Thesis

The Measurement of Performance Evaluation of Private Commercial Banks Operating in Bangladesh. Page: 1
1. Introduction
Banking system plays a very important role in the economic life of the nation. The health of
the economy is closely related to the soundness of its banking system. In a developing
country like Bangladesh the banking system as a whole play a vital role in the progress of
economic development. A bank as a matter of fact is just like a heart in the economic
structure and the Capital provided by it is like blood in it. As long as blood is in circulation
the organs will remain sound and healthy. If the blood is not supplied to any organ then that
part would become useless. So if the finance is not provided to agriculture sector or industrial
sector, it will be destroyed. Loan facility provided by banks works as an incentive to the
producer to increase the production. Banking is now an essential part of our economic
system. Modern trade and commerce would almost be impossible without the availability of
suitable banking services. First of all, banking promotes savings. All manner of people, from
the ordinary laborers and workers to the rich land owners and businessmen, can keep their
money safely in banks and saving centers.
Secondly, banking promotes investments. Banks easily invest the money they get in industry,
agriculture and trade. They either invest it directly or advance loans to other investors.
Thirdly, it is most through banks that foreign trade is carried on. Whether we export or
import, it is through banks that money is transferred from one country to another. For
example, bills of exchange and letters of credit are the regular ways banks use to transfer
money. A number of recent studies, however, indicate that the banking sector plays a more
important role than it was believed earlier.
2. Objectives of the Study
The specific objectives of the study are as follows;
i) To evaluate the financial performance by the measurement techniques of private
commercial Banks of Bangladesh.
ii) To analyze the comparative study of financial performance of those Private
Commercial Banks of Bangladesh.
iii) To recommend remedial measures for the development of selected Private
Commercial Banks of Bangladesh.

3. Scope & Methodology of the study
The present study has been carried out to evaluate the performance of selected private
commercial banks of Bangladesh. The selected banks are
a) Arab Bangladesh Limited (AB Bank Limited),
b) Bank Asia,
c) Brac Bank Limited,
d) Dutch Bangla Bank Limited (DBBL),
e) Mutual Trust Bank Limited (MTBL),
f) National Credit and Commerce Bank Limited (NCC Bank Limited),
g) The Prime Bank Limited,
h) Trust Bank Limited,
i) United Commercial Bank Limited (UCBL),
j) Uttara Bank Limited.
This study has been based mainly on data from secondary sources. The relevant data and
information were collected from Annual Reports of selected commercial banks of
Bangladesh, Relevant articles and literatures in this context have also been consulted. In this
article, banks are analyzed last two years data of selected private commercial banks of
Bangladesh. For evaluating the performance of selected private commercial banks of
Bangladesh data has been analyzed through the various financial measurement i.e, profit
ratios (return on equity, return on assets, net interest margin and earning per share of stocks
EPS), risk ratios (provision for loss ratio and loan ratio) and efficiency ratios (operating
efficiency ratio and employee productivity ratio). These ratios have been calculated by
financial equation and represent in table and bar chart. Both horizontal and vertical
comparison also represented by chart. In addition credit-risk rating of the selected private
commercial banks is shown which are measured by Credit Rating Agency of Bangladesh Ltd.
(CRAB) and Credit Rating Information and Service Ltd. (CRISL).

4. Function of Bangladesh Bank (BB)
Bangladesh Bank (BB) has been working as the central bank since the country's
independence. Its prime jobs include issuing of currency, maintaining foreign exchange
reserve and providing transaction facilities of all public monetary matters. Bangladesh Bank
(BB) regulates and supervises the activities of all banks. BB is also responsible for planning
the government's monetary policy and implementing it thereby. The BB has a governing
body comprising of nine members with the Governor as its chief. Apart from the head office
in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong,
Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal.
5. An overview of selected private commercial banks in Bangladesh
5.1. Arab Bangladesh Bank Limited
AB Bank Limited is one of the first generation private commercial banks (PCBs),
incorporated in Bangladesh on 31 December 1981 as a public limited company under the
Companies Act 1913, subsequently replaced by the Companies Act 1994, and governed by
the Banking Companies Act 1991. The Bank went for public issue of its shares on 28
December 1983 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock
Exchange respectively. AB Bank Limited has 78 Branches including 1 Islami Banking
Branch, 1 Overseas Branch in Mumbai, India. The Bank has a subsidiary company, AB
International Finance Limited, incorporated in Hong Kong. The Bank through its Branches
and non-banking subsidiary provides a diverse range of financial services and products in
Bangladesh and in certain international markets. The Bank has expanded its capital market
oriented service horizon to its customers through Merchant Banking Wing.
5.2. Bank Asia Limited
Bank Asia Limited is one of the third generation private commercial banks (PCBs),
incorporated in Bangladesh on 28 September 1999 as a public limited company under the
Companies Act 1994, and governed by the Bank Companies Act 1991. The Bank went for
public issue of its shares on 23 September 2003 and its shares are listed with Dhaka Stock
Exchange Limited and Chittagong Stock Exchange Limited. At present the Bank has 41

branches, 30 own ATM booths and 33 shared ATM booths. Bank Asia Limited acquired the
business of Bank of Nova Scotia (incorporated in Canada), Dhaka, in the year 2001 and at
the beginning of the year 2002, the Bank also acquired the Bangladesh operations of Muslim
Commercial Bank Limited (MCBL), a bank incorporated in Pakistan, having two branches at
Dhaka and Chittagong. In taking over the Bangladesh operations, all assets and certain
specific liabilities of MCBL were taken over by Bank Asia Limited at book values.
5.3. Brac Bank Limited
Brac Bank Limited is a scheduled commercial bank established under the Bank Companies
Act, 1991 and incorporated as a public company limited by shares on 20 May, 1999 under
the Companies Act, 1994 in Bangladesh. The primary objective of the bank is to carry on all
kind of banking businesses. The bank could not start its operations till 3 June, 2001 since the
activity of the Bank was suspended by the high Court of Bangladesh. Subsequently, the
judgment of the high court was set aside and dismissed by the Appellate Division of the
Supreme Court on 4 June, 2001 and accordingly, the Bank started its operations from 4 July,
2001. At Present the Bank has 69 (sixty nine) branches, 59 SME service centers, 145 zonal
offices and 429 unit offices of SME. The registered address of the Bank is 1, Gulshan
Avenue, Gulshan-1, Dhaka-1212, Bangladesh. BRAC bank is listed with Dhaka Stock
Exchange and Cittagong Stock Exchange as a publicly traded company on 28 January, 2007
and 24 January, 2007 respectively for its general class of shares. The principle activities of
the Bank are banking and related activities such as accepting deposits, personal banking,
trade financing, SME, Retail and Corporate credit, lease financing, project financing, issuing
debit and credit cards, SMS banking, internet banking, phone banking, call center, remittance
facilities, dealing in government securities etc. There have been no significant changes in the
nature of the principle activities of the Bank during the financial year under review.
5.4. Dutch-Bangla Bank Limited
Dutch-Bangla Bank Limited (the Bank) is a scheduled commercial bank. The Bank was
established under the Bank Companies Act 1991 and incorporated as a public limited
company under the Companies Act 1994 in Bangladesh with the primary objective to carry
on all kinds of banking business in Bangladesh. The Bank is listed with Dhaka Stock

