IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014

International journal of Emerging Trends in Science and Technology

Performance Analysis of Leasing Companies: The Case of Bangladesh

Author
Farzana Huda
Senior Lecturer, Department of Business Administration, East West University
Plot no. A/2, Main Road, Jahurul Islam City
Aftabnagar, Dhaka-1212, Bangladesh
Tel: 096-6-6775577, Ext – 184, E-mail: [email protected]
Abstract
In most developing countries, leasing is one of the few forms of medium-to long-term financing available to businesses
for fixed assets. It provides all types specially MFIs (Micro Finance Institutions) with an opportunity to reach new
borrowers and expand existing markets. This paper attempts to analyze the performance of leasing companies in
Bangladesh. Here simple ratio and trend analysis has been done. The ratios and trend analysis show that profitability
situation of leasing companies decrease over the year due to increase financial as well as other operating expenses. On
the other hand lease contribution in revenue portion improving day by day which signifies the efficiency of managing the
lease business properly. The study also covers the laws and regulation of leasing business in Bangladesh. The findings
have important implications for the development of lease financing in Bangladesh.
Key words: Leasing, NBFI, MFIs, term lending, SME

1. Introduction
Bangladesh is a developing country having a per capita Being competitor both BFIs (banking financial
income of $690 with a population of 156.6 million. Being institutions) and NBFIs are working in the same sector
highly populated, people are trying hard and soul to trying to acquire the market share from one another. Non-
manage the basic needs of life. The activities in the Bank Financial Institutions play a key role in fulfilling the
business arena are increasing which show new sign of gap of financial services that are not generally provided
improving the situation. Banking and non-banking by the banking sector. The competition among NBFIs is
financial institution (NBFIs) are the channels through increasing over the years, which is forcing them to
which funds are collected from the Surplus Spending diversify to a wider range of products and services and to
Units (SSUs) of the society and disburse it to the Deficit provide innovative investment solutions. NBFIs appear to
Spending Units (DSUs). offer flexible options and highly competitive products to
The financial system in Bangladesh includes Bangladesh help customers meet their operational and financial goals.
Bank (the Central Bank), scheduled banks, non-bank The major business of most NBFIs in Bangladesh is
financial institutions, microfinance institutions (MFIs), leasing, though some are also diversifying into other lines
insurance companies, co-operative banks, credit rating of business like term lending, housing finance, merchant
agencies and stock exchange. Among scheduled banks banking, equity financing, venture capital financing etc.
there are 4 nationalized commercial banks (NCBs), 4 In total Lease financing, term lending and housing finance
state-owned specialized banks (SBs), 30 domestic private constituted approximately 94% of the total financing
commercial banks (PCBs), 9 foreign commercial banks activities of all NBFIs up to June 2010.
(FCBs) and 31 nonbank financial institutions (NBFIs). Leasing in Bangladesh, like in many of its peer countries,
Among the 31 NBFIs, 21 have been listed in the stock owes its origin to the efforts of the International Finance
exchanges to strengthen financial capability and the rest Corporation (IFC), Washington. At the instance IFC and
are under process to be listed in due course. Aga Khan Fund for Economic Development (AKFED)

Farzana Huda www.ijetst.in Page 514

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
initiated the establishment of the first leasing company in lease payments, which include interest that often will be
Bangladesh, Industrial Promotional Development at rates above commercial lending rates, and at the end of
Company of Bangladesh Ltd. (IPDC) in 1981. IFC and the lease term, usually some residual value (Epstein et al,
AKFED again initiated another company call Industrial 2003).
Development Leasing Company of Bangladesh Ltd. In the emerging era of heightened interest of global
(IDLC) in 1985. investors in the capital market of Bangladesh, it is
For several years, IDLC remained the sole leasing imperative that financial statements correctly reflect the
company in Bangladesh. However, the real momentum financial position of firms. Jahur et al, (2002) concludes
began in the 1990s when Bangladesh Bank put in place a in their paper therefore, capitalization of leases with a
regulatory mechanism under the Financial Institutions Act required set of disclosure as per BAS 17; leases should be
1993. Now a day 31 NBFIs are working in the country made in order to presenting a true and vivid picture of
facilitating the momentum of economic development. financial and operational performance of the lessee.
Companies are thereby to provide a correct picture to the
2. Objectives parties interested in particular concern and to facilitate
This paper has multifaceted objectives, delineating the inter-firm comparisons as well.
performance dynamics of the leasing companies of Salim (2005) in his paper has identified that absence of
Bangladesh being the main objectives. For achieving the accounting standards for lease transactions was the main
main objective, some of the supporting objectives are reason for deviation of actual practice of lease accounting
portrayed below: from improved method advocated by BAS. They also
 To understand the overall leasing industry in terms of the opined that in Bangladesh, capitalization controversy
profitability and effectiveness, the market share and exists because of the provisions of Companies Act 1994
ownership structure of the companies. and Income Tax Ordinance 1984 and Bangladesh lease
 To focus on recent development in the market, legal accounting.
framework for leasing companies, tax structure, The activities of NBFIs witnessed an impressive growth
accounting for lease so as to give complete view on how during the last few years. As per Section 7 of the Banking
these companies are carrying their business. Companies Act 1991, commercial banks also started
different activities offered by NBFIs, specially leasing.
3. Methodology The entry of banks in this sector is expected to brace the
The nature of this report is descriptive; most of the growth momentum and will fill the gap in acquiring the
necessary information has been collected from secondary institutional finance and serve the needs of the industrial
sources. Data is collected from company's catalogue, sector in the acquisition of capital assets. Commercial
brochures and materials issued by the organization and banks worldwide are directly or indirectly involved in
also collected from electronic resources such as, CD, activities such as leasing, hire purchase, term lending,
Internet and Annual Report. The period of study is ten house financing and capital market operation. In
years spanning from 2003 to 2012. This analysis selected developed countries commercial banks are also actively
nine (9) NBFIs by conducting their ratio analysis and involved in different activities other than banking.
trend analysis based on the secondary data of the Operation by banks in what have been traditional non-
companies. banking areas is often questioned by NBFIs although both
can act as complementary to each other rather than being
4. Literature Review competitors.
Leasing has tremendous growth in popularity and today is Bangladesh Lease and Finance Companies Association
the fastest growing form of capital investment. Because of (BLFCA) alleged that commercial banks of the country
the increased significance and prevalence of lease are engaged in non-bank financing activities within the
arrangements, the need for uniform accounting and existing banking rules; which is posing difficulties for
complete informative reporting of these transactions has NBFIs. This is because by having access to cheaper rate
intensified (Keiso, 2005). funds, banks have a comparative advantage over NBFIs
The tremendous popularity of leasing is quite that does not ensure proper competition for both. Again, it
understandable, as it offers greater flexibility, often is argued that if banks continue in the leasing business
coupled with a range of economic advantages over then the default culture of the banking system may also
ownership. For the lessor, there will be a regular stream of infect the leasing industry (Choudhury, 2001).

