Course Title – FIN464

PERFORMANCE ANALYZING OF TWO BANKS

(Before, During & After Pandemic)

Submitted By –
NAME ID
Hussain MD Istiaque 2111061630
Hubert Glen Sarker 2031389630
Arim Kundu Das 2021699630
Fahim Biswas 2111372630
Marium Benty Halim 2012296630

Submitted To –
Trisha Ahmed (TsA)

Department of Accounting and Finance

Submission Date -
11/06/2024

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 TABLE OF CONTENTS

CONTENT PAGE NUMBER

EXECUTIVE SUMMARY 3

INTRODUCTION 4

OVERVIEW OF THE BANKS 4-5

COMPETITORS OF BOTH BANKS 5

BANK PERFORMANCE ANALYSIS 6-29

CREDIT RATING 30-31

CONCLUSION AND 31-32

RECOMMENDATION

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 Executive Summary

This research examines the performance of the National Credit and Commerce Bank (NCCB)
and One Bank over the six-years period 2018–2023 which means before, during and after
pandemic. The analysis shows that both banks grew significantly during the five-year period,
with NCCB displaying constant financial stability and maintaining a strong capital adequacy
ratio. In contrast, One Bank experienced a faster growth rate than NCCB. According to the
profitability analysis, both banks generated positive net income over the course of five years. In
terms of asset quality, both banks had relatively low levels of non-performing loans (NPLs)
across the study period. However, both banks should continue to evaluate their loan portfolios
and take proactive steps to reduce potential credit concerns. The management teams, regulators,
and investors of NCCB and One Bank can use the insightful information from this analysis to
develop plans that will enhance their market positions and promote sustainable growth.

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 Introduction

This report is based on the performance analysis of two banks. They are One Bank and NCC
Bank. To analyze the performance, we did ratio analysis. Which includes liquidity ratios,
profitability ratios, financial risks, market position and efficiency. We used table and graphs to
show comparison from a better angle. Apart ratio analysis we also observed the Credit Ratings
and the Capital Adequacy Ratio (CAR). We did our calculation and observation based on three
time periods and within 6 years. Which are before pandemic (2018-2019), during pandemic
(2020-2021) and after pandemic (2022-2023).

Overview of One Bank and NCC Bank

ONE Bank LTD

The Registrar of Joint Stock Companies approved ONE Bank Limited's registration as a private
commercial bank in May 1999. The bank is expected to demonstrate the highest level of
commitment to the community and its customers. The major areas of concentration are
efficiency, transparency, correctness, and motivation, with the spirit and determination to prosper
as ONE Bank in terms of both value and reputation. In May 1999, ONE Bank Limited was
registered as a private commercial bank with the Registrar of Joint Stock Companies. The bank
is obligated to fully commit to the community and its customers. The key areas of concentration
are efficiency, transparency, correctness, and motivation, with the spirit and determination to
succeed as ONE Bank in terms of quality and reputation. The key areas of concentration are
efficiency, transparency, correctness, and motivation, with the spirit and determination to succeed
as ONE Bank in terms of quality and reputation. OBL is a commercial bank in the private sector
that accepts deposits from the general public through a number of savings programs and makes
profitable loans to a range of sectors. Appropriate risk assessment and compliance are closely
followed while choosing an asset and liability portfolio. Working capital and long-term
borrowing are the two main topics of bank financing. The bank's main areas of concentration in
the industrial sector are the textile and RMG sectors. Increased exposure to RMG has led to a
notable growth in the bank's non-funded business. The bank has made the initiative to increase
its involvement in SMEs in order to increase the availability of bank credit for small businesses.
OBL offers real-time online banking and has created Visa debit and credit cards, ATMs, e-

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banking, mobile banking, and other services. A full-fledged Disaster Recovery (DR) center has
been established in Sirajganj to ensure the bank's operational continuity. OBL has set up a
consolidated loan administration and trade processing facility in the Dhaka and Chattogram
zones.

National Credit and Commerce Bank Limited

National Credit and Commerce Bank began its involvement in the country's financial sector in
1985 as an investment company. Our mission is to provide exceptional financial services to the
local community through strong customer relationships and long-term solutions by integrating
cutting-edge technology, experience and financial strength, and creating a cohesive and
welcoming atmosphere where customers and employees can work and thrive. Its objective was to
mobilize and invest resources from within the country to strengthen the country's industrial and
commercial sectors while acting as a catalyst for the establishment of capital markets. With the
approval of the Central Bank, the company operated 16 branches until 1992, when it transformed
into a full-fledged private trading company. The Bank was established in 1993 with a paid-up
capital of Tk.39 billion to serve the country on a larger scale. NCC Bank Limited has built an
enviable reputation by providing honest and attentive service to each of its customers in a
complex technological environment since its inception.The Bank has set a new standard in trade,
foreign exchange and industrial credit. In addition, the bank's diversity of deposit and credit
products has attracted a number of business and individual customers who feel comfortable with
this service.

