Untitled - Peoples Bank

Transcription

Our Vision
To be the Bank of the aspiring People of Sri Lanka:
Empowering People to become value creating,
competitive and self-reliant.
People’s Bank is committed to putting the ‘numbers to work’ for people across the land. Numerals
figure largely in our life… we measure our core resource - finance - with them. We employ them
in abundance when we put financial resources to work for people… disburse loans… allow credit…
obtain deposits... pay interest… practice philanthropy. In fact they’re just everywhere… not only on
our balance sheet! That’s why our theme illustrations feature them… in abundance!
Our
Business
Values
We recognise that the primary reason for
our existence is to create value for people of
the nation.
In all our activities we exercise our duty with
utmost care in the interest of our depositors.
We promote long-term ethical relationships
with our customers through true and fair
dealing.
Our
Mission
For our Customers
To take pride in providing an excellent
service in the most caring, responsive
and professional manner.
For our Owners
To generate benefits for the national
economy whilst being independent and
commercially viable.
For our Employees
To create opportunities for our employees
to benefit from their high performance
by becoming value creating, skilled,
self-confident and professional individuals
who are also team players.
For our Society
To support empowerment and sustainable
development by contributing to the
upliftment of education, culture and
environment island-wide.
We put our customers at the centre of
everything, by minimising bureaucracy,
demanding hands on management, quick
decision making and implementation.
We empower staff and require them to be
accountable.
We demand the highest standards of
personal integrity at all levels, putting the
Bank’s interest ahead of individuals.
We create an environment of mutual
respect and trust where employees can
demonstrate their performance and achieve
their full potential.
We develop our business by encouraging
high performing teams that recognise and
support the skills, commitment and links to
the community of every employee.
We are committed to comply with the spirit
and letter of all laws and regulations,
adhering to the highest standards of
Corporate Governance, transparency,
disclosure and ethical conduct.
We conduct ourselves as good citizens
promoting the environment and sustainable
development.
’Characterising’
the Bank’s Role
of Empowerment
One of our fundamental business values lies in recognising that we exist
to create value for the people of our nation. Our success in pursuing
this value also ensures that in such empowerment of people and their
enterprise, we play a significant role in supporting national development.
In the work that must be done for and by the people, one sees the
need for a metaphorical ‘super hero’… for there is a wide variety of
input required, both sophisticated and basic, that is often beyond the
capacities of aspiring people.
Whilst we do not claim 'super human powers’, we do claim to offer
premium banking products and services, offered with innovation and
empathy that reaches, relates to and empathises with a diverse palette
of ‘aspiring people’… from the farming heartlands… through the marine
‘farmlands’ and the small-scale entrepreneurial landscape… to the
corporate sector… the home builders… the students… in fact,
the wider panorama of human endeavour.
The emergence of the nation from almost three decades of war
has opened up immense opportunities to fulfil our mission and live
our values more fully than ever before, amongst thousands of our
countrymen in the North and the East.
The Government of Sri Lanka has begun large scale development in
these areas to repair and build the regions in order that they may at
least achieve parity with the standards of advancement of other areas of
the country.
These initiatives are conducted in tandem with development
programmes that are ongoing in other areas of the country.
This Report highlights the Bank’s role of support and empowerment
rendered in key areas of national development, which arises as we
pursue our own mission and widen our footprint of service.
‘Engining’ Enterprise...
The needs of people living along the coast are often related to livelihoods built upon the waters
of the Indian Ocean. People’s Bank assists the fishing industry… lending drive and power…
putting vessels to sea… maximising the catch… building a prosperous community.
We’re present
where it matters...
The spread of People’s Bank products across the island and across livelihoods
assures that the ‘Catch of enterprise’ is always bountiful. Through our Provincial
Development Loan Scheme, working in tandem with the Government’s accelerated
programme to enhance living standards of people, the Bank places resources at the
disposal of the fishing industry island-wide.
Constructing Lives...
...begins with basic needs such as a roof overhead. We heard the nation’s call to fill a dire need
for housing amongst a burdened sector of the population… and responded!
Constructing Lives
must lead to
Building Homes...
The demographics of Sri Lanka’s workforce indicate that the public service
accounts for a larger percentage of the working population, than other sectors.
Within this numerical superiority is also to be found areas of want such as access
to owned housing.
People’s Bank offers a comprehensive loan scheme to address this area of want,
targeting employees in public service who possess a minimum of 5 years service
and eligibility for pension.
We see a ‘super’ role for the Bank in converting rupees and cents into brick and
mortar… and beyond into the ‘warm hearth of a home’ for many.
In the national context, the Bank’s loan scheme fits well with the Government’s
budget proposal of 2005 – to offer loans via commercial banks for public sector
workers to - purchase land to build a house/construct a house on already owned
property/purchase land with already constructed dwelling/improve or add to already
owned housing/complete work on partially constructed housing.
Providing Traction...
Sri Lanka is still an agriculturally driven nation… tea, rubber, rice… this is the lifeblood of national enterprise for a vast
majority of our people. Being there for them… in the harshest of terrain… helping to make their enterprise prosper…
providing the tools of the trade and more… it’s what a People’s Bank would do…and we do!
Committed to
Fields of Gold...
Such is our commitment to the farmers and the agricultural sector of the country,
that we often imagine we’re located right there in a field… on a plantation… or in a
small homestead garden!
The People’s Bank offers a plethora of products tailored to assist small scale paddy
and other farmers, small and medium scale entrepreneurs, widows and female
small scale entrepreneurs and many others who seek their livelihood at great cost.
Under the umbrella of the Government’s ‘Api Wawamu Rata Nagamu’ developmental
initiative, the Bank offers a substantial array of products that are designed to
support and energise the ‘small man/woman’ in the country’s agricultural sector.
Whilst being there for these people, the Bank is supporting the efforts to increase
productivity in the sector and reduce unemployment; we want to play a role
in enhancing the prospects of low income earners; we want to help generate
employment for the poorest; we also want to catalyse the development of
technology and its deployment and use in the villages to uplift communities in
pursuit of a better tomorrow.
As many opportunities as there are… you’ll find a commensurate ‘Empowering’
People's Bank, presence… helping out!
Power... from the Cradle
Seamlessly powering an upcoming generation… to inherit prosperity and responsibility.
‘Super’ Powered
Formation...
for Life!
We know how vital it is to power a younger generation - not only to let them bloom
to full potential… but also to ensure the Nation has ready and accomplished
successors to take up the baton of the future.
People’s Bank offers a seamless trio of savings products that begin at birth and
morph into studenthood and then to employment. ‘Isuru Udanaya’ begins at birth,
then automatically changes to ‘Sisu Udanaya’ when the child starts schooling, then
changes automatically yet again to a ‘YES’ (Young Executive Savings) account when
the youth begins employment.
Rebuilding and Reviving...
Throughout the North and the East of Sri Lanka, across a war ravaged landscape, a massive national impetus
is underway to rebuild and revive lives and livelihoods…People’s Bank plays an integral role in this impetus.
Our Initiatives
keep us close to
the people...
The urgent requirement to kick start enterprise in Northern and Eastern Sri Lanka
placed us with the people, through instruments such as our flagship offerings
‘Pibidena Uthura’ and ‘Nagenahira Navodaya’. These are loan schemes to provide
much needed capital investment for both start up and existing projects and is
targeted at the SME sector.
In the medium to long-term, we expect these schemes to contribute significantly to
the development of the regions, raising the standard of living of the people there and
ultimately helping both regions to up their contribution to the GNP of the Nation.
The physical presence of the People’s Bank throughout this journey is assured
as the developing economies of the regions will enhance income generation and
employment opportunities for their people.
These initiatives of the Bank are significant components of the Government’s
‘Uthuru Vasanthaya’ and ‘Nagenahira Navodaya’ developmental programmes.
People’s Bank Annual Report 2009
[Contents]
[Highlights 26] [Chairman’s Message 28] [Chief Executive Officer/General Manager’s Review 32] [Board of Directors 38]
[Corporate Management 42] [Executive Management 49] [Zonal Management 54] [Business Review 55] [Financial Review 67]
[Human Resources 78] [Corporate Social Responsibility 81] [Outline of Our Reporting Initiatives 84] [Moments in Time 88] [Awards 90]
[Compliance Report 91] [Corporate Governance 94] [Subcommittees of the Board 101] [Risk Management 106] [Key Performance Indicators 113]
[Financial Reports 121] [Directors’ Report 122] [Directors’ Responsibility for Financial Reporting 125] [Audit Committee Report 126]
[Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131] [Cash Flow Statement 132] [Statement of Changes in Equity 134]
[Significant Accounting Policies 135] [Notes to the Financial Statements 151]
[Supplementary Information 179] [Value Added Statement 180] [Sources and Utilisation of Income 181] [Capital Adequacy 182]
[Income Statement US$ 184] [Balance Sheet US$ 185] [Quarterly Financial Highlights 186] [Branch Network 187] [Service Centres 193]
[Worldwide Partners 198] [Decades at a Glance 200] [Performance Review 1999-2009 205] [Glossary of Financial/Banking Terms 206]
[Corporate Information 211]
25
[Highlights]
[Chairman’s Message 28] [Chief Executive Officer/General Manager’s Review 32]
[Board of Directors 38] [Corporate Management 42] [Executive Management 49] [Zonal Management 54]
[Business Review 55] [Financial Review 67] [Human Resources 78] [Corporate Social Responsibility 81]
[Outline of Our Reporting Initiatives 84] [Moments in Time 88] [Awards 90] [Compliance Report 91]
[Corporate Governance 94] [Subcommittees of the Board 101] [Risk Management 106]
[Key Performance Indicators 113] [Financial Reports 121]
26
Operational Highlights
•
48 years in banking services.
•Number of banking outlets increased up to
329 and service centres increased up to 341
expanding our total branch network to 670.
•Number of ATM machines increased to 300,
adding 60 new machines this year.
•
Customer base over 12 Mn.
•
Value of deposits increased by 22.1% totalling
Rs. 396 Bn in year 2009.
•Staff strength stood at 8,863 at the end of
year 2009.
•Inward remittances amounted to Rs. 81.3 Bn,
an increase of 18.5% over year 2008.
•Expansive correspondent banking network
numbering 300 in over 105 countries.
•
216 branches and 245 service centres
totalling 461 are now interconnected.
•Rs. 7.7 Bn paid in taxes, dividend and levies
to the Government of Sri Lanka.
•Introduction of SMS banking.
•
Awarded ‘Strongest Brand’ among banks
operating in Sri Lanka with AA rating by
Brand Finance - LMD
•SLIM Brand Excellence Awards - Brand of
the year 2009
•SLIM Brand Excellence Awards - Service
Brand of the Year 2009 (Gold Award)
•SAFA Awards - The FY 2008 Annual Report
received an Award for the first time in the
history.
[Highlights]
[Chairman’s Message 28] [Chief Executive Officer/General Manager’s Review 32]
27
Financial Highlights
2009
2008
%
Bottom Line Performance
Profit before Taxation (Rs. Mn)
Capital in Hand (Rs. Mn)
6,076
17,780
5,664
15,880
7.3
12.0
Productivity
Net Revenue (Rs. Mn)
Cost/Income Ratio (%)
Head Count (Excluding Outsourced)
Profit per Employee (Rs. ‘000)
30,635
60.6
8,863
375
24,456
65.4
8,587
315
25.3
–
3.2
18.9
Credit Management
Loans & Advances (Gross) (Rs. Mn)
Non-Performing Loan (NPL) Value (Rs. Mn)
NPL Ratio (%)
Provisions for NPLs (Rs. Mn)
NPL Coverage Ratio (%)
299,077
20,040
6.7
14,158
70.6
263,462
17,857
6.8
13,517
75.7
13.5
12.2
–
4.7
–
Customer Confidence
Value of Deposits (Rs. Mn)
No. of Customers (Mn)
396,158
12.4
324,489
11.9
22.1
4.3
1.4
19.7
13.4
21.9
1.5
18.8
10.5
22.5
Key Performance Indicators
Return on Assets (%) - (Before Tax)
Return on Equity (%)
Capital Adequacy Ratio (%)
Non-Funded Income/Net Income (%)
– – – – People’s Bank Annual Report 2009
[Chairman’s Message]
[Highlights 26]
[Chief Executive Officer/General Manager’s Review 32]
(Business Review 55) [Financial Review 67] [Human Resources 78] [Corporate Social Responsibility 81]
28
People’s Bank 2009
Built on a strong foundation of being a Bank
by the people for the people, where we have
always prided ourselves on being one with the
pulse of the people of this country, the People’s
Bank journey over nearly five decades is indeed
commendable. Inaugurated in 1961, with just
169 employees, today we are a multiple award
winning leader in the financial services industry,
thriving on the vision of being the Bank of the
aspiring people of Sri Lanka and as a partner
in empowering them to become value creating,
competitive and self-reliant. 48 years later and
at the helm of pioneering banking services, we
possess an impressive depositor base of over
12 Mn account holders serviced by an
unmatched dedicated team of nearly 8,800
through an expansive outreach of 329 Branches,
341 Service Centres and 300 ATMs.
In a macro context, 2009 has been an year that
has posed for this nation both challenges and
opportunities, but all in an overarching paradigm
of creating an era of peace and hope, where
the country was removed from the clutches of
terrorism and is working towards a renaissance
of development and a united peaceful people.
It is in this backdrop that I present to you the
People’s Bank Annual Report and Financial
Statements for the year of 2009 and hope that
within these pages you will see the development
spurred by the Bank towards the country, whilst
also paying tribute to our stakeholders for
their continued commitment in ensuring the
empowerment of the people of Sri Lanka.
Overall Economy
While the global economy continued to contract
in the background of the pervasive financial crisis
that gripped the entire world in 2008, Sri Lanka’s
amazing resilience and subsequent stability post
the end to the war mid 2009, saw the economy
[Highlights 26]
29
grow by 4.5%. While short of the intended target of
5.8%, it is certainly impressive that the country did
come close to the forecasted growth rate due to
grappling with the escalated conflict prior to the
ending of the war and high inflation and interest
rates in the first-half of the year taking its toll on
the economy. In addition, the country also faced
challenges in the agricultural sector, primarily our
main export earner tea, recording negative growth
due to lower production in major crops.
However, it is noteworthy that both the
industry and services sectors displayed signs
of recovery. The manufacturing sector saw
improvements, expansions and new factory and
plants coming into being, while the increase in
domestic trade activities enhanced the growth
of the services sector.
Both imports and exports showed a cumulative
drop across all major categories in 2009, even
though sporadic periods during the year saw
slight increases. Exports decreased by 12.7%
while imports declined by 29.4%, the latter a
reflection of lower demand across the board.
Earnings from tourism amounted to US$ 384 Mn,
an increase compared to US$ 342 Mn in 2008,
which is also a proclamation that the return
of stability and the ensuing peace dividend
is permeating this potentially large foreign
exchange earner.
While total Government revenue increased by
12.1% in 2009, foreign investment in Treasury
Bills and Bonds also posted an incline from
May 2009, reflective of the renewed investor
confidence, following the end to the war and the
approval of the IMF-SBA facility. With the revival
of credit flows into the economy, the Repurchase
and Reverse Repurchase rates reduced to
further support domestic economic activity.
The Financial Services Sector
One of the most vibrant and dynamic sectors
of the economy, the banking sector today
accounts for nearly 60% of the total assets of
the country’s financial system. Being the core of
the financial system due to its ability to provide
liquidity to the entire economy, in the last few
years, the stringent monitoring and controls
introduced by the apex body of the Central Bank
ensured the consistent stability of the banking
industry, despite the entire global paradigm
crumbling at the seams.
Financial Overview
The balance of this Report and in particular
the Chief Executive Officer/General Manager’s
Review will give you a detailed analysis of
the Bank’s performance in 2009. However,
I would like to touch on some areas within our
financial performance that need mentioning.
As you are aware, we have over the last few
years implemented a milieu that has spurred
competitiveness and productivity which
has eventually translated positively both
quantitatively and qualitatively into our bottom
line. Our consistent growth curve therefore is
cognizant to the fact that despite the intense
competition we faced within the industry, the
partnerships we have nurtured among the
people of Sri Lanka, our accessibility and our
unwavering commitment to the objective of
being the Bank for the people, has held us in
good stead to create an enabling environment
for our Bank to grow.
[Highlights 26]
30
This year too, the performance of People’s Bank
is worthy of mention. Profit after tax is posted at
Rs. 3.3 Bn, an increase of 23% from last year’s
figure of Rs. 2.7 Bn. Profit before Tax is reflected
at a healthy increase of Rs. 412 Mn. compared
to Rs. 5.7 Bn of last year, a 7% increase. Net
Interest Income was recorded at a healthy 26%
growth amounting to Rs. 23.9 Bn, despite a
reduction in lending rates during the last quarter
of 2009, and a declining loan growth experienced
by the private sector, which was compensated by
state sector growth. The Bank’s asset portfolio
increased to a noteworthy 20% to Rs. 476 Bn, up
from last year’s Rs. 398 Bn.
Compared to the banking industry’s NonPerforming Loan (NPL) ratio which stands at
just under 9%, People’s Bank’s NPL remains
below this average at 6.7%, even though the
figure has seen a marginal incline due to the
prevailing economic conditions during the year.
Overall, the Bank recorded a profit before tax
of Rs. 6.1 Bn compared to Rs. 5.7 Bn in 2008.
Moreover, group pre-tax profits show a 10.2%
increase over the previous year, recording a
noteworthy Rs. 7.9 Bn.
Having completed our second debenture
issue of Rs. 2.5 Bn this year, we have boosted
our Capital Adequacy Ratio to 13.4%, with
retained earnings of Rs. 1.9 Bn complemented
by marginal growth in risk-weighted assets.
Total Shareholder Funds stand at Rs. 17.8 Bn
compared to Rs. 15.9 Bn in 2008.
We also reflect a substantial growth in capital
gains through sale of high yielding Treasury Bills
and Bonds during the year. The Bank’s position
on the oil derivative transactions entered into in
2008 remains unchanged, although, in order to
meet CBSL guidelines on provisioning, key assets
were identified and provided for accordingly.
Moving Ahead
Throughout the years, we have continued to
demonstrate that we are tightly woven into the
social fabric of the Sri Lankan people and in a
larger sense, into the economy. Whether it’s
in products, services, corporate accountability
or social responsibility, our commitment is
to ensure that our stakeholders gain the best
from us. To us, this journey is a partnership and
one that has been amply demonstrated with
the Bank winning the People’s Award for three
years consecutively. The people themselves
have made the choice and placed us at the helm
of the financial services industry in Sri Lanka.
Our commitment to innovation and infusion of
technology into our everyday workings is firmly
embedded in the wide breadth and depth of
our portfolio of products and services and our
vision to be accessible throughout the country
and beyond. We have not lost sight of the fact
however, that while physical infrastructure is a
vital core to our existence, innovations like Palm
Top Banking and SMS Banking must become
a feature of everyday banking and our Bank
has been at the forefront of introducing these
technological innovations to our customers. IT
is a key driver within this process and in fact,
our Core Banking initiative won us the Best
Core Banking Implementation and Deployment
Award for South Asia and the Middle East from
Silverlake and IBM at the Banking Technology
Summit held in Perth, Australia.
The proactive presence we have within our
community continues unwaveringly. Partnering
infrastructure projects, developing sustainable
employment avenues and creating knowledgedriven cultures through our CSR project
Vishishtayo while driving the underlying tenets
of community inclusion as one nation buoys
our philosophy of being a truly people’s bank.
[Highlights 26]
31
Our winning team ably takes on the challenge
of taking these goals forward, traversing on a
journey that can sometimes be difficult but will
nevertheless be rewarding, given that they too
will be partners in creating a sustainable future
for the citizenry of this country.
Having aligned ourselves with the Government’s
Ten Year Vision which is embedded in the
Mahinda Chinthanaya, we have now ventured
a step further in meeting the goals mandated
in the strategic plan of 2009 to 2014. We
strongly believe that the objectives, targets and
overarching philosophy within this strategic
plan will be the foundation upon which we can
build the trusses for a new journey ahead, a
journey in a united Sri Lanka that is poised for a
new era of development and prosperity.
In appreciation
The commendable results we achieved during
a year that posed numerous conundrums
is certainly the result of good teamwork,
visionary planning and detailed execution. My
appreciation to the Secretary to the Treasury,
Governor of the Central Bank and the officials
of the Ministry of Finance and Central Bank
for their guidance at all times and to my fellow
Board of Directors for the support extended
to me to be at the helm of this Bank which is
surely a leader in the industry. I also extend
my thanks to the CEO/GM, senior management
and the team, as well as the employee Trade
Unions for their motivation and dynamism in
maintaining this Bank as a truly people’s bank
despite having to make some very decisive
resolutions which though challenging in the
short term, will definitely see positive results
for us in the medium to long term.
W. Karunajeewa
Chairman
24th March 2010
[Highlights 26] [Chairman’s Message 28]
[Chief Executive Officer/General Manager’s Review]
32
An amazing journey over nearly five decades
and People’s Bank is truly one with the people.
Ours has been the transformational approach of
being the axis of macro development designed
to permeate the platform of sustainable
financial security to every citizen. The success
has therefore been twofold. While we have
continued to etch our leadership as a premier
national bank that knows, feels and acts on
the pulse of the people, we have also posted
consistent growth, based on a pragmatic vision
and strategic plan that has not wavered, even in
the sight of difficult challenges.
I am indeed extremely proud to have been at
the operational helm of People’s Bank in the
last year, steering its journey upwards and
outwards, combining the strengths and abilities
of my very able team who have performed
beyond expectation to post some of the best
performance results this year.
Overview
Given our crucial role in the economic
development of the country, People’s Bank
decided to align ourselves with the Government’s
progressive ten-year plan. This macro
development plan is designed on the tenets of
the United Nations Millennium Development
Goals and works on the overarching premise
of sustainable development to springboard
poverty alleviation, knowledge enhancement,
infrastructure development and nurturing
entrepreneurship. Each of these has an indelible
role to play in creating an economy sustained by
communities from all strata and not merely big
business or industry.
Into these ideals, from 2004, we infused the
features of our second strategic plan, which
paved the way for the continuity we envisaged
for a developing economy. This plan anticipated
33
the transformations that we as a country
will be going through and the change in the
development landscape that will ensue. By end
2008, we had met many goals and objectives
and had set the stage for our next strategic
plan based for six years from 2009 to 2014. This
plan will now embed the dynamics of a country
entering a renaissance, where the peace
dividend is bound to follow from the onset of an
end to a crippling three decade war.
What we cannot forget however, is that while
the country did have the dismal task of fighting
terrorism for decades albeit now ended much
to the relief of the nation, the global recession
had spread its tentacles towards all economies.
Sri Lanka though somewhat insulated, did have
to deal with decreasing exports due to global
demand declining overall, which naturally
cascaded to a considerable negative impact on
the country’s foreign exchange reserves. This
did take its toll on a country struggling to get
its growth paradigm back on track. At the same
time, having begun the year on a note of high
inflation and interest regime, the Central Bank
of Sri Lanka did institute measures that saw
both inflation and interest rates dip significantly
by the end of the year.
Financial Performance
By the end of 2009, the country was seeing a
sense of stability but it cannot be forgotten
that we began the year on a massive wave
of uncertainty due to the escalating conflict,
high interest rates and significant inflation
touching a double digit milieu. Operating in
this environment was certainly challenging but
given the prudent strategies we had already
implemented having envisaged a challenging
period ahead, your Bank must be commended
on posting some of the best financial indicators
in its history. We posted the highest ever profit
before taxation of Rs. 6.1 Bn in our history, a
definite growth of 7% from last year’s Rs. 5.7 Bn,
certainly a most commendable achievement
given the extreme market conditions.
We also posted a noteworthy performance in
our Net Interest Income recording a healthy 26%
growth to Rs. 23.9 Bn, despite the challenging
macro environment. With the gradual decline in
interest rates on deposits towards the latter part
of 2009, the Bank was able to cushion the sharp
reduction in lending rates. A notable feature is
that a majority of fixed deposits was contracted
for under one year maturity and therefore was
re-priced at lower. These timely initiatives allowed
the Bank to lower its average cost of funds, which
we saw as high in the first half of 2009.
Exchange gains this year were significant,
amounting to Rs. 1.1 Bn compared to Rs. 818 Mn
in 2008, with the primary contribution from USD/
LKR spot and forward market activities, achieved
despite a decline in trade finance volumes and
insignificant growth in foreign remittances.
We experienced substantial growth in capital
gains which amounted to Rs. 674 Mn compared
to Rs. 111 Mn last year due to the sale of high
yielding Treasury Bills and Bonds. However,
given the consistent prudent measures, we
continue to implement through analysis of
market trends, unrealised capital gains on
tradable securities were not accounted for in
the Bank’s monthly management accounts.
This is due to the sharp decline in interest
rates, resulting in substantial unrealised gains,
which distorted the monthly core business
performance. Total unrealised net book gains
as at end of 2009 was Rs. 197 Mn, up from
Rs. 102 Mn in 2008.
34
The second debenture issue of Rs. 2.5 Bn was
made this year and this, together with envisaged
retained earnings of Rs. 1.9 Bn, enabled us to
increase our Capital Adequacy Ratio to 13.4%. Total
shareholders' funds are posted at Rs. 17.8 Bn, an
increase from Rs. 15.9 Bn last year.
Astute cost management continued to be in focus
this year too and is embedded deeply within
the dynamics of the new strategic plan. But at
the same time, our operational costs continue
to lean upwards, due to some unavoidable
expenses met this year. A significant salary
increase was experienced due to the revision of
the three-year Collective Agreement. However,
we did manage to maintain this at budgeted
levels. Administrative expenses also swelled,
recording an overall increase of 15% over
Financial Year 2008. We also provided Rs. 150 Mn
for the proposed pension scheme for employees
who have been recruited after 1996, based on the
actuary valuation.
The compulsory 1% general provisioning on
the performing loan book as mandated by the
Central Bank continues to be maintained. It
must be noted here that the Bank’s position
on the oil derivative transaction entered into in
2008, remains unchanged, although, in order
to meet CBSL guidelines on provisioning, key
assets pertaining to this issue were provided
for accordingly.
As in previous years, Financial Value Added Tax
(VAT), continues to be a bugbear in dragging
our profitability down, augmented by the fact
that some expenditure items under salaries
and wages cannot be set off against VAT
computation and therefore, marks up an added
liability of 20%. Moreover, Financial VAT and
certain expenses are disallowed for mainstream
taxation, given that these are all added on for the
final ascertaining of the Bank’s taxation liability.
Our taxation for 2009 amounted to Rs. 2.8 Bn, a
considerable slice from our profitability figures.
Deposits, Advances and Treasury
In a milieu where disposable income became
scarce and cost of living tied up to rising inflation
rose alarmingly, People’s Bank close relationships
with the people and our understanding of
people’s aspirations, wants and needs held us in
good stead in growing our deposit portfolio by a
remarkable 22%. This is more so as it is above the
banking industry’s average of 15%. Total deposits
for the year closed at Rs. 396 Bn.
Current and savings accounts over total deposits
averaged at 50% to total deposits but closed at a
slightly lower 54% at end 2009, when compared
to the average of 55% in previous years. Current
account balances closed at an all time high at
Rs. 37.4 Bn contributed primarily by the
expansion of our branch networks. Yet, another
noteworthy achievement was the 13.5% growth
in our Rupee savings balances, which ended
at Rs. 158.2 Bn despite intense competition
from other commercial banks and term deposit
demand driven by high yields. Rupee Fixed
Deposits too infused a fair share into our bottom
line, recording a growth of 33.5%, posted at
Rs. 166.2 Bn, with over 90% contracted for short
tenors of under one year.
Loans and advances grew by 13.5% this year
even though the entire industry experienced
marginal contraction. Also given the challenges
faced this year, the entire industry faced an
increasing trend in the NPL ratio which on
average stands at 9% by end 2009. While
People’s Bank also saw an increase in NPLs,
our ratios stood at 6.7%, which is commendable
as we have managed our portfolio prudently to
remain below the industry average.
35
Developments and Achievements
Once again, People’s Bank proved to have a
pulse for the people when it was accorded
the unprecedented honour of winning the
People’s Award for the fourth consecutive year
as the Leader in the Banking and Financial
Services Sector. This emphasises that the path
we have taken in building and strengthening
relationships with our customers across the
board have held us in good stead. We have
created a solid foundation for this relationship,
building trust, transparency and accountability
for our actions which have overall, given the
customer confidence to make us a part of their
journey towards the future.
One of our greatest achievements this year
and one which we are very honoured to have
been presented is the SAFA Award for our
Annual Report of 2008. SAFA is the South
Asian Federation of Accountants, the apex
body for SAARC and also brings together
the International Federation of Accountants
constructing a foundation of best accounting
practices built on global tenets for the region.
The annual awards presented to entities in the
region are given to those with a high degree of
financial disclosures and corporate governance.
People’s Bank now joins the honour roll as
one of the most transparent and accountable
organisations in the South Asian region.
To get closer to our customer, we have
unreservedly made our Bank accessible, not
only through physical infrastructure but also
by using innovative IT facets to take banking to
the doorstep. Personal banking features were
enhanced, with the introduction of Palm Top
banking and SMS banking and a host of other
IT-driven products which are currently being
designed. Another branch was added to our
portfolio in this year making it a total of 329
branches, while 300 ATMs were also included
into accessibility features to enhance service
delivery points, penetration, and visibility and as
a brand building exercise as well.
Our recognition of our customers as primary
stakeholders within our organisation has
spurred us to continue innovating services
and products that make the dialogue we have
with our customers a two-way comprehensive
and productive one as a means of moving
towards customer care excellence. We
emphasise immensely the nurture of long-term
relationships with our customers and this year,
we added to this open dialogue milieu with the
installation of a hotline which gives customers
direct access to a dedicated customer care
officer who is directly under the purview of
the General Manager. The telephone number,
displayed at all branches around the country
extends the opportunity for any customer
to bring their complaints, suggestions or
grievances directly to the notice of this officer.
Our Core Banking System is also now well on
track, having linked 38 branches and service
centres this year, increasing the total number
of interlinked branches to 461. This aids our
customer-service tenets considerably as
response times are faster, productivity higher
and information gathering is more efficient.
We are very proud of our product and services
portfolio which encompasses customers from
birth to their twilight years. We continue our
product innovations with the aim of adding value
to this underlying axiom. While our flagship
products like Isuru Udana and Sisu Udana, the
latter which has embedded a savings culture in
children and in tandem mobilised a significant
deposit base of Rs. 16.6 Bn through these
accounts, continue to add significantly to our
bottom line, we launched a few more products
this year. The People’s Gift Voucher aims at
creating an investment-oriented gift culture
36
where special occasions can be marked with
an investment rather than material gains. In
celebration and to commemorate the heroism of
our service forces, a loan scheme to assist the
forces and their families, Deya Viru Pranama was
also launched this year. We also relaunched our
senior citizens account, Parinatha, enhancing
benefits and also giving the opportunity for
25 select customers to tour India on pilgrimage.
Our concerted drive in encouraging the use
of official channels for inward remittances
continues to bear fruit with a remarkable
growth of 18.5% showcased by the Bank this
year. One of the initiatives that enhanced
the process was the introduction of people’s
e-remittance which has seen encouragingly
high users who require immediate transfers.
We continue with our focused drive towards
micro development having launched a host of
initiatives that will strengthen the rural economy.
Sector-wise, we are driving the sectors of
agriculture, livestock and small- and mediumenterprise development. The Pibidena Uthura
and Negenahira Udawa Loan Schemes were
introduced to spur a resurgence of economic
activities in the North and the East of the country,
by revitalising the dormant entrepreneur,
distributing loans and providing technical and
non-financial assistance for the development
of the respective sectors. In addition, about
12,000 benefited under the Poverty Alleviation
Microfinance (Revolving Fund) Project Loan
Scheme and the Stage II of the Poverty
Alleviation Microfinance Project Loan Scheme
received loan facilities implemented under the
aegis of the Central Bank of Sri Lanka. The deep
southern areas of Hambantota, Matara and Galle
were also benefited with customers granted
loans under the Dasuna Loan Scheme.
We’ve also augmented a further boost to
the Government’s agricultural drive as a
means of poverty reduction in line with the
UN Millennium Development Goals which are
embedded in the Mahinda Chinthanaya. Our
input into the SMEs and micro sectors while
being wide and varied was added this year with
loans granted to these sectors for fertilizer to
develop cultivation and improve the country’s
food security situation.
The Community and Us
We have always believed that our social
responsibility is not about philanthropy but
rather must have the essential foundation
of building sustainable economies through
sustainable societies. Being strong
proponents of improving communities through
development initiatives that would create
sustainable foundations, our microfinance
schemes have been the crucial element in
building an entrepreneurship culture within
rural economies, which have over the years
flourished and become significant contributors
to the upliftment of the rural economy.
In addition, our CSR platforms hold fast
the need for education, preservation of the
environment and in imbuing into the citizenry
an appreciation of religious values, arts and
culture. We partnered the Government in its
endeavour of making Sri Lanka food sufficient
with the launch of the programme, ‘Plant todayReap Tomorrow’, a goal to plant three million
fruit and vegetable bearing trees around the
country. We are also a significant contributor to
the Uthuru Wasanthaya programme, partnering
the relevant state organisations to develop the
hitherto under-developed people and the land in
the now freed war torn areas of the North and
the East of Sri Lanka, while continuing to create
conducive environments for pursuing higher
37
studies by giving high achievers scholarships
that will aid them in their progress towards
becoming qualified young people who contribute
productively to the development of the nation.
The Way Forward
While we foresee 2010 as being an year of
resurgence for the entire country, we also
envisage tighter controls and stringent
monetary policies coming into being due to
past lessons learned. Some of the initiatives
are already in place including BASEL II and the
new Corporate Governance Code. 2010 will also
see foundations laid for the New Accounting
Standards (SLAS) Nos. 44 and 45 which should
come into effect by 2011.
In the meantime, we will pursue our
fundamental practice of eliminating rural
indebtedness, the Reward of our existence in the
last 48 years. The Bank will continue to focus
on the larger vista of macro development, while
ensuring that the rural economy is fuelled to
become an integral part of that development.
The five-year strategic plan which continues
to embed the positives of the Government’s
Ten-Year Development Plan will aid us in this
process. However, to achieve some of the
ambitious targets we have set for ourselves,
we also require a transformation in both our IT
and Human Resource areas, which is now being
focused upon with added impetus. We do believe
that the added drive to enhance the knowledge
and skill set of our team will be the core upon
which we can build our future journey. Coupled
with a state-of-the-art IT platform and a need to
be better and bigger, I strongly believe that we
can reach our vision with minimum complexities
and maximum commitment.
Given the challenges we continue to face in our
operations each year and the new standards,
rules and disclosures that are implemented into
the industry due to the evolution of the banking
sector, it is pertinent to note that our standards
and disclosures have tremendously improved
over the last few years. My sincere thanks to
the Auditor General, the Government Audit
Department and the External Auditors appointed
by the Auditor General, Messrs Ernst and
Young for their valuable advice, independence,
recommendations and guidance on improving
our reporting standards and disclosure and also
for their input in expediting the Bank’s audits in
the last three years.
My appreciation to the Chairman and the Board
of Directors for their continued confidence
in my abilities to lead this Bank and for
their advice and guidance in performing this
task. I would also like to extend my sincere
thanks to Correspondent Banks for their
continued support, the corporate and executive
management and team of People’s Bank in
addition to the employee trade unions, who
have been instrumental in ensuring that we
remain on the planned path and not lose sight
of our goals. To the Governor of the Central
Bank of Sri Lanka, his officials and regulatory
authorities, Secretary to the Treasury,
Sri Lanka Bankers Association, my thanks for
the support extended throughout the year. My
sincere appreciation to the Commissioner of
Co-operative Development and the Ministry of
Trade Marketing Development, Co-operatives
and Consumer Services. Finally, to all our
stakeholders, thank you for being a part of this
exciting journey and we look forward to your
continued involvement in the years ahead.
P.V. Pathirana
Chief Executive Officer/
General Manager
24th March 2010
[Highlights 26] [Chairman’s Message 28] [Chief Executive Officer/General Manager’s Review 32]
[Board of Directors]
[Corporate Management 42] [Executive Management 49]
[Zonal Management 54] [Business Review 55] [Financial Review 67] [Human Resources 78]
[Corporate Social Responsibility 81] [Outline of Our Reporting Initiatives 84] [Moments in Time 88] [Awards 90]
[Compliance Report 91] [Corporate Governance 94] [Subcommittees of the Board 101] [Risk Management 106]
38
39
1. Mr. W. Karunajeewa
Mr. W. Karunajeewa, joined the Board of
People’s Bank in May 2007. He is also the
Chairman of People’s Leasing Company Ltd.,
a fully-owned subsidiary of People’s Bank.
He is an Attorney-at-Law and also holds a
B.Com. Degree.
Prior to his appointment as Chairman of People’s
Bank, he served as Chairman of the Employees'
Trust Fund (ETF) Board from December 2005 May 2007 and also as the Chairman of Ceylon
Fisheries Corporation from October 2000 to
December 2001.
He has also held the position of Working
Director at Ceylon Fisheries Corporation and
ETF Board.
2. Mr. Chandrasiri de Silva
Mr. Chandrasiri de Silva, an Attorney-at-Law joined
the Board of People’s Bank in January 2006.
He counts over 20 years of active practice in the
District Courts, Appeal Courts and Supreme Court.
Currently, he is the Chairman of People’s Travels
(Pvt) Ltd. and he is also in the directorate of
People’s Insurance Ltd. - a subsidiary of People’s
Leasing Company Ltd., which are subsidiaries of
the People’s Bank.
He is also a Director of the Centre for Monitoring
of Free and Fair Elections and Democratic Rights.
He has completed the Master of Laws
Postgraduate Degree course conducted by
University of Wales, UK in International
Trade Laws.
40
3. Mr. Gunasoma
Wickramasinghe
5. Mr. Anil Parakrama
Weerasinghe
Mr. Gunasoma Wickramasinghe, an Attorneyat-Law was appointed to the Board of People’s
Bank in January 2006.
Mr. Anil Parakrama Weerasinghe, who holds a
Degree in Textile Technology, was appointed to
the Board of People’s Bank in November 2006.
He was appointed to the directorates of People’s
Leasing Property Development Ltd. and People’s
Leasing Fleet Management Ltd., which are the
subsidiaries of People’s Leasing Company - a
subsidiary of the Bank.
In the year 2009, he was appointed to the
directorate of People’s Leasing Finance PLC
which is a subsidiary of People’s Leasing
Co. Ltd. - a subsidiary of People’s Bank.
Mr. Wickramasinghe who holds an LLB Degree,
counts over 26 years of practice as a Lawyer.
He has served as the Chairman of Southern
Province Provincial Council during the period of
1995 to 1999.
4. Mr. R.A. Jayatissa
Mr. R.A. Jayatissa, an Economist, is the Senior
Economic Policy Advisor to the Ministry of
Finance and Planning. He has served as
Director of Economic Research and Assistant
Governor of the Central Bank of Sri Lanka.
He has also served as a staff member and
later as a member of the Executive Board
of the International Monetary Fund. During
August 2005 to November 2008, he was Deputy
Secretary to the Treasury and Senior Economic
Policy Advisor to the Ministry of Finance and
Planning. Mr. Jayatissa was appointed to the
Board of People’s Bank in January 2006.
He holds a BA (Hons.) Degree in Economics
(University of Sri Lanka), MA in Development
Economics (Williams College) and MA in
Political Economy (Boston University, USA).
He has wide experience in the fields of Banking
and Finance, Macroeconomic and Public Sector
Economic Policy Issues.
He is also a Director of J.P. Weerasinghe &
Company Ltd. and Silicon Valley Software
Solutions Ltd.
He has served on the Board of People’s Bank
during the period 1996 to 1999. He is a former
Director of Export Development Board and
Lanka Cement Company Ltd.
6. Mr. D.J.D. Jayakody
Mr. D.J.D. Jayakody was appointed to the
directorate of People’s Bank in July 2007. At
present, he is a Senior Lecturer at the Wayamba
University of Sri Lanka in Kuliyapitiya.
He holds a B.Sc. Special Degree in Public
Administration and MBA awarded by the PIM
of the University of Sri Jayewardenepura. He
has gained senior management experience in
Accounting, Finance, Auditing, Human Resource,
Quality and Productivity and Training. He has
served in many capacities as Accountant, Chief
Internal Auditor, Deputy General Manager and
Additional General Manager.
He has served in the Faculty of Management
and Finance, Faculty of Graduate Studies of the
University of Colombo as a Visiting Lecturer.
41
Mr. Jayakody is a Board Member of the People’s
Leasing Company Ltd., People’s Leasing Property
Development Ltd., People’s Leasing Fleet
Management Ltd. and People’s Leasing Finance
PLC. He has served as a member of National
Labour Advisory Council under the Ministry of
Labour and as a Director of National Livestock
Board. He was a Reserve Assistant Superintendent
of Police and was in charge of Recruitments and
Police Reserve Training Colleges.
Mr. Hewage M.Sc. (UK), B.Sc. (S.I.) is also the
Chairman/CEO of the Sri Lanka State Plantations
Corporation. He also served as the Chairman/
CEO of the State Printing Corporation, Provincial
Road Development Authority (WP), Director Janatha Estates Development Board, Janatha
Fertilizer Enterprises Ltd., General Manager of
Sri Lanka Institute of Co-operative Management
and Assistant General Manager and Regional
Manager of Coconut Cultivation Board.
He is a Fellow of the Institute of Public Finance
and Development Accounts and a member of
The Institute of Management of Sri Lanka.
Mr. Hewage has a vast working experience
around 40 years in the spheres of Consultancy,
Management, Marketing, Projects, Agriculture,
Planting, Extension and Printing.
7. Mr. Wajira Swarna Sri
Bandara
Mr. Wajira Swarna Sri Bandara, an Attorneyat-Law & Notary Public was appointed to the
directorate of People’s Bank in August 2007.
He is also a Director of People’s Leasing Co.
Ltd. and also serves on the directorate of
People’s Leasing Property Development Ltd.
and People’s Insurance Ltd., which are
subsidiaries of People’s Leasing Company.
He holds a BA (Hons.) in Criminology and Criminal
Justice and has served as a Director at Ceramics
Corporation.
8. Mr. K.L. Hewage
Mr. K.L. Hewage was appointed to the
directorate of People’s Bank in July 2009. He
serves as Chairman of People’s Merchant Bank
PLC, which is an associate of the Bank.
9. Mr. Lalith R. de Silva
Mr. Lalith R. de Silva was appointed to the
directorate of People’s Bank in September 2009.
Presently, he is the Secretary to the Ministry of
Trade Marketing Development, Co-operatives
and Consumer Services.
He holds a Special Degree in Economics (Hons.)
and Fellow Member - IPFDA Member Sri Lanka.
He served in the capacity of Deputy Secretary to
the Treasury (Ministry of Finance and Planning)
and also Director General - Department of
Treasury Operations.
In addition to the above, he serves as Chairman
of Natwealth Corporation and E-services Ltd.
and as a Board Member of West Coast Power
(Pvt) Ltd., SLITT, State Trading (Co-operative
Wholesale) Co. Ltd.
[Corporate Management]
[Board of Directors 38]
[Executive Management 49]
42
43
44
1. Mr. P.V. Pathirana
(Chief Executive Officer/General Manager)
Mr. Pathirana has 38 years of experience
at the People’s Bank, is a B.Sc. (Business
Administration) Graduate and a Fellow Member
of the Institute of Bankers of Sri Lanka (FIBSL).
He holds a Diploma in Bank Management from
the Institute of Bankers of Sri Lanka. He has
wide experience working from Branch Manager
level to Senior Deputy General Manager level
in different areas of the Bank, specialising in
Microfinance and Development Banking.
He took over as the CEO/GM of People’s Bank
on 19th January 2009.
He is also a Director of People's Merchant
Bank, Credit Information Bureau, Institute of
Bankers of Sri Lanka, Agricultural and Agrarian
Insurance Board, People's Travels and People's
Leasing Finance PLC.
2. Mr. N. Vasantha Kumar
(Senior Deputy General Manager - Treasury and
Investment Banking)
Mr. Vasantha Kumar holds a Master’s Degree in
Business Administration and counts nearly
31 years of experience in Treasury Management.
He joined the People’s Bank in March 2001,
prior to which he served as Treasurer at ANZ
Grindlays Bank, Colombo for many years.
Mr. Kumar has re-engineered the Bank’s
Treasury Unit from a relatively support-oriented
service unit to a frontline revenue-earning
business segment and has significantly
enhanced the technical expertise and service
quality that is delivered by the Treasury team.
He is the Past President of the Association of
Primary Dealers and of the Sri Lanka Forex
Association.
45
3. Mr. Ahamed Sabry Ibrahim
5. Mr. A.M. Chandrasagara
(Senior Deputy General Manager - Risk and
Compliance)
(Senior Deputy General Manager/
Chief Internal Auditor)
Mr. Ibrahim has over 26 years of banking
Mr. Chandrasagara has 39 years of experience
experience both locally and internationally,
primarily in the areas of Corporate Banking,
Treasury Management and Risk Management.
He holds an Honours Degree (B.Sc.) from the
University of Colombo and is a Fellow of the
Chartered Institute of Bankers - UK (FCIB).
at People’s Bank in the fields of General
Banking, Accounting, Finance, Inspection
and Internal Auditing. He is a Fellow of the
Institute of Bankers of Sri Lanka (FIBSL) and an
Associate Member of The Institute of Chartered
Accountants of Sri Lanka (ACASL). He holds
the Diploma in Information Systems, Security,
Control and Audit conducted by The Institute
of Chartered Accountants of Sri Lanka with
the technical collaboration of the Institute of
Chartered Accountants of India and a Diploma
in Accountancy.
He is also a Director of People’s Merchant
Bank PLC.
4. Mr. H.S. Dharmasiri
(Senior Deputy General Manager - Operations and
Retail Banking)
Mr. Dharmasiri is a Graduate in Economics with
First Class Honours and Fellow of the Institute
of Bankers of Sri Lanka (FIBSL). He has also
obtained a Diploma in Bank Management from
the Institute of Bankers of Sri Lanka.
He joined the Bank as a Management Trainee
and his experience in the banking industry
spans over 34 years, during which time he
has served in various capacities ranging from
Branch Manager to his current position. He
serves in the Governing Board of the Institute of
Bankers of Sri Lanka and also as a Director of
Lanka Clear (Private) Ltd.
During this period, he has participated in a
number of training programmes conducted
by leading institutions in Sri Lanka. Further,
he has followed study courses relating to
Banking and Management by AIM (Philippines),
AOTS (Japan), NIBM (Pune) and University of
Colombia (New York).
Presently, he is the Chairperson of the Committee
of Internal Auditors of Banks, appointed by the
Sri Lanka Banks’ Association (Guarantee) Ltd., to
study fraudulent activities in banks and to suggest
systems and procedures to minimise such frauds.
He was a Member of the Council of the Institute
of Internal Auditors of Sri Lanka and was also a
Member of the Council of the Institute of Bankers
of Sri Lanka.
6. Mrs. Kanthi Atukorale
(Senior Deputy General Manager/Secretary to the
Board of Directors)
Mrs. Atukorale is an Attorney-at-Law with a
Degree in Bachelor of Laws and has 32 years of
experience in banking service. She has served
as the Additional Chief Law Officer prior to her
appointment as the Secretary to the Board of
Directors. She also held the office of Chief Law
Officer in an acting capacity during the period
of February 2006 to July 2008, in addition to her
duties as the Secretary to the Board of Directors.
46
7. Mr. K.U. Pushpakumara
8. Mr. M.T.M. Shuaib
(Director Research)
(Deputy General Manager - Credit Control)
Mr. Pushpakumara is in charge of the Research
Division of the Bank. His career experience
of over three decades covers the areas of
International Banking, Development Banking,
Human Resource Management, Branch
Business/Banking, Information Technology
and Corporate and Institutional Banking at the
levels of Branch Manager, Assistant Regional
Manager, Regional Manager, Zonal Assistant
General Manager and Deputy General Manager.
Mr. Shuaib counts nearly 30 years of service at the
People’s Bank. He joined the Bank in the capacity
of a Finance Officer and has integrated to the
banking functions and acquired wide knowledge in
credit-related activities. Prior to joining the Bank,
he has had several years of experience in Finance
and Management in two large State Institutions.
He is a Member of the Association of Accounting
Technicians of Sri Lanka and possesses part
qualification from the Chartered Institute of
Management Accountants (CIMA) in UK. He
has successfully completed a Management
Development Programme conducted by the
Postgraduate Institute of Management (PIM) of
the University of Sri Jayewardenepura.
He serves as an Alternate Director of the
Institute of Bankers of Sri Lanka (IBSL) and a
Council Member of the University of Moratuwa.
He is a member of the Chartered Management
Institute - UK, the Institute of Management Sri Lanka, the Association of Professional
Bankers of Sri Lanka, the Organisation of
Professionals Association and the prestigious
TMC (The Management Club) of Corporates.
He obtained his first Degree BA (Hons.)
in Mathematics from the University of
Peradeniya in 1975 and joined the People’s
Bank in 1977 as a Manager. He holds an MBA
from the University of Colombo, Diploma in
International Trade and has a professional
banking qualification AIB (Inter.) - SL as well.
His overseas exposure includes Development
Banking, Financial Management, Bank
Marketing, Branch Banking, Corporate
Excellence, etc., in India, Japan, Malaysia,
Singapore, USA, UAE and UK.
Mr. Shuaib retired with effect from
22nd January 2010.
9. Mr. Sarath Hendavitharana
(Chief Law Officer)
Mr. Sarath Hendavitharana counts nearly
40 years of service at the People’s Bank. He is
an Attorney-at-Law and holds a Bachelor of Arts
Degree as well as Bachelor of Laws Degree.
He joined the People’s Bank in 1970 and has
gained experience in the fields of General
Banking and Law.
His experience covers the areas of Banking
Law, Credit Recoveries, Corporate Law, Labour
Law and Land Redemption.
Mr. Hendavitharana retired with effect from
7th February 2010.
47
10. Mr. Deepal Abeysekara
11. Mr. Yohan Soza
(Head of Marketing, Public Affairs and
Corporate Social Responsibility)
(Head of Finance)
Mr. Abeysekara joined the People’s Bank in
March 2001. To date counts 27 years of solid
experience in Strategic Business Development
and Marketing of Financial Services. He has
been responsible for setting up the Sales,
Marketing and Strategic Business Development
Operations in financial sector organisations,
and has successfully led Corporate Brands to
the top positions in their respective industries in
Brand Value.
Mr. Abeysekara is a Chartered Marketer and a
Fellow of the Chartered Institute of Marketing UK, a Member of the Chartered Management
Institute (CMI) - UK and a Certified Member
(CMA) of the Institute of Certified Management
Accountants. He holds a Postgraduate Diploma
in Marketing from the Chartered Institute of
Marketing - UK and an MBA from the University
of Southern Queensland, Australia.
He is currently a Member of the Executive
Committee of the Chartered Management
Institute - UK, Sri Lanka Branch and a Council
Member of the Association of Professional
Bankers. He was honoured by World Bank
Congress 2009 with the award for brand
leadership.
Mr. Soza was appointed as Head of Finance of
the Bank on 1st May 2007.
He is a Member of The Institute of Chartered
Accountants of Sri Lanka and counts more than
16 years of experience in the private sector
in the disciplines of Finance, Management
Information, Strategic Planning and Equity
Research. He received his professional training
at M/s Ernst & Young before joining Lanka ORIX
Factors Ltd. (LOFAC), where as Chief Accountant,
he oversaw their Finance, Management
Information and IT Departments. More recently,
Mr. Soza served Amba Research Lanka (Pvt)
Ltd. as Vice-President, and was involved in
comprehensive equity research and stock
recommendations for one of the most reputed
investment banks in the world.
12. Dr. Nihal Ranjith Jayatilake
(Deputy General Manager - Retail Banking)
Dr. Jayatilake is in charge of Deposit Products,
Personal Loans, Pawning Business, Development
and Microfinance, Co-operative and Credit Card
business that are the foremost-targeted business
sectors of paramount importance to the Bank.
After graduating in Economics and Anthropology,
he obtained the MA & Ph.D. Degree in Mass
Communication from the University of
Sri Jayewardenepura. In 1995, he won the
48
prestigious Gold Medal for the most outstanding
student in journalism from the University of
Colombo followed by the Special Japanese
Prize awarded by the Hideo Shimizu Trust
Fund in passing the Diploma in Journalism. He
also successfully completed the Postgraduate
Diploma in Writership and Communication in
1996 at the University of Sri Jayawardenapura.
He is a finalist of the Institute of Administrative
Accounting - UK and possesses part
qualification from the Chartered Institute of
Management Accountants (CIMA) in UK.
He is a member of the Association of Professional
Bankers of Sri Lanka and several Academic Bodies.
14. Mrs. Chandani Werapitiya
He was the Pioneer Editor of the 'Bankuwai Obai'
the in-house magazine of the Bank, and he
served for 20 long years as its Chief Editor. He
still assists this publication as a consultant. He
authored also the Bank’s official bulletin 'Banku
Puwath' and the book 'Yuga Mehewara' written on
the history of the Bank.
Dr. Jayatilake who is also a freelance journalist,
has to his credit a number of novels, short-story
books and text books written by him. His recent
research text on 'Marketing' and 'Advertising'
received much acclaim and appreciation from
readers as well as critics.
13. Mr. Lionel Chandrasiri
(Deputy General Manager - Human Resources)
Mr. Chandrasiri counts 30 years of experience
at the People’s Bank. He joined the Bank in the
capacity of a Finance Officer and got integrated
to the mainstream banking functions.
During his period of service with the People’s
Bank, he has held responsible positions in the
capacity of Budgetary Control Officer, Chief
Executive Officer (National Development Trust
Fund), Personal Assistant to the CEO/General
Manager and Assistant General Manager
(Offshore Banking).
During his 30 years of service, he has
participated in several training programmes
local and overseas.
(Acting Deputy General Manager - Corporate and
International Banking)
Mrs. Chandani Werapitiya is in charge of the
Corporate Banking Division and Offshore Unit.
She holds a Second Class Honours Degree
(B.Sc.) in Business Administration and M.Sc.
(Management) from the University of
Sri Jayewardenepura and has a professional
banking qualification AIB - Sri Lanka.
She joined the Bank in June 1987 as a
Management Trainee and counts nearly
22 years of experience in the fields of Customer
Services, Project Lending, Corporate Banking
and Credit Management.
[Executive Management]
[Board of Directors 38] [Corporate Management 42]
49
1. Mr. W. D. Dayananda
(Assistant General Manager Overseas Customer Services)
2. Mr. W.M.S. Wijayasinghe
(Assistant General Manager Micro, SME Development & Co-op w.e.f. 14.09.2009 and retired w.e.f.
16th January 2010)
3. Mrs. M.S. Arsacularatne
(Deputy Head of Finance)
4. Mr. Sobitha Weerasekera
(Deputy Head of Information
Technology)
5. Mr. S.M. Maharoof
(Assistant General Manager Credit Control & Supervision)
6. Mr. L.B.N. Siripala
(Assistant General Manager Internal Audit)
50
7. Mrs. G.P.R. Jayasinghe
(Assistant General Manager Services)
8. Mr. Piyasiri Waduge
(Assistant General Manager Marketing & Product Development)
9. Mr. Clive Fonseka
(Deputy Head of Treasury)
10. Mr. G.G.C. Ariyarathne
(Assistant General Manager Branch Operations)
11. Mr. O.K.H. Perera
(Assistant General Manager/CEO General Manager’s Department)
12. Mr. S. Wanniarachchi
(Assistant General Manager Off-Shore Banking Unit)
51
13. Mr. S.A.R.S. Samaraweera
(Assistant General Manager Recoveries - Corp II/FCBU/Special
Assets Unit)
14. Mr. K.B. Rajapakse
(Assistant General Manager Branch Credit)
15. Mrs. S. Prathapasinghe
(Assistant General Manager Corporate Banking Division)
16. Mr. G.B.R.P. Gunawardena
(Assistant General Manager Treasury Unit - Back Office)
17. Mr. R. Pathirage
(Deputy Secretary to the
Board of Directors)
18. Mrs. S.W.A.D.S. Kalyani
(Assistant General Manager Finance & Management Accounting)
52
19. Mr. Jayantha Newunhella
(Assistant General Manager - Trade
Finance Corporate Banking Division)
20. Mr. R.M.S.B. Ratnayaka
(Assistant General Manager Personal Banking)
21. Mr. G. Lionel
(Assistant General Manager Recoveries - Corporate Banking
Division)
22. Mr. H.C. Fernando
(Assistant General Manager Human Resources)
23. Ms. G.M.R.P. Wijeratne
(Deputy Head of Primary Dealer Unit)
24. Ms. G. Ekanayake
(Deputy Chief Law Officer Credit & Commercial Agreements)
53
25. Mr. W.K.S.B. Nandana
(Deputy Chief Law Officer - Recoveries)
26. Mr. A.W. Vipulaguna
(Deputy Chief Law Officer - Operation)
[Board of Directors 38] [Corporate Management 42] [Executive Management 49]
[Zonal Management]
[Business Review 55] [Financial Review 67] [Human Resources 78]
54
1. Mr. K. Anandarajah
(Zonal Assistant General Manager Northern Zone)
2. Mr. T.A. Ariyapala
(Zonal Assistant General Manager Western I Zone)
3. Mr. B. Sirisena
(Zonal Assistant General Manager Wayamba Zone)
4. Mr. A. Siripala
(Zonal Assistant General Manager Southern Zone)
5. Mr. P.M. Dharmapriya
(Zonal Assistant General Manager North Central Zone)
6. Mr. S.A. De Saram
(Zonal Assistant General Manager Western II Zone)
7. Mr. K.B.S. Kulasinghe
(Zonal Assistant General Manager Central Zone)
[Business Review]
[Financial Review 67] [Human Resources 78]
55
Personal Banking
Our diverse mix of products designed to meet
needs and aspirations at every stage of life
encompasses millions of customers, who we
nurture from cradle to their twilight years.
From savings, to personal credit, high interest
deposits to current accounts, these customers
are serviced through our all encompassing
mission of providing excellent customer service
responsively, efficiently and professionally. Our
partnerships are built on a foundation of being
long term and these partnerships continue to be
strengthened with our focus on being proactive
and inclusive of all customer segments.
These customer service tenets are expanded
through our consistent maintenance of service
improvement and network expansion. This
year with the addition of new branches and
service centres, our branch network has
expanded to 670. ATMs were increased to 300
with the addition of 60 more this year. This is a
strategic move to enhance the Bank’s product
and service delivery points by improving
penetration, visibility and also branding.
One of the primary initiatives this year in our
focus towards innovative customer services and
new product development was the development
of a detailed MIS (Management Information
System), which enhanced the personal
banking features we already have, enabling
us to implement and facilitate a better facet
of customer service overall. In addition, our
innovations including Internet banking, Palm Top
banking and SMS banking continue as pivotal
innovations that have enhanced our accessibility,
penetration and the futuristic style of banking
we aim to continue with in order to maintain our
market leadership as a bank for the People.
As already mentioned, our product portfolio
encompasses customer needs from cradle to
twilight years. This product cycle therefore,
begins with Isuru Udana, our account for infants,
followed by Sisu Udana our most successful
student-oriented product. The latter enfolds the
lives of over two million children, resulting in a
notable mobilisation of Rs. 3 Bn during the year
2009. These two products are conceptualised to
reach beyond the conventional banking ethos
by integrating social and cultural facets into a
knowledge-gaining culture among the future
citizenry of the country.
Spurring young leaders with financial mobility
in order to empower them to map a future for
themselves and the nation, our young executive
and young entrepreneur product, YES enhances
quality of life and makes youthful dreams a
reality. The extended brand, YES Future Stars
is aimed at the age group of 16 Plus, youth
preparing for the Advanced Level examination
and higher studies beyond.
Our women’s empowerment product, Vanitha
Vasana, recognises the catalytic role women
play in buoying the national economy. Launched
many years ago, to commemorate International
Women’s Day, this year too, the ceremony
felicitated women for their pragmatism and
unassuming leadership in decision making,
prudent money managing and home making.
In addition, this year’s value addition on the
theme, ‘Double Your Value’, contributed
extensively to deposit mobilisation, growing the
deposit base by 15%.
Aligned with the Government’s ten-year plan
built on the UN’s Millennium Development
Goals, the concerted agricultural drive, which
aims to make Sri Lanka sustainable in food,
[Business Review]
56
in the next few years is ably assisted by our
product, the Harvest (Aswenna) savings
account, specifically designed towards
developing the agricultural industry of our
country. Launched in 2007, the product which
is especially designed for farmers, encourages
savings, prudent money management and the
creation of a nest egg for future planning.
Our pawning product Swarna Pradeepa, which
offers discreet and reliable pawning facilities
is a result of our constant interaction with
people from all walks of life. This product was
built on a solid platform of understanding and
the confidence and confidentiality we maintain
among our customers has seen the pawning
portfolio post a growth of 9.2 % this year.
A product launched this year is the People’s Gift
Voucher, which fulfilled a need that we observed
in people, wanting to present gifts of value in
a rather materialistic world. The gift vouchers
are tangible prudent investments, which will
be appreciated at special occasions such as
weddings, births, birthdays, anniversaries and
other milestone ceremonies.
Given the economic hardships that numerous
segments of society face in varying degrees and
the responsibility we, as a national bank must
accept in creating an enabling environment for
the people, our niche products including Guru
Setha, Suwa Sewana and PALS are designed
for individuals in various competencies for
the furtherance of their future plans. These
products grant access for the purchase of
personal needs, housing to household durables,
vehicles, funding education and setting up
professional private practice for teachers,
health sector employees and professionals.
With the end to a protracted war of nearly three
decades, People’s Bank felt an acute need to
reward the heroism of the service forces for
their integral part in creating a land, devoid
of war. Deya Viru Pranama is a loan scheme
that is a tribute to their valour and is aimed at
allowing the members of the forces to utilise
the benefits in uplifting their families.
Our products launched last year, the Kaptura
Savings Certificate and the Five Year Fixed
Deposit, which guaranteed higher returns
and in turn, the security and stability of a
Government-owned bank continued to add to
our profitability figures. Our expatriate worker
product, Videshika in partnership with the
Foreign Employment Bureau of Sri Lanka, also
gained popularity due to its comprehensiveness
in enabling these migrant workers to use their
income more effectively and productively. This
loan scheme mitigates expenses incurred in
pre-departure and also assists in housing and
subsequent entrepreneurial ventures.
Making housing accessible to all, yet another
primary target within the United Nations
Millennium Development Goals, our aim to
providing shelter is worked through Jaya
Nivasa, a comprehensive housing loan scheme
for public sector employees.
And, while life continues from the cradle, as
already mentioned, our product for the twilight
years, aimed at senior citizens is the Parinatha
account. This is a product that was relaunched
this year and includes a host of added benefits
in addition to the exciting prospect of a
pilgrimage to India for 25 selected customers.
[Business Review]
57
Credit Card Business
Overseas Customer Services
One of the most profitable and successful
financial products, the People’s Bank Credit Card
was launched over 15 years ago aligned to VISA
and a gamut of globally-designed innovations,
modern technology, access points and an ever
expanding network of merchant outlets. Using
our strength of over 630 delivery points through
our branch network and a customer base of over
10 million, the value additions including bundling
of other products and a personalised service
premise delivered by the Bank to its credit card
customers remain unmatched.
We have continued the extraordinary
momentum, which we have been showcasing
over the last few years, with the number of
inward remittances showing a remarkable
increase of 15%, surpassing the 2008 figure
of 898,649, inward SWIFT/Web/Telegraphic
Transfers/Drafts, etc., handled. The substantial
increase in the volume of inward remittances
is consequent to the introduction of the Bank’s
globally accessible web-based remittance
product, People’s e-Remittance. Given that
expatriate remittances continue to remain a
vital source in sustaining the national economy,
this product which is supported by advanced
technology, facilitates transfers within minutes
and certainly marked a giant leap for the Bank’s
remittance service.
We have also been able to grow our customer
base due to having the lowest fee structure
among the card issuing banks in the country,
allowing us to attract the middle income groups
and assisting in market penetration.
Our Core Banking Solutions too, have been
advantageous with payments being credited
speedily and timely responsiveness resulting
in a rapid reduction in cardholders’ attrition
and complaints. Linking our ATM network
to VISA interchange has provided expansive
