Business

Central Bank of Sri Lanka tightens monetary policy stance

Published

5 years ago

2021/08/20

Monetary Policy Review: No. 06 – August 2021

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 18 August 2021, decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points each, to 5.00 per cent and 6.00 per cent, respectively. In addition, the Monetary Board decided to increase the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of licensed commercial banks (LCBs) by 2.0 percentage points to 4.00 per cent, with effect from the reserve maintenance period commencing on 01 September 2021.

These decisions were made with a view to addressing the imbalances on the external sector of the economy and to preempt the buildup of any excessive inflationary pressures over the medium term, amidst improved growth prospects. The global economy is set to make a gradual recovery in 2021, although normalisation of economic activity would largely be uneven across regions As per the July 2021 update to the World Economic Outlook (WEO) of the International Monetary Fund (IMF), the global economy is projected to grow by 6.0 per cent in 2021 and 4.9 per cent in 2022. Economic prospects have diverged across regions and access to COVID-19 vaccines has emerged as the principal factor that drives the global economic recovery in the period ahead.

Most countries have experienced transitory price pressures due to supply-demand mismatches amidst the pandemic. Such transitory pressures could become more persistent, thereby warranting preemptive action by central banks in order to ensure stability in the period ahead. Accordingly, some central banks have already commenced tightening monetary policy while several others have signalled a possible tightening of monetary policy in the period ahead. The Sri Lankan economy is on a recovery path despite the pandemic related disruptions

Supported by fiscal and monetary stimulus measures, the Sri Lankan economy is gradually making headway following the setback in 2020. As per the estimates published by the Department of Census and Statistics (DCS), the economy witnessed a stronger than expected recovery during the first quarter of 2021, recording a real growth of 4.3 per cent, year-on-year. The economy is poised to record a higher growth rate during the second quarter of 2021, partly due to the sharp contraction observed in the corresponding quarter of the previous year. Possible disruptions to domestic economic activity from the re-emergence of the COVID-19 pandemic and related preventive measures could weaken the recovery to some extent during the second half of 2021. Nevertheless, with the successful rolling out of the national COVID-19 vaccination programme and the Government’s strategy to impose only selective mobility restrictions, the momentum of activity is expected to sustain in the period ahead. Available indicators and projections suggest that the real economy would grow over 5 per cent in 2021, and this momentum would be sustained over the medium term.

Most market interest rates have reached low levels resulting in the expected acceleration in credit flows to the private sector With the gradual transmission of accommodative monetary policy measures, most market deposit and lending interest rates declined to their historic low levels. Supported by the low interest rate environment, credit to the private sector expanded notably during the first half of 2021, surpassing the annual expansion of credit observed in 2019 and 2020. The momentum of credit expansion is expected to continue in the period ahead, with increased credit flows to productive and needy sectors of the economy. Meanwhile, credit obtained by the public sector from the banking system, particularly net credit to the Government, also increased notably thus far during the year, amidst the impact of the pandemic on government revenue and recurrent expenditure. Reflecting the impact of increased domestic credit, the growth of broad money (M2b) continued to remain elevated. The external sector continued to face a multitude of challenges requiring coordinated measures The implementation of the essential growth-conducive stimulus measures, which resulted in the availability of low cost credit to the private sector, led to a sustained increase in the demand for merchandise imports since mid-2020. With the increase in import expenditure outweighing the improvements observed in earnings from exports, the trade deficit continued to widen during the first half of 2021 over the corresponding period of last year. Moreover, the expected recovery in the tourism industry could be further delayed due to uncertainties associated with the resurgence of the pandemic globally. Workers’ remittances, which recorded a significant growth in 2020 as well as in the first few months of 2021, have also displayed some deceleration. Limited conversion by exporters and the advancing of imports together with some speculative activity, prompted by anomalies between interest rates on the rupee and foreign currency products in the financial market, exerted undue pressure on the exchange rate in the domestic market. Amidst these developments, all debt service obligations of the Government, including the settlement of the International Sovereign Bond (ISB) of US dollars 1 billion in late July 2021, have been duly met thus far in 2021. Gross official reserves were estimated at US dollars 2.8 billion with an import cover of 1.8 months by end July 2021. This, however, does not include the bilateral currency swap facility with the People’s Bank of China (PBoC) of CNY 10 billion (equivalent to approximately US dollars 1.5 billion). Measures are being taken by the Government and the Central Bank to secure foreign financing from several sources in order to reinforce the level of official reserves in the near future. Meanwhile, the Government continued to aggressively explore avenues to enhance non-debt creating foreign inflows, by strengthening the domestic production economy, which would help strengthen the external sector in the period ahead. Possible upside pressures on inflation are being addressed through preemptive policy measures Inflation, which remained moderate during early 2021, accelerated somewhat in recent months due to high food inflation and some acceleration in non-food inflation. Inflation is projected to hover around the upper bound of the desired 4-6 per cent target range in the near term. The envisaged improvements in aggregate demand conditions and the likely increases in global energy and other commodity prices may generate some inflationary pressures in 2022, requiring preemptive policy measures to ensure the maintenance of inflation in mid-single digit levels over the medium term.

