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General
The Board of Directors of DFCC Bank PLC (the Bank) take pleasure in presenting their Report on the State of Affairs of the Bank as published in this Annual Report of the Bank which also consists of the Audited Financial Statements of the Bank, the Consolidated Financial Statements of the Group and the Auditor’s Report on those Financial Statements.
The disclosures in this Annual Report conform to the requirements of the Companies Act No. 07 of 2007, the Banking Act No. 30 of 1988 (as amended), the Directions issued by the Monetary Board of the Central Bank of Sri Lanka under the Banking Act and the Listing Rules of the Colombo Stock Exchange (CSE).
The disclosures required under Section 168 of the Companies Act No. 07 of 2007, published in this Annual Report are tabulated in the table below:
| Section | Disclosure requirement | Reference to Annual Report |
| 168 (1) (a) | The nature of the business of the Bank and Group | Notes To The Financial Statements Page (Note 1.4 to the Financial Statements) |
| 168 (1) (b) | Signed Financial Statements of the Bank in accordance with Section 152 | Statement Of Financial Position Page (Financial Statements) |
| 168 (1) (c) | Auditor’s Report on Financial Statements of the Bank and the Group | Independent Auditors’ Report Page |
| 168 (1) (d) | Changes in accounting policies made during the accounting period | Notes To The Financial Statements Page (Note 6 to the Financial Statements) |
| 168 (1) (e) | Particulars of entries in the interest register made during the accounting period | Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank Page of this Report |
| 168 (1) (f) | Remuneration and other benefits of Directors during the accounting period | Pages Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank , Notes To The Financial Statements (Notes 19 and 59.2 to the Financial Statements and this Report) |
| 168 (1) (g) | Total amount of donations made by the Bank during the accounting period | Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank Page of this Report |
| 168 (1) (h) | Information on Directorate of the Bank during and end of the accounting period and persons who ceased to hold office as Directors during the accounting period | Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank Page of this Report |
| 168 (1) (i) | Amounts payable to the Auditors’ as audit fees and fees for other services rendered during the accounting period as a separate disclosure | Notes To The Financial Statements Page (Note 19 to the Financial Statements) |
| 168 (1) (j) | Auditors’ relationship or any interest with the Bank and its subsidiaries | Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank Page of this Report |
| 168 (1) (k) | Annual Report of the Board of Directors on the State of Affairs of the Bank signed on behalf of the Board of Directors | Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank Page (Signed with an acknowledgment by two Directors and the Company Secretary) |
Constitution
DFCC Bank was incorporated in 1955 under the Development Finance Corporation of Ceylon Act No. 35 of 1955 as a limited liability public company and the ordinary shares of the Bank were listed on the Colombo Stock Exchange.
Consequent to the enactment of the DFCC Bank (Repeal and Consequential Provisions) Act No. 39 of 2014, the Development Finance Corporation of Ceylon Act No. 35 of 1955 was repealed and with effect from 6 January 2015 the Bank was incorporated under the Companies Act No. 07 of 2007 as a public limited company listed on the Colombo Stock Exchange with the name “DFCC Bank PLC”.
The shareholders at the Extraordinary General Meeting held on 28 August 2015 approved the amalgamation of DFCC Vardhana Bank PLC (DVB) with DFCC Bank PLC (the Bank). The Registrar General of Companies on 1 October 2015 issued the Certificate of Amalgamation in terms of Section 244 (1) (a) of the Companies Act No. 07 of 2007 that DVB has been amalgamated with DFCC Bank PLC in accordance with the provisions of Part VIII of the Companies Act, with DFCC Bank PLC surviving as the amalgamated entity.
DFCC Bank PLC also obtained a commercial banking license from the Monetary Board of the Central Bank of Sri Lanka in terms of the Banking Act No. 30 of 1988, as amended, and accordingly upon the amalgamation now operates as a Licensed Commercial Bank with effect from 1 October 2015.
