Chapter 1

Introduction

1.1 Background of the Study

Master of Business Administration (MBA) is one of the specialized post-graduate degrees that
provide theoretical and practical knowledge related to business cases in specialized field. In the
Department of Management; University of Dhaka, MBA program consolidates a great mix of
hypothetical and classroom information. As a mandatory necessity for the fulfillment of MBA
program, we need to complete an internship program which encourages us to expedite our
hypothetical learning to apply this in down to earth ground. As a student of MBA, I have
finished all the required hypothetical and practical courses and now I need to put my practical
experience in the viable field. By considering the regard I was assigned as an internee in Sonali
Bank Limited. I have got details understanding about the practical field that practised in the
organization. This study is for presenting the understanding in the reporting format.

1.2 Origin of the Study

As per completion of the MBA program under the Department of Management; University of
Dhaka, I have to submit the report entitled ‘Financial Performance Analysis during COVID
Situation: A Study on Sonali Bank Limited’ that is the compulsory necessity of the program.
As an internee, I was assigned to Sonali Bank Ltd, Bangabandhu Avenue Branch in Dhaka. The
title of the report is selected with the consultation of my academic supervisor Prof. Dr. Syed
Golam Maola; Department of Management; Faculty of Business Studies; University of Dhaka.
Here I have tried my best to reflect the details understanding.

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1.3 Objectives of the Study
The objectives of the report are classified in two types. These are as follows:

Broad objective: To investigate and analyze the financial performance, challenges and strategies
during COVID situation of Sonali Bank Limited (SBL).

Specific objectives: Besides the broad objective, the study has some relative objectives. These
are as follows:

 To examine the financial performance gap between normal and COVID situation.
 To evaluate the level of challenges those have been faced by SBL during COVID
situation.
 To explore knowledge about the implications of strategies to enhance performance and to
cope up with COVID and post COVID situation.
 To recommend some suggestions and strategies so that problems can be minimized and
the level of performance can be improved in the motive to build positive perception
among the customers and to create competitive edge in the market.

1.4 Scope of the Study

This study is all about the comparative analysis of performance and challenges of SBL during
COVID situation. It has been understood that there is a correlation between performance and
external situations that prompts productivity as well as profitability.
To make the report, I have needed to collect the employees’ feedback to evaluate the gap of
financial performance, challenges and strategies due to COVID situation. Through questionnaire
method, I have collected the information. The whole reports covers all the information using
several chapters, some information is collected from primary sources and some are from
secondary sources.

Through literature review I have got some theoretical framework regarding financial
performance, challenges and strategies. These theories help me to make the report informative
and practical. By comparing the collected information with the theoretical dimension I draw
conclusion on my entitled topic.

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1.5 Significance of the Study
The banking sector has experienced a very critical situation because of COVID-19 in previous
two years. The time period 2020 and half of 2021 were alarming for the world and banking
sector as well. Due to this threat, almost all banks financial performance is downtrends. Now
they are trying to recover the situations by undertaking strategies.

In this present age, the dimension of banking has been changing rapidly due to deregulation,
technological innovation and globalization. Bangladesh is not out of the race. Now banks must
compete in the market place both with local institutions as well as foreign ones. A large number
of banks offer a wide range of services in different flavor on the basis of situational demand.
SBL is one of the largest and oldest state owned commercial bank in Bangladesh. It has a vast
number of customers. But it has been struggling since 2020-21 because of COVID-19. Here my
intention is to analyze the financial performance and challenges it faced during COVID situation
and strategies have been taken to cope up with the challenges.

1.6 Limitations of the Study

I have tried my best to make the report fruitful but I have some limitations regarding this task.
The encountered limitations are given below:

 The primary limitation of the study was to conduct a small scale survey on employees
due to time and monetary constraints.
 Employees’ answers are not always rational to reflect the real situation because their
views varied from individual to individual.
 SBL has no sufficient information in their website to fulfill the report's requirement.
 Relevant data and document collection were difficult due to the organization
confidentiality.
 Many respondents were hesitant and reluctant to answer certain issues on survey
quewstions.

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 CHAPTER 2
METHODOLOGY

2.1 Flow Chart of the Study

The study is all about the banking performance, challenges and strategies of Sonali Bank
Limited. My research type is descriptive research which is related to explain the situation of a
problem via feedback of the employees. The study depends on several things like exploring
accessible information, subjective methodologies like casual dialogs with employees,
representatives, administration or contenders, and more formal methodologies through top to
bottom meetings. To complete the entire task I use the following working flow that starts with
the selection of topic and ends with the compilation of final report.

Selection of the Topic

Identification of Data Sources

Collection of Data

Classification and Analysis of Data

Findings of the Study

Final Report Compilation

Figure 2.1: Working Flow of the Study

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2.2 Sources of Information
Both primary and secondary data have been used to prepare this report. The sources are
mentioned below by name:

2.2.1 Primary Data Source:

The initial information is collected through interviews with employees and clients of Sonali
Bank Ltd. Mainly I have conducted a questionnaire survey on the employees of SBL from
various levels. I designed a structured questionnaire for the survey.