Tightening of monetary policy stance is expected to support greater economic stability In consideration of the current and expected macroeconomic developments as highlighted above, the Monetary Board decided to rollback some extraordinary support provided to the economy at the onset of the COVID-19 pandemic. Accordingly, with effect from 19 August 2021, the Board decided to increase the policy interest rates, i.e., the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), of the Central Bank by 50 basis points each, to 5.00 per cent and 6.00 per cent, respectively. This would also result in the Bank Rate, which is linked to the SLFR with a margin of +300 basis points, automatically adjusting to 9.00 per cent.

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Business

HNB Assurance delivers industry leading 42% revenue (GWP) growth and 28% rise in profits (PAT)

Published

3 hours ago

2026/03/1

Thilina Walpola

HNB Assurance PLC reported an outstanding financial performance for the year ended 31st December 2025, delivering a 42% year-on-year growth in Life Insurance Gross Written Premium (GWP), this along with the growth rate in Renewals are the highest in the industry.

Life GWP reached Rs. 19.49 Bn compared to Rs. 13.71 Bn in 2024, reflecting strong New Business generation and Renewal Collection. Net Written Premium grew even faster at 43% to Rs. 18.44 Bn, highlighting the quality and sustainability of the Company’s topline expansion.

Commenting on the results, Chairman Stuart Chapman stated, “The year under review was marked by gradual macroeconomic stabilisation, improved investor sentiment and a more predictable policy environment. Although the economy continues to recover from prior volatility, we are beginning to see renewed financial confidence among individuals and businesses. Against this backdrop, HNB Assurance has delivered strong growth in both revenue and profits, while maintaining robust capital adequacy and prudent risk management. Our improvement in top line, profitability and balance sheet strength demonstrates the resilience of our business model and our ability to navigate changing economic conditions which are reflected in an ROE which increased to 18.5% from 16.9% a year earlier.”

Profit Before Tax increased by 28% to Rs. 3.03 Bn from Rs. 2.36 Bn in the previous year, while Profit After Tax (including Life Surplus Transfer) rose by 28% to Rs. 2.12 Bn compared to Rs. 1.66 Bn in 2024. Earnings Per Share improved by 28% to Rs. 14.15 from Rs. 11.04, reinforcing the Company’s ability to consistently translate business growth into enhanced shareholder value. In line with this strong performance, the Board of Directors has proposed a first and final dividend of Rs. 5.00 per share for 2025, representing a 28% increase over the Rs. 3.90 per share declared in the previous year.

Executive Director and Chief Executive Officer Lasitha Wimalaratne highlighted the consistency of the Company’s upward trajectory. “Our 2025 performance reflects a sustained pattern of high growth and disciplined execution over the past four years. During this period, we have consistently strengthened our distribution reach, enhanced advisor productivity, invested in digital enablement and sharpened our customer centric value proposition. Each year we have built on the previous year’s gains, and the 42% growth in Life GWP in 2025 is the strongest affirmation yet of that strategy. Importantly, we have achieved this while maintaining underwriting discipline, expanding our Life Fund and delivering a 28% increase in PAT.”

The strength of the Company’s balance sheet continued to improve during the year. Total Assets grew by 28% to Rs. 68.44 Bn from Rs. 53.40 Bn, while financial investments increased by 29% to Rs. 62.49 Bn from Rs. 48.49 Bn in 2024, reflecting disciplined asset accumulation and prudent investment management. Total Equity rose to Rs. 12.19 Bn from Rs. 10.81 Bn, supported by Retained Earnings which grew by 18% to Rs. 10.23 Bn.

The Life Insurance Fund recorded a significant expansion of 27%, increasing to Rs. 48.87 Bn from Rs. 38.34 Bn in the previous year. During the year, the Company paid Rs. 4.40 Bn in Net Insurance Benefits and Claims, honouring its commitments to policyholders and their families while further strengthening long term reserves. Investment Income remained a key contributor to performance, with interest and dividend income rising by 10% to Rs. 7.49 Bn.

The Market Capitalisation as at the end of the year stood at Rs. 17.21 Bn up 43% from a year ago when it was Rs. 12.02 Bn, while trading for year ended at Rs. 114.75 per share increasing by 43% from Rs. 81.10 a year ago.

