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Review of Non-Bank Financial Sector 2010
Advisor & EditorDr. Toufic Ahmad Choudhury
Report Preparation Team
Team LeaderDr. Prashanta Kumar Banerjee
MembersAbdul Jalil Choudhury
Ashraf Al MamunMd. Alamgir
Md. Mosharref HossainA.N.K. Mizan
Tahmina Rahman
Editorial AssociatesDr. Bandana Saha
Abed Ali
Bangladesh Institute of Bank ManagementPlot # 4, Main Road # 1(South), Section # 2, Mirpur, Dhaka-1216
PABX: 9003031-5, 9003051-2, Fax: 88-02-9006756Email: [email protected], Web: www.bibm.org.bd
Acknowledgement
The report on "Review of Non-Bank Financial Sector 2010" has been completed with enormous
and sustained support from many quarters.
We would like to particularly thank the honorable Director General of BIBM, Dr. Toufic Ahmad
Choudhury for his valuable advice, observations and innovative ideas to improve our work
throughout the year.
We are really appreciative and very grateful to all of our faculty colleagues for their valuable
remarks and positive suggestions which helped us in finishing the report.
Bangladesh Bank and different financial institutions extended their unstinted support in
matters of data collection. We express our gratitude for their contribution.
Our sincere appreciation goes to the Research Officer of BIBM, Ms. Papon Tabassum and
Research Assistants, Mr. Md. Faysal Alam and Mr. Mia Sakib Anam for helping us in obtaining
and processing a wide range of information.
We hope this report would serve as a valuable resource for the financial institutions and
concerned persons working in the financial sector.
Dr. Prashanta Kumar Banerjee
Abdul Jalil Choudhury
Ashraf Al Mamun
Md. Alamgir
Md. Mosharref Hossain
A.N.K. Mizan
Tahmina Rahman
Review of Non-Bank Financial Sector 2010 III
Message from the Director General
Bangladesh Institute of Bank Management (BIBM) presents, in all humility, this first issue of the
'Review of Non-Bank Financial Sector' - a new publication, which basically seeks to assess the
strengths and weaknesses of the non-bank financial institutions of Bangladesh through
comparative performance evaluation.
In the financial market of Bangladesh, both banks and non-bank financial institutions are
working in an intense competitive environment where they need to locate their market niche
so that they can craft and put into use appropriate financial and marketing strategy. We hope
all stakeholders of the financial sector particularly non-bank financial institutions would be
benefited by the analysis contained in the Non-bank Review. We, at the BIBM, envision the
Review to be our flagship publication and would welcome comments and suggestions from
potential users to improve upon our presentation.
(Dr. Toufic Ahmad Choudhury)
Director General
Review of Non-Bank Financial Sector 2010 V
Contents
Review of Non-Bank Financial Sector 2010 VII
Part-1
Part-2
Part-3
Part-4
Part-5
Part-6
References
Pages
1
3
4
4
5
11
13
15
16
18
19
22
23
25
27
28
29
29
30
32
32
35
37
38
38
39
40
41
42
45
70
Introduction
1. Introduction
2. Structure of the Report
3. Data and Methodology
Performance of NBFIs Compared to BFIs
Comparative Performance Evaluation Based on Establishment Year of NBFIs
1. Liquidity
2. Capital Management
3. Fund Utilization
4. Asset Quality
5. Earning
6. Operational Efficiency
7. Concluding Remarks
Comparative Performance Evaluation Based on Listing Status of NBFIs
1. Liquidity
2. Capital Management
3. Fund Utilization
4. Asset Quality
5. Earning
6. Operational Efficiency
7. Concluding Remarks
Comparative Performance Evaluation Based on Ownership Patterns of NBFIs
1. Liquidity
2. Capital Management
3. Fund Utilization
4. Asset Quality
5. Earning
6. Operational Efficiency
7. Concluding Remarks
Pictorial Views of All Tables
List of Tables
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Table 12
Table 13
Table 14
Table 15
Table 16
Pages
8
8
9
9
13
14
15
17
18
20
21
21
22
27
28
29
Part 2: Performance of Non Bank Financial Institutions
NBFIs and BFIs: Paid-up Capital & Reserve, Loan & Advance, Deposit, Borrowings
and Profit
Sector wise Allocation
Correlation Matrix of NBFIs
Correlation Matrix of BFIs
Part 3: Comparative Performance Evaluation Based on Establishment Year of NBFIs
Liquidity: Regulatory - Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR)
Liquidity: Non-regulatory - Current Ratio (CR), Liquid Asset to Total Asset (LA to TA)
Capital Management: Paid-up Capital to Required Capital (PC to RC), Total
Capital to Total Asset (TC to TA) and Debt to Equity (DE) Ratio
Funds Utilization: Total Loan & Lease to Total Deposit (TL&LS to TD), Total Loan
& Lease to Total Borrowings (TL&LS to TB) and Total Loan & Lease to Total
Deposit & Borrowings (TL&LS to TD&B)
Asset Quality: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment
to Total Asset (TI to TA) and Classified Loan & Lease to Total Asset (CL&LS to TA)
Earning: ROA 1 - Operating Profit to Total Asset (OP to TA), ROA 2 - Net
Income Before Tax to Total Asset (NIBT to TA) and ROA 3 - Net Income After Tax
to Total Asset (NIAT to TA)
Earning: Return on Equity - Net Income After Tax to Total Equity (NIAT to TE)
Earning: Interest Income to Net Operating Income (II to NOI)
Operational Efficiency: Operating Expense to Net Operating Income (OE to
NOI), Staff Expense to Net Operating Income (SE to NOI), Staff Expense to Total
Operating Income (SE to TOI)
Part 4: Comparative Performance Evaluation Based on Listing Status of NBFIs
Liquidity: Regulatory - Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR)
and Non-regulatory - Current Ratio (CR), Liquid Asset to Total Asset (LA to TA)
Capital Management: Paid-up Capital to Required Capital (PC to RC), Total
Capital to Total Asset (TC to TA) and Debt to Equity (DE) Ratio
Funds Utilization: Total Loan & Lease to Total Deposit (TL&LS to TD), Total Loan
& Lease to Total Borrowings (TL&LS to TB) and Total Loan & Lease to Total
Deposit & Borrowings (TL&LS to TD&B)
VIII Review of Non-Bank Financial Sector 2010
List of Tables
Table 17
Table 18
Table 19
Table 20
Table 21
Table 22
Table 23
Table 24
Table 25
Table 26
Table 27
Table 28
Table 29
30
30
31
31
32
37
38
39
40
40
41
41
42
Asset Quality: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment to
Total Asset (TIv to TA) and Classified Loan & Lease to Total Asset (CL&LS to TA)
Earning: ROA 1 - Operating Profit to Total Asset (OP to TA), ROA 2 - Net Income
Before Tax to Total Asset (NIBT to TA) and ROA 3 - Net Income After Tax to Total Asset
(NIAT to TA)
Earning: Return on Equity - Net Income After Tax to Total Equity (NIAT to TE)
Earning: Interest Income to Net Operating Income (II to NOI)
Operational Efficiency: Operating Expense to Net Operating Income (OE to NOI),
Staff Expense to Net Operating Income (SE to NOI), and Staff Expense to Total
Operating Expense (SE to TOE)
Part 5: Comparative Performance Evaluation Based on Ownership Patterns of NBFIs
Liquidity: Regulatory - Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR) and
Non-regulatory - Current Ratio (CR), Liquid Asset to Total Asset (LA to TA Ratio)
Capital Management: Paid-up Capital to Required Capital (PC to RC), Total Capital to
Total Asset (TC to TA) and Debt to Equity (DE) Ratio
Funds Utilization: Total Loan & Lease to Total Deposit (TL&LS to TD), Total Loan &
Lease to Total Borrowings (TL&LS to TB) and Total Loan & Lease to Total Deposit &
Borrowings (TL&LS to TD&B)
Asset Quality: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment to
Total Asset (TIv to TA) and Classified Loan & Lease to Total Asset (CL&LS to TA)
Earning: ROA 1 - Operating Profit to Total Asset (OP to TA), ROA 2 - Net Income
Before Tax to Total Asset (NIBT to TA) and ROA 3 - Net Income After Tax to Total Asset
(NIAT to TA)
Earning: Return on Equity - Net Income After Tax to Total Equity (NIAT to TE)
Earning: Interest Income to Net Operating Income (II to NOI)
Operational Efficiency: Operating Expense to Net Operating Income (OE to NOI),
Staff Expense to Net Operating Income (SE to NOI), Staff Expense to Total Operating
Expense (SE to TOE)
Review of Non-Bank Financial Sector 2010 IX
List of Figures
List of Appendices
Pages
Appendix I Indicators and Definitions 73
Appendix II Non-bank Financial Institutions Grouped as Per Year of Establishment 74
Appendix III Non-bank Financial Institutions Grouped as Per Listing Status with
the Secondary Market 75
Appendix IV Non-bank Financial Institutions Grouped as Per Ownership Pattern 76
Appendix V CAGR and CV of Different Parameters of NBFIs from 2007-2010
(Based on Establishment Year) 77
Appendix VI CAGR and CV of Different Parameters of NBFIs from 2007-2010
(Based on Listing in the Exchange) 78
Appendix VII CAGR and CV of Different Parameters of NBFIs from 2007-2010
(Based on Ownership Structure) 79
Figure 1-5
Figure 6-40
Figure 41-64
Figure 65-88
Pages
47-48
48-55
56-62
63-69
Performance of NBFIs Compared to BFIs
A Pictorial View of the Comparative Performance Evaluation Based on
Establishment Year of NBFIs
A Pictorial View of the Comparative Performance Evaluation Based on Listing
Status of NBFIs
A Pictorial View of the Comparative Performance Evaluation Based on
Ownership Patterns of NBFIs
X Review of Non-Bank Financial Sector 2010
AbbreviationBB Bangladesh Bank
BFI Bank Financial Institution
CAR Capital Adequacy Ratio
CAGR Compound Annual Growth Rate
CL&LS Classified Loan and Lease
CR Current Ratio
CRR Cash Reserve Ratio
CSE Chittagong Stock Exchange
CV Coefficient of Variation
DE Debt to Equity
DSE Dhaka Stock Exchange
ECB European Central Bank
II Interest Income
LA Liquid Asset
L/C Letters of Credit
MOF Ministry of Finance
N/A Not Available
NBFIs Non-bank Financial Institutions
NIAT Net Income Ater Tax
NIBT Net Income Before Tax
NOI Net Operating Income
OE Operating Expense
OP Operating Profit
PC Paid-up Capital
RC Required Capital
ROA Return on Asset
ROE Return on Equity
SD Standard Deviation
SE Staff Expense
SLR Statutory Liquidity Ratio
TA Total Asset
TC Total Capital
TB Total Borrowing
TL&LS Total Loan & Lease
TD Total Deposit
TD&B Total Deposit and Borrowing
TE Total Equity
TIc Total Income
TIv Total Investment
TIPS Treasury Inflation-Protected Securities
TOE Total Operating Expense
Review of Non-Bank Financial Sector 2010 XI
1. Introduction
In the 1980s when financial sector of Bangladesh was highly regulated, interest rates were at a
high level, amount of classified loans were excessive, activities of banks were limited to a few
sectors, directed loans were common, then Non-bank Financial Institutions (NBFIs) entered
into the financial sector of Bangladesh. NBFIs were established mainly to offer long-term
financing as, by nature, Bank Financial Institutions (BFIs) usually cannot go for that.
Meanwhile, NBFIs of Bangladesh have undergone qualitative changes in terms of number of
NBFIs as well as list of activities. NBFIs, numbering 31, invested Tk. 163.5 billion in different
sectors of the economy in Bangladesh up to June 30, 2010 (Bangladesh Bank, Annual Report
2009-2010). As a result, now this segment of the financial sector constitutes an integral part of
the Bangladesh financial system. These financial institutions also earned separate identity for
their functional specialization, wide range of tailored financial products, ability to take quicker
decisions, assume more risks, etc. Although these features have facilitated NBFIs in
proliferating their services, this proliferation is not widespread; rather it is confined to the main
urban areas, namely, Dhaka, Chittagong and Khulna cities. In addition, it seems that, currently,
NBFIs are offering many similar types of services like BFIs instead of concentrating more on
their specialized financial services.
Performance evaluation of NBFIs is an old issue but a continuous exercise. NBFIs have become
increasingly complex in terms of variety and concentration of services, sources of funds,
structure of ownership. Continuous performance evaluation of NBFIs with the proper
indicators is, therefore, necessary for the stake holders to know the past and present
performance and understand the future prospect of those organizations. Regarding indicators,
European Central Bank (2010) has suggested earnings, efficiency, risk taking and leverage as
key drivers of Financial Institutions' performance. Harker and Stavros (2000) in their paper
titled 'Performance of Financial Institutions' put forward a host of indicators like earning, price
to earning ratio, the firm's stock beta ( ) and alpha ( ) and Tobin's q ratios for short and long
term performance. The Ministry of Finance (MOF) of Government of China in 2011 has
published the rules for evaluation of financial institutions' performance which is based on a
financial institution's profitability, asset quality, solvency and business growth in a financial
year (www.esnai.com). A number of studies on different areas of NBFIs have also been
conducted in Bangladesh from time to time (Choudhury 1999, Saha et al. 1999, Chowdhury
2001, and Banerjee and Ashraf 2003) .The current report on performance of NBFIs will,
therefore, offer an update on an old issue.
Review of Non-Bank Financial Sector 2010 03
2. Structure of the Report
The study is principally concerned with performance evaluation of the NBFIs with a view to
reviewing the Non Banking Financial Sector. The study proceeds with the introduction,
structure of the report, data and methodology, performance of NBFIs compared to BFIs,
performance of NBFIs under different three groups1 in terms of liquidity, capital adequacy,
fund utilization, asset quality, earnings, and finally, operational efficiency.
3. Data and Methodology
For the study, data are collected from the Financial Institution Department of Bangladesh
Bank, financial statements of NBFIs, annual report of Bangladesh Bank, Activities of Banks and
Financial Institutions of the MOF, Financial Stability Report 2010 of BB and Dhaka Stock
Exchange for the period 2007-2010. The study covers 28 NBFIs2 following the list available in
the 'Activities of Banks and Financial Institutions' published by Ministry of Finance (MoF),
Bangladesh.
To analyze the performance with a view to reviewing the Non Banking Financial Sector, these
financial organizations are grouped on the basis of (1) establishment year, (2) listing status
with DSE/CSE and (3) ownership pattern. Considering establishment year, NBFIs are grouped
under four categories, such as, those established before 1990, between 1990 and 1995,
between 1996 and 2000 and after 2000, respectively (Appendix-II). Taking into consideration
of listing status of NBFIs in the secondary market, groups are made into two categories, listed
and non-listed (Appendix-III). Finally, groups are formed as joint venture (joint venture with
foreign countries and companies) and local on the consideration of ownership pattern
(Appendix-IV).
