Project Profile

 A project profile is a simplified description of an eventual project. In addition to defining the purpose and ownership of the project, it presents a first estimate of the activities involved and the total investment that will be required, as well as the annual operating costs and, in the case of income generating projects, the annual income.

There are a number of key parameters should be considered for a project profile. These are- the level and nature of the demand; the relevance of supply

constraints; the definition of project operations; and the types of costs involved.

Financial Statement Analysis

 Financial statement analysis is the process of understanding the risk and profitability of a firm through analysis of reported financial information, by using

different  accounting  tools  and  techniques.  It  consists  of  1)  reformulating

reported financial statements, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted financial statements. The first two are often dropped in practice, meaning that financial ratios are just calculated on the basis of the reported numbers, perhaps with some adjustments. Financial statement analysis is the foundation for evaluating and pricing credit risk and for doing fundamental company valuation.

MFI MATH

The following information is for XYZ Bank Ltd. (in million Tk.): -

Total Income= 2250

Interest Expense = 1452

Total Asset = 18918

Securities gain (loss) = 25

Earning Asset = 15145

Total liabilities = 18528

Taxes = 20

Shares = 145000

Non Interest Income = 600

Non Interest Expense = 820

Provision for Loan Loss = 455.

Calculate: ROE, ROA, NIM, EPS, NNIM, Net operating margin. 

Solution:

 Net Income

= Interest Income + Non Interest Income + Securities Gains - Interest Expense - Non Interest

Expense – Taxes – Provision for Loan Loss

= 2250 + 600 + 25 – 1452 – 820 – 20 – 455

= 128 million

Total Equity

= Total Assets – Total Liabilities

= 18918 – 18528 = 390 million

ROE

= Net Income / Total Equity

= 128 / 390

= 32.82 % ROA

= Net Income / Total Assets

= 128 / 18918

= 0.68 % NIM

= (Interest Income – Interest Expenses) / Earning Assets

= (2250 - 1452) / 15145

= 798 / 15145

= 5.27 %

EPS = Net Income / No of Shares = 128,000,000 / 145,000 = Tk. 724.14 per share

Net Non-interest Margin

= (Non-interest Income - Non-interest Expenses) / Earning Assets

= (600 – 820) / 15145

= (220) / 15145

= ? % Here,

Total Operating Income

= Int. Income + Non Interest Income

= 2250 + 600 = 2850

Total Operating Expenses

= Int. Expenses + Non Int. Expense + Provision for Loan Loss

= 1452 + 820 + 455

= ?

Net Operating Margin

= (Total Op. Income – Total Op. Expenses) / Total Assets

= (2850 – ?) / 18918

= ? %

MFI Math (Nov-2011)

 4(c)

 i) Net Interest Income = Interest Income - Interest Expense = (80,000+15,000) - 19,500 = Taka

75,500 thousands.

 ii) Net Non-interest Income = Non-interest Income - Non-interest Expenses

=(20000+2000+8000) - (7500+3500+2000+2500+25000) = 30000 - 40500 = (10500)

 iii) Net Interest Margin = (Interest Income – Interest Expenses) / Total Assets = (95000 -

19500) / 682500 = 11.06%

 iv) Operating Efficiency Ratio = Total Operating Expenses / Total Operating Income = (19500+7500+3500+2000+2500+25000) / 125000 = 48%

 v) PLL% = Provision for Loan Losses / Loans = 7500 / 295000 = 0.0254 or 2.54%

 vi) Burden% = (Non Interest Op Expenditure - Non Interest Income)/ Average Assets = [(7500+3500+2000+2500+25000) - (20000+2000+8000)] / 682500 = 1.53%

 vii) ROA = Net Income / Total Assets = 65000 / 682500 =9.52%

 viii) ROE = Net Income / Total Equity = 65000 / (200000+115000+130000) = 14.60% ix) Equity Multiplier (EM) = Total Assets / Total Equity = 682500 / 445000 = 1.53 times x) Equity to Asset Ratio = Total Equity / Total Assets = 445000 / 682500 = 65.20%

Super NOW (Negotiable Order of Withdrawal) account

Super NOW (Negotiable Order of Withdrawal) account is one type of bank account in which interest rate is tagged with money market dealing interest rate and the rate is lower than the existing money market rate. A minimum deposit amount is required and there is no interest rate ceiling. If money market rate goes up, interest rate also goes up. If money market rate falls, interest rate also falls but never goes below a certain minimum rate of interest. 