accessibility, while a 24-hour service desk
which monitors card transactions online, has
helped us brand our product as a Risk Free
Credit Card to a greater extent.
Other modern innovations including the SMS
alert message service, expanding our merchant
network, facilitating POS terminals with other
renowned brands like Master and AMEX to
enhance network compatibility and marketability
of POS terminals in addition to pursuing EMV
compatibility in the near future continue to spur
the growth of our credit card business.
The entire inward remittances portfolio notched
a total of Rs. 81.3 Bn an increase of 18.5% over
last year’s Rs. 68.6 Bn. The increase is also
attributable to the value additions infused over
the year, which included an enhancement of
technology, product and marketing facets and
the strengthening of relationships between
overseas banks and exchange companies.
These were all supported by a team of skilled
representatives to liaise with the remittance
partners and the expatriate customers.
Correspondent relationships too were expanded
this year with Banks and Exchange Companies
in Saudi Arabia, Israel and Oman joining our
portfolio of correspondents. We are currently
in the process of working on correspondent
arrangements with other countries including
Australia, the UK and Canada which have a high
concentration of Sri Lankan expatriates, in order
to make foreign exchange remittances easier and
more efficient, and to ensure that transfers are
effected through official channels.
[Business Review]
58
A savings scheme designed for infants (from birth to six years of age). A new account
could be opened with Rs. 100/-. Account holders will be entitled to attractive gifts such
as mugs, school bags in addition to a bonus interest on the account balance. The Isuru
Udana account will be automatically converted to a Sisu Udana account when the child
starts schooling.
A minors’ savings scheme for children six to eighteen years of age. An account could
be opened with Rs. 100/-. As the account grows, the child will be entitled to a range of
attractive gifts. In addition, special cash bonuses will be awarded to account holders who
pass the G.C.E. Ordinary Level and Advanced Level examinations with ‘A’ grade passes in
the first sitting. The Sisu Udana account will be automatically converted to a YES account
once the account holder turns eighteen years of age.
The savings account designed specially for today’s young executives who aspire to be
independent. The minimum initial deposit is Rs. 2,000/-. The Yes account provides attractive
interest rates with special benefits to account holders, which include: standing orders free of
charge, loan and leasing facilities, a free ATM card, as well as a free credit card.
Yes Future Stars is a brand extension of the existing youth account which is called ‘YES’
and this will be targeted towards those who are about to leave school.
A savings scheme exclusively designed to understand the needs of today’s women. A new
account could be opened with a minimum of Rs. 500/-. Comprehensive loan facilities are
also made available for housing, self-employment, children’s educational needs etc.,
allowing every woman to fulfil her dreams, and be a strength to them.
The Parinatha account is the Bank’s tailor-made product for the senior citizens of today.
A range of attractive benefits specially designed for this segment could be enjoyed by
either making a Parinatha fixed deposit or by opening a Parinatha savings account for
Rs. 500/- or above, with Parinatha life beginning at 55.
[Business Review]
59
The Jaya Nivasa Housing Loan helps you to build your dream home in convenience,
providing flexible loan facilities to suit your needs with competitive interest rates. Loans
could be obtained to purchase a land to build a house, to purchase a house, to build a
house, or even to add an extension to or renovate a house. In addition, the loan scheme
also grants a six-month grace period, a loan up to 75% of the value of the property, etc.
A Jana Jaya account can be opened with a minimum deposit of Rs. 2,000/- with all
subsequent deposits being Rs. 200/- or more. Attractive interest rates, loan and leasing
facilities and special offers for overseas travel are some of the many benefits of Jana Jaya
savings accounts.
People’s Bank is indeed a veritable foundation of wealth. Account holders who maintain
monthly minimum balance of Rs. 20,000/- or above in any of the People’s Bank savings
account or savings certificate (Branded and unbranded other than NRFC, RFC and fixed
deposits) or minimum credit balance of Rs. 10,000/- or more in current accounts, will be
eligible to enter the draw and win fabulous prizes in our Monthly draw and the Year-end
Super draw.
The pawning scheme of People’s Bank provides you the best value for your gold for urgent
cash requirements. The scheme, which is backed by a confidential and personalised service
throughout the branch network, provides both safety and security to all pawned items.
‘Harvest’ (Aswenna) is a special savings account which offers a range of benefits that will
improve the quality of lives of the people who are engaged in agricultural and agri-related
projects with seasonal incomes.
The People’s Bank Ethera Isura NRFC account secures a higher interest on your foreign
earnings. This account is also the fastest way to receive money from abroad through the
670 branches and saving centres of People’s Bank.
[Business Review]
60
Corporate Banking
Continuing as a primary driver in enhancing
the Bank’s overall business growth through
serving both the corporate and Government
with dynamism and commitment, supported
by professionalism acquired through decades
of experience, the Corporate Banking and
International Banking Division increased its
annual contribution to the Bank’s performance
and profits ably assisted by an expansive
correspondent banking network numbering 300
in over 105 countries and a domestic branch
network comprising a total of 670.
Several infrastructure projects driven through
the Government’s mega infrastructure
development plan for the country were financed
by this division. Our largest contribution in
this respect was as the single financier for
the upgrading of infrastructure at the Ceylon
Petroleum Storage Terminals Ltd. on a
staggered basis. We were also funding partners
in the importation of fertilizer on a large scale,
wind power generation and various power
projects mooted by the Ceylon Electricity Board.
In addition, we were also involved in major
private sector construction projects vis-à-vis
providing necessary performance guarantees
and financial assistance. With our input into
these infrastructure projects, mostly carried
out by local entrepreneurs, we have been a vital
arm in saving foreign exchange for the country.
Our loan portfolio saw enhancement with the
granting of advances to the state sector, with
the fertilizer sector expanding substantially.
However, it must be mentioned that we are
very conscious of the need to maintain a wellbalanced financing portfolio which balances both
the state and private sector lending.
Trade Sector
Ably supported by our Correspondent Banking
Division placed in over 105 countries, trade
services concentrated on improving the value
added services provided to our clients over
the year, while relentlessly pursuing efforts to
increase efficiencies and response time. Human
resources development therefore was the axis
upon which these aspects were worked upon, in
anticipation of the envisaged transformations in
the future; we do believe that this division will be
a prime player in the Bank’s journey ahead.
Trade Services this year, remained aligned
to the Corporate Banking Division’s vision of
‘Being the Nation’s Exporters’ Bank’. Several
programmes were launched to attract exporters
and to increase countrywide exporter share.
We also garnered the support of exportoriented organisations including the Central
Province Exporters Chamber to meet this goal.
These initiatives will pave the way to enhanced
results in the year 2010.
Our well-established SWIFT unit processes
approximately 2,500 messages daily for the
entire branch network, displaying extraordinary
efficiency in facilitating foreign currency
payments and receipts which continue to remain
unmatched within Sri Lanka’s banking industry.
Off-Shore Banking Unit (OBU)
Primarily focusing on the needs of regulatorily
approved customers who are essentially
BOI registered export companies, the OBU
maintained its growth momentum in performing
advances, despite the global recession seen in
2009. With a prudent focus essentially on the
apparel and tourism sectors, the OBU continued
its activities with an initial drop in the first half
of the year, compared to 2008. However towards
[Business Review]
61
the latter part of the year, we did see a gradual
upward movement as both the depressed
economy was gradually opening up and more
confidence was gained in an overall context.
Development and Microfinance
Banking
We consciously recognise the crucial role
we play in the advancement of the country’s
macroeconomy and thus, our development
banking platform has contributed to this for
almost five decades, strengthening the rural
economy and spurring a renaissance in the
co-operative movement. The sectoral focus
is on revitalising agriculture, livestock and
small and medium entrepreneurs to develop
their industries. The loan schemes would in
turn enhance domestic production, create
employment opportunities, develop the banking
system, enhance skills and talents, empower
various segments of society including women,
utilise and optimise the use of untapped
resources and uplift the rural economy overall.
2009 was an extremely significant year for
People’s Bank in relation to microfinancing
activities. The Awakening North and the
Awakening East Loan Schemes have been
instrumental in spurring a resurgence of
economic activities in the North and the East
of the country with the ending of the thirtyyear war. Using four prime methodologies, we
began assisting the Sri Lankan entrepreneur to
revitalise the entrepreneurial spark, distributing
loans and providing non-financial services
through varied programmes, especially micro
and development activities.
Loan Schemes with Refinance Facilities
About 10,000 beneficiaries identified through
the Poverty Alleviation Micro Finance (Revolving
Fund) Project Loan Scheme and the Stage II of
the Poverty Alleviation Micro Finance Project
Loan Scheme received loan facilities. These are
implemented under the aegis of the Central
Bank of Sri Lanka with the primary aim of
enhancing income levels among low income
families and in creating sustainable income
avenues. Using the Group Methodology due
to the various challenges encountered by the
targeted groups in producing security as dictated
by the conventional banking system, loans
were released on the inter-se guarantee of the
members within these socially mobilised groups.
While promoting microfinance on a large scale,
this also instigated a loyalty and confidence in
the Bank among this target segment, helping us
to grow our customer portfolio.
Numerous customers identified under the
Dasuna Loan Scheme were also granted loans
in the districts of Hambantota, Galle and Matara
with financial sponsorship of the National
Development Bank, which was implemented for
the development of the Southern Province in 2009.
Loan Schemes with Interest Subsidy
The Agro-Livestock Loan Scheme was the
most popular during the year, with the Bank
actively encouraging SME entrepreneurs to
develop milk production and enhance income
levels through a sustainable dairy development
initiative. With the increase in milk production,
the loan scheme also spurs the reduction of
foreign exchange expended by the country on
imported milk foods.
[Business Review]
62
New Comprehensive Rural Credit Scheme
(NCRCS) for Farmers
These are credit schemes which fund farmers
in the cultivation of paddy, subsidiary crops,
vegetables and seed material production and
are also available for buyers who purchase
agricultural produce under Forward Sales
Contracts (Govi Sahanaya). The scope of the
funding has now expanded to pineapple,
sugarcane, ginger, bee honey production,
floriculture and betel production as well as
the purchasers of these products. The Bank
also extended its assistance to a number of
‘Wap Magula Festivals’ around the country. The
recovery rate in these schemes is exceptionally
high and stands at a creditable 95%.
Micro Entrepreneurial Promotions
People’s Fast Loan Scheme (Micro Credit)
A total of Rs. 3 Bn was granted under the
People’s Fast Loan Scheme, financed by our
own funds and thus seeing a substantial
reduction in interest rates during the year.
Microfinancing received an additional fillip this
year with the introduction of palm top banking,
taking banking literally to the doorstep of these
micro entrepreneurs, making daily trading
and transactions easier and more convenient.
Further, the Athamaru Loan Scheme, relaunched
this year, added to the growth in customer
numbers with its instant credit extended to
those customers who participate in our daily
and weekly promotional savings programme,
providing significant relief to those who are
compelled to borrow from informal lenders at
high interest rates.
The Co-operative Sector
A very notable feature in the development of the
rural economy, which for long was given a back
seat and not given its due place as a primary
contributor towards economic upliftment, the
Co-operative Sector was given a boost this year
with the People’s Bank establishing a partnership
to establish a supermarket system with Co-op
City and Mini Co-op City network. These business
outlets have proved to be vital cogs in the
economy, posting commendable profitability while
selling products at affordable prices.
In order to improve knowledge and skills of the
Co-operative sector People's Bank created a
special fund in 1982. In 2009, the Bank disbursed
Rs. 13 Mn to the National Co-operative Council
of Sri Lanka, Co-operative Ministry and Primary
Co-operative Societies from this fund.
The Bank continued to appoint and train personnel
to further strengthen the co-operative movement
by instilling good financial management practices.
Treasury
Despite the global economic crisis permeating
most areas of business, it is extremely creditable
to note that the Treasury Unit performed
exceptionally well, exceeding expectations and
targeted forecasts. Foreign exchange income
peaked at Rs. 1.1 Bn from Rs. 818 Mn of last year,
achieved in an increasingly competitive milieu.
Market volumes showed considerable upward
movement and the USD/LKR forward markets
remained very active.
The Sri Lankan Rupee depreciated quite
significantly in the first four months of 2009
and the Central Bank of Sri Lanka imposed
restrictions which in turn reduced inter-bank
trading activity. However, with the onset of peace
and an end to the war in May 2009, the increase
in remittances and the receipt of the IMF facility,
the Central Bank was compelled to support
the USD with the purchase of US Dollars in the
[Business Review]
63
inter-bank market. This boosted the country’s
reserves to a dramatic US $ 5.228 Bn.
Support Services
During the first half of the year, the Bank’s
Treasury focused primarily on managing
the Bank’s liquidity position in both local
and foreign currency. The Treasury played a
pivotal role in identifying needs and securing
funding. By the end of the third quarter, the
Bank had positioned itself as one of the largest
liquidity providers to the LKR market, reducing
its dependency on the inter-bank market
for foreign currency. We also strengthened
our position as a market maker in the USD/
LKR currency pair, in both spot and forward
markets. The strong market position we have
continuously espoused has enabled us to quote
more competitively and increase our customer
volumes in exports, imports and remittances.
The integration of Information Technology into
the very innards of the operational and mindset
transformation of the Bank has enabled us
to go from merely being a state bank to one
that continues to keep the pulse on people’s
needs and build on our products and services
efficiently and with excellence. With our
strategic trusses built upon strengthening our
network of branches, the 216 branches and
245 service centres totalling over 460 are now
on a common platform, giving us a definite
competitive advantage. With sixty new ATMs
added to our portfolio, the achievement of
commissioning the 300th ATM into our network
was certainly commendable.
With the Primary Dealer Unit being more active
in debt trading, using selective strategies to
optimise results on LKR yield curve shifts, we
were able to add Rs. 674 Mn as capital gains,
a substantial increase from the envisaged
forecast. Yields in Government Securities
continued to decline sharply however, resultant
of excess liquidity.
Three trainee dealers joined the Treasury Unit
this year, giving us additional scope to concentrate
on our core activities of trading and corporate
sales. The dealing room was also relocated
to the Head Office building in August this year
which instigated a substantial cost saving and
improved efficiencies in our service delivery. We
are also in the process of implementing a stateof-the-art Integrated Treasury System which will
further enhance our ability to provide customised
solutions to our clients and build further on our
customer service tenets.
Information Technology
This year also saw us utilising IT with its
concept of ‘Banking at your Doorstep’ into the
IDP camps with the deployment of four mobile
on-line branches in Vavuniya and Palm Top
banking taking Banking at your Doorstep to
another realm, using it as a means to create a
prudent micro entrepreneurial culture. Palm
top banking was extended expansively to the
agricultural community, bridging the gap in
banking services further with the use of IT.
SMS banking was extended with the inclusion
of Mobitel and an impressive improvement in
software development being carried out by our
IT team. The fundamentals for Internet Banking
have already been constructed, which saw us
being able to serve our Middle East agents with
more agility.
In our portfolio of firsts in the banking
industry in the country, we added yet another.
We successfully launched a fully functional
disaster recovery system, on par with the
production system, achieving a 100% disaster
recovery solution for our core system.
[Business Review]
64
This also showcased the dedication and
teamwork of a highly motivated IT division.
Further, regulatory requirements were also
fulfilled and the Intranet has now become
a primary communication tool for internal
communications.
an effort that has been continued by the Bank
for 16 years. Students who obtained the highest
marks at national and district levels as certified
by the Department of Examinations were
eligible to receive these special scholarships.
Senior Citizens on Pilgrimage
Foreign exchange savings were also boosted
due to the pragmatism displayed by the IT
division in its development of the SLIPS system,
Core System Report Generation, Central
Clearing Systems, systems to aid microfinance
lending and also in converting branches to the
core system. This dedication and commitment
saw the division being amply rewarded with
the Best Core Banking Implementation and
Deployment in South Asia and the Middle
East by Silverlake and IBM at the Banking
Technology Summit held in Perth, Australia.
Marketing and Promotions
High Achievers Recognised
On a value addition introduced under the
Yes Future Stars account meant for students
aspiring towards higher education, the Bank
made a presentation to students who achieved
the highest marks in all four subjects at the
2008 GCE A/Level Examination. Under the
aegis of the Hon. Prime Minister who made the
presentation, the event was also attended by the
Minister of Higher Education and the Chairman
and CEO/General Manager of the Bank. The
20 students who were present observed that
the monetary award from the Bank not only
appreciated that children are the future of the
country, but also encouraged them to pursue
higher education in order to contribute to the
development of the nation more holistically.
In addition, 55 students who excelled at the GCE
O/Level Examination in 2008 were awarded the
Sisu Udana Kusalatha Pranama Scholarships,
25 Parinatha account holders, won a fully-paid
all inclusive pilgrimage to India in a once-in-alifetime opportunity. Some of the winners who
were Buddhists, had the privilege of visiting
the sacred city of Dambadiva while the Hindu
devotees, visited the most sacred Thirupathi
Kovil. Christians got the opportunity to visit
Velankanni.
Awards Galore
Slim Brand Excellence Awards
People’s Bank continues to stand at the helm
of being the bank for the people, smartly
evidenced by winning the 'Brand of the Year'
award at the SLIM Brand Excellence Awards
2009 in recognition of its services towards taking
‘banking’ to Sri Lanka and its people. The Bank,
no stranger to sweeping the boards as well in
the previous years at these awards, also won the
Gold award as the 'Service Brand of the Year'.
These awards were presented after evaluating
marketing skills and brand name expertise as
well as the quality of customer care prevalent
within the Bank. The awards vouch that People’s
Bank possesses a potent powerful brand and the
ensuing brand value, to be recognised as a leader
in the banking industry, strongly committed to
the progress of the nation through its innovative
products, services and social projects.
Strongest Brand
Brand Finance awarded People’s Bank with an
AA rating recognising it as being among the
strongest of the banks operating in Sri Lanka.
Published in the premier business magazine
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65
LMD’s Annual Brands Edition, the rankings
are based on research in the market and on
data available in the public domain. The brand
ratings are similar to a company’s credit rating,
providing an indication of the future prospects
of the brand as well as its ability to attract
future sources of income.
Rs. 5,000. A special loan scheme was introduced
for all senior citizens, granting Rs. 25,000/approved within 24 hours, an unprecedented
move and definite proof that the Bank values its
senior citizens. Film producer Renuka Balasuriya
and Olympic medalist Susanthika Jayasinghe
opened Parinatha accounts for their mothers to
mark the Elders’ Day.
Commemorating Special Days
With a number of days of special significance both
in a religious, cultural and social sense touching
the lives of the people of this country, People’s
Bank strives to create an awareness of the
importance and implication of these special days.
Sinhala and Tamil New Year
As is the tradition in our cultural heritage,
transactions for the year need to be launched
at an auspicious time to promote prosperity
and wealth. This year, the Bank’s branches
celebrated the auspicious transactions at the
allotted time as it has always done each year,
with a special ceremony held at the Tangalle
branch under the aegis of His Excellency the
President Mahinda Rajapaksa. This event also
heralded yet another special commemoration
for the Bank - the Vanitha Vasana Draw wherein
women who have been committed savers were
felicitated through a draw that presented them
with a series of valuable prizes.
Universal Children’s Day and Universal Elders’ Day
A series of special events marked the globally
celebrated children’s and elders’ days by the
Bank. Our customised accounts for children,
Isuru Udana and Sisu Udana offered monetary
gifts to all new born children, deposited in an
Isuru Udana account. Each year, the Bank gifts
over 200,000 new borns with their first deposit.
Sisu Udana in tandem offered an array of exciting
gifts that included laptops and Rs. 5,000/- cash
awards through 327 branches for deposit of
Research Department
One of the most vital conduits within People’s
Bank is the Research Department, which
has been the lifeline to delivering longterm sustainable value to our stakeholders.
Primarily catering to the internal stakeholders
with accurate, timely and industry specific
information and research data, the four decades
of research and analysis conducted and
disseminated by the Department have assisted
immensely in the informed decision making
process within the Bank. Given the diversity of
the Bank’s product range and the varied markets
it serves, the accuracy and systematic flow of
market relevant information is an imperative
for the Bank’s growth and expansion. It is also a
strategy that is employed to effectively manage
the external forces pertaining to competition,
macroeconomic conditions and social aspects
that impact our operations.
The Research Department is involved in
providing both primary and secondary research
which includes customer surveys, market
studies and other qualitative and quantitative
data. These are disseminated vis-à-vis
management briefs, position papers and
reports on industry specific issues, relevant
economic sectors and business areas. The
Department is also tasked with enhancing
productivity throughout the 670 branches,
by contributing towards re-engineering and
simplifying processes and procedures within
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66
the Bank, cascading statistical and other
relevant data and information pertaining to
the branches, namely performance, rankings,
sector and product performance. On research
undertaken in 2009 within the pawning sector,
resultant to the Department’s findings, the
Retail Banking Division increased its pawning
portfolio by nearly Rs. 10 Bn.
We are also proud to publish the country’s
oldest and most-respected economic journal,
The Economic Review since 1975, creating a
platform for a knowledge-gaining fraternity with
its discussion features and literature on a widerange of issues pertaining to the socio-economic
landscape and the country at large. Six issues
of the Review were published on the subject
of Inflation, Budget 2009, the Global Financial
Crisis, Water and Development, International
Trade and the IMF. We also relaunched the
Review in Tamil after a lapse of six years aimed
especially for the North and the East of the country.
The Bank’s official news magazine, Pulse/Hasuna
is also managed and published by the Research
Department. This year, the publication saw a new
lease of life when it was relaunched in a brand
new format to incorporate all three languages,
making the publication an inclusive one.
The Department also has the responsibility of
monitoring the Bank’s Strategic Plan from 2009
to 2014, leveraging on the synergies it possesses
in collating information and the value addition it
can augment in the review and planning process.
[Financial Review]
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[Business Review 55]
67
The Bank’s Net Interest Income (NII) for
Financial Year 2009, recorded a healthy 26%
growth over the previous year, amounting to
Rs. 23.9 Bn. This is a noteworthy achievement
despite the reduction in lending rates during
the last quarter of Financial Year 2009, and
lower than planned loan growth. Average yield
on loans and advances was marginally higher
than Financial Year 2008 in order to absorb
high borrowing costs, whilst yield on other
investments, primarily from Treasury Bonds/
Bills averaged at just under 11% p.a. Overall
interest bearing assets yielded an average of
13.5% p.a. for the year.
Interest rates on deposits experienced a
gradual decline towards the latter half of
2009 enabling the Bank to cushion the sharp
reduction in lending rates. Further, a large
portion of fixed deposits was contracted ‘Under
One Year’, hence maturities were re-priced at
new rates which were drastically low. The Bank
also reduced interest rates on selected savings
deposit products aligned to market rates. These
timely decisions enabled the Bank to lower its
average financial cost of funds and ensured
margins were maintained with reduced lending
rates as directed.
Currently, new commercial loans are disbursed
at approximately 12% p.a., whilst pawning is
availed at 14% p.a. The earlier envisaged high
impact on the Bank’s earnings was softened
to an extent due to the proactive steps taken to
sustain interest margins at over 4% p.a.
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The Bank’s total non-funded income grew
by 22% over Financial Year 2008. However,
noteworthy contributions were recorded from
exchange gains amounting to Rs. 1.1 Bn
compared to Rs. 818 Mn in Financial Year
2008 and capital gains of Rs. 674 Mn over
Rs. 111 Mn in the previous year. Exchange gains
were mainly from USD/LKR spot and forward
market activities. This was achieved despite
the material decline in trade finance volumes
and insignificant growth in foreign remittances
experienced by the Bank in Financial Year 2009.
Other non-funded income which closed at
Rs. 4.9 Bn depicts a 7.6% growth over Financial
Year 2008, due to increase in recovery of bad
debts written off and provision reversals.
The substantial growth in capital gains is
through realised gains from sale of high
yielding Treasury Bills/Bonds during the year, in
the backdrop of declining interest rates.
2009 experienced a sharp salary and related
expense hike through the three-year employee
collective agreement revision. Despite the
overall increase exceeding Rs. 1 Bn over
Financial Year 2008, this was managed within
budgeted levels. Other administrative expenses
swelled in most categories, recording a 15%
overall growth over Financial Year 2008. In
addition, Value Added Tax (VAT) on expenses,
maintenance of business premises, computer
systems and equipment etc. recorded material
increases over Financial Year 2008, augmented
further by inflationary pressure.
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69
The Bank provided an additional Rs. 150 Mn for
the proposed new pension scheme for employees
recruited post-Financial Year 1996. The main
pension fund received Rs. 1.5 Bn from the Bank
for Financial Year 2009, based on the actuary
valuation obtained at the beginning of the year.
The Bank continued to maintain the 1% general
provision on the performing loan book as
stipulated by the Central Bank of Sri Lanka
(CBSL). In addition, specific provisions recorded
material growth in Financial Year 2009 (66%
increase over Financial Year 2008); an issue
common to the banking industry but to a lower
extent for the Bank, in the period under review.
The position on the oil derivative transactions
entered into in Financial Year 2008 by the Bank
remains unchanged. However, to meet CBSL
guidelines on provisioning, all assets pertaining to
this issue were identified and provided accordingly.
Unrealised Capital Gains on tradeable securities
were not accounted for in the Bank’s monthly
management accounts. This was a prudent
measure taken due to the sharp decline in
interest rates and resulting in substantial
unrealised gains on tradeable securities, which
distorted the core business performance on a
monthly basis. This was consequently accounted
for in December 2009. Total unrealised net book
gains as at year end were Rs. 197 Mn compared
to Rs. 102 Mn in the previous year.
Financial Value Added Taxation (VAT) continues
to strain the Bank’s earnings. As per the
financial VAT computation guidelines, certain
salaries and related expenses inter alia should
be added to ascertain this liability at a rate
of 20%. Hence, with the previously discussed
salary revision the overall financial VAT for
Financial Year 2009 increased to Rs. 2.84 Bn
compared to Rs. 2.64 Bn in the previous year.
This charge is relatively high for a state bank,
due to higher than industry salaries and related
expenses. The Bank recorded two-thirds of its
total expenses for salaries.
Another disadvantage is that the financial
VAT charge is not an allowable expense for
mainstream taxation. Hence this number is
added back along with general provisions
inter alia to ascertain the Bank’s main stream
tax liability (i.e. tax on tax). The Bank’s profit
before tax of Rs. 6.1 Bn for Financial Year 2009
depicting a 7% growth over Financial Year 2008
was therefore subject to Rs. 2.8 Bn in taxation,
mainly due to the points noted above.
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70
tax of Rs. 9.3 Bn, which is the highest recorded in
the banking industry todate.
Balance Sheet
Deposits
The Bank’s Rupee demand or current account
balances closed with an all time high of Rs. 37.1 Bn
for Financial Year 2009 over Rs. 27.4 Bn in
Financial Year 2008. The overall increases
mainly in December 2009 were contributed
by the temporary parking of Rs. 3.2 Bn by a
key corporate client and the balance growth
recorded throughout the branch network.
Profit after taxation and retained earnings for
the year are posted at Rs. 3.3 Bn and Rs. 1.9 Bn
respectively, compared to Rs. 2.7 Bn and Rs. 1.5 Bn
for Financial Year 2008, depicting a 23% and 28%
growth.
The Bank’s key deposit, the Rupee savings
balances too recorded a healthy Rs. 18.8 Bn
or 13.5% growth over Financial Year 2008,
which ended at Rs. 158.2 Bn, a noteworthy
achievement considering the severe competition
from competitive banks and the intense demand
for term deposits driven by high yields that
prevailed up to the third quarter of 2009.
Current and Savings Accounts (CASA) to total
deposits which averaged close to 50% (as
compared to over 55% in previous years), closed
at 54% as at December 2009.
It is also interesting that the Bank's core business
(excluding provisions made on oil derivative
transactions) recorded a phenomenal profit before
Fixed Deposits (FD) displayed extraordinary
growth in the backdrop of issues experienced
with certain financial institutions in the country.
The Bank recorded a growth of Rs. 41.7 Bn
in Rupee Fixed Deposits for the year under
review, which closed at Rs. 166.1 Bn depicting
a 33.5% surge. Over 90% of these deposits
were contracted for short tenors enabling the
Bank to re-price these at lower rates at ‘Under
One Year’. This saw maturities which declined
during the latter part of Financial Year 2009
re-priced at low rates with resultant marginal
withdrawals, depicting customer loyalty and
growing reliance on state-backed security.
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71
Therefore, around 90% of the Rupee deposits
portfolio contracted at high interest rates
should be renewed at under 10% p.a before the
third quarter 2010, provided current interest
rates are sustained and withdrawals are
managed astutely.
Foreign currency deposits remained at Financial
Year 2008 levels, despite the planned exit of a
corporate foreign currency Fixed Deposit of
Rs. 11.3 Bn (equivalent in USD) in November 2009.
Total deposits exceeded Rs. 396 Bn recording a
remarkable 22% growth over Financial Year 2008,
compared to around 15% in the banking industry.
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72
Loans and Investments
Due to the above noted sizeable growth in
deposits and lower than anticipated credit
growth, partly due to the conservative stance
taken during most of Financial Year 2009, the
Bank had excess liquidity positions during the
latter half of the year. Hence, around Rs. 16 Bn
of these funds were invested in CBSL securities
yielding around 9% p.a. for tenors of 01 month.
In addition, around Rs. 17 Bn were invested
in the interbank market, yielding around
8.5% p.a. This was more towards the latter
part of the year. These monies are gradually
directed towards loan demand. These factors
in concert resulted in an overall growth in
total investments by 52% or Rs. 46 Bn over the
previous year end.
Loans and advances grew by 13.5% over
Financial Year 2008 as compared to the
contraction experienced in the industry during
Financial Year 2009. Key growth in loans was
recorded towards fertilizer imports (for two
fully Government guaranteed State-owned
enterprises), pawning (mainly for agriculture
purposes) and housing.
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73
Pawning which currently yields 14% p.a. for
advances, recorded minimal growth up to
September 2009. With timely pricing revisions and
increased advance values for a gold sovereign, a
decision influenced by market conditions, the last
three months of the year recorded substantial
growth in this category. This zero risk-weighted
asset which grew by 9% to end at Rs. 97.5 Bn as
at end December 2009, accounts for 33% of the
total loan book, similar to the position in 2008.
However, with the reduction in yields to 14%
p.a. on new advances, monthly interest income
depicts a decline in the last quarter of 2009. This
income should continue to reduce as the total loan
portfolio is gradually re-priced to 14% p.a. before
end of Financial Year 2010.
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74
Non-performing loans (NPL) grew by Rs. 2.2 Bn
for the year 2009 which exceeded at Rs. 20.0 Bn.
The Bank’s NPL ratio is now at 6.7% which is 10
basis points lower than Financial Year 2008 and
very favourable in comparison to the banking
industry’s average of around 9%.
Total assets grew by 20% to end at Rs. 476 Bn
over Rs. 398 Bn in December 2008.
Capital and Reserves
The Bank made its second debenture issue of
Rs. 2.5 Bn in Financial Year 2009. This, together
with retained earnings for the year of Rs. 1.9 Bn
and the marginal growth in risk-weighted assets
during the year, has boosted the Capital Adequacy
Ratio (CAR) to 13.4%. Total shareholders' funds
stands at Rs. 17.8 Bn compared to Rs. 15.9 Bn as
at the end of 2008.
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75
in excess of Rs. 900 Mn in its subsidiaries.
Consequent to the increase in Group profit,
income tax also saw an incline of 43.7%
compared with the previous calendar year.
Performance of Subsidiaries
and Associates
People’s Leasing Group
This year was certainly a hallmark year
for People’s Leasing Group (PLG) with its
diversification and expansion strategies bearing
fruition. Now a firmly established leader in
the leasing industry, PLG made its foray into
finance and insurance, having already created
a presence in fleet management and property
development in 2008, thus strengthening its
core business portfolio.
People’s Leasing Group recorded a net profit of
Rs. 1,038.6 Mn for its latest financial year ended
31st March 2009. However, for the purpose of
consolidation with its Parent Company People’s
Bank’s, Financial Statements are prepared for
the year ended 31st December 2009, which
reflect a net profit of Rs. 1,072.9 Mn.
For the calendar year 2009, the Group posted
a pre-tax profit of Rs. 2,028.7 Mn compared to
Rs. 1,591.9 Mn for 2008, with a growth of 27.4%.
This is a commendable achievement since
the Group achieved this profit after investing
Income from hire-purchase facilities
displayed a growth of 39.5% to Rs. 3,049 Mn.
In comparison to the year 2008, the income
from finance leases marginally contracted by
2.2% to Rs. 2,445.5 Mn. In 2008, it was posted
at Rs. 2,500.9 Mn. Demand for hire-purchase
facilities has continued to grow mainly due to
the VAT exemption on the cash price for vehicles
circulated over the one year and increase
in prices of new and unregistered vehicles.
During the year under review, People’s Leasing
maintained an average lending rate of 27.0% p.a.
and 24.4% p.a. for hire-purchase and leasing
facilities respectively.
Compared with the previous financial years,
the interest cost was increased at a lesser rate,
primarily due to the decline in market interest
rates in the latter part of the year 2009.
The non-performing ratio saw a marginal
increase of 0.7% to 4.2%, compared to 3.5%
in 2008, due to the adverse financial market
conditions prevailing in the country.
Total assets of the Group grew by 18.7% to
Rs. 30,155.3 Mn in 2009 from Rs. 25,412.6 Mn
in 2008.
Operational expenses increased by 29.4% mainly
due to the increased loan loss provisions and
disposal losses in 2009. Collapse of local finance
companies and global financial corporates
contributed directly or indirectly to increase the
disposal losses of People’s Leasing Company.
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76
Growth and Expansion
Branches and Window Offices
On 5th June 2009, People’s Leasing Company
Limited acquired 84.5% of the distressed
Seylan Merchant Leasing PLC, a registered
finance company under the Monetary Board
of the Central Bank of Sri Lanka and listed on
Colombo Stock Exchange. Through a mandatory
offer, this holding was increased to 97.2%. With
effect from 22nd October 2009, the name of
the company was changed and re-branded as
“People’s Leasing Finance PLC”.
People’s Leasing continued to strengthen its
relationship with its Parent Company, People’s
Bank to optimise marketing opportunities. This
spurred PLG to establish seven window offices
in Horowpathana, Vavuniya, Mannar, Tangalle,
Tissamaharamaya, Panadura and Mutur within
the Bank’s branch premises during the year.
Being a registered leasing establishment,
People's Leasing was strictly to accept public
deposits. With the acquisition of People’s
Leasing Finance PLC, the Group is now
empowered to accept deposits at lower costs.
This acquisition can also be considered a
social responsibility initiative since it helped
to mitigate the adverse consequences faced
by the depositor community of the acquired
company and the financial industry in Sri Lanka
as a whole, to re-build investor confidence and
stability in the market place.
During the year under review, the Company
incorporated its new insurance arm ‘People’s
Insurance Ltd.’ on 22nd July 2009, as a whollyowned subsidiary focusing on general insurance
business. The insurance company began
operations on 30th December 2009.
With effect from 16th December, the Central Bank
of Sri Lanka appointed People’s Leasing Company
(PLC) as the Managing Agent of Industrial Finance
Ltd., which was a company facing a liquidity
crisis. The objective of this appointment was to
improve the financial status of the Company, while
closely monitoring its progress. This was also
an impressive show of confidence by the Central
Bank for PLG and its management.
Awards and Accolades
The Company won the Gold Award at the Annual
Report Competition in Leasing Sector organised
by The Institute of Chartered Accountants of
Sri Lanka for the second consecutive year.
In addition, the Company won the Platinum
Award at Quality Summit Award organised by
Business Initiative Directions (BID) in New York,
on promoting and implementing quality culture.
Also, the Company won Second Runners-up in
the Best Corporate Citizen Award 2009 (less
than Rs. 10 Bn revenue category) conducted by
the Ceylon Chamber of Commerce. People's
Leasing is the only company to win a CSR Award
in the leasing domain in Sri Lanka.
People’s Travels (Pvt) Ltd.
Given the global economic downturn cascading
negatively towards general tourism trends in
outbound travel, the year posted a drop in profits
for the entire industry. Profits from the tourism
sector declined due to the decrease in air travel
combined with the negative mindset of travellers
due to instability posed by conflict and in the postwar scenario spurred by negative media reports.
However, our astute marketing strategies
proved to be the panacea during this turbulent
period with People’s Travels posting a
commendable 86% increase in profit after
tax. Due to the strengths we possess in the
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77
Government, corporate and individual client
portfolio, air ticket sales added commendably
into our profit figures, seeing a growth of 95%.
Our mainstay, the luxury Dambadiva religious
tour continues as the market leader and
saw us operate 17 Dambadiva tours for 546
travellers during the year. It’s now renowned
that we provide the best value for money, which
reputation has as a result seen a considerable
number of repeat clientele taking the tour.
Our outbound tour sector has been expanded,
moving towards tours to China, Egypt, Bangkok,
Singapore and Malaysia. More popular tour
destination prospects are being negotiated and
will come to fruition in 2010.
People’s Merchant Bank PLC
An Associate of People’s Bank which together
with People's Leasing Company holds a 39.2%
stake, People’s Merchant Bank PLC (PMB) had
an eventful year with two acquisitions aimed
at expanding the Company’s presence in the
financial services industry.
PMB acquired the operations of ABC Credit Card
Company, a locally-based credit card business
and the registered finance entity Silvereen
Finance Company which was later renamed
People’s Merchant Finance Company Ltd.
PMB Group’s interest income saw an increase
from Rs. 439 Mn to Rs. 597 Mn, a growth of 36%
compared to that of 2008. The main contributors
to this increase were from finance lease income
which amounted to Rs. 222 Mn which saw
an incline of 7% or Rs. 12 Mn, hire purchase
income which saw a growth by Rs. 61 Mn or
36% to stand at Rs. 232 Mn and an increase of
Rs. 60 Mn in trade finance income, a growth of
158% to a total of Rs. 98 Mn.
While the Company posted an operating profit
of Rs. 30 Mn, the Group recorded an operating
loss of Rs. 22 Mn in 2009, which in turn
translated to a loss of Rs. 7 Mn for PMB and
Rs. 92 Mn for the Group. High financial costs
and funding acquisitions primarily through
debt finance affected profitability significantly.
The Rs. 250 Mn Rights Issue in December did
cushion the negative impacts to some extent.
PMB relocated its offices to its own premises at
Nawam Mawatha, considered as the developing
financial hub in Colombo enabling us to capitalise
its image and brand building, aligned to the
re-branding strategy launched in 2009.
During the year, 891 leasing and hire purchase
contracts amounting to Rs. 732 Mn were executed,
while PMB’s Real Estate Division launched new
projects in Malabe, Athurugiriya and Ranala.
PMB's relationship strengthening strategies
have buoyed its business even in difficult times,
evidenced by the fact that over 90% of its client
portfolio comprises repeat customers, despite
competitive and attractive propositions offered by
others in the industry. PMB intends to continue
to nurture its relationship-building efforts as it
strongly believes that its customer base must be
a part of the journey of success and the decisions
made would impact the clients positively to
construe a win-win situation for both sides.
Being fully aware of the onus PMB possesses in
setting an example as a responsible corporate
citizen, the CSR projects are worked through
a predetermined budget which is utilised to
assist underprivileged-children residing within
the environs of our branches. We installed a
drinking water system in a school located within
a difficult area in Hanguranketha to ensure
that children in that school have access to safe
drinking water and therefore will not be plagued
by water-borne diseases.
[Human Resources]
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78
Human Resource Development
and Management
Given our leadership standing within the
banking industry in Sri Lanka and being
awarded the People’s Choice Award for three
years consecutively adds credence to the fact
that we have one of the best teams within the
industry. While they have worked as a dynamic
and motivated team to ensure that we remain
leaders in a constantly transforming milieu,
accepting the changes with passion and
innovating products and services that assist us
in being at the helm, the Bank too in similar
vein, has implemented initiatives that will keep
this team ahead of the rest.
Our recruitment and rewards processes are
constructed on meritocracy and equality,
conforming to all stringent employment
guidelines laid down by the Government of
Sri Lanka, the applicable regulatory authorities
and the International Labour Organisation.
We are an equal opportunity employer. In
addition, we have inculcated an open door
policy which allows for free and fair dialogue
seamlessly between hierarchical boundaries
while instituting regular open forums that
prompt transparent and open discussion and
information dissemination.
Training and Development
Training and Development is generally governed
on a needs-based approach where the training
system will align the needs of the organisation
and the needs of the employee together with
the vision and mission we have for the Bank.
At the same time, this needs-based approach
is analysed holistically to encourage staff at all
levels to participate in the relevant programmes.
Emphasis is given to soft skills development
which we feel is an absolute pre-requisite for
the changing face of the banking industry. Soft
skills training include negotiating, presentation,
marketing, customer service and care and are
conducted with a mix of internal and external
resource persons.
A Management Development Programme
was initiated in August 2009 for a period of
14 months. 107 participants are currently
undergoing training under this programme.
Our staff strength as at year end 2009 stood at
8,863 compared with 8,587 in 2008.
Technical training too receives considerable
emphasis due to the new regulations and
standards being imbued into the industry and
its workings. Our team members participated
in programmes on IT, BASEL II, credit and
debit recovery, mobilisation of foreign currency,
disciplinary procedures, audit, lending and
pawning at the Staff Training College and regional
training centres. Credit training was conducted for
stenographers and typists whose work purview
involves the preparation of credit documents.
The Bank recruited 1,050 Customer Service
Assistants, 01 Building Engineer, 02 Assistant
Engineers and 93 Management Trainees during
2009. This speaks of the Bank's commitment
to move ever closer to the customer - become
more than ever, a People's Bank.
We are also very cognizant of creating an enabling
environment for our team members who work
in areas that require the use of an alternative
language, in addition to their first language.
We have begun language courses in Tamil and
English throughout the Bank. Language skills
Human Resource Base
[Human Resources]
79
in Tamil were conducted for the corporate
management and other team members, while
external resource persons conducted a certificate
course in English Language and Business
English. Aligned to Government policy, training
within the Northern and the Eastern regions
commenced in all three languages under the
aegis of the Staff Training College.
Foreign training exposure is vital for the
furtherance of the skills of our team and this
year, 45 team members availed themselves of
foreign training opportunities, while external
training was conducted for 622 over 128
programmes. We have also introduced a guest
lecture once every three months which covers
relevant features that would be current to the
economy. Four lectures were organised this
year with the aid of external resource people.
An all round training programme comprising 19
modules was launched this year on the basis
of on-the-job training for 91 newly recruited
management trainees. The programme is
conducted for a total of ten weeks prior to their
postings to branches around the country, from
December 2009.
Customer service assistants were given
awareness programmes on relevant areas,
while computer training was provided to branch
staff on the conversion of SIBS.
The year under review saw a total of 18,790 team
members undergo 662 training programmes.
Safety at Work
Fire and emergency drills are conducted regularly
at the Bank and its branches to ensure that all
team members are appraised of the safety drills
and the processes that should be adhered to in
the case of emergencies. Periodic checks and
monitoring is also conducted on all systems and
facilities, with logs maintained on operational and
maintenance procedures.
Welfare and Benefits
While our team works hard to ensure that targets
are exceeded and journey unwaveringly towards
our vision, we have implemented numerous
rewards and benefits that will give them impetus
and incentive to give of their best. A number
of societies function under the umbrella of the
welfare department with the assistance of funds
provided by the Bank. These include the Sports
Club, Buddhist Society, Christian Guild, Hindu
Society, Muslim Majlis and the Art Circle.
A medical scheme is in operation for all our
team members and covers all critical and
major illnesses including cancer, heart and
neuro-surgery and other ailments. Rs. 57 Mn
was disbursed for 141 claims during the year.
A Medical Committee met four times during the
year to resolve issues not categorised within the
circulars with 57 being resolved.
Our team members can also avail themselves
of the facilities of the eleven holiday homes
located in picturesque areas around the
country. We also aim to open two new homes in
Trincomalee and Jaffna soon.
Accommodation and relevant facilities are
extended in Rajagiriya for team members who
travel to Colombo from the outstations on
official duties.
In recognition of yeomen service rendered to the
Bank for 25 years or more, a ceremony is being
organised to felicitate all those team members
who have served the Bank for 25 years.
[Human Resources]
80
Extracurricular activities
The Arts
Sports
Organised by the Arts Circle, our Annual Wesak
Bakthi Gee recital was held at the Staff Training
College Auditorium for the staff in addition to
a public performance at the BMICH. We also
publish a creative magazine named "Kala Handa",
which incorporates the creative might of our team
members and their children. We aim to hold a
concert and awards ceremony at the Elphinstone
Theatre in February 2010 for the winners of the
competitions conducted in the "Kala Handa".
The Sport Club is in the forefront of organising a
host of sports events during the year to ensure
that both mind and body are kept keen, fit and
healthy, prompting the holistic development of
each of our team members.
Built on an idea mooted by the Chairman, Zonal
Sports Meets were held across 11 zones with
the participation of team members and their
families while the Inter-Zonal Finals Sports
Festival was held in Colombo. The People’s
Bank Indoor Games Tournament was also
organised by the Sports Club for the staff.
Our highly talented team excelled in the
Nationalised Services Tournaments and
Sports Meets Soccer: Winner of the Nationalised
Services B Group Tournament
Hockey:Winner of the Nationalised
Services B Group Tournament
Badminton:Winner of the Nationalised
Services Tournament
Table Tennis:Winner of the Nationalised
Services Tournament
Netball:Runners-Up in the Nationalised
Services Tournament
Athletics:Runners-Up in the Nationalised
Services Tournament
Inculcating Religious Foundations and
Helping Communities
The Buddhist Society distributed exercise
books and school implements to 15,000 school
children from underprivileged schools, while
also constructing 12 houses for poor families.
The Christian, Hindu and Muslim Societies
also were engaged in similar humanitarian
programmes and organised various ceremonies
to mark religious and national events.
The Societies also collected Rs. 3 Mn to be utilised
for the IDPs who crossed over into Governmentcontrolled areas during the height of the war.
A blood donation campaign was held at Head
Office with 134 team members donating blood.
A special ceremony was held to felicitate donors
who were awarded medals in recognition of
their contribution.
[Corporate Social Responsibility]
[Outline of Our Reporting Initiatives 84]
[Moments in Time 88] [Awards 90] [Compliance Report 91] [Corporate Governance 94]
[Subcommittees of the Board 101] [Risk Management 106] [Key Performance Indicators 113] [Financial Reports 121]
81
Having strengthened relationships with
our stakeholders for nearly five decades,
People’s Bank has continued to keep its pulse
on the needs, wants and aspirations of our
communities, as well as the impact that our
actions have on the environment. We take
our role of being a solid corporate citizen
very seriously and conceptualise and design
products and services that are aligned to this
role. Ours has been a journey where we have
been a strong partner with the citizenry of this
country, an inherent trait that we have nurtured
and improved upon, touching the lives of our
stakeholders from the cradle to their twilight
years, while also building stable foundations for
the betterment of the nation.
Our social responsibility is built on the basis
of sustainability. We help our communities
improve themselves recognising the fact that
when communities develop, that development
cascades to economic development as well.
We are strong proponents of uplifting rural
communities who have immense potential to
contribute towards nation building both in a
social and economic sense.
Our CSR projects over the years are designed on
the trusses of education, community building,
the environment and the triad of arts, culture
and religion. Each of these platforms deals with
ensuring sustainability of the target community,
who in turn will develop into holistic groups,
founded on good morals, values and principles on
the founding principle of a healthy united nation.
The Environment
Aligned to the United Nations Millennium
Development Goals which are also embedded
in the country’s Ten Year Development Plan
which includes being food sufficient by the end
of the next decade, we partnered the national
programme on the theme, “Plant Today - Reap
Tomorrow’ which aims at planting three million
fruit and vegetable bearing trees and plants
to ensure food security for the future. At a
ceremony held at the Bank’s Staff Training
College and presided over by the Minister of
Trade, Marketing Development, Co-operatives
and Consumer Services, a large number of
plants was also distributed among the staff of
the Bank to launch the countrywide project.
Community Building
With the influx of a large number of IDPs into
the Government-controlled areas to escape
the grip of terrorism during the war at the
beginning of the year, numerous families were
left asunder without basic requirements. A total
of Rs. 14 Mn worth of essential goods including
medicine and kitchen utensils contributed by
the staff of the Bank, were presented to the
displaced people, giving them a chance to gain
some normalcy into their disturbed lives.
In order to aid the displaced people even
further, the Bank, as part of its contribution
towards the Government’s Uthuru Wasanthaya
programme, opened a mobile banking service
and later a service centre in Vavuniya with
the facilities of an ATM, to ensure safety and
security of cash and gold in the possession of
these IDPs.
The Bank was in the forefront of launching the
Uthuru Wasanthaya programme, being the first
to open five service centres on a single day
within the Jaffna region.
In addition, the Bank is making arrangements
to extend loans at reduced interest rates for the
development of sustainable entrepreneurial
ventures, lending a helping hand for the
82
purchase of agricultural equipment, start-ups for
small-scale industries and for paddy, vegetable
and fruit cultivation. These loans, under the
Reawakening North Loan Scheme, grant loans
at concessionary interest rates of 12% spurring a
new lease of life to the Micro & SME sectors.
As further impetus to helping the displaced
gain back their lives, the Bank contributed
Rs. 265,000 towards construction of houses
under the Uthuru Wasanthaya programme.
In yet another measure to bridge the divide
between the geographical boundaries in Sri Lanka
and to build togetherness, the Bank presented
Rs. 5 Mn to mark the recommencement of the
Yal Devi train, which began transporting goods
and passengers 33 years after it stopped running
beyond Vavuniya.
Recognising the utmost sacrifice made
by servicemen who fought to protect the
sovereignty of Sri Lanka, the Bank joined the
efforts of building a welfare fund through the
sale of flags for these gallant war heroes.
The Bank’s Buddhist Society continued its annual
social responsibility project of constructing a
house each month for a deserving member of
society. Each house is valued at Rs. 500,000 and
is funded with Rs. 200,000 from the Society and
contributions of labour and building material by
well wishers. The houses are presented to the
absolutely underprivileged in society and are
selected purely on merit.
We strongly believe that women are the
foundation to overall development. It is they
who nurture future generations and possess
the inherent strengths and skills to develop
communities. Recognising this, the Vanitha
Vasana account gives women their due place in
society, at the helm of creating the future. This
year, on International Women’s Day, the Bank
launched the novel Vanitha Vasana Savings
Voucher to empower women further.
The Muslim Majlis of the Bank renovated the
Maternity Ward of the Base Hospital in Puttalam
in order to improve the hygienic conditions
prevalent within the ward. There was also a
presentation of gifts to the patients at the ward
which comprises sixty beds.
The Bank also donated bedside screens to two
wards at the Colombo National Hospital on a
request made by the Head of the Neurology
Department Consultant, Dr. Ranjani Gamage.
A series of events were organised to
commemorate tsunami victims by way of a
Sangha almsgiving for 35 bhikkus, a Paathra
Pooja for the Maha Sangha in Sooriyawewa and
donation of exercise books and school stationery
for the underprivileged students attending the
Daham Schools in the affected areas.
Education
Especially aimed at children who have
undergone the trauma of war and displacement,
the Bank’s Piyum Vila programme in the North
and the East gathered further momentum with
the end to the war in mid 2009. Working with
thousands of children from underprivileged
families over the three years where sixty
successful programmes were conducted,
this year the Bank held eight programmes
in the Northern and the Eastern Provinces.
Piyum Vila nurtures young children to acquire
knowledge, skills and values that will contribute
towards building a civic-minded society. The
programme designed using modern learning
and counselling techniques assists not only
83
students but parents and teachers too, to
understand and gain insight into issues
such as co-existence, habits, values, civicmindedness and coping with stress arising from
a competitive education system.
Having recognised the challenges young people
face in pursuing higher education avenues
due to the high expenditure involved, the Bank
presented fifty students with Sisu Udana
Kusalatha Pranama scholarships this year,
lending assistance for them to pursue their
educational ambitions. These students are
those who have excelled at national and district
levels achieving the highest marks in the GCE
A/level examination of 2008.
Eminent politician and equality champion, the
late T.B. Ilangaratne was commemorated on his
96th Birth Anniversary in order to create
awareness of the exemplary service he had
rendered to this country. Fifty Ilangaratne
Memorial Scholarships were presented through
the Ilangaratne Student Assistance/Welfare
Trust to students of low-income families,
enabling them to continue on their chosen path
of education.
A crying need for the Ganapathy Hindu
Vidyalayam was the requirement of book
cupboards to safeguard the valuable books
within the school’s library. The Hindu Society of
the Bank, on identifying this need, donated the
book cupboards to the school.
To ensure that students have a conducive
environment to further their higher education,
the Bank renovated the Vincent Subasinghe
Memorial Hostel, which provides accommodation
to a large number of medical students residing
therein and hail from the rural areas of the
island. The refurbishment is at an investment of
Rs. 5 Mn.
Arts, Culture and Religious
Foundations
With future generations growing up experiencing
three decades of war, we strongly believe that
corporate citizens play a crucial role in creating
the right foundations for children to grow up in.
These foundations are made up of the trusses
of being appreciative of our long history and
the culture and traditions steeped therein and
being educated about religious principles,
morals and values. One of the annual events the
Bank continues to sponsor is the Annual Esala
Perahera in Kandy which ideally showcases
the best of Sri Lanka’s cultural and religious
heritage, making every Sri Lankan truly proud
of our inheritance and the legacy left behind by
numerous great leaders.
[Outline of Our Reporting Initiatives]
[Moments in Time 88] [Awards 90]
84
Page Reference
1.
Strategy and Analysis
1.1
Statement from the CEO
and the Chairman
Chairman’s Message
CEO/GM’s Review
1.2
Description of key impacts,
risks and opportunities
CEO/GM’s Review
Human Resources
Corporate Social Responsibility
Compliance Report
Corporate Governance
Risk Management
2.
Organisational Profile
2.1
Primary brands, products
and services
Business Review
Financial Review
55
67
2.2
Operational structure of
the Organisation
Business Review
55
2.3
Location of Organisation’s
headquarters
Corporate Information
2.4
Number and name of countries
with operations
Sri Lanka
2.5
Nature of ownership and legal form
Corporate Information
2.6
Markets served
Business Review
2.7
Scale of the reporting organisation
Human Resources
Income Statement
Balance Sheet
Performance Review 1999-2009
2.8
Significant changes during the
reporting period
Financial Review
67
2.9
Awards received
Business Review
Awards
55
90
28
32
32
78
81
91
94
106
211
211
55
78
130
131
205
85
Page Reference
3.
Report Profile
3.1
Reporting period
1st January 2009 to 31st December
2009
3.2
Date of most recent previous Report
December 2008
3.3
Reporting cycle
Annual
3.4
Contact point for questions regarding
the Report or its contents
No. 75, Sir Chittampalam A. Gardiner
Mawatha, Colombo 02, Sri Lanka
3.5
Boundary of Report
Sri Lanka
3.6
Specific limitations on scope/boundary The Report covers only the Sri Lankan
operations of People’s Bank
3.7
Restatements
None
3.8
Significant changes from previous
reporting period
No significant changes
3.9
Location of standard disclosures
in the Report
Will be uploaded on the People’s Bank
website
4.
Governance, Commitments and Engagement
4.1
Governance structure
94
4.2
Chair of the highest governance body
Chairman’s Message
Board of Directors
28
38
4.3
No. of members in the highest
governance body
94
4.4
Mechanisms for employees/
shareholders to provide
recommendations/directions
to the Board
Regular team briefing feedbacks
4.5
Compensation and performance
Human Resources
78
4.6
Expertise of governance body
Board of Directors
38
94
86
Page Reference
4.7
Mission and value statements
Our Mission and Our Business Values
4.8
Management of performance
Financial Review
67
4.9
Evaluating the performance
Financial Review
67
81
4.11 Economic, environmental and social
charters, principles or other initiatives
81
4.10 Precautionary approach
4.12 List of stakeholder groups
5.
Economic
5.1
Disclosure of management approach
1
Government of Sri Lanka and
Co-operative Societies
Financial Review
67
Economic Performance
5.2
Economic value generated and
distributed
Value Added Statement
5.3
Organisation’s defined benefit
pension plan
Description of the Pension Plan
5.4
Financial assistance from Government Bank receives assistance from the
Government regularly
5.5
Market Presence
Entry-level wage-local minimum age
180
Defined in the Collective Agreement
and Labour Law
5.6
Procedures for local hiring and
proportion of senior management
hired from the local community at
significant locations of operation
Recruitment locally
5.7
Development and impact of
Business Review
infrastructure investments and
services provided primarily for public
benefit through commercial, in-kind or
pro bono engagement
55
81
5.8
Indirect economic impacts
55
Business Review
87
Page Reference
6.
Social
6.1
Disclosure of management approach
81
Corruption
6.2
Analysis for risks of corruption
Risk Management
6.3
Training in anti-corruption
Internal training sessions
6.4
Instances of corruption
None reported
Public Policy
6.5
Public policy development and
lobbying
Major involvement during the year
6.6
Contribution to Government
Major contributions during the year
Anti-Competitive Behaviour
6.7
Legal actions for anti-competitive,
anti-trust and monopoly practices
None reported during the year
Compliance
6.8
Monetary value of significant fines
None reported during the year
107
[Moments in Time]
[Awards 90]
88
Governor, Central Bank of Sri Lanka inaugurates
mobile service unit - Chettikulam
New People’s Bank Service Centre - Jaffna
2009 New Year transactions with HE the President Tangalle Branch
The Staff and People’s Bank help villages in
humanitarian operations by way of donations
Hon. Prime Minister awards students who excelled
in 2008 GCE (A/L)
Donated 100 wheelchairs to disabled Armed
Forces Personnel
[Moments in Time]
[Awards 90]
89
48th Anniversary Pirith Ceremony - Head Office
HE the President opens new Regional
Head Office - Matara
48th Anniversary - Dawatagaha Jumma Mosque
Bakthi Gee - Ruwanwelisaya - Anuradhapura
48th Anniversary - Christian Guild - Negombo
48th Anniversary – Trincomalee Kali Kovil
[Awards]
[Compliance Report 91]
[Outline of Our Reporting Initiatives 84] [Moments in Time 88]
90
Mr. Yohan Soza - Head of Finance - People's
Bank receiving the prestigious 'SAFA' award from
Abdul Maal A Muhith, M.P. Minister of Finance,
Bangladesh at SAFA Best Presented Accounts 2008
Coveted 'Service Brand of the Year' award
presented to People’s Bank at Sri Lanka Institute
of Marketing (SLIM) Brand Excellence Awards 2009
Mr. W. Karunajeewa - Chairman - People’s Bank
accepting the 'Global Brand Finance Rating
Certification' award with the highest brand rating
in the financial services category in Sri Lanka from
Brand Finance Lanka
Mr. W. Karunajeewa - Chairman - People’s Bank
receiving the coveted 'Brand of the Year' award
at Sri Lanka Institute of Marketing (SLIM) Brand
Excellence Awards 2009
Mr. Deepal Abeysekera Head of Marketing and
Public Affairs receiving the 'Award for Brand
Leadership' at the World Brand Congress held in
Mumbai - November 2009
[Outline of Our Reporting Initiatives 84] [Moments in Time 88] [Awards 90]
[Compliance Report]
[Corporate Governance 94] [Subcommittees of the Board 101]
[Risk Management 106] [Key Performance Indicators 113] [Financial Reports 121]
91
In any organisation Compliance starts at
the highest level. It is most effective in a
corporate culture that emphasises standards
of honesty and integrity and in which the Board
of Directors and Senior Management lead by
example. It concerns everyone within the Bank
and should be viewed as an integral part of
the Bank’s business activities. A Bank should
hold itself to high standards when carrying on
its business and at all times strive to observe
the spirit as well as the letter of the law.
Failure to consider the impact of its actions on
its shareholders, customers, employees and
the markets may result in significant adverse
publicity and reputation damage, even if no law
has been broken.
Compliance laws, rules and standards generally
cover matters such as observing proper
standards of market conduct, managing conflict
of interests, treating customers fairly, and
ensuring the suitability of customer advice.
They typically include specific areas such as the
prevention of money laundering and terrorist
financing, and may extend to tax laws that are
relevant to the structuring of banking products
or customer advice. A Bank that knowingly
participates in transactions intended to be used
by customers to avoid regulatory or financial
reporting requirements, evade tax liabilities or
facilitate illegal conduct will be exposing itself
to significant compliance risk.
Compliance laws, rules and standards have
various sources, including primary legislation,
rules and standards issued by legislators and
supervisors, market conventions, codes of
practice promoted by industry associations and
internal codes of conduct applicable to the staff
members of the Bank.
People’s Bank follows the Basel Committee’s
recommendations on compliance risk,
Directions issued by the Central Bank of
Sri Lanka from time to time together with
Legislative Enactments of Sri Lanka and has a
comprehensive Anti-Money Laundering Policy in
place. Apart from the Anti- Money Laundering
Policy, People’s Bank has put in place a Code of
Conduct and Code of Best Practice in Corporate
Governance in order to strengthen and protect
the integrity and reputation of the Bank and
also to enable the Bank to manage and lower its
exposure to legal and regulatory risk.
Legal Framework
People’s Bank is governed by the provisions
of the People's Bank Act No. 29 of 1961 (as
amended) and provisions of the Banking Act
No. 33 of 1988 (as amended). Apart from these
Acts, an important development was witnessed
in the Banking Industry with the introduction
of the following Acts which deal with Money
Laundering and Terrorist Financing:

Convention on the Suppression of Terrorist
Financing Act No. 25 of 2005
Prevention
of Money Laundering Act No. 05
of 2006

Financial Transaction Reporting Act No. 06
of 2006
[Compliance Report]
92
Compliance Structure of
People’s Bank
Board of Directors
Chief executive officer
senior Deputy General manager
(risk and Compliance)
Compliance officer
The Compliance Officer's Role
in People’s Bank
In today’s fast-paced global economy where
Laws and Regulations are changed and revised
frequently, it is possible to overlook and lose
sight of laws and regulations that apply to our
respective functions at People’s Bank. Therefore,
People’s Bank has established the role of
Compliance Officer with the following scope:

Freedom to investigate and examine whether
the Bank’s business activities are conducted
in accordance with the rules and regulations
pertaining to the industry.
Independence
of reporting to CEO / GM or to
Board of Directors.
To
interpret regulations constructively so as
to facilitate business without breaching the
spirit of such regulations to endangering the
Bank’s reputation with its regulators.
Violation of Laws and Regulations can bring
about sanctions. It also impairs the good name
and reputation of the Bank. Thus, an effective
compliance function ensures that the Bank is
insulated from such consequences.
Awareness and conformity with the Laws and
Regulations pertaining to the industry as well
as the maintenance of high ethical standards,
inspires confidence among our clients and
enhances the stature and good name of the
Bank as a leading corporate citizen in the
Sri Lankan Banking Industry.
Combating Money Laundering
and Terrorist Financing
As a leading State Bank in Sri Lanka which
has 329 Branches and 341 Service Centres,
maintaining over 12 Mn customer accounts and
processing thousands of transactions a day,
the People’s Bank could always be a target for
would-be money launderers.
Widely used methods of Combating Anti-Money
Laundering (AML) and the Financing of Terrorism
(CFT) are by following four simple but meaningful
steps:
Identifying
Monitoring
Recording
Reporting
and
[Compliance Report]
93
As such, we have internally developed the following
effective Anti-Money Laundering procedures
under the guidance of the Compliance Officer to
reduce the risk of the Bank being used in Money
Laundering transactions:
The Compliance function therefore, is not merely
a policy making function but rather a function
designed to proactively assist all employees
and the Bank in complying with the Laws and
Regulations pertaining to the industry.
(a)Ensure that the Bank's business activities
are conducted in accordance with the Laws
and Regulations pertaining to the industry
by educating and updating all employees
conversant with applicable Laws and
Regulations
The Compliance Officer is called upon to
periodically certify such compliance, together with
breaches (if any) to the Board Audit Committee
and also to the Board of Directors of the Bank.
(b)Monitor unusually large transactions and
unusual patterns of transactions which
have no economic or visibly lawful purpose,
reviewing internal suspicious transactions
report from staff, analyse and investigate same
(c)Promptly report suspicious transactions to
the Management and Financial Intelligence
Unit (FIU)
(d)Update staff when changes in legislations/
regulations pertaining to banking are made,
and provide the necessary training to ensure
awareness at all times
(e)Provide feedback to staff on compliance related queries
(f)Regularly audit the branch network and
report any breaches and/or shortcomings
(g) Conduct ongoing employee training
programmes on Money Laundering
People’s Bank to the best of our knowledge has
fully complied with the compliance requirements
of the country and has developed systems and
procedures to give the fullest support needed
to combating money laundering and terrorist
financing. All applicable Laws and Regulations
are strictly followed in this regard. As a State
Bank, all known steps have been taken to extend
support to regulatory authorities to ensure the
stability of the financial system of Sri Lanka.
[Corporate Governance]
[Subcommittees of the Board 101] [Risk Management 106]
94
In view of this important financial role in the
economy, the Bank over the past 48 years, has
strived to attain high standards of Corporate
Governance practices recommended by
various regulatory bodies such as The Institute
of Chartered Accountants of Sri Lanka, the
Securities and Exchange Commission of
Sri Lanka and the Central Bank of Sri Lanka.
The Board of Directors of the Bank has continued
to innovate and adopt the latest Corporate
Governance practices and framework at all
times to ensure the highest ethical standards,
transparency and good governance.
The Board of Directors plays a vital role in setting
the strategic direction of the Bank and thereby
enhancing corporate values in order to remain
competitive in an evolving and challenging
business environment. The Board of Directors and
CEO/GM have appointed independent committees
to oversee, evaluate and recommend various
operational aspects in the Bank.
Chairman,
8 Directors
& Board
Secretary
Board
Audit Committee
Board Nominations
Committee
Board Integrated
Risk Management
Committee
Board Human
Resources &
Remuneration
Committee
Board Executive
Creidt Committee
CEO / GM
Retail /
Personal
Banking
Credit
Control
Corporate &
Institutional
Banking
Legal
Research
Marketing
Information
Technology
Human
Resources
Finance
Audit
Treasury &
Investment
Banking
Risk &
Compliance
Operations
& Personal
Banking
SDGM
Committee
Tender Evaluation
Committee
Service
Extension
Committee
Disciplinary
& Appeal
Committee
IT Steering
Committee
HR Development
& Training
Evaluation
Committee
Procurement
Committee
Assets and
liabilities
Committee
Executive
Operations
Committee
95
Bank’s Adherence with The Code of Best Practice on Corporate Governance issued jointly by The
Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission
of Sri Lanka.
Subject
A. General
Chairman and CEO
Corporate Governance Principle
If Chairman and CEO is one and the same person, disclose the name
of the Chairman/CEO and Senior Independent Director appointed and
justification of the decision to combine the positions.
Bank’s Response: The post of Chairman and CEO/GM are separate
positions and held by two individuals.
Board Balance
• Should identify the Independent Non-Executive Directors.
• If a Non-Executive Director is identified as ‘Independent’,
notwithstanding the existence of any of the following factors, the
reason for such determination should be disclosed.
• A Director is not considered independent if he/she:
• Has been employed by the Company during the period of two years
immediately preceding appointment as Director;
• Currently has/had during the period of two years immediately
preceding appointment as Director, a Material Business
Relationship with the Company, whether directly or indirectly;
• Has a close family member who is a Director, Chief Executive
Officer (and/or an equivalent position) in the Company;
• Has a significant shareholding in the Company;
• Has served on the Board of the Company continuously for a period
exceeding nine years from the date of the first appointment;
•Is employed in another company or business:
In which a majority of the other Directors of the Company are
employed or are Directors; or
In which a majority of the other Directors of the Company have a
significant shareholding or material business relationship; or
That has a significant shareholding in the Company or with
which the Company has a business connection;
•Is a Director of another company:
employed or are Directors; or
That has a business connection in the Company or significant
shareholding;
96
Subject
• Has material business relationship or a significant shareholding
in another company or business:
employed or are Directors; and/ or
That has a business connection with the Company or significant
shareholding in the same.
Bank’s Response: Under the People’s Bank Act No. 29 of 1961, the
Minister of Finance is empowered to appoint the Board of Directors.
All Directors appointed under the Act are in a Non-Executive capacity
and are able to form an independent view since they are not part of the
management of the Bank.
Appointment of
New Directors
When new Directors are appointed, the following details should be
disclosed:
• A brief résumé of each such Director;
• The nature of his expertise in relevant functional areas;
• The names of companies in which the Director holds directorships or
memberships in Board committees; and
• Whether such Director can be considered independent.
Bank’s Response: Complied with.
Nomination Committee
The Chairman and members of the Nomination Committee should be
identified.
Bank’s Response: Complied with. The Nomination Committee appoints
the Bank’s CEO/GM and Senior Management. Please refer page 104 of
this Annual Report.
Appraisal of Board
Performance
Should disclose how performance evaluation has been conducted.
Bank’s Response: Plan to disclose in year 2010.
Board Related Disclosures
The following details pertaining to each Director should be disclosed:
• Name, qualification and brief profile;
• The nature of his/her expertise in relevant functional areas;
• Immediate family and/or material business relationships with other
Directors of the Bank;
• Names of other listed companies in Sri Lanka in which the Director
concerned serves as a Director;
• Names of companies in which the Director concerned serves as a
Director and/or the fact that he/she holds other directorships in the
Group Companies;
97
Subject
• Number/percentage of Board meetings of the Bank attended during
the year;
• Names of the Committees in which the Director serves as the
Chairman or a member; and
• Number/percentage of committee meetings attended during the year.
Bank’s Response: Complied with. The Annual Report contains
comprehensive information on the above.
Disclosure of Remuneration • A Statement of Remuneration Policy and details of remuneration of
the Board as a whole.
• Details of remuneration of the Board as a whole.
Bank’s Response: The Ministry of Finance and Planning determines the
allowances payable to Directors. The Board of Directors determines the
allowances of Board members serving in Board subcommittees
of the Bank.
Major Transactions
All major transactions entered into by the Bank should be disclosed.
Audit Committee
• Names of the members of the Audit Committee should be disclosed.
• Basis for determining the independence of auditors.
Bank’s Response: Names of members of the Audit Committee are given
in the Board Audit Committee Report on pages 126 to 127. The Auditor
of the Bank is the Auditor General as enshrined in the Constitution of
Sri Lanka. The independence of the Auditor General is ensured by the
Constitution. The Auditor General has used the services of Messrs Ernst
& Young to complete the Bank’s external audit.
Code of Business Conduct
and Ethics
• Should disclose whether the Bank has a Code of Business Conduct and
Ethics for Directors and members of the Senior Management Team.
• Should also disclose an affirmative declaration that they have abided
by such Code.
• The Chairman must certify that he/she is not aware of any violation of
any of the provisions of this Code.
Bank’s Response: Bank has a Code of Ethics for Directors and a Code of
Conduct for its employees. An affirmative declaration by Directors and
Chairman’s Certificate of Non-Violation will be disclosed in 2010.
Going Concern
• Should report that the Bank is a going concern, with supporting
assumptions and qualifications, as necessary.
Bank’s Response: The Bank is a going concern.
98
Subject
B. Remuneration
Committee Report
Members of Remuneration • The names of members of the Remuneration Committee should be
Committee
disclosed in the Remuneration Committee Report.
Bank’s Response: Complied with. Names of members of the Remuneration
Committee are disclosed in the Board Human Resources and
Remuneration Committee Report on page 102 of this Annual Report.
C. Directors’ Report
Directors’ Report
Should contain the following declarations made by Directors:
• The Bank has not engaged in any activities, which contravene laws
and regulations;
• The Directors have declared all material interest in contracts
involving the Bank and refrained from voting on matters in which they
were materially interested;
• The Bank has made all endeavours to ensure the equitable treatment
of shareholders;
• The business is a going concern with supporting assumptions or
qualifications as necessary; and
• They have conducted a review of internal controls covering financial,
operational and compliance controls and risk management and have
obtained reasonable assurance of their effectiveness and successful
adherence herewith.
D. Financial Statements
Financial Statements
• The Board of Directors should include a Statement of Responsibility
for the preparation and presentation of Financial Statements.
• Auditors should also have a statement about their reporting responsibility.
E. Management Report
Management Report
Should include a ‘Management Discussion and Analysis Report’
discussing at least the following issues:
• Industry structure and developments;
• Opportunities and threats;
• Risks and concerns;
• Internal control systems and their adequacy;
• Social and environmental protection activities carried out by the Bank;
• Financial performance;
• Material developments in human resources/industrial relations; and
• Prospects for the future.
Bank’s Response: Complied with to a great extent. The Bank is planning
to improve on this going forward.
99
Subject
F. Corporate Governance
Report
Report
Should disclose the manner and extent to which the Bank has complied
with as per the principles and provisions of the Code.
Bank’s Response: Plan to comply by year 2010.
G. Audit Committee Report
Audit Committee Report
Should set out the work carried out by the Committee.
Bank’s Adherence with the Corporate Governance Rules as required by Section 3 (8) of the
Banking Act Direction No. 11 of 2007, Issued by the Central Bank of Sri Lanka
Corporate Governance Disclosure Requirements
I. The Board shall ensure that • Annual Audited Financial Statements and quarterly Financial Statements are prepared and
published in accordance with the formats prescribed by the supervisory and regulatory authorities
and applicable accounting standards.
Bank’s Response: Complied with. Please refer ‘Directors’ Responsibility for Financial Reporting’
on page 125 of this Annual Report.
• Such statements are published in the newspapers in an abridged form, in Sinhala.Tamil and English.
II. The Board shall ensure that the following minimum disclosures are made in the Annual Report:
• Statements to the effect that the Annual Audited Financial Statements have been prepared in line
with applicable accounting standards and regulatory requirements, inclusive of specific disclosures.
• A report by the Board of Directors on the Bank’s internal control mechanism that confirms that the
financial reporting system has been designed to provide reasonable assurance regarding the reliability
of financial reporting and that the preparation of Financial Statements for external purposes has been
done in accordance with relevant accounting principles and regulatory requirements.
• The External Auditors’ certification on the effectiveness of the internal control mechanism as
referred to in Direction 3 (8) (ii) in respect of any statements prepared or published after
31st December 2009.
Bank’s Response: We plan to comply by 2010.
100
Corporate Governance Disclosure Requirements
• Details of Directors, including names, fitness and propriety, transactions with the Bank and the
total fees/remuneration paid by the Bank.
Bank’s Response: Complied with. Details of Directors including their names, transactions with the
Bank, total fees paid are given in ‘Directors’ Report’ on pages 122 to 124 ’Related Party Disclosures’
Note 36 and ‘Directors’ Emoluments - Operating Expenses Note on page 151 of this Annual Report.
• Total net accommodation as defined in 3 (7) (iii) of the Direction, granted to each category of
related parties. The net accommodation granted to each category of related parties shall also be
disclosed as a percentage of the Bank’s regulatory capital.
Bank’s Response: Complied with. Please refer Note 36 to the Financial Statements on ‘Related Party
Disclosures’ in this Annual Report.
• The aggregate values of remuneration paid by the Bank to its key management personnel and the
aggregate values of the transactions of the Bank with its key management personnel, set out by
broad categories such as remuneration paid, accommodation granted and deposits or investments
made in the Bank.
Bank’s Response: Complied with. Please refer Note 36 to the Financial Statements on ‘Related Party
Disclosures’ in this Annual Report.
• A report setting out details of the compliance with prudential requirements, regulations, laws and
internal control and measures taken to rectify any material non-compliance.
Bank’s Response: There were no material non-compliances. Please refer ‘Directors’ Responsibility
for Financial Reporting’ on page 125 of this Annual Report for details on Compliance Measures.
• A statement of the regulatory and supervisory concerns on lapses in the Bank’s risk management,
or non-compliance with these directions that have been pointed out by the Director of Bank
Supervision, if so directed by the Monetary Board to be disclosed to the public, together with the
measures taken by the Bank to address such concerns.
Bank’s Response: There were no lapses in risk management and non-compliance with Directions
issued by the Central Bank of Sri Lanka identified for disclosure to the public.
[Subcommittees of the Board]
[Corporate Governance 94]
[Risk Management 106]
101
Subcommittees of the Board
Board
Executive
Credit
Committee
Board Human
Resource and
Remuneration
Committee
Board
Integrated Risk
Management
Committee
Board Executive Credit
Committee Report
Role of the Committee
Main functions of the Board Executive Credit
Committee include the following:

Formulating and periodically reviewing the
credit policy of the Bank.

