Financial Performance Analysis of

Sonali Bank Limited

1.1 Introduction of the Report

Banks play the most important role in the economy. Banks collect money from the individuals and lend them to others. Now banks offer the widest range of financial services and perform lots of financial functions. Thus banks have proven that they are the key factor for the business and economy as well.

Sonali Bank Limited is the largest banking institution in Bangladesh, dynamic in actions, honest in dealings, just in judgment, fair in approaches and devoted to high quality service to customers and thereby contribute to the growth of GDP of the country throughout stimulating trade and commerce, boosting up export, poverty alleviation, raising living standard of limited income group and overall sustainable socio-economic development in the country.

To achieve the aforesaid objectives of the Bank, different banking activities must play an active role to provide the financial assistance to the customer who also helps them by providing them with management assistance when needed. Sonali Bank Limited has played this role with their experiences in the banking sector where the others are not merely performed.

The internship report comprises a brief study on the Sonali Bank Limited during three months internship. The report is distributed in many parts according to nature and requirement of organization and according to the instructions of supervisor of report.

1.2 Justification of the studyInternship Program is a mandatory program for all students of B.B.A under Stamford University of Bangladesh . Practical orientation is a positive development in professional area. Recognizing the importance of practical experience, Department of Business Administration has introduced a one to three months practical exposure as a part of the curriculum of Bachelor of Business Administration.

For the completion of this internship program I have chosen a bank named “Sonali Bank Limited” and my internship report is based on “Financial performance analysis of Sonali Bank Limited”. I have prepared this report under Chowdhury Shahariar khan

Assistant Professor, Department of Business Administration, Stamford University of Bangladesh. In the study period, mainly student gain theoretical knowledge but now a day, in the job market there is no substitute of principle work experience. Therefore, before getting into job, students should have some real world experience in the major field of study on the career choice that interest him/her.

1.3 Objective of the StudyThe objective of the study is to gather practice of all knowledge regarding business sector and operations. Theory classes of B.B.A provide us theories regarding business sector and practical orientation gives us the chance of view those systems and their operations. More precisely we can identify those objectives:

To gather the practical experience base on the theoretical knowledge. To habituated with the corporate environment and culture. To serve the function of overall banker customer relationship. To observe the function of general banking system. To evaluate the financial performance of Sonali Bank Limited. To observe the function of merchant banking operations. To understand and analyze the financial strength of Sonali Bank Limited. To observe the function of foreign exchange department. To learn and acquainted to fulfill the academic purpose.

1.4 Scope of the StudyAs I was an intern, my scope was limited and restricted for some purpose. I had maintained some official formality for the collection of data of my report. This study will give a clear idea about the financial performance of Sonali Bank Limited as well as the different section of different products and services of Sonali Bank Limited. At last the financial position of the bank in the banking industry based on its last couple of year’s performance.

Information availability. Good communication system. Have a wide area of gaining knowledge. Good working environment.

1.5 Methodology of the Study

I have designed this report as an expletory research paper. Here I have discussed the general banking system of Sonali Bank Limited and critically analyze the banking procedure with the standard one as per theoretical framework. For this purpose I use my personal observation during my internship program. Through conversation with the different level officers of the Bank, I also gather knowledge about the general banking system. For theoretical framework, I go through a number of credit related books, financial management books, business communication book, foreign exchange manuals, Bangladesh Bank guidelines.

1.6 Sources of the Information

For smooth and accurate study everyone has to follow some rules and regulations. The study inputs were collected from two sources:

Primary Sources: Practical desk work. Face to face with officers. Face to face conversation with the client. Facing some practical situation related with the day to day banking activities.

Secondary Sources: Annual Report of Sonali Bank Limited. Brochures. Websites.

1.7 Limitation of the Study

Any research work needs high degree of involvement regarding collection of information, creation of data base, literature review and analysis of data. While doing so, many limitations arise even though we always put our best effort to avoid them. In conducting the present study, the following limitation has been faced.

The personnel of the organization did not want to disclose the classified information to the outsiders.

Due to lack of experience, there is a chance of having some mistake in the report though best effort has been applied to avoid any kind of mistake.

I have faced major limitation in the financial projection as my estimate was rather informative base than of actual one.

Time was not sufficient to make an in depth study on such issue2.1 Definition of Bank

Generally Bank is refers to an Organization that deals with money. The definition of Bank may be as follows:As per Bank Companies Act 1991:

Banking Company means any company which transacts the business of banking in Bangladesh and includes a new bank and specialized bank.

Banking means the accepting for the purpose of lending or institute of deposit of money from public repayable on demand or other wise and withdraw able by draft, order o otherwise.

Provided by Famous Encyclopedia:

A commercial banker is a dealer in money in substitutes for money, such as cheque or bill of exchange.-New Encyclopedia Britannica.

Establishment for custody of money which it pays out on customers order. - The New Oxford Encyclopedia Dictionary.

Provided by an Ordinances:

Banker includes a body of person whether incorporated or not, who carry on the business of banking.-English Bills of Exchange Act-1882.

A bank is a person or corporation carrying on bonafide banking business.- English Finance Act.

Provided by Banking Institutes:

A bank performs an essentially distributive task, service or acts as an intermediary between borrowers & lenders. In broader sense, however, a bank can be considered the heart of a complex financial structure. –American Institute of Banking.

Provided by Famous Economist:

A Bank is an institution whose debts are widely in sell element of other people debts to each other. - R.S. Sayers.

A Banker is a dealer in debt his own and other peoples. - Crowther. A Bank is a financial intermediary a dealer in loans and debts. – Cairn Cross.

2.2 Objective of a Bank

The objectives of a Bank can be looked at from 3 different perspectives of the 3 key parties to the banking activities- Bank owners, the Government and The bank clients.

From the owner’s perspective:

i) Earning Profit: Just like any owner of a commercial institution, a bank owner’s main objective is to earn profit, which is achieved mainly through monetary exchanges.

ii) Rendering Service: Banks Provide Different types of services to the government and people of the country.

iii) Goodwill: In order to earn profit through rendering services, banks need to have a lot of goodwill, may be a bit more than other commercial institutions.

iv) Raising Efficiency: To earn maximum profit, banks need to provide efficient service, for which they require expert workforce.

From the Government’s Perspective:

i) Issue of Notes & Currencies: Since civilizations have moved along from the barter system, it has been the objective of the Government of different countries to provide its economy with a proper exchange media through issuance of notes & currencies through bank, which also take upon the duty of maintaining the system.

ii) Capital formation: The Government wants that bank assist in the macroeconomic objective of capital formation by encouraging people to participate in savings.

iii) Capital Investment & Industrialization: the Government, as a part of their secondary macroeconomic objective, wants the bank to assist in capital investment & industrialization by lending out their accumulated capital.

iv) Money Market Control: Government tries to stabilize the money market through banks.

v) Employment: As part of their primary macroeconomic objectives, they expect banks to provide employment for its people.

vi) Advice on Financial Matters: Since banks hire a lot of financial experts and advisors, it often seeks advice from banks to help them develop policies.

From the Bank Client’s Perspective:

i) Deposit: One of the bank’s main objectives is to accept its clients’ deposits. Like bank clients also want to deposit money with a competitive rate of interest.

ii) Safety: Providing safekeeping of its client’s monetary possessions and valuables is another one of banks essential objectives.

iii) Advisors & Consultants: Banks provide its clients with advisors and consultants to help them chalk out an appropriate savings plan.

iv) Representatives or Trustees: Both the clients and government rely on the bank to act as their representatives and trustees of monetary exchange activities.

v) Raising living standard: By providing interests against their deposits, banks help their clients to improve their living standards.

2.3 Business of Banking Company (BANK COMPANY ACT 1991):

In addition to the business of banking a bank company may engage in any one or more of the following forms of business:

a) the borrowing, raising or taking up of money;

b) the lending or advancing of money either upon or without security;

c) the drawing, making, accepting, discounting, buying, selling, collecting and

dealing in bills of exchange, hoondees, promissory notes, coupons, drafts,bills of

lading, railway receipts, warrants, debentures, certificates, participation term

certificates, term finance certificates, musharika certificates, modareka

certificates, such other instruments as may be approved by the Bangladesh Bank,

and such other instruments and securities whether transferable or negotiable or

not;

d) the granting and issuing of letters of credit, traveller's checks, and circular notes;

e) the buying, selling and dealing in gold and silver coins and coins of other metals;

f) the buying and selling of foreign exchange including foreign bank notes;

g) the acquiring, holding, issuing on commission, underwriting and dealing in

stocks,

funds, shares, debenture stock, obligations, participation term certificates, term

finance certificates, musharika certificates, modareka certificates and such other

instruments and investments of any kind as may be approved by the Bangladesh

Bank;

h) the purchasing and selling of bonds, scrips or other forms of securities,

participation term certificates, term finance certificates, musharika certificates,

modareka certificates and, on behalf of the constituents of the Bangladesh Bank

or others, such other instruments as may be approved by the Bangladesh Bank;

i) the negotiating of loans and advances;

j) the receiving of all kinds of bonds or other valuables on deposit or for safe

custody or otherwise;

k) providing vaults for the safety of the deposits;

l) the collecting and transmitting of money against securities;

m) acting as agents for the Government, local authorities or any other person;

n) the carrying on of agency business of any description including the clearing and

forwarding of goods and acting as a law agent on behalf of customers, but

excluding the business of a managing agent or treasurer of a company;

o) contracting for public and private loans and negotiating and issuing the same;

p) the effecting, insuring and underwriting of shares, stocks, debentures, debenture

stock of any company, corporation or association and the lending of money for

the purpose of any such issue;

q) the carrying on and transacting of every kind of guarantee and indemnity

business;

r) the buying and acquiring of any kind of property including merchandise, patents,

designs, trademarks and copyrights, in addition to, at the normal business period

of a bank, such or similar transactions as-

1) repurchase by the seller, or

2) selling in the way called purchase on rent, or

3) repayment of outstanding rates, or

4) leases, or

5) sharing out of revenues, or

6) financing in any other way;

s) bringing into possession any property which may satisfy or partly satisfy any of

the claims of the banking company and the managing and borrowing of such

property;

t) acquiring, holding and managing of any property or any right, title or interest in

any such property which may form the security or part of the security for any

loans or advances or which may be connected with any such security;

u) undertaking and executing trusts;

v) undertaking the administration of movable and immovable property as executor,

trustee or otherwise;

w) for the benefit of employees or ex-employees of the banking company or the

dependants and connections of such persons-

1) establishing and supporting, or aiding in the establishment and support

of associations, institutions, funds, trusts or any other establishment;

2) granting pensions and allowances;

3) making payments toward insurance;

4) subscribing to any exhibition or any object generally useful;

5) guaranteeing money for all these purposes.

x) the acquisition, construction, maintenance and alteration of any building or works

necessary or convenient for the purpose of the banking company;

y) selling, improving, managing, exchanging, leasing, mortgaging or otherwise

transferring or turning into account or otherwise disposing of all or any part of

the property or rights of the banking company;

z) acquiring and undertaking the whole or any part of the business of any person or

company, when such business is of a nature enumerated or described in this

subsection;

aa) doing all such other things as are incidental or conducive to the promotion or

advancement of the business of the company;

ab) any other form of business which the Government may, by notification in the

official Gazette, specify as a form of business in which it is lawful for a banking

company to engage.