2.2.2 Secondary Data Source:

To make the report informative and representative I also used secondary data source. Secondary
data have been collected for this study from the following areas:

1. Banks Annual Report from 2016-17 to 2020-21

2. Different Journals of Bank
3. Different Books, Papers, Manuals etc. Related to the Topic
4. Articles on the Related Topics
5. Websites

2.3 Population of the Study

The employees who have the legal relationship with the SBL have been considered as the
population of the study. Through sampling I collect data from the actual population.

2.4 Sampling Method and Sample Size

On the basis of the topic and purposes, I used stratified sampling method as per random sampling
to make the report perfectly representative and informative. So, the individual employees of SBL
had the equal chance to select as per sample. The reasons to choose stratified sampling are
creating chance to select the entire types of employees like top level employees, middle level
employees and entry level employees. Employees’ perception varies from time to time that’s
why this sampling technique provides quality information to disclose the real scenario.

I have collected information from three strata. In total I took 15 respondents from various
employment areas as per sample size to collect and analyze data.

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2.4.1 Distribution of Sample

Table 2.1: Showing the gender information of the respondents

Particulars No. of respondents Percentage
Male 11 73.33%
Female 4 36.37%
Others 0 0.00%
Total 15 100.00%
Interpretation: For ensuring the validity of the study, some personal information of the
respondents is to be collected. Here the first information is on gender. We all know that views
may differ due to gender related issues especially in South Asian continent. Here 73.33%
respondents are male and rests of the respondents are female. Out of 15, the numbers of female
respondents are 4 that perfectly represent the validity of the study.

Table 2.2: Showing the respondents staying time period (employment status) in the bank
Intervals (year) No. of respondents Percentage
00-01 03 20.00%
01-05 08 53.33%
05+ 04 26.67%
Total 15 100.00%
Interpretation: Here also the respondents staying period are also collected to ensure the
accurate feedback from the respondents. Here the number if medium term respondents are 8 that
are 53.33% of the total respondents. Entry level respondents are 20% of the total number and the
long term staying respondents are 26.67% of total respondents that represents a perfect mix of
the respondents to make the report valid and reliable.

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Table 2.3: Showing the opinion on the actively involved in core banking activities
Particulars No. of respondents Percentage
Assistant General Manager 01 06.67%
Senior Officer 04 26.67%
Officer General 04 26.67%
Officer Cash 06 40.00%
Others 00 00.00%
Total 15 100.00%
Interpretation: To cover up the strata employees in varies areas have been included in the
study. AGM, senior office, officer general and cash officer gave their opinion here to explore the
real figure of the analysis. Here only one AGM gives opinion. The number of senior officer and
officer general are same in number. It is 4 out of 15 that cover 26.67% of the total respondents.
The respondents of re cash officer are 40% of the total respondents. Lastly the activity of the
respondents is also collected to unfold the accurate picture of the organization. Here 100% of the
respondents are actively involved in core banking activities of the bank that is really needed for
the study. So, the sample selection and data collection are totally fine and representative over
here.

2.5 Sample Design

The determination of sample size depends on the variability within the sample. In this study I
chose a sample of 15 employees of SBL. In this regard I use the following statistical technique:

The formula of sample size is n = (ZS/E)2

Here, n = Required Sample Size

Z = standard value that correspondents to the confidence level

S = sample standard deviation or estimate of the population standard deviation

E = acceptable magnitude of error, plus or minus error factor (range in one-half of the
total confidence interval)

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2.6 Questionnaire Design
As per popular tool of collecting data I prepared questionnaire to record feedback from the
employees of SBL. The questionnaire contained some identical questions to check the validity of
the questionnaire. To collect the data regarding performance, challenges and strategies I used
five scale rating to evaluate highly challenging to poorly challenging. Here I covered entire
banking related factors. This structured questionnaire was the major tool of collecting data of this
research project.

2.7 Data Analysis Tools

Collected information has then processed & compiled with the help of MS Word & MS Excel.
Essential tables have been drawn on the basis of collected data and statistical analysis has been
applied on banking performance, challenges and strategies. Detail explanation and analysis have
also been incorporated in the report.

2.8 Data Analysis Technique

By using various statistical tools the gathered information has been analyzed and presented in
this report. I have utilized Microsoft Excel Program for doing the statistical calculations. The
data provided by respondents of the survey about the financial performance, challenges and
strategies were firstly inserted in MS Excel worksheet arranging the respondents in column and
statements in row then the weighted average of those opinions are prepared. Here, the average of
each dimension has been multiplied by their respective weights to find out the weighted averages
of that dimensions regarding performance, challenges and strategies. Finally, taking the mean of
all the five scale dimensions weighted averages; the overall level of challenges and effectiveness
of strategies are calculated. At the end of the findings the entire summary of mean, standard
deviation are presented.

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2.9 Variables
The purpose of this study is to evaluate the banking performance, challenges and strategies of
SBL in COVID situation. So, here the dependent variables are level of challenges and
effectiveness of strategies. Besides independent variables are the related factors of banking.
These are as follows:
Dependent Variable Independent Variable
Lack of modern and hi-tech equipment

Restricted business hours due to Govt. regulation

Risk of employees affected by COVID-19

Slip of operating profit and capital shortfall

Attaining significant profitability

Level of challenges
Liquidity crisis
&
Technological innovation and digitalization
Implications of strategies
Risk Management thresholds

Utilization of non-performing loan

Increasing societal scrutiny through SME finance

Focusing on agent banking

Redesigning the business model

Table 2.4: Dependent and Independent Variables of the Study

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 Chapter 3
Literature Review

3.1 Review of Existing Literature

Analysis financial performance is a common practice for all the organization to generate
information about the financial position of the organization to the interested users. The major
decisions of the organization depend on the financial performance of the organization for a year.
Performance analysis denotes comparing the performance to the previous years to know the
actual scenario of the performance.

