Chapter 1

Introduction

1
1.1 Background of the Study
Banks play the most important role in the economy. Banks collect money from the
individuals and lend them to others. Now banks offer the widest range of financial
services and perform lots of financial functions. Thus banks have proven that they are the
key factor for the business and economy as well.
Sonali Bank Limited is the largest banking institution in Bangladesh, dynamic in actions,
honest in dealings, just in judgment, fair in approaches and devoted to high quality
service to customers and thereby contribute to the growth of GDP of the country
throughout stimulating trade and commerce, boosting up export, poverty alleviation,
raising living standard of limited income group and overall sustainable socio-economic
development in the country.
To achieve the aforesaid objectives of the Bank, different banking activities must play an
active role to provide the financial assistance to the customer who also helps them by
providing them with management assistance when needed. Sonali Bank Limited has
played this role with their experiences in the banking sector where the others are not
merely performed.
The internship report comprises a brief study on the Sonali Bank Limited during three
months internship. The report is distributed in many parts according to nature and
requirement of organization and according to the instructions of supervisor of report.

1.2 Statement of the Research Problem

Actually I am going to learn about the performance analysis of Sonali Bank Limited.
The main business of banking is to provide credit to the borrowers and take deposit from
customers. Banks play the most important role for development of a country as well as to
provide large scale of employment opportunities. A functionary of financial system of a
country. Sonali Bank Limited is the largest banks which play that role. It also plays a
role in the economic development of a nation through saving and credit. It diverts and
allocation of the funds in all over country which are aimed to develop countrys
economy and adds to national wealth. The researcher wants to evaluate the performance
of the Sonali Bank Limited. The performance of the Sonali Bank Limited is satisfactory
level or not. This is the main view

2
1.3 Significance of the Study
The main reason of this internship report study is that to complete a part of mission of
my career. Because every student to meet the extreme challenges. It is also known to all
of that than is no alternative of practical knowledge and the practical knowledge are
much more durable and useful than the theoretical knowledge. This study will help me to
get a tree picture of practical business in the world.

1.4 Rationale of the Study

Bangladesh is one of the underdeveloped countries of the world. However, the country
has many opportunities for massive improvement. In an economy like this, banking
sector can play a vital role as an intermediary, which can mobilize the excess fund of
surplus sectors to provide the necessary finance to those sectors, which need funds to
grow. Thus, banks can establish a sound base for the development of the country.

Here I got the clue to work on. I had a quest to know how a private bank has linked its
motto with the ever increasing pressure of betters operation for new challenges. I wanted
to investigate the pillars based on which the bank is standing and the key performance
indicators of the bank.

1.5 Objectives of the Study

The objective of the study is to gather practice of all knowledge regarding business
sector and operations. Theory classes of BBA provide us theories regarding business
sector and practical orientation gives us the chance of view those systems and their
operations. More precisely we can identify those objectives:
To evaluate the financial performance of Sonali Bank Limited.
To gather the practical experience base on the theoretical knowledge.
To understand and analyze the financial strength of Sonali Bank Limited.
To observe the function of foreign exchange department.
To learn and acquainted to fulfill the academic purpose.

3
1.6 Scope of the Study:
As I was an intern, my scope was limited and restricted for some purpose. I had
maintained some official formality for the collection of data of my report. This study will
give a clear idea about the Performance Analysis of Sonali Bank Limited as well as the
different section of different products and services of Sonali Bank Limited. At last the
financial position of the bank in the banking industry based on its last couple of years
performance.
Information availability.
Good communication system.
Have a wide area of gaining knowledge.
Good working environment.

1.7 Limitations of the report:

Any research work needs high degree of involvement regarding collection of
information, creation of data base, literature review and analysis of data. While doing so,
many limitations arise even though we always put our best effort to avoid them. In
conducting the present study the following limitation has been faced.

The personnel of the organization did not want to disclose the classified
information to the outsiders.
Due to lack of experience, there is a chance of having some mistake in the report
though best effort has been applied to avoid any kind of mistake.
I have faced major limitation in the financial projection as my estimate was rather
informative base than of actual one.
Time was not sufficient to make an in depth study on such issue.

4
 Chapter 2
Literature Review

5
2.1 Introduction
Because performance represents the aggregation of basic stages of action, from
intention to result (Lebas 1995), we cant spear the result, namely the performance
obtained, of the resources and activities through which it was obtained, of the objectives
to be achieved because a result doesnt mean anything if is analyzed by itself. Moreover,
"If you cant measure, you cant control. If you cant control, you cant manage. If you
cant manage, you cant improve and cant be efficient (Kuegen and Krahn 1999 quoted
by Albu and Albu 2005). Founder of the principles of management, Peter Drucker (1954)
considers that "few things are important to a firm's performance as performance
measurement", which tells us that it could represent a vulnerability for management
today. Performance management includes and precedes performance measurement.

2.2 Literature review

There are several theories on how the concept of performance measurement appeared.
Morgan (2004) believes that modern performance measurement appeared in Venice in
the fifteenth century, with the appearance of the do SBL entry accounting. Another view
is that of the authors Johnson and Kaplan (1987) that consider that performance
measurement appeared during the industrial revolution. Either way we can say with fair
certainty that performance management has emerged as the dominant research area in the
early, when academics and practitioners have become interested in the need to measure
performance and measurement consequences (Argyrols 1952, Ridgway 1956).

Interest in management and performance measurement has increased considerably in the

last 20 years (Taticchi 2008). Number of SBL locations on this topic has grown
significantly over the last decade (Beamon 1999, Lohman 2004, Gunasekaran 2004). We
believe that this is mainly due to a fundamental change in business. Furthermore,
performance is not a subject easily addressed. It is clear the need to study and rethink the
concept and in this context to rethink how performance measurement it is done.

6
According to Atkinson 1997 performance measurement should help the economic entity
to understand and assess the value received from suppliers and employees, the value
provided by the stakeholders and the effectiveness of processes implemented in the
economic entity and its strategic properties. Therefore, we can say that performance
measurement plays the role of coordination, monitoring and diagnosis of economic
entity's activities.

Marr distinguishes the following activities in the process of measuring performance: (1)
building a model of performance for each business separately, (2) data collection, (3)
data analysis and interpretation, (4) retrieval and (5) communication information. Such a
definition of performance measurement is more comprehensive than those mentioned
above. Thus, Marr manages to emphasize that performance measurement is a structured
process, focused on results. Another answer to the question "What is performance
evaluation?" is provided by Maria Niculescu in "Global Strategic Diagnostics", where it
considers that "performance measurement is a process that allows you to connect an
abstract concept to empirical indicators" (Niculescu 2005). So, performance
measurement tools are established to be the indicators. The economic literature can
account for dozens of definitions of indicators. Un indicator is an element
or a set of information elements, representative in relation to a concern or an objective,
resulted from tangible measuring or observing a state of a phenomenon or an output
(Boldeanu 2008). Since the performance of an economic entity is influenced by various
factors we consider that the indicators used to assess the performance have to cover all
performance determinants and their influence on performance by highlighting the
quantifiable aspects and also the unquantifiable ones. The measure "financial" or "non-
financial" has not such a great importance and there is no strict rule on the matter.
Relevant criteria are different (strategic relevance, operational efficiency) and can be
met, as appropriate, by the financial indicators and or non-financial (Lorino 2002). The
so-called "non-financial indicators, even if they cant always be expressed in monetary
units, their effect is reflected in other indicators of economic and financial dimension
whose size is easily translated in monetary units. Improving the quality of the entitys
activity is acting on the entitys image (non-financial indicator), but also on the size of
turnover.

7
Currently performance measures should meet the following requirements (Maskell 1992)
to use primarily the non-financial techniques; to vary from one location to another, from
one region to another; to change over time, as entity needs change and to improve
performance, not just monitor performance.