Competitors of Both Banks

As a national mostly all the national and commercially trading banks can be referred as their
competitor. We can name few of the competitors like – United Commercial Bank, AB Bank,
Eastern Bank Limited, Prime Bank etc.

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 Bank Performance Analysis

Liquidity Ratios

Liquidity ratios are important for creditors and debtors because they provide insight into a
company's ability to meet its short-term debt obligations. A higher liquidity ratio indicates that a
company has sufficient liquid assets to cover its short-term liabilities, which is a positive sign for
creditors and debtors alike.

Cash Position Indicator

The cash position indicator assesses a company's capacity to pay its current liabilities. It
represents the percentage of total assets comprising cash and deposits owed to other financial
institutions. The amount of money currently reported on the books of a corporation, investment
fund, or bank is known as its cash position. It represents the company's strength and ability to
pay.

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Cash Position Indicator = Cash & deposits due from depository institutions / total assets

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 7.68% 10% 9.94% 9.00% 9.86% 10%
One Bank 9.34% 11.12% 12.03% 7.79% 9.38% 9.76%

Time Series Analysis

The NCC Bank's liquidity position gradually increased from 2018 to 2020, reaching 9.94% in
2020. However, it decreased to 9% in 2021. After the pandemic, the bank's liquidity position
increased to 9.86% as it kept up with the pace of the world's recovery.

Similarly, ONE Bank faced a similar situation. Its liquidity position increased from 2019 to 2020
but dropped in 2021. However, it started healing from 2022-2023.

Both banks' liquidity positions were affected by the pandemic, but they were able to recover and
maintain a strong liquidity base.

Cross-Sectional Analysis

We can see that both NCC Bank and ONE Bank were growing before the pandemic and were
affected during the pandemic. NCC Bank's liquidity ratio dropped from 9.94% to 9.00%, while
ONE Bank's ratio dropped from 12.03% to 7.79%. However, both banks showed an upward trend
after pandemic.

In conclusion, if we compare both banks, we can see that NCC Bank has performed better in terms
of liquidity, with a higher cash ratio compared to ONE Bank. This means that NCC Bank has more
cash to meet its daily operations compared to ONE Bank. Given that neither bank has performed
exceptionally well in terms of liquidity, the recommendation would be to increase liquidity by
investing in government securities to reduce the liquidity risk. This would help both banks to better
manage their liquidity and meet their daily operational expenses in the event of a liquidity crisis.

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Liquid securities indicator

Liquidity ratios are financial metrics used to assess a company's ability to pay off its short-term
debt commitments without raising additional cash. These ratios analyze a company's ability to
satisfy its financial commitments and its margin of safety by utilizing indicators such as the current
ratio, quick ratio, and operating cash flow ratio.

Liquid securities indicator = government securities / total assets.

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 11.93% 12.74% 13.94% 14.25% 14% 13%
One Bank 8.67% 9.56% 8.4% 10.18% 9.26% 9.00%

Time Series Analysis

Regarding NCC Bank, we can see a growing liquidity security ratio from 2018 to 2019, which was
before the pandemic. In 2020 and 2021, it also increased, which implies a good performance.
However, after the pandemic, the percentage dropped to 14% in 2022.

On the other hand, we can see the growth of One Bank from 2018 to 2019, which was 8.67% to
9.56%. However, it slightly decreased during the pandemic in 2020, which was 8.4%. Again, we

8
can see that in 2021, during the pandemic, their performance grew, and the ratio was 10.18%, the
highest of all the other years. However, after the pandemic, it decreased to 9.26%.

In summary, both NCC Bank and One Bank experienced fluctuations in their liquidity security
ratios during the pandemic. NCC Bank's ratio dropped from 9.94% to 9.00% during the pandemic,
while One Bank's ratio dropped from 12.03% to 7.79%. However, both banks showed an upward
trend in 2022, indicating an improvement in their liquidity positions.

Cross-Sectional Analysis

NCC Bank has performed better than One Bank in terms of liquidity management. NCC Bank
has maintained a stable liquidity position by relying more on cash and investing less in securities.
This approach has allowed NCC Bank to maintain a higher liquidity securities indicator.

Capacity ratio

The capacity ratio is a measure of solvency that compares the total net loans and leases to the total assets
of a bank. It is calculated by dividing the net loans and leases by the total assets and multiplying by 100.
A higher capacity ratio indicates that the bank has less liquidity and is more likely to default on its loans
and leases. This is because loans and leases are typically long-term and non-marketable, making them less
liquid than other assets.

Capacity ratio = net loans & leases / total assets.

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 (Before Pandemic) (During Pandemic) (After Pandemic)
Year 2018 2019 2020 2021 2022 2023
NCC Bank 73.08% 70.47% 70% 69.63% 70.37% 71%
One Bank 74.75% 72.24% 73.59% 71.74% 71.70% 71.5%

Time Series Analysis

we can see that the capacity ratio of NCC Bank was 73.08% in 2018, which was high. However,
it decreased from 2019 to 2021, which is a positive trend. In 2021, the capacity ratio slightly
increased. On the other hand, ONE Bank's capacity ratio decreased from 2018 to 2022, which is a
negative trend.

