ratio is 8.41 times;
9.24 times and 9.19 times. All of them are more than 1 so the company will be able to convert
RATIO ANALYSIS 12
the receivables for assets or cover the financial commitments by covering the dynamic
growth of the company.
Comparison
Year 2018 2019 2020

City Bank (AC) 1.17 times 1.16 times .068 times
Uttara Bank (AC) 8.41 times 9.24 times 9.19 times
If we compare both of these banks in terms of acid test ratio then we can see Uttara bank is
more sufficient than City Bank to cover its Liabilities. In 2020, according to the test, City
bank cannot fulfill its current liabilities as they have ratio less than the standard set which is
1. On the other hand, Uttara bank can be considered more financially stable with higher ratio
compared to City bank.
III. Cash Ratio: This ratio is used to measure the liquidity of any company through
company’s total cash and the cash equivalents of the current liabilities.
City Bank
Formula: Cash / Current Liabilities
Year 2018:
= 19 435 408 446 / 274 423 251 799
= .070 times.
Year 2019:
= 25 906 831 013 / 300 071 966 097
=.086 times.
Year 2020:
=22 403 557 932 / 325 150 117 596
=.068 times.
RATIO ANALYSIS 13
Cash Ratio
0.1 0.086
0.08 0.07 0.068
0.06
TIME
0.04
0.02
0
2018 2019 2020
YEAR
Figure 5: Cash Ratio of CBL from year 2018-2020
Interpretation: When the cash ratio is greater than 1 then it means the company has
satisfactory amount of cash and cash equivalents as a reserve to settles its current liabilities in
time of need. And it is a favorable sign for the company. The cash ratio of City Bank for 3
consecutive year are less than 1. From 2018 to 2020, the cash ratio is .070 times; .086 times
and .068 times. A low cash ratio suggests that the bank does not have enough cash on hand to
fund its activities.
Uttara Bank
Formula: Cash / Current Liabilities
Year 2018:
= 15 258 562 023 / 22 229 374 244
=.6864 times.
Year 2019:
= 15 258 562 023 / 20 578 217 656
=.741 times.
Year 2020:
RATIO ANALYSIS 14
=14 969 993 846 / 23 855 513 701
=.627 times
Cash Ratio
0.741
0.75
0.7 0.6864
TIME
0.65 0.627
0.6
0.55
2018 2019 2020
YEAR
Figure 6: Cash Ratio of UBL from year 2018-2020
Interpretation: The cash ratio of Uttara Bank for 3 consecutive year are less than 1. From
2018 to 2020, the cash ratio is 0.68 times; 0.74 times and o.63 times. A low cash ratio is
indicating that the bank does not have enough cash on hand to fund its activities.
Comparison
Year 2018 2019 2020
City Bank(CR) 0.07 times 0.08 times 0.06 times
Uttara Bank (CR) 0.68 times 0.74 times 0.62 times
If we compare both of these banks than we can see that, the cash ratio is following a
downward trend. Uttara Bank’s ratio is higher than city bank but still both of the banks cash
ratio is less than 1. It indicates that, the banks are at risk of having financial difficulty.
However, a low cash ratio may also be a signal of the banks specialized strategy that
RATIO ANALYSIS 15
demands for keeping low cash reserves. But the cash ratio of City Bank is fluctuating funds
can’t be expanded and keeping the low cash reserve can be hampered.
Financial Risk Ratios
I. Debt to Equity Ratio: The debt-to-equity (D/E) ratio compares a company’s total
liabilities to its shareholder equity and can be used to evaluate how much leverage and
equity a company is using to finance its assets. Higher-leverage ratios tend to indicate
a company or stock with higher risk to shareholders.
City Bank
Formula: Total Liabilities / Shareholder’s equity
Year 2018
= 300350 / 24,430
=12.29%
Year 2019
= 329273 / 25,416
=12.95%
Year 2020
=374107 / 28,818
=12.98%
RATIO ANALYSIS 16
Debt to Equity Ratio

13.20%
12.95% 12.98%
13.00%
12.80%
PERCENTAGE
12.60%
12.40% 12.29%
12.20%
12.00%
11.80%
2018 2019 2020
YEAR
Figure 7: Debt to Equity Ratio of CBL from year 2018-2020
Interpretation: We see that, from year 2018 to 2020 Debt to Equity Ratio of City Bank
increased. There is an upward trend. Debt to Equity Ratio is too high it reflects the ability of
shareholder equity fail to cover all outstanding debts in the event of a business downturn.
Uttara Bank
Formula: Total Liabilities / Shareholder’s equity
Year 2018
= 175287 / 14,742
= 13.81%
Year 2019
= 177499 / 15,662
= 13.85%
Year 2020
= 205054 / 17,463
= 13.95%
RATIO ANALYSIS 17
Debt to Equity Ratio

14.00%
13.95%
13.95%
13.90%
13.85%
13.85%
13.81%
13.80%
13.75%
13.70%
2018 2019 2020
Figure 8: Debt to Equity Ratio of UBL from year 2018-2020
Interpretation: We see that, from year 2018 to 2020 Debt to Equity Ratio of Uttara Bank
increased. Debt to Equity Ratio is too high it reflects the ability of shareholder equity fail to
cover all outstanding debts in the event of a business downturn.
Comparison
Year 2018 2019 2020
City Bank(D/E) 12.29% 12.95% 12.28%

Uttara Bank(D/E) 13.81% 13.85% 13.95%
From the above figure, it can be seen that from the year 2018 to 2020 City Bank’s Debt to
Equity Ratio has increased substantially. Uttara Bank’s Debt to Equity Ratio has also
increased and compared to City Bank, Uttara Banks is not in a very a good position since its
Debt to Equity Ratio is higher than that of City Bank. Both bank are cannot able meet their
liabilities against shareholder equity. This situation is very alarming for both of these banks.
Reason behind the high Debt to equity: Both of these banks have higher ratio. It indicates
that the bank is getting more of its financing by borrowing money, which subjects the
RATIO ANALYSIS 18
company to potential risk if debt levels are too high. Both City and Uttara bank is highly
leveraged firm because they have high debt financing compared to equity financing.
II. The Debt-to-Capital Ratio (D/C ratio): This ratio measures, the financial leverage
of a company by comparing its total liabilities to total capital. In other words, the
debt-to-capital ratio formula measures the proportion of debt that a business uses to
fund its ongoing operations as compared with capital.
City Bank
Formula: Total Debt / Total Debt + Equity
Year 2018:
= 20,911/ (20,911+ 24,430)
= 0.43
Year 2019:
= 19,741/ (19,741+ 25,416)
= 0.44
Year 2020:
= 22890/ (22890+ 28,818)
= 0.45
RATIO ANALYSIS 19
Debt to Capital ratio

0.455
0.45
0.45
0.445
0.44
PERCENTAGE
0.44
0.435
0.43
0.43
0.425
0.42
2018 2019 2020
YEAR
Figure 9: Debt to Capital Ratio of CBL from year 2018-2020
Interpretation: From the above graph we can clearly see that, from year 2018 to 2020 as
each year is passing the portion of debt of City Bank is increasing day by day. This indicates
that, City Bank is using debt financing more frequently to finance its ongoing operations.
Uttara Bank
Formula: Total Debt / Total Debt + Equity
Year 2018:
= 22380/ (22380+ 14,742.70)
= 0.60
Year 2019:
= 24500/ (24500 + 15,662.20)
= 0.61
Year 2020:
= 25890/ (25890+ 16,469.10)