Farzana Huda www.ijetst.in Page 515

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
5. Legal Framework for Lease  Three years tax exemption on income of expatriate
5.1 Financial institutions License (section 4 to 8, personnel employed by the lessor.
Financial Institution Act, 1993)  Government exempted deduction of VAT from lease
Any person who wants to carry financing business in rentals.
Bangladesh has to have license of financial institution Nevertheless, allowance for doubtful accounts is not
issued by Bangladesh Bank. Bangladesh Bank needs to be allowed for tax purposes and payment of interest on term
satisfied on some particulars issues before issuing license deposit is subject to deduction of tax at source @ 10%.
to entity. Such aspects are financial condition,
characteristics of the management, adequacy of capital 6. Performance Analysis
and earning prospect and also the objectives specified in This section evaluated the performance of Nine (09)
the memorandum of association. The Bangladesh Bank NBFIs i.e IDLC Finance Limited, Phoenix Finance and
will determine the minimum capital for the institutions Investment Limited, International Leasing and Financial
and Bangladesh Bank’s permission is required before Services Limited, Prime Finance and Investment Limited,
opening any branch. Bangladesh Bank also reserves the Peoples Leasing and Finance Services Limited,
right to cancel the license of any institution if deemed fit. LankaBangla Finance Limited, MIDAS Financing
5.2 Regulatory Bodies Limited, Islamic Finance and Investment Limited and
Legally licensed as non-banking financial institutions, the Industrial Promotion and Development Company of
leasing businesses in Bangladesh are regulated by Bangladesh Limited. For performance evaluation ratio
Bangladesh Bank under the Financial Institutions Act, analysis and trend analysis has been conducted of the nine
1993. Bangladesh Bank also controls their foreign (9) NBFIs for ten (10) years. Under ratio analysis Equity,
exchange transactions and transactions with commercial EPS, ROA, ROE, NPM, OPM, Operating Profit On
banks. Leasing companies are required to furnish Assets, Debt-Equity Ratio, Financial Expense to Total
monthly, quarterly, semi-annual and annual reports on Expenses, Operating Expense to Operating Revenue,
their operational performance to the central bank. In Leases as % of Total Revenue and Financial Expenses
addition, they are required to submit monthly statements Coverage Ratio has been evaluated by analyzing ten (10)
on the positions of their liquid assets and liabilities as well years data of the nine (9) NBFIs from year 2003 to year
as public deposits and cash reserves maintained with 2012 and based on those data trend analysis has been
Bangladesh Bank. conducted by taking 10 years predicted data from year
5.3 Accounting for leases 2013 to year 2022.
Until the year 2003, there were no specific accounting
standards for the lessor or lessee to account for leasing 6.1 Equity Analysis
transactions. Generally Accepted Accounting Principles The ownership structure of leasing companies (Table-1)
(GAPP) was being followed, under which the leased showed an increasing trend, especially in terms of total
assets were being shown in the books of the lessor while shareholders’ equity. Despite Bangladesh Bank’s
the rental payments were considered as revenue regulation for the NBFI to go for IPO, only 21 out of 31
expenditure by the lessee for financial reporting. are listed in the stock exchange. Considering the equity
However, from January 1, 2004, the Institute of Chartered composition since 2003, smooth uptrend is envisaged
Accountants of Bangladesh (ICAB) has adopted the from the Table-1. In the year 2007, total average equity
International Accounting Standards (IAS) no 17, which (Table-13) capitalization of the leasing companies stood
deals with leases. With the adoption of this standard, it at BDT 3349.36 million, escalating sharply from BDT
has become mandatory for the leasing companies to 289.59 million in the year 2003. Based on the historical
follow financing method of accounting for financial figures from year 2003 to year 2012, the analysis has
reporting, under which the leased assets are shown as predicted the figures for the subsequent years i.e year
fixed assets in the books of the lessee with a 2013 to year 2022 using trend analysis (Table-14) which
corresponding liability and future rental receivables indicated positive and increasing trend of shareholders
shown as receivables in the books of leasing companies. equity.
5.4 Taxation of leasing in Bangladesh
The corporate tax rate for banks and financial institutions, 6.2 Earnings Per Share
including leasing companies is 42.5% on taxable income. From the Table-2, the pattern of Earnings Per Share
A lessor approved by National Board of Revenue is (EPS) is envisaged. Smooth downtrend visualized in this
entitled to the following tax exemptions:
Farzana Huda www.ijetst.in Page 516
IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table-2. In the year 2012, average Earnings Per Share of predicted years, Table-14 demonstrated a positive trend
the leasing companies stood at Tk. 5.27(Table-13), using the trend analysis.
decline sharply from Tk. 37.81 in the year 2003. This 6.7Return On Equity (ROE)