Going Concern
The Directors are satisfied that the Bank has adequate resources to continue its operations in the future and as such, the Financial Statements are prepared on the basis of a going concern. The Auditors have declared the Bank solvent even after the payment of dividend.
Financial Statements
The Financial Statements of the Bank and the Group are given on Income Statement pages to Notes To The Financial Statements page of the Annual Report. The Financial Statements of the Bank and the Group have been prepared in accordance with Sri Lanka Accounting Standards prefixed SLFRS and LKAS, the Banking Act No. 30 of 1988 and amendments thereto, the Companies Act No. 07 of 2007 and other applicable statutory and regulatory requirements.
Review of Business of the Year
The year under review was characterised by positive sentiments buoyed by the easing of many of the socio-economic hardships the country faced during the previous several years. In line with the economic recovery brought about by political stability, foreign inflows and easing of monetary policy, the Bank also adopted a prudent growth strategy focusing on emerging business segments while continuing to support customers who are still undergoing hardships from the past. The Bank continued to deliver high-quality customer centric banking services for the benefit of the valued clientele while falling in line with best practices on sustainability and information security.
The Message from the Chairman, Chief Executive Officer’s Review and the Management Discussion and Analysis give further details of the operations of the Bank and the Group, and the key strategies that were adopted during the year under review.
Profit and Appropriations
| Year ended 31 December 2024 | LKR ’000 |
| Profit for the period | 8,352,531 |
| Appropriations | |
|
Transfer to: Reserve fund (statutory requirement) |
418,000 |
| First and final dividend recommended for financial year ended 31 December 2024 | 2,595,948 |
| Unappropriated profit for the period | 5,338,583 |
Accounting Policies
The accounting policies adopted in the preparation of the Financial Statements of the Bank and the Group are stated on Notes To The Financial Statements of the Annual Report.
There were no changes to the accounting policies of the Group in the year under review, other than as disclosed in Note 6 to the Financial Statements.
Auditors’ Report
The Auditors’ Report on the Financial Statements, which is unqualified, is given on Independent Auditors’ Report page.
Reappointment of Auditors
The present Auditors, Messrs KPMG have expressed their willingness to continue as Auditors of the Bank for the next financial year ending 31 December 2025. The Audit Committee has reviewed the effectiveness and the relationship with the Bank including the fees paid to the Auditors and has concluded that they are suitable to continue in office. The Directors are satisfied that based on the written representation made by the Auditors, they have no relationship or interest with the Bank or with any of its subsidiaries which would impair the Auditors independence. A resolution pertaining to their reappointment and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting for adoption.
The Board of Directors
The Board of Directors of the Bank presently consist of 9 Directors with wide knowledge and experience in the fields of banking, finance, trade, law, commerce, or services. Profiles of the Directors are given on Board Of Directors page.
The Directors of the Bank as at 31 December 2024 categorised in accordance with criteria specified in the Direction No. 11 of 2007 issued by the Central Bank of Sri Lanka are as follows:
Independent Non-Executive Directors
J Durairatnam – Chairman
Ms L K A H Fernando
W R H Fernando
N K G K Nemmawatta
Ms A L Thambiayah
N Vasantha Kumar
H A J de S Wijeyeratne
Non-Independent Non-Executive Director
P A Jayatunga
Executive Director
N H T I Perera – Chief Executive Officer
The Independent Directors satisfy the criteria set out in Section 9.8.3 of the CSE Listing Rules. Further, all Directors satisfy the fit and proper assessment criteria stipulated in the CSE Listing Rules.
Appointment, Retirement/Resignation and Re-election of Directors
P A Jayatunga was appointed as a Director of the Bank on 1 November 2024. He will retire in terms of Article 46 (ii) of the Articles of Association and is offering himself for re-election at the Annual General Meeting.
The Nomination and Governance Committee has recommended the re-election of P A Jayatunga and the Board having concluded that he is a fit and proper person to be a Director in terms of the provision of the Banking Act, unanimously endorsed the recommendation of the Nomination and Governance Committee.
