An Analysis on Bank Performance Evaluation of a Commercial Bank in Bangladesh

Sonali Bank Limited

Overview of the Bank:

Soon after independence of the country Sonali Bank emerged as the largest and leading Nationalized Commercial Bank by proclamation of the Banks' Nationalization Order 1972 (Presidential Order-26) liquidating the then National Bank of Pakistan, Premier Bank and Bank of Bhwalpur. As a fully state owned institution, the bank had been discharging its nation-building responsibilities by undertaking government entrusted different socio-economic schemes as well as money market activities of its own volition, covering all spheres of the economy. The bank has been converted to a Public Limited Company with 100% ownership of the government and started functioning as Sonali Bank Limited from November 15 2007 taking over all assets, liabilities and business of Sonali Bank. After corporatization, the management of the bank has been given required autonomy to make the bank competitive & to run its business effectively. Sonali Bank Limited is governed by a Board of Directors consisting of 13(thirteen) members. The Bank is headed by the Chief Executive Officer & Managing Director, who is a well-known Banker and a reputed professional. The corporate head quarter of the bank is located at Motijheel, Dhaka, Bangladesh, the main commercial center of the capital.

Corporate Profile:
Name of the Company : Sonali Bank Limited Chairman : Quazi Baharul Islam CEO and Managing Director : Md. Humayun Kabir Company Secretary :Zaheed Hossain Legal Status : Public Limited Company Genesis : Emarged as Nationalised Commercial Bank in 1972, following the Bangladesh Bank (Nationlisation) Order No. 1972(PO No.26 of 1972) Date of Incorporation : 03 June, 2007 Date of Vendor's Agreement : 15 November, 2007 Registered Office : 35-42, 44 Motijheel Commercial Area, Dhaka, Bangladesh Authorised Capital :Taka 2000.00 core Paid-up Capital Number of Employee Number of Branches Phone-PABX FAX SWIFT Website :Taka 1125.00 core :21,839 :1196 :9550426-31, 33, 34, 9552924 :88-02-9561410, 9552007 :BSONBDDH :www.sonalibank.com.bd

E-mail

:itd@sonalibank.net.bd

Board of Directors:
Sl No Name Mr. Quazi Baharul Islam Mr. Md. Shahid Ulla Mia Mr. Md. Anwar Shahid Mr. A.S.M. Nayeem, FCA, FCCA Mr. M. Lutfur Rahman Khan Mr. K.M. Zaman Romel Mr. Kashem Humayun Advocate Sattayendra Chandra Bhakta Mrs. Jannat Ara Henry .Mr. Suvas Chandra Singho Roy Mr. Md. Humayun Kabir Chairman Director Director Director Director Director Director Director Director Director Designation

1 2 3 4 5 6 7 8 9 10 11 12

Mr. Shaimum Sarwar Kamal Director

M.D

Vision,Mission&Slogan:
Our Vision :
Socially committed leading banking institution with global presence.

Our Mission :
Dedicated to extend a whole range of quality products that support divergent needs of people aiming at enriching their lives, creating value for the stakeholders and contributing towards socio-economic development of the country.

Our Slogan :
Your trusted partner in innovating banking

Capital Structure:
Authorised Capital : Paid up Capital : Tk. 2000.00 Core. Tk. 1125.00 Core

Branches & Subsidiaries:

Total Branches : 1196 Branches in Urban areas : 341 Branches in Rural areas : 853 Overseas Branches : 2 Subsidiaries : 3 1. Sonali Bank (UK) Limited having 1(one) branch and 6 (sixn) booth offices in UK. 2. Sonali Exchange Company Incorporated (SECI) having 10 (ten) branches in USA. 3. Sonali Investment Limited (Merchant Banking) having 4 (four) branches at Motijheel,Paltan,Uttara,Mirpur in Dhaka, Bangladesh. Representative Office : 1(one) in Jeddah, KSA; 1 (one) in Riyadh, KSA and 1 (one) in Kuwait. Correspondent : 3

581

Digitalization status of Sonali Bank Limited:

1. Branch Computerization : 1037 branches are on live operation. Out of 1194 branches at home, 1178 branches have already been entered in the automation network. 2. Foreign Remittance : Bank's own in-house software "Remittance Management System" (RMS+), having, among others, the feature of paying foreign remittance instantly over the counter is being implemented at all branches. This web based software provides digital services to the expatriates through its unique advantage of sending confirmation message to the mobile phone of the remitter/beneficiary. RMS+ Network 3. ATM : Sonali Bank Limited is a member of Q-Cash ATM network. At present the bank has 41 ATM booths. Sonali Bank's ATM cardholders enjoy the access to the ATMs and POS of Dutch Bangla Bank Ltd. and Brac Bank Ltd. besides those of Q-Cash consortium. Sonali Bank recently launched Credit Card. 4. Online and SMS Banking :

At present 109 branches of Sonali Banks are included in the Online Any Branch Banking (ABB) network. SMS Banking service is runnig in 73 branches. The bank is seriously working on connecting all branches in the Real-time Online Banking network gradually. Branches having ABB facility are also rendering SMS banking services. Features of SBL Q-Cash ATM Network: Sonali Bank Limited has introduced Proprietary Debit & Credit cards. Card holder can easily pay utility bills like- Water, Telephone, Gas etc. It is easy to remit funds among the participating branches of the Bank. 24 hours Transactions is available. It is a risk less Cash Carrying facility. Cashless purchase can be made from specific Point of Sales (POS). Only designed Branches of Bangladesh deal Q-Cash cards. Branches of District and Upazilla level will introduce Sonali Bank Q-Cash card within shortest possible time

Services:
Sonali Bank Limited offers multiple special services with its network of branches throughout the country in addition to its normal banking operations.

Collection:
Gas bills. Electricity bills. Telephone bills. Water/Sewerage bills. Municipal holding Tax. Passport fees, visa fees and Travel tax. Customs & Excise duties. Source tax and VAT. Jakat fund. Hajj deposit. Land development tax.

Payment:
Pension of employees of Government and other Corporate Bodies. Bangladesh Bank employees pension. Army pension. British pension. Students' stipend/scholarship. Govt. & Non-Govt. Teachers' salary. Food procurement bill on behalf of the Govt.

Social Services:
Old age allowances. Widows, divorcees and destitute women allowances. Freedom Fighters' allowances. Rehabilitation allowances for acid survival women. Maternal allowances for poor women. Disability allowances.

Sale & Encashment/Purchase:

Savings Certificates. ICB Unit Certificates. Prize Bonds. Wage Earner's Development Bonds. US Dollar Premium & Investment Bond. Lottery tickets of different Semi-Govt. and Autonomous Bodies. Sanchaypatra. Public Service Commission's application form. Judicial Service Commission's application form. Exchange of soiled / torn notes.

Misc. Services:
Bank a/c information of tax payee client according to demand of NBR. Local Governance Support Project. Enlist of Non Government Insurance company.

Locker Service
Secured Locker Service is provided in some branches of Sonali Bank Limited. Customers may avail this service and secure their valuables. Locker size Yearly Charge (Tk.) Security Deposit (Tk.) Small 1,430.00 2,000.00 (refundable) Medium 1,960.00 2,000.00 (refundable) Large 2,690.00 2,000.00 (refundable) * Additional 15% VAT applicable along with charges

Our Core Business:

Corporate Banking Project Finance SME Finance Remittance Lease Finance Consumer Credit Trade Finance Loan Syndication Foreign Exchange Dealing International Trade NGO-Linkage Loan Consumer Credit Investment Government Treasury Function Money Market Operation Rural and Micro credit Capital Market Operation Special Small Loan

Other Business/Services:
Government Treasury Bonds Locker Service A.T.M. Card Utility Bills Collection Ancillary Services Merchant Banking

Islamic banking:
'Bismillahir Rahmanir Rahim' By the grace of Almighty Allah Sonali Bank limited has started Islamic Banking Activities in consideration with the increasing demand & expectation of religious Muslims.It is completely based on Islamic Shariah. A high profiled Shariah supervisory committee consists of reputed Islamic scholars, Economists & Bankers, has been working for proper & fair Islamic Banking activities.