RATIO ANALYSIS 20
= 0.62
Debt to Capital Ratio

0.625
0.62
0.62
0.615
0.61
PERCENTAGE
0.61
0.605
0.6
0.6
0.595
0.59
2018 2019 2020
YEAR
Figure 10: Debt to Capital Ratio of UBL from year 2018-2020
Interpretation: From the above graph we can clearly see that, from year 2018 to 2020 as
each year is passing the portion of debt of Uttara Bank is increasing day by day. This
indicates that, Uttara Bank is using debt financing more frequently to finance its ongoing
operations.
Comparison
Year 2018 2019 2020
City Bank(D/C) 0.43 0.44 0.45
Uttara Bank(D/C) 0.60 0.61 0.62
From this above table we can gather the idea that, both of the banks debt portion is increasing
each year in their capital. But City Banks is in better condition than Uttara Bank.
Reason behind the situation: The only reason of this increasing ratio is because both of
these banks wants to cut off their expenses and due to this increasing their debt financing
every year.
RATIO ANALYSIS 21
Profitability Ratios
I. Return on Asset (ROA): Return on Assets (ROA) is an indicator of how profitable a

company is relative to its total assets. ROA gives a manager, investor, or analyst an
idea as to how efficient a company's management is at using its assets to generate
earnings.
City Bank
Formula: Net income/Total assets
Year 2018:
= (2,018 / 324,780) in BDT millions
= 0.62%
Year 2019:
= (2,472/ 354,689) in BDT millions
= 0.69%
Year 2020:
= (4,012 / 382,926) in BDT millions
=1.04%
Return on Asset
1.20%
1.04%
1.00%
0.80% 0.69%
PERCENTAGE
0.62%
0.60%
0.40%
0.20%
0.00%
2018 2019 2020
YEAR
Figure 11: Return on Assets of CBL from year 2018-2020

RATIO ANALYSIS 22
Interpretation: The more the ROA the better it is. From year 2018 to 2020 the Return on
Asset of City Bank gradually increased by 0.07%. In 2020, the ROA increases drastically to
1.04%. There is an upward trend. This indicates that, the bank started to utilize its assets
effectively to generate revenues.
Uttara Bank
Formula: Net Income/Total asset
Year 2018:
= (1,719.3/ 190,029.9) in BDT millions
= 0.90%
Year 2019:
= (1,870.0/193,161.6) in BDT millions
= 0.97%
Year 2020:
= (2,143.5 / 222,600.2) in BDT millions
=0.91%
Return on Asset
0.98% 0.97%
0.96%
PERCENTAGE
0.94%
0.92% 0.91%
0.90%
0.90%
0.88%
0.86%
2018 2019 2020
YEAR
Figure 12: Return on Asset of the UBL from year 2018-2020

RATIO ANALYSIS 23
Interpretation: From year 2018 to 2019 the return on asset of Uttara Bank was increasing
(0.90%-0.97%). But in 2020, their ROA decreased to 0.91%. There is a downward trend.
This indicates that, Uttara Bank is not properly utilizing its assets to generate more profits
like it was doing before.
Comparison
Year 2018 2019 2020
City Bank (ROA) 0.62% 0.69% 1.04%
Uttara Bank 0.90% 0.97% 0.91%
(ROA)
If we compare both of the banks in terms of Return on assets (ROA) then, from year 2018-
2019 Uttara Bank was superior to City bank in term of managing their assets effectively to
generate profits. But in year 2020, the ROA of City Bank Increased And ROA of Uttara Bank
decreased. From this we can say that, the performance of City Bank to utilize its assets are
better than Uttara Bank.
Reason behind the increase of ROA: If Return on Asset of a bank is increasing, it means
either net income is increasing or total assets is decreasing. City Bank’s Return on Asset in
2020 increased because they were able to increase their net income which they might have
done by lowering their interest rate charged to borrowers and by decreasing their depreciation
of fixed assets.
Reason behind the fall of ROA: There could be many reasons of Uttara Banks return on
asset decreasing. First of all, the bank might me not using all of its assets (idle assets).
Moreover, due to an increase in depreciation net income might be deceasing. This happens
when a bank disposed many of its old assets and replace it with new one. Furthermore,
charging high interest rate could be another reason to discourage borrowers to get loan from
this bank which can decrease their interest income and increase interest expense, ultimately
decrease the net income of the bank that decreases the ROA.
II. Return on Equity (ROE): Return on Equity ratio measures the rate of return that the
owners of common stock of a company receive on their shareholding. Return on
RATIO ANALYSIS 24
Equity signifies how good an organization is in generating profits/return on the

investment it receives from its shareholders.
City Bank
Formula: Net income/Total equity capital
Year 2018:
Return on equity (ROE) = (2,018 /24,430) in BDT millions
= 8.2%
Every taka of common shareholder’s equity earned about 8.2 taka this year. In other words,
shareholders get 820 percent return on their investment.
Breakdown of ROE-
Net profit margin= Net income/Operating revenue
= (2,018/ 15,902) in BDT millions
= 0.12 or, 12%
For every service worth 1 taka, the bank is generating profit of 0.12 taka.
Assets Utilization = Operating profit/Total asset
= (6,679/3, 24,780) in BDT millions
= 0.02 or, 2.06%
By using asset worth 1 taka, the bank is generating revenue 0.02 taka.
Equity multiplier =Total asset/ total equity
= (3, 24,780/24,430) in BDT millions
= 13x
For every equity worth 1 taka, asset is 13x. It indicated 75% (2443/3247) is financed by
shareholders and the rest 25% is being financed by debt.
Year 2019:
Return on equity (ROE) = (2,472/25,416) in BDT millions
= 9.7%
Breakdown of ROE-
= (2,472/18,285) in BDT millions
=0.13 or, 13.5%
RATIO ANALYSIS 25

= (8, 287/3, 54,689) in BDT millions
= 0.02 or, 2.3%
Equity multiplier =Total asset/ Total equity
= (3, 54,689/25,416) in BDT millions
= 13.5x
For every equity worth 1 taka, asset is 13.5. It indicated 72% (2541/3,546) is financed by
Year 2020:
Return on equity (ROE) = (4,012/ 28,818) in BDT millions
= 14.0%
Breakdown of ROE-
= (4,012 /16,737) in BDT millions
=0.23 or, 23%
= (7,040/382,926) in BDT millions
= 0.01 or, 1.8%
= (3, 82,926/28,818) in BDT millions
= 13.8x
For every equity worth 1 taka, asset is 13.8. It indicated 76% (2,881/3,829) is financed by
RATIO ANALYSIS 26
Retun on Equity
16.00%
14.00%
14.00%
12.00%
9.70%
PERCENTAGE
10.00% 8.20%
8.00%
6.00%
4.00%
2.00%
0.00%
2018 2019 2020
YEAR
Figure 13: Return on Equity of the CBL from year 2018-2020
Interpretation: ROE indicates how much profit a company can generate by using its equity
capital effectively. The Return on Equity of City Bank was increasing gradually which
illustrates, high efficient usage of equity capital. The rapid growth of CBL’s ROE confirms
that, they are generating more profit by using shareholders equity.
Uttara Bank
Formula: Net income/Total equity capital
Year 2018:
Return on equity (ROE) = (1,719.3/ 14,742.7) in BDT millions
= 11.66%
Breakdown of ROE-
= (1,719.3/1, 00,791) in BDT millions
=0.20 or 20%
For every service worth 1 taka, the bank is generating profit of 0.20taka.
RATIO ANALYSIS 27

= (3, 91, 101/190,029.9) in BDT millions
= 2.05%
= (190,029.9/14,742.7) in BDT millions
= 14x
For every equity worth 1 taka, asset is 14. It indicated 76% (1,474/1,900) is financed by
Year 2019:
Return on equity (ROE) = (1,870.0/15,662.2) in BDT millions
= 11.93%
Every taka of common shareholder’s equity earned about 11.93% taka this year. In other
words, shareholders get 1193 percent return on their investment.
Breakdown of ROE-
= (1,870.0/1, 13,028) in BDT millions
= 0.02 or, 20%
= (4, 81601/193,161.6) in BDT millions
= 2.49%
= (193,161.6 /15,662.2) in BDT millions
= 15x
For every equity worth 1 taka, asset is 15x. It indicated 60 %( 1,566/1,931.6) is financed by
Year 2020:
Return on equity (ROE) = (2,143.5/17,469.1) in BDT millions
= 12.27%
Every taka of common shareholder’s equity earned about 12.27% taka this year. In other
words, shareholders get 1227 percent return on their investment.
RATIO ANALYSIS 28
Breakdown of ROE-
= (2,143.5/ 9, 85,059) in BDT millions
=0.21% or, 21%
= (3, 88,229/1, 93,161.6) in BDT millions
= 2.0%
= (222,600.2/17,469.1) in BDT millions
= 17x
For every equity worth 1 taka, asset is 17x. It indicated 55% (1,244/2,226.2) is financed by
Return on Equity
12.40%
12.27%
12.30%
12.20%
12.10%
11.93%
PERCENTAGE
12.00%
11.90%
11.80%
11.66%
11.70%
11.60%
11.50%
11.40%
11.30%
2018 2019 2020
YEAR
Figure 14: Return on Equity of the UBL from year 2018-2020

