Performance Evaluation of Trust Bank Limited

Chapter One Introduction 1. 1 Introduction The existence of financial institution facilitates exchange of resources between borrower and lender. The financial institution such as banks, have a positive role in financing and investment which is a multidimensional process involving complexity of many interrelated and interdependent factors of diversified nature. It is difficult to assess the contribution of each factor independently. To be successful in its arena a bank must maintain a healthy growth rate and minimize the risk. The bank must maintain enough cash to meet obligations.

All these are related to the sound performance of a bank. Evaluating bank’s performance examines the basic risk and returns features of commercial banks. The financial Performance evaluation demonstrates the strengths and weaknesses of bank over time . The Trust Bank is operating its banking operation in a sound manner. In this report general banking activities of trust bank ltd are analyzed and its overall performance is evaluated. 1. 2 Origin of the Report This report is prepared for fulfilling a requirement of both the BBA and the Internship Programs.

Internship programs brings a student closer to the real life situation and there by helps to launch a career with some prior experience Trust Bank Limited is the host organization for the two months internship Program. The knowledge and experience gathered by me, has been described in this report. 1. 3 Objectives The aim of the report is to examine operating procedure of Trust Bank Limited and evaluate the overall banking performance. The major objectives of the report are as follows: ? To present an overview of Trust Bank Limited. ? To explain the operating procedure of Trust Bank Limited ?

To evaluate overall performance of Trust Bank Limited ? To identify the problems in operating procedure and overall performance of Trust Bank Limited and recommend some issues to overcome these problems. 1. 4 Methodology The study requires a systematic procedure from selection of the topic to preparation of the final report. To perform the study, the data sources were to be identified and collected, classified, analyze, interpreted and presented in a systematic manner and key points were to be found out. The overall process of methodology has been presented below: 1. 4. 1 Research Design

This is an exploratory report, which briefly reveals operating procedure and performance evaluation of Trust Bank Limited. Data have been collected from both primary & secondary sources. 1. 4. 2 Sources of Data, Data Collection Procedure This study is mainly based on secondary data available from the various divisions and departments of Trust Bank Limited. Primary Sources of Data • Practical desk work • Observation of the banking activities • Face to face conversation with the bank officers and staffs • Conversation with the clients • Different manuals of Trust Bank Limited Different circulars of Trust Bank Limited Secondary Sources of Data • Files and documents of branch • Annual reports of Trust Bank Limited • Different papers of Trust Bank Limited • Different text books • Websites 1. 4. 3Analysis of Data Data Analysis: For the data analysis the following step is followed: Software: Computer software (e. g. Microsoft Word, Microsoft Excel) have been used which help to make the analysis more efficient and more effective. 1. 5 Limitations Some important facts, those were unavoidable, deserve to be mentioned in this connection. They are: ?

The shortage of the secondary data. Most of the existing and available papers, documents and other governmental and non-governmental publication contain similar kinds of information. ? All the data has been collected under the strict regulation of the department and company ? Some information was withheld to retain the confidentiality of the bank ? I was placed to this branch for two months only. It was difficult to put better effort to gather knowledge about all the department of the bank. With all of these limitation I tried my best to make this report as best as possible. . 6 Preview of the Report The report consists of five chapters. Chapter one contains the introductory part. It is introducing the report and its purposes, objectives, etc. Chapter two explains about the organization (Trust Bank Ltd. ) and the required information about the organization. Chapter three includes operating procedure of Trust Bank Limited. Chapter four includes performance evaluation of Trust Bank Limited and SWOT analysis. Chapter five includes Findings, Recommendation and conclusion. At the end of the report there are Bibliography and Appendix. Chapter Two

Organization Profile of Trust Bank Limited 2. 1 Back Ground of Trust Bank Limited Trust Bank Limited is a scheduled commercial bank established under the Bank Companies Act, 1991 and incorporated as a Public Limited Company under Companies Act, 1994 in Bangladesh on 17th June 1999 with the primary objective to carry on all kinds of banking businesses in and outside Bangladesh. Initially the bank has started its operation in the name of The Trust Bank Limited but on 12 November 2006 it was renamed as “Trust Bank Limited” by the Register of Joint Stock Companies.

The new name of the bank was approved by Bangladesh Bank on 03 December 2006. Trust Bank Limited offers full range of banking services that include deposit banking, loans and advance, export, import and financing national and international remittances etc. Presently the bank is owned by the Army Welfare Trust of the country. It holds 99. 99% shares and the rest (i. e. .01%) is held by the Board members of the bank who are senior army personal by virtue of Army Welfare trust’s mandate. Therefore the shareholding at present is highly concentrated.

However with the flotation of the shares to the public, the shareholding pattern has been diluted with public participation. Recently the bank has launched its Islamic banking Operation in few of their big branches. 2. 2 Vision The vision of Trust Bank Limited is to provide financial services to meet customer expectations so that customers feel we are always there when they need us, and can refer us to their friends with confidence. We want to be a preferred bank of choice with a distinctive identity. 2. 3 Mission

The mission of Trust Bank Limited Mission is to make banking easy for our customers by implementing one-stop service concept and provide innovative and attractive products and services through our technology and qualified human resources. We always look out to benefit the local community through supporting entrepreneurship, social responsibility and economic development of the country. 2. 4 Branch Network The Branch network of Trust Bank Limited is quite strong. With an age of only ten years, the bank is now having a network of 41 branches across Bangladesh as on July 31, 2009.

With this growth pattern, total umber of branches is expected to reach 71 by the year 2011. These branches are situated at various strategically important commercial and industrial locations in the country. Among these braches ? 11 branches are in Dhaka, ? 7 branches in Chittagong, ? 5 branches in Sylhet, ? 1 branch in Sirajgongj ? 1 branch in Khulna ? 1 branch in Feni ? 1 branch in Narshingdi ? 1 branch in Ashuganj, Bramhanbaria And one branch each at the cantonment areas of ? Chittagong, Sylhet, Comilla, Bogra, Rangpur, Jessore, Momenshahi, Savar and Ghatail.

