Orientation To The Report

Orientation
To
The Report
A Comprehensive Study On SEBL
Chapter 1 Introductory Part
1.1 Background of the Study

In Bangladesh, banks are the main vehicles for mobilizing invisible funds and
channeling those funds to foster the growth of the productive sectors of the
economy in the absence of a healthy capital market. After the creation of
Bangladesh the government nationalized all the commercialized banks and
financial institutions functioning in the then East Pakistan. But during 1982-
1983 the government allowed commercial banks to operate in private
sectors side by side with the public sectors banks to start a meaningful and
constructive competition in the banking sector. Now, about three decades
later, we have 48 Banks. Out of the 48 banks, four are Nationalized
Commercial Banks (NCBs), 5 specialized banks, 30 local private commercial
banks and 9 foreign banks.
Some argue that we have more banks than our financial capacity. So the financial
market of the country is very much competitive and banks are facing tough competition
from their competitors. The entire first, second and third generation banks are taking
part in the competition and trying to focus in the competitive advantage. It will help them
to capture the market share from their competitors. On this aspect we have considered
a second generation bank to analyze the whole situation in the Banking Sector in our
country.
1.2 Scope of the study
This report has been prepared in order to analysis the internal strength and
weakness and the external opportunity and threat of Southeast Bank Limited
on the basis of the Annual report provided by the bank and internet. The
reference period for this study only extends from 2004 to 2008. Conditions
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and performance beyond and after this period has not been included in this
study.
1.3 Objective of the study

The objectives of the report are follows
⇒ To find out the activities regarding the financial investments and
capital management of Southeast Bank Ltd.
⇒ To know about their lending policy and lending sectors
⇒ To find out the strength, weakness, opportunity and threat of SEBL.
1.4 Methodology
This report is a descriptive in nature that tries to focus on financial activities
the bank has. To prepare this report we were heavily dependent on
secondary sources. We collected the information from the annual report of
Southeast Bank Ltd., websites, different journals and annual reports and
other periodicals published by the Bangladesh Bank.
1.5 Limitation of the Study

High degree of involvement regarding collection of information, review of
literature and analysis of information is required for any kind of research
work. This study has suffered from certain constraints noted below,
• Primary and unpublished data have not considered for the study.
• The depth of the analysis has been limited to the extent of information
collected from different sources.
• Bank does not conduct the SWOT analysis on its own. So getting
information regarding it is too tough.
• There are very few articles and literature regarding the SWOT analysis
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• Last of all, this study has been conducted within a very limited time. So,
time constraint has played a key role for the whole study.
PART ONE
An Overview of
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Chapter 2 Brief Profile of Southeast Bank Limited
Southeast Bank Limited –one of the first growing second generation private
sector Banks came into being in 1995 with a view to stand out as a pioneer
banking institute in the country and contribute significantly to the national
economy. The Bank was established on March 12, 1995.The Bank started
commercial banking operations from May 25, 1995 with an authorized capital
of Tk. 500 million and paid up capital of Tk. 100 million The initial public
offering of Tk.150 million was made in December 1999. The Authorized
capital of the bank stands Tk.10,000 million. It’s Paid up Capital and Reserve
reached Tk.9927.16 million as on December 31, 2009 which includes paid up
capital of Tk. 3422.64 million and reserve of Tk. 6504.52 million.
The Bank, in the meantime, successfully completed 15th year of banking

operations,
recording significant growth in all the performance indicators. In 2009, the
Bank earned an after tax profit of Tk.1870.19 million. The deposit of the bank
grew by 41 percent to
Tk.96,669.05 million and advance by 29 percent to Tk.77,497.57 million
compared to
those of 2008. During the last five years (2005-2009), the Bank achieved an
average annual growth of 28 percent in deposit, 29 percent in advances, 52
percent in export and 29 percent in import and 110 percent in remittance.
During the last five years, the export volume increased by three times to
Tk.46,724.47 million and foreign remittance increased by seven times to
Tk.23,800.00 million.
At present, the Bank has 56 branches, 10 SME Centers and 1 Off-Shore
Banking unit across the country.
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The Bank has created good employment opportunities for fresh /educated
youth with an average employment growth of 15.00%.The Bank always
fulfills the capital adequacy ratio and provisioning requirements as set by
Bangladesh Bank reflecting sound financial health and discipline. The bank
has a Capital adequacy ratio of 11.72% in 2009.
The Bank is presently operating with 56 branches including 5 Islamic banking
branches and 1 off-shore banking unit at important urban and rural areas
and plans to open more branches to contribute in the expansion of trade
commerce, and industries. The bank plans to expand by opening of at least
10(Ten) new branches in 2009 in important business hubs including non-
urban growth centers with solution driven high quality banking and financial
services to contribute towards expansion of trade and commerce /industry
and agriculture for balanced growth and economic prosperity of the country.
Southeast Bank Limited commits to nation to take a lead in the Banking

sector through not only its strong financial position, but also through
innovation of products and services. It also ensures creating higher value for
its respected customers and shareholders. The bank has focused to bring
services at the doorstep of its customers, and to bring millions into banking
channels those who are outside the mainstream banking arena. Innovative
products and services were introduced in the field of Small and Medium
Enterprise (SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and
Credit Cards (Local & International), ATMs, Internet and SMS Banking,
Remittance Services, Treasury Products and Services, Structured Finance for
Corporate, strengthening and expanding its Islamic Banking activities,
Investment Banking, specialized products and services for NRBs, Priority
Banking, and Customer Care. The Bank has successfully completed its
automation project in mid 2009. It envisages enabling customers to get
banking services within the comfort of their homes and offices.
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2.1 Vision
To be a premier banking institution in Bangladesh and contribute
significantly to the national economy.
2.2 Mission
• High quality financial services with state of the art technology
• Fast customer service Sustainable growth strategy
• Attract and retain quality human resource Commitment to Corporate
Social Responsibility
•
• Follow ethical standards in business Steady return on shareholders’
equity Innovative banking at a competitive price
2.3 Commitment to Clients

• Provide service with high degree of professionalism and use of modern
technology
• Create long - term relationship based on mutual trust
• Respond to customer needs with speed and accuracy
• Share their values and beliefs
• Grow as our customers grow
• Provide products and service at competitive pricing
• Ensure safety and security of customers' valuables in trust with us
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2.4 Company Profile
Name of the Company: Southeast Bank Limited

Chairman: Alamgir Kabir, FCA
Vice Chairman: Ragib Ali
Managing Director: Mahbubul Alam
Company Secretary: Muhammad Shahjahan
Legal Status: Public Limited Company
Date of Incorporation: March 12, 1995
Registered Office: Eunoos Trade Centre 52-53, Dilkusha C/A
(Level 2, 3 & 16), Dhaka-1000
Line of Business: Banking
Authorized Capital: Tk.10,000.00 million
Paid Up Capital: 3,422.64 million
Year of Initial Public Offer: 1999
Stock Exchange Listing:April 10, 2000 (DSE) & April 24, 2000 (CSE)
Phone: 9571115, 7160866, 7173793, 9555466 & 9550081
Fax: 99550086, 9550093 & 9563102
SWIFT: SEBDBDDHXXX
E-mail: info@sebankbd.com
Website: www.sebankbd.com
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2.5 Branch Expansion Program