The performance of the NBFIs has been examined by taking into account the areas like
liquidity, capital adequacy, fund utilization, asset quality, earnings and operational efficiency
(Appendix-I). A simple average of calculated ratios of related NBFIs under each group has been
used to find out the representative figure of each group. In this regard, both regulatory and
non-regulatory measures have been taken into consideration. A number of ratios have been
used. Simple mathematical and statistical tools like average, Compound Annual Growth Rate
(CAGR), Co-efficient of Variation (CV) and correlation have also been used to present more
concrete results. In addition, pictorial views of all tables are placed in a separate chapter with a
view to understanding the findings of the report more clearly.
1 Three groups are formed on the basis of (1) establishment year, (2) listing status with DSE/ CSE and (3) ownership pattern. 2 The study has taken into consideration the NBFIs which got the license from Bangladesh Bank under Financial Institutions Act
1993. However, Hajj Finance Company Limited (HFCL) dedicated mainly to save money for performing Hajj and the recently
established NBFIs, namely, Agrani SME Financing Ltd. and Bangladesh Infrastructure Finance Fund (BIFF) Ltd. have not been
considered here. Notable that prior to the enactment of the Financial Institutions Act 1993, Non-bank Financial Institutions were
allowed by the Bangladesh Bank under the authority of Bangladesh Bank order, 1972 (P.O. No. 127 of 1972). But due to want of
sufficient and effective legal provision to regulate and control them, it was found to be difficult to take legal action against them
and thereby safeguard the interests of their customers. Such situations and circumstance necessitated the enactment of the
Financial Institutions Act 1993.
04 Review of Non-Bank Financial Sector 2010
Performance of NBFIs Compared to BFIs
The total amount of capital and reserves of the NBFIs stood at Tk. 39 billion in 2010 with
Compound Annual Growth Rate (CAGR) of 23 per cent during 2007-2010 (Table-1). The
Co-efficient of Variation (CV) of capital and reserve is 39.06 per cent during the same period.
However, as compared to BFIs, the amount of capital and reserve of NBFIs is very small,
constituting only 8.02 per cent of total in 2010. Considering CAGR and CV of capital and
reserve, NBFIs are also lagging behind the BFIs. Regulatory compulsion for BFIs ensures
persistent increase of the amount of capital and reserve which is not the case for NBFIs.
The share of loans and advances of NBFIs in 2010 is only 5.3 per cent of total. The amount of
loans and advances extended by NBFIs grew at an impressive rate of 19.09 per cent with a
high variation of 31.40 per cent during the period 2007-2010. This indicates that NBFIs have a
limited role as a lender in supporting the economic development of the country when
compared to commercial banks, although the growth rate of loans and advances shows an
impressive rate. This also signifies that NBFIs still have a lot of room to grow. In contrast, the
amount of deposit collected by NBFIs accounts for Tk. 100 billion in 2010 representing
3 per cent of total deposits which is a tiny figure compared to deposits collected by BFIs.
However, growth rate of deposits is inspiring as evident from the 22.09 per cent of CAGR of
deposits for NBFIs during 2007-2010. Another important source of funds of NBFIs is borrowing,
holding 20.40 per cent of total borrowing of BFIs and NBFIs in 2010. The share of borrowing of
NBFIs looks excessively high when one considers the size of business of both units of the
financial sector although borrowing of these organizations shows a negative CAGR. This
borrowing over deposits translates into excess pressure on the money market. In the total
amount of profit of BFIs and NBFIs, the share of NBFIs is only 4.40 per cent indicating their
trivial existence. In addition, the variation in the amount of profit of NBFIs measured by
coefficient of variations is also high (52.45%).
Review of Non-Bank Financial Sector 2010 07
Table 1: NBFIs and BFIs: Paid-up Capital & Reserve, Loan & Advance, Deposit, Borrowings and Profit
(Tk. in Billion)
Sources: "Activities of Bank and Financial Institutions", Ministry of Finance and Financial Stability Report
2010, Bangladesh Bank.
Note: Figures in parentheses indicate percentage of participation in total combined figures of NBFIs
and BFIs.
Looking at the sector-wise allocation of loan and lease of NBFIs (Table-2), it is observed that,
allocation of loan and lease is concentrated mainly on industrial sector with the highest share
of finance of 43.68 per cent, followed by housing sector at 17.5 per cent and merchant
banking and margin loan at 14.88 per cent in 2010. The agriculture sector received a very tiny
share of loan and lease from NBFIs, being only 1.51 per cent of the total. In contrast, BFIs'
sector-wise loan allocation seems more diversified. These organizations contributed 6.12
per cent to the agriculture sector.
Table 2: Sector-wise Allocation
Source: Bangladesh Bank
Particulars
Trade and Commerce
Industry
Agriculture
Housing
Merchant Banking & Margin Loan
Others
Grand Total
Amount of Loan &
Lease Dec. 2010
(In crore Tk.)
1060.73
7988.83
276.38
3202.30
2722.44
3043.70
18294.38
% of
Total
Dec. 2010
5.80
43.68
1.51
17.50
14.88
16.63
100.00
% of
Total
Dec. 2010
37.87
21.80
6.12
7.53
N/A
26.67
100.00
Amount of Loan
Dec. 2010
(In crore Tk.)
121681.01
70054.27
19655.20
24190.05
N/A
85698.34
321278.87
NBFIs BFIs
Year
2007
2008
2009
2010
CAGR
CV
NBFIs
17
(9.04)
20
(8.16)
24
(7.08)
39
(8.02)
23.00
39.06
BFIs
171
(90.96)
225
(91.84)
315
(92.92)
447
(91.98)
27.00
41.67
NBFIs
90
(4.90)
105
(4.60)
140
(5.30)
181
(5.30)
19.09
31.40
BFIs
1758
(95.10)
2185
(95.40)
2512
(94.70)
3248
(94.70)
16.59
25.94
NBFIs
45
(2.00)
55
(2.40)
84
(2.60)
100
(3.00)
22.09
35.83
BFIs
2212
(98.00)
2607
(97.90)
3137
(97.40)
3700
(97.00)
13.72
22.19
NBFIs
79
(100.00)
60
(100.00)
50
(29.07)
41
(20.40)
-15.00
28.35
BFIs
N/A
N/A
N/A
N/A
122
(70.93)
160
(79.60)
15.00
19.06
NBFIs
2
(2.44)
4
(2.03)
7
(5.50)
8
(4.40)
7.46
52.45
BFIs
80
(97.56)
194
(97.97)
122
(94.50)
172
(95.60)
20.09
36.02
Paid-up Capital & Reserve
Loan & Advance Deposit Borrowings Profit
08 Review of Non-Bank Financial Sector 2010
The correlation matrix (Table-3) shows that correlation of profit with all variables except
borrowing is highly positive in case of NBFIs, indicating existence of a high linear relationship.
It means that, NBFIs mostly depend on balance sheet activities for generating profit. In BFIs,
this relationship is also positive; however, coefficient of correlation is not as high as NBFIs
(Table-4). It seems that, banks do not depend on only traditional banking activities like
collecting deposits and giving loans for earning their profits. Besides, banks also concentrate
more on off-balance sheet activities to enhance their profit. This could not be possible in case
of NBFIs as these organizations are not involved in providing popular off-balance sheet
services like issuing Letters of Credit (L/C), performance bond, etc. As mentioned above, one
discernible finding is that, profit of NBFIs has high negative correlation with the borrowings of
NBFIs, signifying the existence of inverse relationship between profit and borrowings (-0.98). It
indicates that borrowing, which is high (Table-1) in NBFIs does not have positive relationship
with the profit. On the other hand, BFIs have very narrow relationship between its profit and
borrowings (0.19).
Table 3: Correlation Matrix of NBFIs
Source: Authors' Calculation
Table 4: Correlation Matrix of BFIs
Source: Authors' Calculation
Variable
Profit
Paid-up Capital & Reserve
Loan & Advance
Deposit
Borrowings
Profit
1
0.86
0.95
0.98
-0.98
Paid-upCapital & Reserve
1
0.97
0.91
-0.85
Loan&
Advance
1
0.99
-0.93
Deposit
1
-0.94
Borrowings
1
Variable
Profit
Paid-up Capital & Reserve
Loan & Advance
Deposit
Borrowings
Profit
1
0.44
0.54
0.47
0.19
Paid-upCapital & Reserve
1
0.99
0.99
0.94
Loan&
Advance
1
0.99
0.91
Deposit
1
0.95
Borrowings
1
Review of Non-Bank Financial Sector 2010 09
Concluding Remarks
It is observed that, NBFIs are far behind of BFIs in terms of maintaining capital and reserve,
collecting deposits, extending loan and advances and earning profit. The sector-wise
allocation of loan and lease of NBFIs is not also well diversified. In addition, NBFIs have
significant dependence on borrowing, while profit and borrowings of NBFIs show a high
negative correlation. NBFIs, therefore, need to deepen their existence in the financial sector of
Bangladesh by using their inherent opportunities to grow.
For this, NBFIs may bring variations in collecting more funds besides currently-used deposits
and other products. In this regard, NBFIs may think of issuing commercial papers for short
term funds and bonds like traditional coupon or Zero coupon bond, Sukuk Bond, TIPS, etc. for
long term funds. On the other side, for offering finance with innovation in product ranges,
these organizations need to go to more geographical areas with a view to covering more
un-banked and under-banked clients and organizations so that NBFIs can play an important
role beside BFIs in the development of the financial sector of Bangladesh like other countries.
10 Review of Non-Bank Financial Sector 2010
Comparative Performance Evaluation Based on Establishment Year of NBFIs
To review the Non-banking Financial Sector of Bangladesh, this section has shown a
comparative picture of 4 (Four) groups created on the basis of the establishment year. A total
number of 5 (Five) NBFIs are grouped under 'Before 1990', 2 (Two) are under '1991 to 1995', 15
(Fifteen) under the group of '1996 to 2000' and finally 6 (Six) are grouped under 'After 2000'.
With a view to knowing a comparative performance of these groups of NBFIs, a good number
of indicators linking the liquidity, capital management, fund utilization, asset quality, earning
and operational efficiency performance (Appendix-I) as described in the methodology have
been used.
1a. Liquidity Performance: Regulatory
All NBFIs are maintaining both Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) in
compliance with Bangladesh Bank requirements (Table-5). The NBFIs which were established
during 1996-2000 and after 2000 are maintaining these regulatory requirements more than
adequately. But CAGRs of CRRs of the NBFIs which were established before 1990 and during
1996-2000 are negative, meaning rate maintained for CRR of these groups of NBFIs is
persistently decreasing although rates are always more than the regulatory requirements.
Table 5: Liquidity Performance: Regulatory - Cash Reserve Ratio (CRR)
and Statutory Liquidity Ratio (SLR)
(%)
Source: Annual Reports, All NBFIs
CAGRs of CRRs of the NBFIs which were established after 2000 and during 1991-1995 are
positive (Table-5) indicating that besides satisfying regulatory requirements, these NBFIs are
continuously increasing their liquidity ratios. The CVs of CRRs for NBFIs established before
Year
2007
2008
2009
2010
CAGR
CV
Before
1990
N/A
2.56
2.61
2.54
-0.22
1.40
During
1991-1995
N/A
2.71
3.22
3.45
8.32
12.04
During
1996-2000
N/A
9.30
3.12
3.50
-27.81
65.27
After
2000
N/A
4.73
3.03
5.20
3.22
26.42
Before
1990
N/A
11.61
9.86
9.19
-7.51
12.25
During
1991-1995
N/A
23.69
24.92
11.34
-21.77
37.57
During
1996-2000
N/A
21.89
26.22
27.82
-62.3
48.82
After
2000
N/A
36.40
12.95
32.65
-3.56
46.08
CRR SLR
Review of Non-Bank Financial Sector 2010 13
1990 is quite low whereas NBFIs established during 1996-2000 hold the higher CV. The CVs of
SLR of all except those of NBFIs established before 1990 are high (Table-5).
1b. Liquidity Performance: Non-regulatory
The Current Ratios (CRs) of all NBFIs are more than 1.00 and it indicates that the NBFIs are able
to meet their current obligations with their current assets. But the CAGRs of CRs of the NBFIs
which were established during 1991-1995 and during 1996-2000 are negative indicating these
groups of NBFIs are persistently decreasing their CRs whereas CAGRs of CRs of the NBFIs which
were established before 1990 and after 2000 are positive (Table-6) indicating these groups of
NBFIs are continuously increasing their CRs. The CVs of CRs are high only exception is for NBFIs
established before 1990. The CAGRs of LA to TA ratios of all the NBFIs are negative with
different figures of CVs.
Table 6: Liquidity Performance: Non-regulatory - Current Ratio (CR), Liquid
Asset to Total Asset (LA to TA)
Source: Authors' Calculation
CR (X) LA to TA (%)
Year
2007
2008
2009
2010
CAGR
CV
Before
1990
1.13
1.11
1.16
1.46
9.31
13.36
During
1991-1995
2.12
1.78
0.60
1.36
-10.43
44.68
During
1996-2000
1.69
1.84
0.88
1.09
-10.38
33.66
After
2000
1.31
1.22
2.02
2.47
17.15
33.87
Before
1990
3.71
0.58
0.43
0.49
-39.83
23.29
During
1991-1995
0.90
0.74
0.24
0.33
-22.42
58.17
During
1996-2000
0.50
0.39
0.38
0.37
-7.22
15.13
After
2000
0.55
0.40
0.44
0.40
-7.69
15.56
14 Review of Non-Bank Financial Sector 2010
2. C
apit
al M
anag
emen
t P
erfo
rman
ce
This
par
t o
f th
e re
po
rt e
xam
ines
th
e st
ren
gth
of N
BFI
s in
term
s o
f su
ffic
ien
cy o
f cap
ital
3 by
usi
ng
ind
icat
ors
like
Pai
d-u
p C
apit
al to
Req
uir
ed
Cap
ital
(PC
to R
C),
Tota
l Cap
ital
toTo
tal A
sset
s (T
C to
TA) a
nd
Deb
t to
Eq
uit
y (D
E) R
atio
.
Tab
le 7
: Cap
ital
Man
agem
ent
Per
form
ance
: Pai
d-u
p C
apit
al t
o R
equ
ired
Cap
ital
(PC
to
RC
),To
tal C
apit
al t
oTo
tal
Ass
et (
TC t
oTA
) an
d D
ebt
to E
qu
ity
(DE)
Rat
io
Sou
rce:
Au
tho
rs' C
alcu
lati
on
3 Du
rin
g 2
007-
08 t
he
reg
ula
tory
cap
ital
req
uir
emen
t fo
r th
e N
BFI
s in
Ban
gla
des
h w
asTk
. 25
cro
re a
nd
it
sto
od
at
Tk. 5
0 cr
ore
in
200
9-10
.
Ho
wev
er, o
n J
uly
24,
201
1 C
entr
al B
ank
aske
d t
he
NB
FIs
to i
ncr
ease
th
eir
Paid
-up
cap
ital
to
Tk. 1
00 c
rore
by
30th
Ju
ne
2012
fro
m t
he
min
imu
m li
mit
of T
k. 5
0 cr
ore
.
