International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2015) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print) Performance Analysis of Nachanmahal Hat Branch of Sonali Limited IKach Mondal, IINishad Nasrin, IIITanbir Hossain, IVShangkari Bala Sarkar IEconomics Discipline, Khulna University, Khulna, Bangladesh IIAssistant Professor, Economics Discipline, Khulna University, Khulna, Bangladesh III,IVEconomics Discipline, Khulna University, Khulna, Bangladesh

Abstract This paper examines the performance of 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 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

I. Introduction The objective of the study is to analyze the performance of NHB The banking system plays a critical role in underpinning economic of Sonali Bank Limited through CAMEL ratings system. development. Money is one of the most significant and necessary elements which can be compared with blood of our body when A. Review of Literature pecuniary institution like bank act as a artery system of that body Different authors across the globe have shown financial [1]. On the other hand, bank is a financial institution which deals performance of banks based on different methods and techniques with deposits and advances and other related services [2]. SBL of which financial ratio analysis, trend analysis, CAMEL rating, explores the opportunity of getting practical banking environment are the most common tools used. Banks play an important role in for the students every year. After independence of Bangladsh, the economic development of every state [4]. This study is intended Sonali Bank emerged as the largest and leading nationalized to measure the performance of selected private sector banks (five), commercial bank by proclamation of the Banks Nationalization listed on both the Dhaka Stock Exchange and Chittagong Stock Order 1972 (Presidential Order-26) liquidating the then National Exchange, in Bangladesh through widespread use of financial Bank of Pakistan, Premier Bank and Bank of Bhwalpur [3]. All ratios that mainly indicate the adequacy of the risk based capital, over the world, the dimension of banking has been changing rapidly credit growth, credit concentration, non-performing loan position, due to deregulation, technological innovation and globalization. liquidity gap analysis, liquidity ratio, return on assets (ROA), return To survive in such a competitive banking world, only theoretical on equity (ROE), net interest margin (NIM), etc. Elizabeth and knowledge in the field of banking studies is not sufficient. To cope Greg (2004) also discuss about three indicators namely, internal- with the changing banking environment, banks are now changing based performance measured by Return on Assets, market-based their pattern of activities delivery. Customers are mobile and they performance measured by Tobin’s Q model (Price/Book ratio) shifts from one bank to another for getting better service and in and Economic-asked performance measured by economic value this respect banks are ranked to their clients. The main focus of add has been used to measure financial performance of the this study is to analyze the banking performance of NHB through some financial institution of Australia [5]. CAMELS’ rating is CAMEL ratings system, though it is mainly used by Central bank. a managerial tool to identify those banking companies that are The study is considered to make huge contribution not only in having problems and involve increased supervision [6]. Under the field of academic research but also in helping managers to this rating system, banking companies are assigned two sets of improve banking performance. An extensive comparative study ratings- (i) performance ratings, and (ii) an overall composite of the financial performance is conducted among different year rating. On the other hand authors examine that in case of the of in order to understand the current scenario of the financial band ‘capital adequacy’, IFIC Bank’s, capital adequacy ratio health position of the branch. This study can be helpful tool for and leverage ratio show better performance than the managers to pay more attention to the aspects where these but in respect of return on equity and net worth protection, IFIC banks are lagging behind which may result in improving both shows not as good as performance than the other [7]. Chowdhury their financial performance and ranking. The findings of this study (2002) analyses that the performance of banks requires knowledge may enrich the present literatures and it can help researchers in about the profitability and the relationships between variables like further study. This study will also pave the way of efficient and market size, bank's risk and bank's market size with profitability effective strategic decision making by the managers. [8]. The study concluded that the banking industry in Bangladesh is experiencing major transition for the last two decades. Chien

