Strategic Direction and the Challenges of the Bank
Although the immediate outlook for the local operating environment is expected to be turbulent, the Commercial Bank Group intends to continue its growth momentum through the initiatives and strategic priorities set out in the Corporate Plan. The Bank is well positioned to mitigate the risks posed by the potential volatility of macroeconomic conditions in the country.

The Corporate Plan and the Budget is a mid term plan, being prepared annually covering a period of five years on a rolling basis. This year the Bank prepared the plan for the period covering the years 2008-2012. The strategic direction of the Bank is critically reviewed by the Management as well as by the Board at the time of preparing and approving the Corporate Plan and the Budget. In keeping with the Vision and Mission statement of the Bank, the strategic direction has been clearly identified and laid down in the Corporate Plan. It detailed out SWOT analysis of the Corporate Banking, Personal Banking, Treasury, Information Technology, Human Resources Management and Bangladesh Operations of the Bank. Besides, it spells out Goals and Objectives of these main segments along with detailed action plans with specific time frames to achieve them. The Corporate Plan and the Budget incorporates highly ambitious targets for the plan period. Undoubtedly, the Corporate Plan and the Budget has immensely contributed in guiding the organisation to its present level. Further, it has contributed to building up the target driven culture across the organisation and leading to record superlative performance and to maintain the pre eminent position in the banking industry.

Priorities identified in the Corporate Plan to be implemented in the medium term:

• Enhancing international presence as envisaged in the Vision of the Bank, thereby reducing the overdependence on the Sri Lankan economy further.

• Consolidation of the Bangladesh Operations by opening more branches and expanding the ATM network.

• Maintain the most preferred bank status for Trade Finance

• Increase the present credit card base.

• Improve exchange turnover and market share.

• Improve the quality of advances and overall asset portfolio.

• Expanding export factoring and commencing import factoring.

• Expanding the remittance business further in the Middle Eastern countries and some parts of Europe.

• Setting up of remittance business in several selected European countries, in Canada and in Australia, under the brand name ‘Commex’.

• Improving the risk management infrastructure.

• Improving key performance ratios.

• Expanding credit and support services to the SME sector.

• Increasing the contribution from fee based operations.

• Offering the most competitive terms and the best service standards.

• Simplifying operations to ensure speedy delivery.

• Leveraging the relationships with the correspondent banks.

• Growth through business acquisitions.

• Consolidate ‘One Bank - One Family’ concept.

The Bank functions in a turbulent environment with many adverse macroeconomic conditions. The Bank is resilient under these conditions and also well positioned to confront the challenges created by the external environment in order to achieve the strategic priorities laid down in the Corporate Plan and the Budget. Some of the challenges which has been identified for the ensuing year in this plan are:

• Increasing competition and resultant pressure on interest margins

• Volatility in rates of interest

• Containment of cost under an inflationary market environment

• Making the Bank Basle II compliant

• Provision of necessary infrastructure to support the expanding business activities

• Adherence to the new accounting standards to be implemented

• Sustain the IT supremacy

• Setting up of a fully pledged risk management unit

• Retention of profits to support the growth in business, being low due to the deemed dividend tax and provision required on performing and overdue loans

• Lower exchange profit due to the stabilisation of the exchange rate

• Possible increase in non-performing advances due to high interest rate environment

• Making the maximum use of the distribution network

• Tax planning under ever changing regulations

The Bank has set its eyes on getting itself elevated from its current position of being the largest private bank in the country and will be working hard to get the credit rating upgraded.