Exchange Limited and Chittagong Stock Exchange Limited. DBBL- a Bangladesh European
private joint venture scheduled commercial bank commenced formal operation from June 3,
1996.
5.5. Mutual Trust Bank Limited
Mutual Trust Bank Limited was incorporated in Bangladesh in the year 1999 as a banking
company under the company Act, 1994. All types of commercial banking services are
provided by the bank within the stipulations laid down by the bank Companies Act, 1991 and
directive as received from Bangladesh Bank from time to time. The bank started its
commercial business from October 24, 1999. The shares of the bank are listed with the
Dhaka and Cittagong Stock Exchange, as a publicly quoted company for its shares. The bank
has 36 branches and 5 (Five) SME service centers, with no overseas branch as on December
31, 2009. The principle activities of the bank are to provide all kinds of commercial banking
services to its customers through its branches in Bangladesh.
5.6. National Credit and Commerce Bank Limited:
The National Credit and Commerce Bank Limited (NCCBL) was formed as a public limited
banking company incorporated in Bangladesh under the companies Act, 1994 with primary
objective to carry on all kind of banking business in and outside Bangladesh. The principle
place of business is the registered office at 7-8, Motijheel Commercial Area, Dhaka-1000. It
has 57 branches all over the Bangladesh. It carries out all banking activities through it
branches in Bangladesh. The bank went for initial public offering in 1999 and its share is
listed with Dhaka and Cittagong Stock Exchange Limited as a publicly traded company for
its general class of share. The commercial banking business activities of the bank encompass
a wide range of services including accepting deposits, making loans, discounting bills,
conducting money transfer, foreign exchange transaction and performing other related
services such as safekeeping collection, issuing guarantees, acceptance and latter of credit
through its branches in Bangladesh.

5.7. The Prime Bank Limited
The Prime Bank Limited ("the Bank") was incorporated as a public limited company in
Bangladesh under Companies Act, 1994. It commenced its banking business with one branch
from April 17, 1995 under the license issued by Bangladesh Bank. Presently the Bank has 84
branches, 5 (five) SME Centre all over Bangladesh, and a booth located at Dhaka Club,
Dhaka. The Bank had no overseas branches as at 31 December 2009. Out of the above 84
branches, 05 (five) branches are designated as Islamic Banking Branch complying with the
rules of Islamic Shariah, the modus operandi of which is substantially different from other
branches run on conventional basis. The Bank went for Initial Public Offering in 1999 and its
share is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited
as a publicly traded company for its general class of shares. The registered office of the
company is located at 119-120, Motijheel C/A, Dhaka-1000. The principal activities of the
Bank are to provide all kinds of commercial banking services to its customers through its
branches and SME centre in Bangladesh.
5.8. Trust Bank Limited
Trust Bank Limited is a scheduled commercial bank established under the Bank Companies
Act, 1991 and incorporated as a Public Limited Company under the Companies Act, 1994 in
Bangladesh on 17 September 1999 with the primary objective to carry on all kinds of
banking business in and outside Bangladesh. The Bank had Forty Two (42) branches and
Four (4) SME Service Centers are operating in Bangladesh as of 31 December 2009. The
Bank had no overseas branches as of 31 December 2009. The bank is listed with Dhaka
Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded
company for its general class of shares. The registered office of the Bank is located at 36,
Dilkusha Commercial Area, Dhaka – 1000 Initially the bank has started its operation in the
name of "The Trust Bank Limited" but on 12 November 2006 it was renamed as “Trust Bank
Limited” by the Registrar of Joint Stock Companies. The new name of the bank was
approved by Bangladesh Bank on 03 December 2006. Trust Bank Limited offers full range
of banking services that include deposit banking, loans & advances, export, import and
financing national and international remittance facilities etc.

5.9. United Commercial Bank Limited
The United Commercial Bank Limited (UCBL) was incorporated in Bangladesh as public
limited company with limited liability as on 26 June, 1983 under Companies Act, 1913
(subsequently replaced by Companies Act, 1994) and commenced its operation immediately
after incorporation with due permission from Bangladesh Bank w.e.f. 13 November, 1983. It
has 98 branches all over the Bangladesh. The principle place of business and the registered
office were located at 60, Motijheel Commercial Area, Federation Bhaban, Dhaka-1000.
Principle place of business have been changed from January 2010 to Plot:CWS(A)1, Gulshan
Avenue, Dhaka1212. The principle activities carried out by the bank include all kinds of
commercial banking activities/services to its customers through its branches and electronic
delivery channels in Bangladesh.
5.10. Uttara Bank Limited
Uttara Bank Limited had been a nationalized bank in the name of Uttara Bank under the
Bangladesh Bank (Nationalization) order 1972, formally known as Eastern Banking
Corporation Limited which is started functioning on and from 28 Jan, 1965. Consequent
upon the amendment of the Bangladesh Bank (Nationalization) order 1972, the Uttara Bank
was converted into Uttara Bank Limited as a public limited company in the year 1983. The
Uttara Bank Limited was incorporated as a banking company on 29 Jun, 1983 and obtained
business commencement certificate on 21 Aug, 1983. The bank floated its share in the year
1984.
Uttara Bank Limited is one of the front ranking first generation private sector commercial
bank in Bangladesh. The bank has been carrying out business through its 211 branches
spreading all over the country. The management of the bank consists of a team lead by senior
bankers with vast experience in national and international markets. The bank’s operation has
achieved the confidence of its customers with sound fundamentals in respect to deposit
accumulation, loans and advances, import and export business. Overall performance of
Uttara Bank Limited has been improved for maintaining effective and constructive principles
of Bangladesh Bank.

6. Performance Evaluation of Selected Private Commercial Banks
6.1. Profit Ratios
6.1.1. Return on Equity
Return on equity is a measure of the rate of return following to the banks shareholder. It
approximates the net benefit that the stockholders have received from investing their capital
in the bank i.e. placing their funds at risk in the hope of earning a suitable profit. The higher
value of ROE is optimistic. Return on Equity is calculated as follows;
Net Income
Return on Equity % =-----------------------------x 100
Total Equity Capital
Table 1.1: Data for Return on Equity of Arab Bangladesh Bank Limited
Year Net Income after Tax Total Equity Capital ROE%
2009 3362556000 10086522932 33.34
2008 2300621640 6722505347 34.22
Comment: According to ROE, 2008 have better performance than
2009 due to higher value of ROE.
Figure 1.1: ROE of AB Bank

Table 1.2: Data for Return on Equity of Bank Asia
2009 1327184458 4954144557 26.79
2008 686704045 3332957347 20.60
Comment: Bank Asia shows better performance in the year of
2009 than 2008.
Table 1.3: Data for Return on Equity of Brac Bank
2009 1303588940 8150954413 15.99
2008 973450830 5437525647 17.90
Comment: Due horizontal comparison of ROE Brac
Bank has better performance in the year of 2008.
Figure 1.2: ROE of Bank Asia
Figure 1.3: ROE of Brac Bank

Table 1.4: Data for Return on Equity of DBBL
2009 1137698057 4351797259 26.14
2008 821665049 3220592183 25.51
Comment: In the year 2009, DBBL had better ROE
than 2008.
Table 1.5: Data for Return on Equity of MTBL
2009 820605298 3684509112 22.27
2008 305031285 2483094698 12.28
Comment: MTBL shows better performance in the
year 2009 than 2008 due to higher ROE.
Figure 1.4: ROE of DBBL
Figure 1.5: ROE of MTBL

Table 1.6: Data for Return on Equity of NCC Bank
2009 882277833 4055298244 21.76
2008 677176546 2958596863 22.89
Comment: In the year 2008, NCC bank had higher
ROE that indicates better performance than 2009.
Table 1.7: Data for Return on Equity of Prime Bank
2009 2784218989 11745223217 23.71
2008 1231832174 6696770778 18.39
Comment: Prime Bank has shown better
performance in the year 2009 due higher value of
ROE in this year.
Figure 1.6: ROE of NCC Bank
Figure 1.7: ROE of Prime Bank

