Authorized Capital : Tk. 15,000 million

Paid up Capital : Tk. 8,366 million

Legal form : A public limited company incorporated in Bangladesh on 26th June 1983 under the companies Act 1994 and listed in Dhaka Stock Exchange Limited on 30th November 1986 and Chittagong Stock Exchange Limited on 15th November 1995.

Slogan : United We Achieve

Nature of business : Commercial banking with different financial services/products

Target customers : Individuals and Corporate customers

Number of branch : 148

Total Employee : 3679

Chairman : Mr. Anisuzzaman Chowdhury

Managing director : Mr. Muhammed Ali

1. Overview of Bank Asia and UCBL:

1.1. Overview of UCBL:

United Commercial Bank Limited (UCBL) is a Bangladesh based private commercial bank

which is considered as one of the first generation bank of Bangladesh that provides banking

services. The services include corporate and retail banking, loans, credit cards, online

banking and money transfer services. The bank operates in Bangladesh having its headquarter

in Gulshan, Dhaka. It was incorporated on 26th June 1983 as a public company with limited

liability under the Companies Act 1993. It obtained permission to start business from 26 June

1983 and started banking operations on 29th June 1983 with an authorized capital of Tk. 800

million. It has 138 branches all over Bangladesh. UCBL has its firm commitment towards the

society for the economic development of the country. Their position is 6th among the 48

banks which include 4 state owned banks, 5specialized banks, 9 foreign banks and 30 private

banks. So the bank has already become a significant part of our economy by serving its

clients through their personalized service, innovative practices, dynamic approach and

efficient Management. At present, UCBL is aiming to play a leading role in the economic

activities of the country, planning to establish more sustainable business relations with large

corporate groups and overcome all its deficiencies and give their competitors an edge.

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1.2. Overview of Bank Asia :

Bank Asia has been launched by a group of successful entrepreneurs with recognized

standing in the society. The management of the Bank consists of a team led by senior bankers

with decades of experience in national and international markets. The senior management

team is ably supported by a group of professionals many of whom have exposure in the

international market. It set milestone by acquiring the business operations of the Bank of

Nova Scotia in Dhaka, first in the banking history of Bangladesh. It again repeated the

performance by acquiring the Bangladesh operations of Muslim Commercial Bank Ltd.

(MCB), a Pakistani bank. In the year 2003 the Bank again came to the limelight with

oversubscription of the Initial Public Offering of the shares of the Bank, which was a record

(55 times) in our capital market's history and its shares commands respectable premium. 

The asset and liability growth has been remarkable. Bank Asia has been actively participating

in the local money market as well as foreign currency market without exposing the Bank to

vulnerable positions. The Bank's investment in Treasury Bills and other securities went up

noticeably opening up opportunities for enhancing income in the context of a regime of

gradual interest rate decline. Bank Asia Limited started its service with a vision to serve

people with modern and innovative banking products and services at affordable charge.

Authorized Capital : Tk. 15,000 million

Paid up Capital : Tk. 7,229 million

Legal form : A public limited company incorporated in Bangladesh on 27th November 1991 under the companies Act 1994 and listed in Dhaka Stock Exchange Limited in 2003 .

Slogan : For a better tomorrow

Nature of business : Commercial banking with different financial services/products

Target customers : Individuals and Corporate customers

Number of branch : 91

Total Employee : 1773

Chairman : Mr. A. Rouf Chowdhury

Managing director : Md. Mehmood Husain

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2. Total operating income,Expense,Asset and Equity capital of Bank

Asia and UCBL:

2.1. Total Operating income:

Total Operating income is the sum of excess of revenues over expenses derived from

normal business operations. Operating income, representing income from ordinary

business activities, excludes expenses, such as interest and taxes.

Figure 1 : Total operating income of Bank Asia and UCBL

From the above graph we can demonstrate that from year 2010 to 2014, UCBL’s operating

income is increasing whereas over the year, Bank Asia’s operating income is decreasing from

2010 to 2011 and increasing from 2011 to 2014. UCBL Bank’s operating income followed an

overall increase tendency over the years. From 2010 to 2014 it is increasing at increasing

trend. But as we can see from the graphical representation of Bank Asia’s operating income

follow this increasing trend from 2011. In 2014 Bank Asia’s total operating is very high on

the other hand in 2011 it was very low. We can also observe that in 2014 that, both bank had

good business.