Performance evaluation of an economic entity requires approaching several criteria, such

as industry and economic entity type, managerial and entrepreneurial strategy,
competitive environment, human and material resources available, using a system of
appropriate performance indicators for this purpose (Petrescu 2008).

The management of an economic entity uses indicators to measure, report and improve
entitys performance. The relationship between indicators and management is ensured by
the existence of performance measurement and can be captured as in figure number 1.

The exigencies of communication occurred on the growing number of phenomena that

marked the global economy in recent decades (internationalization and relocation of
business crises and turmoil in financial markets), demand performance measurement to
be made in a comprehensive way by financial and non-financial criteria. Non-financial
criteria take into account the entitys long-term orientation and they derive from aspects
such as social responsibility (Mironiuc 2009).

In the current context of sustainable development, performance evaluation process

should take into account the interests of all parties involved (Kubiak 2003) internal and
external customers, suppliers, partners, investors, society as a whole. Thus, indicators of
the economic entity's performance evaluation that should be included in the set of
indicators indicated by Evans can be divided into the following categories (Paunescu
8
2007) "financial indicators; indicators reflecting the overall performance of an economic
entity; indicators reflecting on the market performance of the entity indicators for quality
of products and services; indicators on customer relationships indicators on human
resources and indicators for social responsibility and ethical behavior."

As we have seen during the literature revised, research to date in order to identify the
appropriate structure of a system for assessing the performance of economic entities have
found that it takes a set of indicators that reflect a balanced picture of entities
performance (Ciobanu 2006) and reflecting the multidimensional nature of performance.
An example is provided by Kaplan and Norton that offer the Balanced Scorecard in
1996, which is a balanced assessment of the economic entity's performance, including
both financial and non-financial indicators. According to Epstein and Manzoni "systems
(models) for measuring performance should include more non-financial indicators to
complement the financial ones in particular with regard to customer perception and
performance of internal processes". For sustainable development of an entity, value
creation cant be seen in strictly financial terms, therefore any strategies that are defined
by entities concerns not only the quantitative aspects (economic-financial) but also
qualitative aspects (social and environmental). Based on these aspects Global Reporting
Initiative proposed a set of performance measures covering the three dimensions of
overall performance, divided into environmental indicators, social indicators and
economic indicators.

2.3 Performance Evaluation:

Performance evaluation of an economic entity requires approaching several criteria, such
as industry and economic entity type managerial and entrepreneurial strategy,
competitive environment, human and material resources available, using a system of
appropriate performance indicators for this purpose. The exigencies of communication
occurred on the growing number of phenomena that marked the global economy in
recent decades, demand performance measurement to be made in a comprehensive way
by financial and nonfinancial criteria. Indicators are measures of performance used by
management to measure, report and improve performance of the economic entity. The
relationship between indicators and management is ensured by the existence of

9
performance measurement systems. Studies to date indicate that economic entities using
balanced performance measurement systems as a key management tool registered
superior performance compared to entities not using such systems. This study attempts to
address the issue of performance evaluation by presenting opinions of different authors
concerning the process of performance measurement and to present, after revising the
literature, the evolution of the performance evaluation systems. We tried to do this
literature review because sustainable development and therefore, globalization require
new standards of performance that exceeds the economic field, both for domestic
companies as well as international ones. So, these standards should be integrated into
corporate strategy development to ensure sustainability of activities undertaken by
harmonizing the economic, social and environmental objectives. To assess the
performance of economic entities it is required that performance evaluation to be done
with a balanced multidimensional system, including both financial ratios and non-
financial indicators in order to reduce the limits of the two categories of indicators.
Performance measurement and management cant be separated performance
management is a philosophy that is supported by performance measurement.
Performance management precedes performance measurement and creates the context
for performance measurement. Key words: performance, performance measurement,
indicators, sustainable development, global performance. JEL Classification Code: G00,
G30.

a) Environmental and Financial Performance Literature

"We review the growing literature relating corporate environmental performance to
financial performance. We seek to identify achievements and limitations of this literature
and to highlight areas for further research. Our primary interest is to assess the adequacy
of the literature in informing corporate managers how, when, and where to make pro-
environment investments that will pay off with financial returns for long-term
shareholders. To do so, we create a conceptual framework that maps the influence of
regulators, SBL health scientists, environmental advocates, consumers, employees, and
other interested parties upon corporate financial returns. Our discussion has relevance to
all parties interested in influencing corporate actions that affect the environment."

10
b) Financial Analysis
Financial analysis is the process of identifying the strengths and weakness of the firm
with the help of accounting information provided in the Profit and Loss Account and
Balance Sheet. It is the process of evaluation of relationship between component parts of
financial statements to obtain a better understanding of the firms position and
performance.

c) Ratio Analysis
Ratio analysis can also be defined as the yard stick that provides a measure of
relationship between two accounting figures. Ratio analysis can be used both in the trend
or dynamic analysis and statistical analysis. Financial ratio analysis is the calculation and
comparison of ratios which are derived from the information in a companys financial
condition, its operations and attractiveness as an investment. Financial ratios are
calculated from one or more pieces of information from a companys financial
statements. For example, the gross margin is the gross profit from operations divided
by the total sales or revenues of a company, expressed in percentage terms. In solution a
financial ratio is a useless piece of information. In context, however a financial ratio can
give a financial analyst an excellent picture of a companys situation
and the trends that are developing

11
Chapter 3
Methodology

12
3.1 Methodology
I have designed this report as an expletory research paper. Here I have discussed the
general banking system of Sonali Bank Limited and critically analyze the banking
procedure with the standard one as per theoretical framework. For this purpose I use my
personal observation during my internship program. Through conversation with the
different level officers of the Bank, I also gather knowledge about the general banking
system. For theoretical framework, I go through a number of credit related books,
financial management books, business communication book, foreign exchange manuals,
Bangladesh Bank guidelines.
For smooth and accurate study everyone has to follow some rules and regulations. The
study inputs were collected from two sources:

3.1.1 Sources of Data

For collecting the required data, I have used both primary and secondary sources of data.
These are given below:

Primary Data Sources

Practical deskwork
Direct observation of daily activities
Survey of Questionnaire

Secondary Data Sources

Operational Manual
Official records of SBL
Different books and periodicals related to service marketing.
SBL Annual Report
Different books and periodicals related to the banking sector.
Web site of SBL

13
3.2 Data Collection Procedure
Both qualitative and quantitative data collection procedure has utilized in this report. The
qualitative data was collected by informal discussion with the officers and employees of
SBL and the quantitative data was collected through survey with a structured
questionnaire. The survey was conducted among the clients of SBL. The secondary data
was collected from the websites, articles, books and newspapers related to the terms of
the report.

3.2.1 Sampling plan

Population:
All the customer of Sonali Bank Limited, Sundargonj Branch.
Sample element:
The individual customer random of Sonali Bank Limited SBL.
Sample frame:
No well structured sample frame was found-50.
Sampling procedure:
Non-probability convenience sampling procedure is used in the survey.
Sample size:
The sample size was 50 customers.

3.2.2 Data analysis and reporting

After collection of entire data, different approaches are widely used to analyze and
organize the data such as qualitative approach. Descriptive statistics (mainly average,
frequency, Percentage) has been applied for analysis. Statistical Package for Social
Science (SPSS) software, SPSS 11.5 & 16.0 was used to find out the result or data
output. MS Word 2007 & MS Excel 2007 have utilized to arrange and present the data.

14
 Chapter 4
Organizational Profile of SBL

15
4.1 A Brief Overview of Sonali Bank Limited
Soon after independence of the country Sonali Bank emerged as the largest and leading
Nationalized Commercial Bank by proclamation of the Banks Nationalization Order
1972 (Presidential Order-26) liquidating the then National Bank of Pakistan, Premier
Bank and Bank of Bhwalpur. As a fully state owned institution, the bank had been
discharging its nation-building responsibilities by undertaking government entrusted
different socio-economic schemes as well as money market activities of its own volition,
covering all spheres of the economy.