PC
to
RC
(%)
TC t
oTA
(%)
DE
Rat
io (X
)
Year
20
07
20
08
20
09
20
10
CA
GR
CV
Bef
ore
19
90
102
113
144
170
13.6
3
23.3
7
Du
rin
g
19
91
-19
95
131
131
65 105
-5.3
3
28.6
3
Du
rin
g
19
96
-20
00
110
129
77 109
-0.2
3
20.2
9
Aft
er
20
00
104
119
62 98 -1.6
0
25.2
0
Bef
ore
19
90
32 33 25 39 4.94
18.3
7
Du
rin
g
19
91
-19
95
20 20 12 17 -4.3
0
23.9
0
Du
rin
g
19
96
-20
00
20 17 16 18 -2.5
7
9.56
Aft
er
20
00
27 25 22 22 -4.8
6
10.6
4
Bef
ore
19
90
3.97
4.22
3.88 3.2
-5.2
4
11.4
1
Du
rin
g
19
91
-19
95
7.91
8.14 9.5
5.14
-10.
23
23.8
3
Du
rin
g
19
96
-20
00
6.35
7.11
6.93
6.68
1.31 4.9
Aft
er
20
00
5.38
5.79
6.19
4.57
-4.0
1
12.6
5
Review of Non-Bank Financial Sector 2010 15
Table-7 shows that the growth of PC to RC of the NBFIs established before 1990 achieved the
highest rate (13.63%) among all the groups. According to the same table, all NBFI groups
established after 1990 show negative growth rates (-5.33%, -0.23% and -1.60%) in terms of
their Capital Adequacy Ratio (CAR). However, all the NBFI groups hold almost the same CV
with the highest for NBFIs established during 1991 to 1995 (28.63%). In 2010, all except NBFIs
established after 2000 reveals a high percentage of PC over the necessary amount of capital as
per regulation. In examining the percentage of TC to TAs, it is observed that NBFIs established
before 1990 achieved positive growth (4.94%) with the CV of 18.37 per cent, whereas the other
groups show negative growth rates. NBFIs established during 1991 to 1995 represent a high
variation (23.90%) in this regard. To assess the overall debt load of the NBFIs, DE Ratio is used
and the result shows that CAGR of NBFIs established during 1996 to 2000 was only positive
(1.31%) with lowest CV (4.9%). The other three groups demonstrate the negative growth rates
indicating these groups of NBFIs have reduced debt portion in their capital structure
gradually.
3. Fund Utilization Performance
Considering the fund utilization as one of the key indicators, this part of the study attempts to
determine the performance of the NBFIs regarding their funds utilization pattern by using
three key indicators, namely, Total Loan & Lease to Total Deposit (TL&LS to TD), Total Loan &
Lease to Total Borrowing (TL&LS to TB) and Total Loan & Lease to Total Deposit & Borrowing
(TL&LS to TD&B).
Table-8 shows that the growth of TL&LS to TD of the NBFIs established before 1990 achieved
the highest rate (7.89%) among all the groups. The growth is negative (-5.02%) for the NBFIs
established during 1996 to 2000 with the CV of 13.95%. In terms of TL&LS to TB, NBFIs
established before 1990 show the highest growth (16.06%) and NBFIs established after 2000
represent the lowest growth rate (0.46%). NBFIs established during 1996 to 2000 show the
lowest degree of CV (3.79%). To assess the efficiency through the ratio of TL&LS to TD&B, it is
seen that only NBFIs established before 1990 shows positive growth rate (1.44%). The group of
NBFIs established during 1996 to 2000 indicates the lowest CV (2.47%). As a whole, it may be
concluded that NBFIs established before 1990 are more efficient in utilization of funds.
16 Review of Non-Bank Financial Sector 2010
Tab
le 8
: Fu
nd
s U
tiliz
atio
n P
erfo
rman
ce:T
ota
l Lo
an &
Lea
se t
oTo
tal D
epo
sit
(TL&
LS t
oTD
),To
tal L
oan
& L
ease
to
Tota
l Bo
rro
win
gs
(TL&
LS t
oTB
) an
d T
ota
l Lo
an &
Lea
se t
oTo
tal D
epo
sit
& B
orr
ow
ing
s (T
L&LS
to
TD&
B)
Sou
rce:
Au
tho
rs' C
alcu
lati
on
TL&
LS t
oTD
(%)
TL&
LS t
oTB
(%)
TL&
LS t
oTD
&B
(X)
Year
20
07
20
08
20
09
20
10
CA
GR
CV
Bef
ore
19
90
114
188
183
154
7.89
21.4
9
Du
rin
g
19
91
-19
95
182
156
160
182
0.02
8.11
Du
rin
g
19
96
-20
00
276
258
201
224
-5.0
2
13.9
5
Aft
er
20
00
275
231
258
308
2.87
12.0
3
Bef
ore
19
90
1014
977
1402
1841
16.0
6
30.8
4
Du
rin
g
19
91
-19
95
310
261
296
366
4.22
14.1
7
Du
rin
g
19
96
-20
00
225
228
245
230
0.5
3.79
Aft
er
20
00
260
284
306
265
0.46
7.54
Bef
ore
19
90
797
769
844
844
1.44
4.52
Du
rin
g
19
91
-19
95
111
111
92 101
-2.2
7
9.04
Du
rin
g
19
96
-20
00
110
108
104
105
-1.1
3
2.47
Aft
er
20
00
165
155
125
114
-8.9
6
17.4
9
Review of Non-Bank Financial Sector 2010 17
TL&LS to TA TIv to TA CL&LS to TA
Year
2007
2008
2009
2010
CAGR
CV
Befor
1990
48
65
60
54
3.04
12.66
During
1991-
1995
35
40
50
65
16.48
27.44
During
1996-
2000
43
45
59
59
8.37
17.02
After
2000
52
59
60
65
5.66
8.97
Before
1990
4
4
9
11
28.08
51.27
During
1991-
1995
6
3
7
5
-3.61
34.02
During
1996-
2000
4
5
7
7
10.50
22.86
After
2000
3
4
5
7
29.83
42.35
Before
1990
N/A
12
10
6
-21.85
34.69
During
1991-
1995
N/A
2
2
2
-5.13
8.06
During
1996-
2000
N/A
7
14
10
12.08
31.65
After
2000
N/A
6
5
6
-1.42
10.03
4. Asset Quality Performance
This part of the study judges the quality of asset of the NBFIs by using three indicators, namely,
Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment4 to Total Asset (TIv to TA) and
Classified Loan and Lease to Total Asset (CL&LS to TA). Table-9 shows that all the groups of
NBFIs represent a positive growth rate in terms of TL&LS to TA. But NBFIs established during
1991 to 1996 achieved the highest growth rate (16.48%) with high CV (27.24%) among all the
groups. In terms of TIv to TA, NBFIs established after 2000 achieved the highest rate of growth
(29.83%) and NBFIs established before 1990 attained almost the same growth rate of 28.08 per
cent with the high degree of CV (51.27%). All except the NBFIs established during 1996 to 2000
represent a negative growth rate for CL&LS to TA. Thus, NBFIs established during 1996 to 2000
show that the portion of their CL&LS has increased from 2008 to 2010. On the other hand,
other groups particularly NBFIs established before 1990 had the highest negative growth rate
indicating the gradual reduction of their CL&LS.
Table 9: Asset Quality Performance: Total Loan & Lease to Total Asset
(TL&LS to TA), Total Investment to Total Asset (TIv to TA) and Classified
Loan & Lease to Total Asset (CL&LS to TA)
Source: Authors' Calculation
4Investment in Securities of Government and other Financial Institutions.
18 Review of Non-Bank Financial Sector 2010
5. Earning Performance
Like all organizations, earning of financial institutions is very important for achieving the goals,
attracting good customers, retaining quality manpower, contributing to the development
process of a country and satisfying the stockholders. The profitability has been examined by
using ratios like Return on Asset (ROA), Return on Equity (ROE), and Interest Income to Total
Operating Income (II to TOI) (Table-10). The ROA has been calculated by using three ratios,
namely, ROA-1: Operating Profit to Total Asset (OP to TA), ROA-2: Net Income Before Tax to
Total Asset (NIBT to TA) and ROA-3: Net Income After Tax to Total Asset (NIAT to TA).
NBFIs established before 1990 have shown a high growth of the ratio (ROA-1), followed by the
group established after 2000. But the NBFIs established before 1990 experienced the highest
variation (34.38%) among the groups. The other two groups (1991-1995, after 2000) have
lower CAGR with lower degree of variation.
ROA-2 shows that highest CAGR for the NBFIs established before 1990 is 13.74. The second
highest growth rate is achieved by the NBFIs established during the period of 1996-2000. The
NBFIs established after 2000 have CAGR of 5.43. But the CAGR of the NBFIs established during
1991-95 is negative.
As per ROA-3, the group of 1996-2000 holds the highest CAGR (25.94%) compared to three
other groups. It means, this group earns more by using lesser assets. But the group has very
high value of CV of 78.51 per cent. The next best result found in the group established before
1990 with CAGR of 13.16 per cent and CV of 26.06 per cent. The remaining two groups have
not shown good performance during the observed period compared to prior groups.
As per all ratios, NBFIs established before 1990 hold the best position whereas the other
groups show mixed performance which means that they are not consistent in profit earnings
during the observed period.
Review of Non-Bank Financial Sector 2010 19
Tab
le 1
0: E
arn
ing
Per
form
ance
: RO
A 1
- O
per
atin
g P
rofi
t to
Tota
l Ass
et (O
P t
oTA
), R
OA
2 N
et In
com
e B
efo
reTa
x
toTo
tal A
sset
(NIB
T to
TA) a
nd
RO
A 3
- N
et In
com
e A
fter
Tax
toTo
tal A
sset
(NIA
T to
TA)
(%)
Sou
rce:
Au
tho
rs' C
alcu
lati
on
R
OA
1 -
OP
to
TA
R
OA
2 -
NIB
T to
TA R
OA
3 -
NIA
T to
TA
Year
20
07
20
08
20
09
20
10
CA
GR
CV
Bef
ore
19
90
3.15
3.30
5.37
6.31
18.9
3
34.3
8
Du
rin
g
19
91
-19
95
4.45
5.75
4.85
5.30
4.47
10.9
9
Du
rin
g
19
96
-20
00
8.89
6.51
4.96
7.19
-5.1
6
23.6
4
Aft
er
20
00
4.34
4.24
5.95
7.20
13.4
9
26.0
2
Bef
ore
19
90
3.14
3.23
4.16
5.26
13.7
4
24.9
9
Du
rin
g
19
91
-19
95
5.83
6.38
4.22
5.09
-3.3
17.4
0
Du
rin
g
19
96
-20
00
5.17
4.86
3.74
6.73
6.80
24.0
3
Aft
er
20
00
4.43
4.21
4.46
5.47
5.43
12.1
7
Bef
ore
19
90
2.36
2.30
2.70
3.88
13.1
6
26.0
6
Du
rin
g
19
91
-19
95
3.61
3.57
2.61
3.61
3.15
14.7
4
Du
rin
g
19
96
-20
00
3.70
3.17
17.3
0
9.30
25.9
4
78.5
1
Aft
er
20
00
2.57
2.53
3.01
3.46
7.72
15.1
2
20 Review of Non-Bank Financial Sector 2010
Table 11: Earning Performance: Return on Equity - Net Income After
Tax to Total Equity (NIAT to TE)
Source: Authors' Calculation
Year
2007
2008
2009
2010
CAGR
CV
Before
1990
10.9
09.9
144.0
15.0
8.25
146.69
During
1991-1995
17.9
17.6
21.5
20.0
2.81
9.68
During
1996-2000
19.4
17.1
153.7
45.6
23.77
109.30
After
2000
12.9
12.1
15.8
19.6
10.99
22.31
Considering ROE, the NBFIs established
between 1996 and 2000 has shown the
best performance in terms of CAGR
(23.77%) (Table-11). The second best
performer is the group of NBFIs
established after 2000 with the CAGR of
10.99 per cent. The remaining groups
have performed reasonably well during
the observed period although their
positions are behind the above two
groups. In case of ROE, the highest
variation is found with the group
established before 1990. The group of
1996-2000 has the second highest variation. The other two groups that are 1991-1995 and
after 2000 have substantially less variation than the prior groups.
Table 12: Earning Performance: Interest Income to Net Operating Income
(II to NOI)
Source: Authors' Calculation
Table-12 indicates that the highest value of CAGR is held by the group of NBFIs established
during 1996-2000 with relatively lower value of CV. The other three groups are showing
negative growth during the observed period. The second highest CAGR is found for the group
of 1991-1995 with lowest amount of variation (9.68%). The other two groups are carrying the
CAGR of -22.89 and -16.77. The lowest value of CAGR remains with the group established
before 1990 including relatively a high variation of 52.26 per cent.
ROE - NIAT to TE (%)
Year
2007
2008
2009
2010
CAGR
CV
Before 1990
2.19
2.24
0.90
0.77
-22.89
52.26
During 1991-1995
17.9
17.6
21.5
20.0
2.81
9.68
During 1996-2000
0.96
0.72
1.33
1.40
9.79
28.73
After 2000
1.31
3.24
0.97
0.63
-16.77
75.31
II to NOI (X)
Review of Non-Bank Financial Sector 2010 21
6. Operational Efficiency Performance
Management efficiency has great importance to judge the performance of the NBFIs. Efficient
management enables the institutions to gauge cost management problems and ensures
better marginal productivity of funds. The management efficiency has been evaluated by
using three important ratios, namely Operating Expense to Net Operating Income (OE to NOI),
Staff Expense to Net operating Income (SE to NOI) and Staff Expense to Total Operating
Expense (SE to TOE).
The CAGR of the '1991-1995 NBFI' group has the lowest value of OE to NOI, indicating better
cost management during the period than the other three groups (Table-13). The next CAGR
value remains with the 'After 2000' group. But the value is very close to the NBFIs established
during 1996-2000. In terms of SE to NOI, the lowest CAGR lies with the NBFIs established
before 1990. The group has also the lowest CV among all groups. Thus, considering the CAGR
and CV value, the NBFIs established before 1990 are the best performers among the groups.
In terms of CAGR and CV of SE to TOE, the NBFIs established before 1990 also showed the best
performance among the four groups.
