OUR STAKEHOLDERS - Sampath Bank PLC

JUST ASK

OUR STAKEHOLDERS

ANNUAL REPORT 2014FINANCIAL, SOCIAL AND ENVIRONMENTAL PERFORMANCE

At Sampath Bank, we’re very proud of the many ways in which we create value for everyone we work with; through our innovative banking products and services, our principled business practices and ethical approach and the prudent and far-sighted strategies that have driven our trajectory of growth for over 27 years.

a comprehensive analysis of how we generate real

levels, for the thousands of stakeholders we serve.

But you don’t have to take our word for it.

Just ask our stakeholders.

JUST ASK

OUR STAKEHOLDERS

READ THIS REPORT ONLINE

http://www.sampath.lk/images/annual_reports/ar2014.pdf

Content

3 7

Board of Directors 10Corporate Management 16Chief Managers 21Senior Managers 24Vision & Values 28

29 30

Highlights 32Awards and Accolades for the Year 36

38 40

42

Integrated Management Discussion and Analysis 50

Stakeholder Value Creation Blueprint 56 Getting to Know Our Stakeholders and Their Expectations 57 Stakeholder Engagement 58 Stakeholder Strategies 61

Stakeholders Customers 62 Employees 70 84 Society 85 Environment 99 Shareholders 109

Business Pillars 111 113 116 119 121 123 125 127 Corporate Banking: Corporate Credit 129 Corporate Banking: Commercial Credit 131 132 Corporate Banking: Development Banking - MSME Development 134 136 138 139 140 Corporate Finance 141 Treasury 142 144

Support Services 145 Call Centre Operation 148 149

Subsidiaries 150 151 152 153

154 160

Correspondent Banks and Exchange Companies 162 168

Stewardship178204

Corporate Governance 206252256257259262264265267268

Financial Information Financial Calendar 271

272

283

285

286287

289290291292

Statement of Cash Flow 293 Statement of Changes in Equity 295

297

Supplementary Information422423424425

Value Addition 426 Ten Years at a Glance 427 Quarterly Statistics 428 Capital Adequacy 430

436446447

Glossary of Financial and Banking Terms 448 Abbreviations 455

457463465

Stakeholder Feedback Form 467

3

aspects of our business and forms part of a comprehensive suite of

for the year 2014.

Report Profile

SCOPE AND BOUNDARY

subsidiaries for the period 1st January 2014 to 31st December 2014. This report demonstrates the Bank’s commitment to adopt a competent reporting framework that would allow a true representation of the activities

has been prepared in full compliance with all mandatory

banking industry.

transparent disclosure channel that seeks to clarify the Bank’s actions vis-à-vis various stakeholder

environmental and social performance for the reporting period.

A special section has also been incorporated to highlight the Bank’s strategic focus and management approach in relation to all key stakeholders, moreover, material aspects deemed relevant to each stakeholder cluster have been evaluated to establish their relevance to the stakeholder alongside the potential impact on

documented account of this process.

To record how well the Bank has performed with regard

G4 guidelines for sustainability reporting and is prepared in accordance with the “Comprehensive” application level.

unique to the banking business.

and service innovations. This template has been used

to its intended recipients in a manner that would convey meaningful change to the community and society as a whole.

performance for the year has been summarised in the

the directives laid out under the Customer Charter issued

with global best practices for sustainability reporting, the report also carries voluntary disclosures on the following;

OECD guidelines for Multinational Enterprises

G4 - 14, 15, 28, 30, 32

4 SAMPATH BANK PLCANNUAL REPORT 2014Financial, Social and Environmental Performance

Report Profile

MATERIALITY ASSESSMENT

impact of each area. Thereby, evaluating the degree to

stakeholders but also the degree to which it is relevant

and determining materiality, we observe each aspect in the light of the management ethos pertaining to the particular stakeholder group. Accordingly, a number of quantitative and qualitative tools are used to obtain a deeper understanding of the large volume of information. Materiality is then measured using the following aspects.

No Aspect BoundarySustainability

Sampath Bank

Sustainability

Stakeholders

Economic

1 Sampath Bank High High

2 Sampath Bank High Medium

3 Sampath Bank / Community

High High

4 Supplier High Medium

Environmental

5 Materials Sampath Bank High

6 Energy Sampath Bank High High

7 Water Sampath Bank High High

8 Biodiversity Sampath Bank High High

9 Emissions Sampath Bank High High

10 Community Medium High


12 Compliance - Environmental Sampath Bank High High

13 Transport Community Medium Medium

14 Overall Sampath Bank High High

15 Supplier Environment Assessment Suppliers Medium Medium

16 Environment Grievance Mechanisms Sampath Bank Medium Medium

Social - Labour Practices and Decent Work

17 Employment Sampath Bank High Medium

18 Employee High High

19 Occupational Health and Safety Employee High High

20 Training and Education Employee High High

21 Diversity and Equal Opportunity Sampath Bank High Medium


23 Supplier Medium Medium

24 Employee High Medium

Human Rights



27 Freedom of Association & Collective Bargaining

Employee High Medium


G4 - 18, 19, 20, 21

5

H

M

M H

Sus

tain

abili

ty S

igni

fica

nce

to

Sam

path

Ban

k

Sustainability Significance to Stakeholders

2, 4, 17, 21, 22,

24, 25, 26, 27, 33 46

40, 44

31, 41

13, 15, 16, 23,

38, 4310

532

1, 3, 6, 7, 8, 9, 11, 12, 14, 18, 19, 20, 28, 29, 30, 34, 35, 36, 37, 39,

42, 45


Sampath Bank

Sustainability

Stakeholders



31 Sampath Bank

32 Sampath Bank Medium



Society

35 Community High High

36 Anti-Corruption Sampath Bank High High


38 Anti-Competitive Behaviour Sampath Bank Medium Medium

39 Compliance - Society Sampath Bank High High

40 Supplier Medium

41 Grievance Mechanism for impact on Society

Sampath Bank

Product Responsibility

42 Customer Health and Safety Customer High High

43 Sampath Bank Medium Medium

44 Marketing Communications Sampath Bank Medium


46 Supplier High

H

M

High

Medium


Report Profile

A Snapshot of Our Progress Towards Sustainability Reporting

Year GRI Application Level Declaration StatusExternal

Assurance Provided

2011 Self-declared Yes

2012 Self-declared Yes

2013 - Yes

2014 - Yes

ASSURANCETo determine the credibility of our reporting framework

that Messrs Ernst and Young have no involvement or

interest in the scope of activities conducted by Sampath

independent assurance report for our sustainability

comprehensive assurance report issued by Messrs Ernst and Young.

G4-29, 33

Information Source

Compliance Department

ServicesMarketing DepartmentCorporate Credit DepartmentCommercial Credit DepartmentCorporate Finance DepartmentDevelopment Banking UnitForeign Currency Banking UnitTrade Services DepartmentElectronic Banking UnitData Warehouse UnitCard CentreCall Centre All Branches

Marketing DepartmentDevelopment Banking Department

All Branches / Departments

Development Banking UnitOperations DepartmentMarketing Department

Finance Department

Operations Department

Bank’s triple bottom line performance for the reporting period, information has been sought out from the following sources:

7

Corporate Profile

December 2014.

South Asia in 1997.

the prestigious, global Business Magazine "The Euromoney", for the second consecutive year. The Bank has also been adjudged both the Best Commercial

operate with a fully computerised database and related technologies in 1987.

terms of total assets, since 2009. The Bank now operates 220 branches and

G4 - 9


Corporate Profile

BOARD OF DIRECTORS OF SAMPATH BANK PLC

pages 10 to 15.

SUBSIDIARY COMPANIES OF THE BANKDetails of Subsidiaries as of 31st December 2014 are tabulated below.

Subsidiary Principal ActivitiesOwnership as at 31st

December 2014

Siyapatha Finance PLC 100.00%

Names of Board of Directors

Chairman

Mr M A Abeynaike Deputy Chairman

Mr S G Wijesinha Director

Director

Dr H S D Soysa Director

Director

Director

Director


December 2014

Sampath Centre Ltd 97.14%


Chairman

Mr S G Wijesinha Director

Director

Mr Wije Dambawinne Director


December 2014

S C Securities (Pvt) Ltd Share Broking 100.00%


Mr D J Gunarathne Chairman

CEO / Director

Dr S Kelegama Director

Mr Deshal de Mel Director

Director

Director

9


December 2014

Sampath Information Technology Solutions Ltd Hardware

100.00%


Chairman

Mr D J Gunaratne Director

Director

Director

MEMBERSHIP OF ASSOCIATIONS

Name of the Association Membership Status

Member

Member

Member & Treasurer

Member

Member

Member

Member

Member

Member

Member

Member

The Ceylon Chamber of Commerce

Member

Member

Member

Member

Member

Clearing Association of Bankers Member

Member

G4-16, 17


Board of Directors

Mr Sanjiva Senanayake (Senior Independent Director)

Mr Dhammika Perera (Chairman)

Mr Channa Palansuriya (Deputy Chairman)

Mr Deepal Sooriyaarachchi

Mr Ranil Pathirana

Mr Deshal De Mel

Mr Ranjith Samaranayake

Mrs Dhara Wijayatilake

Mrs Saumya Amarasekera

11

Mr S Sudarshan (Group Company Secretary)

Mr Aravinda Perera (Managing Director)

Prof Malik Ranasinghe

Miss Annika Senanayake


MR DHAMMIKA PERERASkills & Experience: quintessential business leader, with interests in a variety of key industries including Hydropower Generation, Manufacturing, Hospitality, Entertainment, Banking and Finance. He enriches the Board with over 25 years of experience in building formidable businesses through unmatched strategic foresight.

Appointed to the Board: 1st August 2007. Appointed as

Membership of Board Sub Committees: Chairman of

Current appointments:

Former appointments: Chairman and Director General,

MR ARAVINDA PERERASkills & Experience: Counts over 30 years in the Banking

Management Accountants, UK; Chartered Engineer and

from the University of Sri Jayewardenepura; Bachelor of Science degree in Engineering from the University of Moratuwa.

Appointed to the Board:Executive Director and appointed as Managing Director

Membership of Board Sub Committees: Member

Board of Directors

Board Treasury Committee

Current Appointments: Managing Director Sampath

Colombo Stock Exchange.

Former Appointments: Deputy Managing Director, Chief

roles spanning a career of 27 years at Sampath Bank

Manager and Service Engineer at Ceylon Tobacco

MR CHANNA PALANSURIYASkills & Experience: Over 30 years of vast experience in the Apparel sector by heading Orit Group of Companies and continuous leadership given to other companies in

Government Administration by being a Board Member

category in 2012.

Appointed to the Board: Executive Director and appointed as Deputy Chairman on 26th January 2012.

Membership of Board Sub Committees: Chairman of

Board Credit Committee.

Current Appointments: Deputy Chairman Sampath

Managing Director of Orit Group comprising of Orit

Committee Member of Joint Apparel Association Forum

Exporters Association and Executive Committee Member

13

Former Appointments:

Exporters’ Association 200gfp during 2006-2008,

2005 to January 2015.

MR SANJIVA SENANAYAKESkills & Experience: Extensive local and overseas

institutions and as an independent consultant.

Appointed to the Board: 1st January 2012 as

Membership of Board Sub Committees: Chairman of Board Treasury Committee, Member of the Board Audit

Current Appointments:


Brunei, various positions including Treasurer and Head of

MR DEEPAL SOORIYAARACHCHISkills & Experience: Counts over 30 years experience

Development & Strategy with extensive experience

Marketer. Holds an MBA from the University of Sri

development consultant and Author.

Appointed to the Board: 5th August 2010 as an

Membership of Board Sub Committees: Chairman

Marketing Committee. Member of Board Audit Committee


Member of Council, University of Moratuwa, Consulting


Marketing.

PROF MALIK RANASINGHESkills & Experience: Extensive governance experience

Vancouver, Canada in Civil Engineering as a Canadian Commonwealth Scholar; published extensively on

Excellence Award for 2012 for the Most Outstanding

the Award for Outstanding Contribution to Education 2012 at World Education Congress and the Education

Awards, Singapore.

Appointed to the Board: 30th August 2011 as an

Membership of Board Sub Committees: Chairman of Board Credit Committee, Member of Board Audit

Management Committee


Former Appointments: Vice-Chancellor of the University of Moratuwa, Chairman of the Committee of Vice Chancellors

Association of Commonwealth Universities, Fellow of the


MRS DHARA WIJAYATILAKESkills & Experience:

Secretary to a Cabinet Ministry.

Appointed to the Board: 30th August 2011 as

Membership of Board Sub Committees: Chairperson of

Committee


Former Appointments: Secretary to the Ministry of

MISS ANNIKA SENANAYAKESkills & Experience: Bachelor of Arts in Management

media & broadcast, automobiles, aviation, warehousing, food & beverage processing and packaging.

Appointed to the Board: 1st January 2012 as an

Membership of Board Sub Committees: Chairperson of

Committee, Member of Board Marketing Committee,

Committee


Former Appointments :

Board of Directors

MR DESHAL DE MELSkills & Experience: Master of Science degree in

of Economics, Bachelor of Arts degree with Honours

University of Oxford.

Appointed to the Board: Executive Director

Membership of Board Sub Committees: Member of

Committee and Board Marketing Committee,


Committee of the Ceylon Chamber of Commerce


MR RANIL PATHIRANASkills & Experience:

Bachelor of Commerce degree from the University of Sri Jayawardenapura.

Appointed to the Board: Executive Director

Membership of Board Sub Committees: Chairman of Board Audit Committee, Member of Board Strategic



15

MRS SAUMYA AMARASEKERASkills & Experience: Counts over 27 years in active legal

services sector clients and has specialised in local and international arbitrations.

Appointed to the Board: 1st June 2012 as an

Membership of Board Sub Committees: Chairperson


Former Appointments: Member of Supreme Court Complex Board of Management

MR RANJITH SAMARANAYAKESkills & Experience: Extensive experience as Head

Appointed to the Board: 1st January 2009 as an Executive Director.

Membership of Board Sub Committees: Member

Committee and Board Treasury Committee


Former Appointments: Senior Deputy General Manager,


1 Mr Aravinda Perera Managing Director

2 Mr Ranjith Samaranayake

3 Mr Nanda Fernando Senior Deputy General Manager

4 Mr Saman Herath

Branch Credit

5 Mr Wije Dambawinne Deputy General Manager - Treasury

6 Mr Tharaka Ranwala Deputy General Manager - Marketing & Business

Development

Corporate Management

17

7 Mr Aruna Jayasekera

8 Mr Ajantha de Vas Gunasekara Deputy General Manager - Finance

9 Mrs Hiranthi De Silva Deputy General Manager - Corporate Credit

10 Mr Dinusha Ihalalanda Deputy General Manager - Operations



11 Mr S Sudarshan Group Company Secretary

12 Mr Amanda Abeyweera Assistant General Manager - Administration

13 Mr Upali Dharmasiri

14 Mrs Nimali Abeyratne Assistant General Manager - Branch Banking

15 Mrs Shashi Jassim Assistant General Manager - Corporate Finance &

FCBU

16 Mr Pradeep Perera

19

17 Mrs Anuja Goonetilleke

18 Mrs Nirosha De Silva Assistant General Manager - Card Centre

19 Mr Manoj Akmeemana Assistant General Manager - Branch Banking

20 Mr Ajith Salgado


21 Mr Rajendra Ranasinghe

Development

22 Mr Pununuwan Wickremasekera

23 Mr Sanath Abhayaratne Assistant General Manager - Global Business

24 Mr Sanjaya Gunawardena

25 Mrs Ayodya Iddawela Perera Assistant General Manager - Corporate Credit


21

1 Mr Maheel Kuragama

2 Mr H B Keerthiratne

3 Mr Amal Kirihena

Chief Managers

4 Mr Thusitha Nakandala

5 Mr Prasantha De Silva Chief Dealer


6 Mr Dushyantha Dassanayake

7 Mr Asoka Manikgoda

8 Mr Ananda Wijitha

9 Mr Thilak Abeysinghe Head of Deposits

10 Mr Sisira Dabare

11 Mr Saman De Silva

12 Mrs Achala Wickramaratne

13 Mrs Chamila Bandara

Chief Managers

23

14 Mr Hemantha Marasinghe

15 Mr Lalith Weragoda


Senior Managers

1 Mr Vijith Peiris

2 Mr Priam Kasturiratna

3 Mr Prasada Gooneratne

4 Mr Chatura Rudesh

5 Mr Nalaka Gunawardena

6 Mr Prasanna Mullegama

7 Mr Janaka Jayasuriya

8 Mr Lasantha Senaratne Assistant Company Secretary

25

9 Mrs Kumari Jayasuriya

10 Mr Pasan Manukith Senior Manager - Systems Development

11 Mr Deepal De Silva

12 Mr Halin Hettigoda

13 Mr Gayan Ranaweera


Senior Managers

14 Ms Dulsiri Jayasinghe

15 Mrs Aloka Ekanayake

16 Mr Lakmal Munasinghe

17 Mr Sumie Mithrapala

18 Mr Senaka Hewavitharana

19 Mrs Champika Nanayakkara

20 Mr Kasun Ratnayake

21 Mr Shiran Kossinna

27

22 Mr Kasun Fernando

23 Mr Janaka Karunaratne

24 Mr Thushantha Sumithraarachchi

25 Mr Udara Suraweera

26 Mr Kusal De Silva


“The Growing Force

Our Values Create a learning culture that promotes individual

and organisational development as well as promoting innovation and value for customers.

Treat all internal and external customers the way we would like to be treated.

Encourage and promote teamwork in all aspects of behaviour.

Open to feedback and demonstrate an eagerness for personal development.

Monitor and demonstrate an impressive commitment to results.

Uncompromising ethical and professional standards of behaviour.

Vision & Values

Our Vision

29

Sustainability Philosophy

OUR SUSTAINABILITY VISIONFocus: 3600 Approach to SustainabilityOur sustainability vision is aligned to our strategic goal to

so, it has always been our aim to create competitive advantages that would spearhead the accomplishment

of corporate goals in sync with national priorities. As

a philanthropic focus to a more strategic approach. We have since embraced a 3600 approach towards sustainability to embody the promise of a sustainable future for all those associated with the business.

3600 Approach to

Sustainability

Sustainability Trends

Corporate Objectives

Strategic

Opportunities and Threats

Management

Sustainability Stewardship

Stakeholder

Framework


Our product portfolio is geared to support the needs of diverse customers. We provide customized solutions that complement our mainstream

empower our customers and help them map out their path to success.

Product Portfolio

Housing Loan Solutions

G4-4

Sampath App

31

41 OFF SITE ATMs

12 Super Branches (365 Days Banking)

1,565Interbank ATM Network 220

326Branches

ATMs

presents a range of delivery channels that aim to strike a balance between traditional values and advances in modern technology.


