1.

Profit Ratio:
a. Return on Equity (ROE)
Return of 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.
Return on Equity is calculated as follows:
Net Income
Return on Equity = ----------------------------------- X 100
Total Equity Capital

Date for Return on Equity of NCC Bank Limited:

Year Net Income Total Equity Capital
2005 352,082,173 1,859,944,324
2006 479,219,807 2,417,368,493
2007 677,176,546 3,326,529,181
2008 882,277,833 4,440,255,205
2009 1,724,838,566 6,054,189,420

Calculation:
2005 2006 2007
352,082,173 479,219,807 677,176,546
= ----------------------- x 100 = ------------------ x 100 = --------------------- x 100
1,859,944,324 2,417,368,493 3,326,529,181
= 18.93% = 19.82% = 20.35%
2008 2009

882,277,833 1,724,838,566
= ----------------- x 100 = ------------------- x 100
4,440,255,205 6,054,489,420
= 19.86% = 28.49%

The Ratio of Return on Equity of NCC Bank is given below:

2005 2006 2007 2008 2009
18.93% 19.82% 20.35% 19.86% 28.49%
Data for Return on Equity of Mutual Trust Bank Limited:
Year Income Total Equity Capital
2005 336,174,698 1,547,484,822
2006 478,279,399 1,904,804,221
2007 210,802,117 2,044,297,172
2008 305,031,285 2,483,094,698
2009 820,605,298 3,684,509,112

Calculation:
2005 2006 2007
336,174,698 478,279,399 210,802,117
= ------------------ x 100 = -------------------- x 100 = -------------------- x 100
1,547,484,822 1,904,804,221 2,044,297,172
= 21.72% = 25.11% = 10.31%
2008 2009

305,031,285 820,605,298
= ------------------- x 100 = ------------------ x 100
2,483,094,698 3,684,509,112
= 12.28% = 22.27%

The Ratio of Return on Equity of Mutual Trust Bank Limited is given below:
2005 2006 2007 2008 2009
21.72% 25.11% 10.31% 12.28% 22.27%
Explanation:
Mutual Trust Bank Ltd: In 2005 the return on equity of bank was 21.75%, but it was increase
in 2006 which was 25.11%. Again it was decrease in 2007 and 2008 which was 10.31% and
12.28%. But in 2009, situation is changed and the Ratio of Return on Equity is increase again
which 22.27% is
NCC Bank Ltd: In 2005 the return on Equity of the bank was 18.93% which increased in 2006
& 2007 that was 19.82% & 20.35% but in 2008 it was decrease and the result was 19.86%. In
2009 the Return on Equity in is increased in a significant number & that is 28.49%.
Comments:
Return on Equity of bank can be broken down in to component parts that help to identify in the
bank’s performance. From above analysis we can see that return on equity between Mutual Trust
Bank Ltd. (MTBL) and National Credit & Commerce (NCC) Bank Ltd. The performance of
NCC Bank is better.
b. Return on Assets (ROA):
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.
Equation for calculating of Return on Assets:
Net Income
Return on Assets = --------------------- x 100
Total Assets
Data for calculating Return on Assets of NCC Bank Ltd:
Year Net Income Total Asset
2005 352,082,173 26,114,129,566
2006 479,219,807 32,615,007,792
2007 677,176,546 42,522,853,993
2008 882,277,833 57,365,523,726
2009 1,724,838,566 65,937,491,463
Calculation:
2005 2006 2007
352,082,173 479,219,807 677,176,546
= -------------------- x 100 = ------------------------ x 100 = ------------------------ x 100
26,114,129,566 32,615,007,792 42,522,853,993
= 1.35% = 1.47% = 1.59%
2008 2009

882,277,833 1,724,838,566
= ----------------------- x 100 = ------------------------x 100
57,365,523,726 65,937,491,463
= 1.54% = 2.61%
The ration of Return on Assets of NCC Bank Ltd. Given below through Bar-Diagram:
2005 2006 2007 2008 2009
1.35% 1.47% 1.59% 1.54% 2.61%

