A REPORT ON

‘’Financial Performance Analysis of

Trust Bank Limited’’
Prepared By
Sourav Miha

1
 Executive Summary
The internship program is an essential part to acquire a degree of bachelor of business
administration from daffodil international university. Every student must meet the credit hours,
and afterward they put for observing a particular circumstance in a genuine working
environment. An honorable supervisor consistently directs the students to prepare their report
well. I feel myself fortunate to get a chance to work in trust bank limited as an intern.

Trust bank limited is a scheduled commercial bank established under the bank company act,
1991 and incorporated as a public limited company under the companies act, 1994 in Bangladesh
on 17 June 1999 with the primary objective to carry on all kinds of banking business in and
outside Bangladesh.

The principal activities of the bank to provide full range of banking services that include deposit
banking, loans and advances, export, import and financing national and international remittance
facilities etc.

In the first part of the report, I discussed about the background of the report, as it is the
introductory part. In this part, I discussed about the objective of the report, its importance and
method used to prepare it.

In the second part of the report, I gave a brief introduction of TBL. I discussed about the
organization overview, mission, vision, values, products, and services of the bank.

In the third part, I attempted to provide an in depth analysis of the bank’s financial performance
analysis utilizing information from the 2014 to2018 annual report. In this part the horizontal,
vertical and ratio analysis analyzed to depict the financial performance of trust bank limited
during the five years.

Last yet not the least, a few issues are shared that found while analyzing the financial
performance. There are given some suggestions according to the problems found so that manager
of trust bank limited can make preparatory strides on the off chance that they feel the proposals
are alright, I also draw a conclusion on the overall report in this part.

2
Chapter -01
Introduction

3
 Introduction
The financial sector of Bangladesh dominated by the banking sector. The dominion of the
banking sector not only makes the financial sector vulnerable but also highlights the crucial
importance of the sector in resource utilization and economic growth. As the business produces
products and items, so does the bank creates and controls money market and advances formation
of capital. From this point of view, banking-a technical profession- can be termed as industry.
Services to its clients are the products of banking industry other than being a pivotal factor in
advancing capital development in the country. As all monetary and fiscal activities spin round
this significant 'Industry', the role of banking scarcely over underscored.

Throughout the report, financial performance of trust Bank limited analyzed based on some key
financial ratios such as debt to equity ratio, return on asset, return on equity, net profit margin,
total asset turnover ratio, fixed asset turnover ratio and so on. Based on the performance on each
of the ratios mentioned, banks scored.

Therefore, financial performance analysis will help the banks to identify in which position they
are standing in the industry.

Origin of the Report

The internship report is prepared to fulfill the partial requirement of internship program for BBA
program of Daffodil International University. Every student must meet the credit hours, and
afterward they put for observing a particular circumstance in a genuine working environment. An
honorable supervisor consistently directs the students to prepare their report well. I have selected
“Financial Performance Analysis of Trust Bank Limited’’ as the topic of my internship report
under the supervision of Ms. Tanzina Hossain, associate professor of Daffodil International
University. The aim of the report is to apply theoretical knowledge in the practical field.

4
 Rational of the Report
The rational of the report is to measure the financial performance of Trust Bank comparing the
years of 2014-2018. The analysis of financial performance is a subjective measure of a
company’s capacity to use the assets of its essential method of business and to generate profit.
The term likewise used as a general measure of the overall financial health of a business over a
given period and used to compare similar businesses in the same sector or to compare industries
or sectors. The measurement of the performances will be comprises of two different ways, the
initial segment is trend analysis that incorporates horizontal and vertical analysis, and the
subsequent part is the ratio analysis which is an exceptionally prevalent analysis to analyze any
financial institutions.

Objectives of the Report

The objectives of the report will assist the readers to identify what are the reasons for what the
report is made and about the objectives of the report.

The significant objective of this report is to make an obvious analysis of financial performance
of trust bank limited. There are some particular objectives given underneath:

 To get an overall view of trust bank limited

 To assess the financial performance through analyzing financial statement of TBL
 To find out the problems of trust bank limited
 To provide some suggestions to overcome the problems found

Methodology of the Report

Sampling and Sample Size: The report comprises of five years of financial information of trust
bank limited taken from the five years annual report from the years of 2014-2018. All the
analysis of this report will pursue these year substantial data.

Data Collection: The data are gathered from a few significant wellsprings of the study and can
be divided into two sources.

5
Primary Sources: The primary data are gathered from

Formal and informal communication of the trust bank’s employees

The practical experiences by working inside of the bank
Oral conversation with the new and prospective clients

Secondary Sources: The secondary data are gathered from

Five years annual report of TBL

Various publications and articles on financial performance analysis
TBL websites
Some of my course components as identified with this report

Data Analysis: The study pursues exploratory research techniques that use both qualitative and
quantitative data. The quantitative data straightforwardly gathered from the Trust Bank’s annual
report of the year 2014-2018. I used Microsoft word and excel to analyze the performance with
the assistance of various outlines.