RATIO ANALYSIS 29
Interpretation: The Return on Equity of Uttara Bank was increasing gradually which
illustrates, high efficient usage of equity capital. The rapid growth of UBL’s ROE confirms
that, they are generating more profit by using shareholders equity.
Comparison
Year 2018 2019 2020
City Bank (ROE) 8.2% 9.7% 14.0%
Uttara Bank (ROE) 11.67% 11.93% 12.27%
We can clearly notice from the above table that, both of the banks Return on Equity (ROE) in
increasing as year passes. It means both bank were able to use its capital equity effectively.
But Uttara Bank’s ROE is higher compared to City Bank.
Reason behind the rise of ROE: A sustainable and increasing ROE over time can mean a
company is good at generating value because it knows how to reinvest its earnings wisely, so
as to increase productivity and profits. The prime reason behind the upward trend in both of
the bank’s ROE is found in their equity multiplier. A higher equity multiplier indicates that a
larger portion of asset financing is attributed to debt. Every year the portion of debt was
increasing and the ROE was going up. As we know, equity equals assets minus total debt, a
company decreases its equity by increasing debt. In other words, when debt increases, equity
shrinks, and since equity is the ROE's denominator, ROE, in turn, gets a boost.
III. Net Interest Margin (NIM): Net interest margin is a measure of the difference
between the interest income earned by a bank or other financial institution and the
interest it pays out to its depositors, relative to the amount of their assets that earn
interest. It is similar to the gross margin or gross profit margin of non-banking finance
companies.
City Bank
Formula: Net Interest Margin = (Interest income from loans & security investments –
Interest expenses on deposits & on other deposits) / Total Assets
Year 2018:
= (22916-13716/324780 in BDT millions
= 0.0283
Year 2019:
= (26819-15987/354688) in BDT millions
= 0.0305
RATIO ANALYSIS 30
Year 2020:
= (23134-14771/382925) in BDT millions
= 0.0218
Net interest margin

0.035 0.0305
0.0283
0.03
0.025 0.0218
MARGIN
0.02
0.015
0.01
0.005
0
2018 2019 2020
YEAR
Figure 15: Net Interest Margin of CBL from year 2018-2020

Interpretation: From year 2018 to 2019 the net interest margin of City Bank gradually
increased. But in 2020, the net interest margin decreases drastically to 21%. There is a
downward trend. Net interest margin decreases refer to the bank is required to pay out more
interest than it receives, where more consumers are saving than borrowing.
Uttara Bank
Formula: Net Interest Margin = (Interest income from loans & security investments –
Interest expenses on deposits & on other deposits) / Total Assets
Year 2018:
= (9410-5259/185203) in BDT millions
= 0.0224
Year 2019:
RATIO ANALYSIS 31
= (9471-4444/193077) in BDT millions
= 0.0260
Year 2020:
= (8633-4365/209534) in BDT millions
= 0.0203
Net interest margin

0.03 0.026
0.025 0.0224
0.0203
MARGIN
0.02
0.015
0.01
0.005
0
2018 2019 2020
YEAR
Figure 16: Net Interest Margin of UBL from year 2018-2020

Interpretation: Uttara Bank net interest margin is same as City Bank. There is downward
trend in graph. The Uttara bank is required to pay out more interest than it receives, where
more consumers are saving than borrowing.
Comparison
Year 2018 2019 2020

City Bank(NIM) 0.0283 0.0305 0.0218
Uttara Bank(NIM) 0.0224 0.026 0.0203
A positive net interest margin indicates that the bank is efficiently investing, whereas a
negative net interest margin implies inefficient investing. From the above figure it can be
seen that from the year 2018 to 2020 City Bank’s net interest margin has decreased
RATIO ANALYSIS 32
substantially. Uttara Bank’s net interest margin is also very low and compared to City Bank,
Uttara Bank is in a bad position since its net interest margin is lower than that of City Bank.
Reason behind the positive NIM: A positive net interest margin indicates that Bank is
earning more money from receiving interest payments than paying interest. Therefore,
Bank’s capital was used efficiently. In this table we can see city bank is more positive than
Uttara bank that means city bank use their capital more efficiently.
Reason behind the negative NIM: A negative net interest margin indicates that Bank is
losing more money than it is making on its own investments. Therefore, Bank’s capital was
used inefficiently. But here both banks net interest margin is positive they are using their
capital efficiently.
IV. Net Non-Interest Margin: Non interest margin is a financial measurement that helps
asses the usefulness of revenue from non-interest items such as fees and service
charges. This is a measurement of significance, particularly for banks and credit card
companies. It is the difference between non-interest income and non-interest expenses
divided by total earning assets.
City Bank
Formula: (Noninterest Revenues – Noninterest Expenses) / Total Assets
Year 2018:
= (4859-13716/324780) in BDT millions
= 0.02130
Year 2019:
= (5367-15987/354688) in BDT millions
= 0.0119
Year 2020:
= (4936-607/382925) in BDT millions
= 0.0150
RATIO ANALYSIS 33
Net non interest margin

0.025
0.0213
0.02
0.015
0.015
MARGIN
0.0119
0.01
0.005
0
2018 2019 2020
YEAR
Figure 17: Net Non-Interest Margin of CBL from year 2018-2020
Interpretation: The City bank’s net non-interest margin showed a positive trend from 2018
to 2020. It was showing that the bank was generating enough noninterest income like
revenues earned from loan, services charges on deposit accounts, trading accounts, revenues
income from investment etc. to cover its total noninterest expenses like salaries, wages and
employee benefits, this is a good sign.
Uttara Bank
Formula: (Noninterest Revenues – Noninterest Expenses) / Total Assets
Year 2018:
= (3882-602/185203) in BDT millions
= 0.0177
Year 2019:
= (4806-625/193077) in BDT millions
= 0.0216
Year 2020:
RATIO ANALYSIS 34
= (3911-594/209534) in BDT millions
= 0.0158
Net non interest margin

0.025 0.0216
0.02 0.0177
0.0158
MARGIN
0.015
0.01
0.005
0
2018 2019 2020
YEAR
Figure 18: Net Non-Interest Margin of UBL from year 2018-2020

Interpretation: Uttara Bank’s net non-interest income showed a positive trend which is
good. That the bank was generating enough noninterest income like revenues earned from
loan. Though it’s positive but it is downward position. From 2018 to 2019 increased the net
non-interest margin but in 2020 it’s decreased.
Comparison
Year 2018 2019 2020

City Bank(NNIM) 0.0213 0.0119 0.0150
Uttara 0.0177 0.0216 0.0158

Bank(NNIM)
From the above figure it can be seen that from the year 2018 to 2020 City Bank’s net non-
interest margin has decreased substantially. Uttara Bank’s net non-interest margin is also very
low but compared to City Bank, Uttara Bank is in a better position since its non-interest
margin is increased in 2020.
RATIO ANALYSIS 35
V. Net-Bank Operating Margin: This ratio measures both liquidity and profitability. It
indicates how well management and staff have been able to keep the growth of
revenues (which come primarily from loans, investments and service fees) ahead of
rising costs (principally the interest on deposits and other borrowings and employee
salaries and benefits). Higher the ratio Better for the bank.
City Bank
Formula :( Total Operating Revenues – Total Operating Expenses) / Total Assets
Year 2018:
= (15953- 9274/324780) in BDT millions
= 0.0205
Year 2019:
= (18284-9997/354688) in BDT millions
= 0.0233
Year 2020:
= (16737- 9697/382925) in BDT millions
= 0.0183
RATIO ANALYSIS 36
Net bank operating margin

