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Performance evaluation of Eastern Bank Ltd.
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  • 1. Topic-performance evaluation of- EASTERN BANK LTD.
  • 2. 01 TemplateMARUF AHMED 1785 WUBO1/11/33/1785CLASS ROLE REGITRATION NUMBER
  • 3. 02To analyze performance of Eastern Bank Limited (EBL) bycalculating different financial ratios, we use following ratios- 1. Current ratio 2. Acid-test(quick) ratio 3. ROE (Return on Equity) 4. ROA (Return on Asset) 5. Profit Margin 6. Net interest margin 7. Loan ratio 8. EPS (Earning Per Share) 9. P/E (Price Earning) Ratio 10. Debts to total assets ratio 11. Times interest earned
  • 4. 03 Current ratio: Year 2008 2009 2010Current 5435,17,95,983 6833,03,33,103 8248,85,76,181assets Current 4722,56,00,000 5620,58,00000 6474,64,00000liabilitiesCurrent 1.15 1.22 1.28 ratio
  • 5. 04 Current ratio 1.30 1.28 1.25 1.22 1.20 1.15 1.15 Current ratio 1.10 1.05 2008 2009 2010Current ratio of EBL in 2008,2009,2010 shows anincreasing trend. Which indicates its efficiency in conducting its existing operation.
  • 6. 05 Acid-test(quick) ratio: Year 2008 2009 2010 Cash 351,85,46,161 340,24,40,722 368,13,27,496 Short-terminvestments 44,00,79,520 27,83,05,675 258,80,55,228Receivables(n 0.0 0.0 3,00000 et) Current 4722,56,00000 5620,58,00000 6474,64,00000 liabilities Acid test .08 .07 .10 ratio
  • 7. 06 Acid test(quick) ratio0.120.10 0.100.08 0.08 0.070.06 Acid test(quick)0.04 ratio0.020.00 2008 2009 2010EBL’s Acid test ratio in 2008 is .08 but it decreases in 2009and it’s overcome in 2010. So, EBL is does well in 2010.
  • 8. 07TITAS BISWAS 1759 WUBO1/11/33/1759CLASS ROLE REGITRATION NUMBER
  • 9. 08 ROE (Return on Equity): Year 2008 2009 2010 NetIncome 79,83,53,197 145,89,91,932 299,53,00000 TotalEquity 473,33,58,666 843,41,81,804 1225,69,81,400 ROE 16.87% 17.3% 24.44%
  • 10. 09 ROE(Return on Equity) 30.00% 25.00% 24.44% 20.00% 15.00% 16.87% 17.30% ROE(Return on 10.00% Equity) 5.00% 0.00% 2008 2009 2010 By this ratio we see that in 2008 EBL’s ROE is relatively lowerthan 2009 & 2010 . But in 2009 it is increased & also continuous incensement is going on. Therefore, investors will attract more effectively to invest.
  • 11. 10 ROA (Return on Asset): Year 2008 2009 2010 NetIncome 79,83,53,197 145,89,91,932 299,53,00000TotalAsset 5435,17,95,983 6833,03,33,103 8248,85,76,181 ROA 1.47% 2.14% 3.63%
  • 12. 11 ROA(Return on asset) 4.00% 3.63% 3.00% 2.00% 2.14% ROA(Return on 1.47% asset) 1.00% 0.00% 2008 2009 2010Managing asset or handling asset is the most important part of an organization. Here, we see that Eastern Bank Ltd. Continually improving in Managing their asset .And also in 2010, ROA is much better than others.
  • 13. 12 WINTERTARIQUL ISLAM 1546 WUBO1/11/33/1546CLASS ROLE REGITRATION NUMBER
  • 14. 13 Profit Margin: Year 2008 2009 2010 Net 79,83,53,197 145,89,91,932 299,53,00000 IncomeOperating revenue 370,16,32,829 461,76,33,138 607,98,00000 Profit Margin 21.57% 31.60% 49.27%
  • 15. 14 Profit margin 60.00% 50.00% 49.27% 40.00% 30.00% 31.60% 20.00% 21.57% Profit margin 10.00% 0.00% 2008 2009 2010EBL’s profit margin ratio in 2008 is 21.57% and it increases in 2009,2010. So, EBL is doing well day by day.
  • 16. 15 Net Interest Margin: Year 2008 2009 2010 5,224,413,145 6,186,163,190 6,995,727,668 3,675,380,751 4,032,711,612 4,011,262,529 54,351,795,983 68,330,333,103 82,488,576,181Net Interest 0.029 0.032 0.036 Margin
  • 17. 16 Net interest Margin 0.040 0.036 0.030 0.032 0.029 0.020 Net interest Margin 0.010 0.000 2008 2009 2010EBL’s profit margin ratio in 2008 is 21.57% and itincreases in 2009,2010. company therefore has anet positive return.
