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Management Discussion and Analysis

Investor Relations

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Dear Stakeholder,

We extend our sincere gratitude to our loyal investors for choosing to invest in the Bank’s capital, both equity and debt, and wish to assure that we are determined to optimise returns for your investments through prudent and sustained growth. As one of the four Domestic Systemically Important Banks and the largest private sector Bank in the country, we are cognisant of our responsibility to present you with timely, relevant, and balanced view of the Bank’s fundamentals in terms of operational results, financial position, and cash flows enabling you to make informed decisions. In this regard, we trust that we were able to fulfil the expectations of our valued investors despite the unprecedented operating environment that prevailed during most part of 2021, and assure that we will continue to discharge our responsibilities in future. We trust that the information presented in this Integrated Annual Report helps investors to comprehend the Bank’s underlying strengths and bolster confidence and loyalty, bringing together a loyal group of investors with a long-term value creation for their investment.

As depicted in the section on “Connecting with stakeholders” on pages 20 to 22, the Bank continuously strives to encourage an effective two-way communication with our valued investors, promoting mutual trust and confidence, whilst ensuring the rights conferred on the investors by various statutes to address the material matters. We firmly believe that these initiatives have enabled the Bank to actively engage with our investors in a consistent, comprehensive and accurate manner, often going beyond the minimum regulations and in the underlying spirit, promoting its reputation.

The Bank follows a multi-faceted approach to engage with its stakeholders, including the Annual Report, which is the Bank’s main investor communications tool, and the Annual General Meeting, which is an opportunity available for the investor community to engage with the Bank. We believe that these engagements will certainly help our investors to gain an insight into the Bank’s performance, strategic direction, business model of the Bank, governance mechanism and the risk management strategies adopted.

Continuing with our efforts as in the past, this year too, the Bank took several initiatives to produce an integrated Annual Report in a concise manner. This can be seen throughout each section of this Report, with due consideration being given to the valuable feedback given by our shareholders in response to the surveys conducted and feedback provided in the past. Continuing this journey, this year too, we have made arrangements to enclose an improved stakeholder feedback form in this Annual Report in order to seek your valuable suggestions and opinion for further improvements. Your comments and opinions are of great value to us and we take a very serious note and actions to produce an improved Annual Report, year on year, taking on board many and incorporating into our strategies for long-term value creation to all our stakeholders.

The investor relations section of our website – https://www.combank.lk/financials - is another popular channel available for stakeholders, and the Bank continues to ensure that its pages are updated in a timely manner along with the rest of the site.

Figure – 25 Modes of engagement with Investors

We are confident that the efforts taken by the Bank to have effective communication and active engagement with important stakeholder groups have made the Bank’s shares a creditable investment proposition, despite a very challenging economic and operating environment that prevailed throughout the year due to the continued impact of the COVID-19 pandemic.

Graph – 14: Performance of the Colombo Stock Exchange and the Banking Sector in 2021

Performance of the Colombo Stock Exchange (CSE) in 2021

Year 2021 was the highest record-breaking year for the CSE, with record capital raised by companies and a record number of investor participants. Performance indicators such as market capitalisation, and total and daily average turnover recorded the highest-ever values in 2021. The benchmark All Share Price Index (ASPI) logged a market return of 80.5% and reached 12,226 points by the end of 2021 compared to 6,774 points as at end of 2020, registering the highest return recorded since 2010. Compared with the market indices of the Asia-Pacific region, the ASPI consistently maintained its status as the highest yielding index. The S&P SL20 index followed the ASPI and recorded a return of over 60.5% in 2021, increasing from 2,638 as at end of 2020 to 4,232 by the end of 2021, which is the highest-ever recorded. Market capitalization also reached a 10-year high of 36.7% of GDP or Rs. 5.5 Tn. from 19.7% in 2020 or Rs. 2.96 Tn. and 34.5% in 2010 or Rs. 2.2 Tn.

Performance of the Banking Sector and Commercial Bank shares in 2021

Despite the exemplary performance in both the ASPI and the S&P SL20 indices as shown in the above graph during 2021, the banking sector shares did not follow the same trend. This was mainly due to the perceived uncertainties specific to the sector, which had a direct impact on the performance of banks. They included many relief programs offered to both affected individuals and corporate customers including the extension of moratoriums by the regulator, restrictions imposed on the payment of cash dividends and the Government tax proposals such as the one off income tax payments and the introduction of new taxes. These factors contributed to the decline in the share price of the Bank’s ordinary voting shares, which traded at a discount to its book value at 0.57 times as at end of 2021 (0.60 times as at end of 2020). Nevertheless, it continued to remain the highest among its peers in the banking sector. The Bank index gained marginally by 3.72% during 2021 and stood at 609.15 compared to 587.30 as at end 2020.

The Bank’s public holding (free float) as at December 31, 2021 was 99.77% in voting shares (99.80% in 2020) and 99.86% in non-voting shares (99.84% in 2020), while float-adjusted market capitalisation (compliant under option-1 of the Rules on minimum public holding requirement of the CSE) remained almost at same levels and stood at Rs. 93.981 Bn. (Rs. 93.483 Bn. in 2020). As shown in Table 37 on page 94, with its shares actively traded in the CSE, investors are provided with a convenient “enter and exit” mechanism. It is pertinent to mention that the number of shareholders holding both voting and non-voting shares of the Bank during the year remained more or less at the same levels, demonstrating the confidence placed by investors in the Bank’s shares despite the challenging conditions experienced during the year 2021.

Compliance report on the contents of the Annual Report in terms of the Listing Rules of the CSE

We are happy to inform you that the Bank has fully complied with all applicable requirements of Section 7.6 of the Listing Rules of the CSE on the contents of the Annual Report and Accounts of a listed entity.