0.025 0.0233
0.0205
0.02 0.0183
MARGIN
0.015
0.01
0.005
0
2018 2019 2020
YEAR
Figure 19: Net-Bank Operating Margin of CBL from year 2018-2020
Interpretation: In the graph of City bank Limited, the net operating income of City bank has
increased from the year 2018 to 2019. But in 2020 it decreased slightly. This indicates the
spread between its operating expense and its operating revenue has increased and this might
be due to the huge operating expenses.
Uttara Bank
Formula :( Total Operating Revenues – Total Operating Expenses) / Total Assets
Year 2018:
= (7341-4667/185203) in BDT millions

= 0.0144
Year 2019:
= (11302-6496/193077) in BDT millions

= 0.0248
Year 2020:
= (9850-5968/209534) in BDT millions

= 0.0185
RATIO ANALYSIS 37
Net bank operating margin

0.03
0.0248
0.025
0.0185
0.02
MARGIN
0.0144
0.015
0.01
0.005
0
2018 2019 2020
YEAR
Figure 20: Net-Bank Operating Margin of UBL from year 2018-2020

Interpretation: For Uttara Bank the net operating margin of UBL has increased by a huge
amount from the year 2018 to 2019 but in 2020 it slightly decreased. This indicates the
spread between its operating revenue and its operating expense has increased and this might
be due to the effective increase of operating expenses.
Comparison
Year 2018 2019 2020

City Bank(NBOM) 0.0205 0.0233 0.0183
Uttara 0.0144 0.0248 0.0185
Bank(NBOM)
From the above figure it can be seen that from the year 2018 to 2020 City Bank’s net-bank
operating margin higher than that of Uttara Bank from 2018 to 20119. But in 2020 both
bank’s net-bank operating margin is equal. However, the net-bank operating margin for City
bank experienced a free fall in 2020 whereas Uttara Bank actually decreased slightly than
City bank. If we see overall net-bank operating margin City Bank was in a better position
than Uttara bank.
Reason behind the higher non-bank operating margin: higher net-bank operating margin
indicates the spread between its operating revenue and its operating expense has increased
and this might be due to the effective reduction of operating expenses.
RATIO ANALYSIS 38
Reason behind the lower non-bank operating margin: lower net-bank operating margin
indicates the spread between its operating expense and its operating revenue has increased
and this might be due to the huge operating expenses.
Efficiency Ratios
I. Tax efficiency ratio: The tax management efficiency ratio is an indicator of funds
that measures the percentage of a fund's earnings that are lost to taxation. Funds that
lose a lot of money to taxes have low efficiency and are less desirable, while those
that lose little to taxes have a high tax management efficiency ratio and greater
desirability.
City Bank
Formula: Net income after Taxes/Net Income before Taxes & Security Gains (or
Losses)
Year 2018:
= (2,018/ 4,355) in BDT million
= 0.46
Year 2019:
= (2,472/ 5,731) in BDT million
= 0.43
Year 2020:
= (4,012/ 6,395) in BDT million
= 0.62
RATIO ANALYSIS 39
Graphical representation
Tax Efficiency
0.7 0.63
0.6
0.5 0.46
0.43
PERCENTAGE
0.4
0.3
0.2
0.1
0
2018 2019 2020
YEAR
Figure 21: Tax Efficiency of the CBL from year 2018-2020

Interpretation: CBL’s tax efficiency is gradually increasing which is a good sign for the
bank. The higher their ratio the less they have to pay taxes which means the bank had to lose
little funds to taxes.
Uttara Bank
Formula: Net income after Taxes/Net Income before Taxes & Security Gains (or
Losses)
Year 2018:
= (1,719.3/ 2,981.5) in BDT million
= 0.57
Year 2019:
= (1,870.0/ 3,716.3) in BDT million
= 0.50
Year 2020:
= (2,143.5/ 3,739.0) in BDT million
= 0.57
RATIO ANALYSIS 40
Tax Efficiency
0.58 0.57 0.57
0.56
0.54
PERCENTAGE
0.52
0.50
0.5
0.48
0.46
2018 2019 2020
YEAR
Figure 22: Tax Efficiency of the UBL from year 2018-2020

Interpretation: In 2018, the tax efficiency ratio was high but in 2019 it falls which means
the bank had to use more of its funds for taxes. But in 2020 the ratio again increases so the
bank had to use less funds to pay taxes.
Comparison
Year 2018 2019 2020
City Bank (TE) 0.46 0.43 0.63
Uttara Bank (TE) 0.57 0.50 0.57
Now if we look at both of the banks situation from the above table, then we can easily
understand that, both of the bank is good at maintaining its taxes. Because there is an upward
trend in both of the banks ratio. But Uttara Bank is superior to manage their tax efficiency
than City Bank. The main reason behind this tax management could be their increasing
amount of debt.
Reason behind the rise: Any organization whether its bank or a multinational company they
are burdened with less taxes if their debt is high. In the previous part of profitability ratio, in
equity multiplier, we saw that, as year’s passes the level of debt equity increases. As debt
increases the tax expense falls ultimately the net income rises and due to this the tax
efficiency ratio rises.
II. Expense Control Efficiency: The efficiency ratio indicates the expenses as a
percentage that shows, how much a corporation or individual spends to make a dollar.
RATIO ANALYSIS 41
The firms are supposed to attempt minimizing the ratio (reducing expenses and
increasing earnings).
City Bank
Formula: Net Income before Taxes & Security Gains (or Losses)/Total Operating
revenue
Year 2018:
= (4,355/ 15,902) in BDT millions
= 0.27
Year 2019:
= (5,731/ 18,285) in BDT millions
=0.31
Year 2020:
= (6,395/ 16,737) in BDT millions
= 0.38
Expense Efficiency
0.4 0.38
0.35 0.31
0.3 0.27
PERCENTAGE
0.25
0.2
0.15
0.1
0.05
0
2018 2019 2020
YEAR
Figure 23: Expense Efficiency of the CBL from year 2018-2020

RATIO ANALYSIS 42
Interpretation: Expense ratio less than 1 is generally a good sign for the company. Although
the ratio of CBL is increasing slowly but still it’s less than 1 which indicates that less
expenses are needed to measure the same amount of assets.
Uttara Bank
Formula: Net Income before Taxes & Security Gains (or Losses)/Total Operating
revenue
Year 2018:
= (2,981.5/10,079) in BDT millions
= 0.29
Year 2019:
= (3,716.3/11,302) in BDT millions
= 0.32
Year 2020:
= (3,739.0/9,850) in BDT millions
= 0.37
Expense Efficiency
0.4 0.37
0.35 0.32
0.29
0.3
PERCENTAGE
0.25
0.2
0.15
0.1
0.05
0
2018 2019 2020
YEAR
Figure 24: Expense Efficiency of the UBL from year 2018-2020

