Chapter I: Introduction

1.1 Introduction
Financial statement analysis is a critical process that enables stakeholders to evaluate an
organization's financial performance, stability, and prospects. This study focuses on
Southeast Bank PLC, a prominent financial institution in Bangladesh that has been
operating since 1995. By analyzing the bank's financial statements, this paper aims to
provide insights into its operational efficiency, profitability, liquidity position, and overall
financial health.

In today's competitive banking sector, understanding a bank's financial dynamics is essential

for investors, creditors, regulatory authorities, and management. Financial statement analysis
serves as a diagnostic tool to assess the bank's strengths and weaknesses, helping stakeholders
make informed decisions. For Southeast Bank PLC, this analysis will reveal how effectively
the bank has managed its resources, generated returns, and maintained stability amid changing
economic conditions.

1.2 Statement of the Problem

The banking sector faces increasing challenges including regulatory changes, technological
disruption, economic volatility, and intense competition. In this context, Southeast Bank
PLC must maintain robust financial performance while adapting to these challenges. The
key problems this analysis addresses include:

1. How effectively has Southeast Bank PLC managed its financial resources to
generate sustainable profits?
2. What is the bank's liquidity position, and is it sufficient to meet its short-term obligations?
3. How has the bank's asset quality evolved, particularly regarding its loan
portfolio and non- performing loans?
4. Is the bank maintaining adequate capital adequacy ratios to withstand potential financial
shocks?
5. How does Southeast Bank PLC's financial performance compare with industry
benchmarks and competitors?

1.3 Objectives of the Study

The primary objectives of this financial statement analysis are:
Primary Objective:
● To comprehensively analyze the financial performance and position of Southeast Bank
PLC through its financial statements.

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Secondary Objectives:

● To evaluate the profitability and efficiency of Southeast Bank PLC using

various financial ratios.
● To assess the bank's liquidity position and its ability to meet short-term
obligations.
● To analyze the asset quality and credit risk
management of the bank.
● To examine the bank's capital structure and long-
term solvency.
● To identify trends in the bank's financial performance
over recent years.
● To compare Southeast Bank's performance with
industry standards.
● To provide recommendations based on the findings of the analysis.

1.4 Scope of the Study

This study encompasses a detailed analysis of Southeast Bank PLC's financial statements over a
five-year period from 2020 to 2024. The analysis includes:

Horizontal and Vertical Analysis: Examination of changes in financial statement items over
time and their relative proportions.
Ratio Analysis: Calculation and interpretation of key financial ratios related to profitability,
liquidity, solvency, and efficiency.
Trend Analysis: Identification of patterns and trends in financial performance indicators.

Comparative Analysis: Benchmarking against industry standards and similar banking

institutions.

1.5 Methodology of the Study

This research employs both qualitative and quantitative approaches to analyze Southeast
Bank PLC's financial performance:

Data Collection:

➢ Primary Data: Annual reports and financial statements of Southeast Bank PLC.
➢ Secondary Data: Published articles, research papers, banking sector reports, Bangladesh
Bank publications, and websites.

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Analytical Tools:

1. Financial Ratio Analysis:

● Liquidity Ratio (Current Ratio, Cash Ratio, quick Ratio, Current cash Debt Ratio & Cash
debt Ratio)
● Profitability Ratio (Gross Profit Margin, Net Profit Margin, Return On Asset, Return on
Investment & Return on Equity)
● Operation Efficiency ratio (Working Capital, Accounts Receivable Turnover, Accounts
payable Turnover, Inventory turnover)
● Leverage ratio (Debt to assets & Debt to equity Ratio)

2. Comparative Financial Statement Analysis:

● Horizontal analysis (trend analysis)
● Vertical analysis (common-size statements)

3. Statistical Tools:
● Time series analysis
● Growth rate calculations
● Correlation analysis among key financial indicators

1.6 Limitations of the Study

Despite thorough efforts to conduct a comprehensive analysis, this study has several limitations:

1. Data Constraints: The analysis relies on published financial statements, which

may not reveal all aspects of the bank's operations and financial health.
2. Time Period: The five-year analysis period may not capture long-term economic
cycles that affect the banking sector.
3. Accounting Practices: Changes in accounting standards or practices during the
study period may affect the comparability of financial data.
4. Qualitative Factors: Some important factors affecting bank performance, such
as management quality, corporate governance, and technological capabilities,
cannot be fully captured through financial statement analysis alone.
5. External Environment: The analysis may not fully account for macroeconomic
factors, regulatory changes, and industry-specific challenges.

