BOC’s Rs. 3 trillion asset base, a measure of its contribution to economy – CFO
by Sanath Nanyakkare
Bank of Ceylon’s assets base grew by 24% to LKR 2.9 trillion by end 2020 and at the point of speaking it has surpassed the 3 trillion mark, and the importance of this financial number is that it has an intrinsic value of our customers’ assets and growth potential, Russel Fonseka, Chief Financial Officer (CFO) of Bank of Ceylon said in Colombo yesterday.
“If anything happens to the national economy it reflects on BOC’s balance sheet. You may think why rupees three trillion asset base is so important. Because it does not tell a monetary value only. Anybody can give asset base numbers. But our asset base of LKR 3 trillion has an intrinsic value in the national economy. The total of this asset base may not be within the bank itself. It may be within the business peripheries of our customers; their establishments, stocks. tea factories, tea estates farms, agriculture produce, they are included in this three trillion asset base.
‘This financial number of BOC represents all sectors of the economy. That is why we are proud of the increase of our asset base and that is why I said our asset base reflects on the nation economy and not just ourselves. We will be expanding on this value in the future as well contributing to the national economy in a meaningful way,” he said.
“Although the profit in 2020 was less than in the preceding year, we have made the largest profit in the banking industry this year. Some people say that the bank industry is making high profit. That is not the truth. We have broad based assets compared to other industries. We mange and administer them. What we reap from that business is our profit. We make less than 1% profit – or about 0.87% from each of these assets. There is no other industry operating on such low profit margin. But as the quantity of assets we manage is huge, we can make profit. This is the truth although people criticise us sayong the banks are making a lot of profit,” he said.
Fonseka said so at a media briefing held by the top management of the bank to announce the Bank’s Financials for the year 2020.
BOC chairman Kanchana Ratwatte speaking at the event said that the bank ended a strenuous year with undisputed leadership position, keeping spotlight on economic revival.
“Bank of Ceylon has once again stamped its resilient leadership position by navigating an exhausting year carefully, but with great strength, continuously powering the wheels of the Sri Lankan economy despite Year 2020 was a year of many unforeseen challenges”, Ratwatte said.
BOC General Manager D.P.K. Gunasekera said that the Bank partnered with the Central Bank of Sri Lanka to maintain the dollar-rupee exchange rate with the backing of foreign remittances it received from migrant workers.
Amidst these unexpected challenges, the bank’s operating profit stood at LKR 29 billion and a reported LKR 23.6 billion as Profit before Tax (PBT) for the year 2020, moving forward with stable performance, while managing headwinds caused by low interest rates, cashflow deferments and operational restrictions. Profit After Tax (PAT) for the year ended was LKR 17.8 billion. The bank’s assets base grew by 24% to LKR 2.9 trillion, primarily backed by an increase of 28% in the loan book.
Reaching another milestone, the bank’s loan book crossed the LKR 2.0 trillion mark during the year and closed with LKR 2.1 trillion gross loans and advances to customers. Both government and private sector lending contributed to growth during the year, while working capital and personal lending showed a boost in all segments, including retail and corporate financing.
The bank’s deposit base (more than 23% of the industry) increased during the year despite low interest rates. The bank’s deposit base of LKR 2.5 trillion represents 35% of the current and saving deposit (CASA) base, which generates funds at low cost. During 2020 the bank successfully executed issuance of its first Additional Tier 1 (AT1) bond, generating LKR 15.0 billion ATI capital. The bank’s Tier I Capital and Total Capital ratio stood at 11.2% and 14.9% respectively by end 2020, which were above regulatory norms. Despite cash flow deferments on loan instalments, the bank was able to maintain better trade -off between liquid assets and liabilities. All liquid level monitoring ratios were maintained positively.
‘Govt. lacks mechanism to recover USD 40 billion spirited out of SL from 2008 to 2018’
By Hiran H.Senewiratne
The government doesn’t have any mechanism to recover the USD 40 billion that was siphoned out of the country illegally from 2008 to 2018 by Sri Lanka’s business elites, Senior Lecturer, Department of Economics, University of Peradeniya Dr. Kalpa Rajapaksha said.
“Most people think that the IMF loan is a victory for Sri Lanka without knowing its risk factors. These are exceptionally high because one of the main impacts would be for the banking sector whose liquidity is due to weaken on account of high tax impositions and certain economic reforms, Dr. Rajapaksha told The Island Financial Review.
Dr. Rajapaksha added: ‘The tax relief given during President Gotabaya Rajapaksha’s tenure triggered this issue, which cost government coffers more than Rs 450 billion. However, Sri Lanka has to carefully follow IMF recommendations taking its history into consideration. It is said that Greece and Ethiopia and several other countries absolutely failed by following IMF recommendations in the past.
‘We are in the dark as to the method of economic recovery because the government is attending to deeper, burning issues in the country, such as reduction of poverty and ending economic inequities.
‘The imposition of heavy taxes on people, especially professionals, via a wealth tax and a heritage tax by 2025 and the increasing of direct taxes, such as VAT, on low income classes, without taking into account the need for a wage hike, will iraise the poverty level and widen wealth inequalities.
