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Q: What is APB and its role in the banking industry?
A: Association of Professional Bankers – Sri Lanka is the premier professional body for career bankers and it was established in July 1988 with the objectives of undertaking, promoting and facilitating studies in the field of banking and promoting fellowship and understanding among members of the Association, among others.
APB plays a vital role in facilitating bankers to acquire the required knowledge and skills with the objective of improving the banking system of the country. Its key learning and development activities are mainly focused on the Annual Convention, lectures by eminent bankers and local and foreign industry experts and periodical publications.
Q: Tell us about your association with the APB?
A: My association with APB dates back to the year 2000 and since then I have been actively participating in all the annual Conventions organised by the Association and served as the Chairman of several committees. I have also been contributing to the Convention publication for the past 5 years. In 2007 I was first elected to the Council and thereafter as the Treasurer, the Vice President, Snr. Vice President and today I am holding the mantle of the President of the Association.
Q: Your views on the performance of the banking industry and where the Industry would be in five years time?
A: Banking sector has recorded substantial growth as a result of improvements in stability of financial institutions, enhanced confidence in the financial system and strengthened regulations. Today, we are talking about a Rs. 4.2 Trillion banking industry which was only Rs. 1 Trillion 10 years ago. The assets of the industry have increased four-fold in the past decade and the Central Bank of Sri Lanka predicts in Road Map 2012 that the financial services will expand by 8.2% in 2012 due to the expanding economic activities.
According to Central Bank predictions for 2016, the banking system will continue to show a healthy growth despite the increased pressure on Net Interest Margin (NIM). It is predicted that the assets of the banking sector will double to Rs. 8 Trillion from the current level and lending to Rs. 5 Trillion from the current level of around Rs. 2.5 Trillion as well as significant improvements to access to finance by 2016. However, NIM will remain a concern as it is predicted that NIM will further decline to around 3.3% in 2016 from the current level of 4.2%.
Q: What challenges does the local banking industry face and how do they impact the industry?
A: Declining NIM will certainly be a challenge due to intensifying competition. This situation should be arrested by exploring alternative, innovative banking solutions such as, fee-based banking, merchant/investment banking, leasing and venture capital, rather than relying only on fund-based conventional banking products. On the other hand, banks can also expand the range of products, services and delivery channels to cater to the emerging needs of the economy and improve profitability by concentrating on cost efficiency and resource utilisation. Other key challenges facing the Sri Lankan banking sector include managing asset quality and accessing capital in the face of rapid expansion, enhancing risk management capabilities, implementing changes in accounting standards in line with IFRS and managing the impact of global market instability.
Q: How important is banking industry to Sri Lanka’s economy? How should the banking industry be aligned with the development goals of the country?
A: An effective, efficient and disciplined banking system brings about rapid growth to all sectors of an economy. Banking is important to economic growth for various reasons such as investment in new projects, capital formation, facilitation of trade and industry, development of agriculture and development of under- and un-developed regions. The banking industry at present makes up 75% of GDP of Sri Lanka.
The Govt. has identified a number of goals to be achieved in the next few years and among them are achieving GDP of 8.0%, worker remittances of Rs. 6.5 Billion, increasing domestic savings ratio to 22%, doubling per capita income to US $ 4,000 and 100% financial inclusion by 2016. The banks can develop its business strategies in line with these development goals through more participation in alternative banking products and services, expanding to un-banked and under-banked areas and segments of people and introducing customer-friendly, flexible products and procedures.
They can also facilitate foreign remittances through tying up with low-cost payment gateways. Convenient, low-cost and speedy remittance facilities offered by banks will also deter channelling of funds through unofficial channels which is estimated to be over US $ 1.5 Billion (this is equivalent to 30% of the funds channelled via formal system). Microfinance is another area banks can venture into esp. with the proposed regularisation of the industry.
Q: As the 24th President of APB, what plans do you have in store for the Association?
A: Knowledgeable, competent and updated human resources are mandatory for the development of the industry amidst turbulent environs. Keeping this in mind we have identified a number of initiatives to be implemented in the coming year. Incorporation is on top of APB priority list. APB has come a long way since 1988 and it is high time the Association was incorporated by an act of parliament and we expect to realise that in 2013, the year in which the Association celebrates the 25th anniversary. Yet another priority we have identified is, while allowing Council Members to preside over committee meetings, we must encourage experienced as well as young people from the industry to take part in the APB work through committees so that eventually they will be able to join the Council and contribute more. APB is aware of the latest developments taking place in the industry such as IFRS implementation, increased emphasis on risk and compliance and the need of adoption of the latest technology. The growth and competitiveness of the industry will depend very much on how accurately we predict the challenges and proactively overcome them and our task, in this regard, would be to equip the bankers with the requisite knowledge, competence and skills.
Being a professional association, it is essential for us to affiliate with other professional bodies as much as possible. While focusing on these priorities, we will continue with all the programs conducted by APB such as lectures, seminars and various training programs. In the past, the Association was able to hold few of these programs in outstations and we hope to expand it further.
