BoC targets Rs 1 trillion asset base end 2012

Mulling $ 100m bond issue to fund overseas expansion :

Ravi Ladduwahetty

The Bank of Ceylon has set itself an ambitious target of reaching the landmark Rs 1 trillion mark for its asset base by December 31, 2012, which will enable it to emerge within the topmost one thousand banks in the world. “We have set this Rs 1 trillion target for end 2012 and it is practical and not elusive. The asset base of the bank was Rs 718 billion as at December 2010 and now it is around Rs. 740 billion. So, we have set ourselves the target of Rs 1 trillion which we hope to achieve by end of next year, a confident Bank of Ceylon Chairman Dr Gamini Wickremesinghe told Daily News Business yesterday.

He said the target will also be a prestigious landmark for the premium and pioneering bank in Sri Lanka and will be ranked among the blue chip banks across the world.

“This landmark will also help the Bank of Ceylon, it is global expansion plan,” he said.

The bank will make the maximum effort to gradually reach towards that target in 2011 so that the finalising in 2012 would be easier. When the bank achieves this target, it will be even among the mega regional players such as the State Bank of India, which has an astronomical 50,000 plus branches spread across India.

“We targeted the Rs 10 billion mark in net profit for 2011 but we achieved it well ahead of the target in 2010. What is also striking is that of the Rs 10 billion, over Rs 2 billion has been from the profits on share trading and a further Rs 1 billion from the trading of the traditional treasury bills and bonds along with government securities,” he said.

He said the bank which originally had the strategy of expanding its asset base through mergers and acquisitions of State corporations and even private sector companies, had now disbanded that plan, but will now increase its lending portfolio and increasing its advances to all sectors of the economy, keeping in mind its responsibilities as a stakeholder in national development in reaching the proposed landmark.

“We will not be merely a lending bank which will lend for the mere interests and profits, but also play a pivotal role in economic development,” he said.

One of the key areas that the bank has in mind in the development plans will be the development of the dairy industry in a bid to reduce the dependence on the import of milk powder on which the Government is now spending a whopping Rs 30 billion annually.

Meanwhile, the Bank of Ceylon will also mull a US $ 100 million Bond issue and a 10 billion Rupee Debenture issue later this year.

The Dollar bond will be for the overseas branch expansion while the local rupee debenture will be for the internal requirements of the bank.

“If the government funds, we could also raise treasury bills and bonds, we can hedge these funds,” he said.

The Rs 10 billion local debenture will also fund the growth demands which will require more liquidity. One of the key areas that the bank funds is the petroleum imports which is a national requirement where the annual bill is over $ 2 billion.

Bank of Ceylon is getting a further $ 130 million from the China National Development Bank following its successful deal earlier for $ 50 million which was for internal liquidity and capital requirements.

“Whenever the government wants money, we get them at attractive rates as we borrow at stipulated rates,” he said.

Earlier, the BoC also did a deal with Mashreq Bank last year where it asked for $ 100 million but got $ 175 million.