Financial Performance Analysis of Southeast Bank Limited,

A Study on Momin Road Branch, Chittagong

(This Internship report is submitted for the partial fulfillment of Bachelor of Business
Administration with major in Accounting & Information System)

Tahannum Mehejabin
ID NO: B-171242

Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong
 Financial Performance Analysis of Southeast Bank Limited,
A Study on Momin Road Branch, Chittagong
(This Internship report is submitted for the partial fulfillment of Bachelor of Business
Administration with major in Accounting & Information System)

Prepared by
Tahannum Mehejabin
ID NO: B171242

Date of Submission
15th September, 2021

Supervised by:

30.09.2021
________________________________________________

Dr. Abdullahil Mamun

Associate Professor
DBA, IIUC

Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong
 Letter of Transmittal

To,
The Convener
BBA Internship Program
DBA, IIUC

Subject: Submission of Internship Report.

Dear Sir
Assalamu-alaikum,
With due respect, I would like to inform you that I have completed my internship
program at “Southeast Bank Limited, Momin Road Branch” and my internship
report entitled “Financial Performance Analysis of SEBL” is now ready for
submission.

I would, therefore, request your good office to accept my report and oblige thereby.

Sincerely yours,

___________________
Tahannum Mehejabin
ID NO: B171242
BBA (Major Accounting)
Department of Business Administration
International Islamic University Chittagong

i
 Acknowledgement

I would like to express my gratitude to God at the beginning for giving me the
patience, strength and sound mind to finish the internship and study writings of
Southeast Bank L td. on financial performance. Without direction and assistance of
some people who somehow contributed their valuable aid to my internship, this paper
would not have been conceivable.

For directing me and motivating me to work on this exciting subject for my Internship
Study, I would like to thank my internship supervisor Dr. Abdullahil Mamun,
Associate Professor, Department of Business Administration, International Islamic
University Chittagong. He gave feedback on my internship report and suggested what
I should do to make my report interesting. This study would have been a
disappointment without his kind help.

My deepest appraisement and special thanks goes to Mr. Kallal Paul (the manager of
Momin Road branch) who welcomed me into the beautiful corporate world of
Southeast Bank Limited. He gave me the opportunity to have an outstanding and
practical working experience. He always motivates me to be confident and creative.
And I also like to thank Mr. Tarequr Islam, the associate vice president of Momin
Road branch for extending his support in compiling this report. It was a great pleasure
for me to work in Southeast Bank Ltd. (Momin Road branch) as an intern. I thank all
the employees for being friendly and co-operative. I was taught lots of important
things throughout my internship career because of their proper attention and co-
operation.

Finally, I would like to convey my gratitude to my Parents. Without their contribution

it would not be possible for me to complete the three months internship as well as my
BBA program.

ii
 Executive Summery

This report entitled Financial Performance Analysis of Southeast Bank Limited, a

study on Momin Road Branch, Chittagong aims to examine the financial performance
of Southeast Bank Limited. The specific objectives of the report are (1) To analyze
various methods used to conduct financial performance analysis, (2) To employ the
tools to evaluate the financial performance of Southeast Bank Limited and (3) To
summarize the findings and suggest necessary recommendations. This report is
divided into five chapters.
Chapter one offers the background of the report. In chapter two, an organizational
overview of Southeast Bank Limited has been presented. The report then analyze the
alternative methods of analyzing financial performance of Banks in chapter three.
Various ratios are examined to evaluate the financial performance of Southeast Bank
Limited in chapter four. The report finishes with some findings and recommendations
in chapter five.
Some major findings of the report are: qualitative statement. The remarkable findings
of this report are the price-earnings ratio and earning per share of SEBL. there are
fluctuations in net income per share of SEBL during 2016-2020. And the earnings
(EPS) was not at a satisfactory level during the period the report considered except
2016. The bank needs to maintain its earning per share to increase in a good position.
And the price-earnings ratio (P/E) of SEBL shows its best performance in 2017. Then
it falls down in 2018-2020, which is highly dissatisfied. Bank stocks tend to trade at
prices below their book value per share as the prices take into consideration the
increased risk from a bank’s trading activities.
The report willbe useful for the bank as bank can take necessary steps for the
improvements in certain areas. It will also be helpful for future in terms to get
necessary guideline and information.

iii
 Table of Contents
Contents Page No.
Letter of Transmittal i
Acknowledgement ii
Executive Summery iii

Chapter One
1.1 Introduction 2
1.2 Objective of the Report 3
1.3 Date Sources and Methodology 3
1.3.1 Data Sources 3
1.3.2 Methodology of the Report 3
1.4 Scope of the Report 4
1.5 Limitation of the Report 5

Chapter Two
2.1 History 6-8
2.2 Mission, vision, goal and commitment 8-9
2.3 Core Strength of SEBL 9
2.4 Objectives and Strategy of SEBL 9-11
2.5 Organizational Structure of Southeast Bank Limited 12
2.6 Hierarchy of Southeast Bank Limited: 13
2.7 Products & Services of SEBL 14

Chapter Three
3.1 Theoretical Overview 16
3.2 The concept of financial performance analysis 16-17
3.3 Method of Financial performance analysis 17
3.3.1 Ratio Analysis 17-18
3.3.1.1 Liquidity Ratio 18
3.3.1.1 (a) Current Ratio 19
3.3.1.1 (b) Quick Ratio 19
3.3.1.2 Profitability Ratio 19

iv
 3.3.1.2 (a) Return on Asset 20
3.3.1.2 (b) Return on Equity 20
3.3.1.2 (c) Net Profit Margin 20-21
3.3.1.3 Leverage Ratio 21
3.3.1.3 (a) Debt to Equity Ratio 21
3.3.1.3 (b) Debt Ratio 21-22
3.3.1.4 Activity Ratio 22
3.3.1.4 (a) Total Asset Turnover Ratio 22
3.3.1.4 (b) Fixed Asset Turnover Ratio 22-23
3.3.1.5 Earnings Ratio 23
3.3.1.5 (a) Price to Earnings Ratio 23
3.3.1.5 (b) Earning Per Share 24
3.3.2 Common Size Analysis 24
3.3.2.1 Common Size of Balance Sheet 25
3.3.2.2 Common Size of Income Statement 25
3.3.3 Trend Analysis 25-26
3.3.3.1 Horizontal Analysis 26
3.3.3.2 Vertical Analysis 26

Chapter Four
4.1 Introduction 28
4.2 Ratio Analysis of SEBL 28
4.2.1 Liquidity Ratio 28
4.2.1.1 Current Ratio 28-29
4.2.1.2 Quick Ratio 30
4.2.2 Leverage Ratio 31
4.2.2.1 Debt to Equity Ratio 31-32
4.2.2.2 Debt Ratio: 32-33
4.2.3 Profitability Ratio 33
4.2.3.1 Return on Asset 33-34
4.2.3.2 Return on Equity 34-35
4.2.3.3 Net Profit Margin: 36-37

v
 4.2.4 Activity Ratio 37
4.2.4.1 Total Assets Turnover Ratio 37-38
4.2.4.2 Fixed Asset Turnover Ratio 38-39
4.2.5 Earnings Ratio 39
4.2.5.1 Price to Earnings Ratio 39-40
4.2.5.2 Earnings Per Share 40-41