Goel, Sharma and Mani (2012) investigated the performance related characteristics of the
organizations. For the purpose of performance evaluation, risk adjusted performance, asset size
and expense ratio of the financial statement have been studied for past five years. Results have
confirmed the presence of performance persistence in funds. This study has contributed towards
existing knowledge for the relationship between financial performance and their characteristics.

Agrawal & Patidar (2009) studied the empirically testing on the basis of financial performance
and analyzing data at the fund manager and fund investor levels. The study revealed that the
performance is affected by the saving and an investment habit of the people and at the second
side the confidence and loyalty of the fund Manager and rewards affects the performance.

Dhanda, Batra and Anjum (2012) attempted to study the performance evaluation of selected open
ended schemes in terms of risk and return relationship. For this study, rate of return method,
mean, Standard Deviation has been used.

Sapar and Madava (2003) conducted a research on the performance evaluation of financial
institutions in a market. The results of performance measures suggest that most of the financial
schemes in the sample of 58 were able to satisfy investor's expectations by giving excess returns
over expected returns based on both premium for systematic risk and total risk.

Customer satisfaction has a positive correlation between top quality performance and customer
feedback on improving the features of services. Gerson (1995) shows that customers satisfaction
needs critical skill regarding recognize, reward, reinforce top quality performance and close the
gap between expectations and performance. He also argues that there is no way to avoid the

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importance of satisfying customers. So, every organization needs to follow the customer
feedback to improve service quality in order to make customer satisfied and attain profitability.

Dimitriades (2008) argues that positive financial performance has been a major goal for business
organizations for many years and that loyal customers contribute to the company‘s profitability
by spending more on the company‘s products and services, but warn that one should distinguish
between customer satisfaction with services and goods as they may be influenced by different
factors. Sometimes the satisfaction regarding service is so much intangible that it is heard to
measures. So organizations need to set strategy by considering the requirement of the market and
changing situation.

3.2 Theoretical Framework

Financial Performance

Financial performance is a subjective measure of how well a firm can use assets from its primary
mode of business and generate revenues. The term is also used as a general measure of a firm's
overall financial health over a given period.

A company's financial performance tells investors about its general well-being. It's a snapshot
of its economic health and the job its management is doing—providing insight into the future:
whether its operations and profits are on track to grow, and the outlook for its stock.

Financial Statement

Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Financial statements include: Balance sheet and income statement.

The Balance Sheet Formula: Assets = (Liabilities + Owner’s Equity)

Income Statement Formula and Calculation: Net Income = (Revenue − Expenses)

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Financial Performance Analysis

Financial analysis refers to the process of studying and assessing a company’s financial
statements—a collection of data and figures organized according to recognized accounting
principles. The aim is to understand the company's business model, the profitability (or loss) of
its operations, and how it's spending, investing, and generally using its money—summarizing the
company by the numbers, so to speak.

A financial performance analysis examines the company at a specific period in time—usually,

the most recent fiscal quarter or year. The balance sheet, the income statement, and the cash flow
statement are three of the most significant financial statements used in performance analysis.

Organizational Strategies

Organization strategies are the sum of actions that organization takes to attain long term goal. As
per the company’s strategic plan different actions are taken up to cope up with the challenges.
During Covid situation every organization especially banks have faced difficulties and
challenges to retain the employees for the consequences of the capital shortfall and slip of
operating profit. To survive in the market organizations took numurious strategies like cost
cutting, firing employees or alternative recruitment, technological innivaton and digiallization.
These all are the organization strategy arise from a company's mission, which explains why a
company is in business.

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 Chapter 4
Organization Overview

4.1 History and Heritage of Sonali Bank Ltd.

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

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

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

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

4.2 Corporate Profile of Sonali Bank Ltd.

Sonali Bank Limited is the largest state-owned commercial banks in Bangladesh. After the
independence of Bangladesh and till today it has been playing pivotal role in overall financial
activities of the country. It has a unique identity to the country people. It is well-known through
the following logo. It serves almost all over the country.

Figure 4.1: The Logo of Sonali Bank Limited

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The details corporate profile of SBL is as follows:

Name of the Company Sonali Bank Limited

Chairman Mr. Ziaul Hasan Siddiqui

CEO & Managing Director Mr. Md. Ataur Rahman Prodhan

Company Secretary Mr. Tauhidul Islam

Legal Status Public Limited Company

Emerged as Nationalised Commercial Bank in 1972,

following the Bangladesh Bank (Nationlisation) Order No.
Genesis
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

Authorised Capital Taka 6000.00 Crore

Paid-up Capital Taka 4530.00 Crore

Number of Employee 19,348

Number of Branches 1228

Phone-PABX : 9550426-31, 33, 34, 9552924

FAX : 88-02-9561410, 9552007

Contact SWIFT : BSONBDDH

Website : www.sonalibank.com.bd

E-mail : [email protected]

