TABLE OF CONTENTS

Serial No. Particulars Page No.

1 Letter of Transmittal I
2 Student’s Declaration II
3 Letter of Acceptance III
4 Acknowledgement IV
5 EXECUTIVE SUMMARY V
3
CHAPTER ONE - INTRODUCTION
1.1 INTRODUCTION 4
1.2 Origin of the Report 5
1.3 Objective of the study 5
1.4 Methodology 5
1.6 Scope of the Report 6
1.7 Limitations of the study 7
CHAPTER TWO - Organizational Overview
2.1 Southeast Bank Limited at a Glance 9
2.2 Company Profile 10
2.3 Vision of the company 11
2.4 Mission of the company 11
2.5 About Khatungonj Branch 12
2.6 Strategic Objectives 12
2.7 Priorities followed in 2017 13
CHAPTER THREE
FINANCIAL PERFORMANCE ANALYSIS
3.1 Financial Performance 15
3.2 Financial Performance Indicators 15
3.3 Financial Performance Evaluation 15
3.3.1 Liquidity Ratios 16
Current ratio 16
Quick (acid-test) ratio 17
Net working capital 18
Cash ratio 19
3.3.2 Asset Management Ratio 20
Fixed Asset Turnover Ratio 21
Total assets turnover ratio 22
3.3.3 Profitability Ratio 22
Net Profit Margin 23
Return on assets 24

1
 Net Interest Margin 25
3.4 SWOT ANALYSIS 26
3.4.1. Strength 27
3.4.2 Weakness 28
3.4.3 Opportunities 28
3.4.4 Threats 28
CHAPTER FOUR
FINDING, RECOMMENDATION AND CONCLUSION
FINDING 30
RECOMMENDATION 31
CONCLUSION 32
References 33

2
CHAPTER ONE
INTRODUCTION

3
1.1 INTRODUCTION
A bank is a financial intermediary that accepts deposits and channels those deposits into
lending activities, either directly by loaning or indirectly through capital markets. A bank links
together customers that have capital deficits and customers with capital surpluses. It plays an
important role in the business sector and promoting industrialization & economic development
of the country. Banks provide necessary funds for the execution of various programs underway
in the process of economic development. As the industry produces goods & commodities, bank
creates and controls money market and promotes formation of capital.

Bank is a powerful medium to bring socio-economic changes in a developing country like

Bangladesh. The three important sectors in Bangladesh like Agriculture, Commerce and
Industry provide the bulk of the country's wealth. So, the nourishment of these sectors is only
possible through satisfactory banking facility.

Basically, Bank collects deposit from the customers at a lower rate of interest and lends it to the
borrowers at a higher rate of interest considering the cost of fund. The spread amount indicates
the operating profit of a bank. Banks provide different services and credits to the customers.
The customer comes from all walks of life, from a small business to a multi-national corporation
having its business activities all around the world. The bank has to satisfy the requirement of
different customers belonging to various social groups. The banking business have therefore
become complex and requires specialized skills. It functions as an agent for bringing about
economic, industrial growth and prosperity of the economy. As a result, different types of bank
with various services have come in to existence to suit specific requirements.

4
1.2 Origin of the Report

This internship report on Southeast Bank Limited, Khatungonj Branch, Chattogram is prepared
to fulfill the partial requirement of the internship program as full credit subject of the M.B.A.
program of University of Chittagong. I have chosen to do my internship report titled
"Performance Evaluation of Southeast Bank Limited-A study on Khatungonj Branch,
Chattogram". It will increase the knowledge to know the corporate world and will tend to apply
theoretical knowledge in the practical life.

1.3 Objectives of the study:

1.3.1 Broad Objective

The report is to analysis the financial performance of Southeast Bank Limited, Khatungonj
Branch, Chattogram.

1.3.2 Specific Objectives

 To present an overview of the Southeast Bank Limited.

 To find out the present performance of the branch.
 Finally, to suggest necessary recommendations to overcome the shortcomings of
Southeast Bank Limited, Khatungonj Branch, Chattogram to improve their financial
performance.

1.4 Methodology:

1.4.1 Research Design

The report is descriptive in nature. To prepare this report gathering data is very important. The
information was collected from both primary and secondary sources of data. The information
was collected within the organization from the Corporate Division of Southeast Bank Limited,
Khatungonj Branch, Chattogram.

1.4.2 Data Collection Method:

This report is prepared based on information collected from two sources i.e. Primary sources
and Secondary sources.

5
1.4.2.1 Sources of Data

Primary data

 Face to face conversation with the respective officers and clients.

 Practical work experience from different department of the concerned officers.
 Collect ratios from Audit department through personal interview.
 Guidelines and suggestions from all the senior employees in charge of Southeast Bank
Limited, Khatungonj Branch, Chattogram

Secondary data

 Annual Reports of Southeast Bank Limited, Khatungonj Branch, Chattogram.