Chapter Five
5.1 Findings from Analysis 43
5.2 Recommendations 44
5.3 Conclusions 45
5.4 Reference 46

vi
 Chapter 01
Background of the Report

1
 Background of the Report
1.1 Introduction
As a part of the internship Program of BBA course requirement, I was assigned to do
my internship in Southeast Bank Ltd (SEBL) for a period of three months. Southeast
Bank Ltd (SEBL) is one of the private sector commercial bank in Bangladesh, with
years of experience. Adaptation of modern technology both in terms of equipment and
banking practice ensures efficient service to clients. Through 57 Branches, SEBL is
providing its best service both clients and country. This report “Financial Performance
Evaluation of Southeast Bank Ltd (SEBL)” has been prepared to fulfill the partial
requirement of BBA Program as a mean of Internship Program. While preparing this
report, I had a great opportunity to have an in-depth knowledge of all the banking
activities of Southeast Bank Ltd (SEBL) as I worked as an intern there.

Financial statement Analysis is one of the most vital elements for any commercial
bank. Southeast Bank takes decision by analyzing the financial statements analysis of
the bank. External shareholders use it to understand the overall health of the
organization. Sometimes bank evaluates its financial performance and we look at the
company’s income statements and statement of cash flows and conclude by covering
by key contents of an annual report. Ratio analysis shows the performance of the bank
and financial health of a bank by using data from the current financial statements.
Ratio analysis mainly used to establish a trend line for the bank’s result over a large
number of financial reporting periods.

This internship report is prepared as partial fulfillment of my BBA program. I believe

the information which have enclosed here would be beneficial to the readers. It also
helps the reader to define the strategic regarding banking profession or banking
activities. In respected to that, internship is mandatory for our BBA program offered
by International Islamic University Chittagong. To do so I decided to complete my
internship in Southeast Bank Ltd (SEBL).

2
1.2 Objective of the Report
Main Objective:
To examine the financial performance of Southeast Bank Limited

Specific Objectives
To achieve the main objective, the specific objectives are as follows:
1. To analyze various methods used to conduct financial performance analysis.
2. To employ the tools to evaluate the financial performance of Southeast Bank
Limited.
3. To summarize the findings and suggest necessary recommendations.

1.3 Data Sources and Methodology

1.3.1 Data Sources

The study is conducted in systematic procedure starting from the selection of topic to
final report preparation. This report has been prepared by collecting secondary data.

Secondary data are collected from the following sources:

a. Annual Report of Southeast Bank Ltd.
b. Working Papers.
c. office files.
d. Several articles related to financial Analysis.

1.3.2 Methodology of the Report

The report employs both qualitative and quantitative techniques to explain the data.
Theoretical explanations of different methods are offered. The report uses ratio
analysis to examine the financial performance of the selected bank. Data are presented
through tables and graphs.

3
1.4 Scope of the Report
The scope of the study covers general banking activities and financial performance
analysis of SEBL.
Main focus of this report is to analyze:
1. Performance analysis through ratio analysis.
Those who are looking for Southeast Bank Limited Financial Performance Analysis
information can get support from this report.

1.5 Limitation of the Report

Main problem is covid-19 pandemic; it’s hard for all the students to enroll into
internship. Due to spread of COVID-19 it is hard to maintain internship office hours
and also supervisor supervision for the preparation of report.

There were some limitations in completing the report with rich resources. Some of the
crucial limitations are –
1. The time of multi-month is inadequate to find out pretty much all the financial
exercises of any branch.
2. A solitary workstation can’t be a finished field to consider the financial
framework.
3. It is extremely hard to gather all the genuine data from different workforce for
the activity imperative.
4. As a portion of the financial fields are not secured by our courses, there was
trouble to see a few exercises.
5. Bank’s arrangement of not revealing private information and data is a major
deterrent in setting up the report.
As a result of restricted data, at times presumptions embraced. Subsequently, there
might be a few slip-ups in accepting.

4
 Chapter 2

Organizational Overview

5
2.1 History
Southeast Bank Limited is a scheduled commercial bank in the private sector
establishes under the ambit of Bank Company Act, 1991 and incorporation as a public
limited company under Company Act, 1994 on March 12, 1995 During this short span
of time the Bank is successful in positioning itself as a progressive and dynamic
financial institution in the country.

The bank achieved the certificate of commencement of business by registrar of Joint

stock Companies and firms on the date of its incorporation and started its operations
under its private sector. Bangladesh Bank issued banking license to the bank on
March 25, 1995. Mr. M Saifur Rahman Former Finance Minister of Bangladesh
inaugurated the foremost branch of the bank at 1, Dilkhusha commercial area, Dhaka
on 25th of the same year. In view of above, the bank within a period of 21 year of its
operation achieved a remarkable success and meet up capital adequacy requirement of
Bangladesh Bank. In present the bank has 115 branches which they are leading very
successfully all over Bangladeshi Southeast Bank was established by leading business
personalities and eminent industrialists of the country with stakes with various
segments of the national economy. They established the Bank with a vision to bring
efficient and professional banking service to the people and the business community
of Bangladesh to help the national economy grow. The incumbent Chairman of the
Bank is Mr. Alamgir Kabir, FCA and a professional Chartered accountant. The
Bank’s managing director is Mr. Shahid Hossain, a young and eminent banker of the
country with 30 years.
The Bank’s operations are built upon unequivocal emphasis on effective corporate
governance. The objective is to create, promote and build long-term company values.
The Bank’s first and the highest priority is to provide effective services and maximum
satisfaction to the customers. The ethos of harmony and co-operation is widely
practiced in the Bank. We take pride in the fact that the public and private face of the
Bank is one and identical. We believe that transparency in decision-making,
monitoring mechanism and full disclosure to shareholders and regulatory authorities
are essential aspects of bank’s corporate governance and that they create and intense
pressure to rationalize Bank’s services and search for new competitive advantages.
We work ceaselessly within these parameters.

6
 In its arduous journey since, Southeast Bank has in realizing the dreams of those
who established it. Today it is one of the country’s leading banks in the private
sector contributing significantly to the national economy.

Southeast Bank has become a synonym of quality banking services and products. It
has a diverse array of products and services tailored carefully to cater to the needs
of all segments of customers. Our operational strategies are structured to address
the special and often complex needs of the customers.
Certificate of Incorporation March12, 1995
Certificate of Commencement of Business March 12, 1995
Bangladesh Bank license March 23, 1995
First Branch Opened May 25, 1995
Authorized Capital 15000.00 Million
Paid-up-Capital and Reserved reached BDT 9,169.50 and 24,886.78
million (Report 2016)
Profit after provision and income tax BDT 2,435.07 million (as on
December 31, 2016)
Total assets BDT 29,798.01 million (as on
December 31, 2016)
Deposit 229,973.43
Investment 61,731.63
Import Business 171,531.73
Export Business BDT in million 146,606.09
Number of branches till 2016 128
Number of Employees 184
Number of Share Holders 1,520
Total Number of Share Outstanding
Dividend (CASH) in 2016 16%

A team of efficient professionals manages the Bank. They create and generate an
environment of trust and discipline that encourages everybody in the Bank to work
together for achieving the Bank. The culture of maintaining congenial work-
environment in the Bank has further enabled to benchmark themselves better against

7
management expectations. A commitment to quality and excellence in service in the
hallmark of their identity.

