Seylan Bank records Rs. 543.301 Mn. Profit after Tax in 2009

* 250% increase over 2008

Seylan Bank recorded a Rs. 543.301Mn Profit after Tax for 2009 representing an increase of 250% over the previous financial year. During the same period, the Bank’s cost-to-income ratio showed a marked improvement decreasing from 75.79% to 67.82%, while the total capital adequacy ratio – under severe pressure during the end 2008 crisis – rose from 8.06% to 11.74%.

The Bank’s Profit before Tax increased from Rs. 155.241Mn in 2008 to Rs. 892.572Mn in 2009 thus recording an unprecedented increase of 475%. This is as a result of operating expenses and provisions for loan losses decreasing by 21.05% (Rs. 1.729Bn) and 11.51% (Rs. 284Mn) respectively as against a drop in net operating income of 11.77% (Rs. 1.275Bn).

Seylan Bank now meets or exceeds the liquidity targets stipulated by the CBSL. These positive indicators have brought a corresponding rise in confidence both in the shareholder and depositors. The share price which returned to pre-crisis levels following the appointment of the new Board of Directors headed by veteran banker Eastman Narangoda, has continued to gain strength as the management implements, at all levels, the wide ranging initiatives set out in the Bank’s new strategic plan.

For more than 20 years the Seylan Bank has proudly called itself “The Bank with a Heart” and has worked hard to live up to this credo. The recent global economic downturn, precipitated by a sharp decline in financial markets in late 2008, had a particularly sharp impact on Sri Lanka. Further compounding the negative impact on the Seylan Bank was the collapse of the Golden Key Credit Card Co Ltd, which resulted in many of the Ceylinco Group Companies facing a liquidity crisis resulting in those companies defaulting on loans from the Seylan Bank.

Chairman of the Seylan Bank Eastman Narangoda said, “As we tackled the unprecedented challenges during the past year, the dedicated men and women of the bank never lost heart. Buoyed by the continued support of our customers, we redefined our vision and improved management practices from the top down. We provided the best possible service while practicing innovative, responsible management for the benefit of all stakeholders”.

“By far the year’s most significant achievement was restoring the stability and liquidity of the Bank. Taking advantage of the buoyant stock market we made a public issue of 54,290,000 ordinary shares at Rs 35/- per share in September last year. The desirability of the issue was bolstered by the aggregate 25% stake taken in Seylan Bank by the two state institutions – Bank of Ceylon and the Sri Lanka Insurance Corporation. The success of the issue clearly demonstrated the recovery of investor confidence in the Bank, being fully subscribed before the closing date”, Narangoda added.

Market capitalisation of the Seylan Bank grew 288% in the course of the year from Rs. 1.2Bn at the end of 2008 to a notable Rs 4.8 Bn at the end of 2009. The Bank now enjoys adequate capital to support the current business volumes as well as its growth plans in the months that lie ahead.

Photo caption: Chairman of the Seylan Bank Eastman Narangoda formally presents the first copy of the book - “The Case Study: A closer look at the extraordinary efforts that restored financial stability to the Seylan Bank” – to the Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal.