Commercial Bank
Sonali Bank Limited
Chapter-1
Company Profile
Sonali Bank Limited is a state-owned leading commercial bank in Bangladesh. Sonali Bank
was established in 1972 under the Bangladesh Banks Order, through the amalgamation and
nationalization of the branches of National Bank of Pakistan, Bank of Bahawalpur 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 tk. In 2001, it’s
authorized and paid up capital were Tk 10 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.
Name of the Company : Sonali Bank Limited
Type : Public Limited Company
Industry : Banking, Financial services
Chairman : Quazi Baharul Islam
CEO and Managing Director : Md. Humayun Kabir
Company Secretary : Zaheed Hossain
Emerged as Nationalized Commercial Bank in 1972, follow
Genesis : 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 : 1191
Phone-PABX : 9550426-31, 33, 34, 9552924
FAX : 88-02-9561410, 9552007
SWIFT : BSONBDDH
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Commercial Bank
Sonali Bank Limited
Our Vision:
Social committed to lead banking institution with globally presence.
Our Mission:
Dedicated to extend a whole range of quality products that support divergent needs to people
aiming at enriching their lives, creating value for the stakeholders and contributing towards
socio-economic development of the country.
1.2 Sonali Bank Core Business
Sonali bank is the largest State owned leading commercial bank in Bangladesh. They have
some core business activity. Those are:
* Corporate Banking
* Project Finance
* 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
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Commercial Bank
Sonali Bank Limited
1.3 Products and Services offered by Sonali Bank Limited
Sonali Bank Limited provides different financial products and services since its operation in
Bangladesh. They can offer very unique products and services for their resident and non-
resident Bangladeshis
Sonali Bank Limited operates the following general services:
1. Ancillary Services
a. Collection of different bills, tax, fund etc.
b. Payment. Like: pension, scholarship etc.
c. Social Services. Like: old age allowance, Disability allowances etc.
d. Sale & Encashment/Purchase. Savings Certificates, ICB Unit Certificates,
Prize Bonds etc.
e. Misc. Services. Like: Local Governance Support Project, Enlist of Non-
Government Insurance company.
2. Q-Cash
3. Automation service
a. Branch services.
b. Foreign Remittance
c. ATM
d. Online and SMS Banking
Sonali bank also provide different types of deposit and loans. These are:
1. Personal Banking
a. Savings A/C
i. Minimum amount : Taka 500.00
ii. Rate of Interest : 5.00% - 6.50% and others
b. Daily Profit A/C
i. Minimum amount : Taka 20000.00
ii. Rate of Interest : 5.00% and others
c. Fixed Deposit Receipt (FDR) A/C
Interest Rates (with effect from : 01, September 2009)
i. 3 Months or above but less than 6 months 7.25%
ii. 6 Months or above but less than 1 year 7.50%
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Commercial Bank
Sonali Bank Limited
iii. 1 Year or above but less than 2 years 8.00%
iv. 2 Years or above but maximum 3 years 8.25%
d. Others
2. Rural Credit
a. Crop Loan
b. Special Investment Program
c. Farming & off farming program
d. Krishi Khamar Rin Karmasuchi
e. Pond Fisheries credit Program
f. Fertilizer Dealers Credit Program
g. Social Afforestation Program
3. Microcredit
Project/Programs Target group Loan size in Tk Rate of Interest
A. Bank's own Program
Bank-NGO Linkage Poor people According to 12
wholesale Credit. project size
Credit for Urban women Urban women 500000 10
Micro Enterprise Entrepreneurs
Development- CUMED
Urban women
Swanirvor Poor Landless Highest - 40,000 10
people
Unmesh Micro Highest - 50,000 10
Entrepreneurs
Daridra Bimochane Hard core poor Highest - 40,000 10
Sahayta Rin
Rural small Business Small Highest - 50,000 11
Entrepreneurs
Small Farming Loan Small Highest - 50,000 11
Entrepreneurs
Loans for SIDR affected SIDR affected Highest - 20,000 08
Area People Highest
Marginal and small Farms Marginal,poor & Highest - 10,000 09
System Crop small farmer
Intensification Pro.-
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Commercial Bank
Sonali Bank Limited
MSFSCIP
Crop Godown credit Small & Medium Highest - 10,000 09
project farmer
Herbal, Forestry, Poor energetic Highest - 25,000 10
Medicinal and Nursery youth
development Credit
Loan to Salt Growers Actual Salt Highest - 44,000 per acre
producer 4+6=10
Loan for disabled people disabled people Highest - 50,000 08
Sonali Bank-BARD, Bittahin rural male Highest -10,000 09
Comilla Priogik Gabesana & female
Rin Prokalpa
B. BRDB-UCCA
BRDB Crop Lending Small & Medium Highest 8,000- 10
farmer 15,000
Shrimp Culture Small & Medium Highest 2,333- 08
farmer 28,000
Women Development Highest 1,500- 10
Program 20,000
RLP (Rural Livelihood Small & Medium Highest 5,000- 6.25
program) farmer 20,000
4. International Finance
a. Products & Services :
Export Credit (Pre-shipment & Post shipment)
Facilitating Supplier's Credit
LCs (Letters of Credit)
Guarantees in Foreign Currency
- Bid Bond
- Performance Guarantee
- Advance Payment Guarantee.
