‘The Business Case’, a fine example of financial reporting
Colombo. Wednesday 23 March 2011. Seylan Bank recorded a net profit of Rs. 1.2 Bn. for 2010 which is a 126% increase compared to Rs. 543 Mn. for the previous financial year. Pre-tax profit, at Rs. 1.9 Bn., was up by a staggering 124% from 2009, the highest ever profit figure earned by the bank since its inception.
The financial results for the year ending 31 December 2010 is a testament to the continued progress of Seylan Bank in returning to sustained, profitable growth.
Seylan Bank also created a new paradigm in financial reporting in Sri Lanka with its Annual Report for 2010. Titled 'The Business Case’, this handsome publication is dedicated to all the Bank’s stakeholders and discusses how Seylan Bank has renewed stakeholder confidence and made remarkable progress throughout year 2010.
The first copy of ‘The Business Case’ was recently formally presented to Mr. Ajith Nivard Cabral, Governor Central Bank of Sri Lanka by the Chairman of Seylan Bank Mr. Eastman Narangoda.
Among the major factors fuelling the progress of Seylan, was the Bank’s success in growing its deposit base to Rs. 109.9 Bn. as well as other strategic measures to improve the efficiency of the bank. At the same time, renewed focus on recovering non-performing loans and advances brought a welcome reduction in the NPL ratio, which dropped by approximately 8% as against the previous year. These measures managed to improve the following key indicators :
The Bank’s cost-to-income ratio increased slightly from 67.82% to 68.69%, while the Capital Adequacy Ratio has remained above 12% in both 2009 and 2010 which is well above the required rate as stipulated by the Central Bank.
- Return on Average Assets increased to 0.87% in 2010 from 0.38% in 2009.
- Return on Equity similarly improved to 10.88% from 6.20% the previous year.
- Interest rate spread increased to 6.00% compared to 5.18% a year earlier.
The positive results posted each quarter throughout 2010 brought a corresponding upswing in investor confidence, both locally and overseas. The Bank’s share price which was stabilized after the appointment of a new Board headed by veteran banker Mr. Eastman Narangoda in early 2009, continued gaining strength over the past year as the management implemented the wide-ranging initiatives set out in the Bank’s aggressive strategic plan. The share price increased from Rs. 37 to Rs. 97.80 during the course of the year.
Says Chairman of the Seylan Bank Eastman Narangoda, “The Board is extremely pleased to report that Seylan Bank achieved an after-tax profit of Rs. 1.2 Bn. for the year. This is an increase of 126% compared to the financial year 2009 despite having made the highest provisions for non-performing loans among Sri Lanka’s major banks (as per the results for the first 9 months). We share the pride of all our stakeholders in this year’s gratifying results”.
‘The Business Case’, which was launched at a colourful ceremony on 23 March at the Cinnamon Grand Hotel, essentially takes the reader through seven principal sections.
Preface – ‘A Vote of Confidence’ – Having restored financial stability, Seylan Bank continues to build a business case that is earning sustained support from stakeholders.
Chapter 01 - ‘Tackling the Challenges’ – As Seylan Bank implemented its new strategic plan for a return to stable prosperity, there were many hurdles to overcome.
Chapter 02 – The Challenges Within’ - To meet the benchmarks of a demanding marketplace, Seylan Bank must review and rebuild many areas of its internal operations.
Chapter 03 – ‘Pro Bono Publico’ - Seylan Bank measures its performance according to the needs of the various stakeholders it serves – “for the public good.”
Chapter 04 – ‘Lessons Learned’ - What the experience of averting a financial crisis has taught Seylan Bank about building a profitable path to the future
Chapter 05 – ‘Strategy Update’ - Measuring the Bank’s progress in relation to the steps set out in the Three-Year Strategic Plan 2009-2011.
‘Benchmarks of Success’ - The ultimate measures of Seylan Bank’s return to stability and growth are the financial and operational results for 2010.
In an endeavour to increase overall efficiency while aligning itself with the best industry standards and performance indicators, Seylan last week launched a VRS scheme open to 250 of its 3622 employees. This was also the very first time in the history of any bank in Sri Lanka that a VRS scheme was made available on an exclusively on-line basis, thus also signifying the adoption of new processes and more advanced technology across its operations.
With the VRS, Seylan will also roll out a series of strategic measures. Among them are organizational restructuring, investment in advanced technology, and employee job enrichment and engagement processes by benchmarking international best practices from within and outside the country.
Added to this will also be further investment on continuous staff training and development. The Bank will also take strategic measures to improve the Brand Equity of the Seylan brand as well as its sub-brands to further strengthen the relationship the Bank has with its key stakeholders. The Bank is currently rolling out a new product development process as well as investing on more research to ensure the success of its current portfolio of brands as well as intended new products and services.
The Bank is currently finalizing an internal marketing program which is intended towards further revitalising the Bank’s staff to deliver an even greater standard of customer service and flexibility. The Bank is further strengthening its international network to deliver greater results on some of the growth segments identified by the Bank’s recent strategic plan. The network of branches will also be aggressively expanded to cater to the needs of the island-wide customer base.
General Manager / Chief Executive Officer of Seylan, Mr. Kapila Ariyaratna said, “Having identified optimum performance standards based on available resources, Seylan Bank is now geared to further develop its future business strategies in a bid to deliver even greater results to all stakeholders. It also looks to add further shareholder value by aligning itself to the exciting new opportunities in the rapidly transforming Sri Lankan economy”.
Chairman Narangoda concluded thus, “We thank especially the Government of Sri Lanka, the Governor of the Central Bank of Sri Lanka (CBSL), Bank Supervision Department of CBSL and all of our stakeholders, including our devoted employees and, above all, our loyal depositors, for their continued confidence in Seylan Bank. I extend special thanks to my fellow Directors for their total commitment and dedication. It is a testament to your steadfast support that we are able to present what we feel is a compelling business case for ‘The Bank with a Heart’.