‘Inflation at the global level is very high and strategies are required to increase exports and cut down the heavy import dependency of the economy. This is a prerequisite to address all economic woes.
‘The previous ruling party squandered and stole billions of dollars but the present government not having any plan to recover that money is a tragedy. Therefore, promoting neo- liberal principles is impossible under the current corruption scenario.
‘Further, the IMF has set the target of reducing the debt to GDP ratio to 0.7 per cent in 2023, along with their recommendations. Many people doubt the achievability of these aims.’
Global banking sector instabilities affect local bourse
By Hiran H.Senewiratne
CSE trading got off to a positive start but later turned negative yesterday due to huge selling pressure. The reasons being investor worries over a domestic debt restructuring mechanism after having secured the IMF loan and the negative global scenario when it comes to the banking sector, market analysts said.
According to analysts, during the last week strategically important banks in the global economic system went through credit default swaps, especially Silicon Valley Bank, Signature Bank and Credit Suisse Group AG. But another leading European Corporate Bank possibly facing a credit default swap, created some ripple effects for economies like Sri Lanka, analysts said.
The All- Share Price Index went down by 134.1 points and S and P SL20 declined by 51.6 points. Turnover stood at Rs 871 million with two crossings. Those crossings were reported in NDB, which crossed 1.2 million shares to the tune of Rs 51.6 million; its shares traded at Rs 43 and Aitken Spence 772,000 shares crossed for Rs 47.1 million, its shares traded at Rs 61.
In the retail market top seven companies that mainly contributed to the turnover were, SLT Rs 82 million (717,000 shares traded), Browns Investments Rs 52.8 million (8.2 million shares traded), Lanka IOC Rs 50.1 million (298,000 shares traded), Tokyo Cement (Non- Voting) Rs 36.5 million (388,000 shares traded), Expolanka Holdings Rs 33.6 million (251,000 shares traded), ALC Cables Rs 33.3 million (406,000 shares traded) and Sunshine Holdings Rs 27.2 million (633,000 shares traded). During the day 45.4 million share volumes changed hands in 15000 transactions.
The market is generating revenue from SLT over news of it being divested; moreover, there has been interest for the hotel and tourism indexes, since tourist arrivals and earnings have been attractive, an analyst said.
It is said that Treasury bond yields opened steady on Monday, while the rupee opened weaker at spot market, dealers said.
A 01.07.2025 bond was quoted at 30.75/31.00 per cent on Monday, up from 30.90/31.20 per cent on Friday. A 15.09.2027 bond was quoted at 28.00/70 per cent, up from 28.00/50 per cent from Friday. The Sri Lanka rupee opened at 322/325 against the US dollar, weaker from 320/325 a day earlier.
Holding ‘Raid Amazones’ for second consecutive year in SL, a rare honour for her – Head of Marketing Srilankan Airlines
By Hiran H.Senewiratne
More than 250 female French athletes arrived in Sri Lanka for the challenging ‘Raid Amazones’ adventure event that took place last week in Kandy. They arrived in Sri Lanka for the second consecutive year, which was a big achievement for the country when it comes to the tourism sector, Head of Marketing SriLankan Airlines Saminda Perera said.
“For the first time in ‘Raid Amazones’ history they selected one country for two consecutive years, which could be considered a great honour for Sri Lanka. This would enable more French tourists to arrive in Sri Lanka in the future, Perera told the media recently during the event in Kandy. ‘Raid Amazones’ will hit the streets of the fabled hill capital, Kandy, with the participation of over 250 female athletes.
‘Raid Amazones’ is a well-known annual destination adventure event originating in France, which features female athletes competing their way through a range of challenges, such as, orienteering, mountain biking, canoeing, riding, running and archery.
“Sri Lanka was chosen over rival destinations by the event’s founders due to the unparalleled warmth of its people and support on the ground to pull off a successful event. Their decision is also due to SriLankan Airlines’ tireless marketing efforts to secure the popular trail on successive occasions for Sri Lanka in its hour of need for international tourism support, Perera said.
Tourism sources added: “During the 21st edition of the trail, the participants will be able to connect with a potpourri of natural and historical highlights as they trek through the Kandyan plateau in Central Sri Lanka.
“Their journey, though, would begin from the moment that they step onboard SriLankan Airlines to fly from Paris to Colombo, on an aircraft dedicated to ‘Raid Amazones 2023’.
“Named as a UNESCO World Heritage Site, Kandy, the iconic setting of ‘Raid Amazones 2023’, is renowned for two of the most recognizable cultural symbols that define Sri Lanka.
“SriLankan Airlines partnered Raid Amazones in 2022 soon after recommencing operations to Paris.
“SriLankan Airlines, together with Connaissance de Ceylan, the official ground- handling partner of the event, will go all out to ensure that the French group experiences the best in Sri Lankan hospitality.
“This event will especially help create more awareness of Sri Lanka as an adventure travel hotspot among French travellers and the rest of Europe, where ‘Raid Amazones’ is sought-after and attracts adventure-seekers.”
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