Table 13: Operational Efficiency Performance: Operating Expense to Net
Operating Income (OE to NOI), Staff Expense to Net Operating Income (SE
to NOI), Staff Expense to Total Operating Income (SE to TOI)
Source: Authors' Calculation
OE to NOI (X) SE to NOI (X) SE to TOE (%)
Year
2007
2008
2009
2010
CAGR
CV
Before
1990
2.64
2.64
0.40
0.37
-38.86
85.87
During
1991-
1995
3.67
2.91
0.22
0.22
-50.05
102.21
During
1996-
2000
2.37
2.73
0.23
0.22
-44.48
97.13
After
2000
2.69
2.74
0.29
0.20
-47.64
96.22
Before
1990
0.25
0.28
0.48
0.45
15.80
31.54
During
1991-
1995
0.02
0.03
0.42
0.46
103.29
101.50
During
1996-
2000
0.08
0.16
0.34
0.37
47.57
58.68
After
2000
0.04
0.25
0.78
1.43
141.82
98.85
Before
1990
31.52
26.75
48.43
45.36
9.52
25.49
During
1991-
1995
14.33
17.52
42.21
46.26
34.04
54.79
During
1996-
2000
8.00
16.92
34.75
37.92
47.57
58.68
After
2000
4.19
25.35
39.94
39.57
75.31
61.67
22 Review of Non-Bank Financial Sector 2010
7. Concluding Remarks
In the context of liquidity, it is seen that all groups of NBFIs maintain liquidity properly in terms
of regulatory and non regulatory measures. One discernible finding is that CAGR of all ratios is
negative meaning that NBFIs progressively decrease excess amount blocked in current assets
and increase business volume in loan, lease and other business after keeping only required
amount to maintain liquidity. Only exception is NBFIs established after 2000. Still these
organizations have inclination to keep more current assets which is evidenced from their
positive CAGR of CRR and CRs. Limited opportunity of investment and more caring attitude for
liquidity may be the causes for maintaining excess amount for liquidity of these lastly
established NBFIs.
In management of capital, NBFIs established before 1990 outperform other groups of NBFIs as
confirmed by positive CAGR of ratios of paid-up capital to total asset and total capital to total
asset with a tolerable coefficient of variation. This is again supported by negative debt equity
ratio. It means that this group of NBFIs increases their amount of capital on the one hand and
decreases their debt equity ratio on the other hand. Other groups of NBFIs more or less also
maintain capital more than required amount of capital. These groups also reduce their debt,
consequently CAGR of debt equity ratio is negative.
In utilization of funds, NBFIs established before 1990 are more efficient and consistent
followed by NBFIs established during 1991-1995. An excessive variation has been observed in
case of NBFIs established after 2000 in utilizing both deposit and borrowing which is
substantiated by their coefficient of variation. One common observation is that CAGRs of Total
Loan and Lease to Total Deposit and Borrowing are negative in all groups except NBFIs
established before 1990. It indicates that aggressiveness in providing loan and lease over
availability of funds has been reduced during the period.
In terms of composition and quality of assets, it is observed that apart from maintaining a
moderate growth of ratio between Total Loan and lease to Total Asset, all except NBFIs
established during 1991-1995 increased their investment portfolio too. In investment
portfolio, growth rates for NBFIs before 1990 and after 2000 show a high rate but with a high
rate of volatility which is evidenced from the calculated co-efficient of variation. In case of
classified loan, it is observed that all except group established during 1996-2000 are gradually
lessening the share of classified Lease and Loan to Total Asset. Particularly NBFIs established
before 1990 achieved more success.
Review of Non-Bank Financial Sector 2010 23
In earning performance, NBFIs established before 1990 clearly shows the best performance in
consistently increasing their earning which is reflected in achieving a double digit CAGR for
three ratios used to calculate ROA with a moderate CV. However, in terms of ROE and Interest
Income to Total Income, the picture is not so rosy. NBFIs established during 1996-2000 show a
good earning performance but with a high variation in considering growth rate of Net Income
after Tax to Total Asset, ROE and Interest Income to Net Operating Income. Other groups show
a mixed result, maintaining positive earning in all observed periods.
In case of operational efficiency, all groups are very successful in reducing their operating
expenses compared to their net operating income at almost the same rate with same
variation. But staff expenses increased at a very high rate for all groups except NBFIs
established before 1990 and during 1996-2000.
24 Review of Non-Bank Financial Sector 2010
Comparative Performance Evaluation Based on Listing Status of NBFIs
In this section of Review of Non-bank Financial Sector, a comparative performance has been
shown by grouping the NBFIs as listed and non-listed. A total of twenty (20) listed NBFIs have
been grouped under the first cluster and the remaining eight (8) NBFIs are grouped under the
second cluster (Appendix-III). To see the performance, contemplated areas and ratios like
earlier remain the same in this section too (Appendix-I).
1a. Liquidity Performance: Regulatory
To determine the liquidity performance as per Bangladesh Bank (BB) regulation, like before,
two measures namely Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are
considered which are placed in Table-14. It is seen that Compound Annual Growth Rate
(CAGR) of CRR of NBFIs listed with stock exchanges is negative indicating this group of NBFIs is
persistently decreasing its CRR whereas CAGR of CRR of NBFIs not listed with stock exchanges
is positive indicating this group of NBFIs is continuously increasing its CRR. But CAGRs of SLR
of both groups are negative. The coefficients of variation (CVs) of both CRR and SLR of the
NBFIs listed with stock exchanges are higher than that of the NBFIs not listed with stock
exchanges.
Table 14: Liquidity Performance: Regulatory - Cash Reserve Ratio (CRR),
Statutory Liquidity Ratio (SLR) and Non-regulatory Performance - Current
Ratio (CR), Liquid Asset to Total Asset (LA to TA)
Source: Annual reports, All NBFIs and Authors' Calculation
Year
2007
2008
2009
2010
CAGR
CV
Listed
N/A
7.77
3.14
3.72
-21.79
51.76
Non-listed
N/A
3.04
2.70
3.78
7.46
17.31
Listed
N/A
352.63
22.70
23.21
-59.62
143.28
Non-listed
N/A
41.25
16.00
32.39
-7.74
42.87
Listed
1.39
1.31
1.15
1.34
-0.85
7.98
Non-listed
2.19
3.03
1.33
2.08
-11.80
32.24
Listed
0.49
0.44
0.38
0.38
-5.86
12.07
Non-listed
2.68
0.48
0.48
0.42
-36.90
112.07
CRR (%) SLR (%) CR (X) LA to TA (%)
Regulatory Non-regulatory
Review of Non-Bank Financial Sector 2010 27
1b. Liquidity Performance: Non-regulatory
From Table-14, it is seen that NBFIs not listed with stock exchanges are maintaining more
current ratio but the CAGR of current ratio of these NBFIs is negative. The CV of current ratio of
the NBFIs not listed with stock exchanges is higher than those of the NBFIs listed with stock
exchanges. The CAGRs of LA to TA of both the NBFIs listed with stock exchanges and not listed
with stock exchanges are negative whereas the CVs of LA to TA of non listed NBFIs are more
than NBFIs listed with stock exchanges.
2. Capital Management Performance
To determine capital management performance, as per Table-15, it is seen that NBFIs not
listed in the exchange achieved a high growth rate (15.96%) of their Paid-up Capital to
Required Capital (PC to RC) although the CV was high (27.04%). In terms of percentage of Total
Capital to Total Asset (TC to TA), listed NBFIs show a CAGR of 2.82 per cent with a lower degree
of variation (7.29%), whereas the group of non-listed companies show a negative growth rate
of -6.17 with a higher degree of variation (20.79%).
Table 15: Capital Management Performance: Paid-up Capital to Required
Capital (PC to RC), Total Capital to Total Asset (TC to TA) and Debt to Equity
(DE) Ratio
Source: Authors' Calculation
From Table-15, the CAGR of DE Ratio of listed NBFIs shows a negative growth rate of -4.29
per cent with a lower CV (10.82%) which means that this group consistently reduced their
debt load. On the other hand, the group of non-listed companies demonstrates a positive
growth rate (9.65%) of such ratio with the higher CV (15.20%) indicating their persistent high
dependency on the debt capital.
Year
2007
2008
2009
2010
CAGR
CV
Listed
123
129
80
111
-2.53
19.70
Non-listed
73
82
97
132
15.96
27.04
Listed
17
17
16
19
2.82
7.29
Non-listed
40
35
24
31
-6.17
20.79
Listed
6.75
7.26
7.14
5.67
-4.29
10.82
Non-listed
3.51
4.20
4.58
5.08
9.65
15.20
PC to RC (%) TC to TA (%) DE Ratio (X)
Year
2007
2008
2009
2010
CAGR
CV
Listed
227
196
206
215
-1.29
6.27
Non-listed
429
412
222
302
-8.38
28.52
28 Review of Non-Bank Financial Sector 2010
Listed
275
277
360
447
12.91
24.08
Non-listed
588
892
645
598
0.44
21.03
Listed
106
113
112
110
0.94
2.79
Non-listed
534
501
519
518
-0.76
2.68
TL&LS to TD (%) TL&LS to TB (%) TL&LS to TD&B (%)
3. Fund Utilization
In examining performance of fund utilization, according to Table-16, it is observed that both
the group of listed and non-listed NBFIs represent a negative growth rate (-1.29% and -8.38%,
respectively) in terms of Total Loan & Lease to Total Deposit (TL&LS to TD) with higher degree
of variation (28.52%) for non-listed NBFIs. But in case of Total Loan & Lease to Total Borrowing
(TL&LS to TB), the listed NBFIs achieved high positive growth rate of 12.91 per cent with almost
the same degree of variation in comparison to the non-listed NBFIs.
Table 16: Funds Utilization Performance: Total Loan & Lease to Total Deposit
(TL&LS to TD), Total Loan & Lease to Total Borrowings (TL&LS to TB) and
Total Loan & Lease to Total Deposit & Borrowings (TL&LS to TD&B)
Source: Authors' Calculation
In considering the Total Deposit and Borrowing (TD&B) in TL&LS, Table-16 depicts that the
listed NBFIs enjoyed a positive growth rate of 0.94 although the rate is very insignificant. On
the other hand, the non-listed NBFIs show a negative growth rate (-0.76%) with almost the
identical CV.
4. Asset Quality Performance
According to Table-17, both listed and non-listed NBFIs achieved a positive growth rate, where
the listed NBFIs demonstrated the high CAGR of 11.45 per cent with relatively high CV
(19.70%). On the other hand, in case of Total Investment to Total Asset (TIv To TA), non-listed
NBFIs showed a higher positive CAGR (32.36%) with the high CV of 59.92 per cent than the
listed NBFI group (CAGR = 26.85% and CV = 45.58%). Both the group of listed and non-listed
NBFIs showed positive growth rate of Classified Loan & Lease to Total Asset (CL&LS to TA) with
almost the same CV but the listed NBFIs reveals the higher growth rate of Classified Loan &
Lease to Total Asset (17.15%).
Review of Non-Bank Financial Sector 2010 29
Year
2007
2008
2009
2010
CAGR
CV
Listed
43
53
66
67
11.45
19.70
Non-listed
58
67
63
61
1.34
6.11
Listed
4
5
10
10
26.85
45.58
Non-listed
3
3
10
9
32.36
59.92
Listed
N/A
7
13
12
17.15
26.58
Non-listed
N/A
12
19
13
4.54
25.93
TL&LS to TA TIv to TA CL&LS to TA
Year
2007
2008
2009
2010
CAGR
CV
Listed
4.9
4.8
5.2
7.2
10.04
20.17
Non-listed
10.6
6.7
5.2
6.0
-13.31
33.88
Listed
4.1
3.9
4.0
6.3
11.23
24.97
Non-listed
6.1
6.1
3.9
5.4
-2.82
19.25
Listed
3.0
2.6
13.8
7.9
26.93
75.82
Non-listed
3.5
3.4
2.4
3.4
-0.74
16.09
ROA 1 - OP to TA ROA 2 - NIBT to TA ROA 3 - NIAT to TA
Table 17: Asset Quality Performance: Total Loan & Lease to Total Asset
(TL&LS to TA), Total Investment to Total Asset (TIv to TA) and Classified
Loan & Lease to Total Asset (CL&LS to TA)
(%)
Source: Authors' Calculation
5. Earning Performance
In investigating earning performance, calculated ratios are placed in Table-18. ROA-1 (Return
on Asset) shows the better performance for the listed NBFIs. The difference of CAGR between
the groups is about 23. The listed group has lower (20.17 %) CV of the ratio than the non-listed
group.
Table 18: Earning Performance: ROA 1 - Operating Profit to Total Asset (OP
to TA), ROA 2 - Net Income Before Tax to Total Asset (NIBT to TA) and
ROA 3 - Net Income After Tax to Total Asset (NIAT to TA)
(%)
Source: Authors' Calculation
The result is almost the same in case of ROA-2 regarding CAGR. But in this particular ratio the
listed companies are showing higher variation than the other. ROA-3 shows the listed
30 Review of Non-Bank Financial Sector 2010
Year
2007
2008
2009
2010
CAGR
CV
Listed
18.7
16.6
120.9
39.3
20.31
100.37
Non-listed
10.6
10.2
93.3
16.5
11.63
123.92
ROE - NIAT to TE (%)
Year
2007
2008
2009
2010
CAGR
CV
Listed
1.69
2.19
1.31
1.30
-6.32
25.86
Non-listed
0.826
0.600
0.678
0.418
-15.64
26.92
II to NOI (X)
companies' CAGR is about 28 per cent higher than the non-listed companies. The difference
between the CV of these two groups is 59.73 (75.82-16.09). So the listed companies have
shown higher growth in the earning but the variation is significantly higher than the
non-listed companies.
Table 19: Earning Performance: Return on Equity - Net Income After Tax to
Total Equity (NIAT to TE)
Source: Authors' Calculation
The CAGR of the listed group in the context of stockholders' earning is 20.31 and the CAGR of
the non-listed group is 11.63 which is more than 74 per cent higher than the later group
(Table-19). In case of CV of both groups have a very high variation although the CV of
non-listed group is higher than the listed group. It states that listed companies show better
earning capacity against the amount of the shareholders equity with less variation to
non-listed companies.
Table 20: Earning Performance: Interest Income to Net Operating Income
(II to NOI)
Source: Authors' Calculation
From the ratio of interest income to net operating income, it is clear that the listed NBFIs have
shown better growth in the interest income than the other group (Table-20).
Review of Non-Bank Financial Sector 2010 31
6. Operational Efficiency Performance
Both the groups have negative CAGRs for Operating Expenses to Net Operating Income (OE to
NOI) during the observed period but the variation is lower in case of the non-listed NBFIs
(Table-21). In terms of Staff Expenses to Net Operating Income (SE to NOI), the non-listed NBFIs
performed better in terms of CAGR but the listed NBFIs show very high growth in staff
expense as well as higher variation compared to the Non-listed NBFs. The performance of
non-listed NBFIs is extremely well in terms of CAGR of Staff Expenses to Total Operating
Expenses (SE to TOE) and the value of CV is also low for the group. The CAGR of the listed
NBFIs is very high with higher variation compared to non-listed NBFIs.