Limitations of the Report

However, the experience of working as an intern was great but there are a few impediments
discovered that make troubles to prepare the report. The limitations given underneath:

 Time is a major imperative for my research. Three months’ time is not enough for such
an extensive study.
 Insufficient data are the main constraint in the development of the report
 The report did not include all the financial ratios to find out the actual financial position
of the bank
 There were some restrictions to have access to the information confidential by the
authority

6
 Chapter -2
Organizational Part

7
 Background of Trust Bank Limited
Trust bank limited is a scheduled commercial bank established under the bank company act,
1991 and incorporated as a public limited company under the companies act, 1994 in Bangladesh
on 17 June 1999 with the primary objective to carry on all kinds of banking business in and
outside Bangladesh. The bank listed with Dhaka stock exchange limited and Chittagong stock
exchange limited as a publicly traded company for its general class of shares.

Branch and SME centers 111

ATM Booths 222
Pay points 20000
POS 65

The bank, sponsored by the Army Welfare Trust (AWT), is first of its kind in the country.  The
principal activities of the bank to provide full range of banking services that include deposit
banking, loans and advances, export, import and financing national and international remittance
facilities etc.

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.

In January 2007, Trust Bank successfully launched Online Banking Services, which facilitate
Any Branch Banking, ATM Banking, Phone Banking, SMS Banking, & 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.

8
 Mission and Vision of Trust Bank Limited

Vision

Build a long-term sustainable financial institution through financial inclusion and deliver
optimum value to all stakeholders with the highest level of compliance.

Mission

 Long Term Sustainable Growth- diversified business with robust risk management.
 Financial Inclusion- bring unbanked population into banking network through low cost
and technology based service delivery.
 Accountable to all stakeholders- customers, shareholders, employees & regulators.
 Highest level of compliance and transparency at all levels of operation.

Values of TBL:

Reliable

Fair
Dependable

Core Values
of TBL

Trustworthy Professional

Dynamic

9
 Corporate Information of Trust Bank
Features Values
Registered Name Trust bank Limited
Genesis Trust bank limited is one of the leading
private commercial banks in Bangladesh. The
company was incorporated on 17 june 1999
under the companies act 1994 as a public
limited company for carrying out all kinds of
banking activities
Sponsor shareholder Army welfare trust
Chairman General Aziz Ahmed (Since 26th June, 2018)
CEO & MD Mr. Faruq Mainuddin Ahmed
Company secretary Mr. Md. Mizanur Rahman, FCS
Registered Office & Head Office Shadhinata tower, bir srestha shaheed
Jahangir gate, Dhaka cantonment, Dhaka-
1206
Authorized capital 10,000.00 (BDT in Million)
Paid up capital 5569.66 (BDT in Million)
Face value per share BDT 100 per share
Number of Shares 61,26,62,837
Number of branches & SME centers 111
Corporate website www.tblbd.com
Email [email protected]
SWIFT TTBLBDDH
Phone 9850635, 02-44870030
Call center 16201

10
 Products &Services of Trust Bank Limited
Trust Bank Limited gives its clients with all banking facilities and services. Its tremendous
branch network and with a quick and productive staff gives the customized services given below:

Retail Banking

Banks usually retail banking for the most part for three reasons that are firstly, it ensures
consistent regular flow of deposits. Secondly, banks have to maintain a standard of asset advance
and deposit ratio as per central banks direction. Lastly, retail baking gives financial support to
the Individuals.

Total banking sector of Bangladesh has suffered huge liability crisis on the first half of the year
2018. In this context, after several years of concentration on asset products, retail banking
division has shifted its business concentration to liability sector. Around the year RBD has
grown to its capacity and potential in terms of technology, human resources, product quality and
business process to both asset business as well as liability business.

 Liability: To ensure balance asset growth a positive volume of deposit is required.

Considering the market scenario, in 2018 RBD had modified the product program
guideline of several liability products and revised the rate of interest. Despite the
financial market competency on liability booking, banks total conventional retail liability
growth was about 4.32%.
 Asset: Over the globe, retail lending has been a viewable advancement in the commercial
banking sector in recent years. Now a day’s people are worried about upgrade of their
way of life with their restricted income. By considering this standard of conduct of
individuals, banking sector is extending their asset business through retail banking.
Following the trend of industry TBL also extended their asset with fierce marketing and
disbursed BDT 726 million of conventional retail loans and the loan outstanding became
BDT 32,813 million. The significant growth in the portfolio was largely due to the
success of loan against pension benefit for defense personnel, a retail asset product of
TBL launched in 2016.

11
  Payroll Banking: To ensure better consumer base for asset business, payroll banking is a
key point to success. In this consequence, TBL RBD team had procured three number of
new payroll organizations. 21.48percent of growth recorded than the previous year.

Deposit Loan
Cards
Products Products

Defence
Youniverse Personnel Payroll
Loans

SME Financing:

 In 2009, Trust Bank started its SME financing by opening a separate department.
 To satisfy the need of different customer segments in different areas trust bank launched
14 new products
 TBL was once ranked by SME foundation as one of the ‘Top Ten’ SME favored banks in
Bangladesh based on the performance.

