Asiamoney best bank awards 2020: Sri Lanka


Best Domestic Bank: NDB Bank

Best Corporate & Investment Bank: NDB Investment Bank

Best International Bank: HSBC

Best Digital Bank: People’s Bank

Best Bank for SMEs: Commercial Bank of Ceylon

Best Bank for CSR: Commercial Bank of Ceylon

Award winners

Best domestic bank
NDB Bank

Dimantha Seneviratne, NDB Bank

Sri Lanka’s banks have had a tough year: the Easter Sunday bomb attacks in April 2019, which killed more than 250 people, disrupted daily life, hit tourism and hurt economic growth overall, while a presidential election later in the year put a further brake on activity. So it is all the more impressive that a number of contenders for this award kept their businesses growing. Of those, NDB Bank stood out as the best domestic bank in the country.

NDB, led by chief executive Dimantha Seneviratne, celebrated its 40th anniversary last year. The bank has grown: it now has 112 branches and 100 ATMs, and for the first time its total assets have surpassed SLRs500 billion ($2.77 billion); annual growth of 12% lifted the figure to SLRs530 billion. Profit before tax was SLRs10.1 billion, up 6% year on year, marking a record for the bank.

However, profit after tax fell 8%, but this was in keeping with other banks in the country and reflected lower economic activity, deteriorating credit quality and the higher taxes imposed on the banking industry.

While non-performing loans rose across the country, NDB contained its NPL ratio to 4.77%, as of the end of December.

After surviving a rough time in 2019, NDB is well positioned to succeed as Sri Lanka’s economic growth picks up.

The bank’s leadership is quick to point out that it’s easy to hide behind regulatory hurdles or the slowness of Sri Lankan people to adapt to new financial technology, but the onus is on the banks to innovate in a way that meets customers’ needs. NDB has certainly been a leader on the digital front, with a realistic approach to tackling the challenges of implementing new technology.

It has watched the efforts of its domestic and international rivals to ensure it does not make the same mistakes. Its efforts have paid off: 71% of its transactions performed in 2019 came through digital platforms, and while digital deposits are still low, at less than 25%, NDB says it will focus on increasing this number in the coming year.

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Best corporate and investment bank
NDB Investment Bank

NDB Investment Bank, led by chief executive Darshan Perera, is rather brazenly described by its staff as the Goldman Sachs of Sri

Darshan Perera, NDB Investment Bank

Lanka. It raised SLRs62 billion ($340 million) for its clients in 2019, and increased its fee income by 69% over the previous year.

This growth is outstanding enough, but it is especially laudable in the face of the difficult economic backdrop in Sri Lanka in 2019.

The investment bank reported healthy levels of activity across the board and, as a testament to its skills, more than 60% of the transactions came from repeat clients.

Of the bank’s 2019 revenue, 48% came from securitizations and structured debt, 28% from equity, mergers and acquisitions and corporate advisory, and 24% from debentures, loans and other debt instruments.

Notable transactions include a $25 million syndicated loan facility for Indocean Developers, the developer of Sri Lanka’s residential Altair Twin Tower, as well as the first Basel III compliant unlisted term debt issue in Sri Lanka for Sanasa Development Bank, worth $18 million.

The Altair loan is an excellent example of NDBIB’s skill in finding funding for its clients. The twin-tower project consists of a 68-floor vertical tower and a 63-floor leaning tower. Because of the second tower’s construction, there were rumours that the integrity of the building was compromised. NDBIB brought in an engineering team to confirm the building’s strength and comfort investors. It also had an independent quantity surveyor determine the cost of completion for the project to make sure that the loan completely covered the cost of development.

NDBIB has a regional profile as well, particularly in the Maldives and Bangladesh. It was the sole financial adviser and manager for the IPO of Maldives Islamic Bank, which raised $16 million. NDBIB was also the sole financial adviser for Lotus Renewable Energy, the subsidiary of Singapore-based G&G Group, on its acquisition of Hatton Plantations for SLRs2 billion.

Having these other markets, with fee-generating products and merger and acquisition transactions, will help NDBIB maintain its market leadership, particularly if Sri Lanka faces further downturns.

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Best international bank

For a relatively small country, Sri Lanka has a large number of banks. Domestic banks have reached most parts of the country’s population, seizing market share that once belonged to internationals. But HSBC has refused to be muscled out.

The bank has had a presence in Sri Lanka since 1892 and still has a strong foothold, particularly in commercial banking, global banking and markets, as well as wealth management and personal banking. It reported total assets of SLRs471 billion ($2.6 billion) in Sri Lanka at the end of September.

As the leading international bank, competing with formidable rivals such as Standard Chartered and Citi, HSBC has become the go-to bank for foreign entities looking to access Sri Lanka.

Thanks to its history in China, it has helped to bring businesses to Sri Lanka as part of the Belt and Road Initiative. It has also worked in the opposite direction, helping local corporations to expand internationally. This will become increasingly important as Sri Lankan firms try to expand in the neighbourhood, for example in India and Bangladesh, or even further afield to the US.

Last year, HSBC celebrated 25 years of credit cards in Sri Lanka, yet another space in which the bank has dominated. Since 1994, HSBC had led the way in credit card development in the country, partnering with top merchants to bring the first chip-enabled cards to market. The bank can brag about its position holding the largest credit card payment network in Sri Lanka, with more than 1,200 outlets around the island.

The bank’s global initiatives around sustainability have also reached Sri Lanka. In December, HSBC and the International Union for Conservation of Nature announced a strategy to make Sri Lanka’s apparel industry, one of the country’s largest export sectors, low carbon.

