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| Sunday, 14 July 2002 |
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| News Business Features Editorial
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Debenture options at Seylan Bank Seylan Bank has announced a debenture issue for Rs. 300 million with an option to issue a further Rs. 300 million. The bank will not seek a listing for this debenture issue. According to a bank spokesman, it is offering investors debentures with three interest options, two fixed rates and a floating rate. The fixed rate option has a monthly interest payment option of 14 per cent per annum and an annual payment option of an interest rate of 15 per cent per annum. In the floating rate option, investors would be entitled to one and half percentage points above the simple average of the one-year weighted average Treasury Bill rate, subject to a cap and floor. The bank has structured the debentures to suit the requirements of different types of investors. The spokesman said the monthly interest option would best suit those who seek a regular monthly income to meet expenses, whereas the fixed rate option of 15 per cent is good for institutional investors looking for a fixed five-year term, while institutional and other investors anticipating an increase in treasury bill rates over the next five years may prefer the floating rate option. The funds raised through this issue will primarily facilitate the increased capital adequacy requirements needed by next year. This will also help the bank to expand its medium and long-term lending portfolio such as leasing and housing construction which the bank is actively engaged in. In the first quarter of this year, the bank posted a profit after tax of Rs. 137 million, recording an increase of 282 per cent over the previous year's Rs. 35.9 million. Last year too, despite economic contraction, Seylan Bank was able to record a profit of Rs. 272 million which was an improvement over the previous year's profit. As a result, the bank was able to pay a higher dividend of 12.5 per cent to its ordinary shareholders and a prorated predetermined rate of 18.5 per cent to preference shareholders (based on a formula linked to the annual treasury bill rates). The advantage to the investor in the present debenture issue is that it is redeemable with a tenor of five years. Seylan Bank is ranked number two in terms of deposit base among listed banks.It has a network of 91 branches with the inclusion of the Jaffna branch opened in May. It is using the latest banking technology with the introduction of SMS and WAP banking, telephone banking, Internet banking visa credit cards and debit cards, automated teller machines (ATM) at branches and offsite ATMs, with real time banking linking branches and customer service centres. Due to these initiatives, the bank has achieved a net income of Rs. 2.08 billion during the first quarter ending March 31 2002, up 9.7 per cent from the previous year's Rs. 1.89 billion. The bank is targeting its customer base in the rural and urban areas, with a view to achieving its objectives. |
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