© 2014, IJRMBS All Rights Reserved 14 www.ijrmbs.com International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print) Business Studies (IJRMBS 2015) and Danw (2004) in his study concluded that Taiwan commercial Table 1: Ratios under CAMEL Ratings of Capital Adequacy banks with higher total deposits, credits, assets, and shareholders’ Component Ratios Formula Standard equity does not always result in better profitability performance Score (In of management [9]. Siddique and Islam (2001) have shown that %) the commercial banks of Bangladesh are performing healthy and Capital Capital Capital & 8 contributing to the economic development of the country [10]. Adequacy Adequacy reserve / Total However, Khandker (2011) examines the average profitability of Ratio risk weighted all Bangladeshi banks collectively was 0.09% during 1980 to 1995 assets×100…… [11]. Haque (2013) discusses about financial performance of some (1) selected private commercial banks in Bangladesh for the period Return on Net profit / 30 2006-2011 clarify whether any relationship exists between a bank’s Equity Paid up capital years of operation and its performance [12]. On the other hand, + free reserves Ahmed and Hasan (2007) compare and analyze the performance of ×100…………(2) Islamic banking and conventional banking system in Pakistan by Net- Total equity / 100 using of financial measures [13]. Therefore, this research examines worth Non-performing the performance of SBL through CAMEL ratings system. In the Protection loan ×100……… previous literature, there is lot of study about performances of (3) banks but there is no study which uses CAMEL rating exactly Source: ’s CAMEL Rating Analysis (Module 1 about a state owned commercial bank. From the academic point and 2), 2012 of view this research will provide a new perspective in evaluating the pecuniary performance of Bangladeshi commercial banks that 2. The CAMEL Ratings: Asset Quality belongs to different generations. The findings of this study will Percentage of classified loan to total loan granted is considered enrich the present literature and it will help researchers in their as the principal ratio for measuring the quality of the assets. At future venture. 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 Table 2: Ratios under CAMEL Ratings of Asset Quality has mainly conducted by secondary data which have both Ratios Formula Standard quantitative and qualitative value so that the performance level Component Score (In %) can be well understood and measured. The paper is secondary as Asset % of Non- 10 well as primary data base. The main sources of secondary data Quality Classified performing are annual report of SBL, different manuals of SBL, different Loan Loan / Total circulars of SBL, Bangladesh Bank website, different websites, Loan×10…(4) website of SBL, journals and articles. The sources of primary data are observation method. SBL is given more priority to Nalchity Source: Bangladesh Bank’s CAMEL Rating Analysis (Module 1 upazila because of this reason here three branches are located and 2), 2012 [14]. The tools for the performance of all the commercial banks under CAMEL Ratings include capital adequacy, asset quality, 3. The CAMEL Ratings: Management Capacity management standard, earnings and liquidity maintenance [15]. The management capacity of SBL can be recognized to the number of variables, such as operating ratio, profit per employee, expenses A. CAMEL Analysis per employee, gross earning assets to total assets etc. At this stage, CAMEL rating is one of the widely used tools which analyze capital the management capacity of the sample banks has been presented adequacy, asset quality, management capacity, earnings ability and through two important ratios in Table 3. 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 1. The CAMEL Ratings: Capital Adequacy Component Ratios Formula Standard Capital adequacy of SBL can be deliberated by calculating a Score number of ratios, like capital adequacy ratio, leverage ratio return Management Income Total Profit/ 0.50 on equity and net worth protection. The ratios for the year 2004 Capacity per Total to 2013 are given in Table 1. employee employees…(5) Expenses Total Cost /Total 0.25 per employees…(6) employee 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, www.ijrmbs.com 15 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2015) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print) diversification ratio, net profit margin, earnings per share, return on capital employed etc. The performance of the banks in respect Table 6: Nature of Loan of NHB of these ratios has been tabulated in Table 4. Types of Agri- Measurement No. of Amount cultural Loan Bor- Table 4: Ratios under CAMEL Ratings of Earning Ability rowers Compo- Ratios Formula Standard Unclassified Which loan is not - - nent Score (In %) Loan /Standard classified or not Net Profit from 6 over due date (basi- Earning Investment Investment / cally 1 year) Ability Margin Total Investment Sub If the loan is past - - × 100...... (7) Stan- due/overdue for 1 dard years or beyond but Net Profit Profit After Tax ….. Clas- (SS) less than 2 years. Margin /Total Loan si-fied & Advance× Doubt- If the loan is past - - Loan 100...... (8) ful due/overdue for 2 (DF) years or beyond but Diversifi- Non-Interest 50 less than 5 years. cation Ratio Income / Total Income× 100 Bad/ If the loan is past - - ...... (9) Loss due/overdue for 5 (BL) years or beyond Source: Bangladesh Bank’s CAMEL Rating Analysis (Module Source: Sonali Bank Limited (SBL), 2013 [16] 1 and 2), 2012 D. SWOT Analysis 5. The CAMEL Ratings: Liquidity Hasan (2012) examines the SWOT analysis of Southeast Bank SBL have to pay regard to the number of factors, specifically (a) shows the internal and external based influential factors which maintenance of cash reserve ratio (CRR) and statutory liquidity link the Southeast bank positively and negatively [17]. After ratio (SLR), (b) adequate loan-deposit ratio, (c) dependence on analysing SWOT, specific inferences can be made in matrix. inter-band deposit and (d) profitability. The scenario is shown in The full abbreviated form of SWOT is strengths, weaknesses, below in Table 5. opportunities and threats.