Table 21: Operational Efficiency Performance: Operating Expense to Net
Operating Income (OE to NOI), Staff Expense to Net Operating Income
(SE to NOI), and Staff Expense to Total Operating Expense (SE to TOE)
Source: Authors' Calculation
7. Concluding Remarks
In liquidity management, it is seen that both listed and non-listed NBFIs never compromised
with the regulatory requirements of Bangladesh Bank in maintaining their liquidity although
variation has been observed. However, it is observed that both groups are persistently
lessening their amount of liquid assets during the period which is confirmed by the negative
CAGR of all ratios, except CRR for Non-listed NBFIs, used for determining liquidity
performance.
In managing capital, listed NBFIs maintain capital above the regulatory requirement in all
observed years except in 2009 whereas paid-up capital of non- listed NBFIs reach required
capital only in 2010. While as per CAGR, it seems that non-listed NBFIs performed better than
listed NBFIs. In terms of Total Capital to Total Asset (TC to TA) and Debt to Equity ratio (DE
Ratio), listed NBFIs undoubtedly do well compared to non-listed NBFIs.
Year
2007
2008
2009
2010
CAGR
CV
Listed
2.63
3.10
0.25
0.26
-43.90
97.14
Non-listed
2.47
1.84
0.32
0.21
-46.01
92.64
Listed
0.04
0.09
0.44
0.44
77.08
84.35
Non-listed
0.36
0.40
0.57
1.12
32.88
56.95
Listed
4.56
9.48
44.11
44.84
77.08
60.67
Non-listed
36.03
40.38
32.19
34.58
-1.01
9.61
OE to NOI (X) SE to NOI (X) SE to TOE (%)
32 Review of Non-Bank Financial Sector 2010
In utilization of funds, listed NBFIs display a negative CAGR of total loan and lease compared to
deposits whereas the same group has a positive CAGR for total loan and lease compared to
borrowing. It means that listed NBFIs are gradually collecting more deposit, thus reducing
dependency on borrowing. Non-listed NBFIS also follow the footprint of the listed NBFIs,
however movement is relatively slow. In addition, non-listed NBFIs is more aggressive than
listed NBFIs in extending loan and lease compared to their sources of funds.
In terms of asset quality, listed NBFIs demonstrate a steady growth rate in their loan, lease and
investment as evidenced from a respectable positive compound annual growth rate.
Non-listed NBFIs also show a good performance in growing their investment, while growth
rate of loan and lease of the same group of NBFIs is very small. In classified loan, non-listed
NBFIs do better than listed NBFIs although classified loan is growing both for listed and non-
listed NBFIs.
In earning performance, listed NBFIs record a high performance compared to non-listed NBFIs
in terms of CAGR of all ratios used for examining profitability. Even though Non-listed NBFIs
show negative growth rates, these organizations always earn a respectable amount of profit
during the period. It is noted that both groups have a negative trend of interest income in
their total operating income.
In case of operational efficiency, both groups have successfully reduced operating expenses
compared to their net operating income almost at the same rate with same variation. But staff
expenses increase at a very high rate for both the groups particularly for listed NBFIs .
Review of Non-Bank Financial Sector 2010 33
Comparative Performance Evaluation Based on Ownership Patterns of NBFIs
With a view to reviewing Non-bank Financial Sector, a comparative performance has been
analyzed in terms of ownership pattern by grouping NBFIs into two groups namely NBFIs
under local and NBFIs under Joint venture. A total of 20 (twenty) local NBFIs and the other 8
(eight) NBFIs have been classified under local and joint venture, respectively (Appendix-IV)
and their performance has been examined by following the same indicators (Appendix-1) like
the previous part of the report.
1a. Liquidity Performance: Regulatory
Both groups of NBFIs always maintain liquidity above their regulatory requirement.
In addition, CAGRs of CRR of both NBFIs under joint venture and NBFIs under local ownership
are negative though the CVs of CRR of NBFIs under joint venture are more than that of NBFIs
under local ownership (Table-22). But the CAGRs of SLR of NBFIs under local ownership is
negative whereas CAGRs of SLR of NBFIs under joint venture is positive. The CVs of SLR of
NBFIs under local is significantly higher than those of NBFIs under joint venture ownership.
1b. Liquidity Performance: Non-regulatory
From Table-22, it is observed that the CAGRs of current ratio of NBFIs under joint venture is
more negative than NBFIs under local ownership. In addition, CVs of current ratio of Joint
venture NBFIs are more than that of local NBFIs. The CAGRs of LA to TA of NBFIs under joint
venture is highly negative compared to CAGR of NBFIs under local can have use both. The CVs
of LA to TA of joint venture NBFIs are excessively high.
Table 22: Liquidity Performance: Regulatory - Cash Reserve Ratio (CRR), StatutoryLiquidity Ratio (SLR)) and Non-regulatory - Current Ratio (CR), Liquid Asset to
Total Asset (LA to TA Ratio)
Source: Annual Reports, All NBFIs and Authors' Calculation
Year
2007
2008
2009
2010
CAGR
CV
Local
N/A
4.37
2.91
3.83
-4.31
19.98
Joint
Ventures
N/A
19.17
3.47
3.44
-43.59
104.34
Local
N/A
320.07
19.08
27.13
-56.07
140.47
Joint
Ventures
N/A
18.20
27.97
19.11
1.65
24.81
Local
1.63
1.66
1.24
1.59
-0.61
12.61
Joint
Ventures
1.37
1.44
0.97
1.13
-7.70
17.78
Local
N/A
0.48
0.43
0.41
0.41
-4.08
Joint
Ventures
2.69
0.53
0.34
0.36
-39.44
116.47
CRR (%) SLR (%) CR (X) LA to TA (%)
Liquidity Ratio Non-liquidity Ratio
Review of Non-Bank Financial Sector 2010 37
2. Capital Management Performance
To investigate capital management performance, Paid-up Capital to Required Capital (PC to
RC), Total Capital to Total Asset (TC to TA) and Debt to Equity (DE) Ratio are shown in Table-23.
Table 23: Capital Management Performance: Paid-up Capital to Required
Capital (PC to RC), Total Capital to Total Asset (TC to TA) and Debt to Equity
(DE) Ratio
Source: Authors' Calculation
From Table-23, it is observed that the group of locally owned NBFIs enjoys a small growth rate
(0.23%) of PC to its RC with higher degree of CV (20.66%) compared to joint venture NBFIs.
However, both local and joint venture NBFIs maintain high PC than the regulatory
requirement in 2010. In terms of TC to TA ratio, local NBFIs depict the negative growth (-2.35%)
and the joint venture NBFIs fail to generate any growth at all (0.00%). The local NBFIs pose 3.28
per cent negative growth in their DE Ratio with the higher CV (10.21%) which indicates that
from 2007 to 2010 their debt load has decreased. On the other hand, the growth rate of the
same ratio for the group of joint venture NBFIs was 3.24 per cent because of their increasing
dependency on debt capital. But the CV for this group was lower (5.58%).
3. Fund Utilization Performance
For fund utilization, the local NBFIs show the negative growth rates of -2.72 in terms of Total
Loan & Lease to Total Deposit (TL&LS to TD), although their TL&LS are far above over the TDs
even in 2010 (Table-24). This happened because of their gradual increase in deposit
mobilization. Locally owned NBFIs demonstrate the lower degree of variation (9.65%).
Year
2007
2008
2009
2010
CAGR
CV
Local
108
121
72
109
0.23
20.66
Joint
Ventures
134
123
117
138
0.74
7.57
Local
22
20
18
20
-2.35
8.16
Joint
Ventures
28
27
20
28
0.00
15.00
Local
6.01
6.56
6.59
5.26
-3.28
10.21
Joint
Ventures
5.36
5.94
5.97
6.09
3.24
5.58
PC to RC (%) TC to TA (%) DE Ratio (X)
38 Review of Non-Bank Financial Sector 2010
Table 24: Funds Utilization Performance: Total Loan & Lease to Total Deposit
(TL&LS to TD), Total Loan & Lease to Total Borrowings (TL&LS to TB) and
Total Loan & Lease to Total Deposit & Borrowings (TL&LS to TD&B)
(%)
Source: Authors' Calculation
The scenario of Total Loan & Lease to Total Borrowing (TL&LS to TB) is different. Table-24
reveals that both groups have the positive growth rates even though the joint venture NBFIs
achieve a significant growth rate (13.58) with a high rate of CV (26.13%). In case of Total Loan &
Lease to Total Deposit and Borrowing (TL&LS to TD&B), both the groups show a small negative
growth (-0.29% and -0.04%) and the group of local NBFIs represent high degree of CV (6.35%).
It means that their dependency on borrowing to give loan and lease is gradually decreasing.
These tiny negative growths indicate that besides deposits and borrowings NBFIs are
gradually increasing their total Paid-up capital5 as sources of funds to give loan and leases.
4. Asset Quality Performance
In examining asset quality performance, both the groups of NBFIs demonstrate the positive
growth rate, where locally owned NBFIs show the higher rate (5.89%), although the CV
(20.71%) is high in comparison to the joint venture NBFIs (Table-25). The growth of Total
Investment (TIv) to Total Asset (TA) reveals that locally owned NBFIs achieve the higher rate of
33.09 per cent with relatively high CV (56.13%) whereas the joint venture NBFIs show the
lower CAGR (13.88%) with a lower CV (28.67%).
5 As per the regulatory requirements, the amount of required capital is mentioned in the earlier part of the report
Year
2007
2008
2009
2010
CAGR
CV
Local
280
243
222
251
-2.72
9.65
Joint
Ventures
126
211
169
175
8.63
20.59
Local
254
254
284
280
2.39
5.92
Joint
Ventures
647
631
862
1077
13.58
26.13
Local
112
126
114
110
-0.29
6.35
Joint
Ventures
518
476
514
517
-0.04
3.94
TL&LS to TD TL&LS to TB TL&LS to TD&B
Review of Non-Bank Financial Sector 2010 39
Year
2007
2008
2009
2010
CAGR
CV
Local
53
41
63
66
5.89
20.71
Joint Ventures
65
71
60
66
0.64
6.89
Local
3
4
10
9
33.09
56.13
Joint Ventures
6
6
9
10
13.88
28.67
Local
NA
7
13
12
20.23
29.56
Joint Ventures
NA
20
12
16
-8.44
24.78
TL&LS to TA TI to TA CL&LS to TA
Year
2007
2008
2009
2010
CAGR
CV
Local
05.6
05.5
05.5
07.5
7.54
16.51
Joint Ventures
08.9
05.1
04.5
05.2
-12.28
33.30
Local
04.9
04.9
04.2
06.6
7.44
19.69
Joint Ventures
04.0
03.5
03.4
04.7
3.99
14.26
Local
03.3
03.0
13.7
07.9
23.89
71.05
Joint Ventures
02.7
02.4
02.5
03.4
5.35
15.62
ROA 1 - OP to TA ROA 2 - NIBT to TA ROA 3 - NIAT to TA
Table 25: Asset Quality Performance: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment to Total Asset (TIv to TA) and Classified
Loan & Lease to Total Asset (CL&LS to TA)
(%)
Source: Authors' Calculation
From Table-25, in terms of Classified Loan & Lease to Total asset (CL&LS to TA), locally owned
NBFIs show the positive growth rate (20.23) that represent their gradual increase in CL&LS
whereas the joint venture NBFIs show the negative growth rate (-8.44%) and achieve better
efficiency in managing classified loan and leases.
5. Earning Performance
In earning performance, from CAGR it is clear that all the three ratios of ROA (Table-26) of the
local NBFIs have higher values than the joint ventures. Considering CV, the joint venture NBFIs
have lower variation of ROA-2 (Return on Asset) and ROA-3. But the Local NBFIs have lower
variation in case of ROA-1.
Table 26: Earning Performance: ROA 1 - Operating Profit to Total Asset (OP to TA), ROA 2 - Net Income Before Tax to Total Asset (NIBT to TA) and ROA 3
- Net Income After Tax to Total Asset (NIAT to TA)
(%)
Source: Authors' Calculation
40 Review of Non-Bank Financial Sector 2010
Year
2007
2008
2009
2010
CAGR
CV
Local
17.5
15.8
118.7
38.2
21.43
101.89
Joint Venture
13.5
12.3
98.8
19.1
9.05
116.78
ROE - NIAT to TE (%)
Table 27: Earning Performance: Return on Equity (ROE) - Net Income After
Tax to Total Equity (NIAT to TE)
Source: Authors' Calculation
The local NBFIs show higher growth in the ROE during the observed period as indicated by the
higher value of CAGR than the joint venture. The difference in the variation of ROE is minimal
between the groups (Table-27).
Table 28: Earning Performance: Interest Income to Net Operating Income
(II to NOI)
Source: Authors' Calculation
In head to head comparison the local NBFIs were better in earning interest from their
investment activities. This is evident from the higher CAGR value of the locals than the Joint
Ventures. Besides, the variation of interest income for both the groups is almost equal (Table-28).
6. Operational Efficiency Performance
In terms of CAGR, the performance of the local NBFIs is better than the Joint ventures, while
the variation is higher than the joint ventures (Table-29). As per CAGR and CV of SE to NOI , the
Joint venture NBFIs is better than the Local NBFIs. The Joint venture NBFIs have lower CAGR
and CV for SE to TOE showing better cost efficiency during the observed period.
Year
2007
2008
2009
2010
CAGR
CV
Local
1.41
1.85
1.18
1.14
-5.19
23.42
Joint Venture
1.51
1.26
1.00
0.82
-13.96
25.96
II to NOI (X)
Review of Non-Bank Financial Sector 2010 41
Year
2007
2008
2009
2010
CAGR
CV
Local
2.85
2.92
0.25
0.23
-46.61
97.58
Joint Ventures
1.93
2.28
0.32
0.28
-38.12
87.03
Local
0.07
0.17
0.50
0.73
77.22
81.13
Joint Ventures
0.25
0.24
0.45
0.46
16.98
35.23
Local
9.02
19.71
50.99
73.65
69.05
76.98
Joint Ventures
25.09
24.05
45.14
46.99
16.98
35.23
OE to NOI (X) SE to NOI (X) SE to TOE (%)
Table 29: Operational Efficiency: Operating Expense to Net Operating Income (OE to NOI), Staff Expense to Net Operating Income (SE to NOI),
Staff Expense to Total Operating Expense (SE to TOE)
Source: Authors' Calculation
7. Concluding Remarks
In case of managing liquidity, both groups of NBFIs all the time maintained their liquidity
above the regulatory requirement. Besides maintaining liquidity, it is also observed that, step
by step, these organizations are becoming more efficient in managing liquidity and
structuring portfolio. However, in this context, joint ventures NBFIs do better than local NBFIs.
This is evidenced from the negative CAGR of almost all liquidity ratios, indicating that not by
blocking more assets unnecessarily for liquidity purpose, these organizations use more funds
for loan, lease and other business. However joint venture NBFIs suffer from variation more
than local NBFIs as supported by CV.
In managing capital, joint venture NBFIs have more deepness over local NBFIs though the
both groups have more capital over the regulatory requirement. Year wise calculated ratios
and CAGRs support this finding. One more observation emerged from the DE ratio, although
joint venture NBFIs have more deepness in capital management, but these organizations are
persistently enhancing their debt portion equity over the period.
