CHAPTER1

INTRODUCTION

1
1.1 Introduction of the Study
Financial statements for banks present a different analytical problem than manufacturing
and service companies. As a result, analysis of a bank's financial statements requires a
distinct approach that recognizes a bank's somewhat unique risks. Banks take deposits
from savers, paying interest on some of these accounts. They pass these funds on to
borrowers, receiving interest on the loans. Their profits are derived from the spread
between the rate they pay for funds and the rate they receive from borrowers. By
managing this flow of funds, banks generate profits, acting as the intermediary of interest
paid and interest received and taking on the risks of offering credit. As one of the most
highly regulated banking industries in the world, investors have some level of assurance
in the soundness of the banking system. As a result, investors can focus most of their
efforts on how a bank will perform in different economic environments. In this project, I
am trying to provide assistance to the investors, by showing them the performance of
two banks underlying the same functions.
Financial Statement Analysis is a method used by interested parties such as investors,
creditors, and management to evaluate the past, current, and projected conditions and
performance of the firm. Ratio analysis is the most common form of financial analysis. It
provides relative measures of the firm's conditions and performance. Horizontal Analysis
and Vertical Analysis are also popular forms. Horizontal analysis is used to evaluate the
trend in the accounts over the years, while vertical analysis, also called a Common Size
Financial Statement discloses the internal structure of the firm. It indicates the existing
relationship between sales and each income statement account. It shows the mix of assets
that produce income and the mix of the sources of capital, whether by current or long
term debt or by equity funding. When using the financial ratios, a financial analyst
makes two types of comparisons. Financial ratio analysis is an important topic and is
covered in all mainstream corporate finance textbooks. It is also a popular agenda item in
investment club meetings. It is widely used to summarize the information in a company's
financial statements in assessing its financial health. In today's information technology
world, real time financial data are readily available via the Internet. Performing financial
ratio analysis using publications, such as Robert Morris Associates Annual Statement
Studies, Dun & Bradstreets Key Business Ratios, Moodys Manuals, Standard & Poors
Corporation Records, Value Line Investment Survey, etc., is no longer efficient. Since
students and investors now have easy access to on-line databases, the assignments on
financial ratio analysis can be modified accordingly to enhance learning. In the current
scenario where financial instability is rife and financial intuitions are becoming popular,

2
when it comes to investing, the sound analysis of financial statements is one of the most
important elements in the fundamental analysis process.

1.2. Background of the Study

The BBA program of Dhaka International University is designed to focus on theoretical
and Professional development of students who are open to take up business as a
profession as well as service as a career. Internship reports are a requirement for the
completion of the BBA program. This Internship reports is of knowledge and learning
become perfect when it is associated with theory and practice. For any business student
only curriculum activity is not enough for handling the real business situation, therefore,
it is a requirement after the completion of BBA to involve with a business organization
to prepare a report. So it is an opportunity for the students to know about the field of
business through the Internship program.

To fulfill this requirement I worked as an intern in Southeast Bank Ltd. for the Internship
my preference was in stationery item. I submitted resume to different institutions but
appointed as an Internship trainee of the SEBL. My assigned topic is Financial
Statement Analysis of Southeast Bank Limited which is assigned by my supervisor in
the department. On the basis of working experience in the Internship period I have
prepared this report and I have tried my level best to relate the theoretical knowledge
with the practical work situation.

1.3 Objectives of the Study

The general objective:
The general objective of the study is to analyze Financial Statement Analysis of
Southeast Bank Limited
The specific objectives of the study are given as:
i. To analyze the financial performance of Southeast Bank Limited.
ii. To explain the Strengths, Weaknesses, Opportunities and Threats of SEBL
iii. To find out problems of Financial Statements of Southeast Bank Limited and
iv. To suggest recommendations to overcome those problems.

1.4 Statement of the Research Problem

Actually this revises going to learn about the investment analysis of southeast bank
limited. The main business of banking is to provide credit to the borrowers and take
deposit from customers. Banks play the most important role for development of a

3
country as well as to provide large scale of employment opportunities. Southeast Bank
Ltd. is the major bank which plays that role. It also plays a role in the economic
development of a nation through saving and glory. It diverts and allocation of the funds
in all over country which are aimed to develop countrys economy and adds to national
wealth.

1.5 Scope of the Study

As I was an intern, my scope was limited and restricted for some purpose. I had
maintained some official formality for the collection of data of my report. This study will
give a clear idea about the Financial Statement of Southeast Bank Limited as well as the
different section of different products and services of Southeast Bank Limited. At last
the financial position of the bank in the banking industry based on its last couple of
years performance. Information availability. Good communication system. Have a wide
area of gaining knowledge. Good working environment.