RATIO ANALYSIS 43
Interpretation: UBL’s expense ratio is also increasing slowly although the expense ratio is
less than 1. As the expense ratio is less than 1, so it can be considered that the bank is still
efficient in controlling its expense to generate revenue.
Comparison
Year 2018 2019 2020
City Bank (EC) 0.27 0.31 0.38
Uttara Bank (EC) 0.29 0.32 0.37
Now if we compare both of these banks according to expense control, Uttara Banks’s
expense ratio is higher compared to City Bank. The lower the ratio the better a bank’s
performs.
Reason behind the increase: There could be many reasons of the increasing Expense
Control Ratio. Expense ratio increases when the operating activities increases along with
their expenses. UBL and CBL’s expense ratio might be increasing due to various operational
costs such as administrative, compliance, distribution, management, marketing, shareholder
services, record-keeping fees, and other costs. Because every year their operational cost
mentioned in their financial statement was increasing which might have triggered their
expense ratio.
VI. Asset Management Efficiency: Asset management ratio is the key to analyze how
effectively and efficiently a company is managing its assets to generate revenues.
The higher the ratio, the more efficient a company is.
City Bank
Formula: Total Operating revenues/Total Assets
Year 2018:
= (15,902/ 324,780) in BDT millions
= 0.04
Year 2019:
= (18,285/ 354,689) in BDT millions
= 0.05
Year 2020:
= (16,737/ 382,926) in BDT millions
= 0.04
RATIO ANALYSIS 44
Graphical Interpretation
Asset Efficiency
0.06
0.05
0.05
0.04 0.04
0.04
PERCENTAGE
0.03
0.02
0.01
0
2018 2019 2020
YEAR
Figure 25: Asset Efficiency of the CBL from year 2018-2020
Interpretation: The asset efficiency level of CBL increased in year 2019 by 0.01. In 2020, it
decreased again by the same amount it increased in 2019. This downward trend shows that,
the banks is not properly maintaining its assets to generate more revenues.
Uttara Bank
Formula: Total Operating revenues/Total Assets
Year 2018:
= (10,079/190,029.9) in BDT millions
= 0.05
Year 2019:
= (11,302/193,161.6) in BDT millions
= 0.06
Year 2020:
RATIO ANALYSIS 45
= (9,850/222,600.2) in BDT millions
= 0.04
Asset Efficiency
0.07
0.06
0.06
0.05
0.05
0.04
PERCENTAGE
0.04
0.03
0.02
0.01
0
2018 2019 2020
YEAR
Figure 26: Asset Efficiency of the UBL from year 2018-2020
Interpretation: From 2018 to 2019 UBL’s assets efficiency level increased by 0.01.But in
2020, the level of efficiency decreased by 0.02. The bank is not properly maintaining its
funds to earn more profits.
Comparison
Year 2018 2019 2020
City Bank (AE) 0.04 0.05 0.04
Uttara Bank (AE) 0.05 0.06 0.05
By comparing both of these according to the above table, we can see that, their assets
efficiency level is decreasing as each year passes. Although, Uttara Bank’s efficiency level
was higher than City Bank but still both of these banks were following downward trend.
Reason Behind the fall: There could be many reasons behind the fall of asset efficiency
level. The banks might not liquidating its obsolete or least usable assets quickly or they might
be purchasing the fixed assets more rather than leasing some, which is triggering the fixed
assets, ultimately total assets and decreasing the asset efficiency level.
RATIO ANALYSIS 46
VII. Funds Management Efficiency: Funds management is the overseeing and handling
of a financial institution's cash flow. The fund manager ensures that the maturity
schedules of the deposits coincide with the demand for loans.
City Bank
Formula: Total Assets/Total Equity
Year 2018:
= (324,780/ 24,430) in BDT millions
= 13.29x
Year 2019:
= (354,689/ 25,416) in BDT millions
= 13.95x
Year 2020:
= (382,926/ 28,818) in BDT millions
= 13.28x
RATIO ANALYSIS 47
Funds Efficiency
14.2
13.95
14
13.8
PERCENTAGE
13.6
13.4 13.29 13.28
13.2
13
12.8
2018 2019 2020
YEAR
Figure 27: Funds Efficiency of the CBL from year 2018-2020
Interpretation: From 2018 to 2019 the fund efficiency level of CBL increased by 0.66x. But
in 2020 the level of efficiency decreased by 0.67x. This is not a good sign for the bank at all
as they are not effectively able to manage their funds.
Uttara Bank
Formula: Total Assets/Total Equity
Year 2018:
= (190,029.9/ 14,742.7) in BDT millions
= 12.89x
Year 2019:
= (193,161.6 /15,662.2) in BDT millions
= 12.33x
Year 2020:
= (222,600.2/ 17,469.1) in BDT millions
= 12.74x
RATIO ANALYSIS 48
Funds Efficiency
13 12.89
12.9
12.8 12.74
12.7
PERCENTAGE
12.6
12.5
12.4 12.33
12.3
12.2
12.1
12
2018 2019 2020
YEAR
Figure 28: Funds Efficiency of the UBL from year 2018-2020

Interpretation: From 2018 to 2019 UBL’s funds efficiency level decreased by 0.57x. This is
not a good indicators for the bank. But in 2020, their funds efficiency level increased by
0.41x. There is an upward trend noticed in their funds management level.
Comparison
Year 2018 2019 2020
City Bank (FE) 13.29 13.95 13.28
Uttara Bank (FE) 12.89 12.33 12.74
If we compare both of these banks in term of Fund efficiency then CBL is following
downward trend and UBL is following upward trend. Although the level of funds efficiency
of CBL is higher than UBL but the situation is not stable in case of both of these banks.
Reason behind the situation: The prime reason behind this unstable situation probably due
to their expense. If we look at their expense ratio then we can understand as each year passes,
their expense ratio was going up. This level of expense such as various operational expenses
might have make their funds less efficient. Proper utilization of funds also depends upon on
the size of the firm. When a company extend its property at that time the fund efficiency can
also decreased.
RATIO ANALYSIS 49
Market Position Ratio
I. Earnings per share (EPS): Earnings per share is calculated as a company's profit
divided by the outstanding shares of its common stock. The resulting number serves
as an indicator of a company's profitability. It is common for a company to report EPS
that is adjusted for extraordinary items and potential share dilution. The higher a
company's EPS, the more profitable it is considered to be.
City Bank
Formula: Net Income after Tax / Common Equity Shares Outstanding
Year 2018:
= 2018/968
= 2.0847 taka
Year 2019:
= 2472/1016.40
= 2.4321 taka
Year 2020:
= 4012/1010.40
= 3.9472 taka
RATIO ANALYSIS 50
Earnings per share

5
3.9472
4
3 2.4321
TAKA
2.0847
2
0
2018 2019 2020
YEAR
Figure 29: Earning per share of CBL from year 2018-2020
Interpretation: As we can see, City bank’s EPS for the year 2018 to 2020 is respectively
2.08 to 3.94 TK. This means that, if City Bank distributed every TK of income to its
shareholders, each share would receive 2.08 to 3.94 Tk.
Uttara Bank
Formula: Net Income after Tax / Common Equity Shares Outstanding
Year 2018:
= 1719/400
= 4.2973 taka
Year 2019:
= 1870/408
= 4.5824 taka
Year 2020:
=2143/501
= 4.2704 taka
RATIO ANALYSIS 51
Earning per share

4.7
4.5824
4.6
4.5
TAKA
4.4
4.2923 4.2704
4.3
4.2
4.1
2018 2019 2020
YEAR
Figure 30: Earning per share of UBL from year 2018-2020
Interpretation: As we can see, Uttara bank’s EPS for the year 2018 to 2020 is respectively
4.29 to 4.27 TK. This means that if Uttara Bank distributed every TK of income to its
shareholders, each share would receive 4.29 to 4.27 Tk.
Comparison
Year 2018 2019 2020

City Bank(EPS) 2.0847 2.4321 3.9472
Uttara Bank(EPS) 4.2923 4.5324 4.2704
From the above figure it can be seen that from the year 2018 to 2020 City Bank’s EPS is
lower than Uttara Bank. That means Uttara Bank provide greater value than City Bank
because investors will pay more for a company's shares if they think the company has higher
profits relative to its share price.
Reason behind the higher EPS: Based on the formula of earnings per share, the only
determining factors for an increasing EPS can either be an increase in net income or a
decrease in the total number of outstanding shares. A higher net income figure will depend on
increasing revenues or lower costs that are associated with that revenue. Uttara bank
increased their net income gradually and decreased their number of outstanding share from
year 2018 to 2020. And City Bank increase their net income in every year but the keep the
number of outstanding shares the same.
RATIO ANALYSIS 52
II. Book value per share (BVPS): Book value per share is the ratio of equity available
to common shareholders divided by the number of outstanding shares. This figure
represents the minimum value of a company's equity and measures the book value of
a firm on a per-share basis.
City Bank
Formula: Company’s equity/ Numbers of Share Outstanding
Year 2018:
= 24430/968
= 25.2376 taka
Year 2019:
= 25416/1016.40
= 25.0059
Year 2020:
= 28818/1016.40
= 28.3530
Book value per share

