Independent University,

Bangladesh

Internship Report on
Social Islami Bank
Limited
 Independent Unviersity, Bangladesh

Internship Report on Social Islami Bank Limited

Submitted as a partial requirement for the fulfillment of Internship (Course ID: BBA499)

Submitted To:

Ms. Zaima Ahmed,

Lecturer A (Senior Lecturer),
Department of Finance,
School of Business & Entrepreneurship,
Independent University, Bangladesh.

Submitted By:

Nishat Tasneem,
Student ID: 1830498
Letter of Transmittal
August 03, 2021.

Ms. Zaima Ahmed,

Lecturer A (Senior Lecturer),
Department of Finance,
School of Business & Entrepreneurship,
Independent University, Bangladesh.

Subject: Submission of Internship Report on Social Islami Bank Limited

Madam,

I would like to report the submission of the internship report on Social Islami Bank Limited as you have
instructed and gave me the permission to work on. This report is an important part of the internship, and
I have tried our best to work on it carefully and sincerely so that I can create an informative outcome.

From this, I got a remarkable amount of knowledge experience that may prove to be useful in the future.

I thank you for all the support that made this paper a success and managed in accordance with our common
hope.

Regards,
Nishat Tasneem.

i
Acknowledgment
The final outcome of this project required a lot of guidance and assistance from many people. Whatever I
have done is only because of such guidance and assistance. I thank the School of Business &
Entrepreneurship of Independent University, Bangladesh for giving us the opportunity to do this report
and providing us all the support and guidance we needed to complete the project. I am very grateful to our
respective faculty Ms. Zaima Ahmed, Lecturer A (Senior Lecturer), Department of Finance, School of
Business & Entrepreneurship, Independent University, Bangladesh. I express deep and sincere gratitude
to her whose guidance, encouragement, suggestion and constructive criticism have contributed immensely
to this report.

I also want to express my gratitude towards _________________. During my internship period, he has
guided me and taught me all of the necessary aspects of an organization with immense professionalism. I
want to thank him for giving me the opportunity to do internship in his organization and giving me the
opportunity to learn the necessary operations in a bank.

To all family members, relatives, friends, and everyone who shared their support either morally or
physically, thank you.

Regards,

Nishat Tasneem.

ii
Table of Contents
Letter of Transmittal .................................................................................................................................... i

Acknowledgment ........................................................................................................................................ ii

List of Figures and Tables.......................................................................................................................... iv

Executive Summary .................................................................................................................................... v

Chapter 1 : Introduction .............................................................................................................................. 1

1.1 Banking and Bangladesh................................................................................................................... 1

1.2 Social Islami Bank Ltd. Profile ......................................................................................................... 2

1.2.1 History and Current State........................................................................................................... 2

1.2.2 Vision, Mission and Values ....................................................................................................... 4

1.2.3 Corporate Structure .................................................................................................................... 5

1.2.4 Products and Services ................................................................................................................ 6

1.2.5 Corporate Social Responsibility ................................................................................................ 8

Chapter 2 : Internship Experience............................................................................................................... 9

2.1 Job Responsibilities .......................................................................................................................... 9

2.2 Functions of the Department ............................................................................................................. 9

Chapter 3 : Issue Analysis......................................................................................................................... 10

3.1 Analysis of Industry ........................................................................................................................ 10

3.2 Ratio Analysis ................................................................................................................................. 15

3.2.1 Methodology ............................................................................................................................ 15

3.2.2 Data Collection ........................................................................................................................ 15

3.2.3 Results and Interpretation ........................................................................................................ 16

Bibliography ............................................................................................................................................. 26

iii
List of Figures and Tables
Figure 1: Vision, Mission and Values of SIBL (SIBL, 2022) .................................................................... 4
Figure 2: Corporate Structure of SIBL ....................................................................................................... 5
Figure 3: Share of Industry Asset from 2016 to 2020 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017) ........................................................................................................................... 11
Figure 4: Share of Industry Deposit from 2016 to 2020 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017) ........................................................................................................................... 11
Figure 5: Ratio of Gross NPLs to Total Loans by Types of Banks (Bangladesh Bank, 2021; Bangladesh
Bank, 2019; Bangladesh Bank, 2017)....................................................................................................... 12
Figure 6: ROA by Types of Banks from 2016 to 2021 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017) ........................................................................................................................... 13
Figure 7: ROA by Types of Banks from 2016 to 2021 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017) ........................................................................................................................... 13
Figure 8: Deposit and Credit (in Billion BDT) of Islamic Banks from 2016 to 2021 (Bangladesh Bank,
2021; Bangladesh Bank, 2019; Bangladesh Bank, 2017) ......................................................................... 14
Figure 9: Current Ratio ............................................................................................................................. 16
Figure 10: Debt to Total Asset Ratio ........................................................................................................ 17
Figure 11: Return on Asset ....................................................................................................................... 18
Figure 12: Return on Equity ..................................................................................................................... 19
Figure 13: Net Profit Margin .................................................................................................................... 20
Figure 14: Capital Adequacy Ratio........................................................................................................... 21
Figure 15: Non-Performing Loans Ratio .................................................................................................. 22
Figure 16: Tier 1 Capital Ratio ................................................................................................................. 23
Figure 17: Earnings Per Share .................................................................................................................. 24
Figure 18: Loan To Deposit Ratio ............................................................................................................ 25

Table 1: Important Milestones of SIBL (SIBL, 2022) ................................................................................ 3

