Cost efficiencies drive vibrant 9-month growth for ComBank
The Commercial Bank of Ceylon Group has achieved characteristically equitable growth for the nine months ending 30th September 2021, despite a slowing down in some key contributors in the third quarter of the year.
The Group, comprising the Commercial Bank of Ceylon PLC – Sri Lanka’s largest private sector bank – its subsidiaries and an associate, has reported a gross income of Rs 120.050 billion for the period, an improvement of 5.66% over the corresponding nine months of 2020, with the third quarter recording a growth of 4.34% in comparison with the 6.34% growth achieved for the first half of 2021.
Interest income, the biggest component of gross income, grew by 3.43% to Rs 96.227 billion, improving on the 3.20% growth achieved up to June 2021, and interest expenses continued to decline, albeit at a lower rate than in the first half of the year, the Group said. Consequently, interest expenses reduced by 13.42% to Rs 48.693 billion for the nine months, enabling the Group to post net interest income of Rs 47.533 billion, recording an increase of 29.18%.
Among the other principal contributors to gross income, fee and commission income grew by 32.21% to Rs 11.002 billion; net other operating income improved by 13.91% to Rs 7.808 billion assisted by higher exchange gains; net gains from de-recognition of financial assets contributed Rs 2.976 billion and net gains from trading amounted to Rs 2.037 billion, an increase of 171.95%. Net gains from de-recognition of financial assets witnessed a decline of 36.10% due to a reduction in profits from the sale of Treasury Bonds and Sovereign Bonds by Rs 1.417 billion, in comparison with the third quarter of last year, the Group said.
Total operating income at Rs 68.951 billion for the nine months, reflected a growth of 23.53% and the Group’s noteworthy achievement of restricting impairment charges to Rs 17.997 billion during the period under review, an increase of only 7.56% as compared with a 47.44% growth at the end of the first half of 2021, resulted in net operating income growing by 30.37% to Rs 50.954 billion. With the Group’s consistency in curtailing growth in operating expenses to 8.39% (8.42% for the first half of 2021), total operating expenses for the nine months increased by Rs 1.647 billion to Rs 21.280 billion.
Consequently, operating profit before VAT on financial services grew by a significant 52.55% to Rs 29.674 billion for the nine months, improving on the 41.09% growth recorded at the end of the first six months of the year.
Commercial Bank Chairman Justice K. Sripavan noted that these results demonstrate Commercial Bank’s strong ability to maintain healthy and balanced growth in core banking operations to mitigate the impacts of fluctuations in income from fee-based operations and other operating income. “Each quarter sees the Bank maintaining or improving on its key performance ratios to become even more financially stable and better-positioned to continue its mission as a systemically important bank,” he said.
The Bank’s Managing Director S. Renganathan elaborated that Commercial Bank continued to improve its CASA ratio, cost-income ratio, provisioning for impairment and provision cover in the period reviewed, disclosing that charges for impairment and other losses had in fact declined by a remarkable 41.87% in the third quarter. “These are excellent indicators of our unrelenting focus on banking fundamentals even as we continue to provide concessions to our customers in consideration of the difficult circumstances that prevail,” Renganathan said. “It is most noteworthy that in terms of profitability, the Group has also surpassed its 2020 full-year performance at the end of the third quarter of 2021 while improving its interest margins, return on assets and return on equity.”
The Group paid Rs 4.608 billion as value added tax on financial services for the nine months, which was up 50.55% in line with the growth in profits. As a result, profit before tax for the period amounted to Rs 25.067 billion, an improvement of 52.90%. Income tax increased by 15.92% to Rs 6.049 billion, the relatively lower rate attributable to the reduction in the income tax rate. Consequently, profit after tax for the nine months reviewed grew by 70.17% to Rs 19.017 billion. Notably, this is Rs 1.931 billion or 11.30% more than the Group’s net profit for the full year of 2020. Total taxes paid by the Group in respect of the nine months amounted to Rs 10.981 billion.
Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs 24.425 billion for the period, with a growth of 56.91% and profit after tax of Rs 18.606 billion, recording an improvement of 75.61%.