Table 24 given below provides a complete list of disclosure requirements and references to the relevant sections of this Annual Report where the Bank’s compliance with the required disclosures are made together with the relevant page numbers.

The pages that follow contain information on the performance of the Bank’s listed securities.

Table – 24 Compliance with requirements of the Section 7.6 of the Listing Rules of the CSE

Rule No. Disclosure requirement Section/reference Page/s
7.6 (i) Names of persons who during the financial year were Directors of the Bank Governance and Risk Management 122
7.6 (ii) Principal activities of the Bank and its subsidiaries during the year and any changes therein Note 1.3to the Financial Statements Group Structure 199 and 200 84 and 85
7.6 (iii) The names and the number of shares held by the 20 largest holders of voting and non-voting shares and the percentage of such shares held Item 4.2 of the “Investor Relations” 93 and 94
7.6 (iv) The float adjusted market capitalisation, public holding percentage (%), number of public shareholders and under which option the Bank complies with the minimum public holding requirement, in respect of voting ordinary shares. The public holding percentage (%) in respect of non-voting ordinary Shares. Item 4.3 of the “Investor Relations” 94
7.6 (v) A statement of each Directors’ holding and Chief Executive Officer’s holding in shares of the Bank at the beginning and end of the financial year Item 4.4 of the “Investor Relations” 94
7.6 (vi) Information pertaining to material foreseeable risk factors of the Bank Item 5 of the “Investor Relations” 95
Rule No. Disclosure requirement Section/reference Page/s
7.6 (vii) Details of material issues pertaining to employees and industrial relations of the Bank Item 6 of the “Investor Relations” 95
7.6 (viii) Extents, locations, valuations and the number of buildings of the Bank’s land holdings and investment properties Note 39.5 (a) and (b) to the Financial Statements 261 to 267
7.6 (ix) Number of shares representing the Bank’s stated capital Note 52 to the Financial Statements Item 7 of the “Investor Relations” 287 and 288 96 and 97
7.6 (x) A distribution schedule of the number of holders in each class of equity securities, and the percentage of their total holdings as at the end of the year Item 4.5 of the “Investor Relations” 95
7.6 (xi) Ratios and market price information: Equity - Dividend per share, dividend payout ratio, net asset value per share, market value per share - highest and lowest values recorded during the financial year and the market value as at the end of financial year - Highest Price, Lowest price, Last traded price Debt - Interest rate of comparable Government Securities, debt/equity ratio, interest cover and quick asset ratio, market prices and yield during the year Any changes in credit rating (for the Bank or any other instrument issued by the Bank) Items 2, 3 and 11 of the “Investor Relations” Financial Highlights Items 10 and 11 of the “Investor Relations” Item 12 of the “Investor Relations” 90 to 93 and 99 10 98 and 99 99
7.6 (xii) Significant changes in the Bank’s or its subsidiaries’ fixed assets and the market value of land, if the value differs substantially from the book value Note 39.5 (b) to the Financial Statements 263 to 267
7.6 (xiii) Details of funds raised through an Initial Public Offering and/or a further issue of Securities during the year Note 52 and 52.1 to the Financial Statements The Bank did not raise funds through a share issue during the year. Note 51 to the Financial Statements for the details of debentures issued during the year. Item 10 of the "Investor Relations" 287 and 288 286 and 287 98
  • the manner in which the funds of such issue/s have been utilized in conformity with the format provided by the Exchange from time to time;
  • if any shares or debentures have been issued, the number, class and consideration received and the reason for the issue; and,
  • any material change in the use of funds raised through an issue of Securities.
In the event the funds raised through the Initial Public Offering and/or the further issue of Securities (as applicable) have been fully utilized by the Bank as disclosed in the Prospectus and/or Circular to shareholders between two financial periods, the entity shall disclose such fact in the immediate succeeding Annual report or the interim financial statement, which ever is published first.

Rule No. Disclosure requirement Section/reference Page/s
7.6 (xiv) a. Information in respect of Employee Share Option Schemes - The number of options granted to each category of employees during the financial year. - Total number of options vested but not exercised by each category of employees during the financial year. - Total number of options exercised by each category of employees and the total number of shares arising therefrom during the financial year. - Options cancelled during the financial year and the reasons for such cancellation. - The exercise price. - A declaration by the directors of the Bank confirming that the Bank or any of its subsidiaries has not, directly or indirectly, provided funds for the ESOS. Note 53.1 to the Financial Statements 288
b. Information in respect of Employee Share Purchase Schemes (ESPS) - The total number of shares issued under the ESPS during the financial year - The number of shares issued to each category of employees during the financial year - The price at which the shares were issued to the employees - A declaration by the Directors of the Bank confirming that the Bank or any of its subsidiaries has not, directly or indirectly, provided funds for the ESPS Not applicable as the Bank does not have Employee Share Purchase Schemes
7.6 (xv) Disclosures pertaining to Corporate Governance practices in terms of Rules 7.10.3, 7.10.5 (c) and 7.10.6 (c) of Section 7 of the Rules. Not applicable since the Bank received an exemption in terms of Section 7.10 (c) of the Listing Rules
7.6 (xvi) Related party transactions exceeding 10% of the equity or 5% of the total assets of the Bank as per Audited Financial Statements, whichever is lower The Bank did not have any related party transactions exceeding this threshold during the year 2021 and as at end 2021 ( Note 63.6 to the Financial Statements) 306
Details of investments in a related party and/or amounts due from a related party to be set out separately The details shall include, as a minimum: i. The date of the transaction; ii. The name of the related party; iii. The relationship between the Bank and the related party; iv. The amount of the transaction and terms of the transaction; v. The rationale for entering into the transaction. Item 20.3 of the Statement of Compliance 148

1. Listed Securities of the Bank

The Bank’s ordinary shares (both voting and non-voting) are listed on the Main Board of the CSE under the ticker symbol “COMB”. All debentures issued are also listed on the CSE. (Refer Table 25 for a summary of listed securities of the Bank).

