Foreign Operation and Performance of Mutual Trust Bank Limited

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Foreign Operation and Performance of Mutual Trust Bank Limited

Executive Summary

The internship is designed to bridge the gulf between the theoretical knowledge & real life experience. It designed to have a practical experience while passing though the theoretical understanding. Banks and other financial institutions play a vital role in forecasting the economic and social condition of a country. Baking system of Bangladesh has gone phases of development-Nationalization, Privatization, and Lastly Financial Sector Reform.

Banks in Bangladesh now constitutes the core of the country’s organized financial system. They mobilize the savings of people and channel the resources toward different sectors of the economy. Customer satisfaction is one of the most vital reflections of the progression toward advancement and development for any service institution. As service providing organization, providing best service is one of the mottos of the commercial banks. With the customers’ perception as well as satisfaction, the mirror image of service quality in private commercial banks can be obtained. The achievement of the customers’ satisfaction is the key feedback to improve service quality.

This study is mainly focused on Foreign Operation and Performance ofThe Mutual Trust Bank Limited (MTBL), Gulshan Branch. Like the other private commercial banks, MTBL also competing with others to flourish in this country. Providing quality service is only means flourish. Firstly, made a Foreign Operation and Performance ofMutual Trust Bank Limited, where had completed my internship program. Here tried to focus the bank’s history of origination, its mission and vision, major departments and business units and major products and services. Then said something about General Banking, Foreign Exchange Department, Loan and Advance and Accounts Department play a vital role to increase the bank’s income and assets. Both divisions are bringing more profit than another division by their activities. So they are important for the Development of Mutual Trust Bank Ltd.

Lastly, the got some findings from the analysis of the remittance behavior of Mutual Trust Bank Limited. Then, conclude report saying some recommendations.

INTRODUCTION

Now a day, it has become essential for almost every person to deal with banks somehow in their bred and better life. As a result it has become essential for every person to have some idea of the bank and banking procedure.

At present time, the banking procedure is becoming faster, easier and the banking arena is becoming wider. As the comparative field of the banking sector, the banking organizations are coming with innovative ideas.

This report has been developed concentrating on the topic “Foreign Operation and Performance ofMutual Trust Bank Ltd (MTBL), Gulshan Branch, Dhaka.” This Mutual Trust Bank with its 36 branches in manipulate locations of the country is providing the best quality services to the clients and customers. Gulshan Branch is the Twenty Second branch of the Mutual Trust Bank.

For the durations of my Three Months internship period 05^th July to 05^th October 2009 in the Gulshan Branch of Mutual Trust Bank. Those types of experiences have acquired these are bring together to formulate this report.

Origin of the Report:

The report titled “Foreign Operation and Performance of Mutual Trust Bank Limited” has been prepared as a partial fulfillment of BBA program authorized by the supervisor Mr. Md. Abdul Mannan, Assistant Professor, Department Of Business Administration, Stamford University Bangladesh.

After completing my Bachelor of Business Administration (BBA) as a student of Stamford University Bangladesh, I wanted to complete Internship program from a reputed Bank which would be helpful for my future professional career. To got the opportunity to perform my internship in the MTB.The sent to Gulshan Branch. It was two months practical orientation program. This report is originated as the requirement of MTB.

Background of the study:

This report has been prepared based on the information of this bank. All information is secondary and collected from Internet, Brochures, annual report etc. Based on this information ratio has been calculated. For the calculation of ratio has been calculated to measure the current position of the Bank. At the same time compare with the market performance. This report has been prepared based on one selected listed Bank in Bangladesh.

Purpose of the study:

The Purpose of the internship program is to familiarize myself with the real market situation, to compare them with the business’ theories & at the last stage make a report on assigned task. The main objective of the study is to have an assessment on Foreign Operation and Performance ofMutual Trust Bank Limited, through different aspects of the banking sector and its effectiveness in this regard. Besides the primary objective of this report is to achieve practical knowledge about banking to observe what the basic bank services,

But the Broad and Specific Objective of the study are given below-

q Broad Objective

· To review the present position of MTBL.

· To find out some problems which are faced by MTBL in customer recovery.

· To determine the qualitative change of customer recovery position.

· To determine the sectors that is responsible for increasing the better service.

· To familiarize with practical Job Environment.

· To have an exposure on the financial institution, especially on banking environment of Bangladesh.

· To have some practical exposures that will be helpful for my future career.

· To make a bridge between the theories and practical procedures of banking day-to-day operations.

· To gain practical knowledge by working in different desks of Gulshan branch of MTBL.

· To observe the working environment in Commercial Banks.

· To study existing Banker-Customer Relationship.

· To know the overall functioning of MTB Limited.