Authorising credit facilities over and above
the delegated limits of specified categories.
Board
Nominations
Committee
Board
Audit
Committee
Committee Meetings
The Committee held twenty-five meetings
during the year under review. The attendance
of Committee Members at meetings is
given on page 105 of this Annual Report.
Key executives of the Bank were invited to
participate at meetings as and when required.
The proceedings of the Committee meetings are
regularly reported to the Board of Directors.
Activities of the Committee
The Composition of the Board
Executive Credit Committee - BECC
The Members of the Committee during 2009
were as follows:
Mr. W. Karunajeewa
Chairman
Mr. Chandrasiri De Silva Director
Mr. D.J.D. Jayakody
Director
Mr. P.V. Pathirana
CEO/General Manager
Mr. Kapila AriyaratneSDGM (C & IB) (Resigned on
17th January 2010)
Mr. Sabry IbrahimSDGM (Risk &
Compliance)
Mr. M.T.M. Shuaib
Credit Controller
The Committee evaluates all credit proposals
against the credit guidelines laid down prior
to granting approval. The main focus of the
Committee was to ensure disbursement of
quality credit facilities. The Committee also
makes every effort to ensure recovery of loans
in time. Credit proposals above Rs. 25 Mn and
credit facilities for Members of Parliament and
Member of Provincial Councils are considered
by the BECC.
W. Karunajeewa
Chairman
Board Executive Credit Committee
102
Board Human Resource and
Remuneration Committee
Report - BHRRC
Main functions of the Board Human Resource and
Remuneration Committee include the following:

Formulate policies and procedures in
relation to Human Resource Management.
The Committee continues to work closely with
the Board in reviewing the human resource
requirements of the Bank. The Committee
considers and recommends to the Board
additional expertise and also promotion of
the Key Management Personnel. Further,
the Committee considers/reviews promotion
schemes for staff members.
Review
and set in place the manning
levels of the Bank according to business
requirements.

Approve recruitment, employee benefits,
specified extensions and Corporate Executive
Management employment contracts.
The Composition of the Human Resource
and Remuneration Committee
were as follows:
Mr. W. Karunajeewa
Mr. Chandrasiri De Silva
Mr. D.J.D. Jayakody
Mr. P.V. Pathirana
Chairman
Director
Director
CEO/General Manager
Committee Meetings
The Committee held nineteen meetings during
the year under review. The attendance of
Committee Members at meetings is given on
page 105 of this Annual Report. Key executives of
the Bank were invited to participate at meetings
monthly and also as and when required. The
proceedings of the Committee meetings are
regularly reported to the Board of Directors.
W. Karunajeewa
Chairman
Remuneration Committee
103
Board Integrated Risk
Management Committee Report BIRMC
Main functions of the Board Integrated Risk
Management Committee include the following:

Assess all risks to the Bank on a periodic
basis through appropriate risk indicators
and management information.
Review
the adequacy and effectiveness of
all management level committees to
address specific risks and to manage those
risks within quantitative and qualitative
risk limits. This includes stress test and
risk dashboard reviews.
corrective action to mitigate the effects
of specific risks in the case such risks are at
levels beyond the prudent limits decided by
the Committee.
Committee Meetings
The Committee held five meetings during
the year under review. The attendance of
Committee Members at meetings is given on
page 105 of this Annual Report. Key executives
of the Bank were invited to participate at
meetings as required. The proceedings of the
Committee meetings are regularly reported to
the Board of Directors.
The Committee reviews Bank-wide risks and
works closely with the Board in fulfilling its
statutory, fiduciary and regulatory responsibilities
for Integrated Risk Management.
Take
The Composition of the Board Integrated
Risk Management Committee
were as follows:
Mr. R.A. Jayatissa
Chairman
Mr. D.J.D. Jayakody
Director
Mr. A.P. Weerasinghe
Director
Mr. P.V. Pathirana
CEO/General Manager
R.A. Jayatissa
Chairman
Board Integrated
Risk Management Committee
104
Board Nomination Committee
Report - BNC
Main functions of the Board Nomination
Committee include the following:
Implement
a procedure to select/appoint
CEO/GM and Senior Management Personnel.
Set
criteria such as qualifications,
experience and key attributes required for
eligibility to be considered for appointment
or promotion to the post of CEO/GM and
Senior Management Positions.
The Composition of the Board
Nomination Committee
were as follows:
Mr. W. Karunajeewa
Chairman
Mr. D.J.D. Jayakody
Director
Appointments and promotions of the
Senior Management positions including the
appointment of CEO/GM were made by the
Board of Directors during the year; therefore,
no meetings of BNC were held in 2009.
W. Karunajeewa
Chairman
Board Nomination Committee
105
Board Audit Committee Report
The Composition of the Board Audit
Committee
were as follows:
Mr. R.A. Jayatissa Mr. A.P. Weerasinghe
Mr. W.S.S. Bandara
Mr. T. Rajapakse
Director
Director
Director
Director (Member
up to July 2009)
The Audit Committee Report is given on pages
126 to 127 and the attendance of Committee
Members at meetings is given below.
Number of Meetings held during the
year 2009
Name of Committee
No. of
Meetings
Board Executive Credit Committee (BECC)
Board Human Resource and Remuneration
Committee (BHRRC)
Board Integrated Risk Management
Committee (BIRMC)
Board Audit Committee (BAC)
25
19
05
14
Attendance of Directors at Board and
Subcommittee Meetings during the
year 2009
Name of the Director
Mr. W. Karunajeewa
Mr. Chandrasiri De Silva
Mr. R.A. Jayatissa
Mr. T. Rajapakse (Resigned in
August 2009)
Mr. D.J.D. Jayakody
Mr. W.S.S. Bandara
BECC
BHRRC
BIRMC
BAC
24
19
N/M
N/M
19
14
N/M
N/M
N/M
5
5
5
N/M
N/M
14
13
N/M
24
N/M
N/M
19
N/M
N/M
5
N/M
01
N/M
14
N/M - Not a Member of the Board Subcommittee.
[Risk Management]
106
People's Bank recognises that the provision of
financial services involves risk and its proper
management is a key success factor. Its policy
is to employ best-in-class risk management
techniques to ensure that its financial
performance is optimised while delivering value
to its shareholders.
We also realise that risk management practices
are continuously evolving and strive to adapt to
the methodologies recommended by the BASEL
Committee and the local regulator, the Central
Bank of Sri Lanka.
Risk Management Structure
at People's Bank
The Board of Directors has the ultimate
responsibility for setting the risk appetite of the
Bank and ensuring that exposure and risks are
maintained within approved levels. The Board
decides on policies for credit, market, liquidity
and operational risks based on recommendations
made by the Board Integrated Risk Management
Committee, the Assets and Liabilities Committee
(ALCO) and the Board Executive Credit
Committee. Internal and External Auditors
provide assurance to the Board about the
effectiveness of policies and procedures in place.
Risk Exposure and
Its Management
As one of the largest banks in Sri Lanka, in
terms of geographical reach, client base as well
as staff strength, People's Bank encounters a
wide range of risks which result in exposure to
credit, market, liquidity, operational, regulatory
and compliance, country and strategic risks.
Credit Risk
Credit Risk arises from the probability that
the Bank’s customers and counterparties may
be unable or unwilling to fulfil their agreed
obligations resulting in a financial loss for the
Bank. The assumption of credit risk is a key
facet of the Bank’s business and accounts for,
by far the largest share of the overall risk in the
Bank. As at the end of 2009, People's Bank had
loans and advances exceeding Rs. 299 Bn
as against Rs. 263 Bn as at end 2008.
Given the extent of the risk involved, the Bank
devotes considerable resources towards the
management of credit risk. Central to this are
the people involved in the credit evaluation and
monitoring process and policies and procedures
adapted. Training in credit evaluation
Board of Directors
• Sets risk appetite
• Is responible for limiting and monitoring risk exposure
Board
Integrated
Risk Management
Committee
• Reviews and reports
on overall risk profile
• Reviews risk management
practices and policies
• Recommends overall risk
appetite to Board
Assets and
Liabilities
Committee
• Monitors and reports
on market and liquidity
risks
• Reviews and recommends
related policies to Board
Board
Executive
Credit
Committee
• Approves credit policies
and procedures
• Approves large credit
exposures
• Monitors and reports
on portfolio quality
Board Audit
Committee
• Monitors, reviews and
reports on compliance
with policies and
procedures
• Provides Board with
assurance on the
effectiveness of risk
practices and policies
[Risk Management]
107
techniques is core to credit risk management
and this is an ongoing process.
Except for the very small exposures, credit
approval is carried out by a hierarchy of
committees, with the larger exposures being
approved by the Board Executive Credit Committee.
2009 was a year in which Sri Lanka faced a
number of challenges, both internationally
and locally that impacted on overall credit
quality. Despite the pressures to fulfil its social
obligations as a State-owned Bank, growth in
non-performing loans (NPL) at People's Bank
was well below the average for the industry;
the Bank’s NPL ratio was 10 basis points lower
than in 2008 and its overall ratio well below the
industry average. These results were achieved
by adopting stringent risk acceptance criteria,
close monitoring and follow up and proactive
management of deteriorating credits.
108
[Risk Management]
[Risk Management]
109
Non-Performing Loan Summary
Market and Liquidity Risk
People's Bank follows the Central Bank’s
guidelines on the recognition and provisioning
of impaired credits. When it is apparent that the
customer will be unable to meet its obligations
(both principal and interest) to the Bank in full, the
exposure is considered as in default. Exposures
that have been in default for over 90 days are
automatically classified as non-performing.
Market Risk is the probability that there will be a
loss to the Bank as a result of adverse movements
in market prices or rates such as interest rates,
foreign exchange rates or equity prices.
Exchange rate risk arises from the Bank’s
proprietary trading activities, providing cover
for its customers involved in foreign trade and
remittance business.
Interest rate risk is a result of providing funding
on a fixed interest rate basis while the bulk of
the funding sources are subject to repricing at
more frequent intervals. Investments in bonds
and other fixed income securities also give rise
to interest rate risk.
The Bank’s investment in equities is negligible
and hence, so is its exposure to equity price
movements.
[Risk Management]
110
Liquidity Risk is the risk that the Bank will
be unable to meet its maturing financial
commitments as and when they fall due or meet
withdrawals of customer deposits. This risk
arises as the majority of its deposits are obtained
on a short-term (contractual maturity of one year
or less) basis while a significant part of its loans
and investments has much longer maturities.
This risk is common to most commercial banks.
The Bank’s overall liquidity is underpinned by
the core retail deposits in the form of savings
and current accounts. These form at least
50% of the Bank’s overall deposit base and
provide a stable source of liquidity for the
Bank’s operations. Although contractually, both
current and savings balances are repayable
on demand, our large network and resulting
broad, well diversified client base provides a
cushion against unexpected fluctuations. By
providing competitive rates, good client service
and maintaining the confidence of depositors
we have diversified our funding sources and
thereby reduced liquidity risk.
In addition to maintaining a stable and
diversified deposit base, liquidity is managed by:
Monitoring
cash flows to ensure that any net
outflows are kept within pre agreed limits
Maintaining
a portfolio of liquid assets that
can mitigate against any large unplanned
liquidity needs
Ensuring
the availability of sufficient credit
lines from other financial institutions to
meet temporary liquidity shortfalls
The Bank’s Treasury department actively
manages the market and liquidity risks on a
daily basis under the guidance and direction of
the Assets and Liabilities Committee.
The Treasury Middle Office, which independently
reports to the Chief Risk Officer, assists in the
management and reporting of risks arising
from the Bank’s Treasury activities. It monitors
price movements and other developments
that could impact the Bank’s earnings and
capital, analyses the risks inherent in all areas
of Treasury activity and evaluates the efficacy
of the systems and controls in place. It also
monitors and reports on adherence with the
various limits imposed by the Board on market
and liquidity related exposures.
Stress-testing of market and liquidity positions
under a range of scenarios has also recently
begun and is done in accordance with the
guidelines set by the Central Bank. This is used
to evaluate the potential vulnerability of the
Bank to certain unlikely but plausible events or
movements in financial variables.
[Risk Management]
111
Operational Risk which is inherent in all
businesses arises from inadequate or failed
internal processes or systems or from external
events. We are fully cognisant of the fact that
Operational Risk cannot be eliminated and
accordingly, our objective is to contain it within
acceptable levels, as determined by the Board of
Directors, and to ensure that we have sufficient
information to make informed decisions about
additional controls, adjustments to controls or
other risk responses.
The core of the operational risk framework at
People's Bank is the definition by all Branches,
Business Units and staff of their roles and
responsibilities so that, collectively, they can
ensure that there is adequate segregation
of duties, complete coverage of risks and
clear accountability. An Operational Risk Unit
monitors and coordinates operational risk
events across the Bank.
[Risk Management]
112
A database of loss events and their impact
is maintained and analysed to ascertain any
trends and refine our procedures and controls
in order to minimise future losses and improve
operational efficiency.
Insurance is used to minimise losses for those
risks identified as having a low probability of
occurrence, but where the financial impact is
high. Damage to the Bank’s assets, fraud and
staff negligence are some of the risks that are
covered by insurance.
Business Continuity Planning and Disaster
Recovery Procedures are also used to minimise
any losses that could arise from any major
disruption to operations, whether it is to our IT
infrastructure or Branch premises.
Compliance and Regulatory Risk arises from a
failure to comply with the rules and regulations
that govern the financial services industry
including Know Your Client, Customer Due
Diligence and Anti-Money Laundering procedures.
In addition, the Bank must also fully comply with
all other laws of the land. Non-compliance may
lead to fines being imposed and/or public censure
with consequent damage to the reputation of the
Bank, which is the Bank’s most valuable asset.
Effective management of Compliance and
Regulatory risk is the responsibility of all
operating and business units in the Bank and
this effort is supported and coordinated by the
Compliance Department which;
Provides
awareness training on applicable
laws and regulatory changes
Monitors
and reports on any potential and
actual breaches
During 2009, there were no fines, regulatory or
otherwise, imposed on the Bank and no major
violations have been reported.
Legal Risk arises from the probability that
unenforceable contracts, lawsuits or violations
of the applicable laws may disrupt or otherwise
negatively affect the operations of the Bank. As
in the case of Compliance and Regulatory risk,
it is the responsibility of all Senior Management
to ensure that business is conducted in
accordance with the prevailing legal framework
and with an awareness of legal risk.
Legal risk is managed by the effective use of both
internal and external counsel, using standardised
documentation to the extent possible and keeping
abreast of the changes and other developments in
the legal environment within which the Bank and
its customers and counterparties operate.
Risk Measurement and
Capital Adequacy
As per the Central Bank rules, People’s Bank uses
the Standardised Approach (for Credit Risk), the
Basic Indicator Approach (for Operational Risk)
and the Standardised Approach (for Market Risk)
for assessing the respective risk asset equivalents
and related capital requirements. Plans are under
way to install a new Treasury management system,
which once implemented, will facilitate Value at
Risk Measurements for the Bank’s market risk.
Careful management of credit risk, prudent
retention of earnings and successful raising
of Tier II Capital have enabled the Bank to
significantly improve its Capital Adequacy
position providing a strong platform for future
growth and expansion that is envisaged with the
opening of the economy in the North and the
East and the revival of the global economy.
Average Risk-Weighted Assets (Rs. Bn.)
Credit Risk
Operational Risk
Market Risk
Total Average Risk
Weighted Assets
2009
2008
118.5
33.9
3.4
122.7
28.8
1.7
155.8
153.2
[Key Performance Indicators]
[Financial Reports 121]
113
Key Performance Indicators(KPI)
What does it Show? What we have accomplished and plan to achieve?
Gross Income
Total turnover or interest and fee-based income of the Bank
Net Income
Net interest income (Interest income, less interest cost) and
non-funded income.
Profit before Taxation
Net income, less overheads and provisions
Gross income exceeded the budgeted target for the year, driven
mainly by growth in the loan book and prudent pricing. The Bank
recorded a growth of 17% over previous year compared to 5%
in the banking industry. We plan to grow this topline further
through loan expansion.
Net income exceeded budget numbers driven by management
of interest margins and growth in loans. In addition, material
contributions from capital and exchange gains resulted in an
overall 25% growth in net income over FY 2008. Going forward,
the Bank plans to focus on growing fee-based revenue, bad debt
recoveries, capital and exchange gains, etc.
This number exceeded budget targets for 2009 and previous year.
This was despite full provisions made on assets pertaining to oil
derivative transactions entered into in 2008 (without prejudice
to the Bank's legal proceedings). In addition, stringent focus
on interest margins and management of overheads were key
elements which contributed to this result. Going forward, we
plan to continue our focus on margins, fee-based revenue and
cost control initiatives.
114
Net Income
Net Interest Income and non-funded income.
Operating Costs
Direct and indirect costs incurred to achieve operating profit.
Cost Income Ratio
Operating cost/Net income
Continuous growth recorded with timely pricing adjustments,
growth in loans and fee-based income.
Key growth in overheads were driven by salaries and related
expenses due to the collective agreement signed in 2009.
Other overheads increased due to inflationary pressure and
inherent issues.
The Bank's cost/income ratio is now at 61% levels compared to
over 70% during early 2000. Growth in net income and stringent
cost control measures were key to this noteworthy achievement.
We plan to reduce this key indicator further going forward.
115
Non-Performing Loans (NPL)
Loans with settlement issues categorised as per Central Bank
of Sri Lanka (CBSL) guidelines.
Gross Loans and Advances
Total loans and advances before deduction of provisions for
doubtful debts.
Non-Performing Loans Ratio
Non-performing loans/Total Gross loans and advances.
Although this number could not be managed within budgeted
levels in FY 2009, growth was marginal during the year. The
increase was mainly influenced by macro economic conditions
which affected the Banking industry at large; however, our
numbers were managed below industry growth. The industry
NPLs expanded by 22% compared to 31% from FY 2007 to FY
2008. Further, around Rs. 9 Bn NPLs are pertaining to pre-2001
granted loans which are fully provided for.
Gross loans and advances increased above budgeted
expectations. Main sectors which fuelled this growth were for
Fertilizer, Agriculture Fisheries, Housing, Pawning, etc. The
Bank's loans and advances grew by 14% in contrast to the 4%
contraction experienced in the industry. We plan to expand on
quality lending going forward.
The NPL ratio decreased by 10 basis points as at end 2009.
Moreover, it is well below the industry average of around 9% for
FY 2009, which grew from 6.3% in FY 2008. The Bank's credit
evaluation process and focus on low risk-weighted lending were
main contributory factors in managing this ratio. Going forward,
the Bank plans to expedite recovery measures on NPLs whilst
minimising slippage.
116
Provision for bad and doubtful debts
Total provisions made on NPLs.
Non-Performing Loans
Loans with recovery or settlement issues categorised as per
CBSL guidelines.
NPL Coverage Ratio
Percentage of provisions made on NPLs.
Made as per CBSL guidelines.
The post-2001 NPL transfers are under Rs. 12 Bn. The Bank
still carries around Rs. 9 Bn worth of old hardcore NPLs granted
prior to FY 2001. The NPL growth in the industry recorded 22%
compared to 31% from FY 2007 to FY 2008.
The Bank's NPL coverage ratio is over 70% compared to under 50%
in the industry. Old hardcore NPLs are almost fully provided. NPL
Coverage Ratio should improve further going forward.
117
Earnings from operations, less overheads and provisions.
Average assets
Total loans and advances, investments and Treasury
instruments, etc.
Return on Average Assets (before tax)
Percentage of profit before tax over average assets.
Steady growth despite challenges both internally as well
as externally.
Second largest asset base in the industry. The Bank has focused
on asset growth over the years which has yielded healthy returns.
FY 2009 recorded an increase of 20% over FY 2008 which ended
at Rs. 476 Bn. This is compared to the growth of 12% in the
banking industry.
A certain portion of Bank assets were acquired prior to the year
2000 and yields low returns. This has weighed down the Bank's
ROA. However, new assets yield market rates and are priced
above marginal cost of funds. We plan to improve on this ratio
going forward.
118
Capital Base
A combination of Tier I & Tier II Capital as approved by CBSL.
Risk-weighted Assets
Risk per cent weighted as per Basel II guidelines for assets in
our books.
Capital Adequacy Ratio (CAR)
A ratio computed using the above variables. The requirement is
above 10% for the local banking industry.
The Bank has continuously increased its Capital Base with
maximum ploughed-back earnings, capital from the Ministry of
Finance and two debenture issues to the value of Rs. 5 Bn. The
total Capital Base has reached Rs. 21 Bn compared to negative
Rs. 7 Bn in FY 2001.
Although the Bank's asset base depicts an increase in Financial
Year 2009 over Financial Year 2008, the increase in risk assets
was managed at prior year levels. The Bank also takes on a
high operational risk charge due to the high net interest income
generated.
The Bank recorded a CAR of 13.4% for FY 2009 over 10.5% in
2008. This is indeed a remarkable achievement given that this
ratio was negative or below 10% a few years ago. Sustaining this
ratio is a key focus going forward.
119
Profit after Tax
Profit before tax, less tax liability.
Number of Employees
Number of permanent employees as at year end.
Profit per Employee
Profit after taxation computed per permanent employee.
Similar to the industry, the Bank bears a huge tax liability on its
earnings. The financial VAT compounded by higher than industry
salaries and wages is a material charge compared to industry.
Financial VAT is not a deductible expense for mainstream tax
liability and has added strain to this bottom line number. Key
focus going forward will be on growing profit after tax in order
to increase the Bank's Tier I Capital Base to meet risk-weighted
asset expansion.
The Bank has recruited around 1,800 customer service assistants
and 100 management trainees in 2009. This was required to
replenish retirees and increasing customer demands. As per
the current age analysis, over 2,000 permanent employees are
due to retire over the next two to three years. As a State Bank,
we also provide value added free services to our customers.
This amount is below the number recorded by most private
commercial banks. We also note that People's Bank offers
services which cannot be accounted in terms of impact on bottom
line growth. Payment of government servants' salaries, armed
forces salaries, teachers' salaries, settlement of electricity
bills, water bills, pension payments to government servants and
loans to government servants for housing are, to name a few.
High personnel cost of the Bank and the requirement of a large
number of staff to man the largest branch outreach in the country
add strain to this KPI.
[Financial Reports]
[Directors’ Report 122] [Directors’ Responsibility for Financial Reporting 125] [Audit Committee Report 126]
[Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131] [Cash Flow Statement 132] [Statement of Changes in Equity 134]
[Significant Accounting Policies 135] [Notes to the Financial Statements 151] [Supplementary Information 179]
121
[Directors’ Report]
[Directors’ Responsibility for Financial Reporting 125]
[Audit Committee Report 126] [Report of the Auditor General 128] [Income Statement 130]
[Balance Sheet 131] [Cash Flow Statement 132] [Statement of Changes in Equity 134]
122
Directors
Subsidiaries and Associates
The Board of Directors of People’s Bank consists
of nine Directors nominated by the Minister of
Finance out of which two names were proposed
by the Minister-in-Charge of Co-operatives under
the provisions of People’s Bank Act No. 29 of
1961 as amended. In year 2009, there were nine
Directors out of which one name was proposed
by the Minister-in-Charge of Co-operatives. The
Board meets at least once a month and met 18
times in 2009. The quorum for a Board meeting is
five members. The Directors of the Bank during
the year 2009 were as follows:
The following are the subsidiaries/associate
companies of the Bank:
Name
Mr. W. Karunajeewa
Mr. H.K. Chandrasiri de Silva
Mr. Gunasoma Wickremasinghe
Mr. R.A. Jayatissa
Mr. Thimira Rajapaksa (Resigned on 07.07.2009)
Mr. D.J.D. Jayakody
Mr. Wajira Swarna Sri Bandara
Mr. K.L. Hewage (Appointed on 14.07.2009)
Mr. Lalith R. de Silva (Appointed on 28.09.2009)
No. of
No. of
Meetings Meetings
Held Attended
Mr. W. Karunajeewa
18
17
Mr. H.K. Chandrasiri de Silva
18
17
Mr. Gunasoma
Wickremasinghe
18
14
Mr. R.A. Jayatissa
18
15
Mr. Thimira Rajapaksa
11
07
18
16
Mr. D.J.D. Jayakody
18
16
Mr. Wajira Swarna Sri Bandara
18
17
Mr. K.L. Hewage
08
07
(After appointment)
03
Directors representation is as follows:
Mr. W. Karunajeewa
-
Mr. D.J.D. Jayakody
-
Mr. Wajira Swarna
Sri Bandara
-
Mr. Kapila Ariyaratne -
Mr. N. Vasanthakumar -
Mr. M.T.M. Shuaib
-
Chairman
Director
Director
Director
(Resigned on 17.01.2010)
Director
Credit Controller
The principal activities of the Company are
Air Ticketing and Organising of Tours.
Mr. Chandrasiri de Silva-
Mr. Thimira Rajapaksa -
Mr. P.V. Pathirana -
Mr. N. Vasanthakumar -
Chairman
Director
Director
Director
(c) People’s Merchant Bank Ltd.
(Till hisresignation)
(After appointment)
The principal activities of the Company are
Financial and Operating Leasing, Hire Purchase,
Asset Financing and Islamic Finance.
Shareholdings - 99%
Number of meetings held during the year 2009 - 18.
Mr. Lalith R. de Silva
Shareholdings - 100%
(b) People’s Travels (Pvt) Ltd.
Directors’ Attendance at the Board Meetings
Name
(a) People’s Leasing Co. Ltd.
01
Shareholdings - 39.2%
The principal activities of the Bank are Lease
Financing, Trade Financing, Corporate Finance
and Related Advisory Services, Investment
Banking and Real Estate Development.
123
Mr. K.L. Hewage
- Chairman
(Appointed on 31.07.2009)
Mr. Thimira Rajapaksa - Chairman
Mr. P.V. Pathirana
- Director
Mr. Sabry Ibrahim
- Director
Mr. Chandrasiri de Silva - Director
Mr. Anil Parakrama
Weerasinghe - Director
The Bank has voluntarily adopted Best
Practice provisions and have in place systems
and procedures to ensure sound Corporate
Governance.
A detailed Report is given on Pages 94 to 100.
Compliance Reporting
A separate Compliance Function Unit has been
set up within the Bank. Monthly Compliance
Reports certified by the CEO/GM and the
Compliance Officer are submitted to the Central
Bank - Bimonthly Compliance Reports are also
submitted to the Board. A Code of Conduct for
staff has been formulated and issued to all
members of staff.
A detailed report is given on pages 91 to 93.
Subcommittees of the Board as at 31st December
2009 are as follows:
Board Audit Committee (BAC)
Mr. R.A. Jayatissa
-
-
Mr. V.S. Bandara
-
Director
(Chaired the Committee)
Director
Director
Main function of the Committee is identifying
the operational risks faced by the Bank as
preventing/minimising the effects of such
risks and communicating and encouraging
best practices and positive quality assurance
throughout the branch network.
Board Executive Credit Committee
(BECC) Meeting
Mr. W. Karunajeewa
- Chairman
Mr. D.J.D. Jayakody
- Director
Mr. P.V. Pathirana
- CEO/GM
Mr. Kapila Ariyaratne
- SDGM (C & IB)
Mr. Sabry Ibrahim
- SDGM (Risk & Compliance)
Mr. M.T.M. Shuaib
- Credit Controller
(Retired on 22.01.2010)
Main functions are formulating and periodically
reviewing the credit policy of the Bank.
Authorising credit facilities over and above the
delegated limits of specified categories.
Remuneration Committee (BHRRC)
Mr. W. Karunajeewa
Mr. Chandrasiri de Silva
Mr. D.J.D. Jayakody
Mr. P.V. Pathirana
-
-
-
-
Chairman
Director
Director
CEO/GM
124
Main functions of the Committee are to
formulate policies and procedures in relation
to Human Resource Management, Review
and set in place the manning levels of the
Bank according to business requirements,
Board Nomination Committee (BNC)
approve recruitment, employee benefits,
specified extensions and Corporate Executive
Management employment contracts.
Main functions of the BNC are to implement a
procedure to select/appoint CEO/GM and Senior
Management Personnel and to set the criteria
such as qualifications, experience and key
attributes required for eligibility to be considered
for appointment or promotion to the post of CEO/
GM and senior management positions.
Board Integrated Risk Management
Committee (BIRMC)
Mr. R.A. Jayatissa Mr. Chandrasiri de Silva
Mr. D.J.D. Jayakody
Mr. P.V. Pathirana -
-
-
-
-
Chairman of BIRMC
Director
Director Director
CEO/GM
The Board subcommittee was set up to have an
overview and input into the Bank-wide efforts
relating to Integrated Risk Management.
The Board subcommittee on Integrated Risk
Management specifically views the summary
of proceedings and issues arising out of Assets
and Liabilities Committee (ALCO) reports and
meetings, credit risk-related issues and reports
and the efforts of establishing an Operational
Risk Management framework.
More details relating to the Bank’s Integrated
Risk Management is set out in a specific
section dealing with the subject in this
Report on page 103.
Mr. W. Karunajeewa
- Chairman
Mr. D.J.D. Jayakody
- Director
[Directors’ Responsibility for Financial Reporting]
[Directors’ Report 122]
[Audit Committee Report 126] [Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131]
[Cash Flow Statement 132] [Statement of Changes in Equity 134] [Significant Accounting Policies 135]
[Notes to the Financial Statements 151] [Supplementary Information 179]
125
The Board of Directors of the Bank has
responsibility for ensuring that the Bank keeps
proper books of account of all the transactions
and prepares Financial Statements that give a
true and fair view of the state of affairs and of
The Bank’s Financial Statements for the year
ended 31st December 2009 prepared and
presented in this report are in conformity with
the requirements of Sri Lanka Accounting
Standards and the Banking Act No. 30 of
the profit/loss for the year.
1988, the amendments thereto. The Financial
Statements reflect a true and fair view of the
state of affairs of the Bank and the Group as at
that date.
Accordingly, the Board of Directors oversees
the Managements’ responsibilities for financial
reporting through their regular meeting reviews
and the Audit Committee. The Audit Committee
Report is given on pages 126 to 127.
The Board of Directors has instituted effective
and comprehensive systems of Internal Control.
This comprises Internal Checks, Internal
Audit and the whole system of financial and
other controls required to carry on business
of banking in an orderly manner, safeguard
its assets and secure as far as practicable
the accuracy and reliability of the records.
Directors consider that they adopted appropriate
accounting policies on a consistent basis
and supported by reasonable and prudent
judgement and estimates in preparing the
Financial Statements for the year 2009 exhibited
on pages 130 to 178.
Kanthi Atukorale
Secretary to the Board of Directors
[Directors’ Report 122] [Directors’ Responsibility for Financial Reporting 125]
[Audit Committee Report]
[Report of the Auditor General 128] [Income Statement 130]
126
The Board Audit Committee (BAC) proceedings
were based on the Charter and Terms of
Reference adopted by the Board of Directors for
the functioning of the Committee.
The Board Audit Committee held fourteen (14)
regular meetings in the year 2009 to review the
progress of internal audit functions, adequacy,
efficiency and effectiveness of controls to manage
risks paying special attention to the following:

Further strengthening of the Risk-Based
Internal Audit approach to identify various
risks faced by the Bank and to ensure proper
management of risks by placing special
emphasis on the comprehensive audit
methodology for pre-audit risk assessment
and audit planning.

Early correction of the deficiencies rectified
identified during the course of audit and
ensuring regular follow-up action on
Audit findings through the Internal Audit
Department.

Actions needed to improve audit gradings/
performance standards of Bank branches.

Examining the system of internal controls
and management of business risks.

Reviewing the external and internal audit
processes.

Reviewing the financial reporting process
and procedures in place for monitoring
compliance with laws, regulations and in
particular Central Bank guidelines and
BASEL II requirements and regularity and
statutory financial reporting requirements.

Reviewing with the senior staff of other
functions to identify key accounting and
control issues and resolve those with
the primary objective of establishing an
adequate control environment and ensuring
presentation of Financial Statements that
provide a true and fair view of the financial
results of the Bank.