Table 2: Current Ratio .............................................................................................................................. 16
Table 3: Debt to Total Asset Ratio ........................................................................................................... 17
Table 4: Return on Asset........................................................................................................................... 18
Table 5: Return on Equity ......................................................................................................................... 19
Table 6: Net Profit Margin ........................................................................................................................ 20
Table 7: Capital Adequacy Ratio .............................................................................................................. 21
Table 8: Non-Performing Loans Ratio ..................................................................................................... 22
Table 9: Tier 1 Capital Ratio .................................................................................................................... 23
Table 10: Earnings Per Share .................................................................................................................... 24
Table 11: Loan To Deposit Ratio.............................................................................................................. 25

iv
Executive Summary
This report is submitted as a requirement for the partial fulfilment of Internship (Course ID: BBA499)
which is a requirement for the completion of Bachelor of Business Administration under School of
Business & Entrepreneurship, Independent University, Bangladesh.

The report presents the internship experience of the author at Social Islami Bank Limited, a second
generation bank of Bangladesh. The first chapter introduces the reader to the

v
Chapter 1 : Introduction
1.1 Banking and Bangladesh
Bangladesh, as a country, has come a long way when the topic is economic growth. Bangladesh has a long
history of growth and development. Over the last decade, it has been one of the world's fastest growing
economies, thanks to a demographic dividend, robust ready-made garment (RMG) exports, remittances,
and stable macroeconomic circumstances. Following the COVID-19 epidemic, the nation had a significant
economic recovery. From 1972, in just 50 years, the Gross Domestic Product (GDP) has increased from
US $5.70 Billion to US $324.2 Billion. The economy is the 41st largest in nominal terms and 30st in terms
of Purchase Power Parity. From a least developed country to meeting the requirements of a becoming a
‘developing’ country and expected to become a developed country by 2041, it’s safe to say, Bangladesh,
as an economy, is growing rapidly.

In every country, banking sector plays a significant role in the development of the financial system and
the whole economy in general. Bangladesh is not an exception. According to the report of Bangladesh
Bank, there are 61 scheduled banks. Among those, there are 6 State Owned Commercial Banks, 3
Specialized Banks, 43 Private Commercial Banks, and 9 Foreign Commercial Banks (Bangladesh Bank,
2022).

Commercial banks have played an essential part in Bangladesh's economic growth. They make investable
money available to both the public and commercial sectors. Furthermore, as previously noted, banks have
played an important part in the four key drivers of economic development in Bangladesh. However, the
banking industry has a number of issues, including bad management, inadequate governance, a lack of
effective leadership, non-compliance and ethical standards, which leads to different sorts of financial
scams including financial fraud and non-performing loans (NPLs). Bangladesh is heavily reliant on
imports. To promote the expansion of the industrial sector, including the RMG sector, it must import raw
materials, accessories, and machinery. Banks have been assisting the industry with payment, financial,
and risk management services. Given the significance of the agricultural industry, the government has
prioritized agriculture and its linked industries for low-cost lending. Bank loan disbursements surpassed
the objective between 2013 and 2017, with the crop sub-sector receiving around half of overall agricultural
credit, followed by livestock and other agricultural operations.

1|Page
1.2 Social Islami Bank Ltd. Profile
1.2.1 History and Current State
Established in 1995, Social Islami Bank Ltd. (SIBL) is the country’s foremost value-added financial
organization founded on Shariah' Principles. Unlike conventional banks, Islamic financial institutions and
financial institutions based on Shariah' Principles accept deposits and disburse loans in accordance with
Islamic principles rather than Western ones. Its headquarters are located in Dhaka, Bangladesh, at 15
Dilkusha C/A Dhaka 1000. The Bangladesh Bank has granted the financial institution a banking license,
making it a scheduled financial institution.

SIBL includes of SIBL Securities Ltd, SIBL Investment Ltd, SIBL Foundation Hospital. The three-tier
banking approach (Formal, Non-formal & Voluntary), the first of its type in the banking arena of
Bangladesh, introduces a new dynamic in welfare banking seeking elimination of economic hardship of
the country with a mantra of “Working Together for a Caring Society”. Social Islami Bank Limited (SIBL)
is offering high quality contemporary banking services to the consumers of all social spheres by running
banking operations through these three channels. Working together with our valued customers and
stakeholders to deliver them one-stop services, access to the very newest goods leveraging technology.
The exceptional client services of the bank have made it unrivalled in the business. The bank develops a
long-term business connection with our customers helping them become profitable.

The bank is now equipped with 4000 workers across 172 branches and 113 subbranches around the nation.
Additionally, 239 Agent Banking Outlets are also working to serve financial services to the remotest
corners of the Land. Some key statistics about the bank are as follows:

• Authorized Capital: Taka 10,000,000,000

• Paid up Capital: Taka 8,933,413,560
• Credit Rating Agency: Emerging Credit Rating Ltd
• Number of Shares: 893,341,356

The strong commitment to establish a cohesive society is the foundation of SIBL’s all operations. It feels
a great attachment to the emotions of individuals. The bank feel that solely banking operations can’t
shepherd our society to a fair and equitable stage. Thus the bank is substantially involved in CSR
operations on humanitarian grounds. It works in the domains such as from eradicating poverty to family

2|Page
empowerment. Unlike the others, the Bank’s standards for success include not only the fundamental aim
to create profit but also markers to become the country’s most humane and comprehensive Bank.

