Group Assignment: Time Series Analysis of the Course: Dutch Bangla Bank Limited

Group Assignment: Time series analysis of “Dutch Bangla Bank Limited” Course: Bank Management Course Code: Fin 464 Limitations: 3 Prepared By: Name ID Syeda Numaira Shehrin 2022400630 Tahmid Shahriyar 1931791630 Mayesha Nuzhat Khandkar 1911465630 Submitted To: Mr. Mokhdum Morshed [MdM] Senior Lecturer Department of Accounting & Finance School of Business & Economics North South University Date of Submission: 2nd September

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Group Assignment: Time series analysis of “Dutch Bangla
Bank Limited”
Course: Bank Management
Course Code: Fin 464
Section: 3
Prepared By:
Name ID
Syeda Numaira Shehrin 2022400630
Tahmid Shahriyar 1931791630
Mayesha Nuzhat Khandkar 1911465630
Submitted To:
Mr. Mokhdum Morshed [MdM]
Senior Lecturer
Department of Accounting & Finance
School of Business & Economics
North South University
Date of Submission: 2nd September, 2022

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Acknowledgment:
We are grateful to our respected faculty member and course instructor, Mr. Mokhdum Morshed
sir, for providing us with the opportunity to work as a group and complete this project with a
united effort and utmost efficiency, as well as for his guidance, sustained interest, constant
encouragement, motivating inspiration, directions, valuable suggestions, and advice. We are
grateful to North South University's Department of Accounting and Finance for providing such
a well-designed course and facilities, which greatly aided us in completing our project
methodically. Finally, we would like to express our gratitude to everyone who assisted us,
directly or indirectly, in the smooth execution and completion of this report.

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Executive Summary:
For this following project, we conducted a performance analysis on our given bank which is
Dutch Bangla Bank Limited. We primarily conducted ratio analysis for this bank. For ratio
analysis, we used the historical data for the last five years, 2017-2021. We used time series
analysis and for ratio analysis, we focused on profitability, liquidity, efficiency, financial
risk, and market positions. Lastly, the following report contains two segments: excel and
word documents. The excel segment contains all the necessary assigned calculations
centering on the project and the word contains the written body of the report which will be
shown in the table of contents below which will further shed light on components we worked
with for the completion of our report.

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Table of Contents
Topic Page Number
Introduction 5
Methodology 5
Limitations 6
Overview of the Assigned Bank 7
Findings and Analysis 8-30
Recommendations and Conclusions 31
Appendix 31
References 32

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Introduction:
In today’s world, banks are the heart of the economic system. If the banking industry fails, the
economy will collapse, demonstrating the importance of this industry in comparison to others.
Commercial banks play an important role in the development of the economy's financial structure
by making large investments in markets to bridge the gap between surplus and deficit units. Banks
are heavily regulated by the government because they deal with public deposits. Furthermore, as
banks control the circulation of money, a country's economic development is heavily reliant on
them. Thus, a bank's performance must be well organized because a strong banking sector is
critical for growth, job creation, wealth creation, poverty eradication, entrepreneurial activity, and
GDP growth. As a result, our course instructor assigned us the task of analyzing the performance
of Dutch Bangla Bank Limited. We will be using historical data from the last five years (2017-
2021). For these, we will primarily use ratio analysis to understand the liquidity position,
efficiency, financial risk, profitability, and market position.
Methodology:
For this report analyzing the profitability, risk exposure, liquidity position, and market analysis for
Dutch Bangla Bank Ltd we used Ratios as our main tool for analysis. We used Liquidity Indicator
Ratios, Profitability Ratios, Efficiency Ratios, and Market Ratios to analyze the different aspects
of this commercial bank. We did a time series analysis using the ratios we calculated. A time series
analysis is the comparison of different values of the same company for a selected period. The time
period provided to us is the last five years starting from 2017 to 2021. This includes the year when
covid-19 began and thus lets us find out the effects of the economic changes on the commercial
banks due to an ongoing pandemic. To calculate these ratios, we needed data about the bank. For
this, we went for the secondary source of data; which is their annual reports. Using their annual
reports for the past five years that we collected from their official website we calculated the ratios.
Along with that, any additional information that was needed for example the closing stock prices
of DBBL each year was obtained from another website called “amarstock.com”.

