Evaluation of Financial Performance of Social

Islami Bank Limited, Jubilee Road Branch

(This Internship report is prepared for the partial fulfillment of the Degree of Bachelor
of Business Administration (BBA) with a major in Accounting)

Prepared by
Nusrat Islam
Program: BBA
ID:B-161291
Major: Accounting
Department of Business Administration
Faculty of Business Studies
International Islamic University Chittagong

Internship Duration: December 05, 2019- March 05, 2020

Date of Submission: 20-05-2020

Department of Business Administration

Faculty of Business Studies
INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG

i
 Evaluation of Financial Performance of Social
Islami Bank Limited, Jubilee Road Branch
(This Internship report is prepared for the partial fulfillment of the Degree of Bachelor
of Business Administration (BBA) with a major in Accounting)

Prepared by
Nusrat Islam
Program: BBA
ID:B-161291
Major: Accounting
Department of Business Administration
Faculty of Business Studies
International Islamic University Chittagong

Supervised by
Mrs. Sultana Akter
Assistant Professor
Department of Business Administration
International Islamic University Chittagong

Signature of Supervisor

Internship Duration: December 05, 2019- March 05, 2020

Date of Submission: 20-05-2020

Department of Business Administration

Faculty of Business Studies
INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG

i
 LETTER OF SUBMISSION
20-05-2020
To,
The Convener
BBA Internship Committee
Department of Business Administration
International Islamic University Chittagong

Subject: Submission of Internship report.

Dear Sir,
Showing the greatest honor to inform that it was the matter of acquiring great pleasure and
practical knowledge which has to be assigned with such a prodigious venture of preparing an
internship report on “Evaluation of Financial Performance of Social Islami Bank Limited,
Jubilee Road Branch”.

I, Nusrat Islam, have the opportunity to submit internship report on “Evaluation of Financial
Performance of Social Islami Bank Limited, Jubilee Road Branch”. I would like to say it has
been a great experience for me to work on this assigned topic, which has enriched my practical
knowledge in this arena. I tried my level best to put meticulous effort for the preparation of this
report. Any shortcomings or flaw may arise as I am very much novice in this aspect. Although
the paper is not fully professional, I feel a comparative one.

I tried my best to gather relevant information for preparing a complete report by following
internship proposal. Without the sincere co-operation and proper guidance of you, it is not
possible for me to prepare the report. I hope your honour will accept it with gracious
consideration.

I would like to place this Paper for your evaluation & recommendation.

Thankfully yours,

______________________
Nusrat Islam
ID:B-161291
Program- BBA
Major: Accounting
Department of Business Administration
International Islamic University Chittagong.

i
 ACKNOWLEDGEMENT

I whole heartedly express my gratitude to my “ALLAH” for His blessings showered upon me
for the completion of the internship report and for every moment of my life. I like to
acknowledge gratitude from my deepest heart to my parents.

I am fortunate to have Mrs. Sultana Akter,Assistant Professor, Department of Business

Administration, International Islamic University Chittagong as my supervisor. She gave me
thoughtful comments on making the report. I have no reservation to say that without him, this
work could not have been presented. I am grateful to him for providing me the necessary initial
guidance and encouragement.

I would like to extend a very special thanks to Rumpa Biswas (Junior Officer), Nadia Jerin
(Senior Officer) and Yasmin Akter (Officer), for their ideas, which always being there to
provide those precious ideas which I get whenever I needed from them.

At last I shall be grateful to those persons who will read this paper and who will get benefit
from this paper at present and in future.

ii
 EXECUTIVE SUMMARY
Mainly our study is limited with theories. But a student has to know practical knowledge for
achieving proper education and practical knowledge is vital for the BBA students. The business
world is going to be more critical in this century and the practical situations are changing day
by day. In develop countries; the business schools give more performance to practical
knowledge than theoretical Knowledge.
Keeping this view in mind my curriculum includes “Internship” in which it prepare a report on
my work and taken a decision, a report on Financial Performance of Social Islami Bank Ltd.
Jubilee Road, Chattogram.
First chapter of this report is Background of the study. Objective of the study is to get an
overall idea about review, recommendation, approval & disbursement procedure of the credit
proposals of Social Islami Bank Limited. Both primary and secondary sources of data are used
to prepare this report. Scope of the study is Process & Operation of Financial Performance,
Documentation & Monitoring of Social Islami Bank ltd. Limitation of the study is lack of scope
& data; some shortcoming may be available in the paper.
Second chapter is based on the organizational profile of SIBL including historical background
of SIBL, mission, vision, objectives, basic features, management structure, swot analysis,
sources of fund, products and services of SIBL, sharia’h compliance and branch’s profile.
Third Chapter is about the discussion of financial performance analysis, balance sheet &
income statement, ratio analysis, benefits of ratio analysis, fundamental ratio analysis and
theoretical discussion of return on equity, return on asset, net interest margin, net non-interest
margin, deposit per employee, value added per employee, business per employee, earning asset
per employee, cash position indicator, liquid security indicator current ratio, cash ratio, deposit
composition ratio.
In Fourth Chapter.I tried to analyse financial performance of Social Islami Bank LTD, Jubilee
road branch graphically. I gave explanation and opinion on the basis of the data and analysis
of return on equity, return on asset, net interest margin, net non-interest margin, cash position
indicator, liquid security indicator current ratio, cash ratio, net working capital.
Finally the Fifth Chapter contains Finding, Recommendations and Conclusion. It has been
found that return on equity and return on asset of SIBL increased over the year which means
that the bank is efficient enough to in using its assets and equity capital to generate profit. There
is decreasing trend of Net non-Interest margin. The higher NNIM is in 2015 which is 2.13%

iii
which is decreased over the year in a significant rate. Though SIBL is maintaining a good the
ROE and ROA, the bank has to maintain it. ROA can be maintained by using more financial
leverage, increasing profit margins, improve asset turnover, distributing idle cash, lower taxes.
ROA can be maintained by reducing asset costs, increasing revenues, reducing expense.

iv
 TABLE OF CONTENTS
Contents Page No
LETTER OF SUBMISSION i
ACKNOWLEDGEMENT ii
EXECUTIVE SUMMARY iii-iv
TABLE OF COTNENTS v-vi
Chapter One
Background of the study 1
1.1 Introduction 2
1.2 Objectives of the Study 3
1.3 Methodology of the Study 3
1.3.1 Data Collection Method 3
1.3.1.1 Sources of Data 3-4
1.4 Scope of the study 4
1.5 Limitations of the Study 5
Chapter Two
Overview of social Islami Bank 6
2.1 Historical Background of Social Islami Bank Limited 7-8
2.2 Mission/ Vision of Social Islami Bank Limited 8-9
2.3 Objective of the Social Islami Bank Limited 9
2.4 Basic Feature of the Social Islami Bank Ltd 9
2.5 Management Structure of Social Islami Bank Ltd 10
2.6 SWOT analysis of Social Islami Bank Ltd 11-12
2.7 Sources of Fund 13
2.8 Products and Services of SIBL 13-14
2.9 Shari’ah Compliance 15
2.10 Small and Medium Enterprises(SMEs) 15
2.11 Corporate Social Responsibility 15-16
2.10 Profile of SIBL, Jubilee Road Branch 16
Chapter Three 17
Theoretical discussion
3.1 Financial Performance Analysis 18
3.2 Balance Sheet & Income Statement 18
3.3 Ratio Analysis 19
3.4 Benefits of Ratio Analysis 19
3.5 Fundamental Ratio Analysis of SIBL 19
3.6 Profitability 19
3.6.1 Return on equity (ROE) 19
3.6.2 Return on asset (ROA) 20
3.6.3 Return on Capital Employed (ROCE) 20
3.6.4 Net interest margin (NIM) 20
3.6.5 Net Non-Interest Margin (NNIM) 21
3.7 Productivity Performance 21
3.7.1 Deposit per employee 21
3.7.2 The value added per employee 21
3.7.3 Business per employee 22
3.7.4 Earning Asset per employee 22
3.8 Liquidity Indicator Approach 22
3.8.1 Cash position indicator 22
3.8.2 Liquid security indicator 22