The following table describes the important milestones throughout the history of the bank:

Year Milestone
1995 • Incorporation
• Certificate of Commence
• Formal Inauguration
• Starting of 1st Branch
2000 • Initial Public Offering
• Listing with Dhaka Stock Exchange
2004 • Online Banking Facilities Introduced
2005 • Listing with Chittagong Stock Exchange
2007 • 1st Right Share
2008 • Launching of Remittance Service
2009 • 2nd Right Share
2010 • Opening of 50th Branch
• Formation of Subsidiary Companies
o SIBL Securities Ltd.
o SIBL Investment Ltd.
• Agreement with VISA
• Introducing Core Banking Software
2011 • Introducing Concurrent Audit System
• 3rd Right Share
• Opening of 75th Branch
• Introducing Green Banking Window
• Introduction of School Banking

Table 1: Important Milestones of SIBL (SIBL, 2022)

3|Page
1.2.2 Vision, Mission and Values

Vision • Working together for a caring society

• Establishing Three Sector Banking Model

• Transformation to a service oriented technology driven profit
earning Bank
• Fast, accurate and satisfactory customer service
• Balanced & sustainable growth strategy
• Optimum return on shareholders’ equity
Mission
• Introducing innovative Islamic Banking Products
• Attracting and retaining high quality human resources
• Empowering real poor families and creating local income
opportunities
• Providing support for social benefit organizations by way of
mobilizing funds and social services

• Honesty: To be honest is ordained by the scripture – we stick to this

value in all our service provision.
• Transparency: Remaining transparent in all acts is a virtue that's
builds trust - we adhere to it.
• Efficiency: Efficiency implies perfection in any job done - we strive
to render full satisfaction with it.
• Accountability: To be accountable is to be responsible and above
any suspicion - we are dutifully there.
• Religiousness: SIBL enhances economic well being with regard to
Values the bliss of religious ethics.
• Innovation: Our minds and eyes are open to the evolution in quality
of life to innovate further benefits for the service takers.
• Flexibility: Flexibility leads to better understanding and greater
satisfaction - we pursue the quality.
• Security: Customers must feel secure with all our products and
services - we keep on ensuring it.
• Technology: Modern life is technology dependent - we keep
looking for the latest development to provide the best in ease to our
clients.

Figure 1: Vision, Mission and Values of SIBL (SIBL, 2022)

4|Page
1.2.3 Corporate Structure

Managing Director

Additional Managing Director

Deputy Managing Director

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

First Assistant vice president

Senior Executive Officers

Executive Officers

Residency Officers

Senior Officers

Officers

Junior Officers

Assistant Officers

Figure 2: Corporate Structure of SIBL

5|Page
1.2.4 Products and Services
The offered products and services can be divided into five categories which are retail, corporate, SME,
international business, and Digital Banking.

Products are services offered under these categories are as follows:

• Retail:
o Investment Products:
▪ SIBL Islamic Auto Finance
▪ SIBL Islamic Home Finance
▪ Islamic Consumer Finance
▪ Bai-Muazzal
▪ HPSM
▪ HPSM-IJARA
▪ Murabaha
▪ Musharaka
▪ Bill Purchase
▪ Bai-Salam (PC)
▪ Quard
o Deposit Products:
▪ Al-Wasiyah Bil Waqf (Cash) Account
▪ Mudaraba Scheme Deposits
▪ Al Wadiah Current Account
▪ Mudaraba Savings Deposit
▪ Mudaraba Term Deposit
▪ Mudaraba Notice Deposit
▪ Cash Waqf. Deposit
▪ SIBL Super Savings Account
o Cards:
▪ About SIBL VISA Islamic Credit Card
▪ SIBL Gift Card
▪ SIBL Duel Prepaid Card

6|Page
 ▪ Visa Islamic Credit Card (Dual)
▪ Visa Islamic Credit Card (Local)
▪ SIBL Zameel Debit Card
▪ Special Offers
▪ SIBL Prepaid Card
▪ SIBL Hajj Card
▪ Card User Guideline
▪ Fees & Charges
▪ Special Offers for Cards
o SIBL International Insta Remit:
▪ SIBL International Insta Edu Remit
▪ SIBL International Insta Medi Remit
▪ SIBL International Insta Family Remit
o School Banking:
▪ SIBL Student Account
▪ Mudaraba Education
o Alternate Banking:
▪ Internet Banking
▪ Agent Banking
o Other Services:
▪ Locker Service
▪ Insurance Service
▪ Pre-registration And Registration Fee of Hajj
• Corporate:
o Trade Finance & RMG
o Working Capital Financing
o Project Financing
• International Business:
o Correspondent Banking
o Centralized Trade Processing Unit
o Offshore Banking Unit

7|Page
 • SME:
o Baim- SME (Revolving)
o HPSM- SME (Com.)
o HPSM- SME (Transport)
o Baim- ME (Micro-Enterprise)
o Bai- Muajjal Com Installment (SME)
o Murabaha- SME
• Digital Banking:
o Internet Banking
o SIBL NOW
o Call Center
o e-Payment
o e-account
o bKash from SIBL AC
o bKash Cash Out Through SIBL ATMs
o NAGAD from SIBL AC

1.2.5 Corporate Social Responsibility

As an Islamic Bank, Social Islami Bank Limited is extremely cognizant of its social responsibilities and
constantly attempting to engage in social cause of the nation. The bank has a specialized CSR Desk with
the purpose to serve mankind via numerous charitable initiatives placing priority
on education, health, disaster management, rehabilitation, eradicating poverty and so on. The bank thinks
that any forms of social & philanthropic initiatives will enhance the quality of the lives of the less
privileged of the nation.

