April, 1, 2021
Banking sector giant, Bank of Ceylon, ends strenuous year with undisputed leadership position, keeping spotlight on economic revival.
Bank of Ceylon has once again stamped its resilient leadership position by navigating an exhausting year carefully, but with great strength, continuously powering the wheels of the Sri Lankan economy. Year 2020 was a year of many unforeseen challenges, resulting in economies around the world contracting due to persistent lockdowns following the COVID-19 outbreak.
Local policymakers implemented promising measures to provide a much-needed push to the economy by way of an accommodative monetary policy stand, specifically by pulling down interest rates to single digits, among other extraordinary measures announced by the CBSL, through moratoriums and concessionary loan schemes.
The role of BOC during the year under discussion in delivering on the benefits of these measures is unmatched and commendable.
While the Bank recorded the highest industry profit in 2020, it’s continued focus during the year was to ensure the integrity of the country’s banking sector, including payments and settlements, continued without interruption, while aiding the country in its economic revival, through SME and local entrepreneurship development.
The Bank extended support by implementing the CBSL announced moratorium to over 258,000 customers in facilities worth LKR 589.4 billion. These moratoria were offered under five schemes: Moratorium – tourism sector, Moratorium COVID-19 first wave, Moratorium COVID-19 second wave, Moratorium - credit support to the SME sector and the extension granted for the Moratorium on the Easter Sunday attacks. The Bank also granted moratoria to customers who were not covered under the CBSL introduced moratorium by way of the Bank’s own moratorium.
Bank of Ceylon topped the industry in granting loans under the “Saubagya” Working Capital Loan scheme, disbursing LKR 39.1 billion to over 18,000 borrowers. Stretching its hands out to needy customers further, the Bank of Ceylon introduced a special loan scheme for businesses affected by the COVID-19 pandemic, with facilities worth LKR 20.5 billion granted.
While focusing on economic revival, the Bank delivered on its duty in developing a strong national economy by boosting the SME and Microfinance sector with disbursements of LKR 128.9 billion to the sector in 2020. The Senior Management of the Bank engaged with entrepreneurs and SMEs to provide support on critical business issues covering all provinces of the country.
The “Mithuru” Micro Finance programme of the Bank also served over 1,083 small groups, with prominence given to the Eastern, North Central and Central provinces. Total disbursements in the year amounted to LKR 9.3 billion.
BOC “Divi Udana”
The Bank also introduced BOC “Divi Udana” loan scheme during the year to revitalise the ailing economy, by way of kick starting SMEs and ensuring their funding needs are met.
The Bank took immediate steps in revising market interest rates to match policy rate reductions and interest rates caps announced by the CBSL, by revising the interest rates down on its loan portfolio. The Bank’s prompt action to revise the pricing of its loan book allowed market rates to ease following the CBSL rate cuts. Given its market share, BOC’s quick response in this regard has been vital in stabilising the market.
The Bank also played an indispensable role in supporting CBSL’s efforts to stabilise the Sri Lankan Rupee and strengthen the external position under difficult economic conditions by way of active participation in the exchange market, facilitating around USD 2.8 billion in inward remittances to the country.
The Bank ensured most of its branches were kept open for essential banking activities even during strict lockdowns experienced in the first half of the year. The Corporate Branch, Trade Services and Treasury were operating throughout without full closure on a single day. The Bank also reached out to lockdown communities, including quarantine centres, to provide essential banking services by deploying all its mobile branches – “Branch on Wheels,” covering the entire island. The Bank has served more than 40,000 customers through this facility during lockdowns.
The Bank also ensured all its digital and virtual channels were up and running for people to serve their banking requirements as social distancing limited visiting branches. A customer base of over 13 million conducted digital transactions worth Rs. 5.2 billion per day during this period.
Year 2020 was also the year that the Bank reaped the harvest of heavy investments made on digital infrastructure development over the years. Registration to the Bank’s Online and Mobile Banking portals has increased nearly three-fold during the year. Ensuring that customers had access to their funds, the bank ensured that over 1,330 ATM, CDM and CRMs in the network, as well as other customer touch points totalling 2,000 in all, were kept up and running with adequate sanitising, allowing customers to conduct their financial transactions without hindrance.
Amidst these unexpected challenges, the Bank’s operating profit stood at LKR 29 billion and reported LKR 23.6 billion as Profit before Tax (PBT) for the year 2020, moving forward with stable performance, while managing headwinds caused by low interest rates, cashflow deferments and operational restrictions. Profit After Tax (PAT) for the year ended was LKR 17.8 billion. The Bank’s assets base grew by 24% to LKR 2.9 trillion, primarily backed by an increase of 28% in the loan book.