v
3.8.3 Capacity Ratio of Social Islami Bank Ltd 22
3.9 Solvency Performance 23
3.9.1 Current Ratio 23
3.9.2 Cash ratio 23
3.9.3 Deposit Composition Ratio 23
Chapter Four
Evaluation of Financial Performance of Social Islami Bank Limited, 24
Jubilee road branch
4.1 Profitability of Social Islami Bank Ltd,Jubilee Road Branch, Chattogram 25
4.1.1 Net Income to Equity(ROE) 24
4.1.2 Return on asset (ROA) 26
4.1.3 Return on Capital Employed (ROCE) 27
4.1.4 Net interest margin (NIM) 28
4.1.5 Net Non-Interest Margin (NNIM) 29
4.2 Liquidity Indicator Approach 30

4.2.1 Cash position indicator 30

4.2.2 Liquid security indicator 31
4.3 Solvency ratio 32

4.3.1 Current Ratio 32

4.3.2 Cash ratio 33

4.3.3 Net Working Capital 34

Chapter Five
Findings, Recommendation and Conclusion 35
5.1 Findings 36
5.2 Recommendations 37
5.3 Conclusion 38
Bibliography 39

Appendix 40

vi
 CHAPTER-01
BACKGROUND OF THE STUDY

1
1.1 Introduction
Financial analysis is the process of evaluating businesses, projects, budgets and other Finance-
related entities to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid or profitable enough to warrant a
monetary investment. When looking at a specific company, a financial analyst conducts
analysis by focusing on the income statement, balance sheet and cash flow statement.
One of the most common ways to analyze financial data is to calculate ratios from the data to
compare against those of other companies or against the company's own historical
performance. For example, return on assets (ROA) is a common ratio used to determine how
efficient a company is at using its assets and as a measure of profitability. This ratio could be
calculated for several similar companies and compared as part of a larger analysis.
The prospective investors are those who have surplus capital to invest in some profitable
opportunities. Therefore, they often have to decide whether to invest their capital in the
company's share. The financial statement analysis is important to them because they can obtain
useful information for their investment decision making purpose. The creditors are the
providers of loan capital to the company. Therefore they may have to take decisions as to
whether they have to extend their loans to the company and demand for higher interest rates.
The financial statement analysis provides important information to them for their purpose. The
management of the company is responsible for taking decisions and formulating plans and
policies for the future. They, therefore, always need to evaluate its performance and
effectiveness of their action to realize the company's goal in the past. For that purpose, financial
statement analysis is important to the company's management.
Liquidity and profitability analysis crucial part of any commercial bank. Success of banking
transaction depends on well management. When the writer practices at the working place of
the organization, the writer was able to get practical knowledge’s, the organization to known
their branches well actives on the basis report. The achievement can only be possible with
proper planning and perform accordingly. As a business student the writer wants to know the
various modes of Liquidity and profitability analysis of Social Islami Bank Ltd that’s why the
researcher selected the topic named “Evaluation of Financial Performance of Social Islami
Bank Limited, Jubilee Road Branch” and the writer does think that this is the appropriate title
of his study considering his aim.

2
1.2 Objectives of the Study
General Objective
The general objective of the study is to evaluate the Financial Performance analysis of Social
Islami Bank Limited, Jubilee Road Branch..
Specific Objective
The specific objective of the study:
 To present an overview of Social Islami Bank Limited.
 To know the theoretical aspects of ratios for the evaluation of financial performance.
 To evaluate the financial performance of SIBL, Jubilee road branch.
 To find out findings and provide recommendations regarding financial performance of
SIBL.

1.3 Methodology of the Study

Methodology describes the manner in which data is collected, analyzed and interpreted. To
conduct the overall study at first I explored the sources of primary and secondary data and data.
Different files of the department and statement prepared the senior officer of the bank helped
me to prepare this report. To present numerical data I used the annual report branch record of
SIBL from 2014 to 2018. For preparing this report, I have used some representation to find out
different types of analytical and interpretation.

1.3.1 Data Collection Method:

This report is prepared based on information collected from two sources i.e. Primary sources
and Secondary sources.

1.3.1.1 Sources of Data

I have collected the information/data from the following sources, which has helped me to make
this report. The source is divided into two parts:

a) Primary Source b) Secondary Source.

Primary Source
 Official record of SIBL.
 Face to face conversation with the respective officers and clients.
 Practical work experience on different department of the bank.

3
  Guidelines and suggestions from all the senior employees in charge of SIBL.

Secondary Source
 Annual Reports of SIBL.
 Official website of SIBL.
 Some brochures and related articles of SIBL Ltd.
 Previous report of SIBL.

1.3.2 Data Processing and Analysis

For the “Financial Performance Evaluation of Social Islami Bank Limited, Jubilee Road
Branch” I mainly used Secondary data. Besides this, I also collect some information by taking
expert opinion from the officers and direct observation while I doing the internship program at
the bank.

Instruments Used For Analysis

Ratio Analysis: The quantitative (such as ratio analysis) tools are used to analyze the gathered
data and different types of computer software are used for reporting the gathered information
from the analysis such as- Microsoft Word, Microsoft Excel etc. Ratio can be classified into
five broad groups-

 Liquidity Ratio.
 Activity Ratio.
 Debt Ratio.
 Profitability Ratio.

1.4 Scope of the Study

The scope of this study is to find out the efficiency and loopholes of “Financial Performance
analysis of Social Islami Bank Limited, Jubilee Road Branch” based on their financial data. I
had to collect the primary data from personal contact with the employee. Later on, I have used
secondary data to complete my report. I have tried to observe and understand the all banking
activities especially general banking activities and other day to day functions perform in this
branch. I also tried to understand different topic from the bank personnel.

4
1.5 Limitations of the Study
This study is not without its limitations like any other study. Although the particular study is
extensive in nature, hard effort was given to make the study worthwhile and meaningful even
so there exists some limitations. One of the limitations is that due to some legal obligation and
business secrecy the bank was reluctant to provide some sensitive data. Thus, this study limits
only on the available published data. As I was in the bank for only three months, so within this
short span of time it is very difficult to be familiar with all the activities of the bank. Another
limitation is as the officers were busy with their daily working activities; they were not able to
give me much time apart from their daily working activities. Furthermore, there were various
types of information that the bank officers cannot disclose due to the security and other
corporate obligations.

