CHAPTER 02

BACKGROUND of THE
ORGANIZATION

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 CHAPTER 02
BACKGROUND of THE
ORGANIZATION

2.1 An Overview of The National Bank Limited :

National Bank Limited has its prosperous past, glorious present, prospective future and
under processing projects and activities. Established as the first private sector bank fully
owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private
sector Bank with the passage of time after facing many stress and strain. The members of
the board of directors are creative businessmen and leading industrialists of the country.
To keep pace with time and in harmony with national and international economic
activities and for rendering all modern services, NBL, as a financial institution, automated
all its branches with computer networks in accordance with the competitive commercial
demand of time. Moreover, considering its forth-coming future, the infrastructure of the
Bank has been rearranging. The expectation of all class businessmen, entrepreneurs and
general public is much more to NBL. At present we have 181 branches under our branch
network. In addition, our effective and diversified approach to seize the market
opportunities is going on as continuous process to accommodate new customers by
developing and expanding rural, SME financing and offshore banking facilities.

The emergence of National Bank Limited in the private sector was an important event in
the Banking arena of Bangladesh. When the nation was in the grip of severe recession, the
government took the farsighted decision to allow the private sector to revive the economy
of the country. Several dynamic entrepreneurs came forward for establishing a bank with
a motto to revitalize the economy of the country.

The then President of the People's Republic of Bangladesh Justice Ahsanuddin

Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48,
Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The
2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.

At present, NBL has been carrying on business through its 181 branches & Agri Branches
spread all over the country. Since the very beginning, the bank has exerted much

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emphasis on overseas operations and handled a sizable quantum of home bound foreign
remittance. It has drawing arrangements with 415 correspondents in 75 countries of the
world, as well as with 37 overseas Exchange Companies located in 13 countries. NBL
was the first domestic bank to establish agency arrangements with the world famous
Western Union in order to facilitate quick and safe remittance of the valuable foreign
exchanges earned by the expatriate Bangladeshi nationals. This has meant that the
expatriates can remit their hard-earned money to the country with much ease, confidence,
safety and speed.

NBL was also the first among domestic banks to introduce international Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card.
The Bank has in its use the latest information technology services of SWIFT and
REUTERS. NBL has been continuing its small credit program for disbursement of
collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi
district for improving their livelihood.

Since its inception, the bank was aware of complying with Corporate Social
Responsibility. In this direction, we have remained associated with the development of
education, healthcare and have sponsored sporting and cultural activities. During times of
natural disasters like floods, cyclones, landslides, we have extended our hand to mitigate
the sufferings of victims. It established the National Bank Foundation in 1989 to remain
involved with social welfare activities. The foundation runs the NBL Public School &
College at Moghbazar where present enrolment is 1140. Besides awarding scholarship to
the meritorious children of the employees, the bank has also extended financial support
for their education. It also provided financial assistance to the Asiatic Society of
Bangladesh at the time of their publication of Banglapedia and observance of 400 years of
Dhaka City.

The Transparency and accountability of a financial institution are reflected in its Annual
Report containing its Balance Sheet and Profit & Loss Account. In recognition of this,
NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the
Institute of Chartered Accountants of Bangladesh.

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The bank has a strong team of highly qualified and experienced professionals, together
with an efficient Board of Directors who play a vital role in formulating and
implementing policies.

2.2 Mission, Vision, Strategy Statement :

Vision of National Bank Limited

Ensuring highest standard of clientele services through best application of latest

information technology, making due contribution to the national economy and
establishing ourselves firmly at home and abroad as a front ranking bank of the country
are our cherished vision.

Mission of National Bank Limited

Efforts for expansion of our activities at home and abroad by adding new dimensions to
our banking services are being continued unabated. Alongside, we are also putting highest
priority in ensuring transparency, account ability, improved clientele service as well as to
our commitment to serve the society through which we want to get closer and closer to
the people of all strata. Winning an everlasting seat in the hearts of the people as a caring
companion in uplifting the national economic standard through continuous up gradation
and diversification of our clientele services in line with national and international
requirements is the desired goal we want to reach.