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Limitations:
One of the major issues we faced while conducting this research was obtaining accurate values
from the bank’s financial statements. Some ratios like the Hot Money Ratio and the Expense
Control Efficiency Ratio were difficult to collect. We had to email the bank and call them multiple
times to gather the information we needed but most of our attempts were unsuccessful. However,
we eventually found the accurate values we had been looking for. Moreover, the time frame from
which we had to derive our analysis and interpretation was subject to the Coronavirus Pandemic
and its aftermath. Hence, the outcome or pattern of majority of our analysis involved the
assumption of the pandemic causing an unexpected change in the usual pattern of the ratios. This
is especially problematic as this does not give the true overview or analysis of the bank but gives
the values for when an adverse situation or anomaly is present. This data might not be a useful tool
for forecasting or comparison with future or past conditions, as there is a good chance that another
outbreak is not going to happen for another generation or even a century.

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Overview of the Assigned Bank:
Dutch Bangla Bank Limited (DBBL):
M Sahabuddin Ahmed (Founder & Chairman) and the Dutch company FMO launched Dutch-
Bangla Bank as Bangladesh's first joint venture private commercial bank. In Bangladesh, DBBL
was founded under the Bank Companies Act of 1991 and incorporated as a public limited company
under the Companies Act of 1994. Its formal operations began on June 3, 1996.
The bank's initial focus was on financing high-growth manufacturing industries in Bangladesh.
The reasoning is that the manufacturing sector exports Bangladeshi goods all over the world. By
financing and concentrating on this sector, Bangladesh can achieve the desired growth. Another
area of emphasis for Dutch Bangla Bank is Corporate Social Responsibility (CSR). Dutch Bangla
Bank has become one of Bangladesh's largest bank donors as a result of its investment in this
sector. Because of its unique approach as a socially conscious bank, the bank has received
numerous international awards.
Dutch Bangla Bank was Bangladesh's first fully automated bank. It is also known as the "most
innovative and technologically advanced bank in Bangladesh." The Electronic-Banking Division
was founded in 2002 with the goal of rapid automation and the introduction of modern banking
services into this field. In 2003, full automation was completed, introducing plastic money to the
Bangladeshi people. Dutch Bangla Bank also operates the nation's largest ATM fleet, cutting
consumer costs and fees by 80% in the process. Furthermore, the decision by Dutch Bangla Bank
to pursue a low-profitability strategy in this sector has surprised many critics. Because of this
mindset, the majority of local banks have joined the Dutch Bangla Bank banking infrastructure
rather than developing their own.
Mission: With a commitment to social responsibility, Dutch-Bangla Bank fosters enterprise and
creativity in business and industry. Profits are not the primary focus of the bank's operations
because "man does not live by bread and butter alone."
Vision: The Dutch-Bangla Bank envisions a better Bangladesh, where the arts and letters, sports
and athletics, music and entertainment, science and education, health and hygiene, a clean and
pollution-free environment, and, most importantly, a society based on morality and ethics make
all of our lives worthwhile. The essence and ethos of Dutch-Bangla Bank are based on a cosmos
of creativity and the marvel-magic of a charmed life that abounds with the spirit of life and
adventures that contribute to human development.