D
ata for calculating Return on Assets of Mutual Trust Bank Limited (MTBL):
Year Net Income Total Assets
2005 336,174,698 19,306,990,566
2006 478,279,399 26,217,985,597
2007 210,802,117 32,181,896,220
2008 305,031,285 38,964,974,123
2009 820,605,298 52,774,766,068
Calculation:
2005 2006 2007
336,174,698 478,279,399 210,802,117
= ---------------------- x 100 = ------------------------ x 100 = ------------------------ x 100
19,306,990,566 26,217,985,597 32,181,896,220
= 1.74% = 1.82% = .66%
2008 2009

305,031,285 820,605,298
= ------------------------ x 100 = ------------------------- x 100
 38,964,974,123 52,774,766,068
= .78% = 1.55%

The Ratio of Return on Assets of Mutual Trust Bank Limited is shown below through Bar-
diagram:
2005 2006 2007 2008 2009
1.74% 1.82% .66% .78% 1.55%

Explanation:
Mutual Trust Bank Limited: In 2005 the return on Assets was 1.74%, but it was increased in
2006, which was 1.82. Again it was decreased in 2007 & 2008, which was .66% & .78%. But in
2009 it was again increased which was 1.55%.
NCC Bank Limited: In 2005 the return on Assets was 1.35%, but it was increased in 2006,
2007, 2008 & 2009, which was 1.47%, 1.59%, 1.54% & 2.61%.
Comments: Return on Assets is commonly used to evaluate banks management. From above
analysis we can see that Return on Assets between these two banks, the performance of NCC
Bank Limited is better.
c. Net Interest Margin:
Net interest margin is a measurement of the difference between the interest income generate by
banks or other financial institutions and the amount of interest paid out of their lenders (for
Example depositors). It is considered similar financial companies.
Equation:
Total Interest Income – Total Interest Expense
Net Interest Margin = ------------------------------------------------------------ x 100
Total Assets – Not performing Loan

Data for calculating Net Interest Margin of Mutual Trust Bank Limited:
Year Total interest Total interest Total Assets Not performing
income expenses loan
2005 1,688,878,026 1,258,704,712 19,306,990,566 0
2006 2,340,970,021 1,708,636,136 26,217,985,597 191,624,000
2007 2,846,923,194 2,292,357,531 32,181,896,220 541,643,000
2008 3,529,718,692 2,792,584,222 38,964,974,123 1,402,847,000
2009 4,279,499,839 3,409,350,043 52,774,766,068 952,762,000

Calculation:
2005 2006
1,688,878,026 - 1,258,704,712 2,340,970,021 - 1,708,636,136
= ---------------------------------------- x 100 = --------------------------------------- x 100
19,306,990,566 – 0 26,217,985,597 - 191,624,000
= 2.23% = 2.42%
2007 2008
2,846,923,194 - 2,292,357,531 3,529,718,692 - 2,792,584,222
= --------------------------------------- x 100 = -------------------------------------- x 100
32,181,896,220 - 541,643,000 38,964,974,123 - 1,402,847,000
= 1.75% = 1.96%
2009

4,279,499,839 - 3,409,350,043
= ------------------------------------------- x 100
52,774,766,068 - 952,762,000
= 1.67%

Net Interest Margin for Mutual Trust Bank Limited is shown below through Bar-diagram:
2005 2006 2007 2008 2009
2.23% 2.42% 1.75% 1.96% 1.67%

Data for calculation of Net Interest Margin of NCC Bank Limited:

Year Total Interest Total Interest Total Assets Not Performing
Income Expense Loan
2005 2,072,486,303 1,463,857,337 26,114,129,566 2,047,363,076
2006 3,023,330,459 2,047,143,589 32,615,007,792 2,606,376,296
2007 3,861,806,484 2,738,449,472 42,522,853,993 3,256,372,004
2008 5,449,728,058 4,099,984,694 57,365,523,726 4,287,927,498
2009 6,487,768,688 4,960,743,231 65,937,491,463 1,431,010,202