Cross-Sectional Analysis

NCC and ONE Bank faced a downward trend in their liquidity ratios from 2018 to 2022,
indicating a stable situation. This trend suggests that both banks are limiting their lending and
leasing activities to protect themselves from a cash shortage. Despite ONE Bank expecting a
higher return than NCC Bank, the lower the bank's liquidity position, the higher the ratio. The
trends at both banks were similar, and their values were comparable. In conclusion, both
institutions should focus on both illiquid and liquid assets to maintain a healthy liquidity
position.

Profitability Ratio

Profitability ratios are financial metrics used to assess a company's ability to generate profit relative to its
sales, operational costs, balance sheet assets, or shareholders' equity over time. These ratios are calculated
using data from a single point in time and are used to evaluate a company's financial performance and
efficiency in converting sales into profit

Return on equity

ROE is defined as the return on net assets since shareholders' equity equals a company's assets less its
debt. The return on equity (ROI) is defined as the return on the net assets, as a company's assets less its
debt equals its owners' equity. The better a corporation is at transforming equity capital into profits, the
higher its ROE

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Time series analysis:

ROE
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
NCC Bank One Bank

2018 2019 2020 2021 2022 2023

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 9.7% 9.96% 7.94% 4.77% 8.29% 9.1%
One Bank 10.87% 11.6% 10.91% 11.48% 11.68% 11.72%

One Bank
a. Before Covid: In the year 2018 and 2019, One Bank had a higher ROE. The ROE ratio
was 9.7% and 9.96%, respectively. It increased yearly.
b. During Covid: In the year 2020, the ROE was 7.94%, and in 2021, it was 4.77%. Over
the year, the ROE decreased significantly. The margin was also higher.
c. After Covid: One Bank had a good comeback after the Covid situation. The ROE
increased to 8.29%.

NCC Bank
a. Before Covid: In the year 2018 and 2019, NCC Bank had an ROE of 10.87% and 11.6%,
respectively. So, it increased.
b. During Covid: During the period of Covid in the year 2020, it decreased to 10.91%. After
that, in the year 2021, it again increased to 11.48%. The peak period of Covid affected
little in the ROE, but it again increased in 2021.
c. After Covid: In 2022, NCC Bank had seen a rise in their ROE, which is 11.66%.

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Cross sectional Analysis

One Bank and NCC Bank experienced fluctuations in their ROE during the Covid-19 pandemic.
One Bank's ROE decreased significantly during the pandemic, but it recovered after the pandemic.
NCC Bank's ROE also decreased during the pandemic, but it increased again in 2021 and further
rose in 2022.

Return on Assets

Return on assets (ROA) is a financial metric used to evaluate a company's profitability compared to its
total assets. It measures how efficiently a business uses its assets to generate profits. ROA is calculated by
dividing a company's net income by its total assets and is expressed as a percentage.

The formula for ROA is:

ROA = (Net Income / Total Assets) x 100

Time series analysis:

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 0.53% 0.57% 0.42% 0.27% 0.5% 0.3%
One Bank 0.81% 0.83% 0.88% 0.92% 0.97% 0.99%

ONE BANK

a. Before Covid: The ROA ratio increases in 2018 and 2019, which are 0.53% and
0.57%, respectively.
b. During Covid: In the year 2020, the ROA was 0.42%, and in 2021, it was 0.27%.
There was a fall in ROA. And the margin was also quite high.
c. After Covid: In 2022, ROA increases to 0.5%, still it is less than the before Covid
period in the year 2018 and 2019, but One Bank increased their ROA after Covid
situation in 2022.

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NCC BANK

a. Before Covid: In 2018 and 2019, their ROA was higher yearly, which is 0.81% and
0.83%, respectively.
b. During Covid: In the year 2020 and 2021, NCC Bank managed to keep their ratio
higher. As we can see in 2020, their ROA was 0.88%, and 0.92% in 2021, which is
higher from the before Covid situation.
c. After Covid: The ROA ratio in 2022 was 0.97%. Overall, we can see that NCC Bank
has an increasing ratio throughout the 5 years.

Cross-Sectional Analysis:

One Bank and NCC Bank experienced fluctuations in their ROA during the Covid-19 pandemic.
One Bank's ROA decreased significantly during the pandemic, but it recovered after the pandemic.
NCC Bank's ROA remained higher throughout the pandemic and increased further in 2022.

Net interest margin

The net interest margin (NIM) is a crucial financial metric that compares the net interest revenue
generated by a financial institution from credit products such as loans and mortgages to the outgoing
interest paid to holders of savings accounts and certificates of deposit (CDs). The NIM, expressed as a
percentage, is a profitability measure that estimates a bank's or investment firm's long-term viability. This

13
indicator assists potential investors in deciding whether or not to participate in a specific financial
services organization by offering insight into the profitability of their interest revenue vs interest costs.