1.6 Limitations of the Study

Each study has its own limitation. This study is also not out of this trend. This study also
had a lot of limitations. Few limitations are listed below.

i. Time is main point of limitation for this wide range of study. Due to the time
limit, the scope and dimension of the report may not be broadened.
ii. There is a lack of sufficient secondary data
iii. All the concerned personnel of the banks different departments may not be
interviewed.
iv. Lack of in-depth knowledge and analytical ability for writing such report.
v. Organizational confidentiality of internal data has restricted me from putting or
disclosing some information.
vi. The personnel of the organization did not want to disclose the classified
information to the outsiders.
vii. Due to lack of experience, there is a chance of having some mistake in the report
though best effort has been applied to avoid any kind of mistake.
viii. I have faced major limitation in the financial projection as my estimate was rather
informative base than of actual one.

4
 CHAPTER2
Methodology of the Study

5
2.1 Methodology of the Study
Correct and smooth completion of report requires adherence to some rules and
methodology. In order to make the report, the decision has been taken to collect various
primary and secondary data. The primary data have been collected by personal
interview of the responsible officers, clients. And others data sources are the annual
report and other documents of SEBL. Different forms of statistical configurations have
been used to make the study meaningful and realistic. After collecting data from the
interview and materials provided by them were carefully scrutinized first. Then the data
was organized as required. In order to make the study effective and efficient, following
two types of data and information have been used widely:
2.2 Sources of Data:
2.2.1 Primary Sources:
a) Face to face conversation with respective officers.
b) Face to face conversation with clients.
c) Close observation of the task
2.2.2 Secondary Sources:
a) Annual report of SEBL. (2016)
b) Financial report of SEBL. (2016)
c) Published documents.
d) Data available at the website of SEBL (www.southeastbank.com.bd)
2.3 Sampling Plan
2.3.1 Study population
The targeted population was officers of Southeast Bank Ltd.
2.3.2 Sampling strategy
Simple random sampling was used for data collection
2.4 Data collection Techniques
This information of this report has been collected from two sources:

2.5 Data analysis

After collection of entire data, different approaches are widely used to analyze and
organize the data such as qualitative approach. Descriptive statistics (mainly average,
frequency, percentage) has been applied for analysis.

6
 CHAPTER3
PROFILE OF THE SOUTHEAST BANK
LIMITED

7
3.1 History of Southeast Bank Ltd.
Southeast Bank Limited is one of the leading commercial bank in the private sector and
it established under the ambit of Bank Company Act, 1991 and incorporated as a Public
Limited Company under Companies Act, 1994 on March 12, 1995. The Bank started
their commercial banking operations on May 25, 1995. During this short period of time
the Bank is successful in positioning itself as a progressive and dynamic financial
institution in the country. The bank had been widely inspired by the business
community, from small entrepreneurs business to large traders commercial business and
industrial conglomerates, including the top-rated corporate borrowers are motivated by
their first trade innovation of work and their activities. Thus within a very short period of
time it has been able to create an image in this industry with their exploratory vision and
also able to create a reputation among all of the bank.
SEBL has been licensed by the Government of Bangladesh as a Scheduled commercial
bank in the private sector in pursuance of the policy of liberalization of banking and
financial services and facilities in Bangladesh. Within a short period of time at most 20
years the Bank of its operation achieved a remarkable success and met up capital
adequacy requirement of Bangladesh Bank. It has been growing fast as one of the leaders
of the new generation banks in the private sector in respect of business and profitability
as it is evident from the financial statements for the last 20 years.
Southeast Bank Limited already has128 branches throughout Bangladesh and its aim is
to be the leading bank in the countrys principal markets. The bank by concentrating on
customer service and specialize them on its sites to make a great reputation. The Bank is
committed to providing continuous training to its staff to keep them up to date with
modern practices in their respective fields of work and in this training they motivated
them keep their pertinence to handle different types of customer and inspire them to
dedication toward their work. The Bank also tries to fulfill its share in community
responsibilities. By such measures the Bank intends to grow and increase shareholders
earning per share. Southeast Bank Limited pledges to maximize customer satisfaction
through services and build a trusting relationship with customers, which has stood the
test of time for the last twenty years.

8
3.2 Profile of Southeast Bank Ltd.
Southeast Bank Limited is a fast growing second generation bank. SEBL has been
achieving a continuous growth rate in different spheres of banking operations since its
establishment in the year 1995 The philosophy of the bank is A Bank with Vision that
indicates its sincerity, integrity as well as the strength of mind to cope with the global
competitiveness and advancement.

Overview of Southeast Bank Limited

Name Southeast Bank Limited
Head Office Eunoos Trade Center,52-53 dilkusha C/A
Date of Incorporation 12th March 1995
Principal Activity Commercial Banking
Number of Branches 133
Chairman Mr. Alamgir Kabir Chowdhury
Telephone No. (8802) 9550081,9567271-2
website www.southeastbank.com.bd

3.3 Vision of Southeast Bank Ltd.

It is especially important for managers and executives in any organization to agree upon
the basic vision of that firm to achieve its long term goal. A clear vision also provides a
better foundation for developing a comprehensive Mission statement. So establishment a
vision statement is very mush necessary for every firm that should fast and state forward.
Southeast Bank also established their vision statement to achieve their long-term
objectives and goal. Their vision is to stand out as a pioneer banking institution in
Bangladesh and contribute significantly to the national economy.