5
 CHAPTER-2
OVERVIEW OF SOCIAL ISLAMI BANK
LIMITED

6
2.1 Historical Background of Social Islami Bank Limited
Social Islami Bank Limited was established in 1995 with a dream and a vision to become a
pioneer banking institution of the country and contribute significantly to the growth of the
national economy. The Bank was established by leading business personalities and eminent
industrialists of the country with stakes in various segments of the national economy. The
incumbent Chairman of the Bank is Mr. Alamgir Kabir, FCA, a professional Chartered
Accountant. Mr. M. A. Kashem a member of the Board and Mr. Yusuf Abdullah Harun were
past Presidents of the Federation of Bangladesh Chamber of Commerce and Industries
(FBCCI). Social Islami Bank is run by a team of efficient professionals. They create and
generate an environment of trust and discipline that encourages and motivates everyone in the
Bank to work together for achieving the objectives of the Bank. The culture of maintaining
congenial work - environment in the Bank has further enabled the staff to benchmark
themselves better against management expectations. A commitment to quality and excellence
in service is the hallmark of their identity.
Social Islami Bank takes pride for bringing women into the banking profession in a significant
number for gender equality. At present, 18.14% of SIBL's employees are women.
Social Islami Bank Limited, a second generation private Bank, emerged in 1995 amid
liberalization of global economies. Currently, its Authorized Capital is Tk.10,000.00 million
and its capital and reserve reached 9,927.16 million as of December 31, 2009. Its vision is to
stand out as a premier banking institution in Bangladesh and contribute significantly to the
national economy.
The Bank, in the meantime, successfully completed 15th year of banking operations, recording
significant growth in all the performance indicators. In 2009, the Bank earned an after tax profit
of Tk. 1870.19 million. The deposit of the bank grew by 41 percent to Tk. 96,669.05 million
and advance by 29 percent to Tk. 77,497.57 million compared to those of 2008. During the last
five years (2005-2009), the Bank achieved an average annual growth of 28 percent in deposit,
29 percent in advances, 52 percent in export and 29 percent in import and 110 percent in
remittance. During the last five years, the export volume increased by three times to Tk.
46,723.14.47 million and foreign remittance increased by seven times to Tk. 23,800.00
million.
Operational excellence, coupled with qualitative improvements continued to be of paramount
importance to the Bank. At present, the Bank has 56 branches, 10 SME Centers and 1 O-Shore

7
Banking unit across the country. Plans have been drawn to raise another 10 branches and at
least 10 more SME Centers in 2012.
As SIBL face the stiff challenges ahead on the way to further improving the profitability of the
Bank, SIBL rely on skilled and experienced workforce. SIBL has product-basket encompasses
Real Time Online Any Branch Banking, Islamic Banking, Merchant Banking, Dual Currency
Visa Credit Card, Visa Travel Card, ATMs, Education Loan Scheme, Double Benefit Scheme,
General Loan, Millionaire Deposit Scheme, SME Banking, Corporate Banking, Syndicate
Loan, Monthly Savings Scheme, Monthly Income Scheme, Pension Saving Scheme, Wage
Earner Pension Scheme, SMS Banking etc. in addition to SIBL has traditional credit and
foreign trade related products and services.
High quality customer services through the integration of the latest and state of the art banking
technology and products is tool to achieve success. Customers are the first priority of SIBL.
Social Islami Bank is trying hard to provide a system of one-stop banking for customers by
providing a broad spectrum of services. SIBL has employees have mastered new technology,
enhanced their product knowledge and honed their skill to help customers meet their financial
goals. SIBL wants to be the best helping customers become financially better o- by providing
free advice, innovative leading-edge financial solutions, choice and convenience.
SIBL is pledge-bound to turn Social Islami Bank into a modern banking institution, dynamic
in actions, progressive in programs, honest in dealings, just in judgment, futuristic in attitude,
fair in approaches and devoted to high quality service to customers. SIBL has charted plans are
aimed at boosting modern management, advanced technology, good profitability, sound -
financial strength and fair corporate image of the Bank

2.2 Mission/ Vision of Social Islami Bank Limited

 Missions
High quality financial services with state of the art technology
Fast customer service
Sustainable growth strategy
Follow ethical standards in business
Steady return on shareholders’ equity
Innovative banking at a competitive price
Attract and retain quality human resource

8
 Vision
To be a premier banking institution in Bangladesh and contribute significantly to the
national economy

2.3 Objective of the Social Islami Bank Limited

 Provide service with high degree of professionalism and use of modern technology
 Create long - term relationship based on mutual trust
 Respond to customer needs with speed and accuracy
 Share their values and beliefs
 Grow as our customers grow
 Provide products and service at competitive pricing
 Ensure safety and security of customers' valuables in trust with us

2.4 Basic Feature of the Social Islami Bank Ltd

Values
Integrity Respect Fairness Harmony Team Spirit
Courtesy Commitment Service Insight and Enthusiasm for
Excellence Spirit Work
Business
Ethics

Strengths
Transparent and Quick Decision Making Efficient Team of Performers
Satisfied Customers Internal Control and Compliance
Skilled Risk Management Diversification
Competencies
Knowledge Experience and Expertise Customer Focus
Transparency Determination Zeal for Improvement
Reliability Pursuit of Disciplined Growth
Strategy

9
2.5 Management Structure of Social Islami Bank Ltd.
There are 14 levels in the bank. I classified them into 3 parts. Top management, Mid-
level Management and Lower level management. The organizational structure is given
below:

MANAGING DIRECTOR

ADDITIONAL MANAGING DIRECTOR

DEPUTY MANAGING DIRECTOR

SENIOR EXECUTIVE VICE

PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

SENIOR ASSISTANT VICE

PRESIDENT

ASSISTANT VICE PRESIDENT

FIRST ASSISTANT VICE PRESIDENT

SENIOR EXECUTIVE OFFICER

EXECUTIVE OFFICER

PROBATIONARY OFFICER

SENIOR OFFICER

OFFICER

JUNIOR OFFICER

ASSISTANT OFFICER

OFFICE ATTENDANT

10
2.6 SWOT analysis of Social Islami Bank Ltd
Every organization is composed of some internal strengths and weaknesses and also has some
external opportunities and threats in its whole life cycle. The following will briefly introduce
the customer to the Social Islami Bank’s internal strengths and weaknesses, and external
opportunities and threats as I have explored in the past ten weeks.
Strength
* Superior Quality: Social Islami Bank provides its customers excellent quality of service. It
gives the first priority to customer satisfaction.
* Dynamism: Social Islami Bank draws its strength from the adaptability and dynamism it
possesses. It has quickly adapted to world class standard in terms of banking services. Social
Islami Bank has also adapted state of the art technology to connect with the world for better
communication to integrate facilities.
* Financial Strength: Social Islami Bank is a finally sound company backed by the enormous
resource base of the mother concern Rangs Group. As result customers feel comfortable in
dealing with the company.
* Efficient Management: All the levels of the management of Social Islami Bank are solely
directed to maintain a culture of the betterment of the quality of the service and development
of a corporate brand image in the market through organization wide term approach and open
communication system.
* State of the Art Technology: Social Islami Bank utilizes state-of-the-art technology to
ensure consistent quality and operation. The corporate office is equipped with SWIFT (SWIFT
is a banking software, used by Social Islami Bank). All other branches are also equipped with
SWIFT system.
* Experts: The key contributing factor behind the success of the Social Islami Bank is its
employee, who are highly trained and most competent in their own field. Social Islami Bank
provides their employees training both in-house and outside job.
* In-House Utility: Social Islami Bank is free from dependence on ever disruptive power
supply of our public sources. The company generates the required power through generator fed
on diesel. Water generation is done by deep tube wells on site and in abundance.
* Excellent Working Environment: Social Islami Bank provides its workforce an excellent
place to work in. Total complex has been centrally air conditioned. The interior decoration was
done exquisitely with choice of soothing colors and blend of artistic that is comparable to any
overseas bank.

