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People's
Bank comes out of the red This year, one of the sectors the bank hopes to concentrate on would be lending to first-class corporate customers who have resumed borrowing after holding back because of the uncertain economic climate last year. It would also focus on the personal sector, where a large number of salary earners who are depositors would need services such as housing loans, and the commercial sector - lending to medium-sized enterprises which are customers of the bank's extensive branch network. "We have some four million customers, almost one in every four Sri Lankans and almost a quarter of the banking industry's deposit base," Kelly said in an interview. "This gives us the opportunity to deliver more revenue earning products to more customers than any other bank." People's Bank deposits increased by almost 11 percent to Rs. 128 billion with foreign currency deposits up 28 percent to Rs. 9.7 billion. Kelly attributed the turnaround to a strategic plan launched last June by a new senior management team hired in early 2001 whose main aim was to enhance income. Chairman Lal Nanayakkara said the new government has taken a more radical approach to restructuring and would like to see ongoing reforms being institutionalised so that they cannot be reversed. "While
we always support national policy goals and the aspirations of the
people, it will not be at the expense of commercial banking tenets,"
he said. Kelly said there might be some changes to the bank's corporate
structure - it is now incorporated by an act of parliament - that
might see it being run by a rotating board of directors. Pawning was another area the bank is concentrating on and was particularly strong in rural areas where it is linked to the agricultural cycle, he said. Government interference in the bank's operations was a thing of the past, he said. "Various politicians do phone and try - without success," he said. The bank has improved its credit quality and contained cost growth, Kelly said. The bank's efforts to recover its huge portfolio of bad loans - almost half of it lent to about two dozen businessmen - was taking time because of delays in courts, he said. Previous ill-judged lending has saddled the bank with Rs. 25 billion in bad loans, he said. Over the next two years the bank hopes to bring down its non-performing loans ratio to 15 percent from 21 percent, he said. Asked whether he felt a "name and shame" policy to expose borrowers who deliberately default on their loans would act as a deterrent, Kelly said: "It is not a bad idea to have a black list of defaulters which is publicly available. It works elsewhere. The publicity would provide added sanction." Kelly also said the bank was not contemplating drastic staff cuts to reduce its 11,000-strong workforce but would rely on natural wastage to bring the numbers down. Rubber
gloves sales are bouncing back, DPL says The company
said it hopes that the revival in the world economy would herald
a turnaround in the rubber market that has been stagnant for years.
DPL chairman Sunil Mendis described the performance of the firm's
plantations as "disappointing". DPL's gloves
manufacturing operation partly offset the adverse performance of
plantations where profits fell by more than half mainly because
of poor rubber prices. Pre-tax profit from DPL plantations plunged to Rs. 42 million mainly because rubber prices are stagnating at 30-year lows. Latex crepe prices fell a further eight- percent during the year - the fifth year of depressed prices. DPL managing director N.G. Wickremeratne called on the government to throw a "lifeline" to both the estate and smallholder sectors to help them tide over the prolonged slump. "Else the sun may set on a 100-year-old industry," he warned. DPL's plantations subsidiary Kelani Valley Plantations lost Rs. 30-40 million from its rubber plantations in 2001, Wickremeratne said. The entire estate sector may have lost close to Rs. 300 - 400 million, he said. "This can hardly be sustained for much longer," he added. Wickremeratne also cautioned against political interference in the running of the island's privatised plantations, referring to government pressure on plantation firms to give a wage hike to estate workers last year. "The plantation companies lost the advantage of the productivity-related component of the wage settlement due to political intervention," he said. "The industry is facing a major crisis because of the continued slump in rubber prices since 1997," he said. Rubber output fell by more than 20 percent to 87,000 tonnes in 2000 from 150,000 tonnes in 1980. "The estate sector is probably in even greater crisis because its cost base is higher, estates are compelled to provide employment to plantation labour with productivity levels which are neither comparable to the smallholders in Sri Lanka nor anywhere else in the region," Wickremeratne said. DPL's manufacturing division "performed well" to contain the fall in group profits to 18 percent last year, he said. He described the growth in profits in manufacturing as "remarkable" given the sharp downturn in Western economies. Manufacturing turnover grew 15 percent to Rs. 1.8 billion while profits rose by 18 percent to Rs. 185 million. But DPL was forced to cut prices especially in the lower market segment to retain business in the face of stiff competition from regional competitors and new manufacturers from China in what was called "softer market conditions". However, this was partly offset by exports of high value gloves. Exports to the United States, one of DPL's biggest markets, fell sharply after the terrorist attacks of September 11 as recession began to bite. But increased sales in other markets helped compensate for this and DPL exported to 13 new countries and secured several new accounts in the year under review, Wickremeratne said. |
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