Southeast Bank Limited

Auditor's Report and Consolidated & Separate Financial Statements as at and for the year ended 31 December 2018 ml='ttft PRfi,4e Chantened Accountants g of SeruA Pinaki & Company

Independent Auditor's Report

To the Shareholders of Southeast Bank Limited

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated financial statements of Southeast Bank Limited and its subsidiaries (the "Group") as well as the separate financial statements of Southeast Bank Limited (the "Bank"), which comprise the consolidated and separate Balance sheet as at 31 December 2018 and the consolidated and separate statement of profit and loss, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Bank give a true and fair view of the consolidated Balance sheet of the Group and the separate Balance sheet of the Bank as at 3l December 2018 and of its consolidated and separate statement of profit and loss and cash flows for the year then ended in accordance with International Financial Reporling Standards (IFRSs) as explained in note 2 to 3.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (lSAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We remained independent of the Group and the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants gESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of have obtained Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we is sufficient and appropriate to provide a basis for our opinion'

Key Audit Matters in our audit Key audit matters are those matters that, in our professional judgment, were of most significance below the key audit of the consolidated and separate financial statements of the current period. We summarize procedures to address those matters matters in arriving at our audit opinion above, together with our key audit These matters were addressed in and, as required for public interest entities, our results from those procedures. and in forming our the context of our audit of the consolidated and separate financial statements as a whole, opinion thereon, and we do not provide a separate opinion on these matters'

and our audit response The key audit matters are discussed below together with an explanation of how the risk was tailored to address these specific areas.

I

Dhoko-l OO0, Bonglodesh Regislered Office : AHSANDELL, 2/A, Mymensingh Rood (2nd Floor), Shohbog, website: www'pinoki'com'bd 7 1 1 -j E-moil : [email protected] Tel # 9 66 09 44, 9 66'509 5, Cell: 0 1 3 1 7 2O1 224, 01 OO:OZ, PRfi{qs ml'Il'ft Chantened Accountants Pinaki & Company ofSerukt

All key audit matters are applicable to both the group and parent company.

Key audit matters: Risks: Our responses:

(D Provision for loans and The financial statement risk arises We established our audit approach advances: particularly from estimation over the individual provision for uncertainties in the calculation of control and substantive tests As of the reporting date, the individually assessed provision on considering the following: r the accuracy of data input into Group reports loans and loan which are based on assumptions probability of the system used for credit advances/ investments BDT and scenarios i.e. default, ability to repossess collateral grading and the approval of 26,7 67 .1 6 crore representing 7 0%o and recovery etc. credit facilities. of total assets; and provisions As part of our risk assessment, we . the ongoing monitoring and regarding loan and advances of identified the following judgments discovery of loans displaying BDT 485.50 crore represertts which could give rise to material indicators of provision and 33% of bank's total operating misstatement or management bias: detection of classified and unclassified status on a timely income. . For individualty assessed basis. provisions, the measurement Refer to note no 10, I I and 21.10 of the provision is We tested the design and oPerating to the financial statements. dependent on the reasonable effectiveness of key controls valuation of collateral, focusing on the following: estimates of exit values and the timing of cash flows. . Tested the credit appraisal, loan disbursement procedures, I Completeness and timing of monitoring and provisioning recognition of provision of process; loans in accordance with . Identification of loss events, criteria set out in BRPD including early warning and circular no. 14 & 1512012, default warning process. t9 12012, 0512013, 161201 4, . Reviewed quarterly of Loans (CL); 0812015, 1512017 . Classification

Our substantive Procedures in relation to the provision for loans and advances portfolio comPrised the following:

. Reviewed the adequacy of the company's general and specific provisions; . Assessed the methodologies on which the Provision amounts based, recalculated the provisions and tested the completeness and accuracY.

2 Dhoko-1000, Bonglodesh Registered Office : AHSANDELL, 2/A, Mymensingh Rood (2nd Floor) , Shohbog, O1 7 1 1 E-moil : [email protected] website: www.pinoki'com'bd Tel # 9 66 09 44, I 66'509 5, Cell : 0 I 3 1 7'201 224, 1 06302' qs mlE"ttft Pmft Chantened Accountants Pinaki & Company eus olStnia . In the tripartite meeting dated 21.04.2019 a discussion was made on fixation of ultimate provision for investment and adequate provision was maintained unanimously. Our Results: Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

Key Audit Matters: Risks: Our Responses: (ii) Measurement of deferred tax pss6gnilisn and measurement of We conducted a risk assessment to assets/liabilities: deferred tax assets contain judgment obtain an understanding of the and objective estimates regarding relevant tax laws and regulations The Bank reported net deferred tax ftr1u1s taxable profit and the usability considering the following: liability of BDT 114.499 crore as at of unused tax losses and tax credits. . evaluation of the policies used 31 December 2018. for recognition and For significant accounting policies The significant risk arises from measurement of deferred tax the and critical accounting estimates for estimation of future usability of assets in accordance with IAS required in the recognition and measurement of benefits. Such estimation 12. deferred tax assets as their deferred tax assets, we refer to note relation to . test of design, implementation on 3.16.2 of the consolidated financial recoverability is dependent and operating effectiveness of profitability available in statements "significant Accounting forecasts of internal controls with resPect to tax Policies" (section "Tax Expense"). near future. recognition of deferred assets. . deferred tax Refer to note no 20,21 and 21.3.2 to the computation of liabilities/assets bY aPPlYing the consolidated financial appropriate provisions of tax statements. law to scheduled reversals particularlY the Potential tax rates applicable at the time of expected reversals. . the strategy's compliance with the tax laws.

Our Result: Based on the results of our key controls testing and substantive audit Procedures we consider recognition and measurelnent of deferred tax liability in particular regarding the assumptions and Parameters to develop the taxable Profit and usability of tax losses and credits to be reasonable.

J Dhoko-l 000, Bonglodesh Regislered Office : AHSANDELL, 2/A, Mymensingh Rood (2nd Floor), Shoh bog, www.pinoki.com'bd t.i* goo-0st4,966-5095, Cell: 0l 317'201224, olzl 1-106302, E-moil : [email protected] website: mtu'fl'ft Pmfi,4s Chantened Accountants Pinaki & Company of Senia

Key Audit Matters: Risks: Our responses: (iii) Carrying value of investments Recoverability of the foreign We focused on the appropriateness in subsidiary(s) by the Bank: investment is generally considered a of the application of value in use high risk matter. However, due to the model, the key assumptions used in The Bank has invested BDT 548.99 investment in the materiality of the the model, the reasonably possible crore in equity shares of its context of the parent company's alternative assumptions, particularly subsidiary Southeast Bank Capital financial statements, this is where they had the most impact on Services Limited (in Bangladesh). It considered to be the area that had the great focus of our overall parent the value in use calculation. has also invested in foreign cornpany audit. subsidiaries namely Southeast We compared the carrying amount of Financial Services (UK) Ltd, the total investment balance with the relevant subsidiary's balance sheet to Southeast Exchange Company identify whether their net assets were (South Pty Ltd and Southeast Africa) in excess of their carrying amount Financial Services (Australia) Pty and assessed historical financial Ltd. As at 3l December 2018 the performance. carrying value of the investment in foreign subsidiaries was BDT 6.51 crore. Total investment in Our results: We considered the subsidiaries was BDT 555.50 which company's assessment of the the investment in represents lYo of the Bank's total recoverability of subsidiaries to be acceptable. assets.

Refer to note no 15, 15.3 and 15.4 to the consolidated financial statements.

Key Audit Matters: Risks: Our Responses:

(iv) IT systems and Internal lT systems and controls due to the Our procedures included: of Controls pervasive nature and complexity the IT environment, the large volume We tested a sample of keY controls information The Group's key financial of transactions Processed in operating over the technology in relation to financial accounting and reporting processes numerous locations dailY and the and rePorting systems, are highly dependent on the reliance on automated and IT accounting system access and system controls over the Group's dependent manual controls. including automated management, information systems and as such change Program and computer there exists an inherent risk that IT Controls over Information SYstem development operations. control deficiency could result in the may be carried out bY IT Personnel, financial accounting and reporting users of the system, a separate of We obtained management's being materially misstated. control effect on Processing transactions in application systems evaluation of the access rights maY granted to applications relevant to Refer to note no 3.20,69.1 and 69.2 and also ineffective controls at financial accounting and reporting to the financial statements. have a risk of misstatements application systems. systems. We also assessed the operating effectiveness of controls over granting, removal and appropriateness of access riglits.

4 Dhoko-,l000, Bonglodesh Regislered Office : AHSANDELL, 2/A, Mymensingh Rood (2nd Floor) , Shohbog, 1 E-moil : [email protected] website: www.pinoki'com'bd Iel # 9 66-09 44, 9 66-509 5, Cell : 0 I 3 1 7'201 224, O17 1 1 06302' qe csl='ltft PFrft Chantened Accountants Pinaki & Company of Seniu

We reviewed the System of Internal Control which is designed to manage all the risks of failure to a reasonable level and this Systern provides reasonable assurance of effective and efficient operations covering all controls including financial & operational controls, reliability of the financial information, compliance with applicable laws & regulations, adherence to management policies, safeguarding of Bank's Assets, prevention & detection of fraud and errors and accuracy and completeness of the accounting records. We checked standards over systetns design, programming and documentation, segregation of duties so that those responsible for design are not responsible for testing and instal lation procedures.

Our results: We considered the user access management, segregation of duties and change management controls in relation to financial accounting and reporting systems to be acceptable.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls

statements of the Management is responsible for the preparation and fair presentation of the consolidated financial in note 3'21 and Group and also separate financial statements of the Bank in accordance with IFRSs as explained consolidated and for such internal control as management determines is necessary to enable the preparation of error' The Bank separate financial statements that are free from material misstatement, whether due to fraud or the Management to ensure Company Act, l99l (amended upto 2018) and the Bangladesh Bank Regulations require The Management is also effective internal audit, internal control and risk management functions of the Bank. report to Bangladesh required to make a self-assessment on the effectiveness of anti-fraud internal controls and Bank on instances offraud and forgeries.

5 Dhoko-,l000, Bong lodesh Registered office: AHSANDELL.2/A, Mymensingh Rood (2nd Floor), shohbog, E-moil : [email protected] website: www. pinoki.com. bd Tel # 966-0944,966-5095, Cell: 0l 317-201224, O1711-106302, ml,'ttft PHffi,qe Chantened Accountants Pinaki & Company of Seruia

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group's and the Bank's ability to continue as a going concem, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's and the Bank's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error. and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

r Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery. intentional omissions, misrepresentations, or the override of internal control.

. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

estimates and o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting related disclosures made by management'

accounting and, based . Conclude on the appropriateness of management's use of the going concern basis of conditions that may on the audit evidence obtained, whether a material uncertainty exists related to events or going concern' If we conclude cast significant doubt on the Group's and the Bank's ability to continue as a the related that a material uncertainty exists, we are required to draw attention in our auditor's report to are inadequate, to disclosures in the consolidated and separate financial statements or, if such disclosures date of our auditor's modify our opinion. Our conclusions are based on the audit evidence obtained up to the cease to continue as a report. However, future events or conditions rnay cause the Group and the Bank to going concern'

6 Dhoko-1000, Bonglodesh R.egistcred Office : AHSANDELL, 2/A, Mymensingh Rood (2nd Floor) , Shohbog, : [email protected] website: www.pinoki'com'bd rel # 966-0944,966 5O95, Cell: OI 317-201224,01711-106302, E-moil qe ml,'flft PHrfr Chantened Accountants g 'ews oJ Seruiu Pinaki & ComPanY

o Evaluate the overall presentation, structure and content ofthe consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during our audit.

ethical We also provide those charged with governance with a statement that we have complied with relevant matters that may requirements regarding independence and to communicate with them all relationships and other reasonably be thought to bear on our independence and where applicable, related safeguards. that were of From the matters communicated with those charged with governance, we determine those matters period and are most significance in the audit of the consolidated and separate financial statements of the current law or regulation precludes therefore the key audit matters. We describe these matters in our auditors' report unless that a matter should not public disclosure about the matter or when, in extremely rare circumstances, we determine reasonably be expected to be communicated in our report because the adverse consequences of doing so would outweigh the public interest benefits of such communication'

Report on other Legat and Regulatory Requirements Rules 1987, the Bank Company Act, In accordance with the Companies Act, 1994,the Securities and Exchange Bank, we also report that: 1991(amended upto 2018) and the rules and regulations issued by Bangladesh

best of our knowledge and belief were (D We have obtained all the information and explanations which to the necessary for the purpose ofour audit and made due verification thereof;

the basis stated under the Auditor's (ii) To the extent noted during the course of our audit work performed on financial statements of the Group Responsibility section in forming the above opinion on the consolidated reports of the Management to and the separate financial statements of the Bank and considering the and forgeries as stated under the Bangladesh Bank on antifra.ud internal controls and instances of fraud control: Management's Responsibility for the financial statements and internal the Group as disclosed in the (a) Internal audit, internal control and risk management arrangemel-lts of financial statements appeared to be materially adequate; forgery or irregularity or (b) Nothing has come to our attention regarding material instances of by employees of the Group and its administrative error and exception or anything detrimental committed financial statements}; related entities {other than matters disclosed in these

7 (2nd Floor), Shohbog, Dhoko-l0OO, Bonglodesh R.egistered Office : AHSANDELL, 2/A, Mymensingh Rood E-moil : pinokl-co@yohoo'com website: www'pinoki'com'bd Iel # 966-0944,966 5O95, Cell: Ol 317'201224, o1711 J 06302, Pmfr,{e ml-'ttft Chantened Accountants Pinaki & ComPanY of Senia

(iii) Financial statements of Southeast Bank Limited and its subsidiaries in Bangladesh, Southeast Bank Capital Services Limited have been audited by us and in outside Bangladesh namely, Southeast Financial Services (UK) Ltd have been certified by Jahan & Co., Chartered Management Accountants and Southeast Exchange Company (South Africa) Pty Ltd have been audited by G.L. PALMER AND COMPANY, registered auditors and Southeast Financial Services (Australia) Pty Ltd. and have been properly reflected in the consolidated financial statements (note no. I '7);

the Bank so far (iv) In our opinion, proper books ofaccounts as required by law have been kept by the Group and ' as it appeared from our examination of those books; in (v) The records and statements submitted by the branches have been properly maintained and consolidated the financial statements;

with the annexed notes (vi) The consolidated balance sheet and consolidated profit and loss account together deatt with by the report are in agreement with the books of account and returns;

year; (vii) The expenditures incurred were for the purpose of the Bank's business for the of the Bank have (viii) The consolidated financial statements of the Group and the separate financial statements standards as well as related been drawn up in conformity with prevailing rules, regulations and accounting - guidance issued by Bangladesh Bank;

are in our opinion, doubtful of (ix) Adequate provisions have been made for advance and other assets which recovery;

and found satisfactory; (x) The information and explanations required by us have been received

and spent over 8,200 person hours; and (xi) We have reviewed over 800/o of the risk weighted assets of the Bank Bank has been maintained (xii) capital to Risk-weighted Asset Ratio (cRAR) as required by Bangladesh adequatelY during the Year.

Pr;o* Dat. Pinaki Das, FCA Pinaki & ComPanY Chartered Accountants

Dhaka, Dated : 30 APril 2019

8

Rood (2nd Floor), Shohbog, Dhoko-1000, Bonglodesh R.egislered Office : AHSANDELL, 2,/A, Mymensingh ]roosoz, : pinoki-co@yohoo'com website: www'pinoki'com'bd rci* gaoogtt,966-5095, Cell: ol 317'201224, o1711 E-moil Southeast Bank Limited and its Subsidiaries Consolidated Balance Sheet as at 31 December 2018 2018 2017 Note Taka Taka PROPERTY AND ASSETS

Cash 4 In hand (including foreign currencies) 3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 17,916,575,574 17,968,153,354 21,515,427,671 20,979,136,329 Balance with other banks and financial institutions 5 In Bangladesh 3,984,794,486 3,196,881,943 Outside Bangladesh 2,449,639,553 1,082,725,811 6,434,434,039 4,279,607,754 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Investments 8 Government 50,963,038,896 50,204,799,973 Others 14,646,513,537 12,706,244,499 65,609,552,433 62,911,044,472 Loans and advances/investments 10 Loans, cash credit, overdrafts etc./investments 255,400,659,122 223,657,502,019 Bills purchased and discounted 12,270,968,683 10,659,214,310 267,671,627,805 234,316,716,329 Fixed assets including premises, furniture and fixtures 12 9,337,295,160 9,321,796,126 Other assets 14 4,110,241,772 3,835,803,180 Non-banking assets - - Total assets 381,575,678,880 339,288,054,190

LIABILITIES AND CAPITAL

Liabilities Borrowings from other banks, financial institutions and agents 16 Subordinated bond 11,800,000,000 7,400,000,000 Other borrowings 11,211,700,343 10,181,648,728 23,011,700,343 17,581,648,728 Deposits and other accounts 18 Current/Al-wadeeah current accounts and other accounts 40,472,065,762 35,511,525,367 Bills payable 4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits 226,108,257,117 205,486,197,802 298,334,794,587 269,828,075,048

Other liabilities 20 32,102,455,720 26,044,632,850 Total liabilities 353,448,950,650 313,454,356,626

Capital/shareholders' equity Paid up capital 22.2 10,544,927,020 9,169,501,760 Statutory reserve 23 10,094,153,565 9,170,000,000 Revaluation reserve 24 4,360,801,902 4,534,239,054 Other reserve 25 247,650,000 247,650,000 Foreign currency translation reserve 26 (28,918,605) (14,142,765) Retained earnings 27 2,898,043,836 2,716,398,712 Total shareholders' equity 28,116,657,718 25,823,646,761 Non-controlling interest 29 10,070,512 10,050,803 Total liabilities and shareholders' equity 381,575,678,880 339,288,054,190

9 Southeast Bank Limited and its Subsidiaries Consolidated Balance Sheet as at 31 December 2018 2018 20\7 Note Taka Taka

OFF.BALANCE SHEET ITEMS

Contingent liabilities Acceptances and endorsements 30.1 63,853,762,984 57,138,532,985 Letters of guarantee s0.2 19,197,993,041 15,924,963,164 lrrevocable letters of credit 30.3 36,374,559,306 44j95,137,436 Bills for collection 30.4 24,664,926,813 22,666,586,856 Other contingent liabilities 30.5 1 .413.684.000 1,744.473.000 Total contingent liabilities '145,504,926,144',141,669,693,441

Other commitments Documentary credits and short term trade-related transactions Forward assets purchased and forward deposils placed 827,10',t,200 Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities, credit lines and other commitments Total other commitments 827,101,200 Total off-balance sheet items including contingent liabilities 145,504,926,144 142,496,794,641

The annexed notes 1 to 71 form an of these financial statements. &aF ffi \

Signed in terms of our separate repoft of even date

Prrr*t U, Dhaka, Pinaki& Company Date : 30 April 2019 Chartered Accountants

10 Southeast Bank Limited and its Subsidiaries Consolidated Profit and Loss Account for the year ended 3l December 2018

2018 2017 Note Taka Taka lnterest income/profit on investments 32 23,977,837.107 17,400,550,075 lnterest paid/profit shared on deposits and borrowings etc. 34 (8.777.897.307\ (1 3.372.859.997) Net interost income/net profit on investments lnvestment income 36 5,129,753,568 5, Commission, exchange and brokerage 38 3,652,775,278 3,462,929,452 Other operating income 40 7 9,761,976,731 9,905,353,314 Total operating income (A) 14,961,916,531 13,933,043,392

Salaries and allowances 2,026,52',t,807 1,880,629,864 Rent, taxes, insurance, electricity, etc. 44 1,031,566,389 931,624,353 Legal expenses 1,299,331 1,832,217 Postage, stamp, telecommunication, etc. 46 182,353,593 176,224,992 Stationery, printing, advertisements, etc. 48 165,642,288 149,545,742 Managing Director's salary and fees 50 10,072,000 10,037,423 Directors'fees 51 2,926,099 3,785,203 Auditors'fees 53 1,847,371 1,906,893 Depreciation and repair 54 476,254,631 455,388,535 Other expenses 56 1 900 1,259,769,572 Total operating expenses (B) 4,870,744,794 Profit before provision (C=A-B) 9,782,995,',122 9,062,298,598 Provision for loans and advances/investments 21 .1 General provision (119.21 1 ,010,610,024 Specific provision 781 4,855,075,924 4,791,934,545 Provision for diminution in value of investments 21.7 413,060,983 (217,213,998) Other provisions 21.5 (153.800.000) 305,500,000 Total provision (D) 5,114,336,907 4,880,220,547 Total profit before taxation (E=C-D) 4,668,658,214 4,182,078,051 Provision for taxation 58 Current 2,230,449,370 Deferred 1 1 332

Net profit after taxation 2,473,208,84 1,168,628,78'l

Net profit after taxation attributable to: Equity holders' of the Bank 2,473,189,135 1 ,"t 68,581 , 1 38 Non-controlling interest 19,709 47.643 Net profit after taxation 2,473,208,844 1,168,628,781

Appropriations Statutory reserve 23 924,153,565 Retained surplus during the year 1,'!68,628.781

Earnings per share (par value 64 2.35

The annexed notes 1 to 71 form pad of these financial statements. \ $ V q'*\ffi$hT.J

Signed in terms of our separate report of even date Q'-,'M- Dhaka, Pinaki& Company Accountants Date : 30 April 2019 Chartered

11 Southeast Bank Limited and its Subsidiaries Consolidated Cash Flow Statement for the year ended 31 December 2018

2018 2017 Note Taka Taka A. Cash flows from operating activities:

Interest receipts in cash 28,773,552,446 22,799,565,274 Interest payments (17,355,370,160) (13,037,924,621) Dividend receipts 178,893,878 246,591,937 Fees and commission receipts in cash 38 3,652,775,278 3,462,929,452 Recoveries on loans previously written-off 404,812,584 154,213,601 Cash payments to employees (2,036,593,807) (1,854,001,450) Cash payments to suppliers (143,129,691) (149,511,264) Income taxes paid (2,194,287,059) (2,647,358,679) Receipts from other operating activities 60 979,305,053 871,775,465 Payments for other operating activities 62 (2,479,049,698) (2,345,344,075) Operating profit before changes in operating assets and liabilities (i) 9,780,908,823 7,500,935,640

Increase (decrease) in operating assets and liabilities Sale of trading securities 1,723,256,168 4,714,880,794 Purchase of trading securities (2,348,147,650) (9,868,562,519) Loans and advances to customers (35,930,567,970) (43,819,951,511) Other assets (189,426,865) (742,818,232) Deposits from other banks 1,030,051,615 2,210,013,646 Deposits from customers 27,230,358,562 39,519,710,822 Other liabilities 2,253,081,234 2,200,804,534 Cash generated from (used in) operating assets and liabilities (ii) (6,231,394,905) (5,785,922,466) Net cash flows from operating activities (A=i+ii) 3,549,513,918 1,715,013,174

B. Cash flows from investing activities:

Proceeds from sale of securities 54,654,139,635 85,715,949,901 Payments for purchase of securities (54,337,993,353) (83,124,735,925) Purchase of fixed assets (372,391,753) (719,836,645) Sale of fixed assets 3,811,056 7,842,971 Cash generated from (used in) investing activities (B) (52,434,415) 1,879,220,302

C. Cash flows from financing activities:

Receipts from issue of loan capital & debt security 5,000,000,000 - Payments for redemption of loan capital & debt security (600,000,000) - Dividends paid - (1,833,900,352) Payment against lease obligation (2,477,131) (8,204,713) Receipts from issue of ordinary shares - - Cash generated from (used in) financing activities (C) 4,397,522,869 (1,842,105,065)

D. Net increase (decrease) in cash and cash equivalents (A+B+C) 7,894,602,372 1,752,128,411 E. Effects of exchange rate changes on cash and cash equivalents 22,040,234 6,919,829 F. Cash and cash equivalents at beginning of the period 28,907,035,123 27,147,986,883 G. Cash and cash equivalents at end of the period (D+E+F) 36,823,677,730 28,907,035,123

Cash and cash equivalents at end of the period represents Cash in hand (including foreign currencies) 4 3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 4 17,916,575,574 17,968,153,354 Balance with other banks and financial institutions 5 6,434,434,039 4,279,607,754 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Treasury bills 9.1.1 1,971,577,720 - Prize bond 9.1.1 5,138,300 4,341,040 36,823,677,730 28,907,035,123

12 Southeast Bank Limited and its Subsidiaries Consolidated Statement of Changes in Equity For the year ended 31 December 2018

Revaluation Other Translation Retained Non-controlling Total equity Paid up capital Statutory reserve Total Particulars reserve reserves reserve earnings interest of the Group Taka Taka Taka Taka Taka Taka Taka Taka Taka

Balance as at 1 January 2018 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 (14,142,765) 2,716,398,712 25,823,646,761 10,050,803 25,833,697,564 Changes in accounting policy/ Prior year adjustments ------Restated balance 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 (14,142,765) 2,716,398,712 25,823,646,761 10,050,803 25,833,697,564

Surplus/deficit on account of revaluation of properties ------Surplus/deficit on account of revaluation of investments - - (173,437,152) - - - (173,437,152) - (173,437,152) Currency translation differences - - - - (14,775,840) 8,034,814 (6,741,025) - (6,741,025) Net gains and losses not recognized in the income statement - - (173,437,152) - (14,775,840) 8,034,814 (180,178,177) - (180,178,177)

Net profit for the period - - - - - 2,473,189,135 2,473,189,135 19,709 2,473,208,844 Cash dividend ------Issue of share capital/ Bonus share 1,375,425,259 - - - - (1,375,425,259) - - - Appropriation made during the year Statutory reserve - 924,153,565 - - - (924,153,565) - - - Balance as at 31 December 2018 10,544,927,020 10,094,153,565 4,360,801,902 247,650,000 (28,918,605) 2,898,043,836 28,116,657,718 10,070,512 28,126,728,230 Balance as at 31 December 2017 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 (14,142,765) 2,716,398,712 25,823,646,761 10,050,803 25,833,697,564

13 Southeast Bank Limited Balance Sheet as at 31 December 2018

2018 2017 Note Taka Taka PROPERTY AND ASSETS

Cash 4.1 In hand (including foreign currencies) 3,598,790,655 3,010,980,173 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 17,916,575,574 17,968,153,354 21,515,366,229 20,979,133,527 Balance with other banks and financial institutions 6 In Bangladesh 3,984,794,486 3,196,881,943 Outside Bangladesh 2,272,907,523 965,226,853 6,257,702,009 4,162,108,796 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Investments 9 Government 50,963,038,896 50,204,799,973 Others 11,920,717,298 10,118,368,557 62,883,756,194 60,323,168,530 Loans and advances/investments 11 Loans, cash credit, overdrafts etc./investments 252,933,241,876 221,191,785,619 Bills purchased and discounted 12,270,968,683 10,659,214,310 265,204,210,559 231,850,999,929 Fixed assets including premises, furniture and fixtures 13 8,782,363,746 8,708,569,268 Other assets 15 9,554,422,290 9,241,315,075 Non - banking assets - - Total assets 381,094,921,027 338,909,245,125

LIABILITIES AND CAPITAL

Liabilities Borrowings from other banks, financial institutions and agents 17 Subordinated bond 11,800,000,000 7,400,000,000 Other borrowings 11,157,491,516 10,181,648,728 22,957,491,516 17,581,648,728 Deposits and other accounts 19 Current/Al-wadeeah current accounts and other accounts 40,457,857,551 35,516,538,988 Bills payable 4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits 226,108,257,117 205,486,197,802 298,320,586,377 269,833,088,669

Other liabilities 21 31,765,504,056 25,732,763,716 Total liabilities 353,043,581,949 313,147,501,113 Capital/shareholders' equity Paid up capital 22.2 10,544,927,020 9,169,501,760 Statutory reserve 23 10,094,153,565 9,170,000,000 Revaluation reserve 24 4,360,801,902 4,534,239,054 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,803,806,592 2,640,353,198 Total shareholders' equity 28,051,339,079 25,761,744,012 Total liabilities and shareholders' equity 381,094,921,027 338,909,245,125

14 Southeast Bank Limited Balance Sheet as at 31 December 2018

2018 2017 Nofe Taka Taka

OFF-BALANCE SHEET ITEMS

Contingent liabilities Acceptances and endorsements 30.1 63,853,762,984 57,138,532,985 Letters of guarantee 30.2 19,197,993,041 't5,924,963,164 lrrevocable letters of credit 30.3 36,374,559,306 44,195,137,436 Bills for collection 30.4 24,664,926,813 22,666,586,856 Other contingent liabilities 30.5 1.413.684.000 1.744,473.000 Total contingent liabilities 145,504,926,144 141,669,693,441

Other commitments Documentary credits and short term trade-related transactions Forward assets purchased and forward deposits placed 827,101,200 Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities, credit lines and other commitments Total other commitments 827,10'.1,200 Total off-balance sheet items including contingent liabilities 145,504,926,',t44 1 1

The annexed notes 1 to 71form an integra of these financial statements.

Shn"A Director Managing Di

Signed in terms of our separate report of even date

Dhaka, P;^,r Date : 30 April 2019 Pinaki & Company Chartered Accountants

'15 Southeast Bank Limited Profit and Loss Account for the year ended 31 December 2018

2018 20L7 Note Taka Taka lnterest income/profit on investments 33 23,951,689,857 17,384,904,816 lnterest paid/profit shared on deposits and borrowings etc. 35 867 1 1 Net interest income/net profit on investments lnvestment income 37 5.062.02?.727 5,485,830,524 Commission, exchange and brokerage 39 3,538,71 2,1 50 3,360,679,342 Other operating income 41 821

Total operating income (A) ,707

Salaries and allowances 43 '1,992,049,030 1,853,318,403 Rent, taxes, insurance, electricity, etc. 45 1,015,140,607 917,262.049

Legal expenses 1,293,220 1 ,553,1 37 Postage, stamp, telecommunication, etc. 47 181 ,005,852 175,303,570 Stationery, printing, advertisements, etc. 49 162,614,460 147,315,550 Managing Oirector's salary and fees 50 10,072,000 10,037,423 Directors'fees 52 2,718,099 3,575,203 Auditors'fees 1,000,000 1,345,000 Depreciation and repair of bank's assets 55 413,975,642 396,062,258 Other expenses 57 1.208.640.252 1,229A22.032 Total operating expenses (B) 4,988,509,1 63 4,735,194,625 Profit before provision (C=A-B) 9,735,'104,731 8,939,129,082 Provision for loans and advances/investments 21.1 General provision (119,210,024) 1 ,010,6'10,024 Specific provision 4,974,285,948 3.781.324.521 4,855,075,924 4,791,934,54s Provision for diminution in value of investments 21.7.1 4'13,060,983 (2s6,602,1 66) Other provisions 21.5 (1 53,800,000) 305,500,000 Total provision (D) 5,'t 14,336,907 4,840,832,379 Total profit before taxation (C-D) 4,620,767,824 4,098,296,703 Provision for laxation 59 Current 2,200,000,000 2,830,000,000 Deferred (35,000,000) 150,000,000 2,165,000,000 2,980,000,000 Net profit after taxation @-:-Tmros'zo' Appropriations Statutory reserve 23

Retained surplus during the year 1,531,614,2s9 1,118,296,703

Earnings per share (par value 65 2.33 1.06

The annexed notes 1 to 71 form an th e se fi n an ci al statements.

Managing Director I Signed in terms of our separate reporl of even date Pr;*-Ur- Dhaka, Pinaki & Company Date : 30 April 2019 Chartered Accountants

16 Southeast Bank Limited

Cash Flow Statement for the period ended 31 December 2018

2018 2017 A. Cash flows from operating activities: Note Taka Taka

Interest receipts in cash 28,747,405,196 22,783,920,015 Interest payment (17,216,299,888) (13,026,594,645) Dividend receipts 130,239,122 194,053,603 Fees and commission receipts in cash 39 3,538,712,150 3,360,679,342 Recoveries on Loans previously written-off 404,812,584 154,213,601 Cash payments to employees (2,002,121,030) (1,826,689,989) Cash payments to suppliers (140,101,863) (147,281,073) Income taxes paid (2,172,386,062) (2,630,312,076) Receipts from other operating activities 61 946,913,502 821,156,590 Payments for other operating activities 63 (2,439,278,046) (2,310,221,404) Operating profit before changes in operating assets and liabilities (i) 9,797,895,665 7,372,923,964

Increase (decrease) in operating assets and liabilities Sale of trading securities 1,723,256,168 2,438,255,841 Purchase of trading securities (2,348,147,650) (7,280,686,489) Loans and advances to customers (35,928,867,124) (43,854,866,880) Other assets (188,674,412) (771,957,502) Deposits from other banks 975,842,788 2,217,701,465 Deposits from customers 27,211,136,730 38,964,451,180 Other liabilities 2,264,998,681 2,247,638,030 Cash generated from (used in) operating assets and liabilities (ii) (6,290,454,818) (6,039,464,355) Net cash flows from operating activities (A=i+ii) 3,507,440,847 1,333,459,609

B. Cash flows from investing activities:

Proceeds from sale of securities 54,654,139,635 85,715,949,901 Payments for purchase of securities (54,337,993,353) (83,124,735,925) Purchase of fixed assets (374,799,850) (395,373,327) Sale of fixed assets 3,776,352 7,842,971 Cash generated from (used in) investing activities (B) (54,877,216) 2,203,683,620

C. Cash flows from financing activities:

Receipts from issue of loan capital & debt security 5,000,000,000 - Payments for redemption of loan capital & debt security (600,000,000) - Dividends paid - (1,833,900,352) Payment against lease obligation (2,477,131) (8,204,713) Receipts from issue of ordinary shares - - Cash generated from (used in) financing activities (C) 4,397,522,869 (1,842,105,065)

D. Net increase (decrease) in cash and cash equivalents (A+B+C) 7,850,086,500 1,695,038,164 E. Effects of exchange rate changes on cash and cash equivalents 7,264,394 17,226,310 F. Cash and cash equivalents at beginning of the period 28,789,533,363 27,077,268,889 G. Cash and cash equivalents at end of the period (D+E+F) 36,646,884,258 28,789,533,363

Cash and cash equivalents at end of the period represents Cash in hand (including foreign currencies) 4.1 3,598,790,655 3,010,980,173 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 4.1 17,916,575,574 17,968,153,354 Balance with other banks and financial institutions 6 6,257,702,009 4,162,108,796 Money at call and on short notice 7 6,897,100,000 3,643,950,000 Treasury bills 9.1.1 1,971,577,720 - Prize bond 9.1.1 5,138,300 4,341,040 36,646,884,258 28,789,533,363

17 Southeast Bank Limited

Statement of Changes in Equity For the year ended 31 December 2018

Revaluation Other Retained Paid up capital Statutory reserve Total Particulars reserve reserves earnings Taka Taka Taka Taka Taka Taka

Balance as at 1 January 2018 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 2,640,353,198 25,761,744,012 Changes in accounting policy/ prior year adjustments ------Restated balance 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 2,640,353,198 25,761,744,012

Surplus/deficit on account of revaluation of properties ------Surplus/deficit on account of revaluation of investments - - (173,437,152) - - (173,437,152) Currency translation differences - - - - 7,264,394 7,264,394 Net gains and losses not recognized in the income statement - - (173,437,152) - 7,264,394 (166,172,757)

Net profit for the period - - - - 2,455,767,824 2,455,767,824 Cash dividend ------Issue of share capital/ Bonus share 1,375,425,259 - - - (1,375,425,259) - Appropriation made during the period Statutory reserve - 924,153,565 - - (924,153,565) - Balance as at 31 December 2018 10,544,927,020 10,094,153,565 4,360,801,902 247,650,000 2,803,806,592 28,051,339,079 Balance as at 31 December 2017 9,169,501,760 9,170,000,000 4,534,239,054 247,650,000 2,640,353,198 25,761,744,012

18 Southeast Bank Limited and its Subsidiaries Notes to the Financial Statements as at and for the year ended 31 December 2018

1 Reporting entity

1.1 Status of the Bank

Southeast Bank Limited (the “Bank”) is a scheduled commercial bank in the private sector established under the Bank Companies Act, 1991 and incorporated in Bangladesh on March 12, 1995 as a public limited company to carry out banking business in Bangladesh. The registered office of the Bank is located at Eunoos Trade Centre 52-53, Dilkusha Commercial Area (Level 2,3 &16), Dhaka-1000. The consolidated financial statements of the Bank as at and for the year ended 31 December 2018 comprise the Bank and its subsidiaries (together referred to as the “Group” and individually as “Group entities”).

1.2 Principal activities of the Bank

The Bank has 135 (2017:132) branches, with no overseas branch as on 31 December 2018. Out of 135 branches 5 (2017:5) branchesrun on Islamic banking, the rest 130 (2017:127) branches run on commercial conventional basis, of which 15 (2017:15) SME/agricultural branches are located across the country. The Bank offers services for all commercial banking needs of the customers, which includes deposit banking, loans and advances, export import financing, inland and international remittance facility etc. The Bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly traded company.

The Bank operates Islamic banking in 5 branches designated for the purpose in complying with the rules of Islamic Shariah the modus operandi.

The Bank has four subsidiaries, one for its merchant banking operation (for details see note 1.5) and another three for its remittance business of which one in the United Kingdom (for details see note 1.6), one in Australia (for details see note 1.7) and other one in South Africa (for details see note 1.8).

1.3 Islamic Banking

The Bank obtained the Islamic Banking branches permission vide letter no. BRPD(P)745(22)/2003-2525 dated 28 June 2003, BRPD(P)745(22)/2004-1801 dated 9 May 2004 and BRPD(P)745(22)/2004-3957 dated 13 October 2004. The Islamic banking branches are governed under the rules and regulations of Bangladesh Bank. Separate financial statements of Islamic Banking Branches are shown in Annexure-G, G.1 and G.2 .

The financial statements of the Islamic banking branches have also been prepared as per the Bank Companies Act, 1991 (amended upto 2018), IFRSs and other prevailing laws and regulations applicable in Bangladesh.

A separate balance sheet and profit and loss account are shown in Annexure-G and G.1 and the figures appearing in the annexure have been converted into relevant heads of financial statements under conventional banking for consolidation and incorporation in these financial statements.

1.4 Off-Shore Banking

In order to cater the varied financial needs of 100% foreign owned/joint venture industrial units and foreign entities located in Export Processing Zones of the country, the Bank obtained Off-Shore Banking License on 24 June 2008 vide letter no. BRPD(P-3)744(98)/2008-2213 from Bangladesh Bank. Presently the Bank has 2 (2017: 2) off-shore banking units - one at Dhaka Export Processing Zone and the other at Chittagong Export Processing Zone. Off-shore banking unit is governed under the rules and regulations of Bangladesh Bank. Separate financial statements of Off- Shore Banking Units are shown in Annexure-H, H.1 and H.2.

19 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.

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.

Board of Directors of the group decided to discontinue the operation of the Southeast Financial Services (Australia) Pty. Ltd. Therefore the group considered the entity as abandoned.

1.8 Southeast Exchange Company (South Africa) Pty Ltd

Southeast Exchange Company (South Africa) Pty Limited (the "Company") was incorporated as a private limited company with The Companies and Intellectual Property Commission under registration no. 2011/008619/07 on 15 April 2011. The Company is a wholly owned subsidiary of Southeast Bank Limited.

The 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.

20 2 Basis of preparation

2.1 Statement of compliance

The Financial Reporting Act, 2015 (FRA) has been enacted in 2015. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. Section 38 of the Bank Companies Act, 1991 (amended upto 2013) has been replaced in 2015 by two new sub-sections to require banks to prepare their financial statements under such financial reporting standards.

The FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisions of the FRA. Hence, considering Section 69 of FRA, the consolidated financial statements of the Bank and its subsidiaries and the separate financial statements of the Bank as at and for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Bank Companies Act, 1991 (amended upto 2018) , the rules and regulations issued by Bangladesh Bank (BB), the Companies Act, 1994, the Securities and Exchange Rules, 1987, The Income Tax Ordinance, 1984, The Value Added Tax, 1991. In case any requirement of the Bank Companies Act, 1991 and provisions and circulars issued by BB differ with those of IFRSs, the requirements of the Bank Companies Act, 1991 and provisions and circulars issued by BB shall prevail. Material departures from the requirements of IFRSs are as follows: i) Investment in shares and Securities

IFRS: As per requirements of IFRS 9: classification and measurement of investment in Share and Securities will depend on how these are managed (the entity’s business model) and their contractual cash flow characteristics. Based on these factors it would generally fall either under “at fair value through profit and loss account” or under “at fair value through other comprehensive income” where any change in the fair value (as measured in accordance with IFRS 13) at the year-end is taken to profit and loss account or other comprehensive income respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment. ii) Revaluation gain (loss) on Government securities

IFRS: Government securities refer primarily various debt instruments which include both bonds and bills. As per requirements of IFRS 9 Financial Instruments, bonds can be categorised as “Amortised Cost (AC)” or “Fair Value Through Profit or Loss (FVTPL)” or “Fair Value through Other Comprehensive Income (FVOCI)”. Bonds designated as Amortised Cost are measured at amortised cost method and interest income is recognised through profit and loss account. Any changes in fair value of bonds designated as FVTPL is recognised in profit and loss account. Any changes in fair value of bonds designated as FVOCI is recognised in other reserve as a part of equity. As per requirements of IFRS 9, bills can be categorised either as “Fair Value Through Profit or Loss (FVTPL)” or “Fair Value through Other Comprehensive Income (FVOCI)”. Any change in fair value of bills is recognised in profit and loss or other reserve as a part of equity respectively.

Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognized in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortization of discount are recognized in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortized at the year end and gains on amortization are recognized in other reserve (loss are recognized in profit and loss account) as a part of equity .

21 iii) Provision on loans and advances IFRS: As per IFRS 9 Financial Instruments an entity shall recognize an impairment allowance on loans and advances based on expected credit losses. At each reporting date, an entity shall measure the impairment allowance for loans and advances at an amount equal to the lifetime expected credit losses if the credit risk on these loans and advances has increased significantly since initial recognition, whether assessed on an individual or collective basis, considering all reasonable information (including that which is forward-looking). For those loans and advances for which the credit risk has not increased significantly since initial recognition, at each reporting date, an entity shall measure the impairment allowance at an amount equal to 12 month expected credit losses that may result from default events on such loans and advances that are possible within 12 months after reporting date.

Bangladesh Bank: As per BRPD circular no. 16 dated 18 November 2014, BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 05 dated 29 May 2013 a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad/losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as per BRPD Circular No.10 dated 18 September 2007 and BRPD Circular No. 14 dated September 23, 2012, the Bank is required to maintain provision @ 1% against Off-Balance Sheet Exposures. Such provision policies are not specifically in line with those prescribed by IAS 39. BRPD Circular no. 1 dated 20 February, 2018 General Provision for Housing Finance under Consumer Financing.

However, if there is any stay order issued by the Honorable High Court Division of the Supreme Court of Bangladesh against any non-performing loans for reporting such loans as unclassified category, the Bank maintains at least general provision for such loans under unclassified loan category as per Bangladesh Bank guidelines. Where Bangladesh Bank suggests any additional provision to be maintained for such loans, the Bank also complies with that. iv) Recognition of interest in suspense

IFRS: Loans and advances to customers are generally classified at amortised cost as per IFRS 9 and interest income is recognised in profit and loss account by using the effective interest rate method to the gross carrying amount over the term of the loan. Once a loan subsequently become credit-impaired, the entity shall apply the effective interest rate to the amortised cost of these loans and advances.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loans is not allowed to be recognized as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet.

v) Other comprehensive income

IFRS: As per IAS 1 Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a Single Comprehensive Income statement.

Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI) statement. As such the Bank does not prepare the OCI statement. However, elements of OCI, if any, are shown in the statements of changes in equity. vi) Financial instruments - presentation and disclosure

In several cases Bangladesh Bank guidelines categories, recognize, measure and present financial instruments differently from those prescribed in IFRS 9 Financial Instruments. Hence some disclosure and presentation requirements of IFRS 7 Financial Instruments: Disclosures and IAS 32 Financial Instruments: Presentation, cannot be made in this financial statements

22 vii) Repo and reverse repo transactions

IFRS: As per IFRS 9 when an entity sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a deposit, and the underlying asset continues to be recognized in the entity’s financial statements. This transaction will be treated as loan and the difference between selling price and repurchase price will be treated as interest expense.The same rule applies to the opposite side of the transaction (reverse repo).

Bangladesh Bank: As per BRPD guidelines, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a normal sales transactions and the financial assets are derecognized in the seller’s book and recognized in the buyer’s book. viii) Financial guarantees

IFRS: As per IFRS 9 Financial Instruments, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortized amount and the loss allowance determined as expected credit loss under IFRS 9. Financial guarantees are prescribed to be included within other liabilities.

Bangladesh Bank: As per BRPD 14, financial guarantees such as L/C, L/G will be treated as Off-Balance Sheet items. No liability is recognized for the guarantee except the cash margin. ix) Cash and cash equivalents

IFRS: Cash and cash equivalent items should be reported as cash item as per IAS 7.

Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, Treasury bills, Prize bonds are not shown as cash and cash equivalent. Money at call and on short notice presented on the face of the balance sheet, Treasury bills and Prize bonds are shown in Investments. x) Non-banking assets

IFRS: No indication of non-banking asset is found in any IFRS.

Bangladesh Bank: As per BRPD 14, there must exist a face item named non-banking assets. xi) Cash flow statement

IFRS: As per IAS 7 Statement of Cash Flows, Cash Flow Statement can be prepared using either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.

Bangladesh Bank: As per BRPD 14, cash flow is the mixture of direct and indirect method. xii) Balance with Bangladesh Bank: (Cash reserve ratio)

IFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per IAS 7.

Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

23 xiii) Presentation of intangible asset

IFRS: Intangible asset must be identified and recognized, and the disclosure must be given as per IAS 38.

Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD 14. xiv) Off-balance sheet items

IFRS: There is no concept of off-balance sheet items in any IFRS; hence there is no requirement of disclosure of off-balance sheet items on the face of the balance sheet.

Bangladesh Bank: As per BRPD 14, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately in face of balance sheet. xv) Disclosure of appropriation of profit

IFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.

Bangladesh Bank: As per BRPD 14, an appropriation of profit should be disclosed in the face of profit and loss account. xvi) Loans and advance net of provision

IFRS: As per IFRS 9, loans and advances/Investments should be presented net of provision.

Bangladesh Bank: As per BRPD 14, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances. xvii) Recovery of written off loans

IFRS: As per IAS 1, an entity shall not offset assets and liabilities or income and expenses, unless required or permitted by any IFRS. Again recovery of written off loans should be charged to profit & loss account as per IFRS 15.

Bangladesh Bank: As per BRPD 14, recoveries of amount previously written off should be adjusted with the specific provision for loans and advances.

(Also refer to note 3.21 Compliance of IFRSs)

2.2 The Bank’s compliance with related pronouncements by Bangladesh Bank i) Internal control

The objective of internal control is to ensure that management has reasonable assurance that (i) operations are effective, efficient and aligned with strategy, (ii) financial reporting and management information is reliable, complete and timely accessible, (iii) the entity is in compliance with applicable laws and regulations as well as its internal policies and ethical values including sustainability and (iv) assets of the company are safeguarded and frauds & errors are prevented or detected.

Southeast Bank Limited has established an effective internal control system whose primary aim is to ensure the overall control of risks and provide reasonable assurance that the objectives set by the Bank will be met. It has designed to develop a high level compliance culture among the personnel of the Bank, establish efficient and qualified operating model in the Bank, ensure reliability of internal and external information including accounting and financial information, secure the Bank’s operations and assets, and comply with laws, regulatory requirements and internal policies.

24 The Board of Directors of Southeast Bank Limited, through its Audit Committee, periodically reviews the effectiveness of Bank’s internal control system covering all the material controls, including financial, operational and compliance controls, risk management systems, the adequacy of resources, qualifications and experience of staff of the accounting and financial reporting functions. Board Audit Committee reviews the actions taken on internal control issues identified by the internal and external auditors and regulatory authorities. It has active oversight on the internal audit’s independence, scope of work and resources and it also reviews the functions of Internal Control & Compliance Division of Head Office, particularly the scope of the annual audit plan and frequency of the internal audit activities. ii) Risk management

Banking business faces uncertainties in its operating environment, which, if not managed and mitigated, would not only disrupt the achievement of its strategic and operational objectives, but may also cause extensive financial and reputational loss. Effective risk management enables Banks to take better and informed decisions that substantially improve the probability of achieving their strategic and operational objectives. In this connection, the Bank has come forward to establish a general framework to manage the risk factors considering Bangladesh Bank’s guidelines.

As one of the leading Banks in Bangladesh, Southeast Bank Limited (SEBL) has established approved policies in compliance with central bank’s guidelines covering major risk areas such as: (a) Credit (b) Foreign Exchange (c) Asset Liability Management (d) Money Laundering Prevention (e) Internal Control & Compliance (f) Information and Communication Technology.

For strengthening and updating risk management system, the Bank has developed a manual for core risks assessment in light of the Bangladesh Bank’s Risk Management Guidelines. The purpose of this assessment is to inform management about the loopholes of full fledged implementation of core risks management, risk management culture, restructure minimum standard and assist in the ongoing improvement.

Risk Management Reports (RMR) are being prepared on monthly, quarterly and semiannually basis and is reviewed in the monthly risk management meeting to have management opinion on the issues identified in RMR. iii) Internal audit Internal audit is the continuous and systematic process of examining and reporting on the activities of an organization undertaken by the specially assigned staff(s). Internal auditor works as the Eyes & Ears of the management. It may therefore be used to bridge the gap between management & shop floor. It can assure the management that the internal controls are adequate and in operations, the policies and systems laid down are being adhered to and accounting records provided by all levels are correct.

Internal audit mechanism is used as an important element to ensure good governance of SEBL. Internal audit activity of SEBL is effective and it provides senior management with a number of important services. These include detecting and preventing errors and fraud, testing internal control and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.

During the year 2018, Audit & Inspection Unit of ICCD conducted inspection on most of the branches and some of the important divisions of head office of the Bank as per plan and submitted reports presenting the findings of the audits/ inspections to the appropriate authorities. The bank conducted the risk grading of branches as per Bangladesh Bank guideline. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The key points of the Reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance of the Bank. iv) Fraud and forgeries

Fraud can happen anywhere. Though, only relatively few major frauds are picked up by the media, huge sums are lost by all kinds of businesses against huge number of smaller frauds. The risks of fraud is increasing day by day as a result of growing globalization, more competitive markets, rapid developments 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.

25 It will never be possible to eliminate all frauds and no system is completely fraud proof, since many fraudsters are able to bypass control systems put in place. SEBL pays attention on anti-fraud internal controls for prevention of fraud and forgery. SEBL assesses/evaluates the effectiveness of its anti-fraud internal control measures on quarterly basis as per the items/areas mentioned in the prescribed checklist of Bangladesh Bank.

2.3 Basis of measurement

The financial statements of the Bank have been prepared on the historical cost basis except for the following:

- Government Treasury Bills and Bonds designated as 'Held for Trading (HFT)' at present value using marking to market concept with gain crediting revaluation reserve - Government Treasury Bills and Bonds designated as 'Held to Maturity (HTM)' and remeasured Government Treasury Bond at present value using amortisation concept - Investment in shares of listed companies - Land and buildings are measured at fair value

2.4 Functional and presentation currency

These financial statements are presented in Bangladesh Taka (Taka/Tk) which is the Bank's functional currency. Except as otherwise indicated, financial information presented in Taka has been rounded to the nearest integer.

2.5 Use of estimates and judgments

The preparation of these financial statements in conformity with Bangladesh Bank circulars and IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect in the year ended 31 December 2019 is included in the following notes: a) Note 3.3.3 : Rate of provision for loans, advances/investments b) Note 3.3.4 : Useful lives of depreciable assets c) Note 21.3.2 : Provision for deferred tax d) Note 24 : Assets revaluation reserve

2.6 Reporting period

These financial statements cover one calendar year from 1 January 2018 to 31 December 2018.

2.7 Cash flow statement

Cash flow statement has been prepared in accordance with the BRPD Circular No. 14 dated 25 June 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank.

2.8 Statement of changes in equity

The Statement of changes in equity reflects information about the increase or decrease in net assets or wealth.

2.9 Liquidity statements

The consolidated and separate liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term which has been given in the statement.

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.

26 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.

27 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.

28 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 Unquoted shares At cost or net book value of the last audited balance sheet whichever is lower Quoted shares At cost or market value whichever is lower at balance sheet date

Details are shown in notes 8 and 9.

3.3.3 Loans and advances/ investments and provisions for loans and advances/ investments

a) Loans and advances of conventional Banking/Investments of Islamic Banking branches are stated in the Balance Sheet on gross value.

b) Provision for loans and advances is made on the basis of periodical review by the management and of instructions contained in Bangladesh Bank BRPD Circular Nos. 14 and 15 of 23 September 2012, BRPD Circular No. 19 of 27 December 2012, BRPD Circular No. 05 of 29 May 2013, BRPD Circular No. 12 of 20 August 2017 and BRPD circular No. 15 of 27 September 2017. BRPD Circular no. 1 dated 20 February, 2018 General Provision for Housing Finance under Consumer Financing. The rates of provision for different classifications are given below:

Particulars 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 1%-2% Consumer financing 2%-5% Loan to Brokerage Houses (BHs)/Merchant Banks (MBs)/ Sponsor Directors (SDs) against shares 2% Special mention account (SMA) 0.25%-5%

Specific provision on: Substandard loans and advances/investments 20% Doubtful loans and advances/investments 50% Bad/loss loans and advances/investments 100%

Provisions for Short term Agricultural and Micro-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.

29 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.

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.

30 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.

3.5.4 Revaluation reserve

Revaluation reserve arises from the revaluation of land and buildings as well as the revaluation of Treasury bills and bonds (HFT & HTM) in accordance with the DOS circular no. 5 dated 26 May 2008 and DOS(SR) 1153/120/2010 dated 8 December 2010. The tax effects on revaluation gain are measured and recognised in the financial statements as per IAS 12: Income Taxes .

Details are shown in note 24.

31 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.

32 3.11 Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.12 Employee benefits

3.12.1 Provident Fund

Provident fund benefits are given to the staff of the Bank in accordance with the registered provident fund rules. The commissioner of Income Tax, Large Tax Payers Unit (LTU), Dhaka has approved the Provident Fund as a recognized fund within the meaning of section 2(52) read with the provisions of part -B of the First Schedule of Income Tax Ordinance 1984. The fund is operated by a Board of Trustees consisting of 6 (six) members of the Bank. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription of the fund. The Bank also contributes equal amount to the fund. Contributions made by the Bank are charged as expense and the bank bears no further liability. Interest earned from the investments is credited to the members' account on half yearly basis. Members are eligible to get both the contribution after 5 (five) years of continuous service from the date of their membership.

3.12.2 Gratuity Fund

Gratuity fund benefits are given to the staff of the Bank in accordance with the approved gratuity fund rules. National Board of Revenue has approved the gratuity fund as a recognized gratuity fund with effect from December 2001. The fund is operated by a Board of Trustees consisting of 7 (seven) members of the Bank. Employees are entitled to gratuity benefit after completion of minimum 7 (seven) years of service in the Bank. The amount payable at the date of balance sheet is recognised and accounted for as at that date based on actual rate. The gratuity is calculated on the basis of last basic pay and is payable at the rate of one month's basic pay for every completed year of service. The amount so calculated are transferred to the fund and charged to expenses of the Bank.

3.12.3 Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.12.4 Workers' Profit Participation Fund (WPPF)

As per Bangladesh Labour Act 2006 and SRO no. 336/Law/2010, all companies fall within the scope of WPPF are required to provide 5% of its profit before charging such expense to their eligible employees within the stipulated time. The Bank obtained opinion from its legal advisor regarding this issue. The legal advisor opined that, "Southeast Bank Limited being governed by Banking Companies Act, 1991 is obliged to follow the provisions of Banking Companies Act, 1991, and Banking Companies Act, 1991 being a special law, provisions of this Act shall prevail over Bangladesh Labour Laws, 2006 (amended in 2013) which is a general law. Thus, we take the view that the Bank is not bound to form a WPPF under Bangladesh Labour Laws, 2006 (amended in 2013)". Consistent with the industry practice and in accordance with the legal opinion and the Bank Company Act, 1991 (amended in 2013), no provision has been made for WPPF.

3.13 Provisions and accrued expenses

In compliance with IAS-37, provisions and accrued expenses are recognized in the consolidated and separate financial statements when the Group/Bank has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

33 3.14 Provision for Off-Balance Sheet Exposures

In compliance with Bangladesh Bank guidelines off-balance sheet items are disclosed under contingent liabilities. As per BRPD Circular No.10 dated 18 September 2007 and BRPD Circular No. 14 dated 23 September 2012 and BRPD Circular no. 13 dated 18 October 2018, the Bank is required to maintain provision @ 1% against off-balance sheet exposures. Details are shown in note 21.5.1 (C).

3.15 Provision for Nostro Accounts

According to guideline of Foreign Exchange Policy Department of Bangladesh Bank, Circular No. FEOD (FEMO)/01/2005-677 dated 13 September 2005, Bank is not required to make provision regarding the un- reconciled debit balance as at Balance Sheet date since there was no debit entries more than three month.

3.16 Tax expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity.

3.16.1 Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Details are shown in note 21.3.1.

3.16.2 Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:

● temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

● temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and

● temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax relating to unrealised surplus on revaluation of held to maturity (HTM) securities and held for trading (HFT) securities and land and buildings are recognised directly in revaluation reserve as a part of equity and is subsequently recognised in profit and loss account on maturity of the security and disposal of land and buildings. Details are shown in note 21.3.2.

34 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 64 and 65.

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.

35 3.20 Risk management

Effective risk management is an essential element of our operations and strategy. The Bank monitors risk at all levels throughout its operations and has established units to manage various types of risk. Our risk management framework is designed to identify, manage and mitigate the risk of any failure to achieve business objectives.

The risk management of the Bank covers following six core risk areas: i) Credit Risk ii) Foreign Exchange Risk iii) Asset Liability Management Risk iv) Money Laundering Risk v) Internal Control & Compliance Risk; and vi) Information and Communication Technology Risk

The Bank’s risk management policy and process are composed with all the structures, policies, process and strategies in line with the guidelines of central bank and other regularity authorities. The Bank endeavors to maximize profits through the development of an integrated risk management system.

3.20.1 Credit risk

Credit risk is the possibility that a borrower or counter party will fail to repay the borrowed money as per the agreed terms and conditions. Managing Credit risk of the Bank in an efficient manner has become one of the most crucial tasks for the management. Given the fast changing, dynamic global economy, implementation of Basel-III and the increasing pressure of globalization and liberalization it is essential that banks have robust credit risk management policies and procedures that are sensitive and responsive to these changes.

A thorough assessment & due diligence are done before sanctioning any credit facility at Credit Risk Management Division (CRM) of the Bank. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the proposed credit facilities and various critical risk factors. The assessment process starts at Branch Credit department by the Officer and ends at Credit Risk Management Division (CRM) in Head Office where it is approved / declined by the competent authority. Credit approval authority has been partially delegated to the individual executives. Proposal beyond their delegation are approved / declined by the Board / Executive Committee (EC) of the Board.

3.20.2 Foreign Exchange Risk

Foreign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss in earnings. As per the guidelines of Bangladesh Bank, Southeast Bank Limited has developed a detailed Foreign Exchange Risk Management policy to minimize different types of risks associated with foreign exchange transactions. The Bank has also developed different strategies to handle foreign exchange risk by setting different types of limits and risk parameters to measure and monitor foreign exchange risk exposure of the Bank.

The Foreign Exchange Desk of Treasury Division is involved in foreign exchange dealing activities with different counterparty banks. The Treasury Back Office is engaged in transfer of funds and passing of the transaction entries in the books of accounts; the Mid Office is responsible for verification of the deals. All foreign exchange assets and liabilities are revalued at market rate as per the directive of Bangladesh Bank. All nostro accounts are reconciled on a monthly basis and outstanding entries beyond 30 days are reviewed by the management for its settlement.