smooth downtrend of EPS is not a good sign for the sector From the Table-7, the pattern of Return On Equity is
as it indicated that the sector is getting slaughter over the envisaged. The ROE has increased significantly over the
years. Though equity capitalization is increasing in this observation period. In the initial period, the Average ROE
sector, the diminish profit also showed negative move stood at 20.20% in the year 2003 (Table-13). In the year
thus resulting in decreasing EPS. In the predicted years 2010 it stood at 29.31%. This high positive return on
also, Table-14 derived a downbeat trend using the trend equity has attracted the equity investors in this particular
analysis. sector in recent time. Leasing companies will have to be
6.3 Net Profit Margin (NPM) very much competitive to sustain their return on equity.
The overall NBFIs showed a positive trend toward The industry is getting stagnant and severe competition is
profitability (Table-3). Though in the initial section of the expected to be seen in the future. The trend depicted in
observation period, it has noticed higher percentage of the Tabel-13. In the predicted year (Table-14) ROE
Average Net Profit Margin (Table-13); in the later section showed a downtrend by the trend analysis.
low Average Net Profit Margin is envisaged. In the year 6.8 Debt-Equity Ratio
2010, Average Net Profit Margin of the leasing The capital structure position of the sector showed in the
companies stood at 24.54%, escalating sharply from Table-8. In the initial part of the reference period,
10.91% in the year 2003(Table-13). After year 2010 it increasing trend in Average Debt-Equity ratio is observed
declined dramatically. In the predicted years, a positive (Table-13). But in the year 2008, due to increased equity
trend using the trend analysis has been shown in Table- capitalization, observed a sharp decline in this regard. But
14. the momentum of the previous trend kept going down in
6.4 Operating Profit Margin (OPM) the subsequent year 2012. In the year 2003 the debt-
Similar to the NPM situation, the overall NBFIs showed a equity ratio was 51.32% and in the year 2012 it stood at
positive trend toward operating profitability demonstrated 24.79%. In the predicted years also, the trend remained
in Table-4. Though in the initial section of the decreasing from year 2013 to year 2022. The trend
observation period, it has illustrated lower percentage of presented in the Table-14.
OPM; in the later section high OPM is envisaged. Table- 6.9 Financial Expense to Total Expenses
13 showed that in the year 2012, Average Operating Though not sharply, the Financial Expense to Total
Profit Margin (OPM) of the leasing companies stood at Expense as a whole showed an increasing trend (Table-
30.79%, increasing sharply from 25.90% in the year 2003. 9). Based on the data showed in Table-14, in the
In the predicted years also, the analysis derived a positive predicted years also derived an increasing trend as well.
trend using the trend analysis which is shown in Table- In the year 2003 the average financial expense to total
14. expenses was 66.94% which get higher to 111.65% in the
6.5 Operating Profit on Assets year 2012(Table-13).
Starting with a low Operating Profit On Assets ratio, 6.10 Operating Expense to Operating Revenue
Table-5 showed a smooth upward trend. The trend also Operating Expense to Operating Revenue indicates the
continued in the predicted years (Table-14). In the year expenses incurred directly for earning the corresponding
2012, Average Operating Profit on Assets of the leasing revenues. For the leasing companies, during the
companies stood at 7.14% (Table-13), rising sharply from observation period, Table-10 perceived an encouraging
4.96% in the year 2003. issue for the companies. The ratio is consistently
6.6 Return on Asset (ROA) decreasing indicating the growing efficiency of the
The overall NBFIs showed inconsistent trend toward industry in terms of cost management. This ratio is
Return on Asset. Though in the initial section of the consistent with the Net Profit Margin and Operating Profit
observation period, Table-6 revealed lower percentage of Margin. Due to this sheer cost management, Net Profit
Average ROA (Table-13); in the later section high Margin and Operating Profit increased substantially
Average ROA is visualized from year 2008 to 2010 but during the observation period. All these facts and figures
stridently declined in 2011. In the year 2012, Average presented in the Table-13 and Table-14.
Return on Asset of the leasing companies stood at 1.48%, 6.11 Leases as % of Total Revenue
turn down sharply from 2.09% in the year 2003. In the Lease as % of Total Revenue indicates the portion of
lease earnings from the total revenue. From the year 2003
Farzana Huda www.ijetst.in Page 517
IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
to year 2012 Table-11 indicated that, the ratio is The overall industry profitability is increasing from year
increasing which signified the revenue of the leasing to year. NBFIs in Bangladesh witnessed a healthy ROE
companies increased due to diversifying into different and ROA over these years. The reserve and paid up
types of business and leasing company’s earnings from capital of the NBFIs are growing and it indicates the
