CHAPTER ONE

INTRODUCTION
1.0 INTRODUCTION:

1.1 BACKGROUND OF THE STUDY:

Keeping pace with the global changes, the banking sector of the country has been changing.
Now   the   bank   is   focusing   on   attracting   valued   customers,   retaining   them   and   always
furthering  the banker customer  relationship  in the markets  through professional  customer
service excellence. 

Bangladesh economy is still dependent largely on its agriculture, that is why Bangladesh
Bank   pursued   the   banks   to   extend   credit   facilities   to   productive   sectors   and   identified
agricultural,   small   and   medium   enterprises   and   women   entrepreneurs   as   the   productive
investment sectors of the economy. 

Banks   operating   in   Bangladesh   are   maintaining   capital   since   1996   on   the   basis   of   risk
weighted assets in line with the Basel committee On Banking Supervision’s (BCBS) capital
framework published in 1998. Considering present complexity and diversity in the banking
industry, capital formation becomes most important. Finance helps banks in capital formation
and capital accumulation; which are essential for the growth of an economy. For ensuring
capital formation, the financial resources of a country need to be mobilized in such a way that
they are put in productive channels. However, to undertake massive capital formation there is
a paucity of a sound financial infrastructure in most of the lender­developed economics

The world is today more globalized than it was during past economic crises. There is a strong
sense that we are all in the same boat, and that we must act and coordinate together if we are
to   lift   ourselves.   There   is   also   a   growing   consensus   that   only   multilateral   solutions   can
address the changes facing the global economy today and prevent sudden and disorderly
market reactions from creating pressure for protectionist and inward­looking policies. 

The banking sector is considered to be an important source of financing for most businesses.
Banks take deposits from savers, paying interest on some of these accounts. They pass these
funds on to borrowers, receiving interest on the loans. Their profits are derived from the

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spread between the rate they pay for funds and the rate they receive from borrowers. This
ability  to pool deposits  from many sources  that can be lent  to many  different  borrowers
creates the flow of funds inherent in the banking system. By managing this flow of funds,
banks generate profits, acting as the intermediary of interest paid and interest received and
taking on the risks of offering credit.

Through continuous and need­base training, human resources development has been a very
dominant factor to organizational growth. Besides, information technology has been a driving
force for sustainable growth and development. 

Now the banking sector particularly the private commercial banks showed its resilience and
continued to perform better by diversifying the asset portfolio to Retail, SME and Capital
markets.

This paper is originated as the course requirement of The MBM program. Under this program
each student has to submit a dissertation paper on a topic assigned on him/her. In this regard I
was assigned to analyze the strength, weakness, opportunities and threats of Standard Bank
Limited and to provide necessary recommendation to improve its operation. 

1.2 OBJECTIVES OF THE STUDY:

The specific objective of the study is to analyze the strength, weakness, opportunities and
threats   of   Standard   Bank   Limited.   The   report   contains   ratio   analysis;   balance   sheet   and
income statement analysis, profitability, liquidity, and credit risk analysis and identifying the
strength, weakness, opportunities and threats, which are done as a part of Ratio analysis. The
other objectives are:

 To assess the overall performance and profitability level of Standard Bank Limited.
 To examine the trends of performance and productivity of Standard Bank Limited.
 To find out the performance indicator ratios of Standard Bank Limited.
 To learn about the strength, weakness and opportunity and threats of the Standard
Bank Limited.
 To measure the effectiveness of the bank in the utilization of available resources.

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1.3 SOURCES OF DATA:
The study has been undertaken on the basis of secondary information. For this extensive 
literature survey has been done. The secondary sources of information (i.e., published data or 
processed data) have been used here depending on the nature of the study. During the 
preparation of the paper a good number of sources have been used. The sources include: 
 Various related research studies
 Books and web sites
 Publications, magazines and journals of different institutions & BIBM.
 Seminar papers of home and abroad.
 Annual Report of Standard Bank Limited.

1.4 LIMITATIONS OF THE STUDY:
To make a paper covering various aspects of a bank requires vast knowledge and experience.
I have also faced some barriers during the preparation of the paper. For any kind of research
work high degree of involvement regarding collection of information, review of literature and
analysis of information is required. This study is also subject to some limitations, which are
as follows:
 The depth of the analysis has been limited to the extent of information collected from
different sources.
 Non­availability of some preceding and latest data.
 Time was very short to do this type of research. The report could have been better if
some more time could be found.
 Some information was not disclosed as they retain the confidentiality of the bank

1.5 STRUCTURE OF THE STUDY:

The introductory chapter covers brief introduction, objectives, methodology and limitations
of the study. The second chapter provides an overview description of Standard Bank Limited,
its history, its vision and mission and goals, different types of products and services that they
offer. Chapter three analyzes the financial statements of the bank and highlights the trends of
different   elements   of   the   financial   statements.   Chapter   four   mainly   concentrated   on   the

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theoretical   aspects   of   financial   performance,   the   various   ratios   used   for   evaluating   the
financial performance, their definitions, descriptions, formulas and interpretations. Chapter
five   is   all   about   the   strengths,   weaknesses,   opportunities   and   Threats   of   Standard   Bank
Limited. Chapter six represents conclusion and some recommendations regarding the study. 