Women Entrepreneur
Entrepreneur Loans
SME Manufacturing Loans
Engineering Loans

Banking Contractors / Suppiers

Loans
Agriculture Loans

Islamic Banking: Islamic banking governed by a set of strict rules derived from the Holy
Qur’an and Sunnah of Prophet (PBUH). TBL is carrying out its Islamic banking operations
through five Islamic banking windows as per Bangladesh bank’s endorsement. Other than the

12
five windows, all TBL branches would now be able to give Islamic banking services through on-
line banking framework.

 Completely separate fund management – no mingling of fund with the conventional

banking deposits of the bank. Investments made from the Islamic banking deposits only.
 Separate book- keeping, profit and loss account by Islamic banking module of bank’s
CBS
 Distinguished Sariah supervisory committee for guidance on Sariah related issues
 Profit distributions are executed as per approved weightage table

Corporate Banking

Tarde Finance: Trade finance offers a wide range of services that tailored to meet the different
needs of buyers and sellers (importers and Exporters). The bank has exhibited quality financing
while facilitating total export and import business transacted during the year 2017 for BDT
42,820 million and BDT 85,197 million respectively.

13
 Chapter -3
Financial Performance Analysis

14
 Financial performance analysis
Financial analysis is the process of identifying the financial strengths and weaknesses of the
firm by property establishing relationships between the item of the balance sheet and the
profit and loss account.

Financial analysis means “analysis, comparisons and interpretation of financial data to

achieve the desired result”.

Financial statement: a financial statement is a quantitative wat of showing how a company is

doing. Financial statements provide the fundamental information that we use to analyze and
answer valuation questions.

Financial statement generally refers to two basic statements

 The Balance sheet statement: balance sheet statement indicates the summary of the
financial position of a company at a particular date. There are three elements of
balance sheet asset, liability and owner’s equity, which represents the equation of
Asset = Liabilities + Owner’s Equity.
 The income statement: the income statement provides a financial summary of the
firm’s operating results during a specified period. It represents the net profit or net
loss of the company during a period.

Techniques of financial analysis

There are several technique used to analyze financial statement. Techniques of financial
statement analysis given below:

Comparati
Trend ve
Analysis Statement
Anlysis
Common
Ratio Size
Analysis Statement
Anlysis

15
These are the key measure of financial statement analysis of a company. It depends on a user
what technique he will be used to measure his firm. Trust bank limited financial performance
from 2014 to 2018 analyzed through ratio analysis and trend analysis. Both of the analysis are
very popular and widely accepted these days. These discussed below:

Ratio analysis: ratio analysis involves methods of calculating and interpreting financial ratios to
analyze and monitor the firm’s performance.

A ratio is an arithmetic relationship between two figures. Financial ratio analysis is a study of
ratios between various items of group of items in financial statements. The ratio analysis is a
very powerful analysis tool and very helpful for measuring the performance of a firm. The
valuation of the ratio will provide a true picture of company’s performance. Evaluating ratio is
relatively simple in nature but only a qualified analyst can perform and interpret ratios properly.
There are various types of ratio analysis including liquidity ratio, activity ratio, profitability ratio,
solvency ratio and financial ratio.

Trend analysis: trend analysis determine the direction upwards or downwards. Under this
analysis the values of an item in different years is expressed in relation to the value in one year
called the base year. Taking the value of the item in the base year to be equal to 100. The values
of the item in different years are expressed as percentage of this value.

Horizontal and Vertical Analysis of Trust Bank Limited

Comparative or horizontal analysis: A financial statement analysis technique represents changes
in the amounts of financial statement items over a period. Two or more years are used in this
technique. Horizontal analysis can be calculated as

Horizontal analysis = current year - Previous year/ previous year * 100

Horizontal Analysis (Income Statement)

Particulars 2014 2015 2016 2017 2018

Interest Income 12435.70 13996.77 13228.57 14413.60 17418.46
=26.08% =12.55% =(5.49)% =8.96% =20.85%
Net Interest 2762.47 3920.10 4493.91 5546.92 6208.86
Income =148.62% =41.91% =14.64% =23.43% =11.93%

16
 Total Operating 5978.24 7865.02 8476.95 9861.63 10085.71
Income =60.46% =31.56% =7.78% =16.33% =2.27%

Total Operating 2720.56 3591.87 3738.00 3675.92 3784

Expenses =24.99% =32.03% =4.07% =(1.66)% =2.94%

Profit Before 3257.68 4273.16 4738.95 6185.70 6301.71

Provision =110.35% =31.20% =10.88% =30.53% =1.88%
Total Profit 2699..12 3183.32 3612.60 4004.67 4115.25
Before Taxes =165.65% =17.94% =13.49% =10.85% =2.76%
Net Profit After 1299.20 1540.52 2015.82 1750.86 1892.58
Tax =300.46% =18.57% =30.85% =(13.14)% =8.09%

Horizontal Analysis (Balance Sheet Statement)