lease portion also increase day by day. The trend stability of leasing industry to face strong challenges
presented in the Table-13. The predicted year 2013 to afterwards. Low non-performing loan, hassle free
year 2022 also point out increasing trend through to the services, integration of the foreign partners, specialized
trend analysis. innovative products helps NBFIs to offer better services
than the banks. Hence further scope of study can be
6.12 Financial Expenses Coverage Ratio availed by the researchers on how new products can be
In general, a high coverage ratio suggests a company is developed to suit the business house purposes. Detailed
"too safe" and is neglecting opportunities to subjective study can also be done to find out what the
magnify earnings through leverage. Financial Expenses main reasons that peoples are availing services from
Coverage ratio below 1.0 indicates that a company is not NBFIs rather than banks when they knows that banks can
able to meet its interest obligations. Financial expenses charge lower than that of the NBFIs.
coverage ratio of the leasing companies (Table-12) In Bangladesh, the financial market is extremely
showed an increasing trend reflecting the companies short competitive with banks and non-banking financial
term ability to meet interest obligations was good. institutions. The competitive environment for leasing
companies is even more challenging, as they have to
7. Conclusion and Recommendation compete with banks which have low cost. In this
Overall study shows number of significant insight through seemingly adverse environment, the leasing companies of
which comments can be delivered on certain items. The Bangladesh continue to grow robustly due to prudent fund
Financial Institution Act 1993 is a complete guideline management, strong credit management policies,
through which Bangladesh Bank can implement and innovative products, better transparency, thus providing
enforce regulations. The ownership structure of the greater value to their customer. Most of the leasing
companies doing business in Bangladesh showed enough companies are using their expertise to pioneer a number
foreign shareholding which in turn ensures international of innovative financial products which provide customer
mobilization of the fund. with better value.
The leasing companies investment portfolio is diversified
which is good in the sense that they are mobilizing fund References:
across all sectors which ensures the economic [1] Hossain M, and Shahiduzzaman, M , “Development of
development to a large extent. Leasing companies are Non Bank Financial Institutions to Strengthen the
moving from fund based to fee based activities which is Financial System of Bangladesh” , Quarterly Journal of
of strategic significance because they can charge a little Bangladesh Institute of Bank Management, Vol. 28, No.
fraction as documentation or processing fees and hence 1, March 2002.
generate direct income. In the lending market NBFIs is [2] Taslima Nasreen and Mosammet Asma Jahan, “Lease
acquiring more market share day by day. The average Accounting Practice of Leasing Companies in
growth of recovery, disbursement and outstanding of Bangladesh: A Lessor’s Disclosure Perspective”, The
NBFIs is more than that of the foreign, specialized and Cost and Management, Vol. 35 No. 6, November-
Nationalized commercial banks. The leasing growth December, 2007 pp. 5-15.
seems to be stabilizing due to increase of the competitors [3] Banerjee, P. K. and Mamun, A. A, “Lease Financing
in the market. In recent years lease shows a stable growth in Bangladesh”, Research Paper of Bangladesh Inatitute
and total industry seems to be stabilizing in this case. of Bank, Management (BIBM), (Dhaka: BIBM), 2003.
NBFIs deposit base has been increased remarkably over [4] Choudhury A. Q., “Leasing in Bangladesh – Problems
these days and it reduces the cost of fund of the and Prospects,” The Daily Star, April 4, 2001.
companies to a large extent. Hence the share business of [5] Md. Nehal Ahmed and Mainul Islam Chowdhury ,
leasing companies witnessed remarkable growth in recent “Non-Bank Financial Institutions in Bangladesh: An
days and it is expected to go up in the upcoming days. Analytical Review” , Working Paper Series: WP 0709,
Underwriting, IPO activities, brokerage activities seems March 2007.
to move at a higher pace as most of the NBFIs are [6] Annual reports (2003 to 2012), (Dhaka: Phoenix
concentrating in these segments. Finance and Investment Ltd.)
Farzana Huda www.ijetst.in Page 518
IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
[7] Annual reports (2003 to 2012), (Dhaka: MIDAS [11] Annual reports (2003 to 2012), (Dhaka: LankaBangla
Financing Ltd.) Finance Ltd.)
[8] Annual reports (2003 to 2012), (Dhaka: Prime Finance [12] Annual reports (2003 to 2012), (Dhaka: (Islamic
and Investment Ltd.) Finance & Investment Ltd.
[9] Annual reports (2003 to 2012), (Dhaka: Industrial [13] Annual reports (2003 to 2012), (Dhaka: International
Promotion & Development Company of Bangladesh Ltd.) Leasing & Financial Services Ltd.)
[10] Annual reports (2003 to 2012), (Dhaka: IDLC [14] Annual reports (2003 to 2012), (Dhaka: Peoples
Finance Ltd.) Leasing and Fin. Services Ltd.)