CHAPTER TWO
CONCEPTUAL ISSUE 

2.0 OVERVIEW OF STANDARD BANK LIMITED:

Standard Bank Limited (SBL)  was incorporated as a Public Limited Company on May 11,
1999 under the Companies Act, 1994 and the Bank achieved satisfactory progress from its
commercial   operations   on   June   03,   1999.Registerd   office   of   the   bank   is   at   Metropolitan
Chamber   Building   (3rd  floor),   122­124   Motijheel   Commercial   Area,   Dhaka­1000,
Bangladesh.   At   present   Standard   Bank   Limited   has   39   branches   operating   in   almost   all
regions of Bangladesh. In Dhaka region it has 17 branches, in Chittagong region it has 8
branches,   besides   it   has   14   branches   in   almost   every   regions   of   the   country.   Altogether
Standard Bank has 13 AD branches of which 6 in Dhaka, 3 in Chittagong, 1 in Khulna and in
Sylhet. Standard Bank has 20 foreign correspondents. Standard Bank has 20 nostro accounts.
SBL   has   introduced   several   new   products   on   credit   and   deposit   schemes.   The   bank   has
already   introduced   real   on­line   banking   and   it   is   now   fully   automated.   It   also   goes   for
Corporate and Retail Banking etc. The Bank also participated in fund Syndication with other
Banks. Through all these myriad activities SBL has created a positive impact in the market. 

2.1 MISSION AND VISION OF STANDARD BANK LIMITED
Vision
To   be   a   modern   Bank   having   the   object   of   building   a   sound   national   economy   and   to
contribute significantly to the public exchequer.
Mission
  To   be   the   best   private   commercial   bank   in   Bangladesh   in   terms   of   efficiency,   capital
adequacy, asset quality, sound management and profitability having strong liquidity.

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Core Values
Shareholders: By ensuring fair return on their investment through generating stable profit.
Customer of the Bank: To become most caring bank by providing the most courteous and
efficient service in every area of our business.
Employee of the Bank: By promoting the well being of the members of the staff.

Community: Assuring our socially responsible corporate entity in a tangible manner through
close adherence to national policies and objectives.

2.2 OBJECTIVES OF STANDARD BANK

 To e a dynamic leader in the financial market in innovating new products as
to the needs of the society.
 To earn positive economic value addition (EVA) each year to come.

 To top the list in respect of cost efficiency of all the commercial banks.

 To become one of the best financial institutions in Bangladesh economy participating
in the most significant segments of business market that we serve.

2.3 TANDARD BANK LIMITED AT A GLANCE

Name Standard Bank Limited
Legal Form Incorporated   as   a   Public   Limited   Company   on
May 11, 1999 under the Companies Act, 1994
Date of commencement On June 03, 1999.
TIN Number
VAT
Present no. Of Branch 39
No. Of ATM Booth 1
Registered Office Metropolitan Chamber Building (3rd floor)
 122­124 Motijheel Commercial Area
Dhaka – 1216
GPO Box
Telephone 7175698,7169134,9560299,9558375
Telefax 7176367,7169078
No.   Of   foreign   correspondent
bank
SWIFT Code SDBLBDDH

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 E­mail sblho@bangla.net
Website www.standardbankbd.com
Special achievement Achieved ‘A1’ Rating for the long­term and ‘ST­2
Rating for Short­term from CRAB.
Recent development SBL has opened an Exchange House in UK under
the   name   of   Standard   Exchange   Company   Ltd
(UK)
Recent undertaking Standard   Bank   Limited   is   going   to   introduce
Islami   Banking   Wing   at   different   branches   of
Dhaka & Chittagong

2.4 PRINCIPAL ACTIVITIES OF STANDARD BANK LIMITED:

Sl. No Deposit products
1 SB A/C
2 STD A/C
3 FDR (1 MONTH)
4 FDR (3 MONTH)
5 FDR (6 MONTH)
6 FDR (1 Year) and above 
7 Five Lac Taka Savings  Project (Monthly TK  5000 deposit. After 6
Year the depositor will get 5.2 Lac)
8 Ten Lac Taka Savings Project (Monthly TK 4500 deposit. After 10
Year the depositor will get 10 Lac)

Besides Standard Bank also has:
 SRDP—SBL Regular Deposit Program
 SRIP­­­ SBL Regular Income Program
 (DI+)     Double Income Plus
 LSDIP—Life Secured Double Income Program
                      
2.4.1 Treasury:
Treasury unit is a core­banking unit and Standard Bank Limited’s treasury unit is one of the
best earning sources of the bank. The bank is well equipped with skilled human resources for
efficient dealing. SBL’s everyday business evolves around participation in Foreign exchange
market and Money Market in a substantial volume. 

2.4.2 Foreign Exchange:  

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Foreign Exchange dealing desk deals with different currencies  in inter­bank market from
liquidity perspective. Everyday SBL offers competitive exchange rates for these currencies
against BDT. 

FX products: 
SBL’s daily foreign exchange products ranges as follows: 
1. Spot dealing.
2. Forward dealing. 
3. SWAPS.
4. Forex­ Commercial and non­commercial.

2.4.3 Money Market: 
Money market comprises all sorts of deals with local currency in inter­bank /NBFI market in
Bangladesh. Standard Bank Limited’s money market desk lends and borrows a remarkable
amount for liquidity management and arbitrage in a lucrative manner. Recurrent deals in the
market make Standard Bank Limited as an agile and active participant in the money market
of Bangladesh. Money market of the bank deals with: 
 
1. Overnight (call) lending and borrowing with Banks­NBFIs.
2. Term placement and with Banks­NBFIs
3.  REPO/Reverse REPO of govt. security scripts with central bank and other commercial
banks. 
 