2.2 Mission, vision, goal and commitment

Each company has to prepare their own mission, vision and goal. Company has to
achieve that mission, vision. For achievement company has to work. For achieve
those to fulfill client’s commitment.

Mission:
1. Highly quality financial service with the help of the latest technology
2. Fast and accurate customer service
3. Balance growth strategy
4. High standard business ethics
5. Steady return on share holder’s equity
6. It innovative banking at competitive price
7. Attract and retain quality human resource
8. Firm commitment to the society and the growth of national economy.

Vision:
To stand out as a pioneer banking institution in Bangladesh and contribute
significantly to the national economy.

Goals:
1. Become the most profitable bank
2. Provides highest level of satisfaction to customers
3. Enhance the value of share holders investments and optimize return on their
investment

8
Commitments:
Provide service with high degree of professionalism and use of most modern banking
technology.
1. Create life-long relationship based on mutual trust and respect.
2. Respond to customer needs with speed accuracy.
3. Share their values and benefits.
4. Grow as the Bank’s customers grow.
5. Officer first-rated solutions of client’s banking problems and issues.
6. Provide products and services at competitive pricing.
7. Ensure and security of customer’s valuables in trust.

2.3 Core Strength of SEBL:

1. Integrity
2. Fairness
3. Harmony
4. Commitment
5. Insight and spirit
6. Enthusiasm for work

2.4 Objectives and Strategy of SEBL:

Southeast Bank believes that its effort to become a leading bank in private sector can
only be achieved and sustained by creating effecting corporate governance, including
professionalism among its stuff and strictly adhering to rule and regulations. SEBL
believe that aim and objective can only be realized fully and sustained over time by
adherence to ethics that not be always to build into sets of rules and regulation. This
believes in ethics motivates the bank in its dealing with those and with whom it
interacts.

9
Objectives:
1. Sound Investments.
2. Meet capital adequacy required.
3. Ensure 100% recovery of all advances.
4. Focus on fee-based income.
5. Adopt an appropriate management technology.

Strategy of SEBL:
SEBL adhere to following principal dealing with customers
1. Strictly follows ethical banking practices.
2. Provide fair treatment to all customers, depositors and borrowers
without any discrimination.
3. Provide steady customer service at a very competitive cost.
4. Deal with customer in a transparent manner without any hidden cost.
5. Maintain strictly sector of customer account.
6. Provide fee financial advice to client.
7. Deal quickly with complain receive from customer.
8. SEBL provide very competitive return to the depositors on their
investment.
9. They listen to client and work for improvement of customer service as
per their suggestion.
10. SEBL always keep promises as they make.
SEBL follows the following principles in Dealing with Shareholders
1. Adequacy disclosure of corporate information and operational result to
help them suitable investment decisions.
2. Stable dividend policy and payment of good dividend.
3. Dialogues with them and implement of their suggestion for
improvement.

SEBL follow the following in dealing with their Regulators

1. They are transparent in operation and governance.
2. SEBL has a culture of timely compliance of regulator requirement.

10
SEBL follows the following in dealing with their Regulators
1. They are transparent in operation and governance.
2. SEBL has a culture of timely compliance of regulatory requirements.
3. SEBL gives their suggestions and directives great value that they
implement for improvement of corporate governance standard,

SEBL follows the following principles in dealing for their employees.

1. Discriminate on grounds of religion, sex or race at any stage. They
recruit the best on the basis of merit under a rigorous recruitment
policy without any biasness or favoritism to anybody.
2. Pay competitive compensation package with career echelon for the
reality deserving candidates.
3. Care for employees and respect them.
4. Clearly defined duties and responsibilities for every employee. No
one is made a scapegoat for undefined responsibilities.
5. Zero tolerance for any act of dishonesty.
6. Provide a congenial work environment.
7. Encourage freedom to employees to give opinion for both qualitative
and quantitative improvement of the bank.
8. SEBL always takes care of their health and safety.
SEBL follows the following principles in Respect of society
1. SEBL believe that the bank gets the business sustenance from the
community in which it operates and therefore must remain
responsive to the community and the society in reciprocity.
2. Do not encourage project which are not environment friendly for
financing by bank
3. Provide material support for protection of environment.
4. Give aid to the poor helpless and natural calamity hit people.
5. Support charitable venture.
6. Support to women and contribute to women empowerment.

11
2.5 Organizational Structure of Southeast Bank Limited
There are 14 levels in the bank. I classified them into 3 parts. Top management, Mid-
level Management and Lower level management. The organizational structure is
given below:

Figure 1: Organization of Southeast Bank Limited

12
2.6 Hierarchy of Southeast Bank Limited:
President & Managing
Director
Deputy Managing Director
Senior Executive Vice
President
Executive Vice President
Vice President
First Vice President
Senior Vice president
Ass. Vice President
Senior Principal Office
Principal Officer
Management Trainee Executive Officer Entry Level
Probationary Officer Senior Officer Entry Level
Trainee Officer Officer Entry Level
Trainee Junior Officer Junior Officer Entry Level
Trainee Assistant Officer Assistant Officer Entry Level
Trainee Computer Officer Junior Officer (Computer) Entry Level
Trainee Cash Officer Junior Officer (Cash) Entry Level
Entry Level
Trainee Assistant

Figure 2: Hierarchy of Southeast Bank Limited

In the organization structure of principal Branch, SEBL we can also observe that each
person reports to only one person. One Executive Vice President is the heads of
branch one first Vice President (Operation Manager) and the In Charge of credit and
exchange department directly report to the EVP. The Operation Manager controls the
general banking cash, accounts, and computer department.

13
2.7 Products & Services of SEBL

General Banking Foreign Exchange

Accounts Opening

Account Maintaining Letter of Credit

Account Closing Parties to Letter of Credit

Issuing Pay Order Operations of Documentary

Letters of Credit
Bank Draft
L/C Application
Demand Draft
Security of Documents
Opening of Fixed Deposit

Investment Service Other Saving Service

Investment Scheme for

Doctors

Small Business
Investment Scheme
Education savings
Housing Investment Scheme (ESS)
Scheme
Marriage Savings
Small Transport Scheme Scheme (MSS)

Car Loan Scheme Pension Saving

Scheme (PSS)
Transport Investment
Scheme

Agriculture Implements
Investment Scheme

14
 Chapter 03
Theoretical Overview

15
3.1 Theoretical Overview
Theoretical overviews To Help The Leader to Understand All the technical terms such
financial concepts that are used in this study so that any reader of the report can easily
understand all the critical concepts of the report as well as understand the financial
performance of the SEBL of recent five years. As shared earlier, the analysis of
financial performance is a subjective measure of a company’s ability to utilize the
resources of its primary mode of business and to generate revenue. This term is also
used as a general measure of the overall financial health of a business over a given
period of time and can be used to compare similar business in the same sector or to
compare industries or sectors. The measurement of the performance consists of two
ways, the first part is Trend analysis that includes Horizontal and Vertical analysis,
and the second part is the ratio analysis which is highly popular to analyze any
financial institutions.

