Annual Report for the Year Ended 31 December 2018

Committed to

TranslateVision Into

Reality

“A bank with vision” is our brand slogan. Our vision to be a premier banking institution of the country and contribute significantly to the national economy was adopted with remarkable foresight in 1995 at the time of inception of the bank. It clearly demonstrates who we are, what we want to become and what we are expected to do. It serves as a beacon to determine our mission and strategies to reach our goals and achieve our vision. It pulls in ideas within the organizations as well as from all stakeholders, generates innovations, provides incentives for excellence in service and above all reiterates the tremendous role of a banking institution for the growth of our national economy through promotion of productive investment. Our vision also reminds us to pursue proactive thinking and adaptability to change in response to emerging opportunities and challenging socioeconomic environment at home and abroad.

At Southeast Bank Limited we continuously design and align our business models keeping in mind our vision, strategies, the aspirations of our stakeholders and above all the need for sustainable development of the economy for greater benefit of the people at large. We relentlessly strive to achieve further excellence in our corporate governance culture and regulatory compliance as well as promote professionalism in our workforce because we believe these are the foundations of sustainable development of our institution. We always keep in mind the dynamic nature of business environment and redesign our lending and deposit mobilization strategies so that they meet the needs of our customers and national development goals not only for the present generation but also for the generations to come.

With clear vision in view, the bank is becoming more and more profitable, flexible, innovative and better structured with attractive products and services for customers at large and skilled, dynamic and dedicated workforce always ready to extend those exceptional services. We are committed to put together all our actions in a dynamic way to transform our vision into reality.

Financial IndicatorsFinancial Overviews - Last 5 Years

236,608 260,718 291,798 339,288 381,576

Total Assets(BDT in million)

2014 2015 2016 20182017

8,290 8,034 8,503 9,062 9,783

Profit before Provision (BDT in million)

2014 2015 2016 20182017

4.18 3.35 2.66 1.11 2.35

Earnings per Share (EPS)

2014 2015 2016 20182017

12.41% 11.52% 12.15% 10.84% 12.38%

Total Capital to Risk WeightedAssets Ratio

2014 2015 2016 20182017

147,071 168,878 191,866 234,317 267,672

Total Loans and Advances(BDT in million)

2014 2015 2016 20182017

3,837 3,069 2,435 1,169 2,473

Profit after Tax(BDT in million)

2014 2015 2016 20182017

1.67% 1.23% 0.88% 0.37% 0.69%

Return on Assets (RoA)

2014 2015 2016 20182017

1.82% 1.31% 0.92% 0.39% 0.79%

Return on Average Risk WeightedAssets (RRWA)

2014 2015 2016 20182017

Committed to translate vision into reality

Non-Financial IndicatorsNon-Financial Overviews - Last 5 Years

A) IN TERMS OF COMPETITIVENESS

416,823 468,154 570,196 638,139 702,019

Number of Deposit Customers

2014 2015 2016 20182017

74,8

43

98,8

18

50,4

38

134,

255

61,3

27

174,

271

201,

310

102,

000

76,7

83

43,5

13

Number of Cardholders

2014 2015 2016 20182017

Debit Cardholders Credit Cardholders

113 122 128 132 135

Number of Branches

2014 2015 2016 20182017

2,221 2,376 2,616 2,704 2,797

Number of Employees

2014 2015 2016 20182017

11,789 13,025 14,155 15,563 16,739

Size of Loan Customers

2014 2015 2016 20182017

114 128 174 189 152

Number of Women Entrepreneurs

2014 2015 2016 20182017

790 811 807 825 644

Number of Foreign Correspondents

2014 2015 2016 20182017

58,169 46,285 39,009 36,038 33,851

Number of Shareholders

2014 2015 2016 20182017

Annual Report 2018 Southeast Bank Limiteda bank with vision


B) IN TERMS OF ACTIVITY LEVEL

63,421 66,239 73,037 85,353 91,041

Number of Loans Disbursed

2014 2015 2016 20182017

Number of Bad Debt Collected

64

129

4

153

7

147

94

13

52

2014 2015 2016 20182017

Classified Loans Written Off Loans

2.73 2.65 2.56 2.87 2.95

97.27 97.35 97.4497.13 97.05

Market Share of SEBL Deposit (in percent)

2014 2015 2016 20182017

SEBL Industry other then SEBL

9,656 10,121 10,795 9,382 8,534

Number of New RemittanceCustomers Engaged

2014 2015 2016 20182017

2.79 3.25 2.87 2.91 2.90

97.21 96.75 97.13 97.09 97.10

Market Share of SEBL Advance (in percent)

2014 2015 2016 20182017

SEBL Industry other then SEBL



C) IN TERMS OF PRODUCTIVITY LEVEL

D) IN TERMS OF QUALITY SERVICE

1.49 1.51 1.60 1.76 1.78

Per Employee Cost (BDT in million)

2014 2015 2016 20182017

2.00% 4.00% 3.00% 2.37%

Average Number of CustomerComplaints Received

2015 2016 20182017

15,942 95,276 159,662 202,809 17,363

Number of Accounts Closed orBecame Dormant

2014 2015 2016 20182017

4,183 4,068 3,690 1,830 1,222

Number of Internet BankingCustomers Engaged

2014 2015 2016 20182017

151,142 138,416 177,260 131,706 149,565

Accounts Opened Trend

2014 2015 2016 20182017

11.00% 3.00% 1.00% 4.44%

Average Number of Service Dropof Call Centre

2015 2016 20182017

a bank with vision

Annual Report 2018 Southeast Bank Limited


91.87% 92.14% 94.76% 96.31% 96.42%

Customer Satisfaction Level withTechnological Facilities

2014 2015 2016 20182017

82.5% 86% 90.7% 94% 94.8%

Customer Satisfaction Levelwith Bank Staff

2014 2015 2016 20182017

4.98% 4.61% 4.15% 6.02% 7.07%

Employee Turnover Rate

2014 2015 2016 20182017

190 184 136 75 94

Number of Employees Received NewQualifications or Completed Courses

2014 2015 2016 20182017

5.39 2.37 3.26 4.40 4.22

Average Time Taken to Respond toCustomer Inquiry (in minutes)

2014 2015 2016 20182017



BalanceScore Card

BDT in million

Financial Highlights 2018 2017 2016Financial ResultsRevenue 33,739.81 27,305.90 25,617.57Provision for Credit Losses 9,961.90 6,628.68 3,728.28Operating Expenses 5,178.92 4,870.74 4,349.23Net Revenue 2,473.21 1,168.63 2,435.07Financial Results(%)Reported/Adjusted Efficiency Ratio 34.61% 34.96% 33.84%Return on Common Shareholder's Equity (ROE) 9.17% 4.46% 9.06%Net Interest Margin (NIM) 3.18% 3.42% 3.77%EPS 2.35 1.11 2.66Common Share PerformanceMarket Capitalization 16,450.10 20,356.29 17,146.97Dividends(%)Dividend Yield 0.06 0.07 0.11Reported/Adjusted Dividend Payout Ratio 0.43 1.18 0.75

Revenue

2016 20182017

25,618 27,306 33,740

Net Revenue

2016 20182017

2,435 1,169 2,473

Dividend Yield

2016 20182017

0.11 0.07 0.06

Provision for Credit Losses

2016 20182017

3,728 6,629 9,962

Earnings per Share

2016 20182017

2.66 1.11 2.35

Operating Expenses

2016 20182017

4,349 4,871 5,179

Dividend per Share

2016 20182017

2.00 1.50 1.00


Awards andRecognition

Southeast Bank won “Silver Award” for Corporate Governance Excellence

Southeast Bank Limited has been awarded Silver Award in the “5th ICSB National Award for Corporate Governance Excellence, 2017” in Banking Companies Category by The Institute of Chartered Secretaries of Bangladesh (ICSB). ICSB bestowed the prestigious Award on the Bank for its Corporate Governance practices that came out in the disclosures in the Bank’s Annual Report-2017.

The Institute of Chartered Secretaries of Bangladesh exhaustively analyzed the Bank’s Annual Report-2017 and sieved out the Bank from many aspirants for its outstanding performance, sufficient disclosures for all stakeholders and its commitment to achieving further excellence in corporate governance, and compliance with legal and regulatory requirements.

M. Kamal Hossain, Managing Director of Southeast Bank Limited received the award from Abul Maal Abdul Muhith, MP, Hon’ble Minister, Ministry of Finance, Government of the People’s Republic of Bangladesh in a ceremony held on 10th November 2018 at a local hotel in Dhaka.

The operations of Southeast Bank are built upon unequivocal emphasis on effective Corporate Governance. Its objective is to create, promote and build long-term company value. It is now one of the most disciplined, compliant and admired Bank in the industry. This award will encourage the Bank enormously and put a responsibility upon the Bank Management to keep up the momentum of its performance and to improve governance practices further in the coming years.


Southeast Bank has been awarded as the country's 4th highest Tax payer in the Banking category.

Southeast Bank Limited has been awarded as the country’s 4th highest Income Tax Payer in the Banking Category for the assessment year 2017-2018. M. A. Mannan, MP, State Minister, Ministry of Finance and Planning handed over the Crest and Tax Card to M. Kamal Hossain, Managing Director, Southeast Bank Limited at the best taxpayer reception ceremony on November 12, 2018. Abul Maal Abdul Muhith, MP, Finance Minister and Md. Mosharraf Hossain Bhuiyan, Chairman, National Board of Revenue were also present at the ceremony.

10


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a bank with vision

Awards andAwards andRecognitionRecognition

Incorporation of SEBL 12.03.1995

Certificate of Commencement of Business 12.03.1995

License Issued by Bangladesh Bank 23.03.1995

Formal Inauguration 25.05.1995Inauguration of 1st Branch

25.05.1995

1995Initial Public Offer (IPO)

Subscription Opened 25.11.1999

Subscription Closed 05.12.1999

1999Listing with Dhaka Stock

Exchange Limited 12.04.2000

Listing with Chittagong Stock Exchange Limited

24.04.2000

2000Formation of SEBL

Foundation 12.03.2002

2002

Launching of ATM and ATM Cards with

own System 27.03.2010

3rd Rights Share Issue

Subscription Opened 07.07.2010Subscription Closed

29.07.2010Incorporation of Southeast Bank Capital Services

Limited 23.09.2010

2010Introduction of Internet

Banking 28.02.2011Launching of SEBL 1st

Mutual Fund 23.05.2011Signed first Short Term

Rollover Loan Agreement with International

Finance Corporation (IFC) 28.06.2011

Incorporation of Southeast Financial

Services (UK) Limited 15.09.2011

100% Online Banking 17.09.2011

2011Established Central Payment

Centre (CPC) at Head Office for International Trade Payments

15.01.2013Incorporation of Southeast

Financial Services (Australia) Pty Limited 18.03.2013

Formation of Southeast Bank-The Financial

Express-Policy Research Institute Green Award Trust

30.06.2013Establishment of Southeast

Bank Green School 12.09.2013

2013Issuance of Subordinated

Bond for BDT 3,000.00 million. 11.11.2014

Introduction of Green Award 15.11.2014

Incorporation of Southeast Exchange Company (South

Africa) Pty Limited 15.12.2014

Opening of Ladies Branches 29.12.2014

2014

Signing of Revolving Credit agreement for USD 5.00 million with Asian Development Bank (ADB ) 31.03.2016

Launching of client acquisition drive through ‘Nibir’ Campaign 15.05.2016

Issuance of Subordinated Bond for BDT 5,000.00 million 02.08.2016

Introduction of Bank’s Health Care Centre 29.09.2016

Introduction of Bank’s E-Library 29.09.2016

Launching of ‘Cash Express Remit Card’ for beneficiary of Foreign Wage Earner Expatriates 08.10.2016

Bank awarded 1st position in “ICMAB Best Corporate Award-2015” 26.10.2016

Awarded ‘Tax Card and Trophy’ as 6th highest Tax Payers of the Country in the Banking Sector 24.11.2016

Signed of agreement with Bangladesh Bank for ‘Green Transformation Fund’ 01.12.2016

20162015Launching of Telecash as

Mobile Financial Services Product 29.01.2015Signed Unsecured Facility Agreement with Global Climate

Partnership Fund (GCPF) 25.02.2015Introduction of Bank’s Modern and full-fledged Training Institute

21.05.2015Signed funded Loan Agreement with International Finance

Corporation (IFC) 05.08.2015Commissioning of ‘SWIFT Sanction Screening Solution’ 30.08.2015

Introduction of Central Monitory System (CMS) tomonitor (24X7) all branches 25.10.2015

Introduction of Real Time Gross Settlement (RTGS) 29.10.2015Implementation of Credit Card Management Software 23.11.2015

Partnership with MasterCard Bangladesh and launched the complete range of Credit Cards (World, Platinum, Titanium and

Gold) and Prepaid Card 15.12.2015Introduction of Bank’s Call Centre 24X7 16.12.2015Introduction of Chip-based Credit Card 31.12.2015

24 Years ofGlorious Journey

1st Rights Share Issue

Subscription Opened 15.02.2003

Subscription Closed 15.03.2003Commencement of Islamic Banking business from Chhagalnaiya Islamic

Banking Branch, Feni 28.07.2003

License Issued from Bangladesh Bankas a Primary Dealer 28.10.2003

2003

Registered as Depository Participant

of CDBL 17.02.2004

1st to Demat Shares in CDS of CDBL in Banking Sector

16.05.2004

Became a member of Trade Finance

Program (TFP) of Asian Development Bank

(ADB) 20.10.2004

2004

2nd Rights Share Issue

Subscription Opened

15.10.2006Subscription

Closed 31.10.2006

2006

Launching of Credit Card 01.01.2005

2005

Introduction of new Core Banking

Software 14.02.2009Launching of 1st

Off-shore Banking Unit 30.12.2009

Became a member of Global Trade Finance

Program (GTFP) of International Finance

Corporation (IFC) 23.04.2007

2009

2007

Obtained license from Bangladesh Bank for Centralizing International Trade and

Foreign Exchange Transactions 26.01.2017Launching of ‘Priority Banking Products’

“ESTEEM” 04.03.2017Southeast Bank distributed Green Award

05.04.2017Organized Scholarship program for

financially challenged meritorious students 20.05.2017

Launching of Payment Gateway 25.05.2017Awarded first position for the best

Corporate Governance among private sector banks by Institute of Chartered

Accountants of Bangladesh (ICAB) 25.11.2017

Received Silver Award for Corporate Governance Excellence, 2016” by The Institute of Chartered Secretaries of

Bangladesh (ICSB) 30.11.2017Establishment of Cafeteria for Safe food for

Bank’s employees 21.12.2017

2017Awarded 1st Runner Up by South Asian Federation of

Accountants (SAFA) for Best Presented Annual Report-2016 in the Private Sector Banking Category

31.01.2018

Won Joint 2nd Runner Up Award in SAARC Anniversary Award for Corporate Governance 31.01.2018

Received Silver Award for Corporate Governance Excellence, 2017 by the Institute of Chartered Secretaries of Bangladesh (ICSB). 10.11.2018

Awarded “Tax Card & Trophy” as the 4th highest Tax Payer of the Country in the Banking Sector. 12.11.2018

2018

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Letter of Transmittal 16Forward Looking Methodology 17Notice of the 24th Annual General Meeting 19Message from the Chairman 20-25Review from the office of the Managing Director 26-30Integrated Reporting 31-33Corporate Philosophy and Business Model 34-35

VISION AND MISSION Strategic Objectives, Planning and Priorities 37-40Core Values, Code of Conduct and Ethics 41-43Corporate Profile 44-45Group Corporate Structure 46-47Organogram of the Bank 48-49Last 10 Years Financial Indicators 50-51Composition of Board of Directors and its Committees 52-58Brief Profile of Board of Directors 60-71Code of Conduct for Directors 72Policy on reviewing effectiveness of the Board of Directors 73Directors’ Responsibility Statements 74-75

DIRECTORS’ REPORT 77-93

Senior Management Team 94-95Code of Conduct for Senior Management Team 96Committees of the Management 97-100

CORPORATE GOVERNANCE 103-154

Report of the Bank’s Shariah Supervisory Committee 155-156

MANAGEMENT REVIEW, RESPONSIBILITY AND EVALUATION 159-204

RISK MANAGEMENT AND CONTROL FRAMEWORK Report on Risk Management Framework, Mitigation Methodology and Risk Reporting by Chief Risk Officer

206-217Risk Management in Southeast Bank LimitedDisclosure on Risk Based Capital Adequacy (Basel III) 218-233

Contents

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FINANCIAL STATEMENTSIndependent Auditor’s Report to the Shareholders 338Consolidated Balance Sheet 343Consolidated Profit and Loss Account 345Consolidated Cash Flow Statement 346Consolidated Statement of Changes in Equity 347Notes to the Financial Statements 353FINANCIAL STATEMENTS OF ISLAMIC BANKING BRANCHES 424FINANCIAL STATEMENTS OF OFFSHORE BANKING 434FINANCIAL STATEMENTS OF SEBL SUBSIDIARIES 443

STANDARD DISCLOSURES CHECKLIST 490-506

Events-2018 507-512Proxy Form and Attendance Slip

SUSTAINABILITY APPRAISAL AND INTEGRATED REPORTING 236-253

COMMUNICATION TO SHAREHOLDERS & STAKEHOLDERS 256-283

SEBL OUTLOOKProducts and Services 286-288Central Monitoring System - Round the Clock 289Call Center 24 X7X365 290Media Highlights 291-293Caring for the Employees (Health and Safety) 294Career Development Program 295Contribution to National Exchequer 296Empowering Women 297Environment - Responsive Bank 298Southeast Bank Green School 299-301Financial Inclusion: Mobile Banking Services – Telecash 302Connecting Customers 303Service Excellence in Action 304Bank's Network: List of Branches and ATMs 305-319Worldwide Correspondents Network 320-335

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All Shareholders of Southeast Bank Limited, Bangladesh Bank, Bangladesh Securities and Exchange Commission, The Registrar of Joint Stock Companies and Firms, The Dhaka Stock Exchange Limited and The Chittagong Stock Exchange Limited

Annual Report of Southeast Bank Limited for the Year - 2018

Dear Sirs:

Thank you for supporting us in the preceding years. It is our immense pleasure to lay before you the Bank’s Annual Report-2018 along with the Audited Financial Statements (consolidated and solo) as at and for the year ended on December 31, 2018. The Annual Report-2018 of the Bank comprises Balance Sheet, Profit and Loss Account, Statement of Changes in Equity, Cash Flow Statement along with Notes to the Accounts. We hope that the report will be of use to you today and tomorrow.

Best regards,

Yours sincerely,

A.K.M. Nazmul HaiderCompany Secretary

Letter of Transmittal

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A forward-looking statement is a statement that contains predictions, projections and possibilities. It relates to future events. It often predicts expected future business and financial performance. It contains words such as ‘expect’, ‘anticipate’, ‘believe’, ‘seek’, ‘will’, ‘may’, ‘would’, ‘presume’, ‘assure’, ‘hope’, so on and so forth. A forward-looking statement naturally addresses matters that are, to certain degrees, uncertain and may not happen. In most cases, a forward-looking statement is made in respect of company’s expected income, earning, business growth, horizontal expansion, cost structure, capital structure, dividends etc. Such a statement is made based on some assumptions about future events which may happen or may not happen.

This Annual Report-2018 of Southeast Bank Limited also contains forward-looking statements. Since there are uncertainties about the occurrence of the future events, those should be treated from that viewpoint in decision-making by the users of the Annual Report.

Forward LookingMethodology

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20

12

20

13

20

1

4

2 0 1 5

2

01

6

20

17

20

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Southeast Bank Lim�ed24th

Annual General Meeting

Venue: Officers’ Club Dhaka26, Baily Road, Ramna,

Dhaka-1000

Date:Sunday, June 23, 2019

at 11.00 a.m.

Notice of the24th Annual General MeetingNotice is hereby given to all members of Southeast Bank Limited that the 24th Annual General Meeting of the Shareholders of the Company will be held on Sunday, June 23, 2019 at 11.00 a.m. at Officers’ Club Dhaka, 26, Baily Road, Ramna, Dhaka-1000 to transact the following business and adopt necessary resolutions:

AGENDA:

1. To receive, consider and adopt the Profit and Loss Accounts of the Company for the year ended on December 31, 2018 and the Balance Sheet as at that date together with the Reports of the Board and the Auditors thereon.

2. To declare dividend for the financial year ended December 31, 2018.

3. To elect / re-elect Directors and to approve the re-appointment of the Independent Director.

4. To appoint Statutory Auditors for the term until the next Annual General Meeting and fix their remuneration.

5. To appoint the Compliance Auditor as per Corporate Governance Code for the year 2019 and fix their remuneration.

6. Miscellaneous, if any, with the permission of the chair.

By order of the Board

Dated: Dhaka A.K.M. Nazmul HaiderMay 30, 2019 Company Secretary

NOTES:

a) The “Record Date” was on Thursday, May 23, 2019.

b) The Shareholders whose name would appear in the CDS/Register of Members of the Company on the Record date shall be entitled to the dividend and attend the AGM.

c) Any member of the Company eligible to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote on his/her behalf. Proxy Form or the Power of Attorney duly signed by the Member and stamped with requisite stamp must be submitted at the Registered Office of the Company at least 48 hours before the meeting.

d) Attendance of the Shareholder/Attorney/Proxy shall be recorded up to 11.00 a.m. at the entrance of the meeting venue. Attendance slip has to be signed and submitted at the Registration Counter. The signature must agree with the recorded signature.

e) Annual Report of the Bank, Attendance Slip, Proxy Form along with the Notice will also be available in the website of the Company at www.southeastbank.com.bd in due course. The Hon’ble Members may also collect the Annual Report, attendance Slip and Proxy Form from the Investors' Relation Department of the Company.

f) All members are requested to update their respective BO Accounts with 12 digits Tax payer’s Identification Number (e-TIN), Bank Account Number, E-mail address, Mailing address and other related information through their respective Depository Participants (DP).

g) As per Bangladesh Securities and Exchange Commission’s Circular No.SEC/CMRRCD/2009-193/154 dated October 24, 2013, and the regulation 24 (2) of the Stock Exchanges (Listing) Regulations-2015 “no benefit in cash or kind, other than in the form of cash dividend or stock dividend, shall be paid to the holders of equity securities” for attending the 24th Annual General Meeting of the Bank.


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Message from theChairman

20


Bismillahir Rahmanir Rahim

Dear Shareholders,

It is with great pleasure that I heartily welcome you all to the 24th Annual General Meeting of the respected Shareholders of the Bank and sincerely thank you for your continued interest and support for the sustained growth of the Bank over the years. On behalf of the Board of Directors of the Bank, this is my privilege to present before you the Audited Financial Statements for the year ended 31, December, 2018 reflecting the consistent performance of the Bank in respect of operational results and standard of Corporate Governance and regulatory compliance. I would also take this opportunity to highlight our strategies to achieve further operational excellence in our business operations in the future.

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Alamgir Kabir, FCAChairman

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1. Synoptic Review of Financial Performance: 2018

By the grace of Almighty Allah (SWT), Southeast Bank Limited (SEBL) delivered strong operating performance and cost efficiencies as well as significant returns and growth in all key business indicators in 2018. I am pleased to announce another set of record results in 2018. During the year, despite many challenges, the bank made a notable growth through reshaping our business strategies and processes and remodeling our service quality and delivery channel. A glimpse of the performance is shown below:

Bank’s total loans and advances portfolio increased by 14.23 percent to BDT 33,354.91 million in 2018, over BDT 234,316.72 million in 2017. Bank’s total asset increased by 12.46 percent to BDT 42,287.62 million in 2018, over BDT 339,288.05 million in 2017. The Bank’s total deposit increased by 10.56 percent to BDT 28,506.72 million in 2018, over BDT 269,828.08 million in 2017. During the year 2018, the Bank made an operating profit of BDT 9,783.00 million as against BDT 9,062.30 million in 2017.

There was increase of cost of fund (COF) and it reached 7.81 percent at year end. The total deposit of the Bank including Islamic Banking Deposits increased by 10.56 percent over that of last year. It led to a healthy Loan to Deposit Ratio of 81.55 percent. The net interest margin of the Bank reached 3.81 percent at the end of 2018. The Bank was able to increase Net Interest Income to BDT 5,199.94 million in 2018 from BDT 4,027.69 million in 2017. Fees and other income during the year 2018 had a good growth of 6.86 percent over that of 2017. The good contribution of Fees and other income to Bank’s total income is a clear testimony of Bank’s strength. We are looking forward to building better and innovative processes and structures to gain a competitive advantage for brighter business result in the coming days.

2. Governance and Transparency

One of the basic policies of Southeast Bank Limited is to strengthen its corporate governance status by practicing efficient corporate governance and compliance processes through meeting all regulatory requirements. We have established ourselves as one of the most compliant banks in the industry by establishing responsible management

system and strengthening supervision. The prime objective of Bank’s Corporate Governance system is to enhance stakeholders’ value by pursuing responsible and ethical practices of business and upholding high standard of disclosure and transparency.

Our Annual Report contains adequate disclosures reflecting compliance of all applicable Accounting Standards. In recognition, over the past few years Southeast Bank received a number of awards from distinguished institutions on corporate governance and quality of disclosure and transparency reflected in the Annual Report. An elaborate report on Corporate Governance of the Bank in 2018 is included in this Annual Report.

3. Code of Conduct of Directors

The Board of Directors of the Bank in its 410th meeting held on December 24, 2012, inter alia approved, the Code of Conduct for the Directors of the Bank. The Directors are sincere in abiding by the Code of Conduct. There had not been any breach of the Code of Conduct by any Director of the Bank. The Directors are regularly apprised of the relevant guidelines given by the regulatory authorities so that they can discharge their responsibilities effectively and efficiently.

4. Customers - Our Partners of Progress

Our first and the highest priority is to provide quick and effective services and maximum satisfaction to the customers and we always work for new and better ways to serve them. This ideology is widely practiced in the Bank.

Our customers need a trustworthy partner and that we are. As a partner of progress, we provide them financial flexibility and service diversity. With our profound understanding of the business and needs of our customers and the challenges being faced by them, we focus on delivering highly customized products and services. Southeast Bank has become a synonym of quality banking services and products. It has a diverse array of products and services tailored carefully to cater to the needs of all segments of customers in the industry through a fair deal. We always emphasize on long term ethical customer relationship considering high productivity through professional team work, creativity and customer-focused marketing.

Our operational strategies are structured with intelligent planning to address the special and

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often complex needs of the customers. It is our ongoing endeavor to understand the unique requirements of our customers and to cater to these requirements to the best of our abilities. We regularly carry out required research, analysis and survey to find out what the customers expect. We obtain meaningful and actionable feedback from customers and use it to improve our services and exceed the expectations of our customers by offering new products and technology-based support. Our customers increasingly want solutions rather than products.

The Bank has also developed and implemented AML and CFT compliance policy. Under the policy, customer due diligence is being done, transactions of clients are being monitored, reporting to regulatory authority is being made, sanction lists are being screened while allowing any transaction and utmost care is being exercised in case of handling walk-in and unknown customers. We have also successfully introduced a ‘Customer Charter’ in line with the guidelines of the Bangladesh Bank. We spend money on things that matter to them and add value to the Bank in terms of image and profit.

5. Risk Management

Recognizing the crucial role of risk management for sustainable growth, the Bank has developed necessary systems and processes for assessment and management of all potential strategic and operational risks in the light of Bangladesh Bank’s Risk Management Guidelines.

Southeast Bank builds its approach to risk management on the concept of three lines of defence, signifying a clear division of responsibilities between the risk owners and control functions. Strategically, Board of Directors, through the Board Risk Management Committee and the senior management team, sets up risk governance structure and risk philosophy, endorses risk strategies and reviews and approves risk policies as well as the risk threshold in line with the bank’s risk appetite. These limits are continuously monitored by an experienced risk management team and overseen by Board Risk Management Committee. The Risk Management Committee of the Board reviews and monitors the overall risk management system of the Bank and reports to the Board from time to time. The risk management system of SEBL has been described in “Risk Management Report” section of this annual report.

6. Internal Control System

The Bank management is held responsible for putting in place a sound system of internal controls to safeguard stakeholders’ interest. Board of Directors of Southeast Bank Limited has the ultimate responsibility to make significant policies to ensure compliance at all levels in the bank’s day-to-day activities. The Audit Committee of the Bank reviews on regular basis adequacy and effectiveness of the system of internal controls in compliance with the guidelines of Regulatory Authorities. The Internal Control & Compliance Division (ICCD) has been organized in line with the guidelines of the regulatory Authority. It reports directly to the Audit Committee and ensures compliance of all internal control systems and procedures and directives given by the Audit Committee and the Board of Directors.

There is maker and checker concept with due areas of accountability for each and every transaction and segment of work in the Bank. The internal control system is designed to meet the purposes of completeness, accuracy, reliability of financial transactions, justification and reasonableness of Bank’s operational aspects.

7. Credit Policy of SEBL

Southeast Bank has a comprehensive credit policy encompassing both Conventional and Islamic banking modes of lending. It comprises clearly stated universal and basic operating concepts, policies and standards for credit operations in accordance with bank’s business objectives and rules of conduct of credit in line with the guidelines of Bangladesh Bank. We promote understanding of and strict adherence to our credit policy among all our concerned employees. Our assessment for corporate loan or investment involves varieties of financial analyses including cash flow to predict an enterprise’s capability of loan or investment repayment and its prospect. While assessing credit worthiness, we focus on a number of principles considering qualitative and quantitative judgment including, but not limited to, borrowers’ background and character, risk factors, purpose of the credit or investment facility, tenor of the Bank’s exposure, security offered, business segment scenario, pricing, national policy etc. While approving a loan or investment, we try to ensure that our power of sanctioning a loan or investment does never over-power our fair judgment. The credit policy

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focuses on inclusive and productive use of credit with distinct attention to adequacy of credit flows to agriculture, SMEs, Women entrepreneurship and we are also keen to move fast for green banking to protect environment. The total volume credit grew by 14.23% at the end of the year 2018.

8. Our Unique Advantage: Our Human Capital

Southeast Bank Limited has always pursued a balanced Human Resource policy. We facilitate greater engagement and reap all the competitive advantage that a productive and skillful manpower provides. We continue to strengthen our workforce management practices. Our people are undoubtedly the core asset of our bank and we acknowledge their hard work and dedication in elevating our bank to where it is today. We are always conscious of the importance of retaining and attracting the best talents. Our human resource management policies are designed on the principles of care, capacity building, knowledge sharing and fairness. Besides hiring best resource on purely merit basis, performance of every staff member is evaluated on a uniform benchmark to help promote a culture of merit and fairplay in the organization.

We provide useful behavioral framework for resolution of dilemma that our employees individually encounter while doing their everyday activities. We help them make responsible and consistent professional decisions selflessly. We provide a competitive compensation and incentive package to motivate our employees. The employees are provided with adequate opportunities for their professional development at home and abroad.

9. Calibrating our Strategic Path for the years to come

We have navigated in the banking sector of Bangladesh for the last 24 years. As we step into the realms of 2019, we are shaping our strategies to better suit the changing economic and financial market scenario and taking pragmatic steps to accelerate growth. We are well-positioned on a firm platform to progress further in our chosen areas of operations. Over the years, we have built up a strong foundation for the future to deliver a leading performance and competitive returns that our shareholders want to see. Our success truly portrays that we keep a watchful eye and analyze our strengths and weaknesses to meet the emerging

challenges to our business operations and also grab the opportunities as and when they arise. We are committed to embrace technological change and innovations to further develop attractive value propositions to our clients. We will continue to strive to improve further our operational efficiency with the main focus on creating wealth for shareholders.

10. Adding to our list of Accolades and Achievements: Symbol of Inspiration

Southeast Bank greatly weighs good corporate governance and operational excellence. These are our fundamental requirements in our aspiration to remain a leading banking institution in our country. We do have strategy, intent and ability to take the Bank forward further. In recognition, The Institute of Chartered Secretaries of Bangladesh (ICSB) awarded our Bank Second Position (Silver Award) for continuous commitment to Corporate Governance Excellence for the year 2017.

Southeast Bank Limited received Tax Card and Crest from National Board of Revenue (NBR), Ministry of Finance, Government of the People’s Republic of Bangladesh. Southeast Bank was given the country’s 4th highest Tax Payers Award in the Banking Institutions Category for the assessment year 2017-2018.

11. Caring about Our Communities for Societal Upliftment

We believe that a stable environment and a strong economy are correlated and preconditions for progress of the country. The Bank is closely related with the communities where it runs its business. We always extend our hands towards underprivileged groups of the society and consistently promote social and economic upliftment of the people at the hour of need. Our focus is on sports, arts & culture, education, and entrepreneurship and on identifying the links between them. We launched and contributed in different programs with the desire to generate more social impact through our activities. Our CSR goes far beyond charity and the engagements of our CSR are steadily increasing in depth and diversity both in expenditures, financial inclusion drives, greening the internal practices and processes, and in lending to environment friendly projects.

We acknowledge our social responsibility well and align our business strategies with our culture. SEBL

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is working towards improving the energy efficiency of its operations and optimizing the use of natural resources. Moreover, the Bank has created a Trust in association with The Financial Express and Policy Research Institute as part of its Corporate Social Responsibility (CSR) to create awareness in green retention and green business.

We created Southeast Bank Foundation to carry out CSR related activities in a most organized way. We are serving the society as part of our Corporate Social Responsibility (CSR) by giving stipends to poor and meritorious students, distributing warm clothes to winter-hit people and contributing to the different relief funds. In the year 2018, we spent BDT 208.53 million for activities related to CSR which is inclusive of the CSR expenditures incurred by Southeast Bank Foundation. During the year the Bank made significant donations to the Prime Minister’s Relief Fund for helping cold and flood hit people across the country including displaced Rohingyas, development of cultural activities, sponsoring Jubo games and so on.

As a Bank born and bred in Bangladesh, we have also a deep commitment to the Country’s economic development and preservation of the environment. We believe our conscious choice of protecting the environment today will lead to a better and sustainable tomorrow. We are also one of the leading tax payers of the country. We contribute to the society by paying taxes to the national exchequer timely. During the year 2017-2018 we contributed an amount of BDT 5,771.73 million to the National Exchequer.

12. Acknowledge Our Stakeholders

I am thankful to the Almighty Allah for the business success of the Bank in 2018 amid competitive and challenging business environment. I also take the opportunity to thank the Directors of the Bank for their support and guidance during the year under review. Their collective wisdom substantially contributed to our success. I also thank our Management and the members of the staff under the leadership of the Managing Director for their loyalty, support and relentless efforts for Bank’s qualitative and quantitative improvements. I respect their zeal to work hard to reach newer heights of success. Our shareholders’ unflinching support and confidence are vital to the Bank’s continued growth and development. We thank them and pledge to maintain the Bank’s legacy.

I conclude by conveying my very sincere and special thanks to our valued customers, patrons, well wishers, the Government of the People’s Republic of Bangladesh, Bangladesh Bank, Registrar of Joint Stock Companies and Firms, the Bangladesh Securities and Exchange Commission, the Dhaka Stock Exchange Limited, the Chittagong Stock Exchange Limited and all others concerned for their unwavering support and co-operation.

I also look forward to their continued support, co-operation and guidance in the days ahead. I reiterate with firm commitment that we will remain disciplined, compliant and result-oriented in all our endeavors and in return seek their continued cooperation.

Finally, I thank the respected shareholders for attending the 24th Annual General Meeting and contributing significantly to the deliberations and adoption of resolutions against the agenda.

May the Almighty Allah bestow on us His infinite blessings.

Allah Hafiz.

Thank you once again for being with us.

With warm regards,

Alamgir Kabir, FCA Chairman


We are delighted to present the Bank’s operating results for 2018 which is the evidence of sustainable business growth of the bank. 2018 was a very challenging year for banks. By the grace of almighty Allah, Southeast Bank’s performance for the year remained stable with good momentum for growth. We have consolidated our position over the years through emphasis on effective execution of our strategies, sensible decision making, robust risk management framework and good governance practices. Our operating results are impressive and we expect the same momentum to continue in the days to come. Prudent direction and guidance of the Board of Directors and acumen and dedication of our experienced management team played a key role in our business performance.

Review from the office of the Managing Director

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M. Kamal HossainManaging Director

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Economic Reflection

In 2018, the global economy recovered at a faster speed than expected, with the developed economies like USA, Europe and Japan growing well. China and India grew faster than the other emerging economies. Brazil, Russia and other emerging markets also remained on a faster growth track. The developed economies, typically the USA, tightened their monetary policies and a majority of the emerging markets remained stable despite somewhat loose monetary policies. Global economic growth improved during 2018 with expansion in both advanced and developing economies. Geopolitical developments in various regions might also affect the economy and financial markets through their impact on commodity prices, risk appetite and capital flows.

2018 was election year but Bangladesh’s economy continued to gain momentum, aided by decisive policy decisions taken by the Government of Bangladesh in the last few years. The accommodative monetary policy stance, increase in development spending, growth in private sector credit, easing energy supply, continuing work on infrastructure and energy projects and growth oriented policies were primarily instrumental in achieving the recent performance of the economy. The large-scale manufacturing growth picked up momentum and agriculture sector achieved its growth target mainly due to supportive policies and increased agriculture credit disbursements. Stable exchange rate and oil prices in local market during 2018 helped contain inflation at an expected level.

Bangladesh’s economic prospects for 2019 seem promising. Therefore, the GDP growth target of 7.80% for fiscal 2018-2019 appears attainable. Manufacturing sector is expected to benefit from higher development spending, improvement in political and security conditions and the trend of low cost of borrowings. To support the acceleration in the economy, banking sector of Bangladesh will need to keep pace with it.

Business and Achievements

Under the low interest rate regime, significant emphasis has been given on productivity improvements to improve overall efficiency. These actions, along with an overall control on costs, allowed the Bank to meet its business objectives.

Despite the challenging landscape, low interest rate and intense market competition, Southeast Bank managed to deliver on various key performance indicators. Some of those achievements are depicted below:

Southeast Bank achieved operating profit (before provisions and tax) of BDT 9,783.00 million for the year 2018 compared to last year’s BDT 9,062.30 million which is 7.95 percent higher than last year. Net profit after taxation reached BDT 2,473.21 million for 2018, a 116.63 percent rise over 1,168.63 million from last year. Earnings per share for 2018 is BDT 2.35 compared to BDT 1.11 of 2017.

Bank’s balance sheet increased by 12.46 percent over December 2017. The Bank added BDT 28,506.72 million to its deposits base in 2018. As such, total deposit base of the Bank reached BDT 298,334.79 million with 34.22 percent low cost deposit at the end of 2018.

Bank’s aggregate loan portfolio grew by 14.23 percent during the year in an environment of low interest rates. As such total loan portfolio reached BDT 267,671.63 million at the end of the year. The Bank has continued to improve the credit portfolio mix towards retail, SME and higher rated corporate loans. The proportion of SME loans in the portfolio increased to 86.49 percent as on December 31, 2018.

In 2018, total Import business grew by 12.50 percent to BDT 242,294.82 million and export business by 13.63 percent to BDT 190,402.80 million.

While loan growth was accelerated, we kept a sharp eye on portfolio quality. As a result, the Non-performing loan’s ratio reduced to 5.87 percent.

The Bank has added over almost 64,000 deposit customers to its base. Total deposit customer of our bank stood around at 700,000 at the end of the year.

The Bank has been able to increase its market share in the remittance business which grew from BDT 95,405.43 million as on December 31, 2017 to BDT116,803.00 million as on December 31, 2018.

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Asset Quality

Banking sector is reeling under bad loans and heavy provision burden. To a certain extent, we are also exposed to this problem. As on December 31, 2018 Southeast Bank reported Gross Non-Performing Loans (GNPLs) of BDT 15,558.85 million as against BDT 13,878.53 million as on December 31, 2017. Southeast Bank has taken multidimensional initiatives for reducing non-performing loans. We hope the process of resolution of the asset quality pressures and NPL issues is likely to witness substantial progress in the days ahead.

Core Assets

I would like to acknowledge the hard work and dedication of all members of Southeast Bank, who are undoubtedly the core asset of our bank. It is my utmost belief that committed and professional team is the main strategic advantage of Southeast Bank over its peers. The talents, passion and commitment of our people, The Southeast Family, has been the cornerstone of our sustained success over the years. We are fortunate to have a diverse group of qualified, trained and dedicated employees across Bangladesh.

Customer Centricity

Customer satisfaction is at the heart of our operations. With a thrust to achieve operational excellence, we continue to invest in our people so that we can collectively provide quality and reliable customer service efficiently with meticulous attention towards regulatory compliance.

Technological Progress

Technological leadership is an absolute must for the delivery of value to all our stakeholders amidst rapidly changing life styles and paradigms. Southeast Bank is committed to place cutting edge technology at the forefront of our delivery channels and operations. While driving technology to new heights, we must remain ever vigilant about information and cyber security. Southeast Bank makes continuous efforts to strengthen its ability to prevent, detect and respond to cyber-attacks by improving governance and leveraging technology advancements. In the process, recently, southeast Bank has further strengthened its security

system especially for online transaction through introduction of Two Factor Authentication (2FA), One Time Password (OTP) etc.

Network Building

Our branch footprint comprises of 135 branches with the addition of 03 new branches opened during 2018. Through our network of 113 conventional branches, 05 Islamic banking branches, 15 SME and Agri Branches, 02 Ladies Branches and 02 Off-shore Banking units, we reach our customers spread across the country. We also have a fast growing Alternative Delivery Channel (ADC) which extends the Bank’s reach beyond its branch network.

Capital Management

The Bank is taking all necessary steps to remain fully compliant with the Basel III transition plan, which includes raising the Capital to Risk-weighted Asset Ratio (CRAR) threshold by the end of 2018. Tier 1 common equity capital ratio exceeds the minimum requirement of Basel-III standards. As such the CRAR of the Bank stood at 12.38 percent as on December 31, 2018 which is well above the regulatory requirement of 11.875%.

Financial Attributes

The Bank always prepares consolidated financial statements of the Bank and its subsidiaries. Side by side, separate financial statements of the Bank is prepared in accordance with Bangladesh Financial Reporting Standards (BFRSs), the requirements of the Bank Companies Act, 1991, the rules and regulations issued by Bangladesh Bank (BB), the Companies Act, 1994, the Securities and Exchange Rules, 1987 and other applicable laws and regulations. Significant accounting policies and estimations detailing nature of the components of financial statements are adequately disclosed. Any significant changes, if made, are aptly addressed along with its impact in the financial statement in Section 3 of Notes to the Financial Statements.

Important financial indicators of current year are presented in comparison with performance of the bank in preceding five years. A thorough presentation comparing with prior years’ business performance has been shown in this report under segment ‘Stakeholders’ Information.

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Looking Ahead

We remain hopeful that stable political environment and the Government multidimensional approach to accelerate economic growth will help create congenial environment for business growth in years ahead.

The environment in which we operate is evolving rapidly and we remain prepared to navigate the challenges and capitalize on the opportunities. The environment of low interest rates and resulting compression on banking spread is likely to continue in the foreseeable future, however industry driven loan growth, along with an off-take in export led manufacturing and private sector credit will present opportunities for which Southeast Bank is well positioned.

In the light of the outlook for the Banking Sector in general, our Bank will be focusing on NPL reduction and to improve efficiency and productivity. Bank is poised to improve the fundamentals and post strong results in 2019.

Strategies

In 2018, the Bank continued to focus on its strategic priorities of improving the portfolio quality and taming down non-performing loans. Within portfolio quality, the emphasis was on improving the portfolio mix with a focus on retail and SME lending, lending to higher rated corporate, resolution of stressed borrowers and proactive monitoring of loan portfolios across businesses. In 2019, the Bank would aim at risk calibrated profitable growth through focusing on the following areas:

The Bank would focus on sustaining its robust deposit base and increasing the proportion of low cost deposits.

The priority would be on growing the retail, SME and higher rated corporate portfolio with a focus on enhancing the customer franchise.

The bank would maintain strong Credit Monitoring with a view to arresting fresh slippage of any loan.

Recovery against Non-performing loans especially rescheduled, classified and written-off loans would be strengthened to further consolidate the credit portfolio.

The Bank would continue to invest in technology and preserve its digital leadership by offering best in class digital products to customers and automating internal processes to increase efficiency.

The Bank would maintain a strong capital position with a view to maintaining strong Capital to Risk-weighted Asset Ratio.

The Bank would leverage all capabilities to be the trusted partner in serving the customers and become the banker of choice.

Note of Thanks

I take this opportunity to thank the members of the Board and Bangladesh Bank for their valuable support and guidance as the Bank continues to face challenging times. I am thankful to our investors for the trust that they have placed in the Bank. The excellent results for 2018 would not have been possible without the loyalty of our customers who have continued to build stronger relationships and patronize our products and service offerings. On behalf of the Bank, I express my appreciation to all our customers and most importantly I would like to acknowledge our employees whose painstaking commitment, hard work and dedication has enabled successful delivery of our promise to all our stakeholders. It is the support and encouragement of all our stakeholders that enhances our strength and helps us stay focused on our goal.


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IntegratedReporting

The Bank through its pragmatic operation and ethical banking has embedded the idea of integrated thinking in its overall strategic attributes. The very aspect of sustainable growth has evolved in the entity’s outlook. Therefore, the bank takes pride in integrating social and environmental growth in the overall business operation to achieve both social and corporate goals.

Scope and Boundary of the Report

The Integrated Report covers the period from January 01, 2018 to December 31, 2018. This report aims to provide a transparent and balanced appraisal of the material issues that faced our business during the year under review and that impacted our ongoing ability to create value. The Financial information regarding sustainable value addition has been presented in respective segments along with independent audit reports and evaluation. Non-financial issues and information regarding the bank had been demonstrated throughout the report in different segments narrated as Non-financial indicators, Sustainability Report, Director’s Report, etc. During preparation of the report there had been no material change in the reporting of financial and non-financial issues regarding the bank.

We have prepared and presented financial statements and other reports in compliance with the requirements of

Bank Company Act, 1991 (Amended upto 2018)

Bangladesh Bank Regulations

The Companies Act 1994

Bangladesh Accounting Standards

Bangladesh Financial Reporting Standards (BFRS)

Financial Institutions Act 1993

Securities and Exchange Rules 1987

The Income Tax Ordinance, 1984

And other applicable laws and regulations of the bank

Materiality

Southeast Bank Limited has always been vigilant in addressing the material issues which have substantial impact on the strategic direction and operation of our business. Several non-financial parameters and our performance in the relevant parameters were disclosed considering their materiality in decision making and formulation of strategic directions. Environmental obligation and financial inclusion having substantial material impacts were prioritized through disclosure of explicit steps taken by the bank.

An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term. Modern business world has embraced this form of reporting as a part of its responsible and proactive sense of communicating with its stakeholders. Southeast Bank Limited has already transformed its integrated thinking into a set of disclosures termed as Integrated Report. The Bank has always been proactive in its strategies in the form of taking into account the integrated thinking in business ideology and value creation. The Bank does believe in dealing with our clientele with the best practice of responsible banking along with the idea of creating sustainable value for all the stakeholders.

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Assurance Approach

The bank scrutinizes the details of the reports submitted and assures the uniform acceptance of the report by its assurance model comprising of different independent and responsible authorities. We do believe that our combined assurance model creates the philosophy that is embedded in every aspect of our business.

We have engaged different external assurers and auditors to ensure the credibility of the report as under:

Financial Statements Audit Pinaki & Company, Chartered Accountants

Corporate Governance compliance

Syful Shamsul Alam & Co., Chartered Accountants

TAX Consultant Akhter Abbas Khan & Co.

Credit Rating AgencyCredit Rating Information and Services Limited (CRISL)

Management Review

External Audit

Assurance

InternalAudit

Assurance

Assuredand Reliable Information

to the Stakeholders

Chart: Combined Assurance Model of information to Stakeholders

Our integrated capitals have substantial impact on our strategic operation. The cycle of integrated thinking and reporting shall result in productive capital allocation and act as a force for financial stability and sustainability. We also do believe that each of the integrated capitals depicted below has been contributing immensely for the organization to achieve its vision to be a premier banking institution in Bangladesh and contribute significantly to the national economy.

Knowledge based functioning Ensuring managerial

performance Proper allocation of

duties Establishing excellent

culture Financing and Funding

managed from depositors and investors Strong Deposit Base Diverse investment

portfolio Steady Interest and

non-Interest income

Financial

Meticulous due diligence of Environmental checklist Ensuring Green Banking

Initiatives Incorporating

Environmental Risk Rating

Natural

Proficient Stakeholder Engagement Strong adherence to

Corporate Social Obligation Consistent contribution

to the national exchequer

Social

Large number of branches with efficient service Integrated Network

providing off the centre services Convenient Mobile

Banking and ATM services

Manufactured

Knowledge Based functioning Efficient Process

Development Competent Core Banking

System

Intellectual

IntegratedCapital

Human

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Integrated Capitals of Southeast Bank Limited

Value Creation Process

Our brand image in the

industry for our excellent

products and services

Diverse investment

portfolio with steady payback

and ensuring asset quality

Preeminent trend of

compliance in corporate

governance and regulatory obligations

Clear divergence

between Board and Manage-

ment Functions

State ofthe art

technologies offering most

convenient operation

Continuous innovation to diversify our

service

Pursuit of Disciplined

Growth Strategies

Key drivers that CreateValue to our organization

Pri

mar

y A

ctiv

itie

s

Sustainable Value Created

Sup

por

tin

g A

ctiv

itie

s

Our Technological brilliance in

Business Operation

Financial Reporting

and Efficient Information

Operational Excellence

Employing efficient

personnel

Market Optimization with efficient

products

Lending & Investment

Value created for

the stakeholders

Excellence in Client Service

Fund Management

� Meeting all regulatory requirements and disclosures

� Hiring professionals with strong background and knowledge

� Effective Risk Management

� Efficient Internal Control and Regulatory Compliance System

� Planned Work Schedule

� Proficient Recruitment and Selection

� Scrutinized Performance Appraisal

� State-of-the-Art Training and Development

� Incessant Banking Service

� Efficient Electronic Fund Transfer System

� Competent Core Banking System (CBS)

� Mobile and Online Banking

� International Accounting Standards

� Financial Accounting� Management Accounting� Comparative Reporting

for Decision-Making� Management information

systems� Monthly, Quarterly, half

Yearly and Annual analysis of performances

� Different divisions with dedicated essence activity

� Knowledge based functioning

� Ensuring managerial performance

� Proper allocation of duties

� Establishing excellent culture

� Exploring New market through branch establishment

� Business And Product segmentation

� Direct Marketing� Policy Development

� Mobilizing Low Cost Deposit from retail client base

� Capital Accretions� Arranging Funds from

overseas sources for Offshore Banking service

� Loans from Other Banks

� Central Bank Loans and Refinance

� Lending through Loan Products

� Strategic investments� Emphasizing Small and

Medium Enterprise Financing

� Long term Foreign Currency loan for corporate clients

� Agricultural and renewable energy financing

� Selection and appraisal of quality asset portfolio

� Proficient Stakeholder Engagement

� Consistent contribution to the national exchequer

� Satisfactory employee benefit

� Incessant customer relationship

� Engagement in CSR activities

� Speeding Customer Service through customer need recognition

� Design prominent product facilities

� Initiating customer oriented culture

� Strengthening trust and partnerships with

customers� Growing as our

customers grow� Online Banking

StrongCorporate

Governanceand Resource Management

Board ResponsibilityThe Board, along with Audit and Risk Management Committee, acknowledges the responsibility to ensure the integrity of this integrated report. The Board believes that all the material issues of the bank have been addressed in the report as well

as integrated performance of the bank has been presented fairly.


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Corporate Philosophyand Business Model

CUSTOMERS

Our company philosophy is simple. It is customer-friendly and fully responsive to customer needs and expectations. We carry out required research, analysis and survey to find out what the customers expect. We leverage technology and expertise to provide the best services and convenience to the customers. We spend money on things that matter to them and add value to the Bank in terms of image and profit. That is why our customer-base has been steadily expanding over the years.

HUMAN RESOURCE

Our people are smart, professional, well-qualified, energetic and sincere. They are passionate about what they do. Since they enjoy their work, it becomes easy for them to work hard. They do not follow any set model, rather they create models. They completely own what they plan and do. They have a longing to be significant. So, they are a part of something noble and purposeful.

COMMUNICATION

Our philosophy is to reduce lines and layers of communication. We believe in free flow of ideas within the Management Team. The Senior Management Team is also open to ideas suggested by the lower level executives and officers. At the same time, our decision making process is short but quick.

CONTROL MECHANISM

Our control mechanism is practiced at all levels. We strive to control the behavior of the employees. Our control mechanism is closely linked to efficiency, quality, innovation and responsiveness to customers.

QUALITY AND PRODUCTIVITY

Our philosophy is geared towards boosting productivity and maintaining a reliable high quality service standard. In the process of delivery of service, co-ordination is the essence of our business. Our philosophy is to achieve our goals through a combination of budgetary control, pay for performance, incentive system, unique corporate culture etc. It continuously stresses key values.

SUCCESS

Our people work hard to succeed. Success is a good fortune. It comes from their aspiration, desperation, perspiration and inspiration. As our people do more, they earn more and get more.

BUILDING FUTURE

Our philosophy is to make decisions today to improve performance tomorrow. We know a company which is successful has to continue to be successful. We do not fear our future, we shape it by our corporate conduct. Our hope is far greater than our fear.

Our corporate philosophy centers around our corporate missions, business domain and management goals. We devote our talent and technology to the creation of value for our stakeholders. Everyday our people bring this philosophy to life and to their work. Our philosophy cannot be bound by a few words or issues. Yet we narrate the followings:

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Business Model Canvas of Southeast Bank Limited

Key Partners

Customers Shareholders Employees Regulators Strategic Partners

Key Activities

Deposit Services Lending International Trade Services Remittance Service Treasury Solutions Islamic Banking Service Off-shore Banking

Key Resources

Highly Professional & Experienced Board Nationwide Network Worldwide Correspondent Network Highly Skilled Staff Dedicated Service Attitude Wide Range of Products Strong IT architecture Strong Capital Base

Cost Structure

Interest Expense Operating Expense Capital Expenditure

Revenue Streams

Interest Income Investment Income Fees, Commission etc. Other Operating Income

Customer Segments

KYC – Know Your Customer Personal Visit Phone Call/ Email/ SMS Automated Services Special Campaign In-depth Analysis Individual Solution Continual Review Research & Development Receiving Feedback

Delivery Channels

Branches ATMs Internet Banking Mobile Banking Call Center Subsidiary Companies

Customer Segments

Corporate Clients Small & Medium Enterprises Non-Banking Financial Institutions Banks Individuals/ Retail Clients Institutional Clients Govt. & Non-Govt. Organizations

Value Proposition

Complete Solution of Business Needs One Stop Service for Personal Banking Innovative Tailor-made Products Timely, Cost-effective & Superior Services Geographically Well-spread Availability

36


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Vision

To be a premier banking institution in Bangladesh and contribute significantly to the national economy.

Mission Statements

High quality financial services with state of the art technology.

Customer Service Excellence / Prompt Customer Service.

Sustainable growth strategy.

High ethical standards in business.

Steady return on shareholders’ equity.

Innovative banking at a competitive price.

Attraction and retention of quality human resource.

Commitment to Corporate Social Responsibility

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StrategicObjectives

Priorities followedin 2018

a) Maintaining a high quality assets portfolio to achieve strong and sustainable returns and to continuously build shareholders’ value.

b) Maintaining adequate capital in line with risk appetite of the Bank.

c) Strengthening trust and partnerships with customers by focusing on the Bank’s core values of quality customer service, professionalism, teamwork and integrity.

d) Hiring professionals with strong background and knowledge.

e) Strengthening technologies that reduce operational risks and promote the implementation of best practices in the industry.

f) Developing innovative products and services that attract our targeted customers and market segments.

g) Exploring new avenues for growth and profitability.

h) Practicing efficient risk management principles in line with all six core risks in banking

operation, green banking and environmental risk management.

i) Practicing efficient corporate governance and compliance processes through meeting all regulatory requirements and disclosures in line with national and international best practices by ensuring best internal control monitoring practices.

j) Upholding Bank’s brand image as a customer friendly bank through efficient and prompt customer service, product diversification with a view to establishing a long term profitable relationship with our customers.

k) Serving the society as part of our Corporate Social Responsibility (CSR) by giving stipends to poor students, distributing warm clothes to winter-hit people, providing financial assistance to disadvantaged people and contributing to different relief funds. We also contribute to the society by paying taxes to the national exchequer timely.

l) Extending banking services to the un-banked people for financial inclusion for meeting socio-economic requirements.

The Bank had the following plans and road-map for business success in 2018.

i) Excellence in banking operations through maintaining strong fundamentals of Capital Adequacy, Business Diversification and Exploring Non-Funded Business

ii) Prudent Asset Management

iii) Prudent Liability Management

iv) Excellence in Delivering Customer Service

v) Effective Risk Management

vi) Effective IT Framework and System

vii) Efficient Internal Control and Regulatory Compliance System

viii) Strong Human Resource Base

ix) Going green in the future of banking

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Strategic priorities- Growth in areas of strength

Sustainable revenue growth comes from our ability to build relationships with our customers, and creating niche markets. We do this by providing our customers with exceptional service.

Diversification and increasing loan clients and maintaining quality assets

Export expansion and diversification Promoting Islamic banking through conventional

branches Emphasizing Small and Medium Enterprises

financing. Agricultural & Rural Credit through Micro

Financial Institutions Sustainable financing for Energy efficiency and

renewable energy projects Arranging funds from overseas sources for Off-

shore banking service and long term foreign currency loans for corporate clients.

Integrated marketing development initiative by creation of customer oriented culture

Remittance as a source of foreign currency

Strategic priorities - Resilience and flexibility

SEBL is committed to consolidate its solid capital base to support the risks associated with our diversified businesses, while still providing investors with superior returns. We actively manage our capital to support the execution of our business strategies. Our goal is to achieve the lowest cost of capital by managing its mix and by building our base through earnings and selective capital issues.

expediting borrowers’ rating,

concentrating on lending portfolio having lower capital charge,

strengthening internal Capital adequacy assessment process (ICAP)

Preemptive preparation for Basel –III compliance

StrategicPriorities

SEBL will keep on growing as a leading Bank of Bangladesh, in spite of existence of external challenges: first because we have a farsighted Board, vibrant management and an enthusiastic & skilled group of employee base that is committed to working together to provide our customers with excellent service; second, because we are building on a solid foundation of key strengths, including a strong capital base, and excellent risk and cost management skills; third, because we are strategically diversifying our business lines, products and locations; and finally, because we have a clear focus on our strategy and where we need to direct our efforts. Our strategic focus– is built around a few key priorities that will guide our actions as we move forward over the next several years. They will serve as a roadmap to help us navigate through the new landscape in which we are now operating. Sustainable revenue growth, capital management, leadership, prudent risk & appetite management, efficiency & expense management – will be the pillars of our strategy in upcoming years. They will play a critical role in our success and, given the ongoing market uncertainty, they deserve a prominent place in our strategic framework.

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Revising the capital allocation to business in line with revised capital adequacy target ratios

At SEBL, we are known for our risk management culture, characterized by a pragmatic approach and rigorous processes. We make a point of knowing our customers. But at the heart of our strength is experience and good judgment.

For Credit Risk-our focus is to develop a strategic business plan for appetite management and structured policy guideline and framework in order to manage default loans.

Ensuring effective risk management system specially prudent management of Asset Liability risk, Foreign Exchange risk and Operational risk

Ensuring meticulous compliance of disbursement procedures and monitoring and follow-up of each loan by the Branch managers to ensure in timely recovery of the same

Strengthening recovery drive to bring down the NPL at a minimum level

Ensuring efficient internal control and regulatory compliance in all levels of banking operations.

Strategic priorities for Leading Customer Experiences

Ensuring quality customer service at primary distribution channel such as Branch and development of alternative delivery channels to improve customer experiences.

Developing and upgrading customized asset, liability and transaction products for Retail, SME and Corporate clients.

Mobilizing low cost sustainable deposits from retail and institutional client base

Increasing client base for financial inclusion and wider market penetration.

Strategic priorities for Leadership/HR capacity development

SEBL’s success depends on having the right leaders to execute our strategy. For this reason, leadership

remains one of our strategic priorities. Our leadership strategy continues to build competitive advantage through comprehensive development programs and tools.

Hiring the best talents in different arenas of Banking

Fostering a culture of creativity, innovation and diversity with a view to sustainable business growth.

Developing Human resource by rendering training and motivation. so that they remain capable to lead new initiatives

Creating Alignment between the leadership development strategy and the business strategy

Key Performance indicator (KPI) based evaluation system

Developing Human resource management system to transform the organization

Efficiency and expense management-

Expense management is a traditional strength at SEBL – and today, it’s more important than ever. While revenue growth is ultimately decided by our customers & external factors, expenses are something we can control. Across SEBL, we are carefully monitoring our spending and looking for ways to improve productivity by being innovative and doing more with less :

Clear Cost saving strategies

Business process reengineering (BPR) in different Business and operational areas to improve efficiency.

Optimizing efficiency by Budgetary control

Paperless banking

Implementing Green office Guide

41


Our Values, Core Values, Core Strengths & Core Competencies

Our ValuesOur Values Serve as a compass for our action and describe our direction.

Core Strengths Professionally Strong Board of Directors

Strong Capital Base

Transparent and Quick Decision Making Efficient Team of Performers

Satisfied Customers Effective Internal Control

Skilled Risk Management

Focus on Diversification

Quality Customer Service

Unique Corporate Culture

Clean divergence Between Board and Management Functions

Strong Asset Base

Core Values Integrity

Respect

Fairness

Harmony

Team Spirit

Courtesy

Commitment

Service Excellence

Insight and Spirit

Enthusiasm for work

Business Ethics

Core Competencies Knowledge

Experience and Expertise

Customer Orientation and Focus

Transparency

Determination

Zeal for Improvement

Pursuit of Discipline Growth Strategies

Reliability

42


Code of Conductand Ethics

Southeast Bank believes that its efforts to become a leading bank in the private sector can only be achieved and sustained by creating effective corporate governance, inculcating professionalism among its staff and strictly adhering to rules and regulations. We believe that our aims and objectives can only be realized fully and sustained over time by adherence to ethics that cannot always be built into sets of rules and regulations. This belief in ethics motivates the Bank in its dealings with those with whom it interacts.

A. WE ADHERE TO THE FOLLOWING PRINCIPLES IN DEALING WITH CUSTOMERS

1. Follow strict ethical banking practices.

2. Provide fair treatment to all customers, depositors and borrowers without any discrimination.

3. Provide speedy customer service at a very competitive cost.

4. Deal with customers in a transparent manner and without any hidden cost.

5. Maintain strict secrecy of customer account.

6. Provide free financial advice to clients.

7. Deal quickly with complaints received from the customers. We endeavour continuously to build relationship of trust and understanding with our customers.

8. Give very competitive return to the depositors on their investment.

9. Listen to our customers and work for improvement of customer service as per their suggestion.

10. Keep relations with customers in weal and woe.

11. Keep promises that we make.

12. Take competitive service charges and rates.

13. Discourage any sort of privilege or gift from customer.

B. WE BELIEVE IN THE FOLLOWING PRINCIPLES IN DEALING WITH SHAREHOLDERS

1. Adequate disclosure of corporate information and operational results to help them take suitable investment decisions / options.

2. Stable Dividend Policy.

3. Dialogue with them and implement their suggestions for improvement.

4. Equal treatment to all shareholders irrespective of their individual size of shareholding.

5. Effective Risk Management.

6. Maintenance of fairness and accuracy of financial reporting and records.

7. Restrictions on insider trading.

C. WE ABIDE BY THE FOLLOWING PRINCIPLES IN DEALING WITH OUR REGULATORS

1. We are transparent in operations and governance.

2. We have a culture of timely compliance of regulatory requirements.

3. We take their suggestions with utmost importance and implement those for improvement of our corporate governance standard.

4. We safeguard information and do not misuse it.

D. WE CONFORM TO THE FOLLOWING PRINCIPLES IN RESPECT OF OUR EMPLOYEES

1. We do not discriminate on grounds of religion, sex or race at any stage. We recruit the best on the basis of merit under a rigorous recruitment

43


policy without any biases or favoritism to anybody.

2. We pay competitive compensation package to the really deserving employees.

3. We care for our employees and create an environment to work together with dignity.

4. We have clearly defined duties and responsibilities for each employee. No one is responsible for unassigned jobs.

5. We have a zero tolerance for any act of dishonesty.

6. We provide a congenial work environment.

7. We encourage freedom to our employees to give opinion for both qualitative and quantitative improvement of the Bank.

8. We take care of their health and safety.

9. Our employees avoid conflict of interest.

10. Our employees obey code of conduct.

11. Professionalism, honesty, integrity and high moral and ethical standards are the creed of our employees.

E. WE UPHOLD THE UNDER-NOTED PRINCIPLES IN RESPECT OF SOCIETY

1. We believe that the Bank gets business sustenance from the community in which it operates and, therefore, it remains responsive to the community and the society in reciprocity.

2. We discourage financing projects that are not environment-friendly.

3. We provide material support for protection of environment.

4. We give aid to the poor, helpless and natural calamity hit people.

5. We support charitable ventures.

6. We give sponsorships to sports, culture, education, health-care and community development ventures.

7. We support the women as a community and contribute to women empowerment.

8. We are keen to move fast for green banking to protect environment.

F. WE DEVOTE TO THE FOLLOWING PRINCIPLES IN RESPECT OF NATIONAL INTEREST

1. We protect national interests.

2. We refrain from prohibited business.

3. We promote causes for national development.

4. We support nation-building efforts from our position.

COMMITMENTS TO CLIENTS

SEBL is a customer focused modern banking institution in Bangladesh. We deliver unparalleled financial services to Retail, Small and Medium Scale Enterprises (SMEs), Corporates, Institutions, Government and individual clients through branches across the country. Our business initiatives center around the emerging demands of the market. Our commitments to the clients are as follows:

1. Provide service with high degree of professionalism and use of modern technology.

2. Create long-term relationship based on mutual trust.

3. Respond to customer needs with speed and accuracy.

4. Share their values and beliefs.

5. Grow as our customers grow.

6. Provide products and services at a competitive price.

7. Ensure safety and security of customers’ valuables assets entrusted to us.

44


CORPORATEPROFILE

Southeast Bank Limited is a second-generation bank that was established in 1995 with a vision to bring efficient and professional banking services to the people and the business community of Bangladesh. It aims to contribute significantly to the growth of the national economy.

The Bank’s glorious journey began as a Public Limited Company on March 12, 1995 through receiving the certificate of Commencement of Business from the Registrar of Joint Stock Companies and Firms on that date. Its Banking License from the Bangladesh Bank was received on March 23, 1995. The Authorized Capital of the Bank today is BDT 15,000 million. Its Paid-Up Capital and Reserve reached BDT 38,860.11 million as on December 31, 2018. The Bank had 2797 Staff of whom 247 were Executives, 2058 were Officers and 492 were other Staff as on December 31, 2018.

Southeast Bank was established by leading business personalities and eminent industrialists of the country with stakes in various segments of the national economy. The incumbent Chairman of the Bank is Mr. Alamgir Kabir, FCA, a professional Chartered Accountant. The Bank’s Managing Director is Mr. M. Kamal Hossain, a creative,

experienced and eminent banker of the country with 36 years of experience in banking to his credit.

A team of efficient professionals manages the Bank. They create and generate an environment of trust and discipline that encourages everybody in the Bank to work together for achieving the objectives of the Bank.

It has a diverse array of products and services tailored carefully to cater to the needs of all segments of customers. Our operational strategies are structured to address the special and often complex needs of the customers. In the growth graph, the Bank has generated profit of BDT 2,473.21 million after provision and income tax in the year 2018. The curve keeps soaring upward everyday making it one of the leading and most successful banking institutions in Bangladesh with a total asset base of BDT 381,575.68 million as on December 31, 2018.

45


CORPORATEPROFILEName of the Company : Southeast Bank LimitedLegal Form : Public Limited Company

Date of Inception : March 12, 1995Company Registration No. : C-27985 (1831) / 95Authorized Capital : BDT 15,000 millionPaid Up Capital : BDT 10,544.93 millionRegistered Office : Eunoos Trade Centre

52-53, Dilkusha Commercial Area (Level #2,3,4,6,16 & 17)Dhaka-1000, BangladeshPhone: (88-02) 9571115, 7160866, 9555466, 7173793Fax: + 88-02-9550093Telex: 632425 SBANK BJSWIFT: SEBDBDDHE-mail: [email protected]: www.southeastbank.com.bd

Tax Payer Identification No. : 555495486932VAT Registration No. : 19011025625Chairman : Alamgir Kabir, FCAVice Chairperson : Duluma AhmedChairman of the Audit Committee of the Board : Syed Sajedul KarimManaging Director : M. Kamal HossainChief Risk Officer : S. M. Mainuddin Chowdhury

CAMLCO : S. M. Mainuddin Chowdhury

Company Secretary : A.K.M. Nazmul Haider

Chief Financial Officer : Rasedul Islam, FCA (Acting)

Auditors : Pinaki & Company, Chartered AccountantsTax Consultant : Akhter Abbas Khan & Co.Credit Rating Agency : Credit Rating Information and Services Limited (CRISL)Date of Opening of First Branch : May 25, 1995Year of Initial Public Offer : 1999Number of Employees : 2797No. of Branches : 135No. of Islamic Banking Branches : 05No. of Ladies Branches : 02No. of Off-Shore Banking Units : 02No. of Foreign Correspondents : 644

Number of Outstanding Shares : 1,054,492,702Listing Status (Shares) : Dhaka Stock Exchange (DSE), Symbol: SOUTHEASTB

Listing Date: April 12, 2000Chitttagong Stock Exchange (CSE), Symbol: SOUTHEASTB Listing Date: April 24, 2000

Market Price Information(as on 31.12.2018)

: DSE: BDT 15.60, Category A CSE: BDT 15.70, Category A

Investors’ Enquiry Investors' Relations DepartmentEunoos Trade Centre 52-53, Dilkusha C/A (Level-2), Dhaka-1000E-mail: [email protected] Phone:+88 02 9567271 Mobile: +88 01700706532

Name of the Bank’s Subsidiaries : Southeast Bank Capital Services Limited Southeast Financial Services (UK) Limited Southeast Financial Services (Australia) Pty Limited Southeast Exchange Company (South Africa) Pty Limited


Group CorporateStructure

Main Operations

Southeast Bank Ltd., a 2nd generation bank

was incorporated as a Public Limited

Company on March 12, 1995. After receiving

Banking License, its 1st branch was opened

on May 25, 1995. Presently the Bank

has 135 Branches & 173 ATMs across the

country. A number of attractive

Deposits and Loan products are available in its product basket. SEBL has launched

Retail Banking, Debit Cards, Credit Cards,

Mobile Banking (Telecash), Ladies

Branches and 24/7 Call Centre to cater to the needs of all segments

of customers.

Asset Size:BDT 340,529.27 million

Deposits:BDT 278,278.07 million

Loans & Advances: BDT 237,775.23 million

Operating Profit: BDT 8,814.00 million

Conventional Banking


Deposits:BDT 20,001.88 million

Investment:BDT 15,684.71 million

Operating Profit: BDT 713.81 million

Besides conventional Banking, SEBL has 05 (five) Islamic banking Branches based on

Islamic Shariah where Separate Accounting

system is being maintained.

As a part of strategic business plan, Islamic Banking Service Desk

(IBSD) has already been expanded to every conventional

Branch.

Islamic Banking


Loans & Advances:BDT 11,744.27 million

Operating Profit:BDT 207.29 million

To cater to the demand for off-shore banking services, Southeast

Bank established two (02) Off-shore Banking

Units (OBUs), one in DEPZ and the other is CEPZ. SEBL OBUs provide a continuum of financial services

such as FC Account for Non-residents, Usance Payable At Sight (UPAS)

Documentary Credit, Time/ Term Loan in

Foreign Currency, Full fledged export-import

services etc. from 2009.

Off-Shore Banking Units

Date of Incorporation:

September 23,2010Paid up Capital: BDT.5,500 million

Ownership Interest in Capital:

BDT 5,489.93 million

In Percentage: 99.82%

Asset Size: BDT 5,876.79 million

To carry on Merchant Banking Operations in a structured way,

the Bank established ‘Southeast Bank Capital Services

Limited’ as a subsidiary company

in 2010.

Southeast Bank Capital Services Ltd.

Group Corporate Head Office

46

Annual Report 2018 Southeast Bank Limiteda bank with visiona bank with vision

Subsidiaries CSR Wing


February 22, 2011

Paid up Capital: BDT 33.53 million


BDT 38.49 million

In Percentage:100%

Asset Size:BDT 26.89 million

To collect remittance from Bangladeshi

expatriates in United Kingdom for their

beneficiaries in Bangladesh through

proper Banking Channel, the Bank

established ‘Southeast Financial Services (UK) Limited’ as a subsidiary

company in 2011.

Southeast Financial

Services (UK) Limited

Date of Incorporation:March 18, 2013



BDT 25.06 million

In Percentage: 100%

Asset Size: BDT 1.38 million


expatriates in Australia for their beneficiaries

in Bangladesh through proper Banking

Channel, the Bank established ‘Southeast

Financial Services (Australia) Pty Limited’

as a subsidiary company in 2013.

Southeast Financial Services

(Australia) Pty Limited


December 15, 2014



BDT 50.10 million

In Percentage: 100%

Asset Size:BDT 171.30 million


expatriates of South Africa for

their beneficiaries in Bangladesh through

proper Banking Channel the Bank

established ‘Southeast Exchange Company

(South Africa)Pty Limited’ as a subsidiary

company in 2014.

Southeast Exchange Company (South

Africa) Pty Limited

Total CSR related Expenditure under

Bank and SEB Foundation in 2018:

BDT208.53 million

To carry out Corporate Social Responsibility

(CSR) related activities in an organized and sustainable manner,

‘Southeast Bank Foundation’ was

established by the Bank in-2002.

It also runs an English Medium school named Southeast Bank Green

School at Dhaka.

Southeast BankFoundation

47


Head of BusinessHead of InternationalBanking

Head of Credit Chief Risk Officer

Islamic BankingDivision

Retail BusinessDivision

SME and Agri.Credit Division

Management InformationSystem Unit

Credit Risk ManagementDivision

Information TechnologySecurity

Special AssetManagement Division

Anti-Money LaunderingDivision

Risk Management Division

Legal Affairs Division

ExecutiveCommittee

Audit and Inspection Team

SustainableFinance Unit

Corporate BankingDivision

Investors’ Relations Department

ShariahSupervisory Committee

Remittance Division

International Division

Cash ManagementUnit

Central Trade ServicesDepartment

Treasury BackOffice Unit

Risk ManagementCommittee Audit Committee

Branches and GeneralBanking Division

Telecash(Mobile Financial Services)

Credit Card Division

Alternative DeliveryChannel Division

Call Center

Asset Monitoring andVerification Division

Investment Unit(Capital Market)

Central ComplianceCommittee

Information TechnologyDivision

Human ResourcesDivision

Logistic andGeneral Services Division

Financial Control andAccounts Division

Internal Control andCompliance Division

(Monitoring &Compliance Units)

Treasury Division

Corporate Affairs andCorporate Social

Responsibility Division

Training Institute

Priority BankingDivision

Board of Directors

Managing Director

Board Secretariat

Organogramof the Bank

48


Head of BusinessHead of InternationalBanking

Head of Credit Chief Risk Officer

Islamic BankingDivision

Retail BusinessDivision

SME and Agri.Credit Division

Management InformationSystem Unit

Credit Risk ManagementDivision

Information TechnologySecurity

Special AssetManagement Division

Anti-Money LaunderingDivision

Risk Management Division

Legal Affairs Division

ExecutiveCommittee

Audit and Inspection Team

SustainableFinance Unit

Corporate BankingDivision

Investors’ Relations Department

ShariahSupervisory Committee

Remittance Division

International Division

Cash ManagementUnit

Central Trade ServicesDepartment

Treasury BackOffice Unit

Risk ManagementCommittee Audit Committee

Branches and GeneralBanking Division

Telecash(Mobile Financial Services)

Credit Card Division

Alternative DeliveryChannel Division

Call Center

Asset Monitoring andVerification Division

Investment Unit(Capital Market)

Central ComplianceCommittee

Information TechnologyDivision

Human ResourcesDivision

Logistic andGeneral Services Division

Financial Control andAccounts Division

Internal Control andCompliance Division

(Monitoring &Compliance Units)

Treasury Division

Corporate Affairs andCorporate Social

Responsibility Division

Training Institute

Priority BankingDivision

Board of Directors

Managing Director

Board Secretariat

49

50


Last 10 YearsFinancial Indicators

BDT in million

PARTICULARS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Authorized Capital 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

Paid up Capital 10,544.93 9,169.50 9,169.50 9,169.50 9,169.50 8,732.86 8,732.86 8,317.01 6,930.84 3,422.64

Reserve Fund/ Others 28,315.19 24,595.63 24,886.78 19,340.03 18,292.59 13,074.71 10,864.68 10,683.05 10,265.96 6,504.52

Total Capital (Tier-I+Tier-II) 38,860.11 33,765.13 34,056.28 28,509.53 27,462.09 21,807.57 19,597.54 19,000.06 17,196.80 9,927.16

Deposit 298,334.79 269,828.08 229,973.43 210,431.09 189,472.54 177,519.46 152,901.24 127,178.22 107,253.19 96,669.05

Advance 267,671.63 234,316.72 191,865.59 168,878.46 147,070.81 134,863.82 126,968.97 107,288.56 93,981.20 77,497.57

Investment 65,609.55 62,911.04 61,731.63 58,829.27 56,378.59 57,589.06 39,011.28 29,846.60 18,869.07 21,350.23

Import Business 242,294.82 215,379.77 171,531.73 151,812.58 155,691.00 131,644.82 111,537.50 99,509.01 103,726.70 69,582.92

Export Business 190,402.80 167,562.98 146,606.09 126,423.89 112,137.60 95,220.40 84,464.20 75,982.06 58,158.06 46,724.47

Foreign Remittance 116,803.00 95,405.43 64,665.84 60,708.50 48,740.50 39,299.10 41,455.40 49,544.10 28,082.25 23,779.20

Guarantee Business including ILC 22,420.12 16,407.09 16,369.36 15,245.19 13,603.30 17,226.41 21,506.65 25,673.90 22,781.19 11,916.74

Total Income 33,739.81 27,305.90 25,617.57 26,260.72 27,667.10 26,918.30 23,134.18 19,931.91 16,100.81 13,415.21

Total Expenditure 23,956.82 18,243.60 17,114.35 18,226.45 19,377.34 20,218.11 17,638.99 13,846.24 9,331.55 8,800.55

Operating Profit 9,783.00 9,062.30 8,503.22 8,034.27 8,289.76 6,700.20 5,495.19 6,085.67 6,769.26 4,614.66

Net Profit after Tax and Provision 2,473.21 1,168.63 2,435.07 3,069.42 3,836.94 3,378.82 1,648.72 1,912.19 2,763.93 1,870.19

Fixed Assets 9,337.30 9,321.80 8,947.16 7,885.23 7,913.00 7,795.65 7,677.51 7,373.11 4,463.64 4,323.59

Total Assets 381,575.68 339,288.05 291,798.01 260,718.03 236,608.40 220,930.85 191,276.30 158,078.59 131,784.27 112,676.98

Earnings per Share (Tk.) 2.35 1.11 2.66 3.35 4.18 3.68 1.89 2.19 3.77 3.24

DividendCash (%) - 20% 15% 15% 16% 15% 15% 10% -

Bonus Shares 10% 15% - - 5% (20:1) - 5% (20:1) 20% (5:1) 35% (20:7)

Net asset value per share (NAV) 26.66 28.16 28.93 29.67 26.77 23.92 22.66 23.30 24.73 33.10

Return on Equity (ROE) 9.17% 4.46% 9.06% 11.86% 16.51% 16.20% 8.42% 10.47% 19.41% 16.51%

Return on Asset (ROA) 0.68% 0.37% 0.88% 1.23% 1.67% 1.64% 0.95% 1.32% 2.26% 1.66%

Non Performing Loan 5.87% 5.99% 4.89% 4.25% 3.64% 3.94% 4.47% 3.51% 4.26% 3.73%

Capital Adequacy Ratio 12.38% 10.84% 12.15% 11.52% 12.41% 10.90% 10.87% 11.46% 11.25% 11.72%

Number of Correspondent Banks 285 265 248 220 211 211 183 161 152 146

Number of Foreign Correspondents 644 825 807 811 791 778 691 654 645 589

Number of Shareholders 33,851 36,038 39,009 46,285 58,169 65,413 64,060 68,039 66,898 22,152

Number of Employees - Banking 2,305 2,194 2,089 1889 1780 1704 1655 1526 1373 1254

- Non Banking 492 510 527 487 441 414 355 322 240 148

Number of Branches 135 132 128 122 113 103 94 84 76 56

51


BDT in million

PARTICULARS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Authorized Capital 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

Paid up Capital 10,544.93 9,169.50 9,169.50 9,169.50 9,169.50 8,732.86 8,732.86 8,317.01 6,930.84 3,422.64

Reserve Fund/ Others 28,315.19 24,595.63 24,886.78 19,340.03 18,292.59 13,074.71 10,864.68 10,683.05 10,265.96 6,504.52

Total Capital (Tier-I+Tier-II) 38,860.11 33,765.13 34,056.28 28,509.53 27,462.09 21,807.57 19,597.54 19,000.06 17,196.80 9,927.16

Deposit 298,334.79 269,828.08 229,973.43 210,431.09 189,472.54 177,519.46 152,901.24 127,178.22 107,253.19 96,669.05

Advance 267,671.63 234,316.72 191,865.59 168,878.46 147,070.81 134,863.82 126,968.97 107,288.56 93,981.20 77,497.57

Investment 65,609.55 62,911.04 61,731.63 58,829.27 56,378.59 57,589.06 39,011.28 29,846.60 18,869.07 21,350.23

Import Business 242,294.82 215,379.77 171,531.73 151,812.58 155,691.00 131,644.82 111,537.50 99,509.01 103,726.70 69,582.92

Export Business 190,402.80 167,562.98 146,606.09 126,423.89 112,137.60 95,220.40 84,464.20 75,982.06 58,158.06 46,724.47

Foreign Remittance 116,803.00 95,405.43 64,665.84 60,708.50 48,740.50 39,299.10 41,455.40 49,544.10 28,082.25 23,779.20

Guarantee Business including ILC 22,420.12 16,407.09 16,369.36 15,245.19 13,603.30 17,226.41 21,506.65 25,673.90 22,781.19 11,916.74

Total Income 33,739.81 27,305.90 25,617.57 26,260.72 27,667.10 26,918.30 23,134.18 19,931.91 16,100.81 13,415.21

Total Expenditure 23,956.82 18,243.60 17,114.35 18,226.45 19,377.34 20,218.11 17,638.99 13,846.24 9,331.55 8,800.55

Operating Profit 9,783.00 9,062.30 8,503.22 8,034.27 8,289.76 6,700.20 5,495.19 6,085.67 6,769.26 4,614.66

Net Profit after Tax and Provision 2,473.21 1,168.63 2,435.07 3,069.42 3,836.94 3,378.82 1,648.72 1,912.19 2,763.93 1,870.19

Fixed Assets 9,337.30 9,321.80 8,947.16 7,885.23 7,913.00 7,795.65 7,677.51 7,373.11 4,463.64 4,323.59

Total Assets 381,575.68 339,288.05 291,798.01 260,718.03 236,608.40 220,930.85 191,276.30 158,078.59 131,784.27 112,676.98

Earnings per Share (Tk.) 2.35 1.11 2.66 3.35 4.18 3.68 1.89 2.19 3.77 3.24

DividendCash (%) - 20% 15% 15% 16% 15% 15% 10% -

Bonus Shares 10% 15% - - 5% (20:1) - 5% (20:1) 20% (5:1) 35% (20:7)

Net asset value per share (NAV) 26.66 28.16 28.93 29.67 26.77 23.92 22.66 23.30 24.73 33.10

Return on Equity (ROE) 9.17% 4.46% 9.06% 11.86% 16.51% 16.20% 8.42% 10.47% 19.41% 16.51%

Return on Asset (ROA) 0.68% 0.37% 0.88% 1.23% 1.67% 1.64% 0.95% 1.32% 2.26% 1.66%

Non Performing Loan 5.87% 5.99% 4.89% 4.25% 3.64% 3.94% 4.47% 3.51% 4.26% 3.73%

Capital Adequacy Ratio 12.38% 10.84% 12.15% 11.52% 12.41% 10.90% 10.87% 11.46% 11.25% 11.72%

Number of Correspondent Banks 285 265 248 220 211 211 183 161 152 146

Number of Foreign Correspondents 644 825 807 811 791 778 691 654 645 589

Number of Shareholders 33,851 36,038 39,009 46,285 58,169 65,413 64,060 68,039 66,898 22,152

Number of Employees - Banking 2,305 2,194 2,089 1889 1780 1704 1655 1526 1373 1254

- Non Banking 492 510 527 487 441 414 355 322 240 148

Number of Branches 135 132 128 122 113 103 94 84 76 56


Board ofDirectors

Sirat Monira DirectorDr. Quazi Mesbahuddin Ahmed Independent DirectorMd. Akikur Rahman DirectorM. Kamal Hossain Managing Director

Jusna Ara Kashem DirectorRehana Rahman DirectorDuluma Ahmed Vice Chairperson

From Left Standing From Left Seating

52

Zakir Ahmed Khan AdvisorSyed Sajedul Karim Independent Director

Alamgir Kabir, FCA ChairmanAzim Uddin Ahmed DirectorM. A. Kashem Director


53



Brief Profile of Board of Directors

54

DirectorsM. A. Kashem

Azim Uddin AhmedJusna Ara Kashem

Md. Akikur RahmanRehana Rahman

Sirat Monira

ChairmanAlamgir Kabir, FCA

Vice ChairpersonDuluma Ahmed

Independent DirectorsSyed Sajedul Karim Dr. Quazi Mesbahuddin Ahmed

Managing DirectorM. Kamal Hossain

AdvisorZakir Ahmed Khan


Executive Committee

Md. Akikur Rahman MemberM. A. Kashem MemberAlamgir Kabir, FCA Chairman

Standing From Left

Azim Uddin Ahmed MemberM. Kamal Hossain Member

55

a bank with vision


Audit Committee

56

Syed Sajedul Karim ChairmanDr. Quazi Mesbahuddin Ahmed Member

Duluma Ahmed MemberJusna Ara Kashem MemberRehana Rahman Member



Risk ManagementCommittee

M. A. Kashem MemberSyed Sajedul Karim Member

Standing From Left

Alamgir Kabir, FCA ChairmanAzim Uddin Ahmed Member

57

a bank with vision


Professor Moulana Mohammad Salah-Uddin Chairman (Not in the picture)M. A. Kashem MemberMoulana Mohammad Kafiluddin Sarker MemberM. Kamaluddin Chowdhury MemberAlamgir Kabir, FCA MemberAzim Uddin Ahmed MemberM. Kamal Hossain Member

From Left

Shariah SupervisoryCommittee

58

5959


Directors’Profile

60


Mr. Alamgir Kabir, FCA was born on December 28, 1947. He did B.Com (Hons.) from the University of Dhaka and M.Com from

Punjab University. He is a professional Chartered Accountant. He has wide experience and profound knowledge in Auditing, Accounting, Banking, Insurance and Financial Institutions both at home and abroad.

Mr. Kabir has been Chairman of the Board of Directors of the Bank since September 29, 2004. He is also the Chairman of the Executive Committee and the Risk Management Committee of the Board of Directors. He is the Chairman of its all subsidiary companies. He is also the Director of Asia Insurance Limited and Independent Director of National Life Insurance Co. Limited.

Mr. Kabir started his career in the year 1969 with Rahman Rahman Huq and Co., Chartered Accountants, Member Firm of KPMG and continued with EWP Associates, Management Consultants, a sister concern of Rahman Rahman Huq and Co. and stayed there until 1979. In 1972, he was in-charge of Audit Team for the first statutory Audit of Accounts of Bangladesh Bank. He moved to Riyadh, Saudi Arabia in 1979 with assignment in Saudi Accounting Bureau, Chartered Accountants, member firms of

Coopers & Lybrand, Moores Rowland International and Inbucon International Ltd., as Management Consultant from 1979 to 1993. He returned to Bangladesh in 1993 with assignment in Bangladesh Securities and Exchange Commission as Member from 1993 to 1996 and also acted as the acting Chairman for a period. During his stay with BSEC, he substantially contributed to the development of the Capital Market of Bangladesh. From 1996 onward, he has been involved in different capacities in formation and development of Bank, Non-Banking Financial Institution, Insurance and Capital Market related Institutions and others.

From 1999 to 2003, Mr. Kabir was the founder Advisor of Export Import Bank of Bangladesh Limited of which his brother Late Shahjahan Kabir was the Founder Chairman. Both the brothers were involved in the formation of EXIM Bank and contributed to its rapid growth.

Mr. Kabir belongs to a family whose members are involved with Banks, Insurances and Financial Institutions. He is member of a number of associations and also associated with many social organizations where he is working very silently for the welfare of the people. Mr. Kabir is a widely traveled person across the globe.

Alamgir Kabir, FCA Chairman

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Mrs. Duluma Ahmed was born on July 7, 1947. She hails from a very respectable Muslim family. She is a Sponsor Director of the

Bank. Mrs. Duluma has been Vice Chairperson of the Board of Directors of the Bank since May 22, 2017. She is also the member of the Audit Committee of the Board of Directors of the Bank. She is associated with business activities. She is the Chairperson of Mutual Food Products Limited and Mutual Milk Products Limited as well as the Director of Mutual Trading Company Limited. She is the partner of Mutual Distribution and Silonia Agencies and Mutual Logistics Service Limited. Mrs. Duluma Ahmed is the Director of Arla Foods Bangladesh Limited, a joint venture between Mutual Milk Products and Arla

Foods of Denmark for production of Dano brand Milk Products.

Mrs. Duluma Ahmed is involved with a number of socio-cultural organizations of the country. She is the patron of Benuka Lalitakala Academy, Dhaka, a famous cultural organization. She is a member of Inner Wheel Club and served as secretary and vice president of Inner Wheel Club of Dhaka North. She is a member of Gulshan Ladies Club a renowned social ladies club of the country serving the humanity. As a social worker, she is generously contributing to the poor and the needy section of the society. She travels almost all the countries of Asia and Europe, USA and also Australia.

Duluma Ahmed Vice Chairperson

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M. A. Kashem Director

Mr. M.A. Kashem is the Founder Chairman of Southeast Bank Limited. Currently, he is a Sponsor Director of the Bank. He is also a

member of the Executive Committee and the Risk Management Committee of the Board of Directors of the Bank. He is the Chairman of Rose Corner (Pvt.) Limited.

Mr. Kashem is the founder life-member of North South University Foundation and the former Chairman of North South University Trust. He is a member of North South University Trustee Board.

Mr. Kashem is the former President of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), the apex body of all the business communities of Bangladesh. He was the Chairman of Arbitration Tribunal of FBCCI. He is the past Chairman of the Association of Private Universities of Bangladesh (APUB) which represented all Private Universities of the country. Mr. Kashem was a member of Board of Trustees of Hamdard Laboratories (WAQF) Bangladesh, the leading producer of herbal medicines in the sub-continent for over 17 (seventeen) years. He was the President of SAHIC Trust (Society for Assistance to Hearing impaired Children), the only voluntary organization rendering health care assistance of the ear, nose and throat services to destitute and poor patients. He is the life member of SAHIC.

Mr. Kashem is an eminent industrialist, renowned patron of education, distinguished philanthropist and an active social worker. He was the winner of “President Export Trophy Award” for the year 1982-83 and 1983-84 for excellent export performance. Mr. Kashem also got “C.R. Das Gold” Medal for excellent

contribution in Industrial sector in the year 1995. He was awarded the “Highest Tax Prayer-2011” and also in 2016-2017 by National Board of Revenue (NBR).

Mr. Kashem was the leader of 20 member FBCCI Trade delegation to Far Eastern Countries in the year 1986. He was also the leader of 5 member Govt. delegations to the U.K., the U.S.A. and Canada sponsored by the UNDP in 1987 and leader of 12 members Export Promotion Bureau (EPB) Govt. of Bangladesh delegations to EEC countries in 1985. As an industrialist he travelled almost all major cities of the world many times on his own business, led FBCCI trade delegations and also North South University.

He has established a Trust named M. Kashem Trust to foster education to the primary and mid-level students of Schools in his locality. Moreover, a general Hospital of 50 Beds in the name of “Tareque Memorial Hospital” has been established by the Trust in his village home. It is a non-profit organization. The Trust also awarded stipends and scholarships to the meritorious students during the last couple of years.

As a philanthropist, Mr. Kashem set up a number of Schools, Madrashsa, Masjid, Club etc. and erected free dwelling houses for the poor and destitute people of his locality.

Mr. Kashem is a member of the Kurmitola Golf Club, Rotary Club of Dhaka West, Gulshan Club Limited, Bangladesh Diabetic Association, Dhaka, Bangladesh Red Crescent Society, National Shooting Club, Shishu Hospital, Chittagong and Baridhara Cosmopolitan Club Limited.

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Azim Uddin Ahmed Director

Mr. Azim Uddin Ahmed was born on June 30, 1940. He is a graduate from the University of Dhaka. He is Sponsor Director and former

Chairman of Southeast Bank Limited. He pushed the Bank forward in its growth and development. He is also a member of the Executive Committee and the Risk Management Committee of the Board of Directors of the Bank.

Mr. Azim Uddin Ahmed is a well-known business personality of the country. He is the Chairman of Mutual Group, Mutual Trading Company Limited, AD Holdings Limited and Chairman of the Arla Foods Bangladesh Limited, a joint venture between Mutual Milk Products Limited and Arla Foods of Denmark for production of Dano Brand Milk Product in Bangladesh. He is also the partner of Mutual Agro Complex, Mutual Departmental Store and Mutual Distribution and Silonia Agencies, Managing Director of Mutual Food Products Limited, the only manufacturers of Horlics in Bangladesh. He is also managing partner of Mutual Logistics Service.

Mr. Azim is a founder life member of Board of Trustees of North South University. He was the chairman of the North South University Board of Trustees for several times and founder life member of North South University Foundation.

Mr. Azim is associated with a number of trade bodies and associations devoted to social work. He was the past President of Rotary Club of Dhaka North and Area Governor of Rotary District. He was the past President of Gulshan Club Limited. He was the President of Baridhara Society for long time. He served in different capacities in Dhaka Chamber of Commerce and Industry (DCCI), Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) and Bangladesh Indenting Agents Association. He is the current President of Bangladesh Consumer Products Manufacturers Association. He represented Bangladesh as a leader and member of a number of Trade Delegation to Europe, USA, Asian countries including China and many others on Govt. and private trade delegations. He is a widely travelled person across the globe.

Mr. Azim came from the educationalist and philanthropic family and engaged him in philanthropic activities. He is the Founder of Azim Uddun Ahmed Islamia Madrasha, Duluma Azim High School, Fatema Farzana Kindergarten and Azim Uddin Ahmed Forkania Madrasha in his village. He has contributed for a number of educational and socio-cultural organizations all out of the country.

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Jusna Ara Kashem Director

Mrs. Jusna Ara Kashem was born in a very respectable Muslim family of Rajshahi. She is a Sponsor Director of the Bank and a

member of the Audit Committee of the Board of Directors of the Bank. She is the Director of Rose Corner (Pvt.) Limited.

Mrs. Jusna Ara Kashem is associated with many humanitarian and philanthropic organizations and is the Vice Chairperson of M. Kashem Trust. This Trust has set up a-50 bed Hospital namely “Tareque Memorial Hospital” at Feni.

She is an enthusiastic member of Gulshan Ladies Club, Inner Wheel Club of Dhaka West and Gulshan

Society. She is the founder of a beautiful Mosque at Kashem Complex named “Jusna Ara Kashem Jame Masjid” in Darogarhat, Feni. She is a widely travelled lady and visited many countries of the world.

Mrs. Kashem is very much amiable in nature and a good social worker and she contributes to the poor and the needy people of the country.

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Md. Akikur Rahman Director

Mr. Md. Akikur Rahman was born on February 15, 1945. He is a Sponsor Director of the Bank. He is also a member of the Executive

Committee of the Board of Directors of the Bank. He was the former Vice Chairman of International Medical College and Hospital, Gusholia, Tongi, Gazipur, Bangladesh. Mr. Akikur Rahman is associated with Southeast Bank Limited since its inception in 1995 as a Sponsor.

a bank with vision

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Rehana Rahman Director

Born on June 06, 1948, Mrs. Rehana Rahman comes from a respectable Muslim family of Khulna. After completing her graduation from

Eden Girls College, Dhaka, Mrs. Rahman now plays a significant role in our country’s socio-economic and educational sector. Throwing a spec of light at her accomplishments, Mrs. Rahman is the Managing Director of Bengal Tradeways Limited, Director of CHB Building Technologies Limited, Director to the Board of Bangladesh Chamber of Industries, a Member of the Board of Trustees of North South University Foundation, Director of Southeast Bank Limited and also a member of the Audit Committee of the Board of Directors of the Bank. Mrs. Rehana Rahman is also an active member of

social organizations, such as Women Entrepreneur Association of Bangladesh (WEAB) and United Nation Association of Bangladesh (UNAB). She served as the President of WEAB for the year 2008-2009 and also received ‘Begum Rokeya Shining Personality Award’ during that time, for her persevering effort in women empowerment and economic growth.

Last but not least, Mrs. Rehana Rahman is a former President of North South University, which is one of the leading Universities in our country, nurturing students with talent and intelligence for our brighter future.

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Sirat Monira Director

Mrs. Sirat Monira was born on September 15, 1949. She obtained Master of Social Science (MSS) Degree from the University of Dhaka.

She became a Director of Southeast Bank from ‘B’ Group i.e. Public Shareholders. She is a member of Dhaka Ladies Club. She is a philanthropist. She widely traveled many countries across the globe.

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Syed Sajedul Karim Director

Mr. Syed Sajedul Karim, a former Secretary to the Government of Bangladesh has recently joined the Southeast Bank Limited as an

Independent Director. Mr. Karim did his Honours and Masters from Dhaka University and Diplomas on Petroleum Accounting from North Texas and Southern Methodist Universities in Dallas, USA.

As an officer of the BCS (Audit & Accounts) cadre, Mr. Karim served the Government of Bangladesh in different capacities both at home and abroad. During his long service career, he was the Chairman and Chief Executive Officer of Petrobangla

during December 2001 through April 2003. He briefly worked as an External Auditor of UNDP Headquarters in New York and UN agencies based in Ethiopia and Cameroon. He was an Audit Adviser to the Government of Seychelles for over two years. He once led a team to overview the operations of UK based branches of nationalized Banks of Bangladesh.

After retirement from Government service, Mr. Karim served over 10 years as a Senior National Consultant in a number of administrative and financial reform projects funded by bilateral and multilateral development partners of Bangladesh.

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Dr. Quazi Mesbahuddin Ahmed Director

Dr. Quazi Mesbahuddin Ahmed was born on January 18, 1948. He did B.A. (Hons.) and M.A. in Economics from the University of Dhaka in 1967 and 1968 respectively.

He obtained M.S. degree in Economics in 1979 from the James Cook University of North Queensland, Australia. He earned another Masters leading to Ph.D. degree in Economics in 1989 from the University of Illinois at Urbana-Champaign, USA.

He was appointed an Independent Director of the Bank in the 21st Annual general Meeting held on April 11, 2016. He is also a member of the Audit Committee of the Board of Directors of the Bank.

Dr. Ahmed started his career at the Research Department of the erstwhile State Bank of Pakistan in February, 1969 and later joined the Planning Department of erstwhile East Pakistan in 1971.

Dr. Quazi Mesbahuddin Ahmed worked as Managing Director of Palli Karma-Sahayak Foundation (PKSF) for a period of more than five-years during January, 2008 through March, 2013. Before joining PKSF, Dr. Ahmed was Member, General Economics Division of the Bangladesh Planning Commission during September 2003 through January 2007. In that capacity, he was in overall charge of preparing the first Poverty Reduction Strategy Paper (PRSP) of Bangladesh. Dr. Ahmed was also simultaneously in-charge of the Industry and Energy Division of the Planning Commission.

Before being Member, Planning Commission, Dr. Ahmed was Additional Secretary, Economic Relations Division (ERD), Ministry of Finance in 2003.He was Economic Minister at the Bangladesh Embassy in Washington DC for six years during 1997-2002 and acted as charge d’ Affaires of the Embassy in absence of HE the Ambassador.

Dr. Ahmed was a visiting fellow at the University of Western Australia during 1994. He worked as an independent expert of the SAARC Secretariat in 2007 and earnestly contributed to SAARC’s endeavorin bringing out the Poverty Profile of South Asia. He was a member of the 7th Bangladesh Pay Commission constituted in 2008. Dr. Ahmed worked as a member of the Advisory Committee at the Ministry of Planning for the Perspective Plan of Bangladesh, 2010- 2021.He was consultant to producing country report for Bangladesh in 1995 for ADB’s Asian Economic Outlook and acted as an expert for writing the Bangladesh report for South Asian Human Development Report, 2007.

Dr. Ahmed shouldered the responsibility of producing the Bangladesh country- reports for the Paris Consortium meetings for various years starting from 1981 and attended all of these meetings since then when present in the country. Dr. Ahmed had travelled beginning early 1970s numerous countries around the globe and participated in several ministerial and some Prime Ministerial delegations abroad.

Dr. Quazi Mesbahuddin Ahmed specialises in poverty discourse, macroeconomic analyses, monetary economics, economics of foreign aid, theories and working of microfinance, etc.He has had some selective publications in national and international journals.

Dr. Ahmed took classes for senior civil servants at PATC, National Defense college, Planning Academy, BARD, Bangladesh Management Academy, and other institutions during 1980s,1990s and 2000s.

Dr. Ahmed has been a senior adjunct faculty in Economics at the East West University since Fall, 2013 and has had a record of obtaining outstanding evaluations by students ever since.

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M. Kamal Hossain Managing Director

Mr. M. Kamal Hossain was born on January 01, 1958. Mr. Hossain had an exemplary academic background. He did his MSS

with distinction in Public Administration from the University of Chittagong in 1982. He started his banking career as a Probationary Officer with National Bank Limited in 1983. He spent 18 (eighteen) years in National Bank Limited holding important positions in different branches and Head Office.

Mr. M. Kamal Hossain has been serving Southeast Bank Limited (SEBL) as Managing Director since the 20th June 2017. He is also a member of the Executive Committee of the Board of Directors of the Bank. He joined SEBL in July 2003 as Vice President and prior to his current assignment, he served as Additional Managing Director of the Bank. During his years of journey with SEBL, he held the position of Head of Branch (HoB) of a number of Bank’s leading branches including Principal Branch.

During his 36 years long banking journey, Mr. Hossain gained extensive banking experience and developed wide range of expertise in almost all areas of commercial banking comprising Import, Export, Credit, General Banking, Human Resources, Accounts etc. Under his visionary leadership, SEBL is expected to evolve as a leading commercial bank of Bangladesh with exemplary business and financial outcomes.

Mr. Hossain is an alumnus of the Public Administration Department of the University of Chittagong. He attended numerous seminars, workshops and training programs at home and abroad. He extensively visited the United States of America (USA), United Kingdom (UK), Switzerland, Germany, France, Spain, Australia, Canada, Myanmar, Turkey, Singapore, Malaysia, Thailand, China, Saudi Arabia, Oman, Qatar, India, etc. Mr. Hossain is married to Ms. Manoara Begum and blessed with two sons and one daughter.

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Zakir Ahmed Khan Advisor

Mr. Zakir Ahmed Khan, Former Finance Secretary to the Government of Bangladesh joined Southeast Bank Limited as Advisor

on 26 September, 2010. He carries with him vast experience and expertise gathered from home and abroad.

Mr. Khan did BA (Hons) and Masters in Economics from the University of Dhaka in 1968. He had graduate study in Development Economics and Development Administration as a Hubert Humphrey North-South Fellow at the Colorado State University, USA. He also did Master of Business Administration from Vrijie Universiteit, Brussels, Belgium.

Before joining Government Service in 1970, he briefly worked as a Research Associate in the Bureau of Economic Research and Institute of Education and Research and Lecturer in Economics, University of Dhaka. He also worked as a part time Lecturer in the Department of Finance, University of Dhaka.

During his 47 years of service, Mr. Khan held various senior level positions in the Ministries of Finance, Commerce, Establishment, Energy, Civil Aviation and Tourism, Cabinet Division and Bangladesh Audit and Accounts Department. He served as Finance Secretary and Secretary, Internal Resources Division and Chairman, National Board of Revenue for five years. He also briefly worked for a number of UN Agencies. Prior to his retirement in early 2009, he served as Alternate Executive Director of the World Bank for three and a half years.

He contributed a number of articles on public policy and public sector financial management to a number of national and international journals. He also made several key note presentations on public sector reforms and financial management in seminars and workshops at home and abroad.

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Code of Conductfor Directors

Southeast Bank Limited has adopted a Code of Conduct for its Directors. It was approved by the Board of Directors in its 410th meeting held on December 24, 2012.

A few important items of the Code of Conduct are cited below:

The Directors are required to disclose their interest, if any, in relation to the Bank.

The Directors shall not take part in any discussion or vote on any contract/arrangement on behalf of the company if he/she is in any way interested in the contract/arrangement.

Every Director shall avoid conflict of his/her personal interest with that of the Bank.

The Directors shall not entertain any employee’s approach to them for lobbying for his/her promotion, posting, extra facility etc.

No Director shall pursue/ insist/interfere for sanction of any credit facility favoring any client.

The Directors must comply with all applicable laws, rules and regulations and shall abstain from insider trading of shares.

The Directors shall not interfere in the day to day affairs of the Bank.

The Directors shall not borrow from the Bank without the approval of the Board and Bangladesh Bank.

The Directors shall fairly treat the Bank’s customers, suppliers, depositors, shareholders and employees.

Arrangement Employee’s

Applicable

Borrow Customers

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Policy on reviewing effectiveness of the Board of Directors

Every year the Board of Directors of Southeast Bank Limited carries out an evaluation of its own performance and effectiveness.

Review of role of the Board of Directors as set out in the Article of Association and regulatory frame-work.

Making an assessment of Directors’ contribution to discussions on business proposals, governance and general issues.

Making an evaluation of the status of compliance with the Code of Conduct framed for Directors.

Apprising the Board of Directors of new regulations and emerging practices in the making rules for their information.

Discussing and analyzing its own performance against benchmark and earlier achievements of result.

Review of the Bank’s strategies for every New Year

Providing sense of direction to the management for

achievement of short term objectives and long-term

goals.

Review of objectives and strategies of the Bank

periodically to ensure they remain consistent with the

Bank’s priorities.

Periodical review of the achievement of objectives

by the Bank.

Reviewing the performance and contribution of the Managing

Director and the Senior Management Team (SMT).

It is doneby way of:

1

2

3

4

56

7

8

9

10

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Directors’ ResponsibilityStatement

Directors’ Responsibility Statement is outlined below in compliance with Bangladesh Bank BRPD Circular No. 11 dated, 27 October 2013, as well as BRPD Circular No. 14, dated 18 October, 2018:

Work-Planning and Strategic Management

The Board determines Bank’s objectives. It chalks out strategies and work-plans on annual basis. It specially engages itself in the affairs of making strategies consistent with the determined objectives and goals and in the issues relating to structural change and reformation for enhancement of institutional efficiency and other relevant policy matters. It analyzes and monitors the implementation of its decisions on quarterly basis. The Board gives its analytical review as incorporated in the Annual Report regarding the success or failure in achieving the business and other targets as set out in its annual work-plan. It apprises the shareholders of its opinions and recommendations on future plans and strategies. It sets the Key Performance Indicators (KPIs) for the CEO and Officers belonging to two tiers below the CEO and evaluates them from time to time.

Credit and Risk Management

The policies, strategies, procedures etc. in respect of appraisal of loan/investment proposal, sanction, disbursement, recovery, rescheduling and write-off of loans are made with the Board’s approval under the purview of the existing laws, rules and regulations. The Board specifically delegates the power of sanction of loan/ investment and such delegations are suitably made amongst the CEO and his subordinate executives as far as desirable for efficient business operations. No Director interferes, directly or indirectly, in the process of loan approval. The Board frames policies for Risk Management and ensures their implementation. It monitors compliance at quarterly intervals through reviews of the reports of the Risk Management Team. The Board monitors the compliance of the

guidelines of Bangladesh Bank regarding Key Risk Management. The Board imposes Code of Ethics for every tier of employees and they follow it properly. It promotes healthy code of conduct in the Bank for developing a compliant banking operation.

Financial Management

The annual budget and the statutory financial statements are finalized with the approval of the Board. It reviews and monitors monthly position of Bank’s income, expenditure, liquidity, non-performing asset, capital-base and capital adequacy, maintenance of loan-loss provision and steps taken for recovery of default loans including legal measures. The Board frames the policies and procedures for Bank’s purchase and procurement activities and accordingly approves the delegation of power for making such expenditures. The maximum possible delegation of such power of expenditures vests on the CEO and his subordinates. The decision on matters relating to infrastructure development and purchase of land, building, vehicles etc. for the purpose of Bank’s business are, however, adopted with the approval of the Board.

Internal Control Management

The Board remains vigilant on the internal control system of the Bank in order to attain and maintain satisfactory qualitative standard of its loan/investment portfolio. The Board establishes internal control system in such a way that the internal audit process can be conducted independently by the concerned department. It reviews the reports submitted by its Committees especially regarding compliance with recommendations made in Internal and External Audit Reports and the Bangladesh Bank Inspection Reports as well as reports on management of risks.

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Human Resources Management and Development

Policies relating to recruitment, promotion, transfer, disciplinary action and punitive measures, human resource development etc. and service rules are framed with the approval of the Board. The Chairman or any Director in no way involves himself or interferes into or exercises influence over any administrative affairs including recruitment, promotion, transfer and disciplinary measures as conducted under the set service rules. No member of the Board of Directors is included in the selection committee for recruitment and promotion to different levels. Recruitment, promotion, transfer and punishment of the officers immediate two tiers below the CEO, however, rest upon the Board. Such recruitment and promotion are done complying with the service rules i.e., policies for recruitment and promotion.

The Board focuses its special attention on the development of skills of Bank’s staff in different fields of its business activities, the adoption of modern electronic and information technologies and the introduction of effective Management Information

System (MIS). The Board gets these programs incorporated in Bank’s annual work plan. The Board reviews the work of the Asset-Liability Committee (ALCO) on a regular basis.

Appointment of Chief Executive Officer (CEO)

One of the major responsibilities of the Board of Directors is to appoint an honest, efficient, experienced and suitable CEO or Managing Director. The appointment of the CEO is made with the approval of the Bangladesh Bank.

Other Responsibilities of the Board

The Board follows and complies with all the responsibilities assigned to it by Bangladesh Bank from time to time.

On behalf of the Board of Directors,


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Directors’Report

Bismillahir Rahmanir Rahim

Dear Shareholders,

The Board of Directors of Southeast Bank Limited takes this opportunity to welcome you all to the 24th Annual General Meeting of the Shareholders and has immense pleasure to lay before you the 24th Annual Report of the Bank together with the Auditors’ Report for the year ended December, 2018.

1. World economic scenario in 2018 and outlook for 2019

Worlds’ aggregate economic growth remained steady at 3.1 percent in 2018 (Source: United Nations and The World Bank Group). Economic growth picked up the pace in more than half the world’s economies in 2018. Thanks to the expansionary fiscal policy in USA, developed economies expanded at a steady pace of 2.2 percent and growth rates in

many countries have risen close to their potential, while full employment prevailed in most of the major developed economies. As far as developing economies are concerned, East and South Asian regions (including Bangladesh) remain on a relatively strong growth trail, growing by 5.8 percent 2018. While economic prospects at the global level have improved over the past year, several large developing countries have seen per capita income decline.

Annual percentage change 2016 2017 2018*

World 2.5 3.1 3.1

Developed economies 1.7 2.2 2.2

United States of America 1.6 2.2 2.8

Japan 1.0 1.7 1.0

European Union 2.0 2.4 2.0

EU-15 1.9 2.2 1.8

EU-13 3.2 4.6 4.2

Euro area 1.9 2.4 2.0

Other developed countries 1.9 2.4 2.5

Economies in transition 0.4 2.0 2.1

South-Eastern Europe 3.1 1.9 3.9

Commonwealth of Independent States and Georgla 0.3 2.0 2.1

Russian Federation -0.1 1.5 1.5

Developing economies 3.9 4.5 4.4

Source : World Econmic Situations & Prospects-2019 United Nation

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Many commodity- exporting countries, notably fuel exporters, are continuing a gradual recovery, although they remain exposed to volatile prices.

The growth in global industrial production and merchandise trade volumes has been contracting since the beginning of 2018. Despite this steady growth in Global economy, vulnerabilities and weaknesses in many developing economies and the unequal seed of economic advancement across the world is also observed.

Over the course of 2018, there was a significant rise in trade tensions among the world’s largest economies, with a steep rise in the number of disputes raised under the dispute settlement mechanism of the World Trade Organization. Moves by the United States to increase import tariffs have sparked retaliations and counter-retaliations. Global trade growth has lost momentum, although stimulus measures and direct subsidies have so far offset much of the direct negative impacts on China and in the United States.

Rising policy uncertainties and deepening country-specific vulnerabilities generated heightened financial market volatility in 2018. Investor sentiments were affected by escalating trade tensions, high levels of debt, elevated geopolitical risks, oil market developments, and shifting expectations over the monetary policy path of the United States. Against this backdrop, global financial conditions experienced some tightening during the year.

Global inflation remains moderate, but is on an upward trend in the majority of countries. Rising oil prices contributed to additional inflationary pressures in oil-importing countries over the course of most of 2018, while currency depreciation against the US dollar put upward pressure on imported prices in many countries.

Inflation in 2017 and 2018

Source : World Econmic Situations & Prospects-2019 United Nation

Major Commodity PricesA. Commodity Prices indicesIndex, 2015 = 100

Source: UNCTAD

Jan-00

Apr-0

1

Jul-02

Oct-0

3

Jan-05

Apr-0

6

Jul-07

Oct-0

8

Jan-10

Apr-1

1

Jul-12

Oct-1

3

Jan-15

Apr-0

16

Jul-17

All Groups FuelsMinerals, ores and metals All Food

B. Oil Prices and US crude inventoriesUS Dorllars per barrel

Source: Energy Information Administration

Miliion barrels140

120

100

80

60

40

20

02014 2015 2016 2017 2018

700

650

600

550

500

450

400

350

300

US Dorllars per barrel WTI Brent

The anticipated failure of policymakers in Europe to finalize legal and regulatory arrangements in advance of the intended withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union subdued economies of Europe.

Considerable uncertainty surrounds the monetary policy adjustment path in the developed economies, particularly the United States. Against a backdrop of fiscal expansion and an increase in import tariffs, a strong rise in inflationary pressures impelled the United States Federal Reserve to raise interest rates at a much faster pace , triggering a sharp tightening of global liquidity conditions specially in Emerging Economies.

2019 outlook

At the global level, growth is expected to moderate slightly to 3 percent in 2019 (International Monitory Fund). Slower growth in China and the United States will be largely offset by continued recovery in some developing regions and economies in transition that earlier had suffered most by the commodity price collapse. Among developed economies, US growth is projected to decelerate notably as the effect of fiscal expansion decreases and the consequences of rising

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interest rates are increasingly being felt. While steady growth is projected for the EU, the risks are tilted to the downside, including potential fallout from Brexit. Among developing and transition economies, the gradual moderation of growth in China is likely to continue, with policy support partly offsetting the negative impact of trade tensions. Several large commodity-exporting countries, such as Brazil, Nigeria and the Russian Federation, are projected to see a moderate pickup in growth in 2019.

Primary signs indicate some slowdown in economic thrust in many countries in 2019, in the middle of increasing trade disputes, risks of financial stress and volatility, and an undercurrent of geopolitical stresses. At the same time, several developed economies are facing capacity constraints, which may have an effect on growth in the short term.

An extended episode of heightened tensions and spiral of additional tariffs among the world’s largest economies poses considerable risk to the global trade outlook. The impact on the world economy could be significant: a slowdown in investment, higher consumer prices and a decline in business confidence. This would create severe disruptions to global value chains, particularly for exporters in East Asian economies that are deeply embedded into the supply chains of trade between China and the United States. Slower growth in China and/or the United States could also reduce demand for commodities, affecting commodity-exporters from Africa and Latin America.

Investors may become particularly cautious of countries with significant domestic vulnerabilities, such as high current account and fiscal deficits, large external financing needs. Financial stress can also spread between countries through banking channels and other financial market linkages. In addition, there is evidence of recent financial market contagion through discrete shifts in investor confidence, placing emerging markets more broadly at risk.

2. State of the Bangladesh Economy in 2018 and Economic Trends

Despite the doldrums of political uncertainties and electoral activities Bangladesh economy has been able to maintain sustained economic growth in 2018.

The major contributors behind the growth remained Industry Expansion and Inward Remittances from abroad. Rapid growth in industrialization has resulted in further employment generation as well as eradication of poverty. Though the Banking sector witnessed a difficult period during the year the economy grew at a rate of 7.86% in 2018, satisfactorily up from 7.28% growth in 2017.

The per capita national income reached US$1,751 in 2018, up by US$141 a year earlier. During the period broad agriculture sector registered a growth of 4.19 %, up by 1.22 % points compared to the previous year due to the better performance of most of its sectors and sub-sectors.

