WELCOME TO MY PRESENTATION

SHARMIN AKTER
EXAM ROLL: FIN031/8
 INTERNSHIP REPORT
ON

“GENERAL BANKING ACTIVITIES & NON-

PERFORMING LOANS OF SONALI BANK LIMITED”
 Objective of the Study
 To get an overall idea about the Non-Performing
Loans and advances of SBL.
 To apply theoretical knowledge in the practical
field.
 To acquire knowledge about the every day general
banking operation of SBL
 To understand the real management situation and
try to recommend for improving existing problems.
Methodology of the Study
 Sources of Data:
i. Primary Data
ii. Secondary Data
 Variables of the Study:
i. Independ variable: CDR, PPE,CAR, NIM,
ROA, IDR
ii. Dependend variavle: NPL
 Hypothisis Testing
 Analysis Tools
Limitations of the Study

 Time shortage
 Absence of adequate
information
 Legal obligation
 Based on secondary
sources
NON-PERFORMING LOANS SCENARIO OF SONALI BANK LTD.
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
NPL
23.88 17.8 33.31 30.21 25.6 25.08 28.38 35.28 26.26 20.32
(%)
SCENARIO OF INDEPENDENT VARIABLES
 Impact of Financial Ratios on Non-Performing Loans of Sonali
Bank Ltd.
 NPL has negative correlation with CDR (r=-.283), PPE (r=-.394), CAR (r=-.531), ROA (r=-.515),
 Positive correlation with NIM (r=.254) and IDR(r=.184)
Table: 13 Correlations
NPL CDR PPE CAR NIM ROA IDR
NPL 1 -.283 -.394 -.531 .254 -.515 .184
CDR -.283 1 -.396 -.436 -.651* -.328 -.948**
PPE -.394 -.396 1 .956** -.026 .986** .410
CAR -.531 -.436 .956** 1 .015 .980** .432
NIM .254 -.651* -.026 .015 1 -.087 .640*
ROA -.515 -.328 .986** .980** -.087 1 .339
IDR .184 -.948** .410 .432 .640* .339 1
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
 Hypothesis: SUMMARY RESULTS OF TESTED
 H1: Credit-deposit ratio is positively related to HYPOTHESES
the NPL ratio.
 H2: Profit per employee is negatively related Hypothese Variables Expected Results Accepted/ Sig.
to the NPL ratio.
s Signs Found Rejected (at5%)
 H3: Capital adequacy ratio is negatively
related to the NPL ratio.
H1 CDR (+) (-) Rejected Not
 H4: Net interest margin to total assets is
positively related to the NPL ratio.
H2 PPE (-) (+) Rejected Not
 H5: Return on asset is negatively related to the
NPL ratio.
H3 CAR (-) (-) Rejected Not
 H6: Investment-deposit ratio is negatively
related to the NPL ratio. H4 NIM (+) (-) Rejected Not

H5 ROA (-) (-) Rejected Not

H6 IDR (-) (+) Rejected Not

 MODEL TESTING
 The coefficient of correlation(R) of the model is .954, which states that there is a strong relationship
between the financial ratios (independent variables) and non-performing loans (dependent variable).
 Coefficient of determination (R-square) value is .911, which shows the highest percentage value that
the independent variables explain 73.2% changes of non- Performing loan.
 The adjusted R-square value of the Table is .732, which means that 73.2% variations of the dependent
variable(NPL) is due to the independent variables (financial ratios).

Table: Model Summary

Std. Error of the
Model R R Square Adjusted R Square Estimate
1 .954a .911 .732 2.80672
a. Predictors: (Constant), IDR, NIM, PPE, CDR, CAR, ROA
 Hypothesis H(0) = There is no significant impact of independent variable on dependent variable.
 Hypothesis H(1) = There is significant impact of independent variable on dependent variable.
 In the following Table, the value of F statistic is 5.091 and Sig. is 0.105 which is greater than 5%. This
indicates that the null hypothesis is rejected.

Table: ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 240.635 6 40.106 5.091 .105b
Residual 23.633 3 7.878
Total 264.268 9
a. Dependent Variable: NPL
b. Predictors: (Constant), IDR, NIM, PPE, CDR, CAR, ROA
 FINDINGS OF THE STUDY
 SBL reduces NPLs in recent years by by strenghening recovery measures.
 This study demonstrated that profit per employee ratio have positive influence on non-performing loan,
on the other hand credit deposit ratio, capital adequacy ratio, and net interest margin ratio, return on
asset ratio, investment deposit ratio have a negative influence on the non-performing loans.
 Increases in NPLs has a negative impact on the retained earnings. On the other hand, a shortfall in
provision against NPL will be deducted from Capital (as per regulatory guideline) which will also trim
down the capital adequacy ratio.
 The NPL ultimately accelerates the operating costs and reduces employment opportunity.
 The effects of NPLs get reflected in dividend payments, high interest rates and low levels of
investments resulting in the lower economic development of the country. 
 RECOMMENDATIONS

 Bank should have adequate and reliable information.

 Classification of extremely risk responsive borrowers.
 Increase investments in productive sectors and SME sectors.
 Banks need to strengthen their corporate governance.
 Security coverage of the loan should be analyzed carefully.
THANK YOU....