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‘Union Bank remains resolute amid challenging environment’

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In 2020, Union Bank crossed the significant milestone of completing 25 years of service to the nation. The year tested the grit and foundations of the bank in many ways and the bank emerged strong amidst challenges. While operational performance was impacted amid the slowdown of economic activity, the bank continued to focus on cost optimisations, effective resource and productivity management as well as prudent portfolio management to overcome these tough conditions , a Union Bank press release said.

The release adds, ‘Despite the challenging backdrop, Union Bank increased its liquidity buffers prudently and was able to maintain a strong excess liquidity position. Fitch ratings in its 2020 ratings release affirmed the Bank’s current rating, which was backed by the strong liquidity and capital. Union bank stands confident with an industry leading capital position alongside significant financial flexibility that effectively help mitigate the pandemic induced economic impacts. The Bank maintained a robust Capital Adequacy Ratio throughout the year reporting 16.95% total capital ratio as at year end – which was well above regulatory requirement levels.

‘Union Bank swiftly re-aligned its operations, prioritising its focus on the new market dynamics and customer inclinations that resulted from the pandemic. The bank executed an inclusive business strategy that ensured smooth continuity of its services while safeguarding the health and well-being of its customers and staff as top priorities. Significant investments were made in ensuring the health and safety of staff by providing alternate work solutions, work from home facilities as well as setting up additional infrastructure to facilitate a smooth work environment for critical staff that attended work despite lockdowns.

‘An imperative focus was placed on rolling out a cohesive plan across all customer segments to provide support to re-build their businesses and lifestyles with the implementation of the CBSL recommended relief schemes for COVID-19 impacted customers. In line with the CBSL directives and policy rate cuts administered to enable economic growth, Union bank implemented a downward revision of interest rates on its lending products including credit cards. Moratoriums of capital and interest were extended to affected borrowers in-line with the CBSL’s financial relief package while a significant number of affected customers were granted debt relief outside the CBSL criteria, as per the Bank’s internal credit policy guidelines. Among the schemes that were considered for moratoria were loans, leases, overdrafts, pawning and trade finance facilities. Non-performing borrowers eligible for relief schemes were also provided customised re-schedulements, inclusive of waivers on accrued interest while withholding further recovery action.

‘The bank’s loans and advances stood at Rs 67,518 Mn. The deposits base of the bank stood at Rs. 82,384 Mn as at year-end and recorded a growth of 7.6% despite the low interest environment. The bank’s strategic focus for low-cost deposits continued to bear results, supported by focused initiatives for CASA growth by the business units. The bank’s CASA portfolio reflected an excellent growth of 26.8% as at December 2020, increasing the CASA Mix of the Bank to 30% in 2020 from 25% in 2019.’

 

As a result of the numerous reliefs extended to affected customers and due to the low interest rate environment, the Bank recorded a Net interest Margin (NIM) of 3.2 % in comparison to 3.6% in 2019. The Bank’s NII was further impacted with the latest CBSL directive issued in November 2020, that mandated 60 days’ loan extension for moratoriums given in March 2020 at subsidised interest rates up to a maximum of 7%; thus, leading to a reduction of interest earned on all such credit facilities repaid on Equal Monthly Instalments (EMI) basis.

The fee income was impacted by adverse market drivers and declined by 18.4% over the comparative year. This was an outcome of the cumulative effect of fee waivers extended as part of COVID-19 reliefs, a slowdown in trade income due to import restrictions and a drop in loan related fees due to slower credit growth that prevailed during the year.

The Treasury performed exceptionally well, recording impressive capital gains that grew significantly by 84.2% YoY. Other Operating Income of the Bank grew notably by Rs.162 Mn led by Foreign Exchange income and backed by a growth in customer transactions, depreciation of the currency and the reduction of swaps in 2020.

The Bank had no trading equities and has not invested in any equity fund as at reporting date.

The total operating income for the year was Rs. 5,890 Mn and recorded only a marginal drop despite the challenging market dynamics.

The gross NPL ratio stood at 6.05% by year-end. The absolute NPL increase however was only Rs. 230 Mn, while an overall reduction in the loan portfolio caused the ratio to reflect an increase. The Bank’s prudent approaches towards managing portfolio quality proved favourable in containing NPLs amidst market volatilities.