  • 18. 17SHARNA YESMIN 1760 WUBO1/11/33/1760CLASS ROLE REGITRATION NUMBER
  • 19. 18 Loan ratio: Year 2008 2009 2010 38,632,083,3 45,277,521,18 54,498,712,05Net loan 00 5 5 Total 54,351,795,9 68,330,333,10 82,488,576,18 asset 83 3 1 Loan 71.08% 66.26% 66.07% ratio
  • 20. 19 Loan ratio 72.00% 71.08% 70.00% 68.00% 66.00% 66.26% 66.07% Loan ratio 64.00% 62.00% 2008 2009 2010 EBL use their asset against loan very well like more than 50%. So, it is the good sign to EBL. But in 2009 and 2010 it graduallydecreases. So, EBL must have to concentrate on this & solve the problem.
  • 21. 20 EPS (Earning Per Share): Year 2008 2009 2010Net Income 79,83,53,197 145,45,41,675 248,47,46,373 No. of 1,38,69,000 29,09,60,066 29,20,81,140Shares Issue EPS 57.56 5.00 8.50
  • 22. 21 EPS(Earning per share) 70.00 60.00 57.56 50.00 40.00 30.00 EPS(Earning 20.00 per share) 10.00 8.50 5.00 0.00 2008 2009 2010 EPS of EBL 2008 is good but in 2009 it is too much lower due to unstable share market condition . In 2010 we seethat EPS of EBL is increasing but not up to the mark. EBL is trying to recover it.
  • 23. 22PROVAS MADHU 1758 WUBO1/11/33/1758CLASS ROLE REGITRATION NUMBER
  • 24. 23 P/E (Price Earning) Ratio: Year 2008 2009 2010Market Price of 589.30 55.10 94.20 per ShareAnnual Earnings 57.56 5.00 8.50per Share (EPS) P/E (Price 10.24 11.02 11.08 Earning) Ratio
  • 25. 24 P/E(Price earning ratio) 11.50 11.00 11.02 11.08 10.50 P/E(Price 10.24 earning ratio) 10.00 9.50 2008 2009 2010EPS of EBL 2008 it is lower. Somehow external factors are not work properly for that P/E ratio decreasing. But it is increasing in 2009 and 2010.
  • 26. 25 Debts to total asset Ratio: Year 2008 2009 2010 Total debt 272,41,00000 464,97,00000 233,77,00000 Total asset 5435,17,95,983 6833,03,33,103 8248,85,76,181Debts to total .05 .07 .03 asset ratio
  • 27. 26 Debts to tatal asset ratio 0.08 0.07 0.06 0.05 0.04 Debts to tatal 0.03 asset ratio 0.02 0.00 2008 2009 2010Debts to total asset ratio is doing better when it’s decreasing. Herewe see that in 2008,2009 this rate is increase & in 2010 its ratebecome lower. So, EBL is standing in a low risk position.
  • 28. 27ZANNATUL FERDOUS 1765 WUBO1/11/33/1765CLASS ROLE REGITRATION NUMBER
  • 29. 28 Times interest earned: Year 2008 2009 2010Income before income taxes 19,310,01,988 2,70,06,98,662 410,88,73,291 Interest expense 367,53,80,751 403,27,11,612 401,12,62,529Times interest earned 1.53 1.67 2.03
  • 30. 29 Times interest earned 2.50 2.00 2.03 1.50 1.53 1.67 1.00 Times interest 0.50 earned 0.00 2008 2009 2010EBL’s Times interest earned standing in 2010 is 2.03, which is better from previous years.
  • 31. 30 Findings EBL is continually improving its current ratio. It increases at a increasing rate during last few years. Acid test ratio of EBL is not so good in the last few years as It is less than 1 can not pay their current liabilities and should be looked at with extreme care. EBL’s ROE shows an increasing trend over the last few years. Which is good. EBL is doing well day-by-day in managing ROA. Which is a good trend. Profit margin rising day by day. Which is good for making future price policy. EPS indicates that the rate of growth of EBL’s earnings are growing. EBL is improving in p/e ratio. this would lead most investors to invest in the company. EBL has low debts to total asset ratio. Which is a good side. Times interest earned is good and increasing day by day.
  • 32. 32 Recommendation: Current ratio below 1 shows critical liquidity on the other hand A current ratio higher than 2.5 might indicate existence of idle or underutilized resources in the company. So, EBL should try to improve its current ratio carefully. Quick ratio of EBL less than 1.00. So ,EBL should give more concentration in their existing operation. EBL should work more to improve its ROE, so that, shareholders attract more to the company. An increasing trend of ROA indicates that the profitability of the company is improving. So, it is necessary to initiate a new project to increase ROA. Ebl should improve their pricing strategy. So that they can defeat their competitors in pricing war. EBL’s EPS is growing but which is not as much as 2008. possible action should need to take to recover this condition. Higher P/E ratio attract more investors. So,EBL should look forward to that side. Debts to total asset ratio is low,but it will go high if the company don’t utilize the asset properly. If times interest earned ratio less than 1.0, then the firm cannot meet its total interest expense on its debt. So EBL should work carefully.
  • 33. 31 ConclusionThe evaluating of bank performance is a complex processinvolving interactions between the environment, internaloperations, and external activities. The primary method ofevaluating internal performance is by analyzing accountingstatements. Financial ratios of accounting items permit anhistorical sketch of bank returns and risks.At Eastern Bank, they believe that, in order tosupport the success of their businesscustomers, they need to take the time tounderstand their unique challenges.