SIBL pioneers CSR initiatives in the nation. The breadth of its operations varies from individual disturbed
persons to institutional wellbeing. It invests a large money every year for welfare of the community. SIBL
continually explores new places where it can give the essential help. SIBL goes to any humanitarian
catastrophe either flood, cyclone or earthquake, fire before anybody with life-saving resources. The
mission of SIBL is to establish a caring society and it is ceaselessly striving for that.

8|Page
Chapter 2 : Internship Experience
2.1 Job Responsibilities
There are three distinct parts of Social Islami Bank Limited’s Bashundhara Branch. The first one is
Department of General Banking, the second one is Department of Investment Banking and the third one
is Department in charge of Foreign Exchange. I worked in the General Banking department in the
Bashundhara Branch of Social Islami Bank Limited as an intern. There are six sections in general banking.
Section 1 and 2 are responsible for opening accounts and billing. My primary responsibilities were
concerned around these two sections and are as follows:

• Filling up blank account forms which are not ready for authorization.
• Helping clients decide which bank account is good or beneficiary for them.
• Assisting clients about how to fill up a bank account opening and letting them know what are
needed for opening a bank account.
• Account opening; Collection of documents for account opening
• Maintaining and updating account opening forms when required
• Processing the documents collected and sending them for further verification
• Cheque and Card requisition; Delivering cheque and card by executive necessary SOP

2.2 Functions of the Department

The General Banking Department of SIBL are responsible for the following:

• Maintenance of Deposit A/Cs/ Saving accounts/ Current accounts/cash credit deposits/Fixed

deposits/short term deposits/margin deposits/Bond deposits/F.C. Bond deposits.
• Receipts & payment of cash; Handling transfer transactions; Operations of clearing house.
• Maintenance of accounts with Bangladesh Bank & other banks.
• Collection of Cheques & Bills; Issue and payment of Demand Drafts, Telegraphic Transfers and
payment Orders.
• Executing customers standing Instructions.
• Maintenance of safe Deposit Lockers; Maintenance of Internal Accounts of the banks
• Maintenance of Internal Accounts of the banks.
• Saving all transaction record in computer; Closing and transfer of different types of accounts.
• Keeping good relationship with valued customer; Providing necessary support to the customers.
9|Page
Chapter 3 : Issue Analysis
3.1 Analysis of Industry
Bangladesh's banking industry has been fighting to survive in recent years. The majority of banks are in
problems due to loan defaults, large non-performing loans, and other concerns. The pandemic crisis has
exacerbated the overall economic predicament. Two years ago, there was a significant shift in banking
policy. In April 2020, the Bangladesh Bank introduced single-digit borrowing and lending rates. The
major goal was to entice investors with a low-interest rate. Because the borrowing rate is less than 10
percent, it was thought that investment would increase. In addition, several banks predicted that deposits
from people would fall due to the less-than-six percent interest rate on depository money.

2021 was a crucial year for the industry due to the arrival of COVID. Almost all the big financial markets
across the globe have been badly damaged owing to the lockdown and other restrictive measures targeted
at preventing the escalation of pandemic. Bangladesh also lost the speed of internal production as well as
export profits owing to regional or national lockdown during the initial wave of the epidemic. However,
although the epidemic eased and the economy began to recover in response to the many policy measures
made by the government and Bangladesh Bank, second wave of the pandemic struck again in April 2021.
Despite the enormous pressure created by the financial market's internal and external situations, all
scheduled banks in the country remained operational during the lockdown period for normal business
hours or for a specified time in every working day to provide regular banking services to their customers
all through the pandemic over the last year and a half. From the beginning of the pandemic scenario,
Bangladesh Bank has announced a series of policies and prudential measures to help scheduled banks and
non-bank financial institutions (NBFIs) survive and continue their commitment to revitalizing the
country's economy.

In Bangladesh, scheduled banks are classified into four types based on their ownership structure: state-
owned commercial banks (SCBs), specialized banks (SBs), private commercial banks (PCBs), and foreign
commercial banks (FCBs). In FY21, there were 61 scheduled banks in operation. Two new banks (Bengal
Commercial Bank Limited and Citizens Bank Limited) were licensed and began operations. At the end of
December 2020, there were 10,752 bank branches, up from 10,578 at the end of December 2019.

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In terms of share in both industry asset and industry deposit, PCBs are always the largest ones. PCBs'
share of the total assets was 67.3 percent in 2020 which was 67.8 percent in 2019. PCBs' share of deposit
decreased from 68.1 percent in 2019 to 67.3 percent in 2020 (Bangladesh Bank, 2021). The share of asset
and deposit across different categories of bank are as follows:

Share of Industry Asset (in Percentage)

80

67.8
67.1
67
65
70
60
50
40
27.6
25.9
25.6
24.5

30
20

5.5
5.2
4.8
4.6
2.6
2.4
2.2
2.2

10
0
SCBs DFIs/SBs PCBs FCBs

2016 2017 2018 2019 2020

Figure 3: Share of Industry Asset from 2016 to 2020 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017)

Share of Industry Deposit (in Percentage)

80
68.1

67.3
65.9
64.8

66

70
60
50
40
28.4
27.3

26.6

25.9
25

30
20
4.8

4.3

4.3
2.8

2.8

2.6

2.6

2.5

10
4
4

0
SCBs DFIs/SBs PCBs FCBs

2016 2017 2018 2019 2020

Figure 4: Share of Industry Deposit from 2016 to 2020 (Bangladesh Bank, 2021; Bangladesh Bank,
2019; Bangladesh Bank, 2017)

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The banking sector's gross NPL ratio was 7.7 percent as of December 2020. FCBs had the lowest gross
NPL ratio, while SCBs had the highest. FCBs had a gross NPL ratio of 3.5 percent, while SCBs, PCBs,
and SBs had ratios of 20.9, 4.7, and 13.3 percent, respectively, as of December 2020.

