As part of my BBA degree, I am pleased to present my internship report on "Financial Performance Analysis of Standard Bank Limited". The internship program was a fantastic experience as it gave me extensive exposure to professional skills and the work environment. I tried to obtain all the relevant information to complete the report as planned. Arif Hassan Assistant Professor Department of Business Administration Faculty of Business and Entrepreneurship Daffodil International University.
He prepared his internship report titled "Analysis of Financial Performance of Standard Bank Limited" under my supervision. I would like to express my heartfelt thanks to all the employees of Standard Bank Limited for their assistance in fulfilling my internship requirements. The paper presents a brief overview of the financial results of Standard Bank Limited from 2016 to 2020.
The vertical balance sheet and income statement was created from the balance sheet and income statement of Standard Bank Limited. Finally, in the last chapter or five, there are some suggestions for improving financial performance.
B ACKGROUND OF THE STUDY
S COPE OF THE STUDY
O BJECTIVES OF THE STUDY
M ETHODOLOGY OF THE STUDY
N ATURE OF D ATA
S OURCES OF D ATA
L IMITATION OF THE S TUDY
BACKGROUND HISTORY
VISION
COMPANY MISSION
OBJECTIVES OF THE BANK
MAJOR OPERATIONS OF THE BANK
ORGANOGRAM
ABOUT FINANCIAL ANALYSIS
FINANCIAL ANALYSIS TOOLS
H ORIZONTAL A NALYSIS
Daffodil International University 9 of the amount in the base year, where the base amount is indicated as 100 percent at the beginning of the analysis.
V ERTICAL A NALYSIS
R ATIO A NALYSIS
- Liquidity Ratio
- Activity Ratio
- Debt Ratio
- Profitability Ratio
When we talk about activity ratios, we are talking about the type of financial ratios that a company uses to assess how efficiently it is able to use the various operating assets present on its balance sheet and convert them into sales or cash . It not only communicates the financial health of a company, but also shows how well the balance sheet components are being used by the company. This includes two ratios. The debt ratio is defined as the decimal or percentage ratio of total debt to total assets.
Analysts and investors use profitability ratios to assess and evaluate a company's ability to create revenue (profit) in relation to sales, balance sheet assets, operating costs and shareholders' equity over a given period of time. Most companies strive for a greater ratio or value because it indicates that the company is functioning well in terms of sales, profitability and cash flow. Gross Profit Margin: The gross margin ratio is the ratio of a company's gross profit to its sales.
It is a profitability ratio that determines how much of a company's sales are converted into gross profit (that is, sales minus the cost of goods sold). The better a higher gross profit margin is (i.e., the lower the relative cost of goods sold). Operating profit margin: Operating margin is the amount of profit a company earns on a dollar of sales after deducting variable production costs such as salaries and raw materials, but before deducting interest and taxes.
Higher ratios are usually better, indicating that the company's operations are efficient and that it is effective in converting revenues into profits. Return on Total Assets (ROA): The ratio of annual net income to the average total assets of a company during a financial year is known as return on assets. It assesses a company's ability to generate net income by maximizing the use of its assets.
Påskelilje International University 12 Return on Equity (ROE): The return on equity ratio is a financial metric that assesses a company's ability to generate profits from its shareholders' investments. Individuals can determine how much after-tax income is left in a company's reserve by calculating its ROE. Net income can then be compared to total equity as shown on the balance sheet.
HORIZONTAL ANALYSIS (TREND ANALYSIS) OF STANDARD BANK
- R EVENUE
- O PERATING P ROFIT
- P ROFIT AFTER TAX
- T OTAL A SSET
- T OTAL L IABILITY
- T OTAL L OAN
- S HAREHOLDER E QUITY
From the graph it can be seen that the operating profit of Standard bank is increasing every year. According to the information above, significant changes in operating profit have occurred each year. Because 2016 is the base year in this case, the Operating Profit changes are increased from 2017 to 2020.
Over the five years of the study, Standard Bank Limited's total profit after tax growth fluctuated. In 2019, profit after tax increased significantly compared to the previous year, but in 2020, the change in profit after tax decreased slightly compared to 2019, and the amount of decrease was BDT. Thus, every year the company's profit after tax increases, which allows the company to invest more money for its business purposes and also allows the company to pay more dividends to its shareholders.
The overall growth in Standard Bank Limited's total assets increased throughout the five-year study period. Only in 2020 has it been clear that there is an increasing trend in the changes in total assets. The overall growth in Standard Bank Limited's total liability increased throughout the five-year study period.
Because 2016 is the base year in this case, the changes in total commitments from 2017 to 2020 have been increased. Only in 2020 has it been clear that there is an increasing trend in the changes to the overall responsibility. Overall growth in Standard Bank Limited's total loans increased over the five-year study period.
The overall growth in Standard Bank Limited's total equity increased throughout the five-year analysis period. Because 2016 is the base year in this case, the changes in total equity from 2017 to 2020 have been increased. In 2020, the highest in total equity increased, and it has been clear that there is an increasing trend in the changes in total liability.
VERTICAL ANALYSIS (COMMON SIZE ANALYSIS) OF STANDARD BANK LIMITED
FINANCIAL RATIO ANALYSIS OF STANDARD BANK LIMITED
- L IQUIDITY R ATIO
- Current Ratio
- Quick Ratio
- A CTIVITY R ATIO
- Total Asset Turnover Ratio
- D EBT R ATIO
- P ROFITABILITY R ATIO
- E FFICIENCY R ATIO
The quick ratio is a measure of a bank's ability to meet its short-term obligations using its most liquid assets, and is an indicator of the bank's short-term liquidity position. The graph shows that the quick ratio of the standard bank fluctuates between 2016 and 2020. The current ratio of the standard bank is very low, which may cause the bank to experience financial problems.
The total asset turnover shows very low rate which means that the bank's interest income is so less than the total assets. It is showing almost a constant rate of asset turnover ratio from 2016 to 2020, which means that the bank is not efficient in generating interest income. In 2016 it was 2.92 because interest income was slightly less than fixed assets, but it decreased slightly in 2017 and increased in 2018. Total asset turnover shows that the bank's interest income is much less than assets total.
As a financial ratio, the debt ratio is used to quantify the leverage level of an organization. A ratio greater than one indicates that assets finance a significant percentage of a firm's debt, implying that the organization has more liabilities than assets. The debt ratio of Standard bank shows a lower rate (below 1) which means that the bank uses its equity to buy assets.
The chart shows the Return on Asset (ROA) of Standard Bank Limited and we can see that the ROA of Standard Bank Limited shows fluctuating trends in 2016. The ROA was 0.71%, which decreased slightly to 0.70% in the following year 2017 and started to decline continuously until 2020, indicating that the bank cannot efficiently generate income from its assets. Return on Equity (ROE) is a measure that compares a company's profitability to its total equity. A manager, investor or analyst can use Return on Equity (ROE) to determine how successfully a company's management uses its owner's equity to create profits.
The graph shows the return on equity (ROE) of Standard Bank Limited and it can be seen that Standard Bank Limited's ROE shows a positive flow but it shows a decreasing trend from 2016 to 2020. This means that the bank is not efficient to generate profits by using its equity capital. The banks' return on equity shows a positive trend, but it shows a decreasing trend from 2016 to 2020.
The bank could run their activities with low operating costs compared to total assets. Most of the time, the bank could reduce the difference between operating income and total assets.
FINDINGS OF THE STUDY
RECOMMENDATIONS
CONCLUSION