Table 4.1: Corporate Profile of Sonali Bank Limited

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4.3 Organogram of Sonali Bank Limited
Sonali Bank Ltd. has the vast functional activities to serve a wide range of services to the large
number of customers. It has corporate head office and regional office to make the services
available to the customers. To conduct the whole functional activities it follows the following
management hierarchy:

Board of Dorectors (BOD)

CEO and Managing Director

General Manager General manager General manager

at Head office at Zone at Field GM office

Deputy General Manager Deputy General Manager

at Division Head of Head Office at Field office

Assistant General Manager Assistant General Manager

at Head Office at Field Office

Other executives Other Executives

SEO,EO,SO,Officer SEO,EO,SO,Officer

Other staffs Other Staffs

at Head Office at field office

Figure 4.2: Management Hierarchy of SBL

4.4 Vision, Mission and Slogan of Sonali Bank Ltd.

Vision

Socially committed leading banking institution with global presence.

Mission

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

Slogan

Your trusted partner in innovative banking.

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4.5 Objectives of Sonali Bank Ltd.
Sonali Bank Limited has its prosperous past, glorious present, prospective future and under
processing projects and activities. It is conducted by focusing mainly on the following
objectives:
 To provide all types of banking services at the door steps of the clients.
 To participate in various social and development programs.
 To take part in implementation of various policies and promises made by the government.

4.6 Products and Services of Sonali Bank Limited

SBL is the complete package of different kinds of banking services and related services. It serves
the customers for the long period of times and day by day it increases it capacity to provise more
services to the customers. A service mix is given bellow:

Services of SBL

Acillary Online
Locker Accounts ATM service
services services

Collection of utility bills NBR-Sonali bank e-

Collection of deposits payment
Source tax and VAT Online banking
Payment of different pension sceme Mobile banking
Social services
Sales and encashment
Miscellenious services

Figure 4.3: Services Mix of SBL

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4.7 Target Clients of Sonali Bank Ltd.
SBL offers a wide range of services to target a large number of customers segments. Through
1224 branches it provides services almost all over the Bangladesh. So, the key target customers
are:
 Government job holders
 Government organization
 Corporate bodies
 Educational institutions
 Students
 Business persons
 Households and so forth.

4.8 Corporate Social Responsibility (CSR) of Sonali Bank Ltd.

SBL is the largest government commercial bank in Bangladesh. Besides regular business activity
it is concern about the social concern. To create positive image to the customers and to face the
competition it uses CSR program to demolish the social conditions that affects the well-being of
the people. It helps the organization to ensure best working practice and community engagement.
CSR also helps it to understand the potentiality of the business. It gives scholarship among the
poor students to remove the obstacles in higher education. These CSR helps it to make the
customers satisfied and to ensure sustainable development. According to the annual report of
2018-19, it expensed BDT 19.01 million in the CSR sectors that covered education and research,
health and treatment, poverty reduction and rehabilitation so forth. In 2019-20 it also expensed in
this sector for the well-being of the society from the accountability to the society.

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 Chapter 5
Analysis and Findings

This chapter is all about analyzing the financial performance of SBL for the last five years to
draw a conclusion about the performance in Covid situation along with the findings getting
through the opinion of the employees who have legal entity in SBL. These two phases are
discussed consecutively. In the year 2020-21, the world experienced a new crisis that is Covid.
All the sectors are affected highly because of this pandemic. As banking is a key sector in
modern economy and Sonali Bank is the key government owned commercial Bank in
Bangladesh, here the volatility of this organization is explored.

5.1 Analysis of Financial Performance

Table 5.1: Summary of Income Statement (Operating performance) of SBL
Particulars Tk. In Million
2020-21 2019-20 2018-19 2017-18 2016-17
Total Revenue 84780 76810 78321 74353 71187
Interest Expenses 41906 40083 39001 42900 47352
Administrative and Other Expenses 21346 19627 19063 19498 19375
Operating Profit 21526 17100 20257 11955 4251
Provisions including Amortization 16184 12347 14006 2381 834
Profit Before Tax 5342 4753 6251 9574 3417
Provision for taxation 2107 2043 3987 2482 1900
Profit After Tax 3234 2710 2264 7092 1516
Reserve Fund 1133 1001 1269 1918 711
EPS 7.14 5.98 5.47 18.50 3.96
Interpretations: It’s the five years comparative statement that shows the income statement data
of SBL. Here the trends are positive in some cases and negative in some cases. The operating
profit was increased in comparing to the year 2019-20 but in comparing to the year 2018-19 the
operating profit was not changed remarkably. The company’s reserve also increased though there
was a Covid situation in 2020-21. The EPS also gave positive outlook over here regarding the
financial performance of SBL.