In utilization of funds, joint ventures are more aggressive as compared to local NBFIs. Joint
venture NBFIs provide facilities almost five times higher than their total borrowing and
deposits whereas this is only one time in case of local NBFIs. One more observation is that
joint venture NBFIs step by step reduces their dependency on borrowing.
42 Review of Non-Bank Financial Sector 2010
In respect to asset quality, almost the 60 per cent of total assets of both groups is in lease and
loan. In considering CAGR, local NBFIs are continuously enhancing this segment of business
more as compared to Joint ventures. Even in case of investment, local NBFIs are performing
consistently better than joint venture as per CAGR. The performance of joint venture is
significantly better in reducing classified loan compared to local NBFIs.
In earning performance, local NBFIs outperform joint venture with a tolerable variation as
documented by three ratios used here to figure out the ROA. In Case of ROE, local NBFIs also
perform better than joint venture. However, CAGR of interest income to net operating income
of both groups is negative indicating percentage of interest income to total operating income
of the groups is declining.
In case of operational efficiency, both groups have successfully reduced operating expenses
compared to their net operating income at almost the same rate with same variation. But staff
expenses increased at a very high rate for both the groups, particularly for listed NBFIs.
Review of Non-Bank Financial Sector 2010 43
Review of Non-Bank Financial Sector 2010 47
0
500
1000
1500
2000
2500
3000
3500
4000
NBFIs BFIs NBFIs BFIs NBFIs BFIs NBFIs BFIs NBFIs BFIs
Paid-up Capital & Reserve
Loan & Advance
Deposit Borrowings Profit
(Tk.
In B
illio
n)
2007
2008
2009
2010
25
30
-20
-15
-10
-5
0
5
10
15
20
NBFIs BFIs BFIsNBFIs NBFIs BFIs NBFIs BFIs NBFIs BFIs
Paid-up Capital& Reserve
Loan & Advance Deposit Borrowings Profit
Performance of NBFIs Compared to BFIs
Figure 1: NBFIs and BFIs: Paid-up Capital & Reserve, Loan & Advance, Deposit,
Borrowings and Profit
NBFIs BFIs BFIsNBFIs NBFIs BFIs NBFIs BFIs NBFIs BFIs
Paid-up Capital& Reserve
Loan & Advance Deposit Borrowings Profit0
10
20
30
40
50
60
Pe
rce
nta
ge
Pe
rce
nta
ge
Figure 2: CAGR of NBFIs and BFIs
Figure 3: CV of NBFIs and BFIs
48 Review of Non-Bank Financial Sector 2010
Figure 4: Sector-wise Allocation of NBFIs in 2010
Figure 6: Cash Reserve Ratio (CRR) Figure 7: Statutory Liquidity Ratio (SLR)
A Pictorial View of the Comparative Performance Evaluation Based on Establishment Year of NBFIs
1a. Liquidity Performance (Regulatory)
Figure 5: Sector-wise Allocation of BFIs in 2010
Merchant Banking &
Margin Loan
Trade andCommerce
6% Merchant Banking &
Margin Loan 0%
Others27% Trade and
Commerce38%
Industry22%
Agriculture6%
Housing7%
Industry44%
Agriculture1%
Housing17%
Others 17%
Before1990
During1991-1995
During1996-2000
After 2000
0
5
10
15
20
25
30
35
40
2008 2009 2010
Pe
rce
nta
ge
Year
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010
Per
cen
tag
e
Year
Before1990
During1991-1995
During1996-2000
After 2000
Review of Non-Bank Financial Sector 2010 49
Figure 8: Current Ratio (CR)
Figure 10: CAGR of Liquidity Performance Based on
Establishment Year (1997-2010)
Figure 11: CV of Liquidity Performance Based on
Establishment Year (1997-2010)
Figure 9: Liquid Asset to Total Asset (LA to TA)
1b. Liquidity Performance (Non-regulatory)
Before1990
During1991-1995
During1996-2000
After 2000
0
0.5
1
1.5
2
2.5
3
2007 2008 2009 2010
Tim
es
Year
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
0
0.5
1
1.5
2
2.5
3
3.5
4
Pe
rce
nta
ge
-60
-40
-20
0
20
40
60
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
/ Ti
me
s
Cash Reserve Ratio (%) Statutory liquidity Ratio (%)
Current Ratio (X) Liquid Asset to Total Asset (%)
0
10
20
30
40
50
60
70
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
/ Tim
es
Cash Reserve Ratio (%) Statutory liquidity Ratio (%)Current Ratio (×) Liquid Asset to Total Asset (%)
50 Review of Non-Bank Financial Sector 2010
Figure 12: Paid up Capital to Required Capital (PC to RC)
Figure 15: CAGR of Capital Management Based on Establishment
Year (2007-2010)
Figure 16: CV of Capital ManagementBased on Establishment Year
(2007-2010)
Figure 14: Debt to Equity (DE) Ratio
Figure 13: Total Capital toTotal Asset (TC to TA)
2. Capital Management Performance
Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
20
40
60
80
100
120
140
160
180
Pe
rce
nta
ge
Pe
rce
nta
ge Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
5
10
15
20
25
30
35
40
45
Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
1
2
3
4
5
6
7
8
9
10
Tim
es
-15
-10
- 5
0
5
10
15
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
/ Ti
me
s
Paid-up Capital to Required Capital (%)
Total Capital to Total Asset (%)
Debt Equity Ratio (x)
Pe
rce
nta
ge
/ Ti
me
s
Paid-up Capital to Required Capital (%)
Total Capital to Total Asset (%)
Debt Equity Ratio (x)
0
5
10
15
20
25
30
35
Before 1990 1991 to 1995 1996 to 2000 After 2000
Review of Non-Bank Financial Sector 2010 51
Figure 19: Total Loan & Lease to Total Deposit & Borrowings (TL&LS to TD&B)
Figure 17: Total Loan & Lease to Total Deposit (TL&LS to TD)
Figure 20: CAGR of Fund Utilization Based on Establishment Year
(2007-2010)
Figure 21: CV of Fund Utilization Based on Establishment Year
(2007-2010)
Figure 18: Total Loan & Lease toTotal Borrowings (TL&LS to TB)
3. Fund Utilization PerformanceP
erc
en
tag
e Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
50
100
150
200
250
300
350
Pe
rce
nta
ge Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
Tim
es
0
100
200
300
400
500
600
700
800
900
-15
-10
-5
0
5
10
15
20
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
/ Ti
me
s
Total Loan & Lease to Total Deposits (%)
Total Loan & Lease to Total Borrowing (%)
Total Loan & Lease to Total Deposit and Borrowing (X)
Pe
rce
nta
ge
/ Ti
me
s
Total Loan & Lease to Total Deposits (%)
Total Loan & Lease to Total Borrowing (%)
Total Loan & Lease to Total Deposit and Borrowing (X)
0
5
10
15
20
25
30
35
Before 1990 1991 to 1995 1996 to 2000 After 2000
52 Review of Non-Bank Financial Sector 2010
Figure 24: Classified Loan & Lease to Total Asset (CL&LS to TA)
Figure 22: Total Loan & Lease to Total Asset (TL&LS to TA)
Figure 23: Total Investment to Total Asset (TIv to TA)
4. Asset Quality Performance
Pe
rce
nta
ge
Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
10
20
30
40
50
60
70
Pe
rce
nta
ge
Before1990
1991-1995
1996-2000
After 2000
2007 2008 2009 2010
Year
0
2
4
6
8
10
12
Figure 25: CAGR of Asset Quality Based on Establishment Year (2007-2010)
Figure 26: CV of Asset Quality Based on Establishment Year (2007-2010)
Before1990
1991-1995
1996-2000
After 2000
Year
0
2
4
6
8
10
12
14
16
2008 2009 2010
Pe
rce
nta
ge
-30
-20
-10
0
10
20
30
40
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
Total Loan & Leases to Total Assets
Total Investment to Total Asset
Classified Loan & Leases to Total Asset
0
10
20
30
40
50
60
Before 1990 1991 to 1995 1996 to 2000 After 2000
Pe
rce
nta
ge
Total Loan & Leases to Total Assets
Total Investment to Total Asset
Classified Loan & Leases to Total Asset
Review of Non-Bank Financial Sector 2010 53
Figure 29: ROA-3 - Net Income After Tax to Total Asset (NIAT to TA)
Figure 27: ROA-1 - Operating Profit to Total Asset (OP to TA)
Figure 28: ROA-2 - Net Income Before Tax to Total Asset (NIBT to TA)
5. Earning Performance
Figure 30: CAGR of Return on Assets Based on Establishment Year
Figure 31: CV of Return on Assets Based on Establishment Year
Pe
rce
nta
ge
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
0
1
2
3
4
5
6
7
8
9
10
Pe
rce
nta
ge
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
0
1
2
3
4
5
6
7
8
Before1990
During1991-1995
During1996-2000
After 2000
Year
0
2
4
6
8
10
12
14
16
18
20
2007 2008 2009 2010
Perc
enta
ge
-10
-5
0
5
10
15
20
25
30
Before 1990 During 1991-1995
During 1996-2000
After 2000Pe
rce
nta
ge
Operating Profit to Total Asset
Net Income Before Tax To Toral Asset
Net Income After Tax to Total Asset
Pe
rce
nta
ge
Operating Profit to Total Asset
Net Income Before Tax To Toral Asset
Net Income After Tax to Total Asset
0
10
20
30
40
50
60
70
80
90
Before 1990 During 1991- During 1996- After 2000
54 Review of Non-Bank Financial Sector 2010
Figure 32: Return on Equity - Net Income After Tax to Total Equity
(NIAT to TE)
Figure 33: Interest Income to Net Operating Income (II to NOI)
Figure 34: CAGR of Return on Equity and Interest Income to Net Operating Income Based on Establishment Year
Figure 35: CV of Return on Equity and Interest Income to Net Operating
Income Based on Establishment Year
Pe
rce
nta
ge
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
0
20
40
60
80
100
120
140
160
180
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
0
0.5
1
1.5
2
2.5
3
3.5
Tim
es
Pe
rce
nta
ge
-30
-20
-10
0
10
20
30
Before 1990 During 1991 -
1995
During 1996 -
2000
After 2000
Net Income After Tax to Total Equity
Interest Income to Net Operating Income
Pe
rce
nta
ge
0
20
40
60
80
100
120
140
160
Before 1990 During 1991-1995
During1996-2000
After 2000
Net Income After Tax to Total Equity
Interest Income to Net Operating Income
Review of Non-Bank Financial Sector 2010 55
Figure 38: Staff Expense to Total Operating Income (SE to TOI)
Figure 36: Operating Expense to Net Operating Income (OE to NOI)
Figure 37: Staff Expense to Net Operating Income (SE to NOI)
6. Operational Efficiency Performance
Figure 39: CAGR of Operating Expense to Net Operating Income (OE to NOI), Staff Expense
to Net Operating Income (SE to NOI), and Staff Expense to Total Operating Income (SE
to TOI) Based on Establishment Year
Figure 40: CV of Operating Expense to Net Operating Income (OE to NOI), Staff Expense
to Net Operating Income (SE to NOI), Staff Expense to Total Operating Income (SE to
TOI) Based on Establishment Year
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
Tim
es
0
0.5
1
1.5
2
2.5
3
3.5
4
Before1990
During1991-1995
During1996-2000
After 2000
2007 2008 2009 2010
Year
Tim
es
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Before1990
During1991-1995
During1996-2000
After 2000
Year
2007 2008 2009 2010
Perc
enta
ge
0
0.1
0.2
0.3
0.4
0.5
0.6
-100
-50
0
50
100
150
200
Before 1990 During 1991-1995 During 1996-2000 After 2000
Pe
rce
nta
ge
Operating Expense To Net Operating Income
Staff Expense To Net Operating Income
Staff Expense to Total Operating Expense
0
20
40
60
80
100
120
Before 1990 During 1991-1995 During 1996-2000 After 2000
Pe
rce
nta
ge
Operating Expense To Net Operating Income
Staff Expense To Net Operating Income
Staff Expense to Total Operating Expense
56 Review of Non-Bank Financial Sector 2010
Figure 42: CAGR of Liquidity Performance Based on
Listing in the Exchanges (2007-2010)
Figure 43: CV of Liquidity Performance Based on
Listing in the Exchanges (2007-2010)
A Pictorial View of the Comparative Performance Evaluation Based on Listing Status of NBFIs
1. Liquidity Performance
Figure 41: Liquidity Performance: Regulatory - Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR)) and Non-regulatory Performance - Current Ratio
(CR), Liquid Asset to Total Asset (LA to TA)
2007
2008
2009
2010
0
50
100
150
200
250
300
350
400
Listed Non-Listed Non-Listed Non-Listed Non-ListedListed Listed Listed
Cash Reserve Ratio (%) Statutory LiquidityRatio (%)
Current Ratio (X) Liquid Asset to TotalAsset (%)
Perc
enta
ge/
Tim
es
-70
-60
-50
-40
-30
-20
-10
0
10
20
Cash ReserveRatio (%)
StatutoryliquidityRatio (%)
Current Ratio(X)
Liquid Assetto Total Asset
(%)
Pe
rce
nta
ge
/ Ti
me
s
Listed Non-listed
Pe
rce
nta
ge
/ Ti
me
s
Listed Non-listed
-20
0
20
40
60
80
100
120
140
160
Cash ReserveRatio (%)
Statutory liquidityRatio (%)
Current Ratio(X)
Liquid Asset to TotalAsset (%)
Review of Non-Bank Financial Sector 2010 57
Figure 45: CAGR of CapitalManagement Based on
Listing in the Exchange (2007-2010)
Figure 46: CV of Capital Management Based on
Listing in the Exchange (2007-2010)
2. Capital Management Performance
Figure 44: Paid up Capital to Required Capital (PC to RC), Total Capital to
Total Asset (TC to TA) and Debt to Equity (DE) Ratio
-10
-5
0
5
10
15
20
Paid-up Capital toRequired Capital (%)
Total Capital toTotal Asset (%)
Debt Equity Ratio(X)
Pe
rce
nta
ge
/ Ti
me
s
Listed Non-listed
0
5
10
15
20
25
30
Paid-up Capital toRequired Capital (%)
Total Capital toTotal Asset (%)
Debt Equity Ratio(X)
Non-ListedListed
Pe
rce
nta
ge
/ Ti
me
s
2007
2008
2009
2010
0
20
40
60
80
100
120
140
Listed Non-listed Listed Non-listed Listed Non-listed
Paid-up Capital to Required Capital (%) Total Capital to Total Asset (%) Debt Equity Ratio (X)