Time series analysis:

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 2.53 2 1.8 1.83 2.33 2.78
One Bank 2.94 2.16 1.96 1.99 2.25 2.35

Cross-sectional Analysis:

ONE BANK –

a. Before Covid: In 2018, the Net Interest Margin (NIM) was 2.53%, and in 2019, it slightly
decreased to 2.00%.

b. During Covid: In 2020, the NIM decreased to 1.80%, and then in 2021, it increased to
1.83%. Although the NIM was lower than the previous two years, it increased in 2021.

c. After Covid: The NIM for One Bank rose to 2.33% in 2022.

NCC Bank -

a. Before Covid: In 2018 and 2019, the NIM was 2.94% and then it slightly decreased in
2019 to 2.16%.

b. During Covid: In 2020, the NIM decreased to 1.96%, and in 2021, it was 1.99%.
Although it slightly increased in 2021, the ratio was lower compared to the last two years.

c. After Covid: In 2022-2023, NCC Bank managed to rise their NIM to 2.25-2.35%.

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One Bank and NCC Bank experienced fluctuations in their Net Interest Margin during the
Covid-19 pandemic. One Bank's NIM decreased significantly during the pandemic but recovered
in 2021. NCC Bank's NIM also decreased during the pandemic but increased slightly in 2021.
Both banks managed to improve their NIM after the pandemic, with One Bank's NIM rising to
2.33% and NCC Bank's NIM rising to 2.25%.

Net non-interest margin

Non-interest income is a crucial revenue source for banks and creditors, primarily generated from various
fees such as deposit and transaction fees, insufficient funds (NSF) fees, annual and monthly account
service charges, inactivity fees, check and deposit slip fees, and credit card penalty fees. These fees are
charged by institutions to augment their income and ensure financial liquidity during periods of
heightened default rates.

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 0.0086 0.0069 0.0091 0.0095 0.0097 0.0099
One Bank 0.0092 0.0095 0.0011 0.0112 0.0121 0.0126

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ONE BANK -
a. Before Covid: The net non-interest margin for One Bank was 0.86% in 2018. It then
slightly decreased to 0.69% in 2019.
b. During Covid: During the Covid period in 2020, the net non-interest margin increased
to 0.91% and further increased to 0.95% in 2021.
c. After Covid: In 2022, the net non-interest margin for One Bank increased to 0.97%.
Over the past 5 years, the net non-interest margin ratio for One Bank has shown an
increasing trend.

NCC BANK -
a. Before Covid: In 2018, the net non-interest margin rate for NCC Bank was 0.92%,
which increased to 0.95% in 2019.
b. During Covid: In 2020, the net non-interest margin decreased to 0.11%, but in 2021,
it increased to 1.12%. Although it fluctuated during the Covid period, the overall
trend was upward.
c. After Covid: In 2022, the net non-interest margin for NCC Bank increased to 1.21%.

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Cross Sectional Analysis

One Bank and NCC Bank experienced fluctuations in their net non-interest margins during the
Covid-19 pandemic. One Bank's net non-interest margin increased consistently over the 5-year
period, while NCC Bank's net non-interest margin decreased in 2020 but recovered in 2021 and
2022, reaching 1.21% in 2022.

Earnings per share

Earnings per share (EPS) is determined by dividing a company's net income by the number of
outstanding shares of common stock. Net income is the money available to all shareholders after
deducting a company's expenditures and expenses.

The formula for calculating EPS is:

EPS = (Net Income - Preferred Dividends) / Weighted Average Common Shares Outstanding

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 1.22 1.54 1.4 0.95 1.55 1.72
One Bank 2.45 2.3 2.12 2.03 2.65 2.82

ONE BANK

a. Before Covid: One Bank had a fluctuating EPS rate in the 5 years. In 2018, it had EPS
1.22, which increased to 1.54 in 2019.

b. During Covid: In the year 2020 and 2021, the EPS decreased to 1.40 and 0.95,
respectively.

c. After Covid: In the year 2022, the EPS increased to 1.55 and in 2023, EPS increased
from 1.55 to 1.72.

NCC BANK -

a. Before Covid: In the year 2018, the EPS was 2.54, which decreased to 2.30 in 2019.

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 b. During Covid: In 2020, the EPS was 2.12, and then in 2021, it decreased to 2.03.

c. After Covid: In the year 2022, the EPS increased to 2.65. Although the EPS rate declined
during the Covid situation, NCC Bank managed to increase their EPS after the pandemic in the
year 2022.

Cross-Sectional Analysis:

One Bank and NCC Bank experienced fluctuations in their EPS during the Covid-19 pandemic.
One Bank's EPS decreased significantly during the pandemic but recovered in 2022. NCC Bank's
EPS also decreased during the pandemic but increased in 2022, indicating a recovery.

