The Analysis of Thai commercial Bank’s Financial Statement During the Year 1986-1990.

Abstract

The analysis on commercial bank’s financial statements in 1986-1990 is done to study the trend in commercial bank’s (CB) incomes, capital structures, deposits, credits, total assets, market shares, factors affecting earning per share ( EPS) and projections on EPS during 1991-1995. Besides, the commercial bank ratio analysis of liquidity, capital adequacy and profitability of CB. The data are gathered from balance sheets and income statements in 1986-1990 of 15 CBs which are registered in the Stock Exchange of Thailand (SET). The data analysis is done by using specifically the CB ratio analysis statistic methods such as Simple, Multiple Regression and Weighted Regression under the assumption that the incomes effected from financial deregulation have affected CBs’ EPS in the most extreme. The EPS calculated in the analysis are used as indications of the trend of CBs’ incomes, showing the increasing rate annually until 1990 with a 40% increase. Capital structure analysis comprises cost of public funds (deposits) averaged at 6-8% p.a., cost of borrowings averaged at 5% p.a. and weighted average cost of funds at 7% p.a. During 1987-1990, deposits and loans were increased by 17.5%-26.7% and 20.8-33.5% respectively while borrowing funds and total assets were projected to rise by 0.78-40.3% and 19.7-28.4% respectively. Market shares study shows that the market shares in 4 dimensions (loans, deposits, borrowings and assets) of large, medium and small banks were 67:26:7 respectively. Or in other words, large banks’ market shares were twice as large as the combined market shares of both medium and small banks. Analysis of factors affecting EPS projection indicates that income derived from financial deregulation has an effect on EPS the most and thus, this assumption is accepted. Moreover projected EPS for 1991-1995 by weighted value method are 35.34, 39.54, 43.74, 47.91 an 52.15 baht respectively. As for the analysis of capital adequacy, liquidity and profitability for 15 CBs in the past 5 year, it shows a satisfactory result in CBs’ stability and well-balanced in their growths with the large banks as the leaders who are capable of generation the most benefits from using total assets and controlling the expenditures better than medium an small banks. With this, all CBs in the whole system will grow respondingly to the development of Thai and global economy. All these analysis may be used as tools in decision-making of investment in CBs’ stocks in the SET.