Report on Overall Banking System of Southeast Bank

Executive Summary

It was a great opportunity to work under one of the largest bank of Bangladesh. The purpose of the program was to perceive the real life situation. The academic knowledge is well enough to compete with the real world. This internship program was helpful to face the real working environment.

Southeast Bank Limited, a second generation private Bank, emerged in 1995 amid liberalization of global economies. Currently, its Authorized Capital is Tk.10,000.00 million and its capital and reserve reached 9,927.16 million as of December 31, 2009. 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 15th year of banking operations, recording signifi­cant growth in all the performance indicators. In 2009, the Bank earned an after tax pro­fit of Tk.1870.19 million. The deposit of the bank grew by 41 percent to Tk.96,669.05 million and advance by 29 percent to Tk.77,497.57 million compared to those of 2008. During the last fi­ve years (2005-2009), the Bank achieved an average annual growth of 28 percent in deposit, 29 percent in advances, 52 percent in export and 29 percent in import and 110 percent in remittance. During the last fi­ve years, the export volume increased by  three times  to Tk.46,724.47 million and foreign remittance increased by seven times  to Tk.23,800.00 million.

Operational excellence, coupled with qualitative improvements continued to be of paramount importance to the Bank. At present, the Bank has 56 branches, 10 SME Centers and 1 O-Shore Banking unit across the country. Plans have been drawn to raise another 10 branches and at least 10 more SME Centers in 2010.

As SEBL face the stiff challenges ahead on the way to further improving the pro­fitability of the Bank, SEBL rely on skilled and experienced workforce. SEBL has product-basket encompasses Real Time Online Any Branch Banking, Islamic Banking, Merchant Banking, Dual Currency Visa Credit Card, Visa Travel Card, ATMs, Education Loan Scheme, Double Benefi­t Scheme, Consumer Loan, Millionaire Deposit Scheme, SME Banking, Corporate Banking, Syndicate Loan, Monthly Savings Scheme, Monthly Income Scheme, Pension Saving Scheme, Wage Earner Pension Scheme, SMS Banking etc. in addition to SEBL has traditional credit and foreign trade related products and services.

High quality customer services through the integration of the latest and state of the art banking technology and products is tool to achieve success. Customers are the ­first priority of SEBL. Southeast Bank is trying hard to provide a system of one-stop banking for customers by providing a broad spectrum of services. SEBL has employees have mastered new technology, enhanced their product knowledge and honed their skill to help customers meet their financial goals. SEBL wants to be the best helping customers become fi­nancially better o‑ by providing free advice, innovative leading-edge fi­nancial solutions, choice and convenience.

SEBL is 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. SEBL has charted plans are aimed at boosting modern management, advanced technology, good profi­tability, sound ­financial strength and fair corporate image of the Bank

1.1 Introduction

To become a successful manager one must need a BBA degree. That is why, I admitted myself into International Islamic University Chittagong BBA program in Dhaka Campus. After completing consecutive eight semesters there is needed an internship program in partial fulfillment for the degree of BBA. In this circumstance, I have to attend an internship program. I choose Southeast Bank for my internship.

1.2 Rationale of this Study

The internship report is an integral part of the BBA program of every university. So it is compulsory to take such task by the students who desirous to complete and successfully end-up their BBA degree. It is also an opportunity for the students to minimize the gap of their theoretical and practical knowledge. Students are required to work on a specific topic based on their theoretical and practical knowledge acquired during the period of the internship program and then submit it to the teacher. That is why I have prepared this report.

1.3 Objectives of the Study

Following are the main objectives of this study:

• To identify the operational procedure of the bank.

• To achieve extensive knowledge about the management process of SEBL.
• To know overall services offering By SEBL to the Customers.
• To evaluate the foreign operations of SEBL.

1.4 Scopes of the Study

The scope of this paper is limited to the organizational structure, background, and objectives, functions, and investment performance of SEBL as a whole. The scope is also limited to the different activities of SEBL regarding to the customers, to the employees, to the shareholders and to the nation.

1.5 Limitation of the Study

There are some limitations in my study. I face some problems which are mentioning below:

• Lack of proper time: Time period of this study is really short. I have only 50 working days (almost 10 weeks) to spend in branch and to complete this report. So I am unable to go deep of the study. Most of the time the officials were busy and were not able to give me much time.
• Insufficient data: Some desired information could not be collected due to privacy of the business.
• Lack of Monitory Support: Few officers sometime felt disturbed, as they were busy in their job. Sometime they didn’t want to supervise me out of their official work.
• Others limitations: As I am newcomers I have little experience in this regard. And many practical matters have been written from our own observation that may vary from person to person.

1.6 Methodology of the Study

There are two sources of collecting data. They are: Primary Data and Secondary Data. These sources are given here.