Table 1: Equity
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 667 756 851 952 1247 1611 2393 3690 3980 4693
Phoenix Finance and Investments 197 252 319 397 425.98 606.98 646.75 1605.5 1872.3 2142.1
Limited
International Leasing and Financial 229.3 331 466.4 504.9 690.2 757.2 924.4 1267.5 1968.6 2084.9
Services Limited
Prime Finance and Investment 212.22 284.4 390.75 496.1 635.26 921.31 1826.4 3893.6 4684.4 5106.6
Limited
Peoples Leasing and Finance 75.24 165.43 362 510 313 874 1231 3372 3897 4126
Services Limited
LankaBangla Finance Limited 128.74 194.66 267.95 423.69 597.34 922.48 2100.5 4790 5720.2 6474
MIDAS Financing Limited 110 131 286 322 1394.3 1510.9 1838.5 1995.5 2165.4 2191.4
Islamic Finance and Investment 82.07 170.36 319.95 343.66 360.56 376 518 928 961 1299
Limited
Industrial Promotion and 904.76 1071.43 1116.67 1545.45 1662.5 1474.2 1610.9 1787.1 1898.7 2027.3
Development Company of
Bangladesh Limited
Source: Data Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Table-2 Earnings Per Share (EPS)

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 75.33 89.33 102 104.67 151.50 162.40 274 221.17 5.05 5.76
Phoenix Finance and Investment Limited 42.51 37.15 39.2 37.26 39.77 3.19 3.69 4.56 3.81 2.95
International Leasing and Financial 83.5 97 91.7 56.5 46.5 38.9 70.5 3.37 -0.33 0.35
Services Limited
Prime Finance and Investment Ltd. 21.57 40.1 48.79 33.99 59.89 1.26 3 7.6 2.96 1.04
Peoples Leasing and Finance Services 39.00 28.00 39 49.58 20.56 3.56 4.94 9.47 2.76 1.54
Limited
LankaBangla Finance Limited 10.34 13.7 21.4 24.3 60.1 1.99 3.93 8.98 4.51 1.77
MIDAS Financing Limited 7.89 20.41 18.06 13.67 19.39 26.17 20.02 43.9 44.78 31.71
Islamic Finance and Investment Limited 17.85 18.22 27.84 18.18 18.66 0.75 1.86 1.62 0.36 1.13
Industrial Promotion and Development 42.32 47.13 28.06 27.57 18.73 6.88 17.43 18.6 1.07 1.23
Company of Bangladesh Limited
Source: Data Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Farzana Huda www.ijetst.in Page 519

 IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 3: Net Profit Margin
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 13.03% 13.58% 15.18% 12.16% 15.15% 18.93% 32.09% 43.02% 12.68% 14.69%
Phoenix Finance and 14.11% 12.53% 12.64% 11.00% 12.75% 9.80% 11.20% 6.75% 19.80% 15.80%
Investment Limited
International Leasing and 9.05% 25.52% 21.50% 12.08% 11.37% 8.95% 12.27% 15.09% -2.72% 2.65%
Financial Services Limited
Prime Finance and 2.48% 2.92% 3.13% 2.77% 4.40% 5.34% 7.45% 13.41% 4.52% 1.79%
Investment Limited
Peoples Leasing and Finance 32.34% 30.89% 35.84% 41.34% 64.30% 32.57% 45.42% 85.37% 30.39% 17.28%
Services Limited
LankaBangla Finance 13.68% 15.93% 23.05% 9.88% 22.08% 34.58% 66.40% 206.27% 82.23% 61.57%
Limited
MIDAS Financing Limited 20.02% 32.89% 36.70% 26.16% 2.76% 2.04% 2.57% 5.36% 1.78% -3.13%
Islamic Finance and 8.61% 7.60% 26.64% 19.93% 17.55% 14.81% 34.38% 27.93% 5.30% 13.13%
Investment Limited
Industrial Promotion and 23.49% 25.11% 11.97% 16.31% 11.55% 7.08% 20.88% 31.06% 16.12% 14.93%
Development Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Table 4: Operating Profit Margin

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 80.97% 87.03% 47.22% 37.10% 44.15% 54.98% 74.68% 98.78% 54.79% 49.51%
Phoenix Finance and 28.53% 26.04% 24.90% 20.61% 24.43% 22.53% 29.10% 38.84% 31.37% 37.96%
Investment Limited
International Leasing 13.80% 29.29% 19.72% 10.89% 11.13% 14.31% 18.36% 36.80% 7.23% 2.89%
and Financial Services
Limited
Prime Finance and 3.94% 3.12% 2.90% 3.38% 4.51% 14.58% 13.74% 23.84% 14.85% 12.29%
Investment Limited
Peoples Leasing and 32.34% 37.46% 38.94% 44.13% 263.14% 72.54% 76.29% 114.77% 59.39% 44.75%
Finance Services
Limited
LankaBangla Finance 13.68% 20.20% 23.37% 21.91% 20.06% 141.20% 216.59% 506.66% 354.50% 667.46%
Limited
MIDAS Financing 36.42% 32.89% 40.25% 26.66% 4.65% 0.00% 6.43% 10.20% 9.40% 4.85%
Limited
Islamic Finance and 8.61% 10.72% 27.98% 21.93% 21.23% 34.55% 47.70% 48.87% 32.20% 25.80%
Investment Limited
Industrial Promotion 25.71% 27.90% 22.07% 19.58% 20.40% 23.04% 33.14% 40.60% 19.07% 24.09%
and Development
Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Farzana Huda www.ijetst.in Page 515