Business

Phoenix Ogilvy Dominates Sri Lanka’s Creative Rankings

Published

3 hours ago

2026/03/1

Thilina Walpola

Irvin Weerackody – Chairman, Ogilvy Group Sri Lanka

Standout year with international award show wins at LIA, One Asia, Clio, AdFest, Spikes Asia & The Work

Phoenix Ogilvy has been named 2025 Sri Lanka Agency of the Year after topping The Campaign Brief Asia’s Creative Rankings as the most internationally awarded agency in the country, an agency news release said..

The agency’s ranking also marks Sri Lanka’s return to the list in 2025, following the country’s absence from it the previous year.

The Campaign Brief Asia Creative Rankings annually evaluate the top 100 most awarded creative agencies in Asia, based on their achievements across leading international award shows.

The rankings are widely regarded as one of Asia’s most credible measures of creative excellence. Agencies accumulate points purely from award wins across major international creative shows, making it one of the longest-running and most respected benchmarks of creative performance in the region.

Phoenix Ogilvy secured the top spot in the national table, amassing an impressive 295 Creative Ranking points after standout wins across six major international creative award shows, including London International Awards (LIA), One Asia Awards, Clio Awards, AdFest, Spikes Asia, and Campaign Brief’s The Work.

Being ranked at the top not only signals national creative leadership for Phoenix Ogilvy but also exhibits the agency’s talent strength. In a testament to this creative calibre, the agency’s talent dominated the Campaign Brief Asia’s Individual Creative Rankings in Sri Lanka.

Leading this list is Nadeera Warawita with 250 Creative Ranking points, followed by Sakuna Ranasinghe at No. 2 with 220 points, and Samitha Kaushalya at No. 3 with 150 points. Meanwhile ranked jointly at No. 4, are Dilshi Aberaja, Dilshard Ahamed, Harsha Kumara, Kasun Wadumestri, Keshan Silva, and Suresh Kumar. At no. 10 is Dilshi Thathsarani.

Speaking on these achievements, Irvin Weerackody, Chairman of the Ogilvy Group Sri Lanka, said, “Creativity has always been our lifeblood, and it is encouraging to see that commitment recognised on the world stage. The real test of an agency is not the trophies, but the courage to create with integrity, especially today. These achievements not only reflect the capability of our talent, but importantly their discipline, their cultural instinct and their refusal to take the easy way out. I am proud of our teams, who continue to push themselves year after year to raise the bar and uphold the standards we believe in.”

For five decades, Phoenix Ogilvy has been a defining pillar of the country’s marketing landscape and an influential creative powerhouse. From its earliest days, the agency has challenged convention and advocated brave thinking, producing work that commands attention, both locally and internationally.

Renowned as a formidable training ground for Sri Lankan advertising talent, the agency has also played a pivotal role in shaping generations of trailblazing creatives, strategic thinkers, and industry leaders who continue to leave their mark across the region and beyond.

Strengthened by the global Ogilvy network, the agency enjoys a rare blend of global creative rigour and deep local intelligence. Over the years, it has diversified across multiple disciplines and today stands as a talent hub for 290 industry specialists spanning creative, strategy, digital, media, public relations and integrated communications in Sri Lanka.

At its core, the agency remains true to the principles it was built on: that great ideas come from disciplined minds, uncompromising craft, and the refusal to settle for the ordinary.

Business

Oak Ray Chef Marks a Culinary Milestone with 118 Unique Creations

Published

3 hours ago

2026/03/1

Thilina Walpola

In the intricate world of pastry and bakery arts, R.S. Weerakoon has emerged as a visionary creator, known for his extraordinary ability to transform any concept into a stunning cake masterpiece. Currently serving as the Head Chef (Pastry & Bakery) at the Oak Ray Group in Kandy, Weerakoon’s journey is a blend of local talent and international expertise.

An alumnus of Udispattuwa Maha Vidyalaya, Weerakoon holds an NVQ Level 04 qualification from NAITA and is a distinguished member of the Chefs’ Guild of Sri Lanka. With over 14 years of experience in the industry, including valuable tenures in Kuwait and Oman, he has successfully integrated Middle Eastern culinary trends with local flavors.

One of his most significant contributions to the industry is the introduction of 118 unique products to the Oak Ray Group. Remarkably, all these creations are made without the use of any artificial food colorings, prioritizing the health and well-being of consumers.

Speaking about this talented professional, the Chairman of the Oak Ray Group, Mr. Sujeewa Palliyaguruge, stated that his vision is to provide a creative platform for such skilled young individuals.

“Our goal is to allow talented creators like Weerakoon the freedom to innovate and bring their unique visions to life, which ultimately benefits the entire culinary industry in Sri Lanka,” he said.

Weerakoon’s dedication to natural ingredients and his mastery of cake architecture continue to set new benchmarks for the next generation of chefs in the hill capital.