HSBC has been a key, supportive bank for the garment industry in Sri Lanka as the sector has become a global player, and its influence on sustainable practices is an important one.

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Best digital bank
People’s Bank 

M A Bonniface Silva, Peoples-Bank

The digital banking landscape in Sri Lanka has become increasingly competitive. Each year Asiamoney finds more banks eager to talk about their advances in digital offerings to their clients, as well as their implementation of new technologies in-house.

With so many new projects launched over the last year, it was a difficult to pin down one winner. But People’s Bank continues to stand out as an active player in the technology field.

It is no easy feat to be at the forefront of innovation when you are a state-owned entity, but People’s Bank has managed to do just that. With 745 branches and 14 million active accounts, People’s Bank – now led by acting chief executive M A Bonniface Silva – has one of the largest networks in the country, but it is digital options that have allowed it to reach millennial clients and customers in rural areas.

The bank’s early efforts have paid off, leading to standardized procedures, easier access and speedier processes. The bank’s Wave app was launched in 2018; mobile usage and transactions done through the app rose 122% in 2019.

People’s Bank implemented a retail loan origination system, branded WiZCredit, last year to digitalize the process for applying for and disbursing loans. 

This system, which is applicable to housing, vehicle, education and personal loans, saves clients a trip to the bank and eases the application process, in addition to bundling in support for multiple loans and allowing customers to open additional accounts. In the coming year, People’s Bank plans to make the loan process completely paperless with digital signatures.

People’s Bank has focused on financial inclusion, particularly for those who live in villages and rural areas. The bank’s digital efforts reflect that, as it makes access easier for those people who do not have a bank branch nearby.

With a large section of the population using mobile phones, People’s Bank knows that mobile is the future for its business. The coming months should reveal additional innovations from the bank, including a wallet app and an upgrade to its corporate banking app.

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Best bank for SMEs
Commercial Bank of Ceylon 

Small and medium-sized enterprises make up an important part of the Sri Lankan economy, representing more than 75% of the total

Sivakrishnarajah Renganathan, Commercial Bank of Ceylon

number of enterprises. To reach these companies, particularly the newest up-and-coming businesses, it’s necessary to venture outside Colombo and find plucky entrepreneurs in the furthest reaches of the country.

Under chief executive Sivakrishnarajah Renganathan, Commercial Bank of Ceylon’s efforts in this area have been outstanding, and its relationships with its SME clients are a testament to the bank’s leadership in the SME sector.

The bank has made a concerted effort to focus more on SMEs, going so far as to hire McKinsey last year to change the bank’s structure and centralize its approach to SME relationships. Beginning in 2019, the bank introduced the position of SME manager to its bank branches. Each manager monitors and works with between 20 and 30 SME customers.

To reach SME clients in remote areas, Commercial Bank of Ceylon has a number of mobile banks that can provide basic banking facilities. These units have helped to introduce banking to some parts of Sri Lanka’s rural population. In the Jaffna Peninsula, customers are able to deposit money and make loan repayments through the bank’s field cash collection in the northernmost part of Sri Lanka.

One of Commercial Bank of Ceylon’s impressive advantages is its Biz Club. Started at the end of 2018, the club takes the bank’s relationships with SMEs to the next level, inviting entrepreneurs to participate in a financial literacy programme, receive discounts on services and to network and learn about relevant information through newsletters, among other perks. As of the end of September, club members had been approved for SLRs8.6 billion ($47 million) in loans.

These efforts were particularly important in 2019 because SMEs were badly affected by the economic consequences of the Easter Sunday bomb attacks.

Commercial Bank of Ceylon reported a 4.7% increase in the value of its small and medium-sized enterprise loan portfolio as of the end of September. It is a leader of Jaya Isura loans, part of the government’s Enterprise Sri Lanka loan scheme; it had processed 450 such loans by the end of September 2019.

The bank’s agriculture lending portfolio grew 9% from 2018, with a low non-performing asset ratio of 2.94%.

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Best bank for CSR
Commercial Bank of Ceylon

In Sri Lanka, corporate social responsibility has played an important role for years, as the country has struggled with poverty, decades of civil war and, more recently, a home-grown terror attack. But Commercial Bank of Ceylon’s CSR initiatives make it stand out from the crowd.

The bank – as is clear from the fact that it won Asiamoney’s award for best bank for SMEs – has focused on improving social mobility through its financial market products, dedicating itself to its small and medium-sized enterprise and micro-finance clients.

The bank also has a CSR trust that is dedicated to the empowerment of Sri Lanka’s citizens.

The trust, established in 2004, is an independent body that ensures the bank upholds its pledge to transfer up to 1% of its post-tax profit each year to effective and meaningful projects. The bank has a CSR unit, run by a chief manager and four employees, to review opportunities for the bank to support.

Commercial Bank of Ceylon’s projects include education, healthcare and environmental initiatives, with a special focus on education and children. For instance, the bank’s trust has donated IT labs to schools across the country, providing computers, printers, tables and chairs.

It has also worked with secondary schools to update classrooms into smart learning environments, as well as set up math labs and e-learning workshops for teachers.

The bank invested SLRs37 million ($203,000) for education-related activities and SLR7.6 million for community-based activities in 2019.

Just as importantly, the bank’s activities extend beyond its trust activities to its own internal projects. Commercial Bank of Ceylon has introduced green and sustainable practices internally and for clients. For instance, in addition to reducing paper usage and energy consumption, the bank has installed solar panels at some of its branches.

It also offers a savings account specifically for women, bearing a higher interest rate than regular accounts.

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