3.20.3 Asset Liability Management

Banks are exposed to the several risks such as Liquidity Risk, Interest Rate Risk, Foreign Exchange Risk, Credit Risk and Operational Risk etc. Monitoring and controlling these risks are vital to the survival of a financial institution. Asset-Liability Management is a tool to oversee whether different balance sheet risks are properly identified, appropriate policies and procedures are well established to control and limit these risks.

Asset-Liability Committee (ALCO) reviews country’s overall economic position, the Bank’s liquidity position, key performance ratios, interest rate risk, deposit and advance growth, cost of deposit & yield on advances, deposit & lending pricing strategy and different forecasted balance sheet risks of the Bank.

36 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.

37 3.20.6 Information and communication technology

The Bank has Centralized Core Banking Software (CBS)and providing online banking services to its clients through 136 Branches across the country. The Bank is also offering 24/7 banking services through its different delivery channels, like Internet Banking, ATM and Mobile Financial Service (MFS). Besides, the Bank has introduced Recycler ATM in the brand name of “SEBL Instant Banking Service.” Through this service, customers are able to deposit cash on a real time basis other than cash withdrawal facility. SMS and E-Mail Alert services are available for any debit/credit transaction through online and Internet Banking or using Bank’s Debit / Credit Card as a deterrent against fraudulent transaction attempts. The Bank has established its Far DC (Data Center) at Jessore as it falls under different seismic zone as part of its business continuity plan (BCP) as well as for compliance of ICT Security Guideline of Bangladesh Bank. Data synchronization in near real time basis has been established through fiber optic cables from main DC to near DC (Disaster Recovery Site at Uttara) and again main DC to far DC at Jessore to ensure availability of data in any catastrophic situation.

The Bank has further reviewed its ICT Security and ICT Risk Management Policies and related internal processes for strengthening security of information assets from internal and external threats. Gradual implementation of the different policies is being carried out. Several sessions were conductedon ICT Security and Risk for the employees of the Bank to build awareness and minimize ICT related risks in banking operation.

3.20.7 Environmental Risk Management (ERM)

Environmental and Social risk is assessed by E&S due diligence (ESDD) checklists. It is a set of questionnaire provided by Bangladesh Bank. The purpose of the E&S due diligence is to review any potential E&S risks associated with the business activities of a potential client ensure that the transaction does not carry E&S risks, which could present a potential liability/risk to the Bank. The ESDD checklists (both generic and sector specific) will auto generate the E&S risk ratings – high, medium and low based on the responses provided to the questions in the checklist.

Potential E&S risks may not seem significant or relevant at the time of approval of a financial transaction, but may become so during execution, for instance as a result of higher regulatory standards and increased levels of enforcement. In other cases, E&S risks, such as spills or explosions, may seem unlikely to occur, but when they do, the E&S impact is potentially extremely high. Therefore, to identify Environment and Social (E&S) risks along with appropriate risk mitigation measures, Environment & Social Risks Management must be integrated with the Credit Risk Management of the bank.

3.21 Compliance of Bangladesh Financial Reporting Standards (BFRSs)

Name of the standards Ref. Status First-time Adoption of Bangladesh Financial Reporting Standards IFRS-1 Not applicable Share-based Payment IFRS-2 Not applicable Business Combinations IFRS-3 Applied Insurance Contracts IFRS-4 Not applicable Non-current Assets Held for Sale and Discontinued Operations IFRS-5 Applied Exploration for and Evaluation of Mineral Resources IFRS-6 Not applicable Financial Instruments: Disclosures IFRS-7 * Applied Operating Segments IFRS-8 ** Applied Financial Instruments IFRS-9 *Applied Consolidated Financial Statements IFRS-10 Applied Joint Arrangements IFRS-11 Not applicable Disclosure of Interests in other Entities IFRS-12 Applied Fair Value Measurement IFRS-13 * Applied Regulatory Deferral Accounts IFRS-14 Not applicable Revenue From Contracts with Customers IFRS-15 Applied Presentation of Financial Statements IAS-1 * Applied Inventories IAS-2 Not Applicable Statement of Cash Flows IAS-7 * Applied Accounting Policies, Changes in Accounting Estimates and Errors IAS-8 Applied

38 Name of the standards Ref. Status Events after the Reporting Period IAS-10 Applied Income Taxes IAS-12 Applied Property, Plant and Equipment IAS-16 Applied Leases IAS-17 Applied Employee Benefits IAS-19 Applied Accounting for Government Grants and Disclosure of Government IAS-20 Not Applicable The Effects of Changes in Foreign Exchange Rates IAS-21 Applied Borrowing Costs IAS-23 Applied Related Party Disclosures IAS-24 Applied Accounting and Reporting by Retirement Benefit Plans IAS-26 Not Applicable Separate Financial Statements IAS-27 Applied Investments in Associates IAS-28 Not Applicable Financial Reporting in Hyperinflationary Economies IAS-29 Not Applicable Financial Instruments: Presentation IAS-32 * Applied Earnings per Share IAS-33 Applied Interim Financial Reporting IAS-34 Applied Impairment of Assets IAS-36 Applied Provisions, Contingent Liabilities and Contingent Assets IAS-37 * Applied Intangible Assets IAS-38 * Applied Financial Instruments: Recognition and Measurement IAS-39 * Applied Investment property IAS-40 Not Applicable Agriculture IAS-41 Not Applicable * Subject to departure described in note 2.1 ** Subject to departure described in note 3.25

Standards issued but not yet effective: A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2019 and earlier application is permitted; however, the Company has not early adopted the following new or amended standards in preparing these financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group and the Bank when will be applicable.

A. IFRS 16 Leases As per IFRS 16 Lease, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 eliminates the classification of leases by the lessee as either finance leases or operating leases. IFRS 16 requires a lessee to recognise a “right-of- use” of the underlying asset and a lease liability reflecting future lease payments for most leases. For lessors, IFRS 16 retains most of the requirements in IAS 17. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently. The Bank is reviewing all of the Company’s leasing arrangements in light of the new lease accounting rules in IFRS 16.

B. IFRS 17 Insurance Contracts Insurance Contracts are effective for annual periods beginning on or after 1 January 2021. Earlier adoption is permitted. This has not been applied in preparing these consolidated and separate financial statements.

3.22 Credit Rating of the Bank

As per the BRPD circular No.6 dated 5 July 2006, the bank has done its credit rating by Credit Rating Information and Services Limited (CRISL) based on the audited financial statements dated 31 December 2017.

Date of Particulars Long term Short term Rating AA ST-2 Double A Surveillance Rating 28-Jun-18 (High quality and High (High Grade) Safety) Outlook Stable

39 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 IFRSs, or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity.

3.25 Operating segments

The Group and the Bank have no identified operating segment and as such presentation of segmental reporting is not made in the financial statements as per IFRS 8. However, geographical and business segments wise limited disclosures are furnished in Annexure-I.

3.26 Going concern basis of accounting

These financial statements have been prepared on the assessment of the Bank’s ability to continue as a going concern. The Bank has neither any intention nor any legal or regulatory compulsion to liquidate or curtail materially the scale of any of its operations. The key financial parameters (including liquidity, profitability, asset quality, provision sufficiency and capital adequacy) of the Bank continued to exhibit a healthy trend for couple of years. Besides, the management is not aware of any material uncertainties that may cast significant doubt upon the Bank’s ability to continue as a going concern.

3.27 Approval of financial statements

The financial statements were approved by the board of directors on 30 April 2018.

3.28 General

Figures of previous year have been rearranged, whenever necessary, to conform the current year's presentation.

40 2018 2017 Note Taka Taka 4 Consolidated cash

In hand (including foreign currencies): Southeast Bank Limited 4.1 3,598,790,655 3,010,980,173 Southeast Exchange Company (South Africa) Pty Ltd 23 1,202 Southeast Financial Services (Australia) Pty Ltd 61,419 1,600 3,598,852,097 3,010,982,975 Balance with Bangladesh Bank and its agent banks (including foreign currencies): Southeast Bank Limited 4.1 17,916,575,574 17,968,153,354 21,515,427,671 20,979,136,329

4.1 Cash

In hand: Local currency 3,506,484,120 2,949,626,994 Foreign currencies 92,306,534 61,353,179 3,598,790,655 3,010,980,173 Balance with Bangladesh Bank: Local currency 16,778,266,745 17,265,232,466 Foreign currencies 724,543,372 385,289,801 17,502,810,117 17,650,522,267 Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency 413,765,457 317,631,087 Balance with Bangladesh Bank and its agent banks 17,916,575,574 17,968,153,354 (including foreign currencies) 21,515,366,229 20,979,133,527

4.2 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with section 33 of the Bank Companies Act, 1991 (Amended up to 2013), MPD Circular nos. 4 and 5 dated 1 December 2010 and MPD Circular no. 1 and 2 dated 23 June 2014 and 10 December 2013 respectively and DOS Circular no.1 dated 19 January 2014 and MPD Circular No.1 dated 03 April 2018.

The statutory Cash Reserve Ratio on the Bank's demand and time liabilities at the rate of minimum 5.0% on daily basis and 5.50% on bi-weekly basis for conventional and Islamic banking has been calculated and maintained with Bangladesh Bank in current account and 13% Statutory Liquidity Ratio for conventional banking and 5.50% Statutory Liquidity Ratio for Islamic banking on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including excess cash reserve balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below:

4.2.1 a) Cash Reserve Ratio (CRR) for Conventional Banking

5.50% of average Demand and Time Liabilities:

Required reserve (Average daily on bi-weekly basis) 14,738,207,613 15,168,896,737 Actual reserve held 15,113,119,138 15,784,414,510 Surplus 374,911,525 615,517,773

b) Cash Reserve Ratio (CRR) for Islamic Banking

5.50% of average Demand and Time Liabilities:

Required reserve (Average daily on bi-weekly basis) 1,007,891,950 819,034,223 Actual reserve held 1,058,360,221 885,851,119 Surplus 50,468,271 66,816,896

41 2018 2017 Note Taka Taka 4.2.2 a) Statutory Liquidity Ratio (SLR) for Conventional Banking

Required reserve (13% of average Demand and Time Liabilities) 34,835,763,448 30,337,793,473 Actual reserve held 54,215,962,419 53,330,118,813 Surplus 19,380,198,971 22,992,325,340

Held for Statutory Liquidity Ratio of Conventional Banking:

Cash in hand 3,448,576,000 2,844,590,000 Balance with agent bank (Sonali Bank Limited) as per 399,436,000 315,211,000 Excess cash reserve 374,911,525 615,517,773 Government Securities (HFT) 10,816,964,383 16,167,101,000 Government Securities (HTM) 39,170,936,211 33,383,358,000 Other eligible securities/ Prize Bond 5,138,300 4,341,040 54,215,962,419 53,330,118,813

b) Statutory Liquidity Ratio (SLR) for Islamic Banking

Required reserve (5.50 % of average Demand and Time Liabilities) 1,007,891,950 693,028,958 Actual reserve held 1,176,260,271 883,920,896 Surplus 168,368,321 190,891,938

Held for Statutory Liquidity Ratio of Islamic Banking:

Cash in hand 150,220,000 166,396,000 Balance with agent bank (Sonali Bank Limited) as per 5,572,000 708,000 Excess cash reserve 50,468,271 66,816,896 Government Securities (HTM) 970,000,000 650,000,000 1,176,260,271 883,920,896

5 Consolidated balance with other banks and financial institutions

In Bangladesh: Southeast Bank Limited 6 3,984,794,486 3,196,881,943 Southeast Bank Capital Services Limited 23,324,151 32,538,042 4,008,118,637 3,229,419,985 Less: Inter company balance eliminated 23,324,151 32,538,042 3,984,794,486 3,196,881,943 Outside Bangladesh: Southeast Bank Limited 6 2,272,907,523 965,226,853 Southeast Financial Services (UK) Ltd 15,447,609 10,861,425 Southeast Financial Services (Australia) Pty Ltd - 7,578 Southeast Exchange Company (South Africa) Pty Ltd 161,284,420 106,629,955 2,449,639,553 1,082,725,811 6,434,434,039 4,279,607,754

6 Balance with other banks and financial institutions

In Bangladesh 6.1 3,984,794,486 3,196,881,943 Outside Bangladesh 6.2 2,272,907,523 965,226,853 6,257,702,009 4,162,108,796

Also refer to note 6.3 for maturity wise grouping

42 2018 2017 Note Taka Taka 6.1 In Bangladesh Current account with: Agrani Bank Limited 30,576,275 575,850 Al Arafah Islami Bank Limited 79,276,813 45,265,708 Bangladesh Krishi Bank 5,116 - BRAC Bank Limited 5,001 5,001 BRAC Bank Limited (El Dorado Network) 283,060 396,695 The City Bank Limited 8,205,526 4,661,023 Commercial Bank of Ceylon PLC 13,577 13,337 EXIM Bank Limited 23,515,071 20,643,735 The Farmers Bank Limited 866,009 3,551,600 Jamuna Bank Limited 47,917,936 50,113,699 Janata Bank Limited 24,392,635 29,747 Meghna Bank Limited 19,447,552 10,255,457 Mercantile Bank Limited 25,904,570 10,779,207 Modumoti Bank Limited 1,552,095 1,561,425 Mutual Trust Bank Limited 29,407,803 23,840,589 National Bank Limited 59,408 11,520,963 NRB Commercial Bank Limited - 100,000 One Bank Limited 1,186,410 (869,991) Prime Bank Limited - 628 Rupali Bank Limited 25,000 - Shahjalal Islami Bank Limited 550,000 550,000 Sonali Bank Limited (2,166,519) (1,411,805) South Bangla Agriculture & Commerce Bank Limited 3,203,623 2,169,078 Trust Bank Limited 9 9 Union Bank Limited 25,137,481 21,993,167 United Commercial Bank Limited 36,882,184 8,547,767 356,246,634 214,292,889 Short term deposits account with: AB Bank Limited 30,690 28,004 The City Bank Limited 1,148,058 1,106,755 Eastern Bank Limited 26,799 29,556 EXIM Bank Limited 505,379,124 3,510,341 Standard Chartered Bank 3,351,284 194,482 Sonali Bank Limited 28,611,897 27,719,571 Uttara Bank Limited - 345 538,547,852 32,589,054 Fixed deposits with other banks: Commercial Bank of Ceylon Plc. - 400,000,000 Dhaka Bank Limited - 550,000,000 Jamuna Bank Limited - 250,000,000 Mutual Trust Bank Limited - 400,000,000 National Bank Limited - 500,000,000 Social Islami Bank Limited 500,000,000 - Standard Bank Limited - 300,000,000 500,000,000 2,400,000,000

Fixed deposits with financial institutions: Bay Leasing and Investment Limited 990,000,000 450,000,000 IDLC Finance Limited 500,000,000 - Delta Brac Housing Finance Corporation Limited 500,000,000 - Bangladesh Industrial Finance Company Limited 100,000,000 100,000,000 Investment Corporation of Bangladesh 500,000,000 - 2,590,000,000 550,000,000 3,984,794,486 3,196,881,943

43 2018 2017 Note Taka Taka 6.2 Outside Bangladesh

Current account Interest bearing: Standard Chartered Bank, New York, USA 344,142,271 86,529,828 Standard Chartered Bank, New York OBU 80,736,585 5,569,926 Citibank N.A, New York, USA 137,769,758 58,188,713 Standard Chartered Bank, London, UK 5,793,834 24,335,170 Mashreq Bank PSC, New York, USA 308,627,026 131,904,873 Wells Fargo Bank, N.A., New York, USA 4,588,519 87,426,417 Citibank AG, Frankfurt, Germany 67,721,709 54,683,457 Standard Chartered Bank, Kolkata, India 25,533,159 619,283 AB Bank Ltd., Mumbai, India 45,309,651 10,276,911 ICICI Bank Ltd., Mumbai, India 49,992,604 38,325,827 JP Morgan Chase Bank N.A., New York, USA 127,388,420 31,734,569 Habib American Bank, New York, USA 535,578,787 113,518,856 Mashreq Bank, Mumbai, India 30,091,175 33,413,883 Mashreq Bank, Mumbai, India 1,485,413 1,543,260 Sonali Bank (UK) Ltd. USD 0.04 257,277 Sonali Bank (UK) Ltd. GBP (0.15) 3,492,835 1,764,758,909 681,821,085 Non-interest bearing: Bank of Sydney Ltd, Sydney 5,025,363 4,096,286 Banque Saudi Fransi, Riyadh 4,144,044 21,954,062 United Bank Limited, Karachi, Pakistan 3,694,384 3,567,858 Standard Chartered Bank, Colombo, Srilanka 29,860,364 19,877,855 Standard Chartered Bank, Mumbai (AEB), India 2,118,895 2,088,589 Bank of Tokyo, Mitsubishi, JPY 79,567,794 32,630,020 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal 27,900,081 22,317,811 Bank of Bhutan, Pheuntsholing, Bhutan 16,711,425 20,589,244 Commerz Bank AG, Frankfurt, Germany EURO 603,335 40,480,379 Commerz Bank AG, Frankfurt, Germany USD 175,698,521 40,185,050 Zuercher Kantonal Bank, Zurich, Switzerland 1,852,844 18,003,835 HDFC Bank, Mumbai, India 77,512,594 7,209,740 Habib Bank AG Zurich, Zurich, Switzerland 0.13 328,475 Mashreq Bank PSC, Dubai, UAE 69,162,123 2,843,673 Habib Metropoliton Bank Ltd., Karachi, Pakistan 14,296,848 47,232,891 508,148,614 283,405,768 2,272,907,523 965,226,853

Details of Balance with other banks-Outside Bangladesh shown in Annexure-C.

6.3 Maturity grouping of balance with other banks and financial institutions

On demand 3,684,700,000 1,179,519,742 Not more than three months 2,373,002,009 2,682,589,054 More than three months but not more than six months 200,000,000 300,000,000 More than six months but not more than one year - - More than one year but less than five years - - Above five years - - 6,257,702,009 4,162,108,796

44 2018 2017 Note Taka Taka 7 Money at call and on short notice

In bank: One Bank Limited 50,000,000 - National Credit and Commerce Bank Limited 100,000,000 350,000,000 National Bank Limited 700,000,000 - Citi Bank N. A 500,000,000 - Dhaka Bank Limited 300,000,000 - Uttara Bank Limited 1,000,000,000 - Standard Bank Limited - 150,000,000 The ICB Islamic Bank Limited 11,300,000 11,300,000 The City Bank Limited 850,000,000 600,000,000 3,511,300,000 1,111,300,000 In non-banking financial institutions (public and private): Bay Leasing and Investment Limited 410,000,000 340,000,000 Delta BRAC Housing Finance Corporation Limited 300,000,000 80,000,000 Investment Corporation of Bangladesh 390,000,000 500,000,000 IDLC Finance Limited 390,000,000 IPDC Finance Limited 50,000,000 - 1,540,000,000 920,000,000 In foreign currency: BRAC Bank Limited - 330,800,000 Dhaka Bank Limited - 165,400,000 Eastern Bank Limited 587,300,000 413,500,000 Mercantile Bank Limited - 330,800,000 Mutual Trust Bank Limited 251,700,000 - NCC Bank Limited 335,600,000 - Pubali Bank Limited 251,700,000 Rupali Bank Limited - 124,050,000 The City Bank Limited 419,500,000 Shahjalal Islami Bank Limited - 165,400,000 United Commercial Bank Limited - 82,700,000 1,845,800,000 1,612,650,000 6,897,100,000 3,643,950,000

8 Consolidated Investments

Government securities: Southeast Bank Limited 9 50,963,038,896 50,204,799,973 50,963,038,896 50,204,799,973 Others: Southeast Bank Limited 9 11,920,717,298 10,118,368,557 Southeast Bank Capital Services Limited 2,725,796,239 2,587,875,942 14,646,513,537 12,706,244,499 65,609,552,433 62,911,044,472

9 Investments

Government securities: Conventional Banking 9.1.1 49,993,038,896 49,554,799,973 Islamic Banking 9.2.1 970,000,000 650,000,000 50,963,038,896 50,204,799,973 Others: Conventional Banking 9.1.2 8,675,863,435 7,327,778,746 Islamic Banking 9.2.2 3,244,853,863 2,790,589,811 11,920,717,298 10,118,368,557 62,883,756,194 60,323,168,530 Also refer to notes 9.3 to 9.8 for further analysis, maturity wise grouping, market value information, sector wise investment, etc.

45 2018 2017 Note Taka Taka 9.1 Conventional Banking

9.1.1 Government Securities

Treasury Bills 91 days Treasury Bills - - 364 days Treasury Bills 968,626,000 - 968,626,000 - Add: Reverse repo with other banks 1,002,951,720 Less:Assured Repo with Bangladesh Bank/ Others (at book value) - - 1,971,577,720 -

Prize Bonds 5,138,300 4,341,040 Bangladesh Bank Bills - - 5,138,300 4,341,040 Government Bonds 2 Years BGTB HTM - 1,000,090,436 5 Years BGTB HTM 8,720,163,602 5,175,910,399 10 Years BGTB HTM 14,729,336,147 13,916,649,159 15 Years BGTB HTM 7,485,640,185 6,490,177,303 20 Years BGTB HTM 7,269,670,916 5,836,710,538 Remeasured 10 years BGTB HTM 966,125,363 963,820,461 2 Years BGTB HFT 2,129,280,900 785,868,231 5 Years BGTB HFT 2,892,653,054 8,536,183,353 10 Years BGTB HFT 3,088,755,189 6,551,995,373 15 Years BGTB HFT 18,453,195 138,217,259 20 Years BGTB HFT 17,774,846 154,836,421 47,317,853,396 49,550,458,933 Add: Reverse repo with other banks (at book value) 698,469,480 - Less: Assured Repo with Bangladesh Bank/ Others (at book value) - - 48,016,322,876 49,550,458,933

49,993,038,896 49,554,799,973 9.1.2 Others

Shares in listed companies 1,648,793,522 1,566,290,136 Shares in un-listed companies 77,069,912 61,488,610 Bonds 6,950,000,000 5,700,000,000 8,675,863,435 7,327,778,746 9.2 Islamic banking 9.2.1 Government securities

Bangladesh Government Islamic bond 970,000,000 650,000,000 970,000,000 650,000,000 9.2.2 Others

Shares in listed companies 3,244,853,863 2,790,589,811 3,244,853,863 2,790,589,811

9.3 Investments classified as per Bangladesh Bank Circular Held for trading (HFT) 10,816,964,383 16,171,441,677 Held to maturity (HTM) 40,146,074,513 34,033,358,296 Other securities 11,920,717,298 10,118,368,557 62,883,756,194 60,323,168,530

9.4 Maturity-wise grouping of investments On demand 5,138,300 4,341,040 Not more than three months 1,607,800,000 2,621,953,085 More than three months but not more than one year 8,230,800,000 10,367,319,260 More than one year but not more than five years 30,097,800,000 21,622,020,484 Above five years 22,942,217,894 25,707,534,661 62,883,756,194 60,323,168,530

46 9.5 Cost and market value of investments

9.5.1 Government securities 2018 2017 Cost price Market price Market price Conventional Banking Taka Taka Taka

Treasury Bills 1,981,126,860 1,971,577,720 - Bangladesh Government Treasury Bond 48,279,121,365 48,016,322,876 49,550,458,933 Prize Bonds 5,138,300 5,138,300 4,341,040 50,265,386,525 49,993,038,896 49,554,799,973 Islamic Banking

Bangladesh Government Islamic Bond 970,000,000 970,000,000 650,000,000 51,235,386,525 50,963,038,896 50,204,799,973

9.5.2 Others (Investment in Shares) 2018 2017 Market price Cost price Cost price Conventional Banking Taka Taka Taka

Shares in listed companies 1,457,958,207 1,648,793,522 1,566,290,137 Shares in un-listed companies 77,069,912 77,069,912 61,488,610 1,535,028,119 1,725,863,435 1,627,778,747

Islamic Banking

Shares in listed companies 2,623,643,648 3,244,853,863 2,790,589,811 2,623,643,648 3,244,853,863 2,790,589,811

Shares in listed 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.

Details are shown in Annexure-D.

9.6 Sector wise investment of shares

2018 2017 Market price Cost price Cost price Shares in listed companies (A) Taka Taka Taka

Banks and NBFI 905,392,651 1,681,086,860 1,473,501,914 Insurance Companies 1,209,410,507 861,676,102 718,797,113 Fuel and Power Companies 274,925,783 381,160,963 246,110,932 Mutual Fund 366,656,060 293,475,095 305,380,556 Manufacturing & Other 1,325,216,854 1,676,248,365 1,613,089,433 4,081,601,855 4,893,647,386 4,356,879,948 - -

2018 2017 Net book value Cost price Cost price Shares in un-listed companies (B) Taka Taka Taka

Banks and NBFI 114,666,920 54,183,820 54,183,820 Others 31,170,812 22,886,092 7,304,790 145,837,732 77,069,912 61,488,610 Total investment of shares (C=A+B) 4,970,717,298 4,418,368,558

The investments in shares of unlisted companies are shown at cost or net book value of the last audited balance sheet, whichever is lower.

47 9.7 Market price and cost price of investments in ordinary shares as on 31 Dec 2018

Differences SL. 2018 Name of the Company (Provision to be no. Market price Cost price required) Taka Taka Taka 1 Asia Insurance 36,732,745 76,805,098 (40,072,353) 2 ACME Laboratories Limited 271,114,144 176,276,266 94,837,878 3 BAY Leasing and Investment Limited 280,453,126 653,782,763 (373,329,637) 4 EXIM Bank 192,288,092 370,656,956 (178,368,864) 5 EXIM Bank 1st MF 31,156,060 43,475,095 6 Lafarge Holcim Bangladesh Limited 43,500,000 89,321,368 (45,821,368) 7 Delta Life 7,502,195 12,382,964 (4,880,769) 8 National Life Insurance Company Limited 1,165,175,567 772,488,040 392,687,527 9 Prime Bank Limited 315,083,937 460,263,791 (145,179,854) 10 SEBL1ST MF 335,500,000 250,000,000 85,500,000 11 ACI Formulation 7,690,000 10,738,662 (3,048,662) 12 AFC Agro Biotech Limited 26,514,653 36,946,327 (10,431,674) 13 Active Fine Chemicals 18,053,155 21,204,434 (3,151,279) 14 AMAN Feed Limited 9,101,682 12,573,171 (3,471,489) 15 Aftab Automobiles Limited 85,682,310 145,359,192 (59,676,882) 16 Apolo Ispat 42,364,587 79,356,578 (36,991,991) 17 Argon Denim 17,316,130 22,675,929 (5,359,799) 18 Barka Power 65,743,532 80,616,388 (14,872,856) 19 BANGAS Limited 12,692,048 11,020,775 1,671,273 20 Bangladesh Building Systems 40,656,000 54,399,157 (13,743,157) 21 BD COM 25,135,302 29,697,505 (4,562,203) 22 BD FINANCE Limited 2,330,900 2,886,450 (555,550) 23 Bangladesh Thai Aluminium Limited 35,454,308 42,868,798 (7,414,490) 24 Beximco Limited 35,655,375 44,103,746 (8,448,371) 25 Bangladesh Shipping Corporation Limited 38,341,485 49,874,160 (11,532,675) 26 BSCCL 34,904,672 58,527,823 (23,623,151) 27 BSRM Limited 36,959,783 56,679,577 (19,719,794) 28 BSRM Steel Mills Limited 4,585,944 7,019,678 (2,433,734) 29 Bashundara Paper Mills Limited 7,542,000 11,647,591 (4,105,591) 30 Central Pharma 4,725,204 9,391,717 (4,666,513) 31 The City Bank Limited 634,200 824,675 (190,475) 32 Confidence Cement 46,812,600 47,548,604 (736,004) 33 Doreen Power 17,753,780 23,687,937 (5,934,157) 34 DESHBANDHU Polymer Limited 1,320,000 1,980,641 (660,641) 35 Eastern Bank Limited 4,320,000 4,564,389 (244,389) 36 Eastern Housing Limited 15,800,848 18,217,288 (2,416,440) 37 Fuwang Ceramic 6,960,583 7,967,868 (1,007,285) 38 FOURTUNE Shoes Limited 3,100,000 3,383,480 (283,480) 39 Golden Harvest Limited 14,865,833 18,665,067 (3,799,234) 40 Global Heavy Chemical Limited 23,807,785 34,247,190 (10,439,405) 41 GPH Ispat Limited 45,515,852 47,043,199 (1,527,347) 42 ICB 19,799,899 27,605,297 (7,805,398) 43 Indo Bangla Pharmacitical Limited 9,159 2,677 6,482 44 International Leasing Limited 17,955,794 24,424,191 (6,468,397) 45 INTRACO Refuling Station Limited 3,114,141 4,977,033 (1,862,892) 46 Islami Bank 9,680,000 15,986,816 (6,306,816) 47 Khulna Power Company Limited 65,647,786 116,697,597 (51,049,811) 48 Kattli Textile Limited 280,081 100,640 179,441 49 LankaBangla Finance Limited 37,412,955 63,609,848 (26,196,893) 50 Matin Spinning Limited 11,315,640 14,044,434 (2,728,794) 51 Mozaffar Hossain Spinning Mills Limited 10,780,473 20,059,098 (9,278,625) 52 MJL Limited 17,707,200 21,016,635 (3,309,435) 53 Meghna Petroleum Limited 18,890,930 22,603,106 (3,712,176) 54 METROSPIN 816,000 1,184,469 (368,469) 55 MLDYEING 125,603 35,242 90,361 56 National Polymar 5,446,666 6,271,005 (824,339) 57 National Tubes Limited 43,346,600 49,167,648 (5,821,048) 58 Olympic Accessories Limited 34,585,798 60,671,590 (26,085,792) 59 OLYMPIC Limited 10,810,000 12,280,119 (1,470,119) 60 Oimex Electrode Limited 164,505 193,491 (28,986) 61 Orion Pharma 44,302,821 61,952,895 (17,650,074) 62 Padma Oil Company Limited 11,196,944 12,487,427 (1,290,483) 63 Premier Cement 39,103,531 57,393,541 (18,290,010)