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Findings and Analysis:
Liquidity Indicator Ratios
Cash Position Indicator:
A cash position represents the amount of cash that a company, investment fund, or bank has on its
book at a specific point in time.
Cash position indicator =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Cash Position
Indicator
10.01% 14.78% 3.51% 4.39% 3.76%
This ratio indicates the strength of the primary reserve. The higher the ratio, the better will be the
liquidity reserve. DBBL saw an increasing trend in 2018 and became 14.78% but in 2019 it
drastically declined to 3.51%. Even though, this ratio raised to 4.39% in 2020 but again it went
down to 3.76% in 2021. From this, we can say that the bank’s first line of defense is getting weaker
day by day as it fluctuates rapidly, and eventually, the bank will be subjected to solvency risk,
interest risk, liquidity risk, and strategic risk.
Cash & due from other depository institutions
Total Assets

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Liquid Securities Indicator:
This ratio compares the most marketable securities an institution can hold with the overall size of
its asset portfolio. The greater the liquid proportion of securities, the more liquid the depository
institution’s position tends to be.
Liquid securities indicator =
This ratio indicates the strength of the secondary reserve of the bank. The higher the ratio, the
better the firm is in a position to deal with solvency risk, interest rate risk, liquidity risk, and
strategic risk. But sadly, there is a gradual decrease in the DBBL’s liquid securities indicator from
2017 to 2020. Later on, in the year the bank saw an increasing trend. In conclusion, even though
DBBL was losing its strength in dealing with the risks in past but they are now raising its reserve
to protect itself from any risk.
Dutch
Bangla
Bank
Limite
d
2017 2018 2019 2020 2021
Liquid
securiti
es
indicat
or
0.00003656057
328
0.00003324957
971
0.00002969703
761
0.00002429793
283
0.002006951
487
Liquid portion of securities
Total Assets

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Capacity ratio:
This is a negative liquidity indicator because loans and leases are often the most illiquid assets.
Capacity Ratio =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Capacity
Ratio
93.76% 93.32% 92.95% 93.24% 92.86%
It indicates how much liquidity is given up by the bank. It is a negative ratio which means the
lower it gets, the better the bank is in a position to deal with liquidity risks. DBBL’s capacity ratio
is going down from 2017-2019 and even though it rose slightly up to 93.24% in 2020, it again
declined in 2021 and became 92.86%. This means DBBL’s liquidity is going up indicating DBBL
is giving lower loans and leases.
Total Assets
Loans and leases

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Hot money ratio:
A ratio that reflects whether the institution has roughly balanced the volatile liabilities it has issued
with the money market assets it holds that could be sold quickly to convert those liabilities. The
ratio going up is good and down is bad. The higher the ratio, the better the position a bank has in
meeting its short-term obligations.
Hot money ratio =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Hot money
ratio
1.75 2.89 1.12 0.51 0.42
This ratio peaked in 2018 followed by a decline in 2019 and a downward trend in the following
year. As it is more than one throughout the time period thus not facing a serious liquidity crisis.
Although this indicates, that the bank has lost significant liquidity in 2021.
Money market assets
Money market liabilities

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Efficiency Ratios
Asset Utilization Ratio:
The ratio indicates how efficiently assets are utilized by the bank to generate operating revenue.
The ratio going up or down is subject to portfolio management policies, mainly mix and yield on
the bank’s assets.
Asset utilization ratio =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Asset
utilization
ratio
5.94% 6.59% 7.03% 5.68% 5.56%
In 2017, DBBL has 5.94% in asset utilization and it gets increased by 0.65% in 2018 indicating
DBBL has been able to raise the average yield on assets. Similarly, in 2019 the asset utilization
rate increased and became 7.03%. However, it becomes 5.68% in 2020 and continues to decline
until it reaches 5.56% in 2021. Thus, we can say DBBL failed to make portfolio management of
assets which was supposed to minimize their risk.
Total Assets
Operating Revenue

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Expense Control Efficiency Ratio:
This ratio indicates how efficiently the bank is managing its operating expense. If the ratio goes
up it means the banks are effectively and efficiently managing their operating expenses.
Expense control efficiency ratios =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Expense
control
efficiency
ratios
27.98% 29.32% 27.59% 35.81% 28.15%
DBBL is having an increasing trend from 2017 to 2018. Ironically, it went to 27.59% from 29.32%
in 2019. But surprisingly, it raises to 35.81% in the year 2020. Later on, in 2021 the ratio drastically
went down and became 28.15%. This is because the total operating expenses and PLL are
increasing over the years.
Net Operating income before taxes
Total Operating Revenue

