1. finance
2. bank

International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Vol. 2 Issue 2 Apr. - June 2015
ISSN : 2348-6503 (Online)
ISSN : 2348-893X (Print)
Performance Analysis of Nachanmahal Hat
Branch of Sonali Bank Limited
Kach Mondal, IINishad Nasrin, IIITanbir Hossain, IVShangkari Bala Sarkar
I
Economics Discipline, Khulna University, Khulna, Bangladesh
Assistant Professor, Economics Discipline, Khulna University, Khulna, Bangladesh
III,IV
Economics Discipline, Khulna University, Khulna, Bangladesh
I
II
Abstract
This paper examines the performance of Sonali Bank Limited (SBL), Nachanmahal Hat Branch (NHB), Jhalakati of Bangladesh.
It basically conducted through using CAMEL ratings, SWOT analysis and Gap model etc. CAMEL rating is one of the widely used
tools for measuring performance on basis of capital adequacy, asset quality, management capacity, earnings ability and liquidity
of the financial institutions including commercial banks by the principal regulators all around the world. In this paper, it is seen
that capital adequacy ratio’s score is higher than standard score. Again, two ratios titled income per employee and expenses per
employee under management capacity are also higher than standard score. Diversification ratio under earning ability is 47.38 which
is near to match standard score (50.00). With regard to asset quality, management capacity and earning ability in this branch has
been exhibiting moderately better performance in the context of Bangladesh. Finally, with regard to liquidity, loan to deposit ratio
and earning assets to deposit ratio in the branch shows excellent performance but liquid asset to total deposit ratio shows poor
performance. In case of credit disbursement and collection system, the branch has been improved in the recent years.
Keywords
Performance measurement, CAMEL ratings system, SWOT analysis, Gap model
The objective of the study is to analyze the performance of NHB
of Sonali Bank Limited through CAMEL ratings system.
I. Introduction
The banking system plays a critical role in underpinning economic
development. Money is one of the most significant and necessary
elements which can be compared with blood of our body when
pecuniary institution like bank act as a artery system of that body
[1]. On the other hand, bank is a financial institution which deals
with deposits and advances and other related services [2]. SBL
explores the opportunity of getting practical banking environment
for the students every year. After independence of Bangladsh,
Sonali Bank emerged as the largest and leading nationalized
commercial bank by proclamation of the Banks Nationalization
Order 1972 (Presidential Order-26) liquidating the then National
Bank of Pakistan, Premier Bank and Bank of Bhwalpur [3]. All
over the world, the dimension of banking has been changing rapidly
due to deregulation, technological innovation and globalization.
To survive in such a competitive banking world, only theoretical
knowledge in the field of banking studies is not sufficient. To cope
with the changing banking environment, banks are now changing
their pattern of activities delivery. Customers are mobile and they
shifts from one bank to another for getting better service and in
this respect banks are ranked to their clients. The main focus of
this study is to analyze the banking performance of NHB through
CAMEL ratings system, though it is mainly used by Central bank.
The study is considered to make huge contribution not only in
the field of academic research but also in helping managers to
improve banking performance. An extensive comparative study
of the financial performance is conducted among different year
of in order to understand the current scenario of the financial
health position of the branch. This study can be helpful tool for
the managers to pay more attention to the aspects where these
banks are lagging behind which may result in improving both
their financial performance and ranking. The findings of this study
may enrich the present literatures and it can help researchers in
further study. This study will also pave the way of efficient and
effective strategic decision making by the managers.