3.4 Mission of Southeast Bank Ltd

A business mission will help us the vision into the reality and is the foundation for
priorities, strategies, plans and work assignment. Southeast Bank is very much concern
about their mission because it can only be revealed by the manager and resolved through
the mission statement. The mission of the hank is stated below:
Establish high quality techniques to provide high quality financial service.
Fast and accurate customer service.
Balanced their growth strategy.
Maintain high standard business ethics and maintain a good environment in their
working field.
Maintain the shareholders return and equity.
9
 Innovative banking system at a competitive price.
Deep commitment to the society and the growth of national economy.
Have attractive and quality human resource.

3.4 Objectives of the Southeast Bank Limited:

Be one of the best Banks of Bangladesh.
Achieve excellence in customer service next to none and superior to all
competition.
Cater to all differentiated segments of Retail and Wholesale Customers.
Be a high quality distributor of product and services.
Use state-of the art technology in all spheres of Banking.
To inspire and motivate the new entrepreneurs by offering various credit product.
To develop the model of modern Banking in the Banking sector.
To boost up and mobilize the savings of urban and rural people.
International trade financing within the country to boost up export and import
activities.
To encourage the investment in private sector independently or under syndication
arrangement.
To develop the living standard of poor income people by offering consumer and
personal credit facility.

3.5 Core Values & Strengths

CORE VALUES CORE STRENGTHS

Integrity Transparent and quick decision

Respect making
Fairness Efficient Term of Performers
Harmony Professional team of performers
Team Spirit Satisfied Customers
Courtesy Internal control
Commitment Skilled control
Service Excellence Skilled risk Management
Insight and Spirit Diversification
Enthusiasm for Work
Business Ethics

10
3.6 Commitment to Clients
Southeast Bank Limited is a customer friendly Banking institution thriving fast in both
earning and ability to stand out as a leading Banking institution in Bangladesh. The Bank
delivers unparalleled financial service with the touch of our heart to Retail, Small and
Medium Scale.
Enterprises (SMEs),Corporate, Institutional, Governmental and individual clients
through the outlets of branches across the Country. Banks business initiatives center on
the emerging needs of the clients. Banks commitments to the clients are the following:
Provide service with high degree of professionalism and use of most modern
Banking technology.
Create life-long relationship based on mutual trust and respect.
Respond to customer needs with speed and accuracy.
Share their values and beliefs.
Grow as the Banks customers grow.
Provide products and services at competitive pricing
Ensure safety and security of customers valuables in trust.

3.7 Management of Southeast bank Limited

To achieve the mission, a set of efficient drivers is mandatory. Commercial Banks in
Bangladesh are now in a hard competition. This is because of continuous growth of
similar service oriented local Bank along with special service providing foreign Bank
due to globalization.
In this respect, Southeast Bank enjoys a team of sound professionals. It is managed by a
team of efficient professionals having long experience in the Banking industry. They
create an environment of trust and discipline that affects everybody in the Bank to work
together for achieving the objectives of the Bank. The culture of maintaining the
congenial work-environment in the Bank has further enabled the staff to benchmark
themselves better against management expectations. A commitment to quality and
excellence in service is the hallmark of their identity. While the board sets the
management objectives and policies, the management is instrumental in providing the
inputs and implementing the strategies set by the board. The Bank maintains a
continuous policy of developing its human resources. It believes that, the professionals
are the key forces behind the achievement of success in banking business at the face of
prevailing rigorous competitive market situation.
11
3.8 Organizational Structure

12
3.9 Products &Services of Southeast Bank Ltd.

13
 CHAPTER4
CONCEPTUAL FRAMEWORK

14
4.1 Definition of Bank and Banking
An institution that provides a great variety of financial services. At their most basic,
banks hold money on behalf of customers, which is payable to the customer on demand,
either by appearing at the bank for a withdrawal or by writing a check to a third party.
Banks use the money they hold to finance loans, which they make to businesses and
individuals to pay for operations, mortgages, education expenses, and any number of
other things. Many banks also perform other services for a fee; for instance they offer
certified checks to customers guaranteeing payment to third parties. In some countries
they may provide investment and insurance services. With the exception of Islamic
banks, they pay interest on deposits and receive interest on their loans. Banks are
regulated by the laws and central banks of their home countries; normally they must
receive a charter to engage in business. Banks are usually organized as corporations.

4.1.1 Banking
In simple words, Banking can be defined as the business activity of accepting and
safeguarding money owned by other individuals and entities, and then lending out this
money in order to earn a profit. However, with the passage of time, the activities
covered by banking business have widened and now various other services are also
offered by banks. The banking services these days include issuance of debit and credit
cards, providing safe custody of valuable items, lockers, ATM services
and online transfer of funds across the country / world.

4.2 Definition of 'Financial Statement Analysis

The process of reviewing and evaluating a company's financial statements (such as the
balance sheet or profit and loss statement), thereby gaining an understanding of the
financial health of the company and enabling more effective decision making. Financial
statements record financial data; however, this information must be evaluated through
financial statement analysis to become more useful to investors, shareholders, managers
and other interested parties.