Inflation

The annual inflation rate in Bangladesh eased to 5.35 percent in December 2018 from 5.37 percent in the prior month. It is the lowest inflation rate since February 2017, amid a slowdown in price rises of both food (5.28% vs 5.29%) and non-food products (5.45% vs 5.495), of which gross rent, fuel & lighting (2.64% vs 2.69%); miscellaneous goods & services (6.63% vs 6.83%) and recreation, entertainment, education & cultural services (0.94% vs 1.25%). On a monthly basis, consumer prices edged up 0.1 percent, following a 0.4 percent decrease in the previous month.

Bangladesh Inflation Rate:

5.88

5.72 5.685.63

5.57 5.54 5.51 5.485.43 5.4 5.37 5.35

Jan 2018 Apr 2018 Jul 2018 Oct 2018

6

5.8

5.6

5.4

5.2

Source: Trading Economics.com | Bangladesh Bureau of Statistics

Government Expenditure

The government expenditure as percentage of GDP has been increasing gradually. Government expenditure increased to 13.60% and 14.27% of GDP in 2017 and 2018 respectively. The utilisation

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of ADP allocation was 95% in 2018. Currently, the larger portion of ADP is financed from domestic sources. A slight reduction has been occurred in Aid flow in 2018 compared to the previous fiscal year.

Monetary policy

The monetary policy strategy for 2018 was targeted to maintain an annual average inflation rate below 6.0%. To keep inflation within desired level the Monetary Policy Statement (MPS) for 2018 set targets for broad money and reserve money growth at 13.3% and 12.0% respectively.

Chart: Sectoral Growth of Private Sector Credit

30%

20%

10%

0%

Jun-

16

Sep-

16

Sep-

17

Dec

-16

Dec

-17

Mar

-17

Mar

-18

Jun-

17

Construction Consumer Finance Industry Transport

Source: Bangladesh Bank. https://www.bb.org.bd/monetaryactivity/mps/

mps_current.pdf

Capital Market Development

Although, in case of Dhaka Stock Exchange, the price index marginally decreased, market capitalisation slightly increased from June 2017 to June 2018. On the other hand, both the price index and market capitalisation of Chattogram Stock Exchange stirred in upward direction in 2018. For ensuring stable and smooth operation of the capital market and restoring the confidence of general investors several restructuring activities were carried out during this period.

Export

Bangladesh is world’s second-biggest apparel exporter after China. Garments including knit wear and hosiery account for 80% of exports revenue; others include: jute goods, home textile, footwear and frozen shrimps and fish. Exports from Bangladesh increased to BDT 253.20 billion in

October from BDT 251.67 billion in September of 2018.

212.

5

201.

62

238.

99

212.

01

232.

6

230.

71 243.

39

211.

88

265

215.

3

251.

67

253.

2

Jan 2018 Apr 2018 Jul 2018 Oct 2018

280

260

240

220

200

Source: Trading Economics.com | Bangladesh Bank

Import

Imports in Bangladesh increased to BDT 426.27 billion in October from BDT 397.41 billion in September of 2018. Imports in Bangladesh averaged BDT 77.24 billion from 1976 until 2018, reaching an all time high of BDT 453.21 billion in May of 2018.

361.

46

344.

39

418.

59

362.

32

369.

96

321.

32

382.

1

331.

9

397.

41

426.

27

404.

12453.21

Jan 2018 Apr 2018 Jul 2018 Oct 2018

460

440

420

400

380

360

340

320


Trade Deficit

Bangladesh recorded a trade deficit of BDT 173.10 billion in October of 2018. Balance of Trade in Bangladesh averaged BDT 27.40 billion from 1976 until 2018.


-100

-120

-140

-160

-180

-200

-220Jan 2018 Apr 2018 Jul 2018 Oct 2018

-149

-142

.8

-179

.6

-150

.3 -137

.4

-173

.4

-173

.1

-145

.7

-116

.6

-117

.1

-109

.4

-209.8

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Current Account Balance

During 2018, the current account of balance of payment shows a deficit for high growth of imports. Import expenditures have boosted up massively because of increasing private investment and implementation of mega projects. However, the increase in foreign direct investment, medium and long term loans inflow of the capital and financial accounts contributed to ease the effect. As a result, foreign exchange reserve remained stable and reached US$32.9 billion at the end of 2018, which allowed slight depreciation of the exchange rate against US dollar.

Jul 2015 Jan 2015 Jul 2016 Jan 2017 Jul 2017 Jul 2018Jan 2018Source: Trading Economics.com | Bangladesh Bank

2000

1000

0

-1000

-2000

-3000

1852

0

1503

907539

-1082-829

41

-1756

-2989

-2341-1694

Overall Outlook 2019

Bangladesh's economy is expected to grow by 7.86 percent in 2019 Fiscal year (Bangladesh Bureau of Statistics). The economic activities will remain buoyat in 2019 aided by strong domestic demand, growth in remittance inflow and pick up in export. Increasing Government expenditure and massive development activities will also support domestic consumption and investment. The Service and Agricultural sector will also remain buoyant supported by political stability and investment friendly climate.

The projection is based on factors like-a new Government with strong commitment for better governance and accelerated development has been formed, mega development Projects including infrastructure are being undertaken and implemented, new policies and legal, structural reforms are taking place. Financial sector is anticipated to be more vibrant than ever and the economy is on the road to further prosperity.

Long-term growth projections for real GDP growth made by several agencies shows that Bangladesh is on top of the five fastest-growing economies in Asia. As per projections, Bangladesh is the only country to maintain 7.0-plus growth rate annually up to 2030 and these even beyond. The global credit ratings of

Bangladesh have also been remarkable as Moody’s, S&P and Fitch rated the country as Stable.

2019 will be a significant year for our journey to became a Middle Income Country (MIC).

3. An overview of the Bank.

Southeast Bank Limited, a second generation private commercial bank, emerged in 1995 amid liberalization of global economies. Currently, its Authorized Capital is BDT 15,000.00 million and its total capital and reserve reached BDT 38,860.11 million as on December 31, 2018. Its vision is to stand out as a premier banking institution in Bangladesh and contribute significantly to the national economy.

The Bank, in the meantime, successfully completed twenty four years of banking operations registering significant growth in performance indicators. In 2018, the Bank earned an after tax profit of BDT 2,473.21 million. The deposit of the Bank grew by 10.56 percent to BDT 298,334.79 million and loans and advances by 14.23 percent to BDT 267,671.63 million compared to those of 2017.

Operational excellence coupled with qualitative improvements continued to be of paramount importance to the Bank. At present, the Bank has 135 branches and 02 Off-Shore Banking Units across the country. Plans have been made to raise another 10 branches in 2019. Our journey towards greater operational success continues with increased energy and enthusiasm.

As we face the stiff challenges ahead on the way to further improving the profitability of the Bank, we rely on our skilled and experienced manpower. Our strengths are our close and cordial partnership with customers, our firmly anchored presence in the country’s strategic places of commercial and business importance and global reach through our correspondent Banks for expansion of foreign trade, foreign exchange and remittance business. Our product-basket encompasses Real Time Online Branch Banking, Islamic Banking, Merchant Banking, Dual Currency Visa Platinum Credit Card, Visa Travel Card, ATMs, Education Loan Scheme, Consumer Loan, Double Benefit Scheme, Millionaire Deposit Scheme, SME Banking, Corporate Banking, Syndicate Loan, Monthly Savings Scheme, Fixed Deposit, Monthly Income Scheme, Pension Saving Scheme, Multi-Millionaire Gold Deposit Scheme (kept in abeyance for the time being), Mohor Saving Scheme, Zakat Account, Cash Wakfh Account, Wage Earner Pension Scheme, etc. in addition to our traditional credit and foreign trade related products and services.

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High quality customer service through the integration of the latest and state of the art banking technology is our tool to achieve success. Customers are our first priority. We are trying hard to provide a system of one stop solutions for customers by providing a spectrum of services. Our employees have mastered new technology, enhanced their product knowledge and honed their skill to help customers meet their financial goals. We want to be the best at helping customers become financially better off by providing necessary advice, innovative leading-edge financial solutions, choice and convenience. Irrespective of customers’ size and type, we aim at delivering the best customer service by meeting their unique and different needs in a professional, ethical, friendly and knowledgeable manner.

We are pledge-bound to turn Southeast Bank into a modern banking institution dynamic in actions, progressive in programs, honest in dealings, just in judgment, futuristic in attitude, fair in approaches and devoted to high quality service to customers. Our charted plans are aimed at boosting modern management, advanced technology, good profitability, sound financial strength and fair image of the Bank. We are firmly committed to transparent, responsible and accountable corporate governance with the participation of our strong and most capable team of professionals and under the

valuable directions and guidance of the Board of Directors of the Bank.

Southeast Bank carries out its business activities keeping in mind its core values, norms of business, commitment to clients, society and the environment at large. Southeast Bank in all its activities and operations tries to establish Green Banking practice and attain a sustainable growth. The Bank in all its endeavours wants to assure its shareholders a steady and competitive return on their investment in line with the best among peer institutions.

4. Capital and Reserves

The Authorized Capital of the Bank was BDT 15,000.00 million and paid-up capital was BDT 10,544.93 million as of December 31, 2018. The Capital and Reserves (Tier-1 Capital and Tier-II Capital) stood at BDT 38,860.11 million as compared to BDT 33,765.13 million in last year showing an increase of 15.09 percent.

SEBL has raised BDT 500 crore during the year 2018 by issuing subordinated bond to strengthen its Tier II Capital base. The fund raised through issuing the bonds are being utilized, among others, to maintain capital to risk weighted Asset Ratio, to fund loans and advances and to maintain liquidity ratios.

Capital and Reserve of the Bank as of December 31, 2018 were as follows:BDT in million

Regulatory Capital Consolidated SoloTier-I capital1) Common Equity Tier-I Capita(CET-1)Fully Paid-up capital 10,544.93 10,544.93Non- repayable share premium accountStatutory reserve 10,094.15 10,094.15General reserve 247.65 247.65Retained earnings 2,898.04 2,803.81Dividend equalization ReserveMinority interest in subsidiaries 10.07Regulatory AdjustmentsGoodwill and all other Intangible assets 124.42 124.422) Additional Tier-1 Capital (AT-1)3) Total Tier-1 Capital (1+2) 23,670.42 23,566.12Tier-2 CapitalGeneral provision (unclassified loans SMA, off balance sheet) 4,522.60 4,522.60Subordinated debt 10,200.00 10,200.00Revaluation Reserves as on December31, 2015 (50% of Fixed Assets and Securities & 10% of Equities) 2,335.43 2,335.43

All other preference sharesRegulatory AdjustmentsRevaluation Reserves for Fixed Assets, Securities & Equity Securities(Phase in deductions as per Basel-III Guidelines) 1,868.34 1,868.34

4) Total Tier-2 Capital 15,189.69 15,189.69Regulatory AdjustmentsRevaluation Reserves for Fixed Assets, Securities & Equity Securities (Phase in deductions as per Basel-III Guidelines) 1,868.34 1,868.34

Goodwill and all other Intangible assets 124.42 124.42Total eligible capital (3+4) 38,860.11 38,755.81

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5. Capital to Risk Weighted Assets Ratio (CRAR)

Southeast Bank has maintained Capital to Risk-weighted Asset Ratio (CRAR) of 12.38 percent (consolidated) as on December 31, 2018 as against the minimum capital requirement of 11.875 percent as set by Bangladesh Bank under Basel-III reporting through BRPD Circular No.18 dated December 21, 2014 of Bangladesh Bank.

6. Capital Market Scenario

The country’s stock market witnessed a bearish trend throughout the year 2018 as both the market index and turnover including foreign investment declined. As a pre-election year all the investors followed a wait and see approach as a result of which turnover in the capital market remained very sluggish. All indicators such as Market Capitalization, DSE General Price Index / CSE all Shares Price Index and daily total turnover could not meet the expectations of the general investors. Market capitalization at the end of the year 2018 went down to BDT 3,872,952.837 million compared to BDT 4,228,945.456 million of the previous year in DSE and in CSE BDT 3,157,178.759 million compared to BDT 3,528,911.082 million of the previous years. It has declined by 8.42 percent in DSE and 10.53 percent in CSE.

At the end of year 2018, DSEX, the benchmark price index, closed at 5,385.64133 points compared to 6,244.52234 points of the previous year and CASPI closed at 16,449.5095 points compared to 19,268,0434 points of the previous year. The index lost 858.88101 points or 13.76 percent in DSE and 2,818.5339 points or 14.63 percent in CSE in the year.

Total 14 companies emerged in the capital market through Initial Public Offering (IPO) in the year 2018. BDT 15, 721.00 million was raised from the capital market through IPOs and 1,572.10 million of shares were floated in 2018. The number of BO Account holders slightly increased to 2,778,797 in 2018 from 2,722,331 of 2017 which showed a marginal growth of 2.07 percent.

7. Shareholders’ Value Enhancement

Shareholders’ interest is the most important matter for strategic planning of the Bank. Our paid-up capital enhanced from BDT 300.00 million to BDT 10,544.93 million, as of Dec’18 registering a growth of 3,415 percent through issuance of Bonus Shares and Rights Issue of Shares since our listing with both Stock Exchanges. The Bank also achieved considerable growth in its profit over the years which facilitated maximization of shareholders’ wealth. Steady rate of dividend declaration on regular basis and maintaining Market Capitalization in terms of Paid-up Capital at a higher end indicates strong fundamentals of our Shares. Net profit after tax of the Bank is BDT 2,473.21 million in 2018 which is 111.63 percent higher than BDT 1,168.63 million reported in 2017.

The Bank takes pride in having a constant positive EPS and satisfactory NAV per share. It maintained a steady growth in achieving EPS of BDT 2.35 and NAV per share of BDT 26.66 in 2018. The Bank achieved a healthy Return On Equity (ROE) of 0.69 percent in 2018. The Shareholders’ equity of the Bank rose by BDT 28,116.66 million in 2018, which increased by 8.88 percent from BDT 25,823.65 million of 2017. Retained earnings of the Bank increased to BDT 2,898.04 million in 2018 registering a 6.69 percent growth from BDT 2,716.40 million in 2017.

8. Deposits

Southeast Bank has diversified its deposit base with numerous products with the mixture of high cost and low cost deposit. Its deposit base had been the foremost contributor for the strong investment portfolio. SEBL maintained its liquidity profile taking into account the regulatory requirements and financial health of the company. As part of its strategic approach, SEBL thrived in low cost or no-cost deposits to gain edge in spread leading to overall profitability of the Bank. The bank through its dynamic retail and corporate team, has managed a strong deposit base with appropriate cost management to gain competitive advantage in the industry.

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The amount of total deposits of the Bank as on December 31, 2018 stood at BDT 298,334.79 million as compared to BDT 269,828.08 million in 2017. Deposit-mix of the Bank as on December 31, 2018 was as follows:

Particulars BDT in Million

Share in Total

Deposits

a) Current and Other Deposits 40,472.07 13.56%

b) Savings Bank/Mudaraba Savings Bank Deposits 27,259.92 9.14%

c) Special Notice Deposits / Mudaraba Special Notice Deposits

29,844.08 10.00%

d) Fixed and Scheme Deposits or Term Deposits

196,264.18 65.79%

e) Bill Payable Accounts 4,494.55 1.51%

Total 298,334.79 100%

9. Lending and Investment

The year 2018 had been one of the most challenging years for the banking industry. Despite being challenged in the current industry scenario, SEBL had been able to utilize its core strengths to uphold a strong lending base for its clients. Pragmatic assessment and good monitoring enabled the bank to expand its investment to the new business horizon. Consequently, the Bank invested through various funded and non-funded loan products and services to facilitate corporate clients, Small and Medium Enterprises (SMEs), rural business and marginal farmers for a healthy growth. Featured products and services of SEBL comprise of cash credit facilities, demand loans, term loans, agri credit, micro credit, project finance, export credit, structured/syndicated finance, letter of credit, guarantees, discounting of bills, documentary credits, credit card, consumer credit etc. As a result, total lending of the Bank stood at BDT 267,671.63 million as on 31st December, 2018 showing 14.23 percent growth over previous year. Bank’s total lending (consolidated) and its growth rate for the last five years are shown below:

Year

Outstanding at the end of the year (BDT in

Million)

Growth Rate

2018 267,671.63 14.23%2017 234,316.72 22.13%2016 191,865.59 13.61%2015 168,878.46 14.83%2014 147,070.81 9.05%

10. Guarantee Business

Guarantee Business (Open Ended/Close Ended) including diverse segments like Performance Guarantee, Bid Bond, Advance Payment Guarantee, Retention Bond and Security Bond help SEBL comprise a strong base for Non-Funded Business. At the end of 2018, total Guarantee Business of the Bank amounted to BDT 22,420.12 million.

Gurantee Business including ILC(BDT in million)

16,3692016

16,4072017

22,4202018

11. Investment Scenario

The investment portfolio of SEBL was BDT 65,609.55 million against BDT 62,911.04 million in the previous year. Total investment portfolio of SEBL consists of diverse mix of several investment components including Treasury Bills, Treasury Bonds, Prize Bonds and Shares of listed and un-listed Companies.

12. Asset Liability Committee (ALCO)

Asset-Liability Committee (ALCO) is a senior level committee with the decision making capacity and responsibility to review, discuss and direct the financial policy, position, and risk exposures. Asset-Liability Committee comprising of members of the senior management team is the most important decision making body from the Asset and Liability Management point of view. As per Bangladesh

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Bank’s ALM guideline, Southeast Bank has a fully functional Asset Liability Committee (ALCO) consisting of senior level executives.

The major roles and responsibilities of ALCO are as follows:

Ensuring bank’s measurement and reporting systems accurately convey the degrees of liquidity and market risk.

Monitoring the structure and composition of bank’s assets and liabilities and identifying balance sheet management issues that may lead to under-performance.

Deciding on the major aspects of balance sheet structure, such as maturity and currency mix of assets and liabilities, mix of wholesale versus retail funding, deposit mix, etc.

Deciding on how to respond to significant, actual and expected increases and decreases in required funding.

Reviewing maturity profile and mix of assets and liabilities.

Articulating interest rate views of the bank and decide on balance sheet strategy.

Reviewing contingency funding plan for the Bank.

13. Internal Control and Compliance

The Board of Directors of Southeast Bank Limited (SEBL) has established an appropriate culture to facilitate an effective internal control process and monitor its effectiveness on an ongoing basis while each individual of the bank has to participate in the process. The main objectives of the internal control process are to ensure:

(I) Efficiency and effectiveness of the bank in using its assets and other resources and protecting the bank from loss;

(II) Reliability, completeness and timeliness of financial and management information needed for decision making within the bank, shareholders, supervisors and other external parties; and

(III) That all banking business complies with applicable laws and regulations, supervisory requirements and the bank’s policies and procedures.

The Board of SEBL reviews and approves the overall business strategies and important policies of the bank as well as organizational structure. It also provides, guidance and oversight to senior management of the bank. SEBL is consistently working towards achieving the required balance between profitability and growth against the appropriate risk levels. The Board assesses management’s plans to grab business opportunities commensurate with risk management priorities and effectiveness of enterprise-wide framework. Within this context, SEBL’s organizational structure has been built upon a framework that promotes a transparent and efficient, enterprise-wide risk management culture wherein the behaviour, attitude and decisions reflect risk awareness and mitigation across the bank. Great importance is given to the risk governance structure which includes corporate value statements, codes of conduct and ethics, policies, procedures and risk assessment. SEBL strives to strengthen and build upon the existent risk values so as to minimize risk exposure to insignificant levels.

The Board itself and its different committees regularly review the potential risk resources of the bank, set acceptable levels for these risks and ensure that senior management takes the steps necessary to identify, measure, monitor and control these risks. The Board of SEBL through its Audit Committee also ensure that senior management is monitoring the effectiveness of the internal control system in order to establish and maintain adequacy and efficiency of SEBL’s system of internal controls.

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14. Performance of Selected Liability Products as on 31st December, 2018

Both Traditional and Islamic Banking

Type of Accounts No. of Accounts

Deposit VolumeBDT in Million

Current Dipost (CD) 103,334 12,591.70Special Notice Depost (SND) 11,570 29,844.08Savings Deposit 574,843 27,259.92Fixed Deposit Receipt (FDR) 72,569 159,422.86

Traditional Banking



Monthly Income Scheme 639 843.96Monthly Savings Scheme 44381 4,143.30Educational Savings Schemes 9 0.76Multimillionaire Gold Deposit Scheme 926 839.67Super Double Benefit Scheme 85 41.01Pension Savings Scheme 52458 8,843.40Millionaire Deposit Scheme 4926 2,249.42Double Benefit Scheme 10858 13,852.33Wage Earner Pension Savings Scheme 1735 242.78

Islamic Banking



Mudaraba Pension Savings Scheme 4421 752.09Mudaraba Wage Earner Pension Savings Scheme 201 48.62Mudaraba Super Double Benefit Scheme 5 1.06Mudaraba Hajj/Umra Scheme 4 0.80Mudaraba Multimillionaire Gold Deposit Scheme 49 49.91Mudaraba Term Deposit Ihsan 1 5.00Mudaraba Monthly Savings Scheme 3224 324.43Mudaraba Double Benefit Scheme 1049 864.04Mudaraba Marriage Saving Scheme 8 0.05Mudaraba Millionaire Deposit Scheme 293 120.86Tijarah Mudaraba Muhor Savings Scheme 80 22.70Hajj Sanchay Prokolpa 2 0.67Mudaraba Monthly Income Scheme 60 88.60Mudaraba Educational Savings Schemes 33 8.21

15. Budget and Budgetary Control

Southeast Bank regularly upgrades its budgetary techniques and processes in line with industry practice, dynamic business environment and national economic goals. Annual Budget is formulated as part of a medium term Five Year budgetary framework and is reviewed from time to time in the light of actual achievements of budgetary goals. In formulating budget, the Bank carefully

evaluates its strengths and weaknesses and also takes into account likely threats and opportunities for business operation that may arise in the near to medium term.

Bank’s budgetary goals and processes are always consistent with the national economic development policies and priorities. While formulating lending volumes and priorities, the Bank duly takes into account the importance of diversified lending to

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industrial and services sectors, geographic areas, SMEs and the agricultural sector. Annual Credit Policy of the Bank, an important guideline for allocation of projected volume of credit to different sectors specifies lending principles of the Bank. The Bank also carries out analysis of potentials of each and every Branch while determining their budgetary goals.

The budget incorporating mobilization of deposits, lending to different sectors, both funded and non-funded, promotion of international trade and above all controlling costs of doing business are monitored at the Headquarters monthly. The process of budget formulation and execution is reviewed with all the branches in Annual Business Policy Meeting as well as in quarterly meetings held with all the branches. Reports on status of implementation of budget are placed to the Board every month and guidelines and directions given by the Board are communicated to all concerned for compliance. An appropriate monitoring mechanism has been established centrally at Headquarters of the Bank to ensure budget implementation.

16. Analysis of the Income and Expenditure Statements

A brief analysis on Bank’s income and expenditure in 2018 is given below:

Interest Income

The interest income of the bank for the year 2018 was BDT 23,977.84 million as compared to BDT 17,400.55 million in the previous year. The income generated from Loans and Advances remained the main contributor.

Interest expenses

Total interest expenses in 2018 was BDT 18,777.90 million as against BDT 13,372.86 million in 2017 posting an increase of 40.42 percent.

Net Interest Income

Net interest income of the Bank for the year 2018 stood at BDT 5,199.94 million against BDT 4,027.69 million in the previous year.

Investment Income

In 2018, Bank’s income from investment was BDT 5,129.75 million as compared to BDT 5,570.65

million in the previous year. Investment income consisted of interest earned on treasury bills and bonds, capital gain, revaluation gain, gain from sales of shares and dividend received from shares.

Other Income

In 2018, commission, exchange and brokerage earnings increased to BDT 3,652.78 million from BDT 3,462.93 million in 2017. Business and trade related fee based activities contributed directly to augment other income.

Operating expenses

Operating expenses of the Bank was BDT 4,870.74 million in 2017 which reached BDT 5,178.92 million in 2018.

Provision against Loans and Advances

In the year 2018, provision against loans and advances was kept BDT 4,855.08 million as compared to BDT 4,791.93 million in 2017.

17. Asset Portfolio

Several diverse asset components including Cash and Cash Equivalents, Investments, Loans and Advances, Fixed Assets and other assets comprise the asset portfolio of the Bank. The total amount of asset portfolio amounted to BDT 381,575.68 million on 31st December, 2018.

The break-up of total assets is given below:

Particulars BDT in Million

Cash and Cash Equivalents 34,846.96

Investments 65,609.55

Loans and Advances 267,671.63

Fixed Assets 9,337.30

Other Assets 4,110.24

Total : 381,575.68

18. Adoption of IAS and IFRS

International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) are universally accepted principles that regulate the financial reporting of the entities. The Institute of Chartered Accountants of Bangladesh (ICAB) has

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accepted and adopted the stated principles to be the benchmark for financial reporting. Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank also mandated the implementation of IAS and IFRS. Consequently, International Accounting Standards (IAS)/Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/and Bangladesh Financial Reporting Standards (BFRS) as applicable in Bangladesh, have been followed in the preparation of the financial statements of the bank for the year 2018 and any departure therefrom has been adequately disclosed.

19.Growth in Operating Profit for the Last 5 years

The Bank has earned operating profit of BDT 9,783.00 million in 2018 which comprises of net interest income, income from investment, commission, exchange etc. Operating profit in 2017 was BDT 9,062.30 million. The operating profit of the Bank for the last (5) five years is given below:

Year Operating Profit BDT in Million2018 9,783.002017 9,062.302016 8,503.222015 8,034.272014 8,289.76

20.Operating Income for the Last 5 years

The operating income of the Bank stood at BDT 14,961.92 million at the end of 2018 while it was BDT 13,933.04million in 2017. The operating income of the Bank for the last five (5) years is given below:

Year Operating Income (BDT in Million)

2018 14,961.92

2017 13,933.04

2016 12,852.45

2015 11,604.39

2014 11,617.19

Despite being affected by certain industry challenges, our core banking activities have produced satisfactory results in 2018.

29%

Operating Income Mix (%)

Net interest income Investment income

6%25%

40%

21. Return on Equity for the Last 5 years

Return on Equity (RoE) of the Bank was 9.17 percent in 2018 while it was 4.46 percent in the previous year. The Return on Equity of the Bank for the last five (5) years is given below:

Year Percentage (%) of RoE

2018 9.17%

2017 4.46%

2016 9.06%

2015 11.86%

2014 16.51%

22. Provision for Income Tax

The provision for income tax including both current and deferred tax of the Bank amounted to BDT 2,195.45 million for the year 2018 while it was BDT 3,013.45 million in the previous year.

23. Profit before Tax and Provision

The Bank earned profit of BDT 9,783.00 million during the year before making any provision for classified loans, off-balance sheet exposures, unclassified loans and advances and before taxes etc. as against BDT 9,062.30 million in the year 2017.

24.Net Profit after Provision and Income Tax

The Bank earned net profit of BDT 2,473.21 million during the year 2018 after making specific provision for classified loans, general provision for unclassified loans and off-balance sheet exposure and after taxes etc. as compared to BDT 1,168.63 million in the year 2017.

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25. Net Profit for the Last 5 years

Net Profit after tax and provision was BDT 2,473.21 million during the year 2018 which was BDT 1,168.63 million in the previous year. Net Profit for the last five (5) years is given below:

Year Net Profit (BDT in Million)

2018 2,473.21

2017 1,168.63

2016 2,435.07

2015 3,069.42

2014 3,836.94

26. Statutory Reserve

The total amount of statutory reserve stood at BDT 924.15 million as on 31st December, 2018 after 20% of the Profit Before Tax was transferred to Statutory reserve for the year 2018.

27. Southeast Bank Capital Services Limited

Southeast Bank Capital Services Limited (SEBCSL) is a subsidiary company of Southeast Bank Limited. It was incorporated by the Registrar of Joint Stock Companies and Firms under Company Act 1994 on September 23, 2010 as a Public Limited Company. The Authorized and the Paid up Capital of the company are BDT 6,000.00 million and BDT 5,500.00 million respectively. SEBCSL has been carrying out operation as a full-fledged Merchant Bank since 2010. Southeast Bank Limited holds 99.82% of the total shares of the company.

The company is managed by a professional team under the policy guidelines of the Board. The company performed as Issue Manager under Issue management service to raise fund through IPO during the year. We committed as underwriter in the 4 (four) companies to the procedure of raising fund through IPO and Right Share issue during the year 2018. Margin and non-margin account for portfolio clients under portfolio management are being offered to the potential investors.

The Board of the company comprises of the following professionals:

Sl No Name of the Directors Position

01 Mr. Alamgir Kabir, FCA Chairman

02 Mr. Syed Sajedul KarimIndependent Director Director

03 Mr. M Kamal Hossain Nominee of Southeast Bank Limited Director

04 Dr. Zaidi SattarNominee of Southeast Bank Limited

Director

05 Mr. Md. Khursheed AlamNominee of Southeast Bank Foundation Director

06 Air Cdre (Retd) Md Abu Bakar, FCA Managing Director

SEBCSL’s products and services includes Portfolio Management, Pre-IPO Placement, Underwriting Management, Issue Management, Corporate Advisory Services etc. The Company’s own portfolio investment in the capital market also increased remarkably in the year.

Capital market of our country showed positive sign from early 2018. Share price as well as turnover of the capital market significantly increased. During the year 2018, Net Operating Profit of the company amounted to BDT 24.08 million whereas the Profit after Tax stood at BDT 10.76 million. It is expected that the company will earn more good return from its investment in 2019.

28.Branches Network

In today’s intense competition, most of the financial institutions are striving hard to display their best possible efforts to be competitive. As customers are more fragmented, Banks are trying to enrich their services and network to serve the customers. Southeast Bank, as a leading banking institution, always gives highest priority to accelerate its branch expansion programme to augment its customer base and provide banking services to unbanked people. It is to be mentioned that business is the prime objective of any branch expansion strategy of a bank and definitely a new branch is aimed at plugging geographical gaps in their network. Southeast Bank invests in network expansion and new technology adoption to achieve competitive edge. Presently the bank is functioning with country-wide network of 135 branches and 2 Off-Shore Banking Units covering all divisions of the country. Division-wise distribution of branches is given below:

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Division Urban Branches Rural, SME/ Agri Branches

Islamic BankingBranches

Ladies’ Branches

TotalBranches

Dhaka 33 30 1 2 66

Chattogram 11 20 3 - 34

Sylhet 6 5 1 - 12

Khulna 4 4 - - 8

Rajshahi 8 1 - - 9

Barisal 1 - - - 1

Rangpur 2 - - - 2

Mymensingh 3 - - - 3

Total 68 60 5 2 135

To facilitate service to female entrepreneurs, the bank has set up two Ladies’ Branches in Dhaka city. The Bank is also offering Offshore Banking facilities through 2 (two) Offshore Banking Units (OBU) in Dhaka Export Processing Zone and Chattogram Export Processing Zone.

Moreover, the Bank is providing “Shariah-Based Islamic Banking Services” to the customers. Out of 135 (One hundred thirty five) Branches of the Bank, 5 (Five) Branches are designated as Islamic Banking Branches located in Dhaka, Chattogram and Sylhet region. At present the number of Bank’s Authorized Dealer (AD) Branches are 21 (twenty one). The Bank is also providing “Evening Banking Service” through 27 (twenty seven) Branches to further augment its service delivery at extended banking hours.

113 122 128 132 135

Year-wise Branches Network

2014 2015 2016 2017 2018

29. Implementation of Basel-III

To strengthen banks against loss absorption and to sustain the capacity for resilience, Bangladesh Bank has given directions to banks to implement

Basel III from January 01, 2015 in phases and fully by January 01, 2020. A Capital Conservation Buffer (CCB) of 2.5% is to be kept at 0.625% each year from the beginning of 2016 to 2019. This is in addition to existing Minimum Capital Requirement (MCR) of 10%. It means CRAR requirement will be 12.50% from 2019.

To increase and strengthen the capital base of the Bank, Basel III has introduced the following measures:

1) Tier 1 capital is divided into two parts: Common Equity Tier 1 (CET1) and Additional Tier 1 (AT1)

2) Tier 3 capital, part of Basel-II, has been eliminated from Basel-III.

3) The Bank has to maintain 3% leverage ratio along with Liquidity Coverage Ratio (LCR) of 100% or more and Net Stable Funding Ratio (NSFR) of more than 100%.

The Bank is well positioned in respect of capital and risk management. It has commenced reporting of CRAR, leverage and liquidity ratio from January 01, 2015 following the new risk based capital adequacy framework. The overall scenario as of December 31, 2018 under pillar-I is depicted below:

Solo CRAR

Consolidated CRAR

Leverage Ratio LCR NSFR

12.47% 12.38% 5.16% 123.37% 115.68%

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The Bank has a Supervisory Review Process (SRP) team comprised of members of the senior management. SRP team of the Bank participated in dialogue with the Supervisory Review & Evaluation Process (SREP) team of Bangladesh Bank on the issue of maintaining adequate capital against all the risks associated with business. Moreover, Stress Test is conducted through a prescribed format given by Bangladesh Bank where impact on Capital to Risk-weighted Asset Ratio (CRAR) is assessed taking plausible shocks into account. Results of the Stress test are informed to the Board of Directors and Board Risk Management Committee (BRMC) on quarterly basis. If needed, appropriate measures are taken on the basis of stress test result as per the recommendation of Board of Directors and Board Risk Management Committee (BRMC).

Pillar-III of Basel III aims at promoting market discipline through disclosing the reports. The reports on disclosure enable market participants to assess and understand the key information relating to the Bank’s regulatory capital and risk exposures more effectively. The Bank has published the disclosure incorporating all the changes in the revised guidelines. The Bank has already made significant progress in implementing Basel-III and prepared itself to face the upcoming risks and challenges.

30. Supervisory Review Process

Supervisory Review Process (SRP), the second pillar of Basel III framework, is designed to ensure not only to have adequate capital to support all the material risks in business which was not covered or adequately addressed in first pillar but also to encourage to use better risk management techniques. There are mainly two components of Pillar 2, the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review Evaluation Process (SREP). The ICAAP is the Bank’s self-assessment process on the overall adequacy of its capital strength in light of the material risks identified. The SREP is undertaken by the Central Bank in order to review and assess the Bank's ICAAP and to assess the quality of the Bank's risk management systems and internal controls. Based on the assessment, the Central Bank makes

its own judgment on capital adequacy of the Bank after having dialogue with the Supervisory Review Process (SRP) team of the Bank.

SEBL has a Supervisory Review Process (SRP) team at management level headed by the Managing Director. The team periodically reviews the risk assessment process and the requirement of adequate capital against all plausible risks. The Bank uses Central Bank’s guidelines on “Revised Process Document for SRP-SREP Dialogue on ICAAP” to assess level of risks and capital requirement. It also reviews the policy documents that would supplement the whole risk mitigating process under SRP. The ICAAP report of 2017 has already been sent to Bangladesh Bank. As of December 2017, the Bank needed to keep BDT 32,861.41 million to act as cushion against risks under pillar-I and Pillar-II of Basel-III. However, the Bank maintained BDT 33,679.04 million as capital including Tier-I and Tier-II.

31. Corporate Governance

One of the basic policies of the Bank is to strengthen its corporate governance status by establishing responsible management system and strengthening supervision. Efforts are also being geared up to improve the transparency and accountability of the management. While putting efforts to achieve corporate objectives, Southeast Bank gives top priority to establishing appropriate corporate governance standard at all levels and in all units. A report on Corporate Governance of the Bank in 2018 is included in this Annual Report.

32. Significant variances between quarterly and Annual Financial Statements

Annual performance of the Bank for the year 2018 slightly deviated from quarterly financial statements due to increase of provisions for loans and advances as well as provision for investment in share due to fall of share price significantly in December 2018.

However, in spite of challenging circumstances, annual performance for the year 2018 improved as compared to the performance of the year 2017. In

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2018, EPS stood at Tk. 2.35 compared to Tk. 1.11 in 2017. Loans and advances during the year 2018 increased by 14.23% and deposit increased by 10.56% from 2017 as well as Non Performing Loan (NPL) of the bank was reduced from 5.99% to 5.87%.

Comparative presentation of quarterly financial statements is presented in the segment titled as “Evaluation of the Quarterly Financials by the Audit Committee and by the Board”.

33. Minority Interest

Share capital structure of Southeast Bank Limited as of 31st December 2018 comprises of Minority Interest of institutional shareholders. The bank possesses a dignified culture of compliance regarding all regulatory obligations related to investors and shareholders. Any decision and actions having material impact on the interest of the shareholders, irrespective of the holding pattern, are disclosed and redressed, in due form, if required.

34. Loans to Directors

No loan excepting Credit Card limit was allowed to any Director of the Bank in the year 2018.

35.Declaration of the Compliance of BSEC Notification

The following disclosures are made in compliance with certain provisions contained in the BSEC Notifications dated June 03, 2018 and June 20, 2018.

a) The financial statements prepared by the management present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

b) All transactions have been recorded in the accounting records and are reflected in the financial statements. (ISA 580 11b) Accounting books have been properly maintained in the Bank.

c) Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.

d) Bangladesh Accounting Standards (BAS)/Bangladesh Financial Reporting Standards (BFRS) as applicable in Bangladesh have been followed except as outlined in Note No 3 in the financial statements.

e) The system of internal control in the Bank is sound in design and has been effectively implemented and monitored.

f) There are no doubts upon the Bank’s ability to continue as a going concern.

36. Declaration of Dividend

The Board of Directors in its 570th meeting held on April 30, 2019 recommended 10 percent Stock Dividend for distribution amongst the shareholders for the year-2018 subject to the approval in the 24th

Annual General Meeting.

As per the requirement of Basel-III the regulatory capital requirement will increase from 11.875% to 12.50% in 2019. Therefore, to maintain a suitable and adequate capital adequacy ratio to facilitate the Bank’s growth and to strengthen its core capital, the Board proposed 10% stock dividend instead of cash dividend for the year 2018.

37. Corporate Social Responsibilities

Southeast Bank manages its business in a responsible way and contributes to the society and environment in which it operates. A report on Corporate Social Responsibility of the Bank in 2018 is included in this Annual Report.

38. Contribution to National Exchequer

Southeast Bank contributed a sum of BDT 5,771.73 million to national exchequer. The Bank’s contributions to the National Exchequer for the last five (5) years are depicted below:

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BDT in million2017 5,771.732016 5,665.452015 4,416.102014 5,278.452013 5,461.27

5,461.27

2013

5,278.45

2014

4,416.10

2015

5,665.45

2016

Contribution to National Exchequer(BDT in million)

5,771.73

2017

39. Acknowledgement

The Board expresses gratitude to the Almighty Allah for the success of the Bank in 2018. The Board extends thanks to the valued customers, patrons and well-wishers for their continued support and co-operation to the Bank. The Board also appreciates the dedicated services, commitment, devotion and hard work of the Management Team and all the employees in different levels of the Bank to achieve

the goals of the Bank. The Board convey its earnest gratitude to the Government of Bangladesh, Bangladesh Bank, National Board of Revenue (NBR), Bangladesh Securities and Exchange Commission, The Registrar of Joint Stock Companies and Firms, The Dhaka Stock Exchange Limited and The Chittagong Stock Exchange Limited and other concerned Authorities for their appreciable continuous support and co-operation to the Bank. The Board also expresses its appreciation to M/S. Pinaki & Company, the auditors of the Bank, for their efforts for timely completion of audit. The Board of Directors also thanks both the print and electronic media personnel for giving media coverage to Bank’s different activities and events. Finally, the Board thanks the respected shareholders and assures them that it will continue to maximize the shareholders’ value through further strengthening and development of the Bank in which they have placed their trust and confidence.

Sincerely,

On behalf of the Board of Directors.



SeniorManagement Team

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Code of Conduct for Senior Management Team

The code of conduct sets the principles for the employees of Southeast Bank Limited (SEBL) to uphold and promote the interests of the Bank. The Senior Management Team of the Bank conducts in accordance with high ethical standards of honesty and integrity articulated in the Bank’s Core Values, Code of Professional Ethics, and other applicable principles and rules.

Honesty and Integrity:Senior Management acts with honesty, integrity and fairness

Conflict of Interest:It does not engage in act that conflicts with the interests of the Bank.

Compliance with Laws, Rules and Regulations:It complies with all applicable laws, rules and regulations.

Dealing with the Customers:It treats the customers with respect and reciprocity.

Confidentiality of Information:It maintains secrecy of the Bank and its customers.

Insider Trading:No member of the Senior Management Team engages himself / herself in any insider trading.

Gifts giving and Acceptance:None of them accepts any gift from Bank’s Customers or ony of its business associate.

Protection of Assets:It protects Bank’s assets from being damaged or stolen.

Information Security:It takes reasonable care to keep secure its information from unauthorized disclosure and exchange.

Private Gain: Senior Management of the Bank exercises his/her power attributed to his/her position for the benefit of the institution. No member of the Senior Management Team uses his/her power attributed to his/her position for private gain.

Other Obligations:It strives on a regular basis for the overall improvement in operations and image of the Bank.

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As per regulatory requirement, Southeast Bank is blessed with an efficient Senior Management Team (SMT). They, in a body, set Bank’s operational strategy and determine sense of directions.

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Committees of theManagementSenior Management Team (SMT)

Sl. No. Name and Designation Position in SMT

1 M. Kamal Hossain, MD Chairman

2 S. M. Mainuddin Chowdhury, AMD Member

3 Syed Faisal Omar, SEVP Member

4 Md. Masum Uddin Khan, SEVP Member

5 Md. Shahjahan Sarker, EVP Member

6 Khandoker Zibanur Rahman, EVP Member

7 S. M. Mainul Kabir, EVP Member

8 Khandaker Zia Hassan, EVP Member

9 Md. Shahjahan, EVP Member

10 Lt Cdr Wares-Ul-Matin (Retd), SVP Member

11 Md. Jahangir Kabir, VP Member

12 Rasedul Islam, FCA, SAVP and CFO (Acting) Member

13 Monzur Ahmed, AVP Member Secretary

Supervisory Review Process (SRP) Team

Sl. No. Name and Designation Position in SRP Team1 M. Kamal Hossain, MD Chair2 S.M. Mainuddin Chowdhury, AMD Member3 Syed Faisal Omar, SEVP Member4 Md. Shahjahan Sarker, EVP Member5 Khandaker Zia Hassan, EVP Member6 Md. Shahjahan, EVP Member7 Md. Jahangir Kabir, VP Member8 Kamrul Islam, VP Member9 Rasedul Islam, FCA, SAVP Member

Executive Risk Management Committee (ERMC)

Sl. No. Name and Designation Position in ERMC1 S.M. Mainuddin Chowdhury, AMD & CRO Chair2 Md. Shahjahan Sarker, EVP Member3 Khandaker Zia Hassan, EVP Member Secretary4 Md. Shahjahan, EVP Member5 Khandaker Khaled Hassan, SVP Member6 Md. Jahangir Kabir, VP Member7 Rasedul Islam, FCA, SAVP Member

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Asset Liability Committee (ALCO)

Sl. No. Name and Designation Position in ALCO1 M. Kamal Hossain, MD Chair2 S.M. Mainuddin Chowdhury, AMD Member3 Syed Faisal Omar, SEVP Member4 Md. Masum Uddin Khan, SEVP Member5 Khandoker Zibanur Rahman, EVP Member6 S. M. Mainul Kabir, EVP Member7 Khandaker Zia Hassan, EVP Member8 Md. Jahangir Kabir, VP Member Secretary9 Mohammad Abeduzzaman, SAVP Member

10 Rasedul Islam, FCA, SAVP Member

Central Compliance Committee (CCC)

Sl. No. Name and Designation Position in CCC

1 S.M. Mainuddin Chowdhury, AMD Chief Anti Money Laundering Compliance Officer

2 Syed Faisal Omar, SEVP Member3 Khorshed Alam Chowdhury,EVP Member4 Md. Shahjahan Sarker, EVP Member5 Khandaker Zia Hassan, EVP Deputy CAMLCO6 S. M. Mainul Kabir, EVP Member7 Khandoker Zibanur Rahman, EVP Member8 Md. Abdus Sabur Khan, SVP Member9 Khandaker Khaled Hassan, SVP Member

10 Md. Jakir Imtiaz, VP Member11 Monzur Ahmed, AVP Member

Integrity Committee

Sl. No. Name and Designation Position in the Committee1 S. M. Mainuddin Chowdhury, AMD Chair2 Md. Shahjahan, EVP Focal Point3 Khandaker Khaled Hassan, SVP Member4 Md. Feroj Hoshen, VP Member5 Rasedul Islam, FCA, SAVP Member

Credit Risk Management Committee (CRMC)

Sl. No. Name and Designation Position in CRMC1 Chief Risk Officer Chair2 Head of Credit Risk Management Member Secretary3 Head of Corporate Banking Member4 Head of Risk Management Member5 Head of Special Asset Management Member6 Head of Treasury Member7 Head of Legal Affairs Member

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Tender Committee

Sl. No. Name and Designation Position in the Committee1 S. M. Mainuddin Chowdhury, AMD Chair2 Khorshed Alam Chowdhury, EVP Member3 S. M. Mainul Kabir, EVP Member4 Lt Cdr Wares-Ul-Matin (Retd), SVP Member5 Kamrul Islam, VP Member6 Rasedul Islam, FCA, SAVP Member7 A. K. M. Moshiour Rahman, AVP Member Secretary

Procurement Committee

Sl. No. Name and Designation Position in the Committee1 M. Kamal Hossain, MD Chair2 S. M. Mainuddin Chowdhury, AMD Member3 Syed Faisal Omar, SEVP Member4 Khandoker Zibanur Rahman, EVP Member5 Lt Cdr Wares-Ul-Matin (Retd), SVP Member6 Mohammad Tanveer Rahman, SAVP Member7 A. K. M. Moshiour Rahman, AVP Member Secretary

IT Steering CommitteeSl. No. Functional Position of the Executives

1 Chief Information Technology Officer2 Head of Internal Control and Compliance 3 Head of Corporate Banking 4 Head of Credit Risk Management5 Head of Human Resources 6 Head of Legal Affairs 7 Head of Special Asset Management 8 Head of Risk Management 9 Head of Financial Control and Accounts

10 Head of Credit Card 11 Head of Alternative Delivery Channel12 Head of Treasury

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Taskforce for Monitoring and Recovery of Rescheduled and Restructured Loans

Sl. No. Name and Designation Position in the Committee1 Md. Masum Uddin Khan, SEVP Chair2 Md. Shahjahan Sarker, EVP Member3 S. M. Mainul Kabir, EVP Member4 Mostofa Meer Khaled Omar, SVP Member5 Joya Hussain, VP Member6 Syed Abu Naser, VP Member7 Mohammad Abeduzzaman, SAVP Member8 Mohammad Kamruzzaman, SAVP Member9 Md. Jahanagir Alam, SAVP Member Secretary

10 Head of Concerned Branch Member

Taskforce for Recovery of Classified Loans and Advances

Sl. No. Name and Designation Position in the Committee1 Syed Faisal Omar, SEVP Head of Taskforce2 Md. Masum Uddin Khan,SEVP Member3 Md. Shahjahan Sarker, EVP Member4 S. M. Mainul Kabir, EVP Member5 Kamrul Islam, VP Member Secretary6 Md. Akhtaruzzaman, AVP Member 7 Head of Concerned Branch Member

Special Asset Management Committee (SAMC)

Sl. No. Name and Designation Position in the Committee1 S. M. Mainuddin Chowdhury, AMD Chair2 Syed Faisal Omar, SEVP Member3 S. M. Mainul Kabir, EVP Member4 Lt Cdr Wares-Ul-Matin (Retd), SVP Member5 Kamrul Islam, VP Member Secretary6 Syed Jonson Ali, EO Member7 S. M. Moshiur Rahman, Senior Officer Member

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CorporateGovernanceStatement of Board of Directors on the Responsibility to Establish AppropriateSystem of Internal Control 103

Statement of Board of Directors on adequacy of Internal Control System 104-105

Corporate Governance Report 106-123

Declaration by CEO and CFO on Financial Statements of the Bank to the Board 124

Compliance Report on BSEC’s Notification on Corporate Governance Code 125-134

Certificate on Compliance of Corporate Governance 135

Compliance with Bangladesh Bank’s Guidelines on Corporate Governance 136-146

Certificate of Senior Management Team (SMT) regarding the Effectiveness of Internal Control Policy, Practice and Procedure 147

Report of the Audit Committee (Composition, Role, Meetings, Attendance etc.)and Internal Control 148-151

Report of the Risk Management Committee 152-153

Evaluation of the Quarterly Financials by the Audit Committee and by the Board 154

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Statement of Board of Directors on the Responsibility to Establish Appropriate System of Internal Control The responsibilities of the Board of Directors of a bank in Bangladesh in respect to establishing appropriate system of internal control are regulated by the Bank Company Act and the notification of Bangladesh Securities and Exchange Commission. The Board of Directors, under section 15(kha) and 15 (Ga) of the Bank Company Act 1991 (amended up to 2018), are responsible for establishing and executing policies of the Bank. It is also accountable for risk management, internal control, internal audit and compliance with requirements of the bank. As per Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 on Corporate Governance Code of Bangladesh Securities and Exchange Commission (BSEC) dated 3 June 2018, it will also establish an Audit Committee as a sub-committee of the Board of Directors to assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business.

Review of the effectiveness of the existing system of internal control of the bank is a fundamental aspect of Board’s responsibilities, but the management of the bank is obligated to the Board for operating, monitoring and developing the system of internal control so that they can assure the Board that the control systems are properly adhered to.

The Board of Directors of Southeast Bank carries out its responsibilities extensively and has established an Audit Committee of the Board for sustaining sound, adequate and effective internal control systems to safeguard the asset of the bank and interest of the shareholders. The Board of Southeast Bank is committed to operating the Bank within a strong system of internal control that enables business to be transacted and risk taken without exposing itself to unacceptable potential losses or reputational damage. The Board of Southeast Bank is also aware that the main objectives of the bank can be achieved depending on the success of risk management.

With this end in view, the internal control system of Southeast Bank is principally designed to mitigate and effectively manage the risks the bank is exposed to and to identify or highlight the deviation and loophole of the established policies and rules.

No system or framework can be foolproof. So the Board of Southeast Bank believes that the internal control system of the bank can manage or mitigate the risk to an acceptable level/profile rather than eliminate the risk of failure entirely to achieve the policies, goals and objectives of the bank. The Board of Southeast Bank also believes that a strong system of internal control has significant role over the reliability of financial information/reporting; effectiveness and efficiency of operations; compliance with applicable laws, regulations and internal policies, safeguarding its assets; early detection of fraud-forgery and protecting the Bank from the financial loss. So, internal control system of Southeast Bank can only provide reasonable and not absolute assurance in achieving the bank’s policies, goals and objectives in generating potential returns to shareholders.

The Board has established a continuous process of identifying, evaluating, monitoring and managing risks faced by the bank. The follow-up and feedbacks concerning possible deviations arising in the internal controls are also established in the daily activities of the bank as a key part of the internal control work for the bank to ensure that errors are corrected and that the control is further strengthened. All the processes and guidelines of the bank are reviewed and updated from time to time to meet the needs of changing business environment or regulatory guidelines.


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Statement of Board of Directors on adequacy of Internal Control System The Board of Directors of SEBL has established a process for identifying, evaluating and managing significant risks faced by the bank. This process also ensures the adequacy and effectiveness of the system of internal controls so that the bank can respond to any change in the business environment or regulatory guidelines.

According to the instructions of Bangladesh Bank (Central Bank), the Board of Directors has formed 03 (three) different committees (Executive Committee, Audit Committee and Risk Management Committee) from its members that are delegated with authorities and responsibilities in line with the Bank’s strategies and goals. The Executive Committee is primarily responsible for the execution and evaluation as well as effective communication of key operational and management decisions throughout the Bank while the Audit committee is a Board level committee tasked to ensure the formulation, adequacy and integrity of the system of internal control, oversight of the financial statements of the bank. The Risk Management Committee is established to assist the Board in the discharge of its risk management functions as well as formulation and execution of the risk management strategies and policies which serve as the foundation for the risk management activities of Southeast Bank.

Southeast Bank has implemented sound internal control system which is monitored effectively and regularly. Among the key processes, the Board has established a written Management Control Policy (MCP) and Internal Control Policy (ICP) in order to review the adequacy and effectiveness of the risk management framework and internal control system. The MCP outlines the specific responsibilities of the various parties i.e. the Management, Internal Control Team and the Audit Committee of the Board (ACB) pertaining to internal control of Southeast Bank Ltd. The ICP is designed to create awareness among all the employees of SEBL with regard to the internal control components and the basic control policy.

The risks to which banks are exposed are becoming more complex and diverse due to internationalization of the financial sector and diversification of financial

services and businesses. In line with the guideline of Bangladesh Bank, the Board of Southeast Bank Limited has established an effective and integrated risk management framework consisting of Credit risk, Foreign Exchange Risk, Asset and Liability/ Balance Sheet Risk, Money Laundering Risk, Internal Control and Compliance Risk and Information and Communication Technology Risk. Aligning with the framework, Southeast Bank has taken 03(three) lines of defense approach i) risk taking units ii) risk control units and iii) internal audit to make sure that all risks across all levels are managed in the best possible way protecting the interests of all stakeholders. The risk taking units are the Business Units responsible for identification and management of risks and maintaining effective controls. The risk control units are responsible for establishing and maintaining risk management framework and methodologies while the Internal Audit is responsible for providing independent assurance on the adequacy of the Bank’s risk management process and controls.

For an effective internal control, the Board of Southeast Bank has approved “Information and Communication Technology Security Policy (ICT Security Policy)”, for protecting information from a wide range of threats as well as safeguarding the confidentiality, integrity and availability of information. Information security policy and the procedures provide assurance to the stakeholders that Southeast Bank’s business is able to leverage on IT to deliver optimal benefits. Control is exercised over Information (IT) resources and IT related risks are well managed.

The size, geographical presence and complexity of the business of Southeast Bank as well as the dynamic operating environment require the Board to constantly review and monitor the effectiveness of its system of internal control. With this end in view the Bank has established a sound and independent Internal Audit function mainly responsible for evaluating the adequacy and effectiveness of the Bank’s internal controls, ensuring compliance with policies, procedures and regulatory requirements. Regular self-testing and high level risk assessment procedures e.g. Departmental Control Function Checklist, Quarterly Operation Report, Loan

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Documentation Checklist, SMT Certificate, Annual Summary Report, Annual Health Report, etc are conducted followed by review and update to ensure an efficient and effective internal control.

The Bank’s Internal Auditors are not assigned with any executive responsibilities in order to maintain their autonomy and impartiality in fulfilling their duties and responsibilities. The Internal Audit function reports are directly placed to the Audit Committee of the Board (ACB) which is accountable for monitoring the overall performance of the function. Audit / Inspections are done aligned with a risk based Audit / Inspection plan on different Branches/ Divisions / Units prepared at the start of each calendar year and approved by the Audit committee of the Board. The ACB is reported about all major observations emanating from the internal audits, external audits and regulatory authorities carried out in the calendar year as well as recommendations for addressing any weakness identified. The decisions of the ACB relating to audit findings and recommendations are complied with by the Management accordingly.

Based upon the results of reviews and audits conducted during the year, the Board through its Audit Committee evaluates whether the existing Internal Control System is “Effective and Acceptable” and provides a reasonable assurance of effective operations covering financial and operational controls and compliance with laws and regulations.

Nevertheless, the system of internal control monitoring mechanism is not flawless, room for improvement still exists, as it can only provide reasonable and not absolute assurance against material misstatement or loss and it is designed to manage rather than eliminate the risk of failure to achieve the organization’s policies, aims and objectives.


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CorporateGovernance ReportConceptual Framework

Good corporate governance principles and practices are now embedded in all activities of the Bank. The tenets for implementation of corporate governance practices are fairness, transparency and accountability, regulatory compliance, integrity in performances, effective internal control system and commitment to the society and the environment. Our ultimate goal in respect of corporate governance is to come out as a good corporate entity and respond to calls of responsibility within the purview of rules and industry best practices. Good corporate governance starts from the top. We are fortunate to have a professional and efficient Board of Directors to oversee our operations and provide us a strategic direction and necessary policy support. Our shareholders are also equally committed to the long-term success of the Bank. They have provided us with financial capital, ideas, direction, advice and support that greatly helped us to achieve our goals. Practices of sound Corporate Governance

Southeast Bank operates within the legal framework of the Companies Act-1994 and as a banking company, complies with the provisions of the Bank Company Act-1991(Amended up to 2018). Its Corporate Governance principles serve the goal of strengthening and consolidating company position with sustainable growth objectives in materializing the trust placed in the company by the shareholders, clients, employees and the general public. Fair practice, accountability, transparency, compliance, value creation and corporate social responsibility are the pillars of our corporate governance. To serve the interest of shareholders and other stakeholders, Southeast Bank’s corporate governance system adheres to ethical business norms with firm commitment to enhance shareholders’ values and compliance with applicable laws and regulations. The Bank’s Board of Directors proactively adopts corporate governance code in order to promote the highest standard of corporate behavior at every level of the organization in building confidence among stakeholders.

Board of Directors, Chairman and CEO

Selection and appointment of Directors

Southeast Bank complies with relevant guidelines of Bangladesh Bank’s circular, rules and regulations of the Companies Act-1994, Bank Company Act-1991 (amended up to 2018) and Bangladesh Securities and Exchange Commission’s (BSEC) notification and Articles of Association of the Bank for appointment of Directors.

As per the Bank Company Act 1991 (amended up to 2018), the Directors are appointed for a term of three years which can be extended by another two term only subject to approval by the shareholders in the Annual General Meeting (AGM).

The term of appointment for an Independent Director is three years which can be extended by one term subject to appointment by the Board and approval by the Shareholders in the AGM. Mentionable that a former independent director may be considered for re-appointment for another tenure after a time gap of one tenure, i.e., three years from his/her completion of consecutive two tenures (i.e., six years). For appointment of an Independent Director, the approval of BSEC is obtained to comply with its requirement. All appointments of the Board is made subject to approval of Bangladesh Bank. The Managing Director is appointed for a minimum period of three years subject to the approval received from Bangladesh Bank. However, unlike other Directors, he is not subject to retirement as long as he remains Managing Director.

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Structure of the Board

The Board of Directors consists of 11 (eleven) Directors including the Managing Director. The Managing Director is an Executive Director (Ex-Officio). All other 10 (ten) Directors are non-executive directors. Of the 10 (ten) non-executive directors, 7 (seven) are sponsor directors, 1 (one) director is from the public shareholders and 2 (two) are independent directors.

Roles and Responsibilities of the Board

The main roles and responsibilities of the Board of Directors as envisaged in the BRPD Circular No.11 dated 27 October, 2013 are the following:

1. approving suitable business strategies2. fixation of operational budgets3. approval of financial statements4. review of Bank’s operational performance towards achievement of objectives5. approval of policies and operational manuals to establish effective risk management in core banking

areas and internal control.6. reviewing company’s corporate governance standard for further improvement7. determining Bank’s corporate social responsibility status and taking steps for its improvement8. developing compliance culture in the Bank9. approving proposals which are beyond the delegated business / financial / administrative powers

of the Management10. appointment of the Managing Director (CEO) and fixation of his benefits11. purchasing or acquiring property for the Bank12. providing welfare to the employees13. making donation for any charitable ventures14. devising annual work plan for goals and monitoring its pace of achievement.15. analyzing reasons for success or failure of Bank’s annual budget achievement16. periodical review of Bank’s operational budget achievement17. taking risk management initiatives18. review of sufficiency and requirement for internal control efforts of the Bank19. reviewing Bank’s human resource policy20. Bank’s financial management and its periodical review21. Approving policies or taking policy decisions for improvement of operation and compliance culture

in the Bank.

Rotation and Retirement of Directors

In terms of Article 105 (i) of the Articles of Association of the Bank, one-third of the Directors for the time being or if their number is not three or multiples of three (3) then the number nearest to one third (1/3rd ) shall retire in rotation from office. The Directors to retire are those who are longest in office. Accordingly, the following three (3) Directors will retire in the 24th Annual General Meeting and eligible to re-election in the upcoming 24th AGM of the Bank.

i) Mrs. Duluma Ahmedii) Mrs. Rehana Rahmaniii) Mr. Md. Akikur Rahman

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The brief resume of the above Directors in Compliance with notification number BSEC/CMRRCD/2006-158/207/Admin/80 dated June 03, 2018 of BSEC is appended in the Director's profile and other information about them as required as per the aforesaid Notification is given below.

Name Expertise Memberships Directors in

Mrs. Duluma Ahmed Banking Activities Audit Committee of the Board

(i) Mutual Food Products Ld. (ii) Mutual Milk Products Ld. (iii) Mutual Trading Co. Ltd.

Mrs. Rehana Rahman Banking Activities Audit Committee of the Board

(i) Bengal Trade Ways Limited(ii) CHB Building Technologies Ltd.

Mr. Md. Akikur Rahman Banking Activities Executive Committee of the Board -

As per Notification No.BSEC/CMRRCD/2006-158/207/Admin/80 on Corporate Governance Code of Bangladesh Securities and Exchange Commission (BSEC) dated 3 June 2018, under condition 1(2) (e), the tenure of office of an independent director shall be for a period of 3 (three) years which may be extended for 1 (one) term only. Accordingly, Dr. Quazi Mesbahuddin Ahmed was appointed as an Independent Director of the Bank in 2016. Hence, he would be entitled for re-appointment for another term in compliance with the above Notification of BSEC subject to approval by the shareholders in the ensuing 24th Annual General Meeting.

Non-Executive Directors

All the Directors of Southeast Bank Limited are Non-Executive Directors including two independent directors. The Managing Director is the only Executive Director on the Board of Directors of the Bank.

Independence of the Non-Executive Directors

All the Non-Executive Directors enjoy full freedom in discharging their responsibilities. They sincerely try to attend all meetings of the Board and its Committee of which they are members. They spontaneously participate in the discussion on agenda for a well-thought-out decision and diligently maintain confidentiality as required under existing regulations.

Beside this, they ensure strict confidentiality of the memo/agenda discussion at the Board Meeting or Board Committee Meetings information and minutes/ resolutions.

Independent Directors’ Independence

As per existing rules and regulations, Independent Directors are not required to have any significant relationship, whether pecuniary or otherwise, with the Bank, its top management and the Board apart from receiving directors’ remuneration for attending Board / Board Committee Meeting. The Bank complies with the requirement and appoints Independent Directors who do not hold any shares in the Bank and do not have any family or other relationship with its Board of Directors and its executive management. The Bank also ensures compliance with Bangladesh Bank’s guidelines and Bangladesh Securities and Exchange Commission’s notification relating to appointment of Independent Directors and seeks approval from Bangladesh Securities and Exchange Commission and Bangladesh Bank for appointing a person as an Independent Director which ensures the independence of the Independent Director.

Chairman and the CEO

The Chairman and the CEO of the Bank are two separate persons in their respective offices and this has been in practice since inception of the Bank. This also complies with clause 1.4 of the BSEC’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 on Corporate Governance Code, dated 3 June 2018.

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Position of Chairman and the Chief Executive Officer of the Bank

In compliance with Notification of Corporate Governance Code issued by the Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank’s requirements, the post of the Chairman and the CEO (Chief Executive Officer) will have to be held by different person. This compliance requirement has been ensured by the Bank. It has appointed Mr. Alamgir Kabir, FCA as the Chairman of the Board of Directors and the position of CEO (Managing Director) is held by Mr. M. Kamal Hossain. As per the Organogram of the Bank, Chairman and the Directors act as non-executives while the Managing Director is the sole executive director on the Board. In considering the appointment of the Chairman, due procedures are observed. It is also ensured that the independence of the Chairman is not hampered.

Roles and responsibilities of the Chairman of the Board

The Chairman of the Bank is elected from amongst the member of the Board of Directors after every Annual General Meeting in obedience to the Articles of Association of the Bank. He carries out his responsibilities within the purview of the provisions contained in BRPD Circular No.11 dated 27 October, 2013 and Corporate Governance Code issued by BSEC on 03 June, 2018. The main responsibilities of the Chairman are to:

Give leadership for Bank’s disciplined growth and operation.

Ensure non-intervention of any Director in the routine affairs of the Bank.

Ensure compliance with corporate governance requirements of regulatory bodies.

Bring policies for Board’s deliberations and consideration for Bank’s reforms and development.

Determine sense of direction for the Bank, etc.

Annual Appraisal of Board’s Performance

The shareholders elect the Directors in the Annual General Meeting. The directors are accountable to the shareholders. In the Annual General Meeting (AGM), the shareholders freely disclose their valued opinion about the financial position of the Bank and performance of the Board and the shareholders also ask question and make queries to the members of the Board of Directors during AGM. On behalf of the Board, the Chairman replies to their all queries made in the meeting. Their constructive suggestions are noted down and implemented for qualitative improvement of the Bank’s key operational segments.

Policy on Training of Directors

Most of the Directors of the Bank are on the Board for many years. They have acquired enough knowledge and acumen to lead the Bank effectively to achieve the desired goal. The latest legislations on the financial sector and directives of the regulatory bodies are made available to them for their instant information in order to discharge their responsibilities efficiently. They also attend various seminars and symposiums mainly on issues relating to business, finance, economics, banking and corporate governance organized by different professional bodies at home and abroad.

Directors’ Knowledge and Expertise in Finance and Accounting

Mr. Alamgir Kabir, FCA, Chairman of the Bank, is a Post-Graduate in commerce. He is also a qualified Chartered Accountant. One Independent Director served the Government of Bangladesh in different capacities both at home and abroad and finally retired as Secretary and another Independent Director holds a PhD degree in Economics and served the government in various high level positions both at home and abroad. They have enough knowledge and expertise in the field of Accounting and Finance. Most of the other Directors are successful business entrepreneurs and professionals. They are well conversant in economic, business and banking related issues.

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Code of Conduct for the Board of Directors

The Board of Directors of the Bank in its 410th meeting held on December 24, 2012, approved inter alia, the Code of Conduct for the Directors of the Bank. The Directors are sincere in abiding by the Code of Conduct. There had not been any breach of the Code of Conduct by any Director of the Bank. The Code of Conduct of the Board of Directors are contained in this Annual Report at Page No. 72.

Directors’ Remuneration

Directors are not eligible for any remuneration other than attendance fee for the Board and its Committee Meeting. Currently, as per BRPD Circular letter No. 11, dated October 04, 2015, Directors are eligible for remuneration of BDT 8,000 for attending each meeting but numbers of such Meetings are also prescribed in the said circular determining the numbers with or without remuneration.

Board Meeting and attendance

The Board of Directors meets as required to discuss financial performance of the Bank, business proposal strategy, compliance issue etc. The Board also reviews minutes of the subsidiaries, risk management report, compliance report and approve the quarterly financial results of the Bank in its meeting. In addition, special meeting of the Board of Directors are held as per instruction of the regulatory authority, when necessary to discuss and decide on major issues. The Chairman of the Board of Directors allocates sufficient time for the Directors to consider each agenda in a prudent way and allows them to freely discuss, inquire, and express opinions on the agenda. Directors who cannot attend the meeting(s) are granted leave of absence by the Board. During the year 2018 total 29 no. of meetings were held and statement of attendance of the directors at those meeting are disclosed at Page No. 120

Related Party Transactions

During the year 2018, the Bank had business deals with the following organizations in which the directors had interest. It was determined on the basis of Common Directorship and Bank’s Subsidiaries.

Name of Organization Relationship Nature of transaction

Asia Insurance Ltd. Common Director Insurance Coverage

Southeast Bank Capital Services Ltd. Subsidiary Company Share Capital

Southeast Financial Services (UK) Ltd. Subsidiary Company Share Capital

Southeast Financial Services (Australia) Pty Ltd. Subsidiary Company Share Capital

Southeast Exchange Company (South Africa) Pty Ltd. Subsidiary Company Share Capital

Board’s Committees and their Responsibilities

The Board has constituted following 3(three) Committees:

i) Executive Committee

Composition of Executive Committee

In compliance with the provisions contained in BRPD Circular No.11 dated 27 October, 2013, the Board of Directors reconstituted the Executive Committee comprising 5 (Five) members. To comply

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with regulatory requirement, no member of the Audit Committee is included as a member of the Executive Committee.

Responsibilities

The Executive Committee is a body to deliberate on generally important issues and matters in the execution of operations of the Bank. The committee performs within the power delegated to it by the Board of Directors. The resolutions of the Executive Committee are submitted before the Board and ratified by the Board of Directors. The minutes of the Executive Committee are sent to Bangladesh Bank for their information and record. In 2018, total 5 meetings were held by the committee. The attendances of the members at those meeting are disclosed at Page No. 120.

ii) Audit Committee

Composition of the Audit Committee:

A 5-member Audit Committee was re-constituted by the Board in compliance with the relevant provisions contained in BRPD Circular No.11 dated 27 October, 2013 of Bangladesh Bank and BSEC’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 on Corporate Governance Code, dated 3 June 2018. As per rules, any member of the Executive Committee cannot be the member of the Audit Committee. A report of the Audit Committee is included in this Annual Report. In 2018, total 5 meetings were held by the committee. The attendances of the members at those meeting are disclosed at page no. 121.

Chairman of the Audit Committee

The Chairman of the Audit Committee is a BSEC approved independent director. He is Mr. Syed Sajedul Karim. He is not involved in the day to day operations of the Bank. He is an experienced individual and qualified to be the Chairman of the Audit Committee. He did B.A (Hons) and M.A from Dhaka University. During his 42 years of long service career, Mr. Karim served the Government of Bangladesh under different capacities both at home and abroad and finally retired as a Secretary to the Government. Prior to his joining as Secretary, he was Chairman and Chief Executive Officer of Bangladesh Oil, Gas and Mineral Corporation (known as Petrobangla).

Members’ qualification of Audit Committee

The members of the Audit Committee are qualified and have years of experience in banking and financial institutions. They are also very competent. Dr. Quazi Mesbahuddin Ahmed is a member of Audit Committee as another Independent Director of the Bank. He did his Masters as well as PhD in Economics from the University of Illinois at Urbana-Champaign, USA. He was the former Managing Director of Palli Karma Sahayak Foundation and Member (GED), Planning Commission Government of Bangladesh. He has publications on development planning, macroeconomic performance, use of foreign aid, budgetary accounts, national income accounts, etc.

Internal Control and Compliance Division’s access to Audit Committee

The Head of Internal Control and Compliance Division has direct access to the Audit Committee and can raise his concerns whenever required. Besides, he presents related memos for the Audit Committee for taking decisions. Beside this, the Audit Committee meets the Head of ICC at least once in a year, without management being present, to discuss their remit and any issues arising from the internal audits carried out.

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Recommendation for appointment of External Auditors

The Audit Committee does an extensive review on the audit work done by the external auditors after the audited financial statements have been signed. The Audit Committee evaluates the performance of auditors extensively and ensures that there were no threats to independence or any other issues with the auditors. The Audit Committee scrutinizes the applications of the auditors and recommends for appointment/re-appointment of auditors for the next year.

Appointment of External Auditors

M/S Pinaki & Company, “A” ranking Audit Firm has been appointed as External Auditors of the Bank for the 2nd term in the 23rd Annual General Meeting held on June 30, 2018. They are eligible for re-appointment as per rules in the ensuing 24th Annual General Meeting. Being satisfied with their performance, the Audit Committee of the Board of Directors of the Bank recommended their re-appointment for the third term. The External Auditors enjoy full freedom in their audit of Bank’s financial statements and reporting to the shareholders of the Bank.

Services not provided by External Auditors

M/S Pinaki & Company is the external auditor of the Bank. The services as are specifically barred in Bangladesh Securities and Exchange Commission Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated 03 June, 2018 are not obtained from the external auditors.

iii) Risk Management Committee

Composition of Risk Management Committee

In Compliance with BRPD Circular No. 11 dated 27 October 2013, the Board of Directors of SEBL reconstituted a four-member Risk Management Committee (RMC) of the Board in 2018. The RMC has been formed to identify and assess risk of the Bank and guide management to formulate action plans for minimizing and controlling of risk. The Committee reviews the risk management policy and modifies the same as per requirement.

Responsibilities The Risk Management Committee is entrusted to examine and review whether management is

properly working on identification, management and mitigation of credit risk, foreign exchange risk, internal control and compliance risk, money laundering risk, information and communication technology risk, operation risk, environmental risk, interest rate risk and liquidity risk. They also ensure whether adequate provision and capital against the said risks are maintained. The roles and responsibilities as well as the major activities of Risk Management Committee of the Board as well as the management have been described in “Report of the Risk Management Committee of the Board” and “Report of Bank’s Chief Risk Officer (CRO)” section of this report. In 2018, total 4 meetings were held by the Committee. The attendances of the members at those meeting are disclosed at Page No. 121.

Appointment of Chief Executive Officer (CEO)

In order to strengthen the financial base of the bank and obtain confidence of the depositors, Board of directors is responsible to appoint an honest, efficient, experienced and suitable CEO or Managing Director for the Bank in compliance with the relevant circular and rules of Bangladesh Bank and BSEC’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 through Corporate Governance Code, dated 3 June 2018.

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Role and Responsibilities of the Managing Director (CEO)

The main responsibilities and authorities of the Managing Director are enumerated below:

a) In terms of the financial, business and administrative authorities vested upon him by the Board, the CEO shall discharge his own responsibilities. He shall remain accountable for achievement of financial and other business targets by means of business plans, efficient implementation thereof and prudent administrative and financial management.

b) The CEO shall ensure compliance with the Bank Company Act, 1991 (amended up to 2018) and other relevant laws and regulations in discharge of functions in the bank.

c) The CEO shall include information on violation of any law, rules, regulation including Bank Company Act, 1991 (amended up to 2018) while presenting memorandums before the Board or the Committees formed by the Board.

d) The CEO will provide all sorts of information to Bangladesh Bank about the violation of Bank Company Act, 1991(amended up to 2018) and any violation of Laws, Rules and Regulations.

e) The recruitment and promotion of all staff of the Bank except those in the two tiers below him shall rest on the CEO. He shall act in such cases in accordance with the approved service rules on the basis of the human resources policy and sanctioned strength of employees as approved by the Board. The Board or the Chairman of any Committee of the Board or any Director does not get involved or intervene in such affairs.

f) The authority relating to transfer of and disciplinary measures against the staff, except those at two tiers below the CEO, shall rest on him, which he shall apply in accordance with the approved service rules. Besides, under the purview of the human resources policy as approved by the Board, he shall nominate officers for training. Besides, the CEO shall assume any other responsibility if the Board assigns within the purview of the Rules, Regulations, Acts and Articles of Association of the Bank.

Benefits provided to the Directors and the Managing Director

In accordance with the guidelines of Bangladesh Bank, the following facilities can only be given to the Directors.

Chairman : An office chamber, one Private Secretary / Office Assistant, a telephone in office, one mobile phone for use within the country and a full time car.

Directors : Fees and other facilities for attending each meeting of the Board or its any Committee.

Managing Director : Only those benefits as are agreed upon in his contractual appointment and as are approved by Bangladesh Bank.

Annual Evaluation of Performance of the Managing Director (CEO) of the Bank

The Board of Directors prescribes the roles and responsibilities of the Chief Executive Officer (CEO) of the Bank. His performance is assessed on certain Key Performance Indicators (KPIs). A few mentionable KPIs for the CEO are to meet the annual budgetary targets of the Bank which was approved by the Board, maximize shareholder value measured through desired ROA, ROI, ROE, EPS and Risk Management as per expectation of

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the Board, sustainable growth in investment and growth of Loans and Deposits, Cost to Income Ratio, Loans Write Off and its recovery, Capital to Risk Weighted Assets Ratio, Advance-Deposit Ratio, revenue earning for the Bank, gradual reduction of the NPL ratio for maintaining asset quality of the Bank and improvement in the scores for CAMELS rating. The Board evaluates the performance of the Managing Director in each month when the month-end financial performance of the Bank is placed before the Board for review. Apart from that, the Board seeks MD’s reports on various operational aspects periodically to assess the trend of movement of the Bank in various indicators. MD’s quality leadership to post better performance is always expected. The performance of the Managing Director is evaluated again annually by the Board based on Bank’s operational results mainly in the achievement of operational budgets.

Appointment of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC).

The Board appointed a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC) as per the policy of the Bank and related rules and regulations. The positions of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC) are held by different individuals and they are well conversant in the field of regulatory, financial and corporate laws to carry out their assigned roles, responsibilities and duties.

Highlights on Central Bank Inspection

In the year 2018, Southeast Bank Limited (SEBL) received 45 (forty five) inspection Reports on Head office and different branches of SEBL from Bangladesh Bank. SEBL submitted compliances on said reports to Bangladesh Bank in time. Appropriate actions have been taken for implementation of the recommendations of Bangladesh Bank’s inspection Teams.

Internal Control and Risk Management

Internal Control

The Board of Directors of Southeast Bank Ltd. ensures maintenance of a sound system of internal control to safeguard bank’s assets. The Board through its Audit Committee conducts an annual review and evaluate effectiveness of the system of Internal Control of the Bank.

Establishment and Review of Internal Control System

A report on Establishment and Review of Internal Control System is included in this report.

Identification of risk to which SEBL is exposed internally and externally

The risk related issues of the Bank are looked after by the Risk Management Committee of the Board. A report on Risk Management is included at page no. 152 of this Annual Report.

Vision, Mission Statements and Strategy approved by the Board

Vision and Mission Statements of the Bank

The vision, mission statements and the strategy of the Bank have been included in the beginning pages of the Annual Report. Those were approved by the Board. The Board firmly adheres to them.

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Business objectives and areas of business focus

The Board always sets business objectives and areas for focus taking into account the overall financial market development and business environment. The latest business objectives and areas of business focus can be found in the “Strategic Priorities Statement” of the Bank at page no. 39 in this Annual Report.

Strategies to achieve business objectives

Our strategies to achieve business objectives are elaborately discussed in the “Strategic Objectives” as contained in this Annual Report at page no. 38.

Ethics and Compliance

Code of Conduct for Directors

The Report contains this issue at page no. 72.

Code of Conduct for Bank’s Employees

Southeast Bank has a Code of Conduct and Ethical Guidelines for Bank’s employees which are integral parts of the Service Rules and Regulations for the employees of the Bank. The employees of the Bank comply with the code of conduct and requirements of ethical principles.

The Board’s commitment to establishing high level of ethics and compliance within the organization

The Board of Directors has always been deeply committed to establishing a high level of ethics and compliance among all employees of the Bank. It has always encouraged the management to ensure that everyone maintains a high ethical standard within the Bank. The Board guides the management on policies that should be adopted and followed by everyone in the Bank.

Management Committee and their responsibilities

Senior Management Team (SMT)

A Senior Management Team (SMT) is working in the Bank. It is composed of senior members of the Management Team. Senior management consists of a core group of individuals responsible and accountable to the Board for the sound and prudent day-to-day management of the bank. The organization and procedures and decision making of senior management are clear and transparent and designed to promote effective management of the bank. This includes clarity on the role, authority and responsibility of the various positions within senior management, including that of the CEO and Managing Director. Consistent with the direction given by the Board, senior management implement business strategies, risk management systems, risk culture, processes and controls for managing the risks – both financial and non-financial – to which the bank is exposed to. The sub-committees of the Senior Management Team for the following issues were constituted:

(a) Product Development and Marketing

(b) Strategic Planning Issues and

(c) Corporate Governance and Administrative Issues.

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The following Sub-Committees of SMT are also functioning in the Bank:

i) Supervisory Review Process (SRP) team

SRP team, headed by the Managing Director of the Bank, is comprised of the divisional heads of ID, CRMD, ICCD, Treasury, Legal Affairs, FCAD, RMD and AMLD. The main function of the team is to assess additional capital requirement for the risks under pillar II of Basel III.

ii) Executive Risk Management Committee (ERMC)

ERMC, headed by the Chief Risk Officer, is comprised of the divisional heads of CRMD, ICCD, AMLD, IT, Treasury and FCAD. Risk Management Division (RMD) acts as the secretariat of the committee. The functions of ERMC are to identify, measure and manage the Bank’s existing and potential risks through detailed risk analysis; to determine risk appetite, tolerance and limits in line with strategic planning; to formulate risk policies for business units etc.

iii) Credit Risk Management Committee (CRMC):

Credit Risk Management Committee, headed by the Chief Risk Officer has been constituted to oversee the implementation status of approved Credit Risk Management Guidelines and other credit related policies of the Bank.

iv) Asset Liability Committee (ALCO):

Asset Liability Management Committee consists of the Managing Director, Additional Managing Directors and strategically important Divisional Heads of Head Office.

v) Central Compliance Committee (CCC):

Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) are getting added importance day by day. All issues relating to AML and CFT are managed and monitored by the Bank. As required by the regulatory authority, Central Compliance Committee (CCC) has been working on these issues in the Bank.

vi) Integrity Committee

As instructed by Bangladesh Bank, a 5-Member Integrity Committee of the Bank headed by a Additional Managing Director is actively functioning in the Bank. An Executive Vice President of the Bank is the Focal Point of the Committee. The Committee sits in meeting to discharge its responsibilities effectively.

Function of Integrity Committee:

The functional areas of the Integrity Committee include, but are not limited to, implementation of National Integrity Strategy, implementation of Bank’s action-plan, resolving identified problems related to integrity, complaint management, reporting to the regulators, performing relevant activities in line with the guidelines of Bangladesh Bank regarding implementation of national Integrity Strategy, etc.

vii) Tender Committee:

Transparency is very important in procuring things and services for the Bank. A 7-members Tender Committee is actively functioning in the Bank.

viii) Taskforce for recovery of classified Loans and advances:

A seven members taskforce for recovery of classified loans and advances are working in the Bank. The taskforce frequently sits in meeting to discharge its responsibilities effectively.

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ix) Procurement Committee:

The procurement policy of Southeast Bank Limited is designed to ensure that the purchase of all goods, services and works required for the satisfactory operation of the Bank is done in a transparent, timely and efficient manner.

x) Taskforce for Monitoring and Recovery of Re-Scheduled and Re-Structured Loans:

A Ten Member Taskforce for Monitoring and Recovery of Re-Scheduled and Re-Structured Loans are working in the Bank. The Taskforce frequently sits in meetings.

xi) Special Asset Management Committee (SMAC) for recovery of classified and written-off loans:

The increase of non-performing loans (NPLs) and written-off loans has a negative impact on profitability, capital adequacy, asset-liability management and overall reputation of the Bank. Therefore, it is essential to strengthen recovery drive to downsize the non-performing/classified loans and written-off loans through cash recovery. From this point of view, a Special Asset Management Committee (SAMC) with high level executives / officers have been formed / reformed at Head Office. They are headed by Additional Managing Directors of the Bank.

The Taskforce and the Special Asset Management Committee review the recovery progress of classified and written-off loans on a monthly basis and provide necessary guidelines to the branches accordingly. They identify the reasons for becoming the loans non-performing in each and every individual case and chalk out the strategy of recovery upon discussion meeting / dialogue with the concerned borrowers at Head Office / Branch. They also review the court cases / suits against the defaulted borrowers and continue follow up with the panel lawyers of the Bank for early disposal of the suits. The members of the Taskforce and the Special Asset Management Committee visit clients’ factory, office, security / mortgaged properties as and when needed. They also place their observations and recommendations before the competent authority for necessary steps for recovery of the loans.

xii) IT Steering Committee:

An IT Steering Committee has been formed in 2012 comprising 12 (twelve) senior officials of the Bank for overall supervision of ICT Operations and ICT Projects Management.

Disclosure of key policies with regard to remuneration of directors, senior management and employees

All employees including the Senior Management employees are paid competitive remuneration package. The structure and level of remuneration are reviewed time to time based on Bank’s performance and affordability. The remuneration also stresses on ensuring internal and external pay equity.

Conflict of Interest

The Code of Ethics and Business Conduct require all employees to avoid situations where their personal interests are in conflict, or may appear to be in conflict with those of the Bank. Employees are advised to take particular care when they are responsible for dealing with customers, business associates and agents on behalf of the Bank. Any failure to disclose a conflict of interest leads to a disciplinary action.

Human Capital

The detailed discussion on Bank’s Human Capital has been presented at Page No. 246 of this Annual Report.

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Communication to Shareholders and Stakeholders:

Every shareholder is given the highest priority by SEBL. The Bank tries to maintain liaison with all shareholders as far as possible and ensures that all stakeholders are informed of the bank’s activities on a routine basis. Shareholders and stakeholders of the Bank may contact the Bank’s Investor Relation Department (IRD) during office hour for any information and queries. Investor Relation Department performs all sorts of share related work, including Share Warrant Process, Share de-materialization and re-materialization, monitoring share movement through Central Depository Bangladesh Limited (CDBL), distribution of dividend warrant including fractional dividend entitlements and re-validates the dividend warrants etc.

Bank always provides all types of accounts i.e. quarterly, half-yearly and annual financial statements and clear assessment of its performance or information are updated on the website and notified to all stakeholders on regular basis. The Directors appreciate the importance of general shareholders of the Bank and use the Bank’s AGM as an ample opportunity to communicate with them. SEBL send copies of Annual Reports through the electronic mail (e-mail) and mailing address of the shareholders available in the Beneficial Owner (BO) account with the depository in order that these are made available to them well in advance for detailed and constructive discussion. It is the company’s policy to give the shareholders the opportunity to ask questions about its activities and future prospects at the AGM. The Board also structures these meetings so that shareholders can vote on each agenda by proposing resolutions. Further details in report of communications with different stakeholders are given at Page No. 258.

Company’s policy to maintaining a website and ensuring participation of shareholders in the Annual General Meeting and providing reasonable opportunity for the shareholder participation in the AGM

SEBL maintains an official website (www.southeastbank.com.bd) which is linked with the websites of the stock exchanges and other related organizations.

SEBL sincerely tries to ensure that all shareholders can participate in the AGM. Annual Reports are sent at least 14 days before the AGM to ensure that all shareholders are notified about the event date, place and time. Also, SEBL always ensures that AGM is held at a convenient place where all shareholders can attend. Notices to shareholders are also published in the daily newspapers and through the digital media as well. To ensure compliance with regulatory bodies, SEBL ensures that it publishes Bank’s Financial Statements in two widely circulated national dailies, one in Bengali and one in English as well as in one online daily news portal. Financial Statements are also sent to the BSEC and stock exchanges.

SEBL ensures effective communication with the shareholders and encourages shareholder participation at the AGM. Good number of shareholders who spoke in the Bank’s each AGM in the past bear the testimony of the statement. SEBL connects with the investors through AGM, EGM, Annual Report and Company’s website. All of the Bank’s publications to the market may be retrieved through the Company’s website. Shareholders are offered the chance to evaluate the performance of the Board regarding the operation of the Bank. They are also given scope to make queries to the Company’s auditors concerning topics linked to the audit of the Company’s financial statements at the AGM.

Environmental and Social Obligations

Southeast Bank integrates environmental and social obligation into all its business activities with the belief that success is not only measured by financial results but also by the commitment to give society back to society and to good environmental practices. The Bank also adopted policies and procedures that integrate social, environmental, ethical, human rights or consumer concerns into the business operations and the core strategy, all in close collaboration with stakeholders.

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The establishment of CSR strategy of SEBL is a crucial component that reflects the bank’s aspiration for sustainable development of the society and creating meaningful value for stakeholders. The Bank carefully planned CSR activities to address the various needs of the community as well as to encourage employees to play an active role. In response to the worldwide call for reduction of global warming, SEBL is committed to reduce energy usage and office consumables. Reduction in paper usage is achieved by making reports available in soft copies and encouraging staff to print on both sides of the paper and print documents only when necessary. SEBL persuades its customers to avail facilities for renewable energy generation and other environmentally friendly projects. The Bank has set guideline, namely “Southeast Shobuj Jibon” targeted to efficient use of electricity, water, paper and re-use of equipments. We believe that every small ‘GREEN’ step taken today would go a long way in building a greener tomorrow. General description of Bank’s policies and practices relating to social and environmental responsibility of Southeast Bank Limited are provided at Page No. 238.

Sustainable Financing

The Board of Directors of the Bank supervises and takes decision in principle and provides strategic directions regarding sustainable banking and sustainable finance (environment friendly banking) of the Bank. The Risk Management Committee also monitors all the social and ecological factors with the aim of protecting the environment and conserving natural resource to achieve sustainable development goals as per guidelines of Bangladesh Bank.

Green Award

As part of environmental and social obligation, SEBL wants to inspire individuals and organizations working actively to preserve environment. With this end in view, the Bank has introduced ‘Southeast Bank-The Financial Express Policy Research Institute Green Award’. The award aims at recognizing and honoring individuals and organizations for significant contributions towards achieving environmental sustainability through green business and operations, knowledge management and community engagement. The award also aims at boosting synergies between the Bank and the climate warriors for conserving environmental resources.

Report to the Shareholders of Southeast Bank Limited on status of compliance on the Corporate Governance Code:

Certificate on states of compliance on Corporate Governance Code from M/S Syful Shamsul Alam & Co., Chartered Accountants on compliance of the Corporate Governance and checklist under condition no. 9 of BSEC's Notifications are exhibited in page no. 135 of this Annual Report.

Declaration or Certification by the Chief Executive Officer and Chief Financial Officer to the Board in line with BSEC notification

In compliance with the Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 on Corporate Governance Code of Bangladesh Securities and Exchange Commission (BSEC) dated 3 June 2018, under condition No. 1(5) (xxvi) a Declaration or Certification by the Chief Executive Officer and Chief Financial Officer of the Bank is exhibited in a separate segment at page 124.

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Directors Remuneration

Statement of Board meetings held during the year 2018 and the attendance of Directors from 01.01.2018 to 31.12.2018 are appended below:

Sl. No Name Designation

Presence of Directors in the Meetings, During

their Tenure Remuneration

Remuneration DrawnNo. of

Meeting held

Present Absent

1 Mr. Alamgir Kabir, FCA Chairman 29 28 1 8,000 2,24,000

2 Mrs. Duluma Ahmed Vice Chairperson 29 24 5 8,000 1,92,000

3 Mr. M. A. Kashem Director 29 24 5 8,000 1,92,0004 Mr. Azim Uddin Ahmed Director 29 23 6 8,000 1,84,0005 Mrs. Jusna Ara Kashem Director 29 24 5 8,000 1,92,0006 Mrs. Rehana Rahman Director 29 20 9 8,000 1,60,0007 Mr. Md. Akikur Rahman Director 29 9 20 8,000 72,0008 Mrs. Sirat Monira Director 29 26 3 8,000 2,08,000

9 Mr. A.H.M. Moazzem Hossain(Retired on June 30, 2018)

Independent Director 29 12 2 8,000 96,000

10 Mr. Syed Sajedul Karim (Appointed on June 30, 2018)

Independent Director 29 12 1 8,000 96,000

11 Dr. Quazi Mesbahuddin Ahmed Independent Director 29 28 1 8,000 2,24,000

12 Mr. M. Kamal Hossain Managing Director 29 25 - - -

* Note: Directors who could not attend any meeting were granted leave of absence by the Board.

Executive Committee Meetings

Statement of Executive Committee held during the year 2018 and the attendance of member from 01.01.2018 to 31.12.2018 are appended below:

Sl. No. Name Designation

Presence of Members in the Meetings, During their

Tenure Remuneration Remuneration DrawnNo. of

Meeting held

Present Absent

1 Mr. Alamgir Kabir, FCA Chairman 5 5 - 8,000 40,000

2 Mr. M. A. Kashem Member 5 2 3 8,000 16,000

3 Mr. Azim Uddin Ahmed Member 5 3 2 8,000 24,000

4 Mr. Md. Akikur Rahman Member 5 3 2 8,000 24,000

5 Mr. M Kamal Hossain Member 5 5 - - -

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Audit Committee meetings

Statement of Audit Committee held during the year 2018 and the attendance of member from 01.01.2018 to 31.12.2018 are appended below:

SlNo Name Designation

Presence of Members in the Meetings, During

their TenureRemuneration Remuneration

DrawnNo. of Meeting

heldPresent Absent

1 Mr. Syed Sajedul Karim (Appointed on June 30, 2018) Chairman 5 2 - 8,000 16,000

2 Mrs. Duluma Ahmed Member 5 3 2 8,000 24,000

3 Mrs. Jusna Ara Kashem Member 5 5 - 8,000 40,000

4 Mrs. Rehana Rahman Member 5 5 - 8,000 40,000

5Dr. Quazi Mesbahuddin Ahmed Member 5 5 - 8,000 40,000

6 Mr. A.H.M. Moazzem Hossain(Retired on June 30, 2018) Member 5 2 - 8,000 16,000

Risk Management Committee meetings

Statement of Risk Management Committee held during the year 2018 and the attendance of member from 01.01.2018 to 31.12.2018 are appended below:

Sl. No Name Designation

Presence of Members in the Meetings, During

their TenureRemuneration Remuneration

Drawn No. of Meeting

heldPresent Absent

1 Mr. Alamgir Kabir, FCA Chairman 4 4 - 8,000 32,000

2 Mr. M. A. Kashem Member 4 2 2 8,000 16,000

3 Mr. Azim Uddin Ahmed Member 4 3 1 8,000 24,000

4 Mr. Syed Sajedul Karim (Appointed on June 30, 2018) Member 4 2 - 8,000 16,000

5 Mr. A.H.M. Moazzem Hossain(Retired on June 30, 2018) Member 4 2 - 8,000 16,000

122


Shareholding Pattern along with name wise details:

i. Shares held by Parent/Subsidiary/Associated Companies and other related Parties: NIL

ii. Shareholding of the Board of Directors.

Sl. No Name of the Directors Designation No. of Shares Value in BDT

1 Mr. Alamgir Kabir, FCA Chairman 23,688,872 236,888,720.00

2 Mrs. Duluma Ahmed Vice-Chairperson 21,945,153 219,451,530.00

3 Mr. M. A. Kashem Director 23,353,119 233,531,190.00

4 Mr. Azim Uddin Ahmed Director 29,314,345 293,143,450.00

5 Mrs. Jusna Ara Kashem Director 21,090,453 210,904,530.00

6 Mr. Md. Akikur Rahman Director 21,410,290 214,102,900.00

7 Mrs. Rehana Rahman Director 21,670,766 216,707,660.00

8 Mrs. Sirat Monira Representing public shareholders Director 138,629 1,386,290.00

9 Mr. Syed Sajedul Karim Independent Director - -

10 Dr. Quazi Mesbahuddin Ahmed Independent Director - -

11 Mr. M. Kamal Hossain Managing Director Managing Director - -

Total 162,611,627 1,626,116,270.00

iii. Shares held by Managing Director, Company Secretary, Chief Financial Officer, Head of Internal Control and Compliance and their spouses and minor children.

Sl. No. Designation Shareholdings as on

31.12.2018

1 a) M. Kamal Hossain Managing Director

Nil

b) Spouse / Minor Children of Managing Director Nil

2 a) A.K.M. Nazmul Haider Company Secretary

Nil

b) Spouse / Minor Children of Company Secretary Nil

3 a) Khaled Mahbub MorshedHead of Internal Control and Compliance

Nil

b) Spouse / Minor Children of the Head of Internal Control and Compliance Nil

4 a) Rasedul Islam, FCA Chief Financial Officer (Acting)

Nil

b) Spouse / Minor Children of the Chief Financial Officer Nil

123


iv. Shares held by top five salaried Executives in the regular services of the Bank:

Sl. No. Name Designation Shareholding as on

31.12.2018

1. S. M. Mainuddin Chowdhury Additional Managing Director Nil

2. Anwar Uddin Deputy Managing Director Nil

3. Syed Faisal Omar Senior Executive Vice President Nil

4. Khandoker Zibanur Rahman Executive Vice President Nil

5. Mohammad Nurul Islam Executive Vice President Nil

v. List of Shareholders holdings 10% and above shares in the Paid-Up-Capital of the Bank. : NIL

Disclosure about Family Domination in the Bank

There is no family domination in the Bank because any individual or family does not hold majority shares of the company to control the company unilaterally.

vi. Free-Float Shares

Free float shares is generally described as those portion of shares held by investors, other than restricted shares owned by company’s sponsor shareholders/directors which are restricted to buying and selling under securities laws.

Free float shares of our Bank is 61.17 percent. These shares are available for free-trading in the bourses. The size of free float shares indicates that their price cannot be easily manipulated by a vested quarter. For obvious reasons, general investors opt to invest in our shares.

124


Managing Director's and CFO's Declaration to the BoardDate: April 29, 2019

The Board of DirectorsSoutheast Bank LimitedEunoos Trade Centre52-53 Dilkusha C/ADhaka-1000.

Sub: Declaration on Financial Statements for the year ended on December 31, 2018

Dear Sirs,

Pursuant to the condition No. 1(5) (xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80. Dated 3 June 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that:

i) The Financial Statements of Southeast Bank Limited for the year ended on 31st December, 2018 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed;

ii) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view;

iii) The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements;

iv) To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records;

v) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and

vi) The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

In this regard, we also certify that: (i) We have reviewed the financial statements for the year ended on 31st December, 2018 and that to the

best of our knowledge and belief:

(a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(b) these statements collectively present true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws.

(ii) There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members.

Sincerely Yours,

Chief Financial Officer (Acting) Managing Director

125


Compliance Report on BSEC’s Notification on Corporate Governance Code

Status of compliance with the conditions imposed by the Commission’s Notification No.BSEC/CMRRCD/2006-158/207/Admin/80, dated 3 June 2018 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

(Report under Condition No. 9)

Condition No. Title

Compliance Status(Put in the appropriate

column) Remarks (if any)

Complied Not Complied

1(1)The total number of members of a company’s Board of Directors (hereinafter referred to as “Board”) shall not be less than 5 (five) and more than 20 (twenty).

- -

1(2)(a)

At least one-fifth (1/5) of the total number of directors in the company’s Board shall be independent directors; any fraction shall be considered to the next integer or whole number for calculating number of independent director(s);

- -

1(2)(b)(i)who either does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company;

- -

1(2)(b)(ii)

who is not a sponsor of the company or is not connected with the company’s any sponsor or director or nominated director or shareholder of the company or any of its associates, sister concerns, subsidiaries and parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship and his or her family members also shall not hold above mentioned shares in the company.

- -

1(2)(b)(iii) who has not been an executive of the company in immediately preceding 2 (two) financial years; - -

1(2)(b)(iv)who does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary or associated companies;

- -

1(2)(b)(v)who is not a member or TREC (Trading Right Entitlement Certificate) holder, director or officer of any stock exchange;

- -

1(2)(b)(vi)who is not a shareholder, director excepting independent director or officer of any member or TREC holder of stock exchange or an intermediary of the capital market;

- -

1(2)(b)(vii)

who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the concerned company’s statutory audit firm or audit firm engaged in internal audit services or audit firm conducting special audit or professional certifying compliance of this Code;

- -

1(2)(b)(viii) who is not an independent director in more than 5 (five) listed companies; - -

1(2)(b)(ix)

who has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan or any advance to a bank or a Non-Bank Financial Institution (NBFI);

- -

126


Condition No. Title




1(2)(b)(x) who has not been convicted for a criminal offence involving moral turpitude; - -

1(2)(c)The independent director(s) shall be appointed by the Board and approved by the shareholders in the Annual General Meeting (AGM);

- -

1(2)(d) The post of independent director(s) cannot remain vacant for more than 90 (ninety) days. - -

1(2)(e)The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) tenure only.

- -

1(3)(a)

Independent director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial laws, regulatory requirements and corporate laws and can make meaningful contribution to the business;

- -

1(3)(b)(i)

Business Leader who is or was a promoter or director of an unlisted company having minimum paid-up capital of Tk. 100.00 million or any listed company or a member of any national or international chamber of commerce or business association;

- - N/A

1(3)(b)(ii)

Corporate Leader who is or was a top level executive not lower than Chief Executive Officer or Managing Director or Deputy Managing Director or Chief Financial Officer or Head of Finance or Accounts or Company Secretary or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted company having minimum paid-up capital of Tk.100.00 million or of a listed company;

- -

1(3)(b)(iii)

Former official of government or statutory or autonomous or regulatory body in the position not below 5th Grade of the national pay scale, who has at least educational background of bachelor degree in economics or commerce or business or Law;

- -

1(3)(b)(iv) University Teacher who has educational background in Economics or Commerce or Business Studies or Law; - -

1(3)(b)(v)

Professional who is or was an advocate practicing at least in the High Court Division of Bangladesh Supreme Court or a Chartered Accountant or Cost and Management Accountant or Chartered Financial Analyst or Chartered Certified Accountant or Certified Public Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification;

- - N/A

1(3)(c) The independent director(s) shall have at least 10 (ten) years of experiences in any field mentioned in clause (b); - -

1(3)(d)In special cases, the above qualifications or experiences may be relaxed subject to prior approval of the Commission.

- - N/A

1(4)(a)The positions of the Chairperson of the Board and the Managing Director (MD) and/or Chief Executive Officer (CEO) of the company shall be filled by different individuals;

- -

1(4)(b)The Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed company shall not hold the same position in another listed company;

- -

1(4)(c) The Chairperson of the Board shall be elected from among the non-executive directors of the company; - -

127


Condition No. Title




1(4)(d)The Board shall clearly define respective roles and responsibilities of the Chairperson and the Managing Director and/or Chief Executive Officer;

- -

1(4)(e)

In the absence of the Chairperson of the Board, the remaining members may elect one of themselves from non-executive directors as Chairperson for that particular Board’s meeting; the reason of absence of the regular Chairperson shall be duly recorded in the minutes.

- -

1(5)(i) An industry outlook and possible future developments in the industry; - -

1(5)(ii) The segment-wise or product-wise performance; -

1(5)(iii)Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any;

- -

1(5)(iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin, where applicable; - - N/A

1(5)(v) A discussion on continuity of any extraordinary activities and their implications (gain or loss); - - N/A

1(5)(vi)

A detailed discussion on related party transactions along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions;

- -

1(5)(vii) A statement of utilization of proceeds raised through public issues, rights issues and/or any other instruments;

- -

1(5)(viii)

An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Share Offer, Direct Listing, etc.;

- - N/A

1(5)(ix)An explanation on any significant variance that occurs between Quarterly Financial Performances and Annual Financial Statements;

- -

1(5)(x) A statement of remuneration paid to the directors including independent directors; - -

1(5)(xi)

A statement that the financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity;

- -

1(5)(xii) A statement that proper books of account of the issuer company have been maintained; - -

1(5)(xiii)

A statement that appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;

- -

1(5)(xiv)

A statement that International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed;

- -

1(5)(xv)A statement that the system of internal control is sound in design and has been effectively implemented and monitored;

- -

1(5)(xvi)

A statement that minority shareholders have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress;

- -

128


Condition No. Title




1(5)(xvii)

A statement that there is no significant doubt upon the issuer company’s ability to continue as a going concern, if the issuer company is not considered to be a going concern, the fact along with reasons there of shall be disclosed;

- -

1(5)(xviii)An explanation that significant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof shall be explained;

- -

1(5)(xix)A statement where key operating and financial data of at least preceding 5 (five) years shall be summarized; - -

1(5)(xx) An explanation on the reasons if the issuer company has not declared dividend (cash or stock) for the year; - - N/A

1(5)(xxi)Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend;

- - N/A

1(5)(xxii) The total number of Board meetings held during the year and attendance by each director; - -

1(5)(xxiii)(a) Parent or Subsidiary or Associated Companies and other related parties (name-wise details); - -

1(5)(xxiii)(b)

Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children (name-wise details);

- -

1(5)(xxiii)(c) Executives; - -

1(5)(xxiii)(d) Shareholders holding ten percent (10%) or more voting interest in the company (name-wise details); - - N/A

1(5)(xxiv)In case of the appointment or reappointment of a director, a disclosure on the following information to the shareholders:

1(5)(xxiv)(a) a brief resume of the director; -1(5)(xxiv)(b) nature of his or her expertise in specific functional areas; -

1(5)(xxiv)(c)names of companies in which the person also holds the directorship and the membership of committees of the Board;

- -

1(5)(xxv)(a) accounting policies and estimation for preparation of financial statements; - -

1(5)(xxv)(b)

changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes;

- -

1(5)(xxv)(c)

Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof;

- -

1(5)(xxv)(d)compare such financial performance or results and financial position as well as cash flows with the peer industry scenario;

- -

1(5)(xxv)(e) briefly explain the financial and economic scenario of the country and the globe; - -

1(5) (xxv)(f)risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company;

- -

1(5)(xxv)(g)

future plan or projection or forecast for company’s operation, performance and financial position, with justification thereof, i.e., actual position shall be explained to the shareholders in the next AGM;

- -

129


Condition No. Title




1(5)(xxvi)Declaration or certification by the CEO and the CFO to the Board as required under condition No. 3(3) shall be disclosed as per Annexure-A;

- -

1(5)(xxvii)The report as well as certificate regarding compliance of conditions of this Code as required under condition No.9 shall be disclosed as per Annexure-B and Annexure-C.

- -

1(6)

The company shall conduct its Board meetings and record the minutes of the meetings as well as keep required books and records in line with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of this Code.

- -

1(7)(a)

The Board shall lay down a code of conduct, based on the recommendation of the Nomination and Remuneration Committee (NRC), for the Chairperson of the Board, other board members and Chief Executive Officer of the company;

N/A -

The Company is waiting for

Bangladesh Bank reply

1 (7) (b) The code of conduct as determined by the NRC shall be posted on the website of the company. N/A - -Do-

2(a)Provisions relating to the composition of the Board of the holding company shall be made applicable to the composition of the Board of the subsidiary company;

- -

2(b)At least 1 (one) independent director of the Board of the holding company shall be a director on the Board of the subsidiary company;

- -

2(c)The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company;

- -

2(d)The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also;

- -

2(e)The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.

- -

3(1)(a)The Board shall appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC);

- -

3(1)(b)The positions of the Managing Director (MD) or Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC) shall be filled by different individuals;

- -

3(1)(c)The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any executive position in any other company at the same time;

- -

3(1)(d)The Board shall clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS;

- -

3(1)(e)The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board as well as immediate dissemination to the Commission and stock exchange(s).

- -

3(2) The MD or CEO, CS, CFO and HIAC of the company shall attend the meetings of the Board. - -

3(3)(a)The MD or CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief:

- -

130


Condition No. Title




3(3)(a)(i)These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

- -

3(3)(a)(ii)These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws;

- -

3(3)(b)

The MD or CEO and CFO shall also certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the code of conduct for the company’s Board or its member;

- -

3(3)(c) The certification of the MD or CEO and CFO shall be disclosed in the Annual Report. - -

4(i) Audit Committee; - -

4(ii) Nomination and Remuneration Committee. - -



5(1)(a) The company shall have an Audit Committee as a sub-committee of the Board; - -

5(1)(b)

The Audit Committee shall assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business;

- -

5(1)(c)The Audit Committee shall be responsible to the Board; the duties of the Audit Committee shall be clearly set forth in writing.

- -

5(2)(a) The Audit Committee shall be composed of at least 3 (three) members; - -

5(2)(b)

The Board shall appoint members of the Audit Committee who shall be non-executive directors of the company excepting Chairperson of the Board and shall include at least 1 (one) independent director;

- -

5(2)(c)

All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience;

- -

5(2)(d)

When the term of service of any Committee members expires or there is any circumstance causing any Committee member to be unable to hold office before expiration of the term of service, thus making the number of the Committee members to be lower than the prescribed number of 3 (three) persons, the Board shall appoint the new Committee member to fill up the vacancy immediately or not later than 1 (one) month from the date of vacancy in the Committee to ensure continuity of the performance of work of the Audit Committee;

- -

5(2)(e) The company secretary shall act as the secretary of the Committee; - -

5(2)(f) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director. - -

5(3)(a)The Board shall select 1 (one) member of the Audit Committee to be Chairperson of the Audit Committee, who shall be an independent director;

- -

5(3)(b)

In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No. 5(4)(b) and the reason of absence of the regular Chairperson shall be duly recorded in the minutes.

- -

131


Condition No. Title




5(3)(c) Chairperson of the Audit Committee shall remain present in the Annual General Meeting (AGM). - -

5(4)(a)

The Audit Committee shall conduct at least its four meetings in a financial year: Provided that any emergency meeting in addition to regular meeting may be convened at the request of any one of the members of the Committee;

- -

5(4)(b)

The quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two-third of the members of the Audit Committee, whichever is higher, where presence of an independent director is a must.

- -

5(5)(a) The Audit Committee shall Oversee the financial reporting process; - -

5(5)(b) Monitor choice of accounting policies and principles; - -

5(5)(c)

Monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report;

- -

5(5)(d) Oversee hiring and performance of external auditors; - -

5(5)(e)Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board for approval or adoption;

- -

5(5)(f) Review along with the management, the annual financial statements before submission to the Board for approval; - -

5(5)(g)Review along with the management, the quarterly and half yearly financial statements before submission to the Board for approval;

- -

5(5)(h) Review the adequacy of internal audit function; - -

5(5)(i) Review the Management’s Discussion and Analysis before disclosing in the Annual Report; - -

5(5)(j) Review statement of all related party transactions submitted by the management; - -

5(5)(k) Review Management Letters or Letter of Internal Control weakness issued by statutory auditors; - -

5(5)(l)

Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors;

- -

5(5)(m)

Oversee whether the proceeds raised through Initial Public Offering (IPO) or Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per the purposes stated in relevant offer document or prospectus approved by the Commission:

- - N/A

5(6)(a)(i) The Audit Committee shall report on its activities to the Board. - -

5(6)(a)(ii)(a) Report on conflicts of interests; - - No such incidence arose

5(6)(a)(ii)(b)suspected or presumed fraud or irregularity or material defect identified in the internal audit and compliance process or in the financial statements;

- - -Do-

5(6)(a)(ii)(c) suspected infringement of laws, regulatory compliances including securities related laws, rules and regulations; - - -Do-

5(6)(a)(ii)(d) any other matter which the Audit Committee deems necessary shall be disclosed to the Board immediately; - - -Do-

132


Condition No. Title




5(6)(b)

If the Audit Committee has reported to the Board about anything which has material impact on the financial condition and results of operation and has discussed with the Board and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board for three times or completion of a period of 6 (six) months from the date of first reporting to the Board, whichever is earlier.

- - No such reportable

incidence arose.

5(7)

Report on activities carried out by the Audit Committee, including any report made to the Board under condition No. 5(6)(a)(ii) above during the year, shall be signed by the Chairperson of the Audit Committee and disclosed in the annual report of the issuer company.

- - N/A

6(1)(a) The company shall have a Nomination and Remuneration Committee (NRC) as a sub-committee of the Board; - -



6(1)(b)

The NRC shall assist the Board in formulation of the nomination criteria or policy for determining qualifications, positive attributes, experiences and independence of directors and top level executive as well as a policy for formal process of considering remuneration of directors, top level executive;

- - -Do-

6(1)(c)The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing covering the areas stated at the condition No. 6(5)(b).

- - -Do-

6(2)(a) The Committee shall comprise of at least three members including an independent director; - - -Do-

6(2)(b) All members of the Committee shall be non-executive directors; - - -Do-

6(2)(c) Members of the Committee shall be nominated and appointed by the Board; - - -Do-

6(2)(d)The Board shall have authority to remove and appoint any member of the Committee; - - -Do-

6(2)(e)

In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the board shall fill the vacancy within 180 (one hundred eighty) days of occurring such vacancy in the Committee;

- - -Do-

6(2)(f)

The Chairperson of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee;

- - -Do-

6(2)(g) The company secretary shall act as the secretary of the Committee; - - -Do-

6(2)(h) The quorum of the NRC meeting shall not constitute without attendance of at least an independent director; - - -Do-

6(2)(i)

No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the company.

- - -Do-

6(3)(a)The Board shall select 1 (one) member of the NRC to be Chairperson of the Committee, who shall be an independent director;

- - -Do-

133


Condition No. Title




6(3)(b)

In the absence of the Chairperson of the NRC, the remaining members may elect one of themselves as Chairperson for that particular meeting, the reason of absence of the regular Chairperson shall be duly recorded in the minutes;

- -



6(3)(c) The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders: - - -Do-

6(4)(a) The NRC shall conduct at least one meeting in a financial year; - - -Do-

6(4)(b) The Chairperson of the NRC may convene any emergency meeting upon request by any member of the NRC; - - -Do-

6(4)(c)

The quorum of the meeting of the NRC shall be constituted in presence of either two members or two third of the members of the Committee, whichever is higher, where presence of an independent director is must as required under condition No. 6(2)(h);

- - -Do-

6(4)(d)The proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC.

- - -Do-

6(5)(a) NRC shall be independent and responsible or accountable to the Board and to the shareholders; - - -Do-

6(5)(b) NRC shall oversee, among others, the following matters and make report with recommendation to the Board: - - -Do-

6(5)(b)(i)

Formulating the criteria for determining qualifications, positive attributes and independence of a director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following:

- - -Do-

6(5)(b)(i)(a)The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully;

- - -Do-

6(5)(b)(i)(b) The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; - - -Do-

6(5)(b)(i)(c)

Remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals;

- - -Do-

6(5)(b)(ii)Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality;

- - -Do-

6(5)(b)(iii)

Identifying persons who are qualified to become directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board;

- - -Do-

6(5)(b)(iv) Formulating the criteria for evaluation of performance of independent directors and the Board; - - -Do-

6(5)(b)(v)Identifying the company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria;

- - -Do-

6(5)(b)(vi) Developing, recommending and reviewing annually the company’s human resources and training policies; - - -Do-

6(5)(c)

The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report.

- - -Do-

7(1)(i) Appraisal or valuation services or fairness opinions; - -

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Condition No. Title




7(1)(ii) Financial information systems design and implementation; - -

7(1)(iii) Book-keeping or other services related to the accounting records or financial statements; - -

7(1)(iv) Broker-dealer services; - -7(1)(v) Actuarial services; - -7(1)(vi) Internal audit services or special audit services; - -7(1)(vii) Any services that the Audit Committee determines; - -

7(1)(viii) Audit or certification services on compliance of corporate governance as required under condition No. 9(1); - -

7(1)(ix) Any other service that creates conflict of interest. - -

7(2)

No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company; his or her family members also shall not hold any shares in the said company:

- -

7(3)

Representative of external or statutory auditors shall remain present in the Shareholders’ Meeting (Annual General Meeting or Extraordinary General Meeting) to answer the queries of the shareholders.

- -

8(1) The company shall have an official website linked with the website of the stock exchange. - -

8(2) The company shall keep the website functional from the date of listing. - -

8(3)The company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchange(s).

- -

9(1)

The company shall obtain a certificate from a practicing Professional Accountant or Secretary (Chartered Accountant or Cost and Management Accountant or Chartered Secretary) other than its statutory auditors or audit firm on yearly basis regarding compliance of conditions of Corporate Governance Code of the Commission and shall such certificate shall be disclosed in the Annual Report.

- -

9(2)

The professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the shareholders in the annual general meeting.

-

9(3)

The directors of the company shall state, in accordance with the Annexure-C attached, in the directors’ report whether the company has complied with these conditions or not.

- -

135


136


Compliance with Bangladesh Bank’s Guidelines on Corporate Governance

Bangladesh Bank Guidelines for Corporate Governance: Our Status of Compliance with BRPD Circular No.11 of 27th October 2013 vis-à-vis latest amendment of law.

Sl. No. Particulars Compliance

Status Remarks

1. Formation of Board of DirectorsFor appointment of new Directors and removal of Directors Bangladesh Bank’s approval to be obtained.

Eligibility and Qualification of Directors, maximum number of Directors on the Board of Directors.

Appointment of Independent Director. Maximum 4 Directors from one family.

1.1 Appointment of New Directors Section 15(4) of Bank Company Act 1991 (Amended upto 2018) requires that application for obtaining approval of Bangladesh Bank to appoint new Directors should be sent along with some specified declarations and approval of Bangladesh Securities and Exchange Commission.

1.2 Vacation of Office of Director(a) Vacancy as per Section 108 (i) of Companies Act 1994 and Vacancy as per

Section 17 of Bank Company Act 1991.No Such

Event(b) Bar to become a Director who was removed by operation of Section 17 of Bank

Company Act 1991. -Do-

Bar to transfer share by a Director who was removed by operation of Section 17 of Bank Company Act 1991. -Do-

(c) Removal of Director and dissolution of the Board by Bangladesh Bank under section 46 and section 47 of Bank company Act 1991. -Do-

1.3 Removal of Directors from office According to section 108(2) of the Companies Act, 1994, with the prior approval of Bangladesh Bank, a bank director other than specialized banks can be removed from his office for the reason specified in its Articles of Association.

-Do-

1.4 Appointment of Alternate Directors(a) To appoint alternate director in place of original Director, Bank has to collect

and properly maintain the documentary evidences relating to departure and arrival of the original director. If there is any exception, the chief executive officer should immediately inform it to Bangladesh Bank.

There is no Alternative Director on the Board of

SEBL

(b) The copy of the decision of the board regarding appointment of alternate director, with original director’s probable returning date from abroad should be sent to Bangladesh Bank within 7 days of taking the decision and the director’s arrival date must be intimated to Bangladesh Bank immediately after his return.

(c) Any loan defaulter or any person who is not eligible to become a director as per any rules & regulation will not be appointed as an alternate director.

(d) As appointment of alternate director is a temporary measure; therefore, he/she will not be included in any kind of committee constituted by the board.

(e) While in the office, an alternate director or his/her affiliated organization will not get any kind of loan facilities from his bank. In case of previous loan, enhancement of limit or extension of time period or any kind of exemption or interest waiver will not be allowed. Moreover, all restrictions applicable to directors according to rules & regulations will also be applicable to the alternate director. All requirements of Law, Rules and Directives applicable to a Director are also equally applicable to an Alternate Director.

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Status Remarks

2. Depositor Director No requirement for appointment of Depositor Director. The tenure of office of current Depositor Directors shall be determined by the Board.

No Such event

3. Information regarding Directors(a) Every bank should keep an updated list of bank directors, (b) Banks should send a directors’ list to other banks or financial institutions

immediately after the appointment or release of director.

(c) Banks should display a list of directors in the website and update it on a regular basis.

