The year 2020 proved to be one of unprecedented economic change across the globe and in Sri Lanka, presenting significant challenges in all industries, particularly impacting the banking and financial services sector, said SDB bank in a media statement on its 2020 performance. “Alongside the Government and Central Bank-led economic revival measures mandated industry-wide on [...]

Business Times

SDB bank says records strong performance in COVID-hit 2020

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The year 2020 proved to be one of unprecedented economic change across the globe and in Sri Lanka, presenting significant challenges in all industries, particularly impacting the banking and financial services sector, said SDB bank in a media statement on its 2020 performance.

“Alongside the Government and Central Bank-led economic revival measures mandated industry-wide on account of COVID-19, including credit moratoriums and policy rate reductions, SDB bank maintained a strong focus on digital transformation which helped them overcome the pandemic’s negative impact rapidly. The bank placed equal emphasis on non-performing advances management and streamlining processes to enhance efficiencies,” it said.

Identified by the bank as essential parameters in resuscitating the nationally critical SME sector, as it single-handedly accounts for 52 per cent of total GDP, the bank transformed rapidly and went on to record a profit of Rs. 835 million in 2020, a massive 229 per cent increase in annual profit from 2019.

This strong performance was impacted heavily by numerous SDB bank-led initiatives in SME and co-operative development, including the partnership with the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) to provide free, one-on-one expert mentorship and technical knowledge to SMEs through a team of fully-qualified accountants, with SDB performing the key role of funding partner. The bank’s partnerships with MILCO in supporting dairy farmers and DIMO to extend support to agri-farmers through leasing promotions to secure agricultural equipment and machinery, represent programmes of equal importance as part of its SME focus.

Active financial support of this nature offered to SMEs in far-flung areas, in addition to strengthening their entrepreneurial efforts plus helping them overcome the economic challenges experienced in 2020, assisted the bank in maintaining a Gross Non-Performing Advances Ratio of 4.54 per cent in 2020, considerably lower than the industry figures for the period. This positive impact on financial performance has helped them maintain their SME-focused initiatives, thereby boosting the national economy considerably.

The bank similarly realized Net Interest Income of Rs. 6.1 billion, displaying an 8 per cent growth from the previous year despite the prevailing lower lending rates and the associated reduction in customer deposits rates. Of equal significance, the bank displayed a Net Interest Margin of 5.89 per cent even with slowing down of borrowing and the extended loan moratoriums granted.

Parallelly, the bank’s revamped digital efforts were aided by its successful completion of the first-ever digital rights issue by a Colombo Stock Exchange-listed entity — officially recognised as the first digital share subscription to be oversubscribed — allowing them to raise a substantial volume of funds and provide low-cost funding to key customer segments.

The bank’s strong relationships with international finance partners such as the International Finance Corporation, Dutch development bank FMO, and Japan-based finance services institution SBI Holdings, have afforded assistance in the bank’s governing framework through the prevailing economic climate. Together with the bank’s independent growth initiatives, these partnerships contributed to the achieving of total assets of Rs. 129 billion and Total Equity of Rs. 9.9 billion in 2020, amounting to a 20 per cent balance sheet growth from 2019.

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