· To make myself more confident and active in future to handle my job.

· To know the financial strength and future threats of the bank.

· Finding out the risk and profitability of different modes theoretically.

· To measure the efficiency of the bank.

q Specific Objective

· To gather comprehensive knowledge on overall banking functions and foreign exchange of the Mutual Trust Bank Ltd.

· To know the performance of the bank through mathematical analysis.

· To visualize the performance of MTB Gulshan Branch.

· To know the work process and monitoring system of MTB Gulshan Branch.

· To access the key performance indicator of the Gulshan Branch.

Capacity of the study:

This report has been prepared through extensive discussion with bank employees and with the clients. It covers the Mutual Trust Bank Ltd organizational overview, Management and organizational Structure, Functions performed by Mutual Trust Bank Ltd. Scope of this report is very confined concentrate only on the generalization banking system of Mutual Trust Bank Ltd in development of capital market of Bangladesh. Moreover this far evaluating the performance, I kept my thinking on accounts, General Banking, Credit and Advances, identification of problems regarding credit Management, types of Credit Extended, Sector of Credit Allocation and Foreign Exchange only for this reasons my capacity is very little area.

Methodology of the report:

The study involves various types of information past and present policies, procedures and tactic of credit management. There are various tactic have been used in preparing this report.

Testing Procedures of The Report:

During my internship period, my testing procedure is biased, because here testing size is too little. Here is my taste is bankers of any department of this branch. Asking them question and collect data for my research. Sometimes he bankers were so busy for their daily activities and then failed to get necessary information. In this situation have used different procedure for my essential element to prepare this report and think that can collect the necessary information.

Data Design:

The report was fully investigative in nature. Data have been collected from both Primary and Secondary Sources.

Data Collection:

This study is mainly based on secondary data available from the various divisions and departments of Mutual Trust Bank, in addition to these other necessary information have been collected from the daily News Papers, Relevant Journals, and Annuals Reports of Mutual Trust Bank, Bangladesh Bank, Ministry of Finance and Planning and Publications of other relevant institutions have also been taken into considerations.

Source of information:

In order to make the report more meaningful and presentable, two sources of data and information have been used widely. They are:

• Primary data
• Secondary data
• The “Primary Sources” are as follows:

§ Face-to-face conversation with the respective officers and staffs of the Branch.

§ Informal conversation with the clients.

§ Practical work exposures from the different desks of the departments of the Branch covered.

§ Relevant file study as provided by the officers concerned.

• The “Secondary Sources” of data and information are:

§ Annual Report of MTB

§ Various books, articles, compilations etc. regarding general banking functions, foreign exchange operations and credit policies.

§ Different ‘Procedure Manual’, published by MTB.

§ Different circular sent by Head Office of MTB and Bangladesh Bank.

§

Limitations of the Study:

The got enthusiastic collaboration from employee of the Mutual Trust Bank Ltd, Gulshan Branch. Every day, they were tremendously busy, but they gave me much time to learn over all banking activities and prepared this report. The present study was not out of limitations. But as an internee it was a great opportunity for me to know the banking activities of Bangladesh especially Mutual Trust Bank Ltd. Some restraints are disclosed bellow:

Limitation of the Time:

The initial obstruct is time itself. Because of the time limit, the scope and measurement of the study has been reduced. Designed for an analytical purpose enough time is required. But Was no has given adequate time to prepare such as in intensity study.

Non Availability Sufficient Data:

To recognize the facts about the study in a practical way and more clearly quantitative appearance of information it’s represented by data. It was very difficult to collect data, which is very essential, because the branch of any new bank that is newly established therefore could not afford required secondary data in all area of the study.

• Every organization has their own secrecy that is not revealed to others. While collecting data i.e. interviewing the employees, they did not disclose much information for the sake of the confidentiality of the organization.
• The main constraints of the study are insufficiency of Information, which was required for the study. There are various information the bank employee can’t provide due to security and other corporate obligations.
• Another significant problem faced during the preparation of this report was the contradictory explanation of a single subject by different employee.
• Other limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.
• Te clients were very busy to provide me much time for interview.
• The carried out such a study for the first time, so inexperience is one of the main constraints of the study.

Banking Overview of Bangladesh

Bank is that kind of organization, which function is lending and borrowing and performed the different types of financial activities with good trust and security. There are two kinds of Banks:

• Central Bank.
• Commercial Bank.

Central Bank:

Bangladesh shares a common past with India and Pakistan in respect of development of banking business. Bangladesh Bank Order, 1972 was promulgated to create the country’s central bank- Bangladesh Bank- to take over the assets, liabilities and responsibilities of the erstwhile State Bank of Pakistan. At the same time Bangladesh government nationalized 6 (six) large Commercial banks in 1972, most of which were owned by the people of the then West Pakistan, through Bangladesh Bank Nationalization Order 1972.