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2.2. Total operating expense:

Total operating expense is the sum of expense in carrying out an organization's day-

to-day activities, but not directly associated with production. Operating expenses

include such things as payroll, sales commissions, employee benefits and pension

contributions, transportation and travel, amortization and depreciation, rent, repairs,

and taxes. These expenses are usually subdivided into selling expenses and

administrative and general expenses. It is also called non-manufacturing expenses.

Figure 2: Total operating Expense of Bank Asia and UCBL

From the above graph we can demonstrate that from year 2010 to 2014, UCBL’s operating

expense is increasing whereas over the year, Bank Asia’s operating expense is also

increasing. Both banks operating expense followed an upward trend over the years.

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2.3. Total assets:

Total Assets are the sum of all current and noncurrent assets that a company owns.

They are reported on the company balance sheet. The total asset figure is based on the

purchase price of the listed assets, and not the fair market value.

Figure 3 : Total Asset of Bank Asia and UCBL

From the above graph we can demonstrate that from year 2010 to 2014, UCBL Bank’s total

assets are increasing whereas over the years, Bank Asia’s total assets are also increasing. But,

if we carry out cross-sectional analysis, then we can see that UCBL Bank’s total assets are

more compared to Bank Asia’s from the year 2010 to 2012.

2.4. Total equity capital:

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Total equity capital is a firm's total assets minus its total liabilities. Equivalently, it is

share capital plus retained earnings minus treasury shares. It is free of debt.

Figure 4 : Total equity capital of Bank Asia and UCBL

From the above graph we can demonstrate that from year 2010 to 2014, total equity capitals

of both banks are increasing over the years. But, if we carry out cross-sectional analysis, then

we can see that UCBL Bank’s total equity capitals are significantly higher than Bank Asia’s.

On the other hand, from the year 2010 to 2014, Bank Asia’s total equity capital is

significantly less than UCBL Bank’s because of its retained earnings gathered from previous

years.

3. Ratios of Bank Asia and UCBL:3.1. Operating efficiency ratio:

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To maximize profitability and the value of the shareholders investment in the bank, many

banking organizations recognize the need for greater efficiency in their operations.

In a business context, operational efficiency can be defined as the ratio between the input to

run a business operation and the output gained from the business. When improving

operational efficiency, the output to input ratio improves. The operating efficiency ratio

indicates how efficiently a bank can be operated.  The lower the value, the less it costs to

manage and operate the business.

Figure 5 . Operating efficency ratio of Bank Asia and UCBL

We can clearly see from the above graph that United Commercial Bank’s operating efficiency ratio in 2010 is 36.75% but in 2011 its operating efficiency ratio decreased. From 2012 to 2014 its operating efficiency ratios are consistent in 43%. On the other hand, Bank Asia’s operating efficiency ratio from 2010 to 2013 was consistent in 35-36%. In 2014 its operating efficiency ratio increased to 40.34%. If we compare between two Bank’s then we can see Bank Asia’s efficiency is better than UCBL.

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3.2. Return on Asset:

This ratio indicates how profitable a company is relative to its total assets. The return on

assets (ROA) ratio illustrates how well management is employing the company's total assets

to make a profit. The higher the return, the more efficient management is in utilizing its asset

base. The ROA ratio is calculated by comparing net income to average total assets, and is

expressed as a percentage. Banks strive to record an ROA of 1.5% or above.

Figure 6 . Return on Asset of Bank Asia and UCBL

From above figure we can see that United Commercial Bank’s ROA has increased to 1.75%

in the year 2010 and then it has decreased rapidly to 0.76% in the year 2012. And 2013 to

2014 ROA is increases by 1.35% & 1.38% consistently. On the other hand, we can see that

Bank Asia’s ROA decreases in 2011. And in 2012 it has again decreased to 0.65%, in 2013 it

has increased to 0.89% and in 2014 to 1.21%. Thus the values of return on assets of UCBL

shows that is more profitable than Bank Asia.