Table 1.8: Data for Return on Equity of Trust Bank
2009 610905838 3754866056 16.27
2008 463049546 3119652987 14.84
Comment: Performance of Trust Bank was better in
the 2009 than 2008 due to higher value ROE.
Table 1.9: Data for Return on Equity of UCBL
2009 932697890 5705466765 16.35
2008 764745570 4384243099 17.44
Comment: UCBL has been shown higher ROE in
the year 2008 that indicates better performance.
Figure 1.8: ROE of Trust Bank
Figure 1.9: ROE of UCBL

Table 1.10: Data for Return on Equity of Uttara Bank
2009 1105226569 6206949763 17.81
2008 1138518172 3688842300 30.86
Comment: ROE in the year 2008 for Uttara Bank
has shown higher than 2009. So, better
performance was occurred in the year 2008.
Table 1.10: Data for Return on Equity of All Banks
Bank Year ROE
i) AB Bank
2009 33.34
2008 34.22
ii) Bank Asia
2009 26.79
2008 20.60
iii) Brac Bank
2009 15.99
2008 17.90
iv) DBBL
2009 26.14
2008 25.51
v) MTBL
2009 22.27
2008 12.28
vi) NCC Bank
2009 21.76
2008 22.89
vii) Prime Bank
2009 23.71
2008 18.39
viii) Trust Bank
2009 16.27
2008 14.84
ix) UCBL
2009 16.35
2008 17.44
x) Uttara Bank
2009 17.81
2008 30.86
Figure 1.10: ROE of Uttara Bank

Comment: In the vertical comparison ROE of AB Bank is highest among
these selected Banks.
6.1.2. Return on Assets
Return on Assets is primary an indicator of managerial efficiency. It indicates
how capably the management of a bank has been converting the institution’s
assets into earning. Return on Assets is calculated as follows;
Net Income
Return on Assets% =---------------------- x 100
Total Assets
Figure 1.11: ROE of All Banks

Table 2.1: Data for Return on Assets of AB Bank
Year Net Income after Tax Total Assets ROA%
2009 3362556000 106912312383 3.15
2008 2300621640 84053612585 2.74
Comment: ROA in the year 2009 for AB Bank has
shown higher than 2008. So, better performance
was occurred in the year 2008.
Table 2.2: Data for Return on Assets of Bank Asia
2009 1327184458 68663199976 1.93
2008 686704045 53371247063 1.29
Comment: Bank Asia has been shown higher ROE
in the year 2009 that indicates better performance.
Figure 2.1: ROA of AB Bank
Figure 2.2: ROA of Bank Asia

Table 2.3: Data for Return on Assets of Brac Bank
2009 1303588940 94581304460 1.38
2008 973450830 72441893391 1.34
Comment: Performance of Brac Bank was better
in the 2009 than 2008 due to higher value ROA.
Table 2.4: Data for Return on Assets of DBBL
2009 1137698057 81480529482 1.40
2008 821665049 60682073066 1.35
Comment: DBBL has shown better performance in
the year 2009 due higher value of ROA in this
year.
Figure 2.3: ROA of Brac Bank
Figure 2.4: ROA of DBBL

Table 2.5: Data for Return on Assets of MTBL
2009 820605298 52774766068 1.55
2008 305031285 38964974123 0.78
Comment: In the year 2008, MTBL had higher
ROA that indicates better performance than 2009.
Table 2.6: Data for Return on Assets of NCC Bank
2009 882277833 57365523726 1.54
2008 677176546 42471641370 1.59
Comment: NCC Bank shows better performance in
the year 2008 than 2009 due to higher ROA.
Figure 2.5: ROA of MTBL
Figure 2.6: ROA of NCC Bank

Table 2.7: Data for Return on Assets of Prime Bank
2009 2784218989 124806383846 2.23
2008 1231832174 110437103311 1.12
Comment: In the year 2009, Prime Bank had better
ROA than 2008.
Table 2.8: Data for Return on Assets of Trust Bank
2009 610905838 54206648607 1.13
2008 463049546 38534721576 1.20
Comment: Trust Bank shows better performance in the year of
2008 than 2009 due to higher value of ROA.
Figure 2.7: ROA of Prime Bank
Figure 2.8: ROA of Trust Bank

Table 2.9: Data for Return on Assets of UCBL
2009 932697890 90483781843 1.03
2008 764745570 64794884487 1.18
Comment: According to ROA, 2008 have better performance
than 2009 due to higher value of ROA in the UCBL.
Table 2.10: Data for Return on Assets of Uttara Bank
2009 1105226569 71945998489 1.54
2008 1138518172 58444332118 1.95
Comment: In the year 2008, Uttara Bank had higher
ROA that indicates better performance than 2009.
Figure 2.9: ROA of UCBL
Figure 2.10: ROA of Uttara Bank

Table 2.11: Data for Return on Assets of All Banks
Bank Year ROA
i) AB Bank
2009 3.15
2008 2.74
ii) Bank Asia
2009 1.93
2008 1.29
iii) Brac Bank
2009 1.38
2008 1.34
iv) DBBL
2009 1.40
2008 1.35
v) MTBL
2009 1.55
2008 0.78
vi) NCC Bank
2009 1.54
2008 1.59
vii) Prime Bank
2009 2.23
2008 1.12
viii) Trust Bank
2009 1.13
2008 1.20
ix) UCBL
2009 1.03
2008 1.18
x) Uttara Bank
2009 1.54
2008 1.95
Comment: On the basis of ROA, among these banks AB bank’s performance is the best.
Figure 2.10: ROA of All Banks

6.1.3. Net Interest Margin
Net interest margin is a measurement of the difference between the interests incomes
generate by banks or other financial institutions and the amount of interest paid out of their
lenders (for example deposit). It is considered similar financial companies. Net Interest
Margin is calculated as follows;
Net interest income – Total interest expenses
Net Interest Margin =---------------------------------------------------------------- x 100
Total assets – Non-performing loan
Table 3.1: Data for Net Interest Margin of AB Bank
Year Total Interest
Income
Total Interest
Expenses
Total Assets Non Performing
Loan
Net Interest
Margin (%)
2009 9,047,169,208 6,139,114,501 106912312383 779,148,078 2.74
2008 7,366,847,213 5,332,444,075 84053612585 1,334,088,577 2.46
Comment: AB Bank shows better performance in the
year 2009 than 2008 due to higher NIM.
Figure 3.1: Net Interest Margin of AB Bank

Table 3.2: Data for Net Interest Margin of Bank Asia
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 6,247,494,941 4,498,016,814 68663199976 498,328,919 2.57
2008 4,973,111,164 3,739,016,507 53371247063 868,151,604 2.35
Comment: According to NIM, 2009 have better performance than
2008 due to higher value of NIM in the Bank Asia.
Table 3.3: Data for Net Interest Margin of Brac Bank
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 9,171,367,664 6,073,232,757 94581304460 1,382,674,637 3.32
2008 8,021,101,674 4,865,091,805 72441893391 783,975,496 4.40
Comment: Brac Bank has shown better performance
in the year 2008 due higher value of NIM in this year.
Figure 3.2: Net Interest Margin of Bank Asia
Figure 3.3: Net Interest Margin of Brac Bank

Table 3.4: Data for Net Interest Margin of DBBL
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 6,162,588,658 4,095,761,110 81,480,529,482 1,149,836,033 2.57
2008 5,453,919,588 3,636,244,111 60,682,073,066 642,490,843 3.03
Comment: According to NIM, 2008 have better performance
than 2009 due to higher value of NIM in the DBBL.
Table 3.5: Data for Net Interest Margin of MTBL
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 4,279,499,839 3,409,650,043 52774766068 843,280,000 1.67
2008 3,529,718,692 2,792,584,222 38964974123 1,011,697,000 1.94
Comment: MTBL has been shown higher NIM in the year
2008 that indicates better performance.
Figure 3.4: Net Interest Margin of DBBL
Figure 3.5: Net Interest Margin of MTBL