Total assets of the Group grew by Rs 200 billion or 11.35% over the nine months to reach Rs 1.962 trillion as at 30th September 2021.
Gross loans and advances increased by Rs 105.195 billion or 10.94% to Rs 1.067 trillion, recording a monthly average growth of Rs 11.688 billion over the nine months. The growth of the loan book over the preceding year was 12.36%.
Total deposits of the Group recorded an improvement of Rs 161.272 billion or 12.53% in the nine months reviewed at a monthly average of Rs 17.919 billion to reach Rs 1.448 trillion as at 30th September 2021. Deposit growth over the preceding 12 months was 18.51%.
In other key indicators, the Bank’s basic and diluted earnings per share improved by 54.72% from Rs 10.07 to Rs 15.58, while its net assets value per share increased to Rs 137.00 from Rs 134.67 as at end 2020.
The CASA ratio improved to an impressive 47.05%, an industry benchmark, from 42.72% at the end of 2020 and 41.97% at the end of the third quarter of 2020, while the Bank’s Cost to Income Ratio (CIR) before VAT on Financial Services improved to 30.73% at the end of the period under review from 33.95% at the end of 2020 and 38.51% at the end of 2019. The cost to income ratio inclusive of VAT on financial services improved to 37.55% from 39.96% at end 2020 and 49.41% at the end of 2019.
The Bank’s Tier 1 Capital Adequacy Ratio (CAR) stood at 12.182% as at 30th September 2021, and its Total Capital Ratio at 16.128%, both comfortably above the revised minimum requirements of 9% and 13% respectively imposed by the regulator consequent to the COVID-19 pandemic.
The Bank’s gross non-performing loans (NPL) ratio improved to 4.94% from 5.11% at end 2020 and 5.20% a year previously, while its net NPL ratio improved to 1.83% from 2.18% as at 31st December 2020 and 3.04% as at 30th September 2020. As a result, provision cover based on existing Central Bank of Sri Lanka (CBSL) regulatory requirements improved to 63.03% at the end of the reviewed nine months, from 57.42% at end 2020 and 41.47% a year previously. The Bank’s impaired loan (stage 3) ratio and impairment (stage 3) to stage 3 loans ratio as at 30th September 2021 stood at 6.83% and 31.92% respectively, compared to 6.78% and 30.87% respectively, at the end of 2020.
The Bank’s interest margin also improved to 3.37% from 3.17% for the year 2020, and 3.17% for the first nine months of the previous year. Return on assets (before taxes) and return on equity stood at 1.78% and 15.51% respectively for the nine months ending 30th September 2021 compared to 1.51% and 11.28% for 2020 and 1.37% and 10.28% at the end of the third quarter of 2020.
Sri Lanka’s first fully carbon neutral bank, the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for 11 years consecutively, Commercial Bank operates a network of 268 branches and 931 automated machines in Sri Lanka. The Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.
ADB partners academia to leverage Environmental Finance for Sri Lanka
‘Bio-diversity prospecting is a very risky area, and therefore, it has to be done right’
‘Many good consultations needed before Sri Lanka can go for climate bonds’
Forum aims at combining profitability with ecosystem conservation and regeneration
by Sanath Nanayakkare
Bringing together a collection of global good practices in investing in natural capital, the Asian Development Bank (ADB) recently held its Serendipity Knowledge Program (SKOP) at the University of Peradeniya on a hybrid platform.
Several high-profile officials and academics from around the world and panelists and participants at the physical forum with specialized knowledge in Bio-Diversity and the Natural Capital Asset Class shared their insights on the topic in a no-holds-barred full-day session on May 31, at the picturesque garden university.
The forum held a lot of relevance to the local audience as Sri Lanka is facing a significant challenge in managing its natural assets not only because of the growing demand for natural resources and the environment’s ability to restore these resources, but also the country’s limited public funds to invest in its natural capital for a sustainable future.
