A REPORT ON FINANCIAL RATIOS OF EMIRATES NBD,
UAE
Project submitted to the
MANIPAL ACADEMY OF HIGHER EDUCATION –
DUBAI CAMPUS
In the partial fulfilment of the Requirement for the Degree of
BACHELOR OF BUSINESS ADMINISTRATION
By
Khwahish Grover
Reg. No.: 200203010
Under the Guidance and Supervision of
Dr. Rajani Ramdas
SCHOOL OF BUSINESS
CONTENTS
INTRODUCTION .................................................................................................................................. 3
FINANCIAL STATEMENTS OF Emirates NBD .................................................................................. 4
2018 & 2019 ....................................................................................................................................... 4
2020 & 2021 ....................................................................................................................................... 5
2022 .................................................................................................................................................... 6
FINANCIAL RATIOS ............................................................................................................................ 7
DIVIDEND POLICY RATIOS: .......................................................................................................... 7
CAPITAL STRUCTURE RATIOS ..................................................................................................... 9
GRAPHS ............................................................................................................................................... 11
Capital Structure Ratios .................................................................................................................... 11
DIVIDEND POLICY RATIO ........................................................................................................... 15
SUGGESTIONS (Regarding few ratios) .............................................................................................. 19
REFRENCES ........................................................................................................................................ 21
INTRODUCTION
Emirates NBD is a prominent banking institution that operates in the United Arab Emirates (UAE)
and is recognized as one of the leading banks in the Middle East region. Established in 2007 through
the merger of Emirates Bank International and the National Bank of Dubai, Emirates NBD has built a
strong reputation for its comprehensive range of financial services and its commitment to innovation
and customer satisfaction.
With its headquarters in Dubai, Emirates NBD serves a diverse clientele, including individuals,
businesses, and corporations. The bank offers a wide array of services tailored to meet the varied
needs of its customers. These services encompass personal banking, corporate banking, wealth
management, investment banking, private banking, asset management, and insurance.
As a retail bank, Emirates NBD provides individuals with a range of products and services to manage
their finances effectively. This includes savings and current accounts, credit cards, loans, mortgages,
and personalized financial planning solutions.
For corporate clients, Emirates NBD offers a comprehensive suite of banking services designed to
support businesses of all sizes. These services encompass corporate finance, trade finance, cash
management, project finance, and treasury services, among others. The bank's expertise in corporate
banking has made it a trusted partner for businesses in various sectors.
Emirates NBD has also been at the forefront of digital transformation in the banking industry. The
bank has made significant investments in technology and innovation to enhance customer experience
and provide seamless digital banking solutions. Through its online and mobile banking platforms,
customers can conveniently access their accounts, conduct transactions, and avail banking services
anytime, anywhere.
In addition to its financial offerings, Emirates NBD places great emphasis on sustainability and
corporate social responsibility. The bank actively engages in environmental conservation initiatives,
community development programs, and financial literacy campaigns to make a positive impact on
society.
Emirates NBD has achieved widespread recognition and numerous accolades for its performance,
customer service, and digital initiatives. Its strong financial position, extensive network, and
commitment to excellence have solidified its position as a trusted and preferred banking partner in the
UAE and the wider Middle East region.
FINANCIAL STATEMENTS OF Emirates NBD
2018 & 2019
2020 & 2021
2022
FINANCIAL RATIOS
DIVIDEND POLICY RATIOS:
1. Dividend Yield ratio – This ratio measures the dividend income received by shareholders
relative to the current market price of the stock.
Dividend Yield Ratio = Dividend per share / Market price per share
ENBD – Dividend Yield Ratio:
DIVIDEND YIELD RATIO
Year
Formula:
Dividends per share
Market price per share
Answer
2018
2019
2020
2021
2022
0.38
8.51
0.38
13
0.4
10.30
0.40
13.55
0.60
13.10
0.044
0.029
0.038
0.029
0.045
2. Dividend Pay-out Ratio: This ratio measures the percentage of earnings paid out as
dividends to shareholders.
Dividend Pay-out Ratio = Dividends per share / Earnings per share
ENBD Dividend Pay-out Ratio:
DIVIDEND PAY-OUT RATIO
Year
Formula:
Dividends per share
Earnings per share
Answer
2018
2019
2020
2021
2022
0.38
1.70
0.38
1.68
0.4
1.00
0.40
1.38
0.60
1.98
0.223
0.226
0.40
0.289
0.303
3. Dividend Coverage Ratio – This ratio measures the ability of the company to cover its
dividend payments with its earnings.
