Internship Presentation On

Financial Performance of Social Islami Bank

Limited: An Analysis
Prepared By:
Ayesha Alam
Metric No: EB163201
Department of Economics & Banking

Department of Economics & Banking.

International Islamic University Chittagong.
 Objective of the Study
The major objective of this study is to make a clear analysis of Financial

Performance of Social Islami Bank Limited. There are some specific

objectives mentioned bellow

 To know the overview of Social Islami Bank Limited.

 To evaluate the financial performance of SIBL.
 To identify the problems related to financial performance and
forward some recommendations to overcome the problems of SIBL.
 Methodology
The data sources used to prepare this report are as follows:

• Five years Annual Reports of Social Islami Bank Ltd.

• Official Records of Social Islami Bank Ltd.

• Web site of the Social Islami Bank Ltd.

• Collections Prior research reports

• Different text book and journals

• Various reports and articles related to study

 Financial Performance of SIBL
• Capital Adequacy Ratio:
Particular 2015 2016 2017 2018 2019 Mean
Capital to risk weighted asset
ratio
13% 13.70% 13.80% 13.83% 13.50% 13.56%

Graph:

CAPITAL TO RISK WEIGHTED

ASSET RATIO
14%
14%
13.80% 13.83%
14% 13.70%
13% 13.50%
Percentage

13%
13%
13%
12.86%
13%
12%
12%
2015 2016 2017 2018 2019
year
Leverage Ratio (Debt to Equity Ratio)
Particular Mean
2015 2016 2017 2018 2019

Leverage ratio 13.36 13.65 13.88 13.57 14.68 13.83

15

14.68
14.5

14
Leverage ratio

13.88
13.65
13.57
13.5
13.36

13

12.5
2015 2016 2017 2018 2019

Year
Leverage Ratio
Loans to Total Assets Ratio

Particulars 2015 2016 2017 2018 2019 Mean

Loans to Total Assets

58.75% 57.10% 57.60% 62.39% 62.63% 59.69%
Ratio

Loans to Total Assets Ratio

64.00%
63.00% 62.39% 62.63%

62.00%
61.00%
60.00%
58.75%
Ratio

59.00%
58.00% 57.60%
57.10%
57.00%
56.00%
55.00%
54.00%
2015 2016 2017 2018 2019

Year

Loans to Total Assets Ratio

Percentage of Classified Loans:
Particular 2015 2016 2017 2018 2019 Mean

Percentage of Classified Loans 3% 3.90% 4.40% 3.70% 5.20% 4.00%

6%
5.20%
5%
4.40%

4% 3.90%
3.70%
Percentage

3.00%
3%

2%

1%

0%
2015 2016 2017 2018 2019
Year

Percentage of Classified Loans

Net Profit per Employee
Particular
2015 2016 2017 2018 2019 Mean
Net Profit per Employee
(in taka)
439275.53 428796.04 397160.49 580711.83 287679.61 426,724.70

Net Profit per Employee

700000

600000
580711.83
500000

400000 439275.53 428796.04

Amount

397160.49

300000
287679.61
200000

100000

0
2015 2016 2017 2018 2019

Year
Expenses per Employee
Particular
2015 2016 2017 2018 2019 Mean

Expense per employee (in

2.47 3.31 2.77 2.96 2.63 2.83
million taka)

Expense Per Employee

3.5 3.31

2.96
3
2.77
2.63
2.47
2.5

2
Ratio

1.5

0.5

0
2015 2016 2017 2018 2019

Year
Net Profit Margin
Particular 2015 2016 2017 2018 2019 Mean

Net profit margin 2.53% 1.89% 1.77% 1.98% 1.02% 1.84%

Net profit margin

3.00%

2.53%
2.50%

1.98%
Net Profit Margin

2.00% 1.89%
1.77%

1.50%

1.02%
1.00%

0.50%

0.00%
2015 2016 2017 2018 2019

Year

Net profit margin

Earning per Share (EPS)
Particular 2015 2016 2017 2018 2019

EPS (in Million Taka) 11.57 10.00 11.03 15.10 8.81

Earnings Per Share Earning Per Share

16

15.1
14

12
11.57
11.03
10
10
8 8.81

0
2015 2016 2017 2018 2019

Year
Return on Equity
Particulars
2015 2016 2017 2018 2019 Mean
ROE (in Million Taka)
21.32 15.84 15.20 18.03 9.98 16.07