4. Responsibility of the Board of DirectorsBoard of Directors is responsible for policy framing and implementation, Risk Management, Internal Control, Internal Audit and ensuring compliance with Internal Audit objections etc

4.1 Responsibilities and Authorities of the Board of Directors(a) Work Planning and Strategic Management

i) Board shall determine Bank’s goals and objectives and devise strategies and work plan. Progress towards achievement of work plan shall be reviewed quarterly by the Board.

ii) Board of Directors shall include its analytical/critical review of Bank’s achievement and its failures in the Bank’s Annual Report. It shall also inform the shareholders about the Bank’s future work plan and strategies. KPI(s) of CEO and two grades below the CEO shall be determined and evaluated by the Board of Directors.

(b) Credit and Risk Managementi) The policies, strategies, procedures etc. in respect of appraisal of loan/investment proposal, sanction, disbursement, recovery, reschedule and write-off thereof shall be made with the board's approval under the purview of the existing laws, rules and regulations. The board shall specifically distribute the power of sanction of loan/investment and such distribution should desirably be made among the CEO and his subordinate executives as much as possible. No director, however, shall interfere, direct or indirect, into the process of loan approval.

ii) The board shall frame policies for risk management and get them complied with and shall monitor the compliance at quarterly rests and review the concerned report of the risk management team and shall compile in the minutes of the board meeting. The board shall monitor the compliance of the guidelines of Bangladesh Bank regarding key risk management.

(c) Internal Control Management Board of Directors shall closely monitor Internal Control System in order to maintain qualitative standard of Loan/Investment portfolio. Board of Directors shall review on quarterly basis the reports of the Audit Committee submitted before it regarding compliance status of suggestions and recommendation of inspection report of Internal Audit, External Auditors and Inspection Team of Bangladesh Bank.

(d) Human Resources Management and Developmenti) Policies relating to recruitment, promotion, transfer, disciplinary and punitive measures, human resources development etc. and service rules shall be framed and approved by the board. The chairman or the directors shall in no way involve themselves or interfere into or influence over any administrative affairs including recruitment, promotion, transfer and disciplinary measures as executed under the set service rules. No member of the board of directors shall be included in the selection committees for recruitment and promotion to different levels. Recruitment, promotion, transfer & punishment of the officers immediate two tiers below the CEO shall, however, rest upon the board. Such recruitment and promotion shall have to be carried out complying with the service rules i.e., policies for recruitment and promotion.

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Status Remarks

ii) The board shall focus its special attention to the development of skills of bank's staff in different fields of its business activities including prudent appraisal of loan/investment proposals, and to the adoption of modern electronic and information technologies and the introduction of effective Management Information System (MIS). The board shall get these programs incorporated in its annual work plan.

iii) The board will compose Code of Ethics for every tier and they will follow it properly. The board will promote healthy code of conducts for developing a compliance culture.

(e) Financial Managementi) The annual budget and the statutory financial statements shall be finalized with the approval of the board. It shall at quarterly rests review/monitor the positions in respect of bank's income, expenditure, liquidity, non-performing asset, capital base and adequacy, maintenance of loan loss provision and steps taken for recovery of defaulted loans including legal measures.

ii) The board shall frame the policies and procedures for bank's purchase and procurement activities and shall accordingly approve the distribution of power for making such expenditures. The maximum possible delegation of such power of expenditures shall rest on the CEO and his subordinates. The decision on matters relating to infrastructure development and purchase of land, building, vehicles etc. for the purpose of bank's business shall, however, be adopted with the approval of the board.

iii) Board of Directors shall review whether Asset-Liability Committee (ALCO) is formed and functioning observing the directives of Bangladesh Bank

(f ) Appointment of Chief Executive Officer (CEO)Board of Director shall appoint an honest, efficient, experienced and a suitable person as Chief Executive Officer. Appointment of CEO shall require Bangladesh Bank’s approval.

(g) Other responsibilities of the Board Board shall ensure proper execution and compliance with any duty vested upon it by Bangladesh Bank.

4.2 Meeting of Board of Directors

Board of directors may meet once or more than once in a month if necessary. But Board of directors shall meet at least once in every three months.

4.3 Responsibilities of Chairman of Board of Directors(a) As the chairman of the board of directors or chairman of any committee formed

by the board or any director does not personally possess the jurisdiction to apply policy making or executive authority, he/she shall not participate in or interfere into the administrative or operational and routine affairs of the bank.

(b) The chairman may conduct on-site inspection of any bank-branch or financing activities under the purview of the oversight responsibilities of the board. He may call for any information relating to bank's operation or ask for investigation into any such affairs; he may submit such information or investigation report to the meeting of the board or the executive committee and if deemed necessary, with the approval of the board, he shall effect necessary action thereon in accordance with the set rules through the CEO. However, any complaint against the CEO shall have to be apprised to Bangladesh Bank through the board along with the statement of the CEO.

(c) An Office Room, a personal Secretary / Assistant, one Peon / MLSS, Telephone at the office, one Mobile Phone and a vehicle may be provided to the chairman with the approval of Board.

5. Formation of Committees from the Board of DirectorsEvery Bank Company shall constitute one Executive Committee, one Audit Committee and one Risk Management Committee consisting of members of the Board of Directors.

139



Status Remarks

5.1 Executive CommitteeExecutive committee should be formed with the members of the board to continue the urgent and daily or routine works between the intervals of two board meetings. Executive committee will perform according to their terms of reference determined by the board of directors.

(a) Organizational Structure:i. Members of the committee will be nominated by the board of directors

from themselves; ii. The executive committee will comprise of maximum 07 (seven) members; iii. Members may be appointed for a 03 (three)-year term of office; iv. Chairman of the Board of Directors can be the chairman of executive

committee; v. Company secretary of the bank will be the secretary of the executive

committee.

(b) Qualification of the Members:i. Integrity, dedication, and opportunity to spare time in the functions of

committee will have to be considered while nominating a director to the committee;

ii. Each member should be capable of making valuable and effective contributions in the functioning of the committee;

iii. To perform his or her role effectively each committee member should have adequate understanding of the detailed responsibilities of the committee membership as well as the bank's business, operations and its risks.

(c) Roles and Responsibilities of the Executive Committee:i. The executive committee can decide or can act in those cases as instructed

by the Board of directors that are not specifically assigned on full board through the Bank Company Act, 1991 and other laws and regulations.

ii. The executive committee can take all necessary decision or can approve cases within power delegated by the board of directors.

iii. All decisions taken in the executive committee should be ratified in the next board meeting.

(d) Meetingsi. The executive committee can sit any time as it may deem fit. ii. The committee may invite Chief Executive Officer, Head of internal audit or

any other Officer to its meetings, if it deems necessary; iii. To ensure active participation and contribution by the members, a detailed

memorandum should be distributed to committee members well in advance before each meeting;

iv. All decisions/observations of the committee should be noted in minutes.

5.2 Audit Committee The board will approve the objectives, strategies and overall business plans of the bank and the audit committee will assist the board in fulfilling its oversight responsibilities. The committee will review the financial reporting process, the system of internal control and management of financial risks, the audit process, and the bank's process for monitoring compliance with laws and regulations and its own code of business conduct.

(a) Organizational Structurei. Members of the committee will be nominated by the board of directors

from the directors; ii. The audit committee will comprise of maximum 05 (five) members, with

minimum 2 (two) independent director; iii. Audit committee will comprise with directors who are not executive

committee members; iv. Members may be appointed for a 03 (three) year term of office; v. Company secretary of the bank will be the secretary of the audit committee.

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Status Remarks

(b) Qualification of the Memberi. Integrity, dedication, and opportunity to spare time in the functions of


ii. Each member should be capable of making valuable and effective contributions in the functioning of the committee;

iii. To perform his or her role effectively each committee member should have adequate understanding of the detailed responsibilities of the committee membership as well as the bank's business, operations and its risks.

iv. Professionally Experienced persons in banking/financial institutions specially having educational qualification in Finance, Banking, Management, Economics, Accounting will get preference in forming the committee.

(c) Roles and Responsibilities of the Audit Committee(i) Internal Control:1. Evaluate whether management is setting the appropriate compliance culture

by communicating the importance of internal control and the management of risk and ensuring that all employees have clear understanding of their roles and responsibilities;

2. Review management’s actions in building computerization of the bank and its applications and bank's Management Information System (MIS);

3. Consider whether internal control strategies recommended by internal and external auditors have been implemented by the management;

4. Consider reports relating to fraud, forgery, deficiencies in internal control or other similar issues detected by internal and external auditors and inspectors of the regulatory authority and place it before the board after reviewing whether necessary corrective measures have been taken by the management.

(ii) Financial Reporting:1. Audit committee will check whether the financial statements reflect the

complete and concrete information and determine whether the statements are prepared according to existing rules & regulations and standards enforced in the country and as per relevant prescribed accounting standards set by Bangladesh Bank;

2. Discuss with management and the external auditors to review the financial statements before its finalization.

(iii) Internal Audit:1. Audit committee will monitor whether internal audit working independently

from the management. 2. Review the activities of the internal audit and the organizational structure

and ensure that no unjustified restriction or limitation hinders the internal audit process;

3. Examine the efficiency and effectiveness of internal audit function; 4. Examine whether the findings and recommendations made by the internal

auditors are duly considered by the management or not.

(iv) External Audit:1. Review the performance of the external auditors and their audit reports; 2. Examine whether the findings and recommendations made by the external

auditors are duly considered by the management or not. 3. Make recommendations to the board regarding the appointment of the

external auditors.

(v) Compliance with existing Laws and Regulations:Review whether the laws and regulations framed by the regulatory authorities (central bank and other bodies) and internal regulations approved by the board are being complied with.

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Status Remarks

(vi) Other Responsibilities:1. Submit compliance report to the board on quarterly basis on regularization

of the omission, fraud and forgeries and other irregularities detected by the internal and external auditors and inspectors of regulatory authorities;

2. External and internal auditors will submit their related assessment report, if the committee solicit;

3. Perform other oversight functions as desired by the Board of Directors and evaluate the committee's own performance on a regular basis.

(d) Meetings 1. The audit committee should hold at least 4 meetings in a year and it can sit

any time as it may deems fit; 2. The committee may invite Chief Executive Officer, Head of internal audit or

any other Officer to its meetings, if it deems necessary; 3. To ensure active participation and contribution by the members, a detailed


4. All decisions/observations of the committee should be noted in minutes.

5.3 Risk Management Committee Risk Management Committee shall be formed in order to play an effective role in lowering possible risks in respect of implementation of strategies and work-plan formulated by Board of Directors. Risk Management Committee shall analyze the policy/system of lowering risks properly by the management and maintenance of required capital against Risks and Provision for Reserve for Credit Risk, Foreign Exchange Risk, Internal Control and Compliance Risk, Money Laundering Risk, Information and Communication Technology Risk, Operational Risk, Interest Rate Risk, Liquidity Risk etc. shall be looked after by the Risk Management Committee.

(a) Organizational Structure:1. Members of the committee will be nominated by the board of directors

from themselves; 2. The Risk Management Committee will comprise of maximum 05 (five)

members; 3. Members may be appointed for a 03 (three) year term of office; 4. Company secretary of the bank will be the secretary of the Risk Management

Committee.

(b) Qualifications of the Member:1. Integrity, dedication, and opportunity to spare time in the functions of


2. Each member should be capable of making valuable and effective contributions in the functioning of the committee;

3. To perform his or her role effectively each committee member should have adequate understanding of the detailed responsibilities of the committee membership as well as the bank's business, operations and its risks.

(c) Roles and Responsibilities of the Risk Management Committee:(i) Risk Identification and Control policy: Formulation and implementation of appropriate strategies for risk assessment and its control is the responsibility of Risk Management Committee. Risk Management Committee will monitor risk management policies & methods and amend it if necessary. The committee will review the risk management process to ensure effective prevention and control measures.

(ii) Construction of Organizational Structures The responsibility of Risk Management Committee is to ensure an adequate organizational structure for managing risk within the bank. The Risk Management Committee will supervise formation of separate management level committees and monitor their activities for the compliance of instructions of lending risk, foreign exchange transaction risk, internal control & compliance risk, money laundering risk, information & communication risk including other risk related guidelines.

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Status Remarks

(iii) Analysis and approval of Risk Management Policy Risk management policies & guidelines of the bank should be reviewed annually by the committee. The committee will propose amendments if necessary and send it to the Board of Directors for their approval. Besides, other limits including lending limit should be reviewed at least once annually and should be amended, if necessary.

(iv) Storage of data & Reporting system:Adequate record keeping & reporting system developed by the bank management will be approved by the risk management committee. The committee will ensure proper use of the system. The committee will minute its proposal, suggestions & summary in a specific format & inform the Board of Directors.

(v) Monitoring the implementation of overall Risk Management Policy:Risk Management Committee will monitor proper implementation of overall risk management policies. They will monitor whether proper steps have been taken to mitigate all risks including lending risk, market risk, and management risk.

(vi) Other responsibilities:1. Committee’s decision and suggestions should be submitted to the Board of

Directors quarterly in short form; 2. Comply instructions issued time to time by the controlling body; 3. Internal & external auditor will submit respective evaluation report whenever

required by the committee.

(d) Meetings: 1. The risk management committee should hold at least 4 meetings in a year

and it can sit any time as it may deems fit; 2. The committee may invite Chief Executive Officer, Chief Risk Officer and any

other Officer to its meetings, if it deems necessary; 3. To ensure active participation and contribution by the members, a detailed


4. All decisions/observations of the committee should be noted in minutes.

6. Training of DirectorsThe directors shall make themselves fully aware of the banking laws and other related rules and regulations for performing his duties properly.

7. This Circular is issued to implement Section 15, 15 Kha and 15 Ga of Bank Company Act, 1991 (Amended up to 2018) . - -

8. Enforcement of the Circular.-

With immediate

effect

143


BRPD Circular No.18 of 27th October 2013 and BRPD Circular Letter No.20 dated 23rd December, 2014 and subsequent amendment regarding Appointment and responsibilities of Chief Executive Officer (CEO)


StatusA Rules and regulations for appointing CEO1 Moral Integrity:

In case of appointment to the post of CEO, satisfaction in respect of the concerned person should be ensured to the effects that:a) He has not been convicted by any Criminal Court of Law.b) He has not been punished for violating any rules, regulations or procedures / norms set by any

regulatory authority;c) He was not associated with any such company/organization registration or license of which has

been cancelled.

Complied

2 Experience and Suitability:a) For appointment as a CEO, the concerned person must have experience in banking profession

for at least 15 (fifteen) years as an active officer and at least 2 (two) years experience in a post immediate below the CEO of a bank.

b) He must at least have a Masters Degree from any recognized university. Higher academic education in the field of Economics, Banking and Finance or Business Administration will be treated as additional qualification for the concerned person.

c) In respect of service, the concerned person should have excellent record of performance.d) Satisfaction should be ensured that the concerned person was not dismissed from service

when he was chairman/director/official of any company.e) Any director of any bank or financial institution or any person who has business interest in the

concerned bank will not be eligible for appointment to the post of CEO.

Complied

3 Transparency and financial integrity: Before appointment as a CEO, satisfaction should be ensured to the effects that:

a) The concerned person was not involved in any illegal activity while performing duties in his own or banking profession.

b) He has not suspended payment to creditors or has not compromised with his creditors to be relieved from debt or he is not a loan defaulter;

c) He is not a tax defaulter.

d) He has never been adjudicated an insolvent

Complied

4 Age Limit: No person crossing the age of 65 years shall hold the post of CEO of a Bank. Complied5 Tenure: The tenure of the CEO shall not be more than 03 (three) years, which is renewable. If the

candidate has less than 3 years left to attain 65 years, he/she can be appointed for the shorter period.

Complied

6 Guidelines in fixing the salary and allowance: Banks are required to follow the guidelines stated below while determining the salary and allowances of the CEO and submitting such proposals to Bangladesh Bank.

Complied

a) In fixing the salary and allowances of the CEO, financial condition, scope of operation, business-volume and earning capacity of the Bank; qualifications, achievement of the candidate in the past, age and experience and the remuneration paid to the persons occupying same position in the peer banks shall have to be taken into consideration.

b) Total salary shall be comprised of direct salary covering ‘Basic Salary’ and ‘House Rent’ and allowances as ‘Others’. The allowances (e.g., provident fund, utility bill, leave-fare assistance) in ‘Others’ head should be specified in amount/ceiling. Besides, other facilities (e.g., car, fuel, driver etc), as far as possible, shall have to be converted in the monetary value and thus determining monthly total salary, it shall have to be mentioned in the proposal submitted to BB. In the proposal, Basic Salary, House Rent, Festival Allowance, other allowances and other facilities shall have to be specified in Taka amount.

144



Statusc) Without improving the bank’s major financial indicator like-CAMELS, annual salary increment will

not be payable.

d) Terms of salary-allowances and other facilities as specified in the terms and conditions of appointment cannot be changed during the tenure. In case of renewal, proposal may be made for re-fixation of the salary considering the work performance of the current CEO.

e) The CEO so appointed shall not get any other direct or indirect facilities (e.g., dividend, commission, club expenses, etc.) other than the salary-allowances and other facilities as enumerated in clause (b) above.

f)The bank shall not pay any income tax for the CEO, i.e. the CEO so appointed shall have to pay it.

Complied

7 Incentive Bonus: The CEO will get incentive bonus subject to paying incentive bonus to all executives/officers/workers of the bank and the said bonus amount will not exceed BDT 1,000,000 in a year. Complied

8 Honorarium for attending the Board Meeting: Being a salaried executive, CEO will not get any honorarium for attending the Board meeting or the meeting of any committee formed by the Board Complied

9 Evaluation Report: For reappointment of the CEO, the Chairman of the bank shall have to submit a Board approved evaluation report to Bangladesh Bank. Complied

10 Prior Approval from Bangladesh Bank: Prior approval from Bangladesh Bank is mandatory before appointing CEO as per section 15(4) & (5) of Bank Company Act 1991 (amended up to 2018). For processing such approval, along with the proposal signed by the Chairman of the BoD, the selected person’s complete resume, offer letter (mentioning the direct & indirect remuneration and facilities) and copy of Board’s approval must be submitted to BB. The selected person must also submit declarations as per Annexure A & Annexure B to BB.

Complied

11 Decision of Bangladesh Bank is final: The decision of BB for appointment of the CEO will be treated as final and the CEO so appointed cannot be terminated, released or removed from his/her office without prior approval from BB.

a) In case the CEO desires to terminate the contract before expiry or resign from his office voluntarily, he shall serve at least one-month notice upon the Chairman of the Board stating the actual reason for such resignation, and, at the same time forward a copy of such notice to Bangladesh Bank.

b) In case the Board of the Bank desires to terminate the contract before expiry or asks the CEO to tender resignation from his post, the Board shall serve at least one-month notice stating the reasons for such action; at the same time forward a copy of such notice to Bangladesh Bank and obtain approval of Bangladesh Bank for such removal.

c) When the position of the CEO falls vacant due to resignation, expiry of contract, or any other reason, the bank shall immediately appoint a ‘CEO In-charge’ (for maximum 3 months) among the officials next to the CEO and notify Bangladesh Bank with details of such Officer In-charge.

No such event

B Duties and Responsibilities of CEO: The CEO of the bank, by whatever name called, shall discharge the responsibilities and affect the authorities as follows:a) In terms of the financial, business and administrative authorities vested upon him by the Board,

the CEO shall discharge his own responsibilities. He shall remain accountable for achievement of financial and other business targets by means of business plan, efficient implementation thereof and prudent administrative and financial management.

Complied

b) The CEO shall ensure compliance of the Bank Company Act 1991 and other relevant laws and regulations in discharging routine functions of the bank.

c) At the time of presenting any memorandum in the Board Meeting or Board Committee Meeting, the CEO must point out if there is any deviation from the Bank Company Act, 1991 and other relevant laws and regulations.

d) The CEO shall report to Bangladesh Bank any violation of the Bank Company Act, 1991 or of other laws/regulations.

e) The recruitment and promotion of all staffs of the bank except those in the two tiers below him/her shall rest on the CEO. He/she shall act in such cases in accordance with the approved service rules on the basis of the human resources policy and sancetioned strangth of employees as approved by the board.

f) The authority relating to transfer of and disciplinary measures against the staff, except those at two tiers below the CEO, shall rest on him/her, which he/she shall apply in accordance with the approved service rules. Besides, under the purview of the human resources policy as approved by the Board, he/she shall nominate officers for training, etc.

145


Status of compliance with the conditions imposed by Bangladesh Bank BRPD Circular Letter No.19 dated 27 October 2013 on Contractual appointment of Advisor and Consultant.

Sl No. Particulars Compliance

Status Remarks

A Appointment of Advisor1. Experience and Suitability

For appointment as advisor, the concerned person will have to fulfill the following requirements with regard to experience and qualifications:

a) Experience in Banking or Administration for at least 15 (fifteen) years or have a long experience in social activities;

b) Higher academic education in the field of Economics, Banking and Finance or Business Administration will be treated as additional qualification for the concerned person;

c) Satisfaction should be ensured that the concerned person was not dismissed from his service when he was Chairman/Director/Official of any company;

d) A person who is working in any bank or financial institution or who has business interest in that bank will not be considered eligible for appointment to the post of advisor;

e) Satisfaction should be ensured that the concerned person is not a loan defaulter or tax defaulter and has never been adjudicated an insolvent by the court.

Complied

2. Responsibilities of the Advisor The Advisor can advise the Board of Directors or the Chief Executive only on those matters that are specified in the appointment letter. Routine works or general works will not be included in his term of reference. He can’t exercise any kind of power or can’t participate in the decision making process of financial, administrative, operational or any other activities of the bank.

Complied

3. Prior approval from Bangladesh BankPrior approval from Bangladesh Bank is mandatory before appointing advisor. For such appointment, the justifications of the post of advisor, responsibilities or terms of reference, complete resume of the concerned person, terms of appointment (mentioning remuneration and facilities) and copy of board’s approval must be submitted to Bangladesh Bank. The nominated person has to make a declaration as per Annexure-ka. This declaration must be also submitted to Bangladesh Bank.

Complied

4. Remuneration and other facilities of AdvisorThe post of advisor is not a fixed or substantive post in the bank’s organisation structure. Advisor will not be entitled to salaries and allowances as regular employee except gross amount of remuneration, transport and telephone facilities. Remunerations inconsistent with terms of reference of the advisor will not be considered as acceptable by Bangladesh Bank.

Complied

5. Tenure of Advisor The tenure of the Advisor shall be maximum 01(one) year which is renewable.

Complied

6. Appointment of former executiveFor ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible to become an Advisor in the same bank immediately after his/her retirement or resignation.

Complied

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Sl No. Particulars Compliance

Status Remarks

B Appointment of Consultant1. Terms of reference of Consultant

Consultant can be appointed for specialized tasks like tax, law and legal procedures, engineering and technical works, information technology, etc. Consultants’ appointment should be avoided as much as possible for those works that could be done by regular employees of the Bank

N/A

No Consultant

in office as on 31st

December, 2018

2. Responsibilities of a Consultant The responsibilities or terms of reference of a Consultant are specified. He does not involve in any activities beyond his terms of references

N/A

3. Appointment of a Consultant A Consultant can be appointed with the approval of the BoD. After such appointment, the bank shall send the Consultant’s complete resume, terms of reference and details of remuneration to Bangladesh Bank immediately

N/A

4. Tenure of a Consultant The tenure of a Consultant should be consistent with the terms of reference but would not exceed 02 (two) years

N/A

5. Remuneration/honorarium of a ConsultantThe consultant’s remuneration should be in the form of monthly or single lump-sum payment, he is not entitled to any other facilities.

N/A

6. Appointment of former executiveFor ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible to appointment as a Consultant in the same bank immediately after his/her retirement or resignation.

N/A

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Certificate of Senior Management Team (SMT) regarding the Effectiveness of Internal Control Policy, Practice and ProcedureInternal Control is a process accomplished by the Board of Directors, Senior Management and personnel at all levels. It is not solely a procedure or policy that is performed at a certain point of time, rather it is continually operating at all levels within the Bank. As per guidelines of Bangladesh Bank the Board of Directors and Senior Management are required to take appropriate steps for establishing appropriate culture to facilitate an effective internal control process and for monitoring its effectiveness on an ongoing basis; however, each individual within an organization must participate in the process.

The SMT received an updated "Review Report on the Risk Management of Internal Control and Compliance of the Bank" and reviewed the internal control mechanism in place and different issues on risk management of Internal Control and Compliance, e.g Appropriateness & Effectiveness of Internal Control Environment; Internal Control Objective; Internal Control Policy Guidelines; Organization Structure; Process Guidelines and Internal Control Process of the Bank. The Committee also reviewed the key points of Bangladesh Bank's last Inspection Report on ICC of the Bank alongwith the Bank's Compliance thereof.

The SMT is satisfied that lntenal Control Policy, Practice and Procedure of the Bank are effective and provide a reasonable assurance in achieving objectives of the Bank in respect of (i) reliability of the financial information; (ii) effectiveness and efficiency of operations; (iii) compliance with applicable laws and regulations; (iv) adherence to management policies; (v) safeguarding of Bank's Assets; (vi) prevention and detection of fraud and errors; and (vii) accuracy and completeness of the accounting records. However, internal control environment of the Bank has further been strengthened after implementation of the processes as mentioned in the revised "Guidelines on Internal Control and Compliance in Banks" provided by Bangladesh Bank vide BRPD Circular No.03 dated 08.03.2016 and an amendment of the guideline through BRPD Circular No-04 dated 04.09.2016..


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Report of the Audit Committee (Composition, Role, Meetings, Attendance etc.) and Internal Control

The Audit Committee is an important functional Committee of the Board of Directors of the Bank. It is assigned with oversight of financial reporting, disclosure, regulatory compliance and disciplined banking operation complying with the rules and norms of banking.

Feature and Composition

The Audit Committee was last re-constituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the Corporate Governance Code issued by BSEC on June 03, 2018 and Bangladesh Bank’s BRPD circular no. 11, dated October 27, 2013.

The composition of the present members of the Audit Committee in 2018 is given below:

Sl. No. Name Status in the

BoardStatus in the Committee Educational Qualification

1. Mr. Syed Sajedul Karim Independent Director

Chairman MA BA (Hons)

2. Mrs. Duluma Ahmed Director Member Graduate

3. Mrs. Jusna Ara Kashem Director Member H.S.C

4. Mrs. Rehana Rahman Director Member Graduate

5. Dr. Quazi Mesbahuddin Ahmed Independent Director

Member B.A (Hons), M.A., MEC, MSC., Phd in Economics

Note: Mr. Syed Sajedul Karim was elected in the 23rd AGM, held on 30 June, 2018.

Quorum

Presence of 3 (three) members constitutes a quorum for holding Audit Committee meeting. The Head of Internal Control and Compliance attended the meetings to present the agenda. On invitation, Senior Executives of the Bank including the Managing Director, Chief Financial Officer (CFO) and Head of Risk Management Division attended the meetings to meet instant queries of the Audit Committee to make its decisions fact-based. In addition, Heads of Branches, whose audit reports were placed to the Audit Committee were also present in the meetings to respond to the issues raised in the reports of Internal Control and Compliance Division and Bangladesh Bank.

Terms of Reference of the Audit Committee

i. Board shall appoint non-executive directors of the Bank as members of the Audit Committee excepting Chairman of the Board.

ii. Mr. Syed Sajedul Karim, in his capacity as the Independent Director, shall be the Chairman of the Audit Committee.

iii. Presence of 03 (three) members shall form a quorum.

iv. The quorum of the Audit Committee meeting shall require presence of at least 1 (one) Independent Director.

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v. The tenure of office of the Audit Committee shall be for 3 years.

vi. The Company Secretary shall act as Secretary to the Audit Committee.

vii. The terms of reference of the Audit Committee shall also be as specified in the BRPD Circular No.11 dated October 27, 2013 of Bangladesh Bank and provisions contained in Notification No.BSEC/CMRRCD/2006-158/207/Admin/80 of Bangladesh Securities and Exchange Commission (BSEC), dated 03 June, 2018.

viii. Mr. Zakir Ahmed Khan, Advisor of the Bank, shall remain present in every meeting of the Audit Committee as far as possible and shall give his advice and suggestions for improvement of Bank’s operations and strict compliance with rules of both the Bank and its regulators.

ix. Chairman of the Audit Committee shall remain present in the Annual General Meeting (AGM).

Charter of the Audit Committee

The Audit Committee is constituted by the Board of Directors for the primary purpose of assisting the Board in:

Overseeing the integrity of the company’s financial statement.

Overseeing the improvement of corporate governance standard of the company.

Overseeing the Company’s system of disclosure, internal controls and procedure.

Overseeing Bank’s internal control over financial reporting.

Overseeing Bank’s compliance with ethical standards adopted by the Bank.

Making reports and recommendations to the Board.

Roles and Responsibilities

The role of Audit Committee is to assist the Board in discharging its duties and responsibilities for financial reporting, effective monitoring, corporate governance, internal control, green banking and environmental & climate change risks. The added roles of the Audit Committee include, but not limited to, the following:

i. Overseeing the financial reporting process. ii. Monitoring choice of accounting policies and

principles. iii. Monitoring Internal Audit and Compliance

process including approval of Internal Audit and compliance plan.

iv. Reviewing the Internal Audit and Compliance Report.

v. Overseeing hiring and performance of external auditors.

vi. Reviewing the Annual Financial Statements before submission to the Board for approval or adoption.

vii. Reviewing the quarterly and half-yearly Financial Statements before submission to the Board for approval.

viii. Reviewing the financial statements, in particular the investments made by the subsidiary company.

ix. Reviewing the adequacy of internal audit functions.

x. Reviewing the Management’s Discussion and Analysis before disclosing in the Annual Report

xi. Overseeing the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors.

xii. Reviewing statement of significant party transactions submitted by the management.

xiii. Reviewing Management Letters/ Letter of Internal Control Weakness issued by Statutory Auditors.

xiv. Reviewing the existing Risk Management Policy and procedures to improve the quality of Bank’s assets portfolio.

xv. Reviewing fund raising through Repeat Public Offering/ Rights Issue and its use and application.

xvi. Monitoring internal control process. xvii. Maintaining oversight on regulatory

compliance, ethics and whistle-blower hotlines. xviii. Reviewing Audit Committee’s own terms of

reference.xix. Reviewing the compliance status of the Minutes

of the Audit Committee Meeting.

Reporting of the Audit Committee

The Audit Committee has reported its findings and observations to the Board of Directors. It is also

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required to report to the Bangladesh Securities and Exchange Commission on anything which has material impact on the financial condition and result of operation of the Bank. But such reporting was not necessitated in 2018 as nothing which has/had material impact on the financial condition and results of operation had occurred in the Bank during the year 2018.

Deliberations of the Audit Committee in 2018

During the year 2018, the Audit Committee carried out its regular functions on areas pertaining to its responsibilities. Some of the issues that it discussed and the decisions it took for improvement of operational performance of the Bank are listed below:

i. The Audit Committee reviewed the Financial Statements of the Bank for the year-2018 which include Balance Sheet, Profit and Loss Account, Statement of Changes in Equity, Cash Flow Statement and the disclosures made through Notes to the Accounts.

ii. The Committee recommended the approval

of the Financial Statements of the Bank for the year 2018 to the Board.

iii. The Committee recommended appointment of bank’s external auditors for the year 2018.

iv. The Committee advised the Management to vigorously monitor the risk assets of the Bank especially the loans in different branches that showed signs of weakness for their timely recovery and adjustment.

v. The Audit Committee approved Inspection Plan of the Bank for the year 2018.

vi. The Audit Committee reviewed the un-audited quarterly and half yearly financial statements before their submission to the Board for final review and approval.

vii. The Audit Committee thoroughly reviewed the findings of the Bangladesh Bank Inspection Team on different branches and instructed management to take appropriate actions to prevent repetition of lapses identified in their inspection reports.

viii. The Audit Committee reviewed the Annual Summary Report on Audit Findings-2018 and advised for strong monitoring of non-performing loans of different branches for their timely

adjustment and turning them into performing loans. The Committee also advised to obtain additional collateral against the loan where there is no collateral or inadequate collateral on best effort basis to safeguard Bank’s interest.

ix. The Committee reviewed the Bank’s Self Assessment of Anti-Fraud Internal Controls and advised to adhere to guidance-notes of Bangladesh Bank to avert attempts of frauds and forgeries in the Bank.

x. The Audit Committee reviewed periodic recovery positions of the Bank against classified, re-scheduled and written-off loans and gave suitable decisions.

xi. The Audit Committee examined the certificate of the Senior Management Team (SMT) regarding the effectiveness of Internal Control, Policy, Practice and Procedures.

xii. The Audit Committee reviewed the Integrated Health Report of the Bank for the year 2018 and referred it to the Board of Directors for approval. The Committee advised the Management to conduct the operations of the Bank in such a way that Bank’s financial health, ICC health, and Image and Reputational health are improved significantly.

Report to the Board

All findings and decisions of the Audit Committee were reported to the Board and the Board closely reviewed and ratified them.

Minutes of Audit Committee to Bangladesh Bank

The minutes of meetings of the Audit Committee were sent to Bangladesh Bank for their information.

Reporting to the Regulatory Authorities

There had not been any occurrence in the Bank that required reporting to the relevant authorities by the Bank’s Audit Committee.

Syed Sajedul KarimChairman Audit Committee of the Board

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Internal Controland Compliance

The internal control process has become more extensive, addressing all the various risks faced by banking organization. It is recognized that a sound internal control process is critical to a bank’s ability to meet its established goals and to maintain its financial viability. The BoD’s Audit Committee of Southeast Bank Limited (SEBL) carried out its responsibilities diligently to ensure effective functioning of the following five interrelated elements of internal control :

The members of Audit Committee have adequate knowledge of financial reporting and internal controls and the Audit Committee on behalf of the BoD of SEBL performs the essential activities to make sure that an adequate and effective system of internal controls is established and maintained within the bank. These activities includes (a) periodic discussions with management concerning the effectiveness of the internal control system; (b) a timely review of evaluations of internal controls made by management, internal auditors, and external auditors; (c) periodic efforts to ensure that management has appropriately followed up on recommendations and concerns expressed by auditors and supervisory authorities on internal control weaknesses; and (d) a periodic review of the appropriateness of the bank’s strategy and risk limits.

Senior Management of SEBL carries out the directives of BoD and has established a well documented organizational structure that clearly shows lines of reporting responsibility and authority and provides for effective communication throughout the bank. The words, attitudes and actions of the BoD and Senior Management in their business dealings, both inside and outside the bank display the ethical values, integrity and control culture. Everyone at all levels

within the bank recognizes the need to carry out his responsibilities effectively and to communicate to the appropriate level of management for any problems in operations, instances of non-compliance with the code of conduct, or other policy violations or illegal actions that are noticed.

The assessment and continuous evaluation of the risks, that could adversely affect the achievement of bank’s objectives, are conducted at the level of individual business and across the wide spectrum of activities including subsidiaries. The bank also evaluates whether to accept those risks or the extent to which it wishes to mitigate the risks through control procedure or to withdraw from or reduce the level of business activity concerned. SEBL has established an appropriate control structure with control activities defined at every business level and these control activities are an integral part of its daily operation. SEBL also has an effective information and communication system that provides reliable and timely information in a consistent format. The overall effectiveness of its internal controls is monitored on an ongoing basis. Monitoring of key risks is part of bank’s daily activities and it is evaluated periodically by the business lines and internal audit.

Management oversight and

the control culture;

Risk recognition

and assessment;

Control activities and segregation of

duties;

Information and

communication; and

Monitoring activities and

correcting deficiencies

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Report of theRisk Management Committee

The Bank Company Act-1991 (Amended up to 2018), inter alia, provided for constitution of a Risk Management Committee of the Board of Directors of every Bank. The committee will scrutinize whether appropriate risk management measures are being put in place and applied and whether adequate capital and provision is being maintained against different risks.

Feature and Composition

The Risk Management Committee was reconstituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the BRPD circular no. 11, dated October 27, 2013 issued by Bangladesh Bank. The composition of the Risk Management Committee in 2018 is given below:

Sl. Name Status with the Bank Status with the Committee

1 Mr. Alamgir Kabir, FCA Chairman Chairman

2 Mr. M. A. Kashem Director Member

3 Mr. Azim Uddin Ahmed Director Member

4 Mr. Syed Sajedul Karim Independent Director Member

Note: Mr. Syed Sajedul Karim was elected in the 23rd AGM held on June 30, 2018.

Structure of the Risk Management Committee

1. The Chairman of the Board of Directors of the Bank shall be the Chairman of the Risk Management Committee.

2. Presence of 3 (three) members in a meeting of the Committee shall form quorum.

3. The Company Secretary of the Bank shall act as the Secretary to the Risk Management Committee of the Board.

Functions of the Risk Management Committee

a. Formulating and reviewing risk management policies and strategies for sound risk management.

b. Monitoring implementation of risk management policies and process to ensure effective prevention and control measures.

c. Ensuring construction of adequate organizational structure for managing risks within the Bank.

d. Supervising the activities of Executive Risk Management Committee (ERMC).

e. Ensuring compliance of Bangladesh Bank instructions regarding implementation of core risk management.

f. Ensuring formulation and review of risk appetite, limits and recommending these to Board of Directors for their review and approval.

g. Approving adequate record keeping and reporting system and ensuring its proper use.

h. Holding at least four meetings in a year and more if deemed necessary.

i. Submitting proposal, suggestions & summary of BRMC meetings to the Board of Directors at least on quarterly basis.

j. Complying with instructions issued from time to time by the regulatory body.

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k. Analyzing all existing and probable risk issues in the meeting and taking appropriate decisions for risk mitigation.

l. Ensuring sufficient and efficient staff resources for RMD.

m. Establishing standards of ethics and integrity for staff and enforcing these standards.

Deliberation of the Risk Management Committee in 2018

During the year 2018, the main issues the committee discussed and the decisions it took for improvement of risk management scenario in the Bank are enumerated below:

1. Quarterly reviewed the report on Risk Management Activities and Minimum Capital Requirement (MCR) of the Bank.

2. Periodically reviewed the Bank’s Stress Testing report.

3. Periodically reviewed the Bank’s Capital mix.

4. Reviewed the ICAAP report under Supervisory Review Process.

5. Reviewed the following policies and guidelines of the Bank:

a. Risk management guidelines.

b. Policy on Supervisory Review Process and ICAAP Methodology.

c. Credit Risk Management guidelines.

d. Manual on Internal Control and Compliance.

e. ICT Security Policy.

f. SEBL Manual for Preventing the Risk of Money Laundering and Terrorist Financing.

g. Asset Liability Management (ALM) Manual (policy statement), Contingency Funding Plan (CFP), Wholesale Borrowing and Lending Guideline, Swapped Fund Guideline.

h. Foreign Exchange Risk Management Manual.

6. Advised the management to regularly monitor Bank’s Large Loans to protect Bank’s exposure.

7. Advised the management to strictly follow the single borrower exposure limit as per the guidelines of Bangladesh Bank.

8. Advised the management to monitor the Non Performing Loans of the Bank constantly to bring those back to performing status.

Reporting to the Board

The decisions and recommendations of the Risk Management Committee were submitted before the Board of Directors and the Board closely reviewed and ratified them.

Submitting Minutes of Risk Management Committee to Bangladesh Bank

The minutes of meetings of the Risk Management Committee were submitted to Bangladesh Bank for their information.

Alamgir Kabir, FCA ChairmanRisk Management Committee of the Board

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Evaluation of the Quarterly Financials by the Audit Committee and by the Board

As per the regulatory requirement of Bangladesh Securities and Exchange Commission (BSEC), Bank has prepared and presented Quarter Ended Financial Statements. These statements are prepared in accordance with BAS (Bangladesh Accounting Standards). The statements are sent to Audit committee for review. After reviewing by the Audit Committee and approval by the Board, the statements are finally submitted to Bangladesh Securities and Exchange Commission (BSEC). Afterwards, the Quarter Ended Financial Statements are published in several daily newspapers. The statement is also published in the website of the bank.

BDT In Million

Particulars

2018 2017 2018 2017 2018 2017 2018 2017

1 Jan'18 to 31

Dec'18

1 Jan'17 to 31

Dec'17

1 Jan '18 to 30 Sep

'18

1 Jan '17 to 30 Sep

'17

1 Jan '18 to 30

June '18

1 Jan '17 to 30

June '17

1 Jan '18 to

31 Mar '18

1 Jan '17 to

31 Mar '17

4th Qtr. 4th Qtr. 3rd Qtr. 3rd Qtr. 2nd Qtr. 2nd Qtr. 1st Qtr. 1st Qtr.

Balance Sheet - - - - - -

Cash 21,515 20,979 19,563 19,483 22,072 18,900 20,751 18,466

Money at call and on short notice 6,897 3,644 5,046 1,304 6,468 293 8,415 4,857

Loans and advances/investments 267,672 234,317 260,018 217,746 257,314 206,957 243,102 197,693Fixed assets including premises, furniture and fixtures 9,337 9,322 9,309 9,349 9,342 9,375 9,278 8,947

Other assets 4,110 3,836 4,172 3,754 3,790 3,461 3,562 2,905

Total assets 381,576 339,288 366,987 315,651 367,868 303,831 352,903 300,178Borrowings from other banks, financial institutions and agents 11,212 10,182 11,014 9,708 14,531 10,669 10,909 8,277

Subordinated bond 11,800 7,400 12,400 8,000 7,400 8,000 7,400 8,000

Deposits and other accounts 289,335 269,828 284,057 248,101 288,782 237,870 280,914 234,976

Other liabilities 32,102 26,045 31,247 22,922 29,887 21,509 27,263 21,223

Total liabilities 353,449 313,454 338,717 288,732 340,600 278,047 326,486 272,477

Paid up capital 10,545 9,170 10,545 9,170 9,170 9,170 9,170 9,170

Total shareholders' equity 28,117 25,824 28,260 26,909 27,258 25,774 26,406 27,691

Total liabilities and shareholders' equity 381,576 339,288 366,987 315,651 367,868 303,831 352,903 300,178

Off- Balance Sheet Items 145,505 142,497 152,143 134,020 149,990 125,110 154,104 123,039

Profit And Loss Account

Net interest income/net profit on investments 5,200 4,028 3,491 2,645 2,288 1,646 1,202 833

Total operating income (A) 14,962 13,933 10,611 9,953 6,888 6,441 3,597 3,173

Total operating expenses (B) 5,179 4,871 3,637 3,431 2,375 2,140 1,154 1,016

Profit before provision (C=A-B) 9,783 9,062 6,974 6,522 4,513 4,301 2,443 2,157

Net profit after taxation 24,73 1,169 2,472 2,367 1,590 1,187 626 877

Earnings Per Share (EPS) 2.35 1.11 2.34 2.24 (Restd) 1.73 1.29 0.68 0.96

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Report of the Bank’sShariah Supervisory CommitteeBismillahir Rahmanir Rahim

All Praise is for Allah, The Most Beneficent, The Most Merciful. Allah, alone without partner or associate.

Muhammad (SWS) is His true worshipper and Messenger, his family and his companions.

The shareholders, depositors and customers of Southeast Bank Limited:

The Shariah Supervisory Committee reviewed different operational issues including those referred by the Management of the Bank. It gave necessary guidelines and counseling.

In carrying out the roles and responsibilities of the Shariah Supervisory Committee of the Bank as prescribed in the Shariah Governance Framework in Guidelines of Bangladesh Bank, we hereby report the following facts and circumstances concerning Bank’s Islamic banking services in the financial year ended December 31, 2018.

During the Year 2018, Shariah Supervisory Committee of Southeast Bank Limited held 03(three) formal meetings.

The Shariah Supervisory Committee advised to arrange Shariah Inspection of every Branch twice in a year and ensure compliance of shariah requirements in Bank’s Islamic Banking operations.

Training Program on Islamic Banking were arranged. Members of Shariah Supervisory Committee and experts in Islamic Banking were

Assalamu Alaikum Warahmatullahi Wabarakatahu.

Southeast Bank Limited has constituted a Shariah Supervisory Committee with experienced and knowledgeable persons in Islamic jurisprudence to advise and provide guidance on Islamic Banking operations. The following veterans versed in Islamic jurisprudence are the Faquih Members on the Shariah Supervisory Committee:

invited to speak to the participants in such training programs.

The people that work in Bank’s Islamic banking branches as well as Islamic Banking Division at Head Office are sufficiently trained to offer best Islamic banking services complying with Shariah principles.

The Islamic Banking Branches were advised to move aggressively to procure more low-cost and no-cost deposit by increasing the number of Accounts and number of deposit customers of the Islamic Banking Branches to improve their deposit-mix.

The Shariah Supervisory Committee advised to park more fresh investment clients in the Islamic Banking Branches.

The Shariah Supervisory Committee approved the Branding of Islamic Banking products within one folder named “Tijarah”. The Committee also advised that the folder containing the salient features of Bank’s Islamic Banking Products should be provided to the Islamic Banking Branches. The instruction was complied.

01. Professor Moulana Mohammad Salah-Uddin Khateeb, Baitul Mukaram National Mosque, Dhaka, and former Principal, Madrasha-e-Alia, Dhaka.

Chairman

02. Mr. M. Kamaluddin ChowdhuryFormer Managing Director of Islami Bank Bangladesh Ltd. and Shahjalal Islami Bank Ltd.

Member

03. Moulana Mohammad Kafiluddin Sarker Principal, Dhaka Nesaria Kamil Madrasa and Khateeb, Aminbagh Jame Mosque

Member

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Considering the good experience of the previous year, the Shariah Supervisory Committee advised to take pragmatic steps to extend the Bank’s services to more Hajjis through all our Branches in the coming year 2019 in the following manner.

i) To take steps to display Hajj banner at prominent places of the branches when Hajj activities will start.

ii To encourage the Branches for issuing Bank Guarantees in favour of parties engaged in organizing Umrah exercising due diligence and observing all norms to boost up operational income of the Branches.

ii) To contact with the nearest registered Hajj Agencies of all the Branches for more Bank guarantee business.

The Shariah Supervisory Committee advised to adopt a 02 (two) year’s Business Strategies and Operational Policy and Plan: 2019-2020 in respect of all areas of Islamic Banking business.

Considering among others sector wise investment, low cost deposit mobilization, number of Account opened.

i) To determine annual performance Budget for 2019 and 2020 separately within the said Strategic Plan.

ii) To determine the priority sector investment areas for Islamic Banking Branches to cope with other peers.

iii) To determine target of minimum 10% annual incremental growth for Islamic Banking Branches by 2020 based on the position as on 31-12-2018.

Shariah Inspection reports of Islamic banking operation of the Bank of the year 2018 We further report that:

i) The Bank engaged one Muraquib for Shariah inspection of Bank’s five Islamic Banking Branches. The Muraquib has been performing his duties satisfactorily.

ii) The Shariah Supervisory Committee stressed upon frequent inspection of the Islamic banking branches. The Management of the Bank confirmed that all the Islamic banking branches were inspected by the Muraquib in 2018. It was observed from the inspection reports that compliance of Shariah has significantly improved during the year.

iii) No deviation of any Shariah requirement was reported to the Shariah Supervisory Committee by the Management.

iv) Efforts regarding engagement of buying agents at branch level has been strengthened . They are being made aware and inspired to comply with shariah requirements in the discharge of their duties as the buying agents.

May Allah give us tawfique to achieve His satisfaction through implementation of Shariah principles in every sphere of our life including those applicable to banking transactions. Ameen.

PROF. MOULANA MOHAMMAD SALAH-UDDINChairmanShariah Supervisory Committee

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Management Review,Responsibility and EvaluationCorporate Banking 159-163

SME, Agri-Credit and Financial Inclusion 164-170

Retail Banking 171-172

Glimpses of some Projects Financed by SEBL 173-179

Islamic Banking 180-181

International Business Operations 182-185

Off-Shore Banking Operations 186

Treasury Management 187-188

Foreign Remittance 189

SEBL Credit Card 190

Alternative Delivery Channel 191-192

Credit Risk Management in Southeast Bank Limited 193-194

Risk Management Practices in Southeast Bank Limited 195-196

Prevention of Money Laundering 197

Information Technology (IT) and Cyber Security Measures 198

Credit Rating 199

Capital Plan 200-201

Statement of Non-Performing Loan 201-204

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CorporateBanking

Southeast Bank always remains vibrant to the changes of customers’ need and choice with the passage of time. Products and policies are redesigned and revised taking the time-befitting features into consideration to meet the diversified needs of the customers irrespective of business size and location.

Corporate Banking is a major source of profit for a bank being the main originator of customer loans. Corporate Banking is the custom-tailored financing and banking services for corporate houses. Such Banking is typically offered by commercial banks and entails all the services that can be extended on a financial level to corporate entities to ease day-to-day operations. Cash management, working capital and project finance are some sorts of products generally available under such banking.

Likewise, the Corporate Banking Division (CBD) of Southeast Bank is engaged in planning, developing and managing the Bank’s corporate, commercial and institutional business to ensure desired profitability and sustained growth in line with the Bank’s strategic plans, credit policies and business objectives.

Southeast Bank finances its corporate clients generally in the following ways –

Export Finance

Project Finance

Trade Finance

Working Capital Finance

Work Order Finance

Real Estate Finance

Syndicated Finance

Besides, Southeast Bank has also set up a Cash Management Services Unit which mainly looks after mobilization of low-cost/ no-cost funds of the corporate houses by providing various tailor made services to them. In the coming years, the Bank will exert enhanced effort for more dynamism in such cash management activities.

In the year 2018, Southeast Bank’s strategic priorities were growth and profitability whilst maintaining asset quality and strengthening the foundations for future growth. During the period, the Bank continued to provide comprehensive and innovative banking solutions to its corporate clients including financial institutions.

Maximization of profitability through promotion of lending products and appropriate loan pricing are the primary focus of the Bank’s Corporate Banking Division. Diversification of credit portfolio in promising and productive sectors is also one of the prime objectives. The strategy of CBD is to maintain a prudent mix of various client segments and products, economic sectors, geographical locations, currency and maturity in commensurate with economic and business trend, life cycle of the products, demand-supply gap, social obligation, etc.

The overall credit policy of Southeast Bank has already been revised and updated incorporating the changes and new aspects in the light of guidelines of Bangladesh Bank to ensure effective credit risk management and compliance with the regulatory framework. Corporate Banking activities of Southeast Bank are carried out addressing appropriate credit risk environment, sound credit approval process, suitable credit administration, measurement and monitoring process and adequate control over credit risk.

Southeast Bank sets specific industry-wise lending caps considering the existing concentration, risk appetite, future growth opportunities, etc. Lending caps discourage concentration of Bank’s global loan portfolio into one particular sector and encourage diversification of the total loan in various sectors with a view to minimizing concentration risk and to maximize the future growth of the Bank.

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On the other hand, considering the cyclical aspects, economic condition, seasonal fluctuation, political environment, related risk factors as well as growth appetite in each sector, Corporate financing activities follows a prudent sector-wise budgetary allocation as per annual credit plan.

Based on the policy guidelines given by the Board of Directors and catering to the ongoing requirements of the entrepreneurs and the economy, the management of the Bank periodically updates the policies and strategies in line with policy-parameters of the central bank with due approval of the Board of Directors.

Year-wise position of Loans & Advances of Southeast Bank is given below:

YearOutstanding at

the end of the year(BDT in Millions)

GrowthRate

2018 267,671.63 14.23%

2017 234,316.72 22.13%

2016 191,865.59 13.61%

2015 168,878.46 14.83%

2014 147,070.81 9.05%

Outstanding at the end of the year(BDT in million)

300,000.00

100,000.002014 2015 2016 2017

Export Finance

The export sector in Bangladesh has grown significantly making a major contribution to the national economy and is playing an important role in employment generation and foreign currency earnings. In the fiscal year 2017-18, Bangladesh exported goods worth BDT 2,922.24 billion where the contribution of RMG sector is 82.82 percent. Southeast Bank has been financing in the export sector on priority basis and at present, a sizeable portion of Bank’s total loan portfolio belongs to around 200 export clients. During the year 2018, the Bank has handled export business to the tune of BDT 190,402.80 million.

A dedicated unit named as ‘RMG, Textile and Export Financing Unit’ at Head Office has been handling the credit portfolio of export-oriented clients. This client base includes entrepreneurs in RMG - both Woven & Knit, Sweater, Textiles, Home Textiles, Spinning, RMG accessories, Jute and Jute goods and Leather goods. Southeast Bank extends both project finance and working capital finance to its export clients.

Southeast Bank extends all types of facilities and services to the export oriented organizations. SEBL continuously enriches its service basket for the exporters some of which are listed below,

L/C Advising

L/C Transfer

Facilitate export against L/C and sales contract

Facilitate buying house activities

Export financing

Documentary collection

Issuance of different certificate as and when required by the exporter

Maintain different FC account (FC, ERQ etc.)

Different advisory services

Facilitate different schemes provided by government & foreign bodies, such as;

Cash incentive

LTFF

EEF

EDF

GTF

The teams working in export financing in Head Office and Branches not only conduct detailed and

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proper analysis of the clients’ requirements but also ensure meticulous compliance with Bank’s RMG /Export financing guidelines, Export and Import policies, Foreign Exchange regulations, Circulars of Bangladesh Bank and other prevailing rules and regulations of the regulatory bodies. Periodic visits are made to clients’ factories as a part of regular monitoring.

Year Export Performance(BDT in Million)

GrowthRate

2018 190,402.80 13.63%

2017 167,562.98 14.29%

2016 146,606.09 15.96%

2015 126,423.89 12.74%

2014 112,137.60 17.77%

Outstanding at the end of the year(BDT in million)

200,000.00

150,000.00

100,000.002014 2015 2016 2017

Outstanding at the end of the year (BDT in million)

Trade Finance

A significant portion of the Bank’s credit portfolio is distributed amongst trading sector. The portfolio is diversified in commodity trading, construction and supply business, import financing, work order financing, stopgap funding, fixed asset procurement, bill purchase etc. This Trade Finance and General Credit unit of Corporate Banking deals with various client segments for different economic purposes in trading, manufacturing and service sectors.

The Trade Finance and General Credit proposals are forwarded to Head Office by the Branches dispersed all over the country. The credit applications are then processed for approval by the Trade Finance and General Credit unit complying with Bank’s credit

policy and rules and regulations of Bangladesh Bank and other regulatory authorities. During this process, the officials meet the clients and visit their business premises for better understanding of their needs and for appropriate evaluations of their proposals. This process of appraisal is done for all types of credit facilities including Term Loan, Overdraft, Time Loan, Letter of Credit, Loan against Trust Receipt, different types of Bank Guarantees such as Bid Bond, Performance Guarantee, Advance Payment Guarantee, Security Bond, Customs Guarantee, etc.

In the year 2018, a good number of corporate clients have availed Trade Finance and General Credit products from the Bank. During this period, the Bank extended facilities in the form of working capital credit as well as Term Loan to both existing and new clients in the fields of food items, edible oil, other consumer items, food processing, rice mill, feed mill, petroleum, chemical, printing & packaging, publishing, ship breaking, construction materials, furniture & saw mill, IT, electronic goods, deemed export, etc.

Project Finance

Southeast Bank provides Project Finance for setting up / Balancing, Modernization, Rehabilitation and Expansion (BMRE) of Manufacturing and Service Industries. There is a dedicated cell named ‘Project Cell’ at our Head Office which handles all sorts of credit proposals of the clients (excluding the clients under RMG, Syndication & SME cell) related to project finance covering:

(i) Construction of new factory building of the new project.

(ii) BMRE of the existing projects financed by our Bank and other Bank(s).

(iii) Setting up new project with new line of business of the existing client.

(iv) Working Capital finance to the newly set up project.

(v) Working Capital finance to the existing project with our Bank and other Bank(s).

(vi) Setting up LPG storage, bottling & distribution plant.

(vii) Construction of inland & coastal ship.

(viii) Setting up Amusement park & resort.

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(ix) Construction of residential/commercial building.Project Finance is generally provided in the form of Term Loan to facilitate the client for procurement of fixed assets, such as capital machinery, auxiliary machinery & equipment, shed / building, etc. Project Finance is usually followed by Working Capital Finance to meet day to day operational expenses of the project so that the project can run profitably to repay the Bank’s dues.

A detailed appraisal called feasibility study is carried out before financing a project. The major aspects include Technical Appraisal, Marketing Appraisal, Financial Appraisal, Managerial Appraisal and Organizational Appraisal. Working Capital assessment is also done for Working Capital Finance for the project to ensure smooth operation of the project.

Since inception, Southeast Bank has been an active partner of the private sector in developing large and medium scale industries of the country. The Bank has financed setting up of various industrial units in the areas of Spinning, Textile, Garments, Pharmaceutical, Ceramic, Cement, Paper, Telecommunication, Steel, etc. The Bank has also extended project finance to several service industries, such as hotel, resort, hospital, educational institution, transport, filling station, etc. The Bank has also financed a good number of real estate projects.

Work Order Finance

Southeast Bank provides financial support – both funded & non-funded credit facilities to the contractors to execute work orders issued by various departments/ divisions of Government as well as different private organizations acceptable to the Bank. The Bank participated in several mega projects of the Government by financing the relevant contractors. In 2017, the Bank continued to facilitate reputed contractors having sound track record for implementation of projects of LGED, Roads and Highways Department (RHD), Railway, City Corporation and other organizations. Bank’s work order financing products also cater to the need of contractors engaged in execution of supply orders.

Real Estate Finance

Real estate is an important sector for the development of an economy. Private sector real estate business has a huge growth prospect in this densely-populated country since a large segment of population belonging to middle and growing middle class prefer to buy apartments. Despite such potential opportunity, the housing sector has been facing setback since 2007/2008. The real estate sector had to suffer severe sales-decline during this period. There is a long queue of unsold flats now. All the entrepreneurs in this sector have been suffering from sluggish sales trend.

Banks and other financial institutions seem to be reluctant to finance the developers in the prevailing condition of this sector. In the year 2018, Southeast Bank’s policy was to maintain the portfolio in real estate sector in a good shape and side by side to finance new real estate projects having extraordinary potential. The Bank is of the opinion that the full opportunity of the housing finance sector can be realized only if all-out efforts are made to develop the housing finance market on sustainable and sound footing.

Syndicated Finance

The main objective of the Syndicated Finance and Club Finance is to spread and share the credit risk among and with all the participating Banks for specific investment. Southeast Bank is acting as one of the Lead Arrangers as well as participants in the Banking industry of the country for development/ operation of different projects under Syndication / Club Financing Arrangement. Some of the sectors financed by the Bank through Syndication are textile, cement, steel, ceramic, refined sugar & oil, paper & pulp, aviation, hospital, University, telecom, power, aviation etc.

As a Lead Bank, Southeast Bank arranged a good number of Syndication deal with total facility of around BDT 3500.00 million. On the other hand, Bank’s participation in different Syndicated/ Club finance arrangement was around BDT 15300.00 million till 2018. In 2018 the Bank participated in a

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number of Syndication deals with total approval of BDT 500.00 million in food and allied industries.

Performance in 2018

Funded Business

In 2018, the Banking Industry of Bangladesh experienced a slow credit growth due to sluggish credit demand by the private sector and it was obviously a major challenge for Southeast Bank. The Bank has always focused on the ‘quality’ aspect of credit with cautious augmentation of its credit portfolio. During the year 2018, the Bank exerted continuous and all-out effort to attract more ‘quality’ customers to maintain the ongoing growth of loans & advances and strengthen further its credit portfolio.

In 2018 the Bank successfully accelerated growth of its funded business. The accumulated loans and advances of the Bank stood at BDT 267,671.63 million as on December 31, 2018 compared to previous year’s position at BDT 234,316.72 million registering a growth of 14.23 percent over the previous year. The Bank was able to maintain a prudent Loan Deposit Ratio throughout the year and it stood at 81.55 percent at the year end.

Non-funded Business

The Bank registered a positive growth of 12.50 percent in import business in 2018 as compared to that of previous year. The volume of import business payments (FOB) in 2018 was BDT 242,294.82 million while the same in 2017 was BDT 215,379.77 million. The main import commodities were capital machinery, raw cotton, scrap vessels, cement clinkers, wheat, edible oil, petroleum products, yarn, fabrics, garment accessories and other consumer items.

The export business of the Bank increased by 13.63 percent in 2018. In the year 2018 the volume of the Bank’s export business was BDT 190,402.80 million which was BDT 167,562.98 million in the previous year. The main export commodities were readymade garments, knitwear, frozen food, shrimp, handicrafts, jute & jute goods, etc.

The Bank registered a positive growth in Bank Guarantee business too. The volume of this business was BDT 22,420.10 million in 2018 while it was BDT 16,407.09 million in 2017, posting a growth of 36.65 percent.

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SME, Agri-Credit andFinancial Inclusion

Like any other developing economies Small & medium enterprises (SMEs) constitute an important component of Bangladesh Economy. Their role is significant in not only contributing to growth but also meeting the aspirations of a developing economy. Our Bank attached with SMEs not only in terms of lending, but also by providing support in other areas like transaction banking and Savings mobilization of SMEs and offer complete banking solutions to SMEs across industry segments with a suite of products customized to their business needs. Our bank has Special SME Officers in all our branches to cater service to Micro, Small and medium enterprises.

Year 2018 was a fascinating period for SME business because Bank had a strategic priority in this segment. Bank focused on careful portfolio growth maintaining a cautious outlook on some sectors. We continued to focus on strengthening our delivery capabilities for SME customers by increasing rural and sub urban branches

Southeast Bank has always viewed the SME segment as integral to Bangladesh’s growth and will continue to partner with them while building a healthy portfolio. A strong SME sector is fundamental to building a resilient and dynamic corporate sector as the Bank acknowledges their complementary role in business ecosystem.

Outstanding SME loan of the Bank as on December 31, 2018 stood at BDT 73,769.60 million compared to 37491.54 million as on December 31, 2017, registering a growth of 96.74%. In 2018, the Bank disbursed BDT 58,921.20 million to clients through all its branches.

Our Growth in Small and Micro Enterprises is very remarkable. Since we felt that smaller segment of SME’s access to finance is more challenging we have concentrated more in this segment and as a consequence in last 2 years small Enterprises outstanding experienced very fast growth.

SME Disbursement

BDT in Million Year Target Achievement2014 25,000 30,8772015 27,500 35,3492016 30,000 40,0002017 40,000 37,4192018 55,000 58,920

Trade54%

Manu:25%

Sectorwise Disbursement in SMEService

21%

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SME Strategy:

To concentrate more in SME banking Southeast Bank adopted a medium term SME strategy in 2016. In line with Bank’s medium term SME strategy Bank segregated SME Business and underwriting from other Business Segments. As evident in our disbursement in SME segment and due to Branch expansion in SME centric areas SME is continuing

Cluster Based SME Financing and refinancing programs

Currently, cluster-based SME development is a popular approach for entrepreneurship development, SME promotion and industrialization with a view to facilitating employment generation and poverty alleviation around the world, especially in emerging economies. In Bangladesh it is considered be the most effective, economically

to remain the fastest growing business segment in the Bank.

The following five fundamental areas have been covered in the strategy: (1) SME focus and execution capabilities; (2) market segmentation, products and services; (3) sales culture and delivery channels; (4) credit risk management; and (5) IT and MIS.

viable and maximum output-oriented approach for economic development.

As per guidelines of Bangladesh Bank SEBL has already adopted a cluster-based financing approach for SMEs in some industrial sector such as Textile, RMG Accessories, Food processing, Dairy & Poultry, Fisheries etc. we are hopeful that we are able to expand cluster based SME financing all over the country in the upcoming years through development of new cluster.

The SME Strategy will streamline a robust Risk management strategy for SME Banking.

SME RISKMANGAGMENT

Understandingthe Market

Developproducts

and Service

Acquire &Screen

SME Clients

ServeSME Clients

Information& Knowledge

Quantifying Risk

Sub-Segmentation

Enhance Predictive

Capabilities

Loan Pricing

Security & Collateral

Non Lending Relationship

Learning from Existing Loans

Internal&

External Data

Separate Business from Risk & Operations

Dedicate Staff

ProvideAdvisoryService

Centralized Team

Using PortfolioData

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SEBL started a Cluster Financing for Hosiery industry in Pabna in collaboration with SME foundation. Each eligible micro and small entrepreneur will enjoy credit facility of BDT 50.00 thousand to Tk.10.00 lac at the interest rate of 9.00 percent from Southeast Bank Limited under the SME Foundation's Credit Wholesaling Program. So far 67 members of the cluster received BDT 28.90 million.

In order to support our SME clients Bank signed agreement with Bangladesh Bank for availing following low cost refinancing windows of Bangladesh Bank:

Women Refinance Scheme

SME Development fund –ADB (SMEDP-2)

JICA Assisted SME Refinance

Refinancing Scheme for Agro based Industry

In 2018 our 16 clients received BDT 30.80 million from Women refinance, 7 clients received BDT 60.01 million from SME- DP 2 and 1 client received BDT 452.00 million from JICA assisted refinance scheme. Rural & Inclusive Banking

Bangladesh rural market presents significant growth opportunities as the market adapts to rapidly growing mobile connectivity and access to formal financial services. The Bank’s rural strategy is focused on leveraging these trends and building a sustainable model for extending financial services to rural customers. This is being made possible by offering them a comprehensive product suite backed by Mobile based technology Service called TeleCash. The Bank has set up a distribution network over the last few years to reach customers in this market. Bank this year successfully launched a new program to lend Mobile banking clients. The Bank has developed customized financial products and services to cater to a wide range of rural customers including farmers, traders, processors, as well as rural entrepreneurs. School banking is also a part of our financial inclusion strategy.

The Bank offers various types of loans covering the entire agricultural value chain including loans to seed/input dealers, crop loans and loans for

purchasing irrigation equipment, raising cattle and purchasing farm equipments through MFI (Micro Financial Institutions) linkage.

Social & Environmental Management and sustainable Finance

Environmental consciousness is nothing new in our Bank. Ethical principles (in respect of society) of our Bank includes following:

1. We do not encourage projects which are not environment-friendly for financing by the Bank.

2. We provide materials support for protection of environment.

As a Bank we recognize that balancing non-financial factors such as environmental and social issues with financial priorities is an essential part of good corporate citizenship in addition to being fundamental to risk management and the protection of investors. We have a direct impact on the environment through our daily consumption of energy and paper/Ink resources. We also potentially have an indirect effect on the environment through the provision of financial services to projects in environmentally sensitive areas.

We ensure we build a sustainable business that brings benefit to our shareholders, society, the environment and economy. Our existing Environmental Policy provides a framework for managing our environmental impacts (including climate change) by establishing a set of commitments to deliver.

As per the above principles, we have implemented Environmental Due Diligence on majority of our loan clients.

Various steps have been taken to minimize the bank’s direct operational impact to the environment to reduce Paper usage and help save Trees and to reduce energy & water consumption.2018 has been a remarkable year for Sustainable finance activities. This year we successfully implemented Bangladesh Bank’s new guideline for Social and Environmental management system and its reporting.

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Environmental and social risk means the risk of causing pollution or destruction of the natural environment (land, water, air. natural habitats, animals and plant species) and violation of human rights for employees or other stakeholders either through accidental or deliberate actions.

We recognize that our primary impact on the natural environment is through our relationship with our customers and the lending decisions we take. Therefore:

All our lending proposals include consideration of environmental and social issues where appropriate

All lending proposals take account of acceptable environmental and social standards or laws and regulations

The risks associated with both environmental and social issues are properly recognized, evaluated and where appropriate mitigated.

Global Climate Partnership Fund

SEBL takes pride for its partnership with a prominent Energy fund named Global Climate partnership Fund (GCPF) managed by Responsibility AG of Switzerland. In 2018 bank progressed significantly to utilize $ 20.00 million fund. SEBL under a technical assistance of GCPF engaged Frankfurt School of Management and Finance -a renowned European Educational institution for capacity building in Energy Efficiency and Renewable energy financing. Under Another technical assistance of the fund world famous “Enclude” advisory group of Netherlands helped the Bank to develop a Social and Environmental management guideline.

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Women Entrepreneur Financing

Women constitute half of the population, which means huge potential to be utilized for socio-economic development of the country. Southeast Bank want to see more and more women be involved in entrepreneurship so that women enjoy more economic empowerment.

Development of women entrepreneurs is an embedded element of SME financing. In our experience we observed that “Access to Finance” is a major challenge for a business owned by women especially during the initial years of starting a business. To address the issue, Southeast Bank has come forward to help the women entrepreneurs and has given utmost emphasis on the growth & development of women entrepreneurship. The Bank has a separate dedicated product named “Southeast Shuprova” for women entrepreneurs. To encourage women Southeast Bank Ltd. provides loan to the women entrepreneurs at much easier terms & conditions including low interest, relaxed collateral requirement etc. Bangladesh Bank’s refinancing windows also help women

led enterprises. Southeast Bank has 2 exclusive branches for a woman which is helping flourish women entrepreneurship.

In 2018 the Bank has disbursed BDT 2,960.80 million to 806 Businesses exclusively owned by women entrepreneurs.

Agricultural and Rural Credit

Agriculture is the main life-blood for the economy of Bangladesh. Almost 47 percent of the total labor force of the country and 85 percent of rural workers of the country are directly involved with agriculture like crops, fisheries, livestock and forestry which ensure food security, create self-employment, diversification of income generating activities and better standard of living for the people of the country. Agriculture, as a sector contributes 17 percent to the national GDP.

Agricultural credit has significant importance on the socio-economic development of the country since agricultural credit has increased production in agriculture sector. This is also a priority sector

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of the government as well as Bangladesh Bank to ensure food security and nutrition, poverty alleviation, employment generation and accelerate the financial inclusion program. To see our country as a middle income country, our GDP growth should be at least 7% which may be not be possible without 4%-4.5% agricultural growth. Considering the above, Southeast Bank Limited has been continuing proactive policy and program to boost up agriculture financing to the farmers and agricultural entrepreneurs with utmost importance.

We also believe that if the nation’s agriculture and rural base economy walk through a techno-based eco-friendly process, all the targeted goals will be achieved in a sustainable way. With the same vision, Bangladesh Bank (BB) announces a farmer-friendly agriculture and rural credit policy for each fiscal year. Keeping this in mind our bank sets the agriculture and rural credit policy for each fiscal year. Our bank has also set sector wise (crops cultivation,

Agriculture loan @4% rebate interest rate

There is a large demand for pulses, oil seeds, spices and maize in the country. But the production of these crops is not sufficient. As a result, we have to spend huge amount of foreign currency for importing them. In order to encourage on production of such crops and disburse loan to this sector Bangladesh Bank (BB) has set the concessional interest rate of credit

irrigation machinery, agriculture machinery, pisciculture farming, cattle/dairy & beef fattening, poultry farming, crop storing & marketing, poverty alleviation program and others activity related to agriculture) and branch wise yearly & monthly target for smooth allocation of agriculture credit. Our bank also extends Agriculture / Rural Credit as one of the major tools to bring the rural & unbanked people specially the farmers into the banking channel as financial inclusion program which plays a vital role in the rural economic development of the country. In the absence of own branch network the bank extends agriculture credit facility through third party networks like well reputed NGOs / MFIs. It is worth mentioning that while using third party network for agriculture financing, the bank selects the NGOs/MFIs very meticulously to ensure the proper utilization of the fund. The Bank has disbursed quite a large portfolio of agriculture loans during the year, which are listed below.

disbursed in the cultivation of pulses, oil seeds, spices and maize at farmers level at 4% from 01 July, FY 2010-2011 under interest-loss subsidy facilities of the Government. During the year of 2018, our bank has disbursed BDT 2.54 million among 24 farmers against the target of BDT 1.50 million at rebate rate (4 percent) for cultivation of maize, oil seeds and spices. All these indicate our endeavor to bring more and more un-banked rural people in banking system by providing them with agriculture credit at a lower interest rate.

Sector of disbursement Loan disbursed during 2018(BDT in million)

Disbursement at percent (%)

Crops / Vegetables cultivation 2,160.37 61.0Fisheries 389.57 11.0Livestock 733.11 20.7Irrigation equipment 106.25 3.0Crop storage & marketing 35.42 1.0Solar 10.62 0.3Poverty Alleviation 106.25 3.0Total 3,541.59 100

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Crops Loan disbursed during 2018(BDT in million) No. of clients

Oil seeds 0.2 1Maize 1.74 17Spices 0.60 6Total 2.54 24

Target and achievement

Southeast Bank Limited has achieved the Agricultural/Rural Credit disbursement target of BDT 3,540 million FY 2017-2018. In line with the Agricultural & Rural Credit Policy and Programme of Bangladesh

Bank, a target of agricultural credit amounting to BDT 4,280.00 million only has been set for Southeast Bank Limited for the FY 2018-2019, out of total target, amount of BDT 1,007.50 million has been achieved during the period from July 2018 to December 2018 which is 23.53% of the yearly target.

BDT in million

FY Target Achievement Achievement in percent (%)

2015-16 2,400.00 2,793.90 116.41

2016-17 2,950.00 4,015.00 136.00

2017-18 3,540.00 3,540.00 100.00

2018-19 4,280.00 1,007.50(Till December 18) 23.53

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RetailBanking

Southeast Bank’s Retail Banking Division was established in the year 2012, with a vision to provide a wide range of retail banking services to the unbanked and under banked customers within the branch network. At present, Retail Banking Division is prepared and well-structured to attain sustainable growth in retail business by offering competitive products & services with minimum turnaround time in every aspect.

In the year 2018, banking industry has faced lots of ups and downs. In the beginning of the year most of the banks faced liquidity crisis in the market and faced a lot of problem to meet the business as well as regulatory requirements. To overcome this, retail marketing team is giving tremendous efforts on mobilization of low cost/no cost deposit.

Retail Deposit Portfolio (in million)

80,166.61 89,578.4329,632.6226,534.17

20182017

CASA

100,000.0090,000.0080,000.0070,000.0060,000.0050,000.0040,000.0030,000.0020,000.0010,000.00

-FD & Scheme

In March 2018, retail banking division launched two deposit products namely SAVINGS FAST and

SAVINGS ROYAL to enhance low cost deposits of the bank. In a very short period of time the balance of the two new products stood at BDT 2250 million. At the end of December 2018, the total retail deposit stood at BDT 119,211.05 million. To increase low cost /no cost deposit by providing retail products to our corporate and SME clients is an opportunity for us. That’s why we started giving Payroll Banking Services to our valued corporate clients

Different Retail Savings Deposit Mix

Savings Fast6.92%

Royal Saving1.43%

Nokkhotro0.05%Taroka0.06%

Bichokkhon0.99%

SavingsAccount84.22%

School Banking0.14%

Anannya6.19%

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Retail Banking Division has also disbursed a good number of retail loans through our wide range of branch network. The Retail Loan portfolio grew by 55.18% and stood at BDT 2,499.11 million at the end

of December, 2018, where the NPL was 2.33%. The main goal for next year is to capture the maximum share with a focus to increase home loan portfolio.

In 2019, we would put strengthened emphasis on retail asset and liability business to achieve a fragmented portfolio to diversify risk and maximize returns. Through establishing improved

process flow, tailor made deposit and loan products (Deposit and Loan) and staffed with the required skill sets, we will expand our business at high pace.

Car Loan

Dec-17118.09

Dec-18142.01

Dec-17510.53

Dec-18514.29

Dec-17977.33

Dec-181,839.64

Personal Loan Home Loan

Figure in million

20.25% 0.74% 88.23%

Year No of Account Growth of A/c Volume (BDT in Millions) Growth of Volume

2017 2,608 20.74% 1,610.48 61.53%

2018 2,863 9.78% 2,499.11 55.18%


Glimpses of someProjects Financed by SEBL

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174


175


176


177


178


179

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IslamicBankingIn tandem with the global expansion of Islamic banking, Bangladesh has experienced phenomenal growth in Islamic banking following strong public demand for the system. Since its inception in 1983, Islamic banking industry has recorded robust performance and the industry now accounted for more than twenty percent market share of the entire banking industry in Bangladesh. An important development in Islamic banking in the last few years has been the entry of some conventional banks in the market and their use of Islamic modes of financing through their Islamic branches, windows, or units.

Southeast Bank Limited is also one of the leading Private Bank which caters both traditional and Islamic Banking services. Bank started its Islamic Banking operation through opening 03 (three) Islamic Banking Branches in the year 2003. In the year 2004, Bank also opened 02 (two) Islamic Banking Branches for smoothly running its Islamic Banking operation based on the principles of Islamic Banking Shariah. At present, Bank has 05 (five) Islamic Banking Branches out of total 135 Branches of the Bank. The Bank provides Islamic Banking services to the customers in compliance of the provisions of the Bank Companies Act 1991, Bangladesh Bank’s directives and the principles of Islamic Shariah.

All activities of Islamic Banking Branches are conducted on interest-free and equity-based financing based on the principles of Islamic Shariah. Investment is made through different modes i.e. Mudaraba, Musharaka, Hire Purchase (under Shirkatul Melk), Bai-Murabaha, Bai-Muajjal, and Bai-Salam and investment income is shared with the Mudaraba depositors on an agreed ratio, ensuring a reasonably fair rate of return on their deposits based on weightage of individual product.

Bank’s Islamic Banking services are branded Southeast Tijarah. The Bank is an active member of the Central Shari’ah Board for Islamic Banks of Bangladesh and Islamic Banks’ Consultative Forum.

Financial analysis

Islamic financial system can serve as a tool to foster economic growth and human well-being. Promoting risk-sharing instead of bad finance, reduces poverty and inequalities which are the necessary objectives of that need to be addressed by economic development policy makers. Islamic banks handle fund from saver to investors through Islamic modes of finance. The goal of Islamic banking and finance is to bring greater justice and strive to achieve socio-economic development.

As on December 31, 2018, the deposit and investment of Islamic Banking Branches were BDT 20,001.90 million and BDT 15,684.70 million which posted growth of 19.77 % and 10.17 % respectively over those of 2017. During the period 2018, total import and export business handled by the Islamic banking branches were BDT.10,919.30 million and BDT 10,204,90 million respectively. Non Performing Investment of Islamic branches were 3.48% of their total investment in 2018. The performance of the Islamic Banking Branches during the year 2018 is also reflected in its Balance Sheet and Profit and Loss Account as are included in this report.

It is expected that backed by the prized guidance and policy directives of Bank’s Board and Management, the Islamic banking operation will progress further in 2019 and earn business success in different indicators, In Sha Allah.

Major Activities in the year 2018

i) 03 (three) meetings of Bank Shari’ah Supervisory Committee were held where different operational issues, policies and strategies were reviewed.

ii) For the purpose of providing premier banking services to holy Hajj Pilgrims, Southeast Bank

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signed Memorandum of Understanding (MOU) with Hajj Agencies Association of Bangladesh (HAAB), Ministry of Religious Affairs and Sonali Bank Limited for collection of Hajj Pre-registration and Registration Fee from the Hajj Pilgrims and Hajj Agencies. Side by side, most of the HAAB members are involved in IATA ticket, visa processing and overseas employment business in addition to their Hajj and Umrah related business. We provided financial support to the Hajj agencies as needed throughout the year by way of Bank Guarantee and working capital finance.

iii) 01 (one) Training Program was conducted on Islamic Banking Operations, IT issues and Islamic

Banking Services Desk (IBSD) for the officers of the Bank.

iv) The Muraqib of the Bank conducted Shariah inspection of the Islamic Banking Branches to ensure strict compliances with Shariah requirements in Islamic Banking. The report of the Muraqib was submitted to the Shariah Supervisory Committee for review.

It is expected that in compliance with the prized guidance and policy directives of Bank’s Board and Management, the Islamic Banking operation will progress further in 2019 and earn business success in different indicators, In Sha Allah

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InternationalBusiness OperationsThe Bank has established itself as one of the top international trade supporting banks in Bangladesh. International Division at Head Office serves as the nucleus of the trade business of the Bank with its Financial Institutions, Business Operations, Central Trade Services Department, Treasury Back Office, EDF, Cash Incentives, LTFF, GTF, FX Transactions Reporting and SWIFT units. The Bank has a balanced network of correspondents to cover almost every corner of the globe to support the correspondent banking needs of the trade clients. The Bank is constantly expanding its relationships with regional, national and global level leading banks in different countries. As of December 31, 2018 the Bank has established Relationship Management Application (RMA) with 644 correspondents including 285 banks in 72 countries over the world.

The Bank is maintaining 35 (Thirty Five) Nostro Accounts in major currencies including 10 (Ten) Nostros under Asian Clearing Union (ACU) and 01 (One) Nostro for Off-shore Banking Unit (OBU) to support foreign exchange transactions. The Bank is also equipped with hefty confirmation lines of over USD 600.00 million as well as funded credit lines with more than 50 reputed banks worldwide.

As of December 31, 201872 Countries

285 Banks35 Nostro Accounts644 Correspondents

IFC, ADB & GCPF

2018 has been a successful year for the Bank. International Division has supported processing USD 5,154 million worth of trade finance business.

Figures BDT in Million

2018 2017 Growth in %

Import Business 242,294.80 215,379.77 13%

Export Business 190,402.80 167,562.98 14%

Currently, International Trade Service is provided from 21 (twenty one) AD Branches, 1 (one) Central Trade Services Department (CTSD), and 2 (two) Off-shore Banking Units (OBUs) under the supervision of International Division. International Division relentlessly coordinates, supervises and supports International Trade and Foreign Exchange transactions of AD branches through following units-

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Having strong relationship with multilateral development finance institutions is one of the key strategic priorities of the Bank. Currently, the Bank has relationship with following development finance institutions:

International Finance Corporation (IFC) - The Bank is availing non-funded limit of USD 35.00 million and funded limit of USD 15.00 million from IFC under Global Trade Finance Program (GTFP).

Asian Development Bank (ADB) - The Bank is availing non-funded limit of USD 89.00 million and Funded Revolving Credit limit of USD 10.00 million under Trade Finance Program (TFP) of ADB.

Global Climate Partnership Fund (GCPF) – The Bank is availing unsecured funded facility of USD 20.00 million to finance Energy Efficiency and Renewable Energy projects to mitigate climate change challenges.

In 2019, our goal is to centralize trade service functions of the Bank under Central Trade Services Department (CTSD) for ensuring more efficiency, control and compliance. In 2018, many initiatives have been taken for automation of transaction processing which would be completed in 2019. This year, we explored different new avenues of learning and successfully implemented some of those. These initiatives will continue in future.

SWIFT Operations and Sanctions Screening Unit

Being a member entity of the Global SWIFT. NET since 2000, Southeast Bank facilitates cross border trade transactions, inward/outward remittance etc. of the Bank through secured state of the art infrastructure. SWIFT Operation Unit works as an authenticated communication medium of the Bank at International Division, Head Office. All the AD branches, Offshore Banking Units, Central Trade Services Department (CTSD) and Central Payment Centre (CPC) are connected to

InternationalDivision

FinancialInstitutions

Off-shoreBanking

BusinessOperations

Central TradeServices

Department

Treasury Back Office

EDF, CashIncentives,

LTFF, GTF

FX TransactionsReporting

SWIFT

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Global SWIFT Network via Data center at Head Office and currently facilitating seamless delivery of SEBL’s innovative Trade and FEX business products & services to the valued clients. In the year 2018, the Bank established one of the most resilient, secured and dedicated separate network architecture for SWIFT Operations through adopting industry’s best practices and multifactor authentication framework, handshaking with Core Banking System (CBS) through the Secure File Transfer Protocol (SFTP), strict monitoring over SWIFT workstations etc to comply the Mandatory Control of SWIFT Customer Security Control Framework and Customer Security Programme (CSP). The Bank continuously evaluates the robust control procedures already in place for operations like centralized trade payments, NOSTRO reconciliation, adhering additional layer of authorization, etc. with a view to ensuring continuous safe and secure Bank’s information in SWIFT network. SWIFT Operations Unit has also implemented ‘SWIFT Mandatory Release 7.2, KYC Registry in the SWIFT Infrastructure of the Bank.

The Bank is using a fully automated cloud based Sanctions Screening System from SWIFT that screens both incoming and outgoing SWIFT transactions against sanction lists (OFAC, UN, US, EU etc.) for combating sanction and terrorist financing related threats. Customers of the Bank may feel more relaxed than ever before, knowing that the banking channel is free from infiltration by any criminal or unscrupulous parties for money laundering and financing of terrorism.

IMPORTANT INITIATIVES OF INTERNATIONAL DIVISION IN 2018

1. Automation of Monthly Reports and Returns as well as S1, S2, S6, EFCS 8 reports to Bangladesh Bank.

2. Automation of EDF processing. Automation of MT 103 and MT 202 is under process.

3. Automation of Treasury Back Office functions like Money market/ Fx deal settlements/ reconciliation and nostro cash position to ensure more efficiency and accuracy.

4. Upgradation of Core Banking System (CBS) for

Off-shore Banking Unit (OBU).

5. Centralization of Credit Report.

Centralized Trade Processing of SEBL; a step towards excellence through compliance

CTSD started its journey on 1 June 2017, covering import business of all Non AD Branches. Now we have already covered all foreign trade business of Non AD branches (export business started on 1 August, 2018). Though CTSD is not a profit generating department, it has made profit of nearly BDT 20.00 million in the year 2018 as rebate and payment charges. As a step forward to full automation of our trade processing, CTSD is implementing system automation step by step. Recently we have launched auto email option whereby our clients are receiving their LCs, payment messages and all other trade related services through their designated email.

Achievement of CTSD at a glance in 2018

1. Covering of import & export business of all Non ADs.

2. Introduction of Centralized Trade Module in Core Banking system.

3. Introduction of export module for Non ADs in Core Banking system.

4. MIS in Trade Wave(LC opening, Bills settlement, FTT, expired LC)

5. Auto email sending option to the client in Trade Wave.

6. Upgradation of Trade Wave for covering AD Branches

7. Income generation of nearly BDT 20.00 million8. Covering of AD (Corporate Br.)

Future plan of CTSD

1. Advising of all export LCs of the bank through CTSD.

2. All import related lodgement and payment of AD Branches through a single counter from CTSD.

3. Centralization of trade business of all AD Branches

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Performance of CTSD in 2018

LC Performance

300

250

200

150

100

50

0

Am

ount

(BD

T in

cro

re)

Amount

No. of LC

January

269176.00

February

206159.31

March

259130.00

April

260189.02

May

22191.80

June

18069.36

July

237183.72

August

209191.99

September

242218.07

October

258110.67

November

221194.11

December

22779.45

Bills Performance

300

250

200

150

100

50

0Am

ount

(BD

T in

Cor

oer)

Amount

No. of Bills

January

244109.83

February

252146.94

March

225137.70

April

262111.90

May

282109.46

June

20187.36

July

265241.35

August

220137.18

September

232154.16

October

279145.24

November

268144.32

Decmber

25397.56

FTT Performance140

120

100

80

60

40

20

0Am

ount

(BD

T in

Cor

oer)

Amount

No. of FTT

January

2235.16

February

825.66

March

1213.84

April

1544.73

May

1959.75

June

1437.21

July

1951.52

August

742.23

September

1949.11

October

30133.27

November

1952.06

December

2580.37

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Off-Shore BankingOperationsSince 2010, the Bank is operating its off-shore banking business with two Off-shore Banking Units (OBU) in Dhaka Export Processing Zone (DEPZ) and Chattogram Export Processing Zone (CEPZ). Due to the sharp rise in demand of Foreign Currency (FC) loan and DP LC, at present, OBU is considered one of the important Strategic Business Units of the Bank. The financial sector of the world has witnessed rising upward trend in LIBOR with significant implications for OBUs. Increasing trend in LIBOR has increased the cost of fund of OBU. Hence, the rate of growth in profit was not in line with the growth in portfolio. Nevertheless, OBU profit exceeds than that of

last year and it remains one of the top ten profit contributing business unit of the bank by generating profit of BDT 211.82 million in 2018. As OBU is highly dependent on borrowed FC fund, it has been able to keep it book on right track amidst severe FC currency crunch in May-June and November- December 2018. Last year, Management’s focus was to diversify OBU portfolio by parking more Type-A EPZ clients. In line with that strategic focus, OBU parked one of the biggest Type-A EPZ enterprise of the country as a client and kept the asset quality as per the expected level.

Business Highlights of OBU

2018 2017 Growth %

In USD Mill: BDT Mill: USD Mill BDT Mill:

Total Deposits & Borrowing 142.98 11,996.38 97.91 8,096.87 48%

Total Loans & Advances 139.98 11,744.27 98.24 8,124.62 45%

Total Operating Profit 2.48 211.82 2.15 173.24 22%

OBU of the Bank offers following products and services to valued clients - Foreign Currency Deposit Account of Non-residents

Export-Import services to A- category industrial units of Export Processing Zones (EPZ) and Economic Zone (EZ).

Financing Usance Payable At Sight (UPAS) Documentary Credit

Short Term Foreign Currency Loan to ADs for purchase of Export Bills in Foreign Currency

Foreign Currency Term Loan to eligible resident industrial units.

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TreasuryManagementTo cater to the needs of different treasury solutions in different economic environments by the customers, Southeast Bank has a very dynamic and innovative treasury team. The team is committed to offer better prices and excellent services with an array of different products which best fit the changing environment. Through forecasting the market scenario in terms of liquidity, interest rate and exchange rate movement, SEBL treasury has contributed remarkably well in 2018 and also helped the Bank earn a consistent profit over the years. SEBL treasury has separate designated desks to ensure optimum treasury solutions which are depicted below:

Money Market Desk

Fixed Income Desk

Asset Liability Management Desk

Foreign Exchange Desk

Corporate Service Desk

Money Market Desk

Money market desk assumes the responsibility of maintaining Cash Reserve Ratio (CRR) as a regulatory requirement of Bangladesh Bank along with local currency fund management of the Bank. This desk also facilitates the Bank to have enough liquidity in order to settle all its financial obligations and commitments to the customers of the Bank. In the year 2018 Bangladesh Bank issued several circulars regarding downward fixation of Loan to Deposit Ratio (LDR), reduction of Cash Reserve Ratio (CRR) and re-fixation of Repo and Reverse Repo rate. Due to reduction of CRR by 100 basis points Tk. 12,500.00 crore approximately was freed from the CRR accounts of all the scheduled banks maintained with Bangladesh Bank which ultimately made the market very liquid that was quite evident by the very low call money rate that prevailed throughout the year 2018. Repo rate was slashed down by 75 basis points keeping Reverse Repo rate unchanged. Consequently deployment of fund in money market in a profitable manner was very challenging. On the other hand downward fixation of LDR also put pressure on the banks as a result of which demand

for inter-bank deposit shot up at the end of the year 2018. In this above stated liquidity scenario our money market desk handled around BDT 3,160.00 million on daily basis while maintaining optimum local currency liquidity of the Bank.

Fixed Income Desk

As one of the active primary dealer banks Southeast Bank Limited has been dealing in the primary and secondary market of fixed income securities. Our fixed income desk of treasury division looks after the Primary Dealership activities of the Bank and also maintains required amount of government approved securities for maintenance of Statutory Liquidity Requirement (SLR) as per Bangladesh Bank directives. Inadequate supply of government securities coupled with high demand of the same forced the rate of interest of government securities fell sharply. In this downward trend of rate of interest of fixed income securities our fixed income desk was able to maintain an optimum portfolio of government securities which contributed significantly to the overall profit of the Bank. In order to minimize interest rate risk and liquidity risk, our fixed income desk analyzed our fixed income portfolio from different dimensions like duration analysis, sensitivity analysis and risk-return perspective. Our fixed income desk always tries to play a key role in developing an active secondary market in our country which is still a far cry. With the farsightedness and acumen, our fixed income desk also took timely decisions by maintaining an optimum portfolio of the fixed income securities which yielded a considerable amount of income in the year 2018.

Asset Liability Management Desk

In banking, Asset-Liability Management is the practice of managing the risks that arise due to mismatches between the assets and liabilities of the Bank. In this dynamic financial market environment banks face several risks such as Liquidity Risk, Interest Rate Risk, Credit Risk and Operational Risk etc. Asset-Liability Management (ALM) is a strategic management tool to manage Interest Rate and Liquidity Risk faced by banks. Asset-Liability

188


Management properly addresses the risks that arise in the banking business. The main objectives and functions of Asset-Liability Management desk are the following:

Liquidity risk management of the bank

Management of market risks including interest rate and exchange rate risk

Planned growth of assets and liabilities

Undertaking financial hedge positions

Overall fund management of the bank

Trading risk management; and

Regulatory compliance

From the Asset liability management point of view, 2018 was a challenging year for all the banks as Bangladesh Bank issued several circulars regarding downward fixation of Loan to Deposit Ratio (LDR), reduction of Cash Reserve Ratio (CRR) and re-fixation of Repo and Reverse Repo rate. Consequently our banking sector became awash with surplus liquidity with very minimum opportunity to invest. Southeast Bank with strong acumen and insight went for planned growth of assets and liabilities so that Net Interest Income (NII) registers a steady growth. Interest rate in the market was in a decreasing trend for both asset and liabilities; so it was a challenge for the ALM to ensure a reasonable spread. The ALM desk was proactive in revising the rate of interest on deposit products so that interest rate risk is minimized as well as the profitability of the bank is safeguarded. The ALM is responsible for the management of balance sheet gap in order to mitigate the liquidity and interest rate risk of the bank. The ALM desk of Southeast Bank has been complying with the BASEL III requirement of maintaining Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) and reporting it to Bangladesh Bank on a regular basis. Apart from this, the desk also reports to the Board of Directors about some liquidity ratios and other important financial indicators in every meeting as stipulated in the new ALM guideline of Bangladesh Bank.

With a view to minimize and address various risks involved in the business, ALM desk of the Treasury Division prepares Asset-Liability Committee (ALCO) paper each month and conducts monthly Asset-Liability meeting where all the issues associated

with ALM are discussed and instructions are given accordingly. The ALM desk also reviews and revises the Asset-liability Management policy of the bank every year according to the policy guidelines of Bangladesh Bank.

Foreign Exchange Desk

Our Foreign Exchange (FX) desk dealing in foreign currency transaction is staffed with experienced and skilled dealers having specialized training at home and abroad. Our foreign exchange dealers remained very watchful throughout the year 2018 to closely monitor the exchange rate movement of USD and other currencies against BDT and accordingly set the exchange rates of major foreign currencies. The desk successfully maintained favorable Net Open Position (NOP) throughout the immediate past year along with ensuring maximum level of foreign currency liquidity and explored the market opportunities through SWAP, Placement and Forward transactions which facilitated the Bank to book an optimum level of profit. Our foreign exchange dealers made a considerable amount of trading gain of around USD 180,000.00 through speculative dealing. The interbank foreign exchange market was quite stable up to third quarter of the year 2018 and from the beginning of the last quarter BDT started to depreciate against USD due to decrease in remittance and increase in import payment which ultimately forced the USD/BDT rate to shoot up to Tk. 83.95 at the year end. The inward remittance at the end of 2018 stood at USD 1,398.86 million compared to USD 1,170.43 million at the end 2017 recording a 19.52 percent growth.

Corporate Service Desk

The corporate service desk of the Treasury Division of Southeast Bank provides specialized services to its corporate clients through its diversified products tailored to the customers’ needs. The main responsibility of this desk is to ensure maximum utilization of the fund of the corporate customers. Basically different renowned life insurance companies are our corporate customers and they are maintaining a sizable amount of government securities portfolio with our bank. Corporate Service Desk of our treasury division gives its customers time befitting advices so that they can maximize their return by exploring new investment opportunities.

189


ForeignRemittanceRemittance has become a major contributor to Bangladeshi economy. As the emigrant workers from Bangladesh gradually increased over the years, the amount of annual remittance to the country significantly rose. According to World Bank, Bangladesh is now one of the largest recipients of remittance with almost 15 billion USD. Southeast Bank Ltd is facilitating its best quality Remittance services and represents itself as a trusted Bank among these Non-Resident Bangladeshis (NRB) and their family members at home and abroad.

Southeast Bank has designed its products as per the needs of the non-resident Bangladeshis and their family members by extending remittance payment network through sub-agencyships with local scheduled Commercial Banks, Mobile Financial Services and Micro Finance Institutions/NGOs. At present, Remittance Division procures Inward Remittances from 30 (Thirty) Exchange Houses around the globe with its 02(two) subsidiaries in South Africa and United Kingdom and facilitates remittance payment through its own 137 (One hundred thirty seven) branches, 17 (seventeen) Sub-Agent Banks, 4 (four) reputed NGOs and with Mobile Financial Service like Telecash & bKash.

Southeast Bank ensures remittance payment with the help of modern technology and fastest services like Cash over counter, fastest BEFTN and RTGS, Direct Online Account deposit by implementing API (Application Program Interface). These initiatives have ensured smooth remittance service for Remitter as well as its Receiver in all the corner of Bangladesh. The Bank’s auto-generated SMS confirms that the money has already been received and payment has been done even in off banking hours. Our foreign correspondents will be able to deposit remittance instantly in the accounts maintained with Southeast Bank.

Apart from providing premier services, we are also facilitating opening of different type of Non-Resident Taka Accounts in the form of Savings Bank Deposit, Monthly Savings Scheme, Wage-Earners Pension Saving Scheme (WEPSS) etc by the expatriates through our subsidiaries, correspondents Contractual Marketing Executives (CME).

Although the flow of remittance has slowed down recently, we were able to achieve positive growth of remittance. In the year 2018, Bank collected USD 1,398.70 million as wage earners’ remittance which is 18.55% higher than previous year. Southeast Bank Ltd. is top-most remittance receiving bank in Bangladesh also received Top Ten Remittance Award for their excellent remittance services by The Centre for Non Resident Bangladeshis (NRB) in 2018 for their excellence performance in the year 2017. We are also taking part in lessening the bank’s dependency on inter-bank market for payment of import bills.

All the Executive and staff members of the Remittance Division are dedicated to rendering efficient & prompt services both to the remitters and the beneficiaries.

Inflow of Inward Remittance over the past years:

Year

USD (million) received by SEBL

USD (million)

received by Country

SEBL Market Share

2014 629.00 15,316.00 4.1%

2015 778.00 14,931.00 5.2%

2016 824.00 12,769.00 6.5%

2017 1,170.00 13,542.00 8.6%2018 1,399.00 15,540.00 9.0%

Year

SEBL Market Share in Remittnace recieved bythe Country in last 05 Years

Year 20144.10%

Year 20155.20%

Year 20166.50%

Year 20189.00%

Year 20172017%

190


SEBLCredit CardSoutheast Bank issues Cards and has designed the products with the best of features at competitive fee along with the state of the art technology and good customer service. The ways and means to pay is changing dramatically. People are becoming more comfortable to use Cards for every kind of formal and informal transactions like shopping at store and also for paying online. Southeast Bank has been issuing Credit Card since the year 2005 and has been adopting latest technologies and attributing newer features to address the ever changing demands.

Southeast Bank issues Mastercard and Visa, the most popular brands of the world. The card can be used at the POS terminal of a retail store without carrying the risk of fraudulent use as it is an EMV CHIP PIN card. Nowadays, many of the best bargains and deals are found online. One can shop online at popular sites, book a hotel, buy a ticket and pay visa processing or exam fee. 3D Secure transaction of Southeast Bank card makes online transactions risk- free. The bank issues and processes card under own card management software which provides additional data security and ensures faster transaction processing. World and Platinum cardholders along with three guests can visit Balaka lounge and Skylounge at Hazrat Shahjalal International Airport free of cost. A cardholder using the card while purchasing earns reward points. Reward points can be redeemed for annual fee waiver or cash reward. “EMI PAY” is a repayment facility for our cardholders that allows a cardholder to repay certain large purchases in Equal Monthly Installments (EMI) over an extended specific repayment period. Our Cardholders get attractive discounts while paying using the card from a good number of retail outlets, restaurants, hotels and fashion houses etc. Cardholders get waiver of renewal fee depending on number and amount of purchase. Cardholders receive instant alert of transaction, balance, available balance etc. by SMS and Email. Priority Pass is complimentary for World and Platinum Cardholders. Priority Pass provides access to over 600 airport lounges

worldwide with nominal fee irrespective of class of air ticket (economy/business).

Since inception, the bank has been maintaining a steady growth in credit card business. Like previous years, 2018 is also a successful year with good business growth to the tune of 11% in net profit, 30% in card base and 22% on outstanding balance over the position of the last year.

65.3 74.7

Figure in million

88 122.24 135.8

2014 2015 2016 20182017

CARD DIVISION (PROFIT)

Trends and customer behavior with regard to payment transaction is changing rapidly. Physical Card Plastic is being converted to digital wallet, conventional POS terminals are being replaced by QR code and transaction is being initiated from smart phones. We have been experiencing emergence of Samsung Pay, Google Pay, Paytm etc. Time has come to take the challenge and react accordingly. We have already initiated a project for introducing QR Code based transaction, Mobile Wallet and Mobile Apps which is likely to be completed in phases.

191


AlternativeDelivery Channel

Alternative delivery channel (ADC) has enabled the Bank to serve the customers beyond regular Banking hours. The Bank is providing 24/7 service through its established delivery channels, like ATM, Recycler-ATM, Mobile Financial Service (MFS), Internet Banking etc. ADC team is relentlessly working for further expansion of delivery channels, improvement of quality of service and introduction of new services.

SEBL Instant Banking

With a view to expanding footprint in modern banking, Southeast Bank has launched SEBL Instant Banking in the year of 2018. SEBL Instant Banking is an Electronic Booth and state-of-the art technology which provides customers with real time cash acceptance and dispense facility through Recycler ATM along with many other banking services 24/7 round the clock.

SEBL ATM

At the end of 2018, our live ATMs were 173 across the country. Moreover, ADC has taken imperative initiatives for rapid expansion of ATM Booths at suitable locations to facilitate our existing customers and penetrate potential clients across the country.

Growth

ADC has implemented world class technology and re-engineered process to ensure faster, smooth and better service. This leads to a noteworthy growth in SEBL Debit Card Transaction Number, Transaction amount and Debit Card Issuance.

Division-wise ATMs Network

90

673

14

164

33

Dhaka

Chattogram

Sylhet

Rajshahi

Khulna

Barisal

Mymenshingh

Rangpur

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Transaction Amount

At the end of 2018, total transaction amount by SEBL Debit Card and ATM/Recycler ATM was BDT 1666.36 crore. In comparison to the year 2017, Transaction amount has increased by 52.79%

SEBL Debit Card Growth

At the end of year 2018, our total number of issued SEBL Debit Card was 2.05 Lac. The number of card has increased by 17.14% in comparison to the year 2017.

additional layer of security which is enabled during login to internet banking system and perform each transaction. We have also introduced Multi-level authorization for fund transfer facility for Corporate Customers. Moreover, for convenience of individual customer, self-registration, self-user Id unlock and password reset etc. are under active consideration for incorporation in the internet banking system.

Internet Banking

The Internet Banking System of the Bank has reached to matured stage, which offers variety of services to its clients. To perform a transaction through internet banking, like fund transfer, utility bill or Credit Card dues payment, the client has to collect Hardware or Software token from the Bank for Two Factor Authentication (2-FA) for an

Successful Transaction Amount(In Corore)

1090.62 1666.362000

1000

02017 2018

Growth 52.79%

No of Debit Card(In Lac)

2.5

2

1.5

1

0.5

0

1.75

2017

2.05

2018

Growth 17.14%

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Credit Risk Managementin Southeast Bank LimitedCredit Risk Management

Credit risk is defined as the risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. While loans are the largest and most obvious source of credit risk; the Bank is exposed to credit risk through its lending and investment activities as well as from contingent liabilities. The main objective of the credit risk management process is to identify, assess, measure and monitor credit risk in all the financial exposure of the Bank. The Bank has established a credit risk management framework to manage credit risk on individual as well as at portfolio level. Credit Risk Management process of the bank is articulated through several Board approved policies viz. Risk Appetite Statement, Credit Risk Management guidelines, delegation of Business Powers of Individual Executives/Officers for loans and advances, valuation methodology, Standardized Recovery/collection Procedure etc. In addition, SEBL has well defined and documented operational guidelines for consumer loans, Credit Card, Islamic Banking, Agri Credit and SME financing. This policy is being reviewed and updated annually incorporating the new instructions of regulators, considering the global and local economic trend and based on appetite of the Bank. The Bank attempts to control risk by monitoring credit exposure, limiting non performing credit and continually assessing the credit worthiness of the borrowers. The Bank manages limits and controls concentrations of credit risk to individual, geographic areas, sectors as well as portfolio level. Major steps of Credit Risk Management practices of the bank encompass the following:

i. Credit Marketing

ii. Credit Approval Processes

iii. Credit Risk Monitoring Processes

iv. Credit Risk Mitigation Processes

i. Credit Marketing

Branch officials and Direct Sales Executives promote the business of the Bank and sell the products and services to the prospective customers. They contact the potential clients and park them to the Bank as per the directives of Head Office in line with the Credit Risk Management Guidelines, annual sectoral budgetary allocation, strategies and policies to achieve the targets. With this end in view, the network of the Bank has been expanded across the country to diversify the credit portfolio of the bank through balanced growth of credit in different productive and promising sectors. ii. Credit Approval Process

Credit Approval Authorities are delegated to individuals based on their qualification, designation and experience. A thorough credit and risk assessment is conducted prior to granting of any loan. The Credit Officer at Branch level acts as relationship Officer and originates credit proposal and submits the same to Head Office for approval. The Corporate Banking Division, SME & Agri Credit Division, Islamic Banking Division, Retail Banking Division of Head Office are actively involved in scrutinizing, analyzing, assessing and processing the credit proposal. The credit evaluation system comprises of well-designed credit appraisal, sanctioning and review procedures for the purpose of emphasizing prudence in its lending activities and ensuring quality of asset portfolio. These divisions at Head Office are being managed by senior level executives for ensuring more intensive and in-depth care of credit operation. On the other hand, the Credit Risk Management Division is involved in evaluation and in-depth analysis of risks associated with the individual borrower and finding out the mitigating factors to minimize those risks. Each credit proposal embodying and complying the observations of CRMD is placed to Head Office Credit Review Committee (HOCRC) for review. Upon recommendation of Head Office Credit

194


Review Committee, the competent authority (as per delegated business power) may approve or decline the proposal. Managing Director may recommend the proposals which are beyond the Managing Director’s delegated authority to the Executive Committee / Board of Directors for approval. Upon approval, a letter, conveying the sanction of loans, is issued in favor of the respective Branch (if declined, the same is communicated accordingly).

iii. Credit Risk Monitoring Process

Credit Risk Review is conducted at obligor level as well as at portfolio level to ensure sound asset quality and adherence to regulatory as well as the Bank’s own policies and procedures. The review process ensures that a sound and proactive risk management culture is maintained across the Bank. It also aims at continuous improvement of the overall quality of assets at the portfolio level, by deploying appraisal skills, maintaining documentation standards and complying with the sanction terms and conditions. The primary monitoring is done by branches’ relationship officers/managers as well as Head of Branch regarding their performances, business, transaction and turnover, repayment behavior etc.

Simultaneously, the Credit Administration Department under Credit Risk Management Division is assigned to look after post approval process such as to establish better control over loan portfolio by helping completion of documentation, scrutinizing the checklist of documents, setting limits and tenor centrally at Head Office and reviewing pricing of loans etc. in a systematic manner and allowing

subsequent disbursement, ensuring utilization of fund, monitoring and compliance of all covenants and conditions precedent. This Department keeps constant follow-up of the credits right from its sanction and continues its efforts to ensure timely repayment/recovery so that the disbursed credits remain performing and unclassified. Besides, overall portfolio along with industries/sectors concentration of the credit portfolio of the bank is reviewed at regular intervals and brought to the notice of senior level management regarding concentration risks, geographical distribution, down gradation along with early alert list (if any) for information & their guidance. These coherent activities altogether enable the Bank to put viable solutions in place to prevent deterioration in credit quality.

iv. Credit Risk Mitigation process:

The Bank has adopted the Simple Approach for Credit Risk Mitigation. Under this approach, cash, lien on deposits, government securities, shares, landed property, flat, building etc. are considered as eligible collateral. The Bank has formulated detailed guidelines with respect to valuation and management of each of these types of collateral. In order to mitigate risks, the Bank also takes necessary insurances, guarantees and documents including charge documents. In addition to that, terms and conditions under which credit is sanctioned also go a long way to mitigate risks associated with credit. Regular monitoring and control of accounts also add up the risk mitigation. Continuous follow up and updating of all relevant data/information are also the key factors for mitigation of credit risks.

195


Risk ManagementPracticesSEBL operates a strong and independent, growth oriented risk management system that contributes to the sustainability of risk adjusted returns through implementation of a sound and dynamic risk management practice. SEBL’s risk management philosophy is to identify, measure, monitor and control as well as manage various risks that are related to the Bank’s business, and to optimize risk-return trade-off.

The Bank always prioritizes management and mitigation of all levels of risks in order to build public trust and confidence which is necessary for mobilizing private savings for investment to facilitate economic growth. Therefore, effective risk management activities are imperative to the achievement of the business objectives of the Bank and also of the economic growth of the country.

Risk Management System The key elements of sound risk management system in SEBL for effective business operations encompasses the following:

Active involvement of the Board and Senior Management;

Adequate organization, policies and procedures;

Appropriate management information systems; and

Comprehensive internal controls and limits.

SEBL’s Risk Management ObjectivesSEBL has clear risk management objectives and a well established strategy to address them. At strategic level, our risk management objectives are as follows:

To identify the Bank's material risks

To analyze risks and managing their consequences by a dynamic interaction among the Board, Senior Management and officials engaged in risk taking and risk managing activities

To formulate the Bank's Risk Appetite and ensure that business profile and plans are consistent with it. To ensure that business

growth plans are properly supported by effective risk infrastructure

To assist the Management and executives in controlling and co-ordinating of risk taking across the business

To manage risk profile to ensure that, specific financial indicators remain favorable under a range of adverse business situation

To design and execute a strategic management process for the Bank integrated with global business risk management process

To define risk management strategies and clear accountabilities and action steps for building and executing risk management capabilities and improving them continuously

To continuously monitor the information provided to decision-makers in order to assist them as they manage key risks and protect the interests of shareholders

Risk Management and Its Relationship with Capital ManagementCapital management in a bank usually refers to implementing measures aimed at maintaining adequate capital, assessing internal capital adequacy of the bank and calculating its capital adequacy ratio. Risk management process is inseparable from capital management. Capital management helps to ensure that the bank has sufficient capital to cover the risks associated with its activities. As part of the Internal Capital Adequacy Assessment Process (ICAAP), management identifies the risks that the Bank is exposed to, and determines the means by which they will be mitigated. Capital is used to cover some of these risks, and the remainder of these risks is mitigated by means of collateral or other credit enhancements, contingency planning, additional reserves and other mechanisms.

Basel-III Implementation

In compliance with the direction of Bangladesh Bank the Risk management Division of SEBL

196


was established to monitor risk management activities of the Bank. The responsibility to ensure effectiveness of the Core Risks Management of The Bank is delegated to Risk Management Division (RMD). It is also the responsibility of RMD to ensure that the capital management of the Bank is done as per Basel Accords and in accordance with the directives of Bangladesh Bank from time to time. As per the phase wise arrangements for Basel-III implementation the Bank has started implementing Basel III from January 2015. The Bank has taken initiatives to improve the Capital to Risk Weighted Asset Ratio (CRAR) in line with the Basel-III guideline. Besides, the Bank has also started maintaining different ratios like Leverage Ratio, Liquidity Coverage Ratio (LCR), and Net Stable Funding Ratio (NSFR) as per Basel-III requirement.

Liquidity Coverage Ratio (LCR)

Liquidity Coverage Ratio (LCR) refers to high quality liquid assets held by the Bank to meet short-term obligations. The ratio is designed to ensure that the Bank has the necessary assets on hand to ride out short-term liquidity disruptions. The Bank is required to maintain LCR ≥ 100% under Basel III.

Internal Capital Generation Rate:

The internal capital generation rate (ICGR) is a quantifiable mathematical rate that portrays how quickly a bank is able to generate equity capital. The higher the internal capital generation rate, the more able a bank is to produce capital in order to provide loans to borrowers that subsequently generate new interest income for the bank. In 2018 the internal capital generation rate (ICGR) of SEBL was 10.75% which indicates its strong capital base.

Net Stable Funding Ratio (NSFR)

Net Stable Funding Ratio (NSFR) is defined as the amount of available stable funding (ASF) relative to the amount of required stable funding (RSF). The purpose of the NSFR is to ensure that the Bank holds a minimum amount of stable funding based on the liquidity characteristics of its assets and activities over a one year horizon. The objective is to reduce

maturity mismatches between the asset and liability items on the balance sheet and thereby reduce funding and rollover risk. The Bank is required to maintain NSFR> 100% under Basel III.

Leverage Ratio

This is a non-risk-based leverage ratio and is calculated by dividing Tier 1 capital by the Bank's average total consolidated assets (sum of the exposures of all on-balance sheet and off-balance sheet items). The Bank is required to maintain a leverage ratio in excess of 3% under Basel III.

Stress Testing

Stress Testing plays the role of a diagnostic tool in the context of SRP to improve the understanding of risk profile of the Bank. It is a part of risk management policy, which alerts the management of the Bank regarding possible vulnerabilities and unexpected outcomes related to variety of risks. It also provides an indication how much Capital might be needed to absorb losses if any shock occurs. It is a popular method designed for analyzing the resilience of the capital of the Bank while addressing its relevant shortcomings.

Bangladesh Bank has advised banks to conduct quarterly Stress Testing to measure resilience of the Bank. Therefore as a part of risk management, the Bank prepares stress testing report on quarterly basis to check out four major risks (interest rate risk, credit risk, equity price risk, liquidity risk) under different magnitude level to ensure optimum allocation of capital across its risk profile. In calculating Stress Testing following analytical tools are used:

Sensitivity analysis (assesses the impact on an institution's financial condition of a move in one particular risk factor)

Scenario test (considers the impact of simultaneous moves in a number of risk factors)

Duration GAP analysis (the analysis of the gap in duration between the Bank’s Assets and Liabilities)

197


Prevention ofMoney Laundering

The AML program consists of, among other things:

1. Risk based KYC in the core banking system;

2. AML risk assessment at the customer, product & service level;

3. Written policies, procedures and a system of internal control designed to facilitate ongoing compliance with applicable AML laws and regulations;

4. Risk based policies and procedures for monitoring transaction activities through customers’ accounts;

5. Identification and reporting of suspicious transactions/activities to regulatory authorities in accordance with applicable laws;

6. AML training for officers at Head Office and Branch level;

7. Self assessment to review and assess the bank for compliance with the AML program, laws and regulations;

8. Independent audit and compliance testing functions to review and assess the bank for compliance with the AML program, laws and regulations;

9. Prohibition from conducting business with shell banks;

10. The stipulation for record keeping & reporting of AML & CFT related activities to regulatory authority on demand; including records obtained pursuant to customer on boarding & consequent transactions, which are maintained for at least 5 years after the termination of a customer relationship

SEBL’s AML Risk Management Framework is established on three components: governance, policies and processes. Governance starts with the Board of Directors, which reviews and approves risk policies and processes prescribed by regulatory authorities. SEBL’s AML Risk Management Framework includes CCC (Central Compliance Committee) which is led by an Additional Managing Director, CAMLCO. SEBL’s CCC directly reports to the Managing Director. SEBL has established Anti Money Laundering Division headed by an Executive Vice President, DCAMLCO.

CCC reviews and monitors the Bank's compliance with the circulars, policies & guidelines of regulatory authorities. The AMLD under supervision of CCC ensures implementation of AML and CFT Program of the Bank.

Southeast Bank Limited (SEBL) has implemented a risk based AML compliance program designed to comply with AML laws and regulations in Bangladesh and other applicable laws and regulations relating to the prevention of money laundering and terrorist financing in the jurisdiction where the Bank operates through subsidiaries.

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Information Technology(IT) and Cyber Security MeasuresThe use of information and communication technology (ICT) in the banking industry has witnessed tremendous growth over the last couple of years and it has become the main enabler/driver of the banking business. ICT is greatly contributing to improve operational efficiency and effectiveness of the banking services. The bank is designing and developing different banking products, diversifying customer service delivery through introducing alternative delivery channels and reducing operating expenses reaping the benefits of ICT. Through ICT, the bank is streamlining business processes; making managerial decisions which have further strengthened competitive position of the Bank in the rapidly changing market. As investments in technology platforms have increased manifold, alternative delivery channels, like ATM and POS terminal, Internet Banking, Mobile App, Mobile Financial Service (MFS) have flourished. Therefore, different segments of customers are doing financial transactions and accessing to various products and services conveniently, which is further accelerating financial inclusion of the un-banked people of the country.

This year the Bank restructured its core IT infrastructure and deployed a few software for further automation of different business operations. These are mainly, i) e-Tendering System for the tenderer to submit their responses of RFP/RFQ (Request for Purchase/Quotation) through online portal, ii) Centralized Credit Processing and Disbursement System (CDMS), iii) Centralized Foreign Trade operation for Non-AD Branches, etc.

The Bank has established its main Data Center (DC) at Dilkusha C/A and Disaster Recovery Site (DRS) at Uttara. This year DR test was conducted, in which Core Banking operation was made live from Uttara DRS and transactions were performed from different branches. However, according to the ICT Security Guideline of Bangladesh Bank, it has been mandated to setup far DC (second DRS) in a separate seismic zone for prevention of data loss in case of any major natural calamity, like earthquake. Considering the major impacts and as part of the Business Continuity Plan (BCP), the bank has also

established its Far DC (second DRS) at Jessore which is located in a separate seismic zone. Now live Data is being replicated from main DC to near DC (Uttara DRS) and then to Far DC at Jessore.

IT infrastructure has grown and core banking applications have evolved over a period to cater to heterogeneous business needs of the Bank. Design and development of different banking products and introduction of new banking services are being done from time to time to meet and fulfill current business demand. However, further expansion of information technology should be aligned with the expansion of the business growth. Therefore, it has been felt necessary to conduct assessment and review of current IT infrastructure and applications of the Bank to define future strategy and roadmap by an independent IT Advisory and Consulting service provider. Work in this regard will be completed soon.