Calculation:
2005 2006
2,072,486,303 - 1,463,857,337 3,023,330,459 - 2,047,143,589
= ---------------------------------------- x 100 = ------------------------------------------- x 100
26,114,129,566 - 2,047,363,076 32,615,007,792 - 2,606,376,296
= 2.52% = 3.25%
2007 2008
3,861,806,484 - 2,738,449,472 5,449,728,058 - 4,099,984,694
= --------------------------------------- x 100 = --------------------------------------------- x 100
42,522,853,993 - 3,256,372,004 57,365,523,726 - 4,287,927,498
= 2.86% = 2.54%
2009

6,487,768,688 - 4,960,743,231
= ---------------------------------------- x 100
65,937,491,463 - 1,431,010,202
= 2.36%

Net Interest Margin for NCC Bank Limited is shown below through Bar-diagram:

Explanation:
Mutual Trust Bank Limited:
In 2005 the Net interest margin was 2.23%, which was increased in 2006 and reached in 2.42%.
But for the next three year it decreased again which was 1.75%, 1.96% & 1.67% for the year of
2007, 2008 & 2009.
NCC Bank Limited:
In 2005 the Net interest margin was 2.52% which was increased in 2006 which was 3.25%. But
for next three year it decreased gradually which was 2.86%, 2.54% & 2.36% for the year 2007,
2008 & 2009.
Comments:
Net interest margin is very important for analysis of bank performance. From above analysis we
can see that Net interest margin between MTBL & NCCBL, the performance of NCC Bank
Limited is better.

Earnings per Share of Stock (EPS):

A financial ration that measures 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.

Earnings per Share of Stock are calculated as follows:

Net Income after Tax

Earnings per Share of Stock (EPS) = ---------------------------------------------------------------
Common equity share outstanding (numbers)

Data for Mutual Trust Bank Limited:

Year Net Income after Tax Common Equity Share
outstanding (Numbers)
2005 336,174,698 9,504,515
2006 478,279,399 9,504,000
2007 210,802,117 9,979,200
2008 305,031,285 14,479,974
2009 820,605,298 17,662,619

Calculation:
2005 2006 2007
336,174,698 478,279,399 210,802,117
= ----------------------- = ---------------------- = ------------------
9,504,515 9,504,000 9,979,200
= 35.37 = 50.32 = 21.12
2008 2009

305,031,285 820,605,298
= ------------------- = --------------------
 14,479,974 17,662,619
= 21.06 = 46.46

The ration of Earnings per Share of Stock of Mutual Trust Bank Limited is shown below
through Bar-diagram:
2005 2006 2007 2008 2009
35.37 50.32 21.12 21.06 46.46

Data for NCC Bank Limited:

Year Net Income after Tax Common equity share
outstanding (Numbers)
2005 352,082,173 9,750,398
2006 479,219,807 12,017,885
2007 677,176,546 13,520,120
2008 882,277,833 17,576,157
2009 1,724,838,566 22,918,397

Calculation:
2005 2006 2007
352,082,173 479,219,807 677,176,546
= ------------------------ = ---------------------- = ----------------------
9,750,398 12,017,885 13,520,120
= 36.11 = 39.88 = 50.08
2008 2009

882,277,833 1,724,838,566
= ----------------------- = -----------------------
17,576,157 22,918,397
= 50.20 = 75.26
The ration of Earnings per Share of Stock of NCC Bank Limited is shown below through
Bar-diagram:

Explanation:
Mutual Trust Bank Limited:
In 2005 the EPS of the bank was 35.37, which increased in 2006, which was 50.32. But in 2007
& 2008 it was decreased again, which were 21.12 & 21.06. Again in 2009 EPS increased &
reached in 46.46.
NCC Bank Limited:
In 2005 the EPS was 36.11, which was increased in next four year & reached to 39.88, 50.08,
50.20 & 75.26 respectively for the year 2006, 2007, 2008 & 2009.
Comments:
Earnings per Share (EPS) are closely watched by the investor as well as stock holders and are
considered an important indicator of corporate success. From above analysis we can see that
Earning per Share between MTDR & NCCBL, the performance of NCC Bank Limited is better.