48 64 Premier Leasing 7,178,100 15,325,745 (8,147,645) 65 Prime Finance Limited 7,643,035 26,958,933 (19,315,898) 66 PRIMETEX Limited 7,233,429 8,288,244 (1,054,815) 67 Paramount Textile Limited 1,153,250 1,085,254 67,996 68 RN Spinning 6,095,525 12,812,929 (6,717,404) 69 RSRM STEEL Limited 53,140,758 77,550,224 (24,409,466) 70 Saif Power Tec Limited 9,821,370 13,859,527 (4,038,157) 71 SALAMCRST 22,954,800 31,969,454 (9,014,654) 72 SAPORTL 18,055,952 31,409,800 (13,353,848) 73 SILVA Pharmacitical Limited 276,709 91,930 184,779 74 Shasha Denim Limited 21,874,604 23,475,673 (1,601,069) 75 Shahjibazar Power Company Limited 58,586,400 79,199,118 (20,612,718) 76 Summit Power 4,138,970 4,622,232 (483,262) 77 SKTRIMS 256,738 50,410 206,328 78 Titas Gas 5,460,000 7,670,726 (2,210,726) 79 United Finance 10,612,613 14,197,006 (3,584,393) 80 United Power Generation 6,686,100 7,582,764 (896,664) 81 VFS Thread Deying Limited 244,072 38,388 205,684 82 WMSHIPYARD Sheppeard Limited 5,014,800 6,603,030 (1,588,230) 83 Zahen Spinning 18,066,097 33,151,273 (15,085,176) 84 Runner auto IPO 1,080,825 1,080,825 - 85 AND Telecom 569,040 569,040 - 86 SSSTEEL 134,920 134,920 - 87 Genex Infor 104,660 104,660 - 88 Esqure net IPO 1,880,145 1,880,145 - 4,081,601,855 4,893,647,386 (799,726,496) Actual provision 799,726,500 Surplus/(deficit) 4

9.8 Transactions of Repo and Reverse-repo during the year

Minimum Maximum Daily average outstanding outstanding outstanding Taka Taka Taka 2018 Securities sold under repo i) With Bangladesh Bank - - - ii) With other Banks & FIs 156,713,657 1,535,260,080 47,674,919

Securities purchased under reverse repo i) With Bangladesh Bank - - - ii) With other Banks & FIs 157,743,152 1,217,850,720 79,343,498

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

49 2018 2017 Note Taka Taka 10 Consolidated loans and advances/investments Loans, cash credit, overdrafts etc./investments: Southeast Bank Limited 11 252,933,241,876 221,191,785,619 Southeast Bank Capital Services Limited 2,467,417,246 2,465,716,400 255,400,659,122 223,657,502,019 Less: Inter company balance eliminated - 255,400,659,122 223,657,502,019 Bills purchased and discounted: Southeast Bank Limited 11 12,270,968,683 10,659,214,310 12,270,968,683 10,659,214,310 267,671,627,805 234,316,716,329 11 Loans and advances/investments Loans, cash credit, overdrafts etc./investments 11.1 252,933,241,876 221,191,785,619 Bills purchased and discounted 11.14 12,270,968,683 10,659,214,310 265,204,210,559 231,850,999,929

11.1 Loans, cash credit, overdrafts etc./Investments

In Bangladesh: Conventional Banking Demand loan 7,446,663,360 6,523,478,141 Time loan 27,005,835,559 25,706,837,604 Term loan 99,358,892,070 79,529,348,385 Agricultural credit-Term 995,463,927 1,673,427,615 Agricultural credit-Time 1,163,473,709 1,661,209,453 Agricultural credit-OD 189,825,090 185,519,891 Consumer credit scheme 2,988,823 3,963,882 Car loan 128,683,786 109,247,296 Personal loan 478,889,995 473,932,761 Home loan 1,256,450,806 948,808,661 Rural Home Loan 170,362,632 - Loan against - LTFF 174,436,799 - Loan against GTF 10,864,315 - Cash credit and overdrafts 58,603,918,907 52,900,215,618 Bills Against Letter of Credit (BLC) 120,286,863 1,009,677,345 Loan re-finance housing sector 15,557,895 18,246,407 Loan against Trust Receipt (LTR) 16,566,111,770 17,985,066,720 Advances-packing credit (PC) 3,210,961,945 3,564,356,842 Loan against foreign bills 120,081,946 97,119,159 House building loan-staff 365,431,298 272,796,136 Digital device 45,859 22,444 Export Development Fund (EDF) 18,199,188,944 12,931,627,959 Loan against cash incentive 132,117,051 79,738,862 Loan-credit card 1,889,094,911 1,553,275,922 237,605,628,260 207,227,917,101

Islamic Banking Demand investment 528,987,815 414,036,921 Bai-Muajjal (Time) investment 195,402,971 399,099,215 Bai-Muajjal Time under CCS 79,622,265 74,507,241 Bai-Murabaha-BLC - 28,009,964 Bai-Murabaha-LTR 1,193,826,782 800,511,034 Bai-Salam (advances-packing credit) 149,133,314 64,089,258 Staff house building investment 16,635,522 12,806,256 Export Development Fund (EDF) 773,063,701 712,130,203 Investment against cash incentive 17,131,016 19,626,562 Bai-Muajjal-investment 3,833,616,144 3,668,800,807 Murabaha-investment 617,028,554 639,319,763 Hire purchase-investment 7,923,165,532 7,130,931,292 15,327,613,616 13,963,868,518 252,933,241,876 221,191,785,619 Outside Bangladesh - - 252,933,241,876 221,191,785,619

50 2018 2017 11.2 Performing loans and advances/investments Note Taka Taka

Gross loans and advances/investments 265,204,210,559 231,850,999,929 Non-performing loans and advances/investments (15,558,851,040) (13,878,533,441) 249,645,359,519 217,972,466,488

11.3 Maturity-wise grouping of loans and advances/investments

On demand 35,920,100,000 53,542,866,451 Less than three months 42,398,300,000 30,554,565,718 More than three months but less than one year 93,389,800,000 67,733,374,239 More than one year but less than five years 55,815,500,000 49,479,816,953 More than five years 37,680,510,559 30,540,376,568 265,204,210,559 231,850,999,929

11.4 Concentration of loans and advances/investments

Advances to allied concerns of directors - Advances to chief executive and other senior executives 121,693,360 102,834,000 Advances to customers' group: Advances to large and medium industries 180,151,419,488 144,177,565,166 Advances to small and cottage industries 12,993,557,061 8,823,634,834 Commercial Loans 43,670,568,760 47,819,953,689 Consumer Credit 4,052,000,000 3,449,384,677 Off-shore Banking Loans 11,744,269,214 8,124,620,108 Other loans and advances 12,470,702,676 19,353,007,455 265,204,210,559 231,850,999,929 Details of large loan/investments

As at 31 December 2018 there were 34 (2017:29) clients with whom amount of outstanding loans and advances exceeded 10% of the total capital of the Bank. Total capital of the Bank was Tk 38,755.80 million as at 31 December 2018 (Tk. 33,679.04 million as at 31 December 2017).

The Bank complies with the requirements of the section 26 (b) of the Bank Companies Act 1991 as amended in 2013 in connection with the general limitations of credit line.

Details are shown in Annexure-D.

11.5 Sector-wise allocation of loans and advances 2018 2017 % of % of total total loan Taka loan Taka

Agriculture 0.99% 2,630,200,000 1.48% 3,432,400,000 Industrial (Manufacturing) 47.98% 127,250,714,579 43.06% 99,834,698,971 Industrial (Services) 16.26% 43,128,100,528 15.73% 36,476,966,000 Export Financing 8.68% 23,019,757,073 7.49% 17,371,600,000 Commercial Loans 16.47% 43,670,568,760 20.63% 47,819,953,689 Consumer Credit 1.53% 4,052,000,000 1.49% 3,449,384,677 Others: - a) Off-shore Banking Loans 4.43% 11,744,269,214 3.50% 8,124,620,108 b) Finance to NBFIs 0.60% 1,582,459,039 0.74% 1,718,300,000 c) Loans to Capital Market 0.54% 1,436,350,764 0.52% 1,214,900,000 d) Miscellaneous 2.52% 6,689,790,600 5.35% 12,408,176,484 100.00% 265,204,210,559 100.00% 231,850,999,929

51 2018 2017 Note Taka Taka 11.6 Industry-wise loans and advances (Industrial Loan)

Ready Made Garment industries Loan (RMG) 50,850,227,088 42,784,200,000 Real Estate industries 20,733,831,268 19,027,600,000 Textile industries 15,234,847,108 15,926,800,000 Agro-Based Industries 13,015,700,000 10,716,234,000 Cement & Ceramics industries 6,316,200,000 5,364,057,313 Ship Breaking & Ship Building industries 4,934,201,824 5,117,000,000 Pharmaceuticals industries 1,870,500,000 1,226,120,300 Other Industries 80,189,496,736 52,839,188,388 193,145,004,024 153,001,200,000

Figures of previous year have been rearranged in notes no: 11.4 , 11.5 and 11.6 to conform the current year's presentation

11.7 Category-wise Small Medium Enterprise loans and advances (SME)

Service sector 18,175,639,030 11,190,600,000 Trading sector 25,165,945,179 18,907,900,000 Industrial sector 30,428,060,601 9,456,700,000 73,769,644,810 39,555,200,000

11.8 Geographical location-wise allocations of loans and advances

2018 2017 % of % of total total loan Taka loan Taka Urban: Dhaka region 74.35% 197,182,734,167 70.60% 163,690,795,982 Chittagong region 15.92% 42,216,725,245 18.54% 42,983,259,723 Rajshahi region 1.89% 5,014,000,055 1.96% 4,537,207,496 Sylhet region 1.22% 3,238,713,660 1.41% 3,279,114,783 Khulna region 0.55% 1,470,516,829 0.73% 1,700,376,628 Rangpur region 0.32% 836,234,155 0.35% 818,059,650 Barisal region 0.08% 220,365,353 0.08% 180,987,657 Mymensingh region 0.15% 386,439,156 0.17% 385,638,011 94.48% 250,565,728,620 93.84% 217,575,439,930

Rural: Dhaka region 2.94% 7,792,380,927 3.27% 7,574,813,414 Chittagong region 1.80% 4,769,399,131 1.89% 4,390,520,410 Sylhet region 0.37% 969,841,873 0.39% 907,113,613 Rajshahi region 0.16% 425,224,948 0.24% 561,204,488 Khulna region 0.26% 681,635,060 0.36% 841,908,074 5.52% 14,638,481,939 6.16% 14,275,559,999 100.00% 265,204,210,559 100.00% 231,850,999,929

11.9 Classification of loans and advances

2018 2017 % of % of total total loan Taka loan Taka Unclassified: Standard including staff loan 90.53% 240,083,546,744 88.67% 205,583,791,156 Special Mention Account (SMA) 3.61% 9,561,812,775 5.34% 12,388,675,332 94.13% 249,645,359,519 94.01% 217,972,466,488 Classified: Sub-standard 0.06% 171,210,454 0.54% 1,244,359,189 Doubtful 0.14% 359,641,627 0.32% 753,245,200 Bad/loss 5.67% 15,027,998,959 5.12% 11,880,929,051 5.87% 15,558,851,040 5.99% 13,878,533,441 100.00% 265,204,210,559 100.00% 231,850,999,929

52 2018 2017 Taka Taka 11.10 Particulars of loans and advances

i) Debts considered good in respect of which the bank is fully secured; 227,388,609,049 174,834,922,331

ii) Debts considered good for which the bank holds no other security than the debtors' personal security; 14,096,135,395 32,167,636,499

iii) Debts considered good secured by the personal liabilities of one or more parties in addition to the personal security of the debtors; 23,709,761,059 24,848,441,099

iv) Debts adversely classified; provision not maintained - -

v) Debts due by directors or officers of the bank or any of them either severally or jointly with any other persons; 375,355,363 284,774,135

vi) Debts due by companies or firms in which the directors or officers of the bank are interested as directors, partners or managing agents or, in case of private companies, as members; - -

vii) Maximum total amount of advances, including temporary advances made any time during the year to directors or managers or officers of the bank or any of them either severally or jointly with any other persons; 375,355,363 284,774,135

viii) Maximum total amount of advances, including temporary advances granted during the year to companies or firms in which the directors of the bank are interested as directors, partners or managing agents or, in case of private companies, as members; - -

ix) Due from banking companies; - -

x) Classified loans/investments for which interest has not been charged:

(a) Increase/(decrease) of provision (specific) 3,333,219,044 2,900,396,650 Amount of debts written off 2,044,946,488 1,030,097,472 Amount realised against the debts previously written off 404,812,584 154,213,601

(b) Provision against the debt classified as bad/loss at the date of balance sheet 7,024,062,597 4,982,251,548

(c) Amount of interest charged in suspense account 5,995,927,271 4,402,732,281

xi) Loans written off: - Current year 2,538,512,754 1,286,795,227 Cumulative to-date 12,216,835,740 10,209,184,626

- The amount of written off loans for which lawsuit filed 12,216,835,740 10,209,184,626

53 11.11 Particulars of required provision for loans and advances/investments

2018 2017 Status Outstanding Base for % of Required Required as at 31 Dec 2018 provision required provision provision Taka Taka provision 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) 169,795,101,016 169,795,101,016 1% 1,697,951,010 1,642,933,199

Small and medium enterprise 63,264,434,215 63,264,434,215 0.25% 158,161,088 85,799,421 financing

Loan to BHs/MBs/SDs against 1,436,350,764 1,436,350,764 2% 28,727,015 24,297,408 shares

Housing and loan for 1,519,081,966 1,519,081,966 1%-2% 15,971,406 21,501,397 professional

Consumer finance 2,430,853,320 2,430,853,320 2%-5% 67,997,386 56,535,590

Agriculture finance 1,262,896,159 1,262,896,159 1%-5% 12,628,962 23,945,436

Staff loan 374,829,304 374,829,304 1% 3,748,293 2,839,626

Special Mention Account (SMA) 9,561,812,775 9,333,771,432 0.25%-5% 97,181,570 145,454,148 2,082,366,729 2,003,306,225

Classified-specific provision: Sub-standard 171,210,454 119,381,536 5%-20% 20,020,046 110,536,686 Doubtful 359,641,627 228,991,968 5%-50% 113,035,177 170,892,722 Bad/loss 15,027,998,959 7,024,062,597 100% 7,024,062,597 4,982,251,548 265,204,210,559 256,789,754,276 7,157,117,820 5,263,680,956

Required provision for loans and advances (A) 9,239,484,549 7,266,987,181

Total provision maintained (B) 13,283,300,001 10,069,290,980

Excess provision as at 31 December (C=B-A) 4,043,815,452 2,802,303,797

54 2018 2017 Note Taka Taka 11.12 Suits filed by the Bank (Branch wise details) Aganagar Branch 20,606,565 24,601,270 Agargaon Branch 28,740,963 106,715,269 Agrabad Branch 3,559,051,883 3,533,041,603 Banani Branch 1,011,368,047 1,011,368,047 Bandar Bazar Branch 49,554,021 49,554,021 Bandura Branch 5,660,298 - Baneshwar Branch 10,773,766 - Bangshal Branch 731,009,992 729,354,206 Bashundhara Branch 20,976,301 - Bashurhat Branch 3,108,991 - Biswanath Branch 2,083,587 - Bogra Branch 394,934,357 118,153,762 Brahmanbaria Branch 14,126,982 14,126,982 CDA Avenue Branch 1,303,347,718 1,279,158,963 Chapainawabgonj Branch 7,964,715 7,964,715 Chowdhuryhat Branch 7,777,683 - Chouhatta Branch 35,429,721 29,324,351 Chowmuhoni Branch 28,016,032 28,016,032 Comilla Branch 47,265,325 - Companygonj Branch 12,162,624 - Corporate Branch 97,479,009 56,546,456 Cox's Bazar Branch 372,592,835 81,196,958 Dhanmondi Branch 1,956,729,814 1,840,299,125 Dinajpur Branch 15,224,750 11,277,731 Donia Branch 4,345,474 - Gulshan Branch 588,769,873 119,450,152 Halishahar Branch 2,035,945,543 2,018,990,181 Hathazari Branch 6,086,747 6,086,747 Hemayetpur Branch 3,590,035 - Hetimgonj Branch 4,720,580 - Imamgonj Branch 298,675,545 298,675,545 Jessore Branch 78,422,418 73,008,143 Jubilee Road Branch 42,730,094 41,758,043 Kakrail Branch 116,570,126 41,352,380 Kawranbazar Branch 298,470,311 297,083,230 Khatungonj Branch 1,222,123,411 859,750,230 Khulna Branch 98,484,842 98,484,842 Konabari Branch 1,862,261 1,862,261 Kotowali Branch 102,783,756 88,541,987 Kulaura Branch 6,965,264 6,965,264 Lohagara Branch 5,020,503 5,020,503 Laldighirpar Branch 142,833,996 113,465,769 Madambibirhat Branch 133,373,278 73,945,318 Madhabdi Branch 56,355,195 56,355,195 Mawna Branch 1,968,254 - Mirpur Branch 14,659,835 - Mohakhali Branch 52,035,572 - Mohammadpur Branch 969,386,296 16,555,592 Momin Road Branch 506,269,625 280,105,740 Motijheel Branch 185,545,788 185,545,788 Mouchak Branch 129,189,304 101,910,981 Moulvibazar Branch 176,748,221 176,748,221 Naogaon Branch 44,418,957 45,095,755 Narayangonj Branch 61,570,175 67,174,359 New Elephant Road Branch 1,160,344,705 509,137,748 New Eskaton Branch 265,105,816 171,613,578 Oxygenmore Branch 7,253,948 7,253,948 Pahartoli Branch 826,535,766 826,535,766 Pahantula Branch 6,287,866 - Principal Branch 7,533,160,574 5,860,973,599 Progoti Soroni Branch 358,264,233 235,817,088 Rajshahi Branch 558,348,642 - Rangpur Branch 71,809,059 - Rupnagar Branch 18,177,710 6,068,408 Sat Mashjid Road Branch 24,402,722 - Saver Branch 1,992,139 - Shyamoli Branch 80,148,835 73,453,562 Shahjalal Uposhahar Branch 111,505,535 141,598,745 Sir Iqbal Road Branch 14,315,940 14,315,940 Uttara Branch 265,683,942 265,683,942 28,429,244,691 22,107,084,042

55 2018 2017 Note Taka Taka 11.13 Listing of assets pledged as security/collaterals Nature of the secured assets Shares & Securities 1,628,543,392 2,393,560,755 Merchandise 3,121,194,707 1,979,609,787 Machinery with other fixed asset and financial obligation 6,294,508,398 9,573,750,430 Real estate with financial obligation 207,857,846,545 170,418,844,517 Financial obligation only 8,110,762,157 12,008,281,446 (Insurance policies, savings certificates, bank deposit etc) Miscellaneous- i) Crops/stock of crops hypothecation 974,760,191 628,811,625 ii) Guarantee of individuals/institutions 27,346,728,778 28,608,939,170 ii) Others 9,869,866,390 6,239,202,199 265,204,210,559 231,850,999,929

11.14 Bills purchased and discounted

Conventional Banking In Bangladesh 3,591,727,500 3,358,027,075 Outside Bangladesh 8,322,147,295 7,027,904,759 11,913,874,795 10,385,931,834 Islamic Banking In Bangladesh 357,093,888 255,665,585 Outside Bangladesh - 17,616,891 357,093,888 273,282,476 12,270,968,683 10,659,214,310

11.15 Maturity grouping of bills discounted and purchased Within one month 5,422,081,397 3,279,484,642 More than one month but less than three months 3,318,600,047 3,480,327,845 More than three months but less than six months 3,060,593,182 2,540,297,150 More than six months 469,694,057 1,359,104,673 12,270,968,683 10,659,214,310

11.16 Information about restructured loan as per Bangladesh Bank's BRPD Circular no. 4 dated 29 January 2015

Loans amounting to Tk. 3,103.80 million (outstanding Tk.2,798.60 million as on 31 December 2018) of Keya Group, Gulshan Branch, Dhaka have been restructured by extension of validity of Term Loan for 12-years & conversion of demand loan into 06-years Term Loan including one year moratorium under the purview of BRPD Circular # 04 dated 29 January 2015. The status of the loans is unclassified and reported as SMA as per Bangladesh Bank's guidelines. Accordingly, 2% provision has been made.

12 Consolidated fixed assets including premises, furniture and fixtures

Cost: Southeast Bank Limited 13 11,176,783,549 10,801,983,699 Southeast Bank Capital Services Limited 742,249,436 742,188,636 Southeast Financial Services (UK) Ltd 9,604,648 9,920,029 Southeast Financial Services (Australia) Pty Ltd 2,520,519 2,752,018 Southeast Exchange Company (South Africa) Pty Ltd 8,484,453 6,562,436 11,939,642,605 11,563,406,818 Less: Accumulated depreciation Southeast Bank Limited 13 2,394,419,803 2,093,414,431 Southeast Bank Capital Services Limited 192,997,136 134,020,673 Southeast Financial Services (UK) Ltd 8,193,109 8,161,521 Southeast Financial Services (Australia) Pty Ltd 1,919,000 1,999,468 Southeast Exchange Company (South Africa) Pty Ltd 4,818,396 4,014,599 2,602,347,445 2,241,610,692 Written down value at the end of the year 9,337,295,160 9,321,796,126

There were no capitalized borrowing cost related to the acquisition of fixed assets during the year (2017: nil).

Details of consolidated amounts have not been provided as such amounts are insignificantly different from those of the Banks.

56 2018 2017 Note Taka Taka 13 Fixed assets including premises, furniture and fixtures

Cost: Land 5,797,250,693 5,770,913,319 Buildings 1,989,262,277 1,897,220,492 Furniture and fixtures 1,331,911,302 1,205,150,111 Office appliances 15,282,870 14,620,108 Computer 272,016,322 255,021,073 Electrical appliances 1,387,170,289 1,310,729,568 ATM Booth 252,882,264 207,974,413 Motor vehicles 131,007,532 140,354,615 11,176,783,549 10,801,983,699 Less: Accumulated depreciation Buildings 526,877,198 469,770,862 Furniture and fixtures 640,658,640 571,449,165 Office appliances 10,185,235 9,087,575 Computer 128,482,224 93,708,239 Electrical appliances 857,053,965 743,073,333 ATM Booth 130,074,144 105,072,021 Motor vehicles 101,088,397 101,253,236 2,394,419,803 2,093,414,431 Written down value at the end of the year 8,782,363,746 8,708,569,268

Details are shown in Annexure-E.

14 Consolidated other assets Southeast Bank Limited 15 9,554,422,290 9,241,315,075 Southeast Bank Capital Services Limited 111,001,319 98,363,419 Southeast Financial Services (UK) Ltd 1,842,676 13,328,299 Southeast Financial Services (Australia) Pty Ltd 718,855 2,377,516 Southeast Exchange Company (South Africa) Pty Ltd 1,530,861 272,024 9,669,516,001 9,355,656,333 Less: Investment in subsidiary: In Bangladesh 5,489,930,000 5,452,930,000 Outside Bangladesh 65,100,021 65,100,021 5,555,030,021 5,518,030,021 Intercompany balance 4,244,208 1,823,132 4,110,241,772 3,835,803,180

57 2018 2017 Note Taka Taka

15 Other assets 9,554,422,290 9,241,315,075

15.1 Classification of other assets

i) Investment in shares of subsidiary companies: - In Bangladesh 15.3 5,489,930,000 5,452,930,000 - Outside Bangladesh 15.4 65,100,021 65,100,021 ii) Stationery, stamps, printing materials, etc. 42,239,443 57,534,926 iii) Advance rent and advertisement 343,744,413 368,571,028 iv) Interest accrued on investment but not collected, commission and brokerage receivable on shares and debentures, and other income receivables 1,585,574,838 1,458,019,937 v) Security deposits 4,622,119 3,017,779 vi) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses 1,185,521,300 829,109,496 vii) Suspense account 49,531,540 159,698,380 viii)Others 788,158,615 847,333,508 9,554,422,290 9,241,315,075

15.2 Non-income generating other assets

i) Stationery, stamps, printing materials, etc. 42,239,443 57,534,926 ii) Advance rent and advertisement 343,744,413 368,571,028 iii) Suspense account 49,531,540 159,698,380 iv) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses 1,185,521,300 829,109,496 1,621,036,697 1,414,913,830

15.3 Investment in shares of subsidiary company in Bangladesh

Cost 5,489,930,000 5,489,930,000 Provision for impairment loss - (37,000,000) 5,489,930,000 5,452,930,000 15.4 Investment in shares of subsidiary companies outside Bangladesh

Cost 113,660,069 113,660,069 Provision for impairment loss (48,560,048) (48,560,048) 65,100,021 65,100,021

15.5 Particulars of required provision for other assets

Base for Rate (%) Taka provision 2018 Legal expenses for defaulting borrowings 12,433,639 50% 6,216,819 Legal expenses for defaulting borrowings 63,542,575 100% 63,542,575 Others - 50% - Others 145,000,000 100% 145,000,000 Protested bills 3,581,157 100% 3,581,157 Nostro account balance - 100% - Required provision on other assets 218,340,551 Total provision maintained 233,735,000 Excess provision 15,394,449 Base for Rate (%) Taka provision 2017 Legal expenses for defaulting borrowings 5,811,177 50% 2,905,589 Legal expenses for defaulting borrowings 63,511,299 100% 63,511,299 Others - 50% - Others 75,000,000 100% 75,000,000 Protested bills 3,581,157 100% 3,581,157 Nostro account balance - 100% - Required provision on other assets 144,998,044 Total provision maintained 163,735,000 Excess provision 18,736,956

58 2018 2017 Note Taka Taka 16 Consolidated borrowings from other banks, financial institutions and agents

Subordinated bond: Southeast Bank Limited 17 11,800,000,000 7,400,000,000 11,800,000,000 7,400,000,000 Other borrowings: Southeast Bank Limited 17 11,157,491,516 10,181,648,728 Southeast Bank Capital Services Limited 54,208,827 - 11,211,700,343 10,181,648,728 Less: Inter company balance eliminated - 11,211,700,343 10,181,648,728 23,011,700,343 17,581,648,728

17 Borrowings from other banks, financial institutions and agents

Subordinated Bond 17.2.ii 11,800,000,000 7,400,000,000 Other borrowings 17.2.i +17.3 11,157,491,516 10,181,648,728 22,957,491,516 17,581,648,728

17.1 Borrowing from other banks, financial institutions and agents

In Bangladesh 17.2 12,260,241,516 9,766,498,728 Outside Bangladesh 17.3 10,697,250,000 7,815,150,000 22,957,491,516 17,581,648,728

17.2 In Bangladesh

i. Secured: Refinance against agro-based credit from Bangladesh Bank 5,355,119 7,159,548 Refinance for housing sector from Bangladesh Bank 62,084,981 29,223,507 Refinance against SME loan from Bangladesh Bank 97,098,757 24,125,625 Refinance against Solar energy, Bio Gas & ETP - - Scheme from Bangladesh Bank 5,555,552 1,766,840 Refinance against RPGCL 9,382,652 39,583,208 Borrowing from IDCOL 280,764,456 264,640,000 Bangladesh Bank Islamic Bond - 2,000,000,000 460,241,516 2,366,498,728

59 2018 2017 Note Taka Taka ii. Unsecured: Subordinated Bond Rupali Bank Limited 1,600,000,000 1,050,000,000 Sonali Bank Limited 2,200,000,000 1,600,000,000 Agrani Bank Limited 2,250,000,000 850,000,000 Pubali Bank Limited 1,330,000,000 1,240,000,000 Mercantile Bank Limited 150,000,000 200,000,000 Saudi-Bangladesh Industrial and Agricultural Investment Company Ltd. 120,000,000 160,000,000 Sadharan Bima Corporation 200,000,000 100,000,000 Uttara Bank Limited 200,000,000 200,000,000 Dhaka Bank Limited 750,000,000 750,000,000 National Life Insurance Limited 1,250,000,000 750,000,000 Janata Bank Limited 1,500,000,000 500,000,000 Delta Life Insurance Co. Limited 250,000,000 - 11,800,000,000 7,400,000,000 Total (iii=i+ii) 12,260,241,516 9,766,498,728

17.3 Outside Bangladesh

Secured Borrowing from MASHREQ BANK PSC-USD - 827,000,000 Borrowing from Commercial Bank of Qatar (CBQ) 1,678,000,000 661,600,000 Borrowing from RAK BANK, UAE 1,384,350,000 1,240,500,000 Borrowing from Bank Muscat, Oman - 661,600,000 Borrowing FM SCB SINGAPORE 2,097,500,000 - Borrowing FM EIB, UAE 1,342,400,000 - Borrowing from FGB, UAE 1,258,500,000 827,000,000 Borrowing FM NMB Bank, Nepal 419,500,000 Borrowing from HDFC BANK, Hong Kong - 413,500,000 8,180,250,000 4,631,200,000 Unsecured - Borrowing from International Finance Corporation (IFC) - 1,240,500,000 Borrowing from Global Climate Partnership Fund S.A. 1,678,000,000 1,654,000,000 Borrowing from ADB 839,000,000 289,450,000 2,517,000,000 3,183,950,000

10,697,250,000 7,815,150,000

17.4 Maturity grouping of borrowings

Repayable on demand - - Repayable within one month 1,266,890,000 1,327,000,000 Over one month but within six months 7,613,624,456 5,858,290,000 Over six months but within one year 2,019,500,000 1,240,500,000 Over one year 12,057,477,060 9,155,858,728 22,957,491,516 17,581,648,728

18 Consolidated deposits and other accounts

Current/Al-wadeeah current accounts and other accounts Southeast Bank Limited 40,457,857,551 35,516,538,988 Southeast Bank Capital Services Limited 37,532,362 27,524,421 40,495,389,913 35,544,063,409 Less: Inter company balance eliminated 23,324,151 32,538,042 40,472,065,762 35,511,525,367 Bills payable Southeast Bank Limited 4,494,551,361 4,933,769,345 Southeast Bank Capital Services Limited - - 4,494,551,361 4,933,769,345 Savings bank/Mudaraba savings bank deposits Southeast Bank Limited 27,259,920,347 23,896,582,534 Southeast Bank Capital Services Limited - - 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits Southeast Bank Limited 226,108,257,117 205,486,197,802 Southeast Bank Capital Services Limited - - 226,108,257,117 205,486,197,802 298,334,794,587 269,828,075,048