Pe
rce
nta
ge/
Tim
es
58 Review of Non-Bank Financial Sector 2010
Figure 48: CAGR of Fund Utilization Based on
Listing in the Exchange (2007-2010)
Figure 49: CV of Fund Utilization Based on
Listing in the Exchange (2007-2010)
3. Fund Utilization Performance
Figure 47: Total Loan & Lease to Total Deposit (TL&LS to TD),
Total Loan & Lease to Total Borrowings (TL&LS to TB) and Total Loan & Lease to Total Deposit & Borrowings (TL&LS to TD&B)
2007
2008
2009
2010
Listed Non-Listed Listed Non-Listed Listed Non-Listed0
100
200
300
400
500
600
700
800
900
1000
Total Loan & Lease toTotal Deposits (%)
Total Loan & Lease toTotal Borrowing (%)
Total Loan & Lease to Total Deposit & Borrowing (X)
Pe
rce
nta
ge/
Tim
es
-10
-5
0
5
10
15
Total Loan & Leaseto Total Deposits
(%)
Total Loan & Leaseto Total Borrowing
(%)
Total Loan & Leaseto Total Deposit
and Borrowing (X)
Per
cen
tag
e/ T
imes
Listed Non-listed
Total Loan & Leaseto Total Deposits
(%)
Total Loan & Leaseto Total Borrowing
(%)
Total Loan & Leaseto Total Deposit
and Borrowing (X)
Per
cen
tag
e/ T
imes
Listed Non-listed
0
5
10
15
20
25
30
Review of Non-Bank Financial Sector 2010 59
Figure 51: CAGR of Asset Quality Based on Listing in the Exchange (2007-2010)
Figure 52: CV of Asset Quality Based on Listing in the Exchange (2007-2010)
4. Asset Quality Performance
Figure 50: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment to Total Asset (TIv to TA) and Classified Loan & Lease to Total Asset (CL&LS to TA)
2007
2008
2009
2010
0
10
20
30
40
50
60
70
80
Listed Non-Listed Non-Listed Non-ListedListed Listed
Total Loan & Leases toTotal Asset
Total Investment to Total Asset Classified Loan and Lease to Total Asset
Pe
rce
nta
ge
Listed Non-listed
0
5
10
15
20
25
30
35
Total Loan & Leases to Total Assets
Total Investmentto Total Asset
Classified Loan &Leases to Total Asset
Pe
rce
nta
ge
Listed Non-listed
0
10
20
30
40
50
60
Pe
rce
nta
ge
Total Loan & Leases to Total Assets
Total Investmentto Total Asset
Classified Loan &Leases to Total Asset
60 Review of Non-Bank Financial Sector 2010
Figure 55: CV of Return on Assets Based on Listing with Stock Exchange
Figure 54: CAGR of Return on Assets Based on Listing with Stock Exchange
5. Earning Performance
Figure 53: ROA-1 - Operating Profit to Total Asset (OP to TA,
ROA-2 - Net Income Before Tax to Total Asset (NIBT to TA) and ROA-3 - Net Income After Tax to Total Asset (NIAT to TA)
2007
2008
2009
2010
0
2
4
6
8
10
12
14
16
Listed Non-Listed Listed Non-Listed Listed Non-Listed
Operational Profit to Total Asset Net Income Aefore Tax Net Income After Tax to Total Asset
ROA-1 ROA-2 ROA -3
Per
cen
tag
e
Listed Non-listed
-20
-15
-10
-5
0
5
10
15
20
25
30
Operating profitto Total Asset
Net Income BeforeTax To toral Asset
Net Income AfterTax to Total Asset
Pe
rce
nta
ge
Listed Non-listed
0
10
20
30
40
50
60
70
80
Operating profitto Total Asset
Net Income Before Taxto Total Asset
Net Income After Taxto Total Asset
Per
cen
tag
e
Review of Non-Bank Financial Sector 2010 61
Figure 56: Return on Equity (ROE) Based on Listing with Stock Exchange
Figure 58: CAGR of Return on Equity and Interest Income to Net Operating
Income Based on Listing with Stock Exchange
Figure 59: CV of Return on Equityand Interest Income to Net Operating
Income Based on Listingwith Stock Exchange
Figure 57: Interest Income to Net Operating Income (II to NOI) Based on
Listing with Stock Exchange
Pe
rce
nta
ge
2007
2008
2009
2010
0
20
40
60
80
100
120
140
Listed Non-Listed
2007
2008
2009
2010
0
0.5
1
1.5
2
2.5
Listed Non-Listed
Tim
es
Listed Non-listed-20
-10
0
10
20
30
Return on Equity Interest Income to NetOperating income
Perc
enta
ge
Listed Non-listed
0
20
40
60
80
100
120
140
Pe
rce
nta
ge
62 Review of Non-Bank Financial Sector 2010
Figure 63: CAGR of Operating Expense to Net Operating Income (OE to NOI), Staff Expense to
Net Operating Income (SE to NOI), and Staff Expense to Total Operating Expense (SE to TOE)
Figure 64: CV of Operating Expense to Net Operating Income (OE to NOI), Staff Expense to
Net Operating Income (SE to NOI), and Staff Expense to Total Operating Expense (SE to TOE)
Figure 60: Operating Expense to Net Operating Income (OE to NOI)
Figure 61: Staff Expense to Net Operating Income (SE to NOI)
6. Operational Efficiency Performance
Figure 62: Staff Expense to Total Operating Expense (SE to TOE)
2007
2008
2009
2010
Listed Non-Listed
Tim
es
0
0.2
0.4
0.6
0.8
1
1.2
2007
Listed Non-Listed
2008
2009
2010
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
Pe
rce
nta
ge
Listed Non-listed
-60
-40
-20
0
20
40
60
80
100
Operating Expense to
Net Operating Income
Staff Expense to Net
Operating Income
Staff Expense to Total
Operating Epense
Pe
rce
nta
ge
2007
2008
2009
2010
0
0.5
1
1.5
2
2.5
3
3.5
Listed Non-Listed
Tim
es
Listed Non-listed
0
20
40
60
80
100
120
Operating Expense to Net Operating Income
Staff Expense to Net Operating Income
Staff Expense to Total Operating Epense
Per
cen
tag
e
Review of Non-Bank Financial Sector 2010 63
Figure 66: CAGR of Liquidity Performance Based on Ownreship
Structure (2007-08)
Figure 67: CV of Liquidity Performance Based on Ownreship
Structure (2007-08)
A Pictorial View of the Comparative Performance Evaluation of NBFIs Based on Ownership Patterns of NBFIs
1. Liquidity Performance
Figure 65: Liquidity Performance: Regulatory Performance - Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR) and Non-regulatory Performance - Current
Ratio (CR), Liquid Asset to Total Asset (LA to TA Ratio)
2007
2008
2009
2010
0
50
100
150
200
250
300
350
Local Joint Ventures Local Joint Ventures Local Joint Ventures Local Joint Ventures
Cash Reserve Ratio (%) Statutory Liquidity Ratio (%) Current Ratio (X) Liquid Asset to Total Asset (%)
-60
-50
-40
-30
-20
-10
0
10
Cash Reserve Ratio (%)
Statutory liquidity
Ratio (%)
Current Ratio(X)
Liquid Asset toTotal Asset (%)
Per
cen
tag
e/ T
imes
Local Joint Venture
0
20
40
60
80
100
120
140
160
Cash Reserve
Ratio (%)
Statutory liquidity
Ratio (%)
Local Joint Venture
Current Ratio(X)
Liquid Asset to
Total Asset (%)
Per
cen
tag
e/ T
imes
64 Review of Non-Bank Financial Sector 2010
Figure 69: CAGR of Capital Management Based on Ownership
Structure (2007-2010)
Figure 70: CV of Capital Management Based on Ownership Structure
(2007-2010)
2. Capital Management Performance
Figure 68: Paid up Capital to Required Capital (PC to RC), Total Capital to Total
Asset (TC to TA) and Debt to Equity (DE) Ratio
2007
2008
2009
2010
Pe
rce
nta
ge/
Tim
es
0
20
40
60
80
100
120
140
160
Local Joint Venture Local Joint Venture Local Joint Venture
Paid-up Capital to RequiredCapital (%)
Total Capital toTotal Asset (%)
Debt Equity Ratio (X)
-4
-3
-2
-1
0
1
2
3
4
Paid-up Capital toRequired Capital (%)
Total Capital toTotal Asset (%)
Debt EquityRatio (x)P
erc
en
tag
e/ T
ime
s
Local Joint Venture
0
5
10
15
20
25
Paid-up Capital toRequired Capital (%)
Total Capital to TotalAsset (%)
Local Joint Venture
Debt Equity Ratio (x)
Per
cen
tag
e/ T
imes
Review of Non-Bank Financial Sector 2010 65
Figure 72: CAGR of Fund Utilization Based on Ownership Structure
(2007-2010)
Figure 73: CV of Fund Utilization Based on Ownership Structure
(2007-2010)
3. Fund Utilization Performance
Figure 71: Total Loan & Lease to Total Deposit (TL&LS to TD), Total Loan & Lease
to Total Borrowings (TL&LS to TB) and Total Loan & Lease to Total Deposit & Borrowings (TL&LS to TD&B)
2007
2008
2009
2010
0
200
400
600
800
1000
1200
Local Joint Venture Local Joint Venture Local Joint Venture
Total Loan & Lease toTotal Deposits (%)
Total Loan & Lease toTotal Borrowing (%)
Total Loan & Lease to TotalDeposit & Borrowing (x)
Pe
rce
nta
ge
/ Tim
es
-4
-2
0
2
4
6
8
10
12
14
16
Total Loan & Lease toTotal Deposits (%)
Total Loan & Lease toTotal Borrowing (%)
Total Loan & Lease toTotal Deposit and
Borrowing (x)
Pe
rce
nta
ge
/ Tim
es
Local Joint Venture
0
5
10
15
20
25
30
Total Loan & Lease to
Total Deposits (%)
Total Loan & Lease to
Total Borrowing (%)
Total Loan & Lease to
Total Deposit and
Borrowing (x)
Pe
rce
nta
ge/
Tim
es
Local Joint Venture
66 Review of Non-Bank Financial Sector 2010
Figure 75: CAGR of Asset Quality Based on Ownership Structure (2007-2010)
Figure 76: CV of Asset Quality Based on Ownership Structure (2007-2010)
4. Asset Quality Performance
Figure 74: Total Loan & Lease to Total Asset (TL&LS to TA), Total Investment to Total Asset (TIv to TA) and Classified Loan & Lease to Total Asset (CL&LS to TA)
2007
2008
2009
2010
0
10
20
30
40
50
60
70
80
Local Joint Venture Local Joint Venture Local Joint Venture
Total Loan & Leasesto Total Asset
Total Investment toTotal Asset
Classified Loan and Leaseto Total Asset
Per
cen
tag
e
-15
-10
-5
0
5
10
15
20
25
30
35
40
Total Loan & Leasesto Total Assets
Total Investmentto Total Asset
Classified Loan & Leasesto Total Asset
Pe
rce
nta
ge
Local Joint Venture
0
10
20
30
40
50
60
Total Loan & Leasesto Total Assets
Total Investmentto Total Asset
Classified Loan &Leases to Total Asset
Joint VentureLocal
Per
cen
tag
e
Review of Non-Bank Financial Sector 2010 67
Figure 78: CAGR of Return on Assets Based on Ownership Structure
Figure 79: CV of Return on Assets Based on Ownership Structure
5. Earning Performance
Figure 77: ROA-1 (Operating Profit to Total Asset (OP to TA), ROA-2 (Net
Income Before Tax to Total Asset (NIBT to TA) and ROA-3 (Net Income After Tax to Total Asset (NIAT to TA) Based on Ownership Structure (2007-2010)
2007
2008
2009
2010
0
2
4
6
8
10
12
14
16
Local Joint Venture Local Joint Venture Local Joint Venture
Operational Profit to Total Asset Net Income Before Tax to Total Asset Net Income After Tax to Total Asset
ROA-1 ROA-2 ROA-3
Pe
rce
nta
ge
-15
-10
-5
0
5
10
15
20
25
30
Operating profitto Total Asset
Net Income Before Tax to toral Asset
Net Income After Taxto Total Asset
Pe
rce
nta
ge
Local Joint Venture
0
10
20
30
40
50
60
70
80
Operating profitto Total Asset
Net Income Before Taxto toral Asset
Net Income After Taxto Total Asset
Pe
rce
nta
ge
Local Joint Venture
68 Review of Non-Bank Financial Sector 2010
Figure 80: Return on Equity - Net Income after Tax to Total Equity (NIAT to TE) Based on Ownership Structure
(2007-2010)
Figure 82: CAGR of Return on Equity and Interest Income to Net Operating
Income Based on Ownership Structure (2007-2010)
Figure 83: CV of Return on Equity and Interest Income to Net Operating
Income Based on Ownership Structure (2007-2010)
Figure 81: Interest Income to Net Operating Income (II to NOI) Based on
Ownership Structure (2007-2010)
0
20
40
60
80
100
120
140
Local Joint Venture
Pe
rce
nta
ge
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Local Joint Venture
Tim
es
-20
-15
-10
-5
0
5
10
15
20
25
Return on Equity Interest Income to NetOperating income
Pe
rce
nta
ge
Local Joint Venture
0
20
40
60
80
100
120
140
Return on Equity Interest Income to NetOperating income
Pe
rce
nta
ge
Local Joint Venture
Review of Non-Bank Financial Sector 2010 69
6. Productivity and Efficiency Performance
Figure 86: Staff Expense to Total Operating Expense (SE to TOE) Based on Ownership Structure (2007-2010)
Figure 87: CAGR of Operating Expense to Net Operating Income (OE to NOI), Staff Expense to
Net Operating Income (SE to NOI), Staff Expense to Total Operating Expense (SE to TOE)
Figure 88: CV of Operating Expense to Net Operating Income (OE to NOI), Staff Expense to
Net Operating Income (SE to NOI), Staff Expense to Total Operating Expense (SE to OE)
Figure 84: Operating Expense to Net Operating Income (OE to NOI) Based on
Ownership Structure (2007-2010)
Figure 85: Staff Expense to Net Operating Income (SE to NOI) Based on
Ownership Structure (2007-2010)
2007
2008
2009
2010
0
0.5
1
1.5
2
2.5
3
3.5
Local Joint Venture
Tim
es
2007
2008
2009
2010
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Local Joint Venture
Tim
es
2007
2008
2009
2010
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Local Joint Venture
Per
cen
tag
e
-60
-40
-20
0
20
40
60
80
100
Operating Expense toNet Operating Income
Staff Expense to Net operating Income
Staff Expense to Total
Operating Expense
Pe
rce
nta
ge
Local Joint Venture
0
20
40
60
80
100
120
Operating Expense toNet Operating Income
Staff Expense to Netoperating Income
Staff Expense to TotalOperating Expense
Pe
rce
nta
ge
Local Joint Venture
References
Bangladesh Bank, Annual Report 2009-2010, p 58.
Bank and Financial Institution Activities, Ministry of Finance.
Banerjee, Prashanta, K. and Ashraf Al Mamun (2003), Lease Financing in Bangladesh, BIBM, Memo.
Choudhury, A. Jalil (1999), "An Appraisal of Non-Banking Financial Institutions in the Context of Economic Development of Bangladesh", Bank Parikrama, Vol. XXIV, No. 1, March, pp. 171-194.