Strategies of National Bank Limited

As the financial services industry is a very competitive industry, the main strategy of NBL
is the organic growth to build branches and strengthen their distribution network. They
will continue to invest and expand in Bangladesh as fast as local regulations allow.

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The principle strategies are :-

People Attract retain and reward top performers.

Profitable Growth Growing sales and increase the revenues.
Execution Performing with skill and speed.
Credit Quality Maintaining credit quality and understand the role in managing
losses.
Customer Centered Always providing exceptional customer service.
Ownership The performance and results should be owned.
Efficiency Lowering the costs and wise use of resources

Table 2.1 : Principle Strategies of National Bank Limited

To manage and operate the Bank in the most efficient manner to enhance
financial performance and to control cost of fund.
To strive for customer satisfaction through quality control and delivery of timely
services.
To identify customers' credit and other banking needs and monitor their perception
towards our performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the ability to
extend better service to customers.
To train and develop all employees and provide them adequate resources so that
customers' needs can be reasonably addressed.
To promote organizational effectiveness by openly communicating company
plans, policies, practices and procedures to employees in a timely fashion.
To cultivate a working environment that fosters positive motivation for improved
performance.

2.3 Ownership Structure :

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Ownership of NBL consists of Government, Promoters & Public. The pattern is like
below-

Promoters 50%

Government 5%

Public 45%

2.4 Composition of The Board :

MR. ZAINUL HAQUE SIKDER Chairman

MRS. MONOWARA SIKDER Director
Particulars
MS. PARVEEN HAQUE SIKDER Amount
Director (in Tk)
Core MR.
Capital:
ALHAJ KHALILUR RHMAN Director
PaidMR.
up MOAZZAM
capital HOSSAIN 15,615,635,680
Director
Statutory reserve
MR. ZAKARIA TAHER 8,439,142,029
Director
General reserve
MR. RICK HAQUE SIKDER 65,396,935
Director
Retained
MR. RONearning as per profit
HAQUE SIKDER 1,464,019,449
Director
and MR.
lossMABROOR
account HOSSAIN Director
PROF. MAHBUB AHMED
Supplementary Capital : Director
MR. A K M
1% general ENAMUL HOQUE
provision Director
307,425,523
MR. SALIM RAHMAN
Exchange Equalization account Director
41,371,514
OtherLT.COL.(Rtd)
reserve MD.AZIZUL Director
1,274,947,661
TotalASHRAF,PSC 27,208,938,791
MR. NEAZ AHMED Managing
Director
Table 2.2 : Composition of The Board

2.5 Capital and Reserves :

Table 2.3 : Capital and Reserve

2.6 Milestones of The Development of The Organization :

Development Date
Incorporation of the Bank 15.03.1983
Certificate of Commencement of Business 20.03.1983
Licensed issued by Bangladesh Bank 22.02.1983
Licensed issued for opening the first branch, 22.03.1983
Dilkusha Branch
Formal launching of the Bank 23.03.1983
Commencement of Business of Dilkusha 23.03.1983

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Branch
Listed with Dhaka Stock Exchange Ltd. 20.12.1984
Publication of prospectus 30.12.1984
Initial Public Offering (IPO) of share 14.01.1985
Trading of share in DSE 21.04.1985
Association with Gulf Overseas Exchange Co 26.11.1985
Pte Ltd
Signing of agreement with Western Union 16.05.1993
Money Transfer
Listed with Chittagong Stock Exchange Ltd 06.11.1995
Trading of Share in CSE 06.11.1995
Listed with CDBL 29.09.2004
Inauguration of NBL Money Transfer Pte Ltd 08.07.2007
Singapore
Registration as DSE Stock Broker 24.10.2007
Registration as DSE Stock Dealer 13.03.2008
Inauguration of NBL Money Transfer Sdn Bhd 04.10.2009
Malayshia
Primary Dealer of Trading of Government 01.01.2010
Securities
Incorporation of NBL Securities Ltd 01.02.2010
Incorporation of NBL Capital and Equity 01.02.2010
Management Ltd
Inauguration of NBL Money Transfer 23.12.2011
(Maldives) Pvt. Ltd.
Inauguration of NBL Money Transfer Payment 15.06.2012
Foundation S.A, Greece
Inauguration of NBL Money Transfer INC. USA 02.07.2014

