Dividend cover consistently below 1.5 may suggest that the company might not be able to maintain the present level of dividends in case of adverse variation in profit in the future. A high dividend cover may suggest that the company is retaining a higher portion of its earnings to meet its financing requirements which may result in higher dividend payouts in the future. Dividend Cover Ratio = Profit after tax - Dividend paid on Irredeemable Preference Shares Dividend paid to Ordinary Shareholders 2011 2010 2009 2008 2007 19.25 45.02 32.52 18.99 14.33 Page | 42
Dutch-Bangla Bank Limited : Performance Evaluation 2011 2010 2009 2008 2007 0 5 10 15 20 25 30 35 40 45 50 Interpretation: Fixed Dividend Coverage ratio shows the portion of net income among annual dividend. At year 2007, the ratio was 14.33, in 2010 the ratio was increased much but now in 2011 its 19.25. However, from the ratio we can say that DBBL is is retaining a higher portion of its earnings to meet its financing requirements which may result in higher dividend payouts in the future. 9.1.40 Provision Coverage Ratio: Provision coverage ratio refers to the percentage of the loan amount that the bank has set aside as provisions to meet an eventuality where the loan might have to be written off it becomes irrecoverable Provision coverage ratio = Cumulative provisions / Gross NPAs 2011 2010 2009 2008 2007 8.16 5.03 26.78 4.09 0.95 2011 2010 2009 2008 2007 0 5 10 15 20 25 30 Page | 43
Dutch-Bangla Bank Limited : Performance Evaluation Interpretation: The provision coverage ratio of DBBL usually bellows 10% but in the year 2009 it was 26.78%. At that year, we faced several political problems like. Therefore the rate of provision was high that year. But now DBBL is doing better therefore DBBL does not expose any risk factor now. 9.1.41 Book Value per Common Stock: A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. 2011 2010 2009 2008 2007 350.05 TK 290.20 TK 316.40 TK 1154.67 TK 821.23 TK 2011 2010 2009 2008 2007 0 200 400 600 800 1000 1200 1400 Interpretation: After the year 2008 the book value of DBBL’s common stock has been decrease. At 2008 it was 1154.67 Taka, but in 2011 it is 350.05 Taka. 9.1.42 Profit after Tax to Total Income Ratio: This is a financial performance ratio, calculated by dividing net income after taxes by net sales. A company's after-tax profit margin is important because it tells investors the percentage of money a company actually earns per dollar of sales. This ratio is interpreted in Page | 44
Dutch-Bangla Bank Limited : Performance Evaluation the same way as profit margin - the after-tax profit margin is simply more stringent because it takes taxes into account. 2011 2010 2009 2008 2007 52% 24% 23% 18% 18% 2011 2010 2009 2008 2007 0% 10% 20% 30% 40% 50% 60% Interpretation: DBBL’s Net Income in 2007 was 18% of Total income. It keeps increasing keeping pace. The final boom was in 2011. The Net Income becomes 52% of total income on that year. 9.1.43 Tier 1 Capital Ratio: This is a comparison between a banking firm's core equity capital and total risk-weighted assets. A firm's core equity capital is known as its Tier 1 capital and is the measure of a bank's financial strength based on the sum of its equity capital and disclosed reserves, and sometimes non-redeemable, non-cumulative preferred stock. A firm's risk-weighted assets include all assets that the firm holds that are systematically weighted for credit risk.
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- Summer '16
- James Bakul Sarkar