2. Risk Ratios:
a. Provision for loss ratio:
Each banks provides an estimated of future loan losses as on expenses on its income statement.

Equation for calculation of Provision for Loss Ratio:

Provision for loan

Provision for loss ratio = ---------------------------------- x 100
Total loans & leases

Data for Mutual Trust Bank Limited:

Year Provision for loan Total loans & leases
2005 145,000,000 14,373,256,533
2006 239,982,078 18,591,520,631
2007 548,429,923 22,683,227,657
2008 1,127,940,772 28,529,345,619
2009 1,051,687,893 33,883,923,705

Calculation:
2005 2006 2007
145,000,000 239,982,078 548,429,923
= ----------------------- x 100 = ------------------------- x 100 = ---------------------- x 100
14,373,256,533 18,591,520,631 22,683,227,657
= 1% = 1.29% = 2.42%
2008 2009

1,127,940,772 1,051,687,893
= ------------------------ x 100 = ----------------------- x 100
28,529,345,619 33,883,923,705
= 3.95% = 3.10%

The ratio of Provision for loss ratio of Mutual Trust Bank Limited is shown below through
Bar-diagram:

Data for NCC Bank Limited:

Year Provision for loan Total Loans & Leases
2005 607,883,000 20,533,129,129
2006 805,670,800 24,678,356,293
2007 1,032,889,000 32,687,753,165
2008 1,368,969,000 46,332,688,464
2009 1,341,821,012 50,387,683,203

Calculation:
2005 2006 2007
607,883,000 805,670,800 1,032,889,000
= ------------------------ x 100 = ------------------------- x 100 = ------------------------- x 100
 20,533,129,129 24,678,356,293 32,687,753,165
= 2.96% = 3.26% = 3.16%
2008 2009

1,368,969,000 1,341,821,012
= ----------------------- x 100 = ------------------------ x 100
46,332,688,464 50,387,683,203
= 2.95% = 2.66%

The ratio of Provision for loss ratio of NCC Bank Limited is shown below through Bar-
diagram:

E
xplanation:
Mutual Trust Bank Limited:
In 2005 the Provision for loss ratio was 1%, which increased in 2006, 2007 & 2008 by 1.29%,
2.42% & 3.95% respectively. But in 2009 it was decreased in 3.10%.

NCC Bank Limited:

In 2005 the Provision for loss ratio was 2.96%, which increased in next year 2006 & reached in
3.26%. But next three years it was decreased gradually to 3.16%, 2.95% & 2.66% for the year of
2007, 2008 & 2009 respectively.
Comments:
This ratio suggests that the bank has provided more for losses on loans than similar banks. From
above analysis we can see that Provision for Loss ratio between MTBL & NCCBL, the
performance of Mutual Trust Bank Limited is better.

b. Loan Ratio:
The amount borrowed dividend by the appraised value of the collateral expressed as a
percentage.
Loan Ratio is calculated as follows:
Net Loans
Loan Ratio = ------------------ x 100
Assets

Data for Loan ratio of Mutual Trust Bank Limited:

Year Net Loans Assets
2005 14,373,256,533 19,306,990,566
2006 18,591,520,631 26,217,985,597
2007 22,683,227,657 32,181,896,220
2008 28,529,345,619 38,964,974,123
2009 33,883,923,705 52,774,766,068

Calculation:
2005 2006 2007
14,373,256,533 18,591,520,631 22,683,227,657
= ------------------------ x 100 = -------------------------- x = ------------------------ x 100
19,306,990,566 100 32,181,896,220
= 74.45% 26,217,985,597 = 70.48%
= 70.91%
2008 2009

28,529,345,619 33,883,923,705
= ------------------------ x 100 = ----------------------- x 100
38,964,974,123 52,774,766,068
= 73.22% = 64.20%

The Loan Ratio Mutual Trust Bank Limited is shown below through Bar-diagram:

Data for NCC Bank Limited:

Year Net Loans Assets
2005 20,533,129,129 26,114,129,566
2006 24,678,356,293 32,615,007,792
2007 32,687,753,165 42,522,853,993
2008 46,332,688,464 57,365,523,726
2009 50,387,683,203 65,937,491,463