Table 2.4 : Milestone of The Development of Organization

2.7 Management Structure :

Managing Director
Mr. Md. Badiul Alam Member
(Current Charge)
Additional Managing
Mr. A F M Shariful Islam Member
Director
Additional Managing
Mr. Abdul Hamid Mia Member
Director
Mr. Syed Mohammad
Deputy Managing Director Member
Bariqullah

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Mr. M. A. Wadud Deputy Managing Director Member

Mr. Wasif Ali Khan Deputy Managing Director Member

Senior Executive Vice

Mr. Forhad Ahmad Chowdhury Member
President
Senior Executive Vice
Mohammad Nazrul Islam Member
President
Senior Executive Vice
Mr. M. A. Wadud Member
President
Senior Executive Vice
Mr. Abdus Sobhan Khan Member
President

Mr. Kazi Kamal Uddin Ahmed Executive Vice President Member

Mr. Hossain Akther

Executive Vice President Member
Chowdhury

Mr. Md. Mahfuzur Rahman Executive Vice President Member

Mr. Iftekhar Hossain

Executive Vice President Member
Chowdhury

Mr. Arun Kumar Halder Senior Vice President Member

Member
Mr. Jahangir Bin Hamid Senior Vice President
Secretary

Mr. Md. Saiful Islam Senior Vice President Member

Mr. Md. Abdul Wahab Senior Vice President Member

Mr. Md. Moniruzzaman Senior Vice President Member

Mr. Krishna Kamal Ghose Vice President Member

Mr. Md. Mahmud Hassan Senior Asst. Vice President Member

Mr. Md. Golam Haider Senior Asst. Vice President Member

Mr. Md. Kaiser Rashid Senior Asst. Vice President Member

Ms. Salima Akhtar Senior Asst. Vice President Member

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Mr. Tanvir Subhan Senior Asst. Vice President Member

Mr. Mahmud-Al-Hasan Senior Asst. Vice President Member

Mr. Tariqul Islam Asst. Vice President Member

Mr. Mohd. Mazharul Alam

Principal Officer Member
Choudhuri

Page | 9
2.8 Risk Management :

Risk is an integral part of our banking industry and the mainstay of our risk management
principle is to find equilibrium between risk and return. Bangladesh Bank, in October
2003, undertook a project for implementing Core Risk Management System in every
bank by identifying 5 (five) core risk areas of banks. The bank has taken the necessary
measures for implementation of the same and is continuously striding ahead for its full
compliance.

The Bank attaches highest importance to risk management. Managing credit risk, as
always, starts first from the very process of selection of quality borrowers, followed by a
well defined credit checking, risk analysis and approval process, which are carried out by
competent personnel at different tiers. All the credit functions are constantly being
supervised and monitored, not only to keep the credit portfolio in sound footing but also
for recovery/ regularization of loan accounts. For ensuring perfection of security
documentation, NBL is still continuing the unique process of rechecking of security
documentation by a second legal adviser, other than the lawyer who vetted it originally.
Above all, our Bank, as you know have installed a high tech Banking Software that
allows better and more effective monitoring of loan portfolio than before.

2.8.1 Risk Management Committee :

Ms. Parveen Haque Sikder Chairperson

Mr. Ron Haque Sikder Member

Mr. Md. Anwar Hussain Member

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2.9 Human Resources Division( HRD) :

It is one of the important divisions of the bank. It formulates the draft policies for the
bank that is usually placed in the board meeting to accept. The division controls all the
administrative activities of the banks. Decision about requirement, and postings of the
bank employees in different divisions or branches as well as other important decisions are
taken by the division.

