FINANCIAL STATEMNET ANALYSIS:

Financial statement analysis is the process of identifying of financial

strengths and weakness of the firms by property establishing
relationship between the items of the balance sheet and the profit & loss
account.
Three techniques may be used in evaluating financial statement
data:
 Horizontal analysis
 Vertical analysis
 Ratio analysis
4 Year Statement Of Financial Position Of
Faysal Bank
Balance sheet
2017 2016 2015 2014
Assets
cash & balances with treasury 37861767 37239302 26,084,007 20,285,851
banks
Balances with other banks 1872771 1139375 1,068,451 1,422,699
Lendings to financial institution 9010335 5000000 12,088,403 -
Investments 179706358 170210137 183,677,239 155,210,513
Advances 231532160 204830997 178,079,084 181,224,805
Operating fixed assets 12939625 12111881 11,342,980 11,543,356
Deferred tax assets 1607625 2264212 3,087,325 2,428,816
Other assets 13496266 11668757 14,645,371 16,009,744

488026907 444464661 430,072,860 388,125,784

Liabilities
Bills payable 7304326 5982285 6,009,238 5,347,774
Borrowings 54788547 52806084 90,565,242 60,926,863
Deposits & other Accounts 373081163 340306404 292,130,258 283,345,739
Sub-ordinated loans - 1497000 2,994,000 2,995,200
Liabilites against assets subject - - - -
to finance lease
Deferred tax liabilities-net - - - -
Other liabilities 13620595 8864563 8,021,649 9,207,632
448794631 409456336 399,720,387 361,823,208
Net Assets 39232276 39232276 30,352,473 26,302,576
Owner’s Equity
Share capital 13197361 11997601 11,997,601 10,432,697
Reserves 7936338 7158248 6,422,761 5,703,155
Unappropriated Profit 12527973 9985870 7,638,330 5,696,366
33661672 29141719 26,058,692 21,832,218
Surplus on revalution of assets- 5570604 5866606 4,293,781 4,470,358
net of tax
39232276 35008325 30,352,473 26,302,576

5 Year Profit & Loss A/C

For The Year Ended December ,31
2017 2016 2015 2014
Mark-up/return/interest earned 28,791,306 26,200,691 32,312,553 32,312,633
Mark-up/return/interest expensed 14,830,923 14,134,284 18,357,971 18,480,191
Net Mark-up/interest income 13,960,383 12,066,407 13,954,582 13,832,442
Reversal of provision against (690,700) 625,813 1,026,128 2,055,820
non-performing loans and
advances-net
Provision for consumer and small 104,409 31,585 (6,852) 33,159
enterprise loans-general-net
Provision against off balance 5,152 31,585 19,929 6,981
sheet obligations
Provision for diminution in the 182,943 4,209 454,551 397,383
value of investments-net
Recoveries against written-off (98,216) (16,930) (100,296) (134,506)
debts-net
 (496,412) (80,599) 1,393,460 2,358,837
Net mark-up/interest 14,456,795 11,502,329 12,561,122 11,473,605
income after provisions

Non mark-up/ interest income

Fee, commission and brokerage 3,086639 2,715,435 2,303,447 2,075,945
income
Dividend income 159,514 276,301 318,715 182,435
Income from dealing in foreign 1,385,057 1,368,290 964,961 1,072.939
currencies
Gain on sale of securities-net 845,659 2,092,759 1,738,630 460,477
Unrealised gain /(loss) on (3,853) 11,107 (27,230) 31,475
revaluation of investments
classified as held for trading-net
Other income 141,060 490,566 265,817 550,898