Particulars 2014 2015 2016 2017 2018

Total Assets 145346.12 180229.57 210241.52 239770.63 259638.37
=24.50% =24% =16.65% =14.05% =8.29%
Cash In Hand 10753.96 14002.61 15645.63 15734.75 15738.01
=12.57% =30.21% =11.73% =0.57% =0.02%
Investments 19352.22 24262.21 30739.00 28545.46 32305.01
=1.73% =25.37% =26.69% =(7.14)% =13.17%
Other Assets 5426.48 5496.16 5362.87 5908.93 6154.57
=18.42% =1.28% =(2.43)% =10.18% =4.16%
Total 137217.43 170717.52 199066.35 227658.45 246750.76
Liabilities =24.89% =24.41% =16.61% =14.36% =8.39%
Total Equity 8128.69 9512.04 11175.16 12112.18 12887.61
=18.39% =17.02% =17.48% =8.38% =6.40%

Vertical analysis or common size analysis: taking sales to be equal to 100. All other items in the
income statement of a year are expressed as percentage of the sales.

In case of balance sheet, the total assets are made equal to 100 and all other assets are expressed
in relative percentages. The same is the case with liabilities with the total liabilities being 100.

17
 Vertical Analysis (Income Statement)
Particulars 2014 2015 2016 2017 2018
Interest Income 12435.70 13996.77 13228.57 14413.60 17418.46
=100% =100% =100% =100% =100%
Net Interest 2762.4m 3920.10 4493.91 5546.92 6208.86
Income =22.21% =28% =33.97% =38.48% =35.65%
Total Operating 5978.24 7865.02 8476.95 9861.63 10085.71
Income =48.07% =56.19% =64.08% =68.42% =57.90%
Total Operating 2720.56 3591.87 3738.00 3675.92 3784
Expenses =21.88% =25.66% =28.26% =25.50% =21.72%
Profit Before 3257.68 4273.16 4738.95 6185.70 6301.71
Provision =26.20% =30.53% =35.82% =42.92% =36.18%
Total Profit 2699.12 3183.32 3612.60 4004.67 4115.25
Before Taxes =21.70% =22.74% =27.31% =27.78% =23.63%
Net Profit After 1299.20 1540.52 2015.82 1750.86 1892.58
Tax =10.45% =11% =15.24% =12.15% =10.87%

Vertical Analysis (Balance Sheet Statement)

Particulars 2014 2015 2016 2017 2018

Total Assets 145346.12 180229.57 210241.52 239770.63 259638.37
=100% =100% =100% =100% =100%
Cash In Hand 10753.96 14002.61 15645.63 15734.75 15738.01
=7.40% =7.77% =7.44% 6.56% =6.06%
Investments 19352.22 24262.21 30739.00 28545.46 32305.01
=13.31% =13.46% =14.62% =11.91% =12.44%
Other Assets 5426.48 5496.16 5362.87 5908.93 6154.57
=3.73% =3.05% =2.55% =2.46% =2.37%
Total 137217.43 170717.52 199066.35 227658.45 246750.76
Liabilities =94.41% =94.72% =94.68% =94.95% =95.04%
Total Equity 8128.69 9512.04 11175.16 12112.18 12887.61
=5.59% =5.28% =5.32% =5.05% =4.96%

18
 Trend Analysis

Horizontal Analysis (Balance Sheet Statement)

Total assets Cash in hand Investments
Other assets Total liabilities Total equity
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2014 2015 2016 2017 2018
-5.00%
-10.00%

This graph shows us the percentage of increase and decease of five years performance. The items
of the graph take from balance sheet. First, analyze the horizontal of all the items of balance
sheet. Therefore, the graph is the horizontal analysis of balance sheet.

Total asset shows in the graph that it was 24.50% in 2014. After that, it was declining from year
to year. In 2018, it has a lower value 8.29%

Cash in hand shows that it was 12.57% in 2014. It has a greatest value 30.21% in 2016.
However, it was decreasing from 2016 to 2018. In 208, it was 8.29%, which is lowest among the
five years.

Investment was 1.73% in 2014. It grew up by 25.37% and 26.69% in 2015 and 2016
respectively. It has a negative value 7.14% in 2017, which has a bad impact on company’s
performance. However, in 2018, it increased by 13.17%.

Total liabilities shows that it was decreasing year by year. It was 24.89% in 2014 and after
decreased it stood at 8.39% in 2018. Decreasing liabilities undoubtedly a good indication for the
company.

Total equity was 18.39% in 2014. It slightly increased at 17.48% in 2016. However, we can say
that it was decreasing. In 2018, it was 6.40%, which is not good enough for a company.

19
 Horizontal Analysis (Income Statement)
interest income net interest income total operating income total operating expense
profit before provision total profit before taxes net profit after tax
350.00%
300.00%
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
2014 2015 2016 2017 2018
-50.00%

This graph shows us the percentage of increase and decrease of 5 years performance. The items
of the graph take from income statement. First, analyze the horizontal of all the items of income
statement. In horizontal analysis, we need for comparing each year with its previous year.
Therefore, this graph is the trend analysis of income statement.

This graph shows us that net interest income was 148.62% in 2014 and it is the highest net
interest income among the five years. After that, it was fluctuating from 2015 to 2018. In 2015, it
was 41.91% and it was rose by 14.64% in the next year. In 2017 it was again grew up by
23.43%. In 2018, it has a lowest value 11.93%.

Total operating income shows that it was highest value 60.46% in 2014. In 2015 and 2016, it
decreased by 31.56% and 7.78% respectively. It increased at 16.33% in 2017 but in 2018, it fell
at 2.27%, which is low income of the company at this year than other years.

Total operating expense shows that it was 24.99% in 2014. In 2015, it increased by 32.03%. It
was rose by 4.07% in 2016. However, it has a negative value 1.66% in 2017, which is good for
the company. In 2018, it was 2.94%.

Total profit before taxes shows in the graph that it has a highest value 165.65% in 2014.
However, it was decreasing from year to year. In 2018, it was lowest value at 2.76%

Net profit/loss after tax shows in the graph that it was 300.46% in 2014, which is greatest value
among the years. It sharply decreased by 18.57% in 2016. It again increased in 2016 at 30.85%.
However, in 2017, it has a negative value 13.14%, which means that company faces a loss in this
year. In 2018. It was increased but in very low figure at 8.09%.

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 V e r t i c a l A na l y s i s ( I nc o me St a t e me nt )

Interest income Net interest income Total operating income

Total operating expenses Total profit before taxes Net profit after tax
120%

100%
Change in Percentage

80%

60%

40%

20%

0%
2014 2015 2016 2017 2018

This graph the result of vertical analysis. Items selected from the income statement. In vertical
analysis all the items divided by interest income. Here interest income is the 100%.

Net interest income shows in the graph that it was increasing from 2014-2017 but it was decline
in 2018. It was highest at 38.48% in 2017 among the five years.

Total operating income shows in the graph that its percentage are increasing year by year,
2014,2015,2016,2017 respectively 48.07%, 56.19%, 64.08%, and 68.42%. It decreased by
57.90% in 2018. In 2016, it earns highest operating income.

Total operating expense shows in the graph that it was increasing simultaneously from 2014 to
2016. It declined in 2017 and 2018. It was lowest at 21.72% in 2018.

Total profit before tax shows in the graph that it increased at 21.70%, 22.74%, 27.31%, and
27.78% respectively from 2014 to 2017. However, it decreased at 23.635 in 2018.

Net profit after tax shows in the graph that it was increased from2014 to 2016 at 10.45%, 11%,
15.24% respectively. However, it decreased in 2017 and 2018. It earned highest net interest
income in 2016 and lowest in 2014.

21
 Vertical Analysis (Balance Sheet Statement)
120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.00%
2014 2015 2016 2017 2018

Total assets Cash in hand Investments

Other assets Total liabilities Total equity

This graph shows the result of vertical analysis. Items selected from the balance sheet. Inn
vertical analysis (balance sheet) all the items divided by total assets. Here total asset is 100%.

So total assets in every year is 100%. There is no increase and decrease.

Cash in hand shows in the graph shows that it was highest value in 2015. After that it was
gradually decreasing at 7.44%, 6.56%, 6.06% respectively from 2016-2018.

Investments shows in the graph that it has a highest value 14.62% among the five years in 2017.
However, in 2017, it declined by 11.91%. It again increased by 12.44% in 2018.

Total liabilities shows in the graph that it was increasing every year except 2016, which may
indicate a bad sign for the company. 2014, 2015, 2016, 2017and 2018 it was 94.41%, 94.72%,
94.68%, 94.95%, and 95.04% respectively.

Total equity shows in the graph that it has a highest equity 5.59% in 2014. It fell down in 2015 at
5.28%, in the next year it increased at 5.32%. However, in 2017 and 2018, it drop by 5.05% and
4.96% respectively. In 2018, it has a lowest equity, which is not good for the company.

22
 Ratio analysis of TBL
The ratio analysis could be a quantitative technique that helps to understand data of a bank’s
liquidity, in operation potency and profitability by relating the information taken from its
financial statements.

External analyst use numerous forms of ratios to evaluate a bank, whereas internal analyst of that
bank can use them less to access more detailed operational data on a bank. There are several
types of ratio to analyze a bank’s financial performance. Few appropriates analyzed below:

Cash Reserve Ratio: Cash reserve ratio is a certain minimum amount of deposit that the
commercial banks have to hold as reserves with the central bank. CRR is set according to the
guidelines of the central bank of a country. We can say that CRR is a tool used by a central bank
to control liquidity in the banking system. The aim is to confirm that banks do not run out of cash
to satisfy the payment demands of their depositors.

Formula: CRR = Reserve Requirement * Bank Deposits

Particular 2014 2015 2016 2017 2018

CRR Ratio 6.69% 6.59% 7.18% 6.57% 5.63%

CRR Rati o
8.00%
7.00% 7.18%
6.69% 6.59% 6.57%
6.00%
5.63%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2014 2015 2016 2017 2018

Statutory Liquidity Ratio: The ratio of liquid assets to net demand and time liabilities called
statutory liquidity ratio.

Apart from cash reserve ratio, banks have to maintain a stipulated proportion of their net demand
and time liabilities in the form of liquid assets like cash, gold, and unencumbered securities.

23
Treasury bills, dated securities issued under market borrowing programmed and market
stabilization schemes etc. from part of the SLR.

Particular 2014 2015 2016 2017 2018

SLR Ratio 19.37% 17.22% 21.92% 15.30% 16.18%

SLR Rati o
21.92%
19.37%
17.22%
15.30% 16.18%

2014 2015 2016 2017 2018

Liquidity Ratio:

The liquidity of a firm is measured by its ability to satisfy its short-term obligations, as they are
available due. Liquidity refers to the financial condition of the firms overall financial position or
the convenience with that it will pay its bills. Clearly, it is fascinating that a firm is ready to pay
its bills, therefore having enough liquidity for day to day operations is very important.

Cash Ratio: The ratio of a company’s total cash and cash equivalents to its current liabilities the
cash most commonly used as a measure of company liquidity. It can therefore determine if, and
how quickly, the company can repay its short-term debt. A strong cash ratio is useful to creditors
when deciding how much debt, if any, they would be willing to extend to the asking party. The
ratio is calculated by Cash Ratio = Cash in Hands at Banks/ Total Deposit *100.

Item Name 2018 2017 2016 2015 2014

Cash in 15738.01 15734.75 15645.63 14002.61 10753.96
Hands at
Banks
Total 212680.61 200453.45 173059.88 150854.20 125059.13
Deposit
Cash Ratio 7.40% 7.85% 9.04% 9.28% 8.60%

24
 Cash Ratio
10.00%
9.00% 9.04% 9.28%
8.60%
8.00% 7.85%
7.00% 7.40%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2014 2015 2016 2017 2018

Interpretation: There is no ideal figure, but a ratio of at least 0.5-1 is usually preferred. The
cash ratio may not provide a good analysis of a company, as it is unrealistic for companies to
hold large amounts of cash. TBL hold a highest cash ratio in 2017 but it was decline in 2018.

Loan to Deposit Ratio: The ratio measures a bank’s liquidity condition. Total deposits include
savings deposit, demand deposits, term deposits and deposits of other banks. An ideal loan to
deposit ratio is between 80%-90%.

Formula: Loan to Deposit Ratio = Total Loans / Total Deposits

Item 2014 2015 2016 2017 2018

Total loan 106886.08 130614.65 141987.43 184910.70 197128.06
Total 125059.13 150854.20 173059.88 200453.45 212680.61
deposit
Loan to 85.47% 86.58% 82.05% 92.25% 92.69%
deposit ratio

Interpretation: TBL loan to deposit ratio is good because it has maintained its range from 2014-
2016. However, in 2017 and 2018 it was 92.25% and 92.69% respectively, which is over from its
range.

Loans To Deposit Ratio

94
92
90
88
86
84
82
80
78
76
2014 2015 2016 2017 2018

25
Leverage Ratio:

Debt Ratio: Debt ratio is a solvency ratio that measures the proportion of total assets financed by
the firm’s creditors. In a sense, the debt ratio shows a company’s ability to pay off its debt with
its assets. The higher the debt ratio, the greater the amount of creditor’s money being used to
generate profits. The formula of debt ratio is given below:

Formula: Debt Ratio: Total Debt /Total Asset

Item name 2014 2015 2016 2017 2018

Total debt 137217.43 170717.52 199066.35 227658.45 246750.76
Total asset 145346.12 180229.57 210241.52 239770.63 259638.37
Debt ratio 0.94 0.95 0.95 0.95 0.95

Debt ratio
0.95200
0.95000 0.95036
0.94948
0.94800 0.94722 0.94685
0.94600
0.94400 0.94407
0.94200
0.94000
2014 2015 2016 2017 2018

Debt ratio

Interpretation: the value indicates the company has financed closer of its assets. Higher debt
ratio indicates that the company used its financial leverage more. It also indicates that it has
greater indebtedness.

Debt to Equity Ratio: The debt to equity ratio is a financial leverage ratio that measures the
relative proportion of total liabilities to common stock equity used to finance the firm’s assets.
The debt to equity ratio shows the proportion of company funding that comes from creditors and
investors. A higher debt to equity ratio indicates that more creditor financing (bank loans) used
than investor financing (shareholders) did.

Formula: Debt to Equity Ratio = Total Debt/ Total Equity

Particular 2014 2015 2016 2017 2018

Total debt 137217.43 170717.52 199066.35 227658.45 246750.76
Total equity 145346.12 180229.57 210241.52 239770.63 259638.37
Debt to 0.944 0.947 0.947 0.949 0.950
equity ratio

26
 Debt to Equity Rati o
Debt to Equity Rartio
0.952
0.950 0.950
0.949
0.948
0.947 0.947
0.946
0.944 0.944
0.942
0.940
2014 2015 2016 2017 2018

Interpretation: This result tell us that for every tk1 common stockholders have invested in trust
bank limited, the company owes about 95 paisa to creditors in 2018. It has 94% debt to equity
ratio in 2017.