Ratio of Gross NPLs to Total Loans by Types of Banks

35
30
30
26.5
25
23.9
25
26 20.9 20.6
23.4
20
19.5
15
9.6 15.1
13.3
10 7 6.5 11.4
5.7 5.4
4.7
5
5.5 5.8
4.6 4.9
3.5 3.9
0
2016 2017 2018 2019 2020 2021 (End of June)

SCBs SBs PCBs FCBs

Figure 5: Ratio of Gross NPLs to Total Loans by Types of Banks (Bangladesh Bank, 2021; Bangladesh
Bank, 2019; Bangladesh Bank, 2017)
Earnings as evaluated by Return on Asset and Return on Equity vary per bank category. The ROA of
SCBs and SBs was always lower than the industry average. Return on Asset of SCB increased modestly
(0.1 percent) in June 2021 vs -1.1 percent in 2020. On the other side, following a positive trend from 2012
to 2016, the ROA of PCBs has fallen in recent years. Although the Return on Asset of FCBs decreased
from 2014 to 2018, it remained consistently high. In June 2021, the banking sector's Return on Asset was
0.5 percent (Bangladesh Bank, 2021).

SCBs had a Return on Equity of -29.6 percent in 2020, up from -13.7 percent in 2019. In terms of loss
recovery, the Return on Equity of SBs increased from -17.0 percent in 2019 to -13.9 percent in 2020,
whereas the ROE of PCBs declined from 11.2 percent to 10.2 percent over the same time. FCB’s Return
on Equity dropped to 13.1 percent in 2020 from 13.4 percent in 2019. In June 2021, the banking sector's
aggregate ROE was 8.3 percent (Bangladesh Bank, 2021). The ROA and ROE for different categories of
banks from 2016-2021 are as follows:

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 ROA
3 2.56
2.24 2.23 2.3 2.13
2 1.48
1.03 0.89 0.79 0.77 0.7 0.68
1

0
0.21 0.13
-0.16
-1 -0.62 -0.61
-1.07
-2 -1.3

-3
-2.8 -2.77
-3.01 -3.2
-4 -3.31
2016 2017 2018 2019 2020 2021 (End of June)

SCBs DFIs/SBs PCBs FCBs

Figure 6: ROA by Types of Banks from 2016 to 2021 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017)

ROE
20
13.08 12.42 13.43 13.1
15 11.31
9.26
10
11.09 12.01 10.98 11.16
3.45 10.22 10.12
5 2.94

0
-6.02
-5
-3.07
-10 -13.68
-15
-13.88 -13.47 -13.85 -14.41
-20 -17.04
-25 -29.61 -29.57

-30

-35
2016 2017 2018 2019 2020 2021 (End of June)

SCBs DFIs/SBs PCBs FCBs

Figure 7: ROA by Types of Banks from 2016 to 2021 (Bangladesh Bank, 2021; Bangladesh Bank, 2019;
Bangladesh Bank, 2017)

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The banking sector's overall advance-deposit ratio (ADR) was 72.7% in December 2020 which is an
increase from71.6 percent in June 2021. During this time period, the prudential limitations for ADR for
conventional and Islamic Shariah-based banks were 87% and 92 %, respectively. As of 30 June 2021, the
banking sector's liquidity coverage ratio (LCR) was 211.7 percent (against a minimum requirement of 100
percent), suggesting that banks have a healthy buffer of high-quality assets to cover cash outflows for at
least the following 30 calendar days under strained conditions. The banking sector's net stable financing
ratio (NSFR) was 109.4% as of June 2021, suggesting that banks were more reliant on stable funding
instead of variable funding to increase their commercial operations (Bangladesh Bank, 2021).

There are three categories of banks depending on their mode of operation (e.g., conventional and Islamic
Shariah based): full-fledged conventional banks, full-fledged Islamic Shariah based banks, and banks with
dual operations. In FY21, eight PCBs functioned as full-fledged Islamic banks among 61 licensed banks,
while 22 conventional banks (including two SCBs and three FCBs) were active in Islamic banking via
their Islamic banking offices. Islamic banks have continued to develop rapidly, as seen by their increased
market share of the entire banking system's assets, funding, and deposits. At the end of December 2020,
total deposits of Islamic banks and Islamic banking branches of conventional banks were at BDT 3207.8
billion, accounting for 22.6% of total deposits (BDT 14187.8 billion) of the banking system. Total credit
of Islamic banks and Islamic banking branches of conventional banks, on the other hand, was at BDT
2871.4 billion at the end of December 2020, accounting for 25.9% of total credit (BDT 11095.6 billion)
of the banking industry. The amount of Deposits and Credits (in Billion BDT) for Islamic Banking sector
are as follows:

Deposit and Credit (in Billion BDT) of Islamic Banks

4000
3207.8
2734 2558.4 2871.4
3000 2321.3 2264.6
2119.5 1958.2
1857.3 1647
2000

1000

0
2016 2017 2018 2019 2020

Deposit Credit

Figure 8: Deposit and Credit (in Billion BDT) of Islamic Banks from 2016 to 2021 (Bangladesh Bank,
2021; Bangladesh Bank, 2019; Bangladesh Bank, 2017)

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 3.2 Ratio Analysis
3.2.1 Methodology
Ratio analysis can show how a firm has changed over time and compare one company to another in the
same industry or sector. Companies may also utilize ratios to determine whether or not there is a trend in
financial performance.