2.4 An Overview of Banking Operation in Bangladesh

The development process of a country largely depends upon its economic activities. Banking is a powerful medium among other spheres of modern socio-economic activities for bringing about socio-economic changes in a developing country like Bangladesh. Three different sectors like socio-economic changes in a developing country like Bangladesh. Three different sectors like Agriculture, commerce, and industry provide the bulk of a country’s wealth.

With the passage of time the functions of the bank has got a multi-dimensional configuration. Of all the functions of a modern bank, lending is by far the most important. They provide both short-term and long term credit. The customers come from all walks of life, from a small business a multi-national corporation having its business activities all around the world. The banks have to satisfy the requirements of different customers belonging to different social groups.

To regulate the activities of other banks, al the commercial private and/ or nationalized, and specialized banks perform service related activities within the jurisdiction of the Central Bank. In our Country, Bangladesh the role of the central bank is entitled to be executed by Bangladesh Bank. The banking system at independence consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks. Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. The insurance business was also nationalized and became a source of potential investment funds. Cooperative credit systems and postal savings offices handled service to small individual and rural accounts. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange. The primary function of the credit system throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent of total advances.The government's encouragement during the late 1970s and early 1980s of agricultural development and private industry brought changes in lending strategies. Managed by the Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and fishermen dramatically expanded. The number of rural bank branches doubled between 1977 and 1985, to more than 3,330. Denationalization and private industrial growth led the Bangladesh Bank and the World Bank to focus their lending on the emerging private manufacturing sector. Scheduled bank advances to private

agriculture, as a percentage of sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987, while advances to private manufacturing rose from 13 percent to 53 percent.The transformation of finance priorities has brought with it problems in administration. No sound project-appraisal system was in place to identify viable borrowers and projects. Lending institutions did not have adequate autonomy to choose borrowers and projects and were often instructed by the political authorities. In addition, the incentive system for the banks stressed disbursements rather than recoveries, and the accounting and debt collection systems were inadequate to deal with the problems of loan recovery. It became more common for borrowers to default on loans than to repay them; the lending system was simply disbursing grant assistance to private individuals who qualified for loans more for political than for economic reasons. The rate of recovery on agricultural loans was only 27 percent in FY 1986, and the rate on industrial loans was even worse. As a result of this poor showing, major donors applied pressure to induce the government and banks to take firmer action to strengthen internal bank management and credit discipline. As a consequence, recovery rates began to improve in 1987. The National Commission on Money, Credit, and Banking recommended broad structural changes in Bangladesh's system of financial intermediation early in 1987, many of which were built into a three-year compensatory financing facility signed by Bangladesh with the IMF in February 1987.

One major exception to the management problems of Bangladeshi banks was the Grameen Bank, begun as a government project in 1976 and established in 1983 as an independent bank. In the late 1980s, the bank continued to provide financial resources to the poor on reasonable terms and to generate productive self-employment without external assistance. Its customers were landless persons who took small loans for all types of economic activities, including housing. About 70 percent of the borrowers were women, who were otherwise not much represented in institutional finance. Collective rural enterprises also could borrow from the Grameen Bank for investments in tube wells, rice and oil mills, and power looms and for leasing land for joint cultivation. The average loan by the Grameen Bank in the mid-1980s was around Tk.2,000 (US$65), and the maximum was just Tk18,000 (for construction of a tin-roof house). Repayment terms were 4 percent for rural housing and 8.5 percent for normal lending operations.

The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10 years. Most of its customers had never dealt with formal lending institutions before. The most remarkable accomplishment was the phenomenal recovery rate; amid the prevailing pattern of bad debts throughout the Bangladeshi banking system, only 4 percent of Grameen Bank loans were overdue. The bank had from the outset applied a specialized system of intensive credit supervision that set it apart from others. Its success, though still on a rather small scale, provided hope that it could continue to grow and that it could be replicated or adapted to other development-related priorities. The

Grameen Bank was expanding rapidly, planning to have 500 branches throughout the country by the late 1980s.

Beginning in late 1985, the government pursued a tight monetary policy aimed at limiting the growth of domestic private credit and government borrowing from the banking system. The policy was largely successful in reducing the growth of the money supply and total domestic credit. Net credit to the government actually declined in FY 1986. The problem of credit recovery remained a threat to monetary stability, responsible for serious resource misallocation and harsh inequities. Although the government had begun effective measures to improve financial discipline, the draconian contraction of credit availability contained the risk of inadvertently discouraging new economic activity.

Foreign exchange reserves at the end of FY 1986 were US$476 million, equivalent to slightly more than 2 months worth of imports. This represented a 20-percent increase of reserves over the previous year, largely the result of higher remittances by Bangladeshi workers abroad. The country also reduced imports by about 10 percent to US$2.4 billion. Because of Bangladesh's status as a least developed country receiving concessional loans, private creditors accounted for only about 6 percent of outstanding public debt. The external public debt was US$6.4 billion, and annual debt service payments were US$467 million at the end of FY 1986.

2.5 Current Structure of Banking Industry

Banks in Bangladesh can be classified into the following categories:

Figure-1: Types of Banks in Bangladesh

Ansar-VDP Unnayan Bank

Nationalized Banks

Bangladesh Bank(Central Bank of the Country)

Specialized Banks and Credit Agencies

Co-operative BanksCommercial Banks

Private Banks

Foreign Banks

Traditional Banks Islamic Banks

Bangladesh Krishi Bank (BKB)

Rajshahi Krishi Unnayan Bank (RKUB)

Bangladesh Shilpa Rin Sangstha (BSRS)

Bank of Small Industry & Commerce Bangladesh Ltd. (BASIC)

Grameen Bank

Karmasangsthan Bank

Bangladesh Shilpa Bank (BSB)

Bangladesh Samabaya Bank Ltd.

Central Co-operative Bank Ltd.

Primary Co-operative Bank Societies

2.6 Central Bank and Its Policy

Bangladesh Bank is the central bank in Bangladesh. It was established on 16 th December 1971 under the Bangladesh Bank (Temporary) Order 1971. Bangladesh Bank (BB), as the central bank, has legal authority to supervise and regulate all the banks. It performs the traditional central banking roles of note issuance and being banker to the government and banks. It formulates and implements monetary policy manages foreign exchange reserves and supervises banks and non-bank financial institutions. Its regulations Include:

Minimum capital requirements.

Limits on loan concentration and insider borrowing.

Guidelines for asset classification.

Income recognition.

Bangladesh Bank has the power to impose penalties for non-compliance and also to intervene in the management of a bank if serious problems arise. It also has the delegated authority of issuing policy directives regarding the foreign exchange regime. The powers and functions of Bangladesh Bank are governed by Bangladesh Bank Order 1972 and Banking Companies Act 1991 to make provisions for streamlining the affair of banking companies to suite the present day’s socio-economic needs of the country. The function of Bangladesh Bank may be classified into following:

Commercial Bank:

The commercial banking system dominates Bangladesh’s financial sector with limited role of Non-Bank Financial Institutions and the capital market. The Banking sector alone accounts for a substantial share of assets of the financial system. The banking system is dominated by the 4 Nationalized Commercial Banks, which together controlled more than 57% of deposits and operated 3390 branches (55% of the total) as of December 31, 2007.

Specialized Banks:

Out of the 5 specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agriculture sector while the other two (Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha) are for extending term loans to the industrial sector. BASIC Bank Limited was established as the policy makers of the country felt the urgency for a bank in the private sector for financing small scale industries (SSSIs).