Financial Risk

The chance of losing money on an investment or business transaction is referred to as financial

risk. Financial risks may cause both people and organizations to lose cash. Financial hazards
include credit, liquidity, and operational risks, among others. (Verma, 2023).

These are some financial risk ratios:

1. Debt Ratio

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2. Debt to Equity Ratio

Debt Ratio

The concept "debt ratio" refers to a financial ratio that assesses how much leverage a business
has. The ratio of total debt to total assets, represented as a decimal or percentage, is known as the
debt ratio. The percentage of a company's assets that are financed by debt is one way to
understand it.

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Debt Ratio = !"#$% *++(#

Time series analysis

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 0.95 0.95 0.94 0.95 0.92 0.91
One Bank 0.92 0.92 0.92 0.94 0.92 0.93

If we look at the table, the numbers remain pretty much stable in the pre-pandemic year and post
covid year. The numbers show that the increasing debt to asset ratio has not changed over time.
Aside from the worrisome statistic, the fluctuation data were insignificant and did not cause any
concern as it seems stable more or less from 2018 to 2023.

Debt Ratio
0.96

0.95

0.94

0.93

0.92

0.91

0.9

0.89
2018 2019 2020 2021 2022 2023

NCC One bank

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Cross-Sectional Analysis

Between both banks have a pretty well oriented and organized debt situation. More than 90% of
the debt can be covered by asset which portray a positive picture for both the banks. Aside from
the worrisome statistic, the fluctuation data were insignificant and did not cause any concern as it
seems stable more or less from 2018 to 2023.

Debt to Equity Ratio

The debt-to-equity (D/E) ratio, which measures a company's financial leverage, is determined by
dividing its total liabilities by the value of its shareholders. The D/E ratio is a crucial indicator in
corporate finance. It gauges how much debt a business is using to fund operations as opposed to
using cash on hand. A specific kind of gearing ratio is the debt-to-equity ratio.

Debt to Equity Ratio = (Total Debt)/ (Total Equity)

Time series analysis

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 12.58 10.70 11.36 13.16 12.10 12.08
One Bank 17.49 17.56 16.91 16.76 16.13 16.06

One bank's D/E ratio was 17.49 in 2018, decreased to 16.76 in 2020, and is pretty much the same
till 2022. On the other hand, NCC banks go through up and down. In 2018 it was 12.58 and in
2019 it decreased to 10.70, next two years it went up and ended up 12.10 in 2023.

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 Debt to Equity Ratio
20
18
16
14
12
10
8
6
4
2
0
2018 2019 2020 2021 2022 2023

NCC One bank

Cross-Sectional Analysis

If we look these two banks, NCC bank's ratio decrease in pandemic year to 10.70 means at that
time bank maintain it D/E ratio well. and in 2021 and 2023 it is going back to their regular
conditions.

On the contrary one banks' debt to equity ratio was decrease by around 1%, 17.49 to 16.13, which
means bank is doing well over time to maintained it D/E ratio.

Market position

Market position can be used to evaluate a company's financial standing and to analyze whether a
stock is properly valued, overpriced, or underpriced. The most popular market value ratios, though
there are others, are the price-earnings, market-to-book, and dividend-per-share ratios. Using
market value ratios, management can learn how banks and other investors see the company's
performance.

Price earnings Ratio

𝐌𝐚𝐫𝐤𝐞𝐭 𝐩𝐫𝐢𝐜𝐞 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞 𝐨𝐟 𝐜𝐨𝐦𝐦𝐨𝐧 𝐬𝐭𝐨𝐜𝐤

Price Earnings Ratio =
𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞

21
Time series analysis:

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 7.73 5.22 5.59 6.22 5.61 6.32
One Bank 10.14 7.93 5.98 6.24 7.18 7.28

ONE BANK - This shows that One Bank's price-to-earnings ratio increased in 2018.The price to
earnings ratio in 2018 was 10.14 prior to the epidemic. The price-to-earnings ratio for 2019 was
7.93. Following the COVID-19 pandemic in 2020, the ratio increased to 5.98 in 2021 and 6.24 in
2021. The ratio was 7.28 in 2023 following the pandemic. Prior to COVID-19, One bank had a
greater price-to-earnings ratio in 2018 and 2019. The ROE ratio stood at 7.93 and 10.14. In the
course of COVID-19 Price-to-earnings ratios were 5.89 in 2020 and 6.24 in 2021. Following the
COVID crisis, one bank made a strong recovery.

NCC Bank - Additionally, we can observe that NCC Bank's price-earnings ratio decreased
before to the pandemic from 2018 to 2019, from 7.73 to 5.22. In 2020 and 2021, it increased to
5.59 and 6.22 times, respectively.However, it drops to 5.61 once more in 2022 following the
epidemic.
a. Prior to COVID-19: NCC Bank's price-earnings ratio dropped in 2018 and 2019, with figures
of 7.73 and 5.22, respectively.
b. During COVID-19: In 2020, it increased to 5.59 during the COVID-19 period; in 2021, it
increased to 6.22 once more. The price-earnings ratio was not significantly impacted by the
COVID-19 peak period, but it did rise in 2021.
c. Following COVID-19: NCC Bank experienced a decline in PE ratio.