60 2018 2017 Note Taka Taka 19 Deposits and other accounts Current/Al-wadeeah current accounts and other accounts Current/Al-wadeeah current deposits 11,250,432,310 11,660,602,738 Foreign currency deposits 1,341,263,887 1,172,088,721 Sundry deposits 19.1 27,866,161,354 22,683,847,529 40,457,857,551 35,516,538,988 Bills payable Payment order issued 4,490,503,198 4,929,177,495 Demand draft 4,048,163 4,591,850 4,494,551,361 4,933,769,345

Savings bank/Mudaraba savings bank deposits 27,259,920,347 23,896,582,534 Fixed deposits/Mudaraba fixed deposits Fixed deposits/Mudaraba fixed deposits 175,396,223,237 154,258,587,986 Special notice/Mudaraba special notice deposits 29,844,075,615 32,795,221,961 Scheme deposits 17,365,549,746 16,206,340,313 Interest payable on FDR/Scheme 3,502,408,519 2,226,047,542 226,108,257,117 205,486,197,802 298,320,586,377 269,833,088,669 19.1 Sundry deposits Margin under letter of credit 2,799,904,442 2,763,811,423 Margin against IBP 36,031,780 2,204,555 Margin against FBP 14,988,274 17,555,879 Margin under letter of guarantee 1,353,760,605 1,153,632,058 Margin against time loan to issue pay order 100,968,639 60,032,178 Deposit held against FDBP/IDBP, export bills etc. 17,968,410 61,711,823 FC held against EDF L/C and LTFF 17,030,469,804 12,794,398,617 Accounts payable 5,331,896 2,661,165 Telegraphic transfer 780,290 1,155,260 Margin on acceptance 6,261,054,275 5,606,379,466 Remittance awaiting disposal 6,787,264 8,665,791 Others 238,115,674 211,639,314 27,866,161,354 22,683,847,529

19.2 Deposits from banks and others

Inter-bank deposits 19.3 10,814,479,860 12,808,254,410 Other deposits 287,506,106,516 257,024,834,259 298,320,586,377 269,833,088,669

19.3 Inter-bank deposits AB Bank Limited 54,059 2,542,053 Agrani Bank Limited 3,500,000,000 2,000,000,000 Al-Arafa Islami Bank Limited 514,380,491 509,579,016 BASIC Bank Limited - 500,000,000 Bangladesh Krishi Bank 250,000,000 500,000,000 Citibank N.A. 114,722,610 280,631,821 Commercial Bank of Ceylon Plc. 650,000,000 - Dhaka Bank Limited - 211,789 EXIM Bank Limited 5,078,241 4,940,476 First Security Islami Bank Limited 160,383 3,147,809 Habib Bank Limited - 200,000,000 IFIC Bank Limited 264,244 259,920 Islami Bank Bangladesh Limited 8,418,107 2,258,232,880 Meghna Bank Limited 4,970 6,765,214 Mercantile Bank Limited 221,567 218,427 Mutual Trust Bank Limited 1,196,746 510,312 NRB Commercial Bank Limited 18,955,006 390,689 Prime Bank Limited 500,000,000 500,000,000 Pubali Bank Limited 500,000,000 - Rajshahi Krishi Unnayan Bank (RAKUB) 140,000,000 - Rupali Bank Limited - 1,000,000,000 State Bank of India 400,000,000 - Sonali Bank Limited 4,000,000,000 2,250,000,000 Shahjalal Islami Bank Limited 451,703 442,850 Standard Chartered Bank 200,000,000 - Social Islami Bank Limited(SIBL) 329,285 323,177 The City Bank Limited 10,239,594 10,022,802 The Trust Bank Limited 2,855 300,003,926 United Commercial Bank Limited - 1,980,000,000 Uttara Bank Limited - 500,031,250 10,814,479,860 12,808,254,410

61 2018 2017 Note Taka Taka 19.4 Sector-wise deposits

Government 8,556,499,639 6,669,198,828 Deposit money banks 10,814,479,860 12,808,254,410 Other public 22,396,797,707 33,099,336,060 Foreign currency 1,359,393,796 1,233,469,083 Private 255,193,415,374 216,022,830,288 298,320,586,377 269,833,088,669

19.5 Unclaimed Deposits and valuables

Payment Order 221,282 952,972 221,282 952,972

19.6 Analysis of residual maturity grouping of deposits

Inter-bank deposits: Payable on demand 115,926,268 284,854,504 Within one month 58,553,592 4,593,399,906 More than one month but less than six months 10,500,000,000 7,930,000,000 More than six months but less than one year - More than one year but less than five years - - More than five years but less than ten years - - 10,674,479,860 12,808,254,410 Other Deposits: Payable on demand 5,423,373,732 97,457,839,958 Within one month 39,928,646,408 10,193,683,482 More than one month but less than six months 66,301,561,377 100,979,387,420 More than six months but less than one year 68,761,725,000 20,760,331,750 More than one year but less than five years 93,513,400,000 21,625,933,190 More than five years but less than ten years 13,717,400,000 6,007,658,459 287,646,106,517 257,024,834,259 298,320,586,377 269,833,088,669

20 Consolidated other liabilities

Southeast Bank Limited 21 31,765,504,056 25,732,763,716 Southeast Bank Capital Services Limited 284,773,226 275,624,978 Southeast Financial Services (UK) Ltd 3,348,674 10,221,012 Southeast Financial Services (Australia) Pty Ltd 787,383 1,566,828 Southeast Exchange Company (South Africa) Pty Ltd 52,286,589 26,279,448 32,106,699,928 26,046,455,982 Less: Inter company balance eliminated 4,244,208 1,823,132 32,102,455,720 26,044,632,850

21 Other liabilities

Provision for loans and advances/investments 21.1 13,283,300,001 10,069,290,980 Interest suspense account 21.2 5,995,927,271 4,402,732,281 Provision for taxation 21.3 5,030,480,782 5,163,120,617 Obligation under finance lease 21.4 1,291,340 3,768,470 Accrued expenses 14,467,280 8,600,057 Interest payable on borrowings 393,432,740 110,226,431 Accounts payable-Bangladesh Bank 276,010,148 129,843,978 Accounts payable-others 1,560,523,945 1,291,009,221 Provision for diminution in the market value of share 21.7 799,726,500 419,055,000 Other provisions 21.5.1 1,456,946,800 1,610,746,800 Unearned income 380,676,896 360,014,159 Branch adjustment 21.6 1,576,218,799 1,160,994,811 Withholding tax 995,501,554 1,002,360,911 Provision for audit fees 1,000,000 1,000,000 31,765,504,056 25,732,763,716

62 2018 2017 Note Taka Taka 21.1 Provision for loans and advances/investments

A. General Balance as at 1 January 3,440,610,024 2,430,000,000 Add: Provision made during the year On standard loans and advances/investments etc. (70,937,446) 982,841,369 On Special Mention Account (SMA) (48,272,578) 27,768,655 (119,210,024) 1,010,610,024 Less: Provision no longer required - - Balance as at 31 December 3,321,400,000 3,440,610,024 B. Specific Balance as at 1 January 6,628,680,956 3,728,284,306 Less: Fully provided debt write off during the year (2,044,946,488) (1,030,097,472) Add: Recoveries of amounts previously written off 404,812,584 154,213,601 Add: Specific provision for the year 4,974,285,948 3,781,324,521 Less: Recoveries and provisions no longer required - - Less: Interest waiver during the year (933,000) (5,044,000) Net charge to Profit & Loss A/C 3,333,219,044 2,900,396,650 Balance as at 31 December 9,961,900,000 6,628,680,956 C. Total provision on loans and advances/investments (A+B) 13,283,300,001 10,069,290,980

21.2 Interest suspense account

Balance as at 1 January 4,402,732,281 3,549,523,832 Add: Amount transferred to "interest suspense" account during the year 4,018,996,469 2,210,542,837 8,421,728,750 5,760,066,669 Less: Amount of interest suspense recovered during the year 1,896,024,473 1,023,651,441 Amount written off during the year 493,566,266 256,697,755 Interest waiver during the year 36,210,740 76,985,192 2,425,801,479 1,357,334,388 Balance as at 31 December 5,995,927,271 4,402,732,281

21.3 Provision for taxation

Provision for current tax 21.3.1 3,885,486,907 3,806,832,079 Deferred tax liabilities 21.3.2 1,144,993,875 1,356,288,538 5,030,480,782 5,163,120,617

21.3.1 Provision for current tax

Provision Balance as at 1 January 16,561,854,123 13,731,854,123 Settlement/adjustments for previous years (4,682,093,254) - Provision made for the current year 21.3.1.1 2,200,000,000 2,830,000,000 (A) Balance as at 31 December 14,079,760,869 16,561,854,123

Less: Advance tax Balance as at 1 January 12,755,022,044 10,124,709,968 Paid during the year 2,172,386,062 2,630,312,076 Settlement/adjustments for previous years (4,733,134,144) - (B) Balance as at 31 December 10,194,273,962 12,755,022,044

(A-B) Net balance as at 31 December 3,885,486,907 3,806,832,079

21.3.1.1 Provision made for the current year

Provision made during the year 2,340,000,000 e 2,830,000,000 Less: Excess provision adjustment for prior years (140,000,000) - 2,200,000,000 2,830,000,000

Provision for current tax of Tk. 2,200,000,000 has been made @ 37.50% as prescribed by Finance Act 2018 of the accounting profit made by the Bank after considering some of the add backs to income and disallowances of expenditure as per the Income Tax Ordinance and Rules 1984 and in compliance of para 46 of IAS 12 "Income Tax ".

63 2018 2017 Note Taka Taka 21.3.2 Deferred tax liabilities

Deferred tax liabilities are attributable to the following:

Revaluation reserve of land 615,761,213 615,761,213 Revaluation reserve of buildings 125,911,051 125,911,051 Fixed assets- except land and revaluation reserve of buildings 21.3.3.1 390,536,360 425,536,360 Revaluation reserve of HTM securities 21.3.3.2 7,662,748 5,611,947 Revaluation reserve of HFT securities 21.3.3.3 5,122,503 183,467,967 1,144,993,875 1,356,288,538

Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled, based on tax rates and laws enacted, by the balance sheet date. Following are the descriptions for each individual item of the deferred tax that are recognised by the Bank as a temporary difference with expected time of realisation.

Revaluation reserve of land As the land is not depreciable and as per local tax rules revaluation gain is not taxable. However, the tax office will charge taxes on capital gain which is the same amount of revaluation gain whether recovered through use or sale. Hence a taxable temporary difference arises against which the Bank recognises deferred tax liabilities. However, the outstanding amount of deferred tax will be automatically released with the disposal of the assets.

Revaluation reserve of buildings

Buildings are depreciable assets. Its revalued carrying amount will be recovered through use and this will generate taxable income which exceeds the depreciation that will be allowable for tax purposes in future periods. As a result taxable temporary difference will arise.

Fixed assets- except land and revaluation reserve of buildings

Accounting depreciation is not tax allowable expenses. Rather, the tax office will allow tax depreciation as per 3rd Schedule of the Income Tax Ordinance 1984. Hence a temporary difference arises due to the different depreciation rates and methodology against which the Bank recognizes deferred tax. This is an ongoing item as there is a difference between the tax depreciation rate and the accounting depreciation rate. However, the outstanding amount of deferred tax will be automatically released with the expiry of the economic useful life of the assets.

Revaluation reserves of HTM and HFT 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.

2018 2017 Note Taka Taka 21.3.3 Movement of deferred tax liabilities

Balance as at 1 January 1,356,288,538 1,391,514,643 Provision made for deferred tax liabilities Charged to profit and loss account (35,000,000) 150,000,000 Charged to revaluation reserve 2,050,800 130,212,148 (32,949,200) 280,212,148 1,323,339,339 1,671,726,791 Adjustment made during the year for revaluation reserve (178,345,464) (315,438,253) Balance as at 31 December 1,144,993,875 1,356,288,538

64 21.3.3.1 Deferred tax on fixed assets- except land and revaluation reserve of buildings

2018 2017 Note Taka Taka

Balance as at 1 January 425,536,360 275,536,360 Charge to profit and loss account (35,000,000) 150,000,000 Balance as at 31 December 390,536,360 425,536,360

21.3.3.2 Deferred tax on revaluation reserve of HTM securities

Balance as at 1 January 5,611,947 4,060,523 Charge to revaluation reserves 2,050,800 1,551,424 Adjustment during the year - - Balance as at 31 December 7,662,748 5,611,947

21.3.3.3 Deferred tax on revaluation reserve of HFT securities

Balance as at 1 January 183,467,967 370,245,496 Charge to revaluation reserves - 128,660,724 Adjustment during the year (178,345,464) (315,438,253) Balance as at 31 December 5,122,503 183,467,967

21.4 Obligation under finance lease

Balance as at 1 January 3,768,470 10,265,943 Addition during the year - 1,707,240 3,768,470 11,973,183 Adjustment during the year (2,477,131) (8,204,713) Balance as at 31 December 1,291,340 3,768,470

21.4.1 Aging analysis of liabilities under finance lease Financial Minimum charge for lease future Principal payment periods outstanding Taka Taka Taka 2018 Payable within 1 year 599,772 176,462 423,310 Payable more than 1 year but less than 2 years 599,772 103,538 496,234 Payable more than 2 years but less than 5 years 399,848 28,053 371,795 1,599,392 308,053 1,291,340

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

65 2018 2017 Note Taka Taka 21.5 Other provisions charged to profit and loss

Provision for other assets 21.5.1 (A) 70,000,000 - Provision for good borrowers 21.5.1 (B) - 20,000,000 Provision for off-balance sheet exposures 21.5.1 (C) (223,800,000) 285,500,000 (153,800,000) 305,500,000

21.5.1 Other Provisions

A) Provision for other assets Balance as at 1 January 163,735,000 163,735,000 Addition during the year 70,000,000 - 233,735,000 163,735,000 Adjustment during the year - - Balance as at 31 December 233,735,000 163,735,000

B) Provision for good borrowers Balance as at 1 January 22,011,800 23,000,000 Addition during the year - 20,000,000 22,011,800 43,000,000 Adjustment during the year - (20,988,200) Balance as at 31 December 22,011,800 22,011,800

C) Provision for off-balance sheet exposures

Balance as at 1 January 1,425,000,000 1,139,500,000 Provision made during the year - 285,500,000 1,425,000,000 1,425,000,000 Adjustments made during the year (223,800,000) - Balance as at 31 December 1,201,200,000 1,425,000,000

D) Total other provisions (A+B+C) 1,456,946,800 1,610,746,800

21.6 Branch adjustment (credit)

General accounts debit 1,451,973,000 2,837,208,189 General accounts credit 3,028,191,799 3,998,203,000 1,576,218,799 1,160,994,811

Branch adjustment account represents outstanding interbranch and head office transactions (net) originated but yet to be responded at balance sheet date. However, the un-respondent entries of 31 Dec 2018 are given below:

No. of unrespondent entries Unrespondent entries (Taka) Debit Credit Debit Credit

Upto 3 months 540 1,275 1,451,973,000 3,028,191,799 Over 3 months but within 6 months - - - - Over 6 months but within 1 year - - - - Over 1 year but within 5 years - - - - 540 1,275 1,451,973,000 3,028,191,799

21.7 Consolidated provision for diminution in value of investments

Southeast Bank Limited 413,060,983 (256,602,166) Southeast Bank Capital Services Limited - 39,388,168 413,060,983 (217,213,998)

21.7.1 Provision for diminution in value of investments

Balance as at 1 January 419,055,000 905,705,624 Adjustments made for loss of sales of shares during the year (32,389,483) (230,048,458) Provision made during the year (Charge to the profit and loss) 413,060,983 (256,602,166) Balance as at 31 December 799,726,500 419,055,000

66 2018 2017 Note 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

676,327,732 ordinary shares of Tk 10 each issued as bonus shares 6,763,277,320 5,387,852,060 1,054,492,702 10,544,927,020 9,169,501,760

22.3 Reconciliation of number of shares

Balance as at 1 January 916,950,176 916,950,176 Issue of bonus shares 137,542,526 - Stock split (1:10) - - Balance as at 31 December 1,054,492,702 916,950,176

22.3 Dividends

The following dividends were declared and paid by the Bank for the year ended 31 December.

1.5 Taka (Stock Dividend) per ordinary share for 2017 and 2.00 Taka per (Cash dividend) ordinary share for 2016 1,375,425,259 1,833,900,352

After the end of the reporting period, the following dividends were proposed by the directors. The dividends have not been provided for and no tax consequences.

1.00 Taka (Stock dividend) per ordinary share for 2018 and 1.5 Taka (Stock dividend) per ordinary share for 2017 1,054,492,702 1,375,425,259

22.4 Share capital at a glance from inception

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 2017 15% Stock Dividend 137,542,526 1,375,425,259 10,544,927,020

67 22.5 Classification of shareholders by holding Number of holders % of total holding 2018 2017 2018 2017 Less than 500 shares 9,048 10,398 0.15 0.21 501 to 5,000 shares 17,794 19,181 3.14 3.83 5,001 to 10,000 shares 2,984 2,982 1.99 2.38 10,001 to 20,000 shares 1,903 1,641 2.52 2.55 20,001 to 30,000 shares 646 540 1.50 1.45 30,001 to 40,000 shares 328 241 1.07 0.92 40,001 to 50,000 shares 173 197 0.75 1.00 50,001 to 1,00,000 shares 421 367 2.77 2.97 1,00,001 to 10,00,000 shares 419 370 11.57 12.33 Over 10,00,000 shares 135 121 74.54 72.36 33,851 36,038 100.00 100.00 22.6 Initial public offer (IPO)

Out of the total issued, subscribed and fully paid up capital of the bank 1,500,000 (after stock split: 15,000,000) ordinary shares of Tk 100 (after stock split: Tk. 10) each amounting to Tk 150,000,000 was raised through public offering on shares in 1999.

22.7 Name of the Directors and their shareholdings in the year 2018

Sl. As at 1 January As at 31 Name of the directors Status no. 2018 December 2018 1 Mr. Alamgir Kabir, FCA Chairman 19,944,672 23,688,872 2 Mrs. Duluma Ahmed Vice Chairperson 19,082,742 21,945,153 3 Mr. M. A. Kashem Director 20,307,060 23,353,119 4 Mr. Azim Uddin Ahmed Director 25,490,735 29,314,345 5 Mrs. Jusna Ara Kashem Director 18,339,525 21,090,453 6 Mr. Md. Akikur Rahman Director 18,443,731 21,410,290 7 Mrs. Rehana Rahman Director 18,844,145 21,670,766 8 Mrs. Sirat Monira Director 120,547 138,629 9 Mr. Syed Sajedul Karim Independent Director - - 10 Dr. Quazi Mesbahuddin Ahmed Independent Director - - 11 Mr. M. Kamal Hossain Managing Director - - 140,573,157 162,611,627

22.8 Capital to Risk weighted Asset Ratio (CRAR) of the Bank

The calculation of CRAR has been done as per BRPD Circular no. 07 dated 31 March 2014 and the Basel-III guideline December 2014 vide BRPD Circular no. 18 dated 21 December 2014.

2018 2017 Note Taka Taka Common equity Tier-1 capital (Going Concern Capital) Paid up capital 10,544,927,020 9,169,501,760 Share premium - - Statutory reserve 23 10,094,153,565 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Retained earnings 28 2,803,806,592 2,640,353,198 23,690,537,177 21,227,504,958 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 124,419,075 148,251,669 A) Total common equity Tier 1 capital 23,566,118,102 21,079,253,289

68 2018 2017 Note Taka Taka Tier 2 Capital (Gone -Concern Capital) Subordinated bond 10,200,000,000 6,800,000,000 General provision maintained against unclassified loan/investments 3,321,400,000 3,440,610,024 General provision on off-balance sheet items 1,201,200,000 1,425,000,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984 17,058,032,734 14,001,042,758 Less: Regulatory adjustments 1,868,346,187 1,401,259,640 Total Tier 2 capital 15,189,686,547 12,599,783,118 B) Total capital 38,755,804,649 33,679,036,407

C) Risk Weighted Assets (RWA)

Credit Risk On-balance sheet 231,060,110,522 226,671,124,618 Off-balance sheet 47,825,004,244 50,312,116,068 278,885,114,766 276,983,240,686 Market risk 9,825,644,530 12,834,521,890 Operational risk 22,128,575,152 20,020,349,602 Total RWA 310,839,334,448 309,838,112,178

D) Required common equity Tier 1 Capital 13,987,770,050 13,942,715,048

Required Tier 1 Capital 6% (2017: 6%) of RWA) 18,650,360,067 18,590,286,731

E) Required total capital 11.875% (2017: 11.25%) of RWA 36,912,170,966 34,856,787,620

F) Surplus common equity Tier 1 Capital(A-D) 9,578,348,052 7,136,538,241

G) Surplus total capital (B-E) 1,843,633,684 (1,177,751,213)

Capital to risk-weighted assets ratio:

On common equity Tier 1 capital against standard of minimum 4.5% 7.58% 6.80% On Tier 1 capital - against standard of minimum 6% 7.58% 6.80% On total capital - against standard of minimum 11.875% (2017:11.25%) 12.47% 10.87%

22.9 Leverage Ratio of the Bank

A) Tier 1 capital considering all regulatory adjustments 23,566,118,102 21,079,253,289

B) On-balance sheet exposure 372,342,421,027 333,842,502,292 C) Off-balance sheet exposure 85,766,147,287 74,492,727,609 D) Deduction from on and off balance sheet exposure /Regulatory adjustment 124,419,075 148,251,670 E) Total exposure (B+C-D) 457,984,149,240 408,186,978,231

Leverage ratio (A/E) 5.15% 5.16% Liquidity coverage ratio 123.37% 102.81% Net stable funding ratio 115.18% 115.55%

69 2018 2017 Note Taka Taka 22.10 Capital to Risk weighted Asset Ratio (CRAR) of the Group

Common Equity Tier 1 Capital Paid up capital 10,544,927,020 9,169,501,760 Share premium - - Statutory reserve 23 10,094,153,565 9,170,000,000 Other reserve 25 247,650,000 247,650,000 Non- controlling interest 29 10,070,512 10,050,803 Retained earnings 27 2,898,043,836 2,716,398,712 23,794,844,933 21,313,601,275 Add: Additional Tier 1 capital - - Less: Regulatory adjustments 124,419,075 148,251,669 A) Total common equity Tier 1 capital 23,670,425,858 21,165,349,606

Tier 2 capital (Gone- Concern Capital) Subordinated bond 10,200,000,000 6,800,000,000 General provision maintained against unclassified loan/investments 3,321,400,000 3,440,610,024 General provision on off-balance sheet items 1,201,200,000 1,425,000,000 Asset revaluation reserve 2,101,404,750 2,101,404,750 Revaluation reserve of Government securities 234,027,984 234,027,984 17,058,032,734 14,001,042,758 Less: Regulatory adjustments 1,868,346,187 1,401,259,640 Total Tier 2 capital 15,189,686,547 12,599,783,118

B) Total capital 38,860,112,405 33,765,132,724

C) Risk weighted assets (RWA)

Credit risk On-balance sheet 227,901,721,877 223,592,214,199 Off-balance sheet 47,825,004,244 50,312,116,068 275,726,726,121 273,904,330,267 Market risk 15,778,852,594 17,439,506,326 Operational risk 22,455,343,921 20,213,502,052 Total RWA 313,960,922,637 311,557,338,645

D) Required common equity Tier 1 capital 14,128,241,519 14,020,080,239

Required Tier 1 capital 6% (2017: 6%) of RWA 18,837,655,358 18,693,440,319

E) Required total capital 11.875% (2017: 11.25%) of RWA 37,282,859,563 35,050,200,598

F) Surplus common equity Tier 1 capital (A-D) 9,542,184,339 7,145,269,367

G) Surplus total capital (B-E) 1,577,252,842 (1,285,067,874)

Capital to risk- weighted asset ratio: On common equity Tier 1 capital - against standard of minimum 4.5% 7.54% 6.79% On Tier 1 capital - against standard of minimum 6% 7.54% 6.79% On total capital - against standard of minimum 11.875% (2017:11.25%) 12.38% 10.84%

70 2018 2017 Note Taka Taka 22.11 Leverage ratio of the Group

A) Tier 1 capital considering all regulatory adjustments 23,670,425,858 21,165,349,606

B) On-balance sheet exposure 372,823,178,880 334,210,339,400 C) Off-balance sheet exposure 85,766,147,287 74,492,727,609 D) Deduction from on and off balance sheet exposure /Regulatory adjustment 124,419,075 148,251,669 E) Total exposure (B+C-D) 458,464,907,092 408,554,815,340

Leverage ratio (A/E) 5.16% 5.18% Liquidity coverage ratio 123.37% 102.81% Net stable funding ratio 115.18% 115.55%

23 Statutory reserve

Balance as at 1 January 9,170,000,000 9,170,000,000 Addition during the year 924,153,565 - Balance as at 31 December 10,094,153,565 9,170,000,000

24 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 13,650,014 9,771,453 Addition during the year 5,468,801 3,878,561 19,118,815 13,650,014 Adjustment during the year - - 19,118,815 13,650,014 Deferred tax liabilities (7,662,748) (5,611,947) Balance as at 31 December 11,456,067 8,038,067

Revaluation reserve on HFT securities: Balance as at 1 January 506,859,455 925,613,743 Addition during the year 1,143,283,843 476,312,385 1,650,143,297 1,401,926,128 Adjustment during the year (1,498,484,459) (895,066,673) 151,658,839 506,859,455 Deferred tax liabilities (5,122,503) (183,467,967) Balance as at 31 December 146,536,336 323,391,488 4,360,801,902 4,534,239,054

25 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

71 2018 2017 Note Taka Taka 26 Foreign currency translation reserve

Balance as at 1 January 14,142,765 24,449,246 (Adjustments)/addition during the year 14,775,840 (10,306,481) Balance as at 31 December 28,918,605 14,142,765

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

27 Consolidated retained earnings

Southeast Bank Limited 28 2,803,806,592 2,640,353,198 Southeast Bank Capital Services Limited 276,328 (10,468,432) Southeast Financial Services (UK) Ltd (16,615,563) (18,001,423) Southeast Financial Services (Australia) Pty Ltd (17,893,249) (18,576,974) Southeast Exchange Company (South Africa) Pty Ltd 79,909,680 37,532,295 Less: Elimination for impairment of investment in subsidiary 48,560,048 85,560,048 2,898,043,836 2,716,398,712

28 Retained earnings

Balance as at 1 January 2,640,353,198 3,171,824,195 Currency translation differences 7,264,394 17,226,310 Prior year adjustment - 166,906,342 2,647,617,592 3,355,956,847 Retained surplus for the year 1,531,614,259 1,118,296,703 4,179,231,851 4,474,253,550 Less: Issue of bonus share 1,375,425,259 - Cash dividend paid - 1,833,900,352 1,375,425,259 1,833,900,352 Retained earnings carried forward 2,803,806,592 2,640,353,198

29 Non-controlling interest

Paid up capital 5,500,000,000 5,500,000,000 Retained earnings 276,835 (10,487,634) Total net assets 5,500,276,835 5,489,512,366

Non-controlling interest 0.183091% (2017:0.183091%) of net assets 10,070,512 10,050,803

Non-controlling interest arises only for Southeast Bank Capital Services Limited since all other subsidiaries are wholly owned by Southeast Bank Limited.