List of scheduled banks in Bangladesh:

Nationalized Banks:

National Commercial Bank Web linkSonali Bank Limited http://www.sonalibank.com.bdJanata Bank Limited http://www.janatabank-bd.comAgrani Bank Limited http://www.agranibank.orgRupali Bank Limited http://www.rupali-bank.com

Specialized Commercial Banks:

National Commercial Bank Web linkBangladesh Krishi Bank http://www.krishibank.org.bdBangladesh Shilpa Bank http://www.shilpabank.gov.bdRajshahi Krishi Unnayan Bank http://www.rakub.org.bdBangladesh Shilpa Rin Shangstha http://www.bsrs.org.bd/BASIC Bank Limited http://www.basicbanklimited.com

Private Commercial Banks:

National Commercial Bank Web linkPubali Bank Limited http://www.pubalibangla.comUttara Bank Limited http://www.uttarabank-bd.comAB Bank Limited http://www.abbank.com.bdIFIC Bank Limited http://www.ificbankbd.comIslami Bank Bangladesh Limited http://www.islamibankbd.comNational Bank Limited http://www.nblbd.comThe City Bank Limited http://www.thecitybank.comUnited Commercial Bank Limited http://www.ucbl.comICB Islamic Bank Limited http://www.icbislamic-bd.com/Eastern Bank Limited http://www.ebl-bd.comNational Credit & Commerce Bank Limited

http://www.nccbank.com.bd

Prime Bank Limited http://www.prime-bank.comSoutheast Bank Limited http://www.sebankbd.comDhaka Bank Limited http://www.dhakabank.com.bdAl-Arafa Islami Bank Limited http://www.al-arafahbank.com/Social Investment Bank Limited http://www.siblbd.comDutch-Bangla Bank Limited http://www.dutchbanglabank.comMercantile Bank Limited http://www.mblbd.comOne Bank Limited http://www.onebankbd.comEXIM Bank Limited http://www.eximbankbd.comPremier Bank Limited http://www.premierbankltd.com

First Security Bank Limited http://www.fsblbd.comStandard Bank Limited http://www.standardbankbd.comThe Trust Bank Limited http://www.trustbank.com.bdMutual Trust Bank Limited http://www.mutualtrustbank.comBank Asia Limited http://www.bankasia-bd.comBangladesh Commerce Bank Limited http://www.bcbl-bd.comJamuna Bank Limited http://www.jamunabankbd.comShahjalal Bank Limited http://www.shahjalalbank.com.bdBRAC Bank Limited http://www.bracbank.com

Foreign Banks:

National Commercial Bank Web linkCommercial Bank of Ceylon Limited http://www.combankbd.comStandard Chartered Bank Limited http://www.standardchartered.com/bdHabib Bank Limited http://www.habibbankltd.comState Bank of India http://www.statebankofindia.comNational Bank of Pakistan http://www.nbp.com.pkCiti Bank N.A. http://www.citi.com/domain/index.htmWoori Bank http://www.wooribank.comBank Al-Falah Limited http://www.bankalfalah.comThe Hong Kong and Shanghai Banking Corporation Limited

http://www.hsbc.com

3.1 A Brief Overview of Sonali bank Limited

Sonali Bank is a state-owned commercial bank in Bangladesh. It is the largest bank of

the country.[A fully state-owned enterprise, the bank has 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. Sonali Bank Limited singularly enjoys the prestige of being the agent of

the Central Bank of Bangladesh in such places where the guardian of the money market

has chosen not to act by itself.

Sonali Bank was established in 1972 under the Bangladesh Banks (Nationalization)

Order, through the amalgamation and nationalization of the branches of National Bank of

Pakistan, Bank of Bhowalpur and Premier Bank branches located in East Pakistan until

the 1971 Bangladesh Liberation War. When it was established, Sonali Bank had a paid

up capital of 30 million taka. In 2001, it’s authorized and paid up capital were Tk. 10

billion and Tk. 3.272 billion respectively. The bank's reserve funds were Tk. 60 million

in 1979 and Tk. 2.050 billion on 30 June 2000.

The management of Sonali Bank is vested in a 7-member board of directors appointed by

the government. The managing director is the chief executive. He is assisted by a deputy

managing director, six general managers, and other senior executives. The general

managers are in charge of the bank's branches in the headquarters of the six

administrative divisions of the country namely, Dhaka, Chittagong, Rajshahi, Khulna,

Sylhet and Barisal. The bank has 32 departments at its head office including a training

institute in Dhaka. On 30 June 2000, the total number of employees of the bank was

26,085.

3.2 Role of Sonali bank Limited in the National Economy

Economy and Banking industry go together and are inseparable. Sonali Bank Limited

has been playing an important role in the economic development of the country. As

many as 26,085 people are in the employment of the Bank as on December 31, 2008.

Besides, Sonali Bank Limited has generated employments for hundreds of people in the

projects and industries established under finance. The Bank has been financing the trade

and commerce of the country since inception of the Bank in 1997. We have handled a

volume of countries exports and imports. The deposits our Bank mobilized through the

outlets of branches helped in the formation of capital in the country. Our lending to

borrower reached Tk. 23163.18 million as on June 30, 2009. It has contributed to the

industrialization and improvement of trade and commerce of the country which

ultimately accelerated economic growth and national welfare through multiplying effect.

We have collected VAT and tax on interest/ profit earning of customers of the Bank. For

relief and rehabilitation of natural calamity-hit people of the country in 2007 the bank

has donated a denoted amount of money.

Foreign Remittance

To develop national infrastructure and economy of Bangladesh Sonali Bank Limited has

been playing dominant role to bring hard earning of Bangladesh expatriates working/

living abroad through banking channels. For this purpose, Sonali Bank Limited has

established a bank named Sonali Bank (U.K) and an exchange house named Sonali

Exchange Company Inc. (SECI), USA. Our Bank has also established drawing

arrangement with various exchange house / banks in Middle East, Canada and Malaysia.

Under this arrangement, remitters can easily send their hard earning to the beneficiaries

in Bangladesh through 1184 Sonali Bank Limited Branches across the country. They can

remit their money through Demand Drafts (DD), Telegraphic Transfers (TTs), SWIFT

and / or Computerized Payment Instructions (PC to PC via dial up modem) on Sonali

Bank Limited selective branches.

Trade Financing:

Sonali Bank Limited extends multiple credit facilities to boost up trade, commerce and industry. The credit packages and interest rates are as under:

Credit Packages Interest Rate (Floating)

1. Credit to Trade and Commerce 14%2. Credit for Power Driven Vehicle/ Water Transport 14%3. Overdraft Against:

Fixed Deposits 13%SDPS AccountsFive years period 12%Ten years period 14%Insurance Policy/ Shares and Debenture of Public Ltd. Co.

14%

Work order of Govt./ Semi Govt. Corp 14%Wage Earners Dev. Bond 13%

4. Housing LoanResidential 13.5%Commercial 14%

5. Small Loan 14%6. Consumers credit 14%7. Loans To Public Sector Enterprise 14%8. Cash Credit Facilities for Small Business enterprises 14%9. Cash Credit Facilities against Bricks Manufacturing 14%

Investment Banking:

Central Accounts & Fund Management Division at Head Office maintains Investment Portfolio of the Bank. With a view to implementing Government policies & decisions and accelerating the growth of the capital market of the country, surplus funds of Sonali Bank are utilized in the following areas:

A) Short Term:

1. Call loans: An overnight investment to other Banks & Financial Institutions.

2. Treasury Bills: Investment made to the Government through Treasury bills.

B) Long Term:

1. Government/ Public Bonds: Sonali Bank Limited purchases bonds issued by the Govt. of Bangladesh and other Public Bodies.

2. Shares/ Equity Participation: Sonali Bank Limited participate in the IPO and extend bridge finance to the equity of public limited companies, institutions and public bodies.

3. Debentures: Sonali Bank Limited purchases debentures issued by the public bodies and financial institutions under Government.

3.3 Corporate Profile of Sonali Bank LimitedName of the Company : Sonali Bank Limited

Chairman : Quazi Baharul Islam

CEO and Managing Director : Md. Humayun Kabir

Company Secretary : Zaheed Hossain

Legal Status : Public Limited Company

Genesis : Emerged as Nationalized Commercial Bank in 1972, following the Bangladesh Bank (Nationalization) Order No. 1972(PO No.26 of 1972)

Date of Incorporation : 03 June, 2007

Date of Vendor's Agreement : 15 November, 2007

Registered Office : 35-42, 44 Motijheel Commercial Area, Dhaka, Bangladesh

Authorized Capital : Taka 10.00 billion

Paid-up Capital : Taka 09.00 billion

Number of Employee : 21,839

Number of Branches : 1184

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

FAX : 88-02-9561410, 9552007

SWIFT : BSONBDDH

Website : www.sonalibank.com.bd

E-mail : sbhoid@bdmail.net

sbhoitd@btcl.net.bd

Logo:

3.4 Vision

3.5 Mission

Socially committed leading banking institution with global presence.

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

3.6 Nature of BusinessThe Principle activities of the bank include providing of all kinds of commercial banking services to its customers. The activities can be classified in the following ways:

Corporate Banking.

Project Financing.

SME Finance.

Consumer Credit.

International Trade.

Trade Finance.

Loan Syndication.

Foreign Exchange Dealing.

Rural and Micro Credit.

NGO- Linkage Loan.

Investment.

Government Treasury Function.

Money Market Operation.

Capital Market Operation.

Remittance.

3.7 Organogram

Figure-2: Organogram of Sonali Bank Limited (position wise)

Board of Directors

CEO & Managing Director

Deputy Managing Director-1 Deputy Managing Director-3Deputy Managing Director-2

General Managers At Head Office - 6

General Managers Field GM Office at Divions-7

Deputy General Managers At Divisional

Head of Head Office

Deputy General Managers At Field Office

(GMO, PO and Corp. Br.)

Assistant General Managers At Head Office

Assistant General Managers At Field Office

Other Executive SEO, EO, SO Officer at Head Office

Other Executive SEO, EO, SO Officer at Field Office

Other Staffs at Head Office Other Staffs at Field Office

Figure-2: Organogram of Sonali Bank Limited (Branch wise)

3.8 Board of DirectorsSl. No. Name Designation

1. Mr. Quazi Baharul Islam Chairman2. Mr. Md. Shahid Ulla Mia Director3. Dr. Nasreen Khundker Director4. Mr. A.S.M. Nayem, FCA, FCCA Director5. Mr. M. Lutfur Rahman Khan Director6. Mr. K.M. Zaman Romel Director7. Mr. Kashem Humayun Director8. Mr. Shaimum Sarwar Kamal Director9. Advocate Sattayendra Chandra Bhakta Director10. Mrs. Jannat Ara Henry Director11. Mr. Suvas Singho Roy Director12. Mr. Md. Anwar Shahid Director13. Mr. Md. Humayun Kabir CEO & MD

Head Office

General Managers Office’s at Field Divisions and Local

Office-07

General Manager’s OfficeAt Head Office-06

Divisions at Head Office-32

Corporate Branch-22Principle Office-42

Regional Office-19

Branch-1187 Overseas Branch -2

3.9 Sources and Uses of FundsSources of Funds Uses of Funds

Authorized Capital. Cash in Hand. Issued Capital. Balances in Current Account with

other banks. Subscribed Capital. Call Loan. Called up Capital Short Loan. Paid up Capital. Purchase of Govt. Credit Instrument,

Share, Security. Reserve fund and other reserves. Bills Discounting and Treasury Bill. Deposits and other accounts. Loans and Advances. Borrowing from Banking companies,

Agency. Loan from Central Bank.