The primary sources of my information are given below:

• Direct observation
• Questionnaire to the executives
• Opinion of the respective persons
• Practical applications of the organization

The secondary sources of my information are given below:

• Websites of the organization
• Reports of the organization
• Written codes of the organization
• Diary of Events of the organization
• Performance evolution report

2.1Southeast Bank at a glance

Name of the Company:  Southeast Bank Limited

Chairman:  Alamgir Kabir, FCA

Vice Chairman:  Ragib Ali

Managing Director:  Mahbubul Alam

Company Secretary:  Muhammad Shahjahan

Legal Status:  Public Limited Company

Date of Incorporation:  March 12, 1995

Registered Office:  Eunoos Trade Centre 52-53, Dilkusha C/A

   (Level 2, 3 & 16), Dhaka-1000

Line of Business:  Banking

Authorized Capital:  Tk.10,000.00 million

Paid Up Capital:  3,422.64 million

Year of Initial Public Offer:  1999

Stock Exchange Listing:  April 10, 2000 (DSE) & April 24, 2000 (CSE)

Phone:  9571115, 7160866, 7173793, 9555466 & 9550081

Fax:  99550086, 9550093 & 9563102

E-mail:  info@sebankbd.com

Website:  www.sebankbd.com
2.2 History of SEBL

Southeast Bank Limited was established in 1995 with a dream and a vision to become a pioneer banking institution of the country and contribute significantly to the growth of the national economy. The 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. Mr. M. A. Kashem a member of the Board and Mr. Yussuf Abdullah Harun were past Presidents of the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI).

Southeast Bank is run by a team of efficient professionals. They create and generate an environment of trust and discipline that encourages and motivates everyone in the Bank to work together for achieving the objectives of the Bank. The culture of maintaining congenial work – environment in the Bank has further enabled the staff to benchmark themselves better against management expectations. A commitment to quality and excellence in service is the hallmark of their identity.

Southeast Bank takes pride for bringing women into the banking profession in a significant number for gender equality. At present, 32% of Southeast Bank employees are women that will rise to 45% over the next five years.

2.3 Diary of Events

2.4 The Strategy of Southeast Bank Limited

            Southeast Bank believes that its effort to become a leading bank in the private sector can only be achieved and sustained by creating effecting corporate governance, including professionalism among its stuff and strictly adhering to rules and regulations. SEBL believe that aims and objectives can only be realized fully and sustained over time by adherence to ethics that can not always to build into sets of rules and regulations. This believes in ethics motivates the bank in its dealing with those with whom it interacts.

2.4.1 SEBL adheres to the following principles in dealing with customers.

a)    Strictly follows ethical banking practices.

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

c)    Provide speedy customer service at a very competitive cost.

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

e)    Maintain strict secrecy of customer account.

f)     Provide free financial advice to clients.

g)    Deal quickly with complaints received from the customers. SEBL endeavor continuously to build trust and understanding with customers.

h)   SEBL give very competitive return to the depositors on their investment.

i)     They listen to their customers and work for improvement of customer service as per their suggestion.

j)      They never desert their customers in adversity.

k)    SEBL always keep promises as they make.

2.4.2 SEBL follows the following principles in dealing with Shareholders.

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

b)    Stable dividend policy and payment of good dividend.

c)    Dialogue with them and implementations of their suggestions for improvement.

2.4.3 SEBL follows the followings in dealing with their regulators.

a)    They are transparent in operations and governance.

b)    SEBL have a culture of timely compliance of regulatory requirements.

c)    SEBL give their suggestions and directives great value that they implement for improvement of corporate governance standard.

2.4.4 SEBL follows the following principles in dealing for their Employees.

a)    No discriminate on grounds of religion, sex or race at any stage. They recruit the best on the basis of merit under a rigorous recruitment policy without any biasness or favoritism to anybody.

b)    Pay competitive compensation package with career echelon for the really deserving candidates.

c)    Care for employees and respect them.

d)    Clearly defined duties and responsibilities for every employee. No one is made a scapegoat for undefined responsibilities.

e)    Zero tolerance for any act of dishonesty.

f)     Provide a congenial work environment.

g)    Encourage freedom to employees to give opinion for both qualitative and quantitative improvement of the bank.

h)   SEBL always take care of their health and safety.

2.4.5 SEBL follows the following principles in respect of society.

a)    SEBL believe that the bank gets business sustenance from the community in which it operates and therefore must remain responsive to the community and the society in reciprocity.

b)    Do not encourage projects which are not environment friendly for financing by the bank.

c)    Provide material support for protection of environment.

d)    Give aid to the poor helpless and natural calamity hit people.

e)    Support charitable ventures.

f)     Support the women as a community and contribute to women empowerment.

g)    Give sponsorships to sports culture education health care and community development ventures.

3.1 Capital and Reserve

The Authorized Capital of the Bank was Tk.10,000.00 million and Paid-up Capital was Tk.3,422.64 million as of December 31, 2009. The Capital and Reserve of the Banks in 2009 stood at Tk.9,927.16 million compared to Tk.7,657.01 million of the previous year showing an increase of 29.65 percent.

3.2 Capital Adequacy Ratio

The Bank maintained a capital adequacy ratio of 11.72 percent of the risk-weighted assets as on December 31, 2009 as against the requirement of 10 percent as set by Bangladesh Bank under Basel-I reporting.