© 2014, IJRMBS All Rights Reserved
A. Review of Literature
Different authors across the globe have shown financial
performance of banks based on different methods and techniques
of which financial ratio analysis, trend analysis, CAMEL rating,
are the most common tools used. Banks play an important role in
the economic development of every state [4]. This study is intended
to measure the performance of selected private sector banks (five),
listed on both the Dhaka Stock Exchange and Chittagong Stock
Exchange, in Bangladesh through widespread use of financial
ratios that mainly indicate the adequacy of the risk based capital,
credit growth, credit concentration, non-performing loan position,
liquidity gap analysis, liquidity ratio, return on assets (ROA), return
on equity (ROE), net interest margin (NIM), etc. Elizabeth and
Greg (2004) also discuss about three indicators namely, internalbased performance measured by Return on Assets, market-based
performance measured by Tobin’s Q model (Price/Book ratio)
and Economic-asked performance measured by economic value
add has been used to measure financial performance of the
some financial institution of Australia [5]. CAMELS’ rating is
a managerial tool to identify those banking companies that are
having problems and involve increased supervision [6]. Under
this rating system, banking companies are assigned two sets of
ratings- (i) performance ratings, and (ii) an overall composite
rating. On the other hand authors examine that in case of the
band ‘capital adequacy’, IFIC Bank’s, capital adequacy ratio
and leverage ratio show better performance than EXIM Bank
but in respect of return on equity and net worth protection, IFIC
shows not as good as performance than the other [7]. Chowdhury
(2002) analyses that the performance of banks requires knowledge
about the profitability and the relationships between variables like
market size, bank's risk and bank's market size with profitability
[8]. The study concluded that the banking industry in Bangladesh
is experiencing major transition for the last two decades. Chien
14
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International Journal of Research in Management &
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Vol. 2 Issue 2 Apr. - June 2015
and Danw (2004) in his study concluded that Taiwan commercial
banks with higher total deposits, credits, assets, and shareholders’
equity does not always result in better profitability performance
of management [9]. Siddique and Islam (2001) have shown that
the commercial banks of Bangladesh are performing healthy and
contributing to the economic development of the country [10].
However, Khandker (2011) examines the average profitability of
all Bangladeshi banks collectively was 0.09% during 1980 to 1995
[11]. Haque (2013) discusses about financial performance of some
selected private commercial banks in Bangladesh for the period
2006-2011 clarify whether any relationship exists between a bank’s
years of operation and its performance [12]. On the other hand,
Ahmed and Hasan (2007) compare and analyze the performance of
Islamic banking and conventional banking system in Pakistan by
using of financial measures [13]. Therefore, this research examines
the performance of SBL through CAMEL ratings system. In the
previous literature, there is lot of study about performances of
banks but there is no study which uses CAMEL rating exactly
about a state owned commercial bank. From the academic point
of view this research will provide a new perspective in evaluating
the pecuniary performance of Bangladeshi commercial banks that
belongs to different generations. The findings of this study will
enrich the present literature and it will help researchers in their
future venture.
Table 1: Ratios under CAMEL Ratings of Capital Adequacy
Component Ratios
Formula
Standard
Score (In
%)
Capital
Capital
Capital &
8
Adequacy
Adequacy reserve / Total
Ratio
risk weighted
assets×100……
(1)
Return on Net profit /
30
Equity
Paid up capital
+ free reserves
×100…………(2)
NetTotal equity /
100
worth
Non-performing
Protection loan ×100………
(3)
Source: Bangladesh Bank’s CAMEL Rating Analysis (Module 1
and 2), 2012
2. The CAMEL Ratings: Asset Quality
Percentage of classified loan to total loan granted is considered
as the principal ratio for measuring the quality of the assets. At
this stage, the performance of the asset under deferent ratios has
been shown in Table 2.
II. Methodology
The research is descriptive well as qualitative in nature which
has mainly conducted by secondary data which have both
quantitative and qualitative value so that the performance level
can be well understood and measured. The paper is secondary as
well as primary data base. The main sources of secondary data
are annual report of SBL, different manuals of SBL, different
circulars of SBL, Bangladesh Bank website, different websites,
website of SBL, journals and articles. The sources of primary data
are observation method. SBL is given more priority to Nalchity
upazila because of this reason here three branches are located
[14]. The tools for the performance of all the commercial banks
under CAMEL Ratings include capital adequacy, asset quality,
management standard, earnings and liquidity maintenance [15].
Table 2: Ratios under CAMEL Ratings of Asset Quality
Component
Asset
Quality
Ratios
Formula
% of
Classified
Loan
Nonperforming
Loan / Total
Loan×10…(4)
Standard
Score (In %)
10
Source: Bangladesh Bank’s CAMEL Rating Analysis (Module 1
and 2), 2012
3. The CAMEL Ratings: Management Capacity
The management capacity of SBL can be recognized to the number
of variables, such as operating ratio, profit per employee, expenses
per employee, gross earning assets to total assets etc. At this stage,
the management capacity of the sample banks has been presented
through two important ratios in Table 3.