Total non-markup / interest 5,614,076 6,954,458 5,564,340 4,374.169

income

Non mark-up/ interest expenses 20,070,871 18,456,787 18,125,462 15,847,774

Administrative expenses 12,607,943 11,660,533 10,591,053 12,162,034
Other provisions/ write offs 4,610 (28,298) 386,126 (88,616)
Other charges 166,143 143,865 221,204 221,826
Total non-markup/ interest 12,778,696 11,776,100 11,198,383 12,295,244
expenses
7,292,175 6,680,687 6,927,079 3,552,530
Share of loss of associate (22,863) (22,050) (7,002) (745)
Extra ordinary / unusual items - - - -
Profit before taxation 7,269,312 6,658,637 6,920,077 3,551,785
Taxation – current 2,647,657 2,262,905 3,038,627 1,712,150
Taxation- Prior years’ (882,491) (901,138) 264,797 (812,786)
Taxation- deferred 989,360 995,098 (605,711) 175,462
2,754,526 2,356.865 2,697,713 1,074,826
Profit after taxation 4,514,786 4,301,772 4,222,364 2,476,959
Basic earnings per share 3,42 3,26 3,52 2,06
 HORIZONTAL ANALYSIS
Balance Sheet
Formula=Current year amount-Base year amount /Base year
amount

2017 2016 2015 2014

Assets -
cash & balances with treasury banks 2% 43% 29 -
Balances with other banks 64% 7% (25) -
Lendings to financial institutions 80% 1,900% - -
Investments 6% (13)% 26 -
Advances 13% 13% (1) -
Operating fixed assets 7% 7% (2) -
Deferred tax assets (29)% (27)% 27 -
Other assets 16% - (20) -
10% 3% 11
Liabilities
Bills payable 22% - -
Borrowings 4% (42)% 29
Deposits & other Accounts 10% 16% (25) -
Sub-ordinated loans (100)% (50)% - -
Liabilites against assets subject to - - (26) -
finance lease
Deferred tax liabilities - - (1) -
Other liabilities 54% 10% (2) -
10% 2% 27 -
12% 15% (20) -
Net Assets
Owner’s Equity
Share capital 10% - 15 -
Reserves 11% 11% 13 -
Unappropriated Profit 25% 31% 34 -
16% 2% 19 -
(5)% 37% (4) =
Surplus on revalution of assets-net of 12% 15% 15 -
tax

HORIZONTAL ANALYSIS
Profit and loss account
2017 2016 2015 2014
Mark-up/return/interest earned 10% (19)% - -
Mark-up/return/interest expensed 5% (23)% (1)% -
Net Mark-up/interest income 16% (14)% 1% -
Reversal of provision against (210)% (41)% (49)% -
non-performing loans and
advances-net
Provision for consumer and small 225% (567)% (121)% -
enterprise loans-general-net
Provision against off balance 25% (80)% 186% -
sheet obligations
Provision for diminution in the (1,176)% (104)% 15% -
value of investments-net
Recoveries against written-off 21% (18)% (26)% -
debts-net
(188)% (60)% (40)% -
Net mark-up/interest 26% (8)% 10% -
income after provisions

Non mark-up/ interest income

Fee, commission and brokerage 14% (18)% 11% -
income
Dividend income (42)% (13)% 75% -
Income from dealing in foreign 1% 42% (10)% -
currencies
Gain on sale of securities-net (60)% 20% 278% -
Unrealised gain /(loss) on (136)% (141)% (187)% -
revaluation of investments
classified as held for trading-net
Other income (71)% 86% (52)% -

Total non-markup / interest (19)% 25% 27% -

income

Non mark-up/ interest expenses 9% 2% 14% -

Administrative expenses 8% 10% (13)% -
Other provisions/ write offs (118)% (108)% (379)% -
Other charges 15% (35)% - -
Total non-markup/ interest 9% 5% 9% -
expenses
9% (4)% 96% -
Share of loss of associate 5% 214% 600% -
Extra ordinary / unusual items - - - -
Profit before taxation 9% (4)% 96% -
Taxation – current 17% (26)% 78% -
Taxation- Prior years’ (2)% (440)% (133)% -
Taxation- deferred (1)% (264)% (446)%
17% (13)% 151%
Profit after taxation 5% 2% 70%
Basic earnings per share 5% 2% 70%
INTERPRETATION
In horizontal analysis of faysal bank balance sheet,which the bank
net assets increase in 2017 as compared to previous years.At the same
time total liabilities is also increases in 2017.In profit and loss account
net markup is increased as compare to previous years.profit after
taxation is also increase in 2017
 VERTICAL ANALYSIS
Balance Sheet
Formula: Individual item of financial statement /Total of item
head*100