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 5: Operating Profit On Assets
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 11.86% 12.65% 5.41% 4.29% 6.12% 6.80% 8.43% 11.31% 6.93% 6.36%
Phoenix Finance and Investment 3.24% 2.68% 2.84% 2.70% 3.32% 2.73% 4.04% 11.26% 4.43% 8.59%
Limited
International Leasing and Financial 3.42% 2.92% 2.30% 1.39% 1.34% 1.66% 2.26% 5.14% 0.93% 0.39%
Services Limited
Prime Finance and Investment 4.93% 4.89% 1.71% 1.79% 4.51% 14.58% 13.74% 23.84% 14.23% 12.34%
Limited
Peoples Leasing and Finance 5.41% 4.44% 3.66% 5.11% 5.94% 7.15% 6.94% 9.90% 6.57% 5.09%
Services Limited
LankaBangla Finance Limited 2.64% 2.23% 3.41% 2.47% 1.99% 19.02% 18.07% 21.61% 15.24% 13.96%
MIDAS Financing Limited 4.60% 4.34% 5.48% 3.26% 6.34% 0.00% 6.66% 7.91% 5.13% 2.34%
Islamic Finance and Investment 1.68% 2.53% 2.94% 2.75% 2.73% 4.67% 5.59% 4.90% 3.46% 2.96%
Limited
Industrial Promotion and 2.19% 1.11% 1.84% 2.40% 2.62% 2.55% 3.59% 3.69% 1.95% 2.92%
Development Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Table 6: Return On Assets (ROA)

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited (IDLC) 1.91% 1.97% 1.74% 1.41% 2.10% 2.34% 3.62% 4.93% 1.60% 1.89%
Phoenix Finance and Investment 1.60% 1.29% 1.44% 1.44% 1.73% 1.19% 1.55% 1.96% 2.80% 3.57%
Limited.
International Leasing and Financial 2.24% 2.54% 2.51% 1.54% 1.37% 1.04% 1.51% 2.11% - 0.36%
Services Limited 0.35%
Prime Finance and Investment Limited 3.10% 4.57% 1.84% 1.47% 4.40% 5.34% 7.45% 13.41% 4.33% 1.79%
Peoples Leasing and Finance Services 5.41% 3.66% 3.37% 4.79% 1.45% 3.21% 4.13% 7.37% 3.36% 1.96%
Limited
LankaBangla Finance Limited 2.64% 1.76% 3.37% 1.11% 2.19% 4.66% 5.54% 8.80% 3.53% 1.29%
MIDAS Financing Limited 2.53% 4.34% 5.00% 3.20% 3.76% 2.42% 2.66% 4.15% 0.97% -1.51%
Islamic Finance and Investment Limited 1.68% 1.80% 2.80% 2.50% 2.26% 2.00% 4.03% 2.80% 0.57% 1.50%
Industrial Promotion and Development 2.00% 1.00% 1.00% 2.00% 1.49% 0.78% 2.26% 2.82% 1.65% 1.81%
Company of Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Farzana Huda www.ijetst.in Page 516

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 7: Return On Equity (ROE)
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 16.94% 17.72% 17.98% 16.49% 24.30% 25.20% 34.35% 35.96% 12.56% 15.19%
Phoenix Finance and 22.84% 20.24% 20.69% 19.90% 24.58% 25.58% 29.06% 14.53% 14.40% 12.66%
Investment Limited
International Leasing and 34.06% 37.04% 31.05% 20.14% 17.05% 14.94% 22.19% 27.07% -2.87% 2.84%
Financial Services Limited
Prime Finance and Investment 18.29% 25.38% 24.56% 20.85% 31.00% 32.58% 42.31% 44.47% 14.58% 5.60%
Limited
Peoples Leasing and Finance 27.23% 14.21% 22.38% 29.02% 79.31% 21.17% 28.92% 30.58% 13.47% 7.85%
Services Limited
LankaBangla Finance Limited 16.11% 15.55% 20.28% 7.42% 21.23% 40.94% 35.42% 35.49% 13.83% 5.04%
MIDAS Financing Limited 7.16% 16.65% 14.84% 10.98% 3.96% 3.37% 3.83% 8.59% 3.07% -5.45%
Islamic Finance and Investment 15.23% 10.73% 15.50% 14.54% 14.21% 15.16% 27.41% 13.36% 2.91% 6.62%
Limited
Industrial Promotion and 21.00% 21.00% 12.00% 11.00% 8.00% 3.33% 8.48% 9.86% 5.88% 6.34%
Development Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Table 8: Debt to Equity

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 7.50% 7.60% 8.00% 9.28% 9.54% 8.32% 8.48% 6.30% 6.83% 7.05%
Phoenix Finance and 64.85% 67.97% 75.19% 71.42% 60.60% 68.60% 93.30% 86.50% 84.50% 83.60%
Investment Limited
International Leasing and 4.20% 4.00% 5.70% 6.00% 5.00% 3.00% 3.20% 1.79% 1.15% 3.25%
Financial Services Limited
Prime Finance and Investment 43.63% 45.96% 84.87% 84.15% 83.25% 3.94% 4.05% 1.91% 1.79% 1.66%
Limited
Peoples Leasing and Finance 80.13% 74.23% 47.18% 52.95% 79.00% 84.84% 85.72% 75.91% 75.04% 74.99%
Services Limited
LankaBangla Finance Limited 53.02% 35.92% 33.92% N/A 66.65% 7.79% 5.40% 3.03% 2.92% 2.91%
MIDAS Financing Limited 56.18% 62.78% 1.64% 1.58% 1.75% 2.65% 2.56% N/A N/A N/A
Islamic Finance and Investment 83.92% 78.35% 76.42% 65.28% 72.07% 3.29% 2.77% 2.46% 2.27% 1.83%
Limited
Industrial Promotion and 68.46% 65.22% 70.28% 65.88% 41.86% 31.00% 13.00% 52.00% 26.00% 23.00%
Development Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78
Note: N/A- Data not available

