Profitability Analysis Using Ratios in Selected Conventional Banks of Bangladesh: A Comparative Study

  • Sultana Akter Assistant Professor, Department of Business Administration, Int'l Islamic University Chittagong, Kumira, Chottogram-4318, Bangladesh. Tel: 088-01778072103
Keywords: Profitability analysis, Average annual growth rate (AAGR), ratios, Conventional banks

Abstract

Globalization, financial crisis, security and other major reasons why banking activities are growing every day. Bangladesh's banking sector is a vital component of the country's financial system.  The analysis was conducted to assess profitability of selected conventional banks in Bangladesh by financial ratios.  The ratio review was carried out to ascertain whether these banks are moving further and how these banks are responsible for managing development of other participants in the field. While reviewing the financial statements of the selected four banking institutions from 2015 to 2019, it was discovered that the reviewed financial statements contained secondary information. Secondary data sources provide some profitability metrics for banks, including (ROA), (ROE), (ROD), (EPS), (PER) and (NPM). For extra conclusion, mean value, standard deviation and Average Annual Growth rate (AAGR) are also used to compare profitability performance among selected banks. The study’s findings conclude that Dhaka Bank Ltd is best performing bank among the selected conventional banks. However, the study shows that AB Bank Ltd is performing worse than expected. The study's findings will help to increase the confidence and the understanding in the Bangladeshi banks regarding the financial transactions. Finally, it included a list of suggestions for improving bank profitability and efficiency.

References

. A.M. Kutan, E. Ozsoz, & E. W. Rengifo. “Cross-sectional determinants of bank performance under deposit dollarization in emerging markets.” Emerging Markets Review, 13, pp. 478-492. http://dx.doi.org/10.1016/j.ememar.2012.07.003

. Agama. “Determinants of Commercial Banks Profitability in Ethiopia.” Asian Journal of Research in Business Economics and Management, Vol. 4, No. 7, pp. 01-12, July 2014.

. Ahmed Arif Almazari. “Financial Performance Evaluation of Some Selected Jordanian Commercial Banks.” International Research Journal of Finance and Economics, ISSN 1450-2887, Issue: 6, pp. 50-63, 2011

. F. Sufian and M.S. Habibullah. “Determinants of bank profitability in a developing economy: Empirical evidence from Bangladesh”. Journal of Business Economics and Management, 10(3), pp. 207-217. http://dx.doi.org/10.3846/1611-1699.2009.10.207-217, 2009.

. F. Sufian. “Determinants of bank profitability in developing economies: empirical evidence from the South Asian banking sectors.” Contemporary South Asia, 20(3), pp. 375-399. http://dx.doi.org/10.1080/09584935.2012.696089, 2012.

. M. Ćuraka, K. Poposkib & S. Pepura. “ Profitability Determinants of the Macedonian Banking Sector in Changing Environment.” Procedia-Social and Behavioral Sciences, 44, pp. 406-416, http://dx.doi.org/10.1016/j.sbspro.2012.05.045

. M. Mittal & A. Dhademade. “ conducted research on a Comparative study on profitability and productivity in Indian Banks.”, ISBN-978-81-7446-983-0, 2005.

. A. Micco, U. Panizza and M. Yañez. Bank ownership and performance. Does politics matter? Journal of Banking & Finance, 31(1), 219-241. http://dx.doi.org/10.1016/j.jbankfin.2006.02.007, 2008.

. N Apergis. “The long-term role of non-traditional banking in profitability and risk profiles: from a panel of U.S. banking institutions.” Journal of International Money and Finance, 45, pp. 61-73, http://dx.doi.org/10.1016/j.jimonfin.2014.03.003, 2014.

. S. B. Naceur and M. Kandil. “The impact of capital requirements on banks’ cost of intermediation and performance: The case of Egypt.” Journal of Economics and Business, 61, pp. 70-89. http://dx.doi.org/10.1016/j.jeconbus.2007.12.001, 2009

Published
2021-06-12
Section
Articles