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| Sunday, 2 May 2004 |
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| News Business Features Editorial
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Pan asia Bank increases operating profit by 300% Pan Asia Bank reported a 300% increase in operating profits over the previous year whilst fully complying with regulatory requirement on provisioning. Commenting on the year's performance, the Managing Director/CEO of the bank, R. Nadarajah, stated that "year 2003 has been an eventful year for Pan Asia Bank, and the encouraging results are fruits of a multi-faceted change process. "We re-capitalised, re-strategised, re-structured and refocussed our business direction,' he said. "Primarily keeping with the Central Bank's guidelines we firstly called up the balance share subscription which increased the capital by Rs. 110m. Further, the bank raised debenture capital of Rs. 250m in October 2003, which was oversubscribed on the opening day. "Secondly, we changed our business direction to focus more on retail banking, in order to broad-base our risk and also to improve our fee based income. Accordingly, the organisation structure was changed and key positions in HR and IT were filled with experienced professionals. The bank also opted for Deputy CEO to lead the change process and continue the strategic direction of the bank. Hence, a Deputy CEO with the required core competencies and dynamism was brought on board in July 2003. Other operational areas also have been streamlined and strengthened to deliver an efficient service to its valued customers. The delivery channels have been re-organised with a view to realising the vision of the bank to become the most customer-preferred commercial bank. "With the bank achieving the capital adequacy requirement stipulated by the Banking Act and guidelines of the Central Bank, the Central Bank has given permission for the bank to open 03 more branches during the latter part of last year. We have opened branches at strategic locations of Kotahena and Dehiwela during the latter part of November 2003 and another branch at Wattala in December 2003. These 03 branches alone currently account for a deposit base exceeding Rs. 450m. The financial performance of the bank of the year 2003 has been very satisfactory with an asset growth of 27.9%. Although the year on year growth in advances is only 1.4%, the six months ending December 2003 has seen a careful growth of 13%, reflecting the bank's retail focus. This has been also due to the concerted efforts taken by the bank towards recovery of delinquent advances and making adequate provisioning strictly in terms of the Central Bank guidelines. Consequently the bank's earning asset book has improved to 77% as of the end of 2003 compared to 55% in Dec. 2002. "The deposits reflected a more aggressive growth of 16.43% through the year complimented by the branch expansion. The deposits which were at Rs. 4165m in December 2002 grew to Rs. 4,849m in December 2003, which attributes to growing confidence and changing perceptions achieved through effective marketing and sales efforts. "Net interest income during the year has been Rs. 271m compared to the Rs. 240m in 2002, recording an increase of 12.79%. The increase is partly due to recovery of interest which has been suspended in the previous years despite narrowing down of interest margins in the banking industry. "The fee-based income of the bank has also increased by 21.12% in the Year 2003 recording an income of Rs. 120.697m. With a view to cleaning up the balance sheet in respect of all cumulative doubtful loans and advances, we have during the year made a total loan loss provisioning of Rs. 155.695m which made the operating profit before provisioning of Rs. 60.349m to a loss of Rs. 95.345m. It is noteworthy that the loss of 2003 was after providing for bad debt provisions carried forward from year 2002." We have cleaned up our provisioning fully this year. In this context, the bottom line is significantly improved," stated Nadarajah. The operating profit before loan loss provisioning of Rs. 60.349m is almost threefold compared to the same in 2002 of Rs. 20.504m. "The ground is now set and we have been aggressive in our approach to competition by service quality, pricing and delivery. There are few innovations up our sleeves for this year. We are confident with the motivated, knowledgeable and committed human resources we have, the bank will go forward with successful results in the coming years," Nadarajah said in conclusion. |
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