Types of commercial banking activities including foreign exchange business Of Mutual Trust Bank Ltd.
Executive Summary
Mutual Trust Bank Limited private sector commercial bank. The bank has its head office at Dhaka and 25 branches. The bank conducts all types of commercial banking activities including foreign exchange business and other financial services. The Company carries out international business through a Global Network of Foreign Correspondent Banks.
While running practical orientation with MTBL Dhanmondi Branch; generally the placed in two vital departments, but the gathered knowledge other department. The placing department is General Banking and Credit (Loans & Advances). Different kinds of practical experience were gathered while performing the job during the Internship period. During the period of internship there were lots of constrains, but it was solved through authentic determination and the proper guidance by the employee of Mutual Trust Bank Ltd.
General banking is the starting point of all banking operations. It is the department, which provides day-to-day services to the customers. General Banking Department comprises of account opening, short collection, remittance, clearing, cash etc. Through this sections the department establishes Banker relationship, collects bills from customers, remit funds of customers from one place to another, honor cheques drawn. General Banking department provide these service in a faster and better manner. The conventional banking operations MTB strives to introduce an array of products and services and already launched a number of consumer banking products with the aim of popularizing consumer banking operations and offer higher return to its clients. These are :- Saving Deposit, Current Deposit, Fixed Deposit, Short Term Deposit, Brick by Brick Savings Scheme, Monthly Benefit Plan, Children Education Plan, BestInvest Plan, MTBL Millionaire Plan, Festival Saving Plan, MTBL Double Sarver Plan, MTBL Triple Sarver Plan, Unique Saving Plan etc. Mutual Trust Bank online banking offers a customer to deposit or withdraw any sum of money from any branch anywhere.
Bank Credit is an important catalyst for banking about economic development in a country. Without adequate finance, there can be no growth or maintenance of a stable economy. The credit department approves the loans and advances of Corporate Banking division. The main function is monitoring credit facilities granted by the corporate banking unit. The credit department of MTBL is divided into two parts: SME & Credit. Under SME the credit products are:- Consumer Financing, Consumer Loan Scheme, Home Loan Scheme, Home Repair/ Renovation Loan Scheme, Auto Loan Scheme. And in credit, the consumers are offered Continues loan, Term loan, Export Finance.
Though Mutual Trust Bank is going well in the market but it faced some problems. To recover this problem some recommendation that will help them to work successfully in the future.
Financial Performance of The Bank
Operating Profit
Mutual Trust bank earned an operating profit of Tk. 969.47 million in 2006 compared to Tk. 651.85 million in 2005 achieving a growth of 48.73%. This growth is a remarkable achievement considering the socio-political environment that prevailed in the country during 2006. After keeping provision on loans and advances Profit Before Tax stood at Tk. 874.47 million. The Net Profit for the year stood at Tk. 478.28 million compared to the previous year’s Tk. 336.17 million. Earning per share (EPS) in 2006 increased Tk. 50.32 registering a 42.27% growth as against Tk. 35.37 during the preceding year. Bank’s Return on Asset (ROA) in 2006 was 1.82% as against 1.74% in 2005.
| Year | Profit After Tax
(Tk. In million) |
Profit Before Tax
(Tk. In million) |
| 2002 | 98.52 | 181.19 |
| 2003 | 190.34 | 371.07 |
| 2004 | 247.19 | 506.94 |
| 2005 | 336.17 | 651.85 |
| 2006 | 478.28 | 969.47 |
Figure-01. Operating Profit (Taka in million)
Capital
MTB started its operation on October 24, 1999 as a private sector bank with an authorized capital of Tk. 1000 million and paid up capital of Tk. 200 million. The paid capital of the bank amounted to Tk. 950.40 million as on December 31, 2006. Total capital of the bank as on December 31, 2006 stood at Tk. 2,114.52 million consisting of shareholders’ equity of Tk. 1,904.79 million and supplementary capital includes general provision against loan and advances and exchange equalization. Total capital of the bank as on December 31, 2005 was Tk. 1,692.52 million.