A. CAMEL Analysis
CAMEL rating is one of the widely used tools which analyze capital
adequacy, asset quality, management capacity, earnings ability and
liquidity of the financial institutions including commercial banks
to find out the performance and improvement capacity.
Table 3: Ratios under CAMEL Ratings of Management
Capacity
Component
Ratios
Formula
Standard
Score
Management Income
Total Profit/
0.50
Capacity
per
Total
employee employees…(5)
Expenses
Total Cost /Total
0.25
per
employees…(6)
employee
1. The CAMEL Ratings: Capital Adequacy
Capital adequacy of SBL can be deliberated by calculating a
number of ratios, like capital adequacy ratio, leverage ratio return
on equity and net worth protection. The ratios for the year 2004
to 2013 are given in Table 1.
Source: Bangladesh Bank’s CAMEL Rating Analysis (Module 1
and 2), 2012
4. The CAMEL Ratings: Earning Ability
Earning ability of SBL can be judged through a number of
accounting ratios, such as net investment margin, return on assets,
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International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Vol. 2 Issue 2 Apr. - June 2015
diversification ratio, net profit margin, earnings per share, return
on capital employed etc. The performance of the banks in respect
of these ratios has been tabulated in Table 4.
Table 6: Nature of Loan of NHB
Types of AgriMeasurement
cultural Loan
Table 4: Ratios under CAMEL Ratings of Earning Ability
Compo- Ratios
Formula
Standard
nent
Score (In %)
Net
Profit from
6
Earning Investment
Investment /
Ability
Margin
Total Investment
× 100......(7)
Net Profit
Margin
Diversification Ratio
Profit After Tax
/Total Loan
& Advance×
100.......(8)
Non-Interest
Income / Total
Income× 100
......(9)
Unclassified
Loan /Standard
…..
50
Table 5: Ratios under CAMEL Ratings of Liquidity
CompoRatios
Formula
Standard
nents
Score
Loan to
Total Loan / Total
…..
Liquidity Deposit
Deposit ×100……
Ratio
(10)
…..
Earning Asset
/ Total Deposit
×100…...(12)
…..
Amount
-
-
-
-
D. SWOT Analysis
Hasan (2012) examines the SWOT analysis of Southeast Bank
shows the internal and external based influential factors which
link the Southeast bank positively and negatively [17]. After
analysing SWOT, specific inferences can be made in matrix.
The full abbreviated form of SWOT is strengths, weaknesses,
opportunities and threats.
5. The CAMEL Ratings: Liquidity
SBL have to pay regard to the number of factors, specifically (a)
maintenance of cash reserve ratio (CRR) and statutory liquidity
ratio (SLR), (b) adequate loan-deposit ratio, (c) dependence on
inter-band deposit and (d) profitability. The scenario is shown in
below in Table 5.
Liquid Asset /
Total Deposit
×100…….(11)
No. of
Borrowers
-
Which loan is not
classified or not
over due date (basically 1 year)
If the loan is past
Sub
due/overdue for 1
Standard
years or beyond but
less than 2 years.
Clas- (SS)
si-fied Doubt- If the loan is past
Loan
ful
due/overdue for 2
(DF)
years or beyond but
less than 5 years.
Bad/
If the loan is past
Loss
due/overdue for 5
(BL)
years or beyond
Source: Sonali Bank Limited (SBL), 2013 [16]
Source: Bangladesh Bank’s CAMEL Rating Analysis (Module
1 and 2), 2012
Liquid
Assets
to Total
Deposit
Ratios
Earning
assets to
deposit
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E. Gap Model of NHB
Ghosh (2011) shows that the customer expectations are subjective
assessments of actual service experience [18].The “Table
7”corresponds to two concepts: customer expectations and bank
perceptions that play a major role in service. Customer expectations
are the standards of or reference points for performance, against
which service experiences are compared, and are often formulated
in terms of what a customer believes, should or will happen.
Table 7: Gap Model
Perspective
Perspective
Expected Service
Customer
Gap (Brand Equity)
Perceived
Bank
Service
Source: Authors Compilation according to Ghosh, 2011 [19]
Source: Bangladesh Bank’s CAMEL rating analysis (Module 1
and 2), 2012
III. Overview
A. Description of Branches and Offices of SBL
SBL is the largest commercial bank in bank in Bangladesh. It has
large network all over the country. It has extensive network to the
root level of the country. The scenario is seen in Table 8.