The bank has been converted to a SBL Limited Company with 100% ownership of the
government and started functioning as Sonali Bank Limited from November 15, 2007
taking over all assets, liabilities and business of Sonali Bank. After corporatization, the
management of the bank has been given required autonomy to make the bank
competitive & to run its business effectively.

Sonali Bank Limited is governed by a Board of Directors consisting of 11 (Eleven)

members. The Bank is headed by the Managing Director & CEO, who is a well-known
Banker and a reputed professional. The corporate head quarter of the bank is located at
Motijheel, Dhaka, Bangladesh, the main commercial center of the capital.

Sonali Bank is a state-owned commercial bank in Bangladesh. It is the largest bank of

the country. A fully state-owned enterprise, the bank has been discharging its nation-
building responsibilities by undertaking government entrusted different socio-economic
schemes as well as money market activities of its own volition, covering all spheres of
the economy. Sonali Bank Limited singularly enjoys the prestige of being the agent of
the Central Bank of Bangladesh in such places where the guardian of the money market
has chosen not to act by itself.
Sonali Bank was established in 1972 under the Bangladesh Banks (Nationalization)
Order, through the amalgamation and nationalization of the branches of National Bank of
Pakistan, Bank of Bhowalpur and Premier Bank branches located in East Pakistan until
the 1971 Bangladesh Liberation War. When it was established, Sonali Bank had a paid
up capital of 30 million taka. In 2001, its authorized and paid up capital were Tk. 10

16
billion and Tk. 3.272 billion respectively. The bank's reserve funds were Tk. 60 million
in 1979 and Tk. 2.050 billion on 30 June 2000.
The management of Sonali Bank is vested in a 7-member board of directors appointed by
the government. The managing director is the chief executive. He is assisted by a deputy
managing director, six general managers, and other senior executives. The general
managers are in charge of the bank's branches in the headquarters of the seven
administrative divisions of the country namely, Dhaka, Chittagong, Rajshahi, Khulna,
Sylhet , Rangpur and Barisal. The bank has 32 departments at its head office including
a training institute in Dhaka. On 30 June 2000, the total number of employees of the
bank was 26,085.

4.2 Role of Sonali Bank Limited in the National Economy

Economy and Banking industry go together and are inseparable. Sonali Bank Limited
has been playing an important role in the economic development of the country. As
many as 26,085 people are in the employment of the Bank as on December 31, 2008.
Besides Sonali Bank Limited has generated employments for hundreds of people in the
projects and industries established under finance. The Bank has been financing the trade
and commerce of the country since inception of the Bank in 1997. We have handled a
volume of countries exports and imports. The deposits our Bank mobilized through the
outlets of branches helped in the formation of capital in the country. Our lending to
borrower reached Tk. 23163.18 million as on June 30, 2009. It has contributed to the
industrialization and improvement of trade and commerce of the country which
ultimately accelerated economic growth and national welfare through multiplying effect.
We have collected VAT and tax on interest/ profit earning of customers of the Bank. For
relief and rehabilitation of natural calamity-hit people of the country in 2007 the bank
has donated a denoted amount of money.

17
4.3 Corporate Profile of Sonali Bank Limited

Name of the Company : Sonali Bank Limited

Chairman : Quazi Baharul Islam
CEO and Managing Director : Md. Humayun Kabir
Company Secretary : Zaheed Hossain
Legal Status : Public Limited Company
Genesis : Emerged as Nationalized Commercial Bank in 1972,
following the Bangladesh Bank (Nationalization)
Order No. 1972(PO No.26 of 1972)
Date of Incorporation : 03 June, 2007
Date of Vendor's Agreement : 15 November, 2007
Registered Office : 35-42, 44 Motijheel Commercial Area, Dhaka,
Bangladesh
Authorized Capital : Taka 10.00 billion
Paid-up Capital : Taka 09.00 billion
Number of Employee : 21,839
Number of Branches :1216
Phone-PABX : 9550426-31, 33, 34, 9552924
FAX : 88-02-9561410, 9552007
SWIFT : BSONBDDH
Website : www.sonalibank.com.bd
E-mail : itd@sonalibank.com.bd
Logo:

18
4.4 Vision

Socially committed leading banking institution with global presence.

4.5 Mission
Dedicated to extend a whole range of quality products that support divergent
needs of people aiming at enriching their lives, creating value for the
stakeholders and contributing towards socio-economic development of the
country.

4.6 Nature of Business

The Principle activities of the bank include providing of all kinds of commercial banking
services to its customers. The activities can be classified in the following ways:
Corporate Banking.
Project Financing.
SME Finance.
Consumer Credit.
International Trade.
Trade Finance.
Loan Syndication.
Foreign Exchange Dealing.
Rural and Micro Credit.
NGO- Linkage Loan.
Investment.
Government Treasury Function.
Money Market Operation.
Capital Market Operation.
Remittance.

19
 4.7 Organogram

Board of Directors

CEO & Managing Director

Deputy Managing Director-1 Deputy Managing Director-2 Deputy Managing Director-3

General Managers General Managers

At Head Office - 6 Field GM Office at Divions-7

Deputy General Managers Deputy General Managers

At Divisional At Field Office
Head of Head Office (GMO, PO and Corp. Br.)

Assistant General Managers Assistant General Managers

At Head Office At Field Office

Other Executive SEO, EO, SO Other Executive SEO, EO, SO

Officer at Head Office Officer at Field Office

Other Staffs at Head Office Other Staffs at Field Office

Figure: Organogram of Sonali Bank Limited (position wise)

20
4.8 Core Strengths
Transparent and Quick Decision Making.
Efficient Team of Performer.
Satisfied Customers.
Internal Control.
Skilled Risk Management.
Diversification.

4.9 Core Competencies

Knowledge
Experience & Expertise.
Customer Orientation/ Focus.
Transparency.
Determination.
Zeal for Improvement.
Reliability.

4.10 Ethical Principles

Sonali Bank Limited believes that it will become a leading bank in the government
sector. They believe that their aims and objectives can only be realized fully and
sustained overtime by faithfulness to ethics that cannot always be built into sets of rules
and regulations. In this belief in ethics that motivates the bank in its dealings with
customer, regulators and employees.
4.11 Commitment to Clients
Sonali Bank Limited has trying to concentrate on modern banking through continuous
using modern technology. We also trying to help more to customer by providing various
savings schemes like as EDS, MES and DBS etc. Our commitments to the clients are the
following:
Provide service with high degree of professionalism & continuous use of modern
technology through proper use of young generation officers.
Create long-term relationship based on mutual trust with customers.
Share customers values & beliefs.
21
 Provide product and service at competitive pricing.
Ensure safety and security of customers valuables in trust with us.

4.12 Corporate Social Responsibility(CSR)

Sonali Bank Limited (SBL) has been rendering various services for attaining greater
social goals and objectives. For this process, we aim to contribute towards sustainable
development of the society as a whole and fulfillment of corporate social obligation in
particular. To reinforce CSR activities, the bank has undertaken fresh initiatives in line
with Bangladesh Bank guidelines in the areas of social services, empowerment of
women and poor, sports & culture, banking for the disadvantaged groups, disaster &
relief activities.

Social Services:
SBL has been rendering social services through distribution of various allowances to the
Freedom Fighters, Widows, Oldage citizens, vulnerable groups, Disabled peoples etc.
as per laid down criteria of the government. Besides, the bank has been disbursing
pension of govt. employees, monthly salary of teachers, and govt. and semi govt.
officials without charges.