15
 4.3 Kinds of Financial Statements

Figure-3 : Kinds of Financial Statements

Financial Statements
Analysis

Basic of Financial Horizontal and Earning Power and

Statement Verticial Analysis Ratio Analysis Irregular Items
Analysis
Need for Balance Sheet Liquidity Discontinued
comparative operations
Income statement Profitability
analysis
Extraordinary items
Retained earnings Solvency
Tools of analysis Changes in accounting
statement Summary
principle
Comprehensive
income

Basic of financial Statement Analysis:

Analyzing financial statements involves evaluating three characteristics: a company's
liquidity, profitability, and solvency. A short-term creditor, such as a bank is primarily
interested in liquidity-the ability of the borrower to pay obligations when they come due.
A long-term creditor, such as a bondholder, looks to profitability and solvency measures
that indicate the company's ability to survive over a long period of time. Stockholders
look at the profitability and solvency of the company. They want to assess the likelihood
of dividends and the growth potential of the stock.

16
Need for Comparative Analysis:
Every item reported in a financial statement has significance. We know the company had
that amount of cash on the balance sheet date. To obtain such information. We need to
compare the amount of cash with other financial statement data.

Tools of analysis:
We use various tools to evaluate the significance of financial statement data.

Horizontal analysis:
A horizontal analysis, or trend analysis, is a procedure in fundamental analysis in which
an analyst compares ratios or line items in a company's financial statements over a
certain period of time. The analyst uses his discretion when choosing a particular
timeline; however, the decision is often based on the investing time horizon under
consideration

Balance sheet:
Definition: The balance sheet is a report that summarizes all of an entity's assets,
liabilities, and equity as of a given point in time. It is typically used by lenders, investors,
and creditors to estimate the liquidity of a business. The balance sheet is one of the
documents included in an entity's financial statements. Of the financial statements, the
balance sheet is stated as of the end of the reporting period, while the income statement
and statement of cash flows cover the entire reporting period.

Income statement:
Definition: The income statement is a financial report that shows an entity's financial
results over a specific period of time. The time period covered is usually for a month,
quarter, or year, though it is possible that partial periods may also be used. This is the
most commonly-used of the financial statements, and is the most likely statement to be
distributed within a business for management review.
The general classifications of information noted on the income statement are as follows:
Revenue
Cost of goods sold
Gross margin (revenues - cost of goods sold)
Selling, general and administrative expenses
Operating income (gross margin - selling, general and administrative expenses)
Other income and expense
Income tax expense
Net income or loss
17
Vertical Analysis:
Vertical analysis, also called common-size analysis, is a technique that expresses each
financial statement item as a percent of a base amount.
Ratio analysis:
Ratio analysis expresses the relationship among selected items of financial statement
data. A ratio expresses the mathematical relationship between one quantity and another.
The relationship is expressed in terms of either a percentage, a rate, or a simple
proportion.

Liquidity Ratios:
Liquidity rations measure the short-terms ability of the company to pay its maturing
obligations and to meet unexpected needs for cash. Short-terms creditors such as bankers
and suppliers are particularly interested in assessing liquidity. The ratios we can use to
determine the enterprise's short-term debt-paying ability are the current ratio, the acid-
test ratio, receivables turnover, and inventory turnover.

Profitability Ratios:
Profitability ratios measure the income or operating success of a company for a given
period of time. Income, or the lack of it, affects the company's ability to obtain debt and
equity financing. It also affects the company's liquidity position and the company's
ability to grow.

Solvency Ratios:
Solvency ratios measure the ability of a company to survive over a long period of time.
Long-term creditors and stockholders are particularly interested in a company's ability to
pay interest as it comes due and to repay the face value of debt at maturity.

18
Summary of Ratios:
Illustration 18-27 summarizes-ratios discussed in this cheaper. The summary includes
the formula and purpose or use of each ratio.

Earning power and irregular items:

Users of financial statements are interested in the concept of earning power, Earning
power means the normal level of income to be obtained in the future. Earning power
differs from actual net income by the amount of irregular revenues, express, gains, and
losses.

Discontinued Operations:
Discontinued operations refers to the disposal of a significant component of a business.
Examples involve stopping an entire activity or eliminating a major class of customers.

Extraordinary Items:
Extraordinary items are events and transactions that meet two conditions: They are (1)
unusual in nature, and (2) infrequent in occurrence. To be unusual, the item should be
abnormal and only incidentally related to the company's customary activities.

Changes in Accounting principle:

For ease of comparison, users of financial statements expect companies to prepare such
statements on a basis consistent with the preceding period.

Comprehensive Income:
The income statement reports most revenues, expenses, gains, and losses recognized
during the period, However, over time, specific exceptions to this general proactive have
developed.

19
Quality of earnings:
In evaluating the financial performance of a company, the quality of a company's
earnings is of extreme importance to analysis. A company that has a high quality of
earnings provides full and transparent information that will not confuse or mislead users
of the financial statements.

Alternative Accounting Methods:

Variations among companies in the application of generally accepted accounting
principles may hamper comparability and reduce quality of a earnings.