B. Disbursement and Recovery of Loan
Actually, loan performance of the SBL is composed with the
yearly loan disbursement and yearly loan recovery. In this research
paper, authors used the information of loan disbursement and loan
recovery of year 2009 to 2013.
C. Nature of Loan
As a loan based branch, there are huge number of borrowers
of agriculture loan in NHB. Therefore, the detailed about the
agricultural loan are given in Table 6.
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Table 8: Branches and Subsidiaries Offices of SBL
S e r i a l Particulars
No.
01.
Total No of Branches
i)
No. of foreign branches
ii) No. of local branches
a) No. of Rural Branches
b) No. of Rural Branches
02.
No of Regional Offices
03.
No of Principal Offices
04.
International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Vol. 2 Issue 2 Apr. - June 2015
No of G.M. Offices
covered 93.38%. The other type of deposits is covered very low
percentage of total deposit.
No.
C. Composition of Total Assets
There are four type of asset in this branch and from those assets,
loan and advance are covered 95.92% of total asset. The others
asset like cash is covered 2.96%, fixed asset is covered 0.90%
and other assets are covered.
1204
2
1202
858
344
19
42
Table 10: Composition of Total Assets
Name of Asset
Amount in BDT
Loan And Advance
12,95,69,214
Cash
40,76,412
Fixed Asset
10,16,103
Other Asset
3,73,978
Total
13,50,35,707
10
Source: Sonali Bank Limited (SBL), 2013 [20]
Nachanmahal Hat Branch is one of the most important branches,
which was opened in the year of 1979 by the head office of SBL
to assist the rural people of Nalchity upazilla of Jhalakati district.
On that time, mainly agricultural loan disbursement was the main
duty of this branch though other some general banking work also
opened to help the rural people. At present both general banking
and agricultural loan and advance are two dominating work of
this branch. It is also an exceptional branch of SBL because here
total loan and advance are more than total deposit [21].
Table 9: Basic Information about NHB
Serial Particulars
Year
No.
01.
Year of Establishment
02.
Number of employees
2013
03.
Total Deposit
2013
04.
Total Loan and Advance 2013
05.
Profit after tax
2013
Percentage
95.92
2.96
0.90
0.22
100
Source: Annual Report of NHB, 2013 [24]
D. Composition of Total Liabilities
There are five types of liabilities in this branch and from those
liabilities; total deposit is covered 69.16% in 2013 of total
liabilities. The scenario is given below:
No.
1979
6
10,74,46,548
12,95,69,214
6,15,342
Source: Annual Report of NHB, 2013 [22]
Fig. 2: Composition of Total Liabilities in Percentage
B. Composition of Deposits
Deposit is one of the major factors of bank which ensures
performance and profitability of bank. The Fig. 1 shows the
composition of total deposit of NHB.
Source: Annual Report of NHB 2013 [25]
In Fig. 2, it shows that the inter branch transaction is covered
27.47% of total liabilities which is the second position and others
are in very tiny in size in 2013.
E. Comparison between Unclassified and Classified
Loan
In the Fig.3, it shows that in this branch 87% loan are unclassified
that means 87% loan are not over their due period and only 13%
loan are classified that means 13% loan are exceeded their due
period.
Fig.1: Composition of Total Deposit in Percentage
Source: Annual Report of NHB, 2013 [23]
In the year of 2013, the percentage of time deposit achieved
the maximum percentage of total deposit where time deposit is
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Fig.3: Comparisons between Unclassified Loan and Classified
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International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Loan
Source: Annual Report of NHB, 2013 [26]
It is a good sign for any branch of any bank where number of
borrowers are engaged in agriculture and they are benefited by
the help of rural credit and also maximum of them do not late
pay their loan.
2011
2010
2009
10.5
10.24
9.82
9.33
10.9
A
2009
2010
2011
N.B.: A stands for average score (In percentage) and S stands for
sstandard Score (In percentage.
S
D. Earning Ability
The net profit margin of the branch (score 0.61) is much better,
there no standard score is selected. But throughout the years,
profit after tax with respect to loan and advance percentage shown
about to same result.