3.10 Core ValuesSonali Bank Limited (SBL)’s Core Value proposition consists of ten key elements. The values would assist the bank in perceiving its employees to work as a team towards accomplishment of assigned duties and responsibility for achievement of desired objectives.Team work: Open communication, discussion and interaction amongst the employees would ensure unification of actions and efforts towards achieving the common goal.

Objectivity

Ethics

Accountability

Transparency

Teamwork

Self Reliance

Commitment

Innovation

Excellence

Integrity

Our Core values

Ethics: Every one must ensure adherence to ethical practices of banking.Objectivity: All persons will have definite objective in carrying out their tasks.Integrity: Protection and safeguard of customers’ interest is a vital element for societal trust.Excellence: Excellent performance and effectiveness are preconditions to ensure quality service to the large customer base of the bank. Innovation: New and innovative products are the needs of the time for which continuous action oriented researches are carried out.Commitment: Every employee is committed to work up to the expected level to ensure satisfaction of valued customers.Self Reliance: Each employee will have ownership attitude towards the bank and self confidence in his work for betterment of the bank. Transparency: Information is to be kept open for all so that stakeholders can have proper ideas about the bank’s activities. Accountability: All employees are responsible for their activities and will remain accountable to their respective superior for accomplishment of tasks.

3.11 Core Strengths Transparent and Quick Decision Making. Efficient Team of Performer. Satisfied Customers. Internal Control. Skilled Risk Management. Diversification.

3.12 Core Competencies Knowledge Experience & Expertise. Customer Orientation/ Focus. Transparency. Determination. Zeal for Improvement. Reliability.

3.13 Ethical PrinciplesSonali Bank Limited believes that it will become a leading bank in the government sector. They believe that their aims and objectives can only be realized fully and sustained overtime by faithfulness to ethics that cannot always be built into sets of rules

and regulations. In this belief in ethics that motivates the bank in its dealings with customer, regulators and employees.

3.14 Commitment to Clients Sonali Bank Limited has trying to concentrate on modern banking through continuous using modern technology. We also trying to help more to customer by providing various savings schemes like as EDS, MES and DBS etc. Our commitments to the clients are the following:

Provide service with high degree of professionalism & continuous use of modern technology through proper use of young generation officers.

Create long-term relationship based on mutual trust with customers. Share customer’s values & beliefs. Provide product and service at competitive pricing. Ensure safety and security of customer’s valuables in trust with us.

3.15 Corporate Social Responsibility(CSR) Sonali Bank Limited (SBL) has been rendering various services for attaining greater social goals and objectives. For this process, we aim to contribute towords sustainable development of the society as a whole and fulfillment of corporate social obligation in particular. To reinforce CSR activities, the bank has undertaken fresh initiatives in line with Bangladesh Bank guidelines in the areas of social services, empowerment of women and poor, sports & culture, banking for the disadvantaged groups, disaster & relief activities.

Social Services:

SBL has been rendering social services through distribution of various allowances to the Freedom Fighters, Widows, Old–age citizens, vulnerable groups, Disabled peoples etc. as per laid down criteria of the government. Besides, the bank has been disbursing pension of govt. employees, monthly salary of teachers, and govt. and semi govt. officials without charges.

Empowerment of women and poor:

SBL has been providing wholesale credit facilities to different micro credit institution who are in turn lending amongst the women and poor people in different Income Generating Activities (IGA).

Sports and Cultural Activities:

Sonali Bank Limited has a tradition of patronizing and sponsoring sports and cultural activities at home and abroad. In 2007, Sonali Bank Limited became Champion in the Victory Day Hockey Tournament and Runners’ up in the Office Hockey League, Dhaka.

Banking service for the Disadvantaged Groups:

With 1182 branches all over Bangladesh, SBL could reach the banking services to the disadvantaged groups with the aim to encourage them in mobilization of their hard earned savings and creation for them investment opportunities.

Employee welfare:

SBL offers annual stipends and scholarships to the brilliant children of the employees of the bank.

Disaster Relief:

SBL always stands beside the helpless people at the times of natural calamities and extends helping hands to the sufferers. SBL donated Tk. 10.5 million to help the victims of cyclone ‘Sidor’ to the relief fund of the Chief Advisor. Sonali Bank Limited has collected funds from Bangladeshis residing abroad and remitted over Tk. 150 million at free of charge through Sonali Exchange Company (SECI), USA and Sonali Bank (UK) Limited. SBL has also donated to establish a Cancer Hospital in Dhaka. It has helped a number of Foundations and Organizations for raising funds through lottery and other means.

Future Plan:

SBL will continue to patronize sports and culture at home and abroad. Arrangements will be made for rendering better social services to the community apart from core banking activities. Specific action plans will be initiated to expand CSR programs in line with the guidelines of Bangladesh Bank and Securities & Exchange Commission (SEC).

4.1 Personal Banking

Sonali Bank Limited extends all the major personal banking facilities and services to its customers with its skilled manpower and largest network of around 1187 branches covering all the urban and remote rural areas of Bangladesh. Sonali Bank Limited provides Local & Foreign Remittance in quickest possible time. Foreign remittance is available in both Taka cash. & Taka draft.

1. Transfer of fund from one branch to another by – Demand Draft Savings A/C – Mail Transfer Daily Profit A/C - Telegraphic Transfer FDR A/C.

2. Transfer of fund on Standing Instruction Arrangement (Trade Finance).3. Collection of cheques through clearing house/beyond Clearing House.4. Issuance of payment Order/Call Deposit.5. Locker facilities for safe keeping of valuables.6. Corporate Client Services with computerized system at selective branches.

4.2 Rural Credit Bangladesh is primarily an agricultural country. A major portion of her population ( about 85%) live in the rural areas. About 75% of the active rural population depend on agriculture as the main source of their livelihood. Agriculture contribute about 22% to the GDP. Majority of the farmers are either small or marginal. So Credit plays a paramount role to augment the capital base to support agriculture production. With this end in view. Sonali Bank Limited the largest state owned commercial bank has been playing a vital role in the socio-economic development & poverty alleviation since 1973. Keeping in view that Credit is one of the many inputs that complete the cycle of agricultural production Sonali Bank extending rural credit through 1182 branches over the country.

Sonali Bank Limited introduced indirect rural credit in 1973 through the then IRDP (Now BRDB) there after continuing lending in the following programs:

Programs

01) Crop Loan (Special Agricultural Credit Program):

As per Government decision this program was introduced in 1977 to increase crop production (credit to subsistance and marginal farmers as well as share-cropers for raising seasonal crops). Now this program is continuing through 707 branches among the farmers of 1639 unions. Recently Sonali Bank Limited introduced Revolving Crop Credit Limit System from one branch of each district.

02) Special Investment Program:

This program was introduced in 1993 for creating self employment by establishing small & medium farms (Poultry, Dairy & Fishery) through bank finance. Under this program credit is extended through 236 selected branches over the country. Maximum ceiling of loan is Tk. 5.00 Lac.

03) Farming & off farming program:

This program was introduced in 1994 to involve unemployed rural people in income generating activities (Poultry, Dairy, Fishery, Horticulture, Nursery, Beef fattening) by establishing small & medium farms through bank finance. Credit is extended through all branches over the country. Maximum ceiling of loan is Tk.15.00 Lac.

04) Krishi Khamar Rin Karmasuchi (Project):

This program was introduced is 1993 for creating new employment, increase national income & Socio economic development by establishing medium & big project (Poultry, Dairy & Fishery) through bank finance.

05) Pond Fisheries Credit Program:

This program was designed to extend bank credit for pisciculture in derelict ponds/Tanks/water bodies in 1977 Credit is extended through 200 branches over the country. Maximum ceiling of loan is Tk.5.00 Lac.

06) Fertilizer Dealers Credit Program:

This program was introduced to extend bank credit among the approved fertilizer dealers operating at primary distribution point of BADC for lifting their quota of Fertilizer from BADC for ultimate distribution among the farmers in 1981.

07) Sugarcane Production loan Program in Mill Zone Area:

This program was introduced in 1975 to increase sugar production. Under this program credit is extended to 11 (eleven) sugar mills for ultimate disbursement among their affiliated farmers.

08) Social Afforestation Program:

This program was introduced in 2004 to increase forestation and to reduce greenhouse effect. Credit is extended through all branches over the country. Maximum ceiling of this program is Taka 5.00 lac.

4.3 Micro Credit Poverty alleviation has appeared to be the focal point of all policy formulation and development issues of the nation. As such, it has been globally accepted as an effective strategy for poverty alleviation in one hand and generating employment opportunities on the other.

In commitment to reduce poverty in urban, semi-urban and rural areas, Sonali Bank Limited has started functioning in Micro Credit through a full pledged micro credit division in its Head Office in the year 2003. Presently, 32 projects/programmes are being run under the control and supervision of this Division. Among all others programmes,

Bank-NGO Linkage program and Credit for Urban Women Micro Enterprise Development (CUMED) in Dhaka City, Goat rearing, Lamb rearing, Fruit, Herbal, Medicinal and Nursery Project, Micro- enterprise program- ‘Unmesh’ in Moulavibazar district, MSFSCIP in Kurigram district, Loan for Disable Persons etc. deserve special mention for channelising the financial resources into the various potential avenues of microfinance.