11
 Weaknesses
* Limited Workforce: Social Islami Bank has limited human resources compared to its
financial activities. There are not many people to perform most of the tasks. As a result many
of the employees are burdened with extra workloads and work late hours with out any overtime
facilities. This might cause high employee turnover that will prove to be too costly to avoid.
* Problem in Delivery: Few of the Social Islami Bank’s products offered to its clients like
“Personal Credit (PC)” is lying idle due to proper marketing initiative from the management.
These products can easily be made available in attractive ways to increases its client base as
well as its deposit status.
Opportunities
* Government Support: Government of Bangladesh has rendered its full support to the
banking sector for a sound financial status of the country, as it has become one of the vital
sources of employment in the country now. Such government concern will facilitate and
support the long-term vision of Social Islami Bank.
* Evaluation of E-Banking: Emergence of e-banking will open more scope for Social Islami
Bank to reach the clients not only in Bangladesh but also in the global banking arena. Although
the bank has already entered the world of e-banking but yet to provide full electronic banking
facilities to its customer. A proper blend of Banking and information technology might give
the bank leverage to its competitors. Nevertheless there are ample opportunities for Social
Islami Bank to go for product innovation in line with the modern day need. The bank has yet
to develop credit card facility, lease financing and merchant banking.
Threats
*Merger and Acquisition: The worldwide trend of merging and acquisition in financial
institution is causing concentration. The industry and competitors are increasing in power their
respective areas.
*Poor Telecommunication Infrastructure: As previously mentioned, the world is advancing
e-technology very rapidly. Though Social Islami Bank has taken effort to join the stream of
information technology, it is not possible to complete the mission due to poor technology and
infrastructure of our country.
* Frequent Currency Devaluation: Frequent devaluation of Taka exchange rate fluctuations
and particularly South-East Asian currency crisis adversely affects the business globally.
*Emergence of Competitors: Due to high customer demand, more and more financial
institutions are being introduced in the country. There are already 52 banks of various types
are operating in the country. Many banks are entering the market with new and lucrative
products. The market for banking industry is now a buyer dominated market. Unless Social
Islami Bank can come up with attractive financial products in the market, it will have to face
steep competition in the days to come.

12
2.7 Sources of Fund
SIBL uses various sources to raise its funds. Among the available sources, deposits occupy the
lion share of the sources. SIBL has introduced various types of attractive saving schemes that
motivate the savers to save their money at a provisional profit rate. The total amount of deposit
at the end of the year 2018 was TK2,48,324.49crorewhen at the end of the year 2017, the total
amount of deposit was 2,28,798.90crore. It shows a greater improvement in creating funds.
Besides deposits paid up capital, investment, provisions, reserves, and other liabilities are the
main sources of fund.

2.8 Products and Services of SIBL

DEPOSIT PRODUCTS
Al-Wadeeah Current Deposit (AWCD)
Account
Mudaraba Savings Deposit Account
Mudaraba Super Savings Account
Mudaraba. Notice Deposit Account
Mudaraba Term Deposit Account
 1 Month
 3 Month
 100 Days
 6 Month
 200 Days
 12 Month
 2 Years
 3 Years
Mudaraba Monthly Profit Deposit Scheme
(SIBL Astha)
Mudaraba Millionaire Savings Scheme
Sonali Din Special Deposit Scheme
MudarabaBashastan Deposit Scheme
Mudaraba Special Deposit Pension Scheme
Mudaraba Hajj/Umrah Savings Deposit
(Kafela)
Cash Waqf
Cash Waqf Deposit Scheme
Cash Waqf Savings Scheme
Cash WaqfMudaraba Monthly Profit
Deposit scheme
MudarabaLakhopoti Deposit Scheme
Sanchita Special deposit Scheme
Subarnalata Special Deposit Scheme
SubarnaRekha Special Deposit Scheme
Mudaraba Marriage Deposit Scheme
Mudaraba Education Savings Scheme
 7 Years
 10 Years
 15 Years
 15 Years
 20 Years
MudarabaMuhorana Savings Scheme
 5 Years
 10 Years
Shabuj Chaya Special Deposit Scheme
ShabujShayanna Special Deposit Scheme
SukherThikana Special Deposit Scheme
SachchandaProtidin Special Deposit
Scheme
Mudaraba Savings Deposit-Student Acount
SIBL Youngster Account
Mudaraba Zakat Savings Deposit Scheme
(Proshanti)
SIBL Super DPS Special Savings Scheme

13
INVESTMENT PRODUCTS SERVICE PRODUCTS
Bai- Murabaha Online Banking
Bai-Muajjal ATM 24/7
Hire Purchase under ShirkatulMelk (HPSM) Automated Clearing
Musharaka Electronic Fund Transfer
Bai- Salam
Documentary Bill Purchase Internet Banking (SIBL NOW)
Quard Offshore Banking
SIBL Employees’ House Building Centralized Trade Processing Services
Investment Scheme Remittance
SME and Agricultural Finance Locker
Women Enterprise Finance
Students File
Retail Finance
SWIFT
Family Empowerment Islamic Micro
Finance Capital Market Services through SIBL
CARD PRODUCTS Subsidiaries
ADR (Alternate Delivery Channel)
VISA Islami Credit Card Products:
School Banking
 Domestic Classic
 International Classic Agent Banking
 Domestic Gold RTGS (Real Time Gross Settlement)
 International Gold
 International Platinum
VISA Islami Prepaid Card Products:
 Hajj Card
 Travel Card
 Student Card
 Gift Card
VISA Islami Debit Card Products:
VISA IslamiZameel Card

14
2.9 Sharia’h Compliance
The Bank abides by a strong Shari’ah Supervisory Committee consisted of 07 (seven)
renowned Islamic scholars of the country. The committee is playing a vital role in framing
and exerting policy for strict adherence of Shari’ah principles in all activities of the Bank.
The Shari’ah Supervisory Committee, which enjoys a high status in the structure of the Bank
meet frequently and deliberate on different issues confronting the Bank on Shari’ah matters.

2.10 Small and Medium Enterprises (SMEs):

The role of Small and Medium Enterprises (SMEs) is indispensable for overall economic development
of a country particularly for developing countries like Bangladesh. Since this sector is labor intensive,
it is capable of increasing national income as well as rapid employment generation; achieving
Sustainable Development Goals (SDGs) especially eradication of poverty, gender equality and women
empowerment. SME Financing is considered as one of the focus areas of operation in SIBL. Specially,
the small entrepreneurs and women entrepreneurs are being addressed properly by SIBL with the
diversified products designed for this purpose. Honorable Speaker of Bangladesh Jatiyo Sangsad
Dr.Shirin Sharmin Chaudhury handed over a cheque on behalf of Social Islami Bank Limited to Mst.
Monwara Begum, proprietor of M/S Affan Textiles in Banker-SME women entrepreneurs’
congregation and product display-2018 being held in Bangladesh Shishu Academy premises on
08.03.2018.