Establishment of Islamic Windows in Sonali Bank Limited: Sonali Bank Limited as the largest state owned commercial bank has commenced its Islamic Banking operation since 29 June 2010 at the following five branches with separate window. Fakirapool branch,Dhaka Agrabad corporate branch, Chittagong Khulna corporate branch, Khulna Bogra corporate banch,Bogra Dargagate corporate branch, Sylhet

Aims & Objectives of Islamic Banking:

To facilitate the online Shariah based banking at the door step of the religious muslims To establish an excellent Islamic Banking System by direct participation in sincere & public welfare Banking, ensuring a proper & developed financial Management, based on Islamic Shariah. To bring dynamism in Islamic banking by utilizing the well versed experience & good will of Sonali Bank Limited. To encourage the savings, following direct Investment. To create more employment facilities by inspiring project Investment. Functions of Islamic Banking: The Islamic Banking windows are performing the following banking activities through on-line banking1. Collection of Deposits 2. Investment Assistance

Islamic Banking Services:

Deposit Products: Al-Wadeeah Current Account(AWCA) Mudaraba Savings Account(MSA) Mudaraba Special Notice Deposit Account(MSNDA) Mudaraba Account(MTDA) Mudaraba Hajj Saving Account(MHSA)

Term

Deposit

Investment Products:
Bai-Murabaha Bai-Muajjal Bai-Salam

Personal Banking:

Rural Credit Micro Credit International Banking Industrial Financing Deposit & Credit Schemes SME Banking Foreign Currency A/C Investment Bond Performance Indicators for Sonali Bank Limited The Implementation Support Mission of the World Bank visited the Bank recently on 16 November, 2009 and review the overall progress of implementation of the project with particular focus on the sustainability of banking reforms and placed its comment as follows: A significant achievement under this project has been the improvement in the financial condition largely due to the Management Team that have been hired under this project. The Management Team have not only turned the bank into operationally profitable organization, but have also: improved customer services; introduced new products; developed policies and manuals for effective and efficient operations of the bank; revised the organizational structure of the bank; embarked on a comprehensive training program for staff; introduced incentives for better staff performance; and are going ahead with the computerization of the banks operation. The bank has maintained an increasing trend in deposits, loans, income, operating profits and net worth. Remarkable achievements have been made in recovering bad and doubtful loans and reducing the ratio of non-performing loans to total loans. Moreover, the Management Team is successfully meeting most of the Key Performance Indicators (KPIs) agreed for the bank.

Credit Rating Report on Sonali Bank Limited

As per Bangladesh Bank's mandatory requirement vide BPRD circular No. 06 dated 05 July,2006, credit rating of Sonali Bank Limited was done by the Credit Rating information and services Ltd. (CRISL) on the audited Balance Sheet as on 31-12-2010 and other related information. The rating of the report is as under:

Rating

Definition:

AAA Triple-A (Highest Safety) Banks rated in this category are adjusted to be of best quality, offer highest safety and have credit quality. Risk factors are negligible and risk free, nearest to risk free Government bonds and securities. Chnaging economis's circumstances are unlikely to have any serious impact on this category of banks. ST-1 Highest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding, Safety is almost like risk free Government short-term obligations. A- Single-A (Adequate Safety) Banks rated in this category are adjusted to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. ST-2 Highest certainty of timely payment. Liquidity factors are and supported by good fundamental protection. CORE DATA OF SONALI BANK LIMITED FOR THE PERIOD FROM 2000 TO 2008 (TAKA IN MILLION) Sl.N o. Particular 2000 2001 2002 2003 2004 2005 2006 2007 2008

1 2 3 4 5 6 7 8 9 10 11 12 13

237,68 254,08 254,08 266,85 292,18 337,68 352,89 461,96 492,94 Total Assets 0 4 4 1 2 7 4 4 6 Total Employees 26,046 26,046 25,237 24,715 24,450 23,933 23,273 22,542 21,839 202,49 215,54 222,22 230,33 252,23 277,07 302,30 328,99 364,38 Total Deposits 5 1 2 9 4 9 3 7 6 Total Investments 44,225 33,405 43,867 45,490 58,896 43,636 39,978 88,891 95,093 133,28 141,99 156,11 155,19 168,28 227,01 241,02 206,34 231,16 Total Loans 1 3 3 7 3 0 9 8 6 Financial Equity 244,71 Capital 5,642 5,706 5,856 5,956 6,106 6,306 28,444 21,742 8 232,03 248,37 265,16 260,89 286,07 331,38 381,33 440,22 468,52 Total Liabilities 8 7 6 5 5 1 8 3 8 Total Income 14871 15,883 16,628 16,145 15,758 19,864 23,131 25,710 26,621 Total Expense 14074 15,392 15,718 15,606 14,686 15,900 20,125 20,287 25,004 237,68 254,08 271,02 266,85 292,18 337,68 352,89 396,22 430,70 Tangible Assets 0 4 2 1 2 7 4 1 3 Intangible Assets 65,743 62,243 Non performing/Classif ied Loans 43,977 45,274 45,447 41,097 43,761 46,261 50,533 63,175 61,154 % of Classified Loans to Total Loans 38.65 38.31 33.46 32.00 28.32 22.52 24.44 44.59 31.44 Disclosure on Risk Based Capital on Basell (II),2010