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Chapter II: Literature Review

2.1 Review of Related Literature

Financial statement analysis has been extensively studied in academic literature, with
numerous researchers examining its application in evaluating banking performance. This
section reviews key literature relevant to financial statement analysis in the banking sector,
with a focus on methodologies, metrics, and findings that inform this study of Southeast
Bank PLC.
Theoretical Framework of Financial Statement Analysis
Horne and Wachowicz (2008) define financial statement analysis as the process of
evaluating relationships between component parts of financial statements to obtain a better
understanding of a firm's position and performance. They emphasize the importance of
trend analysis and ratio analysis in gaining meaningful insights from financial data.
Gibson (2013) categorizes financial statement analysis into three main approaches: cross-
sectional analysis (comparing with industry standards), time-series analysis (examining trends
over time), and combined analysis (incorporating both approaches). This study adopts a
combined approach to provide a comprehensive evaluation of Southeast Bank PLC.
Banking Sector Financial Analysis
Rose and Hudgins (2013) highlight that banks require specialized analytical approaches due to
their unique business model, where managing financial risks and maintaining adequate capital
reserves are paramount. They propose a CAMELS framework (Capital adequacy, Asset
quality, Management efficiency, Earnings, Liquidity, and Sensitivity to market risk) as a
comprehensive approach to bank financial analysis.
In the Bangladesh context, Ahmad and Hassan (2007) studied the performance of
commercial banks in Bangladesh, finding that private commercial banks generally
outperformed state-owned banks in terms of profitability and efficiency. However, they
noted that all banks faced challenges in managing non- performing loans and maintaining
adequate capital levels.
Ratio Analysis in Banking
Kumbirai and Webb (2010) investigated the performance of commercial banks using
financial ratios related to profitability, liquidity, and credit quality. Their study revealed that
these metrics are effective indicators of a bank's operational efficiency and financial
stability.
Samad (2015) examined the financial performance of Bangladesh's banking sector using various
financial ratios and found significant variations in performance between different categories of
banks. The study

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emphasized the importance of loan quality management and operational efficiency for
sustainable banking performance.
Asset Quality and Risk Management
Baral (2005) studied the relationship between asset quality and bank performance, concluding
that banks with better loan portfolio quality consistently demonstrated superior financial
performance. The study recommended stringent credit risk management practices to enhance
banking performance.
Rahman and Sharma (2012) analyzed the non-performing loan situation in Bangladesh's
banking sector, identifying economic factors, ineffective credit risk assessment, and inadequate
monitoring systems as key contributors to deteriorating asset quality.
Capital Adequacy and Bank Performance
Demirgüç-Kunt and Huizinga (2010) investigated the relationship between bank capital,
risk, and performance across multiple countries. Their findings suggest that while higher
capital levels generally lead to better stability, excessive capital requirements may constrain
profitability.
Islam and Nishiyama (2016) examined the impact of capital adequacy requirements on
Bangladeshi banks' performance, finding a positive relationship between capital adequacy and
profitability, particularly for private commercial banks.
Efficiency Analysis in Banking
Sufian and Habibullah (2009) evaluated the efficiency of Bangladesh's banking
sector using Data Envelopment Analysis (DEA) and found that private commercial
banks generally exhibited higher technical efficiency compared to state-owned
banks.
Profitability Determinants in Banking
Athanasoglou et al. (2008) investigated the determinants of bank profitability and found
that bank- specific factors such as capital adequacy, credit risk, and operational
efficiency significantly impact profitability, alongside macroeconomic conditions.
Rahman et al. (2015) studied factors affecting the profitability of commercial banks in
Bangladesh, identifying asset quality, bank size, and operational efficiency as key
determinants. Their study recommended banks focus on diversifying income sources and
improving credit risk management.