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Table 5.2: Summary of operating results during COVID and Pre-COVID situation

Amount (in million) Change Change in

Particulars
2020-21 2019-20 Amount %

Interest income 31666.1 35955.02 -4288.92 -11.93

Interest Expense 41906.61 40082.8 1823.81 4.55
Net Int. Income -10240.5 -4127.78 -6112.72 -148.09
Non-Int. Income 12823.84 12711.1 112.74 0.86
Investment Income 40289.94 28144.09 12145.85 43.16
Total Operating Income 42873.27 36727.41 6145.86 16.73
Total Operating Expense 21346.34 19626.98 1719.36 8.76
Profit before Provision 21526.93 17100.43 4426.5 25.87
Provision for Loans and Advance 11919.32 9377.42 2541.9 27.09
Provision for diminution in value of
-884.22 1087.69 -1971.91 -3.6
investment
Other Provision 5149.67 1882.22 3267.45 173.6
Profit Before Taxes 5342.15 4753.1 589.05 12.38
Provision For Taxation 2107.8 2043.05 64.75 3.6
Net Profit after taxation 3234.35 2710.05 524.3 18.99
Interpretations: In this comparative statement of operational performance, the two years
comparison is given to show narrowly the performance gap between Covid and before Covid
situation. Here the change amount and change rate give mixed expression regarding the financial
performance. Inspite of the challenges of pandemic the company earn a lump sum amount of
total revenue but the interest expenses were not increasing much in comparing to the revenue
that is very positive for the organization. Almost all the areas of operating activities positive over
her that represents regular flow of the business but interest income was negative during the
Covid situation by means of clients incapability due to economic change in Covid situation. The
provision for diminution in value of investment was also negative here that’s very logical in this
types of pandemic situation. But surprisingly the net profit after tax was very positive in SBL
that’s denotes operational agility of the organization.

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Table 5.3: Significant profitability ratios in COVID and pre-COVID situation

Amount (%)
Particulars Change Amount (%)
2020-21 2019-20
Return on Investment (ROI) 7.13 5.98 1.15
Non-interest income to total income 62.65 53.19 9.46
Cost income ratio 74.6 74.13 0.47
Profit after tax to total income 4.21 3.53 0.68
Return on assets (ROA) 0.21 0.2 0.01
Return on equity (ROE) 4.21 3.92 0.29
Interpretations: In the question of profitability ratios, SBL showed its class during Pandemic
situation. Here return on investment was increased by 1.15% in comparing to the previous years
that is quite vital for the organization. The amount of non-interest income was also positive for
SBL and it was about 9.46% changed in the pandemic situation. But return on assets was
remained unchanged here due to underutilization of the assets. Return on equity and cost income
ratio remained moderate in comparing two years. More improvement was expected over here.

Table 5.4: Summary of Balance Sheet (Key Issues) Of SBL for the last five years
Particulars Tk. In Million
2020-21 2019-20 2018-19 2017-18 2016-17
Cash in Hand 7300 7691 5017 5113 6289
Current Assets 522001 499062 422591 438880 388392
Balance With Bangladesh Bank and 83801 101073 93111 82883 73793
its Agent Bank
Balance With Other Banks and FI's 52308 87161 107494 68568 38820
Investments 29691 500387 440921 462577 468881
Loans and Advances 586232 551026 464166 423218 384538
Fixed Assets 33891 33466 33377 33307 33113
Other Assets 188976 175523 143033 142101 191566
Current Liabilities 275643 266687 268138 262856 265545

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 Long Term Liabilities 1315590 1137722 968567 917768 867670
Paid up Capital 45300 45300 45300 41300 38300
Reserve Fund and Surplus 48998 22893 24837 24787 29075
Interpretations: The balance sheet of SBL was not balanced enough during Covid situation. In
some extent it was very alarming like cash in hand. In comparing to the year 2019-20 it was
negative but the total current assets was increased in the situation. Balance with Bangladesh
Bank and agent banking was also decreased during the situation that is considerable issue in the
modern banking era. Balance with other bank and financial institutions were also decreased
along with the amount of investments. Loan and advances also increased that indicates during
the year and it was in increasing trend for the last five years. The liabilities section of the balance
sheet showed the same sign during the situation. It was also in increasing trend. But the
organization experienced a huge change in the reserve and surplus section in comparing to the
pre-Covid situation.

Table 5.5: Overall position of the general credit of SBL during COVID and pre-COVID
situation

Amount (in million) Change Change in

Particulars
2020-21 2019-20 Amount %

Total Outstanding 158750 142860 15890 10.01

Total Disbursement 45400 45770 -370 -0.81
Total Recovery 2230 6010 -3780 -62.9
Interpretations: Collecting deposit and providing loan are the key task of bank. The commercial
banks mainly do this function in large collaboration. So, these issues are very vital to analyze the
performance of any bank. Here SBL showed alarming signal during the Covid situation. Total
loan outstanding decreased in comparing to the year 2019-20. Total disbursement of loan was
also decreased in the pandemic situation. Here the very alarming area was loan recovery. It was
negative for the entire year of Covid situation. 62.9% change rate is not acceptable at all for the
sustainability of the banking business.