| Year | Paid up Capital
(Tk. In million) |
Shareholder Equity
(Tk. In million) |
| 2002 | 200 | 320.02 |
| 2003 | 600 | 970.35 |
| 2004 | 720 | 1217.55 |
| 2005 | 864 | 1547.48 |
| 2006 | 950.4 | 1904.8 |
Figure-02. Capital (Taka in million)
Deposits
Total Deposits of the bank as on December 31, 2006 stood at Tk. 22,264.05 million as against Tk. 16,098.54 million of the previous year registering a 38.30% growth. This rate is a significant achievement considering the economic scenario of the country and stiff competition in the sector. However, cost of deposit has increased during the year due to high interest rate allowed against Fixed Deposit. The bank has laid due stress on procurement of law cost deposit including cost free float of funds to bring down the average cost of funds. It may be mentioned here that strict compliance of Central Bank regulations and adherence to Money Laundering Prevention Act 2002 were ensured while procuring deposits
| Year | Amount (Tk. In million) |
| 2002 | 5158.11 |
| 2003 | 7163.67 |
| 2004 | 13164.13 |
| 2005 | 16098.54 |
| 2006 | 22264.05 |
Figure-03. Deposits
(Taka in million)
Check List of The Document to be Enclosed with Credit Application
A. Common Document required for all business.
- Client’s application in their letterhead for facility.
- Client’s application for facility in bank’s prescribed forms duly filled in & signed thereon.
- Present status of the construction.
- Projected income from the proposed Building.
- CIB inquiry forms along with ‘Angikarnama’ ‘Ko’ for obtaining up to data CIB report from Bangladesh Bank.
- Photograph of the Applicant/Proprietor/Partners/Directors duly signed by the guarantor.
- Photograph of Guarantors.
- Audited financials of the company for the last 3 years.
- Valid Trade license of the client.
- TIN certificate of the client.
- Personal net-worth statement of the Applicant/Proprietor/Partners/Directors.
- Compliance certificate duly complied with terms and conditions of the existing facility.
- Stock report in details [(a) SL, (b) Description, (c) Quantity, (d) Unite Price, (e) Total Price] duly signed by the client and verified by the Branch Official.
- List of Machinery in details [ (a) SL, (b) Description with Year of Manufacture and Country of Origin, (c) Quantity, (d) Unit Price, (e) Total Price, (f) Present written down value] duly signed by the client and verified by Branch Official.
- Performa Invoice/Indent duly signed by the issuer and accepted by the client.
- Project Profile of the company.
- Sanction advice of the loan L/C.
- Other bank’s liability to be filled properly (if the client is availing loan from other bank).
- Working Capital Assessment to be filled up properly (in case of working capital facility).
- Particulars of the Factory/Production.
- Rental agreement for the office/shop/factory between the client and landlord.
- Name of Proprietor/Partners/Directors with ….% of shareholding of the allied concern of the client with nature of Business.
- Feasibility Study Report (in case of new project).
- Loan statement for last 1 year in case of where the client has availing credit facilities from other bank.
- Details of the company/enterprise.
a. Background
b. Nature of business mentioning the name of the products/services.
c. Market Segment/Target market.
d. Major competitors with their market share.
e. Market share of the company.
f. Rank in the industry.
g. Marketing/distribution system/channel and strategy.
h. Future plan.
- Bio-data of the prospective entrepreneurs with details of educational qualification, experience, training, track record etc.
- Short description of the management mentioning their educational qualification, experience, training, track record etc.
- Existing liability position with other banks as per following format
| Name of Business Concern | Name of the Bank | Nature of the facility | Limit | Outstanding as on…… | Overdue, if any |
- Bank A/C statement of the business and proprietor for at least 1 year.
- Short description of the sister concern.
- Any other relevant paper/documents.
For Partnership:
01. Registration certificate (in case of registered partnership).
02. Partnership Deed in case of Partnership.
03. Resolution for availing loan facilities from the bank by all the partners.
04. Any other relevant paper/documents.
For Limited Company:
01. Resolution of the Broad of Directors of the company regarding availing loan facility.
02. Memorandum and Articles of association of the company duly sealed and signed by the Official of Registrar of Joint Stock Company.