The Bank has performed due diligence for assessment of IT security and risk as part of its continual efforts to minimize /mitigate internal and external frauds using IT systems and prevent cyber threats. Multiple layers of security solution for Network, Mailing System, Web/Internet access and the endpoint devices have been deployed and latest security Patches/Fixes have been applied to several banking application software, databases and network devices. The Bank has further strengthened its IT Security Unit through recruitment of additional human resources. Officials of the IT Division have attended several training/workshops to enhance their skills and competencies. IT Security Audit has been conducted by internal and external IT Audit and Inspection Team including inspection team from Bangladesh Bank. Accordingly steps have been taken for rectification of identified weaknesses and related issues in IT operation and service delivery. Periodically, Vulnerability scanning has been executed by IT Security Team on different IT services/applications and identified flaws have been mitigated as far as cyber security is concerned. The Bank is committed to providing better services to its customers with reliability, and added security.

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CreditRating

Credit Rating Information and Services Limited (CRISL) has reaffirmed the long term rating of Southeast Bank Limited at AA (Pronounced as Double A) and the short term rating at ST-2 based on audited financials up to 31st December, 2017 and unaudited financials up to 31st March, 2018 and other relevant qualitative as well as quantitative information up to the date of the rating.

Surveillance RatingExplanation

Rating (2016) Rating (2017)

Long TermAA

Double A( High Quality and High

Safety)

Long TermAA

Double A( High Quality and High Safety)

The Bank being rated AA (High Safety) in credit rating is adjudged to be of high quality, offers higher safety and has high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions.

Short termST-2

High Grade

Short termST-2

High Grade

The Bank being rated ST-2 (High Grade) in the short term in credit rating is considered to have high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.

Outlook StableDate of Rating June 28, 2018

Validity Up to June 27, 2019

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CapitalPlan

Capital planning helps the Bank determine how much capital it needs to continue its growth and produce meaningful earnings as well as meet regulatory requirements. The Bank is committed to maintain a strong capital base to support its business growth and to have a cushion to absorb any unforeseen shock, complying with all regulatory requirements, along with obtaining good credit rating and CAMELS rating.

SEBL annually conducts an integrated strategic planning process which lays out the development of our future strategic direction for our business areas. The strategic plan aims to create a holistic perspective on capital, funding and risk under risk-return considerations. This process translates our long-term strategic targets into measurable short-term to medium-term financial targets and enables intra-year performance monitoring and management. Thereby we aim to identify growth options by considering the risks involved and the allocation of available capital resources to drive sustainable performance. Risk-specific portfolio strategies complement this framework and allow for an in-depth implementation of the risk strategy on portfolio level, addressing risk specifics including risk concentrations.

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain satisfactory return on capital to our shareholders. Our long-term targeted capital structure also considers allocation of capital levels sufficient to exceed capital requirements. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework.

Regular reporting of actual and projected capital and leverage ratios, including those in stressed scenarios, is undertaken and submitted to the Executive Risk Management Committee (ERMC), SRP (Supervisory Review Process) team, ALCO, SMT, Board Risk Management Committee and

the Board. We submit a report to the Board that details how much capital is needed, when it will be needed, various methods of raising capital, the current environment for raising capital, the Bank’s value to others, the best way to protect/enhance shareholder value and the likely pricing of capital.

The Bank monitors regulatory developments very closely to ensure strength of capital position that exceeds the minimum regulatory requirements and remains within the limits of risk appetite as well as consistency with the market expectations.

Stress Test and Capital Planning

Bangladesh Bank regulations require stress tests to evaluate whether an institution has sufficient capital to continue its operation during periods of adverse economic and financial conditions. The rules also limit the Bank’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan.

SEBL operates a comprehensive stress testing program that supports our risk management and capital planning. Our stress testing is supported by dedicated team and infrastructure, and is overseen at the most senior levels of the Bank. Our stress testing program assesses our capital strength through a rigorous examination of our resilience to external shocks. It also helps us understand and mitigate risks and informs our decisions about capital levels.

On an annual basis, strategic business and capital plans are drawn up covering a five year horizon and are approved by the Board. The capital plan ensures

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that adequate level of capital and an efficient mix of the different components of capital are maintained to support our strategy and business plans. Capital planning takes the following into account:

Current regulatory capital requirements and our assessment of future standards

Demand for capital due to the business and loan impairment outlook and potential market shocks or stresses

The Funding Plan is also developed to ensure we have a credible plan to manage the future demand and supply of funds in a prudent yet commercially effective manner.

The Bank is well positioned to comply with the requirements that are subject to phase-in rules within 2019 as per the above table. As the Bank is actively considering to improve its Tier-I and Tier-II capital base, the future minimum requirements are expected to be well complied.

Southeast Bank is adequately capitalized and has sufficient buffers to ensure a going concern even under adverse conditions. The Bank performs stress tests to verify that it is sufficiently capitalized to withstand adverse events caused by material risks arising from its business strategy at present and in

Available supply of capital and capital raising options

Capital Requirement under Basel III

Southeast Bank adopted the Basel III framework introduced by the Central Bank. It came into effect on January 2015 and the Bank has been compliant with the minimum requirements from that date. The phase-in arrangements for Basel III implementation is as follows:

future. The results of stress tests have confirmed the Bank’s substantial capitalization. Our capitalization makes us resilient and ensures that we are well positioned to meet upcoming capital requirements as well as to continue to grow our business.

To ensure sustainable growth in coming years and to strengthen the capital base further, recently the Bank issued a Basel III compliant Tier II Subordinated bond for Taka 5,000 million to raise Tier-II Capital of the Bank. Besides, the Bank is able to accumulate additional capital through the reduction in Risk Weighted Assets, accumulation of profits over time. The Bank is also able to manage the demand for capital through management actions including adjusting its lending strategy through business disposals.

Particulars 2015 2016 2017 2018 2019

Minimum Common Equity Tier-1 (CET-1) Capital Ratio 4.50% 4.50% 4.50% 4.50% 4.50%

Capital Conservation Buffer - 0.625% 1.25% 1.875% 2.50%

Minimum CET-1 plus Capital Conservation Buffer 4. 50% 5.125% 5.75% 6.375% 7.00%

Minimum T-1 Capital Ratio 5.50% 5.50% 6.00% 6.00% 6.00%

Minimum Total Capital Ratio 10.00% 10.00% 10.00% 10.00% 10.00%

Minimum Total Capital plus Capital Conservation Buffer 10.00% 10.625% 11.25% 11.875% 12.50%

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Statement ofNon-Performing Loan

Non-performing loans (NPLs) refer to those financial assets from which banks no longer receive interest or installment payments as scheduled. They are known as non-performing because the loan ceases to perform or generate income for the bank. Southeast Bank follows the rules and regulations of loan classification as per policy of Bangladesh Bank. As per directives of Bangladesh Bank, loans and advances are classified on objective basis and qualitative judgment. In objective criteria, loans are classified as Standard, Special Mentioned Account (SMA), Substandard, Doubtful and Bad and Loss based on the number of past due days. On the other hand, in qualitative judgment, loans are classified based on any doubt of recovery of loans in time due to sudden distressful financial conditions of the client, any bad/weak signals in business or industry, death of the client etc.

Minimizing non-performing loan is a tough challenge for the Bank. Bank’s profitability, strengths, eminence, reputation and ratings are highly dependent on quality of assets. With this end in view, maintenance of asset quality has been given top priority by minimizing non-performing assets through early detection, monitoring, taking corrective actions, shared information and disclosures to keep future recurrence in check. The process of continual review of weak loans enables the bank to monitor the quality of the loan portfolio and to take remedial action to counter deterioration in the quality of portfolio.

Impact of Non-performing loans:

Non-performing loans is treated as undesirable outputs which decrease the bank’s performance. Prudent risk assessment and creation of adequate provisions for classified loans can be a cushion for the bank’s against risk. However, when the level of non-performing loans (NPLs) is very high, the provisions are not adequate for protection. High level of non-performing loans severely damages the confidence in the banking system. If a bank loses public confidence, it will lose domestic deposits and will find itself unable to rollover short term external borrowing. Due to shrinkage of deposits and impairment of the capital, the bank will not be in a position to lend. This will lead to the phenomenon

of credit crunch and it would result the shrinkage of the real economy.

Industry Scenario of Non-Performing Loans

Banking sector is reeling under bad loans and heavy provision burden. Banks in Bangladesh has suffered from high levels of non-performing loans (NPLs) in 2018. To a certain extent, Southeast Bank is also exposed to this problem. A higher percent of NPLs indicates that banks had difficulty in collecting interest and principal on their credits. However, the NPL ratio came down due to all out efforts to realize default loans and rescheduling of loans at the eleventh hour of election. Though the overall economic growth improved in 2018, the banking sector continued to face challenges arising from deteriorating asset quality.

Classification Status of Credit Portfolio

Southeast Bank strictly follows the rules and regulations of Bangladesh Bank regarding classification of loans and advances of the Bank. In case of need, the Bank classifies some loans on qualitative judgment too. Our management always remains vigilant to arrest new loans from being classified, minimize the existing non-performing loans by way of cash recovery and regularize

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through rescheduling in the deserving cases under the purview of Bangladesh Bank’s guidelines. Amid adverse trend of loan classification, Southeast Bank could restrict its classified loan position to BDT 15,558.85 million which was 5.87 percent of total loans and advances as on December 31, 2018. The status of unclassified and classified loans of the bank (solo) as on December 31, 2018 was as follows:

StatusAmount BDT in Million

Percentage

Unclassified LoansStandard 240,083.55 90.53

Special Mention Account 9,561.81 3.60

Sub-Total 249,645.36 94.13

Classified LoansSub-Standard 171.21 0.06

Doubtful 359.64 0.14

Bad/Loss 15,028.00 5.67

Sub Total 15,558.85 5.87

Grand Total 265,204.21 100.00

Non-Performing Loan Ratios:

Strict implementation of Credit Risk Management guidelines coupled with strong recovery and prudent provisioning approach has enabled the Bank to keep a check on quality of its assets. Southeast Bank has made reasonable recovery in 2018. As a result, the Non-performing Loan (NPL) ratio of the Bank has improved to 5.87 percent as at December 31, 2018 which was 5.99 percent as at December 31, 2017. Side by side, the Gross Non-Performing Loan Coverage ratio of the Bank has improved from 72.55 percent as at December 31, 2017 to 85.37 percent as at December 31, 2018. Different ratios of non-performing loans of the Bank as on December 31, 2018 stood as follows:

SL No Parameter/Particulars Percentage

01 Gross Non-Performing Loan (NPL) Ratio 5.87

02 Net Non-Performing Loan (NPL) Ratio 1.35

03Gross Non-Performing Loan (NPL) Coverage (Specific Provision + General Provision)/ Gross NPL

85.37

Provisioning

The Bank continuously reviews its loan portfolio in order to rightly assess the amount of non-performing loans and advances and provision required thereagainst. The Bank creates specific provision against Non-Performing Loans (NPLs) and general provisions against performing loans including off-balance sheet items in accordance with the guidelines and directives of central bank and the same is charged to the profit and loss account. Provisions are held against expected as well as unexpected losses. While assessing this requirement, various factors including the delinquency in the account, financial position of the borrowers, the value of securities and the requirements of the Prudential Regulations are considered. At the end of every quarter, the Bank meticulously ensures maintenance of both general and specific provisions. Sometimes, the Bank keeps additional provision to protect interest of all stakeholders.

Recovery:

The quality of asset has been one of the prime focus areas of the Bank. The inspiring recovery against non-performing loans during the year reflects the prudent strategic focus of the Bank. Cash recovery positions in 2018 against non-performing loans of the Bank are depicted below:

Sl No. Particulars Amount BDT

in Million

01. Recovery against Classified Loans 1,068.21

02. Recovery against Written-off loans 404.81

03. Recovery through Court cases 606.50

Loan Write-off

Impaired loans are written-off when there is less prospect of recovery of part or the entire loan in a shorter span of time. Bangladesh Bank introduced this system by issuance of guidelines vide BRPD circular #02/2003 dated January 13, 2003. Southeast Bank started writing off of loans since 2004 complying Bangladesh Bank’s guidelines.

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Southeast Bank has established a separate division namely “Special Asset Management (SAM) Division” for managing non-performing loans especially written-off loans.

Strategies for Managing Non-performing Loans

Strengthening Monitoring of credit portfolio both at Portfolio and individual level;

Ensuring strict implementation of Credit Risk Management Guidelines;

Ensuring proper documentation before disbursement of credit facilities;

Employing all out effort to recover non-performing loans;

Centralizing of disbursement of credit facilities at Head Office;

Fixing annual target for recovery and follow up the achievement on monthly basis.

Preparing account wise strategy to recover Banks past dues in shortest possible of time.

Selecting priority wise customer where chances of recovery are high based on amount of Loan.

Negotiating with the client for recovery outside the court.

Accelerating recovery drive through prudent use of Artha Rin Adalat Act, filing Criminal Case, Settlement Arrangement, attachment of property, Recovery drives etc.

Reconstitution of three Taskforces for recovery of non-performing loans including rescheduled, classified and written-off loans.

Initiatives for recovery of Non-Performing Loans (NPL)

At the beginning of the year the bank Management sets branch-wise targets for recovery of classified loans. The Head Office Management and the special Taskforce regularly monitor/review the recovery activities of the branches and give necessary guidelines/assistance to achieve the recovery target of the branches.

Two high level “Taskforces” for recovery of classified loan and written-off loans have been constituted comprising the officials of Head Office and Branch headed by Additional Managing Director of the bank. Taskforce actively reviews the recovery position of those loans in their periodic meeting and gives necessary directions/guidelines to gear up the recovery process.

Concerned Officials of Head Office regularly visit the branch located in different parts of the country and meet the defaulted clients to find out ways for settlement/adjustment of bad loans of the bank.

Defaulted Clients are continuously pursued jointly by the Branch and the Head Office officials through letters, phone calls, visits to their place of business and residence and holding meetings at Head Office and the branches.

After exhausting all the avenues to recover the classified loans law suits are filed with Artha Rin Adalat as well as CMM Court to recover non-performing loans. All cases are properly followed up jointly by the Branch and Head Office.

Court cases are constantly monitored through the panel lawyers of the bank. In case of need, senior lawyers are appointed to conduct the court cases of the Bank. Efforts are given to recover bad loans through early disposal of court cases.

A special team has been constituted comprising the 03-officials of Legal Affairs Division at Head Officpe & 03-officials of the concerned branch to follow up early disposal of big cases of the branch.

Efforts are being taken to settle/adjust the loan outside the court through negotiation/persuasion with the defaulted clients. Considering the client’s business/financial condition, long drawn legal procedures, time value of money concept, several measures like longer repayment period, concessional interest rate and in few cases settlement arrangement with waiver of a portion of interest are allowed to recover the loans.

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Report on Risk Management Framework, Mitigation Methodology and Risk Reporting by Chief Risk Officer

Over the last decade, risk management approaches and practices in the financial industry have evolved substantially and risk management practices are accepted by the financial institutions enthusiastically. The safety and soundness of financial institutions rely on the effectiveness of risk oversight and control functions. To implement this, SEBL introduced a strong and disciplined risk management culture and accepted by all the employees of the Bank. A key aspect of this culture is that the Bank is well-diversified across business lines, countries, products, and industries.

The primary goals of risk management are to ensure that the outcomes of risk-taking activities are predictable and consistent with the Bank’s strategies and risk appetite. There must be an appropriate parity between risk and return in order to maximize and protect shareholders’ interest. In 2018, the Bank reviewed the world’s macro economic outlook together with the country’s business and economy to produce Risk Appetite of the Bank. Moreover, the Bank conducted a self-assessment on the implementation of core risks management and

the reports of its findings have been placed to the Board of Directors. The self-assessment report for the year 2018, confirmed that risk management practices of the Bank of all core risk areas achieved above or equal to ‘Satisfactory Level’ (scale defined by BB). Moreover, subsidiaries of the Bank are also in compliance with the Bank’s risk management framework. The Bank’s risk management framework is applied on an enterprise-wide basis and consists of three key elements:

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i) Risk Governance

ii) Risk Appetite

iii) Risk Management Technique

i) Risk Governance

a) The Board of Directors

The Bank’s risk management governance structure begins with oversight by the Board of Directors, either directly or through its committees to ensure that decision-making is aligned with the Bank’s risk appetite. The Board receives regular updates on the key risks of the Bank – including a comprehensive summary of the Bank’s risk profile and performance of the portfolio against defined goals, which are presented quarterly to the Board Risk Management Committee. The Board approves key risk policies, limits, strategies, and risk appetite. The Bank’s Internal Audit Department reports independently to the Board (through the Audit Committee) on the effectiveness of the risk governance structure and risk management framework.

b) Management

The Managing Director (MD) and the Chief Risk Officer (CRO) are responsible for risk management under the direct oversight of the Board. Being CRO, I oversee the Risk Management Division of the Bank and chair the Executive Risk Management Committee. The Risk Management Division acts as the secretariat of the Risk Management Committee of the Board and directly reports risk issues to it.

ii) Risk Appetite

The Bank has clear articulation on the Bank’s risk appetite and how the Bank’s risk profile will be

managed in relation to that appetite. The Bank’s Risk Appetite Framework consists of four components and combines qualitative as well as quantitative terms of reference to guide the Bank in determining the amount and types of risk it wishes to prudently undertake. The components are:

Risk Management Principles

Strategic Principles

Governing Financial Objectives

Risk Appetite Measures

iii) Risk Management Techniques

The Bank’s risk management techniques are guided by the Bank’s risk appetite framework, integrated with the Bank’s strategies and business planning processes. The risk management technique includes: measurement, monitoring and reporting of risk, providing strategies, policies and setting up limits, introducing guidelines and processes.

The above framework is to establish a sound system of risk management supervision and internal control to identify, assess, monitor and manage material risks related to conduct of Bank’s activities. The main objectives are to: constantly improve the management of risk, better understand the reward-to-risk balance and reduce the risks to an acceptable level.

S. M. Mainuddin ChowdhuryAdditional Managing Director& Chief Risk Officer

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RiskManagement

The objective of the Bank is to provide a satisfactory return to shareholders and to manage risks in line with the accepted risk profile. To ensure this, SEBL has established risk management policies designed to confirm that these risks are identified, measured, controlled, monitored and reported appropriately. There is a strong relationship between risk and return. Southeast Bank has been maintaining a parity between risk and return by setting a systematic and professional method defined by the Basel Committee as well. Throughout its 23 years, risk management has always been a priority for the Bank. In 2018, major progress has been made to anticipate and to meet the big challenges faced against a constantly shifting economic, social and regulatory background.

The Bank is focused on building the future through a forward-looking management of all risks, while safeguarding the present through a robust control environment. The Risk Management Division strives to ensure that risk management is implemented correctly and it is in line with all legislation and match the best practices in the market. The Bank’s risks function is based on the following pillars:

Risk Appetite: The Risk Appetite Statement is based on the risk strategy and defines the types and levels of risk which the Bank is willing to accept to achieve its business objectives and is essential for achieving long term sustainable results.

Risk Policy: The Bank’s risk policy is aligned with its strategy and business model that takes on board the recommendations of supervisory bodies, regulators and best market practices.

Management Accountability: Different departments are individually accountable for the risks associated with their operations. A balance is being preserved between risk and return, within the boundaries defined by the relevant risk limits. The forward-looking approach for

all risk types is a part of risk identification, assessment and management processes.

Risk Transparency: All risks are identified, documented and discussed in order to obtain a good understanding of the Bank’s exposures.

Independent Risk Control: This is the structured process of identifying, measuring, monitoring and reporting risk wherein the risk management departments operate independently of the commercial activities.

Three lines of defence

Risk Management is effective when all the regulatory principles and guidelines are implemented and creates and protects value of the organization as an integral part of all of the organization’s processes. Southeast Bank builds its approach to risk management on the concept of three lines of defence, signifying a clear division of responsibilities between the risk owners and control functions.

The risk management of the Bank is based on a sophisticated risk process with following three lines of defence:

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1st Line ofDefense Business Unit

Management/Branches

Manage risks/implement actions to manage and treat risk

Comply with risk management process

Implement risk management processes where applicable

Execute risk assessments and identify emerging risk

2nd line of Defense

Risk Management Division of Head

Office

Establish policy and process for risk management

Strategic link for the enterprise in terms of risk

Provide guidance and coordination among all risks

Identify enterprise trends, synergies, and opportunities for change

Initiate change, integration, operationalization of new events

Liaison between third line of defense and first line of defense

Oversight over certain risk areas (e.g. credit, market) etc.

3rd Line of Defense Internal Audit

Provide oversight on risk-management content/processes, followed by second line of defense (as practical)

Provide assurance that risk-management processes are adequate and appropriate

The third line of defense is not involved in developing, implementing or operating the risk management function or other first or second line of defense functions.

The risk Management at Board level

Risk Management Structure

Three separate committees of Board namely: Executive Committee, Audit Committee and Risk Management Committee are responsible for risk management and operations of the Bank.

Executive Committee of the Board: The executive committee can take all necessary decisions or can approve cases within power

delegated by the Board of Directors. However, All decisions taken in the executive committee should be ratified in the next board.

Audit Committee of the Board: The audit committee assists the Board in fulfilling its oversight responsibilities. The committee

reviews the financial reporting process, the system of internal control and management of financial risks, the supervision of the audit process, and the Bank's process for monitoring compliance with laws and regulations.

Board Risk Management Committee: Board Risk Management Committee is responsible for mitigating risks arising from strategies

and policies formulated by the Board.

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Board of Directors

Board Risk Management

Committee(BRMC)

CEO/MD

Chief Risk Officer (CRO)

(Head of RMD)

ExecutiveRisk

Management Committee

(ERMC)

BaselImplementation

Unit

CreditRiskDesk

Market RiskDesk

Liquidity RiskDesk

Operational Risk Desk

RiskResearch

and Policy

Risk Management Committees and reporting line:

The Risk Management of the Bank has risk oversight for the following core risk areas:

1. Credit Risk Management

2. Asset-Liability Risk Management

3. Foreign Exchange Risk Management

4. Internal Control and Compliance Risk Management

5. Money Laundering Risk Management

6. Information and Communication Technology Risk Management

Apart from the core risks mentioned above, the

environmental risk is one of the major risks that has been considered as an integral part of credit risk. The Bank’s risk management processes, policies and mitigations of the core risks along with environmental risk are described below:

01. Credit Risk Management

Credit risk is the potential risk that the counterparty will cause a financial loss to the Bank due to its inability or unwillingness to meet its contractual obligations. This has traditionally been the greatest risk that lending institutions face and is usually the one for which the most regulatory capital is required. The credit risk management function is

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responsible for ensuring that the Bank’s credit risk is satisfactorily managed. The main objective of the credit risk management process is to identify, assess, measure, monitor and mitigate all types of risks associated with credit exposure of the Bank. The Bank has established a credit risk management framework to manage credit risk at individual as well as portfolio level.

Southeast Bank has a comprehensive credit risk management policy. Credit Risk Management process of the Bank is articulated through several Board approved policies viz. Risk Appetite Statement, Credit Risk Management Policy, Delegation of Business Powers of individual Executives/Officers for loans and advances, Valuation Methodology, Standardized Recovery/collection Procedure etc. The Bank measures, monitors and manages credit risk at individual borrower level and at the portfolio level as well. The Bank’s structured and standardized credit approval process includes a well-established procedure of comprehensive appraisal based on the guidelines of Credit Risk Management Policy of the Bank and rules and regulations of Bangladesh Bank and other regulatory authorities. This policy is being reviewed and updated annually incorporating the new instructions of regulators, considering the global and local economic trend and based on appetite of the Bank. Bank’s Credit Risk Management practices are based on policy directives duly approved by the Board which, inter-alia, encompasses the following:

i. Credit marketing

ii. Credit approval processes

iii. Credit Risk monitoring processes

iv. Credit Risk mitigation processes

i. Credit Marketing

All the branches are the ambassadors of the Bank located at the door step of the customers and they are the primary contact point with the clients. Branch officials and Direct Sales Executives promote the business of the Bank and sell the products and services to the prospective customers. They contact with the potential clients and park them to the Bank as per the directives of Head Office in line with the Credit Risk Management Guidelines, annual sectoral allocation, strategies and policies to achieve the

targets. With this end in view, the network of the Bank has been expanded across the country to diversify the credit portfolio of the Bank through balanced growth of credit in different productive and promising sectors.

ii. Credit Approval Process

The Credit Officer at Branch level acts as relationship Officer and held responsible to ensure the accuracy of the entire credit application/ proposal submitted for approval. A thorough credit and risk assessment is conducted prior to granting of any loan. The Corporate Banking Division, SME & Agricultural Credit Division, Islamic Banking Division, Retail Banking Division of Head Office are actively involved in scrutinizing, analyzing, assessing and processing the credit proposal. These divisions at Head Office have been managed by three senior level executives for ensuring more intensive and in-depth care of credit operation. The Credit Risk Management Division is involved in evaluation and in-depth analysis of risks associated with the individual borrower and find out the mitigating factors to minimize those risks. The respective credit officers of Head Office further process the proposal embodying and complying the observations of CRM and place the proposal to Head Office Credit Review Committee (HOCRC) for decision. Upon recommendation of Head Office Credit Review Committee, the competent authority (as per delegated business power) may approve or decline the proposal. Managing Director may recommend the proposals which are beyond the Managing Director’s delegated authority to the Executive Committee / Board of Directors as per delegation for approval/ decision. Upon approvals a letter conveying the sanction of loans, is issued in four copies (for the Branch, CAD, ICCD and Corporate Banking) by the credit approval Department of CRM. (if declined, the same is communicated accordingly.)

iii. Credit Risk Monitoring Process

The Credit Risk Monitoring activities of the Bank aim at ensuring that there is no undue deterioration in quality of individual assets within the portfolio. It also aims at continuous improvement of the overall quality of assets at the portfolio level, by deploying appraisal skills, ensuring adherence to credit basics/lending guidelines, maintaining

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documentation standards and complying with the rules and regulations of regulatory authorities while leaving enough room for flexibility and innovation. The primary monitoring is done by branches’ relationship officers, Head of Branch regarding their performances, business, transaction and turnover, repayment behavior etc.

Simultaneously, the Credit Administration Department under CRM Division is assigned to look after post approval process. This department focuses on establishing better control over loan portfolio by helping completion of documentation, scrutinizing the checklist of documents, setting limits and tenor and pricing of loans etc. in a systematic manner. It allows subsequent disbursement, ensuring utilization of fund, monitoring and compliance of all covenants and conditions precedent. This Department keeps constant follow-up of the credits right from its sanction and continues its efforts to ensure timely repayment/recovery so that the disbursed credits remain performing and unclassified. Besides, overall portfolio along with industries/sectors concentration of the credit portfolio of the Bank is reviewed at regular intervals and brought to the notice of senior level management regarding concentration risks, geographical distribution, downgradation along with early alert list (if any) for information and guidance. These coherent activities altogether help the Bank to maintain sound health of the credit portfolio and to attain a sustainable growth.

iv. Credit Risk Mitigation process:

The Bank makes all possible efforts to mitigate risks associated with credit accounts through screening and selection of borrowers, assessment of optimum requirement of fund, structuring of the facilities, in-depth market analysis, arrangement for suitable collateral, guarantors, insurance coverage etc. wherever it is considered feasible and desirable. In addition to that, terms and conditions under which credit is sanctioned also go a long way to mitigate risks associated with credit. Regular monitoring and control of accounts also add to risk mitigation. In order to mitigate risks, the Bank takes necessary guarantees and documents including charge documents. Continuous follow up and updating of all relevant data/information are also the key factors for mitigation of credit risks.

02. Asset-Liability Risk Management

The objective of Asset Liability Risk Management (ALM) of the bank is to properly manage the risk arising from due to mismatches between assets and liabilities either due to changes in liquidity, interest rate and foreign currency rate movement in the domestic and international market. ALM is a set of tools that ensures value creation for the shareholders in a regulated environment maintaining a good tradeoff between risk and return. As the banking sector is now concentrating more on liquidity and interest rate risk management along with rates of return on capital and its assets than overriding efforts for balance sheet expansion; proper ALM structure and risk management framework are indispensable. Our main focus of ALM is to keep the risk of doing business within the limit side by side ensuring that the risk which has been taken is properly measured, managed and informed.

Liquidity Risk

Liquidity risk refers to the risk of a bank’s inability to meet its financial obligations as they fall due without incurring unacceptable costs or losses through fund raising and assets liquidation. Liquidity risk can also arise due to Bank’s incapability to manage unexpected decrease or change in funding sources. Liquidity risk management concerns the discipline of ensuring that a bank remains sufficiently liquid at all times and under every market conditions. It can negatively affect the earnings and growth potential of the organization if the liquidity position constrains a bank from undertaking a transaction at normal market rates/prices.

Measurement and mitigation of Liquidity Risk:

Southeast Bank has a well established liquidity contingency plan in line with the Bangladesh Bank guidelines that establishes an appropriate and properly controlled liquidity risk environment. The ALCO, which oversees the liquidity and other risks of the bank, manages the liquidity by ensuring the following:

Preparing Structural Liquidity Profile (SLP) of Assets and Liabilities in different time buckets as per Bangladesh Bank Guideline.

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By setting certain limits in net inflow in different time buckets guided by Bangladesh Bank directives and internal policy of the bank.

By maintaining a liquidity buffer in the form of unencumbered high quality liquid assets that can be used, without impediment, to obtain funding in times of stress;

By maintaining a vibrant participation in the inter-bank market by regular borrowing and lending side by side maintaining credibility and good reputation with the depositors / lenders to make sure that liabilities matured are promptly renewed.

Diversification in the sources (including counterparties, instruments, currencies and markets) and tenor of funding, and regular review of concentration limits helps us to rein in the liquidity risk of the bank.

The BASEL III guideline provided two effective monitoring tools to measure the liquidity namely: Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) which our bank has been maintaining from the beginning.

Interest Rate Risk

Interest rate risk is one of the main risk disciplines in the market risk category which arises due to fluctuations in the interest rates in the market. It can pose a serious threat to the capital base of the Bank and the net interest income (NII) by altering rate sensitive income and expenses. Changes in interest rates also affect the underlying value of the assets and liabilities of the Bank because the present value of future cash flows changes when interest rates change. Interest Rate Risk, if assumed correctly, can be an important source of profit and share value. However, taking excessive Interest Rate Risk can lead to capital erosion and shareholder value by affecting the net interest income of the Bank.

Measurement and Mitigation of Interest Rate Risk:

Effective Interest Rate Risk management is a key component of earnings, capital preservation, and growth. We measure Interest Rate Risk (IRR) through Gap Analysis of Rate Sensitive Assets and Liabilities to estimate the probable impact on Net Interest

Income of the bank. Where rate sensitive assets are more than rate sensitive liabilities (i.e., positive gap) an increase in interest rate will impact the Net Interest Income positively and vice versa.

We use another gauge to measure IRR is Duration Gap Analysis which is used to predict the likely impact of interest rate movements on the net worth of the bank. By changing the durations of assets and liabilities we try to obtain the desired impact of interest rate movements on the Balance Sheet of the Bank.

03. Foreign Exchange Risk Management

Foreign exchange risk is the risk that a long or short position in the banking book or in the trading book in foreign currency may render a loss due to an adverse movement in exchange rates. Typically, a depreciating currency leads to gains from assets and losses from liabilities whereas an appreciating currency results in the opposite. In the foreign exchange business, banks also face the risk of default of the counter parties or settlement risk. The foreign exchange positions arise from the following activities:

Trading in foreign currencies through spot, forward and option transactions as a market maker or position taker, including the un-hedged positions arising from customer-driven foreign exchange transactions;

Holding foreign currency positions in the banking book (e.g. in the form of loans, bonds, deposits or cross-border investments); or

Engaging in derivative transactions that are denominated in foreign currency for trading or hedging purposes.

A common approach to measuring and monitoring exchange rate risk is to limit the size of the open positions (whether positive or negative) in each currency as of the close of business each day. Management's principal goal shall be to ensure that foreign exchange losses that could arise from the open positions will not substantially diminish total earnings and that the capital cushion of the institution will not be undermined.

Bank has formulated a Foreign Exchange Risk Management Manual as per the guidelines given by

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Bangladesh Bank to measure, monitor and control different foreign exchange risks. Apart from this manual, Bank also applies other standard tools to minimize foreign exchange risks, some of which are given below:

Maintaining Net Open Position (NOP) within the limit set by Bangladesh Bank;

By setting counterparty limit which includes forward, placement, SWAP limits for foreign exchange transactions;

By setting limits for the foreign exchange dealers (intraday open position limit, stop loss limit, per deal limit, trigger limit);

By reconciling Nostro accounts periodically as per the instruction of Bangladesh Bank.

By calculating VaR (Value at Risk) to measure the highest possible loss of holding of foreign currency;

04. Internal Control and Compliance Risk Management

A system of effective internal controls is a critical component of Bank management and a foundation for its safe and sound operation. It can help to ensure that Bank’s goals and objectives will be met; Bank’s long-term profitability targets will be achieved; reliable financial and managerial reporting will be maintained; relevant laws, regulations, policies, plans, internal rules and procedures will be complied with; and the risk of unexpected losses or damage to the Bank’s reputation will be decreased.Southeast Bank Limited has established a robust Internal Control and Compliance Framework to ensure (i) efficiency and effectiveness of its day to day operation; (ii) reliability, completeness and timeliness of financial and management information; and (iii) compliance with applicable laws, regulations, policies, procedures; so that the Bank can stay on course towards profitability goals, achievement of its mission and improvement of the performance, and to minimize surprises. The Board of Directors (BoD) through its Audit Committee oversees, monitors and evaluates the system of internal control, the audit/inspection process, and the process relating to compliance with laws and regulations and the code of business practice of Southeast Bank.

Internal Control and Compliance Division (ICCD) of Southeast Bank is independent, acting autonomously and professionally in conformity with regulations in force and overall guidelines for the Bank’s internal control system. ICCD performs some of the supervisory and monitorial activities to ensure that the system of internal control is being implemented in Bank’s day to day operations. The mission of ICCD is to provide independent and objective assurance and advice designed to add value and improve the Banks' operations. ICCD helps the Bank to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and transparent governance processes. ICCD has 03 units i.e. Audit and Inspection Unit, Compliance Unit and Monitoring Unit.

Audit and Inspection Unit

The functions of internal audit/inspection of SEBL constitute a separate component of Internal Control undertaken by specially assigned Officials within the bank with the objective of determining whether other Internal Controls are well designed and properly operated. The Head of Audit and Inspection Unit have full and free access to the Audit Committee of the BoD. The members of audit/inspection team also have unrestricted access to all functions, records, property and personnel for conducting audit/inspection.

The audit and inspection unit conducts audits/inspections using mainly a risk based approach, and reports its findings along with the recommendations relating to possible improvements to risk management policies/measurement and control tools to the Audit Committee of BoD. The activities of this unit are aimed at both controlling activities (a third level control activity), also by means of on-site audits to review trends of operations and risks, and evaluating the completeness, adequacy, functionality and reliability of the organizational structure and the other components of the overall internal control system. This Unit has three (03) Cells for performing its tasks smoothly; that is:

Audit Cell-1 conducts regular audit/inspection based on the approved annual audit/inspection plan by the Audit committee BoD. Apart from this,

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Investigations and Inquiries are also conducted by this unit to uncover the underlying reasons, employees responsible and to mitigate losses and correct errors.

The prime job of Audit Cell-2 is to review the transactions related to trade finance (e.g. trade, treasury, remittance, etc) and the online reporting of the regulatory authority. Comprehensive inspection, according to the approved annual inspection plan on each of the Authorized Dealer (AD) Branches and related Divisions of Head Office like International Division (ID) and Treasury Division are also conducted by this unit.

Audit Cell-3 is responsible for conducting regular IT Audit/Inspection according to the approved inspection plan of the bank as well as in line with the ICT guidelines issued by Bangladesh Bank.

Compliance Unit

This unit performs the necessary monitoring and supervisory activities to ensure that the Bank is operated in conformity with the applicable laws, regulations, policies, international standards, guidelines, etc. and responding fully and in a timely manner to supervisory criticism and orders to take corrective action issued by applicable regulatory authorities or law enforcement bodies. They also assist for the mitigation of compliance risk, which is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation as a result of failure to comply with applicable rules. This unit takes actions as per advice/instructions laid down in the internal as well as external audit/inspection reports or any changes brought in by the regulatory authority. The work of compliance Unit of the Bank is virtually divided into two groups; namely (i) Internal Audit compliance is responsible for monitoring the compliance activities of the branches, divisions of Head Office and subsidiaries based on the findings of internal audit/ inspection reports; and (ii) External Audit Compliance is responsible for monitoring the compliance activities of the branches, Divisions of Head Office and Subsidiaries based on the findings of external/regulatory and statutory audit/inspections.

Monitoring Unit

This unit verifies the internal control system and monitors the operational performance/ activities by

implementing various internal control tools, such as DCFCL, QOR, LDCL, Self-Assessment of Anti-Fraud Internal Controls Report, Annual Summary Report, Bank’s Health Report, etc. They also collect relevant data and perform offsite analysis to assess the risk of individual units. In case they find major deviation, they recommend to the Head of ICCD for sending audit and inspection team for thorough review.

In a year round program of 2018, the comprehensive surprise inspection of 105 (One Hundred Five) branches and divisions of Head Office were carried out by the Internal Auditors. Furthermore, the ICT inspection team conducted inspection on a total of 33 (Thirty Three) branches and 01 (One) division of Head Office. Out of the approved audit/inspection plan a number of special inspection/investigation/inquiry were also carried out by the inspection team as per direction of the competent authority of the Bank.

Findings and observations or the statement of facts identified/discovered through the audit/ inspection are aggregated in an inspection report. The report is then sent to the respective branch/division with significant time period for rectification/regularization of the findings and reply Back to the ICCD. Major observations and summarized reports are discussed in the meetings of ACB and the ACB provides necessary decisions/recommendations for further action to be taken by the management of the Bank. The Bank’s management implements the decisions of the ACB and takes necessary remedial measures according to the decisions of Board Audit Committee.

05. Anti Money Laundering Risk Management

Southeast Bank has always given utmost importance to activities relating to Anti Money Laundering & Combating the Financing of Terrorism to mitigate the reputational, legal and regulatory risk for the bank. Southeast Bank follows a zero tolerance strategy against AML & CFT issues.

The bank has put the following tasks in place for mitigating the risk of money laundering, terrorist financing and proliferation financing at home and abroad:

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1. Works to establish an Enterprise wide AML & CFT policy & culture

2. Adheres to applicable AML & CFT laws and regulations as established by BFIU and other regulatory agencies

3. Reports all identified suspicious transactions/activities as and when identified considering related laws and regulations

4. Monitors AML & CFT activities of the branches, all other related divisions and off shore banking units to check their compliance against AML & CFT related laws and regulations.

5. Retains all customer and AML & CFT documents for the period specified by BFIU

6. Trains all employees on AML & CFT laws & regulations, arranges refresher training for the existing employees & keeps records of training related information

7. Ensures Enhanced Due Diligence (EDD) for High Risk accounts

8. Conducts awareness building program on AML & CFT issues around the year for stakeholders of the bank.

06. Information Technology Risk Management

With the advances in Information and Communication Technology, the major Banks in Bangladesh have introduced online banking service through deploying centralized Core Banking Software (CBS). The Banks have gradually introduced alternative delivery channels, like ATM, POS terminal, Internet Banking and Mobile Financial Service (MFS), other than traditional branch banking system. The customers have been offered with different international branded Credit and Debit cards which facilitated them to make payment or withdraw cash at their convenience without visiting banks’ branches. The opportunity of modern information technology is being fully availed by the financial institutions to expedite financial inclusion process for unbanked population. However, due to dependence on technology for banking operation, it is inviting more risks and vulnerabilities especially fraudulent transactional activities from internal and external sources. Therefore, the Bank has to have strong policies and processes for assessment

of all categories of risks to identify and mitigate them in banking operation. Moreover, before introducing new banking product or service, proper risk assessment is to be conducted for securing information assets of the Bank from internal and external threats.

Taking into consideration of the technological risks, the Bank has been taking substantial initiatives to protect its business from ICT related threats and vulnerabilities. Review of ICT risk management policy, formation of IT security and risk management team, conducting vulnerability assessment and internal and external penetration testing (VA-PT) are the noteworthy steps taken by the Bank to mitigate operational risks related to information technology. Throughout the year, Information Security and risk management audit and inspection were conducted by the internal compliance team, external audit firm and Central Bank. We are also in the process of implementation of 24/7 Network and Security Monitoring System within a shortest possible time. The ICT risk management is an ongoing process, and the Bank is continuously examining risks by analyzing threats and vulnerabilities in its different banking services under the risk management framework and taking gradual steps to mitigate identified risks.

07. Environmental Risk Management

Southeast Bank Limited recognizes that balancing non-financial factors such as environmental and social issues with financial priorities is an essential part of good corporate citizenship, in addition to being fundamental to risk management and the protection of investors. We have a direct impact on the environment through our daily consumption of energy and paper/Ink resources. We also potentially have an indirect effect on the environment through the provision of financial services to projects in environmentally sensitive areas. Protecting the natural systems upon which all life depends while lifting people out of poverty and advancing economic development are among the greatest challenges confronting humanity. We recognize that the policies and practices we adopt today will shape not only our lives but also those of future generations. We therefore have an opportunity to make a positive contribution to

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environmental and social concerns by enacting policies so that our business operations do not degrade the environment or cause social harm. Such policies not only indicate positive environmental responsibility but also present business opportunities such as innovative financial products and investments in sustainable forestry and renewable energy. This will help us better manage our risks, develop expertise, and provide clients with solutions to evolving exposures.

To demonstrate our commitment, Southeast Bank Limited has adopted a comprehensive environmental policy. The policy will be implemented with an Environmental Management System that includes planning, training, implementation, measurement, reporting and review, and applied to new business and existing business that comes up for renewal or extension. Specifically, we will integrate environmental and social awareness into the credit analysis and financing decision process, and incorporate it, where appropriate, as part of our due diligence review. We will train relevant employees to take responsibility for and implementation of these policies. According to the policy:

SEBL defines the term "environment" to include both ecological (such as physical and biological) aspects and related social aspects (such as worker protection and community issues).

SEBL recognizes that taking ecological and social aspects into account is part of good business and leads to sustainable development. The Bank believes that this approach enhances the client's competitive advantage and that economic growth and a healthy environment go hand in hand.

SEBL prioritizes and actively seeks to finance projects with direct or indirect environmental benefits.

SEBL assesses the environmental aspects of all loan applications.

SEBL commits itself to act as a good corporate citizen and will continually pursue improvements in its operations and in applying best practices in environmental management in its internal operations.

SEBL seeks business partners who share their vision and commitment to sustainable development and work together with other organizations to promote sound, coordinated and effective approaches to environmental issues.

The Bank also formed a new Sustainable Finance Unit as per Bangladesh bank guideline. Terms of Reference of the Unit includes implementation of Environmental and social risk management policy.

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Disclosure on Risk Based Capital Adequacy (Basel III)

The promotion of transparency and market discipline through regulatory disclosure requirements have always been key tenets in the Basel framework. The disclosures enable stakeholders and market participants to assess the Bank’s risk appetite and risk exposures, and encourage the banks to move towards more advanced forms of risk management.

The purpose of this disclosure report is to set out how Southeast Bank complies with the Pillar 3 requirements under Basel III. The report will enable market participants to assess key information relating to the Bank’s regulatory capital and risk exposures more effectively in order to instill confidence about the Bank’s exposure to risk and overall regulatory capital adequacy. The report provides additional information to allow market participants to have a full picture of the risk profile of the Bank, to assess key information relevant to the capital structure, risk exposures, risk assessment processes and hence the capital adequacy of the Bank.

These qualitative and quantitative disclosures of the Bank are prepared in accordance with the central bank’s Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for Banks in line with Basel III). The disclosures meet the minimum regulatory requirements and provide disclosure of the risks to which it is exposed, both on and off-balance sheet. The disclosure framework has the following components:

A. Scope of Application B. Capital Structure C. Capital Adequacy D. Credit Risk E. Equities: disclosures for banking book positions F. Interest rate risk in the banking book (IRRBB) G. Market Risk H. Operational RiskI. Liquidity Ratio J. Leverage RatioK. Remuneration

A. SCOPE OF APPLICATION

Qualitative Disclosures

a) The name of the top corporate entity to which this framework applies: Southeast Bank Limited.

b) The quantitative disclosures are made on the basis of consolidated audited financial statements of the Bank and its Subsidiaries as at and for the year ended December 31, 2018 prepared under relevant International Accounting and Financial Reporting Standards as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) and related circulars/instructions issued by Bangladesh Bank from time to time. In preparing consolidated financial statements, the Bank and its subsidiaries’ financial statements are combined on a line by line basis by adding together like items of assets, liabilities, equity, income and expenses. However, all intra group balances, transactions, profits and losses are eliminated in full.

c) Southeast Bank Limited has four subsidiaries particulars of which are given below:

Southeast Bank Capital Services Limited

Date of Incorporation: September 23, 2010

Date of Commencement: September 23, 2010

Authorized Capital : BDT 6,000.00 million

Paid up Capital : BDT 5,500.00 million

Ownership Interest in Capital : 99.82%

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Southeast Financial Services (UK) Limited

Date of Incorporation: February 22, 2011 Date of Commencement: September 26, 2011 Paid up Capital : GBP 300,000.00 Ownership Interest in Capital : 100%

Southeast Financial Services (Australia) Pty Limited

Date of Incorporation: March 18, 2013 Date of Commencement: March 18, 2013 Paid up Capital : AUD 312,082.90 Ownership Interest in Capital : 100%

Southeast Exchange Company (South Africa) Pty Limited

Date of Incorporation: December 15, 2014 Date of Commencement: December 15, 2014 Paid up Capital : RAND 6,632,179.00 Ownership Interest in Capital : 100%

Quantitative Disclosures

Southeast Bank Limited has four subsidiaries: Southeast Bank Capital Services Limited, Southeast Financial Services (UK) Limited, Southeast Financial Services (Australia) Pty Limited and Southeast Exchange Company (South Africa) Pty Limited. Assets and liabilities of these subsidiaries are consolidated with the financials of the parent company. There is no capital deficiency in the financial year 2018.

B. CAPITAL STRUCTURE


a) The regulatory capital under Basel-III is composed of (I) Tier-1 (Going-concern Capital)

and (II) Tier-2 (Gone-concern Capital). From regulatory capital perspective, going-concern capital is the capital which can absorb losses without triggering bankruptcy of the Bank and gone-concern capital is the capital which will absorb losses only in a situation of liquidation of the Bank. Tier-1 capital is composed of (a) Common Equity Tier 1 and (b) Additional Tier 1, Whereas, Common Equity Tier 1 (CET1) capital consists of paid-up capital, statutory reserve, general reserve, retained earnings, minority interest in subsidiaries etc.

Tier-2 capital is composed of general provision, subordinated debt, revaluation reserves etc.

Capital requirement rules

The Bank is required to maintain the following ratios on an ongoing basis:

1. Common Equity Tier 1 of at least 4.5% of the total RWA.

2. Tier-1 capital will be at least 6.0% of the total RWA.

3. Minimum CRAR of 10% of the total RWA.

4. Additional Tier 1 capital can be admitted maximum up to 1.5% of the total RWA or 33.33% of CET1, whichever is higher.

5. Tier 2 capital can be admitted maximum up to 4.0% of the total RWA or 88.89% of CET1, whichever is higher.

6. In addition to minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is introduced which to be maintained in the form of CET1.

Following is the phase-in arrangement for the implementation of minimum capital requirements:

Particulars 2015 2016 2017 2018 2019

Minimum Common Equity Tier-1 Capital Ratio 4.50% 4.50% 4.50% 4.50% 4.50%Capital Conservation Buffer - 0.625% 1.25% 1.875% 2.50%Minimum CET-1 plus Capital Conservation Buffer 4.50% 5.125% 5.75% 6.375% 7.00%Minimum T-1 Capital Ratio 5.50% 5.50% 6.00% 6.00% 6.00%Minimum Total Capital Ratio 10.00%% 10.00% 10.00% 10.00% 10.00%

Minimum Total Capital plus Capital Conservation Buffer 10.00% 10.625% 11.25% 11.875% 12.50%

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Quantitative DisclosuresBDT in Million

b) Regulatory Capital: Consolidated SoloTier-1 capital1) Common Equity Tier-1 Capital (CET-1)Fully Paid-up capital 10,544.93 10,544.93Non- repayable share premium account - -

Statutory reserve 10,094.15 10,094.15 General reserve 247.65 247.65 Retained earnings 2,898.04 2,803.81 Dividend equalization Reserve - -

Minority interest in subsidiaries 10.07 -

Regulatory AdjustmentsGoodwill and all other Intangible assets 124.42 124.422) Additional Tier-1 Capital (AT-1)3) Total Tier-1 capital (1+2) 23,670.42 23,566.12Tier-2 capitalGeneral provision (unclassified loans, SMA, off balance sheet) 4,522.60 4,522.60 Subordinated debt 10,200.00 10,200.00Revaluation Reserves as on December 31, 2014 (50% of Fixed Assets and Securities & 10% of Equities) 2,335.43 2,335.43

All other preference shares - -

Regulatory AdjustmentsRevaluation Reserves for Fixed Assets, Securities & Equity Securities (Phase in deductions as per Basel-III Guidelines) 1,868.35 1,868.35

4) Total Tier-2 capital 15,189.69 15,189.69c) Regulatory AdjustmentsRevaluation Reserves for Fixed Assets, Securities & Equity Securities (Phase in deductions as per Basel-III Guidelines) 1,868.35 1,868.35

Goodwill and all other Intangible assets 124.42 124.42d)Total eligible capital (3+4) 38,860.11 38,755.81

C. CAPITAL ADEQUACYQualitative Disclosures

a) The Bank is presently following Standardized Approach for assessing and mitigating Credit Risk, Standardized Rule Based Approach for quantifying Market Risk and Basic Indicator Approach for Operational Risk to calculate Minimum Capital Requirement (MCR) under pillar-I of Basel-III framework as per the guidelines of Bangladesh Bank.

BDT in Million Capital Adequacy Consolidated Solob) Capital requirement for Credit Risk 27,572.67 27,888.51c) Capital requirement for Market Risk 1,577.89 982.56d) Capital requirement for Operational Risk 2,245.53 2,212.86

e)

Minimum capital requirement(MCR) 31,396.09 31,083.93Total capital maintained 38,860.11 38,755.80Capital surplus over MCR 7,464.02 7,671.87Capital to Risk Weighted Assets Ratio(CRAR) 12.38% 12.47%CET-1 to RWA ratio 7.54% 7.58%Tier-1 Capital to RWA ratio 7.54% 7.58%Tier-2 Capital to RWA ratio 4.84% 4.89%

f) Capital Conservation Buffer (Required) 1.875% 1.875%g) Available Capital under Pillar 2 Requirement 7,464.02 7,671.87

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D. CREDIT RISK


a) Credit risk is the potential loss that may arise from a borrower’s failure to repay a loan or meet its obligation in accordance with agreed term.

1.1. Credit Approval

Bank’s credit risk management guideline has been prepared in line with Bangladesh Bank guidelines illustrating the approval process, delegation of authority and other credit related important issues. The approval process segregates relationship management/marketing from the approval authority. The approval authorities are delegated to different levels of management and Board. The Board of Directors of the Bank has the highest level of authority to approve any credit proposal and delegate such authority to the competent authority (EC, MD, DMD, and Branch Manager). The Corporate Banking Division receives the proposals from the branches and thereafter scrutinizes, analyzes and processes in conformity with Credit Risk Management (CRM) guidelines of Bangladesh Bank and forward the memorandum embodying their recommendations to the CRM division for scrutiny and to ensure that all regulatory procedures/rules and regulations etc. are complied with. After exercising due diligence by CRM, they convey their observations to Corporate Banking/Islamic Banking/SME and Agri Credit Division for submitting the proposals to Head Office Credit Review Committee (HOCRC) and finally forward it to the competent authority for approval.

1.2. Credit Administration

The Bank accomplishes documentations and makes disbursements with utmost care to reduce the potential credit risk. The disbursement authority is given to the branches within approved limit after the completion of necessary documentation. Furthermore, the bank constantly monitors clients’ repayment behaviors, fulfillment of conditions given before disbursement and compliance of covenants in post disbursement period.

1.3. Credit Monitoring

The loan portfolio with classification status is reviewed periodically and brought to the notice of the Board of Directors of the Bank and the senior level management regarding downgradation, overdue, Special Mention Account (SMA), classified and rescheduled portfolio along with early alert list for their information and guidance. The Branches are communicated through letters and circulars for implementation of efficient credit risk management in a proper manner including adherence to the Bank’s and Bangladesh Bank’s rules and regulations. They have also been advised to follow the guidelines of comprehensive recovery/collection procedures and systems to keep the wealth of credit portfolio of the bank sound.

1.4. Credit Assessment and Grading

Know Your Customer (KYC) is the first step to analyze any credit proposal. Banker-Customer relationship is established through opening of CD/SB accounts of the customers. Proper introduction, photographs of the account holders/ signatories, copy of passports etc. and all other required papers as per Bank’s policy are obtained at time of account opening. Physical verification of customer address is done prior to credit appraisal. At least three Cs, i.e., Character, Capital and Capacity of the customers are confirmed. Credit Appraisals include inter alia the details of amount and type of loan(s) proposed, purpose of loan (s), result of financial analysis, Debt Structure (Tenor, Covenants, Repayment Schedule, Interest), security arrangements. The above are minimum components to appraise a credit and there are other analyses depending on the nature of credit.

The bank follows the CRG manual of Bangladesh Bank, circulated on December 11, 2005 through BRPD circular no. 18. Borrowers are assigned to different risk grades based on the qualitative and quantitative factors of their business. There are 08 grades based on the marks obtained in qualitative and quantitative factors. The grades and factors are:

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Grading Short Name Marks Number

Superior SUP 100% Cash Covered Government Guarantee International Bank Guarantee

1

Good GD 85+ 2Acceptable ACCPT 75-84 3Marginal/Watch list MG/WL 65-74 4Special Mention SM 55-64 5Substandard SS 45-54 6Doubtful DF 35-44 7Bad &Loss BL <35 8

Qualitative and Quantitative factors/principal risk components WeightFinancial Risk 50%Business/Industry Risk 18%Management Risk 12%Security Risk 10%Relationship Risk 10%

Credit Risk Mitigation

Potential credit risks are mitigated by taking primary and collateral securities. There are other risk mitigates like netting agreements and other guarantees. The legal certainty and enforceability of the mitigates are verified by the professionals of the respective fields. Collateral types which are eligible for risk mitigation include cash, residential, commercial and industrial property, land and machinery; marketable securities etc. Collaterals are physically verified by the officials of the Branches and Head Office. Side by side, valuation of the same are also done by the enlisted surveyor of the bank in accordance with the credit policy and procedures.

Past Due and Impaired Credit

A claim that has not been paid within due date is termed as past due claim. Payment may be for repayment/renewal/rescheduling or as an installment of a loan. For loan classification and maintenance of specific and general provision, Bank follows BRPD circular no-14 and 19 of 2012, 05 of 2013 and 16 of 2014 and as advised by Bangladesh Bank from time to time.

Approaches followed for specific and general allowances:

Particulars

Short Term Agri.

Credit

Consumer Financing

SMEF Loans to BHs/MBs/SDs

All other Credit

Other than

HF, LP, CCHF LP CC

Standard 1.0% 5% 1% 2% 2% 0.25% 2% 1%

SMA - 5% 1% 2% 2% 0.25% 2% 1%

SS 5% 20% 20% 20% 20% 20% 20% 20%

DF 5% 50% 50% 50% 50% 50% 50% 50%

B/L 100% 100% 100% 100% 100% 100% 100% 100%

NB: SMA=Special Mention Account, SS=Substandard, DF=Doubtful, B/L=Bad/Loss, HF=Housing Finance, LP=Loans for Professionals to setup business, CC=Credit Card, SMEF= Small and Medium Enterprise Financing, BHs/ MBs/SDs= Loans to Brokerage Houses/Merchant Banks/Stock Dealers.

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1.7 Base for Provision

For the following types of eligible collaterals, provision is maintained at the stated rates mentioned above on the base for provision. Base for provision is calculated deducting interest suspense and the value of eligible collateral from outstanding classified loans. Eligible collaterals are the followings:

Deposit with the same bank kept under lien against the loan

Government bond/savings certificate kept under lien,

Guarantee given by Government or Bangladesh Bank.

For all other eligible collaterals, the provision are maintained by the stated rates mentioned above on the balance calculated as the greater of the following two amounts:

Outstanding balance of the classified loan less the amount of Interest Suspense and the value of eligible collateral; and

15% of the outstanding balance of the loan.

1.8 Eligible Collateral

The following collaterals are included as eligible collateral in determining base for provision:

100% of deposit under lien against the loan

100% of the value of government bond/savings certificate under lien

100% of the value of guarantee given by Government or Bangladesh Bank

100% of the market value of gold or gold ornaments pledged with the bank.

50% of the market value of easily marketable commodities kept under control of the bank

Maximum 50% of the market value of land and building mortgaged with the bank

50% of the average market value for last 06 months or 50% of the face value, whichever is less, of the shares traded in stock exchange.

1.9 Subjective Judgment

Considering the nature and performance of a loan, the bank can also classify a particular loan on the basis of subjective judgment taking into consideration the factors such as uncertainty or doubt of repayment, continuous loss of capital, adverse situation, decrease of value of securities, legal suit etc. However, regardless of all rules and regulations the central bank can classify any loan on the basis of their subjective judgment and can instruct the bank to make additional provision on non-performing loans.


b) Total gross credit risk exposures broken down by major types of credit exposure:

Total gross credit risk exposures by major types: Bangladesh Bank guidelines on Basel III stipulated to segregate bank's asset portfolio into different categories and the following table shows our gross exposure in each asset category.

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BDT in MillionSl Particulars Consolidated Soloa Cash 21,515.43 21,515.37b Claims on Bangladesh Government and Bangladesh Bank 50,963.04 50,963.04c Claims on Banks & NBFIs 26,945.89 26,769.16d Claims on Corporate 136,303.74 136,303.74e Claims on SME 61,422.16 61,422.16f Claims under Credit Risk Mitigation 16285.14 16,285.14

g Claims categorized as retail portfolio (excluding SME, Consumer finance and Staff loan ) up to 1 crore 1,125.45 1,125.45

h Consumer finance 2,264.46 2,264.46i Claims fully secured by residential property 3,794.95 3,794.95j Claims fully secured by commercial real estate 4,889.36 4,889.36

k 1. Past Due Claims that is past due for 60 days or more (Risk weights are to be assigned net of specific provision):

Where specific provisions are less than 20% of the outstanding amount of the past due claim 12,554.82 12,554.82

Where specific provisions are no less than 20% of the outstanding amount of the past due claim 2,234.20 2,234.20

Where specific provisions are more than 50% of the outstanding amount of the past due claim 1,286.44 1,286.44

2. Claims fully secured against residential property that are past due for more than 60 days and/or impaired specific provision held there-against is less than 20% of outstanding amount

194.89 194.89

3. Loans and claims fully secured against residential property that are past due for more than 60 days and/or impaired and specific provision held there-against is no less than 20% of outstanding amount

97.81 97.81

l Capital Market Exposure 2,467.42 -

m

Investment in equity and other regulatory capital instruments issued by other banks and Merchant Banks/Brokerage Houses/Exchange Houses which are not listed in the Stock Exchanges (other than those deducted from capital) held in banking book

7,027.07 12,582.10

n Investments in premises, plant and equipment and all other fixed assets 9,337.30 8,782.36 o Claims on all fixed assets under operating lease - -p All other assets i) Claims on GoB & BB 1,092.61 1,092.61 ii) Staff loan 386.70 386.70 iv) Claims on Offshore Banking Unit - - v) Others 3,017.63 2,906.78 Total 365,206.51 367,451.55

c) Geographical distribution of exposuresBDT in Million

Regions Exposure % of Total Loan

Region Based

Dhaka 204,975.12 77.28Chattogram 46,986.12 17.72

Rajshahi 5,439.23 2.05Sylhet 4,208.56 1.59Khulna 2,152.15 0.81

Rangpur 836.23 0.31Barisal 220.37 0.08

Mymensingh 386.44 0.16Total 265,204.21 100.00

Country BasedDomestic 265,204.21Overseas -

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b) Major Industry wise distribution of exposures (Industrial Loan)BDT in Million

Ready Made Garment industries (RMG) 50,850.23 19.77%Real Estate industries 20,733.83 7.82%Textile industries 15,234.85 5.74%Agro-Based Industries 13,015.70 4.91%Cement & Ceramics industries 6,316.20 2.38%Ship Breaking & Ship Building industries 4,934.20 1.86%Pharmaceuticals industries 1,870.50 0.71%Other Industries 80,189.50 30.24%Total 193,145.00 72.83%e) Residual contractual maturity breakdown of the whole portfolio

BDT in MillionOn demand 35,920.10 13.54%Less than three months 42,398.30 15.99%More than three months but less than one year 93,389.80 35.21%More than one year but less than five years 55,815.50 21.05%More than five years 37,680.51 14.21%Total 265,204.21 100.00%

f) Major Industry type amount of impaired loansBDT in Million

Agriculture 58.00 0.37%Industrial (Manufacturing) 6,636.25 42.65%Industrial (Services) 3,375.07 21.69%Consumer Credit 132.11 0.85%Trade & Commerce (Commercial Loans) 4,795.73 30.82%Credit to NBFI - -Loans to Capital Market - -Other Loans 561.69 3.62%Total 15,558.85 100.00%

g) Gross Non-Performing Assets (NPAs)BDT in Million

Gross Non-Performing Assets (NPAs) 15,558.85Non-performing assets to outstanding loans and advances 5.87%Movement of Non-Performing Assets (NPAs): Opening balance 13,878.50 Additions 11,233.90 Reductions 10,549.70 Closing balance 15,558.85Movement of specific provisions for NPAs: Opening balance 6,628.70 Provision made during the period 1,287.30 Write off 2,045.90 Write back of excess provisionsClosing balance 9,961.90

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E) EQUITIES: DISCLOSURES FOR BANKING BOOK POSITIONS


a) Banking book positions consist of those assets which are bought for holding until they mature. The bank treats unquoted equities as banking book assets. Unquoted equities are not traded in the bourses or in the secondary market. They are shown in the balance sheet at cost price and no revaluation reserve is created against these equities.


b) Values of investments as disclosed in the Balance Sheet:BDT in Million

Consolidated Solo

Cost Price Market Price Cost Price Market Price

Unquoted Share 77.07 77.07 77.07 77.07

Quoted Share 7,443.07 7,058.20 4,893.64 4,081.60

c) For Banking Book EquityBDT in Million

Consolidated Solo

The cumulative realized gains/losses arising from sales and liquidations in the reporting period - -

d) For Banking Book EquityBDT in Million

Consolidated Solo

Total unrealized gains/losses - -

Total latest revaluation gains/losses - -

Any amounts of the above included in Tier 2 capital - -

e)BDT in Million

ParticularsCapital Requirement

Consolidated Solo

Unquoted Share 9.63 9.63

Quoted Share 1,411.64 816.32

As equities do not have any maturity, we have calculated risk weighted assets for unquoted equities on the basis of fixed risk weight which is 125% of investment value. And for quoted share capital charge is 10% for both specific and market risks

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F. INTEREST RATE RISK IN THE BANKING BOOK (IRRBB)


a) Interest rate risk affects the bank’s financial condition due to adverse movements in interest rates of interest sensitive assets and interest sensitive liabilities. Changes in interest rates have two types of impact:Earnings perspective: It affects a bank’s earnings by changing its net interest income and the level of other interest sensitive income and operating expenses.

i) Economic value perspective: The economic value of future cash flows changes when interest rate changes.

ii) At present SEBL is following the Bangladesh Bank prescribed format for assessing the economic value due to interest rate shock.


b) Earnings perspective:

Here, we have used maturity gap method to measure changes in earnings due to changes in interest rates:BDT in Million

Up to 12 Month (Cumulative Gap)

Percentage changes in interest rate

Net interest income and re-pricing impact

33,500.60

1% increase in interest rate +335.00

1% decrease in interest rate -335.00

2% increase in interest rate +670.012% decrease in interest rate -670.013% increase in interest rate +1,005.023% decrease in interest rate -1,005.02

G. MARKET RISK


a) View of the Board of Directors on trading/investment activities

Market risk arises due to changes in the market variables such as interest rates, foreign currency exchange rates, equity prices and commodity prices. The financial instruments held with trading intent or to hedge against various risks, which are purchased to make profit from spreads between the bid-price and ask price are subject to market risk. SEBL is exposed to market risk mostly stemming from Government Treasury Bills and Bonds, Shares of listed Public Limited Companies, foreign currency etc.

Methods used to measure Market Risk

There are several methods used to measure market risk and the bank uses those methods which are deemed fit for a particular scenario. For measuring interest risk from earnings perspective, the bank uses Maturity Gap analysis, Duration Gap analysis, Sensitivity Analysis and Mark to Market (MTM) method. For measuring foreign exchange risk, the bank uses VaR analysis.

We use standardized (Rule Based) method for calculating capital charge against market risks for minimum capital requirement of the Bank under Basel-III.

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Market Risk Management System

The Bank has its own Market Risk Management System which includes Asset Liability Risk Management (ALM) and Foreign Exchange Risk Management under the core risk management guidelines.

Asset Liability Management (ALM): The ALM policy specifically deals with liquidity risk management and interest rate risk management framework.

Foreign Exchange Risk Management: Foreign exchange risk arises when the bank is involved in foreign currency transactions. These include foreign currency exchange, placement, investments, loans, borrowings and different contractual agreements. We use different hedging techniques to mitigate foreign exchange risks.

Policies and processes for mitigating market risk are mentioned below:

Risk Management and reporting is based on parameters such as Maturity Gap Analysis, Duration Gap Analysis, VaR etc, in line with the global best practices

Risk Profiles are analyzed and mitigating strategies/ processes are suggested by the Asset Liability Committee (ALCO)

Foreign Exchange Net Open Position (NOP) limit, deal-wise trigger limits, Stop-loss limit, Profit / Loss in respect of cross currency trading are properly monitored and exception reporting is regularly carried out

Holding of equities is monitored regularly so that investment remains within the limit as set by Bangladesh Bank

Asset Liability Management Committee (ALCO) analyzes market and determines strategies to attain business goals

Reconciliation of foreign currency transactions


b) The capital requirements for: BDT in Million

Particulars Consolidated SoloInterest rate risk 141.34 141.34

Equity position risk 1,411.64 816.32

Foreign exchange risk 24.90 24.90

Commodity risk - -

Total 1,577.88 982.56

H. OPERATIONAL RISK


a) Views of the Board of Directors on system to reduce Operational Risk

Operational risk is the risk which may arise directly or indirectly due to failure or breakdown of system, people and process. This definition includes legal risk, but excludes strategic and reputation risk. The bank manages these risks through a control based environment in which processes are documented, authorization is kept independent and transactions are reconciled and monitored. This is supported by a periodic process

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conducted by ICCD and monitoring external operational risk events, which ensure that the bank stays in line with the international best practices.

Performance Gap of Executives and Staffs

The bank believes that training and knowledge sharing is the best way to reduce knowledge gap. Therefore, it arranges trainings on a regular basis for its employees to develop their expertise. The bank offers competitive pay package to its employees based on performance and merit. It always tries to develop a culture where all employees can apply his/her talent and knowledge to work for the organization with high ethical standards in order to add more value to the company and for the economy.

Policies and processes for mitigating operational risk

The Bank has adopted policies which deal with managing different Operational Risks. Bank strongly follows KYC norms for its customer dealings and other banking operations. The Internal Control and Compliance Division of the Bank, the inspection teams of Bangladesh Bank and External Auditors conduct inspection on different branches and divisions at Head Office and submit reports presenting the findings of the inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports.

Approach for calculating capital charge for operational risk

The Bank has adopted Basic Indicator Approach (BIA) to compute capital charge against operational risk under Basel-III as per Bangladesh Bank Guidelines.


b) BDT in Million

Particulars Consolidated Solo

The capital requirements for operational risk 2,245.53 2,212.86

Calculation of Capital Charge for Operational Risk (Consolidated)

Basic Indicator Approach BDT in Million

Year Gross Income (GI) Average GI 15% of Average GI

December, 2016 13,569.32

14,970.23 2,245.53December, 2017 14,786.25

December, 2018 16,555.11

Total GI 44,910.69

I. LIQUIDITY RATIO


a) Views of the Board of Directors on system to reduce Liquidity Risk

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Southeast Bank Limited has proficient Board of Directors that has always been giving utmost importance to minimizing the liquidity risk of the Bank. In order to reduce liquidity risk, strict maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Reserve (SLR) is also being emphasized on a regular basis. Apart from these, as part of Basel-III requirement Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are also maintained under the guidance of the Board of Directors.

Methods used to measure Liquidity Risk

In order to measure liquidity risk various methods are being used which are as follows:

GAP analysis is being done regularly that deals with the mismatch of assets and liabilities in different time buckets like 0-30 days, 31-90 days, 91-180 days, 181-270 days, 271-365 days and beyond 1 year. In our monthly ALCO paper, we show this GAP analysis based on which different strategic decisions are taken in order to reduce liquidity risk that may arise due to the mismatch between assets and liabilities

Cash flow forecasting is another technique to measure liquidity risk that may arise due to future cash flow mismatch. In our monthly ALCO paper we show this cash flow forecasting

Liquidity Risk Management system

As part of liquidity risk management system, we have Board approved liquidity contingency plan. In this liquidity contingency plan, we have incorporated all the strategic decisions to tackle any sort of liquidity crisis. As per Bangladesh Bank ALM guideline, this liquidity contingency plan is reviewed annually which is approved by the Board of Directors.

Policies and processes for mitigating Liquidity risk

We strictly follow the Bangladesh Bank instructions and policy guideline to prepare the structural liquidity profile and submit it to Bangladesh Bank every month. We also place liquidity related information to the meeting of the Board of Directors each month so that Board can give necessary directives to adjust/prevent us from the branch of the limits set by the Board and the Bangladesh Bank.


b)BDT in Million

Liquidity Coverage Ratio (LCR) 123.37%

Net Stable Funding Ratio (NSFR) 115.18%

Stock of High quality liquid assets 73,760.92

Total net cash outflows over the next 30 calendar days 59,788.88

Available amount of stable funding 307,660.82

Required amount of stable funding 267,113.87

J. LEVERAGE RATIO


a) Views of the Board of Directors on system to reduce excessive leverage

Leverage is an inherent and essential part of modern banking business. In other words, banks are highly leveraged organizations which facilitate leverage for others. Leverage, in simple terms, is the extent to which

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a bank funds its assets with borrowings rather than capital. More debt relative to capital means a higher level of leverage.

Banks have a range of financial incentives to operate with high leverage. But it creates risk when it crosses a certain point. Therefore, the Board views that sound prudential controls are needed to ensure that the organization maintains a balance between its debt and equity. The Board also believes that the bank should maintain its leverage ratio on and above the regulatory requirements which will eventually increase the public confidence in the organization.

Policies and processes for managing excessive on and off-balance sheet leverage:

The leverage ratio is a non risk based approach to the measurement of leverage. The ratio acts as a ‘backstop’ against the risk-based capital requirements and is also designed to constrain excess leverage. There are three types of leverage: balance sheet, economic and embedded. Under Basel III, the Bank has to maintain a leverage ratio in excess of 3% of its exposures. The leverage ratio is intended to achieve the following objectives:

a) Constrain the build-up of leverage in the bank

b) Reinforce the risk based requirements with an easy to understand and a non-risk based measure.

To manage excessive leverage, the Bank follows all regulatory requirements for capital, liquidity, commitment, Advance Deposit Ratio (ADR), Maximum Cumulative Outflow (MCO), large exposures, as well as risk management which are eventually reinforcing standards set by Bangladesh Bank. The aim is to ensure that the high leverage that is inherent in banking business models is carefully and prudently managed.

Approach for calculating exposure

Leverage ratio reflects the Bank’s Tier-1 capital (the numerator) over total exposure (the denominator), which includes its balance sheet exposures and certain off-balance sheet exposures.The capital measure for the leverage ratio is based on the Tier-1 capital. The exposure measure for the leverage ratio follows the accounting measure of exposure. In order to measure the exposure consistently with financial accounts, the followings are applied by the bank:

1. On balance sheet, non-derivative exposures will be net off specific provisions and valuation adjustments

2. Physical or financial collateral, guarantee, or credit risk mitigation purchased is not considered to reduce on-balance sheet exposure.

3. Netting of loans and deposits is not considered.

Off-Balance Sheet (OBS) items are calculated by applying a uniform 100% credit conversion factor (CCF). For any commitments that are unconditionally cancellable at any time by the bank without prior notice, a CCF of 10% is applied.Quantitative Disclosuresb)

BDT in Million

Particulars Consolidated Solo

Leverage Ratio 5.16% 5.15%

On balance sheet exposure 372,823.17 372,342.42

Off balance sheet exposure 85,766.14 85,766.14

Total exposure 458,464.91 457,984.15

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K. REMUNERATION

Qualitative Disclosure

a) Information relating to the bodies that oversee remuneration

The Human Resources Division of the Bank oversees the remuneration in line with its HR policy under direct guidance of the Board of Directors of the Bank. A committee comprising some members of senior Management (Additional Managing Directors) led by the Managing Director is responsible for formulating remuneration policy. The Head of Human Resources Division acts as the Member Secretary of the committee. The remuneration committee is the main body for overseeing the Bank’s remuneration. The committee reviews the position of remuneration and recommend to the Board of Directors for approval taking into consideration present cost of living index, rate of inflation and the existing remuneration of peer banks. The Bank does not have any external consultant in preparing and implementing the remuneration policy. The Bank follows a non-discriminatory policy in respect of remuneration and benefits for Head quarter and regions. However, a foreign posting allowance in remuneration is in practice for employees who are posted outside Bangladesh.

b) Information relating to the design and structure of remuneration processes

The motto of the remuneration policy is to attract and retain productive employees who can contribute substantially to the overall growth of the Bank. The remuneration policy is carefully designed and regularly updated to provide adequate incentives so that the employees are fully committed to do their best to achieve the operational goals of the Bank.

The committee reviewed the salary structure of few grades in the year 2018 and the authority concerned approved upward revision of the pay packages of the employees of those grades as an incentive for posting better result.

The risk and compliance related employees are carrying out the activities independently in line with delegation of powers and job descriptions approved by appropriate authorities.

c) Description of the ways in which current and future risks are taken into account in the remuneration processes

When implementing remuneration measures, the Bank considers business risk, financial and liquidity risk, compliance and reputational risk for each official.

Various types of measures are taken into account in determining these risks. The measures focus on the organizational goals set for operational areas. Asset quality (NPL ratio), cost-income ratio, net profit growth etc. are used for measuring the risks.

The performance of each employee is evaluated for a particular period especially annually against performance indicators set and agreed with the officials at the beginning of the year. Performance differs from employee to employee and this affects the remuneration package.

In the year 2018, there has been no material change that could create impact on the remuneration.

d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration

The Bank has one set of Performance Appraisal Form (PAF) to evaluate the performance of all categories of officials of the bank. The PAF has 3 (Three) parts i.e. (i) Key Performance Indicators, (ii) Personal Attributes and (iii) Job Related Skills and Competencies. Key Performance Indicators (KPIs) are deposit, investment and profit target oriented.

Decisions about promotion, granting of annual increment and incentive bonus are linked to the performance of the employees against the set Key Performance Indicators.

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e) Description of the ways in which the bank seeks to adjust remuneration to take account of longer-term performance

The Bank does not seek to adjust remuneration to take account of longer-term performance.

f) Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these different forms

The Bank pays variable remuneration such as, Technical Allowance for the officials of Information Technology Division, Alternative Delivery Channel (ADC) Unit, Branches & General Banking Division, Legal Affairs Division, Surveillance Allowance for the Head/Supervisor, In-charges & Operators of Central Monitoring System (CMS) of Head Office and Charge Allowance for Heads of Branches. Those allowances are paid taking into account the special and technical nature of the job they perform.

Quantitative Disclosure:

g) Number of meetings held by the main body overseeing remuneration during the financial year and remuneration paid to its matter

03 meetings of remuneration committee were held and no remuneration was paid to the members

h) Number of employees having received a variable

remuneration award during the financial year Number and total amount of guaranteed bonuses

awarded during the financial year Number and total amount of sign on awards made

during the financial year Number and total amount of severance payments

made during financial year

232 employees received a variable remuneration in the year 2018

02 guaranteed bonuses were awarded and the total amount of bonus was BDT 154.58 millionNo amount was paid as sign-on awards

No payment was paid as severance

i) Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms. Total amount of deferred remuneration paid out in the financial year

Not Applicable

j) Breakdown of amount of remuneration awards for the financial year to show:

Fixed and variable. Deferred and non-deferred. Different forms used (cash, shares and share linked

instruments, other forms)

Particulars Amount (BDT in Million)

Fixed 154.58174.62

Variable 20.04Deferred -

Non-deferred 174.62Form used (cash) 174.62

k) Quantitative information about employee’s

exposure to implicit (e.g. fluctuation in the value of shares or performance units) and explicit adjustments (e.g. clawbacks or similar reversals or downward revaluation of awards) of deferred remuneration and retained remuneration:

Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments

Total amount of reductions during the financial year due to ex post explicit adjustments

Total amount of reductions during the financial year due to ex post implicit adjustments

Not Applicable

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Sustainability Appraisal andIntegrated ReportingSustainability Report - At A Glimpse 236-237

Report on Corporate Social Responsibility 238-239

Southeast Bank Foundation 240-241

Southeast Bank – The Financial Express – Policy Research Institute Green Award Trust 242

Environment Related Initiatives 243-244

Green Banking Initiatives- Environmental and Social Obligation 245

Report on Human Capital and HR Accounting 246-248

Policy to encourage employees to participate in Management 249

Whistle Blower Policy 249

Contribution to National Economy 250

Value Added Statement 251

Economic Value Added Statement 252

Market Value Added Statement 253

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Sustainability Report At A Glimpse

Southeast Bank recognizes the opportunity to identify broader business drivers through a sustainable lens that considers the integration of social and environmental aspects in addition to the economic and ethical perspectives within its business strategy and daily operations.

We have translated our sustainable goals into concrete objectives and efforts, focusing on four priorities relevant to our business objectives which are as follows:

Customers' Interest

Community Involvement

Good Employment Practices

Environment

Customers' Interest

Customer-centric banking services are imperative to long term value creation. One of SEBL’s strategic targets is to increase customer loyalty. The Bank develops simple and personalized solutions for its customers, increasing their loyalty to the Bank and boosting their trust by providing excellent service through its network of over 135 branches. We do our best to offer simple, transparent and cost effective products and services which safeguard our customers against risky decisions. Besides conventional banking services, we provide alternative delivery channels like ATM service, internet banking service, online banking, locker service etc. Resolving customer complaints quickly and effectively is fundamental to good customer service and an opportunity to show our customers how much we value their business. We encourage all officials to welcome a complaint, take ownership and resolve it then and there if possible. We actively encourage feedback from our customers and regard complaints as constructive comments that enable us to build customer relationships and improve our business. We believe our customer centric approach promotes and strengthens the bank’s reputation.

Community Involvement

Southeast Bank is firmly rooted in the society where it does its business operations. We believe that a stable environment and a strong economy are correlated and precondition for progress of the country. We acknowledge our social responsibility well and align our business strategies with our culture. We participate in society through community activities using our financial skills and expertise. Every year the Bank keeps aside a substantial amount of money from its profit for the development of the society as Corporate Social Responsibility (CSR). As

Southeast Bank has been actively pursuing its sustainability journey towards meeting its stakeholders’ needs and expectations. Our efforts continue to focus on contributing to the development of our local community, investing in our people, conserving environmental resources, enhancing internal operations and adopting local and global policies and best practices.

Sustainability

GoodEmployment

Practice

CommunityInvolvement

Customers’Interest

Environment

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part of its commercial activity, SEBL offers a wide range of products and services with social and/or environmental added value. These products provide access to financial services for low income groups, socially responsible investment and financing in renewable energies and environment-friendly products. By engaging with the communities we not only contribute to a sustainable society but also help the long term sustainability of our business.

Good Employment Practices

The Bank considers its human resources as its assets. Therefore it is committed to offering competitive compensation, benefits, training and development, congenial working environment to bring dynamism and growth in business. The Bank has a safety policy to ensure sound health of the staff. This ties in nicely with our HR policy and our ambition to be the best place to work. To this end, we offer our employees a range of facilities to support their physical, mental, emotional and spiritual well-being. The Bank’s healthy, safe and good working conditions enhance job enjoyment and reduce the chance of illness, accidents, injuries and damage. Our Human Resource Strategy is designed to attract, retain and motivate the best people in many ways:

Providing a Positive Working Environment

Recognizing, Rewarding and Reinforcing the Right Behavior

Creating a Culture of Excellence in which employees are encouraged and enabled to grow their expertise and sharpen their skills. In addition to an ever evolving training course offering for staff, we have an extensive leadership development program which grooms managers to become inspiring leaders.

We believe this approach attracts new talent, retains valuable employees and underlines the reputation of the bank as a good employer and a desired destination for work. As a consequence the bank has emerged as a strong brand in the financial sector and sought after work place for many.

Environment

Southeast Bank is firmly committed to the environment and combating climate change. This commitment is reflected in the Bank’s corporate governance, in the Bank’s lines of action &

development of products and services. Southeast Bank’s commitment towards environment is evident from its positive environmental impact and measurement of its internal environmental footprint. The Bank strives to ensure that its operations are environment friendly. We believe that every small ‘GREEN’ step taken today would go a long way in building a greener future and that each one of us can work towards a better global environment.

To promote green banking, the bank has a policy which serves the following objectives:

Reducing paperwork, utilizing email to disseminate information, saving important information electronically instead of using paper, encouraging double-sided printing etc.

Reducing electricity consumption, using energy efficient electronic equipments, replacing normal bulbs with energy saving bulbs and turning off computers, lights, fans, air coolers during unoccupied times

Ensuring usage of more day light instead of Electric light and proper ventilation instead of using air-conditioning

Introducing online banking that allows the customers to transfer funds and pay bills through the Internet

Abstaining from giving loans to environmentally harmful projects

Creating awareness amongst the stakeholders about environmental and socially responsible business practices

Financing installation of Effluent Treatment Plant (ETP) in the industrial units and to finance in Solar Energy, Bio-gas and Hybrid Hoffman Kiln (HHK) in brick field.

Moreover, Southeast Bank has introduced ‘GREEN AWARD’ for community leaders and entrepreneurs. The award aims to recognize and honor individuals, organizations and companies for significant contributions towards achieving environmental sustainability through green business and operations, knowledge management and community engagement. The award also aims to boost synergies between the bank and the climate warriors for conserving environmental resources. The bank has also adopted the Environmental Risk Management guidelines in its operation.

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Report on CorporateSocial Responsibility CSR Policy of Bank

Our Corporate Social Responsibility (CSR) activities follow transparent business practices that are based on ethical values, compliance with legal and regulatory requirement and respect for people, communities and the environment. We are responsible for the totality of our impact on people and the planet, beyond making profit. Our corporate social responsibility is about addressing the needs of all the stakeholders in a way that advances our business and makes a positive and meaningful contribution to the society.

Southeast Bank pursues a strong policy based on its belief in Corporate Social Responsibility (CSR), a policy by which we contribute our support to the society in which we live and operate. By this policy, we contribute our small bit of backing in sustaining the society that gives us the business sustenance. Our Corporate Social Responsibility encompasses our customers, employees, shareholders, suppliers, business associates and the society as a whole. We endeavor to achieve our objectives in the area of corporate social responsibility in the following manner:

i) Stressing upon extension of credit and participation in projects for economic development of the country;

ii) Following fair and ethical banking practices and maintaining sound management;

iii) Developing and prospering with customers by offering top-quality and high-valueadded products and services;

iv) Offering competitive pay package and career path to the employees and creating a congenial workplace;

v) Enhancing shareholder value by optimizing financial performance at a competitive cost;

vi) Creating a lasting relation with suppliers and business associates for mutual benefit;

vii) Supporting charitable ventures, relief operations and environment protection;

viii) Coming to the aid of the poor and the needy people of the society;

ix) Maintaining high compliance standard in regard to all relevant laws and regulations of all regulatory bodies;

x) Supporting art, education, sports, culture, healthcare etc;

xi) Promoting good community relation to foster a relationship of understanding, trust and credibility;

xii) Observing environment related laws and regulations and working for healthy development of the society;

xiii) Supporting development of the women community;

xiv) Carrying on energy and resource-saving activities within the Bank;

xv) Winning the reputation that the citizens acknowledge the significance of Southeast Bank’s existence;

Southeast Bank Foundation (SEBF)

With a view to discharging Corporate Social Responsibilities in a most organized and coordinated way, Southeast Bank Foundation was set up by Southeast Bank Limited in 2002. Because of having effective and organized frameworks, it has succeeded in undertaking a number of CSR programs.

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Donation to the Prime Minister’s Relief and Welfare Funds

Southeast Bank never lacks in extending its material and financial support to national causes and natural calamity victims on humanitarian ground. At the call of necessity, Southeast Bank donated BDT 57.19 million to the Prime Minister’s Relief and Welfare Fund in 2018.

Educational Scholarship

Southeast Bank Foundation started Scholarship Program back in 2009. It aims at helping the promising and brilliant learners coming from poor families in the pursuit of their education at different levels. The process of selection of students for scholarship is done most neutrally. In 2018, we spent total BDT 13.62 million for Scholarship to students at different levels selected from educational institutions across the country. In 2018, scholarship was given to 692 students at different levels.

Southeast Bank Green School

Considering the predominating demand for quality education at the grooming stage of life, Southeast Bank Green School was set up in 2013 for the children of families with moderate income at Mohammadpur, Dhaka. It is housed in 2 (two) adjacent buildings located in the midst of a number of housing societies. The school follows edexcel British Curriculum. It is equipped with all modern amenities and facilities. Currently, 31 teachers are putting their relentless efforts to impart quality education to the students. In 2018, a total amount of BDT 19.59 million was spent for the school.

Green Award

Corporate citizenship to us means thinking long term and working to integrate social and environmental considerations into how we run our business. We want to inspire the individuals and organizations who are actively working to preserve environment. With that end in view, the Board of Directors of the Bank in its 395th meeting held on March 14, 2012 decided to give Green Awards to institutions and Women Entrepreneurs for really making significant contribution to the preservation of environment. The award was named, ‘Southeast Bank - The Financial Express – Policy Research Institute Green Award’. A separate report on Green Award Trust is included elsewhere in this Annual Report.

Support for Educational Institutions

Education is the backbone of a nation. To create good citizens for the nation, we supported educational institutions in improving their educational environment. In 2018, we spent BDT 33.35 million for the purpose.

Financial Support to poor people for medical treatment of their serious diseases

We get our business sustenance from the society in which we operate. We stand by the poor people distressed by serious illness and provide them financial assistance for medical treatment of their serious diseases. In the year 2018, an amount of BDT 29.55 million was spent for this humanitarian cause.

Support for promotion of law and order in the country

Crime-free society is the key to economic development. We assisted different bodies in their longing for maintenance of law and order in the country. In 2018, we spent BDT 5.63 million for the purpose.

Donation to different bodies/ Institutions

In 2018, we extended financial support to different bodies and institutions to pursue charitable ventures, environment protection, women emancipation etc. In the year 2018, a total amount of BDT 32.87 million was spent for the purpose.

Total CSR expenditureOur CSR-efforts go beyond charity. We support institutions to protect wildlife habitat, curb effect of climate change and improve conditions of families and communities. We promote green living and green banking. We are not interested in financing projects which are not environment friendly or which may cause damage to it.

In 2018, Southeast Bank spent total BDT 208.53 million for education, sports, art, culture, promotion of national heritage, improvement of the condition of autistic children, women emancipation, health-care, financial assistance to disadvantaged people, donation for national disaster-victims, help for poor peoples’ medical treatment of serious diseases, community development, relief operation, winter-clothes for the cold-hit poor people, etc.


Southeast BankFoundation

The Southeast Bank Foundation has been continuing its operation with extended acclamation because of having a powerful and foresighted Board of Directors which is comprised of the following members:

1 Mr. Alamgir Kabir, FCA Chairman2 Mr. M. A. Kashem Director3 Mr. Azim Uddin Ahmed Director4 Mr. Yussuf Abdullah Harun Director5 Mrs. Duluma Ahmed Director6 Dr. Zaidi Sattar Director7 Mr. Zakir Ahmed Khan Director8 Mr. M. Kamal Hossain Director

The scholarship program of SEBF began its march in the year 2009. It is aimed at helping the promising and brilliant learners coming from poor families. The scholarship program started its journey with two dimensions: one for school level and the other for HSC level students. The program was further strengthened by covering scholarship at graduation level in 2011.

At the school level, the Foundation implements its project with the sincere co-operation of SEBL branches.

In the year 2010, the foundation provided scholarship to 245 students. In the year 2011, the

With a view to discharging Corporate Social Responsibilities in a most organized way, Southeast Bank Foundation was founded by Southeast Bank Limited. Because of having effective and organized frameworks, it has succeeded in undertaking a number of CSR programs, such as, Scholarship for the meritorious students living in the midst of poverty; running English medium school for the children belonging to the middle class family.

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number raised up to 337. In the following year, 243 students were awarded. In 2013, the foundation took care of 209 students’ educational expenses. In next year, 173 were selected for the scholarship. Later in 2015, 2016 and 2017, the numbers of recipients were 110, 52 and 20 respectively.

For the students of the higher secondary level, the news of scholarship initially comes into light through the advertisement in the widely read daily newspapers. In addition, it is also made available in the Bank’s website. In the successive years in 2009; 2010; 2011; 2012; 2013; 2014; 2015; 2016 and 2017 the foundation quite professionally handled the scholarship procedure with the number of students of 230; 281; 278; 282; 245; 206; 200; 200; 200 and 200 respectively. In the session 2018-19, the Foundation received around 2,316 applications for scholarship. After scrutiny and conducting viva voce, the Foundation eventually finalized a list of 200 candidates for the scholarship. In the session

2018-19 the Foundation received around 2,230 applications for scholarship and they accorded the initial cheque through an auspicious ceremony.

The announcement of scholarship for the students of the Graduation level is also first published in the daily newspapers. It is also made available in the Bank’s website. In the academic session 2011-2012, scholarships were awarded to 75 applicants. In the academic session 2012-2013, as many as 75 students were nominated for scholarship. In the next session 2013-2014, total 60 students were selected for the purpose. Again for the session 2014-15, the Foundation managed to select yet another 60 candidates. Thus the number of recipients of scholarship at the graduation level in the reporting year stands at 270 who are being supported by the scholarship and steadily progressing in their respective academic fields with the dream of being a powerful, effective and dynamic resource of the country.

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Southeast Bank – The Financial Express – Policy Research Institute Green Award TrustSoutheast Bank-Financial Express-Policy Research Institute Green Award Trust was established in June 30, 2013. The Bank created the Trust to recognize the individuals or organizations who are contributing to foster green conservation, eco-friendly business and operation, community development and poverty reduction in the country. The Green Award Trustee Board consists of distinguished personalities of the country headed by Dr. Mohammed Farashuddin, Former Governor, Bangladesh Bank. The Chief Executive Officer of Southeast Bank, the Editor of the Financial Express and the Chairman of Policy Research Institute are the ex-officio members of the Board of Trustees. The Board of Trustees is composed of the following distinguished personalities:

1. Dr. Mohammed Farashuddin Chairman

2. Mr. Yussuf Abdullah Harun, FCA Member

3. Dr. Zaidi Sattar Member

4. Dr. Saadat Husain Member

5. Mr. Zakir Ahmed Khan Member

6. Mr. M. Kamal Hossain Member

7. Dr. Ainun Nishat Member

8. Dr. Shahnaz Huq Hussain Member

9. Dr. Quazi Mesbahuddin Ahmed Member

10. Mr. KM Mozammel HoqMember Secretary

The Trust created a fund for the purpose of introducing an award to encourage and recognize the achievement of individuals or organizations

including SMEs as well as large enterprises working for sustainable development and operation of Green Business and Poverty Reduction at community level. The awards are given to the eligible candidates under three categories :( 1) Leadership in Sustainable Green Business Operation (2) Leadership in Sustainable Community Development and Poverty Reduction and (3) Leadership in Environmental Management and Sustainable Development. Applications and nominations are invited through mail and internet. Thereafter, the nominations applications are scrutinized by the Board of Trustees for final selection. The Board of Trustees is the highest authority to decide on the final selection of candidates.

The Trust hereunder the following eight companies / NGOs with the Green Award in 2017:

i. Yunusco (BD) Ltd.

ii. AKH Eco Apparels Limited

iii. SQ BIRICHINA LTD

iv. Snowtex Outerwear Limited;

v. Shaymol Bangla Krishe Khamar

vi. Nature Conservation Management (NACOM)

vii. Wave Foundation

viii. SKS Foundation

The Awardees were honored with certificates and prize money for their contribution towards sustainable development, business community development and poverty reduction.

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EnvironmentRelated Initiatives

Highlights of 'Sustainable Finance Activities' of the Bank

In 2016 Bangladesh Bank instructed to form a "Sustainable Finance Unit" by abolishing existing Green Banking Unit. The new Unit consists of six (06) members under the supervision of Head of Credit Risk Management (CRM) Division.

As per the directives of Bangladesh Bank, Southeast Bank adopted a policy namely "Guidelines on Environmental and Social Risk Management".

A separate policy guidelines for 'Green Banking' was adopted in 2011

Green Finance activities of the Bank:

EnvironmentalActivities 2016 2017 2018

Direct Green Finance

BDT 32.50 million

BDT 9.45 million

BDT 6.90 million

In-direct Green Finance

BDT 17,500.00

million

BDT 14,100.00

million

BDT 12,565.00

million

Southeast Bank arranged several training programs and workshops on green banking and environmental risk management.

Environmental Risk has been incorporated in credit proposals and plays an important role in decision making.

The Bank has introduced Green Awards to encourage individuals and organizations who are actively working to protect the environment and tackle the risks of climate change through green business, environment-friendly operations, community investment and

knowledge management.

Enhancing online coverage for clients; for example: ATM, SMS Banking, Internet Banking, mobile Banking etc.

The Bank has adopted and implemented a green office guide named 'southeast Shobuj Jibon' for the Bank. Salient features of this Green Office Guide are as follows:

'Southeast Shobuj Jibon' is an initiative that moves beyond our processes and our customers to efficient automated channels for building awareness and consciousness for environmental issues. The Bank will introduce a monthly news letter to distribute among the employees of the Bank to create green awareness which will provide attention to the following aspects:

Save Paper save Trees (Every ton of paper involves l7 trees).

Maximum communication through e-mail

Purchase recycled paper.

Print on reusable sheets.

Print multiple pages on single sheets of paper.

Set defaults to print double-sided and print on both sides.

Print only the pages required.

Preview documents before printing.

Increase margin width of the documents.

Introduction of Biometric Attendance system.

Change the default font size from 12 point to l0 which would shrink your document by about 10%.

Southeast Bank aims at facilitating to build a sustainable business that brings benefit to our stakeholders, society, environment and economy as a whole. Our existing Environmental Policy provides a framework for managing our environmental impacts, including climate change by establishing a set of commitments to deliver.

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Use e-mail statements. Using post-consumer waste recycled paper internally (copy and printer paper) and externally (brochures, etc.)

Shredding and recycling all paper internally

Sharing electronic files, voice mail and e-mail instead of paper memos

Both side printing (two-sided) when possible as well as limiting printed materials.

Plant or help plant more trees and preventing the cutting of the existing ones, contribute towards the making of a healthy planet at no extra cost.

Pay your bills online. For every 38,000 bills paid online, 5,058 pounds of greenhouse gases are avoided and two tons of trees are preserved.

Use Car pools to go to work. Avoiding 10 miles of driving every week would eliminate about 500 pounds of carbon dioxide emissions a year.

Drive responsibly. Every gallon of gas bumed emits 20 pounds of carbon dioxide.

Use LED lights. Compact Fluorescents Lights produce the same amount of light as normal bulbs, but use about a quarter of the electricity and last ten times longer.

Unplug electronics. Cell phone chargers, TVs, DVD players, stereos, microwaves and other electronics with transformers continue to draw power, even when they're off or not charging anything, as long as they're plugged in.

Turn off the tap while brushing teeth and of course after use.

Always use a cloth bag. Do not use paper or plastic bags for your grocery.

Global Climate Partnership Fund and Green Climate Fund

SEBL takes pride for its partnership with a prominent Energy Fund named Global Climate Partnership Fund (GCPF) managed by RespoosAbility AG of Switzerland up to 2018, we could draw US$ 20.00 million.

Earlier SEBL got two technical assistance from Frankfurt School of Management and Finance (a renowned European Educational Institution) and “Enclude” (An Advisory group of Netherlands). The Bank made significant progress in 2018 to receive GCF funding from UNFCCR.

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Green Banking Initiatives-Environmental and Social Obligation

Southeast Bank recognizes that balancing non-financial factors such as environmental and social issues with financial priorities is an essential part of good corporate citizenship, in addition to being fundamental to risk management and protecting investors.

We recognize that the policies and practices we adopt today will shape not only our lives but also those of future generations. We therefore have an opportunity to make a positive contribution to environmental and social concerns by enacting policies so that our business operations do not degrade the environment or cause social harm. Such policies not only indicate positive environmental responsibility, but also present business opportunities such as innovative financial products and investments in sustainable forestry and renewable energy. This will help us better manage our risks, develop expertise and provide clients with solutions to evolving exposures.

To demonstrate our commitment, Southeast Bank has adopted a comprehensive environmental and social policy. The policy implemented with Social & Environmental Management System that includes planning, training, implementation, measurement, reporting and review and applies to new business and existing business that comes up for renewal or enhancements. Specifically, we integrate environmental and social awareness into the credit analysis and financing decision process and incorporate it, where appropriate, as part of our

due diligence review. We train relevant employees to take responsibility for and implementation of these policies.

In this connection, various steps have been taken to minimize the bank's direct operational impact to the environment to reduce paper usage and help save trees reduce energy & water consumption. In 2016, Southeast Bank developed a new Social and Environmental Risk management system in line with Bangladesh Bank's draft guide line, IFC's Performance Standard (PS) and Global Climate Partnership Fund Guidelines.

The Bank prioritizes and actively seeks projects with direct or indirect environmental benefits which will contribute in reducing pollution in the country.

Environmental Due Diligence Checklist is meticulously followed while financing new customers and extending credit facilities to existing customers. Environmental Risk Rating (EnvRR) is now mandatory for all individual customers (corporate, institutional, personal, small and medium enterprise) whose aggregate facilities are above the following financing thresholds:

For Small and Medium Enterprise-financing >BDT 2.5 million

For Corporate-Financing> BDT 10 million

For Real Estate-Financing> BDT 10 million

Green Banking or Sustainable Finance refers to any form of financial service integrating environmental, social and governance (ESG) criteria into the business or investment decisions for the Iasting benefit of both clients and society at large.

Comparative position of Environmental Risk Rating conducted by the Bank is as follows:

Environmental Activities 2016 2017 2018

Environmental Risk RatingAround 600 proj ects/clients loan proposal wererated.

Around 630 projects/clients loan proposal were rated.

Around 680 projects/clients loan proposal were rated.

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Report on Human Capital andHR Accounting

Human Resources Division plays a lead role to address the above vision and mission statement of the Bank by offering different categories of excellent services to the clients through effecient and skilled human resources of the Bank.

The Bank considers its employees as human capital. The Bank believes that the employees are the key forces behind the success in banking business in the face of prevailing competitive market situation. In order to ensure sustained growth objectives, the Bank evolves a proper manpower planning approach in determining the movement of the Bank from its current manpower position to the desired / optimum position, ensuring the right number and right kind of people at the right time.

The Bank is committed to attract, develop, motivate and retain a competent as well as skilled human capital. The Human Resources Division implements the various fringes benefits other than salary, allowances, bonuses etc. for the employees that attract and retain the workforce in the Bank.

The Bank respects all employees as unique individuals with fundamental human rights and supports the cultural and ethnic diversity of its workforce. It believes that creating a work environment that enables to attract, retain and fully engage diverse talents, leads to enhanced innovation and creativity in the services of the Bank.

The Bank gives topmost priority for development of its human resources and arranges effective training for developing skilled professional manpower. The effective training helps the employees’ career paths which ultimately benefit the bank in reducing cost. The main objectives of employees’ training and development are to help the organization achieve its

vision and mission statement. Skilled employees can also be empowered to train other employees, the fact that reduces pressure for the management team. Because of the practical implications of training, it is important to have training that is effective

As a part of capacity building of the human resources, in addition to the own training institute, the bank sent 63 officials of different grades at Bangladesh Institute of Bank Management (BIBM), 29 officials at Bangladesh Bank Training Academy (BBTA), 108 officials at different institutes at home and 28 officials to abroad. Total 228 officials were sent round the year to take part in different training/workshop/seminar at home and abroad.

Human Resource Position

Employees are essential to achieve the goals and objectives of an organization. The Bank has different segments of human resources that are of the same age or within a specified range of ages. The permanent employees of the Bank stood at 2,797 as on December 31, 2018 out of which Executives (Assistant Vice President and above) were 247, Officers 2,058 and Sub-staff 492.

No. of human resource by Age Group for the Year 2018:

Age Group Total (%)

Below 30 435 15.42

30-39 1,353 48.56

40-49 795 29.59

50 and above 214 6.43

Total 2,797 100

The Corporate Vision of Southeast Bank Limited (SEBL) is to build up such an institution that can stand the test of time and one day blossom into the number one Bank of the country. The cherished Mission will be accomplished through providing excellent services to take the Bank to the doorsteps of the clients as a customer friendly Bank.

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The Bank focuses recruitment of fresh blood which infuses dynamism and help in building Bank's own professional cadre. Besides, the Bank recruits experienced bankers for different fields in various positions. In the year 2018, the Bank recruited a total number of 285 employees. Out of them, 229 were fresh entrants and 56 were experienced bankers. Besides, as part of Bank’s commitments to the community in the field of education, 668 numbers of students of different universities were given opportunity to complete their internship program in the Bank during the year 2018.

Human Resource Accounting (HRA)

Human Resources (HR) are the life blood of an organization. Despite the application of technology in modern business management, human resources are still relevant and most adaptive resources of the organization. The strategic values of HR stem from the fact that apart from other resources employed for providing service to the customers/borrowers (land,

capital, technology etc.) which are passive, human resources are endowed with discretionary decision-making power and thus have competitive advantage over the other resources. Besides, HR combines other resources in the right mix to formulate appropriate strategies for the accomplishment of the desired objectives of the Bank. This essential attribute of HR assists to make rightful decisions and helps respond effectively to the threats and opportunities within the environment of the Bank. Thus, the Bank depends highly on its HR for success and survival.

The objective of Human Resource Accounting (HRA) of the Bank is to manage human resource properly and develop the quality of “human assets”. HRA provides the information on total cost of human assets for business by comparing it with the benefits provided by the employees. The Bank strives for continuous development of its human resources and considers any expenditure incurred on human resource development as investment with potential future benefits.

An overview of HRA for last five years (2014 to 2018) is given below:(BDT in million)

Particulars 2014 2015 2016 2017 2018

Employee (Person) 2,221 2,376 2,616 2,704 2,797

Operating cost per employee 1.49 1.51 1.60 1.76 1.78

Training cost per employee (excluding sub-staff) 0.0016 0.0018 0.0027 0.0038 0.0020

Operating profit per employee 3.70 3.39 3.25 3.32 3.48

Salary cost as % of operating profit 16.29 17.40 20.25 20.24 20.57

Gender Diversity

Gender diversity deals with equal representation of men and women in the workplace. The Bank is committed to provide equal opportunity in employment on the basis of individual merit and personal qualifications to employees. Every male and female employee works in a professional atmosphere that promotes equal opportunities where discriminatory practices, including harassment are prohibited.

The Bank provides wonderful work environment where all employees can work freely and without any harassment on grounds of religion, age, gender,

family background, ethnicity, personal appearance etc. All employees treat each other with respect and courtesy. Harassment in any form including verbal and physical conduct, visual displays, threats, demands and retaliation is strictly prohibited.

The Bank is committed to create an environment free from all forms of discrimination towards female employees. Any discriminatory behavior directed at female employees based on their background, gender, religion, race, color, ethnicity, national origin, age, marital status, physical condition, personal appearance, and status is dealt with appropriate disciplinary action. Both male and female employees are equally treated without any biasness.

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Corporate Organogram

The corporate organogram of the Bank is an intuitive reflection of organization structure, one of the most common diagrams to illustrate the relationships among departments and superiors vividly and briefly. Organogram of the Bank shows the correlation among organizational units in the form of graphics. It provides great convenience for people to view detailed information on organizational units as well as the associated position and personnel. The Bank’s organogram graphically illustrates the chain of commands and shows the flow of authority, responsibility and communication. The organogram of the Bank ensures that the responsibilities are being allocated, activities are being performed and management authority has been established in a way as needed.

The organogram not only helps in dividing the functions of the Bank in an appropriate manner, but it also aids to a great extent in developing the structure of reporting while guiding the employees

properly, as the connecting lines on the chart show who is accountable to whom and who is Divisional Head/in-charge of what Division/Department. The ogranogram of the Bank also guides the employees as to whom they should report and contact in case of the issues that need to be resolved in a timely manner while making the employees aware of their rights and responsibilities.

The Bank’s organogram is not just a snapshot of the Bank at a particular point of time or a blueprint of its functions, but it is cited as a valuable means of a detailed representation through which the management understands how the work fits in all the related departments or units of the Bank. It creates a road-map for how the work is to be done and the process required to ensure this information is shared throughout the Bank, to the right individuals.

The Human Resources Division maintains the corporate organogram of the Bank by updating it with new hires and when employees change positions or leave the Bank.

Gender diversity of the employees for the last five years (2014-2018) is given below:

2014 2015 2016 2017 2018No. of

Employees % No. of Employees % No. of

Employees % No. of Employees % No. of

Employees %

Male 1,818 81.86 1,952 82.15 2,170 82.95 2,245 83.03 2,304 82.37

Female 403 18.14 424 17.85 446 17.05 459 16.97 493 17.63

Total 2,221 2,376 2,616 2,704 2,797

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Participatory management is beneficial to organization as well as employees. It gives employees a higher degree of enjoyment at workplace that drives them to work harder. It is equally rewarding for the management as it ensures significant improvement in work culture within the organization as well as increase productivity. The Bank believes that participatory management quickly cures poor morale, employee attrition, low productivity and job dissatisfaction.

Joint decision making at certain levels in organization through participatory management can work wonders. It makes the best use of human capital and when employees have a say in decision making

Employees of the Bank are vigilant about frauds, theft or illegal activities and shall not engage in such activities at any cost. If any such activity comes into any employee's notice, he/she brings it to the notice of the higher authority of the Bank for appropriate action. He/she acts as a whistle blower thereby. The Bank protects whistle blowers. If one raises a concern, he/she will not be at risk of suffering any form of reprisal or retaliation.

The Bank is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Bank encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. This policy aims to

process gives them a psychological satisfaction. It is a simple force that drives the employees to improve their performance, create a proper channel of communication and find practical solutions to design better organizational processes.

Participatory management is one of the most effective policies of the Bank to retain the best talent in the Bank. It gives employees a sense of pride to have a say in organizational decision making process. Once they are valued by their seniors, they stick to the organization and become management’s partners in meeting specific goals and achieving success.

provide an avenue for employees to raise concerns on any violations of legal or regulatory requirements, misrepresentation of any financial statements and reports, etc.

For disclosure of classified information of the Bank, the concerned employee shall require prior approval from competent authority before making public disclosure. In this respect, the Bank complies with the provisions contained in the “Right to Information Act - 2009”. As per requirement of the law, Mr. S. M. Mainuddin Chowdhury, Additional Managing Director of the Bank is the ‘Responsible Officer’ to make public disclosure of information on behalf of the Bank. The Managing Director of the Bank is the ‘Appellate Authority’ in this respect.

Policy to encourage employees to participate in Management

WhistleBlower Policy

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The role of Small and Medium Enterprises (SMEs) is very important for overall economic development of Bangladesh. During the year 2018, SEBL invested BDT 58,920.00 million in SME sector and BDT 3,541.00 million in agricultural sector of the country. Inward remittance has been the second highest source of foreign currency earnings of Bangladesh. Inward remittance through SEBL by the expatriates living abroad amounted to BDT 116,803.00 million in 2018.

In addition to lending significantly to the industrial and services sectors as a whole , the bank invested a significant amount in environment friendly projects like renewable energy, auto brick kiln, bio-gas, solar home system, establishment of ETP, ensuring work environment and security for workers of textile and garments industry, fire and safety measures

etc. SEBL has been consistently expanding its Foreign Exchange operation. The bank managed BDT 242,294.82 million and BDT 190,402.80 million in total import and total export respectively. SEBL takes immense pride in contributing to the national exchequer in the form of corporate tax, withholding tax, excise duty and VAT. The Bank paid a total of BDT 5,771.73 million as corporate tax to the national exchequer. The bank has been awarded as the country’s 4th highest Income Tax Payer in the Banking Category for the assessment year 2017-2018.

SEBL is committed to playing active part in the growth of the national economy through its existing business strategies and also through devising innovative products and services in days to come.

Contribution toNational Economy

Southeast Bank Limited (SEBL) has transformed itself to be one of the leading contributors to the growth of national economy by providing diverse banking services to the people and business entities. Southeast Bank Limited along with its 135 branches operating nationwide has been contributing immensely to the ever-growing national economy. SEBL formulates its business strategies in conformity with the national economic policies. The bank is committed to building relationships with the community within which it operates. SEBL has been widening its network of Branches to promote financial inclusion. The Bank is providing Mobile Financial Services (MFS) through its exclusive product branded as “Telecash”. The product has enabled the people of all classes living both in rural and urban areas to avail banking and financial services at their doorsteps.

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Value AddedStatement

The value added statement for the Bank shows how the value is created and distributed among different stakeholders of the Bank. Value added to the Bank stood at BDT 7,095.98 million as of December 31, 2018 as against BDT 6,412.31 million in 2017.

27%

20%44%

-3%0%

0%

6%

Wealth Distribution of 2017 (Data in %)

To employees as salariesand allowances

To SEBL Foundation

To Shareholders as dividend

To Government as income tax

Statutory Reserve

Retained Earnings

Depreciation

29%

15%31%

7%

13%

0%

5%

Wealth Distribution of 2018 (Data in %)

To employees as salariesand allowances

To SEBL Foundation

To Shareholders as dividend

To Government as income tax

Statutory Reserve

Retained Earnings

Depreciation

Particulars 2018 % 2017 %Taka Taka

Income from Banking Services:Interest and similar income on loan portfolios 23,977.84 17,400.55 Investment income 5,129.75 5,570.65 Commission, Exchange and Brokerage 3,652.78 3,462.93 Other Operating Income 979.45 871.78

33,739.81 27,305.90 Less: Cost of Services & SuppliesInterest paid on Deposits & Borrowings 18,777.90 13,372.86 Rent, Taxes, Insurance, Lighting etc. 1,031.57 899.48 Legal expenses 1.30 1.83 Postage, Stamp, Telegram & Telephone 182.35 176.22 Stationery, Printing, Advertisement 165.64 149.55 Directors' Fees and Expenses 2.93 3.79 Audit Fee 1.85 1.91 Repairs to Bank's property 85.56 79.16 Other expenses 1,280.40 1,328.58

21,529.49 16,013.37 Value Added by the Banking Services 12,210.32 11,292.53 Add: Non-banking income - - Less: Provision for loans and advances/investmentsSpecific provision on loan loss (4,974.29) (3,781.32)Transfer to general provisions 119.21 (1,010.61)Provision for Off-Balance Sheet Exposures 223.80 (285.50)Provision for diminution in value of Investment (413.06) 217.21 Provision for Other Assets (70.00) (20.00)

(5,114.34) (4,880.22)Value Added 7,095.98 6,412.31 Distribution of Value AdditionEmployees-as Salaries and Allowances 2,026.52 29% 1,843.99 28.76%Transfer to SEBL Foundation - 0.00% - 0.00%Provider of Capital - as dividend 1,054.49 14.86% 1,375.43 21.45%Government - as income tax 2,195.45 30.94% 3,013.45 46.99%Expansion & Growth: Statutory Reserve 924.15 13.02% - 0.00% Retained Earnings 504.63 7.11% (196.79) -3.07% Depreciation 390.73 5.51% 376.23 5.87%

7,095.98 100% 6,412.31 100%

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Economic ValueAdded Statement

Economic Value Added (EVA) indicates the true economic profit of a company. EVA is an estimate of the amount by which earnings exceed or fall short of required minimum return for shareholders at comparable risks. EVA of the bank stood at BDT 2,928.22 Million as of December 31, 2018 as against BDT 1,848.47 Million in 2017.

Economic Value AddedBDT in Million

Particulars 2018 2017

Total Revenue 33,739.81 27,305.90

Less : Expenses (Interest & Operating) (23,956.82) (18,243.60)

Less : Corporate Tax (2,195.45) (3,013.45)

Less : Capital Charges (4,659.33) (4,200.38)

Economic Value Added 2,928.22 1,848.47

Capital Charges = Required Rate of Return X Total Capital & Reserves Required Rate of Return (11.99%) =

Weighted average rate of 10 years treasury bond @ 9.99% +Risk Premium @ 2% in 2018 Weighted average rate of 10 years treasury bond @ 10.44% +Risk Premium @ 2% in 2017

Total Capital & Reserves = BDT 38,860.11 million in 2018 (BDT 33,765.13 million in 2017)Economic Value Added = Total Revenue - (Expenses + Corporate Tax + Capital Changes)

Economic Value Addition(BDT in Million)

2014

2,012.92 3,561.16 1,838.86 1,848.47 2,928.22

2015 2016 2017 2018

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Market ValueAdded Statement

Market Value Added (MVA) is the difference between the equity market value of a company and the book value of equity invested in the company. A high MVA indicates that the company has created substantial wealth for the shareholders. MVA is equivalent to the present value of all future expected Economic Value Added (EVA). The equity market value of the Bank stood at BDT 16,502.81 million whereas the book value of equity stood at BDT 10,544.93 million, resulting a Market Value Added of BDT 5,957.88 million as of December 31, 2018 as against Tk. 11,186.79 million in 2017.

Market Value Addition(BDT in Million)

2014

8,665.18 7,014.67 8,023.32 11,186.79 5,957.88

2015 2016 2017 2018

Particulars 2018 2017

Market Value of Total Equity 16,502.81 20,356.29

Less: Book Value of Equity (share capital) (10,544.93) (9,169.50)

Market Value Added 5,957.88 11,186.79

Total Number of Shares outstanding = 1,054,492,702 916,950,176

Market Value per Share = 15.65 22.20

Market Value of Total Equity = [Total Number of shares outstanding X Market value per share as on 31.12.18]

Market Value Added = [Market Value of Total Equity] - [Book Value of Equity]

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Communication to Shareholders and StakeholdersRedressal of Investors’ Complaints 256-257

Communication to Shareholders 258

Reminders to the Shareholders who have not encashed their Dividends 259

Financial Highlights 260

Key Financial Data and Ratios 261-268

Segment Information 269-273

Ownership Composition – 2018 274

Market Price Information 275

Financial Calendar 2018 276

Stakeholder Engagement Process 277

Memories of 23rd AGM 278-283

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Redressal ofInvestors’ Complaints

Southeast Bank ensures equal treatment to all shareholders. The Bank does not discriminate between minority and majority shareholders. To ensure equal treatment to all shareholders, the bank created various mechanisms, such as:

i) Shareholders who are unable to attend the shareholders’ meeting are provided with proxy forms to nominate proxy to attend and vote on their behalf. The proxy forms which are in accordance with the standard format are sent along with the annual report.

ii) The shareholders’ meetings proceed in accordance with the order of agenda, without adding new and uninformed agenda, to give shareholders the opportunity to study the information on the given agenda before the poll. Moreover, important information for the shareholders’ meetings are not changed abruptly to the disadvantage of the shareholders.

iii) The bank sees the importance of the consideration of transactions which may have conflict of interest or may be connected or related transactions and abides by good corporate governance principles, including the rules and regulations of the Bangladesh Securities and Exchange Commission and the Dhaka Stock Exchange Ltd. and the Chittagong Stock Exchange Ltd. Directors, management and those who are related persons do not participate in the consideration to approve such transactions.

iv) The bank continues to have regular communication with the shareholders through periodic updates of performance and at any other time when it believes it needs to be done in the best interest of shareholders.

v) At times, the investors lodge complaints. These complaints are timely resolved. Investors at times lodge complaints through DSE and CSE.

Those are also timely taken up and resolved. The concerned investors and the DSE/CSE are informed regarding resolution of the complaint.

SEBL follows the following principles in dealing with the Investors :

Fair treatment;

Timeliness in the resolution of investors’ complaints;

Information to investors about the resolution of their complaints;

Friendliness with all investors and all investor segments;

Protection of investors’ interest;

How we know about Investors' Compliants:

An investor can complain through email [email protected].

An investor can make a written complaint through a letter.

The company maintains Investor Grievance Registry in electronic Form in which full details of every written compliant are recorded.

We have 3 designated persons who look after the investor grievances within a timeframe.

The full details of the written complaint are passed on to the concerned department. The compliance officer of the Company must be apprised of it as soon as it is received.

A letter or email is sent to the investor who has submitted written complaint by the designated person or compliance officer acknowledging

257


receipt of the complaint and informing him/her of the process for suitable decision.

The Investors’ Complaints are thoroughly enquired as and when necessary.

