Out Of The Woods

Seylan Bank records Rs. 543.301 mn. profit after tax (p.a.t.) in 2009, a 250% increase over 2008.
Seylan Bank recorded a Rs. 543.301 mn. p.a.t. for 2009, representing a 250% increase over the previous financial year.
During the same period the Bank’s cost to income ratio decreased from 75.79% to 67.82%, while the total capital adequacy ratio-under pressure during the end 2008 crisis-rose from 8.06% to 11.74%.
The Bank’s profit before tax increased from Rs. 155.241mn.in 2008 to Rs. 892.572 mn. in 2009, thus recording an “unprecedented” 475% increase.
This is as a result of operating expenses and provisions for loan losses decreasing by 21.05% (Rs. 1.729 bn.) and 11.51% (Rs. 284 mn.) respectively, as against a drop in net operating income of 11.77% (Rs. 1.275 bn.).
Seylan Bank now meets or exceeds the liquidity targets stipulated by C.B.S.L.
These positive indicators have brought a corresponding rise in confidence among shareholders and depositors.
The share price which returned to pre-crisis levels following the appointment of the new director board headed by veteran banker Eastman Narangoda, has continued to gain strength as the management implements at all levels wide ranging initiatives set out in the Bank’s new strategic plan.
For more than 20 years Seylan Bank has “proudly” called itself “The Bank with a Heart” and has worked hard to live up to this credo. The recent global economic downturn, precipitated by a sharp decline in financial markets in late 2008 had a particularly sharp impact on Sri Lanka.
Further compounding the negative impact on Seylan Bank was the collapse of the Golden Key Credit Card Co Ltd., which resulted in many of the Ceylinco Group Companies facing a liquidity crisis resulting in those companies defaulting on loans from Seylan Bank.
Narangoda said, “As we tackled the unprecedented challenges during the past year, the dedicated men and women of the bank never lost heart. Buoyed by the continued support of our customers, we redefined our vision and improved management practices from “top down.” We provided the best possible service while practicing innovative, responsible management for the benefit of all stakeholders”.
“By far, the year’s most significant achievement was restoring the Bank’s stability and liquidity.
Taking advantage of the buoyant stock market, “we made a public issue of 54,290,000 ordinary shares at Rs 35 per share last September. The desirability of the issue was bolstered by the aggregate 25% stake taken in Seylan Bank by two state institutions-Bank of Ceylon and Sri Lanka Insurance Corporation.
The issue’s success demonstrated the recovery of investor
confidence in the Bank, being fully subscribed before the closing date”, Narangoda added.
Seylan Bank’s market capitalisation grew 288% in the course of the year, from Rs. 1.2 bn. at end 2008 to a notable Rs 4.8 bn. at end 2009. The Bank now enjoys adequate capital to support current business volumes as well as its growth plans in the months that lie ahead.