Key Financial Forecasting of Trust Bank Limited

Key Financial Forecasting of Trust Bank Limited

1.0 LITERATURE REVIEW

Regression analysis is a statistical tool with the help of which we are in a position to estimate

(or predict) the unknown values of one variable from unknown values of another variable.

With the help of regression analysis we can find out the average probable change in one

variable given a certain amount of change in another. In fact it provides estimates of values of

the dependent variables from the values of independent variables. (S.P.Gupta , M.P.Gupta,

2003)

Time series analysis is the most popular method of business forecasting because it helps in

understanding of past behavior, it helps in planning future operations, it helps in evaluating

current accomplishments above all it facilitates comparison. ( S.P.Gupta, M.P.Gupta, 2003)

The basic objective of the study of trend is to predict the future behavior of the data. If a trend

can be determined, then the rate of change or progress can be ascertained and tentative

estimates concerning the future be made accordingly.

Mathematical methods of fitting trend are not foolproof – in fact, they can be a source of

some of the most serious errors that are made in statistical work. They should never be used

unless rigidly controlled by a separate logical analysis. Trend fitting depends upon the

judgment of the statistician, and a skillfully made freehand sketch may often be more

practical than a refined mathematical formula. (Riggleman, Frisbee, ).

The straight line trends indicate the increase or decrease of a time series at constant amount

but in many cases, straight line can not fit the data adequately. In such a case better

description of the time series can be attained by non-linear curve rather than straight line. The

methods of measuring non-linear trends are: graphic method, moving average method,

second degree polynomial equation method and so on. . ( S.P.Gupta, M.P.Gupta: 2003).

Moreover, the trends discussed so far were plotted on arithmetic scales. Trends may also be

plotted on semi-log chart in the form of straight line or a non-linear. The types of trend

usually computed by logarithms are: exponential trends, and growth curves. However based

on the trend/regression type (exponential, linear, logarithmic, polynomial, power, moving

average) polynomial fits better because it is a measure of how well the data fits the trend line:

the closer to one the better the fit. A trend line is most reliable when its R2 value, known as

the correlation coefficient, is at or near 1. The reason for adoption of this polynomial

regression is that this trend analysis is done with single dependent variable and single

independent variable whereas the year is taken as the independent variable which actually

does not have or have insignificant influence on dependent variable.

Basically, trend line polynomial regression has been applied for processing of data and

developing the trend equation on the last five years key financial data with the help of

Microsoft Excel application.

2.0 OBJECTIVES OF THE STUDY

The objectives of the study are to:

Make a bridge between past and future performance of Trust Bank Ltd.

Forecast future performance based on the past performance of Trust Bank Ltd.

Analyze the past growth to predict the future growth of Trust Bank Ltd.

Identifying present strengths and weaknesses and future opportunities and threats.

Provide better insight of the Trust Bank Ltd.

3.0 RESEARCH METHODOLOGY

This is a quantitative analysis based on some key financial data of Trust Bank Limited. For

trend analysis and forecasting, secondary data have been collected from published annual

report of Trust Bank Limited for the year 2009. Last five years data have taken into

consideration for forecasting financial performance of the year 2010 and 2011. For ease, the

year 2005, 2006, 2007, 2008, 2009, 2010 and 2011 has taken as year 1, 2, 3, 4, 5, 6 and 7

respectively in a timeline. For processing of data and developing the trend equation and trend

line polynomial regression has been applied on the last five years key financial data with the

help of Microsoft Excel application. The reason for adoption of this polynomial regression is

that this trend analysis is done with single dependent variable and single independent variable

whereas the year is taken as the independent variable which actually does not have or have

insignificant influence on dependent variable. As a result it works better than linear

regression, logarithm regression, power regression, exponential regression and moving

average regression. Moreover, a trend line is most reliable when its R2 value, known as the

correlation coefficient, is at or near 1. It is a measure of how well the data fits the trend line:

the closer to one the better the fit. In this paper, polynomial showed highest R-squared

compared with other trend regression. With each equation formulated from the polynomial

regression, 2010 and 2011 value has been forecasted putting the value of year.

4.0 LIMITATIONS OF THE STUDY

While going for forecasting, some limitations arise. These are:

Forecasting may be far away of the reality of the market.

Forecasted value is derived from analyzing trend where year has been taken as

independent variable, but year can not be independent variable or does not have direct

impact on financial performance. There are some other micro and macro factors

which may influence the result.

Corporate tax rate is assumed to be same.

Government policy, export-import policy may not be same in the future.

5.0 BANKING SECTORS IN BANGLADESH

5.1 INTRODUCTION

The Jews in Jerusalem introduced a kind of banking in the form of money lending before the

birth of Christ. The word 'bank' was probably derived from the word 'bench' as during ancient

time Jews used to do money -lending business sitting on long benches.

First modern banking was introduced in 1668 in Stockholm as 'Svingss Pis Bank' which

opened up a new era of banking activities throughout the European Mainland.

In the South Asian region, early banking system was introduced by the Afghan traders

popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afghanistan came to

India and started money lending business in exchange of interest sometime in 1312 A.D.

They were known as 'Kabuliwallas'.

5.2 NUMBER AND TYPES OF BANKS

The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are

Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign

banks and the rest five are Development Financial Institutions (DFIs).

Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones.

Among the 12 foreign banks, Standard Chartered has become the largest in the country.

Besides the scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP Bank,

Karmasansthan (Employment) Bank and Grameen bank are functioning in the financial

sector. The number of total branches of all scheduled banks is 6,038 as of June 2000. Of the

branches, 39.95 per cent (2,412) are located in the urban areas and 60.05 per cent (3,626) in

the rural areas. Of the branches NCBs hold 3,616, private commercial banks 1,214, foreign

banks 31 and specialized banks 1,177.

Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now

carrying out a reform program to ensure quality services by the banks.

5.3 BANGLADESH BANK

Bangladesh Bank (BB) has been working as the central bank since the country's

independence. Its prime jobs include issuing of currency, maintaining foreign exchange

reserve and providing transaction facilities of all public monetary matters. BB is also

Bangladesh Bank (BB) has been working as the central bank since the country's

independence. Its prime jobs include issuing of currency, maintaining foreign exchange

reserve and providing transaction facilities of all public monetary matters. BB is also

responsible for planning the government's monetary policy and implementing it thereby.

The BB has a governing body comprising of nine members with the Governor as its chief.

Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and

one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal.

5.4 BANK-LICENSING

Bank Company Act, 1991, empowers BB to issue licenses to carry out banking business in

Bangladesh. Pursuant to section 31 of the Act, before granting a license, BB needs to be

satisfied that the following conditions are fulfilled: "that the company is or will be in a

position to pay its present or future depositors in full as their claims accrue; that the affairs

of the company are not being or are not likely to be conducted in a manner detrimental to the

interest of its present and future depositors; that, in the case of a company incorporated

outside Bangladesh, the Government or law of the country in which it is incorporated

Bangladesh as the Government or law of Bangladesh grants to banking companies

incorporated outside Bangladesh and that the company complies with all applicable

provisions of Bank Companies Act, 1991."Licenses may be cancelled if the bank fails to

comply with above provisions or ceases to carry on banking business in Bangladesh.

5.5 CENTRAL BANK AND ITS POLICIES

Bangladesh Bank (BB), as the central bank, has legal authority to supervise and regulate all

banks and non-bank financial institutions. It performs the traditional central banking roles of

note issuance and of being the banker to the government and banks. Given some broad policy

goals and objectives, it formulates and implements monetary policy manages foreign

exchange reserves and lays down prudential regulations and conduct monitoring thereof as

they apply to the entire banking system. Its prudential regulations include, among others:

minimum capital requirements, limits on loan concentration and insider borrowing and

guidelines for asset classification and income recognition. The Bangladesh Bank has the

power to impose penalties for non-compliance and also to intervene in the management of a

bank if serious problem arise. It also has the delegated authority of issuing policy directives

regarding the foreign exchange regime.

5.6 CAPITAL ADEQUACY OF THE BANKS

With a view to strengthening the capital base of banks and making them prepare for the

implementation of Basel-II Accord, banks are required to maintain Capital to Risk-Weighted

Assets ratio 10% at the minimum with core capital not less than 5% effective from December

31, 2007. However, minimum capital requirement (paid up capital and statutory reserve) for

all banks will be Tk.200 corer as per Bank Company (Amendment) Ordinance, 2007. Banks

having capital shortfall will have to meet at least 50% of the shortfall by June, 2008 and the

rest by June, 2009. Revaluation reserves of held to maturity (HTM) securities (up to 50% of

the revaluation reserves) has been added to the components of supplementary capital.

Besides, 'Hedging the price risk of commodity transactions' has been included in Short-term

self liquidating trade related contingencies.

5.7 SERVICES OF BANKS

5.7.1 ACCOUNTS, CURRENT, FDR, PDS, DEPOSIT SCHEME

Current Account: Generally this sort of account opens for business purpose. Customers can

withdraw money once or more against their deposit. No interest can be paid to the customers

in this account. If the amount of deposit is below taka 1,000 on an average the bank has

authority to cut taka 50 from each account as incidental charge after every six months.

Against this account loan facility can be ensured. Usually one can open this account with taka

500. One can open this sort of account through cash or check/bill. All the banks follow

almost the same rules for opening current account.

5.7.2 SAVINGS BANK ACCOUNT

Usually customers open this sort of account at a low interest for only security. This is also an

initiative to create people's savings tendency. Generally, this account is to be opened at taka

100. Interest is to be paid in June and December after every six months. If money is

withdrawn twice a week or more than taka 10,000 is withdrawn (if 25% more compared to

total deposit) then interest is not paid. This account guarantees loan. Almost all the banks

follow the same rules in the field of savings account, except foreign banks for varying

deposit. On an average, all the Banks give around six percent interest.

5.7.3 INTERNET-BANKING

Customers need an Internet access service. As an Internet Banking customer, he will be given

a specific user ID and a confident password. The customer can then view his account

balances online. It is the industry-standard method used to protect communications over the

Internet. To ensure that customers' personal data cannot be accessed by anyone but them, all

reporting information has been secured using Version and Secure Sockets Layer (SSL).

5.7.4 HOME-BANKING

Home banking frees customers of visiting branches and most transactions will be automated

to enable them to check their account activities transfer fund and to open L/C sitting in their

own desk with the help of a PC and a telephone.

5.7.5 ELECTRONIC BANKING SERVICES FOR WINDOWS (EBSW)

Electronic Banking Service for Windows (EBSW) provides a full range of reporting

capabilities, and a comprehensive range of transaction initiation options. The customers will

be able to process all payments as well as initiate L/Cs and amendments, through EBSW.

They will be able to view the balances of all accounts, whether with Standard Chartered or

with any other banks using SWIFT. Additionally, transactions may be approved by remote

authorization even if the approver is out of station.

5.7.6 AUTOMATED TELLER MACHINE (ATM)

Automated Teller Machine (ATM), a new concept in modern banking, has already been

introduced to facilitate subscribers 24 hour cash access through a plastic card. The network of

ATM installations will be adequately extended to enable customers to non-branch banking

beyond banking.

5.7.7 TELE-BANKING

Tele Banking allows customers to get access into their respective banking information 24

hours a day. Subscribers can update themselves by making a phone call. They can transfer

any amount of deposit to other accounts irrespective of location either from home or, office.

5.7.8 SWIFT

SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial

community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and

Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an

average 4 million message daily and estimated average value of payment messages is USD 2

trillion.

SWIFT is a highly secured messaging network enables Banks to send and receive Fund

Transfer, L/C related and other free format messages to and from any banks active in the

network.

Having SWIFT facility, Bank will be able to serve its customers more profitable by providing

L/C, Payment and other messages efficiently and with utmost security. Especially it will be of

great help for our clients dealing with Imports, Exports and Remittances etc.

6.0 BANKING SECTORS IN 2009

6.1 CASH RESERVE RATIO (CRR)

Cash reserve ratio (CRR) for the scheduled Banks with Bangladesh Bank remained same at 5 percent of their total demand and time liabilities since October 1, 2005. That is, banks are required to maintain CRR daily at the rate of 5 percent on average on bi-weekly basis, provided that CRR would not be less than 4.5 percent in any day with effect from March 01, 2009.

6.2 STATUTORY LIQUIDITY REQUIREMENT (SLR)

Statutory liquidity requirement (SLR) for the scheduled banks, except banks operating under Islamic Shariah and the specialized banks, remained same at 18 percent for their total demand and time liabilities, excluding inter-bank items, since October 01, 2005. SLR for the Islamic banks remained unchanged at 10 percent.

