**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 R^{2} 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.

**5.7.1 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 24×7 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**

TrustBank has an aim to provide financial services to meet customer expectations so that customers feel TrustBank is always there when they need us, and can refer us to their friends with confidence. TrustBank wants to be a preferred bank of choice with a distinctive identity.

**7.4 Mission**

TrustBank 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. TrustBank 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 = 32.189x^{2} + 314.3x + 134.64

R^{2} = 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

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

y = 46.296x^{2} – 53.312x + 220.77

R^{2} = 0.9999

From the equation the following forecasted data (table 4) 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 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.

*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

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

y = -14.109x^{2} + 367.62x – 86.136

R^{2} = 0.982

From the equation the following forecasted data (table 6) 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 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 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 3.

*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

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

y = -21.038x^{2} + 176.16x – 126.3

R^{2} = 0.6488

From the equation the following forecasted data (table 8) 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 |

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.

*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 formulate a trend equation.

(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

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

y = 6.9293x^{2} + 191.46x + 40.166

R^{2} = 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 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 5.

*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 presented in table 11. 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 |

Profit after Tax | 121.29 | 263.16 | 239.03 | 463.05 | 610.91 |

Table 11: Five years Profit after Tax

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

y = 18.581x^{2} + 6.4287x + 115.81

R^{2} = 0.9436

From the equation the following forecasted data (table 12) 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 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 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 6.

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 presented in table 13. 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 |

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

Table 13: Five years Paid-Up Capital

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

y = 23.047x^{2} + 235.32x + 151.46

R^{2} = 0.9501

From the equation the following forecasted data (table 14) 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 |

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 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 7.

*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

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

y = 65.032x^{2} + 358.85x + 443.25

R^{2} = 0.9758

From the equation the following forecasted data (table 16) 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 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.

*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

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

y = 1159.3x^{2} + 1589.5x + 10514

R^{2} = 0.9869

From the equation the following forecasted data (table 18) 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 |

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.

*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

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

y = 480.17x^{2} + 3137.9x + 5664.3

R^{2} = 0.9883

From the equation the following forecasted data (table 20) 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 |

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 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 10.

*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 presented in table 21. 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 Liabilities | 13,790.18 | 19,905.77 | 28,227.93 | 35,355.99 | 50,451.78 |

Table 21: Five years Total Liabilities

The formulated trend equation along with R-squared value is