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Performance Analysis of
Standard Bank Limited
(FYs 2012 & 2013)

1.0 Introduction

1.1 Background of the report
This Paper is prepared as the partial fulfillment of the course Bank Management (FIN
303). The Paper is assigned by the course instructor, Alamgir Hossen, lecturer, IBA-JU. The
main objective of this group report is to allow students to relate their textbook knowledge
with the practical work field practices and provide students superiority over Financial
Statement Analysis.
This report on performance comparison was prepared through a comprehensive ratio
analysis of the financial statements of Standard Bank Limited (SBL). The historical trends of
these ratios were used to make inferences about a SBLs financial condition, its operations
and its investments attractiveness.

1.2 Objective of the Study
To compare financial performance of Standard Bank Limited in FYs 2012 & 2013 as well as to
compare overall performance of these two years with industry average. The basis of the
study objectives are classified into two parts, Board objectives and Specific objectives.
Broad Objectives
The board objective of this paper is comparative analysis of financial statements of
FYs 2012 & 2013.
Specific Objectives
To analyze Balance Sheets of FYs 2012 & 2013
To analyze Income Statements of FYs 2012 & 2013
To determine profitability ratios
To determine valuation ratios
To compare findings with industry average

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1.3 Methodology of the study
The research type is analytical research. The method of analysis is quantitative.
We used secondary data collected from Annual Reports 2012 & 2013 of SBL.
We analyzed and calculated the ratios in Microsoft Excel.
We conducted an online survey to determine Industry Average.
1.4 Scope of the report
Analysis of financial performance of SBL in years 2012 & 2013.
Comparison of the two years performance
Comparison with industry average
Criticism of overall performance.

1.5 Limitations of the Study
Data confidentiality.
Validity of the data.
Time shortage.

2.0 Standard Bank Limited: An Overview


2.1 SBL Profile
Standard Bank Limited (SBL) was incorporated as a Public
Limited Company on Amy 11, 1999 under the Companies
Act, 1994 and the Bank achieved satisfactory progress
from its commercial operations on June 03, 1999. SBL
has introduced several new products on credit and
deposit schemes. It also goes for Corporate and Retail banking etc. The Bank also
participated in fund Syndication with other Banks. Through all these myriad activities SBL has
created a positive impact in the Market.
During the year 2013, the Bank has consolidated its position by ensuring sustainable growth
in business operation by pursuing multiple sources of revenue. Standard bank Limited is
always trying for creating wide array of financial services and products to cater to the
emerging needs of the market. The Bank focused on attracting new customers and retaining
the loyalty of old customers at a very competitive price.


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2.2 Vision
To be a modern Bank having the object of
building a sound national economy and of
contributing significantly to the Public Exchequer.

2.3 Mission
To be the best private commercial bank in
Bangladesh in terms of efficiency, capital
adequacy, asset quality, sound management and
profitability.

2.4 Schemes & Products
Schemes
SBL Regular Deposit Program (SRDP)
SBL Regular Income Program (SRIP)
SBL Double Income Plus (DI+) Program

Products
Consumer Credit Scheme
House Building Loan

2.5 Management Overview
SBL mainly perform by its management of all of its branches and department. Branch
managers are accountable to the regional managers while the supreme power rests with
CEO of the bank. However, branch and regional managers are vested with certain decision
making authority in their respective commanding area.

In the figure next page, we see the companys management overview alias a chain of
command.




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Figure 1: Organogram of SBL

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3.0 Financial Ratio Analysis

Financial ratio analysis involves the calculation and comparison of ratios which are derived
from the information given in the companys financial statements. The historical trends of
these ratios can be used to make inferences about a companys financial condition, its
operations and its investments attractiveness.
Excerpts from the financial statements (Balance Sheet & Profit-Loss Account) of SBL have
been attached in the Appendix section of the report which provides a summary of 2012 &
2013s activity.
Following is the 5 years financial highlights of SBL which is the template of our ratio analysis
calculation and comparison for FYs 2012 & 2013.




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Based on these given data, we will conduct our Ratio Analysis mainly in two steps.
Profitability Ratio Analysis
Valuation Ratio Analysis
Valuation Ratio Analysis indicates the performance of the equity stock of a company in the
stock market. The important valuation ratios are the Price Earnings Ratio and the Market to
Book Value Ratio.
On the contrary, Profitability Ratios help measure the profitability of a firm. There are two
types of profitability ratios.
Profitability Ratios in relation to sales and
Profitability Ratios in relation to investments.

