ANNUAL REPORT 2017

COMMITTED TO GROWING STRONGER TOGETHER

Committed to Growing Stronger Together

Southeast Bank, already a strong Bank, is thriving to be efficient ways. Our maturing understanding of corporate stronger in close cooperation and association with its social responsibility is part and parcel of our approach to stakeholders. We maintain and cherish our relationship drive our business forward. with them; from customers, employees and shareholders to suppliers, business partners and wider community. We Today the Bank is more profitable, more flexible and look forward to collectively growing our business together better structured. It is a powerhouse with outstanding in the coming years. As an experienced Bank, we always solutions and attractive products for customers, excellent have the first-mover advantage to offer the best-in-class opportunities for employees and exceptional potential value-added services to the customers. Our people are for investors. In the growth graph, the Bank has been honest, skilled and efficient. They are better sourced, continuously making good profit and declaring good better motivated and better incentivized. We have the dividend to shareholders. The curve of growth keeps power and commitment today to write our future – we shall write it together. Together we are growing stronger soaring upward everyday. Every year, we leave an indelible and together we shall reach new heights of success. We stamp of success on the annals of Bank’s history. For us, are destined to grow because we have proved our strength yesterday is but today’s memory and tomorrow is today’s in the banking sector. We are accessible, committed vision. Success is not a destination to stop only to look and innovative. Customers provide us opportunity to back. It is a journey which we travel together. Together we grow and strengthen our business which we reciprocate are stronger, safer and happier. We dream together for a by extending all the relevant services they need in most brighter future and work hand in hand to make it a reality. Financial Overviews-Last5Years Financial Indicators Percentage Earnings PerShare Percentage Total CapitaltoRiskWeightedAssetsRatio BDT inmillion Profit BeforeProvision (BDT inmillion) Total Assets 2013 2013 2013 2013

10.90 3.68 6,700 220,931 2014 2014 2014 2014

12.41 4.18 8,290 236,608 2015 2015 2015 2015

11.52 3.35 8,034 260,718 2016 2016 2016 2016

12.15 2.66 8,503 291,798 2017 2017 2017 2017

10.84 1.27 9,062 339,288 BDT inmillion Profit AfterTax (BDT inmillion) Total LoansandAdvances Percentage Return onAverageRiskWeightedAssets Percentage Return onAssets 2013 2013 2013 2013

1.78 1.64 3,379 134,864 2014 2014 2014 2014

1.82 1.67 3,837 147,071 2015 2015 2015 2015

1.31 1.23 3,069 168,878 2016 2016 2016 2016

0.92 0.88 2,435 191,866 2017 2017 2017 2017

0.39 0.37 1,169 234,317 Non-Financial Indicators Non-Financial Overviews - Last 5 Years

A) In terms of Competitiveness Number of Deposit Customers Size of Loan Customers 10,750 11,789 13,025 14,155 15,563 357,210 416,823 468,154 570,196 638,139

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Number of Cardholders Number of Women Entrepreneurs Number of Debit Cardholders

Number of Credit Cardholders 107 114 128 174 189 50,265 38,200 74,843 43,513 98,818 50,438 61,327 76,783 134,255 174,271

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Number of Branches Number of Foreign Correspondents 778 790 811 807 825 103 113 122 128 132

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Number of Employees Number of Shareholders 2,118 2,221 2,376 2,616 2,704 65,413 58,169 46,285 39,009 36,038

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Non-Financial Indicators Non-Financial Overviews - Last 5 Years

B) In terms of Activity Level Number of Loans Disbursed Number of New Remittance Customers Engaged 55,486 63,421 66,239 73,037 85,353 9,656 9,382 10,717 10,121 10,795

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Number of Debt Collection or Received Market Share of SEBL Deposit (Percentage) Classified Loans Written Off Loans 2.91 2.73 2.65 2.56 2.87 7 7 2 4 5 97.09 97.27 97.35 97.44 97.13 64 125 129 153 147

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Market Share of SEBL Advance Market Share of SEBL Branches (Percentage) (In Number) (Percentage) 3.03 2.90 2.91 2.87 3.25 96.97 97.10 97.09 97.13 96.75 1.19 1.25 1.34 1.33 1.36 98.81 98.75 98.66 98.67 98.64

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Non-Financial Indicators Non-Financial Overviews - Last 5 Years

C) In terms of Productivity Level : Per Employee Cost Number of Internet Banking Customers Engaged 1.27 1.49 1.51 1.60 1.76 3,806 4,183 4,068 3,690 1,830

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Accounts Opening Trend 158,985 151,142 138,416 177,260 131,706

2013 2014 2015 2016 2017

D) In Terms of Quality Service Number of Accounts Closed or Became Dormant 13,566 15,942 95,276 159,662 202,809

2013 2014 2015 2016 2017

Number of Service Drops of Call Centre Average Number of Customer Complaints Received 1.00% 3.00% 11.00% 3.00% 2.00% 4.00%

2015 2016 2017 2015 2016 2017 Non-Financial Indicators Non-Financial Overviews - Last 5 Years

Customer Satisfaction Level With Customer Satisfaction Level With Technological Facilities Bank Staff 77% 86% 94% 82.5% 90.7% 9187% 91.91% 92.14% 94.76% 96.31%

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Average Time Taken to Respond Employee Turnover Rate to Customer Inquiry 3.57% 4.98% 4.61% 4.15% 6.02% 6.23 5.39 2.37 3.26 4.40

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Late Attendance Per Month Number of Employees Received New Qualifications or Completed Courses 2.63% 2.73% 4.64% 4.83% 5.92% 75 226 190 184 136

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Awards and Recognition

Southeast Bank awarded SAFA – Best Presented Annual Report Award – 2016 in the Private Sector Banking Category

Southeast Bank Limited (SEBL) has been awarded First and bestowed the prestigious awards on the Bank for its Runner Up Award under the category of Private Sector outstanding performance, encouraging financial results Banks and Joint Second Runner Up under the category and indicators, sufficient disclosures for all stockholders of SAARC Anniversary Award for Corporate Governance and its commitment to achieving further excellence in for “Best Presented Annual Report 2016” by South Asian corporate governance and compliance with legal and Federation of Accountants (SAFA). regulatory requirements.

South Asian Federation of Accountants (SAFA) exhaustively analyzed the Bank’s Annual Report-2016

Southeast Bank Limited 7 Awards and Recognition

Southeast Bank awarded first Position for the best Corporate Governance

Southeast Bank Limited has been awarded first position and indicators, sufficient disclosures for all Stakeholders for the best Corporate Governance among private and its commitment to achieving further excellence in sector banks by Institute of Chartered Accountants of corporate governance and compliance with legal and Bangladesh (ICAB). regulatory requirements.

The Bank has been ranked in the joint Second position M. Kamal Hossain, Managing Director of Southeast Bank under the category: Private Sector Banks and nominated Limited, received the awards from Abul Maal Abdul for the SAFA BPA Reports Award 2016 Competition. The Muhith, MP, Hon’ble Minister, Ministry of Finance, Institute of Chartered Accountants of Bangladesh (ICAB) Government of the People’s Republic of Bangladesh in a exhaustively analyzed the Bank’s Annual Report-2016 ceremony held on 25 November 2017 at a local hotel in and bestowed the prestigious awards on the Bank for its Dhaka. outstanding performance, encouraging financial results

8 Annual Report 2017 Awards and Recognition

Southeast Bank won “Silver Award” for the Corporate Governance Excellence

Southeast Bank Limited has been given Silver Award in the “4th ICSB National Award for Corporate Governance Excellence, 2016” in Banking Companies Category by The Institute of Chartered Secretaries of Bangladesh (ICSB). The 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-2016.

The Institute of Chartered Secretaries of Bangladesh exhaustively analyzed the Bank’s Annual Report-2016 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.

Southeast Bank Limited 9 Awards and Recognition

10 Annual Report 2017 Awards and Recognition

Southeast Bank Limited 11 Balance Score Card

BDT in million Financial Highlights 2017 2016 2015

Financial Results Revenue 27,305.90 25,617.57 26,260.72 Provision for Credit Losses 6,628.68 3,728.28 2,323.29 Operating Expenses 4,870.74 4,349.23 3,570.11 Net Revenue 1,168.63 2,435.07 3,069.42

Financial Results(%) Reported/Adjusted efficiency ratio 34.96% 33.84% 30.77% Return on common shareholder's equity (ROE) 4.46% 9.06% 11.86% Net Interest Margin (NIM) 3.42% 3.77% 3.80% Total Shareholder return 4.95 3.10 (0.30)

Common Share Performance Market Capitalization 20,356.29 17,146.97 16,230.02

Dividends (%) Dividend yield 0.07 0.11 0.08 Reported/Adjusted dividend payout ratio 1.18 0.75 0.45

Revenue Provision for Operating Expenses Credit Losses 6 8 1 30 61 26 323 728 629 570 349 871 2, 3, 6, 3, 4, 4, 27, 25, 26,

2015 2016 2017 2015 2016 2017 2015 2016 2017

Net Revenue Earnings Per Share Dividend Per Share Dividend Yield 35 66 27 50 00 50 08 11 07 069 435 169 3. 2. 1. 1. 2. 1. 0. 0. 0. 3, 2, 1,

2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

12 Annual Report 2017 2017 2018 Obtained license from Bangladesh Bank for Centralizing International Trade Awarded 1st Runner Up by South Asian 23 Years of and Foreign Exchange Transactions 26.01.2017 Federation of Accountants (SAFA) for Best Launching of ‘Priority Banking Products’ “ESTEEM” 04.03.2017 Presented Annual Report-2016 in the Private Southeast Bank distributed Green Award 05.04.2017 Sector Banking Category 31.01.2018 Glorious Journey Organized Scholarship program for financially challenged meritorious students Won Joint 2nd Runner Up Award in SAARC 20.05.2017 Anniversary Award for Corporate Governance Launching of Payment Gateway 25.05.2017 31.01.2018 2016 Awarded first position for the best Corporate Governance among private sector Signing of Revolving Credit agreement for USD 5.00 million with Asian banks by Institute of Chartered Accountants of Bangladesh (ICAB) 25.11.2017 Development Bank (ADB ) 31.03.2016 Received Silver Award for Corporate Governance Excellence, 2016” by The Institute of Chartered Secretaries of Bangladesh (ICSB) 30.11.2017 Launching of client acquisition drive through ‘Nibir’ Campaign 15.05.2016 Establishment of Cafeteria for Safe food for Bank’s employees 21.12.2017 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” 2015 26.10.2016 Launching of Telecash as Mobile Financial Services Product 29.01.2015 Awarded ‘Tax Card and Trophy’ as 6th highest Tax Payers of the Country in Signed Unsecured Facility Agreement with Global Climate Partnership the Banking Sector 24.11.2016 Fund (GCPF) 25.02.2015 Signed of agreement with Bangladesh Bank for ‘Green Transformation Fund’ Introduction of Bank’s Modern and full-fledged Training Institute 01.12.2016 21.05.2015 Signed funded Loan Agreement with International Finance Corporation (IFC) 05.08.2015 Commissioning of ‘SWIFT Sanction Screening Solution’ 30.08.2015 Introduction of Central Monitory System (CMS) to monitor (24X7) all 2004 branches 25.10.2015 1999 Registered as Depository Participant of Introduction of Real Time Gross Settlement (RTGS) 29.10.2015 CDBL 17.02.2004 Initial Public Offer (IPO) Implementation of Credit Card Management Software 23.11.2015 Subscription Opened 1st to Demat Shares in CDS of CDBL in Banking Sector 16.05.2004 Partnership with MasterCard Bangladesh and launched the complete 25.11.1999 range of Credit Cards (World, Platinum, Titanium and Gold) and Subscription Closed 05.12.1999 Became a member of Trade Finance Program 2011 Prepaid Card 15.12.2015 (TFP) of Asian Development Bank (ADB) 2010 Launching of ATM and ATM Cards Introduction of Internet Banking 28.02.2011 20.10.2004 Introduction of Bank’s Call Centre 24X7 16.12.2015 with own System 27.03.2010 Launching of SEBL 1st Mutual Fund 23.05.2011 Introduction of Chip-based Credit Card 31.12.2015 2000 3rd Rights Share Issue Listing with Dhaka Stock 2005 Signed first Short Term Rollover Loan Agreement Exchange Limited 12.04.2000 Launching of Credit Card 01.01.2005 Subscription Opened 07.07.2010 with International Finance Corporation (IFC) 28.06.2011 Listing with Chittagong Stock Subscription Closed 29.07.2010 Exchange Limited 24.04.2000 2006 Incorporation of Southeast Bank Incorporation of Southeast Financial Services (UK) 2nd Rights Share Issue Capital Services Limited 23.09.2010 Limited 15.09.2011 Subscription Opened 15.10.2006 100% Online Banking 17.09.2011 2014 Issuance of Subordinated Bond for BDT 3,000.00 million. Subscription Closed 31.10.2006 11.11.2014 Introduction of Green Award 15.11.2014 Incorporation of Southeast Exchange Company (South Africa) Pty Limited 15.12.2014 1995 2002 2007 Opening of Ladies Branches 29.12.2014 Incorporation of SEBL 12.03.1995 Became a member of Global Trade 2013 Formation of SEBL Foundation 12.03.2002 Established Central Payment Centre (CPC) at Head Finance Program (GTFP) of Certificate of Commencement of Office for International Trade Payments 15.01.2013 Business 12.03.1995 2003 International Finance Corporation 1st Rights Share Issue (IFC) 23.04.2007 Incorporation of Southeast Financial Services License Issued by Bangladesh Bank (Australia) Pty Limited 18.03.2013 23.03.1995 Subscription Opened 15.02.2003 Formation of Southeast Bank-The Financial Subscription Closed 15.03.2003 2009 Formal Inauguration 25.05.1995 Express-Policy Research Institute Green Award Commencement of Islamic Banking business Introduction of new Core Banking Inauguration of 1st Branch 25.05.1995 Trust 30.06.2013 from Chhagalnaiya Islamic Banking Branch, Software 14.02.2009 Feni 28.07.2003 Launching of 1st Off-shore Banking Establishment of Southeast Bank Green School Unit 30.12.2009 License Issued from Bangladesh Bank 12.09.2013 as a Primary Dealer 28.10.2003

14 Annual Report 2017 2017 2018 Obtained license from Bangladesh Bank for Centralizing International Trade Awarded 1st Runner Up by South Asian and Foreign Exchange Transactions 26.01.2017 Federation of Accountants (SAFA) for Best Launching of ‘Priority Banking Products’ “ESTEEM” 04.03.2017 Presented Annual Report-2016 in the Private Southeast Bank distributed Green Award 05.04.2017 Sector Banking Category 31.01.2018 Organized Scholarship program for financially challenged meritorious students Won Joint 2nd Runner Up Award in SAARC 20.05.2017 Anniversary Award for Corporate Governance Launching of Payment Gateway 25.05.2017 31.01.2018 2016 Awarded first position for the best Corporate Governance among private sector Signing of Revolving Credit agreement for USD 5.00 million with Asian banks by Institute of Chartered Accountants of Bangladesh (ICAB) 25.11.2017 Development Bank (ADB ) 31.03.2016 Received Silver Award for Corporate Governance Excellence, 2016” by The Institute of Chartered Secretaries of Bangladesh (ICSB) 30.11.2017 Launching of client acquisition drive through ‘Nibir’ Campaign 15.05.2016 Establishment of Cafeteria for Safe food for Bank’s employees 21.12.2017 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” 2015 26.10.2016 Launching of Telecash as Mobile Financial Services Product 29.01.2015 Awarded ‘Tax Card and Trophy’ as 6th highest Tax Payers of the Country in Signed Unsecured Facility Agreement with Global Climate Partnership the Banking Sector 24.11.2016 Fund (GCPF) 25.02.2015 Signed of agreement with Bangladesh Bank for ‘Green Transformation Fund’ Introduction of Bank’s Modern and full-fledged Training Institute 01.12.2016 21.05.2015 Signed funded Loan Agreement with International Finance Corporation (IFC) 05.08.2015 Commissioning of ‘SWIFT Sanction Screening Solution’ 30.08.2015 Introduction of Central Monitory System (CMS) to monitor (24X7) all 2004 branches 25.10.2015 1999 Registered as Depository Participant of Introduction of Real Time Gross Settlement (RTGS) 29.10.2015 CDBL 17.02.2004 Initial Public Offer (IPO) Implementation of Credit Card Management Software 23.11.2015 Subscription Opened 1st to Demat Shares in CDS of CDBL in Banking Sector 16.05.2004 Partnership with MasterCard Bangladesh and launched the complete 25.11.1999 range of Credit Cards (World, Platinum, Titanium and Gold) and Subscription Closed 05.12.1999 Became a member of Trade Finance Program 2011 Prepaid Card 15.12.2015 (TFP) of Asian Development Bank (ADB) 2010 Launching of ATM and ATM Cards Introduction of Internet Banking 28.02.2011 20.10.2004 Introduction of Bank’s Call Centre 24X7 16.12.2015 with own System 27.03.2010 Launching of SEBL 1st Mutual Fund 23.05.2011 Introduction of Chip-based Credit Card 31.12.2015 2000 3rd Rights Share Issue Listing with Dhaka Stock 2005 Signed first Short Term Rollover Loan Agreement Exchange Limited 12.04.2000 Launching of Credit Card 01.01.2005 Subscription Opened 07.07.2010 with International Finance Corporation (IFC) 28.06.2011 Listing with Chittagong Stock Subscription Closed 29.07.2010 Exchange Limited 24.04.2000 2006 Incorporation of Southeast Bank Incorporation of Southeast Financial Services (UK) 2nd Rights Share Issue Capital Services Limited 23.09.2010 Limited 15.09.2011 Subscription Opened 15.10.2006 100% Online Banking 17.09.2011 2014 Issuance of Subordinated Bond for BDT 3,000.00 million. Subscription Closed 31.10.2006 11.11.2014 Introduction of Green Award 15.11.2014 Incorporation of Southeast Exchange Company (South Africa) Pty Limited 15.12.2014 1995 2002 2007 Opening of Ladies Branches 29.12.2014 Incorporation of SEBL 12.03.1995 Became a member of Global Trade 2013 Formation of SEBL Foundation 12.03.2002 Established Central Payment Centre (CPC) at Head Finance Program (GTFP) of Certificate of Commencement of Office for International Trade Payments 15.01.2013 Business 12.03.1995 2003 International Finance Corporation 1st Rights Share Issue (IFC) 23.04.2007 Incorporation of Southeast Financial Services License Issued by Bangladesh Bank (Australia) Pty Limited 18.03.2013 23.03.1995 Subscription Opened 15.02.2003 Formation of Southeast Bank-The Financial Subscription Closed 15.03.2003 2009 Formal Inauguration 25.05.1995 Express-Policy Research Institute Green Award Commencement of Islamic Banking business Introduction of new Core Banking Inauguration of 1st Branch 25.05.1995 Trust 30.06.2013 from Chhagalnaiya Islamic Banking Branch, Software 14.02.2009 Feni 28.07.2003 Launching of 1st Off-shore Banking Establishment of Southeast Bank Green School Unit 30.12.2009 License Issued from Bangladesh Bank 12.09.2013 as a Primary Dealer 28.10.2003

Southeast Bank Limited 15 Journey Towards Sustainability

16 Annual Report 2017 Table of Contents

Letter of Transmittal 18 Forward Looking Methodology 19 Notice of the 23rd Annual General Meeting 21 Message from the Chairman 22 Review from the office of the Managing Director 30 Integrated Reporting 35 Corporate Philosophy and Business Model 37 VISION AND MISSION Strategic Objectives, Planning and Priorities 42, 43 Core Values, Code of Conduct and Ethics 44, 45 Corporate Profile 47, 48 Group Corporate Structure 49 Organogram of the Bank 50 Last 10 Years Financial Indicators 52 Composition of Board of Directors and its Committees 53 Brief Profile of Board of Directors 62 Code of Conduct for Directors Policy on reviewing effectiveness of the Board of Directors 74 Directors’ Responsibility Statement 75

DIRECTORS’ REPORT 78

CORPORATE GOVERNANCE Corporate Governance Report 105 Managing Director’s and CFO’s Declaration on Integrity of Financial Statements to the Board 119 MANAGEMENT REVIEW, RESPONSIBILITY AND EVALUATION 120-150 Credit Rating 166 Audit Committee (Composition, Role, Meetings, Attendance etc.) and Internal Control 167 Report of the Risk Management Committee 171 Evaluation of the Quarterly Financials by the Audit Committee and by the Board 173 Report of the Bank’s Shariah Supervisory Committee 174 Capital Plan 176

RISK MANAGEMENT AND CONTROL FRAMEWORK Report on Risk Management Framework, Mitigation Methodology and 181 Risk Reporting by the Chief Risk Officer Disclosure on Risk Based Capital Adequacy (Basel III) 191 Capital Market Exposure 203

Southeast Bank Limited 17 SUSTAINABILITY APPRAISAL AND INTEGRATED REPORTING Sustainability Report- At a Glimpse 206 Social Responsibility Initiatives (CSR) 208 Southeast Bank Foundation 210 Southeast Bank - The Financial Express - Policy Research Institute Green Award Trust 212 Environment Related Initiatives 213 Green Banking Initiatives - Environment and Social Obligation 215 STAKEHOLDERS INFORMATION SEBL OUTLOOK Products and Services 246 Caring for the Employees (Health and Safety) & Career Development Program 254-255 Contribution to National Exchequer 256 Empowering Women 257 Financial Inclusion: Mobile Banking Services – Telecash 268 Connecting Customers 269 Service Excellence in Action 270 Bank’s Network: List of Branches and ATMs 271 Memories of 22nd AGM 284

FINANCIAL STATEMENTS Independent Auditor’s Report to the Shareholders 308 Consolidated Balance Sheet 310 Consolidated Profit and Loss Account 312 Consolidated Cash Flow Statement 313 Consolidated Statement of Changes in Equity 314 Notes to the Financial Statements 320 FINANCIAL STATEMENTS OF ISLAMIC BANKING BRANCHES 384 FINANCIAL STATEMENTS OF OFFSHORE BANKING 393 FINANCIAL STATEMENTS OF SEBL SUBSIDIARIES 402-453 STANDARD DISCLOSURES CHECKLIST SAFA Corporate Governance Disclosure Checklist 455 Integrated Reporting Checklist 457 SAFA Standard Disclosure Checklist 466 Important Financial Indicators with Quantitative and Qualitative Factors 469 Proxy Form and Attendance Slip 481 Letter of Transmittal

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 -2017

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-2017 along with the Audited Financial Statements (consolidated and separate) as at and for the year ended 31st December, 2017. The Annual Report-2017 of the Bank comprises Balance Sheet, Profit and Loss Account, Statement of Changes in Equity, Cash Flow Statement along with Notes to the Accounts. Information given in our Annual Report-2017 is complete, full and in line with Bangladesh Accounting Standard and International Accounting Standard. We hope that the report will be of use to you today and tomorrow.

Best regards,

Yours sincerely

A.K.M. Nazmul Haider Company Secretary (Acting)

18 Annual Report 2017 Forward Looking Methodology

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-2017 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.

Southeast Bank Limited 19 SOUTHEAST BANK LIMITED 23rd ANNUAL GENERAL MEETING Venue Officers’ Club Dhaka 26, Baily Road, Ramna Dhaka-1000 Date Saturday, June 30, 2018 at 11.00 a.m.

Officers’ Club Dhaka

20 Annual Report 2017 Notice of the 23rd Annual General Meeting

Notice is hereby given to all members of Southeast Bank Limited that the 23rd Annual General Meeting of the Shareholders of the Company will be held on Saturday, June 30, 2018 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, 2017 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, 2017. 3. To elect / re-elect Directors. 4. To appoint Auditors for the term until the next Annual General Meeting and fix their remuneration. 5. Miscellaneous, if any, with the permission of the chair.

By order of the Board

Dated: Dhaka June 12, 2018 A.K.M. Nazmul Haider Company Secretary (Acting)

NOTES: a) The “Record Date” was on Wednesday, May 23, 2018. 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 entitled to attend and vote at the general meeting may appoint a proxy to attend and vote on his/her behalf. Such proxy except for a Corporation must also be a member of the Company. An Attorney of a member need not himself/ herself be a member. d) The instrument appointing a Proxy 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. e) 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 submitted at the Registration Counter duly signed. The signature must agree with the recorded signature. f) The Hon’ble members may collect “Proxy Form” from the Share Department of the Company. This will also be available in the website of the Company, i.e. www.southeastbank.com.bd g) Hon’ble shareholders are requested to update all the required information with their respective Depository Participants.

PS: 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 23rd Annual General Meeting of the Bank.

Southeast Bank Limited 21 Message from the Chairman

Bismillahir Rahmanir Rahim

Dear Shareholders,

I express my sincerest thanks and regards to you, my respected shareholders, for your continued interest in and support for Southeast Bank Limited over the years. I heartily welcome you to the 23rd Annual General Meeting of the Shareholders of the Bank. I have minutely reviewed the operational results of the Bank for the year 2017 to map out plans and programs for the next year. Based on it, I take it as a privilege to present to you a report summarizing activities and status of the Bank for the year 2017 with an outlook for the succeeding years

Alamgir Kabir, FCA Chairman

1. Performance appraisal of the Management the benefit of the customers for their business success. Resultantly, our average lending rate stood at 8.17 percent We have an experienced and capable management team. at the end of the year 2017. They are capable of building underlying strength of the Bank and pushing it forward. I would like to thank the Bank’s total asset increased by 16.27 percent in line with management and the employees for the commitment that the Bank’s policy of maintaining comfortable liquidity. they displayed in 2017. Liquid assets to total assets stood at 14.85 percent at the end of 2017. During the year, adequate focus was During the year 2017, the Bank continued to prosper, aggressively put on liability management. It resulted in thanks to relentless efforts of the management team headed significant reduction of Cost of Fund (CoF) and it reached by the Managing Director to enhance products, services 6.85 percent at year end. and solution standard across Bank’s operations. Providing comprehensive business solutions continues to be the In the deposit-mix of the Bank, the cost-free and low- focus of the Bank’s business strategy. The Management cost deposit reached 36.00 percent from 35.46 percent team of the Bank deserves your support, suggestion and in 2016. The total deposit of the Bank including Islamic cooperation in the execution of their strategy and pursuit Banking Deposits increased by 17.33 percent over that of business growth. of last year. It led to a healthy Loan to Deposit Ratio (conventional) of 82.12 percent. The net interest margin 2. Bank’s Capital of the Bank reached 3.42 percent at the end of 2017.

Southeast Bank is a highly capitalized Bank. We maintained Fee and other income during the year 2017 had a good capital in commensurate with our business growth. growth of 21.57 percent over those of 2016. The good contribution of Fee and other income to Bank’s total Total Capital income is a clear testimony of Bank’s strength. The Bank’s BDT in million operating income increased to BDT 13,933.04 million in 2017 from BDT 12,852.45 million in 2016. The narrow growth in operating income can rightly be attributed to declining dealing spread in the year which reached 3.15 percent as on 31st December, 2017 from 3.90 percent as 21,807.57 27,462.09 28,509.53 34,056.28 33,765.13 on 31st December, 2016.

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.

2013 2014 2015 2016 2017 4. Operating Profit

Southeast Bank is earning good operating profit every 3. An anatomy of our operational year. performance Operating Profit In 2017, we refocused our Bank on expansion of earning BDT in million avenues, putting together a clear set of initiatives, strengthening our culture and solidifying the foundation of the Bank for future growth. At the same time, we were 9,062.30 not unmindful of market scenario, competitive business 6,700.20 8,289.76 8,034.27 8,503.22 environment and the need for reducing financial cost of doing business. We are pleased with the operational result of our Bank in 2017 against continuously intensifying competitive market and drastic squeeze of dealing spread.

We sincerely believe our success lies in the triumph of our borrowers and other stakeholders. Being guided 2013 2014 2015 2016 2017 by reasons, we drastically reduced the lending rate for

24 Annual Report 2017 5. Corporate Governance 7. Employment in the Bank

Southeast Bank has been practicing sound Corporate In Southeast Bank, we look to ensure competitive terms of Governance principles in all its activities since its employment in order to retain and recruit quality human inception in 1995. Over the years, they have been resource. We assure the highest standard of health and strengthened and have now been actualized. Good safety. We carry out succession planning exercises to corporate governance principles and practices are now ensure that the Bank has the right degree of depth in its embedded in all the Bank’s activities and inculcated in the skill-base. Our people are key to the successful operation working of the Bank and that of the management team. of the Bank. To ensure quality service to the clients, we The tenets for implementation of corporate governance have the right balance of technical knowledge, experience, practices are fairness, transparency and accountability, professionalism and adaptability. Our people do not seek regulatory compliance, integrity in performances, effective power, but they accept power delegated to them. We internal control and commitment to the society and the expand our Bank and our people become part of the larger environment. organization. They face the challenges and experience the sense of achievement and accomplishment. Their future Our ultimate goal in respect of corporate governance is in the Bank is a longer road. We do something different to come out as a good corporate citizen and respond to to create more opportunities, more challenges and more calls of responsibility within the purview of rules and excitement for our team members. We pick the best of international best practices. Good corporate governance the best to work for the Bank and represent it. Their starts from the top. We are fortunate to have a professional dedication, skill and professionalism are considerable and efficient Board of Directors to oversee our operations factors in our success in business pursuits. They make us and provide us a strategic direction and necessary policy better and lift us up. support. 8. Internal Control Our shareholders are also equally committed to the long-term success of the Bank. They have provided us The Bank management is held responsible for putting with financial capital, ideas and support that greatly in place an Internal Control System in the Bank and for helped us achieve our goals. What we do today creates periodically reviewing its effectiveness. A key feature in increased responsibility and credibility for what we shall the fulfillment of these responsibilities is to strengthen the do tomorrow. Bank’s operating procedure and associated internal control system. There is maker and checker concept with due 6. Our Pursuit of Growth amount of accountability for each and every transaction and piece of work in the Bank. The internal control system is designed to meet the purposes of completeness, The vision of the Bank is to be a premier banking accuracy, reliability of financial transactions, justification institution in Bangladesh and contribute significantly to and reasonableness. the national economy. In this context, premier means preferred, admired and dynamic and being recognized for giving the customer a fair deal. We shall continue to secure 9. Coping with Change and maintain our remarkable position within each of our customer segments. We will continue to concentrate on Changes and reforms are inevitable parts of any increasing earnings on a long term basis. We will focus organization’s environment. Markets shift, competitors on investing in the areas which possess greater business offer new products, new technologies emerge and prospects keeping, however, in mind the respective policy Government regulations in respect of doing business guidelines of the Central Bank. In our journey through change. Our Bank responds to all such situations to help the growth path, our interface with our customers, the management detect and bring in required reforms and shareholders and employees shall be further strengthened changes. The Bank is perfectly placed to play a driving and energized. We shall lay greater emphasis on long- role in the management of change. Our noblest search is term ethical client relationship, high productivity through our search for excellence. team work, confident and ambitious sense of excellence, prudence, creativity and customer-focused marketing. However, at times of changes and reforms, we partner We sincerely believe productivity is never a matter of with our management team to help them understand why chance. It’s always the result of our commitment to change is required. We show them that their roles ladder excellence, intelligent planning, right choice of advantages up to a big picture. Our employees come from different and focused effort. life-paths. We make them follow one corporate path for Bank’s well-being.

Southeast Bank Limited 25 10. Anti-Money Laundering (AML) and Training in the Bank is managed in commensurate Combating Financing of Terrorism (CFT) with Bank’s personnel development plan. An annual Platform training calendar is chalked out and implemented. Our trained people can identify themes and ideas well before We are pledge-bound not to allow our banking channel competitors. and services to be used for any money laundering and perpetration of terrorist activity. For obvious reasons, we 13. Our Credit Policy are firmly committed to comply with all related rules and Southeast Bank has a comprehensive credit policy guidelines of regulatory authorities and international best encompassing both Conventional and Islamic banking practices. There is a cost of non-compliance that extends modes of lending. It comprises clearly stated universal and just beyond a monetary value. With the rising changes in the sanctions landscape, we strengthened our Customer basic operating concepts, policies and standard for credit Due Diligence (CDD) process. We, more than ever, quickly operations in accordance with bank’s business objectives respond to the changes and ensure future proofing of AML and rules of conduct of credit. We promote understanding screening technology and process. We are trying hard to of and strict adherence to our credit policy among all our further leverage the technology innovations not only to employees. reduce compliance with AML and CFT requirements Our assessment for corporate loan or investment involves but also to improve client experience. We put in place varieties of financial analyses including cash flow to and implemented a comprehensive AML and CFT Policy. Under the policy, Customer Due Diligence (CDD) is being predict an enterprise’s capability of loan or investment done, transactions of customers including overseas ones repayment and its growth prospect. are being monitored, reporting to regulatory body is being While assessing credit worthiness, we focus on a number made, sanction lists are being screened while opening of principles including, but not limited to, borrowers’ account and allowing transactions, short KYCs are being background and character, purpose of the credit or obtained to the satisfaction of the Bank in case of walk-in investment facility, tenor of the Bank’s exposure, security customers. offered, business segment scenario, pricing, national 11. Our Crises Management policy etc. While approving a loan or investment, we try to ensure that our power of sanctioning a loan or investment To deal with risks that arise due to disaster and computer does never over-power our fair judgment. system failure and then lead to crisis that extends beyond the domain of risk management, Southeast Bank has 14. Volume of Trading of Southeast Bank’s prepared basic policy for crises management system. These policies and systems are intended to ensure the Shares continuation of business activities and early restoration of The daily volume of Southeast Bank’s Shares in Dhaka functions by taking quick action and other measures to Stock Exchange Limited (DSE) and Chittagong Stock minimize risk as well as to secure the safety of customers, Exchange Limited (CSE) averaged to BDT 18.57million employees and others. during the year 2017. We have put in place a business continuity plan based on the assumptions of occurrence of such crises which 15. Our Shareholder Segment include natural disaster, terrorism, system failure, spread of negative rumors, etc. The shares of Southeast Bank are not concentrated in the hands of a few individuals or corporate bodies. There is 12. Training no shareholder, individual or institute, that hold more The basic policy for HR development is to cultivate than 10% of the shares of the Bank. staff with specialized skills in line with the management philosophy of providing customers with high-value Shareholder Segment services. Our training program is a process by which our As on 31st December, 2017 people are taught critical skills especially relating to the bank’s diverse products and services. The gradual increase in our operational activity resulted in the increase of pressure on human resource fueled mainly by competitive 31.82% 32.33% environment. Quality training and career development opportunities are available for all employees. We achieved Sponsors 32.33% increased training delivery to our employees in 2017. The Financial training was targeted to revamp and improve learning by the employees. We have a full-fledged training institute Institutions 35.85% 35.85% with all modern facilities having a number of class rooms General Public 31.82% and other logistics for world-class training.

26 Annual Report 2017 16. Bank’s Treasury Functions and Liquidity 3,432.40 million as on 31st December, 2017 as against Management. BDT 2,438.90 million as on 31st December, 2016. Our Bank exceeded the Agriculture/ Rural Credit disbursement Treasury deals with investment in Treasury bills, bonds, target of 2017 as set by Bangladesh Bank by more than other securities, diversified money market and foreign BDT 1,000 million. exchange products along with asset-liability management of the bank. Treasury Division is the window through 19. Cost Efficiency which the bank diversifies fund management following a process of austere assessment of domestic and international In the backdrop of acute competition among Banks markets. and Financial Institutions, the net interest margin has narrowed and dealing spread squeezed. To maintain The country’s banking sector was unperturbed in terms continuity of Bank’s profitability, cost efficiency is the key of liquidity throughout the year. The excess liquidity that option and a preferred priority. We try hard to avoid an we parked with Bangladesh Bank bill was BDT 16,738.00 unavoidable expenditure because a small leak can sink a billion as on December 31, 2017. The private sector credit great ship. growth was 18.13 percent. The inter-bank call money rate hovered around 3.50 to 4.50 percent in the year. We are trying to increase low and no-cost deposit in our deposit-mix. We are trying to increase fee-based income. Treasury Division of Southeast Bank Limited prudently We have taken initiative to make our office as paperless managed fund and complied with all the regulatory as possible. We are migrating our customer to electronic requirements efficiently. The Credit to Deposit Ratio banking and providing them with e-statements. We have (CDR) as on December 31, 2017 was 82.12 percent. The created sufficient awareness among our employees for Liquidity Coverage Ratio (LCR) and Net Stable Funding minimum use of electronic appliance. For interpersonal Ratio (NSFR) at the reporting date were 102.81 percent, communication, we resort to e-mail instead of writing a 115.55 percent. Treasury Division proactively monitors letter on paper. Since we are making our office as paperless all the liquidity and interest rate-related risks so that as possible, making photocopy of written papers and everything stays within the limit. taking print-out of e-mails have significantly come down.

17. Code of Conduct for Directors To reduce travel expenses, we have introduced video conference in place of physical visit in suitable cases The Board of Directors of the Bank in its 410th meeting between Head office and branches. It will be expanded held on December 24, 2012, inter alia, approved the Code further. Our stringent cost management has bolstered of Conduct for the Directors of the Bank. The Directors efficiency. are sincere in abiding by the Code of Conduct. There had not been any breach of the Code of Conduct by any In terms of cost efficiency, our Bank’s cost income ratio Director of the Bank. was 34.96 percent in 2017 as against 33.84 percent in 18. Our Contribution to the Small and Medium 2016. Our per employee profit was BDT 0.43 million and Enterprises (SME) and Agriculture per Branch profit was BDT 8.85 million in 2017. 20. Growth of Bank’s total Assets Earning good profit is our goal. But we are not oblivious of making a positive contribution to the national Ours is a asset-rich strong Bank. We are working to make economy. Small and Medium Enterprises (SMEs) and it stronger and healthier. Agriculture play a significant role in the country’s economic development. They generate large-scale employment opportunities and facilitate inclusive growth. Total Assets We are duty-bound to contribute to the growth of SMEs BDT in million and Agriculture. Our Bank has adopted a cluster- based financing approach for SMEs. Women constitute almost half of our total population. They need to be involved in production-process and entrepreneurial ventures for country’s economic uplift. For Women entrepreneurs, our 220,930.85 236,608.40 260,718.03 291,798.01 339,288.05 Bank has introduced a dedicated loan product named, “Suprova” to ensure their easy access to finance.

The outstanding SME loan of our Bank was BDT 39,555.20 million as on 31st December, 2017 as against BDT 41,287.10 million as on 31st December, 2016. Likewise, the Bank’s outstanding Agri-credit was BDT 2013 2014 2015 2016 2017

Southeast Bank Limited 27 21. Our Corporate Social Responsibility Bank’s published accounts and reports for the year 2015. (CSR) Initiatives The Institute of Chartered Secretaries of Bangladesh also awarded our Bank Second Position for continuous Business and society need to work in harmony towards commitment to Corporate Governance Excellence for the a mutual advantage. Our CSR goes beyond philanthropy year 2016. The year 2017 has been a momentous year for and regulatory compliance. It is more about investing in the bank in terms of accolades and recognition. business growth while ensuring sustainability of market, customers, community and environment. The South Asian Federation of Accountants (SAFA), a forum of professional accountancy bodies of SAARC We contribute significantly to the national exchequer, countries, bestowed upon Southeast Bank two prestigious maintain fair and transparent management based on awards for its published Accounts and Reports for the year principle of self-responsibility, stand by people distressed 2016. They are 1st Runner-Up in Private Sector Banks in by serious illness and natural calamity, help the under- SAFA Best Presented Annual Report Awards-2016 and privileged sections of the society in their children’s pursuit Joint 2nd Runner-Up in SAARC Anniversary Award for of education and support activity to protect environment. Corporate Governance 2016. We also practice energy and resource saving measures within the Bank. We promote green living and green Recognitions encourage us to make further qualitive and banking by our corporate conduct. English will continue quantitative improvement in the Bank. to play an important role in the pursuit of ways of people’s earning for living. To promote English education, we 24. Outlook for the succeeding years established an English Medium School in Dhaka with modern facilities and experienced teaching staff. It will be We have navigated in the banking sector of Bangladesh expanded and modernized further. for the last 23 years. Prized and fuelled by our long operational history and experience, we are well-positioned In the year 2017, we spent BDT 241.77 million for on a firm platform to progress further in our chosen areas CSR activity which is inclusive of the CSR expenditures of operation. Over the years, we have built up a strong incurred by Southeast Bank Foundation. We are also one foundation for the future to deliver a leading performance of the leading tax payers of the country. and competitive returns that our shareholders want to see. We will continue to strive to improve further our 22. Loans to Directors operational efficiency with the main focus on creating wealth for shareholders. We shall respect, protect and No loan excepting Credit Card limit was allowed to any treat equitably the interest of all stakeholders. We reiterate Director of the Bank in the year 2017. to our customers our firm commitment that we shall resort to innovation and modern technology in providing 23. Awards and Accolades them with value-added convenience, confidentiality and security. Southeast Bank greatly weighs good corporate governance and operational excellence. These are our fundamental In banking, challenge is immense. Success in banking is requirements in our aspiration to remain a leading a collection of problems of customers solved. We identify banking institution in our country. We do have strategy, the tone of our business intelligence. The tone is threaded intent and ability to take the Bank forward further. Our throughout everything we create for going forward. Annual Report contains enough disclosures. We also We are deeply committed to deliver our promises. We publish financial statements complying with all applicable shall continue to enhance our unique capability and Accounting Standards. In recognition, The Institute of competitive advantage. Chartered Accountants of Bangladesh (ICAB) conferred upon us the honor of First position under the category We are focused. Our employees need to see us creating of Corporate Governance and second position for best opportunities for them to push the Bank forward. We published accounts and reports for the year 2016 under have a very strong team. We provide them opportunities the category of Private Sector Banks. They have also to perform and progress in career echelon. We believe rewarded us for our published accounts and reports for success is a good fortune. It comes from aspiration, a number of years including for the years 2012, 2013, desperation, perspiration and inspiration. We tell our 2014 and 2015. The Institute of Cost and Management employees, if you want more, do more and earn more. Accountants of Bangladesh (ICMAB) awarded our Bank Our dreams of today are the vision for tomorrow. Our First Position as the Best Corporate in the Banking Sector employees are the listeners of the stories we tell them. (Private Commercial Bank-Traditional Operation) for the They own the stories told and make them theirs. They then

28 Annual Report 2017 connect the dot to our bigger dream. To attract them and 25. Appreciation acknowledgement then to retain them, we shall continue to work to please them. We will continue to demand that our employees I am thankful to the Almighty Allah for the business assign utmost value to maintain people’s trust, abide by success of the Bank in 2017 amid competitive and rules and regulations, maintain high ethical standard and unfavorable business environment. I also take the act fairly and selflessly. opportunity to thank the Directors of the Bank for their support and input during the year under review. Their Our exporter customers have invested to make sure collective wisdom substantially contributed to our that their factories are environmentally compliant, have success. I also thank our Management and the members control on manufacturing and maintain labor safety and of the staff under the leadership of the Managing Director standards. Their factories are best in class. We expect for their loyalty, support and relentless efforts for Bank’s more export business in the coming year and beyond. qualitative and quantitative improvements. I respect their zeal to work hard to reach newer heights of success. Our We aim to consolidate and enhance management shareholders’ support and confidence is vital to the Bank’s efficiency, achieve more effective credit portfolio, continued growth and development. We thank them and strengthen credit risk management, prepare ourselves pledge to maintain the Bank’s legacy. well for implementation of BASEL- III accord, bring more diversity in business, focus on loans to mid-sized I conclude by conveying my very sincere and special companies and SMEs, ensure full disclosure, place greater thanks to our valued customers, patrons, well wishers, priority on corporate social responsibility and enhance the Government of the People’s Republic of Bangladesh, corporate governance standard. We shall maintain capital Bangladesh Bank, Registrar of Joint Stock Companies of the Bank at the level proportionate to bank’s volume of and Firms, the Bangladesh Securities and Exchange business. Commission, the Dhaka Stock Exchange Limited, the Chittagong Stock Exchange Limited and all others Our pursuit of growth trajectory will be driven by new concerned who have supported us and extended to us their investment, new efficiency and planned expansion of our valued co-operation. I look forward to their continued business volume. The market offers diverse opportunities support, co-operation and guidance that are our constant and our choices are much more powerful than the source of encouragement in the days ahead. I reiterate advantages that the market offers. We have also learned to with firm commitment that we will remain disciplined, distinguish between noise and needs of our customers. In compliant and result-oriented in all our endeavors and the coming year and beyond, we expect to achieve earning in return seek their continued cooperation. I also thank target and demonstrate our ability to grow further. the respected shareholders for attending the 23rd Annual General Meeting and contributing meaningfully to the We have the power today to write our own future. Based deliberations and adoption of resolutions against the on our sound capital base, skilled human resource, loyal agenda. customers, proactive management team, well-regulated operating environments and an expanding national May the Almighty Allah in His infinite mercy bestow upon economy, I have grounds to believe Southeast Bank us His compassion and blessings. Allah Hafiz. Limited has a promising future. We hope to continue setting high standard of excellence around our services, With warm regards, products and innovations. Our actions listen to the voice Sincerely yours, of our conscience. We are optimistic and enthusiastic about reaping a good harvest from our operation in 2018 and beyond for our all stakeholders especially the shareholders. Our hope is much greater than our fear. It Alamgir Kabir, FCA will lead us to achievement and shape our future. Chairman

Southeast Bank Limited 29 Review from the Office of the Managing Director

It gives me great pleasure to announce another successful year at Southeast Bank Limited. It reflects an improved and profitable performance in 2017. The financial results of the Bank reflect healthy growth in assets, earnings and shareholders’ equity. The growth resulted from the strategies of focusing on diverse mix of asset portfolios, strong risk management culture, emphasis on technology and optimization of efficiencies through rationalization of processes and capacity building. Highlights of some financial performances of 2017 are depicted below....

M. Kamal Hossain Managing Director

30 Annual Report 2017 Southeast Bank Limited 31 It gives me great pleasure to announce another successful Remittance business also contributed to our growth. year at Southeast Bank Limited. It reflects an improved We handled remittance of BDT 95,405.40 million and profitable performance in 2017. The financial results in 2017 with an impressive growth of 47.53 percent of the Bank reflect healthy growth in assets, earnings over 2016. and shareholders’ equity. The growth resulted from the strategies of focusing on diverse mix of asset portfolios, For 2017, Return on Assets and Return on Equity strong risk management culture, emphasis on technology were reported at 0.37 percent and 4.46 percent and optimization of efficiencies through rationalization respectively, Earnings per Share for the year was BDT of processes and capacity building. Highlights of some 1.27. financial performances of 2017 are depicted below: Credit portfolio: Our profit and balance sheet have been maintained steadily and the Bank recorded a net profit after tax Our gross Loans and Advances reached an all-time high of BDT 1,168.63 million during 2017. at BDT 234,316.72 million as on December 31, 2017 reflecting 22.13 percent growth over last year. Our Our deposit grew by 17.33 percent mainly on the back Bank continues to re-orient our credit portfolio with an of a healthy increase in customer deposits. The overall increasing share of Retail, SME and selected higher rated deposit-mix also registered marked improvement as corporate customers. On the asset quality front, Gross low cost deposits increased considerably. Non-Performing Assets (GNPA) remained under control at 5.99 percent at the end of 2017 in a challenging macro Deposit environment. The rise of Non-performing loans (NPL) of BDT in million the Bank was not an isolated case but a part and parcel of an overall industry phenomenon. We have redirected our utmost attention and efforts in this area. 177,519 189,472 210,431 229,973 269,828 Total Loans and Advances BDT in million 134,864 147,071 168,878 191,866 234,317

2013 2014 2015 2016 2017

Total loans and advances registered 22.13 percent growth over last year and stood at BDT 234,316.72 million at the end of December 31, 2017. 2013 2014 2015 2016 2017 We added 4 new branches and 12 new ATMs to expand our network. Customer services

We strive to provide customers with an efficient and Remittance a seamless service experience with the sole purpose BDT in million of amplifying customer satisfaction. Thereby we win customer loyalty. As a customer-centric organization, Southeast Bank will continue to explore opportunities

39,299 48,741 60,709 64,666 95,405 with a clear direction and understanding.

Core strengths

The Capital to Risk-Weighted Asset Ratio (CRAR) of the Bank as on December 31, 2017 in terms of Basel-III guideline was 10.84 percent as against the regulatory requirement of 11.25 percent. At the same time, provision for BDT 10,069.29 million was maintained against 2013 2014 2015 2016 2017 required provision of BDT 7,266.99 million against

32 Annual Report 2017 classified, unclassified items as per Bangladesh Bank’s accelerating. More and more of our competition is coming guidelines. not just from other banks but from non-bank newcomers to the market, putting a significant portion of the banking Total Capital to Risk Weighted Assets Ratio business and revenues at risk. This transformation of Percentage the competitive landscape through new entrants has been facilitated through digitization of banking services and momentum of e-Banking and e-Commerce. On the

10.90 12.41 11.52 12.15 10.84 national front, therefore, the Banking sector will have to reposition itself in the face of growing competition and volatile market environment. Apart from these, typical banking challenges for 2018 includes – continuously narrowing interest spread, pile of huge non-performing loans, maintaining Loan Deposit Ratio (LDR) as stipulated by Bangladesh Bank, pressure of maintaining sufficient capital to maintain incremental requirement of CRAR etc. 2013 2014 2015 2016 2017 We are committed to continuously review our business strategies to proactively face the emerging challenges. Human resources Way forward Together we have accomplished a great deal over the last several years. We have got a team of dedicated and The overall macroeconomic outlook however seems hardworking human resource led by a very professional positive as the trends of key economic indicators; management. While recruiting employees, Southeast Bank commodity prices, external account, inflation are expected believes that it is investing in the future by bringing the to stay favorable with necessary policy interventions. best and brightest to work at Southeast Bank. We invest Ongoing implementation of mega projects, particularly in them by offering competitive salaries, professional infrastructure and energy related, will help in credit off- training and development, leadership opportunities and take and improve in large scale manufacturing which will by giving them the support they need to build a promising accelerate economic mobility. career to reach higher goals. As a leading financial institution, Southeast Bank is well Network expansion equipped and well placed to take full advantage of our economy’s bright prospects. Our experienced leadership The Bank is fully committed to upholding its well- has the persistence to steer the Bank through difficult times earned place in the financial industry of the country. The and the acumen to seek out new lucrative opportunities Management is also cognizant of the challenges being for profitability and growth. Southeast Bank’s innovative faced by the industry on their road to success. We serve products and services ensure that the Bank is always through an extensive network comprising 132 state-of- providing customers with banking solutions of the utmost the-art branches including 4 new branches opened in quality and of international standards. It is our incessant 2017 spread across all the divisions of Bangladesh. We focus on excellence, performance and results that has have bank-owned three (03) Exchange Houses abroad. helped our institution consolidate its position in the industry. For the upcoming year our focus would be- Compliance Improving the top-line income by cautiously Every activity of Southeast Bank now passes through a strengthening the loan book by rebalancing the credit compliance filter. We are deeply committed to remain portfolio among Corporate, Retail and SME finance vigilant in our operational area. Compliance with rules and managing yields on investment portfolios. and regulatory requirements get the focused priority. Our Bank emerged as one of the most compliant and admired Controlling cost of deposits by procuring low cost Bank. deposits through increasing the current account concentration in our deposit franchise to supplement Upcoming challenges our net interest margin. Recovering Non-performing assets including written-off loans will continue with Financial industry is undergoing significant transformation greater vigor to minimize provision charge against and the pace of change in the banking industry is non-performing loans.

Southeast Bank Limited 33 Leveraging on technology with product innovations encouragement and above all being with SEBL. I am and service excellence will continue, backed by grateful to our shareholders who have showed their trust network expansion; in furtherance of our aim to by investing in us. We are fortunate to have a diverse and make Southeast Bank as the best bank in the country. experienced Board of Directors, with wealth of experience and depth of knowledge that provides independent Quickly penetrating in the unbanked segment of our oversight, support and guidance to the management and population, to utilize our growing Telecash banking for that, I extend my sincere gratitude to each member of channel for deposit mobilization and fee generation. our august Board.

Involving in the financial inclusion program to ensure that the nation receives the best banking services that SEBL offers.

Maintaining our commitment to properly adhering to the compliance issues prescribed by regulators.

Appreciation M. Kamal Hossain Managing Director As all that we achieve is because of our employees, I want to thank them sincerely for their hard work and dedication. They have clearly demonstrated their willingness and determination to meet the Bank’s strategic goals and business targets. I express my sincere appreciation to our valuable clients and counterparties, for their support,

34 Annual Report 2017 Integrated Reporting

Southeast Bank Limited is always committed to implement the principles of integrated reporting. This Integrated Report provides information on how we create value, considering both qualitative and quantitative matters that may influence our stakeholders’ decision-making.

Our business operation is based on trust and competency. Securities and Exchange Rules 1987 We do believe that the stakeholders are the supreme The Income Tax Ordinance, 1984 arbiters regarding the legitimacy and the sustainability And other applicable laws and regulations of the of the entity. Hence, we are committed to leave no stone bank unturned for the assurance of our integrated thinking. Materiality We believe that our approach represents a steady and considerable level of integrated thinking, which we In the preparation of this Integrated Report, we have continue to deepen as we execute our strategy within our focused particularly on those issues, opportunities and organization. We recognize that embedding integrated challenges that have material impact on Southeast Bank thinking at every level of our organization forms part of and its ability to be a sustainable business entity that our longer-term work to create a culture in which risk consistently delivers value to its stakeholders. management, compliance, ethics and social responsibility are coordinated with the effective and innovative Assurance Approach accomplishment of our clients’ needs. This comprehensive approach is reflected in our report this year. We have an assurance model comprising three lines of defenses to ensure the validity and authenticity of the Scope and Boundary of the Report information provided in the Annual Report. Our combined assurance model has three parts namely, Management The Integrated Report covers the period from January 1 Review, Internal Audit Assurance and External Audit to December 31, 2017. The report covers all operational Assurance. areas and businesses of Southeast Bank Limited and its subsidiaries. In the report, we have considered the We have engaged different external assurers and auditors reporting of both Financial and Non financial issues as to ensure the credibility of the report. Non financial information has material impacts on the decision making of the Stakeholders and sustainable Financial Statements Audit Pinaki & Company growth of the Bank. Corporate Governance Syful Shamsul Alam & Co. compliance The report is intended to address the information TAX Consultant Akhter Abbas Khan & Co. requirements of long-term investors. We also present Credit Rating Agency Credit Rating Information information relevant to other key stakeholders, including and Services Limited (CRISL) our staff, clients, regulators and communities etc.

We have prepared and presented financial statements and Management Review other reports in compliance with the requirements of Assured and Reliable Internal Audit Assurance Bank Company (Amendment) Act-2018 Information Bangladesh Bank Regulations to the Companies Act 1994 External Audit Assurance Stakeholders Bangladesh Accounting Standards Bangladesh Financial Reporting Standards Financial Institutions Act 1993 Chart: Combined Assurance Model of information to Stakeholders

Southeast Bank Limited 35 We do believe that our capitals including Human, These capitals are interrelated with the value creation for Financial, Intellectual, Natural, Manufactured, Social and the stakeholders and the society through a broad range of Relationship have significant impact on the integrated activities. thinking and sustainable value creation of the bank.

Value Creation Process

Strong Our Corporate Employing Technological Financial Governance Efficient Brilliance Reporting Operational and Resource and Efficient Excellence

s Personnel in Business Management Operation Information itie iv

> Meeting all regulatory > Planned Work > Incessant Banking > International Accounting > Different divisions with requirements and Schedule Service Standards dedicated essence of

orting Act disclosures > Proficient Recruitment > Efficient Electronic > Financial Accounting activity > Hiring professionals and Selection Fund Transfer System > Management Accounting > Knowledge based with strong > Scrutinized > Competent Core > Comparative Reporting functioning Supp background and Performance Appraisal Banking System (CBS) for Decision-Making > Ensuring managerial knowledge > State-of-the-Art > Mobile and Online > Management information performance > Effective Risk Training and Banking systems > Proper allocation of Management Development > Monthly, Quarterly, half duties > Efficient Internal Yearly and Annual > Establishing excellent Control and Regulatory analysis of performances culture Compliance System

Sustainable Value Created

Market Value Optimization Fund Lending & Created for Excellence in with Efficient Management Investment the Client Products Stakeholders Service

> Exploring New market > Mobilizing Low Cost > Lending through Loan > Proficient Stakeholder > Speeding Customer through branch Deposit from retail Products Engagement Service through establishment client base > Strategic investments > Consistent contribution customer need > Business And Product > Capital Accretions > Emphasizing on Small to the national recognition segmentation > Arranging Funds from and Medium Enterprise exchequer > Designing prominent

Primary Activities > Direct Marketing overseas sources for Financing > Satisfactory employee product facilities > Policy Development Offshore Banking > Long term Foreign benefit > Initiating customer service Currency loan for > Incessant customer oriented culture > Loans from Other corporate clients relationship > Strengthening trust and Banks > Agricultural and > Engagement in CSR partnerships with > Central Bank Loans and renewable energy activities customers financing Refinance > Growing as our > Selection and appraisal of quality asset customers grow portfolio > Online Banking

Key drivers that Create Value to our 4. Increasing client base for financial inclusion. organization 5. Strengthening technologies that reduce operational risks and promote implementation of best practices 1. Ensuring quality customer service to ensure customer in the industry. satisfaction. 2. Maintaining high quality assets portfolio to achieve strong and sustainable returns. 3. Practicing efficient corporate governance and compliance processes through meeting all regulatory M. Kamal Hossain requirements and making disclosures. Managing Director

36 Annual Report 2017 Corporate Philosophy and Business Model

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 following:

CUSTOMERS CONTROL MECHANISM

Our company philosophy is simple. It is customer-friendly Our control mechanism is practiced at all levels. We and fully responsive to customer needs and expectations. strive to control the behavior of the employees. Our We carry out required research, analysis and survey to find control mechanism is closely linked to efficiency, quality, out what the customers expect. We leverage technology innovation and responsiveness to customers. and expertise to provide best services and convenience to the customers. We spend money on things that matter QUALITY AND PRODUCTIVITY to them and add value to the Bank in terms of image and profit. That is why our customer-base has been steadily Our philosophy is geared towards boosting productivity expanding over the years. and maintaining a reliable high quality service standard. In the process of delivery of service, co-ordination is the HUMAN RESOURCE essence of our business. Our philosophy is to achieve our goals through a combination of budgetary control, pay for Our people are smart, professional, well-qualified, performance, incentive system, unique corporate culture energetic and sincere. They are passionate about what etc. It continuously stresses key values. they do. Since they enjoy their work, it becomes easy for them to work hard. They do not follow any set model, SUCCESS rather they create models. They completely own what they plan and do. They have a longing to be significant. Our people work hard to succeed. Success is a good So, they are a part of something noble and purposeful. fortune. It comes from their aspiration, desperation, perspiration and inspiration. As our people do more, they COMMUNICATION earn more and get more.

Our philosophy is to reduce lines and layers of BUILDING FUTURE communication. We believe in free flow of ideas within the Management Team. The Senior Management Team is Our philosophy is to make decisions today to improve also open to ideas suggested by the lower level executives performance tomorrow. We know a company which is and officers. At the same time, our decision making successful has to continue to be successful. We do not fear process is short but quick. our future, we shape it by our corporate conduct. Our hope is far greater than our fear.

Southeast Bank Limited 37 Business Model Canvas

Key Partners Value Proposition Customer Segments

Customers Complete Solution of Business Needs Corporate Clients Shareholders One Stop Service for Personal Banking Small & Medium Enterprises Employees Innovative Tailor-made Products Non-Banking Financial Institutions Regulators Timely, Cost-effective & Superior Services Banks Strategic Partners Geographically Well-spread Availability Individuals/ Retail Clients Institutional Clients Govt. & Non-Govt. Organizations

Key Activities Cost Structure Customer Segments

Deposit Services Interest Expense Corporate Clients Lending Operating Expense Small & Medium Enterprises International Trade Services Capital Expenditure Non-Banking Financial Institutions Remittance Service Banks Treasury Solutions Individuals/ Retail Clients Islamic Banking Service Institutional Clients Off-shore Banking Govt. & Non-Govt. Organizations

Key Resources Revenue Streams Delivery Channels

Highly Professional & Experienced Board Interest Income Branches Nationwide Network Investment Income ATMs Worldwide Correspondent Network Fees, Commission etc. Internet Banking Highly Skilled Staff Other Operating Income Mobile Banking Dedicated Service Attitude Call Center Wide Range of Products Subsidiary Companies Strong IT architecture Strong Capital Base

38 Annual Report 2017 Southeast Bank Limited 39 Vision

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

40 Annual Report 2017 Mission Statements

High quality financial services with state of the art technology. Fast 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.

Southeast Bank Limited 41 Strategic Objectives

a) Maintaining a high quality assets portfolio to achieve i) Practicing efficient corporate governance and strong and sustainable returns and to continuously compliance processes through meeting all regulatory build shareholders’ value. requirements and disclosures in line with national and international best practices by ensuring best b) Maintaining adequate capital in line with risk appetite internal control monitoring practices. of the Bank. j) Upholding Bank’s brand image as a customer friendly c) Strengthening trust and partnerships with customers bank through efficient and prompt customer service, by focusing on the Bank’s core values of quality product diversification with a view to establishing a customer service, professionalism, teamwork and long term profitable relationship with our customers. integrity. k) Serving the society as part of our Corporate Social d) Hiring professionals with strong background and Responsibility (CSR) by giving stipends to poor knowledge. students, distributing warm clothes to winter-hit people, providing financial assistance to disadvantaged e) Strengthening technologies that reduce operational people and contributing to different relief funds. We risks and promote the implementation of best also contribute to the society by paying taxes to the practices in the industry. national exchequer timely. l) Extending banking services to the un-banked people f) Developing innovative products and services that for financial inclusion for meeting socio-economic attract our targeted customers and market segments. requirements.

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.

Priorities followed in 2017

The Bank had the following plans and road- iv) Excellence in Delivering Customer Service map for business success in 2017. v) Effective Risk Management i) Excellence in banking operations through maintaining strong fundamentals of Capital Adequacy, Business vi) Effective IT Framework and System Diversification and Exploring Non-Funded Business vii) Efficient Internal Control and Regulatory Compliance ii) Prudent Asset Management System viii) Strong Human Resource Base iii) Prudent Liability Management ix) Going green in the future of banking

42 Annual Report 2017 Strategic Priorities

To meet the challenges of the current dynamic environment and deliver on our strategy, SEBL has a set of strategic priorities that are reviewed and refreshed each year. Bank will continue to manage these priorities in a balanced way with an appropriate mix of growth, return, risk and productivity so that it keeps on flourishing as a leading financial institution of Bangladesh, despite existence of external challenges.

Our strategic priorities are: Performance Containing to enhance our funding and liquidity discipline position, including ensuring a diversity of funding pools and optimizing the composition of customer To be the best performing bank in Bangladesh. deposits, through forecasting the market scenario Developing and upgrading customized asset, liability in terms of liquidity, interest rate and exchange rate and transaction products for Retail, SME and Corporate movement. clients. Maintaining a high quality portfolio of assets coupled Managing the business by diversifying activities in with strong provisioning. different segments such as corporate, SME and retail in a balanced way across strength, growth, return and Service Leadership productivity Providing a seamless customer experience across all Mobilizing low cost sustainable deposit from retail and channels institutional client base. Ensuring quality customer service at primary Increasing client base for financial inclusion and wider distribution channel such as Branch and development market penetration. of alternative delivery channels to improve customer Diversification and increasing loan clients and experience. maintaining quality assets. Deepening relationships through context-based Export expansion and diversification. customer experiences. Promoting Islamic banking through conventional Acquiring new customers by making it simpler, easier branches. and better for clients to bank with us. Emphasizing Small and Medium Enterprises financing. Augmenting agricultural and Rural Credit through Digital Transformation Micro Financial Institutions. Sustainable financing for Energy efficiency and Creating a 21st century digitized bank with multi- renewable energy projects. brand capabilities. Arranging funds from overseas sources for Off-shore Simplifying products and processes by digitizing end- banking service and long term foreign currency loans to-end. for corporate clients. Driving efficiency opportunities from digitization and Integrated marketing development initiative by consolidation of systems. creation of customer-oriented culture. Targeted Growth Mobilizing remittance as a source of foreign currency. Maintaining strong levels of capital to meet the needs of Pursuing growth opportunities. our stakeholders and complying with the requirements Focusing on stronger growth in small to medium of regulators. enterprises, wealth and assets. Our goal is to achieve the lowest cost of capital by managing Workforce Revolution its mix and by building our base through earnings and selective capital issues. The means of achiving this goal are : Focusing on a customer service, high performance workforce and culture. Expediting borrowers’ rating, Strengthening the skills of our people to better serve Concentrating on lending portfolio having lower customers and meet their complete financial needs. capital charge, Empowering our people to drive innovation, deliver Strengthening Internal Capital Adequacy Assessment new and improved ways of working and be responsive Process (ICAP) to change. Preemptive preparation for Basel-III compliance, Continuing to enhance the diversity of our workforce. Revising the capital allocation to business in line with revised capital adequacy target ratios,

Southeast Bank Limited 43 Our Values, Core Values, Core Strengths & Core Competencies

Our Values Core Values Courtesy Our Values Serve as a compass for our action Integrity Commitment and describe our direction. Respect Service Excellence Fairness Insight and Spirit Harmony Enthusiasm for work Team Spirit Business Ethics

Core Strengths Core Competencies Professionally Strong Board of Directors Knowledge Strong Capital Base Experience and Expertise Transparent and Quick Decision Making Customer Orientation and Focus E¬fficient Team of Performers Transparency Satisfied Customers Determination Effective Internal Control Zeal for Improvement Skilled Risk Management Pursuit of Disciplined Growth Strategies Focus on Diversification Reliability Quality Customer Service Unique Corporate Culture Sharp bifurcation Between Board and Management Functions Strong Asset Base

44 Annual Report 2017 Code of Conduct and 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 2. Stable Dividend Policy. PRINCIPLES IN DEALING WITH 3. Dialogue with them and implement their suggestions CUSTOMERS for improvement. 1. Follow strict ethical banking practices. 4. Equal treatment to all shareholders irrespective of 2. Provide fair treatment to all customers, depositors their individual size of shareholding. and borrowers without any discrimination. 5. Effective Risk Management. 3. Provide speedy customer service at a very competitive 6. Maintenance of fairness and accuracy of financial cost. reporting and records. 4. Deal with customers in a transparent manner and 7. Restrictions on insider trading. without any hidden cost. C. WE ABIDE BY THE FOLLOWING 5. Maintain strict secrecy of customer account. PRINCIPLES IN DEALING WITH OUR 6. Provide free financial advice to clients. REGULATORS 7. Deal quickly with complaints received from the 1. We are transparent in operations and governance. customers. We endeavour continuously to build 2. We have a culture of timely compliance of regulatory relationship of trust and understanding with our requirements. customers. 3. We take their suggestions with utmost importance 8. Give very competitive return to the depositors on and implement those for improvement of our their investment. corporate governance standard. 9. Listen to our customers and work for improvement of 4. We safeguard information and do not misuse it. customer service as per their suggestion. 10. Keep relations with customers in weal and woe. D. WE CONFORM TO THE FOLLOWING PRINCIPLES IN RESPECT OF OUR 11. Keep promises that we make. EMPLOYEES 12. Take competitive service charges and rates. 1. We do not discriminate on grounds of religion, sex 13. Discourage any sort of privilege or gift from customer. or race at any stage. We recruit the best on the basis of merit under a rigorous recruitment policy without B. WE BELIEVE IN THE FOLLOWING any biases or favoritism to anybody. PRINCIPLES IN DEALING WITH 2. We pay competitive compensation package to the SHAREHOLDERS really deserving employees. 1. Adequate disclosure of corporate information 3. We care for our employees and create an environment and operational results to help them take suitable to work together with dignity. investment decisions / options.

Southeast Bank Limited 45 4. We have clearly defined duties and responsibilities for 8. We are keen to move fast for green banking to protect each employee. No one is responsible for unassigned environment. jobs. F. WE DEVOTE TO THE FOLLOWING 5. We have a zero tolerance for any act of dishonesty. PRINCIPLES IN RESPECT OF 6. We provide a congenial work environment. NATIONAL INTEREST 7. We encourage freedom to our employees to give 1. We protect national interests. opinion for both qualitative and quantitative 2. We refrain from prohibited business. improvement of the Bank. 3. We promote causes for national upliftment. 8. We take care of their health and safety. 4. We support nation-building efforts from our position. 9. Our employees avoid conflict of interest. 10. Our employees obey code of conduct. Commitments to Clients 11. Professionalism, honesty, integrity and high moral Ours is a customer focused modern banking institution and ethical standards are the creed of our employees. in Bangladesh. We deliver unparalleled financial services E. WE UPHOLD THE UNDER-NOTED to Retail, Small and Medium Scale Enterprises (SMEs), Corporates, Institutions, Government and individual PRINCIPLES IN RESPECT OF SOCIETY clients through branches across the country. Our business 1. We believe that the Bank gets business sustenance initiatives center around the emerging demands of the from the community in which it operates and, market. Our commitments to the clients are as follows: therefore, it remains responsive to the community and the society in reciprocity. 1. Provide service with high degree of professionalism 2. We discourage financing projects that are not and use of modern technology. environment-friendly. 2. Create long-term relationship based on mutual trust. 3. We provide material support for protection of environment. 3. Respond to customer needs with speed and accuracy. 4. We give aid to the poor, helpless and natural calamity- 4. Share their values and beliefs. hit people. 5. Grow as our customers grow. 5. We support charitable ventures. 6. Provide products and services at a competitive price. 6. We give sponsorships to sports, culture, education, 7. Ensure safety and security of customers’ valuables in health-care and community development ventures. trust with us. 7. We support the women as a community and

contribute to women empowerment.

46 Annual Report 2017 Corporate Profile

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 It has a diverse array of products and services tailored Company on March 12, 1995 through receiving the carefully to cater to the needs of all segments of customers. certificate of Commencement of Business from the Our operational strategies are structured to address the Registrar of Joint Stock Companies and Firms on that special and often complex needs of the customers. In date. Its Banking License from the Bangladesh Bank was the growth graph, the Bank has generated profit of BDT received on March 23, 1995. The Authorized Capital 1,168.63 million after provision and income tax in the of the Bank today is BDT 15,000 million. Its Paid-Up- year 2017. The curve keeps soaring upward everyday Capital and Reserve reached BDT 33,765.13 million as on making it one of the leading and most successful banking December 31, 2017. The Bank had 2,704 Staff of whom institutions in Bangladesh with a total asset base of BDT 266 were Executives, 1,928 were Officers and 510 were 339,288.05 million as on December 31, 2017. other Staff as on December 31, 2017.

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. Alamgir Kabir, FCA, a professional Chartered Accountant. The Bank’s Managing Director is M. Kamal Hossain, a creative, experienced and eminent banker of the country with 35 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 objectices of the Bank.

Southeast Bank Limited 47 Corporate Profile

Name of the Company : Southeast Bank Limited Legal Form : Public Limited Company Date of Inception : March 12, 1995 Company Registration No. : C-27985 (1831)/95 Authorized Capital : BDT 15,000 million Paid Up Capital : BDT 9,169.50 million Registered Office : Eunoos Trade Centre 52-53, Dilkusha C/A (Level 2,3,4,6 & 16), Dhaka-1000, Bangladesh Phone: +88 02 9571115, 9576415, 9555466 & 9578324 Fax: +88 02 9550093, 9550094 & 9550086 SWIFT: SEBDBDDH, E-mail: [email protected] Website: www.southeastbank.com.bd Tax Payer Identification No. : 555495486932 VAT Registration No. : 19011025625 Chairman : Alamgir Kabir, FCA Vice Chairperson : Duluma Ahmed Chairman of the Audit Committee : A.H.M. Moazzem Hossain Managing Director : M. Kamal Hossain Chief Risk Officer : S. M. Mainuddin Chowdhury CAMLCO : A.K.M. Nurul Alam Company Secretary : A.K.M. Nazmul Haider (Acting) Chief Financial Officer : Rasedul Islam, ACA (Acting) Auditors : Pinaki & Company, Chartered Accountants Tax Consultant : Akhter Abbas Khan & Co. Credit Rating Agency : Credit Rating Information and Services Limited (CRISL) Date of Opening of First Branch : May 25, 1995 Year of Initial Public Offer : 1999 Number of Employees : 2,837 No. of Branches : 134 No. of Islamic Banking Branches : 05 (five) No. of Ladies Branches : 02 (two) No. of Off-Shore Banking Units : 02 (two) No. of Foreign Correspondents : 825 Number of Outstanding Shares : 916,950,176 Listing Status (Shares) : Dhaka Stock Exchange (DSE) Symbol: SOUTHEASTB, Listing Date: April 10, 2000 Chittagong Stock Exchange (CSE) Symbol: SOUTHEASTB, Listing Date: April 24, 2000 Market Price Information DSE: BDT 22.20, Category A (as on 31.12.2017) CSE: BDT 22.20, Category A Investors’ Enquiry : Investor Relations Division Phone:+88 02 9567271, Fax: +88 02 9567273 Eunoos Trade Centre, 52-53, Dilkusha C/A (Level-2), Dhaka-1000. 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

48 Annual Report 2017 Group Corporate Structure Bank 2017 : Southeast Bank in-2002. ‘Southeast Bank Foundation Foundation’ was School at Dhaka. CSR Wing established by the Total CSR related CSR related Total in an organized and in an organized sustainable manner, sustainable manner, SEB Foundation in BDT 241.77 Million Expenditure under Expenditure Social Responsibility (CSR) relatedactivities (CSR) relatedactivities Southeast Bank Green Southeast Bank Green It also runs an English To carry out Corporate To Medium school named 100% Exchange Southeast in Capital: Asset Size: expatriates of In Percentage: proper Banking proper South Africa for (South Africa)Pty from Bangladeshi from Channel the Bank Paid up Capital: Company (South company in 2014. BDT 42.84 million BDT 50.10 million December 15,2014 Bangladesh through Bangladesh through Exchange Company BDT 113.47 Million their beneficiaries in Ownership Interest Ownership Interest Africa) Pty Limited To collect remittance collect remittance To established ‘Southeast Limited’ as a subsidiary Date of Incorporation: 100% Limited’ in Capital: Asset Size: Southeast In Percentage: as a subsidiary March 18,2013 March proper Banking proper BDT 3.14 Million Paid up Capital: from Bangladeshi from Financial Services BDT 20.14 million BDT 25.06 million company in 2013. Channel, the Bank (Australia) Pty Ownership Interest Ownership Interest To collect remittance collect remittance To for their beneficiaries Date of Incorporation: established ‘Southeast in Bangladesh through in Bangladesh through expatriates in Australia (Australia) Pty Limited’ Financial Services Subsidiaries 100% Limited in Capital: Asset Size: Financial Southeast beneficiaries in In Percentage: proper Banking proper from Bangladeshi from Paid up Capital: Kingdom for their company in 2011. Channel, the Bank February 22, 2011 BDT 33.53 million BDT 38.49 million BDT 34.11 Million Services (UK) Bangladesh through Bangladesh through Ownership Interest Ownership Interest To collect remittance collect remittance To expatriates in United established ‘Southeast Financial Services (UK) Limited’ as a subsidiary Date of Incorporation: Head Office 99.82% in Capital: Asset Size: Southeast In Percentage: Capital Services ‘Southeast Bank Paid up Capital: company in 2010. Services Ltd. Bank Capital BDT 5,500 million in a structured way, way, in a structured September 23,2010 Banking Operations the Bank established Ownership Interest Ownership Interest To carry on Merchant carry on Merchant To BDT 5,489.93 Million BDT 5,792.66 Million Limited’ as a subsidiary Date of Incorporation: Asset Size: from 2009. from Off-Shore Off-Shore To cater to the To Southeast Bank Usance Payable At Sight (UPAS) At Sight (UPAS) Operating Profit: banking services, Foreign Currency, Currency, Foreign BDT 173.24 Million for Non-residents, for Non-residents, Off-shore Banking Off-shore Banking Units Loans & Advances: import services etc. of financial services Time/ Term Loan in Term Time/ BDT 8,563.79 Million BDT 8,124.62 Million such as FC Account Full fledged export- DEPZ and the other established two (02) is CEPZ. SEBL OBUs provide a continuum provide Units (OBUs), one in demand for off-shore demand for off-shore Documentary Credit, Branch. Islamic Deposits: Banking Asset Size: maintained. Investment: system is being been expanded to Operating Profit: (IBSD) has already (IBSD) has already Branches based on every conventional BDT 652.88 Million As a part of strategic Separate Accounting Besides conventional Banking Service Desk (five) Islamic banking business plan, Islamic Banking, SEBL has 05 Islamic Shariah where Islamic Shariah where BDT 16,699.76 million BDT 14,237.15 Million BDT 21,173.57 Million Main Operations Deposits: Banking Asset Size: was incorporated the Bank has 128 across the country. the country. across Deposits and Loan Operating Profit: as a Public Limited 24/7 Call Centre to 24/7 Call Centre has launched Retail Banking (Telecash), Banking (Telecash), Conventional Ladies Branches and 2nd generation bank Credit Cards, Mobile Cards, Credit 1995. After receiving 1995. After receiving Loans & Advances: Branches & 117ATMs Branches & 117ATMs Banking, Debit Cards, Banking, Debit Cards, Southeast Bank Ltd., a A number of attractive branch was opened on cater to the needs of all segments of customers. BDT 8,113.01 Million Banking License, its 1st Company on March 12, Company on March May 25, 1995. Presently May 25, 1995. Presently products are available in are products its product basket. SEBL its product BDT 309,171.89 Million 309,171.89 BDT Million 253,098.05 BDT Million 209,489.23 BDT

Southeast Bank Limited 49 Corporate Organogram

Board of Directors

Risk Management Executive Committee Audit Committee Shariah Committee Supervisory Committee Managing Director Board Secretariat Audit and Inspection Team

Central Compliance Committee

Head of Credit Chief Risk Officer Head of International Head of Business Banking Information Technology Division

Corporate Banking Management Information International Division Credit Card Division Division System Unit Human Resources Division

SME and Agri. Credit Risk Management Central Trade Services Alternative Delivery Logistic and Credit Division Division Department Channel Division General Services Division

Sustainable Risk Management Division Financial Control and Remittance Division Call Center Finance Unit Accounts Division

Anti-Money Laundering Division Internal Control and Islamic Banking Cash Management Telecash Compliance Division Division Unit (Mobile Financial Services) (Monitoring & Compliance Units) Information Technology Security Retail Business Treasury Back Branches and General Treasury Division Division Office Unit Banking Division Special Asset Management Division Training Institute Investment Unit (Capital Market) Legal Affairs Division Corporate Affairs and Corporate Social Responsibility Division Investor Relations Division Asset Monitoring and Verification Division

Priority Banking Division

50 Annual Report 2017 Board of Directors

Risk Management Executive Committee Audit Committee Shariah Committee Supervisory Committee Managing Director Board Secretariat Audit and Inspection Team

Central Compliance Committee

Head of Credit Chief Risk Officer Head of International Head of Business Banking Information Technology Division

Corporate Banking Management Information International Division Credit Card Division Division System Unit Human Resources Division

SME and Agri. Credit Risk Management Central Trade Services Alternative Delivery Logistic and Credit Division Division Department Channel Division General Services Division

Sustainable Risk Management Division Financial Control and Remittance Division Call Center Finance Unit Accounts Division

Anti-Money Laundering Division Internal Control and Islamic Banking Cash Management Telecash Compliance Division Division Unit (Mobile Financial Services) (Monitoring & Compliance Units) Information Technology Security Retail Business Treasury Back Branches and General Treasury Division Division Office Unit Banking Division Special Asset Management Division Training Institute Investment Unit (Capital Market) Legal Affairs Division Corporate Affairs and Corporate Social Responsibility Division Investor Relations Division Asset Monitoring and Verification Division

Priority Banking Division

Southeast Bank Limited 51 Last 10 Years Financial Indicators 46 145 151 587 15% 3.11 1080 25.80 4.12% 1.09% 11.12% 887.24 12.06% 12,536 2008 At actual At actual 2,685.56 3,012.58 7,237.55 7,657.01 4,804.81 2,852.20 3,500.00 20% (5:1) 81,181.53 10,250.13 15,078.99 15,221.87 42,178.60 58,019.77 12,299.61 60,281.26 68,714.67 - BDT in million 56 146 148 589 3.24 1254 33.10 3.73% 1.66% 11.72% 16.51% 22,152 2009 4,323.59 1,870.19 4,614.66 8,800.55 9,927.16 6,504.52 3,422.64 13,415.21 11,916.74 23,779.20 46,724.47 69,582.92 21,350.23 77,497.57 96,669.05 10,000.00 35% (20:7) 112,676.98 76 152 240 645 10% 3.77 1373 24.73 4.26% 2.26% 11.25% 19.41% 66,898 2010 4,463.64 2,763.93 6,769.26 9,331.55 6,930.84 20% (5:1) 16,100.81 22,781.19 28,082.25 58,158.06 18,869.07 93,981.20 17,196.80 10,265.96 10,000.00 131,784.27 103,726.70 107,253.19 84 161 322 654 15% 2.19 1526 23.30 3.51% 1.32% 11.46% 10.47% 68,039 2011 7,373.11 1,912.19 6,085.67 8,317.01 5% (20:1) 13,846.24 19,931.91 25,673.90 49,544.10 75,982.06 99,509.01 29,846.60 19,000.06 10,683.05 10,000.00 158,078.59 107,288.56 127,178.22 - 94 183 355 691 15% 1.89 1655 22.66 4.47% 0.95% 8.42% 10.87% 64,060 2012 7,677.51 1,648.72 5,495.19 8,732.86 17,638.99 23,134.18 21,506.65 41,455.40 84,464.20 39,011.28 19,597.54 10,864.68 10,000.00 191,276.30 111,537.50 126,968.97 152,901.24 211 103 414 778 16% 3.68 1704 23.92 3.94% 1.64% 10.90% 16.20% 65,413 2013 7,795.65 3,378.82 6,700.20 8,732.86 5% (20:1) 20,218.11 26,918.30 17,226.41 39,299.10 95,220.40 57,589.06 21,807.57 13,074.71 10,000.00 220,930.85 131,644.82 134,863.82 177,519.46 - 211 113 441 791 15% 4.18 1780 26.77 3.64% 1.67% 12.41% 16.51% 58,169 2014 7,913.00 3,836.94 8,289.76 9,169.50 19,377.34 27,667.10 13,603.30 48,740.50 56,378.59 27,462.09 18,292.59 15,000.00 236,608.40 112,137.60 155,691.00 147,070.81 189,472.54 - 220 122 487 811 3.35 15% 1889 29.67 4.25% 1.23% 11.52% 11.86% 46,285 2015 7,885.23 3,069.42 8,034.27 9,169.50 18,226.45 26,260.72 15,245.19 60,708.50 58,829.27 28,509.53 19,340.03 15,000.00 260,718.03 126,423.89 151,812.58 168,878.46 210,431.09 - 248 20% 128 527 807 2.66 28.93 4.89% 0.88% 9.06% 2,089 12.15% 39,009 2016 8,947.16 2,435.07 8,503.22 9,169.50 17,114.35 25,617.57 16,369.36 64,665.84 61,731.63 34,056.28 24,886.78 15,000.00 291,798.01 146,606.09 171,531.73 191,865.59 229,973.43 - 265 134 510 825 1.27 15% 28.16 2,194 5.99% 0.37% 4.46% 10.84% 36,038 2017 9,321.80 1,168.63 9,062.30 9,169.50 18,243.60 27,305.90 16,407.09 95,405.40 62,911.04 33,765.13 24,595.63 15,000.00 339,288.05 167,562.98 215,379.77 234,316.72 269,828.08 Number of Correspondent Banks Number of Correspondent Capital Adequacy Ratio Non Performaning Loan Return on Asset (ROA) Return on Equity (ROE) Net asset value per share (NAV) Net asset value per share Bonus Shares Dividend Cash (%) Earnings (Tk.) per Share Total Assets Total Fixed Assets Net Profit after Tax and Provision after Net Profit Operating Profit Total Expenditure Total Total Income Total Guarantee Business including ILC Foreign Remittance Foreign Export Business Import Business Investment Advance Deposit Number of Branches Total Capital (Tier-I+Tier-II) Total - Non Banking Reserve Fund/ Others Number of Employees - Banking Paid up Capital Number of Shareholders Authorized Capital Number of Foreign Correspondents Number of Foreign PARTICULARS

52 Annual Report 2017 Board of Directors

From Left Standing

M. Kamal Hossain Managing Director From Left Seating Sirat Monira Director Rehana Rahman Director M. A. Kashem Director Md. Akikur Rahman Director Jusna Ara Kashem Director

54 Annual Report 2017 From Left Standing

Alamgir Kabir, FCA Chairman From Left Seating A.H.M. Moazzem Hossain Independent Director Dr. Quazi Mesbahuddin Ahmed Independent Director Duluma Ahmed Vice Chairperson Zakir Ahmed Khan Advisor Azim Uddin Ahmed Director

Southeast Bank Limited 55 Brief Profile of Board of Directors

Chairman Alamgir Kabir, FCA

Vice Chairperson Duluma Ahmed

Directors M. A. Kashem Azim Uddin Ahmed Jusna Ara Kashem Independent Directors Md. Akikur Rahman A.H.M. Moazzem Hossain Rehana Rahman Dr. Quazi Mesbahuddin Ahmed Sirat Monira

Managing Director Advisor M. Kamal Hossain Zakir Ahmed Khan

56 Annual Report 2017 Executive Committee

From Left Seating From Left Standing

M. A. Kashem Member Md. Akikur Rahman Member Alamgir Kabir, FCA Chairman M. Kamal Hossain Member Azim Uddin Ahmed Member

Southeast Bank Limited 57 Audit Committee

From Right

A.H.M. Moazzem Hossain Chairman Rehana Rahman Member Duluma Ahmed Member Jusna Ara Kashem Member Dr. Quazi Mesbahuddin Ahmed Member

Southeast Bank Limited 57 Risk Management Committee

From Right

M. A. Kashem Member Alamgir Kabir, FCA Chairman Azim Uddin Ahmed Member A.H.M. Moazzem Hossain Member

58 Annual Report 2017 Shariah Supervisory Committee

From Left

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

Southeast Bank Limited 59 Code of Conduct for 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:

Obedience to Behavior Laws, Rules and Conflict of Pattern Interest Regulations

The Directors are required to The Directors shall not entertain The Directors must comply with disclose their interest, if any, in any employee’s approach to all applicable laws, rules and relation to the Bank. them for lobbying for his/her regulations and shall abstain promotion, posting, extra- from insider trading of shares. The Directors shall not take facility etc. part in any discussion or vote The Directors shall not interfere on any contract/arrangement on No Director shall pursue/ in the day to day affairs of the behalf of the company if he/she insist/interfere for sanction of Bank. is in any way interested in the any credit facility favoring any contract/arrangement. client. Every Director shall avoid conflict of his/her personal interest with that of the Bank.

Compliance with Fair the Code of Borrowing Treatment Conduct

The Directors shall not borrow The Directors shall fairly treat The Chairman’s report contains from the Bank without the the Bank’s customers, suppliers, the issue. approval of the Board and depositors, shareholders and Bangladesh Bank. employees.

60 Annual Report 2017 Southeast Bank Limited 61 Directors’ Profiles

Alamgir Kabir, FCA Chairman

r. Alamgir Kabir, FCA was born on December of Coopers & Lybrand, Moores Rowland International and 28, 1947. He did B.Com (Hons.) from the Inbucon International Ltd., as Management Consultant MUniversity of Dhaka and M.Com from Punjab from 1979 to 1993. He returned to Bangladesh in 1993 University. He is a professional Chartered Accountant. with assignment in Bangladesh Securities and Exchange He has wide experience and profound knowledge in Commission as Member from 1993 to 1996 and also acted Auditing, Accounting, Banking, Insurance and Financial as the acting Chairman for a period. During his stay with Institutions both at home and abroad. BSEC, he substantially contributed to the development of the Capital Market of Bangladesh. From 1996 onward, he Mr. Kabir has been Chairman of the Board of Directors has been involved in different capacities in formation and of the Bank since September 29, 2004. He is also the development of Bank, Non-Banking Financial Institution, Chairman of the Executive Committee of the Board of Insurance and Capital Market related Institutions and Directors and the Risk Management Committee of the others. Board of Directors. He is the Chairman of its all subsidiary companies. He is also the Director of Asia Insurance From 1999 to 2003, Mr. Kabir was the founder Advisor of Limited and Independent Director of National Life Export Import Bank of Bangladesh Limited of which his Insurance Co. Limited. brother Late Shahjahan Kabir was the Founder Chairman. Both the brothers were involved in the formation of EXIM Mr. Kabir started his career in the year 1969 with Rahman Bank and contributed to its rapid growth. Rahman Huq and Co., Chartered Accountants, Member Firm of KPMG and continued with EWP Associates, Mr. Kabir belongs to a family whose members are involved Management Consultants, a sister concern of Rahman with Banks, Insurances and Financial Institutions. He is Rahman Huq and Co. and stayed there until 1979. In member of a number of associations and also associated 1972, he was in-charge of Audit Team for the first statutory with many social organizations where he is working very Audit of Accounts of Bangladesh Bank. He moved to silently for the welfare of the people. Mr. Kabir is a widely Riyadh, Saudi Arabia in 1979 with assignment in Saudi traveled person across the globe. Accounting Bureau, Chartered Accountants, member firms

62 Annual Report 2017 Duluma Ahmed Vice Chairperson

rs. Duluma Ahmed was born on July 7, 1947. She hails from a very respectable Muslim Mfamily. 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 Director of Mutual Food Products Limited, Mutual Milk Products Ltd. and Mutual Trading Co. Ltd. She is the partner of Mutual Distribution and Silonia Agencies.

Mrs. Duluma Ahmed is also associated with philanthropic activities. She is the Founder of Duluma Azim High School. She is the patron of Azimia Islamia Senior Madrasha and Fatema Farzana Kindergarten School in Chhagalnaiya. She is a member of Gulshan Ladies Community Club and Inner Wheel Club of Dhaka North. As a social worker, she is generously contributing to the poor and the needy section of the society. She traveled many countries of the world.

Southeast Bank Limited 63 M. A. Kashem Director

r. M.A. Kashem is the Founder Chairman of Medal for excellent contribution in Industrial sector in the Southeast Bank Limited. Currently, he is a Sponsor year 1995. He was awarded the “Highest Tax Prayer-2011” MDirector of the Bank. He is also a member of the and also in 2016-2017 by National Board of Revenue (NBR). Executive Committee and the Risk Management Committee Mr. Kashem was the leader of 20 member FBCCI Trade of the Board of Directors of the Bank. delegation to Far Eastern Countries in the year 1986. He Mr. Kashem is the founder life-member of North South was also the leader of 5 member Govt. delegations to the University Foundation and the former Chairman of North U.K., the U.S.A. and Canada sponsored by the UNDP in South University Trust. He is a member of North South 1987 and leader of 12 members Export Promotion Bureau University Trustee Board. (EPB) Govt. of Bangladesh delegations to EEC countries in 1985. As an industrialist he travelled almost all major cities Mr. Kashem is the former President of the Federation of the world many times on his own business, led FBCCI of Bangladesh Chamber of Commerce and Industry trade delegations and also North South University. (FBCCI), the apex body of all the business communities of Bangladesh. He was the Chairman of Arbitration Tribunal He has established a Trust named M. Kashem Trust to of FBCCI. He is the past Chairman of the Association foster education to the primary and mid-level stundents of Private Universities of Bangladesh (APUB) which of Schools in his locality. Moreover, a general Hospital of represented all Private Universities of the country. Mr. 50 Beds in the name of “Tareque Memorial Hospital” has Kashem was a member of Board of Trustees of Hamdard been established by the Trust in his village home. It is a Laboratories (WAQF) Bangladesh, the leading producer non-profit organization. The Trust also awarded stipends of herbal medicines in the sub-continent for over 17 and scholarships to the meritorious students during the last (seventeen) years. He was the President of SAHIC Trust couple of years. (Society for Assistance to Hearing impaired Children), the only voluntary organization rendering health care assistance As a philanthropist, Mr. Kashem set up a number of Schools, of the ear, nose and throat services to destitute and poor Madrashsa, Masjid, Club etc. and erected free dwelling patients. He is the life member of SAHIC. houses for the poor and destitute people of his locality.

Mr. Kashem is an eminent industrialist, renowned patron Mr. Kashem is a member of the Kurmitola Golf Club, of education, distinguished philanthropist and an active Rotary Club of Dhaka West, Gulshan Club Limited, social worker. He is the winner of “President Export Trophy Bangladesh Diabetic Association, Dhaka, Bangladesh Red Award” for the year 1982-83 and 1983-84 for excellent Crescent Society, National Shooting Club, Shishu Hospital, export performance. Mr. Kashem also got “C.R. Das Gold” Chittagong and Baridhara Cosmopolitan Club Limited.

64 Annual Report 2017 Azim Uddin Ahmed Director

r. Azim Uddin Ahmed was born on June 30, the current President of Bangladesh Consumer Products 1940. He is a graduate from the University of Manufacturers and Marketers Association. He represented MDhaka. As a former Chairman of Southeast Bank Bangladesh as a member of Trade Delegation to Europe Limited, he pushed the Bank forward. Currently, he is a and many other Govt. and private trade delegations to Sponsor Director of the Bank. European, American and Asian countries.

He is also a member of the Executive Committee and the Mr. Azim is also engaged in philanthropic activities. He is Risk Management Committee of the Board of Directors the Founder of Azimia Islamia Senior Madrasha, Duluma of the Bank. Mr. Azim Uddin Ahmed is a well-known Azim High School, Fatema Farzana Kindergarten and business personality of the country. He is the Chairman Purba Silonia Forkania Madrasha. He is a widely traveled of Mutual Food Products Limited, Mutual Milk Products person across the globe. Limited and Mutual Trading Co. Ltd. He is also the partner of Mutual Agrocomplex, Mutual Departmental Store and Mutual Distribution and Silonia Agencies. Mr. Azim was the former chairman of the Board of Trustees of North South University 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 is the past President of Rotary Club of Dhaka North and Area Governor of Rotary District. He was the past President of Gulshan Club Ltd. He is the President of Baridhara Society. 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 Association. He is

Southeast Bank Limited 65 Jusna Ara Kashem Director

rs. Jusna Ara Kashem was born in a very respectable Muslim family of Rajshahi. MShe 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 Vice Chairperson 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.

66 Annual Report 2017 Md. Akikur Rahman Director

r. Md. Akikur Rahman was born on February 15, 1945. He is a Sponsor Director of the Bank. MHe is also a member of the Executive Committee of the Board of Directors of the Bank. He is a successful businessman. He is the Chairman of RAR Investment Limited of Murad Vill, Nower Road, Dorking Surrey, RH43Y, United Kingdom. He is also the Chairman of Dorking Muslim Community Association of 11/15, Hart Road, Doring, Surrey, RH4 1JS, United Kingdom. He is the Managing Director of RAR Holding Limited, 12-25, Prioy Prangan Tower, 19 Kemal Ataturk Avenue, Banani, Dhaka. 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.

Southeast Bank Limited 67 Rehana Rahman Director

rs. Rehana Rahman was born on June 06, 1948 in a respectable Muslim family Mof Khulna. She is a graduate. She is a leading industrialist and a business leader. She is the Managing Director of Bengal Trade Ways Limited and a Director of Drift Packaging Limited. She is a member of the Board of Trustees of North South University Foundation. Formerly, she was the Chairperson of North South University Foundation. She was appointed a Sponsor Director of the Bank by the Board of Directors in its 443rd meeting held on August 11, 2014. Her appointment as Director was approved by Bangladesh Bank by Letter dated August 31, 2014. She is a Member of the Audit Committee of the Board of Directors of the Bank. Mrs. Rehana Rahman is a widely traveled person and a social worker.

68 Annual Report 2017 Sirat Monira Director

rs. Sirat Monira was born on September 15, 1949. She obtained Master of Social Science M(MSS) Degree from the University of Dhaka. She became a Director of Southeast Bank from ‘B’ Group i.e. Public Shareholders. She was also a member of Audit Committee of Board of Directors of the Bank. She is a member of Dhaka Ladies Club. She is a philanthropist. She widely traveled many countries across the globe.

Southeast Bank Limited 69 A. H. M. Moazzem Hossain Director

r. A.H.M. Moazzem Hossain was born on January 01, 1948. He did B.A(Hons) and MMA in Economics from the University of Dhaka. He was appointed Independent Director of the Bank on 24 December, 2012. He is the Chairman of the Audit Committee of the Board of Directors of the Bank. He is also a member of the Risk Management Committee of the Board of Directors of the Bank.

Mr. Moazzem Hossain started his career as a banker with Habib Bank Limited, Pakistan in 1969. He also worked as Economic Investigator, Ministry of Finance, Government of Pakistan in 1970. Later, he joined the Bangladesh Observer, a leading national daily in 1971 and continued there until 1987.

He also worked in the New Nation, the United News of Bangladesh (UNB) as Executive Editor, The Daily Star as Economic Editor and in The Telegraph as Deputy Editor. Currently, he is the Editor of The Financial Express. He was also associated with Press Institute of Bangladesh and Bangladesh Sangbad Sangstha. He was a member of the board of directors of Janata Bank, a nationalized commercial bank of the country for five years. He attended a number of seminars and workshops abroad mostly at the invitation of the host countries. He traveled many countries across the globe.

70 Annual Report 2017 Dr. Quazi Mesbahuddin Ahmed Director

r. Quazi Mesbahuddin Ahmed was born on January Dr. Ahmed was a visiting fellow at the University of Western 18, 1948. He did B.A. (Hons.) and M.A. in Economics Australia during 1994. He worked as an independent expert Dfrom the University of Dhaka in 1967 and 1968 of the SAARC Secretariat in 2007 and earnestly contributed respectively. He obtained M.S. degree in Economics in 1979 to SAARC’s endeavorin bringing out the Poverty Profile of from the James Cook University of North Queensland, South Asia. He was a member of the 7th Bangladesh Pay Australia. He earned another Masters leading to Ph.D. degree Commission constituted in 2008. Dr. Ahmed worked as in Economics in 1989 from the University of Illinois at a member of the Advisory Committee at the Ministry of Urbana-Champaign, USA. Planning for the Perspective Plan of Bangladesh, 2010- 2021.He was consultant to producing country report for He was appointed an Independent Director of the Bank in Bangladesh in 1995 for ADB’s Asian Economic Outlook and the 21st Annual general Meeting held on April 11, 2016. He acted as an expert for writing the Bangladesh report for South is also a member of the Audit Committee of the Board of Asian Human Development Report, 2007. Directors of the Bank. Dr. Ahmed shouldered the responsibility of producing Dr. Ahmed started his career at the Research Department the Bangladesh country- reports for the Paris Consortium of the erstwhile State Bank of Pakistan in February, 1969 and later joined the Planning Department of erstwhile East meetings for various years starting from 1981 and attended Pakistan in 1971. all of these meetings since then when present in the country. Dr. Ahmed had travelled beginning early 1970s numerous Dr. Quazi Mesbahuddin Ahmed worked as Managing countries around the globe and participated in several Director of Palli Karma-Sahayak Foundation (PKSF) for a ministerial and some Prime Ministerial delegations abroad. period of more than five-years during January, 2008 through March, 2013. Before joining PKSF, Dr. Ahmed was Member, Dr. Quazi Mesbahuddin Ahmed specialises in poverty General Economics Division of the Bangladesh Planning discourse, macroeconomic analyses, monetary economics, Commission during September 2003 through January 2007. economics of foreign aid, theories and working of In that capacity, he was in overall charge of preparing the microfinance, etc.He has had some selective publications in first Poverty Reduction Strategy Paper (PRSP) of Bangladesh. national and international journals. Dr. Ahmed was also simultaneously in-charge of the Industry and Energy Division of the Planning Commission. Dr. Ahmed took classes for senior civil servants at PATC, National Defense college, Planning Academy, BARD, Before being Member, Planning Commission, Dr. Ahmed was Bangladesh Management Academy, and other institutions Additional Secretary, Economic Relations Division (ERD), during 1980s,1990s and 2000s. Ministry of Finance in 2003.He was Economic Minister at the Bangladesh Embassy in Washington DC for six years during Dr. Ahmed has been a senior adjunct faculty in Economics at 1997-2002 and acted as charge d’ Affaires of the Embassy in the East West University since fall, 2013.He has had a record absence of HE the Ambassador. of obtaining outstanding evaluations by students ever since.

Southeast Bank Limited 71 M. Kamal Hossain Managing Director

r. M. Kamal Hossain was born on January 01, Banking, Human Resources, Accounts etc. Under his 1958. Mr. Hossain had an exemplary academic visionary leadership, SEBL is expected to evolve as a Mbackground. He did his MSS with distinction in leading commercial bank of Bangladesh with exemplary Public Administration from the University of Chittagong business and financial outcomes. in 1982. He started his banking career as a Probationary Officer with National Bank Limited in 1983. He spent Mr. Hossain is an alumnus of the Public Administration 18 (eighteen) years in National Bank Limited holding Department of the University of Chittagong. He attended important positions in different branches and Head Office. numerous seminars, workshops and training programs at home and abroad. He extensively visited the United States Mr. M. Kamal Hossain has been serving Southeast Bank of America (USA), United Kingdom (UK), Switzerland, Limited (SEBL) as Managing Director since the 20th June Germany, France, Spain, Australia, Canada, Myanmar, 2017. He joined SEBL in July 2003 as Vice President and Turkey, Singapore, Malaysia, Thailand, China, Saudi prior to his current assignment, he served as Additional Arabia, Oman, Qatar, India, etc. Mr. Hossain is married to Managing Director of the Bank. During his years of Ms. Manoara Begum and blessed with two sons and one journey with SEBL, he held the position of Head of Branch daughter. (HoB) of a number of Bank’s leading branches including Principal Branch.

During his 35 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

72 Annual Report 2017 Zakir Ahmed Khan Advisor

r. Zakir Ahmed Khan, Former Finance Secretary During his 45 years of service, Mr. Khan held various to the Government of Bangladesh joined senior level positions in the Ministries of Finance, MSoutheast Bank Limited as Advisor on 26 Commerce, Establishment, Energy, Civil Aviation and September, 2010. He carries with him vast experience and Tourism, Cabinet Division and Bangladesh Audit and expertise gathered from home and abroad. Accounts Department. He served as Finance Secretary and Secretary, Internal Resources Division and Chairman, Mr. Khan did BA (Hons) and Masters in Economics National Board of Revenue for five years. He also briefly from the University of Dhaka in 1968. He had graduate worked for a number of UN Agencies. Prior to his study in Development Economics and Development retirement in early 2009, he served as Alternate Executive Administration as a Hubert Humphrey North-South Director of the World Bank for three and a half years. Fellow at the Colorado State University, USA. He also did Master of Business Administration from Vrijie Universiteit, He contributed a number of articles on public policy Brussels, Belgium. and public sector financial management to a number of national and international journals. He also made Before joining Government Service in 1970, he briefly several key note presentations on public sector reforms worked as a Research Associate in the Bureau of Economic and financial management in seminars and workshops at Research and Institute of Education and Research and home and abroad. Lecturer in Economics, University of Dhaka. He also worked as a part time Lecturer in the Department of Finance, University of Dhaka.

Southeast Bank Limited 73 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.

It is done by way of:

Review of role of the Board of Directors as set out in the Article of Association 01 and regulatory frame-work.

Making an assessment of Directors’ contribution to discussions on business 02 proposals governance and general issues.

Making an evaluation of the status of compliance with the Code of Conduct 03 framed for Directors.

Making new and changed issues known to the Directors so that they can bring 04 new and sharpened knowledge to the table.

Discussing and analyzing its own performance against benchmark and earlier 05 achievements of result.

06 Review of the Bank’s strategies for every new year.

Providing sense of direction to the management for achievement of short- 07 term objectives and long-team goals.

08 Review of objectives and strategies of the Bank periodically to ensure they remain consistent with the Bank’s priorities.

09 Periodical review of the achievement of objectives by the Bank.

Reviewing the performance and contribution of the Managing Director and 10 the Senior Management Team (SMT).

74 Annual Report 2017 Directors’ Responsibility Statement

Directors’ Responsibility Statement is outlined below in compliance with Bangladesh Bank BRPD Circular No. 11 dated 27 October 2013:

Work-Planning and Strategic Management Financial Management

The Board determines Bank’s objectives. It chalks out The annual budget and the statutory financial statements strategies and work-plans on annual basis. It specially are finalized with the approval of the Board. It reviews and engages itself in the affairs of making strategies consistent monitors monthly position of Bank’s income, expenditure, with the determined objectives and goals and in the liquidity, non-performing asset, capital-base and capital issues relating to structural change and reformation adequacy, maintenance of loan-loss provision and for enhancement of institutional efficiency and other steps taken for recovery of default loans including legal relevant policy matters. It analyzes and monitors the measures. The Board frames the policies and procedures implementation of its decisions on quarterly basis. The for Bank’s purchase and procurement activities and Board gives its analytical review as incorporated in the accordingly approves the delegation of power for making Annual Report regarding the success or failure in achieving such expenditures. The maximum possible delegation the business and other targets as set out in its annual of such power of expenditures vests on the CEO and work-plan. It apprises the shareholders of its opinions his subordinates. The decision on matters relating and recommendations on future plans and strategies. It to infrastructure development and purchase of land, sets the Key Performance Indicators (KPIs) for the CEO building, vehicles etc. for the purpose of Bank’s business and Officers belonging to two tiers below the CEO and are, however, adopted with the approval of the Board. evaluates them from time to time. Internal Control Management Credit and Risk Management The Board remains vigilant on the internal control system The policies, strategies, procedures etc. in respect of the Bank in order to attain and maintain satisfactory of appraisal of loan/investment proposal, sanction, qualitative standard of its loan/investment portfolio. disbursement, recovery, rescheduling and write-off of The Board establishes internal control system in such loans are made with the Board’s approval under the a way that the internal audit process can be conducted purview of the existing laws, rules and regulations. The independently by the concerned department. It reviews Board specifically delegates the power of sanction of loan/ the reports submitted by its Committees especially investment and such delegations are suitably made amongst regarding compliance with recommendations made in the CEO and his subordinate executives as far as desirable Internal and External Audit Reports and the Bangladesh for efficient business operations. No Director interferes, Bank Inspection Reports as well as reports on management directly or indirectly, in the process of loan approval. The of risks. Board frames policies for Risk Management and ensures their implementation. It monitors compliance at quarterly Human Resources Management and intervals through reviews of the reports of the Risk Development Management Team. The Board monitors the compliance of the guidelines of Bangladesh Bank regarding Key Risk Policies relating to recruitment, promotion, transfer, Management. The Board imposes Code of Ethics for every disciplinary action and punitive measures, human tier of employees and they follow it properly. It promotes resource development etc. and service rules are framed healthy code of conduct in the Bank for developing a with the approval of the Board. The Chairman or compliant banking operation. any Director in no way involves himself or interferes

Southeast Bank Limited 75 into or exercises influence over any administrative Appointment of Chief Executive Officer affairs including recruitment, promotion, transfer and (CEO) disciplinary measures as conducted under the set service rules. No member of the Board of Directors is included in One of the major responsibilities of the Board of Directors the selection committee for recruitment and promotion is to appoint an honest, efficient, experienced and suitable to different levels. Recruitment, promotion, transfer and CEO or Managing Director. The appointment of the CEO punishment of the officers immediate two tiers below the is made with the approval of the Bangladesh Bank. CEO, however, rest upon the Board. Such recruitment and promotion are done complying with the service rules i.e., Other Responsibilities of the Board policies for recruitment and promotion. The Board follows and complies with all the responsibilities The Board focuses its special attention on the development assigned to it by Bangladesh Bank from time to time. of skills of Bank’s staff in different fields of its business activities, the adoption of modern electronic and On behalf of the Board of Directors, 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 Alamgir Kabir, FCA Committee (ALCO) on a regular basis. Chairman

76 Annual Report 2017 Evaluation of our performance to date and strategiessuccess to andreach excellence new heights of

Southeast Bank Limited 77 Directors’ Report

Bismillahir Rahmanir Rahim

Dear Shareholders,

The Board of Directors of Southeast Bank Limited takes this opportunity to welcome you all to the 23rd Annual General Meeting of the Shareholders and has immense pleasure to lay before you the 23rd Annual Report of the Bank together with the Auditors’ Report for the year ended December, 2017.

World economic scenario in 2017 and outlook several parts of Africa, Western Asia, Latin America and for 2018 the Caribbean negligible growth in par capita GDP is anticipated. For the global economy, 2017 has been a pretty good year. The World Bank forecasts global economic growth to edge According to Goldman Sachs- for the first time since 2010, up to 3.1 percent in 2018 after a much stronger-than- the world economy is outperforming most predictions expected growth in 2017, as the recovery in investment, and they expect this strength to continue. Their global manufacturing and trade continues, and as commodity- GDP forecast for 2018 is 4.0%, up from 3.7% in 2017 exporting developing economies benefit from firming and meaningfully above consensus. The strength in commodity prices. global growth is broad-based across most advanced and emerging economies. However, this is largely seen as a short-term upswing. Over the longer term, slowing potential growth—a measure of All the major fears about 2017- a market crash in the how fast an economy can expand when labor and capital event of a political change in United States, a Brexit- are fully employed—puts at risk gains in improving living triggered recession in the UK and a collapse of the euro standards and reducing poverty around the world, the zone following the implosion of some European country’s World Bank warns in its January 2018 Global Economic banking system - did not create serious chaos in the world Prospects. 2018 is on track to be the first year since the economy. financial crisis that the global economy will be operating at or near full capacity. The new challenge will be to look Some major events of 2017 include Federal Reserve beyond monetary and fiscal policy tools to stimulate continuing their tightening cycle, the Bank of England short-term growth and consider initiatives more likely to raising interest rates for the first time in more than 10 boost long-term potential. years and unstoppable surge of crypto currencies. The slowdown in potential growth is the result of years The global economy grew 3.6 percent in 2017 which is of softening productivity growth, weak investment and 0.10% above expectation (IMF). Remarkable improvement the aging of the global labor force. The deceleration is in investment, trade and industrial production, coupled widespread, affecting economies that account for more with strengthening business and consumer confidence, than 65 percent of global GDP. Without efforts to revitalize are supporting the recovery. Euro area, Japan, China, potential growth, the decline may extend into the next emerging Europe and Russia showed stronger than decade and could slow average global growth by a quarter expected performance which offset downward show percentage point and average growth in emerging market for the United States, the United Kingdom and India. and developing economies by half a percentage point over However, the recovery is not comprehensive as growth that period. Growth in advanced economies is expected remains weak in many countries. For many commodity to moderate slightly to 2.2 percent in 2018, as central exporters economic prospects remain challenging. In banks gradually remove their post-crisis accommodation

78 Annual Report 2017 and as an upturn in investment levels off. Growth in forecasts for the euro area, especially for Germany, Italy emerging market and developing economies as a whole is and the Netherlands “reflecting the stronger momentum in projected to strengthen to 4.5 percent in 2018, as activity domestic demand and higher external demand”. Growth in commodity exporters continues to recover. Real GDP forecast for Japan is 1.2 percent this year and 0.9 percent Growth of the World and regions as projected by the in 2019. IMF maintained its projection for Britain’s growth World Bank: at 1.5 percent this year.

Estimated Projection Emerging Economies (By regions) 2016 2017 2018 2019 East Asia and Pacific:Growth in the region is forecast to World 2.40 3.00 3.10 3.00 slip to 6.2 percent in 2018 from an estimated 6.4 percent Advanced Economies 1.60 2.30 2.20 1.90 in 2017. A structural slowdown in China is seen offsetting USA 1.50 2.30 2.50 2.20 a modest cyclical pickup in the rest of the region. Risks to Euro Area 1.80 2.40 2.10 1.70 the outlook have become more balanced. Stronger-than- expected growth among advanced economies could lead Japan 0.90 1.70 1.30 0.80 to faster-than-anticipated growth in the region. Emerging Market and 3.70 4.30 4.50 4.70 Developing economies Eastern Europe and Central Asia: Growth in the region East Asia & pacific 6.30 6.40 6.20 6.10 is anticipated to ease to 2.9 percent in 2018 from an East Europe & Central 1.70 3.80 2.90 3.00 estimated 3.7 percent in 2017. Recovery is expected to Asia continue in the east of the region, driven by commodity exporting economies, counterbalanced by a gradual South Asia 7.50 6.50 6.90 7.20 slowdown in the western part as a result of moderating economic activity in the Euro Area. Increased policy 1. Growth uncertainty and a renewed decline in oil prices present Pcrccnt World Advanced Economie% MD% risks of lower-than-anticipated growth. Russia is expected 8 to expand by 1.7 percent in 2018, unchanged from its

6 estimated growth rate in 2017.

4 Latin America and the Caribbean: Growth in the region 2 is projected to advance to 2 percent in 2018, from an estimated 0.9 percent in 2017. Growth momentum is 0 expected to gather as private consumption and investment

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 strengthen, particularly among commodity-exporting economies. Source: World Bank Middle East and North Africa: Growth in the region is Advanced Economies: The U.S. economy has been expected to jump to 3 percent in 2018 from 1.8 percent showing steady but underwhelming annual growth since in 2017. Reforms across the region are expected to gain the last recession in 2007-2009. Stubbornly low core momentum, fiscal constraints are expected to ease as oil inflation should tick up in advanced economies as their prices stay firm and improved tourism is anticipated to labor markets continue to strengthen and the drag from support growth among economies that are not dependent low commodity and import prices unwinds. The IMF on oil exports. Continued geopolitical conflicts and oil now expects it to expand by 2.7 percent in 2018, much price weakness could set back economic growth. higher than the 2.3 percent in 2017. They look for the Fed to lean against this strength by tightening considerably South Asia: Growth in the region is forecast to accelerate more than what’s priced by the market, attempting to to 6.9 percent in 2018 from an estimated 6.5 percent in prevent a bigger economic overheating and recession 2017. Consumption is expected to stay strong, exports are down the road. The IMF also revised up its growth anticipated to recover and investment is on track to revive

Southeast Bank Limited 79 as a result of policy reforms and infrastructure upgrades. Sub-Saharan Africa: Growth in the region is anticipated to Setbacks to reform efforts, natural disasters, or an upswing pick up to 3.2 percent in 2018 from 2.4 percent in 2017. in global financial volatility could slow growth. India is Stronger growth will depend on a firming of commodity expected to pick up to a 7.3 percent rate in fiscal year prices and implementation of reforms. 2018/19, which begins April 1, from 6.7 percent in FY 2017/18. On an Upswing

Faster growth is reaching roughly two-thirds ... still, about a quarter of emerging market of the world’s population.... and developing economies have seen their per capital incomes decline.

(real GDP growth across country groups, percent) (share of EMDE countries and populations growing faster or slower than AEs in per capita terms, 2017, percent) 7 Faster growth 2015 120 2016 Slower growth 6 Declining 2017 100 5 80 4 60 3 40 2

1 20

0 0 AE% EMDE% China EMDE EMDE Share of EMDE Share of EMDE Fuel Nonfuel countries population Exporters exporters excluding China Source: IMF staff calculations. Note: Bars denote PPP (purchasing power parity) GDP weighted averages. In the right-hand-side chart, the blue portion of the bars show the share of EMDE countries where per capita real GDP growth is higher then in advanced economies. The red portions show the share of EMDE countries where per capital real GDP growth is slower than in advanced economies, with the darker red portion showing the share of countries where per capita real GDP is declining. AEs = advanced economies; EMDEs = emerging market and developing economies.

2. State of the Bangladesh Economy in 2017 GDP Growth and Economic Trends 2017 has been a mixed year of achievements and The Bangladesh economy has undergone a major challenges for the economy of Bangladesh. One of the transformation over the past two decades. This change major achievements has been a 7.28 percent GDP growth has been spearheaded by the rapid expansion of industry- in FY 2016-17. Strong pickup in domestic investment specially apparel and overseas workers’ remittance which and output activities came about in 2nd half of 2017 has helped reduce poverty and raise employment. The underpinned by substantial public sector infrastructural result has been a sustained increase in per capita income. development, robust domestic demand and broad-based It is important to recognize that Bangladesh is making rise of global output growth.Increased economic activity important progress toward its goal of achieving middle- stimulated domestic credit growth at desired level. income status. Major macroeconomic trends are discussed below: Global trade rebounds Getting high In 2017, global trade grew faster than global GDP. Improved global outlook and increased risk appetite (Global investment, GDP, and trade, oercent change) have boosted asset prices. Real investment Real imports (Equity markets index, 2015 January =100, unless noted otherwise) Euro Stoxx MSCI Emerging Market 4.5 Real GDP at market exchange rates 140 50 130 VIX ( Index; right hand scale) S&P 500 45 4.0 120 TOPIX 40 35 110 3.5 30 100 25 3.0 90 20 80 15 2.5 70 10 60 5 2.0 0 50 1.5 2013 2014 2015 2016 Nov.17 2012 2013 2014 2015 2016 2017 2018 Sources: Bloomberg L.P.; Haver Analytics; and IMF staff calculations. Note: MSIC = Morgan Stanley Capital International; S&P = Standard & poor’s; Source: IMF staff calculations. TOPIX; = Tokyo Note: Shaded area contains IMF projections. Stock Price Index; VIX = Chicago Board Options Exchange Volatility Index.

80 Annual Report 2017 GDP Growth Total Assets (BDT in million) Agriculture 14.74

6.01% 6.06% 6.55% 7.11% 7.28% Industries 8.00% Service 6.00% 4.00% 2.00%

0.00% 52.85 32.42 2012-13 2013-14 2014-15 2015-16 2016-17

Contribution of Agriculture, Services and Industries: Inflation: Among the broad sectors of GDP, the contribution of agriculture and service sector to GDP slid down by 0.61 From the beginning of FY2013-14 a downward trend percentage point to 14.74 percent and Service by 0.27 has been observed in year-on year inflation. Starting percentage point to 52.85 percent which was offset from 7.35 percent in FY2013-14 year-on-year inflation by an increased share of industry by 0.88 percentage declined to 6.41 percent in FY2014-15, 5.92 percent in point to 32.42 percent as compared to the preceding FY2015-16 and 5.44 percent in FY2016-17. Satisfactory year. Agriculture suffered due to flood-related crop losses. domestic production, favorable domestic environment, low budget deficit and prudent monetary policy Manufacturing data point to strong economic activity. In coupled with Low fuel and commodity prices in the FY2016-17, broad industry sector grew by 10.22 percent, international markets contributed to such sliding of slightly lower than the growth of 11.09 percent in the overall inflation. previous year. In FY2016-17 broad service sector grew by 6.69 percent, up by 0.44 percentage point a year After declining through FY17, average inflation has been earlier. According to the final data sectoral share of edging up in recent months, reaching 5.70 percent in broad agriculture, industry and service stood at 14.74 December, 2017. The inflation dynamics reflected rising percent, 32.42 percent and 52.85 percent respectively; food prices, a result of both flood- related disruptions and which were 15.35 percent, 31.54 percent and 53.12 higher global prices. Annual inflation in September hit percent respectively in previous fiscal year. a two-year high of 6.12 percent on the back of surging food prices. Bangladesh bank is expecting a marked improvement in controlling inflation because of huge import and harvest of Boro Rice. Bangladesh Inflation rate Source: Tradingec onomics.com | Bangladesh Bureau 5.15 5.31 5.39 5.47 5.76 5.94 5.57 5.89 6.12 6.04 5.91 5.83

6.2 6 5.8 5.6 5.4 5.2 5 Jan 17 Apr 17 Jul 17 Oct 17

Savings and Investment: private sector’s investment has been almost stagnant since FY 2015-16 hovering around 23 percent but improved at The growth in the level of investment seemed to be on the the end of the year. The major boost has come from the right track in 2017. Target was set to increase investment public sector that saw an increase to 7.4 percent in FY to 32.7 percent of GDP in FY 2016-17, keeping in mind the 2016-17 from 6.7 percent in FY 2015-16. need for a growing economy. In FY 2016-17, investment as a share of GDP went up to 30.50 percent, a marginal Domestic savings-GDP ratio increased by only 0.3 percent increase from 29 percent in FY 2015-16. However, the in FY 2016-17 while national savings-GDP ratio declined

Southeast Bank Limited 81 by 1.2 percentage point to 20.6 percent in FY 2016-17 and output activities came about in the 2nd half of year from 30.8 percent in FY 2015-16 in the backdrop of the 2017 supported by domestic demand as well as global large current account deficit. This has narrowed the gap output growth. Surplus liquidity in the first half of the between national savings and total investment as a share year largely served the purpose of meeting the monetary of GDP for the first time in recent years. demand from increased economic activity. Towards the end of the year private sector credit grew by 18.13% much Inflation above the projections. The financial sector witnessed investment Dometic Savings some challenges resulting from growing non- performing National Savings loans and in some cases capital inadequacy and shortfall 35 of liquidity. Emphasis on improvement of corporate 30 25 governance in the banking sector through appropriate 20 policy interventions will continue to remain a priority. 15 10 Private Credit Growth in 2017 Figures in % 5 0 2014-15 2015-16 2016-17 16.06 17.8 16.94 15.61 16.06 Money market 16.03 18.63 18.13

The monetary policy pursued during 2017 aimed at 15.84 15.21 15.66 limiting inflation within tolerable level and achieving 15.88 desired economic growth through promoting

investment. The monetary policy strategy for 2017 was Ju l Ja n Ju n Oc t Feb Sep Ap r De c Au g Ma r No v targeted to maintain an annual average inflation rate Ma y below 5.8 percent. To keep inflation within desired Capital market Development level the Monetary Policy Statement (MPS) for 2017 set targets for broad money and reserve money Capital market measured by Index rose by 24% during growth at 15.5 percent and 13.90 percent respectively. the year. Market liquidity measured by turnover recorded However, at the end of 2017 broad money and reserve the highest level in 2017 benefiting from participation by money growth stood at 13.20 percent and 16.20 percent overseas investors and positive economic condition since respectively. Start of strong pickup of domestic investment the large stock market correction in 2010-11.

Index movement for one year DSE Indices DSEX DS30 DSES

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 Jul-17 Jan-17 Jun-17 Oct-17 Feb-17 Sep-17 Apr-17 Dec-17 Aug-17 Mar-17 Nov-17 May-17

82 Annual Report 2017 Export Import, Remittance and Balance of 2017-18 remittances grew at 10.1% compared to the payment similar period in 2016-17; yet it was 6.6% lower than the similar period in 2015-16. One important reason for low The external sector which has been a source of strength remittances despite high growth of manpower exports is for the Bangladesh economy for several years has faced the flow of remittances through informal channels. Strong some near-term challenges in 2017. Export growth in FY Bangladeshi Taka against the US Dollar also played a role 2016-17 was only 1.7 percent as opposed to the target of for low export and remittances growth to some extent. 8.0 percent. Imports growing at a higher rate than exports led to a negative current account balance that continued The surplus in the capital and financial account helped during July-October of FY 2017-18.The external current to maintain the overall balance of payments surplus of account deficit has surged to $ 4.76 billion in the first US$3,169 million in FY2016-17. Due to this reason, the half of the fiscal year 2017-18 compared with a deficit exchange rate of Taka against US$ remained broadly stable of 0.54 billion a year earlier. Current account trade during the period. Besides, foreign exchange reserve stood deficit increased up to $8.62 billion in the first half of at US$31.30 billion on December 2017, which is sufficient this fiscal year (FY18), almost double the level of deficit to foot about 9 months of import bills. Overall, some from a year earlier. In FY 2016-17 remittance earning macro-economic indicators posed near-term challenges in experienced a negative growth of (-) 15.9 percent despite containing inflationary pressures and protecting external increase of manpower export. During July-December sector balance of payments sustainability. Bangladesh Exports

197.4 194.6 216.1 260 195.81 214.01 198.09 216.22 185.79 231.82 240.22 189.67 222.28 240

220

200

180 Jan 17 Apr 17 Jul 17 Oct 17

Overall outlook 2018 3. An overview of the Bank.

The year 2018 will be a turning point for Bangladesh Southeast Bank Limited, a second generation private in many ways. It will also continue its efforts toward commercial bank, emerged in 1995 amid liberalization becoming a middle-income country. Bangladesh is well- of global economies. Currently, its Authorized Capital is set to graduate out of LDC status in 2018 after fulfilling all BDT 15,000.00 million and its capital and reserve reached the criteria. Looking forward, remittance and exports are BDT 33,765.13 million as on December 31, 2017. Its showing promising signs of growth from the beginning vision is to stand out as a premier banking institution in of 2018. Almost half of the growth in imports last year Bangladesh and contribute significantly to the national constituted import of key raw materials and intermediate economy. goods for manufacturing and export sector. It will have The Bank, in the meantime, successfully completed a very positive impact on growth in manufacturing and twenty three years of banking operations registering exports in 2018. significant growth in performance indicators. In 2017, the Bank earned an after tax profit of BDT 1,168.63 million. Pick up in global trade and output growth, domestic The deposit of the Bank grew by 17.33 percent to BDT demand and emphasis on infrastructural development 269,828.08 million and loans and advances by 22.13 indicate robust growth prospects for investments and percent to BDT 234,316.72 million compared to those of output activities for the Bangladesh economy. Compared 2016. to previous year, growth outlook for Bangladesh economy is more on the upside indicating achievement of targeted Operational excellence coupled with qualitative 7.40% in GDP growth in 2018. The growth outlook improvements continued to be of paramount importance hinges on a number of factors such as accelerated resource to the Bank. At present, the Bank has 134 branches and mobilization, higher investment both by public and private 2 Off-Shore Banking Units across the country. Plans have sector, upgrading infrastructure, skills and institutions. been made to raise another 5 branches in 2018. Our

Southeast Bank Limited 83 journey towards greater operational success continues 4. Capital and Reserves with increased energy and enthusiasm. The Authorized Capital of the Bank was BDT 15,000.00 As we face the stiff challenges ahead on the way to further million and paid-up capital was BDT 9,169.50 million as improving the profitability of the Bank, we rely on our of December 31, 2017. The Capital and Reserves (Tier- skilled and experienced workforce. Our strengths are our 1 Capital and Tier-II Capital) stood at BDT 33,765.13 close and cordial partnership with customers, our firmly million as compared to BDT 34,056.28 million in last year anchored presence in the country’s strategic places of showing a decrease of 0.85 percent. commercial and business importance and global reach through our correspondent Banks for expansion of Capital and Reserve of the Bank as of December 31, foreign trade, foreign exchange and remittance business. 2017 were as follows: Our product-basket encompasses Real Time Online BDT in Million Branch Banking, Islamic Banking, Merchant Banking, Dual Currency Visa Platinum Credit Card, Visa Travel Consoli- Regulatory Capital Solo Card, ATMs, Education Loan Scheme, Consumer Loan, dated Double Benefit Scheme, Millionaire Deposit Scheme, SME Tier-I capital Banking, Corporate Banking, Syndicate Loan, Monthly 1) Common Equity Tier-I Capital Savings Scheme, Fixed Deposit, Monthly Income Scheme, 21,165.35 21,079.25 Pension Saving Scheme, Multi-Millionaire Gold Deposit (CET-1) Scheme(kept in abeyance for the time being), Mohor Fully Paid-up capital 9,169.50 9,169.50 Saving Scheme, Zakat Account, Cash Wakfh Account, Non- repayable share premium Wage Earner Pension Scheme, SMS Banking etc. in account - - addition to our traditional credit and foreign trade related products and services. Statutory reserve 9,170.00 9,170.00 General reserve 247.65 247.65 High quality customer service through the integration Retained earnings 2,716.40 2,640.35 of the latest and state of the art banking technology and products is our tool to achieve success. Customers are our Dividend equalization Reserve - - first priority. We are trying hard to provide a system of one Minority interest in subsidiaries 10.05 - stop solutions for customers by providing a spectrum of Regulatory Adjustments - services. Our employees have mastered new technology, enhanced their product knowledge and honed their skill Goodwill and all other Intangible to help customers meet their financial goals. We want to assets 148.25 148.25 be the best at helping customers become financially better 2) Additional Tier-1 Capital (AT-1) - - off by providing free advice, innovative leading-edge financial solutions, choice and convenience. Irrespective 3) Total Tier-1 Capital (1+2) 21,165.35 21,079.25 of customers’ size and type, we aim at delivering the Tier-2 Capital best customer service by meeting their unique and General provision (unclassified loans, different needs in a professional, ethical, friendly and SMA, off balance sheet) 4,865.61 4,865.61 knowledgeable manner. Subordinated debt 6,800.00 6,800.00 We are pledge-bound to turn Southeast Bank into a modern Revaluation Reserves as on December

banking institution dynamic in actions, progressive in 31, 2015 (50% of Fixed Assets and 2,335.43 2,335.43 programs, honest in dealings, just in judgment, futuristic Securities & 10% of Equities) in attitude, fair in approaches and devoted to high quality All other preference shares service to customers. Our charted plans are aimed at boosting modern management, advanced technology, Regulatory Adjustments good profitability, sound financial strength and fair image Revaluation Reserves for Fixed of the Bank. We are firmly committed to transparent, Assets, Securities & Equity Securities responsible and accountable corporate governance with (Phase in deductions as per Basel-III 1,401.26 1,401.26 the participation of our strong and most capable team of Guidelines) professionals and under the prized policy directives and 4) Total Tier-2 Capital 12,599.78 12,599.78 guidance of the Board of Directors of the Bank. Regulatory Adjustments Southeast Bank carries out its business activities keeping Revaluation Reserves for Fixed in mind its core values, norms of business, commitment Assets, Securities & Equity Securities to clients, society and the environment at large. Southeast (Phase in deductions as per Basel-III 1,401.26 1,401.26 Bank in all its activities and operations tries to establish Guidelines) the Green Banking practice and attain a sustainable Goodwill and all other Intangible 148.25 148.25 growth. The Bank in all its endeavors wants to assure its assets shareholders a steady and competitive return on their investment in line with the best among peer institutions. Total eligible capital (3+4) 33,765.13 33,679.04

84 Annual Report 2017 5. Capital to Risk Weighted Assets Ratio The Bank takes pride in its having constant positive EPS (CRAR) and good NAV per share. Its EPS is BDT 1.27 and NAV per share is BDT 28.16 in 2017. The Return On Equity (ROE) Southeast Bank has maintained Capital to Risk-weighted of the Bank is 4.46% in 2017. The Shareholders’ equity of Asset Ratio (CRAR) of 10.84 percent as on December the Bank is BDT 25,823.65 in 2017. Retained earnings of 31, 2017 as against the minimum capital requirement of the Bank is BDT 2,716.40 million in 2017 which was BDT 11.25 percent as set by Bangladesh Bank under Basel-III 3,196.97 million in 2016. reporting through BRPD Circular No.18 dated December 21, 2014 of Bangladesh Bank. 8. Deposits

6. Capital Market Scenario Deposits create opportunity for the bank to extend credit facilities to its customers. Deposit mobilization is one of Overall growth of the Capital Market of the country in the core activities of commercial banks. A proper deposit the year 2017 was significant. Small investors, particularly structure of a bank plays significant role in increasing salaried or fixed income group got intetested in putting its interest income. Besides, the bank can contribute to some of their savings in stock market in the year 2017. All the functioning of the broader financial system through capital market indicators such as market capitalization, providing fund to the deficit units. Southeast Bank general index and turn-over improved remarkably during maintained its liquidity position within the approved risk the year 2017. The total market capitalization in both the appetite and tolerance limits. Appropriate liquidity buffers bourses of the country i.e. in the Dhaka Stock Exchange were held in line with regulatory requirements, taking Limited (DSE) and the Chittagong Stock Exchange Limited into account the risk profile and market conditions. (CSE) at the end of the year 2017 stood at BDT 20,356.29 million and BDT 20,356.29 million respectively while it The amount of total deposits of the Bank as on December was BDT 17,146.97 million in DSE and BDT 17,238.66 31, 2017 stood at BDT 269,828.08 million as compared million in CSE at the end of 2016. In 2017, the market to BDT 229,973.43 million in 2016. Competitive interest capitalization grew at the rate of 18.72% in DSE and rates, attractive deposit products, deposit mobilization 18.09% in CSE. The country’s main two bench-mark efforts of the employees and confidence reposed by the share price indices, the DSE Broad Index (DSEX) and customers in the bank contributed to the notable growth CSE all share price Index ended at 6,244.52 points and in deposits. In the year under review, the bank launched 11,649.62 points respectively at the end of 2017 while it Priority Banking Product brand-named “ESTEEM” for was at 5,036.05 points in the DSE and 9,369.91 points in high net-worth customers. The bank introduced two the CSE at the end of 2016. It posted an increase of 24% deposit products named “TAROKA” and “NOKKHOTRO” in DSE and 24.33% in CSE. All these market performance in the year 2017. Deposit-mix of the bank as on December indicators are clearly signaling that a stable and vibrant 31, 2017 was as follows: Stock Market will appear in the near future.

Share In 2017, total 8 Companies and 3 Mutual Funds were BDT in Particulars in Total Million enlisted in the capital market to raise fresh funds needed Deposits to finance their businesses. In the process of Initial Public Offers (IPOs), a fresh capital fund of BDT 2,192.50 million a) Current and Other Deposits 35,511.53 13.16% was injected into the capital market through the DSE. b) Savings Bank/ Mudaraba 23,896.58 8.86% 7. Shareholders’ Value Enhancement Savings Bank Deposits

The Bank has always prioritized shareholders’ interest c) Special Notice Deposits / in its strategic planning. It has a consistent track Mudaraba Special Notice 32,795.22 12.15% Deposits record of dividend payment at an encouraging rate to the shareholders. It has increased its Share Capital by d) Fixed and Scheme Deposits 172,690.98 64.00% declaring stock dividend over the years. It has also raised or Term Deposits its capital by issuance of right shares in 2002, 2006 and 2010. It achieved good growth in its profit and thereby e) Bill Payable Accounts 4,933.77 1.83% helped maximize shareholder wealth. The Bank made a net profit after tax for BDT 1,168.63 million in 2017 Total 269,828.08 100.00% which was BDT 2,435.07 million reported in 2016.

Southeast Bank Limited 85 9. Lending and Investment 10. Guarantee Business

Southeast Bank has always played an active part in Bank Guarantees, one of the non-funded business country’s development program and continued to be an products of the bank, had been one of the major integral part of the key measures that drive our country contributors in generating income for the bank. The Bank forward by ensuring smooth credit flow in different sectors issued guarantees amounting to BDT 16,407.09 million with balanced diversification. The Bank offers various during 2017 favoring different Government Authorities, funded and non-funded loan products and services to Ministries, Autonomous Bodies, Corporations, Private corporate clients, Small and Medium Enterprises (SMEs), Companies, Individuals and Multinational Companies rural business and marginal farmers. These products and etc. on behalf of valued clients. services include cash credit facilities, demand loan, term 11. Investment Scenario loans, agri credit, micro credit, project finance, export credit, structured/syndicated finance, letter of credit, The portfolio of investment comprises of Government guarantees, discounting of bills, documentary credits, Treasury Bills, Treasury Bonds, Prize Bonds and Shares of credit card, consumer credit etc. With its innovative, listed and un-listed Companies etc. The Bank has always diversified and customized products and services given emphasis on investment of funds in high yielding Southeast Bank ensures its consistent growth with perfect areas simultaneously maintaining Statutory Liquidity blend of quality products and services amidst so many Requirements (SLR) as fixed by Bangladesh Bank from challenges during last couple of years. Resultantly, total time to time. The investment portfolio was BDT 62,911.04 lending of the Bank stood at BDT 234,316.72 million as Million against BDT 61,731.63 million in the previous on 31st December, 2017 registering 22.13 percent growth year. over previous year. Bank’s total lending (consolidated) and its growth rate for the last five years are shown below: 12. Asset Liability Committee (ALCO)

As per Bangladesh Bank guideline, Southeast Bank has Outstanding at the end Growth Year a fully functional Asset Liability Committee (ALCO) of the year (BDT in Million) Rate consisting of senior level executives. The Managing 2017 234,316.72 22.13% Director is the Chairman of the Committee. Other members of the Committee are Additional Managing Directors and strategically important Divisional Heads 2016 191,865.59 13.61% of Head Office. The committee meets at least once in every month to analyze, review and formulate strategy 2015 168,878.46 14.83% to manage the different risks associated with the balance sheet of the Bank. 2014 147,070.81 9.05% The major roles and responsibilities of ALCO are as 2013 134,863.82 6.21% follows:

Ensuring that bank’s measurement and reporting systems accurately convey the degrees of liquidity and market risk. Lending and Investment (BDT in million) Monitoring the structure and composition of bank’s assets and liabilities and identify balance sheet management issues that may cause underperformance.

250,000 Deciding on the major aspects of balance sheet structure, such as maturity and currency mix of assets 200,000 134,864 147,071 168,878 191,866 234,317 and liabilities, mix of wholesale versus retail funding, 150,000 deposit mix, etc. 100,000 Deciding on how to respond to significant, actual 50,000 and anticipated increases and decreases in required 0 funding.

2013 2014 2015 2016 2017 Reviewing maturity profile and mix of assets and liabilities.

86 Annual Report 2017 Articulating interest rate structure and decide on 14. Performance of Selected Liability Products balance-sheet strategy. as on 31st December, 2017

Reviewing contingency funding plan for the bank. Both Traditional and Islamic Banking BDT in Million 13. Internal Control and Compliance No. of Deposit Type of Accounts Accounts Volume The Board of Directors of Southeast Bank Group recognizes Current Deposit (CD) 96,017 12,832.69 the importance of sound internal controls and risk management practices to institutionalize good corporate Special Notice Deposit (SND) 10,645 32,795.22 governance. Internal Control of the Group is structured Savings Deposit 5,09,456 23,896.58 in the light of the core risk management guidelines of Bangladesh Bank as well as international standards and Fixed Deposit Receipt (FDR) 67,824 138,996.14 guidelines approved by the Board of Directors. The Audit Traditional Banking Committee of the Board, Internal Control and Compliance BDT in Million Division and the line management play effective roles as No. of Deposit appropriate to ensure that the systems of internal controls Type of Accounts are in place and duly complied with. Accounts Volume Millionaire Deposit Scheme (MDS) 4354 2,023.33 The group has designed, developed and implemented an Double Benefit Scheme (DBS) 11,914 13,313.25 integrated internal control and compliance framework Multimillionaire Gold Deposit 759 664.76 as per internal control and compliance policies. Group’s Scheme (MGDS) internal control and compliance policies include (i) Pension Savings Scheme (PSS) 54,816 8,544.31 Compliance, (ii) Monitoring (iii) Information Security, Wage Earner Pension Savings Scheme (iv) Internal Audit, (v) Risk Management, etc. These 1,766 199.92 functions of the group are independent from the ambit of (WEPSS) management for ensuring a compliance culture within the Monthly Income Scheme (MIS) 585 705.24 organization under the active guidance and supervision of Monthly Savings Scheme (MSS) 38,484 3,735.79 the Senior Management and BOD. The Internal Control Educational Savings Schemes (ESS) 9 0.76 Teams of Southeast Bank Group conduct regular review Super Double Benefit Scheme (SDBS) 11 3.67 and appraisal of the effectiveness of the system of internal controls of the group impartially, proficiently and with Islamic Banking due professional care. Their aim is to ensure that the BDT in Million group is operating in full compliance with its licenses No. of Deposit Type of Accounts and the regulatory framework governing the operations. Accounts Volume The Group’s Audit Committee reviews and provides Mudaraba Millionaire Deposit Scheme appropriate remedial measure on internal control issues 253 118.23 (MMDS) identified by the group’s audit teams, external auditors, regulatory authorities and management and evaluates the Mudaraba Double Benefit Scheme (MDBS) 1149 825.49 adequacy of internal control system. Mudaraba Multimillionaire Gold Deposit 43 39.28 Scheme The group emphasizes on human resource development, Mudaraba Pension Savings Scheme (MPSS) 4731 807.42 training and integrity and it has formulated Service Mudaraba Wage Earner Pension Savings Excellence Guideline and Code of Conduct to protect and 188 37.60 enhance the Group’s reputation for honesty and integrity. Scheme (MWPESS) Internal Control system of Southeast Bank Group is Mudaraba Monthly Income Scheme (MMIS) 69 128.17 capable of continually assessing and recognizing the Mudaraba Monthly Savings Scheme (MMSS) 2,766 290.30 material risks that could adversely affect the achievement Mudaraba Marriage Saving Scheme (MMSS) 9 0.14 of the goals of the Group. This system also ensures Mudaraba Educational Savings Schemes immediate reporting of all the identified significant 36 7.63 weaknesses and control failures together with details of (MESS) corrective action being undertaken to appropriate levels Hajj Sanchay Prokolpa 4 0.86 of the management. Continuous monitoring is in progress Tijarah Mudaraba Muhor Savings 98 22.07 and steps are being taken to make improvements to this Scheme(TMMSS) system, where required, to enhance effectiveness and Mudaraba Hajj/Umra Scheme 4 0.56 efficiency of the group’s internal control.

Southeast Bank Limited 87 15. Budget and Budgetary Control 17. Asset Portfolio The Bank follows bottom up planning approach in The asset portfolio comprises of diverse asset components preparation of annual budget and initially invites including Cash and Cash Equivalents, Investments, Loans draft proposals on different budgetary items including and Advances, Fixed Assets and other assets. The total deposits, advances, profitability and other businesses amount of Asset Portfolio amounted to BDT 339,276.97 from the branches. The draft budget estimates are then million on 31st December, 2017. scrutinized and analyzed by the Head Office management after discussion with the Heads of the respective Branches The break-up of total assets is given below: and reviewed and finalized in the “Business Policy and Managers’ Conference”. The Management of the bank makes constant efforts throughout the year to achieve Particulars BDT in Million the budgetary target. Senior Management Team at Head Cash and Cash Equivalents 28,902.69 Office quarterly reviews the variances and the progress Investments 62,911.04 towards achieving the budgetary goals. Loans and Advances 234,316.72 16. Analysis of the Income and Expenditure Fixed Assets 9,321.80 Statements Other Assets 3,835.80 A brief analysis on Bank’s income and expenditure in Total: 339,288.05 2017 is given below: Interest Income 18. Adoption of IAS and IFRS The interest income of the bank for the year 2017 was BDT 17,400.55 million as compared to BDT 16,972.33 The Institute of Chartered Accountants of Bangladesh million in the previous year. The income generated from (ICAB) adopted the International Accounting Standards Loans and Advances remained the main contributor. (IAS) and International Financial Reporting Standards (IFRS). Bangladesh Securities and Exchange Commission Interest expenses (BSEC) and Bangladesh Bank also mandated the Total interest expenses in 2017 was BDT 13,372.86 implementation of IAS and IFRS. Consequently, million as against BDT 12,765.12 million in 2016 posting International Accounting Standards (IAS)/Bangladesh a increase of 4.76% percent. Accounting Standards (BAS)/ International Financial Net Interest Income Reporting Standards (IFRS)/and Bangladesh Financial Net interest income of the Bank for the year 2017 stood at Reporting Standards (BFRS) as applicable in Bangladesh, BDT 4,027.69 million as against BDT 4,207.21 million in have been followed in the preparation of the financial the previous year resulting in a decrease of 4.27 percent. statements of the bank for the year 2017 and any departure there-from has been adequately disclosed. Investment Income In 2017, Bank’s income from investment was BDT 19. Growth in operating Profit for the Last 5 5,570.65 million as compared to BDT 5,079.61 million years in the previous year. Investment income consisted of interest earned on treasury bills and bonds, capital gain, The Bank has earned operating profit of BDT 9,062.30 revaluation gain, gain from sales of shares and dividend million in 2017 which comprises of net interest income, received from shares. income from investment, commission, exchange etc. Operating profit in 2016 was BDT 8,503.22 million. The Other Income operating profit of the Bank for the last (5) five years is In 2017, commission, exchange and brokerage earnings given below: increased to BDT 3,462.93 million from BDT 2,903.03 million in 2016. Business and trade related fee based Operating Profit Year activities contributed directly to augment other income. BDT in Million Operating expenses 2017 9,062.30 Operating expenses of the Bank was BDT 4,349.23 million 2016 8,503.22 in 2016 which reached BDT 4,870.74 million in 2017. 2015 8,034.27 Provision against Loans and Advances In the year under review, provision against loans and 2014 8,289.76 advances was kept BDT 4,791.93 million as compared to 2013 6,700.20 BDT 3,250.99 million in 2016.

88 Annual Report 2017 20. Operating Income for the Last 5 years 25. Net Profit for the Last 5 years

The operating income of the Bank stood at BDT 13,933.04 Net Profit after tax and provision was BDT 1,168.63 million at the end of 2017 while it was BDT 12,852.45 million during the year 2017 which was BDT 2,435.07 million in 2016. The operating income of the Bank for the million in the previous year. Net Profit for the last five (5) last five (5) years is given below: years is given below:

Operating Income Net Profit Year Year (BDT in Million) (BDT in Million) 2017 13,933.04 2017 1,168.63 2016 12,852.45 2016 2,435.07 2015 11,604.39 2015 3,069.42 2014 11,617.19 2014 3,836.94 2013 9,684.80 2013 3,378.82

21. Return on Equity for the Last 5 years 26. Statutory Reserve

Return on Equity (RoE) of the Bank was 4.46 percent in The total amount of statutory reserve stood at BDT 2017 while it was 9.06 percent in the previous year. The 9,170.00 million as on 31st December, 2017. Return on Equity of the Bank for the last five (5) years is given below: 27. Southeast Bank Capital Services Limited

Year Percentage (%) of RoE Southeast Bank Capital Services Limited (SEBCSL) is a subsidiary company of Southeast Bank Limited. It was 2017 4.46% incorporated by the Registrar of Joint Stock Companies 2016 9.06% and Firms under Companies Act 1994 on September 23, 2010 as a Public Limited Company. The Authorized and 2015 11.86% the Paid up Capital of the company are BDT 6000.00 2014 16.51% million and BDT 5500.00 million respectively. SEBCSL has been carrying out operation as a full-fledged Merchant 2013 16.20% Bank since 2010. Southeast Bank Limited holds 99.82% of the total shares of the company. 22. Provision for Income Tax The company is managed by a professional team under the The provision for income tax both current and deferred policy guidelines of the Board. The Board of the company tax of the Bank amounts to BDT 3,013.45 million for comprises of the following professionals: the year 2017 while it was BDT 2,855.52 million in the previous year. Name of Directors Position 23. Profit before Tax and Provision Mr. Alamgir Kabir, FCA Chairman The Bank earned profit of BDT 9,062.30 million during Mr. A.H.M Moazzem Hossain the year before making any provision for bad and doubtful Director debt, off-balance sheet exposures, unclassified loans and Independent Director advances and before taxes etc. as against BDT 8,503.22 Mr. M Kamal Hossain million in the year 2016. Director Nominee of Southeast Bank Ltd.

24. Net Profit after Provision and Income Tax Dr. Zaidi Sattar Director Nominee of Southeast Bank Limited The Bank earned net profit of BDT 1,168.63 million Mr. Md. Khursheed Alam during the year 2017 after making specific provision for Director classified loans, general provision for unclassified loans Nominee of Southeast Bank Foundation and off-balance sheet exposure and after taxes etc. It was Air Cdre (Retd.) Md. Abu Bakar, FCA Managing Director BDT 2,435.07 million in the year 2016.

Southeast Bank Limited 89 SEBCSL’s products and services include Portfolio Branches are designated as Islamic Banking Branches Management, Pre-IPO Placement, Underwriting located at Dhaka, Chittagong and Sylhet region. At Management, Issue Management, Corporate Advisory present Bank’s Authorized Dealer (AD) Branches are Services etc. The Company’s own portfolio investment in 21 (Twenty one). The Bank is also providing “Evening the capital market also increased remarkably in the year. Banking Service” through 27 (Twenty seven) Branches to further augment its service delivery at extended banking Capital market of our country showed positive sign from hours. To expand the geographical outreach and to cover early 2017. Share price as well as turnover of the capital more strategic locations of business importance, SEBL has market significantly increased. During the year 2017, Net applied to Bangladesh Bank for opening 10 new branches Operating Profit of the Company amounted to BDT 84.39 in the year of 2018. million whereas the Profit after Tax and provision stood at BDT 26.02 million. It is expected that the Company will Year-wise Network Expension earn better return from its investment in 2018.

28. Network Expansion Program 103 113 122 128 132 150 In today’s intense competition, most of the financial institutions are striving hard to display their best 100 possible efforts to be competitive. As customers are more 50 fragmented, Banks are trying to enrich their services and network to serve the customers. Southeast Bank, 0 as a leading financial institution, always gives highest 2013 2014 2015 2016 2017 priority to quicken its branch expansion programme to net the un-banked population across the country. It is to be mentioned that business is the prime objective of 29. Implementation of Basel - III any branch expansion strategy of a bank and definitely a new branch is aimed at plugging geographical gaps in The main objective of the Basel III accord is to enhance their network. Our Bank invests in network expansion economic stability by improving the banks’ ability to and new technology adoption to achieve competitive absorb shocks arising from financial and economic edge. Presently our bank is functioning with country- stress. The Basel III framework aims to achieve this by wide network of 132 branches covering all divisions of both increasing capital, qualitatively (by raising tier the country. Division-wise distribution of branches are 1 capital minimum requirements, the strongest form given below: of risk-absorbing capital) as well as quantitatively (by increasing total capital requirements), and enhancing the risk coverage of the capital framework. As per Basel III Urban Rural Division Total framework, a capital conservation buffer of 2.50% will be Branches Branches required in addition to the minimum capital requirement Dhaka 34 31 65 of 10.00% within 2019. This buffer obliges banks to hold Chittagong 12 20 32 additional high-quality capital. In times of economic Sylhet 07 05 12 distress, this buffer can be used to absorb unexpected Khulna 04 04 08 losses. Rajshahi 08 01 09 The Basel Accord is built on three pillars: Barisal 01 - 01 Pillar I defines the regulatory minimum capital Rangpur 02 - 02 requirements by providing rules and regulations for Mymensingh 03 - 03 measurement of credit risk, market risk and operational Total 71 61 132 risk.

To facilitate the female entrepreneurs, the bank has set Pillar II addresses the Bank’s internal processes for up two Ladies’ Branches in Dhaka city. The Bank is also assessing overall capital adequacy in relation to risks. Pillar offering Offshore Banking facilities through 02 (Two) II also introduces the Supervisory Review and Evaluation Offshore Banking Units (OBU) in Dhaka Export Processing Process, which assesses the internal capital adequacy. Zone and Chittagong Export Processing Zone. Pillar III complements the other two pillars and focuses Moreover, the Bank is providing “Shariah-Based Islamic on enhanced transparency in information disclosure, Banking Services” to the customers. Out of 132 (One covering risk and capital management, including capital hundred thirty two) Branches of the Bank, 05 (Five) adequacy.

90 Annual Report 2017 The Bank is well positioned in respect of capital and its own determination of the capital adequacy of the Bank risk management. It has commenced reporting of after having dialogue with the Supervisory Review Process CRAR (Capital to Risk-weighted Asset Ratio), leverage (SRP) team of the Bank. and liquidity ratio from 2015 following the new risk based capital adequacy framework. The overall scenario SEBL has a SRP team at management level headed by the (Consolidated position) as of December 31, 2017 under Managing Director. The team periodically reviews the pillar-I is depicted below: risk assessment process and the requirement of adequate capital against all plausible risks. The Bank uses central CRAR Leverage Ratio LCR NSFR bank’s guidelines ‘Revised Process Document for SRP- SREP Dialogue on ICAAP’ to assess level of risks and 10.84% 5.18% 102.81% 115.55% capital requirement. It also reviews the policy documents that would supplement the whole risk mitigating process The Bank has a Supervisory Review Process (SRP) team under SRP. The ICAAP report of 2016 has already been comprising members from the senior management which sent to Bangladesh Bank and as per the latest reports participates in dialogues with the Supervisory Review the Bank will require of BDT 29,981.79 million to act as Process Evaluation (SREP) team of Bangladesh Bank on the cushion against risks under pillar-I and Pillar-II of Basel- issue of maintenance of adequate capital to compensate all III. However, the Bank was maintaining BDT 33,765.13 the risks associated with business. Stress tests are used to million as capital including Tier-I and Tier-II. measure the impact on the Bank of extreme, yet plausible events. Where necessary, measures are taken on the basis of the results of the stress tests that are in line with Bank’s 31. Corporate Governance risk appetite. Stress test is conducted through a prescribed format given by Bangladesh bank where impact on Capital One of the basic policies of the Bank is to strengthen its to Risk-weighted Asset Ratio (CRAR) is assessed taking corporate governance status by establishing responsible into account plausible shocks. management system and strengthening supervision. Efforts are also being geared up to improve the transparency Pillar-III of Basel III aims to promote market discipline and accountability of the management. While putting through regulatory disclosure requirements. The reports efforts to achieve corporate objectives, Southeast Bank on disclosure enable market participants to assess more gives top priority to establishing appropriate corporate effectively key information relating to the Bank’s regulatory governance standard at all levels and in all units. A report capital and risk exposures in order to instill confidence on Corporate Governance of the Bank in 2017 is included about the Bank’s exposure to risk and overall regulatory in this Annual Report. capital adequacy. The Bank has published the disclosure incorporating all the changes in the revised guidelines. 32. Declaration of the Compliance of BSEC The Bank has already made a significant progress in Notification implementing Basel-III and preparing itself to meet the upcoming challenges. The following disclosures are made in compliance with certain provisions contained in the BSEC Notification 30. Supervisory Review Process dated August 7, 2012.

The second pillar of the Basel III framework is Supervisory a) The financial statements prepared by the management Review Process (SRP) which is designed to assess the present fairly its state of affairs, the result of its adequacy of the Bank’s capital by considering all material operations, cash flows and changes in equity. risks to the business, including those not covered or b) All transactions have been recorded in the accounting adequately addressed by the first pillar. Furthermore, records and are reflected in the financial statements. requirements under Pillar 2 encourage the Bank to develop, Accounting books have been properly maintained in operate and evolve better risk management techniques the Bank. for monitoring, measuring and managing material risks. There are two components of Pillar 2, the Internal c) Appropriate accounting policies have been Capital Adequacy Assessment Process (ICAAP) and the consistently applied in preparation of the financial Supervisory Review and Evaluation Process (SREP). The statements and that the accounting estimates are ICAAP is the Bank’s own internal assessment of the overall based on reasonable and prudent judgment. adequacy of its capital strength in light of the material risks identified. The SREP is undertaken by the central bank in d) Bangladesh Accounting Standards (BAS)/Bangladesh order to review and assess the Bank’s ICAAP and to assess Financial Reporting Standards (BFRS) as applicable the quality of the Bank’s risk management systems and in Bangladesh have been followed except as outlined internal controls. Based on this, the central bank makes in Note No. 2.1 in the financial statements.

Southeast Bank Limited 91 e) The system of internal control in the Bank is sound 36. Acknowledgement in design and has been effectively implemented and monitored. The Board expresses gratitude to the Almighty Allah for the success of the Bank in 2017. The Board extends f) There are no doubts upon the Bank’s ability to thanks to the valued customers, patrons and well-wishers continue as a going concern. for their continued support and co-operation to the Bank. The Board also appreciates the dedicated services of 33. Declaration of Dividend the Senior Management Team and all the employees in The Board of Directors in its 543rd meeting held on April different levels of the Bank. The Board offers thanks to the 28, 2018 recommended 15 percent Stock Dividend for Government of Bangladesh, Bangladesh Bank, Bangladesh distribution amongst the shareholders for the year-2017. Securities and Exchange Commission, The Registrar of Joint Stock Companies and Firms, The Dhaka Stock 34. Corporate Social Responsibilities Exchange Limited and The Chittagong Stock Exchange Limited for their appreciable support and co-operation Southeast Bank manages its business in a responsible way to the Bank. The Board also expresses its appreciation to and contributes to the society and environment in which M/S. Pinaki & Company, the Auditors of the Bank, for it operates. A report on Corporate Social Responsibility of their efforts for timely completion of Audit. The Board the Bank in 2017 is included in this Annual Report. of Directors also thanks both the print and electronic media personnel for giving media coverage to Bank’s 35. Contribution to National Exchequer different activities and events. Finally, the Board thanks the respected Shareholders and assures them that it will Southeast Bank contributed an amount of BDT 5,665.45 continue to add to the Shareholders’ wealth through million to the National Exchequer in the year 2016-2017. further strengthening and development of the Bank in which they have placed their trust and confidence. The Bank’s contributions to the National Exchequer for the last five (5) years are given below: Sincerely

Year BDT in Million On behalf of the Board of Directors. 2016 5,665.45 2015 4,416.11 2014 5,278.45 2013 5,461.27 Alamgir Kabir, FCA Chairman 2012 4,124.19

92 Annual Report 2017 Southeast Bank Limited 93 Senior Management Team

94 Annual Report 2017 Southeast Bank Limited 95 Code of Conduct for Senior Management Team

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.

The following are the code of conduct for them in the discharge of their professional duties and responsibilities:

Honesty and Integrity: Senior Management acts with honesty, integrity and 01 fairness.

Conflict of Interest: It does not engage in act that conflicts with the interests of 02 the Bank.

Compliance with Laws, Rules and Regulations: It complies with all 03 applicable laws, rules and regulations.

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

Confidentiality of Information: It maintains secrecy of the Bank and its 05 customers.

Insider Trading: No member of the Senior Management Team engages himself / 06 herself in any insider trading.

Gifts giving and Acceptance: None of them accepts any gift from Bank’s 07 Customers or its any business associate.

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

Other Obligations: It strives on a regular basis for the overall improvement 09 in operations and image of the Bank.

96 Annual Report 2017 Committees of the Management

Senior Management Team (SMT)

Sl. No. Functional Position of the Executives 1. Managing Director 2. Chief Risk Officer 3. Chief Anti Money Laundering Compliance Officer 4. Head of Credit 5. Head of International Banking 6. Head of Business 7. Head of Branches and General Banking 8. Principal, Training Institute 9. Head of Credit Risk Management 10. Head of Retail Business 11. Head of Risk Management 12. Head of Internal Control and Compliance 13. Head of Credit Card 14. Chief Information Technology Officer 15. Head of SME and Agri. Credit 16. Head of Logistic and General Services 17. Head of Treasury 18. Head of Special Asset Management 19. Head of Corporate Affairs and Corporate Social Responsibility 20. Chief Financial Officer 21. Head of Human Resources 22. Head of Legal Affairs

Management Level Risk Management Committee

Sl. No. Name and Designation Position in RMC 1 S.M. Mainuddin Chowdhury, AMD & CRO Chair 2 Syed Faisal Omar, SEVP Member 3 Md. Shahjahan Sarker, EVP Member 4 Khandaker Zia Hassan, EVP Member Secretary 5 Khaled Mahbub Morshed, EVP Member 6 Khandaker Khaled Hassan, SVP Member 7 Md. Jahangir Kabir, VP Member 8 Kamrul Islam, SAVP Member 9 Rasedul Islam, AVP Member 10 Jesmin Sultana, AVP Member

Southeast Bank Limited 97 Asset Liability Committee (ALCO) Credit Risk Management Committee (CRMC)

Sl. Position in Sl. Position in Name and Designation Name and Designation No. ALCO No. CRMC 1 M. Kamal Hossain, MD Chair 1 Chief Risk Officer Chair 2 S.M. Mainuddin Chowdhury, AMD Member Member 2 Head of Credit Risk Management 3 A.K.M Nurul Alam, AMD Member Secretary 4 Syed Faisal Omar, SEVP Member 3 Head of Corporate Banking Member 5 Khandoker Zibanur Rahman, EVP Member 4 Head of Risk Management Member 6 S. M. Mainul Kabir, EVP Member 5 Head of Special Asset Management Member 7 Md. Jahir Uddin Ferdouse, EVP Member 6 Head of Treasury Member 8 Khandaker Zia Hassan, EVP Member Member 7 Head of Legal Affairs Member 9 Md. Jahangir Kabir, VP Secretary 10 Md. Shaheen Miah, SAVP Member Tender Committee 11 Rasedul Islam, AVP Member Sl. Position in Name and Designation Central Compliance Committee (CCC) No. TC

Sl. 1 A. K. M. Nurul Alam, AMD Chair Name and Designation Position in No. CCC 2 Khorshed Alam Chowdhury, EVP Member Chief Anti 3 S. M. Mainul Kabir, EVP Member Money 4 Lt Cdr Wares-Ul-Matin (Retd), VP Member 1 A. K. M. Nurul Alam, AMD Laundering Compliance 5 Kamrul Islam, SAVP Member Officer 6 Rasedul Islam, ACA, AVP Member 2 Syed Faisal Omar, SEVP Member Member 7 A. K. M. Moshiour Rahman, FAVP 3 Md. Shahjahan Sarker, EVP Member Secretary 4 S. M. Mainul Kabir, EVP Member Deputy 5 Khandaker Zia Hassan, EVP CAMLCO IT Steering Committee 6 Md. Abdus Sabur Khan, SVP Member Sl. Functional Position of the Executives 7 Khandaker Khaled Hassan, SVP Member No. 8 Salah Uddin Ahmed, SVP Member 1 Chief Information Technology Officer 9 Abu Sabed Sayfullah, SAVP Member 10 Monzur Ahmed, AVP Member 2 Head of Internal Control and Compliance 3 Head of Corporate Banking Integrity Committee 4 Head of Credit Risk Management Sl. Position in the Name and Designation 5 Head of Human Resources No. Committee S. M. Mainuddin 6 Head of Legal Affairs 1 Chair Chowdhury, AMD 7 Head of Special Asset Management Khaled Mahbub Morshed, 2 Focal Point 8 Head of Risk Management FCA, EVP 9 Head of Financial Control and Accounts Khandaker Khaled 3 Member Hassan, SVP 10 Head of Credit Card 4 Md. Feroj Hoshen, SAVP Member 11 Head of Alternative Delivery Channel 5 Rasedul Islam, AVP Member 12 Head of Treasury

98 Annual Report 2017 Procurement Committee Special Asset Management Committee (SAMC) Sl. Position in Name and Designation No. PC Position Sl. Name and Designation in the 1 M. Kamal Hossain, MD Chair No. 2 Syed Faisal Omar, SEVP Member Committee S. M. Mainuddin Chowdhury, 3 Mohammad Omar Faruque, VP Member 1 Chair AMD 4 Lt Cdr Wares-Ul-Matin (Retd), VP Member 2 Syed Faisal Omar, SEVP Member Mohammad Tanveer Rahman, 5 Member SAVP 3 Lt Cdr Wares-Ul-Matin (Retd), VP Member Member Member 6 A. K. M. Moshiour Rahman, FAVP 4 Kamrul Islam, SAVP Secretary Secretary 5 Kazi Abu Taher, SAVP Member Taskforce for Monitoring and Recovery of 6 Syed Jonson Ali, EO Member 7 S. M. Moshiur Rahman, Officer Member Rescheduled and Restructured Loans Supervisory Review Process (SRP) Team Position Sl. Name and Designation in the No. Position Committee Sl. Name and Designation in the No. 1 A. K. M. Nurul Alam, AMD Chair Committee 2 Md. Shahjahan Sarker, EVP Member 1 M. Kamal Hossain, MD Chair 3 S. M. Mainul Kabir, EVP Member 2 S.M. Mainuddin Chowdhury, AMD Member 4 Md. Jahir Uddin Ferdous, EVP Member 3 A.K.M Nurul Alam, AMD Member 5 Mostafa Meer Khaled Omar, VP Member 4 Syed Faisal Omar, SEVP Member Member 6 Joya Hussain, VP 5 Md. Shahjahan Sarker, EVP Member Secretary 6 Khandaker Zia Hassan, EVP Member 7 Md. Shaheen Miah, SAVP Member 7 Khaled Mahbub Morshed, EVP Member 8 Md. Jahangir Kabir, VP Member Taskforce for Recovery of Classified Loans 9 Kamrul Islam, SAVP Member and Advances 10 Rasedul Islam, AVP Member

Position Sl. Name and Designation in the No. Committee 1 A. K. M. Nurul Alam, AMD Chair 2 Syed Faisal Omar, SEVP Member 3 Md. Shahjahan Sarker, EVP Member 4 S. M. Mainul Kabir, EVP Member 5 Md. Jahir Uddin Ferdous, EVP Member Member 6 Kamrul Islam, SAVP Secretary 7 Md. Akhtaruzzaman, AVP Member

Southeast Bank Limited 99 nance framework is Our Corporate Gover a set of transparent rules, requirements and systems practiced by us with a high degree of integrity to meet the expectations that the stakeholders and the society place on us. Corporate Governance

Statement of Board of Directors on the Responsibility to Establish Appropriate System of Internal Control 102 Statement of Board of Directors on Adequacy of Internal Control System 103 Corporate Governance Report 105 Managing Director’s and CFO’s Declaration on Integrity of Financial Statements to the Board 119 MANAGEMENT REVIEW, RESPONSIBILITY & EVALUATION 120-150 Compliance Report on BSEC’s Notification on Corporate Governance 151 Certificate on Compliance of Corporate Governance 157 Compliance of Bangladesh Bank’s Guidelines on Corporate Governance 158 Credit Rating 166 Audit Committee (Composition, Role, Meetings, Attendance etc.) and Internal Control 167 Report of the Risk Management Committee 171 Evaluation of the Quarterly Financials by the Audit Committee and by the Board 173 Report of the Bank’s Shariah Supervisory Committee 174 Capital Plan 176 Statement of Non Performing Loan 178

Southeast Bank Limited 101 Statement of Board of Directors on the responsibility to establish Appropriate System of Internal Control

The responsibilities of Board of Directors of a bank in designed to mitigate and effectively manage the risks Bangladesh in respect to establishing appropriate system the bank is exposed to and to identify or highlight the of internal control are regulated by the Bank Company deviation and loophole of the established policies and Act and the notification of Bangladesh Securities and rules. Exchange Commission. The Board of Directors, under section 15(kha) and 15 (Ga) of the Bank Company Act No system or framework can be foolproof. So the Board of 1991 (amended in 2013), are responsible for establishing Southeast Bank believes that the internal control system of and executing policies of the Bank. It is also accountable the bank can manage or mitigate the risk to an acceptable for risk management, internal control, internal audit level/profile rather than eliminate the risk of failure entirely and compliance with requirements of the bank. Under to achieve the policies, goals and objectives of the bank. notification dated 07.08.2012 of Bangladesh Securities The Board of Southeast Bank also believes that a strong and Exchange Commission, it will also establish an system of internal control has significant role over the Audit Committee as a sub-committee of the Board of reliability of financial information/reporting; effectiveness Directors to assist the Board in ensuring that the financial and efficiency of operations; compliance with applicable statements reflect true and fair view of the state of affairs laws, regulations and internal policies, safeguarding its of the company and in ensuring a good monitoring system assets; early detection of fraud-forgery and protecting the within the business. Bank from the financial loss. So, internal control system of Southeast Bank can only provide reasonable and not Review of the effectiveness of the existing system of absolute assurance in achieving the bank’s policies, internal control of the bank is a fundamental aspect of goals and objectives in generating potential returns to Board’s responsibilities, but the management of the bank shareholders. is obligated to the Board for operating, monitoring and developing the system of internal control so that they can The Board has established a continuous process of assure the Board that the control systems are properly identifying, evaluating, monitoring and managing adhered to the operation of the bank. risks faced by the bank. The follow-up and feedbacks concerning possible deviations arising in the internal The Board of Directors of Southeast Bank carries out its controls are also established in the daily activities of the responsibilities extensively and has established an Audit bank as a key part of the internal control work since this Committee of the Board for sustaining sound, adequate is an efficient manner for the bank to ensure that errors are and effective internal control systems to safeguard the asset corrected and that the control is further strengthened. All of the bank and interest of the shareholders. The Board of the processes and guidelines of the bank are reviewed and Southeast Bank is committed to operating the Bank within updated from time to time to suit the changes in business a strong system of internal control that enables business environment or regulatory guidelines. 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 Alamgir Kabir, FCA internal control system of Southeast Bank is principally Chairman

102 Annual Report 2017 Statement of Board of Directors on Adequacy of Internal Control System

The vision of Southeast Bank’s Board of Directors is to Board (ACB) pertaining to internal control of Southeast perform efficient and competitive banking aligning with Bank Ltd. The ICP is designed to create awareness among the international standards of best practices in Internal all the employees of SEBL with regard to the internal Control and Corporate Governance, complying with control components and the basic control policy. the applicable laws and regulations; Bangladesh Bank’s (Central Bank) instructions, circulars and guidelines The risks to which banks are exposed are becoming which satisfy the credit needs of the domestic economy more complex and diverse due to globalization. With thereby supporting the economic development of the the internationalization of the financial sector and country. The Board of Directors (BOD) has ensured and diversification of financial services and businesses. In established a robust Internal Control System ascertaining a line with the guideline of Bangladesh Bank, the Board of well-defined management structure with clear authorities Southeast Bank Limited has established an effective and and delegation of responsibilities, documented procedures integrated risk management framework consisting of and authority levels, to ensure that all material risks are Credit risk, Foreign Exchange Risk, Asset and Liability/ properly assessed and controlled. Balance Sheet Risk, Money Laundering Risk, Internal Control and Compliance Risk and Information and According to the instructions of Bangladesh Bank (Central Communication Technology Risk. Aligning with the Bank), the Board of Directors has formed 03 (three) different framework, Southeast Bank has taken 03(three) lines of committees (Executive Committee, Audit Committee and defense approach i) risk taking units ii) risk control units Risk Management Committee) from its members that are and iii) internal audit to make sure that all risks across delegated with authorities and responsibilities in line with all levels are managed in the best possible way protecting the Bank’s strategies and goals. The Executive Committee the interests of all stakeholders. The risk taking units is primarily responsible for the execution and evaluation are the Business Units responsible for identification and as well as effective communication of key operational management of risks and maintaining effective controls. and management decisions throughout the Bank while The risk control units are responsible for establishing the Audit committee is a Board level committee tasked and maintaining risk management framework and to ensure the formulation, adequacy and integrity of methodologies while the Internal Audit is responsible for the system of internal control, oversight of the financial providing independent assurance on the adequacy of the statements of the bank. The Risk Management Committee Bank’s risk management process and controls. is established to assist the Board in the discharge of its risk management functions as well as formulation and For an effective internal control, the Board of Southeast execution of the risk management strategies and policies Bank has approved “Information and Communication which serve as the foundation for the risk management Security Policy (ICT Security Policy)”, for protecting activities of Southeast Bank. information from a wide range of threats as well as safeguarding the confidentiality, integrity and availability Southeast Bank has implemented sound internal control of information. Information security policy and the system which is monitored effectively and regularly. underneath procedures provide assurance to the Among the key processes, the Board has established a stakeholders that Southeast Bank’s business is able to written Management Control Policy (MCP) and Internal leverage on IT to deliver optimal benefits. Control is Control Policy (ICP) in order to review the adequacy exercised over Information (IT) resources and IT related and effectiveness of the risk management framework and risks are well managed. internal control system. The MCP outlines the specific responsibilities of the various parties i.e. the Management, The size, geographical presence and complexity of the Internal Control Team and the Audit Committee of the business of Southeast Bank as well as the dynamic operating

Southeast Bank Limited 103 environment require the Board to constantly review in the calendar year as well as recommendations for and monitor the effectiveness of its system of internal addressing any weakness identified. The decisions of the control. With this end in view the Bank has established ACB relating to audit findings and recommendations are a sound and independent Internal Audit function mainly complied with by the Management accordingly. responsible for evaluating the adequacy and effectiveness of the Bank’s internal controls, ensuring compliance with Based upon the results of reviews and audits conducted policies, procedures and regulatory requirements. Regular during the year, the Board through its Audit Committee self-testing and high level risk assessment procedures evaluates whether the existing Internal Control System e.g. Departmental Control Function Checklist, Quarterly is “Effective and Acceptable” and provides a reasonable Operation Report, Loan Documentation Checklist, SMT assurance of effective operations covering financial and Certificate, Annual Summary Report, Annual Health operational controls and compliance with laws and Report, etc are conducted followed by review and update regulations. to ensure an efficient and effective internal control. Nevertheless, the system of internal control monitoring The Bank’s Internal Auditors are not assigned with any mechanism is not flawless, room for improvement still executive responsibilities in order to maintain their exists, as it can only provide reasonable and not absolute autonomy and impartiality in fulfilling their duties and assurance against material misstatement or loss and it responsibilities. The Internal Audit function reports are is designed to manage rather than eliminate the risk of directly placed to the Audit Committee of the Board failure to achieve the organization’s policies, aims and (ACB) which is accountable for monitoring the overall objectives. 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, Alamgir Kabir, FCA external audits and regulatory authorities carried out Chairman

104 Annual Report 2017 Corporate Governance Report

Conceptual Framework Board of Directors, Chairman and CEO

Southeast Bank operates within the legal framework of the Policy on Appointment of Directors Companies Act-1994 and as a banking company, complies with the provisions of the Bank Company (Amendment) Southeast Bank complies with the requirement of Act-2018. Its Corporate Governance principles serve Bangladesh Bank and Bangladesh Securities and Exchange the goal of strengthening and consolidating company Commission (BSEC) for appointment of Directors. As per position with sustained growth objectives in materializing regulations, all Directors, except nominated, independent the trust placed in the company by the shareholders, or alternate directors, maintain at least 2% shares in clients, employees and the general public. Fair practice, the Bank. As per the Companies Act 1994, one-third accountability, transparency, compliance, value creation of the Directors retire and if eligible, place themselves and corporate social responsibility are the pillars of our for reappointment which is approved in the Annual corporate governance. The Bank’s corporate governance General Meeting. As per the Bank Company Act 1991 (As structure comprises of the Shareholders, the Board, amended in 2018), the Directors are appointed for a term Bank Management, Regulatory Authorities, Independent of three years which can be extended by two term only External Auditors and the Employees. subject to approval by the shareholders in the Annual General Meeting (AGM). The term of appointment Our Stakeholders for an Independent Director is also three years which can be extended by one term subject to approval by the Shareholders in the AGM. For appointment of an Our Stakeholders are individuals or groups that have an Independent Director, the approval of BSEC is obtained interest, claim or stake in the Company, in what we do to comply with its requirement. All appointments of the and in how well we perform. All our Stakeholders are in Board is made subject to approval of Bangladesh Bank. an exchange relationship with us. Each of them supplies The Managing Director is also appointed subject to the us with important resources and in exchange each expects approval received from Bangladesh Bank. However, unlike that its interest is satisfied. other Directors, he is not subject to retirement as long as he remains Managing Director. Ownership Composition

31-12-2017 31-12-2016 Sl. No Composition No. of Shares Held % to Total Shares No. of Shares Held % to Total Shares 1 Directors 140,573,157 15.33% 140,573,157 15.33% 2 General Public 447,665,188 48.82% 446,527,386 48.70% 3 Financial Institutions 328,711,831 35.85% 329,849,633 35.97% Total 916,950,176 100.00% 916,950,176 100.00%

As on 31 December 2017, the Directors of Southeast Bank Limited held 15.33 percent of total shares whereas General Public and Financial Institutions are holding 48.82 percent and 35.85 percent shares respectively.

Southeast Bank Limited 105 Pattern of Shareholdings

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

ii) Ownership of Company’s Securities by the Members of Board of Directors.

Ownership Composition

Sl. No. Name of the Directors No. of Shares Value in BDT % to Total Shares 1. Mr. Alamgir Kabir, FCA 19,944,672 199,446,720.00 2.18% 2. Mrs. Duluma Ahmed 19,082,742 190,827,420.00 2.08% 3. Mr. M. A. Kashem 20,307,060 203,070,600.00 2.21% 4. Mr. Azim Uddin Ahmed 25,490,735 254,907,350.00 2.78% 5. Mrs. Jusna Ara Kashem 18,339,525 183,395,250.00 2.00% 6. Mr. Md. Akikur Rahman 18,443,731 184,437,310.00 2.01% 7. Mrs. Rehana Rahman 18,844,145 188,441,450.00 2.06% Mrs. Sirat Monira 8. 120,547 1,205,470.00 0.01% Representing public shareholders Mr. A.H.M. Moazzem Hossain 9. - - - Independent Director Dr. Quazi Mesbahuddin Ahmed 10. - - - Independent Director Mr. M. Kamal Hossain 11. - - - Managing Director Total: 140,573,157 1,405,731,570.00 15.33%

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

Shareholdings as on Sl. No. Designation 31.12.2017 M. Kamal Hossain a) Nil 1. Managing Director b) Spouse / Minor Children of Managing Director Nil Muhammad Shahjahan a) Company Secretary Nil 2. (Retired from Service of the Bank as on 30 April 2018) b) Spouse / Minor Children of Company Secretary Nil Rasedul Islam, ACA a) Nil 3. Chief Financial Officer (Acting) b) Spouse / Minor Children of Chief Financial Officer Nil Haradhan Banik a) Head of Internal Control and Compliance Nil 4. (Retired from Service of the Bank as on 28 April 2018) b) Spouse / Minor Children of the Head of Internal Control and Compliance Nil

106 Annual Report 2017 iv) Shares held by top five salaried Executives in the regular services of the Bank.

Ownership Composition

Shareholding as on Sl. No. Name Designation 31.12.2017 1. S. M. Mainuddin Chowdhury Additional Managing Director Nil 2. Anwar Uddin Senior Executive Vice President 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 vi) 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. vii) 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 61.71 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 an vested quarter. For obvious reasons, general investors opt to invest in our shares.

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 Four (4) Directors will retire in the 23rd Annual General Meeting.

i) Mr. Alamgir Kabir, FCA ii) Mr. Azim Uddin Ahmed iii) Mrs. Jusna Ara Kashem iv) Mr. A. H. M. Moazzem Hossain (Independent Director)

As per Notification of Bangladesh Securities and Exchange Commission (BSEC) dated 07 August, 2012, under condition 7-1.2 (vi), 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. Mr. A. H. M. Moazzem Hossain was appointed as an Independent Director of the Bank in 2012. He completed 6 (six) years in two terms in the 23rd Annual General Meeting. Hence, he would not be entitled to re- election in compliance with the above Notification of BSEC. In the meantime, Bank Company (Amendment) Act-2018 has been passed by the Country’s Parliament which will take immediate effect. In obedience to the amended Act, the other Directors are eligible to re-election in the upcoming 23rd AGM of the Bank.

The brief resume of the above Directors in compliance with Notification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012 of Bangladesh Securities and Exchange Commission (BSEC) is appended in the Directors‘ Profile in the Annual Report.

Southeast Bank Limited 107 Other information about them as required as per the aforesaid Notification is given below.

Name Expertise Memberships Directors in Auditing, Chairman: Asia Insurance Limited, Accounting, Banking, Board of Directors Mr. Alamgir Kabir, FCA National Life Insurance Co. Insurance and Executive Committee Ltd. Financial Institutions Risk Management Committee Mutual Food Products Ltd., Executive Committee and Mr. Azim Uddin Ahmed Banking Mutual Milk Products Ltd., Risk Management Committee Mutual Trading Co. Limited Mrs. Jusna Ara Kashem Banking Audit Committee Rose Corner (Pvt) Ltd. International Publication Audit Committee (Chairman) Mr. A. H. M. Moazzem Hossain Economist, Banking Ltd. (Owning company of Risk Management Committee the Financial Express)

Non-Executive Directors

The Managing Director is the only Executive Director on the Board of Directors of the Bank. All other Directors including the Chairman are the Non-Executive Directors.

Independent Directors

In compliance with the Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) and as per Section-15 of Bank Company (Amendment) Act-2018 regarding appointment of New Directors and the guidelines given by Bangladesh Bank in BRPD Circular No.11 dated 27 October, 2013, the Bank appointed 2 (two) Independent Directors observing all required formalities.

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. 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 requirements 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.

Chairman’s Independence

As per the requirements of Notification on Corporate Governance 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, procedures are observed. It is also ensured that the independence of the Chairman is not hampered.

Chairman and the CEO

The Chairman and the CEO 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 on Corporate Governance Guidelines.

108 Annual Report 2017 Independence of the Non-Executive Directors

The Non-Executive Directors enjoy full freedom in discharging their responsibilities. They sincerely try to attend all meetings of the Board and its any Committee of which they are members. They actively participate in discussion on any agenda for a well-thought-out decision.

Role and Responsibilities of the Board of Directors

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.

Role 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 strategies 2. fixation of operational budgets 3. approval of financial statements 4. review of Bank’s operational performance towards achievement of objectives 5. approval of policies and operational manuals to establish effective risk management in core bankingareas and internal control. 6. reviewing company’s corporate governance standard for further improvement 7. determining Bank’s corporate social responsibility status and taking steps for its improvement 8. developing compliance culture in the Bank 9. approving proposals which are beyond the delegated business / financial / administrative powers of the Management 10. appointment of the Managing Director (CEO) and fixation of his benefits 11. purchasing or acquiring property for the Bank 12. providing welfare to the employees 13. making donation for any charitable ventures 14. devising annual work plan for goals and monitoring its pace of achievement. 15. analyzing reasons for success or failure of Bank’s annual budget achievement 16. periodical review of Bank’s operational budget achievement 17. taking risk management initiatives 18. review of sufficiency and requirement for internal control efforts of the Bank 19. reviewing Bank’s human resource policy 20. Bank’s financial management and its periodical review 21. approving policies or taking Policy decisions for improvement of operation and compliance culture in the Bank.

Role of the Chairman

The Chairman of the Bank is elected from amongst the Directors after every Annual General Meeting in obedience to the Articles of Association of the Bank. The functional areas of the Chairman and that of the Managing Director are sharply bifurcated within the rules of Bangladesh Bank. But they work in cohesion for the disciplined operation and growth of the Bank.

Southeast Bank Limited 109 Responsibilities of the Chairman of the Board

The chairman discharges his responsibilities within the purview of the provisions contained in BRPD Circular No.11 dated 27 October, 2013. His main responsibilities 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 speak about the performance of the Bank and make a critical analysis of the performance of the Board of Directors. The Chairman replies to their queries made in the meeting. Their constructive suggestions are noted down and implemented for qualitative improvement of the Bank. It is disclosed that no formal annual appraisal of the Board took place in the Bank in 2017.

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 (as amended up to date) and/or other relevant laws and regulations in the discharge of his functions in the bank.

C. The CEO shall include information on violation of any law, rules, regulation including Bank Company Act, 1991 (as per latest amendment) 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(including amendment) and/ or 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 the 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 the Board, sustainable growth in

110 Annual Report 2017 investment and revenue earning for the Bank, gradual reduction of the NPL ratio 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.

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 well to the path of progress. The latest legislations on the financial sector and directives of the regulatory bodies are made available to them for their instant information in order that they can discharge their responsibilities effectively. They also attend various seminars and symposiums mainly on corporate governance organized by different professional bodies.

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 is a Ph.D in Economics and another Independent Director is a B.A (Hons) and M.A in Economies. He is also a renowned expert in financial journalism. They have enough knowledge and expertise in the field of Accounting and Finance. Most of the other Directors are successful entrepreneurs and professionals. They are well conversant in business, banking and administration.

Directors’ Report in Compliance with Best Practices on Corporate Governance

The status of compliance with corporate governance guidelines of Bangladesh Bank and Bangladesh Securities and Exchange Commission has been given hereafter. M/S Syful Shamsul Alam & Co., Chartered Accountants, duly certified the Bank’s Compliance Status on corporate governance which is re-produced in a page hereafter.

Board meetings and attendance

Presence of Directors in the Remuneration SL. Meetings During their Tenure Remuneration Name Designation X No. No. of drawn Present Absent Meeting Meetings

1. Alamgir Kabir, FCA Chairman 29 27 2 8000 X 27 BDT 216,000

2. Duluma Ahmed Vice-Chairperson 29 29 - 8000 X 29 BDT 232,000

3. M. A. Kashem Director 29 27 2 8000 X 27 BDT 216,000

4. Azim Uddin Ahmed Director 29 28 1 8000 X 28 BDT 224,000

5. Jusna Ara Kashem Director 29 26 3 8000 X 26 BDT 208,000

6. Md. Akikur Rahman Director 29 21 8 8000 X 21 BDT 168,000

7. Rehana Rahman Director 29 20 9 8000 X 20 BDT 160,000

Sirat Monira, Representing 8. Director 29 23 6 8000 X 23 BDT 184,000 Public Shareholders

9. A.H.M. Moazzem Hossain Independent Director 29 29 - 8000 X 29 BDT 232,000

10. Dr. Quazi Mesbahuddin Ahmed Independent Director 29 29 - 8000 X 29 BDT 232,000

11. M. Kamal Hossain Managing Director 29 23 - - -

Southeast Bank Limited 111 Related Party Transactions

During the year 2017, 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

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

Attendance of members of the Executive Committee in meetings

Presence of Directors in the Meetings During their Tenure Remuneration SL. Remuneration Name Designation X No. drawn No. of Meeting Present Absent Meetings

1. Alamgir Kabir, FCA Chairman 12 12 - 8000 X 12 BDT 96,000

2. M. A. Kashem Member 12 6 6 8000 X 6 BDT 48,000

3. Azim Uddin Ahmed Member 12 10 2 8000 X 10 BDT 80,000

Md. Akikur Rahman 4. (He became a member of the Member 12 4 8 8000 X 4 BDT 32,000 EC from May 22, 2017)

5. M. Kamal Hossain Member 12 9 3 - -

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. 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.

112 Annual Report 2017 Chairman is an independent Non-Executive Director

The Chairman of the Audit Committee is a BSEC approved independent non-executive director. He is Mr. A.H.M. Moazzem Hossain. 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 MA in Economics from Dhaka University. He acted as the Director of Janata Bank Limited for 5 years. He is the Editor of financial daily, ‘The Financial Express’.

All members are suitably qualified

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.

Conflict of Interest

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

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.

Recommendation for appointment of External Auditors

The Audit Committee does an extensive review on the audit work done by the 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/reappointment of auditors for the next year.

Attendance of members of the Audit Committee in meetings

Presence of Directors in the Remuneration SL. Meetings During their Tenure Remuneration Name Designation X No. No. of drawn Present Absent Meeting Meetings

1. A.H.M. Moazzem Hossain Chairman 7 7 - 8000 X 7 BDT 56,000

2. Duluma Ahmed Member 7 7 - 8000 X 7 BDT 56,000

3. Jusna Ara Kashem Member 7 6 1 8000 X 6 BDT 48,000

4. Rehana Rahman Member 7 5 2 8000 X 5 BDT 40,000

5. Dr. Quazi Mesbahuddin Ahmed Member 7 7 - 8000 X 7 BDT 56,000

Appointment of External Auditors

The Board of Directors of the Bank in its 521st Meeting held on August 02, 2017 approved the proposed appointment of M/S Pinaki & Company- ‘A’ ranking Audit Firm as the External Auditors of the Bank on condition that post facto

Southeast Bank Limited 113 approval for such appointment shall be obtained in the next 23rd Annual General Meeting of the shareholders of the Bank. Bangladesh Bank vide their letter # weAviwcwW (Uv¯‹‡dvm©) 748/3/2017-5991 dated September 18, 2017 approved the proposed appointment of M/S Pinaki & Company as the External Auditors of the Bank for the 1st term till conclusion of the next Annual General Meeting. Accordingly, M/S Pinaki & Company was appointed as the External Auditor of the Bank for the year 2017 for the 1st term till conclusion of the next Annual General Meeting.

Services not provided by External Auditors

M/S Pinaki & Company is the external auditors of the Bank. The services as are specifically barred in Bangladesh Securities and Exchange Commission Notification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012 are not obtained from the external auditors.

Highlights on Central Bank Inspection

In the year 2017, Southeast Bank Limited (SEBL) received 34 (thirty four) 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 inspection Teams.

iii) Risk Management Committee Composition:

Risk Management Committee was constituted by the Board in its 514th meeting held on May 22, 2017. Currently, it has 4 (four) members. A report of the Risk Management Committee is included in this Annual Report.

Attendance of members of the Risk Management Committee

Presence of Directors in the Remuneration SL. Meetings During their Tenure Remuneration Name Designation X No. No. of drawn Present Absent Meeting Meetings

1. Alamgir Kabir, FCA Chairman 8 8 - 8000 X 8 BDT 64,000

2. M. A. Kashem Member 8 8 - 8000 X 8 BDT 64,000

3. Azim Uddin Ahmed Member 8 8 - 8000 X 8 BDT 64,000

4. A.H.M. Moazzem Hossain Member 8 7 1 8000 X 7 BDT 56,000

Internal Control and Risk Management

Internal Control

The Board of Directors of Southeast Bank Group 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. 171 of this Annual Report.

114 Annual Report 2017 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.

Business objectives and areas of business focus

The Board always sets business objectives and areas for focus in consistency with the market. The latest business objectives and areas of business focus can be found in the “Strategic Priorities Statement” of the Bank at page no. 43 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. 43. Ethics and Compliance

Code of Conduct for Directors

The Chairman’s Report contains the issue.

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 Committees and their responsibilities

Ensuring effective corporate governance is one of the top priorities of the Bank management for realizing the objectives advocated in our management philosophy. A clearly defined organizational structure with definite lines of responsibility and delegation of powers in different echelon of the management are in place in the Bank. To streamline functions, the following Committees are actively working in the Bank: Senior Management Team (SMT)

A Senior Management Team (SMT) is working in the Bank. It is composed of senior members of the Management Team. Its main functions are to address general issues of importance, introduce new products, frame strategies for improvement of operations, evaluate different types of risks, monitor internal control structure and to review effectiveness of the internal control system. To streamline the management functions further and to quicken decision making process based on best analysis and appraisal, 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.

Southeast Bank Limited 115 The following Sub-Committees of SMT are also functioning in the Bank:

i) 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.

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

iii) Central Compliance Committee 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 the issues in the Bank.

iv) Integrity Committee As instructed by Bangladesh Bank, a 5-Member Integrity Committee of the Bank headed by a Additional Managing Director was constituted on November 18, 2013. One 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 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

v) Committee for Evaluation of the Effectiveness of Management Reporting System: As advised by Bangladesh Bank, a 5- Member Committee for Evaluation of Management Reporting System (MRS) has been constituted in the Bank with a Additional Managing Director as its head.

vi) 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.

vii) 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.

viii) Taskforce for Monitoring and Recovery of Re-Scheduled and Re-Structured Loans: A 7-Member Taskforce for Monitoring and Recovery of Re-Scheduled and Re-Structured Loans are working in the Bank. The Taskforce frequently sits in meetings.

ix) One Taskforce and a Special Asset Management Committee 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, One Taskforce and a Special Asset Management Committee 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

116 Annual Report 2017 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. x) 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.

Remuneration Committee and Activities

The Bank cannot have more than three Committees of the Board of Directors as per law and rules of Bangladesh. For obvious reasons, activities relating to remuneration are done by the Board itself. However, the Senior Management Team of the Bank assists in the formulation of remuneration related policies and practices in alignment of Bank’s short and long term business objectives

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.

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

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

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

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.

Human Capital The detailed discussion on Bank’s Human Capital has been presented at Page No. 216 of this Annual Report. Communication to Shareholders and Stakeholders and Company’s policy/strategy to facilitate effective communication with shareholders and other stakeholders Southeast Bank ensures that all shareholders are notified at least 14 days before the AGM so that all shareholders may attend it. Also all other types of accounts (Quarterly and Half yearly) or information are updated on the website and notified to all stakeholders on a regular basis. The Bank tries to maintain liaison with all major shareholders as far as possible and ensures that all stakeholders are informed of the bank’s activities on a routine basis. SEBL also holds dialogue with the shareholders as far as possible and practicable for the progress and wellbeing of the Bank. 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 provides copies of Annual Reports 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 prospects at the AGM. The Board also structures these meetings so that shareholders can vote on each agenda by proposing resolutions.

Southeast Bank Limited 117 Company’s policy on ensuring participation of shareholders in the Annual General Meeting and providing reasonable opportunity for the shareholder participation in the AGM 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 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 newspapers in English and Bangla and are sent to the stock exchanges and BSEC.

SEBL ensures effective communication with the shareholders and encourages shareholder participation at the AGM. The good number of shareholders that 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. The Bank has a strong stake in the society through investments and projects which takes its banking role one step further. Southeast Bank supports its clients to be conscious about environmental issues. SEBL persuades its customers to avail facilities for renewable energy generation and other environmentally beneficial 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. Sustainable Financing The Risk Management Committee of the Board of Directors supervises and takes decision in principle and provide strategic directions regarding sustainable banking and sustainable finance (environment friendly banking) of the Bank. The Committee also monitors that green financing activities of the Bank are taking place to achieve sustainable development goals as per guidelines of Bangladesh Bank Green Award As part of environmental and social obligation, SEBL wants to inspire the 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.

118 Annual Report 2017 Managing Director’s and CFO’s Declaration on Integrity of Financial Statements to the Board

Date: April 26, 2018

The Board of Directors Southeast Bank Limited Eunoos Trade Centre 52-53 Dilkusha C/A Dhaka-1000.

Sub: Managing Director’s/CFO’s Declaration to the Board regarding integrity of financial statements

We submit the following in our capacity of the Managing Director (CEO) and the Chief Financial Officer (CFO) of the Bank :

In accordance with the notification of Bangladesh Securities and Exchange Commission No. SEC/CMRRCD/2006-158/134/ Admin/44 dated 7 August, 2012, we solemnly declare that: i) we have reviewed the financial statements for the year 2017 and to the best of our knowledge and belief: a) these financial statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b) these statements together present a true and fair picture of the company’s affairs and are in compliance with existing accounting standards and applicable laws. ii) to the best of our knowledge and belief, there is no transaction entered into the books of the bank during the year 2017 which is fraudulent, illegal or violative of the Bank’s code of conduct.

Chief Financial Officer (Acting) Managing Director

Southeast Bank Limited 119 Corporate Banking

Corporate Banking is the custom-tailored financing and banking services for corporations. 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 facilitate business operations. Cash management, working capital and project finance are some sorts of products generally available under such banking.

The Corporate Banking Division (CBD) of Southeast Bank currency and maturity commensurate with economic and is engaged in planning, developing and managing the business trend, life cycle of the products, demand-supply Bank’s corporate, commercial and institutional businesses gap, social obligation etc. to ensure desired profitability and sustained growth in line with the Bank’s strategic plans, credit policies and The overall credit policy of Southeast Bank has already business objectives. been revised and updated incorporating the changes and new aspects as brought by Bangladesh Bank to ensure Southeast Bank finances its corporate clients generally in effective credit risk management and compliance with the following ways – the regulatory framework. Corporate Banking activities of Southeast Bank are carried out addressing appropriate Export Finance credit risk environment, sound credit approval process, suitable credit administration, measurement and Project Finance monitoring process and adequate control over credit risk. Trade Finance Working Capital Finance Southeast Bank sets specific industry-wise lending caps considering the existing concentration, risk appetite, Work Order Finance future growth opportunities etc. Lending caps discourage Real Estate Finance concentration of Bank’s global loan portfolio into one Syndicated Finance particular sector and encourage diversification of the total loan in various sectors with a view to minimizing Besides, Southeast Bank has also set up a Cash Management concentration risk and maximizing the future growth of Service Unit which mainly looks after mobilization of low- the Bank. cost/ no-cost funds of the corporate houses by providing various tailor made services to them. In the coming years, On the other hand, considering the cyclical aspects, the Bank will exert enhanced effort for more dynamism in economic condition, seasonal fluctuation, political such cash management activities. environment, related risk factors as well as growth appetite in each sector, corporate financing activities In the year 2017, Southeast Bank’s strategic priorities follow a prudent sector-wise budgetary allocation as per were growth and profitability whilst maintaining asset annual credit plan. quality and strengthening the foundations for future growth. During the period, the Bank continued to provide Based on the policy guidelines given by the Board of comprehensive and innovative banking solutions to its Directors and catering to the ongoing requirements of the corporate clients including financial institutions. entrepreneurs and the economy, the management of the Bank periodically updates the policies and strategies in Maximization of profitability through promotion of lending line with policy-parameters of the Central Bank with due products and appropriate loan pricing is the primary focus approval of the Board of Directors. of the Bank’s Corporate Banking Division. Diversification of credit portfolio in promising and productive sectors Export Finance is also one of the prime objectives. The strategy of CBD is to maintain a prudent mix of various client segments The export sector in Bangladesh has grown significantly and products, economic sectors, geographical locations, making a major contribution to the national economy and

120 Annual Report 2017 is playing an important role in employment generation Trust Receipt, different types of Bank Guarantees such and foreign currency earnings. In the fiscal year 2016- as Bid Bond, Performance Guarantee, Advance Payment 17, Bangladesh exported goods worth USD 34.83 billion Guarantee, Security Bond, Customs Guarantee etc. where the contribution of RMG sector is 82.82 percent. Southeast Bank has been financing in the export sector on In the year 2017, a good number of corporate clients priority basis and at present, a sizeable portion of Bank’s have availed Trade Finance and General Credit products loan portfolio belongs to around 250 export clients. from the Bank. During this period, the Bank extended During the year 2017, the Bank has handled export various facilities in the form of working capital as well as business to the tune of USD 167,562.48 million. Term Loan to both existing and new clients in the fields of food, food processing, edible oil, other consumer A dedicated unit named as ‘RMG, Textile and Export items, rice mill, feed mill, petroleum, chemical, printing Financing Unit’ at Head Office has been handling the & packaging, publishing, ship breaking, construction credit portfolio of export-oriented clients. This clientbase materials, furniture & saw mill, IT, electronic goods, includes entrepreneurs in RMG - both Woven & Knit, deemed export etc. Sweater, Textiles, Home Textiles, Spinning, RMG accessories, Jute and Jute goods and Leather goods. Project Finance Southeast Bank extends both project finance and working capital finance to its export clients. Southeast Bank provides Project Finance for setting up / BMRE of Manufacturing and Service Industries. Project The teams working in export financing in Head Office and Finance is generally provided in the form of Term Loan to Branches not only conduct detailed and proper analysis facilitate the client for procurement of fixed assets, such of the clients’ requirements but also ensure meticulous as capital machinery, auxiliary machinery & equipment compliance with Bank’s RMG /Export financing guidelines, and construction of shed / building etc. Project Finance Export and Import policies, Foreign Exchange regulations, is usually followed by Working Capital Finance to meet Circulars of Bangladesh Bank and other prevailing rules day to day operational expenses of the project so that the and regulations of the regulatory bodies. Periodic visits project can run profitably to repay the Bank’s dues. are made to clients’ factories as part of regular monitoring. A detailed appraisal called feasibility study is carried out Graphical presentation of year-wise performance of before financing a project. The major aspects include Southeast Bank’s export business has been shown under Technical Appraisal, Marketing Appraisal, Financial “Sustainability Appraisal and Integrated Reporting”. Appraisal, Managerial Appraisal and Organizational Appraisal. Working Capital assessment is also done for Trade Finance Working Capital Finance for the project to ensure smooth operation of the project. A significant portion of the Bank’s credit portfolio is distributed amongst trading sector. The portfolio is Since inception, Southeast Bank has been an active partner diversified in commodity trading, construction and supply of the private sector in developing large and medium scale business, import financing, work order financing, stopgap industries of the country. The Bank has financed setting funding, fixed asset procurement, bill purchase etc. The up of various industrial units in the areas of Spinning, Trade Finance and General Credit unit of Corporate Textile, Garments, Pharmaceutical, Ceramic, Cement, Banking deals with various client segments for different Paper, Telecommunication, Steel etc. The Bank has also economic purposes in trading, manufacturing and service extended project finance to several service industries, sectors. such as Hotel, Resort, Hospital, Educational Institution, Transport, Filling Station etc. The Bank has also financed The proposals related to Trade Finance and General a good number of real estate projects. Credit are forwarded to Head Office by the Branches dispersed all over the country. The credit applications Work Order Finance are then processed for approval by the Trade Finance and General Credit unit complying with Bank’s credit policy Southeast Bank provides financial support - both funded and rules and regulations of Bangladesh Bank and other & non-funded credit facilities to the contractors to execute regulatory authorities. During this process, the officials work orders issued by various departments/ divisions meet the clients and visit their business premises for of Government as well as different private organizations better understanding of their needs and for appropriate acceptable to the Bank. The Bank participated in several evaluation of their proposals. This process of appraisal mega projects of the Government by financing the relevant is done for all types of credit facilities including Term contractors. In 2017, the Bank continued to facilitating Loan, Overdraft, Time Loan, Letter of Credit, Loan against reputed contractors having sound track record for

Southeast Bank Limited 121 accomplishment of project of LGED, RHD, Railway, City Performance in 2017 Corporation and other organizations. Bank’s work order financing products also cater to the need of contractors Funded Business engaged in execution of supply orders. In 2017, the Banking Industry of Bangladesh experienced a slow credit growth due to sluggish credit demand by Real Estate Finance the private sector and it was obviously a major challenge for Southeast Bank. The Bank has always focused on the Real estate is an important sector for the development of an ‘quality’ aspect of credit with cautious augmentation of its economy. Real estate business in private sector has a huge credit portfolio. During the year 2017, the Bank exerted growth prospect in this densely-populated country since continuous and all-out effort to attract more ‘quality’ a large segment of population belonging to middle and customers to maintain the ongoing growth of loans & growing middle class prefer to buy apartments. Despite advances and strengthen further its credit portfolio. such potential opportunity, the housing sector has been facing setback since 2007/2008. The real estate sector had In 2017 the Bank successfully accelerated growth of its to suffer severe sales-decline during this period. There is funded business. The accumulated loans and advances a long queue of unsold flats now. All the entrepreneurs in of the Bank stood at BDT 234,316.72 million as on this sector have been suffering from sluggish sales trend. 31.12.2017 compared to previous year’s position at BDT 191,865.59 million registering a growth of 22.13 percent Banks and other financial institutions seem to be reluctant over the previous year. The Bank was able to maintain to finance the developers in the prevailing condition of a prudent Loan Deposit Ratio (conventional) throughout this sector. In the year 2017, Southeast Bank’s policy was the year and it stood at 82.12 percent at the year end. to maintain the portfolio in real estate sector in a good shape and side by side to finance new real estate projects Graphical presentation of year-wise trend of loans and having extraordinary potentials. The Bank is of the opinion the distribution of loans in respect of different sectors, that the full opportunity of the housing finance sector can divisions, areas have been shown under “Sustainability be realized only if all-out efforts are made to develop the Appraisal and Integrated Reporting”. housing finance market on sustainable and sound footing. Non-funded Business Syndicated Finance The Bank registered a positive growth of 25.66 percent in The main objective of the Syndicated finance and Club import business in 2017 as compared to that of previous finance is to spread and share the credit risk among and year. The volume of import business payments (FOB) with all the participating Banks for specific investment. in 2017 was USD 215,374.77 million while the same Southeast Bank is acting as one of the Lead Arrangers as in 2016 was USD 171,531.73 million. The main import well as participants in the Banking industry of the country commodities were capital machinery, raw cotton, scrap for development/ operation of different projects under vessels, cement clinkers, wheat, edible oil, petroleum Syndication/ Club Financing Arrangement. Some of the products, yarn, fabrics, garment accessories and other sectors financed by the Bank through Syndication are consumer items. textile, cement, steel, ceramic, refined sugar & oil, paper & pulp, aviation, hospital, University, telecom, power, The export business of the Bank increased by 14.29 aviation etc. percent in 2017. In the year 2017 the volume of the Bank’s export business was USD 167,562.48 million which was As a Lead Bank, Southeast Bank arranged a good number USD 146,606.09 million in the previous year. The main of Syndication deal with total facility of around BDT export commodities were readymade garments, knitwear, 3500.00 million. On the other hand, Bank’s participation frozen food, shrimp, handicrafts, jute and jute goods etc. in different Syndicated/ Club finance arrangement was around BDT 14,800.00 million till 2017. In 2017 the The Bank registered a positive growth in Bank Guarantee Bank participated in a number of Syndication deal with business too. The volume of this business was BDT total approval of BDT 5,800 million in petroleum refinery 16,407.09 million in 2017 while it was BDT 16,369.36 and cement sectors. million in 2016, posting a growth of 0.23 percent.

122 Annual Report 2017 Retail Banking

Southeast Bank has introduced its Retail Banking Division in 2012. Since its inception, the bank has been offering different retail products and services to its customers. As the success of Retail Banking depends on customer centric diversified products and services, Southeast Bank has taken tremendous initiatives to strengthen its retail team and also restructure the whole division to provide more diversifiedproducts and services to every customer of the bank. By predicting emerging changes in the banking sector, 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.

Our retail marketing team has given tremendous Retail Deposit Protfolio efforts this year on low cost/ no cost deposit which is Volume in Million very essential for the bank to maintain cost of fund at a lower trend. With the combined effort, retail low/no cost deposit stood at BDT 26,534.17 million in 2017, showing a growth of 19.00% over 2016 22,298.46 26,534.17 79,814.33 80,166.61 and the total retail deposit stood at BDT 106,700.78 million in 2017.

CASA FD & Scheme

Retail Deposit Portfolio Amount In Million CASA FD & Scheme Total Deposit Year Account Amount Account Amount Account Amount 2016 462,448 22,298.46 192,749 79,814.33 655,197 102,112.79 2017 532,809 26,534.17 182,111 80,166.61 714,920 106,700.78 Growth 15.21% 19.00% -5.52% 0.44% 9.12% 4.49%

Retail Loan Portfolio Through our different Branches, retail team has also Volume in Million disbursed a good number of retail loan. With the collective efforts of the bank retail credit grew by 61.53% and stood at BDT 1,610.50 million in the year 2017, where the NPL was 2.70%. Going forward the goal is to capture 32% Personal Loan 515.06 the maximum share and drive the business growth while maintaining the world class value propositions and Car Loan 61% standard of service quality. 118.09 7% Home Loan 977.33

No of Account Growth of A/c Volume (BDT in Million) Year Growth of Volume 2016 2,160 11.86% 997.00 35.83% 2017 2,608 20.74% 1,610.50 61.53%

Southeast Bank Limited 123 SME, Agri-Credit and Financial Inclusion

Small & Medium Enterprises customised to their needs. The Bank has set up dedicated desks across branches to assist SMEs. Small and Medium Enterprises (SMEs) have emerged as a highly vibrant and dynamic sector of Bangladesh The Bank continued to pursue a strategy of calibrated economy. SMEs play a critical role in providing large scale growth of the SME portfolio with higher focus on employment opportunities and also facilitate inclusive managing concentration risks, diversification of portfolio, growth. They are vital for overall socio-economic monitoring and enhancement of collateral. development of the country. At the same time, they face challenges arising from rapid technological developments, Outstanding SME loan of the Bank as on December 31, increasing competition and barriers to scaling up their 2017 stood at BDT 39555.21 Million. In 2017, the Bank operations. disbursed BDT37491.00 million to clients through all its branches. SEBL offers a comprehensive suite of banking products and solutions to SMEs for meeting their business and Our Growth in Small and Micro Enterprises is very growth requirements. Our long-standing experience of remarkable. Since we felt that smaller segment of SME’s partnering with SMEs has enabled us to develop non- access to finance is more challenging we have concentrated traditional techniques for assessing credit risks. These more in this segment and as a consequence in last year techniques are unique and provide appropriate solutions small Enterprises outstanding experienced growth.

Year 2012 2013 2014 2015 2016 2017 Target 21,000 21,200 25,000 27,500 30,000 40,000 Achievement 18,126 26,501 30,877 35,349 40,000 37,491

SME Business - Disbursement Growth Sectorwise Disbursement in SME 21,200 26,501 25,000 30,877 27,500 35,349 30,000 40,000 40,000 37149 1

Service 21% Trade 54% Manufacturing 25%

2013 2014 2015 2016 2017

SME Strategy cell. As evident in our disbursement in SME segment and due to Branch expansion in SME centric areas SME is In 2017 bank successfully conceived a medium term SME continuing to remain the fastest growing business segment strategy. Bank is planning a segregated Small & Medium in the Bank. Almost all the branches opened during year Enterprise Business and underwriting capacity. New 2017 are located in areas where SME business has high Unsecured SME Loan products are under development potential. Bank will initiate a focus group discussion on stage. Retail Sales team will be deployed to crosssale the SME development where all Branches will participate to products under SME. Now SME is also separated from find ways for augmenting SME Business. Agriculture as Bank this year created a separate Agri. Credit

124 Annual Report 2017 IT & MIS Revenue Generation

Sales Delivery SME Quality Banking Performance

Credit Risk Management Operating Efficiency

Market & Products

Cluster Based SME Financing As per guidelines of Bangladesh Bank SEBL has already adopted a cluster-based financing approach for SMEs in Currently, cluster-based SME development is a popular some industrial sector such as Textile, RMG Accessories, approach for entrepreneurship development, SME Food processing, Dairy & Poultry, Fisheries etc. We are promotion and industrialization with a view to facilitating hopeful that we will be able to expand cluster based SME employment generation and poverty alleviation in financing all over the country in the upcoming years accelerating around the world, especially in emerging through development of new clusters. economies. In Bangladesh it is considered as the most effective, economically viable and maximum output- SEBL started a Cluster Financing for Hosiery industry in oriented approach for economic development. Pabna in collaboration with SME Foundation.

Southeast Bank Limited 125 Southeast Bank inks deal with SME As a Bank we recognize that balancing non-financial Foundation factors such as environmental and social issues with financial priorities is an essential part of good corporate Southeast Bank Limited (SEBL) and SME Foundation citizenship in addition to being fundamental to risk (SMEF) signed an agreement at the SME Foundation office management and the protection of investors. We have at Kawran Bazar in the city on Monday, July 17, 2017. Mr. a direct impact on the environment through our daily M. Kamal Hossain, Managing Director, Southeast Bank consumption of energy and paper/ink resources. We also Limited and Mr. Md. Safiqul Islam, Managing Director, potentially have an indirect effect on the environment SME Foundation signed the agreement on behalf of through the provision of financial services to projects in respective organizations. environmentally sensitive areas.

Each eligible micro and small entrepreneur will enjoy We are committed to develop sustainable business that credit facility of BDT 50.00 thousand to BDT10.00 lac at a brings benefit to our shareholders, society, the environment interest rate of 9.00 per cent from Southeast Bank Limited and economy. Our existing Environmental Policy provides under the SME Foundation’s Credit Wholesaling Program. a framework for managing our environmental impacts (including climate change) by establishing a set of Rural & Inclusive Banking commitments to deliver. As per the above principles, we have implemented Bangladesh rural market presents significant growth Environmental Due Diligence on majority of our loan opportunities as the market adapts to rapidly growing clients. mobile connectivity and access to formal financial services. The Bank’s rural strategy is focused on leveraging these Various steps have been taken to minimize the bank’s direct trends and building a sustainable model for extending operational impact on the environment through reducing financial services to rural customers. This is being made of paper usage and helping save trees and reducing energy possible by offering them a comprehensive product suite & water consumption. backed by Mobile based technology Service. The Bank has set up a distribution network over the last few years to 2017 has been a remarkable year for Sustainable finance reach customers in this market. The Bank has developed activities. A New Sustainable finance committee and customized financial products and services to cater a sustainable Finance Unit have been formed. A New to a wide range of rural customers including farmers, Social and Environmental Management system has been traders, processors, as well as rural entrepreneurs. Bank developed which will be operational from 2018. is disbursing easy loan up to BDT 50.00 thousand to BDT 10.00 a/c holders under a Bangladesh Bank refinancing Environmental and social risk means the risk of causing scheme. 200 clients under the scheme received pollution or destruction of the natural environment (land, approximately BDT 1.00 Crore under the scheme. The water, air. natural habitats, animals and plant species) Bank offers various types of loans covering the entire and violation of human rights for employees or other agricultural value chain including loans to seed/input stakholders either through accidental or deliberate actions. dealers, crop loans and loans for purchasing irrigation equipment, raising cattle and purchasing farm equipments We recognize that our primary impact on the natural trough MFI (Micro financial institutions) linkage. environment is through our relationship with our customers and the lending decisions we take. Therefore: School banking is also a part of our financial inclusion strategy. • All our lending proposals include consideration of environmental and social issues where appropriate Social & Environmental Management and sustainable Finance • All lending proposals take account of acceptable environmental and social standards or laws and Environmental consciousness is nothing new in our regulations Bank. Ethical principles (in respect of society) of our • The risks associated with both environmental and Bank includes following: social issues are properly recognized, evaluated and where appropriate mitigated 1. We do not encourage projects which are not environment-friendly for financing by the Bank. Global Climate Partnership Fund

2. We provide material support for protection of SEBL takes pride for its partnership with a prominent environment. Energy fund named Global Climate Partnership Fund

126 Annual Report 2017 (GCPF) managed by Responsibility AG of Switzerland. We also believe that if the nation’s agriculture and rural In 2017 we could drawdown 3rd and final trench of base economy walk through a techno-based eco-friendly USD 10.00 million after successfully utilizing USD 10.00 process, all the targeted goals will be achieved in a million in year 2015 and 2016. sustainable way. With the same vision, Bangladesh Bank (BB) announces a farmer-friendly agriculture and rural Women Entrepreneur Financing credit policy for each fiscal year. Keeping this in mind our bank sets the agriculture and rural credit policy for Women constitute half of the population, which each fiscal year. Our bank has also set sector wise (crops means huge potential to be utilized for socio-economic cultivation, irrigation machinery, agriculture machinery, development of the country. Southeast Bank wants to see pisciculture farming, cattle/dairy & beef fattening, poultry more and more women are involved in entrepreneurship farming, crop storing & marketing, poverty alleviation so that women enjoy more economic empowerment. program and others activity related to agriculture) and branch wise yearly & monthly targets for smooth Development of women entrepreneurs is an embedded allocation of agriculture credit. Our bank also extends element of SME financing. In our experience we observed Agriculture / Rural Credit as one of the major tools to that “Access to Finance” is a major challenge for a business bring the rural & unbanked people specially the farmers owned by women especially during the initial years of into the banking channel as financial inclusion program starting a business. To address the issue, Southeast Bank which plays a vital role in the rural economic development has come forward to help the women entrepreneurs and of the country. In the absence of own branch network has given utmost emphasis on the growth & development the bank extends agriculture credit facility through third of women entrepreneurship. The Bank has a separate party networks like well reputed NGOs / MFIs. It is dedicated product named “Southeast Shuprova” for worth mentioning that while using third party network women entrepreneurs. To encourage women Southeast for agriculture financing, the bank selects the NGOs/ Bank Ltd. provides loan to the women entrepreneurs at MFIs very meticulously to ensure proper utilization of the much easier terms & conditions including low interest, fund. The Bank has disbursed quite a large portfolio of relaxed collateral requirement etc. Bangladesh Bank’s agriculture loans during the year, which are listed below. refinancing windows also help women led enterprises. Southeast Bank has 2 exclusive branches for woman Loan disbursed which is helping flourish women entrepreneurship. Disbursement Sector of disbursement during 2017 at percent (%) In 2017, the Bank has disbursed BDT 1533.40 million (BDT in Million) to Business exclusively owned by women (SME) Crops / Vegetables entrepreneurs. 2,160.37 61.0 cultivation Agricultural and Rural Credit Fisheries 389.57 11.0 Livestock 733.11 20.7 Agriculture is the main life-blood for the economy of Irrigation equipment 106.25 3.0 Bangladesh. Almost 47 percent of the total labor force of Crop storage & marketing 35.42 1.0 the country and 85 percent of rural workers of the country are directly involved with agriculture like crops, fisheries, Solar 10.62 0.3 livestock and forestry which ensure food security, create Poverty Alleviation 106.25 3.0 self-employment, diversification of income generating Total 3,541.59 100 activities and better standard of living for the people of the country. Agriculture, as a sector contributes 17 percent to the national GDP. Agricultural loan disbursement during 2017 Agricultural credit has significant importance for the Crops & vegetables socio-economic development of the country since cultivation 61% agricultural credit has increased production in agriculture Fisheries 11% sector. This is also a priority sector of the government Livestock 20.07% as well as Bangladesh Bank to ensure food security and Irrigation equipment 3% nutrition, poverty alleviation, employment generation and Crop storage & accelerate the financial inclusion program. Considering marketing 1% the above, Southeast Bank Limited has been continuing Solar 0.3% proactive policy and program to boost up agriculture financing to the farmers and agricultural entrepreneurs Poverty Alleviation 3% with utmost importance.

Southeast Bank Limited 127 Agriculture loan @4% rebate interest rate Target and achievement

There is a large demand for pulses, oil seeds, spices Southeast Bank Limited has achieved the Agricultural/ and maize in the country. But the production of these Rural Credit disbursement target of BDT 401.39 crore crops is not sufficient. As a result, we have to spend against total target of BDT 295.00 crore for the FY 2016- huge amount of foreign currency for importing them. 2017. In order to encourage on production of such crops and BDT in crore disburse loan to this sector Bangladesh Bank (BB) has set the concessional interest rate of credit disbursed in the cultivation of pulses, oil seeds, spices and maize at farmers Achievement level at 4% from 01 July, FY 2010-2011 under interest- FY Target Achievement in percent loss subsidy facilities of the Government. The Central (%) Bank (BB) has advised all banks that credit facilities 2015-16 240.00 279.39 116.41 shall be allowed at rebate rate (4%) under interest loss compensation scheme of Government for cultivation of 2016-17 295.00 401.50 136.00 pulse, oil seeds and spices to reduce dependency on import and to save huge amount of foreign exchange incurred for 2017-18 354.00 180.75 51.06 importing the items. Bank may receive 6% interest loss compensation from Government through Central Bank Spices 0.60 6 1000% after realizing the loan from borrower in full. Southeast Bank Limited has positive intention to contribute in Total 2.54 24 flourishing these crops cultivation in the country with a view to reducing import dependency and savinghuge amount of foreign currency. In line with this, the Bank has financed a sizeable amount in cultivation of maize, oil seeds and spices. Credit facilities are allowed at rebate Agricultural / Rural Credit disbursement rate (4%) for cultivation of maize, oil seeds and spices to target & achievement 2016-17 reduce dependency on import and save huge amount of foreign currency incurred for importing the items under interest loss compensation from Government. During the 29 5 40 1 year of 2017, our bank has disbursed BDT 2.54 million among 7 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.

Loan disbursed No. of Crops during 2017 Achievement

clients Target (BDT in Million)

Oil seeds 0.2 1 2016 2017 Maize 1.74 17 Spices 0.60 6 Total 2.54 24

128 Annual Report 2017 Glimpses of Some Projects Financed by SEBL

Southeast Bank Limited 129 130 Annual Report 2017 Southeast Bank Limited 131 132 Annual Report 2017 Southeast Bank Limited 133 134 Annual Report 2017 Islamic Banking

Southeast Bank Limited is a leading commercial Bank As on December 31, 2017, the deposit and investment of in the private sector. The Bank provides both traditional Islamic Banking Branches were BDT 16,699.76 million and and Islamic Banking services to the customers in BDT 14,237.15 million which posted growth of -0.24% compliance with the provisions of the Bank Company Act and 53.23% respectively over those of 2016. During the 1991 (amended), Bangladesh Bank’s directives and the period 2017, total import and export business handled by principles of Islamic Shariah. The Bank has 132 Branches the Islamic Banking branches were BDT 7,179.40 million as on December 31, 2017 out of which 05 (five) branches and BDT 5,522.10 million respectively. Non Performing are designated Islamic Banking Branches. The modus Investment of Islamic branches were 6.96% of their total operandi of Islamic Banking Branches is substantially investment in 2017. The performance of the Islamic different from other branches run on commercial Banking Branches during the year 2017 is also reflected conventional basis. in its Balance Sheet and Profit and Loss Account as are included in this report. The Bank is maintaining a separate set of accounts for Islamic Banking Branches based on Islamic Shariah Major Activities in the Year 2017 Principles. All activities of Islamic Banking Branches are conducted on interest-free system according to Islamic i) 03 (three) meetings of Bank Shari’ah Supervisory Shariah. To ensure Islamic Banking operations, the Bank Committee were held where different operational arranged regular shariah audit of 05 (five) Islamic Banking issues, policies and strategies were reviewed. Branches by Bank’s Muraquib to ensure compliance with ii) For the purpose of providing premier banking all Shariah requirements. services to holy Hajj Pilgrims, Southeast Bank signed Memorandum of Understanding (MOU) with Hajj In Islamic Banking, investment is made through different Agencies Association of Bangladesh (HAAB), Ministry modes and investment income is shared with the Mudaraba of Religious Affairs and Sonali Bank Limited for depositors on an agreed ratio ensuring a reasonably fair collection of Hajj Pre-Registration and Registration rate of return on their deposits based on Islamic Shariah. Fee from the Hajj Pilgrims and Hajj Agencies. Side Bank’s Islamic Banking services are branded Southeast by side, most of the HAAB members are involved in Tijarah. The Bank is an active member of the Central IATA ticket, visa processing and overseas employment Shari’ah Board for Islamic Banks of Bangladesh and business in addition to their Hajj and Umrah related Islamic Banks’ Consultative Forum. business. We provided financial support to the Hajj agencies as needed throughout the year by way of Financial analysis Bank Guarantee and working capital finance.

Bangladesh is one of the emerging economies in South iii) 02 (Two) Training Programs were conducted on Asia. The Islamic Banking set out its glorious journey in Islamic Banking Operations, IT issues and Islamic this country three decades ago. Today, Islamic Banking Banking Service Desk (IBSD) for the officers of the system covers one-fifth of the country’s total banking. On Bank. the basis of asset value (size of assets), Bangladesh holds 12th position in the global Islamic Banking ranking. iv) The Muraqib of the Bank conducted Shariah The position of Islamic Banking in Bangladesh is quite inspection of the Islamic Banking Branches to ensure encouraging. Southeast Bank Limited started its Islamic strict compliances with Shariah requirements in Banking journey in 2003. Islamic Banking. The report of the Muraquib was submitted to the Shariah Supervisory Committee for Islamic Banking focuses on the production of wealth review. and welfare. Islamic Banks work for preventing the It is expected that in compliance with the prized guidance potential causes of inflation and unemployment. It and policy directives of Bank’s Board and Management, follows the principle of partnership and fosters the same the Islamic Banking operation will progress further in with customers rather than pursuing a debtor-creditor 2018 and earn business success in different indicators, In relationship. Sha Allah.

Southeast Bank Limited 135 International Business Operations

Southeast Bank having 23 years of rich experience in Import Business International Trade has placed itself among the top in BDT Million banks in Bangladesh who have proven their expertise in the field of Correspondence Banking. Throughout this long journey, the Bank has established its correspondent network all over the globe with high street banks. 171,531.73 215,379.77 Through this wide network of correspondents, the Bank has gathered strength to serve its clients’ Trade Finance needs promptly. The Bank is constantly expanding its relationships with global, regional and national level leading banks of different countries of the globe. As of December 31, 2017 the Bank has established Relationship 2016 2017 Management Application (RMA) with 825 correspondents including 265 banks in 80 countries all over the world. Export Business in BDT Million The Bank is maintaining As of December 31, 2017 35 (Thirty 80 Countries Five) Nostro 265 Banks 146,606.09 167,562.98 Accounts in major 35 Nostro Accounts currencies 825 Correspondents including 10 (Ten) Nostros IFC, ADB & GCPF under Asian Clearing Union (ACU) and 01 (One) Nostro 2016 2017 for Off-shore Banking Unit (OBU) to support foreign exchange transactions. The Bank is also armed with hefty confirmation lines of over USD 550.00 million as well Currently, International Trade Service is provided from 21 as funded credit lines with more than 50 reputed banks AD Branches, Central Trade Services Department (CTSD), worldwide. and 2 Off-shore Banking Units (OBUs) under the supervision of International Division. International Division relentlessly The International Trade of the bank is supervised by coordinates, supervises and supports International Trade International Division of Head Office. 2017 has been a and Foreign Exchange transactions of AD branches through successful year for the Bank wherein International Division following units- has supported to process USD 4.6 Billion of Trade Finance Business. As relationship with multilateral development finance institutions provides benefits in manifolds, partnering with Figures in BDT Million multilateral development finance institutions is one of the key strategic focuses of the Bank. Currently, the Bank has Growth 2017 2016 relationship with following DFIs- in % International Finance Corporation (IFC) - The Bank Import Business 215,379.77 171,531.73 25.56% is availing non-funded limit of USDF 35.00 million Export Business 167,562.98 146,606.09 14.29% under Global Trade Finance Program (GTFP) and funded limit of USD 15.00 million for OBU.

136 Annual Report 2017 Financial Institutions Off-shore SWIFT Banking

FX Transactions International Business Reporting Division Operations

EDF, Cash Central Trade Incentives, Services LTFF, GTF Treasury Department Bck Office

Asian Development Bank (ADB) - The Bank is availing and 2018 will be a year of centralizing AD branches to non-funded limit of USD 57.00 million and Funded ensure better compliance, security and profitability with a Revolving Credit limit of USD 5.00 million under Trade pool of well experienced and tech savvy professionals.. Finance Program (TFP). The enhancement of Funded Revolving Credit limit up to USD 10.00 million under Important Events of International Division in 2017 process. 1. Establishment of Central Trade Services Department Global Climate Partnership Fund (GCPF) – The (CTSD) and centralization of International Trade of Bank is availing unsecured funded facility of USD 20.00 all Non-AD Branches of the Bank. million to finance Energy Efficiency and Renewable Energy projects to mitigate climate change challenges. 2. Inauguration of SWIFT KYC Registry.

In 2018, our goal is to expand the correspondent network in 3. Centralization of Credit Report. currently less covered regions like Africa and South American countries. 2017 was a year of Non-AD Branch centralization

Southeast Bank Limited 137 138 Annual Report 2017 Off-Shore Banking Operations

Southeast Bank started Off-shore Banking Operation Usance Payable At Sight (UPAS) Letter of Credit facility. back in 2010. Currently Off-shore banking of the Bank The OBU of the Bank is one of the leading providers of is operating with two Off-shore Banking Units (OBU) in Foreign Currency Term Loan (FCTL) to eligible resident Dhaka Export Processing Zone (DEPZ) and Chittagong industrial unit of the country. It is operating with zero Export Processing Zone (CEPZ). OBU is one of the Non-Performing Loan (NPL) and the business of OBU is important Strategic Business Units of the Bank, thanks to growing steadily every year. the growing demand of low cost foreign currency loan and

Business Highlights of OBU Figures in million 2017 2016 Growth % USD BDT USD BDT Total Deposits & Borrowing 97.91 8,096.87 77.68 6,114.44 26.04% Total Loans & Advances 98.24 8,124.62 80.38 6,327.72 22.22% Total Operating Profit 2.15 173.24 1.38 107.79 55.80%

The management is focusing to diversify the OBU portfolio in the year 2018. That diversification objective would be materialized by parking more Type-A EPZ clients side by side increasing UPAS discounting.

Total Deposits & Borrowing Total Loans & Advances Total Operating Profit in USD Million in USD Million in USD Million 1.38 2.15 77.6 8 97.9 1 80.3 8 98.2 4

2016 2017 2016 2017 2016 2017

OBU of the Bank offers following products and services to valued clients -

01 Foreign Currency Deposit Account of Non-residents

Export-Import services to A- category industrial units of Export Processing 02 Zones (EPZ) and Economic Zone (EZ).

03 Financing Usance Payable At Sight (UPAS) Documentary Credit

Short Term Foreign Currency Loan to ADs for purchase of Export Bills in Foreign 04 Currency

05 Foreign Currency Term Loan to eligible resident industrial units.

Southeast Bank Limited 139 Treasury Management

To cater to the needs of different treasury solutions in securities since it emerged as a primary dealer bank in different economic environments by the customers, the year 2003. We have a separate Fixed Income Desk Southeast Bank has a very dynamic and innovative main responsibility of which is to look after the Primary treasury team. The team is committed to offer better prices Dealership activities of the Bank and also to maintain and excellent services with an array of different products required amount of government approved securities for which best fit the changing environment. Through maintenance of Statutory Liquidity Requirement (SLR) as forecasting the market scenario in terms of liquidity, per Bangladesh Bank directives. As a part of integrated interest rate and exchange rate movement, SEBL treasury treasury management team, Fixed Income Desk was able has contributed remarkably well in 2017 and also helped to maintain an optimum portfolio of government securities the Bank to earn a consistent profit over the years. SEBL which contributed significantly to the overall profit of the treasury has separate designated desks to ensure optimum Bank. The fixed income portfolio is being analyzed from treasury solutions which are depicted below: different perspectives like duration analysis, sensitivity analysis and risk-return perspective. With the efficient Money Market Desk market forecasting, the desk also took time befitting Fixed Income Desk decisions by keeping an optimum portfolio of the fixed income securities which yielded a considerable amount of Asset Liability Management Desk income in the year 2017. Foreign Exchange Desk Corporate Service Desk Asset Liability Management Desk

Money Market Desk Asset-Liability Management is the practice of managing the risks that arise due to mismatches between the assets Money Market Desk deals with local currency fund and liabilities of the Bank during the course of its business. management of the Bank along with maintaining the In this dynamic financial market environment, banks face Cash Reserve Requirement (CRR) as fixed up time to several risks such as Liquidity Risk, Interest Rate Risk, time by Bangladesh Bank. This desk also ensures that the Credit Risk, Foreign Exchange Risk and Operational Bank remains sufficiently liquid to meet all its financial Risk. Asset-Liability Management (ALM) desk measures obligations and commitments to the customers of the and manages interest rate risk, liquidity risk and the risk Bank even in the stressed liquidity condition. Money that arises from the fluctuations in the foreign exchange market was mostly liquid throughout the year of 2017. market. The main objectives and functions of Asset- But as the private sector credit picked up during the Liability Management desk are the following: second quarter of the current FY 2017-18 accompanying the regulatory requirement of maintaining LDR at the year Liquidity risk management of the bank end, the interest rate on deposit in the market picked up Management of market risks including interest rate remarkably. Call money rate was hovering around 3.50% and exchange rate risk to 4.00%. In such a scenario, money market desk with Planned growth of assets and liabilities timely integration to fixed income and foreign exchange desk ensured optimum utilization of fund resulting in Undertaking financial hedge positions maximization of the profitability of the Bank. Overall fund management of the bank Trading risk management; and The desk handled around BDT 3,347 million on daily Regulatory compliance basis while maintaining optimum local currency liquidity of the Bank. The year 2017 was a challenging year for bank’s Asset liability management. During the first three quarter of Fixed Income Desk the year, the liquidity situation was unruffled; but the last quarter observed some flounce in the money market and Southeast Bank Limited has been actively participating the interest rate scenario of the country. The weighted in the primary and secondary market of fixed income average rate on deposit increased to 5.24% in December

140 Annual Report 2017 2017 from 5.10% in the same period of the previous year. engaged in foreign currency transactions. In order to settle Given the situation Southeast Bank Limited with strong the transactions of different foreign currencies throughout acumen and insight assessed and addressed the situation the year the desk closely monitored the exchange rate properly in its investment policy and went for planned movement of USD and other currencies against BDT growth of assets and liabilities so that interest rate risk and accordingly set the exchange rates of major foreign is minimized and the bank registers a stable Net Interest currencies. The desk successfully maintained favorable Income (NII). With erratic movement in the interest rate Net Open Position (NOP) throughout the year. While in the market, it was challenging for the ALM to ensure maintaining favorable NOP, the desk also ensured a reasonable spread from operation. The ALM desk maximum level of foreign currency liquidity and explored was proactive in revising the rate of interest on deposit the market opportunities through SWAP, Placement and products so that interest rate risk is minimized as well as Forward transactions which helped the Bank to earn more the profitability of the bank is safeguarded. profit. The interbank foreign market was quite stable up to June 2017 but after that due to decrease in remittance and The ALM is responsible for the management of balance export coupled with increase in import payment made the sheet gap in order to mitigate the liquidity and interest rate foreign exchange market volatile till year end. Thereafter, risk of the bank. The ALM desk of Southeast Bank Limited USD started to appreciate against BDT and stood at 82.70 has been complying with the BASEL III requirement which was 78.40 at the end of June’2016. of maintaining Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) and reporting it to Corporate Service Desk Bangladesh Bank on a regular basis. Apart from this the desk also reports to the Board of Directors about some Treasury Division of Southeast Bank provides superior liquidity ratios and other important financial indicators in services to its corporate clients through its diversified every meeting as stipulated in the new ALM guideline of corporate service desk. The main responsibility of this Bangladesh Bank. desk is to ensure maximum utilization of the fund of the corporate customers. Basically, different renowned life To address and mitigate various risks involved in the insurance companies are our corporate customers and business, ALM desk of the Treasury Division prepares they are maintaining a sizable amount of government Asset-Liability Committee (ALCO) paper each month securities portfolio with our bank. Corporate Service and arranges monthly Asset-Liability meeting where Desk of our Treasury Division gives its customers time- all the issues associated with ALM are discussed and befitting advices so that they can maximize their return by instructions are given accordingly to all the related parties. discovering new investment opportunities. 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

We have a separate Foreign Exchange (FX) desk where experienced and skilled dealers having foreign training are

Southeast Bank Limited 141 Foreign Remittance

In a developing country like Bangladesh, Foreign Inward Inward Foreign Remittance Remittance is one of the most important drivers of the in BDT Million economy. Foreign Inward Remittance significantly supporting the economy of Bangladesh through its contribution in Balance of Payments and Gross Domestic Product (GDP). Considering this importance, the Southeast Bank is playing an important role in bringing 64,665.84 95,405.40 hard earned foreign inward remittance of Bangladeshi expatriates through banking channel. Due to reduction of global oil price and manpower export in middle-east, Bangladesh has faced negative growth in wage earners’ remittance in first two quarter of 2017. But the situation bounce back to positive growth trend and the country experience a healthy growth in wage earners’ remittance at the end of 2017. From the very beginning of 2017, the 2016 2017 Bank was in positive growth trend in foreign remittance business. 2017 was another milestone year for the Bank as Side by side active remittance distribution support, the it achieved 48% growth in remittance business than 2016. Bank has also vertically integrated its remittance operation The Bank has achieved this through leveraging its finest by establishing exchange houses in United Kingdom, personnel, customer focused products and services as well Australia and South Africa as 100% own subsidiary as wide network both in collection and delivery end. to provide efficient service in collection end of inward remittance. Out of these three subsidiaries, Southeast The Bank has earned a place in the heart of millions of Exchange Company (South Africa) Pty Limited (SECL) people by providing praise worthy service in delivering is first in kind company in South Africa. It is the only inward foreign remittance. The Bank has expanded its Bangladeshi owned company in South Africa to provide remittance delivery network even in the remotest part state of the art remittance and non-resident banking of the country through its 132 branches in strategically services to Bangladeshi expatriates. From the very first day important locations along with partnering with some of commencement of operation, SECL is doing excellent NGOs and sub-agent banks in more than 2300 locations and the Bank is considering establishing some more across the country. The Bank has upheld its position branches across South Africa in 2018. Southeast Financial to be one of the leading remittance bringing banks in Services (UK) Limited (SFSL), United Kingdom is also Bangladesh. performing satisfactory and 2018 was a good year for SFSL in terms of business and growth. The bank has quest Figures in BDT Million to excel in 2018 in remittance business to contribute more Growth in the economic development of the country. 2017 2016 in % Inward Foreign 95,405.40 64,665.84 47.53% Remittance

142 Annual Report 2017 SEBL Credit Card

Credit Card is a unique consumer financial product Branch POS: The bank has introduced POS that offers credit and provides the means of payment at Terminals at branches to facilitate cash withdrawal the same time. Credit Card also facilitates charge free for its cardholders. repayment period and repayment in installments. With that unique profile Credit Card has been the convenient Credit Shield: Credit cardholders are now under means by which people around the world spends trillions insurance coverage that will exempt them from credit of money. It is no wonder that Credit Card is becoming card liabilities after death or disability. popular in Bangladesh day by day and eventually Since inception, the bank has been maintaining a steady will become central to the financial lives of the most growth in credit card business. Like previous years, 2017 Bangladeshi consumers in future. Beside that the world is is also a successful year with good business growth to the heading towards the concept of cashless society where the tune of 39% growth in net profit, 26% growth in card base physical cash transaction is being replaced by electronic and 37% growth on outstanding balance over the position transaction. Payment through Card is the most popular of the last year. medium of cashless electronic transaction.

Southeast Bank has been issuing Credit Card since the Card Division year 2005 and shown sincerity in meeting customer Figure: BDT in Million demands. The year 2017has been the year of embracing

new business, exposure to product diversification and 55.2 5 65.3 0 74.7 0 88.0 0 122.27 attributing newer features. Following are the bench marks of the year:

Payment Gateway: E-commerce in Bangladesh is a rising sector due to availability of internet, less operational cost for payment processing and crossing geographical barrier of business. 10 billion 2013 2014 2015 2016 2017 Taka transactions per year is being done through E-commerce sites in Bangladesh. In order to process The bank is also aware of the changing trends in electronic those transactions in a secured and convenient way payment system. Any time, any where, any device and fast the bank has established a Payment Gateway. shipping are the expectations of the customers now a day. Emergence of social platform commerceand technology 2 Factor Authentication: In order to protect driven invention like mobile apps, artificial intelligence fraudulent activity in online transaction the bank has has significant role in changing trends of payment system. introduced 2 Factor Authentication. The cardholder Therefore, the bank is also focusing on contactless card, has to provide additional one time password to E-wallet, QR code based payment etc. in order to address authenticate an online transaction. the upcoming popular changes.

Southeast Bank Limited 143 Alternative Delivery Channel

Alternative delivery channel (ADC) has enabled the Bank to serve the customers beyond Banking hours. ADC team of SEBL is providing 24/7 service for customers’ convenience through Debit Cards and ATMs. ADC team is working relentlessly to provide new and improved services.

Launching Express Card Customer can grab Express Card from any SEBL Branch instantly and access his/ her account within a single day. This initiative has reduced the service delivery time significantly. New re-engineered process of Debit Card Operation has added convenience to customers by avoiding repeated visit and increased security by sending instant notification after Debit Card activation. Customers can also active Personalized Debit Card 24/7 through Call Center.

SEBL ATM At the end of 2017, our live ATMs were 136 across the country. Moreover, ADC has taken important initiatives for rapid expansion of ATM Booths at suitable locations to facilitate our existing customers and penetrate potential clients across the country.

SEBL Debit Card Growth Total 136 ATMs of SEBL At the end of year 2017, our total number of issued Dhaka 71 SEBL Debit Card was 1.75 Lac. The number of card has Chittagong 25 increased by 35.65% in comparison to the year 2016. Barishal 2 Year Wise Succussful ATM Yearwise SEBL Debit Transaction Amount Card Growth Khulna 14 ( In Crore) (In Lac) Rajshahi 13 1.29 1.75

Rangpur 2 736.89 Sylhet 7 1090.62 Mymensingh 2

Growth

ADC has implemented world class technology and re- 2016 2017 2016 2017 engineered process to ensure faster, smooth and better service. This leads to a noteworthy growth in SEBL Debit Real Time Cash Deposit Machine Card Transaction Number, Transaction amount and Debit With a view to enhance customer experience and expand Card Issuance. footprint in modern banking service, the bank is going Transaction Amount to introduce Recycler Machine (Real Time Cash Deposit and Withdrawal Machine). Recycler Machine is a state- In the year of 2017, total successful transaction amount of-the art technology which will facilitate customers by by SEBL Debit Card and ATM was BDT 1090.62 crore. providing real time cash acceptance and dispense facility In comparison to the year 2016, Transaction amount has along with many other banking services round the clock. increased by 48.17% This initiative will have a significant impact on acquisition of low cost deposit.

144 Annual Report 2017 Credit Risk Management in Southeast Bank Limited

Credit Risk is the possibility of losses associated with diminution in the credit quality of borrowers. Credit Risk arises mostly from lending and investment activities of the Bank if a borrower / counter party is unable to meet its financial obligations to the lender. It emanates from changes in the credit quality/worthiness of the borrowers.

The responsibility of managing credit risk of the Bank is analysis and intimate the same to the Board of vested upon Credit Risk Management (CRM) Division, Directors on quarterly basis. which is entrusted with the task of overseeing various risk management measures envisaged under the credit risk Reviewing and re-fixing interest/profit rate based management policy. The CRM Division is playing among on cost of fund, cost of equity, cost of liquidity, risk others the following major roles in line with the Credit appetite and market trend etc. against loans and Risk Management Guidelines of the Bank: advances /investment both for conventional and Islamic Banking operations as and when required. Formulating and/or up-gradating of different policies, procedures, strategies, guidelines related to Credit Risk Management (CRM) Division of the Bank is credit risk management, credit operation and credit comprised of two departments named Credit Approval administration of the bank with a view to mitigating Department and Credit Administration Department. Two its inherent risks. Departments work separately without compromising interest of the bank. Coordinating functions of Credit Approval Department and Credit Administration Department. Credit Approval Department

Assisting Corporate Banking/SME and Agri Credit/ Within this framework, Credit Approval Department Islamic Banking /Retail Banking division regarding analyzes the credit proposals, assesses different risk the business issues through in-depth analysis elements covering Management, Financial, Marketing, and evaluation of credit proposals as well as the Technical, Environmental etc. aspects associated with the compliance issues in order to mitigate different credit business, verifies the offered securities physically, visits risks. projects and finds out the mitigating factors which help the management to expedite the decision making process, Ensuring due diligence in credit approval process. by exercising due diligance. The department also ensures compliance of all regulatory requirements in connection Ensuring proper documentation and disbursement with approval of a credit facility.The Bank follows a well procedures. defined and multi-layered discretionary power structure for approval of any credit facility in accordance with Ensuring proper implementation of all the approved Bank’s credit policy. plans, policies and strategies of the Bank regarding credit portfolio for achievement of the organizational Credit Administration Department goals. The Credit Administration Department is assigned to look Setting different internal limits (with due approval after the post approval process such as to establish better from the competent authority) for diversifying the control over loan portfolio by helping completion of credit portfolio to avoid concentration risks. documentation, scrutinizing the documentation checklist, limit, rate of interest, tenor etc. in a systematic manner Reviewing and supervising sectoral allocation/ and allow subsequent disbursement, ensuring utilization distribution of loans and advances, maturity gap of fund, monitoring and compliance of all covenants and

Southeast Bank Limited 145 conditions precedent. This Department makes constant dual control. At present custodial function of the Bank is post disbursement follow-up and continues its efforts performed by the respective Branches. to keep the credits performing and unclassified. This Department also acts as a bridge between the branch and Major Activities in 2017 the management as well as between the management and the Board of Directors by providing information in Credit Risk Management Guidelines of the Bank has respect of status of the loans and advances. Main functions been reviewed and updated in line with the new of the Department are segregated in the following four Guidelines on Credit Risk Management provided by categories: Bangladesh Bank, present and upcoming domestic and international economic conditions etc which was Disbursement Function dully approved by the Board of Directors.

After successful completion of proper documentation and Delegation of Business power of the Bank has been subsequent request of the client, the respective Branches reviewed and made more practical. seek permission for disbursement of loans and advances. Upon scrutiny of documentation checklist, Credit Some policies like-Valuation Methodologies, Administration Department (CAD) provides permission Documentation Methodology, Interest/Profit rate etc. for disbursement of those particular loans and advances have been reviewed, updated and got approved by to the respective Branch; the Board of Directors.

Monitoring Function A well crafted Risk Appetite Statement has been prepared and got approved by the Board. Credit Monitoring is a continuous process to nurture and foster the health of Credit portfolio of the Bank Through continuous monitoring and vigorous starting just after the disbursement of any loan. One persuasion, sound health of the asset quality has been of the most important tasks of the banks today is the maintained and non-performing loans of the Bank follow up and supervision of the credit portfolio to could be restricted at 5.99 percent of the total loan ensure timely recovery of the loan. The main functions portfolio. of Credit Administration Department are to supervise the performance of the client both at portfolio and individual Loan documentation status has improved significantly level. Since a large number of borrowers from different due to regular monitoring and follow-up in line with sectors of the economy are financed, the supervision of Bank’s Operational Circular #32dated 27.11.2012. credit becomes more challenging. Different modules have been developed for bringing Compliance Function more accuracy of information and strengthening MIS System of the Bank. This Department also complies with the rules and regulation of all the regulatory bodies relating to credit Strengthening Monitoring of standard credit portfolio operation of the Bank. It also provides/submits credit so that slippage of performing loans into non- related statements/information to Bangladesh Bank and performing loans can be arrested and sound asset the management of the Bank. quality can be ensured.

Custodial Function

Main custodial function of the Bank related to credit is the preservation of document in the safe custody under

146 Annual Report 2017 Risk Management in Southeast Bank Limited

Southeast Bank’s proactive and dynamic risk management system is one of the key reasons why it has been able to cope with changes in economic cycles, customers’ new demands and increased competition. Against a background of constant changes, with new types of risks and greater requirements by regulators, Southeast Bank has made headway to maintain an excellent level of risk management in order to achieve sustainable growth. Thus, the Bank has earned the trust of its employees, customers, shareholders and its communities through its holistic approach in Risk identification and control.

The Bank aims to identify, measure and mitigate its short To inform the Board and senior management and long term risks. It also strives to pinpoint, assess and and support them in the establishment and evaluate its top risks, the associated control environment communication of the risk management program for and any potential factors which could jeopardize the the Bank success of the Bank’s strategic plan. The Bank also complies with regulatory requirements concerning an in- To facilitate risk assessments and monitor priority depth understanding of the Bank’s risk profile. risks across the Bank and help establish, maintain and continuously improve risk management capabilities SEBL’s Risk management objectives To assist the CEO and executive team with developing SEBL has clear risk management objectives and a well and communicating risk management policies, risk established strategy to address them. At strategic level, our appetite, risk limits, capital and resource allocation risk management objectives are as follows: decisions

To ensure safety of the Bank To promote a risk-aware culture of risk management and conduct risk management education and training To ensure that SEBL’s risk management activities are aligned with the other management activities in the To implement appropriate systems, controls and risk Bank and are fully embedded within all activities and reporting so that risk can be managed effectively and processes in a cost effective manner

To ensure that SEBL’s risk management activities are To establish, communicate and facilitate the use of dynamic and responsive to changing circumstances appropriate risk management methodologies, tools so that the Bank can successfully manage emerging as and techniques well as existing risks To assist senior management on the financial To ensure that SEBL’s risk management activities are implications of risks related to key issues and proportionate to the nature, size and complexity of important strategic decisions the Bank, comprehensive and consider all types of risks To create risk management process that facilitates the Board and management to make more informed To ensure that risk management policies/manuals/ risk/return decisions by addressing fundamental guidelines delivered by Central bank and other requirements with respect to governance and regulatory bodies are implemented and followed policy (including risk appetite), risk analysis, risk management, monitoring and reporting

Southeast Bank Limited 147 Basel-III Implementation Leverage Ratio

Basel III Framework is a set of international standards This is a non-risk-based leverage ratio and is calculated and best practices that define the minimum capital by dividing Tier 1 capital by the Bank’s average total requirements for the Bank. The Bank has to maintain consolidated assets (sum of the exposures of all on-balance a minimum level of capital, to ensure that it can meet sheet and off-balance sheet items). The Bank is required to its obligations; it can cover unexpected losses and can maintain a minimum leverage ratio of 3% under Basel III. promote public confidence. Bangladesh Bank has declared the roadmap for implementation of BASEL III in banking Stress Testing sector effective from January 01, 2015. As per the phase wise arrangements for Basel-III implementation the Bank Stress Testing is one of the effective and popular ways has started implementing Basel III from January 2015. The to alert the Bank Management with regard to adverse Bank has taken initiatives to improve the Capital to Risk unexpected outcomes related to variety of risks and Weighted Asset Ratio (CRAR) in line with the Basel-III provides an indication on how much capital might be guideline. Besides, the Bank has also started maintaining needed to absorb losses, if any shocks occur. Under different ratios like Leverage Ratio, Liquidity Coverage Pillar II of Basel III, the Bank considers Stress Testing Ratio (LCR) and Net Stable Funding Ratio (NSFR) as per as a diagnostic tool to improve the understanding of its Basel-III requirement. risk profile. The Bank prepares Stress Testing report on quarterly basis to check out four major risks (interest Liquidity Coverage Ratio (LCR) rate risk, credit risk, equity price risk, liquidity risk) under different levels of magnitude to ensure optimum Liquidity Coverage Ratio (LCR) refers to high quality allocation of capital across its risk profile. In Stress liquid assets held by the Bank to meet short-term Testing of the Bank different analytical tools are used, obligations. The ratio is designed to ensure that the Bank like sensitivity analysis which assesses the impact on the has the necessary assets on hand to ride out short-term Bank’s financial condition of a move in one particular risk liquidity disruptions. The Bank is required to maintain factor, scenario test which tends to consider the impact LCR ≥ 100% underBasel III. of simultaneous moves in a number of risk factors and duration GAP analysis which is the analysis of the gap in Net Stable Funding Ratio (NSFR) duration between the Bank’s Assets and Liabilities. On the other hand, different risk factors are judged using three Net Stable Funding Ratio (NSFR) is defined as the amount different level of shocks: minor, moderate and major. The of Available Stable Funding (ASF) relative to the amount risk factors are : performing loan downgraded to Bad/ of Required Stable Funding (RSF). The purpose of the Loss, increase in NPL due to default of top borrowers, NSFR is to ensure that the Bank holds a minimum amount negative shift in NPLs categories, decrease in the FSV of of stable funding based on the liquidity characteristics collateral, change in interest rate, FEX shock, equity shock of its assets and activities over a one year horizon. The and liquidity stress. 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.

148 Annual Report 2017 Prevention of Money Laundering

Money Laundering (ML) and Terrorism Financing (TF) are major threats to the world’s Financial Service Industry. Southeast Bank Group is pledge-bound not to allow its banking channel to be used by any criminal, terrorist or network of terrorists to carry out subversive activities or militancy in the country and elsewhere. The Bank is committed to ensure best corporate governance practices and aims at protecting the Bank and its employees, shareholders, management and customers from the adverse effect of ML and TF.

Considering the social and political cost of ML and The Group has strengthened its process of submitting TF, Southeast Bank Group always attempts to thwart CTR and STR through goAML Software set down by occurrence of both ML and TF in its day-to-day activities. BFIU. It has given added concentration on Customer Due In order to be compliant with FATF recommendations, Diligence (CDD) Process. The CDD measures include KYC instructions and guidelines of BFIU and relevant laws and Procedure, KYE Procedure, Customer Acceptance Policy, regulations, Southeast Bank Group is always sincere to the Customer Identification Process, Verification Process, implementation of its AML and CFT compliance program. Transaction Monitoring, etc. SEBL is utilizing automated In the recent past, the Group took a number of initiatives screening mechanism in respect of various Sanction Lists, on the issue of AML and CFT compliance. e.g. sanction lists of UNSCR, OFAC, AUSTRAC, EU and local Government. In this connection, the screening An eleven-member Central Compliance Committee (CCC) software of the Group ‘S3’ for Core Banking Systems and at Head Office is in place for ensuring compliance with ‘SWIFT’ for international transaction have been put in AML and CFT requirements properly. Money Laundering place and are being used for combating the threats. and Terrorism Financing Prevention Division (MLTFPD) of the Bank is assisting the CCC continuously. In this SEBL has also taken reasonable attempts to ensure respect, the Anti-Money Laundering Compliance Officer that all the officials are fully informed of the AML and (AMLCO) leads CCC and MLTFPD to ensure oversight of CFT Compliance requirements. The Group does never all aspects of the bank’s AML and CFT activities including excuse any violation of applicable legislations or rules or corrective actions to be taken to address the deficiencies regulations or policies or procedures or industry guidance, identified through the inspection of BFIU, Independent etc relating to AML and CFT in the conduct of business Testing Procedure and Self- Assessment Report. Deputy of the Group. AMLCO, Head of Money Laundering and Terrorism Financing Prevention Division and Branch Anti-Money Laundering Compliance Officers (BAMLCOs) also exercise care and caution to prevent acts of ML and TF through the use of Southeast Bank Group service outlets.

Southeast Bank Limited 149 Information Technology (IT) and Cyber Security Measures

The business operations in the banking and financial sector have been increasingly dependent on the computerized information systems over the last decade. Therefore, Information and communication technology (ICT) has become the heart of the banking sector and set the platform for significant improvement in delivery and operational processes. Technology has been adopted by all the banks in Bangladesh to bring diversification in banking services for their customers, like online banking, ATM/POS facility, Mobile financial Service (MFS), Internet Banking and Mobile App for Banking etc. The modernization of ICT has created a new infrastructure to become truly global and also provided the users of new technology, a competitive advantage over their rivals.

During the year, the Bank has made a substantial better services to the customers ensuring reliability, safety investment to reorganize and secure its IT infrastructure and security. and other IT services. Major restructuing was done in the area of core Network, Server and Application The Bank is offering different services to its clients virtualization, Central Storage system upgrade, security through internet banking with added security measures. solutions deployment for the Database system. All the To perform a transaction through internet banking, like single power source devices were converted into and fund transfer on utility bill payment, the client has to brought under dual power systems in the Data Center collect Hardware or Software token from the Bank for Two (DC) and Disaster Recovery Site (DRS) of the Bank. All Factor Authentication (2-FA). This will give an additional these steps were taken to further enhance availability layer of security, which is enabled during login to internet and reliability of the IT operationand service. The Bank banking system. recruited more manpower for IT Division to strengthen its IT service delivery and several overseas training/ This year the Bank has brought more Utility Service workshops were arranged for the IT officials to enhance Providers under internet banking service for customers’ skill and competency. convenience to make payment from anywhere and anytime. SMS and E-Mail Alert services are available for As part of continual efforts to minimize/mitigate internal performing said transactions through internet banking. and external IT related frauds and prevent cyber threats, the Bank was extremely cautious while offering new The available transactional services are: products and services and performed due diligence for security and risk assessment. Multiple security solutions Fund Transfer through BEFTN and RTGS for Network, Mailing System, Web/Internet access and the end point devices have been deployed. According to Utility Bills Payment for DPDC, DESCO, WASA and the ICT Security Policy of the Bank, security measures in BTCL every IT activity were taken. IT security awareness among the employees was created through arranging relevant Mobile Air time Recharge (Pre and Post Paid) training and emailing security alert messages. Associated Risks were assessed and accordingly steps were taken for Bank’s own Credit Card Bill Payment and other Bank’s rectification in IT operation and service delivery. Besides, Credit Card through BEFTN Information Security (IS) audit and inspections were conducted by the internal and the external team including FDR and Scheme Deposit Account Opening Bangladesh Bank. Periodically, Vulnerability Assessment (VA) and Penetration Testing (PT) were executed L/C Request on different IT services and mitigated the identified weaknesses. The Bank is always committed to providing Standing Instruction Setup

150 Annual Report 2017 Compliance Report on BSEC’s Notification on Corporate Governance

Our Compliance Status of compliance with the conditions imposed by Bangladesh Securities and Exchange Commission Notification No.SEC/CMRRCD/2006-158/134/ Admin/44 dated 07 August 2012

Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied The number of the board members of the company shall not be less than 5 (five) and more than 20 (twenty): Provided, however, that in case of banks and non-bank financial institutions, insurance companies and statutory bodies for which 1.1 separate primary regulators like Bangladesh Bank, √ Insurance Development and Regulatory Authority, etc. exist, the Boards of those companies shall be constituted as may be prescribed by such primary regulators in so far as those prescriptions are not inconsistent with the aforesaid condition. At least one fifth (1/5) of the total number of directors 1.2(i) √ in the company’s board shall be independent directors. Who either does not hold any share in the company 1.2(ii)(a) or holds less than one percent (1%) shares of the total √ paid-up shares of the company Who is not a sponsor of the company and is not connected with the company’s any sponsor or director or shareholder who holds one percent (1%) or more shares of the total paid-up shares of the company on 1.2(ii)(b) the basis of family relationship. His/her family members √ also should not hold above mentioned shares in the company Provided that spouse, son, daughter, father, mother, brother, sister, son-in-law and daughter-in-law shall be considered as family members who does not have any other relationship, whether 1.2(ii)(c) pecuniary or otherwise, with the company or its √ subsidiary/associated companies; who is not a member, director or officer of any stock 1.2(ii)(d) √ exchange; who is not a shareholder, director or officer of any 1.2(ii)(e) member of stock exchange or an intermediary of the √ capital market; who is not a partner or an executive or was not a partner 1.2(ii)(f) or an executive during the preceding 3 (three) years of √ the concerned company’s statutory audit firm; who shall not be an independent director in more 1.2(ii)(g) √ than 3 (three) listed companies;

Southeast Bank Limited 151 Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied who has not been convicted by a court of competent 1.2(ii)(h) jurisdiction as a defaulter in payment of any loan to a √ bank or a Non-Bank Financial Institution (NBFI); who has not been convicted for a criminal offence 1.2(ii)(i) √ involving moral turpitude The independent director(s) shall be appointed by the 1.2(iii) board of directors and approved by the shareholders in √ the Annual General Meeting (AGM). The post of independent director(s) cannot remain No such event 1.2(iv) N/A vacant for more than 90 (ninety) days. occurred The Board shall lay down a code of conduct of all 1.2(v) Board members and annual compliance with the √ code to be recorded. The tenure of office of an independent director shall be 1.2(vi) for a period of 3 (three) years, which may be extended √ for 1 (one) term only. Independent Director shall be a knowledgeable individual with integrity who is able to ensure 1.3(i) √ compliance with financial, regulatory and corporate laws and can make meaningful contribution to business. The person should be a Business Leader/Corporate Leader/ Bureaucrat/ University Teacher with Economics or Business Studies or Law background /Professionals 1.3(ii) like Chartered Accountants, Cost & Management √ Accountants, Chartered Secretaries. The independent director must have at least 12 (twelve) years of corporate management/ professional experiences. In special cases, the above qualifications may be relaxed 1.3(iii) N/A subject to prior approval of the Commission. The Position of the Chairman of the Board and Chief 1.4 Executive Officer of the company shall be filled by √ different individuals. Industry outlook and possible future developments 1.5(i) √ in the industry 1.5(ii) Segment-wise or product-wise performance. √ Presented in 1.5(iii) Risks and concerns. √ note 3.20 A discussion on Cost of Goods sold, Gross Profit Margin 1.5(iv) √ and Net Profit Margin Discussion on continuity of any Extra-Ordinary 1.5(v) N/A gain or loss. Basis for related party transactions- a statement of all Presented in 1.5(vi) related party transactions should be disclosed in the √ note 69.3.1 annual report Utilization of proceeds from public issues, rights issues 1.5(vii) N/A and/or through any others instruments. An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), 1.5(viii) N/A Repeat Public Offering (RPO), Rights Offer, Direct Listing, etc

152 Annual Report 2017 Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied If significant variance occurs between Quarterly Financial performance and Annual Financial Statements 1.5(ix) N/A the management shall explain about the variance in the Annual Report. Remuneration to directors including independent 1.5(x) √ directors The financial statements prepared by the management of the issuer company present fairly its state of affairs, 1.5(xi) √ the result of its operations, cash flows and changes in equity. Proper books of account of the issuer company have 1.5(xii) √ been maintained. Appropriate accounting policies have been consistently applied in preparation of the financial statements and 1.5(xiii) √ that the accounting estimates are based on reasonable and prudent judgment International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards 1.5(xiv) √ (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed. The system of internal control is sound in design 1.5(xv) and has been effectively implemented and √ monitored. There are no significant doubts upon the issuer company’s ability to continue as a going concern. If the 1.5(xvi) √ issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed. Significant deviations from the last year’s operating 1.5(xvii) results of the issuer company shall be highlighted and √ the reasons thereof should be explained. Key operating and financial data of at least preceding 5 1.5(xviii) √ (five) years shall be summarized If the issuer company has not declared dividend (cash 1.5(xix) N/A or stock) for the year, the reasons thereof shall be given. The number of Board meetings held during the 1.5(xx) year and attendance by each director shall be √ disclosed. Parent/Subsidiary/Associated Companies and other 1.5(xxi)(a) √ related parties (name wise details); Directors, Chief Executive Officer, Company Secretary, 1.5(xxi)(b) Chief Financial Officer, Head of Internal Audit and their √ spouses and minor children (name-wise details); 1.5(xxi)(c) Executives; √ Shareholders holding ten percent (10%) or more 1.5(xxi)(d) √ voting interest in the company (name wise details). 1.5(xxii)(a) a brief resume of the director; √ 1.5(xxii)(b) nature of his/her expertise in specific functional areas; √

Southeast Bank Limited 153 Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied Names of companies in which the person also holds the Presented-in 1.5(xxii)(c) directorship and the membership of committees of the √ Annexure - F board. The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit (Internal Control and Compliance) and a Company 2.1 Secretary (CS). The Board of Directors should √ clearly define respective roles, responsibilities and duties of the CFO, the Head of Internal Audit and the CS The CFO and the Company Secretary of the companies shall attend the meetings of the Board of Directors, provided that the CFO and/or the 2.2 Company Secretary shall not attend such part of a √ meeting of the Board of Directors which involves consideration of an agenda item relating to their personal matters The company shall have an Audit Committee as a 3(i) √ subcommittee of the Board of Directors. The Audit Committee shall assist the Board of Directors in ensuring that the financial statements reflect true and 3(ii) √ fair view of the state of affairs of the company and in ensuring a good monitoring system within the business. The Audit Committee shall be responsible to the Board 3(iii) of Directors. The duties of the Audit Committee shall be √ clearly set forth in writing. 3.1(i) Constitution of Audit Committee √ Inclusion of independent Director on the Audit 3.1(ii) √ Committee All members of the Audit Committee are ˝financially 3.1(iii) √ literate˝ When the term of service of the Committee members expires or there is any circumstance causing any Committee member to be unable to hold office until expiration of the term of service, thus making the number of the Committee members to be lower than 3.1(iv) the prescribed number of 3 (three) persons, the Board of √ Directors shall appoint the new Committee member(s) to fill up the vacancy(ies) immediately or not later than 1 (one) month from the date of vacancy(ies) in the Committee to ensure continuity of the performance of work of the Audit Committee. The company secretary shall act as the secretary to the 3.1(v) √ Committee. The quorum of the Audit Committee meeting shall not 3.1(vi) √ constitute without at least 1 (one) independent director 3.2(i) Chairman of the Committee √ Presence of the Chairman of the Audit Committee in 3.2(ii) √ the AGM 3.3(i) Oversee the financial reporting process. √ 3.3(ii) Monitor choice of accounting policies and principles √

154 Annual Report 2017 Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied Monitor Internal Control Risk management 3.3(iii) √ process. 3.3(iv) Oversee hiring and performance of external auditors √ Review along with the management, the annual financial 3.3(v) √ statements before submission to the board for approval. Review along with the management, the quarterly 3.3(vi) and half-yearly financial statements before √ submission to the board for approval. 3.3(vii) Review the adequacy of internal audit function √ Review statement of significant related party 3.3(viii) √ transactions submitted by the management. Review Management Letters/ Letter of Internal 3.3(ix) √ Control weakness issued by statutory auditors. When money is raised through Initial Public Offering (IPO)/Repeat Public Offering (RPO)/Rights Issue the company shall disclose to the Audit Committee about the uses/applications of funds by major category (capital expenditure, sales and marketing expenses, working 3.3(x) √ capital, etc), on a quarterly basis, as a part of their quarterly declaration of financial results. Further, on an annual basis, the company shall prepare a statement of funds utilized for the purposes other than those stated in the offer document/prospectus. The Audit Committee shall report on its activities 3.4.1(i) √ to the Board of Directors. 3.4.1(ii)(a) report on conflicts of interests; N/A 3.4.1(ii) suspected or presumed fraud or irregularity or N/A (b) material defect in the internal control system; suspected infringement of laws, including securities 3.4.1(ii)(c) N/A related laws, rules and regulations; any other matter which shall be disclosed to the Board 3.4.1(ii)(d) N/A of Directors immediately 3.4.2 Reporting to the Authorities N/A 3.5 Reporting to the Shareholders and General Investors - 4(i) Appraisal or valuation services or fairness opinions. √ Financial information systems design and 4(ii) √ implementation. Book-keeping or other services related to the accounting 4(iii) √ records or financial statements. 4(iv) Broker-dealer services. √ 4(v) Actuarial services. √ 4(vi) Internal audit services. √ 4(vii) Any other service that the Audit Committee determines √ No partner or employees of the external audit firms shall possess any share of the company they audit 4(viii) √ at least during the tenure of their audit assignment of that company. Audit/Certification Services on Compliance with the 4(ix) √ corporate Governance as required.

Southeast Bank Limited 155 Compliance Status Condition Title (Put √ in the appropriate column) Remarks No. Complied Not complied Provisions relating to the composition of the Board of Directors of the holding company shall be made 5(i) √ applicable to the composition of the Board of Directors of the subsidiary company At least 1 (one) independent director on the Board of 5(ii) Directors of the holding company shall be a director on √ the Board of Directors of the subsidiary company The minutes of the Board meeting of the subsidiary 5(iii) company shall be placed for review at the following √ Board meeting of the holding company The minutes of the respective Board meeting of the holding company shall state that they have 5(iv) √ reviewed the affairs of the subsidiary company also. The Audit Committee of the holding company shall 5(v) also review the financial statements, in particular the √ investments made by the subsidiary company these statements do not contain any materially untrue 6(i)(a) statement or omit any material fact or contain statements √ that might be misleading; these statements together present a true and fair view of the company’s affairs and are in compliance 6(i)(b) √ with existing accounting standards and applicable laws There are, to the best of knowledge and belief, no transactions entered into by the company during 6(ii) √ the year which are fraudulent, illegal or violation of the company’s code of conduct. The company shall obtain a certificate from a practicing Professional Accountant/Secretary (Chartered Accountant/ Cost and Management Accountant/ 7(i) Chartered Secretary) regarding compliance with √ conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis The directors of the company shall state, in accordance with the Annexure attached, in the directors’ report 7(ii) √ whether the company has complied with these conditions.

156 Annual Report 2017 Southeast Bank Limited 157 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.

Compliance Sl No. Particulars Remarks Status Constitution of Board of Directors For appointment of new Directors and removal of Directors Bangladesh √ Bank’s approval to be obtained. 1. Eligibility and Qualification of Directors, maximum number of Directors √ on the Board of Directors. Appointment of Independent Director. √ Maximum 4 Directors from one family. √ Appointment of New Directors Section 15.4 of Bank Company (Amendment) Act-2018 requires that 1.1 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 Vacancy of Office of a Director (a) Vacancy as per Section 108 (i) of Companies Act 1994 and Vacancy as No such event per Section 17 of Bank Company Act 1991. (b) Bar to become a Director who was removed by operation of Section No such event 17 of Bank Company Act 1991. Bar to transfer share by a Director who was removed by operation of No such event Section 17 of Bank Company Act 1991. C Removal of Director and dissolution of the Board by Bangladesh Bank. No such event The offices of Mr. Ragib Ali and Mr. Abdul Hye as Directors Removal of Directors and Dissolution of the Board were vacated in 1.3 application of law For removal of a Director, Bangladesh Bank’s approval to be obtained. with effect from March 8, 2017. It was intimated to Bangladesh Bank on March 9, 2017. 1.4 Appointment of Alternate Directors (a) To appoint alternate director in place of original Director, documentary evidence of foreign visit and return of original Director shall be kept No such event in records. Any deviation from this shall be reported to Bangladesh Bank by the Bank’s Chief Executive Officer (b) Copy of resolution for appointment of Alternate Director by the Board of Directors along with original Director’s probable date of return are No such event to be sent to Bangladesh Bank. (c) Any loan defaulter and anybody who is not eligible to be appointed as Director under Bank Company Act or Companies Act or any other No such event law or rules shall not be appointed as Alternate Director. (d) No Alternate Director shall be appointed as a member of any There is no committee of the Board of Directors Alternative Director on the Board of SEBL

158 Annual Report 2017 Compliance Sl No. Particulars Remarks Status (e) No credit facilities to Alternate Director or to entities where he has √ No such event interest shall be allowed. All requirements of Law, Rules and Directives applicable to a Director √ No such event are also equally applicable to an Alternate Director. 2. Depositor Director No requirement for appointment of Depositor Director. The tenure of office √ of current Depositor Directors shall be determined by the Board. 3. Particulars of Directors (a) Updated list of Directors; √ (b) Distribution of list of Directors to the scheduled Banks and NBFIs √ (c) Updated profile of Directors in the website. √ 4. Responsibility and Power of the Board of Directors Board 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 Responsibility and Powers of the Board of Directors (a) Work Plan and Strategic Management 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. 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 Management Board of Directors shall approve re-schedule & write off of credit √ within existing Laws and Rules & Regulations. Board shall delegate power to approve credit/investment. √ All policies relating to credit evaluation sanction, recovery re-schedule √ and write-off shall be approved by the Board Board of Directors reviews Risk Management Policy on quarterly basis √ Implementation of guidelines of Bangladesh Bank about major risks √ shall also be monitored by the Board. (c) Management of Internal Control Board of Directors shall closely monitor Internal Control System in order to maintain qualitative standard of Credit/Investment. 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 Resource Management and Development of Human Resource All policies and service rules relating to Human Resources of the Bank √ shall be approved by the Board. The appointment, promotion, transfer and disciplinary action against an executive up to two grades below the CEO shall made/taken by √ the Board. Board of Directors shall give special emphasis on Training for enhancement of capability of Bank’s Executives and Officers for √ accurate assessment of Credit/Investment proposals.

Southeast Bank Limited 159 Compliance Sl No. Particulars Remarks Status Modern electronic and information technology and Management Information System (MIS) shall be stressed up and included in the √ annual work-plan. Board of Directors shall devise Code of Ethics for all grades of Executives and Officers and it should be meticulously complied with √ by all Executives and Officers. Board of Directors shall promote high ethical standard for the purpose √ of developing a culture of compliance in the Bank (e) Financial Management Bank’s Annual Budget and Statutory Financial Statements shall be prepared with the approval of the Board of Directors. Bank’s Income, Expenditure, Liquidity, Expired / Unrecovered Loans, Capital Base √ and Capital Adequacy, Provision, classified loans etc must be reviewed by the Board on quarterly basis. Purchase and Procurement Policy shall be devised by the Board of √ Directors. Delegation of powers in this behalf shall be approved by the Board. √ Board’s prior approval shall be required to purchase Land, Building, √ Establishment, construction, Vehicle etc on business consideration. 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 Board of Director shall appoint a honest, skilled, experienced and a √ suitable person as Chief Executive Officer. Appointment of CEO shall require Bangladesh Bank’s approval. (g) Board’s added Duty Board shall ensure proper execution and compliance wtih any duty √ vested upon it by Bangladesh Bank. 4.2 Meeting of Board of Directors One meeting of the Board in each month and if required more than one √ meeting in a month. But minimum one meeting of the Board shall be held in a quarter √ 4.3 Responsibilities of Chairman of Board of Directors (a) Chairman’s area of activities. √ (b) He may visit a branch or Bank’s financed project. √ He may order for an enquiry, if required. √ He may take actions through the CEO with the approval of the Board. √ (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. Constitution of Supporting Committee Every Bank Company shall constitute one Executive Committee, one Audit Committee and one Risk Management Committee consisting of members of the Board of Directors. 5.1 Executive Committee In order to resolve urgent matters and day to day or / routine work during interval of meeting of Board of Directors, it shall constitute an Executive √ Committee. (a) Structure √ (b) Eligibility of the Members of the Executive Committee √ (c) Responsibilities and Duties of the Executive Committee √ (d) Calling Meeting of the Executive Committee √

160 Annual Report 2017 Compliance Sl No. Particulars Remarks Status 5.2 Audit Committee Audit Committee to be constituted to carry out supervisory role on presentation of Financial Reports, Internal Control System, Auditing √ System, compliance with existing Laws and Rules and Regulations of regulators. (a) Structure √ (b) Qualification of Members of Audit Committee √ (c) Duties and Responsibilities of the Audit Committee √ (i) Internal Control √ (ii) Publication of Financial Reports √ (iii) Internal Audit √ (iv) External Audit √ (v) Compliance of existing Laws and Rules √ (vi) Miscellaneous Work √ (d) Calling Meeting of the Audit Committee √ 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) Structure √ (b) Qualification of Committee Members √ (c) Responsibilities and Duties of the Risk Management Committee √ (i) Risk Identification and Control Strategy √ (ii) Preparation of Organizational Structures √ (iii) Review of Risk Management Policy and approval √ (iv) Preparation of Information and Reporting System √ (v) Supervision of Implementation of Overall Risk Management Policy √ (vi) Miscellaneous Work √ (d) Calling Meeting of the Risk Management Committee 6. Training of Directors √ This Circular is issued to implement Section 15, 15 Kha and 15 Ga of Bank 7. - - Company (Amended) Act, 2013. 8. Enforcement of the Circular. - with immediate effect

Southeast Bank Limited 161 BRPD Circular No.18 of 27th October 2013 Appointment and responsibilities of Chief Executive Officer (CEO)

Sl. Compliance Particulars No. Status A Rules and regulations for appointment of the CEO 1 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. Complied 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. 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 have a Master’s Degree at minimum 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. Complied c) In respect of service, the concerned person should have excellent track 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. 3 Transparency and financial integrity: Before making 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. Complied b) He has not deferred payment to creditors or has not compromised with his creditors to be relieved from debts or he is not a loan defaulter. c) He is not a tax defaulter. 4 Age Limit: No person crossing the age of 65 years shall hold the post of CEO of a Bank. Complied 5 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 Complied shorter person. 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 Complied proposals to BB. 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 Complied 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 Complied 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.

162 Annual Report 2017 Sl. Compliance Particulars No. Status c) Without improving the bank’s major financial indicator like-CAMELS, annual salary Complied 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 Complied 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 Complied enumerated in clause (b) above. f) The bank shall not pay any income tax for the CEO, i.e. the CEO so appointed shall Complied have to pay it. 7 Inventive 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 Complied 1,000,000 in a year. 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 Complied by the Board 9 Evaluation Report: For reappointment of the CEO, the Chairman of the bank shall have to Complied submit a Board approved evaluation report to BB. 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 Complied 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. 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 Complied from his/her office without prior approval from BB. B Responsibilities and Authorities of the CEO: The CEO of the bank, by whatever name Complied called, shall discharge the responsibilities and exercise the authorities as follows: a) In terms of the financial, business and administrative authorities vested upon him by the BoD, the CEO shall discharge his own responsibilities. He shall remain accountable for Complied achievement of financial and other business targets by means of business plan, efficient implementation thereof and prudent administrative and financial management. b) The CEO shall ensure compliance of the Bank Company Act 1991 and other relevant Complied laws and regulations in discharging routine functions of the bank. c) The CEO shall include clearly any violation of Bank Company Act 1991 and/or other relevant laws and regulations in the “Memo” presented to the meeting of the BoD or any Complied other Committee(s) engaged by the BoD. D) The CEO shall report to Bangladesh Bank of issues in violation of the Bank Company Complied 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 Complied the approved service rules on the basis of the human resources policy and approved delegation of employees as approved by the BoD. 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 BoD, he/she shall nominate officers for training, etc.

Southeast Bank Limited 163 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.

Compliance Sl No. Particulars Remarks Status A Rules and regulations for appointment of an Advisor

1 Experience and Suitability Complied 2 Responsibilities of the Advisor The roles and responsibilities of the Advisor are defined specifically. Complied The Advisor can advise the Board of Directors or CEO only on those matters specified in the appointment letter. 3 Prior approval from Bangladesh Bank Complied 4 Remuneration and other facilities of Advisor Complied 5 Tenure of Advisor: The tenure of the Advisor shall be maximum Complied 01(one) year which is renewable. 6 Appointment of Former-executive For ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible to become an Complied Advisor in the same bank immediately after his/her retirement or resignation. B Rules and regulations for appointment of a Consultant 1 Terms of reference of Consultant Consultant can be appointed for specialized tasks like tax, law and legal procedures, engineering and technical works, information Complied technology, etc. Consultants’ appointment should be avoided as much as possible for those works that could be done by regular employees of the Bank 2 Responsibilities of a Consultant The responsibilities or terms of reference of a Consultant are Complied specified. He does not involve in any activities beyond his terms of references 3 Appointment of a Consultant A Consultant can be appointed with the approval of the BoD. No Consultant in After such appointment, the bank shall send the Consultant’s Complied office as on 31st complete resume, terms of reference and details of remuneration to December, 2017 Bangladesh Bank immediately 4 Tenure of a Consultant The tenure of a Consultant should be consistent with the terms of Complied reference but would not exceed 02 (two) years 5 Remuneration/honorarium of a Consultant Complied 6 Appointment of former executive For ensuring good governance, any former Director, CEO or any other Executive of the bank will not be eligible to appointment as Complied a Consultant in the same bank immediately after his/her retirement or resignation.

164 Annual Report 2017 Certificate of Senior Management Team (SMT) Regarding the Effectiveness of Internal Control Policy, Practice and Procedure

Internal Control is a process effected by the Board of Directors, Senior Management and personnel of all levels. It is not solely a procedure or policy that is performed at a certain point of time, but 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 Management Committee is satisfied that Internal Control Policy, Practice and Procedure of the Bank are effective and these 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 their BRPD Circular No-04 dated 04.09.2016.

M. Kamal Hossain Managing Director

Southeast Bank Limited 165 Credit Rating

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, 2016 and unaudited financials up to 31st March, 2017 and other relevant qualitative as well as quantitative information up to the date of rating.

Surveillance Rating Explanation Rating (2015) Rating (2016) Long Term Long Term The Bank rated AA (High Safety) in credit rating is adjudged to AA AA be of high quality, offers higher safety and has high credit quality. Double A Double A This level of rating indicates a corporate entity with a sound credit (High Quality and (High Quality and profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. High Safety) High Safety) Short term Short term The Bank rated ST-2 (High Grade) in the short term in credit rating is considered to have high certainty of timely payment. Liquidity ST-2 ST-2 factors are strong and supported by good fundamental protection High Grade High Grade factors. Risk factors are very small.

Outlook Stable

Date of Rating June 05, 2017

Validity Up to June 04, 2018

166 Annual Report 2017 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 lastly re-constituted by the Board of Directors in its 514th meeting held on May 22, 2017. The membership and attendance of the members of the Audit Committee in 2017 are given below: Sl. No Members Position Meetings held Attendance Remarks Mr. A.H.M. Moazzem Hossain 1. Chairman 7 7 (Independent Director) The Members who could 2. Mrs. Duluma Ahmed Member 7 7 not attend any meeting 3. Mrs. Jusna Ara Kashem Member 7 6 showing genuine ground 4. Mrs. Rehana Rahman Member 7 5 were granted leave of absence Dr. Quazi Mesbahuddin Ahmed 5. Member 7 7 (Independent Director)

Quorum No.11 dated October 27, 2013 of Bangladesh Bank and provisions contained in Notification No.SEC/ Presence of 3 (three) members constitutes quorum for CMRRCD/2006-158/134/Admin 44 dated 07 validly holding a meeting of the Audit Committee. August, 2012 of Bangladesh Securities and Exchange Commission (BSEC). The Head of Internal Control and Compliance of Head Office attended the meetings to present the agenda. On vi. Mr. Zakir Ahmed Khan, Advisor of the Bank, invitation, Senior Executives of the Bank including the shall remain present in every meeting of the Audit Managing Director, Chief Financial Officer (CFO) and Committee as far as possible and shall give his advice Head of Risk Management Division attended the meetings and suggestions for improvement of Bank’s operations to meet instant queries of the Audit Committee to make and strict compliance with rules of both the Bank and its decisions fact-based. In addition, Heads of Branches its regulators. whose audit reports were placed to the Audit Committee were also present in the meetings to respond to the issues Charter of the Audit Committee raised in the reports of Internal Control and Compliance The Audit Committee is constituted by the Board of Division. Directors for the primary purpose of assisting the Board Terms of Reference of the Audit Committee in: Overseeing the integrity of the company’s financial i. Mr. A.H.M. Moazzem Hossain, in his capacity as the statement. Independent Director, shall be the Chairman of the Audit Committee. Overseeing the improvement of corporate governance standard of the company. ii. Presence of 03 (three) members shall form quorum. Overseeing the Company’s system of disclosure, iii. The tenure of office of the Audit Committee shall be internal controls and procedure. for 3 years. Overseeing Bank’s internal control over financial iv. The Company Secretary shall act as Secretary to the reporting. Audit Committee. Overseeing Bank’s compliance with ethical standards v. The terms of reference of the Audit Committee adopted by the company. shall also be as specified in the BRPD Circular Making reports and recommendations to the Board.

Southeast Bank Limited 167 Roles and Responsibilities ii. The Audit Committee approved Inspection Plan of the Bank for the year 2017. The role of Audit Committee is to assist the Board in discharging its duties and responsibilities for financial iii. The Committee reviewed the Bank’s Self Assessment reporting, corporate governance, internal control, green of Anti-Fraud Internal Controls and advised to banking and environmental and climate change risks. adhere to guidance-notes of Bangladesh Bank to avert The added roles of the Audit Committee include, but not attempts of frauds and forgeries in the Bank. limited to, the followings: iv. The Audit Committee reviewed periodic recovery i. Overseeing the financial reporting process. positions of the Bank against classified, re-scheduled ii. Monitoring choice of accounting policies and and written-off loans and gave suitable decisions. principles. v. The Audit Committee reviewed the quarterly, half iii. Monitoring Internal Control Risk Management yearly and annual financial statements before their process. submission to the Board for final review and approval. iv. Overseeing hiring and performance of external vi. The Audit Committee examined the certificate of auditors. the Senior Management Team (SMT) regarding the v. Reviewing the annual financial statements before effectiveness of Internal Control, Policy, Practice and submission to the Board for approval. Procedures. vi. Reviewing the quarterly and half-yearly financial vii. The Audit Committee reviewed the Annual Summary statements before submission to the Board for Report on Audit Findings-2016 and advised for strong approval. monitoring of non-performing loans of different vii. Reviewing the adequacy of internal audit functions. branches for their timely adjustment and turning them into performing loans. The Committee also viii. Reviewing statement of significant party transactions advised to obtain additional collateral against the loan submitted by the management. where there is no collateral or inadequate collateral on best effort basis to safeguard Bank’s interest. ix. Reviewing Management Letters/ Letter of Internal Control Weakness issued by Statutory Auditors. viii. The Audit Committee reviewed the report on the x. Reviewing the raising of fund through Repeat Public Health of Southeast Bank Ltd. and gave suitable Offering/ Rights Issue and its use and application. decisions for improving the Bank’s Financial Health. xi. Monitoring internal control process. ix. The Audit Committee thoroughly reviewed the findings of the Bangladesh Bank Inspection Team xii. Maintaining oversight on regulatory compliance, on different branches and instructed management ethics and whistleblower hotlines to take appropriate actions to prevent repetition of xiii. Reviewing Audit Committee’s own terms of reference. lapses identified in their inspection reports. Reporting of the Audit Committee Report to the Board The Audit Committee reported its findings and All findings and decisions of the Audit Committee were observations to the Board of Directors. It is also required reported to the Board and the Board closely reviewed and to report to the Bangladesh Securities and Exchange ratified them. Commission about anything which has material impact on the financial condition and result of operation of the Minutes of Audit Committee to Bangladesh Bank Bank. But such reporting was not necessitated in 2017 as The minutes of meetings of the Audit Committee were nothing which has/had material impact on the financial sent to Bangladesh Bank for their information. condition and results of operation had occurred in the Reporting to the Regulatory Authorities Bank during the year 2017. There had not been any occurrence in the Bank that required reporting to the relevant authorities by the Bank’s Deliberations of the Audit Committee in 2017 Audit Committee. During the year 2017, 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: A.H.M. Moazzem Hossain i. The Committee recommended for appointment of Chairman bank’s external auditors for the year 2017. Audit Committee

168 Annual Report 2017 Internal Control and Compliance

Recognizing the role of effective internal control as an integral part of good corporate governance, Southeast Bank Limited (SEBL) has strengthened its Internal Control and Compliance Division in line with regulatory guidelines.

The Internal Control and Compliance Division of mechanisms to identify and measure the risk of internal Southeast Bank periodically reviews the different ICC control and compliance of the bank. The procedures are work programs through following set of pre-defined as follows: procedures and accordingly undertakes various control

Meticulous implementation and adoption of relevant policy, manuals, processes, procedures and practices throughout the bank.

Monitoring of operational performance / activities by establishing Departmental Control Function Checklist (DCFCL), Quarterly Operation Report (QOR) and Loan Documentation Checklist (LDC).

Review of Self-Assessment of Anti-Fraud Internal Control Report.

Evaluation of effectiveness of internal control system by Senior Management Team (SMT).

Use of approved methodology of Risk assessment of the Branches for Risk Based Inspection.

Review of annual summary report of the lapses / irregularities identified in the internal inspection reports.

Review of Annual Integrated Health Report of the Bank.

SEBL has formed a solid foundation of internal controls Control Environment: An effective internal control and to ensure that the goals and objectives of the bank are compliance system is essential for efficient and sound risk met, the long-term profitability targets of the bank are management practices and to ensure smooth performance achieved and reliable financial and managerial reporting of the Bank. The Board of Directors of SEBL is actively / information is in place. The controls also ensure that concerned with sound corporate governance and diligently the bank complies with laws and regulations as well discharging its responsibilities. The Southeast Bank as policies, plans, internal rules and procedures. The Management proactively discharges their responsibilities following mechanisms are in place to control and mitigate and supervises the activities of the bank. risks:

Southeast Bank Limited 169 Control activities and Segregation of Duties: To daily activities and periodical evaluation is done by the maintain the key business risks within the risk tolerance business lines and internal inspection teams. Internal levels bearing cost/benefit considerations, the SEBL control deficiencies identified by business lines, internal management has set up an appropriate control structure control team or other control personnel are reported with control activities defined at every business level timely and promptly to the appropriate management level i.e. top level review and appropriate activity controls and addressed immediately. for different departments or divisions; physical controls; checks for compliance and follow-up on non-compliance; Independent Audit Mechanism: The internal audit / system for approvals and authorizations; and system for inspection is a strong mechanism of monitoring the verification and reconciliation. The management of the functions of the branches and divisions of Head office. bank has ensured appropriate segregation of duties with Effectiveness of organizational and procedural controls assigned job descriptions for an effective internal control of the Bank is monitored through this mechanism. The system. Internal Control and Compliance Division of the bank has three separate units; i) Compliance Unit, ii) Monitoring Management Information System: An effective internal Unit and iii) Audit & Inspection Unit. The internal control system requires that there is an efficient reporting auditors conduct their activities in an impartial and system of information that is relevant to decision making. independent fashion, in line with their professional code The management of Southeast Bank has ensured that of ethics for strengthening the system of managing the risk information derived from the MIS is reliable, timely of internal control and compliance of the bank. accessible and provided in a consistent format. The bank uses Core Banking System named “Bank ULTIMUS” which The audit and inspection unit carries out risk based is updated with newest version enhancing the existing comprehensive and surprise inspection, special features and functionalities and ensuring transaction inspection, Information System inspection, investigation security. of the bank’s branches and Divisions/Units of Head Office. Independent Testing on AML and CFT compliance at Monitoring of Activities and Correcting Deficiencies: the branch level are also carried out by this team. The The activities of the bank are being monitored on an summary reports from the internal and external audit and ongoing basis so that the policy, manuals, processes, inspection teams are placed to the Audit Committee of the procedures and practices are being adhered to. Key and Board and measures are taken according to the decisions high risk issues are identified and monitored as part of of the committee.

170 Annual Report 2017 Report of the Risk Management Committee

The Bank Company (Amendment) Act-2018, inter alia, provided for constitution of a Risk Management Committee of the Board of Directors of every Bank. Bangladesh Bank issued BRPD Circular No.11 dated October 27, 2013 delineating, among other things, the composition and functions of the Risk Management Committee especially in the areas of Bank’s core risk-related issues.

Feature and Composition Bank. One Independent Director was included in the Committee. The membership of the Risk Management The Board of Directors of the Bank in its 514th meeting Committee of the Board of Directors of the Bank and the held on May 22, 2017 re-constituted the Risk Management members’ attendance in its meetings in 2017 are given Committee comprising the following Directors of the below:

Sl. No Members Position Meetings held Attendance Remarks

1. Alamgir Kabir, FCA Chairman 8 8 The Member who could 2. M. A. Kashem Member 8 8 not attend any meeting 3. Azim Uddin Ahmed Member 8 8 showing genuine ground was granted leave of A. H. M. Moazzem Hossain 4. Member 8 7 absence (Independent Director)

Structure of the Risk Management Committee iii. Review of the Information Management and reporting system of the Bank. i. The Chairman of the Board of Directors of the Bank shall be the Chairman of the Risk Management iv. Overseeing the overall implementation of Risk Committee. Management Policy of the Bank. ii. Presence of 3 (three) members in a meeting of the v. Reporting its decisions and recommendations to the Committee shall form quorum. Board. iii. The Company Secretary of the Bank shall act as the vi. Overseeing the implementation of related guidelines Secretary to the Risk Management Committee. issued by the regulatory bodies from time to time.

Functions of the Risk Management Committee Reporting of the Risk Management Committee

The broad functional areas of the Risk Management As required, the Risk Management Committee reported its Committee are the following: decisions and recommendations to the Board of Directors for review and ratification. i. Risk assessment and risk control strategy. ii. Review of Risk Policy and its approval.

Southeast Bank Limited 171 Deliberation of the Risk Management 9. Periodically reviewed the maturity and duration Committee in 2017 gaps of Bank’s assets and liabilities and advised the management for their prudent management. During the year 2017, the Risk Management Committee discharged its functions in areas relating to its 10. Advised the management to monitor the Non responsibilities. The main issues it discussed and the Performing Loans of the bank constantly to bring decisions it took for improvement of risk management those back to performing status. scenario in the Bank are enumerated below: 11. Asked the Management to diversify their loans and 1. Periodically reviewed the Bangladesh Bank’s report manage related risks efficiently. on SEBL’s Stress Testing. Reporting to the Board 2. Quarterly reviewed the report on Risk Management Activities of the Bank. The decisions and recommendations of the Risk Management Committee were submitted before the Board 3. Advised the management to regularly monitor Bank’s of Directors and the Board closely reviewed and ratified large loans to protect Bank’s exposure. them.

4. Approved the Risk Appetite Statement for 2017. Minutes of the Risk Management Committee to Bangladesh Bank 5. Reviewed the Foreign Exchange Risk Management Manual as per the Foreign Exchange Risk Management The minutes of meetings of the Risk Management Guidelines issued by Bangladesh Bank. Committee were submitted to Bangladesh Bank for their information. 6. Reviewed of the Asset Liability Management (ALM) Manual (Policy Statement) along with the guidelines of Contingency Funding Plan (CFP), Wholesale Borrowing and Lending Guidelines, Swapped Fund Guidelines and Interest Rate Risk (IRR) Management Policy to comply with Bangladesh Bank requirement. Alamgir Kabir, FCA Chairman 7. Approved Southeast Bank Payment Gateway Risk Management Committee (E-Commerce) acquiring Policies and Guidelines.

8. Advised the management to strictly follow the single borrower exposure limit as per the guidelines of Bangladesh Bank.

172 Annual Report 2017 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 2017 2016 2017 2016 2017 2016 2017 2016 1 Jan'17 1 Jan'16 1 Jan '17 1 Jan '16 1 Jan '17 1 Jan '16 1 Jan '17 1 Jan '16 Particulars to 31 to 31 to 30 to 30 to 30 to 30 to 31 to 31

Dec'17 Dec'16 Sep '17 Sep '16 June '17 June '16 Mar '17 Mar '16 4th Qtr. 4th Qtr. 3rd Qtr. 3rd Qtr. 2nd Qtr. 2nd Qtr. 1st Qtr. 1st Qtr. Balance Sheet Cash 20,979 17,835 19,483 17,541 18,900 16,487 18,466 14,306 Money at call and on short notice 3,644 4,271 1,304 3,822 293 3,325 4,857 1,113 Loans and advances/investments 234,317 191,866 217,746 187,505 206,957 181,450 197,693 174,428 Fixed assets including premises, 9,322 8,947 9,349 8,718 9,375 8,638 8,947 8,331 furniture and fixtures Other assets 3,836 3,102 3,754 3,118 3,461 4,526 2,905 4,829 Total assets 339,288 291,798 315,651 289,004 303,831 276,404 300,178 265,479 Borrowings from other banks, 10,182 7,372 9,708 5,249 10,669 7,018 8,277 7,034 financial institutions and agents Subordinated bond 7,400 8,000 8,000 3,000 8,000 3,000 8,000 3,000 Deposits and other accounts 269,828 229,973 248,101 234,293 237,870 220,406 234,976 211,081 Other liabilities 26,045 19,919 22,922 19,428 21,509 19,631 21,223 16,562 Total liabilities 313,454 265,264 288,732 261,970 278,047 250,055 272,477 237,677 Paid up capital 9,170 9,170 9,170 9,170 9,170 9,170 9,170 9,170 Total shareholders' equity 25,824 26,524 26,909 27,025 25,774 26,341 27,691 27,793 Total liabilities and shareholders' equity 339,288 291,798 315,651 289,004 303,831 276,404 300,178 265,479 Off- Balance Sheet Items 142,497 113,911 134,020 103,350 125,110 101,312 123,039 93,116 Profit And Loss Account Net interest income/net profit on 4,028 4,207 2,645 3,357 1,646 2,270 833 1,095 investments Total operating income (A) 13,933 12,852 9,953 9,363 6,441 6,098 3,173 2,871 Total operating expenses (B) 4,871 4,349 3,431 3,005 2,140 1,888 1,016 906 Profit before provision (C=A-B) 9,062 8,503 6,522 6,358 4,301 4,210 2,157 1,965 Net profit after taxation 1,169 2,435 2,367 2,280 1,187 1,302 877 542 Earnings Per Share (EPS) 1.27 2.66 2.58 2.49 1.29 1.42 0.96 0.59

Southeast Bank Limited 173 Report of the Bank’s Shariah Supervisory Committee

Bismillahir Rahmanir Rahim Assalamu Alaikum Warahmatullahi Wabarakatahu.

In the Name of Allah, The Most Compassionate, The Most Southeast Bank Limited caters both conventional and Merciful Islamic banking services. It has constituted a Shariah Supervisory Committee in compliance with the regulatory Praise be to Allah and peace be upon His Messenger, his framework to oversee the Shariah compliance in Bank’s family and his companions. Islamic Banking. The following veterans versed in Islamic jurisprudence are the Faquih Members on the Shariah The shareholders, depositors and customers of Southeast Supervisory Committee: Bank Limited:

01. Professor Moulana Mohammad Salah-Uddin Chairman Khateeb, Baitul Mukaram National Mosque, Dhaka, and former Principal, Madrasha-e-Alia, Dhaka. 02. Mr. M. Kamaluddin Chowdhury Member Former Managing Director of Islami Bank Bangladesh Ltd. and Shahjalal Islami Bank Ltd. 03. Moulana Mohammad Kafiluddin Sarker Member Principal, Dhaka Nesaria Kamil Madrasa and Khatib, Aminbagh Jame Mosque

The Shariah Supervisory Committee reviewed different experts in Islamic Banking were invited to speak to operational issues including those referred by the the participants in such training programs. Management of the Bank. It gave necessary guidelines and counseling. iii) The people that work in Bank’s Islamic banking branches as well as Islamic Banking Division at Head In carrying out the roles and the responsibilities of the Office are sufficiently trained to offer best Islamic Shariah Supervisory Committee of the Bank as prescribed banking services complying with Shariah principles. in the Shariah Governance Framework in Guidelines of Bangladesh Bank, we hereby report the following facts iv) The Islamic Banking Branches were advised to move and circumstances concerning Bank’s Islamic banking aggressively to procure more low-cost and no-cost services in the financial year ended December 31, 2017. deposit by increasing the number of Accounts and number of deposit customers of the Islamic Banking During the Year 2017, Shariah Supervisory Committee of Branches to improve their deposit-mix. Southeast Bank Limited held 03 (three) formal meetings. v) The Shariah Supervisory Committee advised to park i) The Shariah Supervisory Committee advised to more fresh investment clients in the Islamic Banking arrange Shariah Inspection of every Branch twice in a Branches. year and ensure compliance of shariah requirements in Bank’s Islamic Banking operations. vi) The Shariah Supervisory Committee approved the branding of Islamic Banking products within one ii) Training Programs on Islamic Banking were arranged. folder named “Tijarah”. The Committee also advised Members of Shariah Supervisory Committee and that the folder containing the salient features of Bank’s

174 Annual Report 2017 Islamic Banking Products be supplied to the Islamic The Management of the Bank confirmed that all Banking Branches. The instruction was complied the Islamic banking branches were inspected by with. the Muraquib in 2017. It was observed from the inspection reports that compliance of Shariah had vii) The Shariah Supervisory Committee advised to significantly improved during the year. continue frequent training programs on Islamic Banking to develop quality human resources for iii) No deviation of any Shariah requirement was Islamic Banking Service Desks. The advice has been reported to the Shariah Supervisory Committee by taken in right earnest by the Bank’s Management the Management. viii) The Shariah Supervisory Committee advised to iv) Efforts regarding engagement of buying agents at park more Hajj and Umrah Agency Accounts in branch level has been strengthened . They are being collaboration with the HAAB members. The decision made aware and inspired to comply with shariah is being implemented and a good progress in this requirements in discharging their duties as the buying regard has been achieved. agents.

Shariah Inspection reports of Islamic banking May Allah give us tawfique to achieve His satisfaction operation of the Bank for the year 2017 through implementation of Shariah principles in every sphere of our life including those applicable to banking We further report that: transactions. Ameen. i) The Bank engaged one Muraquib for Shariah inspection of Bank’s five Islamic Banking Branches. The Muraquib has been performing his duties satisfactorily. Prof. Moulana Mohammad Salah-Uddin ii) The Shariah Supervisory Committee stressed upon Chairman frequent inspection of the Islamic banking branches. Shariah Supervisory Committee

Southeast Bank Limited 175 Capital Plan

A strong capital plan of a Bank ensures that there is enough fuel to drive its strategic plan and there is adequate insurance against the Bank’s risk profile. The Bank’s capital plan is developed with the objective of maintaining capital that is adequate in quantity and quality to support its risk profile, regulatory and business needs. The capital planning takes into account both short-term and long-term requirement in order to give a comprehensive view of current and future capital levels in line with the Bank’s Strategic Plan and Risk Appetite. The capital plan includes a forecast of the Bank’s expected capital performance based on budgets and takes regulatory requirements into account when future capital requirements are assessed.

The starting point for the capital plan is the annual budget capital at an early stage, enabling us to respond efficiently cycle which forecasts the Bank’s balance sheet trajectory by taking a series of available measures. This deterioration over a five year forward looking horizon. The budget is identified by frequent monitoring of ‘early warning’ cycle incorporates assumptions about the future shape indicators. In addition, the Bank maintains a recovery and direction of the balance sheet of the Bank. It includes plan which sets out a range of potential mitigating actions assumptions around the future path of Risk Weighted that could be taken in response to an extreme stress. The Assets (RWA), profitability and tax. The capital plans are choice of the actions to be applied, such as raising new then tested for capital adequacy and measured against capital or lowering the risk-weighted assets, depends on the Bank’s risk appetite framework using a range of stress the nature and severity of possible scenarios. scenarios covering adverse economic conditions as well as other adverse factors that could impact the Bank. As Capital Management a result, the Bank holds a diversified capital base that provides strong loss absorbing capacity and optimized Capital management and capital adequacy maintenance returns. operation in the Bank is performed in an integrated way, seeking to maximize shareholders’ value by prudently Actual and projected capital and leverage ratios are regularly optimizing the level, mix and distribution to businesses of reported to the Management Level Risk Committee, SRP its capital resources, fulfilling the regulatory requirements Team, ALCO, SMT, Board Risk Management Committee and profit maximization target. The Bank’s objectives are and the Board depending on the normal and stressed achieved through well embedded capital management scenarios. practices into its operations.

The Bank regularly monitors the developments very The main purposes of the Bank’s capital management closely to ensure the maintenance of a strong capital base policies and practices are to support its business strategy that exceeds the minimum regulatory requirements and and to ensure a sufficient level of capital to withstand even risk appetite consistent with market expectations. severe macroeconomic downturns. It is determined by the strategic objectives and by risk appetite set by the Board of Capital Conservation Plan Directors. In order to achieve this, the following policies have been established to shape the approach that the Bank The Bank’s Capital Conservation Plan serves as an action applies regarding capital management: plan that allows us to take prompt measures as soon as our capital position suddenly deteriorates or financial market Establish adequate capital planning that covers conditions are unexpectedly unfavorable. The purpose current needs and provides the necessary resources of the Capital Conservation Plan is to identify stress on to meet the business plan requirements, regulatory

176 Annual Report 2017 requirements and the associated risks in the short well positioned to meet upcoming capital requirements as and medium term, while maintaining the risk profile well as to continue to grow our business. approved by the Board. To ensure sustainable growth in coming years and to strengthen the capital base further, the Bank is considering Ensure that, under stress scenarios, the Bank maintains to increase Bank’s capital in suitable ways. The Bank enough capital to cover the needs arising from the has already decided to issue a Basel III compliant Tier risk increase due to deterioration of macroeconomic II Subordinated bond for Taka 5,000 million to raise conditions. Tier-II Capital of the Bank. Besides, the Bank is able to accumulate additional capital through the reduction in Optimize capital use through appropriate allocation Risk Weighted Assets (RWA), retentation or accumulation of capital among the businesses, based on the relative of retained surplus over time. The Bank is also able to return on capital, considering risk appetite, its growth manage the demand for capital through management and strategic objectives. actions including adjusting its lending strategy through business disposals. Southeast bank is adequately capitalized and has sufficient buffers to ensure a going concern even under adverse Capital Requirement under Basel III conditions. The Bank performs stress tests to verify that it is sufficiently capitalized to withstand adverse events Southeast Bank adopted the Basel III framework caused by material risks arising from its business strategy introduced by the Central Bank. The Bank has been at present and in future. The results of stress tests have compliant with the minimum requirements since it came confirmed the Bank’s substantial capitalization. Our into effect on January 2015. The phase-in arrangement for capitalization makes us resilient and ensures that we are Basel III implementation is as follows:

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%

The Bank is well positioned to comply with the considering to improve its Tier-I and Tier-II capital base, requirements that are subject to phase-in rules within the future minimum requirements are expected to be 2019 as per the above table. As the Bank is actively well-complied with.

Southeast Bank Limited 177 Statement of Non Performing Loan

Loan classification refers to the process the bank uses to review its loan portfolio and segregate loans to different categories or grades based on the perceived risk and other relevant characteristics of the loans. Therefore, minimizing non-performing loan is a tough challenge for the Bank. Bank’s profitability, strengths, images, reputation and ratings are highly dependent on quality of assets. 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 and classification of loans enables bank to monitor the quality of the loan portfolio and to take remedial action to counter deterioration in the quality of portfolio. Southeast Bank follows the rules and regulations of loan classification as per policy of Bangladesh Bank. The Bank also maintains necessary provisions as per rules and in some cases excess provisions are kept in consideration of future uncertainties and unexpected losses.

Industry Scenario of Non-Performing Loans of unclassified and classified loans of the bank (solo) as on 31.12.2017 was as follows: This year has been a particularly challenging year for Amount BDT Status Percentage the Banking industry of the country in terms of Non- in Million performing loans. The amount of non-performing loans in Unclassified Loans the industry increased significantly in 2017 which affected credit quality as a whole. The higher Non-performing Standard 205,583.79 88.67 Loan rate is the combination of a few contributing factors Special Mention Account 12,388.68 5.34 such as political uncertainty, loan scams, excessive finance Sub-Total 217,972.47 94.01 to some large business groups, willful default, business failure, inadequate follow-up and supervision etc. Classified Loans Though, the overall economic growth improved in 2017, the banking sector continued to face challenges arising Sub-Standard 1,244.36 0.54 from deteriorating asset quality. Doubtful 753.25 0.32 Bad/Loss 11,880.93 5.12 Classification Status of Credit Portfolio Sub Total 13,878.53 5.99 Grand Total 231,851.00 100.00 The Bank classifies its loan portfolio in accordance with the rules and regulations set by Bangladesh Bank from Non-Performing Loan Ratios time to time. In case of need the Bank classifies some loans on qualitative judgment too. Our management always Different ratios of non-performing loans of the Bank as on remains vigilant to arrest new loans from being classified, December 31, 2017 stood as follows: minimize the existing non-performing loans by way of Parameter/Particulars Percentage cash recovery and regularize through rescheduling in the Gross Non-Performing Loan (NPL) Ratio 5.99% deserving cases under the purview of Bangladesh Bank’s guidelines. Amid adverse trend of loan classification, Net Non-Performing Loan (NPL) Ratio 2.49% Southeast Bank could restrict its classified loan position Gross Non-Performing Loan (NPL) 72.55% to BDT 13,878.53 million which was 5.99percent of total Coverage (Specific Provision + General loans and advances as on December 31, 2017. The status Provision)/ Gross NPL

178 Annual Report 2017 Provisioning following initiatives to recover the non-performing loans: Formation of Taskforce: A 07-member “Taskforce” for Southeast Bank strictly follows the rules and regulations recovery of classified loan has been constituted comprising of Bangladesh Bank regarding classification of loans and the officials of Head Office and Branch headed by AMD, advances and maintaining provision. At the end of every of the bank. Taskforce is actively reviewing the recovery quarter, the Bank ensures maintenance of both general and position of those loans in their periodic meeting and give specific Provisions. Sometime, the Bank keeps additional necessary directions/guidelines to gear up the recovery provision to protect interest of the Bank. process.

Loan Write-off Fixation of Recovery Target: At the beginning of the year the bank Management has set branch-wise targets for Minimizing the amount of non-performing loans through recovery of classified loans. The Head Office Management writing-off of bad loans is an internationally accepted and the Taskforce regularly monitor/review the recovery practice to keep the balance sheet sound. Bangladesh activities of the branch and give necessary guidelines/ Bank also introduced this system by issuance of guidelines assistance to achieve the recovery target of the branch. vide BRPD circular #02/2003 dated January 13, 2003. Impaired loans are written-off when there is less prospect Negotiation with defaulted Clients: Officials of Legal of recovery of part, or the entire loan in a shorter span of Affairs & Recovery Division at Head Office regularly visit time. Southeast Bank also started writing-off of loans since the branch located in different parts of the country and 2004 complying Bangladesh Bank’s guidelines meet the defaulted clients to find out ways for settlement/ adjustment of bad loans of the bank. Strategies for NPA Management: Close monitoring and Supervision: Defaulted Clients are Targeting substandard assets with special thrust on continuously pursued jointly by the Branch and the Head recent slippages for upgradation. Office officials through letters, phone calls, visits to their place of business and residence and holding meetings at Intense focusing on NPL accounts especially Bad Head Office and the branches. loans where provision is 100%. Selecting priority wise customer where chances of Legal Proceedings & follow-up of cases: After exhausting recovery are high based on amount of Loan. all the avenues to recover the classified loans law suits are filed with Artha Rin Adalat as well as CMM court Preparing account wise strategy to recover Banks to recover non-performing loans. All cases are properly dues in shortest possible of time. followed up jointly by the Branch and Head Office.

Negotiation with the client for recovery outside the Appointment of senior lawyer: Court cases are constantly court. monitored through the panel lawyers of the bank. In case Accelerating recovery drive through prudent use of of need senior lawyers are appointedto conduct the court Artha Rin Adalat Act, filing Criminal Case, Settlement cases of the Bank. Efforts are taken to recover bad loans through disposal of court cases. Arrangement, attachment of property, Recovery drives etc. Formation of Special Team: A 06-member special team Vigorous monitoring and follow up at Branch and has been constituted comprising the 03-officials of Legal Head Office level. Affairs & Recovery Division at Head Office & 03-officials of the concerned branch to follow up and early disposal of Fixation of annual target for recovery and follow up big cases of the branch. the achievement by the task forces on monthly basis. Settlement of Loans outside the Court: Efforts are being taken to settle/adjust the loan outside the court through Initiatives taken for recovery of Non- negotiation/persuasion with the defaulted clients. Performing Loans (NPL) Considering the client’s business/financial condition, long drawn legal procedures, time value of money It is recognized that financial health of the bank depends concept several measures like longer repayment period, upon the amount/percentage of non-performing loans concessional interest rate and in few cases settlement (NPLs) of the bank. Considering the gravity of NPLs, arrangement with waiver of a portion of interest may be bank focuses on keeping credit portfolio performing to allowed to recover the loans. the maximum possible extent. In line with that, special emphasis has been given on NPL recovery. A separate We believe concerted initiatives taken by the Bank shall unit is exclusively working for recovery from hardcore definitely help reduce the non-performing loans and defaulted accounts. Southeast Bank has taken the improve the asset quality of the Bank.

Southeast Bank Limited 179 Our Risk Management and Contr Measures are aimed at remaining disciplined, reducing risks and ol augmenting success.

180 Annual Report 2017 Report on Risk Management Framework, Mitigation Methodology and Risk Reporting by Chief Risk Officer

Risk management is a strategic priority of the Bank. To support this, a strong, disciplined risk management culture has been introduced and shared by all the Bank’s employee. 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 above or equal to ‘Satisfactory Level’ (scale defined by BB). the outcomes of risk-taking activities are predictable and The risk management programs of the Bank’s subsidiaries consistent with the Bank’s strategies and risk appetite also conform in all material respects to the Bank’s risk and that there is an appropriate balance between risk management framework, although the actual execution and reward in order to maximize shareholder returns. of their programs may be different. The Bank’s risk In 2017, the Bank reviewed the world’s macro economic management framework is applied on an enterprise-wide outlook together with the country’s business and economy basis and consists of three key elements: to produce Risk Appetite of the Bank. Besides, the Bank conducted a self-assessment on the implementation of i) Risk Governance core risks management and the reports of its findings have been placed to the Board of Directors. The self-assessment ii) Risk Appetite confirmed that risk management practices are core iii) Risk Management Technique strengths of the Bank as in all core risk areas it achieved

Southeast Bank Limited 181 i) Risk Governance to that appetite. The Bank’s Risk Appetite Framework consists of four components and combines qualitative The Board of Directors as well as quantitative terms of reference to guide the Bank in determining the amount and types of risk it The Bank’s risk management governance structure begins wishes to prudently undertake. The components are: Risk with oversight by the Board of Directors, either directly or management principles, Strategic principles, Governing through its committees to ensure that decision-making is financial objectives, Risk appetite measures. aligned with the Bank’s risk appetite. The Board receives regular updates on the key risks of the Bank – including iii) Risk Management Techniques a comprehensive summary of the Bank’s risk profile and performance of the portfolio against defined goals, which The Bank’s risk management techniques are guided by is presented quarterly to the Risk Management Committee the Bank’s Risk Appetite Framework integrated with the of the Board. The Board also approves key risk policies, Bank’s strategies and business planning processes. The limits, strategies and risk appetite. The Bank’s Audit and risk management technique includes: measurement, Inspteciton Unit reports independently to the Board monitoring and reporting of risk; providing strategies, (through the Audit Committee) on the effectiveness policies and setting up limits; introducing guidelines and of the risk governance structure and risk management processes. framework. The above framework is to establish a sound system of risk Management management supervision and internal control to identify, assess, monitor and manage material risks related to the The Managing Director (MD) and the Chief Risk Officer conduct of Bank’s activities. The aims are to: constantly (CRO), are responsible for risk management under the improve the management of risk; better understand direct oversight of the Board. The CRO, who oversees the reward-to-risk balance; and reduce the risks to an the Risk Management Division of the Bank, reports to the acceptable levels. CEO but also has direct access to the Risk Management Committee of the Board. The CRO is the chairman of Management Level Risk Management Committee.

ii) Risk Appetite S. M. Mainuddin Chowdhury The Bank has clear articulation on the Bank’s risk appetite Additional Managing Director and how the Bank’s risk profile will be managed in relation & Chief Risk Officer (CRO)

182 Annual Report 2017 Risk Management in Southeast Bank Limited

Southeast Bank seeks to manage risks in order to capitalize opportunities and improve its performance through achieving excellence in risk management. The Bank’s risk management is built on clear goals and strategies, policies and guidelines, efficient operating structure and transparent reporting. Throughout its 22 years history, risk management has always been a priority for the Bank. In 2017, major progress has been made to anticipate and to meet big challenges faced against a constantly shifting economic, social and regulatory background.

The Bank is focused on building the future through defined by the relevant risk limits. The forward- a forward-looking management of all risks, while looking approach for all risk types is part of the safeguarding the present through a robust control risk identification, assessment and management environment. The basis of efficient risk management and processes. a good risk-adjusted return is a strong, consistent risk culture with delegated responsibility and decision-making Risk Transparency: All risks are identified, authority. The Risk Management Division strives to ensure documented and discussed in order to obtain a good that risk management is implemented correctly, that it is understanding of the Bank’s exposures. in line with all legislation and that it is consistent with the best practices in the market. The Bank’s risks function is Independent Risk Control: This is the structured based on the following pillars: process of identifying, measuring, monitoring and reporting risk wherein the risk management Risk Appetite: The Risk Appetite Statement is based departments operate independently of the commercial on the risk strategy and defines the types and levels of activities. risk which the Bank is willing to accept to achieve its business objectives and is essential for achieving long Three lines of defense: term sustainable results. Successful risk management requires a strong risk culture Risk Policy: The Bank’s risk policy is aligned with its and a common approach that permeates the entire Bank. strategy and business model that takes on board the Southeast Bank builds its approach to risk management recommendations of supervisory bodies, regulators on the concept of three lines of defense, signifying a clear and best market practices. division of responsibilities between the risk owners and control functions. Management Accountability: Different departments are individually accountable for the risks associated The risk management of the Bank is based on a with their operations. A balance is being preserved sophisticated risk process with following three lines of between risk and return, within the boundaries defense-

Primarily responsible for risk management. The process of assessing, evaluating and measuring risk is ongoing and is integrated into the day- to-day activities of the business. This process includes implementing 1st Line of Business Unit the Bank’s risk management framework, identifying issues and taking Management/Branches Defense remedial action where required. Business unit management is also accountable for reporting to the Head Office management and regulatory bodies.

Southeast Bank Limited 183 Prepare policies in line with the regulatory and economic changes. Head Office management The business unit risk management functions implement the Bank’s 2nd Line of by different specialized divisions and committees risks management framework and policy in the business units and Head Defense like: SMT; ALCO and Office Management approves risk within specific mandates and provide other major committees. an independent overview of the effectiveness of risk management by the first line of defense.

a) Ensure that the Bank will comply with laws and regulations as well a) Internal Control and as policies, plans, internal rules and procedures and decrease the risk Compliance Division 3rd Line of of unexpected losses or damage to the Bank’s reputation. Defense b) Provides an independent assessment of the adequacy and effectiveness b) Risk Management of the overall Risk Management framework and risk governance Division structures and reports to Risk Management Committee of the Board.

The risk management at Board level:

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 decision 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 Board. Risk Management Audit Committee of the Board: Structure 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.

Risk Management Committee of the Board: Board Risk Management Committee is responsible for mitigating risks arising from strategies and policies formulated by the Board.

Risk Management Committees and reporting line:

Board of Directors

Audit Committee Managing Risk Management of the Board Director Committee of the Board

Internal Control and Management Level Compliance Division Risk Committee

Senior Management Asset - Liability Risk Management Team Committee Division

184 Annual Report 2017 The Risk management of the Bank has risk oversight for i. Credit marketing, the following core risk areas: ii. Credit approval processes. iii. Credit Risk monitoring processes. 1. Credit Risk Management iv. Credit Risk mitigation processes. 2. Asset-Liability Risk Management 3. Foreign Exchange Risk Management i. Credit Marketing 4. Internal Control and Compliance Risk Management 5. Money Laundering Risk Management All the branches are the ambassadors of the Bank located 6. Information and Communication Technology Risk at the door step of the customers and they are the primary Management contact point with the clients. Branch officials and Direct Sales Executives promote the business of the Bank and sell Apart from the core risks mentioned above the the products and services to the prospective customers. Environmental risk is one of the major risks that has been They contact the potential clients and park them to the considered as an integral part of credit risk. The Bank’s Bank as per the directives of Head Office in line with risk management processes, policies and mitigations of the Credit Risk Management Guidelines, annual sectoral the core risks along with Environmental risk are described allocation, strategies and policies to achieve the targets. below: With this end in view, the network of the Bank has been expanded across the country to diversify the credit 01. Credit Risk Management portfolio of the Bank through balanced growth of credit in different productive and promising sectors. 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 ii. Credit Approval Process traditionally been the greatest risk that lending institutions face and is usually the one for which the most regulatory The Credit Officer at Branch level acts as relationship capital is required. The credit risk management function Officer and held responsible to ensure the accuracy of the is responsible for ensuring that the Bank’s credit risk is entire credit application/ proposal submitted for approval. satisfactorily managed. The main objective of the credit A thorough credit and risk assessment is conducted risk management process is to identify, assess, measure, prior to granting of any loan. The Corporate Banking monitor and mitigate all types of risks associated with Division, SME & Agri Credit Division, Islamic Banking credit exposure of the Bank. The Bank has established a Division, Retail Banking Division of Head Office are credit risk management framework to manage credit risk actively involved in scrutinizing, analyzing, assessing and at individual as well as at portfolio level. processing the credit proposal. These divisions at Head Office have been managed by three senior level executives Southeast Bank has a comprehensive credit risk for ensuring more intensive and in-depth care of credit management policy. Credit Risk Management process of operation. Whereas, the Credit Risk Management the bank is articulated through several Board approved Division is involved in evaluation and in-depth analysis policies viz. Risk Appetite Statement, Credit Risk of risks associated with the individual borrower and Management Policy, delegation of Business Powers of find out the mitigating factors to minimize those risks. Individual Executives/Officers for loans and advances, Then the respective credit officers of Head Office further valuation methodology, Standardized Recovery/collection process the proposal embodying and complying the Procedure etc. The Bank measures, monitors and observations of CRM and place the proposal to Head manages credit risk at an individual borrower level and Office Credit Review Committee (HOCRC) for decision. at the portfolio level as well. The Bank’s structured and Upon recommendation of Head Office Credit Review standardized credit approval process includes a well- Committee, the competent authority (as per delegated established procedure of comprehensive appraisal based business power) may approve or decline the proposal. on the guidelines- Credit Risk Management Policy of the Managing Director may recommend the proposals which Bank and rules and regulations of Bangladesh Bank and are beyond the Managing Director’s delegated authority other regulatory authorities. This policy is being reviewed to the Executive Committee / Board of Directors as per and updated annually incorporating the new instructions delegation for approval/ decision. Upon approval a letter, of regulators, considering the global and local economic conveying the sanction of loans, is issued in four copies trend and based on appetite of the Bank. Bank’s Credit Risk (for the Branch, CAD, ICCD and Corporate Banking) by Management practices are based on policy directives duly the credit approval Department of CRM. (if declined, the approved by the Board which, inter-alia, encompasses the same is communicated accordingly.) following:

Southeast Bank Limited 185 iii. Credit Risk Monitoring Process 02. Asset-Liability Risk Management

The Credit Risk Monitoring activities of the Bank aim at The aim of Asset Liability Risk Management (ALM) of the ensuring that there is no undue deterioration in quality Bank is to properly manage the risk arising from changes of individual assets within the portfolio. It also aims at in interest rate, mix and mismatches of balance sheet continuous improvement of the overall quality of assets assets and liabilities and foreign currency rate movement at the portfolio level, by deploying appraisal skills, in the domestic and international market. ALM is a set ensuring adherence to credit basics/lending guidelines, of tools that ensures value creation for the shareholders maintaining documentation standards and complying in a regulated environment maintaining a good tradeoff with the rules and regulations of regulatory authorities between risk and return. As the banking sector is now while leaving enough room for flexibility and innovation. concentrating more on liquidity and interest rate risk The primary monitoring is done by branches’ relationship management along with rates of return on capital and its officers/managers as well as Head of Branch regarding assets than overriding efforts for balance sheet expansion; their performances, business, transaction and turnover, proper ALM structure and risk management framework is repayment behavior etc. indispensable. Our main focus of ALM is to keep the risk of doing business within the limit side by side ensuring Simultaneously, the Credit Administration Department that the risk which has been taken is properly managed under CRM Division is assigned to look after post and informed. approval process such as to establish better control over loan portfolio by helping completion of documentation, Liquidity Risk scrutinizing the checklist of documents, setting limits and tenor and pricing of loans etc. in a systematic manner Liquidity risk management concerns the discipline of and allow subsequent disbursement, ensuring utilization ensuring that a bank remains liquid at all times and under of fund, monitoring and compliance of all covenants all market conditions. Liquidity risk refers to the risk of and conditions precedent. This Department keeps a bank’s inability to meet its financial obligations as they constant follow-up of the credits right from its sanction fall due without incurring unacceptable costs or losses and continues its efforts to ensure timely repayment/ through fund raising and assets liquidation. Liquidity recovery so that the disbursed credits remain performing risk can also arise due to bank’s incapability to manage and unclassified. Besides, overall portfolio alongwith unexpected decrease or change in funding sources. It can industries/sectors concentration of the credit portfolio negatively affect the earnings and growth potential if the of the bank is reviewed at regular intervals and brought liquidity position constrains a bank from undertaking a to the notice of senior level management regarding transaction at normal market rates/prices. concentration risks, geographical distribution, down gradation along with early alert list (if any) for information Measurement and mitigation of Liquidity & their guidance. These coherent activities altogether help Risk the bank to maintain sound health of the credit portfolio and to attain a sustainable growth. Southeast Bank has a well established liquidity strategy, policy and procedure in line with the Bangladesh Bank iv. Credit Risk Mitigation Process guidelines that establishes an appropriate and properly controlled liquidity risk environment. The ALCO, which The Bank makes all possible efforts to mitigate risks oversees the liquidity and other risks of the bank, manages associated with credit accounts through screening the liquidity by ensuring the following: and selection of borrowers, assessment of optimum requirement of fund, structuring of the facilities, in- We prepare Structural Liquidity Profile (SLP) of depth market analysis, arrangement for suitable collateral, Assets and Liabilities in different time buckets as per guarantors, insurance coverage etc. wherever it is Bangladesh Bank Guideline. considered feasible and desirable. In addition to that, terms and conditions under which credit is sanctioned We set certain limits in net inflow in different time also go a long way to mitigate risks associated with credit. buckets guided by Bangladesh Bank directives and Regular monitoring and control of accounts also add to internal policy of the bank. the risk mitigation. In order to mitigate risks, the Bank takes necessary guarantees and documents including We maintain a liquidity buffer in the form of charge documents. Continuous follow up and updating unencumbered high quality liquid assets that can of all relevant data/information are also the key factors for be used, without impediment, to obtain funding in mitigation of credit risks. times of stress;

186 Annual Report 2017 We have been maintaining a vibrant participation movement in exchange rates. Typically, a depreciating in the inter-bank market by regular borrowing and currency leads to gains from assets and losses from lending side by side maintaining credibility and good liabilities whereas an appreciating currency results in the reputation with the depositors / lenders to make sure opposite. In the foreign exchange business, banks also face that liabilities matured are promptly renewed. the risk of default of the counter parties or settlement risk. The foreign exchange positions arise from the following Diversification in the sources (including activities: counterparties, instruments, currencies and markets) and tenor of funding and regular review of Trading in foreign currencies through spot, forward concentration limits helps us to rein in the liquidity and option transactions as a market maker or position risk of the bank. taker, including the un-hedged positions arising from customer-driven foreign exchange transactions; The BASEL III guideline provided two effective monitoring tools to measure the liquidity namely Holding foreign currency positions in the banking Liquidity Coverage Ratio (LCR) and Net Stable book (e.g. in the form of loans, bonds, deposits or Funding Ratio (NSFR) which our bank maintaining cross-border investments); or from the beginning. Engaging in derivative transactions that are Interest Rate Risk denominated in foreign currency for trading or hedging purposes. Interest rate risk arises due to fluctuation in the interest Bank has formulated a Foreign Exchange Risk Management rates is the market risk. It can pose a serious threat to Manual as per the guidelines given by Bangladesh Bank to the capital base of the bank and the net interest income measure, monitor and control different foreign exchange (NII) by altering rate sensitive income and expenses. risks. Apart from this manual, Bank also applies other Changes in interest rates also affect the underlying value standard tools to minimize foreign exchange risks, some of the assets and liabilities of the bank because the present of which are given below: value of future cash flows changes when interest rates change. Interest Rate Risk, if assumed correctly, can be Maintaining Net Open Position (NOP) within the an important source of profit and share value. However, limit set by Bangladesh Bank; taking excessive Interest Rate Risk can significantly jeopardize the bank’s income and capital base. By setting counterparty limit which includes forward, placement, SWAP limits for foreign exchange Measurement and mitigation of Interest Rate transactions; Risk By setting limits for the foreign exchange dealers Effective Interest Rate Risk management is a key (intraday open position limit, stop loss limit, per deal component of earnings, capital preservation and growth. limit, trigger limit); We measure Interest Rate Risk (IRR) through Gap Analysis of Rate Sensitive Assets and Liabilities to estimate the By reconciling Nostro accounts periodically as per the probable impact on Net Interest Income of the bank. instruction of Bangladesh Bank. Where rate sensitive assets are more than rate sensitive liabilities (i.e., positive gap) an increase in interest rate will By calculating VaR (Value at Risk) to measure the impact the Net Interest Income positively and vice versa. highest possible loss of holding of foreign currency;

We use another gauge to measure IRR is Duration Gap 04. Internal Control and Compliance Risk Analysis which is used to predict the likely impact of Management interest rate movements on the net worth of the bank. By changing the durations of investment assets we try to Banking has diversified and multifarious financial obtain the desired impact of interest rate movements on activities which involve different risks. Among the six the Balance Sheet of the bank. core risk areas identified by Bangladesh Bank, one of the major risks is the Internal Control and Compliance 03. Foreign Exchange Risk Management Risk. The foundation of safe and sound operation of a bank relies in a strong and effective internal control. The Foreign exchange risk is the risk that a long or short system of internal control by its own merits identifies the position in the banking book or in the trading book in risks associated with the process and adopts a measure to foreign currency may render a loss due to an adverse mitigate such risks. Internal audit is just a part of Internal

Southeast Bank Limited 187 Control system which reinforces the control system (ID) and Treasury Division are also conducted by the through regular review. Internal control and compliance unit. risk arises from error and fraud in operating activities due to lack of standard internal processes, people and systems. 3. Audit Cell-3: This Cell is responsible for conducting regular IT Audit/Inspection according to the approved In line with the Bangladesh Bank guidelines of internal inspection plan of the bank as well as in line with the control and compliance, the management of Southeast ICT guidelines issued by Bangladesh Bank. Bank has established a system of strong internal controls so that the bank can meet its goals and objectives as well as Compliance Unit: Compliance is viewed as an integral achieve long-term profitability target and maintain reliable part of the Bank’s business activities with the aim of financial and managerial reporting. Such a system also protecting the Bank’s name and reputation. Southeast helps ensure that the bank complies with the applicable Bank has established the Compliance Unit under Internal laws and regulations as well as policies, plans, internal Control and Compliance Division as part of its ongoing rules and procedures and decrease the risk of unexpected efforts and commitment to comply with the regulatory losses or damage to the bank’s reputation. issues/instructions and to establish local and international compliance standards for overall soundness and improved The Audit Committee of the Board (AC) plays an effective performance of the bank. The compliance unit takes role in establishing internal control compliance culture. actions as per advice/instructions laid down in the The AC reviews the system of internal control, the audit internal as well as external audit/inspection reports or any process and the bank’s process for monitoring compliance changes brought in by the regulatory authority. The work with laws and regulations and the code of business practice of compliance Unit of the bank is virtually divided into of Southeast Bank. Internal Control and Compliance two groups namely: Division (ICCD) of Southeast Bank performs supervisory (a) Internal Audit Compliance is responsible for and monitorial activities to ensure that the system of monitoring the compliance activities of the branches internal controls is being adhered in bank’s day to day and divisions of Head Office based on the findings of operations. ICCD has 03 units i.e. Audit and Inspection internal audit/inspection reports; and Unit, Compliance Unit and Monitoring Unit. (b) External Audit Compliance is responsible for Audit and Inspection Unit: The audit and inspection monitoring the compliance activities of the branches unit carries out regular and special inspection of the and divisions of Head Office based on the findings of bank’s branches and Divisions/Units of Head Office. external/regulatory and statutory audit/inspections. The workforce of this Unit has a good amalgamation of business, professional and IT knowledge. They inspect Monitoring Unit: The Monitoring Unit verifies the the level of compliance of the bank’s operations with internal control system and operational activities of the relevant legislations, in-house policies and procedures Bank through different tools like: Departmental Control and banking principles and norms. The internal auditors Functions Checklist (DCFCL), Quarterly Operation conduct their activities in an impartial, independent and Report (QOR) and Loan Documentation Checklist (LDC) meticulous fashion, in line with their professional code of following Bangladesh Bank guidelines along with the ethics. This Unit has three (03) Cells for performing its result of Offsite analysis of the branches. Self-Assessment tasks smoothly: of Anti-Fraud Internal Controls Report, Annual Summary Report and Bank’s Health Report are also prepared by this 1. Audit Cell-1: The members of this Cell conduct Unit. All the issues are periodically reviewed by the Audit regular audit/inspection based on the approved Committee of the Board. annual audit/inspection plan by the Audit committee of the Board. Apart from this the Investigations and In a year round program of 2017, the comprehensive Inquiries are also conducted by this unit to uncover surprise inspection of 114 (one hundred fourteen) the underlying reasons, employees responsible and to branches and divisions of Head Office were carried out mitigate losses and correct errors. by the Internal Auditors. They also conducted inspection on Foreign Exchange Operations of all the AD branches. 2. Audit Cell-2: Transactions related to trade finance Furthermore, the ICT inspection team conducted (e.g. trade, treasury, remittance, etc) and the online inspection on a total of 47 (forty seven) branches reporting to the regulatory authority are the prime and 03 (three) divisions of HO. Out of the approved job of this Cell. Comprehensive inspection, according audit/inspection plan a number of special inspection/ to the approved annual inspection plan on each of investigation/inquiry was also carried out by the inspection the Authorized Dealer (AD) Branches and related team as per direction of the competent authority of the Divisions of Head Office like International Division bank.

188 Annual Report 2017 Findings and observations or the statement of facts moved transactions to payment cards (Debit/Credit) and identified/discovered through the audit / inspection are electronic channels, like ATM, POS, Internet Banking and aggregated in an inspection report. The report is then sent to Mobile Banking. The opportunity of modern information the respective branch/division with significant time period technology has been fully availed by the financial for rectification/regularization of the findings and reply institutions to expedite financial inclusion process. The back to the ICCD. Major observations and summarized dependence on technology in banking has also created reports are discussed in the meetings of ACB and the ICT related risks and vulnerabilities. Therefore, to identify ACB provides necessary decisions/recommendations for these risks, the Bank has to have a risk assessment, further action to be taken by the management of the bank. or a process for identifying threats to information or The bank’s management implements the decisions of the information systems. ACB and takes necessary remedial measures according to the decisions of Board Audit Committee. Under this purview, the Bank took substantial initiatives to protect its business from ICT related threats and 05. Money Laundering Risk Management vulnerabilities and ensured sound and secured operation of Core Banking and other delivery channels. Review of Southeast Bank is constantly vigilant to money laundering ICT risk management policy, the formation of IT security prevention and combating the financing of terrorism to and risk management team, vulnerability assessment and mitigate reputational, legal and regulatory risks. In this internal and external penetration testing (VA-PT) are respect, it exercises zero tolerance. the noteworthy steps. Throughout the year, Information Security and risk management audit and inspection The Bank has put the following tasks in place for mitigating were conducted by the internal and external team in the risk of money laundering, terrorist financing and different Divisions and Branches of the Bank. The ICT proliferation financing at home and abroad: risk management is an ongoing process and the Bank is continuously examining risks by analyzing threats and 1. Maintains an enterprise-wide Anti- Money- vulnerabilities in its different technology-based services Laundering and Anti-Terrorist Financing Policy. under the risk management framework and taking gradual steps to mitigate. 2. Complies with applicable Anti-Money Laundering & Terrorist Financing laws and regulations as established Environmental Risk Management by Bangladesh Financial Intelligence Unit. Southeast Bank Limited recognizes that balancing non- 3. Reports all identified suspicious transactions/activities financial factors such as environmental and social issues to the extent that it can do so under all applicable with financial priorities is an essential part of good foreign and domestic laws. corporate citizenship, in addition to being fundamental to risk management and the protection of investors. We 4. Monitors banking functions of the branches and have a direct impact on the environment through our concerned divisions in respect of compliance of daily consumption of energy and paper/Ink resources. We related laws and regulations of regulators. also potentially have an indirect effect on the environment through the provision of financial services to projects in 5. Retains all customer related documents for a period environmentally sensitive areas. Protecting the natural specified by Bangladesh Bank. systems upon which all life depends while lifting people out of poverty and advancing economic development are 6. Trains staff on AML and CFT requirements and among the greatest challenges confronting humanity. We maintains the records. recognize that the policies and practices we adopt today 7. Does Enhanced Due Diligence (EDD) for high risk will shape not only our lives but also those of future customers. generations. We, therefore, have an opportunity to make a positive contribution to environmental and social concerns 8. Conducts awareness building program on AML and by enacting policies so that our business operations CFT requirements round the year. do not degrade the environment or cause social harm. Such policies not only indicate positive environmental 06. Information and Communication responsibility but also present business opportunities such as innovative financial products and investments in Technology Risk Management sustainable forestry and renewable energy. This will help us better manage our risks, develop expertise and provide With the advances in IT, the most Banks in Bangladesh clients with solutions to evolving exposures. have migrated to core Banking Software and have

Southeast Bank Limited 189 To demonstrate our commitment, Southeast Bank Limited SEBL prioritizes and actively seeks to finance projects has adopted a comprehensive environmental policy. with direct or indirect environmental benefits. The policy will be implemented with an Environmental Management System that includes planning, training, SEBL assesses the environmental aspects of all loan implementation, measurement, reporting and review applications. and will apply to new business and existing business that comes up for renewal or extension. Specifically, we SEBL commits itself to act as a good corporate will integrate environmental and social awareness into citizen and will continually pursue improvements the credit analysis and financing decision process and in its operations and in applying best practices in incorporate it, where appropriate, as part of our due environmental management in its internal operations. diligence review. We will train relevant employees to take responsibility for implementation of these policies. SEBL seeks business partners who share its vision and commitment to sustainable development and According to the policy: works together with other organizations to promote sound, coordinated and effective approaches to SEBL defines the term “environment” to include both environmental issues. ecological (such as physical and biological) aspects and related social aspects (such as worker protection The Bank also formed a new Sustainable finance Unit as and community issues). per Bangladesh bank guideline. Terms of Reference of the Unit includes implementation of environmental and social SEBL recognizes that taking ecological and social risk management policy. 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.

190 Annual Report 2017 Disclosure on Risk Based Capital Adequacy (Basel III)

Capital management is considered as an integral part of the risk management of the bank as capital ensures cushion against any loss suffered by the bank and saves bank from running off. Banking Industry of Bangladesh entered into the Basel III from Basel II regime from 1 January 2015. Since then, Southeast Bank Limited (SEBL) has applied the Basel III framework as part of its capital management strategy. Like Basel II, Basel III accord is also made up of three pillars:

Pillar 1 (Minimum Capital Requirement) covers the calculation of risk-weighted assets 01 and minimum capital requirement for credit risk, market risk and operational risk

Pillar 2 (Supervisory Review Process) intends to ensure that the Banks have adequate 02 capital to address all the risks in their business

Pillar 3 (Market Disclosure) speaks of ensuring market discipline by disclosing 03 adequate information to the stakeholders

Pillar 3 of Basel III or market disclosure is intended to Bank Limited (SEBL) and its Subsidiaries for the year inform the general market participants or stakeholders ended on December 31, 2017 and prepared in accordance about the scope of application of new capital adequacy with the relevant International Accounting and Financial framework, capital of the Bank, risk exposures of the Bank, Reporting Standards and related circulars/instructions Bank’s risk assessment processes and its risk mitigation issued by Bangladesh Bank from time to time. The assets, strategies and practices and capital adequacy of the bank liabilities, revenues and expenses of the subsidiaries are through disclosure format in line with the Bangladesh combined with those of the parent company (SEBL), Bank BRPD Circular # 18 dated December 21, 2014 eliminating inter-company transactions. Assets of the termed as “Guidelines on Risk Based Capital Adequacy subsidiaries are risk weighted and equities of subsidiaries (Revised Regulatory Capital Framework for Banks in are crossed out with the investment of SEBL while line with Basel III)”. The report is prepared once a year consolidating. Therefore, information presented in the according to Disclosure Policy of Southeast Bank Limited ‘Quantitative Disclosures’ section can easily be verified (SEBL) and Bangladesh Bank’s guidelines. However, prior and validated with corresponding information presented to furnishing the report, a brief discussion over the Pillar in the consolidated audited financial statements 2017 of 3 (Market Disclosure) of Basel III or qualitative disclosures SEBL and its Subsidiaries along with separate audited and quantitative disclosures is presented below. financial statements of the bank available on the website of the bank (www.southeastbank.com.bd) Qualitative Disclosures and Quantitative Disclosures

The quantitative disclosures are made on the basis of consolidated audited financial statements of Southeast

Southeast Bank Limited 191 A) SCOPE OF APPLICATION

Particulars Discussion 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, 2017 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 and the descriptions are given below: Southeast Bank Capital Services Limited Date of Incorporation: September 23, 2010 Date of Commencement: September 23, 2010 Authorized Capital : BDT 6000.00 million Paid up Capital : BDT 5500.00 million Ownership Interest in Capital : 99.82% Qualitative Disclosures 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%

Southeast Bank Ltd has four subsidiaries: Southeast Bank Capital Services Limited, Southeast Financial Services (UK) Limited, Southeast Financial Services (Australia) Pty Limited and Southeast Quantitative Exchange Company (South Africa) Pty Limited. Assets and liabilities of these subsidiaries are Disclosures consolidated with the financials of the parent company. There is no capital deficiency in the financial year 2017.

B) CAPITAL STRUCTURE can absorb losses without triggering bankruptcy of the Bank and gone-concern capital is the capital which Qualitative Disclosures will absorb losses only in a situation of liquidation of the Bank. a) The regulatory capital under Basel-III is composed of (I) Tier-1 (Going-concern Capital) and (II) Tier- Tier-1 capital is composed of (a) Common Equity Tier 2 (Gone-concern Capital). From regulatory capital 1 and (b) Additional Tier 1, Whereas, Common Equity perspective, going-concern capital is the capital which Tier 1 (CET1) capital consists of paid-up capital, statutory

192 Annual Report 2017 reserve, general reserve, retained earnings, minority Quantitative Disclosures interest in subsidiaries etc. BDT in million Tier-2 capital is composed of general provision, b) Regulatory Capital: Consolidated Solo subordinated debt, revaluation reserves etc. Tier-1 capital 1) Common Equity Tier-1 21,165.35 21,079.25 Capital requirement rules Capital (CET-1)

The Bank is required to maintain the following ratios on Fully Paid-up capital 9,169.50 9,169.50 an ongoing basis: Non- repayable share - - premium account i. Common Equity Tier 1 of at least 4.5% of the total Statutory reserve 9,170.00 9,170.00 RWA. General reserve 247.65 247.65 ii. Tier-1 capital will be at least 6.0% of the total RWA. Retained earnings 2,716.40 2,640.35 Dividend equalization - - iii. Minimum CRAR of 10% of the total RWA. Reserve Minority interest in 10.05 - iv. Additional Tier 1 capital can be admitted maximum subsidiaries up to 1.5% of the total RWA or 33.33% of CET1, Regulatory Adjustments - whichever is higher. Goodwill and all other 148.25 148.25 v. Tier 2 capital can be admitted maximum up to 4.0% Intangible assets of the total RWA or 88.89% of CET1, whichever is 2) Additional Tier-1 - - higher. Capital (AT-1) 3) Total Tier-1 capital (1+2) 21,165.35 21,079.25 vi. In addition to minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is being Tier-2 capital introduced which will be maintained in the form of General provision 4,865.61 4,865.61 CET1. (unclassified loans, SMA, off balance sheet) Following is the phase-in arrangement for the implementation of minimum capital requirements: Subordinated debt 6,800.00 6,800.00 Revaluation Reserves as on 2,335.43 2,335.43 Particulars 2015 2016 2017 2018 2019 December 31, 2014 (50% of Fixed Assets and Securities Minimum & 10% of Equities) Common 4.50% 4.50% 4.50% 4.50% 4.50% Equity Tier-1 All other preference shares Capital Ratio Regulatory Adjustments Capital Conservation - 0.625% 1.25% 1.875% 2.50% Revaluation Reserves for 1,401.26 1,401.26 Buffer Fixed Assets, Securities & Equity Securities (Phase in Minimum deductions as per Basel-III CET-1 plus Guidelines) Capital 4.50% 5.125% 5.75% 6.375% 7.00% Conservation 4) Total Tier-2 capital 12,599.78 12,599.78 Buffer c) Regulatory Adjustments Minimum T-1Capital 5.50% 5.50% 6.00% 6.00% 6.00% Revaluation Reserves for 1,401.26 1,401.26 Ratio Fixed Assets, Securities & Minimum Equity Securities (Phase in Total Capital 10.00%% 10.00% 10.00% 10.00% 10.00% deductions as per Basel-III Ratio Guidelines) Minimum Goodwill and all other 148.25 148.25 Total Capital Intangible assets 10.00% 10.625%% 11.25%%11.875%% 12.50%% plus Capital Conservation d) Total eligible capital (3+4) 33,765.13 33,679.04

Southeast Bank Limited 193 C) CAPITAL ADEQUACY and other credit related important issues. The approval process segregates relationship management/marketing Qualitative Disclosures from the approval authority. The approval authorities are delegated to different levels of management and Board. a) The Bank is presently following Standardized Board of Directors of the Bank has the highest level of Approach for assessing and mitigating Credit Risk, authority to approve any credit proposal and delegate Standardized Rule Based Approach for quantifying such authority to the competent authority (EC, MD, Market Risk and Basic Indicator Approach for DMD, Branch Manager). The Corporate Banking Division Operational Risk to calculate Minimum Capital receives the proposals from the branches and thereafter Requirement (MCR) under pillar-I of Basel-III scrutinizes, analyzes and processes in conformity with framework as per the guidelines of Bangladesh Bank. Credit Risk Management (CRM) guidelines of Bangladesh Bank and forward the memorandum embodying their Quantitative Disclosures recommendations to the CRM division for scrutiny and to ensure that all regulatory procedures/rules and regulations BDT in million etc. are complied with. After exercising due diligence by CRM, they convey their observations to Corporate Capital Adequacy Consolidated Solo Banking/Islamic Banking/SME and Agri Credit Division Capital requirement for submitting the proposals to Head Office Credit b) for Credit Risk 27,390.43 27,698.32 Review Committee (HOCRC) and finally forward it to the competent authority for approval. Capital requirement c) for Market Risk 1,743.95 1,283.45 1.2. Credit Administration Capital requirement d) for Operational Risk 2,021.35 2,002.03 The Bank accomplishes documentations and makes Minimum capital disbursements with utmost care to reduce the potential requirement(MCR) 31,155.73 30,983.81 credit risk. The disbursement authority is given to the Total capital branches within approved limit after the completion maintained 33,765.13 33,679.04 of necessary documentation. Furthermore, the bank Capital surplus over constantly monitors clients’ repayment behaviors, fulfillment of conditions given before disbursement and MCR 2,609.40 2,695.23 compliance of covenants in post disbursement period. Capital to Risk e) Weighted Assets 10.84% 10.87% 1.3. Credit Monitoring Ratio(CRAR) CET-1 to RWA ratio 6.79% 6.80% The loan portfolio with classification status is reviewed Tier-1 Capital to RWA periodically and brought to the notice of Board of Directors 6.79% 6.80% ratio of the Bank and senior level management regarding down gradation, overdue, Special Mention Account (SMA), Tier-2 Capital to RWA 4.04% 4.07% classified and rescheduled portfolio along with early alert ratio list for their information and guidance. The Branches Capital Conservation f) 1.25% 1.25% are communicated through letters and circulars for Buffer (Required) implementation of efficient credit risk management in Available Capital under a proper manner including adherence to the Bank’s and g) Pillar 2 Requirement 2,609.40 2,695.23 Bangladesh Bank’s rules and regulations. They have also been advised to follow the guidelines of comprehensive D) CREDIT RISK recovery/collection procedures and systems to keep the sound wealth of credit portfolio of the bank. Qualitative Disclosures 1.4. Credit Assessment and Grading a) Credit risk is the potential loss that may arise from a borrower’s failure to repay a loan or meet its obligation Know Your Client (KYC) is the first step to analyze in accordance with agreed term. any credit proposal. Banker-Customer relationship is 1.1. Credit Approval established through opening of CD/SB accounts of the customers. Proper introduction, photographs of the Bank’s credit risk management guideline has been account holders/ signatories, passports etc. and all other prepared in line with Bangladesh Bank guidelines required papers as per Bank’s policy are obtained during illustrating the approval process, delegation of authority account opening. Physical verification of customer

194 Annual Report 2017 address is done prior to credit appraisal. At least three Cs, residential, commercial and industrial property, land i.e., Character, Capital and Capacity of the customers are and machinery; marketable securities etc. Collaterals are confirmed. Credit Appraisals include the details of amount physically verified by the officials of the Branches and and type of loan(s) proposed, purpose of loan (s), result Head Office. At the same time, these are also valued by of financial analysis, loan Structure (Tenor, Covenants, independent third party surveyor in accordance with the Repayment Schedule, Interest), security arrangements. credit policy and procedures. The above are minimum components to appraise a credit and there are other analyses depending on the nature of 1.6. Past Due and Impaired Credit credit. A claim that has not been paid as of its due date is termed The bank follows the CRG manual of Bangladesh Bank, as past due claim. Payment may be for repayment/ circulated on December 11, 2005 through BRPD circular renewal/rescheduling or as an installment of a loan. For no. 18. Borrowers are assigned to different risk grades loan classification and maintenance of specific and general based on the qualitative and quantitative factors of their provision, Bank follows BRPD circular no-14 and 19 of business. There are 08 grades based on the marks obtained 2012, 05 of 2013 and 16 of 2014 and as advised by in qualitative and quantitative factors. The grades and Bangladesh Bank from time to time. factors are: Approaches followed for specific and general allowances: Short Grading marks Number Name Consumer Financing Loans • 100% Cash Short to All Covered Term Particulars SMEF BHs/ other • Government Agri Other than MBs/ Credit Credit HF LP CC Superior SUP Guarantee 1 HF, SDs • International LP Bank Guarantee Standard 1.01% 5% 2% 2% 2% 0.25% 2% 1%

Good GD 85+ 2 SMA - 5% 2% 2% 2% 0.25% 2% 1% Acceptable ACCPT 75-84 3 SS 5% 20% 20% 20% 20% 20% 20% 20% Marginal/Watch MG/WL 65-74 4 list DF 5% 50% 50% 50% 50% 50% 50% 50% Special Mention SM 55-64 5 B/L 100% 100% 100% 100% 100% 100% 100% 100% Substandard SS 45-54 6 Doubtful DF 35-44 7 NB: CF=CONSUMER FINANCING, HF=HOUSING Bad & Loss BL <35 8 FINANCE, LP=LOANS FOR PROFESSIONALS TO SET UP BUSINESS, SMA=SPECIAL MENTION ACCOUNT, SS=SUBSTANDARD, DF=DOUBTFUL, Qualitative and Quantitative factors/ Weight B/L=BAD/LOSS, BHs/ MBs,/SDs= LOANS TO principal risk components BROKERAGE HOUSES/MERCHANT BANKS/ Financial Risk 50% STOCK DEALERS. Business/Industry Risk 18% 1.7. Base for Provision Management Risk 12% Security Risk 10% For the following types of eligible collaterals, provision is maintained at the stated rates mentioned above on the base Relationship Risk 10% for provision. Base for provision is calculated deducting interest suspense and the value of eligible collateral from 1.5. Credit Risk Mitigation outstanding classified loans. Eligible collaterals are the following: Potential credit risks are mitigated by taking primary i. Deposit with the same bank under lien against the and collateral securities. There are other risk mitigants loan like netting agreements and other guarantees. The legal certainty and enforceability of the mitigants are verified ii. Government bond/savings certificate under lien, by the professionals of the respected fields. Collateral types which are eligible for risk mitigation includes cash, iii. Guarantee given by Government or Bangladesh Bank.

Southeast Bank Limited 195 For all other eligible collaterals, the provision will be BDT in million maintained by the stated rates mentioned above on the balance calculated as the greater of the following two Particulars Consolidated Solo amounts: a Cash 20,979.14 20,979.13 I. Outstanding balance of the classified loan less the Claims on Bangladesh b 50,204.80 50,204.80 amount of Interest Suspense and the value of eligible Government and Bangladesh Bank collateral; and c Claims on Banks & NBFIs 20,759.24 20,641.74 II. 15% of the outstanding balance of the loan. d Claims on Corporate 140,569.89 140,569.89 1.8. Eligible Collateral e Claims on SME 32,515.99 32,515.99 Claims under Credit Risk f 9,719.38 9,719.38 The following collaterals are included as eligible collateral Mitigation in determining base for provision: Claims categorized as retail portfolio (excluding SME, g 999.53 999.53 Consumer finance and Staff • 100% of deposit under lien against the loan loan) up to 1 crore h Consumer finance 1,909.39 1,909.39 • 100% of the value of government bond/savings Claims fully secured by certificate under lien i 3,272.67 3,272.67 residential property Claims fully secured by • 100% of the value of guarantee given by Government j 3,479.49 3,479.49 commercial real estate or Bangladesh Bank 1. Past Due Claims that is past due for 60 days or more (Risk k • 100% of the market value of gold or gold ornaments weights are to be assigned net of pledged with the bank. specific provision): Where specific provisions are • 50% of the market value of easily marketable less than 20% of the outstanding 16,362.49 16,362.49 commodities kept under control of the bank amount of the past due claim Where specific provisions are no • Maximum 50% of the market value of land and less than 20% of the outstanding 2,577.73 2,577.73 building mortgaged with the bank amount of the past due claim Where specific provisions are more than 50% of the • 50% of the average market value for last 06 months 675.68 675.68 outstanding amount of the past or 50% of the face value, whichever is less, of the due claim shares traded in stock exchange. 2. Claims fully secured against

residential property that are past

due for more than 60 days and/ 1.9. Subjective Judgement 150.77 150.77 or impaired specific provision held there-against is less than Considering the nature and performance of a loan, the 20% of outstanding amount bank can also classify a particular loan on the basis of 3. Loans and claims fully subjective judgement taking into consideration the factors secured against residential such as uncertainty or doubt of repayment, continuous property that are past due for

loss of capital, adverse situation, decrease of value of more than 60 days and/or 7.39 7.39 securities, legal suit etc. However, regardless of all rules impaired and specific provision and regulations the central bank can classify any loan on held there-against is no less than 20% of outstanding amount the basis of their subjective judgement and can instruct the bank to make additional provision on non-performing l Capital Market Exposure 2,460.72 - loans. Investment in equity and other regulatory capital instruments issued by other banks and Quantitative Disclosures Merchant Banks/Brokerage

m Houses/Exchange Houses which 5,761.49 11,279.52 b) Total gross credit risk exposures broken down by are not listed in the Stock Exchanges (other than those major types of credit exposure: deducted from capital) held in banking book Total gross credit risk exposures by major types: Bangladesh Investments in premises, plant Bank guidelines on Basel III stipulated to segregate bank’s n and equipment and all other 9,309.76 8,708.57 asset portfolio into different categories and the following fixed assets table shows our gross exposure in each asset category.

196 Annual Report 2017 Particulars Consolidated Solo f) Major Industry type amount of impaired loans Claims on all fixed assets under o - - operating lease BDT in million p All other assets - - Agriculture 6.50 i) Claims on GoB & BB 1,242.86 1,242.86 Large and Medium Scale Industries 5,471.26

ii) Staff loan 291.69 291.69 Small and Cottage Industry 93.10 iv) Claims on Offshore Banking Unit - - Exports 116.80

v) Others 2,599.00 2,480.42 Commercial Lending 3,907.54 Total 325,849.10 328,069.14 Finance to NBFIs -- Real Estate 1,496.51 c) Geographical distribution of exposures Retail Banking 49.80 BDT in million Transport & Communication 231.20 Regions 2017 Credit Card 85.00 Dhaka 171,265.61 Others 2,420.80 Chittagong 47,373.78 Total 13,878.51 Rajshahi 5,098.41 Sylhet 4,186.23 g) Gross Non Performing Assets (NPAs) Region Khulna 2,542.28 BDT in million Based Rangpur 818.06 Gross Non Performing Assets (NPAs) 13,878.50 Barisal 180.99 Nonperforming assets to outstanding Mymensingh 385.64 5.99% loans and advances Total 231,851.00 Movement of Non Performing Assets Country Domestic 231,851.00 Based Overseas - (NPAs): Opening balance 9,257.80 d) Major Industry wise distribution of Additions 10,297.80 exposures (Industrial Loan) BDT in million Reductions 5,677.10 Textile and Garments Industries Closing balance 13,878.50 58,592.98 including Spinning Industries Movement of specific provisions for NPAs: Food and allied Industries 6,493.70 Opening balance 3,728.30 Pharmaceutical Industries 916.39 Chemical, Fertilizer, etc. 81.53 Provision made during the period 3,935.50 Cement and Ceramic Industries 3,931.53 Write off 1,035.10 Service Industries 3,546.96 Write back of excess provisions - Other Industries 23,727.34 Closing balance 6,628.70 Total 97,290.43 E) EQUITIES: DISCLOSURES FOR e) Residual contractual maturity breakdown BANKING BOOK POSITIONS of the whole portfolio BDT in million Qualitative Disclosures On demand 53,542.87 a) Banking book positions consist of those assets which Less than three months 30,554.57 are bought for holding until they mature. The bank treats unquoted equities as banking book assets. More than three months but less than one year 67,733.37 Unquoted equities are not traded in the bourses More than one year but less than five years 49,479.82 or in the secondary market. They are shown in the More than five years 30,540.38 balance sheet at cost price and no revaluation reserve Total 231,851.00 is created against these equities.

Southeast Bank Limited 197 Quantitative Disclosures ii. Economic value perspective: The economic value of future cash flows changes when interest rate changes. b) Values of investments as disclosed in the Balance Sheet: At present SEBL is following the Bangladesh Bank BDT in million prescribed format for assessing the economic value due to Consolidated Solo interest rate shock. Cost Market Cost Market Quantitative Disclosures Price Price Price Price Unquoted b) Earnings perspective: 61.49 61.49 61.49 61.49 Share Here, we have used maturity gap method to measure Quoted Share 6,813.76 6,235.01 4,356.88 3,932.51 changes in earnings due to changes in interest rates: BDT in million c) For Banking Book Equity BDT in million Net Consolidated Solo Up to 12 interest Month Percentage changes in income The cumulative realized (Cumulative interest rate and gains (losses) arising from - - Gap) re-pricing sales and liquidations in the impact reporting period 1% increase in interest rate 28.79 d) For Banking Book Equity 1% decrease in interest rate -28.79 2% increase in interest rate 57.57 Consolidated Solo 2,878.62 2% decrease in interest rate -57.57 Total unrealized gains - - (losses) 3% increase in interest rate 86.36 Total latent revaluation gains 3% decrease in interest rate -86.36 - - (losses) G) MARKET RISK Any amounts of the above - - included in Tier 2 capital Qualitative Disclosures

e) a) View of the Board of Directors on trading/ BDT in million investment activities Particulars Capital Requirement Market risk arises due to changes in the market variables such as interest rates, foreign currency exchange rates, Unquoted Share 7.69 7.69 equity prices and commodity prices. The financial Quoted Share 1,255.84 795.34 instruments that are held with trading intent or to hedge against various risks, are purchased to make profit from As equities do not have any maturity, we have calculated spreads between the bid-price and ask price are subject risk weighted assets for unquoted equities on the basis of to market risk. SEBL is exposed to market risk mostly fixed risk weight which is 125% of investment value. And stemming from Government Treasury Bills and Bonds, for quoted share capital charge is 10% for both specific Shares of listed Public Limited Companies, foreign and market risks. currency etc.

F) INTEREST RATE RISK IN THE BANKING BOOK Methods used to measure Market Risk (IRRBB) There are several methods used to measure market risk Qualitative Disclosures and the bank uses those methods which are deemed fit for a particular scenario. For measuring interest risk from a) Interest rate risk affects the bank’s financial condition earnings perspective, the bank uses Maturity Gap analysis, due to adverse movements in interest rates of interest Duration Gap analysis, Sensitivity Analysis and Mark to sensitive assets and interest sensitive liabilities. Market (MTM) method. For measuring foreign exchange Changes in interest rates have two types of impact: risk, the bank uses VaR analysis.

i. Earnings perspective: It affects a bank’s earnings by We use standardized (Rule Based) method for calculating changing its net interest income and the level of other capital charge against market risks for minimum capital interest sensitive income and operating expenses. requirement of the Bank under Basel-III.

198 Annual Report 2017 Market Risk Management System H) OPERATIONAL RISK

The Bank has its own Market Risk Management System Qualitative Disclosures which includes Asset Liability Risk Management (ALM) a) Views of the Board of Directors on system to reduce and Foreign Exchange Risk Management under the core Operational Risk risk management guidelines. Operational risk is the risk which may arise directly or Asset Liability Management (ALM): The ALM policy indirectly due to failure or breakdown of system, people specifically deals with liquidity risk management and and process. This definition includes legal risk, but interest rate risk management framework. excludes strategic and reputation risk. The bank manages Foreign Exchange Risk Management: Foreign exchange these risks through a control based environment in which risk arises when the bank is involved in foreign currency processes are documented, authorization is independent transactions. These include foreign currency exchange, and transactions are reconciled and monitored. This is placement, investments, loans, borrowings and different supported by a periodic process conducted by ICCD and contractual agreements. We use different hedging monitoring external operational risk events, which ensure techniques to mitigate foreign exchange risks. that the bank stays in line with the international best practices. Policies and processes for mitigating market risk are mentioned below: Performance Gap of Executives and Staffs

Risk Management and reporting is based on The bank believes that training and knowledge sharing parameters such as Maturity Gap Analysis, Duration is the best way to reduce knowledge gap. Therefore, it Gap Analysis, VaR etc, in line with the global best arranges trainings on a regular basis for its employees to practices. develop their expertise. The bank offers competitive pay package to its employees based on performance and merit. Risk Profiles are analyzed and mitigating strategies/ It always tries to develop a culture where all employees processes are suggested by the Asset Liability can apply his/her talent and knowledge to work for the Committee (ALCO). organization with high ethical standards in order to add more value to the company and for the economy. Foreign Exchange Net Open Position (NOP) limit, deal-wise trigger limits, Stop-loss limit, Profit / Loss Policies and processes for mitigating operational risk in respect of cross currency trading are properly The Bank has adopted policies which deal with managing monitored and exception reporting is regularly different Operational Risk. Bank strongly follows KYC carried out. norms for its customer dealings and other banking Holding of equities is monitored regularly so that operations. The Internal Control and Compliance Division investment remains within the limit as set by of the Bank, the inspection teams of Bangladesh Bank Bangladesh Bank. and External Auditors conduct inspection of different branches and divisions at Head Office of the Bank and Asset Liability Management Committee (ALCO) submit reports presenting the findings of the inspections. analyzes market and determines strategies to attain Necessary control measures and corrective actions have business goals. been taken on the suggestions or observations made in these reports. Reconciliation of foreign currency transactions Approach for calculating capital charge for operational Quantitative Disclosures risk b) The capital requirements for: The Bank has adopted Basic Indicator Approach (BIA) BDT in million to compute capital charge against operational risk under Particulars Consolidated Solo Basel-III as per Bangladesh Bank Guidelines. Interest rate risk 323.36 323.36 Quantitative Disclosures BDT in million Equity position risk 1,255.84 795.34 b) Foreign exchange risk 164.75 164.75 Particulars Consolidated Solo The capital Commodity risk - - requirements for 2,021.35 2,002.03 Total 1,743.95 1,283.45 operational risk

Southeast Bank Limited 199 Calculation of Capital Charge for Operational Risk Policies and processes for mitigating Liquidity risk (Consolidated) We strictly follow the Bangladesh Bank instructions Basic Indicator Approach and policy guideline to prepare the structural Liquidity profile and submit it to Bangladesh Bank every month. Gross 15% of Average We also place liquidity related information to the Board Year Income Average GI of Directors meeting each month so that Board can give (GI) GI necessary directives to adjust/prevent us from breaching December, 2015 12,071.43 the limits set by the Board and the Bangladesh Bank. December, 2016 13,569.32 Quantitative Disclosures 13,475.67 2,021.35 December, 2017 14,786.25 b) BDT in million Total GI 40,427.00 Liquidity Coverage Ratio (LCR) 102.81% I) Liquidity Ratio Net Stable Funding Ratio (NSFR) 115.55% Qualitative Disclosures Stock of High quality liquid assets 70,861.96 Total net cash outflows over the next 68,927.67 a) Views of the Board of Directors on system to 30 calendar days reduce Liquidity Risk Available amount of stable funding 271,685.60 Southeast Bank Limited has proficient Board of Directors Required amount of stable funding 235,123.46 that has always been giving utmost importance to minimizing the liquidity risk of the Bank. In order to J. Leverage Ratio reduce liquidity risk, strict maintenance of Cash Reserve Qualitative Disclosures Ratio (CRR) and Statutory Liquidity Reserve (SLR) is also being emphasized on a regular basis. Apart from these, a) Views of the Board of Directors on system to reduce as part of Basel-III requirement Liquidity Coverage Ratio excessive leverage (LCR) and Net Stable Funding Ratio (NSFR) are also Leverage is an inherent and essential part of modern maintained under the guidance of the Board of Directors. banking business. In other words, banks are highly leveraged organizations which facilitate leverage for others. Methods used to measure Liquidity Risk Leverage, in simple terms, is the extent to which a bank funds its assets with borrowings rather than capital. More In order to measure liquidity risk various methods are debt relative to capital means a higher level of leverage. being used which are as follows: Banks have a range of financial incentives to operate with GAP analysis is being done regularly that deals with high leverage. But it creates risk when it crosses a certain the mismatch of assets and liabilities in different time point. Therefore, the Board views that sound prudential buckets like 0-30 days, 31-90 days, 91-180 days, controls are needed to ensure that the organization 181-270 days, 271-365 days and beyond 1 year. In maintains a balance between its debt and equity. The our monthly ALCO paper, we show this GAP analysis Board also believes that the bank should maintain its based on which different strategic decisions are taken leverage ratio on and above the regulatory requirements in order to reduce liquidity risk that may arise due to which will eventually increase the public confidence in the organization. the mismatch between assets and liabilities. Policies and processes for managing excessive on and Cash flow forecasting is another technique to measure off-balance sheet leverage: liquidity risk that may arise due to future cash flow mismatch. In our monthly ALCO paper we show this The leverage ratio is a non ¬risk based approach to the measurement of leverage. The ratio acts as a ‘backstop’ cash flow forecasting. against the risk-based capital requirements and is also Liquidity Risk Management system designed to constrain excess leverage. There are three types of leverage: balance sheet, economic and embedded. As part of liquidity risk management system, we have Under Basel III, the Bank has to maintain a leverage ratio Board approved liquidity contingency plan. In this in excess of 3% of its exposures. The leverage ratio is liquidity contingency plan, we have incorporated all the intended to achieve the following objectives: strategic decisions to tackle any sort of liquidity crisis. i) Constrain the build-up of leverage in the bank As per Bangladesh Bank ALM guideline, this liquidity contingency plan is reviewed annually which is approved ii) Reinforce the risk based requirements with an easy to by the Board of Directors. understand and a non-risk based measure.

200 Annual Report 2017 To manage excessive leverage, the Bank follows A committee comprising of few members of senior all regulatory requirements for capital, liquidity, Management (Additional Managing Directors) led by commitment, Advance Deposit Ratio (ADR), Maximum the Managing Director is responsible for formulating Cumulative Outflow (MCO), large exposures, as well remuneration policy. The Head of Human Resources as risk management which are eventually reinforcing Division acts as the Member Secretary of the committee. standards set by Bangladesh Bank. The aim is to ensure The remuneration committee is the main body for that the high leverage that is inherent in banking business overseeing the Bank’s remuneration. The committee models is carefully and prudently managed. reviews the position of remuneration and recommend Approach for calculating exposure to the Board of Directors for approval taking into consideration present cost of living index, rate of inflation Leverage ratio reflects the Bank’s Tier-1 capital (the and the existing remuneration of peer banks. The Bank numerator) over total exposure (the denominator), which does not have any external consultant in preparing and includes its balance sheet exposures and certain off- implementing the remuneration policy. The Bank follows balance sheet exposures. a non-discriminatory policy in respect of remuneration and benefits for Head quarter and regions. However, a The capital measure for the leverage ratio is based on the foreign posting allowance in remuneration is in practice Tier-1 capital. The exposure measure for the leverage ratio for employees who are posted outside Bangladesh. follows the accounting measure of exposure. In order to measure the exposure consistently with financial accounts, the followings are applied by the bank: b) Information relating to the design and structure of remuneration processes 1. On balance sheet, non-derivative exposures will be The motto of the remuneration policy is to attract and retain net off specific provisions and valuation adjustments productive employees who can contribute substantially 2. Physical or financial collateral, guarantee, or credit to the overall growth of the Bank. The remuneration risk mitigation purchased is not considered to reduce policy is carefully designed and regularly updated to on-balance sheet exposure. provide adequate incentives so that the employees are fully committed to do their best to achieve the operational 3. Netting of loans and deposits is not considered. goals of the Bank.

Off-Balance Sheet (OBS) items are calculated by applying The committee reviewed the salary structure of few grades a uniform 100% credit conversion factor (CCF). For any in the year 2016 and the authority concerned approved commitments that are unconditionally cancellable at any upward revision of the pay packages of the employees of time by the bank without prior notice, a CCF of 10% is those grades as an incentive for posting better result. applied. The risk and compliance related employees are carrying Quantitative Disclosures out the activities independently in line with delegation of powers and job descriptions approved by appropriate b) BDT in million authorities. Particulars Consolidated Solo c) Description of the ways in which current and future Leverage Ratio 5.18% 5.16% risks are taken into account in the remuneration On balance sheet processes 334,221.31 333,842.50 exposure When implementing remuneration measures, the Bank Off balance sheet considers business risk, financial and liquidity risk, 74,492.73 74,492.73 exposure compliance and reputational risk for each official.

Total exposure 408,565.79 408,186.98 Various types of measures are taken into account in determining these risks. The measures focus on the K) Remuneration organizational goals set for operational areas. Asset quality (NPL ratio), cost-income ratio, net profit growth etc. are Qualitative Disclosure used for measuring the risks. a) Information relating to the bodies that oversee The performance of each employee is evaluated for a remuneration particular period especially annually against performance The Human Resources Division of the Bank oversees indicators set and agreed with the officials at the the remuneration in line with its HR policy under beginning of the year. Performance differs from employee direct guidance of the Board of Directors of the Bank. to employee and this affects the remuneration package.

Southeast Bank Limited 201 In the year 2017, there has been no material change that e) Description of the ways in which the bank seek to could create impact on the remuneration. adjust remuneration to take account of longer-term performance d) Description of the ways in which the bank seeks to link performance during a performance measurement The Bank does not seek to adjust remuneration to take period with levels of remuneration account of longer-term performance. f) Description of the different forms of variable The Bank has one set of Performance Appraisal Form remuneration that the bank utilizes and the rationale (PAF) to evaluate the performance of all categories of for using these different forms officials of the bank. The PAF has 3 (Three) parts i.e. (i) Key Performance Indicators, (ii) Personal Attributes and The Bank pays variable remuneration such as, Technical (iii) Job Related Skills and Competencies. Key Performance Allowance for the officials of Information Technology Indicators (KPIs) are deposit, investment and profit target Division, Alternative Delivery Channel (ADC) Unit, oriented. Surveillance Allowance for the Head/Supervisor, In- charges & Operators of Central Monitoring System Decisions about promotion, granting of annual increment (CMS) of Head Office and Charge Allowance for Heads of and incentive bonus are linked to the performance of the Branches. Those allowances are paid taking into account employees against the set Key Performance Indicators. the special and technical nature of the job they perform. Quantitative Disclosure

g) Number of meetings held by the main body 2 (two) meetings of remuneration committee were held overseeing remuneration during the financial year and and no remuneration was paid to the members remuneration paid to its matter h) 220 employees received a variable remuneration in the Number of employees having received a variable year 2017 remuneration award during the financial year Number and total amount of guaranteed bonuses 2 (two) guaranteed bonuses were awarded and the total awarded during the financial year amount of bonus was BDT 152.14 million Number and total amount of sign on awards made No amount was paid as sign-on awards during the financial year Number and total amount of severance payments No payment was paid as severance made during financial year i) Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms. Total Not Applicable amount of deferred remuneration paid out in the financial year

j) Breakdown of amount of remuneration awards for the Particulars Amount (in Million BDT) financial year to show: Fixed 152.14 163.43 fixed and variable. Variable 11.29 deferred and non-deferred. different forms used (cash, shares and share linked Deferred - instruments, other forms) Non-deferred 163.43 Form used (cash) 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: Not Applicable 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

202 Annual Report 2017 Capital Market Exposure

Capital market development was uneven in 2017. First and second quarter showed bearish trend whereas third and fourth quarter of the year witnessed much bullish trend .Some important indicators of capital market showed positive trend such as market capitalization of DSE. Southeast Bank Limited (SEBL) has remained agile and intensified its monitoring and supervision on investment in the capital market. Due to farsightedness and proactive role of the management on investment decision, SEBL has gained more in 2017 as compared to previous year. According to the Bank Company (Amendment) Act, 2018, capital comprises of four components i.e paid-up capital, balance in share premium account, statutory reserve and retained earnings. Bank’s total exposure in the capital market was BDT 5,226.70 million on solo basis and BDT 1,0579.20 million on consolidated basis. The prescribed exposure limit of 25% and 50% as per Bank Company (Amendment) Act, 2018. We believe that current trend of capital market may continue and it will grow further throughout the year 2018 and Bank will achieve the desired return from the capital market investment in 2018.

Southeast Bank Limited 203 Sustainabil y Appraisal and Integrated Reporting The pressure of adversity is the most powerful sustainer of accountability

204 Annual Report 2017 Sustainability Appraisal and Integrated Reporting

Sustainability Report - At A Glimpse 206 Report on Corporate Social Responsibility (CSR) 208 Environment Related Initiatives 213 Green Banking Initiatives – Environmental and Social Obligation 215 Report on Human Capital and HR Accounting 216 Policy to Encourage Employees to Participate in the Management 218 Whistle Blower Policy 218 Contribution to National Economy 219 Value Added Statement 220 Economic Value Added Statement 221 Market Value Added Statement 222 Redressal of Investors’ Complaints 223 Communication to Shareholders 224

Southeast Bank Limited 205 Sustainability Report At A Glimpse

Southeast Bank’s ambition is to create long-term value from loyalty to the Bank and boosting their trust by providing a financial, ethical, social and environmental perspective. excellent service through its network of over 130 Sustainability for us means that we take responsibility for branches. We do our best to offer simple, transparent and how we conduct our business, how it affects our customers, cost effective products and services which safeguard our employees, shareholders and society at large. Long-term customers against risky decisions. Besides conventional business relationships, low risk-taking and cost awareness banking services, we provide alternative delivery channels are cornerstones of the Bank’s business culture. They form like ATM service, internet banking service, online banking, the basis of successful banking operations being run in a locker service etc. Resolving customer complaints quickly responsible and sustainable manner. We know our success and effectively is fundamental to good customer service is tightly linked to the way we continue to deliver long and an opportunity to show our customers how much term value to our customers, shareholders, employees as we value their business. We encourage all officials to well as to the community. As a result, we consider it as our welcome a complaint, take ownership and resolve it there duty to maintain a balance between entrepreneurial spirit and then if possible. We actively encourage feedback from and social responsibility. To achieve this, we strive to align our customers and regard complaints as constructive our business and sustainability strategies as closely as comments that enable us to build customer relationships possible. Experience has taught us that caring for people, and improve our business. We believe our customer- the climate and the environment often goes hand in hand centric approach promotes and strengthens the bank’s with the creation of new income opportunities. reputation.

We have translated our sustainable goals into concrete Community involvement objectives and efforts, focusing on four priorities relevant to our business objectives. These are: Southeast Bank is firmly rooted in the society where it does its business operation; 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 Customer activities using our financial skills and expertise. Every Environment interest year the bank keeps aside a substantial amount of money as Corporate Social Responsibility (CSR) from its profit for the development of society. As part of its commercial activity, SEBL offers a wide range of products and services with social and/or environmental added value. These Sustainability products provide access to financial services for low- income groups, socially responsible investment and Community financing of renewable energies and environment-friendly Good involvement products. By engaging with the communities we not only employment contribute to a sustainable society but also help the long practices term sustainability of our business.

Good employment practices

The Bank considers its human resources as its assets. Customer interest Therefore it is committed to offering competitive compensation, benefits, training and development, Customer-centric banking services are imperative to long- congenial working environment to bring dynamism and term value creation. One of SEBL’s strategic targets is to growth in business. The Bank has a safety policy to ensure increase customer loyalty. The Bank develops simple and sound health of the staff. This ties in nicely with our HR personalized solutions for its customers, increasing their policy and our ambition to be best place to work. To this

206 Annual Report 2017 end, we offer our employees a range of facilities to support To promote green banking the bank has a policy which their physical, mental, emotional and spiritual well-being. serves the following objectives: The Bank’s healthy, safe and good working conditions enhance job enjoyment and reduce the chance of illness, Reduce paperwork, utilizing email to disseminate accidents, injuries and damage. Our Human Resource information, saving important information Strategy is designed to attract, retain and motivate the best electronically instead of using paper, encouraging people in many ways: double-sided printing etc.

Provide a Positive Working Environment Reduce electricity consumption, using energy efficient electronic equipments, replacing normal bulbs with Recognize, Reward and Reinforce the Right Behavior energy saving bulbs and turning off computers, lights, fans, air coolers during unoccupied times To help our people develop continuously, we are creating a Culture of Excellence in which employees Use more day light instead of Electric light and proper are encouraged and enabled to grow their expertise ventilation instead of using Air-conditioning and sharpen their skills. In addition to an ever- evolving training course offering for staff, we have Introduce online banking that allows the customers an extensive leadership development program which to transfer funds and pay bills through the Internet grooms managers to become inspiring leaders. Reduce giving loans to environmentally harmful projects We believe this approach attracts new talent, retains valuable employees and underlines the reputation of the Create awareness amongst the stakeholders about bank as a good employer and a desired destination for environmental and socially responsible business work. As a consequence the bank has emerged as a strong practices brand in the financial sector and sought after work place for many. Finances for installation of Effluent Treatment Plant (ETP) in the industrial units and to finance in Solar Environment Energy, Bio-gas and Hybrid Hoffman Kiln (HHK) in brick field. Southeast Bank is firmly committed to the environment and combating climate change. This commitment is Moreover, Southeast Bank has introduced ‘GREEN reflected in the Bank’s corporate governance, in the Bank’s AWARD’ for community leaders and entrepreneurs. lines of action in this regard, development of products The award aims to recognize and honor individuals, and services with a positive environmental impact and organizations and companies for significant contributions measurement of its internal environmental footprint. The towards achieving environmental sustainability through Bank strives to ensure that its operations are environment green business and operations, knowledge management friendly. We believe that every small ‘GREEN’ step taken and community engagement. The award also aims to boost today would go a long way in building a greener future synergies between the bank and the climate warriors for and that each one of us can work towards a better global conserving environmental resources. The bank has also environment. adopted the Environmental Risk Management guidelines in its operation.

Southeast Bank Limited 207 Report on Corporate Social Responsibility

CSR Policy of Bank vii) Supporting charitable ventures, relief operations and environment protection. Our CSR activities follow transparent business practices that are based on ethical values, compliance with legal viii) Coming to the aid of the poor and the needy people and regulatory requirement and respect for people, of the society. communities and the environment. We are responsible for the totality of our impact on people and the planet, ix) Maintaining high compliance standard in regard to all beyond making profit. Our corporate social responsibility relevant laws and regulations of all regulatory bodies. is about addressing the needs of all the stakeholders in a way that advances our business and makes a positive and x) Supporting art, education, sports, culture, health- meaningful contribution to the society. care etc.

Southeast Bank pursues a strong policy based on its belief xi) Promoting good community relation to foster a in Corporate Social Responsibility (CSR), a policy by relationship of understanding, trust and credibility. which we contribute our support to the society in which we live and operate. By this policy, we contribute our small xii) Observing environment related laws and regulations bit of backing in sustaining the society that gives us the and working for healthy development of the society. business sustenance. Our Corporate Social Responsibility encompasses our customers, employees, shareholders, xiii) Supporting development of the women community. suppliers, business associates and the society as a whole. We endeavour to achieve our objectives in the area of xiv) Carrying on energy and resource-saving activities corporate social responsibility in the following manner: within the Bank.

i) Stressing upon extension of credit and participation xv) Winning the reputation that the citizens acknowledge in projects for economic development of the country. the significance of Southeast Bank’s existence.

ii) Following fair and ethical banking practices and Southeast Bank Foundation (SEBF) maintaining sound management. With a view to discharging Corporate Social iii) Developing and prospering with customers by Responsibilities in a most organized and coordinated offering top-quality and high-value- added products way, Southeast Bank Foundation was set up by Southeast and services. Bank Limited in 2002. Because of having effective and organized frameworks, it has succeeded in undertaking a iv) Offering competitive pay package and career path to number of CSR programs. 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.

208 Annual Report 2017 Social Responsibility Initiatives

Donation to the Prime Minister’s Relief and Support for Educational Institutions Welfare Funds Education is the backbone of the nation. To create Southeast Bank never lacks in extending its material and good citizens for the nation, we supported educational financial support to national causes and natural calamity institutions in improving their educational environment. victims on humanitarian ground. At the call of necessity, In 2017, we spent BDT 21.71 million for the purpose. Southeast Bank donated BDT 114.75 million to the Prime Minister’s Relief and Welfare Fund in 2017. Financial Support to poor people for medical treatment of their serious diseases Educational Scholarship We get our business sustenance from the society in which Southeast Bank Foundation started Scholarship Program we operate. We stand by the poor people distressed by back in 2009. It aims at helping the promising and brilliant serious illness and provide them financial assistance for learners coming from poor families in the pursuit of their medical treatment of their serious diseases. In the year education at different levels. The process of selection 2017, an amount of BDT 51.73 million was spent for this of students for scholarship is done most neutrally. In humanitarian cause. 2017, we spent total BDT 14.69 million for Scholarship to students at different levels selected from educational Support for promotion of law and order in institutions from across the country. In 2017, scholarship was given to 656 students at different levels. the country

Southeast Bank Green School Crime-free society is the key to economic development. We assisted different bodies in their longing for maintenance Considering the predominating demand for quality of law and order in the country. In 2017, we spent BDT education at the grooming stage of life, Southeast Bank 3.00 million for the purpose. Green School was set up in 2013 for the children of families with moderate income at Mohammadpur, Dhaka. Donation to different bodies/ Institutions It is housed in 2 (two) adjacent buildings located in the midst of a number of housing societies. The school In 2017, we extended financial support to different follows edexcel British Curriculum. It is equipped with all bodies and institutions to pursue charitable ventures, modern amenities and facilities. Currently, 28 teachers are environment protection, women emancipation etc. In the putting their relentless efforts to impart quality education year 2017, a total amount of BDT 11.13 million was spent to the students. In 2017, a total amount of BDT 18.25 for the purpose. million was spent for the school. Total CSR expenditure Green Award Our CSR-efforts go beyond charity. We support institutions Corporate citizenship to us means thinking long term to protect wildlife habitat, curb effect of climate change and working to integrate social and environmental and improve conditions of families and communities. considerations into how we run our business. We want We promote green living and green banking. We are not to inspire the individuals and organizations who are interested in financing projects which are not environment- actively working to preserve environment. With that end friendly or which may cause damage to it. in view, the Board of Directors of the Bank in its 395th meeting held on March 14, 2012 decided to give Green In 2017, Southeast Bank spent total BDT 241.77 million Awards to institutions and Women Entrepreneurs for for education, sports, art, culture, promotion of national really making significant contribution to the preservation heritage, improvement of the condition of autistic of environment. The award was named, ‘Southeast children, women emancipation, health-care, financial Bank - The Financial Express – Policy Research Institute assistance to disadvantaged people, donation for national Green Award’. A separate report on Green Award Trust is disaster-victims, help for poor peoples’ medical treatment included elsewhere in this Annual Report. In 2017, a total of serious diseases, community development, relief amount of BDT 2.4 million was spent for the purpose. operation, winter-clothes for the cold-hit poor people, etc.

Southeast Bank Limited 209 Southeast Bank Foundation

With a view to discharging Corporate Social Responsibilities in a most organized way, Southeast Bank The Southeast Bank Foundation has been continuing Foundation was founded by Southeast Bank Limited. its operation with extended acclamation because of Because of having effective and organized frameworks, it having a powerful and foresighted board of directors has succeeded in undertaking a number of CSR programs, which is comprised with the following members : such as, Scholarship for the meritorious students living in Mr. Alamgir Kabir, FCA Chairman the midst of poverty; running English medium school for Mrs. Duluma Ahmed Director the children belonging to the middle class family. Mr. Azim Uddin Ahmed Director The scholarship program of SEBF began its march in the Mr. M.A.Kashem Director year 2009. It is aimed at helping the promising and brilliant learners coming from poor families. The scholarship Mr. A.H.M Moazzem Hossain Director program started its journey with two dimensions: one Dr. Zaidi Sattar Director for school level and the other for HSC level students. The Mr.Yussuf Abdullah Harun, FCA Director program was further strengthened by covering scholarship at graduation level in 2011. Mr. Zakir Ahmed Khan Director Mr. M. Kamal Hossain Director At the school level, the Foundation materializes its project with the sincere co-operation of SEBL branches.

210 Annual Report 2017 In the year 2010, the foundation provided scholarship to for the scholarship and they accorded the initial cheque 245 students. In the year 2011, the number raised up to through an auspicious ceremony. 337. In the following year, 243 students were awarded. In 2013, the foundation took care of 209 students’ The announcement of scholarship for the students of educational expenses. In next year, 173 were selected the Graduation level is also first published in the daily for the scholarship. Later in 2015, 2016 and 2017, the newspapers. It is also made available in the Bank’s number of recipients were 110; 52; and 20 respectively. website. In the academic session 2011-2012, scholarships For the students of the higher secondary level, the were awarded to 75 applicants. Now they are well settled news of scholarship initially comes into light through in the society by involving themselves in their respective the advertisement in the widely read daily newspapers. job field. In the academic session 2012-2013, as many as In addition, it is also made available in the Bank’s web 75 students were nominated for scholarship. In the next site. In the successive years in 2009; 2010; 2011; 2012; session 2013-2014, total 60 students were selected for the 2013; 2014; 2015; and 2016 the foundation quite purpose. Again for the session 2014-15, the Foundation professionally handed the scholarship procedure with managed to select yet another 60 candidates.. Thus the the number of students of 230; 278; 278; 282; 245; number of recipients of scholarship at the graduation 206; 200; and 200 respectively. In the session 2017-18, level in the reporting year stands at 270 who are, being the Foundation received around 2186 applications for supported by the scholarship, steadily progressing in their scholarship. After scrutiny and conducting viva voce, the respective academic stream with the dream of being a Foundation eventually finalized a list of 200 candidates powerful, effective and dynamic resource of the country.

Southeast Bank Limited 211 Southeast Bank – The Financial Express – Policy Research Institute Green Award Trust

Southeast Bank-Financial Express-Policy Research Poverty Reduction. The eligible candidates are called for Institute Green Award Trust was established in June submitting their nominations through internet and mail. 30, 2013. The Bank created the Trust to recognize the Thereafter, the nominations are scrutinized by the Board individuals or organizations who are contributing to foster of Trustees or by its subcommittees to check the eligibility green conservation, eco-friendly business and operation, and recommend for final selection. The Board of Trustees community development and poverty reduction in the is the highest authority to decide on the final selection of country. The Green Award Trustee Board consists of candidates. distinguished personalities of the country headed by Dr. Mohammed Farashuddin, Former Governor, Bangladesh The Green Award Trust honored the individuals and Bank. The Chief Executive Officer of Southeast Bank, organizations by conferring awards first time in 2014 and Editor of the Financial Express and Chairman of Policy second time in 2017. The winners of the Green Award Research Institute are the ex-officio member of the Board 2014 under Category 1: Pioneer in Climate Leadership of Trustees. The Board of Trustees is composed of the in Business and Operation and Category 2: Pioneer in following distinguished personalities: Climate Leadership in Community Awareness were :

Dr. Mohammed Farashuddin Chairman Category 1: Mr. Yussuf Abdullah Harun, FCA, MP Member i. Chittagong Waste Treatment Plants Limited; and

Dr. Zaidi Sattar Member Category 2: Mr. A.H.M. Moazzem Hossain Member i. Sustainable Energy for Development Program, GIZ Bangladesh Dr. Saadat Husain Member The winners of the Green Award 2017 under Category 1: Mr. Zakir Ahmed Khan Member Leadership in Sustainable Green Business and Operation Mr. M. Kamal Hossain Member and Category 2: Leadership in Sustainable Community Development and Poverty Reduction were : Dr. Ainun Nishat Member Dr. Shahnaz Huq Hussain Member Category 1: i. Yunusco (BD) Ltd. Dr. Quazi Mesbahuddin Ahmed Member ii. AKH Eco Apparels Limited Member iii. SQ BIRICHINA LTD Mr. Md. Khursheed Alam Secretary iv. Snowtex Outerwear Limited;

The Trust created a fund for the purpose of introducing Category 2: an award to encourage and recognize the achievement i. Shaymol Bangla Krishe Khamar of individuals or organizations including SMEs as well ii. Nature Conservation Management (NACOM) as large enterprises working for sustainable development iii. Wave Foundation and operation of Green Business and Poverty Reduction iv. SKS Foundation at community level. The awards are given to the eligible candidates under two categories :( 1) Leadership in The Awardees were honored with certificates and prize Sustainable Green Business and Operation and (2) money for their contribution towards green retention and Leadership in Sustainable Community Development and green business.

212 Annual Report 2017 Environment Related Initiatives

Southeast Bank is committed to financing 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.

Highlights of ‘Sustainable Finance Activities’ risks of climate change through green business, of the Bank environment-friendly operations, community investment and knowledge management. In 2016 Bangladesh Bank instructed to form a “Sustainable Finance Unit” by abolishing existing Enhancing online coverage for clients; for example: Green Banking Unit. The new Unit consists of six ATM, SMS Banking, Internet Banking, mobile (06) members under the supervision of Head of Banking etc. Credit Risk Management (CRM) Division. The Unit was active throughout 2017. The Bank has adopted and implemented a green office guide named ‘Southeast Shobuj Jibon’ for the As per the directives of Bangladesh Bank Southeast Bank. Salient features of this Green Office Guide are Bank adopted a policy namely “Guidelines on as follows: Environmental & Social Risk Management (ESRM) for Banks and Financial Institutions in Bangladesh” ‘Southeast Shobuj Jibon’ is an initiative that moves beyond on Social, Climate Change and Environmental Risk our processes and our customers to cost efficient automated Management (SCERM) in 2017. channels for building awareness and consciousness for environmental issues. The Bank will introduce a monthly A separate policy guidelines for ‘Green Banking’ was news letter to distribute among the employees of the Bank adopted in 2011. to create green awareness which will provide attention to the following aspects: Green Finance activities of the Bank: Save Paper Save Trees (Every ton of paper involves 17 trees). Environmental 2015 2016 2017 Activities Maximum communication through e-mail Direct Green BDT 7.80 BDT 32.50 BDT 9.45 Finance million million million Purchase recycled paper. In-direct Green BDT BDT BDT Finance 13400.00 17500.00 14100.00 Print on reusable sheets. million million million Print multiple pages on single sheets of paper.

Southeast Bank arranged several training programs Set defaults to print double-sided and print on both and workshops on green banking and environmental sides. risk management. Print only the pages required. Environmental Risk has been incorporated in credit Preview documents before printing. proposals and plays important role in decision making. Increase margin width of the documents. Introduction of Biometric Attendance system. The Bank has introduced Green Awards to encourage individuals and organizations who are actively Change the default font size from 12 point to 10 working to protect the environment and tackle the which would shrink your document by about 10%.

Southeast Bank Limited 213 Use e-mail statements. when they’re off or not charging anything, as long as they’re plugged in. Using post-consumer waste recycled paper internally (copy and printer paper) and externally (brochures, Turn off the tap while brushing teeth and of course etc.) after use. Shredding and recycling all paper internally Always use a cloth bag. Do not use paper or plastic bags for your grocery. Sharing electronic files, voice mail and e-mail instead of paper memos Global Climate Partnership Fund Both side printing (two-sided) when possible as well

as limiting printed materials. SEBL takes pride for its partnership with a prominent Plant or help plant more trees and preventing the cutting Energy Fund named Global Climate Partnership Fund of the existing ones, contribute towards the making of a (GCPF) managed by Respoos Ability AG of Switzerland. healthy planet at no extra cost. In 2017, we could drawdown 3rd tranche of USD 10.00 million after successfully utilizing USD 10.00 million in the year 2015 and 2016. Pay your bills online. For every 38,000 bills paid online, 5,058 pounds of greenhouse gases are avoided SEBL under a technical assistance of GCPF engaged and two tons of trees are preserved. Frankfurt School of Management and Finance (a renowned Use Car pools to go to work. Avoiding 10 miles of European Educational Institution) for capacity building in driving every week would eliminate about 500 Energy Efficiency and Renewable energy financing. pounds of carbon dioxide emissions a year. Under Another technical assistance of the fund, world Drive responsibly. Every gallon of gas burned emits famous “Enclude” Advisory Group of Netherlands is 20 pounds of carbon dioxide. helping the Bank develop a Social and Environmental Use LED lights. Compact Fluorescents Lights Management Guideline that will be rolled out in 2018. produce the same amount of light as normal bulbs, but use about a quarter of the electricity and last ten Green Climate Fund: times longer. Southeast Bank is the only bank that got approval of Unplug electronics. Cell phone chargers, TVs, DVD National Designated Authority (NDA) of this UNFCCR players, stereos, microwaves and other electronics fund. Bank will approach the fund for $100.00 million for with transformers continue to draw power, even renewable Energy and Energy efficiency projects in 2018.

214 Annual Report 2017 Green Banking Initiatives- Environmental and Social Obligation

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 lasting benefit of both clients and society at large.

Southeast Bank recognizes that balancing non-financial In this connection, various steps have been taken to factors such as environmental and social issues with minimize the bank’s direct operational impact to the financial priorities is an essential part of good corporate environment to reduce paper usage and help save trees citizenship, in addition to being fundamental to risk and to reduce energy & water consumption. In 2016, management and protecting investors. southeast Bank developed a new Social and Environmental Risk management system in line with Bangladesh Bank’s We recognize that the policies and practices we adopt draft guide line, IFC’s Performance Standard (PS) and today will shape not only our lives but also those of future Global Climate Partnership Fund Guidelines. generations. We therefore have an opportunity to make a positive contribution to environmental and social concerns The Bank prioritizes and actively seeks projects with direct by enacting policies so that our business operations or indirect environmental benefits which will contribute do not degrade the environment or cause social harm. in reducing pollution in the country. Such policies not only indicate positive environmental responsibility, but also present business opportunities Environmental Due Diligence Checklist is meticulously such as innovative financial products and investments in followed whicle financing new customers and extending sustainable forestry and renewable energy. This will help credit facilities to existing customers. Environmental us better manage our risks, develop expertise and provide Risk Rating (EnvRR) is now mandatory for all individual clients with solutions to evolving exposures. customers (corporate, institutional, personal, small and medium enterprise) whose aggregate facilities are above To demonstrate our commitment, Southeast Bank has the following financing thresholds: adopted a comprehensive environmental and social policy. The policy implemented with Social & Environmental For Small and Medium Enterprise-financing >BDT Management System that includes planning, training, 2.5 million implementation, measurement, reporting and review and applies to new business and existing business that comes For Corporate-Financing> BDT 10 million up for renewal or enhancements. Specifically, we integrate environmental and social awareness into the credit For Real Estate-Financing> BDT 10 million analysis and financing decision process and incorporate it, where appropriate, as part of our due diligence review. Comparative position of Environmental Risk Rating We train relevant employees to take responsibility for and conducted by the Bank is as follows: implementation of these policies.

Environmental Activities 2015 2016 2017

Around 600 projects/clients Around 630 projects/clients Around 680 projects/clients Environmental Risk Rating loan proposal were rated. loan proposal were rated. loan proposal were rated.

Southeast Bank Limited 215 Report on Human Capital and HR Accounting

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 lasting benefit of both clients and society at large.

Human Capital Human Resource Position

The Bank considers employees as the most valuable The permanent employees of the Bank stood at 2704 as asset. The Bank believes that the employees are the key on December 31, 2017 out of which Executives (Assistant forces behind the success of banking business. In order Vice President and above) were 266, Officers 1928 and to ensure sustained growth objectives, Bank formulates Sub-staff 510. a proper manpower planning approach in determining the movement of the Bank from its present manpower No. of human resource by Age Group for the Year 2017 position to the desired / optimum position. It ensures the right number and right type of people at the right time. Age Group Total (%) Below 30 417 15.42 The Bank spends considerable resources in building the capacities of our employees. To build the human 30-39 1,313 48.56 resources capacity, training and development are the key 40-49 800 29.59 requirements to improve job performance. The main goal of employees’ training and development is to help the 50 and above 174 6.43 organization achieve its mission and business goals. Total 2,704 100.00

The Bank gives utmost importance to the development The bank is strengthening its work force by recruiting of human resource. To accomplish the purpose, we are young, energetic and self-motivated fresh post-graduates conducting effective in-house training and development from different disciplines and experienced bankers in programs along with arranging outside-training for various positions. In the year 2017, the bank recruited a developing skilled/professional manpower. It is intended total number of 249 employees. Out of them, 168 were to cope with the changed global banking needs. Training fresh entrants and 81 were experienced bankers. and development will help employees build their career and will ultimately benefit the Bank in reducing cost Besides, as part of Bank’s commitments to the community as the trained employees will be able to take higher in the field of education, 560 numbers of students of responsibilities. The Bank gives significant importance different universities were given opportunity to complete for developing competent and professional manpower their internship program in the Bank during the year to build up a strong mid-level management for smoother 2017. running of operations. The Bank is committed to attract, develop, motivate and retain a competent as well as skilled Human Resource Accounting (HRA) human capital. Success and failure of a Bank purely depends upon its As part of capacity building of the human resources, human resource. Human Resource Accounting (HRA) is in addition to the own training institure, the Bank sent the activity of knowing the cost invested for employees 44 number of officials of different grades at Bangladesh towards recruitment, training, salaries and other benefits Institute of Bank Management (BIBM), 39 number of and in return their contribution to organization’s pursuit officials at Bangladesh Bank Training Academy (BBTA), 72 of profitability. The objective of HRA of the Bank is to officials at different institutes at home and abroad to take manage human resource properly and develop the quality part in the different training/workshop/seminar. of “human assets”.

216 Annual Report 2017 The Bank believes that the investments made for acquiring considers any expenditure incurred on human resource the best talents and developing them to be competent development as investment with potential future benefits. and skilled professionals determines the competitive edge and contributes substantially towards achieving HRA provides the information on total cost of human the organizational goals and objectives. The Bank strives assets for business by comparing it with the benefits for continuous development of its human resources and provided by the employees

An overview of HRA for last five years (2013 to 2017) is given below:

Particulars 2013 2014 2015 2016 2017 Employee (Person) 2118 2221 2376 2616 2704 Operating cost per employee 1.27 1.49 1.51 1.60 1.76 Training cost per employee 0.00096 0.0016 0.0018 0.0027 0.0038 (excluding sub-staff) Operating profit per employee 3.25 3.70 3.39 3.25 3.32 Salary cost as % of operating profit 18.22 16.29 17.40 20.25 20.24

Gender Diversity

Southeast Bank offers equal opportunity in employing biasness. They get equal opportunity based on his/her people in its workforce. It does not discriminate any level. Gender diversity of the employees for the last five employee on ground of his/her gender identity. Both male years (2013-2017) is given below: and female employees are equally treated without any

2013 2014 2015 2016 2017 No. of No. of No. of No. of No. of % % % % % Employees Employees Employees Employees Employees Male 1,732 81.78 1,818 81.86 1,952 82.15 2,170 82.95 2,245 83.03 Female 386 18.22 403 18.14 424 17.85 446 17.05 459 16.97 Total 2,118 2,221 2,376 2,616 2,704

Corporate Organogram

An organogram is the most common visual depiction with other employees within the Bank. Employees of the of how an organization is structured. The Bank has Bank have a clear idea of whom to start with in case of a corporate organogram which outlines the roles, any matters or issues in order to comply with the existing responsibilities and relationships between individuals corporate standards. The organogram of the Bank helps within the Bank. Through the organogram anybody can the employees to define chain of command within the see the working relationships of the Bank’s personnel and organization. who is responsible to whom. In the year 2017, we revised the corporate organogram The corporate organogram helps employees to understand due to changes made in the management structure and the key decision makers in the Bank and their relationships additions of some functions.

Southeast Bank Limited 217 Policy to Encourage Employees to Participate in the Management

The Bank is encouraging its employees to take part in the organization and participative management is an effective decision making process of the management for utilization strategy to retain the best talents of the Bank. It gives of intellectual and emotional human capital. It increases employees a sense of pride to have a say in organizational job satisfaction among employees and improves the quality decision making process. of their work life. Management of the Bank motivates the employees to come up with ideas and suggestions that can The Bank believes that a two-way communication plays make organizational processes far more efficient. It gives an important role in the success of the organization. employees an opportunity to share their views, ideas, Employee participation in decision making ensures proper feedbacks and suggestions to improve business processes flow of communication in the Bank. It gives employees a and create a better working environment. In this form of higher degree of enjoyment at work place that drives them management of the Bank, all employees are treated equally to work harder. It ensures tremendous improvement in irrespective of their designations when it comes to giving work culture within the organization. ideas and suggestions for organizational decision making process. Motivated employees are the biggest assets of an

Whistle Blower Policy

The Whistle Blower Policy of Southeast Bank Limited requirement of the law, Mr. A.K.M Nurul Alam, Additional (SEBL) is intended to encourage and make it easier for Managing Director of the Bank is the ‘Responsible Officer’ employees to make public disclosure of suspected or to make public disclosure of information on behalf of the actual occurrence of illegal, unethical or inappropriate Bank. The Managing Director of the Bank is the ‘Appellate events in good faith. It is also intended that whenever Authority’ in this respect. an employee comes to know such an event, he/she shall bring it to the notice of the higher authority of the Bank for appropriate action.

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

218 Annual Report 2017 Contribution to National Economy

For steady growth of the national economy, banking industry is considered to be one of the most important contributors. In the development of the economy, Banks have always been proactive participants by contributing to money market as well as to overall business operation of the country. Southeast Bank Limited (SEBL) has been contributing to the growth of national economy by providing diverse services to the people and business entities. SEBL has established 132 branches nationwide to provide efficient services and contribute to the national economy. These branches sufficiently help economic activity associated with Banking and assist in the growth of national economy.

Through the countrywide network, The bank has invested friendly projects i.e renewable energy, auto brick kiln, bio- BDT 234,316.72 million during the year 2017 in different gas, solar home system, establishment of ETP, ensuring sectors including garments, textiles, pharmaceuticals, work environment and security for workers of textile ICT, import of essential food items and capital machinery, and garments industry, fire and safety measures etc. working capital finance etc. and thus helped achieve amounted to BDT 14,100.00 million. During 2017, the the expected GDP growth of the country. It also helped Bank handled total inward remittances of BDT 95,405.40 generation of employment opportunity for the people of million and the same was distributed to the beneficiaries the country. through bank’s wide branch network across the country. In 2016-2017 fiscal year, SEBL deposited BDT 2,635.45 The role of Small and Medium Enterprises (SMEs) is million to the government exchequer as corporate income indispensible for overall economic development of tax. BDT 302.52 million and BDT 282.31 million were Bangladesh. During the year 2017, SEBL invested BDT also collected and deposited to the government exchequer 37,491.00 million in SME sector and BDT 3,541.00 as VAT and exercise duty. The Bank mobilized total million in agricultural sector of the country. deposits of BDT 269,828.08 million which contributed to the formation of country’s capital. Foreign Exchange operation of SEBL through its prompt service in Export and Import business has made significant As ever, SEBL will remain committed to be an active partner contribution to foreign trade of the country. Total amount for contributing to the ongoing economic development of Import and Export business of SEBL in 2017 was of the country by providing all sorts of financial services BDT 215,379.77 million and BDT 167,562.98 million within the limits of its capacity. respectively. The investment of the bank in environment-

Southeast Bank Limited 219 Value Added Statement

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 6,412.31 million as of December 31, 2017 as against BDT 7,352.70 million in 2016.

BDT in million 2017 2016 Particulars % % Taka Taka Income from Banking Services: Interest and similar income on loan portfolios 17,400.55 16,972.33 Investment income 5,570.65 5,079.61 Commission, Exchange and Brokerage 3,462.93 2,903.03 Other Operating Income 871.78 662.60 27,305.90 25,617.57 Less: Cost of Services & Supplies Interest paid on Deposits & Borrowings 13,372.86 12,765.12 Rent, Taxes, Insurance, Lighting etc. 899.48 801.04 Legal expenses 1.83 0.60 Postage, Stamp, Telegram & Telephone 176.22 166.45 Stationery, Printing, Advertisement 149.55 132.23 Directors' Fees and Expenses 3.79 2.91 Audit Fee 1.91 1.60 Repairs to Bank's property 79.16 94.93 Other expenses 1,328.58 1,087.36 16,013.37 15,052.24 Value Added by the Banking Services 11,292.53 10,565.33 Add: Non-banking income - - Less: Provision for loans and advances/investments Specific provision on loan loss (3,781.32) (2,360.99) Transfer to general provisions (1,010.61) (890.00) Provision for Off-Balance Sheet Exposures (285.50) (249.50) Provision for diminution in value of Investment 217.21 403.60 Provision for Other Assets (20.00) (115.74) (4,880.22) (3,212.62) Value Added 6,412.31 7,352.70

Distribution of Value Addition Employees-as Salaries and Allowances 1,843.99 28.75% 1,741.46 23.68% Transfer to SEBL Foundation - 0.00% 300.00 4.08% Provider of Capital - as dividend 1,375.43 21.45% 1,833.90 24.94% Government - as income tax 3,013.45 46.99% 2,855.52 38.84% Expansion & Growth: Statutory Reserve - 0.00% 272.69 3.71% Retained Earnings (196.79) -3.07% 40.45 0.55% Depreciation 376.23 5.87% 308.67 4.20% 6,412.31 100% 7,352.70 100% Wealth Distribution of 2017 Wealth Distribution of 2016 Percentage Percentage

6 To employees as salaries and 0 4 -3 allowances 4 0 To SEBL Foundation 29 24 To Shareholders as dividend To Government as income tax 4 0 Statutory Reserve 21 47 Retained Earnings 39 25 Depreciation

220 Annual Report 2017 Economic Value Added 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 1,848.47 million as of December 31, 2017 as against BDT 1,383.86 million in 2016.

Economic Value Added BDT in million 2017 2016 Particulars Taka Taka

Total Revenue 27,305.90 25,617.57

Less: Expenses (Interest & Operating) (18,243.60) (17,114.35)

Less: Corporate Tax (3,013.45) (2,855.52) Less: Capital Charges (4,200.38) (4,263.85)

Economic Value Added 1,848.47 1,383.86

Capital Charges = Required Rate of Return X Total Capital & Reserves Required Rate of Return (12.44%) = Weighted average rate of 10 years treasury bond @ 10.44% +Risk Premium @ 2% in 2017 Weighted average rate of 10 years treasury bond @ 10.52% +Risk Premium @ 2% in 2016 Total Capital & Reserves = BDT 33,765.13 million in 2017 (BDT 34,056.28 million in 2016) Economic Value Added = Total Revenue - (Expenses + Corporate Tax + Capital Changes) Economic Value Addition BDT in million 936.23 2,012.92 3,561.16 1,838.86 1,848.47

2013 2014 2015 2016 2017

Southeast Bank Limited 221 Market Value Added 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 20,356.29 million whereas the book value of equity stood at BDT 9,169.50 million, resulting a Market Value Added of BDT 11,186.79 million as of December 31, 2017 as against Tk. 8,023.32 million in 2016.

Market Value Added BDT in million 2017 2016 Particulars Taka Taka

Market Value of Equity 20,356.29 17,192.82

Less: Book Value of Equity (Share Capital) (9,169.50) (9,169.50)

Market Value Added 11,186.79 8,023.32

Total Number of Shares outstanding 916,950,176 916,950,176

Market Value per Share 22.20 18.75

Market Value of Total Equity = [Total Number of shares outstanding X Market value per share as on 31.12.17]

Market Value Added = [Market Value of Total Equity] - [Book Value of Equity]

Market Value Addition BDT in million 6,898.96 8,665.18 7,014.67 8,023.32 11,186.79

2013 2014 2015 2016 2017

222 Annual Report 2017 Redressal of Investors’ 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’ An investor can make a written complaint through a meeting are provided with proxy forms to nominate letter. proxy to attend and vote on their behalf. The proxy The company maintains investor grievance file in forms which are in accordance with the standard which full details of every written compliant are kept. format, are sent along with the annual report. We have 3 designated persons who look after the investor grievances within a timeframe. ii) The shareholders’ meetings proceed in accordance The full details of the written complaint are passed on with the order of agenda, without adding new to the concerned department. The compliance officer and uninformed agenda, to give shareholders of the Company must be apprised of it as soon as it is the opportunity to study the information on the received. given agenda before the poll. Moreover, important A letter or email is sent to the investor who has information for the shareholders’ meetings are submitted written complaint by the designated person not changed abruptly to the disadvantage of the or compliance officer acknowledging receipt of the shareholders. complaint and informing him/her of the process for iii) The bank sees the importance of the consideration suitable decision. of transactions which may have conflict of interest or If necessary, the points of complaints are thoroughly may be connected or related transactions and abides enquired into. by good corporate governance principles, including the rules and regulations of the Bangladesh Securities Availability of information about Southeast Bank Limited and Exchange Commission and the Dhaka Stock Exchange Ltd. and the Chittagong Stock Exchange Annual Report of each year and other relevant information Ltd. Directors, management and those who are related about SEBL may be viewed on SEBL’s website www. persons do not participate in the consideration to southeastbank.com.bd. The Bank provides copies of approve such transactions. Annual Reports to the Bangladesh Securities and Exchange iv) The bank continues to have regular communication Commission, Bangladesh Bank, The Dhaka Stock Exchange with the shareholders through periodic updates of Limited and The Chittagong Stock Exchange Limited for performance and at any other time when it believes it their reference. Investors may read them at public reference needs be done in the best interest of shareholders. room or library. v) At times, the investors lodge complaints. These Investors’ Inquiries complaints are timely resolved. Investors at times lodge complaints through DSE and CSE. Those are also Queries relating to shareholdings, for example, transfer timely taken up and resolved. The concerned investors of shares and payment of dividend, are to be sent to the and the DSE/CSE are informed of the resolution of the following address: complaint. SEBL follows the following principles in Investors’ Relation Department dealing with the Investors Fair treatment. Address : Southeast Bank Limited Timeliness in the resolution of investors’ complaints. Head Office : Share Division, Information to investors about the resolution of their Eunoos Trade Centre (Level-2) complaints. 52-53, Dilkhusha C/A, Friendliness with all investors and all investor Dhaka-1000 segments. Web Address : www.southeastbank.com.bd Protection of investors’ interest. Name of Contact Person : Mohammad Omar Faruque Vice President Way of Redress of Investors’ Complaints E-mail : [email protected] Phone : +8802 9567271 (10:00 A.M. to 6:00 P.M.) An investor can complain through email info@ Fax : +8802 9567273 southeastbank.com.bd.

Southeast Bank Limited 223 Communication to Shareholders

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:

We communicate with Shareholders in the following ways:

a) By releasing Price Sensitive Information (PSI) via DSE and CSE website and publishing PSI in Daily Newspapers and Bank’s web-portal.

b) By publishing Press Release about Bank’s important events in the newspapers.

c) By issuing notices to the Shareholders for holding Annual General Meeting and Extra-Ordinary General Meeting.

d) By sending the Annual Reports of the Bank every year.

e) By sending the Right Offer Document (ROD) as and when required.

f) By publishing of Financial Statements in the newspapers.

g) By holding General Meetings of Shareholders.

h) By holding dialogue with Shareholders.

i) Electronic and other means of communications with Shareholders:

1. Call Centre (24X7X365). 2. Bank’s website- www.southeastbank.com.bd

3. Web-chat. 4. Investors’ Relation Department.

5. Short Message Service (SMS). 6. E-mail communication.

7. Letter communication.

224 Annual Report 2017 Reminders to the Shareholders who Have not Encashed their Dividends

We remind the Shareholders to encash their dividend warrants in the following manner:

a) We serve notice to the press to notify our shareholders to collect their respective dividend warrants.

b) Whenever any shareholder visits our Investors’ Relation Division, we remind them about encashment of their dividend warrants.

c) Whenever any shareholder calls us over the phone, we remind him / her about encashment of the dividend warrants.

d) At times, we send Short Message Service (SMS) to a shareholder to encash his / her dividend warrant.

Southeast Bank Limited 225 226 Annual Report 2017 Financial Highlights

BDT in million Group Bank Particulars Change 2017 2016 2017 2016 Change % %

Performance During the Year Net Interest Income 4,027.69 4,207.21 -4.27% 4,006.66 4,203.21 -4.68% Non Interest Income 9,905.35 8,645.24 14.58% 9,667.67 8,492.73 13.83% Operating Income 13,933.04 12,852.45 8.41% 13,674.32 12,695.94 7.71% Operating Profit 9,062.30 8,503.22 6.57% 8,939.13 8,497.82 5.19% Profit After Tax 1,168.63 2,435.07 -52.01% 1,118.30 2,416.37 -53.72%

Year End Financial Position Loans 234,316.72 191,865.59 22.13% 231,851.00 189,364.96 22.44% Investments 62,911.04 61,731.63 1.91% 60,323.17 59,455.01 1.46% Deposits 269,828.08 229,973.43 17.33% 269,833.09 230,533.70 17.05% Shareholders Equity 25,823.65 26,523.56 -2.64% 25,761.74 26,522.86 -2.87% Total Assets 339,288.05 291,798.01 16.27% 338,909.25 291,993.00 16.07%

Earnings per share (BDT) 1.27 2.66 -52.01% 1.22 2.64 -53.72% Dividend (%) 15.00% 20.00% -25.00% 15.00% 20.00% -25.00% Price earning ratio (times) 17.42 7.06 146.71% 18.20 7.12 155.83% Net asset value per share (BDT) 28.16 28.93 -2.64% 28.10 28.93 -2.87% Market price per share (BDT) 22.20 18.75 18.40% 22.20 18.75 18.40%

Ratios (%) Capital adequacy ratio 10.84% 12.15% -10.77% 10.87% 12.18% -10.75% (as per Basel III) Non performing loans 5.99% 4.89% 22.44% 5.99% 4.89% 22.44% Cost to income ratio 34.96% 33.84% 3.31% 34.63% 33.07% 4.72%

Southeast Bank Limited 227 Key Financial Data, Ratios and Graphical Presentation

BDT in million Particulars 2017 2016 2015 2014 2013 BALANCE SHEET MATRIX Authorized Capital 15,000.00 15,000.00 15,000.00 15,000.00 10,000.00 Paid up Capital 9,169.50 9,169.50 9,169.50 9,169.50 8,732.86 Reserve Fund & Surplus 24,595.63 24,886.78 19,340.03 18,292.59 13,074.71 Total Shareholders’ Equity 25,823.65 26,523.56 27,206.66 24,543.21 21,929.15 Deposits 269,828.08 229,973.43 210,431.09 189,472.54 177,519.46 Loans and Advances 234,316.72 191,865.59 168,878.46 147,070.81 134,863.82 Investments 62,911.04 61,731.63 58,829.27 56,378.59 57,589.06 Fixed Assets 9,321.80 8,947.16 7,885.23 7,913.00 7,795.65 Total Assets 339,288.05 291,798.01 260,718.03 236,608.40 220,930.85 Total Off Balance Sheet Items 142,496.79 113,910.63 88,522.24 92,184.70 82,126.39 Interest Earning Assets 291,947.38 254,120.97 225,546.44 203,449.40 192,452.88 Non-Interest Earning Assets 47,340.68 37,677.04 35,171.59 33,159.00 28,477.97 INCOME STATEMENT MATRIX Interest Income 17,400.55 16,972.33 17,794.80 19,233.89 19,200.64 Interest Expenses 13,372.86 12,765.12 14,656.34 16,049.91 17,233.51 Investment Income 5,570.65 5,079.61 5,158.54 5,274.27 4,782.65 Non-Interest Income 4,334.70 3,565.64 3,307.39 3,158.93 2,935.02 Non-Interest Expenses 4,870.74 4,349.23 3,570.11 3,327.43 2,984.60 Total Income 27,305.90 25,617.57 26,260.72 27,667.09 26,918.31 Total Expenditure 18,243.60 17,114.35 18,226.45 19,377.34 20,218.11 Operating Profit 9,062.30 8,503.22 8,034.27 8,289.76 6,700.20 Profit before Tax 4,182.08 5,290.60 5,517.48 6,760.66 6,078.82 Net Profit after Tax 1,168.63 2,435.07 3,069.42 3,836.94 3,378.82 CAPITAL MATRIX Risk Weighted Assets 311,557.34 280,402.29 247,250.88 221,249.27 200,098.46 Tier-I Capital 21,165.35 21,685.52 21,211.19 19,882.29 17,608.48 Tier-II Capital 12,599.78 12,370.76 7,298.35 7,579.80 4,199.09 Total Capital 33,765.13 34,056.28 28,509.53 27,462.09 21,807.57 Capital Surplus/(Deficit) (1,285.07) 4,263.54 3,784.44 5,337.16 1,797.72 Tier I Capital Ratio 6.79% 7.73% 8.57% 8.99% 8.80% Tier II Capital Ratio 4.04% 4.41% 2.95% 3.43% 2.10% Total Capital to Risk Weighted Assets Ratio 10.84% 12.15% 11.52% 12.41% 10.90% CREDIT QUALITY Classified Loans 13,878.53 9,257.79 7,193.82 5,387.74 5,350.24 Provision for Unclassified Loans 3,440.61 2,430.00 1,540.00 1,334.72 1,220.28 Provision for Classified Loans 6,628.68 3,728.28 2,323.29 2,673.49 2,656.72 Provision for Contingent Liabilities 1,425.00 1,139.50 890.00 909.65 813.04 Percentage of NPLs to total Loans and Advances 5.99% 4.89% 4.25% 3.64% 3.94%

228 Annual Report 2017 BDT in million Particulars 2017 2016 2015 2014 2013 FOREIGN EXCHANGE BUSINESS Import 215,379.77 171,531.73 151,812.58 155,691.00 131,644.82 Export 167,562.98 146,606.09 126,423.89 112,137.60 95,220.40 Remittance (Inward) 95,405.40 64,665.84 60,708.50 48,740.50 39,299.10 OPERATING PROFIT RATIOS Credit Deposit Ratio 82.12% 83.43% 80.25% 78.09% 76.44% Cost of Deposit & Borrowing 5.02% 5.51% 7.12% 8.32% 10.01% Administrative Cost 1.83% 1.88% 1.69% 1.69% 1.72% Yield on Loans and Advances 8.17% 9.41% 11.30% 13.52% 14.96% Spread 3.15% 3.90% 4.18% 5.20% 4.95% Return on Assets 0.37% 0.88% 1.23% 1.67% 1.64% Return on Equity 4.46% 9.06% 11.86% 16.51% 16.20% Debt Equity Ratio 12.14 10.00 8.58 8.64 9.07 PERFORMANCE RATIOS Net Profit per Employee 0.43 0.92 1.30 1.72 1.58 Net Profit per Branch 8.85 19.02 25.16 33.96 32.80 Operating profit as % of Working Fund 2.67% 2.91% 3.08% 3.50% 3.03% Net Interest income as % of Working Fund 1.19% 1.44% 1.20% 1.35% 0.89% Efficiency Ratio 34.96% 33.84% 30.77% 28.64% 30.82% Ratio of Fees Income 24.85% 22.59% 23.78% 22.96% 25.20% Salary Exp. to total Operating Exp. 38.06% 40.32% 39.88% 40.92% 42.55% Salary Exp. to Fees Income 53.54% 60.40% 51.59% 51.05% 52.03% Cost to Income Ratio 34.96% 33.84% 30.77% 28.64% 30.82% DIVIDEND & RIGHTS ISSUE Cash - 20% 15% 15% 16% Stock 15% - - - 5% Rights Issue - - - - - SHARES INFORMATION MATRIX No. of Shares Outstanding 916.95 916.95 916.95 916.95 916.95 Earnings Per Share ( Actual Figure) 1.27 2.66 3.35 4.18 3.68 Number of Shareholders (Actual Figure) 36,038 39,009 46,285 58,169 65,413 Market Value Per Share-DSE (Actual Figure) 22.20 18.70 17.60 19.40 17.90 Price Earnings Ratio 17.42 7.06 5.27 4.67 4.91 Net Assets Value Per Share 28.16 28.93 29.67 26.77 23.92 Dividend Cover Ratio 1.18 0.75 0.45 0.36 0.54 OTHER INFORMATION Number of Branches 132 128 122 113 103 Number of Islamic Windows 5 5 5 5 5 Number of Employees 2704 2616 2376 2221 2118 Number of Foreign Correspondents 825 807 811 790 778

Southeast Bank Limited 229 Horizontal and Vertical Analysis

Horizontal Analysis Balance Sheet BDT in million 2017 2016 2015 2014 2013 Particulars 2017 2016 2015 2014 2013 (%) (%) (%) (%) (%) PROPERTY AND ASSETS Cash In hand (including foreign 167% 3,010.98 135% 2,432.62 106% 1,903.29 89% 1,598.09 100% 1,802.67 currencies) Balance with Bangladesh Bank (including foreign 164% 17,968.15 141% 15,402.83 129% 14,093.70 127% 13,859.38 100% 10,955.39 currencies) Balance with other banks - - - - and financial institutions In Bangladesh 118% 3,196.88 106% 2,860.09 81% 2,187.97 158% 4,283.51 100% 2,706.54 Outside Bangladesh 156% 1,082.73 170% 1,185.13 173% 1,203.35 213% 1,482.74 100% 695.51 Money at call and on short 361% 3,643.95 423% 4,271.34 92% 923.45 54% 548.30 100% 1,008.90 notice Investments - - - - Government 99% 50,204.80 107% 54,299.80 103% 52,620.79 99% 50,185.30 100% 50,860.91 Others 189% 12,706.24 110% 7,431.83 92% 6,208.48 92% 6,193.29 100% 6,728.16 Loans, cash credit, overdrafts 173% 223,657.50 141% 182,661.82 125% 161,556.32 110% 141,778.21 100% 129,184.62 etc./investments Bills purchased and 188% 10,659.21 162% 9,203.77 129% 7,322.14 93% 5,292.59 100% 5,679.20 discounted Fixed assets including premises, furniture and 120% 9,321.80 115% 8,947.16 101% 7,885.23 102% 7,913.00 100% 7,795.65 fixtures Other assets 109% 3,835.80 88% 3,101.61 137% 4,813.31 99% 3,473.97 100% 3,513.30 Total assets 154% 339,288.05 132% 291,798.01 118% 260,718.03 107% 236,608.40 100% 220,930.85 Liabilities - - - - Borrowings from other banks, financial institutions 129% 10,181.65 93% 7,371.64 58% 4,556.92 61% 4,815.92 100% 7,921.43 and agents Subordinated bond 7,400.00 8,000.00 3,000.00 3,000.00 - Deposits and other accounts - - - - Current/Al-wadeeah current 250% 35,511.53 213% 30,285.06 163% 23,179.89 133% 18,935.05 100% 14,212.91 accounts and other accounts Bills payable 258% 4,933.77 342% 6,548.86 111% 2,127.21 141% 2,701.46 100% 1,914.53 Savings bank/Mudaraba 169% 23,896.58 140% 19,700.58 130% 18,419.86 96% 13,531.82 100% 14,118.81 savings bank deposits Fixed deposits/Mudaraba 140% 205,486.20 118% 173,438.93 113% 166,704.14 105% 154,304.20 100% 147,273.21 fixed deposits Other liabilities 192% 26,044.63 147% 19,919.38 114% 15,513.93 109% 14,766.54 100% 13,550.33 Total liabilities - - - -

230 Annual Report 2017 BDT in million 2017 2016 2015 2014 2013 Particulars 2017 2016 2015 2014 2013 (%) (%) (%) (%) (%) Capital/shareholders' equity - - - - Paid up capital 105% 9,169.50 105% 9,169.50 105% 9,169.50 105% 9,169.50 100% 8,732.86 Statutory reserve 142% 9,170.00 142% 9,170.00 138% 8,897.31 121% 7,792.81 100% 6,444.82 Revaluation reserve 105% 4,534.24 110% 4,763.89 138% 5,968.13 108% 4,670.87 100% 4,331.54 Other reserve 100% 247.65 100% 247.65 100% 247.65 100% 247.65 100% 247.65 Foreign currency translation 3578% (14.14) 6186% (24.45) 7052% (27.87) -61% 0.24 100% (0.40) reserve Retained earnings 125% 2,716.40 147% 3,196.97 136% 2,951.94 123% 2,662.14 100% 2,172.67 Total shareholders' equity 118% 25,823.65 121% 26,523.56 124% 27,206.66 112% 24,543.21 100% 21,929.15 Non-controlling interest 96% 10.05 95% 10.00 90% 9.43 97% 10.18 100% 10.48 Total liabilities and 154% 339,288.05 132% 291,798.01 118% 260,718.03 107% 236,608.40 100% 220,930.85 shareholders' equity Acceptances and 174% 57,138.53 133% 43,813.55 110% 36,223.42 94% 30,725.22 100% 32,847.49 endorsements Letters of guarantee 98% 15,924.96 93% 15,154.12 83% 13,395.24 88% 14,253.37 100% 16,230.48 Irrevocable letters of credit 222% 44,195.14 165% 32,881.30 125% 24,992.38 157% 31,246.71 100% 19,925.64 Bills for collection 184% 22,666.59 145% 17,830.30 104% 12,812.74 120% 14,739.31 100% 12,300.43 Other contingent liabilities 212% 1,744.47 179% 1,474.68 134% 1,098.46 148% 1,220.08 100% 822.34 Other Commitments 827.10 2,756.66 - 0% - - Total off-balance sheet items including contingent 174% 142,496.79 139% 113,910.63 108% 88,522.24 112% 92,184.70 100% 82,126.39 liabilities

Southeast Bank Limited 231 Horizontal Analysis

Profit and Loss Account BDT in million 2017 2016 2015 2014 2013 Particulars 2017 2016 2015 2014 2013 (%) (%) (%) (%) (%) Operating Income Interest income/profit on investments 91% 17,400.55 88% 16,972.33 93% 17,794.80 100% 19,233.90 100% 19,200.64 Interest paid/profit shared on deposits 78% 13,372.86 74% 12,765.12 85% 14,656.34 93% 16,049.91 100% 17,233.51 and borrowings etc. Net interest income/net profit on 205% 4,027.69 214% 4,207.21 160% 3,138.46 162% 3,183.99 100% 1,967.13 investments Investment income 116% 5,570.65 106% 5,079.61 108% 5,158.54 110% 5,274.27 100% 4,782.65 Commission, exchange and brokerage 142% 3,462.93 119% 2,903.03 113% 2,759.46 109% 2,666.73 100% 2,440.37 Other operating income 176% 871.78 134% 662.60 111% 547.93 100% 492.20 100% 494.65 Total operating income (A) 144% 13,933.04 133% 12,852.45 120% 11,604.39 120% 11,617.19 100% 9,684.80 Salaries and allowances 145% 1,843.96 137% 1,741.46 112% 1,423.68 107% 1,361.48 100% 1,269.82 Rent, taxes, insurance, electricity etc. 183% 899.48 163% 801.04 134% 658.26 116% 569.34 100% 491.84 Legal expenses 203% 1.83 66% 0.60 165% 1.49 68% 0.62 100% 0.90 Postage, stamp, telecommunication 136% 176.22 128% 166.45 114% 147.33 112% 145.63 100% 129.59 etc. Stationery, printing, advertisements 133% 149.55 117% 132.23 100% 112.62 101% 113.72 100% 112.64 etc. Managing Director's salary and fees 106% 10.04 127% 11.97 100% 9.45 100% 9.45 100% 9.45 Directors' fees and expenses 206% 3.79 159% 2.91 144% 2.65 187% 3.43 100% 1.84 Auditors' fees 230% 1.91 193% 1.60 125% 1.04 161% 1.34 100% 0.83 Depreciation and repair of bank's 149% 455.39 132% 403.60 111% 339.18 117% 356.79 100% 305.33 assets Other expenses 201% 1,328.58 164% 1,087.36 132% 874.41 116% 765.65 100% 662.36 Total operating expenses (B) 163% 4,870.74 146% 4,349.23 120% 3,570.11 111% 3,327.43 100% 2,984.60 Profit before provision (C=A-B) 135% 9,062.30 127% 8,503.22 120% 8,034.27 124% 8,289.76 100% 6,700.20 General provision 10106% 1,010.61 8900% 890.00 2053% 205.28 1144% 114.45 100% 10.00 Specific provision 703% 3,781.32 439% 2,360.99 379% 2,039.77 181% 974.01 100% 537.81 Provision for off-balance sheet items 281% 285.50 245% 249.50 -19% (19.65) 95% 96.61 100% 101.73 Provision for diminution in value of 526% (217.21) 977% (403.60) -652% 269.48 -797% 329.03 100% (41.30) investments Other provisions 152% 20.00 881% 115.74 167% 21.91 114% 15.00 100% 13.14 Total provision (D) 785% 4,880.22 517% 3,212.62 405% 2,516.79 246% 1,529.10 100% 621.37 Total profit before taxation (C-D) 69% 4,182.08 87% 5,290.60 91% 5,517.48 111% 6,760.66 100% 6,078.82 Provision for taxation 112% 3,013.45 106% 2,855.52 91% 2,448.07 108% 2,923.72 100% 2,700.00 Net profit after taxation 35% 1,168.63 72% 2,435.07 91% 3,069.42 114% 3,836.94 100% 3,378.82 Retained surplus during the year 54% 1,168.63 100% 2,162.38 91% 1,964.92 115% 2,488.95 100% 2,170.10 Earnings per share (Tk.) 35% 1.27 72% 2.66 91% 3.35 114% 4.18 100% 3.68

232 Annual Report 2017 Vertical Analysis

Balance Sheet BDT in million 2017 2016 2015 2014 2013 Particulars 2017 2016 2015 2014 2013 (%) (%) (%) (%) (%) PROPERTY AND ASSETS Cash In hand (including foreign currencies) 1% 3,010.98 1% 2,432.62 1% 1,903.29 1% 1,598.09 1% 1,802.67 Balance with Bangladesh Bank and its agent 5% 17,968.15 5% 15,402.83 5% 14,093.70 6% 13,859.38 5% 10,955.39 banks(including foreign currencies) Balance with other banks and financial - - - 0% - 0% - 0% - institutions In Bangladesh 1% 3,196.88 1% 2,860.09 1% 2,187.97 2% 4,283.51 1% 2,706.54 Outside Bangladesh 0% 1,082.73 0% 1,185.13 0% 1,203.35 1% 1,482.74 0% 695.51 Money at call and on short notice 1% 3,643.95 1% 4,271.34 0% 923.45 0% 548.30 0% 1,008.90 Investments 0% - - - 0% - 0% - 0% - Government 15% 50,204.80 19% 54,299.80 20% 52,620.79 21% 50,185.30 23% 50,860.91 Others 4% 12,706.24 3% 7,431.83 2% 6,208.48 3% 6,193.29 3% 6,728.16 Loans and advances/investments 0% - - - 0% - 0% - 0% - Loans, cash credit, overdrafts etc./investments 66% 223,657.50 63% 182,661.82 62% 161,556.32 60% 141,778.21 58% 129,184.62 Bills purchased and discounted 3% 10,659.21 3% 9,203.77 3% 7,322.14 2% 5,292.59 3% 5,679.20 Fixed assets including premises, furniture 3% 9,321.80 3% 8,947.16 3% 7,885.23 3% 7,913.00 4% 7,795.65 and fixtures Other assets 1% 3,835.80 1% 3,101.61 2% 4,813.31 1% 3,473.97 2% 3,513.30 Non - banking assets 0% ------Total assets 100% 339,288.05 100% 291,798.01 100% 260,718.03 100% 236,608.40 100% 220,930.85 LIABILITIES AND CAPITAL - - - - Liabilities - - - - Borrowings from other banks, financial 3% 10,181.65 3% 7,371.64 2% 4,556.92 2% 4,815.92 4% 7,921.43 institutions and agents Subordinated bond 2% 7,400.00 3% 8,000.00 1% 3,000.00 1% 3,000.00 0% - Deposits and other accounts 0% - 0% - 0% - 0% - 0% - Current/Al-wadeeah current accounts and 10% 35,511.53 10% 30,285.06 9% 23,179.89 8% 18,935.05 6% 14,212.91 other accounts Bills payable 1% 4,933.77 2% 6,548.86 1% 2,127.21 1% 2,701.46 1% 1,914.53 Savings bank/Mudaraba savings bank deposits 7% 23,896.58 7% 19,700.58 7% 18,419.86 6% 13,531.82 6% 14,118.81 Fixed deposits/Mudaraba fixed deposits 61% 205,486.20 59% 173,438.93 64% 166,704.14 65% 154,304.20 67% 147,273.21 Bearer certificates of deposit 0% 0% - 0% - 0% - 0% - Other deposits 0% 0% - 0% - 0% - 0% - Other liabilities 8% 26,044.63 7% 19,919.38 6% 15,513.93 6% 14,766.54 6% 13,550.33 Capital/shareholders' equity 0% 0% - 0% - 0% - 0% - Paid up capital 3% 9,169.50 3% 9,169.50 4% 9,169.50 4% 9,169.50 4% 8,732.86 Statutory reserve 3% 9,170.00 3% 9,170.00 3% 8,897.31 3% 7,792.81 3% 6,444.82 Revaluation reserve 1% 4,534.24 2% 4,763.89 2% 5,968.13 2% 4,670.87 2% 4,331.54 Other reserve 0% 247.65 0% 247.65 0% 247.65 0% 247.65 0% 247.65 Foreign currency translation reserve 0% (14.14) 0% (24.45) 0% (27.87) 0% 0.24 0% (0.40) Retained earnings 1% 2,716.40 1% 3,196.97 1% 2,951.94 1% 2,662.14 1% 2,172.67 Total shareholders' equity - 25,823.65 - 26,523.56 - 27,206.66 - 24,543.21 - 21,929.15 Non-controlling interest 0% 10.05 0% 10.00 0% 9.43 0% 10.18 0% 10.48 Total liabilities and shareholders' equity 100% 339,288.05 100% 291,798.01 100% 260,718.03 100% 236,608.40 100% 220,930.85 OFF-BALANCE SHEET ITEMS 0% ------Acceptances and endorsements 40% 57,138.53 38% 43,813.55 41% 36,223.42 33% 30,725.22 40% 32,847.49 Letters of guarantee 11% 15,924.96 13% 15,154.12 15% 13,395.24 15% 14,253.37 20% 16,230.48 Irrevocable letters of credit 31% 44,195.14 29% 32,881.30 28% 24,992.38 34% 31,246.71 24% 19,925.64 Bills for collection 16% 22,666.59 16% 17,830.30 14% 12,812.74 16% 14,739.31 15% 12,300.43 Other contingent liabilities 1% 1,744.47 1% 1,474.68 1% 1,098.46 1% 1,220.08 1% 822.34 Other commitments 1% 827.10 2% 2,756.66 - - - Total off-balance sheet items including 100% 142,496.79 100% 113,910.63 100% 88,522.24 100% 92,184.70 100% 82,126.39 contingent liabilities

Southeast Bank Limited 233 Vertical Analysis

Profit and Loss Account BDT in million 2017 2016 2015 2014 2013 Particulars 2017 2016 2015 2014 2013 (%) (%) (%) (%) (%) Operating Income Interest income/profit on investments 64% 17,400.55 66% 16,972.33 68% 17,794.80 70% 19,233.90 71% 19,200.64 Interest paid/profit shared on deposits 49% 13,372.86 50% 12,765.12 56% 14,656.34 58% 16,049.91 64% 17,233.51 and borrowings etc. Net interest income/net profit on 15% 4,027.69 16% 4,207.21 12% 3,138.46 12% 3,183.99 7% 1,967.13 investments Investment income 20% 5,570.65 20% 5,079.61 20% 5,158.54 19% 5,274.27 18% 4,782.65 Commission, exchange and brokerage 13% 3,462.93 11% 2,903.03 11% 2,759.46 10% 2,666.73 9% 2,440.37 Other operating income 3% 871.78 3% 662.60 2% 547.93 2% 492.20 2% 494.65 Total operating income (A) 51% 13,933.04 50% 12,852.45 44% 11,604.39 42% 11,617.19 36% 9,684.80 Salaries and allowances 7% 1,843.96 7% 1,741.46 5% 1,423.68 5% 1,361.48 5% 1,269.82 Rent, taxes, insurance, electricity etc. 3% 899.48 3% 801.04 3% 658.26 2% 569.34 2% 491.84 Legal expenses 0% 1.83 0% 0.60 0% 1.49 0% 0.62 0% 0.90 Postage, stamp, telecommunication etc. 1% 176.22 1% 166.45 1% 147.33 1% 145.63 0% 129.59 Stationery, printing, advertisements etc. 1% 149.55 1% 132.23 0% 112.62 0% 113.72 0% 112.64 Managing Director's salary and fees 0% 10.04 0% 11.97 0% 9.45 0% 9.45 0% 9.45 Directors' fees and expenses 0% 3.79 0% 2.91 0% 2.65 0% 3.43 0% 1.84 Auditors' fees 0% 1.91 0% 1.60 0% 1.04 0% 1.34 0% 0.83 Charges on loan losses 0% - 0% - 0% - 0% - 0% - Depreciation and repair of bank's assets 2% 455.39 2% 403.60 1% 339.18 1% 356.79 1% 305.33 Other expenses 5% 1,328.58 4% 1,087.36 3% 874.41 3% 765.65 2% 662.36 Total operating expenses (B) 18% 4,870.74 17% 4,349.23 14% 3,570.11 12% 3,327.43 11% 2,984.60 Profit before provision (C=A-B) 33% 9,062.30 33% 8,503.22 31% 8,034.27 30% 8,289.76 25% 6,700.20 Provision for loans and advances/ 0% 0% 0% - 0% - 0% - investments General provision 4% 1,010.61 3% 890.00 1% 205.28 0% 114.45 0% 10.00 Specific provision 14% 3,781.32 9% 2,360.99 8% 2,039.77 4% 974.01 2% 537.81 Provision for off-balance sheet items 1% 285.50 1% 249.50 0% (19.65) 0% 96.61 0% 101.73 Provision for diminution in value of -1% (217.21) -2% (403.60) 1% 269.48 1% 329.03 0% (41.30) investments Other provisions 0% 20.00 0% 115.74 0% 21.91 0% 15.00 0% 13.14 Total provision (D) 18% 4,880.22 13% 3,212.62 10% 2,516.79 6% 1529.10 2% 621.37 Total profit before taxation (C-D) 15% 4,182.08 21% 5,290.60 21% 5,517.48 24% 6,760.66 23% 6,078.82 Provision for taxation 11% 3,013.45 11% 2,855.52 9% 2,448.07 11% 2,923.72 10% 2,700.00 Net profit after taxation 4% 1,168.63 10% 2,435.07 12% 3,069.42 14% 3,836.94 13% 3,378.82

234 Annual Report 2017 Segment Information

Sector-wise Investment Operating Revenue

Agriculture 1.48% Industry 21.11% Working capital financing 20.86% Export credit 7.49% Commercial credit 20.92% Conventational banking 92.78% Small and cottage industries 0.87% Islamic Banking 5.90% Finance to NBFIs 0.74% Off-shore Banking 1.32% Real Estate 7.79% Transport & communication 1.17% Small Enterprise financing 11.97% Miscellaneous 5.60%

Revenue Sources Expenditure Mix

Interest Income 63.72% Interest paid 51.16% Investment Income 20.40% Operating Expenses 18.64% Commission, exchange and brokerage 12.68% Provision 18.67% Other Operating Income 3.19% Tax 11.53%

Division-wise loans Area-wise Loans

Dhaka 73.87% Chittagong 20.43% Rajshahi 2.20% Rural Area 93.84% Sylhet 1.81% Urban Area 6.16% Khulna 1.10% Rangpur 0.35% Barisal 0.08% Mymensingh 0.17%

Southeast Bank Limited 235 Graphical Presentation

Market Price Per Share Price Earnings Ratio 4.91 4.67 5.27 7.06 17.42 17.90 19.40 17.60 18.75 22.20

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Earnings Per Share Total Assets (BDT in Million) 3.68 4.18 3.35 2.66 1.27 220,931 236,608 260,718 291,798 339,288

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Loans and Advances Deposits (BDT in Million) (BDT in Million) 177,519 189,473 210,431 229,973 269,828 134,864 147,071 168,878 191,866 234,317

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

236 Annual Report 2017

Import Business Operating Income (BDT in Million) (BDT in Million) 9,685 11,617 11,604 12,852 13,933 131,645 155,691 151,813 171,532 215,380

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Operating Profit Profit Before Tax (BDT in Million) (BDT in Million) 6,700 8,290 8,034 8,503 9,062 6,079 6,761 5,517 5,291 4,182

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Dividend Shareholders' Equity (BDT in Million) 21% 15% 15% 20% 15% 21,929 24,543 27,207 26,524 25,824

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Southeast Bank Limited 237

Return on Equity Return on Assets 9.06% 4.46% 1.64% 1.67% 1.23% 0.88% 0.37% 16.20% 16.51% 11.86%

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Non Performing Loans Investment (BDT in Million) 3.94% 3.64% 4.25% 4.89% 5.99% 57,589 56,379 58,829 61,732 62,911

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Export Business Operating Expense (BDT in Million) (BDT in Million) 2,985 3,327 3,570 4,349 4,871 95,220 112,138 126,424 146,606 167,563

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Total Provision Profit After Tax (BDT in Million) (BDT in Million) 621 1,529 2,517 3,213 4,880 3,379 3,837 3,069 2,435 1,169

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

238 Annual Report 2017 Distribution of Shareholders in 2017

Name of the Category Number of Shares % to Total Shares Sponsors 296,442,331 32.33% Financial Institutions & Investor A/C Holders 328,711,831 35.85% General Public 291,796,014 31.82% TOTAL 916,950,176 100.00%

Distribution of Shareholders Percentage 31.82% 32.33%

Sponsors 32.33% Financial Institutions & Investor A/C Holders 35.85% 35.85% General Public 31.82%

Shares held by the Directors in 2017

Sl. No. Name of the Directors Designation Shares Percentage 1 Mr. Alamgir Kabir, FCA Chairman 19,944,672 2.18 2 Mrs. Duluma Ahmed Vice Chairperson 19,082,742 2.08 3 Mr. M.A. Kashem Director 20,307,060 2.21 4 Mr. Azim Uddin Ahmed Director 25,490,735 2.78 5 Mrs. Jusna Ara Kashem Director 18,339,525 2.00 6 Mr. Md. Akikur Rahman Director 18,443,731 2.01 7 Mrs. Rehana Rahman Director 18,844,145 2.06 8 Mrs. Sirat Monira Director 120,547 0.01 9 Mr. A.H.M. Moazzem Hossain Independent Director - - 10 Dr. Quazi Mesbahuddin Ahmed Independent Director - - 11 Mr. M. Kamal Hossain Managing Director - - Total Shares - 140,573,157 15.33

Southeast Bank Limited 239 Market Price Information

DSE CSE Total Volume Month Month Month Total Month Month Total on High Low Volume High Low Volume DSE & CSE Jan-17 23.70 18.00 73,527,014 24.00 18.10 2,772,812 76,299,826 Feb-17 22.10 19.10 40,043,277 22.00 19.00 1,201,367 41,244,644 Mar-17 22.50 20.40 50,860,851 22.90 20.40 3,093,356 53,954,207 Apr-17 22.00 18.20 47,634,798 22.00 18.20 1,873,769 49,508,567 May-17 18.50 17.00 20,352,203 18.40 16.10 767,725 21,119,928 Jun-17 18.70 17.40 15,995,129 18.90 17.10 386,502 16,381,631 Jul-17 20.00 18.20 31,971,685 20.00 17.90 1,096,996 33,068,681 Aug-17 21.20 19.10 57,892,422 21.50 19.00 2,229,329 60,121,751 Sep-17 22.50 20.30 61,684,847 22.80 20.40 2,860,930 64,545,777 Oct-17 23.30 19.50 57,704,753 23.20 19.50 2,731,635 60,436,388 Nov-17 24.50 20.30 81,366,609 23.90 20.90 3,613,223 84,979,832 Dec-17 22.40 21.20 17,979,764 23.10 21.20 13,309,422 31,289,186

Month-wise High Low Share Price in Dhaka Stock Exchange Limited (DSE)

30.00

25.00

20.00

15.00

10.00

5.00

- Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 High Low

Month-wise High Low Share Price in Chaka Stock Exchange Limited (CSE)

30.00

25.00

20.00

15.00

10.00

5.00

- Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 High Low

240 Annual Report 2017 Financial Calendar 2017

Business policy and Planning Conference held and Annual Budget discussed- February 11 & 12, 2017 Dhaka & Chittagong Division Rajshahi, Khulna, Rangpur and Barisal Division February 14, 2017

Sylhet Division February 19, 2017 Audited Consolidated Financial Statements for the year 2016 finalized and April 08, 2017 signed Publication of Financial Statements for the year 2016 in two news papers April 22, 2017

22nd Annual General Meeting held May 22, 2017

Final Dividend for 2016 for payment April 08, 2017

Interim Financial Statements

For the 1st quarter ended March 31, 2017 (unaudited) published in two May 15, 2017 widely circulated news papers For the 2nd quarter ended June 30, 2017 (unaudited) published in two July 27, 2017 widely circulated news papers For the 3rd quarter ended September 30, 2017 (unaudited) published in two October 31, 2017 widely circulated news papers

Financial Calendar 2018

Audited Financial Statements for the year 2017 will be finalized and signed April 28, 2018

23rd Annual General Meeting will be held June 30, 2018

Final Dividend for the year 2017 proposed to be paid April 28, 2018

Interim Financial Statements( Proposed)

For the 1st quarter ended March 31, 2018 (unaudited) approved by the Board May 13, 2018 of Directors For the 2nd quarter ended June 30, 2018 (unaudited) approved by the Board July 25, 2018 of Directors For the 3rd quarter ended September 30, 2018 (unaudited) approved by the October 25, 2018 Board of Directors

Southeast Bank Limited 241 Stakeholder Engagement Process

Our Relationship-Activity with Stakeholders: The following table discusses various aspects of stakeholders, their engagement process and our responses:

Our Frequency of Methodologies used for Mode of Engagement Their Priorities Stakeholders Engagement Feedback Customer Feedback Survey Monthly Innovative products Prescribed Form. Branches/ATM/Retail Banking and Frequently and services Suggestion/Complaint Box Mobile Banking At times Service Quality kept in branches. Information in Brochure As and when Competitive Pricing Enhanced monitoring and Newspaper and Electronic Media required Flexibility in offerings due diligence Customers advertisements As and when No hidden Cost Vibrant ALCO Team to Corporate website required Timely disposal decide on pricing Call Centre (24X7) Continuous E-Banking: (Internet Customer education and awareness Frequently Banking, SMS Banking, Complaint Box Any time Mobile Banking Annual Report Annually Results of operation Concerns of existing and Annual General Meeting Annually Business ethics prospective shareholders Extra-Ordinary General Meetings As and when Sustainable Growth are addressed Corporate Disclosures required Assets Quality Periodical dialogue Shareholders Price Sensitive Information As and when Corporate Social Financial Risk Management Interim Financial Statements required Responsibility Process. As and when Risk Management Culture required Timely loan/ investment Quarterly recovery drives Managers’ Conference, Workshops, Annually, Half- Staff Welfare Salary packages revised Seminars. Yearly & as when Measures and adjusted considering Cross Functioning Training felt necessary Remuneration linked industry scenario. Program As and when with performance Comprehensive Training Internet Portal required Whistle blowing and other development Website Continuous process program. Employees Awareness about news / As and when Training and Health and safety standards developments in the business necessitated workshop program. are maintained including, sector Daily Incentive program Health Care Centre and Team building through Periodically Gym in Corporate Office. development of cross-cutting Festival Benefit and working groups Incentive Bonus On-site surveillance by Bangladesh As and when felt Proper compliance Ensuring strict compliance Bank necessary with laws and with all regulatory Off-site supervision As and when required Regulations. requirements Directives and Circulars As and when required Timely payment of all Focus on Compliance Filing of Returns and Statements Within deadlines regulatory dues. Culture in the Bank Regulators Meetings As and when required Timely reporting Time consciousness Timely hoding of meeting and implementation of decisions. Adherence to proper procurement As and when Transparency Rigorous observance of regulations while maintaining a needed Timely payment of Bank’s procurement policy Business good business relationship with the Regularly their bills. Strict observance of Bank’s Associates service providers. ethical principles Regular interaction on issues for mutual benefit Invest in Environment-Friendly Continuous Financial Inclusion Charitable ventures Projects Annually Micro/SME Financing Contribution to Awards to entrepreneurs for Ongoing and Green Banking education, health, outstanding performance in annually Sustainable disaster managements, sustainable development and As and when operations environmental protection protection of environment. required Transparency Financial Inclusion through Environment Green School/ Student Scholarship As and when felt Return to the society Mobile Banking and and Society Program necessary CSR I-Banking Operations Donation to Govt. Fund/ Individual As and when Green School on regular basis to promote decided Scholarship Program citizens’ welfare CSR Activities Sponsoring efforts for protection of environment Other CSR Activities

242 Annual Report 2017 Southeast Bank Limited 243 oud of our achievements and careful We are pr We will continue to capitalize of our future. on our strengths, address our weaknesses, seize opportunities in the face of threats to become market leader in all areas.

244 Annual Report 2017 SEBL Outlook

Products and Services 246 Central Monitoring System - Round the clock 249 Call Center 24X7X365 250 Media Highlights 252 Caring for the Employees (Health and Safety) 254 Career Development Program 255 Contribution to National Exchequer 256 Empowering Women 257 Environment - Responsive Bank 258 SEBL Green School 265 Financial Inclusion: Mobile Banking Services – Telecash 268 Connecting Customers 269 Service Excellence in Action 270 Bank's Network: List of Branches and ATMs 271 Memories of 22nd AGM 284 Worldwide Correspondents Network 288

Southeast Bank Limited 245 Products and Services

ISLAMIC 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 Hajj Sanchaya Prokalpo Mudaraba Cash Waqf Mudaraba Mohor Savings Scheme

CONVENTIONAL BANKING VALUE ADDED SERVICES DEPOSIT PRODUCTS Student File Savings Account (SB) Locker Service Current Deposit Account (CD) Senior Citizen Scheme Short Notice Deposit (SND) Passport Endorsement Fixed Deposit Receipt (FDR) Individual Remittance (Inward and Monthly Savings Scheme (MSS) Outward) Monthly Income Scheme (MIS) Internet Banking Service Pension Savings Scheme (PSS) Call Centre (24X7) Double Benefit Scheme (DBS) Mobile Banking Services (TeleCash) Super Double Benefit Scheme (SDBS) Millionaire Deposit scheme (MDS) Multimillionaire Gold Deposit Scheme (MGDS) Wage Earners Pension Savings Scheme (WEPSS) RETAIL BANKING Anonya™ Savings Account SERVICES Bichokkhon™ Savings Account ESTEEM™ (Priority Banking SEBL Home Loan Service) SEBL Personal Loan School Banking SEBL Car Loan Taroka™ Nokkhotro™

246 Annual Report 2017 SERVICES PROVIDED BY OFF- CARD SERVICES SHORE BANKING UNIT Southeast Credit Card Usance Payable at Sight (UPAS) Facility to Southeast Virtual Card the Documentary Credit opened by the AD Southeast Travel Card Branches. Southeast Hajj Card Time Loan in Foreign Currency to the AD Southeast Prepaid Card Branches Southeast Express Card Term Loan in Foreign Currency Southeast Personalized Debit Card Southeast My Remit Card Student Debit Card

LOAN PRODUCTS

SME & Agri. Loan Corporate Loan

Southeast Shopan Working Capital Finance Real Estate Finance Southeast Shikhor Term Finance Trade Finance Southeast Shuprova Project Finance Commercial Finance Southeast Shopnil Syndication & Club Finance Export Finance Southeast Agri. Loan Work Order Finance Loan to NBFI

TREASURY PRODUCTS

Money Market Products Fixed Income Products Call Money Treasury Bond to Inter-Bank Term Money Treasury Bond to Individual Investors Re-purchase Agreement (Repo) Treasury Bond to Corporate Investors Reverse Repo Subordinated Bond Foreign Exchange Swap Foreign Exchange Products Spot in Major Currency Pairs Forward Contract Placement in USD

Southeast Bank Limited 247 EXPORT SERVICES IMPORT SERVICES

Advising Export Documentary Credit Documentary Credit: Transferring Export Documentary Credit a. Opening Import Documentary Credit (Local and Opening Back- to-Back Documentary Credit (Local Foreign) & Foreign) b. Arranging Add Confirmation through Foreign Foreign Documentary Bills Collection: Correspondent Banks a. Documents Collections Against Payment (D/P) c. Arranging Discounting through Foreign b. Documents Collections Against Acceptance Correspondent Banks (D/A) Pre-shipment Finance: Packing Credit Post Import Finance: a. Trust Receipt (TR) Post-shipment Finance: b. Time Loan a. Foreign Documentary Bills Purchase (FDBP) c. Term Loan b. Purchase/Discounting Export Bills (Local) c. Export Development Fund (EDF) from Documentary Collection services: Bangladesh Bank a. Documents Collections Against Payment (D/P) d. Cash Incentive from Bangladesh Bank b. Documents Collections Against Acceptance (D/A) Foreign Currency (FC) Account Services Issuing Shipping Guarantee Resident Foreign Currency Deposit Account (RFCD) Non-Resident Foreign Currency Deposit Account (NFCD) Non-Resident Taka Account (NRTA) Exporter’s Retention Quota (ERQ) Account

248 Annual Report 2017 Central Monitoring System Round the Clock

Central Monitoring System (CMS), a unique initiative of Southeast Bank Limited 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 its all Branches activities. It is to be noted, though it was mandatory by the Bangladesh Bank Vide circular number BRPD 07, dated July 05, 2015 but beforehand Southeast Bank initiated to install CMS with Bangladesh Bank permission letter BRPD (P-3)/745(22)/2014-7625 dated November 30, 2014.

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. Ensure Service Quality. Assisting investigation agencies. Building customer confidence and organizational image.

Southeast Bank Limited 249 Call Center 24X7X365

Our trendsetting Call Center has been providing quality services to our valuable customers via phone, email & live chat. Our Call Center short code ‘16206’ & long code “09613116206” are proverbial numbers for Bank’s customers. Now it has become the most popular service wing for our valuable customers to meet their day to day banking needs. Increasing trend of customer call also reflects the acceptability of call centre, Call Center has received around .26 million calls in the year 2017. It has a 295.89% call growth in 2017 over the previous year.

250 Annual Report 2017 Customers may email us at [email protected] to avail round the clock service at his/her convenient time. From 2017 we have extended the range of providing services from our Call Centre such as Card activation, Card/ PIN Replacement Request, Ecommerce/Foreign part enable request, EMI Conversion Request, MRP redemption, Card cheque book activation & requisition. Live Chat service has been introduced by our Call Centre in 2017 and it is for the first time among the banks in Bangladesh.

Southeast Bank Limited 251 Media Highlights

252 Annual Report 2017 Southeast Bank Limited 253 Caring for the Employees (Health and Safety)

The compensation and benefit package for the employees of the bank is designed by taking into consideration the strategic goals and business objectives of the Bank. Other than the salary, the bank provides various cash and non-monetary benefits to its employees i.e. contributory provident fund, gratuity, incentive bonus, encashment of un-availed leave, car maintenance allowance and house furnishing allowance, etc. It revises the salary structure of the Bank periodically for inflation adjustment and better living of its employees.

The bank believes that good health and safety of the Bank gives great emphasis on keeping the employees’ employees make a significant contribution to the bank’s health fit and active. To support the healthcare facility of profitability and ensure continual improvement in health the employees, bank has established a health care centre and safety standards. The bank ensures appropriate health at its Head Office which can be used separately by both and safety system in its work places. It has established male and female employees. Bank has already established “Southeast Bank Health Care Center” at Head Office to an e-library and going to start a cafeteria at Head Office. provide health advice and First Aid treatment for both the male and female employees of the Bank.

254 Annual Report 2017 Career Development Program

The Board of Directors and Management at Southeast Bank always recognize the need for professional excellence. Keeping that in mind, SEBL continuously endeavors to transform human resources into human capital through structured training programs at Bank’s own training institute.

In 2017, SEBL Training Institute (TI) conducted courses Orientation courses and 02 (two) Refresher courses along on both operational and soft skills to enable the employees with 01 (one) Outreach program at Khulna covering 2792 achieve a leadership role. In figures, it is 107 courses employees in total. The participation ranges from Junior including 02 (two) Foundations courses; 03 (three) Officers to Top Management Executives.

Southeast Bank Limited 255 Contribution to National Exchequer

Southeast Bank Limited has always been one of the most remarkable contributors to the National Exchequer. SEBL participates in national economic development by contributing to National Exchequer regularly. SEBL deposits corporate tax, withholding tax, excise duty, VAT etc. to the Govt. Exchequer duly by collecting them from different relevant sources.

During the fiscal year 2016-2017, Southeast Bank’s contribution to the National Exchequer was BDT 5,665.45 million. The Bank’s contributions to the National Exchequer for the last five (5) years are given below:

Year BDT in Million 2016 5,665.45 2015 4,416.11 2014 5,278.45 2013 5,461.27 2012 4,124.19

Southeast Bank’s contributions to National Exchequer for fiscal 2016-2017 in corporate tax, withholding tax, excise duty VAT etc. are shown:

Contribution to National Exchequer (2016-2017) BDT in Million 282.31 302.52 2,635.45 2,445.17

Corporate Withholding Excise VAT Tax Tax Duty

256 Annual Report 2017 EMPOWERING WOMEN

Financial emancipation helps women empowerment in the society. Southeast Bank is playing a pivotal role for economic emancipation of women through its business networks all over the country. The Bank has two Ladies Branches to inspire, connect and empower women in business. Unlike other clients, women who hold accounts in two Ladies Branches enjoy a number of privileges for propelling their investments.

The Bank emphasizes inclusion of more unbanked The Bank provides exclusive and priority access to women within the banking umbrella through our banking financial services to women so that they can take better products and services to give them a greater economic care of their investments. The Bank also provides a role in decision making process. The Bank focuses on complete solution to satisfy banking needs of women and economic empowerment for the women because we know in constantly expanding its network to provide banking that the ability to earn an income is linked to the ability to services for the convenience of female customers. make decisions. The Bank believes when women control decisions regarding credit and savings, they will optimize their own and the household’s welfare.

Southeast Bank Limited 257 Environment Responsive Bank

SEBL takes pride in its partnership with a prominent energy fund named Global Climate partnership Fund (GCPF) managed by RespoosAbility AG of Switzerland. In 2016, we could drawdown 3rd trench of USD 10.00 million after successfully utilizing USD 10.00 million in year 2015 and 2016.

SEBL, under a technical assistance of GCPF, engaged Environmental and social risk means the risk of causing Frankfurt School of Management and Finance -a renowned pollution or destruction of the natural environment (land, European Educational institution for capacity building in water, air. natural habitats, animals and plant species) Energy Efficiency and Renewable energy financing. and violation of human rights for employees or other stakeholders either through accidental or deliberate Under another technical assistance of the fund world actions. famous “Enclude” advisory group of Netherlands is helping the Bank develop a social and environmental management guideline that will be rolled out in early 2017.

258 Annual Report 2017 Green Award

Southeast Bank Limited 259 260 Annual Report 2017 262 Annual Report 2017 Southeast Bank Limited 263 264 Annual Report 2017 Southeast Bank Limited 265 Southeast Bank Green School

Southeast Bank Green School is a noble venture of Southeast Bank Limited. It started functioning in 2013. The aim of the school is to provide quality education in English Medium to the students at a reasonably lower cost affordable to the parents of the locality. The school also arranges extra- curricular activities for students.

Southeast Bank Limited 265 School Curriculum themselves within the boundary of academic activities only. They also travel beyond and involve themselves in The school is based on Edexcel British Curriculum. extra- curricular activities like annual sports, science fair, The school offers classes from pre-play (starts with age graduation ceremony, several competitions in singing, 2.5 years old) to 10th grade (O’ level). At present, the dancing, debate, drama, recitation, art, etc. school has 21 dedicated teachers. They serve under the supervision of the competent authority. Our participation in celebration of events

Extra Academic Activity We integrate our students in the celebration of national occasions and traditional events. It is intended to develop Our school has already been implementing many plans in them the seeds of patriotism. We come out with and projects. We offer enough extra- curricular activities specially designed programs on the occasions of National for the students to ignite their inner zeal and longing Mourning day, International Mother Language day, for learning. Our teachers and students do not confine Independence Day, Victory Day, Pohela Baishak etc.

266 Annual Report 2017 Technology-Based Education drawing keen interest among the dwellers of the area. We look forward with much energy and optimism to The school is equipped with all modern equipments the upcoming academic sessions. It will herald further and facilities. To facilitate learning of our students, we development and innovation both in academic and have a science laboratory and a computer laboratory. infrastructural areas. Based on the success already We encourage our students to elevate their thoughts achieved, we are confident that Southeast Bank Green independently and comfortably in Social Club along with School will develop further and emerge as an ideal temple the classroom activities of learning within a very short period of time.

Looking forward

We have completed a very successful year in 2017. With its on-going performance, the school has succeeded in

Southeast Bank Limited 267 Financial Inclusion: Mobile Banking Services – Telecash

TeleCash of the Bank has been providing Mobile Financial Services to its customers by trending with innovative digital manner along with traditional Cash-in, Cash-out and Fund Transfer services. Utility Bills and Tuition Fees Collection Services are the instances which have been reducing the customers’ dependence upon over-the- counter (OTC) service of the Bank and as well as save their valuable time and money. Customers, especially who are dwelling outside the branch network have been availing DESCO, DPDC, Dhaka WASA, BGDCL, KGDCL, Rajshahi WASA Bills and Tuition Fees Payment Services by using since been advised by Bangladesh Bank. This initiative will their mobile phones from anywhere and anytime through increase customers’ easiness for conducting their general their TeleCash mWallets. TeleCash is working with an banking. Moreover, TeleCash has a plan to integrate with objective to achieve customer satisfaction by ensuring the National Payment Switch of Bangladesh (NPSB) for online based instant and secure transaction. Currently, interoperability among the other MFS operators of the TeleCash has been under the technical project to integrate country. TeleCash is eagerly waiting for the success of this with the Core Banking System (CBS) of the Bank to link revolutionary initiative of Bangladesh Bank to establish the between MFS Accounts and general banking accounts nationwide digital eco-platform for financial transactions.

268 Annual Report 2017 Connecting Customers

Southeast Bank Limited has adopted the means to go most of the financial institutions are striving hard to beyond banking and connect customers to a greater make a difference in their product offerings. Therefore, extent by providing diversified products and services. it is important to keep on updating and modifying the The bank has been successful to bring this concept to life product portfolio in order to connect with all segment of through leveraging innovative ideas and product offerings the society effectively. As a result, the corporate leaders that empowered the institution to reach more customers of Southeast Bank Limited with their immense experience in a cost-effective way. Southeast Bank delivers on this and expertise initiated the idea of introducing Priority commitment with perfect measures by offering wide range Banking Services on 4th March, 2017. It is one of the first of products to cater to the changing needs of its customers. banks to obtain the trademark name for its product which is officially known as “ESTEEMTM”. It was developed to Expanding branches throughout the county is definitely establish a synergic effect in the minds of its customers a great way to enhance the customer base of the bank. through excellent brand visibility combined with lucrative However, the bank has given emphasis on providing a services relating to improvement of quality in the lifestyles greater variation in the portfolio of its products to make of a target group of clients. The objective is to combat it more attractive to the customers. SEBL has developed inadequacies that exist between services and customer’s savings products such as “NOKKHOTRO” and “TAROKA” needs where everything is addressed from a single point of which encouraged students to save from an early age. contact and services are provided at the doorstep. Likewise, SEBL has initiated designing products that will attract customers from various age groups. For example, Therefore, SEBL’s commitment to connect customers “BICHOKKHON” was designed to meet the needs of the through friendly, flexible and diversified products will not old age segment of the population. Furthermore, SEBL has only help acquiring more market share but will also boost introduced a product called “ANANNYA”, to address the deposits for the bank. It will enhance the brand value of needs of women. In today’s world of intense competition, Southeast Bank and add to its image as a bank with vision.

Southeast Bank Limited 269 Service Excellence in Action

Service Excellence is one of the core values of Southeast better. The customers can give their valuable feedback Bank Limited. The Bank focuses on providing fast and high through Service Quality Forms available at all branches quality customer service with state of the art technology. under sealed envelope. The branches send the sealed Various methods have been adopted such as, 24X7 Call envelopes containing Service Quality feedback received Center, Central Monitoring System (CMS), Web Chat from the clients to the Head Office for evaluation of Service to provide customer service in the most hassle-free customer opinion. The opinion/feedback of the customers way etc. Short code 16206 is now used round the clock are scrutinized and widely discussed in the monthly SMT 24X7 to address telephonically the business needs and meeting and necessary steps are taken for improvement of queries of the clients. Through CCTV, all the activities customer service. of the branches are monitored by Head Office Central Monitoring System. Recently, bank introduced customer Branch Supervisors at Head Office work relentlessly service through Web Chat. It enables live interaction to ensure service excellence. Supervisors periodically between the client and bank’s customer service executives visit the branches to monitor various performance areas to meet clients’ banking queries. including quality of customer service of the branches. In the Managers’ Conferences, different aspects of branches We resolve customer complaints fairly, consistently and are elaborately reviewed and necessary steps are taken for promptly. Every branch has a dedicated “Customer Service further improvement of the service quality of the bank. As and Complaint Management Desk” for dispute resolution. part of off-site supervision, the supervisors can monitor Customers can lodge complaints in person or through their respective branches’ activities through Central other available means such as, letter, telephone, facsimile Monitoring System (CMS) which has been placed at the and email. Complaint Lodgement Forms are available Bank’s Head Office. According to BRPD Circular No.07 at all our branches. We deal quickly with complaints dated July 05, 2015, Southeast Bank is the pioneer, received from the customers. We seek ideas and among peer banks, to set-up this technological solution suggestions of the customers on how we can serve them to become compliant and disciplined.

270 Annual Report 2017 Bank’s Network List of Branches and ATMs

02 12 02 09 65

01 35 08

BRANCHES

DHAKA DIVISION (65) RAJSHAHI DIVISION (09) CHITTAGONG DIVISION (35) RANGPUR DIVISION (02) SYLHET DIVISION (12) BARISAL DIVISION (01) KHULNA DIVISION (08) MYMENSINGH DIVISION (02)

Southeast Bank Limited 271 DHAKA DIVISION (65)

Principal Branch Imamganj Branch Bangshal Branch 1, Dilkusha Commercial Area, Bhuiyan Market 14/3, North South Road, Dhaka Dhaka-1000 163/2, Mitford Road, Dhaka Tel: 7121248, 7121251, 9567163, Tel: 9563101, 9550081, 9567271 Tel: 7314801, 7316423, 7318567, 7176116, 7176117 Fax: 88-02-9551575 7316644, Fax: 88-02-7314801 Fax: 88-02-9567164 Gulshan Branch Dhanmondi Branch Uttara Branch House # 82 CES (F) 1, Gulshan “Navana Newbury Place”(1st Floor) House # 1, Road # 11, Sector # 1 Avenue, Dhaka 4/1/A, Sobhanbag, Dhaka Uttara, Dhaka-1230 Tel: 9883491, 98834 01-5, 9883492 Tel: 8122474, 9123183, 9123518, Tel: 8922538, 8923680, 8916538 Fax: 88-02-9883495 9123167, Fax: 88-02-9111427 Fax: 88-02-8923781 Kawran Bazar Branch New Eskaton Branch New Elephant Road Branch Jamuna Bhaban (1st Floor), 2, Kawran Chowdhury Centre Kazi Bhaban Bazar C/A, Dhaka-1215 23/Ka, New Eskaton Road, (1st 39, New Elephant Road (1st and 2nd Tel: 9136112, 8189737, 9139276, Floor), P.S. : Ramna, Dhaka-1000 Floor), Dhanmondi, Dhaka-1205 8189738-40, Fax: 88-02-9136510 Tel: 9360953, 9340001, 9330176, Tel: 9674588, 9674327, 9674324-5 9340796, Fax: 88-02-9362177 Fax: 88-02-9674326 Agargaon Branch Banani Branch Motijheel Branch (Islamic Banking) Plot # E-4/B (1st Floor) Plot No.71, Block-B, Kemal Ataturk 125, Motijheel C/A (1st Floor), Agargaon Administrative Area, Avenue, Banani, Dhaka Dhaka-1000 Sher-e-Bangla Nagar Tel: 9860363, 8861697, 8859518, Tel: 9567286, 9567202, 9567303, Mohammadpur, Dhaka-1207 8859987, 8861629 9567262, Fax: 9567701 Tel: 58151717, 9132747, 9134247, Fax: 88-02-9841960 58150498, 58153934, Fax: 9132704 Aganagar Branch (Rural) Corporate Branch Kakrail Branch “Mahboob Plaza” (1st & 2nd Floor) Eunoos Trade Centre (Ground Floor) Toma Tower (1st & 2nd Floor) Aganagar, Keraniganj, Dhaka 52-53, Dilkusha C/A, Dhaka-1000 77/1, VIP Road, Kakrail, Dhaka Tel: 7772516, 7761133, Fax: Tel: 9567764, 9551444, 9554447, Tel: 9356115, 9356116, 9340852-3 7761155 9564878, Fax: 9571424 Fax: 9355990 Shyamoli Branch Joypara Branch (Rural) Madhabdi Branch (Rural) ASA Tower (2nd Floor) Begum Aysha Shopping Complex Khatian # 28 (1st Floor), Madhabdi Holding #23/3 & 23/14, (1st Floor), Holding # 222, Joypara Pauroshava, PS & Dist.: Narshingdi Bir Uttam A.N.M. Nuruzzaman Sarak Pourasava, Thana: Dohar, Tel: 9446127, 9446125 Shyamoli, Mohammadpur, Dist.: Dhaka Fax: 9446126 Dhaka-1207 Tel: 06223-56040, 56041, 56042 Tel: 8141821, 58157150, 9128988, Fax: 06223-56040 Ext.-111 98157155, Fax: 48110799 Ashulia Branch (Rural) Narayanganj Branch Savar Branch (Rural) Helim Shopping Complex Holing # 26-29, S. M Maleh Road Plot # A-109, Bazar Road (1st Floor) (Opposite Fantasy Kingdom Main Tanbazar, Narayanganj Pourasava & P.S. : Savar, Dhaka Gate), Ashulia, Dhaka Tel: 7648201, 7648202, 7648203, Tel: 7743691, 7743692, 7743693, Tel: 7788440, 7788420, Fax: 7634331, Fax: 7648200 7743694, Fax: 7743690 7788441 Mouchak Branch Konabari Branch (Rural) Tongi Branch (Rural) Karnaphuli Point (1st Floor) Plot # A-147/148, BSCIC I/R 8/B, Anarkoli Road (1st Floor) 70, New Circular Road, Union: Konabari, P.S.: Joydebpur Tongi Bazar, Gazipur Malibagh, Dhaka Dist.: Gazipur Tel: 9816647, 9816648, 9816650-51 Tel: 8333347, 8333676, 8333678, Tel: 9298840, 9298836, 9298838, Fax: 9816649 8333679, Fax: 8333348 9298839, Fax: 9298837 Bashundhara Branch Sat Mashjid Road Branch Mohammadpur Branch Plot # 142, Block # B ADC Empire Plaza (1st & 2nd Floor) Axis Delvista (1st Floor), 7/1, Bashundhara R/A, Baridhara, Plot # 183 (Old) 91 (New), Road # 22 Aorongozeb Road Dhaka-1212 (Old) 12/A (New) Block-A, Mohammadpur Housing Tel: 8401031, 8401032, 8401034-5 Sat Mashjid Road, Dhanmondi, Dhaka Estate, Mohammadpur, Dhaka Fax: 8401033 Tel: 8191167, 8191168, 8191170, Tel: 8129649, 8129604, 9101254, 8191171, Fax: 8191169 58150961, Fax: 9119583

272 Annual Report 2017 Pragati Sarani Branch Mawna SME/Krishi Branch Tangail SME/Krishi Branch Plot # Ga-25/5/1, Shahjadpur Holding # 1497, Mawna Bazar Road “Noor Plaza”, Holding # 263, Tangail Pragati Sarani, Gulshan, Dhaka (1st Floor), Sreepur Pauroshava Main Road, Ward # 13, Pauroshava & Tel: 8899238-9, 8899610, 8899240 Ward-8, Thana: Sreepur, Dist.: Gazipur Thana: Tangail, Dist.: Tangail Fax: 8899208 Tel: 068-2552900, 068-2552901 Tel: 0921-51336, Fax: 0921-62798 Fax: 068-2552902 Madanpur SME/Krishi Branch Narsingdi SME/Krishi Branch Rokeya Sarani Branch Ekata Samabay Super Market (2nd “Islam Plaza” (1st Floor) Holding-1, “Kusholi Bhaban” Floor), Mouza: Chanpur, Maddha Kanda Para, Sadar Road, Holding # 238/1, West Kafrul, Rokeya Union: Madanpur, Thana: Bandar, Ward # 4, Narsingdi Pauroshava, Sarani, Mirpur, Ward # 16 Dist.: Narayanganj Thana: Narsingdi Sadar, Dist.: Narsingdi, Dhaka City Corporation, Tel: 7648083, 7648081, Tel: 9452082, 9452080, Thana: Sher-e-Bangla Nagar, Dhaka Fax: 7648082 Fax: 9452081 Tel: 9103249, 9103251, 9103246, 9103247, Fax: 9103248 Islampur Branch Hemayetpur Branch (Rural) Munshigonj Branch “Royal Tower” Hemayetpur Super Market (2nd Floor) “B. M Complex” (1st Floor) Holding #4, Ahsan Ullah Road, Mouza: Kulashur, Union: Tetuljora House # 55, Jubillee Road, Ward # 3 Ward # 37, Dhaka South City Thana: Savar, Dist.: Dhaka Munshigonj Pauroshava, Thana: Corporation, Thana: Kotwali, Dhaka Tel: 7747914, 7747464, 7747915, Munshigonj Sadar, Dist.: Munshigonj Tel: 57394570, 57396174, 57394538, 7747916, Fax: 7747465 Tel: 7620594, 7620591, 7620592, 57394589, Fax: 57396175 7620593, Fax: 7620595 Joydebpur Branch (Rural) Donia Branch (Rural) Rupnagar Branch Holding # 235, Block # K, Shib Bari “Chowdhury Complex” (1st Floor), “Rangan”, Plot # 14, Road # 11 More, B.I.D.C Road, Ward-3, Gazipur Village: Noyapara, Mouza: Dhania Ward # 7, Rupnagar Residential Area Pauroshova, Thana: Joydebpur, Union: Dhania, Thana: Demra, Dist.: Mirpur Housing Estate, Dist.: Gazipur, Tel: 9252852, Dhaka, Tel: 7547955, 7548055 Dhaka City Corporation, Mirpur, 9252851, Fax: 9252850 Fax: 7548122 Dhaka, Tel: 8031924, 8051981 Fax: 8051965 Kamrangirchar Branch (Rural) Bhulta Branch (Rural) Dakhin Khan Branch (Rural) “Elham Square”, Rony Market Road Bhulta Bus Stand, Union: Golakandail “Faisal Mansion” Shah Kabir Mazar Road Mouza: Char Kamrangirchar Thana: Rupgonj, Dist.: Narayanganj Village: Moshair, Mouza: Uttar Khan Union: Sultangonj, Thana: Mob.: 01755-637195 Union: Dakhin Khan Adarsha Union Kamrangirchar, Dist.: Dhaka Parishad, Thana: Dakhin Khan, Tel: 55160210, 55160209 Dist.: Dhaka, Tel: 8953290, 8953292 Fax: 55160211 Fax: 8953299 Gopaldi Branch (Rural) Ati Bazar Branch (Rural) Hasnabad Branch (Rural) Gopaldi Bazar, Union: Sadasadi Mouza: Ati, Union: Sakta “Roky Tower”, Hasnabad, Mouza: Thana: Araihazar, Dist.: Narayanganj Thana: Keranigonj, Dist.: Dhaka Ekuria, Union: Subatta, Thana: Mob.: 01755-637194 Tel: 55103281, 55103282 Keranigonj, Dist.: Dhaka Fax: 55103280 Mob: 01730-781277 Mohakhali Branch Banasree Branch (Rural) Bandura Branch (Rural) “Bay’s” (1st Floor) Twin Tower, House # 13, Block # C, Puraton Bandura Bazar 50, Mohakhali C/A, Dhaka Main Road, Banasree Project, East Mouza: Puraton Bandura, Union: Tel: 9882523, 9885712, 9882527, Rampura, Dhaka Bandura, Thana: Nawabgonj, 9885710, Fax: 9885711 Mob: 01730-781279 Dist.: Dhaka, Mob: 01730-781278 Sarulia Branch Kapasia Branch (Rural) Mirpur Branch Samsul Haque Nilu Shopping Akter Market Simpletree Complex Kapasia Main Road Plot # 01, Road # 08, Block-C, Mouza: Sarulia, Union: Sarulia Thana: Kapasia, Dist.: Gazipur Section-06 Thana: Demra, Dist.: Dhaka Mob.: 01766-673597 Mirpur Housing Estate, Pallabi, Dhaka Mob.: 01730-792169 Mob.: 01766-673595

Ashulia Bazar Branch (Rural) Balivadra Branch (Rural) Kalibari Branch (Rural) Shahid Sonamia Plaza, Bhandari Latif Super Market, Sobur Market, Duptara Adorsha Bazar Bangabandhu Road Balivadra Bazar Sattabhandi Bhuiyan Para (Kalibari) Ashulia Bazar, Mouza: Boro Ashulia Mouza: Ganakbari, Union: Damsona Mouza & Union: Duptara, Thana: Union & Thana: Ashulia, Dist.: Dhaka Thana: Ashulia, Dist.: Dhaka Araihazar, Dist.: Narayanganj Mob.: 01755-630358 Mob.: 01755-630359 Mob.: 01939-900570

Southeast Bank Limited 273 Rajbari Branch Dhanmondi Ladies Branch Moghbazar Ladies Branch “Saleha Akkas Tower” “Rupayan Khan Plaza” “Hall Mars”, Holding # 66 (Old) Holding # 237, Binodpur Plot # 500/A (Old) / 18 (New), Road # Outer Circular Road (College Road) Ward # 08, 7, Dhanmondi R/A, Dhaka 05 (New) Shahid Sangbadik Salina Thana : Rajbari Sadar Mob.: 01934-448906 Parvin Sarak Pauroshava : Rajbari, Dist.: Rajbari Boro Mogbazar, Dhaka Mob.: 01934-448903 Mob.: 01934-448905 Kazi Nazrul Islam Avenue Branch Ghior Branch (Rural) Balla Branch (Rural) “Rupayan Trade Centre” Mouza+Union: Ghior, Upazila: Ghior Mouza & Union: Balla 114, Kazi Nazrul Islam Avenue, Dist.: Manikganj P.S.: Kalihati, Dist.: Tangail Dhaka, Mob.: 01755-624864 Mob.: 01705-403799 Mob.: 01705-403798 Malibagh Branch Singair Branch (Rural) R. K. Mission Road Branch ABN Tower, 45, Siddheswari Circular Singair New Market Nir Chhayabithi Road, Dhaka Holding No.: 2/2, Kansha Road 53, 53/1, R. K. Mission Road, Dhaka Mob.: 01787-694948 Ward No.: 04, Pourasava + P.S.: Mob.: 01934-448919 Singair, Dist.: Manikganj Mob.: 01934-448918 Monipur Bazar Branch (Rural) Faridpur Branch Off-Shore Banking Unit, DEPZ “Isha Chowdhury Tower” “Nilima Tower” - “Khaleque Tower” Zone Servicing Building-1 Pirozali Road, Monipur Bazar Holding-80-81, Mujib Sarak, Ward-04 Room # 77 (3rd Floor), Dhaka EPZ, Union: Bhawal Gor, P.S.: Gazipur Upazila: Faridpur Sadar, Ganakbari, Savar, Dhaka Sadar, Dist.: Gazipur Paurashava: Faridpur, Dist.: Faridpur Tel: 7788628-9 Mob.: 01934-448920 Mob.: 01708-481079

CHITTAGONG DIVISION (33) Agrabad Branch Khatunganj Branch Jubilee Road Branch Faruk Mahal, 93, Agrabad 410/411, Khatunganj, Chittagong 96, Jubilee Road, Chittagong Commercial Area, Chittagong Tel: 031-2863594, 031-621934, Tel: 031-635265, 031-611712-5, Tel: 031-721152, 031-713097-8, 031- 031-620166-7, 031-620516 031-635245, 031-635246, 7130 94-5, 031-721151-3 Fax: 88-031-62 05 17 Fax: 88-031-611716 Fax: 88-031-713096 Halishahar Branch CDA Avenue Branch (Islamic Pahartali Branch House # 3, Block # G Banking) Hajrat Taiyabia Complex Port Connecting Road, Ali Villa, 1640/1861 (New), CDA Holding # 801 (New), D.T Road, Halishahar Housing Estate, Avenue, Asian Highway, East Alongkar Mour Halishahar, Chittagong Nasirabad, Panchliash, Chittagong Abdul Alir Hat, Pahartali, Chittagong Tel: 031-727949, 031-716826, Tel: 031-652150, 031-654875, Tel: 031-2771001, 031-2771002-4 031-2526183, 031-2526184, 031-2552385-6, Fax: 031-2552387 Fax: 031-2771005 Fax: 88-031-727949 Cox’s Bazar Branch (Islamic Chhagalnaiya Branch (Islamic Feni Branch Banking) Banking) Surma Sadan (1st and 2nd Floor), Asha Shopping Complex Mir Shopping Complex (1st Floor) 176, 177 and 178 Trunk Road 430-431, Bazar Ghata (1st Floor), Chhagalnaiya Bazar ,P.S.: Thana - Feni Sadar, Dist. - Feni Cox’s Bazar Chhagalnaiya, Feni Tel: 0331-63004, 62884, 61362, Tel: 0341-63406, 0341-51053 Tel: 03322-78302, 78432 61852 Fax: 0341-64742 Fax: 03322-78302 Ext.-111 Fax: 0331-62884 Ext.-102 Bashurhat Branch (Rural) Chowmuhani Branch (Rural) Momin Road Branch Ayesha Motaleb New Market Hossain Market Equity Central, 42-43, Momin Road Holding # 428, Main Road Holding # 276-284, D. B Road Chittagong City Corporation Ward # 5, Bashurhat Pauroshava Chowmuhani Pauroshava, P.S.: Kotwali, Dist.: Chittagong Companyganj, Noakhali Thana: Begumganj, Dist.: Noakhali Tel: 031-2857345, 031-2857346, Tel: 03223-56415, 56461 Tel: 0321-53534, 0321-53535, 031-2857347, 031-2857348 Fax: 03223-56430 0321-54018, Fax: 0321-54018 Fax: 031-2857349 Madambibir Hat Branch (Rural) Comilla Branch Lohagara SME/Krishi Branch Madambibir Hat, Union-Bhatiary 359/328, Jhawtala Mostafa City Center, P.S.: Sitakunda, Dist.: Chittagong 1st Kandir Paar, Mouza: Amirabad, Thana:- Lohagara, Tel: 031-2781001, 031-2781003, Thana: Kotwali, Comilla Union: Amirabad, Dist.: Chittagong 031-2781004, 031-2781005 Tel: 081-64278, 081-64280, Tel: 0303-456623, Fax: 031-2781002 081-64279, 081-61322 Mobile: 01713-065986 Fax: 081-61321 Fax: 0303-456624

274 Annual Report 2017 Brahmanbaria SME/Krishi Branch Sonagazi SME/Krishi Branch Shebarhat SME/Krishi Branch Shikder Plaza, Holding # 1001 Holding # 431, Ward #4, Shebarhat Bazar, Mouza – Razarampur Dr. Faridul Huda Road, Ward # 4 Pauroshava & Thana: Sonagazi Feni Chowmuhani Sarak (1st Floor) Pauroshava & Thana: Brahmanbaria Dist.: Feni Thana – Shenbag, District - Noakhali Dist.: Brahmanbaria Tel: 03325-76386, 76377 Tel: 01713-065972 Tel: 0581-58202 Fax: 03325-76386 Fax: 0581-58201 Hathazari SME/Krishi Branch Oxygen More Branch Chowdhury Hat SME/Krishi Branch S. A Shopping Complex, Hathazari Holding No.405, Kulgaon “Halim Mansion”, (1st Floor) Bus Stand, Rangamati Road, Plot # Chittagong City Corporation Chowdhury Hat, Mouza: Chikandandi 14238, Khatian # 2517 Oxygen Mour, Ward-2 Union: Fateyabad, Thana: Hathazari, Mouza: Fatika, Union: Fatehpur Thana: Bayezid Bostami Chittagong Thana: - Hathazari, Dist.: Chittagong Dist.: Chittagong Tel: 031-2584007, 031-2584006 Tel: 031-2601855 Tel: 031-2584018, 2584019, 2584020, Fax: 031-2584005 Fax: 031-2601856 2584059, Fax: 031-2584017 Potherhat Branch (Rural) Fatikchari Branch (Rural) Kotwali Branch “Khaiz Ahmed Shopping Centre” “Mir Jahanara Complex” (1st Floor) “Equity Anitri” (1st Floor) (1st Floor) Mouza: Noapara, College Road (Bibir Hat), Holding # 32, Shahid Sohrawardy P.O: Gujra Noapara, Union: 13 No. Khatian-4989, Union: Dhurang, Road, Ward # 33, Chittagong City Noapara, Thana: Raujan Thana: Fatikchari, Chittagong Corporation, Thana: Kotwali, Dist.: Chittagong Tel: 030-2256317, 030-2256316 Dist.: Chittagong Tel: 031-2573214, 031-2573216, Fax: 030-2256315 Tel: 031-632750, 632751, 632752 031-2573217, Fax: 031-2573215 Fax: 031-632753 Companigonj Branch (Rural) Chakaria Branch (Rural) Miabazar Branch (Rural) “Saudia Manjil” (1st & 2nd Floor) “Society Jame Mosque Complex” Haji Siraj Mansion R.S Khatian # 395, Companigonj Mouza: Chiringa, Chakaria Mouza: Ashrabpur, Union: 2 No. Mouza: North Tirish, Union: 15 No. Pauroshova Ujirpur, Thana : Chauddagram, Nobipur (West), Nabinagar Road, Thana: Chakaria, Dist.: Cox’s Bazar Dist.: Comilla Thana: Muradnagar, Dist.: Comilla Tel: 03422-56161, 03422-56162 Mob.: 01766-665140 Tel: 08026-59011, 59004 Fax: 03422-56163 Fax: 08026-59017 Haidergonj Branch (Rural) Teknaf Branch (Rural) Gunabati Branch (Rural) Gazi Super Market Alo Shopping Complex, PC-177, Mouza: Gunabati, Haidergonj Bazar, Mouza: Char Ababil K K Para, Main Road Union: 12 No. Gunabati Union : Char Ababil, Upazila : Raypur, Ward No.: 03, Pourashova: Teknaf, P.S.: Chouddogram, Dist.: Comilla Dist.: Laxmipur Thana: Teknaf, Dist.: Cox’s Bazar Mob.: 01709-633280 Mob.: 01766-673599 Mob.: 01934-448900 Silonia Bazar Branch (Rural) Parshuram Branch (Rural) Off-Shore Banking Unit, CEPZ “Razzak Market”, Feni-Maizdi Road “Mazumder Market” Zone Service Complex (1st Floor) Union: Joylaskar, P.S.: Dagonbhuiyan, Holding # 161, Main Road East Wing North Chittagong EPZ Dist.: Feni Ward # 05, Pourasava: Parshuram Chittagong Mob.: 01708-481074 P.S.: Parshuram , Dist.: Feni Tel: 031-740780 Mob.: 01708-481073 Fax: 031-740779

Baraiyarhat BR. Abu Torab BR. Alam Tower Kazi Market Mosjid Road, Ward # 04 Maddam Bazar Baraiyarhat Pourashava Abu Torab PS-Jorarganj, Upazilla- Mirsharai Upazilla- Mirsharai District- Chittagong District- Chittagong

Southeast Bank Limited 275 SYLHET DIVISION (12)

Laldighirpaar Branch Moulvibazar Branch Chouhatta Branch Manru Shopping City Mubarak Tower Jarif Tower Plot # 4953/4943 (1st Floor) 1794/1788, New Market, Sylhet 199/2, M. Saifur Rahman Road, Chouhatta Mirboxtola Road Tel: 0821-710955, Moulvibazar Chouhatta, Sylhet 0821-715382, 0821-710218 Tel: 0861-53727-9 Tel: 0821-720276, 0821-720276 Fax: 88-0821-710102 Fax: 88-0861-53730 Fax: 88-0821-720276

Shahjalal Uposhahar Branch Bandar Bazar Branch (Islamic Kulaura Branch Plot # 07, Block # D, Main Road, Banking) Aziz Rowshon Shopping Centre and Shahjalal Uposhahar Karimullah Market (1st Floor) Garden City Sylhet Bandar Bazar, Sylhet Holding No. 334, Ward No. 3, Tel: 0821-713057, 0821-713052, Tel: 0821-810322, 812246, 4116495, Pourasava: Kulaura 0821-713062, 0821-811655 4011350, 0821-721243 Thana: Kulaura, Dist.: Moulvi Bazar Fax: 88-0821-711820 Fax: 0821-2831455 Tel: 08624-56208, Fax: 08624-56208

Hetimgonj Branch (Rural) Pathantula Branch Tazpur SME/Krishi Branch Khoyruganj Jame Masjid Market Haque Mansion of Modina Market Tazpur Bazar, Mouza: Boraya, Complex (1st Floor) 704, Pathantula, Union: 8 No Tazpur, Thana: Balagonj, Union: Fulbari, Hetimgonj Chowrasta Sylhet City Corporation Dist.: Sylhet Thana: Golapgonj, Dist.: Sylhet Thana: Jalalabad, Dist.: Sylhet Tel: 08242-56191 Tel: 0821-840374, 840373 Tel: 0821-728745, 0821-724300 Fax: 08242-56191 Fax: 0821-840372 Fax: 0821-724300

Biswanath SME/Krishi Branch Beanibazar SME/Krishi Branch Charkhai Branch (Rural) “Haji Monir Uddin Market” Natun “Panchakhanda Haragabinda High Anisha Complex Bazar, Biswanath, Mouza - Mashala, School Market” Mouza: Kamar Gram, Union: 2 No. Union/Pourashova: Biswanath 834, Beanibazar-Sylhet Road, Charkhai Thana: Biswanath, Dist.: Sylhet P.S.: Beanibazar, Dist.: Sylhet Thana : Beanibazar, Dist.: Sylhet Tel: 08224-56205 Tel: 08223-56164, Fax: 08223-56165 Mob.: 01766-665141

KHULNA DIVISION (8) Khulna Branch Jessore SME/Krishi Branch Satkhira SME/Krishi Branch Haji Hanif Complex Holding # 11, R. N. Road, Ward # 2 Holding # 5896 12 & 13, Khan Jahan Ali Road, Pauroshava: Jessore, Kotwali, Jessore Polash Pole, (1st Floor) Khulna Tel: 0421-67683 Shahid Nazmul Sarak Tel: 041-730606, 041-7314 06, Fax: 0421-68094 (Satkhira Old Bus Stand) 041-731306, 041-731606 Ward # 08, Satkhira Paurashava Fax: 88-041-731506 Thana: Satkhira, Dist.: Satkhira Tel: 0471- 63568, 62508 Fax: 0471- 63569 Sir Iqbal Road Branch Rupdia Bazar Branch (Rural) Dumuria Branch (Rural) “Noor Jahan Plaza” “Bhowmik Super Market”, R. R. Plaza, Mouza: Araji Sajiyara 155, Sir Iqbal Road, Khulna Mouza: Zirat Union: 11 No. Dumuria Tel: 041-721056, 731848, 724471 Union: 12 No. Norendrapur P.S.: Dumuria, Dist.: Khulna Fax: 041-722852 P.S.: Jessore Sadar, Dist.: Jessore Mob.: 01705-403796 Mob.: 01709-633282

Kushtia Branch Chuadanga Branch Aneek Tower, 295, Nowab “Brothers Tower”, Holding No.: 686-06, Thana Road, Sirajuddoula Road Ward No.: 03, Pourasava: Chuadanga Ward # 03, Pauroshava: Kushtia P.S.: Chuadanga Sadar, P.S.: Kushtia Sadar, Dist.: Kushtia Dist.: Chuadanga Mob.: 071-71845, 071-71895 Mob.: 01934-448917

276 Annual Report 2017 RAJSHAHI DIVISION (9) Naogaon Branch Rajshahi Branch Bogra Branch “Kazi Habibur Rahman Market” Plot # 447, Mangol Bhaban Bhandari Manjil (2nd Floor) 301, Old Hospital Road (Bridge Mour) (2nd Floor) Alupatti Mour, 776-777 Barogola, Bogra Pauroshava: Naogaon, Thana: P.O.: Ghoramara, P.S: Boalia, Tel: 051-68083, 68084, Naogaon Sadar, Dist.: Naogaon Dist.: Rajshahi, Tel: 0721-812203, 68085, 68086 Tel: 0741-63227, 0741-63286, 0721-812204, 0721-812205, Fax: 051-51939 0741-63397, 0741-61274, 0721-812206, Fax: 0721-812207 Fax: 0741-61831 Chapainawabganj Branch Sirajganj Branch Baneshwar Branch (Rural) “Sarker Tower”, Holding # 59, 60, 61 Basak Plaza Al-Haj Amzad Hossain Market Kalitala 1st Lane (Jhilim Road), 947-948, Shaheed Suharawardy Road, Mouza : Shibpur, Union : Baneshwar Ward # 02, Chapai Nawabganj Sirajganj Thana : Puthia, Dist.: Rajshahi Pourashova, Thana: Sadar, Mob.: 01766-665142 Mob.: 01766-673596 Dist.: Chapainawabganj Tel: 0781-51717, 0781-51718 Fax: 0781-51716

Pabna Branch Ishwardi Branch Natore Branch “Khairul Tower” “Adib Rana Plaza” “Lily Plaza”, Holding No.: 838, 116, Mawlana Mohammed Ali Road 994/930 &1017, Station Road Kanaikhali (Narikel Bagan Road), Ward # 3 Ward # 07, Thana : Ishwardi Ward No.: 04, Pourasava: Natore (Shibrampur) Pauroshava : Ishwardi, Dist.: Pabna P.S.: Natore Sadar, Dist.: Natore Pabna Pauroshava, Thana: Pabna Mob.: 01787-678778 Mob.: 01712-803701 Sadar, Dist.: Pabna Mob.: 0731-65027, 65032, 65059, 65073 Fax: 0731-65089

RANGPUR DIVISION (2) Rangpur Branch Dinajpur Branch Canopus, Holding # 39/1, 39/7 Holding # 808/837, Ganeshtola Dhap Jail Road, Rangpur City Corporation Jail Road, Dinajpur Municipal Corporation Thana: Kotwali, Dist.: Rangpur Ward # 3, Thana: Kotwali, Dist.: Dinajpur Tel: 0521-64672, 64673, 64778, 64779 Tel: 0531-52025, 0531-52026 Fax: 0521-64780 Fax: 0531-52024

BARISAL DIVISION (1) Barisal Branch 54 Sadar Road (1st Floor) Kotwali, Barisal Tel: 0431-2176601, 0431-2176602, 0431-2176603-04 Fax: 0431-64056

MYMENSINGH DIVISION (3) Mymensingh Branch Sherpur Branch Muktagacha Branch “Minar Complex”, Holding # 09 Muslim Market Rabeya Momtaz Tower (1st Floor), Mukti Joddha Sarani (Choto Bazar) Holding # 166, Shahid Bulbul Sarak Holding-574, Mymensingh-Tangail Ward # 08, Pauroshava: Mymensing Munshi Bazar, Ward No.: 02, Main Road (Old Bus Stand) Thana: Kotwali Sadar, Pourasava: Sherpur Ward No.: 08, Pourashova: Dist.: Mymensing Thana: Sherpur Sadar, Dist.: Sherpur Muktagacha, Upazila: Muktagacha, Mob.: 01934-448904 Mob.: 01705-403797 Dist.: Mymensingh Mob.: 01700-702113

Southeast Bank Limited 277 ATM Network

02 07 02 13 71

02 25 14

ATMS

DHAKA DIVISION (71) RAJSHAHI DIVISION (13) CHITTAGONG DIVISION (25) RANGPUR DIVISION (02) SYLHET DIVISION (07) BARISAL DIVISION (02) KHULNA DIVISION (14) MYMENSINGH DIVISION (02)

278 Annual Report 2017 Dhaka Division (71) Corporate Br. ATM Uttara -ATM-1- Sector 1 Gulshan Br. ATM-1 Eunoos Trade Centre (Ground Floor), House #1, Road #11, Sector #1, House #82 CES (F), 1, Gulshan Avenue 52-53, Dilkusha C/A, Dhaka-1000 Uttara, Dhaka-1230 Dhaka-1212 Pragati Sarani Br. ATM-1 Banani Br. ATM-1 Dhonia Br. ATM-1 Plot No. GA - 25/5/1, Shahjadpur Plot #71, Block #B, Kamal Ataturk Chowdhury Complex” Pragoti Sarani, Gulshan Avenue, Banani, Dhaka (1st & 2nd Floor) 440-441, Noyapara Dhaka-1212 Donia, Jatrabari, Dhaka-1236 Mouchak Br. ATM-1 Madobdi Br. ATM Savar Br. ATM Karnaphuli Point (1st Floor), 70 New Khatian # 28 (1st Floor), Dag # 233, Plot # A -109, Bazar Road (1st Floor) Circular Road Mouza: Par Kashipur, Madhabdi Pauroshava & P.S.: Savar, Dhaka Malibagh, Dhaka Pauroshava, Thana: Narsingdi, Narsingdi Rokeya Sarani Br. ATM Basundhara Br.ATM-1 Hemayetpur Br. ATM “Khusholi Bhaban”, Holding # 1, Plot#142, Block# B, Hemayetpur Super Market West Kafrul Rokeya Sarani, Ward # 16 Bashundhara R/A, (2nd Floor), Hemayetpur, Dhaka City Corporation, Thana: Sher- Baridhara Mouza: Kulashur Union: Tetuljora, e-Bangla Nagar, Mirpur, Dhaka Dhaka -1212 Thana: Savar, Dhaka Ashulia Br. ATM Joypara Br. ATM Konabari Br. ATM Helim Shopping Complex, (Opposite Begum Aysha Shopping Complex Plot # A-147/148, BSCIC I/R, Fantasy Kingdom) (1st Floor), Holding # 222, Joyapara Union: Konabari, Ashulia, Dhaka Pourasava P.S. - Joydebpur Thana-Dohar, District-Dhaka Dist-Gazipur Basundhara Br. ATM-2, NSU Narayanganj Br. ATM Uttara Br. - ATM-2, Sector 14 North South University Campus ATM 53/2 S.M. Maleh Road, Tanbazar, Plot No:20, Road No: 12, Sector No: Booth Plot 15, Block B Narayangonj 14, Uttara Residential Model Town Bashundhara, Dhaka-1229 Dhaka-1230 Principal Br. ATM-2, Elephant Road Br. ATM-1, Kawran Bazar Br. ATM-2 ACS Textile Concord Arcadia Green Road - Comfort Hospital, ACS Textiles (Bangladesh) Limited, Concord Arcadia Shopping Mall, Plot 167, Green Road Tetlabo, Word No: 03, P.O: Parabo, No. 1 & 2, Road No: 04, Dhanmondi (Besides Comfort Hospital) P.S: Rupgonj, Narayanganj Residential Area, Dhaka under the supervision of Elephant Road Branch, Dhaka Bhulta Br. ATM-1 Dokkhinkhan Br. ATM Joydebpur Br. ATM Bhulta Bus Stand, Union: Golakandail, Faisal Mansion, Shah Kabir Mazar Taj Tower,82, Shibbari more, Thana: Rupgonj, Dist.: Narayanganj Road, P.S # Dakshin Khan, Dhaka Joydebpur, Gazipur New Eskaton Br. ATM-1 Shimanto Square, Mohammadpur Br. ATM Chowdhury Center, 23/Ka, New Satmasjid Road-ATM-1 Axis Delvista (1st .Floor), Holding Eskaton Road (1st Floor), P.S.: Ramna, Shimanto Square Market, BGB, No:7/1, Block - A, Aurongajeb Road, Dhaka – 1000 Dhanmondi-02, Dhaka-1205 Mohmmadpur Housing Estate, Mohammadpur Principal Br. ATM-1 Aganagar Br. ATM Principal Br.ATM-03, Holding No: 1, Dilkusha C/A, P.S.: and Sub-Registry Office: Pirjongi Shah Mazar Dilkusha Road, Annex Building Hotel Keraniganj, J.L No: 430 (Sabek), Pirjongi Shah Mazar, Motijheel Purbani International, Mouza: Subadda, C.S Khatian Coloney Jamee Masjid Complex Ward: 32, Motijheel Thana, Dhaka No: 568, S.A Khatian No: 430, Market, Shop No# 08, Pirjongi Shah City Corporation, Dhaka Corresponding C.S & S.A Dag No: Mazar, Outer Circular Road, Ward 1719, Jote No: 6314, Din Complex, No # 33, Paltan Thana, Dhaka City Kodomtoli Circle, Keranigonj, Dhaka Corporation, Dhaka. Elephant Road Br. ATM-2, Hatirpool Donia Br. ATM-2, Dolaipar Tangail Br. ATM Holding No # 149/1, Elephant Road 169/A/2 Dolaipar, Dhaka-1204 Noor Plaza, Holding # 263, Main (Presently- Dr. Kudrat -e- Khuda Road, Tangail-1900 Road), Thana # Kalabagan, Dhaka Dakshin City Corporation, Dhaka Satmasjid Road Br. ATM-2 New Eskaton Br. ATM-2 Gulshan Br.ATM-2 ADC Empire Plaza, Holding No# Boro Mogh Bazar, Shitol Bhaban, 625, Shahabuddin Medical College 91, Road No# 12/A, Satmasjid Road, Boro Moghbazar, Red Crescent Road, Shahabuddin Medical College, Plot Dhanmondi, Dhaka Dhaka City Corporation, Ramana No-12, Road No-113/A, Gulshan Thana, Dhaka Model Town, Gulshan-2, Dhaka-1212

Southeast Bank Limited 279 Kapasia Br. ATM New Eskaton Br.ATM-3 Hasnabad Br. ATM Akhter Market, RS Dag : 235, RS Farr Ceramics, Gazipur, “Farr Building Name: Rocky Tower, Village Khatian : 874, Kapasia Main Road, Ceramics”, Noulapara (Bhabanipur), / Area: Hasnabad, Mouza Name: Village: Kapasia, Mouza: Banar Hawla, Mouza No: 2 No Borkhan, Monipur, Ekuria, Union Name: Subatta, Union : Kapasia, Kapasia Thana, Union : Vaoalergor, Gazipur Sadar Keranigonj Thana, Dhaka District : Dhaka Thana, Gazipur Kamrangirchar Br. ATM Rupnagar Br. ATM Principal Br.-ATM-4 At the ground floor of Rony Market “Rangan”, Plot # 14, Road # 11,Ward Business faculty, DU Campus Bhaban, Holding No. 648-649, # 7, Rupnagar Residential Area,Mirpur At the ground floor of Administrative Rasulpur, Market Road, Ward No. Housing Estate, Dhaka City Building, Faculty of Business Studies, 56, Dhaka South City Corporation, Corporation,Thana: Mirpur, University of Dhaka, Shahabag Thana, Kamrangirchar Thana, Dhaka Dist.: Dhaka Dhaka South City Corporation, Dhaka-1000 Bhulta Br.ATM-2 Ashulia Bazar Br. ATM Kalibari Br. ATM Panchrukhi Bazar, Araihazar, MP “Shahid Sonamia Plaza”, Ashulia “Sabur Market”, Dhuptara Adarsha Tower Building, Panchrukhi Bazar, Bazar, Bangobondu Road, Ashulia Bazar, Kalibari, Village: Shapta Araihazar, Mouza Name: Panchrukhi, Union, Ashulia Thana, Dhaka Bandi Bhuyian Para, Mouza: Union : Panchrukhi, Araihazar Thana, Dhuptara, Union: Dhuptara Union District : Narayangonj Parishad, Thana: Araihazar, District: Narayangonj Balivhadra Br. ATM Mirpur Br. ATM Tongi Br. ATM “Vhandari Latif Super Market”, “Simpletree” Plot # 01, Road # 8, “Kazi Market”, Holding No: 8/B, Village: Balivhadra Bazar, Mouza: Section # 6, Mirpur, Ward # 6, Dhaka Anarkoli Road, Ward No: 57, Gazipur Ganakbari, Union: Swanirvar City Corporation, Thana: Pallabi, City Corporation, Thana:Tongi, Damsona Union Parishad, Thana: District: Dhaka under the supervision Gazipur. Ashulia, District: Dhaka of Mirpur Branch, Dhaka Rajbari Br. ATM Malibag Br. ATM Joydebpur Br. ATM-2 “Saleh Akkas Tower”, Holding # 237, “Fakhr-E-Nur ABN Tower”, Holding “OK Tower”, Holding No: F-214/10, Binodpur (College Road), Ward # # 45, Siddeswari Circular Road, Ward Hakkani Housing Society, Rajbari- 08, Rajbari Porusova, Rajbari Sadar No: 19, Ramna Thana, Dhaka South Jourpukur Road, Ward No: 28, Thana, Dist.-Rajbari. City Corporation, Dhaka. Gazipur City Corporation, Joydebpur Thana, District: Gazipur Balla Br. ATM Ghior Br. ATM Dhanmondi Br. ATM-2 Balla, R.S Dag # 586, 587 R.S Ghior, S.A Dag # 450, Navana New Bury, “Navana Newbury Khatian # 1270, 1271, Mouza :Balla, S.A Khatian # 161, R.S Dag # 783, R.S Place”, Road/Holding No.4/1/A, Union:Balla, Thana: Kalihati, District: Khatian # 159, C.S Dag # 450, C.S Area: Subhanbagh, Mirpur Road, Tangail Khatian # 161, Union: Ghior, Ward No.17, Kalabagan Thana, Thana: Ghior, District: Manikganj Dhanmondi-1213, Dhaka South City Corporation, Dhaka Latif Bawany Jute Mills ATM Wari Br. ATM Imamganj Br. ATM Latif Bawany Jute Mills Ltd. Demra, 4/2 Joykali Mondir, Wari, Dhaka Bhuiyan Market, 163/2, Metford Dhaka. Road, Dhaka Agargaon Br. ATM Singair Br. ATM Madanpur Br. ATM 248-1/G, West Agargaon, Sher-e- “Singair New Market”, Holding # Ekata Samabay Super Market, C.S. Bangla Nagar, Dhaka 02/02, Kansha Road, Singair Bazar, Dag # 83, Khatian # 165, Singair Pauroshava, Ward # 04, S.A. Dag # 56, Mouza: Chandpur, Upazilla/Thana: Singair, District: Union: Madanpur, Thana: Bandar, Manikganj District: Narayanganj Bangshal Branch ATM Booth Segun Bagicha ATM Ati Bazar Branch premises House #5, Road # Bangshal Lane, P.S Segun Bagicha Concord Apartment, 5, Mouza: Ati, Union: Sakta Thana: # Kotowali, Dhaka-1100 Segun Bagicha, Ramna, Dhaka Keranigonj, Dist.: Dhaka Khilgaon ATM, Taltala Uttara Sector# 13 WAPDA Road Rampura ATM House# 566/C, Khilgaon, Taltala, House# 50, Gareeb-e-Nawaz Road, 56, West Rampura, WAPDA Road, Dhaka Sector# 13, Uttara, Dhaka Dhaka APBN Uttara ATM SPBN Mohammadpur ATM Armed Police Battalion (APBn) House No: 19/20, Road No.: 2, Shahjalal Housing Limited, Shahid Buddijibi Compound, Sector-2, Uttara, Dhaka. Shetu Sharok, Mohammadpur, Dhaka

280 Annual Report 2017 Chittagong Division (25) Halishahar Br. ATM Agrabad Br. ATM Oxygen Moor Br. ATM House # 03, Block - G, Port Jahan Building, 59, Agrabad 405, Kulgao, Oxygen More, Biozid Connecting Road, Halishahar Housing Commercial Area, Chittagong Bostami, Chittagong Estate, Halishahar, Chittagong Potherhat Br. ATM Jubilee Road Br. ATM Chakaria Br. ATM Khaiz Ahmed Shopping Centre” Haji Golam Rasul Market, 96 Jubilee “Society Jame Mosque Complex”,R.S (1st Floor) Khatian # 5820, Dag # Road, Chittagong Khatian # 76, R.S Dag # 154,Mouza: 37 & 38 Village: Noapara, Mouza: CDA Avenue ATM 1 & 2 Chiringa, Chakaria Pauroshova, Noapara P.O: Gujra Noapara, Union: Ali Villa, 1640/1861 (New), CDA Thana: Chakaria, Dist.: Cox’s Bazar 13 No. Noapara Thana: Raujan, Avenue, Asian Highway, East District: Chittagong Nasirabad, Thana - Panchliash, Dist.: Chittagong Hathazari Br. ATM Basurhat Br. ATM Companygonj Br. ATM S. A. Shipping Complex Hathazari Bus Kabirhat Road, Basurhat Bazar Saudia Manjil (1st & 2nd Stand, Ranganati Road, Plot # 14238, ,Basurhat Pourusava, Ps # Floor),Dag # 742, R.S Khatian # Khatian # 2517, Mouza: Fatika, Companygonj, Dist.# Noakhali 395, Companigonj, Mouza: North Union: Fatehpur, Thana: Hathazari, Tirish, Union: 15 No. Nobipur Dist: Chittagong (West), Nabinagar Road, Thana: Muradnagar,Dist.: Comilla Chowdhury Hat Br. ATM Chowmuhani Br. ATM Cox’s Bazar ATM-1 S.N. Tower, Dadaram Sharok Road, Tara Manjil, Holding No# 72, Feni M&M Shopnaloy, Plot# A-12, Chowdhury Hat Bazar Road, Hajipur, PS# Begumgonj, Kolatoli, Main Road, Cox’s Bazar Chowmuhani Pourashava, Noakhali Mia Bazar Br. ATM Haidergonj Br. ATM, Laxmipur Fatikchari Br. ATM Hazi Siraj Mansan, Dag No: BS- Kazi Super market, Dag No- Mir Jahanara Complex, College Road, 503, Khatin No: BS-237, Mouza: RS-16687,16688,16689, Khatian No- Bibirhat, Dag No: 7622, Khatian No: Ashrabpur, Union: 02 No Ujirpur, RS-432,950,2049, Haidergonj Bazar, 4989, JL-51, Mouza : North Dhurung, Chowddrogram Thana, Comilla Mouza-Char Ababil, Union-Char Thana: Fatikchari, Chittagong Ababil, Raipir, Laxmipur Madambibir Hat Br. ATM Shebarhat Br. ATM Teknaf Br. ATM Madambibir Hat Union, Jahanara & Sons Market, Village/ “Alo Shopping Complex’, Holding No: Bhatiary, Area: Raja Rampur, Dag No: 3181, P.C-177,K.K Para, Main Road, Teknaf P.S.: Sitakunda, Khatian No: 998 JL-420, Mouza: Raja Pauroshova, Ward No # 03, Thana: Dist. :Chittagong Rampur, Union: 7 No Mohammadpur, Teknaf, District: Cox’s Bazar Senbagh Thana, Noakhali Chhagalniya-ATM, Tareque Medical Cox’s Bazar-ATM-2, Coral Reef Momin Road Br. ATM, Ctg Hospita “Coral Reef Mannan Plaza”, Holding “Equity Central”, Holding No: 42- “Tareque Memorial Hospital No: 569, Main Road, Bazar Ghata, 43, Momin Road, Ward No: 32, Complex”, Dhaka-Chittagong old Ward No: 10, Cox’s Bazar City Chittagong City Corporation, Thana: Main Road (Banshpara, Mouza: Corporation, Sadar -Cox’s Bazar Kotwali, Chittagong. Banshpara, Union: Chhagalniya, Thana, District: Cox’s Bazar. Chhagalniya Thana, Feni Gunabati Br. ATM Kotwali Br. ATM, ctg Gunabati Bazar”, Village: Gunabati, “Equity Anitri”, Holding No: 32, J.L No: C.S/S.A R.S-282/15 B.S-282, Hossain Shahid Sarwardi Road, Khatian No: C.S/R.S-27, 55, 58. 49, Kotwali, Ward No: 33, Chittagong 88, 162, Mouza: Gunabati, Union: City Corporation, Kotwali Thana, 12 No. Gunabati Union, Thana: Chittagong. Choddogram, District: Comilla

Southeast Bank Limited 281 Sylhet Division (07) Patantula -ATM, Ragib Rabeya Medical Shahjalal Uposhar Br. ATM Moulvibazar Br. ATM College and Hospital Block# D, Main Road, Shahjalal Jarip Tower, Holding No: 199/2, Road Jalalabad Ragib-Rabeya Medical Uposhahar, Sylhet No: 59, Central Road (Saifur Rahman College and Hospital, Road: Road), Ward: 04, Moulvibazar Sunamgonj, Pathantula, Sylhet -3100 Pourashava, Thana : Moulvibazar, under the supervision of Pathantula Moulvibazar Branch , Sylhet Laldigirpar-ATM, VIP Tower Chowhatta-ATM-Kazirtula Main Road Kulaura Br. ATM VIP Tower, Plot No: 3714, Khatian Mujibur Rahman Complex, Holding Aziz Rowshon Shopping Center & No: 1909, JL-91, VIP Road No: 1469, 1470, 1471, 1472, Garden City, Holding No: 0334-00, Sylhet, Ward No: 13, Sylhet City Kazirtula Main Road, Ward No: 17, Ward No: 03, Kulaura Pourashava, Corporation, Kotwali Than, Sylhet Sylhet City Corporation , Kotwali Kulaura Thana, District: Moulvibazar Than, Sylhet Pathantula Branch premises Haque Mansion of Modina Market, Holding No. 704, Pathantula Ward No. 8, sylhet City Corporation, Thana: Jalalabad, Dist: Sylhet

Khulna Division (14) Khulna Br. ATM Sir Iqbal Road Br. ATM Satkhira Br. ATM Haji Hanif Complex (1st floor),12 & 155, Sir Iqbal Road, khulna (Thanar Holding # 5896, Palash Pole (Ground 13, Khan Jahan Ali Road,Khulna. Moor) Floor), Shahid Kajal Sarak (Satkhira Bus Stand), Ward # 08, Satkhira Pouroshova, Thana: Satkhira, District: Satkhira Jessore Br. ATM Rupdia Br. ATM Chuadanga Br. ATM 11, R.N. Road, Thana: Kotwali, Dist.: Bhoumik Super Market, Rupdia Bazar, “Brothers Tower”, Holding # 0686-06, Jessore Vill: Zirat, Union: 14 no Narendropur, Thana Road, Chuadanga Pauroshava, Jessore Ward # 03, Thana: Chuadanga Sadar, District: Chuadanga Kahishpur Jute Mills ATM Eastern Jute Mills ATM Kushtia Br. ATM Khalishpur Jute Mills Ltd. Khalishpur, Eastern Jute Mills Ltd. Atra Industrial Aneek Tower, 295, Nowab Khulna Area, Khulna Sirajuddoula Road Ward # 03, Pauroshava : Kushtia P.S.: Kushtia Sadar, Dist.: Kushtia Dumuria Br. ATM “R.R. Plaza”, Village: Araji Sajiara, J.L. No. 38, S.A. Khatian No. 192, D.P. No: 432, Dag No. 140, 141, 143, D.P. Dag No. 1085, 1087, Mouza: Araji Sajiara, Union: 11 No. Dumuria Union, Thana: Dumuria, District: Khulna.

Rajshahi Division (13) Chapainawabgonj Br. ATM Bogra ATM-1 Naogaon Br. ATM “Sarker Tower”, Holding # 59,60 Mofiz Paglar Moor, Bogra Shahid Matiul Isalm Poura Market, & 61, Ward # 02, Kalitola 1st Lane Naogaon Pourashava, Thana: Naogaon (Jhilim Road), Boro Indira Moor, sadar, Dist.: Naogaon Chapainawabganj Municipality, Thana: Chapainawabganj Sadar, District: Chapainawabganj. Rajshahi ATM-1, Laxmipur Bogra ATM-2, Rangpur Road, Bogra Baneswar Br. ATM Holding No: 634, Sher-Sha Road, 288/325, 289/326, Jamil Shopping “Alhaj Amjad Hossain Market”, Laxmipur, Rajshahi Center, Borogola, Rangpur Road, Village: Kolahata, Mouza: Shibpur, Bogra Union: Baneswar, Thana: Potia, District: Rajshahi

282 Annual Report 2017 Rajshahi-ATM-2, Uposhahar New Rajshahi-ATM-3, Greater Road, Rajshahi-ATM-4, Natore Road, Market, Rajshahi Rajshahi, Greater Road, Rajshahi, Rokeya Bhaban, Uposhahar New Market, Holding Ward No: 13, Rajshahi City Holding No: 219, Natore Road, No: 10, Ward No: 14, Rajshahi City Corporation, Boalia Thana, Ward No: 22, Rajshahi City Corporation, Boalia Thana, Rajshahi Rajshahi Corporation, Boalia Thana, Rajshahi Pabna Br. ATM Iswardi Br. ATM Sirajganj Branch premises Khairul Tower, Maowlana Holding # 994/930 & 1017, “Basak Plaza” Holding # 947-948, Mohammad Ali Road (Narikel Bagan Ishwardi Porosova, Ishwardi Thana, Suhrawardi Road, P.S.: Sirajganj, Road), Ward No: 03 (Shibrampur), District: Pabna Dist.: Sirajganj Pabna Porosuva, Pabna Sadar Thana, District: Pabna ABPN Bogra 4 Armed Police Battalion (APBN), Nishindara, Bogra.

Rangpur Division (02) Dinajpur Br. ATM Rangpur Br. ATM Holding # 880/837, Ganesh Tola Jail Road, Dinajpur Shah Murad Complex, RK Road, Medical Moor, Rangpur Municipal Corporation, Ward # 3, Thana: Dinajpur Sadar, Dist: Dinajpur

Barisal Division (02) Barisal-ATM-1, Nazirerpool,Barisal Barisal-ATM-2, Sadar Road,Barisal Holding No: 1367-000, Birsreshta Captain Mohiuddin Holding No: 241, Sadar Road (Opposite of Barisal Zila Jahangir Sarok (Nazirerpool), Ward No: 19, Barisal City School), Ward No: 10, Barisal City Corporation, Kotwali Corporation, Kotwali Thana, Barisal Thana, Barisal

Mymensingh Division (02) Mymensignh Br. ATM APBN Muktagacha Mymensing ATM Minar Complex, Holding No: 09, Moktijodda Sarani 2 Armed Police Battalion (APBN), Muktagacha, Mymensing (Choto Bazar), Ward No: 08, Mymensingh Porosuva, Kotwali Sadar Thana, District: Mymensingh

Southeast Bank Limited 283 Memories of 22nd Annual General Meeting

284 Annual Report 2017 Southeast Bank Limited 285 286 Annual Report 2017 Southeast Bank Limited 287 Worldwide Correspondents Network

COUNTRIES NAME OF BANK CITY FLAGS

ALGERIA CITIBANK N.A. ALGERIA ALGIERS

HSBC BANK ARGENTINA SA BUENOS AIRES ARGENTINA BANK OF TOKYO-MITSUBISHI LTD. BUENOS AIRES BNP PARIBAS SUCURSHL BUENOS AIRES BNP PARIBAS AUSTRAILA SYDNEY BANK OF AMERICA, N.A. SYDNEY SYDNEY BANK OF CHINA LIMITED, SYDNEY BRANCH SYDNEY BANK OF SYDNEY LTD SYDNEY CITIBANK N.A. SYDNEY AUSTRALIA HSBC BANK AUSTRALIA LIMITED SYDNEY JPMORGAN CHASE BANK, N.A. SYDNEY MIZUHO CORPORATE BANK, LTD. SYDNEY BRANCH SYDNEY NATIONAL AUSTRALIA BANK LIMITED MELBOURNE SUMITOMO MITSUI BANKING CORPORATION SYDNEY BRANCH SYDNEY SUNCORP-METWAY LIMITED BRISBANE

288 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS BANK AUSTRIA AG CREDITANSTALT VIENNA BANK AUSTRIA AG VIENNA COMMERZBANK AG, NIEDERLASSUNG WIEN WIEN VIENNA AUSTRIA CITIBANK INTERNATIONAL PLC - AUSTRIA BRANCH VIENNA CREDIT AANSTALT AG VIENNA RAIFFEISENLANDESBANK NIEDEROESTERREICH-WIEN AG VIENNA ALUBAF ARAB INTERNATIONAL BANK B.S.C. (C) MANAMA ARAB INVESTMENT COMPANY, THE MANAMA BMI BANK BSC (C) MANAMA BNP PARIBAS MANAMA, FULL COMMERCIAL BRANCH (FCB) MANAMA BAHRAIN CITIBANK N.A. MANAMA HSBC BANK MIDDLE EAST MANAMA ICICI BANK LTD MANAMA UNITED BANK LIMITED MANAMA WOORI BANK, MANAMA MANAMA BANGLADESH BANK DHAKA AB BANK LIMITED DHAKA AGRANI BANK LIMITED DHAKA AL-ARAFAH ISLAMI BANK LTD DHAKA BANGLADESH COMMERCE BANK LTD. DHAKA BANGLADESH DEVELOPMENT BANK LIMITED (BDBL) DHAKA BANGLADESH KRISHI BANK 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 EASTERN BANK LTD. DHAKA EXPORT IMPORT BANK OF BANGLADESH LTD DHAKA FIRST SECURITY ISLAMI BANK LIMITED DHAKA THE FHARMERS BANK LIMITED DHAKA HABIB BANK LTD. DHAKA BANGLADESH HONGKONG 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 CREDIT AND COMMERCE BANK LIMITED DHAKA NATIONAL BANK OF PAKISTAN DHAKA NRB COMMERCIAL BANK LIMITED DHAKA NRB BANK LIMITED DHAKA NRB GLOBAL BANK LIMITED DHAKA ONE BANK LIMITED. DHAKA PRIME BANK LIMITED. DHAKA PRIMIER BANK LIMITED. DHAKA PUBALI BANK LIMITED. DHAKA

Southeast Bank Limited 289 COUNTRIES NAME OF BANK CITY FLAGS SOUTH BANGLA AGRICULTURE AND COMMERCE BANK LTD. DHAKA SHAHJALAL BANK LIMITED. DHAKA SONALI BANK LIMITED DHAKA SOCIAL ISLAMI BANK LTD. DHAKA SHIMANTO BANK LIMITED DHAKA STANDARD BANK LIMITED. DHAKA BANGLADESH STANDARD CHARTERED BANK DHAKA STATE BANK OF INDIA DHAKA TRUST BANK LIMITED. DHAKA UNITED COMMERCIAL BANK LTD. DHAKA UNION BANK LIMITED DHAKA UTTARA BANK LIMITED. DHAKA WOORI BANK, DHAKA DHAKA BANK OF TOKYO-MITSUBISHI LTD. BRUSSELS BNP PARIBAS S.A. BRUSSELS CBC BANQUE S.A. BRUSSELS COMMERZBANK AG BRUSSELS DEXIA BANK SA BRUSSELS FORTIS BANQUE S.A/NV BRUSSELS BELGIUM FORTIS BANQUE S.A/NV (Head Office) BRUSSELS ING Belgium NV/SA BRUSSELS KBC BANK NV ANTWERPEN KBC BANK NV KORTRIJK SUMITOMO MITSUI BANKING CORPORATION SYDNEY BRANCH BRUSSELS UNION BANK OF INDIA BRUSSELS KBC BANK NV BRUSSELS

BHUTAN BANK OF BHUTAN PHUNTSHOLING

HSBC BANK BRASIL S.A. - BANCO MULTIPLO SAO PAULO BANCO VOTORANTIM S.A. SAO PAULO BRAZIL BANCO SANTANDER (BRASIL) S.A. SAO PAULO HSBC BANK BRASIL S.A. - BANCO MULTIPLO SAO PAULO DEUTSCHE BANK S.A. - BANCO ALEMAO SAO PAULO CITIBANK EUROPE PLC, ORGANIZACNI SLOZKA PRAGUE CZECH CESKOSLOVENSKA OBCHODNI BANKA, A.S. PRAGUE REPUBLIC UNICREDIT BANK CZECH REPUBLIC,A.S. PRAGUE BANK OF NOVA SCOTIA TORONTO BANQUE NATIONALE DU CANADA MONTREAL BNP PARIBAS CANADA, MONTREAL MONTREAL BNPPARIBAS CANADA MONTREAL BANK OF MONTREAL, THE MONTREAL CANADA HABIB CANADIAN BANK MISSISSAUGA HSBC BANK CANADA TORONTO ICICI BANK CANADA TORONTO INTESABCI S.P.A TORONTO STATE BANK OF INDIA TORONTO TORONTO-DOMINION BANK TORONTO

CAMBODIA SHINHAN KHMER BANK PHNOM PENH

CHILE SCOTI SUD AMERICANO SANTIAGO

290 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS ANSHAN CITY COMMERCIAL BANK ANSHAN AXIS BANK LIMITED SHANGHAI BRANCH SHANGHAI BANK OF CHINA BEIJING BANK OF CHINA SHANGHAI BANK OF CHINA BEIJING BANK OF COMMUNICATIONS SHANGHAI BANK OF DALIAN DALIAN BANK OF HEBEI (FORMERLY SHIJIAZHUANG CITY COMMERCIAL BANK) SHIJIAZHUANG BANK OF HUZHOU CO.,LTD MIZHOU BANK OF JIANGSU CO LTD NANJING BANK OF JINHUA (FORMERLY JINHUA CITY COMMERCIAL BANK) JINHUA BANK OF NOVA SCOTIA GUANGZHOU BANK OF TIANJIN CO., LTD. TIANJIN BANK OF TOKYO-MITSUBISHI LTD. BEIJING BANK OF TOKYO-MITSUBISHI LTD. TIANJIN BNP PARIBAS (SUISSE) SA GENEVA BSI SA LUGANO CHINA CITIC BANK BEIJING CHINA DEVELOPMENT BANK BEIJING CHINA EVERBRIGHT BANK LTD BEIJING CHINA MERCHANTS BANK SHENZHEN CITIBANK N.A. BEIJING CITIBANK N.A. SHANGHAI DBS BANK (CHINA) LIMITED SHANGHAI HANGZHOU UNITED RURAL COMMERCIAL BANK CO.LTD HANGZHOU HSBC BANK,THE SHANGHAI HUA XIA BANK BEIJING CHINA SVENSKA HANDELSBANKEN AB, SHANGHAI BRANCH SHANGHAI IANGSU JIANGNAN RURAL COMMERCIAL BANK CO., LTD. CHANGZHOU (FORMALY JIANGSU WUJIN RURAL BANK) ICICI BANK LIMITED SHANGHAI INDUSTRIAL AND COMMERCIAL BANK OF CHINA BEIJING ING BELGIUM NV/SA, BRUSSELS, GENEVA BRANCH (FORMERLY GENEVA BBL BRUXELLES, SUCCURSALE DE GENEVE) INTESABCI S.P.A SHANGHAI 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 JIANGSU JIANGYAN RURAL COMMERCIAL BANK CO., LTD JIANGYAN KBC BANK NV SHANGHAI LINSHANG BANK CO. LTD (FORMERLY LINYI CITY COMMERCIAL LINYI BANK CO., LTD) MIZUHO CORPORATE BANK (CHINA),LTD. SHANGHAI MIZUHO CORPORATE BANK LTD SHANGHAI NINGBO YUYAO RURAL COOPERATIVE BANK YUYAO POSTAL SAVINGS BANK OF CHINA BEIJING STANDARD CHARTERED BANK SHANGHAI SUMITOMO MITSUI BANKING CO. SHANGHAI SWEDBANK AB SHANGHAI SVENSKA HANDELSBANKEN AB, SHANGHAI BRANCH SHANGHAI THE BANK OF NEW YORK MELLON, SHANGHAI BRANCH SHANGHAI WELLS FARGO BANK, NA, SHANGHAI BRANCH (FORMERLY SHANGHAI KNOWN AS WACHOVIA)

Southeast Bank Limited 291 COUNTRIES NAME OF BANK CITY FLAGS WOORI BANK (CHINA) LIMITED BEIJING WOORI BANK SHANGHAI BRANCH (RETAINED BRANCH) SHANGHAI YANTAI BANK CO., LTD. YANTAI YINZHOU BANK NINGBO CHINA ZHEJIANG RURAL CREDIT COOPERATIVE UNION HANGZHOU ZHEJIANG NANXUN RURUAL COOPERATIVE BANK HUZHOU ZHEJIANG SHAOXING COUNTY RURAL COOPERATIVE BANK SHAOXING ZHEJIANG ZHUJI RURAL COMMERCIAL BANK COMPANY LIMITED ZHUJI NORDEA BANK FINLAND PLC GEORGETOWN CAYMAN HSBC BANK BRASIL S.A. - BANCO MULTIPLO ISLANDS GEORGETOWN (GRAND CAYMAN BRANCH) SVENSKA HANDELSBANKEN HELSINKI DANSKE BANK HELSINKI FINLAND HANDELSBANKEN HELSINKI POHJOLA PANKKI OYJ (POHJOLA BANK PLC) HELSINKI PART OF DANSKE BANK GROUP) HELSINKI DANSKE BANK A/S COPENHAGEN HANDELSBANKEN COPENHAGEN NORDEA BANK DENMARK A/S FAXE DENMARK NORDEA BANK HORSENS SYDBANK A/S AABENRAA UNIBANK A/S COPENHAGEN CREDIT AGRICOLE EGYPT CAIRO CITIBANK CAIRO CAIRO EGYPT MASHREQ BANK CAIRO INTESA SANPAOLO SPA PARIS BANCO DE SABADELL S.A PARIS BANK OF TOKYO-MITSUBISHI LTD. PARIS BNP-PARIBUS SA PARIS BANQUE PALATINE PARIS COMMERZBANK AG PARIS CREDIT AGRICOLE INDOSUEZ. PARIS FRANCE CREDIT AGRICOLE SA PARIS CREDIT LYONNAIS PARIS HSBC FRANCE (FORMERLY HSBC CCF) PARIS KBC BANK NV PARIS PARIS MIZUHO CORPORATE BANK LTD PARIS SUMITOMO MITSUI BANKING CO. PARIS UNION DE BANQUES ARABES.ET PARIS KBC BANK DEUTSCHLAND AG BREMEN AKBANK AG FRANKFURT BANK OF TOKYO-MITSUBISHI LTD. DUESSELDORF LANDESBANK BADEN-WUERTTEMBERG STUTTGART BANK OF TOKYO-MITSUBISHI LTD. HAMBURG BAYERISCHE HYPO-UND VEREINS BANK MUENCHEN BNP PARIBAS DEUTCHLAND FRANKFURT JPMORGAN CHASE BANK, N.A FRANKFURT GERMANY CITIBANK N.A. FRANKFURT COMMERZBANK AG FRANKFURT COMMERZBANK AG BERLIN COMMERZBANK AG DUESSELDORF COMMERZBANK AG HAMBURG DANSKE BANK HAMBURG DEUTSCHE BANK AG FRANKFURT DEUTSCHE BANK AG ERFURT

292 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS FRANKFURT AM DEUTSCHE BANK PRIVAT-UND GESCHAEFTSKUNDEN AG MAIN DRESDNER BANK AG FRANKFURT FORTIS BANK, NIEDERLASSUNG DEUTSCHLAND KOELN HSBC TRINKAUS UND BURKHARTD DUESSELDORF HSBC TRINKAUS UND BURKHARDT AG DUESSELDORF HANDELSBANKEN COPENHAGEN HSH NORDBANK AG (MERGER OF HAMBURGISCHE LANDESBANK HAMBURG AND LANDESBANK SCHLESWIG-HOLSTEIN) FRANKFURT AM LANDESBANK HESSEN-THUERINGEN GIROZENTRALE MAIN ING BHF-BANK AKTIENGESELLS BERLIN ING BHF-BANK AKTIENGESELLS CHAFT FRANKFURT ING BHF-BANK AKTIENGESELLS CHAFT FRANKFURT INTESABCI S.P.A FRANKFURT FRANKFURT AM J.P.MORGAN CHASE BANK MAIN KBC BANK NV NIEDERLASSUNG DEUTSCHLAND DUESSELDORF MAINZER VOLKSBANK E.G. MAINZ MIZUHO CORPORATE BANK, LTD., DUESSELDORF BRANCH DUESSELDORF NASSAUISCHE SPARKASSE WIESBADEN GERMANY FRANKFURT AM NORDEA BANK FINLAND PLC NIEDERLASSUNG DEUTSCHLAND MAIN FRANKFURT AM SEB AG SEB MERCHANT BANKING MAIN FRANKFURT AM SEB AG MAIN FRANKFURT AM SHINHAN BANK EUROPE GMBH MAIN SPARKASSE KOELNBONN (FORMER STADTSPARKASSE KOELN) KOELN SPARKASSE KREFELD KREFELD SPARKASSE PADERBORN-DETMOLD DETMOLD STADT-UND KREISSPARKASSE LEIPZIG LEIPZIG SUMITOMO MITSUI BANKING CORPORATION DUESSELDORF SPARKASSE HERFORD, COMMERCIAL AND SAVINGS BANK HERFORD STANDARD CHARTERED BANK FRANKFURT SYDBANK A/S FRANKFURT VEREINS-UND WESTBANK HAMBURG WGZ BANK AG WESTDEUTSCHE GENOSSENSCHAFTS- DUESSELDORF ZENTRALBANK KREISSPARKASSE STEINFURT IBBENBUEREN WESTFALENBANK AG BOCHHUM

GREECE EGNATIA BANK S.A . THESSALONII

HSBC BANK BRASIL S.A. - BANCO MULTIPLO GUYANA GEORGETOWN (GRAND CAYMAN BRANCH)

Southeast Bank Limited 293 COUNTRIES NAME OF BANK CITY FLAGS AXIS BANK LIMITED HONGKONG AB INTERNATIONAL FINANCE LTD HONGKONG BANCO SANTANDER, S.A. HONG KONG BRANCH HONG KONG BANK OF AMERICA, N.A. HONG KONG HONG KONG BANK OF NOVA SCOTIA HONG KONG BANK OF TOKYO-MITSUBISHI LTD. HONG KONG BANK OF TOKYO-MITSUBISHI UFJ, LTD., THE HONG KONG BANCA MONTE DEI PASCHI DI SIENA SPA - HONGKONG BANCO BILBAO VIZCAYA ARGENTARIA, S.A., HONG KONG BRANCH HONGKONG BANK ONE, 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 HANG SENG BANK LIMITED HONG KONG HBZ FINANCE LTD. HONG KONG HSBC, HONG KONG HONG KONG HONG KONG HDFC BANK LTD HONGKONG ICICI BANK LTD HONG KONG INTESA SANPAOLO SPA HONG KONG HONG KONG INDUSTRIAL AND COMMERCIAL BANK OF CHINA HONGKONG INDUSTRIAL BANK OF KOREA, HONG KONG BRANCH HONGKONG JPMORGAN CHASE BANK, N.A., HONG KONG BR. HONG KONG KBC BANK NV, HONG KONG HONG KONG MASHREQ ASIA LTD. HONG KONG MIZUHO CORPORATE BANK LTD HONG KONG NATIXIS (FORMERLY NATEXIS BANQUES POPULAIRES) HONGKONG SHINHAN ASIA LTD. HONG KONG STATE BANK OF INDIA HONGKONG STANDARD CHARTERED BANK HONG KONG SUMITOMO MITSUBI BANKING CO. HONGKONG THE BANK OF NEW YORK MELLON, HONG KONG BRANCH HONG KONG UBAF UNION BANK OF ARABIES HONGKONG UNICREDIT BANK AG HONG KONG BRANCH HONG KONG (HYPOVEREINSBANK HONG KONG BRANCH) UNICREDIT BANK AG HONG KONG BRANCH HONG KONG (HYPOVEREINSBANK HONG KONG BRANCH) WELLS FARGO BANK, N.A. HONG KONG WOORI BANK, HONG KONG HONG KONG UNICREDIT BANK HUNGARY ZRT. BUDAPEST HUNGARY CITIBANK EUROPE PLC HUNGARIAN BRANCH BUDAPEST AXIS BANK LIMITED MUMBAI ARAB BANGLADESH BANK MUMBAI BANK OF AMERICA, N.A. MUMBAI MUMBAI BANK OF NOVA SCOTIA, THE MUMBAI BANK OF TOKYO-MITSUBISHI LTD. MUMBAI BANK OF TOKYO-MITSUBISHI LTD. NEW DELHI INDIA CITIBANK N.A. MUMBAI DEUTSCHE BANK AG MUMBAI HDFC BANK LIMITED MUMBAI EMIRATES NBD BANK PSC MUMBAI HSBC BANK,THE MUMBAI ICICI BANK LIMITED MUMBAI INDUSTRIAL BANK OF INDIA MUMBAI

294 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS JPMORGAN CHASE BANK MUMBAI MASHREQ BANK MUMBAI MIZUHO CORPORATE BANK LTD MUMBAI PUNJAB NATIONAL BANK MUMBAI SHINHAN ASIA LTD. MUMBAI INDIA SONALI BANK KOLKATA STANDARD CHARTERED BANK MUMBAI SUMITOMO MITSUI BANKING C0. MUMBAI UNION BANK OF INDIA MUMBAI UNITED BANK OF INDIA MUMBAI UTI BANK LTD MUMBAI BANK BNP PARIBAS INDONESIA JAKARTA ANZ PANIN BANK, P.T. JAKARTA BANK DBS INDONESIA, PT JAKARTA BANK MEGA PT JAKARTA BANK NEGARA INDONESIA - PT (PERSERO) JAKARTA BANK OF NEGEAR JAKARTA BANK OF TOKYO-MITSUBISHI LTD. JAKARTA INDONESIA BANK RAKYAT INDONESIA JAKARTA CITIBANK, N.A. JAKARTA JPMORGAN CHASE BANK, N.A JAKARTA HSBC BANK,THE JAKARTA PT BANK OCBC NISP TBK JAKARTA STANDARD CHARTERED BANK JAKARTA WOORI BANK, INDONESIA P.T. JAKARTA JAKARTA ABN AMRO BANK NV DUBLIN CITIBANK N.A. DUBLIN IRELAND WELLS FARGO BANK INTERNATIONAL DUBLIN NATIONAL IRISH BANK (PART OF DANSKE BANK GROUP) DUBLIN UGF BANCA SPA BOLOGNA BANCA ANTONVENETA SPA PADOVA BANCA CARIM-CASSA DI RISPARMIO DI RIMINI SPA RIMINI BANCA CARIPE SPA (BANCO POPOLARE GROUP) PESCARA BANCA COMM.ITALIANA MILAN BANCA DELLE MARCHE SPA ANCONA CIVIDALE DEL BANCA DI CIVIDALE S.P.A. FRIULI BANCA DI TRENTO E BOLZANO S.P.A. TRENTO BANCA MONTE DEI PASCHI DI SIENA S.P.A. MILANO BANCA POPOLARE DI SONDRIO SONDRIO BANCA NAZIONALE DEL LAVORO S.P.A. ROMA BANCA NUOVA SPA PALERMO BANCA POPOLARE DE VERONA VERONA BANCA POPOLARE DELL'EMILIA ROMAGNA MODENA ITALY BANCA POPOLARE DI CREMA S.P.A. (BANCO POPOLARE GROUP) CREMA BANCA POPOLARE DI CREMONA SPA (BANCO POPOLARE GROUP) CREMONA BANCA POPOLARE DI INTRA VERBANIA BANCA POPOLARE DI LODI SPA (BANCO POPOLARE GROUP) LODI BANCA POPOLARE DI VICENZA SCPARL VICENZA BANCA POPOLARE FRIULADRIA SPA PORDENONE BANCA POPOLARE DI NOVARA SPA (BANCO POPOLARE GROUP) NOVARA BANCO DI NAPOLI SPA NAPOLI BANCO POPOLARE SOC. COOP. VERONA BANK OF TOKYO-MITSUBISHI LTD. MILAN BANCA UBAE SPA ROMA MORCIANO DI BANCA POPOLARE VALCONCA ROMAGNA CASSA DEI RISPARMI DI FORLI' E DELLA ROMAGNA SPA FORLI' CASSA DI RISPARMIO DEL FRIULI VENEZIA GIULIA SPA UDINE

Southeast Bank Limited 295 COUNTRIES NAME OF BANK CITY FLAGS CASSA DI RISPARMIO DEL VENETO S.P.A. PADOVA CASSA DI RISPARMIO DI CESENA S.P.A. CESENA CASSA DI RISPARMIO DI FIRENZE S.P.A. FIRENZE CASSA DI RISPARMIO DI LUCCA PISA LIVORNO SPA (BANCO LUCCA POPOLARE GROUP) CASSA DI RISPARMIO IN BOLOGNA SPA - CARISBO SPA BOLOGNA CASSA DI RISPPARMIO DI PADOVA E ROVIGO SPA PADOVA COMMERZBANK AG MILANO CREDITO BERGAMASCO S.P.A. (BANCO POPOLARE GROUP) BERGAMO CREDITO DI ROMAGNA SPA FORLI' CREDITO ITALIANO SPA MILAN ITALY CREDITO VALTELLINESE SONDRIO EFIBANCA S.P.A. (BANCO POPOLARE GROUP) ROMA INTESA SANPAOLO SPA (FORMERLY BANCA INTESA SPA) MILANO INTESA SANPAOLO SPA (FORMERLY BANCA INTESA SPA) MILANO HSBC BANK PLC MILANO MIZUHO CORPORATE BANK, LTD. MILAN BRANCH MILANO UBI BANCA (UNIONE DI BANCHE ITALIANE) S.C.P.A. BERGAMO UNICREDIT BANCA DI ROMA S.P.A. ROMA UNICREDIT BANK AG (HYPOVEREINSBANK) MILANO VENETO BANCA HOLDING S.C.P.A. MONTEBELLUNA UNICREDIT S.P.A. MILANO BANK OF NOVA SCOTIA TOKYO ASAHI BANK LTD,(FORMERLY--BANK,LTD) TOKYO BANK OF TOKYO-MITSUBISHI LTD. TOKYO BNP PARIBAS S.A-TOKYO TOKYO CHIBA KOGYO BANK,LTD. TOKYO CITIBANK N.A. TOKYO COMMERZBANK AG TOKYO DEUTSCHE BANK AG TOKYO HONGKONG AND SHANGHAI BANKING CORPORATION TOKYO LIMITED, THE INTESABCI S.P.A TOKYO JAPAN MIZUHO CORPORATE BANK LTD TOKYO OKAZAKI SHINKIN BANK, THE OKAZAKI RESONA BANK, LTD TOKYO HOKURIKU BANK, LTD.,THE TOKYO SHINHAN ASIA LTD. TOKYO STANDARD CHARTERED BANK TOKYO SUMITOMO MITSUI BANKING CO. OSAKA SUMITOMO MITSUI BANKING CO. TOKYO UBAF UNION BANQUE ARABIES TOKYO WELL FARGO BANK TOKYO WOORI BANK, TOKYO TOKYO

JORDAN JORDAN INVESTMENT & FINAN.BK. AMMAN

DUBAI BANK KENYA LTD NAIROBI KENYA CITIBANK N.A. NAIROBI NAIROBI BANK OF NOVA SCOTIA SEOUL BANK OF TOKYO-MITSUBISHI LTD. SEOUL BANK SUMITOMO BANKING CO. SEOUL BNP PARIBAS SEOUL CITIBANK KOREA INC SEOUL KOREA DAEGU BANK LTD,THE DAEGU HSBC BANK,THE SEOUL INDUSTRIAL BANK OF KOREA SEOUL JPMORGAN CHASE BANK, N.A SEOUL KOOKMIN BANK SEOUL

296 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS KOREA DEVELOPMENT BANK, THE SEOUL KOREA EXCHANGE BANK SEOUL MIZUHO CORPORATE BANK LTD SEOUL NATIONAL BANK OF PAKISTAN, SEOUL BRANCH KOREA SEOUL SHINHAN BANK SEOUL STANDARD CHARTERED BANK SEOUL KOREA SUHYUP BANK (FORMERLY NATIONAL FEDERATION OF SEOUL FISHERIES COOPERATIVES) SUMITOMO MITSUI BANKING CORPORATION SEOUL UBAF UNION BANQUE ARABIES SEOUL WELL FARGO BANK SEOUL WOORI BANK SEOUL NATIONAL BANK OF KUWAIT KUWAIT KUWAIT BNP PARIBAS KUWAIT KUWAIT CITIBANK N.A. SAFAT CITIBANK BEIRUT BEIRUT LEBANON BANK OF BEIRUT S.A.L. BEIRUT NORDEA BANK S.A. LUXEMBOURG LUXEMBOURG BANQUE DE COMMERCE ET DE PLACEMENTS S.A. SUCCURSALE LUXEMBOURG DE LUXEMBOURG LUXEMBOURG HSBC TRINKAUS UND BURKHARDT (INTERNATIONAL) SA LUXEMBOURG DANSKE BANK INTERNATIONAL S.A. LUXEMBOURG COMMERZBANK AG LUXEMBOURG

LATVIA NORDEA BANK FINLAND PLC LATVIA BRANCH RIGA

LITHUANIA NORDEA BANK FINLAND PLC LITHUANIA BRANCH VILNIUS

Liechtenstein LGT BANK AG VADUZ

HSBC MEXICO, S.A. INSTITUCION DE BANCA MULTIPLE, GRUPO MEXICO MEXICO FINANCIER HSBC FIMBANK PLC SLIEMA MALTA AKBANK T.A.S. (MALTA BRANCH) ST. JULIAN'S HONGKONG AND SHANGHAI BANKING CORPORATION MACAU MACAU LIMITED, THE STANDARD CHARTERED BANK MACAU CITIBANK MAGHREB CASABLANCA MOROCCO ATTIJARIWAFA BANK (FORMERLY BANQUE COMMERCIALE DU CASABLANCA MAROC) MAURITIUS MAURITIUS COMMERCIAL BANK LTD., THE PORT LOUISE BANK OF NOVA SCOTIA KUALA LUMPUR BANK MUAMALAT MALAYSIA BERHAD KUALA LUMPUR BANK MUAMALAT MALAYSIA BERHAD (6175-W) KUALA LUMPUR CITIBANK BERHAD KUALA LUMPUR HSBC BANK MALAYSIA BERHAD,MY KUALA LUMPUR MALAYSIA AM BANK (M) BERHAD KUALALUMPUR JPMORGAN CHASE BANK, N.A KUALA LUMPUR MALAYAN BANKING BERHAD KUALALUMPUR RHB BANK BERHAD KUALALUMPUR STANDARD CHARTERED BANK KUALA LUMPUR MIZUHO CORPORATE BANK, LTD., LABUAN BRANCH LABUAN

Southeast Bank Limited 297 COUNTRIES NAME OF BANK CITY FLAGS ABN AMRO BANK N.V. (FORMELY KNOWN AS FORTIS BANK ALL DUTCH (NEDERLAND) N.V.) OFFICES ABN AMRO BANK N.V. ROTTERDAM ABN AMRO BANK N.V. AMSTERDAM AKBANK NV AMSTERDAM NETHERLAND COMMERZBANK AG AMSTERDAM DEUTSCHE BANK A.G. AMSTERDAM AMSTERDAM HOLLANDSCHE BANK-UNIE N.V ROTTERDAM ING BANK N.V. AMSTERDAM KOREA EXCHANGE BANK, AMSTERDAM BRANCH AMSTELVEEN YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM

NEPAL NEPAL BANGLADESH BANK LIMITED KATHMONDU

BANK OF NEWZEALAND WELLINGTON CITIBANK NA NEW ZEALAND BRANCH AUCKLAND NEW ZEALAND HSBC(HONGKONG AND SHANGHAI BANKING CORPORATION AUCKLAND LIMITED, THE) NATIONAL NOMINEES LIMITED AUCKLAND DEN NORSKE BANK OSLO FOKUS BANK, PART OF DANSKE BANK GROUP TRONDHEIM NORWAY NORDEA BANK FINLAND PLC HELSINKI NORDEA BANK NORGE ASA OSLO UNION BANK OF NORWAY OSLO BANK SOHAR RUWI OMAN BANKMUSCAT SAOG MUSCAT ASKARIBANK LIMITED KARACHI BANKISLAMI PAKISTAN LIMITED KARACHI BANK AL HABIB LIMITED. KARACHI CITIBANK N.A. KARACHI HABIB METROPOLITAN BANK LIMITED KARACHI HSBC BANK MIDDLE EAST LIMITED KARACHI PAKISTAN MASHREQ BANK KARACHI NIB BANK LIMITED KARACHI ASKARIBANK LIMITED KARACHI PRIME COMMERCIAL BANK LTD KARACHI SONERI BANK LIMITED KARACHI UNITED BANK LIMITED. KARACHI STANDARD CHARTERED BANK KARACHI KOREA EXCHANGE BANK PANAMA PANAMA POWSZECHNA KASA OSZCZEDNOSCI BANK POLSKI SA WARSZAWA ASIAN DEVELOPMENT BANK MANILA MIZUHO CORPORATE BANK, LTD., MANILA BRANCH MANILA HONGKONG AND SHANGHAI BANKING CORPORATION TAGUIG CITY LIMITED, THE PHILLIPINES CITIBANK,N.A., MANILA BRANCH MANILA NORDEA BANK POLSKA S.A. GDYNIA KOREA EXCHANGE BANK MANILA BANK OF TOKYO-MITSUBISHI LTD. MANILA BANCO ESPIRITO SANTO S.A. LISBON PORTUGAL BANCO ESPIRITO SANTO S.A. LISBON CITIBANK INTERNATIONAL PLC LISBON BANK HANDLOWYW WARSZAWIE SA WARSAW BANK POLSKA KASA OPIEKI SA - BANK PEKAO SA WARSAW POLAND DANSKE BANK A/S S.A. ODZIAL W POLSCE WARSZAWA BNP PARIBAS S.A. BRANCH IN POLAND WARSZAWA

298 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS MASHREQ BANK DOHA COMMERCIAL BANK OF QATAR, LTD. DOHA QATAR NATIONAL BANK DOHA QATAR STANDARD CHARTERED BANK DOHA UNITED BANK LIMITED, DOHA DOHA HSBC BANK MIDDLE EAST LIMITED DOHA UNICREDIT TIRIAC BANK SA BUCHAREST ROMANIA PIRAEUS BANK ROMANIA BUCHAREST UNICREDIT BANK SRBIJA A.D. BEOGRAD BANK FOR FOREIGN TRADE MOSCOW AO RAIFFEISENBANK MOSCOW COMMERZBANK AG MOSCOW ZAO CITIBANK, MOSCOW MOSCOW RUSSIA UNICREDIT BANK ZAO MOSCOW WOORI BANK MOSCOW MOSCOW UNICREDIT BANK ZAO MOSCOW MOSCOW BUSINESS WORLD BANK MOSCOW

SENEGAL CITIBANK N.A. DAKAR

SAUDI BRITISH BANK RIYADH AL RAJHI BANK RIYADH BANK AL BILAD RIYADH BANQUE SAUDI FRANSI RIYADH SAUDI ARABIA BNP PARIBAS SAUDI ARABIA RIYADH EMIRATES NBD BANK PSC RIYADH NATIONAL COMMERCIAL BANK, THE JEDDAH SAUDI HOLLANDI BANK RIYADH AXIS BANK LIMITED SINGAPORE ABN AMRO BANK N.V., SINGAPORE SINGAPORE BANK OF AMERICA, N.A. SINGAPORE SINGAPORE BANK OF NOVA SCOTIA SINGAPORE BANK OF TOKYO-MITSUBISHI LTD. SINGAPORE BNP PARIBAS - SINGAPORE BRANCH SINGAPORE CITIBANK N.A. SINGAPORE COMMERZBANK AG SINGAPORE CREDIT LYONNAIS SINGAPORE DBS BANK LTD. SINGAPORE DEUTSCHE BANK AG SINGAPORE EMIRATES NBD BANK PSC SINGAPORE HABIB BANK LIMITED SINGAPORE HSBC BANK,THE SINGAPORE ICICI BANK LIMITED SINGAPORE INDIAN OVERSEAS BANK SINGAPORE INDIAN BANK SINGAPORE INTESA SANPAOLO S.P.A. (FORMER SANPAOLO IMI), SINGAPORE SINGAPORE SINGAPORE BRANCH, SINGAPORE JPMORGAN CHASE BANK, N.A. SINGAPORE KBC BANK NV SINGAPORE KOREA EXCHANGE BANK, SINGAPORE BRANCH SINGAPORE MIZUHO CORPORATE BANK LTD SINGAPORE MALAYAN BANKING BERHAD SINGAPORE NATIONAL BANK OF KUWAIT S.A.K., THE SINGAPORE NORDEA BANK FINLAND PLC, SINGAPORE SINGAPORE NATIXIS SINGAPORE SHINHAN BANK SINGAPORE SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) SINGAPORE STANDARD CHARTERED BANK SINGAPORE STATE BANK OF INDIA SINGAPORE SUMITOMO MITSUI BANKING CO. SINGAPORE UCO BANK SINGAPORE UBAF UNION BANQUE ARABIES SINGAPORE UNICREDIT BANK AG SINGAPORE BRANCH (HYPOVEREINSBANK SINGAPORE AG SINGAPORE BRANCH) WOORI BANK, SINGAPORE SINGAPORE

Southeast Bank Limited 299 COUNTRIES NAME OF BANK CITY FLAGS

CESKOSLOVENSKA OBCHODNA BANKA, A.S. BRATISLAVA SLOVAKIA CITIBANK EUROPE PLC, POBOCKA ZAHRANICNEJ BANKY BRATISLAVA

SLOVENIA UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA

FIRSTRAND BANK LTD. SANDOWN SOUTH ACH TRADING CC BEDFORDVIEW AFRICA CITIBANK SOUTH AFRICA SANDTON BANCO ATLANTICO S.A MADRID ARESBANK, S.A. MADRID LA CORUNA (A BANCO PASTOR S.A. CORUNA) BANKIA S.A. VALENCIA BANCO POPULAR ESPANOL, S.A. MADRID CATALUNYA BANC, S.A. (CATALUNYACAIXA) BARCELONA CAJAMAR CAJA RURAL, SOCIEDAD COOPERATIVA DE CREDITO ALMERIA SVENSKA HANDELSBANKEN MALMO CAIXA D'ESTALVIS I PENSIONS DE BARCELONA (LA CAIXA)- BARCELONA CAJA DE AHORROS Y PENSIONES DE BARCELONA CAJA MEDITERRANEO ALICANTE SPAIN BANCO BILBAO VIZCAYA(ARG)S.A MADRID BANCO DE SABADELL S.A SABADELL BANCO SANTANDER S.A. MADRID BANK OF TOKYO-MITSUBISHI LTD. MADRID BNP PARIBAS SUCURSHL ENESPANA MARDID BANCO ESPANOL DE CREDITO MADRID SVENSKA HANDELSBANKEN GOTEBORG CAJA DE AHORROS DE VALENC VALENCIA SKANDINAVISKA ENSKILDA BANKEN GOTEBORG KBC BANK N.V. MADRID CAJA DE AHORROS DE VALENCIA, CASTELLON Y ALICANTE VALENCIA (BANCAJA) COMMERZBANK AG MARDID CITIBANK N.A. SRI LANKA COLOMBO COMMERCIAL BANK OF CEYLON PLC COLOMBO SRILANKA ICICI BANK LTD COLOMBO STANDARD CHARTERED BANK COLOMBO MASHREQ BANK COLOMBO DANSKE BANK STOCKHOLM DEN NORSKE BANK STOCKHOLM NORDEA BANK SWEDEN AB GOTEBORG SWEDEN SKANDINAVISKA ENSKILDA BANKEN STOLCKHOM NORDEA BANK AB (PUBL) STOLCKHOM SVENSKA HADELSBANKEN STOLCKHOM SWEDBANK STOCKHOLM ATLANTIC FORFAITIERUNGS AG ZURICH BANQUE CANTONALE VAUDOISE LAUSANNE BANQUE DE COMMERCE ET DE PLACEMENTS S.A. GENEVA BANCA POPOLARE DI SONDRIO (SUISSE) LUGANO BANQUE CANTONALE DE GENEVE GENEVA BHF BANK (SCHWEIZ) AG ZURICH SWITZERLAND BANCA ALETTI E C. (SUISSE) SA (BANCO POPOLARE GROUP) LUGANO COMMERZBANK AG ZURICH CREDIT AGRICOLE (SUISSE)SA GENAVA CREDIT SUISSE AG ZURICH CREDIT EUROPE BANK (SUISSE) S.A. GENEVA HABIB BANK AG ZURICH ZURICH NORDEA BANK S.A., LUXEMBURG, ZWEIGNIEDERLASSUNG, ZUERICH. ZURICH

300 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS

SWITZERLAND RAIFFEISENBANK A.S. FRAGUE

UNITED BANK AG ZURICH ZURICH ZUERCHER KANTONALBANK ZURICH UBS AG ZURICH UBS AG (Head Office, Ad ZURICH UNION BANCAIRE PRIVEE, GENEVA ZURICH BANK OF AMERICA, N.A. TAIPEI TAIPEI BANK OF NOVA SCOTIA TAIPEI BANK OF TOKYO-MITSUBISHI LTD. TAIPEI CITIBANK N.A. TAIPEI CITIBANK TAIWAN LIMITED TAIPEI DBS BANK (TAIWAN) LTD TAIPEI HSBC BANK,THE TAIPEI HUA NAN COMMERCIAL BANK, LTD. TAIPEI JPMORGAN CHASE BANK, N.A. TAIPEI KBC BANK NV TAIPEI KBC BANK NV TAIPEI TAIWAN KRUNG THAI BANK PUBLIC COMPANY LIMITED TAIPEI LAND BANK OF TAIWAN TAIPEI MIZUHO CORPORATE BANK LTD TAIPEI MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. TAIPEI STANDARD CHARTERED BANK TAIPEI SUMITOMO MITSUI BANKING CO. TAIPEI SHANGHAI COMMERCIAL AND SAVINGS BANK, LTD., THE TAIPEI THE BANK OF NEW YORK MELLON, TAIPEI BRANCH TAIPEI TAISHIN INTERNATIONAL BANK TAIPEI THE HONGKONG AND SHANGHAI BANKING CORPORATION TAIPEI LTD. WELL FARGO BANK TAIPEI BANK OF TOKYO-MITSUBISHI LTD. BANGKOK MIZUHO CORPORATE BANK, LTD., (FORMERLY THE DAI-ICHI BANGKOK KANGYO BANK, LTD., BANGKOK BRANCH) CITIBANK N.A. BANGKOK EXPORT-IMPORT BANK-IMPO BANGKOK HSBC BANK,THE BANGKOK ISLAMIC BANK OF THAILAND BANGKOK THILAND CITIBANK N.A. BANGKOK MIZUHO BANK, LTD., BANGKOK BRANCH BANGKOK SUMITOMO MITSUI BANKING CO. BANGKOK THANACHART BANK PUBLIC COMPANY LIMITED BANGKOK KASIKORNBANK PUBLIC COMPANY LIMITED BANGKOK TMB BANK PUBLIC COMPANY LIMITED BANGKOK STANDARD CHARTERED BANK BANGKOK

TANZANIA CITIBANK TANZANIA LTD DAR ES SALAAM

TUNISIA BANQUE TUNISO-LIBYENNE TUNIS

TEKSTIL BANKASI A.S. ISTANBUL AKBANK T.A.S. ISTANBUL AKTIF YATIRIM BANKASI A.S. ISTANBUL CITIBANK N.A. ISTANBUL TURKEY ODEABANK A.S. ISTANBUL ICBC TURKEY BANK A.S. (FORMERLY TEKSTIL BANKASI A.S.) ISTANBUL TURKIYE HALK BANKASI A.S. (HEAD OFFICE) ANKARA TURKIYE CUMHURIYETI ZIRAAT BANKASI A.S. ISTANBUL TURK EKONOMI BANKASI A.S. ISTANBUL

Southeast Bank Limited 301 COUNTRIES NAME OF BANK CITY FLAGS AXIS BANK LIMITED, DIFC BRANCH (REGULATED BY DFSA) DUBAI ABU DHABI COMMERCIAL BANK ABU DHABI BANK OF TOKYO-MITSUBISHI UFJ, LTD., DUBAI BNP PARIBAS, ABU DHABI ABU DHABI BNP PARIBAS, DUBAI DUBAI CITIBANK N.A. DUBAI COMMERCIAL BANK OF DUBAI DUBAI DOHA BANK DUBAI DUBAI ISLAMIC BANK DUBAI EMIRATES NBD BANK PSC DUBAI CREDIT EUROPE BANK (DUBAI) LTD DUBAI UAE HABIB BANK AG ZURICH DUBAI HSBC BANK MIDDLE EAST DUBAI MASHREQ BANK PSC DUBAI NOOR ISLAMIC BANK DUBAI NATIONAL BANK OF UMM AL QAIWAIN PSC. DUBAI SMBC DUBAI DUBAI UNION NATIONAL BANK ABU DHABI UAE EXCHANGE CENTER ABU DHABI UNICREDIT S.P.A. ABU DHABI UNITED BANK LTD. DUBAI STANDARD CHARTERED BANK DUBAI NATIONAL BANK OF FUJAIRAH FUJAIRAH ABN AMRO BANK NV LONDON AKBANK NV LONDON BRANCH LONDON BANCA MONTE DEI PASCHI DI SIENA SPA - LONDON BRANCH LONDON BANQUE DE COMMERCE ET DE PLACEMENTS SA-DIFC BRANCH DUBAI BANCO POPOLARE LONDON BANK MANDIRI (EUROPE) LIMITED LONDON BANK MANDIRI (EUROPE) LTD. LONDON BANK NEGARA INDONESIA (PERSERO) P.T., LONDON BRANCH LONDON BANK OF AMERICA, N.A. LONDON LONDON BANK OF NOVA SCOTIA LONDON BANK OF NOVA SCOTIA LONDON BANK OF TOKYO-MITSUBISHI LTD. LONDON BNP PARIBAS FINANCE PLC LONDON BRITISH ARAB COMMERCIAL BANK PLC LONDON CITIBANK N.A. LONDON COMMERZBANK AG LONDON CREDIT AGRICOLE S.A. LONDON BRANCH LONDON DBS BANK LTD LONDON UK DANSKE BANK LONDON FORTIS BANK SA/NV LONDON GULF INTERNATIONAL BANK (UK) LIMITED LONDON HABIB BANK AG ZURICH LONDON HABIBSONS BANK LIMITED LONDON HABIB-UK PLC LONDON HSBC BANK PLC (RFB) LONDON ICICI BANK UK PLC LONDON ING BANK N.V., LONDON BRANCH LONDON ING BHF-BANK AKTIENGESELLS LONDON INTESABCI S.P.A LONDON JPMORGAN CHASE BANK, N.A. LONDON KBC BANK NV LONDON KEYBANK NATIONAL ASSOCIATION CLEVELAND,OH MASHREQ BANK PSC LONDON MIZUHO CORPORATE BANK LTD LONDON MALAYAN BANKING BERHAD LONDON NATIONAL BANK OF ABU DHABI LONDON NORDEA BANK FINLAND PLC LONDON BRANCH LONDON

302 Annual Report 2017 COUNTRIES NAME OF BANK CITY FLAGS NORTHERN BANK (PART OF DANSKE BANK GROUP) BELFAST QIB (UK) PLC LONDON SHINHAN BANK EUROPE GMBH LONDON SONALI BANK (UK) LTD LONDON STANDARD CHARTERED BANK LONDON UK SUISSE CREDIT CAPITAL (2009) LIMITED LONDON SUMITOMO MITSUI BANKING CO. LONDON UNITED NATIONAL BANK LONDON WELLS FARGO BANK, N.A. LONDON WELLS FARGO SECURITIES INTERNATIONAL LIMITED LONDON WOORI BANK, LONDON LONDON ABN AMRO BANK NV NEW YORK ATLANTIC BANK OF NEW YORK NEW YORK ABN AMRO CAPITAL USA LLC NEW YORK BANCA MONTE DEI PASCHI DI SIENA SPA - NEW YORK BANK OF AMERICA SAN FRANSISCO BANK OF AMERICA, N.A NEW YORK BANK OF AMERICA, N.A. NEW YORK BANK OF NEW YORK NEW YORK BANK OF THE WEST NEW YORK BANK OF NOVA SCOTIA NEW YORK BANK OF TOKYO-MITSUBISHI LTD. NEW YORK BANKERS TRUST COPANY NEW YORK BNP PARIBAS U.S.A - NEW YORK BRANCH NEW YORK CATHAY BANK ROSMEAD,CA CITIBANK N.A. NEW YORK CITY NATIONAL BANK LOS ANGELES COMERICA BANK DETROIT,MI CREDIT LYONNAIS NEW YORK EAST-WEST BANK PASADENA,CA FIRST TENNESSEE BANK N.A. MEMPHIS,TN FLEET NATIONAL BANK BOSTON,MA FRENCH AMERICAN BANKING CO NEW YORK HABIB AMERICAN BANK LTD NEW YORK HABIB BANK LIMITED NEW YORK USA HSBC BANK NEW YORK ICICI BANK LIMITED NEW YORK INTERNATIONAL FINANCE CORPORATION WASHINGTON INTESABCI S.P.A NEW YORK JPMORGAN BANK CHASE BANK NEW YORK KBC BANK NV NEW YORK KEB NY FINANCIAL CORP. NEW YORK KEYBANK NEW YORK MASHREQ BANK NEW YORK MERCHANTS BANK OF CALIFORINA CARSON,CA MIZUHO CORPORATE BANK LTD NEW YORK NATIONAL BANK OF PAKISTAN NEW YORK NATIONAL CITY BANK CLEVELA CELEVLAND NORDEA BANK FINLAND PLC, NEW YORK BRANCH NEW YORK SHINHAN BANK NEW YORK STERLING NATIONAL BANK NEW YORK STANDARD CHARTERED BANK NEW YORK SUMITOMO MITSUI BANKING CO. NEW YORK TD BANK, N.A. MOUNT LAUREL,NJ UNITED BANK LTD. NEW YORK U.S.BANK (FORMERLY FIRST BANK) MINNEAPOLIS WELLS FARGO BANK NEW YORK WOORI AMERICA BANK, NEW YORK NEW YORK WOORI BANK, LOS ANGELES LOS ANGELES WOORI BANK, NEW YORK NEW YORK

Southeast Bank Limited 303 COUNTRIES NAME OF BANK CITY FLAGS NATIONAL BANK FOR FOREIGN ECONOMIC ACTIVITY OF THE UZBEKISTAN TASHKENT REPUBLIC OF UZBEKISTAN

URUGUAY EXPRINTER (URUGUAY) S.A. MONTEVIDEO

PJSC 'CITIBANK' KIEV UKRAINE UNEX JOINT STOCK BANK KIEV DIAMANT BANK JOINT STOCK BANK KIEV ASIA COMMERCIAL BANK HO CHI MINH CITY CITIBANK N.A. HANOI BANK OF TOKYO MITSUBISHI HO CHI MINH CITY JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF HANOI VIETNAM HSBC BANK (VIETNAM) LTD. HO CHI MINH CITY JPMORGAN CHASE BANK HO CHI MINH CITY KOREA EXCHANGE BANK, HANOI BRANCH HANOI VIETNAM MIZUHO CORPORATE BANK LTD HANOI SHINHAN BANK HO CHI MINH CITY STANDARD CHARTERED BANK HANOI SUMITOMO MITSUI BANKING CO. HO CHI MINH CITY THE HONGKONG AND SHANGHAI BANKING CORPORATION HANOI LIMITED, HANOI BRANCH WOORI BANK, HANOI HANOI WOORIBANK HOCHIMINH HO CHI MINH CITY

304 Annual Report 2017 Filler

Southeast Bank Limited 305 Finance is the art of passing currency om hand to hand until it finally fr disappears Financial Statements

Independent Auditor's Report to the Shareholders 308 Consolidated Balance Sheet 310 Consolidated Profit and Loss Account 312 Consolidated Cash Flow Statement 313 Consolidated Statement of Changes in Equity 314 Balance Sheet 315 Profit and Loss Account 317 Cash Flow Statement 318 Statement of Changes in Equity 319 Notes to the Financial Statements 320 FINANCIAL STATEMENTS OF ISLAMIC BANKING BRANCHES Balance Sheet 384 Profit and Loss Account 385 Notes to the Financial Statements 386 FINANCIAL STATEMENTS OF OFF-SHORE BANKING Balance Sheet 393 Profit and Loss Account 395 Notes to the Financial Statements 396 FINANCIAL STATEMENTS OF SEBL SUBSIDIARIES Financial Statements of Southeast Bank Capital Services Ltd. 402 Financial Statements of Southeast Financial Services (UK) Ltd 416 Financial Statements of Southeast Financial Services (Australia) Pty Ltd 428 Financial Statements of Southeast Exchange Company (South Africa) Pty Ltd 434 Independent Auditor’s Report to the shareholders of Southeast Bank Limited

Report on the financial statements We have audited the accompanying 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 balance sheet and the separate balance sheet as at 31 December 2017, and the consolidated and separate profit and loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements and internal controls Management is responsible for the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting Standards as explained in note 2 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 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. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements of the Group and separate financial statements of the Bank are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and separate financial statements of the Bank. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and separate financial statements of the Bank, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of consolidated financial statements of the Group and separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and also separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2017, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 2.

308 Annual Report 2017 Report on other legal and regulatory requirements In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act 1991 and the rules and regulations issued by Bangladesh Bank, we also report the following: a) we have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b) 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 anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Control: i) internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in Notes 2.2 (i,ii, and iii) of the financial statements appeared to be materially adequate; and ii) 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 Bank and its related entities other than matters disclosed in these financial statements; c) financial statements of subsidiary companies of the Bank namely Southeast Bank Capital Services Limited has been audited by us, Southeast Financial Services (UK) Limited has been certified by Jahan & Co., Chartered Management Accountants, and Southeast Exchange Company (South Africa) Pty Limited has been certified by G.L. Palmer and Company, Chartered Accountants (SA) but the financial statement of Southeast Financial Services (Australia) Pty has not been certified by any professional accountant of the concerned Country. These accounts have been properly reflected in the consolidated financial statements; d) in our opinion, proper books of account as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books; e) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet and separate profit and loss account of the Bank dealt with by the report are in agreement with the books of account; f) the expenditure incurred was for the purposes of the Bank’s business; g) 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 with related guidance issued by Bangladesh Bank; h) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery; i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; j) the information and explanation required by us have been received and found satisfactory; k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 7,200 person hours for the audit of the books and accounts of the Bank; and Other matter The consolidated financial statements of the Group and also separate financial statements of the Bank as at and for the year ended 31 December 2016 were audited by another auditor who expressed an unmodified opinion on those statements on 08 April 2017.

Dhaka Pinaki & Company Date: 28 April 2018 Chartered Accountants

Southeast Bank Limited 309 Southeast Bank Limited and its subsidiaries Consolidated Balance Sheet As at 31 December 2017

2017 2016 Note Taka Taka

PROPERTY AND ASSETS Cash 4 In hand (including foreign currencies) 3,010,982,975 2,432,620,307 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 17,968,153,354 15,402,827,761 20,979,136,329 17,835,448,068 Balance with other banks and financial institutions 5 In Bangladesh 3,196,881,943 2,860,092,475 Outside Bangladesh 1,082,725,811 1,185,128,939 4,279,607,754 4,045,221,414 Money at call and on short notice 7 3,643,950,000 4,271,344,100 Investments 8 Government 50,204,799,973 54,299,803,894 Others 12,706,244,499 7,431,830,566 62,911,044,472 61,731,634,460 Loans and advances/investments 10 Loans, cash credit, overdrafts etc./investments 223,657,502,019 182,661,818,983 Bills purchased and discounted 10,659,214,310 9,203,770,254 234,316,716,329 191,865,589,237 Fixed assets including premises, furniture and fixtures 12 9,321,796,126 8,947,162,556 Other assets 14 3,835,803,180 3,101,610,244 Non-banking assets - - Total assets 339,288,054,190 291,798,010,079 LIABILITIES AND CAPITAL

Liabilities Borrowings from other banks, financial institutions and agents 16 Subordinated bond 7,400,000,000 8,000,000,000 Other borrowings 10,181,648,728 7,371,635,082 17,581,648,728 15,371,635,082 Deposits and other accounts 18 Current/Al-wadeeah current accounts and other accounts 35,511,525,367 30,285,059,627 Bills payable 4,933,769,345 6,548,856,941 Savings bank/Mudaraba savings bank deposits 23,896,582,534 19,700,582,409 Fixed deposits/Mudaraba fixed deposits 205,486,197,802 173,438,929,873 269,828,075,048 229,973,428,850 Other liabilities 20 26,044,632,850 19,919,384,323 Total liabilities 313,454,356,626 265,264,448,255

Capital/shareholders' equity Paid up capital 22.2 9,169,501,760 9,169,501,760 Statutory reserve 23 9,170,000,000 9,170,000,000 Revaluation reserve 24 4,534,239,054 4,763,888,676 Other reserve 25 247,650,000 247,650,000 Foreign currency translation reserve 26 (14,142,765) (24,449,246) Retained earnings 27 2,716,398,712 3,196,967,474 Total shareholders' equity 25,823,646,761 26,523,558,664 Non-controlling interest 29 10,050,803 10,003,160 Total liabilities and shareholders' equity 339,288,054,190 291,798,010,079

310 Annual Report 2017 Southeast Bank Limited and its subsidiaries Consolidated Balance Sheet As at 31 December 2017

2017 2016 Note Taka Taka

OFF-BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements 30.1 57,138,532,985 43,813,553,641 Letters of guarantee 30.2 15,924,963,164 15,154,116,600 Irrevocable letters of credit 30.3 44,195,137,436 32,881,303,677 Bills for collection 30.4 22,666,586,856 17,830,304,866 Other contingent liabilities 30.5 1,744,473,000 1,474,684,000 Total contingent liabilities 141,669,693,441 111,153,962,784

Other commitments Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed 827,101,200 2,756,664,000 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total other commitments 827,101,200 2,756,664,000 Total off-balance sheet items including contingent liabilities 142,496,794,641 113,910,626,784

The annexed notes 1 to 69 form an integral part of these financial statements.

Chairman Director Director Managing Director

Signed in terms of our separate report of even date

Dhaka, Date: 28 April 2018 Pinaki & Company Chartered Accountants

Southeast Bank Limited 311 Southeast Bank Limited and its subsidiaries Consolidated Profit and Loss Account for the year ended 31 December 2017

2017 2016 Note Taka Taka

Interest income/profit on investments 32 17,400,550,075 16,972,326,566 Interest paid/profit shared on deposits and borrowings etc. 34 (13,372,859,997) (12,765,116,463) Net interest income/net profit on investments 4,027,690,078 4,207,210,103 Investment income 36 5,570,648,397 5,079,606,748 Commission, exchange and brokerage 38 3,462,929,452 2,903,034,957 Other operating income 40 871,775,465 662,602,892 9,905,353,314 8,645,244,597 Total operating income (A) 13,933,043,392 12,852,454,700 Salaries and allowances 42 1,843,964,027 1,741,464,516 Rent, taxes, insurance, electricity, etc. 44 899,480,711 801,036,278 Legal expenses 1,832,217 599,813 Postage, stamp, telecommunication, etc. 46 176,224,992 166,450,976 Stationery, printing, advertisements, etc. 48 149,545,742 132,234,398 Managing Director's salary and fees 50 10,037,423 11,975,000 Directors' fees 51 3,785,203 2,912,276 Auditors' fees 53 1,906,893 1,599,917 Depreciation and repair 54 455,388,535 403,602,733 Other expenses 56 1,328,579,051 1,087,356,457 Total operating expenses (B) 4,870,744,794 4,349,232,364 Profit before provision (C=A-B) 9,062,298,598 8,503,222,336 Provision for loans and advances/investments 21.1 General provision 1,010,610,024 890,000,000 Specific provision 3,781,324,521 2,360,990,098 4,791,934,545 3,250,990,098 Provision for diminution in value of investments 58 (217,213,998) (403,600,751) Other provisions 21.5 305,500,000 365,235,000 Total provision (D) 4,880,220,547 3,212,624,347 Total profit before taxation (E=C-D) 4,182,078,051 5,290,597,989 Provision for taxation 60 Current 2,863,298,938 2,790,553,126 Deferred 150,150,332 64,971,265 3,013,449,270 2,855,524,391 Net profit after taxation 1,168,628,781 2,435,073,598 Net profit after taxation attributable to: Equity holders' of the Bank 1,168,581,138 2,434,965,442 Non-controlling interest 47,643 108,156 Net profit after taxation 1,168,628,781 2,435,073,598 Appropriations Statutory reserve 23 - 272,692,095 - 272,692,095 Retained surplus during the year 1,168,628,781 2,162,381,503

Earnings per share (par value Taka 10) 66 1.27 2.66 The annexed notes 1 to 69 form an integral part of these financial statements.

Chairman Director Director Managing Director Signed in terms of our separate report of even date

Dhaka, Date: 28 April 2018 Pinaki & Company Chartered Accountants

312 Annual Report 2017 Southeast Bank Limited and its subsidiaries Consolidated Cash Flow Statement for the year ended 31 December 2017

2017 2016 Note Taka Taka A. Cash flows from operating activities: Interest receipts in cash 22,799,565,274 21,465,956,048 Interest payments (13,037,924,621) (13,436,169,366) Dividend receipts 246,591,937 206,501,017 Fees and commission receipts in cash 38 3,462,929,452 2,903,034,957 Recoveries on loans previously written-off 154,213,601 72,709,902 Cash payments to employees (1,854,001,450) (1,753,439,516) Cash payments to suppliers (149,511,264) (680,680,071) Income taxes paid (2,647,358,679) (1,857,082,933) Receipts from other operating activities 62 871,775,465 658,098,860 Payments for other operating activities 64 (2,345,344,075) (2,171,105,188) Operating profit before changes in operating assets and liabilities (i) 7,500,935,640 5,407,823,710 Increase (decrease) in operating assets and liabilities Sale of trading securities 4,714,880,794 1,890,405,541 Purchase of trading securities (9,868,562,519) (3,044,094,011) Loans and advances to customers (43,819,951,511) (24,196,787,280) Other assets (742,818,232) 2,181,098,442 Deposits from other banks 2,210,013,646 7,814,715,230 Deposits from customers 39,519,710,822 20,213,388,624 Other liabilities 2,200,804,534 1,261,627,976 Cash generated from (used in) operating assets and liabilities (ii) (5,785,922,466) 6,120,354,522 Net cash from operating activities (A=i+ii) 1,715,013,174 11,528,178,232 B. Cash flows from investing activities:

Proceeds from sale of securities 85,715,949,901 53,629,810,359 Payments for purchase of securities (83,124,735,925) (56,304,115,364) Purchase of fixed assets (719,836,645) (1,359,221,862) Sale of fixed assets 7,842,971 5,141,124 Net cash used in investing activities (B) 1,879,220,302 (4,028,385,743) C. Cash flows from financing activities: Dividends paid (1,833,900,352) (1,375,425,264) Payment against lease obligation (8,204,713) (8,388,117) Net cash used in financing activities (C) (1,842,105,065) (1,383,813,381) D. Net increase (decrease) in cash and cash equivalents (A+B+C) 1,752,128,411 6,115,979,108 E. Effects of exchange rate changes on cash and cash equivalents 6,919,829 25,257,242 F. Cash and cash equivalents at beginning of the period 27,147,986,883 21,006,750,533 G. Cash and cash equivalents at end of the period (D+E+F) 28,907,035,123 27,147,986,883 Cash and cash equivalents at end of the period represents Cash in hand (including foreign currencies) 4 3,010,982,975 2,432,620,307 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 4 17,968,153,354 15,402,827,761 Balance with other banks and financial institutions 5 4,279,607,754 4,045,221,414 Money at call and on short notice 7 3,643,950,000 4,271,344,100 Treasury bills 9.1.1 - 991,930,001 Prize bond 9.1.1 4,341,040 4,043,300 28,907,035,123 27,147,986,883

Southeast Bank Limited 313 - - - Taka Taka 28,150,591 166,906,342 (201,499,031) (229,649,622) Total equity Total 1,168,628,781 of the Group of the Group 26,700,468,166 26,533,561,824 (1,833,900,352) 25,833,697,564 26,533,561,824 ------47,643 Taka Non- interest controlling controlling 10,050,803 10,003,160 10,003,160 10,003,160 - - - Taka Total 28,150,591 166,906,342 (201,499,031) (229,649,622) 1,168,581,138 26,690,465,006 26,523,558,664 (1,833,900,352) 25,823,646,761 26,523,558,664 - - - - Taka 17,844,110 17,844,110 earnings Retained 166,906,342 3,363,873,816 3,196,967,474 2,716,398,712 3,196,967,474 1,168,581,138 (1,833,900,352) ------Taka Taka reserve 10,306,481 10,306,481 Translation Translation (14,142,765) (24,449,246) (24,449,246) (24,449,246) ------Taka Other reserves 247,650,000 247,650,000 247,650,000 247,650,000 ------Taka reserve Revaluation (229,649,622) (229,649,622) 4,534,239,054 4,763,888,676 4,763,888,676 4,763,888,676 ------Taka reserve Statutory 9,170,000,000 9,170,000,000 9,170,000,000 9,170,000,000 ------Taka capital Paid up 9,169,501,760 9,169,501,760 9,169,501,760 9,169,501,760 Particulars Changes in accounting policy/ Prior year adjustments revaluation of properties Surplus/deficit on account of revaluation of investments Surplus/deficit on account of Balance as at 31 December 2017 Balance as at 31 December 2016 Appropriation made during the year Appropriation Statutory reserve Issue of share capital/ Bonus share Issue of share Cash dividend Net profit for the year Net profit Net gains and losses not recognized in Net gains and losses not recognized the income statement Currency translation differences Currency Restated balance Balance as at 1 January 2017 Southeast Bank Limited and its subsidiaries Consolidated Statement of Changes in Equity for the year ended 31 December 2017

314 Annual Report 2017 Southeast Bank Limited Balance Sheet As at 31 December 2017

2017 2016 Note Taka Taka PROPERTY AND ASSETS Cash 4.1 In hand (including foreign currencies) 3,010,980,173 2,428,412,898 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 17,968,153,354 15,402,827,761 20,979,133,527 17,831,240,659 Balance with other banks and financial institutions 6 In Bangladesh 3,196,881,943 2,860,092,475 Outside Bangladesh 965,226,853 1,118,618,354 4,162,108,796 3,978,710,829 Money at call and on short notice 7 3,643,950,000 4,271,344,100 Investments 9 Government 50,204,799,973 54,299,803,894 Others 10,118,368,557 5,155,205,613 60,323,168,530 59,455,009,507 Loans and advances/investments 11 Loans, cash credit, overdrafts etc./investments 221,191,785,619 180,161,187,214 Bills purchased and discounted 10,659,214,310 9,203,770,254 231,850,999,929 189,364,957,468 Fixed assets including premises, furniture and fixtures 13 8,708,569,268 8,613,686,700 Other assets 15 9,241,315,075 8,478,052,796 Non - banking assets - - Total assets 338,909,245,125 291,993,002,059 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 17 Subordinated bond 7,400,000,000 8,000,000,000 Other borrowings 10,181,648,728 7,363,947,263 17,581,648,728 15,363,947,263 Deposits and other accounts 19 Current/Al-wadeeah current accounts and other accounts 35,516,538,988 30,845,332,890 Bills payable 4,933,769,345 6,548,856,941 Savings bank/Mudaraba savings bank deposits 23,896,582,534 19,700,582,409 Fixed deposits/Mudaraba fixed deposits 205,486,197,802 173,438,929,873 269,833,088,669 230,533,702,113 Other liabilities 21 25,732,763,716 19,572,488,052 Total liabilities 313,147,501,113 265,470,137,428 Capital/shareholders' equity Paid up capital 22.2 9,169,501,760 9,169,501,760 Statutory reserve 23 9,170,000,000 9,170,000,000 Revaluation reserve 24 4,534,239,054 4,763,888,676 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,640,353,198 3,171,824,195 Total shareholders' equity 25,761,744,012 26,522,864,631 Total liabilities and shareholders' equity 338,909,245,125 291,993,002,059

Southeast Bank Limited 315 Southeast Bank Limited Balance Sheet As at 31 December 2017

2017 2016 Note Taka Taka OFF-BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements 30.1 57,138,532,985 43,813,553,641 Letters of guarantee 30.2 15,924,963,164 15,154,116,600 Irrevocable letters of credit 30.3 44,195,137,436 32,881,303,677 Bills for collection 30.4 22,666,586,856 17,830,304,866 Other contingent liabilities 30.5 1,744,473,000 1,474,684,000 Total contingent liabilities 141,669,693,441 111,153,962,784 Other commitments Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed 827,101,200 2,756,664,000 Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total other commitments 827,101,200 2,756,664,000 Total off-balance sheet items including contingent liabilities 142,496,794,641 113,910,626,784 The annexed notes 1 to 69 form an integral part of these financial statements.

Chairman Director Director Managing Director

Signed in terms of our separate report of even date

Dhaka, Date: 28 April 2018 Pinaki & Company Chartered Accountants

316 Annual Report 2017 Southeast Bank Limited Profit and Loss Account for the year ended 31 December 2017

2017 2016 Note Taka Taka Interest income/profit on investments 33 17,384,904,816 16,988,878,395 Interest paid/profit shared on deposits and borrowings etc. 35 (13,378,247,565) (12,785,664,559) Net interest income/net profit on investments 4,006,657,251 4,203,213,836 Investment income 37 5,485,830,524 5,014,416,110 Commission, exchange and brokerage 39 3,360,679,342 2,847,697,916 Other operating income 41 821,156,590 630,611,620 9,667,666,456 8,492,725,646 Total operating income (A) 13,674,323,707 12,695,939,482 Salaries and allowances 43 1,816,652,566 1,720,787,663 Rent, taxes, insurance, electricity, etc. 45 885,118,407 781,507,962 Legal expenses 1,553,137 583,977 Postage, stamp, telecommunication, etc. 47 175,303,570 165,740,473 Stationery, printing, advertisements, etc. 49 147,315,550 130,657,839 Managing Director's salary and fees 50 10,037,423 11,975,000 Directors' fees 52 3,575,203 2,697,276 Auditors' fees 1,345,000 1,000,000 Depreciation and repair of bank's assets 55 396,062,258 372,736,739 Other expenses 57 1,298,231,511 1,010,435,457 Total operating expenses (B) 4,735,194,625 4,198,122,386 Profit before provision (C=A-B) 8,939,129,082 8,497,817,096 Provision for loans and advances/investments 21.1 General provision 1,010,610,024 890,000,000 Specific provision 3,781,324,521 2,360,990,098 4,791,934,545 3,250,990,098 Provision for diminution in value of investments 59 (256,602,166) (364,779,225) Other provisions 21.5 305,500,000 365,235,000 Total provision (D) 4,840,832,379 3,251,445,873 Total profit before taxation (C-D) 4,098,296,703 5,246,371,223 Provision for taxation 61 Current 2,830,000,000 2,765,000,000 Deferred 150,000,000 65,000,000 2,980,000,000 2,830,000,000 Net profit after taxation 1,118,296,703 2,416,371,223 Appropriations Statutory reserve 23 - 272,692,095 - 272,692,095 Retained surplus during the year 1,118,296,703 2,143,679,128 Earnings per share (par value Taka 10) 67 1.22 2.64

The annexed notes 1 to 69 form an integral part of these financial statements.

Chairman Director Director Managing Director

Signed in terms of our separate report of even date

Dhaka, Date: 28 April 2018 Pinaki & Company Chartered Accountants

Southeast Bank Limited 317 Southeast Bank Limited Cash Flow Statement for the year ended 31 December 2017

2017 2016 Note Taka Taka

A. Cash flows from operating activities: Interest receipts in cash 22,783,920,015 21,482,507,877 Interest payment (13,026,594,645) (13,377,940,965) Dividend receipts 194,053,603 171,780,691 Fees and commission receipts in cash 39 3,360,679,342 2,847,697,916 Recoveries on Loans previously written-off 154,213,601 72,709,902 Cash payments to employees (1,826,689,989) (1,732,762,663) Cash payments to suppliers (147,281,073) (679,103,512) Income taxes paid (2,630,312,076) (1,847,199,924) Receipts from other operating activities 63 821,156,590 626,107,588 Payments for other operating activities 65 (2,310,221,404) (2,134,111,013) Operating profit before changes in operating assets and liabilities (i) 7,372,923,964 5,429,685,897

Increase (decrease) in operating assets and liabilities Sale of trading securities 2,438,255,841 1,717,610,078 Purchase of trading securities (7,280,686,489) (2,542,420,203) Loans and advances to customers (43,854,866,880) (21,195,755,345) Other assets (771,957,502) (1,971,677,448) Deposits from other banks 2,217,701,465 7,844,166,839 Deposits from customers 38,964,451,180 20,768,980,312 Other liabilities 2,247,638,030 1,256,507,386 Cash generated from (used in) operating assets and liabilities (ii) (6,039,464,355) 5,877,411,619 Net cash from operating activities (A=i+ii) 1,333,459,609 11,307,097,516 B. Cash flows from investing activities: Proceeds from sale of securities 85,715,949,901 53,629,810,359 Payments for purchase of securities (83,124,735,925) (56,304,115,364) Purchase of fixed assets (395,373,327) (1,129,882,695) Sale of fixed assets 7,842,971 4,942,879 Net cash used in investing activities (B) 2,203,683,620 (3,799,244,821) C. Cash flows from financing activities: Dividends paid (1,833,900,352) (1,375,425,264) Payment against lease obligation (8,204,713) (8,388,117) Net cash used in financing activities (C) (1,842,105,065) (1,383,813,381) D. Net increase (decrease) in cash and cash equivalents (A+B+C) 1,695,038,164 6,124,039,314 E. Effects of exchange rate changes on cash and cash equivalents 17,226,310 807,996 F. Cash and cash equivalents at beginning of the period 27,077,268,889 20,952,421,579 G. Cash and cash equivalents at end of the period (D+E+F) 28,789,533,363 27,077,268,889

Cash and cash equivalents at end of the period represents Cash in hand (including foreign currencies) 4.1 3,010,980,173 2,428,412,898 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 4.1 17,968,153,354 15,402,827,761 Balance with other banks and financial institutions 6 4,162,108,796 3,978,710,829 Money at call and on short notice 7 3,643,950,000 4,271,344,100 Treasury bills 9.1.1 - 991,930,001 Prize bond 9.1.1 4,341,040 4,043,300 28,789,533,363 27,077,268,889

318 Annual Report 2017 - - - 17,226,310 Taka Taka Total Total 166,906,342 (229,649,622) (212,423,312) 1,118,296,703 (1,833,900,352) 26,522,864,631 26,689,770,973 25,761,744,012 26,522,864,631 - - - - 17,226,310 Taka Taka 17,226,310 earnings 166,906,342 Retained 1,118,296,703 3,171,824,195 3,338,730,537 2,640,353,198 3,171,824,195 (1,833,900,352) ------Taka Taka Other reserves 247,650,000 247,650,000 247,650,000 247,650,000 ------Taka Taka reserve 4,763,888,676 4,763,888,676 4,534,239,054 4,763,888,676 (229,649,622) Revaluation (229,649,622) ------Taka Taka reserve Statutory 9,170,000,000 9,170,000,000 9,170,000,000 9,170,000,000 ------Taka Taka 9,169,501,760 9,169,501,760 9,169,501,760 9,169,501,760 Paid up capital Particulars Balance as at 1 January 2017 Changes in accounting policy/ prior year adjustments Restated balance Surplus/deficit on account of revaluation of properties Surplus/deficit on account of Currency translation differences Currency Surplus/deficit on account of revaluation of investments Surplus/deficit on account of Net gains and losses not recognized in the income statement Net gains and losses not recognized Net profit for the year Net profit Cash dividend Issue of share capital/ Bonus share Issue of share Appropriation made during the year Appropriation Statutory reserve Balance as at 31 December 2017 Balance as at 31 December 2016 Southeast Bank Limited Statement of Changes in Equity for the year ended 31 December 2017

Southeast Bank Limited 319 Southeast Bank Limited and its Subsidiaries Notes to the Financial Statements as at and for the year ended 31 December 2017

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 2017 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 132 (2016:128) branches, with no overseas branch as on 31 December 2017. Out of 132 branches 5 (2016:5) branches of Islamic banking, the rest 127 (2016:123) branches run on commercial conventional basis, of which 15 (2016:15) 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 up to 2013), BFRSs 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 (2016: 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 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.

320 Annual Report 2017 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 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 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. 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 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 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 up to 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, 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 2017 have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRSs) and 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. In case any requirement of the Bank Companies Act, 1991 and provisions and circulars issued by BB differ with those of BFRSs, the requirements of the Bank Companies Act, 1991 and provisions and circulars issued by BB shall prevail. Material departures from the requirements of BFRSs are as follows: i) Investment in shares and Securities BFRS: As per requirements of BAS 39 investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year-end is taken to profit and loss account or revaluation reserve 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.

Southeast Bank Limited 321 ii) Revaluation gain (loss) on Government securities BFRS: As per requirement of BAS 39 where securities; i.e. T-Bills and T-Bonds will fall under the category of Held for Trading (HFT), any change in the fair value of HFT assets is recognized through profit and loss account. Securities; i.e. T-bills designated as Held to Maturity (HTM) are measured at amortized cost method and interest income is recognized through the profit and loss account. 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 BFRS: As per BAS 39 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis. Bangladesh Bank: As per 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 BAS 39. 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 BFRS: Loans and advances to customers are generally classified as ‘loans and receivables’ as per BAS 39 and interest income is recognized through effective interest rate method over the term of the loan. Once a loan is impaired, interest income is recognized in profit and loss account on the same basis based on revised carrying amount. 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 BFRS: As per BAS 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 categorize, recognize, measure and present financial instruments differently from those prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the accounts. vii) Repo transactions BFRS: 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.

322 Annual Report 2017 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 BFRS: As per BAS 39, 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 terms 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 present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are 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 BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 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. x) Non-banking assets BFRS: No indication of non-banking asset is found in any BFRS. Bangladesh Bank: As per BRPD 14, there must exist a face item named non-banking assets. xi) Cash flow statement BFRS: 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) BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7. Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents. xiii) Presentation of intangible asset BFRS: Intangible asset must be identified and recognized, and the disclosure must be given as per BAS 38. Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD 14. xiv) Off-balance sheet items BFRS: There is no concept of off-balance sheet items in any BFRS; 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 BFRS: 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 BFRS: Loans and advances should be presented net of provisions. 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.

Southeast Bank Limited 323 xvii) Recovery of written off loans BFRS: As per BAS 1, an entity shall not offset assets and liabilities or income and expenses, unless required or permitted by any BFRS. Again recovery of written off loans should be charged to profit & loss account as per BAS 18. 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 BFRSs) 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. 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 risk 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, every 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. Reports on Risk Management (RRM) 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 RRM. 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 the all levels are correct.

324 Annual Report 2017 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 2017, 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 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 BFRSs 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 2018 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

Southeast Bank Limited 325 2.6 Reporting period These financial statements cover one calendar year from 1 January 2017 to 31 December 2017. 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. 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 Significant accounting policies 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.

326 Annual Report 2017 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 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 cost Prize Bonds At cost At cost or net book value of the last audited balance sheet Unquoted shares 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.

Southeast Bank Limited 327 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. The rates of provision for different classifications are given below:

Particulars Rate General 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 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-Credits All credits except 'Bad/Loss' 1%-5% (i.e. Doubtful, Substandard, irregular and regular credit) 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. Details are shown in notes 10 and 11. 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. 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.

328 Annual Report 2017 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 depreciation Land Nil Buildings 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 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.

Southeast Bank Limited 329 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 BAS 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. 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.

330 Annual Report 2017 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 BAS-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. 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, 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.

Southeast Bank Limited 331 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. 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. Details are shown in notes 66 and 67.

332 Annual Report 2017 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 In the context of Banking and Finance ‘Risk’ has always been at the heart of banking. As a consequence, it has become more important for banks to manage effectively the various types of risk they confront, including market, credit, liquidity, operations, and information technology risk. 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 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 counterparts; the treasury back office is engaged in transfer of funds and passing of the transaction entries in the books of accounts, and the mid office is responsible for verification of the deals. All foreign exchange transactions 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.

Southeast Bank Limited 333 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. 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 132 Branches across the country. The Bank is offering 24/7 banking services through its different delivery channels, like Internet Banking, ATM and Mobile Financial Service (MFS). For customer convenience, the Bank is collecting utility bills of DPDC, DESCO, WASA, Titas Gas, BTCL, PDB and Student Tuition Fees of North-South, BRAC and Asia Pacific Universities through its country wide Branch network and Internet Banking channel. Hardware and Software Token based “Two Factor Authentication System (2-FA)” is in place for doing inter-bank fund transfer and to pay utility bills/ student tuition fees through Internet Banking system. 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. Data synchronization between DC (Data Center) and DRS (Disaster Recovery Site) are established through fiber optic cables to ensure availability of data / information. The Bank took further steps to improve its internal policies and processes and strengthen network security to protect information assets from cyber threats. As such, Bank’s ICT Security Policy was further revised including ICT Risk Management Policy. Gradual implementation of the different policies is going on. Network segregation of the SWIFT payment channel from the local area network (LAN) was done to restrict un-authorized users from accessing SWIFT server, other than SWIFT users. Several awareness sessions on ICT Security and Riskware conducted for the employees of the Bank to minimize ICT related risks in banking operation.

334 Annual Report 2017 3.20.7 Environmental Risk Management (ERM) Environmental Risk is a facilitating element of credit risk arising from environmental issues and applicable across all financing transactions undertaken by the Bank. The responsibilities of Credit Risk Management functions are: i) to be aware of environmental issues confronting the various sectors, ii) to review the completed due-diligence checklist and the environmental risk rating, iii) to integrate environmental risk considerations into the credit risk assessment and iv) to specify financing conditions/covenants , if any, are required. Environmental risk is assessed by Environmental Due Diligence (EDD) Checklists. It is a set of questionnaire provided by Bangladesh Bank. There are eleven checklists, one for general purpose and ten others for ten specific sectors for environmental risk rating. For a specific sector both General EDD and Specific EDD checklists are applicable and for other than these specific sectors only General EDD checklist is applicable to determine the environmental risk rating (EnvRR). The EnvRR can be High, Moderate or Low depending on the borrower’s business activity and the vulnerability of the location of the business activity. 3.21 Compliance of Bangladesh Financial Reporting Standards (BFRSs)

Name of the standards Ref. Status First-time Adoption of Bangladesh Financial Reporting Standards BFRS-1 Not applicable Share-based Payment BFRS-2 Not applicable Business Combinations BFRS-3 Applied Insurance Contracts BFRS-4 Not applicable Non-current Assets Held for Sale and Discontinued Operations BFRS-5 Not applicable Exploration for and Evaluation of Mineral Resources BFRS-6 Not applicable Financial Instruments: Disclosures BFRS-7 * Applied Operating Segments BFRS-8 ** Applied Consolidated Financial Statements BFRS-10 Applied Joint Arrangements BFRS-11 Not applicable Disclosure of Interests in other Entities BFRS-12 Applied Fair Value Measurement BFRS-13 * Applied Regulatory Deferral Accounts BFRS-14 Not applicable Presentation of Financial Statements BAS-1 * Applied Inventories BAS-2 Not Applicable Statement of Cash Flows BAS-7 * Applied Accounting Policies, Changes in Accounting Estimates and Errors BAS-8 Applied Events after the Reporting Period BAS-10 Applied Construction Contracts BAS-11 Not Applicable Income Taxes BAS-12 Applied Property, Plant and Equipment BAS-16 Applied Leases BAS-17 Applied Revenue BAS-18 Applied Employee Benefits BAS-19 Applied Accounting for Government Grants and Disclosure of Government Assistance BAS-20 Not Applicable The Effects of Changes in Foreign Exchange Rates BAS-21 Applied Borrowing Costs BAS-23 Applied Related Party Disclosures BAS-24 Applied Accounting and Reporting by Retirement Benefit Plans BAS-26 Not Applicable Separate Financial Statements BAS-27 Applied Investments in Associates BAS-28 Not Applicable Interests in Joint Ventures BAS-31 Not Applicable Financial Instruments: Presentation BAS-32 * Applied Earnings per Share BAS-33 Applied Interim Financial Reporting BAS-34 Applied Impairment of Assets BAS-36 Applied Provisions, Contingent Liabilities and Contingent Assets BAS-37 * Applied Intangible Assets BAS-38 * Applied Financial Instruments: Recognition and Measurement BAS-39 * Applied Investment property BAS-40 Not Applicable Agriculture BAS-41 Not Applicable * Subject to departure described in note 2.1 ** Subject to departure described in note 3.25

Southeast Bank Limited 335 New standards: The Institute of Chartered Accountants of Bangladesh (ICAB) has adopted following new standards during the year 2015- 2016. All previously adopted reporting standards are consistently applied by the Bank to the extent relevant for the Bank.

Possible impact on financial New standards Summary of the requirements statements BFRS 9 Financial BFRS 9 replaces the existing guidance in BAS 39 Financial The Bank is assessing the Instruments Instruments: Recognition and Measurement. BFRS 9 includes potential impact on its financial revised guidance on the classification and measurement ofstatements resulting from the financial instruments, a new expected credit loss model for application of BFRS 9. calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. BFRS 15 Revenue BFRS 15 establishes a comprehensive framework for The Bank is assessing the from Contracts determining whether, how much and when revenue is potential impact on its financial with Customers recognised. It replaces existing revenue recognition guidance, statements resulting from the including BAS 18 Revenue, BAS 11 Construction Contracts application of BFRS 15. and BFRIC 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. 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 2016.

Particulars Date of Rating Long term Short term AA ST-2 Surveillance Rating Double A 5-Jun-17 (High Grade) (High quality and High Safety) Outlook Stable 3.23 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 BFRSs, 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 BFRS 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 28 April 2018. 3.28 General Figures of previous year have been rearranged, whenever necessary, to conform the current year’s presentation.

336 Annual Report 2017 2017 2016 Note Taka Taka 4 Consolidated cash In hand (including foreign currencies): Southeast Bank Limited 4.1 3,010,980,173 2,428,412,898 Southeast Exchange Company (South Africa) Pty Ltd 1,202 4,164,053 Southeast Financial Services (Australia) Pty Ltd 1,600 43,356 3,010,982,975 2,432,620,307 Balance with Bangladesh Bank and its agent banks (including foreign currencies): Southeast Bank Limited 4.1 17,968,153,354 15,402,827,761 20,979,136,329 17,835,448,068 4.1 Cash In hand: Local currency 2,949,626,994 2,381,811,031 Foreign currencies 61,353,179 46,601,867 3,010,980,173 2,428,412,898 Balance with Bangladesh Bank: Local currency 17,265,232,466 14,733,980,769 Foreign currencies 385,289,801 378,978,102 17,650,522,267 15,112,958,871 Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency 317,631,087 289,868,890 Balance with Bangladesh Bank and its agent banks 17,968,153,354 15,402,827,761 (including foreign currencies) 20,979,133,527 17,831,240,659 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. The statutory Cash Reserve Ratio on the Bank's demand and time liabilities at the rate of minimum 6.0% on daily basis and 6.50% 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 Banking 6.50% of average Demand and Time Liabilities: Required reserve (Average daily on bi-weekly basis) 15,168,896,737 14,028,676,662 Actual reserve held 15,784,414,510 14,188,314,690 Surplus 615,517,773 159,638,028 b) Cash Reserve Ratio (CRR) for Islamic Banking 6.50% of average Demand and Time Liabilities: Required reserve (Average daily on bi-weekly basis) 819,034,223 815,652,913 Actual reserve held 885,851,119 870,294,183 Surplus 66,816,896 54,641,270 4.2.2 a) Statutory Liquidity Ratio (SLR) for Conventional Banking Required reserve (13% of average Demand and Time Liabilities) 30,337,793,473 28,057,353,324 Actual reserve held 53,330,118,813 56,373,180,749 Surplus 22,992,325,340 28,315,827,425 Held for Statutory Liquidity Ratio of Conventional Banking: Cash in hand 2,844,590,000 2,289,521,421 Balance with agent bank (Sonali Bank Limited) as per statement 315,211,000 274,217,000 Excess cash reserve 615,517,773 159,638,028 Government Securities (HFT) 16,167,101,000 21,205,497,000 Government Securities (HTM) 33,383,358,000 32,440,264,000 Other eligible securities/ Prize Bond 4,341,040 4,043,300 53,330,118,813 56,373,180,749

Southeast Bank Limited 337 2017 2016 Note Taka Taka b) Statutory Liquidity Ratio (SLR) for Islamic Banking Required reserve (5.50 % of average Demand and Time Liabilities) 693,028,958 690,167,850 Actual reserve held 883,920,896 859,075,747 Surplus 190,891,938 168,907,897 Held for Statutory Liquidity Ratio of Islamic Banking: Cash in hand 166,396,000 138,891,477 Balance with agent bank (Sonali Bank Limited) as per statement 708,000 15,543,000 Excess cash reserve 66,816,896 54,641,270 Government Securities (HTM) 650,000,000 650,000,000 883,920,896 859,075,747 5 Consolidated balance with other banks and financial institutions In Bangladesh: Southeast Bank Limited 6 3,196,881,943 2,860,092,475 Southeast Bank Capital Services Limited 32,538,042 581,276,914 3,229,419,985 3,441,369,389 Less: Inter company balance eliminated 32,538,042 581,276,914 3,196,881,943 2,860,092,475 Outside Bangladesh: Southeast Bank Limited 6 965,226,853 1,118,618,354 Southeast Financial Services (UK) Ltd 10,861,425 2,542,480 Southeast Financial Services (Australia) Pty Ltd 7,578 177,967 Southeast Exchange Company (South Africa) Pty Ltd 106,629,955 63,790,138 1,082,725,811 1,185,128,939 4,279,607,754 4,045,221,414 6 Balance with other banks and financial institutions In Bangladesh 6.1 3,196,881,943 2,860,092,475 Outside Bangladesh 6.2 965,226,853 1,118,618,354 4,162,108,796 3,978,710,829 Also refer to note 6.3 for maturity wise grouping 6.1 In Bangladesh Current account with: Agrani Bank Limited 575,850 575,850 Al Arafah Islami Bank Limited 45,265,708 14,894,941 BRAC Bank Limited 5,001 5,001 BRAC Bank Limited (El Dorado Network) 396,695 543,506 The City Bank Limited 4,661,023 - Commercial Bank of Ceylon PLC 13,337 13,337 EXIM Bank Limited 20,643,735 8,758,775 The Farmers Bank Limited 3,551,600 6,614,752 Jamuna Bank Limited 50,113,699 34,804,125 Janata Bank Limited 29,747 - Meghna Bank Limited 10,255,457 3,129,809 Mercantile Bank Limited 10,779,207 5,538,588 Modumoti Bank Limited 1,561,425 2,301,653 Mutual Trust Bank Limited 23,840,589 13,832,137 National Bank Limited 11,520,963 19,074 NRB Commercial Bank Limited 100,000 100,000 One Bank Limited (869,991) 1,742,091 Prime Bank Limited 628 2,008 Shahjalal Islami Bank Limited 550,000 550,000 Sonali Bank Limited (1,411,805) (326,533) South Bangla Agriculture & Commerce Bank Limited 2,169,078 491,452 Trust Bank Limited 9 3,160,509 Union Bank Limited 21,993,167 14,251,563 United Commercial Bank Limited 8,547,767 16,782,341 214,292,889 127,784,979 Short term deposits account with: AB Bank Limited 28,004 28,005 The City Bank Limited 1,106,755 1,106,755 Eastern Bank Limited 29,556 29,556 EXIM Bank Limited 3,510,341 120,792 Standard Chartered Bank 194,482 4,232,231 Sonali Bank Limited 27,719,571 26,789,812 Uttara Bank Limited 345 345 32,589,054 32,307,496

338 Annual Report 2017 2017 2016 Note Taka Taka 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 - NRB Global Bank Limited - 250,000,000 One Bank Limited - 500,000,000 Social Islami Bank Limited - 300,000,000 Standard Bank Limited 300,000,000 - 2,400,000,000 1,050,000,000 Fixed deposits with financial institutions: Bay Leasing and Investment Limited 450,000,000 500,000,000 Industrial and Infrastructure Development Finance Company Limited - 100,000,000 IPDC Finance Limited - 200,000,000 International Leasing and Financial Services Limited - 100,000,000 Union Capital Limited - 100,000,000 Bangladesh Industrial Finance Company Limited 100,000,000 150,000,000 Investment Corporation of Bangladesh - 500,000,000 550,000,000 1,650,000,000 3,196,881,943 2,860,092,475 6.2 Outside Bangladesh Current account Interest bearing: Standard Chartered Bank, New York, USA 86,529,828 79,939,791 Standard Chartered Bank, New York OBU 5,569,926 2,502,922 Citibank N.A, New York, USA 58,188,713 12,320,169 Standard Chartered Bank, London, UK 24,335,170 35,706,219 Mashreq Bank PSC, New York, USA 131,904,873 378,944,176 Wells Fargo Bank, N.A., New York, USA 87,426,417 43,158,173 Citibank AG, Frankfurt, Germany 54,683,457 2,966,473 Standard Chartered Bank, Kolkata, India 619,283 5,150,727 AB Bank Ltd., Mumbai, India 10,276,911 34,012,582 ICICI Bank Ltd., Mumbai, India 38,325,827 3,331,684 JP Morgan Chase Bank N.A., New York, USA 31,734,569 144,963,770 Habib American Bank, New York, USA 113,518,856 54,519,931 Mashreq Bank, Mumbai, India 33,413,883 13,876,284 Mashreq Bank, Mumbai, India 1,543,260 1,278,977 Sonali Bank (UK) Ltd. USD 257,277 54,288,239 Sonali Bank (UK) Ltd. GBP 3,492,835 16,012,568 Sonali Bank (UK) Ltd. EURO - 2,442,370 681,821,085 885,415,055 Non-interest bearing: Bank of Sydney Ltd, Sydney 4,096,286 - Banque Saudi Fransi, Riyadh 21,954,062 - United Bank Limited, Karachi, Pakistan 3,567,858 12,773,370 Standard Chartered Bank, Colombo, Srilanka 19,877,855 15,961,921 Standard Chartered Bank, Mumbai (AEB), India 2,088,589 1,987,849 Habib Allied Intl Bank, UK EUR - 6,024,463 Bank of Tokyo, Mitsubishi, JPY 32,630,020 1,258,241 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal 22,317,811 3,789,947 Bank of Bhutan, Pheuntsholing, Bhutan 20,589,244 6,233,334 Commerz Bank AG, Frankfurt, Germany EURO 40,480,379 4,947,574 Commerz Bank AG, Frankfurt, Germany USD 40,185,050 39,325,786 Zuercher Kantonal Bank, Zurich, Switzerland 18,003,835 10,784,568 National Australia Bank Ltd., Melbourne, Australia - 7,725,805 HDFC Bank, Mumbai, India 7,209,740 83,931,106 Habib Bank AG Zurich, Zurich, Switzerland 328,475 1,830,346 Mashreq Bank PSC, Dubai, UAE 2,843,673 2,229,915 Habib Metropoliton Bank Ltd., Karachi, Pakistan 47,232,891 28,769,758 Al Rajhi Bank, Saudi Arabia - 5,629,316 283,405,768 233,203,299 965,226,853 1,118,618,354 Details of Balance with other banks-Outside Bangladesh shown in Annexure-C.

Southeast Bank Limited 339 2017 2016 Note Taka Taka 6.3 Maturity grouping of balance with other banks and financial institutions On demand 1,179,519,742 1,246,403,333 Not more than three months 2,682,589,054 2,632,307,496 More than three months but not more than six months 300,000,000 100,000,000 More than six months but not more than one year - - More than one year but less than five years - - Above five years - - 4,162,108,796 3,978,710,829 7 Money at call and on short notice In bank: BRAC Bank Limited - 230,000,000 Midland Bank Limited - 200,000,000 Modhumoti Bank Limited - 200,000,000 NCC Bank Limited 350,000,000 800,000,000 Standard Bank Limited 150,000,000 - The ICB Islamic Bank Limited 11,300,000 11,300,000 The City Bank Limited 600,000,000 - 1,111,300,000 1,441,300,000 In non-banking financial institutions (public and private): Bay Leasing and Investment Limited 340,000,000 - Delta BRAC Housing Finance Corporation Limited 80,000,000 - Investment Corporation of Bangladesh 500,000,000 - Phoenix Finance and Investment Limited - 190,000,000 IPDC Finance Limited - 100,000,000 LankaBangla Finance Ltd. - 100,000,000 920,000,000 390,000,000 In foreign currency: AB Bank Limited - 708,399,900 BRAC Bank Limited 330,800,000 314,844,400 Commercial Bank of Ceylon PLC - 236,133,300 Dhaka Bank Limited 165,400,000 - Eastern Bank Limited 413,500,000 393,555,500 Mercantile Bank Limited 330,800,000 - Mutual Trust Bank Limited - 78,711,100 NCC Bank Limited - 236,133,300 Premier Bank Limited - 314,844,400 Rupali Bank Limited 124,050,000 - Shahjalal Islami Bank Limited 165,400,000 - Social Islami Bank Limited - 157,422,200 United Commercial Bank Limited 82,700,000 - 1,612,650,000 2,440,044,100 3,643,950,000 4,271,344,100 8 Consolidated Investments Government securities: Southeast Bank Limited 9 50,204,799,973 54,299,803,894 50,204,799,973 54,299,803,894 Others: Southeast Bank Limited 9 10,118,368,557 5,155,205,613 Southeast Bank Capital Services Limited 2,587,875,942 2,276,624,953 12,706,244,499 7,431,830,566 62,911,044,472 61,731,634,460 9 Investments Government securities: Conventional Banking 9.1.1 49,554,799,973 53,649,803,894 Islamic Banking 9.2.1 650,000,000 650,000,000 50,204,799,973 54,299,803,894 Others: Conventional Banking 9.1.2 7,327,778,746 2,267,841,260 Islamic Banking 9.2.2 2,790,589,811 2,887,364,353 10,118,368,557 5,155,205,613 60,323,168,530 59,455,009,507 Also refer to notes 9.3 to 9.8 for further analysis, maturity wise grouping, market value information, sector wise investment, etc.

340 Annual Report 2017 2017 2016 Note Taka Taka 9.1 Conventional Banking 9.1.1 Government Securities Treasury Bills 364 days Treasury Bills - 991,930,001 - 991,930,001 Assured Repo with Bangladesh Bank/ Others (at book value) - - - 991,930,001

Prize Bonds 4,341,040 4,043,300 Bangladesh Bank Bills - - 4,341,040 4,043,300 Government Bonds 2 Years BGTB HTM 1,000,090,436 1,324,190,350 5 Years BGTB HTM 5,175,910,399 5,059,213,001 10 Years BGTB HTM 13,916,649,159 13,114,179,977 15 Years BGTB HTM 6,490,177,303 6,496,362,680 20 Years BGTB HTM 5,836,710,538 5,484,568,752 Remeasured 10 years BGTB HTM 963,820,461 961,749,167 2 Years BGTB HFT 785,868,231 3,197,926,886 5 Years BGTB HFT 8,536,183,353 9,452,112,789 10 Years BGTB HFT 6,551,995,373 7,184,666,536 15 Years BGTB HFT 138,217,259 167,447,843 20 Years BGTB HFT 154,836,421 211,412,612 49,550,458,933 52,653,830,593 49,554,799,973 53,649,803,894 9.1.2 Others Shares in listed companies 1,566,290,136 1,006,352,650 Shares in un-listed companies 61,488,610 61,488,610 Bonds 5,700,000,000 1,200,000,000 7,327,778,746 2,267,841,260 9.2 Islamic banking 9.2.1 Government securities Bangladesh Government Islamic bond 650,000,000 650,000,000 650,000,000 650,000,000 9.2.2 Others Shares in listed companies 2,790,589,811 2,887,364,353 2,790,589,811 2,887,364,353 9.3 Investments classified as per Bangladesh Bank Circular Held for trading (HFT) 16,171,441,677 21,209,539,967 Held to maturity (HTM) 34,033,358,296 33,090,263,927 Other securities 10,118,368,557 5,155,205,613 60,323,168,530 59,455,009,507 9.4 Maturity-wise grouping of investments On demand 4,341,040 4,043,300 Not more than three months 2,621,953,085 2,343,870,935 More than three months but not more than one year 10,367,319,260 7,032,299,074 More than one year but not more than five years 21,622,020,484 25,889,694,776 Above five years 25,707,534,661 24,185,101,422 60,323,168,530 59,455,009,507

Southeast Bank Limited 341 9.5 Cost and market value of investments 9.5.1 Government securities

2017 2016 Cost price Market price Market price Taka Taka Taka Conventional Banking

Treasury Bills - - 991,930,001 Bangladesh Government Treasury Bond 48,718,383,528 49,550,458,933 52,653,830,593 Prize Bonds 4,341,040 4,341,040 4,043,300 48,722,724,568 49,554,799,973 53,649,803,894 Islamic Banking

Bangladesh Government Islamic Bond 650,000,000 650,000,000 650,000,000 49,372,724,568 50,204,799,973 54,299,803,894 9.5.2 Others (Investment in Shares) 2017 2016 Market price Cost price Cost price Taka Taka Taka Conventional Banking Shares in listed companies 1,708,515,099 1,566,290,137 1,006,352,650 Shares in un-listed companies 61,488,610 61,488,610 61,488,610 1,770,003,709 1,627,778,747 1,067,841,260 Islamic Banking

Shares in listed companies 2,223,999,003 2,790,589,811 2,887,364,353 2,223,999,003 2,790,589,811 2,887,364,353 Shares in listed companies Investments 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. 9.6 Sector wise investment of shares 2017 2016 Market price Cost price Cost price Taka Taka Taka Shares in listed companies (A)

Banks and NBFI 994,902,097 1,473,501,914 2,055,989,695 Insurance Companies 714,641,238 718,797,113 573,997,079 Fuel and Power Companies 216,626,296 246,110,932 151,199,550 Mutual Fund 440,569,565 305,380,556 365,642,276 Manufacturing & Other 1,565,774,906 1,613,089,433 746,888,403 3,932,514,102 4,356,879,948 3,893,717,003 2017 2016 Market price Cost price Cost price Taka Taka Taka Shares in un-listed companies (B) Banks and NBFI 166,935,993 54,183,820 54,183,820 Others 33,830,764 7,304,790 7,304,790 200,766,757 61,488,610 61,488,610 Total investment of shares (C=A+B) 4,418,368,558 3,955,205,613 The investments in shares of unlisted companies are shown at cost or net book value of the last audited balance sheet, whichever is lower.

342 Annual Report 2017 9.7 Market price and cost price of investments in ordinary shares as on 31 December 2017 2017 Differences SL. (Provision to be Name of the Company no. Market price Cost price required) Taka Taka Taka 1 ACI Formulation 8,680,000 10,738,662 (2,058,662) 2 ACME Laboratories Limited 328,844,400 151,004,255 177,840,145 3 Active Fine Chemicals 17,600,000 19,050,865 (1,450,865) 4 AFC Agro Biotech Limited 33,577,038 36,946,327 (3,369,289) 5 Aftab Automobiles Limited 112,122,347 139,839,645 (27,717,298) 6 Apex Food 2,824,000 2,941,088 (117,088) 7 Apolo Ispat 57,481,124 61,475,254 (3,994,130) 8 Argon Denim 19,229,101 21,660,889 (2,431,788) 9 Asia Insurance 50,166,435 76,805,098 (26,638,663) 10 Barka Power 52,008,087 60,419,999 (8,411,912) 11 Bay Leasing 340,750,400 641,234,702 (300,484,302) 12 Bangladesh Building Systems 50,424,000 54,399,158 (3,975,158) 13 BD COM 10,447,248 16,655,456 (6,208,208) 14 Bangladesh Lamps Limited 13,639,015 16,791,948 (3,152,933) 15 Bangladesh Thai 17,553,679 18,344,909 (791,230) 16 Beximco 30,375,000 34,190,250 (3,815,250) 17 BSC 34,651,400 39,016,698 (4,365,298) 18 BSCCL 40,114,973 61,001,182 (20,886,209) 19 BSRM Limited 42,450,902 56,679,577 (14,228,675) 20 BSRM Steel Mills Limited 5,463,600 7,019,678 (1,556,078) 21 Central Pharma 20,570,000 31,909,590 (11,339,590) 22 Confidence Cement 137,167,650 146,599,246 (9,431,596) 23 Delta Life 7,351,878 12,382,964 (5,031,087) 24 Doreen Power 21,926,400 22,620,685 (694,285) 25 EHL 16,682,441 18,217,288 (1,534,847) 26 Envoy Textile 37,619 55,109 (17,490) 27 EXIM Bank 249,775,270 349,837,751 (100,062,482) 28 EXIM Bank 1st MF 40,477,955 43,475,095 - 29 Family Tex 456,000 556,503 (100,503) 30 Far Chemicals 1,880,853 1,936,808 (55,955) 31 Fuwang Ceramic 4,950,000 5,419,805 (469,805) 32 Generation Next Fashion 4,464,624 7,043,520 (2,578,896) 33 GHCL 24,486,245 34,247,189 (9,760,944) 34 GPH Ispat 44,853,590 46,718,644 (1,865,055) 35 Hamid Fabrics 10,280,000 10,756,440 (476,440) 36 ICB 3,360,000 3,913,592 (553,592) 37 IFIC 1st MF 9,591,610 11,905,461 - 38 Islami Bank 14,640,000 15,986,816 (1,346,816) 39 KDS Limited 17,845,736 21,462,459 (3,616,722) 40 Lafarge Surma Cement Limited 69,900,000 89,321,368 (19,421,368) 41 LankaBangla Finance Limited 4,780,000 5,202,094 (422,094) 42 Matin Spinning Limited 10,946,960 14,044,434 (3,097,474) 43 Mozaffar Hossain Spinning Mills Limited 12,123,248 16,469,266 (4,346,018) 44 MJL Limited 18,547,000 21,016,635 (2,469,635) 45 Meghna Petroleum Limited 13,253,980 16,651,636 (3,397,656) 46 National Life Insurance Company Limited 652,475,426 624,378,084 28,097,341 47 Nahee Aluminium Limited 517,624 64,110 453,514 48 National Polymar 3,037,913 3,151,467 (113,554) 49 National Tubes Limited 33,075,000 33,380,786 (305,786) 50 Nurani Dyeing Limited 24,390 11,857 12,533 51 Olympic Accessories Limited 47,681,656 59,025,030 (11,343,374) 52 Oimex Electrode Limited 499,315 69,620 429,695 53 Orion Pharma 58,629,005 61,952,895 (3,323,891) 54 Padma Oil Company Limited 11,883,080 12,487,427 (604,347) 55 Peninsula 22,997,566 29,597,746 (6,600,180)

Southeast Bank Limited 343 2017 Differences SL. (Provision to be Name of the Company no. Market price Cost price required) Taka Taka Taka 56 Popular Life 4,647,500 5,230,966 (583,466) 57 Premier Cement 43,722,835 54,045,813 (10,322,978) 58 Premier Leasing 13,442,135 15,325,757 (1,883,622) 59 Prime Bank Limited 339,052,066 391,770,539 (52,718,473) 60 Prime Finance Limited 9,815,266 26,958,933 (17,143,667) 61 Paramount Textile Limited 439,000 315,480 123,520 62 RN Spinning 10,390,096 12,812,929 (2,422,832) 63 RSRM STEEL Limited 18,076,500 21,972,185 (3,895,685) 64 Rupali Bank Limited 5,772,772 9,074,723 (3,301,951) 65 Saif Power Tec Limited 7,736,961 8,532,154 (795,193) 66 Saiham Tex 3,840,000 4,490,332 (650,332) 67 S ALAM 21,843,600 26,438,348 (4,594,748) 68 SAPORTL 18,865,000 26,226,619 (7,361,619) 69 SEBL1ST MF 390,500,000 250,000,000 140,500,000 70 Shasha Denim Limited 24,349,782 28,191,038 (3,841,256) 71 Singer Bangladesh 19,550,000 19,575,942 (25,942) 72 Shahjibazar Power Company Limited 69,659,984 79,199,118 (9,539,134) 73 Summit Power 14,360,000 17,600,120 (3,240,120) 74 Titas Gas 6,630,000 7,670,726 (1,040,726) 75 Tunghai 2,040,000 3,674,640 (1,634,640) 76 United Finance 13,514,187 14,197,006 (682,819) 77 United Power Generation 8,357,765 8,444,586 (86,821) 78 Zahen Spinning 26,335,870 27,046,931 (711,061) 3,932,514,102 4,356,879,948 (419,054,855) Actual provision 419,055,000 Surplus/(deficit) 145 As at 31 December 2017, the value of investment cell which includes all investment in shares, corporate bond, debenture, mutual fund and total market value of other capital certificates and loan facilities given to own subsidiary company or companies directly or indirectly involved in capital market affairs stood at Tk 2,151.13 (2016: 2,100.91) crores which is 24.30% (2016: 21.53%) of total sum of paid up capital, statutory reserve and retained earnings of the bank. 9.8 Transactions of Repo and Reverse-repo during the year Minimum Maximum Daily average outstanding outstanding outstanding Taka Taka Taka 2017 Securities 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 repo i) With Bangladesh Bank - - - ii) With other Banks & FIs 79,662,345 1,091,344,540 31,173,092 2016 Securities sold under repo i) With Bangladesh Bank - - - ii) With other Banks & FIs 102,379,665 1,922,396,270 297,493,731 Securities purchased under reverse repo i) With Bangladesh Bank - - - ii) With other Banks & FIs 148,297,350 1,275,868,120 23,960,609

344 Annual Report 2017 2017 2016 Note Taka Taka 10 Consolidated loans and advances/investments Loans, cash credit, overdrafts etc./investments: Southeast Bank Limited 11 221,191,785,619 180,161,187,214 Southeast Bank Capital Services Limited 2,465,716,400 2,500,642,443 223,657,502,019 182,661,829,657 Less: Inter company balance eliminated - 10,674 223,657,502,019 182,661,818,983 Bills purchased and discounted: Southeast Bank Limited 11 10,659,214,310 9,203,770,254 10,659,214,310 9,203,770,254 234,316,716,329 191,865,589,237 11 Loans and advances/investments Loans, cash credit, overdrafts etc./investments 11.1 221,191,785,619 180,161,187,214 Bills purchased and discounted 11.14 10,659,214,310 9,203,770,254 231,850,999,929 189,364,957,468 11.1 Loans, cash credit, overdrafts etc./Investments In Bangladesh: Conventional Banking Demand loan 6,523,478,141 5,025,639,557 Time loan 25,706,837,604 20,064,629,716 Term loan 79,529,348,385 69,051,082,952 Agricultural credit-Term 1,673,427,615 933,182,554 Agricultural credit-Time 1,661,209,453 1,105,435,895 Agricultural credit-OD 185,519,891 94,413,590 Consumer credit scheme 3,963,882 4,924,067 Car loan 109,247,296 73,227,474 Personal loan 473,932,761 373,219,780 Home loan 948,808,661 515,726,845 Cash credit and overdrafts 52,900,215,618 45,296,952,050 Bills Against Letter of Credit (BLC) 1,009,677,345 294,075,920 Loan re-finance housing sector 18,246,407 20,349,457 Loan against Trust Receipt (LTR) 17,985,066,720 13,378,652,768 Advances-packing credit (PC) 3,564,356,842 2,397,107,920 House building loan-staff 272,796,136 188,907,457 Digital device 22,444 185,449 Loan against cash incentive 79,738,862 130,507,407 Export Development Fund (EDF) 12,931,627,959 11,112,134,762 Loan against foreign bills 97,119,159 - Loan-credit card 1,553,275,922 1,135,680,036 207,227,917,101 171,196,035,656 Islamic Banking Demand investment 414,036,921 242,699,956 Bai-Muajjal (Time) investment 399,099,215 310,841,197 Bai-Muajjal Time under CCS 74,507,241 55,960,365 Bai-Murabaha-BLC 28,009,964 32,499,080 Bai-Murabaha-LTR 800,511,034 476,095,001 Bai-Salam 64,089,258 84,436,201 Staff house building investment 12,806,256 8,362,607 Investment against cash incentive 19,626,562 17,327,114 Export Development Fund (EDF) 712,130,203 633,716,266 Bai-Muajjal-investment 3,668,800,807 3,269,956,321 Murabaha-investment 639,319,763 624,262,832 Hire purchase-investment 7,130,931,292 3,208,994,618 13,963,868,518 8,965,151,558 221,191,785,619 180,161,187,214 Outside Bangladesh - - 221,191,785,619 180,161,187,214

Southeast Bank Limited 345 2017 2016 Note Taka Taka 11.2 Performing loans and advances/investments Gross loans and advances/investments 231,850,999,929 189,364,957,468 Non-performing loans and advances/investments (13,878,533,441) (9,257,788,205) 217,972,466,488 180,107,169,263 11.3 Maturity-wise grouping of loans and advances/investments On demand 53,542,866,451 43,794,108,537 Less than three months 30,554,565,718 24,803,469,746 More than three months but less than one year 67,733,374,239 50,941,232,848 More than one year but less than five years 49,479,816,953 47,341,367,857 More than five years 30,540,376,568 22,484,778,480 231,850,999,929 189,364,957,468 11.4 Concentration of loans and advances/investments Advances to allied concerns of directors - - Advances to chief executive and other senior executives 102,834,000 72,967,000 Advances to customers' group: Advances to large and medium industries 97,290,425,036 83,239,207,953 Advances to small and cottage industries 2,015,800,000 1,875,500,000 Commercial lending 48,502,053,689 39,031,160,279 Export financing 17,371,600,000 14,375,200,000 Real estate 18,071,370,071 14,994,200,000 Consumer credit scheme 78,471,123 60,884,432 Other loans and advances 48,418,446,010 35,715,837,804 231,850,999,929 189,364,957,468 Details of large loan/investments As at 31 December 2017 there were 29 (2016:25) 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 33,679.04 million as at 31 December 2017 (Tk. 34,021.14 million as at 31 December 2016). 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 2017 2016 % of % of total Taka total Taka loan loan Agriculture 1.48% 3,432,400,000 1.29% 2,438,900,000 Industry (other than working capital) 21.11% 48,934,533,711 23.10% 43,734,198,080 Working capital financing 20.86% 48,355,891,325 20.86% 39,505,009,874 Export credit 7.49% 17,371,600,000 7.59% 14,375,200,000 Commercial credit 20.92% 48,502,053,689 20.61% 39,031,160,279 Small and cottage industries 0.87% 2,015,800,000 0.99% 1,875,500,000 Others: a) Finance to NBFIs 0.74% 1,718,300,000 0.64% 1,213,000,000 b) Real Estate 7.79% 18,071,370,071 7.92% 14,994,200,000 c) Transport & communication 1.17% 2,717,489,895 0.76% 1,446,700,000 d) Small Enterprise financing 11.97% 27,757,300,000 11.21% 21,231,811,601 e) Miscellaneous 5.60% 12,974,261,237 5.03% 9,519,277,634 100.00% 231,850,999,929 100.00% 189,364,957,468

346 Annual Report 2017 2017 2016 Note Taka Taka 11.6 Industry-wise loans and advances (Industrial Loan) Textile and garments industries including spinning industries 58,592,981,569 48,935,900,000 Food and allied industries 6,493,699,646 6,149,345,353 Pharmaceutical industries 916,394,993 747,703,027 Chemical, fertilizer, etc. 81,528,248 78,410,637 Cement and ceramic industries 3,931,527,054 3,455,073,480 Service industries 3,546,956,299 2,724,598,492 Other industries 23,727,337,227 21,148,176,964 97,290,425,036 83,239,207,953 11.7 Category-wise Small Medium Enterprise loans and advances (SME) Service sector 11,190,600,000 10,190,100,000 Trading sector 18,907,900,000 25,062,000,000 Industrial sector 9,456,700,000 6,035,000,000 39,555,200,000 41,287,100,000 11.8 Geographical location-wise allocations of loans and advances 2017 2016 % of % of total Taka total Taka loan loan Urban: Dhaka region 70.60% 163,690,795,982 69.96% 132,470,612,723 Chittagong region 18.54% 42,983,259,723 18.10% 34,265,791,215 Rajshahi region 1.96% 4,537,207,496 2.07% 3,918,908,039 Sylhet region 1.41% 3,279,114,783 1.76% 3,334,117,812 Khulna region 0.73% 1,700,376,628 0.64% 1,203,827,539 Rangpur region 0.35% 818,059,650 0.48% 901,462,668 Barisal region 0.08% 180,987,657 0.08% 158,019,720 Mymensingh region 0.17% 385,638,011 0.28% 524,914,224 93.84% 217,575,439,930 93.35% 176,777,653,940 Rural: Dhaka region 3.27% 7,574,813,414 3.17% 6,002,966,153 Chittagong region 1.89% 4,390,520,410 1.85% 3,504,951,864 Sylhet region 0.39% 907,113,613 0.81% 1,540,320,041 Rajshahi region 0.24% 561,204,488 0.25% 478,849,898 Khulna region 0.36% 841,908,074 0.56% 1,060,215,572 6.16% 14,275,559,999 6.65% 12,587,303,528 100.00% 231,850,999,929 100.00% 189,364,957,468 11.9 Classification of loans and advances 2017 2016

% of % of total Taka total Taka loan loan Unclassified: Standard including staff loan 88.67% 205,583,791,156 90.47% 171,314,821,176 Special Mention Account (SMA) 5.34% 12,388,675,332 4.63% 8,792,348,087 94.01% 217,972,466,488 95.11% 180,107,169,263 Classified: Sub-standard 0.54% 1,244,359,189 0.83% 1,567,127,630 Doubtful 0.32% 753,245,200 0.31% 587,799,462 Bad/loss 5.12% 11,880,929,051 3.75% 7,102,861,113 5.99% 13,878,533,441 4.89% 9,257,788,205 100.00% 231,850,999,929 100.00% 189,364,957,468

Southeast Bank Limited 347 2017 2016

Taka Taka 11.10 Particulars of loans and advances

i) Debts considered good in respect of which the bank is fully secured; 174,834,922,331 155,162,481,958 ii) Debts considered good for which the bank holds no other security than the debtors’ personal security; 32,167,636,499 12,149,368,473 iii) Debts considered good secured by the personal liabilities of one or more parties in addition to the personal security of the debtors; 24,848,441,099 22,053,107,036 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; 284,774,135 197,859,451 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; 284,774,135 197,859,451 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) 2,900,396,650 1,404,996,225 Amount of debts written off 1,030,097,472 1,012,890,775 Amount realised against the debts previously written off 154,213,601 72,709,902

(b) Provision against the debt classified as bad/loss at the date of balance sheet 4,982,251,548 2,956,142,427

(c) Amount of interest charged in suspense account 4,402,732,281 3,549,523,832

xi) Loans written off: - Current year 1,286,795,227 1,130,516,095 Cumulative to-date 10,209,184,626 9,076,603,000

- The amount of written off loans for which lawsuit filed 10,209,184,626 9,076,603,000

348 Annual Report 2017 11.11 Particulars of required provision for loans and advances/investments 2017 2016 Outstanding Base for % of Required Required Status as at 31 Dec provision required provision provision 2017 Taka provision Taka Taka Taka For loans and advances/ Investments: Unclassified-general provision All unclassified loans (other than small enterprises, housing finance, Loan to MBs loans for professional, consumer financing and special mention account) 164,293,319,625 164,293,319,625 1% 1,642,933,199 1,302,407,000 Small and medium enterprise financing 34,319,767,614 34,319,767,614 0.25% 85,799,421 89,850,351 Loan to BHs/MBs/SDs against shares 1,214,870,418 1,214,870,418 2% 24,297,408 28,374,722 Housing and loan for professional 1,075,069,860 1,075,069,860 2% 21,501,397 12,635,194 Consumer finance 2,002,257,361 2,002,257,361 2%-5% 56,535,590 72,916,567 Agriculture finance 2,394,543,634 2,394,543,634 1%-5% 23,945,436 35,697,134 Staff loan 283,962,642 283,962,642 1% 2,839,626 1,972,701 Special Mention Account (SMA) 12,388,675,332 12,083,983,139 0.25%-5% 145,454,148 117,685,493 2,003,306,225 1,661,539,162 Classified-specific provision: Sub-standard 1,244,359,189 558,597,003 5%-20% 110,536,686 114,289,342 Doubtful 753,245,200 345,353,922 50% 170,892,722 113,835,313 Bad/loss 11,880,929,051 4,982,251,548 100% 4,982,251,548 2,956,142,427 231,850,999,929 223,553,976,767 5,263,680,956 3,184,267,082 Required provision for loans and advances (A) 7,266,987,181 4,845,806,244 Total provision maintained (B) 10,069,290,980 6,158,284,306 Excess provision as at 31 December (C=B-A) 2,802,303,797 1,312,478,062 * Provision for loans and advances has been kept as per Bangladesh Bank vide letter reference no(s):DBI-1/78/2018-1313 dated 26 April 2018 and DBI-1/78/2017-1206 dated 27 March 2017. 2017 2016 Note Taka Taka 11.12 Suits filed by the Bank (Branch wise details) Aganagar Branch 24,601,270 24,601,270 Agargaon Branch 106,715,269 46,495,055 Agrabad Branch 3,533,041,603 3,400,105,252 Banani Branch 1,011,368,047 478,744,788 Bandar Bazar Branch 49,554,021 33,472,439 Bangshal Branch 729,354,206 756,783,708 Bogra Branch 118,153,762 102,439,383 Brahmanbaria Branch 14,126,982 - CDA Avenue Branch 1,279,158,963 1,001,878,996 Chapainawabgonj Branch 7,964,715 6,670,345 Chouhatta Branch 29,324,351 32,123,958 Chowmuhoni Branch 28,016,032 - Corporate Branch 56,546,456 56,546,456

Southeast Bank Limited 349 2017 2016 Note Taka Taka Cox's Bazar Branch 81,196,958 67,768,272 Dhanmondi Branch 1,840,299,125 1,828,021,588 Dinajpur Branch 11,277,731 - Gulshan Branch 119,450,152 119,890,152 Halishahar Branch 2,018,990,181 1,824,036,037 Hathazari Branch 6,086,747 - Imamgonj Branch 298,675,545 298,675,545 Jessore Branch 73,008,143 - Jubilee Road Branch 41,758,043 40,036,273 Kakrail Branch 41,352,380 41,352,380 Kawranbazar Branch 297,083,230 98,482,809 Khatungonj Branch 859,750,230 859,750,230 Khulna Branch 98,484,842 98,484,842 Konabari Branch 1,862,261 1,862,261 Kotowali Branch 88,541,987 74,826,552 Kulaura Branch 6,965,264 9,078,456 Lohagara Branch 5,020,503 - Laldighirpar Branch 113,465,769 113,465,769 Madambibirhat Branch 73,945,318 27,584,384 Madhabdi Branch 56,355,195 - Mohammadpur Branch 16,555,592 10,406,570 Momin Road Branch 280,105,740 109,818,537 Motijheel Branch 185,545,788 - Mouchak Branch 101,910,981 79,543,346 Moulvibazar Branch 176,748,221 171,254,940 Naogaon Branch 45,095,755 7,375,594 Narayangonj Branch 67,174,359 54,511,315 New Elephant Road Branch 509,137,748 127,592,586 New Eskaton Branch 171,613,578 171,552,903 Oxygenmore Branch 7,253,948 - Pahartoli Branch 826,535,766 826,535,766 Principal Branch 5,860,973,599 5,515,730,861 Progoti Soroni Branch 235,817,088 61,593,200 Rupnagar Branch 6,068,408 5,582,437 Shyamoli Branch 73,453,562 - Shahjalal Uposhahar Branch 141,598,745 138,193,352 Sir Iqbal Road Branch 14,315,940 14,315,940 Uttara Branch 265,683,942 270,340,241 22,107,084,042 19,007,524,788 11.13 Listing of assets pledged as security/collaterals Nature of the secured assets Shares & Securities 2,393,560,755 1,295,544,654 Merchandise 1,979,609,787 2,956,323,198 Machinery with other fixed asset and financial obligation 9,573,750,430 7,794,104,888 Real estate with financial obligation 170,418,844,517 140,515,613,690 Financial obligation only 12,008,281,446 10,714,696,416 (Insurance policies, savings certificates,bank deposit etc) Miscellaneous- i) Crops/stock of crops hypothecation 628,811,625 2,058,718,058 ii) Guarantee of individuals/institutions 28,608,939,170 20,977,372,216 ii) Others 6,239,202,199 3,052,584,348 231,850,999,929 189,364,957,468

350 Annual Report 2017 2017 2016 Note Taka Taka 11.14 Bills purchased and discounted Conventional Banking In Bangladesh 3,358,027,075 2,632,005,815 Outside Bangladesh 7,027,904,759 6,245,714,954 10,385,931,834 8,877,720,769 Islamic Banking In Bangladesh 255,665,585 248,139,426 Outside Bangladesh 17,616,891 77,910,059 273,282,476 326,049,485 10,659,214,310 9,203,770,254 11.15 Maturity grouping of bills discounted and purchased Within one month 3,279,484,642 3,311,763,128 More than one month but less than three months 3,480,327,845 2,758,723,516 More than three months but less than six months 2,540,297,150 1,928,586,180 More than six months 1,359,104,673 1,204,697,430 10,659,214,310 9,203,770,254 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. 2,962.80 million as on 31 December 2017) 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 Consolidated fixed assets including premises, furniture and fixtures Cost: Southeast Bank Limited 13 10,801,983,699 10,406,610,372 Southeast Bank Capital Services Limited 742,188,636 405,480,073 Southeast Financial Services (UK) Ltd 9,920,029 8,456,935 Southeast Financial Services (Australia) Pty Ltd 2,752,018 2,422,206 Southeast Exchange Company (South Africa) Pty Ltd 6,562,436 5,022,585 11,563,406,818 10,827,992,171 Less: Accumulated depreciation Southeast Bank Limited 13 2,093,414,431 1,792,923,672 Southeast Bank Capital Services Limited 134,020,673 77,764,768 Southeast Financial Services (UK) Ltd 8,161,521 6,323,279 Southeast Financial Services (Australia) Pty Ltd 1,999,468 1,596,346 Southeast Exchange Company (South Africa) Pty Ltd 4,014,599 2,221,550 2,241,610,692 1,880,829,615 Written down value at the end of the year 9,321,796,126 8,947,162,556 There were no capitalized borrowing cost related to the acquisition of fixed assets during the year (2016: nil). Details of consolidated amounts have not been provided as such amounts are insignificantly different from those of the Banks. 13 Fixed assets including premises, furniture and fixtures Cost: Land 5,770,913,319 5,775,037,313 Buildings 1,897,220,492 1,898,987,918 Furniture and fixtures 1,205,150,111 1,124,644,629 Office appliances 14,620,108 14,193,473 Computer 255,021,073 180,392,040 Electrical appliances 1,310,729,568 1,108,311,271 ATM Booth 207,974,413 174,746,153 Motor vehicles 140,354,615 130,297,575 10,801,983,699 10,406,610,372 Less: Accumulated depreciation Buildings 469,770,862 410,635,626 Furniture and fixtures 571,449,165 509,258,430 Office appliances 9,087,575 8,854,864 Computer 93,708,239 62,231,950 Electrical appliances 743,073,333 640,516,858 ATM Booth 105,072,021 80,142,933 Motor vehicles 101,253,236 81,283,011 2,093,414,431 1,792,923,672 Written down value at the end of the year 8,708,569,268 8,613,686,700 Details are shown in Annexure-E.

Southeast Bank Limited 351 2017 2016 Note Taka Taka 14 Consolidated other assets Southeast Bank Limited 15 9,241,315,075 8,478,052,796 Southeast Bank Capital Services Limited 98,363,419 115,351,911 Southeast Financial Services (UK) Ltd 13,328,299 25,059,186 Southeast Financial Services (Australia) Pty Ltd 2,377,516 1,923,109 Southeast Exchange Company (South Africa) Pty Ltd 272,024 980,261 9,355,656,333 8,621,367,263 Less: Investment in subsidiary: In Bangladesh 5,452,930,000 5,452,930,000 Outside Bangladesh 65,100,021 65,100,021 5,518,030,021 5,518,030,021 Intercompany balance 1,823,132 1,726,998 3,835,803,180 3,101,610,244 15 Other assets 9,241,315,075 8,478,052,796 15.1 Classification of other assets i) Investment in shares of subsidiary companies: - In Bangladesh 15.3 5,452,930,000 5,452,930,000 - Outside Bangladesh 15.4 65,100,021 65,100,021 ii) Stationery, stamps, printing materials, etc. 57,534,926 54,324,003 iii) Advance rent and advertisement 368,571,028 421,683,670 iv) Interest accrued on investment but not collected, commission and brokerage receivable on shares and debentures, and other income receivables 1,458,019,937 1,403,482,450 v) Security deposits 3,017,779 2,282,039 vi) Preliminary, formation and organisational expenses,renovation, development and prepaid expenses 829,109,496 489,509,292 vii) Suspense account 159,698,380 153,037,756 viii) Others 847,333,508 435,703,565 9,241,315,075 8,478,052,796 15.2 Non-income generating other assets i) Stationery, stamps, printing materials, etc. 57,534,926 54,324,003 ii) Advance rent and advertisement 368,571,028 421,683,670 iii) Suspense account 159,698,380 153,037,756 iv) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses 829,109,496 489,509,292 1,414,913,830 1,118,554,721

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) (37,000,000) 5,452,930,000 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

352 Annual Report 2017 15.5 Particulars of required provision for other assets Base for provision Rate (%) Taka 2017 Legal expenses for defaulting borrowings 5,811,177 50% 2,905,588 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 Base for provision Rate (%) Taka 2016 Legal expenses for defaulting borrowings 6,602,196 50% 3,301,098 Legal expenses for defaulting borrowings 59,465,461 100% 59,465,461 Others 97,209,000 50% 48,604,500 Others 48,782,784 100% 48,782,784 Protested bills 3,581,157 100% 3,581,157 Nostro account balance - 100% - Required provision on other assets 163,735,000 Total provision maintained 163,735,000 Excess provision -

2017 2016 Note Taka Taka 16 Consolidated borrowings from other banks, financial institutions and agents Subordinated bond: Southeast Bank Limited 17 7,400,000,000 8,000,000,000 7,400,000,000 8,000,000,000 Other borrowings: Southeast Bank Limited 17 10,181,648,728 7,363,947,263 Southeast Bank Capital Services Limited - 7,698,493 10,181,648,728 7,371,645,756 Less: Inter company balance eliminated - 10,674 10,181,648,728 7,371,635,082 17,581,648,728 15,371,635,082 17 Borrowings from other banks, financial institutions and agents Subordinated Bond 17.2.ii 7,400,000,000 8,000,000,000 Other borrowings 17.2.i +17.3 10,181,648,728 7,363,947,263 17,581,648,728 15,363,947,263 17.1 Borrowing from other banks, financial institutions and agents In Bangladesh 17.2 9,766,498,728 9,625,908,073 Outside Bangladesh 17.3 7,815,150,000 5,738,039,190 17,581,648,728 15,363,947,263

17.2 In Bangladesh i. Secured: Refinance against agro-based credit from Bangladesh Bank 7,159,548 8,784,992 Refinance for housing sector from Bangladesh Bank 29,223,507 30,013,624 Refinance against SME loan from Bangladesh Bank 24,125,625 7,850,000 Refinance against Solar energy, Bio Gas & ETP Scheme from Bangladesh Bank 1,766,840 3,866,844 Refinance against RPGCL 39,583,208 75,392,613 Borrowing from IDCOL 264,640,000 - Bangladesh Bank Islamic Bond 2,000,000,000 1,500,000,000 2,366,498,728 1,625,908,073

Southeast Bank Limited 353 2017 2016 Note Taka Taka ii. Unsecured: Subordinated Bond Rupali Bank Limited 1,050,000,000 1,250,000,000 Sonali Bank Limited 1,600,000,000 1,750,000,000 Agrani Bank Limited 850,000,000 950,000,000 Pubali Bank Limited 1,240,000,000 1,300,000,000 Mercantile Bank Limited 200,000,000 250,000,000 Saudi-Bangladesh Industrial and Agricultural Investment Company Ltd. 160,000,000 200,000,000 Sadharan Bima Corporation 100,000,000 100,000,000 Uttara Bank Limited 200,000,000 200,000,000 Dhaka Bank Limited 750,000,000 750,000,000 National Life Insurance Limited 750,000,000 750,000,000 Janata Bank Limited 500,000,000 500,000,000 7,400,000,000 8,000,000,000 Total (iii=i+ii) 9,766,498,728 9,625,908,073 17.3 Outside Bangladesh Secured Borrowing from MASHREQ BANK PSC-USD 827,000,000 393,555,500 Borrowing from Commercial Bank of Qatar 661,600,000 - Borrowing from RAK BANK, UAE 1,240,500,000 1,416,799,800 Borrowing from Bank Muscat, Oman 661,600,000 393,555,500 Borrowing from FGB, UAE 827,000,000 1,180,666,500 Borrowing from HDFC BANK, Hong Kong 413,500,000 - 4,631,200,000 3,384,577,300 Unsecured - Borrowing from International Finance Corporation (IFC) 1,240,500,000 1,180,666,500 Borrowing from Global Climate Partnership Fund S.A. 1,654,000,000 787,111,000 Borrowing from ADB 289,450,000 385,684,390 3,183,950,000 2,353,461,890 7,815,150,000 5,738,039,190 17.4 Maturity grouping of borrowings Repayable on demand - - Repayable within one month 1,327,000,000 1,393,555,500 Over one month but within six months 5,858,290,000 3,530,377,350 Over six months but within one year 1,240,500,000 1,526,995,340 Over one year 9,155,858,728 8,913,019,073 17,581,648,728 15,363,947,263 18 Consolidated deposits and other accounts Current/Al-wadeeah current accounts and other accounts Southeast Bank Limited 35,516,538,988 30,845,332,890 Southeast Bank Capital Services Limited 27,524,421 21,003,651 35,544,063,409 30,866,336,541 Less: Inter company balance eliminated 32,538,042 581,276,914 35,511,525,367 30,285,059,627 Bills payable Southeast Bank Limited 4,933,769,345 6,548,856,941 Southeast Bank Capital Services Limited - - 4,933,769,345 6,548,856,941

354 Annual Report 2017 2017 2016 Note Taka Taka Savings bank/Mudaraba savings bank deposits Southeast Bank Limited 23,896,582,534 19,700,582,409 Southeast Bank Capital Services Limited - - 23,896,582,534 19,700,582,409 Fixed deposits/Mudaraba fixed deposits Southeast Bank Limited 205,486,197,802 173,438,929,873 Southeast Bank Capital Services Limited - - 205,486,197,802 173,438,929,873 269,828,075,048 229,973,428,850 19 Deposits and other accounts Current/Al-wadeeah current accounts and other accounts Current/Al-wadeeah current deposits 11,660,602,738 10,325,582,928 Foreign currency deposits 1,172,088,721 955,223,540 Sundry deposits 19.1 22,683,847,529 19,564,526,422 35,516,538,988 30,845,332,890 Bills payable Payment order issued 4,929,177,495 6,544,011,764 Demand draft 4,591,850 4,845,177 4,933,769,345 6,548,856,941 Savings bank/Mudaraba savings bank deposits 23,896,582,534 19,700,582,409 Fixed deposits/Mudaraba fixed deposits Fixed deposits/Mudaraba fixed deposits 154,258,587,986 114,612,212,666 Special notice/Mudaraba special notice deposits 32,795,221,961 25,012,168,173 Scheme deposits 16,206,340,313 31,923,436,868 Interest payable on FDR/Scheme 2,226,047,542 1,891,112,166 205,486,197,802 173,438,929,873 269,833,088,669 230,533,702,113 19.1 Sundry deposits Margin under letter of credit 2,763,811,423 2,371,615,981 Margin against IBP 2,204,555 436,626 Margin against FBP 17,555,879 61,007,589 Margin under letter of guarantee 1,153,632,058 959,140,248 Margin under export proceeds - 4,336,873 Margin against time loan to issue pay order 60,032,178 61,704,891 Deposit held against FDBP/IDBP, export bills etc. 61,711,823 19,456,399 FC held against EDF L/C and LTFF 12,794,398,617 10,935,473,081 Accounts payable 2,661,165 168,310 Telegraphic transfer 1,155,260 911,042 Margin on acceptance 5,606,379,466 4,955,318,557 Remittance awaiting disposal 8,665,791 35,073,275 Others 211,639,314 159,883,550 22,683,847,529 19,564,526,422 19.2 Deposits from banks and others Inter-bank deposits 19.3 12,808,254,410 5,583,333,738 Other deposits 257,024,834,259 224,950,368,375 269,833,088,669 230,533,702,113

Southeast Bank Limited 355 2017 2016 Note Taka Taka 19.3 Inter-bank deposits AB Bank Limited 2,542,053 2,488,046 Agrani Bank Limited 2,000,000,000 - Al-Arafa Islami Bank Limited 509,579,016 565,983,998 BASIC Bank Limited 500,000,000 - BRAC Bank Limited - 45,769 Bangladesh Krishi Bank 500,000,000 - Citibank N.A. 280,631,821 185,520,586 Commercial Bank of Ceylon Plc. - 390,000,000 Dhaka Bank Limited 211,789 213,089 EXIM Bank Limited 4,940,476 6,461,754 First Security Islami Bank Limited 3,147,809 7,077,931 Habib Bank Limited 200,000,000 - IFIC Bank Limited 259,920 255,406 Islami Bank Bangladesh Limited 2,258,232,880 3,208,051,238 Meghna Bank Limited 6,765,214 988,204 Mercantile Bank Limited 218,427 239,288 Mutual Trust Bank Limited 510,312 781,492 NCC Bank Limited - - NRB Commercial Bank Limited 390,689 747,504 Prime Bank Limited 500,000,000 700,000,000 Rupali Bank Limited 1,000,000,000 - Sonali Bank Limited 2,250,000,000 - Shahjalal Islami Bank Limited 442,850 433,626 Social Islami Bank Limited 323,177 4,230,200 The City Bank Limited 10,022,802 9,810,644 The Trust Bank Limited 300,003,926 4,963 United Commercial Bank Limited 1,980,000,000 500,000,000 Uttara Bank Limited 500,031,250 - 12,808,254,410 5,583,333,738 19.4 Sector-wise deposits Government 6,669,198,828 5,415,989,663 Deposit money banks 12,808,254,410 5,583,333,738 Other public 33,099,336,060 22,754,898,930 Foreign currency 1,233,469,083 975,352,673 Private 216,022,830,288 195,804,127,109 269,833,088,669 230,533,702,113 19.5 Unclaimed Deposits and valuables Payment Order 952,972 482,443 952,972 482,443 19.6 Analysis of residual maturity grouping of deposits Inter-bank deposits: Payable on demand 284,854,504 191,014,838 Within one month 4,593,399,906 1,692,318,900 More than one month but less than six months 7,930,000,000 3,700,000,000 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 - - 12,808,254,410 5,583,333,738 Other Deposits: Payable on demand 97,457,839,958 3,862,485,162 Within one month 10,193,683,482 45,180,881,100 More than one month but less than six months 100,979,387,420 38,086,500,000 More than six months but less than one year 20,760,331,750 79,864,100,000 More than one year but less than five years 21,625,933,190 41,774,400,000 More than five years but less than ten years 6,007,658,459 16,182,002,113 257,024,834,259 224,950,368,375 269,833,088,669 230,533,702,113

356 Annual Report 2017 2017 2016 Note Taka Taka 20 Consolidated other liabilities Southeast Bank Limited 21 25,732,763,716 19,572,488,052 Southeast Bank Capital Services Limited 275,624,978 309,418,341 Southeast Financial Services (UK) Ltd 10,221,012 18,831,655 Southeast Financial Services (Australia) Pty Ltd 1,566,828 1,881,449 Southeast Exchange Company (South Africa) Pty Ltd 26,279,448 18,491,824 26,046,455,982 19,921,111,321 Less: Inter company balance eliminated 1,823,132 1,726,998 26,044,632,850 19,919,384,323 21 Other liabilities Provision for loans and advances/investments 21.1 10,069,290,980 6,158,284,306 Interest suspense account 21.2 4,402,732,281 3,549,523,832 Provision for taxation 21.3 5,163,120,617 4,998,658,798 Obligation under finance lease 21.4 3,768,470 10,265,943 Accrued expenses 8,600,057 11,784,329 Interest payable on borrowings 110,226,431 93,508,887 Accounts payable-Bangladesh Bank 129,843,978 53,746,147 Accounts payable-others 1,291,009,221 587,702,202 Provision for diminution in the market value of share 59 419,055,000 905,705,624 Other provisions 21.5.1 1,610,746,800 1,326,235,000 Unearned income 360,014,159 388,476,342 Branch adjustment 21.6 1,160,994,811 592,435,184 Withholding tax 1,002,360,911 895,161,458 Provision for audit fees 1,000,000 1,000,000 25,732,763,716 19,572,488,052 21.1 Provision for loans and advances/investments A. General Balance as at 1 January 2,430,000,000 1,540,000,000 Add: Provision made during the year On standard loans and advances/investments etc. 982,841,369 870,814,544 On Special Mention Account (SMA) 27,768,655 19,185,456 1,010,610,024 890,000,000 Less: Provision no longer required - - Balance as at 31 December 3,440,610,024 2,430,000,000 B. Specific Balance as at 1 January 3,728,284,306 2,323,288,081 Less: Fully provided debt write off during the year (1,030,097,472) (1,012,890,775) Add: Recoveries of amounts previously written off 154,213,601 72,709,902 Add: Specific provision for the year 3,781,324,521 2,360,990,098 Less: Recoveries and provisions no longer required - - Less: Interest waiver during the year (5,044,000) (15,813,000) Net charge to Profit & Loss A/C 2,900,396,650 1,404,996,225 Balance as at 31 December 6,628,680,956 3,728,284,306 C. Total provision on loans and advances/investments (A+B) 10,069,290,980 6,158,284,306 * Provision for loans and advances has been kept as per Bangladesh Bank vide letter reference no(s):DBI-1/78/2018-1313 dated 26 April 2018 and DBI-1/78/2017-1206 dated 27 March 2017. 21.2 Interest suspense account Balance as at 1 January 3,549,523,832 2,832,654,051 Add: Amount transferred to interest suspense account during the year 2,210,542,837 1,790,397,963 5,760,066,669 4,623,052,014 Less: Amount of interest suspense recovered during the year 1,023,651,441 892,575,369 Amount written off during the year 256,697,755 117,625,320 Interest waiver during the year 76,985,192 63,327,493 1,357,334,388 1,073,528,182 Balance as at 31 December 4,402,732,281 3,549,523,832

Southeast Bank Limited 357 2017 2016 Note Taka Taka 21.3 Provision for taxation Provision for current tax 21.3.1 3,806,832,079 3,607,144,155 Deferred tax liabilities 21.3.2 1,356,288,538 1,391,514,643 5,163,120,617 4,998,658,798 21.3.1 Provision for current tax Provision Balance as at 1 January 13,731,854,123 10,966,854,123 Provision made during the year 2,830,000,000 2,765,000,000 16,561,854,123 13,731,854,123 Adjustments made during the year - - (A) Balance as at 31 December 16,561,854,123 13,731,854,123 Advance tax Balance as at 1 January 10,124,709,968 8,277,510,044 Paid during the year 2,630,312,076 1,847,199,924 12,755,022,044 10,124,709,968 Adjustments made during the year - - (B) Balance as at 31 December 12,755,022,044 10,124,709,968 (A-B) Net balance as at 31 December 3,806,832,079 3,607,144,155 Provision for current tax of Tk. 2,830,000,000 has been made @ 40.00% as prescribed by Finance Act 2017 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 BAS 12 "Income Tax". 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 21.3.3.1 425,536,360 275,536,360 Revaluation reserve of HTM securities 21.3.3.2 5,611,947 4,060,523 Revaluation reserve of HFT securities 21.3.3.3 183,467,967 370,245,496 1,356,288,538 1,391,514,643 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 securities Deferred 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.

358 Annual Report 2017 2017 2016 Note Taka Taka 21.3.3 Movement of deferred tax liabilities Balance as at 1 January 1,391,514,643 965,112,201 Provision made for deferred tax liabilities Charged to profit and loss account 150,000,000 65,000,000 Charged to revaluation reserve 130,212,148 371,434,778 280,212,148 436,434,778 1,671,726,791 1,401,546,979 Adjustment made during the year for revaluation reserve (315,438,253) (10,032,336) Balance as at 31 December 1,356,288,538 1,391,514,643 21.3.3.1 Deferred tax on fixed assets- except land and revaluation reserve of buildings Balance as at 1 January 275,536,360 210,536,360 Charge to profit and loss account 150,000,000 65,000,000 Balance as at 31 December 425,536,360 275,536,360 21.3.3.2 Deferred tax on revaluation reserve of HTM securities Balance as at 1 January 4,060,523 12,903,577 Charge to revaluation reserves 1,551,424 1,189,282 Adjustment during the year - (10,032,336) Balance as at 31 December 5,611,947 4,060,523 21.3.3.3 Deferred tax on revaluation reserve of HFT securities Balance as at 1 January 370,245,496 - Charge to revaluation reserves 128,660,724 370,245,496 Adjustment during the year (315,438,253) - Balance as at 31 December 183,467,967 370,245,496 21.4 Obligation under finance lease Balance as at 1 January 10,265,943 18,654,060 Addition during the year 1,707,240 - 11,973,183 18,654,060 Adjustment during the year (8,204,713) (8,388,117) Balance as at 31 December 3,768,470 10,265,943 21.4.1 Aging analysis of liabilities under finance lease Minimum Principal Financial charge for lease outstanding future periods payment Taka Taka Taka 2017 Payable 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 2016 Payable within 1 year 9,258,860 1,108,945 8,149,915 Payable more than 1 year but less than 2 years 2,318,297 202,269 2,116,028 Payable more than 2 years but less than 5 years - - - 11,577,157 1,311,214 10,265,943

2017 2016 Note Taka Taka 21.5 Other provisions charged to profit and loss Provision for other assets 21.5.1 (A) - 92,735,000 Provision for good borrowers 21.5.1 (B) 20,000,000 23,000,000 Provision for off-balance sheet exposures 21.5.1 (C) 285,500,000 249,500,000 305,500,000 365,235,000

Southeast Bank Limited 359 2017 2016 Note Taka Taka 21.5.1 Other Provisions A) Provision for other assets Balance as at 1 January 163,735,000 71,000,000 Addition during the year - 92,735,000 163,735,000 163,735,000 Adjustment during the year - - Balance as at 31 December 163,735,000 163,735,000 B) Provision for good borrowers Balance as at 1 January 23,000,000 11,878,000 Addition during the year 20,000,000 23,000,000 43,000,000 34,878,000 Adjustment during the year (20,988,200) (11,878,000) Balance as at 31 December 22,011,800 23,000,000

C) Provision for off-balance sheet exposures

Balance as at 1 January 1,139,500,000 890,000,000 Provision made during the year 285,500,000 249,500,000 1,425,000,000 1,139,500,000 Adjustments made during the year - - Balance as at 31 December 1,425,000,000 1,139,500,000

D) Total other provisions (A+B+C) 1,610,746,800 1,326,235,000 21.6 Branch adjustment (credit) General accounts debit 2,837,208,189 928,625,816 General accounts credit 3,998,203,000 1,521,061,000 1,160,994,811 592,435,184 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 December 2017 are given below: No. of unrespondent entries Unrespondent entries (Taka) Debit Credit Debit Credit Upto 3 months 1,385 2,601 2,837,208,189 3,998,203,000 Over 3 months but within 6 months - - - - Over 6 months but within 1 year - - - - Over 1 year but within 5 years - - - - 1,385 2,601 2,837,208,189 3,998,203,000

2017 2016 Taka Taka 22 Share Capital 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 3,781,649,700 538,785,206 ordinary shares of Tk 10 each issued as bonus shares 5,387,852,060 5,387,852,060 916,950,176 9,169,501,760 9,169,501,760 22.3 Dividends The following dividends were declared and paid by the Bank for the year ended 31 December. 2.00 Taka per ordinary share for 2016 (1.50 Taka per ordinary share for 2015) 1,833,900,352 1,375,425,264 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. 1.50 Taka (stock dividend) per ordinary share for 2017 and 2.00 Taka (cash dividend) per ordinary share for 2016 1,375,425,264 1,833,900,352

360 Annual Report 2017 22.4 Share capital at a glance from inception Number of Capital amount Cumulative Year Particulars shares (Taka) (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 Right Issue @ 1:2 1,650,000 165,000,000 564,300,000 2003 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 Right Issue @1:1 10,563,696 1,056,369,600 2,112,739,200 2006 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 Right Issue @1:2 23,102,801 2,310,280,100 6,930,840,400 2010 20% Stock Dividend 13,861,680 1,386,168,000 8,317,008,400 Stock split (1:10) 748,530,756 - 8,317,008,400 2011 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 22.5 Classification of shareholders by holding Number of holders % of total holding 2017 2016 2017 2016 Less than 500 shares 10,398 12,031 0.21 0.22 501 to 5,000 shares 19,181 21,160 3.83 3.91 5,001 to 10,000 shares 2,982 2,744 2.38 2.10 10,001 to 20,000 shares 1,641 1,521 2.55 2.31 20,001 to 30,000 shares 540 471 1.45 1.27 30,001 to 40,000 shares 241 217 0.92 0.82 40,001 to 50,000 shares 197 121 1.00 0.60 50,001 to 1,00,000 shares 367 309 2.97 2.45 1,00,001 to 10,00,000 shares 370 311 12.33 9.63 Over 10,00,000 shares 121 124 72.36 76.69 36,038 39,009 100.00 100.00 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.

Southeast Bank Limited 361 22.7 Name of the Directors and their shareholdings in the year 2017

Sl. As at 1 January As at 31 December Name of the directors Status no. 2017 2017 1 Mr. Alamgir Kabir, FCA Chairman 19,944,672 19,944,672 2 Mrs. Duluma Ahmed Vice Chairperson 19,082,742 19,082,742 3 Mr. M. A. Kashem Director 20,307,060 20,307,060 4 Mr. Azim Uddin Ahmed Director 25,490,735 25,490,735 5 Mrs. Jusna Ara Kashem Director 18,339,525 18,339,525 6 Mr. Md. Akikur Rahman Director 18,443,731 18,443,731 7 Mrs. Rehana Rahman Director 18,844,145 18,844,145 8 Mrs. Sirat Monira Director 120,547 120,547 9 Mr. A. H. M. Moazzem Hossain Independent Director - - 10 Dr. Quazi Mesbahuddin Ahmed Independent Director - - 11 Mr. M. Kamal Hossain Managing Director - - 140,573,157 140,573,157 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. 2017 2016 Note Taka Taka Common equity Tier-1 capital (Going Concern Capital) Paid up capital 9,169,501,760 9,169,501,760 Share premium - - Statutory reserve 23 9,170,000,000 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,640,353,198 3,171,824,195 21,227,504,958 21,758,975,955 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 148,251,669 108,599,195 A) Total common equity Tier 1 capital 21,079,253,289 21,650,376,760

Tier 2 Capital (Gone -Concern Capital) Subordinated bond 6,800,000,000 7,400,000,000 General provision maintained against unclassified loan/investments 3,440,610,024 2,430,000,000 General provision on off-balance sheet items 1,425,000,000 1,139,500,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984 14,001,042,758 13,304,932,734 Less: Regulatory adjustments 1,401,259,640 934,173,094 Total Tier 2 capital 12,599,783,118 12,370,759,640 B) Total capital 33,679,036,407 34,021,136,400 C) Risk Weighted Assets (RWA) Credit Risk On-balance sheet 226,671,124,618 197,023,731,313 Off-balance sheet 50,312,116,068 52,501,153,245 276,983,240,686 249,524,884,558 Market risk 12,834,521,890 10,687,308,524 Operational risk 20,020,349,602 19,045,800,808 Total RWA 309,838,112,178 279,257,993,890 D) Required common equity Tier 1 Capital 13,942,715,048 12,566,609,725 Required Tier 1 Capital 6% (2016: 5.5%) of RWA) 18,590,286,731 15,359,189,664 E) Required total capital 11.25% (2016: 10.625%) of RWA 34,856,787,620 29,671,161,851 F) Surplus common equity Tier 1 Capital(A-D) 7,136,538,241 9,083,767,035 G) Surplus total capital (B-E) (1,177,751,213) 4,349,974,549 Capital to risk-weighted assets ratio: On common equity Tier 1 capital against standard of minimum 4.5% 6.80% 7.75% On Tier 1 capital - against standard of minimum 5.5% 6.80% 7.75% On total capital - against standard of minimum 11.25% (2016:10.625%) 10.87% 12.18%

362 Annual Report 2017 2017 2016 Note Taka Taka 22.9 Leverage Ratio of the Bank A) Tier 1 capital considering all regulatory adjustments 21,079,253,289 21,650,376,760 B) On-balance sheet exposure 333,842,502,292 288,205,418,780 C) Off-balance sheet exposure 74,492,727,609 65,343,127,141 D) Deduction from on and off balance sheet exposure / Regulatory adjustment 148,251,670 108,599,195 E) Total exposure (B+C-D) 408,186,978,231 353,439,946,726 Leverage ratio (A/E) 5.16% 6.13% Liquidity coverage ratio 102.81% 118.50% Net stable funding ratio 115.55% 109.53% 22.10 Capital to Risk weighted Asset Ratio (CRAR) of the Group Common Equity Tier 1 Capital Paid up capital 9,169,501,760 9,169,501,760 Share premium - - Statutory reserve 23 9,170,000,000 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Non- controlling interest 29 10,050,803 10,003,160 Retained earnings 27 2,716,398,712 3,196,967,474 21,313,601,275 21,794,122,394 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 148,251,669 108,599,195 A) Total common equity Tier 1 capital 21,165,349,606 21,685,523,199 Tier 2 capital (Gone- Concern Capital) Subordinated bond 6,800,000,000 7,400,000,000 General provision maintained against unclassified loan/investments 3,440,610,024 2,430,000,000 General provision on off-balance sheet items 1,425,000,000 1,139,500,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984 14,001,042,758 13,304,932,734 Less: Regulatory adjustments 1,401,259,640 934,173,094 Total Tier 2 capital 12,599,783,118 12,370,759,640 B) Total capital 33,765,132,724 34,056,282,839 C) Risk weighted assets (RWA) Credit risk On-balance sheet 223,592,214,199 193,740,348,940 Off-balance sheet 50,312,116,068 52,501,153,245 273,904,330,267 246,241,502,185 Market risk 17,439,506,326 15,004,950,584 Operational risk 20,213,502,052 19,155,835,724 Total RWA 311,557,338,645 280,402,288,493 D) Required common equity Tier 1 capital 14,020,080,239 12,618,102,982 Required Tier 1 capital 6% (2016: 5.5%) of RWA 18,693,440,319 15,422,125,867 E) Required total capital 11.25% (2016: 10.625%) of RWA 35,050,200,598 29,792,743,152 F) Surplus common equity Tier 1 capital (A-D) 7,145,269,367 9,067,420,217 G) Surplus total capital (B-E) (1,285,067,874) 4,263,539,686 Capital to risk- weighted asset ratio: On common equity Tier 1 capital - against standard of minimum 4.5% 6.79% 7.73% On Tier 1 capital - against standard of minimum 5.5% 6.79% 7.73% On total capital - against standard of minimum 11.25% (2016:10.625%) 10.84% 12.15%

Southeast Bank Limited 363 2017 2016 Note Taka Taka 22.11 Leverage ratio of the Group A) Tier 1 capital considering all regulatory adjustments 21,165,349,606 21,685,523,199 B) On-balance sheet exposure 334,210,339,400 288,083,485,568 C) Off-balance sheet exposure 74,492,727,609 65,343,127,141 D) Deduction from on and off balance sheet exposure / Regulatory adjustment 148,251,669 108,599,195 E) Total exposure (B+C-D) 408,554,815,340 353,318,013,514 Leverage ratio (A/E) 5.18% 6.14% Liquidity coverage ratio 102.81% 118.50% Net stable funding ratio 115.55% 109.53% 23 Statutory reserve Balance as at 1 January 9,170,000,000 8,897,307,905 Addition during the year - 272,692,095 Balance as at 31 December 9,170,000,000 9,170,000,000 24 Revaluation reserve 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 Revaluation reserve on HTM securities: Balance as at 1 January 9,771,453 31,062,627 Addition during the year 3,878,561 2,973,204 13,650,014 34,035,831 Adjustment during the year - (24,264,378) 13,650,014 9,771,453 Deferred tax liabilities (5,611,947) (4,060,523) Balance as at 31 December 8,038,067 5,710,930 Revaluation reserve on HFT securities: Balance as at 1 January 925,613,743 1,747,159,502 Addition during the year 476,312,385 1,437,433,310 1,401,926,128 3,184,592,812 Adjustment during the year (895,066,673) (2,258,979,069) 506,859,455 925,613,743 Deferred tax liabilities (183,467,967) (370,245,496) Balance as at 31 December 323,391,488 555,368,247 4,534,239,054 4,763,888,676 25 Other reserve 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 Foreign currency translation reserve Balance as at 1 January 24,449,246 27,870,748 (Adjustments)/addition during the year (10,306,481) (3,421,502) Balance as at 31 December 14,142,765 24,449,246 The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

364 Annual Report 2017 2017 2016 Note Taka Taka 27 Consolidated retained earnings Southeast Bank Limited 28 2,640,353,198 3,171,824,195 Southeast Bank Capital Services Limited (10,468,432) (36,442,114) Southeast Financial Services (UK) Ltd (18,001,423) (21,927,930) Southeast Financial Services (Australia) Pty Ltd (18,576,974) (16,753,827) Southeast Exchange Company (South Africa) Pty Ltd 37,532,295 14,707,102 Less: Elimination for impairment of investment in subsidiary 85,560,048 85,560,048 2,716,398,712 3,196,967,474 28 Retained earnings Balance as at 1 January 3,171,824,195 2,942,327,335 Currency translation differences 17,226,310 807,996 Prior year adjustment 166,906,342 435,000 3,355,956,847 2,943,570,331 Retained surplus for the year 1,118,296,703 2,143,679,128 4,474,253,550 5,087,249,459 Less: Transfer to SEBL Foundation - 300,000,000 Transfer to Employees Welfare Fund - 200,000,000 Transfer to Green Award Trust - 40,000,000 Cash dividend paid 1,833,900,352 1,375,425,264 1,833,900,352 1,915,425,264 Retained earnings carried forward 2,640,353,198 3,171,824,195 29 Non-controlling interest Paid up capital 5,500,000,000 5,500,000,000 Retained earnings (10,487,634) (36,508,959) Total net assets 5,489,512,366 5,463,491,041

Non-controlling interest 0.183091% (2016:0.183091%) of net assets 10,050,803 10,003,160 Non-controlling interest arises only for Southeast Bank Capital Services Limited since all other subsidiaries are wholly owned by Southeast Bank Limited. 30 Contingent liabilities 30.1 Acceptances and endorsements Acceptance under Letters of Credit (LC) - other than back to back 39,997,385,993 28,774,137,644 Acceptance under Letters of Credit -back to back 17,141,146,992 15,039,415,997 57,138,532,985 43,813,553,641 30.2 Letters of guarantee Local 14,928,991,500 12,150,518,547 Foreign 995,971,664 3,003,598,053 15,924,963,164 15,154,116,600 30.2.1 Balance for which the Bank is contingently liable in respect of guarantee issued favouring: Directors or officers 4,783,000 4,857,301 Government - - Banks and other financial institutions 42,916,540 51,189,342 Others 15,877,263,624 15,098,069,957 15,924,963,164 15,154,116,600 30.3 Irrevocable Letters of Credit (L/C) Back to back L/C 16,719,794,155 13,920,027,996 Others 27,475,343,281 18,961,275,681 44,195,137,436 32,881,303,677

Southeast Bank Limited 365 2017 2016 Note Taka Taka 30.4 Bills for collection Local 11,767,568,379 8,626,271,866 Foreign 10,899,018,477 9,204,033,000 22,666,586,856 17,830,304,866 30.5 Other contingent liabilities Value of Bangladesh Sanchaypatra & others 1,744,473,000 1,474,684,000 31 Income statement Income: Interest, discount and similar income 22,838,457,502 21,860,782,434 Dividend income 194,053,603 171,780,691 Fees, commission and brokerage 2,016,554,343 1,716,151,498 Gains less losses arising from dealing securities (282,508,062) (92,035,077) Gains less losses arising from investment securities 120,732,297 62,766,457 Gains less losses arising from dealing in foreign currencies 1,344,124,999 1,131,546,418 Other operating income 821,156,590 630,611,620 27,052,571,272 25,481,604,041 Expenses: Interest, fees and commission 13,378,247,565 12,785,664,559 Administrative expenses 3,117,829,896 2,907,702,764 Other operating expenses 1,299,784,648 1,011,019,434 Depreciation on banking assets 317,580,081 279,400,188 18,113,442,190 16,983,786,945 Income over expenses 8,939,129,082 8,497,817,096 32 Consolidated interest income/profit on investments Southeast Bank Limited 33 17,384,904,816 16,988,878,395 Southeast Bank Capital Services Limited 22,287,081 98,716,858 Southeast Financial Services (UK) Ltd - - Southeast Financial Services (Australia) Pty Ltd 38 - Southeast Exchange Company (South Africa) Pty Ltd 4,536,934 3,159,897 17,411,728,869 17,090,755,150 Less: Inter company balance eliminated 11,178,794 118,428,584 17,400,550,075 16,972,326,566 33 Interest income/profit on investments Interest on loans and advances (Conventional Banking): Interest on loans and advances 16,097,860,717 15,723,721,273 Interest on placement with other banks and financial institutions 164,342,052 235,799,541 Interest on foreign currency balances 57,142,303 41,032,156 16,319,345,071 16,000,552,970 Profit on investment (Islamic Banking): Profit on investments 1,049,413,515 960,821,860 Profit on placement with other banks 16,146,229 27,503,565 1,065,559,745 988,325,425 17,384,904,816 16,988,878,395 34 Consolidated interest paid/profit shared on deposits and borrowings etc. Southeast Bank Limited 35 13,378,247,565 12,785,664,559 Southeast Bank Capital Services Limited 5,791,226 97,880,488 13,384,038,791 12,883,545,047 Less: Inter company balance eliminated 11,178,794 118,428,584 13,372,859,997 12,765,116,463 35 Interest paid/profit shared on deposits and borrowings etc. Interest paid on deposits (Conventional Banking): Interest on deposits 11,370,686,362 11,055,657,345 Interest on borrowings 1,049,743,814 632,784,047 Interest on repurchase agreement (repo) 14,011,606 17,128,657 Interest on refinance 4,618,683 6,122,088 Interest on foreign bank accounts 683,543 688,517 12,439,744,008 11,712,380,654 Profit shared on deposits (Islamic Banking): Profit paid on deposits 856,271,639 1,033,652,397 Profit on refinance borrowings 82,231,918 39,631,508 938,503,557 1,073,283,905 13,378,247,565 12,785,664,559

366 Annual Report 2017 2017 2016 Note Taka Taka 36 Consolidated investment income Southeast Bank Limited 37 5,485,830,524 5,014,416,110 Southeast Bank Capital Services Limited 101,070,928 65,190,638 5,586,901,452 5,079,606,748 Less: Inter company balance eliminated 16,253,055 - 5,570,648,397 5,079,606,748 37 Investment income Interest income from Government securities 37.1 5,114,905,070 4,850,203,187 Capital gain on Government securities 37.2 694,421,153 165,315,064 Revaluation gain (loss) on Government securities 37.3 (976,929,215) (257,350,141) Dividend on investment in shares 194,053,603 171,780,691 Gain on sale of investment in shares 120,732,297 62,766,457 Interest income from investment in bonds 338,647,616 21,700,852 5,485,830,524 5,014,416,110

37.1 Interest income from Government securities Interest on treasury bills 7,858,032 50,888,907 Interest on treasury bonds/T&T bonds 6,657,538,978 5,212,036,586 Interest on Bangladesh Bank bills 3,275,000 12,775,336 6,668,672,010 5,275,700,829

Interest expenses on treasury bills (23,687) - Interest expenses on treasury bonds (1,553,743,253) (425,497,642) (1,553,766,940) (425,497,642) Net interest income from Government securities 5,114,905,070 4,850,203,187 37.2 Capital gain on Government securities Capital gain on treasury bills 1,273,366 33,613,398 Capital gain on treasury bonds/T&T bonds 841,076,080 470,308,910 Capital gain on BB bills 268,536 - 842,617,982 503,922,308

Capital loss on treasury bills (671,113) (10,522,317) Capital loss on treasury bonds/T&T bonds (147,525,716) (328,084,927) (148,196,829) (338,607,244) Net capital gain on Government securities 694,421,153 165,315,064 37.3 Revaluation gain (loss) on Government securities Revaluation gain on treasury bills - 34,853,444 Revaluation gain on treasury bonds - 1,123,041,580 Revaluation gain on Bangladesh Bank bills - 331,058 - 1,158,226,082 Revaluation loss on treasury bills (227,635) (36,796,312) Revaluation loss on treasury bonds (976,433,044) (1,378,764,241) Revaluation loss on Bangladesh Bank bills (268,536) (15,670) (976,929,215) (1,415,576,223) Net revaluation gain (loss) on Government securities (976,929,215) (257,350,141) 38 Consolidated commission, exchange and brokerage Southeast Bank Limited 39 3,360,679,342 2,847,697,916 Southeast Bank Capital Services Limited 535,000 442,368 Southeast Financial Services (UK) Ltd 24,015,788 17,672,592 Southeast Financial Services (Australia) Pty Ltd 453,195 283,051 Southeast Exchange Company (South Africa) Pty Ltd 77,246,127 36,939,030 3,462,929,452 2,903,034,957

Southeast Bank Limited 367 2017 2016 Note Taka Taka 39 Commission, exchange and brokerage Commission and brokerage 2,016,554,343 1,716,151,498 Exchange gain 39.1 1,344,124,999 1,131,546,418 3,360,679,342 2,847,697,916 39.1 Exchange gain Exchange gain from revaluation/trade of foreign currency 1,294,364,761 1,084,482,265 Exchange gain from credit card 49,760,238 47,064,153 1,344,124,999 1,131,546,418 40 Consolidated other operating income Southeast Bank Limited 41 821,156,590 630,611,620 Southeast Bank Capital Services Limited 53,942,026 33,385,795 Southeast Financial Services (UK) Ltd - 956,063 Southeast Financial Services (Australia) Pty Ltd 788,160 994,837 Southeast Exchange Company (South Africa) Pty Ltd 162,609 241,617 876,049,385 666,189,932 Less: Inter company balance eliminated 4,273,920 3,587,040 871,775,465 662,602,892 41 Other operating income Remittance fees 76,574 383,507 Service and incidental charges 123,578,606 75,606,799 Other fees - telephone and postage 56,000,865 48,779,453 Income from ATM services 32,846,965 23,717,399 Income from credit card 116,782,148 84,365,797 Income from retail banking 6,428,887 6,203,956 Other Fees - SWIFT and others 202,921,414 187,078,571 Gain on sale of fixed assets 41.1 - 4,504,032 Income from telecash 280,047 1,544,548 Miscellaneous income 282,241,084 198,427,558 821,156,590 630,611,620 41.1 Gain on sale of fixed assets Cost: Motor vehicles - 1,950,826 Furniture and fixtures - - Office appliances - 43,200 Electrical appliances - 1,725,338 - 3,719,364 Accumulated depreciation: Motor vehicles - 1,882,200 Furniture and fixtures - - Office appliances - 43,200 Electrical appliances - 1,355,117 - 3,280,517 Written down value - 438,847 Sale proceeds of the above fixed assets - 4,942,879 Gain on sale of fixed assets - 4,504,032 42 Consolidated salaries and allowances Southeast Bank Limited 43 1,816,652,566 1,720,787,663 Southeast Bank Capital Services Limited 10,295,856 8,625,400 Southeast Financial Services (UK) Ltd 10,898,173 7,711,740 Southeast Financial Services (Australia) Pty Ltd 225,742 333,190 Southeast Exchange Company (South Africa) Pty Ltd 5,891,690 4,006,523 1,843,964,027 1,741,464,516 43 Salaries and allowances Basic salary 939,582,089 859,905,510 Allowances 550,510,277 528,545,144 Bonus 248,786,742 259,398,089 Provident fund 77,773,458 72,938,920 1,816,652,566 1,720,787,663

368 Annual Report 2017 2017 2016 Note Taka Taka 44 Consolidated rent, taxes, insurance, electricity etc. Southeast Bank Limited 45 885,118,407 781,507,962 Southeast Bank Capital Services Limited 12,430,740 16,836,502 Southeast Financial Services (UK) Ltd 3,780,890 3,811,899 Southeast Financial Services (Australia) Pty Ltd 320,070 377,117 Southeast Exchange Company (South Africa) Pty Ltd 2,104,524 2,089,838 903,754,631 804,623,318 Less: Inter company balance eliminated 4,273,920 3,587,040 899,480,711 801,036,278 45 Rent, taxes, insurance, electricity etc. Rent, rates and taxes 585,738,951 506,634,063 Insurance 200,424,697 175,031,301 Electricity and lighting 98,954,759 99,842,598 885,118,407 781,507,962 46 Consolidated postage, stamp, telecommunication etc. Southeast Bank Limited 47 175,303,570 165,740,473 Southeast Bank Capital Services Limited 144,673 128,918 Southeast Financial Services (UK) Ltd 274,157 183,062 Southeast Financial Services (Australia) Pty Ltd 34,217 21,703 Southeast Exchange Company (South Africa) Pty Ltd 468,375 376,820 176,224,992 166,450,976 47 Postage, stamp, telecommunication etc. Postage 54,317,413 44,488,954 Telephone /Telex 15,019,822 14,263,286 Electronic banking service 19,200 3,461 FC Charge (Nostro) 5,646,541 5,409,679 VSAT on-line 46,864,229 45,683,245 Reuters services 2,076,740 1,962,811 Other Fees - SWIFT and others 51,359,625 53,929,037 175,303,570 165,740,473 48 Consolidated stationery, printing, advertisements etc. Southeast Bank Limited 49 147,315,550 130,657,839 Southeast Bank Capital Services Limited 256,808 202,117 Southeast Financial Services (UK) Ltd 364,459 607,780 Southeast Financial Services (Australia) Pty Ltd 8,152 - Southeast Exchange Company (South Africa) Pty Ltd 1,600,773 766,662 149,545,742 132,234,398 49 Stationery, printing, advertisements etc. Office stationery 22,982,113 21,152,613 Printing stationery 30,205,473 41,971,518 Security stationery 28,700,945 22,542,957 Computer stationery 12,086,569 12,055,150 Publicity and advertisement 53,340,450 32,935,601 147,315,550 130,657,839 50 Managing Director's salary and fees Basic salary 3,928,757 4,793,333 House rent 1,534,657 1,497,500 House maintenance 866,408 895,833 Leave fare concession 1,262,904 1,497,500 Utility 689,375 595,000 Special allowance 440,575 895,834 Provident Fund 276,747 - Bonus 1,038,000 1,800,000 10,037,423 11,975,000

Southeast Bank Limited 369 2017 2016 Note Taka Taka 51 Consolidated directors' fees Southeast Bank Limited 52 3,575,203 2,697,276 Southeast Bank Capital Services Limited 210,000 215,000 3,785,203 2,912,276 52 Directors' fees Directors' fees 2,983,200 2,344,000 Directors' haltage and travelling 592,003 353,276 3,575,203 2,697,276 Each Director is paid TK. 8,000/ per meeting per attendance. 53 Consolidated auditors' fees Southeast Bank Limited 1,345,000 1,000,000 Southeast Bank Capital Services Limited 69,000 40,000 Southeast Exchange Company (South Africa) Pty Ltd 492,893 559,917 1,906,893 1,599,917 54 Consolidated depreciation and repair Depreciation: Southeast Bank Limited 55 317,580,081 279,400,188 Southeast Bank Capital Services Limited 56,255,905 27,190,185 Southeast Financial Services (UK) Ltd 828,442 888,708 Southeast Financial Services (Australia) Pty Ltd 180,407 152,406 Southeast Exchange Company (South Africa) Pty Ltd 1,384,147 1,039,886 376,228,982 308,671,373 Repair: Southeast Bank Limited 55 78,482,177 93,336,551 Southeast Bank Capital Services Limited 226,265 1,255,742 Southeast Financial Services (UK) Ltd 145,092 100,822 Southeast Financial Services (Australia) Pty Ltd - - Southeast Exchange Company (South Africa) Pty Ltd 306,019 238,245 79,159,553 94,931,360 455,388,535 403,602,733 55 Depreciation and repair of bank's assets A. Depreciation: Buildings 59,510,469 53,357,385 Furniture and fixtures 67,165,556 61,317,791 Professional and reference books - - Office appliances 1,094,721 1,238,052 Computer 31,604,261 19,968,426 Electrical appliances 116,667,374 107,395,523 ATM Booth 21,567,475 20,857,361 Motor vehicles 19,970,225 15,265,650 317,580,081 279,400,188 B. Repair: Furniture and fixtures 7,652,699 35,969,647 Office and electrical appliances 29,183,762 23,976,704 Motor vehicles 5,228,293 4,258,022 Repair, maintenance and utilities 36,417,423 29,132,178 78,482,177 93,336,551 Total (C=A+B) 396,062,258 372,736,739

370 Annual Report 2017 2017 2016 Note Taka Taka 56 Consolidated other expenses Southeast Bank Limited 57 1,298,231,511 1,010,435,457 Southeast Bank Capital Services Limited 7,761,086 5,369,534 Southeast Financial Services (UK) Ltd 4,466,858 4,359,925 Southeast Financial Services (Australia) Pty Ltd 150,514 12,489 Southeast Exchange Company (South Africa) Pty Ltd 17,969,082 9,179,052 Adjustment for impairment loss of investment in subsidiary - 58,000,000 1,328,579,051 1,087,356,457 57 Other expenses Security and cleaning 191,030,312 148,841,877 Entertainment 130,624,782 116,860,733 Car expenses 207,867,443 164,676,795 Books and periodicals 2,455,921 898,728 Subscription and donation 215,112,285 115,669,497 Travelling expenses 11,023,278 11,164,330 Finance charge on leased assets 422,389 3,035,011 Conveyance 13,533,813 12,223,285 Fuel 9,631,531 8,897,361 Training/seminar 8,290,347 5,739,140 Uniforms and apparels 4,351,683 5,307,757 Medical expenses 130,260 104,721 Gratuity 50,000,000 45,000,000 Professional expenses 12,741,797 6,360,999 Loss on sale of fixed assets 57.1 2,751,504 - Expenses for CIB report 865,022 714,180 Expenses regarding credit card 46,219,184 38,096,943 Expenses regarding retail banking & agriculture 59,476,786 72,976,339 Expenses regarding call centre 2,786,845 1,281,797 Expenses relating to ATM services 21,287,699 14,747,512 Expenses regarding mobile banking services-Telecash 3,209,381 8,001,219 Impairment loss from investment in subsidiary - (58,000,000) Miscellaneous 304,419,249 287,837,233 1,298,231,511 1,010,435,457 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) -

Southeast Bank Limited 371 2017 2016 Note Taka Taka 58 Consolidated provision for diminution in value of investments Southeast Bank Limited 59 (256,602,166) (364,779,225) Southeast Bank Capital Services Limited 39,388,168 (38,821,526) (217,213,998) (403,600,751) 59 Provision for diminution in value of investments Dealing securities- Quoted Required provision for the year 9.7 419,055,000 905,705,624 Provision has already been maintained last year (905,705,624) (1,725,241,065) Provision released for disposal of shares during the year 230,048,458 454,756,216 Provision maintained during the year (256,602,166) (364,779,225) 60 Consolidated provision for taxation Current tax: Southeast Bank Limited 61 2,830,000,000 2,765,000,000 Southeast Bank Capital Services Limited 18,983,984 19,740,876 Southeast Exchange Company (South Africa) Pty Ltd 14,314,954 5,812,250 2,863,298,938 2,790,553,126 Deferred tax: Southeast Bank Limited 61 150,000,000 65,000,000 Southeast Exchange Company (South Africa) Pty Ltd 150,332 (28,735) 150,150,332 64,971,265 3,013,449,270 2,855,524,391 61 Provision for taxation Current tax 2,830,000,000 2,765,000,000 Deferred tax 150,000,000 65,000,000 2,980,000,000 2,830,000,000 62 Consolidated cash received from other operating activities Southeast Bank Limited 63 821,156,590 626,107,588 Southeast Bank Capital Services Limited 49,668,106 29,798,755 Southeast Financial Services (UK) Ltd - 956,063 Southeast Financial Services (Australia) Pty Ltd 788,160 994,837 Southeast Exchange Company (South Africa) Pty Ltd 162,609 241,617 871,775,465 658,098,860 63 Cash received from other operating activities Remittance fees 76,574 383,507 Service and incidental charges 123,578,606 75,606,799 Other Fees-Telephone and Postage 56,000,865 48,779,453 Income from ATM services 32,846,965 23,717,399 Income from Credit Card 116,782,148 84,365,797 Other Fees - SWIFT and others 202,921,414 187,078,571 Income from Retail Banking 6,428,887 6,203,956 Income from Telecash 280,047 1,544,548 Miscellaneous income 282,241,084 198,427,558 821,156,590 626,107,588 64 Consolidated payments for other operating activities Southeast Bank Limited 65 2,310,221,404 2,134,111,013 Southeast Bank Capital Services Limited 21,098,572 24,047,813 Southeast Financial Services (UK) Ltd 9,031,456 9,063,488 Southeast Financial Services (Australia) Pty Ltd 512,953 411,309 Southeast Exchange Company (South Africa) Pty Ltd 4,479,690 3,471,565 2,345,344,075 2,171,105,188 65 Payments for other operating activities Rent rates and taxes 835,276,384 864,196,369 Postage 175,303,570 165,740,473 Directors' fees 3,575,203 2,697,276 Repairs 78,482,177 93,336,551 Legal expense 1,553,137 583,977 Audit fees 1,345,000 1,000,000 Other expenses 1,214,685,933 1,006,556,367 2,310,221,404 2,134,111,013

372 Annual Report 2017 2017 2016 Note Taka Taka 66 Consolidated earnings per share Net profit after tax for the year ended 31 December (Taka) 1,168,581,138 2,434,965,442 Number of ordinary shares outstanding 916,950,176 916,950,176 Earnings per share (EPS) (Taka) 1.27 2.66 67 Earnings per share Net profit after tax for the year ended 31 December (Taka) 1,118,296,703 2,416,371,223 Number of ordinary shares outstanding 916,950,176 916,950,176 Earnings per share (EPS) (Taka) 1.22 2.64

68 Group entities

Country of Ownership interest % Name of subsidiary incorporation 2017 2016 Southeast Bank Capital Services Limited Bangladesh 99.816909 99.816909 Southeast Financial Services (UK) Ltd England and Wales 100 100 Southeast Financial Services (Australia) Pty Ltd Australia 100 100 Southeast Exchange Company (South Africa) Pty Ltd South Africa 100 100 69 General 69.1 Audit Committee 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 lastly re-constituted by the Board of Directors in its 514th meeting held on 22 May,2017. The membership and attendance of the members of the Audit Committee are given below: Sl. Name Position Meetings held Attendance Remarks no. 1 Mr. A.H.M. Moazzem Hossain Chairman 7 7 The Members who could (Independent Director) not attend any meeting 2 Mrs. Duluma Ahmed Member 7 7 were granted leave of 3 Mrs. Jusna Ara Kashem Member 7 6 absence. 4 Mrs. Rehana Rahman Member 7 5 5 Dr. Quazi Mesbahuddin Ahmed Member 7 7 (Independent Director) 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. Status with the Name Educational Qualification no. committee 1 Mr. A.H.M. Moazzem Hossain Chairman MA in Economics 2 Mrs. Duluma Ahmed Member Graduate 3 Mrs. Jusna Ara Kashem Member HSC 4 Mrs. Rehana Rahman Member Graduate 5 Dr. Quazi Mesbahuddin Ahmed Member B.A (Hons), M.A., MEC, MSC., Ph. D. in Economics Terms of reference of the Audit Committee i) Mr. A.H.M. Moazzem Hossain, in his capacity as the Independent Director, shall be the Chairman of the Audit Committee. ii) Presence of 03 (three) members shall form quorum. iii) The tenure of office of the Audit Committee shall be for 3 years. iv) The Company Secretary shall act as Secretary to the Audit Committee. v) 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.SEC/CMRRCD/2006-158/134/Admin 144 dated 07 August, 2012 of Bangladesh Securities and Exchange Commission (BSEC). vi) 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 of rules of both the Bank and its regulators.

Southeast Bank Limited 373 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 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, corporate governance, internal control, green banking, and environmental and climate change risks. The added roles of the Audit Committee are to: i) Overseeing the financial reporting process. ii) Monitoring choice of accounting policies and principles. iii) Monitoring Internal Control Risk management process. iv) Overseeing hiring and performance of external auditors. v) Review the annual financial statements before submission to the Board for approval. vi) Reviewing the quarterly and half yearly financial statements before submission to the Board for approval. vii) Reviewing the adequacy of internal audit functions. viii) Reviewing statement of significant related party transactions submitted by the management. ix) Reviewing Management Letters/ Letter of internal control weakness issued by external auditors. x) Reviewing the raising of fund through repeat public offering/ rights issue and its use and application. xi) Monitoring internal control process. xii) Maintaining oversight regulatory compliance, ethics and whistleblower hotlines. xiii) Reviewing Audit Committee’s own terms of reference. 69.2 Risk Management Committee of the Board of Directors of the Bank The Bank Company (Amendment) Act-2013, inter alia, provided for constitution of a Risk Management Committee of the Board of Directors of every Bank. Bangladesh Bank issued BRPD Circular No.11 dated October 27, 2013 delineating, among other things, the composition and functions of the Risk Management Committee especially in the areas of Bank’s core risk-related issues. Feature and composition The Board of Directors of the Bank in its 514th meeting held on May 22, 2017 re-constituted the Risk Management Committee comprising the following Directors of the Bank. One Independent Director was included in the Committee. The membership of the Risk Management Committee of the Board of Directors of the Bank and members’ attendance in its meetings in 2017 are given below:

Sl. Members Position Meetings held Attendance Remarks no. 1 Mr. Alamgir Kabir, FCA Chairman 8 8 The Members who could 2 Mr. M. A. Kashem Member 8 8 not attend any meeting 3 Mr. Azim Uddin Ahmed Member 8 8 showing genuine ground Mr. A. H. M. Moazzem Hossain were granted leave of 4 Member 8 7 (Independent Director) absence Structure of the Risk Management Committee (RMC) i) The Chairman of the Board of Directors of the Bank shall be the chairman of the RMC. 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 RMC. Functions of the Risk Management Committee The broad functional areas of the Risk Management Committee are the following: i) Risk assessment and risk control strategy. ii) Review of risk policy and its approval. iii) Review of the information kept by the Management of the Bank and approval of reporting system. iv) Overseeing the overall implementation of Risk Management Policy of the Bank. v) Reporting its decisions and recommendations to the Board. vi) Overseeing the implementation of related guidelines issued by the regulatory bodies from time to time.

374 Annual Report 2017 69.3 Related party/(ies) Particulars of Directors of the Bank as at 31 December: % of shares % of shares Sl. Name of persons Designation Present address as at 31 Dec as at 31 Dec No. 2017 2016 226, Dilu Road, New 1 Mr. Alamgir Kabir, FCA Chairman 2.18% 2.18% Eskaton, Dhaka Vice Plot No.51, Road No.09, 2 Mrs. Duluma Ahmed 2.08% 2.08% Chairperson Block-F,Banani, Dhaka 73/C, Gulshan Avenue, 3 Mr. M. A. Kashem Director 2.21% 2.21% Dhaka-1212 Plot No.51, Road No.09, 4 Mr. Azim Uddin Ahmed Director 2.78% 2.78% Block-F,Banani, Dhaka 73/C, Gulshan Avenue, 5 Mrs. Jusna Ara Kashem Director 2.00% 2.00% Dhaka-1212 Sonarpara, 6 Mr. Md. Akikur Rahman Director 2.01% 2.01% Nobarun-227, Sylhet House No.10, Road No.68, 7 Mrs. Rehana Rahman Director 2.06% 2.06% Gulshan, Dhaka 226, Dilu Road (Ground 8 Mrs. Sirat Monira Director 0.01% 0.01% Floor),New Eskaton, Dhaka Apartment # A-16, Building Independent # 03, Ramna Estate 9 Mr. A. H. M. Moazzem Hossain - - Director Complex, Bara Moghbazar, Dhaka-1217 Flat No.C/3, House No.01, Dr. Quazi Mesbahuddin Independent 10 Road No.36, Gulshan, - - Ahmed Director Dhaka-1212 Southeast Bank Limited, Managing 11 Mr. M. Kamal Hossain Head Office, 52-53 Dilkusha - - Director 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. 69.3.1 Related party transactions During the year 2017, the Bank concluded business deals with the following organizations in which the directors had interest: Transaction value for the year Balance outstanding as at 31 Name of Nature of ended 31 December December Relationship Organization transaction 2017 2016 2017 2016 Taka Taka Taka Taka Common Insurance Asia Insurance Ltd. 81,094,810 48,939,025 - - Director coverage Southeast Bank Share capital - 4,000,000,000 5,489,930,000 5,489,930,000 Subsidiary Capital Services Interest and company 11,178,794 118,428,584 - 10,674 Limited loan Southeast Financial Subsidiary Share capital - - 38,493,247 38,493,247 Services (UK) Ltd company Southeast Financial Subsidiary Services (Australia Share capital - 36,297 25,063,712 25,063,712 company Pty Ltd Southeast Exchange Subsidiary Company (South Share capital - - 50,103,110 50,103,110 company Africa) Pty Ltd

Southeast Bank Limited 375 69.3.2 Loans and advances to directors and their related concern Nature of Amount in Name of party Name of the director Related by Status transaction Taka Mr. Azim Uddin Ahmed Monorom Traders Director Bank Guarantee 4,783,000 Regular Mrs. Duluma Ahmed Mr. Alamgir Kabir, FCA Mr. Alamgir Kabir, FCA Chairman Credit Card 2,737 Regular Mrs. Duluma Ahmed Mrs. Duluma Ahmed Vice Chairperson Credit Card 30,536 Regular Mr. M.A. Kashem Mr. M. A. Kashem Director Credit Card 62 Regular Mr. Azim Uddin Ahmed Mr. Azim Uddin Ahmed Director Credit Card 91,644 Regular Mrs. Suraiya Begum Mr. Alamgir Kabir, FCA Chairmans’ wife Credit Card 480,962 Regular Ms. Sultana Kashem Mr. M. A. Kashem Directors’ daughter Credit Card 28,647 Regular Ms. Farzana Azim Mr. Azim Uddin Ahmed Directors’ daughter Credit Card 210,178 Regular Mr. Mamun Azim Mr. Azim Uddin Ahmed Directors’ son Credit Card 6,577 Regular The Bank complies with the requirements of the section 26 (c) of the Banking Companies Act 1991 as amended in 2013 in connection to the transactions executed with persons related to the Banks. 69.4 Events after the reporting period The Board of Directors in its 543th meeting held on 28 April 2018 has recommended a stock dividend @ 15% subject to the approval of the shareholders at the next Annual General Meeting. 69.5 Number of employees The number of employees engaged for the whole year or part thereof in 2017 who received a total yearly remuneration of Tk 36,000 or above were 2,704. The total number of employees were 2,616 in 2016. 69.6 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 2017 was Tk. 22.20 (2016: Tk.18.70) for each Tk.10 per value of share at DSE and Tk. 22.20 (2016: Tk.18.80) for each Tk.10 per value of share at CSE. 69.7 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. Name of the Company Shareholding Structure no. 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 69.8 Highlights on the overall activities of the Bank Highlights on the overall activities of the Bank have been furnished in Annexure-A.

376 Annual Report 2017 Southeast Bank Limited Annexure-A Highlights on the overall activities as at and for the year ended 31 December 2017

Sl. no. Particulars 2017 2016

1 Paid-up capital Taka 9,169,501,760 9,169,501,760 2 Total capital Taka 33,679,036,407 34,021,136,400 3 Capital surplus Taka (1,177,751,213) 4,349,974,549 4 Total assets Taka 338,909,245,125 291,993,002,059 5 Total deposits Taka 269,833,088,669 230,533,702,113 6 Total loans and advances/investments Taka 231,850,999,929 189,364,957,468 7 Total contingent liabilities and commitments Taka 142,496,794,641 113,910,626,784 8 Credit deposit ratio 85.92% 82.14% Percentage of classified loans/investments againsttotal loans 9 and advances/investments 5.99% 4.89% 10 Profit after tax and provision Taka 1,118,296,703 2,416,371,223 11 Amount of classified loans/investments Taka 13,878,533,441 9,257,788,205 12 Provisions kept against classified loans/investments Taka 6,628,680,956 3,728,284,306 Provision surplus/(deficit) against classified 13 Taka loans/investments 2,802,303,797 1,312,478,062 14 Cost of fund 6.80% 7.32% 15 Interest earning assets Taka 288,682,338,956 251,553,828,013 16 Non-interest earning assets Taka 50,226,906,169 40,439,174,046 17 Return on investment (ROI) 0.38% 0.93% 18 Return on assets (ROA) [PAT/ Average assets] 0.35% 0.88% 19 Income from investment Taka 5,485,830,524 5,014,416,110 20 Capital adequacy 10.87% 12.18% 21 Dividends a) Stock dividends 15% - b) Cash dividends - 20% 22 Earnings per share Taka 1.22 2.64 23 Net income per share Taka 1.22 2.64 24 Price earning ratio Times 18.20 7.12

Southeast Bank Limited 377 - Annexure-B Taka Taka Total Total 26,044,632,850 17,581,648,728 3,835,803,180 9,321,796,126 3,643,950,000 62,911,044,472 4,279,607,754 20,979,136,329 25,833,697,564 269,828,075,048 234,316,716,329 313,454,356,626 339,288,054,190 - - - - 3,017,779 Taka Taka 8,410,014,228 7,061,622,672 (847,541,133) 66,007,658,459 30,540,376,568 21,112,614,535 14,852,500,000 Above 5 years 74,417,672,687 73,570,131,554 - - - - Taka Taka 1-5 years 6,770,068,227 1,240,500,000 1,676,443,004 2,260,173,454 65,056,511,039 47,019,816,953 19,382,607,972 73,067,079,266 70,339,041,383 (2,728,037,883) - - - - Taka Taka 159,698,380 5,791,734,500 5,685,046,023 1,402,008,796 3-12 months 14,606,944,928 62,883,219,170 71,033,374,239 83,281,898,598 78,280,127,438 (5,001,771,160) - - - - Taka Taka 745,000,000 538,624,080 1,254,200,000 9,127,300,000 1,467,491,380 1-3 months 41,786,500,000 29,974,565,718 43,785,700,000 41,107,981,178 (2,677,718,822) - - Taka Taka 885,200,000 3,922,619,695 34,094,186,379 1,458,019,937 55,748,582,851 7,603,475,942 3,643,950,000 1,410,107,578 6,126,636,329 37,088,766,563 38,902,006,074 75,990,772,637 Up to 1 month Particulars Net liquidity gap (A - B) Total liabilities (B) Total Provision and other liabilities Provision Deposits Liabilities: Bangladesh Bank, other banks, financial from Borrowings institutions and agents Total assets (A) Total Non banking assets Other assets Fixed assets including premises, furniture and fixtures Fixed assets including premises, Loans and advances/investments Investments Money at call and on short notice Balance with other banks and financial institutions Assets: Cash in hand Southeast Bank Limited and its Subsidiaries Consolidated Liquidity Statement (Assets and liabilities maturity analysis) as at 31 December 2017

378 Annual Report 2017 - Taka Taka Total Total Annexure-B.1 9,241,315,075 8,708,569,268 3,643,950,000 4,162,108,796 25,732,763,716 17,581,648,728 60,323,168,530 20,979,133,527 25,761,744,012 269,833,088,669 231,850,999,929 313,147,501,113 338,909,245,125 - - - - Taka Taka 8,410,014,228 5,521,047,800 7,061,622,672 4,670,488,888 66,007,658,459 30,540,376,568 21,112,614,535 14,852,500,000 74,417,672,687 79,088,161,575 Above 5 years - - - - Taka Taka 1-5 years 6,770,068,227 1,240,500,000 1,676,443,004 1,646,946,596 65,056,511,039 47,019,816,953 19,382,607,972 73,067,079,266 69,725,814,525 (3,341,264,741) - - - - Taka Taka 159,698,380 5,791,734,500 5,685,046,023 1,402,008,796 14,295,075,794 62,883,219,170 71,033,374,239 3-12 months 82,970,029,464 78,280,127,438 (4,689,902,026) - - - - Taka Taka 745,000,000 426,105,954 1,254,200,000 9,127,300,000 1,350,000,000 1-3 months 41,786,500,000 29,974,565,718 43,785,700,000 40,877,971,672 (2,907,728,328) - - Taka Taka 885,200,000 3,922,619,695 1,458,019,937 5,015,600,000 3,643,950,000 1,410,100,000 6,126,633,527 34,099,200,000 53,282,866,451 32,030,150,220 38,907,019,695 70,937,169,915 Up to 1 month Particulars Net liquidity gap (A - B) Total liabilities (B) Total Provision and other liabilities Provision Deposits Liabilities: Bangladesh Bank, other banks, financial from Borrowings institutions and agents Total assets (A) Total Non banking assets Other assets Fixed assets including premises, furniture and fixtures Fixed assets including premises, Loans and advances/investments Investments Money at call and on short notice Balance with other banks and financial institutions Assets: Cash in hand Southeast Bank Limited Liquidity Statement (Assets and liabilities maturity analysis) as at 31 December 2017

Southeast Bank Limited 379 - - 1,830,346 6,024,463 1,987,849 4,947,574 3,789,947 7,725,805 6,233,334 2,229,915 1,258,241 5,629,316 3,331,684 5,150,727 2,502,922 2,966,473 2,442,369 1,278,977 Taka Taka 83,931,106 28,769,758 39,325,786 15,961,921 10,784,568 12,773,370 34,012,582 54,519,931 54,288,239 79,939,791 16,012,566 12,320,169 35,706,219 43,158,173 13,876,284 Annexure-C 144,963,770 378,944,176 Equivalent 233,203,299 885,415,055 1,118,618,354 - - 0.68 78.71 78.71 78.71 78.71 76.68 82.25 78.71 78.71 82.25 78.71 78.71 76.68 56.72 78.71 78.71 21.43 78.71 78.71 78.71 78.71 96.44 20.97 78.71 78.71 78.71 96.44 78.71 78.71 78.71 82.25 82.25 82.25 rate 2016 Exchange - - 23,870 73,250 25,255 60,156 48,150 79,193 42,328 65,438 31,799 36,069 29,696 15,551 365,511 499,622 202,791 140,645 136,211 162,282 104,069 432,119 692,659 689,715 166,028 268,460 156,524 370,225 548,311 176,294 FC 1,015,610 1,066,319 1,841,720 4,814,368 1,863,916 5,119,700 16,244,153 11,124,453 amount - - - - 328,475 257,277 619,283 7,209,740 2,088,589 4,096,286 3,567,858 2,843,673 3,492,835 5,569,926 1,543,260 Taka Taka 86,529,828 10,276,911 47,232,891 40,185,050 40,480,379 19,877,855 21,954,062 22,317,811 18,003,835 20,589,244 58,188,713 38,325,827 31,734,569 24,335,170 87,426,417 33,413,883 54,683,457 32,630,020 113,518,856 131,904,873 283,405,768 965,226,853 681,821,085 Equivalent - - - 0.73 82.70 82.70 84.87 82.70 82.70 99.24 82.70 22.05 82.70 84.87 64.53 82.70 82.70 22.52 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 82.70 99.24 82.70 82.70 82.70 99.24 111.79 111.79 rate Exchange - - - 2017 3,870 7,488 3,111 87,179 25,255 63,478 43,142 31,246 67,351 15,551 124,267 571,135 485,914 407,904 240,361 995,605 269,865 212,127 248,963 126,298 703,612 463,432 383,731 217,695 404,037 551,022 FC 1,046,310 1,372,658 1,057,151 1,594,980 8,043,642 44,466,787 48,247,883 56,291,525 amount SAR SAR GBP GBP EUR EUR EUR EUR YEN USD USD USD USD USD USD USD USD USD AED type CHF CHF AUD AUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUEUR Currency Currency HDFC Bank, Mumbai, India Habib Metropoliton Bank Ltd., Karachi, Pakistan Habib Metropoliton Habib Bank AG Zurich, Switzerland Habib Allied Intl Bank, UK Commerz Bank AG, Frankfurt, Germany Bank, Mumbai (AEB), India Chartered Standard Commerz Bank AG, Frankfurt, Germany Standard Chartered Bank, Colombo, Srilanka Chartered Standard Banque Saudi Fransi, Riyadh Nepal Bangladesh Bank Ltd., Kathmandu, Zuercher Kantonal Bank, Zurich, Switzerland Zuercher Bank of Sydney Ltd., National Australia Bank Ltd., Melbourne, Australia United Bank Limited, Karachi, Pakistan Bank of Bhutan, Pheuntsholing, Bhutan Name of the Bank bearing: Interest USA Bank, New York, Chartered Standard AB Bank Ltd., Mumbai, India Citibank AG, Frankfurt, Germany USA Citibank, N.A., New York, USA Habib American Bank, New York, ICICI Bank Ltd., Mumbai, India USA Chase Bank N.A., New York, JP Morgan Sonali Bank (UK) Ltd. Sonali Bank (UK) Ltd. Sonali Bank (UK) Ltd. Bank, Kolkata, India Chartered Standard Bank, London, UK Chartered Standard OBU Bank, New York Chartered Standard USA Bank, N.A., New York, Fargo Wells USA Bank PSC, New York, Mashreq Bank, Mumbai, India Mashreq Bank, Mumbai, India Mashreq bearing: Non-interest Al Rajhi Bank, Saudi Arabia Bank PSC, Dubai, UAE Mashreq JPY Bank of Tokyo-Mitsubishi, Southeast Bank Limited Account) Balance with other banks-Outside Bangladesh (Nostro as at 31 December 2017

380 Annual Report 2017 Southeast Bank Limited Annexure-D Details of Large Loan as at 31 December 2017

2017 2016 Number of clients 29 25 Amount of outstanding advances (Amount in million Taka) 115,640.90 86,912.40 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) Outstanding as at Outstanding as at Sl. 31 December 2017 31 December 2016 Name of clients no. Non Non Funded Total Funded Total funded funded 1 Abul Khair Group 824.40 3,947.40 4,771.80 69.60 2,266.40 2,336.00 2 ACS Textiles (Bangladesh) Limited and its related concern 2,088.50 1,950.90 4,039.40 2,128.50 1,207.50 3,336.00 3 Bashundhara Group 3,119.70 8,009.60 11,129.30 1,301.10 3,558.60 4,859.70 4 Bengal Group 965.90 615.10 1,581.00 799.00 521.30 1,320.30 5 Capital Banani One Ltd. and its related concern 4,082.30 - 4,082.30 4,872.80 - 4,872.80 6 Cassiopea Fashion Ltd. and its related concerns 556.80 3,291.50 3,848.30 488.60 1,591.20 2,079.80 7 Sparrow Apparels Ltd. and its related concerns 1,226.70 3,909.00 5,135.70 499.70 3,568.10 4,067.80 8 Deshbandhu Group 5,343.00 2,004.80 7,347.80 3,929.80 2,645.10 6,574.90 9 Grameen Phone Limited - 1,711.10 1,711.10 - 1,146.60 1,146.60 10 Irish Fabrics Limited and its related 623.60 1,708.10 2,331.70 670.20 1,383.70 2,053.90 concerns 11 Jaj Bhuiyan Textiles Mills and its related concerns - - - 2,301.00 55.80 2,356.80 12 KDS Group 803.50 1,374.20 2,177.70 - - - 13 Keya Group 4,459.80 5,177.10 9,636.90 3,512.10 5,614.50 9,126.60 14 Aaron Denim Limited and its related concerns 2,289.80 1,088.60 3,378.40 2,261.80 890.20 3,152.00 15 Maksons Spinning Mills Ltd. 2,165.20 2,370.60 4,535.80 2,341.60 2,095.90 4,437.50 16 Meghna Group - 9,929.60 9,929.60 - 6,778.50 6,778.50 17 Mother Steel Ltd. and its related concerns 577.00 330.30 907.30 701.30 452.90 1,154.20 18 N. R. Group 660.60 2,171.20 2,831.80 390.70 1,366.80 1,757.50 19 Partex Group 1,303.50 1,902.40 3,205.90 1,033.70 2,412.20 3,445.90 20 S. Alam Group 516.00 980.90 1,496.90 - - - 21 Yunusco (BD) Limited and its related concerns 560.30 1,753.80 2,314.10 1,263.10 1,640.30 2,903.40 22 T. K. Group 299.80 3,645.00 3,944.80 - 3,182.20 3,182.20 23 Rupayan Housing Estate Limited and its related concerns 4,814.70 1.70 4,816.40 4,554.80 2.10 4,556.90 24 Chittagong Asian Apparels Ltd. and its related concerns 1,712.50 1,924.00 3,636.50 1,748.30 1,765.90 3,514.20 25 Snowtex Outerwear Limited and its related concerns 2,080.30 2,410.50 4,490.80 1,897.90 1,427.50 3,325.40 26 Generation Next Fashions Limited - - - 975.40 1,280.90 2,256.30 27 Designtex Fashions Limited and its related concerns 1,966.60 558.20 2,524.80 1,006.40 1,310.80 2,317.20 28 Navana Group 3,732.30 25.20 3,757.50 29 City Group - 3,409.00 3,409.00 30 Bashundhara Oil and Gas Company Limited - 12.50 12.50 31 KSRM Steel Plant Ltd. and its related concerns 2,112.50 543.30 2,655.80 Total 48,885.30 66,755.60 115,640.90 38,747.40 48,165.00 86,912.40

Southeast Bank Limited 381 as at Taka Taka 3,191,052 13,425,658 Written Written Annexure-E 630,657,331 161,312,834 557,274,192 102,902,392 - - - - down value 1,427,449,630 5,770,913,319 31 December 8,705,378,216 8,691,952,558 8,708,569,268 8,613,686,700 3,043,615 10,382,043 35,910,327 3,191,052 5,532,533 as at Taka Taka 13,267,462 Balance 469,770,862 463,787,263 731,441,546 106,026,227 105,072,021 - - - 171,435,790 31 December 1,921,978,641 1,908,711,179 2,093,414,431 1,792,923,672 1,635,675 11,631,787 35,843,673 9,087,575 93,708,239 65,409,563 year Taka Taka (223,443) (375,233) (127,972) (862,010) 3,361,613 (1,888,677) (4,751,378) (2,112,120) during the ------(12,222,222) - - Adjustment for disposal (17,089,322) (14,977,202) (17,089,322) (12,125,316) Depreciation Depreciation 297,227 Taka Taka 2,185,197 1,094,721 6,289,136 2,482,424 6,289,136 during the year 59,510,469 66,868,329 31,604,261 13,681,089 21,567,475 Charged 114,482,177 - - - - - 311,290,945 308,808,521 317,580,081 279,400,187 as at Taka Taka 59,120,427 12,897,158 Balance - - - - 1 January 165,146,654 1,627,777,018 1,614,879,860 1,792,923,672 1,525,648,801 1,561,891 11,335,267 8,854,864 22,162,584 62,231,950 410,635,626 401,670,312 80,142,933 629,181,591 106,026,227 of % 4% 20% 10% 10% 20% 20% 20% 20% 10% 20% 20% 30% dep. - - Rate as at Taka Taka 26,693,120 Balance 174,626,842 - - 31 December 4,679,290 10,627,356,857 10,600,663,737 10,801,983,699 10,406,610,372 22,013,830 1,094,444,594 71,754,000 255,021,073 14,620,108 1,897,220,492 1,288,715,738 5,770,913,319 106,026,227 207,974,413 68,600,615 Taka Taka (525,000) (166,100) during the year ------(2,950,000) (9,135,955) (1,001,438) (1,767,426) (4,123,994) (1,808,500) - - Disposal (3,475,000) (16,561,589) (38,040,002) (34,565,002) (38,040,002) (20,973,403) Taka Taka during ------the year Revalued Cost/Revaluation Taka Taka during the year ------Additions 431,706,088 425,853,938 433,413,328 950,000 4,902,150 8,349,800 1,428,073 1,707,240 5,852,150 1,707,240 1,150,856,098 89,216,436 74,795,133 35,036,760 217,027,736 as at Taka Taka Balance 172,919,602 - - 1 January 9,276,727,677 4,254,290 20,061,680 63,404,200 14,193,473 66,893,375 24,315,970 10,233,690,770 10,209,374,800 10,406,610,372 1,014,364,112 180,392,040 1,898,987,918 1,088,249,591 5,775,037,313 106,026,227 174,746,153 Particulars Electrical Appliances Residence of executives: Furniture and fixtures Furniture and fixtures Motor vehicles Office appliances Office Computer Buildings Electrical appliances Own assets Office: Land Leased assets Furniture and fixtures Balance as at 31 December 2017 Balance as at 31 December 2016 ATM Booth ATM Motor vehicles Professional and reference and reference Professional books Southeast Bank Limited furniture Schedule of fixed assets including premises, and fixtures as at 31 December 2017

382 Annual Report 2017 Southeast Bank Limited Annexure-F Names of Directors and their interest in different entities

Names of firms/companies in which interested as Sl. Status with % of Name proprietor/ director/ Position no. the Bank Shareholdings managing agent/ guarantor/ employee/ partner, etc. 1 Mr. Alamgir Kabir, FCA Chairman Asia Insurance Limited Director 2.97% National Life Insurance Co. Ltd. Independent Director Nil 2 Mrs. Duluma Ahmed Vice Mutual Food Products Ltd. Chairman 31.78% Chairperson Mutual Milk Products Ltd. Do 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 Ltd. Managing Director 44.78% Mutual Milk Products Ltd. Do 52.00% Mutual Trading Co. Limited Chairman & 71.30% Managing Director AD Holdings Ltd. Chairman 0.50% 5 Mrs. Jusna Ara Kashem Director Rose Corner (Pvt) Ltd. Director 20.00% 6 Mr. Md. Akikur Rahman Director - - Nil 7 Mrs. Rehana Rahman Director Bengal Tradeways Limited Managing Director 74.61% CHB Building Technologies Ltd. Director 25.00% 8 Mrs. Sirat Monira Director - - Nil 9 Mr. A.H.M. Moazzem Hossain Independent International Publication Ltd. Director Director (Owning company of the 1.33% Financial Express) 10 Dr. Quazi Mesbahuddin Ahmed Independent - - Nil Director 11 Mr. M. Kamal Hossain Managing - - Nil Director

Southeast Bank Limited 383 Southeast Bank Limited Annexure-G Islamic Banking Branches Balance Sheet as at 31 December 2017

2017 2016 Note Taka Taka PROPERTY AND ASSETS Cash 1 In hand (including foreign currencies) 166,396,106 138,891,477 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 886,571,821 885,846,050 1,052,967,927 1,024,737,527 Balance with other banks and financial institutions 2 In Bangladesh 3,512,215 300,122,666 Outside Bangladesh - - 3,512,215 300,122,666 Money at call and on short notice - - Investments in shares and securities 3 Government 650,000,000 650,000,000 Others 2,790,589,811 2,887,364,353 3,440,589,811 3,537,364,353 Investments 4 General Investments etc. 13,963,868,517 8,965,151,558 Bills purchased and discounted 273,282,476 326,049,485 14,237,150,993 9,291,201,043 Fixed assets including premises, furniture and fixtures 5 24,870,249 20,834,669 Other assets 6 2,414,475,850 6,431,807,594 Non - banking assets - - Total assets 21,173,567,045 20,606,067,852 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 7 2,000,000,000 1,500,000,000 Deposits and other accounts 8 Current/Al-wadeeah current accounts and other accounts 1,643,146,644 1,308,121,942 Bills payable 131,716,580 333,143,196 Savings bank/Mudaraba savings bank deposits 1,919,612,283 1,663,579,436 Fixed deposits/Mudaraba fixed deposits 13,005,288,790 13,435,727,150 16,699,764,297 16,740,571,724 Other liabilities 9 2,473,802,748 2,365,496,128 Total liabilities 21,173,567,045 20,606,067,852 OFF-BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements 10.1 1,155,150,244 849,894,171 Letters of guarantee 10.2 1,685,858,656 908,652,217 Irrevocable letters of credit 10.3 1,606,363,135 727,081,836 Bills for collection 10.4 955,896,017 1,013,397,994 Other contingent liabilities - - 5,403,268,052 3,499,026,218

384 Annual Report 2017 Southeast Bank Limited Annexure-G.1 Islamic Banking Branches Profit and Loss Account for the year ended 31 December 2017

2017 2016 Note Taka Taka Profit on investments 11 1,634,871,176 1,871,410,563 Profit shared on deposits and borrowings etc. 12 (938,503,557) (1,073,283,905) Net profit on investments 696,367,619 798,126,658 Commission, exchange and brokerage 13 93,525,532 71,521,015 Other operating income 14 30,251,448 27,758,952 123,776,980 99,279,967 Total operating income (A) 820,144,599 897,406,625 Salaries and allowances 15 76,640,857 78,885,814 Rent, taxes, insurance, electricity etc. 16 41,212,498 37,555,015 Legal expenses 228,324 36,500 Postage, stamp, telecommunication etc. 17 9,150,825 8,217,481 Stationery, printing, advertisements etc. 18 3,454,726 3,273,577 Depreciation and repair of bank's assets 19 7,535,412 7,415,589 Other expenses 20 29,042,378 26,177,936 Total operating expenses (B) 167,265,018 161,561,912 Profit before provision (C=A-B) 652,879,581 735,844,713 Provision for investments 9.1 General provision 40,847,968 (56,358,307) Specific provision 206,808,920 440,905,620 247,656,888 384,547,313 Provision for off-balance sheet items 9.2 19,042,419 283,441 Provision for diminution in value of investments 9.3 (155,573,513) (587,847,712) Total provision (D) 111,125,794 (203,016,958) Total profit before tax (C-D) 541,753,787 938,861,671

Southeast Bank Limited 385 Southeast Bank Limited Annexure-G.2 Islamic Banking Branches Notes to the Financial Statements as at and for the year ended 31 December 2017

2017 2016 Note Taka Taka 1 Cash In hand: Local currency 165,908,176 138,859,993 Foreign currencies 487,930 31,484 166,396,106 138,891,477 Balance with Bangladesh Bank: Local currency 885,851,119 870,294,183 Foreign currencies - - 885,851,119 870,294,183 Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency 720,702 15,551,867 886,571,821 885,846,050 1,052,967,927 1,024,737,527 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. The statutory Cash Reserve Ratio on the Shariah-based Islamic Bank's demand and time liabilities at the rate of minimum 6.0% on daily basis and 6.50% 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 (6.50% of average Demand and Time Liabilities) 819,034,223 815,652,913 Actual reserve held (Average daily on bi-weekly basis): 885,851,119 870,294,183 Surplus 66,816,896 54,641,270 b) Statutory Liquidity Ratio (SLR) for Islamic Banking Required reserve (5.50 % of average Demand and Time Liabilities) 693,028,958 690,167,850 Actual reserve held 883,920,896 859,075,477 Surplus 190,891,938 168,907,627 Held for Statutory Liquidity Ratio of Islamic Banking:

Cash in hand 166,396,000 138,891,477 Balance with agent bank (Sonali Bank Ltd.) as per statement 708,000 15,543,000 Excess cash reserve 66,816,896 54,641,000 Government Securities (HTM) 650,000,000 650,000,000 883,920,896 859,075,477 2 Balance with other banks and financial institutions In Bangladesh 2.1 3,512,215 300,122,666 Outside Bangladesh - - 3,512,215 300,122,666

386 Annual Report 2017 2017 2016 Note Taka Taka 2.1 In Bangladesh Current account with: Sonali Bank Limited 740 740 740 740

Short term deposits account with: Sonali Bank Limited 1,134 1,134 EXIM Bank Limited 3,510,341 120,792 3,511,475 121,926 Fixed deposits with other banks: Social Islami Bank Limited - 300,000,000 - 300,000,000 3,512,215 300,122,666 3 Investments in shares and securities Bangladesh Government Islamic Bond 650,000,000 650,000,000 Others 3.1 2,790,589,811 2,887,364,353 3,440,589,811 3,537,364,353 3.1 Others Shares in listed companies 2,790,589,811 2,887,364,353 Shares in un-listed companies - - 2,790,589,811 2,887,364,353 Provision for diminution in the market value of shares (566,590,808) (722,164,321) 2,223,999,003 2,165,200,032 3.2 Investments classified as per Bangladesh Bank Circular Held to maturity (HTM) 650,000,000 650,000,000 Other securities 2,790,589,811 2,887,364,353 3,440,589,811 3,537,364,353 3.3 Cost and market value of investments 3.3.1 Government securities

2017 2016 Cost price Market price Market price Taka Taka Taka Bangladesh Government Islamic Bond 650,000,000 650,000,000 650,000,000 650,000,000 650,000,000 650,000,000 3.3.2 Others (Investment in shares) 2017 2016 Market price Cost price Cost price Taka Taka Taka Shares in listed companies 2,223,999,003 2,790,589,811 2,887,364,353 Shares in un-listed companies - - - 2,223,999,003 2,790,589,811 2,887,364,353 3.4 Market price, cost price and related provision of investments as on 31 December 2017 2017 Differences Name of the Company Market price Cost price (Provision to be Taka Taka Required) 1 Active Fine Chemicals 17,600,000 19,050,865 (1,450,865) 2 AFC Agro Biotech Limited 33,577,038 36,946,327 (3,369,289) 3 Aftab Automobiles Limited 112,122,347 139,839,645 (27,717,298) 4 Argon Denim 19,229,101 21,660,889 (2,431,788) 5 Barka Power 52,008,087 60,419,999 (8,411,912) 6 Bay Leasing 340,750,400 641,234,702 (300,484,302) 7 BSC 34,651,400 39,016,698 (4,365,298)

Southeast Bank Limited 387 2017 Differences Name of the Company Market price Cost price (Provision to be Taka Taka Required) 8 BSRM Limited 42,450,902 56,679,577 (14,228,675) 9 BSRM Steel Mills Limited 5,463,600 7,019,678 (1,556,078) 10 Delta Life 7,351,878 12,382,964 (5,031,087) 11 EHL 16,682,441 18,217,288 (1,534,847) 12 Envoy Textile 37,619 55,109 (17,490) 13 EXIM Bank 249,775,270 349,837,751 (100,062,482) 14 GHCL 24,486,245 34,247,189 (9,760,944) 15 ICB 3,360,000 3,913,592 (553,592) 16 Lafarge Surma Cement Limited 69,900,000 89,321,368 (19,421,368) 17 Matin Spinning Limited 10,946,960 14,044,434 (3,097,474) 18 National Life Insurance Company Limited 652,475,426 624,378,084 28,097,341 19 National Polymar 3,037,913 3,151,467 (113,554) 20 Orion Pharma 58,629,005 61,952,895 (3,323,891) 21 Premier Leasing 13,442,135 15,325,757 (1,883,622) 22 Prime Bank Limited 339,052,066 391,770,539 (52,718,473) 23 Prime Finance Limited 9,815,266 26,958,933 (17,143,667) 24 Rupali Bank Limited 5,772,772 9,074,723 (3,301,951) 25 Saif Power Tec Limited 7,736,961 8,532,154 (795,193) 26 Saiham Tex 3,840,000 4,490,332 (650,332) 27 Shahjibazar Power Company Limited 69,659,984 79,199,118 (9,539,134) 28 Titas Gas 6,630,000 7,670,726 (1,040,726) 29 United Finance 13,514,187 14,197,006 (682,819) 2,223,999,003 2,790,589,811 (566,590,808) Actual provision 566,590,808 Surplus/(deficit) -

2017 2016 Note Taka Taka 4 Investments Investments 4.1 13,963,868,517 8,965,151,558 Bills purchased and discounted 4.2 273,282,476 326,049,485 14,237,150,993 9,291,201,043 4.1 Investments In Bangladesh Demand Investment 414,036,921 242,699,956 Bai-Muajjal (Time) Investment 399,099,215 310,841,197 Bai-Muajjal Time under CCS 74,507,241 55,960,365 Bai-Murabaha-BLC 28,009,964 32,499,080 Bai-Murabaha-LTR 800,511,034 476,095,001 Bai-Salam (PACKING CREDIT) 64,089,258 84,436,201 Staff House Building Investment 12,806,256 8,362,607 Export Development Fund (EDF) against LC 712,130,203 633,716,266 Investment against Cash Incentive 19,626,562 17,327,114 Bai-Muajjal - Investment 3,668,800,807 3,269,956,321 Murabaha - Investment 639,319,763 624,262,832 Hire purchase - Investment 7,130,931,292 3,208,994,618 Izarah - Investment - - 13,963,868,517 8,965,151,558 Outside Bangladesh - - 13,963,868,517 8,965,151,558 4.2 Bills purchased and discounted In Bangladesh 255,665,585 248,139,426 Outside Bangladesh 17,616,891 77,910,059 273,282,476 326,049,485

388 Annual Report 2017 2017 2016 Note Taka Taka 5 Fixed assets including premises, furniture and fixtures Cost: Furniture and fixture 24,815,083 20,161,166 Office Appliances 81,620 81,620 Electrical Appliances 27,106,877 26,276,457 Motor Vehicles 2,620,000 2,620,000 ATM Booth 5,524,957 3,915,270 60,148,537 53,054,513 Less: Accumulated depreciation Furniture and fixture 12,547,153 11,270,813 Office Appliances 81,618 81,618 Electrical Appliances 19,896,210 18,515,303 Motor Vehicles 1,135,342 611,339 ATM Booth 1,617,965 1,740,771 35,278,288 32,219,844 Written down value as at 31 December 24,870,249 20,834,669 6 Classification of other assets i) Stationery, stamps, printing materials, etc. 561,840 600,598 ii) Advance rent and advertisement 23,780,432 31,963,867 iii) Interest accrued on investment but not collected, commission and brokerage receivable on shares and debentures, and other income receivables 2,431,241 5,791,241 iv) Security deposits 69,460 69,460 v) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses 32,154,174 4,154,592 vii) Suspense account 2,205,290 2,404,214 viii) Silver - - ix) Head office general account 2,351,077,534 6,384,977,192 X) Others 2,195,880 1,846,430 2,414,475,850 6,431,807,594 7 Borrowing from other banks, financial institutions and agents In Bangladesh 7.1 2,000,000,000 1,500,000,000 Outside Bangladesh - - 2,000,000,000 1,500,000,000 7.1 In Bangladesh Secured Borrowing against securities from Bangladesh Bank 2,000,000,000 1,500,000,000 2,000,000,000 1,500,000,000 Unsecured - - 2,000,000,000 1,500,000,000 8 Deposits and other accounts Al-wadeeah current accounts and other accounts Al-wadeeah current deposits 512,649,667 386,612,640 Foreign currency deposits 52,702,535 25,072,729 Sundry deposits 1,077,794,441 896,436,573 1,643,146,644 1,308,121,942 Bills payable Payment order issued 131,632,916 332,989,460 T.T. payable 30,628 100,700 Demand draft 53,036 53,036 131,716,580 333,143,196 Mudaraba savings bank deposits 1,919,612,283 1,663,579,436 Mudaraba fixed deposits Mudaraba fixed deposits 10,921,320,630 11,682,637,461 Mudaraba Special notice deposits 758,955,126 675,707,267 Scheme deposits 1,324,085,318 981,521,681 Interest Payable on FDR/Scheme 927,717 95,860,741 13,005,288,790 13,435,727,150 16,699,764,297 16,740,571,724

Southeast Bank Limited 389 2017 2016 Note Taka Taka 9 Other liabilities Provision for investments 9.1 1,272,781,335 1,023,189,841 Provision for off-balance sheet exposures 9.2 54,032,681 34,990,262 Profit suspense account 147,180,025 123,540,202 Accrued expenses 1,167,700 1,003,044 Profit payable on borrowings 7,390,820 4,001,370 Accounts payable - others 2,343,610 1,568,524 Provision for diminution in the market value of share 9.2 566,590,808 722,164,321 Unearned income 360,014,159 388,476,342 Withholding tax 62,301,610 66,562,222 2,473,802,748 2,365,496,128 9.1 A. General provision for investments Balance as at 1 January 68,386,107 124,744,414 Provision made during the year 40,847,968 - 109,234,075 124,744,414 Adjustments made during the year - (56,358,307) Balance as at 31 December 109,234,075 68,386,107 B. Specific provision for investments Balance as at 1 January 954,803,734 512,457,114 Recoveries of amounts previously written off 1,934,606 1,441,000 Provision made during the year 206,808,920 440,905,620 1,163,547,260 954,803,734 Adjustments made during the year - - Balance as at 31 December 1,163,547,260 954,803,734 C. Total provision on investments (C=A+B) 1,272,781,335 1,023,189,841 9.2 Provision for off-balance sheet exposures Balance as at 1 January 34,990,262 34,706,821 Provision made during the year 19,042,419 283,441 54,032,681 34,990,262 Adjustments made during the year - - Balance as at 31 December 54,032,681 34,990,262 9.3 Provision for diminution in the market value of share Balance as at 1 January 722,164,321 1,310,012,033 Provision made during the year - - 722,164,321 1,310,012,033 Adjustments made during the year (155,573,513) (587,847,712) Balance as at 31 December 566,590,808 722,164,321 10 Contingent liabilities 10.1 Acceptances and endorsements Acceptance under Letters of credit - Import 653,379,843 267,075,882 Acceptance under Letters of credit - Export 501,770,401 582,818,289 1,155,150,244 849,894,171

10.2 Letters of guarantee Local 1,462,136,656 790,957,217 Foreign 223,722,000 117,695,000 1,685,858,656 908,652,217 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 1,685,858,656 908,652,217 1,685,858,656 908,652,217

390 Annual Report 2017 2017 2016 Note Taka Taka 10.3 Irrevocable letters of credit (L/C) Back to back L/C 640,872,199 328,505,407 Others 965,490,935 398,576,429 1,606,363,135 727,081,836 10.4 Bills for collection Local 547,674,110 519,166,618 Foreign 408,221,907 494,231,376 955,896,017 1,013,397,994 11. Profit on investment Demand investment 26,128,573 9,166,698 Bai-Muajjal (Time) investment 36,067,607 29,191,073 Bai-Muajjal time under CCS 6,979,097 6,076,491 Bai-Murabaha-BLC 9,510,323 7,132,582 Bai-Murabaha-LTR 70,059,575 78,329,760 Bai-Salam (PACKING CREDIT) 5,781,431 8,598,552 Staff house building investment 118 257,208 Staff car loan investment 33,976 166,130 Investment against cash incentive 2,189,502 1,707,058 Bai-Muajjal - Investment 307,187,319 403,072,130 Murabaha - Investment 63,984,546 56,450,361 Hire purchase - Investment 491,817,282 323,550,262 Profit on savings accounts - 18,524 Profit on special term deposit STD 2,267,896 3,300,000 Bills purchased and discounted 29,674,166 37,123,554 Profit on placement with other banks 13,878,333 24,185,041 Inter branch profit income 569,311,431 883,085,139 1,634,871,176 1,871,410,563 12. Profit shared on deposits and borrowings etc. Profit shared on deposits (Islamic Banking Branch): Mudaraba Savings Deposits (MSB) 284,524,614 80,923,783 Mudaraba Short Term Deposits (MSTD) 38,568,104 49,073,389 Mudaraba Fixed Term Deposits (MFDR) 533,095,509 903,655,225 Profit on Re-finance borrowings 82,315,330 39,631,508 Inter Branch profit expenses - - 938,503,557 1,073,283,905 13 Commission, exchange and brokerage Commission and brokerage 77,936,579 60,283,607 Exchange gain 15,588,953 11,237,408 93,525,532 71,521,015 14 Other operating income Remittance fees 38,556 351,761 Service and incidental charges 7,550,934 5,547,600 Other fees-telephone and postage 2,919,908 2,831,104 Income from retail banking 154,153 84,480 Other fees - SWIFT 10,092,965 8,362,968 Miscellaneous income 9,494,933 10,581,039 30,251,448 27,758,952 15 Salaries and allowances Basic salary 39,089,305 39,540,655 Allowances 23,573,491 24,090,710 Bonus 10,512,942 11,770,082 Provident fund 3,465,119 3,484,367 76,640,857 78,885,814 16 Rent, taxes, insurance, electricity etc. Rent, rates and taxes 28,608,351 23,940,299 Insurance 8,612,250 9,316,439 Electricity and lighting 3,991,897 4,298,277 41,212,498 37,555,015

Southeast Bank Limited 391 2017 2016 Note Taka Taka 17 Postage, stamp, telecommunication etc. Postage 2,753,978 2,150,441 Telephone /Telex 318,240 411,530 VSAT on-line 2,202,780 2,241,596 SWIFT services 3,875,827 3,413,914 9,150,825 8,217,481 18 Stationery, printing, advertisements etc. Office stationery 979,558 862,027 Printing stationery 1,044,226 1,147,213 Security stationery 1,275,161 1,001,573 Computer stationery 152,662 250,094 Publicity and advertisement 3,118 12,670 3,454,726 3,273,577 19 Depreciation and repair of bank's assets Depreciation: Furniture and fixtures 1,276,340 873,253 Electrical appliances 1,668,129 1,712,153 Motor vehicles 524,004 524,004 ATM Booth 872,898 592,011 4,341,371 3,701,421 Repair: Furniture and fixtures 365,246 318,002 Office and electrical appliance 1,757,874 1,933,309 Repair and maintenance computers - 172,965 Motor vehicles 151,348 106,130 Repair, maintenance and utilities 919,573 1,183,762 3,194,041 3,714,168 7,535,412 7,415,589 20 Other expenses Security and cleaning 7,022,353 5,511,574 Entertainment 1,393,014 1,509,768 Car expenses 7,829,324 6,697,612 Books and periodicals 34,477 33,272 Subscription and donation - 55,000 Travelling expenses 323,989 564,269 Conveyance 342,006 321,351 Fuel 227,268 187,131 Uniforms and apparels 125,220 187,949 Loss on sale of fixed assets 13,678 44,498 Expenses for CIB report 4,920 6,370 Expenses regarding retail banking 1,011,211 18,800 Miscellaneous 10,714,917 11,040,342 29,042,378 26,177,936

392 Annual Report 2017 Southeast Bank Limited Annexure-H Off-Shore Banking Unit, Bangladesh Balance Sheet as at 31 December 2017

2017 2016 Note USD Taka Taka PROPERTY AND ASSETS Cash In hand (including foreign currencies) - - - Balance with Bangladesh Bank and its agent banks (including foreign currencies) ------Balances with other banks and financial institutions 3 In Bangladesh 1,481,141 122,490,327 30,939,647 Outside Bangladesh 67,351 5,569,926 2,502,922 1,548,492 128,060,253 33,442,569 Money at Call and on short notice 3,500,000 289,450,000 - Investments Government - - - Others ------Loans and advances 4 Loans, cash credit & overdrafts etc. 36,863,821 3,048,637,990 1,765,930,769 Bills purchased and discounted 61,378,260 5,075,982,118 4,561,351,334 98,242,081 8,124,620,108 6,327,282,103 Fixed assets including premises, furniture and 5 18,519 1,531,504 1,700,220 fixtures Other assets 6 243,337 20,124,004 12,555,735 Non-banking assets - - - Total assets 103,552,429 8,563,785,868 6,374,980,627 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 7 97,480,000 8,061,596,000 6,092,632,695 Deposits and other accounts 8 Current accounts and other accounts 97,506 8,063,742 5,213,018 Bills payable - - - Savings bank deposits - - - Fixed deposits 329,082 27,215,079 16,595,974 426,589 35,278,821 21,808,992 Other liabilities 9 1,448,213 116,223,341 82,342,885 Total liabilities 99,354,802 8,213,098,162 6,196,784,572

Capital/shareholders' equity Paid up capital - - - Statutory reserve - - - Other reserves - - - Foreign currency losses - - - Retained earnings 10 4,197,625 350,687,706 178,196,055 Total shareholders' equity 4,197,625 350,687,706 178,196,055 Total liabilities and shareholders' equity 103,552,429 8,563,785,868 6,374,980,627

Southeast Bank Limited 393 Southeast Bank Limited Annexure-H Off-Shore Banking Unit, Bangladesh Balance Sheet as at 31 December 2017

2017 2016 Note USD Taka Taka OFF-BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements - - - Letters of guarantee - - - Irrevocable letters of credit 472,784 39,099,223 9,086,309 Bills for collection 1,948,008 161,100,293 191,033,922 Other contingent liabilities - - - total contingent liabilities 2,420,792 200,199,516 200,120,231 Other commitments Documentary 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 2,420,792 200,199,516 200,120,231

394 Annual Report 2017 Southeast Bank Limited Annexure-H.1 Off-Shore Banking Unit, Bangladesh Profit and Loss account for the year ended 31 December 2017

2017 2016 Note USD Taka Taka Interest income 11 5,572,464 448,187,159 317,159,565 Interest paid on deposits and borrowings etc. 12 (3,723,248) (299,456,776) (214,118,055) Net interest income 1,849,216 148,730,383 103,041,510 Commission, exchange & brokerage 13 355,002 28,552,410 14,893,415 Other operating income 13.1 86,825 6,983,250 7,015,243 441,827 35,535,660 21,908,658 Total operating income (A) 2,291,043 184,266,043 124,950,168

Salaries and allowances 14 54,062 4,348,142 3,589,013 Rent, taxes, insurance, electricity etc. 15 12,626 1,015,474 959,695 Legal expenses - - 3,449 Postage, stamp, telecommunication 16 12,101 973,283 1,176,104 Stationery, printing, advertisements etc. 17 1,263 101,586 126,208 Depreciation and repair of bank's assets 18 4,135 332,560 461,737 Other expenses 19 52,913 4,255,775 10,840,461 Total operating expenses (B) 137,100 11,026,819 17,156,667 Operating profit (C=A-B) 2,153,943 173,239,224 107,793,501 Provision for loans and advances General provision 9.1 217,378 17,977,179 14,292,821 Specific provision - - - 217,378 17,977,179 14,292,821 Provision for diminution in value of investments - - - Other provisions 9.2 (1,217) (100,652) (124,682) Total provision (D) 216,161 17,876,527 14,168,139 Total profit before tax (C-D) 1,937,781 155,362,697 93,625,362

Southeast Bank Limited 395 Southeast Bank Limited Annexure-H.2 Off-Shore Banking Unit, Bangladesh Notes to the Financial Statements as at and for the year ended 31 December 2017

1 Status of the unit Off-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 preparations 2.1 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 Bangladesh Financial Reporting Standards (BFRS). 2.2 Foreign currency Items 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. 82.7000 (closing rate as at 31 December 2017) and Tk.80.4289 (average rate which represents the year end) respectively. 2.3 Basis of Accounting OBU 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 currency The 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.

2017 2016 Note USD Taka Taka 3 Balance with other banks and financial institutions In Bangladesh 3.1 1,481,141 122,490,327 30,939,647 Outside Bangladesh 3.2 67,351 5,569,926 2,502,922 1,548,492 128,060,253 33,442,569 3.1 In Bangladesh Southeast Bank Limited 1,481,141 122,490,327 30,939,647 Other commercial bank - - - 1,481,141 122,490,327 30,939,647 3.2 Outside Bangladesh (current account)

Standard Chartered Bank, New York 67,351 5,569,926 2,502,922 Money at call and on short notic In bank; Placement SEBL Head Office 3,500,000 289,450,000 - 3,500,000 289,450,000 -

396 Annual Report 2017 2017 2016 Note USD Taka Taka

4 Loans and advances Loans, cash credit, overdrafts etc. 4.1 36,863,821 3,048,637,990 1,765,930,769 Bills purchased and discounted 4.2 61,378,260 5,075,982,118 4,561,351,334 98,242,081 8,124,620,108 6,327,282,103 4.1 Loans, cash credit, overdrafts etc. In Bangladesh - - - Outside Bangladesh 4.1.1 36,863,821 3,048,637,990 1,765,930,769 36,863,821 3,048,637,990 1,765,930,769 4.1.1 Outside Bangladesh Time loan 8,570,437 708,775,158 420,400,688 Term loan 26,418,059 2,184,773,489 1,263,383,837 Overdraft - - 2,920,921 Advance-LTR 700,970 57,970,184 79,225,323 Loan against foreign bill 1,174,355 97,119,159 - 36,863,821 3,048,637,990 1,765,930,769 4.2 Bills purchased and discounted In Bangladesh - - - Outside Bangladesh 61,378,260 5,075,982,118 4,561,351,334 61,378,260 5,075,982,118 4,561,351,334 5 Fixed assets including premises, furniture and fixtures Cost: Furniture and fixtures 40,730 3,368,373 3,205,905 Electrical appliances 22,067 1,824,909 1,654,017 62,797 5,193,283 4,859,922 Less: Accumulated depreciation Furniture and fixtures 24,517 2,027,555 1,716,144 Electrical appliances 19,761 1,634,224 1,443,558 44,278 3,661,779 3,159,702 Written down value as at 31 December 18,519 1,531,504 1,700,220 6 Other assets Accrued interest on bill purchased and discounted - - 56,116 Interest on calls and placements(USD) 11,132 920,607 - Prepaid management fee GCPF 162,720 13,456,951 6,658,410 Prepaid interest mashreq 67,238 5,560,583 5,129,340 Prepaid expense-IFC monitoring fee - - 452,590 Insurance 99 8,171 11,447 Advance office rent 2,149 177,692 169,121 Head office general account - - 78,711 243,337 20,124,004 12,555,735 7 Borrowing from other banks, financial institutions and agents Borrowings from IFC 15,000,000 1,240,500,000 1,180,666,500 Borrowings from CBQ 8,000,000 661,600,000 - Borrowings from Mashreq bank PSC-USD 10,000,000 827,000,000 393,555,500 Borrowings from GCPF 20,000,000 1,654,000,000 787,111,000 Borrowings from RAK Bank ,UAE 15,000,000 1,240,500,000 1,416,799,800 Borrowings from Bank Muscat, Oman 8,000,000 661,600,000 393,555,500 Borrowings from FGB, UAE 10,000,000 827,000,000 1,180,666,500 Borrowings from ADB 3,500,000 289,450,000 385,684,390 Borrowings from FM HDFC Bank,Hong Kong 5,000,000 413,500,000 - Borrowings from Head Office 2,980,000 246,446,000 354,593,505 97,480,000 8,061,596,000 6,092,632,695

Southeast Bank Limited 397 2017 2016 Note USD Taka Taka

8 Deposit accounts Current accounts 8.1 97,506 8,063,742 5,213,018 Fixed deposits 329,082 27,215,079 16,595,974 426,588 35,278,821 21,808,992 8.1 Current deposits Current accounts 50,228 4,153,819 1,554,917 Margin against L/C 47,278 3,909,923 908,631 Sundry creditors - - 16,057 Sundry deposit FCY - - 2,733,413 97,506 8,063,742 5,213,018 9 Other liabilities Interest payable on borrowings - - 1,383,457 Interest payable on FDR - - 61 Accrued expenses payable - - 122,964 Accrued interest on borrowing .O/Banks (Call) 2,505 207,176 Interest payable-CBQ Loan 96,907 8,014,182 - Accured interest on borrowing from GCPF 9,306 769,610 Interest payable on RAK Bank, UAE 92,974 7,688,983 4,722,667 Interest payable on Bank Muscat, Oman 35,311 2,920,259 3,331,677 Interest payable on FGB, UAE 46,174 3,818,628 2,626,091 Interest payable on ADB 19,348 1,600,100 2,393,099 Interest payable-IFC loan 21,250 1,757,375 2,488,845 Accrued interest on borrowing FM-HDFC Bank, Hong Kong 74,910 6,195,033 - Provision for unclassified loans and advances 9.1 1,025,319 81,250,000 63,272,821 Provision for off-balance sheet exposures 9.2 24,208 2,001,995 2,001,203 1,448,213 116,223,341 82,342,885 9.1 Provision for unclassified loans and advances Balance as at 1 January 807,941 63,272,821 48,980,000 Provision made during the year 217,378 17,977,179 14,292,821 1,025,319 81,250,000 63,272,821 Adjustments made during the year - - - Balance as at 31 December 1,025,319 81,250,000 63,272,821 9.2 Other provisions

Provision for off-balance sheet exposures Balance as at 1 January 25,425 2,102,648 2,125,885 Add: Provision made during the year - - - 25,425 2,102,648 2,125,885 Less: Adjustments made during the year (1,217) (100,652) (124,682) Balance as at 31 December 24,208 2,001,995 2,001,203 10 Retained earnings Balance as at 1 January 2,259,844 178,196,055 83,762,702 Add/less: foreign currency translation gain for last year - 17,128,953 807,991 2,259,844 195,325,008 84,570,693 Addition during the year 1,937,781 155,362,697 93,625,362 4,197,625 350,687,706 178,196,055 Add/less: foreign exchange gain (loss) - - - Balance as at 31 December 4,197,625 350,687,706 178,196,055 11 Interest income on investment Interest income from loans and advances 1,617,724 130,111,780 75,210,306 Interest on overdraft 590 47,455 102,359 Interest income from bill purchased and discounted 3,943,018 317,132,599 241,846,900 Interest income calls & placement (FCY) 11,132 895,326 - 5,572,464 448,187,159 317,159,565

398 Annual Report 2017 2017 2016 Note USD Taka Taka 12 Interest paid on deposits and borrowings etc. Interest on IFC loan 671,778 54,030,392 51,919,334 Interest expense on mashreq bank loan 209,607 16,858,486 7,912,722 Interest expenses -GCPE loan 809,853 65,135,550 28,267,290 Interest on CBQ loan 525,097 42,233,009 35,795,422 Interest expenses -ICIC bank - - 7,311,538 Interest expenses -RAK bank,UAE 450,841 36,260,651 37,283,968 Interest expenses -Bank Muscat, Oman 282,487 22,720,091 16,017,653 Interest expenses FGB, UAE 369,985 29,757,481 9,092,776 Interest expenses ADB 103,355 8,312,692 2,383,242 Interest on FDR 27 2,184 1,483 Interest expense on -HDFC BANK, HONG 74,910 6,024,906 - Interest on calls and placement 225,309 18,121,334 18,132,627 3,723,248 299,456,776 214,118,055 13 Commission, exchange & brokerage Commission and other charges 355,002 28,552,410 14,893,415 355,002 28,552,410 14,893,415 13.1 Other operating income Other income- SWIFT 7,500 603,217 610,087 Miscellaneous income 17,056 1,371,760 1,096,011 Rebate from trade payments 62,270 5,008,273 5,309,145 86,825 6,983,250 7,015,243 14 Salaries and allowances Basic salary 24,631 1,981,007 1,698,081 Allowances 20,394 1,640,245 1,224,312 Provident fund contribution 2,468 198,522 151,046 Bonus 6,569 528,367 515,574 54,062 4,348,142 3,589,013 15 Rent, taxes, insurance, electricity etc. Rent, rates and taxes 10,607 853,088 791,789 Insurance 244 19,645 17,001 Electricity and lighting 1,775 142,741 150,905 12,626 1,015,474 959,695 16 Postage, stamp, telecommunication etc. Postage 169 13,601 9,852 Expenses regarding On-line - - - Internet service 3,497 281,268 356,688 SWIFT charges 5,920 476,149 525,690 FC Nostro charges 2,127 171,072 241,906 Telephone 388 31,193 41,968 12,101 973,283 1,176,104 17 Stationery, printing, advertisements etc. Office and printing stationery 1,263 101,586 126,208 1,263 101,586 126,208 18 Depreciation and repair of bank's assets Depreciation on own assets: Furniture and fixtures 2,714 218,278 220,945 Electrical appliances 1,421 114,282 240,792 4,135 332,560 461,737 19 Other expenses Entertainment 359 28,876 24,358 Management fee GCPF 21,873 1,759,214 811,691 Expense- IFC front-end fee - - 7,806,029 Expense-IFC portfolio monitoring expense 5,750 462,467 333,144 Travelling expenses and allowance 141 11,301 17,090 House maintenance (Executive ) 2,322 186,746 178,082 Repair, maintenance and utilities 486 39,094 43,391 Books and periodicals 66 5,271 7,265 Conveyance 477 38,390 43,623 Miscellaneous 21,440 1,724,416 1,575,788 52,913 4,255,775 10,840,461

Southeast Bank Limited 399 Annexure-I Total Taka Taka - - (3,013,449,270) (4,870,744,794) (4,880,220,547) 1,168,628,781 4,182,078,051 13,933,043,392 13,933,043,392 339,288,054,190 339,288,054,190 13,933,043,392 - - Taka Taka 21,009,826 65,692,615 65,692,615 35,475,112 65,692,615 Pty Ltd Exchange 109,449,816 109,449,816 Company Southeast (14,465,286) (30,217,503) (South Africa) - - - 322,291 322,291 Taka Taka (919,102) 3,137,644 3,137,644 1,241,393 1,241,393 1,241,393 Pty Ltd Services Financial Southeast (Australia) - - - Outside Bangladesh Ltd 2,978,637 2,978,637 Taka Taka 25,948,232 25,948,232 24,015,788 24,015,788 24,015,788 Financial Southeast (21,037,151) Services (UK) Taka Taka 28,652,278 47,636,262 Limited (6,904,874) Services 174,674,763 174,674,763 167,769,889 (18,983,984) (87,650,333) (39,388,168) SEBL Capital 5,760,123,724 5,760,123,724 Taka Taka Off Shore Off Shore 155,362,697 184,266,043 184,266,043 155,362,697 184,266,043 (11,026,819) (17,876,527) - - - - Banking Unit 8,563,785,868 8,563,785,868 Inside Bangladesh 6,904,874 SEBL Taka Taka 960,303,052 3,940,303,052 13,483,152,790 13,483,152,790 13,490,057,664 (4,719,893,886) (4,822,955,852) (2,980,000,000) 324,825,608,906 324,825,608,906 Islamic Banking) (Conventional & Particulars Segment assets Segment liabilities Net profit Total Income Total unallocated expenses and tax) before (profit Operating profit Allocated expenses Provision against loans & advances and others Provision Profit (loss) before tax (loss) before Profit tax for tax including deferred Provision I) Geographical Segment Income Less: Inter segmental income/expense Southeast Bank Limited and its subsidiaries Geographical and Business Segment

400 Annual Report 2017 - Annexure-I Total Taka Taka 1,168,628,781 4,182,078,051 13,933,043,392 13,933,043,392 13,933,043,392 (3,013,449,270) (4,880,220,547) (4,870,744,794) 339,288,054,190 339,288,054,190 - - Taka Taka Pty Ltd 21,009,826 35,475,112 65,692,615 65,692,615 65,692,615 Exchange Company Southeast 109,449,816 109,449,816 (14,465,286) (30,217,503) (South Africa) - - - 322,291 322,291 Taka Taka Pty Ltd (919,102) 3,137,644 3,137,644 1,241,393 1,241,393 1,241,393 Services Financial Southeast (Australia) - - - Outside Bangladesh Ltd Taka Taka 2,978,637 2,978,637 25,948,232 25,948,232 24,015,788 24,015,788 24,015,788 Financial Southeast (21,037,151) Services (UK) Taka Taka Limited Services 28,652,278 47,636,262 (6,904,874) 174,674,763 174,674,763 167,769,889 (18,983,984) (39,388,168) (87,650,333) SEBL Capital 5,760,123,724 5,760,123,724 - - Taka Taka Islamic Banking 791,241,253 791,241,253 820,144,599 820,144,599 820,144,599 (17,876,527) (11,026,819) 21,173,567,045 21,173,567,045 Inside Bangladesh 6,904,874 Taka Taka Banking 324,424,496 3,304,424,496 Conventional 12,847,274,234 12,847,274,234 12,854,179,108 including OBU (2,980,000,000) (4,822,955,852) (4,719,893,886) 312,215,827,728 312,215,827,728 Particulars Segment liabilities Segment assets Net profit Provision for tax including deferred tax for tax including deferred Provision Profit (loss) before tax (loss) before Profit Provision against loans & advances and others Provision Allocated expenses Operating profit (profit before unallocated expenses and tax) before (profit Operating profit Total income Total Less: Inter segmental income II) Business Segment Income Southeast Bank Limited and its subsidiaries Geographical and Business Segment

Southeast Bank Limited 401 Southeast Bank Capital Services Ltd.

402 Annual Report 2017 AUDITOR’S REPORT TO THE SHAREHOLDERS OF SOUTHEAST BANK CAPITAL SERVICES LIMITED

We have audited the accompanying Financial Statements of SOUTHEAST BANK CAPITAL SERVICES LIMITED as at 31 December 2017 which comprises the Statement of Financial Position and the related Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of cash flows and for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. This responsibility includes designing, implementing, and maintaining internal control relevant to 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. Auditor’s Responsibility Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Financial Statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the Financial Statements along with notes thereon of the company prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as at 31 December 2017 and its cash flow for the year then ended and comply with the rules and regulations issued by Companies Act 1994, Securities and Exchange Rules 1987, and other applicable laws and regulations. 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 account as required by law have been kept by the company so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us; (iii) The Company’s Financial Position as at 31 December 2017 and Statement of Profit or Loss and Other Comprehensive Income and its Statement of Cash Flows dealt with by the report are in agreement with the books of account and returns; (iv) The expenditure incurred was for the purpose of the company’s business;

Dhaka Pinaki & Company Dated: 14 February 2018 Chartered Accountants

Southeast Bank Limited 403 Southeast Bank Capital Services Ltd. Statement of Financial Position as at 31 December 2017

TAKA Note 31-12-2017 31-12-2016 ASSETS A. NON-CURRENT ASSETS 608,167,963 327,715,305 Property, Plant and Equipment 04 608,167,963 327,715,305

B. CURRENT ASSETS 5,184,493,803 5,473,896,220 Margin Loan 05 2,465,716,400 2,500,642,443 Accounts Receivable 06 21,241,611 35,890,284 Advances, Deposits and Prepayments 07 77,121,808 79,461,626 Investment in Quoted Shares 08 2,587,875,942 2,276,624,953 Cash and Cash Equivalents 09 32,538,042 581,276,914 C. TOTAL ASSETS [A + B] 5,792,661,766 5,801,611,525 EQUITY AND LIABILITIES D. CAPITAL AND RESERVE 5,489,512,364 5,463,491,041 Share Capital 10 5,500,000,000 5,500,000,000 Retained Earnings 11 (10,487,636) (36,508,959) E. NON-CURRENT LIABILITIES - - - - F. CURRENT LIABILITIES 303,149,401 338,120,484 Margin Deposit 12 27,524,421 21,003,651 Advance Received for Rent 13 7,110,500 13,095,140 Collection in Transit 14 23,908,591 67,035,027 Loan From ICB 15 - 7,687,819 Bank Overdraft - 10,674 Provision for Corporate Income Tax 16 80,815,923 61,831,939 Provision for Diminution in Value of Investments 17 153,692,107 114,303,939 Accrued Expenses 18 155,483 486,276 Other Liabilities 19 9,942,376 52,666,021 G. TOTAL EQUITY AND LIABILITIES [D + E + F] 5,792,661,766 5,801,611,525

Chairman Director Managing Director PINAKI & COMPANY Chartered Accountants

404 Annual Report 2017 Southeast Bank Capital Services Ltd. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2017

TAKA PARTICULARS Note 2017 2016 Income: Interest on Portfolio Loan 16,899,513 76,502,732 Portfolio Management Fee 14,611,790 15,192,687 Documentation Charge 147,558 22,087 Settlement Fees 34,908,758 14,385,736 Commission on Underwriting 495,000 442,368 Commission on Issue Management 40,000 - Income on Investment Shares 48,532,594 30,470,312 Dividend Income 52,538,334 34,720,326 Other Income 20 4,273,920 3,785,285 Interest on SND Account 5,387,568 22,214,126 Total Income 177,835,035 197,735,660 Expenses: Salary & Allowances 21 10,295,856 8,625,400 Financial Expenses on loan 22 5,791,226 97,880,488 Printing & Stationery 256,808 202,117 Local Conveyance 20,250 15,550 Entertainment 215,400 247,863 Car Maintenance 561,492 361,490 House Service & Utilities 191,935 154,000 House Maintenance 1,017,902 614,000 Telephone & Postage 144,673 128,918 Office Space Rentals 11,441,052 16,831,652 Other Rates & Taxes 617,550 - Miscellaneous Expenses 250,064 42,854 CDBL Expenses 3,445,778 2,068,918 Misc. Contractual Services 813,854 778,165 Bank Charges 41,764 29,570 Seating Fees (Regarding Board Meeting) 210,000 215,000 Fuel and Lubricant 112,048 - Donation/Contribution 50,000 - Audit Fees 69,000 40,000 Professional Service Charge 143,750 132,250 Corporate Expenses (Subscription) 215,000 887,875 Utilities Charges (Repair,Main. & Utilities) 226,265 1,255,742 Training & Seminar 64,300 37,000 Electricity & Lighting Expenses 989,688 4,850 Depreciation 56,255,905 27,190,185 Total Expenses 93,441,560 157,743,888 Net Profit Before Provision 84,393,476 39,991,772 Add/(Less): Provision for Diminution in Value of Investments 23 (39,388,168) 38,821,526 Profit/(Loss) Before Tax 45,005,308 78,813,298 Less: Provision for Corporate Income Tax 18,983,984 19,740,876 Retained Earnings Carried Forward 26,021,323 59,072,422

Chairman Director Managing Director PINAKI & COMPANY Chartered Accountants

Southeast Bank Limited 405 Southeast Bank Capital Services Ltd. Statement of Changes in Shareholders Equity for the year ended 31 December 2017

(Amount in Taka) Retained Particulars Share Capital General Reserve Total Earnings Balance as on 01.01.2017 5,500,000,000 - (36,508,960) 5,463,491,040 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

Statement of Changes in Shareholders Equity for the year ended 31 December 2016

(Amount in Taka) Retained Particulars Share Capital General Reserve Total Earnings Balance as on 01.01.2016 1,500,000,000 - (95,581,382) 1,404,418,618 Add: during the year 4,000,000,000 - - 4,000,000,000 Retained earnings during the year - - 59,072,422 59,072,422 Balance as on 31.12.2016 5,500,000,000 - (36,508,960) 5,463,491,041

Managing Director Director

406 Annual Report 2017 Southeast Bank Capital Services Ltd. Statement of Cash Flows for the year ended 31 December 2017

TAKA PARTICULARS 2017 2016 Cash flow from Operating Activities Cash receipt from Customer 31,548,186 58,243,745 Cash Received from Others 103,009,621 64,298,475 Cash paid to Employee and Suppliers (74,448,866) (23,045,110) Advances, Deposits and Prepayments 19,386,421 182,332,995 Income Tax Paid (17,046,603) (9,883,009) Margin Loan 34,926,043 (137,139,419) Margin Deposit 6,520,770 4,310,588 Advance Received for Rent (5,984,640) (5,996,140) Collection in Transit (43,126,435) 39,715,007

Net cash provided by Operating Activities 54,784,497 172,837,132 Cash flow from Investing Activities Investment in Shares (723,928,362) (508,568,787) Disposal of Investment in Shares 412,677,374 172,795,463 Acquisition of Fixed Asset (Land) (336,708,563) (228,571,220) Interest on SND 5,387,568 22,214,126 Income from Dividend 52,538,334 34,720,326 Net cash used in Investing Activities (590,033,650) (507,410,092) Cash flow from Financing Activities Net Increase/(Decrease) in Overdraft (10,674) (2,863,892,516) Net Increase/(Decrease) ICB Loan- Pronodona Scheme (7,687,819) (29,451,609) Financial Expenses on loan (5,791,226) - Interest Paid on Overdraft - (210,342,810) Interest on ICB Loan - Pronodona Scheme - (1,837,830) Increase share capital - 4,000,000,000 Net cash used in Financing Activities (13,489,719) 894,475,234 Increase/(decrease) in Cash and Cash Equivalents (548,738,872) 559,902,275 Cash and Cash Equivalents at the opening 581,276,914 21,374,639 Cash and Cash Equivalents at the closing 32,538,042 581,276,914

Managing Director Director

Southeast Bank Limited 407 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

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 Policies 2.1 Statement of Compliance The financial statements of Southeast Bank Capital Services Limited have been prepared in accordance with the Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), 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 BAS – 1 “presentation of financial statements “the complete set of financial statements includes the following components: According to International Accounting Standard (IAS) – 1, as adopted by ICAB as BAS – 1 “presentation of financial statements “the complete set of financial statements includes the following components: i) Statement of Financial Position ii) Statement of Profit or Loss and Other Comprehensive Income iii) 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 BAS 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 BAS-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 27-12-2017 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 31-12-2017.

408 Annual Report 2017 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

TAKA No. PARTICULARS Note 2017 2016

04. Property, Plant and Equipment Details of Property, Plant and Equipment and Depreciation as at 31 December 2017 are shown in the annexed Schedule - A. This is arrived at as follows: Written Down Value (a-b) 608,167,963 327,715,305 Opening Balance - At Cost 405,480,073 176,908,853 Add: Addition during the year ( At Cost) 336,708,563 228,571,220 742,188,636 405,480,073 Less : Adjustment during the year - - Closing Balance (a) 742,188,636 405,480,073 Accumulated Depreciation Opening Balance 77,764,768 50,574,583 Add: Charged during the year 56,255,905 27,190,185 134,020,673 77,764,768 Less : Adjustment during the year - - Closing Balance (b) 134,020,673 77,764,768 05 Margin Loan 2,465,716,400 2,500,642,443 As per Last Account 2,500,642,443 2,363,503,024 Add: During the year 3,720,528,091 1,836,503,044 6,221,170,534 4,200,006,068 Less: Received during the year 3,755,454,134 1,699,363,625 06 Accounts Receivable 21,241,611 35,890,284 BLI Securities Ltd. 06.1 18,199,626 35,328,355 AD Holdings Ltd. 06.2 3,274,407 399,584 National Securities & Consultants Ltd. 06.3 - 2,788 IIDFC 06.4 - 37,903 Int. Leasing Securities Ltd. 06.5 (232,422) 121,654 06.1 BLI Securities Ltd. 18,199,626 35,328,355 As per Last Account 35,328,355 3,748,872 Add/Less: Net balancing figure during the year (17,128,729) 31,579,483 06.2 AD Holdings Ltd. 3,274,407 399,584 As per Last Account 399,584 409,183 Add/Less: Net balancing figure during the year 2,874,823 (9,599) 06.3 National Securities & Consultants Ltd. - 2,788 As per Last Account 2,788 457,544 Add/Less: Net balancing figure during the year (2,788) (454,756) 06.4 IIDFC - 37,903 As per Last Account 37,903 10,755,461 Add/Less: Net balancing figure during the year (37,903) (10,717,558) 06.5 Int. Leasing Securities Ltd. (232,422) 121,654 As per Last Account 121,654 2,260,237 Add/Less: Net balancing figure during the year (354,076) (2,138,583)

Southeast Bank Limited 409 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

TAKA No. PARTICULARS Note 2017 2016 07 Advances, Deposits and Prepayments 77,121,808 79,461,626 Lease Rental (Eunoos Center) 07.1 7,401,480 14,802,960 Corporate Income Tax 07.2 68,338,491 51,291,888 Interior Decoration and Air Conditioning - 13,078,428 Security Deposits-(As per Last Account) 238,915 238,915 Advance for Salary 28,600 28,600 Interest Receivable on Portfolio Loan 757,396 - Accounts Receivable (Others) 356,926 - Advance for Misc. Expenses - 20,835 07.1 Lease Rental (Eunoos Center) 7,401,480 14,802,960 As per Last Account 14,802,960 22,204,440 Less : Adjustment during the year 7,401,480 7,401,480 07.2 Corporate Income Tax 68,338,491 51,291,888 As per Last Account 51,291,888 41,408,879 Add: Addition during the year (Advance Income Tax) 16,866,894 9,883,009 68,158,782 51,291,888 Add: Paid by Pay order for the year 2011-12 9,873 - Add: Paid by Pay order for the year 2012-13 169,836 - 68,338,491 51,291,888 Less : Adjustment during the year - - 08 Investment in Shares 08.01 2,587,875,942 2,276,624,953 As per Last Account 2,276,624,953 1,940,851,629 Add: Net investment during the year 311,250,989 335,773,324 08.01 The total amount is invested as under: Exim Bank Ltd. 110,271,800 97,872,791 Bay Leasing & Investment Ltd. 382,935,046 382,935,045 VIPB( Non Listed) 3,500,000 3,500,000 National Life Insurance Co. Ltd. 1,462,000,069 1,501,719,117 Asia Insurance Co. Ltd. 39,043,100 39,043,100 Delta Life Insurance Co. Ltd. 77,330,736 75,668,264 GPH Ispat 12,284,522 - KDS Accessories Ltd. 7,049,362 - Prime Bank Ltd. 85,456,786 - Mobil Jamuna Ltd. 5,954,035 - Lub-rref ( BD) Ltd. 127,500,000 - GBB Power Ltd. 11,836,582 - Barka Power Ltd. 20,713,799 - Mozaffar Hossain Spining Mills Ltd. 12,887,618 - Argon Denims Ltd. 11,133,522 - Orion Pharma Ltd. 16,070,499 - AFC Agro Biotech Ltd. 24,343,785 - JMI Syringes & Medical Devices Ltd. 9,420,561 - Heidelberg Cement Ltd. 7,211,819 - Unique Hotels & Resorts Ltd. 28,506,766 - IFIC Bank Ltd. 2,800,000 - Beximco Ltd. 43,078,997 - Beximco Pharma Ltd. 2,386,760 221,962

410 Annual Report 2017 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

TAKA No. PARTICULARS Note 2017 2016 ACI Formulations 5,540,214 - C & N Textiles 12,169,572 - Omiex 64,800 - IFAD Auto 459,469 - Trust Bank Ltd 2,529,566 - Dhaka Bank Ltd 11,153,360 - FAS Finance & Investment 11,683,746 - Uttara Finance 6,976,776 - Pubali Bank Ltd 5,452,118 - NAHEEACP 62,246 - Paramount Textile Ltd. 13,722,341 - BPML 691,600 - Dutch- Bangla Bank 13,653,967 - Rupali Life Insurance Co. Ltd. - 9,203,333 Greemen One : Sceem Two - 352,526 Appolo Ispat - 5,358,122 Titas Gas - 15,838,465 Generation Next Fashion Ltd - 667,731 ACI Ltd. - 38,231,777 BATA Shose - 1,434,152 Fortune Shoes Ltd.(IPO) - 102,470 FU-Wang Ceramic - 1,656,378 Unique Hotels & Resorts Ltd. - 28,506,765 Prime Bank Ltd. - 74,312,955 2,587,875,942 2,276,624,953 09 Cash and Cash Equivalents 32,538,042 581,276,914 Cash in hand - - Cash at bank 09.1 32,538,042 581,276,914 09.1 Cash at Bank 32,538,042 581,276,914 Southeast Bank Ltd -CD A/C- 1100007409 5,387,250 5,398,400 Southeast Bank Ltd -SND-13100000785(Public Issue) 9,947,442 512,098,296 Southeast Bank Ltd -Al- Wadiah A/C- 11100006778 17,203,350 63,780,218

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

11 Retained Earnings (10,487,636) (36,508,959) As per Last Account (36,508,959) (95,581,382) Add: Profit/Loss during the year 26,021,323 59,072,422 12 Margin Deposit 27,524,421 21,003,651 As per Last Account 21,003,651 16,693,063 Add: During the year 622,034,746 230,147,989 643,038,397 246,841,052 Less: Paid during the year 615,513,976 225,837,401

Southeast Bank Limited 411 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

TAKA No. PARTICULARS Note 2017 2016

13 Advance Received for Rent 7,110,500 13,095,140 As per Last Account 13,095,140 19,091,280 Add: Received during the year - - 13,095,140 19,091,280 Less: Adjustment during the year 5,984,640 5,996,140 14 Collection in Transit 23,908,591 67,035,027 As per Last Account 67,035,027 27,320,020 Add: Received during The year 5,739,017,933 2,715,903,852 5,806,052,959 2,743,223,872 Less: Paid during the year 5,782,144,368 2,676,188,845 15 Loan From ICB - 7,687,819 As per Last Account 7,687,819 37,139,427 Add: Received during the year - - 7,687,819 37,139,427 Less: Paid during the year 7,687,819 29,451,609 16 Provision for Corporate Income Tax 80,815,923 61,831,939 As per Last Account 61,831,939 42,091,063 Add: Addition during the year 18,983,984 19,740,876 80,815,923 61,831,939 Less : Adjustment during the year - - 17 Provision for Diminution in Value of Investments Schedule-B 153,692,107 114,303,939 Opening Balance 114,303,939 153,125,465 Add:/(Less): During the year 39,388,168 (38,821,526)

18 Accrued Expenses 155,483 486,276 Interest on ICB Loan - 44,846 Excise Duty & Bank Charge - 40,375 CDBL Bill 82,383 271,813 Audit Fee 69,000 40,000 News paper Bill 1,100 644 Other Expenses - 88,598 Telephone Bill 3,000 -

19 Other Liabilities 9,942,376 52,666,021 Accounts Payable (Others) 1,904,776 41,603,981 IPO Application Fund 8,037,600 10,702,600 Provident Fund - 359,440 20 Other Income 4,273,920 3,785,285 Rental Income 4,273,920 3,587,040 Miscellaneous Income - 198,245 21 Salary & Allowances 10,295,856 8,625,400 Salary & Allowances 7,438,884 6,544,600 Festival Bonus 750,750 661,100 Incentive Bonus 235,100 - Leave Fare Concession 1,475,937 1,046,600 Provident Fund Contribution 395,185 373,100 Leave Encashment - - Gratuity - -

412 Annual Report 2017 Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

TAKA No. PARTICULARS Note 2017 2016

22 Financial Expenses 5,791,226 97,880,488 Interest on Bank Overdraft - 96,214,458 Interest on ICB Loan - 1,666,030 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 - 23 Provision for Diminution in Value of Investments (39,388,168) 38,821,526 Opening Balance 114,303,939 153,125,465 Less: Required on 31 December 2017 153,692,107 114,303,939

Southeast Bank Limited 413 Schedule - A 608,167,963 10,156 6,178,392 31.12.2017 21,617,400 24,727,531 555,634,484 W.D.V as on W.D.V - - 134,020,673 31.12.2017 1,289,844 4,203,740 7,736,462 120,790,627 Balance as on - - the year 56,255,905 10,156 721,672 2,401,933 53,122,144 Depreciation Depreciation Charged during - - 77,764,768 01.01.2017 1,279,688 3,482,068 5,334,529 67,668,483 Balance as on 50% 20% 10% 10% Rate of % 742,188,636 31.12.2017 1,300,000 10,382,132 29,353,862 24,727,531 676,425,111 Balance as on Cost - - the year 336,708,563 3,717,142 9,928,146 12,922,531 310,140,744 Addition during 405,480,073 01.01.2017 1,300,000 6,664,990 19,425,716 11,805,000 366,284,367 Balance as on Total Total Name of Assets Computer Software Electrical Appliance Furniture & Fixture Buildings Land Particulars Plant and Equipment Property, Southeast Bank Capital Services Ltd. Notes to the Financial Statements as at 31 December 2017

414 Annual Report 2017 Southeast Bank Capital Services Ltd. Schedule to the Financial Statements as at 31 December 2017

Diminution in Value of Investments Schedule-B

Net Difference Particulars Cost Price Market Price (Provision Required) Exim Bank Ltd. 110,271,800 99,499,265 (10,772,535) Bay Leasing & Investment Ltd. 382,935,046 356,596,889 (26,338,157) VIPB( Non Listed) 3,500,000 - - National Life Insurance Co. Ltd. 1,462,000,069 1,418,367,930 (43,632,140) Asia Insurance Co. Ltd. 39,043,100 29,228,457 (9,814,643) Delta Life Insurance Co. Ltd. 77,330,736 56,616,968 (20,713,769) GPH Ispat 12,284,522 11,136,027 (1,148,495) KDS Accessories Ltd. 7,049,362 6,188,156 (861,207) Prime Bank Ltd. 85,456,786 71,840,361 (13,616,425) Mobil Jamuna Ltd. 5,954,035 5,460,455 (493,580) Lub-rref ( BD) Ltd.(non-listed) 127,500,000 - - GBB Power Ltd. 11,836,582 10,333,928 (1,502,655) Barka Power Ltd. 20,713,799 18,411,293 (2,302,505) Mozaffar Hossain Spining Mills Ltd. 12,887,618 8,900,409 (3,987,209) Argon Denims Ltd. 11,133,522 10,439,287 (694,235) Orion Pharma Ltd. 16,070,499 15,259,512 (810,987) AFC Agro Biotech Ltd. 24,343,785 22,006,260 (2,337,525) JMI Syringes & Medical Devices Ltd. 9,420,561 8,687,609 (732,952) Heidelberg Cement Ltd. 7,211,819 7,165,514 (46,305) Unique Hotels & Resorts Ltd. 28,506,766 25,805,149 (2,701,618) IFIC Bank Ltd. 2,800,000 5,040,000 2,240,000 Beximco Ltd. 43,078,997 35,437,500 (7,641,497) Beximco Pharma Ltd. 2,386,760 2,286,922 (99,838) ACI Formulations 5,540,214 4,816,358 (723,856) C & N Textiles 12,169,572 9,002,708 (3,166,865) Omiex(IPO) 64,800 464,746 399,946 IFAD Auto 459,469 467,208 7,739 Trust Bank Ltd 2,529,566 2,487,840 (41,726) Dhaka Bank Ltd 11,153,360 9,900,000 (1,253,360) FAS Finance & Investment 11,683,746 10,752,350 (931,396) Uttara Finance 6,976,776 6,668,989 (307,788) Pubali Bank Ltd 5,452,118 5,331,066 (121,052) NAHEEACP(IPO) 62,246 502,570 440,324 Paramount Textile Ltd. 13,722,341 14,048,000 325,659 BPML(IPO) 691,600 - - Dutch- Bangla Bank 13,653,967 13,342,512 (311,455) 2,587,875,942 2,302,492,238 (153,692,107)

Southeast Bank Limited 415 Southeast Financial Services (UK) Ltd

ACCOUNTS FOR THE YEAR ENDED 31/12/2017

Prepared By: Jahan & Co Chartered Management Accountants 22 Osborn Street London E1 6TD

416 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD

ACCOUNTS FOR THE YEAR ENDED 31/12/2017

DIRECTORS ALAMGIR KABIR, FCA M KAMAL HOSSAIN MUHAMMAD NAZMUL HUDA AZAD

REGISTERED OFFICE 22 NEW ROAD LONDON E1 2AX

COMPANY DETAILS Private company limited by shares registered in EW - England and Wales, registered number 07539137

BANKERS Habib Bank UK

ACCOUNTANTS Jahan & Co Chartered Management Accountants 22 Osborn Street London E1 6TD

Southeast Bank Limited 417 SOUTHEAST FINANCIAL SERVICES (UK) LTD

ACCOUNTS FOR THE YEAR ENDED 31/12/2017

CONTENTS Page

Directors' Report 3 Accountants' Report 4 Statement of Comprehensive Income 5 Balance Sheet 6 Notes To The Accounts 7

The following do not form part of the statutory financial statements: Trading and Profit and Loss Account 10 Profit and Loss Account Summaries 11

418 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 31/12/2017

The directors present their report and accounts for the year ended 31/12/2017

STATEMENT OF DIRECTORS RESPONSIBILITIES

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulation.

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 (United Kingdom Accounting Standards and applicable law). 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 of 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;

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 disclose with reasonable accuracy at any time the financial position of the company and enable then 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 report of the directors has been prepared in accordance with the special provisions within Part 15 of the Companies Act 2006.

This report was approved by the board on 15/01/2018

MUHAMMAD NAZMUL HUDA AZAD Director

Southeast Bank Limited 419 SOUTHEAST FINANCIAL SERVICES (UK) LTD ACCOUNTANTS’ REPORT TO THE BOARD OF DIRECTORS ON THE UNAUDITED ACCOUNTS OF SOUTHEAST FINANCIAL SERVICES (UK) LTD FOR THE YEAR ENDED 31/12/2017

In order to assist you to fulfill your duties under the Companies Act 2006, we have prepared for your approval the accounts of SOUTHEAST FINANCIAL SERVICES (UK) LTD for the year ended 31/12/2017 as set out on pages 5 to 9 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 (CIMA), we are subject to its ethical and other professional requirements which are detailed on their website.

This report is made solely to the Board of Directors of SOUTHEAST FINANCIAL SERVICES (UK) LTD, as a body, in accordance with the terms of our engagement letter dated 28/12/2011. 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 Directors of SOUTHEAST FINANCIAL SERVICES (UK) LTD, as a body, in this report, in accordance with the requirements of the Chartered Institute of Management Accountants (CIMA) as detailed on their 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 Board of Directors 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 profitability of SOUTHEAST FINANCIAL 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 London E1 6TD 15/1/2018

420 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD STATEMENT OF COMPREHENSIVE INCOME for the year ended 31/12/2017

2017 2016 Notes £ £

TURNOVER 229,246 176,454 GROSS PROFIT 229,246 176,454 Distribution costs (2,029) (2,963) Administrative expenses (198,784) (164,503) OPERATING PROFIT 28,433 8,988 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 28,433 8,988

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 28,433 8,988

Southeast Bank Limited 421 SOUTHEAST FINANCIAL SERVICES (UK) LTD BALANCE SHEET At 31/12/017

2017 2016 Notes £ £ FIXED ASSETS Tangible assets 5 15,734 21,972 Current Asset Debtors 6 119,253 258,055 Cash at bank and in hand 97,181 26,182 216,434 284,237 CREDITORS: Amounts falling due within one year 7 91,451 193,925 NET CURRENT ASSETS 124,983 90,312 TOTAL ASSETS LESS CURRENT LIABILITIES 140,717 112,284 CAPITAL AND RESERVES Called up share capital 8 300,000 300,000 Profit and loss account (159,283) (187,716) SHAREHOLDERS' FUNDS 140,717 112,284

For the year ending 31/12/2017 the company was entitled to exemption under section 477 of the Companies Act 2006 relating to small companies. The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006. The directors acknowledge their responsibilities for complying with the requirements of the Act 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.

Approved by the board on 15/01/2018 and signed on their behalf by

MUHAMMAD NAZMUL HUDA AZAD Director

422 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31/12/2017

1. ACCOUNTING POLICIES 1a. Basis Of Accounting The accounts have been prepared under the historical cost convention. The accounts have been prepared in accordance with FRS102 section 1A - The Financial Reporting Standard applicable in the UK and Republic of Ireland and the Companies Act 2006 . 1b. Depreciation Depreciation has been provided at the following rates in order to write off the assets over their estimated useful lives. Short Leasehold Properties straight line 14.28% Fixtures and Fittings reducing balance 20% Equipment reducing balance 20% 1c. Pension Costs The company operates a defined contribution pension scheme. Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the scheme. 1d. Turnover Turnover represents the invoiced value of goods and services supplied by the company, net of value added tax and trade discounts. 2. EMPLOYEES 2017 2016 No. No. Average number of employees 7 9 3. PENSION CONTRIBUTIONS 2017 2016 £ £ Pension contributions 501 - 501 - 4. TAX ON ORDINARY ACTIVITIES 5. TANGIBLE FIXED ASSETS Short Fixtures Leasehold and Equipment Total Properties Fittings £ £ £ £ Cost At 01/01/2017 30,000 47,573 9,515 87,088 Additions - 1,273 397 1,670 At 31/12/2017 30,000 48,846 9,912 88,758 Depreciation At 01/01/2017 24,900 33,809 6,407 65,116 For the year 4,200 3,007 701 7,908 At 31/12/2017 29,100 36,816 7,108 73,024 Net Book Amounts At 31/12/2017 900 12,030 2,804 15,734 At 31/12/2016 5,100 13,764 3,108 21,972

Southeast Bank Limited 423 SOUTHEAST FINANCIAL SERVICES (UK) LTD NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31/12/2017

6. DEBTORS 2017 2016 £ £ Amounts falling due within one year: Trade debtors 102,253 244,526 Amounts due from group companies 2,000 2,000 Prepayments 6,000 2,529 Rent Deposits 9,000 9,000 119,253 258,055 7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR PAYE control 5,262 3,118 Suspense AC - 2,085 Remittance Payable 85,104 186,046 Pension schemes 135 - Accruals 950 2,676 91,451 193,925 8. SHARE CAPITAL Allotted, issued and fully paid: 300000 Ordinary shares of £ 1 each 300,000 300,000 300,000 300,000

424 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31/12/2017

2017 2016 £ £ Turnover 229,246 176,454 Cost of Sales: Gross Profit 229,246 176,454 229,246 176,454 Less: Distribution costs 2,029 2,963 Administrative expenses 198,784 164,504 200,813 167,467 Net profit for the year before taxation 28,433 8,988 Net profit for the year after taxation 28,433 8,988 Retained losses brought forward (187,716) (196,704) Retained losses carried forward (159,283) (187,716) This page does not form part of the Company's Statutory Accounts and is prepared for the information of the Directors only.

Southeast Bank Limited 425 SOUTHEAST FINANCIAL SERVICES (UK) LTD PROFIT AND LOSS ACCOUNT SUMMARIES FOR THE YEAR ENDED 31/12/2017

2017 2016 £ £ Distribution Costs: Advertising and sales promotion 1,944 2,839 Travel and Subsistence 85 124 2,029 2,963 Administrative Expenses: Bad debts 76 - Rent, Rates & Insurance 33,553 33,645 Business Insurance 926 904 Heat, light & water 1,612 1,558 Cleaning 783 972 Wages - regular 103,529 72,020 Pension contributions 501 - Staff welfare 1,577 1,027 Staff Training 350 - Repairs & maintenance 1,385 955 Computer and IT costs 427 420 Accountancy fees 3,800 3,800 Legal and Professional expenses 2,664 150 Compliance 1,988 - Stationery & office supplies 1,535 2,918 Telephone & Internet 2,617 1,734 Fees & Subscriptions 1,443 989 Customer Due Diligence 191 432 Security costs 1,267 908 Bank charges 30,652 33,653 Depreciation and Amortisation: Depreciation of short leasehold properties 4,200 4,200 Depreciation of fixtures and fittings 3,007 3,441 Depreciation of equipment 701 777 198,784 164,503 This page does not form part of the Company's Statutory Accounts and is prepared for the information of the Directors only.

426 Annual Report 2017 SOUTHEAST FINANCIAL SERVICES (UK) LTD 455 / 8986421677 CORPORATION TAX COMPUTATION FOR THE PERIOD 01/01/2017 - 31/12/2017

£ Profit as per Accounts 01/01/2017 - 31/12/2017 28,433 Add: Depreciation & Asset Disposal 7,908 7,908 Less: General Pool Allowances 6,045 (6,045)

Trading Profit 30,296

Losses brought forward and used against profits (30,296)

Capital Allowances General Pool 01/01/2017 - 31/12/2017 pool b/f 31,911 additions 1,670 disposals 33,581 wda (18%) 6,045 6,045 wdv 27,536

Corporation tax chargeable Trading and professional profits 30,296.00 Losses brought forward 30,296.00 Net trading and professional profits .00 Bank building society or other interest and profits .00 Income from UK land and buildings .00 Profit before charges and reliefs .00 Profits chargeable to corporation tax .00 Totals Tax

Tax payable .00

Tax reconciliation

MEMO: Summary of trading losses Losses brought forward 176,178 Losses brought forward used against profits 30,296 Losses carried forward 145,882

Southeast Bank Limited 427 Southeast Financial Services (Australia) Pty Ltd

ABN 40 160 673 165

FINANCIAL REPORT For the year ended 31 December 2017

428 Annual Report 2017 Southeast Financial Services (Australia) Pty Ltd

ABN 40 160 673 165

FINANCIAL REPORT

CONTENTS Page Trading, Profit and Loss Statement 2 Balance Sheet 3 Notes to the Financial Statement 4 Director’s Declaration 5 Compilation Report 6

Southeast Bank Limited 429 Southeast Financial Services (Australia) Pty Ltd ABN 40 160 673 165 TRADING AND PROFIT AND LOSS ACCOUNT For the year ended 31 December 2017

December 2017 December 2016 $ $ INCOME Commission Collected 1,858.29 438.76 Exchange gain 5,449.30 4,416.15 Interest Earned 0.62 0.09 Other Income 12,708.77 17,063.80 20,016.98 21,918.80 EXPENDITURE Advertising - - Bank charges 1,978.18 179.02 Depreciation - SB general pool 2,909.00 2,614.13 Electricity - - Entertainment - - Insurance - 149.36 Legal Services - - Motor vehicle expenses - - Other vehicle expenses 448.80 35.20 Parking - - Office supplies - - Postage - - Printing and Stationery 131.45 - Rental expenses 5,161.00 6,319.08 Repair and maintenance - - Security - - Superannuation 340.00 415.00 Telephone, mobile and fax 551.74 372.25 Wages 3,300.00 5,300.00 Total 14,820.17 15,384.04

PROFIT/LOSS BEFORE INCOME TAX 5,196.81 6,534.76

430 Annual Report 2017 Southeast Financial Services (Australia) Pty Ltd ABN 40 160 673 165 BALANCE SHEET as on 31 December 2017

31-Dec-2017 31-Dec-2016 $ $ ASSETS Current Assets Cash on Hand 24.80 763.45 Westpac Cheque Account - 321645 - 19.15 St George Freedom Account- 10775735 - 2,839.08 St George Saver Account - 158.11 SEBL Account 302.42 883.68 Westpac Cash Reserve - 321653 117.44 117.44 Receivables 17,426.40 13,860.87 Office Bond Deposit 19,119.04 19,119.04 36,990.10 37,760.82 Non-current Assets SB general pool 42,652.06 42,652.06 Less accumulated depreciation (30,988.69) (28,109.69) 11,663.37 14,542.37 TOTAL ASSETS 48,653.47 52,303.19 LIABILITIES Current Liabilities Remittance Payable - - PAYG withhold payable 14,733.53 11,696.35 SEBL Account 24,488.96 29,526.62 Rent Payable 6,123.40 12,016.29 Superannuation payable 6,190.49 4,624.99 Provision for GST (27,252.94) (24,734.28) 24,283.44 33,129.97 EQUITY Share Capital 312,082.90 312,082.90 Retained Earnings Accumulated Losses beginning of the year (292,909.68) (299,444.44) Prior Year Adjustments - - Gain/Losses for the Period 5,196.81 6,534.76 TOTAL EQUITY (287,712.87) (292,909.68) Total Liability & Equity 48,653.47 52,303.19

Southeast Bank Limited 431 Southeast Financial Services (Australia) Pty Ltd ABN 40 160 673 165 NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 December 2017

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNT POLICY

a. This financial report is a 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 with 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.

432 Annual Report 2017 Southeast Financial Services (Australia) Pty Ltd ABN 40 160 673 165 DIRECTORS’ DECLARATION

The directors have determined that the company is not a reporting entity. The directors have determined that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements.

The directors of the company declared that:

1. The financial statements and the notes attached present fairly the company’s financial position as at 31/12/2017 and its performance for the period ended on that date in accordance with the accounting policies described in Note 1 to the financial statements; 2. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with the resolution of the Board of Directors:

Manager & Director:

Khandoker Ziaul Karim

Dated: 15/02/2018

Southeast Bank Limited 433 SOUTHEAST EXCHANGE COMPANY (SOUTH AFRICA) (PROPRIETARY) LIMITED

(REGISTRATION NUMBER 2011/008619/07)

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

434 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017

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 9 Dolly Rathebe Road Corner Mint Road Fordsburg Johannesburg 2092 Business address 9 Dolly Rathebe Road Corner Mint Road Fordsburg Johannesburg 2092 Tax reference number 9084402180 Holding company Southeast Bank Limited incorporated in Bangladesh Bankers Standard Bank of South Africa First 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 02 February 2018

Southeast Bank Limited 435 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017

Index

The reports and statements set out below comprise the annual financial statements presented to the shareholder:

Contents page

Independent Auditors' Report 3 - 5 Directors' Responsibilities and Approval 6 Directors' Report 7 -9 Statement of Financial Position 10 Statement of Comprehensive Income 11 Statement of Changes in Equity 12 Statement of Cash Flows 13 Accounting Policies 14 -16 Notes to the Annual Financial Statement 17 -20

The following supplementary information does not form part of the annual financial statements and is unaudited:

Detailed Income Statement 21 - 22

436 Annual Report 2017 Independent Auditor’s Report To the shareholder of Southeast Exchange Company (South Africa) (Proprietary) Limited

Opinion

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 2017, 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 2017, and its financial performance and cash flows 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 the International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s 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 financial statements in South Africa. We have fulfilled our there 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 in 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 judgment, were of most significance in our audit of the annual financial statements of he 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 of these matters.

We have determined that there are no key audit matters to communicate in our report.

Southeast Bank Limited 437 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.

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 the 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 the International Standards on Auditing, we exercise professional judgment and maintain professional skepticism 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 accounting estimates and related disclosures made by the directors.

438 Annual Report 2017 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.

Report on other legal and regulatory requirements

It was past practice for the company to charge it’s clients a fee to open an account in Bangladesh without a mandate. This is in contravention of the requirements of the South African Reserve Bank. It was however noted to the best of our knowledge, that this practice has subsequently stopped. The amount under question has no material effect on the annual financial statements.

GL PALMER AND COMPANY Registered Auditors Philippos Philippou (CA) SA Partner Johannesburg 02 February 2018

Southeast Bank Limited 439 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Directors’ Responsibilities and Approval

The 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 statements 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 auditor is 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 judgments 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 minimize it by ensuring that appropriate infrastructure, 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 2018 and, in the 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 and signed by the directors on 02 February 2018 and were signed on its behalf by:

Alamgir Kabir M Kamal Hossain

Bangladesh

440 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Directors’ Report

The directors have pleasure in submitting their report on the annual financial statements of Southeast Exchange Company (South Africa) (Proprietary) Ltd. For the year ended 31 December 2017. 1. Nature of business Southeast Exchange Company (South Africa) (Proprietary) Limited was incorporated 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. Review of financial results and activities 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. 2017 2016 3. Share capital Number of Shares Authorised Ordinary shares of no per value 4 000 4 000 2017 2016 2017 2016 R R Number of Shares Issued Ordinary shares 6 632 179 6 632 179 120 120 There have been no changes to the authorised or issued share capital during the year under review (2016-Nill). 4. Control over unissued shares The unissued ordinary shares are the subject of a general authority granted to the directors in terms of section 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 A dividend of R2 700 000 (2016-Nil) was declared and paid to the shareholder during the year under review. 6. Directors The directors in office at the date of this report are as follows: Directors Changes Alamgir Kabir Shahid Hossain Resigned 03 April 2017 M Kamal Hossain Appointed 19 April 2017 7. Directors' interests in contracts 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, plant and equipment 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 2017 the company’s investment in property, plant and equipment amounted to R394 402 (2016- R493 140), of which R131 600 (2016 - R114 840) was added in the current year through additions.

Southeast Bank Limited 441 9. Special resolutions No special resolutions, the nature of which might be significant to the shareholder in it’s appreciation of the state of affairs of the Company were made by the company during the period covered by this report . 10. Events after the reporting period The directors are not aware of any material event which occurred after the reporting date and up to the date of this report. 11. Going concern 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. Litigation statement 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 2017. 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 of the 2018 financial year. 14. Secretaries The company secretaries are KPMG Inc. Business address 85 Empire Road Parktown Johannesburg 2198 15. Date of authorisation for issue of financial statements The annual financial statements have been authorised for issue by the directors on 02 February 2018. No authority was given to anyone to amend the financial statements after the date of issue .

442 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Statement of financial position as at 31 December 2017

Figures in Rand Note 2017 2016

Assets Non-current Assets 2 394 402 493 140 Property, plant and equipment 3 - 25 017 Deferred tax 394 402 518 157 Current Assets Trade and other receivables 4 1 588 899 971 689 Current tax receivable - 122 764 Cash and cash equivalents 5 14 959 581 11 016 877 16 548 480 12 111 330 16 942 882 12 629 487 Total Assets Equity and liabilities Equity Share capital 6 6 632 179 6 632 179 Retained income 6 242 677 2 741 705 12 874 856 9 373 884 Liabilities Non-Current Liabilities 7 - 89 347 Operating lease liability Current Liabilities Trade and other payables 8 3 978 758 3 166 256 Current tax payable 89 268 - 4 068 026 3 166 256 Total Liabilities 4 068 026 3 255 603 Total Equity and Liabilities 16 942 882 12 629 487

Southeast Bank Limited 443 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Statement of Comprehensive Income

Figures in Rand Note 2017 2016

Revenue 9 12 854 644 6 935 214 Other income 10 27 060 45 363 Operating expenses (5 028 436) (3 427 693) Operating profit 7 853 268 3 552 884 Investment revenue 11 754 998 593 263 Finance costs 12 (104) (4) Profit before taxation 8 608 162 4 146 143 Taxation 13 (2 407 190) (1 085 841) Profit for the year 6 200 972 3 060 302 Other comprehensive income - - Total Comprehensive income for the year 6 200 972 3 060 302

444 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Statement of Changes in Equity

Share Share Total share Retained Figures in Rand Total equity Capital premium capital income

Balance at 01 January 2016 6 594 179 38 000 6 632 179 (318 597) 6 313 582 - - - 3 060 302 3 060 302 Profit for the year - - - - - Other comprehensive income - - - 3 060 302 3 060 302 Total comprehensive income for the period - - - Shareholder's contributions 38 000 (38 000) - - - Total Changes 38 000 (38 000) - - - Balance at 01 January 2017 6 632 179 - 6 632 179 2 741 705 9 373 884 Profit for the year - - - 6 200 972 6 200 972 Other comprehensive income - - - - - Total comprehensive income for the year - - - 6 200 972 6 200 972 Dividends - - - (2 700 000) (2 700 000) Total Changes - - - (2 700 000) (2 700 000) Balance at 31 December 2017 6 632 179 - 6 632 179 6 242 677 12 874 856 Note 6 6 6

Southeast Bank Limited 445 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Statement of Cash Flows

Figures in Rand Note 2017 2016

Cash flows from operating activities

Cash generated from operations 14 8 189 551 2 101 066 Interest income 754 998 593 263 Finance costs (104) (4) Tax paid 15 (2 170 141) (1 214 000) Net cash from operating activities 6 774 304 1 480 325

Cash flows from investing activities

Purchase of property, plant and equipment 2 (131 600) (114 840)

Cash flows from financing activities

Dividends paid (2 700 000) -

Total cash movement for the year 3 942 704 1 365 485 Cash at the beginning of the year 11 016 877 9 651 392 Total cash at end of the year 5 14 959 581 11 016 877

446 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Accounting Policies

1. Basis of preparation and summry of significant accounting policies 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 is carried at cost less accumulated depreciation and accumulated impairment losses. Cost include 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 recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Depreciation is provided using the straight-line method to write down the cost, less estimated residual value over the useful life of the property, plant and equipment as follows: Average Item Depreciation useful life Leasehold improvements Straight line 5 years Office equipment Straight line 3 years Computer equipment Straight line 3 years The residual value, depreciation method and useful life of each asset are reviewed only where there is an indication that there has been a significant change from the previous estimate. 1.2 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. 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 are measured at cost less impairment 1.3 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.

Southeast Bank Limited 447 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Accounting Policies

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. 1.4 Leases A lease is classified as a 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. 1.5 Share capital and equity An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. 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 performed. 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.

448 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Notes to the Annual Financial Statements

Figure in Rand 2017 2016 2. Property, plant and equipment 2017 2016 Cost Accumulated Carrying Cost Accumulated Carrying depreciation value depreciation value Leasehold improvements 625 800 (391 500) 234 300 625 800 (260 750) 365 050 Office equipment 87 634 (32 072) 55 562 20 093 (6 613) 13 480 Computer equipment 302 423 (197 883) 104 540 238 365 (123 755) 114 610 Total 1 015 857 (621 455) 394 402 884 258 (391 118) 493 140 Reconciliation of property, plant and equipment - 2017 Opening Additions Depreciation Total balance Leasehold improvements 365 050 - (130 750) 234 300 Office equipment 13 480 67 541 (25 459) 55 562 Computer equipment 114 610 64 059 (74 129) 104 540 493 140 131 600 (230 338) 394 402

3. Deferred tax Deferred tax asset Operating lease accrual - 25 017 Reconciliation of deferred tax asset At beginning of year 25 017 19 622 Movement in operating lease accrual (25 017) 5 395 - 25 017 4. Trade and other receivables Accrued income 17 309 - Cash in transit 1 546 790 946 889 Deposits 24 800 24 800 1 588 899 971 689 5. Cash and cash equivalents Cash and cash equivalents consist of: 186 733 108 Cash on hand 14 959 395 10 283 769 Bank balances 14 959 581 11 016 877 Included in the above bank balances figure at year end, is an amount of R5 000 000 (2016-R5 000 000) which is an unimpaired capital requirement of the South African Reserve Bank. 6. Share capital Authorised 4000 Ordinary shares of no par value 3 880 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. Issued Ordinary 6 632 179 6 632 179

7. Operating lease accrual Lease accrual - 89 347

Southeast Bank Limited 449 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Notes to the Annual Financial Statements

8. FigureTrade and in Rand other payables 2017 2016 Trade payables 3 756 765 2 922 368 Value added tax 81 483 52 402 Accrual for audit fees 81 510 74 100 Other payables 59 000 117 386 3 978 758 3 166 256 9. Revenue Commissions and transaction fees 7 341 653 4 237 061 Exchange gain income/(loss) 5 512 991 2 698 153 12 854 644 6 935 214 10. Other income Sundry income 27 060 45 363 11. Investment revenue Interest revenue Bank 752 488 593 263 SARS interest income 2 510 - 754 998 593 263 12. Finance costs Interest paid 104 4 13. Taxation Major components of the tax expense Current Local income tax - current period 2 385 268 1 091 236 Local income tax - recognised in current tax for prior periods (3 095) - 2 382 173 1 091 236 Deferred Deferred tax 25 017 (5 395) 2 407 190 1 085 841 Reconciliation of the tax expense Reconciliation between accounting profit and tax expense. Accounting profit 8 608 162 4 146 143 Tax at the applicable tax rate of 28% (2016: 28%) 2 410 285 1 160 920 Tax effect of adjustments on taxable income Non-deductible expenses 71 314 94 617 Temporary differences (96 331) (89 222) Assessed tax loss brought forward - (75 079) Over Provision (3 095) - 2 382 173 1 091 236

450 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Notes to the Annual Financial Statements

Figure in Rand 2017 2016

14. Cash generated from operations

Profit before taxation 8 608 162 4 146 143 Adjustments for: Depreciation 230 338 195 236 Interest received (754 998) (593 263) Finance costs 104 4 Movements in operating lease assets and accruals (89 347) 19 270 Changes in working capital: Trade and other receivables (617 210) (945 407) Trade and other payables 812 502 (720 917) 8 189 551 2 101 066 15. Tax paid Balance at beginning of the year 122 764 - Current tax for the year recognised in profit or loss (2 382 173) (1 091 236) Balance at end of the year 89 268 (122 764) (2 170 141) (1 214 000) 16. Directors' remuneration No emoluments were paid to the directors or any individuals holding a prescribed office during the year (2016 - Nil). 17. Auditors' remuneration Fees 81 510 65 000 Adjustment for previous year (513) 40 123 82 023 105 123 18. Related parties Relationships Holding company Southeast Bank Limited Related party balances Amounts included in Trade Payables regarding related parties Southeast Bank Limited 3 756 765 2 922 368

Southeast Bank Limited 451 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Detailed Income Statement

Figures in Rand Note 2017 2016

Revenue 7 341 653 4 237 061 Commissions and transaction fees 5 512 991 2 698 153 Exchange gain income/(loss) 9 12 854 644 6 935 214 Other income Sundry income 10 27 060 45 363 Interest received 11 754 998 593 263 782 058 638 626 Expenses (Refer to page 22) (5 028 436) (3 427 693) Operating profit 8 608 266 4 146 147 Finance costs 12 (104) (4) Profit before taxation 8 608 162 4 146 143 Taxation 13 (2 407 190) (1 085 841) Profit for the year 6 200 972 3 060 302

452 Annual Report 2017 Southeast Exchange Company (South Africa) (Proprietary) Ltd Annual Financial Statements for the year ended 31 December 2017 Detailed Income Statement

Figures in Rand Note 2017 2016

Operating expenses Accounting fees 162 747 128 187 Advertising 85 754 62 264 Assets under R 7 000 27 328 - Auditors' remuneration 17 82 023 105 123 Bank charges 836 721 403 867 Cash carrying charges 1 030 793 638 699 Cleaning 92 - Commission paid 39 518 - Computer expenses 11 151 30 531 Depreciation 230 338 195 236 Employee costs 980 445 750 469 Entertainment 88 463 51 642 Gifts 3 900 - Insurance 62 542 29 264 Lease rentals on operating lease 254 695 337 919 Loss on exchange differences 174 750 180 131 Municipal expenses 31 010 25 179 Office expenses 58 580 8 862 Postage 21 182 16 892 Printing and stationery 176 733 81 675 Rates and taxes 1 970 - Repairs and maintenance 50 925 44 730 Security 437 560 215 672 Staff costs - 1 746 Staff welfare 1 130 - Telephone and fax 56 761 53 855 Training 29 179 - Travel - local 92 146 65 750 5 028 436 3 427 693

Southeast Bank Limited 453 Terminology

AD Authorized Dealer ALCO Asset Liability Committee ATM Automated Teller Machine BB Bangladesh Bank (Central Bank of Bangladesh) B/L Bad/Loss BAS Bangladesh Accounting Standards CRR Cash Reserve Requirement CRG Credit Risk Grading CSR Corporate Social Responsibility CPI Consumer Price Index CDBL Central Depository Bangladesh Limited CBS Core Banking Software CRISL Credit Rating and Information Services Ltd. DEPZ Dhaka Export Processing Zone DP Depository Participants EPS Earnings Per Share EPZ Export Processing Zone FY Fiscal Year (July to June) GDP Gross Domestic Product GRI Global Reporting Initiative HOB Head of Branch IT Information Technology IMF International Monetary Fund IAS International Accounting Standards IPO Initial Public Offering LC Letter of Credit SMT Senior Management Team NII Net Interest Income NIM Net Interest Margin NPL Non Performing Loan OBU Off shore Banking Unit IR Integrated Reporting POS Point of Sale PV Present Value RWA Risk Weighted Assets RMG Readymade Garments ROA Return on Assets ROE Return on Equity R&D Research and Development SAFA South Asian Federation of Accountants SME Small and Medium Enterprise SOP Standard Operating Procedure SLR Statutory Liquidity Ratio RMA Relationship Management Application SWIFT Society for Worldwide Interbank Financial Telecommunication SEBCSL Southeast Bank Capital Service Limited SEFSL Southeast Financial Services (UK) Limited SEFSPL Southeast Financial Services (Australia) Pty Limited SEECPL Southeast Exchange Company (South Africa) Pty Ltd

454 Annual Report 2017

Standard Disclosure Checklist

SAFA Corporate Governance Disclosure Checklist 455 Integrated Reporting Checklist 457 SAFA Standard Disclosure Checklist 466 Important Financial Indicators with Quantitative and Qualitative Factors 469

306 Annual Report 2017 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. 105 Adequate representation of non executive directors i.e. one third of the Board, subject to a minimum of 1.2 105 two At least one independent director on the board and disclosure / affirmation of the Board on such 1.3 108 director’s independence. 1.4 Chairman to be independent of CEO 108 Responsibilities of the Chairman of the Board appropriately defined and disclosed. Disclosure of 1.5 109-110 independence of Non Executive Directors 1.6 Existence of a scheme for annual appraisal of the boards performance and disclosure of the same. 110 1.7 Disclosure of policy on annual evaluation of the CEO by the Board. 110-111 Disclosure of policy on training (including details of the continuing training program) of directors and 1.8 type and nature of training courses organized for directors during the year Existence of a scheme for 111 annual appraisal of the boards performance At least one director having thorough knowledge and expertise in finance and accounting to provide 1.9 guidance in the matters applicable to accounting and auditing standards to ensure reliable financial 111 reporting. Disclosure of number of meetings of the board and participation of each director (at least 4 meetings 1.10 111 are required to be held) Directors issue a report on compliance with best practices on Corporate Governance that is reviewed by 1.11 111 the external auditors 2. VISION / MISSIONS AND STRATEGY 2.1 Company’s vision / mission statements are approved by the board and disclosed in the annual report. 44-45, 115 2.2 Identification of business objectives and areas of business focus disclosed 42-43, 115 2.3 General description of strategies to achieve the company's business objectives 43 3. AUDIT COMMITTEES 3.1 Appointment and Composition 167 3.1.1 Whether the Audit Committee Chairman is an independent Non – Executive Director 113, 167 Whether it has specific terms of reference and whether it is empowered to investigate / question 3.1.2 167 employees and retain external counsel 3.1.3 More than two thirds of the members are to be Non Executive Directors 108 All members of the audit committee to be financially literate and at least one member to have expert 3.1.4 113 knowledge of finance and accounting. 3.1.5 Head of internal audit to have direct access to audit committee 113 The committee to meet at least four times a year and the number of meetings and attendance by 3.1.6 113 individual members disclosed in the annual report. 3.2 Objectives & Activities Statement on Audit Committee’s review to ensure that internal controls are well conceived properly 3.2.1 167-168 administered and satisfactorily monitored Statement to indicate audit committees role in ensuring compliance with Laws, Regulations and timely 3.2.2 167-168 settlements of Statutory dues

Southeast Bank Limited 455 Items Page No. 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. 167-168 - Recommend external auditor for appointment/ reappointment Statement on Audit committee involvement in selection of appropriate accounting policies that are in 3.2.4 line will applicable accounting standards and annual review. Statement of Audit Committee involvement in the review and recommend to the Board of Directors, 3.2.5 annual and interim financial releases 3.2.6 Reliability of the management information used for such computation 4. INTERNAL CONTROL & RISK MANAGEMENT 4.1 Statement of Director's responsibility to establish appropriate system of internal control 102 Narrative description of key features of the internal control system and the manner in which the system 167-168 4.2 is monitored by the Board, Audit Committee or Senior Management. 171-172 4.3 Statement that the Director's have reviewed the adequacy of the system of internal controls 102 4.4 Disclosure of the identification of risks the company is exposed to both internally & externally 183 4.5 Disclosure of the strategies adopted to manage and mitigate the risks 183 5. ETHICS AND COMPLIANCE Disclosure of statement of ethics and values, covering basic principles such as integrity, conflict of 5.1 43-44, 113 interest, compliance with laws and regulations etc.. Dissemination / communication of the statement of ethics & business practices to all directors and 5.2 25,113 employees and their acknowledgement of the same 5.3 Board’s statement on its commitment to establishing high level of ethics and compliance within the organization 115 Establishing effective anti-fraud programs and controls, including effective protection of whistle 5.4 165 blowers, establishing a hot line reporting of irregularities etc. 6. REMUNERATION COMMITTEE 6.1 Disclosure of the charter (role and responsibilities) of the committee 117, 201 Disclosure of the composition of the committee (majority of the committee should be non-executive 6.2 201-202 directors, but should also include some executive directors) 6.3 Disclosure of key policies with regard to remuneration of directors, senior management and employees 201-202 6.4 Disclosure of number of meetings and work performed 201-202 6.5 Disclosure of remuneration of directors, chairman, chief executive and senior executives. 117 7. HUMAN CAPITAL Disclosure of general description of the policies and practices codified and adopted by the company with respect to Human Resource Development and Management, including succession planning, merit 7.1 216-217 based recruitment, performance appraisal system, promotion and reward and motivation, training and development, grievance management and counseling. 7.2 Organizational Chart 49-51 8. COMMUNICATION TO SHAREHOLDERS & STAKEHOLDERS Disclosure of the Company's policy / strategy to facilitate effective communication with shareholders 8.1 117-118 and other stake holders Disclosure of company’s policy on ensuring participation of shareholders in the Annual General 8.2 117-118 Meeting and providing reasonable opportunity for the shareholder participation in the AGM. 9. ENVIRONMENTAL AND SOCIAL OBLIGATIONS Disclosure of general description of the company's policies and practices relating to social and 9.1 environmental responsibility of the entity 213-215 9.2 Disclosure of specific activities undertaken by the entity in pursuance of these policies and practices

456 Annual Report 2017 Integrated Reporting Checklist

Items Page No. 1. Elements of an Integrated Report 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 24-29, 36, 44-51, periods 78-92, 239

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

Southeast Bank Limited 457 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 105-118 addressing integrity and ethical issues 151-164 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.

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. 223-224 How the Company has applied such matters. 242 How the stakeholders are engaged in assessing impacts, implications and outlook unrespects of Company’s business model.

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.

458 Annual Report 2017 Items Page No. 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.

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 3-6, 37-38 235-238 Narrative flow that is logical given the particular circumstances of the organization 246-248

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).

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.

Southeast Bank Limited 459 Items Page No. 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, 176-177 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 37-38 (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.

460 Annual Report 2017 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 2, 12, key stakeholders’ legitimate needs and interests 227-229

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.

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 181-190 to fruition and the magnitude of its effect if it does. 191-202 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.

Southeast Bank Limited 461 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 42-43 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.

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

462 Annual Report 2017 Items Page No. 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 19 (e.g., the continued availability of skilled labour or natural resources), including 28-29 how key relationships are managed and why they are important to the organization’s 78-84 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.

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. 35-36 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).

Southeast Bank Limited 463 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 35-36 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. 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. 35-36 May link to more detailed information, information that does not change frequently or external 42-43 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. 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. 35-36 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.

3.3 Consistency and comparability

The information in an integrated report should be presented:

On a basis that is consistent over time 227-229 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.

464 Annual Report 2017 Items Page No.

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 229-234 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.

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 19, 36 Content elements 28-29 Past , Present & Future Finance and other information

3.5 Materiality

An integrated report should disclose information about matters that substantively affect the 35, 36 organization’s ability to create value over the short, medium and long term

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 36 any qualifications arising from the assurance and the nature of the relationship between the organization and the assurance providers

Southeast Bank Limited 465 SAFA Standard Disclosure Index

Disclosure checklist to the key sections of the Annual Report - 2017

Items Ref. Page No. CORPORATE OBJECTIVES, VALUES & STRUCTURE CLARITY AND PRESENTATION Vision and Mission 40-41 Overall strategic objectives 42 Core values and code of conduct/ethical principles 44-46 Profile of the Company 47-48 Director’s profiles and their representation on Board of other companies & Organizations Chart 50-51, 54-73 MANAGEMENT REPORT AND ANALYSIS INCLUDING DIRECTOR’S REPORT / CHAIRMAN’S REVIEW/CEO’S REVIEW ETC. A general review of the performance of the company 24-29 Description of the performance of the various activities / products / segments of the company and other 83-92 companies of the group during the period under review. A brief summary of the Business and other Risks facing the organization and steps taken to effectively 181-202 manage such risks A general review of the future prospects/outlook. 19, 28 Information on how the company contributed to its responsibilities towards the staff (including health 216, 218, 254-255 & safety) Information on company's contribution to the national exchequer and to the economy 256 SUSTAINABILITY REPORTING Corporate Social Responsibility (CSR) Initiatives 209 Environment Related Initiatives 213 Environmental and Social Obligations 215 Integrated Reporting 35-36 APPROPRIATIONS 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. Any Specific accounting policies 320-383 Impairment of Assets Changes in accounting policies/Changes in accounting estimates SEGMENT INFORMATION Comprehensive segment related information bifurcating segment revenue, segment results and segment capital employed Availability of information regarding different segments and units of the entity as well as non-segmental entities/units SEGMENT ANALYSIS OF 235-238 - Segment Revenue 400-401 - Segment Results - Turnover - Operating profit - Carrying amount of Net Segment assets FINANCIAL STATEMENTS (INCLUDING FORMATS) Disclosures of all contingencies and commitments 365 Comprehensive related party disclosures 375 Disclosures of Remuneration & Facilities provided to Directors & CEO 369 Statement of Financial Position / Balance Sheet and relevant schedules 315 Income Statement / Profit and Loss Account and relevant schedules 317

466 Annual Report 2017 Items Ref. Page No. Statement of Changes in Equity / Reserves & Surplus Schedule 319 Disclosure of Types of Share Capital 360-361 Statement of Cash Flow 318 Consolidated Financial Statements (CFS) 313 Extent of compliance with the core IAS/IFRS or equivalent National Standards 321-336 Disclosures / Contents of Notes to Accounts 320-376 INFORMATION ABOUT CORPORATE GOVERNANCE Board of Directors, Chairman and CEO 105-106 Audit Committee (Composition, role, meetings, attendance, etc) Internal Control and Risk Management 167-168 Ethics and Compliance 115 Remuneration and other Committees of Board 57-59, 117 Human Capital 216 Communication to Stakeholders - Information available on website 223-242 - Other information Management Review and Responsibility 120-150 Disclosure by Board of Directors of Audit Committee on evaluation of quarterly reports 173 Any other investor-friendly information 224-225 RISK MANAGEMENT AND CONTROL ENVIRONMENT Description of the Risk Management Framework 181-202 Risk Mitigation Methodology 181-202 Disclosure of Risk Reporting 147-148 STAKEHOLDERS INFORMATION Distribution of shareholders (Number of shares as well as category wise, e.g Promoter group, FII etc) 239 Shares held by Directors/Executives and relatives of Directors/Executives 239 Redress of investors complaints 223 GRAPHICAL/ PICTORIAL DATA Earnings per Share 236 Net Assets 237 Stock Performance 12, 236 Shareholders’ Funds 12, 236 Return on Shareholders Fund 12, 229 HORIZONTAL/VERTICAL ANALYSIS OF DIFFERENT PERFORMANCE/OPERATION INDICATORS Operating Performance (Income Statement) -Total Revenue -Operating profit -Profit before Tax -Profit after Tax -EPS 230-234 Statement of Financial Position (Balance Sheet) -Shareholders Fund -Property Plant and Equipment -Net Current Assets -Long Term Liabilities/Current Liabilities PROFITABILITY/DIVIDENDS/ PERFORMANCE AND LIQUIDITY RATIOS Gross Profit Ratio Earning before Interest, Depreciation and Tax Price Earning Ratio 227-229 Current Ratios Return on Capital Employed Debt Equity Ratio

Southeast Bank Limited 467 Items Ref. Page No. VALUE ADDED STATEMENT AND ITS DISTRIBUTION Taxes Paid to the Government Dividend Paid to Shareholders Bonus/Remuneration Paid to Employees 220-222 Retained by the entity Market share information of the Company’s product/services Economic value added ADDITIONAL DISCLOSURES Sustainability Development Reporting 206 Human Resource Accounting 216-217 Geographical Presence 271 SPECIFIC AREA FOR BANKING SECTOR Disclosure of ratings given by various rating agencies for instruments issued by /of Bank. 166 Details of loans and advances portfolio: classification wise as per the direction of Bangladesh Bank Disclosure for Non Performing Assets - Movements in NPA - Sector-wise breakup of NPA 178-179 - Movement of Provisions made against NPA - Details of accounts restructured as per regulatory guidelines Maturity Pattern of Key Assets and Liabilities Classification and valuation of investments as per regulatory guidelines/Accounting Standards 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 227-229 - Capital Adequacy Ratio - Operating profit as a percentage of working funds / Return on Asset - Cash Reserve Ratio / Liquid Asset ratio - Dividend Cover Ratio - Gross Non-Performing Assets to Gross Advances/Non-Performing Loans (Assets) to Total Loans (Assets) Details of credit concentration/Sector vise exposures 346-347 The break-up of ‘Provisions and contingencies’ included in the Profit and Loss Account 357-359 Disclosure under regulatory guidelines (Market Discipline- Pillar 3 Disclosures under Basel-III) 362-363 Details of Non-Statutory investment portfolio 191, 340-342 Disclosure in respect of assets given on operating & finance lease 359 Disclosures for derivative investments 340-344 Bank's Network : List of Branches or Centers 271-283

468 Annual Report 2017 Important Financial Indicators with Quantitative and Qualitative Factors

Area Key Components Page No. Capital Adequacy Ratio (CAR) 228 Internal Capital Generation Ratio 177 1. Capital Adequacy Leverage ratio 201 Capital Conservation Buffer 193 Gross Non-Performing Loan (NPL) Ratio 178 Net Non-Performing Loan (NPL) Ratio 178 Gross Non-Performing Loan (NPL) Coverage 178 2. Asset Quality Large Loan Exposure 381 SME Portfolio Concentration Ratio 124, 127-128 Corporate Portfolio Concentration Ratio 196 Return on Average Assets (ROAA) 229 Return on Average Equity (ROAE) 229 3. Profitability Return on Average Risk Weighted Assets (RRWA) 02 Net Interest Margin (NIM) 12 Liquid Assets Ratio 24 Loan to Deposit Ratio 24 4. Liquidity & Funding Liquidity Coverage Ratio (LCR) 27 Net Stable Funding Ratio 27 Dividend yield 12 5. Performance with respect to Net Asset Value (Growth) 52 shareholders Capital Appreciation 193 Short Term 166 6. External Credit Rating (ECA) Long Term 166 Number of Branches 271 Number of ATMs 270 7. Financial Inclusion and IT Apps based Services 143-144, 150 based services Internet Banking 38 Cash Deposit Machines (CDM) 144 Call Centers Services 250 Non Shareholding/Independent Director 108 Single Family Domination 107 Free Float 107 8. Corporate Governance Audit Committee Led by Independent Director 167 Director's Minimum Shareholding 239 Auditors' Opinion 308 Sustainable Financing/ Green Banking Initiatives 206 9. Care for Environment Sustainable/Integrated Reporting 205 Net Employee Turnover 06 Employee Compensation and Benefits 254 10. Employee Focus Gender Diversity 217 Training and Development Spending 255 11. Corporate Social Amount of CSR Expenditure 28 Responsibility (CSR) Quality of CSR Activities 208 12. Contribution to National Direct and Indirect Tax 256 Exchequer

Southeast Bank Limited 469 Events

470 Annual Report 2017 Southeast Bank Limited 471 472 Annual Report 2017 Southeast Bank Limited 473 474 Annual Report 2017 Southeast Bank Limited 475 476 Annual Report 2017 School Banking Conference

Southeast Bank Limited 477 478 Annual Report 2017 Southeast Bank Limited 479 480 Annual Report 2017 Registered Office: 52-53, Dilkusha C/A, Dhaka-1000

PROXY FORM I/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 23rd Annual General Meeting of the company to be held on June 30, 2018 and at any adjournment thereof.

As witness my/our hand this …………………day of ……………….. 2018.

……………………………… ………………………. Signature of Shareholder(s) Signature of PROXY No. of Shares held…………………………………….. Revenue Folio/BOID # Stamp Tk.20.00 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 23rd 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

Proxy Reg. No ……………………………………………….. …………………………….. 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 23rd Annual General Meeting being held today, the Saturday, June 30, 2018 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. PS: 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 23rd Annual General Meeting of the Bank.. SOUTHEAST BANK LIMITED Registered Office: Eunoos Trade Centre 52-53, Dilkusha C/A (Level 2,3,4,6 & 16), Dhaka-1000, Bangladesh Phone : +88 02 9571115, 9576415, 9555466 & 9578324 SWIFT : SEBDBDDH E-mail : [email protected] Website : www.southeastbank.com.bd