Training of Audit Officers to equip them with
the knowledge required to conduct RiskBased Internal Audits, Information Systems
Audits and audits in other specialised areas
such as Treasury Operations, International
Banking etc., providing them an opportunity
to participate in programmes organised by
the Bank’s Staff Training College and other
organisations.
The internal audit functions were directed at
identifying business risks i.e., credit risks,
operational risks, market risks, liquidity risks,
etc. faced by the Bank and preventing mitigating
the effects of such risks and communicating and
encouraging best practices and positive quality
assurance throughout the Branch Network.
Internal audit was also involved in reviewing
of operations under the Core Banking System
(Silverlake Integrated Banking System) to ensure
the adequacy of controls. Similarly it was also
involved in reviewing adequacy of controls in
high risk areas such as Treasury Operations,
Corporate and International Banking.
[Directors’ Report 122] [Directors’ Responsibility for Financial Reporting 125]
[Audit Committee Report]
127
The Committee noted the strong commitment
of the Internal Audit Department to make
continued progress in improving efficiency and
effectiveness of its functions. It completed 627
audit assignments, exceeding the target of 532
set for the year 2009. Significant improvements
were noted in strengthening controls to contain
losses by early detection and getting most of
the deficiencies rectified during the course of
the audit and rectification of other deficiencies
in the systems through regular follow-ups.
The BAC was pleased that the Bank was able
to provide a sufficient number of officers to
the Internal Audit Department during the
year. Continued training and professional
development provided to internal Audit Officers
and the availability of a number of professionally
qualified/experienced Audit Officers in the
department also have contributed to improve the
quality of Internal Audit function.
We wish to place on record our appreciations of
the valuable comments and observations made
in the reports of the Auditor General.
R.A. Jayatissa
Chairman
Board Audit Committee
23rd March 2010
[Report of the Auditor General]
[Income Statement 130] [Balance Sheet 131]
128
The audit of the accompanying financial
statements of People’s Bank (“Bank”) the
consolidated financial statements of the Bank
and its Subsidiaries as at 31 December 2009
which comprise the Balance Sheets as at that
date, and the Income Statements, Statements
of Changes in Equity and Cash Flow Statements
for the year then ended, and a summary
of significant accounting policies and other
explanatory notes (Nos. 1 to 36) to the financial
statements was carried out under my direction
in pursuance of provisions in Article 154 (1) of
the Constitution of the Democratic Socialist
Republic of Sri Lanka. In carrying out this audit, I
was assisted by a firm of Chartered Accountants
in public practice. The financial statements of the
Subsidiaries were audited by firms of Chartered
Accountants in public practice appointed by the
members of the respective Subsidiaries.
Responsibility of the Management
for the Financial Statements
Management is responsible for the preparation
and fair presentation of these financial
statements in accordance with the Sri Lanka
Accounting Standards. This responsibility
includes: designing, implementing and
maintaining internal control relevant to the
preparation and fair presentation of financial
statements that are free from material
misstatement, whether due to fraud or error;
selecting and applying appropriate accounting
policies; and making accounting estimates that
are reasonable in the circumstances.
Scope of Audit and Basis of
Opinion
My responsibility is to express an opinion on
these financial statements based on my audit.
The audit was carried out in accordance with
Sri Lanka Auditing Standards, which require
that the audit shall be planned and performed
to obtain reasonable assurance as to whether
the financial statements are free from
material misstatements. The audit includes
the examination, on a test basis evidence
supporting the amounts and disclosures in
the said financial statements. The audit also
includes assessing the accounting policies
used and significant estimates made by the
management, as well as evaluating the overall
presentation of financial statements. I have
obtained all the information and explanations
[Report of the Auditor General]
[Income Statement 130] [Balance Sheet 131]
129
which to the best of my knowledge and belief
were necessary for the purpose of my audit.
I therefore believe that my audit provides a
reasonable basis for my opinion.
Opinion
So far as appears from my examination, I am of
opinion that the Bank had maintained proper
accounting records for the year ended
31 December 2009 and the financial statements
give a true and fair view of the state of affairs
as at 31 December 2009 and its profit and cash
flows for the year then ended in accordance
with Sri Lanka Accounting Standards.
I am of opinion that the consolidated financial
statements give a true and fair view of the
state of affairs as at 31 December 2009 and
the profit and cash flows for the year then
ended in accordance with Sri Lanka Accounting
Standards, of the Bank, and its subsidiaries
dealt with thereby, so far as concerns the
shareholders of the Bank.
Report on Other Legal and
Regulatory Requirements
These financial statements had been presented
the information required by the Banking Act,
No. 30 of 1988 and subsequent amendments.
Exemption
The Bank has been exempted from the
provisions of Part II of the Finance Act, No. 38
of 1971 by an Order of then Minister of Finance
published in the Government Gazette No. 715 of
14 May 1992 by virtue of powers vested in him
by Section 5(I) of the said Finance Act.
Report to Parliament
My report to Parliament in pursuance of
provisions in Article 154(6) of the Constitution
will be tabled in due course.
S. Swarnajothi
Auditor General
[Income Statement]
[Report of the Auditor General 128]
[Balance Sheet 131]
130
For the year ended 31st December
2009
Rs. ’000
Group
2008
Rs. ’000
Change %
17.1
75,560,338
64,344,746
17.4
53,453,556
(34,491,766)
18,961,790
818,399
3,591,387
110,988
973,780
24,456,344
16.6
11.4
26.2
37.0
(13.4)
507.7
85.3
25.3
68,639,885
(41,491,263)
27,148,622
1,120,819
3,125,970
674,447
1,999,217
34,069,075
58,635,370
(37,240,092)
21,395,278
818,399
3,608,782
110,988
1,171,207
27,104,654
17.1
11.4
26.9
37.0
(13.4)
507.7
70.7
25.7
10,316,475
1,838,624
9,068,398
1,514,794
13.8
21.4
10,728,720
1,838,624
9,417,503
1,514,794
13.9
21.4
3,598,401
99,261
3,866,712
(19,719,473)
2,964,156
148,175
3,463,670
(17,159,193)
21.4
(33.0)
11.6
14.9
3,687,125
15,348
5,110,117
(21,379,934)
3,044,659
12,951
4,234,510
(18,224,417)
21.1
18.5
20.7
17.3
10,915,552
7,297,151
49.6
12,689,141
8,880,237
42.9
6
(2,092,413)
(1,620,025)
29.2
(2,049,046)
(1,723,988)
18.9
7
8
432,635
(3,180,083)
(13,405) 3,327.4
–
432,635
(3,180,083)
Note
INCOME
Interest Income
Interest Expenses
NET INTEREST INCOME
Foreign Exchange Gain
Fees and Commission Income
Capital Gain on Treasury Bills and Bonds
Other Income
OPERATING INCOME
1
2
OPERATING EXPENSES
Personnel Costs
Provision for Staff Retirement Benefits
Premises, Equipment and
Establishment Expenses
Fee and Commission Expenses
Other Overhead Expenses
4
3
5
Profit before Loan Loss Provision and
Provision for Fall in Value of
Dealing Securities/Others
Provision for Loan Losses
Other Provisions
OPERATING PROFIT
Share of Associate Companies’ Profit
before Taxation
PROFIT BEFORE TAXATION
Provision for Taxation
PROFIT AFTER TAXATION
Less: Minority Interest
PROFIT FOR THE YEAR
Earnings Per Share (Rs)
Basic
Diluted
9
10.1
10.2
2009
Rs. ’000
Bank
2008
Rs. ’000
Change
%
69,049,608
58,948,110
62,341,236
(38,414,583)
23,926,653
1,120,819
3,108,401
674,447
1,804,705
30,635,025
(13,405) 3,327.4
–
6,075,691
5,663,721
7.3
7,892,647
7,142,844
–
6,075,691
(2,755,497)
3,320,194
–
3,320,194
–
5,663,721
(2,958,873)
2,704,848
–
2,704,848
–
7.3
(6.9)
22.7
–
22.7
(1,523)
7,891,124
(3,717,316)
4,173,808
409
4,174,217
17,981
(108.5)
7,160,825
10.2
(3,733,322)
0.4
3,427,503
21.8
(44) (1,024.2)
3,427,459
21.8
3,320
23
2,705
19
22.7
22.7
4,174
29
3,427
24
The Accounting Policies on pages 135 to 150 and Notes on pages 151 to 178 form an integral part of these Financial Statements.
10.5
21.8
21.8
[Balance Sheet]
131
As at 31st December
Note
ASSETS
Cash and Short-Term Funds
Balance with the Central Bank
Government Treasury Bills and Treasury Bonds
Bills of Exchange
Loans and Advances
Leases
Other Assets
Deferred Tax
Dealing Securities
Investment Securities
Investments in Subsidiaries and Associate Companies
Government of Sri Lanka Restructuring Bonds
Property, Plant & Equipment
Prepaid Leases
Intangible Assets
TOTAL ASSETS
LIABILITIES
Amounts due to Banks
Deposits from Customers
Borrowings from Banks and Others
Taxation Payable
Deferred Liabilities
Other Liabilities
Retirement Benefit
Debentures
TOTAL LIABILITIES
FUNDS EMPLOYED
Share Capital
Capital Pending Allotment
Reserves
Minority Interest
TOTAL FUNDS EMPLOYED
TOTAL LIABILITIES & FUNDS EMPLOYED
COMMITMENTS AND CONTINGENCIES
11
12
13
14.1
14.2
14.3
15
25.1.1
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Bank
2009
Rs. ’000
2008
Rs. ’000
50,332,575
22,717,034
68,787,087
8,014,366
274,009,496
1,736,392
15,700,155
66,171
423,502
17,421,623
1,775,450
7,323,000
7,410,094
359,356
149,211
476,225,512
18,380,371
18,905,799
61,548,268
5,813,414
239,827,514
2,985,118
20,787,474
–
187,714
12,051,312
1,375,450
7,323,000
7,602,901
467,300
292,138
397,547,773
490,142
396,157,559
36,394,032
1,665,457
164,014
17,878,896
695,186
5,000,000
458,445,286
348,559
324,489,316
33,365,540
1,794,329
128,296
18,710,794
331,217
2,500,000
381,668,051
49,998
7,152,000
10,578,228
17,780,226
–
17,780,226
476,225,512
100,867,201
Change
%
Group
2009
Rs. ’000
2008
Rs. ’000
173.8
20.2
11.8
37.9
14.3
(41.8)
(24.5)
–
125.6
44.6
29.1
–
(2.5)
(23.1)
(48.9)
19.8
51,388,258
22,717,034
68,787,087
8,014,366
273,474,198
25,703,975
16,337,861
134,352
423,502
17,472,398
251,155
7,323,000
8,170,342
359,356
512,935
501,069,820
18,444,041
18,905,799
61,548,268
5,813,414
237,539,966
24,364,669
21,212,657
–
187,714
12,101,322
257,767
7,323,000
8,192,847
467,300
314,984
416,673,748
178.6
20.2
11.8
37.9
15.1
5.5
(23.0)
–
125.6
44.4
(2.6)
–
(0.3)
(23.1)
62.8
20.3
40.6
22.1
9.1
(7.2)
27.8
(4.4)
109.9
100.0
20.1
490,142
396,227,796
52,402,973
2,094,559
433,739
21,259,272
695,186
5,245,530
478,849,197
349,072
323,034,348
47,845,763
1,889,051
319,469
20,629,758
331,217
2,815,000
397,213,678
40.4
22.7
9.5
10.9
35.8
3.1
109.9
86.3
20.6
49,998
7,152,000
8,677,724
–
–
21.9
49,998
7,152,000
15,012,408
49,998
7,152,000
12,257,881
–
–
22.5
15,879,722
–
15,879,722
397,547,773
138,988,771
12.0
22,214,406
6,217
22,220,623
501,069,820
100,867,201
19,459,879
191
19,460,070
416,673,748
138,988,771
14.2
3,151.3
14.2
20.3
(27.4)
12.0
19.8
(27.4)
Change
%
The Board of Directors is responsible for the preparation and presentation of these Financial Statements. These Financial Statements were approved by the
Board of Directors and signed on their behalf.
Yohan A. Soza
Head of Finance
P.V. Pathirana
Chief Executive Officer/General Manager
23rd March 2010
Colombo
W. Karunajeewa
Chairman
[Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131]
[Cash Flow Statement]
[Statement of Changes in Equity 134]
132
Cash Flows from Operating Activities
Interest and Commission Receipts
2009
Rs. ‘000
BANK
2008
Rs. ‘000
GROUP
2009
2008 Rs. ‘000
Rs. ‘000 63,056,600
54,507,416
70,801,463
59,831,325
(33,716,539)
87,613
(16,507,334)
(33,162,198)
124,708
(14,543,152)
(36,656,528)
157,213
(17,991,852)
(35,887,445)
124,708
(15,463,967)
12,920,340
6,926,774
16,310,296
8,604,621
(3,811,235)
(36,772,941)
(6,564,372)
(47,148,548)
4,700,324
(11,457,447)
(16,165,997)
(22,923,120)
(3,811,235)
(41,105,210)
(6,564,372)
(51,480,817)
4,700,324
(15,095,277)
(16,165,997)
(26,560,950)
71,701,039
(32,796)
71,668,243
23,615,948
(82,841)
23,533,107
73,200,749
(7,301)
73,193,448
22,533,687
(82,841)
22,450,846
Net Cash from Operating Activities before Income Tax
Income Taxes Paid
Retirement Benefit Paid during the Year
Net Cash from Operating Activities
37,440,035
(2,993,835)
(1,475,641)
32,970,559
7,536,761
(2,999,494)
(1,421,940)
3,115,327
38,022,927
(3,601,096)
(1,476,685)
32,945,146
4,494,517
(3,380,718)
(1,421,940)
(308,141)
Cash Flows from Investing Activities
Investment in Subsidiary and Associates
Dividend Received
Proceed from Sales of Property, Plant & Equipment
Purchase of Property, Plant & Equipment
Investments Matured/(Additions)
Net Cash from/(used in) Investing Activities
(400,000)
250,291
2,333
(847,900)
(5,173,464)
(6,168,740)
(400,000)
150,205
182,730
(1,056,159)
47,750
(1,075,474)
5,089
36,055
38,720
(1,557,474)
(5,174,229)
(6,651,839)
6,060
156,513
196,669
(1,489,814)
47,750
(1,082,822)
Cash Flows from Financing Activities
Capital Received from Government
Debentures
GOSL Bond Interest Paid
Special Levy Paid to Treasury
Minority Interest Paid
Net Increase/(Decrease) in Borrowings
Net Cash from/(used in) Financing Activities
Net Increase/(Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the beginning of the Year
Cash and Cash Equivalents at the end of the Year
–
2,500,000
(219,690)
(300,000)
–
3,028,492
5,008,802
31,810,621
18,031,812
49,842,433
1,500,000
2,500,000
(219,690)
(500,000)
–
(15,697,231)
(12,416,921)
(10,377,068)
28,408,880
18,031,812
–
2,430,530
(219,690)
(300,000)
(6,436)
4,592,564
6,509,840
32,803,147
18,094,969
50,898,116
1,500,000
2,705,000
(219,690)
(500,000)
(23)
(12,490,284)
(9,004,997)
(10,395,960)
28,490,929
18,094,969
50,332,575
(490,142)
18,380,371
(348,559)
51,388,258
(490,142)
18,444,041
(349,072)
49,842,433
18,031,812
50,898,116
18,094,969
Interest Payments
Recoveries of Loans Previously Written-Off
Cash Payments to Employees and Suppliers
Operating Profit before Changes in
Operating Assets and Liabilities
(Increase)/Decrease in Operating Assets
Deposits held for Regulatory or
Monetary Control Purposes
Funds Advanced to Customers
Treasury Bills and Bonds
Increase/(Decrease) in Operating Liabilities
Deposit from Customers
Negotiable Certificate of Deposits
Cash and Short-Term Funds (Note 11)
Cash and Cash Equivalents Reflected on
Balance Sheet at the end of the Year
[Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131]
[Cash Flow Statement]
133
Reconciliation of Net Profit to Net Cash Flows
from Operating Activities
Net Profit before Taxation
2009
Rs. ‘000
BANK
2008
Rs. ‘000
GROUP
2009
2008 Rs. ‘000
Rs. ‘000 6,075,691
5,663,721
7,891,124
7,160,825
(345,539)
–
(674,447)
5,317,291
1,799,503
(1,120,818)
39,120
1,293,515
(4,270)
2,092,412
80,000
(453,680)
(250,291)
(235,348)
(65,180)
–
(110,988)
(3,120,585)
1,476,009
(818,399)
38,784
1,016,246
(90,721)
1,620,025
85,000
(495,520)
(150,205)
115,690
(345,539)
1,523
(674,447)
5,444,306
1,799,504
(1,120,818)
39,120
1,478,223
(26,971)
2,049,046
80,000
(453,680)
(36,055)
(235,348)
(65,180)
(17,981)
(110,988)
(3,257,127)
1,476,009
(818,399)
38,784
1,149,407
(94,258)
1,723,988
96,248
(503,590)
(156,513)
115,690
Adjustment for Non-Cash Transactions
Notional Tax Credit
Associate Profit Adjustment
Capital Gains on Treasury Bills and Bonds
Net Accrued Interest
Retirement Benefit Provision
Translation Difference on FCBU
Provision for Interest on W&OP Fund
Depreciation
Profit on Disposal of Fixed Assets
Provision for Bad Debts
Provision for Gratuity
Loan Loss Provision Reversals
Investment Income
Provision for Diminution in Value of Shares/Others
Provision for Falling Value of Investments Securities
and Others
Hedging
(Increase)/Decrease in Accounts Receivables
Increase/(Decrease) in Accounts Payables
Operating Profit before Changes in
Operating Assets/Liabilities
(197,287)
3,180,083
5,934,429
(8,710,024)
(102,284)
–
230,166
1,635,015
(197,287)
3,180,083
5,731,581
(7,290,416)
(102,284)
–
383,514
1,586,476
13,820,340
6,926,774
17,313,949
8,604,621
(Increase)/Decrease in Operating Assets
Increase/(Decrease) in Operating Liabilities
Cash Generated from Operations
Income Tax Paid
Pension Fund Paid during the Year
Net Cash from/(used in) Operating Activities
(47,148,548)
71,668,243
38,340,035
(2,993,835)
(1,475,641)
33,870,559
(22,923,120)
23,533,107
7,536,761
(2,999,494)
(1,421,940)
3,115,327
(51,480,817)
73,193,448
39,026,580
(3,601,096)
(1,485,450)
33,940,034
(26,560,950)
22,450,846
4,494,517
(3,380,718)
(1,421,940)
(308,141)
[Report of the Auditor General 128] [Income Statement 130] [Balance Sheet 131] [Cash Flow Statement 132]
[Statement of Changes in Equity]
[Significant Accounting Policies 135]
134
For the year ended 31st December 2009
Share
Capital
Capital
Pending
Allotment
Rs. ‘000
Statutory
Reserve
Revaluation
Reserve
Capital
Reserve
Special Risk
Reserve
General
Reserve
Building
Reserve
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
49,998 5,652,000
49,998
5,610,494
5,663
295,766
1,000
1,000
–
–
–
–
–
–
Rs. ‘000
Profit/
(Loss)
Rs. ‘000
Total
Rs. ‘000
BANK
Balance as at 1st January 2008
Tranche 4 Capital (Note 30.4)
–
Transfer to Special Risk Reserve
–
Net Profit for the Year 2008
–
1,500,000
–
–
–
–
–
–
–
–
–
–
–
–
92,995
–
1,228,645 12,894,564
–
(92,995)
1,500,000
–
2,704,848
2,704,848
(219,690)
(219,690)
Dividend Paid to GOSL (Note 31.8)
–
–
–
–
–
–
–
–
Special Levy to Treasury (Note 31.9)
–
–
–
–
–
–
–
–
(1,000,000) (1,000,000)
2,620,808 15,879,722
Balance as at 31st December 2008
5,663
388,761
1,000
1,000
49,998 7,152,000
–
–
49,998
–
5,610,494
–
–
433,688
–
–
(433,688)
–
Transfer to General Reserve
–
–
–
–
–
–
(312,500)
–
–
312,500
–
–
–
–
–
–
–
–
3,320,194
3,320,194
–
–
–
–
–
–
–
–
(219,690)
(219,690)
–
–
–
–
–
–
–
–
(1,200,000) (1,200,000)
49,998 7,152,000
49,998
5,610,494
5,663
822,449
313,500
1,000
3,775,124 17,780,226
49,998 5,652,000
49,998
5,610,494
5,663
295,766
1,000
1,000
4,086,191 15,752,110
–
–
–
–
–
–
GROUP
Balance as at 1st January 2008 Tranche 4 Capital (Note 30.4) –
Transfer to Special Risk Reserve –
–
1,500,000
–
–
–
–
–
–
–
–
–
–
–
–
92,995
–
–
(92,995)
1,500,000
–
3,427,459
3,427,459
(219,690)
(219,690)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,000,000) (1,000,000)
6,200,965 19,459,879
5,663
388,761
1,000
1,000
Transfer to Special Risk Reserve 49,998 7,152,000
–
–
49,998
–
5,610,494
–
–
433,688
–
–
(433,688)
–
–
–
–
–
–
–
(312,500)
–
–
312,500
–
–
–
–
–
–
–
–
4,174,217
4,174,217
–
–
–
–
–
–
–
–
(219,690)
(219,690)
–
–
–
–
–
–
–
–
(1,200,000) (1,200,000)
1,000
8,209,304 22,214,406
49,998 7,152,000
49,998
5,610,494
5,663
822,449
313,500
[Significant Accounting Policies]
135
1. Corporate Information
Sub-Subsidiaries
The People’s Bank is a Government-owned
Bank, established under People’s Bank Act
No. 29 of 1961 on 1st July 1961 and is domiciled
in Sri Lanka. The Consolidated Financial
Statements of the Bank for the year ended
31st December 2009 comprises the Bank,
its Subsidiaries i.e., People’s Leasing Co.
Ltd. and People’s Travels (Pvt) Ltd. and the
sub-subsidiaries of People’s Leasing Fleet
Management Ltd., People’s Leasing Property
Development Ltd., People’s Leasing Insurance
Ltd., People’s Leasing Finance PLC and its
interest in Associate Company i.e., People’s
Merchant Bank PLC.
The principal activities of Bank’s SubSubsidiaries are as follows:
The Consolidated Financial Statements for
the year ended 31st December 2009 were
authorised for issue on 23rd March 2010 by the
Board of Directors.
2. Principal Activities
Bank
The Bank’s business comprises, Accepting
Deposits, Granting Credit Facilities, Personal
Banking, Development Banking, Pawnbroking,
International Trade, Dealing in Government
Securities, Leasing, Credit Card Operations and
FCBU for Foreign Currency Banking.
Subsidiaries
The principal activities of People’s Leasing Co.
Ltd. are Providing Leases, Hire Purchase Assets,
Financing and Islamic Financial Services. People’s
Travels Ltd., relate to arrangement of Tours and
Air Ticketing.
Name of Company
Principal Activity
People’s Leasing Fleet
Management Ltd.
Providing operating
leases
People’s Leasing
Property Management
Ltd.
Providing property
development and
constructions
People’s Leasing
Insurance Ltd.
Providing non-life
insurance services
People’s Leasing
Finance PLC
Granting finance
leases, operating
leases, hire purchase
assets, financing and
accepting deposits
Associates
The principal activities of People’s Merchant
Bank Ltd., relate to Trade Finance, Leasing,
Hire Purchase, Real Estate, Short-Term
Investments and Corporate Finance Services.
3. Directors’ Responsibility for
Financial Statements
The Board of Directors is responsible for the
preparation and presentation of the Financial
Statements of the Bank and its Subsidiaries
in accordance with Sri Lanka Accounting
Standards.
4. Statement of Compliance
The Consolidated Financial Statements and
the Separate Financial Statements of the
Bank have been prepared in accordance with
generally accepted accounting principles and
Sri Lanka Accounting Standards laid down
by The Institute of Chartered Accountants of
136
Sri Lanka. These principles and standards
used in the preparation of these Financial
Statements have been applied consistently with
the preceding year and appropriately improved
in compliance with the Revised Accounting
Standards. The preparation and presentation of
these Financial Statements are in compliance
with the requirement of the Banking Act No. 30
of 1988 and amendments thereto.
5. Comparative Information
Comparative information including quantitative,
narrative and descriptive information is
disclosed in respect of the previous period
for all amounts reported in the Financial
Statements in order to enhance the
understanding of the current period’s Financial
Statements and to enhance the inter-period
comparability.
The Accounting Policies adopted by the Bank
and Group are consistent with those of the
previous financial year as permitted by
Sri Lanka Accounting Standard No. 3
(Revised 2005) - Presentation of Financial
Statements. However, when the presentation
or classification of items in the Financial
Statements is amended, comparative amounts
are also reclassified to conform with the current
year presentation.
6. Changes to the Accounting
Policies
There were no changes to the Accounting
Policies adopted by the Bank and Group during
the year under review.
Effect of Accounting Standards Issued but not yet
Effective:
The Institute of Chartered Accountants of
Sri Lanka has issued the following Accounting
Standards that are effective for the accounting
periods on the dates specified below:
Sri Lanka Accounting Standard No. 44 Financial Instruments (Presentation) and Sri
Lanka Accounting Standard No. 45 - Financial
Instruments (Recognition and Measurement)
Sri Lanka Accounting Standards No. 44 and
No. 45 were issued and available for public in
the latter part of 2008, and become effective for
the financial years beginning on or after
1st January 2011. For the first time, Sri Lanka
Accounting Standards No. 44 and No. 45 will
be adopted in preparing and presenting the
Financial Statements for the year ending
31st December 2011.
These two standards together provide
comprehensive guidance on identification,
classification, measurement and presentation
of financial assets, financial liabilities, equity
instruments and derivative instruments.
According to these Standards, it is required to
measure such financial asset or liability at its
fair value on initial recognition and transaction
costs that are directly attributable to the
acquisition or issue of financial asset, financial
liability and subsequently measure either at
fair value or amortised cost depending on the
categorisation of financial assets and financial
liabilities. Further, principles used with regard
to impairment provision estimation for loans
and advances in the aforesaid Accounting
Standards for financial assets are considerably
different from the current rules set out by the
Central Bank of Sri Lanka.
137
In accordance with the implementation plan
set out by the Accounting Standard Committee,
Central Bank of Sri Lanka and the banking
industry, the Bank is currently in the process of
evaluating the impact, the aforesaid Accounting
Standards will have on its Financial Statements,
and also has developed a road map to facilitate
their implementation by the effective date, in
order to comply with the requirements of these
Accounting Standards. Due to the complex
nature of the effect of these Accounting
Standards, the impact of adoption cannot be
estimated as at the date of publication of these
Financial Statements.
7. Basis of Preparation
7.1 Basis of Measurement
The Financial Statements of the Bank and
Group are prepared in Sri Lankan Rupees on a
historical cost basis except for the Government
Treasury Bills & Bonds and Dealing Securities
which are stated at valuation as explained in
Note 8.5.6 and revaluation of certain freehold
and leasehold premises. No adjustments have
been made for inflationary factors.
7.2 Significant Accounting Judgements,
Estimates and Assumptions
In the process of applying the Bank’s Accounting
Policies, management is required to make
judgements, apart from those involving
estimations, which may have a significant
effect on the amounts recognised in the
Financial Statements. Further, the management
is required to consider, key assumptions
concerning the future and other key sources
of estimation uncertainty at the Balance Sheet
date, that have significant risk of causing a
material adjustment to the carrying amount of
assets and liabilities. The respective carrying
amounts of assets and liabilities are given in
the related Notes to the Financial Statements.
The key items which involve these judgements,
estimates and assumptions are discussed below.
7.2.1 Defined Benefit Plans
The cost of the defined benefit plans such as
pension and gratuity are determined using
actuarial valuation. The actuarial valuation
is based on assumptions on discount rates,
expected return on assets, future salary
increases, mortality rates, etc. Due to the
long-term nature of these plans, such estimates
are subject to significant uncertainty. All
assumptions are reviewed at each reporting date.
7.2.2 Impairment Losses on Loans and Advances
In addition to the provisions made for possible
loan losses based on the parameters and
directives for specific and general provision
on Loans and Advances by the Central Bank
of Sri Lanka, the Bank reviews its Loans and
Advances portfolio at each recruiting date or more
frequently, if events or changes in circumstances
necessitate to assess whether further provision
for impairment against exposures which, although
not specifically identified as requiring specific
provisions, have a greater risk of default than
when originally granted.
The judgement by the management is required
in the estimation of these amounts and such
estimations are based on assumptions about
a number of factors such as any deterioration
of country risk, industry and technological
obsolescence, as well as identify structural
weaknesses and deterioration in cash flows.
138
7.2.3 Impairment of Non-Financial Assets
The Group assess at each reporting date
or more frequently if events or changes in
circumstances indicate that the carrying value
may be impaired, whether there is an indication
that a non-financial asset may be impaired.
If any such indication exists, or when annual
impairment testing for an asset is required
the Bank makes an estimate of the asset’s
recoverable amount. When the carrying amount
of an asset exceeds its recoverable amount,
the asset is considered impaired and is written
down to its recoverable amount.
7.3 Offsetting
Financial assets and liabilities are offset and
the net amount reported in the Balance Sheet
when there is a legally enforceable right to
set-off the recognised amounts and there is an
intention to settle on a net basis, or realise the
assets and settle the liability simultaneously.
8. Summary of Significant
Accounting Policies
The Principal Accounting Policies applied in
the preparation of these Consolidated Financial
Statements are set out below:
8.1 Basis of Consolidation
8.1.1 Subsidiary Companies
The Subsidiary Companies are accounted in
conformity with Sri Lanka Accounting Standard
No. 26 (Revised 2005) - Consolidated and
Separate Financial Statements, which are
those companies in which the Bank, directly or
indirectly has an interest of more than one-half
of the voting rights or otherwise has power to
exercise control over financial and operating
policies, have been consolidated. Subsidiaries
are consolidated from the date on which
effective controls are transferred to the Bank
and are no longer consolidated from the date of
disposal. Accounting Policies for subsidiaries
have been changed to ensure consistency with
the policies adopted by the Bank. The interests
of the outside shareholders are disclosed
separately under the heading ‘Minority Interest’.
The Consolidated Financial Statements include
the results, assets and liabilities of People’s
Bank and its subsidiaries up to the end of
31st December 2009. All subsidiaries have
31st March financial year ends. Accounts drawn
up as at 31st December 2009 have been used
in the consolidation. The Consolidated Income
Statement reflects profits or losses relating
to the subsidiaries for 12 months from
1st January 2009 to 31st December 2009.
8.1.2 Associate Companies
Associates are those enterprises in which the
Group has significant influence, but not control
over the financial and operating policies.
Investments in associate companies are
accounted for under the equity method, in
conformity with Sri Lanka Accounting
Standard No. 27 (Revised 2005) - Investment
in Associates, whereby the Group’s shares of
profits/losses of the associate companies are
included in the Consolidated Income Statement.
The Group’s share of post-acquisition retained
profits/losses and reserves are aggregated with
the cost of this investment in the Consolidated
Balance Sheet.
139
8.1.3 Goodwill on Consolidation
Goodwill acquired in a business combination
is initially measured at cost, being the excess
of the cost of the business combination over
the Bank’s interests in the net fair value of the
identifiable assets, liabilities and contingent
liabilities acquired. Sri Lanka Accounting
Standard No. 25 (Revised 2004) on Business
Combinations requires that following the initial
recognition, goodwill is to be measured at
cost less any accumulated impairment losses
and goodwill to be reviewed for impairment,
annually or more frequently if events or
changes in circumstances indicate that the
carrying value may be impaired.
8.1.4 Transactions Eliminated on Consolidation
All inter-company transactions, balances
and unrealised surpluses and deficits on
transactions between the Bank and subsidiary
companies have been eliminated in preparing
the Consolidated Financial Statements.
8.2 Foreign Currency Translation
The Consolidated Financial Statements are
presented in Sri Lankan Rupees, which is the
Bank’s functional and presentation currency.
Each entity in the Group determines its own
functional currency and items included in
the Financial Statements of each entity are
measured using the functional currency.
8.2.1 Monetary assets and liabilities
denominated in foreign currencies are
translated using the rates of exchange ruling
at the Balance Sheet date and transactions
in foreign currencies during the year are
converted at the rate ruling at the transaction
date and foreign exchange differences
resulting from the translation and settlement
of transactions, are recognised in the Income
Statement in compliance with Sri Lanka
Accounting Standard No. 21 on The Effects of
Changes in Foreign Exchange Rates.
Non-monetary items measured in terms
of historical cost in a foreign currency are
translated using the exchange rates as at the
date of the initial transaction.
8.2.2 Foreign exchange commitments under
forward purchases and sales contracts are
valued at the forward market rate ruling
on the date of the Balance Sheet and other
Off-Balance Sheet items at exchange rates
prevailing on transaction dates. Unrealised
gains and losses are dealt with through the
Income Statement.
8.2.3 Transactions of the Off-Shore Banking
Centre have been recorded in accordance with
the paragraph 8.2.1 overleaf except for the
application of monthly average exchange rate in
the Income Statement.
8.3 Taxation
8.3.1 Current Taxation
Current tax assets and liabilities consist of
amounts expected to be recovered from or paid
to the Commissioner General of Inland Revenue
in respect of the current as well as prior years.
The tax rates and tax laws used to compute
the amount are those that are enacted or
subsequently enacted by the Balance Sheet date.
Accordingly, provision for taxation is made on
the basis of the profit for the year as adjusted for
taxation purpose in accordance with the provision
of the Inland Revenue Act No. 10 of 2006 and the
amendment thereto, at the rates specified in
Note 9 to the Financial Statements.
140
8.3.2 Deferred Taxation
Deferred tax is provided using the liability
method on temporary differences at the
Balance Sheet date between the tax bases of
assets and liabilities and their carrying amounts
for financial reporting purpose. Deferred tax
liabilities are recognised for all temporary
differences, except:

where the deferred tax liability arises from
the initial recognition of goodwill or of an
asset or liability in a transaction that is not
a business combination and at the time of
transaction, affects neither the accounting
profit nor taxable profit or loss; and

in respect of taxable temporary differences
associated with investments in Subsidiaries
and Associates, where the timing of the
reversal of the temporary differences can
be controlled and it is probable that the
temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all
deductible differences. Carry forward of unused
tax credits and unused tax losses, to the
extent that it is probable that taxable profits
will be available against which the deductible
temporary differences and the carry forward of
unused tax credits and unused tax losses can
be utilised, except:


where deferred tax assets relating to the
deductible temporary differences arise
from the initial recognition of an asset
or liability in a transaction that is not a
business combination and at the time of the
transaction, affects neither the accounting
profit nor the taxable profit or losses; and
in respect of deductible temporary
differences associated with investments in
subsidiaries and associates, deferred tax
assets are recognised only to the extent it
is probable that the temporary differences
will reverse in the foreseeable future and
taxable profit will be available against which
temporary differences can be utilised.
The carrying amount of a deferred tax asset
is reviewed at each Balance Sheet date and
reduced to the extent it is no longer probable
that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets
are reassessed at each Balance Sheet date and
are recognise to the extent that is probable that
future taxable profit will allow the deferred tax
assets to be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in
the year when the assets are realised or the
liabilities are settled, based on tax rates and tax
laws that have been enacted or subsequently
enacted at the Balance Sheet date.
Deferred tax assets and liabilities are set-off
if a legally enforceable right exists to set-off
current tax assets against current tax liabilities
and the deferred taxes relate to the same
taxable entity and the same taxation authority.
8.3.3 Value Added Tax on Financial Services (VAT)
Bank’s total value addition was subjected to
a 20% Value Added Tax as per section 25 A
of the Value Added Tax No. 14 of 2002 and
amendments thereto.
8.3.4 Economic Service Charge (ESC)
As per the provisions of the Economic Service
Charge Act No. 13 of 2006, ESC is payable on
the liable turnover at specified rates. ESC paid
is deductible from the income tax liability. Any
141
unclaimed liability can be carried forward and
set-off against the income tax payable in the
four subsequent years.
8.3.5 Social Responsibility Levy (SRL)
As per the provisions of Finance Act No. 5 of 2005,
and amendments thereto, SRL is payable at the
rate of 1.5% on all taxes and levies chargeable as
specified in the First Schedule of the Act.
8.4 Events after the Balance Sheet Date
All material events arising after the Balance
Sheet date, if any and where necessary, have
been considered and appropriate adjustments
and disclosures have been made in the
Financial Statements.
8.5 Assets and Bases of Their Valuation
8.5.1 Cash and Short-Term Funds
Cash and Short-Term Funds include cash in
hand, balances with banks, placements with
banks and money at call and short notice.
Details of the cash and short-term funds are
given in Note 11 to the Financial Statements.
8.5.2 Balances with the Central Bank
The Monetary Law Act requires that all
commercial banks operating in Sri Lanka to
maintain a statutory reserve equal to 7% on all
local currency deposits (7.75% in 2008). Details
of the cash and short-term funds are given in
Note 12 to the Financial Statements.
8.5.3 Loans and Advances to Customers
Loans and Advances to Customers are stated in
the Balance Sheet net of provision for possible
loan losses and net of interest in suspense,
which is not accrued to revenue.
8.5.3.1 Non-Performing Loans and Advances
Loans and Advances which are in arrears of
due capital and/or interest are classified as
non-performing as per the Direction No. 3 of
2008 on ‘Classification of Loans and Advances,
Income Recognition and Provisioning’, as
amended by the Direction No. 9 of 2008 on
Amendments to Directions on Classification of
Loans and Advances, Income Recognition and
Provisioning for Licensed Commercial Banks in
Sri Lanka of the Central Bank of Sri Lanka.
Details of the non-performing Loans and
Advances are given in Note 14.6 to the Financial
Statements.
8.5.3.2 Provision for Loan Losses
Provision for bad and doubtful loans is made
on the basis of a continuous review of all loans
and advances to customers. In determining the
level of the provision required, management
considers numerous factors including, but not
limited to, composition of the loan portfolio,
period outstanding, prior experience and
stipulations of the Central Bank of Sri Lanka
in relation to provisioning for doubtful debts.
Specific provision is made for those loans that
have been individually reviewed and identified
as bad or doubtful in accordance with
Sri Lanka Accounting Standard No. 23 on
Revenue Recognition and Disclosure in the
Financial Statements of Banks.
A general provision for loans and advances is
made on the basis of 1% of performing and
overdue loans and advances according to the
Central Bank Guidelines.
The Bank has complied with the Standards and
Guidelines that have been issued by the Central
Bank of Sri Lanka in connection with the
accounting and classification of non-performing
advances and provision for possible losses that
may arise from such advances.
142
8.5.3.3 The classification of these doubtful
Loans and Advances together with the level of
provisioning made is as follows:
Period
Outstanding
Classification
Provisions made
on Exposures net
of Realisable
Value of Security
(%)
Sub-standard
4 to 6 months
Credit Cards
25
6 to 12 months
Others
20
Doubtful
6 to 8 months
Credit Cards
50
12 to 18 months
Others
50
Loss
8 months and over
Credit Cards
100
18 months and over
Others
100
The discounted realisable value or the net
realisable value of security as per the amended
directions issued on 9th May 2008 by the
Central Bank of Sri Lanka under Sections 46 (1)
and 46 (A) of the Banking Act No. 30 of 1988 as
amended by Amendment Banking Act No. 33 of
1995 is considered in provisioning for advances.
8.5.3.4 Amended guidelines for discounting of
immovable property is as follows:
% of Forced Sale Value of Immovable
Property that can be considered as the
Value of Security
Freehold Property
At the first time
of provisioning
Leasehold Property
75%
60%
Less than 12
Months
75%
60%
12 to 24 Months
60%
50%
Period of Loss Section
24 to 36 Months
50%
40%
36 to 48 Months
40%
30%
Property should
be reviewed on
a regular basis,
and discounted
further at the
discretion of the
management
Nil
More than 48
Months
Where an Advance is in Loss Category of
Immovable Freehold Property over 4 years,
the Central Bank of Sri Lanka has given the
discretion to determine the discount factor to
the Board of Directors. Accordingly, the Board
has decided to discount the Forced Sale Value
of Immovable Freehold Property offered as
security for Advances in the Loss Category for
more than four years, by 30%.
8.5.3.5 When a loan is uncollectible it is writtenoff against the related provision for loan losses
and uncovered balances, if any, are charged
against the Income Statement. Subsequent
recoveries of loans are credited to the Income
Statement against which such sums had been
previously written-off.
8.5.4 Leases
Assets leased to customers which transfer
substantially all the risks and rewards
associated with ownership other than legal
title are classified as finance leases. Lease
rentals receivable are stated in the Balance
Sheet net of provision for doubtful debts and net
of interest in suspense, which is not accrued
to revenue. The accounting for leases is in
conformity with Sri Lanka Accounting Standard
No. 19 (Revised 2005) on Leases.
8.5.4.1 Provision for Lease Receivable
Specific provision has been made in relation to
identified bad and doubtful leases.
In addition, a general provision for possible
losses on lease receivable is made at 1% of the
total lease receivable according to the Central
Bank Guidelines.
8.5.5 Credit Card Receivable
Amount receivable on credit cards are included
in Loans and Advances to customers at the
amount expected to be recovered.
143
Provision for credit card receivable is made
for when minimum payment is in arrears for
periods exceeding 4 months and beyond.
In addition, a general provision for possible
losses on credit card receivable is made at 1%
of the total credit card receivable according to
the Central Bank Guidelines.
8.5.6.3 Other Investments Securities
Investments (other than Government Securities)
that are held for long term or until maturity
are stated at cost. Provision is made for any
diminution in value, other than for those which
are temporary, determined on an individual basis
for each investment.
8.5.6.4 Investments in Subsidiaries
8.5.6 Investments
8.5.6.1 Dealing Securities
Dealing Securities are marketable securities
acquired and held with the intention of resale
over a short period of time. Such securities
are carried at the market value at the Balance
Sheet date. Any gains/losses in market value
are accounted in the Income Statement.
8.5.6.2 Investment in Government Securities held
for Maturity and held for Sale
Investment in Government of Sri Lanka
Treasury Bills and Bonds, other Government
Securities and Central Bank Securities are
purchased primarily with the intention of
holding them to maturity and are stated at cost.
Discount/Premium on purchase are amortised/
accredited to income/expenditure on a pattern
reflecting a constant periodic rate of return.
Securities purchased for trading purpose are
mark to market-based on current market rates.
Long-Term Treasury Bonds received in settlement
of outstanding loans to CWE are treated as an
Investment Security and are stated at cost.
Securities purchased under Resale Agreements
are advances collateralised by purchase of
Treasury Bills and Treasury Bonds from the
public subject to an agreement to resell them
at a predetermined price. The asset is recorded
in respect of the consideration paid and interest
accrued thereon.
Investments in subsidiaries are stated at cost in
the Bank’s Financial Statements in accordance
with Sri Lanka Accounting Standard No. 26
(Revised 2005) on Consolidated Financial
Statements and Accounting for Investment in
Subsidiaries.
8.5.6.5 Investments in Associates
Investments in Associates are accounted for
under the cost method in the Bank’s Financial
Statements and under the equity method in
the Consolidated Financial Statements in
accordance with Sri Lanka Accounting Standard
No. 27 (Revised 2005) on Accounting for
Investments in Associates.
8.5.7 Foreclosed Property
The immovable property acquired by
foreclosure of collateral from defaulting
customers, or which have devolved on the
Bank’s as part settlement of debt have not been
accounted as an investment property or as part
of the assets of the Bank in accordance with
directions issued by the Central Bank of
Sri Lanka.
8.5.8 Property, Plant & Equipment
8.5.8.1 Basis of Recognition
Property, Plant & Equipment are recognised as
an asset if it is probable that future economic
benefits associated with the item will flow to
the Bank and cost of the asset can be measured
reliably.
144
8.5.8.2 Measurement
An item of Property, Plant & Equipment that
qualifies for recognition as an asset is initially
measured at its cost of purchase directly
attributable to the acquisition of the asset
or construction or valuation together with
any incidental expenses thereon. The cost of
self-constructed assets includes the cost of
materials and direct labour, any other costs
directly attributable to bringing the asset to a
working condition for its intended use and the
costs of dismantling and removing the items
and restoring the site on which they are located.
recognised in profit or loss. A revaluation deficit
is recognised in profit or loss except that deficit
directly offsetting a previous surplus on the
same asset is directly offset against the surplus
in the asset revaluation reserve.
Subsequent Cost
The cost of replacing part of an item of Property,
Plant & Equipment is recognised in the carrying
amount of the item if it is probable that the
future economic benefits embodied within that
part will flow into the Group and its cost can be
reliably measured.
Cost Model
Restoration Cost
Plant & Equipment is stated at cost, excluding
the cost of day-to-day servicing, less
accumulated depreciation and accumulated
impairment in value. Such cost includes the
cost of replacing part of the plant & equipment
when the cost is incurred, if the recognition
criteria are met.
Expenditure incurred on repairs or maintenance
of Property, Plant & Equipment in order to
restore or maintain future economic benefits is
charged to Income Statement as incurred.
Revaluation Model
The Bank applies the revaluation model for the
entire class of freehold land and buildings. Such
properties are carried at a revalued amount,
being their fair value at the date of revaluation,
less any subsequent accumulated depreciation
and impairment charged subsequent to the date
of the revaluation.
Revaluations are performed every 7 years to
ensure that the fair value of a revalued assets
does not differ materially from its carrying
amount. Any revaluation surplus is credited to
the revaluation reserve included in the equity
section of the Balance Sheet, except to the
extent that it reverse a revaluation decrease
of the same asset previously recognised in
profit or loss, in which case the increase is
Derecognition
An item of Property, Plant & Equipment is
derecognised upon disposal when no future
economic benefits are expected from its use
or disposal. Any gain or losses arising on
derecognition of the asset is included in the
Income Statement in the year the asset is
derecognised.
Capital Work-in-Progress
These are expenses of a capital nature directly
incurred in the construction of building, major
plant and machinery and system development,
awaiting capitalisation. These are stated in the
Balance Sheet at cost.
8.5.8.3 Depreciation
Depreciation is calculated on straight line
basis over the useful life of the assets. The
asset’s residual values, useful life and methods
of depreciation are reviewed, and adjusted if
145
appropriate at each financial year end. The
rates of depreciation are given below:
Category of Asset
Period of Depreciation
Leasehold Building
over the period of lease
Freehold Buildings
2% p.a.
Furniture, Equipment
& Machinery
20% p.a.
Freehold & Leasehold
Motor Vehicles
25% p.a.
Prepaid Leases
over the period of lease
8.5.9 Leasehold Property
Leasehold property is stated at recorded
carrying value as per the Sri Lanka Accounting
Standard No. 19 (Revised 2005) on ‘Leases’.
Such carrying amounts are amortised over
the remaining lease period of the leasehold
property. Details of the Leasehold Property are
given in Note 20 to the Financial Statements.
8.5.10 Intangible Assets
8.5.10.1 Basis of Recognition
An intangible asset is recognised if it is
probable that future economic benefits that are
attributable to the asset will flow to the entity
and the cost of the asset can be measured
reliably in accordance with Sri Lanka Accounting
Standard No. 37 on Intangible Assets.
Intangible assets acquired separately are
measured on initial recognition at cost.
Following the initial recognition of the intangible
asset, the cost model is applied requiring
the assets to be carried at cost, less any
accumulated amortisation and accumulated
impairment losses.
8.5.10.2 Subsequent Expenditure
Subsequent expenditure on intangible assets
is capitalised only when it increases the future
economic benefits embodied in these assets. All
other expenditure is expensed when incurred.
8.5.10.3 Amortisation
The useful lives of intangible assets are
assessed to be either finite or infinite. Intangible
assets with finite lives are amortised over
the useful economic life and assess for
impairment whenever there is an indication
that the intangible asset may be impaired.
The amortisation period and the amortisation
method for an intangible asset with the finite
useful life is reviewed at least at each financial
year end. Changes in the expected useful life or
the expected pattern of consumption of future
economic benefits embodied in the asset is
accounted for by changing the amortisation
period or method, as appropriate, and treated
as changes in accounting estimates. The
amortisation expense on intangible asset with
finite life is recognised in the Income Statement.
The useful lives and the amortisation methods
of Intangible Assets with finite life are as
follows:
The Class of Intangible
Assets
IT-related capital
items
Useful Life
5 Years
Amortisation
Method
Straight-line
method
8.5.10.4 Derecognition
Intangible assets are derecognised when it
reveals that they will not generate economic
benefits or circumstances indicate that the
carrying value is impaired.
Gain or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset are recognised
in the Income Statement when the asset is
derecognised.
146
8.5.11 Other Assets
8.6.5 Pension Plans
All other assets are valued net of specific
provision, where necessary, so as to reduce the
carrying value of such assets to reflect their
estimated realisable values.
8.6.5.1 Defined Benefit Pension Plans
8.6 Liabilities and Provisions
8.6.1 Deposits from Customers
Deposits include non-interest bearing deposits,
savings deposits, term deposits, deposits
payable at call and certificate of deposits. They
are stated in the Balance Sheet at amount
payable, interest paid/payable on these deposits
is charged to the Income Statement.
8.6.2 Borrowings
Borrowings include refinance borrowings,
call money borrowings, REPO borrowings
and borrowings from financial institutions.
Borrowings are stated in the Balance Sheet at
amount payable, interest paid/payable on these
borrowings is charged to the Income Statement.
8.6.3 Securities Sold under Repurchase
Agreements
These are borrowings collateralised by sale of
Treasury Bills and Bonds held by the Bank to the
counterparty from whom the Bank borrowed,
subject to an agreement to repurchase at a
predetermined price. Such securities remain
on the Banks Balance Sheet and the liability
is recorded in respect of the consideration
received and interest accrued thereon.
8.6.4 Debentures
These represent the funds borrowed by the
Bank for long-term funding requirements.
These are recorded in the Balance Sheet at the
cash value to be realised when settled. Details
of Debentures are given in Note 28.
8.6.5.1.1 Pre-1996 Pension Scheme
The People’s Bank Pre-1996 Pension Scheme
is a funded, non-contributory, defined
retirement benefit scheme, operated for the
payment of pensions to the members of its
permanent staff who qualify for such payment.
Permanent staff who have joined the Bank prior
to 1st January 1996 qualify to be members of
this Pension Scheme.
The Bank has complied with Sri Lanka
Accounting Standard No. 16 (Revised 2006) on
Employee Benefit and Sri Lanka Accounting
Standard No. 42 on Accounting and Reporting
by Retirement Benefit Plans, when accounting
and reporting of Retirement Benefit Plans.
The Bank provides an annual contribution to
the Pension Fund, based on actuarial valuation
estimates on the required funding level that
is needed to maintain the Pension Fund at
or near a fully-funded state. The actuarial
valuation uses assumptions relating to
actuarial estimates of life expectancy, future
earnings income from investments of the Fund,
retirement expectations of staff, inflation
rate projections and estimations of annual wage
rate increases.
The latest actuarial valuation was carried out
as of 1st January 2009, by Piyal S. Gunatilleke
FSA (USA), Member of the American Academy
of Actuaries and Consulting Actuaries. The
valuation has been carried out based on
Projected Benefit Method recommended by
Sri Lanka Accounting Standard No. 16 (Revised
2006) on Employee Benefits.
147
The result of the valuation indicate that assets
of the Pension Fund exceeds the liability by
Rs. 3,785 Mn (according to the discontinuance
basis).
The principal financial assumptions used in the
valuation as at 31st December 2009 are
as follows:
Interest/Discount Rate
Increase in Cost of Living Allowances
Basic Salary Increase for all Grades
12% p.a.
5% p.a.
10% p.a.
The Bank provides a pension to retiring staff on
the following basis:
Staff are eligible to draw a pension after 10
years of service and after reaching normal
age of retirement of 55 years. The quantum
of pension paid is dependent on the length of
service is as follows:
Length of Service
Quantum of Pension
(i) 10 to 20 years
80% of last drawn
salary.
(ii) 21 to 29 years
80% plus 1% for
each additional year
in excess of 20 years
of last drawn salary.
(iii) 30 years and above
90% of last drawn
salary.
A separate fund is maintained to meet
future obligations of the Fund based on the
recommendation of a qualified Actuary and
managed by a Board of Trustees. Pension
payments are made out of the funds of the
Pension Fund, while annual contributions are
made by the Bank to top-up the funding level of
the Fund as explained above.
The accounts of the Pension Fund are
maintained separately and are subject to annual
audit by Independent External Auditors. The
Statement of Accounts as well as the Auditor’s
Report are tabled and reviewed by the Board of
Trustees. These Statements of Accounts and
Auditor’s Report are also submitted for review
of the disclosure of the Bank, as the Bank has
an obligation of ensuring that funding is made
at optimum levels. Pension is payable monthly
as long as the participant is alive.
A provision is recognised in the Balance Sheet
when the Bank has a legal or constructive
obligation as a result of a past event and it is
probable that an outflow of economic benefits
will be required to settle such obligations, in
No. 36 on Provisions, Contingent Liabilities and
Contingent Assets.
8.6.5.1.2 Gratuity
The employees who joined the Bank on or after
1st January 1996 will be eligible for gratuity
under the Payment of Gratuity Act No. 12 of
1983, as they are not eligible to join the Pension
Scheme described in 8.6.5.1.1.
Other employees whose services are
terminated other than by retirement are eligible
to receive the terminal gratuity under the
Payment of Gratuity Act No. 12 of 1983 at the
rate of one-half of the gross salary applicable
to the last month of the financial year in which
the employment is terminated, for each year of
continuous service, for those who have served
in excess of 5 years.
The Bank makes a monthly provision towards
such Gratuity Payment Liabilities and this value
is reflected in the Balance Sheet of the Bank.
Up to 31st December 2007, the Bank made
a provision based on the gratuity formula.
However, from 2008 onwards in line with revised
Sri Lanka Accounting Standard No. 16 (Revised
2006) on Employee Benefits the provision is
made based on actuary’s valuation.
148
The Subsidiary and Associate Companies of the
Bank provide for gratuity under the Payment
of Gratuity Act No. 12 of 1983. Provision for
gratuity has been made for employees who
have completed one year of service with the
companies, in accordance with Sri Lanka
Accounting Standard No. 16 (Revised 2006) on
Employee Benefits. These liabilities are not
externally funded.
8.6.5.2 Defined Contribution Plans
Contributions to Defined Pension Plans are
recognised as an expense in the Income
Statement on monthly basis.
The Bank contributes to the following Schemes:
8.6.5.2.1 Employees’ Provident Fund
The Bank and employees contribute 12% and
8% respectively of the employee’s monthly
gross salary (excluding overtime) to the
Provident Fund. The Bank’s Provident Fund
is an approved fund under the Employees’
Provident Fund Act.
8.6.5.2.2 Employees’ Trust Fund
The Bank contributes 3% of the employee’s
monthly gross salary excluding overtime to
the Employees’ Trust Fund maintained by the
Employees’ Trust Fund Board.
The Bank still awaits formal approval and
clearance on this scheme by the Ministry of
Finance and other related authorities.
Signing of a common Trust Deed, appointment of
trustees, monthly contributions to this fund, fund
management, disbursement of pensions and
other details are to be finalised in the year 2010.
8.6.5.4 Widows’/Widowers’ and Orphans’
Pension Scheme
A separate Fund is maintained by the Bank to
meet the future obligations under the Scheme,
based on advice of a qualified actuary and
separate set of books of accounts maintained to
record movements of the Fund. Pension payments
are charged against the Fund in respect of
surviving Widows/Widowers and Orphans.
8.6.6 Provision for Liabilities
A provision is recognised in the Balance Sheet
when the Bank has a legal or constructive
obligation as a result of a past event and it is
probable that an outflow of economic benefits
will be required to settle such obligations, in
No. 36 on Provisions, Contingent Liabilities and
Contingent Assets.
8.7 Income Statement
8.6.5.3 Post-1996 Pension Scheme
8.7.1 Revenue Recognition
As approved by the Ministry of Finance the
Bank plans to initiate a new pension scheme
for permanent employees who joined the Bank
post-1st January 1996.
8.7.1.1 Interest Income from Customer Advances
The Bank has transferred Rs. 198 Mn of the
gratuity fund as an initial start up or seed
money for this new pension scheme. In addition,
Rs. 150 Mn was funded in the year 2009 for this
proposed scheme.
In terms of provisions of Sri Lanka Accounting
Standard No. 23, Revenue Recognition and
Disclosures in the Financial Statements of
Banks, Interest Income from advances is
recognised on an accrual basis. Interest ceases
to be taken into revenue when principal and/
or interest on an advance is more than 90 days
overdue and is classified as a
non-performing loan.
149
Interest on advances that are classified as
non-performing have been accounted for on a
cash basis.
Interests falling due on non-performing
advances have been credited to the Interest in
Suspense Account. Interest accrued up to three
months on such non-performing advances
has been eliminated from interest income and
transferred to Interest in Suspense.
8.7.1.2 Interest Income from Other Sources
Interest Income from Money Market Operations,
Government Securities and other Investments
are recognised on an accrual basis. Discounts
on purchase are amortised to income on a
constant yield basis over periods to maturity.
Income from all other interest bearing
investments and interest coupons of Treasury
Bonds are recognised on an accrual basis.
are accounted for in the Income Statement on
the date on which the transaction takes place.
8.7.1.6 Recovery of Non-Performing Loans
and Advances
Interest recovered from Non-Performing Loans
and Advances is recognised as income on a
cash basis.
8.7.1.7 Accounting for Lease Income
The Bank follows the finance lease method of
Accounting for Lease Income as recommended
by Sri Lanka Accounting Standard No. 19.
The excess of aggregate lease rentals
receivables over the cost of the leased assets
constitutes the total unearned lease income at
the commencement of a lease. The unearned
lease income is taken into income over the term
of the lease commencing with the month in
which the lease is executed in proportion to the
declining receivable balance.
8.7.1.3 Fees and Commission Income
Fees and Commission Income are recognised on
cash basis and comprise mainly of fees received
from customers for guarantees and other
services provided by the Bank, together with fees
for foreign and domestic payment tariffs.
Gross earnings under finance leases in respect
of lease rentals due, cease to be taken to
revenue when they are in arrears for over three
months. Thereafter, such income is recognised
on cash basis.
Income on the endorsement of Bills of Exchange
is recognised only when the Bill is received and
either issued or endorsed and payment under
the particular instrument has been effected.
8.7.1.8 Other Income
8.7.1.4 Dividend Income
Interest on Deposits and Borrowings and
Other Expenses payable are recognised on
an accrual basis in the Income Statement, in
No. 23, Revenue Recognition and Disclosures in
Financial Statements of Banks.
Dividend Income is recognised on a cash basis.
8.7.1.5 Gains or Losses Arising from
Sale of Securities
All realised gains and losses from the sale of
equity shares, units and financial instruments,
including Treasury Bills sold prior to maturity,
Other Income is recognised on an accrual basis.
8.7.2 Interest on Deposits and Borrowings
and Other Expenses
150
8.7.3 Off-Balance Sheet Transactions
8.10 Cash Flow Statement
The Bank enters into Off-Balance Sheet
Transactions such as forward exchange
contracts and currency SWAPS.
The Cash Flow Statement has been prepared
by using the ‘Direct Method’ of preparing cash
flows in accordance with Sri Lanka Accounting
Standard No. 9 on Cash Flow Statements.
Cash and cash equivalents comprise of cash
balances and short-term funds with less than
90 days maturity and amounts due to Banks
from the date of acquisition including cash and
balances with Central Bank, Treasury Bills
and other eligible Bills and amounts due from
other Banks and Trading Securities have been
included in the computation of this statement.
Unrealised gains and losses are dealt with
through the Income Statement.
8.8 Commitment and Contingencies
All discernible risks have been accounted for in
determining the amount of other liabilities. The
Bank’s share of any contingencies and capital
commitments of a subsidiary or an associate
for which the Bank is also liable severally or
otherwise has been included where necessary
with appropriate disclosures.
8.9 Segment Reporting
In accordance with Sri Lanka Accounting
Standard No. 28 on Segment Reporting, the Bank
has presented required disclosures in respect of
the Group business. These segments comprise
of Merchant Banking, Leasing and Travels under
business segments. In addition, the Bank has
also geographically divided operations between
domestic and foreign currency banking under
geographical segments. Information relating
to the above is reflected in the Note 35 to the
Accounts of the Bank.
[Statement of Changes in Equity 134] [Significant Accounting Policies 135]
[Notes to the Financial Statements]
[Supplementary Information 179]
151
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 1. Interest Income
Loans and Advances
Treasury Bills and Treasury Bonds
Placement with Other Banks and Other
Money Market Instruments
Total Interest Income
49,542,553
9,845,228
878,760
42,504,415
8,019,963
878,760
55,766,717
9,845,228
878,760
47,667,736
8,019,963
878,760
2,074,695
62,341,236
2,050,418
53,453,556
2,149,180
68,639,885
2,068,911
58,635,370
32,980,191
5,051,347
383,045
38,414,583
26,924,496
7,564,814
2,456
34,491,766
32,931,742
8,176,476
383,045
41,491,263
26,894,873
10,342,763
2,456
37,240,092
12,379
19,152
218,761
18,030
8,423
123,752
12,379
19,152
4,524
18,030
14,732
4,522
1,376,034
178,379
1,804,705
620,229
203,346
973,780
1,403,679
559,483
1,999,217
628,300
505,623
1,171,207
3,012
12,922
2,497
12,433
4,757
14,791
3,193
12,598
1,021,018
100,811
175,853
2,840,146
662,259
25,103
807,704
39,058
169,267
2,639,484
643,553
31,082
1,168,414
100,811
183,702
3,124,980
676,392
27,690
933,425
39,058
176,707
2,646,154
651,230
34,190
2. Interest Expenses
Customer Deposits
Refinance and Bank Borrowings
Others
Total Interest Expenses
3. Other Income
Dividends from Investments
Quoted
Unquoted
Subsidiaries and Associate Companies
Recovery of Bad Debts Written-Off and
Provision Reversals
Other Operating Income
Total Other Income
4. Operating Expenses
Operating Expenses include inter alia
the following;
Directors’ Emoluments
Auditors’ Remuneration
Depreciation of Property,
Plant & Equipment (Note 20)
Amortisation of Prepaid Leases
Amortisation of Intangible Assets (Note 22)
VAT on Financial Services
Advertising, Public Relations and Gift Items
Litigation Expenses
152
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 5. Provision for Staff Retirement Benefits
5.1 Bank’s Contribution to Defined Benefit Plans
People’s Bank Pension Trust Fund
People’s Bank Widows’/Widowers’ &
Orphans’ Pension Fund
Total Contribution for the Year
1,799,504
1,476,009
1,799,504
1,476,009
39,120
1,838,624
38,785
1,514,794
39,120
1,838,624
38,785
1,514,794
5.2 The payment to the Pension Trust Fund are contributions from the Bank based on the shortfall in the Fund
as per actuary valuation. The 2009 Pension Trust Fund contribution includes the Rs. 120 Mn arrears payment
on the pension hike given to employees retired prior to 31st December 2006
The Payment to W & OP Fund is a repayment paid by the Bank with regard a loan obtained by the Pension Trust
Fund from W & OP Fund. This amounts to Rs. 326 Mn by 100 instalments which commenced in August 2004.
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 6. Provision for Loan Losses
General Provision
- Performing Loans
- Pawning
- Bills Charge/(Reversal)
- Leases Charge/(Reversal)
Specific Provisions
- Non-Performing Loans
- Bills
- Leases Charge/(Reversal)
- Credit Card
Total Provision for Loan Losses
417,010
41,401
31,707
(9,762)
577,725
86,321
(18,562)
6,067
417,010
41,401
31,707
(9,762)
577,725
86,321
(18,562)
(247,595)
1,553,460
3,102
–
55,495
2,092,413
871,040
57,853
–
39,581
1,620,025
1,553,460
3,102
(43,367)
55,495
2,049,046
912,116
57,853
316,549
39,581
1,723,988
153
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 7. Provision for (Fall)/Increase in Value of
Dealing Securities and Others
(Fall)/Increase in Value of Dealing Shares
(Fall)/Increase in Value of Investment
(Fall)/Increase in Value of Treasury Bonds
(Fall)/Increase in Value of Treasury Bills
Net Provision for Gain/(Losses) on
Dealing Securities and Others
235,348
–
89,615
107,672
(114,656)
(1,034)
26,144
76,141
235,348
–
89,615
107,672
(114,656)
(1,034)
26,144
76,141
432,635
(13,405)
432,635
(13,405)
8. Other Provisions
This provision is pertaining to oil derivative transactions entered into in late 2008. The Bank is currently
pursuing legal redress with regard to one agreement amounting to around Rs. 2.1 Bn for which a local
commercial bank is the counterparty. This provision in made in line with Central Bank stipulated guidelines
on assets without movements over a specific time and hence will not compromise the Bank’s legal position on
these transactions and without prejudice to legal proceedings.
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 9. Provision for Taxation
9.1 Provision for Taxation is as follows:
Bank
Income Tax on Profits for the Year
Under/(Over) Provision for Taxation
in previous Year
Transfer/(Reversal) to Deferred Taxation
Subsidiary Companies
People’s Leasing Co. Ltd.
Associate Company
People’s Merchant Bank
2,843,190
2,893,011
2,843,190
2,893,011
21,774
(109,467)
2,755,497
15,462
50,400
2,958,873
21,774
(109,467)
2,755,497
15,462
50,400
2,958,873
956,261
475
766,071
2,318
5,083
3,717,316
6,060
3,733,322
–
–
–
2,755,497
–
–
–
2,958,873
Income Tax Liability has been computed based on Inland Revenue Act No. 10 of 2006. As the Bank’s turnover
for the year has exceeded Rs. 30 Mn, the Bank is liable to pay Rs. 75 Mn as Economic Service Charges and this
payment has been set-off against the income tax liability.
154
2009
Rs. ‘000
BANK
2008
Rs. ‘000
9.2 Income Tax Reconciliation
Profit before Tax
Add: Disallowable Expenses
Less: Tax Deductible Expenses
Assessable Income
Less: Qualifying Payments
Taxable Income
Income Tax at 35%
Income Tax at 20%
Deemed Dividend Tax
Social Responsibility Levy
Income Tax on Current year Profit
(Over)/Under Provision in Respect of
Previous Year
Increase/(Decrease) in Current Year Profit
Deferred Tax Charged/(Credit)
Notional Tax Credit
Income Tax Expenses
Effective Tax Rate
6,075,691
7,943,298
(5,880,980)
8,138,009
–
8,138,009
2,738,332
62,840
–
42,018
2,843,190
5,663,722
6,229,832
(3,627,734)
8,265,820
–
8,265,820
2,793,218
57,039
–
42,754
2,893,011
21,774
2,864,964
(109,467)
–
2,755,497
15,462
2,908,473
50,400
–
2,958,873
45%
52%
9.3 Income Tax has been provided on the Taxable Income at the following rates:
Domestic Operation of the Bank
On-Shore Banking Operations of the
Off-Shore Banking Unit
Off-Shore Banking Operations of the
2009
%
2008
%
35
35
35
35
20
35
15
35
20
35
15
35
9.4 Notional Tax Credit for Withholding Tax on Government Securities on Secondary
Market Transactions
The Inland Revenue (Amendment) Act No. 10 of 2006, provides that a company which derives interest
income from the secondary market transactions in Government Securities would be entitled to a
notional tax credit (being one-ninth of the net interest income) provided such interest income forms
part of the statutory income of the Company for that year of assessment.
155
10. Earnings Per Share
10.1 Basic Earnings Per Share
Basic Earnings per Share has been calculated by dividing the Net Profit after Tax attributable to Ordinary
Shareholders by the total number of shares in issue.
Number of Ordinary Shares of Rs. 50/in Issue (‘000)
Net Profit after Tax (Rs. Mn)
Earnings per Share (Rs.)
2009
BANK
1,000
3,297
3,297
2008
1,000
2,705
2,705
2009
GROUP
2008 1,000
4,151
4,151
1,000
3,427
3,427
10.2 Diluted Earnings Per Share
Diluted Earnings per Share has been calculated on the basis of the total number of Ordinary Shares and
Capital Pending Allotment.
Number of Ordinary Shares of Rs. 50/in Issue (‘000)
Number of Ordinary Shares Pending
Allotment (Note 30) (‘000)
Total Shares in Issue and Pending
Allotment (‘000)
Diluted Earnings per Share (Rs.)
2009
BANK
2008
2009
GROUP
2008 1,000
1,000
1,000
1,000
143,040
143,040
143,040
143,040
144,040
23.00
144,040
19.00
144,040
29.00
144,040
24.00
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 11. Cash and Short-Term Funds
Cash in Hand and Balances with Banks
Money at Call and Short Notice
Total Cash and Short-Term Funds
10,938,589
39,393,986
50,332,575
12,083,203
6,297,168
18,380,371
10,992,432
40,395,826
51,388,258
12,099,992
6,344,049
18,444,041
22,717,034
18,905,799
22,717,034
18,905,799
12. Balance with the Central Bank
Current Account with Central Bank
The balance with the Central Bank of Sri Lanka is the Statutory Cash Reserve and is a non-interest bearing
balance. The minimum cash reserve required to be maintained at the Central Bank of Sri Lanka, as at
31st December 2009, represented 7% of weekly average Rupee Deposits Liabilities. A reserve is not required
in respect of Foreign Currency Deposit Liabilities in the Domestic Banking Unit and Deposit Liabilities in the
Off-Shore Banking Unit.
156
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 13. Government Treasury Bills
and Treasury Bonds
Treasury Bills
Treasury Bonds
Less: Provision for Fall in Value
Total Government Treasury Bills and Bonds
10,500,025
58,325,760
(38,698)
68,787,087
2,189,360
59,330,735
28,173
61,548,268
10,500,025
58,325,760
(38,698)
68,787,087
2,189,360
59,330,735
28,173
61,548,268
16,165,819
(38,698)
11,403,013
28,173
16,165,819
(38,698)
11,403,013
28,173
16,127,121
11,431,186
16,127,121
11,431,186
52,659,966
68,787,087
50,117,082
61,548,268
52,659,966
68,787,087
50,117,082
61,548,268
13.1 Government Treasury Bills and Treasury Bonds
Gross Government Treasury Bills and
Treasury Bonds held for Trading
Gain/(Loss) on Mark to Market Valuation
Net Government Treasury Bills and
Treasury Bonds held for Trading
Government Treasury Bills and
Treasury Bonds held to Maturity
13.2 Assets Pledged
The following assets have been pledged as security for liabilities:
Nature of Liabilities
Secured against the
REPO Instruments
Total
Nature of Assets
Government
Treasury Bills
Government
Treasury Bonds
–
493,270
–
493,270
35,909,603
30,082,114
35,909,603
30,082,114
35,909,603
30,575,384
35,909,603
30,575,384
The above amount signifies the carrying amount of assets pledged of Government Treasury Bills and Treasury
Bonds as at 31st December 2009.
157
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 14. Loans and Advances
14.1 Bills of Exchange
14.1.1 Bills of Exchange
Export Bills
Import Bills
Local Bills
Gross Bills of Exchange
Less: Provision for Losses (Note 14.1.2)
Net Bills of Exchange
855,255
2,769,453
6,229,951
9,854,659
(1,840,293)
8,014,366
966,090
4,526,005
2,126,803
7,618,898
(1,805,484)
5,813,414
855,255
2,769,453
6,229,951
9,854,659
(1,840,293)
8,014,366
966,090
4,526,005
2,126,803
7,618,898
(1,805,484)
5,813,414
14.1.2 Provision for Doubtful Bills
Opening Balance
General/Specific Provision during the year
Closing Balance
1,805,484
34,809
1,840,293
1,766,193
39,291
1,805,484
1,805,484
34,809
1,840,293
1,766,193
39,291
1,805,484
71,155,142
3,628,214
10,859,836
201,350,883
286,994,075
51,331,889
3,861,323
10,938,874
185,760,741
251,892,827
70,235,471
3,628,214
10,960,679
201,881,605
286,705,969
49,738,569
3,861,323
11,033,237
185,327,074
249,960,203
32,875,680
319,869,755
29,826,203
281,719,030
32,912,714
319,618,683
29,826,203
279,786,406
(33,559,534)
286,310,221
(30,232,978)
251,486,052
(33,633,602)
285,985,081
(30,475,044)
249,311,362
(12,300,725)
274,009,496
(11,658,538)
239,827,514
(12,510,883)
273,474,198
(11,771,396)
237,539,966
14.2 Loans and Advances
14.2.1 Loans and Advances
Overdrafts
Trust Receipts
Staff Loans
Other Loans
Add:
Interest Receivables on Non-Performing
Advances
Gross Loans and Advances
Less:
Interest in Suspense
Less:
Provision for Losses (Note 14.2.2)
Net Loans and Advances
Overdrafts in financial year 2009 includes facilities granted to Ceylon Fertilizer Company Ltd. and Colombo
Commercial Fertilizer Ltd. to the value of Rs. 28.1 Bn which is fully guaranteed by the Government of Sri lanka.
158
14.2.2 Movement in the Provision for
Loan Losses
Specific
Opening Balance
Translation Difference on FCBU
Provision during the Year
Amount Written-off against the Provision
Provision Reversal
Closing Balance
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 10,013,993
20,455
1,608,954
(157,213)
(1,288,420)
10,197,769
10,287,551
102,208
910,621
(787,535)
(498,852)
10,013,993
10,103,438
20,455
1,673,394
(157,213)
(1,288,420)
10,351,654
10,338,948
102,208
948,669
(787,535)
(498,852)
10,103,438
1,644,545
980,500
1,667,958
1,003,913
41,401
417,010
86,321
577,724
41,401
449,870
86,321
577,724
2,102,956
12,300,725
1,644,545
11,658,538
2,159,229
12,510,883
1,667,958
11,771,396
14.2.3.a Local Currency Loans and Advances
Bills
Overdrafts
Trust Receipts
Leases
Other Loans
Staff Loans
Total Local Currency Loans and Advances
9,413,616
70,710,437
1,456,310
2,228,121
191,373,959
10,859,836
286,042,278
7,175,399
49,961,485
1,796,863
3,950,490
172,957,695
10,938,874
246,780,806
9,413,616
69,790,766
1,456,310
38,365,314
191,904,680
10,960,679
321,891,365
7,175,399
48,368,165
1,796,863
37,362,151
172,524,028
11,033,237
278,259,843
14.2.3.b Foreign Currency Loans and Advances
Bills
Overdrafts
Trust Receipts
Other Loans
Total Foreign Currency Loans and Advances
Total Loans and Advances
441,043
444,705
2,171,904
9,976,925
13,034,577
299,076,855
443,499
1,370,404
2,064,460
12,803,046
16,681,409
263,462,215
441,043
444,705
2,171,904
9,976,925
13,034,577
334,925,942
443,499
1,370,404
2,064,460
12,803,046
16,681,409
294,941,252
General
Opening Balance
Provision during the Year
- Pawning Charge
- Performing Loans
Reversal of General Provision
Closing Balance
Total Loan Loss Provision
159
2009
Rs. ‘000
BANK
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 14.3 Leases
14.3.1 Lease Rentals Receivable within One Year
Gross Lease Rentals Receivable within One
Year from Balance Sheet date
1,552,975
Unearned Lease Income
(233,760)
Initial Rentals Received
(64,853)
Provisions for Bad and Doubtful Debts
(17,208)
Net Lease Rentals Receivable within
One Year
1,237,154
1,875,720
(463,089)
(43,944)
(53,264)
18,553,199
(5,660,742)
(161,455)
(2,189,068)
15,573,501
(5,178,781)
(96,881)
(2,261,711)
1,315,423
10,541,967
8,036,128
2,074,770
(225,853)
19,810,929
(3,672,360)
21,781,513
(4,379,241)
(132,945)
–
(179,222)
–
(977,714)
–
(1,075,079)
–
499,238
1,669,695
15,160,855
16,327,193
14.3.3 Lease Rentals Receivable after Five Years
Gross Lease Rentals Receivable after Five
Years from Balance Sheet date
–
–
–
–
Net Lease Rentals Receivable after Five Years
–
Total Net Lease Rentals Receivable
1,736,392
–
–
–
–
–
2,985,118
1,186
(33)
–
–
1,153
25,703,975
7,137
(97)
(5,692)
–
1,348
24,364,669
7,618,898
251,892,827
3,950,490
263,462,215
9,854,659
286,705,969
38,365,314
334,925,942
7,618,898
249,960,203
37,362,151
294,941,252
1,754,088
51,396
10,013,993
1,644,545
26,000
27,264
13,517,286
1,757,190
83,103
10,287,214
2,126,369
743,322
1,482,331
16,479,529
1,754,088
51,396
9,829,880
2,332,003
769,322
1,492,387
16,229,076
14.3.2 Lease Rentals Receivable from One to Five Years
Gross Lease Rentals Receivable from one
to Five Years from Balance Sheet date
675,146
(42,963)
Net Lease Rentals Receivable from One to
five Years
14.4 Summary of Gross Loans and Advances
Bill of Exchange
Loans and Advances
Leases
Total Gross Loans and Advances
9,854,659
286,994,075
2,228,121
299,076,855
14.5 Summary of Provision for Loan Losses
Bills of Exchange - Specific
- General
Loans - Specific
- General
Leases - Specific
- General
Total Loan Loss Provision
1,757,190
83,103
10,197,769
2,102,956
–
17,208
14,158,226
160
BANK
2009
Rs. ‘000
2008
Rs. ‘000
2009
Rs. ‘000
GROUP
2008 Rs. ‘000 14.6 Non-Performing Advances
and Interest in Suspense on
Non-Performing Advances
Non-Performing Advances (Note 14.6.1)
Interest in Suspense on Non-Performing
Advances
14.6.1 Non-Performing Loans and Advances
Bills of Exchange
Loans and Advances
Leases
14.7 Sector-wise Credit Exposure
Sector
Agriculture and Fishing
Manufacturing
Tourism
Transport
Construction
Traders
Financial and
Business Services
Infrastructure
Other Services
Credit Card
Pawning*
Other
Total
2009
Rs. ’000
20,040,177
17,856,920
21,187,079
19,003,822
32,875,680
29,826,203
32,912,714
35,493,657
1,803,351
18,230,450
6,376
20,040,177
1,908,195
15,939,673
9,052
17,856,920
1,803,351
18,230,450
1,153,278
21,187,079
1,908,195
15,939,673
1,155,954
19,003,822
BANK
Composition
%
2008
Rs. ’000
Composition
%
2009
Rs. ’000
GROUP
Composition
%
2008
Rs. ’000
Composition
%
6,325,915
21,911,664
4,287,081
257,168
55,687,027
50,551,216
2.1
7.3
1.4
0.1
18.6
16.9
3,307,287
15,099,326
4,495,899
1,731,382
63,107,901
40,937,711
1.3
5.7
1.7
0.7
24.0
15.5
14,481,216
22,525,573
4,351,882
9,136,199
56,756,036
60,682,497
4.3
6.7
1.3
2.7
16.9
18.1
4,441,861
15,833,288
4,564,568
9,435,345
64,512,950
47,709,465
1.5
5.4
1.5
3.2
21.9
16.2
5,343,967
605,129
53,687,734
874,837
97,533,723
2,011,394
299,076,855
1.8
0.2
18.0
0.3
32.6
0.7
100
4,763,624
974,651
36,171,584
906,969
89,288,244
2,677,637
263,462,215
1.8
0.4
13.7
0.3
33.9
1.0
100
5,343,967
605,129
60,658,843
874,837
97,533,723
2,011,394
334,961,296
1.6
0.2
18.1
0.3
29.1
0.6
100
4,763,624
974,651
49,540,200
906,969
89,288,244
2,970,087
294,941,252
1.6
0.3
16.8
0.3
30.3
1.0
100
* Mainly disbursed for agriculture, fisheries and housing construction purposes.
2009
Rs. Mn
2008
Rs. Mn
42,030
9,245
14.8 Government Guarantees
Total Loans and Advances for which
Government Guarantees have been Received
The provision for bad and doubtful loans is arrived at after taking into account Treasury and Central Bank guarantees against certain Loans and
Advances. The Bank expects these Guarantees to be renewed based on requirement.
161
15. Other Assets
Other Assets and Prepayments
Interest Receivable & Accrued
Other Income
Less: Provision for Losses Against
Other Assets
Total at Year end Net of Provisions
2009
Rs. ’000
BANK
2008
Rs. ’000
2009
Rs. ’000
GROUP
2008 Rs. ’000 6,449,356
6,930,212
7,173,279
7,434,746
12,639,433
14,074,272
12,583,249
14,008,412
(3,388,634)
15,700,155
(217,010)
20,787,474
(3,418,667)
16,337,861
(230,501)
21,212,657
16. Dealing Securities
No. of
Share (s)
Units
Cost Market Value
as at
as at
31.12.2009
31.12.2009
Rs. ‘000
Rs. ‘000
No. of
Share (s)
Units
Cost Market Value
as at
as at
31.12.2008
31.12.2008
Rs. ‘000
Rs. ‘000
16.1.a Dealing Securities - Bank