3.3. Return on equity:

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Return on equity (ROE) measures the rate of return for ownership interest (shareholders' equity) of common stock owners. It measures the efficiency of a firm at generating profits from each unit of shareholder equity. ROEs 15-20% are generally considered good.

Figure 7 . Return on Equity of Bank Asia and UCBL

From above figure we can see that both Bank’s have same conditions of Return on equity. In 2011 to 2012 consecutively decreased. In 2013 both Banks’ Return on equity has increased to the year in 2014. If we compare two banks, UCBL is considered good.

3.4. Employee productivity ratio:

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For many businesses, including most small businesses, the most significant cost is labor. Salaries and wages comprise the major line-item expense for most retail and small-scale manufacturing companies, but labor also tends to be responsive to productivity improvements. To reduce employee costs, Management should consider measuring employee efficiency and setting aggressive performance targets to get the most bang for their labor buck.

Figure 8 . Employee productivity ratio of Bank Asia and UCBL

From above figure we can see that UCBL Employee productivity ratio has decreased to 1.71 in the year 2012 and then it has consecutively increased from 2013 to 2014. On the other hand, in 2011 Bank Asia’s Employee productivity ratio has decreased to 3.18 and in 2012 it has again increased to 3.40 and the consecutively decreased from 2013 to 2014. Employee productivity of Bank Asia is better than UCBL.

4. Analysis & comparision

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UCBL’s operating income is in increasing trend over the years, whereas Bank Asia’s operating income is decreasing from 2010 to 2011 and increasing from 2011 to 2014. UCBL Bank’s operating income followed an overall increase tendency. From 2010 to 2014 it is in increasing trend. But as we can see from the graphical representation of Bank Asia’s operating income follow this increasing trend from 2011. In 2014 Bank Asia’s total operating is very high. On the other hand in 2011 it was very low. We can also observe that in 2014 that, both bank had good business. It is clear that the operating income of UCBL is higher than the Bank Asia. it doesn’t mean that Bank Asia is performing bad than UCBL . The reason might be that UCBL’s operation is wider than Bank Asia.

UCBL’s operating expense is increasing whereas over the year, Bank Asia’s operating

expense is also increasing. Both banks operating expense followed an upward trend over the

years. This them because by the time both the bank’s business is expanding. So by the

increase of operating income, expense also increasing.

UCBL Bank’s total assets are increasing whereas over the years, Bank Asia’s total assets are

also increasing. But, if we carry out cross-sectional analysis, then we can see that UCBL’s

total assets are more compared to Bank Asia’s from the year 2010 to 2012.

Total equity capitals of both banks are increasing over the years. But, if we carry out cross-

sectional analysis, then we can see that UCBL Bank’s total equity capitals are significantly

higher than Bank Asia’s. On the other hand, from the year 2010 to 2014, Bank Asia’s total

equity capital is significantly less than UCBL Bank’s because of its retained earnings

gathered from previous years.

If we compare the operating efficiency ratios of United Commercial Bank and Bank Asia,then it is found that in last five years operating efficiency of UCBL was good in 2011 and 2010 later on efficiecy ratio decreased comparing to the prevous year. This might be because of increasing operating expense not proportionatley to the inc5 yearreasing operating income. On the other hand Bank Asia’s operating efficiency ratio was between 35-36% but in the year 2014 it drastically increased .So comparing these two banks Bank Asia’s efficiency is better than UCBL in last 5 years

Return on Assets of UCBL is 1.75% in the year 2010 and then it has decreased rapidly to

0.76% in the year 2012. In 2013 & 2014 ROA is increased to 1.35% & 1.38% consistently.

On the other hand, we can see that Bank Asia’s ROA decreases in 2011. And in 2012 it has

again decreased to 0.65%, in 2013 it has increased to 0.89% and in 2014 to 1.21%. The

reason behind is that the net profit has not increased proportionately to 2010 that caused the

return on asset of both the banks to be decreased. Another reason is in 2010 both the bank’s

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total provision has increased that decreased net profit but later on it took measures to increase

the ROA.