Table 3.6: Data for Net Interest Margin of NCC Bank
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 5,449,728,058 4,099,984,694 57365523726 1,902,581,000 2.43
2008 3,861,806,484 2,738,449,472 42471641370 1,353,310,000 2.73
Comment: Performance of NCC Bank was better in the
2008 than 2009 due to higher value NIM.
Table 3.7: Data for Net Interest Margin of Prime Bank
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 10,831,380,275 8,426,118,565 124806383846 5,152,000 1.93
2008 9,095,891,683 7,126,309,515 110437103311 7,532,000 1.78
Comment: Prime Bank has shown better performance
in the year 2009 due higher value of NIM in this year.
Figure 3.6: Net Interest Margin of NCC Bank
Figure 3.7: Net Interest Margin of Prime Bank

Table 3.8: Data for Net Interest Margin of Trust Bank
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 4,027,199,131 3,112,822,489 54206648607 405,261,000 1.70
2008 3,634,651,908 2,462,230,880 38534721576 280,428,000 3.06
Comment: In the year 2008, Trust Bank had higher NIM
that indicates better performance than 2009.
Table 3.9: Data for Net Interest Margin of UCBL
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 6,965,321,635 4,348,234,862 90483781843 985,578,000 2.92
2008 5,749,293,669 3,740,765,703 64794884487 1,124,258,000 3.15
Comment: UCBL has been shown higher NIM in the
year 2008 that indicates better performance.
Figure 3.8: Net Interest Margin of Trust Bank
Figure 3.9: Net Interest Margin of UCBL

Table 3.10: Data for Net Interest Margin of Uttara Bank
Year Total Interest
Income
Total Interest
Expenses
Loan
Net Interest
Margin (%)
2009 4,492,433,245 2,790,427,461 71,945,998,489 2,497,632,000 2.45
2008 4,084,288,089 2,200,521,205 58,444,332,118 2,329,660,000 3.36
Comment: In the year 2008, Uttara Bank had higher
NIM that indicates better performance than 2009
Table 3.11: Data for Net Interest Margin of All Banks
Bank Year Net Interest Margin
i) AB Bank
2009 2.74
2008 2.46
ii) Bank Asia
2009 2.57
2008 2.35
iii) Brac Bank
2009 3.32
2008 4.40
iv) DBBL
2009 2.57
2008 3.03
v) MTBL
2009 1.67
2008 1.94
vi) NCC Bank
2009 2.43
2008 2.73
vii) Prime Bank
2009 1.93
2008 1.78
viii) Trust Bank
2009 1.70
2008 3.06
ix) UCBL
2009 2.92
2008 3.15
x) Uttara Bank
2009 2.45
2008 3.36
Figure 3.10: Net Interest Margin of Uttara Bank

Comment: On the basis of NIM, among these banks Brac Bank’s
performance is the best.
6.1.4. Earning per Share of Stocks (EPS)
A financial ratio that measured the portion of a company’s profit allocated to each
outstanding share of common stock. Earnings per share as the name indicates is the “per
share earnings” of a company in a reported period. Earning per Share of Stocks is
calculated as follows;
Net income after tax
Earnings per share = -------------------------------------------------------------
Common equity share outstanding (numbers)
Figure 3.11: Net Interest Margin of All Banks

Table 4.1: Data for EPS of AB Bank
Year Net Income after Tax Common equity share
outstanding (numbers)
EPS
2009 3362556000 25642532 131.1320
2008 2300621640 25642532 89.7190
Comment: In the year 2009, AB bank had higher
EPS that indicates better performance than 2008.
Table 4.2: Data for EPS of Bank Asia
EPS
2009 1327184458 21448125 61.8788
2008 686704045 21448125 32.0170
Comment: Bank Asia has shown better
EPS in this year.
Figure 4.1: EPS of AB Bank
Figure 4.2: EPS of Bank Asia

Table 4.3: Data for EPS of Brac Bank
EPS
2009 1303588940 20592000 63.3056
2008 973450830 20592000 47.2733
Comment: Performance of Brac Bank was better in
the 2009 than 2008 due to higher value EPS.
Table 4.4: Data for EPS of DBBL
EPS
2009 1137698057 15000000 75.8465
2008 821665049 10000000 82.1665
Comment: DBBL has been shown higher EPS in
Figure 4.3: EPS of Brac Bank
Figure 4.4: EPS of DBBL

Table 4.5: Data for EPS of MTBL
EPS
2009 820605298 17663184 46.4585
2008 305031285 17663184 17.2693
Comment: EPS in the year 2009 for MTBL has
shown higher than 2008. So, better performance
was occurred in the year 2009.
Table 4.6: Data for EPS of NCC Bank
EPS
2009 882277833 17576157 50.1974
2008 677176546 17576157 38.5281
Comment: NCC Bank shows better performance
in the year 2009 than 2008 due to higher EPS.
Figure 4.5: EPS of MTBL
Figure 4.6: EPS of NCC Bank

Table 4.7: Data for EPS of Prime Bank
EPS
2009 2784218989 35546875 78.3253
2008 1231832174 35546875 34.6537
EPS than 2008.
Table 4.8: Data for EPS of Trust Bank
EPS
2009 610905838 18480052 33.0576
2008 463049546 12833370 36.0817
Comment: Due horizontal comparison of EPS Trust
Bank had better performance in the year of 2008.
Figure 4.7: EPS of Prime Bank
Figure 4.8: EPS of Trust Bank

Table 4.9: Data for EPS of UCBL
EPS
2009 932697890 17907408 52.0845
2008 764745570 17907408 42.7055
Comment: UCBL shows better performance in the year of
2009 than 2008 due to EPS.
Table 4.10: Data for EPS of Uttara Bank
EPS
2009 1105226569 15973184 69.1926
2008 1138518172 15973184 71.2768
Comment: According to EPA, 2008 have better performance
than 2009 due to higher value of EPS of the Uttara Bank.
Figure 4.9: EPS of UCBL
Figure 4.10: EPS of Uttara Bank

Table 4.11: Data for EPS of All Banks
Bank Year EPS
i) AB Bank
2009 131.1320
2008 89.7190
ii) Bank Asia
2009 61.8788
2008 32.0170
iii) Brac Bank
2009 63.3056
2008 47.2733
iv) DBBL
2009 75.8465
2008 82.1665
v) MTBL
2009 46.4585
2008 17.2693
vi) NCC Bank
2009 50.1974
2008 38.5281
vii) Prime Bank
2009 78.3253
2008 34.6537
viii) Trust Bank
2009 33.0576
2008 36.0817
ix) UCBL
2009 52.0845
2008 42.7055
x) Uttara Bank
2009 69.1926
2008 71.2768
Comment: Due to EPS, AB Bank’s performance is the best.
Figure 4.11: EPS of All Banks

6.2. Risk Ratios
6.2.1. Provision for Loss Ratio
Each banks provides an estimated of future loan losses as on expenses on its income
statement. This important figure is a reserve account to cover unexpected defaults on loans
by borrowers. These are generally referred to as nonperforming loans. The higher the
nonperforming loan and charge-off percentages, the higher the provision for loan losses
should probably be. Consequently, this would reduce net income and earnings per share.
Provision for Loss Ratio is calculated as follows;
Provision for loan
Provision for Loss Ratio =---------------------------------x 100
Total loans & Leases
Table 5.1: Data for Provision for Loss Ratio of AB Bank
Year Provision for Loan Total Loans & Leases Provision for Loss
Ratio (%)
2009 1137698057 70879933446 1.61
2008 821665049 56708771906 1.45
Comment: AB Bank’s Liquidity reserve was more
in the year 2009 than 2008.
Figure 5.1: PLR of AB Bank