Andreas Thermann, Environmental Finance and Partnerships Specialist at ADB addressing the forum said,” We decided to contribute our expertise and experience by designing natural capital investment strategies for institutional investors, aiming at combining profitability and ecosystem conservation and regeneration. There is increasing interest for blue bonds from investors and potential issuers. However, the lack of universal standards creates risks and slows blue economy growth. In this context, a Global Blue Bond Guidance is to be published in June 2023. This new collaboration is building on: ICMA Green, Social, and Sustainability-Linked Bond Principles, UNEP FI Sustainable Blue Economy Finance Principles and Guidance, ADB Green and Blue Bond Framework, UN Global Compact Sustainable Ocean Principles/Practical Guidance, Blue Bond Reference Papers and International Finance Corporation (IFC) Guidelines for Blue Finance.”
Andreas made a presentation of ADB Action Plan for Healthy Oceans and Sustainable Blue Economy covering pollution control, sustainable coastal and marine development, ecosystem and natural resource management and ocean and climate finance.
He explained ADB’s frameworks for supporting governments to issue blue bonds and supporting the corporate sector to do same, providing them with training, outreach events, technical services and financial services.
Sanath Ranawana, Water Resources Specialist, South Asia Department ADB said,” There are opportunities for investment in Sri Lanka’s environmental resources. These investments may come from the public sector as well as the private sector. In order for these investments to really take place, there is a need for more in-depth assessments. There needs to be monitoring of our basic benchmarks; what Natural Capital do we have at the moment, what is their current status etc. Along with advocacy we need additional monitoring and assessments. As we are all aware, it is very relevant to this topic how the private sector can invest in Natural Capital. There is a general belief that bio-diversity prospecting for commercial purpose is a very risky area, and therefore, it has to be done right. There is a responsibility for the government side in this respect because together we have to undertake bio-prospecting in an organized, controlled and a regulated way. There is a lack of perception about the role the private sector can play in bio-prospecting. So, it is important to make sure that bio-prospecting is done right- that means that it is sustainable, ethical, and results in benefits for the country and the local people. It emerged during our discussion that in terms of environmental financing, there would have to be certain legal provisions that allow the government to make eco-system services payable or not. Such valid concerns may present policy barriers that require policy action. So, engaging relevant stakeholders, in-depth assessments, establishing bond frameworks, arranging independent external reviews etc., will lead to the final desirable objective of climate investment action.”
In addition to ADB, the following global institutes pledged support to provide global guidance to Sri Lanka’s journey in assessing and monitoring its natural capital with the objective of raising long-term environmental financing: The Research Centre for Eco- Environmental Sciences – Chinese Academy of Sciences, People’s Republic of China, Stanford University USA, Sovereign Debt Department Office of the Ministry of Economy and Finance Uruguay and the Government of Belize.
ADB established this new knowledge program in 2021 in line with its vision as a knowledge solutions bank.
Unlocking New Possibilities: The impact of deep fake technology on brand storytelling
By Kavi Rajapaksha
By now, marketers know that they need to work hand in hand with artificial intelligence (AI) to be successful in this era driven by technological advancements. According to the most recent data, more than 650 million unique branded content pieces are posted every day but 87% of them fail in achieving any significant engagement. So brands continually search for innovative ways to engage audiences and captivate their attention.
One such technological marvel that has emerged in recent years is deep fake technology. This cutting-edge AI-driven technique, with its ability to manipulate and recreate images and videos, is revolutionizing brand storytelling. As we explore the potential of deep fake technology, we uncover a new dimension of creativity and narrative possibilities for brands to produce more emotionally captivating and relevant content.
Breaking the boundaries of imagination
Deep fake technology has the power to blur the lines between fiction and reality, allowing brands to push the boundaries of imagination. By seamlessly blending the real and the surreal, brands can transport audiences into immersive storytelling experiences that captivate and leave a lasting impact. Whether it’s bringing historical figures back to life, resurrecting beloved characters, or merging multiple personalities, deep fake technology unlocks a world of limitless possibilities.
With the introduction of ChatGPT, Canva and various other AI platforms that has transformed how the creative industry does things, many have started to question if AI can indeed replace marketers and creatives. AI can automate basic and repetitive tasks and work efficiently to find the best, published information available. However, whether or not Ai can be programmed to emulate human emotions and think like a human is an answer only the future holds. But, the one thing that holds true is that all brands must adapt right now to stay ahead of the curve.