The Bank is presently operating with 56 Branches including 5 Islamic
Banking Branches, 14 Rural Branches. The Bank also opened 10 SME Service
Centers at important business locations of the country and 1 Off-shore
Banking Unit at Dhaka EPZ. The Bank has achieved highest per branch profit
in 2009. To cater to the increasing demand of the clientele, the Bank plans
to open 10 more Branches and 10 SME Branches in 2010 in important hubs
including non-urban growth centers to contribute to the national economy
subject to obtaining license from Bangladesh Bank.
2.5.1 SME Centers

The Bank, in line with the policy guidelines of Bangladesh Bank, has
strengthened its SME operation, through introduction of 10 (ten) SME
Service Centers all over the country during the year 2009.
2.5.2 Offshore Banking Unit (OBU)

Southeast Bank started its Offshore Banking operations in Dhaka EPZ from
30th December, 2009. In order to cater to the finance and banking needs of
100% foreign owned industries in Dhaka Export Processing Zone (EPZ), the
non-resident Bangladeshis working abroad and the non-resident foreign
institutions, Our OBU aims to provide banking products such as Savings /
Current / Term Deposits / Loans and Advances (Working Capital Finance)
and Export Bills discounting facility subject to approval from Bangladesh
Bank.
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2.5.3 Islamic Banking

The Bank started its Islamic Banking Operations on July 28, 2003. The Bank
opened 03
(three) Islamic Banking Branches in the year 2003 and 02 (two) Islamic
Banking Branches in the year 2004. At present, the Bank has 05 (five)
Islamic Banking Branches out of total 56 branches, 10 SME Service Centers
and 1 offshore Banking Unit. To further streamline Islamic banking
operations of the Bank within the purview of Bangladesh Bank BRPD Circular
No. 15 dated November 09, 2009, the Islamic Banking Wing of the Bank has
already been converted into a full-fledged Islamic Banking Division from
December 27, 2009. A separate account with Bangladesh Bank for
maintaining CRR/SLR of Islamic banking fund of the Bank has also been
opened to comply with the guidelines of Bangladesh Bank. The Bank
provides all kinds of Islamic Banking services to the customers within the
provisions of the Bank Company Act 1991, Bangladesh Bank’s Directives and
the principles of Islamic Shariah. The funds and accounts of Islamic banking
branches are completely separate from those of the conventional ones. The
bank is maintaining a separate set of accounts for Islamic Banking Branches.
Fund deposited by the depositors with the Bank under Al-Wadeeah and
Mudaraba principles and profit accrued from different modes of investment
and financing i.e.Mudaraba, Hire Purchase (under Shirkatul Melk), Murabaha,
Bai-Muajjal, and Bai-Salam are distributed amongst the depositors and the
bank ensuring a reasonably fair rate of return on deposits based on
weightage of individual product and complying Shariah norms.
As on December 31, 2009, the deposit and investment of Islamic Banking
Branches were Tk.10,307.54 million and Tk.4,842.20 million showing growth
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of 57% and 66% respectively. During the period 2009, total import and
export business handled were for Tk.1,890.81 million and Tk.1,723.11 million
respectively recording significant growth. Non Performing Investment of
Islamic branches was only 0.64% of their total investment in 2009.There is a
Shariah Supervisory Board in the Bank which oversees and guides Islamic
Banking operations of the bank based on Shariah requirements. Leading
Islamic scholars of the country well versed in Shariah concerning Islamic
Banking operations are on the Bank’s Shariah Supervisory Board:
Under the guidance of Shariah Supervisory Board, the bank designed all
deposits, investment products and services and formulated policy guidelines
and working procedure for Islamic banking operations.
2.6 Merchant Banking Operations

After getting approval from Securities and Exchange Commission on 6th April
2009, Merchant Banking operation of Southeast Bank Limited started from
11th August 2009 with the object to provide quality services to the
prospective institutional and individual investors in the capital market. In
today's diverse and unpredictable economy and global financial crisis, the
need of a sustained profit plan and long term growth strategy have become
essential for both individuals and corporate bodies. Merchant Banking
operation principally involves providing financial services and advice to the
prospective investors.
Figure1-The services rendered by Merchant Banking
The Merchant Banking Division of the Bank has made remarkable progress
within this short period of time and is presently serving customers needs by
providing prevalent services. Some key achievements from merchant bank
operation within this short period are given below:
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• Net profit from MB operation reached Tk.45.00 million in 2009;

• Ratio of funded and non funded income was 79:21;
• Customer base increased to over 400;
• Portfolio size was about Tk.3,200.00 million;
• Daily average transaction volume was over Tk.100.00 million;
• Investors awareness program was arranged;
• Emphasized training and development of our staff on various capital
market and
investment issues;
• Increased staff number for providing additional service to our clients;
• Provided finest services to our customers such as telephonic trading
services, portfolio
and transaction statement sent to client through e-mail, loan margin
facility,
counseling with clients, fundamental and technical analysis of securities;
• Assist client for IPO application, right share, bonus share, pre IPO
placement, and
dividend collection and distribution , online transaction service etc;
• Setting up a separate department for internal control and compliance with
adequate
manpower and arranged proper training to the employees in this respect;
• Complied with the rules, regulations and directives given by Securities and
Exchange
Commission, Dhaka Stock Exchange and Bangladesh Bank;
• Enlisted 4 institutional brokers for daily trade;
• Clients are able to trade in Dhaka and Chittagong Stock Exchange at once;
They made reasonable profit from Merchant Bank Operation during the five
months
operation in the year 2009. Net profit growth trend during the period from
August to
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December 2009 is shown in the graphs aside.
In coming days, SEBL will focus on product variants for its different
customers segment
and would enhance its services to different important locations. As a part of
this program, SEBL will launch six new branches at Dhaka, Chittagong and
Sylhet very soon. This will enable us to offer our valued investors extensive
networks distribution and explore opportunities to strengthen the return of
their investment. To make confidence and reliability on database, centralized
software would be maintained in the Head Office. They are also planning to
capture a significant market share and will proactively arrange some training
sessions to train up and alert general investors which will lead to mitigate
customer investment risk and help to maximize net wealth.
2.7 Human Resource

Human resource is the prime and single most valuable asset for a financial
institution like a bank to attain its ultimate goal. Keeping this idea in mind,
the Bank has adopted a
comprehensive human resource policy as regards recruitment of employees,
acquiring their services, developing their skill, motivating them to perform
with excellence, maintain high morale and ensuring that they remain
committed and devoted to the organization to achieve organization
objectives. Human Resources Division of Southeast Bank developed the
finest team with full of competence in banking in the last fifteen years. It
provides an excellent working environment for the employees to improve
their team spirit, work excellence and creativity.
The Bank follows a structured recruitment policy based on qualifications and
merits for fresh and experienced job aspirants. The division tirelessly gives
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full efforts that the right number and right kind of people are in the right
places at the right time, capable of efficiently and effectively completing
those tasks which help the organization to maintain good asset quality and
fulfill the conditions of the regulatory authority. Total manpower strength of
the Bank as on December 31st 2009 stood at 1402 of which 113 were
executives, 1141 were officers and 148 were subordinate staff.
The bank recruited total 277 employees of which 63 were experienced
bankers and 214 were fresh entrants in the year 2009. Total 107 Nos. of
training, workshops, and seminars were held at our own training institute as
well as in BIBM and other Government and semi Government institutes. The
Bank also accommodated 181 interns for doing internship program from
different Universities of the country. Attracting and retaining quality human
resource is the most important aspect of Human resource policy. The Human
Resources Division of the Bank also takes appropriate and needful timely
action in respect of disciplinary case as soon as it occurs to maintain
discipline in the Bank.
2.8 Products and Services