8
Table 14: Earning Ability (In Percentage)
30
Name of
2013 2012
Ratio
Net Investment Margin -
100
Net
Profit Margin
Diversification Ratio
Table 15: Liquidity (In Percentage)
2012
S
Income
1.38 1.10 1.12 1.15 1.12 1.17 0.50
per Employee
Expenses 1.40 1.41 1.30 1.44 1.44 1.40 0.25
per Employee
Source: Annual Report for the periods, 2009-2013 [29]
A. Capital Adequacy
It is evident from Table 11 that NHB of SBL has achieved a better
result than the standard in relation to capital adequacy. Where the
standard score is 8 but the average score of five years is 10.47.
With regard to return on equity, branch has shown a poor result
(score 17.58) which is far behind the standard (score 30.0). As to
net worth protection, branch has shown a tremendous growth in the
performance in the later years although the average performance
is inferior (score 65.55) to the standard (score 100).
2013
2012
2013
Table 13: Management Capacity (In Percentage)
Name of
A
Ratios
IV. Analysis and discussion
Name of
Ratio
Capital
Adequacy
Ratio
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[
Return on
Equity
19.9
Net-worth
Protection
77.7
18.0
72.9
11.76
77.63
15.44
33.76
22.8
65.77
10.16
17.58
65.55
2010
2009
A
S
-
-
-
-
6
0.54
0.55
0.65
0.77
0.55
0.61
--
34.5
33.54
45.32
65.21
58.32
47.38
50
Source: Annual Report for the periods, 2009-2013 [30]
Source: Annual Report for the periods, 2009-2013 [27]
N.B.: A stands for average score (In percentage) and S stands for
sstandard Score (In percentage).
N.B.: A stands for average score (In percentage) and S stands for
sstandard Score (In percentage).
Finally, with respect to diversification ratio, the performance of
branch is below than the standard score. The average (score 47.38)
is close to standard (score 50.0). Therefore, the difference between
non-interest income and total income is in standard form.
B. Asset Quality
For Asset quality level, Table 12 shows that NHB Branch of SBL
has demonstrated stronger position (score 5.97) than the standard
score (10.0).
Table 12: Asset Quality of NHB of SBL (In Percentage)
Name of 2013 2012 2011 2010 2009 A
Ratio
percent- 6.33 5.77 7.23 4.76 5.77 5.97
age of
Classified
Loan
2011
E. Total Income and Expenditure of the NHB
In the Fig. 4, it shows the total income and expenditure of the
Branch. It is also shown the earning trend of those selected years.
In his chart, both income and expenditure are increased year by
year. Where the amount of expenditure of this branch is always
less than the income of this branch that means the branch is made
an average level of profit every year.
S
10
Source: Annual Report for the periods, 2009-2013 [28]
The percentage of classified loan is less than the unclassified loan
in this branch.
C. Management Capacity
It is revealed from the Table 13 that with regard to profit per
employee, branch demonstrated an outstanding performance
as compared to the standard score. However, as to comparative
performance between the two ratios, the difference is not so high
through the years from 2009 to 2013.
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Fig. 4: Total Income and Expenditure of NHB
Source: Annual Report for the periods, 2009-2013 [31]
F. Liquidity
In case of NHB of SBL, loan to deposit ratio (score 134.99) is in
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Vol. 2 Issue 2 Apr. - June 2015
better position and the deference between loan and deposit are
decreased throughout the years. As per as liquid assets to total
deposit is concerned, the performance of the branch seems to the
very strong as the score is 36.84 but the average earning assets
to deposit ratio of branch is 110.03.
Name of 2013
2012
2011
2010
2009
A
Ratio
LD
111.32 123.43 143.55 144
152.65 134.99
LT
31.33 32.76 44.54 43.23 32.33 36.84
ED
108.54 121.76 101.12 108.54 110.20 110.03
Source: Annual Report for the periods, 2009-2013 [32]
N.B.: A stands for average score (In percentage), LD = Loan to Deposit
Ratio, LT = Liquid Assets to Total Deposit, Ratios and ED = Earning
assets to deposit.
Fig. 5: Deposits and Loan-advances of NHB
Source: Annual Report for the periods, 2009-2013 [33]
In the Fig. 5, it indicates the comparison between total deposit and
total loan and advance of the Nachanmahal Hat Branch of SBL
in the years. In recent year, the difference is lower than the past
years. Thus, it is a better sign for the branch that the difference is
getting low year by year.
G. Nature of Loan
There is huge amount of classified loan in relation to unclassified
loan in NHB. In Table 16, it shows the figure of NHB where no
sub standard and doubtful loan are shown.
