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NSB taking the lead to tackle the ‘challenges of our times’

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A dawning of a new year is always an occasion for renewed hope, rejuvenating wishes and expectations. For us at NSB, the dawning of year 2022 is ever so special as it marks a significant milestone in our remarkable journey as the premier savings institution of the island as we are poised to commemorate our Golden Jubilee in the new year of 2022.

In retrospect of our journey so far, we can be proud of the achievements of NSB over five decades as a Banking partner for all segments of society. In 2021, the year that we have just bid farewell to, we have put up a record-breaking performance as far as the profit and deposit mobilization are concerned. During the year, we have recorded more than Rs. 192 Bn by way of deposit mobilization, and with a stellar performance of a Profit Before Tax (PBT) of approximately Rs. 25.9 Bn and a Profit After Tax (PAT) of approximately Rs. 20.2 Bn, National Savings Bank (NSB) has showed strength and continuous financial resilience amidst challenges.

 We as an institution entering our 50th year of operations, stand tall as the largest and the safest specialized Bank in the country, and is the only such institution in the island backed by 100% explicit Government guarantee. By fostering the savings habit, NSB operates personal wealth creation; and by acting as a financial intermediary on national scale, we productively channel savings into investment for the development of the country’s economy.

Our Mission is to “provide our customers with total financial solutions to optimize their savings and investment needs, while meeting the expectations of all our stakeholders.” As the banking sector becomes more competitive and is faced with unprecedented challenges in the odds presented by the COVID -19 pandemic, it is more essential to remain true to our values and mission.

As the largest and the safest specialized Bank in the country, we take our duty to do everything in our capacity to serve our customers very seriously. Hence, practicing responsible lending, conducting business with fairness, transparency, and integrity; creating meaningful social impact by providing financial inclusion, particularly for the unbanked and the underbanked is at our core, which we will ensure as always in the new year.

As always, the safety and security of our customers’ savings is the bedrock of our institution and the key element of our value proposition, as a Bank specialized in saving. As a result, the Bank has a long-standing culture of operating ethically and with integrity, astute corporate governance, and effective risk management.

We also take pride in announcing that the Bank has been recognized and awarded as the 5th most valuable brand in Sri Lanka by the Brand Finance Lanka Ltd with a brand value of USD 166 Mn. In 2021, NSB was recognized at the Sri Lanka’s first ever gender equality awards as one of the top 10 Women Friendly Workplaces. Moreover, National Savings Bank has also been recognized as one of the 10 Most Admired Companies in Sri Lanka in 2021 by the International Chamber of Commerce Sri Lanka (ICCSL), in collaboration with the Chartered Institute of Management Accountants (CIMA), which speaks volumes of the value we create and add to the Sri Lankan economy and community.

To foster a savings culture among all Sri Lankans that come from all walks of life, and work towards financial and digital inclusion, we at NSB have focused on strengthening our digital as well as physical footprint. Accordingly, the Bank has increased its branch network to 261 branches along with 292 ATMS and 89 CRMs. Further, we have been able to introduce “NSB Pay” App, a mobile payment system enabling our customers to accomplish their daily banking needs safely and efficiently while enjoying an uninterrupted service during these difficult times.

In retrospect, digitalization is a key focus area on which we have focused in the past year. The demand for digital products and services during the recent years, especially with the pandemic, has acted as a catalyst, driving our digital transformation forward. At NSB, we believe that the promise of digitalization is not about technology for technology’s sake. Even beyond the benefits of streamlining operations, enhancing productivity, and realizing cost efficiencies, we approach digitalization in a way that deeply resonates with our brand: as a tool for financial inclusion, enabling the financial systems and solutions to be more accessible to all and sundry.

Therefore, increased accessibility is at the heart of the digital value proposition that we are building at the Bank- allowing all our stakeholders, no matter what strata or location, to benefit from the rapid technological advances that are underway. Accordingly, in 2022, we will be implementing the new core banking system, with all services reengineered to align with industry requirements and regulatory requirements and pave the way towards a fully automated secure digital platform.

With these steps, together with corresponding internal talent and capacity development, the Bank will be positioned at the forefront of the digital banking space and be able to make the maximum use of our distinctive identity in 2022. As such, 2022, will be a crucial year in taking a leap forward in our Bank’s digital strategy and entering a digital era.

Our staff is an unwavering factor behind every success that we reach, and we will rely on them to drive our success in 2022. We wish to place on record our sincere gratitude to our staff for the teamwork and dedicated service to the Bank throughout, and especially in the last couple of difficult years. And our customers too, have our deepest gratitude for their trust in us notwithstanding the challenges of the COVID 19 pandemic that upended the social, economic climates as never before. Your continued confidence in us reaffirms our sense of purpose. Thus, we will continue to play our part true to our word as the safest place for your money in this new year.

We wish to assure that NSB remains guided by its essential values and mission amidst the changes and challenges presented by the environment, and while the shape of banking will change, our responsibilities and commitment to our purpose will remain unchanged.