2.10 District-Wise Branch Distribution :

Division Area Number of branches

Dhaka Division 92
Chittagong Division 33
Rajshahi Division 14
Khulna Division 09
Sylhet Division 18
Barishal Division 06
Rangpur Division 08
Area wise branches:

a wTable 2.5 : District-Wise Branch Distribution

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2.11 Balance Sheet :
National Bank limited
Balance sheet
As at 31 December 2014
Notes 2014 2013
BDT BDT
PROPERTY AND ASSETS
Cash 17,813,280,687 14,859,504,681
In hand (including foreign currencies) 3 2,181,316,440
2,350,521,500
Balance with Bangladesh Bank and its agent banks 4 15,631,964,247 12,508,983,181
(including foreign currencies)

Balance with other banks and financial institutions 5 3,535,896,025 5,624,337,221

In Bangladesh 940,498,680 1,896,062,848
Outside Bangladesh 2,595,397,345 3,728,274,373

Money at call and on short notice 6 98,300,000 98,900,000

Investments 7 54,885,523,925 56,827,520,761
Government 46,318,501,027 47,513,285,781
Others 8,567,022,898 9,314,234,980

Loans and advances 8 172,964,721,444 151,098,985,890

Loans, cash credits, overdrafts etc 167,325,501,311 146,270,580,076
Bills purchased and discounted 5,639,220,133 4,828,405,814

Fixed assets including premises, furniture and fixtures 9 2,763,519,975 2,636,589,375

Other assets 10 4,140,400,140 3,691,299,372
Non - banking assets 2.6.5 335,820,241 336,660,241
Total assets 256,537,462,437
235,173,797,541

LIABILITIES AND CAPITAL

Liabilities

Borrowings from other banks, financial 11 9,176,323,404 3,322,119,629

Institutions And Agents
Deposits and other accounts 12 203,296,182,435 193,642,968,836
Current deposits and other accounts 19,967,086,570 19,121,953,740
Bills payable 2,624,680,314 2,225,679,010
Savings bank deposits 28,714,088,244 24,921,946,124
Fixed deposits 105,576,214,173 92,814,097,206
Term deposit 46,414,113,134 54,559,292,756

Subordinated bonds 1,600,000,000 2,000,000,000

Other liabilities 13 15,501,008,024 12,279,071,943
Total liabilities 229,573,513,863 211,244,160,408
Shareholders' equity

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Total shareholders' equity 26,963,948,574 23,929,637,133
Paid-up capital 14.2 15,615,635,680 14,196,032,440
Statutory reserve 15 8,439,142,029 7,411,663,610
Other reserve 17 1,274,947,661 900,929,703
Retained earnings 18 1,634,223,204 1,421,011,380

Total liabilities and shareholders' equity 256,537,462,437 235,173,797,541

National Bank limited

Balance Sheet
As at 31 December 2014
Note 2014 2013
BDT BDT
OFF-BALANCE SHEET ITEMS
Contingent liabilities 63,525,835,160 73,504,560,576
Acceptances and endorsements 26,589,876,531 26,767,247,428
Letters of guarantee 19 13,175,262,833 14,877,841,680
Irrevocable letters of credit 16,031,139,941 23,722,707,953
Bills for collection 7,729,555,855 8,136,763,515
Other contingent liabilities - -
Other commitments - 894,738,450
Lease rental commitments - -
Documentary credits and short term trade-related transactions - -
Forward assets purchased and forward deposits placed - -
Undrawn note issuance and revolving facilities - -
Undrawn formal standby facilities, credit lines - -
and other commitments
Spot and forward foreign exchange rate contracts - 894,738,450
Other exchange contracts - -

Total off-balance sheet items including contingent liabilities 63,525,835,160 74,399,299,026