6.3 NON-PERFORMING LOAN (NPL)The ratio of gross NPL to total loans of the banking sector decreased from 11.1 percent

during end Q3FY09 to 10.5 percent in end Q4FY09. During the period, gross NPL ratio for

state-owned commercial banks (SCBs) decreased from 26.50 percent to 24.1 percent which

contributed significantly to decreasing overall ratio. The ratios for private commercial banks

(PCBs) and foreign Commercial banks (FCBs) increased marginally to 4.9 percent and 2.4

percent respectively, during end of Q4FY09 from 4.7 percent and 1.9 percent respectively at

the end of Q3FY09.For the state-owned banks (SBs), a proportionately similar rate of

decrease occurred, from 25.9 percent to 25.5 percent during the period. On the other hand, the

net NPL ratio for all banks decreased from 3.0 percent in Q3FY09 to 2.5 percent in Q4FY09

contributed by sharp decline in the ratio for SCBs from 7.2 percent to 3 percent.

6.4 INTEREST RATE SPREAD

During end Q4FY09, the interest rate spread (IRS) stood at 4.86 percent for all banks

marginally higher than 4.81 in end Q3FY09. During Q4FY09, both deposit and lending

interest rates decreased from 7.52 percent and 12.33 percent in Q3FY09 to 7.01 percent and

11.87 percent respectively. However, IRS decreased from 9.48 percent to 9.14 percent for

FCBs and from 3.63 percent to 3.40 percent for SCBs while the same increased from 4.58

percent to 4.81 percent for PCBs; and marginally from 2.99 percent to 3.01 percent for SBs.

The IRS in the banking sector

of major South Asian countries shows that Pakistan has the highest spread rate followed by

Bangladesh, India and Sri Lanka.

6.5 LIQUIDITY POSITION OF THE SCHEDULED BANKS

Excess liquidity of scheduled banks stood at Tk.35 billion as of end June 2009 as against

Tk.13 billion as of end June 2008. Total liquid assets of banks stood higher at Tk.78 billion as

of end June 2009 against at Tk.48 billion as of end June 2008.

6.6 CONCLUDING REMARKS

From aforementioned domestic and international factors, it may be concluded that FY 2009

was not much business friendly especially for financial institutions like a commercial bank.

Entrepreneurs have been shaken by international crisis and less confidence on market barred

them to make rigorous investment. However, Bangladesh Bank pursued growth supportive

and prudent monetary policy stance during FY09 to support credit growth for creation and

expansion of production capacity of real sector.

7.0 TRUST BANK LIMITED

7.1 HISTORY

Trust Bank Limited, sponsored by the Army Welfare Trust (AWT), is first of its kind in the

country. With a wide range of modern corporate and consumer financial products Trust Bank

has been operating in Bangladesh since 1999 and has achieved public confidence as a sound

and stable bank. Trust Bank Limited is one of the leading private commercial bank having a

spread network of 45 branches and 5 SME center across Bangladesh and plans to open few

more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and

other areas in 2010.

7.2 MENTIONABLE ACTIVITIES

In 2001, the bank introduced automated branch banking system to increase efficiency and

improve customer service. In the year 2005, the bank moved one step further and introduced

ATM services for its customers.

Since bank’s business volume increased over the years and the demands of the customers

enlarged in manifold, its technology has been upgraded to manage the growth of the bank and

meet the demands of its customers.

In January 2007, Trust Bank successfully launched Online Banking Services which facilitate

Any Branch Banking, ATM Banking, Phone Banking, SMS Banking, and Internet Banking to

all customers. Customers can now deposit or withdraw money from any Branch of Trust

Bank nationwide without needing to open multiple accounts in multiple Branches.

Via Online Services and Visa Electron (Debit Card), ATMs now allow customers to retrieve

24x7 hours Account information such as account balance checkup through mini-statements

and cash withdrawals.

Trust Bank has successfully introduced Visa Credit Cards to serve it’s existing and potential

valued customers. Credits cards can now be used at shops & restaurants all around

Bangladesh and even internationally.

Trust Bank is a customer oriented financial institution. It remains dedicated to meet up with

the ever growing expectations of the customer because at Trust Bank, customer is always at

the center

7.3 VISION

Trust Bank has an aim to provide financial services to meet customer expectations so that

customers feel Trust Bank is always there when they need us, and can refer us to their friends

with confidence. Trust Bank wants to be a preferred bank of choice with a distinctive

identity.

7.4 MISSION

Trust Bank has a mission is to make banking easy for its customers by implementing one-

stop service concept and provide innovative and attractive products & services through their

technology and qualified human resources. Trust Bank always looks out to benefit the local

community through supporting entrepreneurship, social responsibility and economic

development of the country.

7.5 OVERVIEW OF TRUST BANK LIMITED IN 2009

The year 2009 was challenging for all of TBL due to global economic crisis. In the early part

of the year, the global economy was in a severe recession inflicted by a massive financial

crisis and an acute loss of confidence. However, although TBL is not insulated, Bangladesh

economy was able to manage to ward off the global impact and maintained a commendable

resilience by registering 5.9 percent GDP Growth in FY 2008-09. FY2009-10 started its

journey at a time when lagged impact of the crisis, as apprehended, was becoming evident.

Hence, a lower growth target of 5.5-6.0 percent was fixed for FY 2009-10 in view of the

emerging challenge. Despite the challenges from crisis in the global economy and the shock

of crisis on domestic economy, Trust Bank recorded a solid year of performance in 2009. The

Bank, with untiring efforts and dedication of Board of Directors, Management and

Employees, recorded deposits of Taka 48,464.64 million and loans and advances of Taka

32,663.11 million in 2009, registering growth of 47 percent and 18.65 percent respectively

over preceding year. The operating performance of the Bank was also noteworthy showing

net profit after tax of Taka 610.91 million recording a growth of 32 percent over preceding

year. With opening of 5 new branches and 4 SME/Agri branches in 2009, network of Trust

Bank has widened to 42 branches and 4 SME/ Agri branches, spreading to both urban and

rural business strategic areas.