3.2 The concept of financial performance analysis

Financial performance analysis is the process of identifying the financial strengths
weakness of the firm by properly establishing the relationship between the item of
balance sheet and profit and loss account. It also helps in short-term and long term
forecasting and growth can be identified with the help of financial performance
analysis. The directory meaning of analysis is to resolve or separate a thing in to its
elements or components parts for tracing their relation to the things as whole and to
each other. The analysis of financial statement is a process of evaluating the
relationship between the components part of financial statement to obtain a better
understanding of the firm’s position and performance.

Financial analysis involves the use of financial statements. A financial statement is a

collection of data organized according to logical and consistent accounting
procedures. Its purpose is to understand certain financial aspects of a commercial
enterprise. It is possible to visualize a position during a given period, as in the case of
a balance sheet, or to reveal a series of activities for a certain period, as in the case of
income statement. As a result, the term “balance sheet” generally refers to two
fundamentals: the balance sheet and the income statement.

16
The financial balance sheet indicates the financial condition of the company at a given
time. Provides a snapshot that can be considered a static image. “The financial
statements are a summary of a company’s financial position at a given date, showing
total assets = total liabilities + owner’s capital.”

The income statement reflects the performance of the company over a given period.
“The income statement is a summary of income and expenses of the business in a
given period, which ends with the profit or loss of the period.”

Anyways financial statement do not reveal all the information about a company’s
financial transaction, but they provide extremely useful information that highlights
two important factors: profitability and financial strength.

3.3 Method of Financial performance analysis

1. Ratio Analysis

2. Common Size Analysis

3. Trend Analysis

3.3.1 Ratio Analysis

Proportion investigation is an investigation of the connections between money related
factors. It is utilized to assess different parts of an organization’s working and
monetary execution, for example, its productivity, liquidity, benefit, and
dissolvability. The pattern of this proportions after some time is concentrated to check
whether they are improving or breaking down. Promotion can be communicated as a
percent, rate or extent. The proportion examination is a fundamental strategy for
budget summaries investigation. Various client, for example, speculators, the board,
investors and loan bosses utilize the proportion to break down the money related
circumstance of an organization for their basic leadership reason. Here this report
contains the most widely recognized proportion and examination to asses the working
and budgetary execution of Southeast bank (SEBL) restricted throughout the
years,2016, 2017, 2018, 2019 and 2020.

17
Proportions are among the more generally utilized apparatus of fiscal summary
investigation since they give pieces of information to and side effects of fundamental
conditions. A proportion can enable us to reveal conditions and patterns hard to
identify by examining singular segments making up the proportion. Proportions, as
different investigation, instruments are typically future-situated. They are frequently
balanced for their likely future pattern and size, and their convenience relies upon the
able elucidation. A proportion communicates a scientific connection between two
amounts. It tends to be communicated as a percent, rate, or extent. Calculation of
proportion is a straight forward number crunching activity, yet, its elucidation isn’t to
be significant connection.

In this area, a significant arrangement of monetary proportions and its application are
depicted. The chose proportions are composed into the four structure squares of
budget summary examination. These are as per the following:

Figure: Types of Ratio Analysis

3.3.1.1 Liquidity Ratio

Liquidity ratios measure a company’s ability to pay debt obligations and its margin of
safety through the calculation of metrics including the current ratio, quick ratio, and
operating cash flow ratio.

a. Current Ratio
b. Quick Ratio

18
3.3.1.1 (a) Current Ratio
The current ratio is a liquidity ratio that measures a company’s ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a
company can maximize the current assets on its balance sheet to satisfy its current
debt and other payables.

Current Asset
Formula: Current Ratio = Current Liabilities

Ideal values of Current Ratio:

In general a good current ratio is anything over 1, with 1.5 to 2 being the ideal. A
current ratio of 1.5 or above is considered healthy, while a ratio of 1 or below
suggests the company would struggle to pay its liabilities as and might go bankrupt.

3.3.1.1 (b) Quick Ratio

The quick ratio is an indicator of a company’s short-term liquidity position and
measures a company’s ability to meet its short-term obligations with its most liquid
assets. An “acid test” is a slang term for a quick text designed to produce instant
results.

Cash+Marketable Securities+Account receivable

Formula: Quick Ratio = Current Liabilities

Ideal Values of Quick Ratio:

Ratio of 1:1 is held to be the ideal quick ratio indicating that the business has in its
possession enough assets which may be immediately liquidated for paying off the
current liabilities.

3.3.1.2 Profitability Ratio

Profitability ratios assess a company’s ability to earn profits from its sales or
operations, balance sheet assets, or shareholder’s equity. Profitability ratios indicate
how efficiently a company generates profit and value for shareholders.
a) Return on Asset
b) Return on Equity
c) Net Profit Margin

19
3.3.1.2 (a) Return on Asset
Return on assets (ROA) is an indicator of how profitable a company is relative to its
total assets. ROA gives a manager, investor or analyst an ideal as to how efficient a
company’s management is at using its assets to generate earnings.

Net income
Formula: Return on Asset = Average Total Asset

Ideal values of Return on Asset:

A ROA of 5% or better is typically considered a good ratio while 20% or better is
considered great. In general, the higher the ROA, the more efficient the company is at
generating profits.

3.3.1.2 (b) Return on Equity

The return on equity is a measure of the profitability of a business in relation to the
equity. Because shareholder’s equity can be calculated by taking all assets and
subtracting all liabilities, ROE can also be thought of as a return on assets minus
liabilities.

Net income
Formula: Return on Equity = Shareholders′ equity

Ideal values of Return on Equity:

As with return on capital, a ROE is a measure of management’s ability to generate
income from the equity available to it. ROE’s of 15-20% are generally considered
good. ROE is also a factor in stock valuation, in association with other financial
ratios.

3.3.1.2 (c) Net Profit Margin

Net profit margin (also known as “Profit Margin” or “Net Profit Margin Ratio”) is a
financials ratio used to calculate the percentage of profit a company produces from its
total revenue. It measures the amount of net profit a company obtains per dollar of
revenue gained. The net profit margin is equal to net profit (also known as net
income) divided by total revenue, expressed as a percentage.

20
 Net Profit
Formula: Net Profit Margin= Total Operating Income

Ideal values of Net Profit Margin:

A good margin will vary considerably by industry and size of business, but as a
general rule of thumb, a 10% net profit margin is considered average, a 20% margin is
considered high (or good) and a 5% margin is low.