Table 16: Different Types of Loan of NHB
Year
Unclassified loan
Number Amount
in BDT
2013
3945
10,34,45,843
Classified loan
Sub Standard (SS)
No.
Amount
in BDT
-
2012
2011
2010
2009
4132
3890
4015
4187
10,90,54,760
10,09,87,098
10,69,02,765
11,33,54,000
-
-
Doubtful (DF)
No. Amount
in BDT
-
1125
1,60,30,775
-
1023
1411
1209
1298
1,55,76,887
1,97,80,343
1,45,76,098
1,99,01,234
-
Bad/loss (BL)
No.
Amount in BDT
Source: Annual Report for the periods, 2009-2013 [34]
H. Disbursement and Recovery of Loan
Rural Credit (RCD), micro credit (MCD), small business loan and over draft (OD) loan are the main four method of disbursing
loan. In case of RCD, disbursement amount is lower in 2013 compare with 2009 which is shown in “Table 17” though the amount
of recovery is growing up and recent year the disbursement amount is always lower than the recovery amount. In case of MCD, the
volume of disbursement and recovery amount is low like small business loan. In case of OD loan, the volume of disbursement is
exceeded the targeted volume.
Table 17: Comparative Analysis of Disbursement and Recovery of Loan
Year
RCD
MCD
Small Business
OD
D
R
D
R
D
R
D
R
2013
27,73,000
70,35,000
1,09,000
3,09,000
-
50,800
5,00,500
2,90,000
2012
75,98,000
32,30,000
45,600
2,09,000
54,000
1,00,700
-
1,66,000
2011
43,55,000
42,66,000
75,000
3,00,900
2,56,000
23,000
1,65,000
3,00,500
2010
38,88,000
55,89,000
1,50,900
1,86,000
1,08,900
45,000
3,37,000
4,55,000
2009
95,65,700
40,45,000
4,76,000
5,80,000
-
34,000
87,000
2,05,000
Source: Annual Report for the Periods, 2009-2013 [35]
N.B.: D stands for Disbursement and R stands for Recovery
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Vol. 2 Issue 2 Apr. - June 2015
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I. SWOT Analysis of NHB
SWOT analysis gives an organization an insight of what they can do in future and how they can compete with their existing
competitors.
Table 18: SWOT Analysis of NHB
Strengths
i. A good number of experienced bankers in its
management.
ii. The numbers of agricultural loan borrowers are more than
other bank in our country.
iii. Online service is also available in this branch.
iv. Have proactive & efficient management.
v. Have ability to reach the root level of the country.
vi. Reliable Service
Weaknesses
i. Some of the activities of branch are maintained by
manually.
ii. People do not get better facility as a branch of government
bank than that they get in private commercial bank.
iii. Low remuneration package.
iv. Lack of modern information technology being practiced.
v. There is no ATM booth of this branch of SBL.
vi. Lack of knowledge at software execution.
Opportunities
i. People are interested in getting agricultural loan, microcredit,
SME loan, personal loan with lower interest rate.
ii. High contribution in rural development
iii. Money transfer easily in any branches of Bangladesh.
iv. Great facility of disbursing loan in rural area.
Threats
i. Political influence over the high level management which
causes corruption in branch.
ii. Many banks offer different type of product that people like
than this branch, actually SBL.
iii. The employees take more time to work that people dislike,
so their customers may decrease in future.
iv. Low amount transactions are high so that there is unnecessary
work load.
Source: Authors Compilation based on observation, 2015
This lack of knowledge of the customers creates problems for
SBL. They think their inability as SBL’s poor service.
J. Gap Model of NHB
The four basic criteria of Gap model of NHB are discussed below
which shows the customer expectation and bank perception
relationship
Gap 4: Not Matching Performance to Promises
SBL does not ‘over promise’ to its customers. It also has a good
horizontal communication between its important functional
divisions like loan section, customer relations, and IT. Therefore,
there is no gap under these criteria.
Gap 1: Not Knowing What Customers Expect
SBL does not do extensive research on a continuous basis. Though
there is bottom-up communication, which is planned for enabling
SBL to better understand what customers expect, the total process
is efficient enough to result impressive performance from their
service. For example, in NHB, the customer service officer was
gone under training and then the customers faced problems and
asked for customer service help but most of the trainings are inhouse, which is a barrier to make the customer service officers
more efficient.