The following information is for New Bank Ltd. (in million Tk.): -

Total Income= 1875

Interest Expense = 1210

Total Asset = 15765

Securities gain (loss) = 21

Earning Asset = 12621

Total liabilities = 15440

Taxes = 16

Shares = 145000

Non-Interest Income = 501

Non-Interest Expense = 685

Provision for Loan Loss = 381.

Calculate: ROE, ROA, NIM, EPS, NNIM, Net

Operating Margin.

 Solution: Net Income

= Interest Income + Non Interest Income + Securities Gains - Interest Expense - Non Interest

Expense – Taxes – Provision for Loan Loss

= 1875 + 501 + 21 – 1210 – 685 – 16 – 381

= 105

Total Equity

= Total Assets – Total Liabilities

= 15765 – 15440 = 325

ROE

= Net Income / Total Equity

= 105 / 325

= 32.30% ROA

= Net Income / Total Assets

= 105 / 15765

= 0.66% NIM

= (Interest Income – Interest Expenses) / Earning Assets

= (1875 - 1210) / 12621

Net Income = Interest Income + Non Interest Income + Securities Gains - Interest Expense - Non Interest Expense – Taxes – Provision for Loan Loss

= 1875 + 501 + 21 – 1210 – 685 – 16 – 381 = TK. 105 M

 Total Equity = Total Assets – Total Liabilities

= 15765 – 15440 = TK. 325 M

 

Debt= Deposit Account+ Bills Payable+ Borrowings (from Other or any Bank)

******* Contra will not count (Ignore)

Equity= Share Capital + Profit and Loss + Reserve Fund and other Reserves+ Surplus

Debt Equity Ratio or Burden%= Debt/Equity

Net Interest Income NII= Interest Income-Interest Expense

= (Interest on Advances+ Interest on Investment)-0)

Non Interest Income = Commission, Exchange and Brokerage+ Others Revenue+ Profit on sale on Investment

Non Interest Expenses = Salary+ Allowance+ MD’s Fee + Legal Fees + Sales Expenses +

Printing& Stationary + Postage & Telegram + Repair & Maintenance Net Non Interest Income =Non Interest Income- Non Interest Expense (Operating Income (Interest Income-Interest Expenses+ Other Income) - Operating Expenses (All Expenditure excluding Interest Paid and Provision))

 

ROE= Return on Equity = Net Income / Total Equity = 105 / 325 = 32.30% ROA = Return on Asset= Net Income / Total Assets = 105 / 15765 = 0.66%

NIM = Net Interest Margin= (Interest Income – Interest Expenses) / Total Assets

= (1875 - 1210) / 15765 = 665 / 15765= 4.21%

 

EPS = Earnings Per Share = 105,000,000 / 145,000 = Tk. 724.14 per share 

Net Non Interest Margin = (Non Interest Income – Non Interest Expenses) / Total Assets

= (501 – 685) / 15765 = (184) / 15765 = - 1.16%

 

Here,

Total Operating Income = Int. Income + Non Interest Income

= 1875 + 501 = TK. 2376 M

Total Operating Expenses = Int. Expenses + Non Int. Expense + Provision for Loan Loss

= 1210 + 685 + 381 = TK. 2276 M

Net Operating Margin = (Total Op. Income – Total Op. Expenses) / Total Assets

= (2376 – 2276) / 15765 = 0.63%

 = 665 / 12621

= ?%

EPS = Net Income / No of Shares = 105,000,000 / 145,000 = Tk. 724.14 per share

Net Non-interest Margin

= (Non-interest Income - Non-interest Expenses) / Earning Assets

= (501 – 685) / 12621

= (184) / 12621

= ?% Here,

Total Operating Income

= Int. Income + Non Interest Income

= 1875 + 501 = 2376

Total Operating Expenses

= Int. Expenses + Non Int. Expense + Provision for Loan Loss

= 1210 + 685 + 381

= 2276

Net Operating Margin

= (Total Op. Income – Total Op. Expenses) / Total Assets

= (2376 – 2276) / 15765

= 0.63%