2017 2016 2015 2014

Assets
cash & balances with treasury banks 8% 8% 6% 5%
Balances with other banks - - - -
Lendings to financial institutions 2% 1% - -
Investments 37% 38% 45% 28%
Advances 47% 48% 42% 55%
Operating fixed assets 3% 3% 3% 3%
Deferred tax assets - 1% 1% 1%
Other assets 3% 3% 3% 4%
100% 100% 100% 100%
Liabilities
Bills payable 1% 1% 1% 1%
Borrowings 11% 12% 21% 13%
Deposits & other Accounts 76% 77% 68% 76%
Sub-ordinated loans - - 1% 1%
Liabilites against assets subject to - - - -
finance lease
Deferred tax liabilities - - - -
2Other liabilities 3% 2% 2% 3%
92% 82% 93% 93%
8% 8% 7% 7%

Net Assets
Owner’s Equity
Share capital 3% 3% 3% 3%
Reserves 2% 2% 2% 1%
Unappropriated Profit 3% 2% 2% 1%
7% 7% 7% 6%

Surplus on revalution of assets-net of 1% 1% 1% 1%

tax
8% 8% 8% 7%

VERTICAL ANALYSIS
PROFIT &LOSS A/C
2017 2016 2015 2014
Mark-up/return/interest 100% 100% 100% 100%
earned
Mark-up/return/interest 52% 54% 57% 57%
expensed
Net Mark-up/interest 48% 46% 43% 43%
income
Reversal of provision (2)% 2% 3% 6%
against non-performing
loans and advances-net
Provision for consumer and 0.36% 0.12% 0.02 0.10
small enterprise loans-
general-net
Provision against off 0.17 0.01 0.06 0.02
balance sheet obligations
Provision for diminution in 1% 0.06% 1% 1%
the value of investments-
net
Recoveries against written- 0.34% 0.30% 0.30% 0.41%
off debts-net
(1)% 2% 4% 7%
Net mark-up/interest 50 % 44% 39% 36%
income after provisions
Non mark-up/ interest
income
Fee, commission and 11% 10% 7% 6%
brokerage income
Dividend income 1% 1% 1% 1%
Income from dealing in 5% 5% 3% 3%
foreign currencies
Gain on sale of securities- 3% 8% 5% 1%
net
Unrealised gain /(loss) on 0.01 0.04 0.08 0.09
revaluation of investments .
classified as held for
trading-net
Other income 0.48% 2% 1% 2%

Total non-markup / 20% 26% 17% 13%

interest ,368,209income

Non mark-up/ interest 69% 70% 56% 49%

expenses
Administrative expenses 44% 45% 33% 38%
Other provisions/ write offs 0.01% 0.10% 1% 0.39%
Other charges 1% 1% 1% 1%
Total non-markup/ 45% 46% 35% 39%
interest expenses
24% 24% 21% 10%
Share of loss of 0.07% 0.07% 0.02% 3.47%
associate
Extra ordinary / unusual - - - -
items
Profit before taxation 24% 24% 21% 10%
Taxation – current 9% 9% 9% 5%
Taxation- Prior years’ (3)% (3)% 1% (3)%
Taxation- deferred 3% 4% (2)% 1%
9% 10% 8% 3%
Profit after taxation 15% 14% 13% 7%
 INTERPRETATION
Vertical analysis of balance sheet show that the total assets are
100%.Investments are 37% of its total assets in year 2017 and 38% in 2016
slightly decrease in 2017 from the previous year.Total liabilities are 92% in year
2017 deposit and other accounts holds76% of its total liabilities.The share capital
remained same that means there is no fresh issurance of bonds.Vertical analysis of
profit and loss account show that markup interest earned is 100% and the interest
expense is 52% in 2017 and 54% in 2016.Interset expense in 2017 is decrease as
compare to 2016 that increase the profit in 2017 as compare to previous years

Ratio Analysis
Ratio analysis involves methods of calculating and interpreting financial ratios to
analyze and monitor the firm’s performance.It is used to evaluate various aspects
of a company’s operating and financial performance such as its
efficiency,liquidity,profitability and solvency.