The above branch network is expected to be sufficient to maintain required growth rate of the bank. 2. 5 Islami Banking Trust Islami Banking (TIB) started its operation from later part of 2008 involving killed resource and strictly adhering to the pimples of shariah under the guidance of council the bank. All the products developed under TIB is thoroughly reviewed and approved by the shariah council of the bank which ensures the shariah compliances of such products and calculation. 2. 5. 1 Deposit Products • [pic]Al-Wadiah Current Account • Al-Wadiah Term Deposit Mudaraba Savings Account • Mudaraba Term Deposit Profits on the deposit are initially paid at a provisional rate 2. 5. 2 Loan and Investment •  Home Loan • Car Loan • Qard Scheme 2. 6 Merchant Banking Trust bank started its Merchant Banking operation from May 10, 2008 under appropriate risk management policies and guidelines approved by the board. The division organizes “Investor Awareness Program” on regular basis. It has established a highly decorated and technology based trading facilities for the convenience of the customer in its own premises through enlisted brokerage firms.

However the bank has planned for building capacities in terms of product development, human capital, managing information and research with a view to providing better services in future. Chapter Three Operating Procedure of Trust Bank Limited 3. Operating Procedure Operating procedure of Trust Bank Limited includes the following • A/C opening Department • FDR department • Remittance • FCAD • Clearing • Cash • Credit • Foreign Exchange A/C openings Department, FDR department, Remittance, FCAD, Clearing Cash departments are part of general banking. General banking department is the heart of all banking activities.

This is the busiest and important department of a branch. 3. 1 Account Opening Department This section deals with opening different types of accounts. It also deals with issuing of cheque book and different accounts opener. A customer can open different types of accounts through this department. To establish a banker and customer relationship account opening is the first step. Opening of an account binds the banker and customer into contractual relationship. But selection of customer for opening an account is very crucial for a bank. Indeed fraud and forgery of all kinds start by opening account.

Therefore, the bank takes extremely caution measure in its selection of customers. 3. 1. 1 Types of Accounts Current Deposit Account: Current deposit account is the net flow of current transactions with no restriction, including services and interest payments. It is an easy-to-use, convenient current account with instant access and withdrawals to your money anywhere in Bangladesh. Saving Bank Account: A Saving Bank account (SB account) is meant to promote the habit of saving among the people. It also facilitates safekeeping of money. In this scheme fund is allowed to be withdrawn whenever required, without any condition.

Hence a savings account is a safe, convenient and affordable way to save your money. Bank also pays client a minimal interest for keeping your money with them. Short term Deposits Accounts: Short Term Deposit Account is the net flow of current transactions including services and interest payments. It is an easy-to-use, convenient current account with instant access and withdrawals to client’s money anywhere in Bangladesh. Trust Smart Savers Scheme: Trust Smart Savers Scheme (TSSS) and an Account holder subscribing to this scheme will be called TSSS Account holder. The following table provides the information about TSSS. Amount |3 years |5 years |7 years |10 years | |500 |20,316 |36,717 |55,851 |90,691 | |1,000 |40,632 |73,434 |111,702 |181,383 | |2,000 |81,264 |146868 |223,403 |362,766 | |3,000 |121,897 220,303 |335,105 |544,149 | |4,000 |162,529 |293,737 |446,806 |725,532 | |5,000 |203,161 |367,171 |558,508 |906,914 | Trust Money Double Scheme: The objective of this scheme is to double the deposited amount. Trust Educare Scheme: Students who are eligible to receive refunds from Bank are encouraged to enroll in this deposit.

Monthly Benefit Deposit Schemes: The benefit of the scheme will be paid on monthly basis. As such this is called Monthly Benefit Deposit Scheme (MBDS). Lakhopati Savings Schemes: At the maturity the depositor will get TK. 1. 00 Lac by the depositing monthly installment. 3. 1. 2 Functions of Account Opening Department This department provides lot of services which are as follows: • Opening various types of accounts such as savings Account, Current account and trust smart savers scheme etc. • Customer service to provide their account information includes balance information • Provide bank statement Provide bank solvency or bank certificate • Provide cheque book • Closing account • Transfer account • Opening SMS banking services • Phone banking services • Online banking services • ATM banking services • Debit and Credit Card service • Giving Stop payment service Instruction 3. 1. 3 Requirement of Opening an Account To open a savings, current, STD account, the following documents are mandatory: Individual account: ? Two copies of passport size photograph of the clients(attested by introducer or verified with passport) ?

Passport /Nationality Certificate /Employers certificate of the Proprietor/Individual persons and nominee ? Customer profile ? Transaction profile ? Photograph of the nominee attested by the account holder ? TIN certificate Joint Account: ? Passport /Nationality Certificate /Employers certificate of the Proprietor ? Customer profile ? Transaction profile ? Photograph of the nominee attested by the account holder ? TIN certificate ? relationship between the accountholder ? Purpose of opening the joint account Proprietorship Account: Two copies of passport size photograph of the clients(attested by introducer or verified with passport) ? Passport /Nationality Certificate /Employers certificate of the Proprietor/A/C holder and nominee ? Customer profile ? Transaction profile ? Photograph of the nominee attested by the account holder ? TIN certificate ? Trade license ? VAT registration Company account: Private and Public ltd Company: ? Introduction ? Board resolution of the company regarding opening and operation of the account ? Attested or certified copy of the memorandum and articles of association ?

Certificate of incorporation ? Two copies of passport size photograph of all directors ? Passport /Nationality Certificate/voter ID of all the directors ? TIN certificate ? Trade license ? Photocopy of vat certificate ? Photocopy of TIN and up to date TAX clearance certificate ? Transaction profile ? List of directors ? Rubber stamp seal of he firm ? Personal profile of all directors as per enclosed sheet in the company’s letterhead pad Minor’s Account: ? Putting the word ”minor” after the little of the account(with red color) ? Recording of the special instruction of operation of the account ?

The AOF is to be filled in and signed by either partner or the legal guardian appointed by the court law and not by the minor Private school/college/madrasa: ? Attested or certificate copy of the constitution ? Registration certificate ? List of all executive members(as per enclosed member) ? Two copies of passport size photograph of the clients(attested by introducer or verified with passport) ? Personal profile of all members of the governing body and managing committee ? Board resolution regarding opening and operation of the account. NGO/Club society/Co operative Account: Registration certificate from the joint stock company/ministry f social welfare ? List of all executive members(as per enclosed member) ? Board resolution as per memorandum regarding opening and operation of the account ? Two copies of passport size photograph of the clients(attested by introducer or verified with passport) ? Passport /Nationality Certificate/voter ID of all the directors ? Profile of the firm ? No objection certificate from the ministry of social welfare. 3. 2 FDR Department These are deposits, which are made with the bank for a fixed period, specified in advance.

The bank need not maintain cash reserves against these deposits and therefore, the bank offers higher of interest on such deposits. The products handled by this department are given below: 3. 2. 1 Fixed Deposit Receipt (FDR) This is opened for a fixed period. The interest rate is fixed for this which is paid time to time. The rates vary based on the schemes. The bank provides 80% loan against this FDR. There is 10% tax on these interest earnings. The minimum period is one months and maximum has no limit. After maturity, the customer gets the interest and principal back.

If FDR holder dies the family member must submit the following documents: • Succession certificate • Death certificate In case of joint FDR the survivor will get the amount or the persons name in favoring. The FDR account will be renewed automatically on the maturity date. The renewed period shall be prevailing rate for fixed deposit. A receipt is given to the applicant after opening FDR that is needed to be shown at the maturity. If the customer lost the receipt hen he has to make application to the bank by filling up an indemnity bond. For this the bank charges Tk 25.

In indemnity bond the reason for loosing FDR receipt shall be stated in detail Stamp of tk 1501 is needed in this case. The bank has to maintain these indemnity bonds with care in a safe custody or vault. After payment at maturity period, the FDR account is closed. After the maturity FDR receipt and FDR form are attached together and on the front page of the FDR form bank authority writes “Close of FDR account “and gives the entry in the ledger. 3. 2. 2 Sanchaya Patra (Sp) Shanchaya patra is one types of deposit of a customer which is received from Bangladesh Bank.

Payment of this sanchaya patra is made on maturity to customers from this branch only. Every transaction is reported to BB within 48 hours, otherwise penalty is imposed . Money is realized after making payment to customer. Sanchaya patra paid as coupon system. Interest rate is 12%. TRUST BANK LIMITED mainly provides the following three types of sanchaya patra: 5 years Bangladesh sanchaya patra (5bsp): Duration of this sanchaya patra is 5 years. Any person who purchases this can withdraw her/his interest only after 5 years at the time of maturity along with principal. • Individual can by this sanchaya patra up to 0 lac Jointly can buy up to 1 crore 3Months profit based sanchaya patra: In this sanchaya patra purchaser can withdraw her/his interest every month but the capital is paid at the maturity. Individual can by this sanchaya patra up to 50 lac and jointly can buy up to 1 crore. Interest rate is 11. 5% and the holder will get 4 coupons yearly and total coupon is 20. After every three moths 2875tk will be given against 1 lac tk. Pensioner’s sanchaya patra: Duration of this sanchaya patra is 5 years and the holder can withdraw interest after every three months but the capital can be withdrawn after the maturity period.

Single individual can but this up to 30 lac. Only government employee can open this and the interest rate is 12. 50%. After every three moths 3125 tk will be given against 1 lac tk. Total number of coupon is 20 If any SP holder withdraw the money before maturity at that time holder will not get any interest. In that case they have to pay some charges such as closing charge, excess duty etc. 3. 3 Remittance Carrying cash money is troublesome and risky. That’s why money can be transferred from one place to another through banking channel. This is called remittance.

Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers. Types of remittance ? Between banks and non banks customer ? Between banks in the same country ? Between banks in the different centers. ? Between banks and central bank in the same country ? Between central bank of different customers The instruments used by Trust Bank Limited for remittance of funds are • Demand draft(DD) • Telegraphic transfer • Pay order • Fund transfer/money transfer 3. 3. 1 Demand Draft (DD)

According to section 85(A) of the negotiable instrument Act, A Demand Draft is “An order to pay money drawn by one branch of the bank upon other branch of the sane bank for a sum of money payable to order on demand”. DD is done to send money out side the clearing zone. To get a demand draft customer has to the following things- • Fill up an application form • The form contains date, name ,address , phone number, signature of the applicant • Cheque number( if cheque is given for issuing DD) • Draft number • Name of the payee • Name of the drawee branch • Amount of DD in word and number The form will be signed by the authorized officer • Total amount should e deposited by the party in cash or cheque as per arrangement 3. 3. 2 Telegraphic Transfer (TT) It is the quickest method of transferring funds from one place to another place. It is an order from the issuing branch to the drawee branch to pay a certain amount of money t o the beneficiary. The payment instruction is sent through telephone and funds are paid to the beneficiary through his account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch.

No charge is required for TT. TT application form is to be filled by remitter and is verified by the officials . Money received in cash or by debiting remitters account with commission and telephone charges. The messages are passed immediately through telephone, telex by TRUST BANK LIMITED for confirmation. 3. 3. 3 Pay order To send a pay order client need to fill up a form. Who does not have account with the bank need to fill up another form and for this TRUST BANK LIMITED charges 58 tk including vat for any amount. This is issued to send money only in the clearing zone.

The payment of this instrument is made through clearing while payment relative entry is given in the pay order register with date of payment. 3. 3. 4 Fund transfer/money transfer This transfer is made through account not in cash. Transfer sill is attach to the deposit slip and posted the transfer balance the desired account. Now this type of fund transfer is done through online. 3. 4 Cash Department Banks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by cheque, etc.

But among the banking activities, cash department play an important role. It does the main function of a commercial bank i. e. receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it. The functions of a cash department are described bellow: Cash Payment • Cash payment is made only against cheque • This is the unique function of the banking system which is known as “payment on demand” • It makes payment only against its printed valid Cheque Cash Receipt It receives deposits from the depositors in form of cash • So it is the “mobilization unit” of the banking system • . It collects money only its receipts forms Cash packing After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial. Allocation of currency Before starting the banking hour all tellers give requisition of money through “Teller cash proof sheet”. The head teller writes the number of the packet denomination wise in “Reserve sheet” at the end of the day, all the notes remained are recorded in the sheet. . 5 Financial Control and Account Department (FCAD) It is very important department for every bank. It maintains any financial and account related matter. It operates the following function: • Maintain voucher preparation of general ledger and clean cash book • Maintain of sundry • Any suspense • Account of internal purpose • Inter batch transaction entry and posted to the branch account • Maintain employees salary • Maintain daily entertainment expense for branch • Collection voucher • Maintain debit and credit account Prepare monthly income statement of the branch • Monthly balance sheet of the branch • Monthly affairs of the branch and send it to the head office • Prepare the summary of any account profile as needed but must be in monthly • They check the initial of the concerned officer whom they get voucher • Maintain daily stationary expenses • Collect and accumulate IBCA and IBDA from different department and check • Checking the extract of branch for responding entries • Proper maintenance of stock of stationary Prepare daily weekly and monthly position and send this to head office • Prepare statement of affairs • Maintain fixed assets 3. 6 Clearing Department All instruments collected by Trust Bank Limited on behalf of their customer through the process clearing. DD,PO, Cheques of a bank comes from another bank within the range of particular zone it is sent for clearing through clearing house of Bangladesh bank and SKB branch has the Trust Bank Limited ‘s clearing house. The following three things are essential fir clearing department • Crossing seal collecting bank Endorsement seal collecting bank • Clearing seal collecting bank Clearing and collection transaction are handled in following ways: • Out ward clearing house: When any branch of trust bank receives a cheque to be collected from any other bank it sends the cheque to its collecting bank (SKB). Then the SKB branch sends it to BB and then it sends it to the respective bank for clearance. • Inward clearing house: When other bank sends the cheque to Trust Bank Limited for clearing Through clearing house. Outward bill collection: When SKB branch send any cheque drawn n another branch outside Dhaka city of Trust Bank Limited for collection on part of its account holder, then the procedure is OBC. • Inward bill collection: IBC is reverse procedure of OBC . If a cheque is sent to SKB drawn on SKB but deposited to another branch of Trust Bank Limited by another party collection than before sending to SKB branch they mention an OBC number, SKB writes another number against the OBC number known as IBC. Clearing house set 4 times a day these are First house: client and inter branch placed the cheques last day • Same day: In house day clients place it in cash and the amount is above 5 Lac and bank must be 100 feet with in the clearing bank. Then bank will send it BB to clear at same day • Same day return: When same day cheque return from the payable bank • First house return: When 1st house cheque return. 3. 7 Credit “Credit” it is a very similar word for the bank. It contents a huge meaning. A bank’s main earning source is credit. If bank’s credit management is not good then the bank will never ever achieve its proper goals.

Credit Department at Trust Bank Ltd deals with all customers directly at its branch. Credit is at centralized at Trust Bank Limited and so loan applicants have to submit relevant documents at the branch and receiving that supporting documents. Both retail and corporate loans are provided from this branch. 3. 7. 1 Types of Credit Modern banking operation touches almost every sphere of economic activity. The extension of bank credit is necessary for expansion of business operations. Bank credit is a catalyst bringing about economic about economic development.

Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of commercial and industrial activities of a nation. The credit facilities are generally allowed by the bank may be in two broad categories. They are as follows: 3. 7. 1. A. Funded Facilities Funded facilities can also be divided into the following categories Term Loans The term of loan is determined on the basis of gestation period of a project generation of income by the use of the loan. Such loans are provided for Farm Machinery, Dairy, Poultry, etc.

It is categorized in three segments: |Types of Term Loan |Time (Period) | |Short Term |1 to 3 years | |Medium Term |3 to 5 tears | |Long Term |Above 5 years | Over Draft (OD) OD is some kind of advance. In this case, the customer can over draw from his/her current account. There is a limit of overdraw, which is set by the bank. A customer can with draw that much amount of money from their account. For this there is a interest charge on the over draw amount.

This facility does not provide for every one, the bank will provide only those who will fulfill the requirement. It means that only real customer can get this kind of facility. Cash Credit (Hypo) It allows to individuals or firm for trading as well as whole-sale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending. It is a continuous credit. It allowed under two categories: 1. Commercial Lending 2. Working Capital Cash Credit (Pledge) Financial accommodation to individual/firm for trading as well as whole sale urpose or to industries as working capital against pledge of goods primary security falls under this head of advance. It also a continuous credit and like the above allowed under the categories: 1. Commercial Lending 2. Working Capital SOD (General) Advance allowed to individual/firm against financial obligation (i. e. lien of FDR/PS/BSP etc. ) and against assignment of work order for execution of contract works fall under this head. This advance is generally allowed for allowed for definite period and specific purpose. It is not a continuous credit. SOD (Imports)

Advances allowed for purchasing foreign currency for opening L/C for imports of goods fall under this type of leading. This is also an advance for a temporary period, which is known as preemptor finance and falls under the category ‘Commercial Lending’. PAD Payment made by the bank against lodgment of shipping documents of goods imported through L/C falls under this type head. It is an interim type of advance connected with import and is generally liquidated shortly against payments usually made by the party for retirements of documents for release of import goods from the customer authority. It falls under the category ‘Commercial Lending’.

LTR Advances allowed for retirement of shipping documents and release of goods imported through L/C without effective control over the goods delivered to the customer fall under this head. The goods are handed over the importer under trust with arrangement that sales proceed should be deposited to liquidate the advances within a given period. This is also temporary advance connected with import that is known post-import finance under category ‘Commercial lending’. IBP Payment made through purchase of inlands bill to meet urgent requirements of customer fall under this type of credit facility.

This temporary advance is adjusted from the proceeds of bills purchased for collection. It falls under the category ‘Commercial Lending’. FDBP Payment made to a party through purchase of foreign documentary bills fall under this head. This temporary advance is adjustable from the proceeds of negotiable shipping/export documents. It falls under category ‘Export Credit’. LDBP Payment made to a party through purchase of local documentary bills fall under this head. This temporary liability is adjustable from proceeds of the bill. Bank Guarantee The exporters pay of the imported goods on behalf of the importer through bank guarantee.

If the exporter fails to make the fulfill payment at the moment the bank will take the liability and pay to the exporter. This type of guarantee is also needed to attend in any tender. Micro Credit Loan has given only to the Army Person for the purpose of Repairing and Reconstruction of dwelling Houses. CDS A credit facility is available for Armed Forces officials (Major and above or equivalent Ranks and Status with minimum length 12 years of services). Car loan and Marriage loan are also included as CDS. [ HBL A credit facility is available for the retired Armed Forces officials. 3. 7. 1. B.

Non Funded Facilities Non funded facilities are divided into the following categories: Guarantee A credit facility in contingent liabilities from extended by the banks to their clients for participation in development work, likes supplies goods and services. Letter of Credit: A credit facility in contingent liabilities from provided to the clients by the banks for import/procurement of goods and services. 3. 7. 2 Steps in the Lending Process • Most bank loans to individuals arise from a direct request from a customer who approaches a member of the bank’s staff and asks to fill out a loan application.

Business can requests, on the other hand, often arise from contacts the bank’s loan officers and sales representatives make as they solicit new accounts from firms operating in the banks market area. Sometimes loan officers will call on the same company for months before the customer finally agrees to give the bank a try by filling out a loan application. • Once a customer decides to request a loan, an interview with a loan officer usually follows right away, giving the customer the opportunity to explain his or her credit needs.

That interview is particularly important because it provides an opportunity for the bank’s loan officer to assess the customer’s character and sincerity of purpose. • If a business or mortgage loan is applied for, a site visit is usually made by an officer of the bank to assess the customer’s location and the condition of the property and to ask clarifying questions. The loan officer may contact other creditors who have previously loaned money to this customer to see what their experience has been. If all is favorable to this point, the customer is asked to submit several crucial documents the bank needs in order to fully evaluate the loan request, including complete financial statements and, in the case of a corporation, board of directors’ resolutions authorizing the negotiation of a loan with the bank. Once all documents are on file, the credit analysis division of the bank conducts a thorough financial analysis of them aimed at determining whether the customer has sufficient cash flows and backup assets to repay the loan.

The credit analysis division then prepares a brief summary and recommendation, which goes to the loan committee for approval. • If the loan committee approves the customer’s request, the loan officer or the credit committee will usually check on the property or other assets to be pledged as collateral in order to ensure that the bank has immediate access to the collateral or can acquire title to the property involved if the loan agreement is defaulted. This is often referred to as perfecting the bank’s claim to collateral.

Once the loan officer and the bank’s loan committee are satisfied that both the loan and the proposed collateral are sound, the note and other documents that make up a loan agreement are prepared and are signed by all parties to the agreement. 3. 8 Foreign Exchange Foreign Exchange Department performs many functions to facilitate the foreign transactions. These are: • Facilitating Import Trade • Facilitating Export Trade • Provide Funded and Non-funded Credit Facility. • Maintaining Foreign Currency Accounts • Selling of Foreign Currency Bond etc The above mentioned functions are done by three sections namely: Import Section • Export Section • Foreign Remittance Section. SWIFT facility ensures effective communication between our bank and other local/ foreign banks. Especially for the Foreign Exchange Departments. 3. 8. 1Import operation Import is foreign goods and services purchased by consumers, firms and Governments in Bangladesh. An importer must have Import Registration Certificate (IRC) given by Chief Controller of Import and Exports (CCI and E) to import any thing from other country. To obtain IRC the following certificate are required i. Trade License ii. Income tax clearance certificate iii. Nationality certificate v. Bank’s solvency certificate v. Asset certificate vi. Registration partnership deed (if any) vii. Memorandum and article of association / certificate of incorporation (if any) viii. Rent receipt of the business premises ix. Certificate of incorporation (if any) Import Procedure To import through TRUST BANK LIMITED, a customer requires- i. Bank account ii. Import Registration Certificate iii. Tax Paying Identification Number iv. Pro-forma Invoice Indent v. Membership Certificate vi. LC Application form duly attested vii. One set of IMP Form viii. Insurance Cover note with money receipt ix. Others . 8. 2 Export operation A lot of formalities to be done by the exporter for export their goods with the help of different Government or Non Government organization and Banks . Bank helps exporter for this purpose. Bank advises the LC to the exporter. Here bank acts as an advising bank of the customer. Proper authentication of the LC is a primary duty of an advising bank. After receipt a request from the exporter for issuance of EXP form bank takes the original LC or contract form from the exporter and checks all terms and conditions of the LC or contract. Bank ensures that the exporters have the ERC.