b. Import Finance
c. Export Finance
d. Interest rate
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Commercial Bank
Sonali Bank Limited
i. Fixed deposit 5.0%-6.5%
ii. Sort term deposit 3.5%-3.8%
iii. Savings deposit 8.5%-9.5%
5. Industrial Finance
a. Credit Schemes
b. Thrust Sectors
c. Other Viable Industrial Sectors
Interest Rates:
i. Project/Term Loan : 12.00% to 13.00%
ii. Working Capital : 13.00%
6. Schemes:
a. Deposit Schemes and interest rate
i. Sonali Deposit Scheme 8.5% for 5 years
ii. Education Deposit Scheme 8.0% for 10 years
iii. Medicare Deposit Scheme 8.0% for 10 years
iv. Monthly Earning Scheme 9.0%-10% for 3-5 years
v. Marriage Savings Scheme 8.5% for 10 years
vi. Rural Deposit Scheme 9.0% for 7 years
vii. Double Benifit Scheme 9.0% for 9 years
a. Other Deposit Scheme
7. Foreign Currency Account
a. Foreign Currency(FC) A/C
b. Non Resident Foreign Currency Deposit(NFCD) A/C
c. Resident Foreign Currency Deposit(RFCD) A/C
8. Investment Bond
1. Wage Earner's Development Bond
2. US Dollar Investment Bond
3. US Dollar Premium Bond
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Commercial Bank
Sonali Bank Limited
1.4 Different Department of Sonali Bank:
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Commercial Bank
Sonali Bank Limited
Chapter-2
PERFORMANCE ANALYSIS PART
Introduction
We discuss below some of factors to the obvious factors that investors should consider and
outline the performance presentation standard.
To analyzing any bank’s financial statements is to decide what objectives the bank is seeking
for. The bank’s performance must be directed towards specific objectives. A fair evaluation
of a bank’s performance may start by evaluating whether it has been able to achieve the
objectives its management and Shareholders have desired.
Find out the value of stock
The ultimate objective of a bank to perform is to raise the value of their stocks. Basically
Commercial Bank Management says that to measure the overall performance of the bank and
also maximize the bank’s stock value is the major objective. We calculate the Earnings per
Share and as a result we could calculate the value of the bank’s stock condition, Book Value
of share, Retention ratio and their annual report have provide enough information which is
necessary to find out the stock value.