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3.1 Valuation Ratios
3.1.1 Price Earnings (P/E) Ratio
This ratio shows how much investors are willing to pay per dollar of reported
profits. The formula for calculating P/E Ratio is-

Calculation of P/E Ratio of SBL for 2012 & 2013: (times)
2012 2013
Market price per share 19.20 14.80
Earnings per share 2.73 1.77
P/E Ratio (times) 7.03 8.35
Industry Average 8.5

2012 & 2013 Comparison: The analysis shows an upward movement from 2012 to
2013 indicating better growth opportunities in 2013.
Industry Comparison: SBLs P/E ratio of 8.35 is lower than industry average of 8.5, it
suggests that the company is regarded as being somewhat riskier than its
competitors.

3.1.2 Market to Book Value (M/BV) Ratio
It is an indicator of how investors regard an organizations stock. The
formula for calculating M/BV Ratio is-

Calculation of M/BV Ratio of SBL for 2012 & 2013: (times)
2012 2013
Market price per share 19.20 14.80
Book Value per share 10.00 10.00
M/BV Ratio (times) 1.92 1.48
Industry Average 2.0

2012 & 2013 Comparison: The finding shows a downward movement of M/BV ratio
indicating gradual reduction in returns as market price decreases.

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Industry Comparison: SBL has generated below average returns with respect to both
total assets and common equity.
Graphical presentations of Market Price per Share & Earnings per Share basic of
our valuation ratio analysis is given below for SBL during 2006 to 2013.









Figure 2: Market Price per Share (2006 to 2013)











Figure 3: Earnings per Share (2006 to 2013)


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3.2 Profitability Ratios
3.2.1 Return on Equity Capital
This ratio indicates rate of return on stockholders investment. The formula
for calculating ROE is-




Calculation of P/E Ratio of SBL for 2012 & 2013:
2012 2013
Net Income (Net profit
after taxes)
1,333 1,011
Average total
shareholders equity
8,220 9,289
ROE (in %) 17.67 12.51
Industry Average 16.03 13.38

2012 & 2013 Comparison: The return on total shareholders equity has decreased
from 2012 to 2013 due to reduction in net profits available to equity shareholders.
Industry Comparison: SBLs return of 17.67% in 2012 is higher than industry average
of 16.03%. This result follows from the companys less use of debt (leverage). In
2013, ROE is 12.51% which is less than 13.38% average ROE indicating improvement
in use of debt.
Graphical Presentation of SBLs ROE during 2006 to 2013 is as follows.








Figure 4: ROE of SBL (2006 to 2013)

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3.2.2 Return on Assets
The return on total assets (ROA) is computed as follows-




Calculation of P/E Ratio of SBL for 2012 & 2013:
2012 2013
Net Income (Net profit
after taxes)
1,333 1,011
Total Assets 94,696 109,191
ROA (in %) 1.57 1.10
Industry Average 1.94 1.59

2012 & 2013 Comparison: The return on total shareholders equity has decreased
from 2012 to 2013 due to reduction in net profits available to equity shareholders
and increase in total assets.
Industry Comparison: SBLs .97% and .77% return in 2012 & 2013 is well below than
the industry average. This return results from higher-than-average use of debt.


3.2.3 Net Interest margin
Net interest margin of SBL for 2012 & 2013 is determined in its Annual
report as follows:
2012 2013
Net Interest margin (in %) 3.14 2.54
Industry Average 2.38 2.31

2012 & 2013 Comparison: The net interest margin has decreased significantly from
2012 to 2013 implying less return from interest.
Industry Comparison: Net interest margin was higher than industry average in 2012
but the situation deteriorated in 2013 with return slightly higher than average.



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3.2.4 Net Non Interest margin
Net non interest margin of SBL for 2012 & 2013 is determined in its Annual
report as follows:
2012 2013
Net Non Interest margin
(in %)
.88 1.06
Industry Average 4.81 4.54

2012 & 2013 Comparison: The net non interest margin has increased significantly
from 2012 to 2013 implying higher return.
Industry Comparison: Net non interest margin is well below industry average in both
2012 & 2013 implying their poor management of non interest funding.

3.2.5 Return On Investment (ROI)
Return on Investment of SBL in 2012 and 2013 is reported in its
Financial Highlights as follows.
2012 2013
ROI 7.31 11.09
Industry Average 10.84 11.07

2012 & 2013 Comparison: The ROI has increased significantly from 2012 to 2013
implying higher return on Investment
Industry Comparison: ROI is well below industry average in 2012 & almost equal in
2013 better and efficient management in investment.