Offering customers with diversified products and services is one of the major
goals of SEBL. In implementation of this, the Bank launched a new deposit
product named Millionaire Deposits Scheme (MDS) in 2009 to extend its
deposit product base. All application forms of various products and services
were modified as per the guideline of
Bangladesh Bank for customer’s convenience. The Bank also opened ten new
branches and ten SME centers in 2009. The Bank also introduced SEBL
Travel Card, Merchant Banking etc. to diversify product base and validated
special scheme products with the changes of time catering to clients needs.
The South East Bank Limited is offering a wide range of services to satisfy
their customer need. Along with conventional Banking they provide,
• SME Banking
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• Dual Currency VISA Credit Card

• Remittance Business
• Western Union
• SWIFT Services
• Locker Services
• SMS Banking
• ATM Service
Chapter 3 Deposits and Advances
During the year 2008, Bank’s Deposit climbed to Tk. 68714.67 million
compared to Tk. 55474.05 million in the preceding year. Credit stood at Tk
60281.26 million in the year 2008 against last year’s Tk. 48164.60 million. In
2009 deposits increased to 96,669.05 million and loans and advances were
Tk. 77497.57 million.
(Tk in Million)
Five Years Performance

2009
2008 2007 2006 2005
Deposits 96,669.05 68,714.67 55,474.05 46,056.18 38,258.15
Growth rate 40%
23% 20% 20% 36.97%
of deposits
Advances 77497.57 60281.26 48164.60 41147.28 32551.09
Growth rate 28%

25% 17.05% 26% 32%
of advances
Source: Southeast Bank Limited Annual Reports
From the above table, it can be seen that through the 5 years, both deposit and loans
has shown an increasing upward trend. Another aspect of this figure is the gap between
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the two variables. Never is the difference between the two too big. This is a testimony of
customer’s confidence and trust in the Bank.
Figure: Deposits and Advances
3.1 Deposits
The Bank mobilized total deposits of Tk.96,669.05 million as of December,
2009 as compared to Tk.68,714.67 million in 2008. Competitive interest
rates, attractive deposit products, deposit mobilization efforts of the
employees and confidence reposed by the
customers in the Bank are the factors that contributed to the notable growth
in deposits. The Bank introduced a number of attractive deposit schemes to
cater to the requirement of small and medium savers. This improved not
only the quantum of deposits but also brought qualitative changes in
deposits structure. The deposit-mix of the Bank as on December 31, 2009 is
as follows
Particulars Taka in Million Share in Total Deposits

Current and Other Deposits 6,216.49 6.43%
Savings Bank Deposits 6,694.03 6.93%
Short Term Deposits 6,573.41 6.80%
Fixed/ Term Deposits 73,632.69 76.17%
Fund under Different deposit Schemes 2,379.53 2.46%
Bills Payable Accounts 1,172.90 1.21%
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TOTAL 96,669.05 100.00%
3.2 Lending Policy

The Bank has an exhaustive credit policy which is periodically reviewed and
updated,
under which all the functions of credit operations and management are
carried out. The
credit policy broadly includes and provides the Bank with the guidelines on
the following
aspects of credit:
• The permissible sectors/eligible businesses to finance
• The Application Process
• Analysis of credit risk
• Loan structure and terms
• Documentation / Communication
• Managing risk after loan approval
• Monitoring on-going credit risk
• Loan review function
• Loan modification
• Loan restructuring
• Problem loan identification and mitigation techniques
• Loan account closing
In addition to the above, to cater to the needs of the financing requirement
in specific
sectors, separate schemes like (i) Consumer Credit Scheme (ii) SME Credit
Scheme (iii)
Agricultural Loan Scheme (iv) Scheme for financing in Leather Sector etc.
have been
devised as per policy and guideline of Bangladesh Bank from time to time.
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3.3 Loans and Advances

Bangladesh’s economy has been more or less resilient amidst the global
crisis, but lower
exports and remittances growth and stagnant investment rates in the
country impoverished the growth. In spite of these, the overall banking
environment remained
more or less smooth during 2009, other than the occasional excess liquidity
situation in
the last quarter of 2009. The loans and advances portfolio stood at
Tk.77,497.57 million
as on 31st December, 2009 in comparison to Tk.60,281.26 million as on 31st
December, 2008 registering a growth of 28.56%. The Bank continued its
expansion of loans and advances portfolio throughout the year 2009 by
prudent selection of borrowers.
The Bank took advantage of the opportunities and challenges in the socio-
economic and business scenario of the country and expanded credit in all
segments including priority sectors of Government of Bangladesh like SME
and Agriculture. The bank expanded its SME business operation in 2009 with
top most priority. In addition to substantial SME business through the
existing branches, the Bank also established 10 (ten) SME Service Centers to
tap new business in this sector. In conformity with the Government’s
decision and guidelines to increase credit to agricultural sector, the Bank
took proper steps to increase flow of credit to the agriculture sector.
The loan portfolio of the Bank is spread over the business of different sectors
like ready
made garments, textile, spinning, dyeing, ceramics, pharmaceuticals,
telecommunication, petroleum, steel and engineering, ship scrapping,
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cement, edible oil, sugar industry, real estate, transport, agriculture and
other commercial lending etc. which ensures diversification without
concentration to limited sectors. The Bank also thrives on reducing risk at
the time of borrower selection through due diligence on government policy,
industry outlook, borrower’s business performance along with mitigation of
unforeseeable risk by taking adequate collateral.
However, in spite of the utmost effort to screen out potential risk prone
borrower and regular follow-ups to maintain credit standard, sometimes
businesses do default due to their management problems, global and local
business environment, political uncertainty etc. The Bank however, through
increasing monitoring and supervision of the loan portfolio could manage to
keep the level of Non Performing Loans (NPLs) as on 31st December, 2009 at
3.73% compared to 4.12% as on 31st December, 2008.
Year-wise Lending for the last 5 years

The total lending of the Bank stood at Tk.77,497.57 million as on 31st
December, 2009
as against Tk.60,281.26 million in the previous year showing an increase of
29 percent.
The total lending for the last 5 years are given below:
Year Amount (Taka in Growth Rate

million)
2009 77,497.57 29%
2008 60,281.26 25%
2007 48,164.60 17%
2006 41,147.28 26%
2005 32,551.09 48%
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3.3.1 Guarantee Business

The Bank issued guarantees amounting to Tk.11,916.74 million during the
year 2009
compared to Tk.15,078.99 million recorded in the previous year. The
guarantees were
issued in favor of different Govt. Authorities, Ministries, Autonomous Bodies,
Corporations, Private Companies, Individuals and Multinational Companies,
etc. on
behalf of the valued clients of the Bank.
3.3.2 SME Financing