These financial statements should be read in conjunction with annexed notes for National Bank Limited

Managing Director Director Director Chairman

See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 14 May 2015 Chartered Accountants

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2.12 Profit and Loss Account (Income Statement) :
National Bank Limited
Profit and Loss Statement
For the year ended 31 December 2014
Notes 2014 2013
BDT BDT
Interest income 20 20,621,010,559 18,981,405,720
Less: Interest paid on deposits and borrowings etc 21 16,511,700,458 16,166,135,843
Net interest income 4,109,310,101 2,815,269,877
Investment income 5,952,423,959 5,213,021,470
Commission, exchange and brokerage 23 699,384,658 1,806,869,913
Other operating income 24 754,480,472 956,484,125
8,406,289,089 7,976,375,508
Total operating income 12,515,599,190 10,791,645,385
Salaries and allowances 25 2,956,860,843 2,700,063,918
Rent, taxes, insurance, electricity etc 26 556,559,345 491,965,428
Legal expenses 27 24,708,834 33,950,173
Postage, stamp, telecommunication etc 28 76,737,432 79,124,089
Stationery, printing, advertisements etc 29 109,608,669 119,796,813
Managing Director's salary and allowances 30 6,678,709 10,331,291
Directors' fees and other benefits 31 2,445,639 2,249,035
Auditors' fees 32 450,000 425,000
Repairs, maintenance and depreciation 33 369,859,989 369,007,774
Charges on loan losses 1,345,510,729 3,017,758,260
Other expenses 34 343,786,906 427,060,096
Total Operating expenses 5,793,207,095 7,251,731,877
Profit before provision 6,722,392,095 3,539,913,508
Provision for loans and advances
Specific provision 13.2(a) 365,000,000 -
General provision (including off - balance sheet items) 13.2(b) 440,000,000 -
805,000,000 -
Provision for other classified assets 13.4 780,000,000 50,000,000
Total provision 1,585,000,000 50,000,000
Profit before tax 5,137,392,095 3,489,913,508
Provision for taxation
Current tax 13.1 2,450,000,000 1,365,000,000
Deferred tax 27,098,612 8,322,900
2,477,098,612 1,373,322,900

Net profit after tax 2,660,293,483 2,116,590,608

Retained earnings brought forward from previous year 1,421,011,380 854,165,420
4,081,304,863 2,970,756,028
Appropriations
Statutory reserve 15 (1,027,478,419) (697,982,702)
Dividend
6% cash for 2012 - (851,761,946)
10% bonus shares for 2013 (1,419,603,240) -
(2,447,081,659) (1,549,744,648)
Retained earnings carried forward 1,634,223,204 1,421,011,380

Earnings per share (EPS) 35 1.70 1.36

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These financial statements should be read in conjunction with annexed notes for National Bank Limited

Managing Director Director Director Chairman

See annexed report of the date
2.13 Cash Flow Statement :

National Bank limited

Cash flow statement
As at 31 December 2014
Notes 2014 2013
BDT BDT
A) Cash flows from operating activities
nterest received 20,991,016,888 18,843,746,506
Interest paid (16,539,015,330) (15,278,856,150)
Income from investments 4,889,892,619 4,787,697,219
Fees, commission, exchange and brokerage 1,699,384,658 1,806,869,913
Paid to employees (2,965,985,191) (2,712,644,244)
Paid to suppliers (846,381,197) (820,123,100)
Income taxes paid (1,442,616,790) (2,012,846,969)
Received from other operating activities 750,445,900 811,773,079
Paid for other operating activities (343,783,735) (426,989,540)
Operating profit before changes in operating 6,192,957,822 4,998,626,714
assets and liabilities
Increase/(decrease) in operating assets and liabilities
Sale of trading securities-quoted shares 646,380,260 943,892,362
Purchase of trading securities-quoted shares (65,942,780) (827,787,249)
Loans and advances to other banks - -
Loans and advances to customers (21,494,645,612) (27,946,957,344)
Other assets (1,656,828,813) 548,940,154
Deposits from other banks (4,548,616,552) 5,124,462,940
Deposits from customers 14,201,830,151 31,186,773,702
Other liabilities 1,275,052,692 1,550,057,372
(11,642,770,654) 10,579,381,937
Net cash from /(used in) operating activities (5,449,812,832) 15,578,008,651