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Tax management efficiency ratio:
This ratio indicates how efficiently the bank is managing its taxation. Efficiently managing
means how efficiently banks are minimizing their taxations. If the ratio goes up it means the
banks have been successful in reducing taxation.
Tax management efficiency ratio =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Tax
management
efficiency
ratio
44.63% 60.95% 57.04% 55.94% 67.24%
From the year 2017 to 2018, there has been an increasing trend in DBBL’s Tax management
efficiency ratio. In 2019, it decreased by almost 3.91% obtaining 57.04%, and again in 2020, the
ratio falls by 55.94%. But later on, in 2021 DBBL reached its peak, and the tax management
efficiency ratio increased up to 67.24%. In a nutshell, DBBL regained all its efficiency in managing
its tax expenses and it can allocate more money to the shareholders.
Net income after taxes
Net Operating income before taxes

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Employee productivity ratio:
Human resources are the main asset of service-based companies like commercial banks as services
are delivered through them. From this ratio, we can understand how much value each employee is
contributing to the operating income. The higher the ratio is, the more productive the employees
are.
Employee productivity ratio =
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Employee
productivity
ratio (Taka)
2687725.437 2730436.504 2674189.94 2631728.009 2891948.134
It is convenient to observe that DBBL has shown an increasing trend from 2017 to 2018. Ironically,
it declined from 2019 until it reached BDT 2631728.009 in 2020. But to a surprise, in 2021 the
employee productivity ratio has gone up to BDT 2891948.134. In conclusion, DBBL’s employee
productive ratio suggests that even though their ratio has gone down in past but now the
management and staff are successfully generating more operating revenues or less operating
expenses and can help to squeeze out more operating income with a given employee base. This is
also indicating that the productivity of the employees is up to the standard to generate stable
operating income over the year.
Net operating income
Total number of full-time employees in the bank

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Financial Risk Ratios
Financial Leverage/ Gearing/ Debt Ratio:
This ratio shows how much of the assets of the bank are financed by debt. This ratio in particular
is high for banks as equity financing is significantly more expensive than debt financing. Hence,
banks have high financial leverage; however, it does not mean the bank is performing badly. This
ratio is calculated by the formula:
Financial Leverage / Gearing/ Debt Ratio = !"#$% '($)(%(#*
!"#$% +,,-#,
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Financial
Leverage
Ratio
93.8% 93.3% 93.0% 93.2% 92.9%
In the case of DBBL, the ratios are very high but don’t change drastically during the last 5 years.
It can be seen to have decreased from 93.8% in 2017 to 93.3% in 2018 which further declined to
93.0% in 2019. It slightly increased to 93.2% in 2020 and finally increased again to 92.9% in 2021

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Interest Coverage Ratio:
This shows the ability of the bank to pay off the debt. The higher the ratio, the means the bank is
capable of paying off its debt without help from outside.
Interest Coverage Ratio =
In the case of DBBL, the ratio showed an increasing trend from 2017-2018 but it declined and
became 3.58 in 2019. Ironically, it drastically declined and became 3.38. But later, in the year
2021, the ratio surprisingly increased and became 4.24. From this, we can say, even though the
bank is paying off the debt but still the bank is doing poor management as per taxation is
concerned.
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Interest
Coverage
Ratio
3.59 3.64 3.58 3.38 4.24
Total operating revenue
Interest expense

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Equity Multiplier Ratio:
This ratio indicates how much more of equity financing would be required to finance the bank’s
assets. As the ratio increases, it shows that more debt is required to finance the assets of the
company which is an indicator of financial risk. This is calculated using the formula:
Equity Multiplier = !"#$% +,,-#,
!"#$% ./0(#* 1$2(#$%
The trend of DBBL shows that the Equity Multiplier has decreased over the past few years. From
the highest value of 16.04 in 2017 to the lowest value of 14.01 in 2021. This shows that the
financial risk of DBBL decreased over the past 5 years.
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Equity
Multiplier
16.04 14.98 14.19 14.80 14.01