Table 5: Ratios under CAMEL Ratings of Liquidity E. Gap Model of NHB Compo- Ratios Formula Standard Ghosh (2011) shows that the customer expectations are subjective nents Score assessments of actual service experience [18].The “Table Loan to Total Loan / Total ….. 7”corresponds to two concepts: customer expectations and bank Liquidity Deposit Deposit ×100…… perceptions that play a major role in service. Customer expectations Ratio (10) are the standards of or reference points for performance, against which service experiences are compared, and are often formulated Liquid Liquid Asset / ….. in terms of what a customer believes, should or will happen. Assets Total Deposit to Total ×100…….(11) Table 7: Gap Model Deposit Perspective Expected Service Customer Ratios Gap (Brand Equity) Earning Earning Asset ….. Perspective Perceived Bank assets to / Total Deposit Service deposit ×100…...(12) Source: Authors Compilation according to Ghosh, 2011 [19] Source: Bangladesh Bank’s CAMEL rating analysis (Module 1 and 2), 2012 III. Overview

B. Disbursement and Recovery of Loan A. Description of Branches and Offices of SBL Actually, loan performance of the SBL is composed with the SBL is the largest commercial bank in bank in Bangladesh. It has yearly loan disbursement and yearly loan recovery. In this research large network all over the country. It has extensive network to the paper, authors used the information of loan disbursement and loan root level of the country. The scenario is seen in Table 8. 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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covered 93.38%. The other type of deposits is covered very low Table 8: Branches and Subsidiaries Offices of SBL percentage of total deposit. Serial Particulars No. No. C. Composition of Total Assets 01. Total No of Branches 1204 There are four type of asset in this branch and from those assets, i) No. of foreign branches 2 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% ii) No. of local branches 1202 and other assets are covered. a) No. of Rural Branches 858

b) No. of Rural Branches 344 Table 10: Composition of Total Assets 02. No of Regional Offices 19 Name of Asset Amount in BDT Percentage 03. No of Principal Offices 42 Loan And Advance 12,95,69,214 95.92 04. No of G.M. Offices 10 Cash 40,76,412 2.96 Source: Sonali Bank Limited (SBL), 2013 [20] Fixed Asset 10,16,103 0.90 Other Asset 3,73,978 0.22 Nachanmahal Hat Branch is one of the most important branches, Total 13,50,35,707 100 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. Source: Annual Report of NHB, 2013 [24] On that time, mainly agricultural loan disbursement was the main duty of this branch though other some general banking work also D. Composition of Total Liabilities opened to help the rural people. At present both general banking There are five types of liabilities in this branch and from those and agricultural loan and advance are two dominating work of liabilities; total deposit is covered 69.16% in 2013 of total this branch. It is also an exceptional branch of SBL because here liabilities. The scenario is given below: total loan and advance are more than total deposit [21].