The services and features for SME are:

 Swift processing of Investment proposals (especially for Women Entrepreneurs & Farmers).
 Investment is given with simple terms & conditions considering the merit of the project.
 Revolving and term investment facilities.
 Maintaining Shari’ah through ensuring buy-sell procedure completely.
 Providing cluster based financing After expiry of Investment renewal facility is available
 Collateral free Investment facility (especially for Women Entrepreneurs & Farmers).

2.11 Corporate Social Responsibility

As an Islamic Bank, Social Islami Bank Limited is quite conscious of its social responsibility
and always trying to participate in social cause of the country. The bank has a dedicated CSR
Desk with the aim to serve humanity through different philanthropic activities giving emphasis
on health, education, disaster management, rehabilitation, poverty eradication and so on. The
bank believes that any kinds of social & philanthropic activities would improve the quality of
the lives of the under privileged of the country. It spends a considerable sum every year for
wellbeing of the community. Social Islami Bank Limited (SIBL) donated Tk. 5 Crore to the

15
Prime Minister’s Relief and Welfare Fund on 13 April 2018. Social Islami Bank Limited
(SIBL) donated Tk.10.00 (Ten) Lac to Proyash, Institute of Special Education, an educational
institution for differently abled children & adult patronized by Bangladesh Army as a part of
CSR activities of the bank. SIBL always seeks new areas where it can serve the necessary
assistance. SIBL rushes to any humanitarian crisis either flood, cyclone or earthquake, fire
before anyone with life-saving materials. The vision of SIBL is to create a caring society and
it is tirelessly working for that.

2.12 Profile of SIBL, Jubilee Road Branch

SIBL, Jubilee Road branch is one of the most popular branches of SIBL in Chittagong regional
area. It is situated at Jubilee Road, Chittagong close to Riazuddin Bazar. The branch was
launched on 23 August 2003. Mr Salim Ullah is the Head of Branch and operational manager
is Mr. Mainul Areefin. Besides,

 In charge of Foreign Exchange Department ̶ Mr. Mizanur Rahman.

 In charge of Investment Department ̶ Mr. Mahafuzul Hoque.
 In charge of General Banking Department ̶ Mr. Mahmudul Hasan.

16
 CHAPTER-03
THEORETICAL DISCUSSION

17
3.1 Financial Performance Analysis
Financial analysis is structural and logical way to present overall financial performance of a
financial institution. It also helps to evaluate and decision making for business operation. In
financial analysis process, ratio analysis is the most dominant and logical structure to help
business related stakeholder. Under the financial ratio analysis process, there are few categories
to identical area of financial institution. Therefore, business stakeholders try to concentrate to
get overall business overview from profitability, liquidity, assets management and solvency
ratio analysis. These ratios not only help to decision-making process also emphasized on risk
avoiding and profit raising related factors. To calculate this ratio need to take quantitative data
from bank trading activity and other sources.

Evaluation of bank’s performance from time to time helps them to know how well they are
actually satisfying their customers and becoming successful. The performance evaluation of
banks has thus taken high priority in the context of Bangladesh (Siddique& Islam, 2001).

Financial performance analysis of a company is very important to get an overall view about an
organization. It generally consists of interpretation of balance sheet and interpretation of
income statement. By using these two sources, one can perform the ratio analysis and trend
analysis that are the major tools for analyzing the financial performance of a bank .

3.2 Balance Sheet & Income Statement

In financial accounting, a balance sheet or statement of financial position is a summary of the
financial balances of a sole proprietorship, a business partnership or a company. Assets,
liabilities and ownership equity are listed as of a specific date, such as the end of its financial
year. A balance sheet is often described as a "snapshot of a company's financial condition". Of
the four basic financial statements, the balance sheet is the only statement that applies to a
single point in time of a business' calendar year. A standard company balance sheet has three
parts: assets, liabilities and ownership equity.

Income statement also referred as profit and loss statement, earnings statement, operating
statement or statement of operations is a company's financial statement that indicates how the
revenue is transformed into the net income. It displays the revenues recognized for a specific
period, and the cost and expenses charged against these revenues, including write-offs (e.g.,
depreciation and amortization of various assets) and taxes. The purpose of the income statement
is to show managers and investors whether the company made or lost money during the period.

18
3.3 Ratio Analysis
Ratio analysis is a quantitative method of gaining insight into a company’s liquidity,
operational efficiency and profitability comparing information contained in its financial
statements. Ratio analysis is the cornerstone of fundamental analysis. Main objective of this
report is to analyzing financial performance of Social Islami Bank Limited.

3.4 Benefits of Ratio Analysis

1. Useful in Financial Position Analysis.
2. Useful in Simplifying Accounting Figures.
3. Useful in Assessing the Operational Efficiency
4. Useful in Forecasting Purposes
5. Useful in Locating the Weak Spots of the Business
6. Useful in Comparison of Performance

3.5 Fundamental Ratio Analysis of SIBL

The five (5) major categories in the financial ratios list include the following:

 Liquidity Ratios
 Activity Ratios
 Debt Ratios
 Profitability ratio
 Market Ratio

3.6 Profitability
3.6.1 Return on equity (ROE):
Return on Equity is a prominent measure use in measuring whether bank has utilized
shareholder’s money more profitability or not. Generally, the higher the ROE, the better is the
performance of bank.
Return on equity measure a bank’s profitability by revealing how much profit a company
generates with the money that shareholders have invested.
This ratio is calculated by using the following formula-

But, we can also find the ROE from the financial summary for five years as well.

19
3.6.2 Return on asset (ROA)
Return on Asset is a prominent measure employed in measuring whether bank has utilized
company’s assets more profitability or not. Thus ROA is primarily an indicator or managerial
efficiency; it indicates how capably the management or the bank has been covering the
institution’s assets into net earnings. Generally, the higher the ROA, the better is expected to
be the performance of the bank.

We have also showed here the data on ROA that is directly derived from financial summary.
3.6.3 Return on Capital Employed (ROCE):
It is commonly used as a measure for comparing the performance between businesses and for
assessing whether a business generates enough returns to pay for its cost of capital.

Return on Capital Employed= Profit (Loss) before taxes x100

Total Capital
3.6.4 Net interest margin (NIM)
Net interest margin is used in measuring whether bank has been able to generate spread for
meeting non-interest expense and recovery of profits for fund product. The net interest margin
is efficiency measure as well as profitability measure, indicating how well management and
staff have been able to keep the growth of revenues ahead of rising costs, The net interest
margin measures how large a spread between interest revenues and interest income generated
by banks and amount of interest paid out to their lenders. This ratio has been calculated using
the formula as follows;

Net interest margin is usually expressed as a percentage of what the financial institution earns
on loans in a time period and other assets minus the interest paid on borrowed funds divided
by the average amount of the assets on which it earned income in that period.