Return on Equity

25

21.32

20
18.03
15.84
15.2
Return On Equity

15

9.98
10

0
2015 2016 2017 2018 2019

Year

Return on Equity
Investment to Deposit Ratio
Particulars 2015 2016 2017 2018 2019 Mean

Investment to deposit ratio 73.03% 72.96% 74.61% 81.53% 83.67% 77.16%

I n v es tm en t T o D ep o s it R a tio

Investment to Deposit Ratio

86.00%
83.67%
84.00%
81.53%
82.00%
80.00%
78.00%
76.00% 74.61%
73.03%
74.00% 72.96%
72.00%
70.00%
68.00%
66.00%
2015 2016 2017 2018 2019

Year

Investment to Deposit Ratio

Earning Assets to Deposit Ratio
Particulars 2015 2016 2017 2018 2019 Mean

Earning assets to
1.24 1.28 1.30 1.31 1.34 1.29
deposit ratio

Earning Assets to Deposit Ration

1.36
1.34
1.34

1.32 1.31
1.3
1.3
1.28
1.28
Ratio

1.26
1.24
1.24

1.22

1.2

1.18
2015 2016 2017 2018 2019

Year

Earning Assets to Deposit Ration

 FINDINGS
 Social Islami Bank has been able to maintain a healthy CAR ratio over
the years. The maximum CAR was in 2018. Which was 13.83%.

 Leverage ratio seems to be increasing over the years. It shows that they
are depending more on deposits than shareholder’s equity to manage
their assets.

 The loans to total assets ratio show a stable position of the bank in
giving out loans. It indicates a positive sign for the bank as it is earning
more profits by increasing lending.

 The percentage of classified loans of the bank does not represent a

healthy balance in managing repayments of loans. It implies that the
bank is engaged in high risk lending policies which may harm the
bank’s efficiency in loan management.

 According to the annual report of 2019, the net profit after tax has been
decreased for adverse business condition throughout the year.
 FINDINGS (CONT.…)
 The expense per employee has been quite stable over the years which
indicates a very good sign. In 2019, the expense decreased from 2.96
million to 2.63 million. If the amount continuously decreases, then that
would signify the bank’s efficiency in the long run.

 The earnings per share of Social Islami Bank has quite fluctuated over
the years. In the last year 2019 it was 8.81%.

 The return on equity can be identified to be the highest in 2015 which

was 21.32. The reason behind this reduction is the decreased net profit
in 2019.

 The earning assets to deposit ratio is indicating a healthy sign for the
bank since it seems to increase throughout the five years. In 2015, the
ratio was 1.24 and in the year 2019, it is increased to 1.34 which results
in a positive growth and shows its efficiency in managing assets.
 RECOMMENDATIONS
 Social Islami Bank has been able to maintain a healthy CAR ratio over the
years. They should keep it for the next years.
 Leverage ratio is increasing at a higher rate than the shareholder’s equity.
That means they are depending more on deposits than shareholder’s equity
to manage their assets. They should continue it to meet their financial
obligations.
 The loans to total assets ratio show a stable position of SIBL. The bank
also should maintain this position in next year.
 The expense per employee has been quite stable over the years which
indicates a very good sign. If the amount continuously decreases, then that
would signify the bank’s efficiency in the long run.
 Earnings Per Share (EPS) of SIBL has decrease in the last year. They
should try to increase this ratio. Because, a bank with, high earnings per
share ratio is capable of producing significant dividend for shareholders.
 ROE has decreasing trend of SIBL. Bank shareholders should more invest
to increase this ratio.
 An ideal investment to deposit ratio is between 80% to 90%. So, bank
should to maintain this ratio above 80% in next year.
 CONCLUSIONS
Social Islami Bank has been a successful private commercial bank in
the banking industry. Its main goal is a safe and steady growth. The
bank has been practicing conservative banking over the years. Thus, it
has adopted new technologies to make every area of the bank more
transparent to the central management. It has cut down processes that
took hours previously, now can be executed within minutes. Social
Islami Bank is also continuously expanding its offerings and services
to the clients. Again, its social causes programs create a strong image
for the bank among the shareholders.

The bank has remained profitable since its inception. However,

recently in 2019, the banking sector continued to face challenges like
swelling non-performing loans, excess liquidity, lower capital
adequacy etc. These challenges have also affected the bank in some
way or other eventually. Hence, the bank could not perform well
compared to previous years.
THANK YOU