Pro Forms Income:

Companies whose stock is publicly traded are required to present their income statement
following generally accepted accounting principles (GAAP). In recent years, many
companies have also reported a second measure of income, called proforma income.

4.4 Scope of Financial Statement Analysis

This section is concerned with the techniques of financial analysis employed by external
users of financial statements. The techniques described are generally limited to analysis
of publicly available financial statements or similar reports circulated privately. Principal
emphasis is on the financial statements of companies whose shares are publicly traded.
Chapter 25 of this Handbook is concerned with the valuation of companies whose shares
are not publicly traded.

Management has available far more extensive internal financial data for control of the
business and deployment of resources. In many respects, it may employ similar analysis
as an external user, but in greater detail.

20
4.5 The major objectives of financial statement analysis are as follows:
Past performance is a good indicator of future performance. Investors or creditors are interested
in the trend of past sales, cost of good sold, operating expenses, net income, cash flows and
return on investment. These trends offer a means for judging management's past performance
and are possible indicators of future performance.

Assessment of current position :

Financial statement analysis shows the current position of the firm in terms of the types of assets
owned by a business firm and the different liabilities due against the enterprise.

Prediction of profitability and growth prospects:

Financial statement analysis helps in assessing and predicting the earning prospects and growth
rates in earning which are used by investors while comparing investment alternatives and other
users in judging earning potential of business enterprise.

Prediction of bankruptcy and failure:

Financial statement analysis is an important tool in assessing and predicting bankruptcy and
probability of business failure.

Assessment of the operational efficiency:

Financial statement analysis helps to assess the operational efficiency of the management of a
company. The actual performance of the firm which are revealed in the financial statements can
be compared with some standards set earlier and the deviation of any between standards.

21
 CHAPTER5
ANALYSIS AND FINDINGS

22
5.1 Performance at a glance
(Tk. in crore)
Year 2016 2015 2014 2013 2012
Total Income 2662.10 1429.02 2313.17 1986.39 1575.84
Total Expenses 2500.41 1004.32 2012.59 1590.03 1480.59
Total Operating Profit 161.69 424.70 300.58 396.36 95.25
Net Profit/Net Loss 231.11 97.36 (3627.56) 20.80 15.75
Paid-up Capital 900.00 900.00 500.00 327.22 327.22
Reserve Fund 1246.95 1196.28 283.13 303.40 283.40
Deposits 36438.60 32899.72 30230.30 27707.90 25223.39
Advances 23116.66 20634.76 24102.93 22700.96 16828.30
Export 18283.46 17022.42 17814.40 13957.36 12759.28
Import 16420.80 8881.96 8279.60 12984.31 9153.89
No. of Employees:
Officer 11507 11769 12118 12380 12732
Staff 10332 10773 11155 11553 11718
Total 21839 22542 23273 23933 24450
No. of Branches:
Urban 563 562 562 562 490
Rural 619 621 621 621 696
Total 1182 1183 1183 1183 1186

5.2 Common-size Statement (Balance Sheet)

PROPERTY AND ASSETS TAKA %
Cash 20,641,592,198 4.1873929
Cash in hand (including foreign currency) 4,366,813,852 0.8858602
Balance with Bangladesh Bank and its agent Bank 16,274,778,346 3.3015327
Balance with other Banks and financial institutions 9,979,717,359 2.0245046
In Bangladesh 5,265,819,000 1.0682341
Outside Bangladesh 4,713,898,359 0.9562705
Money at call and short notice 250,857,360 0.0508894
Investments: 95,093,241,199 19.290797

23
Government 93,947,843,070 19.058439
Others 1,145,398,129 0.2323577
Loans and Advances 231,166,579,465 46.894895
Loans, Cash Credits, Overdrafts etc. 208,184,384,025 42.232683
Bills purchased& discounted 22,982,195,440 4.6622122
Fixed assets including premises, furniture and fixtures 9,920,927,663 2.0125784
Other assets 125,893,233,074 25.538942
Total Assets 492,946,148,318 100
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks, financial institutions and 545,955,691 0.1107536
agents
Deposit and other accounts 364,385,970,931 73.920036
Current Accounts and other Accounts 98,795,523,389 20.041849
Bills payable 6,642,924,279 1.3475963
Savings Bank Deposits 120,423,161,432 24.429273
Fixed Deposits 138,524,361,831 28.101317
Other Deposits 0 0
Other Liabilities 103,596,507,559 21.015786
Total Liabilities 468,528,434,181 95.046576
Capital/ Shareholder's Equity
Paid up capital 9,000,000,000 1.8257572
Statutory Reserve 3,116,476,533 0.6322144
Other Reserve 9,353,019,515 1.8973715
Surplus in Profit and Loss A/C / Retained Earnings 2,948,218,089 0.5980812
Total Shareholders' Equity 24,417,714,137 4.9534243
Total Liabilities and Shareholders' Equity 492,946,148,318 100