SBL takes a very dominant rule for coding rate and various market projections in our money
market through its everyday deals.
2.4.4 Correspondent Banking: 
The main aim of Standard Bank Limited is to increase its foreign exchange business and in
this connection SBL is doing international banking with all major banks of the world.

2.4.5 Foreign Remittance: 

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Inward foreign remittance is one of the major sources of the foreign currency reserve of the
country and in order to encourage inflow of remittances through banking channel from the
Non­resident Bangladeshis, Standard Bank Limited provides quality service for repatriation
and   collection   of   remittances   with   the   help   of   its   foreign   correspondents   and   trained
personnel. Remittance services provided by Standard Bank Limited are: ­
Inward Remittance:  Process / collection of cheque/ Draft, TT, EFT in USD, GBP,
    EURO, AUD and JPY
Outward Remittance:   Issuance of FDD, TT, and EFT in USD, GBP, EURO, AUD and
JPY, Issuance of AMEX Travelers Cheques in USD, Handling of Student file of the students
going abroad for educational purpose in USD, GBP, EURO, AUD and JPY 

2.4.6 Foreign Currency Accounts:
 
Standard Bank Limited provides different account services as prescribed by the guidelines of
central bank and offer competitive interest rate for those accounts: ­
 
 Foreign Currency Account. (FC)
 Non­   Resident   Foreign   Currency   Deposit   Account
(NFCD)
 Resident Foreign Currency Deposit Account (RFCD)
 Non­Resident Non­convertible Taka Account.

2.4.7 SWIFT:  

Standard   Bank   Limited   provides   foreign   transactions   facility   through   SWIFT­   a   modern
technology for highly secured, cost effective, highly reliable, with close to 100%
availability and legal guarantees of delivery of messages to a counter party. 

2.4.8 TRADE FINANCE: 

In the wake of recession of business, the government is currently pursuing an accommodative
monetary policy through a number of measures such as reduction in bank rate, reduction in
interest   rate   in   government   bonds   and   reduction   on   SLR   requirement,   simultaneously

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adoption  of floating  exchange rate  and open market  operation  fueling incentives  towards
private investment with the aim of creating more capital avenues thereby generating more
income to add to the GDP of the economy.   In the juncture, it is very tough for a bank to
remain on track of competition to achieve desired goal in international trade.
 In order to achieve the cherished goal of achieving consumer satisfaction SBL extended its
hand in the following sector:
 Trade Finance
 Small & Medium Business
 House Building loan
 Consumer Credit
 Transport Loan
 International Trade
 Project Financing
 Lease Financing
 Financing for BMRE
 Agricultural loan
 Special finance for non­traditional item
 Syndication Finance
Mood of finance that Standard Bank provides:
 Secured Overdraft: For Work Order, General purpose etc.
 Cash Credit (Hypothecation)
 Cash Credit (Pledge)
 Letter of Credit 
 Back­to­Back L/C
 Loan against Trust Receipt

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 CHAPTER THREE

DATA BASE

3.0 INTRODUCTION:

Financial analysis is the process of identifying the financial strengths and weakness of the
firm by properly establishing relationships between the items of the balance sheet and the
profit & loss account. Financial analysis can be undertaken by management of the firm, or by
parties outside the firm, viz. owners, Creditors, investors and others. The nature of analysis
depends on the purpose of the analyst.

Ratio analysis is the process of determining and interpreting numerical relationships based on
financial statements. A ratio is statistical yardstick that provides a measure of the relationship
between variable of figures. This relationship can be expressed as percent of as a time. Ratio
analysis is based on the notion that the analysis of absolute figures may not be the best means
available of assessing an organization performance and prospects. For example and annual
profit of Tk. 20,000 represents a good level of performance for a local grocer with one shop
but a poor achievement for a large company owing a chain of grocery stores. One possible
reason  for this  is   that  two  business   may  use very  different   amounts   of capital.  In brief,
financial analysis is the process of selection, relation and evaluation.

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11
3.1 MEANING AND RATIONALE

Ratio analysis is a widely – used tools of financial analysis. It is defined as the systematic use
of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as
well as its historical performance and current financial condition can be determined. The term
ratio refers to the numerical or quantitative relationship between two items/variables. This
can be expressed as:
(i) Percentages, say net profits are 25 percent of sales (assuming net profits of Tk. 25,000
and sales of Tk.1,00,000),
(ii) Fraction (net profit is one­fourth of sales) and
(iii) Proportion of numbers (the relationship between bet profits and sales is 1:4).
These   alternative   methods   of   expressing   items,   which   are   related   to   each   other   rate,   for
purpose of financial analysis, referred to as ratio analysis. It should be noted that computing
the ratio does not add any information not already inherent in the above figures of profit and
sales. What the ratios do is that they reveal the relationship in a more meaningful way so as to
enable us to draw conclusions from them.

The rationale of ratio analysis lies in the fact that it makes related information comparable. A
single figure by itself has no meaning but when expressed in terms of a related figure, it
yields significant inferences. Ratio analysis is a quantitative tool, enables analysis to draw
quantitative answers to questions such as:
(i) Are the net profits adequate?
(ii) Are the assets being used efficiently?
(iii) Is the firm solvent?
(iv) Can the firm meet its current obligations and so on?