Table 5.2: Data for Provision for Loss Ratio of Bank Asia
Ratio (%)
2009 330845234 50267917439 0.66
2008 499136291 39974998635 1.25
Comment: Bank Asia’s Liquidity reserve was more
in the year 2008 than 2009.
Table 5.3: Data for Provision for Loss Ratio of Brac Bank
Ratio (%)
2009 1537000000 64150835159 2.40
2008 1138548420 52676716740 2.16
Comment: Brac Bank’s Liquidity reserve was
more in the year 2009 than 2008.
Figure 5.2: PLR of Bank Asia
Figure 5.3: PLR of Brac Bank

Table 5.4: Data for Provision for Loss Ratio of DBBL
Ratio (%)
2009 1304145592 48410989619 2.69
2008 918675719 41698321269 2.20
Comment: BDDL’s Liquidity reserve was more in
the year 2009 than 2008.
Table 5.5: Data for Provision for Loss Ratio of MTBL
Ratio (%)
2009 1046928000 33883923705 3.09
2008 1051687893 28529345619 3.69
Comment: MTBL’s Liquidity reserve was more in
Figure 5.4: PLR of DBBL
Figure 5.5: PLR of MTBL

Table 5.6: Data for Provision for Loss Ratio of NCC Bank
Ratio (%)
2009 1368969000 46332688464 2.95
2008 1032889000 32687753165 3.16
Comment: NCC Bank’s Liquidity reserve was
Table 5.7: Data for Provision for Loss Ratio of Prime Bank
Ratio (%)
2009 699500000 89252222894 0.78
2008 1383500000 75156206817 1.84
Comment: Prime Bank’s Liquidity reserve was
Figure 5.6: PLR of NCC Bank
Figure 5.7: PLR of Prime Bank

Table 5.8: Data for Provision for Loss Ratio of Trust Bank
Ratio (%)
2009 212426000 32663107783 0.65
2008 196900064 27528084387 0.72
Comment: Trust Bank’s Liquidity reserve was
Table 5.9: Data for Provision for Loss Ratio of UCBL
Ratio (%)
2009 1307257503 61692218339 2.12
2008 1248915863 44446332765 2.81
Comment: UCBL’s Liquidity reserve was more in
Figure 5.8: PLR of Trust Bank
Figure 5.9: PLR of UCBL

Table 5.10: Data for Provision for Loss Ratio of Uttara Bank
Ratio (%)
2009 320000000 39451355571 0.81
2008 92550000 37141342619 0.25
Comment: Uttara Bank’s Liquidity reserve was
Table 5.11: Data for Provision for Loss Ratio of All Banks
Bank Year Provision for Loss Ratio
i) AB Bank
2009 1.61
2008 1.45
ii) Bank Asia
2009 0.66
2008 1.25
iii) Brac Bank
2009 2.40
2008 2.16
iv) DBBL
2009 2.69
2008 2.20
v) MTBL
2009 3.09
2008 3.69
vi) NCC Bank
2009 2.95
2008 3.16
vii) Prime Bank
2009 0.78
2008 1.84
viii) Trust Bank
2009 0.65
2008 0.72
ix) UCBL
2009 2.12
2008 2.81
x) Uttara Bank
2009 0.81
2008 0.25
Figure 5.10: PLR of Uttara Bank

Comment: Provision for Loan Ratio indicates the liquidity reserve of the bank. In that case,
Higher PLR makes reduced EPS, ROE and ROA. In this situation bank became safe mood.
Average value of PLR indicates higher performance. So, DBBL and Brac bank have the best
performance at the scale of PLR.
6.2.2. Loan Ratio
The amount borrowed dividend by the appraised value of the collateral expressed as a
percentage. The Ratio measures the percentage of total assets that are invested in the loan
portfolio. Management should have established a maximum goal ratio to avoid a liquidity
problem. Loan Ratio is calculated as follows;
Net loans
Loan Ratio = ------------------------ x 100
Total Assets
Figure 5.11: PLR of All Banks

Table 6.1: Data for Loan Ratio of AB Bank
Year Net loans Total Assets Loan Ratio (%)
2009 69732552194 106912312383 65.22
2008 54412358249 84053612585 64.74
Comment: AB Bank’s invested loan percentage is
higher in the year 2009 than 2008.
Table 6.2: Data for Loan Ratio of Bank Asia
2009 49196527873 68663199976 71.65
2008 38676119929 53371247063 72.47
Comment: Bank Asia’s invested loan percentage
is higher in the year 2008 than 2009.
Figure 6.1: Loan Ratio of AB Bank
Figure 6.2: Loan Ratio of Bank Asia

Table 6.3: Data for Loan Ratio of Brac Bank
2009 60141778728 94581304460 63.59
2008 49815852560 72441893391 68.77
Comment: Brac Bank’s invested loan percentage
Table 6.4: Data for Loan Ratio of DBBL
2009 46961778824 81480529482 57.64
2008 40638004789 60682073066 66.97
Comment: DBBL’s invested loan percentage is
Figure 6.3: Loan Ratio of Brac Bank
Figure 6.4: Loan Ratio of DBBL

Table 6.5: Data for Loan Ratio of MTBL
2009 31739078371 52774766068 60.14
2008 25803475127 38964974123 66.22
Comment: MTBL’s invested loan percentage is
Table 6.6: Data for Loan Ratio of NCC Bank
2009 42819764167 57365523726 74.64
2008 30096975185 42471641370 70.86
Comment: NCC Bank’s invested loan percentage is
Figure 6.5: Loan Ratio of MTBL
Figure 6.6: Loan Ratio of NCC Bank

Table 6.7: Data for Loan Ratio of Prime Bank
2009 85821795136 124806383846 68.76
2008 71746248216 110437103311 64.97
Comment: Prime Bank’s invested loan percentage
Table 6.8: Data for Loan Ratio of Trust Bank
2009 32045420783 54206648607 59.12
2008 27050756323 38534721576 70.20
Comment: Trust Bank’s invested loan percentage
Figure 6.7: Loan Ratio of Prime Bank
Figure 6.8: Loan Ratio of Trust Bank

Table 6.9: Data for Loan Ratio of UCBL
2009 58371381878 90483781843 64.51
2008 40744866774 64794884487 62.88
Comment: UCBL’s invested loan percentage is
Table 6.10: Data for Loan Ratio of Uttara Bank
2009 38232100087 71,945,998,489 53.14
2008 36132094226 58,444,332,118 61.82
Comment: Uttara Bank’s invested loan percentage
Figure 6.9: Loan Ratio of UCBL
Figure 6.10: Loan Ratio of Uttara Bank

Table 6.11: Data for Loan Ratio of All Banks
Bank Year Loan Ratio
i) AB Bank
2009 65.22
2008 64.74
ii) Bank Asia
2009 71.65
2008 72.47
iii) Brac Bank
2009 63.59
2008 68.77
iv) DBBL
2009 57.64
2008 66.97
v) MTBL
2009 60.14
2008 66.22
vi) NCC Bank
2009 74.64
2008 70.86
vii) Prime Bank
2009 68.76
2008 64.97
viii) Trust Bank
2009 59.12
2008 70.20
ix) UCBL
2009 64.51
2008 62.88
x) Uttara Bank
2009 53.14
2008 61.82
Comment: Bank Asia’s invested loan percentage is the highest than others. That means the
bank has higher risk that will make maximum return.
Figure 6.11: Loan Ratio of All Banks