To gain insights regarding profitability, liquidity, operational efficiency, and solvency of the Islamic
Banking sector of Bangladesh and to compare Social Islami Bank Limited against four other Islamic
Banks, ratio analysis for the years of 2016-2020 was done for 5 Islamic Banks which are:

I. Social Islami Bank Limited

II. Al-Arafah Islami Bank Limited
III. Islami Bank Bangladesh Limted
IV. EXIM Bank
V. Standard Bank Limited

10 ratios were calculated for all of the banks for the aforementioned period:

I. Current Ratio
II. Debt to Total Asset Ratio
III. Return on Asset
IV. Return on Equity
V. Net Profit Margin
VI. Capital Adequacy Ratio
VII. Non-Performing Loan
VIII. Tier 1 Capital Ratio
IX. Earnings Per Share
X. Loan To Deposit Ratio

3.2.2 Data Collection

All of the data required for the calculation of the ratios were collected from the Annual Reports of the
respective years of the banks. Non-performing Loans and Earnings Per Share were directly collected from
the Annual Reports instead of calculating.

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3.2.3 Results and Interpretation
a. Current Ratio: The current ratio is a liquidity ratio that measures or indicates how much a company is
capable of paying their short – term obligations within one or less than one year. If a company’s ratio
becomes lower, then it means investor’s or investigators get that they are not capable enough to pay their
debts and other obligations and lower current ratio indicates default risk but the higher current ratio rates
indicate that they are not using their cash properly.

Current Asset
The formula for Current Ratio is as follows:
Current Liabilities

The current ratio of the five banks is presented in the Table 2 and Figure 9 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 1.098334 1.141669 1.125075 1.126285 1.128379
Al-Arafah Islami Bank Limited 1.088766 1.004249 1.020091 1.121567 1.18395
Islami Bank Bangladesh Limited 1.120947 1.131405 1.236916 1.132529 1.134975
EXIM Bank 1.111842 1.140413 1.1371 1.125545 1.135545
Standard Bank Limited 1.092698 1.090445 1.095827 1.079357 1.119122

Table 2: Current Ratio

Current Ratio
1.5

0.5

0
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 9: Current Ratio

All of the banks had similar current ratio throughout the years. As of now, SIBL has the fourth highest
current ratio. SIBL’s current ratio indicates that the bank had and currently has ability to pay short-term
obligations during the last five years. The other banks though however are performing slightly better than
SIBL. Al-Arafah Islami Bank Limited, Islami Bank Bangladesh Limited and EXIM Bank has the highest
current ratio.

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b. Debt to Total Asset Ratio: Debt ratio is one of the important ratios to measure a company’s financial
performance that indicates the percentage of a company’s assets that are provided via debt, it is the ratio
of total debt and total asset. Higher debt ratio indicates that companies have used more debt than the actual
benchmark and lower debt ratio indicates that they did not use heavy debts.

Total liabilities
The formula for Debt to Total Asset Ratio is as follows:
Total asset

The Debt to Total Asset Ratio of the five banks is presented in the Table 3 and Figure 10 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 0.948664 0.948643 0.949847 0.953022 0.952527
Al-Arafah Islami Bank Limited 0.929459 0.930619 0.936627 0.939144 0.944022
Islami Bank Bangladesh Limited 0.943681 0.94442 0.948017 0.955835 0.959841
EXIM Bank 0.917188 0.924048 0.932594 0.936905 0.941956
Standard Bank Limited 0.923539 0.924846 0.926775 0.923541 0.923348

Table 3: Debt to Total Asset Ratio

Debt to Total Asset Ratio

0.9700

0.9600

0.9500

0.9400

0.9300

0.9200

0.9100
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 10: Debt to Total Asset Ratio

Again, the banks have similar Debt to Asset Ratios. All of the banks have a ratio lower than one which
indicates these banks have less debts than assets. However, SIBL has the second highest Debt to Total
Asset Ratio as of now which indicates the other four banks have less debt and higher assets. Standard
Bank has the lowest Debt to Total Asset Ratio among the five banks.

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c. Return on Asset: Return on assets is a metric that indicates a company's profitability in relation to its
total assets. ROA can be used by management, analysts, and investors to determine whether a company
uses its assets efficiently to generate a profit.

Net Income
The formula for Return on Asset is as follows:
Total asset

The Return on Asset of the five banks is presented in the Table 4 and Figure 11 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 0.53% 0.52% 0.44% 0.41% 0.43%
Al-Arafah Islami Bank Limited 0.99% 0.73% 0.64% 0.61% 0.46%
Islami Bank Bangladesh Limited 0.55% 0.63% 0.48% 0.34% 0.29%
EXIM Bank 0.99% 0.63% 0.55% 0.58% 0.40%
Standard Bank Limited 0.65% 0.64% 0.68% 0.49% 0.35%

Table 4: Return on Asset

Return on Asset
1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 11: Return on Asset

Till 2019, SIBL had the lowest ROA among the 5 banks. The situation hasn’t improved much as the ROA
for SIBL dropped even further in 2020. In 2021, SIBL had an increased ROA and were the second highest
among the 5 banks. The thing that should be noted here that all of the banks have experienced sharp
decline in terms of ROA over the years.