Source: 1. Article Name-Financial Ratio Analysis: Definition, Types, Examples, and How to Use
(https://www.investopedia.com/terms/r/ratioanalysis.asp)

2. The Wall Street Journal ((https://www.wsj.com/market-data/quotes/bd/xdha/eximbank)

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Chapter III: Organizational Overview

3.1 Historical Background

Southeast Bank Limited (SBL) began its journey in the financial sector of Bangladesh on
March 12, 1995. The bank was established by a group of eminent entrepreneurs and business
leaders who envisioned creating a financial institution committed to excellence in service and
contribution to national economic development.

Starting with just a few branches, Southeast Bank has expanded significantly over the years,
establishing a robust presence across Bangladesh. The bank was incorporated as a public
limited company under the Companies Act 1994, and it obtained its banking license from
Bangladesh Bank in March 1995.

Throughout its history, Southeast Bank has weathered various economic challenges,
including global financial crises and domestic economic fluctuations. The bank has
consistently adapted to changing market conditions and regulatory requirements while
maintaining its commitment to providing quality financial services.

Key milestones in Southeast Bank's history include:

● 1995: Establishment and commencement of operations

● 1999: Listed on the Dhaka Stock Exchange and Chittagong Stock Exchange
● 2001: Introduction of online banking services
● 2005: Launch of Islamic banking services through dedicated windows
● 2010: Implementation of core banking software to enhance operational efficiency
● 2015: Celebrated 20 years of banking operations in Bangladesh
● 2020: Accelerated digital transformation initiatives amid the COVID-19 pandemic

3.2 Corporate Information

Basic Corporate Details: ● Name: Southeast Bank PLC (formerly Southeast Bank
Limited)
● Legal Status: Public Limited Company
● Date of Incorporation: March 12, 1995
● Commencement of Business: March 12, 1995
● Banking License: Obtained from Bangladesh Bank under
the Bank Company Act 1991
● Stock Exchange Listings:
○ Dhaka Stock Exchange (DSE)
○ Chittagong Stock Exchange (CSE)

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 ● Trading Code: SOUTHEAST
● Tax Identification Number (TIN): 210-200-0537
● VAT Registration Number: 19011048345
● Swift Code: SEBDBDKH

Registered Office: Eunoos Trade Centre 52-53, Dilkusha Commercial Area Dhaka-
1000, Bangladesh

Contact Information: ● Phone: +880-2-9567225

● Fax: +880-2-9567223
● Email: info@southeastbank.com.bd
● Website: www.southeastbank.com.bd

Banking Network: ● Total Branches: 138 (as of 2024)

● Sub-Branches: 58
● Islamic Banking Windows: 12
● ATM Network: 210+ ATMs nationwide
● Agent Banking Outlets: 320+

Subsidiaries: 1. Southeast Bank Capital Services Limited

2. Southeast Financial Services Limited
3. Southeast Exchange Company (South Africa) Pty Ltd
4. Southeast Financial Services (UK) Limited
5. Southeast Financial Services (Australia) Pty Limited

Auditors: ACNABIN Chartered Accountants

3.3 Vision, Mission, Goals and Objectives

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

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Mission:

● To provide high-quality financial services with the latest technology

● To create sustainable growth for shareholders
● To maintain corporate and business ethics
● To be a compliant institution following regulatory standards
● To contribute to the welfare of the community
● To be an employer of choice by offering an appropriate working environment
● To build long-term relationships based on mutual trust

Core Values:

1. Integrity: Maintaining unwavering ethical standards in all business operations

2. Respect: Valuing the perspectives and contributions of all stakeholders
3. Fairness: Ensuring equitable treatment in all dealings
4. Transparency: Practicing openness in communication and decision-making
5. Ownership: Taking responsibility for decisions and actions
6. Teamwork: Fostering collaboration to achieve common goals
7. Customer Focus: Prioritizing customer satisfaction in all service offerings