The Bank has strengthened its SME operation, through introduction of 10
(ten) SME Service Centers all over the country. Policy for financing in the
SME Sector has also been devised and implemented. The credit proposals
from the branches helped the Bank to experience a growth of 25.76% in this
sector. At the end of 31st December, 2009, the Bank extended credit
facilities to SME customers amounting to Tk.8,884.30 million compared to
Tk.6,595.20 million at the end of 31st December 2008.
3.3.3 Consumer Credit Scheme (CCS)

The Bank extends credit facilities to individuals for purchase of domestic
durables like Refrigerator, Television, Washing Machine, Furniture,
Computer, Motor Car etc. through its Consumer Credit Scheme (CCS) to
improve quality of life / standard of living, particularly of the fixed income
group of the society. A separate cell at Head Office appraises, monitors and
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supervises all the CCS proposals and ensures quick disposals of the same.
Total investment in CCS Loan as on December 31, 2009 stood at Tk.205.21
million compared to Tk.205.87 million as on December 31, 2008.
3.3.4 Syndicate / Club Finance

Syndicated loans are loans made by two or more lenders and administered
by a common agent using similar terms, conditions and common
documentations. Most loan syndications take the form of a direct-lender
relationship, in which the lead lender is the agent for the other lenders in the
origination and administration of the loan and the
other lending banks are signatories to the loan agreement. Southeast Bank is
one of the pioneers in the banking arena of the country for Syndicated / Club
Financing of corporate houses for new project establishment, BMRE of
existing operations and working capital facilities. The Bank, participated in
11 Syndications during 2009 and allowed Tk.1,827.00 million in different
segments of the economy like ceramics, pharmaceuticals, poultry, textile,
spinning etc.
3.3.5 Corporate Finance

Southeast Bank provides credit facilities to help corporate clients move
forward to
improve cash flow and working capital restructure, debt consolidation,
acquisition and
buyout etc. The credit facilities to the corporate clients are typically of 02
types
(i) asset based lending and
(ii) cash flow based lending.
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Asset based lending also called secured lending, is covered by a wide variety
of assets by using the liquid, current assets of the company (such as
accounts receivable and/or inventory) or the fixed assets of a business (such
as plant, property, and equipment) as collateral. Cash flow financing are
allowed to corporate clients having predictable and historically sustainable
cash flows (operating performance and enterprise value based on brand,
franchise value, technology, or customer base) to meet client’s seasonal
requirements, business expansion, cyclical business swings, improve
business cash conversion cycle etc. The Bank facilitates its corporate clients
with credit facilities only after considering client’s business / industry
environment, current and projected financials, management personnel etc.
and after taking enough risk mitigating measures to protect the interest of
the Bank. The financial packages are recommended and provided to the
corporate clients in conformity with the Bank’s credit policy and annual
sectoral allocation either from own finance of the Bank or raised through
Syndication / Club Finance.
3.3.6 Finance in Leather Sector – a New Innovation

The Bank has ventured into a new avenue of financing through entering into
an
agreement with the Leather Sector Business Promotion Counsel (LSBPC) of
Government
of Bangladesh for financing the primary producers of Leather Goods in the
Leather
Sector. Initially Tk.20.00 million has been allocated on a revolving basis for
the purpose
of such financing which is expected to be raised in future based on
repayment behavior of the extended credit facilities from this sector.
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3.3.7 Agriculture Credit

The Bank has committed itself to the Government’s initiative to channelize
formal credit
facilities to the agricultural sector. During the financial year 2009-2010, the
Bank has
taken a target of Tk.350.00 million for this purpose, and as on 31st
December, 2009,
Tk.53.00 million has already been disbursed. Due to Bank’s limitation in
operational
exposure in this sector coupled with the distinct industry specific nature of
the sector,
most of the funds has been channelized through NGOs already specialized
and
experienced in providing micro credit finance. During 2009, a scheme has
also been
devised for structured financing in the sector through the Bank’s regular
marketing units / branches. The loan outstanding disbursed in the agriculture
sector stood at Tk.273.50 million.
3.3.8 Export Development Fund (EDF)

EDF was established in 1989 by Bangladesh Bank with current allocation of
USD.300
million in size, to facilitate access to financing in foreign exchange for input
procurement by manufacturer-exporter. Authorized Dealer (AD) banks can
borrow US Dollar funds from the EDF against their foreign currency loan to
manufacturer-exporter. As of 31st December 2009, the bank allowed USD
3.45 million for input procurement under the EDF Scheme of Bangladesh
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Bank and in 2010, this facility shall be further increased basing on the
requirement of the export clients.
3.3.9 Project finance and value addition to GDP

Term loans to finance new ventures or projects involve a lot of technical and
analytical
skills. In most of the cases, the economic feasibility of projects is unknown
and must be
subject to market studies and technical appraisals including the prior
identification of
supplier and buyer commitments. However, good historical performance and
operating
practices along with properly documented risk mitigation techniques are
important to
evaluate the creditworthiness of such projects. The economy of Bangladesh
has been
growing at the rate of around 6% p.a. over the past few years. More than half
of the GDP belongs to the service sector and nearly half of Bangladeshis are
employed in the
agriculture sector. RMG, fish, vegetables, leather and leather goods,
ceramics, rice etc. are other important products of GDP. The Bank has
implemented a policy to invest in
projects which have higher contribution to GDP. The RMG sector is the main
priority sector of the Bank. From 2009, the Bank has taken the policy of
consolidation in this sector rather than further expansion. In addition, the
Bank has significant exposure in the ceramics, healthcare, sugar and
infrastructure projects to support transportation, communication, power
supply etc. which contribute significantly to the GDP of the country.
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3.4 Loan Classification and Provisioning

The Bank ensures accurate loan classification and maintains the required
provisions as per the guidelines of Bangladesh Bank. The Bank Management
is always vigilant to minimize the classified loans by way of cash recovery
and regularization through rescheduling. The percentage of classified loans
of the Bank as on 31.12.2009 stood at 3.73 percent as compared to 4.12
percent of the previous year. The Bank always maintains the required
provisions against classified, unclassified loans and off balance sheet items
as per Bangladesh Bank’s guidelines. In 2009 the Bank kept provisions for
Tk.2,310.07 million against required provisions of Tk.2,299.34 million leaving
a surplus of Tk.10.73 million.
3.5 Credit Monitoring and Management of Non-Performing Loans

Maintaining the quality of assets is the foremost important aspect for
efficient banking
business. To secure the shareholders’ and depositors’ interest, the Bank has
strengthened and intensified its monitoring and follow-up activities in order
to maintain quality of assets and to reduce the NPLs to a minimum level. The
Recovery Unit of Branches and the Recovery Cell of Credit Administration
Department at Head Office are primarily responsible for proper monitoring,
follow up and recovery of non-performing/poor performing loans. They keep
close attention to the poor performing loans by preparing a ‘Watch List’ and
remain vigilant to upgrade the status of those loans through continuous
monitoring and follow up. A Problem Account Management Committee has
been formed consisting of Head Office senior level executives headed by the
Managing Director for continuous monitoring and follow up of problem loan
accounts.
3.6 Write-off and Recovery of the Classified Loans
25 | P a g e
To write off bad loans is an internationally accepted practice to maintain a

healthy balance sheet. Bangladesh Bank’s guidelines regarding write-off of
bad loans are meticulously followed by our Bank. The recovery drive and
court cases against defaulted borrowers are also undertaken in full force by
the branch and Head Office recovery team in order to recover the written-off
loans. In the year 2009, the Bank recovered around Tk.1000.00 million from
the defaulted borrowers and some loan cases were regularized through
rescheduling. Besides, for recovery of top-20 defaulters’ loans, a separate
recovery team is working to recover the overdue/defaulted loans. At the
same time, a comprehensive drive for recovery of overdue/classified loans is
also continuing under the direct supervision of the Managing Director of the
Bank.
3.7 Investment Scenario