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Commercial Bank
Sonali Bank Limited
2.2 Some Important Ratio Analysis for Sonali bank Ltd (2009) :
Liquidity Ratios:
1. Current Ratio = Current asset / Current Liabilities
= 155589969143/406211694002
= 0.38
2. Operating cash flow = Cash flow from operation/ Current Liabilities
= 23800169094/ 406211694002
= 0.058
Leverage Ratios
1. Debt ratio = Total liabilities/ Total Assets
= 513493909752/543969267865
= 0.94 or 94%
2. Equity Multiplier ratio = Total Assets/ Total Equity capital
= 543969267865/30475358113
= 17.849%
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Commercial Bank
Sonali Bank Limited
Efficiency Ratios
1. Operating Efficiency ratio = Total operating Expenses/Total operating Revenues
= 14455453224/ 16765920440
= 0.86 or 86%
2. Asset Utilization Ratio = Total operating Revenues/ Total operating Expenses
=16765920440/14455453224
= 1.15%
Profitability Ratios
1. Net Interest income = Interest income-interest expense/ Total assets
=17683108223– 15800026939/ 543969267865
= 1883081284/543969267865
=0.0034 or .34%
3. The banks Equity multiplier ratio = Total assets / Total equity capital
= 543969267865/30475358113
= 17.84
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Commercial Bank
Sonali Bank Limited
3. Operating profit margin Ratio =Total operating Revenues - Total operating Expenses/Total
Asset
= 16765920440-14455453224/543969267865
=0.0042 or .42%
Market Ratios:
1. Book / Market value per share = Common equity or net worth/No of common share
outstanding
= Common Equity or Net worth/ No. of common share outstanding
= 30475358113/90000000
= 338.61
Investors Ratios:
1. ROE Ratio = Net income after tax/total Equity
= 1536766608/30475358113
=0.050 or 5%
2 ROA Ratio = Net income /Total Assets
= 1536766608/543969267865
=0.0042 or 0.42%
3. Earnings per Share (EPS) = Net profit after taxation (Numerator)/Number of shareholder
outstanding
= 1536766608/90000000
= 17.07
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Commercial Bank
Sonali Bank Limited
4. Net Interest Margin = (Interest income from learned security investment-Interest expense
on deposit and dollar deposit)/ Total Asset
= (17683108223-15800026939)/ 543969267865
=0.0034 or .34%
4. Price Earning Ratio (P/E) = Market Price per share /Earnings per share
= N/A
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Commercial Bank
Sonali Bank Limited
Ratio Analysis for Sonali Bank Ltd (2008) :
Liquidity Ratios:
1. Current Ratio = Current asset / Current Liabilities
=125965408116/364931926622
=0.345
2. Operating cash flow = Cash flow from operation/ Current Liabilities
=9726823943/364931926622
=0.026
Leverage Ratios
1. Debt ratio = Total liabilities/ Total Assets
=468528434181/492946148318
=0.95 or 95%
2. Equity Multiplier ratio = Total Assets/ Total Equity capital
= 492946148318/24417714137
= 20.188
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Commercial Bank
Sonali Bank Limited
Efficiency Ratios
1. Operating Efficiency ratio = Total operating Expenses/Total operating Revenues
= 11038246741/12655130835
=0.87 or 87%
2. Asset Utilization Ratio = Total operating Revenues/ Total operating Expenses
= 12655130835/11038246741
= 1.14%
Profitability Ratios
1. Net Interest income = Interest income-interest expense/ Total assets
=13101861774 -13965929070/492946148318
= -864067296/492946148318
= -0.00175 or - .175%
2. The banks Equity multiplier ratio = Total assets / Total equity capital
=492946148318/24417714137
= 20.18
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Commercial Bank
Sonali Bank Limited
Market Ratios:
1. Book / Market value per share = Common equity or net worth/No of common share
outstanding
= Common Equity or Net worth/ No. of common share outstanding
= 24417714137/90000000
= 271.30
Investors Ratios:
1. ROE Ratio = Net income after tax/total Equity
=2311114502/24417714137
= 0.094 or 9.4%
2. ROA Ratio = Net income after tax/Total Assets
=2311114502/492946148318
=0.0033 or .33%
3. Earnings per Share (EPS) = Net profit after taxation Numerator)/Number of ordinary
shares outstanding (Denominator)
= 2311114502/90000000
= 25.67
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Commercial Bank
Sonali Bank Limited
4. Net Interest Margin = (Interest income from learned security investment-Interest expense
on deposit and dollar deposit)/ Total Asset
= (13101861774 - 13965929070)/ 492946148318
=-.00175 or .175%
5. Price Earnings Ratio (P/E) = Market Price per share /Earnings per share
= N/A
2.3 Final Explanation between 2008 & 2009 in Sonali Bank Limited
Bangladesh
1. Current Ratio
2008 2009
0.345 0.38
Explanation: The current ratio is less than 1 as acceptable that means the banks
have ability for short term obligation, but the values acceptability depends on
the industry which the firm operates. If the firm values is more than 1 than it is
quite acceptable. Here we see that 2009 current ratio is quite increase.
2. Operating cash flow
2008 2009
0.026 0.058
Explanation: The operating cash flow ratio is acceptable that means the banks
have ability to meet up the cash obligations for their depositors and debt holders
at most preferably from 2008 position.
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Commercial Bank
Sonali Bank Limited
3. Debt ratio
2008 2009
0.95 0.94
Explanation: That means the bank has financed closed to its assets from debt
which is risky for the bank. The bank higher this ratio the greater the firms
degree of indebtedness and the more financial leverage it has. But the bank is
efficiently run their operation they can easily meet the debt holders claim. By
dividing, the equation provides the company with a relatively low percentage of
leverage as measured by the debt ratio.