30 Contingent liabilities

30.1 Acceptances and endorsements

Acceptance under Letters of Credit (LC) - other than back to back 44,423,696,274 39,997,385,993 Acceptance under Letters of Credit -back to back 19,430,066,710 17,141,146,992 63,853,762,984 57,138,532,985

72 2018 2017 Note Taka Taka 30.2 Letters of guarantee Local 18,086,603,871 14,928,991,500 Foreign 1,111,389,170 995,971,664 19,197,993,041 15,924,963,164

30.2.1 Balance for which the Bank is contingently liable in respect of guarantee issued favouring: Directors or officers 4,783,000 4,783,000 Government - - Banks and other financial institutions 46,205,078 42,916,540 Others 19,147,004,963 15,877,263,624 19,197,993,041 15,924,963,164

30.3 Irrevocable Letters of Credit (L/C)

Back to back L/C 16,060,837,527 16,719,794,155 Others 20,313,721,780 27,475,343,281 36,374,559,306 44,195,137,436

30.4 Bills for collection Local 13,508,211,848 11,767,568,379 Foreign 11,156,714,966 10,899,018,477 24,664,926,813 22,666,586,856

30.5 Other contingent liabilities

Value of Bangladesh Sanchaypatra & others 1,413,684,000 1,744,473,000

31 Income statement Income: Interest, discount and similar income 28,874,960,097 22,838,457,502 Dividend income 130,239,122 194,053,603 Fees, commission and brokerage 2,210,370,584 2,016,554,343 Gains less losses arising from dealing securities (79,827,714) (282,508,062) Gains less losses arising from investment securities 88,341,080 120,732,297 Gains less losses arising from dealing in foreign currencies 1,328,341,566 1,344,124,999 Other operating income 947,056,334 821,156,590 33,499,481,069 27,052,571,272 Expenses: Interest, fees and commission 18,775,867,174 13,378,247,565 Administrative expenses 3,448,714,783 3,117,829,896 Other operating expenses 1,209,933,472 1,299,784,648 Depreciation on banking assets 329,860,908 317,580,081 23,764,376,338 18,113,442,190 Income over expenses 9,735,104,731 8,939,129,082

32 Consolidated interest income/profit on investments

Southeast Bank Limited 33 23,951,689,857 17,384,904,816 Southeast Bank Capital Services Limited 17,246,869 22,287,081 Southeast Financial Services (UK) Ltd - - Southeast Financial Services (Australia) Pty Ltd - 38 Southeast Exchange Company (South Africa) Pty Ltd 9,067,230 4,536,934 23,978,003,956 17,411,728,869 Less: Inter company balance eliminated 166,849 11,178,794 23,977,837,107 17,400,550,075

73 2018 2017 Note Taka Taka 33 Interest income/profit on investments

Interest on loans and advances (Conventional Banking): Interest on loans and advances 21,875,787,034 16,097,860,717 Interest on placement with other banks and financial institutions 473,435,429 164,342,052 Interest on foreign currency balances 121,469,232 57,142,303 22,470,691,694 16,319,345,071

Profit on investment (Islamic Banking): Profit on investments 1,480,929,380 1,049,413,515 Profit on placement with other banks 68,783 16,146,229 1,480,998,163 1,065,559,745 23,951,689,857 17,384,904,816

34 Consolidated interest paid/profit shared on deposits and borrowings etc.

Southeast Bank Limited 35 18,775,867,174 13,378,247,565 Southeast Bank Capital Services Limited 2,196,982 5,791,226 18,778,064,156 13,384,038,791 Less: Inter company balance eliminated 166,849 11,178,794 18,777,897,307 13,372,859,997

35 Interest paid/profit shared on deposits and borrowings etc.

Interest paid on deposits (Conventional Banking): Interest on deposits 15,988,578,364 11,370,686,362 Interest on borrowings 1,487,780,085 1,049,743,814 Interest on repurchase agreement (repo) 2,415,850 14,011,606 Interest on refinance 4,940,677 4,618,683 Interest on foreign bank accounts 2,704,430 683,543 17,486,419,405 12,439,744,008 Profit shared on deposits (Islamic Banking): Profit paid on deposits 1,206,982,422 856,271,639 Profit on refinance borrowings 82,465,347 82,231,918 1,289,447,769 938,503,557 18,775,867,174 13,378,247,565 36 Consolidated investment income

Southeast Bank Limited 37 5,062,022,727 5,485,830,524 Southeast Bank Capital Services Limited 67,730,841 101,070,928 5,129,753,568 5,586,901,452 Less: Inter company balance eliminated - 16,253,055 5,129,753,568 5,570,648,397

37 Investment income

Interest income from Government securities 37.1 4,340,846,226 5,114,905,070 Capital gain on Government securities 37.2 1,094,874,269 694,421,153 Revaluation gain (loss) on Government securities 37.3 (1,174,701,983) (976,929,215) Dividend on investment in shares 130,239,122 194,053,603 Gain on sale of investment in shares 88,341,080 120,732,297 Interest income from investment in bonds 582,424,014 338,647,616 5,062,022,727 5,485,830,524

74 2018 2017 Note Taka Taka 37.1 Interest income from Government securities

Interest on treasury bills 10,670,572 7,858,032 Interest on treasury bonds/T&T bonds 4,862,083,421 6,657,538,978 Interest on Bangladesh Bank bills 292,032 3,275,000 4,873,046,025 6,668,672,010

Interest expenses on treasury bills - (23,687) Interest expenses on treasury bonds (532,199,800) (1,553,743,253) (532,199,800) (1,553,766,940) Net interest income from Government securities 4,340,846,226 5,114,905,070

37.2 Capital gain on Government securities

Capital gain on treasury bills 769,439 1,273,366 Capital gain on treasury bonds/T&T bonds 1,223,140,217 841,076,080 Capital gain on BB bills - 268,536 1,223,909,656 842,617,982

Capital loss on treasury bills (741,259) (671,113) Capital loss on treasury bonds/T&T bonds (128,294,128) (147,525,716) (129,035,387) (148,196,829) Net capital gain on Government securities 1,094,874,269 694,421,153

37.3 Revaluation gain (loss) on Government securities

Revaluation gain on treasury bills - - Revaluation gain on treasury bonds 42,921,719 - Revaluation gain on Bangladesh Bank bills - - 42,921,719 -

Revaluation loss on treasury bills (13,423,235) (227,635) Revaluation loss on treasury bonds (1,204,193,310) (976,433,044) Revaluation loss on Bangladesh Bank bills (7,157) (268,536) (1,217,623,702) (976,929,215) Net revaluation gain (loss) on Government securities (1,174,701,983) (976,929,215)

38 Consolidated commission, exchange and brokerage

Southeast Bank Limited 39 3,538,712,150 3,360,679,342 Southeast Bank Capital Services Limited 325,000 535,000 Southeast Financial Services (UK) Ltd 21,392,216 24,015,788 Southeast Financial Services (Australia) Pty Ltd - 453,195 Southeast Exchange Company (South Africa) Pty Ltd 92,345,912 77,246,127 3,652,775,278 3,462,929,452

39 Commission, exchange and brokerage

Commission and brokerage 2,210,370,584 2,016,554,343 Exchange gain 39.1 1,328,341,566 1,344,124,999 3,538,712,150 3,360,679,342

39.1 Exchange gain

Exchange gain from revaluation/trade of foreign currency 1,292,788,635 1,294,364,761 Exchange gain from credit card 35,552,931 49,760,238 1,328,341,566 1,344,124,999

75 2018 2017 Note Taka Taka 40 Consolidated other operating income Southeast Bank Limited 41 947,056,334 821,156,590 Southeast Bank Capital Services Limited 34,170,935 53,942,026 Southeast Financial Services (UK) Ltd 2,494,536 - Southeast Financial Services (Australia) Pty Ltd - 788,160 Southeast Exchange Company (South Africa) Pty Ltd - 162,609 983,721,805 876,049,385 Less: Inter company balance eliminated 4,273,920 4,273,920 979,447,885 871,775,465 41 Other operating income Remittance fees 17,674 76,574 Service and incidental charges 99,288,754 123,578,606 Other fees - telephone and postage 58,491,405 56,000,865 Income from ATM services 43,787,777 32,846,965 Income from credit card 150,609,574 116,782,148 Income from retail banking 6,745,804 6,428,887 Other Fees - SWIFT and others 222,203,670 202,921,414 Gain on sale of fixed assets 41.1 142,832 - Income from telecash 783,903 280,047 Miscellaneous income 364,984,941 282,241,084 947,056,334 821,156,590

41.1 Gain on sale of fixed assets Cost: Motor vehicles 16,685,000 - Furniture and fixtures 4,401,630 - Office appliances 99,369 - ATM 50,500 - Electrical appliances 8,088,362 - House Electrical appliances 50,000 - 29,374,861 - Accumulated depreciation: Motor vehicles 15,927,016 - Furniture and fixtures 2,433,336 - Office appliances 91,000 - ATM 35,279 - Electrical appliances 7,230,843 - House Electrical appliances 23,867 - 25,741,341 - Written down value 3,633,520 - Sale proceeds of the above fixed assets 3,776,352 - Gain on sale of fixed assets 142,832 -

42 Consolidated salaries and allowances Southeast Bank Limited 43 1,992,049,030 1,853,318,403 Southeast Bank Capital Services Limited 12,546,929 10,295,856 Southeast Financial Services (UK) Ltd 11,848,270 10,898,173 Southeast Financial Services (Australia) Pty Ltd 164,651 225,742 Southeast Exchange Company (South Africa) Pty Ltd 9,912,927 5,891,690 2,026,521,807 1,880,629,864 43 Salaries and allowances Basic salary 1,007,663,400 960,086,331 Allowances 597,803,225 566,671,872 Bonus 304,014,470 248,786,742 Provident fund 82,567,935 77,773,458 1,992,049,030 1,853,318,403

76 2018 2017 Note Taka Taka 44 Consolidated rent, taxes, insurance, electricity etc.

Southeast Bank Limited 45 1,015,140,607 917,262,049 Southeast Bank Capital Services Limited 13,075,067 12,430,740 Southeast Financial Services (UK) Ltd 3,932,573 3,780,890 Southeast Financial Services (Australia) Pty Ltd 616,356 320,070 Southeast Exchange Company (South Africa) Pty Ltd 3,075,707 2,104,524 1,035,840,309 935,898,273 Less: Inter company balance eliminated 4,273,920 4,273,920 1,031,566,389 931,624,353

45 Rent, taxes, insurance, electricity etc.

Rent, rates and taxes 662,528,071.77 617,882,593.00 Insurance 243,894,399 200,424,697 Electricity and lighting 108,718,136 98,954,759 1,015,140,607 917,262,049

46 Consolidated postage, stamp, telecommunication etc.

Southeast Bank Limited 47 181,005,852 175,303,570 Southeast Bank Capital Services Limited 165,253 144,673 Southeast Financial Services (UK) Ltd 423,311 274,157 Southeast Financial Services (Australia) Pty Ltd 15,104 34,217 Southeast Exchange Company (South Africa) Pty Ltd 744,072 468,375 182,353,593 176,224,992

47 Postage, stamp, telecommunication etc.

Postage 57,125,786 54,317,413 Telephone /Telex 16,566,031 15,019,822 Electronic banking service 57,919 19,200 FC Charge (Nostro) 5,189,460 5,646,541 VSAT on-line 45,543,544 46,864,229 Reuters services 1,612,445 2,076,740 Other Fees - SWIFT and others 54,910,668 51,359,625 181,005,852 175,303,570

48 Consolidated stationery, printing, advertisements etc.

Southeast Bank Limited 49 162,614,460 147,315,550 Southeast Bank Capital Services Limited 304,136 256,808 Southeast Financial Services (UK) Ltd 729,184 364,459 Southeast Financial Services (Australia) Pty Ltd - 8,152 Southeast Exchange Company (South Africa) Pty Ltd 1,994,508 1,600,773 165,642,288 149,545,742

49 Stationery, printing, advertisements etc.

General and office stationery 78,530,832 63,769,627 Printing and security stationery 36,103,821 30,205,473 Publicity and advertisement 47,979,807 53,340,450 162,614,460 147,315,550

77 2018 2017 Note Taka Taka 50 Managing Director's salary and fees Basic salary 4,020,000 3,928,757 House rent 1,740,000 1,534,657 House maintenance 900,000 866,408 Leave fare concession 1,200,000 1,262,904 Utility 720,000 689,375 Special allowance 420,000 440,575 Provident Fund 402,000 276,747 Bonus 670,000 1,038,000 10,072,000 10,037,423 51 Consolidated directors' fees Southeast Bank Limited (Note 52) 52 2,718,099 3,575,203 Southeast Bank Capital Services Limited 208,000 210,000 Southeast Financial Services (UK) Limited - - 2,926,099 3,785,203 52 Directors' fees Directors' fees 2,360,000 2,983,200 Directors' haltage and travelling 358,099 592,003 2,718,099 3,575,203

Each Director is paid TK. 8,000/ per meeting per attendance. 53 Consolidated auditors' fees Southeast Bank Limited 1,000,000 1,345,000 Southeast Bank Capital Services Limited 69,000 69,000 Southeast Financial Services (UK) Limited - - Southeast Exchange Company (South Africa) Pty Ltd 778,371 492,893 1,847,371 1,906,893

54 Consolidated depreciation and repair Depreciation: Southeast Bank Limited 55 329,860,908 317,580,081 Southeast Bank Capital Services Limited 58,976,463 56,255,905 Southeast Financial Services (UK) Ltd 425,089 828,442 Southeast Financial Services (Australia) Pty Ltd 92,410 180,407 Southeast Exchange Company (South Africa) Pty Ltd 1,377,449 1,384,147 390,732,319 376,228,982 Repair: Southeast Bank Limited 55 84,114,735 78,482,177 Southeast Bank Capital Services Limited 952,394 226,265 Southeast Financial Services (UK) Ltd 84,996 145,092 Southeast Financial Services (Australia) Pty Ltd - - Southeast Exchange Company (South Africa) Pty Ltd 410,188 306,019 85,562,313 79,159,553 476,294,631 455,388,535

55 Depreciation and repair of bank's assets A. Depreciation: Buildings 57,106,336 59,510,469 Furniture and fixtures 72,112,305 67,165,556 Professional and reference books - - Office appliances 1,189,866 1,094,721 Computer 34,543,455 31,604,261 Electrical appliances 123,951,155 116,667,374 ATM Booth 25,195,613 21,567,475 Motor vehicles 15,762,177 19,970,225 329,860,908 317,580,081

78 2018 2017 Note Taka Taka B. Repair & spare parts: Furniture and fixtures 7,468,328 7,652,699 Office and electrical appliances 33,513,286 29,183,762 Motor vehicles 4,720,176 5,228,293 Repair, maintenance and utilities 38,412,945 36,417,423 84,114,735 78,482,177 Total (C=A+B) 413,975,642 396,062,258 56 Consolidated other expenses Southeast Bank Limited 57 1,208,640,252 1,229,422,032 Southeast Bank Capital Services Limited 6,898,088 7,761,086 Southeast Financial Services (UK) Ltd 6,071,350 4,466,858 Southeast Financial Services (Australia) Pty Ltd 2,365 150,514 Southeast Exchange Company (South Africa) Pty Ltd 21,785,844 17,969,082 Adjustment for impairment loss of investment in subsidiary 37,000,000 - 1,280,397,900 1,259,769,572 57 Other expenses Security and cleaning 199,122,374 170,526,070 Entertainment 90,775,896 130,624,782 Car expenses 213,717,936 207,867,443 Books and periodicals 1,083,090 2,455,921 Subscription 5,772,577 4,515,855 Donation including CSR 174,603,215 210,619,093 Travelling expenses 14,423,981 11,023,278 Finance charge on leased assets 139,653 422,389 Conveyance 14,699,059 13,533,813 Petrol,oil and lubricant 9,402,055 9,631,531 Training/seminar 5,636,562 8,290,347 Uniforms and apparels 3,975,797 4,351,683 Medical expenses 101,692 130,260 Gratuity and othres 295,090,057 263,890,692 Professional expenses 14,287,158 12,741,797 Expenses for CIB report 194,670 865,022 IT enabled services 46,529,061 33,545,578 Loss on sale of fixed assets 57.1 - 2,751,504 Expenses regarding credit card 43,029,219 46,219,184 Expenses regarding retail banking & agriculture 47,464,491 60,986,637 Expenses regarding call centre 2,540,476 2,786,845 Expenses relating to ATM services 49,332,614 21,287,699 Expenses regarding mobile banking services-Telecash 4,468,701 3,209,381 Adjustment for Impairment loss from investment in subsidiary (37,000,000) - Others operating expenses 9,249,918 7,145,228 1,208,640,252 1,229,422,032 Figures of previous year have been rearranged in note no: 57 to conform the current year's presentation

57.1 Loss on sale of fixed assets Cost: Land - 4,123,994 Building - 1,767,426 Furniture and fixtures - 7,407,519 Office appliances - 78,825 ATM - 1,188,175 Electrical appliances - 10,644,578 House Elec. Appliance - 350,000 - 25,560,517 Accumulated depreciation: Building - 375,233 Furniture and fixtures - 4,778,297 Office appliances - 74,855 ATM - 498,488 Electrical appliances - 9,025,362 House Elec. Appliance - 213,807 - 14,966,042 Written down value - 10,594,475 Sale proceeds of the above fixed assets - 7,842,971 Loss on sale of fixed assets - (2,751,504)

79 2018 2017 Note Taka Taka 58 Consolidated provision for taxation Current tax: Southeast Bank Limited 59 2,200,000,000 2,830,000,000 Southeast Bank Capital Services Limited 13,316,862 18,983,984 Southeast Financial Services (UK) Limited - - Southeast Exchange Company (South Africa) Pty Ltd 17,132,508 14,314,954 2,230,449,370 2,863,298,938 Deferred tax: Southeast Bank Limited 59 (35,000,000) 150,000,000 Southeast Exchange Company (South Africa) Pty Ltd - 150,332 (35,000,000) 150,150,332 2,195,449,370 3,013,449,270

59 Provision for taxation Current tax 2,200,000,000 2,830,000,000 Deferred tax (35,000,000) 150,000,000 2,165,000,000 2,980,000,000

59.1 Reconciliation of effective tax rate (Bank) 2018 % Taka

Profit before taxation as per profit and loss account 4,620,767,824

Income tax as per applicable tax rate 37.50% 1,732,787,934 Factors affecting the tax charge for current year Non deductible expenses 51.10% 2,361,365,304 Deductible expenses -27.79% (1,284,072,243) Tax exempt income -8.89% (410,577,851) Tax savings from reduced tax rates for dividend -0.49% (22,791,846) Tax savings for capital loss -0.72% (33,127,905) Change in taxable temporary difference -0.76% (35,000,000) Excess provision -3.11% (143,583,393) Total income tax expenses 46.85% 2,165,000,000

2017 % Taka

Profit before taxation as per profit and loss account 4,098,296,703 Income tax as per applicable tax rate 40.00% 1,639,318,681 Factors affecting the tax charge for current year Non deductible expenses 54.48% 2,232,556,040 Deductible expenses -16.81% (689,075,849) Tax exempt income -6.78% (277,768,462) Tax savings from reduced tax rates for dividend -0.95% (38,810,721) Tax savings from reduced tax rates for capital gain -0.88% (36,219,689) Change in taxable temporary difference 3.66% 150,000,000 Total income tax expenses 72.71% 2,980,000,000

80 2018 2017 Note Taka Taka

60 Consolidated cash received from other operating activities

Southeast Bank Limited 61 946,913,502 821,156,590 Southeast Bank Capital Services Limited 29,897,015 49,668,106 Southeast Financial Services (UK) Ltd 2,494,536 - Southeast Financial Services (Australia) Pty Ltd - 788,160 Southeast Exchange Company (South Africa) Pty Ltd - 162,609 979,305,053 871,775,465

61 Cash received from other operating activities

Remittance fees 17,674 76,574 Service and incidental charges 99,288,754 123,578,606 Other Fees-Telephone and Postage 58,491,405 56,000,865 Income from ATM services 43,787,777 32,846,965 Income from Credit Card 150,609,574 116,782,148 Other Fees - SWIFT and others 222,203,670 202,921,414 Income from Retail Banking 6,745,804 6,428,887 Income from Telecash 783,903 280,047 Miscellaneous income 364,984,941 282,241,084 946,913,502 821,156,590

62 Consolidated payments for other operating activities

Southeast Bank Limited 63 2,439,278,046 2,310,221,404 Southeast Bank Capital Services Limited 21,671,938 21,098,572 Southeast Financial Services (UK) Ltd 11,241,414 9,031,456 Southeast Financial Services (Australia) Pty Ltd 633,825 512,953 Southeast Exchange Company (South Africa) Pty Ltd 6,224,475 4,479,690 2,479,049,698 2,345,344,075

63 Payments for other operating activities

Rent rates and taxes 997,505,888 835,276,384 Postage 181,005,852 175,303,570 Directors' fees 2,718,099 3,575,203 Repairs 84,114,735 78,482,177 Legal expense 1,293,220 1,553,137 Audit fees 1,000,000 1,345,000 Other expenses 1,171,640,252 1,214,685,933 2,439,278,046 2,310,221,404

64 Consolidated earnings per share

Net profit after tax for the year ended 31 December (Taka) 2,473,189,135 1,168,581,138 Number of ordinary shares outstanding 1,054,492,702 1,054,492,702 Earnings per share (EPS) (Taka) 2.35 1.11

65 Earnings per share

Net profit after tax for the year ended 31 December (Taka) 2,455,767,824 1,118,296,703 Number of ordinary shares outstanding 1,054,492,702 1,054,492,702 Earnings per share (EPS) (Taka) 2.33 1.06

*Earnings per share has been calculated in accordance with IAS 33: Earnings Per Share (EPS) . Previous year's figures have been adjusted for the issue of bonus shares during the year.

81 2018 2017 Note Taka Taka

66 Consolidated net assets value (NAV) per share

Net Asset Value (NAV) 28,116,657,718 25,823,646,761 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Asset Value (NAV) per share 26.66 28.16

67 Net Assets Value (NAV) per share

Net Asset Value (NAV) 28,051,339,079 25,761,744,012 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Asset Value (NAV) per share 26.60 28.10

68 Consolidated net operating cash flow per share (NOCFPS)

Net Operating Cash Flow 3,549,513,918 1,715,013,174 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Operating Cash Flow per share (NOCFPS) 3.37 1.87

69 Net Operating Cash Flow per share (NOCFPS)

Net Operating Cash Flow 3,507,440,847 1,333,459,609 Number of ordinary shares outstanding 1,054,492,702 916,950,176 Net Operating Cash Flow per share (NOCFPS) 3.33 1.45

82 70 Group entities Ownership interest % Name of subsidiary Country of incorporation 2018 2017 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

71 General

71.1 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 last re-constituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the Corporate Governance Code issued by BSEC on June 03, 2018 and Bangladesh Bank’s BRPD circular no. 11, dated October 27, 2013. The composition of the present member of the Audit Committee in 2018 are given below:

Sl. Name Position Meetings held Attendance Remarks no. 1 Mr. Syed Sajedul Karim Chairman 5 2 (Independent Director)

2 Mrs. Duluma Ahmed Member 5 3

3 Mrs. Jusna Ara Kashem Member 5 5 The Members who could not attend any meeting were granted leave of absence. 4 Mrs. Rehana Rahman Member 5 5

5 Dr. Quazi Mesbahuddin Member 5 5 Ahmed (Independent Director) Note: Mr. Syed Sajedul Karim was elected on the 23rd AGM, i.e. 30 June, 2018.

On invitation, Senior Executives of the Bank including the Managing Director, Chief Financial Officer (CFO), Head of Internal Control and Compliance and Head of Bank’s Risk Management Division attended the meetings to meet instant queries of the Audit Committee to make its decisions fact-based.

The academic qualifications of the members of the Audit Committee are given below:

Sl. Name Status with the committee Educational Qualification no. Mr. Syed Sajedul Karim Independent Director Chairman M.A., B.A. (Hons) 1 2 Mrs. Duluma Ahmed Director Member Graduate 3 Mrs. Jusna Ara Kashem Director Member H.S.C 4 Mrs. Rehana Rahman Director Member Graduate 5 Dr. Quazi Mesbahuddin Director Member B.A. (Hons), M.A., MEC, MSC., Phd in Ahmed Economics

83 Terms of reference of the Audit Committee i) Board shall appoint non-executive directors of the Bank as members of the Audit Committee excepting Chairman of the Board ii) Mr. Syed Sajedul Karim, in his capacity as the Independent Director, shall be the Chairman of the Audit Committee iii) Presence of 03 (three) members shall form a quorum. iv) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) Independent Director. v) The tenure of office of the Audit Committee shall be for 3 years. vi) The Company Secretary shall act as Secretary to the Audit Committee. vii) The terms of reference of the Audit Committee shall also be as specified in the BRPD Circular No.11 dated October 27, 2013 of Bangladesh Bank and provisions contained in Notification No.BSEC/CMRRCD/2006-158/207/Admin/80 of Bangladesh Securities and Exchange Commission (BSEC), dated 03 June, 2018. viii) Mr. Zakir Ahmed Khan, Advisor of the Bank, shall remain present in every meeting of the Audit Committee as far as possible and shall give his advice and suggestions for improvement of Bank’s operations and strict compliance with rules of both the Bank and its regulators. ix) Chairman of the Audit Committee shall remain present in the Annual General Meeting (AGM).

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, effective monitoring, corporate governance, internal control, green banking and environmental & climate change risks. The added roles of the Audit Committee include, but not limited to, the following: i) Overseeing the financial reporting process. ii) Monitoring choice of accounting policies and principles. iii) Monitoring Internal Audit and Compliance process including approval of Internal Audit and compliance plan. iv) Reviewing the Internal Audit and Compliance Report. v) Overseeing hiring and performance of external auditors. vi) Reviewing the Annual Financial Statements before submission to the Board for approval or adoption. vii) Reviewing the quarterly and half-yearly Financial Statements before submission to the Board for approval. viii) Review the financial statements, in particular the investments made by the subsidiary company. ix) Reviewing the adequacy of internal audit functions. x) Reviewing the Management’s Discussion and Analysis before disclosing in the Annual Report xi) Overseeing the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for xii) Reviewing statement of significant party transactions submitted by the management. xiii) Reviewing Management Letters/ Letter of Internal Control Weakness issued by Statutory Auditors. xiv) Reviewing the existing Risk Management Policy and procedures to improve the quality of Bank’s assets portfolio. xv) Reviewing fund raising through Repeat Public Offering/ Rights Issue and its use and application. xvi) Monitoring internal control process. xvii) Maintaining oversight on regulatory compliance, ethics and whistleblower hotlines xviii) Reviewing Audit Committee’s own terms of reference. xix) Reviewing the compliance status of the Minutes of the Audit Committee Meeting.

84 71.2 Risk Management Committee of the Board of Directors of the Bank

The Bank Company Act-1991 (Amended up to 2018), inter alia, provided for constitution of a Risk Management Committee of the Board of Directors of every Bank. The committee will scrutinize whether appropriate risk management measures are being put in place and applied and whether adequate capital and provision is being maintained against different risks.

Feature and composition

The Risk Management Committee was reconstituted by the Board of Directors in its 548th meeting held on July 25, 2018 in accordance with the BRPD circular no. 11, dated October 27, 2013 issued by Bangladesh Bank. The composition of the Risk Management Committee in 2018 is given below:

Sl. Members Position Meetings held Attendance Remarks no. 1 Mr. Alamgir Kabir, FCA Chairman 4 4 The Members who could not attend any 2 Mr. M. A. Kashem Member 4 2 meeting showing genuine ground were 3 Mr. Azim Uddin Ahmed Member 4 3 granted leave of absence 4 Mr. Syed Sajedul Karim Member 4 2 (Independent Director) Note: Mr. Syed Sajedul Karim was elected on the 23rd AGM, i.e. 30 June, 2018.

Structure of the Risk Management Committee (RMC)

1 The Chairman of the Board of Directors of the Bank shall be the Chairman of the Risk Management Committee. 2 Presence of 3 (three) members in a meeting of the Committee shall form quorum. 3 The Company Secretary of the Bank shall act as the Secretary to the Risk Management Committee of the Board.

Functions of the Risk Management Committee

The broad functional areas of the Risk Management Committee are the following:

a Formulating and reviewing risk management policies and strategies for sound risk management b Monitoring implementation of risk management policies and process to ensure effective prevention and control measures c Ensuring construction of adequate organizational structure for managing risks within the Bank d Supervising the activities of Executive Risk Management Committee (ERMC) e Ensuring compliance of Bangladesh Bank instructions regarding implementation of core risk management f Ensuring formulation and review of risk appetite, limits and recommending these to Board of Directors for their review and approval g Approving adequate record keeping and reporting system and ensuring its proper use h Holding at least four meetings in a year and more if deemed necessary i Submitting proposal, suggestions & summary of BRMC meetings to Board of Directors at least on quarterly basis j Complying with instructions issued from time to time by the regulatory body k Analyzing all existing and probable risk issues in the meeting and taking appropriate decisions for risk mitigation l Ensuring sufficient and efficient staff resources for RMD m Establishing standards of ethics and integrity for staff and enforcing these standards

85 71.3 Related party/(ies)

Particulars of Directors of the Bank as at 31 December: Sl. % of shares % of shares Name of persons Designation Present address No. as at 31 Dec 2018 as at 31 Dec 2017 1 Mr. Alamgir Kabir, FCA Chairman 226, Dilu Road, New Eskaton, 2.25% 2.18% Dhaka 2 Mrs. Duluma Ahmed Vice Chairperson Plot No.51, Road No.09, 2.08% 2.08% Block-F,Banani, Dhaka 3 Mr. M. A. Kashem Director 73/C, Gulshan Avenue, 2.21% 2.21% Dhaka-1212 4 Mr. Azim Uddin Ahmed Director Plot No.51, Road No.09, 2.78% 2.78% Block-F,Banani, Dhaka 5 Mrs. Jusna Ara Kashem Director 73/C, Gulshan Avenue, 2.00% 2.00% Dhaka-1212 6 Mr. Md. Akikur Rahman Director Sonarpara, 2.03% 2.01% Nobarun-227, Sylhet 7 Mrs. Rehana Rahman Director House No.10, Road No.68, 2.06% 2.06% Gulshan, Dhaka 8 Mrs. Sirat Monira Director 226, Dilu Road (Ground 0.01% 0.01% Floor),New Eskaton, Dhaka 9 Mr. Syed Sajedul Karim Independent Director B/3, Summer Holiday, House No. 8, Road No. 121, Gulshan-1, - - Dhaka-1212. 10 Dr. Quazi Mesbahuddin Independent Director Flat No.C/3, House No.01, Road Ahmed No.36, Gulshan, - - Dhaka-1212 11 Mr. M. Kamal Hossain Managing Director Southeast Bank Limited, Head Office, 52-53 Dilkusha C/A, Dhaka- - - 1000

*As per SEC notification no-SEC/CMRRCD/2009-193/119/Admin/34, dated: 22/11/2011; "Each director other than independent director(s)/ nominated director(s) of any listed company shall hold minimum 2% (two percent) shares of the paid-up capital. Otherwise there shall be a casual vacancy of director". But Mrs. Sirat Monira holds 0.01% of total outstanding share who became Director from B Group i.e. public shareholders. 71.3.1 Related party transactions

During the year 2018, the Bank concluded business deals with the following organizations in which the directors had interest:

Transaction value for the year Balance outstanding as at 31 Name of ended 31 December December Relationship Nature of transaction Organization 2018 2017 2018 2017 Taka Taka Taka Taka Asia Insurance Common Insurance coverage 138,208,868 81,094,810 Ltd. Director Southeast Bank Subsidiary Share capital - 5,489,930,000 5,489,930,000 Capital Services company Interest and loan - 11,178,794 SoutheastLi it d Subsidiary Share capital - - 38,493,247 38,493,247 Financial company Services (UK) Ltd Southeast Subsidiary Share capital - - 25,063,712 25,063,712 Financial company Services (Australia) Pty Ltd Southeast Subsidiary Share capital - - 50,103,110 50,103,110 Exchange company Company (South Africa) Pty Ltd

86 71.3.2 Loans and advances to directors and their related concern

Name of party Name of the Related by Nature of Amount in Status director transaction Taka Monorom Mr. Azim Director Bank Guarantee Traders Uddin Ahmed 4,783,000 Regular Mrs. Duluma Ahmed Mrs. Duluma Mrs. Duluma Vice Chairperson Credit Card 85,508.95 Regular Ahmed Ahmed Mr. Azim Uddin Mr. Azim Director Credit Card 19,120.89 Regular Ahmed Uddin Ahmed Ms. Sultana Mr. M. A. Directors’ daughter Credit Card 2,788.64 Regular Kashem Kashem Ms. Farzana Mr. Azim Directors’ daughter Credit Card 411,869.40 Regular Azim Uddin Ahmed Mr. Mamun Mr. Azim Directors’ son Credit Card 6,771.59 Regular Azim Uddin Ahmed The Bank complies with the requirements of the section 26 (c) of the Banking Companies Act 1991 (amended upto 2018) in connection to the transactions executed with persons related to the Banks.

71.4 Events after the reporting period

The Board of Directors in its 570th meeting held on 30 April 2019 has recommended a stock dividend @10% subject to the approval of the shareholders at the next Annual General Meeting.

71.5 Number of employees

The number of employees engaged for the whole year or part thereof in 2018 who received a total yearly remuneration of Tk 36,000 or above were 2797. The total number of employees were 2,704 in 2017. 71.6 Share trading

The Bank started trading its ordinary shares in Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) through CDBL from 16 May 2004. The closing market price of the share as on 31 December 2018 was Tk.15.60 (2017: Tk.22.20) for each Tk.10 per value of share at DSE and Tk 15.70 (2017: Tk.22.20) for each Tk.10 per value of share at CSE.

71.7 Pattern of Shareholding

Breakup of shareholding pattern as per clause 1.5 (xxi) of Securities and Exchange Commission notification No.SEC/CMRRCD/2006- 158/134/Admin/44 dated 07 August 2012 issued under Section 2CC of the Securities and Exchange Ordinance, 1969, is as follows:

a) Parent/Subsidiary/Associated companies and other related parties (name wise details):

Sl. no. Name of the Company Shareholding Structure 1 Southeast Bank Capital Services Limited 99.816909% owned by Southeast Bank Limited 2 Southeast Bank Financial Services (UK) Ltd 100% owned by Southeast Bank Limited 3 Southeast Financial Services (Australia) Pty Ltd 100% owned by Southeast Bank Limited 4 Southeast Exchange Company (South Africa) Pty Ltd 100% owned by Southeast Bank Limited

71.8 Highlights on the overall activities of the Bank

Highlights on the overall activities of the Bank have been furnished in Annexure-A.

87 Annexure-A

Southeast Bank Limited

Highlights on the overall activities as at and for the year ended 31 December 2018

Sl. no. Particulars 2018 2017 1 Paid-up capital Taka 10,544,927,020 9,169,501,760 2 Total capital Taka 38,755,804,649 33,679,036,407 3 Capital surplus Taka 1,843,633,684 (1,177,751,213) 4 Total assets Taka 381,094,921,027 338,909,245,125 5 Total deposits Taka 298,320,586,377 269,833,088,669 6 Total loans and advances/investments Taka 265,204,210,559 231,850,999,929 7 Total contingent liabilities and commitments Taka 145,504,926,144 142,496,794,641 8 Credit deposit ratio 81.55% 85.92% Percentage of classified loans/investments against 9 5.87% 5.99% total loans and advances/investments 10 Profit after tax and provision Taka 2,455,767,824 1,118,296,703 11 Amount of classified loans/investments Taka 15,558,851,040 13,878,533,441 12 Provisions kept against classified loans/investments Taka 9,961,900,000 6,628,680,956 Provision surplus/(deficit) against classified 13 Taka 4,043,815,452 2,802,303,797 loans/investments 14 Cost of fund 7.81% 6.80% 15 Interest earning assets Taka 329,182,199,588 288,682,338,956 16 Non-interest earning assets Taka 51,912,721,439 50,226,906,169 17 Return on investment (ROI) 0.74% 0.38% 18 Return on assets (ROA) [PAT/ Average assets] 0.68% 0.35% 19 Income from investment Taka 5,062,022,727 5,485,830,524 20 Capital adequacy 12.47% 10.87% 21 Dividends a) Stock dividends 10% 15% b) Cash dividends - 22 Earnings per share Taka 2.33 1.06 23 Net income per share Taka 2.33 1.06 24 Price earning ratio Times 6.72 17.68

88 Annexure-B

Southeast Bank Limited and its Subsidiaries Consolidated Liquidity Statement (Assets and liabilities maturity analysis) as at 31 December 2018

Up to 1 month 1-3 months 3-12 months 1-5 years Above 5 years Total Particulars Taka Taka Taka Taka Taka Taka

Assets: Cash in hand 3,598,852,097 3,598,852,097 Balance with other banks and financial institutions 6,028,034,039 2,373,000,000 200,000,000 15,749,975,574 24,351,009,613 Money at call and on short notice 6,897,100,000 6,897,100,000 Investments 498,955,791 1,607,800,000 8,230,800,000 30,097,800,000 25,174,196,642 65,609,552,433 Loans and advances/investments 35,920,100,000 42,398,300,000 93,389,800,000 55,815,500,000 40,147,927,805 267,671,627,805 Fixed assets including premises, furniture and fixtures 1,522,727,974 7,814,567,187 9,337,295,160 Other assets 1,585,574,838 496,833,359 49,531,540 1,973,679,916 4,622,119 4,110,241,772 Non banking assets - Total assets (A) 54,528,616,765 46,875,933,359 101,870,131,540 89,409,707,890 88,891,289,327 381,575,678,880

Liabilities: Borrowings from Bangladesh Bank, other banks, financial institutions and - 1,321,098,827 7,613,624,456 2,019,500,000 12,057,477,060 23,011,700,343 agents Deposits 45,540,708,211 49,385,800,000 91,682,300,000 93,513,400,000 18,212,586,377 298,334,794,587 Provision and other liabilities 6,591,547,666 - 20,480,427,272 5,030,480,782 - 32,102,455,720 Total liabilities (B) 52,132,255,877 50,706,898,827 119,776,351,728 100,563,380,782 30,270,063,437 353,448,950,650 Net liquidity gap (A - B) 2,396,360,888 (3,830,965,468) (17,906,220,188) (11,153,672,892) 58,621,225,890 28,126,728,230

89 Annexure-B.1

Southeast Bank Limited Liquidity Statement (Assets and liabilities maturity analysis) as at 31 December 2018

Up to 1 month 1-3 months 3-12 months 1-5 years Above 5 years Total Particulars Taka Taka Taka Taka Taka Taka

Assets: Cash in hand 3,598,790,655 3,598,790,655 Balance with other banks and financial institutions 5,851,302,010 2,373,000,000 200,000,000 15,749,975,574 24,174,277,584 Money at call and on short notice 6,897,100,000 6,897,100,000 Investments 5,138,300 1,607,800,000 8,230,800,000 30,097,800,000 22,942,217,894 62,883,756,194 Loans and advances/investments 35,920,100,000 42,398,300,000 93,389,800,000 55,815,500,000 37,680,510,559 265,204,210,559 Fixed assets including premises, furniture and fixtures 1,522,727,974 7,259,635,772 8,782,363,746 Other assets 1,585,574,838 385,983,856 49,531,540 1,973,679,916 5,559,652,140 9,554,422,290 Non banking assets ------Total assets (A) 53,858,005,802 46,765,083,856 101,870,131,540 89,409,707,890 89,191,991,939 381,094,921,027

Liabilities: Borrowings from Bangladesh Bank, other banks, financial - 1,266,890,000 7,613,624,456 2,019,500,000 12,057,477,060 22,957,491,516 institutions and agents Deposits 45,526,500,000 49,385,800,000 91,682,300,000 93,513,400,000 18,212,586,377 298,320,586,377 Provision and other liabilities 6,254,596,002 - 20,480,427,272 5,030,480,782 - 31,765,504,056 Total liabilities (B) 51,781,096,002 50,652,690,000 119,776,351,728 100,563,380,782 30,270,063,437 353,043,581,949 Net liquidity gap (A - B) 2,076,909,800 (3,887,606,144) (17,906,220,188) (11,153,672,892) 58,921,928,502 28,051,339,079

90 Annexure-C

Southeast Bank Limited Balance with other banks-Outside Bangladesh (Nostro Account) as at 31 December 2018

2018 2017 Name of the Bank Currency FC Exchange Equivalent FC Exchange Equivalent type amount rate Taka amount rate Taka Interest bearing: Standard Chartered Bank, New York, USA USD 4,101,814.91 83.90 344,142,270.95 1,046,310 82.70 86,529,828 AB Bank Ltd., Mumbai, India ACUD 540,043.52 83.90 45,309,651.33 124,267 82.70 10,276,911 Citibank AG, Frankfurt, Germany EUR 708,978.25 95.52 67,721,708.99 551,022 99.24 54,683,457 Citibank, N.A., New York, USA USD 1,642,071.01 83.90 137,769,757.74 703,612 82.70 58,188,713 Habib American Bank, New York, USA USD 6,383,537.39 83.90 535,578,787.02 1,372,658 82.70 113,518,856 ICICI Bank Ltd., Mumbai, India ACUD 595,859.40 83.90 49,992,603.66 463,432 82.70 38,325,827 JP Morgan Chase Bank N.A., New York, USA USD 1,518,336.35 83.90 127,388,419.77 383,731 82.70 31,734,569 Sonali Bank (UK) Ltd. USD 83.90 0.04 3,111 82.70 257,277 Sonali Bank (UK) Ltd. GBP 106.23 (0.15) 31,246 111.79 3,492,835 Standard Chartered Bank, Kolkata, India ACUD 304,328.48 83.90 25,533,159.47 7,488 82.70 619,283 Standard Chartered Bank, London, UK GBP 54,542.63 106.23 5,793,833.64 217,695 111.79 24,335,170 Standard Chartered Bank, New York OBU USD 962,295.41 83.90 80,736,584.90 67,351 82.70 5,569,926 Wells Fargo Bank, N.A., New York, USA USD 54,690.33 83.90 4,588,518.69 1,057,151 82.70 87,426,417 Mashreq Bank PSC, New York, USA USD 3,678,510.44 83.90 308,627,025.92 1,594,980 82.70 131,904,873 Mashreq Bank, Mumbai, India ACUD 358,655.24 83.90 30,091,174.64 404,037 82.70 33,413,883 Mashreq Bank, Mumbai, India ACUEUR 15,550.78 95.52 1,485,412.58 15,551 99.24 1,543,260 20,919,214 1,764,758,909 8,043,642 681,821,085 Non-interest bearing: Bank of Bhutan, Pheuntsholing, Bhutan ACUD 199,182.66 8 3.90 16,711,425.17 248,963 82.70 20,589,244 Bank of Sydney Ltd., Sydney AUD 84,828.00 59.24 5,025,362.50 63,478 64.53 4,096,286 Banque Saudi Fransi, Riyadh SAR 185,336.06 22.36 4,144,044.17 995,605 22.05 21,954,062 Commerz Bank AG, Frankfurt, Germany EUR 6,316.31 95.52 603,334.97 407,904 99.24 40,480,379 Commerz Bank AG, Frankfurt, Germany USD 2,094,142.08 83.90 175,698,520.51 485,914 82.70 40,185,050 Habib Bank AG Zurich, Zurich, Switzerland CHF 84.53 0.13 3,870 84.87 328,475 Habib Metropoliton Bank Ltd., Karachi, Pakistan ACUD 1 70,403.43 83.90 14,296,847.78 571,135 82.70 47,232,891 HDFC Bank, Mumbai, India ACUD 923,868.82 83.90 77,512,594.00 87,179 82.70 7,209,740 Mashreq Bank PSC, Dubai, UAE AED 3,028,212.89 83.90 69,162,123.48 126,298 22.52 2,843,673 Nepal Bangladesh Bank Ltd., Kathmandu, Nepal ACUD 332,539.70 83.90 27,900,080.83 269,865 82.70 22,317,811 Standard Chartered Bank, Colombo, Srilanka ACUD 355,904.22 83.90 29,860,364.06 240,361 82.70 19,877,855 Standard Chartered Bank, Mumbai (AEB), India ACUD 25,255.00 83.90 2,118,894.50 25,255 82.70 2,088,589 Bank of Tokyo-Mitsubishi, JPY YEN 105,221,057.57 0.76 79,567,794.14 44,466,787 0.73 32,630,020 United Bank Limited, Karachi, Pakistan ACUD 44,033.18 83.90 3,694,383.80 43,142 82.70 3,567,858 Zuercher Kantonal Bank, Zurich, Switzerland CHF 21,920.54 84.53 1,852,844.24 212,127 84.87 18,003,835 112,693,000 508,148,614 48,247,883 283,405,768 133,612,215 2,272,907,523 56,291,525 965,226,853

91 Annexure-D

Southeast Bank Limited Details of Large Loan as at 31 December 2018

2018 2017

Number of clients 34 29 Amount of outstanding advances (Amount in million Taka) 139,088.20 115,640.90 Amount of classified advances (Amount in million Taka) Nil NIL Measures taken for recovery (Taka) Nil NIL

Client-wise break up is as follows: (Amount in million Taka) Outstanding as at 31 December 2018 Sl. Outstanding as at 31 December 2017 Name of clients no. Non Non Funded Total Funded Total funded funded 1 Abul Khair Group 563.10 5,432.10 5,995.20 824.40 3,947.40 4,771.80 2 ACS Textiles (Bangladesh) Limited and its 2,088.90 1,998.50 4,087.40 2,088.50 1,950.90 4,039.40 related concern 3 Bashundhara Group 4,976.00 4,693.30 9,669.30 3,119.70 8,009.60 11,129.30 4 Bengal Group 2,315.00 1,201.90 3,516.90 965.90 615.10 1,581.00 5 Capital Banani One Ltd. and its related 4,222.90 1.40 4,224.30 4,082.30 - 4,082.30 concern 6 Cassiopea Fashion Ltd. and its related 997.00 2,979.70 3,976.70 556.80 3,291.50 3,848.30 concerns 7 Sparrow Apparels Ltd. and its related 1,521.30 6,572.50 8,093.80 1,226.70 3,909.00 5,135.70 concerns 8 Deshbandhu Group 6,156.60 1,272.70 7,429.30 5,343.00 2,004.80 7,347.80 9 Grameen Phone Limited - 1,956.40 1,956.40 - 1,711.10 1,711.10 10 Irish Fabrics Limited and its related 526.20 2,188.30 2,714.50 623.60 1,708.10 2,331.70 concerns 11 KDS Group 672.70 1,373.50 2,046.20 803.50 1,374.20 2,177.70 12 Keya Group 5,077.20 4,634.40 9,711.60 4,459.80 5,177.10 9,636.90 13 Aaron Denim Limited and its related 2,719.00 851.70 3,570.70 2,289.80 1,088.60 3,378.40 concerns 14 Maksons Spinning Mills Ltd. 1,389.10 3,118.30 4,507.40 2,165.20 2,370.60 4,535.80 15 Meghna Group 0.90 7,215.50 7,216.40 - 9,929.60 9,929.60 16 Mother Steel Ltd. and its related concerns 339.70 20.20 359.90 577.00 330.30 907.30

17 N. R. Group 1,009.70 3,091.40 4,101.10 660.60 2,171.20 2,831.80 18 Partex Group 2,181.40 2,424.90 4,606.30 1,303.50 1,902.40 3,205.90 19 S. Alam Group 4,108.70 - 4,108.70 516.00 980.90 1,496.90 20 Yunusco (BD) Limited and its related 1,015.80 1,444.50 2,460.30 560.30 1,753.80 2,314.10 concerns 21 T. K. Group 0.20 4,767.90 4,768.10 299.80 3,645.00 3,944.80 22 Rupayan Housing Estate Limited and its 5,082.90 - 5,082.90 4,814.70 1.70 4,816.40 related concerns 23 Chittagong Asian Apparels Ltd. and its 1,275.60 1,496.40 2,772.00 1,712.50 1,924.00 3,636.50 related concerns 24 Snowtex Outerwear Limited and its related 2,754.70 2,422.60 5,177.30 2,080.30 2,410.50 4,490.80 concerns 25 Generation Next Fashions Limited 1,756.60 1,683.20 3,439.80 - - - 26 Designtex Fashions Limited and its related 2,059.50 1,486.40 3,545.90 1,966.60 558.20 2,524.80 concerns 27 Navana Group 4,187.40 44.80 4,232.20 3,732.30 25.20 3,757.50 28 City Group - 1,716.00 1,716.00 - 3,409.00 3,409.00 29 Bashundhara Oil and Gas Company - 915.90 915.90 - 12.50 12.50 Limited 30 KSRM Steel Plant Ltd. and its related 1,536.40 1,088.50 2,624.90 2,112.50 543.30 2,655.80 concerns 31 Vertex Group 304.10 335.30 639.40 32 Shanin Group 1,437.70 2,363.60 3,801.30 33 Masuma Khatun Textile Industries Ltd. 2,576.50 769.90 3,346.40 34 Bashundhara Trading Company Ltd. and 1,431.80 1,241.90 2,673.70 its related concerns Total 66,284.60 72,803.60 139,088.20 48,885.30 66,755.60 115,640.90

92 Annexure-E Southeast Bank Limited

Schedule of fixed assets including premises, furniture and fixtures as at 31 December 2018

Cost/Revaluation Depreciation Written Balance Additions Revalued Disposal Balance Balance Charged Adjustment Balance down value Particulars as at during during during as at Rate of as at during for disposal as at as at 1 Jan 2018 the Period the year the period 31 Dec 2018 dep. 1 Jan 2018 the period during the period 31 Dec 2018 31 Dec 2018 Taka Taka Taka Taka % Taka Taka Taka Taka Taka A. Own assets Office: Land 5,770,913,319 26,337,374 - - 5,797,250,693 - - - - - 5,797,250,693 Building 1,897,220,492 92,041,785 - - 1,989,262,277 4% 469,770,862 57,106,336 - 526,877,198 1,462,385,079 Furniture and fixtures 1,094,444,595 131,764,299 - (5,528,110) 1,220,680,784 10% 463,787,263 71,716,819 (2,583,482) 532,920,600 687,760,184 Office Appliances 14,620,108 1,307,131 - (644,369) 15,282,870 20% 9,087,575 1,189,866 (92,206) 10,185,235 5,097,635 Computer 23,702,837 9,941,996 - - 33,644,833 20% 10,641,672 3,657,608 230,529 14,529,809 19,115,024 Electrical Appliances 1,288,715,737 90,571,373 - (12,503,501) 1,366,783,609 20% 731,441,546 121,788,304 (7,518,747) 845,711,103 521,072,506 ATM Booth 207,974,413 48,098,082 - (3,190,231) 252,882,264 20% 105,072,020 25,195,613 (193,490) 130,074,144 122,808,120 Professional and Reference Books - - - - - 30% - - - - - Software 231,318,236 7,053,253 - - 238,371,489 20% 83,066,567 30,885,847 - 113,952,414 124,419,075 Motor vehicles 71,754,000 12,337,917 - (6,497,000) 77,594,917 20% 35,843,673 13,758,785 (739,016) 48,863,442 28,731,475 TOTAL 10,600,663,737 419,453,211 - (28,363,211) 10,991,753,737 1,908,711,179 325,299,179 - 10,896,412 2,223,113,946 8,768,639,790

Residence of executives: Furniture and fixtures 4,679,290 3,650,000 - (3,125,000) 5,204,290 10% 1,635,675 395,486 (319,349) 1,711,812 3,492,478 Electrical Appliances 22,013,830 8,675,051 - (10,302,201) 20,386,680 20% 11,631,788 2,162,850 (2,451,776) 11,342,863 9,043,817 26,693,120 12,325,051 - (13,427,201) 25,590,970 13,267,462 2,558,337 - 2,771,125 13,054,674 12,536,296 10,627,356,857 431,778,262 - (41,790,412) 11,017,344,707 1,921,978,642 327,857,516 - 13,667,537 2,236,168,621 8,781,176,086

B. Leased assets Furniture and fixtures 106,026,227 - - - 106,026,227 10% 106,026,227 - - 106,026,227 - Motor vehicles 68,600,615 - - (15,188,000) 53,412,615 20% 65,409,563 2,003,392 (15,188,000) 52,224,955 1,187,660 174,626,842 - - (15,188,000) 159,438,842 171,435,790 2,003,392 (15,188,000) 158,251,182 1,187,660 Balance as at 31 December ' 2018 10,801,983,699 431,778,262 - (56,978,412) 11,176,783,549 2,093,414,432 329,860,908 (28,855,537) 2,394,419,803 8,782,363,746 Balance as at 31 December ' 2017 10,406,610,372 433,413,328 - (38,040,002) 10,801,983,699 1,792,923,672 317,580,081 (17,089,322) 2,093,414,431 8,708,569,268

93 Annexure-F

Southeast Bank Limited Names of Directors and their interest in different entities

Names of firms/companies in which Sl. Status with interested as proprietor/ director/ Position with % of Name of the Directors no. the Bank managing agent/ guarantor/ employee/ Different entities Shareholdings partner, etc. 1 Mr. Alamgir Kabir, FCA Asia Insurance Limited Director 2.97% Chairman National Life Insurance Co. Ltd. Independent Director Nil 2 Mrs. Duluma Ahmed Mutual Food Products Limited Chairman 31.78% Vice Mutual Milk Products Limited " 16.00% Chairperson 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 Mutual Food Products Limited Managing Director 44.78% Mutual Milk Products Limited " 52.00% Director Mutual Trading Co. Limited Chairman & MD 71.30% AD Holdings Limited Chairman 0.50% 5 Mrs. Jusna Ara Kashem Director Rose Corner (Pvt) Limited Director 20.00% 6 Mr. Md. Akikur Rahman Director - - Nil 7 Mrs. Rehana Rahman Director Bengal Tradeways Limited Managing Director 74.61% CHB Building Technologies Limited Director 25.00% 8 Mrs. Sirat Monira Director - - Nil Independent 9 Mr. Syed Sajedul Kairm - - Nil Director Dr. Quazi Mesbahuddin Independent 10 - - Nil Ahmed Director Managing 11 Mr. M. Kamal Hossain - - Nil Director

94 Annexure-G Southeast Bank Limited Islamic Banking Branches Balance Sheet as at 31 December 2018

2018 2017 Note Taka Taka PROPERTY AND ASSETS

Cash 1 In hand (including foreign currencies) 150,219,956 166,396,106 Balance with Bangladesh Bank and its agent banks (including foreign currencies) 1,063,945,753 886,571,821 1,214,165,709 1,052,967,927 Balance with other banks and financial institutions 2 In Bangladesh 1,005,380,998 3,512,215 Outside Bangladesh - - 1,005,380,998 3,512,215 Money at call and on short notice - - Investments in shares and securities 3 Government 970,000,000 650,000,000 Others 3,244,853,863 2,790,589,811 4,214,853,863 3,440,589,811 Investments 4 General Investments etc. 15,327,613,616 13,963,868,517 Bills purchased and discounted 357,093,888 273,282,476 15,684,707,504 14,237,150,993 Fixed assets including premises, furniture and fixtures 5 25,338,771 24,870,249 Other assets 6 33,958,174 2,414,475,850 Non - banking assets - - Total assets 22,178,405,018 21,173,567,045

LIABILITIES AND CAPITAL

Liabilities Borrowings from other banks, financial institutions and agents 7 - 2,000,000,000

Deposits and other accounts 8 Current/Al-wadeeah current accounts and other accounts 2,050,246,536 1,643,146,644 Bills payable 82,297,718 131,716,580 Savings bank/Mudaraba savings bank deposits 2,007,450,494 1,919,612,283 Fixed deposits/Mudaraba fixed deposits 15,861,886,841 13,005,288,790 20,001,881,588 16,699,764,297

Other liabilities 9 2,176,523,430 2,473,802,748 Total liabilities 22,178,405,018 21,173,567,045

OFF-BALANCE SHEET ITEMS

Contingent liabilities Acceptances and endorsements 10.1 1,706,182,184 1,155,150,244 Letters of guarantee 10.2 1,846,759,405 1,685,858,656 Irrevocable letters of credit 10.3 2,285,549,994 1,606,363,135 Bills for collection 10.4 1,267,760,650 955,896,017 Other contingent liabilities - - 7,106,252,233 5,403,268,052

95 Annexure-G.1 Southeast Bank Limited Islamic Banking Branches Profit and Loss Account for the year ended 31 December 2018

2018 2017 Note Taka Taka

Profit on investments 11 1,998,658,866 1,634,871,176 Profit shared on deposits and borrowings etc. 12 (1,289,447,769) (938,503,557) Net profit on investments 709,211,098 696,367,619 Commission, exchange and brokerage 13 143,377,657 93,525,532 Other operating income 14 32,545,319 30,251,448 175,922,976 123,776,980 Total operating income (A) 885,134,073 820,144,599

Salaries and allowances 15 75,385,417 76,640,857 Rent, taxes, insurance, electricity etc. 16 45,010,784 41,212,498 Legal expenses - 228,324 Postage, stamp, telecommunication etc. 17 8,186,790 9,150,825 Stationery, printing, advertisements etc. 18 4,555,279 3,454,726 Depreciation and repair of bank's assets 19 7,413,100 7,535,412 Other expenses 20 30,769,313 29,042,378 Total operating expenses (B) 171,320,683 167,265,018 Profit before provision (C=A-B) 713,813,390 652,879,581

Provision for investments 9.1 General provision 3,444,675 40,847,968 Specific provision (948,089,521) 206,808,920 (944,644,846) 247,656,888 Provision for off-balance sheet items 9.2 4,352,235 19,042,419 Provision for diminution in value of investments 9.3 54,619,407 (155,573,513) Total provision (D) (885,673,204) 111,125,794 Total profit before tax (C-D) 1,599,486,594 541,753,787

96 Annexure-G.2 Southeast Bank Limited Islamic Banking Branches Notes to the Financial Statements as at and for the year ended 31 December 2018

2018 2017 Note Taka Taka

1 Cash

In hand: Local currency 148,326,584 165,908,176 Foreign currencies 1,893,371 487,930 150,219,956 166,396,106 Balance with Bangladesh Bank: Local currency 1,058,360,221 885,851,119 Foreign currencies - - 1,058,360,221 885,851,119 Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency 5,585,532 720,702 1,063,945,753 886,571,821 1,214,165,709 1,052,967,927

1.1 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with section 33 of the Bank Companies Act 1991, MPD Circular nos. 4 and 5 dated 1 December 2010 and MPD Circular no. 1 and 2 dated 23 June 2014 and 10 December 2013 and DOS Circular No. 1 dated 19 January 2014 and MPD Circulars No. 1 dated 03 April 2018.

