Year 2016, saw us achieving great heights and reaping the benefits of the changes that we initiated in the previous years. The achievement of the ‘triple trillion’ in total assets, deposits and loans was no ordinary feat but the result of meticulous strategies executed with precision.
Adapting to the External Environment
Today, technology and innovation are changing the face of banking globally. We responded to the rapidly changing global environment, making maximum use of technology in our product offering and meeting the changing customer expectations. Adopting a technology driven approach, we modernised our branches, creating a more customer-friendly environment and making our products and services more tech savvy. At the same time, we continued to develop our human resources to derive the maximum value from these changes.
In line with the market developments, we also focused on strengthening IT security and controls. With increased regulatory focus on capital adequacy, the management also took steps to align the Bank’s corporate strategy and risk management policies to the Internal Capital Adequacy Assessment Process (ICAAP), thus building up our resilience and a capital buffer to meet any catastrophic events that may occur.
Playing a Major Role in the Economy
Our operating model has been one of low margin – high volume, which is retail banking intensive. Our forte has been extending banking services to all sectors of people throughout the country and uplifting their livelihoods, not only through being their banker, but also partnering their lives. This business model has served us well and we intend to continue this.
As a state bank, the role of BoC is twofold; to operate as an economically viable commercial venture whilst contributing to the development objectives of the Government. The largest branch network gives us the best possible reach, serving a wider network of customers, taking banking to the grassroot levels and enabling financial inclusion. We not only receive the savings from the remote and rural sectors, but we also lend back to the same areas. During the year, we have concentrated on increasing the credit to deposit ratio in these areas focusing on development of SMEs, exports and encouraging new entrepreneurial talent in the youth and women. Thereby, we ensure that development is not concentrated around Colombo but spread across all areas of the country.
The year under review saw a significant decline in the Bank’s lending exposure to the Government and the state sector and a corresponding increase in private sector credit.
Continuing Our Product Dominance
Our comprehensive range of products cater to all segments of society and meet the banking needs of a vast array of enterprises from the blue chip companies, manufacturers and exporters to the small scale businesses and individuals.
The ‘Swa Shakthi’ loan scheme, especially designed to lend a helping hand to the small scale entrepreneurs, carrying a concessionary rate of interest, has seen a vast number of small businesses flourish.
BoC continued to be the market leader for remittances, with 43.5% of Sri Lanka’s remittances being channelled through us. We also improved our offering of remittances based products to these customers, adding value to their hard earned savings.
With the continued rise in value of residential properties, our drive to make BoC the most preferred Bank for obtaining home loans continued. Measures were taken to streamline the documentation process and the
loan approval process for greater customer convenience.
While expanding the largest network of ATMs, we also introduced Cash Deposit Machines at many locations to make a wider array of banking services available to customers 24x365. Our products and channels such as ‘SmartGen’ and ‘SmartZone’, targeted mainly at the younger generation, have gained popularity. The BoC Mobile App will be introduced in the near future enhancing customer convenience.
Towards a Leaner Structure to be Nimble
The management concentrated on increasing the cost efficiencies of operations. At 43%, our cost to income ratio has improved over the past years and is on par with the industry average. Many initiatives have been implemented during the year to bring down the costs in a structured manner.
The organisational structure has been revised to make it more open and empowering the employees to expedite the decision-making process and be competitive with private banks.
Setting Exemplary Governance Standards
Whilst growing our business, we have not lost track of the criticality of systems, processes, internal controls and risk management. The revised corporate plan explicitly addresses how we plan to strengthen our governance, control environment and compliance culture. Significant investments are being made in technological solutions to enable compliance with new regulations such as Basel III capital requirements, liquidity buffers and leverage ratio. Conformity with anti-money laundering legislation and terrorism financing regulations has also been strengthened through a risk based approach.
Towards Sustainable Banking
In our quest to pursue higher goals, we did not forget our responsibility towards ensuring sustainability. The ‘green banking’ concept encompasses the environmentally-friendly steps that we have taken, including encouraging customers to subscribe to e-Statements, supporting solar power lighting and organic farming to name a few.
Our Dynamic Workforce
64% of our workforce is below the age of 35 years which gives our organisation youthful dynamism. Their receptiveness towards embracing new technology facilitates our objective of offering innovative products for the new generation. They will be provided with training and development opportunities in line with the Human Resource Plan, including the succession plan and grooming of next generation leaders. As such, talent management is a critical component in our corporate plan.
Winning the ‘Best Employer’ Award in 2016 was a significant milestone and ample recognition for our HRM practices and efforts in proving a quality work-life balance for all staff, our most valuable resource.
Our Vision for 2017 and Beyond
Through our corporate plan for 2017 through 2019, we have identified the new business trends and devised our action plan to meet the challenges. Investing in technology and exceptional customer service will continue to be key priorities.
Our next major milestone is to achieve total assets of Rupees two trillion by 2019. We are confident of achieving this challenging target given the capabilities that we posses as a team and our unwavering commitment to soaring high. We also aim to maintain the leadership status in channelling inward remittances from overseas. Increasing our overseas presence and off-shore banking activities are also envisaged.
A Word of Thanks
My sincere appreciation goes out to the Chairman and the Board of Directors for their business acumen and invaluable guidance; to our staff for their dedication and perseverance, our esteemed customers for the confidence and trust they have placed in our Bank and the opportunity to serve them. We also deeply value the insights and direction provided by the banking sector regulators and all other stakeholders for their support and encouragement. My appreciation goes out to the Minister and the staff of the Ministry of Public Enterprise Development as well as the Minister and the staff of the Ministry of Finance, for their direction and support. Our gratitude to the Auditor General and his staff for their professionalism in timely execution of the audit. Last but not least, I wish to place on record the co-operation extended by the Trade Unions of the Bank throughout the year.
Given the dynamism in our team and their dedicated efforts, I am confident that BoC will continue to forge ahead as a force to be reckoned within the financial sector.
D M Gunasekara
General Manager
29 March 2017
Colombo