After fulfillment the above processing, Bank certifies the full set of WXP form but before certification EXP form will be filled up and signed by the exporter. Then Bank received the shipping documents from the exporter. Finally, Bank reports all the export proceeds which are received during the month to the central bank 3. 8. 3 Remittance Remittance means sending or receiving an amount of money. It may be done through telegraphy transfer (TT), by mail transfer (MT), Payment order, Demand draft, Credit advice etc. The bank has been continuing to extend special importance to foreign remittance from the very beginning of its establishment.

With this view it has started business in inward foreign remittance with over seas remittance exchange house companies by establishing Drawing Agreement since December 2006 to meet up our internal foreign currency deficit as well as boost up foreign exchanges business. During the year 2008 the bank signed money transfer agreement with overseas exchange companies. As a result, remittance flow has increased significantly. In the year 2008 total amount of the flow of remittance was taka 5789 million as against taka 2612 million in 2007 registering an increase of 122% Chapter Four Performance Evaluation of Trust Bank Limited . Financial Performance Evaluation Trust Bank Limited is a blend of expertise and technological excellence is in place to meet varied needs of modern customers. The bank aims at mobilizing untapped money of the country and prudent deployment for productive activities. To evaluate the performance of the bank we analyze the components of financial statement. Compare some important component For the last five years and do some ratio analysis 4. 1 Analysis of Components of Financial Statements 4. 1. 1 Net profit after tax Net profit after tax measures performance of a bank . Growth of net profit after tax is 66. 8%, 212. 84%, 88. 93%, 191. 93% respectively. Figure 1: Net profit after tax [pic] The net profit after tax of Trust Bank Limited at the end of the year 2008 stood at 463. 05 million which is higher than last five years. We can see that in 2005 the net profit decreases at 121. 29 million after that it has an increasing trend 4. 1. 2 Total Assets Increase in assets is mainly driven by significant growth of deposits . Superiors customer service delivery at the branch level, expansion of the branch to the rural areas and foreign remittance flow has the significant contribution are main element for the higher deposits.

So we can state that the increase in asset of Trust Bank Limited is mainly driven by growth of customer deposits. The growth of deposits was used for finding growth in credit and investment. Figure 2: Total Assets [pic] Total assets of the bank stood at tk 38,475. 6 million from tk 30,382. 22 million in 2007 registering a growth of 26. 64%. The growth of total assets for the last four years is 22. 57%, 42. 47%, 44. 25%, 26. 63% respectively. 4. 1. 3 Shareholder’s Equity Total shareholder’s equity increased by 44. 81% and stood at tk 3,119. 65 million at the end of 2008 as against tk 2, 54. 29 million in 2007.

The increase was due to issue of bonus share for tk 256. 67 million (including premium) and also increase in statutory reserve. Statutory reserve increased by 197. 90 million. Figure 3: Shareholder’s equity [pic] This figure shows that shareholders equity was lowest in 2004 and highest in 2008 and it has an increasing trend. 4. 1. 4 Long term liabilities As the deposit is high the liabilities will automatically high and higher liabilities are good for the bank. On the other hand due to growth in deposits and borrowings from the Bangladesh bank the liabilities have gone up. Figure 4: Long term liabilities [pic] Total liabilities of the bank was highest in 2006. It falls in 2007 then it started to increase again in 2008 due to increase in deposits over the corresponding year. 4. 1. 5 Total Deposits The combination of competitive interest rates, depositor’s trust in the bank and mobilization efforts of the bank management resulted in the growth of deposits Figure 5: Total Deposits [pic] In the year 2008 deposits of the bank shot up to tk 32,919. 76 million from tk 27,101. 59 millions recorded in the year 2007. Total deposits has an increasing trend . The growth of deposits during this period is 21. 7%. the growth of deposit from year 2005 to 2007 is 36. 9%, 49. 43%, 42. 74% respectively. 4. 1. 6 Deposit Mix The bank evolved a number of attractive deposits schemes to cater to the reqirements of small and medium savers which also brought qualitative changes in deposits structure of the bank. The combination of competitive interest rates, depositors’ trust in the bank and mobilization efforts of the bank resulted in this growth of deposits. Efforts are a foot being made to further increase deposit base of the bank through promotion of business and exploring of potential scope.

Figure 6: Deposit Mix [pic] The deposit mix of the bank as on 31st december 2008 is sown by the above figure. 4. 1. 7 Loans and Advances Total loans and advances of the bank as on 31st December 2008 was taka 27528. 08 million as against taka 1862. 16 million in the year 2007, showing an increase by 47. 35%over the preceding year. The growth of loans and advances from the year3005 to 2007 is 43. 11%, 35. 42%, 41. 65%. It means that the corporate landing or investment is in increasing. It means Trust Bank Limited’s activities are aligned with the monetary policy of the government.

Normally loan and advances are financed from customers’ deposits and sometimes from capital fund of the bank. Loan and advance is high because the deposits are high. It measures a good performance for the bank. The credit portfolio of the bank is a mixture of scheme loans, namely –Renovation and Reconstruction of Dwelling House loan (RRDH), consumers durables schemes loan (CDS) Marriage loan car loan, HBF loan and commercial loan Commercial loans comprise trade financing in the form of working capital and industrial loans (both large and medium scale) with both funded and non funded credit facilities.