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Table 5.6: Showing the key ratios on the basis of financial performance
Particulars 2020-21 2019-20 2018-19 2017-18 2016-17
Operating Profit Ratio 25.39% 22.26% 25.86% 16.08% 5.99%
Return of Assets (ROA) 0.21% 0.20% 0.18% 0.58% 0.14%
Return of Equity (ROE) 4.21% 3.92% 3.32% 10.63% 2.18%
Return on Investment (ROI) 7.13% 5.98% 7.58% 7.29% 7.06%
Return on Loan and Advance 5.57% 5.51% 5.74% 6.85% 7.14%
Return on Capital Employed 1.64% 1.42% 0.22% 1.22% 0.45%
Return on Earning Assets 0.27% 0.25% 0.24% 0.85% 0.19%
Operating Profit per Employee 1.14 0.87 1.17 0.65 0.21
Net Profit per Employee 0.17 0.14 0.13 0.39 0.08
Operating Profit per Branch 17.56 13.99 16.67 9.87 3.52
Efficiency Ratio 25.18% 25.55% 24.33% 26.22% 27.30%
Burden Ratio 0.56% 0.50% 0.60% 0.56% 0.93%
Cost of Deposit 3.32% 3.55% 3.61% 4.09% 4.84%
Yields on Loans and Advances 5.57% 5.51 5.74% 6.85% 7.14%
Interest Spread 1.1% 1.96% 2.13% 2.76% 2.30%
Cost of Fund 5.23% 5.29% 5.38% 5.95% 6.95%
Cost to Income Ratio 74.61 77.74% 74.13% 83.92% 94.01%
Debt Equity Ratio (Times) 17.58 20.59 17.63 18.02 16.82
Current Ratio (Times) 1.89 1.87 1.58 1.67 1.46
Net Asset Value per Share 189.00 150.54 154.83 160.02 175.91
(NAVPS-in TK.)
Earnings per Share (EPS- In TK.) 7.14 5.98 5.47 18.50 3.96
Capital Adequacy Ratio (CAR) 10.02% 10.09 10.10% 10.35% 10.33%
Cash Reserve Ratio / Liquidity 13% 7.90% 7.30% 8.08% 7.22%
Ratio (CRR)
Statutory Liquidity Ratio (SLR) 50.02% 41.57% 38.27% 44.13% 48.50%

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Interpretations: Ratio analysis is the key tools to highlight the financial performance of any
organization and evaluate the performance gap. In this table all ratios are encoded to analyze the
performance level of SBL during Covid situation in comparing to the previous four years
performance. Here operating profit ratio showed gradual up gradation and that was consistent in
Covid situation also. Return on assets was also same to the previous year’s especially same to
2019-20 but little bit handsome comparing to the rest of the values. Return on equity and return
on investment were also in positive trend. Return on loan and advancement showed consistent
value in comparing to the all five years.

Return on capital employed and return on earning assets was in the gradual up gradation trend
for the last five years along with Covid situation. Per employee operating was increased
remarkably and surprisingly during the Covid situation. Here operating profit increased very
rapidly but net profit per employee was almost static considering the previous years. Branch wise
operating profits of SBL was increased to 17.56 in 2020-21 that was 13.99 in 2019-20 that very
positive performance indication for the organization. Efficiency ratios we’re static for the last
five years along with Covid situation by 25.18%. Cost of deposit decreased in the pandemic
situation. Cost of fund was also decreased in 2020-21 comparing to the previous years. In the
question of the liquidity ratios the organization has maintained the standard value like in 2020-21
the current ratio was 1.89 where the standard value is 2:1. So, it was in a moderate level.

EPS was also being an increasing trend in SBL. In 2020-21 the EPS was 7.14 that was 5.98 in
one year back. Capital adequacy ratio gave stable results over here. It was very close to 10% for
the last five years. Cash reserve ratio and statutory liquidity ratio were in upwards trend in SBL.
So, the overall performance was good enough considering the situation but some aspects we’re
alarming for the banking industry and SBL as well.

In the following pages breakdown of the some key ratios are shown and discussed critically to
explore the real financial scenario of SBL during the Covid situation. In narrow sense some
ratios shows that SBL performs above standard but considering the broad picture the conclusion
is draws negatively. So SBL needs to focus on th9s areas to enhance performance in the post-
Covid situation.

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Table 5.7: Measuring the change rate of net profit per employees

Amount in Million
Particulars
2020-21 2019-20 2018-19 2017-18 2016-17

Net Profit per Employee 0.17 0.14 0.13 0.39 0.08

Change Amount 0.03 0.01 -0.26 0.31 0

Change Rate (%) 21.43% 7.69% -66.67% 387.5% 0
Interpretation: In the year 2018-19, SBL faced a crucial situation in the banking industry. Here
the symptom is its net profit per employee was declined by 66.67%. But due to core banking
capabilities it has recovered the situation. In 2019-20, it attained 0.14 million net profits per
employee that is 7.67% increased considering the previous year.

In the Covid situation it was also in growing trend. Here the amount is 0.17 million that is
21.43% increase considering the previous year. So, it’s progressing gradually that is positive
indicator for the post-covid performance trends. In the following a graphical representation ig
given that clarifies the fluctuation of the per employees profit in SBL for the last five years. It
was more flutter in 2017-2018 but after the curve was in growing trends that indicates the
performance excellence of SBL in spite of the pandemic situation.

0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2020-21 2019-20 2018-19 2017-18 2016-17

Figure 5.1: Showing the trend of net profit per employee

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Table 5.8: Showing the Return on Investment for the five consecutive years

Particulars 2020-21 2019-20 2018-19 2017-18 2016-17

Return on Investment
7.13% 5.98% 7.58% 7.29% 7.06%
(ROI)
Change Rate 1.15% -1.60% 0.29% 0.23% 0
Interpretation: Return on Investment is a key measure to analyze the financial performance of
any organization especially in banking organization. This parameter shows a mixed situation for
the SBL. In the Covid situation it was satisfactory comparing to the immediate past year. But in
comparing among the previous years, it’s not satisfactory at all for SBL. But it’s in upgrading
trend that is positive sign for the bank.