a) Scope of application
(Tk. in Crore) Qualitative Disclosures (a) (b)

Sonali Bank Limited, 100% state owned commercial Bank manages its risk and maintains risk based capital following the guidelines of Bangladesh Bank. Risk Based Capital Adequacy (RBCA) report of Sonali Bank Limited is submitted to Bangladesh Bank on Solo basis giving deduction treatment for investments in the following entities: 1) Sonali Investment Limited, a wholly owned subsidiary in Dhaka, Bangladesh. 2) Sonali Exchange co. Inc. (SECI), a wholly owned subsidiary in USA. 3) Sonali UK Limited, a joint venture company of Sonali Bank Limited and the Government of Bangladesh is operating in the United Kingdom.
Sonali Bank Limited transfers funds or regulatory capital within the group (subsidiaries & associate) as per Banking rules and regulations under the approval of Board of Directors / Competent

(c)

Authority . Quantitative Disclosures (d) The following subsidiaries are not included in the consolidation and their aggregate capital is as under: Sonali Investment Limited 100.00 Sonali Exchange co. Inc. (SECI) 5.66 Sonali Bank (UK) LTD. London 62.18 (SB. UK. Ltd.)

b) Capital Structure:
(Tk. in Crore) Qualitative Disclosures (a) Core capital of Sonali Bank Limited comprises of fully paid up capital against ordinary shares, statutory reserve and general reserve created out of profit, retained earning etc, and supplementary capital include General provision & assets revaluation reserve. Eligible Capital of Sonali Bank Limited has been calculated as per Basel-II guidelines as shown below. Eligible Capital Tier-1 Capital: (I) Paid up Capital 900.00 (II) Statutory 395.65 Reserve (III) General 4.70 Reserve (IV) Retained 1316.92 Earnings Total Tier-1 2617.27 Capital Total Tier-2 1146.84 Capital. Deductions from 167.84 Capital. Total eligible 3596.27 Capital.(b+c-d)

Quantitative Disclosures

(b)

(c) (d) (e)

c) Capital Adequacy:

(Tk. in Crore) Qualitative Disclosures Quantitativ e Disclosures

(a)

(b) (c) (d) (e) (f)

Sonali Bank Limited is very much aware of maintaining Capital to support its current and future activities. The bank has an ongoing approved 3 year plan for meeting future capital requirement and to increase capital accordingly. A 5 year capital growth plan up to 2017 has also been prepared. Negotiation with the owner (government) has also been continuing to increase capital. Capital Requirement for Credit Risk 2763.18 Capital Requirement for Market Risk 217.22 Capital Requirement for Operational 250.29 Risk Capital Adequacy Ratio (CAR) 10.02 Tier-1 Capital to RWA 7.06

d) Credit Risk:
(Tk. in (a) Crore) Qualitative Disclosure s Sonali Bank Limited has its own Credit Risk Management guideline interms of Core Risks Management guidelines of Bangladesh Bank. The Bank also follows other instructions/guidelines of Bangladesh Bank in this regard. Sonali Bank Limited constantly monitors, reviews and analyses its credit portfolio with a view to improving ability of credit portfolio, minimising potential losses nd ensuring efficient credit process.To manage the NonPerforming Loans (NPL), Sonali Bank Limited has a comprehensive remedial management policy, which includes a framework of controls to identify weak credits and monitoring of these accounts constantly. Total gross credit risk exposures broken down by major types of credit exposure. Balance Sheet Exposures 1) Cash 512.83 2) Claims on Bangladesh Government andBangladesh Bank 8232.18 3) Claims on Public Sector Entities (Other than Government) in 5333.45 Bangladesh 4) Claims on Banks & NBFIs 4363.53 5) Claims on Corporate 4353.54 6) Claims under Credit Risk Mitigation 693.27 7) Claims categorized as retail portfolio & SME 7167.03 8) Consumer Finance 332.79 9) Claims fully secured by residential property 45.18 10) Past Due Claims (Risk weights are to be assigned net of 2923.46 specific provision)