3.2.6 Net loans to Total Assets ratio
Calculation for 2012 & 2013:
2012 2013
Net loans 4315 3958
Total Assets 94,696 109,191
Net loans/TA (%) 65 67.81
Industry Average 63.83 66.44


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2012 & 2013 Comparison: Upward movement.
Industry Comparison: Above average.

3.2.7 Net loans to Deposits & Borrowings
Calculation for 2012 & 2013:
2012 2013
Net deposits &
borrowings
80,392 91,920
Total Assets 94,696 109,191
Net loans/DB (%) 76.37 80.59
Industry Average 82.76 85.08

2012 & 2013 Comparison: Upward movement.
Industry Comparison: Below Average in both years.

3.2.8 Operating Efficiency
The formula for calculating operating efficiency is-





Calculation for 2012 & 2013:
2012 2013
Net operating expense 1,502 1,864
Net operating income 4,503 5,043
Operating Efficiency (%) 33.36 36.96
Industry Average 28.2 31.69

2012 & 2013 Comparison: Efficiency improved from 2012 to 2013.
Industry Comparison: Efficiency of SBL is above industry average that is SBL is more
efficient than its competitors.


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3.2.9 Employee Productivity
The formula for calculating employee productivity is-




Calculation for 2012 & 2013:
2012 2013
Net operating income 4,503
(million Tk.)
5,043
(million Tk.)
No. of Employees 1270 1368
Employee productivity ratio 3545669.3 3686403.5
Industry Average 4515326.6 4335626.7

2012 & 2013 Comparison: Productivity increased from 2012 to 2013. Positive impact
on earnings of SBL.
Industry Comparison: Productivity of SBL is below industry average. SBL is
comparatively less productive than its competitors.

3.3 Liquidity Ratio
Current Ratio
The Current Ratio is calculated as follows:





Net interest margin of SBL for 2012 & 2013 is determined in its Annual report as
follows:
2012 2013
Current Assets 3712.06 2240.99
Current Liabilities 3559.52 2093.01
Current ratio 1.04 1.07
Industry Average 1.06 1.08

2012 & 2013 Comparison: Upward movement.
Industry Comparison: Below Average in both years.

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4.0 Findings in a Nutshell

4.1 Operating and Net Profit
Standard Bank Ltd. generated an operating profit of Tk. 317.92 crore in 2013
compared to Tk. 300.07 crore in 2013 to Tk. 300.07crore in 2012 making a growth of
6%. After all provisions including general provisions on unclassified loans &
advances, profit before tax stood at Tk. 233.10 crore. The total assets of the bank
stand at 109a91 million in the year 2013 from Tk. 94696 million in the ear 2012.
Cash Dividend of 10% was recommended to be paid out. Earnings per share (EPS) is
Tk. 1.77 in 2013.







Figure 5: Operating Profit of SBL (2006 to 2013)









Figure 6: Non Interest Income of SBL (2006 to 2013)

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5.0 Conclusion


This ratio analysis done in this report had a major significance in analyzing the financial
performance of Standard Bank Limited for the years 2012 & 2013. Decisions affecting
product prices, per unit costs, volume or efficiency had an impact on the profit margin or
turnover ratios of the Bank. Similarly, decisions affecting the amount and ratio of debt or
equity used had an affect on the financial structure and overall cost of capital of SBL.
Understanding the inter-relationships among the various ratios, such as turnover ratios and
leverage and profitability ratios, helps managers invest in areas where the risk adjusted
return is maximum.
Humorist & Poet Ogden Nash once wrote, Bankers are just like anybody else, except
richer. It turns out that statement may or may not be true; a lot depends upon how
successful bankers and other financial managers are as perform in the financial marketplace.
Indeed in todays world, bankers and their competitors are under great pressure to perform
well all the time.















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6.0 References

1. Besley, s., & Brigham, E. F., (2008). Essentials of Managerial Finance.
Thomson Higher Education: 5191 Natorp Bulevard, Mason OH 45040, USA.

2. Rose, P. S., & Hudgins, S. C., (2013). Bank Management & Financial Services.
International Edition: Singapore

3. Retrieved on August 20, 2014 from http://www.standardbankbd.com/

4. Retrieved on August 21, 2014 from www.wikipedia.org/

5. Retrieved on August 22, 2014 from
http://www.atozinbanking.com/index.php/study-material-on-banking/83-
financial-ratio-analysis-with-case-study

6. Retrieved on August 22, 2014 from
http://www.bizmove.com/finance/m3b3.htm


7. Retrieved on August 22, 2014 from
http://en.wikipedia.org/wiki/Financial_statement_analysis