Strategic Goals:

1. Sustainable growth through balanced expansion of assets and liabilities

2. Enhancement of the deposit mix with emphasis on low-cost and no-cost deposits
3. Diversification of the loan portfolio to minimize concentration risk
4. Improvement of asset quality by reducing non-performing loans
5. Strengthening the capital base to ensure long-term sustainability
6. Geographic expansion through strategic branch locations and alternative delivery
channels
7. Digital transformation of banking services to enhance customer experience
8. Development of innovative financial products tailored to diverse customer segments

Corporate Objectives:

1. Financial Objectives:
○ Achieve consistent growth in profitability
○ Ensure optimal returns for shareholders
○ Maintain strong capital adequacy ratios above regulatory requirements
○ Improve cost efficiency through operational streamlining
○ Diversify revenue streams to reduce dependency on interest income
2. Customer-Centric Objectives:
○ Deliver superior customer service across all touchpoints

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 ○ Expand the customer base through targeted market penetration
○ Enhance digital banking capabilities to improve accessibility
○ Develop personalized banking solutions for different customer segments
○ Strengthen customer loyalty through relationship banking
3. Operational Objectives:
○ Optimize business processes through automation and reengineering
○ Strengthen risk management and compliance frameworks
○ Enhance operational efficiency through technological integration
○ Improve service delivery through standardization and quality control
○ Develop a robust IT infrastructure to support business growth
4. Learning and Growth Objectives:
○ Build a skilled and professional workforce through continuous training
○ Foster a performance-driven organizational culture
○ Implement effective talent management strategies
○ Encourage innovation and creative problem-solving
○ Promote knowledge sharing and organizational learning

3.4 Organizational Hierarchy

Southeast Bank PLC maintains a structured organizational hierarchy that facilitates effective
governance, strategic decision-making, and operational efficiency. The organizational structure
follows a conventional banking model with clear reporting lines and segregation of duties.

Board Level: Branch Level Hierarchy:

1. Board of Directors 1. Branch Manager

○ Chairman 2. Operations Manager
○ Vice Chairman 3. Relationship Managers
○ Directors (Executive and Non- 4. Customer Service Manager
Executive) 5. Cash Manager
○ Independent Directors 6. Credit Officers
2. Board Committees 7. General Banking Officers
○ Executive Committee 8. Support Staff
○ Audit Committee
○ Risk Management Committee
○ Nomination and Remuneration
Committee

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 Executive Management: Divisional Structure:

1. Managing Director & CEO 1. Business Divisions

2. Deputy Managing Directors (DMDs) ○ Corporate Banking Division
○ DMD, Corporate Banking ○ Retail Banking Division
○ DMD, Operations ○ SME Banking Division
○ DMD, Credit Risk Management ○ Agricultural Credit Division
○ DMD, International Banking & ○ Card Division
Treasury ○ Islamic Banking Division
3. Senior Executive Vice Presidents (SEVPs) ○ International Division
○ SEVP, Retail Banking ○ Treasury Division
○ SEVP, SME Banking 2. Support Divisions
○ SEVP, Finance & Accounts ○ Human Resources Division
○ SEVP, Information Technology ○ Finance & Accounts Division
4. Executive Vice Presidents (EVPs) ○ Information Technology Division
○ EVP, Human Resources ○ General Services Division
○ EVP, Internal Control & ○ Marketing & Brand
Compliance Communications
○ EVP, Card Division ○ Research & Development
○ EVP, Islamic Banking 3. Control & Compliance Divisions
5. Senior Vice Presidents (SVPs) ○ Internal Control & Compliance
○ SVP, Credit Administration Division
○ SVP, Recovery & Legal Affairs ○ Risk Management Division

Source- Southeast Bank PLC website (www.southeastbank.com.bd)

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3.5 Major Products and Services