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Profitability Ratios
Return on Equity (ROE):
Shows the amount of return available to shareholders in comparison to the equity they have
invested. This is one of the most important ratios to consider while analyzing the condition of a
bank, as it can determine how efficiently a bank can convert shareholders’ equity into profits. If
the ratio is high, it means the bank is operating efficiently to generate profits. The formula for this
ratio is:
Return on Equity = 3-# 456"7-
89$:-9"%;-: <, ./0(#*
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Return on
Equity
11.89% 17.66% 15.35% 16.84% 14.75%
Evident by the chart, it can be seen that DBBL enjoyed the highest amount of profits during the
year 2018, which was achieved by a 5.77% rise from 2017. The profits have drastically dropped
during the next 3 years, with a 14.75% ROE during 2021. It can be assumed that the COVID
pandemic might have been the reason for DBBl’s fall in efficiency, which has been impacting their
profits till 2021. It can be said that DBBL has become inefficient in generating profits since 2018.

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Return on Assets (ROA):
ROA serves a similar purpose as the ROE of the business. This determines how much return is
generated against the assets of the bank. A high ratio tells us that the assets are efficient in
generating profit for the business. This is calculated by:
Return on Assets (ROA) = 3-# 456"7-
!"#$% +,,-#,
The values have been in a fluctuating trend throughout the last 5 years. While the lowest was
0.74% in 2017, it quickly rose to 1.18% in 2018, which was the highest. In the next 3 years,inn it
dropped before increasing and finally sat at the value of 1.05% in 2021, which is higher than the
ratio of 2017. It can be assumed that the company’s assets were becoming more efficient in 2018
and started to generate more profit before falling for the next few years and it has not been able to
recover since. This may be mainly due to the pandemic and its aftermath on the economy.
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Return on
Asset
0.74% 1.18% 1.08% 1.14% 1.05%

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Net Interest Margin:
This ratio shows the interest income being generated by the assets of the bank. The higher the
value the more profitable the business. It can be calculated by the formula:
Net Interest Margin = 45#-:-,# 456"7-=45#-:-,# .>2-5,-
!"#$% +,,-#,
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Net Interest
Margin
3.66% 4.32% 4.62% 2.99% 3.04%
The trend of DBBL shows a fluctuating pattern in terms of net interest margin. About the other
profitability ratio, this one too shows a similar pattern. The interest income margin was low in
2017 but rose by 0.66% in 2018 and further increased by 0.3% in 2019. But it fell sharply to 2.99%
in 2020 and recovered in 2021 by rising to 3.04%. The fluctuations can be due to the pandemic
and its after-effects.

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Net bank Operating Margin:
This ratio indicates the amount of operating profit being generated from the operations of the bank.
The higher this ratio, the more operating profit is generated from operations. The formula is:
Net bank Operating Margin = !"#$% ?2-:$#(5@ A-B-50-=!"#$% ?2-:$#(5@ .>2-5,-
!"#$% +,,-#,
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Net bank
Operating
Margin
5.94% 6.59% 7.03% 5.68% 5.99%
This particular ratio has an increasing trend from 2017-2019 but then moves to a decreasing trend
from 2019-2020. The highest value of 7.03% was achieved in 2019, meaning the operating profits
were at their peak. Although in 2021 the ratio did not increase drastically it showed an increasing
pattern with a 0.31% rise.

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Earnings Per Share (EPS):
This ratio indicates what a company/bank makes per share. This ratio in particular can help
determine the corporate value of the company by estimating the amount of money being made
from each outstanding share. This can be calculated using the formula:
EPS = 3-# 456"7- $C#-: #$>
!"#$% 89$:-, ?0#,#$5;(5@
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
EPS 11.44 19.99 8.22 9.61 8.35
During 2017-2018, the EPS was in an increasing trend where the value reached its highest at BDT
19.99 in 2018. However, the values started to fall drastically. The ratio was at its lowest during
2019 at BDT 8.22, which then increased in 2020 before falling again in 2021. This may have been
an effect of the coronavirus pandemic during the years 2019-2021.