Empowerment of women and poor:

SBL has been providing wholesale credit facilities to different micro credit institution
who are in turn lending amongst the women and poor people in different Income
Generating Activities (IGA).

Sports and Cultural Activities:

Sonali Bank Limited has a tradition of patronizing and sponsoring sports and cultural
activities at home and abroad. In 2007, Sonali Bank Limited became Champion in the
Victory Day Hockey Tournament and Runners up in the Office Hockey League, Dhaka.

22
Banking service for the Disadvantaged Groups:
With 1182 branches all over Bangladesh SBL could reach the banking services to the
disadvantaged groups with the aim to encourage them in mobilization of their hard
earned savings and creation for them investment opportunities.
Employee welfare:
SBL offers annual stipends and scholarships to the brilliant children of the employees of
the bank.
Disaster Relief:
SBL always stands beside the helpless people at the times of natural calamities and
extends helping hands to the sufferers. SBL donated Tk. 10.5 million to help the victims
of cyclone Sidor to the relief fund of the Chief Advisor. Sonali Bank Limited has
collected funds from Bangladeshis residing abroad and remitted over Tk. 150 million at
free of charge through Sonali Exchange Company (SEC), USA and Sonali Bank (UK)
Limited. SBL has also donated to establish a Cancer Hospital in Dhaka. It has helped a
number of Foundations and Organizations for raising funds through lottery and other
means.

Future Plan:
SBL will continue to patronize sports and culture at home and abroad. Arrangements will
be made for rendering better social services to the community apart from core banking
activities. Specific action plans will be initiated to expand CSR programs in line with the
guidelines of Bangladesh Bank and Securities & Exchange Commission (SEC).

23
 Chapter 5
Findings and Analysis

24
5.1 Personal Banking
Sonali Bank Limited extends all the major personal banking facilities and services to its
customers with its skilled manpower and largest network of around 1187 branches
covering all the urban and remote rural areas of Bangladesh. Sonali Bank Limited
provides Local & Foreign Remittance in quickest possible time. Foreign remittance is
available in both Taka cash. & Taka draft.

1. Transfer of fund from one branch to another by Demand Draft Savings A/C
Mail Transfer Daily Profit A/C - Telegraphic Transfer FDR A/C.
2. Transfer of fund on Standing Instruction Arrangement (Trade Finance).
3. Collection of cheques through clearing house/beyond Clearing House.
4. Issuance of payment Order/Call Deposit.
5. Locker facilities for safe keeping of valuables.
6. Corporate Client Services with computerized system at selective branches.

5.2 Rural Credit

Bangladesh is primarily an agricultural country. A major portion of her population (
about 85%) live in the rural areas. About 75% of the active rural populations depend on
agriculture as the main source of their livelihood. Agriculture contributes about 22% to
the GDP. Majority of the farmers are either small or marginal. So Credit plays a
paramount role to augment the capital base to support agriculture production. With this
end in view. Sonali Bank Limited the largest state owned commercial bank has been
playing a vital role in the socio-economic development & poverty alleviation since 1973.
Keeping in view that Credit is one of the many inputs that complete the cycle of
agricultural production Sonali Bank extending rural credit through 1182 branches over
the country.

Sonali Bank Limited introduced indirect rural credit in 1973 through the then IRDP
(Now BRDB) there after continuing lending in the following programs:

25
01)Crop Loan Special Agricultural Credit Program:
As per Government decision this program was introduced in 1977 to increase crop
production (credit to subsistence and marginal farmers as well as share-croppers for
raising seasonal crops). Now this program is continuing through 707 branches among the
farmers of 1639 unions. Recently Sonali Bank Limited introduced Revolving Crop
Credit Limit System from one branch of each district.

02)Special Investment Program:

This program was introduced in 1993 for creating self employment by establishing small
& medium farms (Poultry, Dairy & Fishery) through bank finance. Under this program
credit is extended through 236 selected branches over the country. Maximum ceiling of
loan is Tk. 5.00 Lac.

03) Farming & off farming program:

This program was introduced in 1994 to involve unemployed rural people in income
generating activities (Poultry, Dairy, Fishery, Horticulture, Nursery, Beef fattening) by
establishing small & medium farms through bank finance. Credit is extended through all
branches over the country. Maximum ceiling of loan is Tk.15.00 Lac.

04)Krishi Khamar Rin Karmasuchi (Project):

This program was introduced is 1993 for creating new employment, increase national
income & Socio economic development by establishing medium & big project (Poultry,
Dairy & Fishery) through bank finance.

05) Pond Fisheries Credit Program

This program was designed to extend bank credit for pisciculture in derelict
ponds/Tanks/water bodies in 1977 Credit is extended through 200 branches over the
country. Maximum ceiling of loan is Tk.5.00 Lac.

06) Fertilizer Dealers Credit Program:

This program was introduced to extend bank credit among the approved fertilizer dealers
operating at primary distribution point of BADC for lifting their quota of Fertilizer from
BADC for ultimate distribution among the farmers in 1981.

07) Sugarcane Production loan Program in Mill Zone Area:

This program was introduced in 1975 to increase sugar production. Under this program
credit is extended to 11 (eleven) sugar mills for ultimate disbursement among their
affiliated farmers.

08) Social A forestation Program: This program was introduced in 2004 to increase
forestation and to reduce greenhouse effect. Credit is extended through all branches over
the country. Maximum ceiling of this program is Taka 5.00 lac.

26
5.3 International Banking
Sonali Bank Limited expertise in International Banking has a record of in-house growth
over more than half a century. Its pioneer role in handling foreign trade and foreign
exchange transactions ever before independence of the country still remains
unchallenged. With wide network of branches at home and also a large number of
correspondent banks world-wide it is singularly handling the largest volume of export-
import business including home-bound remittances.

Products & Services:

Export Credit (Pre-shipment & Post shipment)
Facilitating Supplier's Credit
LC (Letters of Credit)
Guarantees in Foreign Currency
- Bid Bond
- Performance Guarantee
- Advance Payment Guarantee.
Bill Purchasing/Discounting
Remittance, collection, purchases & sales of Foreign Currency & Travellers
Cheques.
NRAT (Non-Resident Account in Taka)
NFCD A/C (Non-Resident Foreign Currency Deposit)
RFCD A/C (Resident Foreign Currency Deposit)
Convertible and Non-convertible Taka Account
Forward contracts
Correspondent Banking Relations
Import Finance:
Sonali Bank Limited supports its customers by providing facilities throughout the import
process to ensure smooth running of their business. The facilities are:
a. Import Letter of Credit.
b. Post Import Financing (LIM,LTR etc).
c. Import collection services & Shipping Guarantees.
Interest Rate: 12% to 14%

Export Finance:
Sonali Bank Limited offers extra cover to its customers for whole export process to
speed up receipt of proceeds. The facilities are:

27
a. Export Letters of Credit advising.
b. Pre-shipment Export Financing.
c. Export documents negotiation.
d. Letter of Credit confirmation.
Interest Rate: 7% + 1% service charge

The comparative position of foreign exchange business for the year 2014 and 2015.
(Tk. in Crore)
Sl. No. Particulars 2014 2015
1. Total Import 15146.51 7649.68
2. Total Export 7938.98 7804.59
3. Inward Remittance (Including WES) 10344.48 9217.83
4. Outward Remittance (Including WES) 1274.29 1232.28
Total 34704.26 25904.38

28
5.4 SME Banking
To reduce poverty within 2015 Sonali Bank Ltd. Has start a service which is SME loan.
By offering this product Sonali Bank Ltd. Helps government to increase job opportunity
as well as increase GDP.

Objectives of SME Loan-

Help government to remove poverty.
Earn much currency by Export Import business to government.
Helps woman entrepreneur to be self-independent by providing loan.
Industrialization with employment opportunity.