Southeast Bank PLC offers a comprehensive range of banking products and services designed to
meet the diverse financial needs of its retail, corporate, and institutional customers. These products
and services can be categorized as follows:

Deposit Products

Conventional Banking: Islamic Banking:

1. Current Accounts 1. Al-Wadiah Current Account

○ Current Deposit Account 2. Mudaraba Savings Account
○ Foreign Currency Account 3. Mudaraba Term Deposit
○ Exporters' Foreign Currency 4. Mudaraba Special Deposit Scheme
Account 5. Mudaraba Hajj Savings Scheme
○ Resident Foreign Currency Islamic Banking Finance:
Deposit Account 1. Bai-Murabaha
2. Savings Accounts 2. Bai-Muajjal
○ Savings Bank Account 3. Hire Purchase under Shirkatul Melk
○ SEB Special Savings Scheme 4. Musharaka
○ Pension Savings Scheme 5. Quard
○ Education Savings Scheme
3. Fixed Deposit Schemes
○ Fixed Deposit
○ Double Benefit Scheme
○ Millionaire Deposit Scheme
○ Monthly Income Scheme

Loan Products

Retail Loans: Corporate Loans: SME Loans:

1. Consumer Loans 1. Working Capital Finance 3. SE Small Business Loan

○ Personal Loan ○ Overdraft 4. SE Women Entrepreneur
○ Car Loan Facilities Loan
○ Home Loan ○ Cash Credit 5. SE Micro Enterprise Loan
○ Education Loan ○ Short-term Loans 6. SE SME Project Loan
○ Travel Loan ○ Trade Finance 7. SE Agriculture Loan
2. Credit Cards 2. Term Loans
○ Platinum Card 3. Syndicated Loans
○ Gold Card
○ Classic Card

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Trade Services Remittance Services

1. Import Services 1. Foreign Remittance

○ Letter of Credit (LC) Opening ○ Inward Remittance
○ LC Amendment ○ Outward Remittance
○ Import Bills Collection ○ Remittance Arrangements with
○ Import Financing Exchange Houses
2. Export Services 2. Domestic Remittance
○ Export LC Advising ○ Online Fund Transfer
○ Export Documents Handling ○ Demand Draft
○ Pre-shipment Financing ○ Pay Order
○ Post-shipment Financing ○ Real-Time Gross Settlement
3. Guarantee Services (RTGS)
○ Bid Bond
○ Performance Guarantee
○ Advance Payment Guarantee
○ Customs Guarantee

Treasury Services Digital Banking Services

1. Money Market Operations 1. Internet Banking

○ Interbank Term Money ○ Account Information
○ Call Money ○ Fund Transfers
○ Notice Money ○ Bill Payments
○ Account Statement Download
○ Repo & Reverse Repo
2. Mobile Banking
2. Foreign Exchange Services ○ Account Balance Inquiry
○ Spot & Forward Dealing ○ Mini Statement
○ Currency Swaps ○ Fund Transfers
○ Cross Currency Transactions ○ Utility Bill Payments
3. Investment Services 3. SMS Banking
○ Government Securities (Treasury ○ Transaction Alerts
○ Account Balance Information
Bills & Bonds)
○ Mini Statement
○ Corporate Bonds 4. ATM Services
○ Commercial Paper ○ Cash Withdrawal
○ Balance Inquiry

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Chapter IV: Data Analysis and Findings

4.1 Data Analysis

Using financial statements from 2019 to 2023:

1. Liquidity Ratios

Year Current Ratio Quick Ratio Cash Ratio

2018 1.92 0.91 0.53

2019 1.86 0.97 0.30

2020 1.10 0.95 0.25

2021 1.08 0.92 0.22

2022 1.12 0.96 0.24

2023 1.15 0.98 0.27

Formula Current Assets ÷ (Current Assets − Inventory) (Cash + Cash Equivalents) ÷

Current Liabilities ÷ Current Liabilities Current Liabilities

Liquidity Ratios
2.5

1.5

0.5

0
2018 2019 2020 2021 2022

Current Ratio Quick Ratio Cash Ratio

Source: Created by the author himself

Comments: - Southeast Bank PLC's liquidity ratios show a 40% decline in the current ratio from
1.92 in 2018 to 1.15 in 2023, largely due to the COVID-19 pandemic. The quick ratio has remained
stable, indicating a consistent proportion of liquid assets relative to current liabilities. The cash
ratio has declined, indicating a strategic reduction in cash holdings. The recovery trend
demonstrates resilience and effective management response to economic challenges.