Both the Banks have same conditions of Return on equity. In 2011 to 2012 consecutively decreased just because of net profit. In 2013 both Banks’ Return on equity has increased to the year in 2014. If we compare two banks, UCBL is considered good.

UCBL Employee productivity ratio has decreased to 1.71 in the year 2012 and then it has consecutively increased from 2013 to 2014. On the other hand, in 2011 Bank Asia’s Employee productivity ratio has decreased to 3.18 and in 2012 it has again increased to 3.40 and the consecutively decreased from 2013 to 2014. The overall performance of Bank Asia is better than UCBL.

5. Conclusion

We know that United Commercial Bank is one of the oldest private commercials banks in Bangladesh which has started its journey in banking sector in the mid 1983 on the other Bank Asia  started its journey on 27th November, 1999 which is almost 16 years after UCB started.

We did both the bank’s comprehensive analysis based on operating efficiency .If we see the above calculation and graphical presentation of Total operating income,Total operating expense ,Total asstes , Total equity capital , operating efficiency ratio,Return on Assets , Return on equity and Employee productivity ratio of United Commercial Bank and Bank Asia ; we can find that United commercial bank is ahead of in all the cases .

6. Reference

1.(2010-2014). Annaul Report . UCBL. http://www.ucb.com.bd/index.php?page=know-ucb%2Fshareholder-information%2Fannual-report

2.(2010-2014). Annual Report. Bank Asia. http://www.bankasia-bd.com/home/annual_reports

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Appendix

2010 2011 2012 2013 2014Interest Income 9,468.30 15,351.63 21,318.92 22,999.36 22,360.83 Less Interest Expense 5,632.94 10,203.21 14,705.21 15,919.86 14,430.24 Net Interest 3,835.36 5,148.42 6,613.71 7,079.50 7,930.59 Interest from Investment 1,972.54 1,833.82 1,418.51 2,666.44 3,868.66 Commission 1,358.56 1,553.80 1,429.42 2,074.94 2,697.38 Other Operating Income 688.18 758.34 716.01 577.70 712.76

Total operating income (A) 7,854.63 9,294.37 10,177.66 12,398.58 15,209.39 Salaries and allowances 1,795.26 1,784.55 2,366.38 2,923.33 3,589.09 Rent, taxes, insurance, electricity, etc.

373.49 450.07 637.02 673.91 980.79 Legal expenses 11.10 7.39 11.55 65.59 38.01 Postage, stamp, telecommunication, etc

54.03 64.60 86.99 105.85 114.52 Stationery, printing, advertisements, etc

159.09 199.99 215.43 270.38 472.80 Managing Director Fees & Salary 10.03 10.92 7.75 11.32 11.32 Directors' fees 4.60 5.57 6.93 4.51 4.33 Auditors' fees 0.53 0.52 0.58 0.58 0.58 Depreciation 169.02 236.78 338.08 401.04 565.67 Other Expense 545.17 561.07 744.74 815.71 712.82

Total operating expenses (B) 3,122.31 3,321.46 4,415.44 5,272.21 6,489.93

Profit / (loss) before provision(C=A-B) 4,732.33 5,972.91 5,762.22 7,126.37 8,719.46 Provision for loans and advance 832.05 788.31 1,552.31 1,083.15 1,472.30 Provision for diminution in value ofinvestments 71.83 - 351.89 - - Other Provision(Provision for Off-Balance Sheet expenses) 196.65 11.69 118.95 155.90 411.49

Total provision (D) 1,100.53 800.00 2,023.16 1,239.05 1,883.79

Total profit / (loss) before taxes(C-D) 3,631.80 5,172.91 3,739.06 5,887.32 6,835.67

Provision for Income Tax 1,450.16 2,227.11 2,152.94 2,821.91 3,166.95

Net Profit After Tax 2,181.64 2,945.80 1,586.13 3,065.41 3,668.73 Total Assets 129,876.22 168,891.78 207,448.38 226,333.13 266,100.74 No Of Employee 2,738.00 2,982.00 3,374.00 3,445.00 3,679.00 Total Equity capital 7,816.47 15,966.41 18,171.02 20,504.97 22,491.54