Farzana Huda www.ijetst.in Page 517

 IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 9: Financial Expenses to Total Expenses
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 79.3% 68.3% 352.6% 414.2% 458.1% 441.2% 344.3% 188.6% 258.9% 293.3%
Phoenix Finance and 84.7% 84.6% 83.2% 87.0% 65.1% 49.2% 64.7% 76.6% 119.5% 163.2%
Investment Limited
International Leasing and 86.1% 81.9% 82.4% 89.6% 85.4% 95.8% 94.2% 90.2% 91.2% 92.2%
Financial Services Limited
Prime Finance and Investment 28.5% 52.0% 69.3% 79.6% 70.4% 67.6% 72.6% 74.6% 78.0% 76.3%
Limited
Peoples Leasing and Finance 176.2% 142.0% 71.7% 81.0% 204.5% 465.4% 408.4% 372.8% 524.9% 842.6%
Services Limited
LankaBangla Finance Limited 14.0% 22.9% 52.2% 54.5% 64.6% 66.1% 68.7% 67.1% 69.0% 65.1%
MIDAS Financing Limited 23.2% 46.4% 46.5% 47.7% 62.0% 37.2% 38.8% 10.2% 7.6% 18.6%
Islamic Finance and Investment N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Limited
Industrial Promotion and 91.8% 91.1% 92.9% 59.7% 95.3% 86.8% 166.1% 253.2% 322.9% 421.4%
Development Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78
Note: N/A- Data not available

Table 10: Operating Expenses to Operating Revenue

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance Limited 56.40% 62.01% 15.08% 15.26% 13.60% 16.42% 19.13% 31.32% 23.16% 21.80
Phoenix Finance and 71.79% 74.94% 75.10% 80.08% 122.96% 107.09 84.89% 34.02% 72.97% %
49.89
Investment Limited % %
International Leasing and 33.91% 70.70% 80.27% 89.11% 88.87% 85.69% 81.62% 63.20% 92.77% 97.11
Financial Services Limited %
Prime Finance and Investment 27.69% 10.52% 8.99% 8.70% 9.80% 9.45% 6.89% 8.41% 8.54% 9.71%
Limited
Peoples Leasing and Finance 67.88% 82.78% 60.62% 55.87% 26.42% 10.92% 10.33% 11.01% 8.22% 7.73%
Services Limited
LankaBangla Finance Limited 117.56 79.80% 76.63% 94.00% 112.91% 97.96% 121.58 183.65 210.33 622.32
MIDAS Financing Limited 63.58%
% 67.11% 61.07% 74.28% 4.93% 8.53% 8.30%
% 24.67%
% 38.88%
% 33.80
%
Islamic Finance and Investment 62.79% 63.33% 12.97% 12.45% 13.36% 12.25% 15.26% 19.24% 18.29% 16.56
%
Limited %
Industrial Promotion and 64.12% 68.72% 78.00% 80.45% 51.52% 76.08% 33.14% 20.78% 19.29% 15.28
Development Company of %
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78

Farzana Huda www.ijetst.in Page 518

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 11: Lease as % of Total Revenue
Amount in Million BDT
Company 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Name
IDLC Finance 479.82% 422.90% 467.36% 387.37% 228.55% 220.77% 171.11% 133.14% 115.34% 112.70%
Limited
Phoenix N/A N/A N/A N/A N/A N/A N/A N/A 673.21% 577.27%
Finance and
Investments
Limited
International 26.82% 71.28% 65.00% 65.13% 223.84% 312.44% 231.52% 151.58% 160.86% 144.25%
Leasing and
Financial
Services
Limited
Prime Finance 70.05% 48.93% 44.40% 41.32% 37.25% 27.48% 15.65% 10.38% 8.46% 6.95%
and
Investment
Limited
Peoples 148.76% 128.24% 50.31% 40.42% 101.52% 368.67% 344.22% 356.23% 256.88% 169.15%
Leasing and
Finance
Services
Limited
LankaBangla 47.68% 39.24% 25.72% 36.59% 38.32% 161.38% 152.79% 117.59% 87.62% 152.46%
Finance
Limited
MIDAS N/A N/A N/A N/A N/A N/A 81.79% 109.86% 152.20% 162.57%
Financing
Limited
Islamic 82.47% 77.27% 325.00% 183.51% 130.19% 145.97% 138.50% 178.38% 144.13% 146.41%
Finance and
Investment
Limited
Industrial 31.92% 28.84% 19.27% N/A N/A 237.36% 259.68% 225.67% 177.80% 187.85%
Promotion and
Development
Company of
Bangladesh
Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78
Note: N/A- Data not available