29 28.353
28
27
TAKA
26 25.2376 25.0059
25
24
23
2018 2019 2020
YEAR
Figure 31: Book value per share of CBL from year 2018-2020
RATIO ANALYSIS 53
Interpretation: Here, City Bank’s BVPS is positive and higher that means bank is dissolve,
the book value per common share indicates the taka value remaining for common
shareholders after all assets are liquidated and all debtors are paid.
Uttara Bank
Formula: Company’s equity/ Numbers of Share Outstanding
Year 2018:
= 14742.70/400
=36.8493 taka
Year 2019:
= 15662.20/408
= 38.3800 taka
Year 2020:
= 17469.10/501
= 34.8031 taka
Book value per share

39 38.38
38
36.8493
37
TAKA
36
35 34.8031
34
33
2018 2019 2020
YEAR
Figure 32: Book value per share of UBL from year 2018-2020
RATIO ANALYSIS 54
Interpretation: Here, Uttara Bank’s BVPS is positive and very high, that means bank is
dissolve, the book value per common share indicates the taka value remaining for common
shareholders after all assets are liquidated and all debtors are paid.
Comparison
Year 2018 2019 2020

City Bank(BMPS) 2.0847 2.4321 3.9472
Uttara 4.2923 4.5324 4.2704
Bank(BMPS)
From the above figure it can be seen that, from the year 2018 to 2020 City Bank’s BVPS is
gradually higher from 2.0847 to 3.9472. But Uttara bank’s BVPS is better than City Bank
that means Uttara Bank more dissolve than City Bank. Uttara bank assets are more liquidated
and all debtors are paid early before City Bank.
Reason behind higher BVPS: Higher BVPS generate higher profits and use those profits to
buy more assets or reduce liabilities, the firm's common equity increases.
Reason behind lower BVPS: If a bank's share price falls below its BVPS, a corporate raider
could make a risk-free profit by buying the bank and liquidating it. If book value is negative,
where a bank's liabilities exceed its assets, this is known as balance sheet insolvency.
III. Price to Earnings Ratio: The price-earnings ratio (P/E ratio) relates a company's
share price to its earnings per share. It can also be used to compare a company against
its own historical record or to compare aggregate markets against one another or over
time.
City Bank
Formula: Market Price per share / Earning per share
Year 2018:
= 30.2 / 2.1
=14.38x
RATIO ANALYSIS 55
As, the bank is currently trading at a P/E multiple of 14.38x, an investor is willing to pay
14.38 taka for 1 taka of current earnings.
Year 2019:
= 21.1/ 2.4
=8.79x
As, the bank is currently trading at a P/E multiple of 8.79x, an investor is willing to pay 8.79
taka for 1 taka of current earnings.
Year 2020:
= 24.8/ 3.9
= 6.35x
P/E Ratio
16 14.38
14
12
10 8.79
TIME
8
6
6.35
4
2
0
2018 2019 2020
YEAR
Figure 33: Price to earnings ratio of CBL from year 2018-2020
Interpretation: From year 2018- to 20219 the share price of City Bank according to P/E
ratio decreased by 5.59 taka. And in 2020, the price again decreased by 2.44 taka. Companies
RATIO ANALYSIS 56
with high P/E ratio is considered to be profitable for investors. However, this low P/E ratio
can also indicate that the bank may currently be undervalued or that the bank is doing
exceptionally well relative to its past trends.
Uttara Bank
Formula: Market Price per share / Earning per share
Year 2018:
= 28.50/ 4.30
=6.62x
Year 2019:
= 27.20/ 4.58
= 5.98x
Year 2020:
= 24.00/ 4.27
= 5.62x

RATIO ANALYSIS 57
P/E Ratio
7 6.62
5.98
6
5
4 5.62
TIME
3
2
1
0
2018 2019 2020
YEAR
Figure 34: Price to earnings ratio of UBL from year 2018-2020
Interpretation: From the information we can see that, from 2018 to 2019 P/E ratio decreased
by 0.64 time. And again in 2020, P/E ratio decreased by 0.36 times. The ratio was gradually
decreasing which means their share was becoming less profitable for shareholders.
Comparison
Year 2018 2019 2020
City Bank (P/E) 14.38x 8.79x 6.35x
Uttara Bank(P/E) 6.62x 5.98x 5.62x
If we see closely then we can understand, every year the price of share was gradually
decreasing in case of both of these banks. Although, the share price was gradually decreasing
but still City Bank’s share price was higher compared to Uttara Bank.
Reason behind the fall of price: The low P/E ratio of a firm is related to its growth. The
growth of both of these banks were not very much high and due to this their price of share
might be decreasing. Moreover, every year the market price of both of these banks were
RATIO ANALYSIS 58
decreasing. When the share price in stock market is undervalued, the investors feel less
confident to buy that share which also makes P/E ratio lower. And lastly, probably both of
these banks do not have great future prospects. A bank with average or low future prospects
also decreases this ratio.
CAMELS Ratio Analysis
This analysis shows us the capital, assets, management, equity, liquidity and sensitivity of a
bank. Through the analysis we can understand which bank is good and also most investable
for-profit earning.
1. Capital adequacy: This indicates that the minimum level of capitals should keep every
bank. Basically, a bank or financing institute need fund/capital but how much equity or debt
capital the firm need to invest- the capital adequacy ratio can help to take decision. It’s
known as capital of risk, because anyone can measure how much capital the firm needs to
remove risk.
A) (Tire 1 + tire 2)/ total risk weight assets
Tire 1= bank's common stock + retained earning
Tire 2 = surplus on revaluation of assets (net of tax)
Year 2018 2019 2020
City Bank 0.131 0.152 0.155
Uttara Bank 0.124 0.130 0.140
Interpretation (City bank): When the rate is higher than 1, it indicates goods situation. But
in City Bank, the ratio is under 1. It illustrates, for 1 taka risk, the bank have 0.131 (2018),
0.152(2019) and 0.155(2020) taka capital or fund.