The investment portfolio of the Bank during the year 2009 was Tk.21,350.23
million
against Tk.12,299.61 million in the previous year registering a growth of 74
percent. The portfolio of investment included Government Treasury Bills,
Prize Bonds, Shares of
Public Limited Companies etc. The Bank has always given emphasis on
investment of
Funds in high yield areas simultaneously maintaining Statutory Liquidity
Requirements
(SLR) as fixed by Bangladesh Bank.
Figure 2-Investment Portfolio
26 | P a g e
3.8 International Trade Operations

Since its inception, Southeast Bank has been highly active in facilitating
international trade related services to its customers. By adding innovative
product solutions, the bank has continuously upgraded its services for its
corporate clients to cope with the ever changing pace of Globalization. The
Bank offers various types of trade products to its customers such as Import
and Export Letters of Credit, Foreign Guarantees, Standby Letters of Credit,
Discounting etc. Despite global financial turmoil that seriously affected the
import and export trade business world wide, the Bank has achieved a sound
growth in both import and export sector in 2009. Although out of 56
branches of the Bank, only 21 branches are Authorized Dealers to handle
foreign trade operations, almost all the branches are adequately equipped
with professional manpower and infrastructural facilities to provide trade
finance facilities to their corporate customers through the AD branches.
3.9 SWIFT Operations

Since 2000 Southeast Bank has started S.W.I.F.T. (Society for Worldwide
Interbank
Financial Telecommunication) operations for smooth, reliable and secured
financial
transactions to facilitate retail, corporate and trade based customers. Our
SWIFT team
consists of one of the most experienced, trained and hi-tech experts
available in the local banking sector. In the last ten years, our expert SWIFT
team has introduced many
innovative features in its existing SWIFT system to smoothen and expedite
the operation of SWIFT in the bank so that our foreign exchange transactions
and payment processing can be handled in most accurate and efficient
manner resulting in high customer satisfaction. In the last quarter of 2009,
Southeast Bank SWIFT section introduced three tier SWIFT connectivity
27 | P a g e
services so that all branches are hooked up with SWIFT connectivity

uninterrupted all the time.
3.10 Credit Card Operations

Since its inception in 2005, SEBL Card Division has been maintaining
sustained growth
in spite of consistent increase of competition due to advent of a good
number of banks in the business and our perpetual compromise with fees
and charges to remain competitive. Amid stiff competition, we have
managed to book a net profit of Tk.33.43 million in 2009 which projects 40%
growth over the last year’s profit. This growth is reasonable but our endeavor
is to make it phenomenal.
We are always in the process of attributing new features to our product to
retain the
existing customers and attracting the potentials. After successful
introduction of SMS
Push-Pull service to trigger transaction alert, balance enquiry and other
status of card
accounts, we have introduced Card Cheque facility which has become very
popular.
28 | P a g e
Chapter 4 The Management of Capital
Southeast Bank is a fast growing Bank. It believes in gradual enhancement of

Shareholder wealth. Obviously, managing adequate amount of capital
relation to its exposure to risks is a requirement. To secure sufficient capital
in line with Basel-II framework, they have a basic policy for capital
management. The organization believe that securing sufficient capital to
cover risks is extremely important to maintain stable business operations.
The evaluation shows that their capital requirement in relation to our
exposure to risks and initiate action-plans to raise capital when necessary.
As on 31st December 2009 Bank’s authorized capital was Tk.10,000 million
while it’s Paid up Capital reached Tk.3,422.64 million.
4.1 Authorized Capital and Paid-Up Capital

At the time of incorporation in 1995, the Authorized Capital of the Bank was
Tk.500.00
million and the initial Paid Up Capital was Tk.100.00 million. At the end of
2009, the
29 | P a g e
Authorized Capital and Paid Up Capital of the Bank stood at Tk.10,000.00

million and
Tk.3,422.64 million respectively. The Authorized Capital and Paid Up Capital
since
inception of our Bank have been increased by 1,900% and 3,322.64%
respectively to
maintain sound capital adequacy of the Bank and to make the Bank
financially stronger.
The growth of Authorized Capital and Paid Up Capital of the Bank is shown
below:
Year Authorized Capital Paid up Capital

(Taka in millions) (Taka in millions)
2009 10,000.00 3,422.64
2008 3,500.00 2,852.20
2007 3,500.00 2,281.20
2006 3,500.00 2,112.74
2005 2,500.00 1,052.37
Figure 3- Growth in Paid up Capital
4.2 Treasury Operations and Fund Management

Southeast Bank’s Treasury Operation is carried out to manage both local and
foreign currency fund in the growing business need of the bank. Treasury
operation is also responsible to measure and minimize the risk associated
with Bank’s foreign exchange exposure, liquidity, interest rate, asset liability
management and overall fund management of the bank. The department
30 | P a g e
has effectively played its role in determining the direction of the markets,
through different modern business techniques and sophisticated
technological support. Besides, our treasury team has also managed all the
regulatory requirements like maintenance of CRR, SLR etc in an efficient
manner. Due to recent global financial crisis, all the major currencies,
commodities and equities
around the world were highly volatile especially during the middle of the
year 2009. Interest rate of the market came down significantly from March
2009. In this circumstance, the main emphasis of our treasury was to
maintain adequate risk management for the bank. Our Treasury Department
managed the fund effectively and
was able to manage all the associated risks in the volatile interest rate and
liquidity scenario successfully. Treasury department offered best possible
services to its customers and counterparties.
The Foreign Exchange desk handled significant amount of foreign currencies
throughout the year with a reasonable spread through its widespread branch
network. The FX desk handled a total of USD 2,030.00 million in 2009 which
is 21.62% higher than the year 2008. In addition to that, our treasury
department as a profit center generated an operating income of Tk. 417.39
million in Foreign Exchange operations, Tk.1,817.17 million in Money Market
operations and Tk.416.99 million in Government Security trading operations
in aggregate which is 62.22% higher than that of 2008. The Bank adopted a
customer-oriented service policy and developed diverse products to meet
the needs of corporate, commercial and retail customers for better fund
management and optimum return.
4.3 Capital and Reserves

The Authorized Capital of the Bank was Tk.10,000.00 million and Paid-up
Capital was Tk.3,422.64 million as of December 31, 2009. The Capital and
31 | P a g e
Reserve of the Banks in 2009 stood at Tk.9,927.16 million compared to