Quantitati ve Disclosure s

(b)

11) Unlisted equity investments and regulatory capital instruments issued by other banks (other than those deducted from capital) held in banking book 12) Investments in premises, plant and equipment and all other fixed assets 13) All other assets

51.71 1124.65 15784.1 2 1264.47

Off-Balance Sheet Exposure 1) Claims on Bangladesh Government and Bangladesh Bank 2) Claims on Public Sector Entities ( Other than 1148.59 Government) in Bangladesh 3) Claims on Banks & NBFIs 13.80 4) Claims on Corporate 400.57 5) Claims against retail portfolio & SME Geographical distribution of exposures, broken down in significant areas by major types of credit exposure.Inside Bangladesh 1) Dhaka Division. 20920.3 2 2) Chittagong Division. 2422.45 3) Rajshahi Division. 970.51 4) Khulna Division. 2352.57 5) Sylhet Division. 275.50 6) Barisal Division. 348.73 7) Rangpur Division. 1308.64 Industry or counterparty type distribution of exposures, broken down by major types of credit exposure. 1) Agricultural / Rural 2521.76 Credit 2) Micro Credit 865.06 3) Industrial Credit 6372.34 4) Agro-based Industrial 2891.53 Credit 5) General Advances 6725.02 9234.10

(d)

6) International Trade Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit exposure. Loans and Advances On demand 2121.40 Not more than 3 months 1526.61 More than 3 months but not more than 1 11230.35 year More than 1 year but not more than 5 years 3221.50 More than 5 years 7571.94 Bills purchased and discounted Not more than 1 month 1629.56

More than 1 month but not more than 3 months More than 3 months but not more than 6 months More than 6 months Gross Non Performing Assets (NPAs) Non Performing Assets (NPAs) to Outstanding Loans & advances Movement of Non Performing Assets (NPAs) (Loans & advances) Opening balance Additions Reductions Closing balance

438.95 869.36 0.14 24598.17 6831.48

6983.35 1196.33 1348.20 6831.48

e) Credit Risk (Banking Book Position):

(Tk. in Crore) Qualitative Disclosures Quantitativ e Disclosures (a) The Bank has equity exposure in Banking book consisting of listed shares of 101 companies and unlisted shares of 10 companies market value of allotted securities has been determined on the basis of the value of securities at the last trading day of the year. The unlisted investments in shares are shown at cost. Value disclosed in the balance sheet of investments, as well 518.34 as the fair value of those equity at cost price and market price have been disclosed as under: Investment in shares as cost price: Quoted and Un-quoted shares Quoted shares 500.51 Un-quoted shares 17.83 Investment in shares as market price; 616.98 Quoted and Un-quoted shares Quoted shares 599.15 Un-quoted shares 17.83

(b)

f) Market Risk:

(Tk. in Crore) Qualitative Disclosures Quantitative Disclosures

(a)

(b)

Market Risk has been determined under the RBCA guidelines taking into consideration as marked to market principles as directed by Bangladesh Bank under Guidelines on Risk Based Capital Adequacy, December 2010. The capital requirements for: Interest rate risk; 79.40 Equity position risk; 106.34 Foreign exchange risk; 31.48

g) Operational Risk:
(Tk. in Crore) Qualitative Disclosures Quantitative Disclosures (a) (b) Operational Risk of Bank has been worked out under the Basic Indicator Approach of RBCA guidelines. The capital 250.29 requirements for operational risk