The Business section of most daily newspapers, including the Daily News, Daily FT, The Island and Daily Mirror carry a summary of trading activity and the daily prices of shares and debentures traded (if any) using the abbreviation of Commercial Bank or COMB.

Summary of listed securities of the Bank  Table – 25

Number in issue as at
Stock symbol
December 31, 2021 December 31, 2020
Equity
Ordinary shares – Voting 1,124,480,528 1,098,934,937 COMB-N0000
Ordinary shares – Non-voting 69,740,771 67,970,701 COMB-X0000
Debt
Fixed rate Debentures March 2016/21 Redeemed during the year 2021 44,303,400 COMB/BD/08/03/21-C2341-10.75%
Fixed rate Debentures October 2016/21 50,718,000 COMB/BD/27/10/21-C2360-12.00%
Fixed rate Debentures March 2016/26 17,490,900 17,490,900 COMB/BD/08/03/26-C2342-11.25%
Fixed rate Debentures October 2016/26 19,282,000 19,282,000 COMB/BD/27/10/26-C2359-12.25%
Fixed rate Debentures July 2018/23 83,938,400 83,938,400 COMB/BD/22/07/23-C2404-12.00%
Fixed rate Debentures July 2018/28 16,061,600 16,061,600 COMB/BD/22/07/28-C2405-12.50%
Fixed rate Debentures September 2021/26 42,374,700 Issued during the year 2021 COMB/BD/20/09/26-C2491-09.00%
Fixed rate Debentures September 2021/28 43,580,000 COMB/BD/20/09/28-C2492-09.50%

Equity Securities

Features of Ordinary Shares   Table 26

Security Type Quoted Ordinary Shares
Listed exchange Colombo Stock Exchange (CSE) – Main Board
Featured stock indices All Share Price Index (ASPI)
Standard & Poor's Sri Lanka 20 (S&P SL20)
GICS Industry Group Banks
CSE stock symbol Voting - COMB.N0000
Non Voting - COMB.X0000
International Securities Identification Number (ISIN) Voting - LK0053N00005
Non Voting - LK0053X00004

2. Performance of COMB shares and Returns to Shareholders

The investor interest in the shares of the Bank continued during the year compared to pre-pandemic levels, although there was a decline compared to 2020 due to the unprecedented market performance consequent to the market being closed for almost two months and limiting of the share trading hours. This is reflected in the increased number of transactions (Ordinary shares - Voting 174% and Ordinary shares – Non-Voting 245%) compared to 2019 (Refer Table 31 on page 92).

The market price of an ordinary voting share of the Bank decreased by 1.98% (a drop of 14.84% in 2020) from Rs. 80.90 at the end of 2020 to Rs. 79.30 at the end of 2021 (Table 29 on page 91). The Bank continued with its policy of issuing scrip dividends and Employee Share Option Plans. Market capitalisation in terms of Rupees for both voting and non-voting shares remained almost at the same levels (despite there being a reduction in the market capitalisation in terms of US dollars) and stood at Rs. 94.2 Bn. (USD 470.963 Mn.) in 2021 compared to Rs. 93.7 Bn. (USD 500.902 Mn.) in 2020, and accounted for 1.72% of the total market capitalisation as at end of 2021 (3.16% in 2020). The Bank’s shares ranked ninth among all listed entities and first among the listed corporates in the Banking sector. During most of 2021, the movement of the non-voting share price followed the trend of the voting shares.

Graph – 15: Performance of the ordinary shares-voting – 2021

2.1 Movement of COMB Voting Share price over the year  Table 27

Month Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Highest Price (Rs.) 105.00 100.00 92.50 87.30 87.30 92.30 89.00 89.60 86.20 91.20 90.00 82.90
Lowest Price (Rs.) 81.00 80.00 83.00 79.00 79.00 87.00 83.00 82.60 82.00 84.50 79.90 76.90
Price at the month-end (Rs.) 99.70 88.80 85.50 80.70 87.00 88.00 85.30 87.00 84.50 88.90 80.10 79.30

2.2 Share price movement of last five years Table –28

2021 Rs. 2020 Rs. 2019 Rs. 2018 Rs. 2017 Rs.
Ordinary shares – Voting
Highest price during the year 105.00 96.00 115.90 142.50 150.00
Lowest price during the year 76.90 50.00 88.60 107.50 128.50
Last traded price 79.30 80.90 95.00 115.00 135.80
Ordinary shares – Non-voting
Highest price during the year 95.90 87.20 99.40 110.00 118.50
Lowest price during the year 69.60 48.00 74.00 88.00 102.30
Last traded price 72.00 70.10 83.00 95.00 105.00

Graph – 16: Share price trend – Ordinary Shares – Voting

Graph – 17: Share price trend – Ordinary Shares – Non-Voting

2.3 Sustainable value for investors  Table – 29

Ordinary shares – Voting Ordinary shares – Non-voting
Trade date 2021 2020 Trade date 2021 2020
Rs. Rs. Rs. Rs.
Highest price 29.01.2021 105.00 19.01.2021 95.90
02.01.2020 96.00 02.01.2020 87.20
Lowest price 23.12.2021 76.90 22.12.2021 69.60
14.05.2020 50.00 15.05.2020 48.00
Year-end price 79.30 80.90 72.00 70.10

2.4 Information on shareholders’ funds and Bank’s market capitalisation  Table–30

As at December 31, Shareholders’ funds Commercial Bank’s market capitalisation (*) Total market capitalisation of the CSE Commercial Bank’s market capitalisation as a % of CSE market capitalisation Commercial Bank’s market capitalisation ranking Commercial Bank’s market capitalisation (*)
Rs. Bn. Rs. Bn. Rs. Bn. % Rank USD Mn.
2021 165 94 5,490 1.72 9 470.963
2020 157 94 2,961 3.16 5 500.902
2019 133 97 2,851 3.40 4 532.699
2018 118 115 2,839 4.05 3 628.415
2017 107 133 2,899 4.60 4 867.670
(*) Market capitalisation includes both voting and non-voting shares.