3.2 NATURE OF RATIO ANALYSIS

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 Ratio  analysis   is   a  powerful  tool   of  financial   analysis.  A   ratio   is   defined   as  “the
indicated quotient of two mathematical expressions” and as “ the relationship between two of
more things.” In financial analysis, a ratio is used as a benchmark for evaluating the financial
position and performance of a firm. The absolute accounting figures reported in the financial
statements   do   not   provide   a   meaningful   understanding   of   the   performance   and   financial
position of a firm. An accounting figure conveys meaning when it is related to some other
relevant   information.   The   relationship   between   two   accounting   figures,   expressed
mathematically, is known as a financial ratio (or simply as ratio). Ratios help to summarize
the large quantities  of financial  data and to make  qualitative  judgement  about the firm’s
financial performance.

3.3 BASIS OF COMPARISON 

Four types of comparisons are involved with the ratio analysis:
(i) Trend Ratios
(ii) Inter­firm comparisons
(iii) Comparison with standards or plans.

Trends ratios involve a comparison of the ratios of a firm over time i.e. present ratios are
compared with past ratios for the same firm. The comparisons of the profitability of a firm,
say, year 1 to 5 is an illustration of a trend ratio. Trend ratios indicate the direction of change
in the performance­improvement, deterioration or constancy­ over the years.

The inter­firm comparison involving comparison of the ratios of a firm with those of others in
the same line of business or for the industry as a whole reflects its performance in relation to
its competitors.

Other type of comparison may relate to comparison of items within a single year’s financial
statement of a firm and comparison with standards or plans.

3.4 FINANCIAL STATEMENT

The financial statement, that shows the financial position of the business concern.

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There are three types of financial statements:

(i) Balance Sheet: This financial statement reflects the financial position at a particular
date of a firm.

(ii)  Income Statement: This is commonly known as Profit & Loss Account i.e. net profit
or loss which has been incurred in business over a given period of time and also
explain how has been incurred.

(iii) Cash Flow Statement: This statement highlights those major activities, which have a
direct & indirect impact on the cash position of the business.

3.5 IMPORTANCE OF RATIO ANALYSIS:
As a tool financial management, ratios are of crucial significance. The importance of
ratio analysis lies in the fact that it presents fact on a comparative basis and enables the
drawing of inferences, regarding the performance  of a firm. Ratio analysis  is relevant in
assessing the performance of a firm in respect of the following aspects:

(i) Liquidity Positions
(ii) Long­term solvency
(iii) Opening Efficiency
(iv) Overall Profitability
(v) Inter­firm comparison and 
(vi) Trend analysis

Liquidity Position: 
With   the   help   of   ratio   analysis   conclusions   can   be   drawn   regarding   the   liquidity
position of a firm. The liquidity position of firm would be satisfactory if it is able to meet its
current obligations when they become due. A firm can be said to have the ability to meet its
short­term liabilities if it has sufficient liquid funds to pay the interest on its short maturing
debt usually within a year as well as to repay the principal. This ability is reflected in the
liquidity ratios of a firm. The liquidity ratios are particularly useful in credit analysis by bank
and other suppliers of short­term loans.

14
Long­term Solvency: 
Ratio analysis is equally useful for assessing the long­term financial viability of a
firm.   This   aspect   of   the   financial   position   of   a   borrower   is   of   concern   to   the   long­term
creditors, security analysis and the present and potential owners of a business. The long­term
solvency is measured by the leverage/capital structure and profitability ratios, which focus on
earning power and operating efficiency. Ratio analysis reveals the strength and weaknesses of
a firm in this respect. The leverage ratios, for instance, will indicate whether a firm has a
reasonable proportion of various sources of finance or if it is heavily loaded with debt in
which case its solvency is exposed to serious strain. Similarly, the various profitability ratios
would reveal whether or not the firm is able to offer adequate return to its owners to owners
consistent with the risk involved.

Operating Efficiency: 
Yet   another   dimension   of   the   usefulness   of   the   ratio   analysis,   relevant   from   the
viewpoint   of   management,   is   that   it   throws   light   on   the   degree   of   efficiency   in   the
management and utilization of its assets. The various activity ratios measure this king of
operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent
upon the sales revenues generated by the use of its assets­total as well as its components.

Overall Profitability: 
Unlike the outside parties, which are interested in one aspects of the financial position
of a firm, the management  is constantly concerned about the over­all  profitability  of the
enterprise. That is, they are concerned about the ability of the firm to meet its short­term as
well as long­term obligations to its creditors, to ensure a reasonable return to its owners and
secure optimum utilization of the assets of the firm. This is possible if an integrated view is
taken and all the ratios are considered together.

Inter­firm Comparison: 
Ratio analysis not only throws light on the financial position of a firm but also serves
as a stepping stone to remedial measures. This is made possible due to inter­firm comparison
and comparison with industry averages. A single figure of a particular ratio is meaningless

15
unless it is related to some standard or norm. One of the popular techniques is to compare the
ratios   of   a   firm   with   the   industry   average.   It   should   be   reasonably   expected   that   the
performance of a firm should be in broad conformity with that of the industry to which it
belongs. An inter­firm comparison would be demonstrated the firm’s position vis­à­vis its
competitors. If the results are at variance either with the industry average or with those of the
competitors, the firm can seek to identify the probable reasons and in that light, take remedial
measures.