3.3 Shares and our Shareholders

The fundamentals, such as Price Earning Ratio, Dividend Yield, Net Asset Value, Net Operating Cash Flow Per Shares, Value of Traded Shares, Positive Earning Per Share, continuous presence   in   Stock Exchanges as ‘A’ category shares, regular declaration of attractive  rate of  dividend,  number of  shareholders,  higher  percentage of  market capitalization in  terms of Paid-up-Capital,  etc. all are  positive in  case of  shares of Southeast Bank Limited.

i) Number of Shareholders

The rising trend in number of shareholders of the Bank since IPO is continuing and at the end of the year, the number of shareholders of the Bank stood at 22,152 while it was 12,536 as on December 31, 2008. It posted an increase in number of shareholders of the Bank by 76.70%.

ii) Positive Earning Per Share (EPS)

At the end of the year 2009, the number of outstanding shares of our Bank stood at 3,42,26,373 shares. I have 30,00,000 shares at the time of listing with Dhaka Stock Exchange and Chittagong  Exchange in 2000. I have issued 3,12,26,373 shares in the form of Bonus Shares and Rights Shares after listing with stock exchanges, showing 1040.88% increase in number of Bank’s outstanding shares.

iii) Satisfactory Net Assets Value (NAV)

Our Bank’s assets are greater than liabilities with very satisfactory Net Assets Value (NAV) per share. The NAV of the Bank per share in 2009 stood at Tk.331.01 while it was Tk.257.95 in 2008, recording a significant growth of 28.32%.

iv) Authorized Capital and Paid-Up Capital

At the time of incorporation in 1995, the Authorized Capital of the Bank was Tk.500.00 million and the initial Paid Up Capital was Tk.100.00 million. At the end of 2009, the Authorized Capital and Paid Up Capital of the Bank stood at Tk.10,000.00 million and Tk.3,422.64 million respectively. The Authorized Capital and Paid Up Capital since inception of our Bank have been increased by 1,900% and 3,322.64% respectively to maintain sound capital adequacy of the Bank and to make the Bank financially stronger.

v) Declaration of Dividend

The Bank continuously pursues a stable dividend policy and declares dividends to the shareholders at an attractive rate. To cope with the requirement of increased capital of the Bank with the growth of volume of business, bonus shares were issued out of the profit generated by the Bank.

vi) Rights Issue of Shares of the Bank

As approved by the Shareholders in the 5th Extra Ordinary General Meeting of the Bank held on September 24, 2009, Rights Share @ 1R:2 Shares will be issued in favor of Shareholders of the Bank at an issue price of Tk.160/- each with a premium of Tk.60/- per share subject to approval of regulatory authorities. The Bank has so far issued 1,22,13,696 Rights  Shares to the Shareholders to increase the Paid Up Capital of the Bank out of which 16,50,000 Ordinary Shares were issued as Rights Shares to the Shareholders at par at the ratio of 1R:2 in the year 2003 and  1,05,63,696 Rights Shares were issued to the Shareholders in the year 2006 at the ratio of 1:1 at issue price of Tk.200/-each with a premium of Tk.100/- per share to raise the capital base of the Bank.

3.4 Dividend

The Bank focuses on the principles of sharing good achievements with the respected Shareholders. Accordingly, the Board of Directors recommends 35 percent Stock Dividend (Bonus Share) for the year 2009. The Bank’s priority is to increase shareholder value by enhancing the overall earnings of the Bank.

3.5 Deposits

The Bank mobilized total deposits of Tk.96,669.05 million as of December, 2009 as compared to Tk.68,714.67 million in 2008. Competitive interest rates, attractive deposit products, deposit mobilization efforts of the employees and confidence reposed by the customers in the Bank are the factors that contributed to the notable growth in deposits. The Bank introduced a number of attractive deposit schemes to cater to the requirement of small and medium savers.

3.6 Credit Policy

The Bank has an exhaustive credit policy which is periodically reviewed and updated, under which all the functions of credit operations and management are carried out. The credit policy broadly includes and provides the Bank with the guidelines on the following aspects of credit:

•   The permissible sectors/eligible businesses to finance

•   The Application Process

•   Analysis of credit risk

•   Loan structure and terms

•   Documentation / Communication

In addition to the above, to cater to the needs of the financing requirement in specific sectors, separate schemes like (i) Consumer Credit Scheme (ii) SME Credit Scheme (iii) Agricultural Loan Scheme (iv) Scheme for financing in Leather Sector etc. have been devised as per policy and guideline of Bangladesh Bank from time to time.

3.7 Human Resource Division

Human resource is the prime and single most valuable asset for a financial institution like a bank to attain its ultimate goal. Keeping this idea in mind, the Bank has adopted a comprehensive human resource policy as regards recruitment of employees, acquiring their services, developing their skill, motivating them to perform with excellence, maintain high morale and ensuring that they remain committed and devoted to the organization to achieve organization objectives. An organization requires competent managers and employees coordinating their efforts towards achievement of grand success. To ensure this need, Human Resources Division of Southeast Bank developed the finest team with full of competence in banking in the last fifteen years. It provides an excellent working environment for the employees to improve their team spirit, work excellence and creativity.

The Bank follows a structured recruitment policy based on qualifications and merits for fresh and experienced job aspirants. They are recruited in the Bank through a rigid but transparent process and the best are screened out from the bulk candidates. The division tirelessly gives full efforts that the right number and right kind of people are in the right places at the right time, capable of efficiently and effectively completing those tasks which help the organization to maintain good asset quality and fulfill the conditions of the regulatory authority. Total manpower strength of the Bank as on December 31st 2009 stood at 1402 of which 113 were executives, 1141 were officers and 148 were subordinate staff. The bank recruited total 277 employees of which 63 were experienced bankers and 214 were fresh entrants in the year 2009. The Bank also promoted 178 officers during the year 2009.