Dividend Coverage Ratio = Earnings per share / Dividends per share
ENBD – Dividend Coverage ratio:
DIVIDEND COVERAGE RATIO
Year
2018
2019
2020
2021
2022
Formula:
1.70
0.38
1.68
0.38
1.00
0.4
1.38
0.40
1.98
0.60
4.473
4.421
2.5
3.45
3.3
Earnings per share
Dividends per share
Answer
4.
Retention Ratio – This ratio measures the percentage of earnings that the company
retains after paying dividends.
Retention Ratio = (Earnings per share - Dividends per share) / Earnings per share
ENBD – Retention Ratio:
RETENTION RATIO
Year
Formula:
Earnings per share − Dividends per share
Earnings per share
Answer
2018
2019
2020
2021
2022
1.70 − 0.38 1.68 − 0.38 1.00 − 0.4 1.38 − 0.40 1.98 − 0.60
1.70
1.68
1.00
1.38
1.98
0.776
0.773
0.6
0.710
0.6969
CAPITAL STRUCTURE RATIOS
1. Debt to Equity Ratio – This ratio measures the proportion of debt to equity in a company's
capital structure.
Debt to Equity Ratio = Total Debt / Total Equity
ENBD Debt-to-equity Ratio:
DEBT TO EQUITY RATIO
Year
Formula:
Total Debt
Total Equity
Answer
2018
2019
2020
2021
2022
436,318,383
64024363
601,713,703
81,606,861
613469375
84618098
603856929
83579689
648657404
93304149
6.81
7.37
7.24
7.22
6.95
2. Debt to Asset Ratio – The debt-to-asset ratio is a financial ratio that measures the proportion
of a company's assets that are financed by debt.
Debt to Assets Ratio = Total Debt / Total Assets
ENBD Debt-to-Asset Ratio:
DEBT TO ASSET RATIO
Year
2018
2019
2020
2021
2022
Formula:
436318383
500342746
601713703
683320564
613469375
698087473
603856929
687436618
648657404
741961553
0.87
0.88
8.78
0.87
0.87
Total Debt
Total Asset
Answer
3. Equity Ratio – The equity ratio is a financial ratio that measures the proportion of a
company's total assets that are financed by equity.
Equity Ratio = Total Equity / Total Assets
ENBD Equity Ratio:
EQUITY RATIO
Year
2018
2019
2020
2021
2022
Formula:
64024363
500342746
81606861
683320564
84618098
698087473
83579689
687436618
93304149
741961553
0.127
0.119
0.121
0.121
0.125
Total Equity
Total Asset
Answer
4. Interest Coverage Ratio – The interest coverage ratio is a financial metric that indicates a
company's ability to meet its interest obligations on its outstanding debt. It is calculated by
dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.
Interest Coverage Ratio = EBIT / Interest Expenses
ENBD INTEREST COVERAGE RATIO:
INTEREST COVERAGE RATIO
Year
2018
2019
2020
2021
2022
Formula:
10170463
5997538
14894113
10079074
7430465
9191762
9910135
8929717
18068196
10878128
1.695
1.477
0.808
1.109
1.66
EBIT
Interest Expenses
Answer
GRAPHS
Capital Structure Ratios
1. DEBT-TO-EQUITY RATIO
Debt-to-Equity Ratio
Debt-to-Equity Ratio
7.5
7.4
7.3
7.2
7.1
7
6.9
6.8
6.7
6.6
6.5
2018
2019
2020
2021
2022
Years
A debt-to-equity ratio of 6.81 means that for every unit of equity, the company has 6.81 units
of debt. Similarly, for the other years, the ratios indicate the multiple of debt relative to equity.
Interpreting the debt-to-equity ratio requires considering the company's industry norms,
historical trends, and comparing it to other companies within the same sector.
A high debt-to-equity ratio suggests that the company relies more heavily on debt financing,
which may indicate higher financial risk. It could mean that the company has a significant
amount of debt that needs to be serviced and potentially limits its financial flexibility.
On the other hand, a low debt-to-equity ratio implies a lower reliance on debt and a higher
proportion of equity financing. This generally indicates a more conservative financial
structure, lower financial risk, and potentially better stability.
It's important to note that an ideal debt-to-equity ratio can vary depending on the industry and
the company's specific circumstances. Some industries, such as utilities or capital-intensive
industries, typically have higher debt-to-equity ratios compared to others.
Additionally, it's valuable to analyze the trend over multiple years to see if the debt-to-equity
ratio is increasing or decreasing. A consistent upward trend could indicate a growing debt
burden, while a downward trend may suggest a focus on reducing debt or improving financial
health.