The portfolios has been further diversified to avoid risk of single industry concentration Figure 7: Loans and advances [pic] Loans and advance is highest in 2008 and lowest in 2004. 4. 1. 8 Investment The banks investment grew by taka 1177. 21 million during the year and stood at taka 4962. 66 million at the end of 2008 as against taka3785. 45 million in 2007. The growth of the investment is (23. 99) %, 27. 56%, 21. 21%, 31. 25% respectively. It proves that the bank purchased government treasury bills and treasury bonds to cover the increased requirement of SLR. Out of the otal investments, taka 759. 03 million was invested in listed and unlisted shares of different companies Figure 8: Investment [pic] Highest investment is made in 2008 and lowest investment was in 2005 4. 1. 9 Net Interest Income Net interest income registered a significant growth by 75. 56% over the last years figure. Interest from loans and advances remained the principal components of interest income. Interest paid on deposits is the main components of interest expenses. Figure 9: Net Interest Income [pic] The above grap explains that net interest income has an increasing trend . 4. 1. 0 Total operating expenses Total operating exenses increased by 58. 68% during he year mainly due to branch epansion and increase in number of employees. Increases in number of branches resulted in increase in business volume and increase in profi. Additional human resources had to be hored to suport business growth. 4. 2 Ratio Analysis To evaluate the performance of bank we do capital adequacy ratio , profitability ratio , credit quality ratio and liquidity ratio {{ 4. 2. 1 Capital Adequacy Ratio Capital ratio Capital l ratio measures a bank’s Capital Adequacy or financial stability.

As a general rule, the higher the ratio the more sounds the bank. A bank with a high capital-to-asset ratio is protected against operating losses more than a bank with a lower ratio, although this depends on the relative risk of loss at each bank. Figure 10: capital ratio [pic] Capital ratio was highest in 2008 and lowest in 2006 Tire 1 Capital Ratio Tire 1 capital ratio ( core capital ratio) represents the paid up ordinary share capital, share premium, statury reserve and retained earnings. As on december 31st 2008 the bank’s core capital stood at tk. 3045. 37 million against tk. 092. 89 million in 2007. Figure 11 : Tire -1 Capital Ratio [pic] The above graph explains that the tire 1 ration was highest in 2004 and lowest in 2006. Tire – II Capital Ratio Tire II Capital or supplementary capital represents asset revaluation reserve, general provision for loans and advances, preferrance sharecapital and othersubordinated dbt. At the close of business on 31st December 2008 the bank’s supplementary capital stood at tk 459. 07 million Figure 12: Tire II Capital Ratio [pic] The above grapth explain s that the ratio was highest in 2008 and lowest in 2006 4. 2. Operating Performance Ratio Return on Assets (ROA) It explains how much return bank gets from its assets. Return on assets was very good in 2004. But in 2005 it falls to 0 82%. But except year 2007 it was good. This indicates a good performance of the bank. As the income become lower the ROA become lower also. Figure 13: Return on Assets [pic] Return on assets ratio was highest in 2004 and lowest in 2997 Return on Equity(ROE) It explains how much returns bank gets from its equity. The return on equity was highest in 2006. After that it decreases. It is not good for the bank.

It means the income has gone down. So the bank should give more loans to increase its profit. Figure 14: Return on Equity [pic] Return on Investment(ROI) Return on investment is highest in 2008. But it was 5. 46% in 2004 . Then it decresed to 4. 95% after that it incresed in 2006 at 8. 42% but in 2007 it again decreased at 6. 31%. It shows that bank is trying to increase its return from investment by investing in different sectors. Figure 15 : Return on Investment [pic] Return on investment has an increasing trend 4. 2. 3 Profitability Ratio Earning Power

Demonstrated ability of a business to earn a profit on invested capital after paying owners and employees, servicing obligations, and fully recognizing its costs while following good accounting practices. A bank loan officer looks at a company’s ability to generate earnings as an important test of business risk when approving a loan application. Figure 16 : Earning Power [pic] The above grapth shows that earning power was highest in 2004 and lowest in 2006 Interest Margin(Total Assets) To measure the performance of a bank or any financial institution interest margin ratio is calculated.

Figure 17: Interest Margin(Total Asset) [pic] Interest margin ratio has an increasing trend Intereast Margin(Earning Asset) To measure the performance of a bank or any financial institution interest margin ratio(Earning Asset) is calculated. Figure 18: Interest Margin(Earning Asset) [pic] Intereast Marin (Earning Asset) also has an increasimg trend Profit Per Branch Profit per branch is very important to evaluate performance of a bank . This shows how the branches of a bank are operating and contributing to its performance Figure 19: Profit Per Branch [pic] 4. 2. 4 Liquidity Ratio Core Deporit to Asset

Figure 20 : Core Deposit to Asset Ratio [pic] The ratio was highest in 2008 and loest in 2004 Net loans to Deposit This ratio measures how much loans is disbursed agaisnt deposit. Figure 21 : Net loans to Deposit [pic] The ratio has an increasing trend Net loans to Asset Ratio The net loans to assets ratio measure the total loans outstanding as a percentage of total assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The higher the ratio, the more risky a bank may be to higher defaults. Figure 22 : Net Loans to Asset [pic] Net loans to asset was highest in 2004 and lowest in 2008.

As it has a decreasing trend so we can say that bank’s liquidity position has been increased and default risk is decreasing. 4. 2. 5 Others Earning Per Share This indicates the portion of the bank’s profit allocated to each outstanding share of the common stock. It fluctuates because of increase or decrease in net income after tax Figure 23: Earning Per Share [pic] It has no trend but it was highest in 2006 and lowest in 2004 Price Earnings Ratio (P/E) By dividing the price of one share in a company by the profits earned by the company per share, we arrive at the P/E ratio.

If earnings per share move proportionally with share prices the ratio stays the same. But if stock prices gain in value and earnings remain the same or go down, the P/E rises. The price earning ratio is same for the year 2007 and 2008. Figure 24: Price Earning Ratio [pic] Price Earnings Ratio is same for the last two years Debt to total Assets ratio The debt to total assets ratio is an indicator of financial leverage. The debt/asset ratio shows the proportion of a company’s assets which are financed through debt. If the ratio is less than one, most of the company’s assets are financed through equity.

