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Seylan Bank has posted a net operating profit of Rs. 662.27 million for the financial year ended December 31, 2001, an increase of 0.48 percent over the previous year's figure of Rs. 659.12 million.

"The increase in net operating profit was evident due to an increase in the net income of 25.6 percent growth from core operations, there was also growth of 24 percent in interest income from treasury bills and placements with other banks, a 24 percent growth in fee and commission income and profit on sale of investments securities saw a significant improvement recording a figure of Rs. 19.37 million during the year under review, according to the annual report 2001, released yesterday.

Apart from focussing on profitability, we ensured that the operating costs were minimal. As compared with the operating cost of Rs. 2.41 billion of the previous year, operating costs recorded during the year was Rs. 2.63 billion reflecting an increase of only Rs. 0.22 billion or 9 percent which is negligeble after allowing for inflation at 12 percent.

In the past year, the bank's turnover grew by 26.67 percent to Rs. 9.09 billion over the previous year's figure of Rs. 7.17 billion. Interest income increased by 26.8 percent to Rs. 7.45 billion when compared with the previous year's figure of only Rs.5.87 billion, while net interest income showed a marginal growth of 3.41 percent. Total income was, however, boosted by a growth of 9.01 percent due to an increase of 21.6 percent in other income, CEO/General Magager, Rohini Nanayakkara said.

Operational cost was minimised by lowering the level of expenses and also eliminating unnecessary expenditure. The impact of this excercise was evident with a cost saving of 12 percent, there was only an increase of 9.1 percent in year 2001. The overall profitability of the bank as measured by the Operating Profit Margin was 20.09 percent, marginally lower than the figure of 21.45 percent achieved an year ago.

Seylan Bank's deposits rank the second largest among listed commercial banks and recorded a growth of 14.81 percent during the year. The bank's deposit base had risen to Rs.47.8 billion as compared to Rs. 41.6 billion.

In the 2001, the bank followed a policy of controlled lending in order to ease the capital adequacy ratio and also to bring down the level of non-performing advances. The modest growth in advances was due to the controlled and quality lending policy of the bank. The growth in deposits coupled with a decline in interest rates during the last quarter also enabled the bank to channel deposits into high yielding areas in its lending portfolio.

The bank has planed a strategy of re-engineering of its operations to ensure the best allocation of resources. "Hence, our strategy for the next year is to focus on our key strenghts to expand volumes in areas of activities that include foreign currency banking, trade financing, corporate banking and technology based services through ATMs, electronic cards, internet nad telephone," Mrs. Nanayakkara said.

The bank intends to achieve these results by eliminating unprofitable activities and enhancing profitable activities through constant review, combined with enhanced staff productivity, the report said.

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Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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