7.6 ACHIEVEMENTS IN 2009

The achievement of Trust Bank, in retail banking, merchant banking, Islamic banking, SME

financing in terms of growth and diversification was commendable in the year 2009.TBL has

achieved very impressive growth in foreign remittance. Total foreign remittance during the

year was Taka 8,669 million against Taka 5,789 million in 2008 registering a growth of 50

percent. The endeavor of TBL to boost up foreign remittance includes signing contract with

many world-renowned money transfer companies including Western Union, one of the

largest of its kinds. Trust Bank Ltd has also made strategic alliance with Shakti Foundation

for Disadvantaged Women, one of the largest MFIs for distribution of foreign remittance

remitted through Western Union. In 2009, the Bank entered into a new regime of banking

reform, i.e. Basel Capital Accord II. In line with the stipulations of Basel Capital Accord,

Bangladesh Bank has fixed up minimum paid up capital plus statutory reserve for scheduled

banks at Taka 4000 million, which must be attained by 11 August 2011. Bangladesh Bank

imposed a restriction on payment on cash dividend until the required minimum capital is

attained. The Board of Directors has drawn up road map to reach Taka 4000 million within

stipulated time. As part of the road map, the Board of Directors has recommended a moderate

20% bonus shares out of share premium, and balance if any, out of retained earnings for the

year 2009. Under the Basel II requirement, minimum paid up capital should be Taka 2000

million.TBL intends to maintain the paid up capital at this level or marginally over the

minimum requirement. This will help TBL give good dividend to the

shareholders in future. The Board of Directors, above many aspects, puts its emphasis on the

Bank to be a compliant organization in all its actions.

7.7 CORPORATE GOVERNANCE IN 2009

TBL says, you will agree with TBL that a compliant organization is less susceptible to

various risks emanating from internal and external shocks. Trust Bank Ltd does not

encourage making quick profit at the cost of compliance, integrity, and transparency in

management. TBL encourages earning a sustainable profit that will ensure strong position of

the Bank in the long run. To ensure compliance of applicable laws, rules, and regulations,

risk based audits are conducted depending on risk analysis of branches or divisions of Head

Office. Moreover, Board Audit Committee has an Auditor who reviews the internal audit

report and conducts audit in branches, if it is felt necessary. As you know, good corporate

governance system is vital for efficient and effective utilization of business resources,

business operation, long-term stability and sustainable growth for any organization. The

corporate governance system of the Bank has been designed to ensure transparency and

accountability at all levels in doing business. The Board provides leadership and direction for

the management, approves strategic and major policy decisions and oversees management to

attain goals and objectives of the Bank.

8.0 KEY FINANCIAL FORECASTING OF TRUST BANK LIMITED

This paper forecasts key financial performance of Trust Bank Limited from three major

aspects: (1) Key Operating Results, (2) Key Financial Position and (3) Other Business.

From key operating results aspect, total operating income, total operating expense, operating

profit. Provision for loans, investments and other, profit before tax and profit after tax have

further been studied for trend analysis and forecasting growth.

8.1 Total Operating Income

Total operating income comprises of net interest income, income from investments,

commissions, exchange and brokerage and other operating income. In 2009, total operating

income was Tk. 2,467.67 million compared to 2006.11 in 2008. Bank has experienced a

growth of 23% in total operating income. Last five years total operating profit is presented in

table 1. Polynomial regression has been applied on these data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Total Operating Income 511.46 844.19 1,328.66 2,006.11 2,467.67

Table 1: Five years total operating income

The formulated trend equation along with R-squared value is as follows:

y = 32.189x2 + 314.3x + 134.64

R2 = 0.9937

From the equation the following forecasted data (table 2) is calculated putting 6 and 7 for the

year 2010 and 2011 consecutively in the place of x:

(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Operating Income (Forecasted) 3,179.24 3,912.00

Table 2: Forecasted total operating income for year 2010 and 2011

The forecasted operating income shows a forecasted growth of 29% and 23% in 2010 and

2011 respectively. The trend analysis with the forecasted value for year 2010 (referred as 6 in

the graph) and 2011 (referred as 7 in the graph) is depicted in figure 1.

8.2 Total Operating Expense

In 2009, total operating expense was Tk. 1109.31 million compared to 753.67 in 2008. Bank

has experienced an increase of 47 % in total operating expense. Last five years total operating

expense is presented in table 3. Polynomial regression has been applied on these data to

formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Total Operating Expense 215.19 297.29 474.95 753.67 1,109.31

Table 3: Five years Total Operating Expense


y = 46.296x2 - 53.312x + 220.77

R2 = 0.9999



(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Operating Expense (Forecasted) 3,179.24 3,912.00

Table 4: Forecasted total operating expense for year 2010 and 2011

The forecasted operating expense shows an increase of 41% and 35% in 2010 and 2011

respectively. The trend analysis with the forecasted value for year 2010 (referred as 6 in the

graph) and 2011 (referred as 7 in the graph) is depicted in figure 2.

y = 46.29x2 - 53.31x + 220.7R² = 0.999

0

500

1000

1500

2000

2500

1 2 3 4 5 6 7

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Figure 2: Total Operating Expense Trend

Time (x)

Total Operating Expense

8.3 Operating Profit

In 2009, total operating profit was Tk. 1358.35 million compared to 1252.44 in 2008. Bank

has experienced a growth of 8 % in total operating profit. Last five years total operating profit

is presented in table 5. Polynomial regression has been applied on these data to formulate a

trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Operating Profit 296.27 546.9 853.71 1,252.44 1,358.35

Table 5: Five years Operating Profit


y = -14.109x2 + 367.62x - 86.136

R2 = 0.982



(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Operating Profit (Forecasted) 3,179.24 3,912.00

Table 6: Forecasted Operating Profit for year 2010 and 2011

The forecasted operating profit shows an increase of 19% and 11% in 2010 and 2011



y = -14.10x2 + 367.6x - 86.13R² = 0.982

0200400600800

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1 2 3 4 5 6 7

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Figure 3: Operating Profit Trend

Time (x)

Operating Profit

8.4 Provision for Loans, Investment and Other

In 2009, total provision for loans, investment and other was Tk. 207.78 million compared to

Tk. 262.97 in 2008. Bank has experienced a decrease of -21 % in total provision for loans,

investment and other .Last five years total provision for loans; investment and other are

presented in table 7. Polynomial regression has been applied on these data to formulate a

trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Provision for Loans, Investment and Other 69.98 39.2 273.94 262.97 207.78

Table 7: Five years Provision For Loans, Investment and Other


y = -21.038x2 + 176.16x - 126.3

R2 = 0.6488



(Taka in million)

Year 2010 2011

Time (x) 6 7

Provision for Loans, Investment and Other (Forecasted) 3,179.24 3,912.00

Table 8: Forecasted Provision for Loans, Investment and Other for year 2010 and 2011

The forecasted provision for loans, investment and other shows a decrease of 17% and 56%

in 2010 and 2011 respectively. The trend analysis with the forecasted value for year 2010

(referred as 6 in the graph) and 2011 (referred as 7 in the graph) is depicted in figure 4.

y = -21.03x2 + 176.1x - 126.3R² = 0.648

0

50

100

150

200

250

300

350

1 2 3 4 5 6 7

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Figure 4: Provision for Loans, Investment and other Trend

Time (x)

Provision for Loans, Investment and Other

8.5 Profits before Tax

In 2009, total profit before tax was Tk. 1,150.57 million compared to Tk. 989.47 in 2008.