Highlights

FINANCIAL HIGHLIGHTS

BANK GROUP

2014 2013 Change 2014 2013 Change Rs Mn Rs Mn % Rs Mn Rs Mn %

Gross income 45,469 47,334Total operating income 22,863 20,757 10.15 24,143 21,606 11.74Operating expenses, impairment losses and

16,136 16,896 16,817 0.486,727 4,491 49.79 7,247 4,789 51.331,813 1,061 70.88 1,979 1,151 71.944,914 3,430 43.27 5,268 3,638 44.80

Assets & LiabilitiesDue to banks and other

341,946 302,429 13.07 341,655 302,261 13.03

impairment losses 302,370 260,040 16.28 310,504 266,548 16.49Total equity 30,912 28,418 8.78 34,604 31,760 8.95Total assets 432,026 382,042 13.08 442,790 391,304 13.16

Investor Information184.10 169.37 8.70 205.53 188.75 8.89236.30 171.90 37.46

29.27 20.45 43.13 31.35 21.67 44.6729.26 20.44 43.15 31.34 21.66 44.69

4.66 4.65 0.2211.00 8.00 37.50

2.66 2.56 3.911,847 1,343 37.53

39,677 28,843 37.56

Key Indicators

2.27 2.31

- before tax 1.69 1.29 31.01 1.78 1.34 32.841.23 0.98 25.51 1.29 1.02 26.47

16.35 12.88 26.94 15.68 12.47 25.74

53.95 51.23 5.31 53.24 51.22 3.94

60.67 55.54 9.24 59.86 55.53 7.8024.54

Capital adequacy ratios (%)-Tier 1 8.83 8.96-Tier 1 &11 13.62 13.72

LRA rating Fitch rating

33

SAMPATH APP DOWNLOADED

VISHWA LOGINS

SMS ALERTS REGISTRATIONS

CUSTOMERS

GROWTH IN NUMBER OF ATMS

GROWTH IN NUMBER OF BRANCHES

3.8%

11.4%

9.7%

19%

2014

2014

2014

2014

2014CUSTOMER COMPLAINTS SOLVED

100%2014

51.3%

58.5%

40.5%

23.5%

GROWTH IN CUSTOMER BASE

GROWTH IN NUMBER OF DEPOSITACCOUNTS

GROWTH IN NUMBER OF LOANACCOUNTS

9.3%

Sampath App


Highlights

EMPLOYEES

GROWTH IN WORK FORCE

EMPLOYEE RETENTION

TOTAL NUMBER OF TRAINING HOURS

NUMBER OF INDUSTRIAL DISPUTES

MALE : FEMALE RATIO

AVERAGE TRAINING HOURS PER EMPLOYEE PER ANNUM

8.5%

1.2

1.9 : 1

47.8

3.05 1.24

97%

191,261

NIl

2014

2014

2014

2014

2014

2014

2014 2014

2014

0.9 2013

2013

GOVERNMENT

TAXES PAID TO THE GOVERNMENT TAXES COLLECTED ON BEHALF OF THE GOVERNMENT

1.7 : 1

Bn BnRs Rs

35

ENVIRONMENT

COMMUNITY

CARBON FOOT PRINT FOR HEAD OFFICE

CARBON CONSCIOUS OFFICE

NUMBER OF TREES PLANTED DURING THE YEAR

2,753 3,486

NUMBER OF CSR PROJECTS EXECUTED

EDUCATION FOR DEVELOPMENT

ELECTRICITY CONSUMPTION PER

PAPER RECYCLING

SAVING REDUCE

WATER CONSUMPTION PER EMPLOYEE

EMPOWERMENT OF COMMUNITY

ETHICS & VALUES

27

2,812 35

161

27

1,197 2,237,534 211 281,628 123,564 70,407

m3

2014

2014

2014 2014

2014

2014

2014

ENVIRONMENT PROTECTION & CONSERVATION

622014

NUMBER OF FULLY GROWN

TREES

WATER LANDFILL OIL GREENHOUSE

GAS (Kg)

ENTREPRENEURS DEVELOPMENT

kWh

tCO2e

ELECTRICITY

(kWh)


Best Community Program Leadership Award 2014Sampath Bank was awarded with the prestigious Best

Excellence Awards - 2014 held in Singapore

Best Corporate Citizen Sustainability Awards 2014Sampath Bank won prestigious awards in Best Corporate Citizen Sustainability Awards 2014 - the country’s top most Corporate Social

organized by the Ceylon Chamber of Commerce.

National Best Quality ICT Awards 2014Sampath Bank won the Gold Award for Commercial Applications and a Bronze

Awards and Accolades for the Year

CA Sri Lanka Annual Report Awards 2014Bronze award in Overall Excellence

CA Sri Lanka Annual Report Awards 2014Gold award in the Banking

HR Excellence Awards 2014Sampath Bank, Human

Conference 2014

37

Silver Award at the BestWeb.LK 2014Sampath Bank Website has

in the Corporate, Banking,

Best Bank in Sri Lanka – 2014Sampath Bank has been selected

2014" by the prestigious Business Magazine "The Euromoney" for the second consecutive year

Sri Lanka’s Best Commercial and Retail Bank in 2014Sampath Bank is Sri

awarded at the World Finance Banking Awards.

Sumathi Awards 2014Sampath Bank Television Commercial on Sampath Sevana was awarded as the Best Television Commercial

at the Sumathi Awards 2014

CSR Brand of the Year Silver Award 2014Sampath Bank has won The Silver Award in the category

Ceremony


Macro-economic Review

THE GLOBAL PERSPECTIVE

economy expecting to expand only by 3.3% in 2014, as the pace of growth fell below forecasts for the second consecutive year. Although emerging economies did account for a major portion of this growth, a noticeable deceleration of economic activity in these economies meant a lower than expected result. On the other hand, a gradual recovery was observed among the advanced economies, which allowed these economies to register moderately improved growth rates for 2014. While this

cumulative down-side risks associated with low growth,

together with the sharp drop in oil prices, also impacted the global economic performance for the year.

SRI LANKA AT A GLANCE

economy is estimated to record 7.8% growth for the year 2014, more or less on par with the 7.3% registered

construction sector throughout the year, largely driven by the growing number of condominium projects and infrastructure development across the country. The leisure sector too, continued to expand strongly linked to the rapid increase in tourist arrivals in the country, which surpassed 1.5 Mn tourists as at 31st December 2014.

in large part due to prudent demand management,

expectations.

in 2014.

The currency platform too remained strong throughout

Dollar, while depreciating marginally against the US Dollar by December 2014.

As the leading contributor to the country’s foreign exchange earning’s, worker remittances are expected to grow yet again by 9.2% adding USD 592 Mn to the

are also expected to reach USD 8,200 Mn by the end of the year 2014.

INDUSTRY OVERVIEW

licensed commercial banks, 12 foreign commercial banks and 9 licensed specialised banks, with a collective branch network of 6,531 branches and 2,599 ATMs as at

the Banking Sector accounts for approximately 70% of

decision to maintain a low interest rate regime was the

systematic rate reductions, were followed by a steady

and 12 month Treasury Bill yields.

Amidst this backdrop, total banking sector assets grew

compared to December 2013, aided by a growth of

anticipated private sector credit momentum and the industry continued to be trapped in a credit slump for the second consecutive year. With the private sector

industry found itself weighed down by excess liquidity throughout the year. Consequently most key players were seen resorting to low-yielding Treasury Bills and other Government Securities as a means of mopping up the excess liquidity situation. On a positive note, the excess liquidity helped to maintain a healthy Capital Adequacy

Meanwhile, with the industry embracing stricter credit control measures to curb the volume of bad loans,

resulted in an increase in the overall provision coverage for the year.

On the other hand, the low interest rates had an unhealthy impact on deposits, which demonstrated only a

39

previous year 2013.

excess liquidity and the slow deposit growth caused an

the corresponding period in 2013. This was mainly due to timely re-pricing and other fund management strategies adopted by Banks.

Underscored by the prospect of continuous drop in

streamline their operational parametres and derive a

produce an acceptable level of performance in 2014.

2011 2012 2013

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

4,2

52 5,0

98 5,9

41

6,7

80

INDUSTRY TREND IN ASSETS

Rs Bn

Nov 2014

2011 2012 2013

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

LKR Loans FCY Loans

451

559

623

791

3,0

12

2,8

03

2,5

90

2,1

50

INDUSTRY TREND IN LOANS

Rs Bn

Nov 2014

2011 2012 2013 Nov 2014

0

1,000

2,000

3,000

4,000

5,000

LKR Deposits FCY Deposits

496

615680

730

3,8

71

3,4

90

3,0

10

2,5

77

INDUSTRY TREND IN DEPOSITS

Rs Bn

INDUSTRY TREND IN NPL

(%)

2011 2012 2013

0

50

100

150

200

Gross NPL

Rs Bn

Nov 2014

0

2

4

6

8

Gross NPL Ratio

3.83.7

5.6

4.8

99

11

7

19

1

18

1


Chairman’s Report

41

Dear Stakeholders,

year 2014. Despite the many challenges, the intense

indeed the interplay of global pressures, your Bank continued to maintain its momentum of growth.

theme “Ask our Stakeholders” all the more relevant,

growth stories around the country of our multiple

business partners to the communities around us and the environment.

we have continued to deliver consistent value for our

the value that we will present to the future that makes us unique.

With a clear vision and purpose based on solid values, Sampath Bank has worked with resolve to meet its strategic priorities. As a sustainable business that integrates sustainable practice to how we do business, we have utilised a focused strategy-driven approach that leverages our core competencies. With a sustainable business strategy that is fully aligned to the national strategy, we have consistently catalysed socio-economic change. Underpinned by our sustainability philosophy, we have formulated a sustainable business blueprint that addresses key national priorities alongside corporate objectives. You, our shareholders and stakeholders will be pleased to note that at Sampath Bank, our interpretation

performance alone but the collective impact on the triple

We remain committed to the principles of the United

business ethic, while the Customer Charter of The Central

we have re-asserted our commitment to sustainability

reporting format that is representative of and facilitates sustainable business agendas.

just to shareholders, but to all stakeholders especially the

achieved this by better abiding to our strategy, focusing on the basics of good banking, with clients and customers with whom we have deep, and in many cases long, relationships. We endeavour to create value and take a long-term view of our obligations to our shareholders, our clients and customers and the communities in which we operate.

and cost controls, provide our shareholders with a basis

seen. A stable bank over time provides shareholders with the greatest appreciation in value. At the same time the Board understands that it is the employees through their day-to day work to build good customer relations and to run the Bank well, which creates this value and results.

remuneration programme that helps to produce positive results and sound risk-taking. This cyclical movement of

We believe that strong governance is crucial to our long-term success. The complexity of operations in the

corporate governance necessary, and has necessitated that we establish clear goals, strategies, values and good risk controls. Governance remains the Board’s highest priority, duty and responsibility.

performance for Sampath Bank. Today we are a stronger bank in many respects thanks to a consistent strategy, a stable management team, supportive clients, customers and shareholders, and, above all, our great

markets develop. A bank like yours, which wants to gives stakeholders the opportunity to grow in a sustainable

My appreciation to the Board of Directors, the Management and the entire Sampath Bank team for their dedication and resolve.

Dhammika PereraChairman

19th February 2015

G4-1


Managing Director’s Review

43

We continue to uphold the promise to deliver consistent value for all stakeholders as we believe that our success is measured not only in terms of our ability to produce shareholder value, but also our accountability to all stakeholders associated with our business.

People Planet

Profit

Symbolic of our vision to present a promising future for all citizens

remain committed to engender meaningful change for the nation.

We have embraced the triple bottom line model as a template to convey tangible value to all those impacted by our work.

Symbolic of our vision to present a promising future for

committed to engender meaningful change for the nation.

country’s business landscape or navigating through socio-environmental undercurrents, we have always remained true to our fundamental values. We continue to uphold the promise to deliver consistent value to all stakeholders as we believe that our success is measured not only in terms of our ability to produce shareholder value, but also our accountability to all stakeholders associated with our business. Underscored by this rationale we have embraced the triple bottom line model as a template to convey tangible value to all

integrated report, we seek to illustrate our long-term commitment to foster sustainable progress along a

2014 was yet another trying one not only for Sampath

industry, where industry-wide advance growth remained

factors were responsible for this restrained performance, among them was the visible slump in the private sector

credit demand. An alarming trend observed throughout the year, saw many private institutions moving away from the banking system and seeking alternative funding through listed debentures and foreign direct

create a competitive credit culture, by a reduction in policy rates also failed to trigger the desired credit momentum. Beleaguered by the lack of an adequate credit demand, the industry struggled with the problem

of excess liquidity throughout the year, arguably the most disturbing aspect that marred the performance of the industry.

For our part, we continued to respond with strategies that would rationalise market sentiments in tandem

mortar banking ideology towards a more vibrant banking blueprint that advocates a new level of quality assurance

drawn on the stability of our banking legacy. To further strengthen our core competencies, during the year we made investments in developing our infrastructure network and worked on repositioning our brand identity

We continued with our expansion agenda to increase the number of touch points across the country, albeit at a slower pace than in the past few years. While 8 new branches were added to the network in 2014, we also sought to further expand our footprint, mainly through


get together of trade customers

OUR PERFORMANCE

2014 2013 2012

Total operating

Our priority for the year however, was to reposition the “Sampath” brand as the brand of choice among

masses. With this clear aim in mind, we set in motion a comprehensive action plan to re-engineer the brand identity as a key driver of corporate goals.


commissioning of 4 additional Super branches in Borella,

is very encouraging to note the overwhelming customer response to the “Super Branch” concept, at all our Super branch locations.

Our priority for the year however, was to reposition the “Sampath” brand as the brand of choice among

we set in motion a comprehensive action plan to re-engineer the brand identity as a key driver of corporate goals. All communication and promotional

materials were aligned accordingly, together with a corporate communication campaign to integrate these concepts at an operational level as well. Coinciding with this brand building exercise, we also rolled out a formalised visual theme to strengthen the “Sampath” brand identity across the island. The latter also correlates with our long term inclusive banking goals through which we expect to absorb a greater portion of the unbanked masses into the formal banking system. While captioning

strategies would help deliver a new dimension of banking to the masses.

integrate with communities impacted by our business, thereby laying the foundation for lasting social change in the longer term.

during the year. Our “Super Branch” concept also gained considerable momentum in 2014, which led to the

45

focus on commercial and personal lending, including leasing. Meanwhile, despite the inevitable negative

in the pawning space. Thus, our loan portfolio, excluding

this is indeed a commendable achievement given the intense competition in the market and near stagnant

strategies were also initiated in a bid to maintain the

space, we also aggressively promoted the Credit cards. To meet our growth objectives we formulated a campaign that would target both organic and non-organic growth of our cards customer base. With service enhancements and value additions being the crux of our platform, we were able to record a YoY growth of 16.4%. Sampath cards

celebrating its 25th anniversary in 2014. Celebrations to

event held in the Maldives to coincide with the launch

remained the key determinant of performance in the corporate banking arm. Our strategic focus was therefore to develop sound business fundamentals that would support the stability of our corporate banking model and ensure consistent performance in the long term. Despite

Despite the drop in margins, the portfolio has continued to perform consistently with a satisfactory contribution to the Bank’s overall bottom line in 2014.

alternatives to halt any further erosion of the bottom line. While serving the mainstream banking needs of the

develop dynamic business solutions and gear ourselves to facilitate the emerging needs of modern commerce. Hence the strong emphasis on fee-based activities

we launched an aggressive campaign to promote our

our trade services platform, with greater emphasis on servicing the export sector.

Meanwhile, considerable resources were channelled towards research and new product development to help us understand the complexities of the modern customer. By leveraging on our competitive advantage, extensive infrastructure and superior technological platform, we were able to produce pragmatic solutions

“Deposit Kiosks” introduced by us in two locations is one of the many initiatives launched during the year. Having a well-established ATM presence across the country, we were assured of being able to support customer cash withdrawals, without the need to visit the Bank. This prompted us to look at the deposit aspect as well, which spearheaded the introduction of the Deposit

was critical in ensuring customer retention amid the underlying challenges that characterised the banking industry in 2014.

we revisited our personal banking model in order to arrest any further decline in the bottom line. Altering the deposit mix in a bid to capture current market movements, we took a conscious decision to ease high-cost term deposits and focused on growing our Current

also aimed at curtailing any further escalation of our liquid assets. We embarked on an aggressive volume driven agenda to generate organic growth, particularly in

13.1%, with CASA accounting for over 47.0% of the total deposits as at the end of 2014.

burdened by excess liquidity as we faced with the

To curb the negative impact on the bottom line we

CASA

%

2011 2012 2013 20140

10

20

30

40

50

41

35

34

47


To diversify our corporate banking platform, during the year we took steps to capture a larger segment of the Micro, Small and Medium Scale Entrepreneur

to our goal to develop the country’s non-conventional

promoting clean energy projects that would safeguard

responsibility to the environment, as the direct impact from our operations are decidedly limited.

However, our consciousness of the issue has led us to develop a framework of environmental reporting that

who are the driving force behind everything that we do.

aspirations regardless of the challenges of 2014. As in the past, in this year too, we have remained steadfast in the commitment to our employees as we continue to provide a nurturing environment that would stimulate the desire to succeed.

LOOKING AHEAD

prospects for the future to be more conducive for sustainable growth for all stakeholders of Sampath Bank

strategies that would ensure consistent performance in line with medium term corporate goals.

As the level of market competition continues to heighten,

model to escalate considerably in the near term. We would thus need to look at altering the conventional

concepts that represents the diversity of the market needs while at the same time corresponding to a more sustainable cost structure. Further, as customer demographics continue to change, we are likely have to deal with lifestyle banking as opposed to the conventional

explore alternate delivery channels that feature solution-

At the same time, it is also important that we strike the right balance between innovation and feasibility. This would undoubtedly depend on a strong product development and research platform, where data analytics

Euromoney Award for excellence 2014


TOTAL ASSETS

(Rs Mn)432,000Over

NET FEE AND COMMISSION INCOME & NIM

Rs Mn (%)

2011 2012 2013 2014

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Net Fee & Commission Income

0

1

2

3

4

5

6

8

NIM

3.99 4.05 4.39

3.95

1,8

11

2,1

49

2,5

43

3,0

87

47

as an environmental

Supported by this invaluable business framework, we also expect to connect with communities through our work and help manifest truly meaningful societal change that will ensure the betterment of the nation as a whole.