Time Interest Earned Ratio: the time interest earned ratio, sometimes called the interest
coverage ratio, measures the firm’s ability to make contractual interest payments. The higher its
value, the better able the firm is to fulfil its interest obligations. The time interest earned ratio can
be calculated as:

Time interest earned ratio = EBIT/ interest expense

Item name 2014 2015 2016 2017 2018

EBIT 12435.70 13894.90 13186.16 14363.84 17418.46
Interest 9673.23 10075.23 8733.55 8865.34 11209.60
expense
Time 1.29 1.38 1.51 1.62 1.55
interest
earned ratio

Time Interest Earned Ratio

1.6
1.2
0.8
0.4
0
2014 2015 2016 2017 2018

27
Interpretation: A value of at least 3.0 and preferably, closer to 5.0 is often suggested. Time
interest earned ratio of trust bank limited is not good but it was increased gradually from 2014-
2017. In 2018, it was 1.55, which was 1.62 in 2017.

Activity ratio:

Total asset turnover: the total asset turnover indicated the potency with that the firm uses its
assets to generate sales. Generally, the higher a firm total asset turnover, the more efficiently its
assets have been used. This measure is probably of greatest interest to management because of it
indicates whether the firms operations have been financially efficient. Total asset turnover can be
calculated as:

Total asset turnover = sales revenue/ total assets

Particular 2014 2015 2016 2017 2018

Total 12435.70 13996.77 13228.57 14413.60 17418.46
revenue
Total 145346.12 180229.57 210241.52 239770.63 259638.37
assets
Total asset 0.09 0.08 0.06 0.06 0.07
turnover

Total Asset Turnover

2014 2015 2016 2017 2018
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
total asset turnover

Interpretation: the graph shows that trust bank limited turns over its assets 0.07 times in the
year of 2018, which was 0.06 times in 2017. This present trust bank limited used its resources
efficiently to generate sales.

Fixed Asset Turnover: The fixed asset turnover ratio is an efficiency ratio that measures a
company’s return on their investment in property, plant, and equipment by comparing net sales
with fixed assets. In other words, it calculates how efficiently a company is a producing sale with
its machines and equipment.

28
Formula: Fixed Asset Turnover = Total Revenue/ Total Fixed Assets

Particular 2014 2015 2016 2017 2018

Total 12435.70 13996.77 13228.57 14413.60 17418.46
revenue
Total fixed 603.64 827.55 802.07 704.06 578.01
assets
Fixed asset 20.60 16.91 16.49 20.47 30.14
turnover
Interpretation: Although trust bank limited fixed asset turnover was not good enough in 2015
and 2016 but they have surprisingly increased their fixed asset turnover ratio in 2017 as well as
2018. It was highest in 2018.

Fixed Asset Turnover

30.14

20.6 20.47
16.91 16.49

2014 2015 2016 2017 2018

Fixed asset turnover

Profitability Ratio:

Return on assets: the return on total assets measures the overall effectiveness of management in
generating profits with its available assets. The higher the return on assets the better the firms
profitability condition. The return on assets is calculated as:

ROA = EAT/ total assets* 100

Particular 2014 2015 2016 2017 2018

EAT 1299.20 1540.52 2015.82 1750.86 1892.58
Total assets 145346.12 180229.57 210241.52 239770.63 259638.37
ROA 0.89% 0.85% 0.96% 0.73% 0.73%
Interpretation: the results indicates that the company could not efficiently generate its profits by
using its assets in 2017 and still they could not improve it. Therefore, the result is very
dissatisfied for the investors who wants to invest in trust bank limited.

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 ROA
ROA
0.96%
0.89% 0.85%
0.73% 0.73%

2014 2015 2016 2017 2018

Return on equity: the return on equity measures the return earned on the common stockholders’
investment in the firm. Generally, the owners are better off the higher is this return. It is very
important ratio analysis because it shows how effectively a firm invest its shareholders money to
generate profits. The return on equity is calculated as:

ROE = EAT/ total equity capital*100

Particular 2014 2015 2016 2017 2018

EAT 1299.20 1540.52 2015.82 1750.86 1892.58
Total equity 8128.69 9512.04 11175.16 12112.18 12887.61
capital
ROE 15.98% 16.20% 18.04% 14.46% 14.69%

Interpretation: the calculated ROE of 14.69% indicates that during 2018 trust bank limited
earned 14.69 on each tk1 of common stock equity. It was not optimistic for the company. It has
the highest return on equity 18.04% in 2016.

ROE
ROE
20.00% 18.04%
15.98% 16.20%
14.46% 14.69%
15.00%

10.00%

5.00%

0.00%
2014 2015 2016 2017 2018

30
Net profit margin: the net profit margin is a profitability ratio, which measures the percentage of
each sales dollar remaining after all costs and expenses, including interest, taxes, and preferred
stock dividends have been deducted. The higher the firm’s net profit margin the better for the
firm. The net profit margin is calculated as

Net profit margin = EAT/ Sales revenue*100

Particular 2014 2015 2016 2017 2018

EAT 1299.20 1540.52 2015.82 1750.86 1892.58
Total 12435.7 13996.8 13228.6 14413.6 17418.5
revenue
Net profit 10.45% 11% 15.24% 12.15% 10.87%
margin
Interpretation: TBL net profit margin was highest in 2016. However, it steadily decreased by
12.15% and 10.87% respectively from 2017 to 2018. Decreasing net profit margin is not
favorable for the trust bank limited.