As like other self-governing country of the world, Bangladesh also has a Central Bank named Bangladesh Bank. It was established with a view to performing those works usually done by the Central Banks spreading across the world. One of the major functions the Bangladesh is to maintain the international monetary relations in the form of receiving foreign aid, grants, donations and management and invests of Foreign Exchange Reserve in the foreign countries. The appearance of Bangladesh Bank in 1971 after a bloody independence that claimed millions of peoples required the birth of Bangladesh Bank as the representation of economic freedom and sovereignty. As a result in the 31^st October 1972, a Bank rule was introduced by dint of “President Order 27”. Under this ordinance the government acquired all assets and liabilities of the former Dhaka Regional Office the “State Bank of Pakistan” and declared the government and implements the governments’ financial policies.

The main function of the Bangladesh Bank is:

i. Money Exchange

ii. Banking Function

Further functions of Central Bank is to manage financial organization like Commercial Banks, Insurance company etc. Controlling Loan, Clearing House Control the Value of money bank of the commercial banks collecting Income Tax, Representing of the Governments work observe the Development of Banking System etc.

Commercial Bank:

Which Bank borrowing from people and invests for many businesses that are called Commercial Bank. Their main functions is borrowing and lending. Commercial Banks some specific functions; these are Medium of Exchange, Build up of Capital, Creating Bill of Exchange, and Helping International Business etc. There are 52 Commercial Banks are survive in Bangladesh, Just now. There are some local Commercial Banks and some are Foreign Commercial Banks.

The Local Commercial Banks are given below:

The Mutual Trust Bank Limited

Mutual Trust Bank Ltd (MTBL) is sponsored by a group of dynamic Bangladeshi Entrepreneurs, Industrialists, Educations and Professionals. Mutual Trust Bank Ltd is one of the renowned and scheduled private commercial bank of Bangladesh. The company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each.

The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business:

1. All types of commercial banking activities including Money Market operations.

2. Investment in Merchant Banking activities.

3. Investment in Company activities.

4. Financiers, Promoters, Capitalists etc.

5. Financial Intermediary Services.

6. Any related Financial Services.

Services of the Mutual Trust Bank Ltd: Mutual Trust Bank provides various services. Different types of services are given below-

· Institutional Bank

· Corporate Banking

· Consumer Banking

· Commercial Banking

· Lease Finance Banking

The Company (Bank) operates through its Head Office at Dhaka Motijheel Dilkusha and 36 branches and 5 SME Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

MTB Mission:

We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company that offers an array of products and services in the search for excellence and to create an impressive economic value.

MTB Vision:

To be the bank of 1st choice by creating exceptional value for our clients, investors and employees.

Board of Directors:

Chirman

Mr. Samson H. Chowdhury

Vice Chirman

Dr. Arif-ud- Dowla

Directors

Mr. Syed Manzur Elahi

Mr. Md. Hedayetullah

Mr. Kh. Rashiduzzaman

Al- Haj Syed Abul Hossain

Mr. Mohammed Abdur Rouf

Mr. Md. Abdul Malek

Mr. Rashed Ahmed Chowdhury

Mrs. Yasmeen Haque

Mr. A.F.M. Mahfuzul Hassan

Mr. Md. Wakiluddin

Mr. Saidur Rahman Ratan

Managing Director

Mr. Anis A. Khan

Company Secretary

Quamrul Islam Chowdury

Management of Mutual Trust Bank Ltd

 

Management Structure of Mutual Trust Bank Ltd.

In 2001 Mutual Trust Bank Limited made commendable progress in all business, like deposit, credit, fund management, investment, foreign remittance, credit card & foreign exchange related business. Bank has expended business activities as holding previously & parallel by diversification its investment to a new product. As a major financial remarkable portion of total exports of the country. This is the sign of good management. The management processes are as follows:

Organ gram of MTBL:

The above mentioned organ gram is for Mutual Trust Bank Ltd. All operational activities are done by the chain of command which is flows from the top level to lower level. All the employees follow their senior’s instructions. All the commands are made by the Motijheel Dilkusha head office of the bank.

In Mutual Trust Bank Limited Gulshan Branch the Manager Mr. Habibur Rahman, Senior Vice President who is the senior vice president give the instructions to junior employees. The assistant vice president Mr. Anisur Rahman monitors all the employees work and give reports to the branch manager. All operational departments have an in charge that solves the divisional activities. This is the management process of the branch.