As we strive to translate these strategies into reality, we

developing our people. Given our corporate ambitions,

workforce capable of ensuring progress for all

Aravinda PereraManaging Director

19th February 2015

INTEGRATED MANAGEMENT

DISCUSSION AND ANALYSIS

a trajectory of growth

Content

Stakeholder Value Creation Blueprint 56Getting to Know Our Stakeholders and Their Expectations 57Stakeholder Engagement 58Stakeholder Strategies 61

StakeholdersCustomers 62Employees 70

84Society 85Environment 99Shareholders 109

111113116

119121123125

127Corporate Banking: Corporate Credit 129Corporate Banking: Commercial Credit 131Corporate Banking: Development Banking -

132Corporate Banking: Development Banking - MSME Development 134

136138139140

Corporate Finance 141Treasury 142

144

Support Services145

Call Centre Operation 148149

Subsidiaries150151152153

Correspondent Banks and Exchange Companies 162


Financial Performance Review

Despite the stable performance recorded by Sampath

whole. Of the key challenges, the policy decision by the

crucial factor in determining the performance of the Bank and the banking industry in 2014.

ASSETSFollowing the sluggish credit appetite seen towards the end of 2013, the demand for credit continued to slow

interest rates at the start of the year also failed to spark the anticipated credit momentum, with the industry experiencing negative credit growth in 1st quarter,

the marginal credit growth seen in the second half

movement and consequently the industry ended the year with a moderate credit growth of 11%. Sampath Bank

movements of the industry credit growth, with the asset portfolio recording only a marginal 13.1% YoY growth for the year. Meanwhile, as a direct consequence of the low credit growth, excess liquidity was yet another crucial

The Bank also settled a foreign currency borrowing which

quarter in order to reduce the excess liquidity it had at that time and this too contributed towards slowing down

Sampath Bank’s total assets crossed the

at the year end.

Faced with the uphill task of lending amidst the stubborn lack of demand for credit, the Bank sought to alter the lending mix to keep pace with market sentiments and improve returns. Accordingly, the Bank initiated

much as possible, parallel to facilitating the existing

branch network accounting for 57.4% of the advances for 2014, with corporate lending responsible for 42.6%.

strategies across the loan book to achieve maximum

made, Sampath Bank managed to post a credit growth of 14.6% as at the year end.

drop in global gold prices, in 2013, the Bank continued

Meanwhile, as stability continued to elude the gold

to be a challenge in this year too. On a positive note, due to the substantial and adequate impairment provisions made in 2013, impairment charge on pawning was only

charge booked against the same product in 2013.

settlement options. Moreover, an auction process was initiated to dispose articles of hardcore defaulters. As a result the exposure to this product was reduced to 7.9% of the total loan book as at 31st December 2014 compared to 19.7% of the total loan book as at the previous year end. On the other hand, while the funds so released due to the reduced exposure to pawning were used for other

ASSETS

Rs Bn

0

50

100

150

200

250

300

350

2011 2012 2013 2014

16

9.7

23

.1 54

.9

20

8.2

35

.2 66

.0

25

9.4

46

.9 75

.7

30

1.4

17

.01

13

.6

Loans to & Receivable from Other Customers

Financial Assets Held for Trading

Other Assets

retail lending as much as possible, parallel to facilitating the existing corporate lending model.

51

appetite meant that the Bank was yet again faced with an excess liquidity situation.

Financial Assets held for Trading which consists of Government Treasury Bills and quoted equity securities

in Government Treasury Bills as at 31st December 2014

LIABILITIESThe low interest rate regime, continued to undermine

model as the Bank was forced to cut interest rates in an

customer perspective, as the earning capacity of term deposits continued to diminish, some customers were seen moving away from term deposits in pursuit of more

throughout the year.

Aggressive steps taken to boost Current Accounts and

on the widespread island-wide branch network to capture a larger share of the provincial and rural markets in the

the Bank was able to yet again pioneer a number of value added solutions and service enhancements that enrich

CASA portfolio reaching a commendable 47% of the total deposit base as at 31st December 2014, notwithstanding the re-pricing strategies initiated by competitors.

Debt issued and other borrowed funds decreased from

31st December 2014 due to the settlement of USD 100

based operations and representing over 69% of the total

3.95% in 2014, aided by the growth of 15.2% recorded in the Bank’s fund base. The main reasons for achieving

to reduction in net interest margin due to downward pressure on interest rates, lower credit growth in customer advances and the Bank being compelled by the

income securities.

LIABILITIESRs Bn

0

50

100

150

200

250

300

350

2011 2012 2013 2014

19

5.2

19

.81

1.2

24

3.3

28

.8

11

.7

30

0.5

38

.91

4.2

33

9.9

36

.32

4.9

Due to Other Customers Debt Issued & Other Borrowed Funds

Other Liabilities

NET INTEREST INCOME & NIM

Rs Bn

2011 2012 2013 2014

0

4

8

12

16

20

Net Interest Income

8.9

11

.6

15

.3

15

.7

0

1

2

3

4

5

NIM

3.99 4.054.39

3.95

%

INTEREST INCOME & INTEREST EXPENSE

Rs Bn

2011 2012 2013 2014

0

10

20

30

40

50

Interest Income Interest Expense

21

.1

12

.2

31

.9

20

.3

41

.9

26

.6

38

.1

22

.3

NET FEE AND COMMISSION INCOME & NIM

Rs Mn (%)

2011 2012 2013 2014

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Net Fee & Commission Income

0

1

2

3

4

5

6

8

NIM

3.99 4.05 4.39

3.95

1,8

11

2,1

49

2,5

43

3,0

87



NET FEE AND COMMISSION INCOME Although the net interest income recorded only a moderate growth, net fee and commission income of the

growth. This was mainly in line with the growth of business volumes in the card operations, inward remittances and commission income from other banking services.

NET TRADING AND OTHER OPERATING INCOME

accounts for 17.7% of the total operating income have recorded a 40.9% increase over the previous year. The major contributory factors to this increase were higher bad debt recoveries and exchange income generated from foreign exchange related transactions.

IMPAIRMENT OF LOANS AND OTHER LOSSES Total impairment losses decreased during the year

reduction in impairment losses against pawning. The Bank managed to auction the articles that were not redeemed recovering the capital and even a portion of the interest in some instances. The impairment charge

63.3% over the previous year’s charge mainly due to

products discussed above.

OPERATING EXPENSES

growth in operating expenses was due to general price

opening of new branches and ATMs and an island wide programme to upgrade branches to a consistent standard over the last few years. Cost to income ratio of Sampath Bank tends to be high due to a relatively young branch network. The Bank almost doubled its network since 2008. As a result, the contribution from the new members in the network is lower compared to their more mature counterparts. However it is encouraging to note that the new branches are improving rapidly and it is expected that their contribution towards improving cost to income ratio

monitoring its cost structure and continues to reduce

specialised functions. Though the operating expenses grew by 16%, this was very much lower than the growth of 28.6% in the Bank’s net operating income.

NET FEE & COMMISSION INCOME

2011 2012 2013 2014

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1,8

11 2,1

49 2,5

43 3

,08

7

Rs Mn

OPERATING EXPENSES & GROWTH IN OPERATING EXPENSES

Rs Mn (%)

2011 2012 2013 2014

0

3,000

6,000

9,000

12,000

15,000

Operating Expenses

8,0

59

9,2

48

10

,63

4

12

,33

5

0

6

12

18

24

30

Growth in Operating Expenses

25.8

14.8 14.916.0

53

PERFORMANCE RATIOS

2013 2014

51.23% 53.95%

0.98% 1.23%

12.88% 16.35%

Cost to income ratio increased slightly due to increase in

PRE AND POST TAX PROFIT

the year from 23.6% in 2013 to 26.9% in 2014.

KEY CHALLENGES & COUNTER MEASURES The time lag resulting from the re-pricing strategy

situation was further compounded by the persistent level

December 2014 stood at 24.5%. Meanwhile, given the limited investment opportunities available in the market, much of this excess funds were diverted in Government Securities, where the low yield on these instruments had

liquidity, the Bank took a series of counter measures

to re-channel funds to promote loans and advances, particularly retail lending which was denoted by higher margins. To achieve this objective, a highly focused agenda was developed to promote the branch lending

procedures that would help strengthen the credit quality

follow a strict cost-containment policy while increasingly pursuing fee-based activities, particularly in the export sector. While adding a considerable boost to the operating income, fee-based income is deemed to be instrumental in containing the cost to income ratio of the Bank, which remains relatively high owing to the aggressive branch expansion drive of the past few years discussed earlier.

considered a high priority area for the Bank.

PERSONNEL EXPENSES & OTHER OPERATING EXPENSES

Rs Mn

2011 2012 2013 2014

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Personnel Expenses

Other Operating Expenses

3,5

60 4,4

99

4,0

09 5

,23

9

4,4

17

6,2

17

5,0

61

7,2

74

PROFIT BEFORE TAX & PROFIT AFTER TAX

Rs Bn

2011 2012 2013 2014

0

1

2

3

4

5

6

7

8

Profit Before Tax Profit After Tax

5.0

3.4

7.4

5.2

4.5

3.4

6.7

4.9


SHAREHOLDERS' FUNDS

at 31st December 2014 which was a 8.8% growth. Stated

options exercisable period ended on 30th June 2014 and

The maintenance of the investment fund was a mandatory requirement and comprised retentions of

of income tax as per the relevant direction issued by

October 2014. Consequently the Bank transferred the investment fund account balance that prevailed as at

The net impact due to other comprehensive income on


CAPITAL ADEQUACY AND LIQUID ASSETS RATIOS

2013 2014 Statutory Requirement

27.62% 24.54% 20.00%

10.08% 8.83% 5.00%

14.22% 13.62% 10.00%

due to excess liquidity in the market. However the Bank managed to reduce it compared to 2013 as shown in table above.

compared to 2013, due to several factors. A decision was taken in 2014 to pay the dividend for 2013 exclusively

in cash without any scrip element being included therein, to minimise the excess liquidity that prevailed.

in products other than pawning which attracted higher capital allocation. Furthermore, the other comprehensive

which arose from the Actuarial Valuation as at 31st

DIVIDEND PAY OUT RATIO

201437.59%

2011 2012 2013 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

21

,34

4

25

,64

5

28

,41

8

30

,91

2

SHAREHOLDERS FUND

Rs Mn

55

subordinated redeemable debentures at the face value

These debentures were subsequently listed in the Colombo Stock Exchange.

result of the increase in the risk-weighted value of assets.

DIVIDEND

in the form of scrip dividend.

AWARDS

Sampath Bank has been selected as the "Best Bank in

Magazine "The Euromoney", for the second consecutive year. Also the Bank has been adjudged the Best

World Finance Banking Magazine.

EXTERNAL RATINGS

asset quality, better compliance, transparency, capital adequacy, internal control systems and processes of the


Stakeholder Value Creation Blueprint

we believe it is our duty to convey tangible value to all People of the Planet in addition to ensuring the stability and

of our institution. Capturing the essence

strength and structured risk mapping to help deliver measurable change to all stakeholders associated with the business.

STRATEGIC MANAGEMENT

APPROACH

FINANCIAL STABILITY & RISK

MANAGEMENT

TRIPLE BOTTOM LINE IMPACTS

traditional philanthropic focus, towards a more strategic approach that creates competitive advantages for all our stakeholders

Wealth creation for all stakeholders of

corporate strategies, while assessing the relative market risk

Ensure the value creation

through a sustainable banking platform

G4-2, 24, 25

57

Getting to Know Our Stakeholders and Their Expectations

IDENTIFICATION OF ISSUE

No

No

Customers Society Employees

Setting Goals and Objectives Evaluating Alternatives

EnvironmentRegulators

Evaluation & Getting Feedback from Stakeholders

Shareholders Suppliers & Service Providers

Categorisation of Issues

Implementation and Monitoring

Review

Acceptable

Reporting and Record Keeping

Material Aspect

Stakeholder Engagement

Materiality Testing


Yes

Yes



CUSTOMERSManagement Philosophy:

Uphold the customers’ right to demand a stable and progressive banking environment which provides a superior service platform and promotes customer choice / convenience

Primary Engagement MechanismsFrequency of Engagement

Matters of Relevance

One-to-one feedback from customers who visit the Bank Customer satisfaction on existing products

Customer opinion on special promotions

Customer feel for new innovations

Customer communication methods

Demand for customised solutions Speedy transactions

services Superior customer service Financial inclusion

Customer surveys conducted via traditional communication methods or electronic mediums

Social media interactions 24/7

Customer complaint handling mechanism 24/7

Feedback forms-paper based / electronic mediums

Correspondence

SMS alerts 24/7

24/7

24/7

Call centre 24/7

EMPLOYEESManagement Philosophy:

Commitment to create an environment conducive for the employees to develop and reach their potential, both professionally and personally



“Open door” policy Ethical employment practices Employee wellbeing Work-life balance Career development

Talent development Employee communications

Employee forums

Employee suggestions schemes

Grievance procedure

Employee social committees

Feedback forms A

Business unit level meetings

24/7

Memorandums

Circulars

Q

Training

Get-together / Events

24/7

59

REGULATORS

Management Philosophy: Ensuring corporate responsibilities relating to economic, social and environmental aspects imbibed into the corporate

governance code in accordance with the dictates of all mandatory and statutory regulations



Working to ensure the stability and

sector On-going dialogue to promote

Alignment of corporate goals in line with national priorities and ensuring nation-wide economic development

towards the betterment of the industry and promote nation-wide economic development

Management Philosophy: Working in tandem with global and local mandates that safeguard the environment and promote

community empowerment



Ground level interactions with community leaders at branch level activities

Engagement in capacity building and community empowerment activities

SME Development Forums Workshops / Seminars

Media based forums

organisations

Feedback forms

Discussions with local Government representatives

Discussions with other organisations / religious and

G4- 2, 26, 27


SUPPLIERS AND SERVICE PROVIDERS

Management Philosophy: Striking the right balance between cost and quality and promoting ethical and

transparent sourcing practices



Developing strategic partnerships

responsible business practices Feedback forms

Meetings


SHAREHOLDERSManagement Philosophy:

Ensuring long term shareholder value and upholding the rights of the shareholder and supporting a broader shareholder constituency to ensure their Wealth Maximisation



Shareholder relations forums Shareholder satisfaction regarding

and position Shareholder views on key

governance and policy matters Development of shareholder

communication channels Financial results Strategy and continuity

General meetings

Annual report A

Q

Disclosures & announcements on CSE

Correspondence

G4-47

61

Stakeholder Strategies

STR

ATEG

Y EX

ECU

TIO

N P

LATF

OR

M

PLA

NM

AN

AG

EIM

PR

OV

E

CUSTOMERS GOAL: Create a stable and progressive banking environment, which renders high quality banking solutions together with adequate information for the customer to make an informed decision

Strategies

Service excellence Technology-driven banking solutions

customer network Establishing of a broader based nationwide SME

lending across the country Ethical lending practices

customer Complaint resolution Maintaining customer privacy

SHAREHOLDERS GOAL: Support shareholder wealth creation and generate sustainable growth

Strategies Consistent bottom line Ensuring sustainable return on investment Transparency and responsible stewardship

Safeguard asset quality

EMPLOYEESGOAL: Develop a culture where people can

and as a team

Strategies Attraction of best talents from the market Development within through training & development Employee engagement

Grievance Handling Occupational health & safety and employee welfare

REGULATORS GOAL: Developing a voluntary reporting code that integrates all aspects of economic, environmental, social, labour and human rights practices in line with global best practices for sustainability

Strategies Adherence to all mandatory regulations

ENVIRONMENT GOAL: Adopt green management practices and operational procedures to mitigate the environmental impact of the business

Strategies

Managing the impact on the environment

SOCIETY GOAL:

community-based socio-economic issues in line with national priorities

Strategies Community development and capacity building Education and literacy Health and nutritional development of society Ethical sourcing

SUPPLIERSGOAL: To adopt a transparent sourcing mechanism that would ensure fair and equitable purchasing practices

Strategies

Tender procedure that optimises the level of competition throughout the supplier selection process

Ethical sourcing practices

G4-2, EC 1


Stakeholder: Customers

The rapidly changing business environment of today has resulted in an unprecedented level of competition in Sri

pursuing a broader share of the market.

customer needs through unique and innovative solutions

most sustainable manner possible. Working with a clear purpose, we have thus aligned our strategic vision in tandem with the needs of our customers and corporate clients. Moreover, as pioneers in the country’s banking

structure is well equipped to articulate a meaningful value proposition for both mainstream and niche markets in the country.

PRESENTING A MEANINGFUL VALUE PROPOSITION FOR ALL

technology and professionalism are the hallmarks of our customer service paradigm. Our customer-centric strategy helps to create sustainable relationships with all our customers and enhances our commitment towards product responsibility.

We believe that every customer has the right to expect a stable and progressive environment which renders sound and superior banking solutions, backed by the latest

our dedication towards achieving exceptional customer service and operational excellence.

As we expand our presence across the nation, we continue to transform our approach in cognisance with the needs of the customer,

these diverse expectations.

Priyanga GunasekaraManaging Director

Sampath Bank came forward with an innovative

to expand our operation. Sampath Bank has always responded quickly to our banking requirements. When the Development Banking Unit of Sampath Bank

have truly understood our business and has been a partner rather than a banker to us.

G4-DMA

63

PRODUCTS FOR TEENAGERS

A Sustainable Approach to Win over the

Customer

Ensure Financial Strength

Customer

Development

Standardised Service

Growing Committed Work Force

Self Assessment

Benchmarks

PRODUCTS FOR MINORS

PRODUCTS FOR MINORS

PRODUCTS FOR TEENAGERS

PRODUCTS FOR YOUNG ADULTS / CAREER STARTERS

PRODUCTS FOR SENIOR CITIZENS

PRODUCTS FOR YOUNG ADULTS / CAREER STARTERSDeposit Products

PRODUCTS FOR YOUNG ADULTS / CAREER STARTERSAdvance Products

PRODUCT CATEGORISATION BASED ON AGE


Sampath PubuduSampath Sapiri

Sampath X SET

Double S, Hit Saver, Current Accounts, Kalin Cash, Easy FD, Fixed Deposits, Foreign Currency Accounts

Student Loans, Professional Loans, Sampath Sevana, Sampath Leasing, Credit Cards, Randiriya


PRODUCT CATEGORISATION BASED ON AGE CONTD.