24
5.3 Quantitative Analysis of Southeast Bank Limited
5.3.1 Liquidity Ratio:
Current Ratio: Current ratio may be defined as the relationship between current assets
and current liabilities. This ratio is also known as "working capital ratio". It is a measure
of general liquidity and is most widely used to make the analysis for short term financial
position or liquidity of a firm. It is calculated by dividing the total of the current assets
by total of the current liabilities.
The calculation as follows:
Current Ratio= Total Current Assets \ Total Current Liabilities.
The SEBLs Current Ratios of last 6 years are like following
Year 2011 2012 2013 2014 2015 2016
Current Ratio 1.11 1.08 0.98 0.68 .90 .88

Table 03 : Current Ratio

Graphical Presentation:

Figure 4: Current Ratio

Interpretation: The ratio is mainly used to give an idea of the company's ability to pay
back its short-term liabilities (debt and payables) with its short-term assets (cash,
inventory, receivables). The higher the current ratio, the more capable the company is of
paying its obligations. The current ratio decreasing from 2011 to 2016 that is 1.11 to .68
and that is not good sign for the organization. After that year 2013 its increasing and its
a good sign for the organization. A high current ratio indicates that a company is able to
meet its short-term obligations but in 2015 its again decreasing. From the analysis we
have seen that SEBLs current ratio gradually decreasing.

25
5.4 Analyzing Activity Ratios:
5.4.1 Cost Income Ratio:
Cost Income Ratio=Total operating Expenses/Total Operating Income
Year 2011 2012 2013 2014 2015 2016

Cost Income Ratio 53.36% 45.09% 45.42% 47.20% 51.68% 54.64%

Table-04: Cost Income Ratio

Source: Annual Report of SEBL
Graphical Presentation

Figure 5: Cost Income Ratio.

Interpretation:
We know that this ratio measures the operating efficiency of the bank by measuring the
portion if the total operating costs relative to the total operating income of that bank and
the higher the ratio, the lower the operating efficiency. In 2011 the operating cost of
SEBL Bank Ltd. is high but after that year 2012 its decreasing and its a good sign for
the organization. Cost income ratio increasing from 2013 to 2016 which is 45.42% to
54.64% So it can be said that the operating efficiency of the SEBL Ltd. is not in good
position that is they are not able to minimize their operating cost.

26
5.4.2 Total Asset Turnover Ratio:
The total asset turnover indicates the efficiency with which the firm is able to use all its
assets to generate sales.
Total Asset Turnover= Operating Income/Total Asset
Year 2011 2012 2013 2014 2015 2016
Total Asset Turnover 0.059 0.068 0.064 0.071 .067 .058

Table-05: Total Asset Turnover

Source: Annual Report of SEBL
Graphical Presentation:

Figure-6: Total Asset Turnovers

Interpretation:
The banks total asset turnover ratio increasing from 2011 to 2015 that is 0.059- 0.067
which means 5.9 to 6.7 times. But in 2015 its decreasing. We know the greater the total
asset turnover; it is more efficient and 4 to 6 times is slandered position but also depends
on industry. From the analysis we have seen that total asset turnover of Sonali Bank Ltd
is in good position.

27
5.5 Analyzing Debt Ratios:
5.5.1 Debt ratio
The debt ratio measures the proportion of total assets provided by the firms creditors.
Debt Ratio = Total Liabilities / Total Assets
Year 2011 2012 2013 2014 2015 2016

Debt Ratio .95 .94 .91 .92 .90 .92

Table-06: Debt Ratio

Source: Annual Report of SEBL
Graphical Presentation

Figure-7: Debt Ratio

Interpretation
Debt ratio decreasing from 2011 to 2013 which is 0.95 to 0.91 and its a good sign for
the organization. In 2013 its increasing although in 2015 its decreasing. After that year
2016 the debt ratio increasing .Finally we have seen that debt ratio decreasing from .95
to 0.92. We knows that lower the debt lower the risk. So that is good sign for the
organization.

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4.5.2 Equity capital ratio
Equity Capital Ratio = Total Shareholders Equity / Total Assets
Year 2011 2012 2013 2014 2015 2016

Equity Capital Ratio .046 .063 .086 .088 .099 .079

Table-07: Equity Capital Ratio
Source: Annual Report of SEBL
Graphical Presentation

Figure-8: Equity Capital Ratio

Interpretation
Equity capital ratio increasing from 2011 to 2016 which is .046 to .099 which means 4.6
to 9.9 times and thats a good sign for the organization. After that year 2016 equity
capital ratio decreasing and its not a good sign for the organization. From the analysis we
have seen that SEBLs Equity Capital Ratio gradually increasing except 2016. So the
management of the organization should take proper steps to increase the equity capital.

29
5.6 Analyzing Profitability Ratios:
5.6.1 Investment to Deposit ratio:
Investment to Deposit Ratio=Total investment/Total Deposit

Year 2011 2012 2013 2014 2015 2016

Investment To Deposit Ratio 0.332 0.221 0.379 0.228 .381 .278

Table-08: Investment to Deposit Ratio

Source: Annual Report of SEBL
Graphical Presentation:

Figure-9: Investment to Deposit Ratio.

Interpretation:
Investment to deposit ratio shows that which amount of deposit is used to as investment.
From the graphs it has seen that investment to deposit ratio in fluctuating mode. That
means SEBL Bank Ltd. depends on deposits than the share capital.