Magpeck Ltd.
Overseas Reality (Ceylon) PLC
National Equity Fund (units)
Total Value of the Dealing
Securities
125,000
20,722,353
5,112,735
5,000
165,771
76,134
–
125,000
321,196 20,722,353
102,306 5,112,735
5,000
165,771
76,134
–
134,695
53,019
246,905
423,502
246,905
187,714
5,000
165,771
76,134
–
125,000
321,196 20,722,353
102,306 5,112,735
5,000
165,771
76,134
–
134,695
53,019
246,905
423,502
246,905
187,714
16.1.b Dealing Securities - Group
Magpeck Limited
Overseas Reality (Ceylon) PLC
National Equity Fund
Total Value of the Dealing
Securities
125,000
20,722,353
5,112,735
16.2 The market value of the investments in quoted equity shares are based on the market value ruling as at
the Balance Sheet date.
16.3 The market value of investments in unit trusts is based on the Manager’s buying price ruling as at the
Balance Sheet date.
162
17. Other Investment Securities
2009
Rs. ‘000
Bank
2008
Rs. ‘000
2009
Rs. ‘000
Group
2008 Rs. ‘000 17.1 Long-Term Investments - Equities
Unquoted Shares (Note 17.1.1) (Note 17.1.2)
Less: Provision for Permanent Diminution
in Value of Investment
Net Value of Long-Term Investment (Equities)
Long-Term Investments - Debt Securities
Sri Lanka Development Bonds US$
Long-Term Treasury Bonds (Note 17.2)
Net Value of Long-Term Investment
(Debt Securities)
Total Investment Securities
172,758
(23,411)
149,347
124,283
(22,971)
101,312
223,533
(23,411)
200,122
174,293
(22,971)
151,322
16,647,276
625,000
11,325,000
625,000
16,647,276
625,000
11,325,000
625,000
17,272,276
17,421,623
11,950,000
12,051,312
17,272,276
17,472,398
11,950,000
12,101,322
No. of
Director’s
Share(s) Valuation as at
31.12.2009
Rs. ’000
17.1.1 Unquoted Shares - Bank
Sri Lankan Airlines Ltd.
Credit Information Bureau of Sri Lanka
District Corporate Union
Southern Development
Financial Company Ltd.
SWIFT
Rajarata Development Bank
Kandurata Development Bank
Ruhunu Development Bank
Sabaragamuwa Development Bank
Uva Development Bank
Wayamba Development Bank
Lanka Financial Services Bureau Ltd.
Fitch Rating Lanka Ltd
Lanka Clear (Pvt) Ltd.
Total Value of Unquoted Investment
Cost
Director’s
as at Valuation as at
31.12.2009
31.12.2008
Rs. ’000
Rs. ’000
Cost
as at
31.12.2008
Rs. ’000
1
47,400
135
–
50,715
–
–
50,715
–
–
2,240
–
–
2,240
–
2,500,000
14
1,298,448
1,200,000
1,200,000
1,200,000
1,200,000
1,320,000
225,000
62,500
2,100,000
1,589
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
149,347
25,000
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
172,758
2,512
1,168
12,000
12,000
12,000
12,000
12,000
12,000
1,767
625
21,000
101,312
25,000
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
124,283
163
No. of
Director’s
Share(s) Valuation as at
31.12.2009
Rs. ’000
17.1.2 Unquoted Shares - Group
Sri Lankan Airlines Ltd.
Credit Information Bureau of Sri Lanka
District Corporate Union
Ruhunu Venture Capital Co. Ltd.
SWIFT
Rajarata Development Bank
Kandurata Development Bank
Ruhunu Development Bank
Sabaragamuwa Development Bank
Uva Development Bank
Wayamba Development Bank
Lanka Financial Services Bureau Ltd.
Fitch Rating Lanka Ltd
Lanka Clear (Pvt) Ltd.
Sanasa Development Bank Ltd.
Total Value of Unquoted Investment
1
47,400
135
2,500,000
14
1,298,448
1,200,000
1,200,000
1,200,000
1,200,000
1,320,000
500,000
62,500
2,100,000
500,000
–
–
50,715
–
2,512
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
50,775
201,045
Cost
Director’s
as at Valuation as at
31.12.2009
31.12.2008
Rs. ’000
Rs. ’000
–
50,715
–
25,000
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
50,775
223,533
–
2,250
–
2,512
1,168
12,000
12,000
12,000
12,000
12,000
12,000
1,767
625
21,000
50,000
151,322
Cost
as at
31.12.2008
Rs. ’000
–
2,250
–
25,000
1,168
12,000
12,000
12,000
12,000
12,000
12,000
2,250
625
21,000
50,000
174,293
The carrying value of all unquoted investments is based on Board of Directors valuations i.e. lower of cost or
net assets value.
17.2 Long-Term Treasury Bonds
Long-Term Treasury Bonds represent Bonds issued during 2003 on account of Loans and Overdrafts granted
by the Bank to Co-operative Wholesale Establishment (CWE) amounting to Rs. 625 Mn. These Bonds have
been issued as part of the restructuring process of the Co-operative Wholesale Establishment and its financial
obligations. These Bonds are not negotiable and carry a zero coupon rate of interest with a maturity period of
13 years. However, these Bonds carry an interest payment scheme where by the CWE would make a semiannual payment of interest at 3.6822% p.a. net of Withholding Tax.
164
18. Investments in Subsidiaries and Associate Companies
2009
Rs. ’000
Investment in Subsidiaries (Note 18.1)
Investment in Associates (Note 18.2)
Total Investment in Subsidiaries and
Associates Companies
BANK
2008
Rs. ’000
2009
Rs. ’000
GROUP
2008 Rs. ’000 1,619,950
155,500
1,219,950
155,500
–
251,155
–
257,767
1,775,450
1,375,450
251,155
257,767
Principal
Activity
No. of
Shares
Holding % as at
31.12.2009
2009
Rs. ’000
Cost
2008
Rs. ’000
18.1 Investments in Subsidiaries
People's Leasing Co. Ltd.
Leasing
- Ordinary Shares
50,000,000
- Preference Shares
115,000,000
People's Travels (Pvt) Ltd.
Travel Agent
495,000
Total Value of Investment at the Year end
Principal
Activity
Holding % as at
31.12.2009
2009
Rs. ’000
100
100
99
BANK
Cost
2008
Rs. ’000
465,000
1,150,000
4,950
1,619,950
2009
Rs. ’000
465,000
750,000
4,950
1,219,950
GROUP
Cost
2008
Rs. ’000
18.2 Investments in Associates
People's Merchant Bank PLC Merchant Banking
- Ordinary Shares
- Preference Shares
Smart Net Lanka (Pvt) Ltd.
(Non-Operational)
Less : Provision for
Smart Net Lanka (Pvt) Ltd.
Total Value of Investment
at the Year end
39.2
145,500
10,000
145,500
10,000
241,155
10,000
247,767
10,000
37.3
25,000
180,500
25,000
180,500
25,000
276,155
25,000
282,767
(25,000)
(25,000)
(25,000)
(25,000)
155,500
155,500
251,155
257,767
165
19. Government of Sri Lanka Restructuring Bonds
19.1 On April 1993, the Bank received restructuring Bonds amounting to Rs 10,541 Mn from the
Government of Sri Lanka (GOSL) for the following purposes:
Rs. Mn
(i)
(ii)
1,152.0
1,700.5
(iii) 4,355.0
(iv) 3,231.0
(v)
102.5
10,541.0
To achieve the capital adequacy requirement in accordance with CBSL guidelines.
To write-off loans granted to Sri Lanka State Plantations Corporation and Paddy
Marketing Board for Rs. 1,467 Mn and Rs. 233.5 Mn respectively.
To finance pension liabilities.
To provide for loan loss provision.
For loans to be transferred to Special Recovery Unit
19.2 The above value of Bonds granted by the GOSL effectively relates to entries clear the carrying
value of advances granted under state direction, which were deemed as irrecoverable.
19.3 The agreement underlying the granting of these Bonds, stipulates the following:
(a) A tenor of 30 years, where the Bonds could be redeemed through the recovery of any of the
specific loan losses for which the Bonds were issued.
As at the date of this Balance Sheet, no recoveries have been made of those specific loan losses.
(b) An interest rate of 12% p.a. would apply, with half-yearly payment of interest.
(c) A value of 25% of income derived from (b) above is refunded to the GOSL annually as requested.
Thus, the effective net yield on these Bonds amount to 9% p.a.
19.4 As indicated in 19.1, a sum of Rs. 4,355 Mn of this tranche of Bonds, was assigned to the
Pension Fund (Rs. 3,218 Mn) and to the W&OP Fund (Rs. 1,137 Mn).
Accordingly, the carrying balance of Bonds reflected on the Balance Sheet does not include the value
assigned to the Pension Fund, which is managed as an independent Trust Fund.
19.5 The financial implications of these Bonds in year 2009 are as follows:
(a) A value of Rs. 7,323 Mn is reflected on the Balance Sheet as a Long-Term Asset.
(b) A value of Rs. 879 Mn is received during the year as Income and is reflected under Interest Income.
(c) A value of Rs. 220 Mn is repaid to GOSL as a Dividend and is reflected under Appropriations in the
Equity Statement.
166
20. Property, Plant & Equipment
Leasehold
Motor
Vehicles
Rs. ’000
Furniture
Equipment
& Machinery
Rs. ’000
167,632
11,737
(2,710)
176,659
274,375
104,029
–
378,404
6,988,977
349,770
–
7,338,747
13,989,485
641,542
(2,710)
14,628,317
13,284,735
805,963
(101,213)
13,989,485
479,606
335,910
112,236
–
448,146
153,829
9,990
(2,710)
161,109
202,225
57,334
–
259,559
5,669,031
591,359
–
6,260,390
6,590,502
1,021,018
(2,710)
7,608,810
5,792,002
807,704
(9,204)
6,590,502
Net Book Value as at 31.12.2009
Capital Work-in-Progress, at Cost
Furniture, Equipment and
Machinery at store
5,224,158
582,597
15,550
118,845
1,078,357
7,019,507
363,051
7,398,983
200,542
27,536
7,410,094
5,382,168
610,916
13,803
72,150
1,319,946
3,376
7,602,901
7,398,983
Group
Cost or Valuation
As at beginning of the Year
Additions
Disposals
As at end of the Year
5,867,671
98,339
(42)
5,965,968
983,354
85,190
–
1,068,544
230,528
73,478
(8,583)
295,423
632,681
132,380
(41,369)
723,692
7,225,337
459,020
(2,492)
7,681,865
14,939,571
848,407
(52,486)
15,735,492
13,865,163
1,228,469
(142,099)
14,951,533
Depreciation
As at beginning of the year
Charge for the year (Note 4)
Disposals
229,704
250,592
–
480,296
363,247
116,446
–
479,693
190,702
27,431
(6,120)
212,013
383,756
138,376
(32,799)
489,333
5,795,502
660,857
(1,818)
6,454,541
6,962,911
1,193,702
(40,737)
8,115,876
6,068,867
933,425
(39,688)
6,962,604
5,485,672
588,851
83,410
234,359
1,227,324
7,619,616
523,190
7,988,929
200,542
27,536
8,170,342
3,376
8,192,847
7,988,929
Bank
Cost or Valuation
Additions
Disposals
Depreciation
Charge for the Year (Note 4)
Disposals
Capital Work-in-Progress, at Cost
Furniture, Equipment and
Machinery at Store
Freehold
Land and
Buildings
Rs. ’000
Leasehold
Buildings
Motor
Vehicles
Rs. ’000
Rs. ’000
5,611,675
92,089
–
5,703,764
946,826
83,917
–
1,030,743
229,507
250,099
5,662,718
610,579
171,471
130,751
1,413,410
Total
31.12.2009
Total
31.12.2008
Rs. ’000
Rs. ’000
167
2009
Rs. ’000
Bank
2008
Rs. ’000
2009
Rs. ’000
Group
2008
Rs. ’000
21. Prepaid Leases
Cost
Less: Accumulated Amortisation
Net Book Value
693,732
334,376
359,356
700,864
233,564
467,300
693,732
334,376
359,356
700,864
233,564
467,300
846,337
731,639
889,373
763,526
32,926
114,698
879,263
846,337
43,752
–
933,125
125,847
–
889,373
554,199
175,853
730,052
149,211
384,932
169,267
554,199
292,138
574,389
183,709
758,098
175,027
397,682
176,707
574,389
314,984
22. Intangible Assets
IT-Related Capital Items
Cost or Valuation
Branch conversions and
related IT capital expenses
Disposals/Reversals during the Year
Accumulated Amortisation
Amortisation for the Year
Net Book Value
Goodwill
Cost or Valuation
Additions during the Year
Disposals/Reversals during the Year
Accumulated Amortisation
Amortisation for the Year
Net Book Value
Total Net Book Value
–
–
–
–
–
–
–
–
149,211
–
–
–
–
–
–
–
–
292,138
–
337,908
–
337,908
–
–
–
337,908
512,935
–
–
–
–
–
–
–
–
314,984
During the year 2009, People’s Leasing Co. Ltd. acquired Seylan Merchant Leasing PLC. Goodwill is booked as
a result of this acquisition. Subsequently this company was named as ‘People’s Leasing Finance PLC’.
23. Deposits from Customers
Demand Deposits
Saving Deposits
Time Deposits
Certificates of Deposits
Other Deposits
Total Deposits as at end of the Year
37,352,127
174,735,373
181,258,787
67,261
2,744,011
396,157,559
27,466,126
150,871,182
144,233,044
100,057
1,818,907
324,489,316
36,740,452
174,864,164
181,786,413
92,756
2,744,011
396,227,796
27,019,739
150,871,182
143,224,463
100,057
1,818,907
323,034,348
168
2009
Rs. ’000
Bank
2008
Rs. ’000
2009
Rs. ’000
Group
2008
Rs. ’000
23. (a) Local Currency Deposits
Demand Deposits
Saving Deposits
Time Deposits
Certificates of Deposits
Other Deposits
Total Local Currency Deposits
37,103,025
158,173,102
166,112,224
67,261
2,560,874
364,016,486
27,353,949
139,392,791
124,403,611
100,057
1,778,934
293,029,342
36,491,350
158,301,893
166,639,850
92,756
2,560,874
364,086,723
26,907,562
139,392,791
123,395,030
100,057
1,778,934
291,574,374
249,102
16,562,271
15,146,563
183,137
32,141,073
396,157,559
112,177
11,478,391
19,829,433
39,973
31,459,974
324,489,316
249,102
16,562,271
15,146,563
183,137
32,141,073
396,227,796
112,177
11,478,391
19,829,433
39,973
31,459,974
323,034,348
1,165,615
–
755,216
1,159,879
–
954,309
1,165,615
25,119
755,216
1,159,879
144,722
954,309
286,866
477,710
5,493,925
6,799,161
3,842,429
30,343,906
36,394,032
4,683,175
26,090,467
33,365,540
14,619,192
30,343,906
52,402,973
12,697,225
26,090,467
47,845,763
–
164,014
164,014
43,296
85,000
128,296
249,997
183,742
433,739
204,933
114,536
319,469
23. (b) Foreign Currency Deposits
Demand Deposits
Saving Deposits
Time Deposits
Other Deposits
Total Foreign Currency Deposits
Total Deposits as at end of the Year
24. Borrowings
Refinance Borrowings:
Central Bank of Sri Lanka
Government of Sri Lanka
Financial Institutions
Long-Term Borrowings:
Financial Institutions of Sri Lanka
Other Borrowings:
Call Money Borrowings
Treasury Bills/Bonds/Pro Notes Repurchases
Total Borrowings as at end of the Year
25. Deferred Liabilities
Deferred Tax (Note 25.1.2)
Provision for Gratuity (Note 25.2)
Balance as at end of the Year
Temporary
Difference
Rs. ’000
25.1.1 Deferred Tax Asset
As at Beginning of the Year
Amount Originating/(Reversing)
during the Year
BANK
2009
GROUP
2009
Tax
Effect
Rs. ’000
Temporary
Difference
Rs. ’000
Tax
Effect
Rs. ’000
123,704
43,296
585,522
204,933
(312,762)
(189,058)
(109,467)
(66,171)
(969,386)
(383,864)
(339,285)
(134,352)
169
Temporary
Difference
Rs. ’000
BANK
2009
Tax
Effect
Rs. ’000
Temporary
Difference
Rs. ’000
GROUP
2009
Tax
Effect
Rs. ’000
25.1.2 Deferred Tax Liabilities
As at Beginning of the Year
Amount Originating/(Reversing)
during the Year
–
–
585,522
204,933
–
–
–
–
128,755
714,277
45,064
249,997
2009
Rs. ’000
Bank
2008
Rs. ’000
2009
Rs. ’000
Group
2008
Rs. ’000
25.2 Provision for Gratuity
Opening Balance
During the year Provision
During the year Payments
Transferred to Post 1996 Employees’
Pension Fund
Closing Balance
85,000
80,000
(986)
198,000
86,685
(1,685)
114,536
71,235
(2,029)
216,288
97,933
(1,685)
–
164,014
(198,000)
85,000
–
183,742
(198,000)
114,536
303
848,671
13,917,094
3,112,828
17,878,896
3,829,184
2,534,770
10,034,642
2,312,198
18,710,794
303
848,671
13,917,094
6,493,204
21,259,272
3,829,184
2,534,770
9,897,951
4,367,853
20,629,758
315,000
32,186
348,000
695,186
135,000
(1,783)
198,000
331,217
315,000
32,186
348,000
695,186
135,000
(1,783)
198,000
331,217
(1,783)
97,295
758,245
(232,830)
–
(588,741)
32,186
40,363
88,909
721,819
(195,358)
(386)
(657,130)
(1,783)
(1,783)
97,295
758,245
(232,830)
–
(588,741)
32,186
40,363
88,909
721,819
(195,358)
(386)
(657,130)
(1,783)
26. Other Liabilities
Cheques Sent for Collection
Pay Orders and Drafts
Accrued Interest and Other Expenses
Other Liabilities
Total Other Liabilities as at end of the year
27. Retirement Benefit
Pensioner’s Medical Fund
Widows’ and Orphans’ Pension Fund
Post 1996 Employees’ Pension Fund
Total Liabilities
27.1 Movement in Widows’/Widowers’ and
Orphans’ Fund
Opening Balance in Bank
Contributions to the Fund
Interest Income Earned
Payments during the Year
Tax Payment
Transferred to Fixed Deposit
Closing Balance in Bank’s Books
170
27.2 This Fund has been established in January 1965, for the payment of pensions to the widows of former
employees and retired employees of the Bank who are contributors to the Fund. The Fund is approved and is
not open to new entrants from 1st January 1996. The members of the Fund contribute at the rate 5% of their
basic salary. The assets of the W&OP Fund are managed by the Board of Management of the Fund.
27.3 The transfer of the W&OP balance to fixed deposits, during the year, reflects management’s decision to
maintain funds belonging to the W&OP as an independent deposit from Bank assets.
28. Debentures
The Bank has issued 1. Two million five hundred thousand (2,500,000) unsecured subordinated redeemable debentures 2008/2016 of
the aggregate value of Rupees two thousand five hundred million at a par value of one thousand Rupees each
at the rate of 16% p.a. (payable biannually) on 30th December 2008.
2. Two million five hundred thousand (2,500,000) unsecured subordinated redeemable debentures 2009/2017 of
the aggregate value of Rupees two thousand five hundred million at a par value of one thousand Rupees each
at the rate of 13.5% p.a. (payable biannually) on 30th December 2009.
29. Share Capital
29.1 Movement of Share Capital
Authorised
20,000,000 Ordinary Shares of Rs. 50/- each
2009
Rs. ’000
1,000,000
BANK
2008
Rs. ’000
1,000,000
2009
Rs. ’000
1,000,000
GROUP
2008 Rs. ’000 1,000,000
Issued & Fully Paid
999,960 Ordinary Shares of Rs. 50/- each
49,998
49,998
49,998
49,998
All issued shares of 1 Mn are fully paid except for 40 shares for which calls have been made, but remain unpaid.
29.2 Principal Shareholders of the Bank are as follows:
Government of Sri Lanka
Co-operative Societies
2009
%
2008
%
92.27
7.73
100.00
92.27
7.73
100.00
2009
Rs. ’000
2008
Rs. ’000 7,152,000
–
7,152,000
5,652,000
1,500,000
7,152,000
30. Capital Pending Allotment
30.1 Movement of Funds Relating to Capital Pending Allotment
Opening Balance
Capital Received during the Year
Closing Balance as at end of the Year
171
30.2 Rs. 1,152 Mn contributed by the Government of Sri Lanka as capital on 15th April 1993. Capital amounting to Rs. 6,000 Mn received in four
tranches from the Government of Sri Lanka is set aside for the purpose of allotting Share Capital of 143,040,000 shares of Rs. 50/- each to the Bank.
Hence, shares to this value are pending allotment until the authorised Share Capital of the Bank is increased.
30.3 The increase in paid-up capital requires an amendment to the People’s Bank Act and it is yet to be finalised.
30.4 The Ministry of Finance of the Government of Sri Lanka infused capital to the Bank as follows:
Four Tranches of Rs. 1 Bn, Rs. 2 Bn, Rs. 1.5 Bn and Rs. 1.5 Bn for the years 2005, 2006, 2007 and 2008 based on the capitalisation plan and on
conditions of People’s Bank achieving certain performance targets and key performance indicators.
31. Reserves
31.1 Movement in Reserves
Statutory
Reserve
Rs. ’000
Revaluation
Reserve
Rs. ’000
Capital
Reserve
Rs. ’000
Special Risk
Reserve
Rs. ’000
General
Reserve
Rs. ’000
Building
Reserve
Rs. ’000
Profit/
(Loss)
Rs. ’000
Total
2009
Rs. ’000
Total
2008
Rs. ’000
49,998
5,610,494
5,663
388,762
1,000
1,000
2,620,808
8,677,724
7,192,566
–
–
3,320,194
3,320,194
2,704,848
–
–
(433,688)
–
(312,500)
–
Bank
Balance at beginning of Year
Profit for the Year
–
–
–
–
–
–
–
433,688
Notes
312,500
–
–
–
–
–
–
–
–
–
–
(219,690)
(219,690)
–
–
(219,690)
–
–
49,998
5,610,494
5,663
822,450
1,000
1,000
(1,200,000) (1,200,000) (1,000,000)
(31.2)
(31.3)
(31.4)
(31.5)
(31.6)
(31.7)
388,761
1,000
1,000
–
–
4,174,217
–
–
(433,688)
–
–
–
(312,500)
–
–
3,775,124 10,578,228
8,677,724
Group
49,998
5,610,493
5,663
Profit for the Year
–
–
–
–
–
–
–
–
–
–
433,688
–
312,500
6,200,966 12,257,881 10,050,112
–
–
–
–
–
–
–
–
–
–
–
–
(1,200,000) (1,200,000) (1,000,000)
8,209,305 15,012,408 12,257,881
49,998
5,610,493
5,663
822,449
1,000
1,000
(30.2)
(30.3)
(30.4)
(30.5)
(30.6)
(30.8)
(219,690)
3,427,459
Notes
(219,690)
4,174,217
(219,690)
31.2 Permanent Reserve (Statutory Reserve Fund)
The Permanent Reserve is maintained as required by the Banking Act No. 30 of 1988. Accordingly, the Bank should, out of net profit after
taxation but before any dividend is declared, transfer to the Permanent Reserve a sum equivalent to not less than 5% of the Bank’s paid-up
capital until the Permanent Reserve is equal to 50% of the paid-up capital and not less than 2% until the Permanent Reserve equals the paid-up
capital. No transfer to the Permanent Reserve was made this year as it has already reached the required level.
No new transfers have been made to the Permanent Reserve, as the balance now equals the existing Issued Share Capital balance.
172
31.3 Revaluation Reserve
This reserve has been created on revaluation of assets of the Bank as per Board approval in compliance with
Section 19 (7) of the Banking Act No. 30 of 1988.
31.4 Capital Reserve
This reserve has been created in 1987 and increased in 1998 has no transferred todate.
31.5 Special Risk Reserve
In terms of Central Bank directives, 25% of the profit after taxation has been transferred to Special Risk
Reserve in order to promote safety, soundness and stability of the Primary Dealer System and to build up a
Primary Dealer Capital Base.
31.6 General Reserve
This reserve has been created under Section 22 (2) of the People’s Bank Act No. 29 of 1961. The General
Reserve represents accumulated unallocated retained Profits and Losses which are available for distribution
and has a balance of Rs. 1 Mn.
31.7 Building Reserve
This reserve has been created under Section 19 of the People’s Bank Act No. 29 of 1961.
31.8 Dividend Paid to GOSL
According to the Agreement between the Government of Sri Lanka and the People’s Bank, the Bank is required
to pay back 25% of the Restructuring Bond interest to the General Treasury as a Dividend. Additional details
relating to this expense is reflected in Note 19 of these Financial Statements.
31.9 Special Levy to Treasury
This pertains to a special dividend paid to the consolidated fund of the Government of Sri Lanka as determined
by the Ministry of Finance. The amount payable for 2009 has been estimated at Rs. 1,200 Mn.
32. Minority Interest
Acquire during the Year
Share of Net Profit/(Loss) for the Year
Dividend Payments during the Year
Balance at end of Year
2009
Rs. ’000
–
–
–
–
–
BANK
2008
Rs. ’000
–
–
–
–
–
2009
Rs. ’000
191
6,461
(422)
(13)
6,217
GROUP
2008 Rs. ’000 170
–
44
(23)
191
173
33. Commitments and Contingencies
33.1 In the normal course of business, the Bank makes various commitments and incurs contingent liabilities
with legal recourse to its customers. No material losses are anticipated as a result of these transactions.
Commitments
Non-Disbursed Loans
Non-Disbursed Overdrafts
Contingent Liabilities
Acceptances
Documentary Credit
Guarantees
Forward Exchange Contracts
Total Commitments and Contingencies
2009
Rs. ’000
BANK
2008
Rs. ’000
2009
Rs. ’000
GROUP
2008 Rs. ’000 68,096
10,718,394
10,786,490
57,826
11,547,636
11,605,462
68,096
10,718,394
10,786,490
57,826
11,547,636
11,605,462
22,336,626
29,553,988
18,641,302
70,531,916
56,907,727
50,250,306
18,105,551
125,263,584
22,336,626
29,553,988
18,641,302
70,531,916
56,907,727
50,250,306
18,105,551
125,263,584
19,548,795
100,867,201
2,119,725
138,988,771
19,548,795
100,867,201
2,119,725
138,988,771
33.2 Litigation
In the normal course of business, the Bank is involved in various types of litigation, including litigation with
borrowers who are in default under terms of their loan agreements. In certain circumstances, borrowers have
asserted or threatened counter claims defenses. The Bank is also contesting certain Labour Tribunal cases. In
the opinion of management, based on its assessment and consultation with outside counsel, litigation which is
currently pending against the Bank and the Group will not have a material impact on the financial condition or
future operations of the Bank and the Group as a whole. The total value of litigation against the Bank amounts
to approximately Rs 7.92 Bn.
33.3 Capital Commitments
33.3.1 Core Banking Project
The Core Banking project will involve a capital commitment of US$ 10 Mn which commenced from 2003.
Management has decided to capitalised Rs. 838.21 Mn (US$ 7.35 Mn) up to 2009.
33.3.2 Other Capital Commitments
The following indicates the contractual amounts of the Group’s Off-Balance Sheet financial instruments that
commits it to extend credit to customers.
Approved and Contracted for
Approved but Not Contracted for
2009
Rs. ’000
129,333
102,500
231,833
BANK
2008
Rs. ’000
337,294
168,640
505,934
2009
Rs. ’000
129,333
102,500
231,833
GROUP
2008 Rs. ’000 337,294
168,640
505,934
174
34. Financial Reporting by Segments
Interest
Exchange
Leasing
Share Trading/Dividend
Commissions and Fees
Other
Total Revenue from
External Customers
Inter-Segment Revenue
Total Revenue
Segment Result
Income from Associates
Income Tax Expenses
Minority Interest
Net Profit for the Year
Segment Assets
Investment in Associates
Total Assets
Segment Liabilities
Total Liabilities
2009
Rs. ’000
Banking
2008
Rs. ’000
Leasing
2009
2008
Rs. ’000
Rs. ’000
2009
Rs. ’000
Travels
2008
Rs. ’000
Consolidated
2009
2008
Rs. ’000
Rs. ’000
61,626,261
1,120,819
408,803
31,531
3,108,401
2,225,644
52,508,947
818,399
616,022
30,975
3,591,387
925,448
–
–
6,604,553
–
–
416,489
–
–
5,510,401
–
–
325,213
–
–
–
–
17,569
268
–
–
–
–
17,395
559
61,626,261
1,120,819
7,013,356
31,531
3,125,970
2,642,401
52,508,947
818,399
6,126,423
30,975
3,608,782
1,251,220
68,521,459
528,149
69,049,608
6,075,691
–
(2,755,497)
–
3,320,194
476,070,012
155,500
476,225,512
458,445,286
476,225,512
58,491,178
456,932
58,948,110
5,663,721
–
(2,958,873)
–
2,704,848
397,392,273
155,500
397,547,773
381,668,051
397,547,773
7,021,042
243,769
7,264,811
2,028,744
–
(956,261)
–
1,072,483
30,155,279
–
30,155,279
24,210,486
30,155,279
5,835,614
227,636
6,063,250
1,591,909
–
(766,071)
–
825,838
25,412,626
–
25,412,626
20,733,777
25,412,626
17,837
3,405
21,242
2,449
–
(475)
–
1,974
30,487
–
30,487
10,581
30,487
17,954
3,525
21,479
6,444
–
(2,318)
–
4,126
31,746
–
31,746
12,564
31,746
75,560,338
775,323
76,335,661
7,892,647
(1,523)
(3,717,316)
409
4,174,217
500,818,664
251,155
501,069,820
478,849,197
501,069,820
63,344,746
688,093
65,032,839
7,142,844
17,981
(3,733,322)
(44)
(3,427,459)
416,415,981
257,767
416,673,748
397,213,678
416,673,748
34.1 Geographical Segmentation
2009
Rs. ’000
BANK
2008
Rs. ’000
Assets
Domestic Banking Unit
Foreign Currency Banking Unit
462,715,383
13,510,129
381,609,982
15,937,791
Gross Income
68,131,818
917,790
57,630,720
1,317,390
Profit before Tax
5,761,489
314,202
5,378,526
285,195
Profit after Tax
3,068,832
251,362
2,419,653
285,195
175
35. Bank - Maturity Profile of Assets & Liabilities (Rs. ’000)
Interest Earning Assets
Short-Term Funds
Treasury Bills
Treasury Bonds
Unquoted Bond/Shares
Bills of Exchange
Loans and Advances
GOSL Bonds
Leases
As at 31.12.2009
As at 31.12.2008
Non-Interest Earnings Assets
Cash
Balance with Central Bank
Dealing Securities
Subsidiaries
Associates
Unquoted Bond/Shares
Other Assets
Prepaid Leases
Intangible Assets
As at 31.12.2009
As at 31.12.2008
Total Assets as at 31.12.2009
Total Assets as at 31.12.2008
LIABILITIES
Deposits
Amount Due to Banks
Borrowings - Money Markets
Borrowings - REPO Agreements
Borrowings - Refinance/Others
Retirement Benefit
Debentures
Total Interest Bearing Liabilities
as at 31.12.2009
Total Interest Bearing Liabilities
as at 31.12.2008
Total Non-Interest Bearing
Liabilities
Shareholders’ Fund
Total Liabilities as at 31.12.2009
Total Liabilities as at 31.12.2008
Net Liquidity Gap as at 31.12.2009
Net Liquidity Gap as at 31.12.2008
Up to 3 M
3-12 M
1-3 Years
3-5 Years
Over 5 Years
Total
2008
39,393,986
1,219,324
204,123
–
5,898,275
44,325,919
–
168,667
91,210,294
56,362,287
–
9,280,701
7,894,937
3,435,000
1,966,092
161,256,617
–
506,000
184,339,347
161,259,044
–
–
33,898,068
13,212,276
–
34,450,339
–
1,061,725
82,622,408
53,426,812
–
–
15,320,983
–
–
14,336,028
–
–
29,657,011
35,034,310
–
–
968,951
–
–
19,790,592
7,323,000
–
28,082,543
32,026,520
39,393,986
10,500,025
58,287,062
16,647,276
7,864,367
274,159,495
7,323,000
1,736,392
415,911,603
–
9,185,347
2,217,533
59,330,735
11,426,312
5,813,414
239,827,514
7,323,000
2,985,118
338,108,973
–
10,938,589
14,317,836
423,502
–
–
–
15,443,692
–
–
–
41,123,619
40,425,160
132,333,913
96,787,447
–
6,224,182
–
–
–
–
322,635
–
–
–
6,546,817
6,243,567
190,886,164
167,502,611
–
229,277
–
–
–
–
–
–
–
–
229,277
137,604
82,851,685
53,564,416
–
645,908
–
–
–
–
–
–
–
–
645,908
860,000
30,302,919
35,894,309
–
1,299,830
–
1,619,950
155,500
774,347
–
7,410,094
359,356
149,211
11,768,288
11,772,469
39,850,831
43,798,989
10,938,589
22,717,033
423,502
1,619,950
155,500
774,347
15,766,327
7,410,094
359,356
149,211
60,313,909
–
476,225,512
–
9,195,024
18,905,799
187,714
1,219,950
155,500
625,000
20,787,474
7,602,901
467,300
292,138
59,438,800
–
–
397,547,773
269,343,928
490,142
2,207,697
18,917,123
637,215
695,186
–
95,712,449
–
–
11,426,784
1,023,288
–
–
3,304,929
–
–
–
886,073
–
–
9,227,252
–
–
–
884,208
–
–
18,569,000
–
–
–
411,644
–
5,000,000
396,157,558
490,142
2,207,697
30,343,906
3,842,428
695,186
5,000,000
324,489,316
348,559
4,683,175
26,090,467
2,591,898
331,217
2,500,000
292,291,291
108,162,521
4,191,002
10,111,460
23,980,644
438,736,917
225,464,374
99,717,776
3,605,330
11,809,395
20,437,757
19,106,815
601,554
–
–
311,398,106 108,764,075
246,097,793
99,717,776
(179,064,193) 82,122,089
(149,310,346) 67,784,836
–
–
4,191,002
3,605,330
78,660,683
49,959,086
–
–
10,111,460
11,809,395
20,191,459
24,084,915
–
19,708,369
17,780,226
17,780,226
41,760,870 476,225,512
36,317,479
–
(1,910,039)
–
7,481,510
–
–
–
361,034,632
20,633,419
15,879,722
–
397,547,773
–
–
The Bank has a captured rural savings and current account base of around Rs. 150 Bn in 2009. This balance has been continuously and steadily
growing over the years, mainly due to the comfort of state-owned security and the unmatched branch outreach. This base which is inclusive
under “deposits” above has distorted the ‘up to 3M’ liquidity gap.
176
36. Related Party Disclosures
36.1 Transactions with Key Management Personnel of the Bank
Key Management Personnel are defined as those persons having authority and responsibility for planning,
directing and controlling activities of the Bank. Such Key Management Personnel include members of the
Board of Directors of the Bank and their close family members.
36.1.1 Compensation of Key Management Personnel of the Bank
2009
Rs. ’000
2008
Rs. ’000
3,012
–
–
–
2,497
–
–
–
Short-Term Employee Benefits
Post-Employment Pension
Termination Benefits
Share-Based Payments
36.1.2 Transactions with Key Management Personnel
The following table provides the outstanding balance and the corresponding interest, which have been entered
into with Key Management Personnel of the Bank during the year.
Balance as at the Year end
2009
2008
Rs. ’000
Rs. ’000
Residential Mortgages
Credit Cards
Guarantees
–
127
–
Income during the Year
2009
2008 Rs. ’000
Rs. ’000 –
292
–
–
74
–
–
139
–
36.2 Transactions with Subsidiary Companies
The following table provides the outstanding balance of Loans & Advances, other credit facilities, Deposits and
the corresponding interest during the year of subsidiary companies.
Investments- Ordinary Shares (Refer Note 18.1)
- Preference Shares (Refer Note 18.1)
Loans & Advances
Off-Balance Sheet Accommodations
Deposits
Other Receivables (Loan Interest, Building Rentals, etc.)
Other Payables (Agency Commission, Hiring Rentals,
Lease Rentals,etc.)
Building Rental Received
REPO Interest Paid
Agency Commission Paid
Hiring Rental Paid
Income /Expenses
during the Year
2009
2008 Rs. ’000
Rs. ’000 2009
Rs. ’000
2008
Rs. ’000
465,000
1,150,000
2,051,516
–
1,325,168
57,016
465,000
750,000
3,413,775
–
1,418,607
247,586
75,000
138,000
306,174
–
48,449
–
42,250
75,000
328,587
–
28,620
–
303,757
136,690
–
7,740
44,885
83,913
25,439
–
9,115
4,722
135,224
42,330
177
2009
Rs. ’000
2008
Rs. ’000
Lease Rental Paid
Investments - Ordinary Shares (Refer Note 18.1)
Loans and Advances
Off-Balance Sheet Accommodations
Deposits
4,950
–
12,000
9,039
4,950
–
11,250
8,065
Income /Expenses
during the Year
2009
2008 Rs. ’000
Rs. ’000 41,084
16,741
1,238
–
204
540
1,980
–
195
602
36.3 Transactions with Sub-Subsidiaries Companies
The following table provides the outstanding balance of Loans and Advances, other credit facilities, Deposits
and the corresponding interest during the year of Sub Subsidiary Companies.
Income /Expenses
during the Year
2009
2008 Rs. ’000
Rs. ’000 2009
Rs. ’000
2008
Rs. ’000
51,336
64
–
–
People’s Leasing Property Development Ltd.
Loans and Advances
Deposits
175
–
–
25,011
–
–
–
–
People’s Insurance Ltd.
Deposits
REPO Investments
60
499
–
–
–
1,263
–
–
People’s Leasing Finance PLC
Loans and Advances
Deposits
191
100
–
–
–
–
–
–
People’s Leasing Fleet Management Ltd.
Deposits
36.4 Transactions with Associate Company
The following table provides the outstanding balance of Loans and Advances, other credit facilities, Deposits
and the corresponding interest during the year of the Associate Company.
Investments- Ordinary Shares (Refer Note 18.2)
- Preference Shares (Refer Note 18.2)
Loans and Advances
Off Balance Sheet Accommodations
Deposits
2009
Rs. ’000
2008
Rs. ’000
145,500
10,000
477,886
–
100
145,500
10,000
289,904
–
–
Income /Expenses
during the Year
2009
2008 Rs. ’000
Rs. ’000 3,924
600
59,986
–
–
3,922
600
34,181
–
–
178
36.5 Transactions with Government of Sri Lanka (GOSL) and State Owned Enterprises (SOE)
36.5.1 GOSL and SOE Loans and Advances
2009
Balance
Overdrafts
Sri Lanka Government
Rs. ‘000
Loans &
Advances
Rs. ‘000
18,228,520
4,633,076
2008
Balance
Bills
Total
Overdrafts
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Loans &
Advances
Rs. ‘000
890,119 23,751,714
1,772,497
414,069
20,275,079
456,286
98,134
895,728
41,012
7,447
9,024,225
5,009,034 45,887,271
4,191,652
4,228,861
4,834,554
50,512,831 13,698,312
5,925,140 70,136,283
4,711,301
25,399,668
6,651,697
Local Government Bodies
430,298
Provincial Councils
–
–
25,988
41,012
Government Corporations 31,854,013
Total
Income
–
Total
Rs. ‘000
Rs. ‘000
Rs. ‘000
1,897,306 23,944,881
2,688,644
–
–
Income
Bills
10,382
44,646
–
906,110
168,046
44,646
5,840
9,634,065
1,899,547
2,478,336 34,529,701
4,762,078
570,649
36.5.2 GOSL and SOE Deposits
2009
Demand
Rs. ‘000
8,139,855
666,858
962,573
43,943
Local Government Bodies
Provincial Councils
Government Corporations
Total
Balance
Savings
Rs. ‘000
901,076
Expenses
Time
Rs. ‘000
Total
Rs. ‘000
3,114,484 11,921,198
797,599
1,804,115
513
–
2008
Balance
Savings
Rs. ‘000
Expenses
Rs. ‘000
Demand
Rs. ‘000
Time
Rs. ‘000
407,445
5,980,306
323,911
1,921,821
8,226,038
301,925
271,876
717,093
23,218
489,158
1,229,469
126,720
2,911
–
Total
Rs. ‘000
Rs. ‘000
901,589
120,587
1,365,452
1,368,363
6,086
6,755,609
465,894 13,641,640 20,863,143
753,775
3,372,049
1,039,791 13,332,189 17,744,029
503,804
16,759,112
1,176,696 17,554,236 35,490,044
1,553,684
11,434,901
1,386,920 15,746,079 28,567,900
938,535
36.5.3 GOSL and SOE Off-Balance Sheet Items
2009
2008
Acceptances
Documentary
Credit
Guarantees
Total
Acceptances
Documentary
Credit
Guarantees
Total
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
9,992,339
11,877,275
191,814
22,061,427
5,203,302
5,120,837
808
10,324,947
Government Corporations
9,341,515
14,160,443
2,035,393
25,537,350
49,459,814
43,344,505
973,371
93,777,690
19,333,854
26,037,717
2,227,207
47,598,777
54,663,116
48,465,342
974,179 104,102,637
Total
36.5.4 Government Directed Loans & Advances
Microfinance Loans
Agriculture and Other Development Loans
Housing Loans Granted to Government Servants
Balance as at the year end
Income during the year
2008
Rs. ’000
2009
Rs. ’000
2008 Rs. ’000 285,583
1,647,661
9,364,049
237,694
1,142,836
9,521,640
32,130
64,199
1,065,478
26,933
44,065
1,103,934
2009
Rs. ’000
2008
Rs. ’000
1,799,341
1,476,009
36.6 Transactions with Pension Trust Fund
Contribution during the Year
2009
Rs. ’000
[Supplementary Information] [Value Added Statement 180]
[Sources and Utilisation of Income 181] [Capital Adequacy 182] [Income Statement US$ 184]
[Balance Sheet US$ 185] [Quarterly Financial Highlights 186] [Branch Network 187]
[Service Centres 193] [Worldwide Partners 198] [Decades at a Glance 200]
[Performance Review 1999-2009 205] [Glossary of Financial/Banking Terms 206]
[Value Added Statement]
[Sources and Utilisation of Income 181] [Capital Adequacy 182]
[Income Statement US$ 184] [Balance Sheet US$ 185] [Quarterly Financial Highlights 186] [Branch Network 187]
[Service Centres 193] [Worldwide Partners 198] [Decades at a Glance 200] [Performance Review 1999-2009 205]
[Glossary of Financial/Banking Terms 206] [Corporate Information 211]
180
Value Added
Income from Banking Services
Cost of Services
Value Added by Banking Services
Non-Banking Income
Provision for Bad Debts
Provision for Hedging
Value Allocated to Employees
Salaries, Wages and Other Benefits
To Government
Dividend Paid to GOSL Bonds
Special Levy to Treasury
PAYE Tax
Income Tax
VAT
Other Indirect Taxes
To Expansion and Growth
Retained Income
Depreciation/Amortisation
2009
Rs. ’000
%
2008
Rs. ’000
63,462,055
(42,860,686)
20,601,369
54,271,955
(38,583,209)
15,688,746
5,587,553
(2,092,413)
(3,180,083)
20,916,426
4,676,155
(1,620,025)
–
18,744,876
%
10,063,967
48.1
8,895,182
47.5
219,690
1,200,000
394,769
2,755,497
3,010,736
73,581
1.0
5.7
1.9
13.2
14.4
0.4
219,690
1,000,000
224,730
2,958,873
2,890,825
54,390
1.2
5.3
1.2
15.8
15.4
0.3
1,900,504
1,297,682
20,916,426
9.1
6.2
100.0
1,485,158
1,016,029
18,744,876
7.9
5.4
100.0
[Sources and Utilisation of Income]
[Value Added Statement 180]
[Capital Adequacy 182] [Income Statement US$ 184] [Balance Sheet US$ 185] [Quarterly Financial Highlights 186]
[Branch Network 187] [Service Centres 193] [Worldwide Partners 198] [Decades at a Glance 200]
[Performance Review 1999-2009 205] [Glossary of Financial/Banking Terms 206] [Corporate Information 211]
181
For the Year ended 31st December
2005
Rs. ‘000
2006
Rs. ‘000
2007
Rs. ‘000
2008
Rs. ‘000
2009
Rs. ‘000
24,015,741
506,268
1,855,524
268,917
555,822
27,202,272
31,429,436
486,915
2,197,631
154,464
862,526
35,130,972
43,074,181
648,988
2,866,414
86,774
1,307,691
47,984,048
53,453,556
818,399
3,591,387
110,988
973,780
58,948,110
62,341,236
1,120,819
3,108,401
674,447
1,804,705
69,049,608
12,418,323
6,802,132
3,019,489
15,622,100
8,918,858
3,918,364
26,541,983
8,405,683
4,633,972
34,491,766
8,895,182
5,107,471
38,414,583
10,063,967
5,743,785
347,132
352,786
722,174
1,620,025
5,272,496
3,259,224
2,050,236
4,260,119
2,058,745
6,226,043
1,454,193
7,348,508
1,485,158
7,654,273
1,900,504
SOURCES OF INCOME
Interest
Exchange
Commission and Fees
Capital Gain
Other
Total
UTILISATION OF INCOME
To Depositors as Interest
To Employees as Emoluments
To Providers of Supplies & services
Provision for Possible Loan Losses
& Others
To Government - Taxes, Special Levy
& Dividend
Retained for growth
[Capital Adequacy]
[Value Added Statement 180] [Sources and Utilisation of Income 181]
182
Computation of Risk-Weighted Assets
As at 31st December
Assets
Claims on Government of Sri Lanka and
Central Bank of Sri Lanka
Claims on Foreign Sovereigns and their
Central Banks
Claims on Public Sector Entities (PSEs)
Claims on Official Entities and Multilateral
Development Banks (MDBs)
Claims on Banks
Claims on Financial Institutions
Claims on Corporates
Retail Claims
Claims Secured by Residential Property
Claims Secured by Commercial Real Estate
Non-Performing Assets (NPAs)
Cash Items
Other Assets
Total
2009
Rs. ’000
Balance
2008
Rs. ’000
Risk Weight
%
Risk-Weighted Balance
2009
2008
Rs. ’000
Rs. ’000
104,925,771
87,831,737
0
–
–
–
3,802,587
264,439
40,214,164
0-150
20-150
–
3,802,587
264,439
10,324,351
–
23,091,934
3,360,125
30,490,558
26,899,865
33,778,539
–
6,157,401
10,214,958
7,919,237
11,495,395
262,136,370
–
11,962,654
5,192,021
57,770,950
30,882,354
34,042,950
–
5,364,208
11,670,356
9,027,737
12,195,461
306,419,032
0-150
20-150
20-150
20-150
75-100
50-100
100
50-150
0-20
100
100
–
6,405,147
1,827,982
29,254,382
26,899,865
16,889,270
–
7,623,545
247,850
7,919,237
11,495,395
112,365,260
–
7,809,174
3,379,009
28,550,324
23,161,766
17,021,475
–
6,934,829
428,391
9,027,737
12,195,461
119,096,956
Off-Balance Sheet Exposure
Instruments
Direct Credit Substitutes
Transaction-Related Contingencies
Short-Term Self-Liquidating Trade-Related
Contingencies
Sale and Repurchase Agreements and
Assets Sale with Recourse where the
Credit Risk remains with the Bank
Obligations under an On-Going
Underwriting Agreement
Other Commitments with an Original
Maturity of up to One Year or which can be
unconditionally cancelled at any time
Commitments with an Original Maturity
up to One Year
Other Commitments with an Original
Maturity of over One Year
Foreign Exchange Contracts
Interest Rate Contracts
Total
2009
Rs. ’000
Balance
2008
Rs. ’000
Credit
Conversion Factor
%
Credit Equivalent
2009
2008
Rs. ’000
Rs. ’000
3,738,328
11,985,240
4,256,249
4,552,908
100
50
3,738,328
5,992,620
4,256,249
2,276,454
16,927,236
47,146,165
20
3,385,447
9,429,233
–
–
100
–
–
–
–
50
–
–
20,761,116
–
–
–
19,548,795
72,960,715
13,012,520
–
–
–
5,424,185
74,392,027
0
20
50
0-5
0-3
4,138,604
–
–
–
97,744
17,352,743
–
–
–
–
27,121
15,989,057
[Capital Adequacy]
[Value Added Statement 180] [Sources and Utilisation of Income 181]
183
As at 31st December
2009
Rs. ’000
2008
Rs. ’000
7,201,998
49,998
3,775,124
1,142,612
–
7,201,998
49,998
2,620,809
396,424
–
232,500
232,500
113,750
11,823,482
77,750
9,958,979
2,208,884
1,929,894
5,000,000
2,208,884
1,723,205
2,500,000
232,500
232,500
113,750
8,792,528
20,616,010
77,750
6,121,839
16,080,818
112,846,925
3,714,012
37,830,613
154,391,550
119,096,956
2,119,037
32,527,528
153,743,521
7.7%
6.5%
13.4%
10.5%
Computation of Capital
Tier I: Core Capital
Paid-Up Ordinary Shares/Common Stock/
Assigned Capital
Statutory Reserve Fund
Published Retained Profits
General and Other Reserves
Deductions - Tier I
50% of Investments in Unconsolidated Banking and
Financial Subsidiary Companies
50% Investments in the Capital of Other Banks and
Total Eligible Core Capital (Tier I)
Tier II: Supplementary Capital
Revaluation Reserves (as approved by
Central Bank of Sri Lanka)
General Provisions
Approved Subordinated Term Debt
Deductions - Tier II
50% of Investments in Unconsolidated Banking and
Financial Subsidiary Companies
50% Investments in the Capital of Other Banks and
Total Eligible Supplementary Capital (Tier II)
Total Capital Base
Computation of Ratios
Total Risk-Weighted Assets for Credit Risk
Total Risk-Weighted Assets for Market Risk
Total Risk-Weighted Assets for Operational Risk
Total Risk-Weighted Assets (RWA)
Core Capital Ratio - Tier I (Minimum Requirement 5%)
Core Capital
x 100
Total Risk-Weighted Assets
Total Capital Ratio (Minimum Requirement 10%)
Total Capital Base
x 100
Total Risk-Weighted Assets
Note: The above report has being prepared in accordance with the Basel II guidelines set out by the
Central Bank of Sri Lanka.
[Value Added Statement 180] [Sources and Utilisation of Income 181] [Capital Adequacy 182]
[Income Statement US$]
[Balance Sheet US$ 185] [Quarterly Financial Highlights 186]
184
2009
US$ ’000
Bank
2008
US$ ’000
Change
%
2009
US$ ’000
Group
2008
US$ ’000
Change %
INCOME
603,422
520,513
15.9
660,319
568,166
16.2
Interest Income
Interest Expenses
NET INTEREST INCOME
Foreign Exchange Gain
Fees and Commission
Capital Gain on Treasury Bills and Bonds
Other Income
TOTAL INCOME
544,798
(335,704)
209,094
9,795
27,164
5,894
15,771
267,718
471,996
(304,563)
167,433
7,226
31,712
980
8,598
215,950
15.4
10.2
24.9
35.5
(14.3)
501.4
83.4
24.0
599,842
(362,591)
237,251
9,795
27,318
5,894
17,471
297,729
517,752
(328,831)
188,921
7,226
31,866
980
10,342
239,335
15.9
10.3
25.6
35.5
(14.3)
501.4
68.9
24.4
90,155
16,068
80,074
13,376
12.6
20.1
93,758
16,068
83,157
13,376
12.7
20.1
31,446
867
33,791
(172,328)
26,174
1,308
30,584
(151,516)
20.1
(33.7)
10.5
13.7
32,222
134
44,657
(186,839)
26,884
114
37,391
(160,922)
19.9
17.3
19.4
16.1
95,391
64,434
48.0
110,890
78,413
41.4
Less: Provision for Loan Losses/Write-Off
Other Provisions
(18,286)
(14,305)
27.8
(17,907)
(15,223)
17.6
(118) 3,294.1
–
–
3,781
(27,791)
OPERATING PROFIT
Share of Associate Companies’ Profit/Loss
before Taxation
PROFIT BEFORE TAXATION
PROFIT AFTER TAXATION
Less: Minority Interest
PROFIT FOR THE YEAR
53,095
50,011
6.2
68,974
63,071
–
53,095
(24,080)
29,015
–
29,015
–
50,011
(26,127)
23,884
–
23,884
–
6.2
(7.8)
21.5
–
21.5
(13)
68,960
(32,485)
36,475
4
36,478
159
63,230
(32,965)
30,265
–
30,265
OPERATING EXPENSES
Personnel Costs
Provision for Staff Retirement Benefits
Premises, Equipment and
Establishment Expenses
Fee and Commission Expenses
Other Overhead Expenses
Profit before Loan Losses, Provisions and
3,781
(27,791)
(118) 3,294.1
–
–
9.4
(108.4)
9.1
(1.5)
20.5
–
20.5
Exchange Rate: 1 US$ was Rs. 114.43 as at 31st December 2009 (Rs. 113.25 as at 31st December 2008).
The Income Statement and the Balance Sheet given on pages 184 and 185 are solely for the convenience of shareholders, investors,
bankers and other users of Financial Statements.
[Balance Sheet US$]
[Income Statement US$ 184]
[Quarterly Financial Highlights 186]
185
As at 31st December
2009
US$ ’000
Bank
2008
US$ ’000
Growth
%
2009
US$ ’000
Group
2008
US$ ’000
Growth
%
175.7
ASSETS
439,855
162,299
171.0
449,080
162,861
Balance with the Central Bank
198,523
166,939
18.9
198,523
166,939
18.9
Government Treasury Bills and Treasury Bonds
601,128
543,473
10.6
601,128
543,473
10.6
Bills of Exchange
Loans and Advances
Leases
Other Assets
Deferred Tax
Dealing Securities
Investment Securities
70,037
51,333
36.4
70,037
51,333
36.4
2,394,560
2,117,682
13.1
2,389,882
2,097,483
13.9
15,174
26,359
(42.4)
224,626
215,141
4.4
137,203
183,554
(25.3)
142,776
187,308
(23.8)
–
–
1,174
–
–
3,701
578
1,658
123.3
3,701
1,658
123.2
152,691
106,856
42.9
(3.6)
152,247
106,413
43.1
Investments in Subsidiaries and
Associate Companies
15,516
12,145
27.8
2,195
2,276
63,995
64,662
(1.0)
63,995
64,662
(1.0)
64,757
67,134
(3.5)
71,400
72,343
(1.3)
Prepaid Leases
3,140
4,126
(23.9)
3,140
4,126
(23.9)
Intangible Assets
1,304
2,580
(49.5)
4,483
2,781
61.2
4,161,719
3,510,356
18.6
4,378,833
3,679,240
19.0
TOTAL ASSETS
LIABILITIES
4,283
3,078
39.2
4,283
3,082
39.0
3,462,008
2,865,248
20.8
3,462,622
2,852,400
21.4
318,046
294,618
8.0
457,948
422,479
8.4
Taxation Payable
14,554
15,844
(8.1)
18,304
16,680
9.7
Deferred Taxation
1,433
1,133
26.5
3,790
2,821
34.4
156,243
165,217
(5.4)
185,784
182,161
2.0
6,075
2,925
107.7
6,075
2,925
107.7
43,695
22,075
100.0
45,841
24,857
84.4
4,006,338
3,370,137
18.9
4,184,647
3,507,406
19.3
(1.0)
Deposits from Customers
Borrowings from Banks and Others
Other Liabilities
Retirement Benefit
Debentures
TOTAL LIABILITIES
FUNDS EMPLOYED
Share Capital
437
441
(1.0)
437
441
Capital Pending Allotment
62,501
63,152
(1.0)
62,501
63,152
(1.0)
Reserves
92,443
76,624
20.6
131,193
108,237
21.2
155,381
140,218
10.8
194,131
171,831
13.0
54
2
10.8
194,185
171,832
Minority Interest
TOTAL FUNDS EMPLOYED
TOTAL LIABILITIES AND FUNDS EMPLOYED
COMMITMENTS AND CONTINGENCIES
–
–
–
140,218
4,161,719
3,510,356
18.6
4,378,833
3,679,238
19.0
881,475
1,227,274
(28.2)
881,475
1,227,274
(28.2)
Exchange Rate: 1 US$ was Rs. 114.43 as at 31st December 2009 (Rs. 113.25 as at 31st December 2008).
The Income Statement and the Balance Sheet given on pages 184 and 185 are solely for the convenience of shareholders, investors,
bankers and other users of Financial Statements.
–
155,381
13.0
[Income Statement US$ 184] [Balance Sheet US$ 185]
[Quarterly Financial Highlights]
[Branch Network 187] [Service Centres 193]
[Worldwide Partners 198] [Decades at a Glance 200] [Performance Review 1999-2009 205]
186
2009
For the Quarter ended
Quarter 1
Rs. Mn
Income Statement - YTD
Net Interest Income
Non-Funded Income
Operating Expenses
Net Profit before Tax
Provision for Income Tax
Net Profit after Tax
Income Statement for the Quarter
Net Interest Income
Non-Funded Income
Operating Expenses
Net Profit before Tax
Provision for Income Tax
Net Profit after Tax
Balance Sheet
Total Assets
Total Loans and Advances
Total Deposits
Total Shareholders’ Funds
Key Performance Indicators
Return on Assets (before Tax)
Return on Equity (after Tax)
Cost/Income Ratio
Fee Based Income/Net Income
Advances/Deposits Ratio
NPL Ratio
Total Capital Adequacy Ratio