PRODUCTS FOR YOUNG ADULTS / CAREER STARTERSAlternate Channel Products

Alternate Channel Products

Deposit Products

Advance Products

ATM Banking, Telebanking, Sampath Vishwa, Payeasy, Sampath Z – reload, SMS Alertz, SMS Banking, Mobile Cash, Sampath Bank APP, Cardless Cash

ATM Banking, Telebanking, Sampath Viswa, Payeasy, Sampath Z – reload, SMS Alertz, SMS Banking, Mobile Cash, Sampath Bank APP, Cardless Cash

Double S, Hit Saver, Current Accounts, Sampath Supreme, Kalin Cash, Easy FD, Fixed Deposits, Foreign Currency Accounts

Professional Loans, Sampath Sevana, Sampath Leasing, Credit Cards, Randiriya, Bizcash


Sampath App

Sampath App

65

CUSTOMER ENGAGEMENT

and deciding on how best to respond to the evolving needs of our customers, has prompted us to map the degree of change needed to derive a sustainable customer service channel. Customer engagement thus forms an integral part of our day-to-day business processes, where we encourage all employees to “Go the extra mile” on behalf of the customer. Moreover, gauging the pulse of the customer, through regular feedback and special customer gatherings, we are able to catalogue progressive industry trends that are likely to impact our

PRODUCTS FOR SENIOR CITIZENSAdvance Products

PRODUCTS FOR SENIOR CITIZENSAlternate Channel Products

PRODUCTS FOR SENIOR CITIZENSDeposit Products

Sampath Sevana Dayada, Randiriya, Bizcash

ATM Banking, Telebanking, Sampath Vishwa, Payeasy, Sampath Z – reload, SMS Alertz, SMS Banking, Mobile Cash, Sampath Bank APP, Cardless Cash

Sampath Sanhinda Saver, Sampath Sanhinda FD, Double S, Hit Saver, Current Accounts, Sampath Supreme, Kalin Cash, Easy FD, Fixed Deposits, Foreign Currency Accounts

Sampath App


IN SEARCH OF EXCEPTIONAL CUSTOMER SERVICE: GOING THE EXTRA MILE FOR A CUSTOMER We believe, all employees should make a

to a problem does not lie with the Bank, the

capacity, extend necessary guidance to the customer with regard to the person/authority to be approached for resolution and the manner of doing so.

highlights our commitment to act responsibly in interpreting customer needs, while endorsing the customers’

A STRATEGIC APPROACH TO CUSTOMER MANAGEMENT

Step 2: Materiality Assessment


Sampath Bank

Sustainability

Stakeholders

Social: Product Responsibility

1 Customer health and safety Customer High High

2 Sampath Bank Medium Medium

3 Marketing communications Sampath Bank Medium

4 Customer privacy Sampath Bank High High

5 Compliance Sampath Bank High

H

M

M H

5

3 2

1, 4



H

M

High

Medium

67

Type of research - Quantitative

Sample Size - 1,000 per quarterCoverage - Colombo, Galle, Kandy and Kurunegala

During the year, a comprehensive brand tracking exercise was initiated to measure the success of our advertising and branding

ASPECT: MARKETING COMMUNICATIONSRaising the Bar - Customer Communication While working to enhance customer convenience, as keen advocates of customer rights, we also strive to ensure adequate information is made available to assist the customer to make an informed decision at all times.

guidelines on how our products are conveyed to the end consumer. Developed in cognizance with all mandatory

accordance with the guidelines applicable to banking

commitment to act responsibly in interpreting customer

Moreover, our campaign to establish the Sampath brand

prompted a trilingual format for all communications. Meanwhile, a voluntary code of ethics governs the transparency of our actions and ensures that all our communications are free from social, cultural and

for all citizens of the country, our above-the-line and below-the-line communication mediums seek to convey

remains a critical aspect of our publicity framework, we have also sought to embrace the new developments in electronic, digital and social media platforms that have

Mr H D De SilvaChairman - HDDES Group

As a leading bank currently in the forefront of Sri

been associated with the Bank for the past two

instrumental in promoting our company as a leading

unstinted support extended to us by the Bank which has helped us make a name for ourselves in the global marketplace.

campaigns vis-à-vis the success of the corporate brand as perceived by the customer. An island-wide exercise to table the health of the “Sampath” brand, the undertaking also aims to ascertain the general perception of brand strength from the general public.

Outsourced to an independent third party research consultant, the project entails quarterly brand tracking for a one year period.

communication platform, the insights obtained from this process would help us align our brand strategies and derive a more sustainable blueprint for future growth.

past. Our marketing communications are aligned to

violation of these laws have been recorded.


ASPECT: PRODUCT AND SERVICE LABELLING

As a service organisation, our operations have no impact or potential impact on the following: The sourcing of components of the product or

service Content, particularly with regard to substance that

might produce an environmental or social impact Safe use of the product or service Disposal of the product and environmental/social

impact

and banking solutions have been developed in

Sampath Bank Product

Information and Accessibility

Brochures and

Traditional Advertising

24 Hour Call Centre

Branch Merchandising

Accompanied by Application

Forms

CorporateWebsite

E-Channels

Social Media

Marketing Communication Status

product and service policies which mirror the national regulations for banking products. As such there have been no reports of regulatory violations nor any incidents of non-compliance with voluntary codes in relation to disclosure of product information and labelling of our products or services.

ASPECT: CUSTOMER PRIVACYAs a responsible banking institution in the country, we have always upheld the customers’ right to privacy and

this regard, the following measures have been integrated into our day-to-day operations in order to ensure that customer privacy is upheld at all times.


69

Measures adopted in order to ensure customer privacy

located islandwide with the intention to prevent risk of counterfeit credit card

Additional security to credit card holders via added encryption for chip enabled cards

SMS alerts to notify each transaction Direct calls to customer prior to performing high

value transaction

operation.

Mr R D PremasiriChairman / Managing Director

very little money to invest and at the time it was very

But, thanks to the Head of the Development Banking

boost that it needed. From then on, for the past two decades, the Bank has been an active partner in the

Bank over the years, which has helped to develop the

even greater heights in the future.ASPECT: CUSTOMER HEALTH AND SAFETY

Given the nature of our business as a bank, the impact of health and safety aspects cannot be assessed with regard to our products and services. However, our determination to ensure customer wellbeing has led us to formulate products and services that do not in any way impair or harm the health and safety of our customers. As such no incidents were reported on non-compliance with regulations and voluntary codes concerning health and safety impacts of products and service during the

Customer Feedback Monitor

reporting period. Hence the Bank has not been subject

with this regard.

ASPECT: COMPLIANCE

have always strictly complied with all mandatory laws and governing standards relating to advertising and branding. Moreover, it is mandatory that all employees

the customer rights framework remains an integral component. Therefore, no incidents on non-compliance with laws and regulations or breach of customer privacy were reported within the reporting period. Further, no

with laws and regulations concerning the provision and use of products and services.


Stakeholder: Employees

FORTIFYING OUR DNA

genome that binds all aspects of our business.

strive to create an environment conducive for both

G4-DMA

professional and personal development while ensuring a high performance work culture that would support the

commitment to ensure continuous team development vis-à-vis a results-oriented culture, our actions speak for themselves as a testament to our success over the past two decades.

THE CASE FOR DEVELOPING A SUSTAINABLE HR PROTOTYPE

The Challenges that We Face

capacity, encumbered by the demands of this growth. Moreover, as we extrapolate our current growth trajectory, we envision a number of key challenges that are bound to impact Sampath Bank

Sampath brand.

Our Proposition

building employee’s competencies in serving diverse communities across the island. Moreover, to assure the sustainability of these markets, we would need to absorb the cultural dynamics of these communities and understand the intricacies of their lifestyles. Consequently, a rethink of our approach towards human capital development would feature a more inclusive recruitment strategy that subscribes to a greater degree of local hiring. Doing so would not only enhance our service

mass populace.

Another key challenge would be to ensure employee’s readiness to take up responsibilities and

online learning opportunities, coaching and mentoring and leadership development have not only positively contributed in this aspect but made our employees active business partners.

71

such a manner that they would spearhead organisational goals. We believe, every employee of the Bank has the right to expect a work ethos that is committed to build an environment conducive for both professional and personal development.

teams

enrichment. Cascading to all levels of the business, ours is a broad-based human resource framework that features the following policies is in place to support our future-ready workforce.

Culture

Team Work Environment

Development

Change Orientation

Strategies

Continuous Training and Development

Development Culture of

Accountability and

for High

Enhance Employee

Engagement and Employee

Embracing

Ethics and Values



H

M

M H

1, 3, 5, 6, 8, 9, 10,11, 17

15 7, 16

2, 4, 12, 13, 14, 18

Step 2: Materiality Assessment



Sampath Bank

Sustainability

Stakeholders

Social: Labour Practices and Decent Work

1 Employment Sampath Bank High Medium


3 Occupational health and safety Sampath Bank High Medium

4 Training and education Sampath Bank High High

5 Diversity and equal opportunity Sampath Bank High Medium

6 Equal remuneration for women and men Sampath Bank High Medium

7 Supplier assessment for labour practices Supplier Medium Medium

8 Employee High Medium

Social: Human Rights



11 Freedom of association and collectivebargaining

Employee High Medium

12 Child labour Sampath Bank High High

13 Forced and compulsory labour Sampath Bank High High

14 Security practices Sampath Bank High High

15 Sampath Bank

16 Assessments Sampath Bank Medium Medium

17 Supplier human rights assessment Supplier High Medium

18 Human rights grievance mechanisms Sampath Bank High High

A STRATEGIC APPROACH TO MANAGING EMPLOYEES

H

M

High

Medium

73

Male Female Total Above 55 51 - 55 41 - 50 31 - 40 21 - 30 18 - 20

Corporate Management 19 5 24 8% 46% 46% - - -

Senior Management 69 13 82 2% 12% 84% 2% - -

Executive Management 125 48 173 - 3% 73% 23% 1% -

Middle Management 400 167 567 - 2% 26% 63% 9% -

Junior Management 489 296 785 - - 5% 42% 53% -

1,490 700 2,190 - - - 7% 90% 3%

Other Grades 39 140 179 2% 15% 40% 32% 11% -

2,631 1,369 4,000

LABOUR PRACTICES AND DECENT WORKAspect: EmploymentOur WorkforceOur workforce, consisting of 4,000 employees who work

includes 453 new employees recruited in 2014 of which

Mr Rangana Herath

during this period that my career as an international

demands of my training schedule began to increase too, which made it impossible for me comply with

to the management of the Bank for the support

un interrupted training to sharpen my playing skills

During the year we have

training and leadership development.

our commitment to the “develop from within” approach our cadre has only grown by 8.5% in 2014. Moreover,

and leadership development.

Our Workforce at a Glance


EMPLOYEE ANALYSED BY TYPE OF EMPLOYMENT CONTRACT & GENDER

Male Female

1,981 1,272

Trainees 631 65

11 20

Fixed Term Contracts 8 12

Total 2,631 1,369 To ensure a continuous talent pipeline that would drive corporate ambition and inspire long term national progress we continue to recruit talented individuals

out strict guidelines to ensure that the most competent people are recruited based on merit and that all recruitments are free of bias and discrimination.

As a part of the long term employee development strategy, all new hires are subjected to a comprehensive orientation regime. Orientation activities encompass on-the-job training and regular evaluations conducted parallel to the two year training period for school leavers. Upon successful completion of the orientation module and the period of training, recruits are eligible

employment cadre, depending on the available vacancies.

Province New Hires for 2014

Western 179

Southern 46

46

Central 80

Eastern 14

Sabaragamuwa 26

22

22

Uva 18

Total 453

NEW RECRUITS

15%FEMALE

85%MALE

84.3%

2013 2014

Employees entitled for maternity leave

1,354 1,369

Employees taking maternity leave

113 131

Employees taking paternity leave

68 84

Employees returning to work 113 131

Employees still employed 12

leave111 125

100.0% 100.0%

98.2% 95.4%

Maternity Leave


Grade

Promotions for 2014

DGM AGM Chief Mgr

Snr Mgr

Mgr SE II SE I E II E I JE II Snr Exec Sec

Exec Sec

Snr Sec

Sec

1 9 10 11 20 21 45 84 85 136 11 11 3 9

75

RETURN TO WORK AFTER MATERNITY LEAVE

100%

EMPLOYEE TURNOVER

levels in our team.

Reason2013 2014

Male Female Total Male Female Total

Join with other competitor institutes 4 2 6 18 2 20

Join with other organisations 10 3 13 11 6 17

Migration 16 18 34 16 19 35

Higher studies 17 - 17 17 3 20

15 18 33 17 8 25

7 6 13 7 2 9

Other 16 6 22 9 3 12

Total 85 53 138 95 43 138

MANAGING TALENTWhile embodying the promise of a sustainable future

advocates the “develop from within” approach towards

Framework is geared to cultivate employee productivity in a manner that would accomplish personal goals alongside corporate ambitions.

to internal candidates by earmarking potential candidates to be promoted from the existing ranks. As a pre-requisite to hiring, we are also keen to determine if the potential employees’ personal goals mirror our social values and long term corporate values.

Thus in keeping with our goal to be an employer of choice, all potential candidates are assessed and thoroughly evaluated to ascertain their level of competency and degree of value alignment.

The overall objective of the Executive Talent

to Senior Manager grades in order to ensure a continuous talent / leadership development pipeline.

talented Senior Executives / Senior Managers capable of supporting the Bank’s current and future business requirements

potential/performance and introduce development interventions coupled with business strategy of the BankDeliver integrated learning and development processes

Target GroupAt the initial stage, the programme intends to

Senior Manager Grades

Age GroupNew Recruits 2014 Turnover 2014

Male Female Total Male Female Total

Above 55 3 - 3 - 1 1

51-55 - - - 7 6 13

41-50 - 1 1 3 4 7

31-40 1 1 2 6 10 16

21-30 320 62 382 64 32 96

18-20 60 5 65 5 - 5

384 69 453 85 53 138


Ms Pubudu Ratnayake

For me, being a part of the team Sampath has

inculcated at the Bank has taught me invaluable life lessons and has been the key to my success in

gained as part of my job has encouraged me to achieve both my personal and professional goals, and opened up a whole new world of opportunities for

as a television news presenter at a leading media

the greatest achievements of my career up to now.

this stint while serving as a full-time employee of

colleagues at the Bank during this period was an immeasurable strength that words cannot adequately express.

Strong employee relations, remains the key to preventing employee migration and sustaining a skilled resource pool.

EMPLOYEE BENEFIT STRUCTURE

of fair and equitable remuneration for all employees, in accordance with the relevant Statues. The Bank maintains the wages level above the minimum local

Over and above the mandatory stipulations, Sampath

employee security and inspires continuous improvement at every stratum of the workforce. Captioned below is

Annual Bonus based on overall performance of the Bank

housing loans, vehicle loans, educational loans, distress and emergency loans, family loans: loans

education, medical expenses

expenses of the employees and their immediate family members

of the equivalent of two years’ salary, to the

employee

of course fees, professional memberships for

members stationed away from their hometowns. Holiday bungalow facilities

SPECIAL FACILITIES


77

Made a 11% upward increase of salary in 2014

scheme were increased A reduction of interest rates was made to loans

obtained by employees outside the employee

Stipulated waiting period to obtain a second vehicle was reduced

ASPECT: LABOUR / MANAGEMENT RELATIONSEmployee RelationsOur employee relations practices are designed to help

of their work ethic. Moreover, strong employee relations, remains the key to preventing employee migration and sustaining a skilled resource pool. Underpinned by our

both formal and informal engagement mechanisms that encourage freedom of expression among our employees.

promotes best practices in managing our workforce.

opportunities for our employees to freely express their ideas and opinions and voice their concerns.

While providing valuable insights on employee perceptions, these interactions also serve as an ongoing review of our standards and practices, enabling us to engender truly meaningful change at all levels of the business.

represents over 90% of employees. The management conducts monthly meetings with them to address matters of mutual interest going beyond the collective bargaining mechanisms. We encourage an open door communication policy within the organisation to identify that may arise which require attention.

Empl

oyee

Eng

agem

ent

Mec

hani

sm

Bank-wide Two Way Communication

Mr S Sivaneshan

this great institution. Over the years the Bank has helped us to develop personally in our career as well as to enhance our living style. The future also looks promising as Team Sampath leads the Bank towards the competition of another successful year.

G4-11


EMPLOYEE ENGAGEMENT INITIATIVES: Programme Detail: Employee Feedback

Survey Programme Scope: A Bank-wide employee feedback survey was conducted, with the technical assistance of

The survey covered seven areas: Vision, Job role, Work relations and culture, Training and development,

Outcome:

by the research company.

This survey model revealed that 62% are highly committed to their work where 70% have formed a strong loyalty towards the Bank.

Programme Detail: Regional HR Coordinator Programme (RHRCP)

Programme Scope:

advocates an innovative approach towards strengthening communications between management and employees.

aims to nurture a closer bond with all employees under

support for the day-to-day operations of the business.

Outcome:one discussions were held with 936 employees

Programme Detail: Mentoring Programme Scope: of 2014, the Mentoring programme has the following objectives: To align team members to the Bank’s culture,

Sampath values and accepted behaviour within the Bank

To ensure development of competencies of the team members within the stipulated time frame

To ensure team members contribute towards the overall objectives of the Business Unit / Bank

To provide support in addressing grievances /personal issues etc.

To monitor and provide appropriate feedback / solutions for performance related issues

Outcome: 55 Mentors were appointed in 2014

Programme Detail: “Helping Hands” – Counselling Cell

Programme Scope:assistance to help employees manage personal issues, in 2014, the scope of the Counselling Cell was expanded to address work place issues and performance issues as well. The Counselling Cell now covers the following areas:

Development counselling Group counselling Workshops

Outcome: 62 team members were counselled during the year

System

Programme Scope: communication system that uses SMS mobile technology to communicate with all team members or segments of employees.

Sampath Bank Mentoring Guide


79

"Citadel of Wonder" - Visualization of Sampath Song

Competitions: “Citadel of Wonder”Open to all Sampath team members, this competition was based on the “Sampath Song” the theme song of the Bank, organised with a view to encourage employees to appreciate the Bank’s intrinsic value culture. The competition rules required participants to send their responses as original scripts or video clips created by them to capture the essence of “Sampath” brand identity, culture and values.

Long Service Awards48 Team members who have completed 25 years of service at the Bank were felicitated at a ceremony held at

Special events of 2014:

Six a Side Cricket Tournament

48 Employees completed 25 years of service with the Bank this year.


EMPLOYEE WELFARE

committed to provide an environment that enriches the mental, physical and spiritual wellbeing of the team members thereby improving their quality of life. This strategy is also deemed to be a key motivating factor that would enhance employee commitment and result in a higher level of productivity.

ASPECT: OCCUPATIONAL HEALTH AND SAFETYWe follow a Zero accident work practices. As such we seek to create a hazard free environment and have introduced policies and procedures to secure all premises in which we operate across the island. Our focus ranges from simple precautions to situations that demand more complex applications. Basic safety instructions are prominently displayed at all Bank locations, while a specialised crisis control plan seeks to contain potential emergencies. Moreover, a business continuity plan is in place, as a contingency control measure and health and safety are considered as priority area under the

organisation, our employees are not exposed to the risk of occupational diseases.

Corporate Meditation for a Stress-free life

Zero Accidents

Trained 30 employees in First Aid with the

Society. “Corporate Meditation” programme is a pilot

project conducted by the Bank as a guided meditation programme focused on deep relaxation and energy building with a view to enhance the health and wellbeing of our employees and addressing stress related matters.