Tk.7,657.01 million of the previous year showing an increase of 29.65
percent.
The Capital and Reserve of the Bank as on 31st December, 2009 are
appended below:
Taka in Million
(a) Core Capital (Tier-I Capital):
Paid Up Capital 3,422.64
Statutory Reserve 2,665.60
General Reserve 247.65
Retained Earnings 1,278.87
Total Core Capital 7,614.76
(b) Supplementary Capital (Tier-II Capital)

Provision for Unclassified Advances 828.00
General Provision on off-Balance Sheet Exposures 351.33
Assets Revaluation Reserves 1,117.65
Revaluation Reserves of HTM Securities 11.22
Exchange Equalization Account 4.20
Total Supplementary Capital 2,312.40
9,927.16
4.4 Asset Portfolio

As on 31st December, 2009, the total assets of the Bank stood at
Tk.112,676.98 million. The break-up of the total assets are given below:
Taka in Million
a) Cash and Cash Equivalent 7,332.41
b) Investments 21,350.23
c) Loans and Advances 77,497.57
d) Fixed Assets 4,338.34
32 | P a g e
e) Other Assets 2,158.43

TOTAL : 112,676.98
4.5 Asset Liability Committee (ALCO)

As per Bangladesh Bank guideline, the Bank has a fully functional Asset
Liability Committee (ALCO) for prudent balance sheet risk management. The
committee consists
of the Managing Director as the Chairman of the committee, Deputy
Managing Director
and strategically important Divisional Heads of Head Office. The meeting of
the Asset
Liability Committee is held every month. The committee reviews interest rate
risk and
liquidity risk of the bank and takes necessary steps to mitigate those.
4.6 Risk Management of the Bank

Our Bank has an integrated risk management strategy that can create the
transparency we are looking for. This approach makes it easier to
understand, control and optimize the Bank’s financial risks and opportunities.
It can also help detect, prevent and mitigate different risks in Banking
Industry. It enables the Bank for regulatory compliance, secured information
sharing and enhanced risk awareness as well as to embed all the policies
and procedures adopted by the management in business process for more
effective governance and control of the Bank.
33 | P a g e
PART TWO
Financial Performance
Of
34 | P a g e
Chapter 5 Financial Analysis
In this study, the financial performance of Southeast Bank Limited is measured by

applying ratio analysis of financial measurement. It is a post-mortem examination
technique of achievement of a bank Performance.
Though the indication of financial performance can be achieved with the help of trend
analysis, but the best indicators of financial performances is the ratio analysis, where
various ratios are used. These ratios are calculated based on financial data obtained
from the financial statements of Southeast Bank Limited over the past 5 years. In the
following sections are the descriptions of the various ratios that are used in this study
and the results of these ratios. A brief analysis of all the ratios is given also and trends
of theme are shown.
5.1 Current Ratio:
An indication of a company's ability to meet short-term debt obligations; the

higher the ratio, the more liquid the company is. In case of Southeast Bank
Limited, in the last three years, the operating profit has increased gradually
35 | P a g e
from 0.73 in 2007 to 0.86 in the year 2009, which is a positive sign for the
bank.
Figure: 5 Years current Ratio
5.2 ROE:
Return on Equity is a measure of the rate of return flowing to shareholders. It
approximates the Net Benefit that the stockholders have received from
investing their capital. It is one of the most important ratios that measure the
Profitability of the Banking institutions now-a-days.
The percentages of Return on Equity for SEBL from 2005-2009 are given
below:
Year ROE
2009 16.51%
2008 12.06%
2007 19.90%
2006 17.98%
2005 18.37%
The table reveals very attractive ROEs for SEBL covering the last 5 years.
Year Current Ratio The lowest
2009 0.86 earning over this
2008 0.85 period for SEBL,
2007 0.73
2006 0.86 as measured by
2005 1.69 ROE, were a very
36 | P a g e
acceptable 12.06% in 2008. The average ROE for the bank gradually
increased over the years, falling back slightly from 2008.
Figure: 5 Years ROE Analysis
5.3 ROA:
Another most important Profitability indicator is Return on Asset which
indicates how capable management has been in converting assets into net
earnings.
Year ROA
2009 1.66%
2008 1.09%
2007 1.90%
2006 1.69%
2005 0.86%
Figure: 5 years ROA Analysis
5.4 EPS:
EPS is often considered the single most important metric to determine a
company’s profitability. Obviously, the higher this number, the more money
the company is making.
Year 2009 2008 2007 2006 2005

EPS 54.64 31.11 53.60 59.71 42.51
At the end of the year 2009, the number of outstanding shares of SEBL stood
at 34,226,373 shares. It had 3,000,000 shares at the time of listing with DSE
and CSE in 2000. SEBL has issued 31,226,373 shares after listing with stock
exchanges, showing 1040.88% increase in number of its outstanding shares.
37 | P a g e
As SEBL has been making substantial profits for five consecutive years, the
harmony between increased number of Issued Shares and Earning per Share
is being maintained. A positive trend of EPS makes sure that SEBL is finding
more ways to make more money.
Figure: 5 Years EPS
5.5 P/E Analysis:

Price earnings ratio or P/E ratio is a valuation ratio of a company's current
share price compared to its per-share earnings. The most common measure
of how expensive a stock is. This ratio highlights the connection between the
price and recent company performance. Higher P/E ratio indicates that the
more the market is willing to pay for each dollar of annual earnings.
Figure: 5 Years P/E Ratio
Companies with high P/E ratios are more likely to be considered "risky"
investments than those with low P/E ratios. The SEBL has relatively high P/E
ratio at the year 2005, 2007 and 2008. High P/E ratio forecast that the
investor can expect a higher earnings growth in future. But at the end of
the year 2009 they are having a moderate position in the market when the
market itself is fluctuating.
5.6 Net Interest Margin:

For banks, net interest margin measures the difference between interest income
generated by their lending and interest paid on borrowings (for example, deposits) as a
38 | P a g e
percentage of all earning assets of the bank. For banks, earnings assets usually
comprises of investments, loans and advances made and some other assets.
A key measurement of bank profitability, it determines how large the spread
between interest revenues and interest costs management has able to
achieve. In the latest annual report that is published in the year 2009 the net
interest margin is positive and is 0.99%. The SEBL has made successful
investment decisions compared to its debt situations and maintained a
positive net interest margin.
Figure: 5 Years Net Interest Margin Analysis
5.7 Profit (Tk in

million)