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2. Profitability Ratios

Year Gross Profit Net Profit Return on Return on Return on

Margin Margin Assets (ROA) Investment (ROI) Equity (ROE)

2018 76% 14% 1.10% 3.60% 9.00%

2019 75% 15% 1.20% 4.00% 10.00%

2020 42% 15.24% 0.67% 5.48% 10.35%

2021 74% 12% 1.05% 3.30% 8.50%

2022 75% 13% 1.15% 3.80% 9.50%

2023 77% 16% 1.30% 4.40% 10.50%

Formula (Gross Profit (Net Profit ÷ Net Profit ÷ (Net Profit ÷ Net Profit ÷
÷ Net Sales) Net Sales) × Average Total Investment) × 100 Average
× 100 100 Assets Shareholders'
Equity

Profitability Ratios
100%

80%

60%

40%

20%

0%
2018 2019 2020 2021 2022 2023

Gross Profit Margin Net Profit Margin Return on Assets (ROA)

Return on Investment (ROI) Return on Equity (ROE)

Source: Created by the author himself

Comments: - Southeast Bank PLC's profitability ratios show a robust performance, with a slight
improvement from 76% in 2018 to 77% in 2023. The bank's net profit margin improved from 14%
in 2018 to 16% in 2023, indicating enhanced operational efficiency and cost management. The
bank's Return on Assets (ROA) fluctuated between 0.67% and 1.30% over the five-year period,
but the recovery and improvement to 1.30% by 2023 suggest improved asset utilization. The bank's
Return on Equity (ROE) improved from 9.00% in 2018 to 10.50% in 2023, indicating balanced
growth benefiting both business operations and shareholders.

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3. Operational Efficiency Ratios

Year Working Capital Accounts Accounts Payable Inventory

(Cr. BDT) Receivable Turnover Turnover
Turnover

2018 11,66 N/A N/A N/A

2019 1,256 N/A N/A N/A

2020 1,351 N/A N/A N/A

2021 1,102 N/A N/A N/A

2022 1,475 N/A N/A N/A

2023 1,558 N/A N/A N/A

Formula Current Assets − Net Credit Sales ÷ Cost of Goods Sold ÷ Cost of Goods
Current Liabilities Average Accounts Average Accounts Sold ÷ Average
Receivable Payable Inventory

Note: For banks, inventory and trade receivables are often not applicable or not reported in the traditional sense.

Operational Efficiency Ratios

2000

1500

1000

500

0
2018 2019 2020 2021 2022 2023

Working Capital (Cr. BDT) Accounts Receivable Turnover

Accounts Payable Turnover Inventory Turnover

Source: Created by the author himself

Comments: Southeast Bank PLC's operational efficiency is primarily based on working capital
management, with a 33.6% increase over five years. Traditional efficiency ratios are less
applicable, but alternative metrics like cost-to-income, asset utilization, net interest margin, and
employee productivity indicate effective balance sheet management. The consistent growth in
working capital and improved profitability ratios suggest enhanced operational efficiency and
economies of scale.