ASPECT: DIVERSITY AND EQUAL OPPORTUNITY

we continue to pursue an inclusive strategy to develop a work place where equality and diversity feature prominently in the people development agenda.

equality and diversity in the workplace is instrumental in bringing about systematic societal change as the basis for sustainable nation-wide development in the longer term.

Athletic Meet 2014


81

Male: Female remuneration ratio for 2014

levels of management although the participation rate remains low at higher levels of management.

AVERAGE TRAINING HOURS

TOTAL TRAINING HOURS

MALE

FEMALE

47.8

109,01982,242

ASPECT: TRAINING AND EDUCATIONOur Training and Development function is designed in a way that it provides a continuous supervisory and management pipeline for the future, with the desired level of competencies to ensure achievement of the objectives of the Bank. The Bank has a comprehensive development plan which encompasses technical and

Key Training Highlights 2013 2014

22.30 Mn 39.99 Mn

Average training hours per employee

45.00 per annum

47.81 per annum

Training delivery rate 100% 100%

The Annual Training plan is designed based on the

competency assessments, customer expectations and developments in the Bank and the banking sector. This exercise is carried out in collaboration with the Heads of Departments who are then provided with the plans

507 classroom sessions with 172,259 man hours of training and a total of 19,002 man hours of e-learning.

Training Summary for 2014

Male Participants

Female Participants

Total Man

Hours

Training Hours by Employee Grade

Corporate Mgmt (Man

Hours)

Senior Mgmt (Man

Hours)

Executive Mgmt (Man

Hours)

Middle Mgmt (Man

Hours)

Junior Mgmt (Man

Hours)

Ops.

(Man Hours)

4,542 4,150 99,805 286 1,393 3,800 15,739 4,827 73,760

620 492 7,028 - 16 24 236 276 6,476

External 488 420 6,700 484 1,581 1,821 2,038 235 541

Overseas 16 13 733 44 401 180 108 - -

Online English 492 454 57,714 - - - - - 57,714

Online language 36 34 279 - - - - - 279

programmes 18,514 17,089 19,002 - 0.5 7.5 97 431 18,466

ASPECT: EQUAL REMUNERATION FOR MALE & FEMALE


Leadership and Life Skills Development Programmes

who would drive not only corporate ambition but also the movement for national development. Cognisant of this

Academy strives to develop leaders at all levels. Using

a vibrant learning platform that empowers potential

constitutes a large proportion of learning process and creates a dynamic environment that enables participants to learn, practice and derive results.

Programme Target Group No of Programmes No of Participants

Franklin Covey Senior Managers 05 29

Branch Managers 05 127

02 102

05 118

Departments Departments

03 87

Executives attached to Departments 01 13

All employees are subjected to an annual performance reviews and special development plans are provided for employees who need assistance.

ASPECT: LABOUR PRACTICES & GRIEVANCES MECHANISMSThe objective of the policy is to identify, appraise and provide appropriate solutions / feedback for grievances of team members arising out of ones’ employment, in order to enhance employee motivation, commitment and further strengthen employee relations. The Bank recognises the importance of providing a fair and transparent procedure for handling grievances where they are managed fairly, sensitively and expeditiously.

Grievances 36


83

ASPECT: SECURITY PRACTICEAs Bank-wide security is an outsourced service, no

the Bank. All such trainings handled by the respective service providers are facilitated by the Bank.

HUMAN RIGHTSFor our part, we have worked diligently to uphold the dignity, respect and fundamental human rights of all our employees. Moreover, we have always complied fully with all relevant national regulations concerning our employees and their interests. Our uncompromising stance in this regard has led to an unblemished record, with no human rights violations to taint our reputation. Moreover, with a view to strengthening employee relations and maintaining a zero industrial dispute environment, we provide continuous training on industrial relations best practices to employees.

Training on Human Rights

DISCRIMINATION, FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING We consider freedom of association as a right of each employee and respect each individual’s right to be a part of employee associations, provided their actions do not violate the laws of the country or infringe on the fundamental human rights of others.

Disputes

Indicator Status

ASPECTS: CHILD LABOUR, FORCED OR COMPULSORY LABOUR, INDIGENOUS RIGHTS & ASSESSMENTS


stakeholders of the business while at the same time, ensuring the best possible performance of the Bank.

All compliance procedures and guidelines are clearly set

structure and processes, reporting lines and methods for risk mitigation among others. Moreover, to indemnify the Bank from any compliance risk, we adopt a three-tiered risk management approach to monitor and mitigate potential threat elements. We comply with amongst others the following laws and guidelines;

15 of 1995

principles for human rights, labour, environment and anti-corruption

The above list is not exhaustive.

Given the nature of our business as a bank, we are governed by laws and regulations from multiple sources. Hence, at Sampath Bank, we strive to achieve a standard of compliance which exceeds the mere legal requirements and voluntarily apply higher standards of integrity and ethical conduct at all levels of operation. We remain committed to uphold not only all primary legislation, rules and standards issued by regulators and legislators, market conventions and codes of practice promoted by industry associations but also adhere to

members of the Bank.

Espousing a compliance-driven culture across the Bank we have always stressed the importance of compliance across all triple bottom line aspects of the business. We believe this is the only way to account for any and all actions that may impact all stakeholders associated with our business. Structured as a sustainable platform for growth, our procedures and practices are thus geared to build a credible management framework that ensures

of information disclosure. Accordingly we embrace a governance framework that promotes clear and unbiased disclosures, proper accountability to all stakeholders

Stakeholder: Regulators

G4 - 56, 57, 58


Sampath Bank

Sustainability

to Stakeholders


2 Sampath Bank High High3 Sampath Bank High High4 Sampath Bank High High

H

M

M H

1, 2, 3, 4

Materiality Assessment


H

M

High

Medium

85

Being clearly ingrained into our cultural fabric, right from the inception, social responsibility and corporate accountability have always been allocated equal priority in the day-to-day business functions of Sampath Bank

a responsible corporate citizen and a leading Bank in the country, we continue to play an exemplary role in conveying change, particularly at a grass root level.

socio-economic landscape of the country has helped to

commitment to engender sustainable social change for

LOCAL COMMUNITIES

We believe that Social Development is an ongoing process that has a monumental impact on individuals and the communities

these community cells in such a manner that will enable them to overcome both real and perceived limitations and create sustainable livelihoods for the future.

As we endeavour to address national priorities

with the active participation of team Sampath, encompassing our island-wide network of branches, Moreover, aligned to our value

projects are structured in a manner that would convey truly meaningful value to people and communities across the country.

development projects island-wide to improve and develop, marginalised communities and economically challenged communities across the island.

Stemming from this broader economic context, we believe that the livelihood and well-being of the people, businesses, and communities we serve today, as well as those we will serve tomorrow, will depend on access to critical resources. We reinvest back into the community,

such critical resources needed to produce empowered communities across the nation. Moreover, we also encourage our management team and employees to generously dedicate their time and engage their talents to better serve the communities associated with our

communities and strengthen local neighbourhoods in order to steer the course for a better tomorrow.

Total Resource Allocation for CSR in

(Budget Rs 34.3 Mn)

Actual Commitment for CSR in 2014: Rs 62.3 Mn

No of CSR Projects in 2014: 277

SUBSCRIBING TO A NEW PARADIGM OF SOCIAL RESPONSIBILITY AND CORPORATE ACCOUNTABILITYWe strongly believe that responsible stewardship is the key to creating a sustainable future for all communities associated with the business. By following an integrated approach that imbues greater social responsibility and corporate accountability on our part, we subscribe to responsible business practices that are interwoven into

accepted good governance practices and transparent

actions. Moreover, as a policy, the Bank refrains from

that impact all stakeholders of the business. For our part, the opportunity to contribute to matters of national

what we consider an honour in service to the nation.

G4 - DMA

Stakeholder: Society


The overall stewardship of the fund is listed under the

Director with designated appointees to identify and

CSR GOVERNANCE STRUCTURE

MANAGING DIRECTOR

LeaderEducation for Development

LeaderEthics and

Values

LeaderEmpowerment of

Community

LeaderEnvironment

Protection and

Conservation

LeaderEntrepreneur

Development

CSR Assistant - CSR Projects

CSR Assistant - CSR Reporting

Brand Manager - CSR

Overall CSR Leader

Sampath Team Members

Encouraging each employee to embrace the role of a CSR ambassador

By following an integrated approach that imbues greater social responsibility and corporate accountability on our part, we subscribe to responsible business practices.


G4-42

87

SOCIAL IMPACT ASSESSMENTUpon completion of a project, we continue to assess how each undertaking may impact the triple bottom line i.e.

broader change perspective. As such no negative impacts have been reported for projects undertaken during 2014.

INPUTS

PEOPLE PLANET PROFIT

PROJECT IMPLEMENTATION

TRIPLE BOTTOM LINE IMPACT ASSESSMENT

Funds Time Knowledge / Expertise

Development

Entrepreneur Development

Employee Wealth Maximisation

Bio Diversity Management

Emission

Creation

Good Governance

AND COMPLIANCE

From the inception, we have conducted our banking business with honesty and integrity while strictly conforming to all laws and regulations of the country including anti-corruption regulations. Guided by our

aspirations of all our stakeholders.

employee performance is governed by a strict code of conduct issued by the Bank. Compliance with these laws, rules and regulations continue to be well monitored. As such there have been no reported incidents on corruption. Moreover, we have not been subjected to any

non-compliance.


As an independent service provider to the nation, any kind of political contribution either monetary or non-monetary is not accepted nor received from any organisation.

Moreover, we do not engage in or promote any kind of anti-competitive behaviour or anti-trust, monopoly practices and therefore during the reporting period the Bank was not subjected to any legal action in this regard.

DEVELOPING A STRATEGY DRIVEN CSR POLICY

away from a mere philanthropic approach and long since

Aspect Status

Community risk related corruptions

TRAINING IN ANTI CORRUPTION POLICIES & HUMAN RIGHTS

socio economic change across broader social strata. Underscoring the importance of social inclusiveness, the

CSR Value Curve - Charity Driven Approach vs Strategy Driven CSR Approach

Stra

tegy

D

rive

n

Corporate Strategies

Issu

e D

rive

n Community

Char

ity

D

rive

n Activities

No Programme ScopeNo of

ParticipantsNo of Hours

No of Programmes

1 Knowledge on advanced human resource management 38 536 10

2 Knowledge on banking internal systems, processes and related procedures

224 1,242 20

3 Knowledge on building and maintenance 60 287 5

4 Knowledge on legal and good corporate governance 52 540 10

5 Knowledge on procedural aspect in branch operations 2,872 27,250 73

6 1,011 11,169 38

7 271 2,273 10

8 Knowledge on corporate banking 8 285 3

Total 4,536 43,582 169


The above training programmes covered the aspects of anti-corruption policies and human rights.

89

The transition from the conventional charity driven

mindset of employees at all levels of the business. Driven by the belief that shared experiences heighten employee enthusiasm and give birth to greater self-

among our employees and urge them to volunteer

possible. By building a corporate culture that inspires the “greater good of society”, we hope to nurture a breed of exemplary citizens who would be the driving force behind sustainable change at a national level.

STEP 1: GOALS AND PRIORITIESThe strategy driven approach has helped us leverage on our core competencies and unite our corporate objectives in a bid to nurture the desired level of social

business blueprint, our philosophy resonates progressive change at a national level vis-à-vis the achievement of

corporate objectives. Centred on the 5E platform, we aim to accomplish corporate goals in sync with national priorities, while promoting global best practices in cognisance with community stakeholder interests.

Captioning this approach our initiatives are meant to help people to help themselves and help communities to pursue their future aspirations. As a priority, we empower community cells in such a manner so as to enable them to overcome both actual and perceived limitations and create sustainable livelihoods for themselves.

sectors focus on small and medium scale projects to

dimension, grass root level commitment of this nature is deemed to be the catalyst of change that would translate into coherent economic development at a national level

STAKEHOLDER MANAGEMENT

EDUCATION FOR DEVELOPMENT

EMPOWERMENT OF COMMUNITY

ENTREPRENEURS DEVELOPMENT

ENVIRONMENT PROTECTION AND CONSERVATION

ETHICS AND VALUES

Bridge the social and economic inequality, provide livelihoods to those at the base of promoting education and the dissemination of knowledge within the country

Address the grass root levels by providing basic infrastructure or necessities to enable the community to improve its lifespan

Educate the entrepreneurs to facilitate their development and pave the way for wealth creation than to increase dependency on borrowings

Minimise the environmental issues based on social priorities, extend the message to a large captive audience of stakeholders and thereby create knowledge on environment conservation

Accomplishment of prospective principles, values, integrity, ethical behaviour and professional advancement

SUSTAINABLE DEVELOPMENT


STEP 2: MANAGING COMMUNITY STAKEHOLDERSHaving clearly understood that partnerships are the key driver of success, we have always sought to foster strong relationships with all community stakeholders.

leveraged on our solid communicative culture to promote meaningful dialogue with all community stakeholders and interested parties. While these collaborations have laid the groundwork for immediate change, we believe the ensuing synergies would set the stage for sustainable development in the future.

STEP 3: IDENTIFICATION OF MATERIAL ASPECTS AND BOUNDARIES

No AspectBoundary

Sustainability

Sampath Bank

Sustainability

to Stakeholders

Social: Society

1 Community High High



4 Anti-competitive behaviour Sampath Bank Medium Medium

5 Compliance Sampath Bank High High

6 Supplier assessment for impact on society Supplier Medium

7 Grievance mechanism for impact on society

Sampath Bank

An essential pre-requisite of a sound business model, stakeholder management and engagement continues to play a crucial role in the formulation of our sustainable

cluster, we pursue a range of engagement mechanisms from time to time, which act as compass to transmit change. By realigning key social and economic parametres of the business in this manner we are able to deploy timely action to address the most pertinent issues.

H

M

M H


Sus

tain

abili

ty S

igni

fica

nce

to S

ampa

th B

ank

4

1, 2, 3, 5

STEP 4: MATERIALITY ASSESSMENT

7

6


H

M

High

Medium

91

EXECUTING PROJECTS UNDER 5E CSR FRAMEWORK

IDENTIFICATION OF COMMUNITY GRIEVANCES / KEY ISSUES IN MARKET PLACE

Education for

Development

Ethics and Values

Empowerment of Community

Entrepreneur Development

Categorisation of Issues

Project Evaluation, Implementation, Monitoring & Stakeholder Engagement

representing the area

Assigning project objectives, key actions, resource requirements, time frame and involvement of Sampath team members

and team involvement

Continuous monitoring and evaluation of project credentials

Grievance Solved?Impact Assessment

Reporting and Record Keeping

NO

YES

Lack of infrastructure Lack of education facilities for our childrenLack of education and training for livelihood development

National health issues – Lack of health facilities for local communityEnvironment pollution and related grievances

Environment Protection and Conservation

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6


KEY INITIATIVES FOR 2014 Empowerment of Community

Driven by a deeper understanding of the impediments that limit the progress of society, we strived to transmit ongoing social development as a means of nurturing individuals and investing the communities they live in. As a systematic and structured

intervention, these community development initiatives were meant to empower communities with the tools required to better manage their livelihoods. By providing

ON LOCAL COMMUNITIES’ NEEDS

Grievance / Key Issues in Market Place No of Projects

Investment / Financial Assistance

Rs Mn

Employee Engagement

Total Man Hours Spent

(Approx)

Education Basic Facilities Development Competencies and Skills

Development

2713

59

12.522.970.898.66

1985337

108

4,506779174

3,553

Community

Entrepreneur Development SME Workshops Financial Assistance

18814

16145

94

215.4646.20

1.35166.18

1.460.27

349140

48-

13427

5,7743,320

864-

1,246344

An initiative that reinforces our commitment to contribute towards progressive national development. Underpinned by a series of

initiative aims to enhance basic infrastructure requirements of predominantly rural agricultural communities in the island.

the necessary resources in order to help enhance the abilities and capabilities of developing communities, we promote social inclusion in the longer term. Moreover, by creating a comparative platform for progress, these steps also aim to minimise societal inequalities and open the gateway for continuous growth.


93

community-based issues. By reshaping attitudes in this manner, these projects hope to encourage employees to act responsibly in addressing critical issues faced by disadvantaged communities and work towards deriving a suitable framework that would transmit lasting change at a national level.

“Wewata Jeewayak”

committed endeavour to restore the country’s ancient

“Wewata Jeewayak” programme saw the restoration of

area in the Kurunegala District. By assisting nearly 200 families in the area to cultivate more than 65 acres

Mn is deemed to bring new hope to the agricultural communities whose livelihood is dependent on an uninterrupted supply of water from the tank. Following the renovation of the Dematawa tank, the resulting increase in the water storage capacity would help to irrigate farm lands throughout the year and enable farmers to harvest both crop seasons, each year. Moreover, with about 80% of the community entirely

would allow farmers to secure a stable livelihood and register improved living conditions culminating in a better quality of life for the community as a whole.

“Wewata Jeewayak” - Key Highlights

Objective To support the irrigation requirements of the agriculture-based communities

Over 200 families who cultivate over 65 acres of paddy lands in the area

Dr H K De S Kularatne MBBS.MS(Surgery) FRCS (Eng)

than 180 successful neuro surgeries to date, using the sophisticated precision scanning technology to pinpoint the exact location where surgery and

while reducing the time taken for each surgical procedure. Sampath Bank by this measure has served many patients who need critical life saving surgeries.

“Wewata Jeewayak”

to facilitate a level of societal development that would translate into tangible results for the future.

COMMUNITY EMPOWERMENT THROUGH THE DEVELOPMENT OF NATIONAL INFRASTRUCTURE

continue to gather momentum across the country, we have systematically aligned many of our community

national importance. Moreover, grass root level capacity building initiatives of this nature are deemed to stimulate the country’s productivity index while boosting the

From a business perspective, the ensuing improvements in community livelihoods and living conditions are seen as the cornerstone in attaining our inclusive banking goals that seek to grow the bankability of the mass island-wide populace. A notable deviation from the core

to heighten employee awareness regarding pressing


an unusable state. From an engineering perspective, the restoration of the tank was seen as a massive undertaking that would be almost the same as constructing a new tank. Thanks to Sampath Bank, we were able to carry out a comprehensive restoration

to its original glory, but also reinforced the structural framework for generations to come.

The Sampath Bank sponsored Gamata Viduliya

academic activities because they are now able to put in extra night-time work. Having a reliable electricity connection has also helped boost many home-based businesses like tailoring, weaving and pottery. The Gamata Viduliya programme has brought progress

village folk.

Mr R M Upali Rathnayake

Mr G M Wimalarathna

“Gamata Viduliya”

the “Gamata Viduliya” initiative aims to provide electricity to rural communities who continue to live in little isolated hamlets across the country. The maiden undertaking commenced with the campaign to provide electricity to

the country. Severely handicapped due to lack of basic infrastructure, particularly the lack of electricity, the

villagers of this remote settlement continued to face untold hardship, with education and business activities being curtailed as a result.