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5.7 Net Profit margin:
Net Profit Margin (NPM After Tax) measures profitability as a percentage of revenues
after consideration of all revenue and expense, including interest expenses, non-
operating items, and income taxes.. The calculation is like-

Net Profit Margin = Net Profit after Tax/ Total Revenue

Year 2011 2012 2013 2014 2015 2016
NPM 0.13 0.28 0.24 0.35 .25 .17

Table 09: NPM

Graphical Presentation.

Figure 10: NPM

Interpretation: Net profit margin is one of the most closely followed numbers in
finance. Shareholders look at net profit margin closely because it shows how good a
company is at converting revenue into profits available for shareholders. The Bank net
profit margin in 2011-2012 that is 0.13-0.28 which indicates that profit margin is
increasing day by day and its good situation. Although in 2011 its decreasing but in
2014 Net Profit Margin is increasing which is good sign for the organization. In 2015 to
2016, the profit margin is decreasing and its not good situation.

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5.8.1 Return on assets
Measures the amount of profit the company generates as a percentage of the value of its total
assets. Return on assets is the ratio of annual net income to average total assets of a business
during a financial year. It measures efficiency of the business in using its assets to generate net
income. It is a profitability ratio. The calculation as follows:

Return on Assets (ROA) = Net Income / Total Assets

Year 2011 2012 2013 2014 2015 2016

ROA 0.77% 1.95% 1.54% 1.90% 1.69% .99%

Table 10: ROA

Graphical Presentation

Figure 11: ROA

Comment: The ROA figure gives investors an idea of how effectively the company is
converting the money it has to invest into net income. The banks return on asset
increasing from 2011 to 2012which is 0.77% to 1.95% in the preceding 2 years and its a
good sign for the organization. The higher the ROA number, the better, because the
company is earning more money on less investment. After that it was decreasing (1.54%)
then it was increasing trend (1.90%) that means it has seen it is fluctuating. Afterwards
SEBL ROA fall down which is not good sign for the organization.

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5.8.2 ROE:
Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested.
The calculation of ROE is as follows:

ROE = Net Income / Shareholders Equity

Year 2011 2012 2013 2014 2015 2016
ROE 16.69% 30.86% 17.81% 9.27% 17.13% 12.62%

Table 11: ROE

Figure 12:ROE
Comment: Return on equity is an important measure of the profitability of a company.
Higher values are generally favorable meaning that the company is efficient in
generating income on new investment. Return on equity or return on capital is the ratio
of net income of a business during a year to its stockholders' equity during that year. It is
a measure of profitability of stockholders' investments. It shows net income as
percentage of shareholder equity. The banks return on equity increasing from 2011 to
2012 which is 16.69% to 30.86%.in the preceding 2 years and the highest value can be
observed in 2011 and the lowest value can be observed during the 2014, which is not
desirable. The banks return on equity decreasing from 2013 to 2014 that is 17.81% to
9.27% and its not a good sign for the organization. After that year 2015 its increasing
and in 2014 its again decreasing.

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4.9 SWOT Analysis of Southeast Bank Ltd.
Strengths:
It is a moderate profit generating branch of SEBL.
It is a very appropriate place to attract large investors and businessmen.
It has an excellent reputation
All modern banking facilities are available at this branch.
Employees behaviors towards clients are very appealing.
Customer retention level is exceptionally high for this branch.
Working method of this branch is improving day by day.
Employees have a good personal relationship with customers.
All the employees are well-trained.
Good corporate image in the banking sector.
Weaknesses:
Number of employees is not adequate.
Some employees are not combatant enough to work long hours.
Some employees are only fulfilling the requirement of the job, and not interested in
the highest utilization of their capabilities.
Computer literacy of the employees is very much low.
Not much careful about safeguarding the documents.
Lack of communication between different levels of management.
Opportunities:
Increase in the number of private commercial bank itself suggests a potential huge
market for banks in Bangladesh.
Maximum people of this region are in abroad. So there is a huge opportunities of
foreign remittance of this branch.
Threats:
Numbers of private bank are increasing.
Private Banks are giving efficient modern services and continuously innovating new
product.
Current law and order situation is not positive for the investment part.
Pessimistic representation to the government and Bangladesh Bank.
Some banks offering more attractive rate on deposits than Southeast Bank in some
cases.
Some foreign Banks are introducing many new, exceptional and prestigious products
and services to customers.
Number of potential competitors, both foreign and domestic, is increasing day by
day.