Table 9: Basic Information about NHB Serial Particulars Year No. No. 01. Year of Establishment - 1979 02. Number of employees 2013 6 03. Total Deposit 2013 10,74,46,548 04. Total Loan and Advance 2013 12,95,69,214 05. Profit after tax 2013 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 Source: Annual Report of NHB 2013 [25] performance and profitability of bank. The Fig. 1 shows the In Fig. 2, it shows that the inter branch transaction is covered composition of total deposit of NHB. 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 Fig.3: Comparisons between Unclassified Loan and Classified www.ijrmbs.com 17 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2015) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print)

Loan Source: Annual Report of NHB, 2013 [26] Table 13: Management Capacity (In Percentage) It is a good sign for any branch of any bank where number of Name of A S borrowers are engaged in agriculture and they are benefited by Ratios the help of rural credit and also maximum of them do not late pay their loan. 2013 2012 2011 2010 2009 Income 1.38 1.10 1.12 1.15 1.12 1.17 0.50 IV. Analysis and discussion per Em- ployee A. Capital Adequacy Expenses 1.40 1.41 1.30 1.44 1.44 1.40 0.25 It is evident from Table 11 that NHB of SBL has achieved a better per Em- result than the standard in relation to capital adequacy. Where the ployee standard score is 8 but the average score of five years is 10.47. Source: Annual Report for the periods, 2009-2013 [29] With regard to return on equity, branch has shown a poor result N.B.: A stands for average score (In percentage) and S stands for (score 17.58) which is far behind the standard (score 30.0). As to sstandard Score (In percentage. net worth protection, branch has shown a tremendous growth in the performance in the later years although the average performance D. Earning Ability is inferior (score 65.55) to the standard (score 100). The net profit margin of the branch (score 0.61) is much better, there no standard score is selected. But throughout the years, Table 15: Liquidity (In Percentage) profit after tax with respect to loan and advance percentage shown Name of 2013 2012 2011 2010 2009 A S about to same result.

Ratio [ Capital 10.5 10.24 9.82 9.33 10.9 10.16 8 Table 14: Earning Ability (In Percentage) Adequacy Name of 2013 2012 2011 2010 2009 A S Ratio Ratio Return on 19.9 18.0 11.76 15.44 22.8 17.58 30 Net Investment Margin ------6 Equity Net 0.54 0.55 0.65 0.77 0.55 0.61 -- Profit Margin Net-worth 77.7 72.9 77.63 33.76 65.77 65.55 100 Diversification Ratio 34.5 33.54 45.32 65.21 58.32 47.38 50 Protection 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 N.B.: A stands for average score (In percentage) and S stands for sstandard Score (In percentage). sstandard Score (In percentage). Finally, with respect to diversification ratio, the performance of B. Asset Quality branch is below than the standard score. The average (score 47.38) For Asset quality level, Table 12 shows that NHB Branch of SBL is close to standard (score 50.0). Therefore, the difference between has demonstrated stronger position (score 5.97) than the standard non-interest income and total income is in standard form. score (10.0). E. Total Income and Expenditure of the NHB Table 12: Asset Quality of NHB of SBL (In Percentage) In the Fig. 4, it shows the total income and expenditure of the Name of 2013 2012 2011 2010 2009 A S Branch. It is also shown the earning trend of those selected years. Ratio In his chart, both income and expenditure are increased year by percent- 6.33 5.77 7.23 4.76 5.77 5.97 10 year. Where the amount of expenditure of this branch is always age of less than the income of this branch that means the branch is made Clas- an average level of profit every year. sified Loan 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 Fig. 4: Total Income and Expenditure of NHB performance between the two ratios, the difference is not so high Source: Annual Report for the periods, 2009-2013 [31] through the years from 2009 to 2013. F. Liquidity In case of NHB of SBL, loan to deposit ratio (score 134.99) is in