The impairment charge recorded an 88.5% increase YoY. While its actual credit losses were low, the Bank recorded significant provisions through management overlays to account for the deteriorating environment. Three sectors were identified as risk elevated industries and accordingly additional provisions were made for these by shifting stages. Further on the Economic Factor Adjustments (EFA), weightages assigned to the worst-case scenario increased with the transferring of weightages from best-case to worst-case on 31 December 2020 to account for the deteriorating environment. This had a significant impact on the increase in impairments, while the Treasury impairment figures also inflated due to investments denominated in foreign currencies – based on the country risk downgrade. The entire modification loss on account of COVID-19 moratorium scheme was recorded under the impairment charge as per the non-substantial modification method which is in line with the Sri Lanka Accounting Standard–9(SLFRS 9).

The Total Operating Expenses were prudently managed through bank-wide cost management initiatives and were reported as Rs. 3,772 Mn, with an YoY decrease of 1.5%.

The operating margin was Rs. 2,118 Mn and recorded a decline of 3.3% YoY as an effect of a 2.2% decrease of revenue against the 1.5% drop in costs. Excluding the 60-day moratorium impact of reducing the interest earnings to 7%, the operating margin would have improved by 3.4%.

Share of loss of equity accounted investees was Rs. 29 Mn for the year ended 31 December 2020. In the previous year, a one-off gain was reported from UB Finance amounting to Rs. 127 Mn due to tax reversals. The subsidiary profits were also impacted due to the macro-economic challenges of the year under review. Total taxes for the year was Rs. 777 Mn and was a drop of Rs. 417 Mn in comparison to the previous year.

The ‘Bank-only’ profit for 2020 was Rs. 605 Mn and was on par with the previous year. Profit of the Bank including its share of ownership in subsidiaries was Rs. 577 Mn in 2020 and was a decline of 18.8% over the previous year- mainly because of the one-off income recorded at UB Finance in 2019. Other comprehensive income for the year was Rs. 183 Mn, while the total comprehensive income of the Bank was Rs. 759 Mn.

The Group consisting of the Bank and its two subsidiaries – UB Finance Company Limited and National Asset Management Limited reported Rs. 623 Mn in profits after taxes, a decline of 22.6% over the previous year. Total assets of the group were reported as Rs. 129.6 Mn. The Bank accounts for 95% of the Total assets of the Group and hence the Group’s performance is mainly propelled by the Bank.

Operations and Business Continuity amidst challenges

Considering the impact of the pandemic on its customer bases, the Bank’s key focus for the year was shifted to extending COVID-19 related financial relief to customers across corporate, SME and retail banking segments since March 2020, so as to not compromise on its premise to serve customers with the best suited financial solutions and tools.

Under the CBSL recommend scheme, self-employed personnel, foreign currency earners, SMEs and Corporates in identified sectors were eligible for loan repayment moratoria from Union Bank. A gamut of relief measures was channeled towards SMEs including fee waivers on cheque returns and stop payments among others. As part of the relief efforts, around 58% of the Bank’s SME portfolio was accommodated under moratorium schemes by year-end. The Bank granted around Rs 1.3 Billion worth of working capital loans under Central Bank’s ‘Saubhagya’ Covid-19 Renaissance’ credit scheme to SMEs aiding their rebuilding efforts. For impacted retail borrowers, the Bank announced immediate extensions of credit card dues along with a two-month extension for all personal borrowings such as loans and leases. Retail banking relief measures included debt moratoria for all loans upon eligibility and credit cards related relief including minimum payment concessions and fee waivers. Following the second outbreak in October 2020, moratoria of affected customers across all segments were further extended to ensure resilience amidst continuous contraction of business activity in identified sectors.

Union Bank’s digital cash management solution BizDirect continued to offer its Corporate and SME customers much-needed liquidity management efficiency while facilitating CASA and fee-based revenue for the Bank during the year. Due to a growing inclination for digital solutions, many new Corporate and SME Banking customers were on-boarded to the product during 2020. In recognition of its success in Transaction Banking excellence, Union Bank BizDirect was awarded the prestigious ‘Best Cash Management Bank in Sri Lanka’ title at the Asian Banker Transaction Finance Awards 2020. Retail banking business was led by CASA acquisition, deposit mobilisation and Credit Cards portfolio growth. The Bank continued to offer value to its card holders through focused lifestyle savings that included discounts on shopping, dining, and e-commerce platforms along with 0% interest instalment plans.