3.6.5 Net Non-Interest Margin (NNIM)

The Net Non Interest Margin is a prominent measure used in measuring whether bank has
utilized interest money more profitability or not. The Non-Interest Margin measure the amount
of Non-Interest revenues stemming from deposit service charges and other service fees that the
bank has been able to collect relative to the amount of non-interest costs incurred on bank
facilities and loan-loss expenses. For most banks, the Non-Interest Margin is negative: Non-

20
Interest costs are generally outstrip fee income, through bank fee income has been rising rapidly
in recent years as percentage of all bank revenue. Non-Interest Expense = (Total Expenditure-
Interest Expense)
This ratio is calculated by using the formula:

3.7 Productivity Performance

This chapter covers the productivity position of Social Islami Bank Ltd. Generally, productivity
means the ability of an individual, or an organization how it treats with his work, its effort,
actual results which is compared by the Social Islami. In other hand we can also say that how
properly an organization used his resources to generate the profit; this is also a good indicator
of productivity. Here we are going to try disclosing the productivity position of Social Islami
Bank Ltd by using some ratios during the study period.

3.7.1 Deposit per employee:

Deposit per employee is the prominent measure used in measuring whether a bank has collected
more deposit or nor, generally, the higher the deposit per employee, the better is the
performance of bank. Deposit per employee measures the total deposit divided by total number
of employees.

3.7.2 The value added per employee:

The value added per employee is one of the prominent measures used in measuring whether
bank has given more value added or not. Usually, the higher the value added per employee, the
better is the performance of bank. Value added per employee is a better measure of ability to
produce than, say turnover or profit per employee. It is better because turnover may be heavily
influenced by commissions or by goods and services that just go straight through the company.
It is also better that profit for the purpose of comparison because profit figures are relatively
easy to manipulate, at least in private limited companies. By measuring value added per
employee and comparing the result with previous years and other banks, one can get a fairly
good appreciation of how bank’s ability to produce and generate profit develops (Karl Erik
Sveiby 1996, 2001). Value added per employee measures on the total value divided by total
number of employees.

21
3.7.3 Business per employee
The business per employee is a measure used in assessing whether the bank has procured
satisfactory level of Business or not. Generally, the higher the Business per employee, the better
is the performance of bank. Business per employee is measured by the dividing the total income
(Total operating Income + Interest Paid) by total number of Employee.

3.7.4 Earning Asset per Employee

The earning asset per employee are another important measure used in appraising whether a
bank has collected more earning assets or not. Generally, the higher the earning assets per
employee, the better is the performance of bank. Earning Asset per employee is recognized and
indicator of number of employees required to produce that level of income. Therefore, earning
assets per employee measures the management’s ability to use their employee resources
effectively to create profits for the company. Earning Asset = (Interest Earning Asset + Non
Interest Earning Asset)

Earning Asset per employee: Earning Asset/ Number of Employee

3.8 Liquidity Indicator Approach

3.8.1 Cash position indicator:
Cash and Deposit due from depository institutions ÷ total assets=Cash position, where a
greater proportion of cash implies the bank is in a stronger position to handle immediate cash
needs.

3.8.2 Liquid security indicator

Govt. securities ÷ Total Assets=Liquid security indicator, which compares the most
marketable securities a bank, can hold with the overall size of its asset portfolio; the greater the
proportion of government securities, the more liquid the bank’s position trends to be.

3.8.3 Capacity Ratio of Social Islami Bank Ltd

Net Loans and leases ÷ Total assets=Capacity Ratio, which is really a negative liquidity
indicator because loans and leases are often among the most illiquid assets a bank can hold.

3.9 Solvency Performance

Short-term Solvency Ratios attempt to measure the ability of a firm to meet its short-term
financial obligations. In other words, these ratios seek to determine the ability of a firm to avoid
financial distress in the short-run. The two most important Short-term Solvency Ratios are the

22
Current Ratio and the Quick Ratio. (Note: the Quick Ratio is also known as the Acid-Test
Ratio.)

3.9.1 Current Ratio:

The Current Ratio is calculated by dividing Current Assets by Current Liabilities. Current
Assets are the assets that the firm expects to convert into cash in the coming year and Current
Liabilities represent the liabilities which have to be paid in cash in the coming year. The
appropriate value for this ratio depends on the characteristics of the firm's industry and the
composition of its Current Assets. However, at a minimum, the Current Ratio should be greater
than one. Current Assets = Cash and bank balances+ Investments+ Loans and advances+ Other
assets. Current Liabilities = Borrowing + Money at call and short notice + Deposit and other
account excluding fixed deposit + Other Liabilities

Current Ratio

3.9.2 Cash ratio

The cash ratio of a company is calculated by dividing total cash and cash equivalents to its
current liabilities. The cash ratio is most commonly used as a measure of company liquidity. It
can therefore determine if, and how quickly, the company can repay its short-term debt. A
strong cash ratio is useful to creditors when deciding how much debt, if any, they would be
willing to extend to the asking party. Current Liabilities = Borrowing+ Money at call and short
notice + Deposit and other account excluding fixed deposit+ Other Liabilities

3.9.3 Deposit Composition Ratio

Deposit composition Ratio = Demand Deposit/ Time Deposit

23
 CHAPTER-04
FINANCIAL PERFORMANCE ANALYSIS OF
SOCIAL ISLAMI BANK LTD, JUBILEE ROAD
BRANCH, CHATTOGRAM

24
4.1 Profitability of Social Islami Bank Ltd, Jubilee Road Branch,
Chattogram
4.1.1 Net Income to Equity (ROE):
But, we can also find the Net Income to Equity from the financial summary for five years as
well.
Table- 4.1
Net Income to Equity of Social Islami Bank Ltd, Jubilee Road Branch for the period
(2014-2018)
Amount million in Taka
Formula Particulars
2014 2015 2016 2017 2018
Net income
700 1339 2037 2340 4062
Net Income to (NPAT)
Equity=(Net Shareholder’s
11474 13876 20611 21518 23739
Income/Shareholder’s Equity
Equity)×100 Net Income
6.10% 9.65% 9.88% 10.87% 17.11%
to Equity
Source: - Branch Record.

2014 2015 2016 2017 2018

17.11%

10.87%
9.65% 9.88%

6.10%

Net Income to Equity

Analysis:
As with return on capital, a ROE is a measure of management's ability to generate income from
the equity available to it. ROEs of 15-20% are generally considered good. From the table, it is
shown that, the Net Income to Equity ratio of Social Islami Bank Ltd, Jubilee Road Branch has
shown a fluctuating trend from 2014-2018. But it is decreasing in 2017-2018. But in 2018 Net
Income to Equity is 17.11% which is a good one and higher return on equity..

25
4.1.2 Return on asset (ROA)

We have also showed here the data on ROA that is directly derived from financial summary.
Table -4.2

Return on asset of Social Islami Bank Ltd, Jubilee Road Branch for the period (2014-
2018)
Formula Particulars Amount Million in Taka
2014 2015 2016 2017 2018
ROA=(Net Net income 700 1339 2037 2340 4062
Income/Total (NPAT)
Assets)×100 Total Assets 180396 185579 209719 231602 268324
Return on 0.38% 0.72% 0.97% 1.01% 1.51%
Asset
Source: - Branch Record.

2014 2015 2016 2017 2018

1.51%

0.97% 1.01%

0.72%

0.38%

Return on Asset

Analysis: Return on assets (ROA), in basic terms, tells what earnings were generated
from invested capital (assets). ROA for public companies can vary substantially and will be
highly dependent on the industry. This is why when using ROA as a comparative measure, it
is best to compare it against a company's previous ROA numbers or against a similar company's
ROA. From the table, we see that the ROA ratio of Social Islami Bank Ltd, Jubilee road branch
is showing an increasing trend. In year of 2014 is 0.38%, in higher ROA is 2018 is 1.51 and

26
2017 are 1.01%. It implies that there is a scope of improving of proper utilization of assets and
generating a good return.