2009 2008 2007 2006 2005
Operating 4614.66 3012.57 2916.29 2062.67 1473.45
Profit
Profit Before 3,451.76 2154.82 2597.04 1638.31 916.39
Tax
Profit After 1870.19 887.23 1222.96 909.88 374.20
Tax and
provision
From the above table, it can be seen that over the 5 years, both the
operating profit and profit before tax has shown an increasing upward trend.
This increase in the profit level is a significant indicator of the superlative
performance of the bank. During the year 2008, Bank’s Profit after Tax and
provision declined to Tk. 8872.35 lakh compared to Tk. 12229.69 lakh in the
preceding year and in 2009 profit after tax and provision increased to
18701.9 lakh.
39 | P a g e
5.8 Expense
Expense is also an important item of the financial statement. By analyzing
the cost data of Southeast Bank Limited it is evident that the bank has been
able to keep a check on the costs.
(Tk in million)
2009 2008 2007 2006 2005
Total operating 1244.55
1026.85 901.77 658.82 573.46
expenses
Growth rate of 21.20%
13.87% 36.87% 14.88% 18.26%
operating expenses
In the year 2008 expense was less than the previous year but in 2009 the
expense increased by 21.20%.
5.9 Investment
Making investments are one of the primary activities of the bank. After
obtaining funds through deposits, banks use these funds usually in 2 major
ways; providing loans and advances and making investments. Investments
are backup source of liquidity of the bank and provide the bank another
source of income. Banks usually invest in two securities, government
securities and other securities.
(Tk. In million)
2009 2008 2007 2006 2005
Investmen 21350.23 12299.60 8462.86 6265.54 5113.13
ts
Growth 73% 45.33% 35% 22.53% 60.27%
rate of
Investmen
ts
Source: Southeast. Bank Limited Annual Reports
40 | P a g e
Figure: Investments
From the table& graph, it is evident that Southeast Bank Limited was able to
increase its investments in a large scale.
5.10 Net Operating Profit

In case of Southeast Bank Limited, in the least two years, the operating profit
has increased a lot. This is an indicator of good performance over these two
years.
(Tk in Million)
2009 2008 2007 2006 2005
Operating 4614.66 3012.58 2916.2 2062.6 1473.44
Profit 0 6
Growth 53% 3% 41% 39%
Rate
Figure: Operating profit
5.11 Debt Ratio
The debt ratio compares a company's total debt to its total assets, which is
used to gain a general idea as to the amount of leverage being used by a
company. From the last 5 years debt ratio we can notice that the Bank is
becoming less dependent on leverage each year.
41 | P a g e
Figure: 5 Years Debt Ratio
5.12 Capital Adequacy Ratio:
Capital Adequacy is a measure of the degree to which the bank’s capital is

available to mitigate the stress of possible losses.
In the year 2007 the ratio was highest point 13% and the following year the
ratio reduced to 11.12% and in the year 2009 the ration is again increasing,
which is good for
the bank. Year Capital
Adequacy
2009 11.72%
2008 11.12%
2007 13%
2006
Debt Ratio 11.50%
Year
2005 6.90%
2009 89.95%
Figure: Capital 2008 90.94%
Adequacy Ratio 2007 90.45%
2006 90.58%
5.13 Net 2005 95.30%
Operating Margin
42 | P a g e
Operating margin is a measurement of what proportion of a company's

revenue is left over after paying for variable costs of production such as
wages, raw materials, etc. In the year 2005-2007 it was gradually
increasingly but in the year 2008 the number dropped to .037 and in 2009 its
increasing. It is good for the bank because the revenue leftover is increasing.
Figure: Net Operating Income
5.14 Interest sensitive Gap:
The interest sensitivity gap is the difference between interest-sensitive

assets and interest-sensitive liabilities maturing or repricing within a specific
time interval. The gap can be managed by repricing assets or liabilities, by
selling
investments, Year Net Operating Margin
2009 0.041
by replacing 2008 0.037
an asset or
2007 0.045
liability prior 2006 0.038
2005 0.034
43 | P a g e
to maturity, or by adjusting the interest rate during the life of an asset or

liability.
During the past 5 years the interest sensitive gap has increased. In year
2008 the gap was 13,431,888,185 and the following that is in 2009 the
interest sensitive gap was 16,262,181,910
5.15 Operating Income
The Bank earned an operating income of Tk.5,859.21 million during the year
2009 from
Net Interest Income, Income from Investment, Commission, Exchange and
brokerage and other Operating Income. The operating income of the Bank
during the year 2008 was Tk.4,039.43 million. The operating income posted
45 percent growth in 2009. The
operating income for the last 5 years are given below:
Year Year Amount (Takasensitive

Interest in million)Gap
2009 5,859.21
2009 2008 4,039.43
16,262,181,910
2008 2007 3,817.97
13,431,888,185
2007 2006 2,721.48
9,214,986,981
2005 2,046.90
2006 8,814,610,994
2005 5,180,026,862
44 | P a g e
Financial Ratio Highlights
45 | P a g e
♦ ROE has Three major parts/components:
Measure Ratios 2009 2008 2007 2006 2005

Operating Net Profit 31.92% 21.96% 32.03% 33.43% 18.28%
efficiency Margin
Asset- Asset Utilization 0.052 0.050 0.059 0.051 0.047
Ratios 2009 2008 2007 2006 2005
use/management
Current 0.86 0.85 0.73 0.86 1.69
efficiency
Ratio
ROEFinancial 16.51% Equity12.06%
multiplier 9.95 19.90%
11.03 10.48
17.98% 10.62 18.37%
21.26
ROAleverage/Funds
1.66% 1.09% 1.90% 1.69% 0.86%
EPSManagement54.64 31.11 53.60 59.71 42.51
Debt
Efficiency89.95% 90.94% 90.45% 90.58% 95.30%
Ratio
Total 8.95 10.03 9.48 9.62 20.26
Debt-to-
Equity
Ratio
Capital 11.72% 11.12% 13% 11.50% 6.90%
Adequacy
Net 0.041 0.037 0.045 0.038 0.034
Operating
Margin
ROI 11.12% 8.55% 19.90% 18.42% 16.69%
Net 0.99% 1.63% 2.42% 1.98% 2.14%
Interest
Margin
P/E Ratio 6.09 10.22 10.70 4.78 13.10
Credit 80.17% 87.73% 86.82% 89.34% 85.08%
Deposit
Ratio
Interest 16,262,181, 13,431,888,1 9,214,986,9 8,814,610,9 5,180,026,8
sensitive 910 85 81 94 62
Gap
Interest 0.14 0.17 0.14 0.16 0.12
sensitive
Gap Ratio
46 | P a g e
Calculation of the financial ratios
2009 2008 2007 2006 2005
Current ratio
11,363,23 8,707,9 31,827,144,75 49,810,821,02
Current assets 3,970 70,048 7,897,333,507 2 0
13,182,12 10,275,554,33 10,813,740,76 36,692,336,55 29,518,445,68
/ Current liabilities 3,088 9 9 2 8
= Current ratio 0.86 0.85 0.73 0.86 1.69
Return on equity
(ROE)
Net income
1,870,185,240 887,235,037 1,222,969,037 909,880,783 374,203,852
/ stockholders
equity 11,329,177,287 7,357,274,431 6,144,469,101 5,059,294,638 2,036,674,654
= Return on equity
16.51% 12.06% 19.90% 17.98% 18.37%
Total Debt to equity
47 | P a g e
Total Debt
101,347,807,637 73,824,253,488 58,226,220,939 48,646,830,157 41,258,135,979
/ Total stockholders
equity 11,329,177,287 7,357,274,431 6,144,469,101 5,059,294,638 2,036,674,654
= Total Debt to
equity 8.95 10.03 9.48 9.62 20.26
Debt ratio
Total Debt
101,347,807,637 73,824,253,488 58,226,220,939 48,646,830,157 41,258,135,979
/ Total assets
112,676,984,923 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633
= Debt ratio
89.95% 90.94% 90.45% 90.58% 95.30%
Return on assets
(ROA)
Net income 1,870,185,240 887,235,037 1,222,969,037 909,880,783 374,203,852