Availability of information for Investors’ about Southeast Bank Limited

Annual Report of each year and other relevant information about SEBL may be viewed on SEBL’s website www.southeastbank.com.bd. The Bank provides copies of Annual Reports to the

Bangladesh Securities and Exchange Commission, Bangladesh Bank, The Dhaka Stock Exchange Limited and The Chittagong Stock Exchange Limited for their reference. Investors may read them at public reference room or library.

Investors’ Inquiries

Queries of Investors’, for example, information relating to transfer of their shares and payment status of their dividend, are to be sent to the following address:

Investors’ Relation Department

Address : Southeast Bank Limited Head Office Eunoos Trade Centre (Level-2) 52-53, Dilkusha C/A, Dhaka-1000Web Address : www.southeastbank.com.bd E-Mail : [email protected] : +88 01700706532Phone : +8802 9567271Fax : +8802 9567273

258


Communication toShareholders

By Publishing Price Sensitive Information (PSI) in National dailies and in Online News Portal;

By releasing PSI via website of DSE and CSE and also in Bank website: www.southeastbank.com.bdb

a

By publishing Press Release about Bank’s important events in the newspapers;c

By issuing notices to the Shareholders for holding Annual General Meeting every year and Extra-Ordinary General Meeting (as and when necessary);d

By sending the Annual Reports of the Bank every year;e

By sending the Right Offer Document (ROD) as and when required;f

g

By holding General Meetings of Shareholders;h

By holding dialogue with Shareholders;i

j Electronic and other means of communications with Shareholders:

By publishing Financial Statements in the newspapers;

Throughout the year we communicate with Shareholders in the following ways:

iii

i

v

iv

ii

vi

Call Centre (24X7); Bank’s websitewww.southeastbank.com.bd

Web-chat; Investors’ Relation Department(during office hours);

Short Message Service (SMS);

vii Letter communication;

E-mail communication,[email protected].

Communication toShareholders

By Publishing Price Sensitive Information (PSI) in National dailies and in Online News Portal;

By releasing PSI via website of DSE and CSE and also in Bank website: www.southeastbank.com.bdb

a

By publishing Press Release about Bank’s important events in the newspapers;c

By issuing notices to the Shareholders for holding Annual General Meeting every year and Extra-Ordinary General Meeting (as and when necessary);d

By sending the Annual Reports of the Bank every year;e

By sending the Right Offer Document (ROD) as and when required;f

g

By holding General Meetings of Shareholders;h

By holding dialogue with Shareholders;i

j Electronic and other means of communications with Shareholders:

By publishing Financial Statements in the newspapers;

Throughout the year we communicate with Shareholders in the following ways:

259


Reminders to the Shareholders who have not encashed their DividendsWe remind our Shareholders to Collect/encash their dividend warrants in the following manner:

b

a

c

d

We release notice to Newspapers to notify our shareholders to collect their respective dividend warrants.

Any shareholder who visits our Investors’ Relation Department, we remind him/her about Collection /encashment of their dividend warrants.

When shareholder calls us over the phone, we remind him/her about Collection/ encashment of their dividend warrants.

We send Short Message Service (SMS) to the shareholders to Collect/encash their dividend warrants.

260


FinancialHighlights

BDT in million

ParticularsGroup Bank

2018 2017 Change % 2018 2017 Change %

Performance During the Year

Net Interest Income 5,199.94 4,027.69 29.10% 5,175.82 4,006.66 29.18%

Non Interest Income 9,761.98 9,905.35 -1.45% 9,547.79 9,667.67 -1.24%

Operating Income 14,961.92 13,933.04 7.38% 14,723.61 13,674.32 7.67%

Operating Profit 9,783.00 9,062.30 7.95% 9,735.10 8,939.13 8.90%

Profit After Tax 2,473.21 1,168.63 111.63% 2,455.77 1,118.30 119.60%

Year End Financial Position

Loans 267,671.63 234,316.72 14.23% 265,204.21 231,851.00 14.39%

Investments 65,609.55 62,911.04 4.29% 62,883.76 60,323.17 4.24%

Deposits 298,334.79 269,828.08 10.56% 298,320.59 269,833.09 10.56%

Shareholders Equity 28,116.66 25,823.65 8.88% 28,051.34 25,761.74 8.89%

Total Assets 381,575.68 339,288.05 12.46% 381,094.92 338,909.25 12.45%

Earnings per share(BDT) 2.35 1.11 111.71% 2.33 1.06 119.81%

Dividend (%) 10% 15% -33.33% 10% 15% -33.33%

Price earning ratio(times) 6.66 20.00 -66.70% 6.72 20.94 -67.93%

Net asset value per share(BDT) 26.66 28.16 -5.32% 26.60 28.10 -5.32%

Market price per share(BDT) 15.65 22.20 -29.50% 15.65 22.20 -29.50%

Ratios (%)Capital adequacy ratio(as per Basel III) 12.38% 10.84% 14.21% 12.47% 10.87% 14.72%

Non performing loans 5.87% 5.99% -1.99% 5.87% 5.99% -1.94%

Cost to income ratio 34.61% 34.96% -0.98% 33.88% 34.63% -2.16%

261


Key Financial Data, Ratios and Graphical Presentation

BDT in million

Particulars 2018 2017 2016 2015 2014BALANCE SHEET MATRIXAuthorized Capital 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00

Paid up Capital 10,544.93 9,169.50 9,169.50 9,169.50 9,169.50

Reserve Fund & Surplus 28,315.19 24,595.63 24,886.78 19,340.03 18,292.59

Total Shareholders’ Equity 28,116.66 25,823.65 26,523.56 27,206.66 24,543.21

Deposits 298,334.79 269,828.08 229,973.43 210,431.09 189,472.54Loans and Advances 267,671.63 234,316.72 191,865.59 168,878.46 147,070.81Investments 65,609.55 62,911.04 61,731.63 58,829.27 56,378.59

Fixed Assets 9,337.30 9,321.80 8,947.16 7,885.23 7,913.00

Total Assets 381,575.68 339,288.05 291,798.01 260,718.03 236,608.40

Total Off Balance Sheet Items 145,504.93 142,496.79 113,910.63 88,522.24 92,184.70

Interest Earning Assets 331,101.81 291,947.38 254,120.97 225,546.44 203,449.40

Non-Interest Earning Assets 50,473.87 47,340.68 37,677.04 35,171.59 33,159.00INCOME STATEMENT MATRIXInterest Income 23,977.84 17,400.55 16,972.33 17,794.80 19,233.89

Interest Expenses 18,777.90 13,372.86 12,765.12 14,656.34 16,049.91

Investment Income 5,129.75 5,570.65 5,079.61 5,158.54 5,274.27

Non-Interest Income 4,632.22 4,334.70 3,565.64 3,307.39 3,158.93

Non-Interest Expenses 5,178.92 4,870.74 4,349.23 3,570.11 3,327.43

Total Income 33,739.81 27,305.90 25,617.57 26,260.72 27,667.09

Total Expenditure 23,956.82 18,243.60 17,114.35 18,226.45 19,377.34

Operating Profit 9,783.00 9,062.30 8,503.22 8,034.27 8,289.76

Profit before Tax 4,668.66 4,182.08 5,290.60 5,517.48 6,760.66

Net Profit after Tax 2,473.21 1,168.63 2,435.07 3,069.42 3,836.94CAPITAL MATRIXRisk Weighted Assets 313,960.92 311,557.34 280,402.29 247,250.88 221,249.27

Tier-I Capital 23,670.43 21,165.35 21,685.52 21,211.19 19,882.29

Tier-II Capital 15,189.69 12,599.78 12,370.76 7,298.35 7,579.80

Total Capital 38,860.11 33,765.13 34,056.28 28,509.53 27,462.09

Capital Surplus/(Deficit) 1,577.25 (1,285.07) 4,263.54 3,784.44 5,337.16

Tier I Capital ratio 7.54% 6.79% 7.73% 8.57% 8.99%

Tier II Capital ratio 4.84% 4.04% 4.41% 2.95% 3.43%

Total Capital to Risk Weighted Assets Ratio 12.38% 10.84% 12.15% 11.52% 12.41%CREDIT QUALITYClassified Loans 15,558.85 13,878.53 9,257.79 7,193.82 5,387.74

Provision for Unclassified Loans 3,321.40 3,440.61 2,430.00 1,540.00 1,334.72

Provision for Classified Loans 9,961.90 6,628.68 3,728.28 2,323.29 2,673.49

Provision for Contingent Liabilities 1,201.20 1,425.00 1,139.50 890.00 909.65Percentage of NPLs to total Loans and Advances 5.87% 5.99% 4.89% 4.25% 3.64%

262


Particulars 2018 2017 2016 2015 2014FOREIGN EXCHANGE BUSINESSImport 242,294.82 215,379.77 171,531.73 151,812.58 155,691.00

Export 190,402.85 167,562.98 146,606.09 126,423.89 112,137.60

Remittance (Inward) 116,803.00 95,405.43 64,665.84 60,708.50 48,740.50OPERATING PROFIT RATIOSCredit Deposit ratio 81.55% 82.12% 83.43% 80.25% 78.09%

Cost of Deposit & Borrowing 6.17% 5.02% 5.51% 7.12% 8.32%

Administrative Cost 1.70% 1.83% 1.88% 1.69% 1.69%

Yield on Loans and Advances 9.55% 8.17% 9.41% 11.30% 13.52%

Spread 3.38% 3.15% 3.90% 4.18% 5.20%

Return on Assets 0.69% 0.37% 0.88% 1.23% 1.67%

Return on Equity 9.17% 4.46% 9.06% 11.86% 16.51%

Debt Equity ratio 12.57 12.14 10.00 8.58 8.64PERFORMANCE RATIOSNet Profit per Employee 0.88 0.43 0.92 1.30 1.72

Net Profit per Branch 18.32 8.85 19.02 25.16 33.96

Operating profit as % of Working Fund 2.56% 2.67% 2.91% 3.08% 3.50%

Net Interest income as % of Working Fund 1.36% 1.19% 1.44% 1.20% 1.35%

Efficiency ratio 34.61% 34.96% 33.84% 30.77% 28.64%

Ratio of Fees Income 24.41% 24.85% 22.59% 23.78% 22.96%

Salary Exp. to total Operating Exp. 39.32% 38.06% 40.32% 39.88% 40.92%

Salary Exp. to Fees Income 55.75% 53.54% 60.40% 51.59% 51.05%

Cost to Income ratio 34.61% 34.96% 33.84% 30.77% 28.64%DIVIDEND & RIGHTS ISSUECash 0% 0% 20% 15% 15%

Stock 10% 15% - - -

Rights Issue - - - - -SHARES INFORMATION MATRIXNo. of Shares Outstanding 1,054.49 916.95 916.95 916.95 916.95

Earnings Per Share ( Actual Figure) 2.35 1.11 2.66 3.35 4.18

Number of Shareholders ( Actual Figure) 33,851 36,038 39,009 46,285 58,169

Market Value Per Share-DSE ( Actual Figure) 15.60 22.20 18.70 17.60 19.40

Price Earnings ratio 6.66 17.42 7.06 5.27 4.67

Net Assets Value Per Share 26.66 28.16 28.93 29.67 26.77

Dividend Cover ratio 0.64 1.18 0.75 0.45 0.36OTHER INFORMATIONNumber of Branches 135 132 128 122 113

Number of Islamic Windows 5 5 5 5 5

Number of Employees 2,797 2,704 2,616 2,376 2,221

Number of Foreign Correspondents 644 825 807 811 790

BDT in million

263


HorizontalAnalysis

Particulars 2018(%) 2018 2017

(%) 2017 2016(%) 2016 2015

(%) 2015 2014(%) 2014

PROPERTY AND ASSETS

CashIn hand (including foreign currencies) 225 3,598.85 188 3,010.98 152 2,432.62 119 1,903.29 100 1,598.09

Balance with Bangladesh Bank (including foreign currencies) 129 17,916.58 130 17,968.15 111 15,402.83 102 14,093.70 100 13,859.38

Balance with other banks and financial institutions - - -

In Bangladesh 93 3,984.79 75 3,196.88 67 2,860.09 51 2,187.97 100 4,283.51

Outside Bangladesh 165 2,449.64 73 1,082.73 80 1,185.13 81 1,203.35 100 1,482.74

Money at call and on short notice 1258 6,897.10 665 3,643.95 779 4,271.34 168 923.45 100 548.30

Investments - - -

Government 102 50,963.04 100 50,204.80 108 54,299.80 105 52,620.79 100 50,185.30

Others 236 14,646.51 205 12,706.24 120 7,431.83 100 6,208.48 100 6,193.29

Loans, cash credit, overdrafts etc./investments 180 255,400.66 158 223,657.50 129 182,661.82 114 161,556.32 100 141,778.21

Bills purchased and discounted 232 12,270.97 201 10,659.21 174 9,203.77 138 7,322.14 100 5,292.59

Fixed assets including premises, furniture and fixtures 118 9,337.30 118 9,321.80 113 8,947.16 100 7,885.23 100 7,913.00

Other assets 118 4,110.24 110 3,835.80 89 3,101.61 139 4,813.31 100 3,473.97

Total assets 161 381,575.68 143 339,288.05 123 291,798.01 110 260,718.03 100 236,608.40

Liabilities - - -

Borrowings from other banks, financial institutions and agents 245 11,800.00 211 10,181.65 153 7,371.64 95% 4,556.92 100 4,815.92

Subordinated bond 374 11,211.70 7,400.00 8,000.00 3,000.00 3,000.00

Deposits and other accounts - - -

Current/Al-wadeeah current accounts and other accounts 214 40,472.07 188 35,511.53 160 30,285.06 122 23,179.89 100 18,935.05

Bills payable 166 4,494.55 183 4,933.77 242 6,548.86 79 2,127.21 100 2,701.46

Savings bank/Mudaraba savings bank deposits 201 27,259.92 177 23,896.58 146 19,700.58 136 18,419.86 100 13,531.82

Fixed deposits/Mudaraba fixed deposits 147 226,108.26 133 205,486.20 112 173,438.93 108 166,704.14 100 154,304.20

Other liabilities 2020 298,334.79 176 26,044.63 135 19,919.38 105 15,513.93 100 14,766.54

Total liabilities - - -

Capital/shareholders' equity - - -

Paid up capital 115 10,544.93 100 9,169.50 100 9,169.50 100 9,169.50 100 9,169.50

Statutory reserve 130 10,094.15 118 9,170.00 118 9,170.00 114 8,897.31 100 7,792.81

Balance Sheet BDT in million

264


Particulars 2018(%) 2018 2017

(%) 2017 2016(%) 2016 2015

(%) 2015 2014(%) 2014

Revaluation reserve 93 4,360.80 97 4,534.24 102 4,763.89 128 5,968.13 100 4,670.87

Other reserve 100 247.65 100 247.65 100 247.65 100 247.65 100 247.65

Foreign currency translation reserve -11900 (28.92) -5820 (14.14) -10061 (24.45) -11468 (27.87) 100 0.24

Retained earnings 109 2,898.04 102 2,716.40 120 3,196.97 111 2,951.94 100 2,662.14

Total shareholders' equity 115 28,116.66 105 25,823.65 108 26,523.56 111 27,206.66 100 24,543.21

Non-controlling interest 99 10.07 99 10.05 98 10.00 93 9.43 100 10.18

Total liabilities and shareholders' equity 161 381,575.68 143 339,288.05 123 291,798.01 110 260,718.03 100 236,608.40

Acceptances and endorsements 208 63,853.76 186 57,138.53 143 43,813.55 118 36,223.42 100 30,725.22

Letters of guarantee 135 19,197.99 112 15,924.96 106 15,154.12 94 13,395.24 100 14,253.37

Irrevocable letters of credit 116 36,374.56 141 44,195.14 105 32,881.30 80 24,992.38 100 31,246.71

Bills for collection 167 24,664.93 154 22,666.59 121 17,830.30 87 12,812.74 100 14,739.31

Other contingent liabilities 116 1,413.68 143 1,744.47 121 1,474.68 90 1,098.46 100 1,220.08

Other Commitments 827.10 2,756.66 0 - -

Total off-balance sheet items including contingent liabilities 158 145,504.93 155 142,496.79 124 113,910.63 96 88,522.24 100 92,184.70


265


HorizontalAnalysisProfit and Loss Account BDT in million

Particulars 2018 (%) 2018 2017

(%) 2017 2016 (%) 2016 2015 (%) 2015 2014

(%) 2014

Operating IncomeInterest income/profit on investments 125% 23,977.84 90% 17,400.55 88% 16,972.33 93% 17,794.80 100% 19,233.90

Interest paid/profit shared on deposits and borrowings etc.

117% 18,777.90 83% 13,372.86 80% 12,765.12 91% 14,656.34 100% 16,049.91

Net interest income/net profit on investments 163% 5,199.94 126% 4,027.69 132% 4,207.21 99% 3,138.46 100% 3,183.99

Investment income 97% 5,129.75 106% 5,570.65 96% 5,079.61 98% 5,158.54 100% 5,274.27Commission, exchange and brokerage 137% 3,652.78 130% 3,462.93 109% 2,903.03 103% 2,759.46 100% 2,666.73

Other operating income 199% 979.45 177% 871.78 135% 662.60 111% 547.93 100% 492.20Total operating income (A) 129% 1,4961.92 120% 13,933.04 111% 12,852.45 100% 11,604.39 100% 11,617.19

Salaries and allowances 149% 2,026.52 135% 1,843.96 128% 1,741.46 105% 1,423.68 100% 1,361.48Rent, taxes, insurance, electricity etc. 181% 1,031.57 158% 899.48 141% 801.04 116% 658.26 100% 569.34

Legal expenses 211% 1.30 297% 1.83 97% 0.60 242% 1.49 100% 0.62Postage, stamp, telecommunication etc. 125% 1,82.35 121% 176.22 114% 166.45 101% 147.33 100% 145.63

Stationery, printing, advertisements etc. 146% 1,65.64 132% 149.55 116% 132.23 99% 112.62 100% 113.72

Managing Director's salary and fees 107% 10.07 106% 10.04 127% 11.97 100% 9.45 100% 9.45

Directors' fees and expenses 85% 2.93 110% 3.79 85% 2.91 77% 2.65 100% 3.43

Auditors' fees 138% 1.85 143% 1.91 120% 1.60 78% 1.04 100% 1.34Depreciation and repair of bank's assets 133% 476.29 128% 455.39 113% 403.60 95% 339.18 100% 356.79

Other expenses 167% 1,280.40 174% 1,328.58 142% 1,087.36 114% 874.41 100% 765.65Total operating expenses (B) 156% 5,178.92 146% 4,870.74 131% 4,349.23 107% 3,570.11 100% 3,327.43

Profit before provision (C=A-B) 118% 9,783.00 109% 9,062.30 103% 8,503.22 97% 8,034.27 100% 8,289.76

General provision -104% (119.21) 883% 1,010.61 778% 890.00 179% 205.28 100% 114.45

Specific provision 511% 4,974.29 388% 3,781.32 242% 2,360.99 209% 2,039.77 100% 974.01Provision for off-balance sheet items -232% (223.80) 296% 285.50 258% 249.50 -20% (19.65) 100% 96.61

Provision for diminution in value of investments 126% 413.06 -66% (217.21) -123% (403.60) 82% 269.48 100% 329.03

Other provisions 467% 70.00 133% 20.00 772% 115.74 146% 21.91 100% 15.00

Total provision (D) 334% 5,114.34 319% 4,880.22 210% 3,212.62 165% 2,516.79 100% 1,529.10Total profit before taxation (C-D) 69% 4,668.66 62% 4,182.08 78% 5,290.60 82% 5,517.48 100% 6,760.66

Provision for taxation 75% 2,195.45 103% 3,013.45 98% 2,855.52 84% 2,448.07 100% 2,923.72

Net profit after taxation 64% 2,473.21 30% 1,168.63 63% 2,435.07 80% 3,069.42 100% 3,836.94Retained surplus during the year 62% 1,549.06 47% 1,168.63 87% 2,162.38 79% 1,964.92 100% 2,488.95

Earnings per share (Tk.) 56% 2.35 30% 1.11 64% 2.66 80% 3.35 100% 4.18

266


VerticalAnalysisBalance Sheet BDT in million

Particulars 2018 (%) 2018 2017

(%) 2017 2016 (%) 2016 2015 (%) 2015 2014

(%) 2014

PROPERTY AND ASSETSCash In hand (including foreign currencies) 1% 3,598.85 1% 3,010.98 1% 2,432.62 1% 1,903.29 1% 1,598.09

Balance with Bangladesh Bank and its agent banks(including foreign currencies)

5% 17,916.58 5% 17,968.15 5% 15,402.83 5% 14,093.70 6% 13,859.38

Balance with other banks and financial institutions - 0% - 0% - 0% -

In Bangladesh 1% 3,984.79 1% 3,196.88 1% 2,860.09 1% 2,187.97 2% 4,283.51

Outside Bangladesh 1% 2,449.64 0% 1,082.73 0% 1,185.13 0% 1,203.35 1% 1,482.74

Money at call and on short notice 2% 6,897.10 1% 3,643.95 1% 4,271.34 0% 923.45 0% 548.30

Investments - - 0% - 0% - 0% -

Government 13% 50,963.04 15% 50,204.80 19% 54,299.80 20% 52,620.79 21% 50,185.30

Others 4% 14,646.51 4% 12,706.24 3% 7,431.83 2% 6,208.48 3% 6,193.29

Loans and advances/investments - - 0% - 0% - 0% -

Loans, cash credit, overdrafts etc./investments 67% 255,400.66 66% 223,657.50 63% 182,661.82 62% 161,556.32 60% 141,778.21

Bills purchased and discounted 3% 12,270.97 3% 10,659.21 3% 9,203.77 3% 7,322.14 2% 5,292.59

Fixed assets including premises, furniture and fixtures 2% 9,337.30 3% 9,321.80 3% 8,947.16 3% 7,885.23 3% 7,913.00

Other assets 1% 4,110.24 1% 3,835.80 1% 3,101.61 2% 4,813.31 1% 3,473.97

Non - banking assets 0% - - - - -

Total assets 100% 381,575.68 100% 339,288.05 100% 291,798.01 100% 260,718.03 100% 236,608.40

LIABILITIES AND CAPITAL - - -

Liabilities - - -

Borrowings from other banks, financial institutions and agents 3% 11,800.00 3% 10,181.65 3% 7,371.64 2% 4,556.92 2% 4,815.92

Subordinated bond 3% 11,211.70 2% 7,400.00 3% 8,000.00 1% 3,000.00 1% 3,000.00

Deposits and other accounts 0% - 0% - 0% - 0% -

Current/Al-wadeeah current accounts and other accounts 11% 40,472.07 10% 35,511.53 10% 30,285.06 9% 23,179.89 8% 18,935.05

Bills payable 1% 4,494.55 1% 4,933.77 2% 6,548.86 1% 2,127.21 1% 2,701.46

Savings bank/Mudaraba savings bank deposits 7% 27,259.92 7% 23,896.58 7% 19,700.58 7% 18,419.86 6% 13,531.82

Fixed deposits/Mudaraba fixed deposits 59% 226,108.26 61% 205,486.20 59% 173,438.93 64% 166,704.14 65% 154,304.20

Bearer certificates of deposit 0% - 0% 0% - 0% - 0% -

Other deposits 0% - 0% 0% - 0% - 0% -

Other liabilities 78% 298,334.79 8% 26,044.63 7% 19,919.38 6% 15,513.93 6% 14,766.54

Capital/shareholders' equity 0% 0% - 0% - 0% -

267



Particulars 2018 (%) 2018 2017

(%) 2017 2016 (%) 2016 2015 (%) 2015 2014

(%) 2014

Paid up capital 3% 10,544.93 3% 9,169.50 3% 9,169.50 4% 9,169.50 4% 9,169.50

Statutory reserve 3% 10,094.15 3% 9,170.00 3% 9,170.00 3% 8,897.31 3% 7,792.81

Revaluation reserve 1% 4,360.80 1% 4,534.24 2% 4,763.89 2% 5,968.13 2% 4,670.87

Other reserve 0% 247.65 0% 247.65 0% 247.65 0% 247.65 0% 247.65

Foreign currency translation reserve 0% (28.92) 0% (14.14) 0% (24.45) 0% (27.87) 0% 0.24

Retained earnings 1% 2,898.04 1% 2,716.40 1% 3,196.97 1% 2,951.94 1% 2,662.14

Total shareholders' equity - 2,8116.66 - 25,823.65 - 26,523.56 - 27,206.66 - 24,543.21

Non-controlling interest 0% 10.07 0% 10.05 0% 10.00 0% 9.43 0% 10.18

Total liabilities and shareholders' equity 100% 381,575.68 100% 339,288.05 100% 291,798.01 100% 260,718.03 100% 236,608.40

OFF-BALANCE SHEET ITEMS - - - - - - - - -

Acceptances and endorsements 44% 6,3853.76 40% 57,138.53 38% 43,813.55 41% 36,223.42 33% 30,725.22

Letters of guarantee 13% 19,197.99 11% 15,924.96 13% 15,154.12 15% 13,395.24 15% 14,253.37

Irrevocable letters of credit 25% 36,374.56 31% 44,195.14 29% 32,881.30 28% 24,992.38 34% 31,246.71

Bills for collection 17% 24,664.93 16% 22,666.59 16% 17,830.30 14% 12,812.74 16% 14,739.31

Other contingent liabilities 1% 1,413.68 1% 1,744.47 1% 1,474.68 1% 1,098.46 1% 1,220.08

Other commitments 0% - 1% 827.10 2,756.66 - -

Total off-balance sheet items including contingent liabilities

100% 145,504.93 100% 142,496.79 100% 113,910.63 100% 88,522.24 100% 92,184.70

268


VerticalAnalysisProfit and Loss Account BDT in million

Particulars 2018 (%) 2018 2017

(%) 2017 2016 (%) 2016 2015

(%) 2015 2014 (%) 2014

Operating IncomeInterest income/profit on investments 71% 23,977.84 64% 17,400.55 66% 16,972.33 68% 17,794.80 70% 19,233.90Interest paid/profit shared on deposits and borrowings etc. 56% 18,777.90 49% 13,372.86 50% 12,765.12 56% 14,656.34 58% 16,049.91

Net interest income/net profit on investments 15% 5,199.94 15% 4,027.69 16% 4,207.21 12% 3,138.46 12% 3,183.99

Investment income 15% 5,129.75 20% 5,570.65 20% 5,079.61 20% 5,158.54 19% 5,274.27

Commission, exchange and brokerage 11% 3,652.78 13% 3,462.93 11% 2,903.03 11% 2,759.46 10% 2,666.73

Other operating income 3% 979.45 3% 871.78 3% 662.60 2% 547.93 2% 492.20

Total operating income (A) 44% 14,961.92 51% 13,933.04 50% 12,852.45 44% 11,604.39 42% 11,617.19

Salaries and allowances 6% 2,026.52 7% 1,843.96 7% 1,741.46 5% 1,423.68 5% 1,361.48

Rent, taxes, insurance, electricity etc. 3% 1,031.57 3% 899.48 3% 801.04 3% 658.26 2% 569.34

Legal expenses 0% 1.30 0% 1.83 0% 0.60 0% 1.49 0% 0.62Postage, stamp, telecommunication etc. 1% 1,82.35 1% 176.22 1% 166.45 1% 147.33 1% 145.63

Stationery, printing, advertisements etc. 0% 1,60.64 1% 149.55 1% 132.23 0% 112.62 0% 113.72

Managing Director's salary and fees 0% 10.07 0% 10.04 0% 11.97 0% 9.45 0% 9.45

Directors' fees and expenses 0% 2.93 0% 3.79 0% 2.91 0% 2.65 0% 3.43

Auditors' fees 0% 1.85 0% 1.91 0% 1.60 0% 1.04 0% 1.34

Charges on loan losses 0% - 0% - 0% - 0% - 0% -Depreciation and repair of bank's assets 1% 476.29 2% 455.39 2% 403.60 1% 339.18 1% 356.79

Other expenses 4% 1,280.40 5% 1,328.58 4% 1,087.36 3% 874.41 3% 765.65

Total operating expenses (B) 15% 5,178.92 18% 4,870.74 17% 4,349.23 14% 3,570.11 12% 3,327.43

Profit before provision (C=A-B) 29% 9,783.00 33% 9,062.30 33% 8,503.22 31% 8,034.27 30% 8,289.76Provision for loans and advances/investments 0% 0% 0% - 0% -

General provision 0% (119.21) 4% 1,010.61 3% 890.00 1% 205.28 0% 114.45

Specific provision 15% 4,974.29 14% 3,781.32 9% 2,360.99 8% 2,039.77 4% 974.01

Provision for off-balance sheet items -1% (223.80) 1% 285.50 1% 249.50 0% (19.65) 0% 96.61Provision for diminution in value of investments 1% 413.06 -1% (217.21) -2% (403.60) 1% 269.48 1% 329.03

Other provisions 0% 70.00 0% 20.00 0% 115.74 0% 21.91 0% 15.00

Total provision (D) 15% 5,114.34 18% 4,880.22 13% 3,212.62 10% 2,516.79 6% 1529.10

Total profit before taxation (C-D) 14% 4,668.66 15% 4,182.08 21% 5,290.60 21% 5,517.48 24% 6,760.66

Provision for taxation 7% 2,195.45 11% 3,013.45 11% 2,855.52 9% 2,448.07 11% 2,923.72Net profit after taxation 7% 2,473.21 4% 1,168.63 10% 2,435.07 12% 3,069.42 14% 3,836.94

269


SegmentInformation

16%

48%

Sector-wise Investment

9%

16%

2%

4%1%

2% Agriculture

Industrial Manufacturing

Industrial Services

Export Financing

Commercial Loans

Consumer Credit

Off-Shore Loans

Finance to NBFIs

Loan to Capital Market

Miscellaneous

1%

1%

Revenue Sources

Interest Income

Investment Income

Commission, Exchange

and Brokerage

Other Operating Income

3%11%

15%

71%

77%

18%

2%

2% 1%

Division-wise loans

Dhaka

Chattogram

Rajshahi

Sylhet

Khulna

Rangpur

Barisal

Mymensingh

0%

0%

0%

Expenditure Mix

Interest Paid

Operating Expenses

Provision

Tax

7%

17% 60%

16%

Area-Wise Loans

Rural Area Urban Area

94%

6%

270


GraphicalPresentation

19.40 17.60 18.75 22.05 15.65

Market Price Per Share

2014 2015 2016 20182017

4.18 3.35 2.66 1.11 2.35

Earnings per Share

2014 2015 2016 20182017

147,071 168,878 191,866 234,317 267,672

Loans and Advances

2014 2015 2016 20182017

4.67 5.27 7.06 17.42 6.66

Price Earning Ratio

2014 2015 2016 20182017

236,608 260,718 291,798 339,288 381,576

Total Assets

2014 2015 2016 20182017

189,473 210,431 229,973 269,828 298,335

Deposits

2014 2015 2016 20182017

271


155,691 151,813 171,532 215,380 242,295

Import Business

2014 2015 2016 20182017

8,290 8,034 8,503 9,062 9,783

Operating Profit

2014 2015 2016 20182017

15% 15% 20% 15% 10%

Dividend

2014 2015 2016 20182017

11,617 11,604 12,852 13,933 14,962

Operating Income

2014 2015 2016 20182017

6,761 5,517 5,291 4,182 4,669

Profit Before Tax

2014 2015 2016 20182017

24,543 27,207 26,524 25,824 28,117

Shareholders Equity

2014 2015 2016 20182017

272


16.51% 11.86% 9.06% 4.46% 9.17%

Return of Equity

2014 2015 2016 20182017

3.64% 4.25% 4.89% 5.99% 5.87%

2014 2015 2016 20182017

Non Performing Loans

1.67% 1.23% 0.88% 0.37% 0.69%

2014 2015 2016 20182017

Return on Assets

56,379 58,829 61,732 62,911 65,610

2014 2015 2016 20182017

InvestmentBDT in million

273


1,529 2,517 3,213 4,880 5,114

2014 2015 2016 20182017

Total Provision

112,138 126,424 146,606 167,563 190,403

2014 2015 2016 20182017

Export Business

3,837 3,069 2,435 1,169 2,473

2014 2015 2016 20182017

Profit After Tax

3,327 3,570 4,349 4,871 5,179

2014 2015 2016 20182017

Operating Expense

274


OwnershipComposition – 2018

Name of the Category Number of Shares % to total Shares

Directors and Sponsors 341,999,786 32.44

Financial Institutions & Investor A/C Holders 376,787,388 35.73

General Public 335,705,528 31.83

TOTAL 1,054,492,702 100.00

Shares held byDirectors in 2018

Sl. No. Name of the Directors Designation Shares

1 Mr. Alamgir Kabir, FCA Chairman 23,688,8722 Mrs. Duluma Ahmed Vice Chairperson 21,945,1533 Mr. M.A. Kashem Director 23,353,1194 Mr. Azim Uddin Ahmed Director 29,314,3455 Mrs. Jusna Ara Kashem Director 21,090,4536 Mr. Md. Akikur Rahman Director 21,410,2907 Mrs. Rehana Rahman Director 21,670,7668 Mrs. Sirat Monira Director 138,6299 Mr. Syed Sajedul Karim Independent Director -

10 Dr. Quazi Mesbahuddin Ahmed Independent Director -11 Mr. M. Kamal Hossain Managing Director -

Total Shares : - 162,611,627

35.73%

31.83%

32.44%

Directors and Sponsors

Financial Institutions & Investor A/C Holders

General Public

275


25

20

15

10

5

0

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

High

Low

25

20

15

10

5

0

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

High

Low

Market PriceInformation

MonthsDSE CSE Total

Volume in DSE & CSE

Month High

Month Low

Total Volume

Month High

Month Low

Total Volume

Jan-18 22.50 20.20 16,471,764 23.30 20.30 5,821,179 22,292,943Feb-18 21.10 19.10 10,726,466 20.90 19.20 685,773 11,412,239Mar-18 19.70 17.70 6,761,251 19.60 17.70 297,880 7,059,131Apr-18 19.40 17.80 12,390,204 19.50 18.00 367,957 12,758,161May-18 18.40 14.40 10,757,282 18.40 14.50 511,377 11,268,659Jun-18 17.10 14.70 12,616,692 17.10 14.70 333,630 12,950,322Jul-18 16.80 13.30 17,161,353 16.40 13.40 2,879,688 20,041,041Aug-18 17.00 14.70 19,483,616 17.10 14.50 839,175 20,322,791Sep-18 16.40 14.50 7,768,554 16.50 14.30 335,488 8,104,042Oct-18 15.70 14.50 8,220,177 15.60 14.50 416,074 8,636,251Nov-18 15.10 14.70 6,653,556 15.10 14.60 265,702 6,919,258Dec-18 15.10 14.70 6,870,921 15.80 14.10 197,130 7,068,051

Month-wise High Low Share Price in Dhaka Stock Exchange Limited (DSE)

Month-wise High Low Share Price in Chittagong Stock Exchange Limited (CSE)

276


FinancialCalendar 2018Business policy and Planning Conference held and Annual Budget discussed in participation of all Heads of Branches of the Bank

January 06, 2018 January 07, 2018

Audited Consolidated Financial Statements for the year 2017 finalized and signed 28 April, 2018

Publication of Financial Statements for the year 2017 in two news papers May 07, 2018

23rd Annual General Meeting held June 30, 2018

Dividend for 2017 for Disbursed July 4, 2018

Interim Financial Statements

For the 1st quarter ended March 31, 2018 (unaudited) published in two widely circulated news papers May 15, 2018

For the 2nd quarter ended June 30, 2018 (unaudited) published in two widely circulated news papers July 31, 2018

For the 3rd quarter ended September 30, 2018 (unaudited) published in two widely circulated news papers October 31, 2018

Financial Calendar 2019

Audited Financial Statements for the year 2018 finalized and signed April 30, 2019

24th Annual General Meeting will be held June 23, 2019

Final Dividend for the year 2018 proposed to be paid July 4, 2019

Interim Financial Statements

For the 1st quarter ended March 31, 2019 (unaudited) approved by the Board of Directors May 11, 2019

For the 2nd quarter ended June 30, 2019 (unaudited) approved by the Board of Directors (Proposed) July 28, 2019

For the 3rd quarter ended September 30, 2019 (unaudited) approved by the Board of Directors (Proposed) October 28 2019

277


StakeholderEngagement ProcessOur relationship-activity with Stakeholders:

The following table discusses various aspects of stakeholders, their engagement process and our responses:

Our Stakeholders Mode of Engagement Frequency of Engagement Their Priorities Methodologies used for

Feedback

Customers

Customer Feedback Survey Branches/ATM/Retail Banking and

Mobile Banking Information in Brochure Newspaper and Electronic Media

advertisements Corporate website Call Centre (7X24) Customer education and awareness Complaint Box

Monthly Frequently At times As and when required As and when required Continuous Frequently Any time

Innovative products and services

Service Quality Competitive Pricing Flexibility in offerings No hidden Cost Timely disposal

Prescribed Form. Suggestion/Complaint Box kept in

branches. Enhanced monitoring and due

diligence Vibrant ALCO Team to decide on

pricing E-Banking: (Internet Banking, SMS

Banking, Mobile Banking.

Shareholders

Annual Report Annual General Meeting Extra-Ordinary General Meetings Corporate Disclosures Price Sensitive Information Interim Financial Statements

Annually Annually As and when required As and when required As and when required Quarterly

Results of operation Business ethics Sustainable Growth Assets Quality Corporate Social

Responsibility

Concerns of existing and prospective shareholders are addressed

Periodical dialogue Financial Risk Management

Process. Risk Management Culture Timely loan/ investment recovery

drives

Employees

Managers’ Conference, Workshops, Seminars.

Cross Functioning Training Program Internet Portal Website Awareness about news /

developments in the business sector

Team building through development of cross-cutting working groups

Annually, Half-Yearly & as when felt necessary

As and when required Continuous As and when necessitated Daily Periodically

Staff Welfare Measures

Remuneration linked with performance

Whistle blowing process

Training and workshop program.

Incentive program

Salary packages revised and adjusted considering industry scenario.

Comprehensive Training and other development program.

Health and safety standards are maintained including, Health Care Centre and Gym in Corporate Office.

Festival Benefit and Incentive Bonus

Regulators

On-site surveillance by Bangladesh Bank

Off-site supervision Directives and Circulars Filing of Returns and Statements Meetings

As and when felt necessary

As and when required As and when required Within deadlines As and when required

Proper compliance with laws and Regulations.

Timely payment of all regulatory dues.

Timely reporting Timely hoding

of meeting and implementation of decisions.

Ensuring strict compliance with all regulatory requirements

Focus on Compliance Culture in the Bank

Time consciousness

Business Associates

Adherence to proper procurement regulations while maintaining a good business relationship with the service providers.

Regular interaction on issues for mutual benefit

As and when needed Regularly

Transparency Timely payment of

their bills.

Rigorous observance of Bank’s procurement policy

Strict observance of Bank’s ethical principles

Environment and Society

Invest in Environment-Friendly Projects

Awards to entrepreneurs for outstanding performance in sustainable development and protection of environment.

Green School/ Student Scholarship Program

Donation to Govt. Fund/ Individual on regular basis to promote citizens’ welfare

Sponsoring efforts for protection of environment

Other CSR Activities

Continuous Annually Ongoing and annually As and when required As and when felt

necessary As and when decided

Financial Inclusion Micro/SME Financing Green Banking Sustainable

operations Transparency Return to the society CSR

Charitable ventures Contribution to education,

health, disaster managements, environmental protection

Financial Inclusion through Mobile Banking and I-Banking Operations

Green School Scholarship Program CSR Activities


Memories of23rd Annual General Meeting

278


279

a bank with vision


280


281

a bank with vision


282


283

284


SEBL OutlookProducts and Services 286-288

Central Monitoring System - Round the Clock 289Call Center 24 X7X365 290Media Highlights 291-293Caring for the Employees (Health and Safety) 294

Career Development Program 295Contribution to National Exchequer 296Empowering Women 297Environment - Responsive Bank 298Southeast Bank Green School 299-301Financial Inclusion: Mobile Banking Services – Telecash 302Connecting Customers 303Service Excellence in Action 304Bank's Network: List of Branches and ATMs 305-319Worldwide Correspondents Network 320-335


Products and Services

VALUEADDED

SERVICES

CONVENTIONAL BANKING DEPOSIT

PRODUCTS

Mudaraba Savings Account Al-Wadiah Current Deposit Account Mudaraba Short Notice Deposit Mudaraba Monthly Savings Scheme Mudaraba Monthly Income Scheme Mudaraba Pension Savings Scheme Mudaraba Double Benefit Scheme Mudaraba Super Double Benefit Scheme Mudaraba Multimillionaire Gold Deposit Scheme (MGDS) Mudaraba Wage Earners Pension Saving Scheme Mudaraba Millionaire Deposit Scheme Mudaraba Term Deposit Receipt

Student File Locker Service Senior Citizen Scheme Passport Endorsement Individual Remittance

(Inward and Outward) Internet Banking

Service Call Centre (7X24) Mobile Banking

Services (Tele Cash)

SEBL Home Loan SEBL Personal Loan SEBL Car Loan

Savings Account (SB) Current Deposit Account (CD) Short Notice Deposit (SND) Fixed Deposit Receipt (FDR) Monthly Savings Scheme (MSS) Monthly Income Scheme (MIS) Pension Savings Scheme (PSS) Double Benefit Scheme (DBS) Super Double Benefit Scheme (SDBS) Millionaire Deposit scheme (MDS) Multimillionaire Gold Deposit Scheme (MGDS) Wage Earners Pension Savings Scheme (WEPSS) Anonya™ Savings Account Bichokkhon™ Savings Account ESTEEM™ (Priority Banking Service) School Banking

Taroka™ Nokkhotro™ Royal Savings “Savings Account” Savings Fast “Savings Account”

ISLAMICBANKINGDEPOSIT

PRODUCTS

RETAIL BANKING SERVICES

286


SERVICES PROVIDED BY

OFF-SHORE BANKING

UNIT

CARD SERVICES

LOAN PRODUCTS

TREASURY PRODUCTS

Foreign Currency Deposit Account of Non-residents Export-Import services to Type-A industrial units of Export Processing Zones

(EPZ) and Economic Zone (EZ). Financing Usance Payable At Sight (UPAS) Documentary Credit Short Term Foreign Currency Loan to ADs for purchase of Export Bills in

Foreign Currency Foreign Currency Term Loan to eligible resident industrial units.

Southeast Credit Card Southeast Virtual Card Southeast Travel Card Southeast Hajj Card Southeast Prepaid

Card /INSTA Prepaid Card

Southeast Express Card

Southeast Personalized Debit Card

Southeast My Remit Card

Student Debit Card

Southeast Shopan Southeast Shikhor Southeast Shuprova Southeast Shopnil Southeast Agri. Loan

Money Market Products Call Money Term Money Re-purchase Agreement (Repo) Reverse Repo Foreign Exchange Swap Fixed Income Products Treasury Bond to Inter-Bank Treasury Bond to Individual Investors Treasury Bond to Corporate Investors Subordinated Bond Foreign Exchange Products Spot in Major Currency Pairs Forward Contract Placement in USD

287


EXPORT SERVICES

IMPORT SERVICES

Documentary Credit:a. Advising Export Documentary Creditb. Transferring Export Documentary Creditc. Opening Back- to-Back Documentary Credit (Local & Foreign)

Foreign Documentary Bills Collection:a. Documents collection Against Payment (D/P)b. Documents collection Against Acceptance (D/A)

Pre-shipment Finance: Packing Credit Post-shipment Finance:

a. Foreign Documentary Bills Purchase (FDBP)b. Purchase/Discounting Export Bills (Local)c. Export Development Fund (EDF) from Bangladesh Bankd. Cash Incentive from Bangladesh Bank

FOREIGN CURRENCY (FC) ACCOUNT SERVICES:a. Resident Foreign Currency Account (RFCD)b. Non-Resident Foreign Currency Account (NFCD)c. Non-Resident Taka Account (NRTA)d. Exporter’s Retention Quota (ERQ) Account

Documentary Credit:a. Opening Import Documentary Credit (Local and Foreign)b. Arranging Add Confirmation through Foreign Correspondent Banksc. Arranging Discounting through Foreign Correspondent Banks

Post Import Finance:a. Loan Trust Receipt (LTR)b. Time Loanc. Term Loan

Documentary Collection services:a. Documents Collections against Payment (D/P)b. Documents Collections against Acceptance (D/A)

Issuing Shipping Guarantee

288

289


Central MonitoringSystem - Round the Clock

Central Monitoring System (CMS), a unique initiative of Southeast Bank Limited has been introduced to ensure the physical safety & security system and also supervision of service quality of its Branches across the country. CMS is manned 24X7 for ensuring continuous monitoring of all branch activities. It is to be noted that CMS of the Bank was installed ahead of Bangladesh Bank directives making it mandatory for all the Banks.

Activities of the Central Monitoring System (CMS) are following:

To facilitate virtual branch visit for the Branch Supervisors and Bank Management.

To serve periodical reports to the management as per their requirement regarding safety & security and Service Quality of the branches.

To ensure Service Quality.

To assist investigation agencies.

To build customer confidence and organizational image.

290


Call Center24 X 7 X 365

Southeast Bank Call Center has been providing sustainable quality services to its valuable customers via phone, email & live chat round the clock. Contact No of Call Center for local caller is 16206 and overseas caller is 09613116206. Now it has become the most popular service wing for Bank’s valuable customers to meet their day to day banking needs. Increasing trend of customer call also reflects the acceptability of call centre. Call Center received around 0.36 million calls in the year 2018 which is 137% higher than the number of calls in 2017. Customers may email us at [email protected] to avail round the clock service at his/her convenient time. We have extended the range of valuable services from our Call Centre such as Card activation, Card/PIN Replacement Request, E-commerce/Foreign part enable request, EMI Conversion Request, MRP redemption, Card cheque book activation & requisition. Live Chat service has also been introduced by our Call Centre for the first time among the banks in Bangladesh.


MediaHighlights

291

a bank with vision


292


293

294


Caring for the Employees(Health and Safety)

Smoking is injurious to health. With a view to ensuring sound health and safety of the employees, clients, borrowers and visitors, all the premises of the Bank have been declared smoking free zone. The Bank has emergency exit in its all outlets with a view to ensuring safe exit if needed in critical situation. All outlets of the Bank are fully air-conditioned so that the employees of the Bank can discharge their duties in a comfortable environment. Sufficient lighting has been ensured so that employees can work comfortably and move around safely. Automatic emergency lighting, powered by independent sources are available in all Branches of the Bank.

Work stations and workrooms of the employees have enough free space to allow them to move

around with ease. The Bank is maintaining its

equipment, devices and systems in an efficient

manner to ensure the health, safety and welfare

of the employees in the workplace. All outlets of

the Bank have sufficient width and headroom to

allow its employees to move safely with ease. It has

established “Southeast Bank Health Care Center” at

Head Office to provide health advice and First Aid

treatment for both the male and female employees

of the Bank. In addition to the First Aid treatment,

Health Care Center of the Bank was adorned with

a state-of-the-art fitness centre which is used

separately by both male and female employees.

Southeast Bank is committed to providing and maintaining a safe and healthy environment for employees. The Bank believes that healthy employees are more efficient. The Bank has a modern Central Monitoring System (CMS), equipped with Internet Protocol (IP) based CCTV solution for video recording system of live TV footage of all Branches at Head Office to protect the premises, assets, employees etc. through real time visual surveillance round the clock. The Bank is dedicated to maintaining the working place in a safe manner. In a bid to protect the life of the employees, clients, borrowers as well as assets, the Bank has fire extinguishers in its all Branches. The Bank has set up auto fire detector in its Head Office premises.

295


Career DevelopmentProgram

On the basis of annual training calendar-2018, the Institute imparted training on both banking theories & operational areas and soft skills to enable the employees achieve a leadership role. During the year, 91 (Ninety one) training courses/workshops/round table discussions including 04 (Four) Foundation courses for newly recruited officials were held in the Training Institute. In addition the Institute organized 13 (Thirteen) workshops on

Anti-Money Laundering (AML) compliance issues along with 01 (One) outreach training program at Rajshahi. In total 2366 officials of the Bank took part in these training programs covering theoretical and operational aspects of Banking. The Training Institute successfully completed annual training program 2018 and devoted 3521 man-days of training during the year.

Southeast Bank always considers its employees as the most valuable asset and recognizes the need for professional excellence. The Training Institute of the Bank, since its inception, has been providing effective training to Bank’s human resources for developing their Skills, Knowledge and Abilities (SKAs) to achieve the cherished dream of the Bank as a premier banking institution in Bangladesh and contribute significantly to the national economic development during their career. To accomplish this goal, the Institute designs training calendar considering regulatory compliance requirements and new banking innovations and also through training need assessment (TNA).

296


Contribution toNational Exchequer

Southeast Bank contributed a sum of BDT 5,771.73 million to national exchequer. The Bank’s contributions to the National Exchequer for the last five (5) years are depicted below:

Year BDT in million

2017 5,771.73

2016 5,665.45

2015 4,416.10

2014 5,278.45

2013 5,461.27

Southeast Bank’s contributions to National Exchequer for fiscal 2017-2018 in corporate tax, withholding tax, excise duty VAT etc. are shown:

Southeast Bank Limited being one of the leading financial institutions, contributes on time to the national exchequer in the form of taxes, VAT, excise duties etc.

Corporate Tax Withholding Tax

2,239.49 2,861.91

Contribution to National Exchequer (2017-2018)

3,500.00

3,000.00

2,500.00

2,000.00

1,500.00

1,000.00

500.00

-Excise Duty VAT

338.12 332.20Amount in Million

297


EmpoweringWomen

Women empowerment is an important component of socio-economic development of Bangladesh. The government and many other agencies are undertaking measures to further improve the situation through various policies focused on social reforms and generating employment opportunities.

One of the important factors that would lead to women empowerment in Bangladesh is their financial independence. Women need to be empowered economically. This will make women self-reliant and give them the freedom of choice. This will enable them to benefit from the different options available at their free will. Once a woman becomes financially independent and can exercise her choices, she can also help her mother, sister, daughter, and other women in the society to become empowered. This will elevate their position in the society and will bring in equality.

We, at Southeast Bank has been empowering women in the country by providing them financial services through all of our Branches that allow them

to build a secure financial future for themselves and their households. The Bank works to reach the unbanked women who still need access to basic financial services. To spur interest of women in availing banking services, the bank has two Ladies Branches solely for women in two prime locations in Dhaka City. The Bank intends to increase women participation in the broader economy of the country. The Bank has a separate dedicated product named “Southeast Shuprova” for women entrepreneurs. With this product, the Bank provides loan to the women entrepreneurs for creating new employment opportunities. The Bank has also a dedicated savings product for woman named “Ananya” which offers attractive returns to this account holder.

298


In 2018 Bank introduced a new Environmental and Social Risk Management Guideline. The guideline introduces a new Environmental and Social Due Diligence Checklist for assessing environmental and social risk of our clients. The Guideline also provides mitigation of environmental challenges.

A Sustainable Finance Unit comprising 6 members, headed by Head of Credit Risk Management has been constituted. A Sustainable Finance Committee comprising Heads of Divisions has been formed and Board’s Risk Management Committee now oversees our Environmental Activities.

Southeast Bank Limited this year got a nod for USD 100 million for utilizing in Climate Mitigation Programs from Economic Relations Division, Ministry of Finance, and GOB which is working as National Designated Authority (NDA) of UNFCCRs’ Green Climate Fund (GCF). IDCOL is acting as our National Implementation Entity (NIE).

Bank is properly utilizing $20.00 million from another Climate Fund named GCPF.

Bank is a beneficiary of all Environment Protection oriented re-financing facilities from Bangladesh Bank.

Bank has Circulars for In-house Green Banking practices.

Bank is going to arrange 3rd edition of SEBL-FE-PRI Green Award shortly."

Environment -Responsive Bank

299


Southeast Bank Green School is a noble venture of Southeast Bank Limited. It started its journey in 2013. The aim of the school is to provide quality education to be English Medium students at an affordable lower cost. The school also arranges extra- curricular activities for students.

Southeast BankGreen School

300


School Curriculum

The school is based on Edexcel British Curriculum. The school offers classes from pre-play (starts with age 2.5 years old) to 10th grade (O’ level). At present, the school has 31 dedicated teachers. They serve under the supervision of the competent authority.

Extra Academic Activity

Our school has already implemented many plans and projects. We offer enough extra- curricular activities for the students to ignite their inner zeal and longing for learning. Our teachers and students do not confine themselves within the boundary of academic activities only. They also travel beyond and involve themselves in extra- curricular activities like

annual sports, annual picnic, science fair, field trip, math visit (mathematics competition), graduation ceremony, class party and several competitions in singing, dancing, debate, drama, recitation, art, etc. We have installed a secured play zone with different types of toys and playing materials in the ground floor of the school compound for recreation and both mental and physical growth of the students.

Our participation in celebration of events

We integrate our students in the celebration of national occasions and traditional events. We come out with specially designed programs on the occasions of National Mourning day, International

301


Mother Language day, Independence Day, Victory Day, Pohela Baishak etc.

Technology-Based Education

The school is equipped with all modern equipments and facilities. To facilitate learning of our students, we have a science laboratory and a computer laboratory. We encourage our students to elevate their thoughts independently and comfortably in Social Club along with the classroom activities

Looking forward

We have completed a very successful year in 2018. With its on-going performance, the school has

succeeded in drawing keen interest among the dwellers of the area. We look forward with much energy and optimism to the upcoming academic sessions. It will herald further development and innovation both in academic and infrastructural areas. Based on the success already achieved, we are confident that Southeast Bank Green School will develop further and emerge as an ideal temple of learning within a very short period of time.

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Financial Inclusion: Mobile Banking Services – TeleCashThe Bank is providing Mobile Financial Services (MFS) to its customers under the brand name of TeleCash. TeleCash is providing Utility Bills (i.e. DESCO, DPDC, Dhaka WASA, BGDCL, KGDCL, Rajshahi WASA, Chapainawabganj Pouro Water Bills and Pabna Cable Vision) and Tuition Fees Collection Services other than traditional Cash-in, Cash-out and Fund Transfer services. TeleCash service is available in around 10,000 agent points at 278 Thana out of 595.

TeleCash has recently launched cash collection service in favor of corporate clients by using its distribution channel network. PRAN Group and Meghna Life Insurance Company Limited are now availing the service. National Life Insurance Company Limited and International Beverages Private Limited (Coca Cola) are in the pipeline for availing the service. It has already started a pilot project for micro-credit disbursement and repayment through Mobile Financial Service (MFS) in favor of Micro Finance Institutions (MFI) under

the supervision of Palli Karma Sahayak Foundation (PKSF). TeleCash has initiated a project to facilitate the customers to recharge their prepaid smart utility (especially DESCO and DPDC) meters. It has also taken a development task for integration with the Core Banking System (CBS) of the Bank to link between mWallet account and general banking account of the customers.

TeleCash is working with the objective to introduce innovative product/service in the market as well as to achieve customer satisfaction by ensuring instant and secured transaction.

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ConnectingCustomersSoutheast Bank Limited has adopted the means to go beyond traditional banking and connect customers at a greater extent by providing diversified products and services. The bank has been successful in bringing this concept to life through leveraging innovative ideas and product offerings that empowered the institution to reach more customers in a cost-effective way.

Expanding branches throughout the country is definitely an effective way to enhance the customer base of the bank. However, the bank has given emphasis to provide a greater variation in the portfolio of its products to make it more enticing to the customers. SEBL has developed two innovative savings products namely “Royal Savings” and “Savings Fast” during 2018. It will continue to conduct suitable market research to add new products and services with innovative features to attract more deposit customer.

Royal Savings:Royal Savings is an interest bearing and value added transactional account for Retail Customers designed with a wide range of benefits linked with the deposit balance of the account. Customer can transact through the Royal Savings account with Cash Currency (BDT only), Cheque, Debit Card or Payment Orders etc. This account can also be used for receiving Foreign Remittance.

Savings Fast:

Savings Fast is an interest bearing transactional account for Retail Customers designed with a wide range of benefits linked with the deposit balance of the account. Customers can earn interest from this account. Customer can transact through the Savings Fast account with Cash Currency (BDT only), Cheque, Debit Card or Payment Orders etc. This account can also be used for receiving Foreign Remittance.

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Service Excellencein Action

We resolve customer complaints fairly, consistently and promptly. Every branch has a dedicated “Customer Service and Compliant Management Desk” for dispute resolution. Customers can lodge complaints in person or through other available means such as letter, telephone, facsimile and email. Compliant Lodgement Forms are available at all our branches. We deal quickly with complaints received from the customers. We seek ideas and suggestions of the customers on how we can serve them better. The customers can give their valuable feedback through Service Quality Forms available at all branches under sealed envelope. The branches send the sealed envelopes containing Service Quality feedback received from the clients to the Head Office for evaluation of customer opinion. The opinion/feedback of the customers are scrutinized and widely discussed in the monthly Management Committee meeting and necessary steps are taken for improvement of customer service.

Service Excellence is one of the core values of Southeast Bank Limited. The Bank focuses on providing fast and high quality customer service with state of the art technology. Various methods have been adopted such as, 24X7 Call Center, Central Monitoring System (CMS), Web Chat Service to provide customer service in the most hassle-free way. Short code 16206 is now used round the clock 24X7 to address telephonically the business needs and queries of the clients. Through CCTV, all the activities of the branches are monitored by Head Office Central Monitoring System. Recently, bank introduced customer service through Web Chat. It enables live interaction between the client and bank’s customer service executives to meet clients’ banking queries.

Branch Supervisors at Head Office work relentlessly to ensure service excellence. Supervisors periodically visit the branches to monitor various performance areas including quality of customer service of the branches. In the Managers’ Conferences, different aspects of branches are elaborately reviewed and necessary steps are taken for further improvement of the service quality of the bank. As part of off-site supervision, the supervisors can monitor their respective branches’ activities through Central Monitoring System (CMS)-(a state of art technology) which has been placed at the Bank’s Head Office. According to BRPD Circular No.07 dated July 05, 2015, Southeast Bank is the pioneer among peer banks, to set-up this technological solution in order to become compliant and disciplined.


66

03

02

34

08

01

09

12

DHAKA DIVISION (66)

CHATTOGRAM DIVISION (34)CHATTOGRAM DIVISION (34)

SYLHET DIVISION (12)

KHULNA DIVISION (08)KHULNA DIVISION (08)

RAJSHAHI DIVISION (09)

RANGPUR DIVISION (02)

BARISAL DIVISION (01)

MYMENSINGH DIVISION (03)

BRANCHESS

Bank’s NetworkList of Branches and ATMs

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DHAKA DIVISION (66)

Principal Branch1, Dilkusha Commercial Area, Dhaka-1000Tel: 9563101, 9550081 Fax: 88-02-9551575

Imamganj BranchBhuiyan Market 163/2, Mitford Road, DhakaTel: 7314801, 7316423, 7318567, 7316644 Fax: 88-02-7314801

Bangshal Branch14/3, North South Road, DhakaTel: 7121248, 7121251, 9567163, 7176116, 7176117Fax: 88-02-9567164

Gulshan BranchHouse # 82 CES (F) 1, Gulshan Avenue, DhakaTel: 9883491, 98834 01-5, 9883492 Fax: 88-02-9883495

Dhanmondi Branch“Navana Newbury Place”4/1/A, Sobhanbag, DhakaTel: 8122474, 9123183, 9123518, 9123167Fax: 88-02-9111427

Uttara BranchHouse # 1, Road # 11, Sector # 1Uttara, Dhaka-1230Tel: 8922538, 8923680, 8916538 Fax: 88-02-8923781

Kawran Bazar Branch Jamuna Bhaban (1st Floor), 2, Kawran Bazar C/ADhaka-1215Tel: 9136112, 8189737, 9139276, 8189738-40Fax: 88-02-9136510

New Eskaton Branch Chowdhury Centre23/Ka, New Eskaton Road, (1st Floor), P.S. : Ramna Dhaka-1000 Tel: 9360953, 9340001, 9330176, 9340796 Fax: 88-02-9362177

New Elephant Road BranchKazi Bhaban39, New Elephant Road (1st and 2nd Floor)Dhanmondi, Dhaka-1205Tel: 9674588, 9674327, 9674324-5Fax: 88-02-9674326

Agargaon BranchPlot # E-4/B (1st Floor)Agargaon Administrative Area, Sher-e-Bangla NagarMohammadpur, Dhaka-1207Tel: 58151717, 9132747, 9134247, 58150498, 58153934Fax: 9132704

Banani BranchPlot No.71, Block-B, Kemal Ataturk AvenueBanani, DhakaTel: 9860363, 8861697, 8859518, 8859987, 8861629 Fax: 88-02-9841960

Motijheel Branch (Islamic Banking)125, Motijheel C/A (1st Floor) Dhaka-1000Tel: 9567286, 9567202, 9567303, 9567262Fax: 9567701

Aganagar Branch (Rural) “Mahboob Plaza” (1st & 2nd Floor)Aganagar, Keraniganj, DhakaTel: 7772516, 7761133Fax: 7761155

Corporate BranchEunoos Trade Centre (Ground Floor)52-53, Dilkusha C/A, Dhaka-1000Tel: 9567764, 9551444, 9554447, 9564878Fax: 9571424

Shyamoli Branch ASA Tower (2nd Floor) Holding #23/3 & 23/14, Bir Uttam A.N.M. Nuruzzaman SarakShyamoli, MohammadpurDhaka-1207Tel: 8141821, 58157150, 9128988, 98157155 Fax: 48110799

Joypara Branch (Rural) Begum Aysha Shopping Complex (1st Floor)Holding # 222, Joypara PourasavaThana: Dohar, Dist.: DhakaTel: 06223-56040, 56041, 56042Fax: 06223-56040 Ext.-111

Kakrail Branch Toma Tower (1st & 2nd Floor) 77/1, VIP Road, Kakrail, DhakaTel: 9356115, 9356116, 9340852-3 Fax: 9355990

Madhabdi Branch (Rural) Khatian # 28 (1st Floor), Madhabdi PauroshavaPS & Dist.: NarshingdiTel: 9446127, 9446125 Fax: 9446126

Ashulia Branch (Rural)Helim Shopping Complex(Opposite Fantasy Kingdom Main Gate)Ashulia, DhakaTel: 7788440, 7788420Fax: 7788441

Narayanganj BranchHoling # 26-29, S. M Maleh RoadTanbazar, NarayanganjTel: 7648201, 7648202, 7648203, 7634331Fax: 7648200

Savar Branch (Rural) Plot # A-109, Bazar Road (1st Floor)Pourasava & P.S. : Savar, DhakaTel: 7743691, 7743692, 7743693, 7743694Fax: 7743690

Mouchak BranchKarnaphuli Point (1st Floor)70, New Circular Road, Malibagh, DhakaTel: 8333347, 8333676, 8333678, 8333679Fax: 8333348

Konabari Branch (Rural)Plot # A-147/148, BSCIC I/RUnion: Konabari, P.S.: JoydebpurDist.: GazipurTel: 9298840, 9298836, 9298838, 9298839Fax: 9298837

Tongi Branch (Rural)8/B, Anarkoli Road (1st Floor)Tongi Bazar, GazipurTel: 9816647, 9816648, 9816650-51Fax: 9816649

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Bashundhara BranchPlot # 142, Block # BBashundhara R/A, Baridhara, Dhaka-1212Tel: 8401031, 8401032, 8401034-5Fax: 8401033

Sat Mashjid Road BranchADC Empire Plaza (1st & 2nd Floor)Plot # 183 (Old) 91 (New), Road # 22 (Old) 12/A (New)Sat Mashjid Road, Dhanmondi, DhakaTel: 8191167, 8191168, 8191170, 8191171Fax: 8191169

Mohammadpur BranchAxis Delvista (1st Floor), 7/1, Aorongozeb RoadBlock-A, Mohammadpur Housing EstateMohammadpur, DhakaTel: 8129649, 8129604, 9101254, 58150961Fax: 9119583

Pragati Sarani BranchPlot # Ga-25/5/1, ShahjadpurPragati Sarani, Gulshan, DhakaTel: 8899238-9, 8899610, 8899240Fax: 8899208

Mawna SME/Krishi BranchHolding # 1497, Mawna Bazar Road (1st Floor), Sreepur PauroshavaWard # 8, Thana : Sreepur, Dist.: GazipurTel: 068-2552900, 068-2552901Fax: 068-2552902

Tangail SME/Krishi Branch“Noor Plaza”, Holding # 263, Tangail Main RoadWard # 13, Pauroshava & Thana: TangailDist.: TangailTel: 0921-51336Fax: 0921-62798

Madanpur SME/Krishi Branch Ekata Samabay Super Market (2nd Floor)Mouza: Chanpur, Union: MadanpurThana: Bandar, Dist.: NarayanganjTel: 7648083, 7648081Fax: 7648082

Narsingdi SME/Krishi Branch“Islam Plaza” (1st Floor)Holding # 1, Maddha Kanda Para Sadar Road, Ward # 4, Narsingdi Pauroshava Thana: Narsingdi Sadar, Dist.: NarsingdiTel: 9452082, 9452080Fax: 9452081

Rokeya Sarani Branch“Kusholi Bhaban” Holding # 238/1, West Kafrul, Rokeya Sarani, Mirpur, Ward # 16Dhaka City Corporation, Thana: Sher-e-Bangla NagarDhaka Tel: 9103249, 9103251, 9103246, 9103247Fax: 9103248

Islampur Branch“Royal Tower”Holding #4, Ahsan Ullah Road, Ward # 37, Dhaka South City CorporationThana: Kotwali, DhakaTel: 57394570, 57396174, 57394538, 57394589Fax: 57396175

Hemayetpur Branch (Rural)Hemayetpur Super Market (2nd Floor)Mouza: Kulashur, Union: TetuljoraThana: Savar, Dist.: DhakaTel: 7747914, 7747464, 7747915, 7747916Fax: 7747465

Munshigonj Branch“B. M Complex” (1st Floor)House # 55, Jubillee Road, Ward # 3Munshigonj Pauroshava, Thana: Munshigonj SadarDist.: MunshigonjTel: 7620594, 7620591, 7620592, 7620593Fax: 7620595

Joydebpur Branch (Rural)Holding # 235, Block # K, Shib Bari MoreB.I.D.C Road, Ward # 3, Gazipur PauroshovaThana: Joydebpur, Dist.: GazipurTel: 9252852, 9252851Fax: 9252850

Donia Branch (Rural)“Chowdhury Complex” (1st Floor),Village: Noyapara, Mouza: DhaniaUnion: Dhania, Thana: Demra, Dist.: DhakaTel: 7547955, 7548055Fax: 7548122

Rupnagar Branch“Rangan”, Plot # 14, Road # 11Ward # 7, Rupnagar Residential AreaMirpur Housing Estate, Dhaka City Corporation, Mirpur, DhakaTel: 8031924, 8051981Fax: 8051965

Kamrangirchar Branch (Rural)“Elham Square”, Rony Market RoadMouza: Char KamrangircharUnion: Sultangonj, Thana: KamrangircharDist.: DhakaTel: 55160210, 55160209 Fax: 55160211

Bhulta Branch (Rural)Bhulta Bus Stand, Union: GolakandailThana: Rupgonj, Dist.: NarayanganjMob.: 01755-637195

Dakhin Khan Branch (Rural)“Faisal Mansion”Shah Kabir Mazar RoadVillage: Moshair, Mouza: Uttar KhanUnion: Dakhin Khan Adarsha Union ParishadThana: Dakhin Khan, Dist.: DhakaTel: 8953290, 8953292Fax: 8953299

Gopaldi Branch (Rural)Gopaldi Bazar, Union: Sadasadi Thana: Araihazar, Dist.: NarayanganjMob.: 01755-637194

Ati Bazar Branch (Rural)Mouza: Ati, Union: SaktaThana: Keranigonj, Dist.: DhakaTel: 55103281, 55103282Fax: 55103280

Hasnabad Branch (Rural)“Roky Tower”, Hasnabad, Mouza: EkuriaUnion: Subatta, Thana: Keranigonj, Dist.: DhakaMob: 01730-781277

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Mohakhali Branch“Bay’s” (1st Floor)50, Mohakhali C/A, DhakaTel: 9882523, 9885712, 9882527, 9885710Fax: 9885711

Banasree Branch (Rural)Twin Tower, House # 13, Block # C, Main Road Banasree Project, East Rampura, DhakaMob: 01730-781279

Bandura Branch (Rural)Puraton Bandura BazarMouza: Puraton Bandura, Union: BanduraThana: Nawabgonj, Dist.: DhakaMob: 01730-781278

Sarulia BranchSamsul Haque Nilu Shopping ComplexMouza: Sarulia, Union: SaruliaThana: Demra, Dist.: DhakaMob.: 01730-792169

Kapasia Branch (Rural)Akter MarketKapasia Main RoadThana: Kapasia, Dist.: GazipurMob.: 01766-673597

Mirpur BranchSimpletree Plot # 01, Road # 08, Block-C, Section-06 Mirpur Housing Estate, Pallabi, DhakaMob.: 01766-673595

Ashulia Bazar Branch (Rural)Shahid Sonamia Plaza, Bangabandhu Road Ashulia Bazar, Mouza: Boro AshuliaUnion & Thana: Ashulia, Dist.: DhakaMob.: 01755-630358

Balivadra Branch (Rural)Bhandari Latif Super Market, Balivadra Bazar Mouza: Ganakbari, Union: DamsonaThana: Ashulia, Dist.: DhakaMob.: 01755-630359

Kalibari Branch (Rural)Sobur Market, Duptara Adorsha BazarSattabhandi Bhuiyan Para (Kalibari)Mouza & Union: Duptara, Thana: AraihazarDist.: NarayanganjMob.: 01939-900570

Rajbari Branch“Saleha Akkas Tower” Holding # 237, Binodpur (College Road)Ward # 08, Thana: Rajbari SadarPauroshava: Rajbari, Dist.: RajbariMob.: 01934-448903

Dhanmondi Ladies Branch“Rupayan Khan Plaza”Plot # 500/A (Old) / 18 (New), Road # 7, Dhanmondi R/ADhakaMob.: 01934-448906

Moghbazar Ladies Branch“Hall Mars”, Holding # 66 (Old) Outer Circular Road05 (New) Shahid Sangbadik Salina Parvin SarakBoro Mogbazar, DhakaMob.: 01934-448905

Kazi Nazrul Islam Avenue Branch“Rupayan Trade Centre”114, Kazi Nazrul Islam Avenue, DhakaMob.: 01755-624864

Ghior Branch (Rural)Mouza+Union: Ghior, Upazila : Ghior Dist.: ManikganjMob.: 01705-403799

Balla Branch (Rural)Mouza & Union: BallaP.S.: Kalihati, Dist.: TangailMob.: 01705-403798

Malibagh BranchABN Tower, 45, Siddheswari Circular RoadDhakaMob.: 01787-694948

Singair Branch (Rural)Singair New MarketHolding No.: 2/2, Kansha RoadWard No.: 04, Pourasava + P.S.: SingairDist.: ManikganjMob.: 01934-448918

R. K. Mission Road BranchNir Chhayabithi53, 53/1, R. K. Mission Road, DhakaMob.: 01934-448919

Monipur Bazar Branch (Rural)“Isha Chowdhury Tower”Pirozali Road, Monipur BazarUnion: Bhawal Gor, P.S.: Gazipur SadarDist.: GazipurMob.: 01934-448920

Faridpur Branch“Nilima Tower” - “Khaleque Tower”Holding # 80-81, Mujib Sarak, Ward # 04Upazila: Faridpur Sadar, Paurashava: Faridpur, Dist.: FaridpurMob.: 01708-481079

Le Meridien Branch “Finance Square”Le Meridien Hotel cum Office ComplexCommercial Block, Holding # 79/ANorth Nikunja, KhilkhetDhakaMob.: 01700-706530

CHATTOGRAM DIVISION (34)Agrabad BranchFaruk Mahal93, Agrabad Commercial Area, ChattogramTel: 031-721152, 031-713097-8, 031-7130 94-5, 031-721151-3Fax: 88-031-713096

Khatunganj Branch410/411, Khatunganj, ChattogramTel: 031-2863594, 031-621934, 031-620166-7, 031-620516Fax: 88-031-62 05 17

Jubilee Road Branch96, Jubilee Road, ChattogramTel: 031-635265, 031-611712-5, 031-635245, 031-635246Fax: 88-031-611716

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Halishahar BranchHouse # 3, Block # GPort Connecting Road, Halishahar Housing EstateHalishahar, ChattogramTel: 031-727949, 031-716826, 031-2526183, 031-2526184Fax: 88-031-727949

CDA Avenue Branch (Islamic Banking) Ali Villa, 1640/1861 (New), CDA Avenue Asian Highway, East NasirabadPanchliash, Chattogram Tel: 031-652150, 031-654875, 031-2552385-6Fax: 031-2552387

Pahartali BranchHajrat Taiyabia ComplexHolding # 801 (New), D.T Road, Alongkar Mour Abdul Alir Hat, Pahartali, ChattogramTel: 031-2771001, 031-2771002-4Fax: 031-2771005

Cox's Bazar Branch (Islamic Banking)Asha Shopping Complex 430-431, Bazar Ghata (1st Floor), Cox's BazarTel: 0341-63406, 0341-51053Fax: 0341-64742

Chhagalnaiya Branch (Islamic Banking)Mir Shopping Complex (1st Floor)Chhagalnaiya Bazar P.S.: Chhagalnaiya, FeniTel: 03322-78302, 78432 Fax: 03322-78302 Ext.-111

Feni BranchSurma Sadan (1st and 2nd Floor), 176, 177 and 178 Trunk RoadThana - Feni Sadar, Dist. - FeniTel: 0331-63004, 62884, 61362, 61852 Fax: 0331-62884 Ext.-102

Bashurhat Branch (Rural)Ayesha Motaleb New MarketHolding # 428, Main RoadWard # 5, Bashurhat PauroshavaCompanyganj, NoakhaliTel: 03223-56415, 56461Fax: 03223-56430

Chowmuhani Branch (Rural)Hossain MarketHolding # 276-284, D. B RoadChowmuhani Pauroshava, Thana: BegumganjDist.: NoakhaliTel: 0321-53534, 0321-53535, 0321-54018Fax: 0321-54018

Momin Road BranchEquity Central, 42-43, Momin RoadChattogram City CorporationP.S.: Kotwali, Dist.: ChattogramTel: 031-2857345, 031-2857346, 031-2857347, 031-2857348Fax: 031-2857349

Madambibir Hat Branch (Rural)Madambibir Hat, Union-BhatiaryP.S.: Sitakunda, Dist.: ChattogramTel: 031-2781001, 031-2781003, 031-2781004, 031-2781005Fax: 031-2781002

Comilla Branch359/328, Jhawtala1st Kandir Paar, Thana: Kotwali, ComillaTel: 081-64278, 081-64280, 081-64279, 081-61322 Fax: 081-61321

Lohagara SME/Krishi BranchMostafa City Center, Mouza: AmirabadThana:- Lohagara, Union: AmirabadDist.: ChattogramTel: 0303-456623, 01713-065986 (Mobile)Fax: 0303-456624

Brahmanbaria SME/Krishi BranchShikder Plaza, Holding # 1001Dr. Faridul Huda Road, Ward # 4Pauroshava & Thana: BrahmanbariaDist.: BrahmanbariaTel: 0581-58202Fax: 0581-58201

Hathazari SME/Krishi BranchS. A Shopping Complex, Hathazari Bus StandRangamati Road, Plot # 14238, Khatian # 2517Mouza: Fatika, Union: Fatehpur Thana: - HathazariDist.: ChattogramTel: 031-2601855Fax: 031-2601856

Shebarhat SME/Krishi BranchShebarhat Bazar, Mouza – RazarampurFeni Chowmuhani Sarak (1st Floor)Thana – Shenbag, District - NoakhaliTel: 01713-065972

Sonagazi SME/Krishi BranchHolding # 431, Ward #4, Pauroshava & Thana: SonagaziDist.: FeniTel: 03325-76386, 76377Fax: 03325-76386

Oxygen More BranchHolding No.405, KulgaonChattogram City CorporationOxygen Mour, Ward # 2Thana : Bayezid BostamiDist.: ChattogramTel: 031-2584018, 2584019, 2584020, 2584059Fax: 031-2584017

Chowdhury Hat SME/Krishi Branch “Halim Mansion”, (1st Floor) Chowdhury Hat, Mouza: Chikandandi Union: Fateyabad, Thana: Hathazari, ChattogramTel: 031-2584007, 031-2584006Fax: 031-2584005

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Potherhat Branch (Rural)“Khaiz Ahmed Shopping Centre” (1st Floor)Mouza: Noapara, P.O: Gujra NoaparaUnion: 13 No. Noapara, Thana: RaujanDist.: ChattogramTel: 031-2573214, 031-2573216, 031-2573217Fax: 031-2573215

Fatikchari Branch (Rural)“Mir Jahanara Complex” (1st Floor)College Road (Bibir Hat), Khatian # 4989Union: Dhurang, Thana: Fatikchari, ChattogramTel: 030-2256317, 030-2256316Fax: 030-2256315

Kotwali Branch“Equity Anitri” (1st Floor)Holding # 32, Shahid Sohrawardy RoadWard # 33, Chattogram City CorporationThana: Kotwali, Dist.: ChattogramTel: 031-632750, 632751, 632752Fax: 031-632753

Companigonj Branch (Rural)“Saudia Manjil” (1st & 2nd Floor)R.S Khatian # 395, CompanigonjMouza: North Tirish, Union: 15 No. Nobipur (West)Nabinagar Road, Thana: Muradnagar, Dist.: ComillaTel: 08026-59011, 59004Fax: 08026-59017

Chakaria Branch (Rural)“Society Jame Mosque Complex”Mouza: Chiringa, Chakaria PauroshovaThana: Chakaria, Dist.: Cox’s BazarTel: 03422-56161, 03422-56162Fax: 03422-56163

Miabazar Branch (Rural)Haji Siraj MansionMouza : Ashrabpur, Union : 2 No. UjirpurThana : Chauddagram, Dist.: ComillaMob.: 01766-665140

Haidergonj Branch (Rural)Gazi Super MarketHaidergonj Bazar, Mouza : Char AbabilUnion : Char Ababil, Upazila : RaypurDist.: LaxmipurMob.: 01766-673599

Teknaf Branch (Rural)Alo Shopping Complex, PC-177, K K Para, Main RoadWard No.: 03, Pourashova: Teknaf, Thana: TeknafDist.: Cox’s BazarMob.: 01934-448900

Gunabati Branch (Rural)Mouza: Gunabati, Union: 12 No. GunabatiP.S.: Chouddogram, Dist.: ComillaMob.: 01709-633280

Silonia Bazar Branch (Rural)“Razzak Market”, Feni-Maizdi RoadUnion: Joylaskar, P.S.: DagonbhuiyanDist.: FeniMob.: 01708-481074

Parshuram Branch (Rural)“Mazumder Market”Holding # 161, Main RoadWard # 05, Pourasava: ParshuramP.S.: Parshuram , Dist.: FeniMob.: 01708-481073

Baraiyarhat Branch“Alam Tower” (1st Floor), Holding # 139 (1)/139, Mashjid RoadWard # 04, Pourashova: Baraiyarhat, Upazila: MirsharaiDist.: ChattogramMob. : 01700-706528

Abutorab Branch (Rural)“Kazi Market”, Mouza: Modho MoghadiyaUnion: 11 No. Moghadiya, Upazila: MirsharaiDist.: ChattogramMob.: 01700-706529


Laldighirpaar BranchMubarak Tower1794/1788, New Market, SylhetTel: 0821-710955, 0821-715382, 0821-710218Fax: 88-0821-710102

Moulvibazar BranchJarif Tower 199/2, M. Saifur Rahman Road, MoulvibazarTel: 0861-53727-9Fax: 88-0861-53730

Chouhatta BranchManru Shopping CityPlot # 4953/4943 (1st Floor)Chouhatta Mirboxtola RoadChouhatta, SylhetTel: 0821-720276, 0821-720276 Fax: 88-0821-720276

Shahjalal Uposhahar Branch Plot # 07, Block # D, Main Road, Shahjalal UposhaharSylhet Tel: 0821-713057, 0821-713052, 0821-713062, 0821-811655Fax: 88-0821-711820

Bandar Bazar Branch (Islamic Banking)Karimullah Market (1st Floor)Bandar Bazar, SylhetTel: 0821-810322, 812246, 4116495, 4011350, 0821-721243Fax: 0821-2831455

Kulaura BranchAziz Rowshon Shopping Centre and Garden CityHolding No. 334, Ward No. 3, Pourasava: KulauraThana: Kulaura, Dist.: Moulvi BazarTel: 08624-56208Fax: 08624-56208

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Hetimgonj Branch (Rural)Khoyruganj Jame Masjid Market Complex (1st Floor)Union: Fulbari, Hetimgonj ChowrastaThana: Golapgonj, Dist.: SylhetTel: 0821-840374, 840373Fax: 0821-840372

Pathantula BranchHaque Mansion of Modina Market704, Pathantula, Sylhet City CorporationThana: Jalalabad, Dist.: SylhetTel: 0821-728745, 0821-724300Fax: 0821-724300

Tazpur SME/Krishi BranchTazpur Bazar, Mouza: Boraya, Union: 8 No TazpurThana: Balagonj, Dist.: SylhetTel: 08242-56191Fax: 08242-56191

Biswanath SME/Krishi Branch“Haji Monir Uddin Market” Natun Bazar, BiswanathMouza - Mashala, Union/Pourashova: BiswanathThana: Biswanath, Dist.: SylhetTel: 08224-56205

Beanibazar SME/Krishi Branch“Panchakhanda Haragabinda High School Market”834, Beanibazar-Sylhet Road, P.S.: BeanibazarDist.: SylhetTel: 08223-56164Fax: 08223-56165

Charkhai Branch (Rural)Anisha ComplexMouza : Kamar Gram, Union : 2 No. CharkhaiThana : Beanibazar, Dist.: SylhetMob.: 01766-665141

KHULNA DIVISION (8)Khulna BranchHaji Hanif Complex 12 & 13, Khan Jahan Ali Road, KhulnaTel: 041-730606, 041-7314 06, 041-731306, 041-731606 Fax: 88-041-731506

Jessore SME/Krishi BranchHolding # 11, R. N. Road, Ward # 2Pauroshava: Jessore, Kotwali, JessoreTel: 0421-67683Fax: 0421-68094

Satkhira SME/Krishi BranchHolding # 5896, Polash Pole, (1st Floor)Shahid Nazmul Sarak (Satkhira Old Bus Stand)Ward # 08, Satkhira Paurashava Thana: Satkhira, Dist.: SatkhiraTel: 0471- 63568, 62508Fax: 0471- 63569

Sir Iqbal Road Branch“Noor Jahan Plaza”155, Sir Iqbal Road, KhulnaTel: 041-721056, 731848, 724471Fax: 041-722852

Rupdia Bazar Branch (Rural)"Bhowmik Super Market", Mouza: ZiratUnion: 12 No. Norendrapur P.S.: Jessore Sadar, Dist.: JessoreMob.: 01709-633282

Dumuria Branch (Rural)R. R. Plaza, Mouza: Araji SajiyaraUnion: 11 No. Dumuria P.S.: Dumuria, Dist.: KhulnaMob.: 01705-403796

Kushtia BranchAneek Tower, 295, Nowab Sirajuddoula RoadWard # 03, Pauroshava : KushtiaP.S.: Kushtia Sadar, Dist.: KushtiaMob.: 071-71845, 071-71895

Chuadanga Branch“Brothers Tower”, Holding No.: 686-06, Thana RoadWard No.: 03, Pourasava: ChuadangaP.S.: Chuadanga Sadar, Dist.: ChuadangaMob.: 01934-448917

RAJSHAHI DIVISION (9)Bogra Branch Bhandari Manjil (2nd Floor)776-777 Barogola, BograTel: 051-68083, 68084, 68085, 68086 Fax: 051-51939

Rajshahi BranchPlot # 447, Mangol Bhaban (2nd Floor)Alupatti Mour, P.O.: GhoramaraP.S: Boalia, Dist.: RajshahiTel: 0721-812203, 0721-812204, 0721-812205, 0721-812206 Fax: 0721-812207

Naogaon Branch“Kazi Habibur Rahman Market” 301, Old Hospital Road (Bridge Mour)Pauroshava: Naogaon, Thana: Naogaon SadarDist.: NaogaonTel: 0741-63227, 0741-63286, 0741-63397, 0741-61274Fax: 0741-61831Website : www.southeastbank.com.bd

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Chapainawabganj Branch“Sarker Tower”, Holding # 59, 60, 61 Kalitala 1st Lane (Jhilim Road), Ward # 02Chapai Nawabganj Pourashova Thana: Sadar, Dist.: ChapainawabganjTel: 0781-51717, 0781-51718 Fax: 0781-51716Website : www.southeastbank.com.bd

Sirajganj BranchBasak Plaza947-948, Shaheed Suharawardy Road, SirajganjMob.: 01766-665142Website : www.southeastbank.com.bd

Baneshwar Branch (Rural)Al-Haj Amzad Hossain MarketMouza : Shibpur, Union : BaneshwarThana : Puthia, Dist.: Rajshahi Mob.: 01766-673596Website : www.southeastbank.com.bd

Pabna Branch “Khairul Tower”116, Mawlana Mohammed Ali Road (Narikel Bagan Road), Ward # 3 (Shibrampur)Pabna Pauroshava, Thana: Pabna Sadar, Dist.: PabnaMob.: 0731-65027, 65032, 65059, 65073Fax: 0731-65089Website : www.southeastbank.com.bd

Ishwardi Branch“Adib Rana Plaza” 994/930 &1017, Station RoadWard # 07, Thana : IshwardiPauroshava : Ishwardi, Dist.: PabnaMob.: 01787-678778

Natore Branch“Lily Plaza”, Holding No.: 838, Kanaikhali Ward No.: 04, Pourasava: NatoreP.S.: Natore Sadar, Dist.: NatoreMob.: 01712-803701Website : www.southeastbank.com.bd

RANGPUR DIVISION (2)Rangpur BranchCanopus, Holding # 39/1, 39/7Dhap Jail Road, Rangpur City CorporationThana: Kotwali, Dist.: RangpurTel: 0521-64672, 64673, 64778, 64779Fax: 0521-64780Website : www.southeastbank.com.bd

Dinajpur BranchHolding # 808/837, GaneshtolaJail Road, Dinajpur Municipal CorporationWard # 3, Thana: Kotwali, Dist.: DinajpurTel: 0531-52025, 0531-52026Fax: 0531-52024Website : www.southeastbank.com.bd

BARISAL DIVISION (1)Barisal Branch54 Sadar Road (1st Floor)Kotwali, BarisalTel: 0431-2176601, 0431-2176602, 0431-2176603-04Fax: 0431-64056Website : www.southeastbank.com.bd

MYMENSINGH DIVISION (3)Mymensingh Branch“Minar Complex”, Holding # 09Mukti Joddha Sarani (Choto Bazar)Ward # 08, Pauroshava : MymensingThana: Kotwali Sadar, Dist.: MymensingMob.: 01934-448904Website : www.southeastbank.com.bd

Sherpur BranchMuslim MarketHolding # 166, Shahid Bulbul SarakMunshi Bazar, Ward No.: 02, Pourasava: SherpurThana: Sherpur Sadar, Dist.: SherpurMob.: 01705-403797Website : www.southeastbank.com.bd

Muktagacha BranchRabeya Momtaz Tower (1st Floor), Holding # 574Mymensingh-Tangail Main Road (Old Bus Stand)Ward No.: 08, Pourashova: MuktagachaUpazila: Muktagacha, Dist.: MymensinghMob.: 01700-702113Website : www.southeastbank.com.bd

Off-Shore Banking Unit, DEPZZone Servicing Building-1Room # 77 (3rd Floor), Dhaka EPZ, Ganakbari, SavarDhaka Tel: 7788628-9Website : www.southeastbank.com.bd

Off-Shore Banking Unit, CEPZZone Service Complex (1st Floor)East Wing North Chattogram EPZChattogramTel: 031-740780Fax: 031-740779


90

06

03

33

16

04

14

07

DHAKA DIVISION (90)

CHATTOGRAM DIVISION (33)CHATTOGRAM DIVISION (33)


KHULNA DIVISION (16)KHULNA DIVISION (16)

RAJSHAHI DIVISION (14)

RANGPUR DIVISION (03)

BARISAL DIVISION (04)

MYMENSINGH DIVISION (06)

ATMS

ATM Network

313

314


Dhaka Division (90)CorporateEunoos Trade Centre (Ground Floor) Plot #52-53, Dilkusha C/A Dhaka-1000

Uttara -ATM-1- Sector 1House #1, Road #11, Sector #1, Uttara Dhaka-1230

Gulshan ATM-1House #82 CES (F), 1, Gulshan Avenue Dhaka -1212

Pragati Sarani ATM-1Plot No. GA - 25/5/1, Shahjadpur Pragoti Sarani Gulshan, Dist.: Dhaka

Banani ATM-1Plot #71, Block #B, Kamal Ataturk Avenue Banani, Dhaka

Dhonia ATM-1Chowdhury Complex” (1st & 2nd Floor) 440-441, Noyapara, Donia, Jatrabari Dhaka - 1236

Mouchak ATM-1 Karnaphuli Point (1st Floor) 70 New Circular Road Malibagh, Dhaka

MadobdiKhatian # 28 (1st Floor), Mouza: Par Kashipur Madhabdi Pauroshava, Thana: Narsingdi Dist: Narsingdi

SavarPlot # A -109, Bazar Road (1st Floor) Pauroshava & P.S.: Savar Dhaka

Basundhara ATM-1Plot#142, Block# B, Bashundhara R/A Baridhara, Dhaka -1212

HemayetpurHemayetpur Super Market (2nd Floor), Mouza: Kulashur Union: Tetuljora, Thana: Savar District: Dhaka

AshuliaHelim Shopping Complex, (Opposite Fantasy Kingdom) Ashulia, Dhaka

JoyparaBegum Aysha Shopping Complex (1st Floor) Holding # 222, Joyapara Pourasava Thana - Dohar, District - Dhaka

Konabari Plot # A-147/148, BSCIC I/R, Union: Konabari P.S. - Joydebpur, Dist - Gazipur

Basundhara ATM-2, NSUNorth South University Campus ATM Booth Plot 15, Block B, Bashundhara Dhaka-1229

Narayanganj53/2 S.M. Maleh Road, Tanbazar, Narayangonj

Uttara - ATM-2, Sector 14Plot No: 20, Road No: 12, Sector No: 14 Uttara Residential Model Town Dhaka-1230

Principal-ATM-2, ACS TextileACS Textiles (Bangladesh) Limited Tetlabo, Word No: 03, P.O: Parabo P.S: Rupgonj, Narayanganj

Elephant Road-ATM-1, Concord ArcadiaConcord Arcadia Shopping Mall, Plot No. 1 & 2 Road No: 04, Dhanmondi Residential Area, Dhaka

Kawran Bazar-ATM-2, Green Road - Comfort Hospital167, Green Road (Besides Comfort Hospital)

Bhulta ATM-1Bhulta Bus Stand, Union: Golakandail, Thana: Rupgonj Dist.: Narayanganj

DokkhinkhanFaisal Mansion, Shah Kabir Mazar Road P.S # Dakshin Khan, Dhaka

JoydebpurTaj Tower,82, Shibbari more Joydebpur, Gazipur

New Eskaton ATM-1Chowdhury Center, 23/Ka, New Eskaton Road (1st Floor) P.S.: Ramna, Dhaka - 1000

MohammadpurAxis Delvista (1st .Floor), Holding No:7/1, Block-A Aurongajeb Road, Mohmmadpur Housing Estate Mohammadpur

Principal ATM-11, Dilkusha C/A, Annex Building Hotel Purbani International Motijheel Thana, Dhaka

AganagarDin Complex, Kodomtoli Circle, Keranigonj Dhaka

Principal-ATM-03, Pirjongi Shah MazarPirjongi Shah Mazar, Motijheel Coloney Jamee Masjid Complex Market Shop No# 08, Pirjongi Shah Mazar, Outer Circular RoadDhaka.

Elephant Road, ATM-2, Hatirpool149/1, Elephant Road (Presently- Dr. Kudrat -e- Khuda Road)Kalabagan, Dhaka

Donia ATM-2, Dolaipar169/A/2 Dolaipar, Dhaka-1204

315


TangailNoor Plaza, Holding # 263, Main Road, Tangail-1900

Satmasjid Road ATM-2ADC Empire Plaza, Holding No# 91, Road No# 12/A Satmasjid Road, Dhanmondi, Dhaka

New Eskaton-ATM-2, Boro Mogh BazarShitol Bhaban, 625, Boro Moghbazar Red Crescent Road, Ramana, Dhaka

KapasiaAkhter Market, Kapasia Main Road, Village: KapasiaMouza: Banar Hawla, Union: Kapasia Kapasia Thana, District: Dhaka

New Eskaton-ATM-3Farr Ceramics, Gazipur“Farr Ceramics”, Noulapara (Bhabanipur Union : Vaoalergor Gazipur Sadar Thana, Gazipur

HasnabadRocky Tower, Village / Area: Hasnabad, Ekuria Union Name: Subatta, Keranigonj, Dhaka

KamrangircharAt the ground floor of Rony Market Bhaban, Holding No. 648-649, Rasulpur, Market Road, Ward No. 56, Dhaka South City Corporation, Kamrangirchar Thana, Dhaka

Rupnagar“Rangan”, Plot # 14, Road # 11,Ward # 7, Rupnagar Residential Area,Mirpur Housing Estate, Dhaka City Corporation,Thana: Mirpur, Dist.: Dhaka

Principal Br.-ATM-4, Business faculty, DU CampusAt the ground floor of Administrative Building, Faculty of Business Studies, University of Dhaka, Shahabag Thana, Dhaka South City Corporation, Dhaka-1000

Bhulta-ATM-2, Panchrukhi Bazar, AraihazarMP Tower Building, Panchrukhi Bazar, Araihazar, Dag No : RS-1862,1863, SA-986,987, Khatian No: RS-3036, Mouza Name: Panchrukhi, Union : Panchrukhi, Araihazar Thana, District : Narayangonj

Ashulia Bazar“Shahid Sonamia Plaza”, Ashulia Bazar, Bangobondu Road, Dag No: 839, JL No: 115, Khatian No: 101, Ashulia Union, Ashulia Thana, Dhaka

Kalibari“Sabur Market”, Dhuptara Adarsha Bazar, Kalibari, Village: Shapta Bandi Bhuyian Para, Mouza: Dhuptara, Union: Dhuptara Union Parishad, Thana: Araihazar, District: Narayangonj

Balivhadra“Vhandari Latif Super Market”, Village: Balivhadra Bazar, Mouza: Ganakbari, Union: Swanirvar Damsona Union Parishad, Thana: Ashulia, District: Dhaka

Mirpur"Simpletree” Plot # 01, Road # 8, Section # 6, Mirpur, Ward # 6, Dhaka City Corporation, Thana: Pallabi, District: Dhaka under the supervision of Mirpur Branch, Dhaka

Tongi“Kazi Market”, Holding No: 8/B, Anarkoli Road, Ward No: 57, Gazipur City Corporation, Thana:Tongi, Gazipur.

Rajbari“Saleh Akkas Tower”, Holding # 237, Binodpur (College Road), Ward # 08, Rajbari Porusova, Rajbari Sadar Thana, Dist.-Rajbari.

Malibugh “Fakhr-E-Nur ABN Tower”, Holding # 45, Siddeswari Circular Road, Ward No: 19, Ramna Thana, Dhaka South City Corporation, Dhaka.

Joydebpur, ATM-2“OK Tower”, Holding No: F-214/10, Hakkani Housing Society, Rajbari-Jourpukur Road, Ward No: 28, Gazipur City Corporation, Joydebpur Thana, District: Gazipur

BallaBalla, R.S Dag # 586, 587 R.S Khatian # 1270, 1271, Mouza :Balla, Union:Balla, Thana: Kalihati, District: Tangail

Ghior Ghior, S.A Dag # 450, S.A Khatian # 161, R.S Dag # 783, R.S Khatian # 159, C.S Dag # 450, C.S Khatian # 161, Union: Ghior, Thana: Ghior, District: Manikganj

Dhanmondi ATM-2, Navana New Bury, "Navana Newbury Place", Road/Holding No.4/1/A, Area: Subhanbagh, Mirpur Road, Ward No.17, Kalabagan Thana, Dhanmondi-1213, Dhaka South City Corporation, Dhaka

Latif Bawany Jute Mills ATMLatif Bawany Jute Mills Ltd. Demra, Dhaka.

Wari4/2 Joykali Mondir, Wari, Dhaka

Imamganj Bhuiyan Market, 163/2, Metford Road, Dhaka

316


Agargaon248-1/G, West Agargaon, Sher-e-Bangla Nagar, Dhaka

Singair“Singair New Market”, Holding # 02/02, Kansha Road, Singair Bazar, Singair Pauroshava, Ward # 04, Upazilla/Thana: Singair, District: Manikganj

MadanpurEkata Samabay Super Market, C.S. Dag # 83, Khatian # 165, S.A. Dag # 56, Mouza: Chandpur, Union: Madanpur, Thana: Bandar, District: Narayanganj

Segun Bagicha Segun Bagicha Concord Apartment, 5, Segun Bagicha, Ramna, Dhaka

Ati Bazar Branch premisesMouza: Ati, Union: Sakta Thana: Keranigonj, Dist.: Dhaka

Bangshal Branch ATM BoothHouse #5, Road # Bangshal Lane, P.S # Kotowali, Dhaka-1100

Uttara Sector# 13House# 50, Gareeb-e-Nawaz Road, Sector# 13, Uttara, Dhaka

WAPDA Road Rampura56, West Rampura, WAPDA Road, Dhaka

Khilgaon, TaltalaHouse# 566/C, Khilgaon, Taltala, Dhaka

APBN Uttara ATMArmed Police Battalion (APBn) compound, sector-2, Uttara, Dhaka.

SPBN MohammadpurHouse No: 19/20, Road No.: 2, Shahjalal Housing Limited, Shahid Buddijibi Shetu Sharok, Mohammadpur, Dhaka

Shyamoli Branch ATM ASA Tower of 23/3 and 23/14, Bir Uttam A.N.M Nuruzzaman Sarak, Shyamoli, Mohammadpur, Dhaka-1207, Bangladesh

Adabor ATM“Baitul Aman Housing Society” House-533, Road-11, Adabor, Dhaka

Faridpur Branch ATM“Nilima Tower” & “Khaleque Tower” (Block # A, Shop No. # 03), Holding # 80-81, Niltuli, Road Name: Mujib Sarak, Ward No: 04, Pauroshava: Faridpur, Thana: Faridpur Sadar, District: Faridpur.

Banasree ATMHouse # 4, Block # C, Banasree, Dhaka

Munshigonj Branch “B. M Complex”,House # 55, Jubillee Road, Ward # 3,Munshigonj Pauroshava,Thana: Munshigonj, Dist.: Munshigonj

Monipur Bazar Branch “Isha Chowdhury Tower”, Village: Monipur Bazar, Pirujali Road, Mouza: Bokran Monipur, Union: Mirzapur, Thana: Gazipur Sadar, District: Gazipur

East MonipurEdi-Fice Center, 1281 Begum Rokeya Sarani, East Monipur, Mirpur, Dhaka-1216

Ibrahimpur ATM284 Khan Mansion, Ibrahimpur, Dhaka Cantonment, Kafrul, Dhaka-1206

Jatrabari ATMHouse No.- 100/1/Kha, Sahid Faroque Road, Jatrabari, Dhaka

Rokeya Sarani Branch ATM 237, West Kafrul, Shere Bangla Nagar, Dhaka

Kamalapur ATMHolding No 1/2/B & 1/2/A, Kamalapur Bazar road, Dhaka

Corporate Branch InhouseEunoos Trade Centre (Ground Floor), Plot #52-53, Dilkusha C/A, Dhaka-1000

Nikunja Branch ATMLe Meridien Hotel Cum Office Complex Plot # 79/A, Commercial Block, North Nikunja, Dhaka

Azampur Kacha Bazar ATMBismillah Shopping Complex, Shop no. 12 & 13, Shah Kabir Majar Road, Azampur Kacha Bazar, Dakhin Khan, Dhaka-1230

Sparrow ATMSparrow Apparels Limited, Chandana, Laxmipura, Joydevpur, Gazipur.

CHATTOGRAM DIVISION (33)HalishaharHouse # 03, Block - G, Port Connecting Road, Halishahar Housing Estate, Halishahar, Chattogram

AgrabadJahan Building, 59, Agrabad Commercial Area, Chattogram

Oxygen Moor405, Kulgao, Oxygen More, Biozid Bostami, Chattogram

317


PotherhatKhaiz Ahmed Shopping Centre” (1st Floor) Khatian # 5820, Dag # 37 & 38 Village: Noapara, Mouza: Noapara P.O: Gujra Noapara, Union: 13 No. Noapara Thana: Raujan, District: Chattogram

Jubilee RoadHaji Golam Rasul Market, 96 Jubilee Road, Chattogram

CDA Avenue ATM 1 & 2Ali Villa, 1640/1861 (New), CDA Avenue, Asian Highway, East Nasirabad, Thana - Panchliash, Dist.: Chattogram

Chakaria“Society Jame Mosque Complex”,R.S Khatian # 76, R.S Dag # 154,Mouza: Chiringa, Chakaria Pauroshova,Thana: Chakaria, Dist.: Cox’s Bazar

HathazariS. A. Shipping Complex Hathazari Bus Stand, Ranganati Road, Plot # 14238, Khatian # 2517, Mouza: Fatika, Union: Fatehpur, Thana: Hathazari, Dist: Chattogram

BashurhatKabirhat Road, Basurhat Bazar ,Basurhat Pourusava, Ps # Companygonj, Dist.# Noakhali

CompanygonjSaudia Manjil (1st & 2nd Floor),Dag # 742, R.S Khatian # 395, Companigonj, Mouza: North Tirish, Union: 15 No. Nobipur (West), Nabinagar Road, Thana: Muradnagar,Dist.: Comilla

Chowdhury HatS.N. Tower, Dadaram Sharok Road, Chowdhury Hat Bazar`

Chowmuhani Tara Manjil, Holding No# 72, Feni Road, Hajipur, PS# Begumgonj, Chowmuhani Pourashava, Noakhali

Cox's Bazar ATM-1M&M Shopnaloy, Plot# A-12, Kolatoli, Main Road, Cox’s Bazar

Mia BazarHazi Siraj Mansan, Dag No: BS-503, Khatin No: BS-237, Mouza: Ashrabpur, Union: 02 No Ujirpur, Chowddrogram Thana, Comilla

Haidergonj, LaxmipurKazi Super market, Dag No-RS-16687,16688,16689, Khatian No-RS-432,950,2049, Haidergonj Bazar, Mouza-Char Ababil, Union-Char Ababil, Raipir, Laxmipur

FatikchariMir Jahanara Complex, College Road, Bibirhat, Dag No: 7622, Khatian No: 4989, JL-51, Mouza : North Dhurung, Thana: Fatikchari, Chattogram

Madambibir HatMadambibir Hat Union, Bhatiary, P.S.: Sitakunda, Dist. :Chattogram

ShebarhatJahanara & Sons Market, Village/ Area: Raja Rampur, Dag No: 3181, Khatian No: 998 JL-420, Mouza: Raja Rampur, Union : 7 No Mohammadpur, Senbagh Thana, Noakhali

Teknaf“Alo Shopping Complex’, Holding No: P.C-177,K.K Para, Main Road, Teknaf Pauroshova, Ward No # 03, Thana: Teknaf, District: Cox’s Bazar

Chhagalniya-ATMTareque Medical Hospita“Tareque Memorial Hospital Complex”, Dhaka-Chattogram old Main Road (Banshpara), Chhagalniya Thana, Feni

Cox's Bazar-ATM-2Coral Reef “Coral Reef Mannan Plaza”, Holding No: 569, Main Road, Bazar Ghata, Ward No: 10, Cox’s Bazar City Corporation, Sadar -Cox’s Bazar Thana, District: Cox’s Bazar.

Momin Road, Ctg“Equity Central”, Holding No: 42-43, Momin Road, Ward No: 32, Chattogram City Corporation, Thana: Kotwali, Chattogram..

GunabatiGunabati Bazar”, Village: Gunabati, Union: 12 No. Gunabati Union, Thana: Choddogram, District: Comilla

Kotwali, ctg“Equity Anitri”, Holding No: 32, Hossain Shahid Sarwardi Road, Kotwali, Ward No: 33, Chattogram City Corporation, Kotwali Thana, Chattogram.

318


Chagalniya Branch“Mir Shopping Complex”, Chhagalnaiya Bazar, P.S.: Chhagalnaiya, Feni.

APBN-Chattogram ATM9 Armed Police battalion (APBN) Solosohor, Chattogram

Khatungonj Branch ATMZaynab Tower, Holding # 46, Road Name# Khatungonj, Ward # 35, Chattogram City Corporation, Thana # Kotwali, District # Chattogram.

Sonagazi Branch ATMHolding # 431, Dag # 565, 03, Khatian # 433, Mouza: Char Ganesh, Thana: Sonagazi, District: Feni

Silonia Bazar Branch ATMBKB Building, Silonia Bazar, Dagonbhuiyan, Feni.

Feni Branch ATM Liberty Super Market of Feni Pourashava, Feni

SYLHET DIVISION (07)Patantula -ATMRagib Rabeya, Medical College and Hospital, Jalalabad Ragib-Rabeya Medical College and Hospital, Road: Sunamgonj, Pathantula, Sylhet -3100

Shahjalal UposharBlock# D, Main Road, Shahjalal Uposhahar, Sylhet

MoulvibazarJarip Tower, Holding No: 199/2, Road No: 59, Central Road (Saifur Rahman Road), Ward: 04, Moulvibazar Pourashava, Thana : Moulvibazar, Moulvibazar

Laldigirpar-ATMVIP Tower, Plot No: 3714, Khatian No: 1909, JL-91, VIP Road Sylhet, Ward No: 13, Sylhet City Corporation , Kotwali Than, Sylhet

Chowhatta-ATMKazirtula Main RoadMujibur Rahman Complex, Holding No: 1469, 1470, 1471, 1472, Kazirtula Main Road, Ward No: 17, Sylhet City Corporation , Kotwali Than, Sylhet

KulauraAziz Rowshon Shopping Center & Garden City, Holding No: 0334-00, Ward No: 03, Kulaura Pourashava, Kulaura Thana, District: Moulvibazar

Pathantula Branch premisesHaque Mansion of Modina Market, Holding No. 704, Pathantula Ward No. 8, sylhet City Corporation, Thana ; Jalalabad, Dist : Sylhet

KHULNA DIVISION (16)KhulnaHaji Hanif Complex (1st floor),12 & 13, Khan Jahan Ali Road,Khulna.

Sir Iqbal Road155, Sir Iqbal Road, khulna (Thanar Moor)

SatkhiraHolding # 5896, Palash Pole (Ground Floor), Shahid Kajal Sarak (Satkhira Bus Stand), Ward # 08, Satkhira Pouroshova, Thana: Satkhira, District: Satkhira

Jessore11, R.N. Road, Thana: Kotwali, Dist.: Jessore

RupdiaBhoumik Super Market, Rupdia Bazar, Vill: Zirat, Union: 14 no Narendropur, Jessore

Dumuria"R.R. Plaza", Village: Araji Sajiara, Union: 11 No. Dumuria Union, Thana: Dumuria, District: Khulna.

Khalishpur Jute Mills ATM Khalishpur Jute Mills Ltd. Khalishpur, Khulna

Eastern Jute Mills ATMEastern Jute Mills Ltd. Atra Industrial Area, Khulna

KushtiaAneek Tower, 295, Nowab Sirajuddoula Road Ward # 03, Pauroshava : Kushtia P.S.: Kushtia Sadar, Dist.: Kushtia

Chuadanga “Brothers Tower”, Holding # 0686-06, Thana Road, Chuadanga Pauroshava, Ward # 03, Thana: Chuadanga Sadar, District: Chuadanga

APBN,Khulna ATM 3, Armed Police Battalion (APBN), Shiromoni, Khulna

319


RAJSHAHI DIVISION (14)Chapainawabgonj“Sarker Tower”, Holding # 59,60 & 61, Ward # 02, Kalitola 1st Lane (Jhilim Road), Boro Indira Moor, Chapainawabganj Municipality, Thana: Chapainawabganj Sadar, District: Chapainawabganj.

Bogura ATM-1Mofiz Paglar Moor, Bogura

NaogaonShahid Matiul Isalm Poura Market, Naogaon Pourashava, Thana: Naogaon sadar, Dist.: Naogaon

Rajshahi ATM-1, LaxmipurHolding No: 634, Sher-Sha Road, Laxmipur, Rajshahi

Bogura ATM-2, Rangpur Road, Bogura288/325, 289/326, Jamil Shopping Center, Borogola, Rangpur Road, Bogura

Baneswar“Alhaj Amjad Hossain Market”, Village: Kolahata, Mouza: Shibpur, Union: Baneswar, Thana: Potia, District: Rajshahi

Rajshahi-ATM-2, Uposhahar New Market, RajshahiUposhahar New Market, Holding No: 10, Ward No: 14, Rajshahi City Corporation, Boalia Thana, Rajshahi

Rajshahi-ATM-3, Greater Road, RajshahiGreater Road, Ward No: 13, Rajshahi City Corporation, Boalia Thana, Rajshahi

Rajshahi-ATM-4, Natore Road, RajshahiRokeya Bhaban, Holding No: 219, Natore Road, Ward No: 22, Rajshahi City Corporation, Boalia Thana, Rajshahi

PABNAKhairul Tower, Maowlana Mohammad Ali Road (Narikel Bagan Road), Ward No: 03 (Shibrampur), Pabna Porosuva, Pabna Sadar Thana, District: Pabna

IswardiHolding # 994/930 & 1017, Ishwardi Porosova, Ishwardi Thana, District: Pabna

Sirajganj Branch premises “Basak Plaza” Holding # 947-948, Suhrawardi Road, P.S.: Sirajganj, Dist.: Sirajganj

ABPN Bogura 4 Armed Police Battalion (APBN), Nishindara, Bogura.

RANGPUR DIVISION (03)Rangpur Shah Murad Complex, RK Road, Medical Moor, Rangpur

DinajpurHolding # 880/837, Ganesh Tola Jail Road, Dinajpur Municipal Corporation, Ward # 3, Thana: Dinajpur Sadar, Dist: Dinajpur

Rangpur Branch ATM (Unit # 2)“Canopus”, Holding # 39/7, Dhap Jail Road Mouza: Voghi, Ward # 19, Rangpur City Corporation, Thana: Kotwali, District: Rangpur.

BARISAL DIVISION (04)Barisal-ATM-1, Nazirerpool,Barisal Holding No: 1367-000, Birsreshta Captain Mohiuddin Jahangir Sarok (Nazirerpool), Ward No: 19, Barisal City Corporation, Kotwali Thana, Barisal

Barisal-ATM-2, Sadar Road,Barisal Holding No: 241, Sadar Road (Opposite of Barisal Zila School), Ward No: 10, Barisal City Corporation, Kotwali Thana, Barisal

APBN Barishal ATM10, Armed police battalion (APBN), Barisal

MYMENSINGH DIVISION (06)MymensinghMinar Complex, Holding No: 09, Moktijodda Sarani (Choto Bazar), Ward No: 08, Mymensingh Porosuva, Kotwali Sadar Thana, District: Mymensingh

APBN Muktagacha Mymensingh2 Armed Police Battalion (APBN), Muktagacha, Mymensingh

Crown Wears ATMCrown Wears (Pvt.) Limited, Zamirdia, Bhaluka, Mymensingh.