4.1.3 Return on Capital Employed (ROCE)

Return on Capital Employed= Earnings before interest and tax

Capital Employed
Table -4.3
Particulars 2014 2015 2016 2017 2018
Earnings before interest and tax 2176 3207 4393 4765 7049
Capital employed 12752 14325 19718 20375 23095
ROCE (%) 17.06% 22.38% 22.28% 23.38% 30.52%
Source: - Branch Record.

35.00%
30.52%
30.00%

25.00% 22.38% 23.38%

22.28%

20.00% 17.06%
15.00%

10.00%

5.00%

0.00%
ROCE (%)

2014 2015 2016 2017 2018

Analysis: The ROCE measurements show us that Company A makes better use of
its capital. From the table, we see that the ROCE of Social Islami Bank Ltd,Jubilee road branch
is showing a increasing trend. In the year of 2014 is 17.06%, in higher ROCE is 2018 is 30.52%
and 2017 are 23.52%.It implies that there is a scope of improving of proper utilization of capital
and generating a good return.

27
4.1.4 Net interest margin (NIM)
This ratio has been calculated using the formula as follows;

Table -4.4
Net interest margin of Social Islami Bank Ltd, Jubilee Road Branch for the period (2014-
2018)

Particulars Amount Million in Taka

Formula
2014 2015 2016 2017 2018
Interest
16714 18134 16794 17373 17842
income
Net Interest
Interest
Margin=(Net Interest 10195 11283 9192 8699 7036
Expense
Income/Total
Total Asset 173677 179713 204592 224492 248605
Asset)×100
Net Interest
3.75% 3.81% 3.72% 3.86% 4.35%
margin
Source: - Branch Record.

4.40% 4.35%
4.30%
4.20%
4.10%
4.00%
3.90% 3.86%
3.81%
3.80% 3.75%
3.72%
3.70%
3.60%
3.50%
3.40%
Net Interest margin

2014 2015 2016 2017 2018

Analysis:- Net interest margin (NIM) is a measure of the difference between the interest income
generated by banks or other financial institutions and the amount of interest paid out to their lenders
(for example, deposits), relative to the amount of their (interest-earning) assets. from the table, the
NIM ratio of Social Islami Bank Ltd, Jubilee road branch is showing fluctuating trend. In the
year of 2014 is 3.75% and higher NIM is in 2018 is 4.35% and 2017 are 3.86%. It means that

28
the spread between the interest income and interest expense has not been the same compared
to average earning assets. So there is a scope of improving that.

4.1.5 Net Non-Interest Margin (NNIM)

This ratio is calculated by using the formula:

Table -4.5
Net Non-Interest Margin of Social Islami Bank Ltd, Jubilee Road Branch for the period
(2014-2018)

Particulars 2014 2015 2016 2017 2018

Non Interest Revenue 3396 4304 4967 6438 7111
Non Interest Expense 6350 8266 8676 10354 11586
Total Asset 180396 185579 209719 231602 268324
Net Non-Interest Margin (%) 1.64% 2.13% 1.77% 1.69% 1.67%
Source: - Branch Record.

2.50%
2.13%
2.00% 1.77%
1.64% 1.69% 1.67%
1.50%

1.00%

0.50%

0.00%
Net Non-Interest Margin (%)

2014 2015 2016 2017 2018

Analysis:- For all the services offered, banks charge certain fees. Income earned through fees
and other charges is called non-interest income. From the table, the NNIM ratio is showing a
fluctuating trend during the study period. In the year of 2014 is 1.64%, in higher NNIM is 2015
is 2.13% and 2016 are 1.77%.In 2015 the ratio is better than other years. Management has to
try maximizing the NNIM.

29
4.2 Liquidity Indicator Approach
4.2.1 Cash position indicator:
Cash and Deposit due from depository institutions ÷ total assets=Cash position
Table:-4.6
Cash position indicator of Social Islami Bank Ltd, Jubilee Road Branch for the period
(2014-2018) (Figure In Million)
Particulars 2014 2015 2016 2017 2018
Cash 13581 17162 17091 16227 15827
Deposit due from other depository 10978 11485 25264 24790 31148
institutions
Total Asset 180396 185579 209719 231602 268324
Cash Position 13.61% 15.44% 20.19% 17.71% 17.51%
Source: Branch Record.

2014 2015 2016 2017 2018

20.19%
17.71% 17.51%
15.44%
13.61%

Cash Position

Analysis: A cash position represents the amount of cash that a company, investment fund, or
bank has on its books at a specific point in time. The cash position is a sign of financial strength
and liquidity. From this table, it is clear that the cash position of Social Islami Bank Ltd is
showing a fluctuating trend. The reason behind this trend is the interest rates on deposit in other
institutions are moving up and down. In the year of 2014 is 13.61%, the higher Cash Position
is in 2016 (20.19%) and in 2017 (17.71%). It implies that when interest rate is increased, then
the bank is interested to deposit its cash in depository institution and vice-versa.

30
4.2.2 Liquid security indicator
Govt. securities ÷ Total Assets=Liquid security indicator
Table -4.7 Liquid security indicator of SIBL for the period (2014-2018) (Figure In Million)

Particulars 2014 2015 2016 2017 2018

Govt. securities 21858 19365 20559 14979 17045
Total Asset 180396 185579 209719 231602 268324
Liquid Security 12.12% 10.43% 9.80% 6.47% 6.35%
Source: Branch Record.

14.00%
12.12%
12.00%
10.43%
9.80%
10.00%

8.00%
6.47% 6.35%
6.00%

4.00%

2.00%

0.00%
Liquid Security

2014 2015 2016 2017 2018

Analysis: The higher the liquid securities indicator, the better. It contrasts the most
marketable securities an institution is able to clutch through the whole volume of its asset
portfolio From the table, it is clear that the liquid security indicator ratio shows a decreasing
trend.. So SIBL, Jubilee road branch should try to improve its liquid security.

31
4.3 Solvency Ratio
4.3.1 Current Ratio:
Current Ratio

Table 4.8
Current ratio of Social Islami Bank Ltd, Jubilee Road Branch for the period (2014-2018)
(Figure In Million)
Particulars 2014 2015 2016 2017 2018
Current Assets 158885 165576 181475 208248 240057
Current Liabilities 93923 109626 125397 146775 160896
Current Ratio 1.69 1.51 1.45 1.42 1.49
Source: Branch Record.

1.75 1.69

1.7

1.65

1.6
1.51
1.55 1.49

1.5 1.45
1.42
1.45

1.4

1.35

1.3

1.25

2014 2015 2016 2017 2018

Analysis:- A good current ratio is between 1.2 to 2, which means that the business has 2 times
more current assets than liabilities to covers its debts.From the table, it is evidenced that the
current ratio of Social Islami Bank Ltd during the study period is between 1.2 to 2 times, which
is a good sign This indicates that Current asset of the bank is more than the current liabilities.
This is a positive factor for the bank.

32
4.3.2 Cash ratio

Table -4.9
Cash ratio of Social Islami Bank Ltd, Jubilee Road Branch for the period (2017-2013)
(Figure In Million)
Particulars 2014 2015 2016 2017 2018
Cash 13581 17162 17091 16227 15827
Current Liabilities 93923 109626 125397 146775 160896
Cash Ratio 0.14 0.16 0.14 0.11 0.09
Source: Branch Record.