 Online data from Southeast Bank Limited website.
 Working papers
 Office files
 Several article related on financial analysis
 Selected Books

1.6 Scope of the Report

The scope of the study is to have an idea about Financial Performance Analysis of Southeast
Bank Limited, Khatungonj Branch, Chattogram. The report starts with the outline of the
organization in focus, presenting the mission and vision of organization. It accompanied by the
global perspective and look into the future. The researcher provides information about the
strengths, weakness, opportunities and threats of the organization. Those who looking for the
information about Financial Performance Analysis of Southeast Bank Limited, Khatungonj
Branch, Chattogram they might get help from this report. The study explores the present
market scenario of Southeast Bank Limited and future market growth prospects in Bangladesh.

6
1.7 Limitations of the study

There is some limitation of my report. When I used the main methods of ratio analysis for
performance of Southeast Bank Limited, Khatungonj Branch, Chattogram I have faced different
kinds of problems. In order to achieve the good of performance evaluations we need to choose
a ratio that is suitable. This means that data must be correct, otherwise calculate of ratio may
be erroneous. Some problems are stated below:

Legal obligation: Due to some legal obligation and business secrecy the bank was reluctant
to provide some sensitive data. Thus, this study limits only on the available published data and
certain degree of formal and informal interview and limited survey.

Extensive Nature: Although the particular study is extensive in nature, hard effort was given
to make the study worthwhile and meaningful even then there exists some limitation.

Lack of time: The researcher was in the bank for two months so within this short span of time
it is very difficult to be familiar with all the activities of the bank

Lack of Supervision by the bank officers: As the officers were busy with their daily
working activities, they were not able to give me much time apart from their daily working
activities.

Restricted Information: There were various types of information that the bank officers
cannot disclose due to the security and other corporate obligations.

7
 CHAPTER TWO
Organizational Overview

8
2.1 Southeast Bank Limited at a Glance:
Southeast Bank Limited is a fast growing 2nd generation bank. The bank has been achieving
continuous growth rate indifferent shares 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. The emergence of Southeast Bank Limited was at the juncture liberalization of
global economic activities. It is a scheduled commercial bank in the private sector 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 commercial banking
operations with the vision to stand out as a pioneer banking institution in Bangladesh and
contribute significantly to the national economy on May 25, 1995.

It is the second generation bank and its Certificate of Commencement of Business of the bank
was issued by the Registrar of joint Stock Companies & Firms and was also dated March 12,
1995. The Bank’s First branch was opened by Late M. Saiful Rahman , the Honorable Finance
Minister of the government of the people’s Republic of Bangladesh as the chief Guest at the
busiest commercial hub of the country at 1, Dilkusha Commercial Area, Dhaka on May 25,1995.

Southeast Bank Limited (SEBL) is the leading private sector bank in Bangladesh offering full
range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and capital
Market services. Southeast Bank Limited is the preferred choice in banking for friendly and
personalized services, cutting edge technology, tailored solutions for business needs, global
reach in trade and commerce and high yield on investments, assuring excellence in banking
services.

Southeast Bank Limited today is a synonym of quality banking products: it has a diverse array of
carefully tailored products and services to cater to the needs of all customer segments. The
bank structured its operational strategies to address the special and often complex needs of the
customers.

9
2.2 Company Profile:
Name of the Company Southeast Bank Limited

Legal Form Privet Limited Company

Date of Inception March 12, 1995

Company Registration No. C-27985 (1831)/95

Authorized Capital BDT 15,000 million

Paid Up Capital BDT 9,169.50 million

Registered Office Eunoos Trade Centre

52-53, Dilkusha C/A (Level 2,3,4,6 & 16),

Dhaka-1000, Bangladesh
Phone: +88 02 9571115, 9576415, 9555466 &
9578324
Fax: +88 02 9550093, 9550094 & 9550086
Website www.southeastbank.com.bd

Chairman Alamgir Kabir, FCA

Vice Chairperson Duluma Ahmed

Date of Opening of First Branch May 25, 1995

Year of Initial Public Offer 1999

Number of Employees 2,837

No. of Branches 134

No. of Islamic Banking Branches 05

No. of Ladies Branches 02

No. of Off-Shore Banking Units : 02 (two)

No. of Foreign Correspondents : 825

Number of Outstanding Shares : 916,950,176

Listing Status (Shares) Dhaka Stock Exchange (DSE)

Symbol: SOUTHEASTB, Listing Date: April 10,
2000

10
 Chittagong Stock Exchange (CSE)
Symbol: SOUTHEASTB, Listing Date: April 24,
2000
Source: Annual report- 2017

2.3 Vision of the company: (Annual report- 2017)

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

2.3 Mission of the company: (Annual report- 2017)

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

 Fast customer service.
 Sustainable growth strategy.
 High ethical standards in business.
 Steady return on shareholders’ equity.
 Innovative banking at a competitive price.
 Attraction and retention of quality human resource.
 Commitment to Corporate Social Responsibility