320


Worldwide CorrespondentsNetwork

COUNTRIES NAME OF BANK CITY FLAGS

AUSTRALIA

AUSTRALIA AND NEW ZEALAND BANKING GROUP LID MELBOURNE

BANK OF AMERICA, N.A. SYDNEY

BANK OF SYDNEY LTD SYDNEY

CITIBANK N.A. SYDNEY

HSBC BANK AUSTRALIA LIMITED SYDNEY

JPMORGAN CHASE BANK, N.A. SYDNEY

MIZUHO CORPORATE BANK, LTD. SYDNEY

MUFG BANK, LTD SYDNEY

NATIONAL AUSTRALIA BANK LIMITED MELBOURNE

SUMITOMO MITSUI BANKING CORPORATION SYDNEY

SUNCORP-METWAY LIMITED BRISBANE

AUSTRIA

CITIBANK INTERNATIONAL PLC VIENNA

COMMERZBANK AG VIENNA

RAIFFEISENLANDESBANK NIEDEROESTERREICH-WIEN AG VIENNA

RAIFFEISENLANDESBANK LINZ

UNICREDIT BANK AUSTRIA AG VIENNA

BAHRAIN

ALUBAF ARAB INTERNATIONAL BANK B.S.C. (C) MANAMA

CITIBANK N.A. MANAMA

ICICI BANK LIMITED MANAMA

UNITED BANK LIMITED MANAMA

WOORI BANK MANAMA

BANGLADESH

AB BANK LIMITED DHAKA

AGRANI BANK LIMITED DHAKA

AL-ARAFAH ISLAMI BANK LTD DHAKA

BANGLADESH BANK DHAKA

BANGLADESH COMMERCE BANK LTD. DHAKA

BANGLADESH DEVELOPMENT BANK LIMITED (BDBL) DHAKA

BANGLADESH KRISHI BANK DHAKA

BANK ALFALAH LIMITED DHAKA

BANK ASIA LTD DHAKA

BASIC BANK LIMITED DHAKA

BRAC BANK LIMITED DHAKA

CITIBANK N.A. DHAKA

CITY BANK LIMITED THE DHAKA

COMMERCIAL BANK OF CEYLON DHAKA

DHAKA BANK LIMITED DHAKA

DUTCH-BANGLA BANK LTD DHAKA

321



BANGLADESH

EASTERN BANK LTD. DHAKA

EXPORT IMPORT BANK OF BANGLADESH LTD DHAKA

FIRST SECURITY ISLAMI BANK LIMITED DHAKA

HABIB BANK LIMITED DHAKAHONGKONG AND SHANGHAI BANKING CORPORATION LTD, THE DHAKA

ICB ISLAMIC BANK LIMITED DHAKA

IFIC BANK LIMITED. DHAKA

ISLAMI BANK BANGLADESH LTD DHAKA

JAMUNA BANK LIMITED DHAKA

JANATA BANK LIMITED DHAKA

MEGHNA BANK LIMITED. DHAKA

MERCANTILE BANK LIMITED DHAKA

MIDLAND BANK LIMITED DHAKA

MODHUMOTI BANK LIMITED. DHAKA

MUTUAL TRUST BANK LIMITED DHAKA

NATIONAL BANK LIMITED DHAKA

NATIONAL BANK OF PAKISTAN DHAKA

NATIONAL CREDIT AND COMMERCE BANK LIMITED DHAKA

NRB BANK LIMITED DHAKA

NRB COMMERCIAL BANK LIMITED DHAKA

NRB GLOBAL BANK LIMITED DHAKA

ONE BANK LIMITED. DHAKA

PRIME BANK LIMITED. DHAKA

PRIMIER BANK LIMITED. DHAKA

PUBALI BANK LIMITED. DHAKA

RUPALI BANK LTD DHAKA

SHAHJALAL BANK LIMITED. DHAKA

SHIMANTO BANK LIMITED DHAKA

SOCIAL ISLAMI BANK LTD. DHAKA

SONALI BANK LIMITED DHAKASOUTH BANGLA AGRICULTURE AND COMMERCE BANK LTD. DHAKA

SOUTHEAST BANK LIMITED DHAKA

STANDARD BANK LIMITED. DHAKA

STANDARD CHARTERED BANK DHAKA

STATE BANK OF INDIA DHAKA

THE FHARMERS BANK LIMITED DHAKA

TRUST BANK LIMITED. DHAKA

UNION BANK LIMITED DHAKA

UNITED COMMERCIAL BANK LTD. DHAKA

UTTARA BANK LIMITED. DHAKA

WOORI BANK, DHAKA DHAKA

322



BELGIUM

BNP PARIBAS FORTIS (FORTIS BANK SA/NV) BRUSSELS

BYBLOS BANK EUROPE S.A. BRUSSELS

COMMERZBANK AG BRUSSELS

DEXIA BANK SA BRUSSELS

HABIB BANK LIMITED BRUSSELS

KBC BANK NV BRUSSELS

STATE BANK OF INDIA ANTWERPEN

SUMITOMO MITSUI BANKING CORPORATION BRUSSELS

BHUTANBANK OF BHUTAN PHUNTSHOLING

DRUK PNB BANK LIMITED THIMPHU

BRAZIL

BANCO BRADESCO SA SAO PAULO

BANCO SANTANDER (BRASIL) S.A. SAO PAULO

BANCO VOTORANTIM S.A. SAO PAULO

DEUTSCHE BANK S.A. - BANCO ALEMAO SAO PAULO

CANADA

BANK OF NOVA SCOTIA TORONTO

BANK OF MONTREAL, THE MONTREAL

HABIB CANADIAN BANK MISSISSAUGA

HSBC BANK TORONTO

ICICI BANK CANADA TORONTO

TORONTO-DOMINION BANK TORONTO

CHINA

AXIS BANK LIMITED SHANGHAI

BANK OF CHINA BEIJING

BANK OF COMMUNICATIONS SHANGHAI

BANK OF DALIAN DALIANBANK OF HEBEI (FORMERLY SHIJIAZHUANG CITY COMMERCIAL BANK) SHIJIAZHUANG

BANK OF HUZHOU CO.,LTD MIZHOU

BANK OF JIANGSU CO LTD NANJINGBANK OF JINHUA (FORMERLY JINHUA CITY COMMERCIAL BANK) JINHUA

BANK OF JINING CO.LTD JINING

BANK OF LIUZHOU CO.,LTD. LIUZHOU

BANK OF NINGBO NINGBO

BANK OF RUIFENG SHAOXING

BANK OF TIANJIN CO., LTD. TIANJIN

CHANGSHU RURAL COMMERCIAL BANK CHANGSHU

CHINA CITIC BANK BEIJING

CHINA DEVELOPMENT BANK BEIJING

CHINA EVERBRIGHT BANK LTD BEIJING

CHINA MERCHANTS BANK SHENZHEN

CITIBANK (CHINA) COM., LTD SHANGHAI

COMMERZBANK AG SHANGHAI

COMMERZBANK AG TIANJIN

323



CHINA

COMMERZBANK AG BEIJING

DBS BANK (CHINA) LIMITED SHANGHAI

GUANGZHOU RURAL COMMERCIAL BANK CO GUANGZHOU

HANGZHOU UNITED RURAL COMMERCIAL BANK CO.LTD HANGZHOU

HSBC BANK (CHNA) COMPANY LIMITED SHANGHAI

HUA XIA BANK BEIJING

ICICI BANK LIMITED SHANGHAI

INDUSTRIAL AND COMMERCIAL BANK OF CHINA BEIJING

JIANGSU JIANGNAN RURAL COMMERCIAL BANK CO.,LTD. CHANGZHOU

JIANGSU JIANGYAN RURAL COMMERCIAL BANK CO., LTD JIANGYAN

JIANGSU JINGJIANG RURAL COMMERCIAL BANK CO., LTD JIANGSU

JIANGSU WUJIANG RURAL COMMERCIAL BANK WUJIANG

JPMORGAN CHASE BANK (CHINA) COMPANY LIMITED GUANGZHOU

JPMORGAN CHASE BANK (CHINA) COMPANY LIMITED SHANGHAI

JPMORGAN CHASE BANK (CHINA) COMPANY LIMITED TIANJIN

KBC BANK NV SHANGHAI

LINSHANG BANK CO. LTD LINYI

MIZUHO BANK (CHINA), LTD. SHANGHAI

MUFG BANK (CHNA), LTD TIANJIN

NANXUN BANK HUZHOU

NINGBO YUYAO RURAL COOPERATIVE BANK YUYAO

POSTAL SAVINGS BANK OF CHINA BEIJING

SHINHAN BANK (CHINA) LTD BEIJING

STANDARD CHARTERED BANK (CHINA) LIMITED SHANGHAISUMITOMO MITSUI BANKING CORPORATION (CHINA) LIMITED SHANGHAI

SVENSKA HANDELSBANKEN AB SHANGHAI

SWEDBANK AB SHANGHAI

THE BANK OF NEW YORK MELLON, SHANGHAI BRANCH SHANGHAI

WELLS FARGO BANK, N.A. SHANGHAI

WOORI BANK (CHINA) LIMITED BEIJING

YINZHOU BANK NINGBOZHEJIANG PINGHU RURAL COMMERCIAL BANK COMPANY LIMITED PINGHU

ZHEJIANG RURAL CREDIT COOPERATIVE UNION HANGZHOU

ZHEJIANG TAILONG COMMERCIAL BANK TAIZHOUZHEJIANG ZHUJI RURAL COMMERCIAL BANK COMPANY LIMITED ZHUJI

CZECH REPUBLIC

CESKOSLOVENSKA OBCHODNI BANKA, A.S. PRAGUE

CITIBANK EUROPE PLC, ORGANIZACNI SLOZKA PRAGUE

COMMERZBANK AG PRAGUE

RAIFFEISENBANK A.S. PRAGUE

UNICREDIT BANK CZECH REPUBLIC,A.S. PRAGUE

324



DENMARKDANSKE BANK A/S COPENHAGEN

SYDBANK A/S AABENRAA

EGYPT

CITIBANK CAIRO CAIRO

COMMERCIAL INTERNATIONAL BANK (EGYPT) S.A.E. CAIRO

MASHREQ BANK PSC CAIRO

FINLAND

DANSKE BANK PLC HELSINKI

OP CORPORATE BANK PLC HELSINKI

SVENSKA HANDELSBANKEN AB HELSINKI

FRANCE

BANQUE PALATINE PARIS

BRED BANQUE POPULAIRE PARIS

BYBLOS BANK EUROPE S.A. PARIS

COMMERZBANK AG PARIS

CREDIT AGRICOLE CIB PARIS

CREDIT AGRICOLE SA PARIS

CREDIT LYONNAIS PARIS

HSBC FRANCE PARIS

INTESA SANPAOLO SPA PARIS

MUFG BANK, LTD PARISSUMITOMO MITSUI BANKING CORPORATION EUROPE LIMITED PARIS

UNION DE BANQUES ARABES.ET PARIS

GERMANY

AKBANK AG FRANKFURT AM MAIN

BREMER KREDITBANK AG BREMEN

CITIBANK EUROPE PLC FRANKFURT

COMMERZBANK AG FRANKFURT

COMMERZBANK AG BERLIN

COMMERZBANK AG DUESSELDORF

COMMERZBANK AG HAMBURG

COMMERZBANK AG FRANKFURT

DANSKE BANK HAMBURG

DB PRIVAT-UND FIRMENKUNDENBANK AG FRANKFURT AM MAIN

DEUTSCHE BANK AG MANNHEIM

DEUTSCHE BANK AG MUENCHEN

DEUTSCHE BANK AG HAMBURG

DEUTSCHE BANK AG BREMEN

DEUTSCHE BANK AG WUPPERTAL

DEUTSCHE BANK AG KOELN

DEUTSCHE BANK AG DUESSELDORF

DEUTSCHE BANK AG BERLIN

DEUTSCHE BANK AG LEIPZIG

DEUTSCHE BANK AG CHEMNITZ

325



GERMANY

DEUTSCHE BANK AG FREIBURG IM BREISGAU

DEUTSCHE BANK AG MAINZ

DEUTSCHE BANK AG BIELEFELD

DEUTSCHE BANK AG HANNOVER

DEUTSCHE BANK AG FRANKFURT

DEUTSCHE BANK AG ERFURT

DEUTSCHE BANK AG STUTTGART

DZ BANK AG DUESSELDORF

HSBC TRINKAUS UND BURKHARDT AG DUESSELDORF

HSBC TRINKAUS UND BURKHARTD DUESSELDORF

HSH NORDBANK AG HAMBURG

ICICI BANK UK PLC FRANKFURT

JPMORGAN CHASE BANK, N.A. FRANKFURT AM MAIN

KBC BANK NV NIEDERLASSUNG DEUTSCHLAND DUESSELDORF

LANDESBANK BADEN-WUERTTEMBERG (LBBW) STUTTGARTLANDESBANK HESSEN-THUERINGEN GIROZENTRALE (HELABA)

FRANKFURT AM MAIN

MAINZER VOLKSBANK E.G. MAINZ

MIZUHO BANK (EUROPE) N.V. DUESSELDORF

MUFG BANK, LTD DUESSELDORF

ODDO BHF AKTIENGESELLS FRANKFURT

SEB AB (PUBL.) FRANKFURT AM MAIN

SHINHAN BANK EUROPE GMBH FRANKFURT AM MAIN

SPARKASSE HERFORD, COMMERCIAL AND SAVINGS BANK HERFORD

SPARKASSE PADERBORN-DETMOLD DETMOLD

STANDARD CHARTERED BANK FRANKFURT

UNICREDIT BANK AG MUENCHEN

GUADELOUPE CREDIT AGRICOLE POINTE-A-PITRE

HONG KONG

AB INTERNATIONAL FINANCE LTD HONGKONG

ABN AMRO BANK N.V. KOWLOON

ALLAHABAD BANK HONGKONG

AXIS BANK LIMITED HONGKONG

BANCO SANTANDER, S.A. HONG KONG

BANK OF AMERICA, N.A. HONG KONG

BNP PARIBAS HONG KONG

CITIBANK (HONG KONG) LIMITED HONG KONG

CITIBANK N.A. HONG KONG

COMMERZBANK AG HONG KONG

DBS BANK (HONG KONG) LIMITED HONG KONG

DEUTSCHE BANK AG HONG KONG

EBL FINANCE (HK) LIMITED HONGKONG

326



HANG SENG BANK LIMITED HONG KONG

HBZ FINANCE LTD. HONG KONG

HDFC BANK LTD HONGKONGHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE HONG KONG

ICICI BANK LIMITED HONG KONGINDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LTD HONGKONG

INDUSTRIAL BANK OF KOREA, HONG KONG BRANCH HONGKONG

INTESA SANPAOLO SPA HONG KONG HONG KONG

JPMORGAN CHASE BANK, N.A. HONG KONG

KBC BANK NV, HONG KONG HONG KONG

MASHREQ BANK PSC HONG KONG

MIZUHO BANK, LTD HONG KONG

MUFG BANK, LTD HONG KONG

PBL FINANCE (HONG KONG) LIMITED HONGKONG

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) HONG KONG

STANDARD CHARTERED BANK (HONG KONG) LIMITED HONG KONG

SUMITOMO MITSUBI BANKING CORPORATION HONGKONG

THE BANK OF NEW YORK MELLON HONG KONG

UNICREDIT BANK AG HONG KONG

WELLS FARGO BANK, N.A. HONG KONG

WOORI BANK HONG KONG

HUNGARYCITIBANK EUROPE PLC BUDAPEST

UNICREDIT BANK HUNGARY ZRT. BUDAPEST

INDIA

AB BANK LIMITED MUMBAI

AXIS BANK LIMITED MUMBAI

BANK OF AMERICA, N.A. MUMBAI

CITIBANK N.A. MUMBAI

DBS BANK LTD MUMBAI

DEUTSCHE BANK AG MUMBAI

DOHA BANK Q.S.C MUMBAI

EMIRATES NBD BANK PJSC MUMBAI

HDFC BANK LIMITED MUMBAIHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE MUMBAI

ICICI BANK LIMITED MUMBAI

INDUSIND BANK LIMITED MUMBAI

JPMORGAN CHASE BANK, N.A. MUMBAI

KARUR VYSYA BANK LTD MUMBAI

KOTAK MAHINDRA BANK LIMITED MUMBAI

MASHREQ BANK PSC MUMBAI

327



INDIA

MIZUHO BANK, LTD MUMBAI

MUFG BANK, LTD NEW DELHI

PUNJAB NATIONAL BANK MUMBAI

SHINHAN BANK MUMBAI

SONALI BANK KOLKATA

STANDARD CHARTERED BANK MUMBAI

UNION BANK OF INDIA MUMBAI

UNITED BANK OF INDIA MUMBAI

YES BANK LIMITED MUMBAI

INDONESIA

BANK ANZ INDONESIA, P.T. JAKARTA

BANK DBS INDONESIA, PT JAKARTA

BANK MEGA PT JAKARTA

BANK NEGARA INDONESIA - PT (PERSERO) JAKARTA

CITIBANK, N.A. JAKARTA

JPMORGAN CHASE BANK, N.A. JAKARTA

MUFG BANK, LTD JAKARTA

PT BANK HSBC INDONESIA JAKARTA

PT BANK RAKYAT INDONESIA (PERSERO), TBK JAKARTA

PT.BANK WOORI SAUDARA INDONESIA 1906 TBK JAKARTA

STANDARD CHARTERED BANK JAKARTA

IRELAND

CITIBANK EUROPE PLC DUBLIN

DANSKE BANK A/S DUBLINWELLS FARGO BANK INTERNATIONAL UNLIMITED COMPANY DUBLIN

ITALY

BANCA MONTE DEI PASCHI DI SIENA S.P.A. MILANO

BANCA NAZIONALE DEL LAVORO S.P.A. ROMA

BANCA POPOLARE DI SONDRIO SONDRIO

BANCA POPOLARE VALCONCA MORCIANO DI ROMAGNA

BANCA UBAE SPA ROMA

BANCO BPM S.P.A. VERONA

BPER BANCA S.P.A. MODENA

COMMERZBANK AG MILANO

CREDITO DI ROMAGNA SPA FORLI'

CREDITO VALTELLINESE SONDRIOICCREA BANCA - ISTITUTO CENTRALE DEL CREDITO COOPERATIVO ROMA

INTESA SANPAOLO SPA MILANO

MIZUHO BANK, LTD MILANO

MUFG BANK, LTD MILANO

UBI BANCA S.P.A. BERGAMO

UNICREDIT S.P.A. MILANO

UNIPOL BANCA SPA BOLOGNA

328



JAPAN

CHIBA KOGYO BANK,LTD. TOKYO

CITIBANK N.A. TOKYO

COMMERZBANK AG TOKYO

HOKURIKU BANK, LTD.,THE TOKYOHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED,THE TOKYO

MUFG BANK, LTD TOKYO

OKAZAKI SHINKIN BANK, THE OKAZAKI

RESONA BANK, LTD TOKYO

SAITAMA RESONA BANK, LIMITED TOKYO

SHIZUOKA BANK, LTD., THE SHIZUOKA

STANDARD CHARTERED BANK TOKYO

STATE BANK OF INDIA TOKYO

SUMITOMO MITSUI BANKING CORPORATION TOKYO

UBAF UNION BANQUE ARABIES TOKYO

WELL FARGO BANK TOKYO

WOORI BANK TOKYO

JORDAN INVESTBANK AMMAN

KUWAIT CITIBANK N.A. SAFAT

LEBANONBANK OF BEIRUT S.A.L. BEIRUT

BYBLOS BANK S.A.L. BEIRUT

LIECHTENSTEIN LGT BANK AG VADUZ

LUXEMBOURGBANCO SANTANDER (BRASIL) SA LUXEMBOURG

DANSKE BANK INTERNATIONAL S.A. LUXEMBOURG

MACAU STANDARD CHARTERED BANK MACAU

MALAYSIA

AM BANK (M) BERHAD KUALALUMPUR

BANK MUAMALAT MALAYSIA BERHAD (6175-W) KUALA LUMPUR

CITIBANK BERHAD KUALA LUMPUR

HSBC BANK MALAYSIA BERHAD KUALA LUMPUR

JP MORGAN CHASE BANK BERHAD KUALA LUMPUR

MALAYAN BANKING BERHAD KUALALUMPUR

MIZUHO BANK (MALAYSIA) BERHAD LABUAN

RHB BANK BERHAD KUALALUMPUR

STANDARD CHARTERED BANK (MALAYSIA) BERHAD KUALA LUMPUR

SUMITOMO MITSUI BANKING CORPORATION LABUAN

MALTA FIMBANK PLC SLIEMA

329



MAURITIUS THE MAURITIUS COMMERCIAL BANK LIMITED PORT LOUISE

MAROCCO ATTIJARIWAFA BANK CASABLANCA

NEPAL NEPAL BANGLADESH BANK LIMITED KATHMONDU

NETHERLAND

ABN AMRO BANK N.V. AMSTERDAM

ABN AMRO BANK N.V. ROTTERDAM

CREDIT EUROPE BANK N.V. AMSTERDAM

DEUTSCHE BANK A.G. AMSTERDAM

HSBC BANK PLC. AMSTERDAM

KEB HANA BANK AMSTELVEEN

RABOBANK UTRECHT

YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM

NEW ZEALAND

ANZ BANK NEW ZEALAND LIMITED WELLINGTON

BANK OF NEWZEALAND WELLINGTONHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED,THE AUCKLAND

NORWAY

DANSKE BANK A/S TRONDHEIM

DNB BANK ASA OSLO

SKANDINAVISKA ENSKILDA BANKEN OSLO

OMANBANK MUSCAT SAOG MUSCAT

BANK SOHAR RUWI

PAKISTAN

ASKARI BANK LIMITED KARACHI

BANK AL HABIB LIMITED. KARACHI

BANKISLAMI PAKISTAN LIMITED KARACHI

CITIBANK N.A. KARACHI

HABIB METROPOLITAN BANK LIMITED KARACHI

SONERI BANK LIMITED KARACHI

STANDARD CHARTERED BANK (PAKISTAN) LIMITED KARACHI

SUMMIT BANK LTD. KARACHI

UNITED BANK LIMITED KARACHI

PANAMA KEB HANA BANK PANAMA

PHILLIPINES

ASIAN DEVELOPMENT BANK MANILA

CITIBANK N.A. MANILA

KEB HANA BANK MANILA

MIZUHO BANK, LTD. MANILA

MUFG BANK, LTD. MANILA

330



POLAND

BANK HANDLOWYW WARSZAWIE SA WARSAW

BANK POLSKA KASA OPIEKI SA - BANK PEKAO SA WARSAW

CREDIT AGRICOLE BANK POLSKA S.A. WROCLAW

DANSKE BANK A/S S.A. ODZIAL W POLSCE WARSZAWA

PKO BANK POLSKI S.A. WARSZAWA

RAIFFEISEN BANK POLSKA S.A WARSZAWA

PORTUGAL NOVO BANCO, SA LISBON

QATAR

DOHA BANK DOHA

MASHREQ BANK PSC DOHA

QATAR NATIONAL BANK DOHA

STANDARD CHARTERED BANK DOHA

THE COMMERCIAL BANK (Q.S.C) DOHA

UNITED BANK LIMITED DOHA

ROMANIA UNICREDIT TIRIAC BANK SA BUCHAREST

SAUDI ARABIA

ALAWWAL BANK RIYADH

BANK AL BILAD RIYADH

BANQUE SAUDI FRANSI RIYADH

BNP PARIBAS SAUDI ARABIA RIYADH

EMIRATES NBD BANK PJSC RIYADH

ISLAMIC DEVELOPMENT BANK JEDDAH

NATIONAL COMMERCIAL BANK, THE JEDDAH

SAUDI BRITISH BANK RIYADH

SERBIASBERBANK SRBIJA A.D. BELGRADE

UNICREDIT BANK SRBIJA A.D. BELGRADE

SINGAPORE

ABN AMRO BANK N.V. SINGAPORE

AXIS BANK LIMITED SINGAPORE

BANK OF AMERICA, N.A. SINGAPORE

BANK OF MONTREAL SINGAPORE

CITIBANK N.A. SINGAPORE

COMMERZBANK AG SINGAPORE

DBS BANK LTD. SINGAPORE

DEUTSCHE BANK AG SINGAPORE

EMIRATES NBD BANK PJSC SINGAPORE

FIRST ABU DHABI BANK PJSC SINGAPORE

HABIB BANK LIMITED SINGAPOREHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE SINGAPORE

ICICI BANK LIMITED SINGAPORE

INDIAN BANK SINGAPORE

331



SINGAPORE

INDIAN OVERSEAS BANK SINGAPORE

INTESA SANPAOLO S.P.A. SINGAPORE

JPMORGAN CHASE BANK, N.A. SINGAPORE

KEB HANA BANK SINGAPORE

LANDESBANK BADEN-WUERTTEMBERG (LBBW) SINGAPORE

MALAYAN BANKING BERHAD SINGAPORE

MIZUHO BANK, LTD SINGAPORE

MUFG BANK, LTD SINGAPORE

NATIONAL BANK OF KUWAIT S.A.K., THE SINGAPORE

QATAR NATIONAL BANK SINGAPORE

RABOBANK SINGAPORE

SHINHAN BANK SINGAPORE

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) SINGAPORE

STANDARD CHARTERED BANK SINGAPORE

STANDARD CHARTERED BANK (SINGAPORE) LIMITED SINGAPORE

SUMITOMO MITSUI BANKING CORPORATION SINGAPORE

UBAF- UNION BANQUE ARABIES SINGAPORE

UCO BANK SINGAPORE

UNICREDIT BANK AG SINGAPORE

WELLS FARGO BANK SINGAPORE

WOORI BANK SINGAPORE

SLOVENIA UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA

SOUTH AFRICACITIBANK SOUTH AFRICA SANDTON

FIRSTRAND BANK LTD JOHANNESBURG

SOUTH KOREA

CITIBANK KOREA INC SEOUL

DAEGU BANK LTD,THE DAEGU

DBS BANK LTD SEOULHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE SEOUL

INDUSTRIAL BANK OF KOREA SEOUL

JPMORGAN CHASE BANK, N.A. SEOUL

KEB HANA BANK SEOUL

KOOKMIN BANK SEOUL

KOREA DEVELOPMENT BANK, THE SEOUL

MIZUHO BANK, LTD SEOUL

MUFG BANK, LTD SEOUL

SHINHAN BANK SEOUL

STANDARD CHARTERED BANK KOREA LIMITED SEOUL

SUHYUP BANK SEOUL

SUMITOMO MITSUI BANKING CORPORATION SEOUL

UBAF UNION BANQUE ARABIES SEOUL

WELLS FARGO BANK SEOUL

WOORI BANK SEOUL

332



SPAIN

ARESBANK, S.A. MADRIDBANCO CAIXA GERAL MADRIDBANCO DE SABADELL S.A SABADELL

BANCO PASTOR S.A. LA CORUNA (A CORUNA)

BANCO POPULAR ESPANOL, S.A. MADRIDBANCO SANTANDER S.A. MADRIDBANKIA S.A. VALENCIACAIXABANK, S.A. BARCELONACAJAMAR CAJA RURAL, SOCIEDAD COOPERATIVA DE CREDITO ALMERIA

COMMERZBANK AG MARDIDCREDIT AGRICOLE CIB MADRIDDEUTSCHE BANK SOCIEDAD ANONIMA BARCELONAMUFG BANK (EUROPE) N.V. SUCURSAL EN ESPANA MADRID

SRILANKA

AXIS BANK LIMITED COLOMBOCITIBANK N.A. COLOMBOCOMMERCIAL BANK OF CEYLON PLC COLOMBOICICI BANK LIMITED COLOMBOSTANDARD CHARTERED BANK COLOMBO

SWEDEN

DANSKE BANK STOCKHOLMSKANDINAVISKA ENSKILDA BANKEN STOLCKHOMSKANDINAVISKA ENSKILDA BANKEN GOTEBORGSVENSKA HANDELSBANKEN STOLCKHOMSWEDBANK AB (PUBL) STOCKHOLM

SWITZERLAND

ARAB BANK (SWITZERLAND) LTD ZURICHBANCA POPOLARE DI SONDRIO (SUISSE) LUGANOBANQUE CANTONALE DE GENEVE GENEVABANQUE CANTONALE VAUDOISE LAUSANNEBANQUE DE COMMERCE ET DE PLACEMENTS S.A. GENEVACOMMERZBANK AG ZURICHCREDIT EUROPE BANK (SUISSE) S.A. GENEVACREDIT SUISSE AG ZURICHHABIB BANK AG ZURICH ZURICHHSBC BANK PLC ZURICHODDO BHF (SCHWEIZ) AG ZURICHUBL (SWITZERLAND) AG ZURICHUBS SWITZERLAND AG ZURICHZUERCHER KANTONALBANK ZURICH

TAIWAN

BANK OF AMERICA, N.A. TAIPEICITIBANK TAIWAN LIMITED TAIPEIDBS BANK (TAIWAN) LTD TAIPEIE. SUN COMMERCIAL BANK LTD. TAIPEIHONGKONG AND SHANGHAI BANKING CORPORATION LTD, THE TAIPEI

HSBC BANK (TAIWAN) LIMITED TAIPEIHUA NAN COMMERCIAL BANK, LTD. TAIPEIJPMORGAN CHASE BANK, N.A. TAIPEILAND BANK OF TAIWAN TAIPEI

333



TAIWAN

MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. TAIPEIMIZUHO BANK, LTD TAIPEIMUFG BANK, LTD TAIPEISHANGHAI COMMERCIAL AND SAVINGS BANK, LTD., THE TAIPEISTANDARD CHARTERED BANK (TAIWAN) LIMITED TAIPEISTANDARD CHARTERED BANK TAIPEISUMITOMO MITSUI BANKING CORPORATION TAIPEITAISHIN INTERNATIONAL BANK TAIPEITHE BANK OF NEW YORK MELLON TAIPEIWELL FARGO BANK TAIPEI

THILAND

BANK OF AYUDHYA PUBLIC COMPANY LIMITED BANGKOKCITIBANK N.A. BANGKOKEXPORT-IMPORT BANK OF THAILAND BANGKOKKASIKORNBANK PUBLIC COMPANY LIMITED BANGKOKKRUNG THAI BANK PUBLIC COMPANY LIMITED BANGKOKSTANDARD CHARTERED BANK (THAI) PCL BANGKOKSUMITOMO MITSUI BANKING CORPORATION BANGKOKTHANACHART BANK PUBLIC COMPANY LIMITED BANGKOKTMB BANK PUBLIC COMPANY LIMITED BANGKOK

TUNISIA BANQUE TUNISO-LIBYENNE TUNIS

TURKEY

AKBANK T.A.S. ISTANBULAKTIF YATIRIM BANKASI A.S. ISTANBULALBARAKA TURK PARTICIPATION BANK ISTANBULCITIBANK AS ISTANBULHABIB BANK LTD. ISTANBULICBC TURKEY BANK A.S. ISTANBULKUVEYT TURK KATILIM BANKASI A.S. ISTANBULODEABANK A.S. ISTANBULTURKIYE CUMHURIYETI ZIRAAT BANKASI A.S. ISTANBULTURKIYE FINANS KATILIM BANKASI A.S. ISTANBULTURKIYE HALK BANKASI A.S. ANKARATURKLAND BANK A.S. (T-BANK) ISTANBULZIRAAT KATILIM BANKASI A.S ISTANBUL

UAE

ABU DHABI COMMERCIAL BANK ABU DHABI

AXIS BANK LIMITED DUBAIBANQUE DE COMMERCE ET DE PLACEMENTS SA-DIFC BRANCH DUBAI

CITIBANK N.A. DUBAI

COMMERCIAL BANK OF DUBAI DUBAI

CREDIT EUROPE BANK (DUBAI) LTD DUBAI

DOHA BANK DUBAI

DUBAI ISLAMIC BANK DUBAI

EMIRATES ISLAMIC BANK DUBAI

EMIRATES NBD BANK PJSC DUBAI

FIRST ABU DHABI BANK PJSC ABU DHABI

334



UAE

HABIB BANK AG ZURICH DUBAIHABIB BANK LIMITED DUBAIICICI BANK LIMITED DUBAIMASHREQ BANK PSC DUBAINATIONAL BANK OF FUJAIRAH FUJAIRAH

NATIONAL BANK OF RAS AL KHAIMAH RAS AL KHAIMAH

NATIONAL BANK OF UMM AL QAIWAIN PSC. DUBAINOOR BANK P.J.S.C. DUBAISTANDARD CHARTERED BANK DUBAISUMITOMO MITSUI BANKING CORPORATION DUBAIUNICREDIT S.P.A. ABU DHABIUNITED BANK LIMITED DUBAI

UK

BANK NEGARA INDONESIA (PERSERO) P.T. LONDONBNP PARIBAS LONDONBYBLOS BANK EUROPE S.A. LONDONCITIBANK N.A. LONDONCOMMERZBANK AG LONDONDANSKE BANK LONDONDBS BANK LTD LONDONHABIB BANK AG ZURICH LONDONHABIB BANK UK LONDONHSBC BANK PLC LONDONHSBC UK BANK PLC LONDONICICI BANK UK PLC LONDONINTESA SANPAOLO SPA LONDONJPMORGAN CHASE BANK, N.A. LONDONMALAYAN BANKING BERHAD LONDONMASHREQ BANK PSC LONDONMUFG BANK, LTD LONDONSHINHAN BANK LONDONSONALI BANK (UK) LTD LONDONSTANDARD CHARTERED BANK LONDONUNICREDIT BANK AG LONDONWELLS FARGO BANK, N.A. LONDONWELLS FARGO SECURITIES INTERNATIONAL LIMITED LONDONWOORI BANK LONDON

USA

BANK OF AMERICA, N.A NEW YORKBANK OF AMERICA, N.A. NEW YORKBNP PARIBAS U.S.A NEW YORKCITIBANK N.A. NEW YORKCITY NATIONAL BANK LOS ANGELESDEUTSCHE BANK TRUST COMPANY AMERICAS NEW YORKEAST-WEST BANK PASADENA,CAFIRST TENNESSEE BANK N.A. MEMPHIS,TNHABIB AMERICAN BANK LTD NEW YORKHABIB BANK LIMITED NEW YORKHSBC BANK NEW YORKICICI BANK LIMITED NEW YORK

335



USA

INTERNATIONAL FINANCE CORPORATION WASHINGTONJPMORGAN CHASE BANK, N.A. NEW YORKKEB HANA BANK NEW YORKKEYBANK N.A. NEW YORKMASHREQ BANK PSC NEW YORKMETROPOLITAN BANK AND TRUST COMPANY NEW YORKMIZUHO BANK, LTD NEW YORKMONTE DEI PASCHI DI SIENA SPA - NEW YORKMUFG BANK, LTD NEW YORKNEW YORK COMMUNITY BANK NEW YORKSHINHAN BANK NEW YORK

SHINHAN BANK AMERICA LOS ANGELES,CA

STANDARD CHARTERED BANK NEW YORKSTERLING NATIONAL BANK NEW YORKSUMITOMO MITSUI BANKING CORPORATION NEW YORK

TD BANK, N.A. MOUNT LAUREL,NJ

THE BANK OF NEW YORK MELLON NEW YORKU.S.BANK N.A. MINNEAPOLISWELLS FARGO BANK N.A. NEW YORKWELLS FARGO BANK N.A. LOS ANGELESWELLS FARGO BANK N.A. SAN FRANCISCOWELLS FARGO BANK N.A. PHILADELPHIAWELLS FARGO BANK, N.A. MIAMIWOORI AMERICA BANK NEW YORKWOORI BANK LOS ANGELESWOORI BANK NEW YORK

UZBEKISTAN NATIONAL BANK FOR FOREIGN ECONOMIC ACTIVITY OF THE REPUBLIC OF UZBEKISTAN TASHKENT

VIETNAM

AN BINH COMMERCIAL JOINT STOCK BANK HO CHI MINH CITY

ASIA COMMERCIAL BANK HO CHI MINH CITY

CITIBANK N.A. HANOI

HSBC BANK (VIETNAM) LTD. HO CHI MINH CITY

JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM HANOI

KEB HANA BANK HANOIMIZUHO BANK, LTD HANOI

MUFG BANK, LTD HO CHI MINH CITY

SHINHAN BANK VIETNAM LIMITED HO CHI MINH CITY

STANDARD CHARTERED BANK (VIETNAM) LIMITED HANOI

SUMITOMO MITSUI BANKING CORPORATION HO CHI MINH CITY

WOORI BANK VIETNAM LIMITED HANOI

336


FINANCIAL STATEMENTSFINANCIAL STATEMENTS

Independent Auditor’s Report to the Shareholders 338Consolidated Balance Sheet 343Consolidated Profit and Loss Accounts 345Consolidated Cash Flow Statement 346Consolidated Statement of Changes in Equity 347Balance Sheet 348Profit and Loss Accounts 350Cash Flow Statement 351Statement of Changes in Equity 352Notes to the Financial Statements 353FINANCIAL STATEMENTS OF ISLAMIC BANKING BRANCHES

Balance Sheet 424Profit and Loss Accounts 425Notes to the Financial Statements 426FINANCIAL STATEMENTS OF OFF-SHORE BANKING

Balance Sheet 434Profit and Loss Accounts 436Notes to the Financial Statements 437FINANCIAL STATEMENTS OF SEBL SUBSIDIARIES

Southeast Bank Capital Services Limited 443Southeast Financial Services (UK) Limited 456Southeast Financial Services (Australia) Pty Limited 465Southeast Exchange Company (South Africa) Pty Limited 469

338


Independent Auditor’s ReportTo the Shareholders of Southeast Bank Limited

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated financial statements of Southeast Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Southeast Bank Limited (the “Bank”), which comprise the consolidated and separate Balance sheet as at 31 December 2018 and the consolidated and separate statement of profit and loss, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Bank give a true and fair view of the consolidated Balance sheet of the Group and the separate Balance sheet of the Bank as at 31 December 2018 and of its consolidated and separate statement of profit and loss and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 2 to 3.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We remained independent of the Group and the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. We summarize below the key audit matters in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters are discussed below together with an explanation of how the risk and our audit response was tailored to address these specific areas.

All key audit matters are applicable to both the group and parent company.

Key audit matters: Risks: Our responses:(i) Provision for loans and advances:

As of the reporting date, the Group reports loans and advances/ investments BDT 26,767.16 crore representing 70% of total assets; and provisions regarding loan and advances of BDT 485.50 crore represents 33% of bank’s total operating income.

Refer to note no 10, 11 and 21.10 to the financial statements.

The financial statement risk arises particularly from estimation uncertainties in the calculation of individually assessed provision on loan which are based on assumptions and scenarios i.e. probability of default, ability to repossess collateral and recovery etc.

As part of our risk assessment, we identified the following judgments which could give rise to material misstatement or management bias:

We established our audit approach over the individual provision for control and substantive tests considering the following:

the accuracy of data input into the system used for credit grading and the approval of credit facilities.

the ongoing monitoring and discovery of loans displaying indicators of provision and detection of classified and unclassified status on a timely basis.

We tested the design and operating effectiveness of key controls focusing on the following:

Tested the credit appraisal, loan disbursement procedures, monitoring and provisioning process;

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Key audit matters: Risks: Our responses: For individually

assessed provisions, the measurement of the provision is dependent on the reasonable valuation of collateral, estimates of exit values and the timing of cash flows.

Completeness and timing of recognition of provision of loans in accordance with criteria set out in BRPD circular no. 14 & 15/2012, 19/2012, 05/2013, 16/2014, 08/2015, 15/2017.

Identification of loss events, including early warning and default warning process.

Reviewed quarterly Classification of Loans (CL);

Our substantive procedures in relation to the provision for loans and advances portfolio comprised the following:

Reviewed the adequacy of the company’s general and specific provisions;

Assessed the methodologies on which the provision amounts based, recalculated the provisions and tested the completeness and accuracy.

In the tripartite meeting dated 21.04.2019 a discussion was made on fixation of ultimate provision for investment and adequate provision was maintained unanimously.

Our Results: Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

Key audit matters: Risks: Our responses:(ii) Measurement of deferred tax assets/liabilities:

The Bank reported net deferred tax liability of BDT 114.499 crore as at 31 December 2018.

For significant accounting policies and critical accounting estimates for the recognition and measurement of deferred tax assets, we refer to note 3.16.2 of the consolidated financial statements “Significant Accounting Policies” (section “Tax Expense”).

Refer to note no 20, 21 and 21.3.2 to the consolidated financial statements.

Recognition and measure-ment of deferred tax assets contain judgment and objective estimates regarding future taxable profit and the usability of unused tax losses and tax credits.

The significant risk arises from estimation of future usability of the benefits. Such estimation required in relation to deferred tax assets as their recoverability is dependent on forecasts of profitability available in near future.

We conducted a risk assessment to obtain an understanding of the relevant tax laws and regulations considering the following:

evaluation of the policies used for recognition and measurement of deferred tax assets in accordance with IAS 12.

test of design, implementation and operating effectiveness of internal controls with respect to recognition of deferred tax assets.

the computation of deferred tax liabilities/assets by applying appropriate provisions of tax law to scheduled reversals particularly the potential tax rates applicable at the time of expected reversals.

the strategy’s compliance with the tax laws.

Our Result: Based on the results of our key controls testing and substantive audit procedures we consider recognition and measurement of deferred tax liability in particular regarding the assumptions and parameters to develop the taxable profit and usability of tax losses and credits to be reasonable.

a bank with vision

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Key audit matters: Risks: Our responses:(iii) Carrying value of investments in subsidiary(s) by the Bank:

The Bank has invested BDT 548.99 crore in equity shares of its subsidiary Southeast Bank Capital Services Limited (in Bangladesh). It has also invested in foreign subsidiaries namely Southeast Financial Services (UK) Ltd, Southeast Exchange Company (South Africa) Pty Ltd and Southeast Financial Services (Australia) Pty Ltd. As at 31 December 2018 the carrying value of the investment in foreign subsidiaries was BDT 6.51 crore. Total investment in subsidiaries was BDT 555.50 which represents 1% of the Bank’s total assets.

Refer to note no 15, 15.3 and 15.4 to the consolidated financial statements.

Recoverability of the foreign investment is generally considered a high risk matter. However, due to the materiality of the investment in the context of the parent company’s financial statements, this is considered to be the area that had the great focus of our overall parent company audit.

We focused on the appropriateness of the application of value in use model, the key assumptions used in the model, the reasonably possible alternative assumptions, particularly where they had the most impact on the value in use calculation.

We compared the carrying amount of the total investment balance with the relevant subsidiary’s balance sheet to identify whether their net assets were in excess of their carrying amount and assessed historical financial performance.

Our results: We considered the company’s assessment of the recoverability of the investment in subsidiaries to be acceptable.

Key audit matters: Risks: Our responses:(iv) IT systems and Internal Controls

The Group’s key financial accounting and reporting processes are highly dependent on the automated controls over the Group’s information systems and as such there exists an inherent risk that IT control deficiency could result in the financial accounting and reporting being materially misstated.

Refer to note no 3.20, 69.1 and 69.2 to the financial statements.

IT systems and controls due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls.

Controls over Information System may be carried out by IT personnel, users of the system, a separate control effect on processing of transactions in application systems and also ineffective controls may have a risk of misstatements at application systems.

Our procedures included:

We tested a sample of key controls operating over the information technology in relation to financial accounting and reporting systems, including system access and system change management, program development and computer operations.

We obtained management’s evaluation of the access rights granted to applications relevant to financial accounting and reporting systems. We also assessed the operating effectiveness of controls over granting, removal and appropriateness of access rights.

We reviewed the System of Internal Control which is designed to manage all the risks of failure to a reasonable level and this System provides reasonable assurance of effective and efficient operations covering all controls including financial & operational controls, reliability of the financial information, compliance with applicable laws & regulations, adherence to management policies, safeguarding of Bank’s Assets, prevention & detection of fraud and errors and accuracy and completeness of the accounting records.

We checked standards over systems design, programming and documentation, segregation of duties so that those responsible for design are not responsible for testing and installation procedures.

Our results: We considered the user access management, segregation of duties and change management controls in relation to financial accounting and reporting systems to be acceptable.

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Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank in accordance with IFRSs as explained in note 3.21 and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 (amended upto 2018) and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Bank to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

a bank with vision

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Dhaka, Dated: 30 April 2019

Pinaki Das, FCAPinaki & CompanyChartered Accountants

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, the Securities and Exchange Rules 1987, the Bank Company Act, 1991(amended upto 2018) and the rules and regulations issued by Bangladesh Bank, we also report that:

(i) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

(ii) To the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the separate financial statements of the Bank and considering the reports of the Management to Bangladesh Bank on antifraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the financial statements and internal control:

(a) Internal audit, internal control and risk management arrangements of the Group as disclosed in the financial statements appeared to be materially adequate;

(b) Nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Group and its related entities {other than matters disclosed in these financial statements};

(iii) Financial statements of Southeast Bank Limited and its subsidiaries in Bangladesh, Southeast Bank Capital Services Limited have been audited by us and in outside Bangladesh namely, Southeast Financial Services (UK) Ltd have been certified by Jahan & Co., Chartered Management Accountants and Southeast Exchange Company (South Africa) Pty Ltd have been audited by G.L. PALMER AND COMPANY, registered auditors and Southeast Financial Services (Australia) Pty Ltd. and have been properly reflected in the consolidated financial statements (note no. 1.7);

(iv) In our opinion, proper books of accounts as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books;

(v) The records and statements submitted by the branches have been properly maintained and consolidated in the financial statements;

(vi) The consolidated balance sheet and consolidated profit and loss account together with the annexed notes dealt with by the report are in agreement with the books of account and returns;

(vii) The expenditures incurred were for the purpose of the Bank’s business for the year;

(viii) The consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;

(ix) Adequate provisions have been made for advance and other assets which are in our opinion, doubtful of recovery;

(x) The information and explanations required by us have been received and found satisfactory;

(xi) We have reviewed over 80% of the risk weighted assets of the Bank and spent over 8,200 person hours; and

(xii) Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been maintained adequately during the year.

Dated: 30 April 2019

343


Southeast Bank Limited and its subsidiariesConsolidated Balance SheetAs at 31 December 2018

Note 2018 Taka

2017 Taka

PROPERTY AND ASSETS

Cash 4In hand (including foreign currencies) 3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks(including foreign currencies) 17,916,575,574 17,968,153,354

21,515,427,671 20,979,136,329

Balance with other banks and financial institutions 5In Bangladesh 3,984,794,486 3,196,881,943 Outside Bangladesh 2,449,639,553 1,082,725,811

6,434,434,039 4,279,607,754 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Investments 8Government 50,963,038,896 50,204,799,973 Others 14,646,513,537 12,706,244,499

65,609,552,433 62,911,044,472 Loans and advances/investments 10Loans, cash credit, overdrafts etc./investments 255,400,659,122 223,657,502,019 Bills purchased and discounted 12,270,968,683 10,659,214,310

267,671,627,805 234,316,716,329 Fixed assets including premises, furniture and fixtures 12 9,337,295,160 9,321,796,126 Other assets 14 4,110,241,772 3,835,803,180 Non-banking assets - - Total assets 381,575,678,880 339,288,054,190

LIABILITIES AND CAPITAL

LiabilitiesBorrowings from other banks, financial institutions and agents 16Subordinated bond 11,800,000,000 7,400,000,000 Other borrowings 11,211,700,343 10,181,648,728

23,011,700,343 17,581,648,728 Deposits and other accounts 18Current/Al-wadeeah current accounts and other accounts 40,472,065,762 35,511,525,367 Bills payable 4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits 226,108,257,117 205,486,197,802

298,334,794,587 269,828,075,048

Other liabilities 20 32,102,455,720 26,044,632,850 Total liabilities 353,448,950,650 313,454,356,626

Capital/shareholders' equityPaid up capital 22.2 10,544,927,020 9,169,501,760 Statutory reserve 23 10,094,153,565 9,170,000,000 Revaluation reserve 24 4,360,801,902 4,534,239,054 Other reserve 25 247,650,000 247,650,000 Foreign currency translation reserve 26 (28,918,605) (14,142,765)Retained earnings 27 2,898,043,836 2,716,398,712 Total shareholders' equity 28,116,657,718 25,823,646,761 Non-controlling interest 29 10,070,512 10,050,803 Total liabilities and shareholders' equity 381,575,678,880 339,288,054,190

344


Southeast Bank Limited and its subsidiariesConsolidated Balance SheetAs at 31 December 2018

Note 2018 Taka

2017 Taka

OFF-BALANCE SHEET ITEMS

Contingent liabilitiesAcceptances and endorsements 30.1 63,853,762,984 57,138,532,985 Letters of guarantee 30.2 19,197,993,041 15,924,963,164 Irrevocable letters of credit 30.3 36,374,559,306 44,195,137,436 Bills for collection 30.4 24,664,926,813 22,666,586,856 Other contingent liabilities 30.5 1,413,684,000 1,744,473,000 Total contingent liabilities 145,504,926,144 141,669,693,441

Other commitmentsDocumentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - 827,101,200 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total other commitments - 827,101,200 Total off-balance sheet items including contingent liabilities 145,504,926,144 142,496,794,641

The annexed notes 1 to 71 form an integral part of these financial statements.

Dhaka,Date : 30 April 2019

Signed in terms of our separate report of even date

Pinaki & CompanyChartered Accountants

Chairman Director Director Managing DirectorChairman Director

345


Southeast Bank Limited and its subsidiariesConsolidated Profit and Loss AccountFor the year ended 31 December 2018

Note 2018 Taka

2017 Taka

Interest income/profit on investments 32 23,977,837,107 17,400,550,075 Interest paid/profit shared on deposits and borrowings etc. 34 (18,777,897,307) (13,372,859,997)Net interest income/net profit on investments 5,199,939,800 4,027,690,078 Investment income 36 5,129,753,568 5,570,648,397 Commission, exchange and brokerage 38 3,652,775,278 3,462,929,452 Other operating income 40 979,447,885 871,775,465

9,761,976,731 9,905,353,314 Total operating income (A) 14,961,916,531 13,933,043,392 Salaries and allowances 42 2,026,521,807 1,880,629,864 Rent, taxes, insurance, electricity, etc. 44 1,031,566,389 931,624,353 Legal expenses 1,299,331 1,832,217 Postage, stamp, telecommunication, etc. 46 182,353,593 176,224,992 Stationery, printing, advertisements, etc. 48 165,642,288 149,545,742 Managing Director's salary and fees 50 10,072,000 10,037,423 Directors' fees 51 2,926,099 3,785,203 Auditors' fees 53 1,847,371 1,906,893 Depreciation and repair 54 476,294,631 455,388,535 Other expenses 56 1,280,397,900 1,259,769,572 Total operating expenses (B) 5,178,921,410 4,870,744,794 Profit before provision (C=A-B) 9,782,995,122 9,062,298,598 Provision for loans and advances/investments 21.1 General provision (119,210,024) 1,010,610,024 Specific provision 4,974,285,948 3,781,324,521

4,855,075,924 4,791,934,545 Provision for diminution in value of investments 21.7 413,060,983 (217,213,998)Other provisions 21.5 (153,800,000) 305,500,000 Total provision (D) 5,114,336,907 4,880,220,547 Total profit before taxation (E=C-D) 4,668,658,214 4,182,078,051 Provision for taxation 58 Current 2,230,449,370 2,863,298,938 Deferred (35,000,000) 150,150,332

2,195,449,370 3,013,449,270 Net profit after taxation 2,473,208,844 1,168,628,781 Net profit after taxation attributable to:

Equity holders' of the Bank 2,473,189,135 1,168,581,138 Non-controlling interest 19,709 47,643

Net profit after taxation 2,473,208,844 1,168,628,781 Appropriations Statutory reserve 23 924,153,565 -

924,153,565 - Retained surplus during the year 1,549,055,280 1,168,628,781

Earnings per share (par value Taka 10) 64 2.35 1.11 The annexed notes 1 to 71 form an integral part of these financial statements.





346


Southeast Bank Limited and its subsidiariesConsolidated Cash Flow StatementFor the year ended 31 December 2018

Note 2018 Taka

2017 Taka

A. Cash flows from operating activities:Interest receipts in cash 28,773,552,446 22,799,565,274 Interest payments (17,355,370,160) (13,037,924,621)Dividend receipts 178,893,878 246,591,937 Fees and commission receipts in cash 38 3,652,775,278 3,462,929,452 Recoveries on loans previously written-off 404,812,584 154,213,601 Cash payments to employees (2,036,593,807) (1,854,001,450)Cash payments to suppliers (143,129,691) (149,511,264)Income taxes paid (2,194,287,059) (2,647,358,679)Receipts from other operating activities 60 979,305,053 871,775,465 Payments for other operating activities 62 (2,479,049,698) (2,345,344,075)Operating profit before changes in operating assets and liabilities (i) 9,780,908,823 7,500,935,640 Increase (decrease) in operating assets and liabilitiesSale of trading securities 1,723,256,168 4,714,880,794 Purchase of trading securities (2,348,147,650) (9,868,562,519)Loans and advances to customers (35,930,567,970) (43,819,951,511)Other assets (189,426,865) (742,818,232)Deposits from other banks 1,030,051,615 2,210,013,646 Deposits from customers 27,230,358,562 39,519,710,822 Other liabilities 2,253,081,234 2,200,804,534 Cash generated from (used in) operating assets and liabilities (ii) (6,231,394,905) (5,785,922,466)Net cash flows from operating activities (A=i+ii) 3,549,513,918 1,715,013,174

B. Cash flows from investing activities:

Proceeds from sale of securities 54,654,139,635 85,715,949,901 Payments for purchase of securities (54,337,993,353) (83,124,735,925)Purchase of fixed assets (372,391,753) (719,836,645)Sale of fixed assets 3,811,056 7,842,971 Cash generated from (used in) investing activities (B) (52,434,415) 1,879,220,302

C. Cash flows from financing activities:Receipts from issue of loan capital & debt security 5,000,000,000 - Payments for redemption of loan capital & debt security (600,000,000) - Dividends paid - (1,833,900,352)Payment against lease obligation (2,477,131) (8,204,713)Receipts from issue of ordinary shares - - Cash generated from (used in) financing activities (C) 4,397,522,869 (1,842,105,065)

D. Net increase (decrease) in cash and cash equivalents (A+B+C) 7,894,602,372 1,752,128,411 E. Effects of exchange rate changes on cash and cash equivalents 22,040,234 6,919,829 F. Cash and cash equivalents at beginning of the year 28,907,035,123 27,147,986,883 G. Cash and cash equivalents at end of the year (D+E+F) 36,823,677,730 28,907,035,123

Cash and cash equivalents at end of the year representsCash in hand (including foreign currencies) 4 3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks(including foreign currencies) 4 17,916,575,574 17,968,153,354 Balance with other banks and financial institutions 5 6,434,434,039 4,279,607,754 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Treasury bills 9.1.1 1,971,577,720 - Prize bond 9.1.1 5,138,300 4,341,040

36,823,677,730 28,907,035,123

347


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348


Southeast Bank LimitedBalance SheetAs at 31 December 2018

Note 2018 Taka

2017 Taka

PROPERTY AND ASSETS

Cash 4.1In hand (including foreign currencies) 3,598,790,655 3,010,980,173 Balance with Bangladesh Bank and its agent banks(including foreign currencies) 17,916,575,574 17,968,153,354

21,515,366,229 20,979,133,527 Balance with other banks and financial institutions 6In Bangladesh 3,984,794,486 3,196,881,943 Outside Bangladesh 2,272,907,523 965,226,853

6,257,702,009 4,162,108,796 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Investments 9Government 50,963,038,896 50,204,799,973 Others 11,920,717,298 10,118,368,557

62,883,756,194 60,323,168,530 Loans and advances/investments 11Loans, cash credit, overdrafts etc./investments 252,933,241,876 221,191,785,619 Bills purchased and discounted 12,270,968,683 10,659,214,310

265,204,210,559 231,850,999,929 Fixed assets including premises, furniture and fixtures 13 8,782,363,746 8,708,569,268 Other assets 15 9,554,422,290 9,241,315,075 Non - banking assets - - Total assets 381,094,921,027 338,909,245,125


LiabilitiesBorrowings from other banks, financial institutions and agents 17Subordinated bond 11,800,000,000 7,400,000,000 Other borrowings 11,157,491,516 10,181,648,728

22,957,491,516 17,581,648,728 Deposits and other accounts 19Current/Al-wadeeah current accounts and other accounts 40,457,857,551 35,516,538,988 Bills payable 4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits 226,108,257,117 205,486,197,802

298,320,586,377 269,833,088,669

Other liabilities 21 31,765,504,056 25,732,763,716 Total liabilities 353,043,581,949 313,147,501,113 Capital/shareholders' equityPaid up capital 22.2 10,544,927,020 9,169,501,760 Statutory reserve 23 10,094,153,565 9,170,000,000 Revaluation reserve 24 4,360,801,902 4,534,239,054 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,803,806,592 2,640,353,198 Total shareholders' equity 28,051,339,079 25,761,744,012 Total liabilities and shareholders' equity 381,094,921,027 338,909,245,125

349


Note 2018 Taka

2017 Taka


Contingent liabilitiesAcceptances and endorsements 30.1 63,853,762,984 57,138,532,985 Letters of guarantee 30.2 19,197,993,041 15,924,963,164 Irrevocable letters of credit 30.3 36,374,559,306 44,195,137,436 Bills for collection 30.4 24,664,926,813 22,666,586,856 Other contingent liabilities 30.5 1,413,684,000 1,744,473,000 Total contingent liabilities 145,504,926,144 141,669,693,441

Other commitmentsDocumentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - 827,101,200 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total other commitments - 827,101,200 Total off-balance sheet items including contingent liabilities 145,504,926,144 142,496,794,641


Southeast Bank LimitedBalance SheetAs at 31 December 2018

Dhaka,Date: 30 April 2019




350


Southeast Bank LimitedProfit and Loss AccountFor the year ended 31 December 2018

Note 2018 Taka

2017 Taka

Interest income/profit on investments 33 23,951,689,857 17,384,904,816 Interest paid/profit shared on deposits and borrowings etc. 35 (18,775,867,174) (13,378,247,565)Net interest income/net profit on investments 5,175,822,683 4,006,657,251 Investment income 37 5,062,022,727 5,485,830,524 Commission, exchange and brokerage 39 3,538,712,150 3,360,679,342 Other operating income 41 947,056,334 821,156,590

9,547,791,212 9,667,666,456 Total operating income (A) 14,723,613,895 13,674,323,707 Salaries and allowances 43 1,992,049,030 1,853,318,403 Rent, taxes, insurance, electricity, etc. 45 1,015,140,607 917,262,049 Legal expenses 1,293,220 1,553,137 Postage, stamp, telecommunication, etc. 47 181,005,852 175,303,570 Stationery, printing, advertisements, etc. 49 162,614,460 147,315,550 Managing Director's salary and fees 50 10,072,000 10,037,423 Directors' fees 52 2,718,099 3,575,203 Auditors' fees 1,000,000 1,345,000 Depreciation and repair of bank's assets 55 413,975,642 396,062,258 Other expenses 57 1,208,640,252 1,229,422,032 Total operating expenses (B) 4,988,509,163 4,735,194,625 Profit before provision (C=A-B) 9,735,104,731 8,939,129,082 Provision for loans and advances/investments 21.1 General provision (119,210,024) 1,010,610,024 Specific provision 4,974,285,948 3,781,324,521

4,855,075,924 4,791,934,545 Provision for diminution in value of investments 21.7.1 413,060,983 (256,602,166)Other provisions 21.5 (153,800,000) 305,500,000 Total provision (D) 5,114,336,907 4,840,832,379 Total profit before taxation (C-D) 4,620,767,824 4,098,296,703 Provision for taxation 59 Current 2,200,000,000 2,830,000,000 Deferred (35,000,000) 150,000,000

2,165,000,000 2,980,000,000 Net profit after taxation 2,455,767,824 1,118,296,703 Appropriations Statutory reserve 23 924,153,565 -

924,153,565 - Retained surplus during the year 1,531,614,259 1,118,296,703 Earnings per share (par value Taka 10) 65 2.33 1.06






351


Southeast Bank LimitedCash Flow StatementFor the year ended 31 December 2018

Note 2018 Taka

2017 Taka

A. Cash flows from operating activities:Interest receipts in cash 28,747,405,196 22,783,920,015 Interest payment (17,216,299,888) (13,026,594,645)Dividend receipts 130,239,122 194,053,603 Fees and commission receipts in cash 39 3,538,712,150 3,360,679,342 Recoveries on Loans previously written-off 404,812,584 154,213,601 Cash payments to employees (2,002,121,030) (1,826,689,989)Cash payments to suppliers (140,101,863) (147,281,073)Income taxes paid (2,172,386,062) (2,630,312,076)Receipts from other operating activities 61 946,913,502 821,156,590 Payments for other operating activities 63 (2,439,278,046) (2,310,221,404)Operating profit before changes in operating assets and liabilities (i) 9,797,895,665 7,372,923,964

Increase (decrease) in operating assets and liabilitiesSale of trading securities 1,723,256,168 2,438,255,841 Purchase of trading securities (2,348,147,650) (7,280,686,489)Loans and advances to customers (35,928,867,124) (43,854,866,880)Other assets (188,674,412) (771,957,502)Deposits from other banks 975,842,788 2,217,701,465 Deposits from customers 27,211,136,730 38,964,451,180 Other liabilities 2,264,998,681 2,247,638,030 Cash generated from (used in) operating assets and liabilities (ii) (6,290,454,818) (6,039,464,355)Net cash flows from operating activities (A=i+ii) 3,507,440,847 1,333,459,609

B. Cash flows from investing activities:Proceeds from sale of securities 54,654,139,635 85,715,949,901 Payments for purchase of securities (54,337,993,353) (83,124,735,925)Purchase of fixed assets (374,799,850) (395,373,327)Sale of fixed assets 3,776,352 7,842,971 Cash generated from (used in) investing activities (B) (54,877,216) 2,203,683,620

C. Cash flows from financing activities:Receipts from issue of loan capital & debt security 5,000,000,000 - Payments for redemption of loan capital & debt security (600,000,000) - Dividends paid - (1,833,900,352)Payment against lease obligation (2,477,131) (8,204,713)Receipts from issue of ordinary shares - - Cash generated from (used in) financing activities (C) 4,397,522,869 (1,842,105,065)

D. Net increase (decrease) in cash and cash equivalents (A+B+C) 7,850,086,500 1,695,038,164 E. Effects of exchange rate changes on cash and cash equivalents 7,264,394 17,226,310 F. Cash and cash equivalents at beginning of the year 28,789,533,363 27,077,268,889 G. Cash and cash equivalents at end of the year (D+E+F) 36,646,884,258 28,789,533,363

Cash and cash equivalents at end of the year representsCash in hand (including foreign currencies) 4.1 3,598,790,655 3,010,980,173 Balance with Bangladesh Bank and its agent banks(including foreign currencies) 4.1 17,916,575,574 17,968,153,354 Balance with other banks and financial institutions 6 6,257,702,009 4,162,108,796 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Treasury bills 9.1.1 1,971,577,720 - Prize bond 9.1.1 5,138,300 4,341,040

36,646,884,258 28,789,533,363

352


Sout

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-

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Curr

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Net

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-

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1810

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1

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17 9

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9

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53,1

98

25,

761,

744,

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353


Southeast Bank Limited and its SubsidiariesNotes to the Financial StatementsAs at and for the year ended 31 December 2018

1 Reporting entity

1.1 Status of the Bank

Southeast Bank Limited (the “Bank”) is a scheduled commercial bank in the private sector established under the Bank Companies Act, 1991 and incorporated in Bangladesh on March 12, 1995 as a public limited company to carry out banking business in Bangladesh. The registered office of the Bank is located at Eunoos Trade Centre 52-53, Dilkusha Commercial Area (Level 2,3 &16), Dhaka-1000. The consolidated financial statements of the Bank as at and for the year ended 31 December 2018 comprise the Bank and its subsidiaries (together referred to as the “Group” and individually as “Group entities”).

1.2 Principal activities of the Bank

The Bank has 135 (2017:132) branches, with no overseas branch as on 31 December 2018. Out of 135 branches 5 (2017:5) branches run on Islamic banking, the rest 130 (2017:127) branches run on commercial conventional basis, of which 15 (2017:15) SME/agricultural branches are located across the country. The Bank offers services for all commercial banking needs of the customers, which includes deposit banking, loans and advances, export import financing, inland and international remittance facility etc. The Bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company.

The Bank operates Islamic banking in 5 branches designated for the purpose in complying with the rules of Islamic Shariah the modus operandi.

The Bank has four subsidiaries, one for its merchant banking operation (for details see note 1.5) and another three for its remittance business of which one in the United Kingdom (for details see note 1.6), one in Australia (for details see note 1.7) and other one in South Africa (for details see note 1.8).

1.3 Islamic Banking

The Bank obtained the Islamic Banking branches permission vide letter no. BRPD(P)745(22)/2003-2525 dated 28 June 2003, BRPD(P)745(22)/2004-1801 dated 9 May 2004 and BRPD(P)745(22)/2004-3957 dated 13 October 2004. The Islamic banking branches are governed under the rules and regulations of Bangladesh Bank. Separate financial statements of Islamic Banking Branches are shown in Annexure-G, G.1 and G.2 .

The financial statements of the Islamic banking branches have also been prepared as per the Bank Companies Act, 1991 (amended upto 2018), IFRSs and other prevailing laws and regulations applicable in Bangladesh.

A separate balance sheet and profit and loss account are shown in Annexure-G and G.1 and the figures appearing in the annexure have been converted into relevant heads of financial statements under conventional banking for consolidation and incorporation in these financial statements.

1.4 Off-Shore Banking

In order to cater the varied financial needs of 100% foreign owned/joint venture industrial units and foreign entities located in Export Processing Zones of the country, the Bank obtained Off-Shore Banking License on 24 June 2008 vide letter no. BRPD(P-3)744(98)/2008-2213 from Bangladesh Bank. Presently the Bank has 2 (2017: 2) off-shore banking units - one at Dhaka Export Processing Zone and the other at Chittagong Export Processing Zone. Off-shore banking unit is governed under the rules and regulations of Bangladesh Bank. Separate financial statements of Off- Shore Banking Units are shown in Annexure-H, H.1 and H.2.

1.5 Southeast Bank Capital Services Limited

Southeast Bank Capital Services Limited is a subsidiary of Southeast Bank Limited which was incorporated on 23 September 2010 and commenced its operation from 1 December 2010. The Bank transferred its Merchant Banking operation to the newly formed subsidiary company in pursuance of the direction of Bangladesh Bank vide DOS Circular No. 4 dated 15 June 2010. The principal activities of this subsidiary company is to provide quality

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services to the prospective institutional and individual investors in the capital market. It is decisively providing the following services:

i) Portfolio Management Services

ii) Underwriting of Share

iii) Issue Management Services etc.

Copy of the audited financial statements is attached in Appendix - A.

1.6 Southeast Financial Services (UK) Ltd

Southeast Financial Services (UK) Ltd (the “Company”) was incorporated as a private limited company with Companies House of England and Wales under registration no. 7539137 on 22 February 2011. The company is a wholly owned subsidiary of Southeast Bank Limited. Earlier on 28 October 2010, Southeast Bank Limited got the approval of Bangladesh Bank to establish a wholly owned subsidiary in the United Kingdom. Southeast Financial Services (UK) Limited obtained Certificate of Registration for Money Laundering Regulation (MLR) on 12 April 2011 from Her Majesty Customs and Excise. The company was granted registration from Financial Services Authority (FSA) on 21 July 2011 as Small Payment Institution (SPI) to carry out Money Service Business (MSB) under Payment Services Regulations 2009. The Company commenced its operation of business on 26 September 2011. The registered office is located at 22 New Road, London E1 2AX, United Kingdom.

The principal activities of the Company are to carry on the remittance business as well as to undertake and participate in transactions, activities and operations generally carried on or undertaken by Exchange House.

The subsidiary is registered in the United Kingdom (UK). Audit of financial statements of this subsidiary is not required as per rules 7 regulations of UK. The financial statements including accountant’s report of this subsidiary are attached in Appendix - B.

1.7 Southeast Financial Services (Australia) Pty Ltd

Southeast Financial Services (Australia) Pty Limited (the “Company”) was incorporated as a private limited company with Australian Business Register (ABR) under registration no. 40160673165 on 08 October 2012. The Company is a wholly owned subsidiary of Southeast Bank Limited.


The subsidiary is registered in Australia. Audit of financial statements of this subsidiary is not required as per the Corporations Act 2001 of Australia. The financial statements of this subsidiary are attached in Appendix - C.

Board of Directors of the group decided to discontinue the operation of the Southeast Financial Services (Australia) Pty. Ltd. Therefore the group considered the entity as abandoned.

1.8 Southeast Exchange Company (South Africa) Pty Ltd

Southeast Exchange Company (South Africa) Pty Limited (the “Company”) was incorporated as a private limited company with The Companies and Intellectual Property Commission under registration no. 2011/008619/07 on 15 April 2011. The Company is a wholly owned subsidiary of Southeast Bank Limited.


The subsidiary is registered in South Africa. The Financial Statements of the Company is audited by G.L. Palmer and Company. The audited financial statements of this Company are attached in Appendix - D.

2 Basis of preparation

2.1 Statement of compliance

The Financial Reporting Act, 2015 (FRA) has been enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. Section 38 of the Bank Companies Act, 1991 (amended upto 2013) has been replaced in 2015 by two new sub-sections to require banks to prepare their financial statements under such financial reporting standards.

The FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisions of the FRA. Hence, considering Section 69 of FRA, the consolidated financial statements of the Bank and its subsidiaries and the separate financial statements of the Bank as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the requirements

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of the Bank Companies Act, 1991 (amended upto 2018) , the rules and regulations issued by Bangladesh Bank (BB), the Companies Act, 1994, the Securities and Exchange Rules, 1987, The Income Tax Ordinance, 1984, The Value Added Tax, 1991. In case any requirement of the Bank Companies Act, 1991 and provisions and circulars issued by BB differ with those of IFRSs, the requirements of the Bank Companies Act, 1991 and provisions and circulars issued by BB shall prevail. Material departures from the requirements of IFRSs are as follows:

i) Investment in shares and Securities

IFRS: As per requirements of IFRS 9: classification and measurement of investment in Share and Securities will depend on how these are managed (the entity’s business model) and their contractual cash flow characteristics. Based on these factors it would generally fall either under “at fair value through profit and loss account” or under “at fair value through other comprehensive income” where any change in the fair value (as measured in accordance with IFRS 13) at the year-end is taken to profit and loss account or other comprehensive income respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment.

ii) Revaluation gain (loss) on Government securities

IFRS: Government securities refer primarily various debt instruments which include both bonds and bills. As per requirements of IFRS 9 Financial Instruments, bonds can be categorised as “Amortised Cost (AC)” or “Fair Value Through Profit or Loss (FVTPL)” or “Fair Value through Other Comprehensive Income (FVOCI)”. Bonds designated as Amortised Cost are measured at amortised cost method and interest income is recognised through profit and loss account. Any changes in fair value of bonds designated as FVTPL is recognised in profit and loss account. Any changes in fair value of bonds designated as FVOCI is recognised in other reserve as a part of equity.

As per requirements of IFRS 9, bills can be categorised either as “Fair Value Through Profit or Loss (FVTPL)” or “Fair Value through Other Comprehensive Income (FVOCI)”. Any change in fair value of bills is recognised in profit and loss or other reserve as a part of equity respectively.

Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognized in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortization of discount are recognized in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortized at the year end and gains on amortization are recognized in other reserve (loss are recognized in profit and loss account) as a part of equity.

iii) Provision on loans and advances

IFRS: As per IFRS 9 Financial Instruments an entity shall recognize an impairment allowance on loans and advances based on expected credit losses. At each reporting date, an entity shall measure the impairment allowance for loans and advances at an amount equal to the lifetime expected credit losses if the credit risk on these loans and advances has increased significantly since initial recognition, whether assessed on an individual or collective basis, considering all reasonable information (including that which is forward-looking). For those loans and advances for which the credit risk has not increased significantly since initial recognition, at each reporting date, an entity shall measure the impairment allowance at an amount equal to 12 month expected credit losses that may result from default events on such loans and advances that are possible within 12 months after reporting date.

Bangladesh Bank: As per BRPD circular no. 16 dated 18 November 2014, BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 05 dated 29 May 2013 a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad/losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as per BRPD Circular No.10 dated 18 September 2007 and BRPD Circular No. 14 dated September 23, 2012, the Bank is required to maintain provision @ 1% against Off-Balance Sheet Exposures. Such provision policies are not specifically in line with those prescribed by IAS 39. BRPD Circular no. 1 dated 20 February, 2018 General Provision for Housing Finance under Consumer Financing.

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However, if there is any stay order issued by the Honorable High Court Division of the Supreme Court of Bangladesh against any non-performing loans for reporting such loans as unclassified category, the Bank maintains at least general provision for such loans under unclassified loan category as per Bangladesh Bank guidelines. Where Bangladesh Bank suggests any additional provision to be maintained for such loans, the Bank also complies with that.

iv) Recognition of interest in suspense

IFRS: Loans and advances to customers are generally classified at amortised cost as per IFRS 9 and interest income is recognised in profit and loss account by using the effective interest rate method to the gross carrying amount over the term of the loan. Once a loan subsequently become credit-impaired, the entity shall apply the effective interest rate to the amortised cost of these loans and advances.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans is not allowed to be recognized as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet.

v) Other comprehensive income

IFRS: As per IAS 1 Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a Single Comprehensive Income statement.

Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI) statement. As such the Bank does not prepare the OCI statement. However, elements of OCI, if any, are shown in the statements of changes in equity.

vi) Financial instruments - presentation and disclosure

In several cases Bangladesh Bank guidelines categories, recognize, measure and present financial instruments differently from those prescribed in IFRS 9 Financial Instruments. Hence some disclosure and presentation requirements of IFRS 7 Financial Instruments: Disclosures and IAS 32 Financial Instruments: Presentation, cannot be made in this financial statements.

vii) Repo and reverse repo transactions

IFRS: As per IFRS 9 when an entity sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a deposit, and the underlying asset continues to be recognized in the entity’s financial statements. This transaction will be treated as loan and the difference between selling price and repurchase price will be treated as interest expense.The same rule applies to the opposite side of the transaction (reverse repo).

Bangladesh Bank: As per BRPD guidelines, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a normal sales transactions and the financial assets are derecognized in the seller’s book and recognized in the buyer’s book.

viii) Financial guarantees

IFRS: As per IFRS 9 Financial Instruments, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortized amount and the loss allowance determined as expected credit loss under IFRS 9. Financial guarantees are prescribed to be included within other liabilities.

Bangladesh Bank: As per BRPD 14, financial guarantees such as L/C, L/G will be treated as Off-Balance Sheet items. No liability is recognized for the guarantee except the cash margin.

ix) Cash and cash equivalents

IFRS: Cash and cash equivalent items should be reported as cash item as per IAS 7.

Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, Treasury bills, Prize bonds are not shown as cash and cash equivalent. Money at call and on short notice presented on the face of the balance sheet, Treasury bills and Prize bonds are shown in Investments.

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x) Non-banking assets

IFRS: No indication of non-banking asset is found in any IFRS.

Bangladesh Bank: As per BRPD 14, there must exist a face item named non-banking assets.

xi) Cash flow statement

IFRS: As per IAS 7 Statement of Cash Flows, Cash Flow Statement can be prepared using either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.

Bangladesh Bank: As per BRPD 14, cash flow is the mixture of direct and indirect method.

xii) Balance with Bangladesh Bank: (Cash reserve ratio)

IFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per IAS 7.

Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

xiii) Presentation of intangible asset

IFRS: Intangible asset must be identified and recognized, and the disclosure must be given as per IAS 38.

Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD 14.

xiv) Off-balance sheet items

IFRS: There is no concept of off-balance sheet items in any IFRS; hence there is no requirement of disclosure of off-balance sheet items on the face of the balance sheet.

Bangladesh Bank: As per BRPD 14, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately in face of balance sheet.

xv) Disclosure of appropriation of profit

IFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.

Bangladesh Bank: As per BRPD 14, an appropriation of profit should be disclosed in the face of profit and loss account.

xvi) Loans and advance net of provision

IFRS: As per IFRS 9, loans and advances/Investments should be presented net of provision.

Bangladesh Bank: As per BRPD 14, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances.

xvii) Recovery of written off loans

IFRS: As per IAS 1, an entity shall not offset assets and liabilities or income and expenses, unless required or permitted by any IFRS. Again recovery of written off loans should be charged to profit & loss account as per IFRS 15.

Bangladesh Bank: As per BRPD 14, recoveries of amount previously written off should be adjusted with the specific provision for loans and advances.

(Also refer to note 3.21 Compliance of IFRSs)

2.2 The Bank’s compliance with related pronouncements by Bangladesh Bank

i) Internal control

The objective of internal control is to ensure that management has reasonable assurance that (i) operations are effective, efficient and aligned with strategy, (ii) financial reporting and management information is reliable, complete and timely accessible, (iii) the entity is in compliance with applicable laws and regulations as well as its internal policies and ethical values including sustainability and (iv) assets of the company are safeguarded and frauds & errors are prevented or detected.

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Southeast Bank Limited has established an effective internal control system whose primary aim is to ensure the overall control of risks and provide reasonable assurance that the objectives set by the Bank will be met. It has designed to develop a high level compliance culture among the personnel of the Bank, establish efficient and qualified operating model in the Bank, ensure reliability of internal and external information including accounting and financial information, secure the Bank’s operations and assets, and comply with laws, regulatory requirements and internal policies.

The Board of Directors of Southeast Bank Limited, through its Audit Committee, periodically reviews the effectiveness of Bank’s internal control system covering all the material controls, including financial, operational and compliance controls, risk management systems, the adequacy of resources, qualifications and experience of staff of the accounting and financial reporting functions. Board Audit Committee reviews the actions taken on internal control issues identified by the internal and external auditors and regulatory authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities.

ii) Risk management

Banking business faces uncertainties in its operating environment, which, if not managed and mitigated, would not only disrupt the achievement of its strategic and operational objectives, but may also cause extensive financial and reputational loss. Effective risk management enables Banks to take better and informed decisions that substantially improve the probability of achieving their strategic and operational objectives. In this connection, the Bank has come forward to establish a general framework to manage the risk factors considering Bangladesh Bank’s guidelines.

As one of the leading Banks in Bangladesh, Southeast Bank Limited (SEBL) has established approved policies in compliance with central bank’s guidelines covering major risk areas such as: (a) Credit (b) Foreign Exchange (c) Asset Liability Management (d) Money Laundering Prevention (e) Internal Control & Compliance (f) Information and Communication Technology.

For strengthening and updating risk management system, the Bank has developed a manual for core risks assessment in light of the Bangladesh Bank’s Risk Management Guidelines. The purpose of this assessment is to inform management about the loopholes of full fledged implementation of core risks management, risk management culture, restructure minimum standard and assist in the ongoing improvement.

Risk Management Reports (RMR) are being prepared on monthly, quarterly and semiannually basis and is reviewed in the monthly risk management meeting to have management opinion on the issues identified in RMR.

iii) Internal audit

Internal audit is the continuous and systematic process of examining and reporting on the activities of an organization undertaken by the specially assigned staff(s). Internal auditor works as the Eyes & Ears of the management. It may therefore be used to bridge the gap between management & shop floor. It can assure the management that the internal controls are adequate and in operations, the policies and systems laid down are being adhered to and accounting records provided by all levels are correct.

Internal audit mechanism is used as an important element to ensure good governance of SEBL. Internal audit activity of SEBL is effective and it provides senior management with a number of important services. These include detecting and preventing errors and fraud, testing internal control and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.

During the year 2018, Audit & Inspection Unit of ICCD conducted inspection on most of the branches and some of the important divisions of head office of the Bank as per plan and submitted reports presenting the findings of the audits/ inspections to the appropriate authorities. The bank conducted the risk grading of branches as per Bangladesh Bank guideline. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The key points of the Reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance of the Bank.

iv) Fraud and forgeries

Fraud can happen anywhere. Though, only relatively few major frauds are picked up by the media, huge sums are lost by all kinds of businesses against huge number of smaller frauds. The risks of fraud is increasing day by day as a result of growing globalization, more competitive markets, rapid developments

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in technology, periods of economic difficulty, etc. Banks by virtue of the nature of activities undertaken and its operating environment are vulnerable to frauds, which take place when aggressive business strategy and process for quick growth is adopted without adequate/appropriate internal controls or non-adhering of operating standards/ controls. In the recent past, incidence of frauds in the Banking industry has increased which calls for concerted steps in investigating the frauds and identifying the fraudsters for eventual criminal prosecution and internal punitive action.

It will never be possible to eliminate all frauds and no system is completely fraud proof, since many fraudsters are able to bypass control systems put in place. SEBL pays attention on anti-fraud internal controls for prevention of fraud and forgery. SEBL assesses/evaluates the effectiveness of its anti-fraud internal control measures on quarterly basis as per the items/areas mentioned in the prescribed checklist of Bangladesh Bank.

2.3 Basis of measurement

The financial statements of the Bank have been prepared on the historical cost basis except for the following:

Government Treasury Bills and Bonds designated as ‘Held for Trading (HFT)’ at present value using marking to market concept with gain crediting revaluation reserve

Government Treasury Bills and Bonds designated as ‘Held to Maturity (HTM)’ and remeasured Government Treasury Bond at present value using amortisation concept

Investment in shares of listed companies

Land and buildings are measured at fair value

2.4 Functional and presentation currency

These financial statements are presented in Bangladesh Taka (Taka/Tk) which is the Bank’s functional currency. Except as otherwise indicated, financial information presented in Taka has been rounded to the nearest integer.

2.5 Use of estimates and judgments

The preparation of these financial statements in conformity with Bangladesh Bank circulars and IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect in the year ended 31 December 2019 is included in the following notes:

a) Note 3.3.3 : Rate of provision for loans, advances/investments

b) Note 3.3.4 : Useful lives of depreciable assets

c) Note 21.3.2 : Provision for deferred tax

d) Note 24 : Assets revaluation reserve

2.6 Reporting period

These financial statements cover one calendar year from 1 January 2018 to 31 December 2018.

2.7 Cash flow statement

Cash flow statement has been prepared in accordance with the BRPD Circular No. 14 dated 25 June 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank.

2.8 Statement of changes in equity

The Statement of changes in equity reflects information about the increase or decrease in net assets or wealth.

2.9 Liquidity statements

The consolidated and separate liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term which has been given in the statement.

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Consolidated liquidity statements of the Group and the separate liquidity statements of the Bank have been furnished in Annexure-B and Annexure-B.1 respectively..

3 Significantaccountingpolicies

The accounting policy set out below have applied consistently to all periods presented in these consolidated financial statements of the Group and those of the Bank, and have been applied consistently by the group entities.

3.1 Basis of consolidation

The consolidated financial statements include the financial statements of Southeast Bank Limited and its four subsidiaries Southeast Bank Capital Services Limited, Southeast Financial Services (UK) Ltd, Southeast Financial Services (Australia) Pty Ltd and Southeast Exchange Company (South Africa) Pty Ltd made up to the end of the financial year.

3.1.1 Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date; i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

the fair value of the consideration transferred; plus

the recognised amount of any non-controlling interests in the acquiree; plus

if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

3.1.2 Non-controlling interest

For each business combination, the Group elects to measure any non-controlling interests in the acquiree either:

at fair value; or

at their proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

Subsidiaries are the entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

3.1.3 Transactions eliminated on consolidation

Intra-group balances, and income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.2 Foreign currency

3.2.1 Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated

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in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction.

Foreign currency differences arising on translation are recognised in profit or loss, except for differences arising on translation of equity investments in respect of which an election has been made to present subsequent changes in fair value in equity.

3.2.2 Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Taka at spot exchange rates at the reporting date. The income and expenses of foreign operations, are translated into Taka at average exchange rates.

Foreign currency differences are presented in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interest.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of the net investment in the foreign operation and presented in the translation reserve in equity.

3.3 Assets and basis of their valuation

3.3.1 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and its agent bank, balance with other banks and financial institutions, money at call and on short notice, investments in treasury bills and prize bond.

3.3.2 Investments

All investment securities are initially recognised at cost, including acquisition charges associated with the investment. Premiums are amortised and discounts are accredited.

Held to Maturity

Investments which have, ‘fixed or determinable payments’ and are intended to be held to maturity are classified as ‘Held to Maturity’.

Held for Trading

Investment classified in this category are acquired principally for the purpose of selling or repurchasing in short trading or if designated as such by the management.

Re-measured bond

As per DOS circular letter no. 2 dated 19 January 2012, Treasury bond held in HFT category by the Primary Dealer (PD) may be re-measured at amortized cost instead of fair value.

Revaluation

As per the DOS Circular letter no. 5 dated 26 May 2008, HFT securities are revaluated each week using Marking to Market concept and HTM securities are amortised once a year according to Bangladesh Bank guidelines.

Value of investments has been shown as under:

Government Treasury Bills and Bonds (HFT) At present value (using marking to market concept)Government Treasury Bills and Bonds (HTM) At present value (using amortisation concept)Re-measured Government Treasury Bonds At present value (using amortisation concept)Bangladesh Government Islamic Bond At costPrize Bonds At cost

Unquoted shares At cost or net book value of the last audited balance sheet whichever is lower

Quoted shares At cost or market value whichever is lower at balance sheet date

Details are shown in notes 8 and 9.

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3.3.3 Loans and advances/ investments and provisions for loans and advances/ investments

a) Loans and advances of conventional Banking/Investments of Islamic Banking branches are stated in the Balance Sheet on gross value.

b) Provision for loans and advances is made on the basis of periodical review by the management and of instructions contained in Bangladesh Bank BRPD Circular Nos. 14 and 15 of 23 September 2012, BRPD Circular No. 19 of 27 December 2012, BRPD Circular No. 05 of 29 May 2013, BRPD Circular No. 12 of 20 August 2017 and BRPD circular No. 15 of 27 September 2017. BRPD Circular no. 1 dated 20 February, 2018 General Provision for Housing Finance under Consumer Financing. The rates of provision for different classifications are given below:

Particulars RateGeneral provision on:All unclassified loans and advances/investments except followings 1%Small and medium enterprise financing 0.25%Housing finance (HF) and loans for professionals (LP) to set up business under consumer financing scheme 1%-2%Consumer financing 2%-5%Loan to Brokerage Houses (BHs)/Merchant Banks (MBs)/ Sponsor Directors (SDs) against shares 2%Special mention account (SMA) 0.25%-5%

Specific provision on: Substandard loans and advances/investments 20%Doubtful loans and advances/investments 50%Bad/loss loans and advances/investments 100%

Provisions for Short term Agricultural and Micro-CreditsAll credits except 'Bad/Loss' (i.e. Doubtful, Substandard, irregular and regular credit)

1%-5%

Bad/Loss 100%

c) Loans and advances are written off to the extent that

i) there is no realistic prospect of recovery, and

ii) against which legal cases are filed and classified as bad/loss as per guidelines of Bangladesh Bank.

These write off however will not undermine/affect the claim amount against the borrower. Detailed memorandum records for all such write off accounts are maintained and followed up.

d) Amounts receivable on credit cards are included in advances to customers at the amounts expected to be recovered.


3.3.4 Fixed assets and depreciation

Recognition and measurement

Items of fixed assets excluding land are measured at cost/revaluation less accumulated depreciation and accumulated impairment losses, if any. Land is measured at revaluation.

Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location and condition necessary for it to be capable of operating in the intended manner.

When parts of an item of fixed asset have different useful lives, they are accounted for as separate items (major components) of fixed assets.

The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from disposal with the carrying amount of the item of fixed asset, and is recognised in other income/other expenses in profit or loss.

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Subsequent costs

The cost of replacing a component of an item of fixed assets is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed assets are recognised in profit or loss as incurred.

Depreciation

Depreciation is recognised in profit or loss on reducing balance method, except motor vehicles which are depreciated on straight line basis, over the estimated useful lives of each part of an item of fixed assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. In case of acquisition of fixed assets, depreciation is charged from the month of acquisition, whereas depreciation on disposed off fixed assets is charged up to the month prior to the disposal. Asset category-wise depreciation rates for the current and comparative years are as follows:

Category of assets Rate of depreciationLand NilBuildings 4%Furniture and fixtures 10%Office appliances 20%Professional and reference books 30%Electrical appliances 20%Computer 20%ATM Booth 20%Motor vehicles 20%

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted, if appropriate.

3.3.5 Leased assets – lessee

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and are not recognised in the Group’s Balance Sheet.

3.4 Liabilities and basis of their valuation

3.4.1 Borrowings from other banks, financial institutions and agents

Borrowings from other banks, financial institutions and agents includes refinance from Bangladesh Bank against agro-based credit, SME Loan etc., interest-bearing borrowings against securities from Bangladesh Bank and call borrowing from other banks. These items are brought to financial statements at the gross value of the outstanding balance. Details are shown in notes 16 and 17.

3.4.2 Deposits and other accounts

Deposits and other accounts include non interest-bearing current deposit redeemable at call, interest bearing on demand and short-term deposits, savings deposit and fixed deposit. These items are brought to financial statements at the gross value of the outstanding balance. Details are shown in notes 18 and 19.

3.4.3 Other liabilities

Other liabilities comprise items such as provision for loans and advances/investments, provision for taxation, interest payable, interest suspense, accrued expenses, obligation under finance lease etc. Other liabilities are recognised in the balance sheet according to the guidelines of Bangladesh Bank, Income Tax Ordinance, 1984 and internal policy of the Bank. Details are shown in notes 20 and 21.

3.5 Capital/Shareholders’ equity

3.5.1 Authorised capital

Authorised capital is the maximum amount of share capital that the Bank is authorised by its Memorandum and Articles of Association.

Details are shown in note 22.1

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3.5.2 Paid up capital

Paid up capital represents total amount of shareholder capital that has been paid in full by the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders’ meetings. In the event of a winding-up of the Bank, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation. Details are shown in note 22.2.

3.5.3 Statutory reserve

Statutory reserve has been maintained @ 20% of profit before tax in accordance with provisions of section 24 of the Bank Companies Act 1991, until such reserve equals to its paid up capital together with the share premium.

3.5.4 Revaluation reserve

Revaluation reserve arises from the revaluation of land and buildings as well as the revaluation of Treasury bills and bonds (HFT & HTM) in accordance with the DOS circular no. 5 dated 26 May 2008 and DOS(SR) 1153/120/2010 dated 8 December 2010. The tax effects on revaluation gain are measured and recognised in the financial statements as per IAS 12: Income Taxes.

Details are shown in note 24.

3.6 Contingent liabilities

A contingent liability is -

A possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or

A present obligation that arises from past events but is not recognised because:

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

- the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated.

Contingent assets are not recognised in the financial statements as this may result in the recognition of income which may never be realised.

3.7 Revenue recognition

3.7.1 Interest income (Conventional Banking)

Interest on loans and advances is calculated on daily product basis and accrued at the end of each month, but charged to customers’ accounts on quarterly basis. Interest accrued on loans and advances fall under Sub Standards (SS) and Doubtful (DF) category are credited to interest suspense account instead of income account. Interest is not charged on bad and loss loans as per guideline of Bangladesh Bank. Such interest is kept in separate memorandum account. Interest on classified loans and advances is accounted for on a cash receipt basis. Interest income from fixed deposit with other banks and call lending to other banks is recognized on accrual basis.

3.7.2 Profit on investment (Islamic Banking)

Mark-up on investment is taken into income account proportionately from profit receivable account. Overdue charge/compensation on classified investments is transferred to profit suspense account instead of income account.

3.7.3 Investment income

Income on investments is recognised on accrual basis. Investment income includes discount on treasury bills and interest on treasury bonds. Capital gain on investments in shares is also included in investment income. Capital gain is recognised when it is realised.

3.7.4 Fees and commission income

The Bank earns fees and commissions from diverse range of services provided to its customers. Fees and commission income is recognised on a realisation basis. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions.

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3.8 Interest paid on borrowing and other deposits (Conventional Banking)

Interest paid and other expenses are recognised on accrual basis.

3.9 Profit shared on deposits (Islamic Banking)

Profit shared to mudaraba deposits is recognised on accrual basis as per provisional rate.

3.10 Dividends

Dividend income is recognised when the right to receive income is established. Usually this is the ex-dividend date for equity securities. Dividends are presented in investment income.

3.11 Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.12 Employee benefits

3.12.1 Provident Fund

Provident fund benefits are given to the staff of the Bank in accordance with the registered provident fund rules. The commissioner of Income Tax, Large Tax Payers Unit (LTU), Dhaka has approved the Provident Fund as a recognized fund within the meaning of section 2(52) read with the provisions of part - B of the First Schedule of Income Tax Ordinance 1984. The fund is operated by a Board of Trustees consisting of 6 (six) members of the Bank. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription of the fund. The Bank also contributes equal amount to the fund. Contributions made by the Bank are charged as expense and the bank bears no further liability. Interest earned from the investments is credited to the members’ account on half yearly basis. Members are eligible to get both the contribution after 5 (five) years of continuous service from the date of their membership.

3.12.2 Gratuity Fund

Gratuity fund benefits are given to the staff of the Bank in accordance with the approved gratuity fund rules. National Board of Revenue has approved the gratuity fund as a recognized gratuity fund with effect from December 2001. The fund is operated by a Board of Trustees consisting of 7 (seven) members of the Bank. Employees are entitled to gratuity benefit after completion of minimum 7 (seven) years of service in the Bank. The amount payable at the date of balance sheet is recognised and accounted for as at that date based on actual rate. The gratuity is calculated on the basis of last basic pay and is payable at the rate of one month’s basic pay for every completed year of service. The amount so calculated are transferred to the fund and charged to expenses of the Bank.

3.12.3 Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.12.4 Workers’ Profit Participation Fund (WPPF)

As per Bangladesh Labour Act 2006 and SRO no. 336/Law/2010, all companies fall within the scope of WPPF are required to provide 5% of its profit before charging such expense to their eligible employees within the stipulated time. The Bank obtained opinion from its legal advisor regarding this issue. The legal advisor opined that, “Southeast Bank Limited being governed by Banking Companies Act, 1991 is obliged to follow the provisions of Banking Companies Act, 1991, and Banking Companies Act, 1991 being a special law, provisions of this Act shall prevail over Bangladesh Labour Laws, 2006 (amended in 2013) which is a general law. Thus, we take the view that the Bank is not bound to form a WPPF under Bangladesh Labour Laws, 2006 (amended in 2013)”. Consistent with the industry practice and in accordance with the legal opinion and the Bank Company Act, 1991 (amended in 2013), no provision has been made for WPPF.

3.13 Provisions and accrued expenses

In compliance with IAS-37, provisions and accrued expenses are recognized in the consolidated and separate financial statements when the Group/Bank has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

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3.14 Provision for Off-Balance Sheet Exposures

In compliance with Bangladesh Bank guidelines off-balance sheet items are disclosed under contingent liabilities. As per BRPD Circular No.10 dated 18 September 2007 and BRPD Circular No. 14 dated 23 September 2012 and BRPD Circular no. 13 dated 18 October 2018, the Bank is required to maintain provision @ 1% against off-balance sheet exposures. Details are shown in note 21.5.1 (C).

3.15 Provision for Nostro Accounts

According to guideline of Foreign Exchange Policy Department of Bangladesh Bank, Circular No. FEOD (FEMO)/01/2005-677 dated 13 September 2005, Bank is not required to make provision regarding the un-reconciled debit balance as at Balance Sheet date since there was no debit entries more than three month.

3.16 Tax expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity.

3.16.1 Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Details are shown in note 21.3.1.

3.16.2 Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and

temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax relating to unrealised surplus on revaluation of held to maturity (HTM) securities and held for trading (HFT) securities and land and buildings are recognised directly in revaluation reserve as a part of equity and is subsequently recognised in profit and loss account on maturity of the security and disposal of land and buildings. Details are shown in note 21.3.2.

3.16.3 Tax exposures

In determining the amount of current and deferred tax, the Bank takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Bank to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

3.17 Impairment of non-financial assets

The carrying amounts of the Group’s and the Bank’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit (CGU) exceeds its estimated recoverable amount.

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The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.18 Earnings per share

The Group and the Bank present basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group/ Bank by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.


3.19 Reconciliation of inter-bank/inter-branch account

Books of accounts with regard to inter-bank (in Bangladesh and outside Bangladesh) are reconciled regularly and there are no material differences which may affect the financial statements significantly.

Un-reconciled entries in case of inter-branch transactions as at the reporting date are not material.

3.20 Risk management

Effective risk management is an essential element of our operations and strategy. The Bank monitors risk at all levels throughout its operations and has established units to manage various types of risk. Our risk management framework is designed to identify, manage and mitigate the risk of any failure to achieve business objectives.

The risk management of the Bank covers following six core risk areas:

i) Credit Risk

ii) Foreign Exchange Risk

iii) Asset Liability Management Risk

iv) Money Laundering Risk

v) Internal Control & Compliance Risk; and

vi) Information and Communication Technology Risk

The Bank’s risk management policy and process are composed with all the structures, policies, process and strategies in line with the guidelines of central bank and other regularity authorities. The Bank endeavors to maximize profits through the development of an integrated risk management system.

3.20.1 Credit risk

Credit risk is the possibility that a borrower or counter party will fail to repay the borrowed money as per the agreed terms and conditions. Managing Credit risk of the Bank in an efficient manner has become one of the most crucial tasks for the management. Given the fast changing, dynamic global economy, implementation of Basel-III and the increasing pressure of globalization and liberalization it is essential that banks have robust credit risk management policies and procedures that are sensitive and responsive to these changes.

A thorough assessment & due diligence are done before sanctioning any credit facility at Credit Risk Management Division (CRM) of the Bank. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the proposed credit facilities and various critical

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risk factors. The assessment process starts at Branch Credit department by the Officer and ends at Credit Risk Management Division (CRM) in Head Office where it is approved / declined by the competent authority. Credit approval authority has been partially delegated to the individual executives. Proposal beyond their delegation are approved / declined by the Board / Executive Committee (EC) of the Board.

3.20.2 Foreign Exchange Risk

Foreign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss in earnings. As per the guidelines of Bangladesh Bank, Southeast Bank Limited has developed a detailed Foreign Exchange Risk Management policy to minimize different types of risks associated with foreign exchange transactions. The Bank has also developed different strategies to handle foreign exchange risk by setting different types of limits and risk parameters to measure and monitor foreign exchange risk exposure of the Bank.

The Foreign Exchange Desk of Treasury Division is involved in foreign exchange dealing activities with different counterparty banks. The Treasury Back Office is engaged in transfer of funds and passing of the transaction entries in the books of accounts; the Mid Office is responsible for verification of the deals. All foreign exchange assets and liabilities are revalued at market rate as per the directive of Bangladesh Bank. All nostro accounts are reconciled on a monthly basis and outstanding entries beyond 30 days are reviewed by the management for its settlement.

3.20.3 Asset Liability Management

Banks are exposed to the several risks such as Liquidity Risk, Interest Rate Risk, Foreign Exchange Risk, Credit Risk and Operational Risk etc. Monitoring and controlling these risks are vital to the survival of a financial institution. Asset-Liability Management is a tool to oversee whether different balance sheet risks are properly identified, appropriate policies and procedures are well established to control and limit these risks.

Asset-Liability Committee (ALCO) reviews country’s overall economic position, the Bank’s liquidity position, key performance ratios, interest rate risk, deposit and advance growth, cost of deposit & yield on advances, deposit & lending pricing strategy and different forecasted balance sheet risks of the Bank.

3.20.4 Money Laundering Risk

Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source. If money laundering is done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Drug traffickers, the terrorists, the organized criminals, the insider dealer, the tax evaders as well as many others who intend to avoid the attention from the authorities of their sudden wealth brought from illegal activities take the help of money laundering. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws.

Southeast Bank Limited (SEBL) has implemented an enterprise-wide AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism) compliance program, which covers all the activities of the Bank and is reasonably designed to comply with applicable laws and regulations. It is the policy of SEBL to take all reasonable and appropriate steps to prevent persons engaged in money laundering, fraud, or other financial crime, including the financing of terrorists or terrorist operations, from utilizing SEBL products and services. SEBL makes every effort to remain in full compliance with all applicable AML and CFT laws, rules and standards in the jurisdictions in which it does business.

In order to facilitate compliance with AML and CFT requirements, SEBL has appointed one of its Senior Executives as the CAMLCO (Chief Anti-Money Laundering Compliance Officer) and a team of employees with experience on AML and CFT requirements under law to oversee the Bank’s AML and CFT program. SEBL has developed and implemented written AML and CFT policies, procedures, internal controls and systems, which include (but not limited to) a customer identification program and procedures; procedures to collect and refresh, as appropriate, customer due diligence information; processes to assess risk; processes and systems to monitor customer transactions and activity; processes and systems to identify and report suspicious activity; and, processes to keep required records. SEBL educates its all employees on AML and CFT requirements and activities and also subjects its AML and CFT program to regular independent testing. SEBL cooperates fully with law enforcement and regulatory investigations and inquiries in identifying the criminals involve in Money Laundering and Terrorist Activities/Financing.

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3.20.5 Internal Control & Compliance Risk

Internal control is fundamental to the successful operation and day-to-day running of a business and it assists the bank in achieving its business objectives. It encompasses all controls incorporated into the strategic, governance and management processes, covering the bank’s entire range of activities and operations, and not just those directly related to financial operations and reporting. Its scope is not confined to those aspects of a business that could broadly be defined as compliance matters, but extends also to the performance aspects of a business.

SEBL has established a System of Internal Control, which is designed to manage all the risks of failure to a reasonable level, achieve aims and objectives/goals of the Bank and this System provides reasonable assurance of effective & efficient operations covering all controls including financial & operational controls, reliability of the financial information, compliance with applicable laws & regulations, adherence to management policies, safeguarding of Bank’s Assets, prevention & detection of fraud & errors, and accuracy & completeness of the accounting records.

The Board of Directors of SEBL regularly reviews the effectiveness of internal control process through its Audit Committee and the Audit Committee plays an effective role amongst the Board of Directors, Management, Shareholders, Depositors and develops an efficient, powerful and a safe banking system. The committee also performs a very important role for publishing Bank’s financial statements, developing an appropriate internal control system and maintains an effective communication with internal and external auditors. It significantly contributes in controlling and monitoring various risks factors that arise from the business activities of the Bank. Board Audit Committee reviews the actions taken on internal control issues identified in the reports prepared by the internal & external auditors and regulatory authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities.

3.20.6 Information and communication technology

The Bank has Centralized Core Banking Software (CBS)and providing online banking services to its clients through 136 Branches across the country. The Bank is also offering 24/7 banking services through its different delivery channels, like Internet Banking, ATM and Mobile Financial Service (MFS). Besides, the Bank has introduced Recycler ATM in the brand name of “SEBL Instant Banking Service.” Through this service, customers are able to deposit cash on a real time basis other than cash withdrawal facility. SMS and E-Mail Alert services are available for any debit/credit transaction through online and Internet Banking or using Bank’s Debit / Credit Card as a deterrent against fraudulent transaction attempts. The Bank has established its Far DC (Data Center) at Jessore as it falls under different seismic zone as part of its business continuity plan (BCP) as well as for compliance of ICT Security Guideline of Bangladesh Bank. Data synchronization in near real time basis has been established through fiber optic cables from main DC to near DC (Disaster Recovery Site at Uttara) and again main DC to far DC at Jessore to ensure availability of data in any catastrophic situation.

The Bank has further reviewed its ICT Security and ICT Risk Management Policies and related internal processes for strengthening security of information assets from internal and external threats. Gradual implementation of the different policies is being carried out. Several sessions were conductedon ICT Security and Risk for the employees of the Bank to build awareness and minimize ICT related risks in banking operation.

3.20.7 Environmental Risk Management (ERM)

Environmental and Social risk is assessed by E&S due diligence (ESDD) checklists. It is a set of questionnaire provided by Bangladesh Bank. The purpose of the E&S due diligence is to review any potential E&S risks associated with the business activities of a potential client ensure that the transaction does not carry E&S risks, which could present a potential liability/risk to the Bank. The ESDD checklists (both generic and sector specific) will auto generate the E&S risk ratings – high, medium and low based on the responses provided to the questions in the checklist.

Potential E&S risks may not seem significant or relevant at the time of approval of a financial transaction, but may become so during execution, for instance as a result of higher regulatory standards and increased levels of enforcement. In other cases, E&S risks, such as spills or explosions, may seem unlikely to occur, but when they do, the E&S impact is potentially extremely high. Therefore, to identify Environment and Social (E&S) risks along with appropriate risk mitigation measures, Environment & Social Risks Management must be integrated with the Credit Risk Management of the bank.

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3.21 Compliance of International Financial Reporting Standards (IFRSs)

Name of the standards Ref. Status First-time Adoption of International Financial Reporting Standards IFRS-1 Not applicableShare-based Payment IFRS-2 Not applicableBusiness Combinations IFRS-3 AppliedInsurance Contracts IFRS-4 Not applicableNon-current Assets Held for Sale and Discontinued Operations IFRS-5 AppliedExploration for and Evaluation of Mineral Resources IFRS-6 Not applicableFinancial Instruments: Disclosures IFRS-7 * AppliedOperating Segments IFRS-8 ** AppliedFinancial Instruments IFRS-9 *AppliedConsolidated Financial Statements IFRS-10 AppliedJoint Arrangements IFRS-11 Not applicableDisclosure of Interests in other Entities IFRS-12 AppliedFair Value Measurement IFRS-13 * AppliedRegulatory Deferral Accounts IFRS-14 Not applicableRevenue From Contracts with Customers IFRS-15 AppliedPresentation of Financial Statements IAS-1 * AppliedInventories IAS-2 Not ApplicableStatement of Cash Flows IAS-7 * AppliedAccounting Policies, Changes in Accounting Estimates and Errors IAS-8 AppliedEvents after the Reporting Period IAS-10 AppliedIncome Taxes IAS-12 AppliedProperty, Plant and Equipment IAS-16 AppliedLeases IAS-17 AppliedEmployee Benefits IAS-19 AppliedAccounting for Government Grants and Disclosure of Government Assistance

IAS-20 Not Applicable

The Effects of Changes in Foreign Exchange Rates IAS-21 AppliedBorrowing Costs IAS-23 AppliedRelated Party Disclosures IAS-24 AppliedAccounting and Reporting by Retirement Benefit Plans IAS-26 Not ApplicableSeparate Financial Statements IAS-27 AppliedInvestments in Associates IAS-28 Not ApplicableFinancial Reporting in Hyperinflationary Economies IAS-29 Not ApplicableFinancial Instruments: Presentation IAS-32 * AppliedEarnings per Share IAS-33 AppliedInterim Financial Reporting IAS-34 AppliedImpairment of Assets IAS-36 AppliedProvisions, Contingent Liabilities and Contingent Assets IAS-37 * AppliedIntangible Assets IAS-38 * AppliedFinancial Instruments: Recognition and Measurement IAS-39 * AppliedInvestment property IAS-40 Not ApplicableAgriculture IAS-41 Not Applicable

* Subject to departure described in note 2.1** Subject to departure described in note 3.25

Standards issued but not yet effective:

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2019 and earlier application is permitted; however, the Company has not early adopted the following new or amended standards in preparing these financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group and the Bank when will be applicable.

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A. IFRS 16 Leases

As per IFRS 16 Lease, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 eliminates the classification of leases by the lessee as either finance leases or operating leases. IFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases. For lessors, IFRS 16 retains most of the requirements in IAS 17. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently. The Bank is reviewing all of the Company’s leasing arrangements in light of the new lease accounting rules in IFRS 16.

B. IFRS 17 Insurance Contracts

Insurance Contracts are effective for annual periods beginning on or after 1 January 2021. Earlier adoption is permitted. This has not been applied in preparing these consolidated and separate financial statements.

3.22 Credit Rating of the Bank

As per the BRPD circular No.6 dated 5 July 2006, the bank has done its credit rating by Credit Rating Information and Services Limited (CRISL) based on the audited financial statements dated 31 December 2017

Particulars Date of Rating Long term Short term

Surveillance Rating 28-Jun-18

AA ST-2Double A

(High quality and High Safety)

(High Grade)

Outlook Stable3.23 Correspondence items

Correspondence items are maintained to have control over all items of importance and for such transactions where the Bank has only a business responsibility and no legal commitment. Stock of travelers cheques, savings certificates, wage earners bond and others fall under the correspondence items.

3.24 Offsetting

Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group and the Bank have a legal right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRSs, or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity.

3.25 Operating segments

The Group and the Bank have no identified operating segment and as such presentation of segmental reporting is not made in the financial statements as per IFRS 8. However, geographical and business segments wise limited disclosures are furnished in Annexure-I.

3.26 Going concern basis of accounting

These financial statements have been prepared on the assessment of the Bank’s ability to continue as a going concern. The Bank has neither any intention nor any legal or regulatory compulsion to liquidate or curtail materially the scale of any of its operations. The key financial parameters (including liquidity, profitability, asset quality, provision sufficiency and capital adequacy) of the Bank continued to exhibit a healthy trend for couple of years. Besides, the management is not aware of any material uncertainties that may cast significant doubt upon the Bank’s ability to continue as a going concern.

3.27 Approval of financial statements

The financial statements were approved by the board of directors on 30 April 2018.

3.28 General

Figures of previous year have been rearranged, whenever necessary, to conform the current year’s presentation.

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Note 2018 Taka

2017 Taka

4 Consolidatedcash

In hand (including foreign currencies):Southeast Bank Limited 4.1 3,598,790,655 3,010,980,173 Southeast Exchange Company (South Africa) Pty Ltd 23 1,202 Southeast Financial Services (Australia) Pty Ltd 61,419 1,600

3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks(including foreign currencies): Southeast Bank Limited 4.1 17,916,575,574 17,968,153,354

21,515,427,671 20,979,136,329 4.1 Cash

In hand:Local currency 3,506,484,120 2,949,626,994 Foreign currencies 92,306,534 61,353,179

3,598,790,655 3,010,980,173 Balance with Bangladesh Bank:

Local currency 16,778,266,745 17,265,232,466 Foreign currencies 724,543,372 385,289,801

17,502,810,117 17,650,522,267 Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency 413,765,457 317,631,087 Balance with Bangladesh Bank and its agent banks 17,916,575,574 17,968,153,354 (including foreign currencies)

21,515,366,229 20,979,133,527 4.2 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance

with section 33 of the Bank Companies Act, 1991 (Amended up to 2013), MPD Circular nos. 4 and 5 dated 1 December 2010 and MPD Circular no. 1 and 2 dated 23 June 2014 and 10 December 2013 respectively and DOS Circular no.1 dated 19 January 2014 and MPD Circular No.1 dated 03 April 2018. The statutory Cash Reserve Ratio on the Bank's demand and time liabilities at the rate of minimum 5.0% on daily basis and 5.50% on bi-weekly basis for conventional and Islamic banking has been calculated and maintained with Bangladesh Bank in current account and 13% Statutory Liquidity Ratio for conventional banking and 5.50% Statutory Liquidity Ratio for Islamic banking on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including excess cash reserve balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below:

4.2.1 a) Cash Reserve Ratio (CRR) for Conventional Banking5.50% of average Demand and Time Liabilities: Required reserve (Average daily on bi-weekly basis) 14,738,207,613 15,168,896,737 Actual reserve held 15,113,119,138 15,784,414,510 Surplus 374,911,525 615,517,773 b) Cash Reserve Ratio (CRR) for Islamic Banking5.50% of average Demand and Time Liabilities:Required reserve (Average daily on bi-weekly basis) 1,007,891,950 819,034,223 Actual reserve held 1,058,360,221 885,851,119 Surplus 50,468,271 66,816,896

4.2.2 a) Statutory Liquidity Ratio (SLR) for Conventional BankingRequired reserve (13% of average Demand and Time Liabilities) 34,835,763,448 30,337,793,473 Actual reserve held 54,215,962,419 53,330,118,813 Surplus 19,380,198,971 22,992,325,340 Held for Statutory Liquidity Ratio of Conventional Banking:Cash in hand 3,448,576,000 2,844,590,000 Balance with agent bank (Sonali Bank Limited) as per statement 399,436,000 315,211,000 Excess cash reserve 374,911,525 615,517,773 Government Securities (HFT) 10,816,964,383 16,167,101,000 Government Securities (HTM) 39,170,936,211 33,383,358,000 Other eligible securities/ Prize Bond 5,138,300 4,341,040

54,215,962,419 53,330,118,813

373


b) Statutory Liquidity Ratio (SLR) for Islamic Banking

Required reserve (5.50 % of average Demand and Time Liabilities) 1,007,891,950 693,028,958 Actual reserve held 1,176,260,271 883,920,896 Surplus 168,368,321 190,891,938 Held for Statutory Liquidity Ratio of Islamic Banking:Cash in hand 150,220,000 166,396,000 Balance with agent bank (Sonali Bank Limited) as per statement 5,572,000 708,000 Excess cash reserve 50,468,271 66,816,896 Government Securities (HTM) 970,000,000 650,000,000

1,176,260,271 883,920,896 5 Consolidated balance with other banks and financial institutions

In Bangladesh:Southeast Bank Limited 6 3,984,794,486 3,196,881,943 Southeast Bank Capital Services Limited 23,324,151 32,538,042

4,008,118,637 3,229,419,985 Less: Inter company balance eliminated 23,324,151 32,538,042

3,984,794,486 3,196,881,943 Outside Bangladesh:

Southeast Bank Limited 6 2,272,907,523 965,226,853 Southeast Financial Services (UK) Ltd 15,447,609 10,861,425 Southeast Financial Services (Australia) Pty Ltd - 7,578 Southeast Exchange Company (South Africa) Pty Ltd 161,284,420 106,629,955

2,449,639,553 1,082,725,811 6,434,434,039 4,279,607,754

6 Balancewithotherbanksandfinancialinstitutions

In Bangladesh 6.1 3,984,794,486 3,196,881,943 Outside Bangladesh 6.2 2,272,907,523 965,226,853

6,257,702,009 4,162,108,796 Also refer to note 6.3 for maturity wise grouping

6.1 In BangladeshCurrent account with:

Agrani Bank Limited 30,576,275 575,850 Al Arafah Islami Bank Limited 79,276,813 45,265,708 Bangladesh Krishi Bank 5,116 - BRAC Bank Limited 5,001 5,001 BRAC Bank Limited (El Dorado Network) 283,060 396,695 The City Bank Limited 8,205,526 4,661,023 Commercial Bank of Ceylon PLC 13,577 13,337 EXIM Bank Limited 23,515,071 20,643,735 The Farmers Bank Limited 866,009 3,551,600 Jamuna Bank Limited 47,917,936 50,113,699 Janata Bank Limited 24,392,635 29,747 Meghna Bank Limited 19,447,552 10,255,457 Mercantile Bank Limited 25,904,570 10,779,207 Modumoti Bank Limited 1,552,095 1,561,425 Mutual Trust Bank Limited 29,407,803 23,840,589 National Bank Limited 59,408 11,520,963 NRB Commercial Bank Limited - 100,000 One Bank Limited 1,186,410 (869,991)Prime Bank Limited - 628 Rupali Bank Limited 25,000 - Shahjalal Islami Bank Limited 550,000 550,000 Sonali Bank Limited (2,166,519) (1,411,805)South Bangla Agriculture & Commerce Bank Limited 3,203,623 2,169,078 Trust Bank Limited 9 9 Union Bank Limited 25,137,481 21,993,167 United Commercial Bank Limited 36,882,184 8,547,767

356,246,634 214,292,889

Note 2018 Taka

2017 Taka

374


Short term deposits account with:AB Bank Limited 30,690 28,004 The City Bank Limited 1,148,058 1,106,755 Eastern Bank Limited 26,799 29,556 EXIM Bank Limited 505,379,124 3,510,341 Standard Chartered Bank 3,351,284 194,482 Sonali Bank Limited 28,611,897 27,719,571 Uttara Bank Limited - 345

538,547,852 32,589,054 Fixed deposits with other banks:

Commercial Bank of Ceylon Plc. - 400,000,000 Dhaka Bank Limited - 550,000,000 Jamuna Bank Limited - 250,000,000 Mutual Trust Bank Limited - 400,000,000 National Bank Limited - 500,000,000 Social Islami Bank Limited 500,000,000 - Standard Bank Limited - 300,000,000

500,000,000 2,400,000,000 Fixed deposits with financial institutions:

Bay Leasing and Investment Limited 990,000,000 450,000,000 IDLC Finance Limited 500,000,000 - Delta Brac Housing Finance Corporation Limited 500,000,000 - Bangladesh Industrial Finance Company Limited 100,000,000 100,000,000 Investment Corporation of Bangladesh 500,000,000 -

2,590,000,000 550,000,000 3,984,794,486 3,196,881,943

6.2 Outside BangladeshCurrent accountInterest bearing:

Standard Chartered Bank, New York, USA 344,142,271 86,529,828 Standard Chartered Bank, New York OBU 80,736,585 5,569,926 Citibank N.A, New York, USA 137,769,758 58,188,713 Standard Chartered Bank, London, UK 5,793,834 24,335,170 Mashreq Bank PSC, New York, USA 308,627,026 131,904,873 Wells Fargo Bank, N.A., New York, USA 4,588,519 87,426,417 Citibank AG, Frankfurt, Germany 67,721,709 54,683,457 Standard Chartered Bank, Kolkata, India 25,533,159 619,283 AB Bank Ltd., Mumbai, India 45,309,651 10,276,911 ICICI Bank Ltd., Mumbai, India 49,992,604 38,325,827 JP Morgan Chase Bank N.A., New York, USA 127,388,420 31,734,569 Habib American Bank, New York, USA 535,578,787 113,518,856 Mashreq Bank, Mumbai, India 30,091,175 33,413,883 Mashreq Bank, Mumbai, India 1,485,413 1,543,260 Sonali Bank (UK) Ltd. USD - 257,277 Sonali Bank (UK) Ltd. GBP - 3,492,835

1,764,758,909 681,821,085

Note 2018 Taka

2017Taka

375


Non-interest bearing:Bank of Sydney Ltd, Sydney 5,025,363 4,096,286 Banque Saudi Fransi, Riyadh 4,144,044 21,954,062 United Bank Limited, Karachi, Pakistan 3,694,384 3,567,858 Standard Chartered Bank, Colombo, Srilanka 29,860,364 19,877,855 Standard Chartered Bank, Mumbai (AEB), India 2,118,895 2,088,589 Bank of Tokyo, Mitsubishi, JPY 79,567,794 32,630,020 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal 27,900,081 22,317,811 Bank of Bhutan, Pheuntsholing, Bhutan 16,711,425 20,589,244 Commerz Bank AG, Frankfurt, Germany EURO 603,335 40,480,379 Commerz Bank AG, Frankfurt, Germany USD 175,698,521 40,185,050 Zuercher Kantonal Bank, Zurich, Switzerland 1,852,844 18,003,835 HDFC Bank, Mumbai, India 77,512,594 7,209,740 Habib Bank AG Zurich, Zurich, Switzerland - 328,475 Mashreq Bank PSC, Dubai, UAE 69,162,123 2,843,673 Habib Metropoliton Bank Ltd., Karachi, Pakistan 14,296,848 47,232,891

508,148,614 283,405,768 2,272,907,523 965,226,853

Details of Balance with other banks-Outside Bangladesh shown in Annexure-C.

6.3 Maturity grouping of balance with other banks and financial institutionsOn demand 3,684,700,000 1,179,519,742 Not more than three months 2,373,002,009 2,682,589,054 More than three months but not more than six months 200,000,000 300,000,000 More than six months but not more than one year - - More than one year but less than five years - - Above five years - -

6,257,702,009 4,162,108,796

7 Moneyatcallandonshortnotice

In bank: One Bank Limited 50,000,000 - National Credit and Commerce Bank Limited 100,000,000 350,000,000 National Bank Limited 700,000,000 - Citi Bank N. A 500,000,000 - Dhaka Bank Limited 300,000,000 - Uttara Bank Limited 1,000,000,000 - Standard Bank Limited - 150,000,000 The ICB Islamic Bank Limited 11,300,000 11,300,000 The City Bank Limited 850,000,000 600,000,000

3,511,300,000 1,111,300,000 In non-banking financial institutions (public and private):

Bay Leasing and Investment Limited 410,000,000 340,000,000 Delta BRAC Housing Finance Corporation Limited 300,000,000 80,000,000 Investment Corporation of Bangladesh 390,000,000 500,000,000 IDLC Finance Limited 390,000,000 - IPDC Finance Limited 50,000,000 -

1,540,000,000 920,000,000

Note 2018 Taka

2017 Taka

376


In foreign currency: BRAC Bank Limited - 330,800,000 Dhaka Bank Limited - 165,400,000 Eastern Bank Limited 587,300,000 413,500,000 Mercantile Bank Limited - 330,800,000 Mutual Trust Bank Limited 251,700,000 - NCC Bank Limited 335,600,000 - Pubali Bank Limited 251,700,000 - Rupali Bank Limited - 124,050,000 The City Bank Limited 419,500,000 - Shahjalal Islami Bank Limited - 165,400,000 United Commercial Bank Limited - 82,700,000

1,845,800,000 1,612,650,000 6,897,100,000 3,643,950,000

8 Consolidated Investments

Government securities:Southeast Bank Limited 9 50,963,038,896 50,204,799,973

50,963,038,896 50,204,799,973 Others:

Southeast Bank Limited 9 11,920,717,298 10,118,368,557 Southeast Bank Capital Services Limited 2,725,796,239 2,587,875,942

14,646,513,537 12,706,244,499 65,609,552,433 62,911,044,472

9 Investments

Government securities:Conventional Banking 9.1.1 49,993,038,896 49,554,799,973 Islamic Banking 9.2.1 970,000,000 650,000,000

50,963,038,896 50,204,799,973 Others:

Conventional Banking 9.1.2 8,675,863,435 7,327,778,746 Islamic Banking 9.2.2 3,244,853,863 2,790,589,811

11,920,717,298 10,118,368,557 62,883,756,194 60,323,168,530

Also refer to notes 9.3 to 9.8 for further analysis, maturity wise grouping, market value information, sector wise investment, etc.