Tend Analysis: 
Finally, ratio analysis enables a firm to take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the years.
This is made possible by the use of trend analysis. The significance of a trend analysis of
ratios lies in the fact that the analysis can know the direction of movement, that is, whether
the movement is favorable or unfavorable. For example, the ratio may be low as compared to
the   norm   but   the   trend   may   be   upward.   On   the   hand,   though   the   present   level   may   be
satisfactory but the trend may be a declining one. 

3.6 LIMITATIONS OF RATIO ANALYSIS:
Ratio   analysis   is   a   widely   used   tool   of   financial   analysis.   Yet,   it   suffers   from   various
limitations.  The operational  implication of this  is that while using ratios, the conclusions
should   not   be   taken   on   their   face   value.   Some   of   the   limitations   that   characterize   ratio
analysis are:
(i) Difficulty in comparison
(ii) Impact of Inflation and
(iii) Conceptual Diversity

Difficulty in Comparison: One serious limitation of ratio analysis arises out of the difficulty
associated with their comparability. One technique that is employed is inter­firm comparison.
But such comparisons are vitiated by different  procedures adopted by various firms. The
differences may release to:
 Differences in the basis of inventory valuation (e.g. last in first out, first in first out,
average cost and cost);
 Different depreciation methods (i.e. straight line vs. written down basis);

16
  Estimated working life of assets, particularly of Plant and Equipment: 
 Amortization of intangible assets like goodwill, patents and so on;
 Amortization   of   deferred   revenue   expenditure   such   as   preliminary   expenditure   and
discount on issue of shares;
 Capitalization of lease;
 Treatment of extraordinary items of income and expenditure; and so on.

Secondly,   apart   from   the   different   accounting   procedures,   company   may   have   deferent
accounting periods, implying differences in the composition of the assets, particularly current
assets. For these reasons, the ratio of two firms may not be strictly comparable.

Another basis of comparison is the industry average. This presupposes the availability, on a
comprehensive   scale,   of   various   ratios   for  each   industry   group   over   a  period   of   time.   If,
however,  as  is  likely,   such   information  is  not  compiled   and  available,  the   utility  of  ratio
analysis would be limited.

Impact of Inflation: The second major limitation of the ratio analysis as a tool of financial
analysis is associated with price level changes, This, in fact, is a weakness of the traditional
financial statements which are based on historical costs.  An implication of this feature of the
financial statements as regards ratio analysis is that assets acquired at different periods are, in
effect, shown at different prices in the balance sheet, as they are not adjusted for changes in
the price level. As a result, ratio analysis will not yield strictly comparable and, therefore,
dependable results.

Conceptual Diversity: Yet another factor, which influences the usefulness of ratios, is that
there  is  difference  of opinion  regarding the various concepts  used to compute the ratios.
There is always room for diversity of opinion as to what constitutes shareholders’ equity,
debt, assets, profit and so on. Different firms may use these terms in different senses or the
same firm may use them to mean different things at different senses or the same firm may use
them to mean different things at different times.

Reliance on a single ratio for a particular purpose may not be a conclusive indicator. For
instance, the current ratio alone is not a adequate measure of short­term financial strength; it

17
should be supplemented by the acid­test ratio, debtors turnover ratio and inventory turnover
ratio to have a real insight into the liquidity aspect.

Finally, ratios are only a post­mortem analysis of what has happened between two balance
sheet dates. For one thing, the position in the interim period is not revealed by ratio analysis.
Moreover, they give no clue about the future.

In   brief,   ratio   analysis   suffers   from   some   serious   limitations.   The   analyst   should   not   be
carried away by its oversimplified nature, easy computation with a high degree of precision.
The reliability and significance attached to ratio will largely depend upon the quality of data
on which they are based. They are as good as the data itself. Nevertheless, they are important
tools of financial analysis.

18
 CHAPTER FOUR
FINDINGS OF THE STUDY
PROFITABILITY RATIO:

RETURN ON ASSET (ROA):

YEAR 2008 2009 2010 2011 2012

ROA 2.19% 2.16% 2.40% 1.74% 2.06%

2008 2009 2010 2011 2012

Return on asset (ROA) as an indicator of managerial efficiency, indicates the capability of

management in converting the institution’s assets into net earnings. The ROA of Standard
Bank shows a positive trend with very little fluctuations in 2010 & 2012, which provides an
idea of the overall return on investment earned by the Bank.

RETURN ON INVESTMENT (ROI):

YEAR 2008 2009 2010 2011 2012

ROI 4.62% 5.41% 6.88% 7.73% 7.61%

10

8
Taka in billion

6
ROI
4

0
2008
2004 2009
2005 2010
2006 2011
2007 2012
2008
Year

Return on Investment (ROI) means that decision makers evaluate the investment by
comparing the magnitude and timing of expected gains to the investment costs. It measures

19
how effectively the firm uses its capital to generate profit. The ROI of Standard Bank has an
upward trend from 2008 to 2012.
NET INTEREST MARGIN (NIM):

YEAR 2008 2009 2010 2011 2012

NIM 5.21% 4.40% 4.07% 2.33% 3.72%

6
5
Taka in billion

4
3 NIM
2
1
0
2004
2008 2005
2009 20102006 2011 2007 2012 2008
Year

The Net interest margin (NIM) measures the spread between interest revenue and interest
cost that management has been able to achieve by controlling the bank’s earning asset and
the pursuit of cheapest sources of earning. The NIM of Standard Bank is showing a
downward trend from 2008 to 2012after which it increased.