Sonali Bank Limited jointly with Swanirvar Bangladesh, BRDB and ADB has been providing huge investible funds into the different Upazillas within the country. 152 Upazillas have been covered by the Rural Livelihood Programme (RLP). Further, this Division has provided taka 179.09 crore to 68 NGO’s under its widely accepted Bank-NGO Linkage Programme on whole sale basis and whose recovery rate is 100%. Specially, for the disable people Disable Loan Programme has been undertaken to bring the disable section of the people under the micro credit facilities. The Goat Rearing Programme undertaken by this Division has been running with a remarkable impact in reducing the rate of massive- scale rural poverty. Sonali Bank has already disbursed 46.47 crore upto 31 December, 2007.

Further, in order to create employment opportunities and to generate income of the rural people two loan schemes under the name and style “Rural Small Farming Loans scheme " and "Rural Small business loan" scheme have been introduced in-2004 . In both the programs there is a provision of collateral free loan up to Tk. 50,000/- . In 2006 a new program has been introduced named ‘‘ Daridra Bimochane Sahayta Karmasuchi’’for the extremely ‘Monga’ affected rural people. Moreover, in 2007 a special program has been introduced for SIDR affected 12 areas in which there is a provision of collateral free loan up to TK.20,000/-.

Up to December 2007, Tk. 3299.47 crore has been disbursed under various project/ programs of this Division where as this disbursement figure was Tk. 3056.63 crore up to December 2006. The key features of some running projects/Programs of Micro Credits given as follows:-

Sl. No.

Project/ Programs Target Group Loan Size in Tk.

1 Swanirvar Credit Program Poor Landless people 1,000-15,0002 Crop Godown Credit Project Small & Medium

FarmersHighest 10,000

3 Sonai Bank -BARD, Comilla Priogik Gabesana Rin Prokalpa

Bittahin rural male & female

Highest 10,000

4 Sonai Bank- RDA, Bogra Priogik Gabesana Rin Prokalpa

Bittahin rural male & female

Highest 10,000

5 Marginal and Small Farms System Crop Intensification program(MSFSCIP)

Marginal, Poor & Small Farmers

Highest 10,000

6 Herbal & Forestry, Medicinal Plant & Nursery Development Credit

Bittahin, Poor Energetic Youth

5,000-25,000

program7 Grameen Khudra Babsa Rin

KarmasuchiPoor People Highest 50,000

8 Daridra Bimochane Sahayta Rin Karmasuchi

Hard Core Poor People

5,000-10,000

9 Loans to Disable People Disabled People 25,000-50,00010 Unmesh Credit Program Micro Entrepreneurs 50,000-2,00,00011 Goat Rearing Credit Program Small &Medium

EntrepreneursHighest 50,000

12 Credit for Urban Women Micro Enterprise Development (CUMED)

Urban Women Entrepreneurs

Highest 5,00,000

13 Bank-NGO linkage Credit Program Poor People Highest 5000-50,000(Loan Wholesaling to NGOs)

14 Khudra Khamar Rin Karmasuchi Small Entrepreneurs Highest 50,00015 Salt Production Credit Program Actual Salt Producer 5,000-12,50016 Individual Irrigation / Agriculcural

Equipment Credit Program Small, Marginal & Medium Farmers

10,000-16,500

17 BRDB Crop Credit Program Small, Marginal & Medium Farmers

8,000-15,000

18 BRDB Integrated Rural Development Program

Co operative Poor Male & Female Member

1,500-20,000

19 BRDB Rural Livelihood Program Small, Marginal & Medium Farmers

5,000-20,000

20 BRDB -Shrimp Culture Credit Program

Small, Marginal & Medium Farmers

2,333-28,000

21 Special Loan for SIDR affected Area

SIDR affected People Highest 20,00

4.4 International Banking Sonali Bank Limited expertise in International Banking has a record of in-house growth over more than half a century. Its pioneer role in handling foreign trade and foreign exchange transactions ever before independence of the country still remains unchallenged. With wide network of branches at home and also a large number of correspondent banks world-wide it is singularly handling the largest volume of export-import business including home-bound remittances.

Products & Services: Export Credit (Pre-shipment & Post shipment) Facilitating Supplier's Credit

LCs (Letters of Credit)

Guarantees in Foreign Currency- Bid Bond- Performance Guarantee- Advance Payment Guarantee.

Bill Purchasing/Discounting

Remittance, collection, purchases & sales of Foreign Currency & Traveller’s Cheques.

NRAT (Non-Resident Account in Taka)

NFCD A/c (Non-Resident Foreign Currency Deposit)

RFCD A/c (Resident Foreign Currency Deposit)

Convertible and Non-convertible Taka Account

Forward contracts

Correspondent Banking Relations

Import Finance:Sonali Bank Limited supports its customers by providing facilities throughout the import process to ensure smooth running of their business. The facilities are:

a. Import Letter of Credit.b. Post Import Financing (LIM,LTR etc).c. Import collection services & Shipping Guarantees.

Interest Rate: 12% to 14%

Export Finance:Sonali Bank Limited offers extra cover to its customers for whole export process to speed up receipt of proceeds. The facilities are:

a. Export Letters of Credit advising.b. Pre-shipment Export Financing.c. Export documents negotiation.d. Letter of Credit confirmation.

Interest Rate: 7% + 1% service charge

The comparative position of foreign exchange business for the year 2007 and 2008. (Tk. in Crore)Sl. No. Particulars 2008 2007

1. Total Import 15146.51 7649.68

2. Total Export 7938.98 7804.59

3. Inward Remittance (Including WES) 10344.48 9217.83

4. Outward Remittance (Including WES) 1274.29 1232.28

Total 34704.26 25904.38

4.5 Industrial Financing Credit Schemes:Long term loan for setting up new industrial units and BMRE of existing units including working capital finance are extended by Sonali Bank Limited to cottage industries, small-medium-large scale industries and also to self-employed persons with a view to creating employment opportunities, deployment of resources, increasing GDP and over-all industrial development of the country. Currently the following credit schemes are on offer by the bank:

Some of the main Credit Schemes: Industrial Financing for Thrust Sectors. Sonali Bank Industrial Credit Scheme. Special Investment Scheme for Cottage and Small Industries. Financing Large Scale Industries through Banks' Consortium. Financing Software Development and Data Processing.

Designated Branches:About 100 branches including all the corporate and district headquarters branches are designated to handle industrial credit.

Thrust Sectors:Besides the traditional and oft-trodden sectors, Sonali Bank Limited has also come up with very low rate of interest to finance the following thrust sectors of the economy as identified by the Government:

Software development and data processing. Agro-based industries (excepting cold storage for preservation of potatoes).

Manufacture of artificial flowers.

Frozen foods.

Gift items (preferably export oriented).

100% export oriented finished leather goods.

100% export oriented jute goods.

Jewelry and Diamond cutting and polishing.

Oil and Gas.

Sericulture and silk industries.

Stuffed Toys (preferably export oriented).

100% export oriented textile industry (excepting garments manufacturing industries).

Other Viable Industrial Sectors: Composite textile (woven & knit fabrics). Textile / Acrylic Spinning. Sweater Industry. Garments Accessories & Washing Plant. Denim Fabrics (export oriented). Tourism / Hotel and Resort facilities. Hospital & Clinics. Other Export linkage industries. Power Generating Plant. LPG, CNG Filling & Conversion plant. Pharmaceutical Ind. Plastic Ind. Tannery/Rubber Foot wear. Other highly rewarding appropriate technology based projects.

Interest Rates: Project/Term Loan : 12.00% to 13.00% Working Capital : 13.00%

Overall Industrial Credit Position of the Bank as on 31 December, 2008:

(Tk. in Crore)

Sl. No

Nature of Loan No. of

Units

Amount sanctioned

Amount recovered

Outstanding

1. Large & Medium 698 3811.31 1050.55 2646.66

2. Small & Cottage 21152 675.02 648.62 158.70

3. W.C to industries 1298 1421.32 851.49 2474.92

Total: 23148 5907.65 2550.66 5280.28

4.6 Merchant Banking Sonali Bank Limited, the largest State owned commercial bank in Bangladesh. Began to

invest in the secondary market from the month of February 2009.

The growth of institutional investments in capital market of Bangladesh has been far

below the expectation. As we know Merchant Bankers can play a vital role in helping to

make the stock market transparent and vibrant. Sonali Bank Limited obtained License

from the Securities and Exchange Commission in 23 March 2009, to operate in the

Capital market as a full-fledged Merchant bank. The terms & conditions imposed

by the SEC in operating the Merchant Banking activities are:

1. There shall be separate unit with separate personnel and designed area for the

purpose of Merchant Banking Operation.

2. The Merchant Banking Unit shall maintain separate books of accounts and financial

statements to show clearly the financial position in respect of its Merchant Banking

Operation. Financial statements shall be audited by a chartered accountant firm

certifying that the relevant rules and guidelines by SEC and other relevant authorities

have been strictly adhered to;

3. The Merchant Banking Unit shall be equipped with necessary modern office

equipment for smooth functioning & efficient services to the clients;

4. All other terms & conditions as laid down in the SEC (Merchant Banker & Portfolio

Manager) Regulations 1996, SEO 1969, SEC Rules 1993 and any amendment thereof

from time to time shall be adhered to at all times.

As stipulated in the Securities and Exchange Commission (Merchant Banker and

Portfolio Manager) regulations 1996, the services of issue management, portfolio

management, underwriting of shares and securities and advisory services fall under the

purview of Merchant Banking Operation. Sonali Bank Limited has been going with

Merchant Banking Operation since 14 September 2009 at 11/A, Sara Tower (11th

Floor), Toyeenbee Circular Road, Motijheel, Dhaka. It has a Merchant Banking

Management Committee to manage & take quick decision of merchant banking

activities.

