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| Sunday, 31 March 2002 |
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Business |  |
| News Business Features Editorial
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Seylan Bank geared to improve performance, profitability Seylan Bank has mapped out a strategy to re-engineer operations and ensure the best allocation of resources to improve performance and profitability. The strategy for 2002 is to focus on key strengths to expand volumes in foreign currency banking, trade financing, corporate banking and technology-based services through ATMs, electronic cards, Internet and telephone. "We intend to accomplish these results by eliminating unprofitable activities and enhancing profitable activities through a constant review combined with enhanced staff productivity," said Director, General Manager and Chief Executive Officer Rohini Nanayakkara. Chairman of the Bank Lalith Kotelawala said that despite a difficult business environment and severe competition in the banking industry, Seylan Bank has achieved satisfactory levels of growth, satisfying the aspirations of its shareholders, customers and staff. Ms Nanayakkara said the bank adopted a PC-based budgeting system and a reward-based performance review based on the Balanced Score Card (BSC) system and it is held once a year. The BSC is expected to help identify and monitor key variables such as customer satisfaction and employee motivation. She said that the bank has achieved a net profit of Rs 662.27 million, an increase of 0.48 per cent over last year's Rs 659.12 million despite the dismal and uncertain macro-economic climate of the country. The bank experienced an increase of 25.5 per cent in net income which included loans and advances. There was also a growth of 24 per cent in interest income, Treasury Bills and placements with other banks. In addition, a 24 per cent growth in fees and commission income and profits on sale of investment securities saw a significant improvement, recording a figure of Rs 19.37 million during the year under review. "Apart from focusing on profitability, we also ensured that operating costs were minimal at the bank," said Ms Nanayakkara. Compared with the operating costs of Rs 2.41 billion in the previous year, operating costs during the year was Rs. 2.63 billion, which is negligible after allowing for inflation at 12 per cent. The bank's turnover has grown by 26.67 per cent to Rs 9.09 billion over the previous year's Rs 7.17 billion. Interest income has increased by 26.8 per cent to Rs 7.45 billion when compared with the previous year's figure of Rs 5.87 billion. Net interest income showed a marginal growth of 3.41 per cent. However total income recorded a growth of 9.01 per cent due to a 21.6 per cent increase in other income. The bank has minimised operational costs by lowering expenses and eliminating unnecessary expenditure, she added. The impact was evident with a cost saving of 1.2 per cent from budgeted estimates. Despite an inflation level of 12 per cent, there was an increase of only 9.1 per cent in 2001. The overall profitability of the bank as measured by the operating profit margin was 20.09 per cent, marginally lower than last year's 21.45 per cent. Ms Nanayakkara said the bank's deposits rank the second largest among the listed commercial banks and recorded a growth of 14.8 per cent during the year. The deposit base of the bank has risen to Rs 47.87 billion from Rs 41.69 million in the previous year. Seylan Bank followed a policy of controlled lending to ease the capital adequacy ratio and bring down the level of non-performing advances, said Ms Nanayakkara. The growth in deposits coupled with a decline in interest rates during the last quarter enabled the bank to channel deposits to high yielding areas of our lending portfolio. The bank's controlled lending policy is evident with the volume achieved in lending. The corporate banking unit lent Rs 3.2 billion, a decrease of 13.51 per cent compared to Rs 3.7 billion in 2000. The 88 branches lent Rs 32.9 billion, an increase of 14.39 per cent over the previous year. Hence the bank's advances had a relatively slow growth in the past year. Overall, the bank's advances grew to Rs 36.1 billion from Rs 32.5 billion an year ago, registering a growth of 11.15 per cent. The Corporate Banking division contributes to a significant share of the bank's trade finance business while emphasis is placed on marketing new business. The division has been successful in booking business from well-known blue chip corporates, she added. In the area of private banking, arrangements are being made to enhance the bank's fee-based income and non-credit risk business. Although trade financing is likely to show a significant improvement in the future due to improved business sentiments, the bank achieved an impressive growth during the year under review. The volume of export bills negotiated and purchased increased to Rs 4.86 billion from Rs 4.09 billion, recording an increase of 18.8 per cent while the volume of import bills purchased went up from Rs 25.26 billion to Rs 25.87 billion. The overall advances in the foreign currency banking unit grew by 25 per cent. At present the bank has 88 branches, 70 of which are linked. Plans are under way to link the others in 2002. The bank will also open new branches in strategic locations as and when opportunities arise. The ATM network of the bank has been expanded to 32 from 21 during the year under review and plans are under way to increase this to 60 by the end of the first quarter. |
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