Bank has experienced an increase of 16 % in total profit before tax. Last five years total profit

before tax is presented in table 9. Polynomial regression has been applied on these data to


(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Profit before Tax 226.29 507.7 579.77 989.47 1,150.57

Table 9: Five years Profit before Tax


y = 6.9293x2 + 191.46x + 40.166

R2 = 0.9671

From the equation the following forecasted data (table 10) is calculated putting 6 and 7 for

the year 2010 and 2011 consecutively in the place of x:

(Taka in million)

Year 2010 2011

Time (x) 6 7

Profit before Tax (Forecasted) 3,179.24 3,912.00

Table 10: Forecasted Profit before Tax for year 2010 and 2011

The forecasted profit before tax shows an increase of 25% and 20% in 2010 and 2011



y = 6.929x2 + 191.4x + 40.16R² = 0.967

0200400600800

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1 2 3 4 5 6 7

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Figure 5: Profit before Tax Trend

Time (x)

Profit before Tax

8.6 Profits after Tax

In 2009, total profit after tax was Tk. 610.91 million compared to 463.05 in 2008. Bank has

experienced an increase of 32 % in total profit after tax. Last five years total profit after tax is


trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Profit after Tax 121.29 263.16 239.03 463.05 610.91

Table 11: Five years Profit after Tax


y = 18.581x2 + 6.4287x + 115.81

R2 = 0.9436



(Taka in million)

Year 2010 2011

Time (x) 6 7

Profit after Tax (Forecasted) 3,179.24 3,912.00

Table 12: Forecasted Profit after Tax for year 2010 and 2011

The forecasted profit after tax shows an increase of 35% and 30% in 2010 and 2011



y = 18.58x2 + 6.428x + 115.8R² = 0.943

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Figure 6: Profit after Tax Trend

Time (x)Profit after Tax

From key financial position aspect, paid-up capital, total shareholder’s equity, deposits, loans

and advances, total liabilities, investments, fixed assets, earning assets and total assets have

further been studied for trend analysis and forecasting growth.

8.7 Paid-Up Capital

In 2009, total paid-up capital was Tk. 1,848 million compared to Tk. 1,540 in 2008. Bank has

experienced a growth of 20 % in total paid-up capital. Last five years total paid up capital is


trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Paid-Up Capital 500 500 1,166.67 1,540.00 1,848.00

Table 13: Five years Paid-Up Capital


y = 23.047x2 + 235.32x + 151.46

R2 = 0.9501



(Taka in million)

Year 2010 2011

Time (x) 6 7

Paid-Up Capital (Forecasted) 3,179.24 3,912.00

Table 14: Forecasted Paid-Up Capital for year 2010 and 2011

The forecasted paid-Up Capital shows an increase of 29% and 22% in 2010 and 2011



y = 23.04x2 + 235.3x + 151.4R² = 0.950

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Figure 7: Paid-Up Capital Trend

Time (x)

Paid-Up Capital

8.8 Total Shareholders’ Equity

In 2009, total shareholders’ equity was Tk. 3,754.87 million compared to Tk. 3,119.65 in

2008. Bank has experienced a growth of 20 % in total shareholders’ equity. Last five years

total shareholders’ equity is presented in table 15. Polynomial regression has been applied on

these data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Total Shareholders’ Equity 991.97 1,155.00 2,154.29 3,119.65 3,754.87

Table 15: Five years Total Shareholders’ Equity


y = 65.032x2 + 358.85x + 443.25

R2 = 0.9758



(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Shareholders’ Equity (Forecasted) 3,179.24 3,912.00

Table 16: Forecasted Total Shareholders’ Equity for year 2010 and 2011

The forecasted total Shareholders’ equity shows an increase of 31% and 24% in 2010 and

2011 respectively. The trend analysis with the forecasted value for year 2010 (referred as 6 in

the graph) and 2011 (referred as 7 in the graph) is depicted in figure 8.

y = 65.03x2 + 358.8x + 443.2R² = 0.975

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Figure 8: Total Shareholders’ Equity Trend

Time (x)

Total Shareholders’ EquityPoly. (Total Shareholders’ Equity)

8.9 Deposits

In 2009, a total deposit was Tk. 48,464.64 million compared to Tk. 32,919.76 in 2008. Bank

has experienced an increase of 47 % in total deposit. Last five years total deposit is presented

in table 17. Polynomial regression has been applied on these data to formulate a trend

equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Deposits 12,704.90 18,985.95 27,101.59 32,919.76 48,464.64

Table 17: Five years Deposits


y = 1159.3x2 + 1589.5x + 10514

R2 = 0.9869



(Taka in million)

Year 2010 2011

Time (x) 6 7

Deposits (Forecasted) 3,179.24 3,912.00

Table 18: Forecasted Deposits for year 2010 and 2011

The forecasted deposits show an increase of 27% and 27% in 2010 and 2011 respectively.