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d. Return on Equity: Return on equity (ROE) is a ratio that provides investors with insight into how
efficiently a company (or more specifically, its management team) is handling the money that shareholders
have contributed to it. In other words, return on equity measures the profitability of a corporation in
relation to stockholders’ equity. The higher the ROE, the more efficient a company's management is at
generating income and growth from its equity financing.

Net Income
The formula for Return on Equity is as follows:
Total Equity

The Return on Equity of the five banks is presented in the Table 5 and Figure 12 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 10.33% 10.14% 8.81% 8.66% 9.02%
Al-Arafah Islami Bank Limited 14.07% 10.46% 10.05% 10.10% 8.21%
Islami Bank Bangladesh Limited 9.71% 11.38% 9.23% 7.66% 7.31%
EXIM Bank 11.93% 8.27% 8.16% 9.20% 6.86%
Standard Bank Limited 8.45% 8.47% 9.26% 6.45% 4.59%

Table 5: Return on Equity

Return on Equity
15.00%

10.00%

5.00%

0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 12: Return on Equity

SIBL had the highest ROE in the year of 2021. All of the banks except Standard Bank Limited had a
downward trend from 2017 to 2012 in terms of ROE. After that period, in 2021 SIBL had an increased
ROE whereas all the other banks still experienced a decline. It indicates that currently SIBL is better at
generating income and growth from its equity financing compared to other banks.

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e. Net Profit Margin: The net profit margin, or simply net margin, measures how much net income or
profit is generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or
business segment. Net profit margin is typically expressed as a percentage but can also be represented in
decimal form. The net profit margin illustrates how much of each BDT in revenue collected by a company
translates into profit.

Net Income
The formula for Net Profit Margin is as follows:
Revenue/Sales

The Net Profit Margin of the five banks is presented in the Table 6 and Figure 13 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 13.33% 13.69% 12.34% 14.99% 15.87%
Al-Arafah Islami Bank Limited 25.84% 19.70% 17.04% 19.15% 14.54%
Islami Bank Bangladesh Limited 13.68% 15.70% 12.52% 11.90% 10.92%
EXIM Bank 29.92% 18.95% 18.25% 21.30% 16.98%
Standard Bank Limited 18.40% 17.57% 19.40% 13.87% 12.65%

Table 6: Net Profit Margin

Net Profit Margin

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 13: Net Profit Margin

In 2021, SIBL had the second highest Net Profit Margin among these five banks. Another thing to note is
that all of the banks experienced a decline in 2021 from 2020 but SIBL had an increase in 2021. During
the last two years, EXIM bank had the highest Net Profit Margin.

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f. Capital Adequacy Ratio: The capital adequacy ratio (CAR), also known as capital to risk-weighted
assets ratio, measures a bank's financial strength by using its capital and assets. The reason minimum
capital adequacy ratios (CARs) are critical is to make sure that banks have enough cushion to absorb a
reasonable amount of losses before they become insolvent and consequently lose depositors’ funds.

Tier I capital + Tier II capital

The formula for Capital Adequacy Ratio is as follows:
Risk weighted assets

The Capital Adequacy Ratio of the five banks is presented in the Table 7 and Figure 14 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 11.59% 14.37% 13.88% 13.57% 11.64%
Al-Arafah Islami Bank Limited 13.07% 14.68% 14.67% 15.97% 15.46%
Islami Bank Bangladesh Limited 10.91% 11.65% 12.55% 13.37% 12.31%
EXIM Bank 12.08% 10.88% 12.57% 13.25% 14.25%
Standard Bank Limited 13.96% 9.97% 11.32% 12.86% 14.12%

Table 7: Capital Adequacy Ratio

Capital Adequacy Ratio

18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 14: Capital Adequacy Ratio

All of the banks have more than 8% CAR, which is the minimum under Basel III. Apart from EXIM Bank
and Standard Bank Limited, all other three banks experienced a decline in terms of CAR. SIBL had the
lowest CAR in 2021 which indicates the four other banks are financially stronger in terms of absorbing
losses.

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g. Non-Performing Loan Ratio: The nonperforming loan ratio, better known as the NPL ratio, is the
ratio of the amount of nonperforming loans in a bank's loan portfolio to the total amount of outstanding
loans the bank holds. The NPL ratio measures the effectiveness of a bank in receiving repayments on its
loans.

Non−Performing Loans
The formula for Non-Performing Loans Ratio is as follows:
Total Loans

The Non-Performing Loans Ratio of the five banks is presented in the Table 8 and Figure 15 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 8.20% 7.69% 6.63% 6.05% 5.18%
Al-Arafah Islami Bank Limited 4.10% 4.79% 4.82% 3.80% 4.81%
Islami Bank Bangladesh Limited 3.56% 4.12% 3.82% 3.41% 3.35%
EXIM Bank 2.49% 5.87% 4.87% 3.10% 4.81%
Standard Bank Limited 7.42% 5.67% 5.29% 4.29% 6.44%

Table 8: Non-Performing Loans Ratio

Non Performing Loan

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 15: Non-Performing Loans Ratio

SIBL has been experience a decline in terms of NPL ratio since 2017 which indicates that amount of non-
performing loans has decreased throughout the years. This is a good sign for the bank as SIBL along with
Islami Bank Bangladesh Limited are the only two banks that managed to reduce their NPL. However,
SIBL still has the second highest NPL ratio among these banks which means they are still behind their
competitors.