3.3.1.3 Leverage Ratio

A leverage ratio is any one of several financial measurements that look at how much
capital comes in the form of debt (loans) or assesses the ability of a company to meet
its financial obligations. Banks have regulatory oversight on the level of leverage they
are can hold.
a) Debt to Equity Ratio
b) Debt Ratio

3.3.1.3 (a) Debt to Equity Ratio

The debt to equity ratio is used to evaluate a company’s financial leverage and is
calculated by dividing a company’s total liabilities by its shareholders equity. The
D/E ratio is an important metric used in corporate finance.

Total Debt
Formula: Debt to Equity Ratio = Shareholder′s Equity

Ideal values of Debt to Equity Ratio:

Generally, a good debt to equity ratio is anything lower than 1.0. A ratio of 2.0 or
higher is usually considered risky. If a debt to equity ratio is negative, it means that
the company has more liabilities than assets- this company wouldbe considered
extremely risky.

3.3.1.3 (b) Debt Ratio

Debt ratio is a financial ratio that indicates the percentage of a company’s assets that
are provided via debt. It is the ratio of total debt and total assets.

21
 Total Debts
Formula: Debt Ratio= Total Assets

Ideal values of Debt Ratio

In general, many investors look for a company to have a debt ratio between 0.3 and
0.6. From a pure risk perspective, debt ratios of 0.4 or lower are considered better,
while a debt ratio of 0.6 or higher makes it more difficult to borrow money.

3.3.1.4 Activity Ratio

An activity ratio is a type of financial metric that indicates how efficiently a company
is leveraging the assets on its balance sheet, to generate revenue and cash.
a) Total Asset Turnover Ratio
b) Fixed Asset Turnover Ratio

3.3.1.4 (a) Total Asset Turnover Ratio

The asset turnover ratio is an efficiency ratio that measures a company’s ability to
generate sales from its assets by comparing net sales with average total assets. In
other words, this ratio shows how efficiently a company can use its assets to generate
sales.

Total Operating Income

Formula: Total Asset Turnover Ratio = Average Total Asset

Ideal values of Total Asset Turnover Ratio:

In the retail sector, an asset turnover ratio of 2.5 or more couldbe considered good,
while a company in the utilities sector is more likely to aim for an asset turnover ratio
that’s between 0.25 and 0.5

3.3.1.4 (b) Fixed Asset Turnover Ratio

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure
operating performance. This efficiency ratio compares net sales (income statement) to
fixed assets (balance sheet) and measures a company’s ability to generate net sales
from its fixed-asset investments, namely property, plant and equipment.

22
 Total Operating Income
Formula: Fixed Asset Turnover Ratio = Average Net Fixed Asset

Ideal values of Fixed Asset Turnover Ratio

A low fixed asset turnover ratio shows that a company isn’t very efficient at using its
assets to generate revenue. A high ratio, on the other hand shows greater efficiency.
Fixed asset turnover ratio is a great way to benchmark one company against another
or against an industry average.

3.3.1.5 Earnings Ratio

Earning are perhaps the single most important and most closely studied number in a
company’s financial statements. It shows a company’s real profitability compared to
the analyst estimates, its own historical performance, and the earning of its
competitors and industry peers.
a) Price Earnings Ratio
b) Earning Per Share

3.3.1.5 (a) Price Earnings Ratio

The price to earnings ratio (PE Ratio) is the measure of the share price relative to the
annual net income earned by the firm per share. PE Ratio shows current investor
demand for a company share. A high PE ratio generally indicates increased demand
because investors anticipate earnings growth in the future. The PE ratio has units of
years, which can be interpreted as the number of years of earnings to pay back
purchase price.

Market Price Per Share

Formula: Price Earnings Ratio =
Earning Per Share

Ideal values of Price Earnings Ratio:

A “good” P/E ratio isn’t necessarily a high ratio or a low ratio on its own. The market
average P/E ratio currently ranges from 20-25, so a higher PE above that could be
considered bad, while a lower PE ratio could be considered better.

23
3.3.1.5 (b) Earning Per Share
Earnings per share (EPS) is a figure describing a public company’s profit per
outstanding share of stock, calculated on a quarterly or annual basis. EPS is arrived at
by taking a company’s quarterly or annual net income and dividing by the number of
its shares of stock outstanding. EPS is a basic yardstick of a company’s profitability
and is used to tell investors whether the company is a safe bet.

Net Proft After Tax

Formula: Earning Per Share = No of Shares Outstanding

Ideal values of Earning Per Shares:

Earnings per share is widely considered to be the best measure of a share’s true price
because it shows you how much of a company’s profit after tax that each shareholder
owns. There is no rule-of-thumb figure that is considered a good or bad EPS, although
obviously the higher the figure the better.

3.3.2 Common Size Analysis

Common Size assessment is an instrument to evaluate individual financial rundown
things or a social event of things on the term of the species based whole. We, by and
large, portray a key all out figure as the base, which for a bank’s compensation is hard
and fast pay or pay an d for a money related record is ordinarily full scale assets.
Common size examination is required common size clarifications. Along these lines,
for the common size examination of SEBL’s financial report, I have orchestrated its
common size compensation clarifications and common size fiscal records for quite a
while.
I use common size clarifications of SEBL to reveal the modifications in the general
importance of each spending rundown things. Each individual aggregate in common
size clarifications is renamed in regards to common size rates. The common size
related records and pay declarations are shown about from 2016 to 2020.

24
3.3.2.1 Common Size of Balance Sheet
A common size monetary record is an asset report that showcases both the numeric
worth and relative rate for absolute resources, complete liabilities, and value accounts.
A common size monetary record considers the general degree of every benefit, risk,
and value record to be immediately examined. Any single resource detail is contrasted
with the estimation of all out resources. Similarly, any single obligation is contrasted
with the estimation of complete liabilities and any value record is contrasted with the
estimation of all out value. Hence, each significant order of record will rise to 100%,
as every single littler segment will signify the real account characterization.

3.3.2.2 Common Size of Income Statement

A common size salary articulation where each record is communicated as a level of
the estimation of offers. It is utilized for vertical investigation, in which each detail in
a fiscal summary is recorded as a level of a base figure inside the announcement, to
make examinations simpler.
A common size salary explanation examination makes its simpler to perceive what is
driving an organization’s benefits, and contrast the exhibition with its companions. By
taking a gander at how that exhibition has been changing after some time, common
size fiscal reports help speculator’s spot inclines that a crude budget summary may
not reveal. Huge changes in the level of income utilized by various cost classes over a
given timeframe could be an indication that the plan of action is changing, or that
assembling expenses are evolving.

3.3.3 Trend Analysis

A common size salary articulation is a pay proclamation wherein each record is
communicated as a level of the estimation of offers. It is utilized for vertical
examination, in which each detail in a budget summary is recorded as a level of base
figure inside the announcement , to make correlation simpler.