6.3. Efficiency Ratio
6.3.1. Operating Efficiency Ratio
Operating efficiency ratio refers to the degree of efficiency of a process whether it relates to a
level of success of processing within an organization. The cost effectiveness of a market
erosion income measures by expense. Operating efficiency Ratio is calculated as follows;
Total operating expenses
Operating efficiency Ratio =----------------------------------------
Total operating revenue
Table 7.1: Data for Operating Efficiency Ratio of AB Bank
Year Total operating
expenses
Total operating revenue Operating efficiency
Ratio
2009 2466194319 8268590576 0.2983
2008 1854346922 6152735077 0.3014
Comment: According to OER, 2008 have better performance
than 2009 due to higher value of OER.
Figure 7.1: Operating Efficiency Ratio of AB Bank

Table 7.2: Data for Operating Efficiency Ratio of Bank Asia
expenses
Ratio
2009 1512465951 4129503653 0.3663
2008 987656985 2892535558 0.3415
Comment: Bank Asia shows better performance in the year of
2009 than 2008.
Table 7.3: Data for Operating Efficiency Ratio of Brac Bank
expenses
Ratio
2009 3546573197 7264162137 0.4882
2008 2862277587 6036183837 0.4742
Comment: Due horizontal comparison of OER
Brac Bank has better performance in the year of
2009.
Figure 7.2: Operating Efficiency Ratio of Bank Asia
Figure 7.3: Operating Efficiency Ratio of Brac Bank

Table 7.4: Data for Operating Efficiency Ratio of DBBL
expenses
Ratio
2009 2122801392 4818521809 0.4406
2008 1703637577 3693509604 0.4613
Comment: In the year 2008, DBBL had better
OER than 2009.
Table 7.5: Data for Operating Efficiency Ratio of MTBL
expenses
Ratio
2009 917102223 2544020774 0.3605
2008 644486330 1839574728 0.3503
Comment: MTBL shows better performance in the
year 2009 than 2008 due to higher OER.
Figure 7.4: Operating Efficiency Ratio of DBBL
Figure 7.5: Operating Efficiency Ratio of MTBL

Table 7.6: Data for Operating Efficiency Ratio of NCC Bank
expenses
Ratio
2009 954169877 3317659842 0.2876
2008 750332990 2530576172 0.2965
Comment: In the year 2008, NCC bank had higher
OER that indicates better performance than 2009.
Table 7.7: Data for Operating Efficiency Ratio of Prime Bank
expenses
Ratio
2009 84399543 724424756 0.1165
2008 76847790 505451536 0.1520
Comment: Prime Bank has shown better
OER in this year.
Figure 7.6: Operating Efficiency Ratio of NCC Bank
Figure 7.7: Operating Efficiency Ratio of Prime Bank

Table 7.8: Data for Operating Efficiency Ratio of Trust Bank
expenses
Ratio
2009 1109313775 2467667896 0.4495
2008 753668020 2006111087 0.3757
Comment: Performance of Trust Bank was better
in the 2009 than 2008 due to higher value OER.
Table 7.9: Data for Operating Efficiency Ratio of UCBL
expenses
Ratio
2009 2066885136 5192054616 0.3981
2008 1659543161 4109442039 0.4038
Comment: UCBL has been shown higher OER in
Figure 7.8: Operating Efficiency Ratio of Trust Bank
Figure 7.9: Operating Efficiency Ratio of UCBL

Table 7.10: Data for Operating Efficiency Ratio of Uttara Bank
expenses
Ratio
2009 2092237998 4606114567 0.4542
2008 1807336918 4112955090 0.4394
Comment: OER in the year 2009 for Uttara Bank
has shown higher than 2008. So, better
performance was occurred in the year 2009.
Table 7.11: Data for Operating Efficiency Ratio of All Banks
Bank Year Operating Efficiency Ratio
i) AB Bank
2009 0.2983
2008 0.3014
ii) Bank Asia
2009 0.3663
2008 0.3415
iii) Brac Bank
2009 0.4882
2008 0.4742
iv) DBBL
2009 0.4406
2008 0.4613
v) MTBL
2009 0.3605
2008 0.3503
vi) NCC Bank
2009 0.2876
2008 0.2965
vii) Prime Bank
2009 0.1165
2008 0.1520
viii) Trust Bank
2009 0.4495
2008 0.3757
ix) UCBL
2009 0.3981
2008 0.4038
x) Uttara Bank
2009 0.4542
2008 0.4394
Figure 7.10: Operating Efficiency Ratio of Uttara Bank

Comment: On the basis of OER Brac Bank’s performance is the best among
these Banks.
6.3.2. Employee Productivity Ratio
In an effort to maximize profit ability and the value of the share holder investment in the
bank many banking organizations recognize the need for greater efficiency in their
operations. This usually means reducing operating expenses and increasing the productivity
of their employees through the use of automated equipment & improved employee training.
Employee productivity Ratio is calculated as follows;
Total operating income -Total operating expenses
Employee productivity Ratio =-------------------------------------------------------------
Number of full time equivalent employee
Figure 7.11: Operating Efficiency Ratio of All Banks

Table 8.1: Data for Employee Productivity Ratio of AB Bank
Year Total Operating
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 8268590576 2466194319 1952 2972539.07
2008 6152735077 1854346922 1804 2382698.53
Comment: EPR in the year 2009 for AB Bank has
shown higher than 2008. So, better performance was
occurred in the year 2009.
Table 8.2: Data for Employee Productivity Ratio of Bank Asia
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 4129503653 1512465951 1031 2538348.89
2008 2892535558 987656985 802 2375160.32
Comment: Bank Asia has been shown higher EPR in
Figure 8.1: Employee Productivity Ratio of AB Bank
Figure 8.2: Employee Productivity Ratio of Bank Asia

Table 8.3: Data for Employee Productivity Ratio of Brac Bank
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 7264162137 3546573197 5907 629353.13
2008 6036183837 2862277587 4192 757134.12
Comment: Performance of Brac Bank was better in
the 2008 than 2009 due to higher value EPR.
Table 8.4: Data for Employee Productivity Ratio of DBBL
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 4,818,521,809 2,122,801,392 1785 1510207.52
2008 3,693,509,604 1,703,637,577 1229 1619098.48
Comment: DBBL has shown better performance in
the year 2008 due higher value of EPR in this year.
Figure 8.3: Employee Productivity Ratio of Brac Bank
Figure 8.4: Employee Productivity Ratio of DBBL

Table 8.5: Data for Employee Productivity Ratio of MTBL
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 2544020774 917102223 739 2201513.60
2008 1839574728 644486330 739 1617169.69
Comment: In the year 2009, MTBL had higher EPR
that indicates better performance than 2008.
Table 8.6: Data for Employee Productivity Ratio of NCC Bank
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 3317659842 954169877 1500 1575659.98
2008 2530576172 750332990 1400 1271602.27
Comment: NCC Bank shows better performance in
the year 2009 than 2008 due to higher EPR.
Figure 8.5: Employee Productivity Ratio of MTBL
Figure 8.6: Employee Productivity Ratio of NCC Bank

Table 8.7: Data for Employee Productivity Ratio of Prime Bank
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 724424756 84399543 1844 347085.26
2008 505451536 76847790 1551 276340.26
EPR than 2008.
Table 8.8: Data for Employee Productivity Ratio of Trust Bank
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 2467667896 1109313775 1041 1304855.06
2008 2006111087 753668020 979 1279308.55
Comment: Due horizontal comparison of EPR Trust
Bank has better performance in the year of 2009.
Figure 8.7: Employee Productivity Ratio of Prime Bank
Figure 8.8: Employee Productivity Ratio of Trust Bank