2.5 Number of share transactions (No.)  Table – 31

2021 2020 2019 2018 2017
Ordinary shares – Voting 58,754 85,914 21,481 13,364 11,811
Ordinary shares – Non-voting 18,827 21,407 5,452 4,553 4,432

2.6 Number of shares traded (No. ‘000) Table – 32

2021 2020 2019 2018 2017
Ordinary shares – Voting 187,853 385,017 89,289 95,286 144,205
Ordinary shares – Non-voting 15,712 26,614 5,893 10,637 6,717

3. Dividends

We wish to reiterate that the Bank is fully aware and understands that a declaration of a dividend is fundamental to maintaining a balance between the shareholders’ expectations and the business needs of the Bank. Although the Bank has been paying interim cash dividends up to 2019, the Bank did not pay any interim cash dividends during the past two years. This was in compliance with the requirements of the Banking Act Direction No. 03 of 2021, dated May 13, 2020, Direction No. 01 of 2021 dated January 19, 2021 and Direction No. 11 of 2021 dated July 13, 2021, issued by the CBSL on “Restrictions on Discretionary Payments of Licenced Banks”, wherein licenced banks were instructed to refrain from declaring cash dividends for financial years ended December 31, 2020 and 2021 in view of the possible adverse impact on liquidity and other key performance indicators of banks. However, as per the Banking Act Direction No. 01 of 2021, dated January 19, 2021 and Direction No. 11 of 2021 dated July 13, 2021, issued by the CBSL on the same subject, licenced banks incorporated or established in Sri Lanka were instructed to defer payment of cash dividends until the financial statements for the year ended December 31, 2020 and 2021 are finalised and audited by the external auditors. Accordingly, the Board of Directors of the Bank has now recommended a final dividend of Rs. 7.50 per ordinary share for both ordinary voting and non-voting shares of the Bank. This will be paid in the form of a cash dividend of Rs. 4.50 per share and Rs. 3.00 per share by the issue and allotment of new shares for both voting and non-voting shareholders of the Bank for the year ended December 31, 2021. This proposed first and final dividend for the year 2021 will be submitted for the approval of the shareholders at the 53rd AGM, to be held on March 30, 2022.

(A dividend of Rs. 6.50 per share was declared and paid by the Bank for the year ended December 31, 2020. It consisted of a cash dividend of Rs. 4.50 per share and balance entitlement of Rs. 2.00 per share satisfied in the form of an issue and allotment of new shares).

3.1 Dividend information  Table – 33

Dividends 2021 2020 2019 2018 2017

Cash – Rs. Per share

First interim paid 1.50 1.50 1.50
Second interim paid 3.00 3.00 3.00
Final proposed 4.50 4.50

Total

4.50 4.50 4.50 4.50 4.50

Scrip – Rs. Per share

Final proposed/allotted 3.00 2.00 2.00 2.00 2.00

Total

7.50 6.50 6.50 6.50 6.50

Gross Dividend paid (Rs. Bn.)

Cash 5.37 5.25 4.62 4.55 4.48
Scrip 3.58 2.34 2.06 2.02 2.00

Total

8.95 7.59 6.68 6.57 6.48

Dividend payout ratio (%)

Cash 22.77 32.07 27.16 25.92 26.42
Cash and Shares 37.94 46.33 39.23 37.44 38.17

Graph – 21: Dividend per share

Graph – 22: Distribution to shareholders (Dividend paid) and Dividend pay-out ratio

4. Shareholders

The Bank had 16,609 ordinary voting shareholders and 5,954 ordinary non-voting shareholders as at December 31, 2021, compared to 16,820 and 5,786 voting and non-voting shareholders as at December 31, 2020 (Table 34). With three new investors joining ranks, the percentage of ordinary voting shares held by the 20 largest shareholders as at end 2021 increased to 74.22% from 71.96% as at end 2020. However, a marginal drop was witnessed in the non-voting ordinary shares held by the 20 largest shareholders from 38.22% as at end 2020 to 37.69% as at end 2021.

4.1 Number of ordinary shareholders Table – 34

As at December 31, 2021 2020
Ordinary shareholders – Voting 16,609 16,820
Ordinary shareholders – Non-voting 5,954 5,786

Total

22,563 22,606

4.2 The names, number of shares and percentages of shares held by the twenty largest shareholders (As per rule No. 7.6 (iii) of the Listing Rules of the CSE) Voting shareholders  Table – 35

