Financial Performance Analysis of Sonali Bank Limited.(part-5)
Subject: Economics, Finance | Topics: ,

5.8 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

Eligibility:Permanent employees with 5 years’ service in Govt., Semi-Govt. organization and Autonomous & recognized bodies.
Loan Limit: Maximum Tk. 1.00 lac.
Debt-equity ratio:75:25
Interest rate(w.e.f. 01, September 2009):14.00%
Mode of repayment: Monthly installment.
Period of loan: Maximum 3 years.
Security: 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.
Designated Branches: All district branches and the corporate branches.

5.9 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 2009) : 14.00%
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.

5.10 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 3 years’ 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, September 2009):12.00%
Mode of repayment: Monthly installment.
Period of loan: Maximum 3 years.
Products purchased by the loan      Personal computer, printer, scanner.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.

5.11 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, September 2009):12.00%
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.

6.1 Performance at a glance

(Tk. in crore)

                Year

2008

2007

2006

2005

2004

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

Staff

11507

10332

11769

10773

12118

11155

12380

11553

12732

11718

Total

21839

22542

23273

23933

24450

No. of  Branches:Urban

Rural

563

619

562

621

562

621

562

621

490

696

Total

1182

1183

1183

1183

1186

6.2 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 agentBank

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

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 agents

545,955,691

0.1107536

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

6.3 Evaluating Liquidity Position

Current Ratio:

Current Assets

Current Liabilities

Year

Current Assets

Current Liabilities

Current Ratio

2005

11464318193

309692580346

0.037018382

2006

30842225314

290140094220

0.106301149

2007

32241852735

335987250854

0.095961536

2008

30872166917

964931926622

0.03199414

2009

42110002834

406211694002

0.103665166

Capture

Graph-1: Current Ratio

Interpretation: The current ratio of Sonali Bank limited has increased from year 2005 to 2006 but from year 2007 the current ratio is decreasing. Again in year 2009 ratio is increased. That means it has average liquidity position. The firm can able to pay its current obligations.

Cash Ratio:

Cash+ Marketable Securities

Current Liabilities

Capture

Graph-2: Cash ratio

Interpretation: The cash ratios of Sonali Bank limited for the first 3 years are increasing but in  the year 2008 the ratio is quite low.That indicates the firm has strong lines of cash available on short notice. In year 2009 again the ratio is increased.

6.4 Evaluation of Operating Efficiency

Net Working Capital:

Current Assets Current Liabilities

(Taka in Millions)

Year

Current Assets

Current Liabilities

Net Working Capital

2005

11464.31

309692.58

(298228.26)

2006

30842.22

290140.09

(259297.86)

2007

32241.85

335987.25

(303745.39)

2008

30872.16

964931.92

(934059.75)

2009

42110.00

406211.69

(364101.69)

Capture

Graph-3: Net Working Capital

Interpretation: Net Working Capital of Sonali bank Limited for the 5 years has shown negative trend. In 2008 it was highest shortfall of net working capital. However in 2009 the bank has improved its level of net working capital. But still net working capital shows negative. The bank should take necessary steps to improve its net working capital level by turning the negative position into positive.

Interest Margin:

Interest Income Interest Paid

Year

Interest Income

Interest Paid

Interest Margin

2005

11968455635

11413075053

555380582

2006

15962873888

15039410984

923462904

2007

8962089341

6625390799

2336698542

2008

13101861774

13965929070

(864067296)

2009

17683108223

15800026939

1883081284

Capture

Graph-4: Interest Margin

Interpretation: For first 3 years, Sonali Bank Limited’s Interest margin exhibit increasing trend. But in 2008 the margin became negative. However in 2009 the interest margin position had improved. The bank may take necessary steps to improve further the interest margin.

Cost of Deposit:

      Interest Paid    X 100

Average Deposit

Year

Interest Paid

Average Deposit

Cost of Deposit (%)

2005

11413075053

277079059813

4.11

2006

15039410984

302303013211

4.97

2007

6625390799

328997209441

2.01

2008

13965929070

364385970931

3.83

2009

15800026939

406151569403

3.89

Capture

Graph-5: Cost of deposit

Interpretation: Cost of deposit of Sonali Bank limited in 2006 was highest and in 2007 it was lowest. Sonali Bank Limited should take necessary steps to mobilize low cost or no cost deposits to keep the Cost of deposit at minimum.

Return on Credit:

                            Interest income               X 100

Average Loans and Advances

Year

Interest Income

Average Loans and Advances

Return on credit (%)

2005

11968455635

227009620206

5.27

2006

15962873888

241029268443

6.62

2007

8962089341

206347592413

4.34

2008

13101861774

231166579465

5.67

2009

17683108223

254022504699

6.96

Capture

Interpretation: Return on credit of Sonali Bank limited in 2009 was highest and in 2007 it was lowest. Sonali Bank Limited should take necessary steps to mobilize high return on credit to keep the return on credit at maximum.

6.5 Operating Profitability Ratios

Return on Total Assets (ROA):

                            Net Profit before Tax               X 100

Total Assets

Year

Net Profit before Tax

Total Assets

Return on Total Assets (%)

2005

208038723

337687117072

0.06

2006

(36275634028)

35293818371

-10.27

2007

(1834170743)

461946232939

-0.39

2008

1336450387

492949148318

0.27

2009

2244267216

543969267865

0.41

Capture

Graph-7: Return on total assets

Interpretation: Return on Total assets of Sonali Bank Limited in 2006 was lowest and after 2006 the return on total assets were increasing. That shows Sonali Bank Limited tries to enhance their net profit before tax generating from assets.

Return on Equity (ROE):

                            Net Profit after Tax               X 100

Total Equity

Year

Net Profit After Tax

Total Equity

Return on Equity (%)

2005

208038723

6306200000

3.29

2006

(36275634028)

(28444370219)

-127.53

2007

2311114502

21741728899

10.62

2008

973580120

24417714137

3.98

2009

1536766608

30475358113

0.50

Capture

Graph-8: Return on Equity

Interpretation: Return on Equity of Sonali Bank Limited in 2006 was lowest and in 2007 the return on was highest. Sonali Bank Limited should take necessary steps to enhance their net profit after tax using equity.

 

For more parts of this post, click the following links-

Financial Performance Analysis of Sonali Bank Limited.(part-1)

Financial Performance Analysis of Sonali Bank Limited.(part-2)

Financial Performance Analysis of Sonali Bank Limited.(part-3)

Financial Performance Analysis of Sonali Bank Limited.(part-4)

Financial Performance Analysis of Sonali Bank Limited.(part-5)

Financial Performance Analysis of Sonali Bank Limited.(part-6)

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