A common size pay explanation examination makes it simpler to perceive what is

driving an organization’s benefits, a contrast that exhibition with its friends. By taking
a gander at how that presentation has been changing after some time, common size
fiscal summaries help speculator’s spot drifts that a crude budget report may not
reveal. Enormous changes in the level of income utilized by various cost classes over

25
a given timeframe could be an indication that the plan of action is changing, or that
assembling expenses are evolving.

3.3.3.1 Horizontal Analysis

According to Edwards (2011), the horizontal analysis examines the amounts of the
financial statements over several years. Horizontal analysis is also called trend
analysis. Amounts from previous budgets will be redefined as a percentage of the base
year amounts.

3.3.3.2 Vertical Analysis

According to Rich Jones and Heiger (2011), the vertical analysis expresses each
amount in a financial statement as a percentage of another amount. The vertical
analysis of a budget implies that each budget amount is redefined as a percentage of a
total assets. The vertical analysis of an income statement results in any income
statement amount that is recalculated as a percentage of net sales.

26
 Chapter 04
Financial performance Analysis of SEBL

27
4.1 Introduction
Financial statement analysis is the process of reviewing and analyzing company’s
financial statement to make better economic decisions to earn income in future. These
statements include the income statement, balance sheet and statement of cash flows,
notes to account and a statement of change in equity. Financial performance in
broader sense refers to the degree to which financial objectives being or has been
accomplished and is an important aspects of financial risk management. It is the
process of measuring the results of a firm’s policies and operations in monetary terms.
It is used to measure firm’s overall financial health over a given period of time and
can also be used to compare similar firms across the same industry or to compare
industries or sectors in aggregations. Financial performance analysis includes analysis
and interpretation of financial statements in such a way that it undertakes a full
diagnosis of the profitability and financial soundness of the business. The financial
soundness of the business. The financial analyst program provides vital
methodologies of financial analysis.

4.2 Ratio Analysis of SEBL

External analyst use various kinds of ratios to evaluate a bank, while inside analyst of
that bank can use them less to access more detailed operational data on bank. There
are several types of ratio to analyze a bank’s financial performance. Few appropriates
are analyzed below:

4.2.1 Liquidity Ratio

They measure the firm’s ability to meet current obligations. Liquidity ratio has some
sources which is analyzed in below:

28
4.2.1.1 Current Ratio
The current ratio is actually a liquidity Ratio that measures a bank’s ability to pay
short time obligation or those that mature in a year. It informs analysts and investors
whether the bank is maximizing its current assets on its balance sheet to satisfy its
current debtors and other accounts payable or not. The formula used to measure
SEBL’s current account ratio is:
Current Assets
Formula: Current Ratio = Current Liabilities
Table 4.1: Current ratio of SEBL: (Times)
Years Current Assets Current Liabilities Current Ratio
2016 29253.62 26249.44 1.11
2017 32738.49 28830.35 1.14
2018 38957.20 31754.47 1.23
2019 38916.04 34512.14 1.13
2020 36253.08 42001.27 0.86
Source: Annual report of SEBL-2020

2
1.8
1.6
1.4
1.23
1.2 1.11 1.14 1.13

1 0.86
0.8
0.6
0.4
0.2
0
2016 2017 2018 2019 2020

Figure 4.1: Current Ratio of SEBL

Comment:
Table 4.1 shows the current ratios of SEBL during 2016-2020. It has a rising trend
from 2016-2019 and reaches to the maximum at 1.23 in 2018. During 2016-2019, the
current ratio lies above 1, meaning that the bank maintains greater assets compared to
its liability which is good for the bank. But, the current ratio drops to 0.86 which is
less than 1. It indicates that the assets of the bank are no longer higher than its
liability. It is not good for the bank.
29
4.2.1.2 Quick Ratio
The quick ratio, also known as the acid-test ratio, measures the ability of a company
to pay all of its outstanding liabilities when they come due with only assets that can be
quickly converted to cash.
Cash+Marketable Securities+Account receivable
Formula: Quick Ratio = Current Liabilities

Table 4.2: Quick ratio of SEBL: (times)

Cash + Marketable
Years Current Liabilities Quick Ratio
Securities + A/R
2016 26152.01 26249.44 1.00
2017 28902.69 28830.35 1.00
2018 34846.96 28830.35 1.10
2019 34831.61 34512.14 1.01
2020 28299.43 42001.27 0.67
Source: Annual report of SEBL-2020
2.00
1.80
1.60
1.40
1.20 1.10
1.00 1.00 1.01
1.00
0.80 0.67
0.60
0.40
0.20
0.00
2016 2017 2018 2019 2020

Figure 4.2: Quick Ratio of SEBL

Comment:
Table no 4.2 shows that the quick ratios were similar in 2016 and 2017. In 2018, it
increased at 1.10, which was good. But in 2020, it has decreased at 0.67 which it is
lower than in 2019. It means that the bank may not be able to fully pay off its current
liabilities in the short term.
4.2.2 Leverage Ratio
These ratios show the proportion of debt and equity in financing the firm’s assets.
Leverage ratio has some sources which is analyzed in below:

30
4.2.2.1 Debt to Equity Ratio
The Debt-to-Equity ratio (D/E) shows the capital and debt used to finance the assets
of a business. Closely linked to leverage, the relationship is also called risk, debt or
leverage. Usually, the two variables are collected from the company’s or bank’s
balance sheet (the book value), but the ratio can also be calculated using market
values for both if the company’s debt and equity are traded on the stock exchange, or
combination of a book value for debt and market value for the capital stock.
Total Debt
Formula of Debt to Equity Ratio = Total Shareholders Equity

Table 4.3: Debt to equity ratio of SEBL (Times)

Years Total Debt Total Shareholders’ Equity Debt to Equity Ratio
2016 249892.81 26523.56 9.42
2017 295872.71 25823.65 11.46
2018 330437.25 28116.66 11.75
2019 366394.46 30499.46 12.01
2020 435579.44 29703.77 14.66
Source: Annual report of SEBL-2020

16 14.66
14
11.75 12.01
11.46
12

10 9.42

0
2016 2017 2018 2019 2020

Figure 4.3: Debt to equity ratio of SEBL

Comment:
Table 4.3 shows that the relative proportion of capital and debt used to finance the
assets of SEBL from the year 2016-2020. Here SEBL used its capital and debt mostly
in 2020 which the ratio is very higher that is not a good sign. But the previous four
years, the ratios were lower than in 2020.

31
4.2.2.2 Debt Ratio:
The analysis of the debt ratio, defined as an expression of the relationship between the
debt and the total assets of a company enables the ability to serve a company’s debt to
be measured. Indicates what percentage of a company’s financial capital derives from
debt, making is a good way to verify a company’s long term solvency. In general a
lower ratio is preferable. A debt ratio of less than or equal to 1 indicates the good
financial health of a company. The formula used to measure the debt ratio is:
Total Debts
Formula: Debt Ratio= Total Assets
Table 4.4: Debt Ratio of SEBL: (amount in %)
Years Total Debt Total Asset Debt Ratio
2016 249892.81 291798.01 85.64%
2017 295872.71 339288.05 87.20%
2018 330437.25 381575.68 86.60%
2019 366394.96 422312.71 86.76%
2020 435579.44 465293.41 93.61%
Source: Annual report of SEBL-2020
100.00 93.61
85.64 87.20 86.60 86.76
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2016 2017 2018 2019 2020

Figure 4.4: Debt Ratio of SEBL

Comment:
In Table no 4.4 shows that the percentage of SEBL’s financial capital derives from
debt from the year 2016-2020, making it a good way to verify the bank’s long term
solvency. But in 2020, the debt ratio is 93.61% which it increased than the last four
years. But it indicates that the lower the ratio, it is less risky. So it is in an increasing
trend which is not a good sign for a bank.