0.18 0.16
0.16 0.14 0.14

0.14
0.11
0.12
0.09
0.1
0.08
0.06
0.04
0.02
0
Cash Ratio

2014 2015 2016 2017 2018

Analysis: Compared to the current ratio and the quick ratio, it is a more conservative measure
of a company's liquidity position. There is no ideal figure, but a ratio of at least 0.5 to 1 is
usually preferred. From the table, it is evidenced that Average cash ratio of Social Islami Bank
Ltd, Jubilee road branch is between 0.5 to 1 except 2018 In 2018 it shows that the bank doesn’t
have the ability to pay off short-term liabilities with highly liquid assets. To change the situation
in 2018, SIBL,Jubilee road branch can involve loans or realize a part of exceeding assets in
order to increase the amount of the most liquid assets.

33
4.3.3 Net Working Capital
Net working capital = Current Assets- Current Liabilities

Table -12 Table 4.10

Net working capital of Social Islami Bank Ltd, Jubilee Road Branch for the period (2014-2018)
(Figure In Million)
Particulars 2014 2015 2016 2017 2018
Current Assets 158885 165576 181475 208248 240057
Current Liabilities 93923 109626 125397 146775 160896
Net working capital 64962 55950 56078 61473 79161

90000
80000
70000
60000
50000
40000
30000
20000
10000
0
1 2 3 4 5

Particulars Net working capital

Analysis: The success or failure of a business is heavily dependent on that business's ability to
use its assets effectively. From te above table thenet working capital of Social Islami Bank,
Jubilee road branch increased gradually. The highest net working capital is in 2018, which
means the bank has enough liquid assets to pay its bills that are due in one year or less.

34
 CHAPTER-5
FINDINGS, RECOMMENDATIONS AND
CONCLUSION

35
5.1 Findings
1. ROE and ROA of SIBL increased over the year which means that the bank is
efficient enough to in using its assets and equity capital to generate profit.
2. ROCE of SIBL, Jubilee road branch is in increasing trend, which shows that there
is chance of better use of capital.
3. There is decreasing trend of Net non-Interest margin. The higher NNIM is in 2015
which is 2.13% which is decreased over the year in a significant rate.
4. Cash position indicator of SIBL, Jubilee road branch is in fluctuating trend.
5. Liquid security indicators decreased over the year.
6. Current ratio of SIBL, Jubilee road branch decreased till 2017 and slightly increased
in 2018.
7. Cash ratio of SIBL, Jubilee road branch decreased over the years.
8. Net working capital of Social Islami Bank, Jubilee road branch increased slowly.

36
5.2 Recommendations
Based on findings, we would like to recommend some suggestions for Social Islami Bank, Jubilee road
branch:

1. Though SIBL is maintaining a good the ROE and ROA, the bank has to maintain it.
ROA can be maintained by using more financial leverage, increasing profit margins,
improve asset turnover, distributing idle cash, lower taxes . ROA can be maintained by
reducing asset costs, increasing revenues, reducing expense.
2. ROCE of SIBL can be maintained properly by Improve the top line
(i.e. increase operating profit) without a corresponding increase in capital employed
and maintain operating profit but reduce the value of capital employed.
3. To change the decreasing trend of Net non-interest margin of SIBL, the bank should
identify the common sources of net non-interest income (such as Overdraft and
nonsufficient funds charges, which are highly scrutinized, and Gains on sales of loans
and investment securities) , improve collections. stay on top of the market, consider
relationship value pricing, obtain professional advice..
4. To improve cash position of SIBL, it is generally required to have a minimum cash
position, which is based upon the number of funds it holds. This ensures that the bank
can pay out its account holders if they demand funding.
5. The liquid security indicator should maintain upward trend management .Thus the
changes in government policy affecting the financial performance of every bank in
Bangladesh.
6. To maintain the good current ratio in the upcoming year SIBL should pay
off current liabilities, improve current Asset by rising shareholder's funds.
7. Cash position of SIBL is very low and the management should improve cash position
by either its current assets or lower its current liabilities.
8. To maintain good net working capital, the bank should have improved liquidity,
operational efficiency, increased profits.

37
5.3 Conclusion
Now a day the all the banks are contributing much than the previous years for the growth and
development of the country. Banking industry is now much organized because of strong
vigilance and supervision of Bangladesh Bank. In the industry, Social Islami Bank Ltd is one
of the pioneers in many criteria. Social Islami Bank Ltd is committed towards the excellence
in the service with efficiency, accuracy and proficiency. Social Islami Bank Ltd is unique in
terms of constitution, its mandate, its objectives and modes operandi. Through this the bank
has, in the meantime, found its own special position in the sector at a higher rank. Social Islami
Bank Ltd is expected to continue maintaining strong competitive edge in banking sector in
Bangladesh in the years ahead. Through its specialization and integrated approach, the bank
aims to build a strong position in the industrial development of Bangladesh. Shareholders are
the owners of the company. Time and again, they may have to take decisions whether they
have to continue with the holdings of the company's share or sell them out. The financial
statement analysis is important as it provides meaningful information to the shareholders in
taking such decisions.
Success of banking transaction depends on well management. When the writer practices at the
working place of the organization, the writer was able to get practical knowledge’s, the
organization to known their branches well actives on the basis report. The achievement can
only be possible with proper planning and perform accordingly. As a business student the writer
wants to know the various modes of Liquidity and profitability analysis of Social Islami Bank
Ltd .The Bank also plans to maintain its focus on managing capital and costs to maximize
shareholders’ value. In this environment, the bank expects to make further gains of revenue,
income and return on capital .Recently the bank’s performance in different arena of banking
strongly testifies that Social Islami Bank is one of the soundest banks operating in the country.
Social Islami Bank is a leader in banking industry. Continuous improvement in different
segment with a proactive attitude can make a difference in the banking business.

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Bibliography
Books:

1. Horne, V. J. C., &Wachowicz, J. M. (2005). Financial statement analysis,

11th edition.

Journals:

1. Chowdhury, T. A., & Ahmed, K. (2009). Performance Evaluation of Selected

Commercial Banks in Bangladesh. International Journal of Business and Management,
86-97.
2. Qamruzzaman, M. (2014). Analysis of Performance and Financial soundness of
financial. Research Journal of Finance and Accounting, 169-186.
3. Chowdhury, A.(2002). Politics, Society and Financial Sector Reform in Bangladesh,
International Journal of Social Economies, vol. 4, pp. 963 – 988.
4. Siddique,S.H.; and Islam,A.F.M.M.(2001). Banking Sector in Bangladesh: Its
Contribution and Performance Journal of Business Research Jahangirnagar University,
vol. 3, pp. 16-33.
5. Uppal,R.K.(2010). Stability in Bank Income through Free-Based Activities Journal of
Information Management and Business Review, vol. 1, pp. 1-8.
6. https://www.investopedia.com/exam-guide/cfa-level-1/financialratios/default.asp

Others
1. Annual Report OF Social Islami Bank Ltd, 2014-2018
2. Web Site of Social Islami Bank Ltd-http://www.Social Islamibankltd.com.bd
3. Profile of Social Islami Bank Ltd.
4. Broacher of Social Islami Bank Ltd.

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Appendix

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