7.13% 7.58% 7.29% 7.06%

5.98%

2020-21 2019-20 2018-19 2017-18 2016-17

Figure 5.2: Return on Investment Trend of SBL

Table 5.9: Current ratio analysis of SBL for the last five years

Particulars 2020-21 2019-20 2018-19 2017-18 2016-17

Current Ratio (Times) 1.89 1.87 1.58 1.67 1.46
Change 0.02 0.29 -0.09 0.21 0
Interpretation: Current ratio denotes short term liquidity status of any organization. In the bank
liquidity issues are very crucial. So, banks need to maintain 2:1 current ratio. In SBL, the ratio is
almost close to the standard value but it’s not satisfactory for the banking industry at all. Here the
ratios are in increasing trend but during the Covid situation it was not increased up to the mark
comparing to the previous years. Here the change is about 0.02. So, they need to be concerned
about the matter.

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 2

1.5

0.5

0
2020-21 2019-2020 2018-19 2017-18 2016-17
Current Ratio 1.89 1.87 1.58 1.67 1.46

Figure 5.3: Analysis of current ratio of SBL

Table 5.10: Showing the Change rate of EPS for the last five years

Particulars 2020-21 2019-20 2018-19 2017-18 2016-17

Earnings per Share (EPS-
7.14 5.98 5.47 18.5 3.96
In TK.)
Change Amount 1.16 0.51 -13.03 14.54 0
Change Rate 19.40% 9.32% -70.43% 367.17% 0
Interpretation: Calculating EPS is a mandatory requirement for the public limited company.
The EPS rate in SBL is satisfactory in comparing to the recent past as it was increased by
19.40% in 2020-2021. But comparing the past five years it is alarming as in 2017-18, The EPS
was 18.5 that was far better than 2020-21. But it’s in increasing trend.

20

15

10

0
2020-21 2019-2020 2018-19 2017-18 2016-17

Figure: EPS trend of SBL for the last five years

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Table: 5.11: CRR of SBL for the last five years

Particulars 2020-21 2019-20 2018-19 2017-18 2016-17

Cash Reserve Ratio /
13% 7.90% 7.30% 8.08% 7.22%
Liquidity Ratio (CRR)
Change 5.10% 0.60% -0.78% 0.86%
Interpretation: It’s known to all that banks need to maintain a amount of liquidity to meet the
immediate needs of the clients. Here cash reserve ratio plays vital to maintain liquidity. In
considering the past five years the CRR is in growing trend in SBL. In 2018-19, the trend was in
negative but then it recovered the situation. In 2020-21, the CRR was 13% that is 5.10% increase
comparing the recent past.

13%

7.90% 8.08%
7.30% 7.22%

2020-21 2019-2020 2018-19 2017-18 2016-17

Figure: Showing the CRR trend of SBL

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5.2 Findings the Level of Challenges and the Implications of Strategies
(A) Opinion on the level of challenges SBL faced during COVID situation
Table 5.12: Measuring the level of challenges during COVID situation in SBL
Areas of Challenges Level of Challenges Mean Standard
Deviation
1 2 3 4 5
Lack of modern and hi-tech equipment 8 6 0 1 0 1.60 3.74
Restricted business hours due to Govt. regulation 0 2 1 9 3 3.87 3.54
Overall position of the general credit 0 3 1 8 3 3.73 3.08
Slip of operating profit and capital shortfall 1 2 2 7 3 3.60 2.35
Declining profitability ratios 0 1 0 11 4 4.40 4.66
Liquidity crisis 4 7 1 3 0 2.20 2.74
Interpretation: In the previous analysis it’s seen that SBL had verities in performance during
the Covid situation. In some extents it did really well due to Pandemic but in some extents it
failed to cop up with and logically the performance was declined. Here the response of the
respondents is presented to show what about they think about the challenges if SBL during the
Covid situation. In this Likert scale 1 represents poorly challenging and 5 represents highly
challenging factors. Total six factors were raised to test the level of challenges. Here the
challenging factors were declining profitability ratios, restricted business hours due to
government regulations, position of the general credit and capital shortfall due to clients’
incapability. Here the mean of all the factors were above average like the mean if declining
profitability ratios is 4.40 that is in the middle of the challenging and highly challenging
parameters. Lack of modern and Hi-Tech equipment and liquidity crisis showed low challenge
over here as SBL was below the ideal values of the current ratios. But the ratios we’re growing
comparing to the previous years. Here the mean we’re 1.60 and 2.30 respectively that was
positive sign for SBL and helped it to maintain performance due to Covid. Here the overall
picture is pretty good for SBL.