Together we have come along way, and the path ahead that we have to traverse together is longer. We live in an era of unprecedented uncertainty owing to a global pandemic that has spared no region, country or individual from its impact. In such a global, financial, societal climate, if we are to forge our way forward in a positive light, it is imperative that we embrace one vision in a collaborative effort.

As we now march forward to our 50th Anniversary in banking, we are confident that all members of “NSB Family” will contribute greatly together, through commitment and dedication to take the Bank forward to the next phase of development and to go forward from strength to strength in serving our customers.

NSB family wishes all our valued customers, other stakeholders, and all Sri Lankans a happy and safe new year in 2022, the year of our Golden Jubilee.



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Conclusion of phase 1 of private placement of Ordinary Shares of JKH to ADB

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Krishan Balendra Chairman JKH

Following is the text of a letter addressed by JKH Deputy Chairman/Group Finance Director Gihan Cooray to the CSE’s Chief Regulatory Officer Renuke Wijayawardhana.

Further to the announcements to the Colombo Stock Exchange on 22 November 2021 and 22 December 2021 regarding the Private Placement of up to a maximum cumulative amount of the Sri Lankan Rupee (“LKR”) equivalent of USD 80 million to Asian Development Bank (“ADB”), through the issuance of up to a maximum of 122,500,000 new ordinary shares of the Company in two phases (Phase 1 & Phase 2), we wish to inform that Phase 1 of the Private Placement of ordinary shares of the Company to ADB was concluded on 19 January 2022.

Accordingly, 65,042,006 ordinary shares (“Initial Placement Shares”) of the Company were allotted to ADB at a price of LKR 154.50 per share on 19 January 2022 for a consideration of the LKR equivalent of USD 50 million. The Initial Placement Shares results in a post-issue dilution of 4.70 per cent in Phase 1 of the transaction.

Additionally, in terms of Phase 2, the Company has issued 39,025,204 non-tradable/non-transferable options (“Options”), which will entitle ADB to subscribe for additional new ordinary shares of the Company (“Option Shares”), for an investment amount of up to a maximum of the LKR equivalent of USD 30 million.

Therefore, the maximum number of ordinary shares that would potentially be issued under the entire transaction, assuming all Option Shares are subscribed for, will be 104,067,210, thereby capping the post-issue dilution on the conclusion of both phases to a maximum of 7.31 per cent.

The salient details of the Options are as morefully detailed in the Shareholder Circular dated 29 November 2021. Based on the subscription date of the Initial Placement Shares, the Option Exercise Period will be from 19 October 2022 to 18 January 2023.

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Bangladesh – Sri Lanka Preferential Trade Agreement: Gains and policy challenges

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By Asanka Wijesinghe and Chathurrdhika Yogarajah

0espite enhanced trade partnerships in South Asia, intra-regional trade is far from reaching its theoretical potential. Similar production patterns and competitive sectors can be the causes. However, bilateral discussions to further lower trade costs continue. The ongoing Bangladesh-Sri Lanka discussions on a preferential trade agreement (PTA) will benefit from knowing the potential gains from reducing bilateral trade costs. In addition, knowledge of products with higher potential for export gains will help optimise the economic benefits from a trade deal.

Bangladesh – Sri Lanka Trade:
The Current Status

In 2018, when discussions on a PTA began to firm up, Sri Lanka’s exports to Bangladesh were USD 133 million, while imports from Bangladesh were USD 37 million. Despite the low trade volume, Sri Lanka’s exports to Bangladesh have grown (Figure 1). In addition, Sri Lanka records a bilateral trade surplus with Bangladesh, which is encouraging given the country’s trade deficit concerns. However, weak growth of exports from Bangladesh to Sri Lanka can be seen from 2001 to 2016 (Figure 1).

The current trade deals between the two countries are still partially restrictive. Both countries keep a sensitive list of products that are not eligible for tariff cuts. Sri Lanka maintains a list of 925 products sanctioned by SAFTA (South Asian Free Trade Area) while Bangladesh keeps 993 products. Sri Lanka’s sensitive list covers USD 6.2 million or 23.8% of imports from Bangladesh. The sensitive list of Bangladesh covers USD 77.6 million or 62% of imports from Sri Lanka. Thus, the elimination of sensitive lists may benefit Sri Lanka more.

Figure 1: Trade Intensity between Bangladesh and Sri Lanka

Source: Authors’ Illustration using Trademap Data.

Theoretically, bilateral alliances deepen trade by removing weaknesses in existing multilateral trade arrangements. A trade deal between Bangladesh and Sri Lanka can simplify trade regulations further. In addition, Bangladesh needs alternative preferential access as graduation from Least Developed Country (LDC) status will take away preferential access to its key markets. For Sri Lanka, increasing bilateral participation in production value chains, especially in the textiles sector, might be an economic motivation. Financial support extended by Bangladesh to manage Sri Lanka’s foreign currency pressures might be a political motivation for a trade deal.