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4. Leverage Ratios

Year Debt to Assets Debt to Equity

2018 93.55% 14.5%

2019 88.27% 7.33%

2020 89.33% 8.09%

2021 90.64% 9.00%

2022 88.95% 7.33%

2023 87.23% 6.69%

Formula Total Liabilities ÷ Total Assets × Total Liabilities ÷ Shareholders' Equity×

100 100

Debt to Assets Debt to Equity

96.00% 20.00%
94.00% 15.00%
92.00%
90.00% 10.00%
88.00%
5.00%
86.00%
84.00% 0.00%
2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023

Debt to Assets Debt to Equity

Source: Created by the author himself

Comments: Southeast Bank PLC's debt to assets ratio and debt to equity ratio have shown a
significant decrease, indicating a strategic shift towards a stronger capital position and reduced
financial leverage. The improved capital structure enhances the bank's resilience against potential
loan defaults and market downturns. The deliberate reduction in leverage suggests a shift towards
sustainable growth, providing greater flexibility for future strategic initiatives and potentially
reducing financing costs. This balanced approach positions the bank well for sustainable growth
in an increasingly regulated banking environment.

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4.2 Major Findings

Based on the comprehensive analysis of Southeast Bank PLC's financial statements from 2018 to
2023, the major findings are:

1. Liquidity Position:

o The current ratio has declined from 1.92 in 2018 to 1.15 in 2023, indicating a
reduction in the bank's short-term liquidity position.

o Quick ratio has remained relatively stable around 0.95, suggesting consistent ability
to meet short-term obligations without relying on inventory.

o Cash ratio decreased from 0.53 in 2018 to 0.27 in 2023, indicating reduced
immediate liquidity but still maintaining an adequate level for banking operations.

2. Profitability Performance:

o Gross profit margin has remained strong, increasing slightly from 76% in 2018 to
77% in 2023, with a notable dip to 42% in 2020 likely due to pandemic impacts.

o Net profit margin has shown moderate growth from 14% in 2018 to 16% in 2023,
reflecting improved operational efficiency.

o Return on Assets (ROA) has increased from 1.10% to 1.30% over the five-year
period, indicating enhanced efficiency in utilizing assets to generate profits.

o Return on Equity (ROE) has improved from 9.00% in 2018 to 10.50% in 2023,
demonstrating better returns for shareholders.

3. Capital Structure and Leverage:

o Debt to assets ratio has decreased from 93.55% in 2018 to 87.23% in 2023,
indicating a gradual reduction in financial leverage and improved financial
stability.

o Debt to equity ratio shows significant improvement from 14.5 times in 2018 to 6.69
times in 2023, suggesting strengthened capital structure.

4. Asset Quality:

o Although specific non-performing loan (NPL) data is not directly provided in the
ratios, the improvement in profitability ratios suggests better asset quality
management.

o The consistent improvement in ROA indicates more effective asset utilization and
potentially better loan portfolio management.

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5. Operational Efficiency:

o Working capital has increased from 1,166 crore BDT in 2018 to 1,558 crore BDT
in 2023, reflecting enhanced operational liquidity.

o The bank has maintained relatively stable working capital despite market
fluctuations, indicating effective management of short-term assets and liabilities.

6. Covid-19 Impact and Recovery:

o The significant drop in gross profit margin to 42% in 2020 reflects the severe
impact of the COVID-19 pandemic.

o Subsequent recovery to 77% by 2023 demonstrates the bank's resilience and

effective management strategies during challenging economic conditions.

7. Capital Adequacy:

o The improving debt-to-equity ratio suggests that the bank has been strengthening
its capital base, potentially maintaining capital adequacy ratios above regulatory
requirements.

8. Sustainable Growth:

o Consistent improvements in profitability metrics (ROA, ROE, and net profit

margin) from 2021 to 2023 indicate a sustainable growth trajectory following the
pandemic-induced downturn.

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Chapter V: Recommendations and Conclusion

5.2 Conclusion

Southeast Bank PLC has demonstrated resilience and adaptability in navigating challenging
economic conditions, as evidenced by its financial performance over the 2018-2023 period. The
bank has maintained a stable liquidity position while gradually improving its profitability
indicators and strengthening its capital structure.

The analysis reveals that Southeast Bank has effectively recovered from the pandemic-induced
downturn of 2020, with consistent improvements in key financial metrics during the post-
pandemic period. The bank's working capital management has been particularly noteworthy,
providing a solid foundation for operational stability.

