Ratio Analysis of Bank Al Habib

Limited, Habib Metropolitan

Bank Limited and J.S Bank
Limited for Financial Year 2013,
2014 and 2015
 Introduction of the Project

Financial Statement Analysis punctuates the financial performance of

organization. It is detail analysis of company’s financial performances. In this
project financial statements of Bank Al Habib LTD, Habib Metropolitan bank
LTD and J.S Bank Limited were reviewed with the help of ratio analysis to
come to conclusion. This reports covers financial reports of selected banks
for Financial year 2013 , 2014 and 2015.
Financial ratios like debt ratio, debt to equity ratio, net profit margin ratio,
operating cash flow ratio, return on equity ratio, price to earning ratio, spread
ratio, Advance to deposit ratio, gross spread ratio, non-interest income to total
income ratio were calculated and analyzed.
 Objectives and Significance
The objectives of this projects are:
• To understand the process of Financial statement Analysis with the help of
financial ratios.
• To check efficiency, effectiveness, profitability and solvency of selected
banks.
• To give recommendations and suggestions to selected banks for further
progress and improvement.

The significance of this project is:

• Summarize huge amount of financial information in such a way that it can be
easily understand by investor , creditors, bankers etc.
• This project will help investors and creditors in the process of decision
making regarding investments.
• This report will serve management of banks in decision making , financial
forecasting and planning, and making controlling mechanism very effective.
• Help other financial consultants who are providing consultancy services to
public in purchase and sales of securities, stock and bonds .
 Data Collection

Data of the study has been collected from the concerned

Bank, applied to the study on the financial statements
during the period (2013-2015) of the Bank Al Habib
Limited, Habib Metropolitan Bank Limited and J.S Bank
Limited.
 Data Processing

The most important tool used in the data processing and

analysis is financial ratios. Ratio analysis is being
supported with graphical representations, tabulation and
financial calculations with the help of M.S Word and M.s
Excel.
 Data Analysis
Financial Data has been analysed with the help of
following ratios:
• Debt Ratio
• Debt to Equity Ratio
• Net Profit Margin Ratio
• Operating Cash Flow Ratio
• Return on Equity
• Price/Earnings Ratio
• Spread Ratio
• Advance to Deposit Ratio
• Gross Spread Ratio
• Non-interest income to Total Income Ratio
 Debt Ratio
Debt Ratio = Total Debts / Total Assets
2013 2014 2015
Total Debts 435,440,679 546,283,877 601,832,280
BAHL Total Assets 461,021,913 579,310,440 640,023,814
Debt Ratio 94.45% 94.30% 94.03%
Total Debts 283,410,354 362,905,686 453,023,398
HMPBL Total Assets 311,395,637 397,674,817 489,885,635
Debt Ratio 91.01% 91.26% 92.48%
Total Debts 103,441,191 163,637,271 202,507,760
J.S Bank Total Assets 114,748,759 176,716,817 218,475,663
Debt Ratio 90.15% 92.60% 92.69%
 DEBT RATIO
95.00
94.45 94.30
94.03
94.00

93.00 92.60 92.69

92.48
BAHL
92.00
91.26
91.01 HMBL
91.00
90.15
90.00 JSBL

89.00

88.00

87.00
20131 20142 2015
3
 Debt to Equity Ratio
Debt to Equity Ratio = Total Debt /Total
Equity
2013 2014 2015
Total Debt 435,440,679 546,283,877 601,832,280
Total Equity 25,581,234 33,026,563 38,191,534
BAHL
Debt to Equity
17.02% 16.54% 15.76%
Ratio
Total Debt 283,410,354 362,905,686 453,023,398
Total Equity 27,985,283 34,769,131 36,862,237
HMPBL
Debt to Equity
10.13% 10.44% 12.29%
Ratio
Total Debt 103,441,191 163,637,271 202,507,760
Total Equity 11,307,568 13,079,546 15,967,903
J.S Bank
Debt to Equity
9.15% 12.51% 12.68%
Ratio
 DEBT TO EQUITY RATIO
18.00 17.02
16.54
15.76
16.00

14.00
12.51 12.68
12.29
12.00 BAHL

10.13 10.44
10.00 9.15
HMBL
8.00

6.00 JSBL

4.00

2.00

-
2013 2014 2015
1 2 3
 Net Profit Margin
Net Profit Margin = Net profit / Revenue *
100
2013 2014 2015
Net Profit 5,198,257 6,436,370 7,331,752
Revenue 41,244,819 47,956,995 54,796,732
BAHL
Net Profit Ratio 12.60% 13.42% 13.38%
Net Profit 3,526,768 4,942,150 7,673,483
Revenue 29,461,396 38,054,479 46,108,798
HMPBL
Net Profit Ratio 11.97% 12.99% 16.64%
Net Profit 837,764 1,060,039 2,025,547
Revenue 9,566,882 13,703,541 18,617,607
J.S Bank
Net Profit Ratio 8.76% 7.74% 10.88%
 NET PROFIT MARGIN RATIO
18.00
16.64
16.00