© 2014, IJRMBS All Rights Reserved 18 www.ijrmbs.com International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print) Business Studies (IJRMBS 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 Fig. 5: Deposits and Loan-advances of NHB assets to deposit. Source: Annual Report for the periods, 2009-2013 [33]

In the Fig. 5, it indicates the comparison between total deposit and G. Nature of Loan total loan and advance of the Nachanmahal Hat Branch of SBL There is huge amount of classified loan in relation to unclassified in the years. In recent year, the difference is lower than the past loan in NHB. In Table 16, it shows the figure of NHB where no years. Thus, it is a better sign for the branch that the difference is sub standard and doubtful loan are shown. getting low year by year.

Table 16: Different Types of Loan of NHB Year Unclassified loan Classified loan Number Amount Sub Standard (SS) Doubtful (DF) Bad/loss (BL) in BDT No. Amount No. Amount No. Amount in BDT in BDT in BDT 2013 3945 10,34,45,843 - - - - 1125 1,60,30,775 2012 4132 10,90,54,760 - - - - 1023 1,55,76,887 2011 3890 10,09,87,098 - - - - 1411 1,97,80,343 2010 4015 10,69,02,765 - - - - 1209 1,45,76,098 2009 4187 11,33,54,000 - - - - 1298 1,99,01,234 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 www.ijrmbs.com 19 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2015) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print)

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 Weaknesses i. A good number of experienced bankers in its i. Some of the activities of branch are maintained by management. manually. ii. The numbers of agricultural loan borrowers are more than ii. People do not get better facility as a branch of government other bank in our country. bank than that they get in private commercial bank. iii. Online service is also available in this branch. iii. Low remuneration package. iv. Have proactive & efficient management. iv. Lack of modern information technology being practiced. v. Have ability to reach the root level of the country. v. There is no ATM booth of this branch of SBL. vi. Reliable Service vi. Lack of knowledge at software execution. Opportunities Threats i. People are interested in getting agricultural loan, microcredit, i. Political influence over the high level management which SME loan, personal loan with lower interest rate. causes corruption in branch. ii. High contribution in rural development ii. Many banks offer different type of product that people like iii. Money transfer easily in any branches of Bangladesh. than this branch, actually SBL. iv. Great facility of disbursing loan in rural area. 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

