Financial Ratio Analysis
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Transcript of Financial Ratio Analysis
FINANCIAL ANALYSIS ON ASKARI COMMERCIAL BANK
LIMITEDPRESENTED BY
SYED SUBHAN SHAHMUHAMMAD SARMAD
SHAFI ULLAH
INTRODUCTIONACBL was incorporated on October, 09, 1991.commenced its operations in April, 1992 as a
Public Limited Company. Askari bank has expended in to a nationwide
presence of 200 branches, 199 in Pakistan and 1 in Azad Kashmir.
CONT… 18 Islamic banking branches, An offshore Banking unit in Bahrain. A shared network of over 800 online ATMs
covering all major cities in Pakistan.Askari Commercial Bank is pioneer in Mobile
ATM facility started in 2005 dedicated to serving the urban consumer market.
CONT… ACBL has a correspondent Bank network in more
than 95 countries with about 167 banks. The registered office of the bank is situated at
AWT plaza, The Mall, Rawalpindi.
CREDIT RATING OF ACBL (PACRA)
• A1+ for obligation supported by the higher capacity for timely repayment.
• AA rating denote a very low expectation of credit risk, they indicate very strong capacity for timely payment of financial commitments.
FINANCIAL RATIOS ANALYSIS
The following types of ratios are frequently used:
• Liquidity Ratios• Profitability Ratios• Solvency Ratios• Financial leverage Ratios• Credit Risk Ratios
Liquidity Ratios
• Earning Asset to Total Assets: (Earning Asset / Total Assets) * 100• Advances to Deposit Ratio: TOTAL ADVANCES/TOTAL DEPOSITS*100• Yield on Earning Assets: (Net Profit after Tax / Earning Assets) * 100
Years 2006 (‘000) 2007 (‘000 2008 (‘000)
Earning Assets
147,344,027 163,687,402 181,895,045
Total Assets 166,033,588 182,171,885 206,191,138
Results 89% 90% 88%
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Total Advances
99,179,372 100,780,162 128,818,242
Total Deposits
131,839,283 143,036,707 167,676,572
Results 75.22 70.45 76.82
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Net Profit After Tax
2,249,974 2,681,012 386,225
Earning Assets
147,344,027 163,687,402 181,895,045
Results 1.53 % 1.64% 0.21%
Liquidity Ratios
0%
20%
40%
60%
80%
100%
2006 2007 2008
Years
0.00%
0.50%
1.00%
1.50%
2.00%
Asset to Asset
Advance to Deposit
Yeild on EarningAssets
Profitability ratios• Return on Equity (ROE):
ROE= Net income/Total Equity
• Return on Assets: ROA= Net income/Total Assets
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)Net Income 2,249,974 2,681,012 386,225
Total Equity
11,053,230 12,265,987 12,971,363
ACBL Ratio 20.27% 21.86% 2.98%Industry Ratio
27.0% 25.0% 12.0%
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Net Income 2,249,974 2,681,012 386,225
Total Assets 166,033,588 182,171,885 206,191,138
ACBL Ratio 1.35% 1.47% 0.18%
Industry Ratio
3.5% 3.7% 1.7%
SOLVENCY RATIOS
• Equity to Asset Ratio: Total Equity / Total Assets)
• EQUITY TO DEPOSIT RATIO: (Total Equity / Total Deposits)
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Total Equity 11,053,230 12,265,987 12,971,363
Total Assets 166,033,588 182,171,885 206,191,138
Results 6.6% 6.7% 6.2%
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Total Equity 11,053,230 12,265,987 12,971,363
Total Deposits
131,839,283 143,036,707 167,676,572
Results 8.3% 8.5% 7.7%
Leverage Ratios• Owner’s Equity-to-Total Asset
Ratio• Owner’s Equity-to-Fixed Asset
RatioOwner's E quity-to-T otal As s et
R atio
0
0.5
1
1.5
2
2.5
2006 2007 2008
Owner's E quity-to-F ixed As s ets R atio
44
46
48
50
52
54
56
58
60
2006 2007 2008
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Share holder’s Equity
2,004,333 3,006,499 4,058,774
Total Assets 166,033,588 182,171,885 206,191,138
Results 1.20 1.65 1.96
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Share holder’s Equity
2,004,333 3,006,499 4,058,774
Total Fixed Assets
3,810,331 5,128,428 8,266,458
Results 52.60 58.62 49.09
Credit Risk Ratios• Nonperforming assets to loans
• NON-PERFORMING ASSETS TO EQUITY CAPITAL
00.10.20.30.40.50.60.70.80.9
1
2006 2007 2008 PeerGroup
Non-Performingloans to equitycapital
Annual Provisionfor loan losses toequity capital
Non-PerformingAssets to equitycapital
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Net NPLs 3,656,297 6,907,591 11,689,417
Total loans 99,179,372 100,780,162 128,818,242
Results 0.04 0.07 0.09
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Net NPLs 3,656,297 6,907,591 11,689,417
Equity Capital
9,619,066 12,099,645 12,034,895
Results 0.38 0.57 0.97
•ANNUAL PROVISION FOR LOAN LOSSES TO EQUITY CAPITAL
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Provisions 1,128,137 3,920,240 3,824,778
Equity Capital
9,619,066 12,099,645 12,034,895
Results 0.12 0.32 0.32
ASSET QUALITY• Non-Performing loans to Advances • Provision to Non-Performing Loans:
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
NPLs 3,656,297 6,907,591 11,689,417
Advances 99,179,372 100,780,162 128,818,242
Results 0.04 0.07 0.09
Years 2006 (‘000) 2007 (‘000) 2008 (‘000)
Provisions 1,128137 3,920,240 3,824,778
NPLs 3,656,297 6,907,591 11,689,417
Results 0.3 0.6 0.3
0
0.02
0.04
0.06
0.08
0.1
2006 2007 2008
00.10.20.30.40.50.60.7
Non-Performing Loansto Advances
Provisions to Non-Performing Loans
CONCLUSION• The year 2007 was a volatile year for the banking
sector in terms of profitability.• The bank is either not very efficient at collecting
the outstanding loans or has a very liberal loans distribution policy.
• bank may face considerable credit risk from its loan defaulters.
• The liquidity of the bank has maintained a consistent trend.
• The solvency of the company has been successfully maintained over the year.