The statutory Cash Reserve Ratio on the Shariah-based Islamic Bank's demand and time liabilities at the rate of minimum 5.0% on daily basis and 5.50% on bi-weekly basis been calculated and maintained with Bangladesh Bank in current account and 5.50% Statutory Liquidity Ratio on the same liabilities has also been maintained in the form of treasury bills, bonds and debentures including excess cash reserve balance with Bangladesh Bank. Both the reserves maintained by the Bank are in excess of the statutory requirements, as shown below:

1.1.1 a) Cash Reserve Ratio (CRR) for Islamic Banking

Required reserve (5.50% of average Demand and Time Liabilities) 1,007,891,950 819,034,223 Actual reserve held (Average daily on bi-weekly basis): 1,058,360,221 885,851,119 Surplus 50,468,271 66,816,896

b) Statutory Liquidity Ratio (SLR) for Islamic Banking

Required reserve (5.50 % of average Demand and Time Liabilities) 1,007,891,950 693,028,958 Actual reserve held 1,176,260,271 883,920,896 Surplus 168,368,321 190,891,938

Held for Statutory Liquidity Ratio of Islamic Banking:

Cash in hand 150,220,000 166,396,000 Balance with agent bank (Sonali Bank Ltd.) as per statement 5,572,000 708,000 Excess cash reserve 50,468,271 66,816,896 Government Securities (HTM) 970,000,000 650,000,000 1,176,260,271 883,920,896

97 2018 2017 Note Taka Taka 2 Balance with other banks and financial institutions

In Bangladesh 2.1 1,005,380,998 3,512,215 Outside Bangladesh 1,005,380,998 3,512,215

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 505,379,124 3,510,341 505,380,258 3,511,475 Fixed deposits with other banks: Social Islami Bank Limited 500,000,000 500,000,000 - 1,005,380,998 3,512,215

3 Investments in shares and securities

Bangladesh Government Islamic Bond 970,000,000 650,000,000 Others 3.1 3,244,853,863 2,790,589,811 4,214,853,863 3,440,589,811 3.1 Others

Shares in listed companies 3,244,853,863 2,790,589,811 Shares in un-listed companies - - 3,244,853,863 2,790,589,811 Provision for diminution in the market value of shares (621,210,215) (566,590,808) 2,623,643,648 2,223,999,003

3.2 Investments classified as per Bangladesh Bank Circular

Held to maturity (HTM) 970,000,000 650,000,000 Other securities 3,244,853,863 2,790,589,811 4,214,853,863 3,440,589,811

3.3 Cost and market value of investments

3.3.1 Government securities 2018 2017 Cost price Market price Market price Taka Taka Taka Bangladesh Government Islamic Bond 970,000,000 970,000,000 650,000,000 970,000,000 970,000,000 650,000,000

3.3.2 Others (Investment in shares) 2018 2017

Market price Cost price Cost price Taka Taka Taka Shares in listed companies 2,623,643,648 3,244,853,863 2,790,589,811 Shares in un-listed companies - - - 2,623,643,648 3,244,853,863 2,790,589,811

98 3.4 Market price, cost price and related provision of investments as on 31 December 2018

Differences Name of the Company 2018 (Provision to be Required) Market price Cost price Taka Taka

1 BAY Leasing and Investment Limited 280,453,126 653,782,763 (373,329,637) 2 EXIM Bank 192,288,092 370,656,956 (178,368,864) 3 Lafarge Holcim Bangladesh Limited 43,500,000 89,321,368 (45,821,368) 4 Delta Life 7,502,195 12,382,964 (4,880,769) 5 National Life Insurance Company Limited 1,165,175,567 772,488,040 392,687,527 6 Prime Bank Limited 315,083,937 460,263,791 (145,179,854) 7 AFC Agro Biotech Limited 26,514,653 36,946,327 (10,431,674) 8 Active Fine Chemicals 18,053,155 21,204,434 (3,151,279) 9 Aftab Automobiles Limited 85,682,310 145,359,192 (59,676,882) 10 Argon Denim 17,316,130 22,675,929 (5,359,799) 11 Barka Power 65,743,532 80,616,388 (14,872,856) 12 Bangladesh Shipping Corporation Limited 38,341,485 49,874,160 (11,532,675) 13 BSRM Limited 36,959,783 56,679,577 (19,719,794) 14 BSRM Steel Mills Limited 4,585,944 7,019,678 (2,433,734) 15 Doreen Power 17,753,780 23,687,937 (5,934,157) 16 Eastern Housing Limited 15,800,848 18,217,288 (2,416,440) 17 Golden Harvest Limited 14,865,833 18,665,067 (3,799,234) 18 Global Heavy Chemical Limited 23,807,785 34,247,190 (10,439,405) 19 ICB 19,799,899 27,605,297 (7,805,398) 20 INTRACO Refuling Station Limited 3,114,141 4,977,033 (1,862,892) 21 Matin Spinning Limited 11,315,640 14,044,434 (2,728,794) 22 METROSPIN 816,000 1,184,469 (368,469) 23 National Polymar 5,446,666 6,271,005 (824,339) 24 OLYMPIC Limited 10,810,000 12,280,119 (1,470,119) 25 Orion Pharma 44,302,821 61,952,895 (17,650,074) 26 Premier Leasing 7,178,100 15,325,745 (8,147,645) 27 Prime Finance Limited 7,643,035 26,958,933 (19,315,898) 28 Paramount Textile Limited 1,153,250 1,085,254 67,996 29 RSRM STEEL Limited 53,140,758 77,550,224 (24,409,466) 30 Saif Power Tec Limited 9,821,370 13,859,527 (4,038,157) 31 Shahjibazar Power Company Limited 58,586,400 79,199,118 (20,612,718) 32 Titas Gas 5,460,000 7,670,726 (2,210,726) 33 United Finance 10,612,613 14,197,006 (3,584,393) 34 WMSHIPYARD Sheppeard Limited 5,014,800 6,603,030 (1,588,230) 2,623,643,648 3,244,853,863 (621,210,215) Actual provision 621,210,215 Surplus/(deficit) -

4 Investments

Investments 4.1 15,327,613,616 13,963,868,517 Bills purchased and discounted 4.2 357,093,888 273,282,476 15,684,707,504 14,237,150,993

99 2018 2017 Note Taka Taka 4.1 Investments

In Bangladesh Demand Investment 528,987,815 414,036,921 Bai-Muajjal (Time) Investment 195,402,971 399,099,215 Bai-Muajjal Time under CCS 79,622,265 74,507,241 Bai-Murabaha-BLC - 28,009,964 Bai-Murabaha-LTR 1,193,826,782 800,511,034 Bai-Salam (PACKING CREDIT) 149,133,314 64,089,258 Staff House Building Investment 16,635,522 12,806,256 Export Development Fund (EDF) against LC 773,063,701 712,130,203 Investment against Cash Incentive 17,131,016 19,626,562 Bai-Muajjal - Investment 3,833,616,144 3,668,800,807 Murabaha - Investment 617,028,554 639,319,763 Hire purchase - Investment 7,923,165,532 7,130,931,292 15,327,613,616 13,963,868,517 Outside Bangladesh - - 15,327,613,616 13,963,868,517 4.2 Bills purchased and discounted

In Bangladesh 357,093,888 255,665,585 Outside Bangladesh - 17,616,891 357,093,888 273,282,476

5 Fixed assets including premises, furniture and fixtures

Cost: Furniture and fixture 25,664,381 24,815,083 Office Appliances 81,620 81,620 Electrical Appliances 29,402,923 27,106,877 Motor Vehicles 2,620,000 2,620,000 ATM Booth 6,925,030 5,524,957 64,693,954 60,148,537 Less: Accumulated depreciation Furniture and fixture 13,662,545 12,547,153 Office Appliances 81,618 81,618 Electrical Appliances 21,886,863 19,896,210 Motor Vehicles 1,659,346 1,135,342 ATM Booth 2,064,811 1,617,965 39,355,183 35,278,288 Written down value as at 31 December 25,338,771 24,870,249

6 Classification of other assets

i) Stationery, stamps, printing materials, etc. 496,036 561,840 ii) Advance rent and advertisement 15,535,825 23,780,432 iii) Interest accrued on investment but not collected, commission and brokerage receivable on shares and debentures, and other income receivables 631,241 2,431,241 iv) Security deposits 69,460 69,460 v) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses 12,859,073 32,154,174 vii) Suspense account 1,676,660 2,205,290 viii) Silver - - ix) Head office general account - 2,351,077,534 X) Others 2,689,880 2,195,880 33,958,174 2,414,475,850

100 2018 2017 Note Taka Taka 7 Borrowing from other banks, financial institutions and agents

In Bangladesh 7.1 - 2,000,000,000 Outside Bangladesh - - - 2,000,000,000

7.1 In Bangladesh

Secured Borrowing against securities from Bangladesh Bank 2,000,000,000 - 2,000,000,000 Unsecured - - - 2,000,000,000

8 Deposits and other accounts

Al-wadeeah current accounts and other accounts Al-wadeeah current deposits 480,070,113 512,649,667 Foreign currency deposits 168,005,202 52,702,535 Sundry deposits 1,402,171,221 1,077,794,441 2,050,246,536 1,643,146,644 Bills payable Payment order issued 82,164,252 131,632,916 T.T. payable 80,630 30,628 Demand draft 52,836 53,036 82,297,718 131,716,580

Mudaraba savings bank deposits 2,007,450,494 1,919,612,283

Mudaraba fixed deposits Mudaraba fixed deposits 14,112,403,140 10,921,320,630 Mudaraba Special notice deposits 519,691,322 758,955,126 Scheme deposits 1,005,212,686 1,324,085,318 Interest Payable on FDR/Scheme 224,579,694 927,717 15,861,886,841 13,005,288,790 20,001,881,588 16,699,764,297

9 Other liabilities

Provision for investments 9.1 367,401,062 1,272,781,335 Provision for off-balance sheet exposures 9.2 58,384,916 54,032,681 Profit suspense account 120,629,304 147,180,025 Accrued expenses 70,443 1,167,700 Profit payable on borrowings - 7,390,820 Accounts payable - Bangladesh Bank 5,955 - Accounts payable - others 1,774,777 2,343,610 Provision for diminution in the market value of share 9.2 621,210,215 566,590,808 Unearned income 380,676,896 360,014,159 Head office general account 561,325,472 - Withholding tax 65,044,390 62,301,610 2,176,523,430 2,473,802,748

9.1 A. General provision for investments

Balance as at 1 January 109,234,075 68,386,107 Provision made during the year 3,444,675 40,847,968 112,678,750 109,234,075 Adjustments made during the year - Balance as at 31 December 112,678,750 109,234,075

101 2018 2017 Note Taka Taka B. Specific provision for investments

Balance as at 1 January 1,163,547,260 954,803,734 Recoveries of amounts previously written off 39,264,573 1,934,606 Provision made during the year - 206,808,920 1,202,811,833 1,163,547,260 Adjustments made during the year (948,089,521) - Balance as at 31 December 254,722,312 1,163,547,260

C. Total provision on investments (C=A+B) 367,401,062 1,272,781,335

9.2 Provision for off-balance sheet exposures

Balance as at 1 January 54,032,681 34,990,262 Provision made during the year 4,352,235 19,042,419 58,384,916 54,032,681 Adjustments made during the year - - Balance as at 31 December 58,384,916 54,032,681

9.3 Provision for diminution in the market value of share

Balance as at 1 January 566,590,808 722,164,321 Provision made during the year 54,619,407 - 621,210,215 722,164,321 Adjustments made during the year - (155,573,513) Balance as at 31 December 621,210,215 566,590,808

10 Contingent liabilities

10.1 Acceptances and endorsements

Acceptance under Letters of credit - Import 626,409,221 653,379,843 Acceptance under Letters of credit - Export 1,079,772,962 501,770,401 1,706,182,184 1,155,150,244

10.2 Letters of guarantee

Local 1,507,850,405 1,462,136,656 Foreign 338,909,000 223,722,000 1,846,759,405 1,685,858,656

10.2.1 Balance for which the Bank is contingently liable in respect of guarantee issued favouring:

Directors or officers - - Government - - Banks and other financial institutions - - Others 1,846,759,405 1,685,858,656 1,846,759,405 1,685,858,656

10.3 Irrevocable letters of credit (L/C)

Back to back L/C 991,945,659 640,872,199 Others 1,293,604,336 965,490,935 2,285,549,994 1,606,363,135

102 2018 2017 Note Taka Taka 10.4 Bills for collection

Local 637,248,073 547,674,110 Foreign 630,512,576 408,221,907 1,267,760,650 955,896,017

11. Profit on investment

Demand investment 23,067,695 26,128,573 Bai-Muajjal (Time) investment 36,337,316 36,067,607 Bai-Muajjal time under CCS 8,590,851 6,979,097 Bai-Murabaha-BLC 4,818,214 9,510,323 Bai-Murabaha-LTR 129,255,381 70,059,575 Bai-Salam (PACKING CREDIT) 9,020,244 5,781,431 Staff house building investment - 118 Staff car loan investment - 33,976 Investment against cash incentive 1,948,784 2,189,502 Bai-Muajjal - Investment 339,377,788 307,187,319 Murabaha - Investment 26,208,793 63,984,546 Hire purchase - Investment 857,945,183 491,817,282 Profit on special term deposit STD 68,783 2,267,896 Bills purchased and discounted 44,359,133 29,674,166 Profit on placement with other banks - 13,878,333 Inter branch profit income 517,660,703 569,311,431 1,998,658,866 1,634,871,176

12. Profit shared on deposits and borrowings etc.

Profit shared on deposits (Islamic Banking Branch): Mudaraba Savings Deposits (MSB) 272,778,245 284,524,614 Mudaraba Short Term Deposits (MSTD) 35,504,446 38,568,104 Mudaraba Fixed Term Deposits (MFDR) 896,801,767 533,095,509 Interest on foreign bank accounts 1,897,963 - Profit on Re-finance borrowings 82,465,347 82,315,330 1,289,447,769 938,503,557

13 Commission, exchange and brokerage

Commission and brokerage 119,684,128 77,936,579 Exchange gain 23,693,530 15,588,953 143,377,657 93,525,532

14 Other operating income

Remittance fees 9,845 38,556 Service and incidental charges 6,833,387 7,550,934 Other fees-telephone and postage 3,051,706 2,919,908 Income from retail banking 73,000 154,153 Other fees - SWIFT 13,844,029 10,092,965 Miscellaneous income 8,733,352 9,494,933 32,545,319 30,251,448

103 2018 2017 Note Taka Taka 15 Salaries and allowances

Basic salary 40,988,179 39,089,305 Allowances 24,305,639 23,573,491 Bonus 6,456,643 10,512,942 Provident fund 3,634,956 3,465,119 75,385,417 76,640,857

16 Rent, taxes, insurance, electricity etc.

Rent, rates and taxes 28,776,589 28,608,351 Insurance 11,837,732 8,612,250 Electricity and lighting 4,396,463 3,991,897 45,010,784 41,212,498

17 Postage, stamp, telecommunication etc.

Postage 3,202,018 2,753,978 Telephone /Telex 265,864 318,240 VSAT on-line 1,994,914 2,202,780 SWIFT services 2,723,994 3,875,827 8,186,790 9,150,825

18 Stationery, printing, advertisements etc.

Office stationery 934,342 979,558 Printing stationery 1,297,330 1,044,226 Security stationery 2,073,296 1,275,161 Computer stationery 244,623 152,662 Publicity and advertisement 5,688 3,118 4,555,279 3,454,726

19 Depreciation and repair of bank's assets

Depreciation: Furniture and fixtures 1,272,551 1,276,340 Electrical appliances 1,712,714 1,668,129 Motor vehicles 524,004 524,004 ATM Booth 1,005,873 872,898 4,515,142 4,341,371

Repair: Furniture and fixtures 497,864 365,246 Office and electrical appliance 1,198,035 1,757,874 Motor vehicles 277,694 151,348 Repair, maintenance and utilities 924,365 919,573 2,897,958 3,194,041 7,413,100 7,535,412

104 2018 2017 Note Taka Taka 20 Other expenses

Security and cleaning 8,913,162 7,022,353 Entertainment 1,466,620 1,393,014 Car expenses 6,398,613 7,829,324 Books and periodicals 36,820 34,477 Subscription and donation 55,905 - Travelling expenses 326,568 323,989 Conveyance 347,421 342,006 Fuel 246,328 227,268 Uniforms and apparels 104,398 125,220 Loss on sale of fixed assets 14,551 13,678 Expenses relating ATM services 328,713 - Expenses for CIB report 5,920 4,920 Expenses regarding retail banking 951,157 1,011,211 Miscellaneous 11,573,137 10,714,917 30,769,313 29,042,378

105 Annexure-H Southeast Bank Limited Off-Shore Banking Unit, Bangladesh Balance Sheet as at 31 December 2018

2018 2017 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 1,311,143 110,004,898 122,490,327 Outside Bangladesh 962,295 80,736,585 5,569,926 2,273,438 190,741,482 128,060,253 Money at Call and on short notice 10,000,000 839,000,000 289,450,000 Investments Government - - - Others ------Loans and advances 4 Loans, cash credit & overdrafts etc. 62,281,780 5,225,441,312 3,048,637,990 Bills purchased and discounted 77,697,591 6,518,827,903 5,075,982,118 139,979,371 11,744,269,214 8,124,620,108 Fixed assets including premises, furniture and fixtures 5 15,485 1,299,197 1,531,504 Other assets 6 194,578 16,325,091 20,124,004 Non-banking assets - - - Total assets 152,462,872 12,791,634,985 8,563,785,868

LIABILITIES AND CAPITAL

Liabilities Borrowings from other banks, financial institutions and agents 7 142,500,000 11,955,750,000 8,061,596,000 Deposits and other accounts 8 Current accounts and other accounts 77,927 6,538,058 8,063,742 Bills payable - - - Savings bank deposits - - - Fixed deposits 406,360 34,093,601 27,215,079 484,287 40,631,659 35,278,821 Other liabilities 9 3,227,309 265,977,326 116,223,341 Total liabilities 146,211,595 12,262,358,985 8,213,098,162

Capital/shareholders' equity Paid up capital - - - Statutory reserve - - - Other reserves - - - Foreign currency losses - - - Retained earnings 10 6,251,276 529,276,000 350,687,706 Total shareholders' equity 6,251,276 529,276,000 350,687,706 Total liabilities and shareholders' equity 152,462,872 12,791,634,985 8,563,785,868

106 Southeast Bank Limited Off-Shore Banking Unit, Bangladesh Balance Sheet as at 31 December 2018

2018 2017 Note USD Taka Taka OFF-BALANCE SHEET ITEMS

Contingent liabilities Acceptances and endorsements - - - Letters of guarantee - - - Irrevocable letters of credit - - 39,099,223 Bills for collection 2,129,080 176,671,092 161,100,293 Other contingent liabilities - - - total contingent liabilities 2,129,080 176,671,092 200,199,516

Other 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 2,129,080 176,671,092 200,199,516

107 Annexure-H.1 Southeast Bank Limited Off-Shore Banking Unit, Bangladesh Profit and Loss account for the year ended 31 December 2018

2018 2017 Note USD Taka Taka

Interest income 11 8,061,335 673,202,880 448,187,159 Interest paid on deposits and borrowings etc. 12 (5,982,051) (499,561,684) (299,456,776) Net interest income 2,079,284 173,641,196 148,730,383 Commission, exchange & brokerage 13 400,370 33,434,928 28,552,410 Other operating income 13.1 141,700 11,833,382 6,983,250 542,070 45,268,310 35,535,660 Total operating income (A) 2,621,354 218,909,506 184,266,043

Salaries and allowances 14 53,184 4,441,390 4,348,142 Rent, taxes, insurance, electricity etc. 15 12,688 1,059,615 1,015,474 Legal expenses - - - Postage, stamp, telecommunication 16 13,235 1,105,281 973,283 Stationery, printing, advertisements etc. 17 1,537 128,332 101,586 Depreciation and repair of bank's assets 18 3,160 263,905 332,560 Other expenses 19 55,350 4,622,300 4,255,775 Total operating expenses (B) 139,155 11,620,824 11,026,819 Operating profit (C=A-B) 2,482,199 207,288,683 173,239,224 Provision for loans and advances General provision 9.1 431,466 36,200,000 17,977,179 Specific provision - - - 431,466 36,200,000 17,977,179 Provision for diminution in value of investments - - Other provisions 9.2 (2,918) (235,284) (100,652) Total provision (D) 428,548 35,964,716 17,876,527 Total profit before tax (C-D) 2,053,651 171,323,967 155,362,697

108 Annexure-H.2 Southeast Bank Limited Off-Shore Banking Unit, Bangladesh Notes to the Financial Statements as at and for the year ended 31 December 2018

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 International Financial Reporting Standards (IFRS).

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. 83.9000 (closing rate as at 31 December 2018) and Tk.83.5101 (average rate which represents the year end) respectively.

2.3 Basis of 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.

2018 2017 Note USD Taka Taka

3 Balance with other banks and financial institutions

In Bangladesh 3.1 1,311,143 110,004,898 122,490,327 Outside Bangladesh 3.2 962,295 80,736,585 5,569,926 2,273,438 190,741,483 128,060,253

109 2018 2017 Note USD Taka Taka 3.1 In Bangladesh

Southeast Bank Limited 1,311,143 110,004,898 122,490,327 Other commercial bank - - - 1,311,143 110,004,898 122,490,327

3.2 Outside Bangladesh (current account)

Standard Chartered Bank, New York 962,295 80,736,585 5,569,926

Money at call and on short notice In bank; Placement SEBL Head Office 10,000,000 839,000,000 289,450,000 10,000,000 839,000,000 289,450,000

4 Loans and advances

Loans, cash credit, overdrafts etc. 4.1 62,281,780 5,225,441,312 3,048,637,990 Bills purchased and discounted 4.2 77,697,591 6,518,827,903 5,075,982,118 139,979,371 11,744,269,214 8,124,620,108

4.1 Loans, cash credit, overdrafts etc.

In Bangladesh - - - Outside Bangladesh 4.1.1 62,281,780 5,225,441,312 3,048,637,990 62,281,780 5,225,441,312 3,048,637,990

4.1.1 Outside Bangladesh

Time loan 29,556,084 2,479,755,489 708,775,158 Term loan 30,352,152 2,546,545,580 2,184,773,489 Advance-LTR 954,839 80,110,992 57,970,184 Loan against foreign bill 1,418,704 119,029,250 97,119,159 62,281,780 5,225,441,312 3,048,637,990

4.2 Bills purchased and discounted

In Bangladesh - - - Outside Bangladesh 77,697,591 6,518,827,903 5,075,982,118 77,697,591 6,518,827,903 5,075,982,118

5 Fixed assets including premises, furniture and fixtures

Cost: Furniture and fixtures 40,730 3,417,250 3,368,373 Electrical appliances 22,067 1,851,389 1,824,909 62,797 5,268,639 5,193,283 Less: Accumulated depreciation Furniture and fixtures 27,102 2,273,891 2,027,555 Electrical appliances 20,209 1,695,551 1,634,224 47,312 3,969,442 3,661,779 Written down value as at 31 December 15,485 1,299,197 1,531,504

6 Other assets

Interest on calls and placements(USD) 58,056 4,870,862 920,607 Prepaid management fee GCPF 134,145 11,254,793 13,456,951 Prepaid interest mashreq - - 5,560,583 Insurance 89 7,443 8,171 Advance office rent 2,149 180,270 177,692 Others 140 11,723 - 194,578 16,325,091 20,124,004

110 2018 2017 Note USD Taka Taka 7 Borrowing from other banks, financial institutions and agents

Borrowings from IFC - - 1,240,500,000 Borrowings from CBQ 20,000,000 1,678,000,000 661,600,000 Borrowings from Mashreq bank PSC-USD - - 827,000,000 Borrowings from GCPF 20,000,000 1,678,000,000 1,654,000,000 Borrowings from RAK Bank ,UAE 16,500,000 1,384,350,000 1,240,500,000 Borrowings from Bank Muscat, Oman - - 661,600,000 Borrowings from FGB, UAE 15,000,000 1,258,500,000 827,000,000 Borrowings from ADB 10,000,000 839,000,000 289,450,000 Borrowings from NBM Bank, Nepal 5,000,000 419,500,000 - Borrowings from SCB, Singapore 25,000,000 2,097,500,000 - Borrowings from EIB, UAE 16,000,000 1,342,400,000 - Borrowings from FM HDFC Bank,Hong Kong - - 413,500,000 Borrowings from Head Office 15,000,000 1,258,500,000 246,446,000 142,500,000 11,955,750,000 8,061,596,000

8 Deposit accounts

Current accounts 8.1 77,927 6,538,058 8,063,742 Fixed deposits 406,360 34,093,601 27,215,079 484,287 40,631,659 35,278,821 8.1 Current deposits

Current accounts 59,054 4,954,608 4,153,819 Margin against L/C - - 3,909,923 Sundry creditors 18,873 1,583,450 - 77,927 6,538,058 8,063,742

9 Other liabilities

Accrued interest on borrowing .O/Banks (Call) 234,097 19,640,758 207,176 Interest payable-CBQ Loan 149,655 12,556,060 8,014,182 Accrued interest on borrowing from NBM Bank, Nepal 54,250 4,551,575 - Interest payable on RAK Bank, UAE 105,304 8,834,995 7,688,983 Interest payable on FGB, UAE 178,723 14,994,897 3,818,628 Interest payable on ADB 118,809 9,968,047 1,600,100 Accrued interest on borrowing from EIB, UAE 192,018 16,110,291 - Accrued interest on borrowing from SCB, Singapore 325,307 27,293,236 - Accrued interest on borrowing from GCPF - - 769,610 Interest payable on Bank Muscat, Oman - - 2,920,259 Interest payable-IFC loan - - 1,757,375 Accrued interest on borrowing FM-HDFC Bank, Hong Kong - - 6,195,033 Interest Suspense 391,070 32,810,757 - Provision for unclassified loans and advances 9.1 1,456,785 117,450,000 81,250,000 Provision for off-balance sheet exposures 9.2 21,291 1,766,711 2,001,995 3,227,309 265,977,326 116,223,341

9.1 Provision for unclassified loans and advances

Balance as at 1 January 1,025,319 81,250,000 63,272,821 Provision made during the year 431,466 36,200,000 17,977,179 1,456,785 117,450,000 81,250,000 Adjustments made during the year - - - Balance as at 31 December 1,456,785 117,450,000 81,250,000

9.2 Other provisions

Provision for off-balance sheet exposures Balance as at 1 January 24,208 2,001,995 2,102,648 Add: Provision made during the year - - - 24,208 2,001,995 2,102,648 Less: Adjustments made during the year (2,918) (235,284) (100,652) Balance as at 31 December 21,291 1,766,711 2,001,995

111 2018 2017 Note USD Taka Taka 10 Retained earnings

Balance as at 1 January 4,197,625 350,687,706 178,196,055 Add/less: foreign currency translation gain for last year - 7,264,328 17,128,953 4,197,625 357,952,034 195,325,008 Addition during the year 2,053,651 171,323,967 155,362,697 6,251,276 529,276,000 350,687,706 Add/less: foreign exchange gain (loss) - - - Balance as at 31 December 6,251,276 529,276,000 350,687,706

11 Interest income on investment

Interest income from loans and advances 2,637,614 220,267,367 130,111,780 Interest on overdraft 118 9,829 47,455 Interest income from bill purchased and discounted 5,161,369 431,026,422 317,132,599 Interest income calls & placement (FCY) 262,235 21,899,262 895,326 8,061,335 673,202,880 448,187,159

12 Interest paid on deposits and borrowings etc.

Interest on FDR 35 2,898 2,184 Interest expense on mashreq bank loan 171,099 14,288,517 16,858,486 Interest expenses -GCPE loan 1,187,458 99,164,755 65,135,550 Interest on IFC loan 463,017 38,666,637 54,030,392 Interest on CBQ loan 721,498 60,252,403 42,233,009 Interest expenses -ICIC bank 155,123 12,954,324 - Interest expenses -RAK bank,UAE 919,401 76,779,269 36,260,651 Interest expenses -Bank Muscat, Oman 101,554 8,480,808 22,720,091 Interest expenses FGB, UAE 263,971 22,044,233 29,757,481 Interest expenses ADB 360,398 30,096,860 8,312,692 Interest expense on -HDFC BANK, HONG 8,375 699,421 6,024,906 Interest expense on -SCB, Singapore 651,772 54,429,512 - Interest expense on -EIB, UAE 340,651 28,447,807 - Interest expense on -NMB Bank 54,250 4,530,423 - Interest on calls and placement 583,448 48,723,817 18,121,334 5,982,051 499,561,684 299,456,776

13 Commission, exchange & brokerage

Commission and other charges 400,370 33,434,928 28,552,410 400,370 33,434,928 28,552,410

13.1 Other operating income

Other income- SWIFT 27,820 2,323,251 603,217 Miscellaneous income 26,440 2,208,008 1,371,760 Rebate from trade payments 87,440 7,302,123 5,008,273 141,700 11,833,382 6,983,250

14 Salaries and allowances

Basic salary 25,173 2,102,214 1,981,007 Allowances 21,518 1,796,939 1,640,245 Provident fund contribution 2,429 202,822 198,522 Bonus 4,064 339,415 528,367 53,184 4,441,390 4,348,142

15 Rent, taxes, insurance, electricity etc.

Rent, rates and taxes 10,735 896,478 853,088 Insurance 222 18,531 19,645 Electricity and lighting 1,732 144,606 142,741 12,688 1,059,615 1,015,474

112 2018 2017 Note USD Taka Taka 16 Postage, stamp, telecommunication etc.

Postage 200 16,684 13,601 Internet service 3,114 260,078 281,268 SWIFT charges 6,553 547,280 476,149 FC Nostro charges 2,960 247,190 171,072 Telephone 408 34,050 31,193 13,235 1,105,281 973,283

17 Stationery, printing, advertisements etc.

Office and printing stationery 1,537 128,332 101,586 1,537 128,332 101,586

18 Depreciation and repair of bank's assets

Depreciation on own assets: Furniture and fixtures 2,585 215,907 218,278 Electrical appliances 575 47,998 114,282 3,160 263,905 332,560

19 Other expenses

Entertainment 672 56,095 28,876 Management fee GCPF 28,575 2,386,283 1,759,214 Pay Protection 193 16,090 - Expense-IFC portfolio monitoring expense - - 462,467 Travelling expenses and allowance 49 4,111 11,301 House maintenance (Executive ) 2,281 190,472 186,746 Repair, maintenance and utilities 732 61,120 39,094 Books and periodicals 71 5,949 5,271 Conveyance 560 46,805 38,390 Miscellaneous 22,217 1,855,374 1,724,416 55,350 4,622,300 4,255,775

113 Annexure-I Southeast Bank Limited and its subsidiaries Geographical and Business Segment I) Geographical Segment Inside Bangladesh Outside Bangladesh SEBL Off Shore SEBL Capital Southeast Financial Southeast Financial Southeast Exchange Particulars Total (Conventional & Banking Unit Services Limited Services (UK) Ltd Services (Australia) Pty Company (South Africa) Islamic Banking) Ltd Pty Ltd Taka Taka Taka Taka Taka Taka Taka Income 14,504,704,388 218,909,506 113,002,743 23,886,752 - 101,413,142 14,961,916,531 Less: Inter segmental income/expense 4,107,071 (4,107,071) - Total Income 14,500,597,317 218,909,506 117,109,814 23,886,752 - 101,413,142 14,961,916,531 Operating profit (profit before unallocated expenses and tax) 14,500,597,317 218,909,506 117,109,814 23,886,752 - 101,413,142 14,961,916,531 Allocated expenses (5,013,888,340) (11,620,824) (88,921,410) (23,520,884) (890,886) (40,079,066) (5,178,921,410) Provision against loans & advances and others (5,078,372,191) (35,964,716) - (5,114,336,907) Profit (loss) before tax 4,408,336,786 171,323,967 28,188,404 365,868 (890,886) 61,334,075 4,668,658,214 Provision for tax including deferred tax (2,165,000,000) (13,316,862) (17,132,508) (2,195,449,370) Net profit 2,243,336,786 171,323,967 14,871,542 365,868 (890,886) 44,201,567 2,473,208,844 Segment assets 362,707,676,157 12,791,634,985 5,876,791,255 26,894,933 1,381,793 171,299,757 381,575,678,880 Segment liabilities 362,707,676,157 12,791,634,985 5,876,791,255 26,894,933 1,381,793 171,299,757 381,575,678,880

II) Business Segment Inside Bangladesh Outside Bangladesh Conventional Islamic SEBL Capital Southeast Financial Southeast Financial Southeast Exchange Particulars Total Banking including Banking Services Limited Services (UK) Ltd Services (Australia) Pty Company (South Africa) OBU Ltd Pty Ltd Taka Taka Taka Taka Taka Taka Taka Income 13,838,479,821 885,134,073 113,002,743 23,886,752 - 101,413,142 14,961,916,531 Less: Inter segmental income 4,107,071 - (4,107,071) - - - - Total income 13,834,372,750 885,134,073 117,109,814 23,886,752 - 101,413,142 14,961,916,531 Operating profit (profit before unallocated expenses and tax) 13,834,372,750 885,134,073 117,109,814 23,886,752 - 101,413,142 14,961,916,531 Allocated expenses (4,854,188,480) (171,320,683) (88,921,410) (23,520,884) (890,886) (40,079,066) (5,178,921,410) Provision against loans & advances and others (6,000,010,111) 885,673,204 - - - - (5,114,336,907) Profit (loss) before tax 2,980,174,159 1,599,486,594 28,188,404 365,868 (890,886) 61,334,075 4,668,658,214 Provision for tax including deferred tax (2,165,000,000) - (13,316,862) - - (17,132,508) (2,195,449,370) Net profit 815,174,159 1,599,486,594 14,871,542 365,868 (890,886) 44,201,567 2,473,208,844 Segment assets 353,320,906,124 22,178,405,018 5,876,791,255 26,894,933 1,381,793 171,299,757 381,575,678,880 Segment liabilities 353,320,906,124 22,178,405,018 5,876,791,255 26,894,933 1,381,793 171,299,757 381,575,678,880

114