Ms V J Senaratne and Ms H M N S Gunawardana retired from the Board with effect from 5 July 2024 and 10 August 2024 respectively in terms of Section 3 (2) (ii) of the Banking Act, Direction No. 11 of 2007, each having served a period of nine years as a Director of the Bank.
W D Batagoda resigned from the Board with effect from 19 December 2024.
Retirement by Rotation and Re-election of Directors
The Directors retiring by rotation in terms of Article 44 are Ms L K A H Fernando and N K G K Nemmawatta, who offer themselves for re-election under the said Article with the unanimous support of the Directors.
Details relating to Directors seeking re-election:
|
Name of Director/ Date of appointment |
Date last re-elected |
Board Committees served during 2024 |
Directorships and other principal commitments 2022 to 2024 |
|
Ms L K A H Fernando/ 1 November 2017 |
30 March 2022 |
|
|
|
N K G K Nemmawatta/ 20 December 2018 |
30 March 2022 |
|
|
|
P A Jayatunga/ 1 November 2024 |
N/A |
|
|
* Functioned as a member until 26 November 2024.
** Functions as a member with effect from 27 November 2024.
Directors’ Remuneration
The Directors’ remuneration in respect of the Bank and the Group for the financial year ended 31 December 2024 is given below:
| Year ended 31 December |
2024 LKR ’000 |
2023 LKR ’000 |
| Bank | 105,620 | 61,854 |
| Group | 134,829 | 89,270 |
Directors’ Meetings
The Bank held 12 Board meetings during the year. The Table on Corporate Governance page of the Annual Report gives details of the attendance of the Directors at Board and Board Committees during the year.
Directors’ Interests in Shares/Debentures
| As at 31 December |
2024 LKR ’000 |
2023 LKR ’000 |
| W D Batagoda1 | – | Nil |
| J Durairatnam | Nil | Nil |
| Ms L K A H Fernando | Nil | Nil |
| W R H Fernando | Nil | Nil |
| Ms H M N S Gunawardana1 | – | Nil |
| P A Jayatunga2 | Nil | – |
| N K G K Nemmawatta | Nil | Nil |
| N H T I Perera | 26,469 | 25,814 |
| Ms V J Senaratne1 | – | 2,101 |
| Ms A L Thambiayah | 107,761 | 105,094 |
| N Vasantha Kumar | 1,845 | 1,800 |
| H A J de S Wijeyeratne | 13,232 | 12,905 |
1. Not a Director as at 31 December 2024.
2. Not a Director as at 31 December 2023.
No Director directly or indirectly holds debentures or options of the Bank.
Directors’ Interests Register
Directors have made the general disclosure as provided for in Section 192 of the Companies Act No. 07 of 2007. The Directors have declared all material interests in contracts involving the Bank and have not participated in the decision-making related to such transactions. As required by the Companies Act No. 07 of 2007, an interest register is maintained by the Bank and relevant entries are recorded therein.
Directors’ Interests in Transactions with the Bank
The Directors’ interests in transactions carried out in the ordinary course of business on an arm’s length basis with entities/persons (other than subsidiaries, the joint venture, and associate) listed under each Director for the year ended 31 December 2024 is as follows:
| LKR ’000 | |
|
J Durairatnam
Aggregate amount of accommodation |
1,500 |
|
Assetline Finance Limited
Asian Hotels and Properties PLC Aggregate amount of accommodation |
4,000,000 |
|
Asian Hotels and Properties PLC
Aggregate amount of payment for services |
2,337 |
|
Ms L K A H Fernando Aggregate amount of accommodation |
8,000 |
|
PAP SPGM Solar (Pvt) Ltd
PAP PTS Solar (Pvt) Ltd Aggregate amount of accommodation |
2,270,000 |
|
United Motors Lanka PLC
Aggregate amount of payment for services |
2,179 |
|
N H T I Perera Aggregate amount of accommodation |
500 |
|
Ms A L Thambiayah Aggregate amount of accommodation |
1,500 |
|
Renuka Hotels PLC
Aggregate amount of payment for services |
2,007 |
|
N Vasantha Kumar Aggregate amount of accommodation |
1,750 |
|
H A J de S Wijeyeratne Aggregate amount of accommodation |
13,700 |
|
Trans Asia Hotels PLC Aggregate amount of payment for service |
2,059 |
During the year, N H T I Perera has been Chairman/Director of one or more of the subsidiary, joint venture, or associate company. Details of transactions with subsidiary, joint venture and associate company are disclosed in Note 59.4.