Also, deep fake technology disrupts conventional notions of authenticity and challenges the way we perceive truth in storytelling. With the power to recreate personalities, brands are now faced with the responsibility of navigating the ethical landscape surrounding this technology. Transparency and clear communication are crucial to ensure audiences understand the creative intent and the boundaries between reality and fiction. As brands venture into this realm, it becomes essential to strike a delicate balance between the captivating allure of deep fake technology and the need for honesty and integrity in brand storytelling.
Empowering creativity and collaboration
The most common jokes in the industry are revolved around how small the client budgets are versus the very inspiring briefs that are received. Often, marketers and creative teams come up with great ideas that require a lot in terms of the budgets which prevents them from executing them. In a way, its fair to say that the strength of the ideas is parallel and even better than some of those in the world right now, but not many organizations can afford to spend the required amount to make those a reality. But now with AI, many of those boundaries can be easily crossed and a lot of video and static content can be created within seconds.
Now is the time to leave hygiene content to AI and focus on really breaking the clutter with unimaginable things that collaborations between human intelligence and creativity can achieve in partnership with AI.
Deep fake technology is transforming brand storytelling by unlocking new realms of creativity and narrative possibilities. It empowers brands to establish emotional connections, challenge the status quo, and collaborate with technology experts to create captivating campaigns. However, as brands explore this innovative technology, they must prioritize transparency, ethics, and authenticity to maintain the trust of their audiences. Ai is unlocking the possibility of pursuing larger than life campaigns that previously was not a possibility due to budgetary restrictions and now more than ever, marketers need to really adapt and work hand in hand with Ai and all forms of technology to stay relevant.
(The writer is the Senior Vice President/Chief Marketing Officer at Softlogic Life Insurance PLC)
IronOne Technologies appoints former Sri Lankan ambassador Manori Unambuwe as vice president to drive global expansion
IronOne Technologies is pleased to announce the appointment of Manori as Vice President of Strategy and International Markets. In this role, Manori will lead IronOne’s global strategy, overseeing the company’s expansion into new markets and driving growth in existing ones. She will also be responsible for IronOne’s business development efforts, identifying new opportunities to bring innovative IT solutions to clients worldwide.
Manori brings to IronOne over 20 years of experience in Information Technology, having held senior leadership positions in three global technology giants. Prior to her appointment as Ambassador, she served as the Sri Lankan Ambassador Extraordinary and Plenipotentiary to the Federal Republic of Germany with concurrent accreditation to Switzerland, Croatia, North Macedonia, and Montenegro. She has also served on the Boards of the Information and Communication Technology Agency of Sri Lanka (ICTA) and the Sri Lanka Computer Emergency Readiness Team (SLCERT).
“We are delighted to welcome Manori to the IronOne team,” said Lakmini Wijesundera, Co-founder and Executive Director of IronOne Technologies. “Her extensive experience in information technology and her track record of success in business development and market expansion will be invaluable as we continue to grow and expand our global reach.”
The appointment plays a crucial role in IronOne’s strategic vision to position the company as the foremost IT solution provider in the field of artificial intelligence across Asia and expand its global business presence.
Manori said, “I am excited to join IronOne Technologies and to work with the talented team to drive the company’s growth and success. I look forward to contributing to the company’s vision of bringing innovative IT solutions to clients worldwide.”
IronOne Technologies is an IT solutions provider to many clients worldwide, including some listed in the Fortune 500. Its AI labs division, consisting of a highly skilled team of AI engineers with experience in Data Science and Machine Learning, can deliver state-of-the-art solutions to various industries. Atrad, a multi-disciplinary financial trading platform with over 80% of the market share in Sri Lanka, and the Mobile web solutions, with unique apps provided to renowned global brands, are the other business solutions the company provides.
Manori currently serves as an Ambassador for AsiaBerlin Forum, an initiative by the Berlin Senate to support Asian tech startups to access the German market. Her experience and knowledge will be instrumental in guiding IronOne Technologies’ strategic decisions and expanding its global footprint.
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