Table 8.9: Data for Employee Productivity Ratio of UCBL
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 5192054616 2066885136 2508 1246080.33
2008 4109442039 1659543161 2292 1068891.31
Comment: UCBL shows better performance in the year of 2009
than 2008.
Table 8.10: Data for Employee Productivity Ratio of Uttara Bank
Income
Total Operating
Expenses
Number of Full Time
Equivalent Employee
Employee
Productivity Ratio
2009 4606114567 2092237998 3291 763864.04
2008 4112955090 1807336918 3476 663296.37
Comment: According to EPR, 2009 have better performance
than 2008 due to higher value of EPR.
Figure 8.9: Employee Productivity Ratio of UCBL
Figure 8.10: Employee Productivity Ratio of Uttara Bank

Table 8.11: Data for Employee Productivity Ratio of All Banks
Bank Year
Employee Productivity
Ratio
i) AB Bank
2009 2972539.07
2008 2382698.53
ii) Bank Asia
2009 2538348.89
2008 2375160.32
iii) Brac Bank
2009 629353.13
2008 757134.12
iv) DBBL
2009 1510207.52
2008 1619098.48
v) MTBL
2009 2201513.60
2008 1617169.69
vi) NCC Bank
2009 1575659.98
2008 1271602.27
vii) Prime Bank
2009 347085.26
2008 276340.26
viii) Trust Bank
2009 1304855.06
2008 1279308.55
ix) UCBL
2009 1246080.33
2008 1068891.31
x) Uttara Bank
2009 763864.04
2008 663296.37
Comment: On the basis of EPR, AB Bank’s performance is the best.
Figure 8.11: Employee Productivity Ratio of All Banks

7. Credit Rating of the Selected Banks by CRAB and CRISL
7.1. Credit Rating agency of Bangladesh Ltd. (CRAB)
Credit Rating agency of Bangladesh Ltd. (CRAB) was established in 2003 at the initiative of
some leading personalities in private sector and institutions of the country with the
commitment to contribute to the development of the capital market by providing quality
ratings and comprehensive research services. CRAB was incorporated as a public limited
company in 2003 and received its Certificate for Commencement of Business in the same
year. In 2004, CRAB was granted license by the Securities & Exchange Commission (SEC)
of Bangladesh (under the Credit Rating companies Rules 1996) for operating as a Credit
Rating Company. In 2009 CRAB has been accredited as an External Credit Assessment
Institution (ECAI) by Bangladesh Bank, to provide rating of Bank Clients under Basel II
regime. CRAB has established its reputation as a reliable source of independent opinion on
risks based on systematic and standardized analysis done by professionals.
CRAB has a Technical Collaboration Agreement with ICRA Ltd. of India, one of the leading
credit rating agencies of the region. This collaboration has provided CRAB with facility for
development of rating methodologies, for performing rating assignments and for training of
its professionals. ICRA-CRAB collaboration facilitates sharing of resources and information
base and professional expertise between the two organizations, much to the advantage of
CRAB. ICRA Limited (an Associate of Moody's Investors Service, USA) was incorporated
in 1991 as an independent and professional company. ICRA is a leading provider of
investment information and credit rating services in India. ICRA's major shareholders
include Moody's Investors Service and leading Indian financial institutions and banks. With
the growth and globalization of the Indian capital markets leading to an exponential surge in
demand for professional credit risk analysis, ICRA has been proactive in widening its service
offerings, executing assignments including credit ratings, equity grading, and specialized
performance grading and mandated studies spanning diverse industrial sectors. In addition to
being a leading credit rating agency with expertise in virtually every sector of the Indian
economy, ICRA has broad-based its services for the corporate and financial sectors, both in
India and overseas.

CRAB has developed highly standardized rating methodologies for different instruments and
entities. The methodologies have been developed considering all the relevant factors
affecting the future cash generation capacity of the issuers. These factors include industry
characteristics, competitive position of the issuer, operational efficiency, management
quality, commitment to new projects and other associate companies, and future funding
policies of the issuer. A detailed analysis of the past financial statements is made to assess
the actual business performance. Analysis considers the estimated future earnings under
various sensitivity scenarios are drawn up and evaluated against the future obligations that
require servicing over the tenure of the instrument being rated. CRAB rating methodology
intends to assess the relative comfort level of the issuers to service the obligations and this is
reflected in the rating of a debt instrument. In case of equity instruments, the rating reflects
the future earning capabilities with reference to the resilience to perform in adverse
situations.
7.1.1. Rating Definition
A) Long Term
AAA (Triple A): Have extremely strong capacity to meet financial commitments,
maintains highest quality, with minimal credit risk.
AA1, AA2, AA3 (Double A): Have very strong capacity to meet financial commitments,
maintains very high quality, with very low credit risk.
A1, A2, A3 (Single A): Have strong capacity to meet financial commitments, maintains
high quality, with low credit risk, but susceptible to adverse changes in circumstances
and economic conditions.
BBB1, BBB2, BBB3 (Triple B): Have adequate capacity to meet financial commitments
but are susceptible to moderate credit risk. Adverse changes in circumstances and
economic conditions are more likely to impact capacity to meet financial commitments.
BB1, BB2, BB3 (Double B): Have inadequate capacity to meet financial commitments
and possess substantial credit risk, with major ongoing uncertainties and exposure to
adverse business, financial, or economic conditions.

B1, B2, B3 (Single B): Have weak capacity to meet financial commitments and are
subject to high credit risk. Currently meeting the financial commitments, but adverse
business, financial, or economic conditions are likely to impair capacity to meet
obligations.
CCC1, CCC2, CCC3 (Triple C): Currently vulnerable, and are dependent upon
favorable business, financial, and economic conditions to meet financial commitments.
Have very weak standing and are subject to very high credit risk.
CC (Double CC): Currently highly vulnerable, highly speculative and are very near to
default, with some prospect of recovery.
C (Single C): Currently very highly vulnerable to non-payment, may be subject of
bankruptcy petition or similar action, though have not experienced payment default. C is
typically in default, with little prospect for recovery.
D Default: 'D' rating also will be used upon the filing of bankruptcy petition or similar
action if payments on an obligation are jeopardized.
B) Short Term
ST-1: Highest Grade. Have highest capacity for timely repayment of obligations.
ST-2: High Grade. Have strong capacity for timely repayment of obligations.
ST-3: Average Grade. Have average capacity for timely repayment of obligations.
ST-4: Below Average Grade. Have below average capacity for timely repayment of
obligations.
ST-5: Inadequate Grade. Have inadequate capacity for timely repayment of obligations.
ST-6: Lowest Grade. High risk of default or are currently in default.
7.2. Credit Rating Information and Service Ltd. (CRISL)
CRISL is the first ever multinational rating agency operating in the country since 1995. It is
joint venture rating agency of Rating Agency Malaysia Berhad (RAM), JCR-VIS Credit
Rating Company of Pakistan, few financial institutions and a host of celebrated professionals
of Bangladesh. Starting operation with the license from the Securities and Exchange
Commission (SEC) under Credit Rating Companies Rules 1996, in 2002, CRISL appeared
now as a flagship rating agency of the country. CRISL is a founder member of the

Association of Credit Rating Agencies in Asia (ACRAA) sponsored by Asian Development
Bank where it is positive contribution towards the development of the profession of credit
rating in the Asian region. CRISL is public limited company dedicated for credit rating and
related services and being recognized by Bangladesh Bank as The external Credit
Assessment Institution (ECAI) to offer its services to the banking community for client
rating. CRISL provides its services with high business and ethical standard as approved by
the International Organization of securities Commission (IOSCO), Securities and Exchange
Commission of Bangladesh and Bangladesh Bank ECAI recognition criteria.
7.2.1. Credit Rating Definition
A) Long Term
AAA (Triple A): To offer highest safety and having highest credit quality.
AA+, AA, AA- (Double A): To offer higher safety and having higher credit quality.
A+, A, A- (Single A): To offer adequate safety for timely repayment of financial
obligations.
BBB+, BBB, BBB- (Triple B): To offer moderate degree of safety for timely repayment
of financial obligations.
BB+, BB, BB- (Double B): Lack of key protection factors which result in an inadequate
safety.
B+, B, B-(Single B): Timely repayment of financial obligations is impaired by serious
problem which the entity is faced with.
CCC+, CCC, CCC- (Triple C): This rating indicates that the degree of certainty
regarding timely payment of financial obligations is quit lower unless overall
circumstances are favorable or requirement of high degree external support.
C+, C, C- (Single C): In this category are adjusted to be with near to default in timely
repayment of financial obligations. This type rating may be use to cover a situation where
an insolvency position has been field.
D (Default): This category are adjusted to be either currently in default or expected to be
in default. This level of rating indicates that the entities are unlikely to meet maturing
financial obligations are call for immediate support of a high order.