JOB AS AN INTERNEE IN MTBL:

JOB DESCRIPTION:

As per my appointment letter my job description mentioned that an intern will working under the direct supervision of MTBL Gulshan Branch and in the special project assigned by supervisor. Apart from project work intern are required to assist supervisor by doing the job assigned from time to time. Interns working hours will be: Sunday to Thursday 9:00 am to 5:00 pm intern should conduct themselves in a manner, which is not prejudicial to the Bank’s interest. On the completion of the program intern is required to submit a report on the project within the agreed time.

SPECIFIC RESPONSIBILITIES OF THE JOB:

I have worked in General banking, Foreign Exchange Department, Accounts & IT department, clearing department and in Credit Department of the MTB Gulshan Branch. My daily responsibilities were:

• All functions of Debit Card.
• Prepare L/C advice through inward register.
• Forwarding L/C advice.
• Maintain IDBC register of L/C’s.
• Maintain also IBDA register of L/C purchase.
• Deal with customers
• Works with different types of account opening
• Pay order issue and Check issues
• OBC prepare and maintain OBC register
• Checking clearing supplies end of the day.
• Clients account balance check and provide bank account statements
• Check and sorting documents of accounts
• Responsible for the processing of clearing cheque for clearing house
• Tracking all returned cheque
• Prepare customer’s CIB report to the Bangladesh Bank.

DIFFERENT ASPECTS OF JOB PERFORMANCE:

Working in a bank is so much challenging. Bank’s has so many rules, regulations and confidentiality in working process. People who work in bank have to be alert and conscious all time. Not only alert and consciousness but also bankers have to do work faster with 100% accuracy. There is no chance to do mistake. So as an intern in the bank also had to go through the process. There was lot of pressure of work. In my working period, MTB managing director has changed. So their management has also changed largely. Interest rate is revised. And head office has audits the branch whole documents. For these reasons, every paper documents and processes was revised and checked to resolve error and update with new systems. The checked the most of the documents accurately. It was a great opportunity for me that the could learn about the process and how to work accurately and faster under so much pressure.

Overview of MTB Gulshan Branch

The worked in MTB Gulshan branch’s Foreign Exchange Department, General Banking department ,Clearing Department, Card Department and Credit and Advance Department as an internee. Let’s see the overview of MTB Gulshan branch. It is one of the profitable branches of Mutual Trust Bank.

Any bank’s branch has actually 4 operational departments. They are: I) General Banking department II) Accounts department (Cash, clearing & transfer) III) credit & advance department & IV) Foreign exchange department. But in MTB Gulshan Branch, the actual situation is a little bit different. In this branch there are actually 6 operational departments and 1 separate Merchant Banking Department. The 6 operational departments are

· General Banking and Accounts Department

· Cash Department

· Clearing Department

· Credit & Advance Department

· Foreign Exchange Department

· Card Department

General Banking & Accounts Department:

A bank is a financial institution whose primary activity is to act as a payment negotiator for customers and to borrow and lend money. They deposits money from investors and lend that money in different sectors. General Banking is the primary activities of banking.

General banking activities which is done by the accounts department has some sections in the branch according to activities. The sections are:

• New account opening/ account closing and account maintenance section (including check book issue, check book closing, charge cutting, deposit slip provide, give bank statement, account balance check etc.)
• Customer service section
• Remittance section (Payment Order issue/ Collection, Demand draft issue/ collection, T.T issue/collection, OBC/IBC collection, Endorsement etc)
• Locker service

Mutual Trust Gulshan branch have 3 employees in General Banking & Accounts department. They have friendly trained me on the GB works.

Credit & Advance Department:

In Credit & Advance department; Lending money is the main activities of a bank and which department operates for lending money in different sectors called Credit & Advance department. This department has lots of activities, such as borrower selection; approve loan/credit proposal, credit risk management, loan recovery etc.

Foreign Exchange Department:

For settlement of debts of international transactions in between nations there has evolved a economic science which deals with the means and methods by which rights to wealth in one country’s current are converted into rights to wealth in terms of another county’s currency, known as Foreign Exchange. In the bank department serves for these activities called Foreign Exchange Department.

Cash Department:

In Cash department deals with liquid money or receive money and pay to the drawer. They receive cash money from clients and also provide cash money according to clients demand. In MTB Gulshan branch has a separate cash departments. Here they operate with the cash money such as cash receive, cash payment, cash count etc.

Clearing department:

The department which performs Collection of Cheques, drafts etc. on behalf of its customers in one of the basic function of a commercial bank function is known as clearing department. Clearing house is the assembly of locally operating banks under the supervision of Bangladesh Bank for exchanging cheque, draft, pay order, warrant and other demand instruments. From clearing house all these will draw and received payment from their customers for payment collection. The bank operates for certain hours on the working day under the supervision of Bangladesh bank. In clearing house there is Sonali Bank acts as an agent of Bangladesh Bank. Mutual Trust Bank is also a recognized member of clearing house. MTB clearing house code is 65. In Gulshan Branch have a separate department for clearing Cheques/Warrant. Shahnaz Parveen is an officer who is the in charge of clearing department.