Following a comprehensive evaluation of the eligibility

families with children showing outstanding academic potential and families with children preparing for a competitive examination within the next six months. Special focus was also allocated to single parent families and to non-alcoholic breadwinners. Consequently, ten

0.29 Mn under the inaugural “Gamata Viduliya” initiative.

stood at 33 including 19 children.


95

“Gamata Viduliya”- Key Highlights

Objective To elevate the present living status of the families, support children for their education and also enhance the self-employment status, inculcating positive lifestyle changes by providing electricity to needy families

District

10 families

Livelihood Development Projects in Navatkuli Including Rebuilding of the Navatkuli Railway Station

Yal-Devi railway track, deemed to play a pivotal role in

to trunk roads and easily accessible to the general public

“Emblem of Hope”- Key Highlights

Objective Appended to the Government led

reconciliation agenda

Outcome:

stakeholders

Travellers - Access to the Yal-Devi railway route

Farmers - Capacity building

Entrepreneurs - Entrepreneur

schemes

Students - Education support

development and capacity building

Additional rebuilding initiative, Sampath Bank

steps to further integrate with

District. Driven by empathy for these people who had lost so

a number of measures to bring a glimmer of hope to the lives of these people. While deepening the connection with communities

predominantly on enhancing the facilities available for children.

regard were the refurbishment

re-stocking of the children’s library at the Chavakachcheri Urban Council and the construction of a children’s park also in the

the commencement of the undertaking, Sampath Bank

Given that the original infrastructure was completely destroyed during the civil war, the undertaking resulted

complete with all modern amenities including a 24 hour on-site ATM.

commissioned on 13th October 2014, the rebuilding

commitment to engender meaningful socio-economic


progressive development at a national level.

business framework that would produce sustainable

Community Empowerment through Entrepreneur Development (Sampath Saviya)

integral part of our operational code, we also remain committed towards long-term community building through our involvement in supporting local businesses and organisations that drive community-based economies.

“Sampath Saviya”- Key Highlights

Objectives Enhancing personal entrepreneurial skills

expansion of existing businesses

ability to develop an appropriate business plan

record keeping skills

regulations and labour laws

449 entrepreneurs

Our initiatives in this regard are meant to help people to help themselves. As a priority we empower community cells in such a manner so as to enable them to overcome both actual and perceived limitations and

so, we use a broad range of engagement initiatives to encourage communities to pursue their future aspirations and broader life goals.

initiated to produce core values of leadership and responsibility as pre-requisites for nurturing sustainable communities in the future.

Equipping a library catering mostly to students enhances general knowledge and peripheral education. Amusement, socialising, peer camaraderie are promoted among kids and juveniles in a children’s park. With a robust library and a modern children’s park, Thachchanthopu is a dream-becoming-true location for about 1,500 children in the area. The

Thenmaradchy south area. Which is one of the most

the children’s park at Thachchanthopu are non-Banking outreaches built and donated by Sampath Bank, with futuristic perception. All knowledge

developmental infrastructure gratis inputs shall remain ever grateful to Sampath Bank.

Mr K Sachithananthan [MA. MSC, DSc

Focusing primarily on

community education across the country, all

aimed at eliminating the persistent knowledge disparity that exists in


97

Year Average Participants Colour Code

2012 6,500

2013 9,100

2014 9,655

Dematawa Tank - Kurunegala

Gamata Viduliya - Anuradhapura

Education for DevelopmentA key indicator of social progress, education continues to play an increasingly decisive role in realising self-sustainable and equal development across a wider

changing status quo for education, we aim to support the broader educational needs of selected segments

undertakings are aimed at eliminating the persistent

the appropriate knowledge and skills to ensure that the

Sampath Bank PLC, Grade 5 Scholarship Support Programme

Grade 5 Scholarship Programme 2014 - Key Highlights

Objective To strengthen the country’s primary education sector at a grass roots level

10 locations islandwide

Approximately 9,655 children

support for students preparing for the annual Grade 5

registration, workshops held island-wide are conducted in both Sinhala and Tamil, to assist students in their chosen

Bank customers only, the highly focused half-day workshops are intended not merely to impart theoretical

aspects of the examination process, while also motivating students to aspire for success by envisioning broader life goals. Outlining key aspects of child psychology, each workshop is also accompanied by a special counselling session for parents, to provide insights into child psychology while highlighting the value of childhood nutrition in maintaining good physical health

Special Community Projects Conducted in 2014

Horana

Hingurakgoda

Chilaw

Embilipitiya

Matale

Trincomalee

Bandarawela

Dikwella

Vavunia Padaviya

Hali-Ela

Pelmadulla

Kegalle

Deniyaya

PannalaKatugasthota

Kamburupitiya

Balangoda

Tissamaharamaya

Neluwa

Buttala

Dehiattakandiya

Hanguranketha

Kuliyapitiya

Kahatagasdigiliya

Mulativu

Kurunegala

Navatkuli

Anuradhapura

Ratnapura

Kandy

Puttalam

Jaffna

Matara

Batticaloa

Monaragala

Kalutara

Galle


ASPECT: SUPPLIER ASSESSMENT FOR IMPACTS ON SOCIETY

Supplier AssessmentOur suppliers and service providers are selected through a highly transparent selection process. We adhere to globally accepted best practices that emphasise the importance of anti-corruption and anti-competitive behaviour. Our supplier selection criterion is comprehensively structured to cover all aspects of sourcing and procurement, including the following critical areas, among others.

Tender procedure including tender negotiations

Fair and equitable selection of suppliers Optimising competition Dispute resolution

While price and consistent quality remain critical components, supplier evaluation also focuses on establishing the overall capabilities of vendor. There is no reported negative impact on society through our supply chain.

Environmental

Schedule / Volume

Technical Handling

On Time Delivery

Services / Supply

DocumentationCooperation

Quality Management Quotation BehaviourContract

Cooperation

Co-operation

Financial StabilityMarket / DependabilityAvailability / Delivery

Capability

Asse

ssm

ent

Safety

Quality

M

echa

nism

Commercial

Viability

M

ciaal

ssm

ent

S

Qualit

Categories and

Criteria

Supplier

Supply Chain Management

SUPPLIER EVALUATION CRITERIA

Supplier Quality Management

Supp

lier

Man

agem

entSupply

Managem

ent


99

G4-DMA

MANAGEMENT APPROACHWe are dedicated in preserving the natural composition of air, water, energy and biodiversity in order to make the earth a better place to live.

environmental conservation and protection. Funding is extended only to those projects or businesses that promote earth-friendly concepts using modern technology and support the principles of lean-resource consumption while strictly complying with all mandatory environment protection regulations.

We are in accordance with Carbon Footprint calculation for the second consecutive year and we became a carbon conscious Head

LEADING BY EXAMPLE: OUR APPROACH TO ENVIRONMENTAL STEWARDSHIP

As a leading business entity in the country, environmental sustainability has always been predominantly featured

impact on the environment resulting from the business.

caused by our own operations, we remain passionate

which would inherit the earth. With global resource depletion reaching critical levels, our conservation

natural resources utilised as a consequence of greater urbanisation and accelerated development. Hence, our initiatives focus on a broad spectrum of environmental themes that would serve the interest of the people of Sri

A STRATEGIC APPROACH TO ENVIRONMENTAL MANAGEMENTSTEP 1: IDENTIFICATION OF MATERIAL ASPECTS AND BOUNDARIES

fundamental guidelines not only to help control and mitigate the environmental impact caused by our business, but also to address underlying environmental grievances.

No Aspect Boundary

Sustainability

Sampath Bank

Sustainability

to Stakeholders

Environmental

1 Materials Sampath Bank High

2 Energy Sampath Bank Medium High

3 Water Sampath Bank High

4 Biodiversity Community Medium High

5 Emissions Community Medium High

6 Community Medium High

7 Customer

8 Compliance Sampath Bank High High

9 Transport Sampath Bank Medium Medium

10 Overall Sampath Bank High High

11 Supplier environment assessment Suppliers Medium Medium

12 Environment grievance mechanism Sampath Bank Medium Medium

Stakeholder: Environment


STEP 3: SUBSCRIBING TO INTEGRATED

Having prioritized material environmental aspects directly impacted by our activities, we use a range of qualitative and quantitative benchmarks to help us monitor and control our imprint on the environment.

for the entire branch network by 2017, we have stepped

all levels of the business.

Extending well beyond the obligatory considerations, our approach to manage environmental sustainability imparts a new paradigm in environmental consciousness. As an integrated approach, our environmental stewardship model seeks to lessen the impact on the environment through continuous engagement that triggers pre-emptive action.

Achievements Strategic Focus Modular Focus Goal

Obtain Carbon Conscious

Bank by 20172014

Subscribing to

friendly Business

Carbon Footprint Calculation

Eco Guidelines

Management

to embrace an

Eco-friendly Mindset

Community-based

H

M

M H

9, 11, 12

8,10

STEP 2: MATERIALITY ASSESSMENT

7 1,3

2, 4, 5, 6


Sus

tain

abili

ty S

igni

fica

nce

to S

ampa

th B

ank


H

M

High

Medium

101

regulations relevant to the Banking industry, voluntary adherence to the six fundamental eco guidelines spelt out by our environmental policy, make us strengthen to address and to minimise environmental grievances.

1. Adopt lean resource consumption practices across our operations, to reduce the use of paper, energy and non-biodegradable material

2. Ensure proper disposal of waste, to minimise harmful environmental impacts

3. Create awareness of protecting and conserving the environment among employees, customers and other stakeholders

4. Address critical environment related issues through a tripartite involvement between the Bank, employee and the community

5. Ensure compliance with environmental regulations in all our business transactions

6. Facilitate green enterprises, through special incentives, grants, loans and guidance

SAMPATH BANK NATURE PROTECTION CLUB

Project Statistics 2014

27

324

2,399

is a voluntary entity that comprises members drawn from various disciplines

objective is to support environmental sustainability in the longer term, while adhering to the above guidelines to outline its role in promoting an eco-friendly business practices.

Prof Sarath KotagamaDepartment of Zoology, University of Colombo

concerns, despite having very little direct impact

a great willingness on the part of the Bank to ensure that its stakeholders including the families of employees are also made aware of the importance

popular radio programme sponsored by the Bank under the theme "A minute for the environment", a highly informative documentary aimed at highlighting the value of protecting the environment. Apart from

launched by the Bank and nature protection club to encourage its customers and employees to make the

SAMPATH BANK PLC ECO COMPETITION:

greater awareness among employees, on the importance of green concepts. By motivating team members to conduct outstanding green activities, the eco-competition was designed to compel a greener behavioural attitude among

pivotal role in embedding the required green attitude

calibrate the employee mindset cognisant of our integrated work practices are seen as the key to nurturing a green attitude.

MATERIAL ASPECT: MATERIALProduct and Services Responsibility

We are aware that the impact on the environment resulting from our operations is decidedly limited, particularly given the nature of our business as a commercial Bank. However, environmental sustainability remains an important part of the product responsibility framework associated with our core business. To further demonstrate our commitment to this cause, we have developed a number of structured green lending schemes that have been instrumental in formulating eco-friendly business propositions at concessionary rates. Moreover, in the recent past we have made a


Number of ProjectsInstalled Capacity

(MW)Loan Amount

(Rs Mn)

Mini-hydro power projects 7 12.55 1,669.00

Solar power 17 0.09 18.15

Total 24 12.64 1,687.15

DEVELOPMENT INITIATIVES THAT WOULD HELP TRANSITION TOWARDS PAPERLESS SOCIETYWithin the framework of our core business we also aim to trigger solutions that would produce a broader change perspective. Viewed as part of our product responsibility

consciousness among our customers which help them determine their liability and responsibility towards the environment. As such our e-initiatives and paperless communication channels seek to transition customers towards more eco-friendly practices and allow them to account for their actions.

Area of focus Initiative Description

Deliverychannels

Sampath MobileCash

Enables any person irrespective of them being customers to send money instantly to any person having any brand of mobile or CDMA phone with any service

postal and money orders, revitalising the inland money transfer system across the country

Enhanced to provide additional featuresView inward cheques

View entire Banking portfolioOpen savings and term deposit accounts

Mobile BankingApplication systems

Enhanced SMSAlerts Sampath the only Bank to provide a comprehensive service

Enhancements toCorporate ClientsModule

Trust Fund remittances online via e-Bank solution providing a single portal for multiple functions

e- Statement / e- Advice

A new trilingual “e- mail indemnity” has been implemented to cover all

minimising the volume of paper, used for the purpose in addition to reducing the cost incurred on postage and stationary

Sampath Employee This is a communication mechanism to send messages using the Short Message

on important matters / emergency situations which require urgent attention.

OPERATIONAL LEVEL CHANGES THAT PROMOTE THE PAPERLESS CONCEPT


103

Area of focus Initiative Description

Operations

systemand monitoring of transactions. The system integrates routine audit functions,

across the Bank

Automated covering approvalsystem

An online system for approval of facilities which reduce consumption of paper

e-Circularsdemand

Governance

An automated system for tracking Directors’ interests & related party transactions

e-Board papersSystem to deliver and maintain history of Board papers to Directors over secure

platform

MATERIAL ASPECT: ENERGY MANAGEMENTGiven the nature of our business, electricity remains the primary source of energy needed for the day-to-day operations. To minimise the number of electricity units consumed during the course of our operations, we have always sought energy saving alternatives that would control usage and help manage our impact on the environment. Cognisant of this goal, the following initiatives were introduced during the year:

was introduced in 2014 and would be extended to the entire branch network by end 2015

Campaign on reduction of Energy Consumption

Electricity” was initiated to commemorate Green Day 2014, with the objective of inculcating a habit of using the stairs as an eco-friendly alternative to the use of elevators.

Saving Tips

in 2014, we also took steps to promote energy saving at household level by encouraging our employees to reduce

awarded cash prizes at the Green Awards Ceremony held by the Bank in 2014. This initiative saved more than 12,100 household electricity units in 2014 which can be used to provide electricity for 200 rural houses.

GREEN LENDING SCHEMESWe believe that doing everything possible to raise the eco consciousness of our customers will go a long way in ensuring a greener tomorrow. With the motive of encouraging the use of renewable energy sources, we continue to pursue solutions that would elicit environmental change on a broader scale such as Solar

Electricity Consumption per Employee

kWh2,8123,120,771 kWh


The knowledge that meaningful change can be realised

encourage our employees, to also embrace eco-friendly lifestyles choices.

attitudes of our employees who would trigger a vibrant eco movement at a national level in the future.

MATERIAL ASPECT: WATER MANAGEMENTThough our operations have no direct impact to or from water, we have put in place a mechanism that regularly

through our enormous contribution towards the following initiatives.

SNAKE CONSERVATION INITIATIVES WITH THE COMMANDO REGIMENT OF THE SRI LANKA ARMY

Lt Col E M G H J B Dehideniya

Training School, Vedithaltivue - Mannar.

As a keen advocate of environmental conservation,

the preservation of natural resources in the country. Among the many initiatives taken by the Bank in this regard, the snake conservation programme is a unique endeavour that aims to preserve the endemic serpent population and protect the rich bio-diversity of Sri

species and carry out public awareness programmes across the country.

At an exhibition

from Sampath Bank

Meanwhile, we also conduct regular employee awareness programmes in order to minimise water wastage across the Bank.

MATERIAL ASPECT: CONSERVATION OF BIO DIVERSITY

leased or managed in protected areas of bio diversity.

on bio diversity through our Banking operations, we

m335

Stakeholders: EnvironmentStakeholder: Environment

Water Consumption per Employee

39,154 m3

105

Tree planting 2013 2014

projects42 62

completed the projects42 27

67 43

5,600 3,486

Approved project 1,239,960 3,088,365

During 2014, 62 tree planting projects were approved for

projects were completed by the end of the year with 3,486 trees covering 43 locations island-wide.

CONTRIBUTION TO THE WILD LIFE PROTECTION FUND

issued by the Bank to a fund in support of conservation

preventing the destruction and harmful commercial exploitation of species of wild animals and plants, and wherever desirable and possible, to preserve wildlife

MATERIAL ASPECT: EMISSION

We have obtained professional assistance of The Carbon

towards reducing our Carbon Footprint. The Carbon Footprint calculation is a multi-functional tool that helps ascertain the business impact on the environment and highlight areas where critical action is deemed necessary. The measurement of the CO2 emission forms the point of origin for the Carbon Footprint Calculation, which is preceded by an extensive data gathering exercise that

Dr P B Terney Pradeep Kumara

Former Head, Department of Oceanography and Marine

precious resource. The steps taken by the Bank in this regard have helped to enhance the natural beauty of our island and lead to greater economic development in the country.

With the motive of contributing to conserve habitats, Sampath Bank in collaboration with the Commando

initiated a project for the conservation of snakes including endangered serpents. Through this project

Modern Serpentarium at the Warfare Training School. Further the Bank facilitated a public awareness campaign in this regard.

THE CORAL RESTORATION PROJECT

the designated marine environment consists of a 4 kilometre stretch of coral reef located approximately

progress and is being conducted with the assistance of the Department of Oceanography and Marine Geology of


RECOMMENDATIONS FOR THE FUTUREFollowing the results of this Green House Gas assessment, CCC recommends that Sampath Bank

successfully completed on 30th April 2014, with the establishment of the carbon footprint for the Bank’s

GREEN HOUSE GAS EMISSION SUMMARY FOR SAMPATH BANK PLC’S HEAD OFFICE OPERATIONS

Scope 1 Direct emissions released from sources that are owned or controlled by the Bank

571.22 tCO2e

Scope 2 1,060.22 tCO2e

Scope 3 All other indirect emission sources that are not released from sources mentioned under scope 1 & 2

1,121.75 tCO2e

Emissions from Scope 1, 2 & 3 2,753.20 tCO2e

GHG Protocol Scope Emission Source Data Quality

Direct emissionsOnsite fuel - stand by generator Complete

Fugitive emissions Complete

Company owned vehicles Complete

Complete

Grid electricity Complete

Hired vehicles Complete

Third-party deliveries Complete

Waste Estimated

Foreign travel Complete

Employee commuting Estimated

Colombo 02.


107

Carbon Conscious Office certificate for year 2014

MATERIAL ASPECT: WASTE MANAGEMENTOur proactive approach to managing our environmental impact has prompted us to embrace lean resource management concepts together with the fundamentals

solutions to be applied in our day-to-day operations.

waste management practices and reduce our annual energy and water consumption levels.

in order to minimise the burden on the environment,

reliable electronic waste management solutions in Sri

Based on the nature of our business, incidents of

Total Volume of Disposed to be included 2013 2014 Growth %

59,624 70,407 18.08

Savi

ngs

resu

ltin

g fr

om

recy

clin

g of

1,013 1,197 18.16

Electricity kWh 238,496 281,628 18.08

1,894,850 2,237,534 18.09

104,640 123,564 18.08

178 211 18.54

MATERIAL ASPECT: COMPLIANCE

Steered by the clarity of our environmental policy, we at

all mandatory regulations pertaining to the environment. Our campaign to observe the highest international standards have prompted us to embrace global best practices for environmental governance and reporting

stewardship model embodies a new dimension of transparent reporting and examines the underlying concerns of all stakeholders linked to our business. As

throughout the history of the Bank.