B) Short Term
ST-1: Highest certainty of timely repayment.
ST-2: High certainty of timely repayment.
ST-3: Good certainty of timely repayment.
ST-4: Satisfactory/Moderate liquidity and other protection factors qualify issues as t
invest grade. Risk factors are larger and subject to more variation.
ST-5: Speculative investment characteristics. Liquidity is not sufficient to issue against
disruption in debt service. Operating factors and market access may be subject to a high
degree of variation.
ST-6: Issuer failed to meet scheduled principle and/or interest payments.
Table 9: Credit Rating Grade of the Selected Banks
Selected Bank Long term Rating Short term Rating Rated By
1. AB Bank AA3 ST1 CRAB
2. Bank Asia AA2 ST1 CRAB
3. Brac Bank AA3 ST2 CRAB
4. DBBL AA3 ST1 CRAB
5. MTBL A1 ST2 CRAB
6. NCC Bank A1 ST2 CRAB
7. Prime Bank AA ST-1 CRISL
8. Trust Bank AA- ST-2 CRISL
9. UCBL A+ ST-2 CRISL
10. Uttara Bank A2 ST2 CRAB

8. Recommendation and Findings
Table 10: At the measuring parameter high performer banks
Measuring Parameter High Performer Banks Credit Rating of The Bank
Long Term Short Term
ROE AB Bank AA3 ST1
ROA AB Bank AA3 ST1
NIM Brac Bank AA3 ST2
EPS AB Bank AA3 ST1
PLR Brac Bank AA3 ST2
LR Brac Bank AA2 ST1
OER Brac Bank AA3 ST2
EPR AB Bank AA3 ST1
Table 11: At the measuring parameter low performer banks
Measuring Parameter Low Performer Banks Credit Rating of The Bank
Long Term Short Term
ROE Trust Bank AA- ST-2
ROA UCBL A+ ST-2
NIM Prime Bank AA ST-1
EPS MTBL A1 ST2
PLR MTBL A1 ST2
LR Prime Bank A+ ST-2
OER Prime Bank AA ST-1
EPR Prime Bank AA ST-1
As per 2008 and 2009 comparative ratio analysis for ten commercial banks throughout this
paper, AB Bank and Brac Bank had high performance. Therefore further achievements, such
banks may take sustainable plans to perform more soundly in future based on comparatively
weak performance some of which are sketched out in this paper by some ratios.

Trust Bank and UCBL had lowest ROE and ROA respectively and MTBL had lowest EPS
which indicated that the banks need to increase their return or earning and take strategic
measures and healthy management. Again, Prime Bank performed with lowest NIM, OER
and EPR which suggested proper nursing of employees with overall skills and improvement
of employment system. So that it can make better operating profit and interest income.
Medium category with mediocre ratios like Bank Asia, DBBL, NCC Bank and Uttara Bank
should emphasize on their overall operation and maintenance to ensure brighter future
performance. Even, to prevent possible crises, they should at least take care to minimize the
obstructive and temporary bad factors which are liable for comparative lower ratios.
Financial ratios are contracted by forming ratios of accounting data contained in the bank’s
Annual Report of Income (i.e., profit and loss account) and Condition (i.e., balance sheet). A
wide variety of financial ratios can be calculated to assess different characteristics of
financial performance. It is beneficial to track the ratio over time relative to other banks.
Even without comparison with other banks, ratio trends over time may provide valuable
information about the bank’s performance.

9. Conclusion
A potential shortfall of financial ratio analysis is that other factors are held constant. To
overcome this problem, various financial ratios should be calculated that provide a broader
understanding of the bank’s financial condition. Most of the remainder of this discusses key
ratios commonly used by bank analysts to evaluate different dimensions of financial
performance. It is quite optimistic that if the given suggestions of this paper are implemented
then the Banking sector may be able to overcome its present problems and may contribute in
the rapid development of the economy of Bangladesh.

Bibliography
Al Shammari, M., and Salimi, M. (1998). Modeling the operating efficiency of banks, A
parametric methodology. Journal of Logistic Information Management, Vol. 11.
Avkiran, N. K. (1997). Models of retail performance for bank branches: predicting the level
of key business drivers. International Journal of Bank Marketing, Vol. 15, No. 6.
Bhatt, P. R., and Ghosh, R. (1992). Profitability of Commercial Banks in India. Indian
Journal of Economics, India.
Chowdhury, A., (2002). Politics, Society and Financial Sector Reform in Bangladesh.
International Journal of Social Economies, 29(12), 963 – 988. Vol. 4, No. 4
International Journal of Business and Management 92.
Chowdhury, H. A., and Islam, M. S. (2007). Interest Rate Sensitivity of Loans and Advances:
A Comparative Study between Nationalized Commercial Banks (NCBs) and
specialized Banks (SBs). ASA University Review, Vol.1, No.1.
CPD Dialogue Report 49, (2002). Financial Sector Reforms in Bangladesh: The Next Round.
Center for Policy Dialogue, Dhaka.
Hossain, M. K., and Bhuiyan, R. H. (1990). Performance Dynamics of Nationalized
Commercial Banks in Bangladesh – The Case of Sonali Bank. Journal of Business
Studies, University of Dhaka, Vol. XI, No. 1.
Jahangir, N., Shill, S., and Haque, M. A. J. (2007). Examination of Profitability in the
Context of Bangladesh Banking Industry. ABAC Journal, Vol. 27, No. 2.
Siddique, S. H., and Islam, A. F. M. M. (2001). Banking Sector in Bangladesh: Its
Contribution and Performance. Journal of Business Research, Jahangirnagar
University, Vol. 3.
Swamy, M. R., and Vashudevan, S. V. (1985). A Text Book of Banking. S. Chand &
Company, New Delhi.
Annual Reports of Selected Private Commercial Banks.

Appendices
A (I)
List of Selected Private Commercial Banks in Bangladesh
a) Arab Bangladesh Limited (AB Bank Limited),
b) Bank Asia,
c) Brac Bank Limited,
d) Dutch Bangla Bank Limited (DBBL),
e) Mutual Trust Bank Limited (MTBL),
f) National Credit and Commerce Bank Limited (NCC Bank Limited),
g) The Prime Bank Limited,
h) Trust Bank Limited,
i) United Commercial Bank Limited (UCBL),
j) Uttara Bank Limited.

A (II)

A (III)

A (IV)

A (V)

A (VI)

A (VII)

A (VIII)

A (IX)

A (X)

A (XI)

A (XII)

A (XIII)

A (XIV)

A (XV)

A (XVI)

A (XVII)

A (XVIII)

A (XIX)

Thesis

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