Card Department:

Debit and credit card issue and maintenance is the main activities of this department. In MTBL there has a separate card department. MTBL issues Credit Card, Visa Card, and Master Card as ATM card.

Profit Position:

Profit position in Gulshan Branch is given below:

Profit upto June’09	Tk. 11.27 mln
Target upto June’09	Tk. 25.30 mln
Achievement upto June’09 (In percentage)	44.55%
Target upto Dec’ 09	Tk. 70.00 mln
Growth (Point to Point Basis over June 30,2008)	57.42 %
Per Employee Profit	Tk. 0.75 mln

Export Position:

Description	Contribution
1. Export upto June’09	Tk. 193.29 mln
2. Target upto June’09	Tk. 250.00 mln
3. Achievement upto June’09( In percentage)	77.32%
4. Target upto Dec,09	Tk. 500.00 mln
5. Growth	56.16 %

(Point to Point Basis over June 30, 2008)

Import Position

Description	Contribution
1. Import upto June’09	Tk. 114.88 mln
2. Target upto June’09	Tk. 500.00 mln
3. Achievement upto June’09(In Percentage)	22.98%
4. Target upto Dec’09	Tk. 1000.00 mln
5. Growth	143.24 %

(Point to Point Basis over June 30,2008)

Financial Performance of Mutual Trust Bank Limited

The overall performance of MTB is in line with the first generation banks. Besides, the bank has been facing decline trend in some of the performance parameters compared to its previous performance up to 30^th June 2008.However, some of the parameters has again shown upward trend in 31^st August 2007 performance. The Performance of the bank is analyzed below:

OPERATING PROFIT:

Mutual Trust Bank earned an operating profit of Tk. 1,195.09 million in 2008 compared to Tk. 763.85 million in 2007.

The performance may not be termed unsatisfactory considering the socio-political environment that prevailed in the country during 20008. Profit before tax stood at Tk. 558.53 million after keeping provision on loans and advances. The Net profit for the year stood at Tk. 305.03 million compared to the previous year’s Tk. 210.80 million. Earnings per Share (EPS) in 2008 increased to Tk. 21.07 registering an increase by 42.36% as against Tk. 14.80 of the preceding year. Bank’s Return on Asset in 2008 was 0.78% as against in 2007.

CAPITAL:

Mutual Trust Bank started its operation on October 24, 1999 as a private sector bank with an authorized capital of Tk. 1,000.00 million and paid up capital of Tk. 200.00 million. The authorized capital increased to Tk. 3,800.00 million in 2007.

The paid up capital of the bank stood at Tk. 1496.88 million as on December 31, 20008 registering an increase of Tk. 498.96 million from that of previous year. Total capital of the bank as on December 31, 20008 increased by Tk. 517.38 million and stood at Tk. 2888.33 million consisting of shareholder’s equity s( Tier-1) of Tk. 2480.03 million and supplementary capital ( Tier-2) of Tk. 408.30 million. Shareholders equity consists of paid up capital, reserve and retained earning whereas Supplementary capital includes general provision against loans and advances and exchange equalization.

CAPITAL ADEQUACY RATIO:

Capital Adequacy Ratio (CAR) of the bank was 10.39% as on December 31, 2008 as against the minimum requirement of 10% indicating a sound capital base of the bank.

CREDIT RATING:

Mutual Trust Bank was rated as A1 (pronounced single A one) in the Long Term and ST3 (pronounced ST three) in the Short term by Credit Rating Agency of Bangladesh CRAB) on 29 May 2008. A1 rating in the long term is adjudged to be strong banks, characterized by good financials, healthy and sustainable franchises, and a first rate-operating environment. This level of rating indicates strong capacity for timely payment of financial commitment, with low likeliness to be adversely affected by foreseeable events. ST3 ratings in the short term are characterized with satisfactory level liquidity, internal fund generation and access to alternative sources of funds.

DEPOSITS:

Total deposits of the bank as on December 31, 2008 stood at Tk. 33,820.41 million as against Tk. 24,776.92 million of the previous year registering a 36.50% growth.

The bank has given due stress on procurement of low cost deposit including cost free float of funds. As part of Banks strategy some products such as Brick By Brick, Double Saver, Monthly Benefit Plan, and Triple Saver etc. have been introduced in our deposit product line to attract retail customers.