Quarter 2
Rs. Mn
2008
Quarter 3
Rs. Mn
Quarter 4
Rs. Mn
Quarter 1
Rs. Mn
Quarter 2
Rs. Mn
Quarter 3
Rs. Mn
Quarter 4
Rs. Mn
5,195
1,239
(4,604)
1,348
(700)
10,810
2,583
(9,552)
2,604
(1,294)
16,698
3,950
(14,131)
3,928
(1,954)
23,927
6,708
(19,719)
6,076
(2,755)
4,240
1,224
(3,937)
1,262
(620)
8,586
2,436
(8,211)
2,287
(1,175)
13,325
3,799
(12,744)
3,579
(1,840)
18,962
5,495
(17,159)
5,664
(2,959)
648
1,310
1,974
3,320
642
1,112
1,739
2,705
5,195
1,239
(4,604)
1,348
(700)
648
5,615
1,344
(4,948)
1,256
(594)
662
5,888
1,367
(4,579)
1,324
(660)
664
7,229
2,758
(5,588)
2,148
(801)
1,346
4,240
1,224
(3,937)
1,262
(620)
642
4,346
1,212
(4,274)
1,025
(555)
470
4,739
1,363
(4,533)
1,292
(665)
627
5,637
1,696
(4,415)
2,085
(1,119)
966
420,688
282,191
344,870
16,473
442,640
300,441
362,894
17,080
471,730
298,945
396,663
17,389
476,225
299,077
396,158
17,780
390,961
248,132
301,240
13,813
400,745
249,371
314,604
14,228
404,974
258,514
315,663
14,800
397,548
263,462
324,489
15,880
1.3%
16.0%
66.5%
19.3%
81.8%
6.8%
10.3%
1.2%
15.9%
66.9%
19.3%
82.8%
6.8%
10.4%
1.2%
15.8%
63.7%
19.1%
75.4%
7.7%
10.6%
1.4%
19.7%
60.6%
21.9%
75.5%
6.7%
13.4%
1.3%
19.0%
69.0%
22.4%
82.4%
6.4%
6.5%
1.2%
16.2%
68.9%
22.1%
79.3%
6.3%
6.9%
1.2%
16.5%
68.7%
22.2%
81.9%
6.5%
6.7%
1.5%
18.8%
65.4%
22.5%
81.2%
6.8%
10.5%
[Income Statement US$ 184] [Balance Sheet US$ 185] [Quarterly Financial Highlights 186]
[Branch Network]
187
3a
1. Central Province
3
1a. Kandy
1b. Matale
3b
1c. Nuwara-Eliya
2. Eastern Province
2a. Ampara
2b. Batticaloa
2c. Trincomalee
3. Northern Province
4a
2c
3a. Jaffna
3b. Wanni
4. North Central Province
4a. Anuradhapura
4
4b
5a
4b. Polornnaruwa
5
5. North Western Province
2b
5b
5a. Puttalam
1b
5b. Kurunegala
6. Sabaragamuwa Province
6b. Ratnapura
9c
6a
7. Southern Province
7a. Galle
7b. Hambantota
7c. Matara
8. Uva Province
1a
1
6a. Kegalle
2
1c
2a
8a
9b
8b
6
9
9a
6b
8a. Badulla
8b. Moneragla
9. Western Province
9a. Kalutara
9b. Colombo
9c. Gampaha
8
7a
7
7c
7b
[Branch Network]
188
Zone/Region
Branch
Ampara
Addalachenai
228
Akkaraipattu
063
Ampara
015
Kalmunai
023
Karaitivu
181
Nintavur
296
Branch
Branch
Code
Diyatalawa
151
Girandurukotte
268
Haldummulla
195
Haliela
225
Haputale
216
Kandaketiya
250
Keppetipola
240
Koslanda
260
Lunugala
251
Pothuvil
164
Sainthamaruthu
338
Sammanthurai
064
Mahiyangana
058
224
Passara
116
189
Uvaparanagama
156
Welimada
016
Batticaloa
075
113
Uhana
Anuradhapura
008
A’pura - Nuwarawewa
220
Batticaloa
Eppawala
170
Batticaloa Town
Galenbindunuwewa
177
Chenkalady
227
Galkiriyagama
301
Eravur
123
Galnewa
179
Kaluwanchikudy
190
218
Kattankudy
065
Kahatagasdigiliya
051
Kallar
339
Kebithigollewa
150
Oddamavadi
340
Kekirawa
042
Valachchenai
102
Medawachchiya
096
Meegalewa
246
Anamaduwa
267
Nochchiyagama
171
Chilaw
024
043
Dankotuwa
291
Talawa
315
Kalpitiya
125
Thambuttegama
219
Madampe
215
Mahawewa
303
Marawila
322
Nattandiya
083
Puttalam
009
Wennappuwa
076
Horowpathana
Padaviya
Badulla
Zone/Region
223
Mahaoya
Thirukkovil
Anuradhapura
Branch
Code
Badulla
010
Badulla-Muthiyangana
269
Bandarawela
037
Boralanda
209
Puttalam
[Branch Network]
189
Zone/Region
Branch
Zone/Region
Branch
Western Zone I
Bambalapitiya
310
Western Zone II
Avissawella
029
Borella
Borella Town
078
Battaramulla
208
320
Dehiwala
019
Central Road
298
Dehiwala - Galle Road
337
Dam Street
297
Gangodawila
097
Dematagoda
071
Hanwella
229
Duke Street
001
Homagama
049
First City Branch
046
Kaduwela
196
Grandpass
126
Katubedda
313
Headquarters
204
Kesbewa
327
Hyde Park Corner
025
Kolonnawa
194
Kehelwatta
259
Kotikawatta
098
Kirillapona
319
Kottawa
328
Kollupitiya Co-op. House
210
Maharagama
306
Kotahena
308
Moratumulla
290
Liberty Plaza
309
Moratuwa
091
Lucky Plaza
331
Mount Lavinia
336
Malwatte Road
312
Nugegoda
174
Maradana
236
Nugegoda City
335
Majestic City
200
Piliyandala
103
Mid City
176
Pitakotte
279
Mutwal
214
Ratmalana
080
Narahenpita
119
Olcott Mawatha
275
Ahangama
188
Pettah
139
Ambalangoda
035
Queens Branch
033
Baddegama
087
Sangaraja Mawatha
056
Balapitiya
154
Sea Street
277
Batapola
234
Suduwella
143
Elpitiya
073
Thimbirigasyaya
086
Galle Fort
013
Town Hall
167
Galle Main
169
Union Place
014
Hikkaduwa
136
145
Imaduwa
247
Koggala
329
Thalgaswala
272
Wellawatte
Branch
Code
Galle
Branch
Code
[Branch Network]
190
Zone/Region
Gampaha
Hambantota
Branch
Branch
Code
Zone/Region
Branch
Branch
Code
Udugama
131
Middeniya
265
Uragasmanhandiya
197
Suriyawewa
264
Wanduramba
325
Tangalle
067
Tissamaharama
061
Delgoda
118
Walasmulla
120
Gampaha
026
Ganemulla
332
Atchchuvely
107
Ja-Ela
239
Chankanai
108
Kadawatha
273
Chavakachcheri
110
Kandana
175
Chunnakam
109
Katunayake
276
J/Kannathijdy
284
Kelaniya
055
J/Main Street
104
Kiribathgoda
237
J/Stanley Road
030
Kirindiwela
202
J/University
162
Mahara
217
Kankesanthurai
031
Malwana
191
Kayts
105
Marandagahamula
100
Nelliady
106
Mirigama
198
Point Pedro
285
Minuwangoda
021
Velvettithurai
141
Nittambuwa
278
Pamunugama
318
Aluthgama
084
Pugoda
093
Baduraliya
283
Ragama
316
Bandaragama
121
Seeduwa
324
Beruwala
311
Veyangoda
079
Bulathsinhala
161
Wattala
222
Horana
041
Yakkala
333
Ingiriya
300
Kochchikade
142
Kalutara
039
Negombo
034
Maggona
282
Matugama
070
Jaffna
Kalutara
Ambalantota
072
Neboda
249
Angunakolapelessa
205
Panadura
148
Beliatta
244
Panadura Town
321
Hambantota
007
Pelawatta
261
Kudawella
288
Wadduwa
262
[Branch Network]
191
Zone/Region
Branch
Kandy
Kegalle
Branch
Code
Zone/Region
Branch
Akurana
153
Kurunegala
Alawwa
149
Alawathugoda
294
Bingiriya
172
Ankumbura
183
Galgamuwa
184
Davulagala
206
Giriulla
092
Deltota
257
Hettipola
144
Galagedara
114
Ibbagamuwa
207
Gampola
018
Kobeigane
281
Hasalaka
140
Ku/Ethugalpura
334
Kadugannawa
159
Ku/Maliyadeva
226
Kandy
003
Kuliyapitiya
028
Katugastota
089
Kurunegala
012
Menikhinna
157
Maho
052
Nawalapitiya
053
Makandura
137
Panwila
211
Mawathagama
199
Peradeniya
057
Narammala
082
Pilimatalawa
256
Nikaweratiya
124
Pussellawa
274
Polgahawela
059
Senkadagala
158
Pothuhera
280
Teldeniya
112
Ridigama
193
Wattegama
074
Wariyapola
163
Aranayake
248
Dambulla
138
Bulathkohupitiya
252
Galewela
115
Dehiowita
293
Matale
002
Deraniyagala
180
Naula
146
Galigamuwa
185
Pallepola
241
Gonagaldeniya
238
Rattota
128
Hemmathagama
221
Ukuwela
201
Kegalle Main
027
Wilgamuwa
122
Kegalle Bazaar
299
Mawanella
069
Akuressa
117
Rambukkana
101
Deniyaya
132
Ruwanwella
081
Devinuwara
243
Thulhiriya
270
Dickwella
135
Warakapola
054
Gandara
307
Yatiyantota
047
Hakmana
130
Matale
Matara
Branch
Code
[Branch Network]
192
Zone/Region
Moneragala
Nuwara-Eliya
Ratnapura
Branch
Branch
Code
Kamburupitiya
133
Matara - Dharmapala
Mawatha
152
Matara - Uyanwatta
032
Morawaka
060
Urubokka
271
Walasgala
304
Weligama
077
Bibile
011
Buttala
147
Kataragama
168
Medagama
258
Moneragala
068
Thanamalwila
230
Wellawaya
062
Ginigathhena
302
Hatton
186
Maskeliya
178
Nildandahinna
127
Nuwara-Eliya
134
Pundaluoya
173
Ragala
036
Talawakelle
038
Udapussellawa
292
Hanguranketha
022
Balangoda
017
Eheliyagoda
085
Embilipitiya
045
Godakawela
245
Kahawatta
155
Kalawana
235
Kaltota
289
Zone/Region
Polonnaruwa
Trincomalee
Wanni
Branch
Branch
Code
Kiriella
266
Kuruwita
263
Nivitigala
192
Pelmadulla
160
Rakwana
129
Ratnapura
088
Ratnapura Town
317
Udawalawa
295
Aralaganwila
253
Bakamuna
242
Dehiattakandiya
330
Habarana
203
Hingurakgoda
006
Medirigiriya
231
Polonnaruwa
005
Polonnaruwa Town
232
Welikanda
254
Kantalai
090
Kinniya
094
Muttur
095
Serunuwara
233
Trincomalee
066
Trincomalee Town
255
Kilinochchi
048
Mankulam
165
Mannar
044
Mullaitivu
020
Murunkan
166
Paranthan
111
Vavuniya
040
OCU
[Service Centres]
[Worldwide Partners 198] [Decades at a Glance 200]
193
Zone/Region
Attached
Service Centres
Ampara
Oluvil
863
South-East
University, Oluvil
814
Alayadiwembu
Anuradhapura
Badulla
Service
Centres
Code
Zone/Region
Attached
Service Centres
Service
Centres
Code
Attampitiya
564
Demodara
895
Meegahakivula
872
902
Madolsima
890
Erakkamam
861
Lunuwatte
880
Maruthamunai
425
Welimada Town
875
Padiyathalawa
860
Sammanthurai
862
Iruthayapuram
909
Siththandy
934
Puttur
952
Mandur
874
859
Batticaloa
Vilinaiyady Town,
Sammanthurai
924
Central Camp
870
Gonagolla
916
Ariyampathi
Kokkadicholai
954
Anuradhapura
410
Wakarai
953
Nachchiyaduwa
829
Rambewa
866
Andigama
554
Mihintale
434
Arachchikattuwa
467
Vilachchiya - Pemaduwa
832
Udappuwa
908
Thirappane
912
Fisheries S.C.
589
Bulnewa
931
Norochcholai
500
Gomarankadawala
938
Thoduwawa
460
Pulmuday
948
Kottaramulla
498
Maradankadawala
507
Welipennagahamulla
570
Saliyawewa
508
Narawila
571
Padavi Sri Pura
827
Madurankuliya
546
Rajanganaya
833
Bolawatta
482
Damsopura
950
Lunuwila
483
Ulhitiyawa
828
Rajina Handiya Thambuttegama
912
Mihindu Mawatha
884
Hultsdorf Courts
Premises
808
Dematagoda
514
Colombo Harbour
Premises
822
Puttalam
Western Zone I
Badulla Bazaar
402
Badulla - Welekade
910
Badulla - Pahala Weediya
897
Uva Provincial
Council Premises
824
Grandpass
403
Bandarawela Town
431
St. Joseph’s Street
843
Ballaketuwa
542
Wekanda
515
Slave Island
891
Bandarawela
Commercial Centre
906
Havelock Town
513
Bogahakumbura
548
Jampattah Street
553
Nawa Medagama
928
Bloemendhal
919
[Service Centres]
194
Zone/Region
Attached
Service Centres
Zone/Region
Attached
Service Centres
Service
Centres
Code
Lotteries Board H/O
Premises
Wellampitiya
900
831
Gothatuwa
415
Nagalagam Street
484
Mulleriyawa (Angoda)
838
Mutwella
840
Athurugiriya
416
Mattegoda
531
Pannipitiya
(Moraketiya)
429
Pamunuwa
922
Registrar of Motor
Vehicles Premises Narahenpita
818
Central Bank
Premises
820
Puwakaramba
449
Maligawatta
485
Rawathawatta
448
Suduwella
401
Katukurunda
494
Embuldeniya
412
Colombo University
Premises
586
Colombo Medical
College Premises
Nawala University
Premises
450
803
Chapel Lane
526
Welikada Plaza
821
Kohuwala
464
Boralesgamuwa
422
Treasury Unit Ministry
of Finance
Western Zone II
Service
Centres
Code
826
Kosgama
439
Piliyandala City
839
Thalduwa
460
Ethulkotte
586
Talawathugoda
413
Malabe
896
Sri Ja’pura Thalapathpitiya
932
Hokandara
926
Economic Centre
949
Sri Lanka Foreign
Employment Bureau
Premises
806
Ambalangoda
Main Street
549
Attidiya
457
Watugedera
560
Nedimala
521
Kosgoda
889
Delkanda
407
Meetiyagoda
937
Pitigala
441
Galle
Sri Ja’pura University
Premises
812
Karandeniya
444
Hanwella Town
418
Kahahena
551
Kurundugaha
Hethekma
869
Padukka
419
Gintota
420
Godagama
497
Karapitiya
421
Homagama City
572
Wanchawala
520
Army H.Q.
807
Meegoda
883
Galle Town Service
Centres
815
809
Kaluwella
404
Nawagamuwa
535
Pinnaduwa
587
Soyzapura
428
Ratgama
469
Kahatuduwa
409
Palali Army Camp
[Service Centres]
195
Zone/Region
Gampaha
Hambantota
Attached
Service Centres
Service
Centres
Code
Zone/Region
Attached
Service Centres
Service
Centres
Code
Gonapeenuwala
561
Vitharandeniya
960
Yakkalamulla
424
Nagoda
522
Weerawila
(Pannegamuwa)
565
Neluwa
442
Lunugamwehera
941
Weeraketiya
486
Weliweriya
512
Gampaha - Ja-Ela Road
533
Pandatherippu
957
Udugampola
907
Kopay
966
Welipillewa
575
Inuvil
905
Weligampitiya
528
Urumpirai
865
Dehiyagatha Junction
529
Manipai
837
Ekala
925
Jaffna Navalar Road
956
Kirillawela
446
Thirunelvely
855
Evariwatta
576
Kalviyankadu
964
Sinharamulla
445
Mallakam
899
Peliyagoda
(Pattiyahandiya)
Puloly
963
536
Mawaramandiya
525
Dargatown
451
Urapola
511
Alubomulla
568
Enderamulla
555
Divulapitiya
437
Beruwala Fisheries
Harbour Premises
819
Demanhandiya
530
Moragahahena
567
Kotadeniyawa
830
Millaniya
588
Thihariya
438
Gonapola
871
Pasyala
510
Kalutara Central
Junction
458
Watupitiwala
539
Kalutara North
476
Dompe
538
Mahabage
524
Kalutara Hospital
Junction
929
Batuwatta
917
Agalawatta
447
Raddolugama
834
Panadura Keselwatta
462
Naiwala
556
Modarawila
811
Oliyamulla (Wattala)
557
Moronthuduwa
534
Welisara Economic
Centre
893
Ambathanna
882
Mudungoda
532
Welamboda
894
Katana
465
Galaha
877
Negombo Main Street
523
Hataraliyadda
847
Fishe. Bank - Negombo
590
Gelioya
491
Gampola
492
Jaffna
Kalutara
Kandy
Hungama
961
Kurunduwatta
493
Katuwana
856
Kolongoda
490
Ranna
505
Mahaiyawa
885
Kandy Court Premises
903
[Service Centres]
196
Zone/Region
Kegalle
Kurunegala
Attached
Service Centres
Service
Centres
Code
Zone/Region
Attached
Service Centres
Service
Centres
Code
Kandy City Centre
944
Udubaddawa
868
Kundasale
927
Hedeniya
584
Kurunegala Government
Hospital Premises
816
Poojapitiya
804
Digana
455
Kurunegala Municipal
Council Premises
947
Huluganga
920
Polpitigama
414
Nagollagama
573
Pannala
475
Paragahadeniya
432
Katupotha
405
Nikaweratiya
574
Giriulla
886
Godawela
502
Panagamuwa
543
Dodangaslanda
849
Maspotha
878
Inamaluwa (Sigiriya)
499
Madatugama
852
Dewahuwa
509
Matale-Trinco Street
406
559
Muruthalawa
583
Peradeniya
University SC
801
Pottapitiya
915
Talatuoya
454
Marassana
858
Medamahanuwara
456
Udu Dumbara
854
Madawala Bazaar
898
Talduwa
460
Kotiyakumbura
461
Nelundeniya
873
Amithirigala
943
Morontota
435
Dewalagama
489
Matale Gongawela
Mawanella
436
Aluthnuwara
946
Porcelain Factory
Premises
802
Karawanella
936
Madawala Ulpotha
853
Galapitamada
488
Yatawatta
558
Horagasmankada
518
Kaikawala
887
Algama
935
Warakamura
585
Kitulgala
519
Laggala-Pallegama
466
Boyawalana
851
Telijjawila
463
Weerapokuna
577
Pallegama
918
Ambanpola
433
Kottegoda
487
Damabadeniya
474
Kekanadura
921
Bandarakoswatta
848
Deiyandara
459
Melsiripura
423
Kirinda - Puhulwella
930
Kumbukgete
473
Makandura
440
Boraluwewa
544
Walgama
578
Hiripitiya
850
Kotuwegoda
408
Piduruwella
503
Yatiyana
443
Dummalasooriya
504
Bihalpola
545
Ruhunu University
Unit
825
Kandanegedera
566
Matale
Matara
[Service Centres]
197
Zone/Region
Moneragala
Nuwara-Eliya
Ratnapura
Attached
Service Centres
Service
Centres
Code
Zone/Region
Attached
Service Centres
Polonnaruwa
Service
Centres
Code
Matara Hospital
Premises
945
Diyabeduma
563
Pitabeddara
417
Siripura
965
Opatha
942
Diyasenpura
939
Mawarala
579
Kaduruwela
835
Mirissa
468
Thambala
923
Lankapura
580
Sevanapitiya
933
Mullipothanai
842
Kachchakodithivu
959
Thoppur
958
Palaoothu
841
Uppuveli (Nilaveli)
881
Central Road, SPC
501
Badalkumbura
527
Okkampitiya
857
Moneragala
569
Dambagalla
867
Trincomalee
Watawala
540
Kotagala
427
Dickoya
541
Bogawantalawa
411
Upcott
552
Pesalai
955
Walapane
581
Chettikulam
950
Kandapola
516
Ramanathn - IDP Camp
962
Nanuoya
582
Thawalantenna
876
Hapugastalawa
913
Ragala
495
Bandaranayake Intl’
Airport Pre. (Attached
to Intl. Div.)
805
Agarapatana
496
Talawakelle
517
Padiyapelella
470
Hewaheta
471
Rikillagaskada
472
Weligepola
480
Pambahinna
562
Eheliyagoda
430
Padalangala
453
Kolonna
537
Sevanagala Sugar
Corporation Premises
813
Pallebedda
452
Ayagama
477
Karawita
478
Opanayake
479
Ratnapura New Town
810
Wewelwatta
940
Wanni
[Worldwide Partners]
[Decades at a Glance 200]
[Service Centres 193]
198
1
2
6
4
3
5
5
Europe
ING Belgium SA/NV, Brussels
ABN AMRO Bank NV Amsterdam
Intesa Sanpaolo SpA, Milano
Banca Nazionale del Lavoro SpA, (BNL) Rome
Unicredit Bank Austria AG, Vienna
Bank of Ceylon, London
Bank of Cyprus Public Company Ltd., Nicosia
Barclays Bank PLC, London
BHF Bank Aktiengesellsschaft, Frankfurt am Main
BNP Paribas SA, Paris
Commerzbank AG, Frankfurt am Main
Credit Suisse, Zurich
Danske Bank A/S, Copenhagen
Deutsche Bank AG, Frankfurt am Main
1. Europe
2. North America
3. Africa
4. Asia
5. Oceania
6. Middle East
Dresdner Bank AG Frankfurt am Main
HSBC Bank PLC, London
ING Bank NV, Amsterdam
Lloyds TSB Bank PLC, London
Natixis, Paris
National Westminster Bank PLC, London
Nordea Bank Norge ASA, Oslo
Nordea Bank AB (Publ), Stockholm
Skandinaviska Enskilda Banken AB (Publ),
Stockholm
Sparkasse Kolnbonn, Cologne
Svenska Handelsbanken AB (Publ), Stockholm
UBAE S.P.A, Italy
UBS AG, Zurich
UniCredito Italiano SpA, Milan
WestLB AG, Dusseldorf
[Worldwide Partners]
[Decades at a Glance 200]
[Service Centres 193]
199
North America
MCB Bank Ltd., Karachi
ABN AMRO Bank, New York
Mizuho Corporate Bank Ltd., Tokyo
Bank of Montreal, Montreal
Bank of Nova Scotia, Canada
Canadian Imperial Bank of Commerce, Toronto
Citibank NA, New York
Deutsche Bank Trust Company Americas,
New York
HSBC Bank USA NA, New York
JP Morgan Chase Bank NA, New York
MashreqBank PSC, New York
Standard Chartered Bank, New York
Myanmar Foreign Trade Bank, Yangon
Nepal Bank Ltd., Katmandu
Oversea-Chinese Banking Corp. Ltd., Hong Kong
Oversea-Chinese Banking Corp. Ltd.,
Kuala Lumpur
Oversea-Chinese Banking Corp. Ltd., Singapore
Rupali Bank Ltd., Dhaka
Pubali Bank Ltd., Dhaka
Standard Chartered Bank (Pakistan) Ltd., Karachi
Standard Chartered Bank, Tokyo
Wachovia Bank NA, USA
State Bank of India, Chennai
Africa
UBAF, Singapore
Nedbank Ltd., Johannesburg
ABSA Bank Ltd., Johannesburg
Asia
ABN AMRO Bank NV, Chennai
Axis Bank Ltd., Mumbai
Bank of Ceylon, Chennai
Bank of China, China
Bank of Tokyo Mitsubishi UFJ Ltd., Tokyo
DBS Bank Ltd., Singapore
Habib Bank Ltd., Karachi
HSBC Bank, Hong Kong
ICICI Bank Ltd., Mumbai
MashreqBank PSC, Mumbai
Sumitomo Mitsui Banking Corporation, Tokyo
Oceania
Australia & New Zeland Banking Group Ltd.,
Melbourne
ANZ National Bank Ltd., Wellington
National Australia Bank Ltd., Melbourne
Middle East
BankMuscat SAOG, Ruwi
Commercial Bank of Dubai PSC, Dubai
MashreqBank PSC, Dubai
National Bank of Abu Dhabi, Abu Dhabi
National Bank of Oman SAOG, Muscat
UBAE S.P.A., Dubai
[Decades at a Glance]
[Service Centres 193] [Worldwide Partners 198]
200
1961
1970
People’s Bank was inaugurated on 1st July 1961.
The first branch was opened at Duke Street,
Colombo. During the year, eight more branches
were opened in Polonnaruwa, Hingurakgoda,
Hambantota, Anuradhapura, Puttalam, Matale
and Kandy in addition to the Foreign Branch
in Colombo. The total number of employees
stood at 169.
The ‘Athamaru’ Loan Scheme was introduced
to finance economic activities of the informal
sector. The Investment Savings Scheme, a
Credit Linked Savings Scheme was launched to
attract regular savers.
1962
The Head Office was relocated to Ratnam’s
Building in Union Place, Colombo 2 and 17 more
branches were opened.
1963
The Bank commenced its pawning services.
1964
The Co-operative Rural Banking Scheme was
inaugurated.
1965
Some departments of the Bank were relocated
to the GCSU building in Sir Chittampalam A.
Gardiner Mawatha, Colombo 2. The total number
of branches increased to 48, this included
new branches in Horana, Kekirawa, Padaviya,
Mannar, Embilipitiya, Kahatagasdigiliya, Ragala
and Talawakelle.
1967
The Bank commenced a new Agriculture Credit
Scheme becoming the pioneer lender to the
small farm sector.
1971
The Bank’s hundredth branch was opened at
Marandagahamula.
1973
A Regionalisation Programme commenced
to decentralise the administration and speed
up customer service. A comprehensive Rural
Credit Scheme was launched to provide both
production and consumption credit facilities.
The Bank initiated the ‘ganu-denu’ practice,
identifying itself with the traditions of the
Sinhala and Tamil New Year and encouraging
customers to transact with the Bank at the
auspicious time.
1975
An aggressive branch expansion programme
brought our total branch count to 158.
1977
Our two hundredth branch opened at
Kollupitiya. The Head Office was relocated to a
building in Fort. The total number of employees
reached 5,000. The first Fisheries Bank was
opened at Koralawella.
1981
Our branch network increased to 290 branches.
The Extended Minor Savings Scheme was
launched.
201
1982
1990
The three hundredth branch of the Bank opened
at Ingiriya. The total number of employees
reached 10,000.
An Endowment Savings Deposit Scheme
was introduced. The People’s Visa Card was
introduced in association with Visa International
and 24 branches were fully computerised.
1984
The People’s Merchant Bank, a subsidiary
of the Bank, was established. Our branch at
Slave Island was merged with the International
Division and the Fort Foreign Branch.
1991
The first ATM was installed at our Headquarters
Branch. The Bank was a co-sponsor of the first
Unit Trust established in the country viz. ‘NAMAL’.
1986
1992
The process of computerisation began at our
Central Head Office and selected City branches
and a Black Light System was introduced.
Customer turn-around time was thereby
significantly reduced.
People’s Venture Investment Co. (Pvt) Ltd., a
subsidiary of the Bank was formed. The Bank
supported the Government’s 200 Garment
Factory Programme. ‘People’s Automated
Banking System’ (PABS) a banking application
developed in-house, commenced live operations.
1987
Our Headquarters Branch became the
Bank’s first fully automated branch. A Special
Loan Scheme for rural electrification was
implemented in collaboration with the CEB.
1989
The Bank introduced a new Inland Bill Scheme
for lending to the rural sector and for financing
agricultural activities. The Bank participated in a
loan scheme sponsored by the Ministry of Labour
to provide for housing against assignment of EPF
balances. A scheme was launched in association
with the Sri Lanka Foreign Employment Bureau
to provide loans for job seekers abroad. The
Bank participated in a loan scheme launched by
REPIA to provide credit to those affected by civil
unrest in 1983. A Janasaviya Associated Loan
Scheme was introduced during the year. The
Bank also commenced the issue of Negotiable
Savings Certificates during the year.
1993
The 330 Bank branches were operating
throughout the country and 35 main branches
were fully automated. ‘Vanitha Vasana’, a
savings scheme for women was introduced.
1994
Eight new ATMs were installed and 160 branches
were computerised under the automation
programme.
1995
‘Gurusetha’, a new deposit mobilisation and
loan scheme catering to Government teachers
was launched with the co-operation of the
Ministry of Education.
202
1996
1999
‘Suwa Sevana’, a credit package for Government
sector health personnel was launched. ‘Sisu
Udana’, a new deposit scheme for school
children was introduced. The Bank participated
in two ADB funded credit schemes - the Tea
Small Holdings Development Project and
the Perennial Crops Development Project.
A Rural Banking Innovation Project was initiated
with the collaboration of German Technical
Co-operation to provide technical, financial and
training assistance for branch operations and to
introduce innovative products. The Bank’s fully
owned subsidiaries, People’s Leasing Co. (PA) Ltd.
and People’s Travels (Pvt) Ltd. commenced
operations. Zonal offices were opened to
strengthen decentralised administration and
to facilitate better customer service.
The Bank launched ‘Isuru Udana’, a deposit
scheme that encourages parents and guardians
to save for the benefit of their young charges.
1997
The ‘Surathura’ Loan Scheme was launched
to assist self-employment projects. The Bank
extended its credit facilities to small and
medium scale enterprises and industries under
the NDB funded Small and Medium Enterprises
Assistance Project (SMEAP).
1998
The total number of ATMs increased to 36 serving
over 125,000 PET cardholders. 175 branches
were fully automated and the number of pawning
centres increased to 188. A special credit cum
deposit scheme known as ‘Videshika’ was
introduced in collaboration with the Sri Lanka
Foreign Employment Bureau to assist migrant
workers. A Business Process Re-Engineering
Programme was launched internally, with a view
to redesigning main branches and to promote the
activities of customer service teams.
2000
The ‘Jana Jaya’, savings cum loan scheme was
launched. The newly introduced ‘Jaya Sri’ draw
offered attractive prizes for depositors. The ATM
network expanded to 74 machines throughout the
country. The Central ATM Switch was introduced
to connect the PABS branches and the ATM.
2001
The Bank’s Corporate Management Team was
strengthened by the recruitment of certain
Heads of Division from the private banking
sector. Restructuring of the Bank was initiated
through the launch of a Strategic Plan. A
New Annual Business Planning Process was
implemented, to link with the Bank’s Strategic
Plan. The total number of ATM machines grew
to 90. The Bank launched a staff Performance
Incentive Scheme for Teams.
2002
The number of PABS automated branches
increased to 218 and 119 branches were
connected to the Central ATM Switch. A
treasury automation package was implemented.
New funds transfer pricing and new business
segment profit measurement systems were
introduced. Significant upgrading made to the
quality of Management Information Reporting.
203
2003
The Young Executive Saver’s (YES) Account
was launched. ‘Deepavali’ celebrations were
held at all branches to identify with traditional
customs of our large Hindu customer base. The
Bank signed up with Silver Lake System SDV
BUD Malaysia to install a state-of-the-art core
banking package and Trade Services Solutions
which will initially be operational in 60 selected
branches including Head Office. The Housing
Loan product was repackaged and re-launched
under the ‘Jaya Nivasa’ name. The new Savings
Scheme titled ‘Visrama Suvaya’ was launched
for the pensioners.
2004
The second phase of the restructuring plan
for 2004-2008 launched and approved by
the Government of Sri Lanka was based on
the recapitalisation support of ADB. The
Bank obtained the first ever public rating of
BBB+from Fitch Ratings Lanka and recorded
a positive capital value for the first time since
1998 amplifying the turn around of the Bank.
The Core Banking project was implemented
successfully. Innovative Ratasalli Prize Scheme
launched to attract inward remittances of
foreign currency into Sri Lanka.
2005
The 15th Chairman of the Bank Dr. P.A.
Kiriwandeniya assumed duties at the beginning
of December 2005. This was followed
immediately thereafter with a receipt of Rs. 2 Bn
as the first tranche of Equity Capital Investment
in the Bank by the Government of Sri Lanka in
keeping with the agreement signed between
the Government, ADB and People’s Bank. The
Max Super Deposit Scheme was launched and
the Core Banking project was further extended
across the branch network. The Bank also was
the major intermediary in bringing Government
granted financial assistance for the rebuilding
of lives, homes and businesses affected by the
Tsunami of December 2004.
2006
The Bank obtained an A-rating from Fitch
Ratings Lanka Ltd. indicating progress from
its earlier Rating level. The on-line access to
AMEX account was facilitated enabling efficient
customer service by granting immediate credit
on account of incoming remittances.
People’s Bank was awarded the POP Award
for 2006 in the Banking and Financial Services
Sector by the Sri Lanka Institute of Marketing.
‘The first lesson in school’ was launched to
inculcate savings habit among new students
entering year 1 classes where the initial deposit
was matched one-to-one up to a maximum of
Rs. 500/-. ‘Nidahase Upatha‘ rewarded new life
by giving Rs. 500/- to all babies born in the first
week of February. The second tranche of capital
of Rs. 1 Bn was received from the Government
of Sri Lanka.
2007
The 16th Chairman of the Bank Mr. W.
Karunajeewa assumed duties in May 2007.
The rating level of A - from Fitch Ratings was
maintained during the year. The Government
of Sri Lanka injected the third capital tranche
of Rs. 1.5 Bn into People’s Bank. People’s
Bank won the People’s Award for the Banking
& Financial Services Brand of the Year for the
second consecutive year. The Bank surpassed
the Rs. 300 Bn mark in total deposits during the
year 2007.
204
2008
2009
Mr. M. Wickremasinghe assumed office as the
12th CEO/General Manager of the Bank. People’s
Bank won the People’s Award for the third
consecutive year in the Banking and Financial
sector and the coveted ‘Service Brand of the
Year’ award for the first time by the Sri Lanka
Institute of Marketing. Bringing the anywhere
anytime banking to its customers, the Bank
launched its latest service offer of Palm Top
Banking to its customers.
The 13th CEO/General Manager of the Bank
Mr. P.V. Pathirana assumed duties in January, 2009.
The Bank issued its second Debenture issue for
Rs. 2.5 Bn during the year.
214 branches and 236 service centres are now
connected online. The Bank has strategically
placed over 300 ATM’s islandwide.
Total deposits reached Rs. 400 Bn.
The Government of Sri Lanka released the forth
capital tranche of Rs. 1.5 Bn. The Bank reached
the Capital Adequacy Level of 10.5% by the end
of the year. Further, the Bank’s first Debenture
issue of Rs. 2.5 Bn was made in the year.
A notable advancement in the Bank’s remittance
service with the introduction of ‘People’s
e-Remittance’, a web-based remittance product
supported by latest technology to remit money
from overseas within minutes. Two new foreign
currency deposit products were launched, viz.,
‘Doo Daru Ethera Isura’ a foreign currency
deposit product for children and ‘Special Foreign
Investment Deposit Account’ [SFIDA].
The highest recorded profit before tax of Rs. 6.1 Bn
was achieved.
Received a SAFA (South Asian Federation of
Accountants) award for the 2008 Annual Report for
the first time in the Bank’s history.
[Performance Review 1999-2009]
[Glossary of Financial/Banking Terms 206]
205
(Sri Lanka Rs. Mn)
Capital & Reserves
Issued Share Capital
Capital Pending Allotment & Reserves
Total
Current Liabilities
Customer Deposits
Borrowing from Banks and Others
Other Liabilities
Debentures
Total Liabilities
Non-Current Assets
Property, Plant & Equipment, etc.
Investments
Current Assets
Loans and Advances (Net)
Other Assets
Total Assets
Commitments & Contingencies
1999
2000
2001
2002
2003
50
(4,685)
(4,635)
50
(6,524)
(6,474)
50
(6,216)
(6,166)
50
(3,351)
(3,301)
50
(1,460)
(1,410)
104,688
12,405
14,458
–
131,551
126,916
115,007
39,744
18,677
–
173,428
166,954
127,543
28,369
17,851
–
173,763
167,597
141,835
24,003
19,391
–
185,229
181,927
2,945
23,066
2,930
32,079
2,834
25,636
25,260
66,944
8,701
100,905
126,916
19,051
35,147
87,087
9,711
131,945
166,954
26,365
24,818
106,142
8,167
139,127
167,597
26,726
2004
2005
2006
2007
2008
2009
50
(84)
(34)
50
3,967
4,017
50
10,221
10,271
50
12,845
12,895
50
15,830
15,880
50
17,730
17,780
157,310
29,027
15,797
–
202,134
200,724
185,643
24,925
13,514
–
224,082
224,048
225,600
29,134
16,512
–
271,246
275,262
269,947
35,840
22,496
–
328,283
338,555
300,956
49,063
17,670
–
367,689
380,584
324,489
33,714
20,965
2,500
381,668
397,548
396,158
36,884
20,404
5,000
458,445
476,226
4,488
33,773
4,530
43,792
4,756
31,978
4,862
50,583
8,936
62,682
8,414
61,095
8,362
80,109
7,919
84,807
36,259
101,131
6,277
143,667
181,927
23,350
40,290
101,072
11,040
152,402
200,724
32,072
55,386
122,477
9,451
187,314
224,048
30,060
65,592
142,497
11,727
219,816
275,262
45,177
47,191
207,138
12,608
266,937
338,555
39,450
57,090
238,293
15,691
311,075
380,584
74,222
39,663
248,626
20,787
309,076
397,547
138,989
83,973
283,760
15,766
383,500
476,226
100,867
Operations
Gross Earnings
Net Income
Total Overheads
Profit after Taxation
14,262
5,705
5,459
(6,671)
98
(6,573)
18,450
8,512
8,160
(1,268)
–
(1,268)
25,198
10,513
8,867
880
–
880
23,976
10,903
8,235
1,360
(218)
1,578
23,105
13,575
9,123
2,127
–
2,127
22,601
13,705
10,362
2,463
377
2,086
27,202
14,784
11,070
4,035
1,263
2,772
35,131
19,509
15,038
4,079
922
3,157
47,984
21,442
15,736
5,002
2,628
2,374
58,948
24,456
17,159
5,664
2,959
2,705
69,050
30,635
19,719
6,076
2,755
3,320
Performance Indicators
No. of Employees
11,623
11,577
11,401
10,834
10,145
9,592
9,531
9,645
8,416
8,587
8,863
11,187
9,310
2,210
77
13,092
9,335
2,213
146
15,506
9,963
2,277
210
19,354
12,769
2,356
217
23,670
14,951
2,854
291
27,988
21,476
3,642
327
35,760
28,314
5,702
282
37,788
28,954
6,865
315
44,698
32,016
7,791
375
Per Employee
(Sri Lanka Rs. ‘000)
Deposits
Advances
Gross Earnings
Profit after Tax
Per Share
(Sri Lanka Rs.)
Profit after Taxation
Total Assets
Net Worth
Return on Assets (%) (Before Tax)
Return on Equity (%)
Cost/Income Ratio (%)
Non-Performing Loan (NPL)
Ratio (Gross) (%)
Ratio (Net) (%)
Coverage Ratio (%)
Capital Adequacy Ratio (CAR) (%)
9,007
5,760
1,227
(566)
9,934
7,522
1,594
(110)
(6,573)
126,916
(4,635)
(1,268)
166,954
(6,474)
880
167,597
(6,166)
1,578
181,927
(3,301)
2,127
200,724
(1,410)
2,086
224,048
(34)
2,772
275,262
4,017
3,157
338,555
10,271
2,374
380,584
12,895
2,705
397,547
15,880
3,320
476,226
17,780
(5.4)
2,319.1
146.0
(0.9)
22.8
102.8
0.5
(13.9)
89.2
0.8
(33.3)
79.7
1.1
(90.3)
70.2
1.2
(289.0)
73.1
1.6
139.2
72.7
1.3
44.2
73.8
1.4
20.5
68.7
1.5
18.8
65.4
1.4
19.7
60.6
22.2
18.9
20.9
19.6
18.2
14.1
11.0
7.1
5.9
6.8
6.7
6.2
4.4
8.2
6.7
4.0
2.4
1.8
0.9
0.7
1.6
2.0
72.3
–
76.9
(11.3)
61.0
(10.5)
65.8
(9.2)
78.1
(4.5)
83.0
(2.3)
83.9
1.9
87.1
5.6
88.0
6.9
75.7
10.5
70.6
13.4
[Glossary of Financial/Banking Terms]
206
Accounting Policies
Capital Adequacy
Principles, rules and procedures selected and
consistently followed by the management of an
entity in preparing and reporting the Financial
Statements.
The ability of a bank to meet the needs of their
depositors and other creditors in terms of
available funds. As per requirement of Bank for
International Settlements (SIBS) and Central
Bank of Sri Lanka, Local Banks should maintain
a stipulated minimum capital.
Accrual Basis
Recognition of the effects of transactions and
other events when they occur without waiting for
receipt or payment of cash or its equivalents.
Amortisation
Systematic allocation of the depreciable amount
of an intangible asset over its useful life.
Depreciation and Amortisation both have the
same meaning.
Associate Company
A company other than a subsidiary in which a
holding company has a participating interest
and exercise a significant influence over its
operating and financial policies.
Bill Discounted
A promissory note or bill of exchange that has
been purchased for less than face value, the
difference representing interest on the unexpired
term of the bill. At maturity the holder collects
the face value of the bill for its own account.
Bill of Exchange
*Tier I Capital (Core Capital)
Core Capital includes selected items of capital
funds. Major core capital items are share
capital, share premium, statutory reserve
funds, retained profits, general reserves,
surpluses/losses after tax arising from the sale
of fixed and long-term investments.
*Tier II Capital (Supplementary Capital)
Supplementary Capital includes, approved
revaluation reserves, general provisions,
hybrid (debt/equity) capital items and approved
subordinated term debts.
Cash Equivalents
Short-term highly liquid investments that are
readily convertible to known amounts of cash
and which subject to an insignificant risk of
changes in value.
Certificate of Deposit (CD)
A certificate issued by a bank against funds
deposited with it that specifies the rate of interest
payable and the date when the deposit will be
repaid to the bearer. CDs are often negotiable.
A signed, written, unconditional order addressed
by one person (the drawer) directing another
person (the drawee) to pay a specified sum of
money to the order of a third person (the payee).
The terms bill of exchange and draft are often
used interchangeably.
Commercial Paper
Call Deposits or Call Money
Commitments
Deposits or funds lent out which are repayable
on demand.
the clients as at the Balance Sheet date.
Unsecured short-term promissory notes issued
by banks and credit worthy corporate borrowers.
Credit facilities approved but not yet utilised by
207
Contingencies
Deferred Tax
A condition or situation, the ultimate outcome
of which, gain or loss, will be confirmed only
on the occurrence or non-occurrence of one or
more uncertain future events.
Sum set aside in the Financial Statements for
taxation that may become payable in a financial
year other than the current financial year.
The process by which corporate entities are
governed. It is concerned with the way in which
power is exercised over the management and
direction of entity, the supervision of executive
actions and accountability to owners and others.
Correspondent Bank
A bank that acts as an agent for another bank.
The correspondent bank will generally provide
a wide variety of banking services on behalf
of the other bank in the region in which the
correspondent bank is located.
Cost Income Ratio
Derivatives
A financial instrument whose price has a strong
relationship with an underlying commodity,
bond, equity or currency.
Disintermediation
The term often used to describe borrowers
raising funds directly from the capital markets
rather than from the banking sector. This is
usually only undertaken by borrowers with the
strongest credit ratings.
Documentary Bill
A bill of exchange that is accompanied by
various documents, such as a bill of lading, an
invoice and an insurance policy.
Operating expenses as a percentage of net income.
Counterparty
The other party (including a bank) with whom a
Documentary Credit
A letter of credit that stipulates the documents that
must be produced in order for payment to be made.
deal is made or closed.
Country Risk
The credit risk associated with lending
to borrowers within a particular country,
sometimes taken to include sovereign risk.
Cross Rate
The calculated foreign exchange rate from two
separate quotations involving the same currency.
Currency Swap
A current exchange of principle amounts in two
currencies combined with an agreement to reexchange the currencies at a later date and to
make interest payments, until the re-exchange,
on the currency received.
Draft
A term generally synonymous with bill of
exchange but sometimes used specifically in
the context of inter-bank bills. A banker’s draft
is a draft, payable on demand, drawn by or on
behalf of a bank.
Fixed Charge
A charge on specific property, usually freehold
or leasehold property, or plant and machinery,
given under a legal mortgage.
Floating Charge
A charge, taken by a lender to secure an advance
upon property, such as stock, debtors, or cash,
208
that permits the company to continue using and
disposing of those assets in connection with its
ordinary business. Such a charge becomes fixed
in the event of the company’s default.
Hedging
Foreign Exchange Income
Impairment
The realised gain recorded when assets or
liabilities denominated in foreign currencies
are translated into Sri Lankan Rupees on the
Balance Sheet date at prevailing rates which
differ from those rates in force at inception or
on the previous Balance Sheet date. Foreign
exchange income also arises from trading in
foreign currencies.
Forward Contract
A contract that commits two parties to an
exchange at a specific future date under terms
set out at the contract date.
Forward Rate
The price of currency with a maturity beyond
the spot date. Forward rates may be either the
same in price as spot rates or different. In the
first case, the forward is flat. In the second
case, the price is either higher, at a premium, or
lower, at a discount.
Forward Rate Agreement (FRA)
An agreement to exchange payments at a
specified future date based on the difference
between a particular interest rate index (e.g.
LIBOR) and an agreed fixed rate.
General Provision
A Balance Sheet item representing funds set
aside by the Bank to pay for losses that are
anticipated to occur in the future. This is 1% of
total performing advances.
Group
A group is a parent and all its subsidiaries.
A methodology used to cover against risk of
unfavourable price movements (interest rates,
prices, commodities, etc.)
This arises due to decline in recoverable amount
below carrying amount.
Indemnity
An agreement whereby a person agrees to bear
any loss that is suffered by a party to a contract to
which he himself is not a party. The person giving
the indemnity assumes primary liability, unlike a
guarantor who assumes secondary liability.
Interest Margin
Net interest income expressed as a percentage
of interest earning assets.
Key Management Personnel
Those persons who have the authority and
responsibility for planning, directing and
controlling the activities of the entity.
Letter of Credit (LC)
A document issued by a bank, requesting
another bank or banks to advance money
to a third person, up to a certain amount, in
accordance with the terms and conditions set
out in the document.
Mark to Market
The policy to periodically revaluing positions up
or down to their current market or fair value.
Minority Interest
The proportion of the profit or loss and net
assets of a subsidiary attributable to equity
interest that are not owned, directly or indirectly
through subsidiaries, by the Parent.
209
Mortgage
Promissory Note
A lien on real property used to secure a borrowing.
An unconditional promise in writing made by
one person to another, signed by the promisor,
engaging to pay on demand or at fixed or
determinable future time a fixed sum to, or to
the order of, a specified person, or to bearer.
Negotiable Instrument
A security or other financial instrument which can
be freely sold to a third party (i.e. ‘negotiated’).
Bank notes, bearer bonds, bills of exchange and
cheques are normally negotiable instruments.
Related Parties
Interest income as a percentage of Average
Interest Earning Assets.
Parties where one party has the ability to control
the other party or exercise significant influence
over the other party in making financial and
operating decisions.
Non-Performing Loan
Repo
A loan where principal or interest payments are
not being made on the due dates, or where the
borrower is failing to meet some other term or
condition of the loan. Non-performing loans are
frequently allocated non-accrual status.
Jargon for sale and repurchase agreement.
Reserve Assets
Nostro Account
Reverse Repo
A foreign currency current account maintained
with another bank, usually but not necessarily a
foreign correspondent bank. At the other bank,
the deposit is called a nostro account.
The opposite of a repo, i.e. a purchase and
resale agreement.
Net Interest Margin
Assets of a financial institution which form part of
its reserve requirements with the Central Bank.
Revolving Credit
Transactions not recognised as assets or
liabilities in the Balance Sheet but which give
rise to contingencies and commitments.
A line of credit that has terms permitting
successive drawings and payments at the
borrower’s discretion. The funds available to the
borrower are replenished by any repayments
of principal.
Position
Securitisation
The netted total commitments in a given
currency or interest rate. A position can be
either flat or square (no exposure), long (more
currency bought than sold overbought) or shot
(more currency sold than bought oversold).
This involves the transfer of a block of income
producing assets to a vehicle company that
finances the purchase through the issue of debt
(usually notes or commercial paper).
Off-Balance Sheet Transactions
Prime Rate
The interest rate which a bank charges its most
credit worthy corporate customers.
Segmental Analysis
Analysis of financial information by segments
of an enterprise specifically, the different
geographical areas in which it operates.
210
Segment Reporting
Total Capital
Segment reporting indicates the contribution to
the revenue derived from business segments
such as banking operations, leasing operations,
stock broking and securities dealings, property
and insurance.
Is the sum of Tier I capital (core capital) and
Tier II capital (supplementary capital).
Settlement Date
The date on which a securities transaction is
completed by actual exchange of securities
for cash.
Short Position
An excess of liabilities (and/or forward sale
contracts) over assets (and/or forward purchase
contracts). A dealer’s position when the net
of purchases and sales leaves a net sold or
oversold position.
Subsidiary Company
A subsidiary is an enterprise that is controlled
by another enterprise (known as the parent).
Suspense Account
An account used to record items temporarily
which are held subject to clarification and
transfer to the appropriate account.
Syndicated Loan
A loan arrangement in which a number of
banks, in a form of joint venture, provide funds
which they would individually be unwilling or
unable to provide. Syndications are used for
customers whose scale of financing is too great
for any single bank to accommodate without
distorting its loan portfolio.
Time Deposit
An interest bearing deposit account which is
subject to withdrawal only after a fixed term.
Treasury Bond (T-Bond)
A long-dated security issued by the Central
Bank of Sri Lanka. T-Bonds carry a coupon rate
of interest.
Value Added
Value added is the wealth created by providing
banking services less the cost of providing
such services. The value added is allocated
among the employees, the providers of capital
to Government by way of taxes and retained for
expansion and growth. Value at Risk (VAR).
A risk management methodology that estimates
the potential loss arising from adverse movement
in market interest or exchange rates over a
defined holding period.
Vostro Account
A local currency current account maintained
with a bank by another bank (compare with
nostro account).
Yield Curve
A graph showing market interest rates as a
function of maturity. Normally, the yield curve is
upward sloping: interest rates increase with the
term of the instrument.
[Corporate Information]
211
Name of the Bank
Corporate Banking Division
People’s Bank
P.O. Box 437
ANCL (Lake House Building)
35, D.R. Wijewardena Mawatha,
Colombo 10, Sri Lanka.
Cable VIDESA BANK
Tel 2320651-6, 2437239-41
Telex 21500-PB SWTCE, (21364), (21637)
e-mail [email protected]
SWIFT PSBKLKLXA 022
Legal Status
A Licensed Commercial Bank under the
Banking Act No. 30 of 1988 incorporated
as a Commercial Bank by People’s Bank
Act No. 29 of 1961.
Head Office (Registered Office)
No. 75, Sir Chittampalam A. Gardiner Mawatha,
Cable JANABANK
Tel 2327841 (6 Lines),
2446316 (15 Lines), 2481481
web www.peoplesbank.lk
VAT Registration No. 409000037-7000
Auditors
Auditor General
Auditor General’s Department
Independence Square, Colombo 7, Sri Lanka.
Ernst & Young
Chartered Accountants
201, De Saram Place, Colombo 10, Sri Lanka.
Secretary
Mrs. P.W.K. Atukorale
LLB, Attorney-at-Law
People’s Bank, Head Office
75, Sir Chittampalam A. Gardiner Mawatha,
Tel 2206703, 2458821
Fax 2458752
Telex 21500 (PBSWTCE)
SWIFT PSBKLKLX
Overseas Customer Services
Tel 2332746, 2334278, 2446409
Telex 21486 PBKFMS CE
[email protected], [email protected]
SWIFT PSBKLKLX
[Corporate Information]
212
(Subsidiary Company of People’s Bank)
(Subsidiary Company of People’s Bank)
Tel 2332747, 2478385, 5662935, 5664172,
2470190
Tel/Fax 2434530
P.O. Box 1346,
Colombo 2.
Tel 2481000, 2490000
Fax 2389999
Kandy Travel Desk
Subsidiaries of People’s Leasing Co. Ltd.
17, Dalada Veediya, Kandy
Tel 081-2234224 Ex. 215
Fax 081-2234681
People’s Insurance Ltd.
(Associate Company of People’s Bank)
21, Nawam Mawatha,
Colombo 2.
Te 2300191-4
Fax 2300190
53, Dharmapala Mawatha, Colombo 3.
Tel 2206406
Fax 2206399
People’s Leasing Property
Development Ltd.
Colombo 2.
Tel 2481000, 2424367
Fax 2389839
People’s Leasing Fleet
Management Ltd.
Colombo 2.
Tel 2481000
Fax 2490160
People’s Leasing Finance PLC
385, The Land Mark, Galle Road, Colombo 3.
Tel 2376476
Fax 2376477
How We Evolved our Numeric Theme…
The process began with a hand drawn sketch. This was then scanned and
transferred to Adobe Illustrator. We then arranged numerals from 0 to 9 in a
spiral format to allow for diminishing size and varied angles as the numerals
followed the curves of the spiral. Next, numerals were placed within the
outlined sketch in a ‘drag and drop’ operation where the natural contours of
the main sketch were filled in with numerals painstakingly aligned for size
and angle.
The whole process, though accomplished on computer, required hours of
precision work requiring great skill and hand eye co-ordination and was not
the product of a pre-written programme.

Untitled - Peoples Bank

Transcription

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