Seylan to get aggressive; rolls out 4-year plan to become bigger with booming biz

• New strategic plan developed by world-renowned global specialist Boston Consulting Group with internal inputs

In a bid to become a formidable player in the industry, Seylan Bank is rolling out a new strategic plan aimed at further boosting its business in the next four years.

Developed by world famous specialists Boston Consulting Group (BCG) with internal inputs, the 2017-2020 strategic plan is built on pillars of excellent customer service, product innovation and value addition and cost-efficiency aided by digital transformation. A key feature of the move is BCG will assist Seylan in the initial rollout of the strategic plan along with identified internal champions.

The fresh initiative comes following the successful completion of the previous 2012-2016 strategic plan which despite many challenges, ensured significant progress in terms of SME coverage, retail growth, branch expansion and process improvement.

In 2016, Seylan saw its total assets grow by 20% to Rs. 356 billion and after tax profit improving by 4.7% to surpass the Rs. 4 billion mark. Four years ago Seylan’s bottom line was only Rs. 1 billion.  

In comparison to the bottom line of some of the larger banks, Seylan has lot of catching up to do. 

Private sector giant Commercial Bank’s after tax profit in 2016 was Rs. 14.5 billion and HNB’s was Rs. 14.1 billion whilst that of Sampath Bank was Rs. 9.1 billion. 

However, having suffered some setbacks due to the Golden Key and Ceylinco Group issues, Seylan Bank has certainly bounced back commendably as confirmed by profits improving by four times in the past four years. 

“Going forward within the next four years we are looking at achieving a profit figure of Rs. 10 billion,” said a proven and continuously-focused Seylan Bank CEO/Director Kapila Ariyaratne. “The new four-year plan signifies we will be more aggressive in building business and reaching customers with innovative products and solutions,” he added, during an interview with Daily FT.

At present Seylan’s market share is around 5% and the goal is to strengthen it further to over 7% in the medium term.

Under the previous plan, Seylan also increased its branch presence to over 160 from 120 and Ariyaratne says with permission from the Central Bank a similar aggressive expansion of about a further 40-50 branches will be pursued in the next four years. The focus is towards expansion of more “leaner and efficient” branches in the future. 

“What the market will also see is Seylan reaching out more prominently to serve their needs,” said the Director/CEO, who added that a dedicated centralised sales staff would be progressively increased along with a new incentive scheme at branch level. At present Seylan’s staff is around 3,100 and its footprint comprises 166 Banking Centres, 100 Student Savings Centres and 202 ATMs.

Expanding the reach to further serve Small and Medium Enterprises along with commercial clients (those who are not categorised as big corporates) is a key pillar of the 2017-2020 Strategic Plan as well. 

“Seylan with its slogan ‘A Bank with a Heart’ has over the years been a boon to the SME sector. With the recently secured $ 75 million foreign funding facility, the focus on empowering SMEs will be done with greater vigour,” Ariyaratne emphasised. 

In late April, achieving a historic milestone, Seylan Bank raised a long-term funding facility of $ 75 m from five separate financial institutions – three Development Finance Institutions (DFIs) in Europe, Deutsche Investitions-und EntwicklungsgesellschaftmbH (DEG), Germany, the Development Bank of Austria (OeEB) and OPEC Fund for International Development (OFID) of Austria, Symbiotics – a Switzerland-based investment fund and National Bank of Ras Al Khaimahin the United Arab Emirates (UAE). 

In 2016, Seylan’s net advances grew to Rs. 236 billion from Rs. 193 billion in the previous year and one-third of the lending portfolio is for the SMEs. 

“This segment is challenging to all because of the sheer numbers. Nevertheless, Seylan has firmly established its presence among SMEs and our focus will only expand further,” the bank’s CEO/Director said. 

In empowering the export-oriented SMEs, Seylan will continue to carry out business development and management workshops apart from stressing the importance of sustainable practices, which is one of the key component in the new five-year financing arrangement secured by the bank. Seylan will also enhance inclusivity by reaching more of the under-banked or underserved areas of the country in the push to empower SMEs. 

Personal/Retail and Consumer banking is another key pillar of the new strategic plan and this market segment is likely to see a more dynamic presence from Seylan with renewed offerings and innovations. Seylan’s deposit base in 2016 grew by 22% to Rs. 273.4 billion.

The digital transformation under the Strategic Plan, according to Ariyaratne, will ensure twin benefits of process improvement and automation internally as well as reaching customers efficiently. Other pillars of the strategic plan are Human Resource Development and improvement in Risk Management and Compliance.

Seylan Bank remained soundly capitalised, with the key capital adequacy ratios well above the regulatory minimum requirements and recorded 10.39% as the core capital adequacy ratio and 12.63% as the total capital adequacy ratio. In the first quarter of this year, Seylan improved its after-tax profit by 20% to Rs. 866 million despite challenging market conditions. 

The bank increased its Net Interest Income and recorded a robust growth of 21% in spite of the mounting pressure on the margins due to rising cost of funds. Net fee and commission income witnessed a healthy growth of 24.94% to reach Rs. 869 million in 1Q due to core banking related business such as card-related income, trade finance related fee income and fees from guarantees, remittances, etc. The bank said it would continue to look towards enhancing its fee-based income from products such as debit and credit cards and trade-related products.

Major shareholders of Seylan Bank Plc include Sri Lanka Insurance Corporation (15%), Brown and Company (14%), Employees’ Provident Fund (9.86%), LOLC Investments (9.55%), NDB (7.5%), Bank of Ceylon (7.5%) and R. S. Captain (4.43%).

Board of Directors of Seylan Bank comprises Ravi Dias (Chairman), Ishara Nanayakkara (Deputy Chairman), Kapila Ariyaratne (Director/CEO), B.A.J.G. Peiris, W.D.K. Jayawardena, S.P.S. Ranatunga, P.L.S.K. Perera, M.C. Pietersz, S.V. Corea, A.S. Wijesinha and S.A.K. Salgado.