RATIO ANALYSIS 59
Interpretation (Uttara Bank): When the rate is higher than 1, it indicate goods situation.
But in Uttara Bank, the ratio is under 1. It illustrates, for 1 taka risk the bank have 0.124
(2018), 0.130 (2019) and 0.140(2020) taka capital or fund.
Comparison: Here, both banks risk is higher than capital investment. So, they are not staying
in good level of capital adequacy.
B) Advance equity = Loan & advances/shareholders’ equity
Year 2018 2019 2020
City Bank 9.471 9.716 9.306
Uttara Bank 7.584 8.456 7.662
Interpretation (City bank): This ratio indicate that, how much debt the bank has against in
1 taka equity. And it’s good when the ratio bigger than 1 because the bank need not bear
more tax. So, more cash inflow will occur. If the ratio is smaller than 1 taka, it’s also good for
shareholders, because the holder predicts more dividend.
For City Bank, all the ratios are bigger than 1 that means, the bank have 9.4719(2018),
9.716(2019) and 9.306(2020) Taka debts against 1 taka equity. So, the bank need not pay
more tax because the bank have more debt than equity capital.
Interpretation (Uttara Bank): For Uttara bank, all the ratios are bigger than 1 that shows,
the bank have 7.584 (2018), 8.456(2019) and 7.662(2020) taka debts against 1 taka equity.
So, the bank need not pay more tax because the bank have more debt than equity capital.
2. Assets quality: The assets of a bank, which include loans, leases, securities, and derivative
contracts, determine its profitability and, thus, its long-term viability. In short, banks make
money by making loans and investments that generate income and can be repaid. This covers
RATIO ANALYSIS 60
an institutional loan’s factors, where the bank measure or balance the loans basis on capital
earn.
A) Net non-performing loan/ advances
Year 2018 2019 2020
City Bank 0.795 1.046 0.143
Uttara Bank 0.960 0.870 0.041
Interpretation (City bank): The NPL ratio measures the effectiveness of a bank in receiving
repayments on its loans. Ratio more than 1 indicates that, the bank is at a greater risk of loss
if it does not recover the owed loan amounts. On the other hand, a small ratio means that, the
outstanding loans present a low risk to the bank which they can easily recover.
In city bank, only in 2019 showed that, the bank have 1 taka loan against 1.05 taka non
recovery loan, which is a risky portion for the bank and bad condition. But remaining 2 years
ratio is indicated that the bank have no risk on loan which is good. Because the measurement
ratio is under 1 taka.
Interpretation (Uttara Bank): In case of Uttara bank the ratio is less than 1 in all three
years. It indicates the bank has less risk to recover its outstanding loan.
B) Advances/ total assets
Year 2018 2019 2020
City Bank 0.712 0.696 0.700
Uttara Bank 0.625 0.645 0.601
Interpretation (City bank): This ratio means that how much loan the bank gave against
their assets (deposit, security, bonds). If the ratio is bigger than 1 taka- means that the bank
has more loan in per 1 taka, so the bank can earn more interest income, at the same time the
RATIO ANALYSIS 61
bank has more risk. For city bank, they has 0.71, 0.696 and 0.700 (2018-2020) taka loan each
year where their asset is 1 taka. Its shows, the bank reduce risk and also reduce interest
income.
Interpretation (Uttara Bank): For Uttara bank, they has 0.63, 0.65 and 0.60 (2018-2020)
taka loan each year where their asset is 1 taka. Ratio is less than 1 which illustrates, the bank
reduce risk and also reduce interest income.
Comparison: Both banks are performing well and the banks has reduced their risk but interest
incomes has become low for both banks. This ratio indicates that, the city bank is performing
well because the bank can use more loans and advances.
3. Management quality: Management assessment determine the institute or banks are in a
good financial position like their deposits and loans are acceptable for management, and the
expense and income are right in position for operating banking activities.
A) Total advances/ total deposit
Year 2018 2019 2020
City Bank 1.127 1.210 1.292
Uttara Bank 1.337 1.241 1.110
Interpretation (City Bank): Against 1 taka deposit, the bank has 1.13, 1.21 and 1.29 (2018 -
2020) taka. The condition is favorable for the bank. Because the bank is generating more loan
with more interest income. They do have loan written off risk but the return is also higher.
From the ratio we can say the bank is operating their loans and deposit in right way.
Interpretation (Uttara Bank): Against 1 taka deposit the bank has 1.34, 1.24 and 1.11
(2018 - 2020) taka. The return in case of Uttara bank is also higher. The bank is also
operating their loans and deposit in right way.
B) Management expense / total income

RATIO ANALYSIS 62
Year 2018 2019 2020
City Bank 0.294 0.040 0.024
Uttara Bank 3.587 3.474 2.743
Interpretation (City Bank): Against 1 taka of the bank income, the bank expenses are
0.024, 0.041 and 0.024 (2018 - 2020) taka- which is a positive sign for the bank. The bank
income is more than expense. So their managements operating condition is good.
Interpretation (Uttara Bank): Against 1 taka of the bank income, the bank expenses are
3.59, 3.47 and 2.78 (2018 - 2020) taka- which is not good for the bank because the bank has
more expense than income. It shows, the bank is not handling their expenses properly.
Comparison: Between both of these banks, City bank is superior in terms of handling the
loan and deposit operation and also in controlling their expenses. Uttara bank is not in good
condition because the income and expense maintenance is not good. The bank’s expense is
too high compared to its income.
4. Earning quality: This ratio determines a bank's ability to produce earnings to be able to
sustain its activities, expand, and remain competitive are a key factor in rating its continued
viability.
A) Spread ratio = (interest earn/advances) - (Interest expenses /deposits)
Year 2018 2019 2020
City Bank 0.015 0.031 0.015
Uttara Bank 0.030 0.040 0.034
Here, the positive ratio of both of these banks illustrates the bank’s interest income and
utilization of loans are good.
Comparison:
B) ROA = Net profit / total assets
Year 2018 2019 2020

RATIO ANALYSIS 63
City Bank 0.621 0.697 1.047
Uttara Bank 0.904 0.968 0.962
Interpretation (City Bank): For per 1 taka assets, the bank’s net profit is 0.62, 0.69 and 1.04
(2018-2020) taka each year. So, the bank uses more assets but can’t generate more profit-
which is not acceptable. But in 2020, the ratio came more than 1, because they utilize the
assets systematically.
Interpretation (Uttara Bank): For per 1-taka assets, the bank’s net profit is 0.90, 0.97 and
0.96 (2018-2020) taka each year. So, the bank uses more assets but can’t generate more
profit.
C) ROE = Net profit/ owners capital
Year 2018 2019 2020
City Bank 0.082 0.097 0.139
Uttara Bank 0.116 0.119 0.122
Interpretation (City bank): For per 1 taka of owner’s capital, the bank generates net profit
8.2, 9.7 and 14.00 (2018-2020) taka. Here, the bank is utilizing its capital in a proper way.
Interpretation (Uttara bank): For per 1 taka of owner’s capital, the bank generates net
profit 11.67, 11.93 and 12.27 (2018-2020) taka. Here, the bank can utilize the capital proper
way.
Comparison: City bank’s overall performance is good. Although in 2018 and 2019 the bank
did not utilize their assets in a right way but in 2020 they performed well. And Uttara bank is
not performing good cause they can’t utilize the assets right way which is very unhealthy.
City bank performance in the equity section is also positive compared with Uttara Bank.
RATIO ANALYSIS 64
However, Spread ratio of Uttara bank is good because their market spreading power is higher
than City Bank.
5. Liquidity: This ratio shows that the interest rate sensitivity, assets liquidity, and how
easily a bank can convert their short term and long-term deposit. Mainly focus on current
assets and cash liquidity.
A) Current ratio= current assets/ total assets
Year 2018 2019 2020
City Bank 0.989 0.984 0.984
Uttara Bank 0.002 0.078 0.071
Interpretation (City bank): If total assets is 1 taka, the bank’s current assets is 0.989, 0.984
and 0.985 (2018-2020) taka. So, the bank current assets is less liquid which is not good for a
bank.
Interpretation (Uttara Bank): If total assets is 1 taka, the bank’s current assets is 0.002,
0.0798and 0.071 (2018-2020) taka. So, the bank current assets is less liquid.
B) Cash ratio = Cash/deposit
Year 2018 2019 2020
City Bank 0.264 0.030 0.027
Uttara Bank 0.035 0.040 0.025
Interpretation (City Bank): Against 1 taka deposit of bank, the bank has 0.26, 0.03 and
0.027 (2018-2020) taka cash which is very low cash. They should improve their liquidity.
Interpretation (Uttar Bank): Against 1 taka deposit of bank, the bank has 0.035, 0.040 and
0.025 (2018-2020) taka cash which is very low cash. They should improve their liquidity.
RATIO ANALYSIS 65
Comparison: Both banks are same. Both have same condition but the liquidity is very low in
Uttara Bank compared with City Bank.
6. Sensitivity: Sensitivity covers how particular risk exposures can affect institutions.
Examiners assess an institution's sensitivity to market risk by monitoring the management of
credit concentrations. Through the ratio we can understand, how many periods the bank or
institute lead in market.
Total securities/ total assets
Year 2018 2019 2020
City Bank 2.980 2.865 2.654
Uttara Bank 0.066 0.002 0.004
Interpretation (City bank): If the value of asset is 1 taka, the bank security value is 2.98,
2.87 and 2.65 (2018-2020) taka. Here the value of the bank is good. So in future, the bank’s
market share will increase and the bank can get more equity if the bank publishes new shares.
Interpretation (Uttara Bank): If the value of asset is 1 taka, the bank security value is
00.66, 0.002 and 0.004 (2018-2020) taka. The value of the bank is very low, so the bank
share value will valuated under rated.
Comparison: City bank’s securities (bond, share) is valuated high but Uttara bank’s
securities are under valuated. Here, city bank is better than Uttara bank.
Credit Rating
City bank: The Bank has achieved AA2 (Very High Quality and Very Low Credit Risk) in
long term and ST-2 (High Grade) in short term. The outlook of the City Bank is stable. The
above surveillance rating has been done in consideration of Bank’s visible improvement in
fundamentals such as asset quality, capital adequacy, liquidity position, profitability and
limited market share.