The division took massive initiative to train its manpower in the year 2009 to equip themselves with the techniques of modern banking. Total 107 Nos. of training, workshops, seminars were held at SEBL own training institute as well as in BIBM and other Govt and semi Govt institutes. The Bank also accommodated 181 interns for doing internship program from different Universities of the country. Attracting and retaining quality human resource is the most important aspect of Human resource policy. In this regards, Southeast Bank is generous enough to declare a good amount of bonus as incentive in every year. Employees of the Bank also enjoy working in a workplace which is comfortable, flexible and rewarding. To ensure social security, the Bank has implemented the policy of gratuity, contributory provident fund, encashment of unveiled leave etc. The Bank takes good care of their health and safety.

3.8 Information Technology

The bank has taken number of major initiatives to modernize its IT infrastructure, notably implementation of Core Banking Software (CBS), modernization of Wide Area Network (WAN) infrastructure, establishment of Data Center (DC) and Disaster Recovery Site (DRS). Under the modernization initiatives of IT infrastructure, the bank has rolled out a centralized web based solution for its CBS known as BankUltimus. The BankUltimus is a web based banking system which is bundled with world’s most modern and reliable relational database Oracle and secured UNIX operating system called Sun Solaris. The system has got many modules to cater newer services and introduction of newer products with minimum lead time. The system allows integration with the multiple channels and interfaces such as ATM, Internet Banking, Mobile Banking, SWIFT, CallCenteretc.

4.1 Research and Development (R & D) and Training

The Bank has successfully completed 15th year of banking operation with a network of 56 Branches and 10 SMECenters recording significant growth in deposit, business and profitability. In order to consolidate the present position and maintain sustained growth objectives, the Bank gives utmost importance in making continuous investment in Research and Development (R&D) and Training to optimize its financial performance keeping socio- economic priorities in mind. In the backdrop, the Bank has decided to establish a separate Research and Development (R&D) division at head office to make continuous research and economic forecasts / analysis on the macro-economic variables so that operational efficiency is achieved at all levels and excellence in customer service and brand image are increased in the competitive banking scenario by appropriately addressing upon risk management principles.

4.2 Branch Expansion Program

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

4.3 Budget and Budgetary Control

The Bank follows bottom up planning approach in the preparation of annual budget and initially invites draft proposals on different budgetary items including deposits, advances, profitability, and businesses from the Branches. The draft budget estimates are then prepared by the Head Office Management and reviewed/finalized in the “Business Policy and Managers’ Conference”. After approval in the meeting of the Board of Directors, Bank’s budget is implemented. The Bank Management puts constant efforts throughout the year for achievement of the budget. It periodically reviews the variances and the progress towards achieving the budgetary goals.

4.4 Treasury Operations and Fund Management

Southeast Bank’s Treasury Operation is carried out to manage both local and foreign currency fund in the growing business need of the bank. Treasury operation is also responsible to measure and minimize the risk associated with Bank’s foreign exchange exposure, liquidity, interest rate, asset liability management and overall fund management of the bank. The department has effectively played its role in determining the direction of the markets, through different modern business techniques and sophisticated technological support. Besides, our treasury team has also managed all the regulatory requirements like maintenance of CRR, SLR etc in an efficient manner.

The Foreign Exchange desk handled significant amount of foreign currencies throughout the year with a reasonable spread through its widespread branch network. The FX desk handled a total of USD 2,030.00 million in 2009 which is 21.62% higher than the year 2008. In addition to that, our treasury department as a profit center generated an operating income of Tk. 417.39 million in Foreign Exchange operations, Tk.1,817.17 million in Money Market operations and Tk.416.99 million in Government Security trading operations in aggregate which is 62.22% higher than that of 2008. The Bank adopted a customer-oriented service policy and developed diverse products to meet the needs of corporate, commercial and retail customers for better fund management and optimum return.

4.5 Asset Liability Committee (ALCO)

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

4.6 Credit Monitoring

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

4.7 Risk Management of the Bank

Southeast Bank has an integrated risk management strategy that can create the transparency SEBL are looking for. This approach makes it easier to understand, control and optimize the Bank’s financial risks and opportunities. It can also help detect, prevent and mitigate different risks in Banking Industry. It enables the Bank for regulatory compliance, secured information sharing and enhanced risk awareness as well as to embed all the policies and procedures adopted by the management in business process for more effective governance and control of the Bank. Southeast Bank Ltd. has already established an effective program to combat Money Laundering and Terrorist Financing.

The elements of the said program are communicated to all levels of personnel of the Bank to ensure a thorough understanding of individual responsibilities, prompt identification of unusual activity and maintaining record retention requirements set forth by the aforesaid regulations. The Bank has also implemented the aforesaid AML and ATF Program which includes all the AML and ATF Principles in all the jurisdictions in which the Bank operates. The entire Clients’ Accounts are monitored by the Bank on an ongoing basis to detect unusual/suspicious transactions on the basis of Transaction Profile provided by the client.