No Director or their close family members has had any material business relationship during the year with other Directors of the Bank.
Corporate Donations
During the year, the Bank made donations amounting to LKR 135,000/-.
Board Committees
The following are the present members of the Permanent Committees of the Board. Changes to the composition during the year are set out in the respective Committee Reports in the Annual Report:
| Committee | Members |
Nature of Directorship |
Date Appointed to Committee |
| Audit Committee | H A J de S Wijeyeratne – Chairman | Independent | 1 July 2020 |
| Ms L K A H Fernando | Independent | 1 November 2017 | |
| W R H Fernando | Independent | 11 August 2024 | |
| Credit Approval Committee | J Durairatnam – Chairman | Independent | 31 August 2018 |
| N K G K Nemmawatta | Independent | 28 July 2019 | |
| Ms A L Thambiayah | Independent | 1 January 2022 | |
| Credit Restructure Committee | J Durairatnam – Chairman | Independent | 28 July 2019 |
| N K G K Nemmawatta | Independent | 24 June 2020 | |
| N Vasantha Kumar | Independent | 28 September 2021 | |
| Human Resources and Remuneration Committee | Ms A L Thambiayah – Chairperson* | Independent | 24 November 2021 |
| J Durairatnam | Independent | 28 July 2019 | |
| P A Jayatunga | Non-Independent | 27 November 2024 | |
| Nomination and Governance Committee | W R H Fernando – Chairman | Independent | 28 September 2022 |
| J Durairatnam | Independent | 28 July 2019 | |
| N Vasantha Kumar | Independent | 1 July 2022 | |
| Integrated Risk Management Committee | N Vasantha Kumar – Chairman | Independent | 1 September 2021 |
| W R H Fernando | Independent | 28 September 2022 | |
| P A Jayatunga | Non-Independent | 27 November 2024 | |
| Related Party Transactions Review Committee | N K G K Nemmawatta – Chairman | Independent | 1 July 2022 |
| J Durairatnam | Independent | 28 July 2019 | |
| Ms A L Thambiayah | Independent | 1 February 2024 | |
* With effect from 11 August 2024.
In addition, from time to time the Board appoints committees to deal with specific matters. The Board also invites external advisors and Key Management Personnel to serve on some of the committees as and when necessary.
Further details relating to the committees are given in the section on Corporate Governance and the Committee Reports.
Dividend
The Directors have approved the payment of a first and final dividend of LKR 6.00 per share, (final dividend paid in the previous period, LKR 5.00 per share). The total dividend for the year will amount to approximately LKR 2,596 Mn (LKR 2,110 Mn in the previous period), which amounts to 33% of the Bank’s distributable profit.
The Directors unanimously declare that, DFCC Bank PLC will satisfy the solvency test stipulated in Section 57 of the Companies Act No. 07 of 2007 immediately after the dividend payment is made and a certificate of solvency from its Auditor is obtained.
Property, Plant, and Equipment, and Leasehold Property
The total expenditure of acquisition on property, plant, and equipment during the year amounted to LKR 1,728 Mn, of which intangible assets amounted to LKR 460 Mn. Details of these are given in Notes 39 and 40 to the Financial Statements.
Reserves
Total reserves and retained profit amounted to LKR 69,323 Mn.