Net Profit Margin

15%
16.00%
12%
14.00% 11% 11%
10%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2014 2015 2016 2017 2018

Net profit margin

Price/ earnings ratio: the price/ earnings ratio is commonly used to assess the owner’s appraisal
of share value. The price/ earnings ratio measures the amount that investors are willing to pay for
each dollar of a firm’s earnings. The level of this ratio indicates the degree of confidence that
investors have in the firm’s future performance. The higher the P/E ratio the greater the investor
confidence. The P/E ratio is calculated as

P/E ratio: market price per share/ earnings per share

Item name 2014 2015 2016 2017 2018

MPS 14.50 24.10 23.80 42.60 32.50
EPS 2.77 3.04 3.61 3.11 3.40
P /E Ratio 5.23 7.93 6.60 13.72 9.56

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Interpretation: the figure indicates that investors were paying TK9.56 for each TK1 of
earnings. In 2017, the P/E ratio was 13.72 and it was the highest value among the years. As I said
before the higher the P/E ratio the greater the investor confidence. Therefore, the result of 2018
is not attractive for the investors.

P /E Ratio
16
14
13.72
12
10
9.56
8
7.93
6 6.6
4 5.23

2
0
2014 2015 2016 2017 2018

P /E Ratio

32
 Chapter - 4
Findings, Recommendations
and Conclusion

Findings
33
 There are some findings, which I get after analyzing the performance of trust bank limited noted
down:

 The net profit margin was 12.15% in 2017 but it decreased by 10.87% in 2018.
 Return on equity has slightly increased in 2018 at 14.69%, which was 14.46% in 2017. In
2016, return on equity was 18.04%, which is highest among the years.
 Return on asset was 73% which is as same as 2017. In 2016, it was 96%.
 Fixed asset turnover was 30.14 times in 2018, which was highest fixed asset turnover
among the five years. It presents that TBL has efficiently used its fixed asset to generate
sales.
 Total asset turnover had increased in 2018 at 0.07 times. It was 0.06 times in 2017. But it
was highest in 2014, which was0.09 times
 Time interest earned ratio was 1.62 in 2017. However, it decreased in 2018 at 1.55 times.
 Debt to equity ratio was same from 2015 to 2018. It was 95% in these years.
 Benchmark of loan to deposit ratio is between 80% - 90%. But it was 92.69% in 2018.

Recommendations
Here I want to put some suggestions according to the findings, which I hope that help the
trust bank limited to improve their performance.

1. Net profit margin ratio decreased in 2018. I think they should reduce their expenses as
much as they can. They have to invest in more profitable sector, which will be helped
them to increase net profit margin.
2. Return on equity increased by .23 only. To increase the return on equity, the bank should
increase its net profit margin and should reduce total equity capital.
3. To satisfy its liabilities, the bank should increase the fixed asset more, which will assist to
increase its return on assets.
4. Loan to deposit increase is attributable to a lower growth in deposit than loan. Which
significantly decreasing the bank’s liquidity position. So the bank should cautious in
giving loans and assessing credit worthiness because of then on going fund crisis
5. They have to use more equity capital than debt capital so that they can increase their
solvency
6. Time interest earned ratio should be increased by increasing EBIT and decreasing interest
expenses
7. Being a service providing organization, trust bank should introduce new and dynamic
services to serve the people and capture the target market. It is required to build up some
successful persuasive projects.
Conclusion

34
Today the banking service is very competitive. Now bank offer the widest range of
financial services and perform many financial functions. Thus, banks have proven that
they are the key factor for the business and economy as well. Trust bank limited is one of
the leading private commercial bank in Bangladesh, dynamic in actions, honest in
dealing, Just in judgement, fair in approaches, and devoted to high quality service to
customers and thereby contribute to the expansion of gross domestic product of the
country. Throughout stimulating trade and commerce, boosting up export, poverty
alleviation, rising standard of living of limited income group and overall socio economic
development in the country. Trust bank limited definitely satisfies their corporate
customers and to maintain this scenario in a more efficient and prospective manner the
bank can surely accept this project in a cordial manner.to enrich and maintain a better
reputation is the only solution to make a business more progressive.

Bibliography

35
Report:

Annual report of trust bank limited from 2013-2017

Some of my course materials related to the subject

Book:

 Principles of Managerial Finance By Lawrence J. Gitman (14th Edition)

 Investments (Analysis And Management) By Charles P. Jones (9th Edition)
 Financial Management By Professor M. Shahjahan Mina

Website:

https://www.tblbd.com/

https://www.investopedia.com

https://en.wikipedia.org/wiki/Trust_Bank_Limited

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