J. Gap Model of NHB This lack of knowledge of the customers creates problems for The four basic criteria of Gap model of NHB are discussed below SBL. They think their inability as SBL’s poor service. 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 Gap 1: Not Knowing What Customers Expect horizontal communication between its important functional SBL does not do extensive research on a continuous basis. Though divisions like loan section, customer relations, and IT. Therefore, there is bottom-up communication, which is planned for enabling there is no gap under these criteria. SBL to better understand what customers expect, the total process is efficient enough to result impressive performance from their V. Concluding Remarks service. For example, in NHB, the customer service officer was gone under training and then the customers faced problems and A. Findings asked for customer service help but most of the trainings are in- The study has conducted on Nachanmahal Hat Branch of Sonali house, which is a barrier to make the customer service officers Bank Limited. From the study the researcher has found some more efficient. major findings. The Bank has diversified product line and gives preferences to its local customer through its business strategies. Gap 2: Not Selecting the Right Service Designs and Standards In the NHB of Sonali Bank Limited has shown a better result From practical observations, researcher found few areas that he in case of capital adequacy ratio in compare to recent year with identified as gap 2. From the observed many customers, who had the past years. On the other hand, return on equity and net worth to come a long way to complain about Internet Password or SME protection both are in poor condition in this branch, net profit is loan, foreign remittance. This can affect the Bank Image a great relatively lower than the paid up capital and free reserve. Amount deal, being dissatisfying hassle for the customers. Moreover at of non-performing loan is higher than the total equity. Asset quality the time of attending a new customer, complains or dissatisfaction of NHB is in stronger position than standard rating because in from an existing customer can harm the bank image. this branch number of classified loan or non-performing loan is comparatively lower than the unclassified loan. Management Gap 3: Not Delivering to Service Standards capacity in NHB is reliable rather than any other element of This gap is also insignificant at NHB of SBL. This gap is very banking. From the year of 2009 to year 2013, the performance important, because it occurs when a company sets a standard but of employees income are increasing and also the expenses per not deliver as per the standard. From observation, some areas of gap employee are decreasing. Loan and advances is 95.92% of 100% 3 are: It takes too much time for TT sending and foreign remittance assets at all. The total net amount of asset is BDT 13, 50, 35, downloading. The information centre of SBL lacks capacity. It is 707 at all. Total deposit is 69.16% in 2013 of total assets. In the very much time consuming to avail service there. But such services loan picture, classified loan and unclassified loan are BDT 1, 60, are expected to be availed at a least possible time. At NHB, many 30, 775 and 10, 34, 45, 843 at all. Profit after tax and total loan of the SBL customers are not well educated. They are not equipped and advances clears the result of NHB of SBL about the earning enough to handle the mobile phone appropriately or use Internet. ability. Also the relationship between non-interest income and