LOANS & ADVANCES:

The Credit portfolio of the bank comprises diversified areas of business and industry sectors. The sectors include textiles, edible oil, ready-made garments, chemicals, cement, telecom, steel, real estate and service industries.

The bank’s credit growth recorded at 25.77% with a total credit portfolio of Tk. 28,529.35 million at the end of December 2008 compared to Tk. 22,683.23 million at the end of December 2007. Total interest income of the bank from loans and advances stood at Tk. 3,529.72 million in 2008 registering a 23.98% growth over the preceding year. The bank has given utmost importance to acquire quality assets and is committed to retain good borrowers through customer relationship management and financial counseling. At the same time efforts have been made to do business with new clients having good potentials to have a diversified and well-structured advances portfolio and to reduce overall portfolio risk.

SME FINANCING:

MTB has given special focus on SME’s & Consumer Banking (CNB) business. Year 2008 was the year of entire SME and CNB business unit like product policy, process, development, distribution channels and ultimately triggering the focus on the growth of the business.

Numerical data indicating the performance in different area can give a gist of SME’s & CNB activities in 2008. Total loans and advances reported growth of 366% percent in 2008 compared to 2007. SME was not only growing in the book size but also maintained good health of the portfolio and significantly reduced the non performing asset burden. Our proper selection of borrowers, strong monitoring and business strategies were the main strength to reduce the overdue rate.

Mutual Trust Bank (MTB) has participated in the SME’s business line for the last 2 years. Presently 38 branches and five SME’s Service Center of MTB are available over the country where dedicated team members are working to educate SME’s people for their development. MTB is providing working capital and fixed Asset financing facilities in service, trading & manufacturing sectors under SME’s.

INVESTMENTS:

The total investment portfolio of the bank stood at Tk. 5,606.49 million in December 31, 2008 as compared to Tk. 3,956.53 million in December 31, 2007 recording a growth of 41.07%. The investment portfolio includes treasury bills, treasury bonds, zero coupon bonds, shares of different companies, bonds, prize bonds etc. the investment is made primarily to meet SLR requirement.

INTERNATIONAL TRADE:

MTB has designed Trade Finance Products to gain the competitive edge in the changing foreign exchange market arena. The banks offers a broad spectrum of trade finance products namely issuance of documentary credit, advising, confirmations, forward covers, pre-shipment and post-shipment finance, negotiation and purchase of export bills, discounting of bills, collections etc.

IMPORT:

Import volume of Mutual Trust Bank in 2008 has increased to Tk. 30,381.62 million compared to Tk. 24,872.07 million of 2007 reflecting growth of 22.15%.

The main import items were raw materials, fabrics and accessories, chemicals, electronics goods and other consumer products, capital machinery, medical equipments, food grains (vegetable oil, pulse, rice, sugar) etc.

EXPORT:

In 2008 the export of Mutual Trust Bank has increased to Tk. 19,463.23 million compared to previous year’s volume of Tk. 18,281.46 reflecting a growth of 6.46%. The export items were ready-made garments, jute, jute goods, leather etc. due to the global recession at the second half of the year it showed a download trend in the expected export growth.

FOREIGN REMITTANCE:

Foreign remittance is one of the major sources of the foreign currency reserve of our country and in order to encourage inflow of remittance through banking channel from the Non-resident Bangladesh, mutual Trust Bank provides exclusives service for repatriation and collection of remittances with the help of its foreign correspondents. MTB has established remittance arrangement with a number of exchange houses abroad to facilitate wage earners to remit their money in Bangladesh. The Bank has already been in operation with 14 exchange houses 4 in UAE, in UK, 1 in Qatar and 4 in Global based.

The extensive branch network of the existing exchange houses have been largely helping Bangladeshi expatriates working in more than 85 countries such as UAE, Oman, Qatar, Bahrain, KSA, Lebanon, Jordan, Cyprus, Greece, U.K., U.S.A.,Malaysia, Singapore, Australia, Sudan, Uganda, Italy, Canada, Spain, France etc to remit their funds speedily and efficiently through online network.

Establishment of remittance arrangement with 4 Exchange Houses in UAE, 2 in UK, 2 in USA, 6 in Qatar, 6 in Oman, 8 in Bahrain, and 2 in Singapore are under process. MTB’s total remittance stood at Tk. 7242.51 million in 2008 compared to previous year’s volume of Tk. 5456.71 million recording a growth by 32.73%. MTB is exploring further avenues of remittance from other countries through direct arrangement with KSA, Malaysia, USA, Canada and Italy in near future.