Reaching another milestone, the Bank’s loan book crossed the LKR 2.0 trillion mark during the year and closed with LKR 2.1 trillion of gross loans and advances to customers. Both Government and Private sector lending contributed to growth during the year, while working capital and personal lending showed a boost in all segments, including Retail and Corporate financing.
The Bank’s deposit base (more than 23% of the industry) increased during the year despite low interest rates. The Bank’s deposit base of LKR 2.5 trillion represents 35% of the Current and Saving deposit (CASA) base, which generates funds at low cost. During 2020, the Bank successfully executed issuance of its first Additional Tier 1 (AT1) bond, generating LKR 15.0 billion ATI capital. The Bank’s Tier I Capital and Total Capital ratio stood at 11.2% and 14.9% respectively by end 2020, which were above regulatory norms. Despite cash flow deferments on loan instalments, the Bank was able to maintain better trade -off between liquid assets and liabilities. All liquid level monitoring ratios were maintained positively.
Long-term Strength and Stability
The long-preserved stability, strength and sustainable growth of the Bank continued, undeterred by the negative market dynamics, highlighted by the reported profit for the year 2020, reflecting the Bank being a true cross-section of the country’s economy.
The Bank also operates a fully owned subsidiary in London, UK. During the year under review extra effort invested to manage the Bank’s overseas branches, namely Maldives, Seychelles, India, and the UK, due to lockdowns, economic downturns and other social distancing measures experienced in those countries.
Chennai Branch
As the COVID-19 pandemic raged across India, the Bank adopted contingency and business continuity plans, together with safety measures, to ensure uninterrupted services. A moratorium relief package for needy customers was provided, through a roster-based work plan and special transport for staff. During the complete lockdown, a Virtual Private Network (VPN) facility was granted to selected staff members, ensuring continuous services.
Maldives
As one of South Asia’s hardest hit economies, given that 70% of the country’s GDP stems from tourism, the Bank gave its utmost support by way of moratorium relief packages for needy customers. With the majority of staff in quarantine and the senior management working remotely, the Management of BOC took steps to operate services without interruption in customer service. As most Sri Lankan expatriates were unable to access the city from the Islands during the lockdown, the Branch made arrangements to channel remittances to Sri Lanka with the support of the Overseas Branches Division and Offshore Banking Division at the Head Office.
Seychelles
Moratorium relief packages were also provided for needy customers in the Seychelles during the partial lockdown, while uninterrupted customer services were provided, including salary payments of customers and social benefits granted by the Seychelles Government.
Trade Services
Capitalising on more than 650 corresponding relationships and the Bank’s extensive experience in trade services, the Bank facilitated all essential and medical emergency-related imports without disruption. The trade services branch was kept open for all exports-related customers to facilitate and to ensure they met their export orders in a timely manner.
Bank of Ceylon continues to be recognised as the highest ranked local bank and listing among the Top 1000 Banks by the Banker Magazine UK for the year 2020, ranked among the Top 10 Most Admired Companies in Sri Lanka by CIMA/ICCSL/Daily FT, and as the Most Valuable Banking Brand for 12 consecutive years by Brand Finance Lanka. In addition, Bank of Ceylon received four awards at the “Best Corporate Citizen Sustainability Awards 2020” by the Ceylon Chamber of Commerce, which included Category Winner for Employee Relations, Triple Bottom Line Award for Economic Sustainability (Profit), Category Winner of Financial Performance and was also listed among the 10 Best Corporate Citizens (Sustainability) for 2020. It was also chosen as the People’s Banking Services Provider of 2020 and 2021 at the SLIM - Nielson Awards.
The Bank was also the recipient of three Gold Awards for Green Building by the Green Building Council for its Panadura City, Malsiripura and Walasmulla branches.
Leading Sri Lanka’s banking industry with over 81 years of experience as the No.1 Bank in the country, Bank of Ceylon continues to fulfil its role as the most stable and trusted banking entity in the country, serving Sri Lankans from all walks of life with over 2,000 customer touch-points across the island, helping them build their lives, providing financially stability and uplifting the country’s economy.
With greater focus on digital delivery channels and delivering customer delight, whilst ensuring maximum safety for customers and staff, Bank of Ceylon stands ready to meet the challenges of 2021, forging ahead as ‘Bankers to the Nation”.
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