03. Certificate of commencement (in case of public limited company)
04. List of Directors in form XII duly signed by the Managing Director.
05. Certificate of incorporation of the company.
For Contractor Financing:
01. Detail work performed so far.
02. The proposed work order.
For Export Oriented Garments Industry:
01. Export Registration Certificate (ERC).
02. Import Registration Certificate (IRC).
03. Bonded warehouse license.
04. Fire protection license from civil defense authority.
05. BGMEA membership certificate.
06. EPB registration certificate.
07. Textile directorate/board of investment registration certificate.
08. Tax holding approval from NBR.
09. PDB/DESA/REB sanction of electricity load.
10. Conformation of no customer demand (verification of pass book to ascertain that there are no entry of imported goods which have not been exported in two years)
11. Fire Insurance of factory stipulating the bank as beneficiary.
12. Lease agreement validity if the factory leasehold property.
13. List of machinery (category wise).
14. Type of export (Woven, Knit etc).
15. Items of export (shirt, jacket, denim etc)
16. Production capacity as per machinery.
17. Export during the last year in US$.
18. Projected export during the next year (12 month) in UD$.
19. Number of workers and employees.
20. Number of vehicles.
21. Monthly expenses of the factory.
a. Salary
b.Wages
c. Electricity/water/gas bill
d.Rent
e. Directors remuneration
f. C & F agent’s bill
g. Others
22. List of ABPs as per following format
| ABP No | Date Amount | Due Date | Export L/C No,; amount & expiry | Progress of
export/ production |
23. List of export bill on collection:
| FDBP/FDBC No. | Date | Amount | Status of payment |
24. Quota position (category & number)
25. Position of stock lot (if any)
26. Name of the Major buyers and country.
For Real Estate Finance:
For Collateral security
01. Photography of original title deed of the landed property offered for mortgage.
02. Photography of bia-deed of the same property.
03. Certified copy of mutation khatain.
04. Duplication carbon receipt.
05. Up-to-date rent receipt and municipal tax receipt.
06. Certified copy of C.S., S.A., R.S. khatian.
07. Up-to-date non-encumbrance certificate.
08. Clearance certificate from RAJUK/WORK MINISTRY (if any property is leasehold) relating to availing loan facility from subject bank by mortgaging the property.
09. RAJUK approved plan of the building along with the approval letter.
10. Photograph of the owner of the property.
11. Site plan/mouza map of the property.
12. Photography of the mortgaged property/the property to be mortgaged (from three different angles) duly signed by the client.
13. Site location map of the property mortgaged/to be mortgaged duly signed by the client.
14. Plan of the building duly approved by the competent authority.
Loans & Advances
The credit portfolio of the bank comprises a diversified area of business and industries sectors. The sectors include textiles, pharmaceuticals, edible oil, ready-made garments, chemicals, cement, telecom, steel, real state and service industries.
The bank’s credit growth recorded at 29.34% with a total credit portfolio of Tk. 18,591.52 million at the end of December 2006 compared to Tk. 14,373.26 million at the end of December 2005. Total interest income of the bank from loans and advances stood at Tk. 2,220.91 million in 2006 registering a 37.13% growth over the preceding year. The bank has given utmost importance to acquire quality assets and is committed to retain good borrowers through focused relationship management and financial counseling. This has resulted in a diversified and well-structured advances portfolio.
| Year | Amount (Tk. in million) |
| 2002 | 3437.13 |
| 2003 | 5904.18 |
| 2004 | 11692.97 |
| 2005 | 14373.26 |
| 2006 | 18591.52 |
Figure-04. Loan & Advances (Taka in million)
Export
In 2006 the export volume of MTBL reached Tk. 12,943.26 million compared to previous year’s volume of Tk. 8,810 reflecting a sound growth of 46.92%. The items handle in export trade were ready-made garments, jute, jute goods, pharmaceuticals, leather etc.
| Year | Amount |
| 2002 | 2142.67 |
| 2003 | 3513.92 |
| 2004 | 5924 |
| 2005 | 8810 |
| 2006 | 12943.29 |
Figure-05. Export (Taka in million)
Import
| Year | Amount |
| 2002 | 6393.53 |
| 2003 | 11284.41 |
| 2004 | 17355.9 |
| 2005 | 17660 |
| 2006 | 26255.29 |
Import volume of MTBL in 2006 reached Tk. 26,255.29 million compared to FY05’s volume of Tk. 17,600.00 million achieving a growth of 48.67%. The main import items were industrial machineries, raw materials, fabrics and accessories, chemicals, electronic goods and other consumer products, capital machinery, petroleum and petroleum products.