Requirements for getting Loan-

Minimum 2 years business experience.
Entrepreneur must be educated & healthy and age must be within 18-60.
Women entrepreneur will get first preference.
Entrepreneur must be Bangladeshi citizen.

Types of product for getting SME loan-

Export products-
1. Fringing Plant for fish.
2. Tanaree business.
3. Export furniture.
Import products-
1. Xining Mill.
2. Garments accessories.
3. Washing plant, Packaging.
Loan Limit-
Depends on business type loan can be 50000-100000000

Duration and Interest rate-

Duration depends on business type. But in case of current assets 1 year and in
case of term loan 3-7 years. Interest rate is 13%.

29
5.5 Online Banking
1.Branch Computerization: 267 branches are on live operation. Out of 1182 branches
at home, 1169 branches have already been entered in the automation network.

2.Foreign Remittance : Bank's own in-house software "Remittance Management

System" (RMS), having, among others, the feature of paying foreign remittance instantly
over the counter is being implemented at all branches. This web based software provides
digital services to the expatriates through its unique advantage of sending confirmation
message to the mobile phone of the remitter/beneficiary.

3. ATM: Sonali Bank Limited is a member of Q-Cash ATM network. At present the
bank has 12 ATM booths. Establishment of 43 more ATM is on. Sonali Bank's ATM
cardholders enjoy the access to the ATMs and POS of Dutch Bangla Bank Ltd. and Brac
Bank Ltd. besides those of Q-Cash consortium. Sonali Bank recently launched Credit
Card.
Features:
Sonali Bank Ready Cash Card is a Debit Card.
Cardholder can easily pay utility bills like - Water, Telephone, Gas etc.
It is easy to remit funds among the participating branches of the Bank.
Transaction beyond working hours.
It is a riskless Cash Carrying facility.
Cashless purchase can be made form specific merchandise points.
Only computerized Branches of Dhaka City will deal Ready Cash Card.
Branches of other Cities and Towns will introduce Sonali Bank Ready Cash Card
in due course.
4.Online and SMS Banking: At present 34 branches of Sonali Banks are included in the
Online Any Branch Banking (ABB) network. The bank is seriously working on
connecting all branches in the Real-time Online Banking network gradually. Branches
having ABB facility are also rendering SMS banking services.

5. SWIFT: SWIFT facilities are available in Banks Head Office and in 21 designated
branches.

5.6 Consumer Credit:

With the steady development of the industrial and the service sectors in Bangladesh, the
level of personal consumption has recorded progressive growth. To cater to the growing
demand for consumer durables, Sonali Bank Limited has launched the "Consumers
Credit Scheme" with the following features:
30
Eligibility
Loan Limit
Debt-equity ratio
Interest rate(w.e.f. 01, :14.00%
September 2009)
Mode of repayment
Period of loan
Security
Designated Branches
:Permanent employees with 5 years service in Govt.,
Semi-Govt. organization and Autonomous & recognized
bodies.
: Maximum Tk. 1.00 lac.
:75:25
: Monthly installment.
: Maximum 3 years.
: a) Hypothecation of consumer goods to be purchased.
b) Letter of guarantee from the employer.
c) No objection certificate & salary certificate from
employer.
d) Lien on provident fund/gratuity.
: All district branches and the corporate branches.

5.7 Loan Facility for Diagonstic Center:

Sonali Bank Limited has launched a new loan scheme for "Diagnostic Center" to
promote medical facilities. The salient features of the scheme are as follows:
Nature of loan : Cash Credit (Hypothecation).
Debt-equity ratio : 60:40
Interest rate(w.e.f. 01, September : 14.00%
2009)
Primary Security : Stock of Chemicals, X-ray papers, Injection
Syringe, Medicine etc.
Collateral Security : Collateral security twice the value of the loan is
required.
Period of Loan : One Year.

31
5.8 Special Small Credit Scheme:
Sonali Bank Limited has launched a loan scheme for "Teachers and Employees" to
enhance their living standards. The salient features of the scheme are as follows:
Eligibility :Permanent employees and teachers with 3years service in
Govt., Semi-Govt. organization and Autonomous
&recognized bodies.
Loan Limit : Tk.20, 000 to Tk. 9.00 lacs.
Margin : Maximum 20% of loan limit.
Interest rate(w.e.f. 01, :12.00%
September 2009)
Mode of repayment : Monthly installment.
Period of loan : Maximum 3 years.
Products purchased by Personal computer, printer, scanner.
the loan Sewing and embroidery machine.
Refrigerator, freezer, television, furniture and electronic
fan.
Motor cycle or by cycle.
Solar power or bio-gas plant.
Nursery or vegetable firm.
Poultry, dairy, fishery plant.
Marketing of agricultural products.
Designated Branches : All district branches and the corporate branches.

5.9 Foreign Employment Credit Scheme:

Sonali Bank Limited has launched a loan scheme for "Foreign employment" to bear their
air heir, commission and charges for foreign employment agency. The salient features of
the scheme are as follows:
Eligibility : Bangladeshi permanent employees in foreign countries
who has work permit and visa.
Loan Limit : Maximum Tk. 3.00 lacs.
Interest rate(w.e.f. 01, :12.00%
September 2009)
Mode of repayment : Monthly installment.
Period of loan : 3 months grace period and Maximum 3 years.
Designated Branches : All district branches and the corporate branches.

32
 5.10 Performance at a glance
(Tk. in crore)
Year 2015 2014 2013 2012 2011
Total Income 2662.10 1429.02 2313.17 1986.39 1575.84
Total Expenses 2500.41 1004.32 2012.59 1590.03 1480.59
Total Operating Profit 161.69 424.70 300.58 396.36 95.25
Net Profit/Net Loss 231.11 97.36 (3627.56) 20.80 15.75
Paid-up Capital 900.00 900.00 500.00 327.22 327.22
Reserve Fund 1246.95 1196.28 283.13 303.40 283.40
Deposits 36438.60 32899.72 30230.30 27707.90 25223.39
Advances 23116.66 20634.76 24102.93 22700.96 16828.30
Export 18283.46 17022.42 17814.40 13957.36 12759.28
Import 16420.80 8881.96 8279.60 12984.31 9153.89
No. of Employees:
Officer 11507 11769 12118 12380 12732
Staff 10332 10773 11155 11553 11718
Total 21839 22542 23273 23933 24450
No. of Branches:
Urban 563 562 562 562 490
Rural 619 621 621 621 696
Total 1182 1183 1183 1183 1186

5.11 Common-size Statement (Balance Sheet)

PROPERTY AND ASSETS TAKA %
Cash 20,641,592,198 4.1873929
Cash in hand (including foreign currency) 4,366,813,852 0.8858602
Balance with Bangladesh Bank and its agent Bank 16,274,778,346 3.3015327
Balance with other Banks and financial institutions 9,979,717,359 2.0245046
In Bangladesh 5,265,819,000 1.0682341
Outside Bangladesh 4,713,898,359 0.9562705
Money at call and short notice 250,857,360 0.0508894

33
Investments: 95,093,241,199 19.290797
Government 93,947,843,070 19.058439
Others 1,145,398,129 0.2323577
Loans and Advances 231,166,579,465 46.894895
Loans, Cash Credits, Overdrafts etc. 208,184,384,025 42.232683
Bills purchased& discounted 22,982,195,440 4.6622122
Fixed assets including premises, furniture and fixtures 9,920,927,663 2.0125784
Other assets 125,893,233,074 25.538942
Total Assets 492,946,148,318 100
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks, financial institutions and 545,955,691 0.1107536
agents
Deposit and other accounts 364,385,970,931 73.920036
Current Accounts and other Accounts 98,795,523,389 20.041849
Bills payable 6,642,924,279 1.3475963
Savings Bank Deposits 120,423,161,432 24.429273
Fixed Deposits 138,524,361,831 28.101317
Other Deposits 0 0
Other Liabilities 103,596,507,559 21.015786
Total Liabilities 468,528,434,181 95.046576
Capital/ Shareholder's Equity
Paid up capital 9,000,000,000 1.8257572
Statutory Reserve 3,116,476,533 0.6322144
Other Reserve 9,353,019,515 1.8973715
Surplus in Profit and Loss A/C / Retained Earnings 2,948,218,089 0.5980812
Total Shareholders' Equity 24,417,714,137 4.9534243
Total Liabilities and Shareholders' Equity 492,946,148,318 100