Evaluation & Comments of World Bank A project titled Enterprise Growth and Bank Modernization Project (EGBMP) has been undertaken by the Government of Bangladesh (GoB) in July, 2004 under the guidance of and financed by World Bank. This project was designed with the aim to enhance the capacity building of the entrepreneurial skill of the industry and trade related sector and modernize the bank management through a program of reforms of the Nationalized Commercial Banks (NCBs). A. A World Bank Mission (Implementation Support Mission) visited Bangladesh over the period June 7 to 18, 2009 to follow up with the Government of Bangladesh on the progress of the banking component under the Enterprise Growth and Bank Modernization Project. The mission comprised the Local Specialists / Analysts of World Bank, Dhaka Office as well as Foreign Specialists of Washington Office. The mission discussed the banking reforms with Ministry of Finance, the Bangladesh Bank (Central Bank of Bangladesh) and the Management of Sonali Bank Limited. The mission submitted the Aide Memoire which contained the following on Sonali Bank Limited (SBL) performance: 1.1 Cash recoveries from NPA This is one of the most notable achievements made by Sonali Bank Ltd. in the overall performance indicators. The reduction in actual NPL level is attributed to various methods used for cash recoveries of NPL including writeoffs, out of court settlements, rescheduling and appointment of private collection agents as well as bank-wide efforts and introduction of an incentive scheme to reward employees for recovering non-performing loans. Against the recovery target of Tk. 500 crore in 2008, SBL realized Tk. 496 crore which represents almost 100% of the target and is the highest amongst SCBs in terms of amount recovered in cash. All these contributed to reduction of NPL level as a share of gross loans from 47 percent in 2007

to 33 percent in 2008. Despite the remarkable progress in 2008, the NPL level of Sonali Bank is still the highest among the three state-owned commercial banks (SCBs) and needs further reduction, including realization of loans from State-owned Enterprises (SOEs). 1.2 The result for Business and revenue growth indicators and non-funded income is encouraging. Revenue targets were met with "good loan" portfolio having a robust growth of 46% in 2008. Meanwhile, conversion of Bangladesh Petroleum Corporation (BPC) loan into government bond and increased market competition has seriously affected Sonali Bank's net interest income and some of the operating efficiency indicators due to the larger share of BPC loan in the bank's portfolio relative to other SCBs. Although net interest income is still negative, increased business activity from remittances, letter of credit facilities, other fees and commissions contributed to 29% growth in non-funded income in 2008, surpassing the target. Strong inflow of remittances has helped increase deposits compared to 2007. Nonetheless, the Bank performed comparatively better under this category with all indicators meeting the target, but narrowly missing (69% in place of 70%) the target for low cost deposit as percentage of total deposit. 1.3 Operating efficiency indicators Sonali Bank Limited (SBL) has achieved the net spread & net interest margin targets. But it could be better enough which is missed because of its larger share of low-yielding BPC bonds and concessional interest rates and this position is indicating that banking sector is becoming more competitive. The target for net operating income to total assets and cost to income ratio have not been achieved largely due to increased operating expenses on amortization of intangible assets by Tk. 350 crore and salary. Recent interest controls imposed by Bangladesh Bank will reduce the net spread in the banking sector, but Sonali Bank would have to make extra efforts to enhance its revenue generation ability in the face of escalating competition in the banking sector. SBL has the scope to enhance its revenue generation by improving the Advance-Deposit ratio (AD ratio). 1.4 Profitability As per audited financial statements, SBL made net income before provision and tax of Tk.161.6 crore in 2008, compared to Tk.424.6 crore in 2007. This decline in profit has been caused mainly by increase in operating expenses (e.g., salary and allowances increased by more than double in a year and amortization of intangible assets by Tk.350 crore in 2008). Though this reduction in net profit before tax had affected its ROA, it has improved to 0.47 percent in 2008 from a negative 6.17 percent in 2007. 1.5 Staffing The target set for staff rationalization could not be materialized due to delays in implementation of VRS scheme. Staff cost as percentage of total operating cost reduced to 52.7% in 2008 from 75.6%o in 2007. Income per staff has also improved from 0.11 to 0.12 in 2008. However, staff expenses to total income has increased due to increase in staff benefits. Current figures may further deteriorate when Sonali Bank adopts a new pay scale without any adjustments in the total number of staff

via a VRS scheme. The number of staff has been reduced by 703 in 2008, as a result of natural attrition and this trend will continue. 1.6 The Net Worth of the bank continued to improve under the review period. Given the systematic importance of Sonali bank as the largest state-owned commercial bank, the capital position needs to be further strengthened. The amount of actual provisioning for loan losses remained higher than required provisioning in 2008. 1.7 Computerization Target on computerization of branches has been met with 56% of deposits and 74% of loans procedures automated as of end 2008. 1.8 Disclosure requirements have been met with financial statements both for annual statement and quarterly provisional (within one month) completed within the prescribed time frame.