Eliminating sensitive lists can lead to trade creation, although it may not happen due to political and economic reasons. When it comes to tariff cuts, both countries will act defensively as certain products in the sensitive lists are vital for employment and revenue generation. Thus, the success of a trade deal depends on how many products with high export potential are under its purview. In this direction, a group of products with specific characteristics can be identified as an offensive list. For example, Sri Lanka’s offensive list includes products that Bangladesh imports from anywhere in the world, produced by Sri Lanka with a capacity for expansion. Sri Lanka has a comparative advantage in exporting that good, and Bangladesh already has a tariff on the product.

Export Gains from Tariff Elimination

If tariffs on the sensitive lists are eliminated, there will be modest export gains for Bangladesh and Sri Lanka in absolute terms. Sri Lanka will gain USD 24.7 to 49.7 million of exports to Bangladesh, while Bangladesh will gain USD 2.1 to 4.5 million of exports to Sri Lanka. Potential export gains are given in a range due to assumptions on elasticity values used in the partial equilibrium model. Elimination of sensitive lists will generate a higher tariff revenue loss to Bangladesh, ranging between USD 13.5 million to USD 19.1 million. By contrast, Sri Lanka’s revenue loss will be slight at USD 1.4 million to USD 1.9 million.

Whatever the arrangement, it is crucial to include the products with high export potential in the offensive lists (See Table 1 for the major products). Out of 39 products in Bangladesh’s offensive list, 21 are intermediate goods, while 18 are consumption goods. Similarly, 75 out of 115 products in Sri Lanka’s offensive list are intermediate goods. Tariff cuts on intermediate products may induce fragmented production between two countries, which would harness country-specific comparative advantages. Major intermediate goods in the offensive lists are dyed cotton fabrics, cartons, boxes, and cases, plain woven fabrics of cotton, denim, natural rubber, and smoked sheets of natural rubber (Table 1).

The ex-ante estimates predict modest gains for Sri Lanka and Bangladesh in absolute terms, even after completely removing the sensitive list. But complete removal is politically challenging for both countries. Moreover, Bangladesh as an LDC may expect special and differential (S&D) treatment. Thus, the outcome can be a limited PTA in line with weaknesses in existing trade agreements governing South Asian trade. The impact on trade of regional trade agreements in force is negative primarily due to stringent general regulatory measures, including rules of origin (ROO), sensitive lists, and prolonged phasing-in. Given that the estimated modest economic gains of a Bangladesh-Sri Lanka PTA do not justify a trade deal that requires substantial resources for negotiations,the PTA should have fewer regulatory measures and tariff concessions for the products on the offensive lists to maximise the economic benefits of a PTA between the two countries.

Link to the full Talking Economics blog: https://www.ips.lk/talkingeconomics/2022/01/20/bangladesh-sri-lanka-preferential-trade-agreement-gains-and-policy-challenges/

Asanka Wijesinghe is a Research Economist at IPS with research interests in macroeconomic policy, international trade, labour and health economics. He holds a BSc in Agricultural Technology and Management from the University of Peradeniya, an MS in Agribusiness and Applied Economics from North Dakota State University, and an MS and PhD in Agricultural, Environmental and Development Economics from The Ohio State University. (Talk with Asanka – asanka@ips.lk)

Chathurrdhika Yogarajah is a Research Assistant at IPS with research interests in macroeconomics and trade policy. She holds a BSc (Hons) in Agricultural Technology and Management, specialised in Applied Economics and Business Management from the University of Peradeniya with First Class Honours. She is currently reading for her Master’s in Agricultural Economics at the Postgraduate Institute of Agriculture, Peradeniya. (Talk with Chathurrdhika: chathurrdhika@ips.lk)

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Expolanka boosts bourse by adding 21.7 points to ASPI

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By Hiran H.Senewiratne

CSE trading started in negative territory yesterday due to heavy profit- takings but after 1 pm the market began to recover, triggered by index heavy counter Expolanka, which gained by adding 21.7 points to the All-Share Price Index. The stock market yesterday produced a creditable recovery to finish on a positive note after early losses amid a relatively low but healthy turnover level. The Expolanka share price appreciated by 2.5 per cent or Rs 9.50. Its shares started trading at Rs 386 and at the end of the day they shot up by Rs 9.50.

Amid those developments both indices moved upwards. The All -Share Price Index went up by 42.8 points and S and P SL20 rose by 7 points. Turnover stood at Rs 4.9 billion with a single crossing. The crossing was reported in Expolanka, which crossed 100,000 shares to the tune of Rs 39.5 million and its shares traded at Rs 395.

In the retail market, top seven companies that mainly contributed to the turnover were, Expolanka Rs 715 million (1.8 million shares traded), Browns Investments Rs 336 million (19.9 million shares traded), ACL Cables Rs 261 million (2.1 million shares traded), LOLC Finance Rs 231 million (8.1 million shares traded), JKH Rs 193 million (1.2 million shares traded), Expack Corrugated Cartons Rs 162 million (seven million shares traded) and  Softlogic Capital Rs 161 million (11.3 million shares traded). During the day 154 million share volumes changed hands in 37000 transactions.

Yesterday, the US dollar was quoted at Rs 202.91, which was the controlled price of the Central Bank. The actual price would be more than Rs 250, market sources said.

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