22
Cross section analysis

Price Earnings Ratio

12

10

0
2018 2019 2020 2021 2022 2023

NCC One bank

It is visible to us from 2018 to 2023, one bank's price-earnings ratio exceeds that of NCC Bank.
However, the price-earnings ratio continued to rise even after the epidemic, but NCC Bank was
unable to stabilize its circumstances and saw a significant drop in its ratio.

Market to Book value ratio

A financial indicator called the market to book value ratio is used to evaluate the relationship
between a company's book value and market value. It is computed by dividing the book value
per share of common stock by the market price per share. The book value of a corporation is the
amount that its assets less its liabilities are worth as stated in its financial accounts, whereas the
market value is the opinion that the market now has of the company's worth. The ratio shows
whether the market believes that a company's assets are overpriced or undervalued by comparing
the market value of the assets to their accounting value.

𝐌𝐚𝐫𝐤𝐞𝐭 𝐩𝐫𝐢𝐜𝐞 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞 𝐨𝐟 𝐜𝐨𝐦𝐦𝐨𝐧 𝐬𝐭𝐨𝐜𝐤

Market to Book value ratio =
𝐁𝐨𝐨𝐤 𝐕𝐚𝐥𝐮𝐞 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞 𝐨𝐟 𝐜𝐨𝐦𝐦𝐨𝐧 𝐬𝐭𝐨𝐜𝐤

23
Time series analysis
(Before Pandemic) (During Pandemic) (After Pandemic)
Year 2018 2019 2020 2021 2022 2023
NCC Bank 0.89 1.02 1.14 1.26 1.38 1.35
One Bank 1.01 0.84 0.48 0.27 0.55 0.45

ONE BANK -
a. Before covid-19 -The market to book value ratio of One Bank was relatively stable
before the COVID-19 pandemic however, the ratio fell by 0.13.
b. During COVID-19 -The market to book value ratio of One Bank continued to fall
consistently. Despite the hardships of covid -19 pandemic
c. After the COVID-19 After the COVID-19 phase the market to book value ratio
increased. It was 0.55.

NCC BANK -
a. Despite the COVID-19 phase in between, the graph shows that NCC Bank's market to
book value ratio has increased over time. In 2019, the market to book value ratio
begins at a concerning 0.89. But in 2022, the ratio soars to 1.38, exceeding the
industry average and indicating a significant improvement over time for NCC Bank.
b. Prior to COVID-19: In 2018, NCC Bank's market to book value ratio—which
stood at 0.89—was comparatively low. Thankfully, in 2019 the ratio rises to 1.02.
b. During COVID-19: NCC banks' market to book value ratio increased from 1.14 to
1.26, above the industry average, notwithstanding the difficulties posed by the
epidemic.
c. Following the COVID-19 pandemic (2022-23): NCC Bank's market to book value
ratio increased following the pandemic. In 2023, NCC Bank's market to book value
ratio reached its greatest point of 1.38.

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Cross Section Analysis

In 2018, One bank market to book value ratio, which is 1.01 is relatively higher than that of NCC
bank’s market to book value ratio which is 0.89. However. The market to book value ratio of fall
whereas the market to book value ratio of NCC bank continued rise intensely. In 2022, NCC bank
had a relatively higher market to book value ratio of 1.38 and One bank market to book value ratio
of 0.55. This shows that NCC bank has better performance at managing their shareholder wealth
than One bank

Dividend Per share

Dividend per share refers to the distribution of a company's earnings or profits among its
shareholders on a per-share basis.

𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐩𝐚𝐢𝐝
Dividend Per share =
𝐓𝐨𝐭𝐚𝐥 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐜𝐨𝐦𝐦𝐨𝐧 𝐬𝐡𝐚𝐫𝐞𝐬 𝐨𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠

25
Time series analysis

(Before Pandemic) (During Pandemic) (After Pandemic)

Year 2018 2019 2020 2021 2022 2023
NCC Bank 1 1.7 1.5 1.6 1.5 1.3
One Bank 1.23 0.78 0.71 0.65 0.91 0.93

ONE BANK - the dividend per share was 1.23 in 2018 prior to the epidemic. The dividend per
share for 2019 was 0.78. Nevertheless, they had a mixed decline in 2019. After the COVID
epidemic struck in 2020, the ratio increased to 0.71 in 2021, then to 0.65 in 2021. One Bank's
dividend per share has been steadily declining. The ratio was 0.91 following the epidemic in
2022. The dividend per share increased over this time. One bank should manage its profit to
enhance the amount of cash dividends it pays to its shareholders, even though its dividend per
share has increased.