CORRESPONDENT BANKING RELATIONSHIP:

Mutual Trust bank has a very strong correspondent banking network with 225 banks around the globe. The bank has SWIFT Relationship Management Application (RMA) services with 353 renowned banks around the world, out of which 42 local banks and 311 foreign banks. The banks are also able to carry out their International Trade Business with most of the globe trading regions. We have total 32 Nostro Accounts with different correspondent banks abroad in GBP, USD, EURO, JPYen, and ACU. We earn interest and rebates on overseas banks and training/ seminars. We also enjoy credit lines of substantial banks, which help us to honors our L/C’s and fulfill our payment commitments abroad.

5 YEARS GLANCE of MUTUAL TRUST BANK Ltd.

Figure in Million Taka

SL	Particulars	2008		2007		2006		2005		2004
1.	Authorized Capital	3,800.00		3,800.00		1,000.00		1,000.00		1,000.00
2.	Paid-up Capital	1,496.88		997.92		950.40		864.00		720.00
3.	Shareholder’s Equity	2,483.09		2,044.30		1,904.80		1,560.94		1,217.55
4.	Total capital(Core+ Supplementary)	2,888.33		2,370.95		2,114.53		1,705.97		1,335.08
5.	Total Assets	38,964.97		32,181.90		25,983.92		19,306.99		15,931.03
6.	Total Deposits	33,820.41		24,776.92		22,264.05		16,098.54		13,164.13
7.	Total Loans & Advances	28,529.35		22,683.23		18,591.52		14,373.26		11,692.13
8.	Total Investment	5,606.49		3,956.53		2,821.62		2,495.98		1,676.21
9.	Export	19,463.24		18,282.00		12,943.29		8,810.00		5,924.00
10.	Import	30,381.62		24,866.00		26,255.29		17,660.00		17,355.90
11.	Total Contingent Liabilities	11,467.71		10,916.14		9,671.39		7,498.27		5,924.00
12.	Operating Income	1,843.90		1,188.34		1,284.86		877.01		686.00
13.	Operating Expenditure	648.81		424.48		315.39		225.17		179.06
14.	Profit before provision and tax	1,195.09		763.85		969.47		651.85		506.94
15.	Profit after provision and tax	305.03		210.80		478.28		336.17		247.19
16.	Total Provision maintained	1,236.07		603.43		239.98		145.00		117.50
17.	Earning Assets	33,944.60		28,470.97		23,575.83		17,419.05		14,779.16
18.	Non-interest earning assets	5,020.37		3,710.93		2,642.16		1,887.95		1,151.87
	Earning per share(figure in taka)		21.07		14.80		47.93	35.37	34.33
	Book value per share(figure in taka)		165.88		204.86		200.42	180.66	169.10
	Dividend Cash		–		–		20%	14%	–
	-Bonus Share		18%		25%		5%	10%	20%
	Return on Equity		12.28%		10.31%		25.11%	22%	20.30%
	Return on Assets (ROA)		0.78%		0.66%		1.82%	1.78%	1.55%
	Classified Loans as %of Total Loans and Advances		4.92%		2.39%		1.03%	Nil	Nil
	Lending –Deposit Ratio		84.36%		91.55%		83.50%	89.28%	88.82%
	Capital Adequacy Ratio		10.39%		10.19%		11.83%	12.55%	11.87%
	Price-Earning Ratio(Times)		15.18		40.30		7.14	11.12	17.10
	No. of Branches		36		30		25	20	16
	No. of Employees		739		578		470	376	298

DEFINITION OF FOREIGN EXCHANGE:

Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country onto that of another. Mutual Trust Bank Ltd provides a wide range of banking services to all types of commercial concerns such as Import & Export Finance and Services, Investment Advice, Foreign Remittance and other specialized services as required. Although we are a private commercial Bank, we have a strong global network that helps us to undertake international trade smoothly and efficiently.

In the course of the name sounds buying and selling and selling of foreign currencies, but actually it is the trade Foreign Exchange Department (FED) of the branch. This department provides services regarding financing of international trade to its customers. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealer (AD). If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries. So Mutual Trust Bank, Gulshan Branch is an authorized dealer. Financing can be in terms of services including financing have Letter of credit (LC) and other services. This is another major department is headed by the Foreign Exchange In-charge.

There are three kinds of foreign exchange transaction:

• Exports Business
• Import Business
• Remittance.

FOREIGN TRADE AND FOREIGN EXCHANGE:

International trade refers to trade between the residents of two different countries.

Each country functions as a sovereign State with its set of regulations and currency. The difference in the national of the exporter and the importer presents certain peculiar problems in the conduct of international trade and settlement of the transactions arising therefore. Important among such problems are:

(a) Different countries have different monetary units;

(b) Restrictions imposed by countries on import and export of goods;

(c) Restrictions imposed by nations on payment from and into their countries;

(d) Differences in legal practices in different countries.