11
2.4 About Khatungonj Branch, Chattogram:
In 1995 Southeast Bank launched the Khatungonj Branch. Its bank code is 447. Khatungonj
Branch started its operation from 8th November, 1995. The branch address is 410-411
Khatunganj, Chittagong. Mr. Abdul Manan is the SAVP and Head of the branch, Mr. Monir is the
AVP (Credit) and Syed Redwanul Hakim is the officer of HRD. It is a profitable branch for
Southeast Bank. The branch stays a good position to run business at large wholesale market of
Bangladesh. The branch has been running business with earning huge profits. In 2015, 2016,
2017 profits are 298,043,000 287,211,000 and 262,907,000. There are 38 employees. The
branch starts at 10.00 am to 4.00 pm of working days. The branch operates about all services of
Southeast Bank Ltd. The services are Loans & Advances, SEBL Cards, Foreign Remittance,
Foreign Trade, SME Banking, SWIFT Service, Locker Service, ATM Service, Southeast Bank
Instant Banking, Bill Payment Service, E-Statement Service, SMS Alert Service, Internet Banking,
Mobile Financial Service. The branch is working its daily activity by dividing different
department. There is cash department, general banking department, clearing department,
credit department, foreign exchange department. (Branch article – 2017)

2.4 Strategic Objectives

 Maintaining a high quality assets portfolio to achieve strong and sustainable returns and
to continuously build shareholders’ value.
 Maintaining adequate capital in line with risk appetite of the Bank.
 Strengthening trust and partnerships with customers by focusing on the Bank’s core
values of quality customer service, professionalism, teamwork and integrity.
 Hiring professionals with strong background and knowledge.
 Strengthening technologies that reduce operational risks and promote the
implementation of best practices in the industry.
 Developing innovative products and services that attract our targeted customers and
market segments.
 Exploring new avenues for growth and profitability.
 Practicing efficient risk management principles in line with all six core risks in banking
operation, green banking and environmental risk management.
(Annual report of SEBL – 2017)

12
2.5 Priorities followed in 2017

The Bank had the following plans and roadmap for business success in 2017. (Annual report of
SEBL – 2017)

 Excellence in banking operations through maintaining strong fundamentals of Capital

Adequacy, Business Diversification and Exploring Non-Funded Business
 Prudent Asset Management
 Prudent Liability Management
 Excellence in Delivering Customer Service
 Effective Risk Management
 Effective IT Framework and System
 Efficient Internal Control and Regulatory Compliance System
 Strong Human Resource Base
 Going green in the future of banking

13
 CHAPTER THREE
FINANCIAL PERFORMANCE ANALYSIS

14
3.1 Financial Performance
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. This term is also used as a general measure
of a firm's overall financial health over a given period of time, and can be used to compare
similar firms across the same industry or to compare industries or sectors in aggregation.

3.2 Financial Performance Indicators:

Financial indicators have always and still been widely used for monitoring performance,
developing strategies and for benchmarking purpose. Various devices are used in the analysis of
financial statement data to bring out the comparative and relative significance of the financial
information presented.

3.3 Financial Performance Evaluation:

In this report only one device is used to evaluate the financial performance of SEBL. That is ratio
analysis. Because it is the starting point in developing the information desired by the analyst.
Ratio analysis provides only a single snapshot and the analysis being for one give point or
period in time. Financial ratio analysis involves the calculation and comparison of ratio, which
are derives from the information given in the company’s financial statement.

The absolute accounting figure reported in the financial statements does not provide a
meaningful understanding performance and financial position of a firm. An accounting figure
conveys meaning, when it is related to some other related information. The relationship
between two accounting figure, expressed mathematically, is known as a financial ratio. The
ratios are describing in below:

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3.3.1 Liquidity Ratios
The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they
come due. Liquidity refers to the solvency of the firm’s overall financial position—the ease with
which it can pay its bills. Because a common precursor to financial distress and bankruptcy is
low or declining liquidity, these ratios can provide early signs of cash flow problems and
impending business failure. Clearly it is desirable that a firm is able to pay its bills, so having
enough liquidity for day-to-day operations is important. However, liquid assets, like cash held at
banks and marketable securities, do not earn a particularly high rate of return, so shareholders
will not want a firm to overinvest in liquidity. Firms have to balance the need for safety that
liquidity provides against the low returns that liquid assets generate for investors.
The four basic measures of liquidity are:

 Current ratio
 Quick (acid-test) ratio
 Net working capital
 Cash ratio

Current ratio:
The current ratio, one of the most commonly cited financial ratios, measures the firm’s ability
to meet its short-term obligations. A higher current ratio indicates a greater degree of liquidity.
How much liquidity a firm needs depends on a variety of factors, including the firm’s size, its
access to short-term financing sources like bank credit lines, and the volatility of its business.
It is expressed as follows:

Current ratio = Current assets/Current liabilities

16
 Table: 1.1 current ratio of SEBL, Khatungonj Branch

Year 2017 2016 2015

Current assets 114,493,803 73,896,220 95,272,201
Current liabilities 9,149,401 6,120,484 7,518,785
Current ratio 12.51 12.07 12.67

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Current ratio
12.8
12.6
12.4 Year 2017
12.2
12 Year 2016
11.8 Year 2015
11.6
Year 2017 Year 2016 Year 2015

Chart presentation of Current ratio of SEBL, Khatungonj Branch

Analysis: By calculating the current ratio of SEBL, Khatungonj Branch for three years the report
has found that it has always been in a good condition. This branch has been always having more
than TK 1 worth of asset for every TK 1 of liabilities. Now it has TK 12.51 worth of asset for
every TK of liabilities. There is a positive thing but the current ratio is not increasing consistently
over the last three years which is presented in above chart.

Quick (acid-test) ratio:

The quick (acid-test) ratio is similar to the current ratio except that it excludes inventory, which
is generally the least liquid current asset. The generally low liquidity of inventory results from
two primary factors:
 Many types of inventory cannot be easily sold because they are partially completed
items, special-purpose items, and the like; and
 Inventory is typically sold on credit, which means that it becomes an account receivable
before being converted into cash.
An additional problem with inventory as a liquid asset is that the times when companies face
the direst need for liquidity, when business is bad, are precisely the times when it is most
difficult to convert inventory into cash by selling it.
The quick ratio is calculated as follows:
Quick ratio = (Current assets – Inventory) / Current liabilities

17
 Table: 1.2 Quick ratio of SEBL, Khatungonj Branch

Years 2017 2016 2015

Quick Asset 105,445,961 68,545,601 89,422,477
Total Current Liability 9,149,401 6,120,484 7,518,785
Quick Ratio 11.52 11.20 11.89

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Quick ratio

12
Year 2017
11.5
Year 2016
11
Year 2015
10.5
Year 2017 Year 2016 Year 2015

Chart presentation of Quick ratio of SEBL, Khatungonj Branch

Analysis: By calculating the quick ratio of SEBL, Khatungonj Branch for three years the report
has found that it has always been in a good condition. This branch has been always having more
than TK 1 worth of asset for every TK 1 of liabilities. Now it has TK 11.52 worth of asset for
every TK of liabilities. As with the current ratio, the quick ratio level that a firm should strive to
achieve depends largely on the nature of the business in which it operates.

Net working capital

Working capital, also known as net working capital, is the difference between a company’s
current assets, like cash, accounts receivable (customers’ unpaid bills) and inventories of raw
materials and finished goods, and its current liabilities, like accounts payable. Working capital is
a measure of both a company's operational efficiency and its short-term financial health. The
working capital ratio (current assets/current liabilities), or current ratio, indicates whether a
company has enough short-term assets to cover its short-term debt.

Net Working Capital = Current Assets - Current Liabilitie

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 Table: 1.3 Net Working Capital of SEBL, Khatungonj Branch

Year 2017 2016 2016

Current Assets 114,493,803 73,896,220 95,272,201
Current Liabilities 9,149,401 6,120,484 7,518,785
Net Working Capital 105,344,402 67775736 87,693,416

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Net working capital

150,000,000

100,000,000 Year 2017

50,000,000 Year 2016
Year 2015
0
Year 2017 Year 2016 Year 2015

Chart presentation of Net working capital of SEBL, Khatungonj Branch

Analysis: Here for SEBL, Khatungonj Branch net working capital has always been positive. The net
working capital indicates that this branch has always used long term financing rather than going for a
short term. It has always excess amount of current assets to cover its short-term obligation which is
good indicator of managing working capital. Liquidity is good here.

Cash ratio
The cash ratio is the ratio of a company's total cash and cash equivalents (CCE) to its current
liabilities. The metric calculates a company's ability to repay its short-term debt; this
information is useful to creditors when deciding how much debt, if any, they would be willing to
extend to the asking party. The cash ratio is generally a more conservative look at a company's
ability to cover its liabilities than many other liquidity ratios because other assets, including
accounts receivable, are left out of the equation. The cash ratio is most commonly used as a
measure of company's liquidity. The metric calculates a company's ability to pay current
liabilities using only cash and cash equivalents on hand.

Cash Ratio = Cash and cash equivalents/ Current Liabilities

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 Table: 1.4 Cash Ratio of SEBL, Khatungonj Branch
Year 2017 2016 2015
Cash and Cash 12,992,149 9,609,160 13,157,874
Equivalents
Current Liabilities 9,149,401 6,120,484 7,518,785
Cash Ratio 1.42 1.57 1.75

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Cash Ratio
2
2
Year 2017
1
1 Year 2016
0 Year 2015
Year 2017 Year 2016 Year 2015

Chart presentation of Cash Ratio of SEBL, Khatungonj Branch

Analysis: In 2015, the cash ratio was 1.75 and the next year 2016 it was 1.57 and finally 2017 it
is 1.42. In 2016 & 2017 it has been decreasing continuously. Decline of cash ratio is an alarming
issue for Southeast Bank Limited, Khatungonj Branch. If the trend will continue it become so
tuff to pay day to day financial obligation.

3.3.2. Asset Management Ratio:

Activity dimension of Asset management ratio are financial analysis tools used to gauge the
ability of a business to convert various assets, liability and capital accounts into cash or sales,
the more efficient it runs. Activity ratios become more meaningful when compared to industry-
average activity ratios. Different industries have different industry-average activity ratios and
patting your ratios against those of peer businesses allows you to know if your ratios are better
or worse. Activity ratios measure the speed with which various accounts are converted into
sales or cash inflows or outflows. In a sense, activity ratio measure how efficiently a firm
operates along a variety of dimensions such as inventory, accounts receivable and accounts
payable. The efficiency with which total assets are used can also be assessed. Activity ratios
measure bank sales per another asset account- the most common asset accounts used are
account receivable, inventory and total assets. Activity ratios measure the efficiency of the bank
in using its resources. Since most banks invest heavily in accounts receivable or inventories,
these accounts are used in the denominator of the most popular activity ratios. It is called
turnover ratio because it indicates the asset converted or turnover into sales.

20
Following are discussed two types of Asset Management Ratio:
i. Fixed assets turnover ratio
ii. Total assets turnover ratio

Fixed Asset Turnover Ratio:

The fixed-asset turnover ratio is, in general, used by analysts to measure operating
performance. It is a ratio of net sales to fixed assets. This ratio specifically measures a
company's ability to generate net sales from fixed-asset investments, namely property, plant
and equipment (PP&E), net of depreciation. In general, a higher fixed-asset turnover ratio
indicates that a company has more effectively utilized investment in fixed assets to generate
revenue.
The fixed-asset turnover ratio is calculated as
Fixed Asset Turnover Ratio = Net interest income / Total fixed assets

Table: 1.5 fixed asset turnover ratio of SEBL, Khatungonj Branch

Years 2017 2016 2015

Net interest 298,043 287,211 262,907
income(‘000)
Total Fixed Assets(‘000) 76,557 91,178 90,971
Fixed Asset Turnover 3.89 3.15 2.89
Ratio

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

100%
3.89 3.15 2.89

0%
Year 2017 Year 2016 Year 2015

Year 2017 Year 2016 Year 2015

Chart presentation of fixed asset turnover of SEBL, Khatungonj Branch

Analysis: The efficiency of net fixed asset turnover of SEBL, Khatungonj Branch is ups position. It is good
for SEBL, Khatungonj Branch. In 2015, the revenue fixed asset turnover was 2.89 and in 2017 it was 3.89.
So, it shows that in case of assets turnover performance SEBL, Khatungonj Branch is doing well.

21
Total assets turnover ratio
The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with
which a company is using its assets to generate revenue. The asset turnover ratio is calculated
on an annual basis. The total assets number used in the denominator can be calculated by
taking the average of assets on the balance sheet at the beginning of the year and at the year's
end.
Total assets turnover ratio = Net interest income / Total assets

Table: 1.6 Total asset turnover ratio of SEBL, Khatungonj Branch

Year 2017 2016 2015

Net interest income 298,043 287,211 262907
Total assets 114,570,360 73,987,398 95,363,172
Total assets turnover 0.95 0.81 0.61
ratio

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Total Assets Turnover Ratio

1

Year 2017
0.5
Year 2016
0 Year 2015
Year 2017 Year 2016 Year 2015

Chart presentation of total assets turnover Ratio of SEBL, Khatungonj Branch

Analysis: The Total Asset turnover of SEBL, Khatungonj Branch has up position from the year
2015 to 2017. It means that the efficiency of generating total revenue against total asset is
poor.

3.3.3 Profitability Ratios

Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings relative to its associated expenses. For most of these ratios, having a higher
value relative to a competitor's ratio or relative to the same ratio from a previous period
indicates that the company is doing well. Some industries experience seasonality in their
operations. The retail industry, for example, typically experiences higher revenues and earnings

22
for the Christmas season. It would not be useful to compare a retailer's fourth-quarter profit
margin with its first-quarter profit margin. Comparing a retailer's fourth-quarter profit margin
with the profit margin from the same period a year before would be far more informative.There
are five important profitability ratios that we are going to analyze:

 Net Profit Margin

 Return on Asset
 Return on Equity
 Return on Deposit
 Earnings Per Share Ratio

Net Profit Margin

Net profit margin, or net margin, is equal to net income or profits divided by total revenue, and
represent how much profit each dollar of sales generates. Net profit margin is the ratio of net
profits or net income to revenues for a company, business segment or product. Net profit
margin is typically expressed as a percentage but can also be represented in decimal form. The
net profit margin illustrates how much of each dollar collected by a company as revenue
translates into profit. The term "net profits" is equivalent to "net income" on the income
statement, and one can use the terms interchangeably. Most commonly, investors will refer to
net profit margin as the "net margin" and describe it as "net income" divided by total sales
instead of using the term "net profits."
Net Profit Margin = Net profit after tax / Net Interest Income

Table: 1.7 Net profit margin of SEBL, Khatungonj Branch

Year 2017 2016 2015
Net Profit Margin 67% 59.21% 55.78%

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Net Profit Margin Ratio

100% Year 2017

50% Year 2016
0% Year 2015
Year 2017 Year 2016 Year 2015

Chart presentation of Net profit margin Ratio of SEBL, Khatungonj Branch

Analysis: It indicates that how much profit is generated from each TK of sales. Here in 2015-
2017 it is gradually increasing its position. Especially at 2017 its increasing 7.79% from its last
year profit which is good indication for the branch.

23
Return on assets
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives a manager, investor, or analyst an idea as to how efficient a company's management
is at using its assets to generate earnings. In basic terms, ROA tells you what earnings were
generated from invested capital (assets). ROA for public companies can vary substantially and
will be highly dependent on the industry. This is why when using ROA as a comparative
measure, it is best to compare it against a company's previous ROA numbers or against a similar
company's ROA. Return on assets is displayed as a percentage and it’s calculated as:

ROA = Net Income / Total Assets

Table: 1.8 ROA of SEBL, Khatungonj Branch

Year 2017 2016 2015

ROA 15% 13.96% 13%

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

ROA
15%

14%
Year 2017
13%
Year 2016
12% Category 3
ROA
Year 2017
Year 2016
Category 3

Chart presentation of ROA Ratio of SEBL, Khatungonj Branch

Analysis:

ROA of SEBL, Khatungonj Branch is 15% now which was 13% in 2015. It is increasing; the
analysis shows that the figures are satisfactory enough. This has huge assets which are good for
SEBL, Khatungonj Branch.

24
Net Interest Margin
Net interest margin is a ratio that measures how successful a firm is at investing its funds in comparison
to its expenses on the same investments. A negative value denotes that the firm has not made an
optimal investment decision because interest expenses exceed the amount of returns generated by
investments.Net interest margin is typically used for a bank or investment firm that invests depositors'
money, allowing for an interest margin between what is paid to the bank’s client and what is made from
the borrower of the funds. A positive net interest margin indicates that an entity has invested its funds
efficiently while a negative return implies that the bank or investment firm has not invested efficiently.
In a negative net interest margin scenario, the company would have been better served by applying the
investment funds toward outstanding debt or utilizing the funds for more profitable revenue streams.

Net interest margin is calculated as:

Net interest margin = Net interest income after expenses / Total earning assets

Table: 1.9 Net interest margin of SEBL, Khatungonj Branch

Year 2017 2016 2015

Net interest 7.25% 7.45% 7.60%
margin(NIM)

Sources: Annual report of SEBL, Khatungonj Branch, Year of 2017 to 2015

Net Interest Margin

7.80%
7.60% Year 2017
7.40%
7.20% Year 2016
7.00%
Year 2015
Year 2017 Year 2016 Year 2015

Chart presentation of Net interest margin of SEBL, Khatungonj Branch

Analysis: Note how narrow this net interest margin is just 7.25 percent. Remember that this is
not yet the bank’s profit borrowing and lending funds because we have not considered
noninterest expenses. If the bank’s management does find this 7.25% net interest margin
acceptable, it will probably use a variety of interest rate risk hedging methods to protect this
NIM ratio, thereby helping to stabilize the bank’s net earnings.

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3.4 SWOT ANALYSIS of SEBL, Khatungonj Branch:
A SWOT analysis is “a technique for matching organizational strengths and weaknesses with
environmental opportunities and threats to determine the organization’s right niche”. SWOT
analysis is an important tool for evaluating the company’s Strengths, Weaknesses,
Opportunities and Threats. It helps the organization to identify how to evaluate its performance
and scan the macro environment, which in turn would help organization to navigate in the
turbulent ocean of competition. With this tool, we will be able to determine, though not
perfectly, since we are not internal members of this organization, the internal strengths and
weaknesses of SEBL as well as the opportunities and challenges that the changing external
environment provides.

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3.4.1 Strength:
Market Leader: Market leadership is the position of a company with the largest market share or
highest profitability margin in a given market for goods and services. Market share may be measured by
either the volume of goods sold or the value of those goods. The bank has the capability to earn highest
profitability.

Company reputation: the branch has good reputation in this area. As a result, it can meet huge
customer to gain profitability.

Financial resources: A bank needs to always have enough financial resources on hand to take
advantage of a great opportunity if it comes along. The branch has sufficient financial
resources.

Interactive corporate culture: Corporate culture refers to the beliefs and behaviors that
determine how a company's employees and management interact and handle outside business
transactions. The bank's culture is reflected in its dress code, business hours, office setup,
employee benefits, turnover, hiring decisions, and treatment of clients, client satisfaction and
every other aspect of operations.

Team work: Working together as part of a team can be challenging when bank has diverse
personalities, goals and work ethics. Successful strategies should help team members define a
collective identity and values they can buy into, and they should employ effective
communication and collaboration. The branch’s employees work together as a team work.
Every day they meet to discuss for team work.

Competitive advantage: Competitive advantage is the leverage that a business has over its
competitors. This can be gained by offering clients better and greater value. Advertising
products or services with lower prices or higher quality piques the interest of consumers.
Target markets recognize these unique products or services. The bank has great competitive
advantage in its product and service. The bank focuses on cost leadership, differentiation, and
focus strategy. SEBL recognizes that taking ecological and social aspects into account is part of
good business and leads to sustainable development. The Bank believes that this approach
enhances the client’s competitive advantage and that economic growth and a healthy
environment go hand in hand.

Modern equipment and technology: Technology means the art of logic or the art of scientific
discipline. The branch uses modern equipment and technology for daily activities. The branch
finds out reduced costs of operations, new product and new market creation, adaptation to
changes in scale and format, improved customer service, reorganized administrative
operations.

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3.4.2 Weakness:

New rivalry: Rivalry refers to the degree to which firms respond to competitive moves of the
other firms in the industry. Rivalry among existing firms may manifest itself in a number of
ways- price competition, new products, increased levels of customer service, warranties and
guarantees, advertising, better networks of wholesale distributors, and so on. There are various
financial companies so that the company always can’t face properly.

Inefficient production management: There are some inefficient production management

problems. Sometimes there are miscommunications, scheduling problems and continuously
improvement.

Poor supply chain management: Supply chain management operates at three levels: strategic,
tactical, and operational. But the bank always can’t meet together all departments. As a result,
the bank faces various problems to take decision.

3.4.3 Opportunities:
Market dominance: A firm is in a dominant position, has control over other competitors.
Dominance in the market gives a firm chance to enjoy more freedom to select suitable strategic
options. The branch can dominate the huge market by taking achievable strategies.

Increasing demand for the products: the branch has the opportunity in the market if the
branch will look at the other products that are dominated the market. The branch collects the
market information and will contribute to make a product.

Organizational goals: There are ways to achieve organizational goals. As a result, the bank will
look at the huge market how to implement their products.

3.4.4 Threat:
Economic crisis: The branch sometimes faces various problems for world economic crisis.
Because the branch stays in an important place, as a result it always remains prepared to give
services. But economic crisis becomes a big threat for the branch.

Growing competition: Bangladesh is 41th economic country and the branch stays in a big
market of Bangladesh. As a result, there are to become different types of competitions for the
branch.

Labor union: The labor union is very important for any organization. But the branch labor union
is not good working. For this reason, the branch will face a big problem.

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 CHAPTER FOUR

FINDING, RECOMMENDATION AND

CONCLUSION

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Summary of Findings:
Throughout Financial Performance Evaluation of Southeast Bank Limited, Khatungonj Branch,
Chattogram some mentionable results are found that the branch is doing well in its financial
operation. The amount of interest earning shows the success. As a result the branch has already
reached one of the profitable branches of the bank.

The quick ratio is strong position of the branch. As with the current ratio, the quick ratio level
that a firm should strive to achieve depends largely on the nature of the business in which it
operates.

Khatungonj Branch net working capital has always been positive. The net working capital
indicates that this branch has always used long term financing rather than going for a short
term. It has always excess amount of current assets to cover its short-term obligation which is
good indicator of managing working capital. Liquidity is good here.

The branch has been decreasing continuously. Decline of cash ratio is an alarming issue for
Khatungonj Branch. If the trend will continue it become so tuff to pay day to day financial
obligation.

The branch is doing well. Because, it’s fixed asset turnover is good. In general, a higher fixed-
asset turnover ratio indicates that a company has more effectively utilized investment in fixed
assets to generate revenue.

Besides, total assets turnover is not well. It means that the efficiency of generating total
revenue against total asset is poor.

The branch is gradually increasing its position. Because, it’s net profit margin is increasing
yearly.

But the branch’s Net Interest Margin is in the decreasing trend. A positive net interest margin
indicates that an entity has invested its funds efficiently while a negative return implies that the
bank or investment firm has not invested efficiently. In a negative net interest margin scenario,
the company would have been better served by applying the investment funds toward
outstanding debt or utilizing the funds for more profitable revenue streams.