9.1 Conventional Banking9.1.1 Government Securities

Treasury Bills91 days Treasury Bills - - 364 days Treasury Bills 968,626,000 -

968,626,000 - Add: Reverse repo with other banks 1,002,951,720 -Less:Assured Repo with Bangladesh Bank/ Others (at book value) - -

1,971,577,720 -

Prize Bonds 5,138,300 4,341,040 Bangladesh Bank Bills - -

5,138,300 4,341,040

Note 2018 Taka

2017Taka

377


Note 2018 Taka

2017Taka

Government Bonds2 Years BGTB HTM - 1,000,090,436 5 Years BGTB HTM 8,720,163,602 5,175,910,399 10 Years BGTB HTM 14,729,336,147 13,916,649,159 15 Years BGTB HTM 7,485,640,185 6,490,177,303 20 Years BGTB HTM 7,269,670,916 5,836,710,538 Remeasured 10 years BGTB HTM 966,125,363 963,820,461 2 Years BGTB HFT 2,129,280,900 785,868,231 5 Years BGTB HFT 2,892,653,054 8,536,183,353 10 Years BGTB HFT 3,088,755,189 6,551,995,373 15 Years BGTB HFT 18,453,195 138,217,259 20 Years BGTB HFT 17,774,846 154,836,421

47,317,853,396 49,550,458,933 Add: Reverse repo with other banks (at book value) 698,469,480 - Less: Assured Repo with Bangladesh Bank/ Others (at book value) - -

48,016,322,876 49,550,458,933 49,993,038,896 49,554,799,973

9.1.2 OthersShares in listed companies 1,648,793,522 1,566,290,136 Shares in un-listed companies 77,069,912 61,488,610 Bonds 6,950,000,000 5,700,000,000

8,675,863,435 7,327,778,746 9.2 Islamic banking9.2.1 Government securities

Bangladesh Government Islamic bond 970,000,000 650,000,000 970,000,000 650,000,000

9.2.2 OthersShares in listed companies 3,244,853,863 2,790,589,811

3,244,853,863 2,790,589,811 9.3 Investments classified as per Bangladesh Bank Circular

Held for trading (HFT) 10,816,964,383 16,171,441,677 Held to maturity (HTM) 40,146,074,513 34,033,358,296 Other securities 11,920,717,298 10,118,368,557

62,883,756,194 60,323,168,530 9.4 Maturity-wise grouping of investments

On demand 5,138,300 4,341,040 Not more than three months 1,607,800,000 2,621,953,085 More than three months but not more than one year 8,230,800,000 10,367,319,260 More than one year but not more than five years 30,097,800,000 21,622,020,484 Above five years 22,942,217,894 25,707,534,661

62,883,756,194 60,323,168,530

9.5 Cost and market value of investments9.5.1 Government securities

2018 2017 Cost price

Taka Market price

Taka Market price

Taka Conventional BankingTreasury Bills 1,981,126,860 1,971,577,720 - Bangladesh Government Treasury Bond 48,279,121,365 48,016,322,876 49,550,458,933 Prize Bonds 5,138,300 5,138,300 4,341,040

50,265,386,525 49,993,038,896 49,554,799,973 Islamic BankingBangladesh Government Islamic Bond 970,000,000 970,000,000 650,000,000

51,235,386,525 50,963,038,896 50,204,799,973

378


9.5.2 Others (Investment in Shares)2018 2017

Market price Taka

Cost price Taka

Cost price Taka

Conventional BankingShares in listed companies 1,457,958,207 1,648,793,522 1,566,290,137 Shares in un-listed companies 77,069,912 77,069,912 61,488,610

1,535,028,119 1,725,863,435 1,627,778,747 Islamic Banking

Shares in listed companies 2,623,643,648 3,244,853,863 2,790,589,811 2,623,643,648 3,244,853,863 2,790,589,811

Shares in listed companiesInvestments have been recorded at cost and adequate provision has been maintained for probable future losses as per Bangladesh Bank guidelines. Market value of shares has been determined on the basis of the value of shares at the last trading day of the year.Details are shown in Annexure-D.

9.6 Sector wise investment of shares 2018 2017

Market price Taka

Cost price Taka

Cost price Taka

Shares in listed companies (A)

Banks and NBFI 905,392,651 1,681,086,860 1,473,501,914 Insurance Companies 1,209,410,507 861,676,102 718,797,113 Fuel and Power Companies 274,925,783 381,160,963 246,110,932 Mutual Fund 366,656,060 293,475,095 305,380,556 Manufacturing & Other 1,325,216,854 1,676,248,365 1,613,089,433

4,081,601,855 4,893,647,386 4,356,879,948

2018 2017Net Book Vaiue

Taka Cost price

Taka Cost price

Taka Shares in un-listed companies (B)Banks and NBFI 114,666,920 54,183,820 54,183,820 Others 31,170,812 22,886,092 7,304,790

145,837,732 77,069,912 61,488,610 Total investment of shares (C=A+B) 4,970,717,298 4,418,368,558 The investments in shares of unlisted companies are shown at cost or net book value of the last audited balance sheet, whichever is lower.

9.7 Market price and cost price of investments in ordinary shares as on 31 Dec 2018

SL. no. Name of the Company

2018 Differences (Provision to be required)

Taka Market price

Taka Cost price

Taka 1 Asia Insurance 36,732,745 76,805,098 (40,072,353)2 ACME Laboratories Limited 271,114,144 176,276,266 94,837,878 3 BAY Leasing and Investment Limited 280,453,126 653,782,763 (373,329,637)4 EXIM Bank Ltd. 192,288,092 370,656,956 (178,368,864)5 EXIM Bank 1ST MF 31,156,060 43,475,095 -6 Lafarge Holcim Bangladesh Limited 43,500,000 89,321,368 (45,821,368)7 Delta Life 7,502,195 12,382,964 (4,880,769)8 National Life Insurance Company Limited 1,165,175,567 772,488,040 392,687,527 9 Prime Bank Limited 315,083,937 460,263,791 (145,179,854)

10 SEBL1ST MF 335,500,000 250,000,000 85,500,000 11 ACI Formulation 7,690,000 10,738,662 (3,048,662)12 AFC Agro Biotech Limited 26,514,653 36,946,327 (10,431,674)

379




Taka Market price

Taka Cost price

Taka 13 Active Fine Chemicals 18,053,155 21,204,434 (3,151,279)14 AMAN Feed Limited 9,101,682 12,573,171 (3,471,489)15 Aftab Automobiles Limited 85,682,310 145,359,192 (59,676,882)16 Apolo Ispat 42,364,587 79,356,578 (36,991,991)17 Argon Denim 17,316,130 22,675,929 (5,359,799)18 Barka Power 65,743,532 80,616,388 (14,872,856)19 BANGAS Limited 12,692,048 11,020,775 1,671,273 20 Bangladesh Building Systems 40,656,000 54,399,157 (13,743,157)21 BD COM 25,135,302 29,697,505 (4,562,203)22 BD FINANCE Limited 2,330,900 2,886,450 (555,550)23 Bangladesh Thai Aluminium Limited 35,454,308 42,868,798 (7,414,490)24 Beximco Limited 35,655,375 44,103,746 (8,448,371)25 Bangladesh Shipping Corporation Limited 38,341,485 49,874,160 (11,532,675)26 BSCCL 34,904,672 58,527,823 (23,623,151)27 BSRM Limited 36,959,783 56,679,577 (19,719,794)28 BSRM Steel Mills Limited 4,585,944 7,019,678 (2,433,734)29 Bashundara Paper Mills Limited 7,542,000 11,647,591 (4,105,591)30 Central Pharma 4,725,204 9,391,717 (4,666,513)31 The City Bank Limited 634,200 824,675 (190,475)32 Confidence Cement 46,812,600 47,548,604 (736,004)33 Doreen Power 17,753,780 23,687,937 (5,934,157)34 DESHBANDHU Polymer Limited 1,320,000 1,980,641 (660,641)35 Eastern Bank Limited 4,320,000 4,564,389 (244,389)36 Eastern Housing Limited 15,800,848 18,217,288 (2,416,440)37 Fuwang Ceramic 6,960,583 7,967,868 (1,007,285)38 FOURTUNE Shoes Limited 3,100,000 3,383,480 (283,480)39 Golden Harvest Limited 14,865,833 18,665,067 (3,799,234)40 Global Heavy Chemical Limited 23,807,785 34,247,190 (10,439,405)41 GPH Ispat Limited 45,515,852 47,043,199 (1,527,347)42 ICB 19,799,899 27,605,297 (7,805,398)43 Indo Bangla Pharmacitical Limited 9,159 2,677 6,482 44 International Leasing Limited 17,955,794 24,424,191 (6,468,397)45 INTRACO Refuling Station Limited 3,114,141 4,977,033 (1,862,892)46 Islami Bank 9,680,000 15,986,816 (6,306,816)47 Khulna Power Company Limited 65,647,786 116,697,597 (51,049,811)48 Kattli Textile Limited 280,081 100,640 179,441 49 LankaBangla Finance Limited 37,412,955 63,609,848 (26,196,893)50 Matin Spinning Limited 11,315,640 14,044,434 (2,728,794)51 Mozaffar Hossain Spinning Mills Limited 10,780,473 20,059,098 (9,278,625)52 MJL Limited 17,707,200 21,016,635 (3,309,435)53 Meghna Petroleum Limited 18,890,930 22,603,106 (3,712,176)54 METROSPIN 816,000 1,184,469 (368,469)55 MLDYEING 125,603 35,242 90,361 56 National Polymar 5,446,666 6,271,005 (824,339)57 National Tubes Limited 43,346,600 49,167,648 (5,821,048)58 Olympic Accessories Limited 34,585,798 60,671,590 (26,085,792)59 OLYMPIC Limited 10,810,000 12,280,119 (1,470,119)60 Oimex Electrode Limited 164,505 193,491 (28,986)61 Orion Pharma 44,302,821 61,952,895 (17,650,074)62 Padma Oil Company Limited 11,196,944 12,487,427 (1,290,483)63 Premier Cement 39,103,531 57,393,541 (18,290,010)64 Premier Leasing 7,178,100 15,325,745 (8,147,645)65 Prime Finance Limited 7,643,035 26,958,933 (19,315,898)66 PRIMETEX Limited 7,233,429 8,288,244 (1,054,815)

380




Taka Market price

Taka Cost price

Taka 67 Paramount Textile Limited 1,153,250 1,085,254 67,996 68 RN Spinning 6,095,525 12,812,929 (6,717,404)69 RSRM STEEL Limited 53,140,758 77,550,224 (24,409,466)70 Saif Power Tec Limited 9,821,370 13,859,527 (4,038,157)71 SALAMCRST 22,954,800 31,969,454 (9,014,654)72 SAPORTL 18,055,952 31,409,800 (13,353,848)73 SILVA Pharmacitical Limited 276,709 91,930 184,779 74 Shasha Denim Limited 21,874,604 23,475,673 (1,601,069)75 Shahjibazar Power Company Limited 58,586,400 79,199,118 (20,612,718)76 Summit Power 4,138,970 4,622,232 (483,262)77 SKTRIMS 256,738 50,410 206,328 78 Titas Gas 5,460,000 7,670,726 (2,210,726)79 United Finance 10,612,613 14,197,006 (3,584,393)80 United Power Generation 6,686,100 7,582,764 (896,664)81 VFS Thread Deying Limited 244,072 38,388 205,684 82 WMSHIPYARD Sheppeard Limited 5,014,800 6,603,030 (1,588,230)83 Zahen Spinning 18,066,097 33,151,273 (15,085,176)84 Runner auto IPO 1,080,825 1,080,825 - 85 AND Telecom 569,040 569,040 - 86 SSSTEEL 134,920 134,920 - 87 Genex Infor 104,660 104,660 - 88 Esqure net IPO 1,880,145 1,880,145 -

4,081,601,855 4,893,647,386 (799,726,496)Actual provision 799,726,500 Surplus/(deficit) 4

9.8 Transactions of Repo and Reverse-repo during the yearMinimum

outstandingTaka

Maximum outstanding

Taka

Daily average outstanding

Taka 2018Securities sold under repo

i) With Bangladesh Bank - - - ii) With other Banks & FIs 156,713,657 1,535,260,080 47,674,919

Securities purchased under reverse repoi) With Bangladesh Bank - - - ii) With other Banks & FIs 157,743,152 1,217,850,720 79,343,498

2017Securities sold under repo

i) With Bangladesh Bank - - - ii) With other Banks & FIs 198,581,600 2,719,035,691 222,494,944

Securities purchased under reverse repoi) With Bangladesh Bank - - - ii) With other Banks & FIs 79,662,345 1,091,344,540 31,173,092

381


10 Consolidatedloansandadvances/investments

Loans, cash credit, overdrafts etc./investments:Southeast Bank Limited 11 252,933,241,876 221,191,785,619 Southeast Bank Capital Services Limited 2,467,417,246 2,465,716,400

255,400,659,122 223,657,502,019 Less: Inter company balance eliminated -

255,400,659,122 223,657,502,019 Bills purchased and discounted:

Southeast Bank Limited 11 12,270,968,683 10,659,214,310 12,270,968,683 10,659,214,310

267,671,627,805 234,316,716,329 11 Loansandadvances/investments

Loans, cash credit, overdrafts etc./investments 11.1 252,933,241,876 221,191,785,619 Bills purchased and discounted 11.14 12,270,968,683 10,659,214,310

265,204,210,559 231,850,999,929 11.1 Loans, cash credit, overdrafts etc./Investments

In Bangladesh:Conventional BankingDemand loan 7,446,663,360 6,523,478,141 Time loan 27,005,835,559 25,706,837,604 Term loan 99,358,892,070 79,529,348,385 Agricultural credit-Term 995,463,927 1,673,427,615 Agricultural credit-Time 1,163,473,709 1,661,209,453 Agricultural credit-OD 189,825,090 185,519,891 Consumer credit scheme 2,988,823 3,963,882 Car loan 128,683,786 109,247,296 Personal loan 478,889,995 473,932,761 Home loan 1,256,450,806 948,808,661 Rural Home Loan 170,362,632 - Loan against - LTFF 174,436,799 - Loan against GTF 10,864,315 - Cash credit and overdrafts 58,603,918,907 52,900,215,618 Bills Against Letter of Credit (BLC) 120,286,863 1,009,677,345 Loan re-finance housing sector 15,557,895 18,246,407 Loan against Trust Receipt (LTR) 16,566,111,770 17,985,066,720 Advances-packing credit (PC) 3,210,961,945 3,564,356,842 Loan against foreign bills 120,081,946 97,119,159 House building loan-staff 365,431,298 272,796,136 Digital device 45,859 22,444 Export Development Fund (EDF) 18,199,188,944 12,931,627,959 Loan against cash incentive 132,117,051 79,738,862 Loan-credit card 1,889,094,911 1,553,275,922

237,605,628,260 207,227,917,101 Islamic BankingDemand investment 528,987,815 414,036,921 Bai-Muajjal (Time) investment 195,402,971 399,099,215 Bai-Muajjal Time under CCS 79,622,265 74,507,241 Bai-Murabaha-BLC - 28,009,964 Bai-Murabaha-LTR 1,193,826,782 800,511,034 Bai-Salam (advances-packing credit) 149,133,314 64,089,258 Staff house building investment 16,635,522 12,806,256 Export Development Fund (EDF) 773,063,701 712,130,203 Investment against cash incentive 17,131,016 19,626,562 Bai-Muajjal-investment 3,833,616,144 3,668,800,807 Murabaha-investment 617,028,554 639,319,763 Hire purchase-investment 7,923,165,532 7,130,931,292

15,327,613,616 13,963,868,518 252,933,241,876 221,191,785,619

Outside Bangladesh - - 252,933,241,876 221,191,785,619

Note 2018 Taka

2017 Taka

382


11.2 Performing loans and advances/investments

Gross loans and advances/investments 265,204,210,559 231,850,999,929 Non-performing loans and advances/investments (15,558,851,040) (13,878,533,441)

249,645,359,519 217,972,466,488

11.3 Maturity-wise grouping of loans and advances/investments

On demand 35,920,100,000 53,542,866,451 Less than three months 42,398,300,000 30,554,565,718 More than three months but less than one year 93,389,800,000 67,733,374,239 More than one year but less than five years 55,815,500,000 49,479,816,953 More than five years 37,680,510,559 30,540,376,568

265,204,210,559 231,850,999,929

11.4 Concentration of loans and advances/investments

Advances to allied concerns of directors - -Advances to chief executive and other senior executives 121,693,360 102,834,000Advances to customers' group:

Advances to large and medium industries 180,151,419,488 144,177,565,166 Advances to small and cottage industries 12,993,557,061 8,823,634,834 Commercial Loans 43,670,568,760 47,819,953,689 Consumer Credit 4,052,000,000 3,449,384,677 Off-shore Banking Loans 11,744,269,214 8,124,620,108 Other loans and advances 12,470,702,676 19,353,007,455

265,204,210,559 231,850,999,929

Details of large loan/investments

As at 31 December 2018 there were 34 (2017:29) clients with whom amount of outstanding loans and advances exceeded 10% of the total capital of the Bank. Total capital of the Bank was Tk 38,755.80 million as at 31 December 2018 (Tk. 33,679.04 million as at 31 December 2017).The Bank complies with the requirements of the section 26 (b) of the Bank Companies Act 1991 as amended in 2013 in connection with the general limitations of credit line.Details are shown in Annexure-D.

11.5 Sector-wise allocation of loans and advances 2018 2017

% of total loan

Taka % of total loan

Taka

Agriculture 0.99% 2,630,200,000 1.48% 3,432,400,000 Industrial (Manufacturing) 47.98% 127,250,714,579 43.06% 99,834,698,971 Industrial (Services) 16.26% 43,128,100,528 15.73% 36,476,966,000 Export Financing 8.68% 23,019,757,073 7.49% 17,371,600,000 Commercial Loans 16.47% 43,670,568,760 20.63% 47,819,953,689 Consumer Credit 1.53% 4,052,000,000 1.49% 3,449,384,677 Others:

a) Off-shore Banking Loans 4.43% 11,744,269,214 3.50% 8,124,620,108 b) Finance to NBFIs 0.60% 1,582,459,039 0.74% 1,718,300,000 c) Loans to Capital Market 0.54% 1,436,350,764 0.52% 1,214,900,000 d) Miscellaneous 2.52% 6,689,790,600 5.35% 12,408,176,484

100.00% 265,204,210,559 100.00% 231,850,999,929

Note 2018 Taka

2017Taka

383


Note 2018Taka

2017Taka

11.6 Industry-wise loans and advances (Industrial Loan)Ready Made Garment industries Loan (RMG) 50,850,227,088 42,784,200,000 Real Estate industries 20,733,831,268 19,027,600,000 Textile industries 15,234,847,108 15,926,800,000 Agro-Based Industries 13,015,700,000 10,716,234,000 Cement & Ceramics industries 6,316,200,000 5,364,057,313 Ship Breaking & Ship Building industries 4,934,201,824 5,117,000,000 Pharmaceuticals industries 1,870,500,000 1,226,120,300 Other Industries 80,189,496,736 52,839,188,388

193,145,004,024 153,001,200,000 Figures of previous year have been rearranged in notes no: 11.4 , 11.5 and 11.6 to conform the current year’s presentation

11.7 Category-wise Small Medium Enterprise loans and advances (SME)

Service sector 18,175,639,030 11,190,600,000 Trading sector 25,165,945,179 18,907,900,000 Industrial sector 30,428,060,601 9,456,700,000

73,769,644,810 39,555,200,000

11.8 Geographical location-wise allocations of loans and advances 2018 2017

% of total loan


Taka

Urban:Dhaka region 74.35% 197,182,734,167 70.60% 163,690,795,982 Chittagong region 15.92% 42,216,725,245 18.54% 42,983,259,723 Rajshahi region 1.89% 5,014,000,055 1.96% 4,537,207,496 Sylhet region 1.22% 3,238,713,660 1.41% 3,279,114,783 Khulna region 0.55% 1,470,516,829 0.73% 1,700,376,628 Rangpur region 0.32% 836,234,155 0.35% 818,059,650 Barisal region 0.08% 220,365,353 0.08% 180,987,657 Mymensingh region 0.15% 386,439,156 0.17% 385,638,011

94.48% 250,565,728,620 93.84% 217,575,439,930 Rural:

Dhaka region 2.94% 7,792,380,927 3.27% 7,574,813,414 Chittagong region 1.80% 4,769,399,131 1.89% 4,390,520,410 Sylhet region 0.37% 969,841,873 0.39% 907,113,613 Rajshahi region 0.16% 425,224,948 0.24% 561,204,488 Khulna region 0.26% 681,635,060 0.36% 841,908,074

5.52% 14,638,481,939 6.16% 14,275,559,999 100.00% 265,204,210,559 100.00% 231,850,999,929

11.9 Classification of loans and advances

2018 2017

% of total loan


Taka

Unclassified:Standard including staff loan 90.53% 240,083,546,744 88.67% 205,583,791,156 Special Mention Account (SMA) 3.61% 9,561,812,775 5.34% 12,388,675,332

94.13% 249,645,359,519 94.01% 217,972,466,488

384


Classified:Sub-standard 0.06% 171,210,454 0.54% 1,244,359,189 Doubtful 0.14% 359,641,627 0.32% 753,245,200 Bad/loss 5.67% 15,027,998,959 5.12% 11,880,929,051

5.87% 15,558,851,040 5.99% 13,878,533,441 100.00% 265,204,210,559 100.00% 231,850,999,929

2018Taka

2017Taka

11.10 Particulars of loans and advances

i) Debts considered good in respect of which the bank is fully secured; 227,388,609,049 174,834,922,331

ii) Debts considered good for which the bank holds no other security than the debtors’ personal security; 14,096,135,395 32,167,636,499

iii) Debts considered good secured by the personal liabilities of one or more parties in addition to the personal security of the debtors;

23,709,761,059 24,848,441,099

iv) Debts adversely classified; provision not maintained - -v) Debts due by directors or officers of the bank or any of

them either severally or jointly with any other persons; 375,355,363 284,774,135

vi) Debts due by companies or firms in which the directors or officers of the bank are interested as directors, partners or managing agents or, in case of private companies, as members;

- -

vii) Maximum total amount of advances, including temporary advances made any time during the year to directors or managers or officers of the bank or any of them either severally or jointly with any other persons;

375,355,363 284,774,135

viii) Maximum total amount of advances, including temporary advances granted during the year to companies or firms in which the directors of the bank are interested as directors, partners or managing agents or, in case of private companies, as members;

- -

ix) Due from banking companies; - -x) Classified loans/investments for which interest has not

been charged:(a) Increase/(decrease) of provision (specific) 3,333,219,044 2,900,396,650

Amount of debts written off 2,044,946,488 1,030,097,472 Amount realised against the debts previously written off 404,812,584 154,213,601

(b) Provision against the debt classified as bad/loss at the date of balance sheet 7,024,062,597 4,982,251,548

(c) Amount of interest charged in suspense account 5,995,927,271 4,402,732,281

xi) Loans written off:

- Current year 2,538,512,754 1,286,795,227 Cumulative to-date 12,216,835,740 10,209,184,626

- The amount of written off loans for which lawsuit filed 12,216,835,740 10,209,184,626

2018 2017

% of total loan


Taka

385


11.11 Particulars of required provision for loans and advances/investments

Status

2018 2017Outstanding as at 31 Dec

2018Taka

Base for provision

Taka

% of required provision

Required provision

Taka

Required provision

Taka

For loans and advances/Investments:Unclassified-general provisionAll unclassified loans(other than small enterprises, housing finance, Loan to MBs loans for professional, consumer financing and special mention account) 169,795,101,016 169,795,101,016 1%

1,697,951,010

1,642,933,199

Small and medium enterprise financing 63,264,434,215 63,264,434,215 0.25% 158,161,088 85,799,421 Loan to BHs/MBs/SDs against shares 1,436,350,764 1,436,350,764 2% 28,727,015 24,297,408 Housing and loan for professional 1,519,081,966 1,519,081,966 1%-2% 15,971,406 21,501,397 Consumer finance 2,430,853,320 2,430,853,320 2%-5% 67,997,386 56,535,590 Agriculture finance 1,262,896,159 1,262,896,159 1%-5% 12,628,962 23,945,436 Staff loan 374,829,304 374,829,304 1% 3,748,293 2,839,626 Special Mention Account (SMA) 9,561,812,775 9,333,771,432 0.25%-5% 97,181,570 145,454,148

2,082,366,729 2,003,306,225 Classified-specific provision:Sub-standard 171,210,454 119,381,536 5%-20% 20,020,046 110,536,686 Doubtful 359,641,627 228,991,968 5%-50% 113,035,177 170,892,722 Bad/loss 15,027,998,959 7,024,062,597 100% 7,024,062,597 4,982,251,548

265,204,210,559 256,789,754,276 7,157,117,820 5,263,680,956

Required provision for loans and advances (A) 9,239,484,549 7,266,987,181

Total provision maintained (B) 13,283,300,001 10,069,290,980

Excess provision as at 31 December (C=B-A) 4,043,815,452 2,802,303,797

Note 2018Taka

2017Taka

11.12 Suits filed by the Bank (Branch wise details)

Aganagar Branch 20,606,565 24,601,270 Agargaon Branch 28,740,963 106,715,269 Agrabad Branch 3,559,051,883 3,533,041,603 Banani Branch 1,011,368,047 1,011,368,047 Bandar Bazar Branch 49,554,021 49,554,021 Bandura Branch 5,660,298 - Baneshwar Branch 10,773,766 - Bangshal Branch 731,009,992 729,354,206 Bashundhara Branch 20,976,301 - Bashurhat Branch 3,108,991 - Biswanath Branch 2,083,587 - Bogra Branch 394,934,357 118,153,762 Brahmanbaria Branch 14,126,982 14,126,982 CDA Avenue Branch 1,303,347,718 1,279,158,963

386


Chapainawabgonj Branch 7,964,715 7,964,715 Chowdhuryhat Branch 7,777,683 - Chouhatta Branch 35,429,721 29,324,351 Chowmuhoni Branch 28,016,032 28,016,032 Comilla Branch 47,265,325 - Companygonj Branch 12,162,624 - Corporate Branch 97,479,009 56,546,456 Cox's Bazar Branch 372,592,835 81,196,958 Dhanmondi Branch 1,956,729,814 1,840,299,125 Dinajpur Branch 15,224,750 11,277,731 Donia Branch 4,345,474 - Gulshan Branch 588,769,873 119,450,152 Halishahar Branch 2,035,945,543 2,018,990,181 Hathazari Branch 6,086,747 6,086,747 Hemayetpur Branch 3,590,035 - Hetimgonj Branch 4,720,580 - Imamgonj Branch 298,675,545 298,675,545 Jessore Branch 78,422,418 73,008,143 Jubilee Road Branch 42,730,094 41,758,043 Kakrail Branch 116,570,126 41,352,380 Kawranbazar Branch 298,470,311 297,083,230 Khatungonj Branch 1,222,123,411 859,750,230 Khulna Branch 98,484,842 98,484,842 Konabari Branch 1,862,261 1,862,261 Kotowali Branch 102,783,756 88,541,987 Kulaura Branch 6,965,264 6,965,264 Lohagara Branch 5,020,503 5,020,503 Laldighirpar Branch 142,833,996 113,465,769 Madambibirhat Branch 133,373,278 73,945,318 Madhabdi Branch 56,355,195 56,355,195 Mawna Branch 1,968,254 - Mirpur Branch 14,659,835 - Mohakhali Branch 52,035,572 - Mohammadpur Branch 969,386,296 16,555,592 Momin Road Branch 506,269,625 280,105,740 Motijheel Branch 185,545,788 185,545,788 Mouchak Branch 129,189,304 101,910,981 Moulvibazar Branch 176,748,221 176,748,221 Naogaon Branch 44,418,957 45,095,755 Narayangonj Branch 61,570,175 67,174,359 New Elephant Road Branch 1,160,344,705 509,137,748 New Eskaton Branch 265,105,816 171,613,578 Oxygenmore Branch 7,253,948 7,253,948 Pahartoli Branch 826,535,766 826,535,766 Pathantula Branch 6,287,866 - Principal Branch 7,533,160,574 5,860,973,599 Progoti Soroni Branch 358,264,233 235,817,088 Rajshahi Branch 558,348,642 - Rangpur Branch 71,809,059 - Rupnagar Branch 18,177,710 6,068,408 Sat Mashjid Road Branch 24,402,722 - Savar Branch 1,992,139 - Shyamoli Branch 80,148,835 73,453,562 Shahjalal Uposhahar Branch 111,505,535 141,598,745 Sir Iqbal Road Branch 14,315,940 14,315,940 Uttara Branch 265,683,942 265,683,942

28,429,244,691 22,107,084,042

Note 2018Taka

2017Taka

387


11.13 Listing of assets pledged as security/collaterals

Nature of the secured assetsShares & Securities 1,628,543,392 2,393,560,755 Merchandise 3,121,194,707 1,979,609,787 Machinery with other fixed asset and financial obligation 6,294,508,398 9,573,750,430 Real estate with financial obligation 207,857,846,545 170,418,844,517 Financial obligation only 8,110,762,157 12,008,281,446 (Insurance policies, savings certificates, bank deposit etc)Miscellaneous-i) Crops/stock of crops hypothecation 974,760,191 628,811,625 ii) Guarantee of individuals/institutions 27,346,728,778 28,608,939,170 ii) Others 9,869,866,390 6,239,202,199

265,204,210,559 231,850,999,929

11.14 Bills purchased and discountedConventional Banking

In Bangladesh 3,591,727,500 3,358,027,075 Outside Bangladesh 8,322,147,295 7,027,904,759

11,913,874,795 10,385,931,834 Islamic Banking

In Bangladesh 357,093,888 255,665,585 Outside Bangladesh - 17,616,891

357,093,888 273,282,476 12,270,968,683 10,659,214,310

11.15 Maturity grouping of bills discounted and purchasedWithin one month 5,422,081,397 3,279,484,642 More than one month but less than three months 3,318,600,047 3,480,327,845 More than three months but less than six months 3,060,593,182 2,540,297,150 More than six months 469,694,057 1,359,104,673

12,270,968,683 10,659,214,310 11.16 Information about restructured loan as per Bangladesh Bank’s BRPD Circular no. 4 dated 29 January 2015

Loans amounting to Tk. 3,103.80 million (outstanding Tk.2,798.60 million as on 31 December 2018) of Keya Group, Gulshan Branch, Dhaka have been restructured by extension of validity of Term Loan for 12-years & conversion of demand loan into 06-years Term Loan including one year moratorium under the purview of BRPD Circular # 04 dated 29 January 2015. The status of the loans is unclassified and reported as SMA as per Bangladesh Bank’s guidelines. Accordingly, 2% provision has been made.

12 Consolidatedfixedassetsincludingpremises,furnitureandfixtures

Cost:Southeast Bank Limited 13 11,176,783,549 10,801,983,699 Southeast Bank Capital Services Limited 742,249,436 742,188,636 Southeast Financial Services (UK) Ltd 9,604,648 9,920,029 Southeast Financial Services (Australia) Pty Ltd 2,520,519 2,752,018 Southeast Exchange Company (South Africa) Pty Ltd 8,484,453 6,562,436

11,939,642,605 11,563,406,818 Less: Accumulated depreciationSoutheast Bank Limited 13 2,394,419,803 2,093,414,431 Southeast Bank Capital Services Limited 192,997,136 134,020,673 Southeast Financial Services (UK) Ltd 8,193,109 8,161,521 Southeast Financial Services (Australia) Pty Ltd 1,919,000 1,999,468 Southeast Exchange Company (South Africa) Pty Ltd 4,818,396 4,014,599

2,602,347,445 2,241,610,692 Written down value at the end of the year 9,337,295,160 9,321,796,126 There were no capitalized borrowing cost related to the acquisition of fixed assets during the year (2017: nil).Details of consolidated amounts have not been provided as such amounts are insignificantly different from those of the Banks.

Note 2018 Taka

2017 Taka

388


13 Fixedassetsincludingpremises,furnitureandfixtures

Cost:Land 5,797,250,693 5,770,913,319 Buildings 1,989,262,277 1,897,220,492 Furniture and fixtures 1,331,911,302 1,205,150,111 Office appliances 15,282,870 14,620,108 Computer 272,016,322 255,021,073 Electrical appliances 1,387,170,289 1,310,729,568 ATM Booth 252,882,264 207,974,413 Motor vehicles 131,007,532 140,354,615

11,176,783,549 10,801,983,699 Less: Accumulated depreciation

Buildings 526,877,198 469,770,862 Furniture and fixtures 640,658,640 571,449,165 Office appliances 10,185,235 9,087,575 Computer 128,482,224 93,708,239 Electrical appliances 857,053,965 743,073,333 ATM Booth 130,074,144 105,072,021 Motor vehicles 101,088,397 101,253,236

2,394,419,803 2,093,414,431 Written down value at the end of the year 8,782,363,746 8,708,569,268 Details are shown in Annexure-E.

14 Consolidatedotherassets

Southeast Bank Limited 15 9,554,422,290 9,241,315,075 Southeast Bank Capital Services Limited 111,001,319 98,363,419 Southeast Financial Services (UK) Ltd 1,842,676 13,328,299 Southeast Financial Services (Australia) Pty Ltd 718,855 2,377,516 Southeast Exchange Company (South Africa) Pty Ltd 1,530,861 272,024

9,669,516,001 9,355,656,333 Less:

Investment in subsidiary: In Bangladesh 5,489,930,000 5,452,930,000 Outside Bangladesh 65,100,021 65,100,021

5,555,030,021 5,518,030,021 Intercompany balance 4,244,208 1,823,132

4,110,241,772 3,835,803,180

15 Otherassets 9,554,422,290 9,241,315,075

15.1 Classification of other assets

i) Investment in shares of subsidiary companies:- In Bangladesh 15.3 5,489,930,000 5,452,930,000 - Outside Bangladesh 15.4 65,100,021 65,100,021

ii) Stationery, stamps, printing materials, etc. 42,239,443 57,534,926 iii) Advance rent and advertisement 343,744,413 368,571,028 iv) Interest accrued on investment but not collected,

commission and brokerage receivable on shares and debentures, and other income receivables

1,585,574,838 1,458,019,937

v) Security deposits 4,622,119 3,017,779 vi) Preliminary, formation and organisational expenses,

renovation, development and prepaid expenses 1,185,521,300 829,109,496 vii) Suspense account 49,531,540 159,698,380 viii) Others 788,158,615 847,333,508

9,554,422,290 9,241,315,075

Note 2018Taka

2017Taka

389


Note 2018Taka

2017Taka

15.2 Non-income generating other assets

i) Stationery, stamps, printing materials, etc. 42,239,443 57,534,926 ii) Advance rent and advertisement 343,744,413 368,571,028 iii) Suspense account 49,531,540 159,698,380 iv) Preliminary, formation and organisational expenses,

renovation, development and prepaid expenses 1,185,521,300 829,109,496 1,621,036,697 1,414,913,830

15.3 Investment in shares of subsidiary company in Bangladesh

Cost 5,489,930,000 5,489,930,000 Provision for impairment loss - (37,000,000)

5,489,930,000 5,452,930,000 15.4 Investment in shares of subsidiary companies outside Bangladesh

Cost 113,660,069 113,660,069 Provision for impairment loss (48,560,048) (48,560,048)

65,100,021 65,100,021

15.5 Particulars of required provision for other assets Base for provision Rate (%) Taka

2018Legal expenses for defaulting borrowings 12,433,639 50% 6,216,819 Legal expenses for defaulting borrowings 63,542,575 100% 63,542,575 Others - 50% - Others 145,000,000 100% 145,000,000 Protested bills 3,581,157 100% 3,581,157 Nostro account balance - 100% - Required provision on other assets 218,340,551 Total provision maintained 233,735,000 Excess provision 15,394,449

Base for provision Rate (%) Taka

2017Legal expenses for defaulting borrowings 5,811,177 50% 2,905,589 Legal expenses for defaulting borrowings 63,511,299 100% 63,511,299 Others - 50% - Others 75,000,000 100% 75,000,000 Protested bills 3,581,157 100% 3,581,157 Nostro account balance - 100% - Required provision on other assets 144,998,044 Total provision maintained 163,735,000 Excess provision 18,736,956

Note 2017 Taka

2016 Taka

16 Consolidatedborrowingsfromotherbanks,financialinstitutionsandagents

Subordinated bond:Southeast Bank Limited 17 11,800,000,000 7,400,000,000

11,800,000,000 7,400,000,000 Other borrowings:Southeast Bank Limited 17 11,157,491,516 10,181,648,728 Southeast Bank Capital Services Limited 54,208,827 -

11,211,700,343 10,181,648,728 Less: Inter company balance eliminated -

11,211,700,343 10,181,648,728 23,011,700,343 17,581,648,728

390


17 Borrowingsfromotherbanks,financialinstitutionsandagents

Subordinated Bond 17.2.ii 11,800,000,000 7,400,000,000 Other borrowings 17.2.i +17.3 11,157,491,516 10,181,648,728

22,957,491,516 17,581,648,728 17.1 Borrowing from other banks, financial institutions and agents

In Bangladesh 17.2 12,260,241,516 9,766,498,728 Outside Bangladesh 17.3 10,697,250,000 7,815,150,000

22,957,491,516 17,581,648,728

17.2 In Bangladesh

i. Secured:Refinance against agro-based credit from Bangladesh Bank 5,355,119 7,159,548 Refinance for housing sector from Bangladesh Bank 62,084,981 29,223,507 Refinance against SME loan from Bangladesh Bank 97,098,757 24,125,625 Refinance against Solar energy, Bio Gas & ETP - - Scheme from Bangladesh Bank 5,555,552 1,766,840 Refinance against RPGCL 9,382,652 39,583,208 Borrowing from IDCOL 280,764,456 264,640,000 Bangladesh Bank Islamic Bond - 2,000,000,000

460,241,516 2,366,498,728

ii. Unsecured:Subordinated BondRupali Bank Limited 1,600,000,000 1,050,000,000 Sonali Bank Limited 2,200,000,000 1,600,000,000 Agrani Bank Limited 2,250,000,000 850,000,000 Pubali Bank Limited 1,330,000,000 1,240,000,000 Mercantile Bank Limited 150,000,000 200,000,000 Saudi-Bangladesh Industrial and Agricultural Investment Company Ltd. 120,000,000 160,000,000 Sadharan Bima Corporation 200,000,000 100,000,000 Uttara Bank Limited 200,000,000 200,000,000 Dhaka Bank Limited 750,000,000 750,000,000 National Life Insurance Limited 1,250,000,000 750,000,000 Janata Bank Limited 1,500,000,000 500,000,000 Delta Life Insurance Co. Limited 250,000,000 -

11,800,000,000 7,400,000,000 Total (iii=i+ii) 12,260,241,516 9,766,498,728

17.3 Outside Bangladesh

SecuredBorrowing from MASHREQ BANK PSC-USD - 827,000,000 Borrowing from Commercial Bank of Qatar (CBQ) 1,678,000,000 661,600,000 Borrowing from RAK BANK, UAE 1,384,350,000 1,240,500,000 Borrowing from Bank Muscat, Oman - 661,600,000 Borrowing FM SCB SINGAPORE 2,097,500,000 - Borrowing FM EIB, UAE 1,342,400,000 - Borrowing from FGB, UAE 1,258,500,000 827,000,000 Borrowing FM NMB Bank, Nepal 419,500,000 -Borrowing from HDFC BANK, Hong Kong - 413,500,000

8,180,250,000 4,631,200,000

Note 2018Taka

2017Taka

391


Unsecured Borrowing from International Finance Corporation (IFC) - 1,240,500,000 Borrowing from Global Climate Partnership Fund S.A. 1,678,000,000 1,654,000,000 Borrowing from ADB 839,000,000 289,450,000

2,517,000,000 3,183,950,000

10,697,250,000 7,815,150,000

17.4 Maturity grouping of borrowings

Repayable on demand - - Repayable within one month 1,266,890,000 1,327,000,000 Over one month but within six months 7,613,624,456 5,858,290,000 Over six months but within one year 2,019,500,000 1,240,500,000 Over one year 12,057,477,060 9,155,858,728

22,957,491,516 17,581,648,728

18 Consolidateddepositsandotheraccounts

Current/Al-wadeeah current accounts and other accountsSoutheast Bank Limited 40,457,857,551 35,516,538,988 Southeast Bank Capital Services Limited 37,532,362 27,524,421


40,472,065,762 35,511,525,367 Bills payable

Southeast Bank Limited 4,494,551,361 4,933,769,345 Southeast Bank Capital Services Limited - -

4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits


27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits


226,108,257,117 205,486,197,802 298,334,794,587 269,828,075,048

19 Depositsandotheraccounts

Current/Al-wadeeah current accounts and other accounts

Current/Al-wadeeah current deposits 11,250,432,310 11,660,602,738 Foreign currency deposits 1,341,263,887 1,172,088,721 Sundry deposits 19.1 27,866,161,354 22,683,847,529

40,457,857,551 35,516,538,988 Bills payable

Payment order issued 4,490,503,198 4,929,177,495 Demand draft 4,048,163 4,591,850

4,494,551,361 4,933,769,345

Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534

Note 2018 Taka

2017 Taka

392


Fixed deposits/Mudaraba fixed depositsFixed deposits/Mudaraba fixed deposits 175,396,223,237 154,258,587,986 Special notice/Mudaraba special notice deposits 29,844,075,615 32,795,221,961 Scheme deposits 17,365,549,746 16,206,340,313 Interest payable on FDR/Scheme 3,502,408,519 2,226,047,542

226,108,257,117 205,486,197,802 298,320,586,377 269,833,088,669

19.1 Sundry deposits

Margin under letter of credit 2,799,904,442 2,763,811,423 Margin against IBP 36,031,780 2,204,555 Margin against FBP 14,988,274 17,555,879 Margin under letter of guarantee 1,353,760,605 1,153,632,058 Margin against time loan to issue pay order 100,968,639 60,032,178 Deposit held against FDBP/IDBP, export bills etc. 17,968,410 61,711,823 FC held against EDF L/C and LTFF 17,030,469,804 12,794,398,617 Accounts payable 5,331,896 2,661,165 Telegraphic transfer 780,290 1,155,260 Margin on acceptance 6,261,054,275 5,606,379,466 Remittance awaiting disposal 6,787,264 8,665,791 Others 238,115,674 211,639,314

27,866,161,354 22,683,847,529 19.2 Deposits from banks and others

Inter-bank deposits 19.3 10,814,479,860 12,808,254,410 Other deposits 287,506,106,516 257,024,834,259

298,320,586,377 269,833,088,669 19.3 Inter-bank deposits

AB Bank Limited 54,059 2,542,053 Agrani Bank Limited 3,500,000,000 2,000,000,000 Al-Arafa Islami Bank Limited 514,380,491 509,579,016 BASIC Bank Limited - 500,000,000 Bangladesh Krishi Bank 250,000,000 500,000,000 Citibank N.A. 114,722,610 280,631,821 Commercial Bank of Ceylon Plc. 650,000,000 - Dhaka Bank Limited - 211,789 EXIM Bank Limited 5,078,241 4,940,476 First Security Islami Bank Limited 160,383 3,147,809 Habib Bank Limited - 200,000,000 IFIC Bank Limited 264,244 259,920 Islami Bank Bangladesh Limited 8,418,107 2,258,232,880 Meghna Bank Limited 4,970 6,765,214 Mercantile Bank Limited 221,567 218,427 Mutual Trust Bank Limited 1,196,746 510,312 NRB Commercial Bank Limited 18,955,006 390,689 Prime Bank Limited 500,000,000 500,000,000 Pubali Bank Limited 500,000,000 - Rajshahi Krishi Unnayan Bank (RAKUB) 140,000,000 - Rupali Bank Limited - 1,000,000,000 State Bank of India 400,000,000 - Sonali Bank Limited 4,000,000,000 2,250,000,000 Shahjalal Islami Bank Limited 451,703 442,850 Standard Chartered Bank 200,000,000 - Social Islami Bank Limited(SIBL) 329,285 323,177 The City Bank Limited 10,239,594 10,022,802 The Trust Bank Limited 2,855 300,003,926 United Commercial Bank Limited - 1,980,000,000 Uttara Bank Limited - 500,031,250

10,814,479,860 12,808,254,410

Note 2018Taka

2017Taka

393


19.4 Sector-wise depositsGovernment 8,556,499,639 6,669,198,828 Deposit money banks 10,814,479,860 12,808,254,410 Other public 22,396,797,707 33,099,336,060 Foreign currency 1,359,393,796 1,233,469,083 Private 255,193,415,374 216,022,830,288

298,320,586,377 269,833,088,669 19.5 Unclaimed Deposits and valuables

Payment Order 221,282 952,972 221,282 952,972

19.6 Analysis of residual maturity grouping of depositsInter-bank deposits:

Payable on demand 115,926,268 284,854,504 Within one month 58,553,592 4,593,399,906 More than one month but less than six months 10,500,000,000 7,930,000,000 More than six months but less than one year - - More than one year but less than five years - - More than five years but less than ten years - -

10,674,479,860 12,808,254,410 Other Deposits:

Payable on demand 5,423,373,732 97,457,839,958 Within one month 39,928,646,408 10,193,683,482 More than one month but less than six months 66,301,561,377 100,979,387,420 More than six months but less than one year 68,761,725,000 20,760,331,750 More than one year but less than five years 93,513,400,000 21,625,933,190 More than five years but less than ten years 13,717,400,000 6,007,658,459

287,646,106,517 257,024,834,259 298,320,586,377 269,833,088,669

20 Consolidatedotherliabilities

Southeast Bank Limited 21 31,765,504,056 25,732,763,716 Southeast Bank Capital Services Limited 284,773,226 275,624,978 Southeast Financial Services (UK) Ltd 3,348,674 10,221,012 Southeast Financial Services (Australia) Pty Ltd 787,383 1,566,828 Southeast Exchange Company (South Africa) Pty Ltd 52,286,589 26,279,448


32,102,455,720 26,044,632,850 21 Otherliabilities

Provision for loans and advances/investments 21.1 13,283,300,001 10,069,290,980 Interest suspense account 21.2 5,995,927,271 4,402,732,281 Provision for taxation 21.3 5,030,480,782 5,163,120,617 Obligation under finance lease 21.4 1,291,340 3,768,470 Accrued expenses 14,467,280 8,600,057 Interest payable on borrowings 393,432,740 110,226,431 Accounts payable-Bangladesh Bank 276,010,148 129,843,978 Accounts payable-others 1,560,523,945 1,291,009,221 Provision for diminution in the market value of share 21.7 799,726,500 419,055,000 Other provisions 21.5.1 1,456,946,800 1,610,746,800 Unearned income 380,676,896 360,014,159 Branch adjustment 21.6 1,576,218,799 1,160,994,811 Withholding tax 995,501,554 1,002,360,911 Provision for audit fees 1,000,000 1,000,000

31,765,504,056 25,732,763,716

Note 2018 Taka

2017 Taka

394


21.1 Provision for loans and advances/investments

A. General Balance as at 1 January 3,440,610,024 2,430,000,000 Add: Provision made during the year

On standard loans and advances/investments etc. (70,937,446) 982,841,369 On Special Mention Account (SMA) (48,272,578) 27,768,655

(119,210,024) 1,010,610,024 Less: Provision no longer required - - Balance as at 31 December 3,321,400,000 3,440,610,024

B. SpecificBalance as at 1 January 6,628,680,956 3,728,284,306 Less: Fully provided debt write off during the year (2,044,946,488) (1,030,097,472)Add: Recoveries of amounts previously written off 404,812,584 154,213,601 Add: Specific provision for the year 4,974,285,948 3,781,324,521 Less: Recoveries and provisions no longer required - - Less: Interest waiver during the year (933,000) (5,044,000)

Net charge to Profit & Loss A/C 3,333,219,044 2,900,396,650 Balance as at 31 December 9,961,900,000 6,628,680,956

C. Total provision on loans and advances/investments (A+B) 13,283,300,001 10,069,290,980 21.2 Interest suspense account

Balance as at 1 January 4,402,732,281 3,549,523,832 Add: Amount transferred to interest suspense account during the year 4,018,996,469 2,210,542,837

8,421,728,750 5,760,066,669 Less: Amount of interest suspense recovered during the year 1,896,024,473 1,023,651,441

Amount written off during the year 493,566,266 256,697,755 Interest waiver during the year 36,210,740 76,985,192

2,425,801,479 1,357,334,388 Balance as at 31 December 5,995,927,271 4,402,732,281

21.3 Provision for taxation

Provision for current tax 21.3.1 3,885,486,907 3,806,832,079 Deferred tax liabilities 21.3.2 1,144,993,875 1,356,288,538

5,030,480,782 5,163,120,617 21.3.1 Provision for current tax

ProvisionBalance as at 1 January 16,561,854,123 13,731,854,123 Settlement/adjustments for previous years (4,682,093,254) - Provision made for the current year 21.3.1.1 2,200,000,000 2,830,000,000 (A) Balance as at 31 December 14,079,760,869 16,561,854,123 Less: Advance taxBalance as at 1 January 12,755,022,044 10,124,709,968 Paid during the year 2,172,386,062 2,630,312,076 Settlement/adjustments for previous years (4,733,134,144) - (B) Balance as at 31 December 10,194,273,962 12,755,022,044 (A-B) Net balance as at 31 December 3,885,486,907 3,806,832,079

21.3.1.1 Provision made for the current year

Provision made during the year 2,340,000,000 2,830,000,000 Less: Excess provision adjustment for prior years (140,000,000) -

2,200,000,000 2,830,000,000 Provision for current tax of Tk. 2,200,000,000 has been made @ 37.50% as prescribed by Finance Act 2018 of the accounting profit made by the Bank after considering some of the add backs to income and disallowances of expenditure as per the Income Tax Ordinance and Rules 1984 and in compliance of para 46 of IAS 12 “Income Tax”.

Note 2018Taka

2017Taka

395


21.3.2 Deferred tax liabilities

Deferred tax liabilities are attributable to the following:

Revaluation reserve of land 615,761,213 615,761,213 Revaluation reserve of buildings 125,911,051 125,911,051 Fixed assets- except land and revaluation reserve of buildings

21.3.3.1 390,536,360 425,536,360

Revaluation reserve of HTM securities 21.3.3.2 7,662,748 5,611,947 Revaluation reserve of HFT securities 21.3.3.3 5,122,503 183,467,967

1,144,993,875 1,356,288,538 Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled, based on tax rates and laws enacted, by the balance sheet date. Following are the descriptions for each individual item of the deferred tax that are recognised by the Bank as a temporary difference with expected time of realisation.Revaluation reserve of land

As the land is not depreciable and as per local tax rules revaluation gain is not taxable. However, the tax office will charge taxes on capital gain which is the same amount of revaluation gain whether recovered through use or sale. Hence a taxable temporary difference arises against which the Bank recognises deferred tax liabilities. However, the outstanding amount of deferred tax will be automatically released with the disposal of the assets.Revaluation reserve of buildings

Buildings are depreciable assets. Its revalued carrying amount will be recovered through use and this will generate taxable income which exceeds the depreciation that will be allowable for tax purposes in future periods. As a result taxable temporary difference will arise. Fixed assets- except land and revaluation reserve of buildings Accounting depreciation is not tax allowable expenses. Rather, the tax office will allow tax depreciation as per 3rd Schedule of the Income Tax Ordinance 1984. Hence a temporary difference arises due to the different depreciation rates and methodology against which the Bank recognizes deferred tax. This is an ongoing item as there is a difference between the tax depreciation rate and the accounting depreciation rate. However, the outstanding amount of deferred tax will be automatically released with the expiry of the economic useful life of the assets.Revaluation reserves of HTM and HFT securitiesDeferred tax relating to unrealised interest on the revaluation of Held to Maturity (HTM) and Held for Trading (HFT) securities is recognised directly in other reserves as a part of equity and is subsequently recognised in the profit and loss account on maturity of the securities. The deferred tax recognised against this will be fully reversed at the maturity of all related securities.

Note 2018 Taka

2017 Taka

21.3.3 Movement of deferred tax liabilities

Balance as at 1 January 1,356,288,538 1,391,514,643 Provision made for deferred tax liabilities

Charged to profit and loss account (35,000,000) 150,000,000 Charged to revaluation reserve 2,050,800 130,212,148

(32,949,200) 280,212,148 1,323,339,339 1,671,726,791

Adjustment made during the year for revaluation reserve (178,345,464) (315,438,253)Balance as at 31 December 1,144,993,875 1,356,288,538

21.3.3.1 Deferred tax on fixed assets- except land and revaluation reserve of buildings Balance as at 1 January 425,536,360 275,536,360 Charge to profit and loss account (35,000,000) 150,000,000 Balance as at 31 December 390,536,360 425,536,360

Note 2018 Taka

2017 Taka

396


21.3.3.2 Deferred tax on revaluation reserve of HTM securities

Balance as at 1 January 5,611,947 4,060,523 Charge to revaluation reserves 2,050,800 1,551,424 Adjustment during the year - - Balance as at 31 December 7,662,748 5,611,947

21.3.3.3 Deferred tax on revaluation reserve of HFT securities

Balance as at 1 January 183,467,967 370,245,496 Charge to revaluation reserves - 128,660,724 Adjustment during the year (178,345,464) (315,438,253)Balance as at 31 December 5,122,503 183,467,967

21.4 Obligation under finance lease

Balance as at 1 January 3,768,470 10,265,943 Addition during the year - 1,707,240

3,768,470 11,973,183 Adjustment during the year (2,477,131) (8,204,713)Balance as at 31 December 1,291,340 3,768,470

21.4.1 Aging analysis of liabilities under finance leaseMinimum lease

paymentFinancial charge

for future periodsPrincipal

outstandingTaka Taka Taka

2018Payable within 1 year 599,772 176,462 423,310 Payable more than 1 year but less than 2 years 599,772 103,538 496,234 Payable more than 2 years but less than 5 years 399,848 28,053 371,795

1,599,392 308,053 1,291,340 2017Payable within 1 year 2,918,069 440,938 2,477,131 Payable more than 1 year but less than 2 years 599,772 176,462 423,310 Payable more than 2 years but less than 5 years 999,620 131,591 868,029

4,517,461 748,991 3,768,470

21.5 Other provisions charged to profit and loss

Provision for other assets 21.5.1 (A) 70,000,000 - Provision for good borrowers 21.5.1 (B) - 20,000,000 Provision for off-balance sheet exposures 21.5.1 (C) (223,800,000) 285,500,000

(153,800,000) 305,500,000

21.5.1 Other ProvisionsA) Provision for other assets

Balance as at 1 January 163,735,000 163,735,000 Addition during the year 70,000,000 -

233,735,000 163,735,000 Adjustment during the year - - Balance as at 31 December 233,735,000 163,735,000

B) Provision for good borrowersBalance as at 1 January 22,011,800 23,000,000 Addition during the year - 20,000,000

22,011,800 43,000,000 Adjustment during the year - (20,988,200)Balance as at 31 December 22,011,800 22,011,800

Note 2018Taka

2017Taka

397


C) Provision for off-balance sheet exposures

Balance as at 1 January 1,425,000,000 1,139,500,000 Provision made during the year - 285,500,000

1,425,000,000 1,425,000,000 Adjustments made during the year (223,800,000) - Balance as at 31 December 1,201,200,000 1,425,000,000

D) Total other provisions (A+B+C) 1,456,946,800 1,610,746,800 21.6 Branch adjustment (credit)

General accounts debit 1,451,973,000 2,837,208,189 General accounts credit 3,028,191,799 3,998,203,000

1,576,218,799 1,160,994,811 Branch adjustment account represents outstanding interbranch and head office transactions (net) originated but yet to be responded at balance sheet date. However, the un-respondent entries of 31 Dec 2018 are given below:

No. of unrespondent entries Unrespondent entries (Taka)

Debit Credit Debit Credit Upto 3 months 540 1,275 1,451,973,000 3,028,191,799 Over 3 months but within 6 months - - - - Over 6 months but within 1 year - - - - Over 1 year but within 5 years - - - -

540 1,275 1,451,973,000 3,028,191,799

21.7 Consolidated provision for diminution in value of investments

Southeast Bank Limited 413,060,983 (256,602,166)Southeast Bank Capital Services Limited - 39,388,168

413,060,983 (217,213,998)21.7.1 Provision for diminution in value of investments

Balance as at 1 January 419,055,000 905,705,624 Adjustments made for loss of sales of shares during the year (32,389,483) (230,048,458)Provision made during the year (Charge to the profit and loss) 413,060,983 (256,602,166)Balance as at 31 December 799,726,500 419,055,000

22 ShareCapital

22.1 Authorised

1,500,000,000 Ordinary shares of Tk 10 each 15,000,000,000 15,000,000,000

22.2 Issued, subscribed and paid up

378,164,970 ordinary shares of Tk 10 each issued for cash 3,781,649,700 3,781,649,700 676,327,732 ordinary shares of Tk 10 each issued as bonus shares 6,763,277,320 5,387,852,060

1,054,492,702 10,544,927,020 9,169,501,760 22.2.1 Reconciliation of number of shares

Balance as at 1 January 916,950,176 916,950,176 Issue of bonus shares 137,542,526 - Stock split (1:10) - - Balance as at 31 December 1,054,492,702 916,950,176

Note 2018 Taka

2017 Taka

398


22.3 Dividends

The following dividends were declared and paid by the Bank for the year ended 31 December.

1.5 Taka (Stock Dividend) per ordinary share for 2017 and 2.00 Taka per (Cash dividend) ordinary share for 2016 1,375,425,259 1,833,900,352 After the end of the reporting period, the following dividends were proposed by the directors. The dividends have not been provided for and no tax consequences.1.00 Taka (Stock dividend) per ordinary share for 2018 and 1.5 Taka (Stock dividend) per ordinary share for 2017 1,054,492,702 1,375,425,259

22.4 Share capital at a glance from inception

Year Particulars Number of shares

Capital amount (Taka)

Cumulative (Taka)

1995 Opening / Sponsors Capital 1,000,000 100,000,000 100,000,000 1996 None - - 100,000,000 1997 25% Stock Dividend 250,000 25,000,000 125,000,000 1998 20% Stock Dividend 250,000 25,000,000 150,000,000 1999 Initial Public Offer (IPO) 1,500,000 150,000,000 300,000,000 2000 10% Stock Dividend 300,000 30,000,000 330,000,000 2001 10% Stock Dividend 330,000 33,000,000 363,000,000 2002 10% Stock Dividend 363,000 36,300,000 399,300,000

2003 Right Issue @ 1:2 1,650,000 165,000,000 564,300,000 20% Stock Dividend 1,128,600 112,860,000 677,160,000

2004 30% Stock Dividend 2,031,480 203,148,000 880,308,000 2005 20% Stock Dividend 1,760,616 176,061,600 1,056,369,600

2006 Right Issue @1:1 10,563,696 1,056,369,600 2,112,739,200 8% Stock Dividend 1,690,191 169,019,100 2,281,758,300

2007 25% Stock Dividend 5,704,395 570,439,500 2,852,197,800 2008 20% Stock Dividend 5,704,395 570,439,500 3,422,637,300 2009 35% Stock Dividend 11,979,230 1,197,923,000 4,620,560,300

2010 Right Issue @1:2 23,102,801 2,310,280,100 6,930,840,400 20% Stock Dividend 13,861,680 1,386,168,000 8,317,008,400

2011 Stock split (1:10) 748,530,756 - 8,317,008,400 5% Stock Dividend 41,585,042 415,850,420 8,732,858,820

2012 None - - 8,732,858,820 2013 5% Stock Dividend 43,664,294 436,642,940 9,169,501,760 2014 None - - 9,169,501,760 2015 None - - 9,169,501,760 2016 None - - 9,169,501,760 2017 15% Stock Dividend 137,542,526 1,375,425,259 10,544,927,020

Note 2018Taka

2017Taka

399


22.5 Classification of shareholders by holding

Number of holders % of total holding

2018 2017 2018 2017 Less than 500 shares 9,048 10,398 0.15 0.21 501 to 5,000 shares 17,794 19,181 3.14 3.83 5,001 to 10,000 shares 2,984 2,982 1.99 2.38 10,001 to 20,000 shares 1,903 1,641 2.52 2.55 20,001 to 30,000 shares 646 540 1.50 1.45 30,001 to 40,000 shares 328 241 1.07 0.92 40,001 to 50,000 shares 173 197 0.75 1.00 50,001 to 1,00,000 shares 421 367 2.77 2.97 1,00,001 to 10,00,000 shares 419 370 11.57 12.33 Over 10,00,000 shares 135 121 74.54 72.36

33,851 36,038 100.00 100.00

22.6 Initial public offer (IPO)

Out of the total issued, subscribed and fully paid up capital of the bank 1,500,000 (after stock split: 15,000,000) ordinary shares of Tk 100 (after stock split: Tk. 10) each amounting to Tk 150,000,000 was raised through public offering on shares in 1999.

22.7 Name of the Directors and their shareholdings in the year 2018

Sl. no. Name of the directors Status As at

1 January 2018 As at

31 December 2018

1 Mr. Alamgir Kabir, FCA Chairman 19,944,672 23,688,872 2 Mrs. Duluma Ahmed Vice Chairperson 19,082,742 21,945,153 3 Mr. M. A. Kashem Director 20,307,060 23,353,119 4 Mr. Azim Uddin Ahmed Director 25,490,735 29,314,345 5 Mrs. Jusna Ara Kashem Director 18,339,525 21,090,453 6 Mr. Md. Akikur Rahman Director 18,443,731 21,410,290 7 Mrs. Rehana Rahman Director 18,844,145 21,670,766 8 Mrs. Sirat Monira Director 120,547 138,629 9 Mr. Syed Sajedul Karim Independent Director - -

10 Dr. Quazi Mesbahuddin Ahmed Independent Director - - 11 Mr. M. Kamal Hossain Managing Director - -

140,573,157 162,611,627 22.8 Capital to Risk weighted Asset Ratio (CRAR) of the Bank

The calculation of CRAR has been done as per BRPD Circular no. 07 dated 31 March 2014 and the Basel-III guideline December 2014 vide BRPD Circular no. 18 dated 21 December 2014.

Note 2018 Taka

2017 Taka

Common equity Tier-1 capital (Going Concern Capital)Paid up capital 10,544,927,020 9,169,501,760 Share premium - - Statutory reserve 23 10,094,153,565 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,803,806,592 2,640,353,198

23,690,537,177 21,227,504,958 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 124,419,075 148,251,669 A) Total common equity Tier 1 capital 23,566,118,102 21,079,253,289

400


Tier 2 Capital (Gone -Concern Capital)Subordinated bond 10,200,000,000 6,800,000,000 General provision maintained against unclassified loan/investments 3,321,400,000 3,440,610,024 General provision on off-balance sheet items 1,201,200,000 1,425,000,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984

17,058,032,734 14,001,042,758 Less: Regulatory adjustments 1,868,346,187 1,401,259,640 Total Tier 2 capital 15,189,686,547 12,599,783,118 B) Total capital 38,755,804,649 33,679,036,407 C) Risk Weighted Assets (RWA)Credit Risk

On-balance sheet 231,060,110,522 226,671,124,618 Off-balance sheet 47,825,004,244 50,312,116,068

278,885,114,766 276,983,240,686 Market risk 9,825,644,530 12,834,521,890 Operational risk 22,128,575,152 20,020,349,602 Total RWA 310,839,334,448 309,838,112,178 D) Required common equity Tier 1 Capital 13,987,770,050 13,942,715,048

Required Tier 1 Capital 6% (2017: 6%) of RWA) 18,650,360,067 18,590,286,731 E) Required total capital 11.875% (2017: 11.25%) of RWA 36,912,170,966 34,856,787,620 F) Surplus common equity Tier 1 Capital(A-D) 9,578,348,052 7,136,538,241

G) Surplus total capital (B-E) 1,843,633,684 (1,177,751,213)

Capital to risk-weighted assets ratio: On common equity Tier 1 capital against standard of minimum 4.5% 7.58% 6.80%On Tier 1 capital - against standard of minimum 6% 7.58% 6.80%On total capital - against standard of minimum 11.875% (2017:11.25%) 12.47% 10.87%

22.9 Leverage Ratio of the Bank

A) Tier 1 capital considering all regulatory adjustments 23,566,118,102 21,079,253,289

B) On-balance sheet exposure 372,342,421,027 333,842,502,292 C) Off-balance sheet exposure 85,766,147,287 74,492,727,609 D) Deduction from on and off balance sheet exposure /Regulatory adjustment 124,419,075 148,251,670 E) Total exposure (B+C-D) 457,984,149,240 408,186,978,231

Leverage ratio (A/E) 5.15% 5.16%Liquidity coverage ratio 123.37% 102.81%Net stable funding ratio 115.18% 115.55%

22.10 Capital to Risk weighted Asset Ratio (CRAR) of the Group

Common Equity Tier 1 CapitalPaid up capital 10,544,927,020 9,169,501,760 Share premium - - Statutory reserve 23 10,094,153,565 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Non- controlling interest 29 10,070,512 10,050,803 Retained earnings 27 2,898,043,836 2,716,398,712

23,794,844,933 21,313,601,275 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 124,419,075 148,251,669 A) Total common equity Tier 1 capital 23,670,425,858 21,165,349,606

Note 2018Taka

2017Taka

401


Tier 2 capital (Gone- Concern Capital)Subordinated bond 10,200,000,000 6,800,000,000 General provision maintained against unclassified loan/investments 3,321,400,000 3,440,610,024 General provision on off-balance sheet items 1,201,200,000 1,425,000,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984

17,058,032,734 14,001,042,758 Less: Regulatory adjustments 1,868,346,187 1,401,259,640 Total Tier 2 capital 15,189,686,547 12,599,783,118

B) Total capital 38,860,112,405 33,765,132,724

C) Risk weighted assets (RWA)

Credit risk On-balance sheet 227,901,721,877 223,592,214,199 Off-balance sheet 47,825,004,244 50,312,116,068

275,726,726,121 273,904,330,267 Market risk 15,778,852,594 17,439,506,326 Operational risk 22,455,343,921 20,213,502,052 Total RWA 313,960,922,637 311,557,338,645

D) Required common equity Tier 1 capital 14,128,241,519 14,020,080,239 Required Tier 1 capital 6% (2017: 6%) of RWA 18,837,655,358 18,693,440,319

E) Required total capital 11.875% (2017: 11.25%) of RWA 37,282,859,563 35,050,200,598 F) Surplus common equity Tier 1 capital (A-D) 9,542,184,339 7,145,269,367

G) Surplus total capital (B-E) 1,577,252,842 (1,285,067,874)

Capital to risk- weighted asset ratio:On common equity Tier 1 capital - against standard of minimum 4.5% 7.54% 6.79%On Tier 1 capital - against standard of minimum 6% 7.54% 6.79%On total capital - against standard of minimum 11.875% (2017:11.25%) 12.38% 10.84%

22.11 Leverage ratio of the Group

A) Tier 1 capital considering all regulatory adjustments 23,670,425,858 21,165,349,606

B) On-balance sheet exposure 372,823,178,880 334,210,339,400 C) Off-balance sheet exposure 85,766,147,287 74,492,727,609 D) Deduction from on and off balance sheet exposure / Regulatory adjustment 124,419,075 148,251,669 E) Total exposure (B+C-D) 458,464,907,092 408,554,815,340 Leverage ratio (A/E) 5.16% 5.18%Liquidity coverage ratio 123.37% 102.81%Net stable funding ratio 115.18% 115.55%

23 Statutoryreserve

Balance as at 1 January 9,170,000,000 9,170,000,000 Addition during the year 924,153,565 - Balance as at 31 December 10,094,153,565 9,170,000,000

24 Revaluationreserve

Revaluation reserve of land and buildings:Balance as at 1 January 4,944,481,764 4,944,481,764 Addition during the year - -

4,944,481,764 4,944,481,764 Deferred tax liabilities (741,672,265) (741,672,265)Balance as at 31 December 4,202,809,499 4,202,809,499

Note 2018 Taka

2017 Taka

402


Revaluation reserve on HTM securities:Balance as at 1 January 13,650,014 9,771,453 Addition during the year 5,468,801 3,878,561

19,118,815 13,650,014 Adjustment during the year - -

19,118,815 13,650,014 Deferred tax liabilities (7,662,748) (5,611,947)Balance as at 31 December 11,456,067 8,038,067

Revaluation reserve on HFT securities:Balance as at 1 January 506,859,455 925,613,743 Addition during the year 1,143,283,843 476,312,385

1,650,143,297 1,401,926,128 Adjustment during the year (1,498,484,459) (895,066,673)

151,658,839 506,859,455 Deferred tax liabilities (5,122,503) (183,467,967)Balance as at 31 December 146,536,336 323,391,488

4,360,801,902 4,534,239,054 25 Otherreserve

General reserve:Balance as at 1 January 247,650,000 247,650,000 Addition during the year - - Balance as at 31 December 247,650,000 247,650,000

26 Foreigncurrencytranslationreserve

Balance as at 1 January 14,142,765 24,449,246 (Adjustments)/addition during the year 14,775,840 (10,306,481)Balance as at 31 December 28,918,605 14,142,765 The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

27 Consolidatedretainedearnings

Southeast Bank Limited 28 2,803,806,592 2,640,353,198 Southeast Bank Capital Services Limited 276,328 (10,468,432)Southeast Financial Services (UK) Ltd (16,615,563) (18,001,423)Southeast Financial Services (Australia) Pty Ltd (17,893,249) (18,576,974)Southeast Exchange Company (South Africa) Pty Ltd 79,909,680 37,532,295 Less: Elimination for impairment of investment in subsidiary 48,560,048 85,560,048

2,898,043,836 2,716,398,712 28 Retainedearnings

Balance as at 1 January 2,640,353,198 3,171,824,195 Currency translation differences 7,264,394 17,226,310 Prior year adjustment - 166,906,342

2,647,617,592 3,355,956,847 Retained surplus for the year 1,531,614,259 1,118,296,703

4,179,231,851 4,474,253,550 Less:

Issue of bonus share 1,375,425,259 - Cash dividend paid - 1,833,900,352

1,375,425,259 1,833,900,352 Retained earnings carried forward 2,803,806,592 2,640,353,198

Note 2018Taka

2017Taka

403


29 Non-controllinginterest

Paid up capital 5,500,000,000 5,500,000,000 Retained earnings 276,835 (10,487,634)Total net assets 5,500,276,835 5,489,512,366

Non-controlling interest 0.183091% (2017:0.183091%) of net assets 10,070,512 10,050,803

Non-controlling interest arises only for Southeast Bank Capital Services Limited since all other subsidiaries are wholly owned by Southeast Bank Limited.

30 Contingentliabilities

30.1 Acceptances and endorsements

Acceptance under Letters of Credit (LC) - other than back to back 44,423,696,274 39,997,385,993 Acceptance under Letters of Credit -back to back 19,430,066,710 17,141,146,992

63,853,762,984 57,138,532,985

30.2 Letters of guarantee

Local 18,086,603,871 14,928,991,500 Foreign 1,111,389,170 995,971,664

19,197,993,041 15,924,963,164

30.2.1 Balance for which the Bank is contingently liable in respect of guarantee issued favouring:Directors or officers 4,783,000 4,783,000 Government - - Banks and other financial institutions 46,205,078 42,916,540 Others 19,147,004,963 15,877,263,624

19,197,993,041 15,924,963,164

30.3 Irrevocable Letters of Credit (L/C)

Back to back L/C 16,060,837,527 16,719,794,155 Others 20,313,721,780 27,475,343,281

36,374,559,306 44,195,137,436

30.4 Bills for collectionLocal 13,508,211,848 11,767,568,379 Foreign 11,156,714,966 10,899,018,477

24,664,926,813 22,666,586,856 30.5 Other contingent liabilities

Value of Bangladesh Sanchaypatra & others 1,413,684,000 1,744,473,000 31 Incomestatement

Income:Interest, discount and similar income 28,874,960,097 22,838,457,502 Dividend income 130,239,122 194,053,603 Fees, commission and brokerage 2,210,370,584 2,016,554,343 Gains less losses arising from dealing securities (79,827,714) (282,508,062)Gains less losses arising from investment securities 88,341,080 120,732,297 Gains less losses arising from dealing in foreign currencies 1,328,341,566 1,344,124,999 Other operating income 947,056,334 821,156,590

33,499,481,069 27,052,571,272 Expenses:

Interest, fees and commission 18,775,867,174 13,378,247,565 Administrative expenses 3,448,714,783 3,117,829,896 Other operating expenses 1,209,933,472 1,299,784,648 Depreciation on banking assets 329,860,908 317,580,081

23,764,376,338 18,113,442,190 Income over expenses 9,735,104,731 8,939,129,082

Note 2018 Taka

2017 Taka

404


32 Consolidatedinterestincome/profitoninvestments

Southeast Bank Limited 33 23,951,689,857 17,384,904,816 Southeast Bank Capital Services Limited 17,246,869 22,287,081 Southeast Financial Services (UK) Ltd - - Southeast Financial Services (Australia) Pty Ltd - 38 Southeast Exchange Company (South Africa) Pty Ltd 9,067,230 4,536,934

23,978,003,956 17,411,728,869 Less: Inter company balance eliminated 166,849 11,178,794

23,977,837,107 17,400,550,075 33 Interestincome/profitoninvestments

Interest on loans and advances (Conventional Banking):Interest on loans and advances 21,875,787,034 16,097,860,717 Interest on placement with other banks and financial institutions 473,435,429 164,342,052 Interest on foreign currency balances 121,469,232 57,142,303

22,470,691,694 16,319,345,071 Profit on investment (Islamic Banking):Profit on investments 1,480,929,380 1,049,413,515 Profit on placement with other banks 68,783 16,146,229

1,480,998,163 1,065,559,745 23,951,689,857 17,384,904,816

34 Consolidatedinterestpaid/profitsharedondepositsandborrowingsetc.

Southeast Bank Limited 35 18,775,867,174 13,378,247,565 Southeast Bank Capital Services Limited 2,196,982 5,791,226

18,778,064,156 13,384,038,791 Less: Inter company balance eliminated 166,849 11,178,794

18,777,897,307 13,372,859,997 35 Interestpaid/profitsharedondepositsandborrowingsetc.

Interest paid on deposits (Conventional Banking): Interest on deposits 15,988,578,364 11,370,686,362 Interest on borrowings 1,487,780,085 1,049,743,814 Interest on repurchase agreement (repo) 2,415,850 14,011,606 Interest on refinance 4,940,677 4,618,683 Interest on foreign bank accounts 2,704,430 683,543

17,486,419,405 12,439,744,008 Profit shared on deposits (Islamic Banking):

Profit paid on deposits 1,206,982,422 856,271,639 Profit on refinance borrowings 82,465,347 82,231,918

1,289,447,769 938,503,557 18,775,867,174 13,378,247,565

36 Consolidatedinvestmentincome

Southeast Bank Limited 37 5,062,022,727 5,485,830,524 Southeast Bank Capital Services Limited 67,730,841 101,070,928

5,129,753,568 5,586,901,452 Less: Inter company balance eliminated - 16,253,055

5,129,753,568 5,570,648,397

37 Investmentincome

Interest income from Government securities 37.1 4,340,846,226 5,114,905,070 Capital gain on Government securities 37.2 1,094,874,269 694,421,153 Revaluation gain (loss) on Government securities 37.3 (1,174,701,983) (976,929,215)Dividend on investment in shares 130,239,122 194,053,603 Gain on sale of investment in shares 88,341,080 120,732,297 Interest income from investment in bonds 582,424,014 338,647,616

5,062,022,727 5,485,830,524

Note 2018Taka

2017Taka

405


37.1 Interest income from Government securities

Interest on treasury bills 10,670,572 7,858,032 Interest on treasury bonds/T&T bonds 4,862,083,421 6,657,538,978 Interest on Bangladesh Bank bills 292,032 3,275,000

4,873,046,025 6,668,672,010

Interest expenses on treasury bills - (23,687)Interest expenses on treasury bonds (532,199,800) (1,553,743,253)

(532,199,800) (1,553,766,940)Net interest income from Government securities 4,340,846,226 5,114,905,070

37.2 Capital gain on Government securities

Capital gain on treasury bills 769,439 1,273,366 Capital gain on treasury bonds/T&T bonds 1,223,140,217 841,076,080 Capital gain on BB bills - 268,536

1,223,909,656 842,617,982 Capital loss on treasury bills (741,259) (671,113)Capital loss on treasury bonds/T&T bonds (128,294,128) (147,525,716)

(129,035,387) (148,196,829)Net capital gain on Government securities 1,094,874,269 694,421,153

37.3 Revaluation gain (loss) on Government securities

Revaluation gain on treasury bills - - Revaluation gain on treasury bonds 42,921,719 - Revaluation gain on Bangladesh Bank bills - -

42,921,719 - Revaluation loss on treasury bills (13,423,235) (227,635)Revaluation loss on treasury bonds (1,204,193,310) (976,433,044)Revaluation loss on Bangladesh Bank bills (7,157) (268,536)

(1,217,623,702) (976,929,215)Net revaluation gain (loss) on Government securities (1,174,701,983) (976,929,215)

38 Consolidatedcommission,exchangeandbrokerage

Southeast Bank Limited 39 3,538,712,150 3,360,679,342 Southeast Bank Capital Services Limited 325,000 535,000 Southeast Financial Services (UK) Ltd 21,392,216 24,015,788 Southeast Financial Services (Australia) Pty Ltd - 453,195 Southeast Exchange Company (South Africa) Pty Ltd 92,345,912 77,246,127

3,652,775,278 3,462,929,452 39 Commission,exchangeandbrokerage

Commission and brokerage 2,210,370,584 2,016,554,343 Exchange gain 39.1 1,328,341,566 1,344,124,999

3,538,712,150 3,360,679,342 39.1 Exchange gain

Exchange gain from revaluation/trade of foreign currency 1,292,788,635 1,294,364,761 Exchange gain from credit card 35,552,931 49,760,238

1,328,341,566 1,344,124,999 40 Consolidatedotheroperatingincome

Southeast Bank Limited 41 947,056,334 821,156,590 Southeast Bank Capital Services Limited 34,170,935 53,942,026 Southeast Financial Services (UK) Ltd 2,494,536 - Southeast Financial Services (Australia) Pty Ltd - 788,160 Southeast Exchange Company (South Africa) Pty Ltd - 162,609

983,721,805 876,049,385 Less: Inter company balance eliminated 4,273,920 4,273,920

979,447,885 871,775,465

Note 2018 Taka

2017 Taka

406


41 Otheroperatingincome

Remittance fees 17,674 76,574 Service and incidental charges 99,288,754 123,578,606 Other fees - telephone and postage 58,491,405 56,000,865 Income from ATM services 43,787,777 32,846,965 Income from credit card 150,609,574 116,782,148 Income from retail banking 6,745,804 6,428,887 Other Fees - SWIFT and others 222,203,670 202,921,414 Gain on sale of fixed assets 41.1 142,832 - Income from telecash 783,903 280,047 Miscellaneous income 364,984,941 282,241,084

947,056,334 821,156,590 41.1 Gain on sale of fixed assets

Cost:Motor vehicles 16,685,000 - Furniture and fixtures 4,401,630 - Office appliances 99,369 - ATM 50,500 - Electrical appliances 8,088,362 - House Electrical appliances 50,000 -

29,374,861 - Accumulated depreciation:

Motor vehicles 15,927,016 - Furniture and fixtures 2,433,336 - Office appliances 91,000 - ATM 35,279 - Electrical appliances 7,230,843 - House Electrical appliances 23,867 -

25,741,341 - Written down value 3,633,520 - Sale proceeds of the above fixed assets 3,776,352 - Gain on sale of fixed assets 142,832 -

42 Consolidatedsalariesandallowances

Southeast Bank Limited 43 1,992,049,030 1,853,318,403 Southeast Bank Capital Services Limited 12,546,929 10,295,856 Southeast Financial Services (UK) Ltd 11,848,270 10,898,173 Southeast Financial Services (Australia) Pty Ltd 164,651 225,742 Southeast Exchange Company (South Africa) Pty Ltd 9,912,927 5,891,690

2,026,521,807 1,880,629,864 43 Salariesandallowances

Basic salary 1,007,663,400 960,086,331 Allowances 597,803,225 566,671,872 Bonus 304,014,470 248,786,742 Provident fund 82,567,935 77,773,458

1,992,049,030 1,853,318,403 44 Consolidatedrent,taxes,insurance,electricityetc.

Southeast Bank Limited 45 1,015,140,607 917,262,049 Southeast Bank Capital Services Limited 13,075,067 12,430,740 Southeast Financial Services (UK) Ltd 3,932,573 3,780,890 Southeast Financial Services (Australia) Pty Ltd 616,356 320,070 Southeast Exchange Company (South Africa) Pty Ltd 3,075,707 2,104,524

1,035,840,309 935,898,273 Less: Inter company balance eliminated 4,273,920 4,273,920

1,031,566,389 931,624,353

Note 2018Taka

2017Taka

407


45 Rent,taxes,insurance,electricityetc.

Rent, rates and taxes 662,528,071.77 617,882,593.00 Insurance 243,894,399 200,424,697 Electricity and lighting 108,718,136 98,954,759

1,015,140,607 917,262,049 46 Consolidatedpostage,stamp,telecommunicationetc.

Southeast Bank Limited 47 181,005,852 175,303,570 Southeast Bank Capital Services Limited 165,253 144,673 Southeast Financial Services (UK) Ltd 423,311 274,157 Southeast Financial Services (Australia) Pty Ltd 15,104 34,217 Southeast Exchange Company (South Africa) Pty Ltd 744,072 468,375

182,353,593 176,224,992

47 Postage,stamp,telecommunicationetc.

Postage 57,125,786 54,317,413 Telephone /Telex 16,566,031 15,019,822 Electronic banking service 57,919 19,200 FC Charge (Nostro) 5,189,460 5,646,541 VSAT on-line 45,543,544 46,864,229 Reuters services 1,612,445 2,076,740 Other Fees - SWIFT and others 54,910,668 51,359,625

181,005,852 175,303,570 48 Consolidatedstationery,printing,advertisementsetc.

Southeast Bank Limited 49 162,614,460 147,315,550 Southeast Bank Capital Services Limited 304,136 256,808 Southeast Financial Services (UK) Ltd 729,184 364,459 Southeast Financial Services (Australia) Pty Ltd - 8,152 Southeast Exchange Company (South Africa) Pty Ltd 1,994,508 1,600,773

165,642,288 149,545,742

49 Stationery,printing,advertisementsetc.

General and office stationery 78,530,832 63,769,627 Printing and security stationery 36,103,821 30,205,473 Publicity and advertisement 47,979,807 53,340,450

162,614,460 147,315,550

50 ManagingDirector'ssalaryandfees

Basic salary 4,020,000 3,928,757 House rent 1,740,000 1,534,657 House maintenance 900,000 866,408 Leave fare concession 1,200,000 1,262,904 Utility 720,000 689,375 Special allowance 420,000 440,575 Provident Fund 402,000 276,747 Bonus 670,000 1,038,000

10,072,000 10,037,423 51 Consolidateddirectors'fees

Southeast Bank Limited (Note 52) 52 2,718,099 3,575,203 Southeast Bank Capital Services Limited 208,000 210,000 Southeast Financial Services (UK) Limited - -

2,926,099 3,785,203

Note 2018 Taka

2017 Taka

408


52 Directors'fees

Directors' fees 2,360,000 2,983,200 Directors' haltage and travelling 358,099 592,003

2,718,099 3,575,203

Each Director is paid TK. 8,000/ per meeting per attendance.

53 Consolidatedauditors'fees

Southeast Bank Limited 1,000,000 1,345,000 Southeast Bank Capital Services Limited 69,000 69,000 Southeast Financial Services (UK) Limited - - Southeast Exchange Company (South Africa) Pty Ltd 778,371 492,893

1,847,371 1,906,893 54 Consolidateddepreciationandrepair

Depreciation:Southeast Bank Limited 55 329,860,908 317,580,081 Southeast Bank Capital Services Limited 58,976,463 56,255,905 Southeast Financial Services (UK) Ltd 425,089 828,442 Southeast Financial Services (Australia) Pty Ltd 92,410 180,407 Southeast Exchange Company (South Africa) Pty Ltd 1,377,449 1,384,147

390,732,319 376,228,982

Repair:Southeast Bank Limited 55 84,114,735 78,482,177 Southeast Bank Capital Services Limited 952,394 226,265 Southeast Financial Services (UK) Ltd 84,996 145,092 Southeast Financial Services (Australia) Pty Ltd - - Southeast Exchange Company (South Africa) Pty Ltd 410,188 306,019

85,562,313 79,159,553 476,294,631 455,388,535

55 Depreciationandrepairofbank'sassets

A. Depreciation:Buildings 57,106,336 59,510,469 Furniture and fixtures 72,112,305 67,165,556 Professional and reference books - - Office appliances 1,189,866 1,094,721 Computer 34,543,455 31,604,261 Electrical appliances 123,951,155 116,667,374 ATM Booth 25,195,613 21,567,475 Motor vehicles 15,762,177 19,970,225

329,860,908 317,580,081

B. Repair & spare parts:Furniture and fixtures 7,468,328 7,652,699 Office and electrical appliances 33,513,286 29,183,762 Motor vehicles 4,720,176 5,228,293 Repair, maintenance and utilities 38,412,945 36,417,423

84,114,735 78,482,177 Total (C=A+B) 413,975,642 396,062,258

56 Consolidatedotherexpenses

Southeast Bank Limited 57 1,208,640,252 1,229,422,032 Southeast Bank Capital Services Limited 6,898,088 7,761,086 Southeast Financial Services (UK) Ltd 6,071,350 4,466,858 Southeast Financial Services (Australia) Pty Ltd 2,365 150,514 Southeast Exchange Company (South Africa) Pty Ltd 21,785,844 17,969,082 Adjustment for impairment loss of investment in subsidiary 37,000,000 -

1,280,397,900 1,259,769,572

Note 2018Taka

2017Taka

409


57 Otherexpenses

Security and cleaning 199,122,374 170,526,070 Entertainment 90,775,896 130,624,782 Car expenses 213,717,936 207,867,443 Books and periodicals 1,083,090 2,455,921 Subscription 5,772,577 4,515,855 Donation including CSR 174,603,215 210,619,093 Travelling expenses 14,423,981 11,023,278 Finance charge on leased assets 139,653 422,389 Conveyance 14,699,059 13,533,813 Petrol,oil and lubricant 9,402,055 9,631,531 Training/seminar 5,636,562 8,290,347 Uniforms and apparels 3,975,797 4,351,683 Medical expenses 101,692 130,260 Gratuity and othres 295,090,057 263,890,692 Professional expenses 14,287,158 12,741,797 Expenses for CIB report 194,670 865,022 IT enabled services 57.1 46,529,061 33,545,578 Loss on sale of fixed assets - 2,751,504 Expenses regarding credit card 43,029,219 46,219,184 Expenses regarding retail banking & agriculture 47,464,491 60,986,637 Expenses regarding call centre 2,540,476 2,786,845 Expenses relating to ATM services 49,332,614 21,287,699 Expenses regarding mobile banking services-Telecash 4,468,701 3,209,381 Adjustment for Impairment loss from investment in subsidiary (37,000,000) - Others operating expenses 9,249,918 7,145,228

1,208,640,252 1,229,422,032 Figures of previous year have been rearranged in note no: 57 to conform the current year’s presentation

57.1 Loss on sale of fixed assets

Cost:Land - 4,123,994 Building - 1,767,426 Furniture and fixtures - 7,407,519 Office appliances - 78,825 ATM - 1,188,175 Electrical appliances - 10,644,578 House Elec. Appliance - 350,000

- 25,560,517 Accumulated depreciation:

Building - 375,233 Furniture and fixtures - 4,778,297 Office appliances - 74,855 ATM - 498,488 Electrical appliances - 9,025,362 House Elec. Appliance - 213,807

- 14,966,042 Written down value - 10,594,475 Sale proceeds of the above fixed assets - 7,842,971 Loss on sale of fixed assets - (2,751,504)

58 Consolidatedprovisionfortaxation

Current tax:Southeast Bank Limited 59 2,200,000,000 2,830,000,000 Southeast Bank Capital Services Limited 13,316,862 18,983,984 Southeast Financial Services (UK) Limited - - Southeast Exchange Company (South Africa) Pty Ltd 17,132,508 14,314,954

2,230,449,370 2,863,298,938

Note 2018 Taka

2017 Taka

410


Deferred tax:Southeast Bank Limited 59 (35,000,000) 150,000,000 Southeast Exchange Company (South Africa) Pty Ltd - 150,332

(35,000,000) 150,150,332 2,195,449,370 3,013,449,270

59 ProvisionfortaxationCurrent tax 2,200,000,000 2,830,000,000 Deferred tax (35,000,000) 150,000,000

2,165,000,000 2,980,000,000 59.1 Reconciliation of effective tax rate (Bank)

2018 % Taka

Profit before taxation as per profit and loss account 4,620,767,824

Income tax as per applicable tax rate 37.50% 1,732,787,934 Factors affecting the tax charge for current yearNon deductible expenses 51.10% 2,361,365,304 Deductible expenses -27.79% (1,284,072,243)Tax exempt income -8.89% (410,577,851)Tax savings from reduced tax rates for dividend -0.49% (22,791,846)Tax savings for capital loss -0.72% (33,127,905)Change in taxable temporary difference -0.76% (35,000,000)Excess provision -3.11% (143,583,393)Total income tax expenses 46.85% 2,165,000,000

2017 % Taka

Profit before taxation as per profit and loss account 4,098,296,703

Income tax as per applicable tax rate 40.00% 1,639,318,681 Factors affecting the tax charge for current yearNon deductible expenses 54.48% 2,232,556,040 Deductible expenses -16.81% (689,075,849)Tax exempt income -6.78% (277,768,462)Tax savings from reduced tax rates for dividend -0.95% (38,810,721)Tax savings from reduced tax rates for capital gain -0.88% (36,219,689)Change in taxable temporary difference 3.66% 150,000,000 Total income tax expenses 72.71% 2,980,000,000

Note 2018Taka

2017Taka

60 Consolidatedcashreceivedfromotheroperatingactivities

Southeast Bank Limited 61 946,913,502 821,156,590 Southeast Bank Capital Services Limited 29,897,015 49,668,106 Southeast Financial Services (UK) Ltd 2,494,536 - Southeast Financial Services (Australia) Pty Ltd - 788,160 Southeast Exchange Company (South Africa) Pty Ltd - 162,609

979,305,053 871,775,465 61 Cashreceivedfromotheroperatingactivities

Remittance fees 17,674 76,574 Service and incidental charges 99,288,754 123,578,606 Other Fees-Telephone and Postage 58,491,405 56,000,865 Income from ATM services 43,787,777 32,846,965 Income from Credit Card 150,609,574 116,782,148 Other Fees - SWIFT and others 222,203,670 202,921,414 Income from Retail Banking 6,745,804 6,428,887 Income from Telecash 783,903 280,047 Miscellaneous income 364,984,941 282,241,084

946,913,502 821,156,590

Note 2018 Taka

2017 Taka

411


62 Consolidatedpaymentsforotheroperatingactivities

Southeast Bank Limited 63 2,439,278,046 2,310,221,404 Southeast Bank Capital Services Limited 21,671,938 21,098,572 Southeast Financial Services (UK) Ltd 11,241,414 9,031,456 Southeast Financial Services (Australia) Pty Ltd 633,825 512,953 Southeast Exchange Company (South Africa) Pty Ltd 6,224,475 4,479,690

2,479,049,698 2,345,344,075 63 Paymentsforotheroperatingactivities

Rent rates and taxes 997,505,888 835,276,384 Postage 181,005,852 175,303,570 Directors' fees 2,718,099 3,575,203 Repairs 84,114,735 78,482,177 Legal expense 1,293,220 1,553,137 Audit fees 1,000,000 1,345,000 Other expenses 1,171,640,252 1,214,685,933

2,439,278,046 2,310,221,404 64 Consolidatedearningspershare

Net profit after tax for the year ended 31 December (Taka) 2,473,189,135 1,168,581,138 Number of ordinary shares outstanding 1,054,492,702 1,054,492,702 Earnings per share (EPS) (Taka) 2.35 1.11

65 Earningspershare

Net profit after tax for the year ended 31 December (Taka) 2,455,767,824 1,118,296,703 Number of ordinary shares outstanding 1,054,492,702 1,054,492,702 Earnings per share (EPS) (Taka) 2.33 1.06

*Earnings per share has been calculated in accordance with IAS 33: Earnings Per Share (EPS). Previous year’s figures have been adjusted for the issue of bonus shares during the year.

66 Consolidatednetassetsvalue(NAV)pershare

Net Asset Value (NAV) 28,116,657,718 25,823,646,761 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Asset Value (NAV) per share 26.66 28.16

67 NetAssetsValue(NAV)pershare

Net Asset Value (NAV) 28,051,339,079 25,761,744,012 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Asset Value (NAV) per share 26.60 28.10

68 Consolidatednetoperatingcashflowpershare(NOCFPS)

Net Operating Cash Flow 3,549,513,918 1,715,013,174 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Operating Cash Flow per share (NOCFPS) 3.37 1.87

69 NetOperatingCashFlowpershare(NOCFPS)

Net Operating Cash Flow 3,507,440,847 1,333,459,609 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Operating Cash Flow per share (NOCFPS) 3.33 1.45

70 Groupentities

Name of subsidiary Country of incorporation

Ownership interest %

2018 2017Southeast Bank Capital Services Limited Bangladesh 99.816909 99.816909Southeast Financial Services (UK) Ltd England and Wales 100 100Southeast Financial Services (Australia) Pty Ltd Australia 100 100Southeast Exchange Company (South Africa) Pty Ltd South Africa 100 100

Note 2018 Taka

2017 Taka

412


71 General

71.1 Audit CommitteeThe Audit Committee is an important functional Committee of the Board of Directors of the Bank. It is assigned with oversight of financial reporting, disclosure, regulatory compliance and disciplined banking operation complying with the rules and norms of banking.Feature and compositionThe Audit Committee was last re-constituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the Corporate Governance Code issued by BSEC on June 03, 2018 and Bangladesh Bank’s BRPD circular no. 11, dated October 27, 2013. The composition of the present member of the Audit Committee in 2018 are given below:

Sl. no. Name Position Meetings held Attendance Remarks

1 Mr. Syed Sajedul Karim (Independent Director)

Chairman 5 2 The Members who could not attend any meeting were granted leave of absence.

2 Mrs. Duluma Ahmed Member 5 33 Mrs. Jusna Ara Kashem Member 5 54 Mrs. Rehana Rahman Member 5 55 Dr. Quazi Mesbahuddin

Ahmed (Independent Director) Member 5 5

Note: Mr. Syed Sajedul Karim was elected on the 23rd AGM, i.e. 30 June, 2018.

On invitation, Senior Executives of the Bank including the Managing Director, Chief Financial Officer (CFO), Head of Internal Control and Compliance and Head of Bank’s Risk Management Division attended the meetings to meet instant queries of the Audit Committee to make its decisions fact-based.

The academic qualifications of the members of the Audit Committee are given below:

Sl. no. Name Status with the committee Educational Qualification

1 Mr. Syed Sajedul Karim Independent Director

Chairman M.A., B.A. (Hons)

2 Mrs. Duluma Ahmed Director Member Graduate3 Mrs. Jusna Ara Kashem Director Member H.S.C4 Mrs. Rehana Rahman Director Member Graduate5 Dr. Quazi Mesbahuddin Ahmed Director Member B.A (Hons), M.A., MEC, MSC., PhD. in

Economics

Terms of reference of the Audit Committeei) Board shall appoint non-executive directors of the Bank as members of the Audit Committee excepting

Chairman of the Board.ii) Mr. Syed Sajedul Karim, in his capacity as the Independent Director, shall be the Chairman of the Audit

Committee.iii) Presence of 03 (three) members shall form a quorum.iv) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) Independent

Director.v) The tenure of office of the Audit Committee shall be for 3 years.vi) The Company Secretary shall act as Secretary to the Audit Committee.vii) The terms of reference of the Audit Committee shall also be as specified in the BRPD Circular No.11

dated October 27, 2013 of Bangladesh Bank and provisions contained in Notification No.BSEC/CMRRCD/2006-158/207/Admin/80 of Bangladesh Securities and Exchange Commission (BSEC), dated 03 June, 2018.

viii) Mr. Zakir Ahmed Khan, Advisor of the Bank, shall remain present in every meeting of the Audit Committee as far as possible and shall give his advice and suggestions for improvement of Bank’s operations and strict compliance with rules of both the Bank and its regulators.

ix) Chairman of the Audit Committee shall remain present in the Annual General Meeting (AGM).

413


Charter of the Audit CommitteeThe Audit Committee is constituted by the Board of Directors for the primary purpose of assisting the Board in:

Overseeing the integrity of the company’s financial statement.Overseeing the improvement of corporate governance standard of the company. Overseeing the Company’s system of disclosure, internal controls and procedure.Overseeing Bank’s internal control over financial reporting.Overseeing Bank’s compliance with ethical standards adopted by the company.Making reports and recommendations to the Board.Roles and responsibilities

The role of Audit Committee is to assist the Board in discharging its duties and responsibilities for financial reporting, effective monituring, corporate governance, internal control, green banking, and environmental and climate change risks. The added roles of the Audit Committee include, but not limited to, the following:

i) Overseeing the financial reporting process.ii) Monitoring choice of accounting policies and principles.iii) Monitoring Internal Audit and Compliance process including approval of Internal Audit and compliance plan.iv) Reviewing the Internal Audit and Compliance Report.v) Overseeing hiring and performance of external auditors.vi) Reviewing the Annual Financial Statements before submission to the Board for approval or adoption.vii) Reviewing the quarterly and half-yearly Financial Statements before submission to the Board for approval.viii) Review the financial statements, in particular the investments made by the subsidiary company.ix) Reviewing the adequacy of internal audit functions.x) Reviewing the Management’s Discussion and Analysis before disclosing in the Annual Report.xi) Overseeing the determination of audit fees based on scope and magnitude, level of expertise deployed

and time required for effective audit and evaluate the performance of external auditors.xii) Reviewing statement of significant party transactions submitted by the management.xiii) Reviewing Management Letters/ Letter of Internal Control Weakness issued by Statutory Auditors.xiv) Reviewing the existing Risk Management Policy and procedures to improve the quality of Bank’s assets portfolio.xv) Reviewing fund raising through Repeat Public Offering/ Rights Issue and its use and application.xvi) Monitoring internal control process.xvii) Maintaining oversight on regulatory compliance, ethics and whistleblower hotlines.xviii) Reviewing Audit Committee’s own terms of reference.xix) Reviewing the compliance status of the Minutes of the Audit Committee Meeting.

71.2 Risk Management Committee of the Board of Directors of the Bank

The Bank Company Act-1991 (Amended up to 2018), inter alia, provided for constitution of a Risk Management Committee of the Board of Directors of every Bank. The committee will scrutinize whether appropriate risk management measures are being put in place and applied and whether adequate capital and provision is being maintained against different risks. Feature and composition

The Risk Management Committee was reconstituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the BRPD circular no. 11, dated October 27, 2013 issued by Bangladesh Bank. The composition of the Risk Management Committee in 2018 is given below:

Sl. no. Members Position Meetings

held Attendance Remarks

1 Mr. Alamgir Kabir, FCA Chairman 4 4 The Members who could not attend any meeting showing genuine ground were granted leave of absence

2 Mr. M. A. Kashem Member 4 23 Mr. Azim Uddin Ahmed Member 4 3

4 Mr. Sayed Sajedul Karim (Independent Director) Member 4 2

Note: Mr. Syed Sajedul Karim was elected in the 23rd AGM, held on 30 June, 2018.

Structure of the Risk Management Committee (RMC)i) The Chairman of the Board of Directors of the Bank shall be the Chairman of the Risk Management

Committee.ii) Presence of 3 (three) members in a meeting of the Committee shall form quorum.iii) The Company Secretary of the Bank shall act as the Secretary to the Risk Management Committee of

the Board.

414


Functions of the Risk Management CommitteeThe broad functional areas of the Risk Management Committee are the following:

a Formulating and reviewing risk management policies and strategies for sound risk managementb Monitoring implementation of risk management policies and process to ensure effective prevention

and control measuresc Ensuring construction of adequate organizational structure for managing risks within the Bankd Supervising the activities of Executive Risk Management Committee (ERMC)e Ensuring compliance of Bangladesh Bank instructions regarding implementation of core risk managementf Ensuring formulation and review of risk appetite, limits and recommending these to Board of

Directors for their review and approvalg Approving adequate record keeping and reporting system and ensuring its proper useh Holding at least four meetings in a year and more if deemed necessaryi Submitting proposal, suggestions & summary of BRMC meetings to Board of Directors at least on

quarterly basisj Complying with instructions issued from time to time by the regulatory bodyk Analyzing all existing and probable risk issues in the meeting and taking appropriate decisions for

risk mitigationl Ensuring sufficient and efficient staff resources for RMD

m Establishing standards of ethics and integrity for staff and enforcing these standards

71.3 Related party/(ies)Particulars of Directors of the Bank as at 31 December:

Sl. No. Name of persons Designation Present address

% of shares as at 31 Dec

2018

% of shares as at 31 Dec

2017

1 Mr. Alamgir Kabir, FCA Chairman 226, Dilu Road, New Eskaton, Dhaka 2.25% 2.18%

2 Mrs. Duluma Ahmed Vice Chairperson

Plot No.51, Road No.09, Block-F, Banani, Dhaka 2.08% 2.08%

3 Mr. M. A. Kashem Director 73/C, Gulshan Avenue, Dhaka-1212 2.21% 2.21%

4 Mr. Azim Uddin Ahmed Director Plot No.51, Road No.09, Block-F, Banani, Dhaka 2.78% 2.78%

5 Mrs. Jusna Ara Kashem Director 73/C, Gulshan Avenue, Dhaka-1212 2.00% 2.00%

6 Mr. Md. Akikur Rahman Director Sonarpara, Nobarun-227, Sylhet 2.03% 2.01%

7 Mrs. Rehana Rahman Director House No.10, Road No.68, Gulshan, Dhaka 2.06% 2.06%

8 Mrs. Sirat Monira Director 226, Dilu Road (Ground Floor), New Eskaton, Dhaka 0.01% 0.01%

9 Mr. Syed Sajedul Karim Independent Director

Flat No. B/3, Summer Holiday, House No. 8, Road No. 121, Gulshan-1, Dhaka-1212.

- -

10 Dr. Quazi Mesbahuddin Ahmed

Independent Director

Flat No.C/3, House No.01, Road No.36, Gulshan, Dhaka-1212

- -

11 Mr. M. Kamal Hossain Managing Director

Southeast Bank Limited, Head Office, 52-53 Dilkusha C/A, Dhaka-1000

- -

*As per SEC notification no-SEC/CMRRCD/2009-193/119/Admin/34, dated: 22/11/2011; “Each director other than independent director(s)/ nominated director(s) of any listed company shall hold minimum 2% (two percent) shares of the paid-up capital. Otherwise there shall be a casual vacancy of director”. But Mrs. Sirat Monira holds 0.01% of total outstanding share who became Director from B Group i.e. public shareholders.

415


71.3.1 Related party transactions

During the year 2018, the Bank concluded business deals with the following organizations in which the directors had interest:

Name of Organization Relationship Nature of

transaction

Transaction value for the year ended 31 December

Balance outstanding as at 31 December

2018Taka

2017Taka

2018Taka

2017Taka

Asia Insurance Ltd. Common Director

Insurance coverage 138,208,868 81,094,810 - -

Southeast Bank Capital Services Limited

Subsidiary company

Share capital - 5,489,930,000 5,489,930,000

Interest and loan - 11,178,794 - -

Southeast Financial Services (UK) Ltd

Subsidiary company

Share capital - - 38,493,247 38,493,247

Southeast Financial Services (Australia) Pty Ltd

Subsidiary company

Share capital - - 25,063,712 25,063,712

Southeast Exchange Company (South Africa) Pty Ltd

Subsidiary company

Share capital - - 50,103,110 50,103,110

71.3.2 Loans and advances to directors and their related concern

Name of party Name of the director Related by Nature of transaction

Amount in Taka Status

Monorom TradersMr. Azim Uddin Ahmed

Director Bank Guarantee 4,783,000 RegularMrs. Duluma Ahmed

Mrs. Duluma Ahmed Mrs. Duluma Ahmed Vice Chairperson Credit Card 85,508.95 Regular

Mr. Azim Uddin Ahmed Mr. Azim Uddin Ahmed Director Credit Card 19,120.89 Regular

Ms. Sultana Kashem Mr. M. A. Kashem Directors' daughter Credit Card 2,788.64 Regular

Ms. Farzana Azim Mr. Azim Uddin Ahmed Directors' daughter Credit Card 411,869.40 Regular

Mr. Mamun Azim Mr. Azim Uddin Ahmed Directors' son Credit Card 6,771.59 Regular

The Bank complies with the requirements of the section 26 (c) of the Banking Companies Act 1991 (amended upto 2018) in connection to the transactions executed with persons related to the Banks.

71.4 Events after the reporting period

The Board of Directors in its 570th meeting held on 30 April 2019 has recommended a stock dividend @10% subject to the approval of the shareholders at the next Annual General Meeting.

71.5 Number of employees

The number of employees engaged for the whole year or part thereof in 2018 who received a total yearly remu-neration of Tk 36,000 or above were 2797. The total number of employees were 2,704 in 2017.

71.6 Share trading

The Bank started trading its ordinary shares in Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) through CDBL from 16 May 2004. The closing market price of the share as on 31 December 2018 was Tk.15.60 (2017: Tk.22.20) for each Tk.10 per value of share at DSE and Tk 15.70 (2017: Tk.22.20) for each Tk.10 per value of share at CSE.

416


71.7 Pattern of Shareholding

Breakup of shareholding pattern as per clause 1.5 (xxi) of Securities and Exchange Commission notification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued under Section 2CC of the Securities and Exchange Ordinance, 1969, is as follows:

a) Parent/Subsidiary/Associated companies and other related parties (name wise details):

Sl. no. Name of the Company Shareholding Structure

1 Southeast Bank Capital Services Limited 99.816909% owned by Southeast Bank Limited

2 Southeast Bank Financial Services (UK) Ltd 100% owned by Southeast Bank Limited

3 Southeast Financial Services (Australia) Pty Ltd 100% owned by Southeast Bank Limited

4 Southeast Exchange Company (South Africa) Pty Ltd 100% owned by Southeast Bank Limited

71.8 Highlights on the overall activities of the Bank

Highlights on the overall activities of the Bank have been furnished in Annexure-A.

417


Sl. no. Particulars 2018 2017

1 Paid-up capital Taka 10,544,927,020 9,169,501,760

2 Total capital Taka 38,755,804,649 33,679,036,407

3 Capital surplus Taka 1,843,633,684 (1,177,751,213)

4 Total assets Taka 381,094,921,027 338,909,245,125

5 Total deposits Taka 298,320,586,377 269,833,088,669

6 Total loans and advances/investments Taka 265,204,210,559 231,850,999,929

7 Total contingent liabilities and commitments Taka 145,504,926,144 142,496,794,641

8 Credit deposit ratio 81.55% 85.92%

9 Percentage of classified loans/investments against total loans and advances/investments 5.87% 5.99%

10 Profit after tax and provision Taka 2,455,767,824 1,118,296,703

11 Amount of classified loans/investments Taka 15,558,851,040 13,878,533,441

12 Provisions kept against classified loans/investments Taka 9,961,900,000 6,628,680,956

13 Provision surplus/(deficit) against classified loans/investments Taka 4,043,815,452 2,802,303,797

14 Cost of fund 7.81% 6.80%

15 Interest earning assets Taka 329,182,199,588 288,682,338,956

16 Non-interest earning assets Taka 51,912,721,439 50,226,906,169

17 Return on investment (ROI) 0.74% 0.38%

18 Return on assets (ROA) [PAT/ Average assets] 0.68% 0.35%

19 Income from investment Taka 5,062,022,727 5,485,830,524

20 Capital adequacy 12.47% 10.87%

21 Dividends

a) Stock dividends 10% 15%

b) Cash dividends - -

22 Earnings per share Taka 2.33 1.06

23 Net income per share Taka 2.33 1.06

24 Price earning ratio Times 6.72 17.68

Southeast Bank LimitedHighlights on the overall activitiesAs at and for the year ended 31 December 2018

Annexure-A

418


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421


Southeast Bank LimitedDetails of Large LoanAs at 31 December 2018

Annexure-D

2018 2017

Number of clients 34 29 Amount of outstanding advances (Amount in million Taka) 139,088.20 115,640.90 Amount of classified advances (Amount in million Taka) Nil Nil Measures taken for recovery (Taka) Nil Nil

Client-wise break up is as follows:

(Amount in million Taka)

Sl. no. Name of clients

Outstanding as at31 December 2018

Outstanding as at31 December 2017

Funded Non funded Total Funded Non

funded Total

1 Abul Khair Group 563.10 5,432.10 5,995.20 824.40 3,947.40 4,771.80

2ACS Textiles (Bangladesh) Limited and its related concern

2,088.90 1,998.50 4,087.40 2,088.50 1,950.90 4,039.40

3 Bashundhara Group 4,976.00 4,693.30 9,669.30 3,119.70 8,009.60 11,129.30 4 Bengal Group 2,315.00 1,201.90 3,516.90 965.90 615.10 1,581.00 5 Capital Banani One Ltd. and its related concern 4,222.90 1.40 4,224.30 4,082.30 - 4,082.30

6Cassiopea Fashion Ltd. and its related concerns

997.00 2,979.70 3,976.70 556.80 3,291.50 3,848.30

7 Sparrow Apparels Ltd. and its related concerns 1,521.30 6,572.50 8,093.80 1,226.70 3,909.00 5,135.70 8 Deshbandhu Group 6,156.60 1,272.70 7,429.30 5,343.00 2,004.80 7,347.80 9 Grameen Phone Limited - 1,956.40 1,956.40 - 1,711.10 1,711.10

10 Irish Fabrics Limited and its related concerns 526.20 2,188.30 2,714.50 623.60 1,708.10 2,331.70 11 KDS Group 672.70 1,373.50 2,046.20 803.50 1,374.20 2,177.70 12 Keya Group 5,077.20 4,634.40 9,711.60 4,459.80 5,177.10 9,636.90 13 Aaron Denim Limited and its related concerns 2,719.00 851.70 3,570.70 2,289.80 1,088.60 3,378.40 14 Maksons Spinning Mills Ltd. 1,389.10 3,118.30 4,507.40 2,165.20 2,370.60 4,535.80 15 Meghna Group 0.90 7,215.50 7,216.40 - 9,929.60 9,929.60 16 Mother Steel Ltd. and its related concerns 339.70 20.20 359.90 577.00 330.30 907.30 17 N. R. Group 1,009.70 3,091.40 4,101.10 660.60 2,171.20 2,831.80 18 Partex Group 2,181.40 2,424.90 4,606.30 1,303.50 1,902.40 3,205.90 19 S. Alam Group 4,108.70 - 4,108.70 516.00 980.90 1,496.90 20 Yunusco (BD) Limited and its related concerns 1,015.80 1,444.50 2,460.30 560.30 1,753.80 2,314.10 21 T. K. Group 0.20 4,767.90 4,768.10 299.80 3,645.00 3,944.80

22Rupayan Housing Estate Limited and its related concerns

5,082.90 - 5,082.90 4,814.70 1.70 4,816.40

23Chittagong Asian Apparels Ltd. and its related concerns

1,275.60 1,496.40 2,772.00 1,712.50 1,924.00 3,636.50

24Snowtex Outerwear Limited and its related concerns

2,754.70 2,422.60 5,177.30 2,080.30 2,410.50 4,490.80

25 Generation Next Fashions Limited 1,756.60 1,683.20 3,439.80 - - -

26Designtex Fashions Limited and its related concerns

2,059.50 1,486.40 3,545.90 1,966.60 558.20 2,524.80

27 Navana Group 4,187.40 44.80 4,232.20 3,732.30 25.20 3,757.50 28 City Group - 1,716.00 1,716.00 - 3,409.00 3,409.00 29 Bashundhara Oil and Gas Company Limited - 915.90 915.90 - 12.50 12.50 30 KSRM Steel Plant Ltd. and its related concerns 1,536.40 1,088.50 2,624.90 2,112.50 543.30 2,655.80 31 Vertex Group 304.10 335.30 639.40 32 Shanin Group 1,437.70 2,363.60 3,801.30 33 Masuma Khatun Textile Industries Ltd. 2,576.50 769.90 3,346.40

34 Bashundhara Trading Company Ltd. and its related concerns

1,431.80 1,241.90 2,673.70

Total 66,284.60 72,803.60 139,088.20 48,885.30 66,755.60 115,640.90

422


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423


Southeast Bank LimitedNames of Directors and their interest in different entities

Annexure-F

Sl. no. Name of the Directors Status with

the Bank

Names of firms/companies in which interested as proprietor/ director/

managing agent/ guarantor/ employee/ partner, etc.