The trend analysis with the forecasted value for year 2010 (referred as 6 in the graph) and

2011 (referred as 7 in the graph) is depicted in figure 9.

y = 1159.x2 + 1589.x + 10514R² = 0.986

0100002000030000400005000060000700008000090000

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Figure 9: Deposits Trend

Time (x)Deposits

8.10 Loans and Advances

In 2009, total loans and advances was Tk. 32,663.11 million compared to Tk. 27,528.08 in

2008. Bank has experienced an increase of 19 % in total loans and advances. Last five years

total loans and advances are presented in table 19. Polynomial regression has been applied on

these data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Loans and Advances 9,738.32 13,188.09 18,682.16 27,528.08 32,663.11

Table 19: Five years Loans and Advances


y = 480.17x2 + 3137.9x + 5664.3

R2 = 0.9883



(Taka in million)

Year 2010 2011

Time (x) 6 7

Loans and Advances (Forecasted) 3,179.24 3,912.00

Table 20: Forecasted Loans and Advances for year 2010 and 2011

The forecasted loans and advances show an increase of 28% and 22% in 2010 and 2011



y = 480.1x2 + 3137.x + 5664.R² = 0.988

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Figure 10: Loans and Advances Trend

Time (x)

Loans and Advances

8.11 Total Liabilities

In 2009, total liabilities were Tk. 50,451.78 million compared to Tk. 35,355.99 in 2008. Bank

has experienced an increase of 43 % in total liabilities. Last five years total liabilities are


trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Total Liabilities 13,790.18 19,905.77 28,227.93 35,355.99 50,451.78

Table 21: Five years Total Liabilities


y = 1197.6x2 + 1691.8x + 11297

R2 = 0.9932



(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Liabilities (Forecasted) 3,179.24 3,912.00

Table 22: Forecasted Total Liabilities for year 2010 and 2011

The forecasted total liabilities show an increase of 28% and 27% in 2010 and 2011



y = 1197.x2 + 1691.x + 11297R² = 0.993

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Figure 11: Total Liabilities Trend

Time (x)

Total Liabilities

8.12 Investments

In 2009, total investment was Tk. 8,705.61 million compared to Tk. 4,962.66 in 2008. Bank

has experienced a growth of 75 % in total investment. Last five years total investments are


trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Investments 2,447.95 3,122.81 3,785.45 4,962.66 8,705.61

Table 23: Five years Investments


y = 475.05x2 - 1414.8x + 3623.7

R2 = 0.9715



(Taka in million)

Year 2010 2011

Time (x) 6 7

Investments (Forecasted) 3,179.24 3,912.00

Table 24: Forecasted Investments for year 2010 and 2011

The forecasted investment shows an increase of 41% and 39% in 2010 and 2011 respectively.



y = 475.0x2 - 1414.x + 3623.R² = 0.971

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Figure 12: Investments Trend

Time (x)Investments

8.13 Fixed Assets

In 2009, total fixed asset was Tk. 381.92.million compared to Tk. 342.39 in 2008. Bank has

experienced an increase of 12% in total fixed asset. Last five years fixed asset is presented in

table 25. Polynomial regression has been applied on these data to formulate a trend equation

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Fixed Assets 110.62 146.05 194.22 342.39 381.92

Table 25: Five years Fixed Assets


y = 7.7286x2 + 27.523x + 67.458

R2 = 0.9532



(Taka in million)

Year 2010 2011

Time (x) 6 7

Fixed Assets (Forecasted) 3,179.24 3,912.00

Table 26: Forecasted Fixed Assets for year 2010 and 2011

The forecasted fixed assets show an increase of 34% and 25% in 2010 and 2011 respectively.



y = 7.728x2 + 27.52x + 67.45R² = 0.953

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Figure 13: Fixed Assets Trend

Time (x)Fixed Assets

8.14 Earning Assets

In 2009, total earning assets was Tk. 49,000.5 million compared to Tk. 34,475.64 in 2008.

Bank has experienced an increase of 42 % in total earning assets. Last five years earning

assets is presented in table 27. Polynomial regression has been applied on these data to


(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Earning Assets 13,708.73 18,608.06 27,636.29 34,475.64 49,000.50

Table 27: Five years Earning Assets


y = 1218.7x2 + 1332.7x + 11282

R2 = 0.9935



(Taka in million)

Year 2010 2011

Time (x) 6 7

Earning Assets (Forecasted) 3,179.24 3,912.00

Table 28: Forecasted Earning Assets for year 2010 and 2011

The forecasted earning assets show an increase of 29% and 27% in 2010 and 2011



y = 1218.x2 + 1332.x + 11282R² = 0.993

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Figure 14: Earning Assets Trend

Time (x)

Earning Assets

8.15 Total Assets

In 2009, total asset was Tk. 54,206.65 million compared to Tk. 38,475.64 in 2008. Bank has

experienced an increase of 41 % in total assets. Last five years total asset is presented in table

29. Polynomial regression has been applied on these data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Total Assets 14,782.15 21,060.77 30,382.22 38,475.64 54,206.65

Table 29: Five years Total Assets


y = 1262.6x2 + 2050.6x + 11741

R2 = 0.9952



(Taka in million)

Year 2010 2011

Time (x) 6 7

Total Assets (Forecasted) 3,179.24 3,912.00

Table30: Forecasted Total Assets for year 2010 and 2011

The forecasted total assets show an increase of 27% and 28% in 2010 and 2011 respectively.



y = 1262.x2 + 2050.x + 11741R² = 0.995

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100000

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Figure 15: Total Assets Trend

Time (x)Total Assets

Finally import, export, foreign remittance and guarantee issued have been analyzed in other

business aspects.

8.16 Import

In 2009, total import was Tk. 23,680 million compared to Tk. 16,660.98 in 2008. Bank has

experienced an increase of 42 % in total imports. Last five years total import is presented in


(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Import 9,746.00 11,483.00 13,816.16 16,660.98 23,680.00

Table 31: Five years Import


y = 791.12x2 - 1442.1x + 10701

R2 = 0.9876



(Taka in million)

Year 2010 2011

Time (x) 6 7

Import (Forecasted) 3,179.24 3,912.00

Table 32: Forecasted Import for year 2010 and 2011

The forecasted import shows an increase of 29% and 29% in 2010 and 2011 respectively. The

trend analysis with the forecasted value for year 2010 (referred as 6 in the graph) and 2011

(referred as 7 in the graph) is depicted in figure 16.

y = 791.1x2 - 1442.x + 10701R² = 0.987

05000

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Figure 16: Import Trend

Time (x)Import

8.17 Export

In 2009, total export was Tk. 12,770 million compared to Tk. 6,078.79 in 2008. Bank has

experienced a growth of 110 % in total exports. Last five years total export is presented in


(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Export 2,911.00 2,884.00 3,980.87 6,078.79 12,770.00

Table 33: Five years Export


y = 1031.2x2 - 3896.2x + 6069.8

R2 = 0.9796



(Taka in million)

Year 2010 2011

Time (x) 6 7

Export (Forecasted) 3,179.24 3,912.00

Table 34: Forecasted Export for year 2010 and 2011

The forecasted export shows an increase of 55% and 48% in 2010 and 2011 respectively. The

trend analysis with the forecasted value for year 2010 (referred as 6 in the graph) and 2011

(referred as 7 in the graph) is depicted in figure 17.

y = 1031.x2 - 3896.x + 6069.R² = 0.979

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Figure 17: Export Trend

Time (x)Export

8.18 Foreign Remittance

In 2009, total foreign remittance was Tk. 8,669 million compared to Tk. 5,788.87 in 2008.