14.00 13.42 13.38

12.99
12.60
11.97
12.00
10.88 BAHL

10.00
8.76
HMBL
8.00 7.74

6.00 JSBL

4.00

2.00

-
12013 2 2014 32015
 Operating Cash Flow Ratio
OCF Ratio= Cash flow from operating
Activities/ Current Liabilities
2013 2014 2015
Cash flow from
(7,787,747) 98,072,605 31,611,638
operating Activities
BAHL
Current Liabilities 421,751,956 532,751,724 587,455,308
OCF Ratio (1.85)% 18.41% 5.38%
Cash flow from
(10,830,851) 71,243,361 89,904,152
operating Activities
HMPBL
Current Liabilities 274,546,933 350,033,738 441,015,880
OCF Ratio (3.94)% 20.35% 20.39%
Cash flow from
(21,256,836) 38,650,130 34,992,128
operating Activities
J.S Bank
Current Liabilities 101,620,915 160,657,953 198,088,230
OCF Ratio (20.92)% 24.06% 17.66%
 OPERATING CASH FLOW RATIO
30.00

25.00 24.06
20.35 20.39
20.00 18.41 17.66

15.00

10.00
BAHL
5.38
5.00

- HMBL
1 2 3
(1.85)
(5.00) (3.94)
JSBL
(10.00)

(15.00)

(20.00)
(20.92)
(25.00)

2013 2014 2015

 Return on Equity
ROE = Net Income/Shareholder's Equity
2013 2014 2015
Net Income 5,198,257 6,436,370 7,331,752
Share Holder
BAHL 25,581,234 33,026,563 38,191,534
Equity
ROE Ratio 20.32% 19.49% 19.20%
Net Income 3,526,768 4,942,150 7,673,483
Share Holder
HMPBL 27,985,283 34,769,131 36,862,237
Equity
ROE Ratio 12.60% 14.21% 20.82%
Net Income 837,764 1,060,039 2,025,547
Share Holder
J.S Bank 11,307,658 13,079,546 15,967,903
Equity
ROE Ratio 7.41% 8.10% 12.69%
 RETURN ON EQUITY RATIO
25.00

20.32 20.82
20.00 19.49 19.20

15.00 14.21 BAHL

12.60 12.69

HMBL
10.00
8.10
7.41
JSBL

5.00

-
2013
1 22014 32015
 Price/Earnings Ratio
P/E Ratio = Market Value Price Per
Share/Earning per Share
2013 2014 2015
Market value price
41.55 48.55 41.60
per Share
BAHL
Earning Per Share 5.14 5.79 6.60
P/E Ratio 8.08 8.39 6.30
Market value price
25 37 30
per Share
HMPBL
Earning Per Share 3.37 4.72 7.32
P/E Ratio 7.44 7.90 4.16
Market value price
5 7 8
per Share
J.S Bank
Earning Per Share 0.44 0.92 1.65
P/E Ratio 10.23 7.80 4.70
 PRICE EARNING RATIO
12.00

10.23
10.00

8.39
8.08 7.90
8.00 7.80 BAHL
7.44

6.30
HMBL
6.00
4.70
4.16 JSBL
4.00

2.00

-
2013 1 2
2014 3
2015
 Spread Ratio
Spread Ratio = Interest Earned / Interest
Expense
2013 2014 2015