Calculation:
2005 2006 2007
20,533,129,129 24,678,356,293 32,687,753,165
= ------------------------- x 100 = ------------------------- x 100 = ----------------------- x 100
26,114,129,566 32,615,007,792 42,522,853,993
= 78.63% = 75.67% = 76.87%
2008 2009
46,332,688,464 50,387,683,203
= ------------------------- x 100 = ------------------------ x 100
57,365,523,726 65,937,491,463
= 80.77% = 76.41%

The Loan Ratio NCC Bank Limited is shown below through Bar-diagram:

Explanation:
Mutual Trust Bank Limited:
In 2005 the Loan Ratio of MTBL was 74.45% which was better than loan ratio of 2006, 2007,
2008 & 2009 which were 70.91%, 70.48%, 73.22% & 64.20% respectively.

NCC Bank Limited:

In 2005 the Loan ratio of the bank was 78.63% but next four years the loan ratio changed &
reached to 75.67%, 76.87%, 80.77% & 76.41% for the year 2006, 2007, 2008 & 2009.
Comments:
Loan ratio shows the bank’s equity in the property. The bank’s equity is basically the amount of
property the bank own expressed as a monetary figure at this value price less what the bank have
to return to the bank’s lender to repay the bank’s loan. From above analysis we can see that Loan
Ratio between MTBL & NCCBL, the performance of MTBL is better.
 3. Efficiency Ratios:

a. 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 of income by expense.
Equation for calculating of operating efficiency ratio:
Total operating expenses
Operating efficiency ratio = --------------------------------------------
Total operating revenue
Data for Mutual Trust Bank Limited:
Year Total operating expenses Total operating revenue
2005 225,166,416 651,846,250
2006 315,393,644 469,472,115
2007 424,484,555 763,852,540
2008 648,812,007 1,195,088,398
2009 917,102,223 1,626,918,551

Calculation:
2005 2006 2007
225,166,416 315,393,644 424,484,555
= -------------------------- = ---------------------- = ---------------------------
651,846,250 469,472,115 763,852,540
= 0.35 = 0.33 = 0.56
2008 2009

648,812,007 917,102,223
= --------------------------- = -------------------------
1,195,088,398 1,626,918,551
= 0.54 = 0.56

The Operating Efficiency Ratio of Mutual Trust Bank Limited is shown below through
Bar-diagram:
Data for NCC Bank Limited:
Year Total Operating Expenses Total Operating Revenue
2005 449,801,711 687,600,451
2006 598,471,482 1,056,513,069
2007 750,332,990 1,361,325,308
2008 954,169,877 1,798,959,821
2009 1,234,594,030 2,713,693,924

Calculation:
2005 2006 2007
449,801,711 598,471,482 750,332,990
= ------------------------ = ------------------------ = -------------------------
687,600,451 1,056,513,069 1,361,325,308
= 0.65 = 0.57 = 0.55
2008 2009

954,169,877 1,234,594,030
= -------------------------- = ------------------------
1,798,959,821 2,713,693,924
= 0.53 = 0.45

The Operating Efficiency Ratio of NCC Bank Limited is shown below through Bar-
diagram:

Explanation:
Mutual Trust Bank Limited: In 2005 the Operating Efficiency ratio was 0.35, which decreased in
the next year 2006 which was 0.33. But in 2007, 2008 & 2009 the Operating Efficiency ratio was
0.56, 0.54 & again 0.56 respectively which were more constant.
NCC Bank Limited: In 2005 the Operating Efficiency ratio was 0.65 which decreased gradually
for next four years & the ratio were 0.57, 0.55, 0.53 & 0.45 for the year 2006, 2007, 2008 &
2009 respectively.
Comments: More generally any of number of ratios measuring a banks operating efficiency, such
as sales to cost of goods sold, net profit to gross income, operating expenses to operating income
and net profit to net worth. From above analysis we can see that Operating Efficiency Ratio
between MTBL & NCCBL, the performance of NCC Bank Limited is better.