Market Value of Freehold Properties
The information on market value of freehold properties are given in Note 39.1.2 to the Financial Statements.
Stated Capital and Subordinated Debentures
The stated capital as at 31 December 2024 was LKR 14,710 Mn. The number of shares in issue as at 31 December 2024 was 432,658,011. Consequent to the Scrip issue approved during the year, the stated capital was increased by LKR 843.9 Mn.
The Bank raised LKR 8,000 Mn through the issuance of 80,000,000 Basel III compliant, Tier II, Listed, Rated, Unsecured, Subordinated, Redeemable debentures of upto 7 years with a Non-viability conversion, at a par value of LKR 100/-.
Further information is given on Notes To The Financial Statements page.
Share Information
Information relating to earnings, net asset and market value per share are given on Investors pages of the Annual Report and also contain information pertaining to the share trading during the period.
Shareholders
As at 31 December 2024, there were 11,062 registered shareholders and the distribution is indicated on Investors page.
The 20 largest shareholders as at 31 December 2024 are listed on Investors page.
Employment and Remuneration Policies
The policy of the Bank is to develop and maintain a dedicated and highly motivated group of employees who are committed to creating sustainable value through effective risk management and high quality service while supporting public and private sector in its development efforts within the ambit of the Articles of Association of the Bank. DFCC Bank PLC continuously invests in training and development of its staff to meet these objectives. The Bank is an equal opportunity employer. Remuneration of employees consists of fixed and variable payments. Annual increments and pay awards are based on the performance of the Bank and the individual. It is the Bank’s policy to fix remuneration at a level which will attract, motivate, and retain high quality employees.
Statutory Payments
The Directors, to the best of their knowledge and belief are satisfied that all statutory payments due to the Government and in relation to the employees have been made on time.
Review of Related Party Transactions
The Related Party Transactions Review Committee is responsible for ensuring compliance with the code specified in Section 9.14 of the CSE Listing Rules. The Committee reviewed the related party transactions carried out during the year and noted that the transactions were in compliance with the said code.
Compliance with Laws, Regulations, and Prudential Requirements
DFCC Bank PLC has not engaged in any activities contravening the laws and regulations and has complied with prudential requirements. Directors are provided with updates on revisions to Rules, Directions and other applicable laws. The Directors obtain a confirmation report from the Management with regard to compliance with laws, regulations, and prudential requirements on a quarterly basis.
Events Occurring after the Reporting Period
Subsequent to the date of the statement of financial position, no circumstances have arisen which would require adjustments to the accounts. Significant events occurring after the reporting period which in the opinion of Directors require disclosure are described in Note 61 to the Financial Statements.
Corporate Governance
Corporate Governance practices of the Bank are governed by Direction No. 11 of 2007 of the Central Bank of Sri Lanka (as amended) and Section 9 of the Listing Rules of the Colombo Stock Exchange. Details of governance practices are given on Corporate Governance page.
The Directors have obtained External Auditors’ assurance on effectiveness of the internal control mechanism and compliance with the Direction 11 of 2007 of the Central Bank of Sri Lanka on Corporate Governance.