As at December 31, 2021 2020*
Ordinary shares – Voting Number of shares % Number of shares %
1. DFCC Bank PLC A/C 1 136,272,121 12.12 132,119,619 12.02
2. Mr Y S H I Silva 111,100,779 9.88 97,441,255 8.87
3. Employees Provident Fund 96,883,940 8.62 94,723,763 8.62
4. CB NY S/A International Finance Corporation 79,992,025 7.11 78,208,480 7.12
5. Sri Lanka Insurance Corporation Ltd. - Life Fund 56,747,851 5.05 61,403,691 5.59
6. Melstacorp PLC 46,521,219 4.14 45,483,957 4.14
7. CB NY S/A IFC Emerging Asia Fund LP 41,238,490 3.67 40,319,015 3.67
8. CB NY S/A IFC Financial Institutions Growth Fund LP 41,238,490 3.67 40,319,015 3.67
9. Citibank Newyork S/A Norges Bank Account 2 40,824,369 3.63 45,759,984 4.16
10. Sri Lanka Insurance Corporation Ltd. - General Fund 39,793,725 3.54 38,906,463 3.54
11. Mr K D D Perera 35,623,143 3.17
12. Mr D P Pieris 26,696,174 2.37 21,003,054 1.91
13. Employees Trust Fund Board 19,586,019 1.74 19,159,319 1.74
14. Renuka Hotels PLC 11,118,680 0.99 9,893,069 0.90
15. Mr M J Fernando 10,108,137 0.90 9,882,761 0.90
16. Mrs L E M Yaseen 10,000,000 0.89 17,077,784 1.55
17. Renuka Consultants & Services Limited 8,935,921 0.79 8,631,578 0.79
18. Cargo Boat Development Company PLC 8,017,215 0.71 4,389,182 0.40
19. Hallsville Trading Group INC. 7,876,387 0.70 7,564,706 0.69
20. Mr S V Somasunderam 6,001,380 0.53
Sub total 834,576,065 74.22 772,286,695 70.28
Other shareholders 289,904,463 25.78 326,648,242 29.72

Total

1,124,480,528 100.00 1,098,934,937 100.00
* Comparative shareholdings as at December 31, 2020 of the twenty largest shareholders as at December 31, 2021.

Non-voting shareholders  Table – 36

As at December 31, 2021 2020*
Ordinary shares – Non-voting Number of shares % Number of shares %
1. Employees Trust Fund Board 5,425,375 7.78 5,287,676 7.78
2. Akbar Brothers (Pvt) Ltd. A/C No 1 3,345,296 4.80 3,117,457 4.59
3. GF Capital Global Limited 1,803,067 2.59 1,757,304 2.59
4. Mr A H Munasinghe 1,694,141 2.43 1,651,143 2.43
5. Mr M F Hashim 1,362,616 1.95 1,282,270 1.89
6. M J F Exports (Pvt) Ltd. 1,193,037 1.71 1,162,757 1.71
7. Janashakthi Insurance PLC - Shareholders 1,098,757 1.58
8. Mrs L V C Samarasinha 1,052,622 1.51 1,025,906 1.51
9. Saboor Chatoor (Pvt) Ltd. 997,913 1.43 947,600 1.39
10. Deutsche Bank AG As Trustee To Assetline Income Plus Growth Fund 899,345 1.29 1,770,354 2.60
11. Mr T W A Wickramasinghe, Mrs N Wickramasinghe (Joint) 859,923 1.23 780,000 1.15
12. Mr E Chatoor 825,963 1.18 805,000 1.18
13. Mr J G De Mel 780,974 1.12 590,000 0.87
14. Mr R Gautam 745,897 1.07 708,999 1.04
15. Mr J D Bandaranayake, Ms N Bandaranayake & Dr V Bandaranayake (Joint) 742,382 1.06 723,540 1.06
16. Mr J D Bandaranayake, Dr V Bandaranayake & Ms I Bandaranayake (Joint) 720,767 1.03 702,474 1.03
17. Mr A L Gooneratne 718,873 1.03 500,628 0.74
18. Mr K S M De Silva 706,366 1.01 626,249 0.92
19. Mr M J Fernando 685,247 0.98 801,511 1.18
20. Serendip Investments Limited 635,881 0.91 1,167,646 1.72
Sub total 26,294,442 37.69 25,408,514 37.38
Other shareholders 43,446,329 62.31 42,562,187 62.62

Total

69,740,771 100.00 67,970,701 100.00
* Comparative shareholdings as at December 31, 2020 of the twenty largest shareholders as at December 31, 2021.

4.3 Public Shareholding (As per rule No. 7.6 (iv) and 7.13.1 of the Listing Rules of the CSE)  Table – 37

2021 2020
Number % Number %
Number of Shareholders representing the public holding (Voting) 16,569 99.77 16,785 99.80
Number of Shareholders representing the public holding (Non-voting) 5,949 99.86 5,781 99.84
Float Adjusted Market Capitalization Rs. Bn. - (Compliant under Option 1) 94 93

4.4 Directors’ shareholding including the Chief Executive Officer’s shareholding (As per Rule No. 7.6 (v) of the Listing Rules of the CSE) Table – 38

Ordinary shares – Voting Ordinary shares – Non-voting
2021 2020 2021 2020
Justice K Sripavan - Chairman 14,319 14,000 Nil Nil
Prof A K W Jayawardane - Deputy Chairman 13,083 12,792 Nil Nil
Mr S Renganathan - Managing Director/Group Chief Executive Officer 432,336 362,010 12,781 12,457
Mr S C U Manatunge 73,038 71,410 Nil Nil
Mr K Dharmasiri Nil Nil Nil Nil
Mr L D Niyangoda Nil Nil Nil Nil
Ms N T M S Cooray 350,274 342,465 54,251 52,875
Mr T L B Hurulle Nil Nil Nil Nil
Ms J Lee Nil Nil Nil Nil
Mr R Senanayake Nil Nil Nil Nil
Mr Sharhan Muhseen * 2,503 2,448 Nil Nil
Mrs D L T S Wijewardena** Nil Nil Nil Nil
* Appointed as a Director w.e.f. February 15, 2021 ** Appointed as a Director w.e.f. March 31, 2021