32
4.2.3 Profitability Ratio
These ratios measure overall performance & effectiveness of the firm. Profitability
ratio has some sources which is analyzed in below:

4.2.3.1 Return on Asset

Return on Asset (ROA) is an index of profitability which evaluates the rate of return
on resources that a company owns. It measures the level of net income generated by
the assets of a company. The return of asset is a list of crossed financial statements. It
uses the ‘net income’ of the income statement and the ‘total assets’ of the balance
sheet.
Net Income
Formula: Return of Assets = Average Total Asset

Table 4.5: Return on Asset Ratio of SEBL: (amount in %)

Years Net Income Average Total Asset Return on Asset
2016 2435.07 246258.02 0.88%
2017 1168.63 315543.03 0.37%
2018 2473.21 360431.87 0.69%
2019 2508.56 401944.20 0.62%
2020 2149.10 443803.06 0.47%
Source: Annual report of SEBL-2020

1.00
0.88
0.90
0.80
0.69
0.70 0.62
0.60
0.47
0.50
0.37
0.40
0.30
0.20
0.10
0.00
2016 2017 2018 2019 2020

Figure-4.5: Return on Asset Ratio of SEBL

Comment:
Table no 4.5 shows that the level of net income generated by the assets of SEBL
between the year of 2016-2020. But in 2016-2020, the ratios were highly down. The
bank’s performance was very poor. Because the bank couldn’t use its assets
effectively to generate income.
33
4.2.3.2 Return on Equity
ROE is an indicator of how effectively management uses capital funding to finance
operations and grow the company. Moreover, it is a profitability ratio that measures a
company’s ability to generate profits from its shareholder’s investments in the
company. In other words, the rate of return on capital indicates the number of profits
generated by each dollar of equity. Therefore, a return of 1 means that every dollar of
net worth generates 1 dollar of net income. This is an important step for potential
investors because they want to see how effectively a company will use its money to
generate net income. The formula used to calculate ROE is:
Net Income
Formula: Return on Equity = Shareholder′ s Equity

Table 4.6: Return on Equity of SEBL (amount of %)

Years Net Income Shareholder’s Equity Return on Equity
2016 2435.07 26523.56 9.18%
2017 1168.63 25823.65 4.53%
2018 2473.21 28116.66 8.80%
2019 2508.56 30499.46 8.22%
2020 2149.10 29703.77 7.24%
Source: Annual report of SEBL-2020
10.00 9.18
8.80
9.00 8.22
8.00 7.24
7.00
6.00
5.00 4.53
4.00
3.00
2.00
1.00
0.00
2016 2017 2018 2019 2020

Figure 4.6: Return on Equity of SEBL

Comment:
Table no 4.6 shows that how effectively management of SEBL had used capital funding
to finance operations and to grow up. Moreover, it shows the bank’s ability to generate
profit from its shareholders’ investments. In 2020, the return on equity is 7.24% which it
has decreased. But it was better in 2018 and 2019. So it can be said that a higher ROE is
usually better while a falling ROE may indicate a less efficient usage of equity capital.

34
4.2.3.3 Net Profit Margin:
The net profit margin ratio or the net margin is a measure of profitability which
calculates the percentage of each dollar earned by a company that becomes a profit at
the end of the year. In other words, the net profit margin ratio shows the net income of
a business for every dollar of sale. Investors and analysts often use net margin to
predict the effectiveness of running a business and future profit forecast based on the
manager sales forecast. By comparing net sales with total sales, investors can see how
much percentage of their operating income and operating costs and any percentage for
shareholders or company will be redefined. The formula used to find the net profit
margin of SEBL is:
Net Profit After tax
Formula: Net profit margin = Total Operating Income

Table 4.7: Net Profit Margin of SEBL (amount of %)

Years Net Profit After Tax Total Operating Net Profit Margin
Income
2016 2435.07 12852.45 18.95%
2017 1168.63 13933.04 8.39%
2018 2473.21 14961.92 16.53%
2019 2508.56 14390.72 17.43%

2020 2149.10 13770.56 15.61%

Source: Annual report of SEBL-2020
20.00 18.95
17.43
18.00 16.53
15.61
16.00
14.00
12.00
10.00 8.39
8.00
6.00
4.00
2.00
0.00
2016 2017 2018 2019 2020

Figure 4.7: Net Profit Margin of SEBL

Comment:
Table no 4.7 shows that the bank’s net profit margin has reduced in 2020, than in
2019. But in 2016, the ratio was the highest position at 18.95%.

35
4.2.4 Activity Ratio
They reflect the firm’s efficiency in utilizing the assets. Activity ratio has some
sources which is analyzed in below:

4.2.4.1 Total Assets Turnover Ratio

The asset turnover ratio measures the efficiency of a company’s assets in generating
revenue of sales. Thus, to calculate the assets turnover ratio, divide total operating
income or revenue by the average total assets.
Total Operting Income
Formula: Total Asset turnover ratio= Average Total Assets

Table 4.8: Total Asset Turnover Ratio of SEBL: (Times)

Years Total Operating Average Total Assets Total Asset

Income Turnover ratio
2016 12852.45 276258.02 0.047
2017 13933.04 315543.03 0.044
2018 14961.92 360431.87 0.042
2019 14390.72 401944.20 0.036

2020 13770.56 443803.06 0.031

Source: Annual report of SEBL-2020
0.05 0.047
0.044
0.045 0.042
0.04 0.036
0.035 0.031
0.03
0.025
0.02
0.015
0.01
0.005
0
2016 2017 2018 2019 2020

Figure 4.8: Total Asset Turnover Ratio of SEBL

Comment:
Table no 4.8 shows that the total asset turnover ratio of SEBL was not stable. The
greater the total asset turnover, it is more efficient. During the period from 2016-2020,
the bank’s total asset turnover ratio was not as good as it expected. The bank’s
performance is highly dissatisfied. So it needs to be improved.
36
4.2.4.2 Fixed Asset Turnover Ratio
The fixed asset turnover ratio is a metric that measures how effectively a company
generates sales using its fixed assets. If a company has a higher fixed asset turnover
ratio than its competitors, it shows the company is using its fixed assets to generate
sales better than its competitors.
Total Operating Income
Formula: Fixed asset turnover ratio = Average Net Fixed Assets

Table 4.9: Fixed assets turnover ratio of SEBL: (Times)

Years Total Operating Average Net Fixed Fixed Assets

Income Assets Turnover Ratio
2016 12852.45 8416.20 1.53
2017 13933.04 9134.48 1.53
2018 14961.92 9329.55 1.60
2019 14390.72 9335.48 1.54

2020 13770.56 9524.32 1.45

Source: Annual report of SEBL-2020
1.80
1.60
1.60 1.53 1.53 1.54
1.45
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2016 2017 2018 2019 2020

Figure 4.9: Fixed Assets Turnover Ratio of SEBL

Comment:
Table no 4.9 shows that the fixed asset turnover ratio of SEBL was not in a
satisfactory level. In 2018, the ratio was higher position at 1.60. Then it has decreased
in 2019 and 2020.