Despite lockdowns, curfews and regional isolation procedures imposed from time to time to curtail the spread of the virus, the Bank provided uninterrupted banking services via its strategic business continuity plan that was executed through its branches, ATMs and other touch points. Union Bank’s Online Banking portal and Mobile Banking app were further enhanced in 2020, to facilitate a wider range of banking conveniences to users enabling contactless banking from the safety of their homes.

Commenting on the 2020 performance, Director/CEO of Union Bank Indrajit Wickramasinghe said, “Our agility and apt business continuity execution have allowed Union Bank to weather the macroeconomic storm in good shape. the Bank has safeguarded the interests of its stakeholders amidst challenges and maintained healthy liquidity levels, and stands strongly capitalised to withstand the adverse environment in which we operate in. We will continue on a path of cost optimisation and enhanced operational efficiency in the year 2021 in which we have re-strategised for stronger growth and will continue to leverage on our key strengths – while ensuring the health and safety of our customers and staff as a priority when navigating in the new normal.”



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Business

2021 HUAWEI Women Developers Summit: Her Contributions

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HUAWEI Women Developers Summit was successfully closed recently, in which women from different fields and at different career development stages joined together and showed their empowerment. At the summit, several outstanding women representatives from science and technology were invited to share their technical knowledge, work experience, and personal stories, aiming to encourage more women to play a valuable role in science and technology in an active way.

HUAWEI Women Developers (HWD), the holder of this summit, empowers women developers to create world-changing apps and tools and encourages more women to join in with technological innovation by providing them with more resources, opportunities, and platforms for learning, communication, and self-expression, with the goal of building a more multiple ecosystem.

There are still many spaces and opportunities for women to develop themselves in science and technology. To eliminate the digital gender gap, Huawei has launched digital technology enablement programs for women in Ireland, Argentina, Bangladesh, Kenya, South Africa, and other countries or regions. The Operations Director of Huawei Consumer Cloud Service Developer Alliance gave a speech at the summit in which she said: “We really hope that more women can play a leading role in technological innovation with their own talents, values, and strengths.” As such, HWD will continuously provide more opportunities and support for women in tech.

Tang Wenjie, co-founder of Ladies Who Tech, participated in the topic Tech Has No Gender. She put forward her belief that the development of science and technology requires teams with gender diversity and more inclusiveness. Faced with existing gender stereotypes and strong prejudices, women need to be more courageous in designing and creating technological or digital products.

In the era of women’s startups, how women in tech balance the challenges and difficulties when starting up with a firm yet positive attitude has gained a lot of attention. Liu Yi, the co-founder of QIchat, encouraged women in tech to innovate and promote the advancement of science and technology by sharing her own experiences in the affordable and universal education domain.

Both the Product Director of HUAWEI Ads and User Experience Designer of Huawei 2012 Laboratories also discussed how women developers play a more important role in cross-technology fields from the perspectives of business thinking and technical practice. They insisted that women should attempt to make more contributions to the technology industry in different ways with an uncompromising and confident spirit.

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Innovative pipe borne LPG to Sri Lanka

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In the global energy landscape, LPG is considered the safest and the most environmentally sound choice suitable for a variety of functions – from household requirements to industrial consumption, LPG is increasingly emerging as the world’s preferred clean and green energy.

Although in house LPG cylinders have been used in Sri Lanka for a considerable period of time, the safest and the most modern option that is operational worldwide is pipe borne LPG that provides a safe and an easy accessible LPG solution, says Anil Koswatte, chairman & CEO of Litro Gas Lanka Limited & Litro Gas Terminal Lanka (Private) Limited, Sri Lanka’s national LPG provider.

As a measure of upscaling the LPG availability in Sri Lanka, Litro Gas Lanka will be introducing pipe borne LPG supply to households and consumers in Sri Lanka, giving them access to world class energy solutions, he adds.

“Litro Gas Lanka believes in delivering innovative and safe LPG solutions to our customers. Introducing the pipe borne LPG is a step towards ensuring the highest safety protocols in LPG supply – while also ensuring an easy and convenient way of delivery LPG to your home or work place. The LPG provided will be measured in litres, in keeping with global standards.”