4.5 Distribution schedule of number of holders and percentage of holding in each class of equity securities (As per rule No. 7.6 (x) of the Listing Rules of the CSE) Table – 39

As at December 31, 2021 As at December 31, 2020
Number of shareholders % Number of shares % Number of shareholders % Number of shares %
Ordinary shares – Voting
1 – 1,000 9,159 55.14 2,197,203 0.20 8,801 52.32 2,308,178 0.21
1,001 – 10,000 5,004 30.13 17,389,250 1.55 5,441 32.35 19,304,413 1.76
10,001 – 100,000 2,032 12.23 57,783,364 5.14 2,139 12.72 60,718,288 5.53
100,001 – 1,000,000 340 2.05 89,545,274 7.96 364 2.16 95,838,529 8.72
Over 1,000,000 74 0.45 957,565,437 85.15 75 0.45 920,765,529 83.78

Total

16,609 100.00 1,124,480,528 100.00 16,820 100.00 1,098,934,937 100.00
Ordinary shares – Non-voting
1 – 1,000 3,306 55.53 810,801 1.16 3,161 54.63 810,631 1.19
1,001 – 10,000 1,885 31.66 6,514,550 9.34 1,863 32.20 6,341,366 9.33
10,001 – 100,000 653 10.97 17,992,665 25.80 654 11.30 18,176,361 26.74
100,001 – 1,000,000 102 1.71 27,447,844 39.36 99 1.71 24,419,830 35.93
Over 1,000,000 8 0.13 16,974,911 24.34 9 0.16 18,222,513 26.81

Total

5,954 100.00 69,740,771 100.00 5,786 100.00 67,970,701 100.00

4.6 Composition of shareholders Table – 40/p>

As at December 31, 2021 As at December 31, 2020
No. of shareholders % No. of shares % No. of shareholders % No. of shares %
Ordinary shares – Voting
Resident 16,353 98.46 892,930,537 79.41 16,534 98.30 838,880,863 76.34
Non-resident 256 1.54 231,549,991 20.59 286 1.70 260,054,074 23.66

Total

16,609 100.00 1,124,480,528 100.00 16,820 100.00 1,098,934,937 100.00
Individuals 15,895 95.70 350,776,984 31.19 16,096 95.70 301,468,333 27.43
Institutions 714 4.30 773,703,544 68.81 724 4.30 797,466,604 72.57

Total

16,609 100.00 1,124,480,528 100.00 16,820 100.00 1,098,934,937 100.00
Ordinary shares – Non-voting
Resident 5,883 98.81 65,580,173 94.03 5,707 98.63 63,316,978 93.15
Non-resident 71 1.19 4,160,598 5.97 79 1.37 4,653,723 6.85

Total

5,954 100.00 69,740,771 100.00 5,786 100.00 67,970,701 100.00
Individuals 5,699 95.72 46,434,683 66.58 5,537 95.70 45,572,024 67.05
Institutions 255 4.28 23,306,088 33.42 249 4.30 22,398,677 32.95

Total

5,954 100.00 69,740,771 100.00 5,786 100.00 67,970,701 100.00

5. Material foreseeable risk factors (As per Rule No. 7.6 (vi) of the Listing Rules of the CSE)

Information pertaining to the material foreseeable risk factors, that require disclosures as per Rule No. 7.6 (vi) of the Listing Rules of the CSE is discussed in the Section on “Risk Governance and Management” on pages 159 to 178.

6. Material issues pertaining to employees and industrial relations pertaining to the Bank (As per Rule No. 7.6 (vii) of the Listing Rules of the CSE)

During the year under review, there were no material issues relating to employees and industrial relations pertaining to the Bank, which warrant disclosure.

7. Information on movement in number of shares represented by the stated capital (As per rule No.7.6 (ix) of the Listing Rules of the CSE)  Table – 41