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 5.10 Findings of the Study
Following are important findings or this study:

i. From the current ratio Analysis we have seen that SEBL has not enough current
assets to pay their short term obligations and the current ratio is decreasing year by
year.
ii. Cost income ratio is increasing. This is not good position that is they are not able to
minimize their operating cost.
iii. Total asset turnover of Southeast Bank Ltd is in good position. Its total asset
turnover ratio increasing day by day.
iv. Debt ratio is decreasing. We knows that lower the debt lower the risk. So that is
good sign for the organization.
v. Bank Equity Capital Ratio gradually increasing
vi. Bank has seen that investment to deposit ratio in fluctuating mode. That means
SEBL depends on deposits than the share capital.
vii. From the above statement we can see that total cash has been decreased in the year
2013 than 2012. Money at call on short notice has decreased in 2013 and loan and
advance has increased. Fixed asset including premises, furniture & fixture increased
and Liabilities and Capital has increased from 2012 to 2013. Deposit and other
accounts has increased in 2013. Other liability has increased. Total liabilities has
increase. Total shareholder equity has decrease 2013.
viii. Net profit margin is increasing which is good sign for the organization.
ix. ROA is good position which means SEBL earns more profit from the asset which is
good sign for the organization.
x. Although ROE has been increased in previous years on 2012 to 2015. But it has
been decreased in other recent years.
xi. EPS is decreasing day by day. It indicates bad sign for SEBL, which cant attract
investors.

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 CHAPTER5
RECOMMENDATIONS & CONCLUSION

36
5.1 Recommendations
Following Recommendations are given:

i. SEBL should increase skilled manpower to do its financial activities more

efficiently, so that many of the employees do not have to do extra work.
ii. The authority of SEBL should introduce more innovative and modern Banking
service.
iii. SEBL should initiates different investment modes according to changing /diverse
needs of clients by conducting huge Research and study.
iv. SEBL should increase their profit rate on different deposit scheme.
v. Maximum clients do not know about SEBL loan scheme. They should carryout
more promotional activities to make clients aware about their offer.
vi. To avoid bad debts SEBL should more emphasize on landing risk analysis (LRA)
and try to conduct sensitivity analysis.
vii. In the branch level employee is working so many extra time. So management
should provide some extra incentives to motivate the employee.
viii. On-line banking is coming soon so the responsible employee should be trained
effectively.
ix. Form financial analysis it has seen that SEBL net profit margin was increasing
trend but in last year its net profit margin decreased more. For this reason bank
should try more for increasing its operating results.
x. From the trends analysis it has observed that SEBLs ROA was increasing but
2014 it has decreased slightly so bank should try to improve this and should also
take necessary steps to increase ROA.
xi. From the trends analysis it has seen that ROE of SEBL was fluctuating. So bank
should try to improve this and should take necessary steps to increase ROE.
xii. The training evaluation process and form is to be more modernized.
xiii. Physical and technological facilities should be increased in evaluating credit
proposals.
xiv. The cost of fund needs to be minimized.
xv. The gap between employees and customers will be reduced through arranging
meetings.

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5.2 Conclusion
As a bank Southeast Bank Limited has to do a lot of things for the betterment of the
country. The Bank is strongly positioned in the market and with its core strengths it can
match shareholders expectations and thus raise their wealth in future through ethical
banking and best pricing. Thus, it has to take initiative so that it can fulfill the desire of
the govt. as well as people. It will enhance more public services and build up working
teams to provide the best services to its valuable customers. It must be run in organized
way and discipline must be ensured in all sphere of its performance. Efficient export
team, import team and remittance team must be formed and perform duties properly.
More training, computerization, data collection, market analysis and swiftness in
servicing are essentially required. To do these the recommended suggestions can be
used. Although it is theoretical suggestions, it is not valueless. It has great impact on the
banking business and other sectors of the economy. For this, govt. help is essential and it
is expected that govt. will broaden its hand for implementing the recommendations for
the welfare of the people of Bangladesh.
The current situation of Southeast Bank Limited is satisfactory. But in the age of
competition if the bank does not provide extra ordinary that means superior services than
it will be difficult to continue banking because everybody wants to maintain quality. In
general banking portion Southeast Bank Limited has some problem. On the other hand in
Ratios liquidity, efficiency and leverage ratio of Southeast Bank Limited is satisfactory
which indicates better position of Southeast Bank Limited. But profitability ratio of the
bank is not satisfactory so Southeast Bank Limited should take necessary steps to beat
the overall problem as early as possible. And when Southeast Bank Limited is able to
overcome this type of problem then it would be more structured compared to any other
bank operating local or foreign in Bangladesh.

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 References

Books & Articles

Andley.K.K & Motto,V.J., Investment principles and practice, Suitan Chand & Sons
,New Delhi,1997

Khan, M, Y andJain, P.k.(2014), Financial Management, 6th Edition, Tata McGraw

Hill Education Private Limited, New Delhi.

1st Edition. Dhaka, Bangladesh: A.S. Syed. (1995). Foreign Exchange & Financing of
Foreign Trade. Narayan Publication.

12th edition. Delhi, India: C.V. James Horne (2011). Financial Management. Nithua
Publication.

10th edition. Delhi, India: E. Brigham and J Huston. (2008). Fundamental of Financial
Accounting. Cengage learning India private limited Publication.

3rd Edition. Dhaka, Bangladesh: M.D. Dr. Ramani. (2013). Business of Banking. Lotus
publication.

Annual Report of Southeast Bank Limited-2016

Web References:
Reading Materials from internet.
SEBL Official Website
https://www.southeastbank.com.bd
http://wikipedia.com
http://www.Bangladeshtrades.com

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Appendix

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