The branch has good financial rating. That is a plus point for it. The branch tries to make money
for customers in a short time than its rivals. (Face to face communication)

Southeast Bank Limited, Khatungonj Branch, Chattogram is mainly focusing on industrial credit
and foreign exchange beside other sides. The foreign exchange department and credit

30
department are strong sides for the branch. Many business men believe that the branch greatly
contribute for their foreign business.

RECOMMENDATION
The study is constructed over the financial statement analysis from the financial year 2015 to
2017. Here the report analysis the financial position of Southeast Bank Limited, Khatungonj
Branch, Chattogram. And here is some recommendation to better financial performance of the
branch.

 Current ratio is a positive thing but the current ratio is not increasing consistently over
the branch have to keep it consistently.
 Cash and Cash Equivalents are decrease in great number and for this reason cash ratio is
declining from 2016 to 2017. Declining of cash ratio is an alarming issue of the Southeast
Bank Limited, Khatungonj Branch, Chattogram. So financial management have to move
concern regarding this matter.
 The Total Asset turnover of SEBL, Khatungonj Branch has up position from the year 2015
to 2017, but it is not good for the branch. So the financial management has to take steps
to recover it.
 There has to more efficient capital management and investment analysts appointed so that
idle money does not remain in the branch.
 In order to remain as the market leading branch they have to emphasize much on retain
the existing customer base and also should try to attract new customers.
 SEBL, Khatungonj Branch has to increase management efficiency.
 The branch management has to arrange more training programs for its employees so
that they can become more efficient.

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CONCLUSION

Southeast Bank has been a successful private commercial bank in the banking industry. Its main
goal is a bank with vision. The bank has been practicing conservative banking over the years.
Thus, it has adopted new technologies to make every area of the bank more transparent to the
central management. It has cut down processes that took hours previously, now can be
executed within minutes. Southeast Bank is also continuously expanding its offerings and
services to the clients. Again, its social causes programs create a strong image for the bank
among the shareholders.

The bank has remained profitable since its inception. However, recently in 2017, the banking
sector continued to face challenges like swelling non-performing loans, excess liquidity, lower
capital adequacy etc. These challenges have also affected the bank in some way or other
eventually. Hence, the bank could not perform well compared to previous years.

Nonetheless, the bank has all the capabilities to recover the damages. They need to pay
attention to their limitations and take measures to improve their current condition. Southeast
Bank has been pioneer in automation. Its strong exposure in different banking areas has also
made the bank trustworthy among their huge number of clients. Therefore, focusing on the
areas that they should improve or upgrade will eventually help them in achieving continuous
growth.

Finally, Bangladesh has 32 billion dollars as a reserve. Now the country is 41th economy country
of the world. Bangladesh will be 24th economy country of the world. As a result, Bangladesh
government is doing various activities to increase business performance. For this reason, the
government wants to help all sectors organizations to contribute from owns position. The
Southeast Bank Ltd, Khatungonj Branch, Chattogram is always trying to provide their best
service for their customers. Thus by providing various services, the bank is playing an important
role in the banking system of Bangladesh. With the current performance of the Bank and with
little improvement here and there; Southeast Bank Ltd will certainly make itself the best Private
Bank in Bangladesh in the near future.

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References

1) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “quick asset turnover ratio”, the United States of America, 3.4, page- 125.
2) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “Liquidity ratios”, the United States of America, 3.5, page- 128
3) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “ Net profit margin”, the United States of America, 3.7, page-131
4) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “profitability ratio”, the United States of America, 3.8, page- 133
5) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “net working ratio”, the United States of America, 3.7, page- 132
6) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) -“ net interest margin”, the United States of America, 3.8.3, page-136
7) Lawrence J. Gitman & Chad J. Zutter (2012) - Principles of Managerial Finance (13th
edition) - “return on assets”, the United States of America, 3.9, page- 139
8) Will Kenton (2012) – Financial Analysis, from
https://www.investopedia.com/terms/c/currentratio.asp (Published: Oct 23, 2018)
9) Will Kenton (2012) – Financial Analysis, from
https://www.investopedia.com/terms/c/cash-ratio.asp (Published: Jul 9, 2018)
10) Will Kenton (2012) – Financial Analysis, from
https://www.investopedia.com/terms/c/totalasset-ratio.asp (Published: Nov 16, 2018)
11) Mr. Monir, (2017) - Profit and loss statement of the branch -2017, (Published:
December 31, 2017)
12) Mr. Monir, (2017) – Trial balance statement of the branch -2017, (Published: December
31, 2017)
13) Hasanur Korim & Rakib Hossain (2018),- Annual Reports of Southeast Bank Ltd – 2017,
(Published: March 26, 2018)
14) Syed Redwanul Hakim (2018) - Branch articles 2017, (Published: April 12, 2018)

33