We also continued to encourage our customers to focus on safeguarding the environment by obtaining

E-waste

2014 - 630.2 (2013 - 1,351.4)

2014 - 99,731.5 (2013 - 197,071.5)

CARBON FOOT PRINT

Company Owned Vehicles

Employee Commuting

Electricity Distribution & transmission loss

Onsite Fuel - Stand by Generator

4.68

0.126.34

14.29

38.51

0.070.432.07

0.12

%

33.37

Leased Vehicles Electricity

Foreign TravelWaste

Hired Vehicles Third-party deliveries


MATERIAL ASPECT: TRANSPORT

Carbon emission of Bank owned vehicles, leased vehicles, hired vehicles, foreign travels, third-party deliveries

tCO2e in the respective year. Since employee commuting

our employees to minimise the negative impact on environment due to their transportation preferences.

MATERIAL ASPECT: OVERALL

CategoryTotal Expenditure - 2014

(Rs)

Emissions treatment 300,000

environmental management cost

3,088,365

MATERIAL ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENTOur business as a Bank and the customer-driven business template that we subscribe to, means we do not directly monitor the environmental impact of our suppliers.

MATERIAL ASPECT: ENVIRONMENTAL GRIEVANCES MECHANISMS

operations was reported during the review period from stakeholders associated with our business. However, as a responsible corporate citizen we voluntarily engage in addressing the environmental grievances of the

Locationthe Community

Engagement Mechanism

Kantale Dam Kantale Dam has been polluted due to dumping of garbage

Sampath Team - Kantale and students of Agbopura Maha Vidyalaya carried out a campaign to clean the Kantale Dam and placed permanent garbage bins to ensure the cleanliness of the place.

Athagala Senasanaya, Ampara

Athagala Senasanaya faced numerous

electricity, especially due to the threats of wild animals

environmental friendly mechanism and train people in the village to maintain the solar panel

B/Janananda MMV, Diyathalawa

their daily garbage without polluting the surrounding area

Team Welimada has constructed a compost processing Unit in the school premises and conducted several educational sessions on environment protection and conservation to students

Kolonkanda Jungle Hermitage, Kaluaggala

The jungle hermitage had been severely

rainsarchaeological site from soil erosion by building stone barricades. Further the team reconstructed the temple and "bomaluwa" and facilitated the supply of Water to the hermitage.


109

Our shareholders have always been a monumental strength to us and it is their continued patronage which has been the basis on which we have built our banking legacy. Thus the commitment to our shareholders remains deeply entrenched in our value culture and is integrated into the fundamental principles by which

creation means so much more than the mere obligatory response, indeed it is a non-negotiable item on the business agenda.

Mr U H Upawansa

Shareholder

to have been part of this process and feel deeply thankful that the Bank has continued to produce

core values at all times

Mr K K Wijayaweera

Shareholder

2,553 depositors who were a part of Sampath Bank

present status with 17,688 shareholders and over 220

participation policy which has given me the opportunity to be a part of this remarkable journey.

Hence, over the years, we have worked with a strong purpose to create a suitable value-based management formulae that would be an adequate representation

has reinforced our performance and helped us deliver a

gains for our shareholders from time to time, yet another testament to the sustainability of our business model.

to 175 for further details.

Aside from this results-driven rationale, we remain committed to abide by all legal and mandatory stipulations that would safeguard shareholder interests, now and in the future.

Stakeholder: Shareholders

Mr M Thiyagaraja

Sampath Bank Shareholder

transformed into one of the most technologically advanced banks in the country, which has brought rich rewards to all shareholders over the years. As

see that the Bank has used its expertise very well in

shareholders alike.

BUSINESS REVIEWreal value, sustainable growth

111

OPERATIONAL FOCUS FOR THE YEAR: With the impact of low market interest rates gradually unfolding throughout best part of the year, the savings and deposit market was viewed as a less attractive investment option, signalling a much lower industry-wide

December 2014.

As the industry continued to feel the pinch, for its part,

these challenges. A deliberate decision was also taken to ease away from costly term deposits in favour of smaller

stimulate organic CASA growth was launched with all branches being assigned a mandate to boost CASA volumes. While each branch was mandated to carry out a minimum of three localised campaigns for the year, this highly focused endeavour was also designed to inspire a more meaningful savings culture among the masses. Engaging local schools, community, and business

number of key promotional activities were carried out in tandem with the 2014 volume drive.

Meanwhile, alongside the use of the diverse range of delivery channels, the Bank continued to emulate the ideals of relationship banking to qualify a unique banking experience that delivers unparalleled customer convenience.

Sampath DoubleS

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Focus on low cost short term deposits and reduce

dependency on high-cost term deposits

KEY OPERATIONAL TARGETS FOR THE YEAR: Grow CASA by 19%

PERFORMANCE REVIEW:

remained more or less the same as the previous year.

Measures taken to realign the deposit mix were also evidently a success, with the mainstream CASA mix

while the Bank continued to shed the quantum of high cost term deposits.

“Sampath Samaja” -to cater to the needs of community-based institutions

a long felt need in the market.

A widespread campaign to stimulate organic CASA growth was launched with all branches being assigned a mandate to boost CASA volumes.

Personal Banking: Deposits


FUTURE OUTLOOK:For the immediate future, the focus would rely on steadily expanding the low-cost CASA base across the country. Supported by localised promotional campaigns, the Bank would strive to generate organic growth of mainstream CASA. Meanwhile, the heightening market competition is likely to provoke a new level of customer

From a longer term perspective, the proliferation of

unprecedented growth opportunities for the personal deposit business. Given that a major portion of this critical market would consist of a highly tech-savvy youth generation, the key to tapping into this potential would depend on the ability to deliver highly innovative

these products would need to convey an unprecedented level of convenience in cognisance of the evolving needs of the future customer. While a strong

aspirations, investments in the use big data analytics would undoubtedly help develop customised solutions to capture these emerging niche markets in the years ahead.

Personal Banking: Deposits

TOTAL DEPOSITS VS CASA %

Rs Bn

2011 2012 2013 2014

0

50

100

150

200

250

300

350

Total Deposits

19

6

24

4

30

2

34

2

0

7

14

21

28

35

42

49%

4135

34

47

CASA

113

Personal Banking: Loans and Advances

OPERATIONAL FOCUS FOR THE YEAR:

business model. Following the rapid growth in the island-wide network, branch banking now accounts for a sizeable portion of the personal banking business, both in terms of volumes and revenue.

Officers and Consultants From Sampath Bank

The Bank also focused on deriving a healthy lending mix by striking a balance between short term and long term

From an industry perspective, as low market interest rates became the new norm in 2014, competition within the industry continued to deepen as the year progressed. With private sector credit growth remaining stubbornly resistant, despite the low interest rates, widespread re-pricing was being deployed across the industry, as players scrambled to engage the limited market possibilities. As a consequence, the loan book continued to be burdened

negative connotations on the bottom line became a

on a rigorous campaign to boost volumes of all lending products, the Bank sought to arrest depleting margins. Securing the support of the island-wide branch network,

Overseen by the newly set up personalised lending unit, specialised managers were appointed to drive growth of

Meanwhile a re-pricing strategy was put in place to encourage customers to make use of the current low-

also focused on deriving a healthy lending mix by striking

Consequently, the following promotional campaigns were initiated, in a bid to stimulate customer demand for credit and grow island-wide volumes;

Moreover, as in the past, the Bank continued to pursue tie-ups with major housing development projects as part

Aside from the above volume driven initiatives, strict management and control measures were exercised to ensure the pawning portfolio remains within acceptable limits.

ADVANCES AND DEPOSITS -BRANCHES

Rs Bn

2011 2012 2013 2014

0

50

100

150

200

250

300

Total Advances Total Deposits

10

2

16

6

13

5

20

5

16

4

24

8

17

7

29

9


commercial lending, personal loans, leasing, hire purchase and housing loans.

Commercial Lending

loan book experienced a YoY growth of 24.8% indicative of the successful mid-year re-pricing strategy adopted

construction and hospitality sectors were seen taking

capital expenditure and working capital requirements. On the other hand, the new facilities granted at low interest

resulting from the aggressive promotional agenda outlined above.

Leasing and Hire Purchase

supported by strong contributions from leasing facilities extended to individuals alongside a healthy growth

the Bank continued to play a leading role in extending support to SMEs engaged in agriculture, manufacturing, construction and services by providing necessary capital for acquiring vehicles, machinery and equipment.

Quarter” promotional campaign designed to promote

contribution towards overall volumes in 2014. Meanwhile, keen to capture the emerging market requirements, the following new product was launched during the year.

Hire Purchase for Hybrid Vehicles

vehicles being imported to the country, the Bank introduced a new hire purchase

to penetrate this growing market. The overwhelming response for the facility seen in September and October months following its launch on 25th September 2013, translated well for the leasing portfolio, with the facility accounting for 4.7% over of the overall growth in the hire purchase portfolio in 2014.

Personal Banking: Loans and Advances

Operational Goals and Objectives for the year: Grow the overall loan book Ensure a healthy mix between short term and long

term lending products

Performance Review: Overall Advances Portfolio

The total advances portfolio excluding pawning grew by a robust 31.4%. This commendable increase was due mainly to the successful campaign to promote

The commercial loan book experienced a YoY growth of 24.8% indicative of the successful mid-year re-pricing strategy adopted by the Bank.

115

Housing Loans

solutions, the growing popularity of housing loans at

endeavour to nurture development at all levels of society.

PawningGiven the continuing instability of the world market’s gold prices, the exposure to the pawning sector was consciously reduced from 19.7% to 7.9% of the total

previous year. Moreover, in deciding the quantum of advances, the Bank exercised further caution by

sanctioned Credit Guarantee Scheme introduced on 2nd

pawning customers to access a higher value on their

seen as a positive step towards improving the quality of the pawning product and minimising the risk to the Bank

prices.

FUTURE OUTLOOK:Given the rapid transformation seen in many of the personal banking parametres, better management

personal banking function in the years ahead. Meanwhile, supporting the mainstream lending portfolio can only be done by adopting the fundamentals of the lean management philosophy which would help trim costs and improve productivity, thereby sanctioning a more resourceful operational prototype for the future.

From a marketing perspective, a proactive customer-centric approach that envisions the needs of the customer and provides a greater degree of solution based convenience, is deemed to be the catalyst of

correspond to the evolving needs of the customer.

brand image, accompanied by a widespread marketing communication agenda that targets diverse market

term business goals, managing the product mix would also remain a critical success factor that would help realise future business targets.

2011 2012 2013 2014

0

50

100

150

200

250

300

350

Pawning Advances - Gross

Advances Other than Pawning - Gross

41 55 53 25

28

5

21

8

16

2

13

7

PAWNING ADVANCES VS ADVANCES OTHER THAN PAWNING

Rs Bn

HOUSING LOANS

2011 2012 2013 2014

0

3,000

6,000

9,000

12,000

15,000

9,0

14

10

,35

2

12

,15

7 14

,55

4Rs Mn


OPERATIONAL FOCUS FOR THE YEAR: Signifying 25 years in the card business, the year 2014

evolutionary process which has served to reinforce its iconic

currently authorised to issue cards under the three major

been traditional values and innovative leadership.

More recently, driven by varying business dimensions and cosmopolitan socio-economic paradigms, change

prompted the Bank to deploy a whole new approach to the card business. While staying true to the conventional value proposition of being the responsible choice, Sampath branded cards strive to reshape industry

Thus the focus for 2014, was to develop a multi-functional operational model that would ensure a sustainable platform for growth in the longer term. Cognisant of this aim, the Bank pursued an aggressive merchant acquisition strategy, to broaden accessibility

to expand the merchant network, a series of merchant development measures saw the introduction of diverse e-commerce and point-of-sale platforms that aim to

customer.

a prudent credit strategy that would at the same time make a consistent contribution to the bottom line of the

cards unit. Meanwhile, ensuring the security and integrity of the card function continued to be a key priority for

processes to validate the security interface of the card network at all times.

Meanwhile, value addition was an integral part of the strategy to engage existing customers and encourage more frequent use of the card. Spearheaded by this objective, in 2014, the Bank featured a widespread promotional agenda that presented a range of special deals on shopping, dining, entertainment and travel among others. Aimed at captioning the needs of cardholders across the country, some of the key highlights are outlined below;

Promotion to Commemorate 25 Years of SampathCards

To mark the 25th Anniversary and reward loyal

including special deals on clothing, groceries, travel, dining, hotels, furniture & home appliances, Motor

Town-on-sale Extravaganza A unique concept launched to promote special deals

Held for the fourth time, the "Town-on-sale" campaign tied up with 18 merchants in Galle in August 2014, to

appliances, books, hotels and eye wear products.

U Shop V DropSeasonal campaigns launched to coincide with both

selected merchants

We are the only local bank presently authorised to issue cards under the three major global franchises, namely

American Express.

Personal Banking: Cards

A satisfied merchant, Mr Janaka Fonseka,

117

Loyalty Programme

high-end international hotels and a host of international retailers and service providers in addition to a number of leading local retail partners.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Develop a versatile card brand in cognisance of

market trends Strive to benchmark industry standards for

performance, technological superiority and service quality

KEY OPERATIONAL TARGETS FOR THE YEAR: Grow the number of cards by 34% Grow the credit card portfolio by 29%

PERFORMANCE REVIEW:Sampath Cards demonstrated a strong performance for the year, with the number of active cards tabling

able to only record a YoY growth of 7.6% . The growing popularity of debit cards also made a strong contribution towards the performance tabled by SampathCards.

Furthermore, while usage statistics show that card usage in the industry increased by 4.8%, the usage of Sampath Cards on the other hand saw a phenomenal increase

promotional campaign.

Consequently, the credit card portfolio also shot up by 20.9% YoY. A continuing trend seen for the past few years, this consistent growth in the portfolio is indicative of the versatility and security associated with the Sampath Cards.

Meanwhile, the following new developments were

Having launched the concept as a pilot undertaking

to the market in January 2014. Forming a part of the merchant development initiatives, the

enlisting SMEs and sole proprietorships into the merchant network. Delivery service providers were also brought in as a subsequent addition during the year. Using the highly secure EMV encryption

also saw a considerable investment being made

management operations in order to ensure the security of terminal management systems and adequate capacity control tools.


would be underpinned by strong brand value that

these market demands, the skilful use of technology to generate greater solution based convenience would result in the introduction of dynamic e-commerce modules that cater to the next generation of consumers.

Moreover, the demand for corporate cards is also viewed as a potential growth area for the future. To adequately capture this market, the Bank would need to rethink the conventional cards model and develop a more vibrant needs-based platform to cater to the demand for corporate cards.

Meanwhile, amid heightening competition in the market, security and transaction authenticity are likely to underpin the success of the entire card model. Seeking to develop suitable solutions would therefore require much

misuse and fraud, in the future.

Personal Banking: Cards

2011 2012 2013 2014

0

10

20

30

40

50

CARD ACQUIRING VOLUME

Rs Bn

Sampath Bank American Express® Platinum Ultramiles Credit Card

Sampath Bank, with a rich history of introducing many

credit card market when they introduced the Sampath

Maldives. Attended by the senior management teams from Sampath Bank and American Express, the Sampath Bank

introduced to customers with much fanfare.

Ultramiles Card is the fastest and highest miles earning

members are extended a superior convenience that has

Visa Debit Platinum Display Card

and e-Commerce transactions, with an additional layer of security which will be visible to them on the display panel embedded in the card plastic, in the form of a second factor of authentication.

FUTURE OUTLOOK:Given the growing trend in favour of a cashless society,

years ahead, as new emerging markets continued to open up. Certainly, the key to harnessing this potential

GROWTH OF SAMPATH CREDIT CARDS

GROWTH OF SAMPATH CREDIT CARD PORTFOLIO

16.4%

20.9%2014

2014

119

Channel Products: Branch Banking

As part of the campaign to deliver greater value to the customer, the Bank also continued to enhance the visual

the identical visual theme was replicated across the entire network, creating a sense of much needed brand uniformity for both the exterior and the interior layout of the branch. While strengthening the island wide market presence, this move is widely expected to transform the “Sampath” brand perception across the country in the longer term.

ensure the branch value proposition was being optimised at each branch tier.

process, a number of key operational functions were centralised during the year, in a bid to minimise the processing time and improve the credit quality of the overall branch portfolio.

Additionally, while staying true to the core operational

the evolution of its customer base.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Selective growth in the branch network

the customer via the branch concept Strengthening Brand association by resonating an

identical visual appeal across the entire branch network

branch portfolio and sustain a satisfactory bottom line for each branch tier

PERFORMANCE REVIEW: Fully Fledged Branches

With the expansion of the branch network transitioning towards a more selective growth model, 8 new fully-

to bring the total number of branches to 220 as at 31st December 2014. To enhance the customer experience, 8 branches were also relocated to more prominent locations that support better physical attributes including extended lobby areas, additional parking and better accessibility.

OPERATIONAL FOCUS FOR THE YEAR:Having successfully achieved a nation-wide market presence, the rapid expansion of the Sampath Bank

somewhat in 2014. Having substantially increased the branch footprint in the past four years following the 2010 strategic expansion drive, growth in the network did continue during the year, albeit at a more moderate pace than that seen in the past few years.

branches were opened during the year to bring the total number of branches to 220.

branch model that would make a robust contribution

a sustainable operational platform is deemed imperative to ensure the branch function is optimised. Moreover, much emphasis was also placed on consolidating the branch function to generate a more meaningful value

that, in cities and townships that have a high population density, opening a second branch unit would greatly help customise the needs of all customers in these highly populated area.

NUMBER OF NEW BRANCHES OPENED

0

5

10

15

20

25

30

35

40

2007 2008 2012201120102009 20142013

9 9

18

40

35

3 38


Meanwhile, underpinned by the strategy to exploit

safety deposit lockers continued to be introduced at selected branches across the island.

Moreover, in response to the customer demand, banking

pm, with the possibility of upgrading to super branch status in the future.

Super BranchesThe Super branch concept introduced in 2011 continued to be well received, as demonstrated by the growing number of transactions resulting from the extended

2014, a further 4 branches were added to Super branch network with the opening one new branch in Borella while the facilities at the Kandy Dalada Veediya branch, Maharagama Singer Mega branch and Anuradhapura branch were upgraded on par with Super branch status.

cash deposits kiosks, to further augment the facilities available at the Super branch, with the initial unit being commissioned at the Colombo Super branch located at Dharmapala Mw, Colombo 7.