RATIO ANALYSIS 66
Uttara Bank (2018): The Bank has achieved AA (Very high quality and very low credit risk)
in the long term process and ST-2 (High grade) in the short term process. From both of them
AA have the very strong capacity to meet their financial commitments and s judged to be of
very high quality and is subject to very low credit risk. And ST-2 are considered to have
strong capacity for timely repayment and characterized with commendable position in terms
of liquidity, internal fund generation, and access to alternative sources of funds.
Uttara Bank (2019): The Bank has achieved AA (Very high quality and very low credit risk)
in the long term process and ST-2 (High grade) in the short term process. From both of them
AA have the very strong capacity to meet their financial commitments and s judged to be of
very high quality and is subject to very low credit risk. And ST-2 are considered to have
strong capacity for timely repayment and characterized with commendable position in terms
of liquidity, internal fund generation, and access to alternative sources of funds.
Uttara Bank (2020): The Bank has achieved AA (Very High Quality and Very Low Credit
Risk) in long term and ST-2 (High Grade) in short term. The above surveillance rating has
been done in consideration of Bank’s visible improvement in fundamentals such as asset
quality, capital adequacy, liquidity position, profitability and limited market share.
RATIO ANALYSIS 67
Findings & Problems
• Both of these banks use high debt as their capital. As each year passes the debt
portion was increasing and equity capital was decreasing. Due to that, ROE of City
Bank and Uttara Bank was increasing gradually.
• Highly financial leverage banks have high efficiency in tax payment.
• No massive change was seen in net margin ratio of both of these banks even after
having high ROE.
• Banks can artificially increase their ROE by simply changing their bookkeeping value
(balance sheet information) without making actual major changes.
• Both of these banks liquidity ratio was lower. Low liquidity means they are invest
maximum capital in different sector- which is good because they earn profit. But in
case of both of these banks their growth in earning was mild.
• When the share price in stock market is undervalued, the investors feel less confident
to buy that share which also makes P/E ratio lower. In case of both of these banks
investors’ willingness to pay for the share was decreasing according to the P/E ratio
because market price was decreasing.
• Both of these banks has some management deficiency. They have poor management
in controlling their assets, balanced equity capital, proper fund management and also
poor management of loan and deposits.
• Less efficient in managing expenses.
RATIO ANALYSIS 68
Recommendations
✓ Both of the banks does not have enough cash on hand to fund its activities. Their Cash
ratio is less than one which can make these banks financially unstable. They need to
take proper measure to converts their liquid assets on time to have sufficient amount
of cash.
✓ Both banks should improve their current assets otherwise they will not be able pay to
the account payables in right time.
✓ They need to increase retail earning and revaluation the assets. The bank can focus on
assets value increasing, as result the earning will grow up.
✓ Both banks reduces their tax through high debt portion as capital. But the shareholders
predict dividend, here the shareholders will demotivated to invest. And this scenario
was clearly visible in case of City and Uttara bank. Because every year, they were
increasing debt and their share price in market was decreasing. So the management
needs focus on that. Both options are important for the bank, so the bank can keep
more equity for some period than again low down the equity capital for reduction tax.
✓ Both banks have low efficiency in managing their funds which was decreasing their
income from assets. Moreover, in spite of having high debt their return from funds
were less which means they have idle funds in the bank so they need invest those
funds to generate more revenues such as buying interest bearing short and long term
securities.
✓ Uttara bank has higher debt compared to City bank but still Uttara bank’s expense
was increasing every year. Uttara bank need to reduce their expense, otherwise the
management system might get collapsed.
✓ Uttara bank’s market lead time is very low so the securities value is low. The bank
should improve their security value. Here, the bank can reduce total assets or increase
securities.
✓ Uttara bank market lead time compared to City bank is very low so the securities
value is low. The bank should improve their security value. Here the bank can reduce
total assets or increase securities.
RATIO ANALYSIS 69
Conclusion
Both of these banks has some issues regarding their overall banking operation which was
discussed in this paper thoroughly. These various financial ratios and their analysis enables to
find out how effectively City bank and Uttara Bank is operating, in which section of their
operation they need to improve and specific recommendations to overcome the problems are
also discussed for their further future growth and development in banking industry.
RATIO ANALYSIS 70
References
Assignment point. (2021). Assignment point. Retrieved June 9, 2021, from Assignment
point: https://www.assignmentpoint.com/business/organizational-behavior/overview-
of-the-city-bank-ltd.html
Assignment point. (2021). Assignment point. Retrieved June 10, 2021, from Assignment
point: https://www.assignmentpoint.com/business/finance/report-on-uttara-bank-
limited.html
City Bank. (2021). City Bank. Retrieved June 9, 2021, from City Bank:
https://www.thecitybank.com/report/annualreports
Uttara Bank. (2021). Uttara Bank. Retrieved June 10, 2021, from Uttara Bank:
https://www.uttarabank-bd.com/index.php/home/annualreports

Ratio Analysis Uttara Bank VS City Bank

Uploaded by

Copyright:

Available Formats

Ratio Analysis Uttara Bank VS City Bank

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ratio Analysis Uttara Bank VS City Bank

Uploaded by

Copyright:

Available Formats

Running head: RATIO ANALYSIS 1

An Analysis of Financial Ratios

Overview of the banks

• Local City card.

Uttara Bank Limited history-

Financial Ratio Analysis

Figure 1: Current Ratio of CBL from year 2018-2020

extend the credit of their company.

Formula: Current Asset / Current Liabilities

= 186 979 914 313 / 22 229 374 244

= 349 013 541 253 / 300 071 966 097

= 219 320 246 078 / 23 855 513 701

Figure 2: Current Ratio of UBL from year 2018-2020

need. And it is a favorable sign for the company.

enough resources to repay the debt.

Year 2018 2019 2020

City Bank (CA) .070 times 1.16 times 1.15 times

Uttara Bank (CA) 8.41 times 1.16 times 9.91 times

making good use of debt properly to add value for shareholders.

Formula: (Current Asset- inventory) / Current Liabilities

= 321 270 901 225 / 274 423 251 799

= 349 013 541 253 / 300 071 966 097

=377 005 522 011 / 325 150 117 596

Acid Test Ratio

Figure 3: Acid-Test Ratio of CBL from year 2018-2020

assets for covering the growth of the company.

Formula: (Current Asset- inventory) / Current Liabilities

= 186 979 914 313 / 22 229 374 244

= 190 156 399 534 / 20 578 217 656

= 219 320 246 078 / 23 855 513 701

Acid Test Ratio

Figure 4: Acid-Test Ratio of UBL from year 2018-2020

growth of the company.

Year 2018 2019 2020

compared to City bank.

Formula: Cash / Current Liabilities

= 19 435 408 446 / 274 423 251 799

= 25 906 831 013 / 300 071 966 097

=22 403 557 932 / 325 150 117 596

Figure 5: Cash Ratio of CBL from year 2018-2020

fund its activities.

Formula: Cash / Current Liabilities

= 15 258 562 023 / 22 229 374 244

= 15 258 562 023 / 20 578 217 656

=14 969 993 846 / 23 855 513 701

Figure 6: Cash Ratio of UBL from year 2018-2020

Year 2018 2019 2020

City Bank(CR) 0.07 times 0.08 times 0.06 times

Uttara Bank (CR) 0.68 times 0.74 times 0.62 times

Financial Risk Ratios

Formula: Total Liabilities / Shareholder’s equity

Debt to Equity Ratio

Figure 7: Debt to Equity Ratio of CBL from year 2018-2020

Debt to Equity Ratio

Figure 8: Debt to Equity Ratio of UBL from year 2018-2020

cover all outstanding debts in the event of a business downturn.

Year 2018 2019 2020

City Bank(D/E) 12.29% 12.95% 12.28%