Chowdhury, A. Quadir (2001), "Leasing in Bangladesh-Problems and Prospects", The Daily Bangladesh Observer, April 4.
European Central Bank (2010), Definition and Approaches to Performance Measurement for Financial Institutions, Germany: European Central Bank.Financial Stability Report (2010), Bangladesh Bank.
Harker, Patrick, T. and Stavros A. Zenious (2000), Performance of Financial Institutions: Efficiency, Innovation, Regulation, UK: Cambridge University Press.
Saha, Sujit, R., Munim K. Barai and Ashraf Al Mamun (1999), "Progress and Prospects of Non Banking Financial Institutions in Bangladesh", Bank Parikrama, Vol. XXIV, No. 1, March, pp. 171-194.
www.esnai.com
70 Review of Non-Bank Financial Sector 2010
Appendix I: Indicators and Definitions
I. Liquidity:
a. Regulatory Measures:
1. Cash Reserve Ratio (CRR) (%)
2. Statutory Liquidity Ratio (SLR) (%)
b. Non-regulatory Measures:
1. Current Ratio (CR): Current Asset to Current Liability (CA to CL) (X)
2. Liquid Assets to Total Assets (LA to TA) (%)
II. Capital Management:
1. Paid-up Capital to Total Capital (PC to TC) (%)
2. Total Capital to Total Asset (TC to TA) (%)
3. Debt to Equity (DE) Ratio (X)
III. Fund Utilization:
1. Total Loan & Lease to Total Deposit (TL&LS to TD) (%)
2. Total Loan & Lease to Total Borrowing (TL&LS to TB) (%)
3. Total Loan & Lease to Total Deposit and Borrowing (TL&LS to TD&B) (X)
IV. Asset Quality:
1. Total Loan & Lease to Total Asset (TL&LS to TA) (%)
2. Total Investment to Total Asset (TIv to TA) (%)
3. Classified Loan & Leases to Total Asset (CL&LS to TA) (%)
V. Earnings:
1. Return on Assets (ROA):
a. ROA-1: Operating Profit to Total Asset (OP to TA) (%)
b. ROA-2: Net Income Before Tax to Total Asset (NIBT to TA) (%)
c. ROA-3: Net Income After Tax to Total Asset (NIAT to TA) (%)
2. Return on Equity: Net Income After Tax to Total Equity (NIAT to TE) (%)
3. Interest Income6 to Net Operating Income (II to NOI) (X)
VI. Operational Efficiency:
1. Operating Expense to Net Operating Income (OE to NOI) (X)
2. Staff Expense to Net Operating Income (SE to NOI) (X)
3. Staff Expense to Total Operating Expense (SE to TOE) (%)
6 Includes income from Lease Finance, Real Estate Finance, Term Finance, Short Term Finance
and Consumer Finance.Review of Non-Bank Financial Sector 2010 73
Establishment
Year
Before 1990
1981
1984
1985
1989
1989
1991 to 1995
1995
1995
1996 to 2000
1996
1996
1996
1996
1996
1996
1996
1996
1997
1997
1998
1998
1998
2000
2000
After 2000
2001
2001
2001
2001
2001
2002
Short Name
IPDC
SABINCO
IDLC
UBICo
ULCL
PHOENIX
UFI
BAY
DBH
FIRST LIL
GSPFCBL
ILFSL
Reliance
PRIME
PLFSL
IDCOL
LANKA
BIFC
NHFIL
UCL
BdFICL
MIDAS FL
FIDELITY
FAREAST
Islami FIL
IIDFCL
NatFin
Premier
Name of the NBFI
Full Name
Industrial Promotion and Development Company of Bangladesh Ltd.
Saudi-Bangladesh Industrial & Agricultural Investment Company Ltd.
IDLC Finance Limited
The UAE-Bangladesh Investment Company Limited
United Leasing Company Limited
Phoenix Finance and Investments Limited
Uttara Finance and Investments Limited
Bay Leasing and Investment Limited
Delta BRAC Housing Finance Corporation Limited
First Lease Finance & Investment Limited
GSP Finance Company (Bangladesh) Limited
International Leasing and Financial Services Limited
Reliance Finance Limited (Oman-BD)
Prime Finance and Investment (PFI) Limited
People's Leasing and Financial Services Limited
Infrastructure Development Company Limited
LankaBangla Finance Limited
Bangladesh Industrial Finance Company Limited
National Housing Finance and Investments Limited
Union Capital Limited
Bangladesh Finance & Investment Company Limited
MIDAS Financing Limited
Fidelity Assets and Securities Company Limited
Fareast Finance & Investment Limited
Islamic Finance and Investment Limited
Industrial and Infrastructure Development Finance Company Ltd.
National Finance Limited (NFL)
Premier Leasing & Finance Limited
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Appendix II: Non-bank Financial Institutions Grouped as Per Year of
Establishment
74 Review of Non-Bank Financial Sector 2010
DSE & CSEListed/
Non-listed
DSE-Listed
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
Non-Listed
N
N
N
N
N
N
N
N
Short Name
BdFICL
BIFC
BAY
DBH
FIDELITY
FIRST LIL
IDLC
Islami FIL
IIDFCL
IPDC
LANKA
MIDAS FL
NHFIL
PRIME
PHOENIX
PLFSL
Premier
UCL
UFI
ULCL
FAREAST
GSPFCBL
IDCOL
ILFSL
NatFin
Reliance
SABINCO
UBICo
Name of the NBFI
Full Name
Bangladesh Finance and Investment Company Limited
Bangladesh Industrial Finance Company Limited
Bay Leasing and Investment Limited
Delta BRAC Housing Finance Corporation Limited
Fidelity Assets and Securities Company Limited
First Lease Finance and Investment Limited
IDLC Finance Limited
Islamic Finance and Investment Limited
Industrial and Infrastructure Development Finance Company Ltd.
Industrial Promotion and Development Company of Bangladesh Ltd.
LankaBangla Finance Limited (LBFL)
MIDAS Financing Limited (MFL)
National Housing Finance and Investments Limited (NHFIL)
Prime Finance and Investment (PFI) Limited
Phoenix Finance and Investments Limited (PFIL)
People's Leasing and Financial Services Limited (PLFSL)
Premier Leasing and Finance Limited (PLFL)
Union Capital Limited (UCL)
Uttara Finance and Investments Limited (UFI)
United Leasing Company Limited (ULCL)
Fareast Finance and Investment Limited (FFIL)
GSP Finance Company (Bangladesh) Limited (GSPB)
Infrastructure Development Company Limited (IDCOL)
International Leasing and Financial Services Limited (ILFSL)
National Finance Limited (NFL)
Reliance Finance Limited (Oman-BD) (REFL)
Saudi-Bangladesh Industrial and Agricultural Investment Company Ltd.
The UAE-Bangladesh Investment Company Limited (UAEBIC)
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Appendix III: Non-bank Financial Institutions Grouped as Per Listing Status
with the Secondary Market
Review of Non-Bank Financial Sector 2010 75
76 Review of Non-Bank Financial Sector 2010
Ownership
Status
Local
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
Joint Venture
J
J
J
J
J
J
J
J
Short Name
BdFICl
BAY
FIDELITY
FAREAST
FIRST LIL
GSPFCBL
IDCOL
IDLC
Islami FIL
ILFSL
IIDFCL
MIDAS FL
NatFin
NHFIL
PRIME
PHOENIX
PLFSL
Premier
UCL
ULCL
BIFC
DBH
IPDC
LANKA
Reliance
SABINCO
UBICo
UFI
Name of the NBFI
Full Name
Bangladesh Finance & Investment Company Limited
Bay Leasing & Investment Limited
Fidelity Assets & Securities Company Limited
Fareast Finance & Investment Limited
First Lease Finance & Investment Limited
GSP Finance Company (Bangladesh) Limited
Infrastructure Development Company Limited
IDLC Finance Limited
Islamic Finance and Investment Limited (IFIL)
International Leasing and Financial Services Limited
Industrial and Infrastructure Development Finance Company Limited
MIDAS Financing Limited (MFL)
National Finance Limited (NFL) (Operation Started 2007)
National Housing Finance and Investments Limited (NHFIL)
Prime Finance & Investment (PFI) Limited
Phoenix Finance and Investments Limited (PFIL)
People's Leasing and Financial Services Limited (PLFSL)
Premier Leasing & Finance Limited (PLFL)
Union Capital Limited
United Leasing Company Limited
Bangladesh Industrial Finance Company Limited
Delta BRAC Housing Finance Corporation Limited
Industrial Promotion and Development Company of Bangladesh Ltd.
LankaBangla Finance Limited
Reliance Finance Limited (Oman-BD) (REFL)
Saudi-Bangladesh Industrial & Agricultural Investment Company Ltd.
The UAE-Bangladesh Investment Company Limited
Uttara Finance and Investments Limited (UFI)
Appendix IV: Non-bank Financial Institutions Grouped as Per Ownership
Pattern
Review of Non-Bank Financial Sector 2010 77
A. Liquidity CRR
SLR
Current Ratio
LA/TA
B. Capital ManagementPaid-up Cap. /Required Cap
Total Capital/Total Asset
Debt Equity Ratio
C. Utilization of FundsTotal Loan & Lease/Total Deposits
Total Loan & Lease/Total Borrowing
Total Loan & Lease/Total Deposit & Borrowing
D. Asset QualityTotal Loan & Leases/ Total Asset
Total Investment/Total Asset
Classified Loan & Leases/ Total Asset
E. EarningsOperating Profit/Total Asset
Net Income Before Tax/ Total Asset
Net Income After Tax/ Total Asset
Net Income After Tax/ Total Equity
Interest Income /Net Operating Income
F. Operational EfficiencyStaff Expense /Net Operating Income
Operating Expense/Net operating Income
Staff Expense /Total Operating Expense
Appendix V: CAGR and CV of Different Parameters of NBFIs from 2007-2010 (Based on Establishment Year)
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGR
CVCAGR
CVCAGR
CV
CAGRCV
CAGRCV
CAGRCV
CAGR
CVCAGR
CVCAGR
CV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGR
CVCAGR
CVCAGR
CV
Before 1990-0.221.40-7.5112.259.31
13.36-39.8323.29
13.6323.374.94
18.37-17.4431.98
7.8921.4916.0630.841.444.52
3.0412.6628.0851.27-21.8534.69
18.9334.3813.7424.9913.1626.068.25
146.69-22.8952.26
15.8031.54-38.8685.879.52
25.49
1991-19958.32
12.04-21.7737.57-10.4344.68-22.4258.17
-5.3328.63-4.3023.9015.0739.80
0.028.114.22
14.17-2.279.04
16.4827.44-3.6134.02-5.138.06
4.47
10.99-3.3
17.400.03
14.742.819.68-7.8221.51
103.29101.50-50.05102.2134.0454.79
1996-2000-27.8165.27-62.348.82-10.3833.66-7.2215.13
-0.2320.29-2.579.56
17.3539.82
-10.2444.660.50
45.69-1.1373.43
8.37
17.0210.5022.8612.0831.65
-5.1623.646.80
24.0325.9478.5123.77
109.309.79
28.73
47.5758.68-44.4897.1347.5758.68
After 20003.22
26.42-3.5646.0817.1533.87-7.6915.56
-1.6025.20-4.8610.6454.5674.87
2.8712.030.467.54-8.9617.49
5.668.97
29.8342.35-1.4210.03
13.4926.025.43
12.177.72
15.1210.9922.31-16.7775.31
141.8298.85-47.6496.2275.3161.67
78 Review of Non-Bank Financial Sector 2010
A. Liquidity CRR
SLR
Current Ratio
LA/TA
B. Capital ManagementPaid-up Cap. /Required Cap
Total Capital/Total Asset
Debt Equity Ratio
C. Utilization of FundsTotal Loan & Lease/Total Deposits
Total Loan & Lease/Total Borrowing
Total Loan & Lease/Total Deposit & Borrowing
D. Asset QualityTotal Loan & Leases/ Total Asset
Total Investment/Total Asset
Classified Loan & Leases/ Total Asset
E. EarningsOperating Profit/Total Asset
Net Income Before Tax/ Total Asset
Net Income After Tax/ Total Asset
Net Income After Tax/ Total Equity
Interest Income /Net Operating Income
F. Operational EfficiencyStaff Expense /Net Operating Income
Operating Expense/Net operating Income
Staff Expense /Total Operating Expense
Appendix VI: CAGR and CV of Different Parameters of NBFIs from 2007-2010 (Based on Listing in the Stock Exchange)
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
Listed-21.7951.76-59.62143.28-0.857.98-5.8612.07
-2.5319.702.827.299.68
23.22
-24.2756.3512.9121.010.942.79
11.4519.7026.8545.5817.1526.58
10.0420.1711.2324.9726.9375.8220.31
100.37-6.3225.86
77.0884.35-43.9097.1477.0860.67
Non-Listed7.46
17.31-7.7442.87-11.8032.24-36.90112.07
15.9627.04-6.1720.791.23
53.40
-8.3828.520.44
21.03-0.762.68
1.346.11
32.3659.924.54
25.93
-13.3133.88-2.8219.25-0.7416.0911.63
123.92-15.6426.92
32.8856.95-46.0192.64-1.019.61
Review of Non-Bank Financial Sector 2010 79
A. Liquidity CRR
SLR
Current Ratio
LA/TA
B. Capital ManagementPaid-up Cap. /Required Cap
Total Capital/Total Asset
Debt Equity Ratio
C. Utilization of FundsTotal Loan & Lease/Total Deposits
Total Loan & Lease/Total Borrowing
Total Loan & Lease/Total Deposit & Borrowing
D. Asset QualityTotal Loan & Leases/ Total Asset
Total Investment/Total Asset
Classified Loan & Leases/ Total Asset
E. EarningsOperating Profit/Total Asset
Net Income Before Tax/ Total Asset
Net Income After Tax/ Total Asset
Net Income After Tax/ Total Equity
Interest Income /Net Operating Income
F. Operational EfficiencyStaff Expense /Net Operating Income
Operating Expense/Net operating Income
Staff Expense /Total Operating Expense
Appendix VII: CAGR and CV of Different Parameters of NBFIs from 2007-2010 (Based on Ownership Structure)
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
CAGRCV
Local-4.3119.98-56.07140.47-0.6112.61-4.088.18
0.2320.66-2.358.165.87
20.57
-21.3151.132.395.92-0.2959.45
5.8920.7133.0956.1320.2329.56
7.5416.517.44
19.6923.8971.0521.43
101.89-5.1923.42
77.2281.13-46.6197.5869.0576.98
Joint Venture-43.59104.34
1.6524.81-7.7017.78-39.44116.47
0.747.570.00
15.0019.7964.26
-13.0229.3813.5826.13-0.043.94
0.646.89
13.8828.67-8.4424.78
-12.2833.303.99
14.265.35
15.629.05
116.78-13.9625.96
16.9835.23-38.1287.0316.9835.23
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