If the ratio is greater than one, most of the company’s assets are financed through debt. Companies with high debt/asset ratios are said to be “highly leveraged,” and could be in danger if creditors start to demand repayment of debt. . Figure 25: Debt to Asset Ratio [pic] From the graph we can see that the debt to asset ratio has a decreasing trend which is a good sign for the company 4. 3. SWOT Analysis of Trust Bank Limited SWOT Analysis is an important tool for evaluating the companies Strengths, Weaknesses, Opportunities and Threats.

It helps the organization to identify how to evaluate its performance and can scan the macro environment, which is turn would help the organization to navigate in the Turbulence Ocean of competition. Following is given the SWOT analysis of The Trust Bank: Strengths 1. Top Management The top management of the bank, the key strength for The Trust Bank has contributed heavily towards the growth and development of the bank. The top management officials are army’s highest position holder, so they have a good idea about the current situation. 2.

Company Reputation The Trust Bank has created a good reputation in the banking industry of the country. Their main customers are army persons. The popularity of this bank is increase day by day also in the general public area. 3. Sponsors The Trust Bank has founded by The Army Welfare Trust. The main sponsor for this bank is Sena Kalyan Sangstha. The chairperson of this bank is Chief of Army Staff and directors are also appointed by the sangstha, that’s why the sponsor does not have any problem for the fund. 4. Modern Facilities and Computer

From the very beginning The Trust Bank tries to furnish their work surroundings with modern equipment and facilities for speedy service to the customer. 5. Stirring Branches From the formative stage of The Trust Bank tried to furnish their branches by the impressive style. Their well-decorated branches gets attention of the potential customer, this is one kind of positioning strategy. The Sena Kalyan Bhaban Branch is also impressive and is comparable of foreign banks. 6. Interactive Corporate Culture The corporate culture of The Trust Bank is very much interactive compare to other local organization.

This interactive environment encourages the employee to work attentively. Science the banking jobs is very much routine work oriented and lovely environment boots up the work capability of the employees. Weaknesses 1. Hierarchy Problem The hierarchy problem treated as a weakness for The Trust Bank, because the employee will not stay for a long. So there will be a chance of brain drain from this bank to other bank. 2. Advertisement Problem There is another weakness for The Trust Bank is advertisement. Their media coverage is so much low that people do not know the bank thoroughly. . Branch Network Branch network of Trust bank Limited is too small comparing to other private commercial banks. Opportunities 1. Diversification The Trust Bank can pursue diversification strategy in expanding its current line of business. They do not serve not only the army but also the general people. 2. Business Banking The investment potential of Bangladesh is foreign investors. So TRUST BANK LIMITED has opportunity to expand in business banking. Threats Increased competition: Increased competition from other private banks is a threat to Trust bank

Switch of Customer: As branch network of TBL is too small so customers are not getting facilities from their nearest place so they may switch the bank and it is a threat to the bank. Chapter Five Findings, Recommendation and Conclusion 5. 1 Findings Based on the analysis following problem are found: • Media coverage of Trust Bank Limited is so much low that people do not know the bank thoroughly • The hierarchy problem treated as a big problem for The Trust Bank, because the employee will not stay for a long. [ • Return on equity and return on assets are not following an increasing trend.

There are many fluctuations. • The competitors of Trust Bank Limited are very efficient and within a short time they are growing up. For that reason Trust Bank Limited must give attention on this matter. • Sometimes SWIFT machine creates problem to log on and the statement of proceed and SWIFT message does not come on time and at that day it becomes late for proceed realization. • Trust Bank Limited does not maintain any aggressive marketing activities. Promotional activities are very much lower than the other bank. • ATM booth for Trust Bank Limited is too low comparing to other competitive banks. Lacking of manpower in the recovery department and employees are needed some strategic planning procedures for recovery 5. 2 Recommendation For the improvement of their performance and remove the problem the following recommendation are provided for The Trust Bank Ltd: • They have to explore their name to the people that every one can know about The Trust Bank . So that they need vast advertising. Thus they can remove their name conflict. • Trust Bank Limited must concentrate on products and services because the competitors are growing fast in the market. Should increase the number of ATM booth • Trust Bank Limited should open more new branches to satisfy its customer and to grab new • Bank should try to increase its net income for this reason The bank should give more loans to increase its profit • Trust Bank Limited should recruit more employees at that place it has lacking of manpower. • Trust Bank Limited need to allow some selective clients to enjoy some flexibility. Flexibility indicates providing some advantages to the client beyond the regulation. • Motivation must be increased by the management to the employee. 5. 3 Conclusion

Finally, we can say that Trust Bank Limited is set to take off with its new and innovative modern banking facilities within very short period of time. The analysis shows that at recent time Trust Bank Limited does not have best quality in the entire sector. It can modify its operation by simply changing to increase its value in the market. On the other hand it is also true that not all the organization is perfect, everything has its own limit. In this age of global recession, and most of the private banks in Bangladesh have been bale to sustain shocks and are looking for the further expansion of services.

Considering the recent performance and its operating activities the future of this bank will be brighter. We hope that this bank will compete with the first class bank of Bangladesh very soon. Bibliography • Annual Reports of the Trust Bank Limited • Brochures of the Trust Bank Limited • www. trustbank. com. bd • News papers Appendix-A Abbreviations • SOD = Secured Over Draft • PAD = Payment against Documents • LTR = Letter of Trust Receipts • IBP = Inland Bill Purchase • FDBP = Foreign Document Bill Purchase • LDBP = Local Document Bill Purchase • CDS = Consumer Durable Scheme • HBL = House Building Loan [pic][pic][pic]

December 12, 2017