5.1 SME Banking

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

Bank provides credit facilities to the small and medium entrepreneurs to be more productive and stable. The entrepreneur should be skilled in managing his / her business and has experience of successfully managing the business for at least 2 (two) years. The literate entrepreneur is given preference. The age of the entrepreneur must be within the range of 20 to 50. The entrepreneur must be socially acceptable. A clear succession plan for the entrepreneur must be present. If the entrepreneur is an individual, he / she must be a national or permanent resident of Bangladesh. If the entrepreneur is a company / firm or other business entity, it must be registered in Bangladesh with majority shares owned by Bangladeshi and valid licenses for the business. The entrepreneur’s principal place of business must be in Bangladesh. If the entrepreneur is a member of any social organization / association, he / she should arrange a corporate guarantee of the association / organization through formal regulation (if any). The business must be legally valid, i.e., have trade license, income tax or VAT registration certificate (wherever applicable). The business must have a defined market with clear growth potentials. Proper utilization and timely repayment of previous loan(s) will be considered as proven track record of the applicant for renewal & enhancement of credit facility.

• Ø For small enterprise: Taka 2.00 lac to Taka 30.00 lac
• Ø For medium enterprise: Taka 2.00 lac to Taka 50.00 lac

5.2 Offshore Banking Service

Southeast Bank started its Offshore Banking operations in Dhaka EPZ from 30^th December, 2009.  In order to cater to the finance and banking needs of 100% foreign owned industries in Dhaka Export Processing Zone (EPZ), the non-resident

Bangladeshis working abroad and the non-resident foreign institutions, Our OBU aims to provide banking products such as Savings / Current / Term Deposits / Loans and Advances (Working Capital Finance) and Export Bills discounting facility subject to approval from Bangladesh Bank.

5.3 Islamic Banking

The Bank started its Islamic Banking Operations on July 28, 2003. The Bank opened 03 (three) Islamic Banking Branches in the year 2003 and 02 (two) Islamic Banking Branches in the year 2004. At present, the Bank has 05 (five) Islamic Banking Branches out of total 56 branches, 10 SME Service Centers and 1 offshore Banking Unit. To further streamline Islamic banking operations of the Bank within the purview of Bangladesh Bank BRPD Circular No. 15 dated November 09, 2009, the Islamic Banking Wing of the Bank has already been converted into a full-fledged Islamic Banking Division from December 27, 2009.

There is a Shariah Supervisory Board in the Bank which oversees and guides Islamic Banking operations of the bank based on Shariah requirements. Leading Islamic scholars of the country well versed in Shariah concerning Islamic Banking operations are on the Bank’s Shariah Supervisory Board.

The Bank provides all kinds of Islamic Banking services to the customers within the provisions of the Bank Company Act 1991, Bangladesh Bank’s Directives and the principles of Islamic Shariah. The bank is maintaining a separate set of accounts for Islamic Banking Branches. Fund deposited by the depositors with the Bank under Al-Wadeeah and Mudaraba principles and profit accrued from different modes of investment and financing i.e.Mudaraba, Hire Purchase (under Shirkatul Melk), Murabaha, Bai-Muajjal, and Bai-Salam are distributed amongst the depositors and the bank ensuring a reasonably fair rate of return on deposits based on weightage of individual product and complying Shariah norms. As on December 31, 2009, the deposit and investment of Islamic Banking Branches were Tk.10,307.54 million and Tk.4,842.20 million showing growth of 57% and 66% respectively. During the period 2009, total import and export business handled were for Tk.1,890.81 million and Tk.1,723.11 million respectively recording significant growth. Non Performing Investment of Islamic branches were only 0.64% of their total investment in 2009.

5.4 Merchant Banking

After getting approval from Securities and Exchange Commission on 6th April 2009, Merchant Banking operation of Southeast Bank Limited started from 11th August 2009 with the object to provide quality services to the prospective institutional and individual investors in the capital market. In today’s diverse and unpredictable economy and global financial crisis, the need of a sustained profit plan and long term growth strategy have become essential for both individuals and corporate bodies. Merchant Banking operation principally involves providing financial services and advice to the prospective investors.

6.1 ATM Services

Southeast Bank Limited is a member of the E-cash Shared ATM Network. E-Cash has a network of 32 ATM’s located in strategically important locations on five important cities / towns of the country namely: Dhaka, Chittagong, Sylhet, Cox’s Bazar and Rajshahi. SEBL are providing ATM service coverage to our 30 branches.

• SEBL issue ATM card against SB, CD & STD Account
• TK 500 for annual / renewal fee.

6.2 Dual Currency VISA Credit Card

Single Card-Dual Use (Local & International):

SEBL Visa (Dual) Credit Card has unique feature of allowing limits both for local and international usage in a single card. However, one may opt for separate cards if he / she find the same convenient for him / her. SEBL Visa (Dual) Credit Card is accepted at any merchant locations or payment counters displaying Visa logo in any part of the world.

• Widely Accepted at Merchants & ATMs Worldwide
• Competitive Annual / Renewal Fee
• 20 – 50 Days Interest Free Credit Facility
• 50% Cash Drawing Facility at ATMs and any Southeast Bank Branch
• 100% Cash Drawing Facility at purchase mode through Card Cheque
• Easy Repayment: Cardholder has also the option of paying a minimum of 5% of his / her bill amount every month and thus can enjoy the flexibility to plan repayment in installment basis.
• Auto Payment facility: If a cardholder maintains an account with any of the SEBL branches, he / she can instruct us to realize the monthly bill against his / her credit card from his / her SB/CD/STD account automatically.
• Payment of International Roaming Bill of Mobile Phone: Cardholder can pay his / her international roaming bill of cell phone through Credit Card.
• Auto Debit Facility of Mobile Phone Post Paid Subscribers
• Free Supplementary Cards: Supplementary cards are issued against a Principal Card. While each supplementary cardholder will have his / her own independent usage within the principal card – holder’s credit limit, the expenses will be charged to the principal card – holder’s account. Separate limit but not exceeding the principal may be fixed for each supplementary card.
• SMS Push – Pull Service

6.3 Locker Services

Southeast Bank has locker facilities. A client must have a CD or STD or SB or any type of account in the respective branch where they wants to avail the locker service.

Fees and Charges of Locker Service

6.4 Loans and Advances

Bangladesh’s economy has been more or less resilient amidst the global crisis, but lower exports and remittances growth and stagnant investment rates in the country impoverished the growth. In spite of these, the overall banking environment remained more or less smooth during 2009, other than the occasional excess liquidity situation in the last quarter of 2009. The loans and advances portfolio stood at Tk.77,497.57 million as on 31st December, 2009 in comparison to Tk.60,281.26 million as on 31st December, 2008 registering a growth of 28.56%.

The Bank continued its expansion of loans and advances portfolio throughout the year 2009 by prudent selection of borrowers. The Bank took advantage of the opportunities and challenges in the socio-economic and business scenario of the country and expanded credit in all segments including priority sectors of Government of Bangladesh like SME and Agriculture. The bank expanded its SME business operation in 2009 with top most priority. In addition to substantial SME business through the existing branches, the Bank also established 10 (ten) SME Service Centers to tap new business in this sector.

The loan portfolio of the Bank is spread over the business of different sectors like ready made garments, textile, spinning, dyeing, ceramics, pharmaceuticals, telecommunication, petroleum, steel and engineering, ship scrapping, cement, edible oil, sugar industry, real estate, transport, agriculture and other commercial lending etc. which ensures diversification without concentration to limited sectors. The Bank also thrives on reducing risk at the time of borrower selection through due diligence on government policy, industry outlook, borrower’s business performance along with mitigation of unforeseeable risk by taking adequate collateral. The Bank however, through increasing monitoring and supervision of the loan portfolio could manage to keep the level of Non Performing Loans (NPLs) as on 31st December, 2009 at 3.73% compared to 4.12% as on 31st December, 2008.

6.5 Guarantee Service

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

6.6 Club Finance

Syndicated loans are loans made by two or more lenders and administered by a common agent using similar terms, conditions and common documentations. Most loan syndications take the form of a direct-lender relationship, in which the lead lender is the agent for the other lenders in the origination and administration of the loan and the other lending banks are signatories to the loan agreement.

Southeast Bank is one of the pioneers in the banking arena of the country for Syndicated / Club Financing of corporate houses for new project establishment, BMRE of existing operations and working capital facilities. The Bank participated in 11 Syndications during 2009 and allowed Tk.1,827.00 million in different segments of the economy like ceramics, pharmaceuticals, poultry, textile, spinning etc.

6.7 Corporate Financing

Southeast Bank provides credit facilities to help corporate clients move forward to improve cash flow and working capital restructure debt, consolidation, acquisition and buyout etc. The credit facilities to the corporate clients are typically of 02 types (i) asset based lending and (ii) cash flow based lending. Asset based lending also called secured lending, is covered by a wide variety of assets by using the liquid, current assets of the company (such as accounts receivable and/or inventory) or the fixed assets of a business (such as plant, property, and equipment) as collateral. Cash flow financing are allowed to corporate clients having predictable and historically sustainable cash flows (operating performance and enterprise value based on brand, franchise value, technology, or customer base) to meet client’s seasonal requirements, business expansion, cyclical business swings, improve business cash conversion cycle etc.

The Bank facilitates its corporate clients with credit facilities only after considering client’s business / industry environment, current and projected financials, management personnel etc. and after taking enough risk mitigating measures to protect the interest of the Bank. The financial packages are recommended and provided to the corporate clients in conformity with the Bank’s credit policy and annual sectoral allocation either from own finance of the Bank or raised through Syndication / Club Finance.

6.8 Agriculture Credit

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

6.9 Lather Section Investment

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

6.10 Consumer Credit Scheme (CCS)

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

6.11 Products and Services

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

6.12 Customer Service

In the backdrop of changing and globalize banking scenario, the Bank has evolved a conducive organizational structure to promote appropriate marketing approaches to face the new challenges and stay in the competition. The restructuring of Marketing Division organogram focuses on customer centric approaches to increase brand loyalty of SEBL as a business friendly Bank. The Bank envisages conducting of marketing promotional activities and establishes Brand marketing through Customer Service, CSR, Event Management, Product Diversification, Positioning and Repositioning etc. This promotes establishing long term profitable relationship with the clients, providing total solutions to customer problems and ultimately adds value to the Bank by way of creating a win-win situation both for the client and the Bank.

6.13 Corporate Social Responsibilities

Southeast Bank’s banking practice is based on a network of relationship with its employees, customers, suppliers, business associates, shareholders, regulatory authorities and the community.

The Southeast bank is fully committed to protect the interest of its shareholders. Their constructive suggestions are implemented for the betterment of the company. It releases enough disclosures for the information of the shareholders in the Annual Reports, half-yearly financial statements, the print and electronic media and in the Bank’s website. It always endeavors to enhance shareholders value by optimizing financial performance at least cost.

The Bank continuously strives to ensure that its operations are environment-friendly and discourages financing projects contrary to it. It is one of the leading participants in the beautification of DhakaCity. The beautification of the road-island from Russell Square to Manik Miah Avenue was done by the Southeast Bank.

Southeast Bank works to promote good community relations to foster a relationship of understanding, trust and credibility. It has a long history of support for charitable causes. In 2009, Southeast Bank has spent Tk.24.75 million as donations for education, sports, art, culture, health-care, community development, relief operations etc. A senseless killing of valiant army officers was committed by the misguided BDR personnel at BDR Headquarters, Peelkhana, Dhaka on February 25, 2009. It widowed and orphaned innocent people and catapulted the affected families in distress and uncertainty.

Brig. General Md. Abdul Bari

Tk. 40,000.00

Tk. 480,000.00

Ms. Farhana Bari2BA 1480

Col. Md. Mojibul Huq

Tk. 40,000.00

Tk. 480,000.00

Ms. Nehrin Ferdousi3BA 2324

Col. Md. Mashiur Rahman

Tk. 40,000.00

Tk. 480,000.00

Ms. Zobaida Begum4BA 2409

Col. Kudrat Elahi Rahman

Tk. 40,000.00

Tk. 480,000.00

Ms. Loby Rahman5BA 2605

Maj.Md. Abdus Salam Khan

Tk. 40,000.00

Tk. 480,000.00

Ms. Mahbuba Begum6BA 2806

Lt. Col.Md. Lutfur Rahman

Tk. 40,000.00

Tk. 480,000.00

Ms. Munmun Rahman7BA 3716

Maj.Md. Mahbubur Rahman

Tk. 40,000.00

Tk. 480,000.00

Ms. Rita Rahman

     Total : Tk. 33,60,000.00

6.14 National Economy

Southeast Bank has directly employed 1402 people in the service of the Bank. SEBL have also generated employments for thousands of men and women in the projects and industrial ventures established with our finance. The credit policy of the Bank has also been so designed as to promote trade, commerce and industry which will ultimately contribute to the growth of national economy. It will also help creation of employment opportunities. By mobilizing deposits for the Bank, Southeast Bank has contributed to the formation of capital of the country. SEBL has collected tax on interest/profit earning of the depositors for the public exchequer. Our Bank has been a conduit for bringing foreign remittance from Bangladeshi expatriates living abroad and thereby contributed to the overall foreign exchange reserve of the country. Southeast Bank contributed handsome amounts to the national exchequer in the preceding years as corporate tax.

7.1 Export Development Fund (EDF)

EDF was established in 1989 by Bangladesh Bank with current allocation of USD.300 million in size, to facilitate access to financing in foreign exchange for input procurement by manufacturer-exporter. Authorized Dealer (AD) banks can borrow US Dollar funds from the EDF against their foreign currency loan to manufacturer-exporter. As of 31st December 2009, the bank allowed USD 3.45 million for input procurement under the EDF Scheme of Bangladesh Bank and in 2010.

7.2 International Trade Operations

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

7.3 Import Trade

In 2009, the Bank experienced a robust growth in its import based business. The total import of the Bank stood at Tk. 69,582.92 million (USD 1,004.51 million) which is around 20% higher from the import of 2008. Food Commodities such as Wheat, Sugar, and Crude Soyabean Oil, Capital Machineries, Raw Materials for export-oriented garment industries, Scrap Vessel, Raw Cotton and Flat Rolled Steel / Steel Billet etc. occupy the substantial portion of import items for the bank in 2009.

Import Figures of the bank for the last 6 years are as below:

Year

Import volume in eqvt.

US Dollars (in Million)

Import volume in eqvt.

Taka (In Million)

2004

306.51

20229.62

2005

421.44

29079.30

2006

501.79

35125.12

2007

557.50

38470.34

2008

840.86

58019.77

2009

1004.51

69582.92

Source: Annual Report of SEBL 2009

7.4 Export Trade

Since 2004, Southeast Bank has been strongly committed to strengthen the export sector of this country by facilitating the exporters of Readymade Garments, Agro based Industries, Frozen Fish, Leather, Jute and Jute Goods sector. In addition to the above, the bank has been facilitating novel export based industries such as Ceramics Industries and ShipBuilding to earn substantial volume of foreign exchange for our country. Despite decline in overall export of our country due to the financial crisis in the developed economies, our Bank registered a sound increase in exports in 2009 from last year. The total export of the Bank was Tk.46,724.47 million (equivalent to USD 674.53 million) which is 11% higher than that of 2008.

Source: Annual Report of SEBL 2009

7.5 Foreign Correspondent Banks

The Correspondent Banking team of Southeast Bank works relentlessly to build and expand strong correspondent network with top ranking banks of the world, so that the international import, export, guarantees and remittance business of the customers are handled in a most efficient and effective manner. Southeast Bank have successfully secured lines from International Finance Corporation (a World Bank subsidiary), FMO (of the Netherlands), and Asian Development Bank to facilitate our trade transactions. As of 31st December, 2009, the number of foreign correspondents stood at 589 banks in 95 countries of the world.

8.1 Capital Market Scenario of Five years

Country’s capital market has experienced changes in its infrastructure and has developed with the advancement in information and communication technologies introduced in capital market. In recent time, the practice of Corporate Governance by the listed companies has progressed faster than ever before. At the end of 2009, the DSE General Index was 4535.53 and it was 2795.34 at end of 2008. The DSE General was up 1740.19 points or 62.25% in the year 2009, compared to that of the previous year. Total market capitalization at the end of 2009 was Tk.1,903.23 billion which was Tk.1,043.79 billion at the end of 2008. Eighteen companies offered parts of their Authorized Capital to the public through Initial Public Offerings (IPOs) in the year 2009. The total value of fresh capital injected in the market in the form of IPO in 2009 was Tk.19,047.00 million.

8.2 Investment Scenario of Five years

The investment portfolio of the Bank during the year 2009 was Tk.21,350.23 million against Tk.12,299.61 million in the previous year registering a growth of 74 percent. The portfolio of investment included Government Treasury Bills, Prize Bonds, Shares of Public Limited Companies etc. The Bank has always given emphasis on investment of Funds in high yield areas.

8.3 Money Market Scenario of Five years

The Bank actively participated in the money market transaction in the year 2009. Bangladesh Bank reduced the repo and reverse repo rate to 4.50% and 2.50% respectively in 2009 which were previously 8.50% and 6.50% respectively. At the same time, Bangladesh Bank adopted Expansionary Monetary Policy and as a result, the inter-bank call rate went fairly low and reached the historic low at 0.10%.

8.4 Asset Portfolio of Five years

As on 31st December, 2009, the total assets of the Bank stood at Tk.112,676.98 million.

The break-up of the total assets are given below:

Source: Annual Report of SEBL 2009

8.5 Contribution to the National Exchequer of Five years

                                                                                                            Source: www.sebankbd.com

The Bank’s contribution to the National Exchequer was Tk.1475.33 million during the year 2009.

8.6 Year-wise Operating Income of Five years

                                                                                                Source: Annual Report of SEBL 2009

The Bank earned an operating income of Tk.5,859.21 million during the year 2009 from Net Interest Income, Income from Investment, Commission, Exchange and brokerage and other Operating Income. The operating income of the Bank during the year 2008 was Tk.4,039.43 million. The operating income posted 45 percent growth in 2009.

8.7 Year-wise Lending of Five years

                                                                                                Source: Annual Report of SEBL 2009

The total lending of the Bank stood at Tk.77,497.57 million as on 31st December , 2009 as against Tk.60,281.26 million in the previous year showing  an increase of 29 percent.

8.8 Growth of Operating Profit of Five years

                                                                                                            Source: www.sebankbd.com

The Operating Profit of the Bank stood at Tk.4,614.66 million in 2009 as against Tk.3,012.58million of the previous year.

8.9 Year-wise Return on Equity of Five years

                                                                                                            Source: www.sebankbd.com

During the year 2009, Return on Equity (ROE) of the Bank was 16.51 percent as against 12.06 percent of the previous year.

8.10 Year-wise Net Profit of Five years

                                                                                                Source: Annual Report of SEBL 2009

Net profit of the Bank stood at Tk.1,870.19 million as on 31st December, 2009 as against Tk.887.24 million in the previous year showing  an increase of 110.80 percent.

9.1 Finding Problems of the organization

• As Southeast Bank has no branches in many districts in the country, they can’t operate overall operations in the economy of the country.
• Peoples have lack of knowledge about SEBL as they have limited of branches in some specific districts.
• Less of the efficiency of Marketing sector of SEBL, the bank can hold the position that they can achieve. The peoples should be aware about the activities of SEBL.
• Lack of sufficient employees keeps pressure on the existing employees on their works. That is why sometimes the employees makes mistake and get frustrated.
• The operational charges of SEBL are high from others bank causes discouragement of the peoples to work with it.
• Employees are recruitment criteria should be more effective as less efficient peoples may not be recruiting.
• As clearing house get electronic, IT sector have not sufficient employee to hold this effectively.

9.2 Recommendations

• Southeast Bank should open more branches to operate more effective operations in the country.
• Marketing Sector should be improved and effective.
• More effective people should be recruited to serve for SEBL, as they can serve better.
• IT sector should expand as it can works with the Electronic Clearing house with Bangladesh Bank.
• SEBL should concentrate to the Internship student as they can be effective for the Bank.

9.3 Conclusion

Southeast Bank shapes its tomorrow today. The Bank has already earned a good operating pro­fit. Demands for our fi­nancial products remain strong. The profi­table expansion of our activities continues to be underpinned by our strategy of responsible lending, disciplined growth and careful management of credit quality. Comprehensive new Software, Bank Ultimus, has been put in place. The new Software will be the tool to devise more innovative products for customers and improve the Management Information System (MIS). The Bank has been modernized and readied to penetrate the market with more value added products.

Southeast Bank’s priority for 2010 is to consolidate its existing position and attain higher growth and profitability without compromising the quality of its assets. SEBL commit themselves in exercising total compliance with all regulatory requirements and remain as a compliant Bank in the years ahead. SEBL will continue to share the common vision to build up an institution that can stand the test of time and one day emerges as a world class bank.