Bank has experienced an increase of 50 % in total foreign remittances. Last five years total

foreign remittance is presented in table 35. Polynomial regression has been applied on these

data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Foreign Remittance 535.2 765 2,532.98 5,788.87 8,669.00

Table 35: Five years Foreign Remittance


y = 484.9x2 - 780.24x + 665.05

R2 = 0.9916



(Taka in million)

Year 2010 2011

Time (x) 6 7

Foreign Remittance (Forecasted) 3,179.24 3,912.00

Table 36: Forecasted Foreign Remittance for year 2010 and 2011

The forecasted foreign remittance shows an increase of 55% and 41% in 2010 and 2011



y = 484.9x2 - 780.2x + 665.0R² = 0.991

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Figure 18: Foreign Remittance Trend

Time (x)

Foreign Remittance

8.19 Guarantee Issues

In 2009, total guarantee issues was Tk. 1,527.64 million compared to Tk. 847.7 in 2008.

Bank has experienced an increase of 80 % in total guarantee issues. Last five years total

guarantee issues is presented in table 37. Polynomial regression has been applied on these

data to formulate a trend equation.

(Taka in million)

Year 2005 2006 2007 2008 2009

Time (x) 1 2 3 4 5

Guarantee Issues 1,627 726.51 1,114.84 847.7 1,527.64

Table 37: Five years Guarantee Issues


y = 178.96x2 - 1081.5x + 2444.7

R2 = 0.7011



(Taka in million)

Year 2010 2011

Time (x) 6 7

Guarantee Issues (Forecasted) 3,179.24 3,912.00

Table 38: Forecasted Guarantee Issues for year 2010 and 2011

The forecasted guarantee issues show an increase of 57% and 52% in 2010 and 2011



y = 178.9x2 - 1081.x + 2444.R² = 0.701

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Figure 19: Guarantee Issues Trend

Time (x)

Guarantee Issues

9.0 SUMMARY OF KEY FINANCIAL PERFORMANCE INDICATORS

OF TRUST BANK LIMITED

With the forecasted value, a summary of key financial performance indicators of Trust Bank

Limited with actual and forecasted growth is presented below in a tabular format (table 39):

(Taka in million)

Performance Indicators

Forecasted Growth % Actual Growth %

Operating Result 2011 2010 2009 2008 2007 2006 2005Total Operating Income 3,912.00 3,179.24 2,467.67 2,006.11 1,328.66 844.19 511.46

Growth % 23% 29% 23% 51% 57% 65% N/A Total Operating Expense 2,116.09 1,567.55 1,109.31 753.67 474.95 297.29 215.19Change % 35% 41% 47% 59% 60% 38% N/A Operating Profit 1,795.86 1,611.66 1,358.35 1,252.44 853.71 546.9 296.27Growth % 11% 19% 8% 47% 56% 85% N/A Provision for Loans, Investment and Other 75.958 173.292 207.78 262.97 273.94 39.2 69.98Change % -56% -17% -21% -4% 599% -44% N/A Profit before Tax 1,719.922 1,438.38 1,150.57 989.47 579.77 507.7 226.29Change % 20% 25% 16% 71% 14% 124% N/A Profit after Tax 1,071.28 823.2982 610.91 463.05 239.03 263.16 121.29Change % 30% 35% 32% 94% -9% 117% N/A Financial Position Paid-Up Capital 2,928.00 2,393.07 1,848.00 1,540.00 1,166.67 500 500Change % 22% 29% 20% 32% 133% 0% N/A Total Shareholders’ Equity 6,141.77 4,937.50 3,754.87 3,119.65 2,154.29 1,155.00 991.97Change % 24% 31% 20% 45% 87% 16% N/A

Deposits 78,446.2061,785.8

048,464.6

432,919.7

627,101.5

918,985.9

512,704.9

0Change % 27% 27% 47% 21% 43% 49% N/A

Loans and Advances 51,157.9341,777.8

232,663.1

127,528.0

818,682.1

613,188.0

9 9,738.32Change % 22% 28% 19% 47% 42% 35% N/A

Total Liabilities 81,822.0064,561.4

050,451.7

835,355.9

928,227.9

319,905.7

713,790.1

8Change % 27% 28% 43% 25% 42% 44% N/A

Performance Indicators

Forecasted Growth % Actual Growth %

Operating Result 2011 2010 2009 2008 2007 2006 2005

Investments 16,997.5512,236.7

0 8,705.61 4,962.66 3,785.45 3,122.81 2,447.95Change % 39% 41% 75% 31% 21% 28% N/A Fixed Assets 638.82 510.83 381.92 342.39 194.22 146.05 110.62Change % 25% 34% 12% 76% 33% 32% N/A Earning Assets 80,327.20 63,151.4 49,000.5 34,475.6 27,636.2 18,608.0 13,708.7

0 0 4 9 6 3Change % 27% 29% 42% 25% 49% 36% N/A

Total Assets 87,962.6069,498.2

054,206.6

538,475.6

430,382.2

221,060.7

714,782.1

5Change % 27% 28% 41% 27% 44% 42% N/A Other Business

Import 39,371.1830,528.7

223,680.0

016,660.9

813,816.1

611,483.0

0 9,746.00Change % 29% 29% 42% 21% 20% 18% N/A

Export 29,325.2019,815.8

012,770.0

0 6,078.79 3,980.87 2,884.00 2,911.00Change % 48% 55% 110% 53% 38% -1% N/A

Foreign Remittance 18,963.4713,440.0

1 8,669.00 5,788.87 2,532.98 765 535.2Change % 41% 55% 50% 129% 231% 43% N/A Guarantee Issues 3,643.24 2,398.26 1,527.64 847.7 1,114.84 726.51 1,627Change % 52% 57% 80% -24% 53% -55% N/A

Table: 39 Key Financial Performance Indicators

10.0 FINDINGS

While going through this study, many important factors have come out of the analysis. These

findings are:

1. Trust bank is experiencing a downturn in the growth rate of its operating income

from 2006. But with the expiry of the global financial crisis, it may expect a slight

increase in growth rate of operating income in 2010 which forecasted value has

shown in the analysis. But may not sustain long in the next year that is 2011.