/ Total assets 112,676,984,923 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633
= ROA 1.66% 1.09% 1.90% 1.69% 0.86%
Capital Adequacy
of the Bank
(Tier one
capital+tier two
capital) 9,927,160,550 7,657,011,723 6,468,361,219 4,940,916,000 2,236,843,424
/Risk weighted
assets 84,669,322,000 68,830,874,500 49,777,444,000 42,960,414,000 32,428,978,000
= CAR 11.72% 11.12% 13% 11.50% 6.90%
Net profit margin
Net income 1,870,185,240 887,235,037 1,222,969,037 909,880,783 374,203,852

/ Total operating
revenue 5,859,214,918 4,039,434,361 3,817,973,689 2,721,481,961 2,046,904,277
= NPM 31.92% 21.96% 32.03% 33.43% 18.28%
Degree of asset
utilization
Total operating
revenue 5,859,214,918 4,039,434,361 3,817,973,689 2,721,481,961 2,046,904,277
/ Total assets 112,676,984,923 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633
= AU 0.052 0.050 0.059 0.051 0.047
48 | P a g e
The equity
multiplier
Total assets 112,676,984,923 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633

/ Total equity capital 11,329,177,287 7,357,274,431 6,144,469,101 5,059,294,638 2,036,674,654
= EM 9.95 11.03 10.48 10.62 21.26
Net operating
margin
(Total operating
revenue- Total
operating expense) 4,614,658,771 3,012,579,689 2,916,198,763 2,062,657,684 1,473,436,252
/ Total assets 112,676,984,923 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633
= NOM 0.041 0.037 0.045 0.038 0.034
Earnings per share
Net income 1,870,185,240 887,235,037 1,222,969,037 909,880,783 374,203,852

/ Common equity 34,226,37
shares outstanding 3 28,521,979 22,817,583 15,238,131 8,803,080
= EPS 54.64 31.11 53.60 59.71 42.51
Interest sensitive
Gap
Interest Sensitive
Asset 98,847,807,049 72,580,867,260 56,627,467,150 47,412,831,960 37,664,228,296
- Interest Sensitive
liability 82,585,625,139 59,148,979,075 47,412,480,169 38,598,220,966 32,484,201,434
= Interest
Sensitive Gap 16,262,181,910 13,431,888,185 9,214,986,981 8,814,610,994 5,180,026,862
Interest
Sensitive Gap
ratio
Interest Sensitive
Gap 16,262,181,910 13,431,888,185 9,214,986,981 8,814,610,994 5,180,026,862
112,676,984,92
/Total Asset 3 81,181,527,919 64,370,690,040 53,706,124,795 43,294,810,633
Interest sensitive
Gap ratio 0.14 0.17 0.14 0.16 0.120
49 | P a g e
PART Three
Concluding Part
50 | P a g e
Chapter 6 SWOT Analysis
51 | P a g e
Chapter 7 Concluding Remarks
Southeast Bank Limited had some difficulties in the past, but in the last five years, it
experienced growth in their operations. The company observes growth in its entire
sector. Investment is increasing rapidly and it is getting a good response from the
clients in different investment scheme.
On the whole, the profits of the bank demonstrated an increasing trend, but the rate of
growth of profit was very much uneven over the reference period. This indicates the
unsystematic business development of the bank. Regarding the overall trend in the rate
of growth of profit, one clear-cut observation is that it was the variation in the burden
(i.e.; fluctuation in the non-interest expenditure and income), which was mainly
responsible for the uneven growth in the profits of the Southeast Bank Limited over the
reference period. Another cause for the uneven growth in profits is the increase in the
non-performing loan over the last few years.
The Bank was also able to increase its investments significantly, which in turn led to
significant investment income for the bank.
52 | P a g e
Turning on to the financial ratios, it can be observed that most of the ratio indicators are
showing a better performance of the Southeast bank, especially after 2005. The
performance of the bank at 2006 &2007 was indeed excellent, but in 2008, some had a
negative growth rate. This may be due to some reasons which have been described in
the earlier sections. In 2009, SEBL successfully back to their previous performance or
we can say even better than that.
Southeast bank Limited had significantly reduced its various risk elements. All of its
credit risk exposures show that the management of the bank has been able to reduce
the credit risk, one of the primary risks of any bank. The Liquidity risk ratio and the
earnings risk ratios all show signs of improvement in the last 5 years, but there are
some elements in these ratios which need the management’s notice and has scope for
further improvement.
Southeast Bank Limited is making huge contribution to the national economy by

investing on different sector. Nevertheless, this Bank is still performing below
satisfactory level in some financial aspect. So if Southeast Bank Limited properly takes
care of the above mentioned discussed issues, it might help them to improve their
financial performance and contribute more to the national economy.
53 | P a g e

Orientation To The Report

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Orientation To The Report

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Orientation

Chapter 1 Introductory Part

1.1 Background of the Study

1.2 Scope of the study

1.3 Objective of the study

1.5 Limitation of the Study

Chapter 2 Brief Profile of Southeast Bank Limited

The Bank, in the meantime, successfully completed 15th year of banking

Southeast Bank Limited commits to nation to take a lead in the Banking

2.3 Commitment to Clients

2.4 Company Profile

Name of the Company: Southeast Bank Limited

2.5 Branch Expansion Program

2.5.1 SME Centers

2.5.2 Offshore Banking Unit (OBU)

2.5.3 Islamic Banking

2.6 Merchant Banking Operations

Figure1-The services rendered by Merchant Banking

• Net profit from MB operation reached Tk.45.00 million in 2009;

December 2009 is shown in the graphs aside.

2.7 Human Resource

2.8 Products and Services

• Dual Currency VISA Credit Card

Chapter 3 Deposits and Advances

Five Years Performance

Advances 77497.57 60281.26 48164.60 41147.28 32551.09

Growth rate 28%

Figure: Deposits and Advances

Particulars Taka in Million Share in Total Deposits

TOTAL 96,669.05 100.00%

3.2 Lending Policy

3.3 Loans and Advances

Year-wise Lending for the last 5 years

Year Amount (Taka in Growth Rate

3.3.1 Guarantee Business

3.3.2 SME Financing

3.3.3 Consumer Credit Scheme (CCS)

3.3.4 Syndicate / Club Finance

3.3.5 Corporate Finance

3.3.6 Finance in Leather Sector – a New Innovation

3.3.7 Agriculture Credit

3.3.8 Export Development Fund (EDF)

3.3.9 Project finance and value addition to GDP

3.4 Loan Classification and Provisioning

3.5 Credit Monitoring and Management of Non-Performing Loans

3.6 Write-off and Recovery of the Classified Loans

To write off bad loans is an internationally accepted practice to maintain a

3.7 Investment Scenario

Figure 2-Investment Portfolio

3.8 International Trade Operations

3.9 SWIFT Operations

services so that all branches are hooked up with SWIFT connectivity

3.10 Credit Card Operations

Chapter 4 The Management of Capital

Southeast Bank is a fast growing Bank. It believes in gradual enhancement of

4.1 Authorized Capital and Paid-Up Capital

Authorized Capital and Paid Up Capital of the Bank stood at Tk.10,000.00

Year Authorized Capital Paid up Capital

Figure 3- Growth in Paid up Capital