SBL provides margin loan to the investors at the ratio- 1:25 (previously 1:1.5) and we

always abide by the restrictions, rules & regulations of Securities and Exchange

Commission. For example, the recent SEC restriction to provide margin loan to the

company, which have more than 50% of P/E ratio. SBL doesn’t provide margin loan for

‘Z’ category shares, Mutual funds & some risky shares. SBL always counsel the clients

to follow the fundamental factors of investment. Firstly, SBL suggest taking an overview

of the desired company in which the investors want to invest, such as company’s

background, authorized capital, Paid up Capital, Assets & Liabilities, last five years Net

Profit, Dividends, Earning per Share, Net Asset Value, P/E ratio, highest & the lowest

price of the share etc. Thus an investor can know the Company’s Performance &

Management Efficiency to take an investment decision. After all these, investors can

take his/her decision at his/her risk to invest in any company’s share.

Now SBL has a workstation of ICB named ISTCL for the trading purpose. So far SBL is

going to underwrite the Tk.100 crore IPO of Janata Bank Limited. SBL have been

offered to take private placement of Beximco Pharmaceuticals to purchase preference

shares. We are participating in the upcoming IPO of JBL as Banker’s to the issue.

As per BPRD Circular no-12 of Bangladesh Bank on 12 th October 2009 every merchant

Banking Unit of Commercial bank should be converted into a subsidiary company. We

are already got the permission of Bangladesh Bank. In this regard a Memorandum and

Articles of association have been approved by the Board of Directors of Sonali Bank

Limited. Sonali Bank Limited has submitted the name of the subsidiary company as

“Sonali Investment Limited” to the registrar of joint stock companies and also got the

Name clearance letter. There will be 6(six) Directors for Sonali Investment Limited

including 4(four) Directors represented from Sonali Bank Limited & 2 independent

Directors from other than Sonali Bank Limited. Human resources will be employed from

Sonali Bank Limited on deputation. We hope Sonali Investment Limited will also

become the Leading Merchant Bank like the Sonali Bank Limited, a Leading

Commercial bank in Bangladesh.

The data regarding the Merchant Banking operations in the Merchant Banking Unit of Sonali Bank Ltd is given below:

Obtained License from SEC : 23 March 2009

Started Merchant Banking Operation : 14 September 2009

Number of Accounts opened up to date : About 200

Size of the Investors Portfolio : Tk. 150.50 million

Income of SBL from Merchant Banking

(Tk. In millions)

Name of the Income Head

Year (Range)2009 (September-December)

Year2010 up to January 25

Interest on Portfolio Loan

0.24 0.33

Management Fees 0.035 0.064Documentation

Charge0.025 0.083

Settlement Fees 0.25 0.28Total 0.55 0.757

Loan Ratio : 1: 1.5 (at present 1:1) Rate of Interest : 13% Management Fee : 1%

To operate the Merchant Banking activities Sonali Bank Ltd have purchased the unique

soft ware namely ‘’m bank” developed by the renowned software Vendor M/S Leads

Corporation.

The Merchant Banking Unit will start its operation as a subsidiary company under the

name of “Sonali Investment Limited” very soon. And we believe that it will be able to

hold the position of the leading Merchant Bank as it has been doing since it started its

journey in the banking arena.

4.7 SME Banking To reduce poverty within 2015 Sonali Bank Ltd. Has start a service which is SME loan. By offering this product Sonali Bank Ltd. Helps government to increase job opportunity as well as increase GDP.

Objectives of SME Loan-

Help government to remove poverty. Earn much currency by Export Import business to government. Helps woman entrepreneur to be self-independent by providing loan. Industrialization with employment opportunity.

Requirements for getting Loan- Minimum 2 years business experience. Entrepreneur must be educated & healthy and age must be within 18-60. Women entrepreneur will get first preference. Entrepreneur must be Bangladeshi citizen.

Types of product for getting SME loan- Export products-

1. Fringing Plant for fish.2. Tanaree business.3. Export furniture.

Import products-1. Xining Mill.2. Garments accessories.3. Washing plant, Packaging.

Loan Limit-Depends on business type loan can be 50000-100000000

Duration and Interest rate-Duration depends on business type. But in case of current assets 1 year and in case of term loan 3-7 years. Interest rate is 13%.

4.8 Online Banking 1. Branch Computerization: 267 branches are on live operation. Out of 1182 branches at home, 1169 branches have already been entered in the automation network.

2. Foreign Remittance : Bank's own in-house software "Remittance Management System" (RMS+), having, among others, the feature of paying foreign remittance instantly over the counter is being implemented at all branches. This web based software provides digital services to the expatriates through its unique advantage of sending confirmation message to the mobile phone of the remitter/beneficiary.

3. ATM: Sonali Bank Limited is a member of Q-Cash ATM network. At present the bank has 12 ATM booths. Establishment of 43 more ATM is on. Sonali Bank's ATM cardholders enjoy the access to the ATMs and POS of Dutch Bangla Bank Ltd. and Brac Bank Ltd. besides those of Q-Cash consortium. Sonali Bank recently launched Credit Card.

Features: Sonali Bank Ready Cash Card is a Debit Card. Cardholder can easily pay utility bills like - Water, Telephone, Gas etc.

It is easy to remit funds among the participating branches of the Bank.

Transaction beyond working hours.

It is a riskless Cash Carrying facility.

Cashless purchase can be made form specific merchandise points.

Only computerized Branches of Dhaka City will deal Ready Cash Card.

Branches of other Cities and Towns will introduce Sonali Bank Ready Cash Card in due course.

4. Online and SMS Banking: At present    34   branches of Sonali Banks are included in the Online Any Branch Banking (ABB) network. The bank is seriously working on connecting all branches in the Real-time Online Banking network gradually. Branches having ABB facility are also rendering SMS banking services.

5. SWIFT: SWIFT facilities are available in Bank’s Head Office and in 21 designated branches.

4.9 Ancillary Services Sonali Bank Limited offers multiple special services with its network of branches throughout the country in addition to its normal banking operations.Collection:

Gas bills. Electricity bills.

Telephone bills.

Water/Sewerage bills.

Municipal holding Tax.

Passport fees, visa fees and Travel tax.

Customs & Excise duties.

Source tax and VAT.

Jakat fund.

Hajj deposit.

Land development tax.

Payment: Pension of employees of Government and other Corporate Bodies. Bangladesh Bank employees’ pension.

Army pension.

British pension.

Students' stipend/scholarship.

Govt. & Non-Govt. Teachers' salary.

Food procurement bill on behalf of the Govt.

Social Services: Old age allowances. Widows, divorcees and destitute women allowances.

Freedom Fighters' allowances.

Rehabilitation allowances for acid survival women.

Maternal allowances for poor women.

Disability allowances.

Sale & Encashment/Purchase: Savings Certificates. ICB Unit Certificates.

Prize Bonds.

Wage Earner's Development Bonds.

US Dollar Premium & Investment Bond.

Lottery tickets of different Semi-Govt. and Autonomous Bodies.

Sanchaypatra.

Public Service Commission's application form.

Judicial Service Commission's application form.

Exchange of soiled / torn notes.

4.10 Miscellaneous Services Bank A/C information of tax payee client according to demand of NBR. Local Governance Support Project.

Enlist of Non Government Insurance Company.

Locker Service is provided in some branches of Sonali Bank Limited. Customers may avail this service and secure their valuables.

Locker Size Yearly Charge (Tk.) Security Deposit (Tk.)

Small 1,200.00

2,000.00 (Refundable)Medium 1,500.00

Large 2,000.00

5.1 Rural Deposit Scheme (RDS): A deposit scheme for the rural or people live under middle-class. Monthly deposits: 100,200,300,400,500 and 1000Tk.

Duration of the deposit- 7 years & rate of interest- 9%

Loan against account: When any particular account duration reaches to 1 year and on that account if there are 5000 Tk. Balance money then the account-holder can get maximum 80% overdraft opportunity. RDS can be opened in those branches of Sonali Bank which are located in the rural.

Procedure of Rural Deposit schemeDeposit

amounts typesTotal Money After 7 years

Given Interest Bonus Amount Total Money including

Interest and Bonus

100 8400 2677 1000 12077200 16800 5355 1100 23255300 25200 8032 1200 34432400 33600 10710 1300 45610500 42000 13387 1400 567871000 84000 26775 1900 112675

5.2 Marriage Savings Scheme (MSS): Duration of the deposit: 10 years & interest- 8.5%

Loan opportunity against account: When any particular account duration reaches to 1 year and on that account if there are 10000Tk. balance money then the account-holder can get maximum 80% overdraft opportunity. MSS can be opened in all branches of Sonali Bank Limited.

Bonus only is given after the continuous operation by the account holder.

Procedure of Marriage Savings SchemeDeposit

amounts typesTotal Money

After 10 yearsGiven Interest Bonus Amount Total Money

including Interest and

Bonus100 1200 6622 300 18922200 2400 13244 600 37844300 3600 19866 900 56766400 4800 26488 1200 75688500 6000 33110 1500 94610

1000 120000 66220 2000 1882202000 240000 132440 3000 3754403000 360000 198660 4000 5626604000 480000 264880 5000 7498805000 600000 331100 6000 9371006000 720000 397320 7000 11243207000 840000 463540 8000 13115408000 960000 529760 9000 14987609000 1080000 595980 10000 168598010000 1200000 662200 11000 1873200

5.3 Monthly Earning Scheme (MES): Duration of the deposit: 3 and 5 years.Amount of deposits: 50000 or 100000.Rate of interest: For 3 years 9% and for 5 years 10%.Loan opportunity against account: When 80% overdraft opportunity on a particular account. MES can be opened in all branches of Sonali Bank. Bonus amount can be taken monthly wise.