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Dividend Per Share (DPS):
This ratio shows the amount of dividend the bank is offering to the common shareholders. If this
ratio is high, it indicates that the company is profitable and can give generous dividends to its
shareholders. This can also make the company more attractive to investors, which can invite more
funding. DPS can be calculated by:
DPS = !"#$% D(B(;-5; E$(; #" 1"77"5 8#"6F 9"%;-:,
!"#$% 89$:-, ?0#,#$5;(5@
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
DPS 2.55 2.55 0.83 1.36 1.32
The DPS in the years 2017 and 2018 remained unchanged at BDT 2.55. However, it fell drastically
in 2019 by BDT 1.72 but increased slightly in 2020 before taking a minor fall again in 2021. This
trend can be a product of uncertainty and unexpected circumstances that happened during the
pandemic.

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Retained Earnings Per Share:
This ratio indicates the portion of net income that is being retained by the bank instead of paid out
to shareholders as dividends. It is calculated using the formula:
Retained Earnings Per Share = A-#$(5-; .$:5(5@,
!"#$% 89$:-, ?0#,#$5;(5@
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Retained
Earnings Per
Share
8.86 17.44 7.39 8.25 7.03
The ratio was in an increasing trend from 2017-2018. However, it took a quick fall of BDT 10.05
in 2019. In 2020 the value increased before decreasing again while currently at the value of BDT
7.03 in 2021. The pattern is similar to the other ratios as it may be an outcome of the pandemic.

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Dividend Payout Ratio:
This ratio shows the amount allocated to shareholders out of the total earnings of the bank. The
higher the ratio, indicates that the company can distribute more profits to shareholders as they are
sufficiently profitable. It is calculated using the formula:
Dividend Payout Ratio = DE8
.E8
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Dividend
Payout Ratio
22.31% 12.77% 10.10% 14.17% 15.83%
The dividend ratio follows a decreasing trend from 2017-2021. Although it increased slightly
during 2020 and 2021 it did not reach close to the high of 22.31% during the year 2017.

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Dividend Yield Ratio:
This ratio indicates the rate of return in terms of dividends for shareholders. An increasing rate can
indicate higher profitability status. It can be calculated using this formula:
Dividend Yield Ratio: DE8
!"#$% 89$:-, ?0#,#$5;(5@
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Dividend
Yield Ratio
5.85% 6.11% 1.62% 2.65% 1.89%
In 2018 the ratio increased from 5.85% to 6.11%. However, it declined to 1.62% in 2019, and after
a slight increase, it further declined in 2021 to 1.89%. This means that DBBL has been less
profitable since the end of the year 2018 and has faced difficulties to recover from it.

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Net Profit Margin:
This ratio shows the amount of operating revenue is contributing to the net profit of the bank. The
higher the ratio, the more profitable the bank is. It is calculated using this formula:
Net Profit Margin: 3-# E:"C(#
?2-:$#(5@ A-B-50-
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Net Profit
Margin
12.49% 17.87% 15.38% 20.03% 18.93%
The net profit margin shows an increasing trend for DBBL. It was at its lowest in 2017 with a
margin of 12.49% which increased till 2018. After a slight decline in 2019, it increased to its
highest in 2020 at 20.03% and finally sitting at 18.93% in 2021.