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(B) Opinion on the effectiveness of strategies to recover challenges due to COVID
Table 5.13: Measuring the effectiveness of strategies that have been taken to cope up with
the challenges of COVID
Areas of Effectiveness Level of Effectiveness Mean Standard
Deviation
1 2 3 4 5
Technological innovation and digitalization 1 2 1 3 8 4.00 2.92
Risk Management thresholds 0 3 1 8 3 3.73 3.08
Focusing on agent banking 0 12 0 2 1 2.47 5.09
Increasing societal scrutiny through SME 1 2 1 7 4 3.73 2.55
finance, agricultural/rural credit
Utilization of non-performing loan 0 1 2 10 2 3.87 4.00
Redesigning the business model 0 11 2 2 0 2.40 4.58
Interpretation: In the phase of the questionnaire, the motive was collecting data to test
effectiveness if the strategies that SBL applied to cover up the challenges of Covid situation.
Based on the challenging edge they set down their strategies. Here the first factors were
technological innovation and digitalization. The response was really positive for the bank as the
mean was 4. Most of the respondents we’re happy with the digitalization as SBL implemented
Sonali Bank e-sheba and e-wallet during the pandemic. The second factor was risk management
measures. Here the effectiveness was moderate. Mixed opinion was drawn over here but the
mean 3.73 represents effectiveness of risk management system.

The third factor utilization of non-performing loan as every bank had huge amount of idle loan
during the Pandemic because of economic condition. Along with the collaboration with the
government of Bangladesh SBL invested on industrial finance that helped to respondents to
show opinion over here. The mean value of 3.87 represents moderately effectiveness of the
strategy. Increasing social scrutiny during Covid situation helped SBL to maintain performance
agility during Covid. Here the mean 3.73 represents positive sign for the bank.

Focusing on agent banking is the common practice for most of the banks to spread banking
everywhere. SBL starts to practice agent banking concept. But during Covid situation it didn’t
get enough monetary return from the agent banking. The main value of 2.47 shows less of
effectiveness of this strategy.

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Finally redesigning the business model wasn’t effective during the Pandemic situation. The mean
of the response 2.40 clarifies the ineffectiveness of the strategy. But the overall picture of SBL
was pretty good for SBL due to pandemic but it was not up to the mark as SBL is the largest
state-owned commercial Bank in Bangladesh.

5.3 Summary of the Analysis and Findings

Table 5.14: Comparative table to show the areas that had been changed remarkably during
Covid situation

Areas in Increasing Trend Areas in Declining Trend

Interest Expense Interest income

Return on Investment (ROI) Return on assets (ROA)

Credit Total Outstanding Credit Total Disbursement

Operating Profit Ratio Interest Spread

Earnings per Share (EPS- In TK.) General CreditTotal Recovery

Interpretation: In the Covid situation SBL showed mixed outlook regarding the financial
performance. Some areas it has done really well due to the challenges of the pandemic but in
some extent it has failed to show its profitability. Its interest expense increased in the pandemic
beside its interest come declined. So logically it was negative balance in the net interest earning
section. But return on investment increased remarkably following with operating profit and
earning per share. It showed very alarming situation in the general credit section. Here total
disbursement and recovery was in negative value comparing to the previous years.

Particulars Mean

Level of Challenges During Covid situation 3.23

Effectiveness of the Strategies During Covid Situation 3.37

Interpretation: Level of challenges and effectiveness of strategies during Covid situation both
are moderate for SBL due to its on time action and operational excellence. But it has some
alarming areas that need to be improved to perform in the post Covid situation. The areas are
focusing more on agent banking, loan recovery and risk management practices.

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 QUESTIONNAIRE
The Questionnaire is given below that is used to find out the financial performance gap and
strategies have been taken to enhance performance during COVID situation in SBL.

Dear Sir/Madam,

As per the completion of MBA degree I need to prepare an internship report on the topic of
‘Financial Performance Analysis during COVID Situation: A Study on Sonali Bank
Limited’. For this purpose I would like to collect data to make my report informative and
practical. Please provide your kind feedback regarding the questions. I assure that I will maintain
entire privacy of the data. I also assure that this information will be used only for academic
purposes.

A. Personal Information (1-3): (Please put a tick mark which is suited to you).

Name (Optional):

1. What is your gender?

a) Male b) Female c) Others

2. How long would you stay in Sonali Bank Limited?

a) Below 1 year (Entry level)

b) 1 to 5 years (Middle level)
c) Above 5 years (Top level)

3. What is your position (Job title) in SBL?

a) Assistant General Manager

b) Senior Officer
c) Officer General
d) Officer Cash
e) Others…….
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B. Information regarding the factors that create challenges and level of challenges during
COVID situation
You are cordially requested to draw your opinion about the afterward statements on the basis of
the following scale where,
Poorly Challenging=1, Moderately Challenging=2, Neutral=3,
Challenging=4, and Highly Challenging=5
No Statement 1 2 3 4 5
1 Lack of modern and hi-tech equipment.

2 Restricted business hours due to Govt. regulation.

3 Overall position of the general credit
4 Slip of operating profit and capital shortfall
5 Attaining significant profitability
6 High cash withdrawal of clients (liquidity crisis)

C. Information regarding the implications of strategies has been taken to cope up with the
challenging factors due to COVID situations.
Please rate in 1 to 5 scales to show your expression regarding the strategies of Sonali Bank
Limited to recover the COVID challenges. Here,
Highly Ineffective=1, Ineffective=2, Neuteal-3, Effective=4, Highly Effective=5
No Particulars 1 2 3 4 5
1 Technological innovation and digitalization
2 Risk Management thresholds
3 Utilization of non-performing loan
4 Increasing societal scrutiny through SME finance,
agricultural/rural credit
5 Focusing on agent banking
6 Redesigning the business model

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