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h. Tier 1 Capital Ratio: The tier 1 capital ratio is the ratio of a bank’s core tier 1 capital—that is, its
equity capital and disclosed reserves—to its total risk-weighted assets. It is a key measure of a bank's
financial strength that has been adopted as part of the Basel III Accord on bank regulation. The tier 1
capital ratio measures a bank’s core equity capital against its total risk-weighted assets—which include
all the assets the bank holds that are systematically weighted for credit risk.

Core Capital
The formula for Tier 1 Capital Ratio is as follows:
Risk Weighted Assets

The Tier 1 Capital Ratio of the five banks is presented in the Table 9 and Figure 16 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 7.04% 8.15% 8.11% 8.48% 8.15%
Al-Arafah Islami Bank Limited 10.40% 10.12% 10.28% 9.74% 10.37%
Islami Bank Bangladesh Limited 8.16% 7.99% 8.16% 8.26% 7.76%
EXIM Bank 8.62% 7.79% 7.88% 8.52% 9.61%
Standard Bank Limited 9.13% 5.97% 7.57% 8.03% 10.55%

Table 9: Tier 1 Capital Ratio

Tier 1 Capital Ratio

12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 16: Tier 1 Capital Ratio

All of the banks have a Tier 1 Capital Ratio of more than 6% which is the minimum under Basel III. SIBL
has had a constant up and down in terms of Tier 1 Capital Ratio. SIBL had the highest Tier 1 Capital Ratio
in 2020 but it was declined again in 2021. As of now, SIBL has the second lowest Tier 1 Capital Ratio
among these five banks which indicates three of the banks are financially stronger in terms of absorbing
losses.

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i. Earnings Per Share: Earnings per share (EPS) is calculated as a company's profit divided by the
outstanding shares of its common stock. The resulting number serves as an indicator of a company's
profitability. EPS also measures the company’s business valuation and how much price investors pay to
buy a share from the company.

The Earnings Per Share of the five banks is presented in the Table 10 and Figure 17 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 1.79 1.77 1.62 1.57 1.69
Al-Arafah Islami Bank Limited 3.15 2.35 2.28 2.41 1.96
Islami Bank Bangladesh Limited 3.06 3.92 3.4 2.98 2.99
EXIM Bank 2.34 1.65 1.69 1.94 1.49
Standard Bank Limited 1.42 1.13 1.5 1.05 0.77

Table 10: Earnings Per Share

EPS
4.5

3.5

2.5

1.5

0.5

0
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 17: Earnings Per Share

SIBL had a declining EPS from 2017 to 2020 and in 2021, it increased again. SIBL and Islami Bank
Bangladesh Limited were the only banks to experience an incline in terms of EPS in the year of 2021.
However, among the five banks, it has third highest EPS which puts SIBL in the middle.

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j. Loan To Deposit Ratio: The loan-to-deposit ratio (LDR) is used to assess a bank's liquidity by
comparing a bank's total loans to its total deposits for the same period. If the ratio is too high, it means
that the bank may not have enough liquidity to cover any unforeseen fund requirements. Conversely, if
the ratio is too low, the bank may not be earning as much as it could be.

Total Loan
The formula for Loan to Deposit Ratio is as follows:
Total Deposit

The Loan to Deposit Ratio of the five banks is presented in the Table 11 and Figure 17 below:

2017 2018 2019 2020 2021

Social Islami Bank Limited 91% 96% 92% 93% 91%
Al-Arafah Islami Bank Limited 96% 98% 97% 95% 95%
Islami Bank Bangladesh Limited 94% 98% 95% 88% 86%
EXIM Bank 90% 102% 97% 100% 102%
Standard Bank Limited 95% 94% 92% 96% 101%

Table 11: Loan To Deposit Ratio

Loan to Deposit Ratio

105%
100%
95%
90%
85%
80%
75%
2017 2018 2019 2020 2021

Social Islami Bank Limited Al-Arafah Islami Bank Limited Islami Bank Bangladesh Limited
EXIM Bank Standard Bank Limited

Figure 18: Loan To Deposit Ratio

SIBL had a slightly higher than ideal LDR throughout the years. As of 2021, Islami Bank Bangladesh
Limited and SIBL had the most ideal LDR. EXIM Bank and Standard Bank have experiencing very high
LDR throughout the years. In 2021, these two banks have a LDR higher than 100% which indicates these
bank has loaned out every single BDT in deposits. They are in the danger zone because they have no
reserves to pay customers for demand deposits.

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Bibliography
Bangladesh Bank. (2017). Annual Report (2016-2017). Bangladesh Bank. Retrieved from
https://www.bb.org.bd/pub/annual/anreport/ar1617/index1617.php

Bangladesh Bank. (2019). Annual Report (2018-2019). Bangladesh Bank. Retrieved from
https://www.bb.org.bd/pub/annual/anreport/ar1819/index1819.php

Bangladesh Bank. (2021). Annual Report (2020-2021). Bangladesh Bank. Retrieved from
https://www.bb.org.bd/pub/annual/anreport/ar2021/index2021.php

Bangladesh Bank. (2022). Banks & FIs. Retrieved from Bangladesh Bank:
https://www.bb.org.bd/en/index.php/financialactivity/bankfi

SIBL. (2022). AN OVERVIEW OF SIBL. Retrieved from SIBLBD: https://www.siblbd.com/about/profile

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