partial fulfillment of the requirements for the Degree of Bachelor of Business Administration (BBA)

Abstract

Sonali Bank PLC, one of the largest state-owned commercial banks in Bangladesh, plays a significant role in the country’s financial system and overall economic development. As a government-owned institution, the bank operates an extensive network of branches across both urban and rural areas, providing a wide range of banking services to individuals, corporate clients, and public sector organizations. In this context, the profitability of a bank is considered a key indicator of its financial performance and long-term sustainability. This report focuses on analyzing the determinants of profitability of Sonali Bank PLC, with particular emphasis on Return on Equity (ROE) as a measure of financial performance. The study is conducted based on financial statement analysis, relevant statistical data, and selected financial ratios over the period from 2015 to 2024. It examines how various bankspecific and macroeconomic variables, including Loan to Deposit Ratio (LDR), Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Non-Performing Loan Ratio (NPLR), Capital Adequacy Ratio (CAR), bank size, and inflation, influence the profitability of the bank. The analysis applies regression techniques along with other statistical tools to identify the relationship between these variables and ROE. The findings reveal that certain variables, particularly capital adequacy and loan utilization, have a significant impact on profitability, while others show weaker or insignificant relationships. Overall, the results indicate that Sonali Bank PLC has experienced moderate profitability during the study period, with fluctuations influenced by both internal management factors and external economic conditions. Despite its strong presence in the banking sector, the study highlights several areas that require improvement to enhance profitability. The bank needs to strengthen its credit risk management practices to reduce the level of non-performing loans, which negatively affect earnings. In addition, improving the efficiency of asset utilization and ensuring an optimal balance between liquidity and lending activities are essential for increasing returns. Furthermore, the adoption of modern banking technologies, effective cost management, and diversification of income sources can contribute to better financial performance. By addressing these issues, Sonali Bank PLC can improve its profitability and maintain a sustainable position in the competitive banking industry.