© 2014, IJRMBS All Rights Reserved 20 www.ijrmbs.com International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print) Business Studies (IJRMBS 2015) total income shows the standard result in the year from 2009 to Case Study on Limited, Bangladesh Research 2013. Though there is no standard in CAMEL rating analysis Publications Journal, 7(4), 2012, 428-436. of liquidity measurement but the liquidity condition of NHB of [4] R. A. Karim, and T. Alam, An Evaluation of Financial SBL have a decent figure. The amount of total loan and advance Performance of Private Commercial Banks in Bangladesh: is higher than the total amount of deposit. Therefore, it is a good Ratio Analysis, Journal of Business Studies, 5(2), 2013, 54- sign for the branch. Capital adequacy ratio is 10.16 where the 65. standard ratio is 8 at all. On the other hand, returns on equity [5] D. Elizabeth and E. Greg, Efficiency Customer Service and net-worth protection ratio are not satisfactory in this paper. and Financial Performance Among Australian Financial Earning assets are also higher than deposit of the branch. In NHB Institutions, International Journal of Bank Marketing, 22(5), all the classified loans are treated as bad/loss loan though the 2004, 319-342. percentage of classified loans are low which is only about 13%. [6] K. Rehman, and I. Saba, Gauging, The Financial Performance The performance of recovery of RCD loan is increasing yearly of Banking Sector Using CAMEL Model: Comparison of when the amount of recovery of loans was BDT 40, 50,000 in Conventional, Mixed and Pure Islamic Banks in Pakistan, 2009 but in 2013 the amount of recovery loans are increased. International Research Journal of Finance and Economics, On the other hand, the recovery of MCD, small business, OD is 82, 2012. better position over those years in compare with its disbursement. [7] M. A. Kabir, and S. Dey, Performance Analysis through Though NHB of SBL has been started online banking system for CAMEL Rating: A Comparative Study of Selected Private providing better service to the customers but, the online bank is Commercial Banks in Bangladesh, Journal of Politics and not implied in all the branch of SBL. Having manual and online Governance, 1(2/3), 2012, 16-25. banking at the same time, the bank sometime find some problem [8] A. Chowdhury, Politics, Society and Financial Sector Reform to do their inter branch activities. The accountability is working in Bangladesh, International Journal of Social Economics, in the SBL. Every day they have finished their transaction and if 29(12), 2002, 963-988. there is any miss match, the employees have to explain it and even [9] T. Chien, and S. Z. Danw, Performance Measurement have to pay it, so the condition of transparency is good here. of Taiwan Commercial Banks, International Journal of Productivity and Performance Management, 53(5), 2004, B. Conclusion 425-434. Sonali Bank Ltd. is providing and maintaining pleasant working [10] S. H. Siddique, and A. F. M. M. Islam, Banking Sector in environment for delivery of better quality services to maintain Bangladesh: Its Contribution and Performance, Journal of edge over the competitors. Due to radical changes in the banking Business Research, 3(1), 2001, 1-25. sector in the recent years, the central banks of all around the [11] R. A. Karim, and T. Alam, An Evaluation of Financial world have improved their supervision quality and techniques. Performance of Private Commercial Banks in Bangladesh: In evaluating the function of the banks, many of the developed Ratio Analysis, Journal of Business Studies, 5(2), 2013, 54- countries are now following uniform financial rating system along 65. with other existing procedures and techniques. CAMEL rating is [12] S. Haque, The Performance Analysis of Private Conventional a supervisory tool to recognize those banking institution that are Banks: A Case Study of Bangladesh, IOSR Journal of having problems and require increased supervision. Bangladesh Business and Management, 12(1), 2013, 19-25. Bank is also following the above techniques in respect of evaluating [13] NHB, Annual Report of Nachanmahal Hat Branch of scheduled Commercial banks. Keeping these developments in SBL(2009, 2010, 2011, 2012, 2013)’, Nachanmahal Hat view, this paper has applied CAMEL Ratings techniques for Branch, Sonali Bank Limited, Finance Division, Ministry of assessing financial strength of NHB of SBL. The study will Finance, Government of the People’s Republic of Bangladesh, help managers to pay more attention to the aspects where these Dhaka, 2013. banks are lagging behind which may result in improving both [14] SBL, Branches & Subsidiaries Offices of SBL, Sonali Bank their financial performance. From the academic point of view Limited (SBL), Dhaka, 2013. this research will provide a new perspective in evaluating the [15] M. A. Kabir, and S. Dey, Performance Analysis through pecuniary performance of Bangladeshi commercial banks that CAMEL Rating: A Comparative Study of Selected Private belongs to different generations. The findings of this study will Commercial Banks in Bangladesh, Bangladesh Bank, enrich the present literature and it will help researchers in their Journal of Politics and Governance, 1(2/3), 2012, 16-25. future venture. This study will also pave the way of efficient and [16] SBL, Branches and Subsidiaries Offices of SBL, Sonali Bank effective strategic decision making by the managers. So, all the Limited (SBL), Dhaka, 2013. concern section should be more prompt and efficient to compete [17] G. M. Hasan, Measuring Customer Satisfaction Level of with the challenging opportunities of the future. Credit Cardholders of Southeast Bank Limited, Unpublished MBA Internship Paper, BRAC Business School, BRAC References University, Dhaka, 2012. [1] A. Khandker, (2011). Commercial Banking in Developing [18] S. Ghosh, Performance Analysis and Customer Satisfaction Economy: A Case Study of Ten Private Commercial Banks of : A Study on Tipusultan Road Branch, of Bangladesh, ASA University Review, 5(1), 2011. Unpublished MBA Internship Paper, Business Faculty, [2] M. K. Roy, and S. H. Khan, Study on Private Commercial Jaganath University, Dhaka, 2011. Banks in Bangladesh, ASA University Review, 7(1), 2013, [19] S. Ghosh, Performance Analysis and Customer Satisfaction 165-187. of Uttara Bank Limited: A Study on Tipusultan Road Branch, [3] M. Z. Hossain, A. Hossain, D. Kumar, S. M. Hasan, M. F. Islam, Unpublished MBA Internship Paper, Business Faculty, Financial Performance Analysis of NCBs in Bangladesh: A Jaganath University, Dhaka, 2011. www.ijrmbs.com 21 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2015) Vol. 2 Issue 2 Apr. - June 2015 ISSN : 2348-893X (Print)

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