Number of shares
Year Basis Number of shares issued/ (redeemed) Ordinary shares voting Ordinary shares non-voting Cumulative redeemable preference shares
1987 As at December 31, 1987 3,000,000
1988 Bonus issue Voting 2 for 3 2,000,000 5,000,000
1990 Bonus issue Voting 1 for 1 5,000,000 10,000,000
1993 Rights issue Voting 1 for 4 2,500,000 12,500,000
1996 Bonus issue Voting 3 for 5 7,500,000 20,000,000
Rights issue Voting 1 for 4 5,000,000 25,000,000
Share swap Non-voting 894,275 25,000,000 894,275
Bonus issue Non-voting 3 for 5 536,565 25,000,000 1,430,840
Rights issue Non-voting 1 for 4 357,710 25,000,000 1,788,550
1998 Bonus issue Voting 3 for 10 7,500,000 32,500,000 1,788,550
Bonus issue Non-voting 3 for 10 536,565 32,500,000 2,325,115
2001 Bonus issue Voting 1 for 5 6,500,000 39,000,000 2,325,115
Bonus issue Non-voting 1 for 5 465,023 39,000,000 2,790,138
Issue of cumulative redeemable preference shares 90,655,500 39,000,000 2,790,138 90,655,500
2003 Bonus issue Voting 1 for 3 13,000,000 52,000,000 2,790,138 90,655,500
Rights issue Voting 1 for 4 13,000,000 65,000,000 2,790,138 90,655,500
Bonus issue Non-voting 1 for 3 930,046 65,000,000 3,720,184 90,655,500
Rights issue Non voting 1 for 4 930,046 65,000,000 4,650,230 90,655,500
Issue of cumulative redeemable preference shares 100,000,000 65,000,000 4,650,230 190,655,500
2004 ESOP Voting 29,769 65,029,769 4,650,230 190,655,500
2005 ESOP Voting 1,361,591 66,391,360 4,650,230 190,655,500
Bonus issue Voting 1 for 1 66,389,162 132,780,522 4,650,230 190,655,500
Bonus issue Non-voting 1 for 1 4,650,230 132,780,522 9,300,460 190,655,500
2006 ESOP Voting 737,742 133,518,264 9,300,460 190,655,500
Redemption of cumulative redeemable preference shares (90,655,500) 133,518,264 9,300,460 100,000,000
2007 Rights issue Voting 3 for 10 40,288,996 173,807,260 9,300,460 100,000,000
Bonus issue Voting 1 for 3 58,204,268 232,011,528 9,300,460 100,000,000
ESOP Voting 919,649 232,931,177 9,300,460 100,000,000
Rights issue Non-voting 3 for 10 2,790,138 232,931,177 12,090,598 100,000,000
Bonus issue Non-voting 1 for 3 4,030,199 232,931,177 16,120,797 100,000,000
2008 Redemption of cumulative redeemable preference shares (100,000,000) 232,931,177 16,120,797
ESOP Voting 350,049 233,281,226 16,120,797
2009 ESOP Voting 540,045 233,821,271 16,120,797
2010 Share split Voting 1 for 2 117,402,608 351,223,879 16,120,797
Share split Non-voting 1 for 2 8,060,398 351,223,879 24,181,195
ESOP Voting 2,081,508 353,305,387 24,181,195
2008 Redemption of cumulative redeemable preference shares (100,000,000) 232,931,177 16,120,797
ESOP Voting 350,049 233,281,226 16,120,797
2009 ESOP Voting 540,045 233,821,271 16,120,797
Number of shares
Year Basis Number of shares issued/ (redeemed) Ordinary shares voting Ordinary shares non-voting Cumulative redeemable preference shares
2010 Share split Voting 1 for 2 117,402,608 351,223,879 16,120,797
Share split Non-voting 1 for 2 8,060,398 351,223,879 24,181,195
ESOP Voting 2,081,508 353,305,387 24,181,195
2011 Scrip issue for final dividend 2010 Voting Rs. 2.00 per share 2,277,195 355,582,582 24,181,195
Scrip issue for final dividend 2010 Non-voting 255,734 355,582,582 24,436,929
ESOP Voting 1,457,645 357,040,227 24,436,929
Rights issue Voting 1 for 14 25,502,433 382,542,660 24,436,929
Rights issue Non-voting 1 for 14 1,745,494 382,542,660 26,182,423
Share split Voting 1 for 1 382,542,660 765,085,320 26,182,423
Share split Non-voting 1 for 1 26,182,423 765,085,320 52,364,846
2012 Scrip issue for final dividend 2011 Voting Rs. 2.00 per share 13,587,144 778,672,464 52,364,846
Scrip issue for final dividend 2011 Non-voting 1,108,902 778,672,464 53,473,748
ESOP Voting 1,341,768 780,014,232 53,473,748
2013 Scrip issue for final dividend 2012 Voting Rs. 2.00 per share 13,076,189 793,090,421 53,473,748
Scrip issue for final dividend 2012 Non-voting 1,069,474 793,090,421 54,543,222
ESOP Voting 1,445,398 794,535,819 54,543,222
2014 Scrip issue for final dividend 2013 Voting Rs. 2.00 per share 12,504,344 807,040,163 54,543,222
Scrip issue for final dividend 2013 Non-voting 1,036,724 807,040,163 55,579,946
ESOP Voting 3,237,566 810,277,729 55,579,946
2015 Scrip issue for final dividend 2014 Voting Rs. 2.00 per share 8,118,773 818,396,502 55,579,946
Scrip issue for final dividend 2014 Non-voting 719,740 818,396,502 56,299,686
ESOP Voting 2,170,613 820,567,115 56,299,686
2016 Scrip issue for final dividend 2015 Voting Rs. 2.00 per share 11,818,040 832,385,155 56,299,686
Scrip issue for final dividend 2015 Non-voting 912,967 832,385,155 57,212,653
ESOP Voting 1,136,732 833,521,887 57,212,653
2017 Scrip issue for final dividend 2016 Voting Rs. 2.00 per share 10,521,802 844,043,689 57,212,653
Scrip issue for final dividend 2016 Non-voting 903,357 844,043,689 58,116,010
Rights issue Voting 1 for 10 84,649,465 928,693,154 58,116,010
Rights issue Non-voting 1 for 10 5,811,601 928,693,154 63,927,611
ESOP Voting 3,278,537 931,971,691 63,927,611
2018 Scrip issue for final dividend 2017 Voting Rs. 2.00 per share 11,998,388 943,970,079 63,927,611
Scrip issue for final dividend 2017 Non-voting 1,085,563 943,970,079 65,013,174
ESOP Voting 1,739,324 945,709,403 65,013,174
2019 Scrip issue for final dividend 2018 Voting Rs. 2.00 per share 15,249,529 960,958,932 65,013,174
Scrip issue for final dividend 2018 Non-voting 1,241,095 960,958,932 66,254,269
ESOP Voting 293,385 961,252,317 66,254,269
2020 Scrip issue for final dividend 2019 Voting Rs. 2.00 per share 22,485,434 983,737,751 66,254,269
Scrip issue for final dividend 2019 Non Voting 1,716,432 983,737,751 67,970,701
Issue of shares via a Private Placement Voting 115,197,186 1,098,934,937 67,970,701
2021 Scrip issue for final dividend 2020 Voting Rs. 2.00 per share 25,071,337 1,124,006,274 67,970,701
Scrip issue for final dividend 2020 Non Voting 1,770,070 1,124,006,274 69,740,771
ESOP Voting 474,254 1,124,480,528 69,740,771

