HNB to finance Sri Lanka’s development drive through $50M CDB loan facility

Hatton National Bank PLC (HNB), Sri Lanka’s premier private sector commercial bank, recently signed an agreement with the China Development Bank Corporation (CDB) to raise $50 million through a five-year long term loan.

This five-year credit facility from China Development Bank Corporation is part of HNB’s capital raising effort which portrays the ability of the bank to raise funds during a short period of time from a well reputed foreign source, at a very attractive rate of interest.

HNB’s capital augmentation plan commenced in mid-2011 to raise over Rs.20 billion in equity and debt capital. Under the programme, the bank has so far raised over Rs.18.5 billion through a combination of tier I capital, tier II capital and senior debt. China Development Bank’s partnership with HNB is the first ever relationship with a private bank in Sri Lanka and marks the beginning of a continuous co-operation between the two parties.

China Development Bank is one of the state-owned banks of the People’s Republic of China with a total asset base of approximately one trillion dollars. It has successfully managed the balance between growth and risk as indicated by the NPA levels which has been below one per cent over the past eight years.

CDB is the strongest rated bank in China that has been awarded an international credit rating equivalent to the sovereign rating of China by Fitch Ratings and an international rating which is one notch below the sovereign rating by Standard & Poor.

As stated by HNB’s Deputy Chief Executive Officer Jonathan Alles, the $50 million long-term loan raised from the prestigious China Development Bank Corporation (CDB) will boost the loan-able funds available to Hatton National Bank PLC (HNB) and will fuel plans to finance infrastructure and Small and Medium Enterprises (SME) development projects across the country in post-war Sri Lanka.

This, he said, was a remarkable achievement for a local private bank to be able to secure a $50 million long-term loan at such a competitive rate.

Speaking further, Mr. Alles went on to say that HNB is reaping the benefits of the investments made since 2010. The expansion of the bank’s balance sheet and the branch network has complemented well with the bank’s overall plan and returns are now being generated based on the expansion drive undertaken in the last two years.

The CDB credit facility will permit HNB to grow its loan book by 23 per cent which is in line with the bank’s original plan for the year and permits the bank to follow up some of the projects initiated in 2011, albeit being more selective and thereby enhancing the quality of the bank’s portfolio.  

Some of these projects are supporting infrastructure and industrial development in the country while continuing its retail focus in supporting SMEs by leveraging its branch network spread throughout Sri Lanka.   The financial collaboration agreement was signed in Colombo recently by HNB Chairperson Dr. Ranee Jayamaha and HNB Managing Director/CEO Rajendra Theagarajah on behalf of Hatton National Bank PLC and Guangxi Branch Deputy General Manager Wei Peng on behalf of China Development Bank Corporation.