4.4 NET NON-INTEREST MARGIN (NNIM)

YEAR 2008 200 2010 2011 2012

NNIM 0.75% 1.08% 1.30% 1.65% 1.89%

2
Taka in billion

1.5

1 NNIM

0.5

0
2008
2004 2009
2005 2010
2006 2011
2007 20122008

Year

The Net Non Interest Margin (NNIM) is the measurement of the amount of non-interest
revenues generated from deposit service charge and other service fees the bank has been

20
able to collect relative to the amount of non-interest cost incurred by the Bank. The NNIM
of Standard Bank increased over the year.

RETURN ON EQUITY (ROE):

YEAR 2008 2009 2010 2011 2012

ROE 24.83% 24.91% 22.16% 15.32% 21.22%

30
25
Taka in billion

20
15 ROE
10
5
0
2008
2004 2009
2005 20102006 2011 2007 2012 2008
Year

ROE is the measurement of rate of return flowing to the bank’s shareholders. It measures
the net benefit that the stockholders have received from investing their capital in the bank.
The ROE of the Standard bank indicates that the shareholders return increased with little
fluctuation in the year 2012.

EARNING SPREAD:

YEAR 2008 2009 2010 2011 2012

Earning
Spread

2.50%
2.00%
Taka in billion

1.50%
1.00%
EARNING SPREAD
0.50%
0.00%
2008 2009 2010 2011 2012
-0.50% 2004 2005 2006 2007 2008
-1.00%
Year

21
The Earning spread is the measurement of the effectiveness of the bank’s intermediation
function in borrowing and lending money and also the intensity of competition in the bank’s
market area. Greater competition tends to squeeze the difference between average yield and
average liability cost. The Standard Bank’s earning spread indicates that the bank is capable
enough to compete with the other rival and keep constant earning spread.

Evaluation of Liquidity Performance:
Liquidity   concerns   with   the   organization’s   current   financial   position   and   in
particular with its capacity to pay its debts as they arise in the short term. Liquidity ratios
are normally presented either as ratios or as time periods and short term financial solvency.
Liquidity ratios also measure the ability of a firm to meet its short­term financial strength.
Liquidity performance of Bionic Seafood Exports Ltd. has been analyzed on the
basis of following ratios. 
Table-4.a
Sl. 2012 2011 2010 2009
Ratios
No. Tk. ‘000 Tk. ‘000 Tk. ‘000 Tk. ‘000
1. CURRENT RATIO 1.36 1.39 1.35 1.41

2. QUICK RATIO 0.99 0.99 1.05 0.24

3. CASH RATIO 0.06 0.10 0.11 0.19

Source: Appendix­3

1.0 Break up of Current Assets:

Particulars 2012 2011 2010 2009
Inventory 116,594,687 66,417,953 83,604,238 290,674,579
Advance, Deposit &  46,532,505 16,142,111 15,615,930 11,642,442
prepayments
Receivables 248,502,714 243,412,560 242,932,563 1,632,356
Cash & Bank Balances 19,452,364 25,254,236 30,369,748 47,654,497
Total 431,082,270 351,226,860 372,522,479 351,603,874
2.0 Break up of Current Liabilities:
Short Term Bank Loan 307,566,027 242,513,234 266,012,395 226,022,367
Dividend Payable 18,564 5,077,500 5,152,000 10,425,245
Accounts Payable 10,350,963 4,341,324 4,288,419 13,425,245
 Total 317,935,554 251,932,058 275,452,814 249,447,612

1.1 Inventory:
Particulars 2012 2011 2010 2009

22
 Finished Goods 37,894,700 30,220,980 53,890,000 228,742,421
Packing Materials 18,741,179 7,872,966 8,259,915 3,528,256
Chemicals and Detergent 12,190,674 503,615 506,718 612,318,
Diesel Oil & ammonia 312,628 412,317 447,605 363,956
Spare parts 19,744,814 9,465,955 5,510,000 9,394,828
Plastic Crates, Tray etc. 13,574,733 8,693,560 6,990,000 0
Stainless still level 13,267,624 9,248,560 8,000,000 0
Raw shrimps 868,335 0 0 48,032,800
Total 116,594,687 66,417,953 83,604,238 290,674,579
1.2 Advance, Deposit & prepayments
Export tax 2,678,446 2,320,152 2,320,152 2,245,493
Advance office rent 60,000 205,800 205,800 205,800
Advances to parties 43,794,059 13,616,159 13,089,978 9,191,149
Total 46,532,505 16,142,111 15,615,930 11,642,442
1.3 Receivables
Insurance claim 240,770,000 240,770,000 240,770,000 ­
Employee Advance 7,732,714 2,642,560 2,162,563 1,632,356
Total 248,502,714 243,412,560 242,932,563 1,632,356
1.4 Cash & Bank Balances
Cash in  Hand 794 128,557 21,595 906,191
Cash at Bank 4,451,570 126,679 349,153 1,749,306
FDR 15,000,000 24,999,000 29,999,000 44,999,000
Total 19,452,364 25,254,236 30,369,748 47,654,497
2.1 Break up Accounts Payable
Liabilities for raw  6,504,841 10,363,785 1,357,663 10,703,553
shrimps suppliers
Provision for Expenses 646,082 62,350 112,320 218,320
WPPF Balance 3,200,040 2,988,341 2,818,436 2,313,372
Uncleared Refund  ­ ­ ­ 190,000
warrants & Seal 
Commission
Total 10,350,963 13,414,476 4,288,419 13,425,245