FOREIGN EXCHANGE MEANS FOREIGN CURRENCY AND INCLUDES:-

(i) All deposits, credits and balances payable in any foreign currency and any drafts, travelers cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;

(ii) Any instrument payable, at the option of the drawee or holder thereof or any other party thereto. Either in Indian currency or in foreign currency or partly in one and partly in the other. Thus, foreign exchange includes foreign currency; balances kept abroad and instruments payable in foreign currency.

FUNCTION OF FOREIGN EXCHANGE:

The Bank actions as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, specially foreign business should have knowledge of these following functions :-

i) Rate of exchange.

ii) How the rate of exchange works.

iii) Forward and spot rate.

iv) Methods of quoting exchange rate.

v) Premium and discount.

vi) Risk of exchange rate.

vii) Causes of exchange rate.

viii) Exchange control.

ix) Convertibility.

x) Exchange position.

xi) Intervention money.

xii) Foreign exchange transaction.

xiii) Foreign exchange trading.

xiv) Export and import letter of credit.

xv) Non-commercial letter of trade.

xvi) Financing of foreign trade.

xvii) Nature and function of foreign exchange market.

xviii) Rules and Regulation used in foreign trade.

xix) Exchange Arithmetic.

LIST OF MTBL AUTHORIZED DEALERS:

SL. No.	BRANCH NAME	CONTACTS
1.	Principal Branch	7-8, Motijheel C/A, Dhaka. Tel : 711 3237-8, 7110930-1, Fax : 890-2-956 6181 Tlx : 642543 EMTEB BJ, E-mail: mtbpb@bangla.net
2.	Panthapath Branch	Chandrashila Suvastu Tower ,69/1 Panthapath, Dhaka. Tel : 861 3907, 8629887, Fax : 862 4687 Tlx: 632129 MTB PP BJ E-mail: mtbpp@progetelbd.net
3.	Babu Bazar branch	Aman Court, 15, Armenian Street, Babu Bazar, Dhaka. Tel :731 4821-2, Fax : 731 6393 Tlx : 632128 MTBBB BJ E-mail: mtblbb@bangla.net
4.	Agrabad branch	Quaderi Chamber, 37, Agrabad C/A , Chittagong Tel : 031-716 487, 813 287 Fax : 031-721 091 Tlx : 633265 EMTEB BJ E-mail: mtbagbj@gononet.com
5.	Progati Sarani Branch	15/5, Progati Sarani, Dhaka Tel : 881 8804, 885 5863 Tlx: 642543 EMTEB BJ E-mail: mtbpsb@bangla.net
6.	Dilkusha branch	68 Dilkusha C/A, Dhaka 1000 Tel : 7171 301- 2 E-mail: mtbldil@bangla.net
7.	Khatunganj Branch	325 Asadganj Road, Chittagong Tel : 031-612254 , 626966 E-mail: mtblktg@gononet.com
8.	Uttara Model Town Branch	House#39, Road#07, Sector#04, Uttara Model Town, Dhaka. Tel : 892 4379, 895 1474 E-mail: mtbumtb@bangla.net
9.	Dhanmondi Branch	Green Taj Center, Plot # 81 New, Road # 8/A New 1st Floor, Dhanmondi, Dhaka. Tel : 815 5607, 8158334 E-mail: mtbldhan@bonline.org
10.	Gulshan Branch	House # 50, Road # 03Plot- SWH-7, South Avenue, Gulshan, Dhaka

DEFINITION OF LETTER OF CREDIT (LC):

On behalf of the importer if the Bank undertakes to make payment to the foreign bank is known as documentary credit or letter of credit.

A letter of credit is an instrument issued by a bank to a customer placing at the letters disposal such agreed sums in foreign currency as stipulated. An importer is a country requests his bank to open a credit in foreign currency in favor of his exporter at a bank in the letters country. The letter of credit is issued against payment of amount by the importer or against satisfactory security. The L/C authorizes the exporter to draw a draft under is terms and sell to a specified bank in his country. He has to hand over to the bank, will the Bill of exchange, shipping documents and such other papers as may be agree upon between the exporter and the importer. The exporter is assured of his payment because of the credit while the importer is protected because documents in respect of export of goods have to be delivered by the exporter to the paying bank before the payment is made.

From of Letter of Credit:

A letter of credit (L/C) may be two forms. These as below:

i) Revocable letter of credit.

ii) Irrevocable letter of credit.

(i) Revocable L/C:

If any letter of credit can be amendment or change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit.

A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the documents have been honored by the issuing bank or its correspondent. Thus a revocable credit does not usually provide adequate security for the beneficiary.

(ii) Irrevocable L/C:

If any letter of credit can not be changed or amendment without the cons