Prior to COVID-19 In 2018, One Bank's dividend per share was 1.23. Nonetheless, One Bank's
dividend per share in 2019 was 0.78.
Throughout COVID-19 One bank's dividend per share has been steadily increasing, albeit more
slowly. Even with the reduced value of dividends, one bank was nevertheless able to provide
them in spite of the COVID-19 pandemic's problems. One Bank's dividend per share in 2020 and
2021 was 0.71 and 0.65, respectively.
Following the COVID-19 The dividend per share increased to 0.91 after the COVID-19 phase.
One bank should manage its profits to enhance the amount of cash dividends it pays to its
shareholders, even though its dividend per share has increased.

NCC BANK- Despite the COVID-19 phase in between, the graph shows that NCC Bank's
dividend per share has increased over time. The dividend per share is set at 1, meaning that
investors will get one cash dividend for each share they own. The dividend per share values of
NCC Bank rise and fall during the ensuing years. Their dividend per share for 2022 was 1.5,
which was less than the 1.6 they paid out the year before.
Prior to COVID-19 Prior to the COVID-19 epidemic, NCC Bank's dividend per share was at its
highest point, 1 in 2018 and rising to 1.7 in 2019.
During COVID-19, NCC Bank's dividend per share decreased to 1.5 in 2020 but increased to 1.6
the following year.
Following the COVID-19 Following the COVID-19 phase, NCC Bank's dividend per share

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dropped to 1.5 once more. This implies that compared to the prior year, they might pay their
stockholders fewer cash dividends.

Cross section analysis

In every year from 2019 to 2022, the dividend per share of NCC Bank outperformed the dividend
per share of One Bank by a considerable margin. One bank had a dividend per share of 1.23, while
NCC bank had a dividend per share of 1. One bank this year outperforms NCC bank. Furthermore,
the dividend per share of NCC Bank in 2022 was 1.5, clearly larger than the dividend per share of
One Bank. In conclusion, NCC bank is able to distribute more cash dividends for each share owned
than One bank.

Efficiency Ratio

The efficiency ratio is a financial indicator used to evaluate a company's operational effectiveness
and performance.

Operating Efficiency

The operational ratio shows how well a company's management is performing by comparing
operating costs to net operating revenue. The company's ability to turn a profit increase as the ratio

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falls. Investors should be aware that while using this ratio, it does not take debt repayment or
growth into account. Banks strive for lower efficiency ratios since they demonstrate that they
produce more money than they spend. As a general rule, the optimal efficiency ratio is thought to
be 50%.

(Before Pandemic) (During Pandemic) (After Pandemic)

Operating Efficiency 2018 2019 2020 2021 2022 2023
Ratio
NCC BANK 0.74 0.77 1.13 0.90 1.14 1.19
ONE BANK 0.77 0.97 1.49 1.20 1.41 1.46

Operating Efficieny
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2018 2019 2020 2021 2022 2023

NCC One bank

Time Series Analysis

NCC BANK - We can observe from the graph that from 2018 to 2023, the operational efficiency
ratio fluctuates between increases and decreases. Their operating efficiency ratio was 0.74 in 2018
and increased to about 0.4 by the end of 2023, which demonstrates inadequate spending
management.

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 a. Before Covid-19 (2018-2019): The operating efficiency ratio of NCC Bank was 0.74 in
2018 and marginally increased to 0.03 in 2019, which might indicate a little increase in
their expenditures.
b. During Covid-19 (2020-2021): NCC's operational efficiency ratio increased to 1.13 in 2020
but significantly decreased to 0.90 the following year. This decrease in costs might also be
the result of layoffs.
c. After the COVID-19 pandemic (2022-23): Bank increased to 1.14 following the COVID-
19 phase. As previously indicated, this considerable growth in the ratio translates to an
increase in their costs, such as a higher allowance for loan losses, etc.

ONE BANK - We can observe from the graph that from 2018 to 2023, the operational efficiency
ratio fluctuates between increases and decreases. Their operating efficiency ratio was 0.77 in 2018
and increased to about 0.64 by the end of 2022, which demonstrates inadequate spending
management.

a. Before Covid-19 (2018-2019): The operating efficiency ratio of ONE Bank was 0.77 in
2018 and marginally increased to 0.20 in 2019, which might indicate a little increase in
their expenditures.
b. During Covid-19 (2020-2021): ONE's operational efficiency ratio increased to 1.49 in 2020
but significantly decreased to 1.20 the following year. This decrease in costs might also be
the result of layoffs.
c. After the COVID-19 pandemic (2022-23): Bank increased to 1.41 following the COVID-
19 phase. As previously indicated, this considerable growth in the ratio translates to an
increase in their costs, such as a higher allowance for loan losses, etc.