2. DEBT-TO-ASSET
Debt-to-Asset Ratio
10
9
Axis Title
8
7
6
5
4
3
2
1
0
2018
2019
2020
2021
2022
Axis Title
A debt-to-asset ratio of 0.87 means that for every unit of assets, the company has 0.87 units of
debt. Similarly, for the other years, the ratios indicate the proportion of debt relative to total
assets.
Interpreting the debt-to-asset ratio requires considering the company's industry norms,
historical trends, and comparing it to other companies within the same sector.
A lower debt-to-asset ratio suggests that the company has a lower level of debt relative to its
total assets. It indicates a conservative financial structure and implies that a larger portion of
the company's assets is financed by equity or other non-debt sources.
On the other hand, a higher debt-to-asset ratio implies a higher level of debt relative to total
assets. This suggests that the company relies more heavily on debt financing to fund its
operations and asset acquisitions.
It's important to note that the ideal debt-to-asset ratio can vary depending on the industry and
the company's specific circumstances. Some industries, such as capital-intensive industries or
those with stable cash flows, may tolerate higher debt levels, while others may require lower
debt levels for financial stability.
Analyzing the trend over multiple years is also valuable. A consistent upward trend in the
debt-to-asset ratio may indicate a growing debt burden and potentially higher financial risk.
Conversely, a stable or declining trend may suggest a focus on reducing debt or maintaining a
healthy financial structure.
3. Equity Ratio
Equity Ratio
0.128
Equity Ratio
0.126
0.124
0.122
0.12
0.118
0.116
0.114
2018
2019
2020
2021
2022
Years
An equity ratio of 0.127 means that 12.7% of the company's total assets are financed by
equity. Similarly, for the other years, the ratios indicate the proportion of equity relative to
total assets.
Interpreting the equity ratio can provide insights into the financial structure and risk profile of
a company.
A higher equity ratio indicates a larger proportion of equity financing relative to total assets.
This suggests that the company has a stronger financial position with a significant portion of
its assets financed by equity. A higher equity ratio is generally seen as a positive sign,
indicating lower financial risk and greater financial stability.
On the other hand, a lower equity ratio suggests a smaller proportion of equity financing
relative to total assets. This implies a higher reliance on debt financing and potentially higher
financial risk. A lower equity ratio may indicate that the company has a smaller cushion of
equity to absorb losses or financial difficulties.
Analyzing the trend of the equity ratio over multiple years can provide further insights. If the
ratio is consistently increasing, it indicates a strengthening financial position and greater
reliance on equity financing. Conversely, a declining trend may suggest a reduction in equity
or an increase in debt financing.
4. Interest Coverage Ratio
Interest Coverage Ratio
Interest Coverage Ratio
3.5
3
2.5
2
1.5
1
0.5
0
2018
2019
2020
2021
2022
Years
A ratio of 2.901 in 2018 indicates that the company's earnings were 2.901 times higher than
its interest expenses for that year. Similarly, for the other years, the ratios indicate the number
of times the company's earnings covered its interest payments.
Interpreting the interest coverage ratio requires considering the trend over multiple years and
comparing it to industry benchmarks or peer companies.
Generally, a higher interest coverage ratio indicates a company has a healthier financial
position and is better able to meet its interest obligations. It suggests the company has
sufficient earnings to comfortably cover its interest expenses, reducing the risk of defaulting
on interest payments.
Conversely, a lower interest coverage ratio implies a higher risk that a company may struggle
to meet its interest obligations. If the ratio approaches or falls below 1, it indicates that the
company's earnings are barely sufficient to cover its interest expenses. This raises concerns
about the company's ability to service its debt and may indicate higher financial risk.
Analyzing the trend of the interest coverage ratio is important. If the ratio is consistently
improving over time, it suggests that the company's earnings are growing at a faster pace than
its interest expenses, which is generally seen as positive. However, a declining trend could
indicate a worsening financial situation or increased interest expenses relative to earnings.
DIVIDEND POLICY RATIO
1. Dividend Payout Ratio
Dividend Payout Ratio
Dividend Payout Ratio
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2018
2019
2020
2021
2022
Years
A ratio of 0.223 in 2018 means that the company distributed dividends equivalent to 22.3% of
its earnings for that year. Similarly, for the other years, the ratios indicate the percentage of
earnings paid out as dividends.
Interpreting the dividend payout ratio requires considering the trend over multiple years and
comparing it to industry norms or peer companies.
A higher dividend payout ratio suggests that the company is distributing a larger portion of its
earnings as dividends. This may be seen as positive by income-seeking investors who value
regular dividend income. However, a high payout ratio may also indicate limited reinvestment
in the company's growth or potential financial strain if the company cannot sustain the high
dividend payments.