Backed by a unique legacy that goes back 150 years, Litro Gas Lanka possesses a heritage that is rich with industry firsts; a part of that legacy was the network of gas pipes that delivered gas to households as far back as a century ago, installed by Ceylon Gas & Water Co, precursor of Litro Gas Lanka.

Today, as energy industry dynamics change with consumer demand, the company remains firmly committed to infusing change and transformation needed to meet changing requirements.

“We are taking the concept of LPG supply beyond that of bringing a cylinder home and stocking it in your kitchen. This will take the LPG availability to the next level, by giving our customers safe & easy accessibility to the energy they need on demand.”

“In keeping with the development goals for the energy sector outlined in H.E The President’s “Vistas of Prosperity & Splendour” economic vision, we believe that the Litro Gas Lanka LPG Pipeline Project would add value to customer proposition and enhance energy efficiency for all”, Koswatte adds.

Commenting on the project, Jayantha Basnayake, Director – Health, Safety & Environment/Professional Business – Litro Gas Lanka Limited says that the new project will optimize safety and improve convenience for the consumers – “LPG supply via a pipeline is the standard procedure for global LPG operations – we are introducing the same safety and ease of operations procedure to Sri Lanka with this.”

“As a Company engaged in the handling highly inflammable LPG as the core product, safety is a key value for us and for our customers. This process will rule out any compromises on safety given the fact that the installation is safely placed outside the living areas. We will be ensuring a 24/7 support service while also ensuring maximum safety levels”, he points out.

Litro Gas Lanka is a member of The World LPG Association (WLPGA); while adhering in all operational protocols to the global standards and parameters stipulated for the LPG industry, the Company will be deploying industry specific equipment, accessories and installations for its pipe line operation.

Litro Gas Lanka has obtained and following local and global standards of ISO (International Organization for Standardization), NFPA (National Fire Protection Association), BS (British Standard), ASTM (American Society for Testing and Materials) and SLS (Sri Lanka Standards Institute) along with other safety protocols required by local authorities.

Janaka Pathirathna, Director – Sales & Marketing at Litro Gas Lanka says that on demand model of LPG supply ensures an uninterrupted supply, while giving customers a hassle free, doorstep service that is convenient and easy to obtain.

“It promises to be a unique and a world class product that comes with international standards in safety and customer experience. There will be several product categories & packages that will offer various benefits to customers, based on their specific needs. We will also introduce attractive payment methods for the convenience of customers, “he adds.

Litro Gas Lanka plays a pivotal role in the country’s energy sector with a 75% market share and a network of 42 distributors, over 14,000 points-of-sale, 1,500 home delivery hubs and a seamless supply of LPG throughout Sri Lanka. The Company maintains a strong market presence with their Litro Gas Home Delivery Mobile App and a dedicated 1311 customer care hotline.

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Ceylinco Life donates High Flow Nasal Cannula

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Ceylinco Life recently donated High Flow Nasal Cannula (HFNC) equipment to the Colombo South Teaching Hospital at Kalubowila, responding to an urgent need to enhance the non-invasive ventilator facilities for patients with severe hypoxic respiratory failure.

The HFNC equipment donated by the company will be used at the four-bed surgical High Dependency Unit (HDU) previously donated by Ceylinco Life to Ward 24 of the hospital. The High Flow Nasal Cannula is used by the medical team to bridge patients being weaned from invasive ventilation.

Ceylinco Life has built, equipped and donated High Dependency Units to the Colombo South Teaching Hospital, Kalubowila, the National Hospital, Colombo, the Lady Ridgeway Children’s Hospital and the Jaffna Teaching Hospital. HDUs are needed to upgrade a patient from normal care or as a step down from intensive care, helping release beds in the intensive care units. These units are used for post-surgery care, before transferring patients to the wards, or to treat an intensive disease.

Pictured here at the donation of High Flow Nasal Cannula equipment to the Colombo South Teaching Hospital, Kalubowila are Ceylinco Life’s Senior Assistant General Manager – Alternative Channels & Emerging Business Lakshika Keragala (extreme left), the hospital’s Consultant Surgeon Dr Malith Nandasena, and medical and nursing staff of the hospital.

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