Cross-Sectional Analysis

In comparison, ONE Bank's operating efficiency ratio of 0.77 was higher than NCC Bank's 0.74
starting in 2018. NCC bank had a lower operating efficiency ratio, but in the years that followed,
ONE bank seemed to have better cost control. At the end of 2022, we can see that the difference
between the operating efficiency ratios of the two banks had significantly decreased, indicating
that ONE bank had more effective control over their expenses than NCC bank, despite the fact
that NCC bank had an operating efficiency ratio that was slightly lower than AB bank (ONE
bank had an operating efficiency ratio of 1,41 and NCC bank had an operating efficiency ratio of
1.14.

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 Credit Rating

A credit rating is a determination of a person's or an organization's creditworthiness or financial

soundness. It is often given by a credit rating organization and entails determining the borrower's
capacity and desire to make timely payments on their loans. Credit ratings are typically
expressed as a letter grade or score, such as AAA, AA, A, B, C, or D, where AAA is the highest
rating and D is the lowest. For investors, lenders, and other financial institutions to evaluate the
risk involved with disbursing funds or making investments in a company, these ratings are
crucial. Credit ratings are essential in the financial sector because they give lenders and investors
important information about a person's, a business's, or a nation's creditworthiness.

NCC Bank One Bank

Years Short -term Long-term Short-term Long-term

2018 ST- AA ST-2 AA

2019 ST-1 AA ST-2 AA

2020 ST-1 AA ST-2 AA

2021 ST-1 AA ST-2 AA

2022 ST-1 AA ST-2 AA

2023 ST-1 AA ST-2 AA

NCC Bank credit rating analysis

In 2018, NCC Bank (CRISL) received ratings from the External Credit Assessment Institutions
(ECAIs) of ST-1 for the short term and AA for the long term. The most significant level of
payment assurance is known as "ST-1." Access to alternative finance sources and short-term
liquidity, including internal capital creation, are both very good. Nearly as risk-free as immediate
government responsibilities are safety.

30
In the long term, NCC Bank was rated AA, which is adjusted to be high quality, provide better
safety, and have good credit quality. For the years 2018–2023, the NCC bank's credit rating
remained stable.

One bank credit rating analysis

One bank (ECRL) received an AA rating over the long term, demonstrating a strong ability to
satisfy financial obligations and a general ability to adjust to adverse changes in business,
economic, and other external situations. These organizations often have a solid track record and
no obvious shortcomings.

They fall into the ST-2 short-term group, which implies they have the financial capacity to pay
their obligations but are relatively vulnerable to unfavorable changes in the commercial,
economic, and other external factors.

Conclusion and Recommendation

Bank financial statements require a complex approach due to the specific nature of their
activities and the specialized ratios utilized for evaluation. Unlike other organizations, banks use
industry-specific financial measures. Understanding these differences is critical to appropriately
judging a bank's performance. Traditional financial measures employed in other industries may
not apply to banks due to their unique business models and regulatory frameworks. Instead,
banks use measures that are relevant to their operations and provide information about many
aspects of their performance, such as liquidity, efficiency, and profitability. It is essential that
these specialized ratios and their implications be taken into account while assessing the
performance of NCC Bank and One Bank. The two banks' comparison highlights the advantages
and disadvantages of each institution's financial management across a number of industries.
Efficiency is a crucial indicator of a bank's ability to control costs and run its operations. This is
an area where NCC Bank outperforms One Bank, suggesting a more effective use of resources.
This efficiency may result from improved asset usage, efficient cost management techniques, or
streamlined procedures, all of which support NCC Bank's competitive edge in this area.
Liquidity is another important aspect of banking operations, indicating a bank's ability to satisfy
short-term obligations without incurring large losses. NCC Bank outperforms One Bank in terms
of liquidity, indicating a stronger position in terms of liquid assets and government securities.
While this demonstrates a responsible approach to risk management and financial stability, it also

31
raises concerns about resource allocation. Holding surplus liquidity may hinder NCC Bank's
profitability if not properly allocated for income-generating activities. The primary factor
influencing banking success is still profitability, and NCC Bank's superiority over One Bank in
this area highlights its strong financial position and competitive edge. A number of variables,
including as efficient asset management, a variety of revenue sources, and successful operations,
can lead to increased profitability. Long-term profitability, however, necessitates a careful
balancing act between taking on risk and managing it, as well as flexibility in response to
shifting market conditions and legislative changes. In summary, a detailed picture of the
strengths and shortcomings of NCC Bank and One Bank may be obtained by comparing their
financial statements. Although NCC Bank exhibits exceptional profitability and efficiency,
resource optimization may be impacted by its cautious approach to liquidity management. On the
other hand, One Bank might gain from reevaluating its strategy for profitability and operational
efficiency in order to strengthen its position in the market. In the end, a thorough comprehension
of these variables is necessary for the banking industry to make wise decisions and develop
strategic plans.

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 References

1. https://www.bb.org.bd/fnansys/ecai_rating/ecai_2023_2024.pdf

2. https://www.onebank.com.bd/home/financial/financial-statements/

3. https://www.nccbank.com.bd/NccbFinancialReports/annualReports

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