Conversely, a lower dividend payout ratio indicates that the company retains a larger portion
of its earnings for reinvestment or other uses. This may imply a focus on growth, capital
expenditures, or strengthening the company's financial position. A lower payout ratio can also
provide flexibility for the company to navigate challenging periods.
Analyzing the trend of the dividend payout ratio is important. If the ratio is consistently
increasing, it suggests that the company is paying out a larger proportion of its earnings as
dividends over time. Conversely, a declining trend may indicate a shift towards retaining
more earnings or changes in the company's dividend policy.
It's important to note that the optimal dividend payout ratio can vary across industries and
depends on various factors, including the company's growth prospects, financial health, and
investor expectations.
2. Dividend Yield Ratio
Dividend Yeild Ratio
Dividend Yeild Ratio
0.05
0.045
0.04
0.035
0.03
0.025
0.02
0.015
0.01
0.005
0
2018
2019
2020
2021
2022
Years
A ratio of 0.044 (4.4%) in 2018 means that the company's dividends for that year represented
4.4% of its stock's market price. Similarly, for the other years, the ratios indicate the
percentage of dividend income relative to the stock price.
Interpreting the dividend yield ratio requires considering the trend over multiple years and
comparing it to industry averages or peer companies.
A higher dividend yield ratio suggests a relatively higher return on investment in the form of
dividends. It may be attractive to income-oriented investors seeking regular income from their
investments. However, a high dividend yield ratio can also indicate that the stock price has
declined, potentially reflecting investor concerns or a deteriorating financial position of the
company.
Conversely, a lower dividend yield ratio implies a lower return on investment from dividends
relative to the stock price. This may suggest that the stock is priced at a premium, indicating
market confidence in the company's growth prospects or financial stability.
Analyzing the trend of the dividend yield ratio is important. If the ratio is consistently
increasing, it suggests a higher dividend return compared to the stock price, which may attract
dividend-seeking investors. Conversely, a declining trend may indicate a decrease in dividend
payments relative to the stock price or an increase in the stock price itself.
It's important to note that the dividend yield ratio should not be considered in isolation but in
conjunction with other factors such as the company's financial health, dividend history,
earnings growth, and market conditions. Additionally, comparing the dividend yield ratio with
industry averages and analyzing the company's dividend policy can provide additional
insights into its dividend-paying capacity and investor returns.
3. Dividend Coverage Ratio
Dividend Coverage Ratio
Dividend Coverage Ratio
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018
2019
2020
2021
2022
Years
A ratio of 4.473 in 2018 means that the company's earnings were 4.473 times higher than its
dividend payments for that year. Similarly, for the other years, the ratios indicate the multiple
by which the company's earnings covered its dividend payments.
Interpreting the dividend coverage ratio requires considering the trend over multiple years and
comparing it to industry averages or peer companies.
A higher dividend coverage ratio suggests that the company's earnings are more than
sufficient to cover its dividend payments. This indicates a healthy financial position, as the
company is generating ample earnings to support the distribution of dividends to
shareholders. A higher dividend coverage ratio is generally seen as a positive sign, as it
indicates a lower risk of the company having to reduce or suspend dividend payments.
Conversely, a lower dividend coverage ratio indicates that the company's earnings may be less
able to cover its dividend payments. This may raise concerns about the sustainability of the
dividend, as the company may need to rely on other sources of funds, such as debt or retained
earnings, to maintain or increase dividend payments. A lower dividend coverage ratio may
suggest higher financial risk and potential challenges in meeting future dividend obligations.
Analyzing the trend of the dividend coverage ratio is important. If the ratio is consistently
increasing over time, it indicates an improvement in the company's ability to cover dividend
payments with its earnings. Conversely, a declining trend may suggest a deterioration in the
company's earnings relative to dividend payments or changes in its dividend policy.
4. Retention Ratio
Retention Ratio
0.9
Retention Ratio
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018
2019
2020
2021
2022
Years
A ratio of 0.776 (77.6%) in 2018 means that the company retained 77.6% of its earnings for
reinvestment or other uses, while 22.4% was distributed as dividends. Similarly, for the other
years, the ratios indicate the percentage of earnings retained by the company.
Interpreting the retention ratio requires considering the trend over multiple years and
comparing it to industry norms or peer companies.
A higher retention ratio suggests that the company is retaining a larger portion of its earnings
for internal reinvestment. This indicates a focus on growth, as the retained earnings can be
used for research and development, acquisitions, expanding operations, or reducing debt. A
higher retention ratio implies that the company is reinvesting in itself rather than distributing
profits to shareholders in the form of dividends.