Rule 3 (8) of the Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka prescribe disclosures in this Annual Report. These disclosures have been made in this Annual Report as shown in the table below:
| Reference to Rule | Requirement | Reference to Annual Report |
| 3 (8) (i) | Financial Statements on prescribed format | Financial Statements on Income Statement pages to Notes To The Financial Statements. |
| 3 (8) (ii) (a) | Affirmative assurance of compliance with accounting standards and requirements | Directors’ Responsibility Statement on Statement Of Directors’ Responsibilities In Relation To Financial Statements page. |
| 3 (8) (ii) (b) | Affirmative assurance of the integrity of financial reporting system | Directors’ Statement of Internal Control on Directors’ Statement of Internal Control page. |
| 3 (8) (ii) (c) | Assurance report issued by the External Auditor | Independent Assurance Report on Assurance Report On The Directors’ Statement On Internal Control page. |
| 3 (8) (ii) (d) | Information on Directors | Board of Directors Page. |
| 3 (8) (ii) (d) | Remuneration of Directors | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. |
| 3 (8) (ii) (e) | Net accommodation granted to each category of related party | Corporate Governance Report. Table on Corporate Governance page. |
| 3 (8) (ii) (f) | Compensation and other transactions with Key Management Personnel | Corporate Governance Report on Corporate Governance page. |
| 3 (8) (ii) (h) | Compliance with prudential requirements and regulations | This Report. |
The Annual Report disclosures prescribed by Section 9 of the Listing Rules of the Colombo Stock Exchange have been made in this Annual Report as shown in the Table below:
|
Reference to Section |
Requirement | Reference to Annual Report |
| 9.1.3 | Statement on compliance with the Corporate Governance Rules | Corporate Governance Report on Corporate Governance page. |
| 9.2.2 | Any waivers or exemptions granted | None. |
| 9.2.3 | List of Policies | Corporate Governance Report on Corporate Governance page. |
| 9.4.2 (a) & (c) | Communication and relations with shareholders and investors | Corporate Governance Report on Corporate Governance page. |
| 9.5.2 | Policy governing matters relating to the Board | Corporate Governance Report on Corporate Governance page. |
| 9.7.5 | Fit and Proper Assessment Criteria | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. |
| 9.8.5 (b) | Names of Directors determined to be “independent” | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. |
| 9.10.1 | Policy on maximum number of directorships permitted to be held by Board members | Twenty directorships. |
| 9.10.4 | Details with respect to Directors | Profiles on Board Of Directors page. Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank pages. Corporate Governance Report on Corporate Governance page. |
| 9.11.4 (3) | Members of the Nomination and Governance Committee | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. |
| 9.11.6 | Report of the Nomination and Governance Committee | Report Of The Nomination And Governance Committee Page. |
| 9.12.8 | Members of the Remuneration Committee, remuneration policy and aggregate remuneration | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank pages. |
| 9.13.5 | Report of the Audit Committee | Report of the Audit Committee Page. |
| 9.14.8 (1) & (2) | Non recurrent and Recurrent Related Party Transactions in terms of the Section | Financial Statements Note 59.7 on Notes To The Financial Statements page. |
| 9.14.8 (3) | Report of the Related Party Transactions Review Committee | Report Of The Related Party Transactions Review Committee Page. |
| 9.14.8 (4) | Affirmative declaration | Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. |
| 9.16 | Additional Disclosures That Directors have: | |
|
i. Declared all material interests in contracts and have refrained from voting on matters in which they were materially interested |
Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. | |
|
ii. Conducted a review of the internal controls covering financial, operational and compliance controls and risk management and have obtained reasonable assurance of their effectiveness and successful adherence |
Directors’ Statement of Internal Control on Directors’ Statement Of Internal Controls page. Independent Assurance Report on Assurance Report On The Directors’ Statement On Internal Control Page. | |
|
iii. Made arrangements to make themselves aware of applicable laws, rules and regulations and are aware of changes particularly to Listing Rules and applicable capital market provisions |
Annual Report of the Board of Directors on the State of Affairs of the Bank on Annual Report Of The Board Of Directors On The State Of Affairs Of The Bank page. | |
|
iv. Disclosed any material non-compliance with law or regulation and any fines, if any which are material, imposed by any government or regulatory authority |
None | |
Annual General Meeting
The Sixty-Ninth Annual General Meeting will be held on 28 March 2025 at 10.00am.
Acknowledgment of the Content of the Report
As required by Section 168 (1) (k) of the Companies Act No. 07 of 2007, the Board of Directors does hereby acknowledge the contents of this report.
For and on behalf of the Board of Directors,
J Durairatnam
Chairman
N H T I Perera
Director and
Chief Executive Officer
Ms N Ranaraja
Company Secretary
19 February 2025