1. Current Ratio:
# Concept:
The   current   ratio   measures   the   size   of   the   short­term   liquidity   buffer.   The   ratio
indicates the firm’s ability to meet its short­term obligations out of its current assets. A
standard of 2:1 is desired but there are deviations. A high ratio may arise due to high level
of stocks, debtors and idle cash. A low ratio indicates the liquidity gap of an organization. It
is also called working capital.
     # Observation:

23
 Ratios 2012 2011 2010 2009

CURRENT RATIO 1.36:1 1.39:1 1.35:1 1.41:1

From the above table we see that the current ratio is not satisfactory. Every year
current ratio is under standard and the trend is decreasing. Apparently, they can meet the
short­term obligation out of its current assets & the working capital is properly used. 
# Findings:
i) Stock, specially packing materials, spare parts, plastic crates etc. highly increased.
ii) Advance to parties occupies a large portion of current assets. In 2012 adv. to parties 
is 43,794,059 that is more than 3times of the year 2011.
iii) Insurance claim (56% of Current assets) has not yet been settled. A case has been 
filed. There is no sign of immediate settlement of this claim.
iv) Cash shortage (cash deficit).
# Recommendation:
i) Inventory Management should be developed.
ii) Advances to the parties should be reduced. Procurement Dept. should be prudent.
iii) Fund management especially working capital management should be improved. 
iv) Dividend should not be paid.

2. Quick Ratio:
       # Concept:
One of the limitations of working capital or current ratio is that it includes stocks,
which may be illiquid one simple if crude, way of avoiding such problems is to exclude the
stock   from   the   current   asset.   Sometimes,   it   is   described   as   “Acid   Test   Ratio”.   The
conventional standard for this ratio is 1:1. 

      # Observation:

Ratios 2012 2011 2010 2009

QUICK RATIO 0.99:1 0.99:1 1.05:1 0.24:1

24
 The quick ratio in the study is not so satisfactory except the year 2009.In 2012 it is 
satisfactory. The trend is slightly declining.
# Findings:
i) Larger advances to the parties.
ii) No sign of immediate settlement of the high amount of insurance claim.
iii) Cash deficit.
iv) Short Term Loan increased.
# Recommendation:
i) Advances to the parties should be reduced.
ii)  Proper use of STL in increasing production & turnover.

3. Cash Ratio:
# Concept:
Cash is the most liquid asset. It shows how liquid cash is available to pay the current
liabilities .The high ratio is expectable but idle cash is not acceptable.
     # Observation:

Ratios 2012 2011 2010 2009

CASH RATIO 0.06:1 0.10:1 0.11:1 0.19:1

In this study, the cash is decreasing. 
     # Findings:
1. Cash deficit because total turnover does not cover the cost & expenses.
2. Delay payment because sales revenue is earned by export L/C.
     # Recommendation:
No alternative way of increasing cash except increasing the turnover.

1. Gross Profit Margin:

25
# Concept:
The Gross Profit Margin reflects the efficiency with the management produces each
unit of product. The ratio indicates the average spread between the cost of goods sold and
the sales revenue. A high ratio is a sign of good management as it implies that the cost of
product of the company is relatively low. A low gross profit margin is not satisfactory,
needed a careful and detailed analysis of the factors responsible.
# Observation:
Ratio 2012 2011 2010 2009

GROSS PROFIT MARGIN 34.49% 6.06% 19.46% 9.04%

RATIO
In this study, the gross profit margin is increasing though the turnover is decreasing.
In the year 2011, the company did not operate, exported only old stocks due to natural
disaster (tidal flood) on 4­8­2010.
# Findings:
i) Raw materials are relatively going cheaper.
ii) Turnover is decreasing.
# Recommendation:
i) Marketing Dept. should be more active for creating new buyers.
iii) Stock of finished goods should be kept smaller.

EVALUATION OF LEVERAGE PERFORMANCE:
To   judge   the   long­term   financial   position   of   the   firm,   the   financial   leverage   or
capital structure ratios are used.
Leverage performance of Bionic Seafood Exports Ltd. has been analyzed on the
basis of following ratios.

Table­4.d

Sl. 2012 2011 2010 2009

Ratios
No.
1. DEBT­ EQUITY RATIO 45:55 42:58 47:53 56:54

2. GEARING RATIO 31.35% 29.65% 32.27% 35.96%

Source: Appendix­6

26
1. Debt­ Equity Ratio:
# Concept:
The debt­equity ratio reflects the relationship between the contribution of creditor
and owners of business financing. A high ratio shows a large share of financing by the
creditors, relatively to the owners who have larger claim against the assets of the firm. A
lower ratio implies a smaller claim of the creditors.
# Observation:
Ratios 2012 2011 2010 2009

DEBT­ EQUITY RATIO 45:55 42:58 47:53 56:54

In this study, the long­term solvency is poor though equity is stronger than debt. The
situation is risky for the creditors and general shareholders.
# Findings:
i) Retained earnings is decreasing because of declining rate of turnover.
ii) Debt is in slightly decreasing trend.
# Recommendation:
i) Retained earnings should be increased through generation of more turnover.