Conversely, a lower retention ratio indicates a larger proportion of earnings being paid out as
dividends. This may reflect a company's commitment to providing regular dividend income to
shareholders or the absence of significant reinvestment opportunities. A lower retention ratio
can also imply that the company is relying more on external financing, such as debt or equity
issuance, for growth and expansion.
Analyzing the trend of the retention ratio is important. If the ratio is consistently increasing, it
suggests that the company is retaining a higher percentage of earnings over time, indicating a
stronger focus on internal growth and investment. Conversely, a declining trend may suggest
a shift towards higher dividend payments or reduced reinvestment opportunities.
It's important to note that the optimal retention ratio can vary across industries and depends on
various factors, including the company's growth prospects, financial health, and capital
requirements. Some industries may require higher reinvestment ratios due to the need for
continuous research and development or substantial capital expenditures.
SUGGESTIONS (Regarding few ratios)
1. For EQUITY RATIOS:
To make future suggestions, it's important to consider the context and specific goals of the
company. However, here are some general suggestions based on the provided data:
1. Maintain a stable equity position: Since the equity ratio has remained relatively steady over
the years, it suggests that the company has been maintaining a consistent level of equity in its
capital structure. Continuing this trend can provide stability and confidence to investors.
2. Monitor and manage debt levels: While the data provided focuses on equity ratio, it's
essential to also keep an eye on the company's debt levels. Managing debt effectively can
contribute to maintaining a healthy equity ratio. Ensure that the company's debt-to-equity
ratio remains within acceptable limits and doesn't increase significantly.
3. Evaluate profitability and growth opportunities: The equity ratio alone doesn't provide a
complete picture of a company's financial health. It's important to consider profitability and
growth prospects. Assess the company's ability to generate profits and explore opportunities
for sustainable growth to strengthen the equity position.
2. INTEREST COVERAGE RATIO::
Based on this trend, there are a few suggestions for the future:
1. Strengthen Financial Position: As the interest coverage ratio has been increasing, it
indicates that the company's financial position has improved. To continue this positive trend,
it is advisable to focus on maintaining a strong financial position by effectively managing
costs, improving operational efficiency, and optimizing revenue streams.
2. Monitor Debt Levels: While a higher interest coverage ratio is positive, it's important to
monitor debt levels. Excessive debt can increase interest expenses and put a strain on the
interest coverage ratio. Consider prudent debt management strategies, such as refinancing at
lower interest rates or reducing debt levels to ensure sustainable financial health.
3. Diversify Revenue Streams: Relying heavily on a single revenue source can increase the
risk of fluctuations in earnings. To further enhance the interest coverage ratio, consider
diversifying revenue streams by exploring new markets, expanding product or service
offerings, or identifying additional sources of income. This can provide a buffer against
potential downturns in specific sectors or markets.
4. Conduct Regular Financial Analysis: It is essential to regularly analyze the company's
financial statements and performance metrics, including the interest coverage ratio. This will
help identify any unfavorable trends or warning signs at an early stage, allowing for timely
corrective actions to maintain a healthy interest coverage ratio.
3. DIVIDEND YIELD RATIO:
Future suggestions would depend on various factors and should be tailored to the specific
company or investment portfolio. However, here are some general suggestions:
1. Conduct in-depth research: Gather more data and conduct thorough research on the
company's financial health, profitability, and dividend policies. This will provide a clearer
picture of the company's ability to sustain and potentially increase dividend payouts.
2. Analyze industry trends: Assess the dividend yield ratios of other companies within the
same industry to determine whether the observed fluctuations are consistent with broader
market trends or specific to the company in question.
3. Consider long-term stability: Dividend yield ratios are just one aspect of evaluating an
investment. Consider other factors such as the company's growth potential, competitive
advantages, and overall financial stability when making investment decisions.
4. Monitor economic conditions: Keep an eye on macroeconomic factors that could impact
dividend payments, such as interest rates, inflation, and overall market conditions. These
factors can influence companies' ability to maintain or increase dividend payouts.
5. Diversify your portfolio: Instead of relying solely on dividend-paying stocks, consider
diversifying your investment portfolio across different asset classes and sectors. This can help
mitigate risks and provide a more balanced return.
REFRENCES
EMIRATESNBD.AE Interactive Stock Chart | Emirates NBD Bank PJSC Stock - Yahoo Finance..
EMIRATES: Emirates NBD Bank PJSC Stock Price Quote - DFM - Bloomberg..
Annual Reports and Financial Statements | Emirates NBD..