SDBL maintains growth momentum in 2011

SANASA Development Bank Ltd (SDBL) has registered a impressive performance during 2011 by making a growth of 21% in deposits reaching Rs.15.2 billion from Rs.12.6 billion recorded during 2010. The advances portfolio indicated a growth of 33% from Rs.12.4 billion to Rs.16.5 billion. The focus was, as before, on the rural and SME sectors with a greater emphasis on the group loan system, which has shown remarkable success. Due to stringent controls, risk-management systems and collection mechanisms, the bank's NPL portfolio ended on a strong note of just 4.5%, which puts it on par with the industry average and shows a declining trend (5.84% in the previous year and 6.62% in 2009).

Profit before tax declined, from Rs.646 million in the previous year to Rs.537 million. This is attributed to overall staff salary revision and the commencement of depreciation for the new core-banking system, both of which are considered necessary investments which are expected to translate into greater degrees of efficiency resulting in a greater volume of returns over time.

However, the profit after tax increased from Rs.323 million in 2010 to Rs.345 million, an increase of 6.76%. “The net interest income rose from Rs.1.717 billion in the previous year to Rs.1.740 billion in the year under review, a marginal increase due to interest rate fluctuations,” said Nimal Mamaduwa, General Manager/CEO of SDBL in a press release.

During the year under review the bank made only modest inroads in terms of expanding the branch network, concentrating instead on strengthening the existing units.

New Customer Centres were established in Buttala, Hatharaliyadda, Hingurana, Narammala, Kaduwela and Aluthgama during the year under review.

In 2011 the bank concentrated on provincial expansion and will continue to focus on this area in view of the fact of the development activities taking place in the provinces. As a result the bank further strengthened the regional management system by giving more authority to regional managers, because this role will be different and more challenging in time to come.

In particular it is envisaged that regional managers will work closely and cohesively with regional officials, such as, Provincial Councils, Government Agents, AGAs and GNs to strengthen public-private sector partnerships.

Capital base: steady improvement

The total capital base of the Bank, which stood at Rs.2,180 million at the end of 2010, improved to Rs.3,055 million at year end. Tier I Capital continues to increase and the bank continues to improve on this in view of anticipated listing in the CSE.

Tier I and Tier II capital stood at 14.48% and 14.91% as against 10% and 5% of regulatory requirement respectively. In view of the Central Bank directive for all banks to be listed in the Colombo Stock Exchange, the bank focused a considerable degree of energy to streamline operations to meet this eventuality, again with the primary intention of retaining controlling power among its current stakeholders, key among who are the varied and extensive members of the larger SANASA Movement.

Corporate Social Responsibility (CSR)

As a development bank and one that is inspired by a century long engagement in empowering the disempowered and in mainstreaming and uplifting the neglected, social responsibility is both a core value of the bank as well as a necessity given that the vast majority of the bank’s shareholders in fact happen to belong to the social group that is typically targeted to enhance CSR portfolios.

In line with the sustainability, a prerogative inherent to it’s thinking, the bank supported many initiatives targeting youth during the year under review.

The programme to improve financial literacy launched in the previous year in Sabaragamuwa Province with the support of the City Group was expanded to Uva Province (with GTZ funding) and Central Province (City Group funding).

Around 700 young people are set to benefit from this important endeavour to confer skills necessary for young people to meaningfully benefit from microfinance programmes.

Technology for optimizing efficiencies

The bank scored yet another first in being the first financial institution based on and promoting cooperative principles in Sri Lanka to work towards offering ATM and debit card facilities to its customers.

All necessary infrastructure to this end and as well as all required documentation are in place and this has become a reality in April 2012. With this implementation, the bank will open doors to many modern facilities such as Mobile Banking, SMS Banking, Phone Banking, Internet Banking, online purchasing etc.

The bank has already installed its’ own ATMs in 10 branches, and is sharing the ATM services with the Commercial Bank. As such, the bank’s clients will not only be able to access the bank’s own machines in ten branches, namely, Head Office at Kirulapone, First Colombo City, Jaffna, Karapitiya, Ambalangoda, Matale, Kurunegala, Kegalle, Anuradhapura and Polonnaruwa but will be able to withdraw from 500 machines operated by Commercial Bank.

The bank won the Bronze for its Annual Report 2010 in the ‘Financial Sector’ category at the Annual Report award competition organized by The Institute of Chartered Accountants of Sri Lanka.