Farzana Huda www.ijetst.in Page 519

IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Table 12: Financial Expense Coverage Ratio
Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IDLC Finance 44.75% 42.35% 53.17% 63.21% 62.30% 72.42% 65.86% 59.07% 59.97% 63.93%
Limited
Phoenix Finance and 60.82% 63.39% 62.45% 69.64% 80.04% 52.67% 54.91% 26.05% 87.20% 81.41%
Investments Limited
International Leasing 29.18% 57.92% 66.11% 79.84% 75.88% 82.06% 76.90% 56.99% 84.60% 89.50%
and Financial
Services Limited
Prime Finance and 7.88% 5.47% 6.23% 6.93% 6.90% 6.39% 5.00% 6.27% 6.66% 7.41%
Investment Limited
Peoples Leasing and 119.63% 117.53% 43.46% 45.23% 54.02% 50.80% 42.20% 41.05% 43.14% 65.18%
Finance Services
Limited
LankaBangla 16.49% 18.24% 40.02% 51.25% 72.90% 64.75% 83.58% 123.27% 145.17% 405.21%
Finance Limited
MIDAS Financing 14.73% 31.15% 28.40% 35.45% 3.05% 3.18% 3.22% 2.53% 2.96% 6.29%
Limited
Islamic Finance and N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Investment Limited
Industrial Promotion 58.86% 62.59% 72.45% 47.99% 49.10% 66.05% 55.06% 52.63% 62.28% 64.39%
and Development
Company of
Bangladesh Limited
Source: Annual Reports of the respective NBFIs for the year 2003-2012
Note: US $1 = BDT 78
N/A- Data not available

Table 13: Average of Selected Financial Indicators

Amount in Million BDT
Company Name 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Average Equity 289.59 372.92 486.64 610.53 814.01 1006.01 1454.38 2592.12 3016.40 3349.36
Average Earnings Per 37.81 43.45 46.23 40.64 48.34 27.23 44.37 35.47 7.22 5.28
Share
Average Net Profit 10.91% 12.01% 11.48% 10.09% 10.49% 10.69% 15.62% 24.45% 9.68% 6.37%
Margin
Average Operating 25.90% 26.61% 18.40% 15.74% 22.94% 33.95% 35.22% 52.34% 33.41% 30.79%
Profit Margin
Average Operating 4.96% 3.56% 2.96% 2.86% 4.23% 7.47% 8.33% 12.60% 7.79% 7.14%
Profit On Asset
Average Return On 2.09% 1.61% 1.85% 1.83% 1.93% 2.35% 3.69% 5.89% 2.26% 1.48%
Asset
Average Return on 20.20% 20.82% 18.75% 15.94% 18.25% 18.71% 26.26% 29.31% 10.75% 6.88%
Equity
Average Debt to Equity 51.32% 49.12% 44.80% 44.57% 46.64% 23.71% 24.28% 28.74% 25.06% 24.79%

Average Financial 66.94% 70.57% 95.80% 94.08% 103.14% 95.24% 103.10% 91.99% 100.32% 111.65%
Expense to Total

Farzana Huda www.ijetst.in Page 520

 IJETST- Volume||01||Issue||04||Pages 514-526||June||ISSN 2348-9480 2014
Expenses

Average Operating 47.68% 43.74% 36.98% 38.18% 32.36% 35.22% 27.02% 26.11% 29.78% 32.61%
Expense to Operating
Revenue
Average Lease as % of 126.79% 116.67% 142.44% 125.73% 126.61% 210.58% 174.41% 160.35% 197.39% 184.40%
Total Revenue
Average Financial 44.04% 49.83% 46.54% 49.94% 50.52% 49.79% 48.34% 45.98% 61.50% 97.91%
Expense Coverage
Source: Annual Reports of the respective NBFIs for the year 2003-2012 , Note: US $1 = BDT 78

Table 14: Expected Average of Selected Financial Indicators

Amount in Million BDT

Company Name 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e
Expected Average Equity 4927.89 6701.62 9127.15 12454.85 16816.52 22609.79 29589.22 38661.54 53651.25 73809.94
Expected Average Earnings Per Share 9.47 6.74 4.76 3.37 2.34 1.73 1.19 0.97 0.87 0.62
Expected Average Net Profit Margin 11.02% 10.69% 10.51% 10.21% 9.53% 8.74% 7.82% 7.52% 8.39% 8.27%
Expected Average Operating Profit Margin 40.63% 46.20% 54.05% 58.83% 59.13% 60.30% 64.60% 69.15% 81.18% 88.49%
Expected Average Operating Profit On 10.72% 13.55% 16.34% 18.50% 19.46% 20.48% 23.13% 26.39% 33.11% 38.08%
Asset
Expected Average Return On Asset 2.91% 3.14% 3.18% 3.21% 3.14% 2.97% 2.80% 2.87% 3.42% 3.56%
Expected Average Return on Equity 12.19% 11.03% 10.00% 8.84% 7.43% 6.28% 5.31% 4.94% 5.11% 4.63%
Expected Average Debt to Equity 20.27% 18.21% 16.47% 14.93% 13.88% 13.65% 12.07% 10.61% 9.70% 8.82%
Expected Average Financial Expense to 116.67% 117.69% 116.43% 120.26% 123.61% 129.51% 133.71% 139.92% 142.14% 144.62%
Total Expenses
Expected Average Operating Expense to 25.63% 24.87% 24.28% 23.32% 22.86% 21.99% 21.79% 20.68% 19.33% 18.50%
Operating Revenue
Expected Average Lease as % of Total 207.93% 223.25% 233.38% 250.82% 259.67% 260.82% 286.51% 306.36% 318.33% 340.01%
Revenue
Expected Average Financial Expense 70.21% 74.88% 82.08% 89.21% 98.35% 108.80% 119.42% 128.13% 131.35% 137.26%
Coverage
Source: Annual Reports of the respective NBFIs for the year 2003-2012, Note: US $1 = BDT 78

Farzana Huda www.ijetst.in Page 521