34
5.12 Quantitative Analysis of Sonali Bank Limited:
5.12.1 Liquidity Ratio:
Current Ratio: Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as "working capital ratio". It is a measure of general liquidity and is
most widely used to make the analysis for short term financial position or liquidity of a firm. It is
calculated by dividing the total of the current assets by total of the current liabilities.
The calculation as follows:
Current Ratio= Total Current Assets \ Total Current Liabilities.
The SBLs Current Ratios of last 6 years are like following
Year 2010 2011 2012 2013 2014 2015
Current Ratio 1.11 1.08 0.98 0.68 .90 .88

Table 01 : Current Ratio

Graphical Presentation:
Figure 1: Current Ratio.

Current Ratio
Current Ratio

1.11 1.08
0.98
0.9 0.88
0.68

2007 2008 2009 2010 2011 2012

Interpretation: The ratio is mainly used to give an idea of the company's ability to pay
back its short-term liabilities (debt and payables) with its short-term assets (cash,
inventory, receivables). The higher the current ratio, the more capable the company is of
paying its obligations. The current ratio decreasing from 2010 to 2015 that is 1.11 to .68
and that is not good sign for the organization. After that year 2012 its increasing and its
a good sign for the organization. A high current ratio indicates that a company is able to
meet its short-term obligations but in 2014 its again decreasing. From the analysis we
have seen that SBLs current ratio gradually decreasing.

35
5.13 Analyzing Activity Ratios:
5.13.1 Cost Income Ratio:
Cost Income Ratio=Total operating Expenses/Total Operating Income
Year 2010 2011 2012 2013 2014 2015

Cost Income Ratio 53.36% 45.09% 45.42% 47.20% 51.68% 54.64%

Table-02: Cost Income Ratio

Source: Annual Report of SBL
Graphical Presentation

Cost Income Ratio

60.00% 53.36% 54.64%
51.68%
45.42% 47.20%
50.00% 45.09%

40.00%

30.00%

20.00%

10.00%

0.00%
2007 2008 2009 2010 2011 2012

Figure 2: Cost Income Ratio.

Interpretation:
We know that this ratio measures the operating efficiency of the bank by measuring the
portion if the total operating costs relative to the total operating income of that bank and
the higher the ratio, the lower the operating efficiency. In 2010 the operating cost of SBL
Bank Ltd. is high but after that year 2011 its decreasing and its a good sign for the
organization. Cost income ratio increasing from 2012 to 2015 which is 45.42% to
54.64% So it can be said that the operating efficiency of the SBL Ltd. is not in good
position that is they are not able to minimize their operating cost.

36
5.13.2 Total Asset Turnover Ratio:
The total asset turnover indicates the efficiency with which the firm is able to use all its
assets to generate sales.
Total Asset Turnover= Operating Income/Total Asset
Year 2010 2011 2012 2013 2014 2015
Total Asset Turnover 0.059 0.068 0.064 0.071 .067 .058

Table-03: Total Asset Turnover

Source: Annual Report of SBL
Graphical Presentation:

Total Asset Turnover

0.08 0.071
0.068 0.067
0.07 0.064
0.059 0.058
0.06

0.05

0.04

0.03

0.02

0.01

0
2007 2008 2009 2010 2011 2012

Figure-3: Total Asset Turnovers

Interpretation:
The banks total asset turnover ratio increasing from 2010 to 2014 that is 0.059- 0.067
which means 5.9 to 6.7 times. But in 2014 its decreasing. We know the greater the total
asset turnover; it is more efficient and 4 to 6 times is slandered position but also depends
on industry. From the analysis we have seen that total asset turnover of Sonali Bank Ltd
is in good position.

37
5.14 Analyzing Debt Ratios:
5.14.1 Debt ratio
The debt ratio measures the proportion of total assets provided by the firms creditors.
Debt Ratio = Total Liabilities / Total Assets
Year 2010 2011 2012 2013 2014 2015

Debt Ratio .95 .94 .91 .92 .90 .92

Table-04: Debt Ratio

Source: Annual Report of SBL
Graphical Presentation

Debt Ratio
0.96 0.95
0.95 0.94
0.94
0.93 0.92 0.92
0.92 0.91
0.91 0.9
0.9
0.89
0.88
0.87
2007 2008 2009 2010 2011 2012

Figure-4: Debt Ratio

Interpretation
Debt ratio decreasing from 2010 to 2012 which is 0.95 to 0.91 and its a good sign for the
organization. In 2012 its increasing although in 2014 its decreasing. After that year 2015
the debt ratio increasing .Finally we have seen that debt ratio decreasing from .95 to
0.92. We knows that lower the debt lower the risk. So that is good sign for the
organization.

38
5.14.2 Equity capital ratio
Equity Capital Ratio = Total Shareholders Equity / Total Assets
Year 2010 2011 2012 2013 2014 2015

Equity Capital Ratio .046 .063 .086 .088 .099 .079

Table-05: Equity Capital Ratio

Source: Annual Report of SBL
Graphical Presentation

Equity Capital Ratio

0.12
0.099
0.1 0.086 0.088
0.079
0.08
0.063
0.06 0.046

0.04

0.02

0
2007 2008 2009 2010 2011 2012

Figure-5: Equity Capital Ratio

Interpretation
Equity capital ratio increasing from 2010 to 2015 which is .046 to .099 which means 4.6
to 9.9 times and thats a good sign for the organization. After that year 2015 equity
capital ratio decreasing and its not a good sign for the organization. From the analysis we
have seen that SBLs Equity Capital Ratio gradually increasing except 2015. So the
management of the organization should take proper steps to increase the equity capital.

39
5.15 Analyzing Profitability Ratios:
5.15.1 Investment to Deposit ratio:
Investment to Deposit Ratio=Total investment/Total Deposit

Year 2010 2011 2012 2013 2014 2015

Investment To Deposit Ratio 0.332 0.221 0.379 0.228 .381 .278

Table-06: Investment to Deposit Ratio

Source: Annual Report of SBL
Graphical Presentation:

Investment To Deposit Ratio

0.45
0.379 0.381
0.4
0.332
0.35
0.278
0.3
0.221 0.228
0.25
0.2
0.15
0.1
0.05
0
2007 2008 2009 2010 2011 2012

Figure-6: Investment to Deposit Ratio.

Interpretation:
Investment to deposit ratio shows that which amount of deposit is used to as investment.
From the graphs it has seen that investment to deposit ratio in fluctuating mode. That
means SBL Bank Ltd. depends on deposits than the share capital.

40
5.15.2 Net Profit margin:
Net Profit Margin (NPM After Tax) measures profitability as a percentage of revenues
after consideration of all revenue and expense, including interest expenses, non-operating
items, and income taxes.. The calculation is like-

Net Profit Margin = Net Profit after Tax/ Total Revenue

Year 2010 2011 2012 2013 2014 2015
NPM 0.13 0.28 0.24 0.35 .25 .17

Table 07: NPM

Graphical Presentation.

NPM
0.4 0.35
0.35
0.28
0.3 0.25
0.24
0.25
0.2 0.17
0.13
0.15
0.1
0.05
0
2007 2008 2009 2010 2011 2012

Figure 8: NPM

Interpretation: Net profit margin is one of the most closely followed numbers in
finance. Shareholders look at net profit margin closely because it shows how good a
company is at converting revenue into profits available for shareholders. The Bank net
profit margin in 2010-2011 that is 0.13-0.28 which indicates that profit margin is
increasing day by day and its good situation. Although in 2010 its decreasing but in
2013 Net Profit Margin is increasing which is good sign for the organization. In 2014 to
2015, the profit margin is decreasing and its not good situation.

41
5.15.3 ROA: Return on assets
Measures the amount of profit the company generates as a percentage of the value of its total
assets. Return on assets is the ratio of annual net income to average total assets of a business
during a financial year. It measures efficiency of the business in using its assets to generate net
income. It is a profitability ratio. The calculation as follows:

Return on Assets (ROA) = Net Income / Total Assets

Year 2010 2011 2012 2013 2014 2015

ROA 0.77% 1.95% 1.54% 1.90% 1.69% .99%

Table 8: ROA
Graphical Presentation

ROA
2.50%
1.95% 1.90%
2.00% 1.69%
1.54%
1.50%
0.99%
1.00% 0.77%

0.50%

0.00%
2007 2008 2009 2010 2011 2012

Figure 8: ROA

Comment: The ROA figure gives investors an idea of how effectively the company is
converting the money it has to invest into net income. The banks return on asset
increasing from 2010 to 2011which is 0.77% to 1.95% in the preceding 2 years and its a
good sign for the organization. The higher the ROA number, the better, because the
company is earning more money on less investment. After that it was decreasing (1.54%)
then it was increasing trend (1.90%) that means it has seen it is fluctuating. Afterwards
SBL ROA fall down which is not good sign for the organization.

42
5.15.4 ROE:
Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested.
The calculation of ROE is as follows:

ROE = Net Income / Shareholders Equity

Year 2010 2011 2012 2013 2014 2015

ROE 16.69% 30.86% 17.81% 9.27% 17.13% 12.62%

Table 9: ROE

ROE
35.00% 30.86%
30.00%
25.00%
16.69% 17.81% 17.13%
20.00%
12.62%
15.00%
9.27%
10.00%
5.00%
0.00%
2007 2008 2009 2010 2011 2012

Figure 9:ROE
Comment: Return on equity is an important measure of the profitability of a company.
Higher values are generally favorable meaning that the company is efficient in
generating income on new investment. Return on equity or return on capital is the ratio
of net income of a business during a year to its stockholders' equity during that year. It is
a measure of profitability of stockholders' investments. It shows net income as
percentage of shareholder equity. The banks return on equity increasing from 2010 to
2011 which is 16.69% to 30.86%.in the preceding 2 years and the highest value can be
observed in 2010 and the lowest value can be observed during the 2013, which is not
desirable. The banks return on equity decreasing from 2012 to 2013 that is 17.81% to

43
9.27% and its not a good sign for the organization. After that year 2014 its increasing
and in 2013 its again decreasing.

5.16 Sensitivity Analysis

Particulars Given Data When Interest When Interest
(2015) income is 10% income is 10%
increased decreased
Interest income 17683108223 19451419045 15914797401
Interest paid on deposit (15800026939) (15800026939) (15800026939)
Net Interest income 1883081284 35251445984 31714824340
Investment income 7709248980 7709248980 7709248980
Commission, exchange & brokerage 6889922752 6889922752 6889922752
Other operating income 283667424 283667424 283667424
Total Operating Income (A) 16765920440 50134285140 46597663496
Salary and allowance 7374257001 7374257001 7374257001
Rent, Taxes, Insurance, electricity etc. 410285295 410285295 410285295
Legal expenses 38782497 38782497 38782497
Postage, stamp, telecommunication etc. 70943693 70943693 70943693
Stationary, Printing, Advertisement etc. 138374104 138374104 138374104
Chief Executives Salary and fees 9600000 9600000 9600000
Directors fees 1729240 1729240 1729240
Auditors fees 855000 855000 855000
Charges on loan losses - - -
Depreciation and repair of bank assets 196779376 196779376 196779376
Other Expenses 1213847018 1213847018 1213847018
Total Operating expenses before 9455453224 9455453224 9455453224
amortization
Amortization of Intangible Assets 5000000000 5000000000 5000000000
Total operating expenses (B) 14455453224 14455453224 14455453224
Profit/ (Loss) before provision (C=A-B) 2310467216 35678831916 32142210272
Provision for loan - - -
Provision for diminution in value of (11200000) (11200000) (11200000)
investments
Other provision (55000000) (55000000) (55000000)
Total Provision (D) 66200000 66200000 66200000
Total Profit/(Loss) before taxes (C-D) 2244267216 35612631916 32076010272
Provision for taxation
Current tax (981948567) (981948567) (981948567)
Deferred tax 274447959 274447959 274447959
(707500608) (707500608) (707500608)
Net Profit after Taxation 1536766608 36320132524 32783510880
Earnings Per Share (EPS) 17.08 403.557028 364.261232

44
5.17 Scenario Analysis
Particulars Given Data Best Case Worse Case
(2015)
Interest income 17683108223 19451419045 15914797401
Interest paid on deposit (15800026939) (15010025592) (16590028286)
Net Interest income 1883081284 34461444637 32504825687
Investment income 7709248980 8480173878 6938324082
Commission, exchange & brokerage 6889922752 7578915027 6200930477
Other operating income 283667424 312034166.4 255300681.6
Total Operating Income (A) 16765920440 50832567709 45899380927
Salary and allowance 7374257001 7005544151 7742969851
Rent, Taxes, Insurance, electricity etc. 410285295 389771030.3 430799559.8
Legal expenses 38782497 36843372.15 40721621.85
Postage, stamp, telecommunication etc. 70943693 67396508.35 74490877.65
Stationary, Printing, Advertisement etc. 138374104 131455398.8 145292809.2
Chief Executives Salary and fees 9600000 9120000 10080000
Directors fees 1729240 1642778 1815702
Auditors fees 855000 812250 897750
Charges on loan losses - - -
Depreciation and repair of bank assets 196779376 186940407.2 206618344.8
Other Expenses 1213847018 1153154667 1274539369
Total Operating expenses before 9455453224 8982680563 9928225885
amortization
Amortization of Intangible Assets 5000000000 4750000000 5250000000
Total operating expenses (B) 14455453224 13732680563 15178225885
Profit/ (Loss) before provision (C=A-B) 2310467216 37099887146 30721155042
Provision for loan - - -
Provision for diminution in value of (11200000) (10640000) (11760000)
investments
Other provision (55000000) (52250000) (57750000)
Total Provision (D) 66200000 62890000 69510000
Total Profit/(Loss) before taxes (C-D) 2244267216 37036997146 30651645042
Provision for taxation
Current tax (981948567) (932851138.7) (1031045995)
Deferred tax 274447959 301892754.9 247003163.1
(707500608) (672125577.6) (42875638.4)
Net Profit after Taxation 1536766608 37709122724 31394520680
Earnings Per Share (EPS) 17.08 418.9902525 348.8280076

45
5.18 SWOT Analysis:
STRENGTHS:
Largest commercial bank in Bangladesh.
Widely recognized and strong brand name.
Agent of Bangladesh bank.
Qualified and experienced workforce.
Strong liquidity and financial condition.
Strong networks all over in Bangladesh.

WEAKNESS:
Huge amount of bad/debt loan.
Lack motivation of workers.
Service is not up to the mark.
Online banking is not strong.
Absence of teamwork.
Weak branch controlling and monitoring system.

OPPORTUNITY:
Investment potentiality in Bangladesh.
Increasing demand of customer finance.
Enormous opportunity in foreign remittance section.
By implementing e-commerce and online banking remarkable
Opportunities are created.