Procedure Of Payment Of Monthly InterestDeposit 3 years 5 years50000 375 420100000 750 835

5.4 Double Benefit Scheme (DBS): Duration of the deposit: 8 years.Amount of deposits: 5000 minimum.Rate of interest given yearly basis as following:

Duration Interest rate Interest Total AmountUp to 6 months 4% 1000 51000

Up to 1 year but more than 6 months

5% 2500 52500

Up to 2 year but more than 1 year 6% 6000 56000Up to 3 year but more than 2 year 7% 10500 60500Up to 4 year but more than 3 year 8% 16000 66000Up to 5 year but more than 4 year 8.5% 21250 71250Up to 6 year but more than 5 year 8.5% 31537 81573Up to 7 year but more than 6 year 8.75% 39945 89945Up to 8year but more than 7 year 9% 49628 99628

Including Bonus 372 Tk.

100000

All types of vat according to government rule will be deducted from the account.

Rule for Double Benefit Scheme-

This account can be open in all the branches of Sonali Bank Limited. But account holder must be age of 18 or above.

An account holder can get up to 80% loan against his deposit in the account.

In case of closing account customer can any time apply to the Manager (Where account was opened), but a charge of 250 Tk. will be applicable.

5.5 Medicare Deposit Scheme (MDS): Duration: 10 years.Amount of monthly saving: 500-10000 Tk. & rate of interest is yearly 8%.Date of payment: 10 -20 of every month.

Cumulative total after end of durationMonthly Payment amount Bonus Bonus + Interest after end of duration

500 1500 921851000 2000 1833712000 3000 3657433000 4000 5481154000 5000 7304875000 6000 9128586000 7000 10952307000 8000 12776028000 9000 14599749000 10000 164234510000 11000 1824717

5.6 Sonali Deposit Scheme (SDS): Duration: 5 years.Amount of monthly savings-500-10000 Tk. & rate of interest is yearly 8.5%.Date of payment: 16-25 of every month.

Cumulative total after end of durationMonthly Payment amount Bonus Bonus + Interest after end

of duration500 1500 386891000 2000 763782000 3000 1517563000 4000 2271344000 5000 3025125000 6000 3778916000 7000 4532697000 8000 5286478000 9000 6040259000 10000 67940410000 11000 754782

5.7 Education Deposit Scheme (EDS): Duration: 10 years.Amount of monthly savings: 500-10000 Tk. & rate of interest is yearly 8%.Date of payment: 10-15 of every month.

Cumulative total after end of durationMonthly Payment amount Bonus Bonus + Interest after end

of duration500 1500 921851000 2000 1833712000 3000 3657433000 4000 5481154000 5000 7304875000 6000 9128586000 7000 10952307000 8000 12776028000 9000 14599749000 10000 164234510000 11000 1824717

Requirement for the special scheme:

Photocopy of national ID of both nominee and client. 2copy of passport size photograph which is attached by introducer and one copy of photograph of nominee which is attached by the client.Valid introducer of particular branch.Clients must be 18.

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 :75:25Interest 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 2004Total Income 2662.10 1429.02 2313.17 1986.39 1575.84

Total Expenses 2500.41 1004.32 2012.59 1590.03 1480.59Total Operating Profit 161.69 424.70 300.58 396.36 95.25Net Profit/Net Loss 231.11 97.36 (3627.56) 20.80 15.75Paid-up Capital 900.00 900.00 500.00 327.22 327.22Reserve Fund 1246.95 1196.28 283.13 303.40 283.40Deposits 36438.60 32899.72 30230.30 27707.90 25223.39Advances 23116.66 20634.76 24102.93 22700.96 16828.30Export 18283.46 17022.42 17814.40 13957.36 12759.28

Import 16420.80 8881.96 8279.60 12984.31 9153.89

No. of Employees:OfficerStaff 11507

10332

1176910773

1211811155

1238011553

1273211718

Total 21839 22542 23273 23933 24450

No. of Branches:UrbanRural

563619

562621

562621

562621

490696

Total 1182 1183 1183 1183 1186

6.2 Common-size Statement (Balance Sheet)PROPERTY AND ASSETS TAKA %

Cash 20,641,592,198 4.1873929Cash in hand (including foreign currency) 4,366,813,852 0.8858602Balance with Bangladesh Bank and its agentBank 16,274,778,346 3.3015327Balance with other Banks and financial institutions 9,979,717,359 2.0245046In Bangladesh 5,265,819,000 1.0682341Outside Bangladesh 4,713,898,359 0.9562705Money at call and short notice 250,857,360 0.0508894Investments: 95,093,241,199 19.290797Government 93,947,843,070 19.058439Others 1,145,398,129 0.2323577Loans and Advances 231,166,579,465 46.894895Loans, Cash Credits, Overdrafts etc. 208,184,384,025 42.232683Bills purchased& discounted 22,982,195,440 4.6622122Fixed assets including premises, furniture and fixtures 9,920,927,663 2.0125784Other assets 125,893,233,074 25.538942Total Assets 492,946,148,318 100LIABILITIES AND CAPITAL    Liabilities    Borrowings from other banks, financial institutions and agents 545,955,691 0.1107536Deposit and other accounts 364,385,970,931 73.920036Current Accounts and other Accounts 98,795,523,389 20.041849Bills payable 6,642,924,279 1.3475963Savings Bank Deposits 120,423,161,432 24.429273Fixed Deposits 138,524,361,831 28.101317Other Deposits 0 0Other Liabilities 103,596,507,559 21.015786Total Liabilities 468,528,434,181 95.046576Capital/ Shareholder's Equity    Paid up capital 9,000,000,000 1.8257572Statutory Reserve 3,116,476,533 0.6322144Other Reserve 9,353,019,515 1.8973715Surplus in Profit and Loss A/C / Retained Earnings 2,948,218,089 0.5980812Total Shareholders' Equity 24,417,714,137 4.9534243Total 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 Ratio2005 11464318193 309692580346 0.0370183822006 30842225314 290140094220 0.1063011492007 32241852735 335987250854 0.0959615362008 30872166917 964931926622 0.031994142009 42110002834 406211694002 0.103665166

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

Year Cash Marketable Securities

Current Liabilities

Cash Ratio

2005 17391147480 0 309692580346 0.0561561642006 19514138474 0 290140094220 0.0672576422007 23407815028 0 335987250854 0.069668762008 20641592198 0 964931926622 0.021391762009 28415953542 0 406211694002 0.069953559

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 Capital2005 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)

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 Margin2005 11968455635 11413075053 5553805822006 15962873888 15039410984 9234629042007 8962089341 6625390799 23366985422008 13101861774 13965929070 (864067296)2009 17683108223 15800026939 1883081284

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 DepositYear Interest Paid Average Deposit Cost of Deposit (%)2005 11413075053 277079059813 4.112006 15039410984 302303013211 4.972007 6625390799 328997209441 2.012008 13965929070 364385970931 3.832009 15800026939 406151569403 3.89

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 5.272006 15962873888 241029268443 6.622007 8962089341 206347592413 4.342008 13101861774 231166579465 5.672009 17683108223 254022504699 6.96

Graph-6: Return on Credit

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 0.062006 (36275634028) 35293818371 -10.272007 (1834170743) 461946232939 -0.392008 1336450387 492949148318 0.272009 2244267216 543969267865 0.41

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 3.292006 (36275634028) (28444370219) -127.532007 2311114502 21741728899 10.622008 973580120 24417714137 3.982009 1536766608 30475358113 0.50

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.

6.6 Risk Analysis

Business Risk: Standard Deviation of Operating Earnings

Mean of Operating Earnings

Year Operating earnings2005 2080387232006 (36275634028)2007 (1834170743)2008 13364503872009 2244267216Mean (6864209689)

SD 16511852169CV -2.405499383

Interpretation: The business risk is that a bank will not have adequate cash flow to meet its operating expenses. The higher CV posses’ higher business risk. Sonali Bank Limited has negative CV which posses its business risk is lower.

Financial Risk: Debt-Equity Ratio: Total Long Term Debt Total Equity

Year Total Long term liability Total Equity Debt equity ratio2005 331380917072 6306200000 52.54

2006 381338188590 (28444370219) -13.41

2007 440222504040 21741728899 20.24

2008 468528434181 24417714137 19.18

2009 513493909752 30475358113 16.84

Graph-9: Debt-equity ratio

Interpretation: A high debt/equity ratio generally means that a Bank has been aggressive in financing its growth with debt. The debt equity ratio of Sonali Bank limited indicates that in 2005 it was highest and in 2006 it was lowest which posses that debt used more than equity.

6.7 Sensitivity AnalysisParticulars Given Data

(2009)When Interest income is 10%

increased

When Interest income is 10%

decreasedInterest income 17683108223 19451419045 15914797401Interest paid on deposit (15800026939) (15800026939) (15800026939)Net Interest income 1883081284 35251445984 31714824340Investment income 7709248980 7709248980 7709248980Commission, exchange & brokerage 6889922752 6889922752 6889922752Other operating income 283667424 283667424 283667424Total Operating Income (A) 16765920440 50134285140 46597663496Salary and allowance 7374257001 7374257001 7374257001Rent, Taxes, Insurance, electricity etc. 410285295 410285295 410285295Legal expenses 38782497 38782497 38782497Postage, stamp, telecommunication etc. 70943693 70943693 70943693Stationary, Printing, Advertisement etc. 138374104 138374104 138374104Chief Executive’s Salary and fees 9600000 9600000 9600000Director’s fees 1729240 1729240 1729240Auditor’s fees 855000 855000 855000Charges on loan losses - - -Depreciation and repair of bank assets 196779376 196779376 196779376Other Expenses 1213847018 1213847018 1213847018Total Operating expenses before amortization

9455453224 9455453224 9455453224

Amortization of Intangible Assets 5000000000 5000000000 5000000000Total operating expenses (B) 14455453224 14455453224 14455453224Profit/ (Loss) before provision (C=A-B) 2310467216 35678831916 32142210272Provision for loan - - -Provision for diminution in value of investments

(11200000) (11200000) (11200000)

Other provision (55000000) (55000000) (55000000)Total Provision (D) 66200000 66200000 66200000Total Profit/(Loss) before taxes (C-D) 2244267216 35612631916 32076010272Provision for taxation    Current tax (981948567) (981948567) (981948567)Deferred tax 274447959 274447959 274447959