V. Concluding Remarks
A. Findings
The study has conducted on Nachanmahal Hat Branch of Sonali
Bank Limited. From the study the researcher has found some
major findings. The Bank has diversified product line and gives
preferences to its local customer through its business strategies.
In the NHB of Sonali Bank Limited has shown a better result
in case of capital adequacy ratio in compare to recent year with
the past years. On the other hand, return on equity and net worth
protection both are in poor condition in this branch, net profit is
relatively lower than the paid up capital and free reserve. Amount
of non-performing loan is higher than the total equity. Asset quality
of NHB is in stronger position than standard rating because in
this branch number of classified loan or non-performing loan
is comparatively lower than the unclassified loan. Management
capacity in NHB is reliable rather than any other element of
banking. From the year of 2009 to year 2013, the performance
of employees income are increasing and also the expenses per
employee are decreasing. Loan and advances is 95.92% of 100%
assets at all. The total net amount of asset is BDT 13, 50, 35,
707 at all. Total deposit is 69.16% in 2013 of total assets. In the
loan picture, classified loan and unclassified loan are BDT 1, 60,
30, 775 and 10, 34, 45, 843 at all. Profit after tax and total loan
and advances clears the result of NHB of SBL about the earning
ability. Also the relationship between non-interest income and
Gap 2: Not Selecting the Right Service Designs and Standards
From practical observations, researcher found few areas that he
identified as gap 2. From the observed many customers, who had
to come a long way to complain about Internet Password or SME
loan, foreign remittance. This can affect the Bank Image a great
deal, being dissatisfying hassle for the customers. Moreover at
the time of attending a new customer, complains or dissatisfaction
from an existing customer can harm the bank image.
Gap 3: Not Delivering to Service Standards
This gap is also insignificant at NHB of SBL. This gap is very
important, because it occurs when a company sets a standard but
not deliver as per the standard. From observation, some areas of gap
3 are: It takes too much time for TT sending and foreign remittance
downloading. The information centre of SBL lacks capacity. It is
very much time consuming to avail service there. But such services
are expected to be availed at a least possible time. At NHB, many
of the SBL customers are not well educated. They are not equipped
enough to handle the mobile phone appropriately or use Internet.
© 2014, IJRMBS All Rights Reserved
20
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ISSN : 2348-6503 (Online)
ISSN : 2348-893X (Print)
International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Vol. 2 Issue 2 Apr. - June 2015
Case Study on Janata Bank Limited, Bangladesh Research
Publications Journal, 7(4), 2012, 428-436.
[4] R. A. Karim, and T. Alam, An Evaluation of Financial
Performance of Private Commercial Banks in Bangladesh:
Ratio Analysis, Journal of Business Studies, 5(2), 2013, 5465.
[5] D. Elizabeth and E. Greg, Efficiency Customer Service
and Financial Performance Among Australian Financial
Institutions, International Journal of Bank Marketing, 22(5),
2004, 319-342.
[6] K. Rehman, and I. Saba, Gauging, The Financial Performance
of Banking Sector Using CAMEL Model: Comparison of
Conventional, Mixed and Pure Islamic Banks in Pakistan,
International Research Journal of Finance and Economics,
82, 2012.
[7] M. A. Kabir, and S. Dey, Performance Analysis through
CAMEL Rating: A Comparative Study of Selected Private
Commercial Banks in Bangladesh, Journal of Politics and
Governance, 1(2/3), 2012, 16-25.
[8] A. Chowdhury, Politics, Society and Financial Sector Reform
in Bangladesh, International Journal of Social Economics,
29(12), 2002, 963-988.
[9] T. Chien, and S. Z. Danw, Performance Measurement
of Taiwan Commercial Banks, International Journal of
Productivity and Performance Management, 53(5), 2004,
425-434.
[10] S. H. Siddique, and A. F. M. M. Islam, Banking Sector in
Bangladesh: Its Contribution and Performance, Journal of
Business Research, 3(1), 2001, 1-25.
[11] R. A. Karim, and T. Alam, An Evaluation of Financial
Performance of Private Commercial Banks in Bangladesh:
Ratio Analysis, Journal of Business Studies, 5(2), 2013, 5465.
[12] S. Haque, The Performance Analysis of Private Conventional
Banks: A Case Study of Bangladesh, IOSR Journal of
Business and Management, 12(1), 2013, 19-25.
[13] NHB, Annual Report of Nachanmahal Hat Branch of
SBL(2009, 2010, 2011, 2012, 2013)’, Nachanmahal Hat
Branch, Sonali Bank Limited, Finance Division, Ministry of
Finance, Government of the People’s Republic of Bangladesh,
Dhaka, 2013.
[14] SBL, Branches & Subsidiaries Offices of SBL, Sonali Bank
Limited (SBL), Dhaka, 2013.
[15] M. A. Kabir, and S. Dey, Performance Analysis through
CAMEL Rating: A Comparative Study of Selected Private
Commercial Banks in Bangladesh, Bangladesh Bank,
Journal of Politics and Governance, 1(2/3), 2012, 16-25.
[16] SBL, Branches and Subsidiaries Offices of SBL, Sonali Bank
Limited (SBL), Dhaka, 2013.
[17] G. M. Hasan, Measuring Customer Satisfaction Level of
Credit Cardholders of Southeast Bank Limited, Unpublished
MBA Internship Paper, BRAC Business School, BRAC
University, Dhaka, 2012.
[18] S. Ghosh, Performance Analysis and Customer Satisfaction
of Uttara Bank Limited: A Study on Tipusultan Road Branch,
Unpublished MBA Internship Paper, Business Faculty,
Jaganath University, Dhaka, 2011.
[19] S. Ghosh, Performance Analysis and Customer Satisfaction
of Uttara Bank Limited: A Study on Tipusultan Road Branch,
Unpublished MBA Internship Paper, Business Faculty,
Jaganath University, Dhaka, 2011.
total income shows the standard result in the year from 2009 to
2013. Though there is no standard in CAMEL rating analysis
of liquidity measurement but the liquidity condition of NHB of
SBL have a decent figure. The amount of total loan and advance
is higher than the total amount of deposit. Therefore, it is a good
sign for the branch. Capital adequacy ratio is 10.16 where the
standard ratio is 8 at all. On the other hand, returns on equity
and net-worth protection ratio are not satisfactory in this paper.
Earning assets are also higher than deposit of the branch. In NHB
all the classified loans are treated as bad/loss loan though the
percentage of classified loans are low which is only about 13%.
The performance of recovery of RCD loan is increasing yearly
when the amount of recovery of loans was BDT 40, 50,000 in
2009 but in 2013 the amount of recovery loans are increased.
On the other hand, the recovery of MCD, small business, OD is
better position over those years in compare with its disbursement.
Though NHB of SBL has been started online banking system for
providing better service to the customers but, the online bank is
not implied in all the branch of SBL. Having manual and online
banking at the same time, the bank sometime find some problem
to do their inter branch activities. The accountability is working
in the SBL. Every day they have finished their transaction and if
there is any miss match, the employees have to explain it and even
have to pay it, so the condition of transparency is good here.
B. Conclusion
Sonali Bank Ltd. is providing and maintaining pleasant working
environment for delivery of better quality services to maintain
edge over the competitors. Due to radical changes in the banking
sector in the recent years, the central banks of all around the
world have improved their supervision quality and techniques.
In evaluating the function of the banks, many of the developed
countries are now following uniform financial rating system along
with other existing procedures and techniques. CAMEL rating is
a supervisory tool to recognize those banking institution that are
having problems and require increased supervision. Bangladesh
Bank is also following the above techniques in respect of evaluating
scheduled Commercial banks. Keeping these developments in
view, this paper has applied CAMEL Ratings techniques for
assessing financial strength of NHB of SBL. The study will
help managers to pay more attention to the aspects where these
banks are lagging behind which may result in improving both
their financial performance. From the academic point of view
this research will provide a new perspective in evaluating the
pecuniary performance of Bangladeshi commercial banks that
belongs to different generations. The findings of this study will
enrich the present literature and it will help researchers in their
future venture. This study will also pave the way of efficient and
effective strategic decision making by the managers. So, all the
concern section should be more prompt and efficient to compete
with the challenging opportunities of the future.
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21
© All Rights Reserved, IJRMBS 2014
International Journal of Research in Management &
Business Studies (IJRMBS 2015)
Vol. 2 Issue 2 Apr. - June 2015
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