Figure-06. Import (Taka in million)
MTB Five Years at a Glance
| SL | ITEMS | 2006 | 2005 | 2004 | 2003 | 2002 |
| 01 | Authorized Capital | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 |
| 02 | Paid up Capital | 950.40 | 864.00 | 720.00 | 600.00 | 200.00 |
| 03 | Shareholder’s Equity | 1,904.80 | 1,547.48 | 1,217.55 | 970.35 | 320.02 |
| 04 | Total Capital (Core + Supplementary) | 2,114.53 | 1,692.52 | 1,335.08 | 1,030.38 | 355.05 |
| 05 | Total Assets | 26,217.99 | 19,306.99 | 15,931.03 | 9,037.53 | 5,832.10 |
| 06 | Total Deposits | 22,264.05 | 16,098.54 | 13,164.13 | 7,163.67 | 5,158.11 |
| 07 | Total Loans & Advances | 18,591.52 | 14,373.26 | 11,692.97 | 5,904.18 | 3437.13 |
| 08 | Total Investments | 3,055.69 | 2,495.98 | 1,676.21 | 996.06 | 631.34 |
| 09 | Export | 12,943.29 | 8,810.00 | 5,924.00 | 3,513.92 | 2,142.67 |
| 10 | Import | 26,255.29 | 17,660.00 | 17,355.90 | 1,1284.41 | 6,393.53 |
| 11 | Total Contingent Liability | 9,671.39 | 7,498.27 | 5,474.58 | 3887.90 | 1,315.41 |
| 12 | Operating Income | 1,284.86 | 877.01 | 686.0 | 489.15 | 252.78 |
| 13 | Operating Expenditure | 315.39 | 225.17 | 179.06 | 118.09 | 71.59 |
| 14 | Profit before provision & tax | 969.47 | 651.85 | 506.94 | 371.07 | 181.19 |
| 15 | Net Profit after provision & tax | 478.28 | 336.17 | 247.19 | 190.34 | 98.52 |
| 16 | Total provision maintained | 239.98 | 145.00 | 117.50 | 60.00 | 35.00 |
| 17 | Earning Assets | 23,575.83 | 17,419.05 | 14,779.16 | 8,300.61 | 5,369.61 |
| 18 | Non-interest Earning Assets | 2,642.16 | 1,887.94 | 1,151.87 | 736.92 | 462.49 |
| ITEMS | 2006 | 2005 | 2004 | 2003 | 2002 |
| Earning per Share (figure in taka) | 50.32 | 35.37 | 34.33 | 43.37 | 49.26 |
| Book Value per Share (figure in taka) | 200.42 | 180.66 | 169.10 | 161.73 | 160.01 |
| Dividend-Cash | 20% | 14% | – | – | 20% |
| – Bonus Share | 05% | 10% | 20 % | 20% | – |
| Return on Equity | 25.11% | 22.00% | 20.30% | 19.62% | 30.79% |
| Return on Assets (ROA) | 1.82% | 1.74% | 1.55% | 2.11% | 1.69% |
| Classified Loans as % of Total Loans & Advances | 1.03% | Nill | Nill | Nill | Nill |
| Leading-Deposit Ratio | 83.50% | 89.28% | 88.82% | 82.42% | 66.64% |
| Capital Adequacy Ratio | 11.83% | 12.55% | 11.87% | 17.33% | 10.81% |
| Price-Earning Ratio (Times) | 6.80 | 11.35 | 17.10 | 5.14 | – |
| No. of Branches | 25 | 20 | 16 | 13 | 8 |
| No. of Employees | 470 | 376 | 298 | 228 | 142 |