However, challenges remain in terms of optimizing the bank's asset quality, further diversifying
revenue streams, and enhancing operational efficiency. The competitive banking landscape in
Bangladesh, coupled with regulatory changes and technological disruptions, necessitates
continuous strategic adaptation.

By implementing the recommended strategies, Southeast Bank PLC can further strengthen its
market position, enhance financial performance, and deliver sustainable value to its stakeholders.
The bank's ability to leverage digital capabilities while maintaining prudent risk management
practices will be crucial for its long-term success in Bangladesh's evolving banking sector.

As Southeast Bank moves forward, balancing growth ambitions with financial stability will remain
a key strategic imperative. With its established market presence, improving financial metrics, and
opportunities for digital innovation, Southeast Bank PLC is well-positioned to enhance its
contribution to Bangladesh's financial ecosystem while delivering sustainable returns to its
shareholders.

5.1 Recommendations

Based on the financial statement analysis of Southeast Bank PLC, the following recommendations
are proposed to enhance the bank's financial performance and strategic positioning:

1. Strengthen Asset Quality Management:

o Implement more rigorous credit assessment frameworks to minimize potential non-
performing loans.
o Develop specialized recovery strategies for different categories of non-performing
assets.
o Enhance early warning systems to identify potential credit deteriorations before
they affect the bank's financial health.
2. Optimize Capital Structure:
o Continue the positive trend of reducing the debt-to-equity ratio to strengthen
financial stability.

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 o Consider a balanced approach to dividend distribution that supports both
shareholder returns and capital retention for growth.
o Explore tier-2 capital instruments to further diversify the capital structure while
maintaining regulatory compliance.
3. Enhance Revenue Diversification:
o Increase focus on fee-based income to reduce dependency on interest income,
particularly in a volatile interest rate environment.
o Expand digital banking services to generate alternative revenue streams through
electronic transactions and digital product offerings.
o Develop specialized banking products for emerging sectors like green financing,
technology startups, and sustainable infrastructure projects.
4. Improve Cost Efficiency:
o Implement process automation in back-office operations to reduce operational
costs.
o Conduct regular cost-benefit analysis of branch operations and consider optimizing
the branch network.
o Invest in technological infrastructure that can support scalable growth without
proportional increases in operational costs.
5. Strengthen Liquidity Management:
o Develop a more robust liquidity stress testing framework to prepare for market
volatilities.
o Optimize the deposit mix with greater emphasis on stable retail deposits rather than
volatile wholesale funding.
o Maintain prudent liquidity buffers above regulatory requirements to ensure
resilience during economic downturns.
6. Accelerate Digital Transformation:
o Increase investment in digital banking capabilities to enhance customer experience
and operational efficiency.
o Implement data analytics solutions to gain deeper customer insights and enable
personalized banking services.
o Develop strategic partnerships with fintech companies to accelerate innovation and
service development.
7. Enhance Risk Management Framework:
o Strengthen the enterprise risk management framework to address emerging risks in
cybersecurity, climate change, and regulatory compliance.
o Implement advanced analytics for market risk assessment and management.
o Develop scenario-based stress testing models incorporating diverse economic
conditions.
8. Focus on Sustainable Banking Practices:
o Integrate Environmental, Social, and Governance (ESG) considerations into
lending and investment decisions.
o Develop green banking products to capitalize on growing demand for sustainable
financing.
o Incorporate sustainability metrics into performance evaluation frameworks

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References:
1. Annual Report for the Year Ended 31 December 2023

2. Annual Report for the Year Ended 31 December 2022

3. Annual Report for the Year Ended 31 December 2021

4. Annual Report for the Year Ended 31 December 2020

5. Annual Report for the Year Ended 31 December 2019

6. Annual Report for the Year Ended 31 December 2018

7. The Wall Street Journal (https://www.wsj.com/market-data/quotes/bd/xdha/eximbank)

8. Article Name-Financial Ratio Analysis: Definition, Types, Examples, and How to Use
(https://www.investopedia.com/terms/r/ratioanalysis.asp)

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