B) Cash flows from investing activities

Proceeds from sale of securities 45,703,238,368 34,704,173,770
Payments for purchase of securities (44,429,018,237) (36,711,564,950)
Purchase of property, plant and equipment (418,893,970) (943,127,728)
Sale proceeds of fixed assets 4,451,699 184,965,653
Net cash from /(used in) investing activities 859,777,860
(2,765,553,255)
C) Cash flows from financing activities
Borrowings from other banks, 5,854,203,775 (9,063,736,387)
financial institutions and agents
Redeemption of subordinated bonds (400,000,000) (500,000,000)
Cash dividend paid - (851,761,946)
Net cash from /(used in) financing activities 5,454,203,775 (10,415,498,333)
D) Net increase /(decrease) in cash and 864,168,803 2,396,957,063
cash-equivalents (A+B+C)

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 E) Effects of exchange rate changes on cash 3,924,407 (69,937,026)
and cash equivalents
F) Cash and cash-equivalents at beginning of the year 20,588,589,202 18,261,569,165
G) Cash and cash-equivalents at end of the year (D+E+F) 21,456,682,412 20,588,589,202

Cash and cash-equivalents at end of the year

Cash in hand (including foreign currencies) 2,181,316,440 2,350,521,500
Balances with Bangladesh Bank and its agent bank(s) 15,631,964,247 12,508,983,181
Balances with other banks and financial institutions 3,535,896,025 5,624,337,221
Money at call and on short notice 98,300,000 98,900,000
Reverse repo - -
Prize bonds 9,205,700 5,847,300

21,456,682,412 20,588,589,202

for National Bank Limited

Managing Director Director Director Chairman

See annexed report of the

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 14 May 2015 Chartered Accountants

Page | 16
 CHAPTER 09
ANALYSIS

In this chapter, I have used the ratio analysis, I have analyzed Return on Asset of NBL,
Return on Equity of NBL, Net profit margin ratio, Equity multiplier ratio, Fixed asset
turnover ratio, Total asset turnover ratio etc. And I have also analyzed SWOT analysis of
National Bank Limited.

9.1 Return on Equity (ROE) :

Return on equity measures the rate of return on stockholders' investment. If' ROE is the
less then other companies ROE, it indicates a decrease in stock price. The component of
ROE indicates the performance of the company.

Calculation of the ROE :

ROE = Net Income / Total Equity Capital

The Return on equity (2010-2014) of National Bank Limited is shown in the following
table :

Table 9.1 : ROE of NBL

Year ROE
2010 48.96%
2011 29.96%
2012 6.78%
2013 9.14%
2014 10.45%

Source : Annual Report of NBL (2010 -2014)

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 Return on Equity

60.00%

50.00%

40.00%

30.00%
Column2
20.00%

10.00%

0.00%
2010 2011 2012 2013 2014

Figure 9.1 : ROE of NBL

Return on equity indicates the percentage or return on its equity. In the year 2010 the
ROE was 48.96%. Then it started to decrease. In the year 2011 ROE was 29.96%. and
then it has been decreased to 6.78% in 2012. Then it has been again started to increase in
the year 2013 and 2014. The highest ROE was 48.96% in the year 2010 and the lowest
was 6.78% in the year 2012.

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9.2 Return on Assets (ROA) :

Return on assets indicates how successfully a firm is using its assets to generate its
income. Return on asset also measures the efficiency or firm 's manager to using its
assets.

ROA can be calculating by the following formula :

ROA = Net Income / Total Asset.