United Commercial Bank

Operating efficiency ratio=Total operating expense/Total operating revenue

39.75% 35.74% 43.38% 42.52% 0.43

Return on Asset = Net profit after tax/ Total asset

1.68% 1.74% 0.76% 1.35% 0.01

Return on equity = Net profit after tax/Total equity capital

27.91% 18.45% 8.73% 14.95% 0.16

Employee productivity Ratio = Net operating income(Profit before provision

and tax)/No.of full-time-equivalent employees

1.73 2.00 1.71 2.07 2.37

Calculation of Ratios

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2010 2011 2012 2013 2014Interest Income 8,381.35 10,903.58 13,296.06 14,319.42 13,914.31 Less Interest Expense 5,420.58 8,202.66 9,616.35 11,139.14 10,699.77 Net Interest 2,960.77 2,700.92 3,679.71 3,180.28 3,214.54 Interest from Investment 1,163.50 1,285.55 1,930.64 3,053.80 4,029.12 Commission 2,141.48 2,126.00 1,760.31 1,801.34 1,877.81 Other Operating Income 424.66 290.97 450.01 497.74 564.73

Total operating income (A) 6,690.41 6,403.44 7,820.68 8,533.16 9,686.20 Salaries and allowances 1,015.22 1,096.64 1,281.95 1,448.94 1,821.36 Rent, taxes, insurance, electricity, etc.

158.63 284.47 326.56 370.25 429.94 Legal expenses 4.20 4.01 7.05 8.86 10.47 Postage, stamp, telecommunication, etc

40.68 23.05 53.92 64.86 68.25 Stationery, printing, advertisements, etc 84.02 78.97 70.02 69.80 75.55 Managing Director Fees & Salary 6.42 7.37 12.20 13.00 14.16 Directors' fees 1.58 2.24 2.00 1.72 2.77 Auditors' fees 0.45 1.15 1.06 1.09 0.69 Depreciation 258.14 332.55 338.46 379.30 440.64 Other Expense 872.22 531.02 675.64 759.56 1,043.54

Total operating expenses (B) 2,441.55 2,361.47 2,768.87 3,117.39 3,907.37

Profit / (loss) before provision(C=A-B)

4,248.86 4,041.97 5,051.81 5,415.76 5,778.83 Provision for loans and advance 477.57 416.65 2,090.36 1,568.80 1,406.75 Provision for Off-Balance Sheetexpenses

167.93 47.46 130.57 79.49 43.63 Provision for diminution in value of investments

23.82 88.84 100.00 246.88 56.50 Other Provision 0.02 56.81 7.88 - 55.00

Total provision (D) 669.34 609.76 2,328.81 1,895.17 1,561.88

Total profit / (loss) before taxes(C-D)

3,579.52 3,432.21 2,723.00 3,520.59 4,216.96

Provision for Income Tax 1,649.94 1,515.99 1,815.00 2,060.77 1,998.26

Net Profit After Tax 1,929.58 1,916.21 908.00 1,459.82 2,218.69 Total Assets 105,198.05 117,729.41 140,361.37 163,777.74 182,730.94 No Of Employee 1,237.00 1,270.00 1,485.00 1,600.00 1,773.00 Total Equity capital 7,059.94 12,478.93 13,045.17 14,617.70 16,864.42

Bank Asia

Operating efficiency ratio=Total operating

expense/Total operating revenue36.49% 36.88% 35.40% 36.53% 40.34%

Return on Asset = Net profit after tax/

Total asset1.83% 1.63% 0.65% 0.89% 1.21%

Return on equity = Net profit after

tax/Total equity capital27.33% 15.36% 6.96% 9.99% 13.16%

Employee productivity Ratio = Net

operating income(Profit before provision

and tax)/No.of full-time-equivalent

employees

3.43 3.18 3.40 3.38 3.26

Calculation of Ratios

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