(707500608) (707500608) (707500608)Net Profit after Taxation 1536766608 36320132524 32783510880Earnings Per Share (EPS) 17.08 403.557028 364.261232

6.8 Scenario AnalysisParticulars Given Data

(2009)Best Case Worse Case

Interest income 17683108223 19451419045 15914797401Interest paid on deposit (15800026939) (15010025592) (16590028286)Net Interest income 1883081284 34461444637 32504825687Investment income 7709248980 8480173878 6938324082Commission, exchange & brokerage 6889922752 7578915027 6200930477Other operating income 283667424 312034166.4 255300681.6Total Operating Income (A) 16765920440 50832567709 45899380927Salary and allowance 7374257001 7005544151 7742969851Rent, Taxes, Insurance, electricity etc. 410285295 389771030.3 430799559.8Legal expenses 38782497 36843372.15 40721621.85Postage, stamp, telecommunication etc. 70943693 67396508.35 74490877.65Stationary, Printing, Advertisement etc. 138374104 131455398.8 145292809.2Chief Executive’s Salary and fees 9600000 9120000 10080000Director’s fees 1729240 1642778 1815702Auditor’s fees 855000 812250 897750Charges on loan losses - -  - Depreciation and repair of bank assets 196779376 186940407.2 206618344.8Other Expenses 1213847018 1153154667 1274539369Total Operating expenses before amortization

9455453224 8982680563 9928225885

Amortization of Intangible Assets 5000000000 4750000000 5250000000Total operating expenses (B) 14455453224 13732680563 15178225885Profit/ (Loss) before provision (C=A-B) 2310467216 37099887146 30721155042Provision for loan - - - Provision for diminution in value of investments

(11200000) (10640000) (11760000)

Other provision (55000000) (52250000) (57750000)Total Provision (D) 66200000 62890000 69510000Total Profit/(Loss) before taxes (C-D) 2244267216 37036997146 30651645042Provision for taxation    Current tax (981948567) (932851138.7) (1031045995)Deferred tax 274447959 301892754.9 247003163.1

(707500608) (672125577.6) (42875638.4)Net Profit after Taxation 1536766608 37709122724 31394520680Earnings Per Share (EPS) 17.08 418.9902525 348.8280076

In best case, we considered all the income are calculated as an increasing rate of 10% and all the expenses as decreasing rate of 5%. In worst case, we considered all the expenses as an increasing rate of 5%and all the income as decreasing rate of 10%.For the considerable percentages in best case EPS has increased 2453.10% and in worst case the EPS is decreased 2042.31%.

FindingsAs a largest commercial bank and the agent of Bangladesh Bank Sonali Bank has to do various types of work without thinking about the profit. For this reason we have seen that in some cases bank has doing loss, but this loss we directly cannot say that bank failing los, this is happening only for helping the nation.

On the other hand we have seen that the bank profit increasing rate is poor but increasing. The bank is highly liquid and earns much profit on owner’s equity. Bank’s operating efficiency is good. EPS is increasing double per year and earning spread is also increasing.

So after all we can say that as a nationalized bank commercial bank Sonali Bank Limited is a bank which is earning better than other nationalized bank.

Conlusion & RecomendationConclusion:

As a bank Sonali Bank Limited has to do a lot of things for the betterment of the country. The Bank is strongly positioned in the market and with its core strengths it can match shareholders’ expectations and thus raise their wealth in future through ethical banking and best pricing. Thus, it has to take initiative so that it can fulfill the desire of the govt. as well as people. It will enhance more public services and build up working teams to provide the best services to its valuable customers. It must be run in organized way and discipline must be ensured in all sphere of its performance. Efficient export team, import team and remittance team must be formed and perform duties properly. More training, computerization, data collection, market analysis and swiftness in servicing are essentially required. To do these the recommended suggestions can be used. Although it is theoretical suggestions, it is not valueless. It has great impact on the banking business and other sectors of the economy. For this, govt. help is essential and it is expected that govt. will broaden its hand for implementing the recommendations for the welfare of the people of Bangladesh.

Recommendation:

The Top management of Sonali Bank Limited should be more effective to the employee then current situation. Because they should take care the branch level employee’s benefits, opportunities etc.

The bank has highly skilled employee in the branch level. But the bank should be able to utilize these employees at appropriate way to take out the bank’s output.

The website design is need to improve. Therefore, the website should be changed and can put more information about the bank. The existing design cannot capture the customer’s attention.

The cheque’s design is poor. The good looking cheque design can motivate the customer.

The human resource division can be more effective. Because this human resource department should think about the employee benefit much.

In the training institute, the training process should be used latest technology to provide to the trainee. The bank should give training about the office package, basic idea on computer and internet.

In the branch level when employees could transfer to another department during that time that employee is needed at least ten days training according on the transfer position.

The higher management should be more effective about the employee, to take right strategy, right decision making.

In the branch level employee is working so many extra time, so management should provide some extra incentives to motivate the employee.

On-line banking is coming soon so the responsible employee should be trained effectively.

The training evaluation process and form is to be more modernized.

Physical and technological facilities should be increased in evaluating credit proposals.

Infrastructure should be modernized.

The cost of fund needs to be minimized.

The gap between employees and customers will be reduced through arranging meetings.

Appendix: A

BIBLIOGRAPHY

http://www.sonalibank.com.bd/

http://www.sonalibank.com.bd/webs/catalog/sonali_bank_uk_ltd.html

http://www.sonalibank.co.uk/

http://www.sonalibank.co.uk/wage_earners.asp

http://www.sonalibank.co.uk/bonds_premium.asp

http://www.sonalibank.co.uk/trade_finance.asp

http://wikipedia.com

http://www.investorswords.com/401/bank.html

http://www.bangladesh-bank.org/fnansys/bankfi.html

http://www.reportbd.com

http://www.Bangladeshtrades.com

Appendix: BList of Graphs

No. Graph Name Page no.

1 Current ratio 56

2 Cash Ratio 57

3 Net Working Capital 58

4 Interest Margin 59

5 Cost of Deposit 60

6 Return on Credit 61

7 Return on Total Asset 62

8 Return on Equity 63

9 Debt-equity ratio 65

Table of ContentsLETTER OF TRANSMITTAL iDECLARATION iiCERTIFICATE OF SUPERVISOR iiiACKNOWLEDGEMENT ivEXECUTIVE SUMMERY vABBREVIATIONS vii

Part - 1IINTRODUCTIONNTRODUCTION

1.1 Introduction of the Report........................................................................................................11.2 Justification of the study..........................................................................................................11.3 Objective of the Study..............................................................................................................21.4 Scope of the Study....................................................................................................................21.5 Methodology of the Study........................................................................................................21.6 Sources of the Information.......................................................................................................31.7 Limitation of the Study.............................................................................................................3

Part – 2Literature review

2.1 Definition of Bank.....................................................................................................................42.2 Objective of a Bank..................................................................................................................52.3 Business of Banking Company (BANK COMPANY ACT 1991):...................................................62.4 An Overview of Banking Operation in Bangladesh...................................................................92.5 Current Structure of Banking Industry....................................................................................122.6 Central Bank and Its Policy.....................................................................................................13

Part – 3An Overview Of Sonali Bank Limited

3.1 A Brief Overview of Sonali bank Limited.................................................................................163.2 Role of Sonali bank Limited in the National Economy............................................................173.3 Corporate Profile of Sonali Bank Limited................................................................................203.4 Vision.....................................................................................................................................213.5 Mission...................................................................................................................................213.6 Nature of Business.................................................................................................................223.7 Organogram...........................................................................................................................233.8 Board of Directors..................................................................................................................243.9 Sources and Uses of Funds.....................................................................................................253.10 Core Values..........................................................................................................................253.11 Core Strengths......................................................................................................................263.12 Core Competencies...............................................................................................................263.13 Ethical Principles..................................................................................................................263.14 Commitment to Clients........................................................................................................273.15 Corporate Social Responsibility(CSR)....................................................................................27

Part – 4Products and Services 0f Sonali Bank Limited

4.1 Personal Banking...................................................................................................................294.2 Rural Credit............................................................................................................................294.3 Micro Credit...........................................................................................................................314.4 International Banking............................................................................................................334.5 Industrial Financing................................................................................................................354.6 Merchant Banking..................................................................................................................364.7 SME Banking..........................................................................................................................394.8 Online Banking.......................................................................................................................404.9 Ancillary Services....................................................................................................................414.10 Miscellaneous Services.........................................................................................................42

Part – 5Special Scheme Of Sonali Bank Limited

5.1 Rural Deposit Scheme (RDS):..................................................................................................435.2 Marriage Savings Scheme (MSS):...........................................................................................445.3 Monthly Earning Scheme (MES):............................................................................................455.4 Double Benefit Scheme (DBS):................................................................................................455.5 Medicare Deposit Scheme (MDS):..........................................................................................465.6 Sonali Deposit Scheme (SDS):.................................................................................................465.7 Education Deposit Scheme (EDS):...........................................................................................475.8 Consumer Credit:....................................................................................................................485.9 Loan Facility for Diagonstic Center:........................................................................................485.10 Special Small Credit Scheme:................................................................................................495.11 Foreign Employment Credit Scheme:...................................................................................49

Part – 6Financial Analysis

6.1 Performance at a glance........................................................................................................506.2 Common-size Statement (Balance Sheet)..............................................................................516.3 Evaluating Liquidity Position..................................................................................................526.4 Evaluation of Operating Efficiency.........................................................................................546.5 Operating Profitability Ratios.................................................................................................586.6 Risk Analysis...........................................................................................................................606.7 Sensitivity Analysis.................................................................................................................626.8 Scenario Analysis....................................................................................................................63

Part – 7Findings

Findings........................................................................................................................................64Part – 8

Conclusion & Recommendations

Conlusion & Recomendation........................................................................................................65