•Liquidity ratio

•Debt ratio

•Profitability ratio

Liquidity Ratio:
The ratio between the liquid assets and liabilities of bank or other institution

Current Ratio:

Current ratio show firm’s ability to cover its short term liabilities.It is the ratio of
current assets to current liabilities.Higher the ratio greater will be the ability of
organization to pay liabilities.
CURRENT RATIO: current assets /current liabilities
YEAR 2017 2016 2015 2014
Current 459,983,391 418,419,811 400,997,184 358,143,868
Assets
Current 435,147,036 400,591,773 391,698,738 97,604.416
liabilities
Ratio 1.05 1.04 1.02 3.6

INTERPRETATION
Current ratio measures the business ability to pay its short term liabilities.Short
term creditors interest in current ratio.Standard for

current ratio is 2:1. Faysal bank current for 2017 is 1.05 its means current assets
are slightly more than current liabilities.It is not a good ratio.In 2016 it was 1.04.In
2015 it was 1.02.As compared with 2016 the ratio of 2017 is increased.

DEBT RATIO: total liabilities/total assets*100

YEAR 2017 2016 2015 2014
total liabilities 448,794,631 409,456,336 399,720,387 361,823,208
total assets 488,026,907 444,464,661 430,072,860 388,125,784
Ratio 92% 92% 92.9% 92.3%

INTERPRETATION
The higher this ratio,the greater the amount of others people money used to
generate profit. The overall leverage position is showing better trend. The
contribution of equity in total assets is decreasing, while the debt contribution is
increasing. Equity ratio is increased which shows better condition of the bank.
Solvency ratio is in good condition. So we can say that overall solvency condition
of the Faysal bank is better with comparison to the previous year.
TIME INTEREST EARNED RATIO:Earning before interest and
taxes/Interest
YEAR 2017 2016 2015 2014
Earning 20,070,871 18,456,787 18,125,462 15,847,774
before interest
and taxes
Interest 12,778,696 11,776,100 11,198,383 12,295,24
Ratio 1.57% 1.56% 1.61% 1.28%

Interpretation:
The time interest earned ratio for faysal bank is not acceptable. A value of atleast
3.0 and preferably closer to 5.0 is suggested. Bank earning before interest and
taxes could shrink by 36%. The bank is not able to pay its interest.

Profitability Ratio:
Profitability analysis of a firm indicates the overall efficiency of the
management.without profit a company cannot attract the outside
capital.Profitability analysis include:

•Return on total assets

•Return on equity

• Earning per share

RETURN ON TOTAL ASSETS: Earning available for Common
Stock holders/Total Assets*100
YEAR 2017 2016 2015 2014
Earning available 4,514,786 4,301,772 42,22,364 24,769,59
for
Common stock
holders
Total assets 488,026,907 444,464,661 430,072,860 388,125,784
Ratio 0.92% 0.96% 0.98% 0.63%

RETURN ON EQUITY: Earning Available for Common Stock

holders/Common Stock Equity *100
YEAR 2017 2016 2015 2014
Earning 4,514,786 4,301,772 4,222,364 2,476,959
available for
common Stock
holders
Common Stock 39,232,276 35,008,325 30,325,473 26,302,576
Equity
Ratio 11.5% 12.2% 13.9% 9.4%
EARNING PER SHARE: Earning Available for Common Stock
holders/ Number Of Shares Of Common Stock Out Standing
YEAR 2017 2016 2015 2014
Earning available 4,514,786 4,301,772 4,222,364 2,476,959
for common
Stock holders
Number Of 1,319,736 1,319,736 1,199,760 1,199,760
Shares Of
Common Stock
Out Standing
Ratio 3.42 3.26 3.52 2.06

Interpretation:
Profitability analysis shows the entire performance of business and if we study the
profitability trend of bank then it will clear to us that it showing a trend. Net profit
after tax is increased as compare to previous year, due to its return on asset,
decrease as compared to previous year and return on equity is also decreased.