So the calculated ROA (2010-2014) of NBL is shown in the following table :

Table 9.2: ROA of NBL

Year Net Income Total Asset ROA
2010 6860.34 134732.31 5.09%
2011 6085.70 169037.38 3.60%
2012 1487.91 205207.33 0.73%
2013 2116.59 235173.80 0.90%
2014 2660.29 256537.46 1.04%
Source : Annual Report of NBL (2010 -2014)

The calculated R.OA (2010-2014) of National Bank Limited is shown in the following
graph chart :
Return on Asset
6.00% 5.09%
5.00%
4.00% 3.60%
3.00%
2.00%
1.00% 0.73% 0.90% 1.04%
0.00%
2010 2011
2012 2013
2014
Column2

Figure 9.2 : ROA of NBL

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From the table it is clear that the return on assets was not fluctuated enough from the Year
2010 to 2014. In the year 2010 it was 5.09%. Then it has been decreased to 3.60% in the
year 2011. Then it has been again decreased to 0.73% in 2012. But in 2013 ROA has been
increased to 0.90%. The highest return on asset was in the year 2010 which was 5.09%.
The lowest was 0.73% in the year 2012.
9.3 Net Profit Margin Ratio :

Net profit margin ratio provides information about the ability of management to control
firms expenses. It explains how effectively and efficiently the managers are managing
the firm's total expenses.

Net profit margin can be calculated by the following formula :

Net Profit Margin = Net Income / Sales.

Net profit margin ratio (2010 -2014) of NBL is shown in the following table :

Table 9.3: Net Profit Margin of NBL

Year Net Income Sales Net Profit Margin
2010 6860.34 9616.14 71.34%
2011 6085.70 14434.75 42.16%
2012 1487.91 19103.18 7.79%
2013 2116.59 18981.41 11.15%
2014 2660.29 20621.01 12.90%
Source : Annual Report of NBL (2010 -2014)

Net profit margin ratio of National Bank Ltd. for 2010 -2014 is shown in the following
graph chart :
Net Profit Margin
80.00% 71.34%
70.00%
60.00%
50.00% 42.16%
40.00%
30.00%
20.00% 12.90%
11.15%
7.79%
10.00%
0.00%
2010 2011 2012 2013 2014
Column2

Figure 9.3 : Net Profit Margin of NBL

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The net profit margin ratio of NBL has been fluctuated enough from the year 2010 to
2014. In 2010 it was 71.34% and in the year 2011 it has been decreased to 42.16%. Then
it has again decreased to 7.79% in 2012. But in 2013 it has been started to increase. In the
year2014 the net profit margin ratio has been jumped to 12.90%. The highest net profit
margin ratio was 71.34% in the year 2010 and the lowest was 7.79% in the year 2012.
9.4 Equity Multiplier Ratio :

Equity multiplier indicates the amount of assets is backed by the owners equity. The
owners equity multiplier measured by the following formula :

Equity Multiplier = Total Assets / Total Equity.

The Equity multiplier ratio (2010-2014) of NBL is shown in the following table :

Table 9.4: Equity Multiplier Ratio of NBL

Year Total Assets Total Equity Equity
Multiplier
Ratio
2010 134732.31 19105.60 7.05 Times
2011 169037.38 21522057 7.85 Times
2012 205207.33 22374.27 9.17 Times
2013 235173.80 23929.64 9.83 Times
2014 256537.46 26963.95 9.52 Times
Source : Annual Report of NBL (2010 -2014)

Equity multiplier ratio (2010-2014) of NBL is shown in the following chart :

Column2

9.83 9.52
9.17
7.85
7.05

2010 2011 2012 2013 2014

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 Figure 9.4 : Equity multiplier ratio of NBL

From the table we can see that in the year 2010 the EM ratio was 7.05. In 2011,2012 and
2013 EM ratio has been again increased to 7.85 and 9.17 and 9.83 times respectively.
Then it has been decreased 9.52 in 2014. The highest EM ratio 9.83 in the year 2013 and
the lowest was 7.05 in the year 2010.
9.5 Fixed Assets Turnover Ratio :

Fixed asset turn over ratio indicates how effectively and efficiently the organization is
using its fixed assets to generate revenue. It gives the idea about total sales comparatively
with its fixed assets.