8. Engaging with shareholders

During the year, the Bank complied with its Shareholder Communication Policy, which outlines the various formal channels through which it engages with shareholders. It covers the timely communication of quarterly performance of the Group and the Bank as set out on pages 74 to 79 in “Summary of Interim Financial Statements - Group and Bank”. It also records significant events that may reasonably be expected to impact the share price. (More details are given in Financial Calendar on page 181)

9. Quarterly performance in 2021 compared to 2020 (As per Rule No. 7.4 (a) (i) of the Listing Rules of the CSE)

Despite the challenges faced during the pandemic, the Bank duly submitted the Interim Financial Statements for the year 2021 to the CSE within applicable statutory deadlines. (The Bank duly complied with this requirement for 2020 as well). Please refer “Financial Calendar” on page 181 for further details. A Summary of the Income Statement and the Statement of Financial Position depicting quarterly performance during 2021 together with comparatives for 2020 is given in Summary of Interim Financial Statement – Group and Bank on pages 74 to 79 for the information of stakeholders.

The Audited Income Statement for the year ended December 31, 2021 and the Audited Statement of Financial Position as at December 31, 2021 will be submitted to the CSE within three months from the year end, which is well within the required deadline as required by Rule No. 7.5 (a) of the Listing Rules of the CSE. (The Bank duly complied with this requirement for 2020).

This Annual Report in its entirety is available on the Bank’s website both as a PDF file and as well as an interactive version (http://www.combank.lk/newweb/en/investors).

Shareholders may also elect to receive a hard copy of the Annual Report on request. The Company Secretary of the Bank will respond to individual letters received from shareholders based on the requests made through the specimen request letter included in the booklet sent to shareholders.

10. Debt securities

Details of debentures issued and redeemed by the Bank during the year as well as the balances outstanding is as shown in the Table 42 given below:

10.1 Debenture Composition Table – 42

Fixed Interest Rate Fixed Interest Rate
2021 2020
Type of Issue Public Public Public Public Public Public Public Public Public Public Public Public
Debenture Type Type "B" Type "B" Type "A" Type "B" Type "A" Type "B" Type "A" Type "B" Type "A" Type "B" Type "A" Type "B"
CSE Listing Listed Listed Listed Listed Listed Listed Listed Listed Listed Listed Listed Listed
Issue Date 9-Mar-16 28-Oct-16 23-Jul-18 23-Jul-18 21-Sep-21 21-Sep-21 9-Mar-16 9-Mar-16 28-Oct-16 28-Oct-16 23-Jul-18 23-Jul-18
Maturity Date 8-Mar-26 27-Oct-26 22-Jul-23 22-Jul-28 20-Sep-26 20-Sep-28 8-Mar-21 8-Mar-26 27-Oct-21 27-Oct-26 22-Jul-23 22-Jul-28
Interest Payable Frequency Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually Bi-Annually
Offered Interest Rate 11.25% p.a. 12.25% p.a. 12.00% p.a. 12.50% p.a. 9.00% p.a. 9.50% p.a. 10.75% p.a. 11.25% p.a. 12.00% p.a. 12.25% p.a. 12.00% p.a. 12.50% p.a.
Amount (Rs. Mn.) 1,749.09 1,928.20 8,393.84 1,606.16 4,237.47 4,358.00 4,430.34 1,749.09 5,071.80 1,928.20 8,393.84 1,606.16
Market Values
– Highest (Rs.) Not traded during the year Not traded during the year Not traded during the year Not traded during the year Not traded during the year 102.00 100.49 100.00 Not traded during the year Not traded during the year Not traded during the year 100.00
– Lowest (Rs.) 100.00 100.00 95.00 100.00
– Year-end (Rs.) 102.00 100.49 95.00 100.00
Interest Rates
– Coupon Rate (%) 11.25 12.25 12.00 12.50 9.00 9.50 10.75 11.25 12.00 12.25 12.00 12.50
– Effective Annual Yield (%) 11.57 12.63 12.36 12.89 9.20 9.73 11.04 11.57 12.36 12.63 12.36 12.89
Interest rate of comparable Government Security (%) 10.67 10.86 8.45 11.32 10.65 11.42 4.70 6.75 5.00 6.80 5.95 7.15
Other Ratios as at date of last trade
– Interest Yield (%) N/A N/A N/A N/A N/A N/A 9.80 12.43 N/A N/A N/A 12.49
– Yield to Maturity (%) N/A N/A N/A N/A N/A N/A 9.86 12.37 N/A N/A N/A 12.50

11. Key Shareholder Return Indicators  Table – 43

2021 2020
Debt equity ratio (%) 23.74 35.51
Net assets value per share (Rs.) 138.08 134.67
Interest cover (Times) 13.18 10.37
Liquid assets ratio (%) (Minimum 20%)
Domestic Banking Unit 38.73 44.99
Off-shore Banking Unit 36.39 32.70
Liquidity Coverage Ratio (%)
Rupee 425.97 599.38
All Currency 242.52 422.86
Net Stable Funding Ratio – NSFR (%) 157.47 157.49

12. Credit ratings

12.1 National Long-term ratings

Fitch Ratings Lanka Ltd., has revised the National Long-term Rating of the Sri Lankan financial institutions following the recalibration of its Sri Lankan national rating scale. However, Fitch Ratings reaffirmed the National Long-term rating of the Bank at AA-(lka) and its outlook to stable in August 2021.

The Bank’s Bangladesh Operation’s credit rating was reaffirmed at AAA by Credit Rating Information Services Ltd., in June 2021 for the 11th consecutive year.

12.2 Credit ratings – Debentures

The credit rating of the Bank’s Subordinated Debentures was also reaffirmed at A(lka) by Fitch Ratings Lanka Ltd., in September 2021.