People's Bank Annual Report 2020
People's Bank Annual Report 2020
People's Bank Annual Report 2020
BOOK 1 BOOK 2
The Report begins with an overview about the Bank followed by The financial reports and supplementary reports sections include
the Letter from the Chairman and the Chief Executive Officer/ the Audited Financial Statements with notes showcasing the
General Manager's Review. The section “Positioned for value financial performance of the Bank and the Group for the financial
creation” sets out how we have engaged stakeholders to identify, year ended 2020 and the financial position as at 31 December
prioritise and manage environmental, social and governance 2020 along with supplementary information.
themes, our impacts and our value creation and how our
strategy facilitates value creation for our stakeholders in the GRI 102-51
short, medium and, long term. It also provides an update on the Our most recent integrated report for the year ended
execution of our strategy and insights into the results. The section 31 December 2019, as well as the reports for the past five years
“Operational review” details the contribution of the business are available on our website: https://www.peoplesbank.lk
units to the strategic direction of the Bank. This is followed by an
overview of our governance structure, how we embed our policies
on ethics and integrity, and the manner in which we manage risks.
The six capitals as defined by the International <IR> Framework. SCOPE AND BOUNDARY
The Report covers the operations of People’s Bank (“Bank”) and its
subsidiaries People’s Leasing & Finance PLC and People’s Travels (Pvt)
01. Financial capital
Ltd., (collectively referred to as the “Group”).
The key financial aspects are discussed in the context of the Bank as
02. Manufactured capital well as the Group whilst non-financial aspects are discussed in the
context of the Bank unless stated otherwise.
The scope of the People’s Bank Annual Report 2020 covers the
03. Intellectual capital
12-month period from 1 January 2020 to 31 December 2020
and is consistent with the annual reporting cycle for financial and
sustainability reporting.
04. Human capital
During the year under review, there were no significant changes
from previous reporting periods in the scope and aspect boundaries,
neither were there any restatements as compared to the Annual
05. Social and relationship capital
Report issued in the previous reporting year.
GRI 102-11
PRECAUTIONARY PRINCIPLE
We apply the precautionary principle with regard to our social and environmental sustainability. We understand that our operations cause
reciprocal impacts on society and the environment. As a bank, even though our operations do not directly create a negative impact on the society
and the environment, we have taken necessary measures to alleviate such risks. These are detailed under Community Capital and Natural Capital
on pages 114 to 125.
GRI 102-56
ASSURANCE
We value the accuracy and reliability of all information and data contained in this Report, both financial and non-financial. By adopting a
combined assurance model, we have assessed and assured various aspects of our business operations.
FORWARD-LOOKING STATEMENTS +94 11 232 7841, +94 11 244 6315, +94 11 248 1481
There are certain statements in this report which may constitute info@peoplesbank.lk
forward-looking statements that are based on assumptions made by www.peoplesbank.lk
and information currently available. These forward-looking statements
are, by their nature, subject to significant risks and uncertainties. These
forward-looking statements include, without limitation, statements
relating to the Bank’s business prospects, future developments, trends
and conditions in the industry and geographical markets in which the
Bank operates, its strategies, plans, objectives and goals, its ability
to control costs, statements relating to prices, volumes, operations,
margins, overall market trends, risk management and exchange rates.
People’s Bank does not give any assurance on the probabilities of
achieving these future events due to the risk and uncertainty related
to the circumstances on which these events depend on, especially the
macroeconomic conditions.
CONTENT
FINANCIAL REPORTS
202 Directors’ Responsibilities for Financial Reporting 208 Statement of Changes in Equity – Bank
203 Auditor General’s Report on Financial Statements 210 Statement of Changes in Equity – Group
205 Income Statement 212 Statement of Cash Flows
206 Statement of Comprehensive Income 213 Notes to the Financial Statements
207 Statement of Financial Position
Content
OPERATIONAL REVIEW
127 Retail Banking
131 Enterprise Banking
133 Corporate Banking
135 Treasury
137 Overseas Customer Services and
International Banking
SUPPLEMENTARY REPORTS
330 Income Statement USD 349 External Assurance on Sustainability Report
331 Statement of Financial Position USD 351 GRI Content Index “in Accordance with Core” Criteria
332 Ten Year Summary – Bank 355 Glossary of Financial/Banking Terms
333 Ten Year Summary – Group 358 Corporate Information
334 Basel III – Market Discipline Disclosure
Requirement Under Pillar III
People’s Bank – The pride of the Nation Our commitment to social responsibility and
Our Bank through the country’s largest network of branches, we serve sustainability
more than 14 million customers, which is the largest customer base in Recognising our efforts for taking responsibility for our operations
the Sri Lankan banking industry offering a wide spectrum of financial and setting an example of good practices in the financial services
services. People’s Bank is Sri Lanka’s second largest commercial industry, we were awarded with CarbonConscious® certification by
Bank in terms of asset volume with an asset base exceeding SFG, thereby making us, Asia’s First State-owned Bank to achieve this
LKR 2.2 Tn. we enjoy an unparalleled position of stability and security, distinction. The ‘People’s Green Pulse’ showcases our commitment
maintaining the highest level of professionalism and ethics in all our towards environmental sustainability and our pledge towards a
activities. On a standalone basis, we are Sri Lanka’s largest foreign green future.
currency borrower amongst Licensed Commercial Banks; which is self
attesting to our reputation and strength of relationships. Established Read more on pages 121 and 125.
as a licensed commercial Bank under the People’s Bank Act No. 29
of 1961, we are a systematically important bank in Sri Lanka. In an
unprecedented year, following the COVID-19 pandemic, we supported
Credit rating
our people and our Nation extending financial support in a manner Fitch Ratings Lanka Ltd. has given a National Long-Term Rating at
previously unseen in our own history. AA-(lka) with a stable outlook. This takes into account our high
systemic importance as the second-largest bank in the country,
accounting for nearly 16% of domestic banking system assets at
Our digitalisation drive end-December 2020, our quasi-sovereign status, our role as a key
Today, we lead the digital revolution in Sri Lanka’s Banking fraternity. lender to the government and full government ownership.
Our successes in this sphere has enabled the masses of our island
to benefit from technology that is in par with the world’s best. Our
digitalisation drive has witnessed a number of ground-breaking
Capitalisation
digital initiatives being launched in the local market to deliver ease, Capital adequacy measures the Bank's ability to withstand in an
speed, efficiency and convenience to customers at every point in their unexpected loss scenario due to various activities carried out by the
interaction. We are the first and only bank in Sri Lanka to be accredited Bank. This is a key financial indicators which illustrate the soundness
the ISO/IEC 27001:2013 certification; the highest international and the stability of the Bank.
accreditation for information protection and security.
>400,000 >70%
Individual customers
of all branches/service
centres functioning
>21,000
Businesses All 244 SBUs
functioning on a 24/7 basis
>5,000 with over 99.0% uptime
Bank pensioners Value of transactions
processed by People’s Bank
ATM and CDMs exceeded
>5,000 LKR 1 Tn.
Bank employees
Approximately 5,000 digital
transactions processed daily
Key differentiators
741 branches
“The “The
244 Self Banking Units country’s 1 Mn. country’s most
largest + mobile app downloaded
4,000 network” downloads Banking app”
+ supplementary
ATM network
EMPLOYEE BRAND
BASE VALUE
“The
63.9% industry’s top two LKR 44.75 Bn. “One of country’s
+ work force with over largest employers.
10 years service and Highest female Rating: AAA- top 3 highest
valued brands”
61.3% Female representation” (Source: Brand Finance)
OUR GROUP
Ownership 75%
Year of 1995
incorporation
Customer Individuals
segments
Micro Enterprises
Small and Medium-sized Businesses
PEOPLE’S BANK
Main products Leasing and hire purchases
and services
Microfinance
Year of 1961 Deposits
incorporation
Loans
Customer Individuals Performance Assets: LKR 182 Bn.
segments highlights
Micro Enterprises Profit before tax: LKR 4.1 Bn.
Small and Medium-sized Businesses
Number of 104
Corporate, Government, and branches
State-owned Enterprises
Staff strength 3,332
Main products Retail banking
and services
Enterprise banking
Corporate banking
International banking
Staff strength 22
Continuous learning
culture and team Integrity and
spirit accountability
OUR JOURNEY
1987 1989
Our Headquarters Branch became the Bank’s The Bank participated in a loan scheme sponsored by the Ministry of Labour to provide
first fully-automated branch. A special for housing against EPF balances. A scheme was launched in association with the
loan scheme for rural electrification was Sri Lanka Foreign Employment Bureau to provide loans for job seekers abroad. The Bank
implemented in collaboration with the CEB. 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 issuing Negotiable Savings Certificates during the year.
The process of computerisation began The People’s Merchant Bank, The 300th branch Our branch network
at our Head Office and selected city a subsidiary of the Bank, was of the Bank opened increased to 290. The
branches and a Black Light System was established. Our branch at Slave Island at Ingiriya. The total Extended Minors’ Savings
introduced. Customer turnaround time was merged with the International number of employees Scheme was launched.
was thereby significantly reduced. Division and the Fort Foreign Branch. reached 10,000.
Our 200th branch opened at An aggressive A comprehensive rural credit scheme was launched to The Bank’s
Kollupitiya. The Head Office was branch expansion provide both production and consumption credit facilities. hundredth branch
relocated to a building in Fort. programme The Bank initiated the “Ganu- Denu” practice, identifying was opened at
The total number of employees brought our total itself with the traditions of the Sinhala and Tamil New Year Marandagahamula.
reached 5,000. The first fisheries branch count to and encouraging customers to transact with the Bank at
bank was opened at Koralawella. 158. the auspicious time.
The “Athamaru” loan scheme was The Bank commenced a Some departments of the Bank were relocated to the
introduced to finance economic new Agriculture Credit Government Clerical Service Union (GCSU) building in
activities of the informal sector. The Scheme becoming the Sir Chittampalam A. Gardiner Mawatha, Colombo 2. The
Investment Savings Scheme, a credit pioneer lender to the total number of branches increased to 48, including
linked savings scheme was launched to small farm sector. new branches in Horana, Kekirawa, Padaviya, Mannar,
attract regular savers. Embilipitiya, Kahatagasdigiliya, Ragala and Talawakelle.
People’s Bank was inaugurated on 1 July 1961. The first The Head Office was The Bank The Co-operative Rural
branch was opened at Duke Street, Colombo. During the relocated to Ratnam’s commenced Banking Scheme was
year, eight more branches were opened in Polonnaruwa, Building in Union Place, its pawning inaugurated.
Hingurakgoda, Hambantota, Anuradhapura, Puttalam, Colombo 2 and 17 more services.
Matale and Kandy in addition to the Foreign Branch in branches were opened.
Colombo. The total number of employees stood at 169.
Our journey
An Endowment Savings The first The Bank supported the Three hundred and thirty Eight new ATMs
Deposit Scheme was ATM was Government’s 200 Garment bank branches were operating were installed and
introduced. The People’s installed at our Factory Programme. “People’s throughout the country and 160 branches were
Visa Card was introduced Headquarters Automated Banking System” 35 main branches were fully computerised under
in association with Visa Branch. (PABS) a banking application automated. “Vanitha Vasana”, the automation
International and 24 branches developed in-house, a savings scheme for women programme.
were fully-computerised. commenced live operations. was introduced.
1995
1996
“Suwa Sevana”, a credit package for Government sector health personnel was launched. “Sisu “Gurusetha”, a new deposit
Udana”, a new deposit scheme for schoolchildren was introduced. The Bank participated in two mobilisation and loan scheme
ADB-funded credit schemes – the Tea Small Holdings Development Project and the Perennial catering to Government teachers
Crops Development Project. The Bank’s fully owned subsidiaries, People’s Leasing Co. Ltd. and was launched with the co-
People’s Travels (Pvt) Ltd., commenced operations. Zonal offices were opened to strengthen operation of the Ministry of
decentralised administration and to facilitate better customer service. Education.
1997 1998
The “Surathura” Loan Scheme was launched to assist The total number of ATMs increased to 36, serving over 125,000 PET
self-employment projects. The Bank extended its credit cardholders. One hundred and seventy-five branches were fully-automated
facilities to small and medium scale enterprises and and the number of pawning centres increased to 188. A special credit cum
industries under the NDB-funded Small and Medium deposit scheme known as “Videshika” was introduced in collaboration with
Enterprises Assistance Project (SMEAP). the Sri Lanka Foreign Employment Bureau to assist migrant workers.
The Bank’s Corporate Management team was The “Jana Jaya”, savings cum loan scheme was The Bank launched
strengthened by the recruitment of certain heads launched. The newly introduced “Jaya Sri” draw “Isuru Udana”, a deposit
of divisions from the private banking sector. offered attractive prizes for depositors. The ATM scheme that encourages
Restructuring of the Bank was initiated through the network expanded to 74 machines throughout the parents and guardians
launch of a Strategic Plan. The total number of ATM country. The Central ATM Switch was introduced to to save for the benefit of
machines grew to 90. connect the PABS branches and the ATMs. their young charges.
2002
2003 2004
The number of PABS The 11th CEO/General Manager of the Bank, Mr Asoka The second phase of the restructuring plan for 2004-
automated branches de Silva assumed duties on 1 February 2003. The Young 2008 launched and approved by the Government of
increased to 218 and 119 Executive Saver’s (YES) Account was launched. The Bank Sri Lanka was based on the recapitalisation support
branches were connected signed up with Silver Lake System SDV BUD Malaysia to of ADB. The Bank obtained the first ever public rating
to the Central ATM Switch. install a state-of-the-art core banking package and trade of BBB+ from Fitch Ratings Lanka. The core banking
A Treasury automation services solutions which will initially be operational in project was implemented successfully.
package was implemented. 60 selected branches including Head Office.
Our journey
2012 2013
The total branch network reached 728, whilst ATM locations Twenty-three SME centres were established across the island. Surpassed
increased to 420. The Bank obtained an upgraded rating of AA + one million cards milestone with access to over 30 million Visa
(stable) from Fitch Ratings Lanka Ltd. The Bank’s total assets, total accredited merchants globally. Corporate customers were provided
deposits and total loans and receivables surpassed LKR 873 Bn., with an on line real time payment facility for EPF, ETF and Customs Duty
LKR 683 Bn. and LKR 660 Bn. respectively. The Bank’s 2011 Payments. People’s Bank became the first bank to be connected to the
Annual Report won one Grand Award and three Gold Awards in National Common ATM Switch. ATM locations increased to 460 with the
the National Category at the 2012 International ARC Awards. branch network expanding to 735. Debentures amounting to LKR 5 Bn.
were issued at the Bank’s fourth Debenture issue.
2011
The Bank celebrated the Golden Jubilee on 1 July 2011. Total branch network reached 714 whilst ATM locations increased to 382. Fitch
Ratings upgraded the rating to AA (stable). The Bank’s total assets, total deposits and total loans and receivables surpassed LKR 663 Bn.,
LKR 539 Bn. and LKR 478 Bn. respectively. Achieved the highest recorded profit before tax of LKR 15.3 Bn. and a profit after tax of
LKR 10.2 Bn. People’s Bank won the SLIM-Nielsen People’s Award for the Most Popular Bank in the Sri Lankan Banking and Financial
Services Sector, Service Brand of the Year, and the Bronze Award for the Service Category at the SLIM Brand Excellence Awards 2011.
2009 2010
The Bank issued its second Debenture for LKR 2.5 Bn. Branch network and service centres expanded to 679. ATMs increased to 330.
214 branches and 236 service centres were connected People’s International VISA Debit Card was launched. The Bank obtained AA- from
online. The Bank strategically placed over 300 ATMs Fitch Ratings Lanka Ltd. and AAA from Ram Ratings. Total deposits surpassed
island-wide. Total deposits reached LKR 400 Bn. Achieved LKR 462 Bn. and recorded the highest profit before tax of LKR 8.7 Bn. The People’s
the highest recorded profit before tax of LKR 6.1 Bn. For Bank Annual Report won two Gold Awards at the ARC Awards held in New York.
the first time, received the SAFA (South Asian Federation The Bank received the SAFA (South Asian Federation of Accountants) Award, for
of Accountants) Award for the 2008 Annual Report. the 1st Place in the Public Sector Category, for the 2009 Annual Report.
2008 2007
The Government of Sri Lanka released the fourth capital tranche of The rating level of A - from Fitch Ratings was
LKR 1.5 Bn. The Bank reached the Capital Adequacy Level of 10.5% by the end maintained during the year. The Government of
of the year and conducted its first Debenture issue of LKR 2.5 Bn. Introduced Sri Lanka injected the third capital tranche of LKR 1.5
“People’s e-remittance”, a web-based remittance product supported by latest Bn. into People’s Bank. The Bank won the People’s
technology to remit money from overseas within minutes. Two new foreign Award for the Banking and Financial Services Brand
currency deposit products were launched, viz., “Doo Daru Ethera Isura” and of the Year for the second consecutive year. The Bank
“Special Foreign Investment Deposit Account” [SFIDA]. surpassed the LKR 300 Bn. mark in total deposits.
2005 2006
The Bank received LKR 2 Bn. as the first tranche of Equity Capital The Bank obtained an A-rating from Fitch Ratings Lanka
Investment in the Bank by the Government of Sri Lanka in keeping with Ltd., indicating progress from its earlier rating level.
the agreement signed between the Government, ADB and People’s Bank. People’s Bank was awarded the POP Award for 2006 in
The core banking project was further extended across the branch network. the banking and financial services sector by the Sri Lanka
The Bank was also a major intermediary in bringing Government-granted Institute of Marketing. The second tranche of capital of
financial assistance for rebuilding, after the December 2004 tsunami. LKR 1 Bn. was received from the Government of Sri Lanka.
Our journey
2014 2015
The Bank’s asset base crossed one trillion rupees, as the The Bank commenced an ambitious digitisation initiative. The ATM network
second largest bank in the industry. Bank garnered the triple was upgraded to an enterprise strength hardware platform. Investments
accolades of “Bank of the Year 2014” at the European Global were also made in upgrading the Core Banking System, data warehousing
Banking and Finance Award-Sri Lanka 2014 as well as “Best capabilities and POS infrastructure. The Bank launched a Green Banking
Banking Group Sri Lanka” and “Most Sustainable Bank Sri Concept in demonstrating its sustainability commitments. Successfully rolled
Lanka” at the World Finance Banking Awards 2014. out to the Bank’s Strategic Plan for 2016-2020.
2017 2016
The consolidated contribution towards national economic development The Group achieved the rupees one trillion milestones
over the last ten years surpassed the LKR 150.0 Bn. The Bank received in both deposits and advances during the year, the only
a new capital infusion of LKR 5.0 Bn. Opened Sri Lanka’s first fully- financial services group to achieve two trillion rupee
digitalised branch in Colombo and received the prestigious ISO/IEC feats in a single year. The Bank was awarded the ‘‘Best
27001:2013 quality certification for Information Security Management Banking Group in Sri Lanka’ and the “Most Sustainable
first for any State bank in the Nation. The Bank became the 400th Bank in Sri Lanka” by World Finance Banking Awards
Largest Bank in Asia, was included amongst the World’s Top 1000, for the third consecutive year. It was also adjudged the
crowned ”Country’s Best Bank in 2017 and was recognised as the 387th largest Bank in Asia. The Bank launched self-
second most valuable Sri Lankan brand. The Bank was conferred the banking centres comprising cash deposit machines
exclusive ”People’s Service Brand of the Year“ and ”People’s Banking (CDM), ATMs and kiosks in seven locations in Colombo
Service Provider of the Year“ for the 11th consecutive year. and launched a new logo to reflect the Bank’s evolution.
2018
Launched six alternative digital channels. People’s Wave become the most downloaded finance app in Sri Lanka.
Was awarded the “People’s Banking Service Provider of the Year” for the 12th consecutive year and garnered many
recognitions and accolades including Being ranked amongst the Top 1000 Banks in the World, adjudged the “Best
Branch Digitization Initiative Program Award” in Asia Pacific Region and recognised as “The Best Bank in Sri Lanka.”
2019
The Bank raised LKR 10.0 Bn. via debenture issue post People’s Bank (Amendment) Bill passed by the Parliament. SBUs reached 239 - a
feat achieved in just three years. People’s Wave app became one of the most downloaded finance apps in Sri Lanka. The Bank received
numerous local and international awards including the Best Digital Bank 2019, the Best Digitization Initiative Programme, the Best
Mobile Banking Application for 2019, the Best Retail Bank in Sri Lanka and the Most Improved Retail Bank in Asia Pacific, Middle East and
Africa during 2019. ADB recognised People’s Bank as the Leading Partner Bank in Trade Finance operations in Sri Lanka. The Bank signed
the largest ever and the longest tenor bilateral funding facility secured by any commercial bank in Sri Lanka to date.
2020
The Bank’s operates the largest digital footprint in Sri Lanka, and processed over LKR 1.0 Tn. in transactions via its digital channels.
Following the COVID-19 pandemic, the Bank extended unparalleled support to the Nation, customers and the general public.
People’s Bank successfully raised LKR 20.0 Bn. Tier II Debentures which is the highest-ever by the industry to-date. Was the
only entity amongst the Top 3 and only state bank to have a positive incline in brand value. Gaining both local and international
acclamation, the Bank was recognised amongst the Top 1000 Banks in the World 2020, 400 largest banks in Asia, recognised as the
Best Digitized Bank in Sri Lanka and as the Most Admired Company in Sri Lanka by the International Chamber of Commerce
Sri Lanka and Chartered Institute of Management Sri Lanka (CIMA). The People’s Bank Annual Report was accorded the Best in
Sri Lanka at the International ARC Awards 2020.
GRI 102-7
FINANCIAL HIGHLIGHTS
Bank Group
* Certain comparative figures have been adjusted to conform to the current period presentation.
GRI 102-7
NON–Financial highlights
EMPLOYEE VALUE
Value of community 22,967 7,852
based loans granted
2020 2019
(LKR Mn.) 192.5%
Retention rate (%) 98.1 96.6 Number of community 37,064 31,686
based loans granted
1.6%
17.0%
Employees outside the 4,625 4,716
Western Province
(1.9%)
ENVIRONMENT
Female employees (%) 61.3 61.0 2020 2019
0.5%
Renewable energy 6,236.6 6,499.3
consumption (GJ)
Employees with over 4,920 3,131 (4.0%)
10 years service
57.1% Energy intensity per 9.52 9.35
employee (GJ)
Profit per employee 1,843 1,650 1.8%
(LKR ’000)
11.7% Non-renewable energy 5,979.2 5,888.0
consuption (GJ)
(1.5%)
LETTER FROM
THE CHAIRMAN
SUJEEWA RAJAPAKSE
Chairman
GRI 102-14
In a year which brought unprecedented challenges, People’s Bank across the Bank, from the leadership to the most junior team member
demonstrated tremendous financial and operational resilience. Not worked with empathy, adaptability and resolve, placing the county
only did we enter the crisis well-capitalised, our significant, multi-year first. Whilst realigning our strategic direction with the clear purpose of
investments in our people, processes, and technology positioned us supporting economic revival, we were the first responder Bank to roll
well to serve the people and our Nation. out the Central Bank relief program for the benefit of the customers.
It is my pleasure, on behalf of the Board of Directors, to present to you From offering moratoriums on loans and extending loans to struggling
the People’s Bank annual report of 2020. enterprises including small scale entrepreneurs (SMEs) at highly
favourable terms, to maintaining our presence and reach largely
undiminished across our branch network, through the 24/7 operation
Stoic service in a challenging year of our digital services and mobile ATMs, we supported our ‘people’ as
To say that 2020 was a difficult year would be an understatement. only Peoples Bank could. The COVID-19 relief extended by us is the
While economies around the world are still reeling from the largest for any financial services group, which benefited over 460,000
impact of the global pandemic, the Sri Lankan economy had been retail customers, and more than 21,000 businesses.
under pressure even before its onset. This was primarily due to
macro level stresses, which included amongst other, the inevitable The extent of loan schemes introduced within a short span of time
consequences which stemmed from a slowdown in economic growth, attest to the degree of commitment and care we extend to the people
high inflationary pressure, interest rate volatility and imposition of and our commitment to advance financial inclusion. Most of these
additional taxes and levies which impacted industry earnings. The loans are aligned to support the Government’s effort to create a self-
situation was further exacerbated by the Easter Sunday attacks. sufficient nation. The numerous facilities launched during the year
were targeted at developing agriculture, SMEs, empowering youth
In order to navigate the challenges of an unprecedented year, we and women, supporting the differently abled and senior citizens,
focused on remaining accessible to our customers and the general and professionals of our country. Over LKR 27.0 Bn. was extended to
public for all their banking needs and supporting the Government revive SMEs, including LKR 13.7 Bn. in Saubagya loans, and over
in its endeavours to preserve and protect the economy from further LKR 10.0 Bn. to the agriculture sector.
consequence and to help in its revival. It was our resilience and agility,
dedication and commitment of our people and digital capabilities that The magnitude of financial support to the State during the year was
enabled to meet and exceed the expectations of our customers and the largest-ever in the history of our Bank. During one of the most
support our Nation through difficult times. difficult of circumstances, we to supported the State and other State
Owned Enterprises by granting over LKR 320.0 Bn. facilities and
LKR 358.0 Bn. to the Government Treasury to maintain the Rupee
A first responder to economic revival interest rates at desired levels.
Even through the challenges, the pandemic has unified us all in
a manner previously unseen, propelled us to collaborate for a
common cause and instilled a greater sense of discipline. From an A resilient performance
economic development perspective, it has brought agriculture to The consolidated net loans grew by 21.6% YoY to LKR 315.7 Bn. and
the fore, emphasised the importance of self-sufficiency, healthcare account for close to one-third of overall net sector credit extended
and wellness and reinforced that technology is the way forward. during the period ended 31 December 2020.
Whilst creating a level playing field in the retail sector, the pandemic
has shown that flexibility, adoptability and innovation are crucial Consolidated assets growth reached LKR 2,400.6 Bn. reflecting an
for business survival and reinforced the importance of promoting all-time high of 17.1% YoY. Total deposits too swelled by 21.8% YoY
local industries and nurturing the micro small and medium scale to LKR 1,935.2 Bn. which was the highest-ever growth for the Bank. Of
enterprises which is key to our Nation’s economic revival. deposit growth, 53.8% stemmed from Current and Savings Accounts –
which indicate our brand strength and depositor confidence.
In this extraordinary year, what determines our success is our national
value added and customer centricity which was at the heart of every Reflecting fee waivers, concessions and the drop in trade finance
decision making process. Being the Bank of the people, we bear a activities during the year, the consolidated net fee reduced by 10.2%
great responsibility to assist the Government to restart the YoY whilst the consolidated operating income declined by 5.8% to
economy and help the people of our Nation to get through the LKR 90.8 Bn. in 2020. Consolidated post tax profit decreased by a
deepest and most abrupt economic reversal ever known. Leading the marginal 0.5% to LKR 16.1 Bn. whilst at Bank level it increased by
country’s effort to realise the Vistas of Prosperity for all, everyone 9.7% YoY to LKR 14.2 Bn.
Reflecting the strong expression of investor confidence, the largest- On a standalone basis, we are Sri Lanka’s largest foreign currency
ever Basel III, Tier 2-compliant, subordinated debenture issue in borrower amongst Licensed Commercial Banks, a testament to our
Sri Lanka was concluded, which strengthened the capital base of reputation and strength of relationships in the eyes and minds of our
our Bank. overseas counterparts. Attesting to our cordial and non-compromising
relationship with our foreign counterparties including lenders, we
have over 900 foreign correspondent and vostro relationships with
Bridging the digital divide an average length of relationship of over 20 years. This enabled us to
The pandemic has forced the banking sector to seek alternate raise LKR 164.4 Bn. foreign currency borrowings as at 31 December
working practices, such as working from home and flexible working 2020.
hours, both of which have previously been unchartered territory for
State organisations such as People’s Bank. Due to pandemic-related
restrictions, the industry has also witnessed an exponential migration Sound corporate governance and sustainability
of its customers to digital modes of banking which will inevitably Our efforts and endeavours to align with the Government's sub-policy
offer tangible financial benefits in the years to come. We are ready initiative towards an efficient nation that is free from corruption
to capitalise on these opportunities. Digital will be at the heart of include the maintenance of an effective governance mechanism
every strategic initiative and decision-making process. The regulator’s and zero tolerance for corruption. Championed by our leadership,
push towards a more cash less society has already resulted in marked openness and transparency remain essential elements in all our
changes to the way people, bank and shop in Sri Lanka. Technology- dealings. Clear and concise communication on this topic, combined
centred collaborations between institutions will also be inevitable. with the necessary training and development for all employees,
ensures our people across the board remain committed to ensuring
Despite the challenges posed by the pandemic, we remain focused the highest levels of good corporate governance.
on accelerating our shift towards digitization and our ability to create
industry-leading experiences for all customers and people of We also have in place a robust State Enterprises Management Policy.
Sri Lanka. Leveraging our pre-crisis strength and momentum, we are The Bank’s capital requirements continue to be managed through
strengthening a high-performance, digitally enabled bank that is the tenets of this policy without compromising the sole ownership
geared for the future. Our digital operating models that encompass of the Government of Sri Lanka or being a burden to the Bank’s sole
every aspect, continued to drive efficiency, support innovative ways shareholder for new capital.
of working and deliver the speed, simplicity and flexibility that
customers expect. The resilience and adaptability of our technology Contributing towards the United Nation’s Sustainable Development
infrastructure enabled our people to transition to working from Goals, we continue to focus on areas such as alleviating poverty
home in our rapid response to the pandemic. Our success in the and hunger, improving health and well-being, supporting quality
digitalisation sphere enabled masses to benefit from technology that education, gender equality, decent work and economic growth and
is in par with the world’s best. Over LKR 1.0 Tn. transactions were clean and affordable energy. In addition to supporting youth and
processes via People’s Bank ATMs, CDMs and Kiosks and over female entrepreneurs, we continue to focus our energies on the
LKR 350 Bn. transactions were conducted through our internet and micro and SME segment even as the industry is reasonably likely to
mobile platforms which was staggering 200% YoY increase. increase their credit allocation to this segment in order to hasten an
economic revival.
Strength of foreign counter party relationships tested amidst
extra-ordinary circumstances We have also been recognised and lauded for adopting international
standards in corporate reporting. For our 2019 Annual Report titled
With the sovereign rating downgrade, it is inevitable that the capacity “The Frontier, “People’s Bank was the recipient of the Country’s Best
of local banks to raise debt capital in overseas markets will be Annual Report Award at the International ARC Awards, considered the
impacted. Maintaining the strength, stability and reputation of the Academy Awards of Annual Reports.
borrowing institution, however, as well as the trust and confidence
between the parties involved will remain important factors going Our commitment to create sustainable value is demonstrated by
forward. At People’s Bank, we are pleased to state that, we have ‘The People’s Green Pulse’ policy which seeks to address climate
successfully maintained most of our counterparty relationships during change and reduce our carbon footprint. Through our many initiatives
this extraordinary time. to promote digital banking we make a significant effort to bring our
customers to transition to a low-carbon future.
2021 outlook
The Sri Lankan banking industry has already witnessed a substantial
change, with the pandemic hastening the adoption of digital banking
and encouraging banks to adopt innovative methods to meet
stakeholder needs – including those of customers and employees.
Many of these innovations involve enhancing operational efficiency,
reducing costs and providing higher customer satisfaction, all of which
will remain beneficial to the industry even after the world is better
able to manage the pandemic.
Expressions of gratitude
For their valued counsel and support, I extend my sincere appreciation
to His Excellency the President, the Honourable Prime Minister, the
Secretary to the President, and the Secretary to the Treasury. I also
wish to thank the officials at the Central Bank of Sri Lanka for their
guidance on regulatory matters. My sincere appreciation is extended
to my colleagues on the Board for their unstinted support and wise
counsel. Thank you to the management team led by able CEO/GM and
all employees for their dedication and valued contribution during the
year - without their selfless commitment to serving our nation, the
Bank would not have been able to achieve so much in a challenging
year. My deep gratitude also goes out to our customers, and other
stakeholders for their unswerving loyalty.
SUJEEWA RAJAPAKSE
Chairman
25 February 2021
RANJITH KODITUWAKKU
CEO/GM
The year under review reminds me of the quote “I can't control the success is ultimately our staff members who worked tirelessly and
wind but I can adjust the sail”. This ultimately sums up what we did at selflessly during this time putting customer and national cause ahead
People’s Bank during 2020 despite the many challenges posed by the of all else.
COVID-19 pandemic.
Unparallel growth
A year of unprecedented challenge and an extra Total financial facilities extended during the year exceeded
ordinary rise to national duty LKR 300.0 Bn. on a consolidated basis. This was the highest
2020 was a year of challenge on many fronts. It was the year which recorded by this Institution to date. Of this, over two third being to
saw heart breaking human tragedy around the world, border closures the State and Other State Owned Enterprises. Multiple loan schemes
and human movement control in a manner previously unseen and were also launched for the benefit of all its customers of varying
the year which witnessed the worst economic stress event since the socio-economic and demographic profiles and small and medium
great depression in the 1930s. The pandemic brought many countries scale enterprises of diverse nature, scale and scope, whilst also
simultaneously encouraging women entrepreneurship. The Saubagya
and their economies to a complete standstill – leaving no individual
loan scheme, Aswenna loan scheme, Made in Sri Lanka and Vanitha
immune or business unscathed from its consequences.
Saviya are some of the concessionary loan schemes launched during
the year.
Despite the unprecedented challenges, People’s Bank rose up to the
national duty with a shared responsibility. The Bank’s delivery during Moreover, salary and pension payments, including Samurdhi
this time self attests to its overarching commitment to support the payments, surpassed LKR 130.0 Bn. was facilitated through our island
Government in their numerous initiatives to preserve the economy wide branch network just during peak of the lock down. During such
and play a vital role in its revival. The investments made by the Bank extraordinary times and despite such extraordinary measures, we
in its digital infrastructure and efforts made during 2019 to bolster were able to not only maintain positive bottom line but also record
our regulatory and regulatory capital levels enabled the Bank to the Bank’s strongest ever balance sheet growth to date which remains
smoothly weather the pandemic storm, catering to the unprecedented testament the Institution’s resilience and its capacity.
demand for digital banking solutions and absorbing the economic
shock on behalf of our customers.
Maintaining financial soundness
Despite the significant impact of the moratoriums, the Bank reported
The Bank of the People – our ethos shines
profit after tax of LKR 14.2 Bn. as compared with LKR 12.9 Bn. during
through 2019. On a consolidated, it was LKR 16.1 Bn. and LKR 16.2 Bn.,
In times of distress is when the support from the Financial Services respectively. Its consolidated assets grew by 17.1% to surpass
Provider is most required. We are proud to say that we were with LKR 2.4 Tn. whilst its deposit base reached LKR 1.9 Tn. at end
our customers at every step of the way during the pandemic; December 2020 growing by 21.8% from LKR 1.6 Tn. at end
starting from the height of the lockdown when most things were December 2019.
yet unknown, implementing the most ambitious customer relief
measures in the country’s history, with deferrals on lending and Despite the out of the ordinary circumstances, consolidated taxes and
targeted support. We were amongst the “first responder” banks to dividend payments to the Government amounted to LKR 16.8 Bn. in
roll out the Central Bank’s relief program to customers with such 2020. On a Bank standalone basis, this was LKR 14.4 Bn.
relief on a consolidated basis touching the lives of close to 460,000
individuals, which was most for any financial services organization,
Despite the adverse operating context following the COVID-19
and over 21,000 businesses. However, the consolidated cost of such
pandemic, we successfully raised a LKR 20.0 Bn. debenture which was
interest concessions exceeded LKR 5.0 Bn.; which speaks volumes to
the single largest Basel III, Tier 2-compliant, subordinated debenture
the extent we gave back for the benefit of both our customers and our
issuance the country has seen to date. This reflects the strong investor
country. In addition, despite the lockdown, over 70% of the Bank’s
confidence in the Institution. Furthermore, during a year when interest
branches remain open even during the peak of the lock down for
rates were well into double digits, we took a pioneering role to bring
essential service banking and all our 1,000 self-servicing terminals
down the interest rates to a single digit.
throughout the country, close to 1000 other owned ATMs together
with our digital platforms; including mobile and internet banking and
customer service desks were functioning on a 24/7 basis with over Digitally fortified
99.0% uptime continuously maintained. Our mobile banking services
We have invested over LKR 3.0 Bn. in building a single, fully integrated
reached over 1,000 locations around the Nation, providing banking
digital banking system which connects all our functions and
access to some of the neediest communities. The real heroes of our
processes, and customer interfaces such as web and mobile apps. This
encompasses the entire infrastructure including critical components Bank or financial services providers in the country can boast of. During
like governance, security, and risk. With the global pandemic having the year alone, LKR 286 Mn. in financial facilities were extended to
accelerated the demand for digital banking and financial services support women entrepreneurs by our Vanitha Saviya program.
exponentially, being at an advanced stage in our digital journey, we
were able to meet such demands almost immediately. During the As part of our goal to ensure a comfortable home for every family,
period We continue to create digital operating models that extend to home loan financial facilities were extended to over 9,000 customers
every area, driving efficiency, supporting novel ways of working and amounting to over LKR 105.0 Bn. In addition, we provided home
delivering the speed, simplicity and flexibility that customers expect. loan facilities for all our employees at highly concessionary rates
The resilience and adaptability of our technology infrastructure of interest.
saw our employees’ transition seamlessly to work from home in our
rapid response to the pandemic. Our real-time customer onboarding
platform; People’s Wiz, the first for any bank in Southeast Asia, Africa,
Recalibrating strategy for 2021 and beyond ‑
and the Middle East has on-boarded over 785,000 customers, since country first
its launch in 2017. People’s Wave our mobile banking app which is As the Bank’s five-year strategic plan (2016- 2020) came to an end,
the most downloaded finance app in Sri Lanka, is making a significant and the new operating circumstances and priorities considered. we
contribution to the bank’s mission to drive financial inclusivity revisited our strategic and tactical plans for the future. In tandem
with over 70.0% of active People’s Wave users outside the with the changes in the digital landscape, we ensured our plan
Western Province. encompassed the agility and dynamism as only requisite and
necessary. Our latest plan (2021-2023) will encompass areas that
are in line with the growth of the Bank and the State, prioritising
An exemplary team our contribution to the overall economic development of Sri Lanka.
Demonstrating tremendous resilience over the past year, our staff Areas such as further enhancing the Bank’s digital capabilities and
members went above and beyond to serve the Nation and support other infrastructure and continuous human resource development
our customers, communities and each other despite the adverse will be given priority. The plan for the next two years is driven by the
circumstances caused by the global pandemic. Their dedication and Bank’s alignment with the Government's development plan, which
commitment enabled to deliver and uninterrupted service even gives priority to SMEs and to market and customer segments most
through the lockdown curfews. We proactively and rapidly deployed vulnerable as well as those with the most economic value potential.
extensive measures to ensure our premises remain as safe as possible
while supporting the well-being of all staff members.
Recognitions received
Despite the many challenges, in recognition of our efforts on
Investing in our youth many fronts and our quest to push the boundaries of success and
Contributing towards the Government's sub-policy initiative performance, the Bank continued to receive awards and accolades
“A productive citizen and a happy family,” we channelled over both locally and internationally
LKR 400.0 Mn. in financial assistance to support the youth of our
Nation. With a range of initiatives including providing vocational From a digital banking perspective, at the Asia Money Awards,
training opportunities to university undergraduates to extending People’s Bank was bestowed the Best Digital Bank in Sri Lanka Award
financial assistance of over LKR 170.0 Mn. to purchase laptops and 2020 - which was the third consecutive year while at the World
rewarding high performers of the Grade 5 scholarship examination, Finance Digital Banking Awards 2020, we were accorded the Best
we continued to empower our next generation. Over LKR 37.0 Bn. Consumer Digital Banking Award 2020 and the Best Mobile Banking
savings were mobilised during the year through our digitally-enabled App Award for 2020. In addition, the International Business Magazine
“Yes” youth saver account. Our children’s savings deposit base, which awarded People’s Bank the Best Digital Bank in Sri Lanka for the
is the largest in Sri Lanka, exceeded LKR 80.0 Bn. as at 31 December year 2020.
2020. We are proud in our ability to open accounts for close to 60.0%
of the country’s new-borns. From a service perspective, at the SLIM Neilson’s and People’s Awards.
People’s Bank won the Service Brand of the Year and the Banking
Services Provider of the Year Award for the 14th consecutive year.
Supporting working women and families
As an Institution, we highly value the economic and social contribution From a global ranking perspective, People’s Bank was once again
of women to our nation. At People’s Bank, approximately 60.0% of ranked among the top 1000 banks in the World by The Banker’s
its employees are women with close to 50.0% of our corporate and Magazine UK and was in the list of the 400 largest banks in Asia by the
executive management represented by women – a feat not many Asian Banker Magazine either of which for 2020.
In addition, its 2019 Annual Report titled Frontier was the recipient of
the Best in Sri Lanka Award at the International ARC Awards - which
was one of the 45 Grand Award Winners, globally
Deeply grateful!
It a year of many highs and lows, the Bank has remained strong
thanks to our team for going above and beyond the call of duty.
I wish to extend my deep gratitude to our Chairman and the Board of
Directors for their invaluable guidance and leadership from the front.
My appreciation is also extended to the Senior Officials at General
Treasury, Ministry of Finance and the Central Bank of Sri Lanka for
their wise counsel on all matters of a related nature. A big thank you
to my corporate and executive members and staff at all levels for
their hard work and dedication without which none of this is possible.
Importantly, our gratitude to our customers for their continued trust
and confidence in the Institution
Looking ahead, whilst our pandemic related challenges are far from
over, considering the resolve of our work force, our unwavering nation
focus and customer centricity coupled with our industry pioneering
digital capabilities well places us to seize opportunities in the year
and years ahead
RANJITH KODITUWAKKU
Chief Executive Officer/General Manager
25 February 2021
BOARD OF DIRECTORS
From left to right: Mr Sudarshan Ahangama, Mrs Bhadranie Jayawardhana, Mr Isuru Balapatabendi, Mr Keerthi Goonatillake, Mr Sujeewa Rajapakse
Board of Directors
From left to right: Mr K A Vimalenthirarajah, Mr Malindu Ranasinghe, Mr Manjula Wellalage, Mr Kumar Gunawardana
Board of Directors
Mr Sujeewa Rajapakse (Amro Bank), ABN Amro Bank and finally to representative of Sri Lanka, to the organisation
National Development Bank PLC (NDB). He has for Prohibition of Chemical Weapons and Hague
Chairman served in Senior Management positions for over Convention of Private International Law (HCCH).
20 years having first appointed as an Assistant He was also appointed as the Head of Chancery
Mr Sujeewa Rajapakse is a Managing Partner of
Vice President of ABN AMRO Bank in the year at the Sri Lankan Mission in The Hague.
BDO Partners which is the local representative
2000. His areas of expertise is wide and varied
of BDO accounting network in the world. A He was appointed as the Legal Advisor to the
and include branch network management,
Fellow of The Institute of Chartered Accountants Minister of Investment Promotions in 2012, for
institutional banking, trade finance, operations,
of Sri Lanka (FCA) and a Fellow of Institute of legal matters relating to investment laws in
administration and services.
Chartered Management Accountants of Sri Lanka Sri Lanka and Board of Investment.
(FCMA), Mr Rajapskse holds a Master of Business He has also served as a Member of the Board of
Administration (MBA) from Postgraduate Mr Balapatabendi has also served in the Director
Directors of Development Holdings (Pvt.) Ltd.
Institute of Management (PIM), University of Boards of Sri Lanka Insurance Corporation,
which is an entity jointly owned by National
Sri Jayewardenepura. Seylan Bank, and Bank of Ceylon, prior to being
Development Bank PLC (NDB) and Export
appointed to the People’s Bank Board.
Development Board (EDB) and Treasurer of
During his professional career that spanned
Sri Lanka Tennis Association. He has served as an executive committee
nearly four decades, he held the honorary
positions of President, Vice President and member of the Bar Association of Sri Lanka.
Council Member (elect) of The Institute of He was appointed the Chairman of the Junior
Chartered Accountants of Sri Lanka
Mr Sudarshan Ahangama National Law Conference in 2007 and as the
(CA Sri Lanka), Former Chairman of Auditing Director Convener of the National Law Conference 2020.
Standards Committee of CA Sri Lanka, President He is appointed as the Chairman of People’s
Sudarshan Ahangama is a fellow member of insurance PLC.
of Practicing Accountants Forum of Sri Lanka,
The Institute of Chartered Accountants of
Treasurer of Sri Lanka Cricket, Treasurer for
Sri Lanka. He serves on the Board of MAS
Cricket World Cup 2011, Board Member and
technical Advisor to South Asian Federation
Holdings, as its Group Finance Director for Mr Malindu Ranasinghe
15 years where he had responsibilities for Director
of Accountants (SAFA), Technical Advisor to
the finance function in 17 countries across
Confederation of Asia Pacific Accountants
multiple regions and currently as Director Mr Malindu Ranasinghe holds a BSc (Hons)
(CAPA) and Council member of University of
Strategic Investments handling the Group’s Degree in Business from Manchester
Sri Jayewardenepura.
mergers acquisitions, cross border transactions, Metropolitan University (UK) and is currently
He is the current Chairman at People’s Leasing & venture capital investments and organisational reading for his MBA specialising in Marketing
Finance PLC. restructuring. at University of Bedfordshire (UK). He is the
Director/CEO of the award winning private
He has served in the directorates of National Previously he was with John Keells Holdings, as
higher education provider, Oxford College
Development Bank PLC, NDB Capital Ltd. – Managing Director of John Keells Stock Brokers.
of Business. He counts for over 19 years of
Bangladesh, The Finance Company PLC, Unidil He was part of the exchange automation task
experience in leading teams and marketing
Packaging. force and led several roadshows overseas
products and services.
promoting the equity markets. In a subsequent
Currently he is serving as the Deputy Chairman
role as Managing Director of the software Furthermore, Mr Ranasinghe was instrumental
at Softlogic Life PLC, Board member at – Haycarb
out-sourcing activities of the Group he was also in ensuring flexibility in response to an
PLC, Dipped Products PLC, Lanka Holdings
responsible for setting up several development increasingly demanding education sector
(Pvt) Ltd.
centres in collaboration with leading global and the continued strategic development of
His expertise includes all accounting and airlines and telecommunication companies. He professionals that have a yearning to learn
auditing standards and practices, government served on many Boards in both the Financial and grow. He has an excellent track record of
regulations related to financial disciplines and Services and IT sectors at John Keells. building and strengthening online services
ethics, human resource management and overall and platforms to meet and exceed the high
management practices and principles in both expectations of customers from diversified
private and public sectors. Mr Isuru Balapatabendi industries. Over the years, his unique leadership
Director style and determined commitment towards
creating a sustainable and resilient workplace
Mr Kumar Gunawardana Mr Isuru Balapatabendi is an Attorney-at-Law at Oxford College of Business, that minimises
Director and currently operates a Law Chamber in the the impact on the environment while ensuring
practice of Civil and Commercial Law. He also meaningful contribution towards society,
Kumar Gunawardana was appointed to the holds a LLM from the University of Pittsburg, has been recognised by state and private
Board of Directors of People’s Bank on Pennsylvania, USA. institutions locally and internationally.
26 December 2019 as a Non-Executive Director.
Mr Balapatabendi served as a State Counsel in
He commands over 40 years of experience in
the Attorney General’s Department, prior to
diverse areas of banking. Having started his
being appointed a Diplomat to the Embassy of
career with Commercial Bank PLC in 1979, he
Sri Lanka in The Hague, The Netherlands from
has moved on to Amsterdam Rotterdam Bank
2008 to 2010, during which he served as the
Board of Directors
CORPORATE MANAGEMENT
CORPORATE MANAGEMENT
Front row left to right: Mr Ranjith Kodituwakku, Mr Rohan Pathirage, Mr Clive Fonseka, Mr G Lionel Galagedara, Ms M A D Muditha Karunarathne
Back row left to right: Mr P R S Jayatissa, Ms G M R P Wijerathna, Mr Dhammika Dasa, Mr Lalith Withana
Corporate Management
He has a wealth of banking knowledge in a wide spectrum of areas He holds a Second Class Honours Degree (BSc) in Public
covering Branch Banking, Consumer Banking, Commercial Banking, Administration from the University of Sri Jayewardenepura and
Corporate Banking, Off-shore Banking, International Banking, Project has a Master's Degree in Management and IT from the University of
Financing, Recoveries, and Digitalisation etc. Kelaniya. He is a Fellow Member of the Institute of Bankers of
Sri Lanka, an Attorney at Law of Sri Lanka and holds a Diploma in
He is a key figure in driving the Bank towards digitalisation on mapping Institute of Credit Management of Sri Lanka.
business requirements to a digital platform by adopting best practices
in the industry and re-engineering business processes for which Mr Rajapakse is presently the Chairman of People’s Leasing Fleet
the Bank was awarded many prestigious awards/recognition both Management Limited and People’s Micro Commerce Limited. He
internationally and locally. He was also bestowed upon “Sri Lanka has served as an Ex-officio Board member in several regulatory
Innovation Leadership Awards 2020” awarded by World Innovation organisations namely, The Governing Board of Institute of Bankers
Congress, for his innovative role played in transforming the Bank from of Sri Lanka, Regional Development Bank and also served as an
a conventional set up to contemporary set up through digitalisation. Alternate Director of Credit Information Bureau of Sri Lanka up to May
2019. At present, he is the Senior Vice President of the Association of
Additionally, he has played a key role in the efforts carried out by Professional Bankers of Sri Lanka (APB).
People's Bank to re-open Bank’s branches in the Northern Province
with the aim of rebuilding the lives of the people and strengthening
the economy of the region soon after the end of humanitarian Mr Rohan Pathirage
operation in 2009. Senior Deputy General Manager – Legal
He also serves as a Director of People’s Leasing & Finance PLC, Mr Rohan Pathirage has been a senior member of People’s Bank’s
People’s Insurance PLC, People’s Merchant Finance PLC, People’s Corporate Management team since 2010. He has Master‘s in Bank
Travels Ltd., Lankan Alliance Finance Ltd. Bangladesh, Financial Management from Massey University, New Zealand and holder of
Ombudsman Sri Lanka (Guarantee) Ltd, Credit Information Bureau of a Postgraduate Diploma in Banking. He holds a Degree in Law from
Sri Lanka, Lanka Clear (Pvt) Ltd., National Payments Council, Sri Lanka the University of Colombo and is an Attorney-at-Law. Mr Pathirage
Banks’ Association (Guarantee) Ltd, Lanka Financial Services Bureau, joined the Bank in 1995 and counts more than 25 years experience
and Institute of Bankers of Sri Lanka. in Overall Management and Administration and Human Resources.
During his tenure, he has played a key role to facilitate best practices
Mr Kodituwakku holds a Master’s Degree in Business Administration in governance and has contributed towards the establishment of
specialised in Finance from the University of Colombo, Bachelor of several subsidiaries of the Bank. He has been a member of the key
Laws (Honours) from the University of New Buckinghamshire, United management committees of the Bank.
Kingdom and is an Associate Member of the Institute of Bankers of
Sri Lanka and a Certified Member of Sri Lanka Institute of Marketing. Mr Pathirage serves as a Director on the Boards of People’s Leasing
& Finance PLC, Lankan Alliance Finance Company in Bangladesh,
People’s Micro Commerce, People’s Leasing Fleet Management, and
Mr K B Rajapakse People’s Travels (Pvt) Ltd. He is the Chairman of People’s Leasing
Senior Deputy General Manager – Payment and Digital Havelock Properties Ltd. Prior to joining the Bank, he worked as
General Manager of export oriented BOI company. He is an Alternate
Mr Rajapakse is the Senior Deputy General Manager to the Card Director of the Board of the Institute of Bankers of Sri Lanka – IBSL and
Centre, Payment and Digital of the Bank from November 2020 and he a member of the Academic Council of IBSL.
was the Senior DGM to the Retail Banking from 2018 to 2020.
He joined the Bank in 1987 as a Management Trainee and counts
over 33 years of experience in the People’s Bank.
Corporate Management
Ms G P R Jayasinghe Mr B M Premanath
Deputy General Manager – Retail Banking, Deputy General Manager – Channel Management
Process Management and Quality Assurance
Mr Premanath joined People’s Bank as a Management Trainee in 1987
Ms Renuka Jayasinghe joined the Bank in 1987 as a Management and counts nearly 34 years of service. Presently he is being appointed
Trainee and counts over 33 years of experience in the field of banking. as the Deputy General Manager (Channel Management).
During her career, she has covered the branch banking area at During his banking career, he has participated in various exposure
the levels of Branch Manager, Zonal Senior Manager, Regional programmes both locally and internationally and has vast knowledge
Manager and Asstistant General Manager, Deputy General Manager in managing business banking by holding various Management
(Cooperative and Development) and Deputy General Manager (Retail Level capacities.
Banking) and worked as Deputy General Manager (Business Support
Service). Presently, she is working as the Deputy General Manager From 2011 to end October 2020 he held the position of Deputy
(Retail Banking, Process Management and Quality Assurance). General Manager (Banking Support Services) and was in charge of
six departments covering Supplies, Transport, Security, Maintenance
She holds a First Class Special Degree in BCom from the University Engineering, Building Engineering, and Desk Top Publishing where
of Sri Jayewardenepura and has a professional banking qualification he has gained variety of immense experience in procurement,
(AIB), Sri Lanka. She is a Life Member of Association of Professional construction and maintenance, stores and inventory control, transport
Bankers of Sri Lanka and the Institute of Bankers of Sri Lanka. and security procedure.
Mr Fonseka is a Fellow of the Institute of Bankers of Sri Lanka and Mr G Lionel Galagedara
holds a Master’s Degree in Business Administration from Postgraduate Deputy General Manager – Recoveries Department
Institute of Management of University of Sri Jayewardenepura. He
has received a Distinction for the ACI Dealing Certificate and counts Mr Lionel Galagedara is incharge of the Recoveries Department of
more than 27 years experience in Treasury Management. He is also the Bank. He joined the Bank as a Management Trainee and counts
a Certified Member (CMA) of the Institute of Certified Management over 33 years of service at the Bank. His variety of experience covers
Accountants of Australia. the areas of Channel Management, Retail Banking, Corporate Banking,
Project Financing, Credit Administration and Recoveries.
He has acted as the President of the Association of Primary Dealers
during the period of 2018 to 2020, as a member of the National He holds a BCom (Special) Degree from the University of
Payment Council, Financial System Stability Consultative Committee Sri Jayewardenepura and an (LLB) Degree from the Open
and the task force to study and design a new alternative benchmark University of Sri Lanka. He is also an Associate Member of the
interest rates committee of Central Bank of Sri Lanka. At present, he Institute of Bankers of Sri Lanka and an Attorney-at-Law.
acts as a member of the Central Bank of Sri Lanka’s Market Working
Group on Domestic Financial Market Infrastructure Development
Project. He also acts as a non-independent Non-Executive Director at
Mr Azzam A Ahamat
People’s Leasing & Finance PLC at present. Furthermore, he has acted Head of Finance
as a Chief Examiner for Institute of Bankers of Sri Lanka’s IABF/DABF
Mr Ahamat joined People’s Bank on 3 January 2017 and has over
Examinations previously.
19 years experience both locally and internationally across strategic
financial management, alternate investments, and risk. His prior
Mr Fonseka joined People’s Bank in 2002, prior to which he served at
employers include some of the largest multinational professional
American Express Bank and Standard Chartered Bank. He has been a
service firms and other Tier I service providers across respective
member of People’s Bank’s Senior Corporate Management team from
market spaces. He is a Fellow Member of the Chartered Institute of
November 2011.
Management Accountants (UK), a Fellow Member of the Association
of Chartered Certified Accountants (UK) and a Fellow Member of the
Corporate Management
Institute of Certified Management Accountants of Sri Lanka. He is also is also an Associate Member of Institute of Bankers of Sri Lanka
a Certified Practicing Accountant (AUST.), a Certified Member of the and Institute of Credit Management of Sri Lanka. She obtained an
Chartered Institute of Securities & Investment (UK) and the Chartered Advanced Certificate in Customer Relationship Management from the
Institute of Credit Management (UK) and a Technical Specialist of the Postgraduate Institute of Management at University of
Institute of Risk Management (UK). Sri Jayewardenepura.
In 2007, she joined the Petroleum Resources Development He has been exposed to both international and domestic training
Secretariat, the Regulatory Authority of Upstream Oil and Gas Industry programmes with relevance to human resources. Mr Jayatissa is
in Sri Lanka which functions under the Ministry, as the Director Legal currently overseeing the duties as the Deputy General Manager -
and Land and during this era she served as the Secretary to the Human Resources of the Bank. He holds a Bachelor of Commerce
Petroleum Resources Development Committee. During her 35 years of (Special) degree offered by the University of Colombo. He has the
experience as an Attorney-at-Law she has gained immense exposure Professional Banking qualification AIB - Sri Lanka and Associate
by participating in many local and international programmes, events, membership of Institute of Bankers of Sri Lanka. Mr Jayatissa
and forums. also possesses an Advanced Diploma in English Language for
Administration and Academic purpose from the University of Colombo.
Ms V K Narangoda
Deputy General Manager – Enterprise Banking Ms P S J Kurukulasooriya
Deputy General Manager –
Ms Krishani Narangoda joined the People’s Bank in 1987 as a Strategic Planning, Performance Management and Research
Management Trainee and counts over 33 years of service in the
Bank. She covered the areas of Branch Banking, Overseas Customer Ms Jayanthi Kurukulasooriya joined the Bank, as a Management
Services, Off-shore Banking and Corporate Banking under various Trainee in 1994 and counts over 26 years of experience in the banking
management capacities and presently serves as Deputy General field. Her experience mainly encompasses in the areas of Branch
Manager-Enterprise Banking covers the areas of Commercial Credit, Banking, Credit, Staff Training, Human Resources Development, Credit
SME, Development Finance, Microfinance, Commercial Banking and Administration, Channel Management and Retail Banking. Prior to
Project Financing and Revival Unit. joining the Bank, she has gained experience as a Senior Assistant
Accountant at the Road Construction and Development Company.
She holds an Honours Degree (BSc Business Administration
with Second Class Upper Division) from the University of She holds a BSc Business Administration (Special) Degree with a
Sri Jayewardenepura and Master’s Degree in Business Studies Second Class Upper Division (Honours) from the University of
from the Faculty of Graduate Studies, University of Colombo. She Sri Jayewardenepura and Master’s Degree in Business Administration
Corporate Management
(MBA) from the University of Colombo. She is a Fellow member (FIB) Mr Dhammika Dasa
of Institute of Bankers of Sri Lanka, a member of AAT Sri Lanka, a Chief Information Officer
Licentiate member of The Institute of Chartered Accountants of
Sri Lanka and holds a Diploma in Human Resource Management Mr Dhammika Dasa joined People’s Bank in August 2019 as the
(Dip HRM) as well. Chief Information Officer.
She was able to enhance the Bank’s image by winning three Gold Mr Dhammika's 25 years of experience in the IT industry consists
Medals at the Convocation (1997) of Institute of Bankers of of Strategic Management, Programme Management, Project
Sri Lanka for obtaining maximum number of distinctions, completing Management, Infrastructure Technology Management, Software
examination within two consecutive years and obtaining highest Development and Implementation Exposure with Financial, Insurance,
aggregate marks at the Intermediate and Final Examinations, which is Banking, Manufacturing, Logistics, Leisure domain in Sri Lanka,
still an undefeated record. Australia, and New Zealand. He has wide knowledge in information
security implementations as well.
Ms G M R P Wijerathna
He holds a BSc Degree in Mathematics and Computer Science from
Deputy General Manager – Risk Management University of Kelaniya. Prior to joining the Bank, he has held several
Senior Management positions in Aitken Spence Group and KPMG
Ms Roshini Wijerathna is in charge of the Risk Management and
Sri Lanka.
Credit Control functions of the Bank. She joined the Bank in 1990 as
a Management Trainee and counts over 26 years of experience in the
Bank’s Treasury. She deputised the Primary Dealer Unit of the Bank Ms Kumari Senaratne
since 2003 and the Treasury later on prior to moving to the area of Acting Deputy General Manager – Corporate Banking
Risk Management in 2017. She holds a Bachelor of Science (Physical
Science) with a Second Class Upper from University of Colombo, a Ms Kumari Senaratne is an Associate Member of the Institute of
Master of Business Administration (in Finance) from University of Bankers of Sri Lanka and Institute of Credit Management of Sri Lanka.
Colombo and a Diploma in Treasury and Risk Management from She holds a Masters' Degree in Business Studies from University
IBSL. She has obtained a distinction for ACI Dealing Certificate – ACI, of Colombo and a Bachelor of Science (Special) degree in Business
Financial Markets Association and is an Associate member of the Administration from the University of Sri Jayewardenepura.
Institute of Bankers of Sri Lanka.
She joined People's Bank in 1987 as a Management Trainee and has
She is a past President and Secretary of the Association of Primary gained experience in the areas of International Banking operations,
Dealers and currently a member of the Sri Lanka Forex Association & Commercial Credit, Retail Banking, and Corporate Banking under
Association of Professional Bankers and an Exco member of the various capacities. She has contributed immensely by conducting
Association of Banking Sector Risk Professionals. several training programmes. During her career she has also
participated in various programmes both local and overseas.
Ms N R Wijayaratne
Deputy General Manager – Transaction Banking Mr Lalith Withana
Deputy General Manager (Actg.) – (Banking Support Services)
Ms Nipunika Wijayaratne serves as the Deputy General Manager of
Transaction Banking, counting over 30 years of experience in banking, Mr Withana joined People’s Bank as a Management Trainee in 1990
having joined the Bank in 1990 as a Management Trainee. She holds and counts nearly 30 years service. He holds a second class (Lower)
a BSc Degree in Agriculture from the University of Peradeniya and an Degree in BSc. (Agriculture) from the University of Peradeniya,
MBA in Finance from University of Colombo. Master of Business Administration from University of Colombo and
Postgraduate Diploma in Management from University of
She has experience in Trade Services and Correspondent Banking and Sri Jayewardenepura. He is a Fellow Member of the Institute of
prior to joining the Bank, she served in the private sector. She is an Bankers of Sri Lanka.
Associate member of Institute of Bankers of Sri Lanka. She is also an
Executive Committee member of International Chamber of Commerce He has gained extensive exposure in various management level
Sri Lanka. capacities in the branch network of the Bank, Corporate Banking
Division, Human Resource Department, Investigation and Inquiries
Department and Credit Recoveries Department. He has eight years of
experience in Executive and Corporate Management positions.
EXECUTIVE MANAGEMENT
Front row left to right: Mrs H L S S Senanayake, Mr K D Karunatilake, Mr A S M V Kumarasiri, Mr T D De Z Gunawardena, Mrs P R Madurawala
Middle row left to right: Mrs D M D Dasanayake, Mr W A L P Jayarathne, Mr W A Wasantha Kumara, Mr K A Nihal, Mr A U L A Anzar
Back row left to right: Mrs P C K Gamage, Mr A Jayaasith, Mr T G S P Kumarasiri, Mrs W G P Senanayake, Mr P M Ariyawanse, Mrs N A C W K Nissanka
executive management
Front row left to right: Mrs N C Mudalige, Mrs U S Gerty, Mr S N B M W Narayana, Mrs R P Nilmini Premalal, Mrs M B A K B Mudduwa
Middle row left to right: Mr K B N Seelanatha, Mrs G S Galappaththi, Mr T M W Chandrakumara, Mrs W D A B Liyanagunawardena, Mrs K S R S Loku Kaluge
Back row left to right: Mr E A M Dissanayake, Mrs T Hewawasam, Mrs D R Beneragama, Mr R Ravikaran, Mr N H Wijayawardana
CHIEF MANAGERS
OPERATING ENVIRONMENT
FINANCIAL CAPITAL
yy Equity capital yy Capital management
yy Customer deposits yy Dividend Policy
yy Borrowings yy Shareholder engagement
yy Liquidity management yy Market capitalisation
Consumer Banking
Enterprise Banking
MANUFACTURED CAPITAL
Treasury and Investment Banking
yy Property, plant, and equipment yy Largest branch network in the banking
yy Information security industry Corporate Banking
yy Advanced technology platforms yy Widest SBU network in Sri Lanka
International Operations
INTELLECTUAL CAPITAL
yy Organisational knowledge yy Robust risk management framework
yy Strong brand image and value yy Innovation
yy Value based culture yy Sound policies and procedures
yy Good governance framework yy Ethics and compliance
yy Effective internal control system yy Digitalisation drive
HUMAN CAPITAL
yy Diversified workforce of 7,692 yy Loyalty and commitment
employees yy Recruitment policy
yy Skills and competencies yy Training and development
yy Performance driven culture yy Employee grievance policy
yy Performance based reward structure
STRATEGIC PILLARS
MISSION
OUTPUTS AND OUTCOMES
FINANCIAL
Achieved growth in business volumes and incomes, strengthened the capital base and liquidity
position and created financial value for our stakeholders. Based on proposed final dividend,
investors are to receive returns of LKR 3.0 Bn. for 2020. Employees received salaries and other
benefits amounting to LKR 19.7 Bn. in 2020. Creating financial value to society as a whole;
paid LKR 7.1 Bn. in corporate income tax in 2020 to support public services. Reinvested in our
business for the future by making a sustainable profit.
MANUFACTURED
Delivered unparalleled value to customers by leveraging our flexible and resilient
multi-channel network.
INTELLECTUAL
We have enhanced our brand score to 81 (from 80 in 2019) conducted 85% of the Bank’s
conventional banking transactions from digital channels, strengthened our risk and
governance aspects and, promoted a culture of transparency, integrity and accountability.
SERVICES
HUMAN
We have built a resilient, engaged and inclusive workforce with a strong sense of purpose
DELIVERY
and ethics. By providing almost 183,460 hours training, we have increased the skills and
CHANNELS capabilities of our people, whilst providing a safe and conducive work environment, with a
healthy work-life balance.
SUPPORT
SERVICES SOCIAL
We support growth, deliver services and develop opportunity by connecting with, and
investing in the communities in which we operate. Our customer base over 14 million across
the Island YoY, extended debt moratoriums exceeding LKR 400 Bn. and promoted social and
economic development by collaborating with local and global partners.
NATURAL
We have reduced the negative impact on the environment through our operations, by
providing sustainable financing, using renewable energy in our buildings, incorporating
environmental considerations into our lending and investment decisions and, efficiently
managing our energy and water consumption.
Financial capital
Manufactured capital
Investment property, plant and equipment (LKR Mn.) (1,276.4) 2,560.8 1,284.4
Number of SBUs 5 239 244
Number of ATMs 10 755 765
Number of branches 2 739 741
Number of CDMS 4 270 274
Intellectual capital
Human capital
Natural capital
OPERATING ENVIRONMENT
Our macroeconomic operating context one million lives have been lost, whilst many have suffered serious
illness and approximately 90 million people are expected to fall into
The outbreak of COVID-19 pandemic has fundamentally changed
extreme deprivation in 2020. The governments across the world
the external environment in which we operate. Its implications on
have taken various measures to retain employees. However, the
economies extend far beyond the health related concerns, testing the
International Labour Organization (ILO) estimates, the working hour
resilience of the financial sector.
losses to be equivalent to a loss of 345 million full time workers.
With the partial easing of stringent lockdowns in mid-2020, there has
The global economic growth impacted by been a resurgence of economic activity. However, the reimposition
the pandemic of containment measure in the second half of 2020, as the virus
continued to spread, has slowed down the pace of global economic
2021 2020 2019 recovery. The International Monetary Fund (IMF) estimates global
(Projection) (Estimate) economic growth to have contracted by 3.5% in 2020. However,
World output 5.5 -3.5 2.8 with the approval of multiple vaccines and the launch of vaccination
in certain countries in December 2020, there are raised hopes of an
Advanced economies 4.3 -4.9 1.6
eventual end to the pandemic. However, the global recovery is likely
United States 5.2 -3.4 2.2 to be long, uneven, and uncertain.
Euro Area 4.2 -7.2 1.3
Japan 3.1 -5.1 0.3
Divergent global economic recovery
United Kingdom 4.5 -10.0 1.4
The global economy is projected to grow by 5.5% in 2021 and
Emerging market and moderate to 4.2% in 2022. The local transmission of the virus is
developing economies 6.3 -2.4 3.6 expected to be brought down to low levels by end 2022, with the
Russia 3.0 -3.6 1.3 increased vaccine availability, improved therapies, testing, and tracing.
China 8.1 2.3 6.0
Consistent with global economic recovery, global trade volumes are
India 11.5 -8.0 4.2
projected to grow by 8.0% in 2021. Services trade is expected to
ASEAN 5.2 -3.7 4.9 recover at a slower pace, which is consistent with subdued cross-
border tourism and business travel until transmission declines across
Source: World Economic Outlook – January 2021
the globe. Inflation is expected to remain subdued during 2021/22,
GLOBAL ECONOMIC GROWTH with advanced economies projected to remain at 1.5% and emerging
market and developing economies at just over 4.0%, which is lower
% than the historical average of the Group.
9
Reflecting the strong policy support and the anticipated widespread
6 availability of vaccines in summer 2021, the output loss of advanced
economies is projected to be relatively smaller compared with the
3 pre-COVID forecast. Reflecting the wide divergence in recovery, USA
and Japan are projected to regain end-2019 activity levels in the
0
second half of 2021, while in the Euro Area and the United Kingdom is
-3 expected to remain below end-2019 levels into 2022. The resurgence
of economic activity among advanced economies is expected to have
-6 favourable spillovers to trading partners.
Advanced Emerging market World
economies and developing output
economies Emerging market and developing economies (EMDE) too are projected
to trace diverging recovery paths, with considerable differentiation
2019 2020 (Estimate) 2021 (Projection) between China and other EMDE nations. Effective containment
Source: World Economic Outlook – January 2021
measures, a forceful public investment response, and central bank
liquidity support have facilitated a strong recovery in China. The
The COVID-19 pandemic has led to a deep global recession as outlook for oil exporters and tourism-based economies within the
severe as the two World Wars and the Great Depression over the group are subdued due to the expected slow normalisation of cross-
past century and a half. Since the outbreak of the pandemic, over border travel and the subdued demand for oil prices. The pandemic is
expected to reverse the progress made in poverty reduction across the
Operating Environment
past two decades, with close to 90 million people likely to fall below In order to expedite the monetary policy transmission process, the
the extreme poverty threshold during 2020/21. India is projected to CBSL reduced the policy interest rates and the Statutory Reserve Ratio
grow by 2.7% for 2021, reflecting carryover from a stronger-than- (SRR) to their lowest levels in history. The substantial monetary easing
expected recovery in 2020 after lockdowns were eased. measures resulted in a significant decline in market interest rates,
with most benchmark interest rates reaching historically low levels.
16
-8
-16
-24
’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20
Q1 Q2 Q3 Q4
Operating Environment
EXCHANGE RATE (LKR PER USD) Envisaged recovery of the Sri Lankan economy
LKR
Through monetary and fiscal interventions, the CBSL will continue to
provide adequate impetus to the economy, amidst the challenging
200 domestic and global macroeconomic conditions in 2021. Accordingly,
the CBSL will continue the prevailing accommodative monetary
160
policy stance in the ensuing year, to ensure the envisaged recovery of
120 economic activity.
INFLATION
7.0
5.6
4.2
2.8
1.4
0
Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
’18 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’20 ’20 ’20 ’20 ’20 ’20 ’20 ’20 ’20 ’20 ’20 ’20
Operating Environment
The CBSL will continue to allow market forces to determine the The banking sector exhibited a higher resilience against liquidity risk
exchange rate. However, any excessive volatility in the exchange rate as a result of the unprecedented easing of monetary policy, regulatory
due to speculative moves would be strictly monitored and corrective forbearances and low demand for loans. Rupee deposit, which
action taken for the greater good of the overall economy. continued to be a major source of funding for the banking sector,
recorded a notable growth of 19.3% in September 2020, compared
to 7.7% in September 2019. Foreign Currency (FC) deposits recorded
A stable banking sector a marginal increase from 14% to 14.3% from September 2019
At the onset of the pandemic, the banking sector was well poised to September 2020. The credit to deposit ratio declined to 84.8%
in terms of capital and liquidity buffers, due to stringent regulatory in September 2020 from 88.2% in December 2019 reflecting the
requirements. A deterioration in credit quality was observed following easing of credit growth relative to deposits growth. The cumulative
the pandemic, despite the moratorium being in effect, during the nine maturity gap as a percentage of the cumulative liabilities, for maturity
months ending September 2020. buckets up to six months marginally widened indicating the unhealthy
maturity profile of assets and liabilities in the short term. The NPL
Credit growth was mainly driven by an increase in loans and advances ratio of the banking sector improved to 4.3% at end December 2020.
to the government and State-Owned Enterprises (SOEs). There was
a high concentration of credit to six sectors with 73.1% of the loans Due to the prevailing low interest rate scenario and the subdued
concentrated into consumption, construction, trade, manufacturing, demand for loans, net profits for the nine months period increased
infrastructure, and agriculture at end September 2020. to LKR 94.8 Bn. in September 2020 from LKR 82.6 Bn. in the
corresponding period in 2019. Reflecting the policy measures taken
The overall NPL ratio of the banking sector reached 5.3% in by the CBSL, the net interest margin (NIM) of the sector declined to
September 2020, with the manufacturing sector reporting the highest 3.1% of the average assets for the nine months ending September
NPL ratio of 9.0%, followed by agriculture (7.3%), trade (7.3%), 2020. Return on assets (ROA) of the sector increased marginally from
tourism (7.1%), construction (6.7%), and consumption (5.2%) at 0.93% to 0.97% YoY in September 2020, whilst return on equity
end September 2020. The increase in rescheduled loans within the (ROE) increased from 10.5% to 10.9% YoY for the same period. As at
banking sector, further deteriorated the asset quality of the banking end December 2020 both ROA and ROE had improved to 1.0% and
sector. The specific provision coverage ratio increased from 38.2% as 11.3% respectively.
at end September 2019 to 45.9% by end September 2020.
NON-PERFORMING LOANS TO
TOTAL LOANS AND ADVANCES ROE – AFTER TAX
% %
6.25 20
5.00 16
3.75 12
2.50 8
1.25 4
0 0
’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating Environment
ROA – AFTER TAX initially facilitating a shared know-your-customer (KYC) solution based
on Blockchain Technology.
%
0.3 Significant progress was made towards introducing a new Banking Act
by repealing the existing Banking Act No. 30 of 1988. The aim is to
0 create a stronger legal foundation for supervision of banking system
’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20 ’18 ’19 ’20
Q1 Q2 Q3 Q4
of the country.
STAKEHOLDER ENGAGEMENT
Our stakeholders are the individuals, groups, and organisations that significantly affect or could be significantly affected by our strategy
execution and business operations. We regularly engage with our stakeholders as they provide us with essential resources that enable us to
generate competitive sustainable value in the short, medium, and long term. The feedback received helps to improve our products, customer
service, processes and management and also maintain social, environmental, and ethical standards.
Key stakeholders
Our key stakeholders are determined based on the level of engagement, their impact on our business and involvement in the
decision-making process.
Suppliers Employees/
Trade unions
Regulators/ Shareholders
Legislators
Regular dialogue with our stakeholders help us to have a clear understanding of our stakeholders’ expectations and about the value we can create
in our diverse roles as a bank, employer, investor, and responsible corporate citizen.
Stakeholder Engagement
The table below identifies our key stakeholders and how we engage with them.
Who they are Shareholders both the Government Retail and SME customers All full-time and part-time employees
and other Corporate and Institutional
Banking clients
Public sector clients
Brokers and intermediaries
Why they matter To have continued access to capital for the Improving customer experience is A team of dedicated and motivated
to us long-term performance of our business. essential to differentiate ourselves from employees supports the vision of the
the competition and achieve business Bank. By delivering to the expectations
success. We enhance product performance of our people, we support their well-
and value through collaboration and being and enable them to make the right
innovation with our customers. business decisions and retain and develop
the best talent.
Key concerns/ zzConsistent economic performance zzResearch and innovation zzHealth and safety
expectations zzEthical conduct, environmental, and zzQuality of service zzTransparent, fair, and attractive
zzBrand reputation and image zzFinancial stability of the Bank zzCareer opportunities
zzPrivacy
Channels of Frequency Mode of engagement Frequency Mode of engagement Frequency Mode of engagement
engagement and Annually Annual report Ongoing Customer satisfaction Annually Performance appraisal
frequency surveys
Quarterly Quarterly financial Ongoing Customer networking Ongoing Collective bargaining
statements
Continuous Corporate website Ongoing Corporate website Ongoing Muti-level staff meetings
Ongoing Phone calls, email, Ongoing Relationship Ongoing Staff orientation
written communication management
Ongoing Financial literacy Ongoing Training programmes
programmes
Ongoing Customer hotline Ongoing Group intranet, email
Ongoing Social media Quarterly Pulse magazine
Our strategic We work with our investors, to deliver We provide cutting-edge products with We provide a safe and motivating working
response robust returns and long-term sustainable speed and convenience to our customers environment that support personal and
value whilst keeping them apprised of our through our Self-Banking Units and digital professional development through fair
progress and challenges in a timely and channels. We work towards innovating remuneration and talent development.
transparent manner. our processes to provide an excellent
customer experience. Human capital on pages 83 to 96.
The entire annual report provides
information necessary for a Customer capital on pages 98 to 105.
comprehensive assessment of our
progress.
Stakeholder Engagement
Why they matter We engage with regulators and legislators Our external supply chain and our We are committed to building positive
to us to ensure ethical operations, attract suppliers are vital to our performance. relationships with the communities in
funding, enable markets, and achieve which we operate and safeguarding
sustainability. the environment.
Key concerns/ zzGovernance and transparency zzMaintaining strong relationships zzFuture talent pipeline
expectations zzRisk management zzBuilding capability and expertise zzLocal operational impact
zzIndustry support for policies zzResponsible procurement, trust, zzHealth, safety, and environment
zzRegulatory compliance
digital solutions development
zzQuality of service zzGuidance on financial management
zzFinancial literacy
zzResponsible sourcing
Channels of Frequency Mode of engagement Frequency Mode of engagement Frequency Mode of engagement
engagement Weekly Regulatory reporting Ongoing Supplier surveys Ongoing Press releases, media
and frequency Monthly briefings
Quarterly
Annually
Ongoing On-site surveillance Ongoing Supplier relationships Ongoing Corporate website
Ongoing Industry forums and Ongoing On-site meetings Ongoing Public events
meetings and visits
Ongoing Press releases Ongoing Social media
Our strategic We maintain good working relationships We build trusting relationships from We strengthen economic development,
response with governmental authorities through which we can mutually benefit and ensure enhance social sustainability and ensure
ongoing dialogue, timely submission reliable and sustainable supply chains. environmental protection within our
of relevant information and meeting communities.
regulatory requirements. Business partner capital on
pages 106 to 109. Community capital on pages 114 to 120
Value creation on pages 40 and 41. and environmental capital on
pages 121 to 125.
MATERIALITY
The materiality assessment process is a vital element in embedding The material topics are presented in relevance to our four strategic
integrated thinking at our Bank which helps to ensure long-term themes, encompassing all capitals for preparing this Report and in
sustainability of our business and stakeholder value creation. Our alignment with relevant SDGs. A new material theme was added
ability to create value is impacted by a multitude of factors including during the year.
the operating context, our responses to the risks and opportunities
and implementation of our strategy. This section provides the context
for determining material matters – those that have influenced, or
Our approach to create shared value
could influence, our ability to create value over the short, medium and At People’s Bank, we focus on sustainable value creation by optimally
long term. allocating resources to deliver value to stakeholders just as much as
we derive value from them. Our strategies and strategic imperatives
We conduct a materiality assessment annually to determine the are formulated based on the outcomes of our materiality analysis. All
content of our review, with due consideration given to significant material topics are managed in alignment with our strategic priorities
economic, environmental, and social impacts on our business and and responsibilities and are assigned to the respective Business
our stakeholders. The degree of materiality or importance of a topic Unit Heads. Resources are allocated based on the degree of risk
is assessed by its relevance to our Bank or our stakeholder and and opportunities of the material topic. Measuring the performance
its significance. Significance is determined by the probability of of our employees and operations against a set of predefined Key
occurrence and the magnitude of its impact. Performance Indicators (KPIs) indicates our commitment to achieving
the strategic objectives.
Material topics in
voluntary frameworks Matters
and standards highlighted
adopted by through
internal External
Operating Direct inputs Strategic
UN Sustainability sources stakeholder Customer
context from key priorities of
Development (Board engagement feedback
of the Bank stakeholders the Bank
Goals committee activities
meetings,
GRI Standards internal audit
UN Global reports)
Compact
Materiality
In defining report content, we sought to prioritise the material impacts based on their relative importance to internal and external stakeholders.
This prioritisation and identification of material topics for reporting is shown below.
The material topics prioritised for inclusion in this report are given below:
No. Material GRI Reason for Capital Management approach Evaluation of the Relevance Materiality to stakeholders and
GRI topic standard materiality management/ GRI 103-2 management to topic boundry
GRI 102-47 No. GRI 103-1 strategic theme approach People’s GRI 102-46
GRI 103-3 Bank
Internal External
Shareholders
Environment
Community
Employees
Customers
Suppliers
1. Financial GRI 201 A strong financial Increase revenue Financial Capital
performance performance from all business (page 65)
strengthens the lines by leveraging on Performance of
stability, resilience, market opportunities Business
and growth capacity and effective cost Units (pages 127
of the Bank whilst management to to 138)
improving the brand improve the bottomline. Risk Management
equity Managing risks Report (page 142)
strategically, reinforcing
capital position and
strengthening Bank’s
balance sheet.
2. Customer Customer Deliver a compelling Manufactured
experience experience is crucial value proposition to Capital
to secure a captive customers by adopting (page 70)
market share and a customer centric Intellectual Capital
strengthen the approach and facilitating (page 76)
sustainability of seamless transition to Social and
the Bank digital banking channels Relationship
that offer a high customer Capital – Customer
experience (page 98)
3. Operational Essential to realise Enhance the efficiency Manufactured
efficiency better outcomes for of all key operations of Capital
all stakeholders of the Bank mainly through (page 70)
the Bank automation to generate Intellectual Capital
increased value for (page 76)
stakeholders. Social and
Relationship
Capital Customer
(page 98) and
Supplier (page 106)
Human Capital
(page 83)
Natural Capital
(page 121)
4. Employee Improved employee Invest in employee Human Capital
productivity productivity is training and development (page 83)
essential to drive and nurture a highly
the Bank’s strategic engaged team of
agenda and employees
performance
Materiality
No. Material GRI Reason for Capital Management approach Evaluation of the Relevance Materiality to stakeholders and
GRI topic standard materiality management/ GRI 103-2 management to topic boundry
GRI 102-47 No. GRI 103-1 strategic theme approach People’s GRI 102-46
GRI 103-3 Bank
Internal External
Shareholders
Environment
Community
Employees
Customers
Suppliers
5. Digital Achieve a Continuous and Manufactured
leadership competitive edge, ongoing investment in Capital (page 70)
deliver exceptional digitalisation to maintain Intellectual Capital
customer outcomes our position as the (page 76)
resulting in most digitalised and Social and
enhanced brand technologically advanced Relationship
equity and a strong Bank in the Nation and Capital-Customer
market position deliver increased value to (page 98)
our economy and all our
stakeholders
6. Risk and Enhance the Risk Management Strengthen the Risk management
governance integrity, trust, and and Corporate sustainability of the report (page 142)
stability of the Bank Governance/ Bank by adopting a Corporate
proactive approach to risk governance report
management following (page 173)
sound governance
practices
7. Compliance GRI 416, Elevate Bank’s Corporate Ensure full compliance Social and
417, 418 reputation and Governance/ with all applicable Relationship
strengthen brand laws and regulations Capital – Customer
equity by maintaining strong (page 98)
governance and oversight
framework
8. Talent GRI 410, A team of highly- Recruit, retain, and Human Capital
management 402, 403, engaged, motivated, develop a high (page 83)
404, 405 and committed performing team of
team of employees employees to implement
deliver a responsible the Bank’s strategic
and ethical service agenda
10. Anti-corruption GRI 205 Contribute towards Corporate Nurture a stringent, Human Capital
an ethical society Governance/ ethical and compliant (page 83)
through compliance culture within our Bank to
support our people to be
at their best, conducting
themselves with integrity
adhering to highest
standards.
11. Socio- GRI 202, Align with national Community Reduce social Social and
economic 203, 413 priority issues Capital/ inequalities across Relationship
impacts Sri Lanka by Capital –
supporting the socio- Community
economic progress of (page 114)
communities.
Materiality
No. Material GRI Reason for Capital Management approach Evaluation of the Relevance Materiality to stakeholders and
GRI topic standard materiality management/ GRI 103-2 management to topic boundry
GRI 102-47 No. GRI 103-1 strategic theme approach People’s GRI 102-46
GRI 103-3 Bank
Internal External
Shareholders
Environment
Community
Employees
Customers
Suppliers
12. Environmental GRI 302, Contribute towards Mitigate our overall Natural Capital
impact of the 305, 306 a sustainable environmental footprint (page 121)
business green environment by implementing
through sustainable effective energy, water,
business practices and waste management
measures across the
Bank.
13. Supplier value GRI 204 Minimise the risk of Strengthen long-term, Social and
creation business disruptions mutually beneficial Relationship
due to a breakdown business partner Management
in the supply relationships and create Capital –Supplier
chain and thereby shared value through (page 106)
strengthen supply compliance, transparency,
value creation ethical business practices
and timely payments.
14. Brand equity Increase market Grow our brand equity Intellectual Capital
share and achieve a through digitalisation (page 76)
competitive edge by leadership, innovation,
strengthening the strong governance,
brand reputation customer service
excellence, effective
customer relationship
management, strong
market presence and
stability.
15. Channel Deliver an Enhance the quality and Social and
management exceptional efficiency of our delivery Relationship
customer channels. Management
experience through Capital –
a smooth and Supplier
sustainable delivery (page 106)
channel
17. Training and GRI 404 Develop a high Build industry-leading Human Capital
development performing team capability and enable (page 83)
of employees who our employees to realise
are capable of their full potential by
implementing the investing in training
strategic plan of and development of our
the Bank to deliver human resources.
an outstanding
stakeholder
experience
Materiality
No. Material GRI Reason for Capital Management approach Evaluation of the Relevance Materiality to stakeholders and
GRI topic standard materiality management/ GRI 103-2 management to topic boundry
GRI 102-47 No. GRI 103-1 strategic theme approach People’s GRI 102-46
GRI 103-3 Bank
Internal External
Shareholders
Environment
Community
Employees
Customers
Suppliers
18. Customer GRI 416 Ensure a safe Eliminate any adverse Social and
health and and healthy work impacts to health and Relationship
safety environment that is safety of our customers Management
secure, motivating, by ensuring our business Capital –
and engaging premises are safe Customer
and our products and (page 98)
services are safe
19. Customer The COVID-19 Providing customers a Social and
service pandemic has range of digital banking Relationship
enhancement accelerated channels to conduct Management
through remote customers adopting their banking services Capital – Customer
channels digital channels of safely and with ease (page 98)
banking Intellectual Capital
(page 76)
Relevance
High: Considered a priority for action
Moderate: Adequate action is required to control potential impacts
Low: Adequate measures are already in place or the impact is beyond our control
Materiality Matrix
1, 2, 3, 4, 5,
HIGH
6, 7, 15, 16
Importance to stakeholders
MODERATE
8, 9, 10, 14, 17
18, 19
LOW
11, 12, 13
Importance to organisation
Our Strategic Plan, ''SP 2016 – 2020'' was unveiled in 2016 outlining Key Performance Indicators (KPIs) have been assigned for each of the
the key strategic initiatives that would enable the Bank to achieve its pillars with set target values to be achieved by 2020. In this section,
2020 profitability targets and secure its position as the undisputed we give an update of the activities that were performed under each
market leader in the financial services sector. The Plan is based pillar and our progress.
on four strategic pillars. Our digitisation vision articulates our
revolutionary journey into the digitised space, pushing boundaries
and opening windows of opportunity that have showcased impressive
Delivering innovative market-leading client
results since embedding into our strategic journey in 2015. Five years experiences
on, we have transitioned into the most digitalised and technologically As the bank of the people, we believe in financial inclusion and in
advanced bank in the Nation, by converting our 348 branches by making banking accessible to all citizens of our country. We have been
facilitating digital customer on boarding application across the island. constantly looking at avenues to reach customers and address their
banking needs. With the emergence of the tech era, we have been in
Our strategic plan has moved us towards electronic and lifestyle based the forefront of digital innovation through our impressive digitisation
channels and enhanced our service culture and branch ergonomics. programme. This has enabled us to introduce digital products
Several customer-centric initiatives have also been implemented to that provide hassle-free banking which is efficient, delivering an
reach a wider range of high-end customers, whilst maintaining our unparalleled customer experience.
current customer base. We have explored other funding opportunities
and expanded our international footprint in high potential markets.
Through our paperless banking journey we have offered revolutionary
Maintaining a steady growth momentum and
new green banking solutions, brought a new level of convenience building resilience
to our customers whilst reducing our carbon footprint and levels of Strengthening our balance sheet and growing our capital base
energy consumption at the same time. is essential support business growth. We play a pivotal role in
our Nation’s economic development as a key economic driver by
spearheading financial inclusivity and providing a wider segment of
the population with access to high quality banking facilities
and services.
Being operationally excellent in everything transactions originating via digital channels. Our deposit base have
we do surpassed LKR 1.8 Tn. and we serve a loyal customer base exceeding
14 million. Governance and best practices remains top on the agenda,
Creating a more customer-centric and goal-orientated culture and
as reflected through our AA- Fitch Rating.
implementing a new culture of efficiency and service standards to
deliver an exceptional user experience.
We are the only entity among the Top 3 most valuable brands in
Sri Lanka and the only State bank to showcase an increase in brand
Always do business the right way value. Our far-reaching digitalisation process and innovation were
instrumental for our excellent performance in the Most Valuable
Prioritising corporate governance and ethics, including transparency
Brand Index and being the vanguard in transforming conventional
and accountability. Implementing stringent audit and compliance
banking business into one that embraces the future in a sustainable
processes to strengthen the risk management and governance
and going concern.
structure of the Bank.
Going forward, we will unveil our new strategic plan that would chart
The progress of the strategic plan the course of the Bank from 2021 onwards, focused on capitalising
We were the first banking institution in Sri Lanka to spearhead a the opportunities of our technological advancements whilst reaching
fully-fledged comprehensive digitalisation campaign covering the untapped customer segments in the Nation. The key areas of focus
entire operational structure encompassing all tiers, from the lowest will be improving the health of the Bank by maintaining sound KPIs
to the highest. The progress of our strategic vision is reflected in for business goals and Capital Adequacy Asset Quality Management
our 7,500+ strong team driving the Bank towards its objective of Earnings Liquidity Sensitivity (CAMELS), leveraging and improving
market leadership, with 85% of the Bank’s conventional banking digital channels for business growth, introducing structural changes
for process improvement and cost leadership and service excellence.
Short Term and Medium Term Measures to Improve the Performance of the Bank in the Future
zzAgriculture (farming, livestock, fisheries, agro produce collectors and intermediaries, small rice millers)
zzManufacturing industries focused on direct and indirect exports and imports substitution
zzConstructions
ix. Set up a desk for women and youth entrepreneurship development – This segment is mostly immature in financial literacy and
business planning
x. Develop entrepreneurship in young graduates through an incubation system developed by the Bank
xi. Direct entrepreneurs to support agencies such as Industrial Development Board, CISIR, SLTDA, SLIM etc.
xii. Develop linkages with large corporates for supply chains and business improvements
xiii. Appoint 24 Development Officers/Field Officers to cover the entire 24 regions to grow MF/DF portfolio
xiv. Match facilities with Agri Modernisation Scheme of Ministry of Agriculture grants
xv. Liaise with Smallholder Agribusiness Partnership Programme (SAPP) to consider facilities to farmers
xvi. Establish a Credit Revival Unit to rehabilitate sick projects
2. Deposits
1. Maintain interest margin at a competitive level to gain the competitive market edge when reducing the deposit interest rate (whilst
maintaining the position as the market leader) when and where necessary and market the higher interest offered by the Bank and provide
benefits to the savings products and, to attract customers through, enhancing the quality of customer service, providing additional
benefits etc. and marketing our higher interest rates in order to gain the competitive advantage against the competition.
2. Maintain a strong low cost deposit base as a competitive advantage for the Bank to survive in the crisis situation and to maintain the
leading position in the market through, reinstating and revitalising the “Sales team”, establishing Memorandum of Understanding
between People’s Bank and other companies/institutes which are benefited through the Bank, introducing a mechanism to bypass bottle
necks in Sisu Udana/Isuru Udana gift scheme, introducing a system or a privilege card to identify loyal, profitable, best customers of the
Bank to provide a superior service at any branch of the Bank, aggressive direct mail promotions to attract new customers.
3. Offer customer oriented-features/attributes of savings products when promoting existing products/introducing new products and give
priority for the qualitative aspects, and provide personal attention on the requirements of the customers and provide quality service in a
short period of time through the bundle of features affiliated with the savings products.
4. Increase the demand deposit base (current account deposits) of the Bank as a highest income generating source through advertising the
CA products and special features of those products, special packages to best profitable customers, enhancing the image of People's Bank
current account by reducing cheque returns due to non-availability of funds and also remarks like stop payments, ENR, PP, Package of
products as per the need of the customers (e.g. letter of guarantee, Leasing, temporary overdraft, Loans, short term loan, Bill Discounting,
letter of credit openings etc.)
5. Mechanisms to follow up minor accounts which are having stagnated balances, with a view to increase minor (low cost) deposits. Follow
up on minor accounts which are having stagnated balances, with a view to increase minor (low cost) deposit base and maximise the return
on investment made by the Bank by providing the initial deposit.
6. To increase the deposit base of the Bank;
i. Experiment Alternative Channels
ii. Strengthen daily collection process in the branch network and introduce mechanism to monitor the daily collection regularly
iii. Integrate personalisation with Big Data
iv. Implementing strategies to increase demand deposit base of the Bank
v. Increase total deposits through overall customer experience
vi. Relaunch deposit products
vii. Streamline the promotional campaigns of asset and liability products (retail) of the Bank
viii. Dedicated sales channel to increase deposits
3. Pawning
1. Improve customer service of the pawning unit to increase the pawning income and enhance the pawing business of the Bank through
identifying regular and prime customers of pawning and providing a loyalty card to serve them on priority basis, providing uninterrupted
service at Pawning section (during employees’ lunch time), extending pawning business hours (e.g. 7.00 am to 5.00 pm) and efficient
service for renewal customers.
2. Offer extended services to retain existing customers and attract new customers to enhance the pawning business of the Bank through
facilitating pawning sections with technologically advanced, sensitive and reliable gold valuation equipments (Densimeters), pawning
advance amount should be on a par with market gold value and competitor rates, attractive and relaxed ambience at pawning lobby area,
information relating to pawning procedure could be exhibited at the lobby area (part payments, renewals, interest rate benefits i.e)
3. Arrange awareness programmes (campaigns) on pawning business and promotional strategies to enhance the pawning business of
the Bank.
4. Improve the auction process to optimise the recovery process
5. Strengthen marketing and promotional strategies
6. Management of Expenses
1. Cost reduction measures on expenses related to marketing/business promotion, rent, electricity, hiring charges of ATM, CDM, Kiosks, and
maintenance of premises and data communication, to mitigate the impact of COVID 19.
2. Resource optimisation and harnessing the maximum benefit from the expenses of the Bank by increasing the number of transactions per
CDM and reducing per transaction cost alternatively.
7. New Channels
1. Attract immediate family members of internal customers of the Bank, an organised effort to tap into the staff and their families – as an
alternate channel to increase the low cost deposit base, credit card volume and healthy customer base of the Bank simultaneously and
increase loan portfolio of the Bank; since the non-performing ratio would be zero or very low in this segment.
Contribution to SDGs
The following section covers the progress made in implementing the strategic priorities to achieve the Bank’s strategic vision. Relevant strategic
priorities have been identified for each of the four strategic pillars to deliver value to the stakeholders. The Bank is committed to contributing
towards the Sustainable Development Goals whilst executing its strategic priorities. The strategies maintain a close interaction between the six
capitals – financial, manufactured, human, intellectual, natural, and social and relationship capitals, which facilitate the value creation process of
the Bank.
Strategic pillar Material topics, 2020 strategic priorities 2020 progress Future priorities
SDGs, and capitals
Delivering Material topics zzUnderstand customer needs and zzSuccessfully launched Corporate zzDeliver an outstanding
innovative market- zzCustomer experience provide value added and cost Internet Banking (CIB) and and differentiated banking
leading client zzDigital leadership
effective banking solutions Corporate Mobile Banking (CMB) experience for our customers, by
experiences zzEnhance customer experience systems to enhance customer leveraging on our digital network
zzBrand equity
zzProvide state-of-the-art
experience leadership position
GRI 201 zzCustomer access zzKiosk machines were installed zzNurture and strengthen a
technology to customers
zzBuild enduring relationships with
in 244 SBUs to facilitate bill customer-centric culture
SDGs payments, partial payment of zzContinue to set the bar in the
customers
pawn instalments and redeem banking industry by launching
pawned articles innovative products, processes
zz Launched the Retail Loan and technology
Originating System (RLOS) in
100 branches to process personal
loans at a shorter time, on a
digital application
zzContinuous training was given
to staff on customer service
standards
Capitals
zzPotential customers were
Manufactured capital
attracted through customer
Human capital focused initiatives that
Intellectual capital were launched by corporate
banking and commercial credit
departments
zz1.6 Mn. customers were on
boarded to digital banking
channels
zzDigital banking products such
as credit cards against to fixed
deposits and pensioner’s life
certificate online verification
system were launched
zzEmpowered Sri Lanka’s micro
and SME sectors and supported
the Government’s economic
development agenda
zzPeople's Bank crowned as the
Best Digital Bank in Sri Lanka
2020 at Asiamoney Best
Bank Awards 2020 and The
International Business Magazine
Awards 2020
Strategic pillar Material topics, 2020 strategic priorities 2020 progress Future priorities
SDGs, and capitals
Maintaining a Material topics zzRecord a strong financial zzDespite the challenging zzMaintain a steady growth
steady growth zzFinancial performance performance economic context, the Bank momentum
momentum and zzStrengthen risk and governance recorded a profit after tax of zzBuild the resilience of the Bank
Being operationally Material topics zzEnhance operational efficiency zzThe Bank has successfully zzAchieve operational excellence
excellent in zzOperational efficiency zzMaintain the digital leadership implemented the Strategic Plan through automation and process
everything we do position for the period 2016-2020. The development
zzEmployee productivity plan was based on 12 strategies zzContinue to introduce innovative
zzAugment employee productivity
GRI 410, 402, 403, zzTalent management broken down into 65 strategic banking technologies to
zzEffective talent management
404, 405 initiatives and 488 stractions for customers
zzChannel management zzStrengthen risk and governance easy implementation. We have zzTrain staff on aspects such as
GRI 404 successfully implemented over
zzTraining and mechanism
audit standards and internal
zzSpearhead product innovation, 90% of the strategic initiatives as
development controls environment
at the end of 2020.
process development and zzPromote Green Banking
zzEnhanced service culture and
digitalisation of banking services
SDGs branch ergonomics.
zzEngage in continuous process
zzStreamlined human resource
improvement
zzPromote Green Banking policies such as welfare policy,
transfer policy, compensation
zzInvest in employee development
policy, and leave policy.
zzNurture a culture of learning and zzInvested on training programmes,
Capitals development webinars and online trainings.
Natural capital zzContinuous focus on driving
Human capital business with efficiency,
Intellectual capital innovation and technological
advancement.
zzStreamlined processes
Strategic pillar Material topics, 2020 strategic priorities 2020 progress Future priorities
SDGs, and capitals
Always do business Material topics zzComply with the standards zzPromoted the Green Banking zzContinue to support the UNSDG
the right way zzRisk and governance set out by the ECD, and the concept as a part of the Bank’s and adopt relevant standards
International Labour Organization sustainability commitment zzImplement Board approved
GRI 416, 417, 418 zzCompliance zzContribute towards the 10 zzContributed towards the UN policies for every operational
GRI 205 zzResponsible lending principles outlined under the Sustainability Development Goals aspect
UN Global Compact and the zzComplied with BASEL III and zzMaintain a strong culture of
zzAnti-corruption
GRI 202, 203, 413 United Nations Sustainability IFRS 9 regulations compliance
zzSocio-economic Development Goals (UNSDG) zzStrengthened the whistle-blower zzPromote a culture of ethics and
GRI 302, 305, 306
zzImplement Board approved
impacts policy, which is a critical element integrity
GRI 204 policies for every operational of the internal control system and zzEnhance employee engagement
zzEnvironmental impact
aspects corporate governance framework
GRI 416 of the business
of the Bank
zzSupplier value creation zzImplemented an effective
Capitals
Social and relationship
capital
Natural capital
Human capital
65 / Financial Capital
70 / Manufactured Capital
76 / Intellectual Capital
83 / Human Capital
98 / Social and Relationship Capital
121 / Natural Capital
FINANCIAL CAPITAL
FINANCIAL CAPITAL
Financial capital is most critical to our business, as we are able to achieve sustainable
growth, deliver increased value to our stakeholders and maintain our standing in the
local banking industry by leveraging our financial capital. The capital which includes
debt and equity finance can be increased by increasing our profit generation and
managing costs.
60
Total operating income
40
LKR Bn. 2020 2019 2018 2017 2016
20
Total operating income 90.8 96.5 89.8 77.5 68.4
- Net interest income 74.4 78.6 71.2 62.7 53.6 0
’16 ’17 ’18 ’19 ’20
- Non-interest income 16.4 17.9 18.7 14.8 14.8
Total operating income Net interest income
NIM - %
Non-interest income
- Consolidated 3.3 3.8 4.0 4.0 3.9
- Bank 3.0 3.2 3.5 3.5 3.5
Net interest income
Consolidated total operating income reached LKR 90.8 Bn. in 2020 Net interest income which represents core operations of the Group,
with compared to LKR 96.5 Bn. in 2019. The Bank’s operating income accounted for approximately 81.9% of total operating income. Net
accounted for 79% of Group operating income. interest income decreased by only 5.3% YoY to LKR 74.4 Bn. in 2020,
compared LKR 78.6 Bn. in 2019 under the COVID-19 conditions.
Given below is an analysis of the constituents of net interest income.
Interest income
Interest income contracted by 5.9% to LKR 207 Bn. in 2020. This was
mainly due to loans interest rate reduction in the industry. Income
from customer advances accounted for 83.9% of total interest
income, whilst other investments comprising Government Securities
accounted for the balance.
FINANCIAL CAPITAL
Interest expenses Other operating income decreased by 10.4% to LKR 6.3 Bn. from to
LKR 7.0 Bn. in 2019. Other operating income consists of net earned
Interest expenses also contracted by 6.2% to LKR 132.6 Bn. in 2020
premiums across the Group’s insurance business and bad debt
and LKR 141.3 Bn. in 2019 primarily due to the interest rate reduction
recoveries.
on deposits. Of the total interest expenses, deposit related expenses
accounted for approximately 85% of total interest expenses, of which
more than 78% accounted for term deposits. Impairment charges
Impairment charges rose by 50.4% to LKR 17.6 Bn. in 2020 compared
The Group’s net interest margin reduced to 3.3% in 2020 from 3.8%
to LKR 11.7 Bn. in the previous year.
in 2019 due to the decreasing trend in advance rates. At Bank level
also, the interest margin decreased to 3.0% in 2020 to 3.2% in 2019.
At a bank level, asset quality measured by gross non-performing loans
This is mainly due to monetary policy measures imposed to reduce
to total loans remained at 3.2%, whilst at Group level it increased to
interest rates and the moderating loan book growth due to sluggish
3.9% from 3.7% recorded in 2019.
economic environment.
NET INTEREST MARGIN The provisioning policy of both at Bank and Group levels continued
to be conservative, enabling coverage levels of 64.5% and 64.8%,
% respectively to be maintained at the end of the financial year 2020.
5 NON-PERFORMING LOANS
4
%
3 4.0
2 3.2
1 2.4
0 1.6
’16 ’17 ’18 ’19 ’20
0.8
Bank Consolidated
0
’16 ’17 ’18 ’19 ’20
Non-interest income
Non-interest income comprises fee and commission income, trading
income and other operating income. This remains a key area of focus Cost management
for further improvement across the Bank and the Group. Total operating costs decreased by 7.7% to LKR 44 Bn. in 2020 from
LKR 47.6 Bn. in 2019.
The Group’s net non-interest income decreased by 8.2% from
LKR 17.9 Bn. in 2019 to LKR 16.4 Bn. in 2020. Of this, net fee and
commission income, which accounted for more than one third of net Personnel costs:
non-interest income, amounted to LKR 7.3 Bn. in 2020 as compared to Personnel costs accounted for approximately 54% of total operating
LKR 8.2 Bn. in 2019 due to contraction in international trade activities costs and Bank was able to maintain at same level as reported in 2019.
which came with the pandemic.
Other operating cost:
Net gains, which accounted for 17% of total non-interest income,
increased by 4% to LKR 2.8 Bn. in 2020; from LKR 2.7 Bn. in the Other operating costs decreased by 14.4% to LKR 20.3 Bn. during
previous financial year. the year under review from LKR 23.7 Bn. in 2019. Approximately,
one fourth of the decrease was attributable to the marketing and
promotional costs contraction due to cost control during
COVID 19 period.
FINANCIAL CAPITAL
The Group’s cost to income ratio improved to 53.5% from 61.3% in Balance sheet analysis
2019. At Bank level, cost to income ratio improved to 54.3% in 2020
from 61.8% in 2019. Further, improvements are expected over the
Deposit growth
short-to-medium term, amidst enhanced employee productivity and
LKR Bn. 2020 2019 2018 2017 2016
improved operational efficiency resulting from the ongoing Bank’s
digitalisation drive. CASA 757 571 543 525 484
Term deposits 1,172 1,012 943 771 633
Value Added Tax(VAT), Nation Building Tax (NBT) and Others 6 6 10 9 3
Debt Repayment Levy (DRL): Total 1,935 1,589 1,495 1,306 1,120
Decreased by 59.4% to LKR 4.7 Bn. in 2020 from LKR 11.5 Bn. in CASA % 39.1 35.9 36.3 40.2 43.2
2019. This is due to the abolition of Nation Building Tax (NBT) and
Debt Repayment Levy (DRL) from December 2019 and January Currency
2020 respectively. Local 89.8% 91.8% 93.4% 90.6% 88.7%
Foreign 10.2% 8.2% 6.6% 9.4% 11.3%
Profitability Total 100.0% 100.0% 100.0% 100.0% 100.0%
The Group’s pre-tax profit decreased by 3.9% from LKR 25.7 Bn. in
2019 to LKR 24.6 Bn. in 2020. The Group’s customer deposits increased by 21.8% to LKR 1,935.2 Bn.
as at end 2020 from LKR 1,588.9 Bn. at the end of the previous
Meanwhile the Group’s return on equity (ROE) dipped to 12.0% financial year.
compared to 12.8% in 2019. At Bank level, this ratio was 14.4%
compared to 13.9% in the previous year. Deposits which account for approximately 81% of total Bank/Group
funding, reflects the Bank’s strong deposit base which is supported by
Return on assets (ROA) as measured by pre-tax profits over average the industry’s largest network spread across the country.
assets was maintained at 1.1% in 2020.
Meanwhile as a reflection of the low interest rate environment, CASA
Profit after tax decreased by 0.5% to LKR 16.1 Bn. compared to increased to 39.1% in 2020 from 35.9% in 2019.
LKR 16.2 Bn. in 2019.
Local currency deposits accounted for 89.8% of total deposits and
PROFIT BEFORE TAX foreign currency deposits increased to 10.2% in 2020 from 8.2%
in 2019.
LKR Bn.
35 DEPOSITS
28 LKR Bn.
2,000
21
1,600
14
1,200
7
800
0
’16 ’17 ’18 ’19 ’20
400
Bank Consolidated 0
’16 ’17 ’18 ’19 ’20
FINANCIAL CAPITAL
CASA Gross loans grew by 21.5% in 2020 to LKR 1,876.2 Bn., compared
to LKR 1543.7 Bn. in the previous year. Much of the loan growth
% stemmed from credit extended to the State/State Owned Enterprises.
50
The Sector wise exposures were diverse with construction and
40 infrastructure accounting for 21% and 20% respectively of the total
customer advances in 2020.
30
20
Despite challenging market conditions, gross non-performing loan
ratio was maintained at 3.9% below the industry average. In 2020
10 Bank non-performing ratio was 3.2%.
4% 2% 6% 2%
14% 9%
40
Overdrafts Trade finance Pawning
20 Term loans Lease rental receivable Others
0
’16 ’17 ’18 ’19 ’20
CUSTOMER ADVANCES BY SECTOR
Local Foreign
9% 10%
21% 2% 18%
3%
2%
Customer advances growth 5% 2%
6%
LKR Bn. 2020 2019 2018 2017 2016 9%
7%
2020 2019
1%
Total advances (gross) 1,876 1,544 1,490 1,209 1,076 2%
3% 2%
By type
8% 21%
8% 21%
Overdraft 258 145 126 116 58
20% 20%
Trade finance 251 234 281 141 177
Pawning 175 163 150 137 114
Term loans 1,073 880 808 700 618 Agriculture, forestry and fishing Manufacturing
Tourism Transport and storage
Lease rental
Construction Infrastructure development
receivable 82 88 95 89 84
Wholesale and retail trade Professional, scientific and
Others 38 34 30 26 24
Financial services technical activities
Total 1,876 1,544 1,490 1,209 1,076
Consumption Others
FINANCIAL CAPITAL
Regulatory capital
Total shareholders’ equity increased by 7.0% to LKR 139.1 Bn. in
2020 compared to LKR 130.0 Bn. in 2019.
During the year, the total value created for the Government, amounted
to LKR 16.8 Bn. and over 85% of the value was generated by the Bank.
LKR Bn.
27.5
22.0
16.5
11.0
5.5
0
’16 ’17 ’18 ’19 ’20
Manufactured capital
MANUFACTURED CAPITAL
The Bank’s manufactured capital comprises the physical assets that facilitate value
creation for our stakeholders. This includes our island-wide branch network, vehicle
fleet, ICT infrastructure and property, plant and furniture.
Largest branch network in the Ensure a safe and conducive Promote paperless banking
banking industry workplace for our employees through digital banking
Widest SBU network channels and e-procurement
for efficient resource
utilisation
MATERIAL THEMES
Advance operational Contribute towards a greener
priorities through innovation, planet through our digital
Digital leadership
digitalisation and system banking channels
Customer access improvements to increase
resource efficiency and
sustainability
CHALLENGES
SBUs across the island provide
Setting up new SBUs and refurbishing of all customer segments access
branches has to be halted due to COVID-19 to world-class banking
solutions
Sourcing computer hardware and other
equipment was challenging due to import
restrictions and COVID-19 VALUE CREATED
Manufactured capital
Capital linkages
through COVID-19
Paperless banking through digital channels
Green branches that optimise natural resources
737 737 506 572 7 102 1,176 1,091 21 396 397 987
2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019
738 739 716 755 210 239 1,391 1,378 299 203 322 430
2020 2020 2020 2020 2020 2020
Manufactured capital
NUMBER OF BRANCHES AND SBUs for the financial year 2020. Transactions conducted through the
self-service channels during the year amounting to LKR 1,026 Bn. Our
Nos. commitment towards environmental sustainability is reflected in our
800 “People’s Green Pulse” environmental sustainability policy.
274
leader in digital banking services, we provide financial solutions to
over 14 million customers across the island through our 741 branches
and an extended ATM network of over 4,000 ATMs. Through our
221 CDMs
Kiosks
network of SBUs located island-wide, customers enjoy a convenient
and efficient banking experience 24 hours, a day on all 365 days
of the year, without ever having to visit a bank branch. Our total
investment on expansion of customer touchpoints was LKR 228 Mn.
Habarakada Service Centre opening Isipathana College Self Service School Banking Unit opening
Manufactured capital
GRI 102-4,102-6
DIGITAL
72 ATMs 1 BRANCHES
NORTH CENTRAL
20 SBUs 238 ATMs
20 KIOSKS 88 SBUs
24 CDMs
79 KIOSKS
NORTH WESTERN
EASTERN 104 CDMs
ELEGANCE
1 CENTER
CENTRAL
CENTRAL UVA
29 SBUs 14 SBUs
25 KIOSKS 14 KIOSKS
SOUTHERN
32 CDMs 14 CDMs
SOUTHERN SABARAGAMUWA
86 BRANCHES 56 BRANCHES
91 ATMs 56 ATMs
30 SBUs 16 SBUs
28 KIOSKS 16 KIOSKS
31 CDMs 19 CDMs
ELEGANCE
1 CENTER
Manufactured capital
LKR Mn.
2,250
1,800
1,350
900
450
0
’17 ’18 ’19 ’20
Information technology
We have elevated the entire banking operations to next level by
adopting the most advanced technology platform to implement our
digitalisation process which is easy to upscale and capable of meeting
future expansion capacity requirements of our Bank. The first-of-
its kind technology in Sri Lanka have given us an unprecedented
advantage in the banking sector helping us to expand coverage,
improve reliability, convenience, and speed.
Investment in property, plant and equipment We aim to implement Artificial Intelligence (AI) data mining to
LKR 1,284.4 Mn. was invested to augment our physical infrastructure improve segmenting, targeting, acquiring, and retaining customers to
by acquiring property, plant and equipment in 2020. This includes maintain and grow a profitable customer base.
freehold land, buildings, motor vehicles, furniture, machinery,
equipment, and computers that supports the value creation process of The details of the host of world-class digital banking facilities offered
our Bank. to our customers are given on pages 81 and 82 of this Report.
Manufactured capital
The Digital Banking
Trailblazer
People’s People’s
Wave Bank
BEST MOBILE BEST CONSUMER
BANKING APP DIGITAL BANK
SRI LANKA SRI LANKA
People’s
Bank
BEST DIGITAL
BANK
SRI LANKA
Intellectual Capital
INTELLECTUAL CAPITAL
Intellectual capital is the driving force behind our value creation process. It includes our
intangible assets such as brand reputation, organisational knowledge, corporate culture,
awards and accolades and systems and processes.
Our approach
We enhance the value of our intellectual capital by investing in digitalisation to offer cutting-edge banking solutions to customers, upgrading
our systems and processes, nurturing a strong culture of compliance, building our corporate brand, enhancing our organisational knowledge and
innovating new solutions.
Intellectual Capital
Capital linkages
Investment in digitalisation has reduced costs across the Bank on a
Supporting our sustainable level.
stakeholders
through COVID-19 Investment in digitalisation has reduced costs across the
Bank on a sustainable level
Our digital investments enabled to support our customers Digitalisation has reduced consumption of paper
and our employees throughout the pandemic significantly contributing to a green environment
Kept all the island-wide Self-Banking Units (SBUs) open
throughout the year following strict safety guidelines to Investment in capacity development and training
ensure continued service for the people of our Nation improves employee productivity and build tacit
Our digital innovations have made banking simpler and knowledge
safer for our customers
Investment in digitalisation, systems and processes
Transactions conducted through our digital channels soared
builds manufactured capital
by 152% to LKR 268.9 Bn.
Customer onboarding can be done without investment in
Number of People’s Web/Wave registrations increased branch expansion
to 500,000+ enabling many users to conduct their
transactions from anywhere, anytime
Our compliance to strong governance, business ethics and
Our innovative technology and tools across the Bank customer-centric culture enhances our brand reputation
helped to foster effective virtual collaboration for and customer confidence
employees and customers
Intellectual Capital
20
10
0
’16 ’17 ’18 ’19 ’20
Intellectual Capital
Corporate culture
People’s Bank retains No 3 spot in Sri Lanka’s Most Valuable Brands by
Brand Finance As the “Bank of the people”, we are rooted in a value based culture
underpinned by our vision, mission, and core values. We nurture a
culture that fosters knowledge, supports innovation and inclusivity.
Receival of certification from the Central Bank of Sri Lanka (CBSL) to acquire
Organisational knowledge
Lanka QR Payments The accumulated knowledge of our experienced employees is one of
our greatest assets. We have a workforce consisting of employees who
have been with the Bank for a long period and who are the custodians
Brand development of our corporate culture. For almost six decades of operations, we
We have a strong brand reputation, which reflects our values and our have created an immense pool of expertise and experience by
differentiation strategy. Whilst reliability, service, convenience and collaborating with our employees. We strive to document and share
technology play an important role in developing a strong brand, our this vast store of tacit, accumulated knowledge, including highly
value proposition comprising digitalisation leadership, innovation, specialised expertise in banking in multiple ways through
good governance, customer service excellence, market presence knowledge sharing sessions, extensive training, and human
and stability has helped to build a strong brand. The fact that we are capital management tools.
backed by the Government of Sri Lanka elevates the trust in our
Bank further. The diversity of our employees in terms of their qualifications,
knowledge and experience is an important competitive advantage.
Our customer satisfaction rating which reflects our inclusive digital Our high employee retention rate of 98% showcase the success in
banking reach was a high 92% in 2020. Over 85% of conventional retaining experienced and knowledgeable people who are capable of
banking transactions are now conducted on our digital channels delivering an outstanding service to customers.
and the value of transactions through our mobile apps and internet
banking have increased to LKR 268.9 Bn. in 2020.
Intellectual Capital
Our stringent audit and compliance processes is reflected in our Awarded the “Best Digital Bank in Sri Lanka” at
ratings. Please refer page 173 for our comprehensive governance the prestigious Asiamoney Best Bank Awards
framework. 2020, International Business Magazine Awards
2020 and World Finance Digital Banking
We have continued to maintain a clear record without being subject to Awards 2020
any fines or actions for any instances of non-compliance.
Intellectual Capital
People’s Wave
People’s Wave is the most revolutionary and the most downloaded People’s Wiz
finance app in Sri Lanka with nearly one million downloads since its
launch in 2018. Integrated to the Bank’s core system, the app allows
customers to carry out over 50 different banking transactions from People’s Wiz Accounts - Digital on boarding of customers is the first
the comfort of their homes, without ever having to step into a branch. ever real-time digital customer on boarding application for any bank
The app offers many features including balance inquiries of multiple in the South East Asia, Africa and the Middle Eastern region. This
accounts, loans and credit cards, payments, bill payments, transaction is a completely paperless process facilitating opening of multiple
history, fund transfers to own or third-party People’s Bank or other accounts with multiple services such as online activated debit cards
bank accounts and set future-date transfers and standing orders. with card-less cash facility, e-statement facility and internet banking
services like People’s Wave app, signature verification/KYC, and
With over 70% of active People’s Wave users outside the Western FACTA and risk categorization. People’s Wiz Accounts has resulted in
Province, the app has made a significant contribution to the Bank’s time-and-cost savings and also contributed towards a green economy.
mission of driving financial inclusivity. On average there are 30,000 Since its launch in July 2017, over one million customers have been
monthly People’s Wave downloads and the app has executed nearly on boarded through People’s Wiz. The facility is rolled out in 348
800,000 financial transactions for the value of LKR 13 Bn. each month. Branches across the island and planned to rollout in 50 Service
Centers in year 2021.
Intellectual Capital
HumanHUMAN
Capital CAPITAL
People’s Bank is one of the largest employers in Sri Lanka, employing over 7,500
individuals from diverse socio-economic backgrounds. The passionate and committed
team of employees, have always been key to our success. They deliver exceptional
customer experience, create innovative solutions and enable the Bank to achieve
its strategic objectives. We support our people’s safety, health and wellbeing, and
professional development, and actively reward their performance.
Our strength has always been our Human Capital of over 7,500 Our approach
employees. In an year faced with an unprecedented external
Our success has been underpinned by our team of highly talented
challenge of a global pandemic, the human resources (HR)
and dedicated employees. We have always focused on attracting,
team continued to provide leadership in effective employee
developing and retaining a top talent as one of the preferred
communications, continuous employee engagement and delivery
employers in Sri Lanka. We strive to add value to our core HR functions
of HR services for smooth functioning of the Bank. We also played
including learning and development, employee engagement, talent
a pivotal role in establishing health and safety protocols for our
acquisition and compensation and benefits. Even through the
employees as per our business continuity plan and Government
pandemic, we continued to add value with the same vigour to deliver
regulations and adopted new measures to adapt to the new dynamics
an outstanding value proposition to our employees.
presented following the pandemic.
In addition to mobilising resources to support the changing needs
Demonstrating tremendous resilience over the past year, our
of our customers and business during the COVID-19 pandemic, our
employees went above and beyond to serve the Nation and support
focus for the year was on procuring a fully pledged Human Resource
our customers, communities and each other despite the difficult
Management (HRM) system to enhance the HR functions of the Bank.
circumstances. Through their commitment and dedication, we were
able to keep 70% of our branches open and serve our customers even
through the lockdown curfews.
17th Annual Inter Branch/Department Quiz programme Celebration of Thai Pongal festival
Human Capital
Diversity
54.7% female at assistant manager level Building employee capacity
and above and knowledge development
through training and
development
MATERIAL THEMES
Employee productivity
Talent management LKR 19.7 Bn. distributed as employee benefits
Anti-corruption 29 promotions were effected during the year.
Training and development
CHALLENGES
Human Capital
Capital linkages
Conducting PCR tests of employees where necessary at the A dedicated team of employees delivers an exceptional
expense of the Bank medical scheme customer experience
Training in customer relationship management helps to
Enabling employees to encash their 14 days of casual and
enhance customer service levels
medical leave
No salary deductions
Our team
No downsizing of our staff The total staff strength stood at 7,692 as of 31 December 2020.
All employees were given special COVID-19 incentives Our retention rate was 98.1% reflecting the strong trust and loyalty
that our employees have placed on us. Our workforce is diverse
The collection of staff loans were delayed and inclusive reflecting the diversity of our customers representing
different ethnicities from all geographical regions. Following is a
detailed statistical representation of our workforce in 2020:
2016 2017 2016 2017 2016 2017 2016 2017 2016 2017
3,367 3,402 4,882 5,052 8,249 8,454 1,818 2,159 14,804 19,182
2018 2019 2018 2019 2018 2019 2018 2019 2018 2019
3,184 3,058 4,909 4,778 8,093 7,836 2,112 1,650 22,400 25,489
2020 2020 2020 2020 2020
Human Capital
9,000 30,000
39%
7,200 24,000
5,400 18,000
61%
3,600 12,000
1,800 6,000
0 0 Male Female
’16 ’17 ’18 ’19 ’20
GRI 102-8
GRI 405-1
Male Female Total Male Female Male Female Total Male Female
Nos. Nos. Nos. % % Nos. Nos. Nos. % %
Human Capital
GRI 102-8
2,125 3,500
1,700 2,800
1,275 2,100
850 1,400
425 700
0 0
Western Southern Central Northern North Central Uva Sabaragamuwa North Eastern
province province province province province province province Western provinces
Human Capital
18 - 25 years 30 6 36 51 12 63
26 - 45 years 1,980 3,887 5,867 2,044 3,938 5,982
46 - 55 years 781 668 1,449 769 689 1,458
56 > years 188 152 340 194 139 333
Total 2,979 4,713 7,692 3,058 4,778 7,836
Corporate management 1 2 1 2 8 1 15
Executive management 2 6 7 13 – 28
Officers (3–III-Grade 1) 8 566 2,190 994 182 17 3,957
Staff assistant grade – 1,020 995 72 6 – 2,093
Other categories – 1,060 21 388 14 3 1,486
Management trainees – 1 – – – – 1
Customer service assistants – 1 – – – – 1
Other contracted employees 26 85 – – – – 111
Total 37 2,735 3,213 1,463 223 21 7,692
Nos. Recruitment
3,500 Our strategy is to have a strong pipeline of future talent and
diverse experience for our ongoing success. All recruitments are
2,800
done in conformance to the regulations applicable to Government
2,100 institutions, and in accordance to our formal recruitment policy. The
recruitment process includes a competency testing and a formal
1,400 interview process. We always recruit qualified individuals who have
potential for advancement and the aptitude to handle increased
700 responsibility so that they can be an asset to the Bank. Majority of our
recruitments are done at entry-level and our management trainees
0
<2 3 to 10 11 to 20 21 to 30 31 to 35 >36 and customer service assistants are recruited on a regular basis. They
are groomed as per the Bank’s successions plan to take on managerial
positions in the future. Bank’s promotion policy, enables customer
service assistants to rise up to the rank of officer grade. We give
prominence to recruiting IT graduates, which is vital to drive forward
our digitalisation strategy. During the year we did not recruit any
management trainees or customer service assistants.
Human Capital
However, as per our human resource plan, we recruited a specialist New recruitments by region and gender for 2020
to develop our cards business and five assistant law officers to
strengthen the legal aspects of our regional head offices. All Region Male Female Total Male Female
% %
recruitments for Bank’s Senior Management positions are citizens of
Sri Lanka. Anuradhapura – – – – –
2.7 Jaffna – – – – –
Kandy – – – – –
1.8
Kalutara – – – – –
0.9 Kurunegala – – – – –
0 Kegalle – – – – –
18-25 years 26-45 years 46-55 years 56 + years
Matara – – – – –
Total 4 4 8 Total 4 4 8 50 50
Human Capital
training programme, a post implementation evaluation is conducted AVERAGE TRAINING HOURS PER EMPLOYEE AND
in the form of employee feedback after every training programme. TRAINING COST
Our strategy is to enhance the knowledge and skills of all employees
within a specific period either through internal, external, on-the-job Hours LKR Mn.
or foreign training programmes. During the year, we launched the 25 120
managerial development program to develop better managers who
can engage staff and enhance team performance. The plan is to 20 96
enhance their capacity to take on more advanced leadership roles
15 72
and accelerate their readiness for succession to senior managerial
positions in the future. 10 48
In tandem with our digitalisation strategy, we continued to upgrade Internal training programmes 219 10,956 85,360
the skills and provide new knowledge on digital environments. To External training
this extent, we conducted training sessions on information security programmes 52 298 10,251
policy of the Bank to provide a greater level of protection by ensuring
Foreign training 2 18 824
employees are well aware of internal information security policies,
procedures and understand basic security controls and best practices. Total 273 11,272 96,435
Human Capital
TRAINING HOURS BY In general, we conduct promotions for most of the grades, and for
EMPLOYMENT CATEGORY AND GENDER senior management level as and when the vacancies occur. Transfers
are effected within the region and outside the regions. An employee
Hours can appeal to the Appeal Committee established under the transfer
4,500 policy seeking redress, if he/she is dissatisfied with a transfer.
3,600 During the year under review, we promoted nine Assistant General
Managers (AGMs), six Chief Managers and the Deputy Chief Law
2,700
Officer equivalent to the AGM grade.
1,800
GRI 405-1
900
Diversity and equal opportunity
0 Customer Service We believe a culture of inclusion and diversity is essential to drive
Assistants
Corporate
Management
Executive
Management
Officers
(3-III - Grade I)
Staff Assistant
Grades
Management
Trainees
Human Capital
Human Capital
Succession planning During the year, we enabled our staff to work from home and
organised a conference in Kandy for corporate and executive
We continued to invest in building our next generation of leaders.
management including regional managers. This was a two-day
Launching the management development programme during the
programme held in a hotel, where corporate executives and regional
year was a key initiative to strengthen leadership capabilities of our
managers participated.
management team. A total of 50 managers were developed during the
year, which is essential to maintain our leadership position within the
Due to the outbreak of the pandemic, we could not organise the
banking industry.
annual staff engagement activities during the year in adherence to the
GRI 401-2 Government’s safety regulations.
Adopting an equal pay policy towards male and female employees, we Employee turnover
maintain an impartial remuneration structure, offering our employees
We have maintained a low staff turnover, with a total of 22 employees
fair, competitive, and attractive packages. To keep employees engaged
relinquishing employment during the financial year 2020.
and motivated we offer performance-based rewards and other
monetary and non-monetary benefits. Our employees are eligible for EMPLOYEE TURNOVER BY GENDER
gratuity, Employees’ Provident Fund (EPF) and the Employees’ Trust
Fund (ETF) payments in line with the relevant laws and regulations.
The Bank made a total contribution of LKR 291.4 Mn. to the ETF and
LKR 1,165.3 Mn. to the EPF for the financial year 2020. 54%
Human Capital
Male Female Male Female Male Female Male Female Male Female
Corporate management – – – – – – 1 – 3 –
Executive management – – – – – – – – 2 2
Officers (3-III – Grade 1) – – 4 5 2 3 8 1 32 32
Staff assistant grade – – 2 8 – 2 – – 4 1
Other categories – – 2 4 1 2 4 2 14 8
Management trainees – – – – – – – – – –
Customer service assistants – – – – – – – – – –
Other contracted employees – – – – – – – – 3 –
Total – – 8 17 3 7 13 3 58 43
Region Male Female Total Male Female Employee communication, ethics and integrity
% %
Employee communication
Ampara – 1 1 – 100
We have developed a range of channels to communicate and engage
Anuradhapura 3 – 3 100 –
with our employees and keep them informed about matters affecting
Badulla 2 1 3 66.67 33.33 or of interest to them, and also to provide opportunities for feedback
Batticaloa 2 – 2 100 – and dialogue. We also encourage employees to participate and
engage through both formal and informal channels and strive to
Colombo 8 13 21 38.10 61.90
ensure internal communication remain meaningful and impactful.
Galle 2 2 4 50 50 Employees are able to discuss key developments and business
Gampaha 7 5 12 58.33 41.67 performance and to contribute their views through team briefings and
employee forums.
Hambantota 2 1 3 66.67 33.33
Jaffna 6 – 6 100 –
Kalutara 2 4 6 33.33 66.67
Kandy 5 9 14 35.71 64.29
Kegalle 1 4 5 20 80
Kurunegala 1 2 3 33.33 66.67
Matale – 1 1 100
Matara 2 5 7 28.57 71.43
Monaragala 3 – 3 100 –
Nuwara Eliya – 1 1 – 100
Polonnaruwa 1 – 1 100 –
Puttalam 2 1 3 66.67 33.33
Ratnapura 2 1 3 66.67 33.33
Wanni 1 2 3 33.33 66.67
Trincomalee 1 1 2 50 50
Head Office 29 16 45 64.44 35.56
Total 82 70 152 53.95 46.05
Human Capital
Minimum notice period for operational changes GRI 102-16, 102-17, 102-26, 205-2, 205-3
We provide employees adequate notice of any operational changes
and their possible impacts. This helps to reduce any adverse impact Anti-corruption
on staff morale due to such changes. The minimum notice periods to We nurture a stringent anti-corruption culture within our Bank.
operational changes are: The Internal Audit Department, Investigations and Inquiries
Department and the Risk Management Unit facilitate this. All
Operational change Notice period employees are trained on preventing and averting corruption and
fraudulent behaviour by the Investigations and Inquiries Department
Transfers 2 weeks
and the Internal Audit Department.
Resignations 1 month
Retirements 3 months We have a Board approved anti-corruption policy, which is
Terminations 1-3 months communicated to all employees within the Bank. Adopting a
zero tolerance approach to bribery and corruption, we take strict
disciplinary action in the event of a breach. During the year, 2,588
Grievance handling employees were given 19,804 hours of training on anti-corruption.
We have in place a Board approved mechanism to handle grievances,
which arise due to difficulties they face as a part of their working
relationship. A course of action is in place for employees to forward
complaints and to ensure they are treated fairly, reasonably, and in a
timely manner.
Human Capital
Number %
Future outlook
As operations return to normalcy gradually in the post-COVID-19 era,
Total number and percentage of we will recommence our initiatives and programmes with a focus on
Governance body members that the management and leadership development. We will use the expertise
organisation's anti-corruption policies and of a HR consultant to develop and improve our HR functions further.
procedures have been communicated to All 100
Total number and percentage of The implementation of the new HRM system in the ensuing year
employees that the organisation's anti- would enhance employee communication within the Bank and
corruption policies and procedures have elevate internal employee experience.
been communicated to All 100
Total number and percentage of We will implement the procedure in dealing with the COVID-19
employees that have received training on pandemic and safeguard our employees for the next
anti-corruption 2,588 33.6 foreseeable future.
Total number and nature of confirmed
incidents of corruption/misconducts 113 N/A
Total number of confirmed incidents
in which employees were dismissed or
disciplined for corruption/misconducts 448 N/A
the values and conduct of the Bank that sets the tone for all
employees to ensure ethical behaviour and integrity within the
Bank. This helps to build an environment of trust, transparency and
accountability to foster long-term investment, financial stability
and business integrity.
zzCode of Conduct for Employees – All employees of the Bank are
CUSTOMER CAPITAL business with us. By expanding our digital channels, we give customers
a wide option to decide when, where, and how they want to meet us.
Our approach By combining our financial acumen with deep understanding of our
Over 14 million customers, we serve more than half the population customer needs, we deliver industry-leading innovative products.
of Sri Lanka across the Nation. We have always nurtured a culture of By delivering our services with a personal touch, we strive to meet
putting the customers first, which has helped us to thrive as a Bank and exceed customer expectations proactively. It is our investment in
over the decades. By investing in our people, processes and digital customer relationships, innovation, digitalisation, and operational and
capabilities, we continue to make it easier for our customers to do service excellence that continue to differentiate us.
Customer experience
Operational efficiency
Digital leadership VALUE CREATED
Compliance
Responsible lending LKR 39 Bn. loans were disbursed via digital channels
Customer access
70% of rural customers have migrated to self-banking channels
Customer health and safety
CHALLENGES
Capital Linkages
We extended unparalleled support to our customers during Customers using digital channels have contributed to less
the COVID-19 pandemic paper consumption and reduced carbon footprint
Constructing green buildings to serve customers
During the lockdown, over 70% of branches and all
contributes to a green environment
Self-Banking Units remained operational, following all the
safety protocols.
Investment in digitalisation and processes helps to
Ten fully equipped Mobile Banking Units were deployed
deliver an exceptional customer experience
to provide services to customers at their doorsteps. These
Units covered over 1,000 remote locations dispensing cash
withdrawals of LKR 643 Mn. during the lockdown. Innovation helps to launch industry-leading banking
Took necessary steps to provide all the concessions to solutions to fulfil customer needs
customers declared in the gazette by the Central Bank of Strong governance and business ethics helps to build
Sri Lanka (CBSL). customer trust
To provide more convenience to customers, the ATM VALUE OF DEPOSITS AND ADVANCES
network was extended to as many as over 4,000 ATMs
LKR Bn.
through a partnership with LankaPay network.
2,000
Facilitated salary and pension payments, including
Samurdhi payments, totalling over LKR 800 Bn. via our 1,600
island wide branch network.
1,200
Facilitated repayments for the benefit of depositors of
troubled finance companies for and on behalf of the CBSL 800
with disbursements to date exceeding LKR 19 Bn.
400
A series of awareness campaigns were conducted on social
media for the well-being of the customers. 0
’16 ’17 ’18 ’19 ’20
over the six decades is a testament to the strong customer trust and 12%
loyalty towards the Bank. During the financial year 2020, Close to
600,000 new customers were added to our customer base.
9% 6%
CUSTOMERS' AGE PROFILE -2020
8%
7%
11%
8% 11%
19%
15%
Western province Northern province North Central province
26% Southern province Eastern province Uva province
Sabaragamuwa North Western Central province
province province
29%
CUSTOMERS BASED ON GENDER
10 to 15 15 to 25 25 to 45
45 to 60 Over 60
49%
Male Female
8%
22%
1% GRI 102-2, 206-1
3%
7%
Our product and service offering
22% Innovating solutions to meet the changing customer needs by
understanding their requirements is core to what we do. During
Agriculture, forestry and fishing Manufacturing
2020, we helped our customers to transition to a more efficient and
sustainable economy and continued to innovate to improve their
Tourism Transport and storage
banking experience. Our range of solutions are inclusive and dynamic,
Construction Infrastructure development
catering to every life stage of our diverse customer base. Our products
Wholesale and retail trade Professional, scientific and
and services are enriched by our unique blend of experiences,
Financial services technical activities
customer centricity and our exposure to technological advancements.
Consumption Others They are priced in line with market trends and the country’s monetary
policy. We do not engage in anti-competitive, anti-trust and monopoly
practices. No fines or penalties were incurred by us during the
reporting year.
Our product portfolio spans advances, deposits and other products as shown below:
Our products and services
DEPOSITS PRODUCTS Jana Jaya v. Foreign Currency OTHER
I. Current accounts Aswenna Deposits i. Credit/Debit Cards
ii. Savings Parinatha ii. Gift vouchers
Isuru Udana People’s Relax ADVANCES iii. Mobile Banking/SMS
Sisu Udana Normal Savings i. Personal Loans Banking
RETAIL BANKING ii. Term Loans iv. Internet Banking
Yes iii. Fixed Deposits
Vanitha Vasana iv. Call Deposits iii. Housing Loans
iv. Pawning
i. Current Accounts vi. SME Loans
ii. Savings Accounts vii. Development and
iii. Fixed Deposits Microfinance Loans
iv. Overdrafts viii. Trade Finance
v. Term Loans
ENTERPRISE BANKING
People's Bank together with the Institute of Chartered Accountants of Sri Lanka People’s Bank deploys Lanka QR payment solution at Lanka Sathosa.
introduced a special relief loan scheme for their COVID-19 affected members.
The performance of our branches is monitored by the Channel Especially with the outbreak of the COVID-19 pandemic, customers
Management Department based on KPIs. The best performing adopting digital channels have accelerated significantly. Over
branches are rewarded for their performance annually. The LKR 369 Bn. worth transactions were conducted via our digital
effectiveness and efficiency of internal controls and risk management platforms during the year. All these measures have increased
mechanism of each branch is monitored by the Bank’s Internal Audit customer trust and loyalty in our Bank.
Department.
GRI 203-2
Inclusive banking
We have always been committed to inclusive finance, from opening
our doors to the economically disadvantaged regions in Sri Lanka to More than 1.6 million Mobile and
empowering women entrepreneurs. We were one of the first financial internet banking customers
institutions to have a presence in the Northern and Eastern Provinces
over 58 years ago. Whilst our staff serving in these regions are well More than 240,000 Facebook fan base
conversant in all three languages, all our marketing communications
are conducted in all three languages to provide an inclusive service. 720 average Facebook inquiries every month
Nearly 179 branches and 95 SBUs across Sri Lanka provide convenient
access and services to differently abled customers. Average number of visitors to People’s Web
81,000 monthly
We pioneered specialised products for women and minors to uplift
underserved customer segments in our Nation. We still continue
to hold a significant market share in these segments, even though Adoption of digital banking channels
intense competition. In order to improve financial inclusivity, our A steady acceleration was observed in the adoption of self-service
digital services are offered free of charge. channels among our customers. 70% of our rural customers have
migrated to self-banking channels.
Our commitment to inclusive banking is reflected in our efforts
during the COVID-19 pandemic. Apart from introducing multiple
loan schemes at highly concessionary rates of interest to support our
customers with diverse socio-economic and demographic profiles
and small and medium scale enterprises of varying nature, scale and
scope, we continued to encourage women entrepreneurship.
1,300,000
Customer education
We strive to empower our customers through structured customer
1,200,000 education programmes and customer engagement initiatives. Our aim
’18 ’19 ’20 is to empower customers as tech savvy citizens by bridging the social
and digital barrier to banking.
NUMBER OF FINANCIAL TRANSACTIONS –
MOBILE AND INTERNET BANKING Customer education programmes conducted in 2020
Nos. ’000
10,000
8,000
6,000
4,000
2,000
0
’18 ’19 ’20
Through our 24-hour customer service hotline and dedicated Fraud prevention
Customer Complaint Handling Unit we ensure all grievances
A dual control mechanism has been implemented to prevent fraud, by
recorded and responded within a specific time period. The relevant
ensuring every transaction is checked and authorised by at least two
regional manager is responsible for investigating and responding independent managers. Every branch is subject to a strict audit process
to the grievances. Any recurring complaints and grievances relating by their respective in-house audit department, the Bank’s internal
to employees are directed to the Bank’s Internal Investigations audit department, and the annual external and Central Bank audit.
and Inquiries Department for review and action. Employees are
kept informed about customer complaints at the monthly branch A separate audit function has been established to monitor the growing
managers’ conferences and corrective action is recommended to number of online transactions manned by over 200 staff members.
avert recurrence.
GRI 418-1
Complaints pertaining to breakdown of ATMs is monitored by the
Central ATM Control Department. A robust mechanism has been Customer privacy
instituted to ensure every breakdown is reported to the relevant Stringent measures have implemented to protect customer privacy
branch and prompt action is taken within a reasonable time. This has and maintain a high standard of confidentiality. With the large
resulted in a significant decline in the number of ATM breakdowns. volumes of sensitive information handled by us, from a wide range of
Our ATM uptime has been on average 99.67% in 2020. banking transactions, we continue to strengthen our IT and
cyber security framework to ensure that confidential customer data
4,275 staff members were strengthened on product knowledge is safeguarded. We have several controls in place including regular IT
to minimise customer complaints through more than vulnerability assessments, network upgrades, IT audits by third parties
100 training sessions. and ongoing employee training on IT security aspects. During the year
under review, there were no incidents of non-compliance reported
due to breaching of customer privacy.
Details of customer complaints received in 2020
Details Numbers Sale of banned or disputed products
Number of customer complaints received 908 In strict compliance to the CBSL Customer Charter, we do not sell or
market products or services which are banned in the market or
Number of customer complaints resolved 844
subject to stakeholder or public debate. We do not finance any
Pending complaints 56 illegal project, which is documented as illegal in our credit policy.
Pending investigations 08 There were no incidents of non-compliance with the sale of banned or
Pending legal cases 0 disputed products.
In progress 64
Future outlook
GRI 416-1, 416-2 We will continue to improve customer loyalty by deepening customer
relationships, providing necessary support to customers and drive an
Customer health and safety inclusive and high-performance work culture. We will also leverage
Customer health and safety is a material aspect and we have taken our full suite of products, solutions and digital capabilities, to offer
utmost care to design our products and services to minimise any a compelling value proposition to customers. We will continue to
adverse impacts to health and safety of our customers. However, the enhance the customer digital experience and drive efficiencies by
nature of such an impact cannot be easily evaluated due to the nature simplifying and streamlining operations.
of our business. To safeguard our branch premises, all buildings have
fire extinguishers, fire exits, fire sirens and are protected by armed Our efforts to migrate all our customers to digital banking channels
and non-armed security guards. will continue as we empower our citizens to become financially aware
and empowered by our digital technology backed financial solutions.
In response to COVID-19, our core focus was protecting the safety of We will raise the bar in customer service standards by delivering an
our people and our customers. Several health and safety protocols exceptional customer experience every time.
were implemented according to Government guidelines in all our
branches, SBUs, and other customer touchpoints to ensure the safety
and well-being of customers.
CHALLENGES
VALUE CREATED
Disruptions to supply continuity where
suppliers were materially impacted by LKR 11.1 Bn. paid to suppliers
COVID-19.
LKR 10.3 Bn. paid to local suppliers
Had to postpone opening of tenders and
adopt an online tender process due to
safety regulations.
Government’s import restriction caused
delays in procurement of certain
imported supplies
Capital linkages
Correspondent banks
Vostro agents
BUSINESS GROWTH PARTNERS
Franchise partners
State institutions
Software suppliers
Waste management
MAINTENANCE PARTNERS Communication
Debt collection agencies
Human resource providers
Contractors
OTHERS
Premises providers
242 40 71 11.1
GRI 102-9, 102-10
HIGH
Material suppliers
providers
services to customers. We collaborate with our business partners
to ensure quality and compliance and with product and service
INTERACTION
procurement through cost optimisation and quality standard. New outsourced and consultants
suppliers are register every year, through a formal Board approved Employees Assets Communication
Suppliers Service
tender procedure by calling for public tenders and following a
stringent screening process. Suppliers are screened on environmental
and social impacts, in compliance to environmental certifications Premises Providers
LOW
relationships span over 23 years based on mutual trust. zzThe Association of Banking Sector Risk Professionals – Sri Lanka
0 GRI 408
<1 1 to 5 5 to 10 10 to 20 >20
Child labour
Number of correspondent banks
Suppliers, authorised dealers, manufacturers, and contractors
Number of Vostro agents (Banks/Exchange companies)
who comply with the Sri Lankan laws and regulations related on
child labour.
Length of relationships (Years)
VALUE CREATED
Capital linkages
EPS ROE
LKR %
20,000 30
16,000 24
12,000 18
8,000 12
4,000 6
0 0
’16 ’17 ’18 ’19 ’20 ’16 ’17 ’18 ’19 ’20
ROA
2.0
1.6
1.2
0.8
0.4
0
’16 ’17 ’18 ’19 ’20
Shareholder profile
Our principal shareholder is the Government of Sri Lanka holding a 92.27% stake and the balance 7.73% is held by Corporative Societies.
Invested equity
Shareholders’ funds 101,983,598 94,964,440 7.4
Add: Cumulative provision for loan losses/provision for impairment 87,886,600 76,330,377 15.1
Total 189,870,198 171,294,817 10.8
Earnings
Profit after tax 14,174,943 12,925,683 9.7
Add: loan losses and provisions/impairment provision 11,567,174 8,488,026 36.3
Less: Loans written off (412,843) (95,638) 331.7
Total 25,329,274 21,318,071 18.8
Cost of equity (Based on 12 months weighted average Treasury Bills + 2% for risk premium) 7.0% 8.6%
Cost of average equity 12,694,950 14,210,948 -10.7
Economic value added 38,024,224 35,529,019 7.0
Note: Certain comparative figures have been adjusted to conform to the current period presentation.
LKR Mn.
40,000
32,000
24,000
16,000
8,000
0
2019 2020
GRI 201-1
For the year ended December 31, 2020 2019 2018 2017 2016 Growth %
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 2020 vs 2019
SOURCES OF INCOME
Interest 179,717,526 186,714,218 166,441,208 149,184,471 109,970,256 -3.7
Exchange 3,311,844 800,416 6,016,099 2,119,499 2,572,743 313.8
Commission and fees 6,723,826 7,336,594 6,956,292 5,132,907 3,948,052 -8.4
Capital gain 336,495 329,071 162,923 125,763 531,921 2.3
Other 892,017 4,548,686 1,707,356 4,272,751 5,091,388 -80.4
Total 190,981,708 199,728,985 181,283,878 160,835,391 122,114,360 -4.4
UTILISATION OF INCOME
To depositors/Borrowers as interest 118,783,744 125,507,699 111,034,922 98,718,636 66,845,869 -5.4
To employees as emoluments 19,685,506 19,226,233 19,504,835 14,738,069 13,633,514 2.4
To providers of goods and services 11,128,830 12,153,293 12,822,211 11,168,408 8,588,379 -8.4
Net impairment loss on financial assets 11,567,174 8,488,026 2,623,970 1,348,460 1,246,748 36.3
To Government – Taxes, special levy and dividend 14,444,917 19,817,027 19,814,596 20,522,887 20,515,560 -27.1
To community 28,703 35,683 42,288 56,317 40,269 -19.6
Retained for growth 15,342,833 14,501,024 15,441,056 14,282,614 11,244,022 5.8
Total 190,981,708 199,728,985 181,283,878 160,835,391 122,114,360 -4.4
Note: Above figures has been derived from the Audited Financial Statements that were prepared based on the Sri Lanka Accounting Standards (SLFRS/LKAS)
Certain comparative figures have been adjusted to conform to the current period presentation.
Future outlook
We will continue to increase shareholder value by generating increased profits, delivering attractive financial returns, effecting improvements to
governance and through sustainable and prudent growth.
As a leading financial services provider with the widest reach and Our approach
the largest customer base, we play a significant role in society.
We are guided by our sustainability policy, to touch the lives of local
We support the socio-economic progress of communities by
communities through our CSR programmes. Through inclusive finance,
connecting with them and investing in communities in which we
we empower society and enhance their quality of life. Building
operate to support growth and build resilience.
financial literacy and business acumen have enabled women
and youth to emerge as community leaders and entrepreneurs.
Our financial inclusion programmes are helping disadvantaged people
to build financial management skills and savings capabilities. Whilst
conducting our business in a socially responsible manner, we strive
to uplift the underprivileged communities by developing arts and
culture, healthcare, and education in particular.
LKR 28.7 Mn. invested in community Spurring economic growth Supporting education
development through inclusive financing, through scholarships
education, and creation of job
opportunities
MATERIAL THEMES
Increasing food production Sharing knowledge,
Socio-economic impacts through the provision of technology, expertise,
inclusive finance for small and financial resources to
scale farmers achieve SDGs
CHALLENGES
Enhance the health
systems through funding,
COVID-19 created challenges for the
infrastructure development,
communities to engage in employment and safeguarding the health
and access finances and well-being of communities
Staff could not volunteer their time to through awareness campaigns
engage in CSR activities due to safety
reasons
VALUE CREATED
Capital linkages
Staff and customers were educated on practicing safety Self Banking Units have greatly enhanced convenience
protocols and provided communities in remote areas to access
banking services
Several COVID-19 awareness campaigns were conducted
on social media and mass media to educate the
Our investment in CSR activities builds our brand image
communities
and reputation as a socially responsible company
LKR 10.0 Mn. was donated to COVID–19 Healthcare and
Social Security Fund
Staff volunteer their time and effort to engage in
Offered the CBSL moratoriums on loans to 21,000
CSR activities
businesses
Staff engaging in CSR activities builds team spirit and
Offered loans to struggling enterprises including SMEs at enhances employee well-being
highly favourable terms
Recruiting from local communities improves the standard
Maintained our presence and reach largely undiminished of living of communities
across our branch network, through the 24/7 operation of
our digital services
Community capital statistics
Kept over 70% of our branches open for essential services
in the height of the lockdown Investment in Community based Community based
CSR (LKR Mn.) development loans development loans
People in the remote areas were provided access to their (Nos.) (LKR Mn.)
finances through Mobile ATMs that reached over 1,000 2016 2017 2016 2017 2016 2017
remote locations
40.3 56.3 62,943 51,375 13,168.8 10,479.2
Provided services through our SBUs free of charge 2018 2019 2018 2019 2018 2019
Facilitated salary and pension payments, including 42.3 35.7 42,511 31,686 9,017.6 7,852.4
Samurdhi payments on time
2020 2020 2020
Made repayments for the benefit of depositors of troubled
finance companies for and on behalf of the CBSL 28.7 37,064 22,967.2
Introduced a number of new loan schemes, to provide
financial relief to the numerous industries affected by the We uplift communities around us though structured CSR programmes
pandemic focused on uplifting arts and culture, education, health, and other
social activities. Our financial solutions uplifting the lives of diverse
individuals.
An official passenger van was converted as an Ambulance with basic first aid
facilities, to be used in an emergency of the People’s Bank staff.
The Gampaha Regional Head Office donated a refrigerator, washing machine and
a hot water purification unit to the Negombo District Hospital under the guidance
of CEO/GM in order to upgrade the healthcare and quality of the hospital during
the COVID-19 outbreak.
Education
In collaboration with the Employees' Trust Fund (ETF), we presented financial gifts
to children of ETF members who excelled in the Grade 5 scholarship examination.
This was done for the 10th consecutive year. We were the main sponsor of the historical Kandy Esala Maha Perahera,
the iconic cultural pageant of Sri Lanka culminating perennial customs and
traditional dances.
The Ruhunu Katharagama Esala Maha Perahara was sponsored by the Bank with
a contribution of LKR 5 Mn.
The Bank donated musical instruments and equipment to the Anuradhapura The Bank also contributed LKR 1.0 Mn. for the annual “Navam Maha
Sri Sarananda Vidyalaya with the participation of Bank officials from Perehara 2020” which was organised by the Gangaramaya Temple.
Anuradhapura Region and Head Office Marketing Department.
Empowering communities
We tied up with the Industrial Development Board (IDB) to develop Micro, Small
and Medium Enterprises (MSMEs), which had greater potential for export, import
substitution, domestic value addition, and employment generation. Close to
5,000 MSMEs were empowered with technical and managerial support together
New “Vanitha Saviya” loans were introduced to empower women with proper financial facilities to ensure sustainability of their businesses. This
entrepreneurship. To commemorate our 59th anniversary 966 women were reflects our commitment to developing entrepreneurship in Sri Lanka.
granted “Vanitha Saviya” loans.
Environment
People’s Bank partners with Co-operative Rural Bank Federation to grant loans to
uplift the standard of the farming community
Launch ceremony for People’s Bank becoming the first state bank to accept
fingerprints for pensioner verification.
Nearly 650, 000 pensioners benefited when we became the first Bank
to accept fingerprint verification as equivalent to the submission of
the life certificate. This has greatly enhanced convenience for the
pensioners when obtaining their monthly pensions. This facility is
People’s Bank initiated an Eco Park development project at Welimada where the
available across 75 People’s Bank branches across the Nation. Bank in 2019 initiated planting of trees in order to develop an Eco Park with a
view of reducing the carbon footprint. The trees planted at the initial stage are
now growing under close supervision of a team of agricultural specialists.
The Bank sponsors annually the maintenance and labour costs of the project.
People’s Bank meets with the Spices and Allied Products Producers' and Traders
Association (SAPPTA) with the aim of creating tailor-made financial solutions to
boost spice exports.
“Special Financial Service package for Young professionals (18-40 years) – doctors, dentists, vets, engineers, architects, accountants, IT
Young Professionals” professionals/software engineers
Special loan scheme for Government Medical Specialists, consultants, medical officers, internship medical officers, nurses, and other health
Officers/Government Dental Surgeons sector staff
“Gurusetha” loan scheme Permanent teachers in Government Schools, Government Technical Colleges, Pirivenas, and
Government-approved private schools
Laptop/PC/tablet loan scheme Teachers in Government Schools, Pirivenas, Government-approved private schools and technical
colleges, Buddhist monks, undergraduates of Medicine, Engineering and IT faculties of universities
Special loan scheme under the University Staff members of all universities
Grants Commission (UGC)
Special loan scheme for Judicial Services Judges
Special loan scheme Members of the Artist Associations
GRI 203-1
Future outlook
We will continue to fulfil the needs of the local communities within which we operate, focusing on priority areas that are of strategic importance
to our operations and our Nation.
Natural capital
NATURAL CAPITAL
We remain committed to a cleaner and a greener planet by managing the short-term and
long-term impacts of our business operations. By following a comprehensive Natural
Capital management strategy we strive to minimise climate change and global warming
which are the most challenging environmental issues of our times. Therefore, we focus
on sustainable value creation by optimising our sustainable resource use and promoting
sustainable business practices among our stakeholders.
Our approach
A comprehensive management plan has been implemented to digitalisation process improves our waste management, given that it is
mitigate our overall GHG (Green House Gas) impact. We do this by paperless. Our green banking concept offers concessionary lending to
focusing on energy, waste, increasing the efficiency of our products environmentally friendly business projects and promotes the digital
and services and optimising resource allocation. In particular, our banking drive.
VALUE CREATED
Natural capital
Capital linkages
E-waste generated reduced substantially due to reusing of Integrating environmental sustainability initiatives
computer hardware improves our brand reputation and trust and confidence
in our Bank
The Bank’s governance structure ensures that we comply
with all applicable rules and regulations
Our responsible and ethical actions towards scarce
resources ensure environmental sustainability
Natural capital
Employees Society
yy Certifying selected Introduce paperless operations Promote Green banking Offering the benefits yy Creating environmental
branches as carbon such as – concepts such as – of operating as sustainability awareness,
neutral buildings yy Cash and Cheque Deposit yy Opening of accounts through the most carbon yy Providing concessionary staff
yy Introducing solar Machines Express Banking which is a conscious Bank/Green loan facilities to purchase solar
power generating paperless operation Bank in Sri Lanka to power systems, hybrid cars
yy Kiosk for utility bill payments
systems to 100 the society as a whole and electric cars
yy Widest ATM network in the yy Issuing E-statements to all
buildings account holders on request yy Encouraging employees
country
yy Constructing new yy Aggressively promoting SMS to practice electronic
yy Paperless accounts opening
buildings according and Internet Banking communication and
and E-statements for accounts
to LEED/GREENSL/ documentation
yy Loan processing in paperless yy Issuing of debit cards –
CIOB guidelines yy Nurturing an environment
environment cashless society
yy All building conscious culture
yy Rolling-out Express Banking
contractors to follow yy Internet, Mobile and Web
based banking systems for new customers
LEED/GREENSL/
CIOB Green Mark yy Debit and credit cards yy CDM-cash depositing,
Certification ATM-cash withdrawals
yy 24/7 People’s Call Centre
Kiosk-bill payments
Given below is the carbon footprint of our Head Office for the financial year 2020. As a result of the effective measures implemented across the
Bank to reduce the GHG impact.
Natural capital
5,353 water litres to the “Energy Efficiency Ratio” of the machinery and electronic
equipment we purchase
72,970 kWh of electricity
zzReplacing all lighting fixtures with energy efficient LED lights
efficiency
Natural capital
GRI 307 1
Energy source Energy type Consumption level (GJ)*
RETAIL BANKING
HIGHLIGHTS
Debt moratoriums for First State Bank to Over 29% YoY increase
nearly 400,000 retail accept fingerprint in the personal loan
borrowers verification of pensioners portfolio
For over a five decades we have continued to provide innovative We facilitated salary and pension payments, including Samurdhi
financial solutions to our valued customer base exceeding 14 million payments, totalling over LKR 840 Bn. through our island-wide branch
across Sri Lanka. By understanding their aspirations – from the new network, covering weekends too. Additionally, we undertook the task
born baby to the employed professional and the senior citizen of facilitating repayments for the benefit of depositors of troubled
enjoying retirement, our suite of products and services caters to finance companies for and on behalf of the Central Bank with
every life stage of the customer. Our services span deposits, pawning, disbursements to date exceeding LKR 22 Bn.
personal loans and credit cards.
We also become the first State Bank in Sri Lanka to accept fingerprints
of Pensioners for verification purposes, in lieu of conventional
Our operations in 2020 life certificate. Any of the almost 650,000 pensioners can avail
The adverse impact of the COVID-19 pandemic caused the Sri Lanka themselves to this service, irrespective of whether they are People’s
economy to slow down since mid-March 2020 exerting severe Bank customers or not which has greatly enhanced their convenience.
hardships to people. Even during the period of crisis, we ensured that The facility was launched in 75 branches in 2020.
our customers are well taken care of. Over 70% of our branches were
kept open and self-banking units (SBUs) operational to provide an Multiple loan schemes were introduced during the year at highly
uninterrupted service to our customers. Appropriate precautions were concessionary rates of interest to support our customers with diverse
taken to ensure the health and safety of our onsite staff as well as our socio-economic and demographic profiles. These include, new loan
customers. To resolve customer disputes a Special Call Centre was schemes on special concessionary interest rates offered for a large
established as well. cross-section of groups. Most of these loan schemes were offered
at single digit interest rates. The groups included Doctors, Dentists,
The People's Bank Mobile Service was launched, covering 1,000 rural Engineers, Accountants, IT Professionals/Software Engineers,
cities to enable customers even in the most remote areas in Sri Lanka Healthcare Professionals, School Teachers, University Staff Members,
to access their finances. Financial transactions worth of LKR 671 Mn. University Students and Artists.
was processed through this service during the year. The service
was further empowered with Palm Top Banking; which allowed the The Retail Loan Originating System (RLOS) has introduced into 100
customer to deposit or withdraw money without an ATM card. branches during the year to enable customers to obtain personal
loans expeditiously and thereby enhance customer experience.
We were amongst the first financial institutions to roll out the Central
Bank Relief Programme for the benefit of our customers. The debt
moratoriums worth LKR 4.4 Bn. were extended to nearly 400,000
retail customers in 2020 - the largest so extended by any financial
services group. The beneficiaries of relief included, amongst many
other, salary earners in government or private sector professionals.
Retail Banking
Product portfolio
LOAN
PRODUCTS Loans for Professionals Vehicle loans Education loans Loan scheme for Teachers Loan schemes for Nurses and
Paramedical staff
People’s Wisdom
People’s Professional People’s Auto
Gurusetha
Loan Suwa Sewana
Consumption loans Loans to Housing Loan scheme for members Loan scheme for People's Pension
of the Three Armed Forces Government medical
officers
Pahasu (Jayaniwasa)
Deyaviru Pranama
SAVINGS
PRODUCTS
Mudarabah
Jana Jaya ISA, Parinatha
CHANNEL
PRODUCTS Cash deposit machines, self service Kiosks, People’s
Debit and Credit Cards
Net and People’s Mobile Banking
Retail Banking
LKR Bn.
DEPOSITS MOBILISATION FOR 2020 – PROVINCE-WISE
200
3%
160 8%
4%
120 6%
80 3%
56%
8%
40
0 8%
’16 ’17 ’18 ’19 ’20
4%
Retail Banking
to every purchase made via the credit card to minimise fraud. Further, months and all pension payments were made in advance before
as per international regulations, all cards are EMV (Electronic Magnetic the due date.
Verification) enabled as well. Premier credit card facility consists zzAmongst the first to roll out the Central Bank relief programme for
of three categories as platinum, Visa Signature and Master World. the benefit of customers.
These premier cards have several benefits such as travel insurance zzLKR 829 Bn. was allocated to extend the credit schemes introduced
and lounge-key facilities. We continued to grow our card-spend by
by the Central Bank at concessionary interest rates.
launching attractive seasonal and year-long promotions, offering
zzMultiple loan schemes were introduced at concessionary rates of
incentives, and other privileges to card holders. During the year we
extensively deployed the merchant acquiring POS machines. interest to support our customers.
zzKept 70% of our branches open across the island and enabled
concessionary loans.
ENTERPRISE BANKING
HIGHLIGHTS
The enterprise banking arm plays an integral role in uplifting the The tour operators were severely affected initially by the Easter
micro and small and medium enterprises (SMEs) that form the Sunday attacks in 2019 and then by the COVID-19 pandemic. To
backbone of the Sri Lankan economy. The Unit serves diverse provide relief to these customers we allocated a sum of LKR 250 Mn.
customer segments including SMEs, Development and Micro of which LKR 200 Mn. was disbursed during the year. The rates were
Finance, Commercial Credit and commercial banking customers. We further reduced to 4% and the tenor of the facilities were extended
gain access to concessionary lines of funding by working with the by 6 months to provide further financial relief to this segment.
Government of Sri Lanka and global aid agencies. By combining both
conventional and non-conventional lending products, a unique value In keeping with the Government’s “Vistas of Prosperity” national
proposition is offered to our customers. Our conventional lending policy framework we launched Made in Sri Lanka loan programme
products include term loans, trade and working capital facilities and in collaboration with Industrial Development Board who provides
cash margins loans. Non-conventional includes special funding lines the technical expertise. The aim of the scheme is to boost the
that promote the concept of development banking through low-cost development of local industries, promote export-oriented industries
funding lines. and import substitute industries, enhance quality of local products,
increase self-employment opportunities for locals and drive regional
development. These facilities are disbursed through our island wide
Our operations in 2020 branch network. 250 applications were received by our customers and
Following the outbreak of the COVID-19 pandemic, the micro and non-customers during the year.
SMEs were severely affected during the year. The Government
of Sri Lanka (GOSL), introduced concessionary schemes to revive To expedite the credit evaluation process, a special rehabilitations
the businesses adversely affected by the outbreak. During this and project finance unit was established at the head office. We also
unprecedented time, we assisted the Government to re-start the strengthened our regional credit units by deploying minimum of
economy and support people of our nation to get through the difficult three officers for SME , development banking and commercial banking
time through an injection of much-needed funds via bank loans and credit evaluation and relationship management.
advances with attractive financial solutions. Hence, our focus for
the year was to support enterprise banking customers by offering To boost the expertise of the SMEs, we organised three
moratoriums and other concessionary facilities to revive “Entrepreneurial Glory” programmes in different regions of the
their businesses. island. This includes a series of seminars tailor-made to provide
valuable insights to entrepreneurs looking to start their own business
New working capital facilities were granted to 8,600 customers to or expand their existing ventures. The aim of this programme is to
the value of LKR 13.7 Bn. under the refinance scheme introduced by enhance their knowledge on a variety of key topics such as Business
the Central Bank of Sri Lanka (CBSL). These facilities were offered at Planning, Marketing, Accounting, Financial and Tax Management.
a concessionary interest rate of 4% per annum. LKR 829 Mn. of the
Bank’s own funds were also utilsed to extend these facilities. We also continued to disburse facilities under Asian Development
Bank’s (ADB) Rooftop Solar Power Generation Project to promote
To expedite the loan granting process, authority was delegated to environmental sustainability. 307 facilities to the value of
branches through a special management approval. As a result, we LKR 527 Mn. was disbursed during the year 2020.
were able to disburse these facilities to affected customers across the
island in a speedy manner.
Enterprise Banking
Several training programmes were conducted for our regional Credit guarantee scheme
managers and regional credit officers to enhance their knowledge
These facilities are granted without collateral and a portion of the loan
and expertise.
is guaranteed by the Government. Only a few facilities were granted
under this scheme during the year.
Refinance loans
We supported financial facilities to support government contractors to
We granted 3266 New Comprehensive Rural Credit Scheme (NCRCS)
get their outstanding payments during the year. Treasury guarantees
introduced by the CBSL to the value of LKR 7.3 Mn. in 2020. These
were issues for these facilities. A total of LKR 208 Mn. was disbursed
schemes are funded by the GOSL and are introduced annually
under this scheme in 2020.
targeting the Yala and Maha seasons. The schemes serves as an
interest subsidy scheme and a credit guarantee scheme as well. Note:
NCRCS is not a refinance loan scheme but a credit guarantee scheme Future focus
We will focus on increasing the proportion of commercial customers
Interest Subsidy Loans to have a balanced portfolio. More entrepreneurs will be canvasses
through our branch network to enhance financial inclusion.
Several loan schemes were introduced under this category at a
concessionary interest rates to revive businesses severely affected by
We will reach untapped customer segments in remote areas of the
the pandemic.
island by appointing development officers.
We disbursed LKR 100 Mn. bulk loan facilities to the Corporate Rural
To spur the entrepreneur spirit in university graduates a special
Bank Federation to disburse to the farmers affected by the pandemic.
programme will be launched in the ensuing year.
These facilities were introduced by the CBSL under the Smallholder
Agribusiness Partnerships Programme (SAPP) implemented the by
Emphasis will be given to maintaining a healthy profitable
Ministry of Agriculture.
credit portfolio.
Under the “Aswenna” loan scheme 4,700 credit facilities were
We will continue to develop the knowledge of our customers who are
granted, amounting to LKR 1.7 Bn. during the financial year. The
the engine of growth of the economy.
customers received facilities upto LKR 3 Mn. for agricultural business
purposes with repayment period extending upto three years for
We will enhance and empower or staff to offer an excellent
working capital loans and five years for investment loans.
customer experience.
To support the government’s development programme, ”Business
Power” loan scheme was launched to empower SMEs operating in Our response to COVID-19
sectors of agriculture, manufacturing, construction, direct and indirect
zzProvided over 8,600 working capital loans totalling LKR 13.7 Bn.
exports, innovation and technology, etc. 440 credit facilities were
granted amounting to LKR 671 Mn. under this scheme in the fiscal from the CBSL refinance scheme
year 2020. Facilities up to LKR 50 Mn. were granted for working zzLKR 1.0 Bn. was allocated from our funds.
capital and investment purposes with repayment period extending up zzMultiple new loan schemes were introduced by us to certain
to three and five years respectively. sectors with most of the loan schemes offering single digit
interest rates.
Together with the Industrial Development Board (IDB), we launched
the “Made in Sri Lanka” loans programme. Whilst IDB provides the
necessary technical and managerial support these projects, we
provide specialised financial support to ensure sustainability of their
businesses. By end December 2020 over25 facilities were extended
with a total value of LKR 125 Mn. But more than 200 applications are
in process.
CORPORATE BANKING
HIGHLIGHTS
Corporate Banking
2020 2019 Priority will be given to expanding credit to the energy sector,
in particular to private-owned power plants and renewable
energy plants.
75% 77%
By leveraging our island wide branch network, we also expect to
canvass more corporate clients across the island.
Government and SOEs Private sector
We will further accelerate our digital offerings to lead in customer
experience, optimise costs, and realise efficiencies. More emphasis
CORPORATE BANKING PORTFOLIO – 2020 Will be given to upskilling our staff in areas such credit risk
management and analytics in the ensuing year.
0.1%
0.1% 3.1%
3.0%
1.9%
Our response to COVID-19
zzNet loan amount of LKR 117 Bn. was granted to SOEs in 2020
TREASURY UNIT
HIGHLIGHTS
Treasury Unit, a key division of the Bank continued to be in the Our operations in 2020
forefront making a significant contribution to the Bank’s profitability
Year 2020 was challenging following the COVID-19 pandemic that
in 2020. Treasury plays a vital role in managing the Bank’s balance
had an adverse impact on economies, households, businesses and
sheet, funding and liquidity requirements and optimising the usage of
financial institutions across the world. We maintained seamless
funds. The Unit further manages the market risk of Bank’s investment
operations throughout the pandemic by connecting with clients
portfolios, foreign exchange, and cash instruments. Treasury is
through digital strategies and tools and our staff working productively
responsible for achieving the overall foreign exchange income, trading
from home and from our fully-fledged disaster recovery site.
income and realised/unrealised gains of the Bank.
Our overarching commitment to support the Government in their
The investment banking unit continued to be one of the top
numerous initiatives remained steadfast even through the difficult
investment banks in Sri Lanka for the second consecutive year, a feat
operating context in 2020.
achieved in a short span, since commencement of operations in 2012.
As the top fund raiser accounting for a significant amount of total FX
Lines of business borrowings of commercial banks in Sri Lanka, we continued to set the
benchmark in raising funds from foreign banks in 2020. The strong
zzForeign Exchange Desk – dealing in foreign currency (FX) corporate
relationships with our foreign banking partners across the world,
transactions, FX interbank transactions, management of FX helped to secure substantial short and long-term foreign currency
liquidity, FX Money Market transactions, quoting rates for foreign funding facilities during the year.
currency fixed deposits, transactions in USD denominated Sri Lanka
Development Bonds and GOSL ISB's. Despite the debilitating pandemic, we raised the largest-ever,
zzMoney Market Desk – managing the Bank’s Statutory Reserve Ratio,
longest-tenor Basel III, Tier 2-compliant, subordinated debenture
management of LKR liquidity, Repurchase and Reverse Repurchase ever concluded up to now. The LKR 20 Bn. debenture issue was
transactions and quoting of rates for local currency fixed deposits oversubscribed within few hours reflecting the strong investor
zzPrimary Dealer Unit–trading in treasury bills and treasury bonds confidence in our Bank.
to earn capital gains and management of Sri Lankan Rupee
denominated government securities portfolios. Through diligent investment decisions, we aggressively built up a
zzInvestment Banking Unit – management of Bank’s equity portfolio, Government of Sri Lanka international sovereign bond (ISB) portfolio
in a challenging dollar liquidity scenario. The prices of government
structuring and placement of short and long term corporate
bonds plunged due to several factors including the unprecedented
instruments including IPO’s, management of equity and debt IPO’s,
pandemic shock and country’s rating downgrade by international
providing of trustee and placement agent services
rating agencies. As a result, the yield of the bonds increased from
about 8% in February 2020 to a high of 30% in October 2020. The
weighted average yield of our ISB portfolio is extremely attractive and
would generate a steady income for the Bank in the years ahead.
Treasury Unit
People’s Bank was awarded the “Trade Deal of the Year” at the Future focus
prestigious ADB Trade Finance Programme Awards 2020 (TFP Awards
We will venture into custodian services and fund management
2020). This was in recognition of the support we extended to our
services. With the completion of the treasury systems upgrade in
customers to transact with counterparties across the world even
January 2021, we will be able to provide aforesaid services and
during the pandemic. By participating in the TFP, we are able to use
position ourselves as the preferred partner to the SOEs and leading
an ADB guarantee and give comfort to the foreign parties to transact
corporate entities.
business with Sri Lankan entities.
With the expected challenge in extending project finance due to a
Performance highlights dearth in long-term funding conditions in the ensuing year, we aim to
support the flow of credit by raising long-term LKR funding through
The operating conditions were challenging in 2020, as COVID-19
debentures. We will focus on strengthening our funding profile
impacted the global economy and supply chains leading to sharply
further by increasing the proportion of customer deposits.
lower levels of activity in every geography and many sectors. The
markets were volatile, characterised by subdued credit demand, low
With the envisaged challenges in credit due to the debt moratorium,
dollar liquidity and reduced interest rates. As a result, the market
we intend to increase our contribution to Bank’s profitability next year.
volumes reduced by 30 - 40% YoY during 2020 exerting pressure on
Our focus will be to increasing our trading income and net interest
net interest income. Despite the trying year, we successfully achieved
income to drive our revenue streams.
all our key performance indicators, whilst meeting all our payment
obligations on time. We were a significant contributor to the Bank's
We will continue to strengthen the relationships with our clients and
profitability during the year.
business partners.
business partners
The Overseas Customer Services (OCS) is responsible for managing We have continued to nurture mutual relationships with our
foreign currency accounts, engaging in FX related transactions, network of global partners across the world. Several new partners
facilitating remittances, and currency repatriation. International were on boarded during the year, including new integrations with
Banking (IB) engages in international banking related activities several exchange companies to increase our market share of inward
including trade transactions and guarantees. remittances.
Performance highlights
Despite the difficult operating conditions, we recorded a
commendable performance, achieving most of our targets.
Import financing
(USD Mn.) 4,332 5,765 5,286 4,392 1,917
Export financing
(USD Mn.) 919 527 997 596 85
Average LC processing
time (Hours) 3 4 4 4 4
Number of trade
guarantees 2,202 2,970 2,939 3,167 3,141
Number of
correspondence banks 71 70 73 72 70
Future focus
Expand our global partner network to facilitate remittances.
the lockdown
zzAll staff members worked on a roster basis from the office
the whole
world listens
RISK MANAGEMENT
economic environment, banks need to dynamically manage their zzDevelop an effective system to monitor the Bank’s risk exposures,
credit portfolios and the risk functions need to be closely integrally
linked to Bank’s capital
connected with the entire operations of the Bank. It is also essential
zzEstablish a compliance mechanism to monitor compliance with
for banks to improve data availability and quality across the risk
function to enable real-time sharing, discussion and feedback. internal policies, particularly with regard to risk management
zzEstablish an effective communication mechanism to communicate
The challenges posed by non-traditional new participants entering
all relevant policies and procedures across the Bank
certain segments of the market, disrupting the traditional bank
operating model with the use of advanced technologies, agile delivery zzAdopt and support strong internal controls
methodologies and analytical tools offering a highly customised zzNurture a strong risk culture within the Bank
user experience with lower fixed costs has the potential to impact
revenues and costs in certain areas of the banking business as well.
Bank’s risk management framework
As the leading bank in digitalisation with the largest customer base
in Sri Lanka, our digital transformation and automation journey The Bank has a robust risk management framework based on the
have proven to be highly effective in conducting our operations Three Lines of Defence Model, to ensure a structured mechanism
and providing an interrupted service through the pandemic. The to manage all risk exposures of the Bank. This is an integrated and
Bank’s sound Integrated Risk Management Framework (IRMF) helps holistic system that manage risks effectively through three separate
to identify, assess, measure, mitigate, monitor, and report risks and clearly identified lines of defence.
Risk identification and ownership for Provide direction for risk management Providing independent and objective
the management of risk, ensuring risks and compliance, maintain an effective assurance on the risk exposure,
are within the Bank's accepted risk risk management policy framework and processes and practices in place and
appetite and risk management policies. independent monitoring for effective ensure highest level of governance and
implementation of risk management compliance.
framework.
Retail, corporate, and enterprise banking Risk Management Department Internal audit
Treasury Compliance unit External audit
Branch operations Finance Regulatory compliance
Information technology Human resources
Risk Management
Risk categories
The main risk categories of the Bank are credit risk, market risk, operational risk, liquidity risk, funding risk, compliance risk, reputational risk, legal
risk and strategic risk.
Credit risk Liquidity risk Market risk Operational risk Strategic risk Compliance risk
RISKS
Default risk Equity risk Commodity risk People risk Reputational risk
Concentration risk Interest rate risk Exchange rate risk IT risk
Compliance risk
Business
continuity
MONITORED BY THE BANK TO ASSESS IMPACT
Credit risk management Market risk management Operational risk Liquidity risk Compliance risk
framework framework management framework management framework management framework
Strategic Plan (2016-2020) ICAAP under Basel III Performance management Process quality management
Risk appetite
Risk appetite expresses the aggregate level of risk that the Group is willing to undertake to achieve its strategic objectives. This is defined by a set
of minimum quantitative metrics and qualitative statements. The risk appetite indicates the maximum level of risk the Group can assume before
breaching regulatory constraints and its obligations to stakeholders. This provides a framework for the Bank to drive sustainable performance
by evaluating optimal growth options alongside the risks involved. The risk appetite is reviewed and approved by the Board annually, to ensure
alignment with the Group strategy, business environment, and stakeholder requirements.
Risk Management
The risk profile of People’s Bank as at 31 December 2019 and 31 December 2020, compared to risk appetite is given below:
High risk Medium risk Low risk 31 December 2020 31 December 2019
High risk Medium risk Low risk 31 December 2020 31 December 2019
Systems availability
High critical <97.5% 97.5%-99.9% >99.9% 99.92% 99.87%
Medium critical <95% 95%-97.5% >97.5% 99.21% 99.06%
Low critical <87% 87%-90% >90% 99.99% 99.98%
Percentage of branch audits rated less than average >12% 7.5%-12% <7.5% 15% 26%
Risk governance
The Bank’s risk management framework is founded on a governance The Board is aptly assisted by several sub-committees and executive
approach that includes a robust committee structure and a committees in the discharge of duties related to risk management.
comprehensive set of corporate policies and limits, which are This provides clear segregation of duties between risk origination and
approved by the Board of Directors or its committees. It also includes approval of risk exposures whilst ensuring Board level oversight.
specific corporate standards and operating procedures. The Board The Board and the risk committees operate under the directions of
of Directors hold the apex responsibility for risk oversight and their their respective charters.
priorities includes determining risk appetite levels, formulating risk
policies and ensuring the effective management of risk exposures.
Risk Management
BOARD OF DIRECTORS
Sets risk appetite
Responsible for limiting and
monitoring risk exposure
BOARD COMMITTEES
Reviews and reports on Reviews financial reporting Approves credit policies and Approves all investment
overall risk profile process and policies procedures related decisions and
Reviews risk management Identifies operational risks Approves large credit relevant policies
practices and policies Communicates and exposures
Recommends overall risk encourages best practices Monitors and reports on
appetite to Board and positive quality assurance portfolio quality
throughout the branch
network
MANAGEMENT COMMITTEES
Credit Risk Management
Risk Management
BOARD OF DIRECTORS
CEO/GENERAL MANAGER
Risk Management
Regular reviews are conducted by the BIRMC on Group’s stress testing outcomes and the major assumptions that underpin them. The outcomes
are vital inputs for capital planning for ICAAP, strategic planning, defining risk appetites, communicating with internal and external stakeholders
and managing risk within defined parameters.
STRESS TESTING
Deterioration in asset quality Movements in market interest rates Effects of “hot money”/retail fund
Shifts in NPL categories Movements in market exchange rates withdrawals
Fall in value of collateral Movements in market equity prices Effects on SLAR and LCR
Increase in NPLs from top 10 borrowers
Impact on core capital, total capital, and the capital adequacy ratio
New developments in risk management at The following security assessments were conducted as a preventive
People’s Bank measure:
The Group’s preparedness was strengthened to deal with emerging Web application security assessments 10 Web Applications
risks, which can surface without warning. The following measures Host discovery assessments 1
were taken to deal with such emerging risks.
Wireless security assessments 3 sites (Scheduled
zzStreamlining work processes 18 February 2021)
zzStaff adjustments were made by enabling working-from-home
Firewall security assessments 8 Firewalls (Ongoing)
facilities and working on a roster basis on location
zzAutomation of processes were expedited such as the roll out of
Risk Management
To mitigate the heightened IT risk due to increased use of digital In a low interest rate regime, floor rates will be imposed on lending
channels for banking following the pandemic, we will expand our and whilst discouraging granting of fixed-interest corporate loan
cybersecurity capabilities to defend against potential threats and facilities, to manage the interest rate risk. Adherence to the limits
minimise the impact to the business, including the activities to imposed for liquidity risk management will continue to be monitored.
reinforce the Bank’s resilience to events caused by factors out of the To strengthen the management of foreign currency risk, currency-wise
Bank’s control. and tenor-wise limits will be imposed as well.
The credit post review function will be strengthened by placing the We continue to ensure high system availability to ensure an
post-review unit under the purview of DGM-Risk Management for uninterrupted customer service and enhance customer confidence.
closer and frequent monitoring. The regional risk officers too will Prompt attention to any adverse comments about the Bank on social
be placed under DGM-Risk Management to enhance the regional media will help to safeguard the reputation of the Bank further.
risk management function. The credit evaluation skills of the credit
officers will be sharpened through training and development in the On an ongoing basis, we will continue to identify, manage, and assess
ensuing year. the internal and external risks that could impede achievement of, or
progress of, strategic objectives. And amendments to the strategic
To further strengthen credit concentration of the Bank, geographical plan will be taken by the Management after discussion and careful
limits will be imposed on loans and advances. Limits will be evaluation.
introduced to present value basis point risk of government securities
portfolio pertaining to the trading portfolio of Government Securities.
Credit risk zzBoard of Directors Increased Sound management of credit quality with
zzBIRMC enhanced corporate governance framework and
zzBECC
improved risk culture in credit lending practices to
strengthen Bank’s overall performance.
zzBIBC
zzALCO
zzCRMC
Credit Concentration risk zzBoard of Directors Increased Focus on managing the credit concentration
zzBIRMC exposures within the aspects of industry risk
related factors and maintain better diversified
sector exposures accordingly.
Market risk zzBoard of Directors Decreased Managing exposure of market risk assets within
zzBIRMC the set limits parameters.
zzBIBC
zzALCO
Interest rate risk zzBIRMC Decreased Maintain interest rate risk within prudential limits
zzALCO by better management of exposures of interest
sensitivity.
Risk Management
Equity risk zzBIRMC Decreased More focus on close monitoring of equity market
zzBIBC movements and price volatilities and managing
zzALCO
investments accordingly.
zzIT Department
zzCBSL
Compliance risk zzBoard of Directors Static AML and strengthen compliance system of
zzBIRMC the Bank
zzBAC
zzORMC
zzLegal Department
zzCompliance Department
zzCompany Secretary
Strategic risk zzBoard Strategic Plan Review Increased Increased focus on customer’s behaviour and
Committee (BSPRC) changing banking business models with special
zzStrategic Planning Department attention on disruptive technology
Reputational risk zzBoard of Directors Static Enhance the brand reputation and increase
zzBIRMC market share
Risk Management
Credit risk The Board Executive Credit Committee (BECC) provides oversight
to the Bank’s credit risk management. The responsibilities of the
Credit risk is one of the Group’s key risk exposures, stemming from
BECC include:
the loans and advances portfolio, financial guarantees, letters of credit
zzFormulating and updating credit policies in consultation with the
and acceptances issued and made on behalf of the customers. The risk
arises due to the potential loss arising from the failure of a customer BIRMC and business units.
or a counterparty failing to meet their contractual obligations to zzEstablishing credit approval structures to handle larger and higher
the Bank. Default risk, concentration risk of counterparties, Rating risk exposures.
Migration risk and business sectors or geographical regions are the zzConducting periodic reviews of individual credit exposures and the
forms of credit risk. overall portfolio to eliminate undue risk concentrations.
zzEffective management of higher risk exposures and ensuring
zzMaintain a high portfolio quality and minimise non-performing Managing credit risk
loans i. Robust risk policies and control framework
zzPre-identification of potential credit risk with changing
The credit risk framework is reviewed and updated regularly by
macroeconomic and industry factors the BECC, based on evolving best practices and emerging risks and
opportunities. The credit policy which is approved by the Board,
Managing the credit risk defines the Bank’s credit culture, prudential limits in line with the
defined risk appetites and remedial and recovery actions.
Credit risk accounts for over 85% of Bank’s risk weighted assets.
Hence, credit risk management is an on an ongoing process beyond
mere regulatory compliance, conducted under the credit risk
framework approved by the Board. The framework includes a risk
governance structure including policies, procedures, segregation of
authority, risk ratings, collateral management and credit monitoring.
BOARD
DGM
CEO/GM
(Risk Management)
Heads of AGM
Chief Internal Auditor
Business Units (Loan Review Unit)
Risk Management
LKR Bn. %
iv. Risk rating of obligors and prudential limits 120 3.5
The Bank evaluates the creditworthiness and assign ratings to the
borrowers, by adopting a range of measures including in-house 96 2.8
assessment methodologies, scorecards and a nine points rating scale.
72 2.1
Each category of borrower has different risk rating scorecards, which
are periodically reviewed and validated by the BIRMC. 48 1.4
24 0.7
v. Credit risk mitigating and collateral management
Diverse methods are applied to mitigate potential credit losses from 0 0
’16 ’17 ’18 ’19 ’20
any given account, customer or portfolio. These include restructuring,
collateral, netting agreements through credit insurance, credit
NPL Loans (LKR Bn.) Provision cover ratio – Bank (%)
derivatives and guarantees. Collaterals are obtained according to the
Provision cover ratio – Industry (%)
Bank’s collateral policy and the main types of collaterals are movable
and immovable property mortgages, cash deposits, plant
and machinery, mortgages on stocks, book debts, corporate and As at 31 December 2020 2019 2018 2017 2016
personal guarantees.
NPL ratio (%) 3.2 3.3 2.5 1.9 1.9
Provision cover ratio – Bank (%) 64.5 60.0 72.3 97.5 110.4
Provision cover ratio –
Industry (%) 61.3 52.3 57.4 69.9 71.8
Risk Management
72 1,000,000
48 800,000
24 600,000
0 400,000
AAA AA A BBB BB B CCC CC C
200,000
2019 2020
0
’16 ’17 ’18 ’19 ’20
Risk rating Number of corporate customers
BBB 60 75 32
BB 103 84
24
B 67 70
16
CCC 43 34
CC 19 22 8
C 15 17
0
Up to 3 3-12 1-3 3–5 Over
months months years years 5 years
2019 2020
Risk Management
Excluding SOE
Managing default risk 2019 13 20 32 47
All our credit exposures are closely monitored on a continuous basis 2020 11 15 25 41
using risk management tools such as NPL/overdue analysis, rating
migration analysis etc. Robust processes are in place to identify at
an early stage, credit exposures which have high risk of loss. Such Managing concentration risk
exposures are generally placed on a watch list and are managed The measures adopted to monitor and control concentrations are
closely to maximise recovery. the single borrower limit and the Herfindahl-Hirschman Index (HHI).
HHI index is calculated for all exposures (the greater of limit or
PRODUCT WISE IMPAIRMENT OF outstanding) above LKR 100 Mn. (direct and contingent) based on
LOANS AND ADVANCES 2020 counterparty name and sector. The Bank’s portfolio is segmented into
16 industry sectors. The table below shows the tolerance levels for
11.9% each degree of concentration.
Risk Management
0% 0% 4.6% 2.5%
15% 2.8%
3.5%
1.5%
2.5%
4.2%
15%
2.2%
59%
0%
10%
76.2%
1%
51.9%
22.4%
67%
7.3%
2.6%
Large exposures Others
23%
77%
Risk Management
Increase In NPLs Magnitude of shock -5% Magnitude of shock – 10% Magnitude of shock – 20%
Revised core capital ratio 9.40 9.28 9.02
Revised total capital ratio 15.35 15.22 14.97
Adverse movements within NPL Categories Magnitude of shock – 50% Magnitude of shock – 80% Magnitude of shock – 100%
Revised core capital ratio 9.22 9.04 8.92
Revised total capital ratio 15.17 14.99 14.86
Fall in the FSV of collateral held by the Bank Magnitude of shock – 5% Magnitude of shock – 10% Magnitude of shock – 15%
Revised core capital ratio 9.41 9.29 9.16
Revised total capital ratio 15.35 15.23 15.11
Slippage of performing loans to NPLs Magnitude of shock – 1% Magnitude of shock – 2% Magnitude of shock – 3%
Revised core capital ratio 9.01 8.50 7.99
Revised total capital ratio 14.96 14.45 13.93
Defaults by large borrowers Magnitude of shock – 5% Magnitude of shock – 7.5% Magnitude of shock – 10%
Revised core capital ratio 9.35 9.26 9.18
Revised total capital ratio 15.30 15.21 15.12
Credit risk review for 2020 People’s Bank is exposed to market risk mainly from the interest rate
risk arising from trading and non-trading books and its exposure to
Net loans and advances is reported at LKR 1,630.3 Bn. at the end of
gold prices through its pawning portfolio. Bank’s exposure to foreign
2021 which represented 73% of the total assets in the Statement of
exchange risk is moderate due to proprietary trading and foreign
Financial Position at the end of the reporting period. Asset quality of
currency denoted transactions of the Bank. Exposure to equity risk is
the loan portfolio shows marginal improvement from 3.3 to 3.2 by
limited due to the low trading portfolio.
the year end of 2020 and remains positive position level compared
to the industry average of 4.9%. Adverse economic conditions that
prevailed during most part of the year due to COVID-19 pandemic, Objectives of market risk management
loss of Markets too contributed to the slow growth of the loan book
zzOptimise the risk-reward relationship of business units within
and deterioration of assets quality in whole industry.
the predefined risk appetite.
zzAvert exposure to unacceptable losses.
Market risk zzEnsure all operations of the Bank are within the defined
Market risk is the probable loss that could arise due to movement in risk appetites.
market driven variables such as interest rates, exchange rates,
equity and commodity prices. The Bank’s key market risk categories
are interest rate risk, foreign exchange risk, equity risk and
commodity risk.
Risk Management
Assets
Treasury Bills 44,999 16,688 79,198 169,781
Treasury Bonds 1,164 327,355 126 111,155
Sri Lanka Development Bonds – 4,771 – 3,703
GOSL Bonds – 7,689 – 7,689
Other investments 263 24,589 191 18,421
Debentures – 43,558 – 22,714
Governance of market risk management the market risk exposures within the defined risk appetite. The
Risk Management Department is responsible for the daily risk
At Board level, the BIRMC has the responsibility to monitor the Bank’s
management activities, including market risk assessment, monitoring
market risk exposure, formulate policies and risk appetite limits
and reporting.
and provide recommendations to the Board on management of
market risk.
The Treasury Middle Office (TMO) measures and monitors the Bank’s
treasury transactions independently from the Treasury Front Office
At executive level, the Asset Liability Committee (ALCO) is responsible
and Back Office functions. The TMO ensures compliance to risk limits
to implement the market risk management framework and maintain
set by the Board.
BIBC BIRMC
Risk Management
Risk Management
4. Action trigger points Earnings at risk over one year horizon (net impact of 1%)
The risk thresholds that trigger specific management action are
specified, in order to ensure market risk exposures are maintained Up to 1 1-3 3-6 6-12
within the levels defined by the risk appetite statement. month months months months
Risk Management
2020
Rate sensitive assets 226,910 286,110 236,350 456,885 148,707 169,317 535,889
Rate sensitive liabilities 332,581 336,345 262,878 963,984 33,619 9,951 75,812
Period gap (105,672) (50,235) (26,528) (507,099) 115,088 159,366 460,077
Cumulative gap (105,672) (155,906) (182,435) (689,533) (574,445) (415,080) 44,997
2019
Rate sensitive assets 170,844 201,114 242,899 327,666 150,614 186,259 418,108
Rate sensitive liabilities 285,516 260,021 327,152 766,588 17,384 6,521 144,442
Period gap (114,672) (58,907) (84,253) (438,922) 133,230 179,738 273,666
Cumulative gap (114,672) (173,579) (257,832) (696,755) (563,524) (383,786) (110,120)
IMPACT ON MARKET VALUE OF EQUITY DUE TO 1% ADVERSE INTEREST RATE CHANGE USING
DURATION GAP ANALYSIS – 2020
LKR Mn.
-6,000
-7,000
-8,000
-9,000
-10,000
-11,000
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Risk Management
IRR stress testing for the overall management of FOREX risk. The clear segregation of
duties between the Front, Middle and Back Office functions of the
Magnitude of Magnitude of Magnitude of Treasury Department ensure an effective internal control mechanism.
shock - 0.25% shock - 0.50% shock - 1.00% Monitoring of open positions, asset liability maturities, currency
2020 exposures and the aggregate exposure are done by the middle office
independently.
Impact on earnings
(LKR Mn.) 2,736 5,471 10,942
VaR calculations and stress testing are carried out on portfolios
Revised overall CAR (%) 15.14 14.82 14.16 exposed to FOREX risk. Parallel VaR calculations are conducted by
the Bank’s Treasury Management System (based on Finacle) and the
2019
internationally accepted Bloomberg system. The potential impact on
Impact on earnings Bank’s profitability and capital adequacy levels are measured through
(LKR Mn.) 1,992 3,982 7,970 stress testing.
Revised overall CAR (%) 14.17 13.87 13.28
Position as at 31 December 2020
2020
Foreign exchange risk
Impact on earnings
Foreign exchange (FOREX) risk arises as a result of Bank’s earnings (LKR Mn.) 141 282 423
and/or capital being impacted due to adverse fluctuations in exchange
Revised overall CAR (%) 15.46 15.44 15.42
rates. The Bank’s exposure to FOREX risk arises from foreign currency
denominated transactions such as import/export transactions and 2019
remittances and proprietary trading.
Impact on earnings
(LKR Mn.) 137 273 410
Managing foreign exchange risk Revised overall CAR (%) 14.45 14.43 14.41
Foreign exchange transactions are governed by a stringent regulatory
framework. Whilst the CBSL sets the approval mechanism and limits,
the Bank set stringent volume limits, within the regulatory confines
and limits defined by ALCO on open positions for individual currency
exposures and aggregate exposures. Risks arising from FOREX
maturity gaps within the Bank’s risk appetite are managed through
forward maturity gap limits. The Treasury Department is responsible
Risk Management
60 225,000
48 180,000
36 135,000
24 90,000
12 45,000
0 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Limit (NOP - USD Mn.) NOP USD Mn. 2020 VaR USD
Risk Management
Commodity risk
People’s Bank’s exposure to commodity risk stems from the pawning portfolio, which holds gold collateral. The Bank holds a high market share in
the pawning market. Gold is impacted by fluctuations in gold prices.
LKR
100,000
80,000
60,000
40,000
20,000
0
1 January 31 December
2020 2020
Managing commodity risk and its exposure is backed by gold, which is considered to be readily
resalable. The Bank has taken measures to manage and mitigate the
Commodity risk is managed through a meticulous process. A series
inherent risk in pawning by LTV ratio at a comfortable level at all times
of pre-disbursement measures are carried out including, determining
through assigning risk weights imposed by the regulator. In addition,
the gold content of the pawned articles, conducting due diligence
gold market prices are periodically assessed and analysed and are
of customers, maintaining prudent loan to value ratios, continuous
monitored by ALCO along with competitor product features. The
assessment of gold prices and competitor offerings and obtaining an
Bank has highly sophisticated equipment in their pawning centers to
insurance cover against losses arising from stolen articles.
assess the gold accurately. Although the Bank staff handling pawning
are well experienced and have the expertise, regular training is
The post-disbursement measures include, conducting independent
provided to such staff to update their awareness to new technology
valuation of pawned items regularly, daily verification of a sample of
related to pawning activities and the risk areas to be concentrated on.
5% and regular auctioning of unredeemed articles.
Insurance coverage is in place for the pawning portfolio. Impairment
provisions are made with market gold value while regular auctions are
Commodity risk review conducted to recover the defaulted advanced. Furthermore, the Bank
Commodity risk is the exposure to changes in prices and volatilities has facilitated the customers to affect the repayments monthly basis
of commodities. The Bank has a negligible exposure to commodity as well to ease their financial burden and this can be done via our self-
price risk as the Bank is not engaged in commodity trading at present banking units as well. All these measures have enabled the Bank to
and its only exposure to commodity risk is associated with the Bank’s manage and mitigate its commodity risk associated with the pawning
pawning business. The Bank has been a pioneer of pawning activities activities prudentially.
Risk Management
consecutive days
Managing liquidity risk zzOver 50% increase in NPL ratio
A well-articulated liquidity risk management framework is in place zzLarger than expected deposit withdrawals
to ensure sufficient liquidity is maintained to meet its contractual zzConsolidated AD ratio exceeding 105% for more than 15 days
obligations on time. The ALCO ensure compliance with internal
zzCall facilities being withdrawn by market participants or imposing a
liquidity targets and regulatory liquidity requirements by providing
oversight, managing liquidity risks and continuous monitoring of the premium over the market rate for Bank’s borrowings
Bank’s liquidity position. The Head of Treasury is responsible for the zzCredit rating downgraded by more than two notches
90
2. Diversified funding base
87
The Bank sources liquidity from multiple sources, based on market
conditions, regulatory considerations and interest rate movement 84
trends. Deposits are the largest funding source amounting to 84.1%
of the Bank’s total funding base, followed by other borrowings 81
(11.2%) and shareholders’ funds (4.7%). The Bank has a relatively ’16 ’17 ’18 ’19 ’20
high proportion of savings, which is considered a quasi-stable source
of funds.
Risk Management
% 0.2% 4.1%
102
100
98 58.9% 36.8%
96
94
92
Q1 Q2 Q3 Q4 Demand Savings Fixed Others
% %
75 75
60 60
45 45
30 30
15 15
0 0
Q1 Q2 Q3 Q4 ’16 ’17 ’18 ’19 ’20
Statutory liquid assets ratio – DBU Statutory liquid assets ratio – FCBU
FUNDING DIVERSIFICATION – 2020
81%
Risk Management
Risk Management
BOARD
BIRMC BAC
CHIEF EXECUTIVE
OFFICER/
GENERAL MANAGER
OPERATIONAL
RISK MANAGEMENT
COMMITTEE
DGM CHIEF
(RISK MANAGEMENT) INTERNAL AUDITOR
OTHER OPERATING
BRANCHES DEPARTMENTS/
BUSINESS UNITS
Risk Management
i. Identification and assessment of operational risk zzCreating a culture of risk awareness by providing continuous
training to staff
The Risk Management Department together with business units
zzPrior to launch of new products and services, conducting a
identify potential areas of operational risk. All staff members are
given training on operational risk exposures and are engaged thorough analysis of the potential impact of operational risk
proactively to identify and assess these risks. zzOperational Risk Management system in compliance to Basel II
guidelines
Key business units conduct Risk and Control Self-Assessments
(RCSA) to evaluate exposures according to defined operational risk
parameters. Along with loss events and near misses reported by
Risk reporting
business units, the key findings of RCSA help to identify and devise Systematic identification of root cause, trends and frequency of
action plans for potential gaps in risk management. Operational risks are facilitated by maintaining a database of operational risk
risk is assessed on new products, processes and activities on an events, losses and near misses by the Risk Management Department.
ongoing basis. Information of significant loss events, emerging issues, risk oversight,
monitoring and reviewing of risks are reported through quarterly
reports. This information is included in the risk committee reports
ii. Limits and tolerance levels which are presented to the BIRMC and/or ORMC. Based on the
The Board has defined specific limits and tolerance levels for potential impact and frequency of the risk, control failures are
operational risk indicators in the Bank’s Risk Appetite Statement. reported to the Operational Risk Management Committee.
These include the total value of operational losses as a percentage of
operational expenses, the number of internal and external loss events, OPERATIONAL LOSSES
and the percentage of branch audits rated less than average. Regular
LKR Mn. LKR Mn.
reporting to the BIRMC and Board helps to ensure corrective actions
are initiation when needed. 800 900
640 720
iii. Mitigating operational risk
480 540
Risk mitigation policies and programmes are implemented to maintain
a sound operating environment within the Bank. These include: 320 360
zzImplementing a comprehensive framework of operational risk
outsourced partners
Risk Management
OPERATIONAL LOSSES BY EVENT (NUMBERS) – 2020 OPERATIONAL LOSSES BY EVENT (VALUE) – 2020
0% 0% 0% 1%
0% 0%
3%
33%
3% 63%
1%
0% 0%
96%
Internal frauds
Internal frauds External frauds
External frauds
Clients, products and business practices
Clients, Products and business practices
Employee practices and workplace safety
Employment practices and workplace safety
Damage to physical assets
Damage to physical assets
Business disruption and systems failure
Business disruption and system failure
Execution, delivery and process management
Execution, delivery and process management
Risk Management
High critical – Central ATM Switch 99.92% >99.9% Green – Low risk
97.5%-99.9% Amber – Moderate risk
– NOVUS Switch
<97.5 Red – High risk
– Core banking system/SIBS interface
– SWIFT
– Credit/Debit card management system
– SLIPS
Medium critical – Image capturing and presentment system 99.21% >97.5% Green – Low risk
– Web remittance system 95%-97.5% Amber – Moderate risk
– Finacle treasury <95% Red – High risk
– ATM (individual)
– PRIME 4
– CIB/CMB/ORA
– RIB/RMB
– Express Banking
– RLOS
Low critical IHRM System 99.99% >90% Green – Low risk
87%-90% Amber – Moderate risk
<87% Red – High risk
Risk Management
from the IT Department to report to the Risk Management People risk review
Department directly. People are the most significant asset in any business as they are
zzConduct Internal/External Vulnerability assessments for all
the central point in overall performance of the other assets. Thus
anticipating and efficiently managing the people risk is highly
systems including web based application and rectification of
important to the success of the Bank in sustainable Business Model.
any issues found.
Hence having HR Development programs in place as an ongoing
ensures up to date knowledge/skills of the staff which requires
IT risk review to enhance customer delivered value, and allows minimising the
zzConduct routine and non routine risk assessments for all IT related
risk associated to the business due to lack of knowledge, product
promotion strategies, etc. and will in turn result to increase reputation
processes and follow up the same through Information Security
& brand image through customers. Furthermore, reducing the
Operations committee.
disruption to work, protecting the employees and their families
zzPeriodical review of Information Security Policy Procedures of the
from the financial difficulties, minimising staff turnover, maintaining
Bank and get the board approval
healthy atmosphere with the working environment with emerging
zzReviewing of access logs for critical systems and critical
health pandemics etc. could be considered as highly concerns in
infrastructure. managing the People Risk.
zzReviewing of user access rights of critical systems
Turnover of trained skilled staff impacts the competitiveness of the Reputational risk
Bank, leading to deterioration in competency and productivity. Hiring Reputational risk is an indirect loss arising from an event or incident
qualified, competent individuals and retaining the high performing that adversely affects earnings, assets and liabilities and brand value.
employees through a rewarding work environment is challenging Reputational risk is also driven by other risks such as credit, market,
as well. and operational risk etc.
Risk Management
The negative impact on the Bank’s reputation has been low, as Compliance risk governance
People’s Bank has maintained an impeccable track record for nearly
six decades as a premier State bank in Sri Lanka. Customer confidence BOARD OF DIRECTORS
is founded on a sound reputation which reflects the integrity of the
Bank, the competence of staff and the high product quality.
BIRMC
The Bank monitors the reputation risk through early warning
indicators. The customer complaint-handling unit, addresses all
customer complaints efficiently and effectively. Even as the scope AGM – Compliance
of reputation risk has widened due to social media, the Bank has
implemented several measures to enable customers to forward their
The Board holds the highest responsibility to ensure compliance
grievances. These include, the Bank’s website, Facebook page, the call
with relevant external regulations and internal guidelines and is duly
centre, email and the postal address.
supported by the BAC and BIRMC in its compliance functions. The
compliance of the Bank is ensured by the dedicated Compliance Unit,
Appropriate measures, including, communication policies, code of
reporting directly to the BIRMC. In addition to the Risk Management
conduct, and ethics are also in place to be followed by employees
Department and the internal audit function, the Compliance Unit
across the Bank, without exception. The Bank’s active engagement
provides assurance to the Board on the Bank’s overall level of
in Corporate Social Responsibility (CSR) activities, as a part of the
compliance.
corporate strategy, and the media presence in social media platforms
helps to drive brand visibility.
Bank’s compliance risk is assessed through a five-point rating
scale scorecard, in relation to internal best practices and external
Reputational risk is assessed through a comprehensive scorecard
regulations. This scorecard is submitted to the BIRMC.
developed by the Bank based on the ICAAP guidelines.
regulations and best practices. compliance policies and procedures to eliminate or minimise the
risk of non-compliance with regulatory requirements.
zzDevelop a code of conduct/ethics for all employees, clearly
Objectives of managing compliance risk
articulating the best practices and monitor to ensure compliance at
zzIncrease Bank’s reputation and brand value
all levels.
zzEnhance customer confidence and trust zzImplement an Anti-Money Laundering Policy aligned to Know Your
zzFacilitate smooth and efficient operations Customer (KYC) regulations, to be adhered by all departments of
zzStrengthen employee integrity the Bank.
zzOffer products and services of the highest quality zzMaintain regular contact and cordial relationships with
zzAugment the strength and stability of the Bank regulators based on clear and timely communication and mutual
understanding.
zzStrengthen the sustainability of the Bank
zzNurture a culture of compliance within the Bank.
Risk Management
zzReport to the Board all relevant regulatory developments and zzLiaise with the Bank’s internal and external audit function to
changes in laws that could give rise to compliance issues. address compliance issues.
zzHighlight any breaches related to compliance and work with the zzFollow up on compliance issues identified through audits.
management to address and rectify them within an acceptable zzLiaise with the auditors and conduct random compliance audits on
timeframe. risk-based assessment.
zzSubmit monthly compliance reports to the Central Bank of
and staff.
Risk Management
changes in the business environment. ensures the adequacy of the internal control mechanisms of the
subsidiaries, through periodic reviews.
Strategic risk is assessed using a scorecard, by taking into zzIn certain instances, Directors are nominated to the respective
consideration a range of factors including the Bank’s size, complexity, Boards of the subsidiaries by People’s Bank.
sophistication of operations, environmental analysis as well as zzThe risk profiles of the regulated subsidiaries are reviewed by
customer profiling. The scorecard helps to identify areas that need
People’s Bank’s BIRMC, periodically.
improvements to mitigate strategic risk.
zzThe Bank’s Board of Directors have access to the board minutes of
Group companies.
Credit Risk Market Risk Operational risk Compliance risk Strategic risk Reputation risk
CORPORATE GOVERNANCE
The Bank's Corporate Governance framework defines the structure of roles, practices and processes used to direct and manage the Bank. A strong
and effective corporate governance framework has enabled the integrity, high performance and sustainability of the Bank. Identification of power
and decision making bodies enable to create more accountability towards the Bank.
Assurance
Governance structure
Bank’s corporate governance structure consists of several layers. The Board provides oversight and deliberates with the Executive Management
about the Bank’s strategic direction, financial goals, resource allocation, and risk appetite. The Management is responsible to execute the policies
of the Board to create shared value for all its stakeholders.
Corporate Governance
Innovators and Investors at the early stage and develop them into Holding of regular Board meetings
successful entrepreneurs in the future, by partnering with them at (Principle A. 1.1)
the initial stage. The Board meets at least once a month and additional meetings are
zzMaintain high level of Customer Service Quality (CSQ) convened based on necessity. The Board met 20 times during the year
2020, and all Board meetings were characterised by high attendance,
active participation and constructive and open discussions.
Assurance
The Auditor General provides assurance on the Financial Statement Directors are required to attend all Board meetings and Committee
of the Bank and on the Directors’ Statement on Internal Controls over meetings of which they are members. Instances of non-attendance at
Financial Reporting which are published on pages 203 to 204 and 199 Board meetings were generally due to prior engagements, personal
respectively. He also certifies the level of compliance with the commitments or illness.
Banking Act Direction No. 11 of 2007 on Corporate Governance for
Licensed Commercial Banks issued by the Central Bank of Sri Lanka. In addition, Non-Board members of the Senior Management and the
advisory members may, by invitation, attend meetings to address
specific items in the agenda. Members of the Corporate Management
GRI 102-22, 102 -23, 102-24
and/or external experts are allowed to make presentations to the
Board and Subcommittees on a regular basis on matters pertaining to
Compliance with the Code of Best Practice for the Bank’s strategy.
Corporate Governance
The Board (Principle A.1)
Board of Directors of People’s Bank are appointed by the Minister
of Finance. The current Board comprises the Chairman, and Non-
Executive Directors. All Directors are eminent professionals of
The attendance of each Director at Board meetings and respective committee meetings in 2020 are detailed below:
Name of Director Status Board meeting BAC BHRRC BIRMC BECC BNC BIBC BITC BSPRC
Corporate Governance
Role of the Board (Principle A. 1.2) Compliance with laws of the country as applicable
The Board is responsible to provide leadership, oversight, control, to the business and procedure to obtain
development, and ensure long-term success of the Bank. They also independent professional advice
facilitate value creation to shareholders in accordance with applicable (Principle A. 1.3)
laws and regulations. The Board is also responsible for nurturing
The Board of Directors collectively and severally, are expected to act
the right culture, instilling values and promoting ethical behaviour
in accordance with the laws of the country, applicable to the business
throughout the Bank.
conducted by the Bank. Therefore, the Board is responsible for
ensuring all relevant procedures and controls are in place to maintain
There is a formal schedule of matters reserved for the Board,
compliance with all applicable laws and regulations.
which are reviewed regularly to ensure it remains current.
Matters reserved for the Board include the items summarised in
The Board acknowledges the need to obtain independent judgement
the table below:
from time to time, on certain matters. Accordingly, Board members
are entitled to seek independent professional advice (including but
Governance Strategy and directions Risk management accountability
and control not limited to legal, accounting, and financial advice) at the Bank’s
expense on any matter connected with the discharge of his/her duties
yy Review of yy Approval of yy Approval of financial and responsibilities.
governance strategy and statements, other
arrangements annual budgets updates to market and
yy Terms of yy Authorisation of recommendations on Company Secretary (Principle A. 1.4)
reference for acquisition and dividends All Directors have access to the Board Secretary. The Board Secretary
and membership disposal activity yy Approval of authority is responsible to the Board for ensuring all agreed procedures and
of Board yy Affirmation of levels, financial, and applicable rules and regulations are observed. In addition, the Board
committees risk management treasury policies Secretary serves as the Secretary to all committees and maintains
strategies and yy Review of internal the minutes of all Board meetings and committee meetings. Other
risk appetite control and risk responsibilities of the Board Secretary include:
management zzCoordinating matters pertaining to the conduct of Board meetings
yy Approval of health and and subcommittee meetings
safety policies zzConducting proceedings in accordance with the People’s Bank Act
of the Board. The scope of work assigned to each committee along including assisting the Directors with respect to their duties and
with the progress made during the year is given on pages 192 to 196 responsibilities, in compliance with relevant legislation and best
of this Report. practice
zzActing as the communication liaison between Non-Executive
Monitoring the effectiveness of the Bank’s risk management and Directors and Management
internal control systems has been delegated to the Board Risk
zzEnsuring appropriate disclosures on related parties and related
Management Committee and Audit Committee. The Board retains
party transactions in line with regulatory requirements
ultimate responsibility for determining the Bank’s “risk tolerance”.
zzObtaining legal advice in consultation with the Board on the
The Risk Management Report is reviewed by the Board, and this
includes, monitoring, controlling and reporting of identified risks and People’s Bank Act and other relevant legislations in ensuring Bank’s
uncertainties. In addition, the Board reviews reports referred by the compliance with all applicable laws and regulations
Chairman of the Risk Committee and Audit Committee pertaining to
risk management.
Independent judgement of Directors
(Principle A. 1.5)
Directors are required to bring an independent judgement to
bear on decisions of the Bank. As experienced professionals, their
duties are performed without any influence from other persons. The
Board promotes dynamic, and constructive contribution from
Non-Executive Directors.
Corporate Governance
Bank operates. This includes written reports and presentations by zzSetting the agenda for each Board meeting, taking cognisance
senior executives or consultants, on Bank’s operations, corporate of the matters proposed by other Directors, members of various
governance, legal and regulatory developments. subcommittees or the Board Secretary
zzEnsuring the Board members receive accurate, timely, and clear
Manager (GM) are collectively responsible for the leadership of circulated among the Directors
People’s Bank and for promoting the highest standards of integrity zzProviding leadership and governance to the Board to create a
and probity, there is a clear and effective division of accountability conducive environment for the Board and individual Director’s to
and responsibility between the Chairman and the CEO/GM. Each play discuss issues in a timely manner
a distinctive role which complements each other to ensure balance zzPromoting a culture of transparency and encouraging Non-
of power and authority and avoid unfettered powers of decision and
Executive Directors to engage in constructive and healthy exchange
control for one individual.
of views pertaining to matters of the Board and thereby facilitating
contribution to the effective functioning of the Board
The Chairman is responsible for leading, directing and managing the
zzEnsuring the Board plays a full and constructive role in developing
Board to ensure effective operations and fully discharging its legal
and regulatory responsibilities. The primary role of CEO/GM is to and assessing Group’s strategies and policies, and ensuring Board
manage the day-to-day operations of the Bank. decisions are taken in the best interest of the Bank and fairly reflect
Board’s consensus
zzProving leadership for self-assessment to generate meaningful
A decision to combine the posts of Chairman and feedback to further improve the effectiveness of the Board
Chief Executive Officer in one person should be
justified and highlighted (Principle A. 2.1)
Financial acumen (Principle A. 4)
The position of the Chairman and the CEO/GM are clearly separated,
preventing unfettered powers for decision-making by one person. The People’s Bank Board comprises members with sufficient
financial acumen and knowledge. In addition to the Senior Chartered
The Chairman and the CEO/GM have been identified on pages 28 Accountants and Chartered Management Accountants who provide
and 32 of the Annual Report. guidance on the financial matters, the rest of the Directors have
sufficient financial acumen acquired through their extensive
professional experience.
Corporate Governance
Board balance (Principle A. 5) subject to a maximum term of nine years and an age limit of up to 70
years, whichever comes first in line with the provisions of the Banking
The People’s Bank Board is well balanced with eight Non-Executive
Act Direction No. 11 of 2007.
Directors, of whom seven function in an independent capacity. This is
above the minimum stipulated by Code of Best Practice for Corporate
All appointments for directorships are submitted to the Central Bank
Governance issued jointly by the Securities Exchange Commission of
of Sri Lanka for assessment under the Fit and Proper Criteria for
Sri Lanka and The Institute of Chartered Accountants of Sri Lanka.
Directors.
All Independent Non-Executive Directors are independent of
management and free from any business or other affiliations that Appraisal of Board performance (Principle A. 9)
could materially interfere with or could reasonably be perceived
Every member of the Board conducts a self-assessment of his/her own
to materially interfere with the exercise of their unfettered and
effectiveness as well as the Board as a team annually, incorporating
independent judgement.
all criteria specified in the Board performance evaluation checklist
of the Code. The responses are collated by the Board Secretary and
Every Non-Executive Director submits a signed declaration of
submitted to the Board as a summary report.
independence/non-independence against the specified criteria
and they are evaluated to ensure compliance with the criteria for
determining independence. Disclosure of information in respect of Directors
(Principle A. 10)
In the year under review, there were no circumstances that warranted
Information specified in the Code in relation to Directors is disclosed
the appointment of Alternate Directors. The need to appoint a Senior
in this Annual Report as follows:
Independent Director did not arise either due to the segregation of
zzName, qualifications, brief profile and the nature of expertise on
positions of the Chairman and the CEO/GM.
pages 28 and 29.
zzNumber of Board and Committee meetings held in year 2020 and
Supply of information (Principle A. 6) attendance on page 174.
Board meetings are scheduled well in advance, giving adequate notice zzNames of committees in which the Director serves as the Chairman
to Directors. Prior to every Board or committee meeting, the Bank or a member on page 173.
Secretary ensures all relevant papers including the agenda, content zzRelated party transactions on pages 294 to 299.
and a summary of management presentations are made available
to all the Directors seven working days prior to the meeting. The
Directors who are unable to attend the meetings are updated through Appraisal of the CEO (Principle A. 11)
the documented minutes, which are tabled at the next meeting with
The evaluation of the CEO/GM is one of the most important
the matters to be followed-up from the minutes.
responsibilities of the Board. The evaluation process provides a
formal opportunity for the Board and CEO/GM to have a constructive
Monthly accounts for a given month are prepared and circulated
discussion regarding the performance and the leadership of the
among Directors in the following month along with key financial
CEO/GM. The set of KPIs for the CEO/GM formulated under Strategic
performance indicators of each division/subsidiary. If the Board feels
Planning and Performance Management is reviewed monthly by the
the information provided is insufficient or not clear, they are entitled
panel who submits the review to the Board monthly for their review.
to request for further clarification or additional information. The
These goals are confirmed by the Board and are used as the basis for
respective management personnel can be called for the meetings
the annual CEO/GM’s appraisal process.
when deemed necessary to provide further details.
The CEO/GM is responsible to provide the Board with explanations for
GRI 102-24
any adverse variances along with corrective action to be taken.
Appointments to the Board
(Principle A. 7 and A. 8) Director’s and executive remuneration procedure
In accordance with the People’s Bank Act, a maximum of 10 Directors (Principle B. 1. B.1.1, B. 1.2, B. 1.3)
are appointed by the Minister in charge of the portfolio of which two Board remuneration is decided according to guidelines set by the
Directors are nominees of the respective Minister handling the subject Ministry of Finance. No Director is involved in determining his/her
of cooperatives. Appointments are made for a period of three years own remuneration. The BHRRC makes recommendations to the Board
pertaining to the remuneration and benefits of the CEO/GM and
Corporate Governance
Key Management Personnel within agreed terms of reference and zzDirectors’ Statement on Internal Control over Financial Reporting
in accordance with the remuneration policies of the Bank, and the on pages 197 to 198.
Collective Agreement. Remuneration is designed to attract, retain and zzManagement Commentary on pages 192 to 196.
motivate high performing, qualified and experienced employees of zzStatement of going concern of the Company is set out in the
the Bank. The Board in turn makes recommendations to the Minister of
Statement of Directors’ Responsibility on page 202.
Finance who is the final authority for approval of their remuneration
zzRelated Party Transactions are disclosed on pages 294 to 299 of
under the collective agreement.
the Directors’ Report and in Note 45 in the Financial Statements
The BHRRC seeks professional advice externally, when deemed
necessary, in discharging their responsibilities. The report of the Internal control and Audit Committee
BHRRC, disclosing the Statement of Remuneration Policy and the
names of the Chairman and members of the BHRRC is given on
(Principle D. 2 and D. 3)
page 193. The aggregate remuneration paid to the Directors is given The Board is cognisant of its responsibility for formulating and
on page 236. implementing appropriate and adequate processes for risk
management and sound internal control systems to safeguard
shareholder interests and assets of the Bank. BAC assists the Board
Relations with shareholders (Principle C. 1, C. 2) in relation to risk managements while BIRMC assists the Board in
As a State Bank, with the Government of Sri Lanka being the main discharge of its duties with regard to risk management. Their roles
shareholder, People’s Bank comes directly under the purview of the and responsibilities are provided in the Committee Reports given on
Ministry of Finance. The Board liaises with the Ministry to ensure pages 192 and 196, respectively.
alignment with the socio-economic development goals of the country.
BIRMC is supported by the Risk Management Department of the
The Annual Report is printed in English, Sinhala, and Tamil and is Bank. A comprehensive report on Bank’s risk management process
circulated through the Ministry of Finance to the Parliament. The Bank is included on pages 110 to 138. BAC is supported by the internal
liaises with the Ministry of Finance for matters concerning the Ministry. audit function of the Bank. The Internal Audit Department reviews
the adequacy and effectiveness of the internal control systems
and reports to the BAC on a regular basis. Duties of the BAC include
Major and material transactions (Principle C. 3) keeping under review the scope and results of such audits and its
There were no transactions which would materially alter the Bank’s effectiveness. BAC also plays a primary role in liaising with the
or Group’s net asset base, other than those disclosed in the Note 45 Auditor General, who conducts the external audit of the Bank.
to the Financial Statements, Related Party Disclosures on pages 294
to 299.
Code of Business Conduct and Ethics
and Corporate Governance Report
Financial reporting (Principle D. 1) (Principle D. 4 and D. 5)
The Annual Report presents a balanced review of the Bank’s The Bank has two Codes of Business Conduct and Ethics, one
financial position, performance, and prospects. Both narrative and applicable to the Directors and the other to the employees. BHRRC is
visual elements have been used in presenting the information, to responsible to regularly review the respective codes to ensure they
increase comprehension and clarity. We have provided a balanced remain relevant and adequate considering the evolving business
view on our performance in this report and other communications operations of the Bank. The Codes of Business Conduct and Ethics are
presented to relevant authorities including the Ministry of Finance in compliance with the requirements of the Schedule I of the Code of
and regulators. The Bank takes every effort to ensure compliance with Best Practice on Corporate Governance.
statutory requirement in the Annual Report and in the issue of interim
communications on financial performance. This Corporate Governance Report from pages 179 to 191 complies
with the requirement to disclose the extent of compliance with
The following disclosures as required by the Code are included in the Code of Best Practice on Corporate Governance as specified in
this Report: Principle D 5.
zzStatement of Directors’ Responsibility on page 202 includes a
Corporate Governance
The Banking Act Direction No. 11 of 2007 and subsequent amendments thereto on
Corporate Governance for Licensed Commercial Banks in Sri Lanka issued by the Central Bank
Section Principle Compliance and implementation Complied
Bank’s strategic objectives have been communicated to the Business Unit Heads and to the
Operational level staff at an offsite location.
Monthly progress of Strategic Plan 2016 to 2020 has been reviewed by the Board.
Budget 2020 has been presented by the Head of Finance (HOF). HOF has explained the Bank’s
2020 Budget together with three scenarios.
b. Approval of overall Business Strategic Plan includes strategic objectives and overall business strategy of the Bank.
Strategy including Risk Policy Complied with
Risk management procedures and mechanisms are in place. Board has reviewed the Risk
and Management
Management Policy of the Bank.
The Bank is in the process of developing strategic plan 2021-2023 through an external
consultant.
c. Risk management Board Integrated Risk Management Committee (BIRMC) takes the initiative in the assessing Complied with
of all risks of the bank with the assistance of the Credit Risk Officers (CROs) and the
relevant KMPs.
Bank will have to initiate a process where the Board members discuss new strategies of the
Bank, the risks arising out of new strategies and further the ways and means to mitigate
such risks.
d. Communication with all The Board has approved and implemented an effective cooperate communication policy Complied with
stakeholders with all stakeholders. It was initially approved by the Board in 2012.
Corporate Governance
As per the Head of Internal Audit, IAD is in the process of reviewing the internal control
systems with the collaboration of respective Heads of Depts.
Further, People’s Bank Act defines the areas of authority and Key responsibilities for the
Board of Directors including the CEO.
Key responsibilities of the KMPs are entirely operational based and are specified in their
respective job descriptions.
Authority of key management personnel are defined under delegation authority limits.
h. Oversight of affairs of the Board has exercised appropriate oversight of the affairs of the Bank by key management Complied with
Bank by KMP personnel.
i. Assess effectiveness of own
governance practices
(i) The selection, nomination, People’s Bank Act No. 29 of 1961, Section 8 defines the selection and appointment of Complied with
and election of Directors and Directors by the Minister and two of them shall be nominated by the Minister in charge of the
Key Management Personnel; subject of Corporative.
(ii) The management of People’s Bank Act No. 29 of 1961, Section 11 speaks on the conflicts of interest of the Board Complied with
conflicts of interests; and of Directors. Further, the Code of Best Practice, Section 2.13.G approved by the Board in
September 2011 speaks on conflicts of interests of the Board members.
(iii) The determination Bank has a Self-Evaluation process in place for the Board of Directors which include the Complied with
of weaknesses and evaluation of Board Directors' own governance practices. Further, the Code of Best Practice,
implementation of changes Section 2.21 approved by the Board in 30 September 2011 speaks on Self- Evaluation
where necessary. process.
Self-evaluations of board members for the year 2020 collected by the Board Secretary.
Self-evaluation of CEO and KMPs has to be submitted to the board as per the Section 2.21 of
code of best practice and a summary has to be submitted to the Board for their review and to
discuss areas of weaknesses and recommend changes where necessary.
j. Succession plan for KMP Board approved Succession Plan for CEO and KMPs are in place. Complied with
k. Regular meetings with KMP Key Management Personnel are called regularly when the need arises by the Board to explain Complied with
matters relating to their area of functions.
Corporate Governance
l. Regulatory environment Board has taken measures and processes in place to understand the regulatory environment Complied with
and maintaining an effective and that the Bank maintains a relationship with regulators.
relationship with regulator
On appointment as Directors, the Board secretary furnishes them with Code of Best Practice
on Corporate Governance, details of existing directors etc.
CBSL Statutory Examination Report as at 30 September 2019 has been discussed in Board
Audit Committee by BAC and need to available for review of the Board to take note over the
supervisory concerns.
Attendance of the CEO at CBSL meetings further evidence the relationship maintained with
the regulator.
m Hiring External Auditors By People’s Bank Act Section 34, the Auditor General is the auditor of the bank. Complied with
3.1 (ii) Appointment of Chairman As per the People’s Bank Act, Section 10, Minister shall appoint the Chairman of the Board Complied with
and CEO and defining and from among the Members of the Board.
approving their functions and
During the financial year the Chairman and all CEO/GMs were duly appointed.
responsibilities
Section 2.22 and 2.23 of Code of Best Practice in Corporate Governance of the Bank defines
the Powers and Roles of the Chairman.
Code of Best Practice in Corporate Governance (CBPCG) Section 3.9 Annex III of the Bank
defines the Roles, Duties and Responsibilities of the CEO/GM.
3.1 (iii) Regular Board meetings Bank has held 20 meetings during the year 2020.There was no Board meeting held during the Complied with
month of September.
Further as a practice, notice of at least 7 days is given for the Board to provide all Directors an
opportunity to attend regular meetings.
3.1 (vi) Directors attendance As per the Board Attendance schedule, All the Directors have attended two-thirds of the Complied with
meetings held during the year 2020.
3.1 (vii) Appointment and setting Board Secretary is an Attorney at Law who satisfies the board approved SOR section 2.5.i Complied with
responsibilities of the Board
The Board has appointed Ms Shyama Wijekoon, Assistant Board Secretary as an Acting
Secretary
Secretary to the Board of Directors w.e.f 1 April 2019.
3.1 (viii) Directors access to advice Section 2.25 of the Code of Best Practice in Corporate Governance has a provision in Complied with
and services of Board this regard.
Secretary
3.1 (ix) Maintenance of Board Duties of the Secretary to the Board (Annex iv) given in the Code of Best Practice in Corporate Complied with
minutes Governance (version 1.2) approved by the Board includes a provision in this regard.
3.1 (x) Minutes to be of sufficient Detailed minutes are kept covering the given criteria and the Board minutes evidence that Complied with
detail and serve as a they contain the required details such as individual views of the members, ultimate decision of
reference for regulators and the Board, whether complies with strategies and policies of the Bank and further they speak on
supervisory authorities data, reports and information used by the Board members in arriving at the decisions.
Corporate Governance
3.1 (xi) Directors ability to seek Board approved policy is in place to seek independent professional advice in appropriate Complied with
independent professional circumstances, at the Bank’s expense.
advice
3.1 (xii) Dealing with conflicts of People’s Bank Act No. 29 of 1961 Section 11 speaks on the conflicts of interest of the Board Complied with
interest of Directors. This procedure further evidence that the director is to abstain from voting on any
board resolution in relation to which he/she or any of his/her close relation or a concern in
GRI 102-25
which a director has substantial interest and he/she not been counted in the quorum.
Section 2.13 of Code of Best Practice of the Bank approved by the Board also has a provision
with regard to this.
The Board has discussed about the Related party Transaction Policy in their meeting held on
19 March 2018.
3.1 (xiii) Formal schedule of matters Board Charter of Code of Best Practice of the Bank approved by the Board, Section 2.28 Complied with
reserved for Board decision defines the Powers Reserved for the Board.
3.1 (xiv) Inform Central Bank if there There is a procedure in place at the Bank for informing the Director of Bank Supervision of the Complied with
are solvency issues situation of the Bank prior to taking any decision or action, if it considers that the procedures
to identify when the Bank is, or is likely to be, unable to meet its obligations.
As per the Board minutes such an instance has not arisen during the year 2020.
3.1 (xv) Capital adequacy Board has capitalised the Bank at levels required by the Monetary Board. This has been Complied with
addressed through the Monthly Compliance Certificate submitted by the Compliance Officer.
3.1 (xvi) Publish Corporate Board has published its Corporate Governance report on compliance with Section 3 of this Complied with
Governance Report in Direction on page179 to 191 of the Annual Report 2020.
Annual Report
3.1 (xvii) Self-assessment of Directors The Bank has a scheme of self-evaluation of directors in place and the Board Secretary Complied with
annually obtains the evaluation forms from all the Directors.
3.(2) (v) Alternate Independent There is no provision in the People’s Bank Act to appoint alternate directors and such a Complied with
Directors situation does not arise.
Corporate Governance
3.(2) (vi) Criteria for Non-Executive The appointments to the Board are made by the Minister in Charge of the Finance, under Complied with
Directors Section 8 of the People’s Bank Act No. 29 of 1961.
3.(2) (vii) More than half the quorum All the Directors of the Bank are non- executive and as per the section 2.3 of Code of Best Complied with
to comprise Non-Executive Practice of the Bank the stipulated quorum of the Board is five.
Directors
As per the Attendance submitted by the Board Secretary for the financial year 2020 evidence
that the required quorum has been complied with at all Board meetings.
3.(2) (viii) Identify Independent Composition of the Board, including the names of the Chairman, Non-Executive Directors and Complied with
Non-Executive Directors in Independent Directors have been disclosed in the Annual Report 2020 on page 174.
communications and disclose
categories of Directors in
Annual Report
3.(2) (ix) Formal and transparent The appointments to the Board are made by the Minister of Finance, economy and policy Complied with
procedure for appointments development, under Section 8 of the People’s Bank Act No. 29 of 1961.
to the Board
3.(2) (x) Re-election of Directors Such a situation does not arise since the Minister in Charge of the subject appoints them. Complied with
filling casual vacancies
3.(2) (xi) Communication of reasons People’s Bank Act, Section 8 (4), provides a director to resign by writing a letter to the Minister Complied with
for removal or resignation of of the subject. Further the minister can also remove a director by publishing a Gazette
Director notification.
Corporate Governance
3.(4) (iii) Review delegation The delegated powers are reviewed periodically by the Board to ensure that they Complied with
arrangements periodically remain relevant to the needs of the Bank.
to ensure relevance to
operations of the Bank
Corporate Governance
Reports/minutes of such committees are submitted and tabled at the main board for the
information and review by the Board.
Annual Report 2020 includes individual reports of each Board subcommittee on page 192
to 196 and such report includes a summary of its duties, roles and performance of each
committee.
Corporate Governance
e. Provision of non-audit This is not relevant since the Bank’s auditor is the Auditor General. Complied with
services by an External
Auditor
f. Determines scope of audit Committee has discussed and finalised the nature and scope of the audit, with the external Complied with
auditors in accordance with SLAuS before the audit commences.
g. Review financial information Committee has a process to review financial information of the Bank when the quarterly and Complied with
of the Bank annual audited financial statements and the reports prepared for disclosure are presented to
the Committee by the Head of Finance.
h. Discussions with External Committee has held a confidential discussion with the representative of Auditor General. Complied with
Auditor on interim and final
audits
i. Review of Management Management Letter for 2019 was submitted to the Board Audit Committee on 16 February Non-complied
Letter and Bank’s response 2021. This is to be taken for deliberation at the upcoming meeting. at 6 April 2021
However, to be
complied on or
before 30 April
2021
j. Review of internal audit
function
(i) The adequacy of the scope, Committee has discussed the Scope and functions of the internal audit department along Complied with
functions and resources of with the audit plan.
the IAD and satisfy itself on
necessary authority to carry
out its work;
(ii) Internal audit programme CIA has presented the Audit Plan 2020 to the Board Audit committee on 18 June 2020 and Complied with
and results of the internal BAC has discussed the scope of the Internal Audit and observed main recommendations
audit process to priorities the branches which has issues highlighted by the management letter, CBSL
statutory examination etc., to route cause analysis submit together with the remedial actions.
Committee has reviewed the results of internal audit reports submitted with regard to the
Bank’s departments.
Committee has reviewed progress of the Internal Audit Plan from time to time.
(iii) Any appraisal or BAC satisfied with the performance of the former CIA for the period 18 January 2019 to 18 Complied with
assessment of the January 2020 and the committee has approved increment of the former CIA.
performance of the head and
Performance appraisal of the senior staff members has to be consider by the Committee.
senior staff members of IAD
(iv) Recommend any Former CIA (Mr E A D J Priyashantha) was retired on 26 May 2020 and overlooking the duties Complied with
appointment or termination thereon by AGM (Audit) – Mr E A N Dissanayake. AGM (Audit) – Ms G S Gallapathi appointed on
of the head, senior staff 3 February 2020 and AGM (Audit) – Ms M S L Perera retired on 06 March 2020.
members, and outsourced
Further confirmed no services were outsourced for year 2020.
service providers
(v) The Committee is No resignations of Senior staff of IAD taken place during the year 2020. Complied with
appraised of resignations of
senior staff members of IAD
including the Chief Internal
Auditor and any outsourced
service providers, and to
provide an opportunity to
the resigning senior staff
members and outsourced
service providers to submit
reasons for resigning;
Corporate Governance
(vi) The internal audit Internal Audit Department lastly submitted confirmation on independence of the internal Complied with
function is independent of Audit activity and performs with impartiality, proficiency and due professional care to the
the activities it audits and Board Audit Committee.
that it is performed with
impartiality, proficiency, and
due professional care.
k. Internal investigations As per HIA, major findings of internal investigations have taken place during the year 2020. Complied with
l. Attendees at Audit This is not relevant since there are no Executive Directors in the Board of People’s Bank. Complied with
Committee meetings
m. Explicit authority, resources, Board approved Code of Best Practice in Corporate Governance Section 6.1 (d) speaks of the Complied with
and access to information rights of the Board Audit Committee and ensures that the Committee has such authority.
TOR of the BAC has been further reviewed by the Committee at their meetings held on
25 October 2019 and recommended the same for the approval of the Board. TOR of BAC has
not reviewed on the year 2020.
n. Regular meetings BAC has held nine (09) meetings during the year 2020 and minutes of such meetings are Complied with
maintained by the Board Secretary.
o. Disclosure in Annual Report Details of the activities of the Audit Committee has disclosed in their Annual Report 2020 on Complied with
page 192. The number of meetings and the details of attendance of each individual director
at such meetings disclosed on page 174.
p. Maintain minutes of The Board Secretary has been appointed as the Secretary of Board Audit Committee and Complied with
meetings keeps detailed minutes of the meetings.
q. Whistle-blowing policy and Board approved Whistle Blowing Policy established in the year 2013 has been reviewed Complied with
relationship with External again on 3 July 2017 at the BAC.As per the provisions of the prevailing policy, this policy
Auditor should be reviewed in every two years. It has reviewed by Internal Audit Department on 15
December2020 as per the evidence of BAC No. 09/2021. Board approval is in pending.
Human Resources and Remuneration Committee
3.(6) (iii) Remuneration policy relating Remuneration of the Directors is decided by the guidelines set up by the Ministry of Finance. Complied with
(a) to Directors, CEO/GM and Key
BHRRC has reviewed the Terms of reference of board subcommittee and implemented a
Management Personnel of
Compensation/Remuneration Policy to determine the remuneration (salaries, allowances and
the Bank.
other financial payments) relating to CEO and KMPs.
GRI 102-35, 102-36
(b) Set goals and targets for the Goals and targets of CEO and KMPs have to be considered by the Committee for better Complied with
Directors, CEO/GM, and the governance.
Key Management Personnel
(c ) Evaluating the performance A new performance evaluation template for the corporate and executive management of the Complied with
of the CEO and Key Bank has been developed.
Management Personnel
Board Integrated Risk Management Committee (BIRMC) reviewed the performance appraisal
of AGM Compliance and reviewed the performance appraisal of DGM Risk Management in
order to annual salary increment.
Board Strategic Plan Review Committee (BSPRC) reviewed the monthly KPI achievements of
project champions.
Corporate Governance
(d) The CEO shall be present Reviewed Terms of Reference of Board Sub Committees’ Board Paper No. 754/2019 and Complied with
at all meetings of the meeting held on 30 September 2019 evidence that the CEO/GM should be present at all
Committee, except when meetings of the Committee, except when matters relating to the CEO/GM are being discussed.
matters relating to the CEO
Since the Committee has not considered performance evaluations of CEO/GM, no evidence
are being discussed.
found in the BHRRC minutes during the year 2020.
Nominations Committee
3.(6) (iv) Appointment of Directors, Directors are appointed by the Minister in charge of the subject as per the provision of the Complied with
a. CEO and KMP People’s Bank Act.
Procedure to select/appoint a new CEO is in place in the Succession Plan document approved
by the BHRRCand Board.
Further, the Nomination Committee should implement a procedure to select/appoint senior
management personnel as per the TOR of BNC.
b. Re-election of Directors This requirement does not arise since Directors are appointed by the Minister in charge of the Complied with
subject as per the provision of the People’s Bank Act.
c. Eligibility criteria for Board has approved the selection criteria such as qualifications, experience and key attributes Complied with
appointments to key required for eligibility to be considered for appointment or promotion to the post of CEO,
managerial positions DGMs and AGMs (who are the Key Management Personnel) included in their job descriptions.
including CEO
Further, Committee has granted approval for the evaluation criteria for the selection and
appointment of KMPs in the Bank.
d. Fit and proper persons Declarations of Directors and CEO have been submitted to the CBSL through the Board. Complied with
However, committee has to initiate actions to submit declarations of Directors through the
Committee going forward.
e. Succession Plan and new Boards of Directors are appointed by the Ministry of Finance. Complied with
expertise
Board approved Succession Plan for CEO and Key Management Personnel is in place.
However, Succession Plan for KMPs has to submit through the committee going forward.
f Committee Chairman and Committee is Chaired by Mr Sujeewa Rajapakse who is an Independent Director appointed on Complied with
preferably majority of 24 January 2020. Other members are Mr Sudarshan Ahangama, (Independent – appointed on
Directors be Independent. 24 January 2020) and Mr Malindu Ranasinghe (Independent – appointed on 24 January 2020).
The CEO may be present at
CEO participates at the BNC meetings by invitation.
meetings by invitation.
3.(6) (v) Integrated Risk Management Committee/Board Risk Management Committee
a. Composition of BIRMC Committee consists of three Non-Executive Directors, CEO/GM.DGM – Risk Management and Complied with
any other officer participate by invitation.
Non-Executive Directors of the Committee are Mr Sudarshan Ahangama (Chairman of BIRMC),
Mr K A Vimalenthirarajah, Mr Isuru Balapatabendi and CEO/GM Mr Ranjith Kodithuwakku.
b. Risk assessment BIRMC has implemented a procedure to assess risks such as credit, market, strategic, Complied with
operational and liquidity risks of the Bank through relevant risk indicators and management
information and such risks are reported to BIRMC through Quarterly risk report and Risk
Matrix table.
c. Review of management level Committee has evaluated the adequacy and effectiveness of all managerial level committees Complied with
committees on risk against their current Terms of References (TOR).
d. Corrective action to mitigate Committee has reviewed and considered risk indicators which have gone beyond the Complied with
risks exceeding prudential specified quantitative and qualitative risk limits.
levels
e. Frequency of meetings BIRMC has held four (04) meetings during the financial year 2020 except at least one for Complied with
1st and 3rd quarters.
Corporate Governance
f. Actions against officers This is handle by the separate Board subcommittee being the BHRRC Complied with
responsible for failure to
identify specific risks or
implement corrective action
g. Risk assessment report to Committee submits Risk Minutes to the Board for their review Complied with
Board
h Compliance function Committee has established a compliance function to assess the Bank's compliance with laws, Complied with
regulations, and regulatory guidelines. Compliance Officer who has been designated as a
KMP submits monthly reports on statutory and mandatory requirements/regulations and the
status of compliance to the Board and Report on Compliance Risk to the BIRMC.
Further, Compliance officer has initiated actions to submits a monthly compliance report to
the Board for their awareness
Compliance function annually obtains a confirmation from all departments heads to ensure
bank’s compliance with internal controls and approved policies on all areas of business
operations of the Bank.
Corporate Governance
3.(7) (vi) Favourable treatment or As per the Board approved Code of Best Practice Section 2.14.G there is a process in place at Complied with
accommodation to Bank the Bank in this regard. No accommodation has granted to employees on a favourable basis
employees or their close other than the general schemes applicable to all employees of the Bank, such as staff loan
relations facilities.
3.(7) (vii) Remittance of As per the Board approved Code of Best Practice Section 2.14.G there is a process in place at Complied with
accommodations subject to the Bank in this regard.
Monetary Board approval
However, one exceptional case described under Section 3(7) (v) as above.
Disclosures
3.(8) (i) Publish annual and quarterly Bank prepares and publishes financial statements accordingly. Complied with
financial statements
Quarterly financial statements have been published in the newspapers in abridged form, in
Sinhala, Tamil and English.
3.(8) (ii) Disclosures in Annual Report
a. A statement to the effect The statement to this effect is included in the Directors’ Responsibility for Financial Reporting Complied with
that the annual audited on page 202 of the Annual Report 2020.
financial statements have
been prepared in line with
applicable accounting
standards and regulatory
requirements, inclusive of
specific disclosures.
b. The report by the Board on Report by the Board on the bank’s internal control mechanism has been disclosed in the Complied with
the Bank’s internal control “Directors’ Statement on Internal Control” on page 197 to 198 in the Annual Report 2020.
mechanism
c External Auditor’s “Auditor General’s Assurance Report” on Internal Controls disclosed on page 199 in their Complied with
certification on the Annual Report 2020.
effectiveness of the internal
control mechanism
d Details of Directors, including Details of directors, including names, qualifications and experience disclosed under Profiles Complied with
names, fitness and propriety, of Directors are given on pages 28-29.
transactions with the
Directors’ Emoluments have been disclosed under Note 13 to the Financial Statements on
Bank, and the total of fees/
page 236.
remuneration paid by the
Bank Aggregate value of Remuneration and transactions with Directors 2020.
LKR '000
Corporate Governance
e Total accommodations Total accommodation granted to related parties 2020 Complied with
granted to each category
of related parties and as a LKR '000 Percentage
of Bank's
percentage of the Bank’s
regulatory
regulatory capital capital
f. Aggregate values of Aggregate Value of Remuneration and Transactions with KMP 2020 Complied with
remuneration to, and
transactions with KMP LKR '000
g. External Auditors Board has obtained the Auditor General’s Factual Findings Report on Corporate Governance. Complied with
certification of compliance All findings of the Auditors have been incorporated in this Corporate Governance Report.
h. Report confirming This has been disclosed in “Directors’ Responsibility for Financial Reporting” on page 202 of Complied with
compliance with prudential the Annual Report 2020.
requirements, regulations,
laws, and internal controls
i. Non-Compliance Report As per the confirmation of compliance officer no such instances/occurrences during 2020. Complied with
GRI 102-34
Nine (09) meetings were held during the financial year ended
The quorum for a BAC meeting is two (02) members. 31 December 2020. The BAC considered the internal audit reports,
the deficiencies observed therein, responses given by the respective
The Actg. Board Secretary functions as the Secretary to the BAC. Chief DGMM/Heads of the Departments and monitored corrective actions
Internal Auditor, Deputy General Manager (Risk Management), Head of taken to rectify deficiencies observed. The minutes of the BAC
Finance and Assistant General Manager (Compliance) attend the BAC meetings are reported to the Board for information.
meetings on invitation. The Superintendent of the Government Audit
also attends these meetings. The BAC also followed up on corrective measures taken by the
management during the year 2020 on matters raised by CBSL
The BAC in particular Statutory Examination Reports.
zzReviews the financial reporting process to ensure the compliance
with financial reporting requirements under the statute. The BAC ensured the provision of all information and documents
zzExamines the system of internal control and management of
required by the Auditor General for the purpose of audit and
compliance with Sri Lanka Accounting Standards in preparation and
business risks.
presentation of Financial Statements. The BAC is of the view that
zzReviews the audit processes, both external and internal.
adequate controls and procedures are in place and Charter of the BAC
zzReviews the procedures in place for monitoring compliance with were complied with all material aspects.
laws and regulations and in particular the guidelines of the Central
Bank of Sri Lanka.
Board Human Resources and Remuneration Board Integrated Risk Management Committee
Committee (BHRRC) Report (BIRMC) Report
Scope Scope
The BHRRC is responsible for formulating human resource (HR) and The BIRMC is responsible for implementing the risk strategy of the
remuneration policies and initiating strategies in relation to human Bank as stipulated by the Board of Directors. The Committee has
resource management. The Committee ensures these policies are been given the responsibility to approve frameworks for efficient
reviewed regularly and are adhered to in all circumstances. functioning of the business units and monitoring of risks.
The Committee plays a key role in recruitment and determining The Committee is responsible for reviewing the risk profile of the
salaries and other employee benefits. It has vested authority to Bank within the risk parameters determined by the Board.
consider service extensions of the Executive Management and
make recommendations to the Board. The Committee reviews The Committee is responsible for the assessment of all risks
employment contracts of the members of the Corporate and Executive pertaining to credit, market, liquidity, operational, and strategic risks,
Management as well. using appropriate risk indicators and management information and
make recommendation to the Board.
officer of the Bank may be present at meetings by invitation. zzMr K A Vimalenthirarajah - Director
Committee meetings
The Committee meets quarterly to address matters pertaining to risk
management and makes recommendations to the Board. The quorum
for the BIRMC meeting is two Directors of the Board and the CEO/GM.
SHYAMA WIJEKOON
Acting Secretary to the Board
24 February 2021
SHYAMA WIJEKOON
Acting Secretary to the Board
24 February 2021
Board Executive Credit Committee (BECC) Report Board Nomination Committee (BNC) Report
Scope Scope
The BECC is authorised to approve all credit proposals over the limit of Main function of the BNC is to implement a procedure to select/
CEO/GM and to the members of the staff above the grade of Assistant appoint a CEO/GM and Key Management Personnel. The Committee
General Manager grade. sets the eligibility criteria for appointment or promotion to the post of
CEO/GM and the key management positions.
The BECC is also empowered to consider credit rescheduling
proposals and lump sum settlement. The Committee is also responsible for consideration and
recommendation of the requirement for additional/new expertise and
the succession arrangements for retiring Key Management Personnel.
Composition
The Committee consists of at least two Directors of the Board and the
CEO/GM. Composition
The Committee consists of at least three Directors of the Board.
Present members of BECC are:
zzMr Kumar Gunawardana - Chairman Present members of BNC are:
zzMr Keerthi Goonatillake - Director zzMr Sujeewa Rajapakse - Chairman
Any other officer of the Bank may be present by invitation. CEO/GM attends the meetings on invitation.
SHYAMA WIJEKOON
SHYAMA WIJEKOON Acting Secretary to the Board
Acting Secretary to the Board 24 February 2021
24 February 2021
Board Investment Banking Committee (BIBC) Board Information Technology Committee (BITC)
Report Report
Scope Scope
The BIBC was constituted to regularly review the investment banking The BITC was established to facilitate the degree of reliance on
model and operations of Investment Banking Unit of the Bank. The information technology and assist the Bank with the growing demand
Committee is authorised to grant approval for share trading limits, for IT Governance.
new investment products and deploying stock brokers, trading
platforms and IT Systems. The Committee is responsible to formulate overall strategies for IT
and make recommendations to the Board on the latest technologies to
cater the impending demands.
Composition
The Committee consists of at least two Directors of the Board and the
CEO/GM. Composition
The Committee consists of at least two Directors of the Board.
Present members of BIBC are:
zzMr K A Vimalenthirarajah - Chairman Present members of BITC are:
zzMr Kumar Gunawardana - Director zzMr Keerthi Goonatillake - Chairman
Head of Treasury and investment banking, DGM (Risk Management) Any other officer of the Bank may attend the meetings on invitation.
and any other officer of the Bank may attend the meetings on The quorum for the meeting of BITC is two members.
invitation.
Committee meetings
The Committee meets quarterly to attend on the matters within SHYAMA WIJEKOON
its scope. The quorum for the meeting of BIBC is three members Acting Secretary to the Board
including two Directors of the Board.
24 February 2021
SHYAMA WIJEKOON
Acting Secretary to the Board
24 February 2021
Composition
The Committee shall be appointed by the Board and it consists of at
least two Directors and the CEO/GM.
Committee meetings
The Committee meets quarterly and the quorum for the meeting is
two members.
SHYAMA WIJEKOON
Acting Secretary to the Board
24 February 2021
In the light of foregoing, the system of internal controls can only with policies and procedures and the effectiveness of the internal
provide reasonable, and not absolute assurance, against material control systems on an ongoing basis using samples and rotational
misstatement of financial information and records or against financial procedures and highlights significant findings in respect of any
losses or frauds. non-compliance. Internal audit assignments are carried out on all
units and branches, the frequency of which is determined by the
The Board has established an ongoing process for identifying, level of risk assessed to provide an independent and objective
evaluating and managing the significant risks faced by the Bank report. The annual audit plan is reviewed and approved by the
and this process includes enhancing the system of internal control Board Audit Committee. Findings of the Internal Audit Department
over financial reporting as and when there are changes to business are submitted to the Board Audit Committee (BAC) for review at
environment or regulatory guidelines. The process is regularly their periodic meetings.
reviewed by the Board and in accordance with the “Guidance for zzThe BAC of the Bank reviews internal control issues identified
Directors of Banks on the Directors Statement on Internal Control” by the Internal Audit Department, regulatory authorities and
issued by the Institute of Chartered Accountants of Sri Lanka. The management, and evaluates the adequacy and effectiveness of the
Board has assessed the internal control over financial reporting taking risk management and internal control systems. They also review
into account, principles for the assessment of internal control system the internal audit functions with particular emphasis on the scope
as given in that guidance. of audits and quality of same. The minutes of the BAC meetings
are tabled at the meetings of the Board of Directors of the Bank on
The Board is of the view that the system of internal controls over a periodic basis. Details of the activities undertaken by the BAC of
financial reporting in place is sound and adequate to provide the Bank are set out in the Board Audit Committee Report (refer
reasonable assurance regarding the reliability of financial reporting page 192).
and the preparation of Financial Statements for external purposes zzIn assessing the internal control system, identified officers of
is in accordance with relevant accounting principles and regulatory the Bank continued to review and update all procedures and
requirements. controls that are connected with significant accounts and
disclosures of the Financial Statements of the Bank. The Internal
The Management assists the Board in the implementation of the Audit Department of the Bank continued to verify the suitability of
Board’s policies and procedures on risk and control by identifying and design and effectiveness of these procedures and controls on an
assessing the risks faced, and in the design, operation and monitoring ongoing basis.
of suitable internal controls to mitigate and control these risks.
the internal control system during the financial year 2019 were
taken into consideration and steps have been taken to incorporate
them where appropriate. Further appropriate measures have
been initiated to develop procedures to improve the controls
documentation on identification of related party transactions in the
ensuing year.
Confirmation
Based on the above processes, the Board confirms that the financial
reporting system of the Bank has been designed to provide a
reasonable assurance regarding the reliability of financial reporting
and the preparation of Financial Statements for external purposes and
has been done in accordance with Sri Lanka Accounting Standards and
regulatory requirements of Central Bank of Sri Lanka.
Assurance Report of the Auditor General to the Board of Directors on the Directors’ Statement on
Internal Control of People’s Bank
Introduction Summary of work performed
This report is to provide assurance on the Directors’ Statement I conducted my engagement to assess whether the Statement is
on Internal Control over Financial Reporting (“Statement”) of supported by the documentation prepared by or for Directors; and
People’s Bank included in the annual report for the year ended appropriately reflected the process the Directors have adopted in
31 December 2020. reviewing the system of internal control over financial reporting of
the Bank.
Management’s responsibility The procedures performed were limited primarily to inquiries of Bank
Management is responsible for the preparation and presentation of personnel and the existence of documentation on a sample basis that
the Statement in accordance with the “Guidance for Directors of Banks supported the process adopted by the Board of Directors.
on the Directors’ Statement on Internal Control” issued in compliance
with the Section 3(8) (ii) (b) of the Banking Act Direction No. 11 of SLSAE 3050 (Revised) does not require me to consider whether the
2007, by the Institute of Chartered Accountants of Sri Lanka. Statement covers all risk and controls, or to form an opinion on the
effectiveness of the Bank’s risk and control procedures.
SLSAE 3050 (Revised) also does not require me to consider whether
My Responsibility and Compliance with the processes described to deal with material internal control aspects
SLSAE 3050 (Revised) of any significant problems disclosed in the annual report will, in fact,
My responsibility is to assess whether the Statement is both supported remedy the problems.
by the documentation prepared by or for directors and appropriately
reflects the process the directors have adopted in reviewing the design The procedures selected depend on my judgement, having regard to
and effectiveness of the internal control of the People’s Bank. my understanding of the nature of the Bank, the event or transaction
in respect of which the Statement has been prepared.
I conducted my engagement in accordance with Sri Lanka Standard I believe that the evidence I have obtained is sufficient and
on Assurance Engagements (SLSAE) 3050 (Revised), Assurance Report appropriate to provide a basis for my conclusion.
for Banks on Directors’ Statement on Internal Control, issued by the
institute of Chartered Accountants of Sri Lanka. This Standard required Conclusion
that I plan and perform procedures to obtain limited assurance about Based on the procedures performed, nothing has come to my attention
whether Management has prepared, in all material respects, the that causes me to believe that the Statement included in the Annual
Statement on Internal Control. For purpose of this engagement, I am Report is inconsistent with my understanding of the process the Board
not responsible for updating or reissuing any reports, nor have I, in of Directors has adopted in the review of the design and effectiveness
the course of this engagement, performed an audit or review of the of internal control system over the financial reporting of the Bank.
financial information.
W P C WICKRAMARATHNE
Auditor General
FINANCIAL REPORTS
202 Directors’ Responsibilities for 207 Statement of Financial Position
Financial Reporting 208 Statement of Changes in Equity – Bank
203 Auditor General’s Report on 210 Statement of Changes in Equity – Group
Financial Statements 212 Statement of Cash Flows
205 Income Statement 213 Notes to the Financial Statements
206 Statement of Comprehensive
Income
RISK MANAGEMENT
140 Risk Management
Financial Reports Supplementary Reports
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 profit/loss for the year.
SHYAMA WIJEKOON
Acting Secretary to the Board
25 February 2021
Report of the Auditor General on the Financial Statements and Other Legal and Regulatory
Requirements of the People’s Bank and its Subsidiaries for the year ended 31 December 2020
in terms of Section 12 of the National Audit Act No. 19 of 2018.
1. Financial statements 1.3 Other information included in the Bank’s
1.1 Opinion 2020 Annual Report
The audit of the financial statements of People’s Bank (the “Bank”) and The other information comprises the information included in the Bank’s
the consolidated financial statements of the Bank and its Subsidiaries 2020 Annual Report but does not include the financial statements and my
(the “Group”) for the year ended 31 December 2020 comprising the auditor’s report thereon, which is expected to be made available to me
statement of financial position as at 31 December 2020 and the income after the date of this auditor’s report. Management is responsible for the
statement, statement of comprehensive income, statement of changes in other information.
equity, and statement of cash flows for the year then ended, and notes to
My opinion on the financial statements does not cover the other
the financial statements, including a summary of significant accounting
information and I do not express any form of assurance conclusion thereon.
policies, was carried out under my direction in pursuance of provisions in
Article 154 (1) of the Constitution of the Democratic Socialist Republic of In connection with my audit of the financial statements, my responsibility
Sri Lanka read in conjunction with provisions of the National Audit Act is to read the other information identified above when it becomes
No. 19 of 2018. The Bank has been exempted from the provisions of Part II available and, in doing so, consider whether the other information is
of the Finance Act No. 38 of 1971 by an Order of the Minister of Finance materially inconsistent with the financial statements or my knowledge
published in the Government Gazette No. 715 of 14 May 1992 by virtue of obtained in the audit or otherwise appears to be materially misstated.
powers vested in him by Section 5 (1) of the said Finance Act. My report to
Parliament in pursuance of provisions in Article 154 (6) of the Constitution When I read the Bank’s 2020 Annual Report, if I conclude that there
will be tabled in due course. are material misstatements therein, I am required to communicate that
matter to those charged with governance for correction. If further material
In my opinion, the accompanying financial statements of the Bank and uncorrected misstatements are existed those will be included in my
the Group give a true and fair view of the financial position of the Bank report to Parliament in pursuance of provisions in Article 154 (6) of the
and the Group as at 31 December 2020 and of its financial performance Constitution that will be tabled in due course.
and its cash flows for the year then ended in accordance with Sri Lanka
Accounting Standards.
1.4 Responsibilities of Management and those
1.2 Basis for opinion charged with governance for the financial
I conducted my audit in accordance with Sri Lanka Auditing Standards
statements
(SLAuSs). My responsibilities, under those standards are further described Management is responsible for the preparation of financial statements
in the Auditor’s Responsibilities for the Audit of the Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting
section of my report. I believe that the audit evidence I have obtained is Standards, and for such internal control as management determine is
sufficient and appropriate to provide a basis for my opinion. necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the Bank’s zzEvaluate the overall presentation, structure and content of the financial
and the Group’s financial reporting process. statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a
As per Section 16 (1) of the National Audit Act No. 19 of 2018, the Bank manner that achieves fair presentation.
and Group are required to maintain proper books and records of all its
income, expenditure, assets and liabilities, to enable annual and periodic I communicate with those charged with governance regarding, among
financial statements to be prepared of the Group. other matters, significant audit findings, including any significant
deficiencies in internal control that I identify during my audit.
INCOME STATEMENT
Bank Group
For the year ended 31 December 2020 2019* Change 2020 2019* Change
Note LKR ’000 LKR ’000 % LKR ’000 LKR ’000 %
Fee and commission income 6,723,826 7,336,594 -8.4 7,816,265 8,595,802 -9.1
Fee and commission expense (482,522) (426,758) 13.1 (482,522) (426,758) 13.1
Net fee and commission income 8 6,241,304 6,909,836 -9.7 7,333,743 8,169,044 -10.2
Net gain/(loss) from trading 9 2,589,121 2,721,543 -4.9 2,785,261 2,678,985 4.0
Other operating income (net) 10 1,951,235 2,956,630 -34.0 6,285,845 7,017,896 -10.4
Total operating income 71,715,442 73,794,528 -2.8 90,835,808 96,475,276 -5.8
Impairment charge 11 (11,567,174) (8,488,026) 36.3 (17,566,149) (11,677,519) 50.4
Net operating income 60,148,268 65,306,502 -7.9 73,269,659 84,797,757 -13.6
Personnel expenses 12 (19,722,367) (19,494,074) 1.2 (23,693,466) (23,968,761) -1.1
Other expenses 13 (15,347,735) (17,236,449) -11.0 (20,258,765) (23,660,142) -14.4
Operating profit before Value Added Tax (VAT),
Nation Building Tax (NBT) and Debt Repayment
Levy (DRL) 25,078,166 28,575,979 -12.2 29,317,428 37,168,854 -21.1
* Certain comparative figures have been reclassified to conform to the current period presentation (Refer Note 51)
The Notes appearing on pages 213 to 328 form an integral part of these Financial Statements.
Bank Group
Other comprehensive income for the year, net of taxes (4,132,115) (6,751,478) (3,916,784) (6,858,632)
Total comprehensive income for the year 10,042,828 6,174,205 12,173,702 9,319,536
Attributable to:
Equity holders of the Bank 10,042,828 6,174,205 11,287,454 8,132,499
Non-controlling interests – – 886,248 1,187,037
10,042,828 6,174,205 12,173,702 9,319,536
The Notes appearing on pages 213 to 328 form an integral part of these Financial Statements.
Bank Group
Assets
Cash and cash equivalents 17 71,461,242 50,703,158 40.9 72,899,208 51,594,638 41.3
Balances with Central Bank of Sri Lanka 18 14,196,565 38,858,470 -63.5 14,196,565 38,858,470 -63.5
Placements with banks 19 10,304,422 9,689,132 6.4 13,910,824 13,395,360 3.8
Derivative financial instruments 20 97,645 90,560 7.8 97,645 90,560 7.8
Financial assets – at fair value through profit or loss 21 46,425,027 79,514,568 -41.6 52,728,589 80,405,966 -34.4
Financial assets – at amortised cost
Loans and advances to banks 22 23,610,101 29,771,919 -20.7 23,622,700 29,771,919 -20.7
Loans and advances to other customers 23 1,635,579,343 1,310,150,137 24.8 1,776,231,315 1,460,497,766 21.6
Debt instruments measured at amortised cost 24 357,107,701 280,935,892 27.1 365,900,452 290,739,848 25.9
Financial assets – at fair value through other
comprehensive income (OCI)
Equity instruments at fair value through OCI 25 1,937,778 1,997,896 -3.0 1,778,585 1,772,838 0.3
Debt instruments at fair value through OCI 26 2,632,231 2,573,067 2.3 2,899,609 2,573,067 12.7
Investments in subsidiaries 27 1,937,881 1,205,414 60.8 – – –
Investments in associates 28 – – – 531,963 531,085 0.2
Investment properties 29 1,261,338 1,263,045 -0.1 1,257,499 1,259,206 -0.1
Property, plant and equipment & right-of-use assets 30 38,405,839 34,310,028 11.9 48,101,865 43,744,442 10.0
Intangible assets and goodwill 31 702,181 700,875 0.2 1,007,730 1,090,714 -7.6
Net deferred tax assets 36 695,424 – – – – –
Other assets 32 23,763,947 31,642,057 -24.9 25,402,844 33,448,808 -24.1
Total assets 2,230,118,665 1,873,406,218 19.0 2,400,567,393 2,049,774,687 17.1
Liabilities
Due to banks 33 164,489,623 207,484,446 -20.7 172,439,795 219,434,075 -21.4
Derivative financial instruments 20 976,486 59,748 1534.3 976,486 59,748 1534.3
Due to other customers 34 1,835,099,456 1,491,385,937 23.0 1,935,194,040 1,588,903,098 21.8
Other borrowings 35 36,362,434 17,324,960 109.9 36,362,434 16,289,502 123.2
Current tax liabilities 6,608,202 3,775,283 75.0 7,538,938 6,127,935 23.0
Net deferred tax liabilities 36 – 1,071,797 -100.0 805,442 2,821,420 -71.5
Other liabilities 37 41,041,170 34,625,117 18.5 51,271,458 45,610,085 12.4
Subordinated term debts 38 43,557,696 22,714,490 91.8 56,868,035 40,513,091 40.4
Total liabilities 2,128,135,067 1,778,441,778 19.7 2,261,456,628 1,919,758,954 17.8
Equity
Stated capital/assigned capital 39 12,201,998 12,201,998 – 12,201,998 12,201,998 –
Statutory reserve fund 40 8,024,521 7,315,774 9.7 8,024,521 7,315,774 9.7
Other reserves 41 32,859,237 27,368,542 20.1 34,923,662 29,297,472 19.2
Retained earnings 42 48,897,842 48,078,126 1.7 72,268,676 70,339,829 2.7
Total shareholders’ equity 101,983,598 94,964,440 7.4 127,418,857 119,155,073 6.9
Non-controlling interests – – 11,691,908 10,860,660 7.7
Total equity 101,983,598 94,964,440 7.4 139,110,765 130,015,733 7.0
Total equity and liabilities 2,230,118,665 1,873,406,218 19.0 2,400,567,393 2,049,774,687 17.1
Contingent liabilities and commitments 43 489,938,862 363,925,754 34.6 497,689,847 370,985,611 34.2
The Notes appearing on pages 213 to 328 form an integral part to these Financial Statements.
Certification
These Financial Statements give a true and fair view of the state of affairs of the Bank and its subsidiaries as at 31 December 2020 and the profit for the year then ended.
AZZAM A AHAMAT
Head of Finance
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:
Ordinary Assigned
shares capital
Reserves
– – – – 12,925,683 12,925,683
– – – 485,730 (7,237,208) (6,751,478)
– – – 485,730 5,688,475 6,174,205
– – – – 14,174,943 14,174,943
– 4,697,022 – (80,191) (8,748,946) (4,132,115)
– 4,697,022 – (80,191) 5,425,997 10,042,828
Ordinary Assigned
shares capital
Reserves
Bank Group
Net increase/(decrease) in cash and cash equivalents 20,758,084 (7,176,775) 21,304,570 (7,240,452)
Cash and cash equivalents at the beginning of the year 50,703,158 57,879,933 51,594,638 58,835,090
Cash and cash equivalents at the end of the year 71,461,242 50,703,158 72,899,208 51,594,638
The Bank’s business comprises, accepting deposits, granting credit People’s Merchant Providing leasing, hire purchase, trade
facilities, personal banking, development banking, pawn brokering, Finance PLC finance, real estate, short-term investments,
international trade, dealing in Government Securities, credit card and corporate financial Services.
operations, investment banking and offshore banking unit for foreign
currency banking, inter alia.
2. Basis of Preparation
Subsidiaries 2.1. Statement of compliance
The principal activities of the Bank’s subsidiaries are as follows: The Consolidated Financial Statements of the Group and the
Separate Financial Statements of the Bank which comprise with
Name of company Principal activities the Income Statement, Statement of Comprehensive Income,
People’s Leasing & The principal business activities are Statement of Financial Position, Statement of Changes in Equity,
Finance PLC providing finance leases, hire-purchase and Statement of Cash Flow have been prepared in accordance with
assets financing, term loans, Islamic finance, Sri Lanka Accounting Standards (LKAS and SLFRS) as issued by The
margin trading, share trading, issue of debt Institute of Chartered Accountants of Sri Lanka. The preparation
instruments, factoring, gold loans and and presentation of these Financial Statements are in compliance
mobilisation of public deposits. with the requirements of the People’s Bank Act No. 29 of 1961. The
presentation of the Financial Statements is also in compliance with
People’s Travels Arrangement of tours and air ticketing
the requirements of the Banking Act No. 30 of 1988.
(Private) Limited (travel agent).
4.4 Useful life time of property, plant The accounting policies which are most sensitive to the use of
and equipment judgement, estimates and assumptions are specified below:
The Group reviews the residual values, useful lives and methods of (i) Fair value measurement
depreciation of property, plant and equipment at each reporting date.
A significant portion of financial instruments are carried at fair value
Judgement of the Management is exercised in the estimation of these
as of the financial reporting date.
values, rates, methods and hence they are subject to uncertainty.
Fair value is the price that would be received to sell an asset or
The Group is subject to income tax and judgement is required to
paid to transfer a liability in an orderly transaction between market
determine the total provision for current, deferred, and other taxes
participants at the measurement date.
due to the uncertainties that exist with respect to the interpretation of
the applicable tax laws, at the time of preparation of these Financial
Where the classification of a financial asset or liability results in it
Statements.
being measured at fair value, wherever possible, the fair value is
determined by reference to the quoted bid or offer price in the most
4.5 Commitments and contingencies advantageous active market to which the Bank has immediate access.
An adjustment for credit risk is also incorporated into the fair value
All discernible risks are accounted for in determining the amount of all
as appropriate.
known liabilities. Contingent liabilities are possible obligations whose
existence will be confirmed only by uncertain future events or present
Fair value for a net open position that is a financial liability quoted
obligations where the transfer of economic benefit is not probable or
in an active market is the current offer price, and for a financial asset
cannot be reliably measured. Contingent liabilities are not recognised
the bid price, multiplied by the number of units of the instrument held
in the Statement of Financial Position but are disclosed unless they
or issued.
are remote. Details of commitments and contingencies are given in
Note 43.
Where no active market exists for a particular asset or liability, the
Bank uses a valuation technique to arrive at the fair value, including
4.6 Classification of investment properties the use of transaction prices obtained in recent arm’s length
Management requires using its judgement to determine whether a transactions, discounted cash flow analysis, option pricing models
property qualifies as an, investment property. The Group has exercised and other valuation techniques, based on market conditions and risks
its judgement consistently to recognise a property that is held to earn existing at reporting date. In doing so, fair value is estimated using a
rentals or for capital appreciation or both and which generates cash valuation technique that makes maximum use of observable market
flows largely independently of the other assets held by the Group are inputs and places minimal reliance upon entity-specific inputs.
accounted for as investment properties. On the other hand, a property
that is used for operations or in the process of providing services or The best evidence of the fair value of a financial instrument at
for administrative purposes and which do not directly generate cash initial recognition is the transaction price (i.e. the fair value of
flows as a standalone asset are accounted for as property, plant and the consideration given or received) unless the fair value of that
equipment. The Group assesses on an annual basis the accounting instrument is evidenced by comparison with other observable current
classification of its properties taking into consideration the current market transactions in the same instrument (i.e. without modification
use of such properties. or repackaging) or based on a valuation technique whose variables
include only data from observable markets. When such evidence
exists, the Bank recognises the difference between the transaction
4.7 Critical accounting assumptions and estimates price and the fair value in profit or loss on initial recognition
Assumptions made at each reporting date are based on best estimates (i.e. on day one).
at that date. Although the Bank has internal control systems in place
to ensure that estimates are reliably measured, actual amounts may
differ from those estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in
any future periods affected.
(ii) Impairment charges on loans and advances Any contingent consideration payable is measured at fair value at
the acquisition date. If the contingent consideration is classified as
Judgement is required by management in the estimation of the
equity, then it is not remeasured and settlement is accounted for
amount and timing of future cash flows when determining an
within equity. Otherwise, subsequent changes in the fair value of the
impairment loss for loans and advances. In estimating these cash
contingent consideration are recognised in Income Statement.
flows, the Bank makes judgements mainly about the borrower’s
financial situation and the net realisable value of collateral. These
estimates are based on assumptions about a number of factors 5.1.2 Non-controlling interests (“NCI”)
and actual results may differ, resulting in future changes to the
NCI are measured at their proportionate share of the acquirer’s
impairment allowance.
identifiable net assets at the acquisition date. Changes in the Group’s
interest in a subsidiary that do not result in a loss of control are
A collective assessment of impairment takes into account data
accounted for as equity transactions.
from the loan portfolio (such as credit quality/levels of arrears,
credit utilisation etc.), and concentrations of risk and economic data
(including levels of unemployment, Inflation, GDP Growth Rate etc.). 5.1.3 Subsidiaries
“Subsidiaries” are investees controlled by the Group. The Group
“controls” an investee if it is exposed to, or has rights to, variable
5. Significant accounting policies
returns from its involvement with the investee and has the ability to
Group has consistently applied the accounting policies as set out from affect those returns through its power over the investee. The Financial
Note 5.1 to Note 5.23 to all periods presented in these Consolidated Statements of subsidiaries are included in the Consolidated Financial
and Separate Financial Statements. Statements from the date on which control commences until the date
when control ceases.
5.1 Basis of consolidation
The Financial Statements of the Bank and the Group comprise the 5.1.4 Loss of control
Financial Statements of the Bank and its Subsidiaries for the year When the Group loses control over a subsidiary, it derecognises the
ended 31 December 2020. The Financial Statements of the Bank’s assets and liabilities of the subsidiary, and any related NCI and other
subsidiaries for the purpose of consolidation are prepared for the components of equity. Any resulting gain or loss is recognised in
same reporting year as that of People’s Bank, using consistent Income Statement. Any interest retained in the former subsidiary, is
accounting policies. measured at fair value when control is lost.
Non-monetary items that are measured in terms of historical cost in 5.4.1 Business model assessment
a foreign currency are translated using the spot exchange rates as at
The Group’s business model is determined at a level that reflects
the date of recognition. Non-monetary items measured at fair value in
how groups of financial assets are managed together to achieve a
a foreign currency are translated using the spot exchange rates at the
particular business objective. The Group’s business model does not
date when the fair value was determined.
depend on Management’s intention for an individual instruments.
Accordingly the Group’s business model is not an instrument-by
5.3 Financial instruments – Initial recognition -instrument approach to classification, but at a higher level of
aggregated portfolios and is based on observable factors such as:
5.3.1 Date of recognition
zzHow the performance of a business model and the financial assets
A financial asset or financial liability is recognised in the Statement of
held within that business model are evaluated and reported to the
Financial Position when the Bank becomes a party to the contractual
Group’s Key Management Personnel;
provisions of the instrument, which is generally on trade date. Loans
zzThe risk that affect the performance of the business model (and the
and advances are recognised when cash is advanced (or settled) to the
borrowers. financial assets held within the business model) and, in particular,
the way in which those risks are managed;
Financial assets at fair value through profit or loss are recognised zzHow managers of the business are compensated (whether the
initially at fair value. All other financial assets are recognised initially compensation is based on the fair value of the assets managed or
at fair value plus directly attributable transaction costs. on the contractual cash flows collected)
Non-regular purchases of financial assets and liabilities are recognised The business model assessment is based on reasonably expected
on the trade date, i.e. the date that the Bank becomes a party to the scenarios without taking “worst case” or “stress case” scenarios into
contractual provisions of the instrument. account. If cash flows are realised in a way that is different from the
Group’s original expectations, that neither give a rise to a prior period
A regular purchase is a purchase of a financial asset under a contract error nor change the classification of the remaining financial assets
whose terms require delivery of the assets within the time frame held in that business model. However, when the Group assesses the
established generally by a regulation or convention in the market business model for newly originated or newly purchased financial
place concerned. assets, it considers information about how cash flows were realised in
the past, along with all other relevant information.
For this purpose “Principal” is defined as the fair value of the financial
5.4 Initial measurement of financial instruments asset at initial recognition. However, that principal amount may
The classification of financial instruments at initial recognition change over the life of the financial asset.
depends on their contractual terms and the business model for
managing the instruments, as described in Notes 5.4.1 and 5.4.2 For this purpose “Interest” consist of consideration for the time
below. Financial instruments are initially measured at their fair value of money, for the credit risk associated with the principal
value except in the case of financial assets and financial liabilities amount outstanding during a particular period of time and for other
recorded at fair value through profit or loss, transaction costs are basic lending risks and costs, as well as profit margin. Group applies
added to, or subtracted from, this amount. judgement and considers relevant factors such as the currency in
which the financial asset is denominated, and the period for which the
interest rate is set.
5.5.1 Financial instruments measured at These debt instruments are initially recognised at fair value plus
amortised cost directly attributable transaction costs and subsequently measured
Debt instruments at fair value. Gains and losses arising from changes in fair value
Investments in debt instruments are measured at amortised cost are included in other comprehensive income within a separate
where they have: component of equity. Impairment losses or reversals, interest revenue
and foreign exchange gains and losses are recognised in profit and
zzContractual terms that give rise to cash flows on specified dates,
loss. Upon disposal, the cumulative gain or loss previously recognised
that represent solely payments of principal and interest on the
in other comprehensive income is reclassified from equity to the
principal amount outstanding; and
Income Statement.
zzAre held within a business model whose objective is achieved by
holding to collect contractual cash flows. The measurement of credit impairment is based on the three-stage
expected credit loss model as applied to financial assets at amortised
These debt instruments are initially recognised at fair value plus cost. The expected credit loss model is described below in Note 5.6
directly attributable transaction costs and subsequently measured Impairment of financial assets.
at amortised cost. The measurement of credit impairment is based
on the three-stage expected credit loss model described below in
Note 5.6 Impairment of financial assets. Equity instruments
Investment in equity instruments that are neither held for trading
nor contingent consideration recognised by the Bank in a business
Loans and advances to banks, loans and advances
combination to which SLFRS 3 – “Business Combinations” applies, are
to other customers
measured at fair value through other comprehensive income, where
The Group measures loans and advances to banks and loans and an irrevocable election has been made by Management. For portfolios
advances to other customers including leases and hire purchase where Management does not consider an irrevocable election
contracts at amortised cost since both of the following conditions of adopting fair value through other comprehensive income, by
are met: default such investments shall be measured at fair value through
zzThe financial asset is held within a business model with the profit and loss.
objective to hold financial assets in order to collect contractual
cash flows. Amounts presented in other comprehensive income are not
zzThe contractual terms of the financial asset give rise on specified subsequently transferred to profit or loss. Dividends on such
dates to cash flows that are solely payments of principal and investments are recognised in profit or loss.
interest (SPPI) on the principal amount outstanding.
5.5.3 Financial assets at fair value Where a financial liability is designated at fair value through profit or
through profit or loss loss, the movement in fair value attributable to changes in the Bank’s
own credit quality is calculated by determining the changes in credit
Items at fair value through profit or loss comprise:
spreads above observable market interest rates and is presented
(a) Items held for trading; separately in other comprehensive income.
(b) Items specifically designated as fair value through profit or loss on
initial recognition; and
5.5.4 Derivative financial instruments
(c) Debt instruments with contractual terms that do not represent
and hedge accounting
solely payments of principal and interest.
Derivative financial instruments are contracts whose value is
Financial instruments held at fair value through profit or loss are derived from one or more underlying price, index or other variable,
initially recognised at fair value, with transaction costs recognised in and typically comprise of instruments such as swaps, forward rate
the Income Statement as incurred. Subsequently, they are measured agreements, futures and options.
at fair value and any gains or losses are recognised in the Income
Statement as they arise. All derivatives are recognised in the Statement of Financial Position
at fair value and are classified as trading except where they
Where a financial asset is measured at fair value, a credit valuation are designated as a part of an effective hedge relationship and
adjustment is included to reflect the credit worthiness of the classified as hedging derivatives. The carrying value of a derivative
counterparty, representing the movement in fair value attributable to is remeasured at fair value throughout the life of the contract.
changes in credit risk. Derivatives are carried as assets when the fair value is positive and as
liabilities when the fair value is negative.
may only be designated at fair value through profit or loss if doing through other comprehensive income;
so eliminates or significantly reduces measurement or recognition zzLoan commitments; and
inconsistencies (i.e. eliminates an accounting mismatch) that would
zzFinancial guarantee contracts.
otherwise arise from measuring financial assets or liabilities on a
different basis.
No ECL is recognised on equity investments.
zzIf financial assets and liabilities are both managed and their
Stage 1: 12 months ECL Bank considers reasonable and supportable information that is
For exposures where there has not been a significant increase in relevant and available without undue cost or effort for this purpose.
credit risk since initial recognition and that are not credit impaired This includes quantitative and qualitative information and also,
upon origination, the portion of the lifetime ECL associated with the forward-looking analysis.
probability of default events occurring within the next 12 months is
recognised. An exposure will migrate through the ECL stages as asset quality
deteriorates. If, in a subsequent period, asset quality improves
Bank determines 12-month ECL from customers whom are not and also reverses any previously assessed significant increase in
significantly credit deteriorated (i.e. less than 30 days past due). credit risk since origination, then the provision for doubtful debts
reverts from lifetime ECL to 12 months ECL. Exposures that have not
Stage 2: Lifetime ECL – Not credit impaired deteriorated significantly since origination, or where the deterioration
For exposures where there has been a significant increase in credit remains within the Bank’s investment grade criteria, or which are
risk since initial recognition but are not credit impaired, a lifetime less than 30 days past due, are considered to have a low credit risk.
ECL (i.e. reflecting the remaining lifetime of the financial asset) The provision for doubtful debts for these financial assets is based
is recognised. on a 12-month ECL. When an asset is uncollectible, it is written off
against the related provision. Such assets are written off after all
Inconsistent with the policies of the Bank, significant deterioration is the necessary procedures have been completed and the amount of
measured through the rebuttable presumption of 30 days past due the loss has been determined. Subsequent recoveries of amounts
other than the credit facilities categorised under Stage 3, in line with previously written off reduce the amount of the expense in the
the requirements of the standard. Income Statement.
Bank also have considered all restructured loans, which are The Bank assesses whether the credit risk on an exposure has
restructured up to two times, other than credit facilities/exposures increased significantly on an individual or collective basis. For
upgraded credit facilities from a higher stage to a lower stage consider the purposes of a collective evaluation of impairment, financial
under Stage 2 as per the guidance issued by the Central Bank. instruments are grouped on the basis of shared credit risk
characteristics, taking into account instrument type, credit risk ratings,
Stage 3: Lifetime ECL – Credit impaired date of initial recognition, remaining term to maturity, industry, and
Exposures are assessed as credit impaired when one or more other relevant factors.
events that have a detrimental impact on the estimated future cash
flows of that asset have occurred. For exposures that have become
credit impaired, a lifetime ECL is recognised and interest revenue is
5.6.2 Measurement of ECLs
calculated by applying the effective interest rate to the amortised cost ECLs are derived from unbiased and probability-weighted estimates
(net of provision) rather than the gross carrying amount. of expected loss, and are measured as follows:
zzFinancial assets that are not credit-impaired at the reporting date:
Bank determines credit facilities where contractual payments of a as the present value of all cash shortfalls over the expected life of
customer are more than 90 days past due which are subject to the the financial asset discounted by the effective interest rate. The
rebuttable presumption as stated in SLFRS 9 together with all NPL cash shortfall is the difference between the cash flows due to the
classifications as per Central Bank classification, all restructured loans Bank in accordance with the contract and the cash flows that the
which are restructured more than twice and all rescheduled loans Bank expects to receive.
other than credit facilities/exposures upgraded credit facilities from zzFinancial assets that are credit-impaired at the reporting date: as
a higher stage to a lower stage and all credit facilities/customers the difference between the gross carrying amount and the present
classified as non-performing as per CBSL Directions under Stage 3. value of estimated future cash flows discounted by the effective
interest rate.
5.6.1 Determining the stage for impairment zzUndrawn loan commitments: as the present value of the difference
At each reporting date, the Bank assesses whether there has been a between the contractual cash flows that are due to the Bank if
significant increase in credit risk for exposures since initial recognition the commitment is drawn down and the cash flows that the Bank
by comparing the risk of default occurring over the expected life expects to receive.
between the reporting date and the date of initial recognition. The zzFinancial guarantee contracts: as the expected payments to
reimburse the holder less any amounts that the Bank expects to
recover.
ECLs are recognised using a provision for doubtful debts account 5.8.2 SLFRS 16 – Leases
in profit and loss. In the case of debt instruments measured at fair
SLFRS 16 supersedes LKAS 17 – “Leases”. The standard sets out
value through other comprehensive income, the measurement of
the principles for the recognition, measurement, presentation, and
ECLs is based on the three-stage approach as applied to financial
disclosure of leases.
assets at amortised cost. The Bank recognises the provision charge in
profit and loss, with the corresponding amount recognised in other
Upon adoption of SLFRS 16, the Group recognised right-of-use assets
comprehensive income, with no reduction in the carrying amount of
and lease liabilities for those leases previously classified as operating
the asset in the Statement of Financial Position.
leases. The right-of-use assets were recognised based on the amount
equal to the lease liabilities, adjusted for any related prepaid and
5.7 Derecognition of financial assets accrued lease payments previously recognised. Lease liabilities
and financial liabilities were recognised based on the present value of the remaining lease
payments, discounted using the incremental borrowing rate at the
5.7.1 Financial assets date of initial application.
The Bank derecognises a financial asset when the contractual
cash flows from the asset expire or it transfers its rights to receive Additionally, the Bank/Group applied the following practical
contractual cash flows on the financial asset in a transaction in which expedients permitted by SLFRS 16 to leases previously classified as
substantially all the risks and rewards of ownership are transferred. operating leases under LKAS 17:
Any interest in transferred financial assets that is created or retained zzApplied a single discount rate to a portfolio of leases with
by the Bank is recognised as a separate asset or liability. reasonably similar characteristics.
zzExcluded the initial direct costs from the measurement of the
5.7.2 Financial liabilities right-of-use assets at the date of initial application.
A financial liability is derecognised from the Statement of Financial
Position when the Bank has discharged its obligation or the contract is
5.9 Cash and cash equivalents
cancelled or expires.
Cash and short-term funds include cash in hand, balances with
banks, placements with banks and money at call, and at short notice.
5.7.3 Offsetting financial instruments Details of the cash and short-term funds are given in Note 17 to the
Financial assets and liabilities are offset and the net amount is Financial Statements.
presented in the Statement of Financial Position when the Bank has a
legal right to offset the amounts and intends to settle on a net basis or
to realise the asset and settle the liability simultaneously.
5.10 Derivatives held for risk
management purposes
Derivatives held for risk management purposes include all derivative
5.8 Leases assets and liabilities that are not classified as trading assets or
5.8.1 Finance lease income liabilities. Derivatives held for risk management purposes are
Assets leased to customers to whom the Group transfers substantially measured at fair value in the Statement of Financial Position.
all the risks and rewards associated with ownership other than the
legal title are classified as finance leases. Amounts receivable under
5.11 Investment properties
finance leases are included under “Lease Rental Receivable’”. Leasing
Investment properties are properties held either to earn rental income
balances are stated in the Statement of Financial Position after
or for capital appreciation or both but not for sale in the ordinary
deduction of initial rentals received.
course of business, used in the production or supply of goods or
services or for administrative purposes.
The excess of aggregate rentals receivable over the cost of the leased
assets constitutes the total unearned income. The unearned income is
taken into revenue over the term of the lease, commencing from the 5.11.1 Basis of recognition
month in which the lease is executed in proportion to the remaining
Investment property is recognised if it is probable that future
receivable balance of the lease.
economic benefits that are associated with the investment property
will flow to the Group and cost of the investment property can be
reliably measured.
Goodwill is reviewed for impairment annually, or more frequently, The Bank provides a pension to retiring staff on the following basis;
if events or changes in circumstances indicate that the carrying staff are eligible to draw a pension after 10 years of service and
value may be impaired. For the purpose of impairment testing, after reaching normal age of retirement of 55 years. The quantum of
goodwill acquired in a business combination is, from the acquisition pension paid is dependent on the length of service as follows:
date, allocated to each of the Bank’s CGUs or group of CGUs, which
are expected to benefit from the synergies of the combination, Length of service Quantum of pension
irrespective of whether other assets or liabilities of the acquire
are assigned to those units. Each unit to which the goodwill is i. 10 to 20 years 80% of last drawn gross salary
allocated represents the lowest level within the Bank at which the ii. 21 to 29 years 80% plus 1% for each additional year in
goodwill is monitored for internal management purposes, and is excess of 20 years of last drawn gross salary
not larger than an operating segment in accordance with SLFRS 8 –
iii. 30 years and above 90% of last drawn gross salary
“Operating Segments”.
Where goodwill forms part of a CGU (or group of CGUs) and part of The Financial Statements of the Pension Trust Fund are maintained
the operation within that unit is disposed of, the goodwill associated separately and are subject to annual audit by Independent External
with the operation disposed of is included in the carrying amount of Auditors. The Financial Statements as well as the Auditor’s Report
the operation when determining the gain or loss on disposal of the are tabled and reviewed by the Board of Trustees. These Financial
operation. Goodwill disposed of in this circumstance is measured Statements and Auditor’s Report are also submitted for review of the
based on the relative values of the operation disposed of and the disclosure of the Bank, as the Bank has an obligation of ensuring that
portion of the CGU retained. funding is made at required levels. Pension is payable monthly as long
as the participant is alive.
When subsidiaries are sold, the difference between the selling
price and the net assets plus cumulative translation differences and
goodwill is recognised in the Income Statement. 5.14.1.2 Post-1996 – Pension Fund
As approved by the Ministry of Finance the Bank has almost finalised
GRI 201 - 3
a new pension fund for permanent employees who joined the Bank
post 1 January 1996. Since the Bank has concluded this as a define
5.14 Pension benefits benefit plan, the surplus/deficit has been recorded as per LKAS 19.
5.14.1 Defined benefit pension plans
5.14.1.1 Pre-1996 – Pension Trust Fund The latest actuarial valuation was carried out as of 31 December
2020, by Mr Piyal S Gunatilleke FSA (USA), Member of the American
The Bank operates a defined benefit pension plan, for the permanent
Academy of Actuaries and Consulting Actuaries.
staff members who have joined the Bank prior to 1 January 1996,
which requires contributions to be made to a separately administered
fund. The cost of providing benefits under the defined benefit plan is 5.14.1.3 Gratuity
determined separately using the projected unit credit method. Employees who joined the Bank on or after 1 January 1996 will be
eligible for Gratuity under the Payment of Gratuity Act No. 12 of 1983,
The defined benefit asset or liability comprises the present value or if opted can join the proposed new Post-1996 Pension Fund and if
of the defined benefit obligation less past service costs not yet so such employees will forfeit their right to gratuity.
recognised and less the fair value of plan assets out of which the
obligations are to be settled directly, less actuarial losses not yet Other employees whose services are terminated other than by
recognised. The value of any asset is restricted to the sum of any retirement are eligible to receive Terminal Gratuity under the
actuarial losses and past service cost not yet recognised and the Payment of Gratuity Act No. 12 of 1983 at the rate of one-half of
present value of any economic benefits available in the form of gross salary applicable to the last month of the financial year in which
refunds from the plan or reductions in the future contributions to employment is terminated, for each year of continuous service, for
the plan. those who have served in excess of five years.
The latest actuarial valuation was carried out as of 31 December If a participant who has completed five years of services becomes
2020, by Mr Piyal S Gunatilleke FSA (USA), Member of the American totally and permanently disabled, he is eligible for disability gratuity.
Academy of Actuaries and Consulting Actuary. Further, if an active participant with minimum of five years of service,
dies while in service, a gratuity benefit will be paid to his heirs.
The Bank makes a monthly provision towards such Gratuity Payment 5.17 Commitments and contingencies
Liabilities and this value is reflected in the Statement of Financial
All discernible risks are accounted for in determining the amount
Position of the Bank, the Bank made a provision based on the Actuarial
of all known liabilities. The Bank’s share of any contingencies and
Valuation. However, as per Sri Lanka Accounting Standards the Bank
capital commitments of a subsidiary or associate for which the Bank
has provided for gratuity liability based on an actuary valuation.
is also liable severally or otherwise are also included with appropriate
disclosures.
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 5.17.1 Basis of recognition
one year of service with the companies. These liabilities are not In the ordinary course of business, the Bank gives financial guarantees
externally funded. consisting of letters of credit, guarantees, and acceptances.
Financial guarantees are initially recognised in the financial under
5.14.2 Defined contribution plans commitments at facility value.
Deferred tax assets are recognised for all deductible differences. Carry
forward of unused tax credits and unused tax losses, to the extent that 5.18.6 Withholding Tax on dividends (WHT)
it is probable that taxable profits will be available against which the Dividend distributed out of taxable profit of the local subsidiaries
deductible temporary differences and the carry forward of unused tax attracts a 14%, deduction at source and is final tax liability for of the
credits and unused tax losses can be utilised, except: Bank. Withholding tax on dividends has been abolished with effect
zzWhere deferred tax assets relating to the deductible temporary from 1 January 2019.
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
5.18.7 Crop Insurance Levy (CIL)
taxable profit or losses; and As per the provision of the Section 14 of the Finance Act No. 12 of
zzIn respect of deductible temporary differences associated with
2013, the Crop Insurance Levy (CIL) was introduced with effect from
1 April 2013. Accordingly, Bank is required to pay 1% of the profit
investments in subsidiaries, deferred tax assets are recognised
after tax for a year of assessment to the National Insurance Trust Fund.
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. 5.18.8 Nation Building Tax (NBT)
As per the provisions of the Nation Building Tax Act No. 09 of 2009
The carrying amount of a deferred tax asset is reviewed at each and the subsequent amendments thereto, Nation Building Tax should
statement of financial position date and reduced to the extent it is be payable at the rate of 2% with effect from 1 January 2019 on
no longer probable that sufficient taxable profit will be available to the liable turnover as per the relevant provisions of the Act. Nation
allow all or part of the deferred tax asset to be utilised. Unrecognised Building Tax has been abolished with effect from 1 December 2019.
deferred tax asset are reassessed at each statement of financial
position date and are recognised to the extent that it is probable that
future taxable profit will allow the deferred tax asset to be recovered. 5.18.9 Nation Building Tax on Financial
Services (FSNBT)
Deferred tax assets and liabilities are measured at the tax rate that With effect from 1 January 2014, NBT of 2% was introduced on
are expected to apply in the year when the assets are realised or supply of financial services via amendment to the NBT Act No. 09 of
the liabilities are settled, based on tax rates and tax laws that have 2009. This Tax has been abolished with effect from 1 December 2019.
been enacted or subsequently enacted at the statement of financial
position date.
5.18.10 Debt Repayment Levy (DRL)
The Debt Repayment Levy (DRL) has been imposed by the Section 36
5.18.3 Value Added Tax on Financial Services (FSVAT) of Finance Act No. 35 of 2018. A levy of 7% is charged on the value
Bank’s total value addition was subjected to a 15% value added tax addition attributable to the supply of financial services under the
as per Section 25A of the Value Added Tax Act No. 14 of 2002 and provisions of the Value Added Tax Act No. 14 of 2002 and subsequent
amendments thereto. amendments thereto. This tax has been abolished with effect from
1 January 2020.
5.19 Recognition of income and expenses zzDeposit liabilities falling within the meaning of abandoned
granted
The main assumption underlying these techniques is that a company’s 5.23.2 Revenue recognition
past claims development experience can be used to project future
Gross written premium
claims development and hence ultimate claims costs. As such,
these methods extrapolate the development of paid and incurred Non-life insurance gross written premium comprises the total
losses, average costs per claim and claim numbers based on the premium receivable for the whole period of cover provided by
observed development of earlier years and expected loss ratios. contracts entered into during the accounting period and are
Historical claims development is mainly analysed by accident years, recognised on the date on which the policy commences.
but can also be further analysed by geographical area, as well as by
significant business lines and claim types. Large claims are usually Reinsurance premium
separately addressed, either by being reserved at the face value of
Non-life gross reinsurance premium written comprises the total
loss adjuster estimates or separately projected in order to reflect
premium payable for the whole cover provided by contracts entered
their future development. In most cases, no explicit assumptions are
into the period and is recognised on the date on which the policy
made regarding future rates of claims inflation or loss ratios. Instead,
incepts. Premium includes any adjustments arising in the accounting
the assumptions used are those implicit in the historical claims
period in respect of reinsurance contracts incepting in prior
development data on which the projections are based.
accounting periods.
6. Gross income
Accounting policy
Revenue is recognised to the extent that it is probable that the economic benefit(s) will flow to the Bank/Group and the revenue can be
reliably measured. The specific recognition criteria for each type of income are more fully set off in respective income notes.
Bank Group
EIR is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument or a
shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation takes into account all
contractual terms of the said financial instrument and includes any fees or incremental costs that are directly attributable to the instrument
which are an integral part of the EIR, but excludes future credit losses.
Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest income
continues to be recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Gains and losses arising from changes in fair value of the said instruments are recognised in the Income Statement in the period in which they
arise and derivative financial instruments are fair valued at each reporting date.
Bank Group
9.2 Net fair value gain/(loss) on financial assets at fair value through profit or loss
Bank Group
Government Securities
Treasury Bills (233,867) 216,794 (233,867) 216,794
Treasury Bonds (3,785) 1,498 (3,785) 1,498
Debt securities 7,278 (7,278) 7,278 (7,278)
Total (1,140,027) 1,590,650 (1,140,027) 1,590,650
Bank Group
Profit from disposals of property, plant and equipment and right-of-use assets 39,389 51,174 54,687 81,487
11.1 Bank
For the year ended 31 December 2020
11.2 Group
For the year ended 31 December 2020
Others
Loss on disposal of collaterals including write-offs 678,796
Impairment charges on right-of-use assets 30.2 36,965
Impairment charges for goodwill 31.2 87,342
Total impairment charge 17,566,149
Others
Loss on disposal of collaterals including write-offs 1,095,468
Impairment on goodwill 31.2 33,383
Total impairment charge 11,677,519
Bank Group
Bank Group
Contribution to defined benefit plan – pre 1996 pension trust fund 37.1.3 1,949,053 1,307,059 1,949,053 1,307,059
Contribution to defined benefit plan – post 1996 pension fund 37.2.3 520,492 121,841 520,492 121,841
2,469,545 1,428,900 2,469,545 1,428,900
Depreciation and amortisation methods and rates are as stipulated in the Note 30 (property, plant and equipment and right-of-use assets).
Bank Group
Accordingly, the 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. 24 of 2017. Detailed disclosure of accounting policies are given in Note 5.18 to these Financial
Statements
Deferred taxation
Deferred tax is provisioned for using the liability method on temporary differences at reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. Detailed disclosure of accounting policies and estimate of deferred
tax is more fully available in Note 5.18.2 to the Financial Statements
Bank Group
Profit before tax for the year 21,226,680 19,666,184 24,647,581 25,652,251
Income tax for the period (accounting profit at applicable tax rate) 5,943,470 5,506,532 6,901,323 7,182,630
Add:
Tax effect of expenses that are not deductible for tax purposes 7,439,507 5,847,582 11,214,209 12,339,783
(Less):
Tax effect of expenses that are deductible for tax purposes (5,626,331) (4,997,742) (8,554,038) (12,358,043)
Income tax expense for the period 7,756,646 6,356,372 9,561,494 7,164,370
14.2 The deferred tax charge/(credit) in the Income Statement comprise the following:
Bank Group
14.3 The deferred tax charge/(credit) in other comprehensive income comprise the following:
Bank Group
The tax liabilities of the Group are computed at the above rates except for the following companies which enjoy exemptions and concessions.
Bank Group
Net profit attributable to ordinary equity holders (LKR ’000) 14,174,943 12,925,683 15,229,858 14,984,837
Weighted-average number of ordinary shares in issue (’000) 1,000 1,000 1,000 1,000
Basic earnings per share (LKR) 14,175 12,926 15,230 14,985
Bank Group
Net profit attributable to ordinary equity holders (LKR ’000) 14,174,943 12,925,683 15,229,858 14,984,837
Weighted-average number of ordinary shares in issue (’000) 1,000 1,000 1,000 1,000
Number of ordinary shares in capital pending allotment (’000) 243,040 243,040 243,040 243,040
Total number of shares in issue and pending allotment (’000) 244,040 244,040 244,040 244,040
Diluted earnings per share (LKR) 58 53 62 61
2020
FVTPL 1
FVOCI 2
AC3 Total
Assets
Cash and cash equivalents – – 71,461,242 71,461,242
Balances with central banks – – 14,196,565 14,196,565
Placements with banks – – 10,304,422 10,304,422
Derivative financial instruments 97,645 – – 97,645
Financial assets – at fair value through profit or loss 46,425,027 – – 46,425,027
Liabilities
Due to banks – – 164,489,623 164,489,623
Derivative financial instruments 976,486 – – 976,486
Due to other customers – – 1,835,099,456 1,835,099,456
Other borrowings – – 36,362,434 36,362,434
Subordinated term debts – – 43,557,696 43,557,696
Total financial liabilities 976,486 – 2,079,509,209 2,080,485,695
1 Fair Value through Profit or Loss 2 Fair Value through Other Comprehensive Income 3 Amortised Cost
Assets
Cash and cash equivalents – – 50,703,158 50,703,158
Balances with central banks – – 38,858,470 38,858,470
Placements with banks – – 9,689,132 9,689,132
Derivative financial instruments 90,560 – – 90,560
Financial assets – at fair value through profit or loss 79,514,568 – – 79,514,568
Liabilities
Due to banks – – 207,484,446 207,484,446
Derivative financial instruments 59,748 – – 59,748
Due to other customers – – 1,491,385,937 1,491,385,937
Other borrowings – – 17,324,960 17,324,960
Subordinated term debts – – 22,714,490 22,714,490
Total financial liabilities 59,748 – 1,738,909,833 1,738,969,581
1 Fair Value through Profit or Loss 2 Fair Value through Other Comprehensive Income 3 Amortised Cost
Assets
Cash and cash equivalents – – 72,899,208 72,899,208
Balances with central banks – – 14,196,565 14,196,565
Placements with banks – – 13,910,824 13,910,824
Derivative financial instruments 97,645 – 97,645
Financial assets – at fair value through profit or loss 52,728,589 52,728,589
Liabilities
Due to banks – – 172,439,795 172,439,795
Derivative financial instruments 976,486 – – 976,486
Due to other customers – – 1,935,194,040 1,935,194,040
Other borrowings – – 36,362,434 36,362,434
Subordinated term debts – – 56,868,035 56,868,035
Total financial liabilities 976,486 – 2,200,864,304 2,201,840,790
1
Fair Value through Profit or Loss 2
Fair Value through Other Comprehensive Income 3
Amortised Cost
Assets
Cash and cash equivalents – – 51,594,638 51,594,638
Balances with central banks – – 38,858,470 38,858,470
Placements with banks – – 13,395,360 13,395,360
Derivative financial instruments 90,560 – 90,560
Financial assets – at fair value through profit or loss 80,405,966 80,405,966
Liabilities
Due to banks – – 219,434,075 219,434,075
Derivative financial instruments 59,748 – – 59,748
Due to other customers – – 1,588,903,098 1,588,903,098
Other borrowings – – 16,289,502 16,289,502
Subordinated term debts – – 40,513,091 40,513,091
Total financial liabilities 59,748 – 1,865,139,766 1,865,199,514
1
Fair value through profit or loss 2
Fair value through other comprehensive income 3
Amortised cost
17.1 Cash
Bank Group
As at 31 December 2020
As at 31 December 2019
Group
As at 31 December 2020
As at 31 December 2019
2019
Group
2020
2019
Bank Group
Statutory balances with Central Bank of Sri Lanka (Stage 1) 14,196,565 38,858,470 14,196,565 38,858,470
14,196,565 38,858,470 14,196,565 38,858,470
Bank Group
2019
Group
2020
2019
2019
Currency swaps
Sales 57,471 12,054,900 47,446 4,522,349 57,471 12,054,900 47,446 4,522,349
Purchases 34,396 10,410,093 41,310 6,183,167 34,396 10,410,093 41,310 6,183,167
Currency swaps
Sales 934,215 86,078,566 20,652 6,140,423 934,215 86,078,566 20,652 6,140,423
Purchases 11,878 4,610,694 29,056 3,099,277 11,878 4,610,694 29,056 3,099,277
Bank Group
Capital goods
ACL Cables PLC 331,610 15,798 25,401 – – –
Access Engineering PLC 68,940 1,655 1,696 – – –
Telecommunication services
Dialog Axiata PLC 2,000,000 21,750 24,800 2,172,813 21,455 26,726
Diversified holdings
John Keells Holdings PLC 18,137 2,377 2,713 18,137 2,377 3,040
Hemas Holdings PLC 755,504 56,093 75,475 457,336 37,819 36,587
Richard Pieris and Company PLC – – – 948,048 9,480 11,187
Aitken Spence PLC 330,000 15,160 19,074 200,000 9,510 9,300
Manufacturing
Pelawatta Sugar Industries PLC – – – 58,100 1,829 –
Alumex PLC – – – 1,498,732 29,969 22,181
Teejay Lanka PLC 300,000 8,960 11,400 – – –
Motors
United Motors Lanka PLC – – – 3,426 305 216
Health care
Asiri Hospital Holdings PLC 1,514,157 30,303 52,239 1,614,157 32,341 32,282
Total value of the quoted equity securities 164,703 226,119 167,717 158,831
Capital goods
ACL Cables PLC 331,610 15,798 25,401 – – –
Access Engineering PLC 68,940 1,655 1,696 – – –
Manufacturing
Alumex PLC – – – 1,498,732 29,969 22,181
Teejay Lanka PLC 300,000 8,960 11,400 – – –
Pelawatta Sugar Industries PLC – – – 58,100 1,829 –
Telecommunication services
Dialog Axiata PLC 2,000,000 21,750 24,800 2,172,813 21,455 26,726
Diversified holdings
John Keells Holdings PLC 18,137 2,377 2,713 18,137 2,377 3,040
Hemas Holdings PLC 755,504 56,093 75,475 457,336 37,819 36,587
Richard Pieris and Company PLC – – – 948,048 9,480 11,187
Aitken Spence PLC 330,000 15,160 19,074 200,000 9,510 9,300
Health care
Asiri Hospital Holdings PLC 1,514,157 30,303 52,239 1,614,157 32,341 32,282
Motors
United Motors Lanka PLC – – – 3,426 305 216
Total value of quoted equity securities 188,664 249,835 204,453 192,962
The Group measures loans and advances to banks at amortised cost since the said instruments qualify both contractual cash flow assessment
and business model assessment which has been described in Note 5.5.1 to these Financial Statements.
Bank Group
22.1 Analysis of loans and advances to banks based on exposure to credit risk
Bank
As at 31 December 2020
As at 31 December 2019
Group
As at 31 December 2020
As at 31 December 2019
22.2 Allowance for expected credit losses/Impairment losses – Loans and advances to banks
Bank and Group
As at 31 December 2020
As at 31 December 2019
LKR Mn.
(i) 1,152.0 To achieve the capital adequacy requirement in accordance with CBSL Guidelines
(ii) 1,700.5 To write-off loans granted to Sri Lanka State Plantations Corporation and Paddy Marketing Board for LKR 1,467 Mn. and
LKR 233.5 Mn. respectively
(iii) 4,355.0 To finance pension liabilities
(iv) 3,231.0 To provide for loan loss provision
(v) 102.5 For loans to be transferred to Special Recovery Unit (RACA)
10,541.0
22.3.b The above value of Bonds granted by GOSL effectively relates to accounting entries that were booked to clear carrying values of
advances granted under State recommendation, which were deemed as irrecoverable.
22.3.c 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 statement of financial position date, no recoveries have been made of those specific loan losses.
b. As per the initial agreement 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 would be refunded to the GOSL annually.
22.3.d As indicated in 22.3.a., a sum of LKR 4,355 Mn. of this tranche of Bonds was assigned to the Pension Fund (LKR 3,218 Mn.) and
to the W & OP Fund (Rs. 1,137 Mn.).
Accordingly, the carrying balance of Bonds reflected on the Statement of Financial Position does not include the value assigned to the Pension
Fund, which is managed as an independent Trust Fund.
22.3.e The financial implications of these Bonds in year 2020 are as follows:
a. A value of LKR 7,689 Mn. is reflected on the Statement of Financial Position as loans and advances to Banks.
b. A value of LKR 879 Mn. is received during the year as income and is reflected under Interest Income.
zzThose for which the Bank may not recover substantially all of its initial investment, other than because of credit deterioration
The Bank/Group measures loans and advances to other customers at amortised cost since both of the following conditions are met:
zzThe financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows
zzThe contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
Bank Group
Gross loans and advances to other customers 23.1 1,723,465,943 1,386,480,514 1,876,212,559 1,543,726,915
Stage 1 1,451,654,411 1,223,763,735 1,524,043,835 1,329,338,443
Stage 2 137,901,961 25,614,133 173,617,030 57,602,462
Stage 3 133,909,571 137,102,646 178,551,694 156,786,010
Less:
Allowance for expected credit losses 23.2 (87,886,600) (76,330,377) (99,981,244) (83,229,149)
Stage 1 (6,419,888) (5,036,021) (7,309,834) (5,693,729)
Stage 2 (3,533,121) (1,442,409) (5,250,002) (2,178,583)
Stage 3 (77,933,591) (69,851,947) (87,421,408) (75,356,837)
Net loans and advances 1,635,579,343 1,310,150,137 1,776,231,315 1,460,497,766
By product
Bills of exchange 1,001,619 1,977,123 1,001,619 1,977,123
Overdrafts 258,281,894 145,448,601 257,950,664 144,724,972
Trade finance 250,894,973 234,096,610 250,894,973 234,096,610
Credit cards 3,067,432 3,336,587 3,067,432 3,336,587
Pawning 174,814,192 162,582,929 174,814,192 162,582,929
Staff loans 23.1.1 23,958,937 19,706,237 24,785,370 20,495,711
Short-term loans 259,527,250 202,760,034 259,527,250 202,760,034
Long-term loans 751,538,010 616,216,358 813,173,316 677,166,341
Lease rental receivable – – 81,891,112 88,287,070
Others 381,636 356,035 9,106,631 8,299,538
Gross total 1,723,465,943 1,386,480,514 1,876,212,559 1,543,726,915
By currency
Sri Lankan rupee 1,293,932,661 1,033,543,858 1,443,062,842 1,188,136,545
United States dollar 425,100,996 348,588,956 425,100,996 348,588,956
Great Britain pound 45,820 43,249 45,820 43,249
Others 4,386,466 4,304,451 8,002,901 6,958,165
Gross total 1,723,465,943 1,386,480,514 1,876,212,559 1,543,726,915
By industry
Agriculture, forestry and fishing 136,609,009 129,152,822 166,308,552 158,236,727
Manufacturing 33,844,343 33,875,134 44,604,569 43,295,098
Tourism 36,794,901 33,078,339 40,690,756 37,306,649
Transport and storage 63,488,966 59,020,700 97,382,327 93,050,379
Construction 386,330,264 306,051,041 396,691,973 319,150,921
Infrastructure development 375,810,596 302,303,448 375,810,596 302,303,448
Wholesale and retail trade 126,296,983 102,534,685 143,257,606 120,993,300
Professional, scientific, and technical activities 45,247,609 30,031,324 54,042,527 36,857,354
Financial services 22,648,245 13,695,663 31,887,446 22,519,287
Consumption 129,358,898 123,253,909 137,207,839 131,974,611
Others 367,036,129 253,483,449 388,328,368 278,038,141
Gross total 1,723,465,943 1,386,480,514 1,876,212,559 1,543,726,915
23.2 Movement in allowance for expected credit loss [ECL] based on exposure to credit risk
Bank
2020
2019
Group
2020
2019
Bank Group
24.1 Analysis of debt instruments measured at amortised cost based on exposure to credit risk
Bank
As at 31 December 2020
As at 31 December 2019
Group
As at 31 December 2020
As at 31 December 2019
24.2 Allowance for expected credit losses – Debt instruments measured at amortised cost
Bank and Group
2020
Bank Group
25.1.2 Group
Name Number of shares Fair value as at Cost as at Number of shares Fair value as at Cost as at
31.12.2020 31.12.2020 31.12.2020 31.12.2019 31.12.2019 31.12.2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000
Overseas Reality (Ceylon) PLC 30,538,203 439,750 518,963 30,538,203 488,611 518,963
The Finance PLC 2,080,400 – 83,400 2,080,400 – 83,400
People’s Merchant Finance PLC – Ordinary Shares 33,856,246 291,164 311,477 33,856,246 358,876 311,477
The Lanka Hospitals Corporation PLC 7,316,042 390,677 307,274 7,316,042 297,763 307,274
United Mortors Lanka PLC 3,426 271 305 – – –
C T Land Development PLC 555 16 24 – – –
Total 1,121,878 1,221,443 1,145,250 1,221,114
25.2.2 Group
Name Number of shares Fair value as at Cost as at Number of shares Fair value as at Cost as at
31.12.2020 31.12.2020 31.12.2020 31.12.2019 31.12.2019 31.12.2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000
Overseas Reality (Ceylon) PLC 30,538,203 439,750 518,963 30,538,203 488,611 518,963
The Finance PLC 2,080,400 – 83,400 2,080,400 – 83,400
Sanasa Development Bank PLC 2,094,012 131,961 203,382 2,094,012 133,808 203,382
The Lanka Hospitals Corporation PLC 7,316,042 390,677 307,274 7,316,042 297,763 307,274
United Mortors Lanka PLC 3,426 271 305 – – –
C T Land Development PLC 555 16 24 – – –
Total 962,675 1,113,348 920,182 1,113,019
Detailed policies are given under Note 5.5.2 to these Financial Statements
Bank Group
26.1 Analysis of debt instruments at fair value through OCI based on exposure to credit risk
Bank
As at 31 December 2020
As at 31 December 2019
Group
As at 31 December 2020
As at 31 December 2019
26.2 Allowance for expected credit losses – Debt instruments at fair value through OCI
Bank and Group
As at 31 December 2020
As at 31 December 2019
zzexposure or rights to variable returns from its involvement with the investee
zzthe ability to use its power over the investee to affect its returns
The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences,
until the date that control ceases. Where subsidiaries have been sold or acquired during the year, assets, liabilities, income and expenses of
the said subsidiary are included in the Consolidated Financial Statements, from the date the Group gains control until the date the Group
ceases to control the subsidiary.
When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies in line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries, not owned directly or indirectly by the
Bank. The non-controlling interest is presented in the Consolidated Statement of Financial Position within equity, separately from the equity
attributable to the equity holders of the Bank. Non-controlling interests in the profit or loss of the Group, is disclosed separately in the
Consolidated Statement of Profit or Loss.
A change in the ownership interest of a subsidiary without a loss of control, is accounted for as an equity transaction. Upon the loss of
control, the Group derecognises the assets (including goodwill) and liabilities of the subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control, is recognised in the Statement of Changes
in Equity. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control
is lost. Subsequently, it is accounted for as an equity-accounted investee or in accordance with the Group’s accounting policy for financial
instruments depending on the level of influence retained.
The Bank’s investments in subsidiaries are carried at cost in the Separate Financial Statements.
Bank Group
People's Travels (Private) Ltd. 495,000 99.00 4,950 495,000 99.00 4,950
Total 4,950 4,950
Name Principal place of business/country of incorporation Operating segment Ownership interest held by NCI
2020 2019
% %
People’s Leasing & Finance PLC No. 1161, Maradana Road, Colombo 8, Sri Lanka Leasing and finance 25.0 25.0
2020 2019
LKR ’000 LKR ’000
The investments in associates are carried in the Statement of Financial Position at cost plus post acquisition changes in the Group’s share of
net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised
nor individually tested for impairment. After application of the equity method, the Group determines whether it is necessary to recognise any
additional impairment loss with respect to the Group’s net investment in the associate.
At each reporting date Group determines whether there is any objective evidence that the investment in the associate is impaired. If this is
the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying
value and recognises the amount in the share of results of equity-accounted investees’ in the Income Statement.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any
long-term investments, is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the investee. If the associate subsequently reports profits, the Group resumes recognising its
share of those profits only after its share of the profits equal the share of losses not recognised previously.
Date when the Group ceased to have significant influence it discontinues the use of the equity method and accounts for such investments in
accordance with the Sri Lanka Accounting Standard – SLFRS 9 – “Financial Instruments”.
Bank Group
Bank Group
Cost
Balance as at 1 January 1,301,346 1,301,346 1,285,575 201,415
Transfer from PPE upon disposal of subsidiary – – – 1,084,160
Balance as at 31 December 1,301,346 1,301,346 1,285,575 1,285,575
Accumulated depreciation
Balance as at 1 January 38,301 36,594 26,369 25,620
Charge for the year 1,707 1,707 1,707 749
Balance as at 31 December 40,008 38,301 28,076 26,369
Net book value 1,261,338 1,263,045 1,257,499 1,259,206
Cost model
Plant and equipment are 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 and equipment when the cost is incurred, if the recognition
criteria are met.
Revaluation model
The Bank applies the revaluation model for the entire class of freehold land and buildings and leasehold building. 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 three years to ensure that the fair value of a revalued asset does not differ materially from its carrying
amount. Any revaluation surplus is credited to the revaluation reserve included in the equity section of the Statement of Financial Position,
except to the extent that it reverses a revaluation decrease of the same asset previously recognised in Income Statement, in which case
the increase is recognised in profit or loss. A revaluation deficit is recognised in Income Statement, 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 and 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.
Restoration cost
Expenditure incurred on repairs or maintenance of property, plant and equipment in order to restore or maintain future economic benefits is
charged to Statement of Comprehensive Income as incurred.
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 Statement of Financial Position at cost.
Depreciation
Depreciation is calculated using the straight-line method to write-down the cost of property and equipment to their residual values over their
estimated useful lives. Leased assets under finance leases are depreciated over the shorter of either lease term or its useful life, which is
limited to maximum tenor of 50 years. Freehold land is not depreciated. The estimated useful lives are as follows:
Derecognition
Property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
recognised in “other operating income” in the Income Statement in the year the asset is derecognised.
RIGHT-OF-USE assets
The Group has lease contracts for its branches, service centres, select machinery etc. The Group adopted SLFRS 16 using the modified
retrospective approach of adoption with effect from the date of initial application of 1 January 2019. Under this approach, the standard is
applied retrospectively and thereby the comparative figures were not restated which were reported under LKAS 17. Further, the Bank applied
the standard only to contracts that were previously identified as leases, by applying LKAS 17 at the date of initial application.
Upon adoption of SLFRS 16, the Bank recognised such leases as right-of-use assets and lease liabilities for those leases previously classified
as operating leases. The right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related
prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining
lease payments, discounted using the incremental borrowing rate at the date of initial application.
Cost/Fair value
Balance as at 1 January 13,102,109 6,084,747 2,646,645 1,504,117 500,245 3,860,113
Effect of adoption of SLFRS 16 as at
1 January 2019 – – – – – –
Additions – 48,351 9,809 28,454 81,260 842,050
Disposals – (4,751) (2,546) (12,439) (5,023) (161,339)
Transfers/Adjustments 41,573 (46,883) – 924 2,206
Revaluation adjustment on
accumulated depreciation – (838,308) (373,499) – – –
Revaluation surplus 5,886,156 371,077 71,580 – – –
Balance as at 31 December 19,029,838 5,614,233 2,351,989 1,520,132 577,406 4,543,030
Accumulated depreciation
Balance as at 1 January – 702,748 313,060 1,381,383 271,167 2,509,488
Reclassified from prepaid leases upon
adoption of SLFRS 16 as at 1 January 2019 – – – – – –
Charge for the year – 282,200 124,953 60,539 84,561 609,309
Disposals – – (240) (12,439) (5,023) (161,339)
Transfers/Adjustments – – – (10) –
Revaluation adjustment on
accumulated depreciation (838,308) (373,499) – – –
Balance as at 31 December – 146,640 64,274 1,429,483 350,695 2,957,458
Net book value as at 31 December 2020 19,029,838 5,467,593 2,287,715 90,649 226,711 1,585,572
Capital work-in-progress at cost
Furniture equipment and
machinery at store 1,379 21,374
– – – – – – – 9,086,704
274,504 1,284,428 4,820 758,662 100,411 863,893 2,148,321 3,201,786
(97,103) (283,201) (10,055) (82,366) (6,453) (98,874) (382,075) (112,157)
(4,206) (6,386) – – – – (6,386) 2,008
– (1,211,807) – – – – (1,211,807) –
– 6,328,813 – – – – 6,328,813 –
6,434,131 40,070,759 1,007,973 4,301,953 5,182,819 10,492,745 50,563,504 43,686,638
–
3,490,994 8,668,840 581,213 748,561 1,185,667 2,515,441 11,184,282 6,882,602
– – – – – – – 552,165
774,746 1,936,308 25,852 790,146 1,242,631 2,058,629 3,994,937 3,824,365
(96,997) (276,038) (8,060) (21,013) (2,717) (31,790) (307,828) (74,850)
– (10) – – – – (10) –
– (1,211,807) – – – – (1,211,807) –
4,168,743 9,117,293 599,005 1,517,694 2,425,581 4,542,280 13,659,573 11,184,282
2,265,388 30,953,466 408,968 2,784,259 2,757,238 5,950,465 36,903,931 32,502,356
1,429,134 1,698,056
30.1.1 On 1 July 2020 – the Bank carried out an independent valuation of all its land and buildings. This valuation was carried out by Messrs
Prathap Chartered Valuations & Consultancy (Private) Limited together with D Prathapasinghe [ FRICS (UK), Professional Associate Member
(IVSL) MBA (UK), BSc. Est. Mgt. & Val. (sp) (Hons) (SJP), PG Dip Eco. Dev. (Colombo), Dip. Surv. (Reading - UK)], an Independent Valuer, on a market
value basis. Book values of these properties were adjusted for the revalued amounts and revaluation surplus was credited accordingly to the
Revaluation Reserve.
LKR ’000
30.1.2 The carrying amount of revalued assets, in the Financial Statements if carried at net book value is as follows:
Class of assets Cost Accumulated Net book value
depreciation as at 31 December
2020
LKR ’000 LKR ’000 LKR ’000
2020
Type of asset Valuation Significant Range of estimates for Sensitivity of fair value to
technique unobservable inputs unobservable inputs unobservable inputs
LKR
Freehold buildings 1. Depreciated replacement Property transaction 10,000.00 – 45,000.00 Positively correlated
cost method and comparison evidences, internal data sensitivity
method of valuation from previous valuations
and asking prices
2. Investment method of
valuation and comparison
method of valuation
Buildings on leasehold Depreciated replacement cost Estimated cost per sq.ft. 250.00 – 8,000.00 Positively correlated
lands method and comparison method estimated rate of all sensitivity
of valuation types of deprecations and
obsolescence and rental
evidences
Cost/Valuation
Balance as at 1 January 16,112,285 10,383,366 2,732,408 2,217,290 1,048,711 4,870,904
Effect of adoption of SLFRS 16 as at
1 January 2019 – – – – – –
Additions – 371,622 9,809 46,954 106,031 911,474
Disposals – (4,751) (2,546) (92,610) (7,721) (175,306)
Transfers/Adjustments 41,573 (357,815) – – 924 2,206
Disposal of subsidiary during the year – – – – – –
Exchange rate variance – – – – (2,486) 186
Fair value adjustments – – – – – –
Transfers to investment property upon
disposal of subsidiary – – – – – –
Revaluation adjustment on
accumulated depreciation – (838,308) (373,499) – – –
Revaluation surplus 5,886,156 421,077 71,580 – – –
Balance as at 31 December 22,040,014 9,975,191 2,437,752 2,171,634 1,145,459 5,609,464
Accumulated depreciation
Balance as at 1 January – 702,542 382,409 1,645,794 707,254 3,207,000
Effect of adoption of SLFRS 16 as at
1 January 2019 – – – – – –
Charge for the year – 282,200 124,953 114,458 127,711 696,332
Disposals – – (240) (37,203) (7,720) (175,312)
Impairment – – – – – –
Transfers/Adjustments – – – – (10) –
Disposal of subsidiary during the year – – – – – –
Exchange rate variance – – – – (346) 135
Revaluation adjustment on
accumulated depreciation – (838,308) (373,499) – – –
Balance as at 31 December – 146,434 133,623 1,723,049 826,889 3,728,155
Net book value as at 31 December 2020 22,040,014 9,828,757 2,304,129 448,585 318,570 1,881,309
– – – – – – – 10,260,348
336,003 1,781,893 14,318 1,559,657 100,411 1,674,386 3,456,279 3,742,353
(129,767) (412,701) (24,588) (132,486) (6,453) (163,527) (576,228) (156,837)
(4,206) (317,318) – – – – (317,318) 2,008
– – – – – – – (107,148)
176 (2,124) – – – – (2,124) 4,608
– – – – – – – 238,323
– – – – – – – (1,084,160)
– (1,211,807) (1,211,807) –
– 6,378,813 – – – – 6,378,813 –
7,331,653 50,711,167 1,090,835 6,375,080 5,182,819 12,648,734 63,359,901 55,632,286
– – – – – – – 555,232
868,464 2,214,118 25,852 1,152,560 1,242,631 2,421,043 4,635,161 4,420,561
(129,665) (350,140) (8,060) (34,915) (2,717) (45,692) (395,832) (116,967)
– – 36,965 – 36,965 36,965 –
– (10) – – – – (10) –
– – – – – – – (96,493)
161 (50) – – – – (50) 419
– (1,211,807) – – – – (1,211,807) –
4,906,692 11,464,842 642,102 2,227,419 2,425,581 5,295,102 16,759,944 13,695,517
2,424,961 39,246,325 448,733 4,147,661 2,757,238 7,353,632 46,599,957 41,936,769
1,429,134 1,698,056
50,021 72,774 109,617
48,101,865 43,744,442
30.2.1 Book values of these properties were adjusted for revalued amounts and revaluation surplus was
credited accordingly to the revaluation reserve
LKR ’000
Goodwill represents the excess of the cost of acquisition over the fair value of Group’s share of the net identifiable assets of the acquired
subsidiary at the date of acquisition.
Detailed policies of goodwill and intangible assets are set out in Note 5.12 to these Financial Statements.
Cost
As at beginning of the year 1,982,609 1,552,292 2,201,524 1,788,352
Disposal of subsidiary during the year – – – (31,171)
Additions during the year 196,222 430,317 208,570 444,343
Disposals during the year – – (61) –
Adjustments during the year – 2,245 –
As at end of the year 2,178,831 1,982,609 2,412,278 2,201,524
Accumulated amortisation
As at beginning of the year 1,281,734 1,112,775 1,464,526 1,305,978
Disposal of subsidiary during the year – – – (26,699)
Charge for the year 194,916 168,959 203,556 185,247
Adjustments during the year – – 2,840 –
As at end of the year 1,476,650 1,281,734 1,670,922 1,464,526
Net book value 702,181 700,875 741,356 736,998
31.2 Goodwill
Bank Group
Cost
As at beginning of the year 417,099 417,099
As at end of the year 417,099 417,099
Accumulated impairment
As at beginning of the year 63,383 30,000
Impairment for the year 87,342 33,383
As at end of the year 150,725 63,383
Net book value 266,374 353,716
Total net book value 1,007,730 1,090,714
Receivables
Receivables predominantly include the amount receivable on behalf of the senior citizen interest subsidy
Bank Group
Bank Group
These deposits are initially recognised at fair value. Subsequent to initial recognition, deposits are measured at their amortised cost using the
effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on the issue and costs that
are an integral part of the EIR.
Bank Group
Bank Group
Analysis
By product
Demand deposits (current accounts) 75,135,538 53,141,785 74,036,176 51,674,274
Savings deposits 675,994,591 513,230,302 683,131,848 519,187,318
Fixed deposits 1,080,610,331 921,652,378 1,172,016,115 1,012,151,033
Other products 3,358,996 3,361,472 6,009,901 5,890,473
Total 1,835,099,456 1,491,385,937 1,935,194,040 1,588,903,098
By currency
Sri Lanka rupee 1,637,875,615 1,361,165,004 1,737,970,199 1,458,682,165
United State dollar 182,107,906 114,289,379 182,107,906 114,289,379
Great Britain pound 3,159,988 2,971,349 3,159,988 2,971,349
Others 11,955,947 12,960,205 11,955,947 12,960,205
Total 1,835,099,456 1,491,385,937 1,935,194,040 1,588,903,098
Subsequent to initial recognition these borrowings are measured at their amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on the issue and costs that are an integral part of the EIR.
Bank Group
Bank
Retirement benefit 5,901,327 296,167 676,889 (3,402,368) 3,614,967 735,286 516,927 (2,814,470)
Impairment allowance for
loan advances 1,294,165 – (755,589) – 538,576 – (453,705) –
Accelerated depreciation
allowance for tax purpose – PPE – 1,445,888 (43,598) 178,496 – 1,310,990 (18,054) –
Revaluation of Freehold
land and building – 4,940,922 – 1,648,123 – 3,292,799 – –
Right-of-use asset 182,909 (69,175) – 113,735 (113,735)
7,378,401 6,682,977 (191,473) (1,575,749) 4,267,278 5,339,075 (68,567) (2,814,470)
Group
Retirement benefit 6,016,585 205,336 643,108 (3,374,264) 3,683,782 623,015 482,639 (2,819,406)
Carry forward tax losses – (3,701) 8,652 – – (12,353) 1,032 –
Impairment allowance for
loan receivables 1,294,165 (949,265) (1,315,355) – 538,576 (689,224) (105,977) –
Deferred tax on transitional
adjustment – (266,494) – – – – – –
Accelerated depreciation allowance
for tax purpose – (Lease) – 1,564,206 252,369 – – 1,311,837 (2,176,167) –
Accelerated depreciation allowance
for tax purpose – (PPE) – 1,705,851 30,214 178,496 – 1,497,012 40,418 –
Revaluation of freehold
land and building – 6,062,526 (1,930) 1,662,123 – 4,408,786 (3,106) 150,113
Right-of-use-asset 182,909 (19,358) (108,021) – 113,735 18,440 (95,294) –
7,493,659 8,299,101 (490,963) (1,533,645) 4,336,093 7,157,513 (1,856,455) (2,669,293)
Deferred income in respect of off-balance sheet items 418,695 413,383 418,695 413,383
Expected credit loss in respect of contingent
liabilities and commitments 43.3 547,579 1,174,344 547,579 1,174,344
Sundry creditors 3,995,263 3,628,196 3,995,263 3,628,196
Net defined benefit obligation – Pre-1996 Pension Trust Fund 37.1 19,151,770 10,441,586 19,151,770 10,441,586
Net defined benefit obligation – Post-1996 Pension Fund 37.2 144,187 – 144,187 –
Provision for gratuity 37.3 722,474 538,498 1,350,596 1,154,368
Lease liability 37.4 6,017,463 7,027,076 7,415,918 7,922,255
Payable on other expenses 3,548,739 3,340,351 3,877,066 3,828,002
Insurance liabilities and reinsurance payable – – 4,591,123 4,902,211
Other liabilities 6,495,001 8,061,683 9,779,262 12,145,740
Total 41,041,170 34,625,117 51,271,458 45,610,085
Bank Group
Bank Group
Financial assumptions
Discount rate 7.97 10.30 7.97 10.30
Increase in cost of living allowances 5.00 5.00 5.00 5.00
Future gross salary increase 9.00 9.00 9.00 9.00
Demographic assumptions
Mortality table RP – 2000 RP – 2000 RP – 2000 RP – 2000
Bank Group
Bank Group
Bank Group
Financial assumptions
Discount rate 8.90 10.43 8.90 10.43
Increase in cost of living allowance 5.00 5.00 5.00 5.00
Future gross salary increase 6.50 8.10 6.50 8.10
Demographic assumptions
Mortality table RP – 2000 RP – 2000 RP – 2000 RP – 2000
Bank Group
37.3.1 The Principal financial assumptions used in the valuations are as follows:
Bank
2020 2019
2020 2019
Bank Group
As at 31 December Interest rate and Issue date Maturity date 2020 2019 2020 2019
repayment terms LKR ’000 LKR ’000 LKR ’000 LKR ’000
Authorised
1,000,000,000 ordinary shares of 50/- each 50,000,000 50,000,000 50,000,000 50,000,000
In September 2019, the People’s Bank Act No. 29 of 1961 was amended whereby, amongst other, the Bank’s authorised share capital was
increased to LKR 50.0 Bn. from LKR 1.0 Bn. previously.
Bank Group
Fully paid
999,960 Ordinary Shares of 50/- each 49,998 49,998 49,998 49,998
All issued shares are fully-paid with the exception of 40 shares which yet remain unpaid.
Accordingly, Bank has transferred LKR 709 Mn. for the current year.
According to Central Bank Direction 08/11/011/0019/001 dated 14 February 2013 Bank is exempted from the requirement of maintaining the
reserve. Therefore, no transfer is made to the reserve this year based on the direction from the Central Bank of Sri Lanka.
LKR 2,804 Mn. pertains to a dividend/special levy paid to the Consolidated Fund of the Government of Sri Lanka as determined by the
Ministry of Finance.
Balance as at 1 January 2019 6,669,490 14,051,911 5,663 1,633,710 10,187,228 130,436 46,329,489 79,007,927
Profit for the year – – – – – 12,925,683 12,925,683
Net Gains/(Losses) on equity instruments
at fair value through OCI – – – – – 189,223 – 189,223
Net Gains/(Losses) on debt instruments
at fair value through OCI – – – – – 296,507 – 296,507
Net actuarial gains and losses on defined
benefit plans – – – – – (10,051,678) (10,051,678)
Deferred tax effect on defined benefit plans – – – – – 2,814,470 2,814,470
Transfer to reserve during the year 646,284 – – – 873,864 (1,520,148) –
Special levy to Treasury/Dividend – – – – – (2,419,690) (2,419,690)
Balance as at 31 December 2019 7,315,774 14,051,911 5,663 1,633,710 11,061,092 616,166 48,078,126 82,762,442
Balance as at 1 January 2020 7,315,774 14,051,911 5,663 1,633,710 11,061,092 616,166 48,078,126 82,762,442
Profit for the year – – – – – – 14,174,943 14,174,943
Net Gains/(Losses) on equity instruments
at fair value through OCI – – – – – (67,773) – (67,773)
Net Gains/(Losses) [including change in ECL]
on debt instruments at fair value through OCI (12,418) (12,418)
Net defined benefit obligation – – – – – – (12,151,314) (12,151,314)
Deferred tax effect on defined benefit plans 3,402,368 3,402,368
Revaluation surplus of land and building – 6,523,641 – – – – – 6,523,641
Deferred tax effect on revaluation surplus (1,826,619) – – – – – (1,826,619)
Transfer to reserve during the year
(Note 40) and ( Note 41.4) 708,747 – – – 873,864 – (1,582,611) –
Special levy to Treasury/
Dividend (Note 41.6) – – – – – – (3,023,670) (3,023,670)
Balance as at 31 December 2020 8,024,521 18,748,933 5,663 1,633,710 11,934,956 535,975 48,897,842 89,781,600
42.2 Group
Statutory Revaluation Capital Special risk General Financial Exchange Retained Total Non- Total
reserve reserve reserve reserve reserve assets equalisation earnings controlling
at FVOCI fund interest
reserve
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Balance as at 1 January 2019 6,669,490 15,797,815 5,663 1,633,710 10,187,228 130,436 272,378 66,494,500 101,191,220 10,120,232 111,311,452
Balance as at 31 December 2019 7,315,774 15,863,971 5,663 1,633,710 11,061,092 498,755 234,281 70,339,829 106,953,075 10,860,660 117,813,735
Balance as at 1 January 2020 7,315,774 15,863,971 5,663 1,633,710 11,061,092 498,755 234,281 70,339,829 106,953,075 10,860,660 117,813,735
Balance as at 31 December 2020 8,024,521 20,587,993 5,663 1,633,710 11,934,956 492,808 268,532 72,268,676 115,216,859 11,691,908 126,908,767
Bank Group
43.2 Commitments
Bank Group
43.3 Movement in allowance for expected credit loss (ECL) based on exposure to credit risk
Bank and Group 2020
Bank Group
Income tax
Income tax for the Years of Assessment 2010/11, 2011/12, 2012/13, 2013/14, 2014/15, 2015/16, 2016/17 and 2017/18 are respectively
LKR 2,422.29 Mn. (ITA 13291100319V1), LKR 1,383.83 Mn. (ITA 14271100064V1), LKR 6,054.77 Mn. (ITA 15271100004V1), LKR 7,452.63 Mn.
(ITA 16300500108V1), LKR 5,564.82 Mn. (ITA 170106000084V1), LKR 3,891.59 Mn. ( 201516002 ), LKR 3,523.21 Mn. (0201617002) and
LKR 5,375.42 Mn. ( 0201718002).
43.6 Litigation against the Bank and companies within the Group
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 defences. 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 damage claimed of litigation against the bank amounts to approximately LKR 8 Bn., of which details are
given Below:
45.2 Key Management Personnel (KMPs) and their Close Family Members (CFMs)
Key Management Personnel are defined as those persons having authority and responsibility for planning, directing, and controlling the activities
of the Bank. Such key management persons include Chairman, Executive, and Non-Executive Directors, and Chief Executive Officer/General
Manager of the Bank. Close family members of an individual are those family members who may be expected to influence, or to be influenced by,
that individual in their dealings with the entity. They may include individual’s domestic partner and children, children of the individual’s domestic
partner and dependants of the individual or the individual’s domestic partner.
45.2.3 Transactions with Close Family Members (CFMs) of the Key Management Personnel (KMP)
For the year ended 31 December 2020 2019
LKR ’000 LKR ’000
45.3.1 Transactions with subsidiaries, subsubsidiaries, and associate companies of the Bank
The aggregate amount of income and expenses arising from the transactions during the year, amount due to and due from the relevant related
party and total contract sum of off-balance sheet transactions at the year end are summerised below:
Liabilities
Deposits 8,473,458 3,624,440 705,640 884,441
Securities sold under repurchase agreements 6,247,581 9,611,891 – –
Other payables 1,511 2,377 176,876 3,748
14,722,549 13,238,709 882,516 888,190
45.4 Transactions with Government of Sri Lanka (GOSL) and State Owned Enterprises (SOEs)
Transactions and arrangements entered in to by the Bank with the Government of Sri Lanka and State Owned Enterprises as follows:
Liabilities
CBSL borrowings 5,150,052 856,636
Deposits – Demand 27,310,447 19,888,975
– Savings 39,134,865 24,614,053
– Time 150,661,433 172,431,223
222,256,797 217,790,886
Derivatives
Derivative products valued using a valuation technique with market observable inputs are mainly currency swaps and forward foreign exchange
contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The
models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates.
46.3 Assets measured at fair value – by level of the fair value hierarchy
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
Financial assets
Derivative financial instruments
Forward foreign exchange contracts and SWAPS – 97,645 – 97,645 – 97,645 – 97,645
Financial liabilities
Derivative financial instruments
Forward foreign exchange contracts – 976,486 – 976,486 – 976,486 – 976,486
Financial assets
Derivative financial instruments
Forward foreign exchange contracts and SWAPS – 90,560 – 90,560 – 90560 – 90560
Financial liabilities
Derivative financial instruments
Forward foreign exchange contracts – 59,748 – 59,748 – 59,748 – 59,748
Bank Group
Financial assets
Financial investments at
fair value through OCI
Unquoted equity securities 852,646 – (44,116) 7,370 815,900 852,656 – (44,116) 7,370 815,910
Total Level 3 financial assets 852,646 – (44,116 7,370 815,900 852,656 – (44,116) 7,370 815,910
Financial liabilities
Total Level 3 financial liabilities – – – – – – – – – –
Total net Level 3 financial
assets/(liabilities) 852,646 – (44,116) 7,370 815,900 852,656 – (44,116) 7,370 815,910
Bank Group
As at Total gains/ Total gains/ Purchases/ As at As at Total gains/ Total gains/ Purchases/ As at
1 January (losses) (losses) (Sales) 31 December 1 January (losses) (losses) (Sales) 31 December
2019 recorded in recorded 2019 2019 recorded in recorded 2019
profit or loss in OCI profit or loss in OCI
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Financial assets
Financial investments at
fair value through OCI
Unquoted equity securities 671,881 – 170,765 10,000 852,646 671,914 – 170,765 9,977 852,656
Total Level 3 financial assets 671,881 – 170,765 10,000 842,646 671,914 – 170,765 9,977 852,656
Financial liabilities
Total Level 3 financial liabilities – – – – – – – – – –
Total net Level 3 financial
assets/(liabilities) 671,881 – 170,765 10,000 842,646 671,914 – 170,765 9,977 852,656
46.5 Fair value of assets and liabilities not measured at fair value
The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not already
recorded at fair value in the Financial Statements.
Set out below is a comparison by class, of the carrying amount and fair values of the Bank’s financial instruments that are not carried at fair value
in the Financial Statements. This table does not include the fair values of non-financial assets and non-financial liabilities.
Bank Group
Financial assets
Cash and cash equivalents 71,461,242 71,461,242 50,703,158 50,703,158 72,899,208 72,899,208 51,594,638 51,594,638
Balances with central banks 14,196,565 14,196,565 38,858,470 38,858,470 14,196,565 14,196,565 38,858,470 38,858,470
Placements with banks 10,304,422 10,304,422 9,689,132 9,689,132 13,910,824 13,910,824 13,395,360 13,395,360
Loans and advances to banks 23,610,101 23,610,101 29,771,919 29,771,919 23,622,700 23,622,700 29,771,919 29,771,919
Loans and advances to
other customers 1,635,579,343 1,635,579,343 1,310,150,137 1,309,702,865 1,776,231,315 1,776,231,315 1,460,497,766 1,460,050,494
Debt instruments measured
at amortised cost 357,107,701 345,717,384 280,935,892 276,939,658 365,900,452 354,510,135 290,739,848 283,958,922
Financial liabilities
Due to banks 164,489,623 164,489,623 207,484,446 207,484,446 172,439,795 172,439,795 219,434,075 219,434,075
Due to other customers 1,835,099,456 1,827,015,368 1,491,385,937 1,485,965,084 1,935,194,040 1,927,109,952 1,588,903,098 1,583,151,163
Other borrowings 36,362,434 36,362,434 17,324,960 17,324,960 36,362,434 36,362,434 16,289,502 16,289,502
Subordinated term debts 43,557,696 43,557,696 22,714,490 22,714,490 56,868,035 56,868,035 40,513,091 40,513,091
zzCorporate banking
zzLeasing
zzInsurance
zzFinance
zzTravels
The following table presents income, profit, total assets, total liabilities of the Group’s operating segments:
Retail banking Corporate banking Treasury and PDU Total Bank Leasing
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Net gain (loss) from trading 1,330,339 747,536 815,781 1,118,403 443,001 855,604 2,589,121 2,721,543 142,835 (45,969)
Others 1,050,633 1,249,605 98,697 137,448 4,000 49,712 1,153,330 1,436,765 21,745 (74,575)
Inter-segment revenue
Net interest income – – 411,865 139,179 – – 411,865 139,179 (407,056) (133,640)
Total inter-segment
revenue 65,438 72,873 411,865 139,179 732,467 1,446,992 1,209,770 1,659,044 (286,987) 53,669
Total operating income 44,783,022 50,901,054 13,558,622 12,340,238 13,373,798 10,553,235 71,715,442 73,794,528 14,319,389 18,055,868
Share of profits/(loss) of
associates (Net of tax) – – – – – – – –
Non-controlling interest
Profit for equity holders
of the Bank
Other comprehensive
income net of tax
Total comprehensive
income
Non-controlling interest
Profit for the equity
holders of the Bank
Segment assets 1,051,000,534 695,608,681 702,910,359 613,817,952 476,207,772 563,979,584 2,230,118,665 1,873,406,218 172,303,777 177,441,772
Total assets 1,051,000,534 695,608,681 702,910,359 613,817,952 476,207,772 563,979,584 2,230,118,665 1,873,406,218 172,303,777 177,441,772
Segment liabilities 1,004,496,393 697,097,082 676,176,122 582,145,389 447,462,552 499,199,307 2,128,135,067 1,778,441,778 137,935,866 144,842,121
Total liabilities 1,004,496,393 697,097,082 676,176,122 582,145,389 447,462,552 499,199,307 2,128,135,067 1,778,441,778 137,935,866 144,842,121
Total equity and liabilities 1,051,000,534 695,608,681 702,910,359 613,817,952 476,207,772 563,979,584 2,230,118,665 1,873,406,218 172,303,777 177,441,772
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
– – – – (4,810) (5,539) – – – – – –
– – – – – – – – – – – –
– – – – – – – – – – – –
5,910,524 5,881,516 – 85,473 10,170 49,788 – 567,884 (1,119,716) (1,959,781) 90,835,808 96,475,276
(3,538,238) (3,538,238) – (309,164) (33,817) (43,030) – (7,034) 387,249 512,789 (66,189,105) (70,812,883)
– – – – – – – – 878 (10,142)
1,981,251 2,250,265 – (225,433) (21,757) 3,657 – 560,850 (732,467) (1,446,992) 16,090,486 16,178,168
860,628 1,193,331
15,229,858 14,984,837
(3,916,784) (6,858,632)
12,173,702 9,319,536
886,248 1,187,037
11,287,454 8,132,499
Held at fair value through profit or loss 32,905,912 (25,255,968) 27,493,748 (25,899,563)
Net increase in balance with Central Bank 24,661,905 12,757,326 24,661,905 12,757,326
Net increase in placement with Bank (615,290) (5,338,406) (515,464) (4,299,108)
Net increase in loans and advances to banks 6,161,818 2,395,502 6,149,219 2,779,738
Net increase in loans and advances to customers (336,996,380) (52,970,696) (332,496,596) (55,118,898)
Net increase/(decrease) in financial investments FVOCI (79,237) 2,157,584 (351,284) 1,947,004
Change in other assets 7,860,240 (1,009,858) 7,367,169 (2,477,366)
Net increase in investment in associate – – – (531,085)
Total (266,101,032) (67,264,515) (267,691,303) (70,841,952)
Certain reclassifications have been made to the prior year’s Financial Statements to enhance comparability with the current year’s Financial
Statements. As a result, certain line items have been amended in the Income Statement and the related Notes to the Financial Statements.
The People’s Bank Group Risk Management Framework forms the The Board Executive Credit Committee (BECC) functions as the
foundation for managing risk, and sets out the Group’s risk universe, steering committee holding overall responsibility for implementing
risk parameters and assigns Executive, and Board responsibility for the Bank’s Credit Risk Management Framework. The Credit Control
the Management and oversight of risk and ensures that growth and Unit operates independently from the business lines and drives
risk considerations are appropriately balanced. Policies and systems all credit risk management efforts. The primary responsibility for
associated with the Risk Management Framework are reviewed on a managing credit risk lies with the business units, complemented by
regular basis to factorise the adversities in market conditions, and the independent review by the Credit Control Unit.
changes in Group’s activities.
Key aspects of the Group’s credit policies include delegated
The framework is based on the three lines of defence model approval authority at multiple levels, a comprehensive credit
specifically, the Business Line, Risk Management and Internal Audit. appraisal mechanism which includes well-defined credit criteria
and prudential limits in line with the defined risk appetite among
others. Borrowers are assessed primarily on repayment capacity and
internally developed risk rating scorecards and a 9-point rating scale Stage 1: 12-month ECL
is used for evaluating credit worthiness. Tailor-made scorecards have For exposures where there has not been a significant increase in
been developed for assessing corporates, SME borrowers financial credit risk since initial recognition, and that are not credit impaired
institutions as well as retail borrowers. The internal credit rating upon origination, the portion of the lifetime ECL associated with the
models in place represent diverse risk factors and are able to predict probability of default events occurring within the next 12 months
the probability of default and loss given default. is recognised. Bank determines 12-month ECL from customers
whom are not significantly credit deteriorated (i.e. less than or
equal to 30 days past due).
Impairment assessment
Definition of default and cure Stage 2: Lifetime ECL – not credit impaired
The Bank considers a financial instrument defaulted and therefore For exposures where there has been a significant increase in credit
Stage 3 (credit-impaired) for ECL calculations in all cases when the risk since initial recognition but are not credit impaired, a lifetime
borrower becomes 90 days past or three instalments in arrears due ECL (i.e. reflecting the remaining lifetime of the financial asset) is
on its contractual payments or when classified as non-performing recognized. In consistent with the policies of the bank, significant
loan (NPL) as per directions issued by the Central Bank of Sri Lanka deterioration is measured with the rebuttable presumption of 30 days
(CBSL). The Bank considers treasury and interbank balances defaulted, past due other than the credit facilities categorised under Stage 3,
and takes immediate action when the required intraday payments in line with the requirements of the standard. Bank also has
are not settled by the close of business as outlined in the individual considered all restructured loans, which are restructured up to two
agreements. times, other than credit facilities/exposures upgraded from a higher
stage to a lower stage under stage 2 as per the guidance issued by the
Central Bank.
Individually-assessed allowances
The Bank determines the allowances appropriate for each individually Stage 3: Lifetime ECL – credit impaired
significant loan or advance on an individual basis if there is any Exposures are assessed as credit impaired when one or more events
objective evidence of a potential loss. The Bank has currently set that have a detrimental impact on the estimated future cash flows
individually significant threshold at Rupees twenty-five million, of that asset have occurred. For exposures that have become credit
and every customer having an aggregate exposure above that limit impaired, a lifetime ECL is recognised, and interest revenue is
is individually assessed for objective evidence of incurred loss. calculated by applying the effective interest rate to the amortised
Items considered when determining allowance amounts include cost (net of provision) rather than the gross carrying amount. Bank
the sustainability of the counterparty’s business plan, its ability to determines credit facilities where contractual payment of customer is
improve performance if it is in a financial difficulty, projected receipts more than 90 days past due subject to the rebuttable presumption as
and the expected payout should bankruptcy arise, the availability stated in SLFRS 9 together with all NPL classifications as per Central
of other financial support, the realisable value of collateral, and the Bank classification, all restructured loans which are restructured
timing of the expected cash flows. more than twice and all rescheduled loans other than credit facilities/
exposures upgraded from a higher stage to a lower stage.
Collectively-assessed allowances
2020 2019
Allowances are assessed collectively for losses on loans and
LKR ‘000 LKR ‘000
receivables that are not individually significant, and for individually
significant loans and receivables that have been assessed individually Individually significant impaired loans
and found not to be impaired. The collective assessment is made for Amortised cost 97,183,340 89,827,326
groups of assets with similar risk characteristics, in order to determine
Allowances for impairment (58,223,125) (52,764,618)
whether provision should be made due to incurred loss events for
which there is objective evidence, but the effects of which are not yet Carrying amount as at 31 December 38,960,215 38,779,126
evident in the individual loans assessments. The collective assessment
Collectively assessed loans
takes account of data from the loan portfolio (such as loan types,
industry codes, and level of arrears). The Bank applies a three-stage Amortised cost 1,626,282,602 1,293,963,808
approach to measure expected credit losses (ECLs). Financial assets Allowances for impairment (29,663,474) (23,565,758)
migrate through the following three stages based on the change in
Carrying amount as at 31 December 1,596,619,128 1,271,371,011
credit risk since initial recognition.
PD estimation process increase their exposure. For non-revolving facilities, already utilised
amount plus any accrued interest over same is considered as EAD.
Probability of Default is the estimate of the likelihood of default over
a given time horizon. PD estimation for loans and advances to other
customers under SLFRS 9 is largely based on the Days Past Due (DPD) Loss given default (LGD)
of the customers. Accordingly, exposures are categorised among five
Loss given default (LGD) is the magnitude of likely loss on exposure,
groups based on the DPD as follows:
and is expressed as a percentage of exposure. These LGD rates
zzZero days past due take into account the expected EAD in comparison to the amount
zz1-30 days past due expected to be recovered or realised from any collateral held.The
Bank segments its retail lending products into smaller homogeneous
zz31-60 days past due
portfolios, based on key characteristics that are relevant to the
zz61-90 days past due estimation of future cash flows. The applied data is based on
zzAbove 90 days past due historically collected loss data, and involves a wider set of transaction
characteristics (e.g., product type, wider range of collateral types) as
well as borrower characteristics.
The exposure at default (EAD)
The exposure at default (EAD) represents the gross carrying amount For each year, closed contracts which have crossed the Above 90 days
of the financial instruments subject to the impairment calculation, at-least once in their lifetime are considered. LGD will factor in all
addressing both the client’s ability to increase its exposure while cash flows subsequent to the point of default until the full settlement
approaching default, and potential early repayments too. The Bank of the loan. Virtually closed contracts are also added to this data
uses Credit Conversion Factors (CCF) which explains the historical set. Virtually closed contracts are active loans which have been long
utilisation of defaulted facilities at the time of default to calculate outstanding. A contract is determined to be virtually closed at the
the EAD of revolving facilities in which customers have the ability to point the Bank determines that the cash flows have dried up.
Scenario A – Actual
Base case – 30%, Upside – 30%, Downside – 40% 29,663,474
Scenario B
Base case – 25%, Upside – 25%, Downside – 50% 29,879,364
Change in impairment allowance – Increase/(Decrease) – (B – A) 215,890
As at 31 December 2020
Scenario A – Actual
Base case – 30%, Upside – 30%, Downside – 40% 29,663,474
Scenario B
Base case – 35%, Upside – 35%, Downside – 30% 29,447,078
Change in impairment allowance – Increase/(Decrease) – (B – A) (216,396)
Scenario A – Actual
Base case – 30%, Upside – 30%, Downside – 40% 22,592,797
Scenario B
Base case – 25%, Upside – 25%, Downside – 50% 22,670,256
Change in impairment allowance – Increase/(Decrease) – (B – A) 77,459
As at 31 December 2019
Scenario A – Actual
Base case – 30%, Upside – 30%, Downside – 40% 22,592,797
Scenario B
Base case – 35%, Upside – 35%, Downside – 30% 22,516,929
Change in impairment allowance – Increase/(Decrease) – (B – A) (75,868)
The tables show the values of key forward looking economic variables/assumptions used in each of the economic scenarios for the ECL calculations.
As at 31 December 2020
Key drivers ECL scenario Assigned 2021 2022 2023 2024 2025 2026 2027
probabilities
GDP growth Best case 30% 4.73% 5.17% 6.29% 6.93% 7.11% 7.11% 7.11%
Base case 30% 3.00% 3.94% 4.45% 4.94% 4.96% 4.96% 4.96%
Worst case 40% -2.91% -1.39% 0.02% 1.33% 0.02% 0.02% 0.02%
Inflation (YoY average) Best case 30% 4.28% 4.39% 4.50% 4.60% 4.36% 4.36% 4.36%
Base case 30% 5.39% 5.86% 6.18% 6.01% 6.02% 6.02% 6.02%
Worst case 40% 6.56% 6.71% 6.86% 7.02% 7.09% 7.09% 7.09%
Interest rate (PLR) Best case 30% 6.24% 6.15% 5.99% 5.78% 5.58% 5.58% 5.58%
Base case 30% 6.56% 6.63% 6.63% 6.57% 6.50% 6.50% 6.50%
Worst case 40% 6.91% 7.17% 7.38% 7.51% 7.55% 7.55% 7.55%
Exchange rate – (US$:LKR) Best case 30% 189.5 193.6 197.7 201.9 206.3 210.7 215.2
Base case 30% 197.1 209.3 222.3 236.1 250.8 266.4 282.9
Worst case 40% 221.5 264.4 315.6 350.0 350.0 350.0 350.0
Unemployment Best case 30% 5.37% 5.36% 5.34% 5.31% 5.28% 5.28% 5.28%
(Percentage of labour force) Base case 30% 5.42% 5.43% 5.43% 5.42% 5.41% 5.41% 5.41%
Worst case 40% 5.46% 5.50% 5.52% 5.54% 5.54% 5.54% 5.54%
As at 31 December 2019
Key drivers ECL scenario Assigned 2020 2021 2022 2023 2024 2025 2026
probabilities
GDP growth Best Case 30% 2.74% 2.77% 2.81% 2.85% 2.86% 2.86% 2.86%
Base Case 30% 2.70% 2.70% 2.70% 2.70% 2.70% 2.70% 2.70%
Worst Case 40% 2.64% 2.63% 2.61% 2.60% 2.57% 2.57% 2.57%
Inflation (YoY average) Best Case 30% 4.13% 4.09% 4.05% 4.00% 3.91% 3.91% 3.91%
Base Case 30% 4.30% 4.30% 4.30% 4.30% 4.30% 4.30% 4.30%
Worst Case 40% 4.42% 4.52% 4.63% 4.74% 4.79% 4.79% 4.79%
Interest rate (PLR) Best Case 30% 9.49% 9.37% 9.25% 9.13% 8.86% 8.86% 8.86%
Base Case 30% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Worst Case 40% 10.36% 10.68% 11.01% 11.35% 11.50% 11.50% 11.50%
Exchange rate – (US$:LKR) Best Case 30% 182.05 182.47 182.89 183.31 183.73 184.15 184.57
Base Case 30% 192.27 203.52 215.44 228.05 241.41 250.00 250.00
Worst Case 40% 217.16 250.00 250.00 250.00 250.00 250.00 250.00
Unemployment Best Case 30% 4.87% 4.86% 4.86% 4.85% 4.83% 4.83% 4.83%
(Percentage of labour force) Base Case 30% 4.90% 4.90% 4.90% 4.90% 4.90% 4.90% 4.90%
Worst Case 40% 4.92% 4.94% 4.95% 4.97% 4.98% 4.98% 4.98%
The following tables show the maximum exposure and net exposure (net of fair value of any collaterals held) to credit risk by class of
financial asset:
An analysis of risk concentration by industry for the financial assets is given below:
Financial assets
Cash and cash equivalents – – 71,464,946 –
Balances with Central Bank of Sri Lanka 14,196,565 – – –
Placement with banks – – 10,335,455 –
Derivative financial instruments – – 97,645 –
Financial assets – at fair value through profit and loss 46,162,420 108,662 – 36,488
Loans and receivables to banks 12,460,363 – 11,251,412 –
Loans and receivables to other customers 844,801,266 126,401,392 21,370,178 12,115,009
Debt instruments measured at amortised cost 357,380,322 – – –
Equity instruments at fair value through OCI – 439,750 1,079,652 –
Debt instruments at fair value through OCI 318 2,376,803 255,110 –
Total 1,275,001,254 129,326,607 115,854,398 12,151,497
Financial assets
Cash and cash equivalents – – 50,704,066 –
Balances with Central Bank of Sri Lanka 38,858,470 – – –
Placement with banks – – 9,690,715 –
Derivative financial instruments – – 90,560 –
Financial assets – at fair value through profit and loss 79,323,896 82,295 – 31,841
Loans and receivables to banks 11,392,437 – 18,420,595 –
Loans and receivables to other customers 615,415,952 136,416,301 17,020,127 13,183,637
Debt instruments measured at amortised cost 280,935,892 – – –
Equity instruments at fair value through OCI – 488,611 1,188,729 –
Debt instruments at fair value through OCI 318 2,497,319 75,430 –
Total 1,025,926,965 139,484,526 97,190,222 13,215,478
– – – – – – (3,704) 71,461,242
– – – – – – – 14,196,565
– – – – – – (31,033) 10,304,422
– – – – – – – 97,645
40,418 – – – 77,038 – – 46,425,027
– – – – – – (101,674) 23,610,101
30,517,974 23,975,431 350,728,450 272,989,118 12,087,949 28,479,174 (87,886,599) 1,635,579,343
– – – – – – (272,621) 357,107,701
271 – 16 – 418,089 – – 1,937,778
– – – – – – – 2,632,231
30,558,663 23,975,431 350,728,467 272,989,118 12,583,076 28,479,174 (88,295,631) 2,163,352,055
– – – – – – (908) 50,703,158
– – – – – – – 38,858,470
– – – – – – (1,583) 9,689,132
– – – – – – – 90,560
17,511 – 17 – 59,008 – – 79,514,568
– – – – – – (41,113) 29,771,919
31,341,508 22,725,151 272,133,405 242,128,454 11,441,125 21,985,472 (73,640,997) 1,310,150,137
– – – – – – – 280,935,892
– – – – 320,556 – – 1,997,896
– – – – – – – 2,573,067
31,359,019 22,725,151 272,133,422 242,128,454 11,820,689 21,985,472 (73,684,601) 1,804,284,799
Stress testing
i. Increase in NPL
Min Reqt – 2020 Actual as at Minor Moderate Major
31 December 2020
Revised CAR %
Tier I capital as a percentage of RWA (%) 8.50 9.53 9.40 9.28 9.02
Total capital as a percentage of RWA (%) 12.50 15.47 15.35 15.22 14.97
*Calculation is based on CBSL loan loss provisioning.
Revised CAR%
Tier I capital as a percentage of RWA (%) 8.50 9.53 9.22 9.04 8.92
Total capital as a percentage of RWA (%) 12.50 15.47 15.17 14.99 14.86
*Calculation is based on CBSL loan loss provisioning.
EFFECT OF INCREASE IN NPLs ON CAR EFFECT OF NEGATIVE SHIFTS IN NPL CATEGORIES ON CAR
% %
17.5 17.5
14.0 14.0
10.5 10.5
7.0 7.0
3.5 3.5
0 0
Actual Minor Moderate Major Actual Minor Moderate Major
shock shock shock shock shock shock
Tier I CAR 8.5% – Regulatory Tier I CAR Tier I CAR 8.5% – Regulatory Tier I CAR
Total CAR 12.5% – Regulatory Total CAR Total CAR 12.5% – Regulatory Total CAR
Revised CAR%
Tier I capital as a percentage of RWA (%) 8.50 9.53 9.41 9.29 9.16
Total capital as a percentage of RWA (%) 12.50 15.47 15.35 15.23 15.11
*Calculation is based on CBSL loan loss provisioning.
% %
17.5 12.5
14.0 10.0
10.5 7.5
7.0 5.0
3.5 2.5
0 0
Actual Minor Moderate Major 2016 2017 2018 2019 2020
shock shock shock
Non-performing ratio NPLs Overdue ratio
Tier I CAR 8.5% – Regulatory Tier I CAR
Total CAR 12.5% – Regulatory Total CAR
Liquidity risk
Liquidity risk is the potential loss of earnings/erosion of capital arising from the inability to meet the Bank’s contractual financial obligations as
and when they fall due. Banks are vulnerable to liquidity and solvency problems resulting from asset and liability mismatches. The management
of such risks are a vital element of the Bank’s operations.
The Bank’s Liquidity Risk Management Framework aims to assess/quantify and ensure the availability of funds required to meet Bank’s contractual
obligations at appropriate times. This is ensured under both normal and stressed conditions. The Bank’s Treasury is entrusted to manage the
liquidity risk and the Risk Management Department ensures same by monitoring the adherence to set limits/regulatory ratios etc; and performing
other related analysis. ALCO on the other hand, oversee the management of same by continuously monitoring the Bank’s liquidity position to
ensure that compliance to internal targets as well as regulatory requirements is met.
The Bank measures liquidity through the dual approaches of flow and stock. The flow method measures liquidity through analysing the mismatch
between inflows and outflows in various time bands based on the maturity of assets and liabilities. The stock method measures liquidity in terms
of a set of key ratios such as loans to deposit ratio, commitments ratio (unutilised portion of overdrafts/unutilised inter-bank lines), statutory
liquid asset ratio and cumulative mismatches.
Up to 3 months 3-12 months 1-3 years 3-5 years Over 5 years 2020 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Assets
Cash and cash equivalents 71,461,242 – – – – 71,461,242 50,703,158
Balances with Central Bank
of Sri Lanka 3,624,344 5,110,281 1,478,038 1,284,532 2,699,370 14,196,565 38,858,470
Placements with banks 10,304,422 – – – – 10,304,422 9,689,132
Derivative with banks 97,645 – – – – 97,645 90,560
Other financial assets held for trading 1,445,543 44,979,484 – – – 46,425,027 79,514,568
Loans and receivables to banks 4,367,843 5,885,529 9,702,760 2,913,842 740,127 23,610,101 29,771,919
Loans and receivables to
other customers 302,580,377 407,717,414 139,502,324 201,855,139 583,924,089 1,635,579,343 1,310,150,137
Debt instrument measured
at amortised cost 66,057,123 89,049,915 30,455,121 171,545,542 – 357,107,701 280,935,892
Financial investments –
Available for sale 570,009 – – – – 4,570,009 4,570,963
Investments in subsidiaries – – – – 1,937,881 1,937,881 1,205,414
Goodwill and intangible assets – – – – 702,181 702,181 700,875
Property, plant and equipment – – – – 38,405,839 38,405,839 34,310,028
Investment properties – – – – 1,261,338 1,261,338 1,263,045
Other assets 20,038,910 2,160,123 577,855 1,245,224 437,259 24,459,371 31,642,057
Total assets 2020 484,547,457 554,902,746 181,716,098 378,844,280 630,108,084 2,230,118,665 –
Total assets 2019 402,518,479 497,201,748 200,324,145 303,301,399 470,060,448 – 1,873,406,218
Total
Up to 3 months 3-12 months 1-3 years 3-5 years Over 5 years 2020 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Liabilities
Due to banks 155,097,044 9,392,579 – – – 164,489,623 207,484,446
Derivative with banks 976,486 – – – – 976,486 59,748
Due to other customers 468,495,900 660,573,424 191,056,549 166,043,289 348,930,295 1,835,099,456 1,491,385,937
Other borrowings 34,286,090 2,076,344 – – – 36,362,434 17,324,960
Current tax liabilities 6,608,202 – – – – 6,608,202 3,775,283
Deferred tax liabilities – – – – – – 1,071,797
Other liabilities 22,056,428 15,382,891 3,159,914 441,937 – 41,041,170 34,625,117
Subordinated term debts – – 12,535,684 27,522,722 3,499,290 43,557,696 22,714,490
Stated capital – – – – 12,201,998 12,201,998 12,201,998
Statutory reserve fund – – – – 8,024,521 8,024,521 7,315,774
Other reserve – – – – 32,859,237 32,859,237 27,368,542
Retained earnings – – – – 48,897,842 48,897,842 48,078,126
Total liabilities 2020 687,520,150 687,425,237 206,752,147 194,007,947 454,413,183 2,230,118,665 –
Total liabilities 2019 1,061,271,106 671,225,577 16,134,710 6,024,097 118,750,727 – 1,873,406,218
NET 2020 (202,972,693) (132,522,492) (25,036,049) 184,836,333 175,694,901 – –
NET 2019 (658,752,627) (174,023,829) 184,189,435 297,277,301 351,309,720 – –
Total equity and liabilities 2020 484,547,457 554,902,746 181,716,098 378,844,280 630,108,084 2,230,118,665 –
Total equity and liabilities 2019 402,518,479 497,201,748 200,324,145 303,301,399 470,060,448 – 1,873,406,218
Maturity profile of the undiscounted cash flows of financial liabilities as at 31 December 2020
Financial liabilities On demand Less than 3-12 months 1-5 years Over 5 years Total
3 months
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
Maturity profile of the undiscounted cash flows of financial liabilities as at 31 December 2019
Financial liabilities On demand Less than 3-12 months 1-5 years Over 5 years Total
3 months
LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000 LKR ’000
EFFECT OF HOT MONEY/RETAIL FUND WITHDRAWALS VaR model used by the Bank is based on a 99% confidence level and
ON GAP IN UP TO ONE MONTH TIME BAND assumes a 1 day holding period. The VaR model used is based mainly
on variance co variance method.
%
105 The Bank uses VaR limits to monitor and manage the market risk,
specifically foreign exchange and interest rate. The overall structure
70 of VaR limits is subject to review and approval by BIRMC. VaR limits
are allocated to trading portfolios. VaR is measured and monitored
35
against it’s limits at least daily by the Treasury Middle Office, which is
0 attached to the Risk Management Department.
-35
Interest rate risk
-70 Interest rate risk is the potential loss to earnings and capital resulting
Unstressed Scenario I Scenario II Scenario III
from the Bank’s exposure to interest rate sensitive assets. The market
position
value of such assets fluctuates in line with changes in interest rates
Assets Liability Gap as a percentage of Liability and credit spreads. The Bank’s exposure to interest rate risk arises
from its lending portfolio, trading securities and deposit liabilities.
Market risk Techniques used to measure interest rate risk include Duration Gap
Market risk is potential losses arising from changes in earnings, market Analysis, VaR and Earnings at Risk. Rate sensitive assets and liabilities
or future cash flows of a portfolio of financial instruments resultant are mapped into time buckets based on their maturity period, in order
from adverse movements in market variables such as interest rates, to ascertain the duration gap and overall exposure to interest rate risk.
share prices, foreign exchange rates and bond and commodity
prices. Most of the Bank’s operations are exposed to at least one or Stress test for interest rate risk
more elements of market risk. The market risk stems primarily from
the interest rate risk of its trading and non-trading books and from Revised CAR Q1 Q2 Q3 Q4
% % % %
exposure to gold prices due to its pawning portfolio.
Tier 1 CAR 9.16 9.41 8.94 8.22
At Board level, exposure to market risk is monitored by the BIRMC
Total CAR 12.84 13.26 15.30 14.16
which is also responsible for providing recommendations to the
Board on the Bank’s Market Risk Management Framework, policies
and risk appetite limits. The ALCO is vested with the responsibility EFFECT OF 1% INTEREST RATE
of implementing the Market Risk Management Framework at an INCREASE ON CAR
executive level and ensures that the Bank’s market risk exposures
are within the defined risk appetite. Policies governing the Bank’s %
market risk include Treasury policy and policy on stress testing. These 17.5
frameworks collectively provide guidance on the systems, procedures,
tools and techniques for the identification, assessment, mitigation, 14.0
monitoring and reporting on all market related risks. The policies are
reviewed and updated regularly in view of emerging market risks. 10.5
The management of market risk is entrusted to the Bank’s Treasury,
7.0
and Risk Management ensures the same through its monitoring and
analysis. 3.5
The principal tool used to measure and control market risk exposure 0
Q1 Q2 Q3 Q4
within the Bank’s trading portfolio is Value at Risk (VaR). The VaR of a
trading portfolio is the estimated loss that will arise on the portfolio Tier I CAR 8.5% – Regulatory Tier I CAR
over a specified period of time (holding period) from an adverse Total CAR 12.5% – Regulatory Total CAR
market movement with a specified probability (confidence level). The
Revised CAR%
Tier 1 capital as a percentage of RWA (%) 8.50 9.53 9.51 9.49 9.48
Total capital as a percentage of RWA (%) 12.50 15.47 15.46 15.44 15.42
Equity risk
Equity risk arises from exposures to changes in fluctuations in the value of equity investments held by the Bank. This arises primarily from its fair
value through profit or loss and fair value through OCI investment portfolio and excludes strategic investments by the Bank in subsidiaries.
The BIBC (Board Investment Banking Committee) is responsible for formulating all investment-related policies and ensuring that the Bank’s
investment risks are managed in line with its defined risk appetite. The Board approved Investment Banking Policy Manual clearly articulates the
procedures, tools, and techniques for managing equity risk as well as volume, and stop loss limits.
Revised CAR%
Tier 1 capital as a percentage of RWA (%) 8.50 9.53 9.52 9.51 9.50
Total capital as a percentage of RWA (%) 12.50 15.47 15.47 15.46 15.45
% %
17.5 17.5
14.0 14.0
10.5 10.5
7.0 7.0
3.5 3.5
0 0
Actual Minor Moderate Major Actual Minor Moderate Major
shock shock shock shock shock shock
Tier I CAR 8.5% – Regulatory Tier I CAR Tier I CAR 8.5% – Regulatory Tier I CAR
Total CAR 12.5% – Regulatory Total CAR Total CAR 12.5% – Regulatory Total CAR
The details of the computation of the capital and the ratios as at 31 December 2019 and 31 December 2020 are given below for the Bank and Group:
Bank
Assets
Claims on Government of Sri Lanka and Central Bank of Sri Lanka 978,894,070 745,914,337 0-20 50,625,977 30,730,516
Claims on foreign sovereigns and their central banks – – 0-150 – –
Claims on Public Sector Entities (PSEs) 131,502,915 136,949,488 20-150 78,134,064 78,781,418
Claims on official entities and Multilateral Development Banks (MDBs) – – 0-150 – –
Claims on banks 28,412,420 12,713,010 20-150 11,701,070 4,079,104
Claims on financial institutions 4,454,573 10,321,902 20-150 2,708,497 5,369,002
Claims on corporates 140,063,928 147,419,649 20-150 134,025,919 132,150,592
Retail claims 442,421,693 352,798,975 75-100 348,331,918 283,212,677
Claims secured by gold 174,814,192 162,582,929 20-100 17,229 31,908
Claims secured by residential property 62,191,796 62,007,332 50-100 31,095,898 31,003,666
Claims secured by commercial real estate – – 100 – –
Non-performing assets (NPAs) 25,147,190 23,361,467 50-150 30,241,399 28,482,214
Higher risk categories 816,645 793,542 150-250 2,041,612 1,983,856
Cash items 46,023,864 49,252,071 0-20 47,522 123,116
Property, plant and equipment 39,667,178 35,573,076 100 39,667,178 35,573,076
Other assets 15,017,158 19,154,128 100 15,017,158 19,154,128
Total 2,089,427,622 1,758,841,906 743,655,441 650,675,273
Above risk weighted assets include the credit equivalent of off-balance Sheet exposures illustrated below:
Off-balance sheet exposures
Bank
Instruments
Direct credit substitutes 20,991,955 21,526,462 100 20,991,955 21,526,462
Transaction-related contingencies 41,129,235 51,641,885 50 20,564,618 25,820,942
Short-term self-liquidating trade-related contingencies 99,190,395 154,356,301 20 19,838,079 30,871,260
Sale and repurchase agreements and assets sale with recourse
where the credit risk remains with the Bank – – 100 – –
Obligations under an ongoing underwriting agreement – – 50 – –
Other commitments with an original maturity of up to one year or
which can be unconditionally cancelled at any time – – 0-20 – –
Commitments with an original maturity up to one year 65,568,079 35,011,384 20 13,113,616 7,002,277
Other commitments with an original maturity of
over one year – – 50 – –
Foreign exchange contracts 114,970,306 23,969,919 0-5 2,299,406 479,398
Interest rate contracts – – 0-3 – –
Total 341,849,969 286,505,951 76,807,673 85,700,340
Bank
2020 2019
LKR ‘000 LKR ‘000
Computation of capital
Common equity Tier I (CET1) capital 79,604,100 77,941,284
Computation of ratios
Total risk-weighted assets for credit risk 743,655,441 650,675,272
Common equity Tier I (CET1) capital ratio (Minimum requirement 7.0% – 2020, 8.0% – 2019) 9.53 10.68
Total Tier I capital (Tier I) (Minimum requirement 8.5% – 2020, 9.5% – 2019) 9.53 10.68
Total capital ratio (Minimum requirement 12.5% – 2020, 13.5% – 2019) 15.47 14.66
Group
Assets
Claims on Government of Sri Lanka and Central Bank of Sri Lanka 987,144,585 755,718,293 0-20 50,625,977 30,730,516
Claims on foreign sovereigns and their central banks – – 0-150 – –
Claims on Public Sector Entities (PSEs) 131,502,915 136,949,488 20-150 78,134,064 78,781,418
Claims on official entities and Multilateral Development Banks (MDBs) – – 0-150 – –
Claims on banks 31,938,007 14,987,176 20-150 12,417,381 4,895,450
Claims on financial institutions 5,122,660 10,365,254 20-150 3,119,119 6,400,135
Claims on corporates 141,447,901 149,413,570 20-150 135,409,892 134,144,513
Retail claims 573,554,336 502,145,117 75-100 479,464,562 432,558,819
Claims secured by gold 174,814,192 162,582,929 20-100 17,229 31,908
Claims secured by residential property 62,191,796 62,007,332 50-100 31,095,898 31,003,666
Claims secured by commercial real estate – – 100 – –
Non-performing assets (NPAs) 34,666,518 25,862,953 50-150 39,760,727 30,983,701
Higher risk categories – – 150-250 – –
Cash items 46,874,558 50,032,260 0-20 47,522 123,116
Property, plant and equipment 49,359,365 45,003,651 100 49,359,365 45,003,651
Other assets 16,782,844 20,960,877 100 16,782,844 20,960,877
Total 2,255,399,677 1,936,028,901 896,234,579 815,617,770
Above risk-weighted assets include the credit equivalent of off-balance sheet exposures illustrated below:
Instruments
Direct credit substitutes 20,991,955 22,251,399 100 20,991,955 22,251,399
Transaction-related contingencies 41,129,235 51,641,885 50 20,564,618 25,820,942
Short-term self-liquidating trade-related contingencies 99,190,395 154,356,301 20 19,838,079 30,871,260
Sale and repurchase agreements and assets sale with
recourse where the credit risk remains with the Bank – – 100 – –
Obligations under an ongoing underwriting agreement – – 50 – –
Other commitments with an original maturity of up to one
year or which can be unconditionally cancelled at any time – – 0-20 – –
Commitments with an original maturity up to one year 72,487,943 41,356,304 20 14,497,589 8,271,261
Other commitments with an original maturity of
over one year – – 50 – –
Foreign exchange contracts 114,970,306 23,969,919 0-5 2,299,406 479,398
Interest rate contracts – – 0-3 – –
Total 348,769,833 293,575,808 78,191,646 87,694,261
Group
2020 2019
LKR ‘000 LKR ‘000
Computation of capital
Common Equity Tier I (CET 1) capital 109,596,440 106,246,759
Total Tier I capital 109,596,440 106,246,759
Total capital 160,292,747 136,303,475
Computation of ratios
Total risk-weighted assets for credit risk 896,234,579 815,617,770
Total risk-weighted assets for market risk 18,454,779 8,402,021
Total risk-weighted assets for operational risk 110,974,487 93,362,542
Total risk-weighted assets 1,025,663,845 917,382,333
Common Equity Tier I (CET1) capital ratio (Minimum requirement 7.0% – 2020, 8.0% – 2019) 10.69 11.58
Total Tier I capital (Tier I) (Minimum requirement 8.5% – 2020, 9.5% – 2019) 10.69 11.58
Total capital ratio (Minimum requirement 12.5% – 2020, 13.5% – 2019) 15.63 14.86
52.1. The COVID-19 pandemic, relief measures July 2021. Repayment period of the new loan shall be two years
undertaken to assist affected businesses and in general, however may vary based on the terms and conditions
agreed with the borrower. The Banks were allowed to recover
individuals and underlying expected loss interest at the original EIR during the moratorium period and
assessment(s) therefore did not recognise any modification loss on account of
the second phase of the Covid-19 moratorium.
Overview
The Coronavirus pandemic (“COVID-19”) caused a disruption to The granting of the moratorium is directly related to the cash flow
overall economic activity, not only locally but also globally, effecting difficulties generated by the occurrence of the Covid-19 pandemic.
most industries and sub sectors. It lead to travel restrictions, However, it did not lead to an automatic transfer of these credit
lockdowns of cities and countries and overall movement control in facilities into stage 2 or in to stage 3. A case-by-case analysis has
a manner previously unseen in our lifetime. Many are still subject to been conducted on the most significant exposures and only those
quarantine measures. In addition to the health risks, the economic exposures with increased credit risk has been moved to stages 2
implications were across the Board. Businesses dealing with lost or stage 3.
revenue and disrupted supply chains and many individuals dealing
with loss of jobs.
Significant assumptions and judgements
As a State Bank – People’s Bank undertook several measures to offer
Central Bank of Sri Lanka measures to assist relief to its customers to navigate the COVID-19 pandemic. Utilization
businesses and individuals during their time of need of a payment deferral programme does not, all else being equal,
CBSL undertook several measures to provide financial relief to automatically trigger a significant increase in credit risk.
those affected both individuals and businesses. This was in the form
of a debt moratorium extended through licensed banks/financial Exercise of credit judgement
institutions in the country and special working capital loans extended
The Bank has applied expert credit judgement, in the assessment
through highly concessionary rates of interest.
of underlying credit deterioration and migration of balances to
progressive stages. The Bank considers both quantitative and
Relief was extended primarily via the following circulars – amongst
qualitative information in the assessment of significant increases in
many other:
credit risk which includes, amongst other, a facility being 30 days past
1. Circular No. 5 of 2020 dated 27 March 2020 instructing banks to due. Utilisation of a payment deferral programme was not necessarily
offer a debt moratorium to COVID-19 affected segments of the considered an immediate trigger, in keeping with CA Sri Lanka and
economy. According to the above circular, banks were required to regulatory guidance, for an account to migrate to a progressive stage.
offer moratoriums of two months, three months, six months for
eligible borrowers under different qualifying criteria. As per the The measurement of expected credit losses for each stage and the
Circular No. 4 of 2020 and the subsequent communication issued assessment of significant increase in credit risk considers information
by the CBSL in this regard, banks were required to charge interest about past events and current conditions as well as reasonable and
at a reduced rate of 7% per annum during the moratorium period supportable projections of future events and economic conditions.
for equated monthly instalments (EMI) loans. The estimation and application of forward-looking information
requires significant judgement.
2. Circular No. 8 of 2020 dated 26 August 2020 and Circular
10 of 2020 dated 9 November 2020: The 2nd wave of the
COVID-19 outbreak in the country resulted in re-imposing the Significant increase in credit risk
travel restrictions, leading to disruption of economic activities.
The Bank uses as an exhaustive list in determining significant increase
Giving due consideration on the requests received from affected
in credit risk which includes, amongst other, those set out in Section
individuals and businesses, CBSL advised licensed banks, to
5.4 of Central Bank of Sri Lanka’s Circular No. 4 of 2018 dated
extend the debt moratorium for a further period of six months
31 December 2018.
commencing from 1 October 2020 to 31 March 2021. Licensed
banks shall convert the capital and interest falling due during the
moratorium period commencing from 1 October 2020 to 31 March
2021 into a term loan of which repayment shall commence from
SUPPLEMENTARY
REPORTS
330 / Income Statement USD
331 / Statement of Financial Position USD
332 / Ten Year Summary – Bank
333 / Ten Year Summary – Group
334 / Basel III – Market Discipline Disclosure
Requirement Under Pillar III
349 / External Assurance on Sustainability Report
351 / GRI Content Index “In accordance with Core” Criteria
355 / Glossary of Financial/Banking Terms
358 / Corporate Information
Bank Group
For the year ended 31 December 2020 2019* Change 2020 2019* Change
USD ’000 USD ’000 % USD ’000 USD ’000 %
Fee and commission income 35,781 40,448 -11.50 41,594 47,390 -12.20
Fee and commission expense (2,568) (2,353) 9.10 (2,568) (2,353) 9.10
Net fee and commission income 33,213 38,095 -12.80 39,027 45,037 -13.30
Net gain/(loss) from trading 13,778 15,004 -8.20 14,822 14,770 0.40
Other operating income (net) 10,384 16,300 -36.30 33,450 38,691 -13.50
*Certain comparative figures have been reclassified to conform to the current period presentation (Refer Note 51).
Exchange Rate: 1 USD was LKR 187.92 as at 31 December 2020 (LKR 181.38 as at 31 December 2019).
The Income Statement and Statement of Financial Position given on pages 330 and 331 are solely for the convenience of shareholders, investors and other
users of Financial Statements.
Bank Group
For the year ended 31 December 2020 2019* Change 2020 2019* Change
USD ’000 USD ’000 % USD ’000 USD ’000 %
Assets
Cash and cash equivalents 380,281 279,536 36.0 387,934 284,451 36.4
Balances with Central Bank of Sri Lanka 75,547 214,234 -64.7 75,547 214,234 -64.7
Placements with banks 54,835 53,418 2.7 74,027 73,851 0.2
Derivative financial instruments 520 499 4.1 520 499 4.1
Financial assets - at fair value through profit or loss 247,051 438,379 -43.6 280,596 443,293 -36.7
Financial assets - at amortised cost
Loans and advances to banks 125,641 164,138 -23.5 125,708 164,138 -23.4
Loans and advances to other customers 8,703,747 7,223,102 20.5 9,452,227 8,051,997 17.4
Debt instruments measured at amortised cost 1,900,351 1,548,852 22.7 1,947,142 1,602,903 21.5
Liabilities
Due to banks 875,333 1,143,900 -23.5 917,640 1,209,781 -24.1
Derivative financial instruments 5,196 329 1477.5 5,196 329 1477.5
Due to other customers 9,765,494 8,222,289 18.8 10,298,148 8,759,919 17.6
Other borrowings 193,503 95,516 102.6 193,503 89,807 115.5
Current tax liabilities 35,166 20,814 69.0 40,119 33,784 18.7
Net deferred tax liabilities – 5,909 -100.0 4,286 15,555 -72.4
Other liabilities 218,401 190,895 14.4 272,841 251,457 8.5
Subordinated term debts 231,793 125,229 85.1 302,624 223,358 35.5
Total liabilities 11,324,885 9,804,881 15.5 12,034,357 10,583,990 13.7
Equity
Stated capital/assigned capital 64,933 67,272 -3.5 64,933 67,272 -3.5
Statutory reserve fund 42,703 40,333 5.9 42,703 40,333 5.9
Other reserves 174,861 150,888 15.9 185,847 161,522 15.1
Retained earnings 260,210 265,064 -1.8 384,578 387,797 -0.8
Total shareholders’ equity 542,706 523,557 3.7 678,060 656,924 3.2
Non-controlling interests – – 62,219 59,877 3.9
Total equity 542,706 523,557 3.7 740,279 716,801 3.3
Total equity and liabilities 11,867,592 10,328,438 14.9 12,774,636 11,300,791 13.0
Contingent liabilities and commitments 2,607,213 2,006,391 29.9 2,648,460 2,045,313 29.5
Exchange Rate: 1 USD was LKR 187.92 as at 31 December 2020 (LKR 181.38 as at 31 December 2019).
The Income Statement and Statement of Financial Position given on pages 330 and 331 are solely for the convenience of shareholders, investors and other users of
Financial Statements.
(LKR Mn.) 2020 2019* 2018 2017 2016 2015 2014 2013 2012 2011
Assets
Cash and short-term funds 85,658 89,562 109,496 134,647 127,058 74,112 80,940 59,143 67,814 52,510
Investments 443,955 405,688 299,160 269,691 250,240 304,519 290,486 226,075 175,491 129,977
Loans and receivables (Net) 1,635,579 1,310,150 1,265,667 1,012,643 890,528 768,515 627,209 619,830 611,414 461,656
Property, plant and equipment and right-
of-use assets 38,406 34,310 26,260 25,048 17,224 16,304 14,947 14,706 8,235 7,523
Other assets 26,521 33,697 34,120 25,071 16,999 13,146 13,186 10,832 10,343 10,412
Total assets 2,230,119 1,873,406 1,734,703 1,467,099 1,302,048 1,176,595 1,026,769 930,585 873,296 662,077
Liabilities
Customer deposits 1,835,099 1,491,386 1,422,961 1,244,003 1,077,812 899,238 793,342 762,249 683,951 550,226
Borrowing from banks and others 200,852 224,809 173,607 105,057 134,109 192,083 157,198 102,148 135,150 64,053
Other liabilities 48,626 39,532 34,391 28,051 17,947 20,747 17,727 14,619 14,991 14,709
Subordinated term debts 43,558 22,714 12,534 12,532 12,532 15,033 15,033 15,033 10,000 10,000
Total liabilities 2,128,135 1,778,442 1,643,493 1,389,642 1,242,400 1,127,100 983,299 894,048 844,092 638,988
Total equity 101,984 94,964 91,210 77,457 59,649 49,495 43,470 36,537 29,205 23,089
Total equity and liabilities 2,230,119 1,873,406 1,734,703 1,467,099 1,302,048 1,176,595 1,026,769 930,585 873,296 662,077
Contingent liabilities and commitments 489,939 363,926 402,762 303,344 226,430 181,533 182,573 197,119 207,021 190,732
Operating results
Gross income 190,982 199,729 181,284 160,835 122,114 103,649 96,377 120,456 94,777 68,298
Total operating income 71,715 73,795 69,886 61,856 55,060 54,743 41,894 46,530 43,310 36,431
Total operating expenses (Including VAT) 38,922 45,640 42,855 34,594 32,999 31,483 26,093 22,509 24,186 20,421
Profit before tax 21,227 19,666 24,406 25,913 20,814 19,520 17,231 10,304 15,249 15,600
Income tax 7,052 6,741 7,312 7,663 5,819 6,922 3,012 2,816 4,355 5,154
Profit after tax 14,175 12,926 17,095 18,250 14,995 12,598 14,219 7,488 10,894 10,446
Performance indicators
Number of employees (permanent) 7,692 7,836 8,093 8,454 8,249 8,368 8,156 7,409 7,823 8,249
Per employee
(LKR ’000)
Deposits 238,572 190,325 175,826 147,150 130,660 107,462 97,271 102,881 87,428 66,702
Loans and receivables 212,634 167,196 156,390 119,783 107,956 91,840 76,902 83,659 78,156 55,965
Gross earnings 24,829 25,489 22,400 19,025 14,804 12,386 11,817 16,258 12,115 8,280
Profit after tax 1,843 1,650 2,112 2,159 1,818 1,505 1,743 1,011 1,393 1,266
Per share
(LKR)
Profit after tax 14,175 12,926 17,095 18,250 14,995 12,598 14,219 7,488 10,894 10,446
Total assets 2,230,119 1,873,406 1,734,703 1,467,099 1,302,048 1,176,595 1,026,769 930,585 873,296 662,077
Equity 101,984 94,964 91,210 77,457 59,649 49,495 43,470 36,537 29,205 23,089
Return on assets % (before tax) 1.0 1.1 1.5 1.9 1.7 1.8 1.8 1.1 2.0 2.6
Return on equity % 14.4 13.9 20.3 26.6 27.5 27.1 35.5 22.8 41.7 49.2
Cost/income ratio % 54.3 61.8 61.3 55.9 59.9 57.5 62.3 48.4 55.8 56.1
Capital adequacy ratio (CAR) % 15.5 14.7 14.5 13.5 12.1 12.6 14.3 15.0 14.0 14.8
Non-performing loan (NPL) ratio (Gross) % 3.2 3.3 2.5 1.9 1.9 2.4 3.2 5.3 2.8 3.4
Fitch rating AA- AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA
*Certain comparative figures have been adjusted to conform to the current period presentation.
(LKR Mn.) 2020 2019* 2018 2017 2016 2015 2014 2013 2012 2011
Assets
Cash and short-term funds 87,096 90,453 110,451 135,364 129,458 76,840 83,003 61,174 69,515 54,583
Investments 461,373 419,190 311,581 280,357 258,049 311,141 300,366 229,280 176,138 130,333
Loans and receivables (Net) 1,776,231 1,460,498 1,415,928 1,143,767 1,013,921 869,781 722,099 710,074 690,197 534,875
Property, plant and equipment and right-
of-use assets 48,102 43,744 35,434 33,758 23,441 22,696 19,364 18,184 10,923 9,933
Other assets 27,766 35,889 35,147 25,833 19,528 14,279 14,425 12,760 14,087 14,665
Total assets 2,400,567 2,049,775 1,908,540 1,619,079 1,444,398 1,294,737 1,139,258 1,031,473 960,860 744,389
Liabilities
Customer deposits 1,935,194 1,588,903 1,495,326 1,305,626 1,119,753 932,906 829,019 789,225 708,897 572,722
Borrowing 208,802 235,724 207,330 134,263 172,419 225,795 193,825 140,865 174,728 101,028
Other liabilities 60,592 54,619 49,285 40,299 30,509 32,328 27,469 23,153 21,486 21,906
Subordinated term debts 56,868 40,513 33,085 32,448 36,526 30,907 24,883 23,141 10,000 10,000
Total liabilities 2,261,457 1,919,759 1,785,027 1,512,635 1,359,207 1,221,937 1,075,196 976,384 915,111 705,656
Total equity 139,111 130,016 123,513 106,443 85,191 72,801 64,062 55,088 45,749 38,734
Total equity and liabilities 2,400,567 2,049,775 1,908,540 1,619,079 1,444,398 1,294,737 1,139,258 1,031,473 960,860 744,389
Contingent liabilities and commitments 497,690 370,986 409,575 304,102 226,442 181,545 182,597 197,376 208,570 191,045
Operating results
Gross income 223,898 238,219 214,664 188,854 144,750 123,831 118,641 139,957 109,974 79,900
Total operating income 90,836 96,475 89,843 77,518 68,429 67,635 54,308 55,576 49,618 42,163
Total operating expenses (Including VAT) 48,623 59,135 54,554 44,600 41,633 38,346 32,779 27,264 27,304 22,669
Profit before tax 24,648 25,652 31,162 29,868 25,433 24,121 21,628 13,412 17,671 18,843
Income tax 8,557 9,474 9,669 9,358 7,477 9,053 4,674 4,248 5,775 6,319
Profit after tax 16,090 16,178 21,492 20,511 17,956 15,068 16,953 9,164 11,897 12,524
Performance indicators
Number of employees 11,051 11,237 11,394 11,396 10,471 10,682 10,331 9,384 8,905 9,723
Per employee
(LKR ’000)
Deposits 175,115 141,399 131,238 114,569 106,939 87,334 80,246 84,103 79,607 58,904
Loans and receivables 160,730 129,972 124,270 100,366 96,831 81,425 69,896 75,669 77,507 55,011
Gross earnings 20,260 21,199 18,840 16,572 13,824 11,592 11,484 14,914 12,350 8,218
Profit after tax 1,456 1,440 1,886 1,800 1,715 1,411 1,641 977 1,336 1,288
Return on assets % (before tax) 1.1 1.3 1.8 1.9 1.9 2.0 2.0 1.3 2.1 2.8
Return on equity % 12.0 12.8 18.7 21.4 22.7 22.0 28.5 18.2 28.2 38.6
Cost/income ratio % 53.5 61.3 60.7 57.5 60.8 56.7 60.4 49.1 55.0 53.8
Capital adequacy ratio (CAR) % 15.6 14.9 14.5 13.7 13.0 13.8 14.9 15.9 15.7 15.7
Non-performing loan (NPL) ratio (Gross) % 3.9 3.7 2.7 2.0 1.9 2.4 3.2 4.9 2.6 2.9
*Certain comparative figures have been adjusted to conform to the current period presentation.
Capital Adequacy
Capital adequacy is one of the key financial indicators which illustrate the soundness and the stability of a bank. This measures banks ability to
withstand in an unexpected loss scenarios during various activities carried out by the Bank.
Basle committee on Bank supervision (BCBS) has implemented set of stringent measures of capital, liquidity and funding reforms. Accordingly
BASEL III accord was issued in December 2010 and it has come into force and effect in Sri Lanka on 1 July 2017 based on the Central Bank
Direction 01 of 2016 on capital requirement under BASEL III for licensed commercial banks. This replaces Basel II reforms which were in force and
effect in Sri Lanka since 1 January 2008 onwards.
Commencing from 1 July 2017, with the amendment thereto under Direction 11 of 2019 on Domestically Systemically Important Banks (D-SIBS)
dated 20 December 2019; Bank has to maintain the Capital in three tiers as mentioned below:
Due to extraordinary measures taken by CBSL due to COVID-19 outbreak, minimum capital requirements are revised to support the economic
stability and growth of the country. Accordingly minimum capital requirement of the bank are as follows:
Minimum requirement
Common Equity Tier I (CET I) is mainly comprised of equity capital, other capital and retained earnings. CET I is the highest quality capital and
effective capital in absorbing losses.
Additional Tier I (AT 1) capital includes capital instruments other than the instruments included in CET I capital.
Total capital is comprised of Tier I plus other qualifying capital instruments (i.e. such as subordinated debentures subject to regulatory deductions,
revaluation reserves on property, plant and equipment with a cap of up to 50% and general loan loss provision)
BASLE III has introduced new capital buffers and all banks are required to hold additional capital buffers over and above the minimum CET I and
Total Capital Adequacy levels stipulated above.
Three Pillars introduced by BASEL II is continued to be applied in the BASEL III framework is mentioned below:
zzPillar I – Minimum capital requirements
zzPillar II – supervisory review process
zzPillar III – Market discipline
Accordingly disclosures required to be published as per the Central Bank Direction 1 of 2016 are set out below:
As at 31 As at 31 As at 31 As at 31
December 2020 December 2019 December 2020 December 2019
Regulatory liquidity
Statutory liquid assets – Bank
Domestic Banking Unit (LKR ’000) 463,930,635 446,351,080 NA NA
Off-Shore Banking Unit (USD ’000) 1,165,688 504,025 NA NA
As at 31 As at 31 As at 31 As at 31
December 2020 December 2019 December 2020 December 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000
Common Equity Tier I (CET I) capital after adjustments 79,604,100 77,941,284 109,596,440 106,246,759
Common Equity Tier I (CET I) capital 83,062,102 80,750,618 111,748,610 109,238,461
Equity/Assigned capital 12,201,998 12,201,998 12,201,998 12,201,998
Reserve fund 8,024,521 7,315,774 8,024,521 7,315,774
Public retained earning/(Accumulated retained losses) 49,012,539 48,307,520 72,526,668 70,855,815
Publish accumulated other comprehensive income (OCI) 248,715 224,861 252,196 224,861
General and other disclosed reserves 13,574,329 12,700,465 13,574,329 12,700,465
Unpublished current year's profit/Loss and gain reflected in OCI – – – –
Ordinary shares issued by consolidated banking and financial subsidiaries of
the Bank and held by third parties – – 5,168,898 5,939,548
Total adjustments to CET I capital 3,458,002 2,809,334 2,152,170 2,991,702
Goodwill (Net) – – – –
Deferred tax asset (Net) 695,424 – – –
Intangible assets (Net) 702,181 700,875 1,007,730 1,090,714
Other (Investment in the capital of subsidiaries and other financial institution) 2,060,397 1,412,952 1,144,440 1,205,481
Defined benefit asset – 695,507 – 695,507
Additional Tier I (AT i) capital after adjustments – – – –
Additional Tier I (AT i) capital – – – –
Qualifying additional Tier I capital instruments – – – –
Instrument issued by consolidated banking and financial subsidiaries of the
Bank and held by third parties – – – –
Total adjustments to AT I Capital – – – –
Investment in own shares – – – –
Other (Specify) – – – –
Tier II capital after adjustments 49,667,691 29,030,921 50,696,308 30,056,716
Tier II capital 49,667,691 29,030,921 50,696,308 30,056,716
Qulifing Tier II capital instruments 33,796,850 15,625,000 33,796,850 15,625,000
Revaluation gains 7,025,956 7,025,956 7,025,956 7,025,956
Loan loss provisions 8,844,885 6,379,965 9,873,502 7,405,760
Instrument issued by consolidated banking and financial subsidiaries of the
Bank and held by third parties
Total adjustment to Tier II – – – –
Investment in own shares – – – –
Other (Specify) – – – –
CET capital 79,604,100 77,941,284 109,596,440 106,246,759
Total Tier I capital 79,604,100 77,941,284 109,596,440 106,246,759
Total capital 129,271,791 106,972,205 160,292,747 136,303,475
Bank Group
As at 31 As at 31 As at 31 As at 31
December 2020 December 2019 December 2020 December 2019
As at 31 As at 31 As at 31 As at 31
December 2020 December 2019 December 2020 December 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000
Total stock of high-quality liquid assets (HQLA) 435,978,801 434,450,384 410,810,268 409,287,666
Level 1 assets 432,921,968 432,921,968 407,765,063 407,765,063
Level 2A assets – – – –
Level 2B assets 3,056,833 1,528,416 3,045,205 1,522,603
Total cash outflows 2,225,493,314 539,890,881 1,851,660,335 381,470,849
Deposits 1,281,030,229 128,103,023 1,034,947,511 103,494,751
Unsecured wholesale funding 594,546,403 307,322,741 486,161,256 240,769,480
Secured funding transactions 14,436,972 – 11,508,468 –
Undrawn portion of committed (irrevocable) facilities and
other contingent funding obligations 267,432,676 36,418,083 306,238,279 24,401,797
Additional requirements 68,047,034 68,047,034 12,804,821 12,804,821
Total cash inflows 218,809,926 150,423,304 135,011,332 71,650,766
Maturing secured lending transactions backed by collateral 23,992,082 12,740,676 29,841,508 11,415,369
Committed facilities – – – –
Other inflows by counterparty which are maturing within 30 days 116,278,613 71,457,687 95,505,309 52,853,956
Operational deposits 12,314,289 – 2,283,074 –
Other cash inflows 66,224,941 66,224,941 7,381,441 7,381,441
Liquidity coverage ratio (%) (Stock of high quality liquid assets/
Total net cash outflows over the next calendar days)* 100 111.55 132.10
Coupons/dividends
Fixed or floating dividend/
coupon Fixed rate Fixed rate Fixed rate Fixed rate Fixed rate Fixed rate Fixed rate
Coupon rate and any related
index 13.50% 13.00% 13.00% 12.00% 12.25% 9.50% 10.25%
Non-cumulative or
cumulative N/A N/A N/A N/A N/A N/A N/A
Convertible or
non-convertible
If convertible, conversion
trigger (s) Non-convertible Non-convertible Non-convertible Non-convertible Non-convertible Non-convertible Non-convertible
If convertible, fully or
partially N/A N/A N/A N/A N/A N/A N/A
If convertible, mandatory or
optional N/A N/A N/A N/A N/A N/A N/A
If convertible, conversion rate N/A N/A N/A N/A N/A N/A N/A
Template 06: Summary discussion on the adequacy/meeting current and future capital requirements
Overview
zzIn accordance with CBSL stipulations, the Bank carries out an annual Internal Capital Adequacy Assessment Process. The assessment covers a
five (5) year time horizon with the last carried out for 2019-2023
Material exposures
zzAt the end of 2020, close 50.2% of the Bank’s total loan book was composed of exposures to the State and Other State-Owned Enterprises.
State exposures mostly backed by sovereign undertaking(s) by way of either a Treasury guarantee/indemnity and/or another form of
Government assurance
zzLeaving aside such sovereign-backed exposures, the Bank’s single largest exposure to a non-sovereign does not account for over 2.0% of the
Initiatives taken to bolster regulatory capital during 2017, 2018, 2019 and 2020
zzDuring 2017, 2018, 2019 and 2020 – the Bank undertook several initiatives to bolster its regulatory capital and meet all requisite Basel III Risk
Control measures. From a Capital Adequacy/Solvency perspective, these included amongst other.
2017
a. Raise LKR 5.0 Bn. in New Capital from General Treasury, Ministry of Finance on 21 July 2017. This was first so received over the last eight (8)
years
b. Reduce its dividend payout, as measured as a function of post tax profit, to 28.6% during 2017 from 54.8% in 2016
c. Revalued all its land and buildings on 1 July 2017. This enabled the Bank recognise close to LKR 3.6 Bn. in Tier II capital with requisite
regulatory clearance
d. Ensured new facilities extended to State-Owned Enterprises were backed by the sovereign backed and, in case of other forms of Government
assurances, ensure they are as a general rule routed through the Monetary Board of the Central Bank of Sri Lanka for prior approval
e. Carry-out an interim profit certification for the six-month period ended 30 June 2017 in view of ensuring interim regulatory capital pressures
are managed in order to support loan book growth
f. Undertake efforts necessary to amend the People’s Bank Act to facilitate the issuance of Debentures to enable the Bank conform with Basel
rules. This process was once again revived with the assistance of the line of Ministry
As a result of all the above, during 2017 – the Bank successfully met all Basel III Risk Control measures without any exception or excuse, be
Capital Adequacy Ratio, Liquidity Coverage Ratio, Net Stable Funding and Leverage.
2018
a. The Bank endeavoured to further reduce its dividend payout ratio, as measured as a function of dividends over post tax profit, to 20.0% in
2018 from 28.6% in 2017.
b. Loan book growth was risk measured during 2018
c. Interim profit certifications were carried out for the six months period ended 30 June 2018 in view of ensuring interim regulatory capital
requirements were met
d. The process in relation to the People’s Bank Act amendment continued. This was key to long-term sustainable loan book growth
As a result of all the above, during 2018 – the Bank successfully met all Basel III Risk Control measures without any exception or excuse, be
Capital Adequacy Ratio, Liquidity Coverage Ratio, Net Stable Funding and Leverage.
2019
a. The Bank further reduced its dividend payout ratio to 18.7% in 2019 from 20.0% in 2018
b. Interim profit certifications were carried during the three months ended 31 March 2019, six months ended 30 June 2019 and the nine months
ended 30 September 2019 in view of managing/avoiding interim regulatory capital pressures
c. The People’s Bank Act amendments was finalised in September 2019
d. On 8 November 2019 – the Bank issued its first Basel III, Tier II compliant debenture for value LKR 10.0 Bn.
As a result of all the above, during 2019 – the Bank successfully met all Basel III Risk Control measures without any exception or excuse, be
Capital Adequacy Ratio, Liquidity Coverage Ratio, Net Stable Funding and Leverage.
2020
a. On 1 July 2020 – as originally planned – the Bank revalued all its land and buildings. This resulted in a Tier II benefit of close to LKR 2.3 Bn.
(Net of deferred tax) However, such benefit is likely to be recognised at 31 March 2021 once requisite regulatory clearance is received.
The next detailed revaluation is set to be carried out on 1 July 2023
b. On 27 July 2020 – the Bank issued LKR 20.0 Bn. in Basel III, Tier II debentures which was the single largest issuance for any Bank/Financial
Services Provider to date in the country
As a result of all the above, during 2020 – the Bank successfully met all Basel III Risk Control measures without any exception or excuse, be
Capital Adequacy Ratio, Liquidity Coverage Ratio, Net Stable Funding and Leverage.
2021 plan
zzThe Bank is in a constant and continuous process of undertaking measures reasonably necessary to bolster its regulatory capital levels
Template 07: Credit risk under standardised approach credit risk exposures and
credit risk mitigation (CRM) effects (Bank)
As at 31 December 2020 Exposures before CCF and CRM Exposures after CCF and CRM
Template 08 : Credit risk under standardised approach: Exposures by asset classes and
risk weights – Bank only
Description
Description Amount [LKR ‘000 as at 31 December 2020 (Post CCF and CRM)]
Risk weight 0% 20% 50% 75% 100% 150% >150% Total credit
exposures
Asset classes amount
Template 08 : Credit risk under standardised approach: Exposures by asset classes and
risk weights – Group only
Description
Description Amount [LKR ‘000 as at 31 December 2020 (Post CCF and CRM)]
Risk weight 0% 20% 50% 75% 100% 150% >150% Total credit
exposures
Asset classes amount
As at As at As at As at
31 December 2020 31 December 2019 31 December 2020 31 December 2019
LKR ’000 LKR ’000 LKR ’000 LKR ’000
(a) RWA for interest rate risk 165,101 419,575 165,101 419,575
General interest rate risk 161,553 408,483 161,553 408,483
(i) Net long or short position 161,553 408,483 161,553 408,483
(ii) Horizontal disalloawance – – – –
(iii) Vertical disallowance – – – –
(iv) Options – – – –
Specific interest rate risk 3,548 11,092 3,548 11,092
(b) RWA for equity 288,307 434,005 1,896,238 710,080
(i) General equity risk 155,657 227,615 960,097 366,019
(ii) Specific equity risk 132,650 206,390 936,141 344,061
(c) RWA for foreign exchange and gold 245,508 46,628 245,508 46,628
(d) Capital charge for market risk (a)+(b)+(c) 698,916 900,207 2,306,847 1,176,283
RWA for market risk (d ) *100/12.5 (2020) , *100 /13.5 (2019) 5,591,325 6,430,053 18,454,779 8,402,021
1st year 2nd year 3rd year Average 1st year 2nd year 3rd year Average
Template 11: Differences between accounting and regulatory scopes and mapping of
financial statement categories with regulatory risk categories – Bank only
Carrying value Carrying value Subject to Subject to Subject to
as reported in under scope credit risk market risk deduction
published of regulatory framework framework from capital
financial statements reporting
LKR ‘000 LKR ‘000 LKR ‘000 LKR ‘000 LKR ‘000
Size indicator
Section 1 – Total exposures
Total exposure measure 2,492,962,547
Interconnectedness indicators
Section 2 – Intra-financial system assets
a. Funds deposited with or lent to other financial institutions (including unused portion of committed lines extended) 27,082,621
(i) Funds deposited 22,117,519
(ii) Lending 4,965,102
b. Holdings of securities issued by other financial institutions 1,194,163
c. Net positive current exposure of securities financing transactions (SFTs) with other financial institutions 15,654
d. Over-the-counter (OTC) derivatives with other financial institutions that have a net positive mark to market value 246,030
Intra-financial system assets 28,538,467
LKR ’000
Complexity indicators
Section 9 – Notional amount of over-the-counter (OTC) derivatives
OTC derivatives 120,078,089
Management is also responsible for ensuring that staff involved with the
Our conclusions preparation and presentation of the description and Report are properly
Our conclusion has been formed on the basis of, and is subject to, the trained, information systems are properly updated and that any changes in
matters outlined in this report. We believe that the evidence we have reporting encompass all significant business units.
obtained is sufficient and appropriate to provide a basis for our conclusions.
5. Stakeholder engagement
102-40 List of stakeholder groups 49 to 51
102-41 Collective bargaining agreements 95
102-42 Identifying and selecting stakeholders 49 to 51
102-43 Approach to stakeholder engagement 49 to 51
102-44 Key topics and concerns raised 49 to 51
6. Reporting practice
102-45 Entities included in the consolidated financial statements 02
102-46 Defining report content and topic boundaries 02, 53 to 56
102-47 List of material topics 53 to 56
102-48 Restatements of information 02
102-49 Changes in reporting 02
102-50 Reporting period 02
102-51 Date of most recent report 01
102-52 Reporting cycle 02
102-53 Contract point for questions regarding the report 03
102-54 Claims of reporting in accordance with the GRI Standards 02
102-55 GRI content index 351 to 354
102-56 External assurance 03
GRI 103: Management approach
103-1 Explain the material topics and its boundary 53 to 56
103-2 The Management Approach and its components 53 to 56
103-3 Evaluation of the Management Approach 53 to 56
Social topics
GRI 401: Employment
401-1 New employee hires and employee turnover 89, 93 and 94
401-2 Benefits provided to full-time employee that are not provided to
temporary or part time employees 93
401-3 Parental leave 92
GRI 402: Labour/management relations
402-5 Minimum notice periods regarding operational changes 95
Amortised cost convertible to known amounts of cash and which are Derivative
The amount at which the financial asset or financial subject to an insignificant risk of changes in value. A financial instrument with all three of the following
liability is measured at initial recognition minus Certificate of deposit (CD) characteristics: (a) Its value changes in response to
principal repayments, plus or minus the cumulative A certificate issued by a Bank against funds deposited the change in a specified interest rate, security price,
amortisation using the effective interest method of with it that specifies the rate of interest payable and commodity price, foreign exchange rate, index of prices
any difference between that initial amount and the the date when the deposit will be repaid to the bearer. or rates, a credit rating or credit index, or other variable
maturity amount and minus any reduction (directly CDs are often negotiable. (sometimes called the “underlying”). (b) It requires no
or through the use of an allowance account) for initial net investment that is smaller than would be
impairment or uncollectability. Commercial paper required for other types. (c) It is settled at a future date.
Unsecured short-term Promissory Notes issued by
Associate company banks and creditworthy corporate borrowed. Dealing securities
A company other than a subsidiary in which a holding Securities acquired and held with the intention of
company has a participating interest and exercise a Commitments reselling them in the short-term.
significant influence over its operating and financial Credit facilities approved but not yet utilised by the
policies. clients as at the balance sheet date. Defined benefit plan
Retirement benefit plans under which amounts to
Available-for-sale financial asset Contingencies be paid as retirement benefits are determined by
Those financial assets that are designated as A condition or situation, the ultimate outcome of which, reference to a formula usually based on employees’
available-for-sale or are not classified as (a) loans and gain or loss, will be confirmed only on the occurrence remuneration and/or years of service.
receivables, (b) held-to-maturity investments, or (c) or non-occurrence of one or more uncertain future
financial assets at fair value through profit and loss. events. Disintermediation
The term often used to describe borrowers raising
B Corporate governance funds directly from the capital markets rather than
The process by which corporate entities are governed. from the banking sector. This is usually only undertaken
Bill discounted It is concerned with the way in which power is by borrowers with the strongest credit ratings.
A Promissory Note or Bill of Exchange that has been exercised over the management and direction of entity,
purchased for less than face value, the difference the supervision of executive actions and accountability Documentary bill
representing interest on the unexpired term of the bill. to owners and others. A Bill of Exchange that is accompanied by various
At maturity, the holder collects the face value of the bill documents, such as a Bill of Lading, an invoice and an
for its own account. Correspondent banks insurance policy.
A bank that acts as an agent for another bank. The
Bill of exchange correspondent Bank will generally provide a wide Documentary credit
A signed, written, unconditional order addressed by variety of banking services on behalf of the other A letter of credit that stipulates the documents that
one person (the drawer) directing another person banks in the region in which the correspondent bank must be produced in order for payment to be made.
(the drawee) to pay a specified sum of money to the is located.
order of a third person (the payee). The terms bill of Draft
exchange and draft are often used interchangeably. Cost income ratio A term generally synonymous with Bill of Exchange
Operating expenses as a percentage of net income. but sometimes used specifically in the context of inter-
C Bank bills. A banker’s draft, payable on demand, drawn
C Counterparty by or on behalf of a Bank.
The other party (including a bank) with whom a deal is
Call deposits or call money made or closed. E
Deposits or funds lent out which are repayable on
demand. Country risk Effective interest method
The credit risk associated with lending to borrowers The method of calculating the amortised cost of a
within a particular country, sometimes taken to include financial asset or a financial liability and of allocating
sovereign risk. the interest income or interest expense over the
relevant period.
CORPORATE INFORMATION
Name of the Bank Off-shore Banking Unit People’s Leasing & Finance PLC
People’s Bank People’s Bank, 11th Floor, No. 1161, Maradana Road, Borella,
Head Office Building, Colombo 08, Sri Lanka.
Legal Status No. 75, Tel: +9411 263 1631
A licensed commercial bank under the Sir Chittampalam A. Gardiner Mawatha, Fax: +9411 263 1000
Banking Act No. 30 of 1988 incorporated Colombo 02, Sri Lanka.
as a commercial bank by People’s Bank Act Tel: +9411 220 6745-7, +9411 220 6725 Subsubsidiaries of People’s Bank
No. 29 of 1961. Fax: +9411 247 0303 (Subsidiaries of People’s Leasing & Finance PLC)
Email: fcbu@peoplesbank.lk
SWIFT: PSBKLKLX People’s Insurance PLC
Head Office (Registered Office)
No. 7, Havelock Road,
No. 75, Sir Chittampalam
International Banking Division Colombo 05.
A. Gardiner Mawatha,
ACHC Building, Tel.: +9411 212 6126
Colombo 02, Sri Lanka.
No. 91, Fax: +9411 2126322
Tel.: +9411 232 7841 (6 Lines),
+9411 244 6316 (4 Lines), +9411 248 1481 Sir Chittampalam A. Gardiner Mawatha, People’s Leasing Property Development Ltd.
Email: info@peoplesbank.lk Colombo 02, Sri Lanka. No. 1161, Maradana Road, Borella,
Web: www.peoplesbank.lk Tel: +9411 243 7239-41, + 9411 232 0651-6 Colombo 08, Sri Lanka.
Swift: PSBKLKLX/PSBKLKLX 023 Fax: +9411 243 3139 Tel: +9411 263 1631
VAT Registration No. 409000037-7000 E-mail: cbdadmin@peoplesbank.lk Fax: +9411 263 1596
SWIFT: PSBKLKLX
People’s Leasing Fleet Management Ltd.
Auditors
Overseas Customer Services No. 1161, Maradana Road, Borella,
Auditor General
No. 59, D R Wijewardena Mawatha, Colombo 08, Sri Lanka.
Auditor General’s Department,
Colombo 10, Sri Lanka. Tel: +9411 230 4465
No. 306/72, Polduwa Road,
Tel.: +9411 233 2746, +9411 233 4278, Fax: +9411 230 4467
Battaramulla, Sri Lanka.
+9411 244 6409 People’s Micro-Commerce Ltd.
Email: fastcash@peoplesbank.lk, No. 1161, Maradana Road, Borella,
Acting Board Secretary
nrfc@peoplesbank.lk, Colombo 08, Sri Lanka.
Ms Shyama Wijekoon,
teletran@peoplesbank.lk Tel: +9411 289 0990
Attorney-at-Law
SWIFT: PSBKLKLX Fax: +9411 281 7653
PGEDBM (IBSL)
Email: shyamaw@peoplesbank.lk People’s Leasing Havelock Properties Ltd.
People’s Card Centre
2nd Floor, No. 1161, No. 1161, Maradana Road, Borella,
Corporate Banking Division Colombo 08, Sri Lanka.
Maradana Road, PLC Building,
People’s Bank, 11th Floor, Tel: +9411 263 1631
Colombo 08, Sri Lanka.
Head Office Building, Fax: +9411 263 1596
Tel: +9411 249 0490
No. 75,
Fax: +9411 216 9029 Lankan Alliance Finance Limited
Sir Chittampalam A. Gardiner Mawatha,
Email: card@peoplesbank.lk Level 10,
Colombo 02, Sri Lanka.
Tel: +9411 232 4716, + 9411 244 6316-9, Laila Tower,
Subsidiaries of People’s Bank No. 8, South Gulshan Avenue,
+9411 248 1481
Fax: +9411 232 9575, +9411 244 6410 People’s Travels (Pvt) Ltd. Dhaka, 1212, Bangladesh
Email: cbdunit1@peoplesbank.lk, No. 59, D R Wijewardena Mawatha, Tel: +8802 984 0411-12
Colombo 10, Sri Lanka.
Tel.: +9411 247 0190, +9411 247 8385,
+9411 239 6296
Fax: +9411 243 4530
Email: ptravel@peoplesbank.lk
Web: www.peoplestravels.com
NOTES
Notes