Fixed assets turnover ratio can be calculated by the following formula :

Fixed assets turn over = Total sales / Total fixed assets.

The result of fixed assets turnover ratio (2010-2014) of NBL is shown in the following
Table :
Table 9.5: Fixed assets turnover Ratio of NBL
Year Total sales Total fixed Fixed assets
assets. turnover
ratio
2010 4139.99 2609.46 1.57 times
2011 5245.92 2310.94 2.27 times
2012 5423.52 2340.19 2.32 times
2013 2815.27 2973.25 0.95 times
2014 4109.31 3099.34 1.33 times
Source : Annual Report of NBL (2010 -2014)

Fixed assets turnover ratio of NBL (2010-2014) is shown in the following graph :

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 Series 3
2.27 2.32

1.57
1.33
0.95

2010 2011 2012 2013 2014

Figure 9.5 : Fixed assets turnover ratio of NBL

The fixed asset turnover ratio of NBL was increasing consistently from the year 2010 to
2012. But in the year 2013 it has decreased. The highest was 2.32 times in the year 2012
and the lowest was 0.95 times in the year 2013.
9.6 Total Assets Turnover Ratio :

Total assets turnover ratio represents the ability of the management team of any firm to
employ assets effectively to generate revenue.

The formula of calculating the Total asset turnover is given below :

Total Assets Turnover = Operating Revenue / Total Assets

The Total assets turnover ratio (2010-2014) of NBL is shown in the following table :

Table 9.6 : Total Assets turnover Ratio of NBL

Year Operating Total Assets Total Assets
Revenue Turnover
2010 130350.19 134732.31 0.97 Times
2011 127436.47 169037.38 0.75 Times
2012 120419.81 205207.33 0.59 Times
2013 107916.45 235173.80 0.46 Times
2014 125155.10 256537.46 0.49 Times
Source : Annual Report of NBL (2010 -2014)

The Total assets turnover ratio (2010-2014) of NBL is shown in the following graph
chart:

Total Asset Turnover

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 Figure 9.6 : Total assets turnover ratio of NBL

From the table we can see that total assets turnover ratio was decreasing consistently from
the year 2010 to 2013. The highest was in the year 2010 and the lowest was 2013.
9.7 Price Earning Ratio :

Price earning ratio usually estimates that the investor will invest how much money for
earning one unit of money. It is a relation between the market price of the common stock
and the earning per share. So the firm with more prices earning ratio is like to the
investor, because it provide the investor more profit. Price earning ratio also gives the
idea that the firm is faster growing low risk taker or slower growing high risk taker.

Price earning ratio can be calculated by following formula :

Price Earnings ratio = Market price per share of common stock / Earning per share.

Price earnings ratio (2010-2014) of NBL is shown in the following table :

Table 9.7 : Price Earnings Ratio of NBL

Year Market price Earnings per Price Earning
per share of share Ratio
common stock
2010 191.60 7.97 24.04
2011 66.80 4.29 15.57
2012 22.10 1.05 21.05
2013 11.80 1.36 8.68
2014 11.40 1.70 6.71
Source : Annual Report of NBL (2010 -2014)

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Price earnings ratio (2010-2014) of NBL is shown in the following graph chart :

Price Earning Ratio

Column2
24.04

21.05

15.57

8.68
6.71

2010 2011 2012 2013 2014

Figure 9.7 : Price Earning Ratio of NBL

From the graph we can see that in the year 2010 price earning ratio was 24.04 and then
decrease 15.57 in the year 2011. But in the year 2012 price earning ratio increased 21.05
and then decreased in year 2013 and 2014 consistently 8.68 and 6.71

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