2. Gearing Ratio:

#  Concept:
It is the relation between fixed income bearing capital and variable income bearing
capital. An organization having 50% or more gearing ratio is said to be the high geared
while less than 50% is low geared.
        # Observation:

Ratios 2012 2011 2010 2009

GEARING RATIO 31.35% 29.65% 32.27% 35.96%

In   this   study,   the   company   is   low   geared.   It   means   the   company   does   not   much
depended on borrowed capital. It is able to perform its financial activity by using its own
capital.
# Recommendation:

27
 The Company management can be serious to run the business properly with a view to
generate production and profit.

STANDARD BANK
5 YEARS FINANCIAL HIGHLIGHTS
Balance sheet
Authorized capital 1250 1250 3000 3000 3000
Paid-up capital 759 911 1093 1967 2203
Shareholder’s equity (capital& 1100 1412 1764 2767 3426
reserve)
Borrowings 710 180 0 0 0
Deposits 8731 12043 14221 19214 29305
Other liabilities 530 806 875 969 1480
Liquid assets 2721 3574 3680 4715 6291
Money at call& short notice 100 380 220 20 20
Loans& advances 7801 10184 12634 17311 27190
Investments 943 1272 1623 2014 3218
Fixed assets 36 55 72 94 115
Other assets 513 629 475 829 614
Total assets (excluding off-balance 11071 14442 16861 22949 34210
sheet items)
Off-balance sheet exposure 3653 6523 7557 9806 13423
Other business
Import business 11353 16145 18270 26155 35689
Export business 3537 7569 15169 17788 25072

Capital measure
Total risk weighted assets 7547 10480 11498 16083 24780
Core capital (Tier-1) 1100 1412 1764 2767 3423
Supplementary capital (Tier-2) 79 103 153 226 399

Total capital 1179 1515 1917 2993 3822

Tier 1 capital ratio 14.58% 13.47% 15.34% 17.20% 13.81%
Tier 2 capital ratio 1.05% 0.98% 1.33% 1.41% 1.61%
Total capital ratio 15.62% 14.46% 16.67% 18.61% 15.42%

CREDIT QUALITY 2004 2005 2006 2007 2008

Volume of non-performing loan 33 46 127 263 509
% Of NPLs to total loans & 0.43% 0.45% 0.98% 1.52% 1.87%
advances
Provision for unclassified loans 78 101 151 180 282
(NPLs)
Provision for classified loans 20 27 52 61 245

Share information 2008 2009 2010 2011 2012

Number of share outstanding 9.11 10.93 13.12 19.67 22.03
Earning per share (taka) 32.01 28.58 26.83 17.62 29.80
Book value per share (taka) 100.00 100.00 100.00 100.00 100.00
Market price per share (taka) 457.50 341.25 288.00 329.00 227.25
Price earning ratio (times) 14 10 11 19 7

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Dividend per share 2008 2009 2010 2011 2012
Cash dividend (%) 0 0 0 0 0
Bonus share (%) 20% 20% 20% 12% 20%
Right share issue 0 0 2:1 0

CHAPTER FIVE
CONCLUSION AND BIBLIOGRAPHY 

CONCLUSION:
The examined company is a 100% exported company. The ratios in the year 1999 &
2000 show that the company is running well with only a few problem areas. But after the
tidal flood of 4­8­2000 the performance of the company is declining in all respect. In the
year 2001 there was on production and in 2002 the company has improved its position in
some extent but the overall performance is still unsatisfactory.

At   present,   the   liquidity   performance   of   the   company   is   not   satisfactory.   The

profitability performance is also dissatisfactory. Activity performance is not up to the mark.
Though low geared, the company has marginal long­term solvency. So, the company should
not be financed.  

But   for   the   existing   banker,   working   capital   may   be   financed   with   strict
recommendation & close supervision so that the company may come out of this alarming
situation and repay the debt. 

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BIBLIOGRAPHY

Ahmad Md. Abu., History and organizational Structure of Sonali bank LTD. AGM
SBSC, Dhaka. (Lecture Synopsis).
Ali, S.A. Foreign Exchange and Financing of Foreign Trade. Dhaka: Lita Academics, 1995.
Andley, K.K. & V.J. Mattoo. Foreign Exchange Principles and Practices. New Delhi:
Sultan Chand & Sons, 1996.
Bangladesh Bank, homepage, http://www.bangladesh-bank.org
Choudhury, Dr. T.A., An Overview of Banks and Their Services, Reading Materials on
Theory & Practice of Banking (B-101), Bangladesh Institute of Bank Management (BIBM),
2000.
Gordon, E. & Natarajan, K., Banking: Theory, Law & Practice, Mumbai: Himalaya
Publishing House, 1996.
Gulshan, S.S. & Kapoor, G.K., Banking Law and Practice, New Delhi,: S Chand &
Company, 1994.
Morium, S. & Rahman, S., Credit Investigation and Preparation of Credit Report, Reading
Materials on Credit Management in Banks (B-104), Bangladesh Institute of Bank
Management, 2000.
Rose, S.P., Commercial Bank Management, McGraw-Hill Companies Inc., Boston,1996.
Standard Bank Limited, Annual Report 2007

Standard Bank Limited, Financial Transaction’s Abstract

Standard Bank Limited, Manual of Foreign Exchange.

Sundharam, K.P.M. & Varshney, P.N., Banking Theory, Law and Practice, New Delhi:
Sultan Chand & Sons, New Delhi, 1996.
www.standardbankbd.com

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