Interest Earned 37,254,862 44,007,124 50,310,263

BAHL Interest Expense 22,993,817 24,933,172 25,475,557

Spread Ratio 162.02% 176.50% 197.48%

Interest Earned 24,641,671 32,288,259 36,860,192

HMPBL Interest Expense 15,569,764 21,078,626 22,460,706

Spread Ratio 158.27% 153.18% 164.11%

Interest Earned 6,969,555 11,113,380 15,327,901

J.S Bank Interest Expense 4,512,561 7,259,340 9,738,029

Spread Ratio 154.45% 153.09% 157.40%

 SPREAD RATIO
250.00

197.48
200.00
176.50
162.02 158.27 164.11
157.40 BAHL
154.45 153.18 153.09
150.00

HMBL

100.00
JSBL

50.00

-
2013 2014 2015
1 2 3
 Advances to Deposits Ratio
A/D ratio= Advances/Deposits
2013 2014 2015
Advances 167,569,070 181,357,100 205,858,857
Deposits 386,098,828 446,311,464 516,197,547
BAHL
Advance to
43.40% 40.63% 39.88%
Deposit Ratio
Advances 129,833,937 134,175,636 132,646,839
Deposits 247,507,718 319,948,274 403,208,597
HMPBL
Advance to
52.46% 41.94% 32.90%
Deposit Ratio
Advances 33,769,008 56,706,066 76,666,180
Deposits 80,055,276 108,739,960 141,840,487
J.S Bank
Advance to
42.18% 52.15% 54.05%
Deposit Ratio
 ADVANCE TO DEPOSIT RATIO
60.00
54.05
52.46 52.15
50.00
43.40 42.18 41.94
40.63 39.88
40.00 BAHL

32.90
30.00 HMBL

20.00 JSBL

10.00

- 2013 2014 2015

1 2 3
 Gross Spread Ratio
Gross Spread Ratio = Net Markup
Income/Gross Income
2013 2014 2015
Net Markup
14,261,045 19,073,952 24,834,706
Income
BAHL Total Income 8,032,647 10,561,691 14,230,984
Gross Spread
177.54% 180.60% 174.51%
Ratio
Net Markup
9,071,907 11,209,633 14,399,486
Income
HMPBL Total Income 7,226,524 9,114,718 14,791,390
Gross Spread
125.54% 122.98% 97.35%
Ratio
Net Markup
2,456,994 3,854,040 5,589,872
Income
J.S Bank Total Income 1,342,278 2,427,003 3,989,937
Gross Spread
183.05% 158.80% 140.10%
Ratio
 GROSS SPREAD RATIO
200.00

183.05 180.60
177.54
180.00 174.51

158.80
160.00

140.10
140.00
125.54
122.98
BAHL
120.00

97.35
100.00
HMBL

80.00

60.00 JSBL

40.00

20.00

-
1
2013 22014 32015
 Non-Interest income to Total
Income Ratio
= Non-Markup Income/Total Income
2013 2014 2015
(10,603,722
Non-Markup Income (6,228,398) (8,512,261)
)
BAHL Total Income 8,032,647 10,561,691 14,230,984
Non-Interest Income to Total Income
(77.54)% (80.60)% (74.51)%
Ratio
Non-Markup Income (1,845,383) (2,094,915) 391,904
Total Income 7,226,524 9,114,718 14,791,390
HMPBL
Non-Interest Income to Total Income
(25.54)% (22.98)% 2.65%
Ratio

Non-Markup Income (1,114,716) (1,427,037) (1,599,935)

Total Income 1,342,278 2,427,003 3,989,937
J.S
Bank Non Interest Income to Total Income
(83.05)% (58.80)% (40.10)%
Ratio
 NON INTEREST INCOME TO TOTAL INCOME RATIO
10.00
2.65
-
1 2 3

(10.00)

(20.00)

(22.98)
BAHL
(30.00) (25.54)

(40.00) HMBL
(40.10)

(50.00)
JSBL

(60.00)
(58.80)

(70.00)

(74.51)
(80.00) (77.54)
(80.60)
(83.05)
(90.00)

2013 2014 2015

 Conclusion/Findings
• Total Assets of all three banks were increased in the period
between Financial year 2013 to Year 2015.
• Total Equity of BAHL, HMBL and JSBL were also increased in
the period of three years. This increasing trend show positive
sign of growth.
• The efficiency of converting total sales in to actual profits has
been increased in the period of 2013 to 2015. The profit earning
rate has been increased.
• HBML has shown greater progress in regards to ROE, it
jumped to 20.82% in year 2015 from 12.60% in year 2013 in
year 2015. JSBL also improved from 7.41% to 12.69% and
BAHL ROE has been decreased to 19.20% from 20.32% in
year 2013
• P/E ratio of BAHL and HMBL was constant with slight fluctuations but
decreased down in last year. JSBL P/E ratio has been decreased down to
4.70 in year 2015 from 10.23 in year 2013.
• The income earned by BAHL, HMBL and JSBL was totally mark-up income
except in case of HMBL for Year 2015, in that year, HMBL has earned
2.65% of total income as non-mark up income.
 Recommendations
• SWOT analysis should be conducted by each bank.
• R&D department should conduct proper survey and
research before the introduction of any scheme or
product in their product line or in introduction of any new
branch.
• All of three banks should take advantage from prevailing
technology available in banking sector.
• The documentary procedures should be made in such
way that they can create ease for customers.
• Before introduction of new scheme banks should use
electronic and print media which is beneficial for both
customers and banks
Thank You