Position with Different entities

% of Share

holdings

1 Mr. Alamgir Kabir, FCA ChairmanAsia Insurance Limited Director 2.97%National Life Insurance Co. Ltd. Independent Director Nil

2 Mrs. Duluma Ahmed Vice Chairperson

Mutual Food Products Limited Chairman 31.78%Mutual Milk Products Limited Chairman 16.00%Mutual Trading Co. Limited Director 12.96%

3 Mr. M. A. Kashem Director Rose Corner (Pvt.) Limited Chairman 50.00%

4 Mr. Azim Uddin Ahmed Director

Mutual Food Products Limited Managing Director 44.78%Mutual Milk Products Limited Managing Director 52.00%Mutual Trading Co. Limited Chairman & MD 71.30%AD Holdings Limited Chairman 0.50%

5 Mrs. Jusna Ara Kashem Director Rose Corner (Pvt) Limited Director 20.00%6 Mr. Md. Akikur Rahman Director - - Nil

7 Mrs. Rehana Rahman DirectorBengal Tradeways Limited Managing Director 74.61%CHB Building Technologies Limited Director 25.00%

8 Mrs. Sirat Monira Director - - Nil

9 Mr. Syed Sajedul Kairm Independent Director - - Nil

10 Dr. Quazi Mesbahuddin Ahmed

Independent Director - - Nil

11 Mr. M. Kamal Hossain Managing Director - - Nil

424


Annexure-G

Note 2018 Taka

2017 Taka

PROPERTY AND ASSETS

Cash 1In hand (including foreign currencies) 150,219,956 166,396,106 Balance with Bangladesh Bank and its agent banks(including foreign currencies) 1,063,945,753 886,571,821

1,214,165,709 1,052,967,927 Balance with other banks and financial institutions 2In Bangladesh 1,005,380,998 3,512,215 Outside Bangladesh - -

1,005,380,998 3,512,215 Money at call and on short notice - - Investments in shares and securities 3Government 970,000,000 650,000,000 Others 3,244,853,863 2,790,589,811

4,214,853,863 3,440,589,811 Investments 4General Investments etc. 15,327,613,616 13,963,868,517 Bills purchased and discounted 357,093,888 273,282,476

15,684,707,504 14,237,150,993 Fixed assets including premises, furniture and fixtures 5 25,338,771 24,870,249 Other assets 6 33,958,174 2,414,475,850 Non - banking assets - - Total assets 22,178,405,018 21,173,567,045


LiabilitiesBorrowings from other banks, financial institutions and agents 7 - 2,000,000,000

Deposits and other accounts 8Current/Al-wadeeah current accounts and other accounts 2,050,246,536 1,643,146,644 Bills payable 82,297,718 131,716,580 Savings bank/Mudaraba savings bank deposits 2,007,450,494 1,919,612,283 Fixed deposits/Mudaraba fixed deposits 15,861,886,841 13,005,288,790

20,001,881,588 16,699,764,297

Other liabilities 9 2,176,523,430 2,473,802,748 Total liabilities 22,178,405,018 21,173,567,045


Contingent liabilitiesAcceptances and endorsements 10.1 1,706,182,184 1,155,150,244 Letters of guarantee 10.2 1,846,759,405 1,685,858,656 Irrevocable letters of credit 10.3 2,285,549,994 1,606,363,135 Bills for collection 10.4 1,267,760,650 955,896,017 Other contingent liabilities - -

7,106,252,233 5,403,268,052

Southeast Bank LimitedIslamic Banking BranchesBalance Sheet As at 31 December 2018

425


Note 2018 Taka

2017 Taka

Profit on investments 11 1,998,658,866 1,634,871,176 Profit shared on deposits and borrowings etc. 12 (1,289,447,769) (938,503,557)Net profit on investments 709,211,098 696,367,619 Commission, exchange and brokerage 13 143,377,657 93,525,532 Other operating income 14 32,545,319 30,251,448

175,922,976 123,776,980 Total operating income (A) 885,134,073 820,144,599

Salaries and allowances 15 75,385,417 76,640,857 Rent, taxes, insurance, electricity etc. 16 45,010,784 41,212,498 Legal expenses - 228,324 Postage, stamp, telecommunication etc. 17 8,186,790 9,150,825 Stationery, printing, advertisements etc. 18 4,555,279 3,454,726 Depreciation and repair of bank's assets 19 7,413,100 7,535,412 Other expenses 20 30,769,313 29,042,378 Total operating expenses (B) 171,320,683 167,265,018 Profit before provision (C=A-B) 713,813,390 652,879,581

Provision for investments 9.1 General provision 3,444,675 40,847,968 Specific provision (948,089,521) 206,808,920

(944,644,846) 247,656,888 Provision for off-balance sheet items 9.2 4,352,235 19,042,419 Provision for diminution in value of investments 9.3 54,619,407 (155,573,513)Total provision (D) (885,673,204) 111,125,794 Total profit before tax (C-D) 1,599,486,594 541,753,787

Southeast Bank LimitedIslamic Banking BranchesProfit and Loss Account For the year ended 31 December 2018

Annexure-G.1

426


Annexure-G.2Southeast Bank LimitedIslamic Banking BranchesNotes to the Financial Statements As at and for the year ended 31 December 2018

Note 2018 Taka

2017 Taka

1 Cash

In hand:Local currency 148,326,584 165,908,176Foreign currencies 1,893,371 487,930

150,219,956 166,396,106 Balance with Bangladesh Bank:

Local currency 1,058,360,221 885,851,119 Foreign currencies - -

1,058,360,221 885,851,119 Balance with Sonali Bank Limited (as agent of Bangladesh Bank):

Local currency 5,585,532 720,702 1,063,945,753 886,571,821 1,214,165,709 1,052,967,927

1.1 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with section 33 of the Bank Companies Act 1991, MPD Circular nos. 4 and 5 dated 1 December 2010 and MPD Circular no. 1 and 2 dated 23 June 2014 and 10 December 2013 and DOS Circular No. 1 dated 19 January 2014 and MPD Circulars No. 1 dated 03 April 2018.The statutory Cash Reserve Ratio on the Shariah-based Islamic Bank’s demand and time liabilities at the rate of minimum 5.0% on daily basis and 5.50% on bi-weekly basis been calculated and maintained with Bangladesh Bank in current account and 5.50% Statutory Liquidity Ratio on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including excess cash reserve balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below:

1.1.1 a) Cash Reserve Ratio (CRR) for Islamic Banking

Required reserve (5.50% of average Demand and Time Liabilities) 1,007,891,950 819,034,223 Actual reserve held (Average daily on bi-weekly basis): 1,058,360,221 885,851,119 Surplus 50,468,271 66,816,896 b) Statutory Liquidity Ratio (SLR) for Islamic Banking

Required reserve (5.50 % of average Demand and Time Liabilities) 1,007,891,950 693,028,958 Actual reserve held 1,176,260,271 883,920,896 Surplus 168,368,321 190,891,938

Held for Statutory Liquidity Ratio of Islamic Banking:

Cash in hand 150,220,000 166,396,000 Balance with agent bank (Sonali Bank Ltd.) as per statement 5,572,000 708,000 Excess cash reserve 50,468,271 66,816,896 Government Securities (HTM) 970,000,000 650,000,000

1,176,260,271 883,920,896

2 Balance with other banks and financial institutionsIn Bangladesh 2.1 1,005,380,998 3,512,215 Outside Bangladesh

1,005,380,998 3,512,215

427


2.1 In BangladeshCurrent account with:

Sonali Bank Limited 740 740 740 740

Short term deposits account with: Sonali Bank Limited 1,134 1,134 EXIM Bank Limited 505,379,124 3,510,341

505,380,258 3,511,475 Fixed deposits with other banks:

Social Islami Bank Limited 500,000,000 500,000,000 -

1,005,380,998 3,512,215 3 Investments in shares and securities

Bangladesh Government Islamic Bond 970,000,000 650,000,000 Others 3.1 3,244,853,863 2,790,589,811

4,214,853,863 3,440,589,811 3.1 Others

Shares in listed companies 3,244,853,863 2,790,589,811 Shares in un-listed companies - -

3,244,853,863 2,790,589,811 Provision for diminution in the market value of shares (621,210,215) (566,590,808)

2,623,643,648 2,223,999,003 3.2 Investments classified as per Bangladesh Bank Circular

Held to maturity (HTM) 970,000,000 650,000,000 Other securities 3,244,853,863 2,790,589,811

4,214,853,863 3,440,589,811 3.3 Cost and market value of investments3.3.1 Government securities

2018 2017 Cost price

Taka Market price

Taka Market price

Taka Bangladesh Government Islamic Bond 970,000,000 970,000,000 650,000,000

970,000,000 970,000,000 650,000,000

3.3.2 Others (Investment in shares)2018 2017

Market price Taka

Cost price Taka

Cost price Taka

Shares in listed companies 2,623,643,648 3,244,853,863 2,790,589,811 Shares in un-listed companies - - -

2,623,643,648 3,244,853,863 2,790,589,811

Note 2018 Taka

2017 Taka

428


3.4 Market price, cost price and related provision of investments as on 31 December 2018

Name of the Company2018 Differences

(Provision to be Required)

Market priceTaka

Cost priceTaka

1 BAY Leasing and Investment Limited 280,453,126 653,782,763 (373,329,637)

2 EXIM Bank Ltd. 192,288,092 370,656,956 (178,368,864)

3 Lafarge Holcim Bangladesh Limited 43,500,000 89,321,368 (45,821,368)

4 Delta Life 7,502,195 12,382,964 (4,880,769)

5 National Life Insurance Company Limited 1,165,175,567 772,488,040 392,687,527

6 Prime Bank Limited 315,083,937 460,263,791 (145,179,854)

7 AFC Agro Biotech Limited 26,514,653 36,946,327 (10,431,674)

8 Active Fine Chemicals 18,053,155 21,204,434 (3,151,279)

9 Aftab Automobiles Limited 85,682,310 145,359,192 (59,676,882)

10 Argon Denim 17,316,130 22,675,929 (5,359,799)

11 Barka Power 65,743,532 80,616,388 (14,872,856)

12 Bangladesh Shipping Corporation Limited 38,341,485 49,874,160 (11,532,675)

13 BSRM Limited 36,959,783 56,679,577 (19,719,794)

14 BSRM Steel Mills Limited 4,585,944 7,019,678 (2,433,734)

15 Doreen Power 17,753,780 23,687,937 (5,934,157)

16 Eastern Housing Limited 15,800,848 18,217,288 (2,416,440)

17 Golden Harvest Limited 14,865,833 18,665,067 (3,799,234)

18 Global Heavy Chemical Limited 23,807,785 34,247,190 (10,439,405)

19 ICB 19,799,899 27,605,297 (7,805,398)

20 INTRACO Refuling Station Limited 3,114,141 4,977,033 (1,862,892)

21 Matin Spinning Limited 11,315,640 14,044,434 (2,728,794)

22 METROSPIN 816,000 1,184,469 (368,469)

23 National Polymar 5,446,666 6,271,005 (824,339)

24 OLYMPIC Limited 10,810,000 12,280,119 (1,470,119)

25 Orion Pharma 44,302,821 61,952,895 (17,650,074)

26 Premier Leasing 7,178,100 15,325,745 (8,147,645)

27 Prime Finance Limited 7,643,035 26,958,933 (19,315,898)

28 Paramount Textile Limited 1,153,250 1,085,254 67,996

29 RSRM STEEL Limited 53,140,758 77,550,224 (24,409,466)

30 Saif Power Tec Limited 9,821,370 13,859,527 (4,038,157)

31 Shahjibazar Power Company Limited 58,586,400 79,199,118 (20,612,718)

32 Titas Gas 5,460,000 7,670,726 (2,210,726)

33 United Finance 10,612,613 14,197,006 (3,584,393)

34 WMSHIPYARD Sheppeard Limited 5,014,800 6,603,030 (1,588,230) 2,623,643,648 3,244,853,863 (621,210,215)

Actual provision 621,210,215 Surplus/(deficit) -

429


4 Investments

Investments 4.1 15,327,613,616 13,963,868,517 Bills purchased and discounted 4.2 357,093,888 273,282,476

15,684,707,504 14,237,150,993 4.1 Investments

In BangladeshDemand Investment 528,987,815 414,036,921 Bai-Muajjal (Time) Investment 195,402,971 399,099,215 Bai-Muajjal Time under CCS 79,622,265 74,507,241 Bai-Murabaha-BLC - 28,009,964 Bai-Murabaha-LTR 1,193,826,782 800,511,034 Bai-Salam (PACKING CREDIT) 149,133,314 64,089,258 Staff House Building Investment 16,635,522 12,806,256 Export Development Fund (EDF) against LC 773,063,701 712,130,203 Investment against Cash Incentive 17,131,016 19,626,562 Bai-Muajjal - Investment 3,833,616,144 3,668,800,807 Murabaha - Investment 617,028,554 639,319,763 Hire purchase - Investment 7,923,165,532 7,130,931,292

15,327,613,616 13,963,868,517 Outside Bangladesh - -

15,327,613,616 13,963,868,517 4.2 Bills purchased and discounted

In Bangladesh 357,093,888 255,665,585 Outside Bangladesh - 17,616,891

357,093,888 273,282,476 5 Fixed assets including premises, furniture and fixtures

Cost:Furniture and fixture 25,664,381 24,815,083 Office Appliances 81,620 81,620 Electrical Appliances 29,402,923 27,106,877 Motor Vehicles 2,620,000 2,620,000 ATM Booth 6,925,030 5,524,957

64,693,954 60,148,537 Less: Accumulated depreciation

Furniture and fixture 13,662,545 12,547,153 Office Appliances 81,618 81,618 Electrical Appliances 21,886,863 19,896,210 Motor Vehicles 1,659,346 1,135,342 ATM Booth 2,064,811 1,617,965

39,355,183 35,278,288 Written down value as at 31 December 25,338,771 24,870,249

6 Classification of other assetsi) Stationery, stamps, printing materials, etc. 496,036 561,840 ii) Advance rent and advertisement 15,535,825 23,780,432 iii) Interest accrued on investment but not collected,

commission and brokerage receivable on shares and debentures, and other income receivables 631,241 2,431,241

iv) Security deposits 69,460 69,460 v) Preliminary, formation and organisational expenses,

renovation, development and prepaid expenses 12,859,073 32,154,174 vi) Suspense account 1,676,660 2,205,290 vii) Silver - - viii) Head office general account - 2,351,077,534 iX) Others 2,689,880 2,195,880

33,958,174 2,414,475,850

Note 2017 Taka

2016 Taka

430


Note 2018 Taka

2017 Taka

7 Borrowing from other banks, financial institutions and agentsIn Bangladesh 7.1 - 2,000,000,000 Outside Bangladesh - -

- 2,000,000,000

7.1 In BangladeshSecuredBorrowing against securities from Bangladesh Bank 2,000,000,000

- 2,000,000,000 Unsecured - -

- 2,000,000,000

8 Deposits and other accountsAl-wadeeah current accounts and other accounts

Al-wadeeah current deposits 480,070,113 512,649,667 Foreign currency deposits 168,005,202 52,702,535 Sundry deposits 1,402,171,221 1,077,794,441

2,050,246,536 1,643,146,644 Bills payable

Payment order issued 82,164,252 131,632,916 T.T. payable 80,630 30,628 Demand draft 52,836 53,036

82,297,718 131,716,580

Mudaraba savings bank deposits 2,007,450,494 1,919,612,283

Mudaraba fixed depositsMudaraba fixed deposits 14,112,403,140 10,921,320,630 Mudaraba Special notice deposits 519,691,322 758,955,126 Scheme deposits 1,005,212,686 1,324,085,318 Interest Payable on FDR/Scheme 224,579,694 927,717

15,861,886,841 13,005,288,790 20,001,881,588 16,699,764,297

9 Other liabilities

Provision for investments 9.1 367,401,062 1,272,781,335 Provision for off-balance sheet exposures 9.2 58,384,916 54,032,681 Profit suspense account 120,629,304 147,180,025 Accrued expenses 70,443 1,167,700 Profit payable on borrowings - 7,390,820 Accounts payable - Bangladesh Bank 5,955 - Accounts payable - others 9.2 1,774,777 2,343,610 Provision for diminution in the market value of share 621,210,215 566,590,808 Unearned income 380,676,896 360,014,159 Head office general account 561,325,472 - Withholding tax 65,044,390 62,301,610

2,176,523,430 2,473,802,748

431


Note 2018 Taka

2017 Taka

9.1 A. General provision for investments

Balance as at 1 January 109,234,075 68,386,107 Provision made during the year 3,444,675 40,847,968

112,678,750 109,234,075 Adjustments made during the year - Balance as at 31 December 112,678,750 109,234,075

B. Specific provision for investments

Balance as at 1 January 1,163,547,260 954,803,734 Recoveries of amounts previously written off 39,264,573 1,934,606 Provision made during the year - 206,808,920

1,202,811,833 1,163,547,260 Adjustments made during the year (948,089,521) - Balance as at 31 December 254,722,312 1,163,547,260

C. Total provision on investments (C=A+B) 367,401,062 1,272,781,335

9.2 Provision for off-balance sheet exposures

Balance as at 1 January 54,032,681 34,990,262 Provision made during the year 4,352,235 19,042,419

58,384,916 54,032,681 Adjustments made during the year - - Balance as at 31 December 58,384,916 54,032,681

9.3 Provision for diminution in the market value of share

Balance as at 1 January 566,590,808 722,164,321 Provision made during the year 54,619,407 -

621,210,215 722,164,321 Adjustments made during the year - (155,573,513)Balance as at 31 December 621,210,215 566,590,808

10 Contingent liabilities10.1 Acceptances and endorsements

Acceptance under Letters of credit - Import 626,409,221 653,379,843 Acceptance under Letters of credit - Export 1,079,772,962 501,770,401

1,706,182,184 1,155,150,244 10.2 Letters of guarantee

Local 1,507,850,405 1,462,136,656 Foreign 338,909,000 223,722,000

1,846,759,405 1,685,858,656 10.2.1 Balance for which the Bank is contingently liable in

respect of guarantee issued favouring: Directors or officers - - Government - - Banks and other financial institutions - - Others 1,846,759,405 1,685,858,656

1,846,759,405 1,685,858,656 10.3 Irrevocable letters of credit (L/C)

Back to back L/C 991,945,659 640,872,199 Others 1,293,604,336 965,490,935

2,285,549,994 1,606,363,135 10.4 Bills for collection

Local 637,248,073 547,674,110 Foreign 630,512,576 408,221,907

1,267,760,650 955,896,017

432


Note 2018 Taka

2017 Taka

11. Profit on investmentDemand investment 23,067,695 26,128,573 Bai-Muajjal (Time) investment 36,337,316 36,067,607 Bai-Muajjal time under CCS 8,590,851 6,979,097 Bai-Murabaha-BLC 4,818,214 9,510,323 Bai-Murabaha-LTR 129,255,381 70,059,575 Bai-Salam (PACKING CREDIT) 9,020,244 5,781,431 Staff house building investment - 118 Staff car loan investment - 33,976 Investment against cash incentive 1,948,784 2,189,502 Bai-Muajjal - Investment 339,377,788 307,187,319 Murabaha - Investment 26,208,793 63,984,546 Hire purchase - Investment 857,945,183 491,817,282 Profit on special term deposit STD 68,783 2,267,896 Bills purchased and discounted 44,359,133 29,674,166 Profit on placement with other banks - 13,878,333 Inter branch profit income 517,660,703 569,311,431

1,998,658,866 1,634,871,176 12. Profit shared on deposits and borrowings etc.

Profit shared on deposits (Islamic Banking Branch): Mudaraba Savings Deposits (MSB) 272,778,245 284,524,614 Mudaraba Short Term Deposits (MSTD) 35,504,446 38,568,104 Mudaraba Fixed Term Deposits (MFDR) 896,801,767 533,095,509 Interest on foreign bank accounts 1,897,963 - Profit on Re-finance borrowings 82,465,347 82,315,330

1,289,447,769 938,503,557 13 Commission, exchange and brokerage

Commission and brokerage 119,684,128 77,936,579 Exchange gain 23,693,530 15,588,953

143,377,657 93,525,532 14 Other operating income

Remittance fees 9,845 38,556 Service and incidental charges 6,833,387 7,550,934 Other fees-telephone and postage 3,051,706 2,919,908 Income from retail banking 73,000 154,153 Other fees - SWIFT 13,844,029 10,092,965 Miscellaneous income 8,733,352 9,494,933

32,545,319 30,251,448 15 Salaries and allowances

Basic salary 40,988,179 39,089,305 Allowances 24,305,639 23,573,491 Bonus 6,456,643 10,512,942 Provident fund 3,634,956 3,465,119

75,385,417 76,640,857 16 Rent, taxes, insurance, electricity etc.

Rent, rates and taxes 28,776,589 28,608,351 Insurance 11,837,732 8,612,250 Electricity and lighting 4,396,463 3,991,897

45,010,784 41,212,498 17 Postage, stamp, telecommunication etc.

Postage 3,202,018 2,753,978 Telephone /Telex 265,864 318,240 VSAT on-line 1,994,914 2,202,780 SWIFT services 2,723,994 3,875,827

8,186,790 9,150,825

433


Note 2018 Taka

2017 Taka

18 Stationery, printing, advertisements etc.Office stationery 934,342 979,558 Printing stationery 1,297,330 1,044,226 Security stationery 2,073,296 1,275,161 Computer stationery 244,623 152,662 Publicity and advertisement 5,688 3,118

4,555,279 3,454,726 19 Depreciation and repair of bank's assets

Depreciation:Furniture and fixtures 1,272,551 1,276,340 Electrical appliances 1,712,714 1,668,129 Motor vehicles 524,004 524,004 ATM Booth 1,005,873 872,898

4,515,142 4,341,371 Repair:Furniture and fixtures 497,864 365,246 Office and electrical appliance 1,198,035 1,757,874 Motor vehicles 277,694 151,348 Repair, maintenance and utilities 924,365 919,573

2,897,958 3,194,041 7,413,100 7,535,412

20 Other expensesSecurity and cleaning 8,913,162 7,022,353 Entertainment 1,466,620 1,393,014 Car expenses 6,398,613 7,829,324 Books and periodicals 36,820 34,477 Subscription and donation 55,905 - Travelling expenses 326,568 323,989 Conveyance 347,421 342,006 Fuel 246,328 227,268 Uniforms and apparels 104,398 125,220 Loss on sale of fixed assets 14,551 13,678 Expenses relating ATM services 328,713 - Expenses for CIB report 5,920 4,920 Expenses regarding retail banking 951,157 1,011,211 Miscellaneous 11,573,137 10,714,917

30,769,313 29,042,378

434


Southeast Bank LimitedOff-Shore Banking Unit, BangladeshBalance Sheet As at 31 December 2018

Annexure-H

Note 2018 2017

USD Taka Taka PROPERTY AND ASSETS

CashIn hand (including foreign currencies) - - - Balance with Bangladesh Bank and its agent banks(including foreign currencies) - - -

- - - Balances with other banks and financial institutions 3In Bangladesh 1,311,143 110,004,898 122,490,327 Outside Bangladesh 962,295 80,736,585 5,569,926

2,273,438 190,741,482 128,060,253 Money at Call and on short notice 10,000,000 839,000,000 289,450,000 InvestmentsGovernment - - - Others - - -

- - - Loans and advances 4Loans, cash credit & overdrafts etc. 62,281,780 5,225,441,312 3,048,637,990 Bills purchased and discounted 77,697,591 6,518,827,903 5,075,982,118

139,979,371 11,744,269,214 8,124,620,108 Fixed assets including premises, furniture and fixtures 5 15,485 1,299,197 1,531,504 Other assets 6 194,578 16,325,091 20,124,004 Non-banking assets - - - Total assets 152,462,872 12,791,634,985 8,563,785,868


LiabilitiesBorrowings from other banks, financial institutions and agents 7 142,500,000 11,955,750,000 8,061,596,000 Deposits and other accounts 8Current accounts and other accounts 77,927 6,538,058 8,063,742 Bills payable - - - Savings bank deposits - - - Fixed deposits 406,360 34,093,601 27,215,079

484,287 40,631,659 35,278,821 Other liabilities 9 3,227,309 265,977,326 116,223,341 Total liabilities 146,211,595 12,262,358,985 8,213,098,162

Capital/shareholders' equityPaid up capital - - - Statutory reserve - - - Other reserves - - - Foreign currency losses - - - Retained earnings 10 6,251,276 529,276,000 350,687,706 Total shareholders' equity 6,251,276 529,276,000 350,687,706 Total liabilities and shareholders' equity 152,462,872 12,791,634,985 8,563,785,868

435


Southeast Bank LimitedOff-Shore Banking Unit, BangladeshBalance Sheet As at 31 December 2018

Annexure-H

Note 2018 2017

USD Taka Taka OFF-BALANCE SHEET ITEMS

Contingent liabilitiesAcceptances and endorsements - - - Letters of guarantee - - - Irrevocable letters of credit - - 39,099,223 Bills for collection 2,129,080 176,671,092 161,100,293 Other contingent liabilities - - - Total contingent liabilities 2,129,080 176,671,092 200,199,516

Other commitmentsDocumentary credits and short term trade-related transactions

- - -

Forward assets purchased and forward deposits placed

- - -

Undrawn note issuance and revolving underwriting facilities - - - Undrawn formal standby facilities, credit lines and other commitments

- - -

Total other commitments - - - Total off-balance sheet items including contingent liabilities 2,129,080 176,671,092 200,199,516

436


Southeast Bank LimitedOff-Shore Banking Unit, BangladeshProfit and Loss account For the year ended 31 December 2018

Annexure-H.1

Note 2018 2017

USD Taka Taka Interest income 11 8,061,335 673,202,880 448,187,159 Interest paid on deposits and borrowings etc. 12 (5,982,051) (499,561,684) (299,456,776)Net interest income 2,079,284 173,641,196 148,730,383 Commission, exchange & brokerage 13 400,370 33,434,928 28,552,410 Other operating income 13.1 141,700 11,833,382 6,983,250

542,070 45,268,310 35,535,660 Total operating income (A) 2,621,354 218,909,506 184,266,043

Salaries and allowances 14 53,184 4,441,390 4,348,142 Rent, taxes, insurance, electricity etc. 15 12,688 1,059,615 1,015,474 Legal expenses - - - Postage, stamp, telecommunication 16 13,235 1,105,281 973,283 Stationery, printing, advertisements etc. 17 1,537 128,332 101,586 Depreciation and repair of bank's assets 18 3,160 263,905 332,560 Other expenses 19 55,350 4,622,300 4,255,775 Total operating expenses (B) 139,155 11,620,824 11,026,819 Operating profit (C=A-B) 2,482,199 207,288,683 173,239,224 Provision for loans and advances

General provision 9.1 431,466 36,200,000 17,977,179 Specific provision - - -

431,466 36,200,000 17,977,179 Provision for diminution in value of investments - - Other provisions 9.2 (2,918) (235,284) (100,652)Total provision (D) 428,548 35,964,716 17,876,527 Total profit before tax (C-D) 2,053,651 171,323,967 155,362,697

437


Southeast Bank LimitedOff-Shore Banking Unit, BangladeshNotes to the Financial Statements As at and for the year ended 31 December 2018

Annexure-H.2

1 Status of the unitOff-shore Banking Unit (OBU) is a separate business unit of Southeast Bank Limited, governed under the Rules and Guidelines of Bangladesh Bank. The Bank obtained permission to operate OBU vide Letter No. BRPD(P-3)744(98)/2008-2213 dated June 24, 2008. The Bank presently has 2 (two) OBUs – one at Export Processing Zone, Dhaka and the other at Export Processing Zone, Chittagong. OBU boosts up foreign trade by extending finance to industrial units inside and outside the Export Processing Zone (EPZ) area. OBU is free to make loans/advances to persons/institutions not resident in Bangladesh and to make loans/advances to Type-A (wholly foreign owned) units in the EPZs in Bangladesh. Industrial units outside the EPZs and Type-B and Type-C industrial units within the EPZs in Bangladesh may avail term loans in foreign currencies from OBU subject to compliance with the guidelines issued by the Board of Investment for borrowing abroad by industrial units Bangladesh.

2 Significant accounting policies and basis of preparations2.1 Basis of preparation

The financial statements are prepared on the basis of a going concern and represent the financial performance and financial position of the OBU. The financial statements of the OBU are prepared in accordance with the Bank Companies Act 1991, in particular, Banking Regulation and Policy Department (BRPD) Circular No. 14 dated June 25, 2003, other Bangladesh Bank Circulars and International Financial Reporting Standards (IFRS).

2.2 Foreign currencyItems included in the financial statements are measured using the currency of the primary economic environment in which the entity operates, i.e., the functional currency. The financial statements are presented in Taka which is the Bank’s functional and presentation currency. Figures appearing in the financial statements have been rounded off to the nearest Taka. Assets & liabilities and income & expenses have been converted into Taka currency @ US$1 = Tk. 83.9000 (closing rate as at 31 December 2018) and Tk.83.5101 (average rate which represents the year end) respectively.

2.3 Basis of AccountingOBU maintains its accounting records in USD from which accounts are prepared according to the Bank Companies Act, 1991, Bangladesh Financial Reporting Standards and other applicable directives issues by Bangladesh Bank.

2.4 Functional and presentation currencyThe Financial Statements of OBU are presented in both USD and Bangladesh Taka (Taka/Tk.) except as otherwise indicated. Financial information presented in Taka and USD has been rounded off to the nearest integer. and financial information presented in USD has been rounded into two decimal points

Note 2018 2017 USD Taka Taka

3 Balance with other banks and financial institutionsIn Bangladesh 3.1 1,311,143 110,004,898 122,490,327 Outside Bangladesh 3.2 962,295 80,736,585 5,569,926

2,273,438 190,741,483 128,060,253 3.1 In Bangladesh

Southeast Bank Limited 1,311,143 110,004,898 122,490,327 Other commercial bank - - -

1,311,143 110,004,898 122,490,327 3.2 Outside Bangladesh (current account)

Standard Chartered Bank, New York 962,295 80,736,585 5,569,926 Money at call and on short noticeIn bank;Placement SEBL Head Office 10,000,000 839,000,000 289,450,000

10,000,000 839,000,000 289,450,000

438


4 Loans and advancesLoans, cash credit, overdrafts etc. 4.1 62,281,780 5,225,441,312 3,048,637,990 Bills purchased and discounted 4.2 77,697,591 6,518,827,903 5,075,982,118

139,979,371 11,744,269,214 8,124,620,108 4.1 Loans, cash credit, overdrafts etc.

In Bangladesh - - - Outside Bangladesh 4.1.1 62,281,780 5,225,441,312 3,048,637,990

62,281,780 5,225,441,312 3,048,637,990 4.1.1 Outside Bangladesh

Time loan 29,556,084 2,479,755,489 708,775,158 Term loan 30,352,152 2,546,545,580 2,184,773,489 Advance-LTR 954,839 80,110,992 57,970,184 Loan against foreign bill 1,418,704 119,029,250 97,119,159

62,281,780 5,225,441,312 3,048,637,990 4.2 Bills purchased and discounted

In Bangladesh - - - Outside Bangladesh 77,697,591 6,518,827,903 5,075,982,118

77,697,591 6,518,827,903 5,075,982,118 5 Fixed assets including premises, furniture and fixtures

Cost:Furniture and fixtures 40,730 3,417,250 3,368,373 Electrical appliances 22,067 1,851,389 1,824,909

62,797 5,268,639 5,193,283 Less: Accumulated depreciation

Furniture and fixtures 27,102 2,273,891 2,027,555 Electrical appliances 20,209 1,695,551 1,634,224

47,312 3,969,442 3,661,779 Written down value as at 31 December 15,485 1,299,197 1,531,504

6 Other assetsInterest on calls and placements(USD) 58,056 4,870,862 920,607 Prepaid management fee GCPF 134,145 11,254,793 13,456,951 Prepaid interest mashreq - - 5,560,583 Insurance 89 7,443 8,171 Advance office rent 2,149 180,270 177,692 Others 140 11,723 -

194,578 16,325,091 20,124,004 7 Borrowing from other banks, financial institutions and agents

Borrowings from IFC - - 1,240,500,000 Borrowings from CBQ 20,000,000 1,678,000,000 661,600,000 Borrowings from Mashreq bank PSC-USD - - 827,000,000 Borrowings from GCPF 20,000,000 1,678,000,000 1,654,000,000 Borrowings from RAK Bank ,UAE 16,500,000 1,384,350,000 1,240,500,000 Borrowings from Bank Muscat, Oman - - 661,600,000 Borrowings from FGB, UAE 15,000,000 1,258,500,000 827,000,000 Borrowings from ADB 10,000,000 839,000,000 289,450,000 Borrowings from NBM Bank, Nepal 5,000,000 419,500,000 - Borrowings from SCB, Singapore 25,000,000 2,097,500,000 - Borrowings from EIB, UAE 16,000,000 1,342,400,000 - Borrowings from FM HDFC Bank,Hong Kong - - 413,500,000 Borrowings from Head Office 15,000,000 1,258,500,000 246,446,000

142,500,000 11,955,750,000 8,061,596,000 8 Deposit accounts

Current accounts 8.1 77,927 6,538,058 8,063,742 Fixed deposits 406,360 34,093,601 27,215,079

484,287 40,631,659 35,278,821

Note 2018 2017 USD Taka Taka

439


Note 2018 2017

USD Taka Taka 8.1 Current deposits

Current accounts 59,054 4,954,608 4,153,819 Margin against L/C - - 3,909,923 Sundry creditors 18,873 1,583,450 -

77,927 6,538,058 8,063,742 9 Other liabilities

Accrued interest on borrowing .O/Banks (Call) 234,097 19,640,758 207,176 Interest payable-CBQ Loan 149,655 12,556,060 8,014,182 Accrued interest on borrowing from NBM Bank, Nepal 54,250 4,551,575 - Interest payable on RAK Bank, UAE 105,304 8,834,995 7,688,983 Interest payable on FGB, UAE 178,723 14,994,897 3,818,628 Interest payable on ADB 118,809 9,968,047 1,600,100 Accrued interest on borrowing from EIB, UAE 192,018 16,110,291 - Accrued interest on borrowing from SCB, Singapore 325,307 27,293,236 - Accrued interest on borrowing from GCPF - - 769,610 Interest payable on Bank Muscat, Oman - - 2,920,259 Interest payable-IFC loan - - 1,757,375 Accrued interest on borrowing FM-HDFC Bank, Hong Kong - - 6,195,033 Interest Suspense 391,070 32,810,757 - Provision for unclassified loans and advances 9.1 1,456,785 117,450,000 81,250,000 Provision for off-balance sheet exposures 9.2 21,291 1,766,711 2,001,995

3,227,309 265,977,326 116,223,341 9.1 Provision for unclassified loans and advances

Balance as at 1 January 1,025,319 81,250,000 63,272,821 Provision made during the year 431,466 36,200,000 17,977,179

1,456,785 117,450,000 81,250,000 Adjustments made during the year - - - Balance as at 31 December 1,456,785 117,450,000 81,250,000

9.2 Other provisionsProvision for off-balance sheet exposuresBalance as at 1 January 24,208 2,001,995 2,102,648 Add: Provision made during the year - - -

24,208 2,001,995 2,102,648 Less: Adjustments made during the year (2,918) (235,284) (100,652)Balance as at 31 December 21,291 1,766,711 2,001,995

10 Retained earningsBalance as at 1 January 4,197,625 350,687,705 178,196,055 Add/less: foreign currency translation gain for last year - 7,264,328 17,128,953

4,197,625 357,952,033 195,325,008 Addition during the year 2,053,651 171,323,967 155,362,697

6,251,276 529,276,000 350,687,706 Add/less: foreign exchange gain (loss) - - - Balance as at 31 December 6,251,276 529,276,000 350,687,706

11 Interest income on investmentInterest income from loans and advances 2,637,614 220,267,367 130,111,780 Interest on overdraft 118 9,829 47,455 Interest income from bill purchased and discounted 5,161,369 431,026,422 317,132,599 Interest income calls & placement (FCY) 262,235 21,899,262 895,326

8,061,335 673,202,880 448,187,159 12 Interest paid on deposits and borrowings etc.

Interest on FDR 35 2,898 2,184 Interest expense on mashreq bank loan 171,099 14,288,517 16,858,486 Interest expenses -GCPE loan 1,187,458 99,164,755 65,135,550 Interest on IFC loan 463,017 38,666,637 54,030,392

440


Note 2018 2017

USD Taka Taka Interest on CBQ loan 721,498 60,252,403 42,233,009 Interest expenses -ICIC bank 155,123 12,954,324 - Interest expenses -RAK bank,UAE 919,401 76,779,269 36,260,651 Interest expenses -Bank Muscat, Oman 101,554 8,480,808 22,720,091 Interest expenses FGB, UAE 263,971 22,044,233 29,757,481 Interest expenses ADB 360,398 30,096,860 8,312,692 Interest expense on -HDFC BANK, HONG 8,375 699,421 6,024,906 Interest expense on -SCB, Singapore 651,772 54,429,512 - Interest expense on -EIB, UAE 340,651 28,447,807 - Interest expense on -NMB Bank 54,250 4,530,423 - Interest on calls and placement 583,448 48,723,817 18,121,334

5,982,051 499,561,684 299,456,776 13 Commission, exchange & brokerage

Commission and other charges 400,370 33,434,928 28,552,410 400,370 33,434,928 28,552,410

13.1 Other operating incomeOther income- SWIFT 27,820 2,323,251 603,217 Miscellaneous income 26,440 2,208,008 1,371,760 Rebate from trade payments 87,440 7,302,123 5,008,273

141,700 11,833,382 6,983,250 14 Salaries and allowances

Basic salary 25,173 2,102,214 1,981,007 Allowances 21,518 1,796,939 1,640,245 Provident fund contribution 2,429 202,822 198,522 Bonus 4,064 339,415 528,367

53,184 4,441,390 4,348,142 15 Rent, taxes, insurance, electricity etc.

Rent, rates and taxes 10,735 896,478 853,088 Insurance 222 18,531 19,645 Electricity and lighting 1,732 144,606 142,741

12,688 1,059,615 1,015,474 16 Postage, stamp, telecommunication etc.

Postage 200 16,684 13,601 Internet service 3,114 260,078 281,268 SWIFT charges 6,553 547,280 476,149 FC Nostro charges 2,960 247,190 171,072 Telephone 408 34,050 31,193

13,235 1,105,281 973,283 17 Stationery, printing, advertisements etc.

Office and printing stationery 1,537 128,332 101,586 1,537 128,332 101,586

18 Depreciation and repair of bank's assetsDepreciation on own assets:

Furniture and fixtures 2,585 215,907 218,278 Electrical appliances 575 47,998 114,282

3,160 263,905 332,560 19 Other expenses

Entertainment 672 56,095 28,876 Management fee GCPF 28,575 2,386,283 1,759,214 Pay Protection 193 16,090 - Expense-IFC portfolio monitoring expense - - 462,467 Travelling expenses and allowance 49 4,111 11,301 House maintenance (Executive ) 2,281 190,472 186,746 Repair, maintenance and utilities 732 61,120 39,094 Books and periodicals 71 5,949 5,271 Conveyance 560 46,805 38,390 Miscellaneous 22,217 1,855,374 1,724,416

55,350 4,622,300 4,255,775

441


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Southeast Bank Capital Services Ltd.

444


Independent Auditor’s Report To The Shareholders of Southeast Bank Capital Services Limited

Report on The Audit of The Financial Statements

Opinion

We have audited the financial statements of Southeast Bank Capital Services Ltd. which comprise the statement of financial position as at 31 December 2018 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended and notes to the financial statements including a summary of significant accounting policies and other explanatory notes.

In our opinion, the accompanying give true and fair view, in all material respects, of the financial position of the company as at 31 December 2018 and of its financial performance and cash flows for the year then ended and in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs).Our responsibilities under those standards are further described in the Auditors Responsibilities for the audit of the financial statements section of our report. We remained independent of the company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting standards (IFRS), the companies Act 1994, and other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In preparing the financial statements, management is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

In preparing the financial statements, management is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the the company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the company’s financial reporting process.

Auditor’s Responsibilities for the Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control.

445


Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Report on other Legal and Regulatory Requirements

We also report that:

i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

ii. in our opinion, proper books of accounts as required by law have been kept by the company and so far as it appeared from our examination of those books;

iii. The Company’s Financial Position as at 31 December 2018 and Statement of Profit or Loss and Other Comprehensive Income and its Cash Flows dealt with by the report are in agreement with the books of account and returns;

Pinaki Das, FCAPinaki & CompanyChartered Accountants

Dhaka.Dated: 6th March, 2019

446


Southeast Bank Capital Services Ltd.Statement of Financial PositionAs at 31 December 2018

PARTICULARSTAKA

31-12-2018 31-12-2017

ASSETSA. NON-CURRENT ASSETS 549,252,300 608,167,963

Property, Plant and Equipment Note- 04 549,252,300 608,167,963

B. CURRENT ASSETS 5,327,538,955 5,184,493,803 Margin Loan Note- 05 2,467,417,247 2,465,716,400 Accounts Receivable Note- 06 20,494,316 21,241,611 Advances, Deposits and Prepayments Note- 07 90,507,003 77,121,808 Investment in Quoted Shares Note- 08 2,553,196,239 2,456,875,942 Investment in Un Quoted Shares Note- 09 172,600,000 131,000,000 Cash and Cash Equivalents Note- 10 23,324,151 32,538,042

C. TOTAL ASSETS [A + B] 5,876,791,255 5,792,661,766 EQUITY AND LIABILITIES D. CAPITAL AND RESERVE 5,500,276,834 5,489,512,364

Share Capital Note- 11 5,500,000,000 5,500,000,000 Retained Earnings Note- 12 276,834 (10,487,636)

E. NON-CURRENT LIABILITIES - - - -

F. CURRENT LIABILITIES 376,514,421 303,149,402 Margin Deposit Note- 13 37,532,362 27,524,421 Advance Received for Rent Note- 14 1,125,860 7,110,500 Collection in Transit Note- 15 23,512,365 23,908,591 Loan From ICB Note- 16 54,208,826 - Provision for Corporate Income Tax Note- 17 94,132,785 80,815,923 Provision for Diminution in Value of Investments Note- 18 153,692,107 153,692,107 Accrued Expenses Note- 19 637,740 155,483 Other Liabilities Note- 20 11,672,375 9,942,376

G. TOTAL EQUITY AND LIABILITIES [D + E + F] 5,876,791,255 5,792,661,766

Director Managing Director PINAKI & COMPANYChartered Accountants

Chairman

447


Southeast Bank Capital Services Ltd.Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December 2018

PARTICULARSTAKA

01.01. 2018 to 31.12.2018

01.01. 2017 to 31.12.2017

Income:Interest on Portfolio Loan 17,080,020 16,899,513 Portfolio Management Fee 14,942,265 14,611,790 Documentation Charge 146,450 147,558 Settlement Fees 14,773,595 34,908,758 Commission on Underwriting 325,000 495,000 Commission on Issue Management - 40,000 Income on Investment in Shares 19,076,085 48,532,594 Dividend Income 48,654,756 52,538,334 Other Income Note- 21 4,308,624 4,273,920 Interest on SND Acc. 166,849 5,387,568 Total Income 119,473,644 177,835,035

Expenses:Salary & Allowances Note- 22 12,546,929 10,295,856 Financial Expenses Note- 23 2,196,982 5,791,226 Printing & Stationery 304,136 256,808 Local Conveyances 34,286 20,250 Entertainment 304,784 215,400 Car Maintenance 647,660 561,492 House Service & Utilities 282,500 191,935 House Maintenance 1,292,680 1,017,902 Telephone & Postage 165,253 144,673 Office Space Rentals 12,074,202 11,441,052 Other Rates & Taxes 100,100 617,550 Miscellaneous Expenses 827,108 250,064 CDBL Expenses 1,293,192 3,445,778 Misc. Contractual Services 827,815 813,854 Bank Charges 50,332 41,764 Seating Fees ( Director Remuneration ) 208,000 210,000 Fuel and Lubricant 320,320 112,048 Donation/Contribution - 50,000 Audit Fees 69,000 69,000 Professional Service Charge 264,500 143,750 Corporate Expenses (Subscription) 150,000 215,000 Utilities Charges (Repair & Main & Utilities) 952,394 226,265 Gratuity Provision 500,000 - Training & Seminar 2,810 64,300 Electricity & Lighting Expenses 1,000,865 989,688 Depreciation 58,976,463 56,255,905 Total Expenses 95,392,312 93,441,560

Net Profit Before Provision 24,081,333 84,393,476 Add/(Less): Provision for Diminution in Value of Investments

Note- 24 - (39,388,168)

Profit/(Loss) Before Tax 24,081,333 45,005,308 Less: Provision for Corporate Income Tax 13,316,862 18,983,984 Retained Earnings Carried Forward 10,764,471 26,021,323

Director Managing Director PINAKI & COMPANYChartered Accountants

Chairman

448


Southeast Bank Capital Services Ltd.Statement of Changes in Shareholders EquityFor the year ended 31 December 2018

Statement of Changes in Shareholders Equityfor the year ended 31 December 2017

(Amount in Taka)

Particulars Share Capital General Reserve Retained Earnings Total

Balance as on 01.01.2018 5,500,000,000 - (10,487,637) 5,489,512,364

Retained earnings during the year - - 10,764,471 10,764,471

Balance as on 31.12.2018 5,500,000,000 - 276,834 5,500,276,834

(Amount in Taka)

Particulars Share Capital General Reserve

Retained Earnings Total

Balance as on 01.01.2017 5,500,000,000 - (36,508,960) 5,463,491,040

Add: during the year - - - -

Retained earnings during the year - - 26,021,323 26,021,323

Balance as on 31.12.2017 5,500,000,000 - (10,487,637) 5,489,512,364

Managing DirectorDirector

449


Managing DirectorDirector

Southeast Bank Capital Services Ltd.Statement of Cash FlowsFor the year ended 31 December 2018

TAKA

01.01.2018 to 31.12.2018

01.01.2017 to 31.12.2017

Cash flow from Operating Activities

Cash receipt from Customer 17,827,315 31,548,186 Cash Received from Others 53,572,019 103,009,621 Cash paid to Employee and Suppliers (32,006,610) (74,448,866)Advances, Deposits and Prepayments 8,515,802 19,386,421 Income Tax Paid (21,900,997) (17,046,603)Margin Loan (1,700,847) 34,926,043 Margin Deposit 10,007,941 6,520,770 Advance Received for Rent (5,984,640) (5,984,640)Collection in Transit (396,226) (43,126,435)

Net cash provided by Operating Activities 27,933,757 54,784,497

Cash flow from Investing Activities Investment in Quoted Shares (137,920,297) (723,928,362)Disposal of Investment in Quoted Shares - 412,677,374 Acquisition of Fixed Asset (60,800) (336,708,563)Interest on SND 166,849 5,387,568 Income from Dividend 48,654,756 52,538,334

Net cash used in Investing Activities (89,159,492) (590,033,650)

Cash flow from Financing Activities Net Increase/(Decrease) in Overdraft - (10,674)Net Increase/(Decrease) ICB Loan- Pronodona Scheme 54,208,826 (7,687,819)Interest on ICB Loan - Pronodona Scheme (2,196,982) - Financial Expense on Loan - (5,791,226)

Net cash used in Financing Activities 52,011,844 (13,489,719)

Increase/(decrease) in cash and cash equivalents (9,213,891) (548,738,872)

Cash and cash equivalents at the opening 32,538,042 581,276,914

Cash and cash equivalents at the closing 23,324,151 32,538,042

450


Southeast Bank Capital Services Ltd.Notes to the Financial StatementsAs at 31 December 2018

1.0 Legal Status and Nature of the Company Southeast Bank Capital Services Limited (hereinafter referred to as “the Company”) was incorporated in

Bangladesh as a public limited company on 23.09.2010 under the Companies Act 1994 and granted registration number C-87139/10.

1.1 Address of the Registered Office The company operates its activities from Eunoos Trade Center, 52/53 Dilkusha C/A, Dhaka-1000.1.2 Nature of Business Activities: The main object of Southeast Bank Capital Services Limited is to carry on the business of merchant banking under

the Bangladesh Securities and Exchange Commission (Merchant Banking and Portfolio Management) Rules 1996.2.0 Significant Accounting Policies2.1 Statement of Compliance The financial statements of Southeast Bank Capital Services Limited have been prepared in accordance with the

International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), Companies Act 1994 and other applicable laws and regulations.

2.2 Measurement Bases Used in Preparing the Financial Statements The elements of financial statements have been measured on “Historical Cost” basis, which is one of the most

commonly adopted base provided in “the framework for the preparation and presentation of financial statements” issued by the International Accounting Standard Board (IASB).

2.3 Going Concern Financial Statements have been prepared on going concern basis as there was no significant doubt or uncertainty

to continue the operation of the company in the foreseeable future.2.4 Components of Financial Statements: According to International Accounting Standard (IAS) – 1, as adopted by ICAB as IAS – 1 “presentation of financial

statements“ the complete set of financial statements includes the following components:i) Statement of Financial Positionii) Statement of Profit or Loss and Other Comprehensive Incomeiii) Statement of Changes in Shareholders Equity iv) Statement of Cash Flows and v) Notes to the Financial Statements.

3.0 Principal Accounting Policies:3.1 Cash Flow Statement Cash Flow Statement is prepared in accordance with IAS 7 “Cash Flow Statement”. The cash flow from the

operating activities have been presented under Direct Method as prescribed by the Securities and Exchange Rules 1987 and considering the provisions of Paragraph 18(b) of IAS-7 which provides that “Enterprises are encouraged to report Cash Flow from Operating Activities using the Direct Method”.

3.2 Reporting Currency and Level of Precision: The figures in the financial statements represent Bangladesh Currency (Taka), which have been rounded-off to

the nearest Taka.3.3 The board at its meeting dated 17-12-2018 identified certain parties quite unable to accommodate interest on its

portfolio loan which were considered totally unrealizable and as such kept the same out of interest during the year. 3.4 Others:

a) There is no claim against the company, which has not been acknowledged as debt in the Statement of Financial Position.

b) There was no contingent liability as on 31-12-2018.c) Figures of the previous year have been rearranged, wherever considered necessary to conform to current

year’s presentation.d) Investment in shares (Note: 08) has been restated in quoted and unquoted for fair presentation.

451


No. PARTICULARSTAKA

31.12.2018 31.12.2017

04. Property, Plant and Equipment

Details of Property, Plant and Equipment and Depreciation as on 31 December 2018 are shown in the annexed Schedule - A. This is arrived at as follows:Written Down Value (a-b) 549,252,300 608,167,963

Cost Value

Opening Balance - At Cost 742,188,636 405,480,073 Add: Addition during the year -At Cost 60,800 336,708,563

742,249,436 742,188,636 Less : Adjustment during the year - -

Closing Balance (a) 742,249,436 742,188,636

Accumulated Depreciation

Opening Balance 134,020,673 77,764,768 Add: Charged during the year 58,976,463 56,255,905


Closing Balance (b) 192,997,136 134,020,673

05 Margin Loan 2,467,417,247 2,465,716,400

As per Last Account 2,465,716,400 2,500,642,443 Add: During the year 1,776,271,962 3,720,528,091

4,241,988,362 6,221,170,534 Less: Received during the year 1,774,571,115 3,755,454,134

06 Accounts Receivable 20,494,316 21,241,611

BLI Securities Ltd. 14,910,720 18,199,626 AD Holdings Ltd. 2,380,715 3,274,407 National Securities & Consultants Ltd. 7,943 - Int. Leasing Securities Ltd. 2,437,301 (232,422)Accrued Income Note- 06.1 757,637 -

06.1 Accrued Income 757,637 -

Interest on portfolio loan 757,395 - Accrued portfolio management fee 242 -

07 Advances, Deposits and Prepayments 90,507,003 77,121,808

Lease Rental (Eunoos Center) Note- 07.1 - 7,401,480 Corporate Income Tax Note- 07.2 90,239,488 68,338,491 Security Deposits-(As per Last Account) 238,915 238,915 Interest Receivable on Portfolio Loan - 757,396 Advance for Salary 28,600 28,600 Accounts Receivable (Others) - 356,926

07.1 Lease Rental (Eunoos Center) - 7,401,480

As per Last Account 7,401,480 14,802,960 Less : Adjustment during the year 7,401,480 7,401,480

Southeast Bank Capital Services Ltd.Notes to the Financial StatementsAs at 31 December 2018

452


No. PARTICULARSTAKA

31.12.2018 31.12.2017

07.2 Corporate Income Tax 90,239,488 68,338,491

As per Last Account 68,338,491 51,291,888 Add: Addition during the year (Advance Income Tax) 12,587,567 16,866,894

80,926,058 68,158,782 Add: Paid by Pay order for the year 2011-12 - 9,873 Add: Paid by Pay order for the year 2012-13 - 169,836 Add: Paid by Pay order for the year 2013-14 9,313,430 -


08 Investment in Quoted Shares Note- 08.01 2,553,196,239 2,456,875,942

As per Last Account 2,456,875,942 2,276,624,953 Add: Net investment during the year 96,320,297 180,250,988

08.01 The total amount is invested as under: Exim Bank Ltd. 115,356,536 110,271,800 Bay Leasing & Investment Ltd. 382,935,045 382,935,046 National Life Insurance Co. Ltd. 1,462,000,069 1,462,000,069 Asia Insurance Co. Ltd. 39,043,100 39,043,100 Delta Life Insurance Co. Ltd. 77,664,988 77,330,736 GPH Ispat 13,059,608 12,284,522 KDS Accessories Ltd. 3,720,146 7,049,362 Western Marine Shipyard Ltd. 13,724,199 - Runner Auto Mobiles Ltd. 1,080,825 - SS Steel Ltd. 134,920 - Prime Bank Ltd. 94,277,014 85,456,786 BBS Cables 6,540,668 - Mobil Jamuna Ltd. 7,257,972 5,954,035 Intraco Refueling Station Ltd. 2,540 - GBB Power Ltd. 12,157,161 11,836,582 United Power Goneration & Distribution Cr. 7,352,511 - Barka Power Ltd. 25,134,499 20,713,799 Mozaffar Hossain Spining Mills Ltd. 12,887,618 12,887,618 Khulna Power Company ltd. 7,886,188 - Argon Denims Ltd. 13,082,641 11,133,522 Queen South Textile Ltd. 1,349,035 - VFS Thread Dyeing Ltd. 38,389 - Esquire Knit Composit Ltd. 1,880,145 - M..L Dyeing Ltd. 35,233 - Kattali Textile Ltd. 100,640 - Orion Pharma Ltd. 17,430,133 16,070,499 AFC Agro Biotech Ltd. 25,120,269 24,343,785 Active Fine Chemicals Lyd. 6,664,815 - Indo-Bangla Pharmaceuticals Ltd. 2,677 - Silva Pharmaceuticals Ltd. 91,940 - Boshundhora Paper Mills Ltd. 12,978,480 - Genex Infosys Ltd. 104,660 - Confidence Cement Ltd. 7,015,880 - ADN Telecom Ltd. 569,040 - SK Trims & Industries Ltd. 50,410 - JMI Syringes & Medical Devices Ltd. - 9,420,561 Heidelberg Cement Ltd. 10,343,914 7,211,819 Unique Hotels & Resorts Ltd. 19,370,853 28,506,766 Brac Bank Ltd. 8,003,965 - IFIC Bank Ltd. 2,800,002 2,800,000

No. PARTICULARSTAKA

31.12.2018 31.12.2017

453


No. PARTICULARSTAKA

31.12.2018 31.12.2017

Beximco Ltd. 50,129,634 43,078,997 Beximco Pharma Ltd. - 2,386,760 ACI Formulations 8,341,067 5,540,214 C & N Textiles 12,992,031 12,169,572 Omiex - 64,800 IFID Auto - 459,469 Trust Bank Ltd 4,755,645 2,529,566 Dhaka Bank Ltd 17,461,794 11,153,360 FAS Finance & Investment 13,018,491 11,683,746 Uttara Finance 8,086,101 6,976,776 Pubali Bank Ltd 12,226,754 5,452,118 NAHEEACP - 62,246 Paramount Textile Ltd. - 13,722,341 BPML - 691,600 Dutch- Bangla Bank 16,935,993 13,653,967

2,553,196,239 2,456,875,942 09 Investment in Un Quoted Shares 172,600,000 131,000,000

VIPB(Non Listed) 3,500,000 3,500,000 Lub-rref (BD) Ltd. 127,500,000 127,500,000 BD Thai Food & Beveridge Ltd. 41,600,000 -

10 Cash and Cash Equivalents 23,324,151 32,538,042

Cash in hand - - Cash at bank Note - 10.1 23,324,151 32,538,042

10.1 Cash at Bank 23,324,151 32,538,042

Southeast Bank Ltd -CD A/C- 1100007409 83,485 5,387,250 Southeast Bank Ltd -SND-13100000785 13,616,930 9,947,442 Southeast Bank Ltd -Al- Wadiah A/C- 11100006778 9,623,736 17,203,350

10 Share Capital 5,500,000,000 5,500,000,000

Authorised Capital:600,000,000 shares of TK. 10/- each 6,000,000,000 6,000,000,000

Issued and Subscribed Capital:550,000,000 shares of TK. 10/- each

Paid up Capital:550,000,000 shares of TK. 10/- each 5,500,000,000 5,500,000,000

12 Retained Earnings 276,834 (10,487,637)As per Last Account (10,487,637) (36,508,960)Add: Profit/Loss during the year 10,764,471 26,021,323

13 Margin Deposit 37,532,362 27,524,421

As per Last Account 27,524,421 21,003,651 Add: During the year 383,495,317 622,034,746

411,019,738 643,038,397 Less: Paid during the year 373,487,375 615,513,976

14 Advance Received for Rent 1,125,860 7,110,500 As per Last Account 7,110,500 13,095,140 Add: Received during the year - -

7,110,500 13,095,140 Less: Adjustment during the year 5,984,640 5,984,640

454


15 Collection in Transit 23,512,365 23,908,591 As per Last Account 23,908,591 67,035,027 Add: Received during The year 2,508,397,879 5,739,017,933

2,532,306,470 5,806,052,959 Less: Paid during the year 2,508,794,105 5,782,144,368

16 Loan From ICB 54,208,826 -

As per Last Account - 7,687,819 Add: Received during the year 54,208,826 -

54,208,826 7,687,819 Less: Paid during the year - 7,687,819

17 Provision for Corporate Income Tax 94,132,785 80,815,923 As per Last Account 80,815,923 61,831,939 Add: Addition during the year 13,316,862 18,983,984


18 Provision for Diminution in Value of Investments 153,692,107 153,692,107

Opening Balance 153,692,107 114,303,939 Add:/(Less): During the year Note-24 - 39,388,168

19 Accrued Expenses 637,740 155,483

Interest on ICB Loan 451,740 - CDBL Bill 110,000 82,383 Audit Fee 69,000 69,000 News paper Bill - 1,100 Telephone Bill 7,000 3,000

20 Other Liabilities 11,672,375 9,942,376

Accounts Payable (Others) 1,904,774 1,904,776 IPO Application Fund 9,267,600 8,037,600 Provision for Gratuity 500,000 -

Taka01.01. 2018 to

31.12.201801.01. 2017 to

31.12.2017

21 Other Income 4,308,624 4,273,920 Rental Income 4,273,920 4,273,920 Miscellaneous Income 34,704 -

22 Salary & Allowances 12,546,929 10,295,856 Salary & Allowances 9,189,947 7,438,884 Festival Bonus 878,780 750,750 Incentive Bonus - 235,100 Leave Fare Concession 1,962,480 1,475,937 Provident Fund Contribution 515,722 395,185

23 Financial Expenses 2,196,982 5,791,226 Interest on ICB Loan 2,196,982 - Interest on Loan-SEBL A/C No. 12594 - 204,113 Interest on Loan-SEBL A/C No. 12091 - 1,806,452 Interest on Loan-SEBL A/C No. 12229 - 19,183 Interest on Loan-SEBL A/C No. 12030 - 3,761,479

24 Provision for Diminution in Value of Investments - (39,388,168)Opening Balance 153,692,107 114,303,939 Less: Required on 31 December 2018 153,692,107 153,692,107

No. PARTICULARSTAKA

31.12.2018 31.12.2017

455


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456


SOUTHEAST FINANCIAL SERVICES (UK) LTD.

Report of the Directors and Unaudited Financial Statements

Period of accountsStart date: 01 January 2018

End date: 31 December 2018

457


SOUTHEAST FINANCIAL SERVICES (UK) LTDCompany Information

For the year ended 31 December 2018

DIRECTORS Alamgir Kabir, FCA M Kamal Hossain Muhammad Nazmul Huda Azad

REGISTERED NUMBER 07539137

REGISTERED OFFICE 22 NEW ROAD LONDON E1 2AX

ACCOUNTANTS Jahan & Co Chartered Management Accountants 22 Osborn Street London E1 6TD

458


SOUTHEAST FINANCIAL SERVICES (UK) LTDDirectors’ Report For the year ended 31 December 2018

The directors present their annual report and the audited financial statements for the year ended 31 December 2018.

Principal activities

Principal activity of the company during the financial year was of financial intermediation.

Directors

The directors who served the company throughout the year were as follows:

Alamgir Kabir, FCA

M Kamal Hossain

Muhammad Nazmul Huda Azad

Statement of Directors’ responsibilities

The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations and in accordance with United Kingdom Generally Accepted Accounting Practice.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial Reporting Standard 102). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently

make judgements and accounting estimates that are reasonable and prudent

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom, governing the preparation and dissemination of financial statements, may differ from legislation in other jurisdictions

Each director who held office at the date of approval of this report confirms that: so far as the director is aware, there is no relevant audit information needed by the company’s auditor in connection with preparing their report of which the company’s auditor is unaware; and the director has taken all the steps that they ought to have taken as a director in order to be aware of any relevant audit information and to establish that the company’s auditor is aware of that information .

This report was approved by the board and signed on its behalf.

MUHAMMAD NAZMUL HUDA AZAD Director

Date Approved: 13 January 2019

459


SOUTHEAST FINANCIAL SERVICES (UK) LTDAccountants’ Report For the year ended 31 December 2018

In order to assist you to fulfil your duties under Companies Act 2006, we have prepared for your approval the accounts of SOUTHEAST FINANCIAL SERVICES (UK) LTD for the year ended 31 December 2018 which comprise the Statement of Comprehensive Income, the Statement of Financial Position and related notes from the company’s accounting records and from information and explanations you have given us.

As a practising member of the Chartered Institute of Management Accountants, we are subject to its ethical and other professional requirements which are detailed at CIMA’s website.

This report is made solely to the member of SOUTHEAST FINANCIAL SERVICES (UK) LTD, as a body, in accordance with the terms of our engagement letter. Our work has been undertaken solely to prepare for your approval the accounts of SOUTHEAST FINANCIAL SERVICES (UK) LTD and state those matters that we have agreed to state to the Board of SOUTHEAST FINANCIAL SERVICES (UK) LTD, as a body, in this report in accordance with the requirements of the Chartered Institute of Management Accountants and as detailed at its website. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than SOUTHEAST FINANCIAL SERVICES (UK) LTD and its members as a body for our work or for this report.

It is your duty to ensure that SOUTHEAST FINANCIAL SERVICES (UK) LTD has kept adequate accounting records and to prepare statutory accounts that give a true and fair view of the assets, liabilities, financial position and Profit of SOUTHEAST FlNANCIAL SERVICES (UK) LTD. You consider that SOUTHEAST FINANCIAL SERVICES (UK) LTD is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the accounts of SOUTHEAST FINANCIAL SERVICES (UK) LTD. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory accounts.

Jahan & Co Chartered Management Accountants 22 Osborn Street LondonE1 6TD 13 January 2019

460


SOUTHEAST FINANCIAL SERVICES (UK) LTDIncome StatementFor the year ended 31 December 2018

Notes 2018£

2017£

Turnover 214,992 229,246

Gross profit 214,992 229,246

Selling and Distribution costs (4,228) (2,029)

Administrative expenses (207,471) (198,784)

Operating profit 2 3,293 28,433

Profit/Loss on ordinary activities before taxation 3,293 28,433

Tax of profit on ordinary activities - -

Profit/Loss for the financial year 3,293 28,433

461


SOUTHEAST FINANCIAL SERVICES (UK) LTDStatement of Financial PositionAs at 31 December 2018

Notes 2018£

2017£

Fixed assetsTangible fixed assets 5 13,240 15,734

13,240 15,734

Current AssetDebtors 6 110,657 119,253Cash at bank and in hand 51,523 97,181

162,180 216,434Creditors: Amounts falling due within one year 7 (31,410) (91,451)Net Current Assets 130,770 124,983

Total Assets less current liabilities 144,010 140,717Net Assets 144,010 140,717

Capital and reserves

Called up share capital 8 300,000 300,000 Profit and loss account 9 (155,990) (159,283)Shareholders funds 144,010 140,717

For the year ended 31 December 2018 the company was entitled to exemption from audit under section 477 of the companies act 2006 relating to small companies.

Directors’ Responsibilities:

1. The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476

2. The directors acknowledge their responsibilities for complying with the requirements of the companies act 2006 with respect to accounting records and the preparation of accounts

These accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies regime of part 15 of the companies Act 2006

Signed on behalf of the board of directors

MUHAMMAD NAZMUL HUDA AZAD Director

Date Approved by the Board: 13 January 2019

462


SOUTHEAST FINANCIAL SERVICES (UK) LTDNotes to the Financial StatementsFor the year ended 31 December 2018

GeneralInformation

SOUTHEAST FINANCIAL SERVICES (UK) LTD is a private company, limited by shares, registered in England and Wales, registration number 07539137, registration address 22 NEW ROAD, LONDON, E1 2AX.1.AccountingPolicies

Significant accounting policiesStatement of complianceThese financial statements have been prepared in compliance with FRS 102- The Financial Reporting Standard applicable in the UK and Republic of Ireland and the Companies Act 2006.Basis of preparationThe financial statements have been prepared on the going concern basis and under the historical cost convention as modified by the revaluation of land and buildings and certain financial instruments measured at fair value in accordance with the accounting policies.

The financial statements are prepared in sterting which is the functional currency of the company. TurnoverTurnover comprises the invoiced value of goods and services supplied by the company, net of Value Added Tax and trade discounts.Foreign currenciesMonetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the statement of financial position date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All foreign exchange differences are included to the income statementTangible fixed assetsTangible fixed assets, other than freehold land, are stated at cost or valuation less depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following basis:Computer Equipment 20% Reducing balance Fixtures and Fittings 20% Reducing balance Short Leasedhold Properties 7.14 Years Straight Line

2.OperatingProfit/(Loss)2018

£2017

£The operating Profit/Loss is stated after charging/(crediting):

Directors' emoluments 53,711 45,442 Depreciation of tangible fixed assets 3,826 7,908 3.Directors’Emoluments

Directors Salaries 53,711 45,442 53,711 45,442

4.StaffcostsWages and salaries 50,729 58,087 Pension costs, defined contribution plan 2,200 501 Other staff costs 2,444 1,927

55,373 60,515

Average number of employees during the year Number Number Administration 2 2Sales 5 4

7 6

463


SOUTHEAST FINANCIAL SERVICES (UK) LTDNotes to the Financial StatementsFor the year ended 31 December 2018

5.TangibleFixedAssets

Short LeaseholdProperties

£

Fixturesand

Fittings £

Computer Equipment

£

Total£

CostAt 01 January 2018 30,000 48,847 9,911 88,758 Additions - - 1,332 1,332 Disposals - - - - At 31 December 2018 30,000 48,847 11,243 90,090 DepreciationAt 01 January 2018 29,100 36,816 7,108 73,024 Charge for the year 900 2,232 694 3,826 On Disposals - - - - At 31 December 2018 30,000 39,048 7,802 76,850 Net Book valuesClosing balance as at 31 December 2018 - 9,799 3,441 13,240 Opening balance as at 01 January 2018 900 12,030 2,804 15,734

2018£

2017£

6.Debtors:amountfallingduewithinoneyear

Trade Debtors - 102,253 Amounts Owned by Group Undertakings 2,000 2,000 Prepayments and Accurals Income 6,188 6,000 Deposits paid 9,000 9,000 Cash in Transit 93,373 - Foreign Currency Translation Reserve 96 -

110,657 119,253 7.Creditors:amountfallingduewithinoneyear

Amounts Owed to Group Undertakings 25,731 - PAYE control and Social Security 4,507 5,262 Accrued Expenses 951 950 Other Creditors - 85,104 Pension Scheme 221 135

31,410 91,451 8.ShareCapital

Allotted300000 Ordinary shares of £ 1.00 each 300,000 300,000

300,000 300,000 9.ProfitandLossaccount

Balance at 01 January 2018 (159,283)Profit for the year 3,293 Balance at 31 December 2018 (155,990)

464


SOUTHEAST FINANCIAL SERVICES (UK) LTDDetailed Income StatementFor the year ended 31 December 2018

2018£

2017£

TurnoverFee Income 22,452 23,714 Remittance Commissions 113,693 99,555 Exchange Rate Gain 78,847 105,977

214,992 229,246 Gross Profit 214,992 229,246 Selling and Distribution CostsAdvertising 4,077 1,944 Travel & Subsistence 151 85

(4,228) (2,029)

Administrative Expenses:Wages & Salaries 50,729 58,087 Pension Contributions 2,200 501 Staff Training 1,152 350 Staff Welfare 1,292 1,577 Direcrors Salaries 53,711 45,442 Accountancy Fees 3,700 3,800 Legal and Professional Fees(Allowable) 55 2,664 Customer Due Diligence - 191 Heat, Light & Power 1,241 1,612 Cleaning of Premises 1,350 783 Rent, Rates & Insurance 33,592 33,553 Bad Debts Written Off (Specific) - 76 Bank Charges 36,957 30,652 Depreciation Charges: Leasehold Properties 900 4,200 Depreciation Charges: Fixtures and Fittings 2,232 3,007 Depreciation charges: Computer Equipment 694 701 Fees & Subscriptions 7,415 3,431 General Insurance 562 926 Computer Expenses 938 427 Repairs & Renewals 765 1,385 Stationery & Postage 2,486 1,535 Telephone, Fax & Internet 3,810 2,617 Sundry Expenses 1 - Security Expenses 1,689 1,267

(207,471) (198,784)Operating Profit 3,293 28,433 Profit/Loss for the financial year 3,293 28,433

465


Southeast Financial Services (Australia) Pty Ltd

FINANCIAL REPORTFor the year ended 31 December 2018

ABN 40 160 673 165

466


Southeast Financial Services (Australia) Pty LtdABN 40 160 673 165BALANCE SHEET As at 31 December 2018

31 December 2018AUD

31 December 2017AUD

ASSETSCurrent AssetsCash on Hand 1,039.33 24.80 Westpac Cash Reserve - 321653 - 117.44 SEBL Account 2,302.42 302.42 Receivables 9,862.00 17,426.40 Office Bond Deposit - 19,119.04

13,203.75 36,990.10 Non-current AssetsSB General pool 42,652.06 42,652.06 Less accumulated depreciation (32,473.19) (30,988.69)

10,178.87 11,663.37 TOTAL ASSETS 23,382.62 48,653.47

LIABILITIESCurrent LiabilitiesPAYG withhold payable 15,383.53 14,733.53 SEBL Account 19,488.96 24,488.96 Rent Payable - 6,123.40 Superannuation payable 6,360.49 6,190.49 Provision for GST (27,908.94) (27,252.94)

13,324.04 24,283.44

EQUITYShare Capital 312,082.90 312,082.90

Retained EarningsAccumulated Losses beginning of the period (287,712.87) (292,909.68)Profit/(Loss) for the Period (14,311.45) 5,196.81 TOTAL EQUITY 10,058.58 (287,712.87)Total Liability & Equity 23,382.62 48,653.47

467


Southeast Financial Services (Australia) Pty LtdABN 40 160 673 165Profit and Loss AccountFor the year ended 31 December 2018

31 December 2018AUD

31 December 2017AUD

INCOMEInterest Earned - 0.62Commission Collected - 1,858.29 Exchange gain - 5,449.30 Other Income - 12,708.77

- 20,016.98

EXPENDITUREPrinting and Stationery - 131.45 Depreciation - SB general pool 1,484.50 2,909.00 Rental expenses 9,901.31 5,161.00 Telephone, mobile and fax 242.64 551.74 Bank charges - 1,978.18 Motor vehicle expenses - 448.80 Other vehicles expenses 38.00 - Superannuation 170.00 340.00 Wages 2,475.00 3,300.00 Total 14,311.45 14,820.17 Profit/Loss for the period (14,311.45) 5,196.81

468


Notes 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICY

This financial report is special purpose financial report prepared for use by directors and members of the company. The directors have determined that the company is not a reporting entity

The financial report is prepared in accordance wit the requirements of the following Australian Accounting Standards:

AASB 1031: Materiality

AASB 110: Events after the Balance sheet Date

The financial report is prepared on an accruals basis and is based on historic costs and does not take into account changing money values or ,except where specifically stated,current valuations of non current assets.

The following specific accounting policies, which are consistent with the previous period unless otherwise stated,have been adopted in the preparation of this report:

i. Property Plant and Equipment

Property, Plant and equipment are carried at cost, independent or directors' valuation. All assets excluding freehold land and buildings are depreciated over their useful lives to the company.

Southeast Financial Services (Australia) Pty LtdABN 40 160 673 165NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 December 2018

469


SOUTHEAST EXCHANGE COMPANY(SOUTH AFRICA) (PROPRIETARY) LIMITED

ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018

(REGISTRATION NUMBER 2011/008619/07)

470


Southeast Exchange Company (South Africa) (Proprietary) LimitedAnnual Financial Statements for the year ended 31 December 2018

General Information

Country of incorporation and domicile South Africa

Nature of business and principal activities Facilitator of funds remittance

Directors Alamgir Kabir M Kamal Hossain

Registered office and Business Address 9 Dolly Rathebe RoadCorner Mint RoadFordsburgJohannesburg2092

Tax reference number 9084402180

Holding company Southeast Bank Limited incorporated in Bangladesh

Bankers Standard Bank of South AfricaFirst National Bank

Auditors GL Palmer and Company Registered Auditors

Level of Assurance These annual financial statements have been audited in compliance with the applicable requirements of the South African Reserve Bank

Preparer The annual financial statements were independently compiled by: MM Zackey CA(SA)

Issued 31 January 2019

471


Independent Auditors' ReportTo the shareholder of Southeast Exchange Company (South Africa) (Proprietary) LimitedOpinion

We have audited the annual financial statements of Southeast Exchange Company (South Africa) (Proprietary) Limited set out on pages 10 to 20, which comprise the Statement of Financial Position as at 31 December 2018, and the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the annual financial statements, including significant accounting policies.

In our opinion, the annual financial statements present fairly, in all material respects, the financial position of Southeast Exchange Company (South Africa) (Proprietary) Limited as at 31 December 2018, and its financial performance and cashflows for the year then ended in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act 71 of 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the annual financial statements section of our report. We are independent of the company in accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of annual financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the annual financial statements of the current period. These matters were addressed in the context of our audit of the annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined that there are no key audit matters to communicate in our report.

Other information

The directors are responsible for the other information. The other information comprises the Directors’ Report as required by the Companies Act 71 of 2008, which we obtained prior to the date of this report. Other information does not include the annual financial statements and our auditors’ report thereon.

Our opinion on the annual financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the annual financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the annual financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Annual Financial Statements

The directors are responsible for the preparation and fair presentation of the annual financial statements in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act 71 of 2008, and for such internal control as the directors determine is necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error.

a bank with vision

472


In preparing the annual financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the Annual Financial Statements

Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements.

As part of an audit in accordance with International Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the annual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the annual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

GL PALMER AND COMPANYRegistered AuditorsPhilippos Philippou (CA) SAPartnerJohannesburg31 January 2019

473



Directors’ Responsibilities and ApprovalThe directors are required by the Companies Act 71 of 2008. to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statments and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the International Financial Reporting Standard for Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining, a strong control environment. To enable the directors to meet these responsibilities. the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework. effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated. the company endeavours to minimise it by ensuring that appropriate infrustructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However. any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s cash flow forecast for the year to 31 December 2019 and, in light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the company’s annual financial statements. The annual financial statements have been examined by the company’s external auditors and their report is presented on pages 3 to 5.

The annual financial statements set out on pages 10 to 22 which have been prepared on the going concern basis, were approved by the board on 31 January 2019 and were signed on its behalf by:

Alamgir Kabir

Bangladesh

M Kamal Hossain

474



Directors’ ReportThe directors have pleasure in submitting their report on the annual financial statements of Southeast Exchange Company (South Africa) (Proprietary) Limited For the year ended 31 December 2018.

1. Natureofbusiness

Southeast Exchange Company (South Africa) (Proprietary) Limited was incorporated in and operates in South Africa with interests in the facilitator of funds remittance industry.There have been no material changes to the nature of the Company's business from the prior year.

2. Reviewoffinancialresultsandactivities

The annual financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium size Entities and the requirements of the Companies Act 71 of 2008. The accounting policies have been applied consistently compared to the prior year.Full details of the financial position, results of operations and cash flows for the company are set our in these annual financial statements.

2018 2017

3. Sharecapital Number of SharesAuthorisedOrdinary shares of R1 par value 4 000 4 000

2018 2017 2018 2017

R R Number of SharesIssued Ordinary shares of R1 par value 120 120 120 120

There have been no changes to the authorised or issued share capital during the year under review (2017-Nill).

4. Controloverunissuedshares

The unissued ordinary shares are the subject of a general authority granted to the directors in terms of sec-tion 38 of the Companies Act 71 of 2008. As this general authority remains valid only until the next AGM, the shareholder will be asked at that meeting to consider an ordinary resolution placing the said unissued ordinary shares under the control of the directors until the next AGM.

5. Dividends

Given the current state of the global economic environment, the board believes that it would be more appro-priate for the company to conserve cash and maintain adequate debt headroom to ensure that the company is best placed to withstand any prolonged adverse economic conditions. Therefore the board has resolved not to declare a dividend for the financial year ended 31 December 2018 (2017- R2 700 000).

6. Directors

The directors in office at the date of this report are as follows :

Directors Alamgir Kabir M Kamal Hossain

7. Directors'interestsincontracts

During the financial year, no contracts were entered into which directors or officers of the Company had an interest and which significantly affected the business of the company.

8. Property,plantandequipment

There was no change in the nature of the property, plant and equipment of the company or in the policy regarding their use.At 31 December 2018 the company's investment in property, plant and equipment amounted to R640 919 (2017- R394 402), of which R467 439 (2017 - R131 600) was added in the current year through additions.

475


9. Specialresolutions

No special resolutions, the nature of which might be significant to the shareholder in its’ appreciation of the state of affairs of the Company were made by the company during the period covered by this report .

10. Eventsafterthereportingperiod

The directors are not aware of any material event which occurred after the reporting date and up to the date of this report.

11. Goingconcern

The directors believe that the company has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on the going concern basis. The directors have satisfied themselves that the Company is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the company. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the company.

12. Litigationstatement

The Company is not currently involved in any claims or lawsuits, which individually or in the aggregate, are expected to have a material adverse effect on the business or its assets.

13. Auditors

GL Palmer and Company continued in office as auditors of the Company for 2018.

At the AGM, the shareholder will be requested to reappoint GL Palmer and Company as the independent external auditors of the Company and to confirm Mr. Philippos Philippou (CA) SA as the designated lead audit partner for the 2019 financial year.

14. Secretaries

The company secretaries are GLP Secretarial Services CC.

Postal address PO Box 220BrumaJohannesburg 2026

Business address 22A Ernest Oppenheimer AvenueBrumaJohannesburg 2198

15. Dateofauthorisationforissueoffinancialstatements

The annual financial statements have been authorised for issue by the directors on 31 January 2019. No author-ity was given to anyone to amend the financial statements after the date of issue .


Directors’ Report

476



Statement of Financial Position as at 31 December 2018

Figures in Rand Note 2018 2017

Assets

Non-current Assets 2Property, plant and equipment 640 919 394 402

Current Assets Trade and other receivables 3 1 266 993 1 588 899 Cash and cash equivalents 4 27 197 221 14 959 581

28 464 214 16 548 480 29 105 133 16 942 882

Total Assets

Equity and Liabilities Equity Share capital 5 120 120 Non-distributable reserve 6 632 059 6 632 059 Retained income 13 331 942 6 242 677

19 964 121 12 874 856

Liabilities Non-Current Liabilities 6 302 513 - Instalment sale obligations

Current Liabilities Trade and other payables 7 8 668 117 3 978 758 Instalment sale obligations 6 87 049 - Current tax payable 83 333 89 268

8 838 499 4 068 026 Total Liabilities 9 141 012 4 068 026 Total Equity and Liabilities 29 105 133 16 942 882

477



Statement of Comprehensive Income


Revenue 8 14 810 892 12 854 644 Other income 9 - 27 060 Operating expenses (6 415 497) (5 028 436) Operating profit 8 395 395 7 853 268 Investment revenue 10 1 454 247 754 998 Finance costs 11 (12 581) (104)Profit before taxation 9 837 061 8 608 162 Taxation 12 (2 747 796) (2 407 190) Profit for the year 7 089 265 6 200 972 Other comprehensive income - - Total Comprehensive income for the year 7 089 265 6 200 972

478


Figures in Rand Share Capital

Non-distributable reserve

Retained income Total equity

Balance at 01 January 2017 120 6 632 059 2 741 705 9 373 884 Profit for the year - - 6 200 972 6 200 972 Other comprehensive income - - - - Total comprehensive income for the period - - 6 200 972 6 200 972 Total Changes - - ( 2 700 000) ( 2 700 000) Balance at 01 January 2018 120 6 632 059 6 242 677 12 874 856 Profit for the year 7 089 265 7 089 265 Other comprehensive income - - - - Total comprehensive income for the year - - 7 089 265 7 089 265 Balance at 31 December 2018 120 6 632 059 13 331 942 19 964 121 Note 5


Statement of Changes in Equity

479



Cash flows from operating activities

Cash generated from operations 14 13 627 582 8 189 551 Interest income 1 454 247 754 998 Finance costs (12 581) (104)Tax paid 15 (2 753 731) (2 170 141) Net cash from operating activities 12 315 517 6 774 304

Cash flows from investing activities

Purchase of property, plant and equipment 2 (467 439) (131 600)

Cash flows from financing activities

Movement in instalment sale obligation 389 562 - Dividends paid - (2 700 000) Net Cash flows from financing activities 389 562 (2 700 000)

Total cash movement for the year 12 237 640 3 942 704 Cash at the beginning of the year 14 959 581 11 016 877 Total cash at end of the year 4 27 197 221 14 959 581


Statement of Cash Flows

480


1. Basisofpreparationandsummryofsignificantaccountingpolicies

The annual financial statements have been prepared on a going concern basis in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and the Companies Act 71 of 2008. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rand.These accounting policies are consistent with those applied in the previous year.

1.1 Property, plant and equipment

Property, plant and equipment are tangible assets which the company holds for its own use which are expected to be used for more than one period. Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses.Property, plant and equipment is initially measured at cost.

Cost includes costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognized in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Depreciation of an asset commences when the asset is available for use as intended by management. Depreciation is charged to write off the asset’s carrying amount over its estimated useful life to its estimated residual value, using a method that best reflects the pattern in which the asset’s economic benefits are consumed by the company

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Depreciation method

Average useful life

Leasehold improvements Straight line 5 years Motor vehicles Straight line 5 years Office equipment Straight line 3 years Computer equipment Straight line 3 years

1.4 Leases

A Lease is classified as finance lease if it transfers substantially all the risks and rewards incidental to ownership to the lessee. All other leases are operating leases.Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term unless: another systematic basis is representative of the time pattern of the benefit from the leased asset, even if

the payments are not on that basis, or the payments are structured to increase in line with expected general inflation (based on published

indexes or statistics) to compensate for the lessor’s expected inflationary cost increases.Any contingent rents are expensed in the period they are incurred.

1.3 Financial instruments

Initial measurement

Financial instruments are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through profit or loss) unless the arrangement constitutes, in effect, a financing transaction in which case it is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.Financial instruments at amortised cost

These include loans, trade receivables and trade payables. Those debt instruments which meet the criteria in section 11.8(b) of the standard, are subsequently measured at amortised cost using the effective interest method. Debt instruments which are classified as current assets or current liabilities are measured at the undiscounted amount of the cash expected to be received or paid, unless the arrangement effectively constitutes a financing transaction.


Accounting Policies

481


At each reporting date, the carrying amounts of assets held in this category are reviewed to determine whether there is any objective evidence of impairment. If there is objective evidence, the recoverable amount is estimated and compared with the carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.

Financial instruments at cost

Commitments to receive a loan are measured at cost less impairment.

Equity instruments that are not publicly traded and whose fair value cannot otherwise be measured reliably without undue cost or effort are measured at cost less impairment.

1.4 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.The tax liability reflects the effect of the possible outcomes of a review by the tax authorities.

Deferred tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences.

A deferred tax asset is recognised for all deductible temporary differences and for the carry forward of unused tax losses and unused tax credits.Deferred tax assets and liabilities are measured at an amount that includes the effect of the possible outcomes of a review by the tax authorities using tax rates that, on the basis of enacted or substantively enacted tax law at the end of the reporting period, are expected to apply when the deferred tax asset is realised or the deferred tax liability is settled.Deferred tax asset balances are reviewed at every reporting date. When necessary, a valuation allowance is recognised against the deferred tax assets so that the net amount equals the highest amount that is more likely than not to be realised on the basis of current or future taxable profit.Tax expenses

Tax expense is recognised in the same component of total comprehensive income or equity as the transaction or other event that resulted in the tax expense.

1.5 Share capital and equity

If the company reacquires its own equity instruments, those instruments are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company's own equity instruments. Consideration paid or received shall be recognised directly in equity.Ordinary shares are recognised at par value and classified as 'share capital' in equity. Any amounts received from the issue of shares in excess of par value is classified as 'share premium' in equity. Dividends are recognised as a liability in the year in which they are declared.

1.6 Revenue

Interest is recognised, in profit or loss, using the effective interest rate method.

Service fees included in the price of the product are recognised as revenue over the period during which the service is provided.

1.7 Foreign exchange

Foreign currency transactions

Exchange differences arising on monetary items are recognised in profit or loss in the period in which they arise.

The foreign exchange component of a non-monetary item is recognised consistently with any other gains or losses on those items, in other comprehensive income or in profit or loss.


Accounting Policies

482


Figures in Rand 2018 20172. Property,plantandequipment

2018 2017Cost Accumulated

depreciationCarrying

valueCost Accumulated

depreciationCarrying

valueLeasehold improvements 625 800 (515 798) 110 002 625 800 (391 500) 234 300Motor vehicles 399 987 (778) 399 209 - - - Office equipment 87 634 (59 233) 28 401 87 634 (32 072) 55 562Computer equipment 369 875 (266 568) 103 307 302 423 (197 883) 104 540Total 1 483 296 (842 377) 640 919 1 015 857 (621 455) 394 402Reconciliation of property, plant and equipment - 2018

Opening balance Additions Depreciation Total

Leasehold improvements 234 300 - (124 298) 110 002Motor vehicles - 399 987 (778) 399 209Office equipment 55 562 - (27 161) 28 401Computer equipment 104 540 67 452 (68 685) 103 307

394 402 467 439 (220 922) 640 9193. Tradeandotherreceivables

Accrued income 7 755 17 309Cash in transit 999 360 1 546 790Deposits 24 800 24 800Prepayments 228 198 - Sundry debtors 6 880 -

1 266 993 1 588 8994. Cashandcashequivalents

Cash and cash equivalents consist of: 4 186Cash on hand 27 197 217 14 959 395 Bank balances 27 197 221 14 959 581Included in the above bank balances figure at year end, is an amount of R 5 000 000 (2017 - R 5 000 000) which is an unimpaired capital requirement of the South African Reserve Bank.

5. Sharecapital

Authorised4000 Ordinary shares with par value of R 1 4 000 4 000

3880 unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last annual general meeting. This authority remains in force until the next annual general meeting.IssuedOrdinary shares with par value of R 1 120 120

6. Instalmentsaleobligations

Minimum lease payments which fall due within one year 87 049 - in second to fifth year inclusive 388 036 -

475 085 - Less: future finance charges (85 523) - Present value of minimum lease payments 389 562 -

Non current liabilities 302 513 - Current liabilities 87 049 -

389 562It is company policy to lease certain motor vehicles under finance leases.The company’s obligations under finance leases are secured by the leased assets. Refer note 2.


Notes to the Annual Financial Statements

483


7. Tradeandotherpayables

Trade payables 8 411 929 3 756 765Value added tax 78 924 81 483Accrual for audit fees 105 100 81 510 Other payables 72 164 59 000

8 668 117 3 978 7588. Revenue

Exchange gain income 5 134 908 5 512 991Online charge 652 997 - Commissions and transaction fees 9 022 987 7 341 653

14 810 892 12 854 6449. Otherincome

Sundry income - 27 060

10. Investmentrevenue

Interest revenueBank 1 454 247 752 488SARS interest income - 2 510

1 454 247 754 99811. Financecosts

late payment of tax 2 385 - Interest paid 47 104Finance charges 10 149 -

12 581 104

12. Taxation

Major components of the tax expense

Current taxationLocal income tax - current period 2 747 796 2 385 268Local income tax - recognised in current tax for prior periods - (3 095)

2 747 796 2 382 173

Deferred taxation South African deferred tax-current year - 25 017

- 25 0172 747 796 2 407 190

Reconciliation of the tax expense

Reconciliation between accounting profit and tax expense.

Accounting profit 9 837 061 8 608 162

Tax at the applicable tax rate of 28% (2017: 28%) 2 754 377 2 410 285

Tax effect of adjustments on taxable incomeNon-deductible expenses 885 71 314Temporary differences (7 466) (96 331)Over Provision - (3 095)

2 747 796 2 382 173

Figures in Rand 2018 2017



484


Figures in Rand 2018 201713. Auditors'remuneration

Fees 105 100 81 510Adjustment for previous year 19 739 513

124 839 82 023

14. Cashgeneratedfromoperations

Profit before taxation 9 837 061 8 608 162

Adjustments for:Depreciation 220 922 230 338Interest received (1 454 247) (754 998)Finance costs 12 581 104Movements in operating lease assets and accruals - (89 347)Changes in working capital:Trade and other receivables 321 906 (617 210)Trade and other payables 4 689 359 812 502

13 627 582 8 189 55115. Taxpaid

Balance at beginning of the year (89 268) 122 764Current tax for the year recognised in profit or loss (2 747 796) (2 382 173)Balance at end of the year 83 333 89 268

(2 753 731) (2 170 141)16. Directors'remuneration

No emoluments were paid to the directors or any individuals holding a prescribed office during the year (2017 - Nil).

17. Relatedparties

RelationshipsHolding company Southeast Bank Limited

Related party balancesAmounts included in Trade Payables regarding related partiesSoutheast Bank Limited 8 411 117 3 756 765



485



RevenueCommissions and transaction fees 8 9 022 987 7 341 653Exchange gain income 8 5 134 908 5 512 991Online charges 8 652 997 -

14 810 892 12 854 644

Other incomeSundry income 9 - 27 060Interest received 10 1 454 247 754 998

1 454 247 782 058

Expenses (Refer to page 486) (6 415 497) (5 028 436)Operating profit 9 849 642 8 608 266Finance costs 11 (12 581) (104)Profit before taxation 9 837 061 8 608 162Taxation 12 (2 747 796) (2 407 190)Profit for the year 7 089 265 6 200 972


Detailed Income Statement

486



Operating expensesAccounting fees 99 529 162 747Advertising 121 396 85 754Assets under R 7 000 9 011 27 328Auditors' remuneration 13 124 839 82 023Bank charges 1 378 919 836 721Cash carrying charges 1 057 594 1 030 793Cleaning - 92Commission paid 29 643 39 518Computer expenses 3 521 11 151Consulting fees 13 209 - Depreciation 220 922 230 338Employee cost 1 589 884 980 445Entertainment 77 917 88 463Gifts 454 3 900Insurance 75 708 62 542Lease rentals on operating lease 380 590 254 695Loss on exchange differences 139 965 174 750Motor vehicles expenses 1 917 - Municipal expenses 34 669 31 010Office expenses 74 849 58 580Postage 13 674 21 182Printing and stationery 198 039 176 733Rates and taxes 2 330 1 970Repairs and maintenance 65 788 50 925Security 416 905 437 560Staff welfare 980 1 130Telephone and fax 105 664 56 761Training 20 318 29 179Travel - local 131 963 92 146Travel - overseas 25 300 -

6 415 497 5 028 436


Detailed Income Statement

487


Terminology

AD Authorized DealerALCO Asset Liability CommitteeATM Automated Teller MachineBB Bangladesh Bank (Central Bank of Bangladesh)B/L Bad/LossBAS Bangladesh Accounting StandardsCRR Cash Reserve RequirementCRG Credit Risk GradingCSR Corporate Social ResponsibilityCPI Consumer Price IndexCDBL Central Depository Bangladesh LimitedCBS Core Banking SoftwareCRISL Credit Rating and Information Services Ltd.DEPZ Dhaka Export Processing ZoneDP Depository ParticipantsEPS Earnings Per ShareEPZ Export Processing ZoneFY Fiscal Year (July to June)GDP Gross Domestic ProductGRI Global Reporting Initiative HOB Head of BranchIT Information TechnologyIMF International Monetary FundIAS International Accounting StandardsIPO Initial Public OfferingLC Letter of CreditSMT Senior Management TeamNII Net Interest IncomeNIM Net Interest MarginNPL Non Performing LoanOBU Off shore Banking UnitIR Integrated ReportingPOS Point of SalePV Present ValueRWA Risk Weighted AssetsRMG Readymade GarmentsROA Return on Assets ROE Return on EquityR&D Research and DevelopmentSAFA South Asian Federation of AccountantsSME Small and Medium EnterpriseSOP Standard Operating ProcedureSLR Statutory Liquidity RatioRMA Relationship Management ApplicationSWIFT Society for Worldwide Interbank Financial TelecommunicationSEBCSL Southeast Bank Capital Service LimitedSEFSL Southeast Financial Services (UK) LimitedSEFSPL Southeast Financial Services (Australia) Pty Limited SEECPL Southeast Exchange Company (South Africa) Pty Ltd

488


489


489


Standard DisclosureChecklistSAFA Corporate Governance Disclosure Checklist 490-492

Integrated Reporting Checklist 493-501

SAFA Standard Disclosure Checklist 502-505

Important Financial Indicators with Quantitative and Qualitative Factors 506

490


SAFA Corporate Governance Disclosure Checklist

Items Page No.

1. BOARD OF DIRECTORS, CHAIRMAN AND CEO

1.1 Company's policy on appointment of directors disclosed. 106

1.2 Adequate representation of non executive directors i.e. one third of the board, subject to a minimum of two 107

1.3 At least one independent director on the board and disclosure/affirmation of the board on such director’s independence. 108

1.4 Chairman to be independent of CEO 108-109

1.5 Responsibilities of the Chairman of the Board appropriately defined and disclosed. Disclosure of independence of Non Executive Directors 108-109

1.6 Existence of a scheme for annual appraisal of the boards performance and disclosure of the same. 109

1.7 Disclosure of policy on annual evaluation of the CEO by the Board. 113

1.8Disclosure of policy on training (including details of the continuing training program) of directors and type and nature of training courses organized for directors during the year Existence of a scheme for annual appraisal of the boards performance

109

1.9At least one director having thorough knowledge and expertise in finance and accounting to provide guidance in the matters applicable to accounting and auditing standards to ensure reliable financial reporting.

109

1.10 Disclosure of number of meetings of the board and participation of each director (at least 4 meetings are required to be held) 120

1.11 Directors issue a report on compliance with best practices on Corporate Governance that is reviewed by the external auditors 119

2. VISION / MISSION AND STRATEGY

2.1 Company’s vision / mission statements are approved by the board and disclosed in the annual report. 37

2.2 Identification of business objectives and areas of business focus disclosed 38

2.3 General description of strategies to achieve the company’s business objectives 38-39

3. AUDIT COMMITTEES

3.1 Appointment and Composition 111, 148

3.1.1 Whether the Audit Committee Chairman is an independent Non-Executive Director and Professionally Qualified 111, 148

3.1.2 Whether it has specific terms of reference and whether it is empowered to investigate / question employees and retain external counsel 148

3.1.3 More than two thirds of the members are to be Non Executive Directors 108

3.1.4 All members of the audit committee to be suitably qualified and at least one member to have expert knowledge of finance and accounting. 111

3.1.5 Head of internal audit to have direct access to audit committee 111

3.1.6 The committee to meet at least four times a year and the number of meetings and attendance by individual members disclosed in the annual report. 121

491


Items Page No.

3.2 Objectives & Activities

3.2.1 Statement on Audit Committee’s review to ensure that internal controls are well conceived properly administrated and satisfactorily monitored.

148-150

3.2.2 Statement to indicate audit committees role in ensuring compliance with Laws, Regulations and timely settlements of Statutory dues

3.2.3

Statement of Audit committee involvement in the review of the external audit function Ensure effective coordination of external audit function Ensure independence of external auditors To review the external auditors findings in order to be satisfied that appropriate

action is being taken Review and approve any non-audit work assigned to the external auditor and

ensure that such work does not compromise the independence of the external auditors.

Recommend external auditor for appointment/ reappointment

3.2.4 Statement on Audit committee involvement in selection of appropriate accounting policies that are in line will applicable accounting standards and annual review.

3.2.5 Statement of Audit Committee involvement in the review and recommend to the board of directors, annual and interim financial releases

3.2.6 Reliability of the management information used for such computation

4. INTERNAL CONTROL AND RICK MANAGEMENT

4.1 Statement of Director's responsibility to establish appropriate system of internal control 103

4.2 Narrative description of key features of the internal control system and the manner in which the system is monitored by the Board, Audit Committee or Senior Management. 151

4.3 Statement that the Director's have reviewed the adequacy of the system of internal controls 104

4.4 Disclosure of the identification of risks the company is exposed to both internally & externally 152-153

4.5 Disclosure of the strategies adopted to manage and mitigate the risks 152-153

5. Ethics and Compliance

5.1 Disclosure of statement of ethics and values, covering basic principles such as integrity, conflict of interest, compliance with laws and regulations etc. 41-42, 115

5.2 Dissemination / communication of the statement of ethics & business practices to all directors and employees and their acknowledgment of the same 110, 115

5.3 Board’s statement on its commitment to establishing high level of ethics and compliance within the organization. 115

5.4 Establishing effective anti-fraud programs and controls, including effective protection of whistle blowers, establishing a hot line reporting of irregularities etc. 249

6. REMUNERATION COMMITTEE

6.1 Disclosure of the charter (role and responsibilities) of the committee

232-233

6.2 Disclosure of the composition of the committee (majority of the committee should be non-executive directors, but should also include some executive directors)

6.3 Disclosure of key policies with regard to remuneration of directors, senior management and employees

6.4 Disclosure of number of meetings and work performed

6.5 Disclosure of Remuneration of directors, chairman, chief executive and senior executives.

492


Items Page No.

7. HUMAN CAPITAL

7.1

Disclosure of general description of the policies and practices codified and adopted by the company with respect of Human Resources Development and Management, including succession planning, merit based recruitment, performance appraisal system, promotion and reward and motivation, training and development, grievance management and counseling.

246-248

7.2 Organizational Chart 48-49

8. Communication to Shareholders & Stakeholders

8.1 Disclosure of the Company's policy / strategy to facilitate effective communication with shareholders and other stake holders 258

8.2Disclosure of Company’s policy on ensuring participation of shareholders in the Annual General Meeting and providing reasonable opportunity for the shareholder participation in the AGM.

118

9. Environmental and Social Obligations

9.1 Disclosure of general description of the company's policies and practices relating to social and environmental responsibility of the entity

118-119, 238

9.2 Disclosure of specific activities undertaken by the entity in pursuance of these policies and practices

118-119, 238

493


Integrated ReportingChecklist

Items Page No.1. Elements of an Integrated Report 1.1 Organizational overview and external environment

An integrated report should disclose the main activities of the organization and the environment of which it operates.

An integrated report should identify the organization’s mission and vision, and provides essential context by identifying matters such as:

The organization’s:

culture, ethics and values

ownership and operating structure including size of the organization, location of its operations)

principal activities and markets

competitive landscape and market positioning (considering factors such as the threat of new competition and substitute products or services, the bargaining power of customers and suppliers, and the intensity of competitive rivalry)

position within the value chain

Key quantitative information

e.g., the number of employees, revenue and number of countries in which the organization operates highlighting, in particular, significant changes from prior periods

Significant factors affecting the external environment and the organization’s response (include aspects of the legal, commercial, social, environmental and political context that affect the organization’s ability to create value in the short, medium or long term)

Eg:

The legitimate needs and interests of key stakeholders

Macro and micro economic conditions, such as economic stability, globalization, and industry trends

Market forces, such as the relative strengths and weaknesses of competitors and customer demand

The speed and effect of technological change

Societal issues, such as population and demographic changes, human rights, health, poverty, collective values and educational systems

Environmental challenges, such as climate change, the loss of ecosystems, and resource shortages as planetary limits are approached

The legislative and regulatory environment in which the organization operates

The political environment in countries where the organization operates and other countries that may affect the ability of the organization to implement its strategy

2-6, 42, 20-30

494


Items Page No.1.2 Governance

An integrated report should how does the organization’s governance structure support its ability to create value in the short, medium and long term.

An integrated report needs to provide an insight about how such matters as the following are linked to its ability to create value:

The organization’s leadership structure, including the skills and diversity (e.g., range of backgrounds, gender, competence and experience) of those charged with governance and whether regulatory requirements influence the design of the governance structure

Mandatory and voluntary code of corporate governance adopted by the Company.

Code of ethical conduct adopted by the Company in relation to ethical business.

Specific processes used to make strategic decisions and to establish and monitor the culture of the organization, including its attitude to risk and mechanisms for addressing integrity and ethical issues

Particular actions those charged with governance have taken to influence and monitor the strategic direction of the organization and its approach to risk management

How the organization’s culture, ethics and values are reflected in its use of and effects on the capitals, including its relationships with key stakeholders

Whether the organization is implementing governance practices that exceed legal requirements/ Key Policies

The responsibility those charged with governance take for promoting and enabling innovation

How remuneration and incentives are linked to value creation in the short, medium and long term, including how they are linked to the organization’s use of and effects on the capitals.

106-123, 125-135

1.3 Stakeholder Identification/ relationships

An integrated report should identify its key stakeholders and provide insight into the nature and quality of the organization’s relationships with its key stakeholders, including how and to what extent the organization understands, takes into account and responds to their legitimate needs and interests. Stakeholders are the groups or individuals that can reasonably be expected to be significantly affected by an organization’s business activities, outputs or outcomes or whose actions can reasonably be expected to significantly affect the ability of the organization to create value.

An entity may disclose the following in their integrated reports in respect of stakeholder relationships.

How the company has identified its stakeholders. Stakeholder engagement methodology. Identification of material matters of stakeholders. How the Company has applied such matters. How the stakeholders are engaged in assessing impacts, implications and outlook

unrespects of Company’s business model.

277

495


Items Page No.Capitals

An integrated report needs to provide insight about the resources and the relationships used and affected by the organization, which are referred to collectively as the capitals and how the organization interacts with the capitals to create value over the short, medium and long term

An integrated report need to identify the various forms of capitals which are essential for the success of its business operations.

Eg:

Financial Capital – The pool of funds that is available to the organization for use in the production of goods or provision of services.

Manufacturing Capital – Manufactured physical objects that are available to the organization for use in the production of goods and provision of services.

Intellectual Capital – Organizational, Knowledge based intangibles.

Human Capital – People’s competencies, capabilities and experience, and their motivations to innovate

Social and Relationship Capital – The institutions and the relationships within and between communities, groups of stakeholders and other networks and the ability to share information to enhance individual and collective wellbeing.

Natural Capital – All renewable and non-renewable environmental resources and processes that provide goods and services that support the past, current and future prosperity of the organization.

However an entity can do its own classification of capitals based on its business activities. An entity needs to ensure that it does not overlook a capital that it uses or affects.

277

1.4 Business model

An integrated report should describe the organization’s business model An integrated report need to describe the business model, including key:

Inputs Business activities Outputs Outcomes

Features that can enhance the effectiveness and readability of the description of the business model include:

Explicit identification of the key elements of the business model

A simple diagram highlighting key elements, supported by a clear explanation of the relevance of those elements to the organization

Narrative flow that is logical given the particular circumstances of the organization

Identification of critical stakeholder and other (e.g., raw material) dependencies and important factors affecting the external environment

Connection to information covered by other Content Elements, such as strategy, risks and opportunities, and performance (including KPIs and financial considerations, like cost containment and revenues).

34-35

496


Items Page No.Inputs

An integrated report shows how key inputs relate to the capitals on which the organization depends, or that provide a source of differentiation for the organization, to the extent they are material to understanding the robustness and resilience of the business model.

Business activities

An integrated report describes key business activities. This can include:

How the organization differentiates itself in the market place (e.g., through product differentiation, market segmentation, delivery channels and marketing)

The extent to which the business model relies on revenue generation after the initial point of sale (e.g., extended warranty arrangements or network usage charges)

How the organization approaches the need to innovate

How the business model has been designed to adapt to change.

When material, an integrated report discusses the contribution made to the organization’s long term success by initiatives such as process improvement, employee training and relationships management.

Outputs

An integrated report identifies an organization’s key products and services. There might be other outputs, such as by-products and waste (including emissions), that need to be discussed within the business model disclosure depending on their materiality.

Outcomes

An integrated report describes key outcomes, including:

Both internal outcomes (e.g., employee morale, organizational reputation, revenue and cash flows) and external outcomes (e.g., customer satisfaction, tax payments, brand loyalty, and social and environmental effects)

Both positive outcomes (i.e., those that result in a net increase in the capitals and thereby create value) and negative outcomes (i.e., those that result in a net decrease in the capitals and thereby diminish value).

Organizations with multiple business models

Some organizations employ more than one business model (e.g., when operating in different market segments). This requires a distinct consideration of each material business model as well as commentary on the extent of connectivity between the business models (such as the existence of synergistic benefits).

The integrated report of an organization with multiple businesses needs to balance disclosure with need to reduce complexity; however material information should not be omitted.

34-35

497


Items Page No.1.5 Performance

An integrated report needs to explain the extent to which the organization has achieved its strategic objectives for the period and what are its outcomes in terms of effects on the capitals?

An integrated report should contain qualitative and quantitative information about performance that may include matters such as: Quantitative indicators with respect to targets and risks and opportunities, explaining

their significance, their implications, and the methods and assumptions used in compiling them

The organization’s effects (both positive and negative) on the capitals, including material effects on capitals up and down the value chain

The state of key stakeholder relationships and how the organization has responded to key stakeholders’ legitimate needs and interests

The linkages between past and current performance, and between current performance and the organization’s outlook.

KPIs that combine financial measures with other components (e.g., the ratio of greenhouse gas emissions to sales) or narrative that explains the financial implications of significant effects on other capitals and other causal relationships (e.g., expected revenue growth resulting from efforts to enhance human capital) may be used to demonstrate the connectivity of financial performance with performance regarding other capitals. In some cases, this may also include monetizing certain effects on the capitals (e.g., carbon emissions and water use).

Include instances where regulations have a significant effect on performance (e.g., a constraint on revenues as a result of regulatory rate setting) or the organization’s non-compliance with laws or regulations may significantly affect its operations.

260

1.6 Risks, opportunities and internal controls

An integrated report should explain what are the specific risks and opportunities that affect the organization’s ability to create value over the short, medium and long term, and how is the organization dealing with them? and effectiveness of the system of internal controls.

This can include identifying:

The specific source of risks and opportunities, which can be internal, external or, commonly, a mix of the two.

The organization’s assessment of the likelihood that the risk or opportunity will come to fruition and the magnitude of its effect if it does.

The specific steps being taken to mitigate or manage key risks (eg: Risk Management Framework, Risk Management review process and reporting structure) or to create value from key opportunities, including the identification of the associated strategic objectives, strategies, policies, targets and KPIs.

Risk Management Report (Which includes details about risk, root course, potential impact, response to risk, risk rating)

Response on the effectiveness of the internal controls and the board’s responsibility for the disclosures on internal controls to safeguard stakeholder interest.

206-233

498


Items Page No.1.7 Strategy and resource allocation

An integrated report should describe it strategic direction (Where does the organization want to go and how does it intend to get there)

An integrated report need to identify:

The organization’s short, medium and long term strategic objectives

The strategies it has in place, or intends to implement, to achieve those strategic objectives

How the entity has positioned in the wider market.

How the long term strategies relate to current business model.

The resource allocation plans it has to implement its strategy

How it will measure achievements and target outcomes for the short, medium and long term.

This can include describing:

The linkage between the organization’s strategy and resource allocation plans, and the information covered by other Content Elements, including how its strategy and resource allocation plans:

relate to the organization’s business model, and what changes to that business model might be necessary to implement chosen strategies to provide an understanding of the organization’s ability to adapt to change

are influenced by/respond to the external environment and the identified risks and opportunities affect the capitals, and the risk management arrangements related to those capitals

What differentiates the organization to give it competitive advantage and enable it to create value, such as:

the role of innovation how the organization develops and exploits intellectual capital the extent to which environmental and social considerations have been

embedded into th organization’s strategy to give it a competitive advantage

Key features and findings of stakeholder engagement that were used in formulating its strategy and resource allocation plans.

38-39

499


Items Page No.1.8 Outlook

An integrated report should explain what challenges and uncertainties is the organization likely to encounter in pursuing its strategy, and what are the potential implications for its business model and future performance? An integrated report should highlight anticipated changes over time and provides information on

The organization’s expectations about the external environment the organization is likely to face in the short, medium and long term

How that will affect the organization

How the organization is currently equipped to respond to the critical challenges and uncertainties that are likely to arise.

The discussion of the potential implications, including implications for future financial performance may include:

The external environment, and risks and opportunities, with an analysis of how these could affect the achievement of strategic objectives

The availability, quality and affordability of capitals the organization uses or affects (e.g., the continued availability of skilled labour or natural resources), including how key relationships are managed and why they are important to the organization’s ability to create value over time.

An integrated report may also provide lead indicators, KPIs or objectives, relevant information from recognized external sources, and sensitivity analyses. If forecasts or projections are included in reporting the organization’s outlook, a summary of related assumptions is useful. Comparisons of actual performance to previously identified targets further enables evaluation of the current outlook.

Disclosures about an organization’s outlook in an integrated report should consider the legal or regulatory requirements to which the organization is subject.

77-93

1.9 Basis of preparation and presentation

An integrated report should answer the question: How does the organization determine what matters to include in the integrated report and how are such matters quantified or evaluated?

An integrated report describes its basis of preparation and presentation, including:

A summary of the organization’s materiality determination process

Brief description of the process used to identify relevant matters, evaluate their importance and narrow them down to material matters

Identification of the role of those charged with governance and key personnel in the identification and prioritization of material matters

A description of the reporting boundary and how it has been determined Eg:Include process used for identifying the reporting boundary, geographic scope, the entities represented in the report and the nature of the information provided for each entity

A summary of the significant frameworks and methods used to quantify or evaluate material matters (e.g., the applicable financial reporting standards used for compiling financial information, a company-defined formula for measuring customer satisfaction, or an industry based framework for evaluating risks).

31-33

500


Items Page No.2. Responsibility for an integrated report

An integrated report should include a statement from those charged with governance that includes:

An acknowledgement of their responsibility to ensure the integrity of the integrated report

An acknowledgement that they have applied their collective mind to the preparation and presentation of the integrated report

Their opinion or conclusion about whether the integrated report is presented in accordance with the Framework

or, if it does not include such a statement , it should explain:

What role those charged with governance played in its preparation and presentation What steps are being taken to include such a statement in future reports The time frame for doing so, which should be no later than the organization’s third

integrated report that references this Framework.

31-33

3. Other Qualitative Characteristics of an Integrated Report 3.1 Conciseness

An integrated report should be concise. An integrated report need to include sufficient context to understand the organization’s strategy, governance, performance and prospects without being burdened with less relevant information. Eg: Follows logical structure and includes internal cross-reference as appropriate to limit repetition. May link to more detailed information, information that does not change frequently or external sources. Express concepts clearly and in as few words. Favours plain language over the use of jargon or highly technical terminology. Avoids highly generic disclosures.

31-33

3.2 Reliability and completeness

An integrated report should include all material matters, both positive and negative, in a balanced way and without material error

The organization achieve the reliability and completeness through, Eg :

Selection of presentation formats that are not likely to unduly or inappropriately influence assessments made on the basis of integrated report.

Giving equal consideration to both increases and decreases in the capitals, both strengths and weaknesses of the organization, both positive and negative performance etc.

When information includes estimates, this is clearly communicated and the nature and limitations of the estimation process are explained.

31-33

501


Items Page No.3.3 Consistency and comparability

The information in an integrated report should be presented:

On a basis that is consistent over time

In a way that enables comparison with other organizations to the extent it is material to the organization’s own ability to create value over time.

Eg:

Using benchmark data, such as industry or regional benchmarks

Presenting information in the form of ratios (e.g., research expenditure as a percentage of sales, or carbon intensity measures such as emissions per unit of output)

Reporting quantitative indicators commonly used by other organizations with similar activities, particularly when standardized definitions are stipulated by an independent organization (e.g., an industry body).

Reporting policies are followed consistently from one period to other unless a change is needed to improve the quality of information reported.

Reporting the same KPIs if they continue to be material across reporting period.

When a significant change has been made, the organization explains the reasons for the change describing its effect.

260-264

3.4 Connectivity of information

An integrated report should show a holistic picture of the combination, interrelatedness and dependencies between the factors that affect the organization’s ability to create value over time.

Eg: Connectivity between – Capitals Content elements Past , Present & Future Finance and other information

31-33

3.5 Materiality

An integrated report should disclose information about matters that substantively affect the organization’s ability to create value over the short, medium and long term

31-33

3.6 Assurance on the Report

The policy and practice relating to seeking assurance on the report, the nature and scope of assurance provided for this particular report any qualifications arising from the assurance, and the nature of the relationship

between the organization and the assurance providers

31-33

502


SAFA StandardDisclosure ChecklistDisclosure checklist to the key sections of the Annual Report – 2018

Items Page No.Corporate Objectives, Values & StructureClarity and presentation: Vision and Mission 37 Overall strategic objectives 38 Core values and code of conduct/ethical principles 41-43 Profile of the Company 44-45 Director’s profiles and their representation on Board of other companies & Organization

Chart 60-71, 423,

48-49Management Report/ Commentary and analysis including Director’s Report / Chairman’s Review/CEO’s Review etc. A general review of the performance of the company 20-25 Description of the performance of the various activities/products/segments of the

company and its group companies during the period under review. (Weightage to be given for pictorial/graphical / tabular presentations used for this purpose)

2-7, 26-30

A brief summary of the Business and other Risks facing the organization and steps taken to effectively manage such risks 206-233

A general review of the future prospects/outlook. 17 Information on how the company contributed to its responsibilities towards the staff

(including health & safety) 294

Information on company's contribution to the national exchequer & to the economy 296Sustainability Reporting Social Responsibility Initiatives ( CSR) 238-239 Environment related Initiatives 243-244 Environmental & Social Obligations 245 Integrated Reporting 31-33

Appropriateness of Disclosure of Accounting policies and General Disclosure Disclosure of adequate and properly worded accounting policies relevant to assets,

liabilities, Income and expenditure in line with best reporting standards.

353-423 Any Specific accounting policies Impairment of Assets Changes in accounting policies/Changes in accounting estimates Accounting policy on subsidiaries (if there is no any subsidiary, full marks should be granted)

Segment Information Comprehensive segment related information bifurcating Segment revenue, segment

results and segment capital employed

269,441-442

Availability of information regarding different segments and units of the entity as well as non-segmental entities/units

Segment analysis of Segment Revenue Segment Results Turnover Operating profit Carrying amount of Net Segment assets

503


Items Page No.Financial Statements (Including Formats) Disclosures of all contingencies and commitments 403 Comprehensive related party disclosures 414-415 Disclosures of Remuneration & Facilities provided to Directors & CEO 407-408 Statement of Financial Position / Balance Sheet and relevant schedules 348 Income Statement / Profit and Loss Account and relevant schedules 350 Statement of Changes in Equity / Reserves & Surplus Schedule 352 Disclosure of Types of Share Capital 397 Statement of Cash Flow 351 Consolidated Financial Statement (CFS) 344 Extent of compliance with the core IAS/IFRS or equivalent National Standards 354 Disclosures / Contents of Notes to Accounts 353

Information about Corporate Governance Board Of Directors, Chairman And CEO 106 Audit Committee (Composition, role, meetings, attendance, etc) Internal Control & Risk

Management 148-153

Ethics And Compliance 72, 110, 232

Remuneration and other Committees of Board 120-121 Human Capital 246-248

Communication To Shareholders & Stakeholders Information available on website Other information

256-283

Management Review And Responsibility 159-204 Disclosure by Board of Directors or Audit Committee on evaluation of quarterly reports 154 Any other investor friendly information 258-259

Risk Management & Control Environment Description of the Risk Management Framework 206-233 Risk Mitigation Methodology 206-233 Disclosure of Risk Reporting 224-227

Stakeholders Information Distribution of shareholdering (Number of shares as well as category wise, e.g Promoter

group, FII etc) 274

Shares held by Directors/Executives and relatives of Directors/Executives 274 Redressal of investors complaints 256-257 Graphical/ Pictorial Data: 270-275 Earnings per Share

2, 270-273 Net Assets Stock Performance Shareholders’ Funds Return on Shareholders Fund

504


Items Page No.Horizontal/Vertical Analysis including following. Operating Performance (Income Statement) Total Revenue Operating profit Profit Before Tax Profit after Tax EPS

263-268

Statement of Financial Position (Balance Sheet) Shareholders Fund Property Plant & Equipment Net Current Assets Long Term Liabilities/Current Liabilities

263-268

Profitability/Dividends/ Performance and Liquidity Ratios Net Interest income Ratio Profit before provisions and Tax Price earnings ratio Capital Adequacy Ratio Return on Capital Employed Debt Equity Ratio

260-262

Statement of Value Added and Its Distribution Government as Taxes

251-253

Shareholders as dividend Employees as bonus/remuneration Retained by the entity Market share information of the Company’s product/services Economic value added

Presentation of Financial Statements Quality of the Report/ Layout of Contents Cover and printing including the theme on the cover page Appropriateness and effectiveness of photographs and their relevance Effectiveness of Charts and Graphs Clarity, simplicity and lucidity in presentation of Financial Statements

Timeliness in issuing Financial Statements and holding AGMs 3 months time to produce the Annual Report and hold AGM are considered reasonable

for full marks Delay after the initial period of 3 months - deduction of 2 marks is to be made for each

month If the period is over 6 months – no marks shall be awarded

Additional Disclosures Human Resource Accounting 246-248

Specific Areas for Banking Sector Disclosure of Ratings given by various rating agencies for the Bank and for its Instruments issued by /of Bank. For eg. FD, CD, Tier I and Tier 11 Bonds 199

Details of Advances portfolio Classification wise as per the direction issued by the central bank of the respective countries 381-384

505


Items Page No.Disclosure for Non Performing assets Movements in NPA Sector-wise breakup of NPA Movement of Provisions made against NPA Details of accounts restructured as per regulatory guidelines

202-204

Maturity Pattern of Key Assets and Liabilities (ALM) Classification and valuation of investments as per regulatory guidelines/Accounting Standards 418

Business Ratio/Information Statutory Liquidity Reserve (Ratio) Net interest income as a percentage of working funds / Operating cost - Efficiency ratio Return on Average Asset Cost / Income ratio Net Asset Value Per Share Profit per employee Capital Adequacy ratio Cost of Funds Cash Reserve Ratio / Liquid Asset ratio Dividend Cover ratio Gross Non-Performing assets to gross advances / Non-Performing Loans (Assets) to

Total Loans (Assets

260-262

Details of credit concentration / Sector vise exposures The break-up of ‘Provisions and contingencies’ included in the Profit and Loss Account 394, 403,

409Disclosure under regulatory guidelines 355Details of Non-Statutory investment portfolio 377-380Disclosure in respect of assets given on operating & finance lease 396Disclosures for derivative investments 377-380Bank's Network : List of Centers or Branches 305-319

506


Important Financial Indicators with Quantitative and Qualitative FactorsArea Key Components Page No.

1. Capital Adequacy

Capital Adequacy Ratio (CAR) 260Internal Capital Generation Ratio 196Leverage ratio 231Capital Conservation Buffer 220

2. Asset Quality

Gross Non-Performing Loan (NPL) Ratio 203 Net Non-Performing Loan (NPL) Ratio 203 Gross Non-Performing Loan (NPL) Coverage 203 Large Loan Exposure 421SME Portfolio Concentration Ratio 164Corporate Portfolio Concentration Ratio 224

3. Profitability

Return on Average Assets (ROAA) 262Return on Average Equity (ROAE) 262Return on Average Risk Weighted Assets (RRWA) 2Net Interest Margin (NIM) 7

4. Liquidity & Funding

Liquid Assets Ratio 372Loan to Deposit Ratio 163Liquidity Coverage Ratio (LCR) 230Net Stable Funding Ratio 230

5. Performance with respect to shareholders

Dividend yield 7Net Asset Value (Growth) 50Capital Appreciation 219

6. External Credit Rating (ECA)

Short Term 199Long Term 199

7. Financial Inclusion and IT based services

Number of Branches 305Number of ATMs 313Apps based Services 190Internet Banking 192Cash Deposit Machines (CDM) 191Call Centers Services 290

8. Corporate Governance

Non Shareholding/Independent Director 122Single Family Domination 123Free Float 123Audit Committee Led by Independent Director 148Director's Minimum Shareholding 274Auditors' Opinion 338

9. Care for Environment Sustainable Financing/ Green Banking Initiatives 245Sustainable/Integrated Reporting 31

10. Employee Focus

Net Employee Turnover 6Employee Compensation and Benefits 294Gender Diversity 247Training and Development Spending 295

11. Corporate Social Responsibility (CSR)

Amount of CSR Expenditure 239Quality of CSR Activities 238

12. Contribution to National Exchequer Direct and Indirect Tax 296

507


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a bank with vision

Events 2018

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508

509


509

a bank with vision

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510

511


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a bank with vision

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512

Registered Office: 52-53, Dilkusha C/A, Dhaka-1000

PROXY FORMI/We……………………………………………....……………............................................................…………..…of…………..............………………………………..

............................…………...............……………………………………. being a member of Southeast Bank Limited, do hereby appoint Mr./

Mrs.…………………………………...................…………….of……………………………. as my/our proxy to attend and vote on my/our behalf

at the 24th Annual General Meeting of the company to be held on June 23, 2019 and at any adjournment thereof.

As witness my/our hand this …………………day of ……………….. 2019.

……………………………….... .……………………….Signature of Shareholder(s) Signature of PROXYNo. of Shares held…………………………………….. Folio/BOID #

Folio No.

Or

BO ID No.

Note: i. Signature of the shareholders must agree with the recorded signature registered with the company/depository participant(s).ii. A Member entitled to attend and vote at the 24th AGM may appoint a proxy to attend and vote on his/her behalf. The Proxy Form duly stamped must be deposited at the Registered Office of the Company at least 48 hours before the time fixed for meeting.

Signature Verified

Authorized Signatory Southeast Bank Limited

Registered Office: 52-53, Dilkusha C/A, Dhaka-1000

ATTENDANCE SLIP

I/We hereby record my/our attendance at the 24th Annual General Meeting being held today, the Sunday, June 23, 2019 at 11.00 a.m. at Officers’ Club Dhaka, 26 Baily Road, Ramna, Dhaka.

Name of the Shareholder(s) / Proxy (in Block Letters)

No. of Shares

Folio No.

BO ID No.

Name of the Proxy (If any)

……………………………….............................…… ………….............……………….Signature of Shareholder(s)/Proxy Signature verified by

IMPORTANT : To facilitate registration formalities at the meeting place, shareholder(s) are requested to bring the attendance slip duly filled in.

N.B. : General Meeting can only be attended by the honorable shareholders or properly constituted Proxy/Attorney. Therefore, any friend or child accompanying the honorable shareholders or proxies can not be allowed into the Meeting.

RevenueStamp

Tk.20.00

……………………………..Proxy Reg. No ………………………………………………..

Annual Report for the Year Ended 31 December 2018

Documents

Transcript of Annual Report for the Year Ended 31 December 2018