THREATS:
High standard Commercial/Foreign bank as well as private bank.
Illegal interference of CBA in banking activities.
Highly qualified and experienced bankers leave the bank a very high percentage.
Cannot take proper action against bad debtor due to political interference.
Increasing percentage of shifting customer loyalty.
Low Interest rate compare to private /Foreign banks.

46
5.19 Findings

From the current ratio Analysis we have seen that SBL has not enough current
assets to pay their short term obligations and the current ratio is decreasing year
by year.
From the analysis we have seen that cost income ratio is increasing. SBL. is not
good position that is they are not able to minimize their operating cost.
From the analysis we have seen that total asset turnover of Sonali Bank Ltd is in
good position. Its total asset turnover ratio increasing day by day.
From the graph we have seen that Debt ratio is decreasing. We knows that lower
the debt lower the risk. So that is good sign for the organization.
From the analysis we have seen that SBLs Equity Capital Ratio gradually
increasing
From the graphs it has seen that investment to deposit ratio in fluctuating mode.
That means SBL depends on deposits than the share capital.
From the graph we have seen that Net profit Margin is increasing which is good
sign for the organization.
From the analysis we have seen that ROA is good position which means SBL
earns more profit from the asset which is good sign for the organization.
Although ROE is increasing from 2010 to 2011 but from that ROE is decreasing
which is not good for the company.
From the analysis we have seen that EPS is decreasing day by day. It indicates
bad sign for SBL, which cant attract investors.

47
 Chapter 6
Conclusion & Recommendations

48
6.1 Conlusion
As a bank Sonali Bank Limited has to do a lot of things for the betterment of the country.
The Bank is strongly positioned in the market and with its core strengths it can match
shareholders expectations and thus raise their wealth in future through ethical banking
and best pricing. Thus, it has to take initiative so that it can fulfill the desire of the govt.
as well as people. It will enhance more public services and build up working teams to
provide the best services to its valuable customers. It must be run in organized way and
discipline must be ensured in all sphere of its performance. Efficient export team, import
team and remittance team must be formed and perform duties properly. More training,
computerization, data collection, market analysis and swiftness in servicing are
essentially required. To do these the recommended suggestions can be used. Although it
is theoretical suggestions, it is not valueless. It has great impact on the banking business
and other sectors of the economy. For this, govt. help is essential and it is expected that
govt. will broaden its hand for implementing the recommendations for the welfare of the
people of Bangladesh.
The current situation of Sonali Bank Limited is satisfactory. But in the age of
competition if the bank does not provide extra ordinary that means superior services than
it will be difficult to continue banking because everybody wants to maintain quality. In
general banking portion Sonali Bank Limited has some problem. On the other hand in
Ratios liquidity, efficiency and leverage ratio of Sonali Bank Limited is satisfactory
which indicates better position of Sonali Bank Limited. But profitability ratio of the bank
is not satisfactory so Sonali Bank Limited should take necessary steps to beat the overall
problem as early as possible. And when Sonali Bank Limited is able to overcome this
type of problem then it would be more structured compared to any other bank operating
local or foreign in Bangladesh.

49
6.2 Recommendations

The Top management of Sonali Bank Limited should be more effective to the
employee then current situation. Because they should take care the branch level
employees benefits, opportunities etc.
The bank has highly skilled employee in the branch level. But the bank should be
able to utilize these employees at appropriate way to take out the banks output.
The website design is need to improve. Therefore, the website should be changed
and can put more information about the bank. The existing design cannot capture
the customers attention.
The human resource division can be more effective. Because this human resource
department should think about the employee benefit much.
In the training institute, the training process should be used latest technology to
provide to the trainee. The bank should give training about the office package,
basic idea on computer and internet.
In the branch level when employees could transfer to another department during
that time that employee is needed at least ten days training according on the
transfer position.
The higher management should be more effective about the employee, to take
right strategy, right decision making.
In the branch level employee is working so many extra time. so management
should provide some extra incentives to motivate the employee.
On-line banking is coming soon so the responsible employee should be trained
effectively.
The training evaluation process and form is to be more modernized.
Physical and technological facilities should be increased in evaluating credit
proposals.
Infrastructure should be modernized.
The cost of fund needs to be minimized.
The gap between employees and customers will be reduced through arranging
meetings.

50
 Appended parts
Appendix A: References

51
 BIBLIOGRAPHY
Books & Articles
Dr. Ramani Mohann Debnath, 2013, Business of Banking, 3rd Edition, Lotus
publication Dhaka.
Syed Asraf Ali, Foreign Exchange & Financing of Foreign Trade. 1st Edition
1995, Academics, 295 Ka/3 Tali office Road, Rayer Bazar, Dhaka-1209.
Annual Report 2015, Sonali Bank Limited.
International Finance Corporation (IFC) 2013, scoping study of foreign exchange
business in Bangladesh.
Data Stream, 2015, Daily Index Data 2011-2015. Available from: Register Book,
General Services Division, Sonalil Bank Limited.
Press Release, 2015, Sonali Bank Limited, 2011-2015. Available from Press
Relationship Division, Sonali Bank Limited.

Web References:
http://www.sonalibank.com.bd/
http://www.sonalibank.com.bd/webs/catalog/sonali_bank_uk_ltd.html
http://www.sonalibank.co.uk/
http://www.sonalibank.co.uk/wage_earners.asp
http://www.sonalibank.co.uk/bonds_premium.asp
http://www.sonalibank.co.uk/trade_finance.asp
http://wikipedia.com
http://www.investorswords.com/401/bank.html
http://www.bangladesh-bank.org/fnansys/bankfi.html
http://www.reportbd.com
http://www.Bangladeshtrades.com

52
 Appended parts
Appendix B: Financial Statements

53
Appendix B: Financial Statement
Balance Sheet at 31 December 2015

Amounts in Taka

At 31 Dec 2015 At 31 Dec 2014

PROPERTY AND ASSETS

Cash 759561720 642612517

In hand (including foreign currencies) 105054105 103310494

With Bangladesh Bank (including foreign currencies) 654507615 539302023

Balance with other banks and financial institutions 366819473 119921431

In Bangladesh 36659948 38380521
Outside Bangladesh 330159525 81540910
Money at call and at short notice 1104617231 990467991
Investments 2256278942 3240516524
Government 2152152008 3110985100
Others 104126934 129531424
Loans and Advances 17869844542 11861196096
Loans, cash credits, overdrafts etc 15252372045 10930096002
Bills purchased and discounted 2617472497 931100094
Fixed assets including assets taken on lease 442167364 116288933
Other assets 580675356 839530037
Non-banking assets - -
Total assets 23379964628 17810533529

LIABILITIES AND CAPITALS

Liabilities

Borrowing from other banks, financial institutions and

agents
1350000000 1490000000
Deposits and other accounts
18500070655 13470981849
Current deposit and other accounts
1983287400 1362942877
Bills payable

54
Savings bank deposit 296085857 127702523

Fixed deposits 1176495618 999076129

Other liabilities 15044201780 10981260320

Total liabilities 1962911904 1666080989

21812982559 16627062838
Capital/Shareholders Equity

Paid-up capital

Statutory reserve 930000000 744000000

Proposed issue of bonus share 351826300 231106109
Proposed cash dividend 186000000 186000000
Share premium 93000000 -
Retained earnings 330 330
Total shareholders equity 6155439 22364252
Total liability and shareholders equity 1566982069 1183470691

23379964628 17810533529

Amounts in Taka

At 31 Dec 2015 At 31 Dec 2014

OFF-BALANCE SHEET ITEMS

Contingent liabilities

Acceptances and endorsements - -

Letter of guarantee 1513007722 759164358

Irrevocable letters of credit 2011380036 4796325629

Bills of collection 1437722959 353922472

Other contingent liabilities 5544112445 467110291

10506223162 6376522750

Total off-balance sheet items including contingent

liabilities
10506223162 6376522750

55