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Market Ratios
Price-to-Earnings (P/E) Ratio:
This is a ratio that helps value a company by measuring its current share price in comparison to
the earnings per share ratio. When the share price is high it means that there is high demand for
the shares of the bank. This may be a good ratio for investors as it can determine the potential for
economic growth or investor’s confidence in the future of the company. this can be calculated
using the formula:
P/E Ratio = 89$:- E:(6-
.E8
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
P/E Ratio 3.81 2.09 6.23 5.35 8.51
The P/E ratio was low for DBBL in 2017 and 2018. It then started increasing in 2019 to 6.23
despite the world economic crisis due to the pandemic. In 2020 there was a minor decrease in the
ratio to 5.35, which may have been caused by the adverse global situation. However, it finally
increased to 8.51 during the year 2021 which indicates that DBBL’s stocks might be a good
investment option for the future.

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Market/Book Ratio:
This is a ratio to help evaluate a company using its current market value to the book value, just as
the name suggests. Market/Book ratio can determine whether the shares of a company are
overvalued or undervalued. This can help investors to understand the value of the stock in
comparison to the market value. If the value of this ratio is high, it means that the shares of the
company are high in value too.
Market/Book Ratio = G$:F-# 2:(6- 2-: ,9$:-
3-#)""F H$%0- 2-: ,9$:-
Dutch
Bangla Bank
Limited
2017 2018 2019 2020 2021
Market/Book
Ratio
3.75 3.14 2.18 1.73 2.16
The market/book ratio of DBBL shows a fluctuating trend, the highest being 3.75 in 2017 which
reduces until 2020 to 1.73. In 2021it increases again to 2.16. one thing to note is that the
market/book value did not fall below 1 which says that the shares of DBBL are overpriced, and as
the values of 2021 indicates a rising trend it can be assumed to increase in the future too. However,
without comparison with other banks, it would be difficult to assume the true value of DBBL.

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Recommendations and Conclusions:
Ratios are simply one number divided by another, but the key is how those ratios are analyzed and
used by the decision maker. A good strategy is to compare the ratios to some sort of benchmarks,
such as industry averages or past performance of a bank, or both. Once the ratios have been
calculated, an analyst will need some benchmarks to determine where the bank stands at that point.
Industry comparisons and bank trends are useful benchmarks. To get a sense of how a bank is
performing, it may be useful to compare it to certain industry averages. In finance, ratios are
typically two financial statement items that are related to one another and can provide valuable
information to the prudent user.
For DBBL, the debt ratio shows close to 92.9% which indicates that the bank is using a lot of Debt
financing. It should increase its equity capital through retained earnings, issuing common stocks,
and statutory reserve. The bank also has an unfavorable return on assets as they have a lot of non-
revenue generating assets and they should get rid of those assets by selling. Also, by investing in
loans and securities, the bank will be able to get a favorable return against assets. The degree of
asset utilization is also less for DBBL and they should think about increasing interest revenues.
Moreover, in managing expenses especially operating and tax expenses DBBL showed
inefficiency and to fix this they should come up with new strategies to decrease their salaries and
other expenses as well. The bank's net interest margin is very low due to higher interest expenses
on deposits and borrowings and lowers interest revenues; it should increase loans to earn higher
interest revenues to achieve a favorable net interest margin. In terms of tax management efficiency,
the bank is doing well because they can reduce their taxes. Finally, DBBL's price-to-earnings ratio
and market-to-book ratios are decreasing due to lower dividends per share and dividend yield, so
the bank should focus on giving stable dividends to shareholders to increase the market price of
shares because lower share prices will result in poor performance.
Appendix:
All the relevant calculations are attached in an MS Excel file with this report.

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References:
Dr. Rengasamy, D. (n.d.). The need to evaluate bank performance. News and Events.
https://news.curtin.edu.my/insight/2012-2/the-need-to-evaluate-bank-performance/.
Dutch-Bangla Bank. (n.d.). Dutch-Bangla Bank. https://www.dutchbanglabank.com/.
Brief History of Dutch Bangla Bank. (n.d.). Dutch-Bangla Bank.
https://www.dutchbanglabank.com/about-us/brief-
history.html#:~:text=Dutch%2DBangla%20Bank%20started%20operation,growth%
20manufacturing%20industries%20in%20Bangladesh.