2. Though operating expense is increasing year to year, but the increase rate from

year to year is slowing down from 2006 and expected to continue up to 2011.

3. Another concerning issue for Trust Bank Limited is its down wording operating

profit growth rate. The reason may be attributed to the decrease in the growth of

the operating income from the year 2006.

4. Provision for loans and investment abnormally increased in 2007. The cause may

be the instability of political situation in the country and the presence of the

caretaker government at that period. After that period, the bank has observed

normal negative growth or decrease in the provision for loans and investment.

5. The bank has faced an abnormal growth in before tax profit in 2006 with a

growth rate of 124% which suddenly fell to 14% growth in 2007. Again it boosted

up its growth rate with a 71% growth in 2008. But after the tenure of caretaker

government, it again failed to maintain its growth rate compared with 2007 and

achieved a growth of 16% in 2009 in before tax profit.

6. Total deposit in the bank is growing constantly with unstable growth rate.

Interestingly, though interest rate has cut down by the order of Bangladesh Bank,

the bank has 47% increase in total deposit in 2009 from 2008. But forecasted

deposits for 2010 and 2011 shows slight fall of this growth rate to 27% for both

the 2010 and 2011.

7. 2009 shows an increase of 43% in total liabilities and expected to face increase of

28% and 22% in total liabilities in 2010 and 2011.

8. With the increase in deposits, investment has increased remarkably in 2009 with a

75% increase from 2008. Since banks are investing more in the stock market, the

annual report shows only 19% increase in loans and advances in 2009 which was

47% increase for the same in 2008.

9. Annual report shows an growth of 12% in fixed assets in 2009 which was 33%

and 76% for the year 2007 and 2008 consecutively. Moreover earning assets has

shown an increase of 42 % which was 49% and 25% for the year 2007 and 2008

respectively.

10. Import business doubled in 2009 from 2008 with a increase of 42% for 2009 and

21% for 2008. It is expected from forecasting that the growth will be stable with

29% increase in 2010 and 2011 in import.

11. Export was almost doubled in 2009 from 2008 with an increase of 110%. And it is

expected to have 55% increase in 2010 which is almost half of the increase rate of

2009.

12. Foreign remittance is increasing each year with a decreasing growth rate from

2007 and expected to increase slightly in 2010 with an increase of 55%.

11.0 CONCLUSION

After the period global downturn, Trust Bank has regained its rhythm in 2009. It has

increased its deposits by 47%in 2009 from 2008 and doubled its investment in the same year.

In 2009 fixed assets growth has been cut off while accelerating the earning assets growth

compared with 2008. Since provision for loans and advances has been reduced noticeably

operating profit has been increased leading toward increased profit. But in both situations the

growth is not to the level of expectation created from 2008. Moreover, import, export and

guarantee issues played a wide range of role in 2009.

The basic objective of the study of using trend is to predict the future behavior of the data of

Trust Bank Limited especially to forecast the operating result, financial position and some

other business to the forthcoming year 2010 and 2011.But mathematical methods of fitting

trend are not foolproof – in fact, they can be a source of some of the most serious errors that

are made in statistical work. They should never be used unless rigidly controlled by a

separate logical analysis. Trend fitting depends upon the judgment of the statistician, and a

skillfully made freehand sketch may often be more practical than a refined mathematical

formula. Basically, trend line polynomial regression has been applied for processing of data

and developing the trend equation on the last five years key financial data with the help of

Microsoft Excel application.

Here independent variable is assumed to be the time (year) and the dependent variables are

some of the key performance factors e.g. operating income, operating expense, total assets,

total liabilities etc. Trend analysis has been made based on the annual report of 2006, 2007,

and 2008.and brought the performance of 2009 and on the basis of financial result of 2009

forecasting has been made on 2010 and 2011. In 2009 Trust Bank Limited has increased its

Investment i.e.75% increase in comparison to the previous year. Certainly it is a good sign.

One of the noteworthy aspects has come out throughout the study that is year-2007 during the

tenure of caretaker government. Trust Bank Ltd could not reap its expected performance due

to the fact that the political condition at that time was the worst one that Bangladesh has ever

witnessed. If the political unrest and socio-economic deterioration prevail simultaneously, no

business organization can perform well let alone Banks.

12.0 RECOMMENDATIONS

After analyzing trend, some recommendations for Trust Bank Limited in respect of present

and forecasted situation are presented in this section.

Firstly, in the emerging banking business, competition is growing up. To sustain in the

competition, customers should be valued and satisfied highly. Deposits should be increased.

So, it is suggested to introduce new schemes to attract deposits from customers which

ultimately help to accelerate loans and advances.

Secondly, merchant banking could play a vital role in the bottom line of the bank. Since other

banking and non-banking financial institutions are making maximum profit from stock

market, Trust Bank should provide full concentration on merchant banking for its full swing

operation.

Thirdly, to spread its operation, Trust Bank should increase its operating branch to provide

service to the customer’s door. For this purpose it is suggested to increase its fixed assets in

that purpose as shown in the forecasted fixed assets.

Fourthly, bank should provide its attention in the stable growth in profit, volatility in profit

growth may decrease its share price in the market which may decrease company’s value.

Finally, it is suggested that investment should be increased according to Bangladesh Bank’s

rule, otherwise it may cause in risk increment, If risk is increased; the risk weighted assets

will increase following increased required capital which may block valuable capital.

REFERENCES

1. D. Mason, A. Lind. 1999, Statistical Techniques in Business and Economics,10th

edition, Jeffrey J. Shelstad, United States of America

2. SP.Gupta, M.P.Gupta. 2005-06, Business Statistics, 11th edition, Sultan Chand &

Sons, New Delhi.

3. Rig Leman and Frisbee. 2003, Business Statistics, Sultan Chand & Sons, New Delhi.

4. Trust Bank Ltd, Annual Report 2005





9. http://www.bangladesh-bank.org

10. http://www.trustbank.com.bd

Documents

Key Financial Forecasting of Trust Bank Limited