Southeast Bank to issue Tk1,000cr bond
According to its price-sensitive statement, the floating rate non-convertible subordinate bond aimed at raising regulatory capital (tier-2) is expected to help the bank fulfil its Basel-III requirements
Southeast Bank, a private sector lender, has decided to raise the bond amount to Tk1,000 crore from its previous decision of Tk500 crore aiming to enhance its capital base.
According to its price-sensitive statement, the floating rate non-convertible subordinate bond aimed at raising regulatory capital (tier-2) is expected to help the bank fulfil its Basel-III requirements.
The decision to issue the bond was approved by the board of directors at a board meeting on 6 February, reads the statement.
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The issuance of the bonds, which have a seven-year term, is subject to approval from the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank.
Earlier, on 20 October last year, Southeast Bank had decided to raise Tk500 crore through issuing bonds.
Currently, the local bond market is dominated by subordinated bonds, mainly issued by banks. These bonds help lenders construct their mandatory tier-2 capital base through the bond proceeds within a specific tenure.
The Bangladesh Bank is implementing Basel-III in the local banking industry to ensure that banks have adequate capital to avert systemic risk.
Basel-III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital.
Meanwhile, Southeast Bank reported a 70% decline in its consolidated net profit for the July-September quarter of 2024, primarily due to high provisions for classified loans, according to its unaudited financial statement.
During the quarter, its consolidated net profit was Tk34.94 crore, which was Tk115 crore a year ago at the same time.
In that quarter, it kept Tk226.90 crore as a provision against classified loans, which was 10 times higher than the previous year at the same time.
At the end of the first nine months of the last year, the bank's consolidated net profit was Tk157 crore, which was 48% lower than the previous year at the same time.
Southeast Bank's consolidated earnings per share stood at Tk1.17 at the end of September.
Its share closed at Tk8.80 on Thursday, down by 2.22% from the previous session on the Dhaka Stock Exchange.
Southeast Bank had paid a 6% cash and 4% stock dividends for the year of 2023.
