Seylan Bank surpasses Rs. 1 b after tax profit in 2011 despite VRS cost of Rs. 700 m

Seylan Bank Plc reported its best ever Q4 results, reflecting a growth of 82% over last year to report a post-tax-profit of Rs. 699.73 m (2010 – Rs. 383.91 m) for the quarter.

Seylan Bank Chairman Eastman Narangoda stated: “Profit-after-tax for the entire year surpassed Rs. 1 b. This was even after the extraordinary cost of Rs. 698.7 m incurred for a Voluntary Retirement Scheme. The 2011 reported post-tax-profit of Rs. 1,003 m is below last year’s profit figure of Rs. 1,229 m. However, if the VRS cost (Rs. 698.7 m) is factored out, 2011 results would have significantly exceeded last year’s performance.”

During the year, significant growth was evident in the performing loan book, which grew by 27.6% to reach Rs. 97.5 b. Deposits too recorded a growth of 9.5% to reach

Rs. 121 b as at end of the year.  Total assets stood at Rs. 166 b, recording a growth of 11% over 2010. A notable feature was the robust growth in the bank’s core business activities in the second half of the year, with the momentum increasing significantly in the last quarter.

In 2011, Seylan Bank successfully raised Rs. 4.7 b through a fully subscribed Rights Issue. The bank’s equity ended the year at Rs. 17.5 b, significantly higher than Rs. 12.1 b recorded last year. This enabled the Bank’s Capital Adequacy Ratio (Tier II) to reach 14.53% (2010 – 12.07%) for 2011, one of the highest in the industry.

During Q3, Fitch Rating upgraded the Bank’s rating to “A-”, which was yet another milestone reached in 2011.

In terms of network, Seylan Bank further expanded its reach in 2011 by opening four new branches and seven convenient centres. It also relocated 10 branches/convenient centres to service customers better.  As at end 2011, Seylan Bank boasted 133 branches and convenient centres spread across the country. In addition, eight new ATMs were added to the ATM network, increasing the total to 134.

Seylan Bank General Manager/Chief Executive Officer Kapila Ariyaratne stated: “The results prove beyond doubt that the re-structuring of the organisation structure, improvement of operational and risk management processes and the significant improvement in HR practices and processes are beginning to yield the desired results.  Emphasis on recoveries/restructuring of non performing debt, branch credit and customer service quality has combined to provide a platform for sustainable growth in Core activities. Non-Performing Advances which stood at Rs. 25.7 b were reduced to Rs. 20.9 b as at end 2011, a reduction of Rs. 4.8 b. This resulted in the NPA ratio (Net of IIS) significantly reducing from 21.4% in 2010 to 14.2% in 2011.”

In terms of efficiency, the bank was able to rationalize overall staff numbers from 3,622 in 2010 to 3,150 as at end 2011.  This reduction, despite expansion, was possible due to efficiency obtained through restructuring, centralisation, automation and process

re-engineering.

In terms of Group results, profit applicable to equity holders of the bank stood at

Rs. 1,006 m as of 2011. Group Net Assets per share was at Rs. 52.99, an improvement from the last year’s figure of Rs. 49.17.

With regard to national visibility, the ‘Seylan Thagi Pita Thagi’ campaign, launched in October 2011 was a highly successful brand building and deposit mobilisation campaign which has attracted great attention from Sri Lankans across the country and from all walks of life.

In Q3 & Q4, Seylan Bank developed a four-year Strategic Plan with the participation and input of staff across the branch network as well as all organisational support functions.  The plan focuses on growth and profitability in the four years ahead with customer service, asset quality, automation and improved efficiency being key areas of focus.

“The unveiling of the Strategic Plan comes at an opportune time, when the Bank has consolidated itself and is ready for ‘growth’ in the years ahead. 2011 has, in retrospect, been a year of consolidation where growth levels and efficiency ratios point towards the correct direction and a firm platform being laid for well chartered growth and further consolidation of its position as one of the leading players in Sri Lanka’s banking industry,” Chairman Narangoda concluded.