37
4.2.5 Earnings Ratio
A company’s earnings are its after-tax net income. This is the company’s bottom line
or its profits. Earnings ratio has some sources which is analyzed in below:

4.2.5.1 Price Earnings Ratio

In short, the P/E ratio shows what the market is willing to pay today for a stock based
on its past or future earnings. A high P/E could mean that a stock’s price is high
relative to earnings and possibly overvalued. Conversely, a low P/E might indicate
that the current stock price is low relative to earnings.
Market Price Per Share
Formula: Price Earnings Ratio = Earning Per Share

Table 4.10: Price Earnings Ratio of SEBL: (Times)

Years Market Price Per Earnings Per Share Price to Earnings

Share Ratio
2016 18.75 2.66 7.05
2017 22.05 1.27 17.36
2018 15.65 2.35 6.66
2019 13.30 2.16 6.16

2020 12.50 1.81 6.91

Source: Annual report of SEBL-2020
20.00
17.36
18.00
16.00
14.00
12.00
10.00
8.00 7.05 6.66 6.91
6.16
6.00
4.00
2.00
0.00
2016 2017 2018 2019 2020

Figure 4.10: Price to Earnings Ratio of SEBL

Comment:
Table no 4.10 shows that it compares 2016-2020, the value started from 7.05 and
ended 6.91. The value of 2017 was in a pick position at 17.36. But the value of 2019
was in the lowest position at 6.16 than in 2020. Then in 2020, the ratio has increased
at 6.91.

38
4.2.5.2 Earnings Per Share
Earnings per share (EPS) is a company’s net profit divided by the number of common
shares it has outstanding. EPS indicates how much money a company makes for each
share of its stock and is a widely used metric for estimating corporate value.

Net Profit After Tax

Formula: Earnings Per Share= No.of Shares Outstanding

Table 4.11: Earnings Per Share of SEBL: (In BDT)

Years Net Profit After Tax No. of Shares Earnings Per

Outstanding Share
2016 2435.07 916.95 2.66
2017 1168.63 916.95 1.27
2018 2473.21 1054.49 2.35
2019 2508.56 1159.94 2.16

2020 2149.10 1188.94 1.81

Source: Annual report of SEBL-2020

3.00
2.66
2.50 2.35
2.16
2.00 1.81

1.50 1.27

1.00

0.50

0.00
2016 2017 2018 2019 2020

Figure 4.11: Earning Per Share of SEBL

Comment:
Table no 4.11 shows that results of EPS of the bank for the period from 2016-2020
was 2.66, 1.27, 2.35, 2.16 and 1.81 respectively. The bank showed their better
presentation in 2016 and 2018. EPS of 2016 showed good performance because of
increasing net income of outstanding share. But in 2019 and 2020, the ratio has
decreased.

39
 Chapter: 05
Findings, Recommendation & Conclusion

40
5.1 Findings
Take care of objectives:
1. SEBL current ratio has decreased in 2020 because the bank’s performance was
not so good but the last four years, the current ratio was higher than in 2020. And
the quick ratio has also decreased in 2020 but in 2016-2019, the ratio was higher
which was good.
2. The bank’s debt to equity ratio has increased in 2020 than the previous four
years, which is very risky. And the debt ratio is also higher in 2020 but in 2016-
2019, the ratio was lower than in 2020. Because the lower the ratio, which is less
risky. So, the higher the ratio, it is not a good sign.
3. In 2016-2020, the return on asset of SEBL is not in a satisfactory range. The
bank’s performance was very poor. So, the bank needs to be improved. And the
return on equity has decreased in 2020. In 2016, 2018 and 2019, the ratio was
higher, but it was not satisfied.
4. The bank’s net profit margin has decreased in 2020. Although the ratio was
higher in 2016 and 2019, but it was not at a satisfactory level.
5. The bank could not use its total assets properly in these years (2016-2020). So,
the total assets turnover ratio was very poor. And the fixed asset turnover ratio of
SEBL was not so stable. In 2020, the ratio has decreased than the last four years.
6. There are fluctuations in net income per share of SEBL during 2016-2020. And
the earnings per share (EPS) was not that good during the period the report
considered except 2016. And the price-earnings ratio (P/E) of SEBL shows its
best performance in 2017.

41
5.2 Recommendations
1. SEBL should try to keep the current ratio and quick ratio at a satisfactory level.

2. In the previous five years, the bank’s debt to equity ratio and debt ratio was not
in a satisfactory level. So, they should take steps to maintain its debt to equity
ratio and debt ratio at desired level.

3. SEBL should have to improve the return on asset in a satisfactory level. And the
bank should also have to increase the return on equity in a good position.

4. The bank should concentrate on net profit margin with the goal that it will
increment.

5. The bank should use its total assets more properly to increase its revenue. And
they should also have to raise the fixed asset turnover ratio in a satisfactory
position.

6. SEBL should raise its price to earnings ratio because the P/E ratio of SEBL was
not in a satisfactory position in previous years. And the bank also has to increase
its earnings per share (EPS) ratio to increase net income per share.

42
5.3 Conclusion
Banks have been established in last few years and these banks have made banking
sector very competitive. In this competitive world this sector has trenched its wings
wide enough to cover any kind of financial services anywhere in this world. The
major task for banks, to survive in this competitive environment is by managing its
assets and liabilities in an efficient way according to the need of the market. Now the
success of a bank totally depend upon the factors such as decision making, efficient
and cordial services, confidence, self-reliance, maximum use of resources and
introduction of new financial products. Within a short period of time (more than 16
years) Southeast Bank Limited has shown a great improvement. Within a short
duration of time it is not possible to properly work the entire environment. However, I
have tried to give my best effort to achieve the objectives for the internship program
and found out some problems. The bank would grow more smoothly if the problems
are solved that I identified. Finally, I want to say that Southeast Bank Limited
(Momin Road Branch) is always trying to provide its best service for its customer
satisfaction. It is playing an important role in the banking and in payment system of
Bangladesh. I wish the bank all success prosperity in their field.

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 Reference
A. Referred Books

1. Brigham & Houston. Fundamentals of Financial Management.

B. Websites

1. Topic: Historical Background of Southeast Bank Ltd.

available https://en.wikipedia.org/wiki/Southeast_Bank_Limited

C. Annual Report

1. https://www.southeastbank.com.bd/

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