4. Equity Multiplier ratio
2008 2009
20.188 17.849
Explanation: The bank has financed only 17.849% fund for their investors, it is
good for the bank because they taking higher profit and they give small portion
of dividend for their stockholders most of the portion they can retain for their
earnings as a future expansion.
5. Operating Efficiency ratio
2008 2009
0.87 0.86
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Commercial Bank
Sonali Bank Limited
Explanation: The bank can use only small portion of fund they expenses as
their operation other fund may generates the more income. We see that not
highest changes in 2009 from 2008.
6. Asset Utilization Ratio
2008 2009
1.15%
1.14%
Explanation: This ratio for this bank is satisfactory. It indicates those assets are
efficiently utilized by the management and generate revenue. It reflects
portfolio management policies especially the mix and yield on assets. Here
only .01% is changes from 2008
7. Net Interest income
2008 2009
- .175% .34%
Note: The 2008 ratio is not satisfactory for this bank. Or it was a negative
portion of the bank. The spread between interest income and interest expense is
not significant percentage. Management must have to concentrate to increase
this percentage.
8. ROE Ratio
2008 2009
9.4% 5%
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Commercial Bank
Sonali Bank Limited
Explanation: This ratio is moderately good for the investor that means investors are getting
higher return for their investment. The bank cannot need new capital for further investment.
But in 2008 investor have more interest to invest.
9. ROA Ratio
2008 2009
.33% 0.42%
Explanation: The ROA ratio is not good for the bank. If the management can generate
more income by utilizing the assets of the bank that will obviously be good for the bank..but
it is increases in 2009 from 2008.
10. Book Value per Share
2008 2009
271.30 338.61
Explanation: The values of share are increase yearly. For that investor are
willingly to buy the shares.
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Commercial Bank
Sonali Bank Limited
Chapter-3:
SWOT Analysis of Sonali Bank Limited
A SWOT analysis was developed for Sonali Bank Limited of Bangladesh on the basis of the
internal strengths it possesses due to effective management system and the weakness it is
going through due to its internal limitations. Internal factors that affect the activities,
influencing the way Sonali Bank Limited develops are considered as strengths as well as
weakness of that organization. The first step in the strategy formulation is the corporate
mission that leads to the determination of corporate objectives. Finally their performance is
evaluated and information is clarified into the system and a program so that adequate control
of organizational activities is required.
3.1 Strength:
Strong global brand image around the world.
Sonali bank has the largest network banking around the local area.
Good relationship with customers.
Some financial ratio condition is good for bank.
Large number of branches around the country.
3.2 Weakness:
The bank does not engage in any rural area.
Taking higher service charge for their clients.
Some financial ratio condition is not so good.
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Commercial Bank
Sonali Bank Limited
3.3 Opportunity:
Easily manage international transaction dispute for their clients.
Offering different products and services for their customers.
Engage in different social welfare activities.
3.4 Threat:
Other bank services are highly granted.
Expand their all types of business
More formal procedure is to be followed which time is consuming.
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Commercial Bank
Sonali Bank Limited
Chapter-4:
Recommendation of Sonali Bank Limited
The analysis indicated that most of the ratios favor Sonali Bank Ltd. According to the
liquidity, leverage, efficiency and profitability ratio analysis it was revealed that Sonali bank
limited is in a good position than previous year. Moreover, it was also revealed that Sonali
bank’s growth potential is higher than previous year.
Reducing the debt of the bank through efficient operation of management.
Managements should more concentrate to increase the interest spread.
Publishing well defined and understandable financial report for their stakeholders.
More and well understandable advertisement is required for their potential customers.
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Commercial Bank
Sonali Bank Limited
Conclusion of Sonali Bank Limited
Sonali Bank Limited is the largest banking service provider around the country or another
country. Now the bank has been directly engaged in social and economic contributor of a
country. AS a multinational bank the customer expectation is always very high to get better
services. Management and others related to Sonali Bank Limited are trying to formulate new
services and products. Operation and satisfaction of the customers are now satisfactory level.
But the bank should not extend its’ branches to become a sustainable financial institution in
this country. So this assignment to enrich my practical knowledge of banking sector as well
as business administration and made my BBA education more complete and applied.
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Commercial Bank
Sonali Bank Limited
Bibliography
Commercial Bank Management (International Edition), McGraw-Hill Irwin.
www.sonalibank.com.bd
Rahman, 2008, “Overview of banking sector in Bangladesh-their role and
importance’s, ASA University Review, Vol. 5, no.12, pp. 45-48.
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