FUTURE OUTLOOK:Having achieved the underlying strategic objectives of the branch expansion initiative, the Bank is likely to

format in the years ahead. Given that the low interest

the foreseeable future, the viability of the existing branch

Opening of Borella Super Branch

Opening of Dickwella Branch

cost structure would certainly become questionable in the years ahead.

more customer-centric agenda cognisant of the evolving needs of the market, the Bank proposes to enact a series of pro-active strategies that would reshape the network strategy in the years ahead. The Bank would thus be called upon to strike a balance between multichannel delivery mediums as a means of replacing

banking” philosophy would underpin the technology-

automated solution for most mainstream banking needs.

be commissioned, accompanied by automated self-service kiosks which leverages on innovative technology to enhance customer convenience.

hubs would also be maintained to deliver the entire gamut of banking services to those customers who demand the traditional bricks and mortar banking

inclusive banking goals in the coming years, which would see the Bank strive to encourage the country’s vast rural unbanked population to embrace formal banking channels.

to 159.

Channel Products: Branch Banking

121

Channel Products: ATM Network

OPERATIONAL FOCUS FOR THE YEAR:Spearheaded by the decision taken in 2013, moves to expand the number of customer touch points continued

island-wide ATM network. The campaign to grow the ATM network led to the commissioning of a series of on-site

machines.

are intended primarily to complement the banking requirements of a particular region. Anticipating the potential demand for 24/7 access from customers in emerging new markets across the country, many of the newly commissioned on-site ATMs, were located in cities and townships which were found to have a higher population density. The strategy for on-site ATMs was thus strongly appended to the growth in the branch network.

ATMs focused on bringing the Bank "closer to the

Anticipating the potential demand for 24/7 access from customers in emerging new markets across the country, many of the newly commissioned on-site ATMs, were located in cities and townships which were found to have a higher population density.

On-site ATMs

285

41customer” by facilitating the day-to-day needs of varying

educational institutions and public transport terminals across the country.

GROWTH IN ON-SITE AND OFF-SITE ATMS

2011 2012 2013 2014

-50

0

50

100

150

200

250

300

17

(23)

4

(10)

22

3

8

273

%

Growth in On-Site ATMS %

Growth in Off-Site ATMS %


To further supplement the conventional stand-alone ATM concept, in 2014, the Bank introduced movable ATMs.

the teller machine unit. The epitome of convenience, this

To further supplement the conventional stand-alone ATM concept, in 2014, the Bank introduced portable

eco-friendly alternative

site ATM model, this pioneering endeavour

containers to house the teller machine unit.

Channel Products: ATM Network

platform as traditional teller machines and is deemed to play a crucial role in broad-basing the “Sampath” brand

FUTURE OUTLOOK:With widespread infrastructure development taking place across the country, a host of new customer segments are likely to materialise in the years ahead, opening up multiple opportunities to serve the needs

perspective, expanding the number of ATM touch points across the country would help provide the required traction to secure these markets.

Container ATM at Borella

123

Channel Products: Mobile and Tele-banking

OPERATIONAL FOCUS FOR THE YEAR:The advent of smartphones have undoubtedly played a pivotal role in determining the way in which the modern customers interact with their bank. Consequently, in the recent past, the escalating demand for digital communication mediums have steadily outpaced the demand for conventional banking channels.

Capitalising on this growing phenomenon, the Bank’s focus for the year sought to enlist the mounting popularity of social media as a means of broadening the scope of digital communication accessible to customers. The move is seen as an innovative step towards eliminating the perceived communication gap

media landscape also acts as a barometer helping the Bank to gauge evolving demands and cater to the high expectations of the digitally-savvy younger generation.

underpinned by the need to facilitate greater customer convenience, the Bank sought to introduce proactive value additions that would complement the changing lifestyles of the modern customer.

Meanwhile, leveraging on the country’s burgeoning mobile telephone market the Bank also launched an aggressive campaign to promote SMS alerts among the island-wide customer base. To complement this move, steps were taken during the year to expand the number

introduced in 2014.

PERFORMANCE REVIEW:

overwhelming since the initiation of the process.

Sampath Mobile App, version 2 was also launched on 23rd July 2014. An upgrade to version 1 launched in 2013, the new App allows for an integrated solution that capture the needs of the digital age customer by combining the entire gamut of mobile and tele-banking services. Moreover, supporting a much higher level of functionality, the Sampath Mobile App version 2 also facilitates live streaming and real-time connectivity associated with social media access.

Consequent to these developments mobile banking volumes experienced a 269% YoY growth, while tele-banking volumes rose by 15% YoY.

NEW OFFERINGS:

ATM network. An extension of the card-less cash concept launched in 2013, the facility is available to both customers as well as non-customers and

The Bank’s focus for the year sought to enlist the mounting popularity of social media as a means of broadening the scope of digital communication accessible to customers.


can be activated by a one-time pre-registration

convenience, the mobile cash concept also serves to augment the operational controls of the

convenience of the mobile cash facility to insurance claimants, saw the Bank tie up with Janashakthi

claims within a few hours of completing the documentary procedure.

FUTURE OUTLOOK:

for the immediate future would be, to embed a highly

Meanwhile, reinforced by the positive response received for the mobile cash concept, the Bank would also look at extending the number of touch points across the island,

Bank would thus pursue partnerships with grass root level organisations in order to broaden Sampath Bank

well.

While the long term prospects of the mobile and tele-banking framework remain strongly appended to the global developments in the mobile telephony, the

growth opportunities for the Bank, particularly given the emerging new generation of young adults demanding

based tools and hi-concept branches, parallel to enlisting the power of social media marketing in order to promote

Channel Products: Mobile and Tele-banking

NUMBER OF APPS DOWNLOADED

2013 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

19

,74

9

29

,87

9

Sampath Mobile Cash

LIKES / FOLLOWERS IN SOCIAL CHANNELS2014

Face

book

Twitt

er

YouT

ube

Link

edIn

0

5,000

10,000

15000

20,000

25,000

30,000

35,000

40,000

39

,82

5

54

1

16

7

1,7

79

125

Channel Products: Internet Banking

OPERATIONAL FOCUS FOR THE YEAR:While completely altering the boundaries of the global marketplace, the unprecedented speed with which the internet has developed in the past few years continues to transform the scope of global business practices.

core internet banking platform too came under strict

Sampath Vishwa, personal internet banking module being re-engineered in line with a more versatile framework. Entirely developed in-house using the latest metro design layout, the new format corresponds to a responsive web design that combines a seamless device adjustable interface to facilitate easy access, anywhere, anytime.

management tool for customers, the following key resource upgrades were also introduced as part of the

the virtual branch

for new accounts via the interactive deposit modelling function

model to embrace a range of unconventional alternatives vis-à-vis the introduction of multiple payment options coupled with a diverse range of merchants partners

Following the unveiling of the newly revamped personal internet banking interface, the corporate internet banking facility was also re-launched during the year and featured the following tools;

Online documentary credit procedure

Online payment gateway to expedite payments to Government institutions including Customs duties

Being one of the pioneers of mainstream e-commerce

With e-commerce rapidly becoming the most favoured global business tool, the Bank took proactive steps to engage the widely untapped e-commerce market in Sri

payment gateway mechanism currently in place.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: As a strategic initiative the Bank focused on revamping of the Sampath Vishwa personal internet banking

Being one of the pioneers of mainstream e-commerce solutions

has always sought to

demands of modern commerce.


PERFORMANCE REVIEW:

successful with business volumes gaining momentum following the 31st July 2014 launch of the newly

banking transactions for the year recorded an overall YoY growth of 63.5%.

Moreover, both mainstream and customised e-commerce solutions also made healthy contributions to the bottom

decision to diversify the e-commerce suite.

FUTURE OUTLOOK:The future of internet banking in general would be

that correlate to the dynamism of modern commerce. From the Bank’s perspective, doing so would require the internet banking framework to deliver versatile

alongside customised value additions.

The emerging growth prospects from online payment and collection, would necessitate a future-ready e-commerce

that would drive sustainable long term growth in this sphere.

transactions for the year recorded an overall YoY growth of 63.5%.

Channel Products: Internet Banking

127

Remittances

established “Sampath” brand value, the Mobile Cash concept was instrumental in penetrating new emerging opportunities in provincial and rural tier markets in the country.


migrant worker remittances continuing to head the list as the country’s top foreign currency earner for 2014. Demonstrating a YoY growth of 23.3% in transaction volumes, the inward remittances arena continued

agents aiming to capitalise on the industry’s seemingly unconstrained growth trajectory.

From a Bank’s perspective, having been in the business

to increase the market share in the inward remittances market, regardless of the growing level of market

on the well-established “Sampath” brand value, the Mobile Cash concept was instrumental in penetrating new emerging opportunities in provincial and rural tier markets in the country. To further complement

were conducted to advocate the savings habit among

sustainable communities in the longer term while also

Meanwhile, given the challenges resulting from the highly competitive market environment and the relatively

established markets, the Bank focused on value additions

With increasing emphasis being placed on developing fee-based activities, many of the add-ons were promoted

facilitate greater customer convenience.

As in the past, the expansion of the overseas network also remained a key priority in 2014. Measures taken in this regard were intended to further strengthen the Bank’s presence in existing inward remittance corridors,

countries in the Middle-East.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Grow market share at a provincial and rural

markets To grow seasoned markets and promote value

additions vis-à-vis solution based customer convenience

Strengthen presence in overseas markets

KEY OPERATIONAL TARGETS FOR THE YEAR: Grow transaction volumes 22% Grow commission income 28%

PERFORMANCE REVIEW:Demonstrating healthy signs of growth for the year,

commission income also recorded a robust growth of 27.9%.


With the Mobile Cash facility gaining momentum

attributable to the facility doubled in 2014, signalling the

proved to be successful with a sizeable number of new additions to the existing partner network as at 31st December 2014.

also sponsored the Dubai Vesak Festival, a promotional

migrant worker communities in the Middle-East region.

NEW OFFERINGS: Concentration on the B2B solutions saw the

introduction of exclusive tie up with wow.lk where the Bank’s inward remittance platform was used as a payment gateway for online purchases, a previously untapped market segment.

FUTURE OUTLOOK:With the inward remittance market set to grow even further in the years ahead, the key challenge would be to retain and indeed expand market share amid the intensifying competition. The Bank’s strategic thrust would thus be to strengthen the island-wide reach while concurrently pursuing a highly focused promotional agenda to reinforce the “Sampath” brand identity among

share, the Bank is also likely to pursue other viable non-organic business alternatives including remittance partner acquisitions that would produce obvious synergies for future growth

Moreover, with the Bank’s clear strategic vision to use value additions as the key volume driver, product innovation and enhanced value creation are deemed to play a crucial role in achieving the desired transaction volumes in the medium term.

at least a quota of the potential market by enlisting the support of the migrant workers at source itself. Achieving

programme in order to secure the commitment of the migrant workers prior to their departure for overseas employment.

Meanwhile, expanding the Bank’s overseas presence, particularly in Europe and the Far-East also remains an important long term goal. While greatly easing the habitual dependence on GCC countries, broad-basing the business framework in this manner would also help overcome many of the underlying market challenges that could manifest in the years ahead.

Remittances

REMITTANCE TRANSACTION VOLUME GROWTH

2011 2012 2013 2014

0

5

10

15

20

25

11 12

22

24

%

REMITTANCE COMMISSION INCOME GROWTH

2011 2012 2013 2014

0

5

10

15

20

6

13

20 20

%

129

Corporate Banking: Corporate Credit

OPERATIONAL FOCUS FOR THE YEAR:As market liquidity swelled amidst progressively declining market interest rates, credit growth remained stubbornly

model. Overcoming the challenges caused by the credit

arm to rethink the primary credit strategy in a bid to stimulate the corporate credit appetite in the second half of the year. Accordingly, the loan book was re-priced in

core CASA base was appraised and re-structured pricing

of the collection / transactional accounts of corporate customers.

presence in already established sectors throughout the year, while guardedly exploring possibilities in versatile new sectors emerging in the market. A well-thought out tactical move, the strategy also underpinned the need to

ratio to a manageable level.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Generate organic growth through price

competitiveness by optimising CASA mix among corporate clients

Strengthening the presence in existing sectors while exploring emerging sectors

Maintaining the quality of the portfolio and control

KEY OPERATIONAL TARGET FOR THE YEAR: Grow the loan book by 25%

PERFORMANCE REVIEW:Amid a series of challenges that dominated the business landscape in 2014, the deepening credit slump and

to regularise any potential asset-liability mismatch in order to stem further deterioration in the margins.

performance of Corporate Credit remained consistent throughout the year. Accounting for a healthy 12.9% of the Bank’s top-line and 28.5% of the bottom-line as at 31st December 2014, Corporate Credit yet again

performance of the Bank.

evidences the success of the Bank’s lending model, where the conventional lending mix continued to take precedence during the year. While the Bank’s share of the corporate market remained intact, lending was predominantly to already established sectors. Traditional exposure limits remained more or less unchanged, with

growing presence in the leisure sector.

Characterised as a volume driven year, the Corporate Credit loan book grew by a commendable 26.7% for the year, a testament to the sound strategic refocusing process that was initiated in mid-2014. Given the surplus market liquidity, supplementary credit lines were seen as unnecessary and a two-pronged approach was adopted

credit lines, the re-pricing of the loan book was carried

Accounting for a healthy 12.9% of the Bank’s top-line and 28.5% of the bottom-line as at 31st December 2014, Corporate Credit

its position as a key contributor to the overall performance of the Bank.


traditionally market driven framework, this rate re-pricing model featured a risk and allocation based pricing

deployment. Moreover, a highly focused marketing campaign to boost fee-based income by leveraging on advisory services and speciality banking concepts was also initiated during the year, well supported by the

Moreover, underscored by the long term goal to secure a larger portion of the collection accounts of corporate

providing comprehensive fund management solutions vis-à-vis e-banking products for corporate customers in order to benchmark a new level of customer convenience that would ultimately translate into a more favourable corporate CASA mix in the longer term.

NEW OFFERINGS:

alternative to expedite port related landing and delivery payments. While ensuring less procedural complexity and greater transparency in the documentation process, the new facility allows freight forwarders, logistic solution providers or cargo agents the option to use the Sampath Vishwa online banking interface, the Bank’s retail or

/ super branches to make port related payments

Corporate Banking: Corporate Credit

and ensure the fastest possible turnaround time for the cargo clearance procedure. While introducing a whole new dimension to customer convenience, the facility which is extended to both Sampath

is a strategic move that aims to capture a larger number of corporate collection accounts. An

held on 24th June 2014, under the patronage of

clientele. Following the launch, the overwhelming

solutions to customers.

FUTURE OUTLOOK:

foreseeable future, organic growth of CASA will remain a key priority for the Corporate Credit in order to ensure a sustainable revenue growth. Moreover, the growing focus on fee based income would be the catalyst in supplementing the bottom line. Easing away from fund-based activities in favour of fee-based alternatives in this manner would most likely result in a greater number of value added e-commerce and management

customers in the years ahead. Conceptualised as solution based convenience, these alternatives would advocate a new paradigm in corporate credit management in tandem with the evolving needs of modern commercial enterprises.

Among the strategic focus areas for the Corporate Credit in the medium term would be to grow the market share by strengthening support to existing sectors. Meanwhile,

particularly to harness the emerging possibilities that are likely to unfold as a result of accelerated growth seen in country’s infrastructure and property development

would seek to service the needs of high-rise property development projects and integrated mixed development ventures that are deemed to reshape Colombo’s cityscape in the next 3 - 5 years.

Hotel Citrus - Waskaduwa

131

Corporate Banking: Commercial Credit

OPERATIONAL FOCUS FOR THE YEAR:With the growing pressures of a lacklustre credit appetite coming on the back of high levels of market liquidity, competition among industry players continued to intensify during 2014, with many resorting to competitive strategies to stimulate a seemingly inactive trading market.

widespread measures to boost trade activities and provide the much needed impetus for overall economic

Credit division too, focused on a diversifying lending mix to expand overall volumes and boost the division’s top-line and the bottom-line for 2014. While continuing to develop the export business, the division also stepped

expenditure requirements of the import sector. This also meant strengthening the exposure in established sectors while selectively expanding to new sectors including

altering the conventional exposure matrix as well.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Strong focus on import export business with

greater emphasis on exports Explore new opportunities in import export

business

KEY OPERATIONAL TARGETS FOR THE YEAR:

PERFORMANCE REVIEW:

improvement in exports / imports both in terms of turnover and volumes during 2014.

Featured by a multi-layered product menu geared to service the needs of commercial enterprises, the

year.

However, a notable reduction was observed in the volume of vehicle imports, a direct consequence of the increase in the duty structure for imported vehicles. Meanwhile,

demonstrated a 100% volume growth during the year.

The performance of all business lines culminated towards the healthy bottom line recorded by the division in 2014.

Meanwhile, by continuing to apply strict credit control parametres, the division was also able to maintain a

FUTURE OUTLOOK:The country is likely to experience vibrant growth prospects in the years ahead. Moreover, underpinned by the goal to achieve a target export turnover of USD 20 Bn by 2020, the initiative is deemed to be a catalyst

division.

division would focus on consolidating key strengths in servicing traditionally established sectors parallel to addressing the needs of new emerging businesses. Doing so would necessitate the division to explore a greater

e-commerce tools that are likely to be key business drivers, in the next 3 - 5 years.

with all export product

headway during the year.


Corporate Banking: Development Banking - Project Finance


unit was to nurture growth prospects in the energy

on a more holistic approach to derive a sustainable model for the long term management of energy projects.

role to clients, thus introducing a whole new dimension to successful project management. Moreover, inspired

concepts and technologies to promote consistent growth in the country’s renewable energy sector.

Meanwhile, in line with the potential seen in emerging

be another priority area in 2014, alongside the growing

Continuing with the policy to prudently increase exposure to the leisure sector, the division focused on projects that would augment the room inventory at selected destinations across the country.

The Government’s thrust to encourage export oriented industries also featured prominently in the division’s agenda, with the promotion of non-traditional exports

taken in this regard saw a series of structured credit lines being introduced to support medium and large scale enterprises that produce value added products from traditional agro based industries.

PERFORMANCE REVIEW:

achieved a remarkable advances growth of 45% as against the budgeted growth of 27%.

SIGNIFICANT PROJECTS FOR THE YEAR: Power & Energy Sector

One of the single largest projects funded during

indigenous lubricant manufacturing plant. While

energy sector, the project is expected to result in sizeable savings in import expenditure in the long term.

Given the Bank’s pivotal role in reshaping Sri

Finance unit embark on a more holistic approach to derive a sustainable model for the long term management of energy projects.

SECTOR WISE LENDING OF DEVELOPMENT BANKING

Agriculture Construction Infrastructure

Other Services

Tourism Traders Transport

Other Customers

12.97

0.043.24

4.760.04

6.22

56.90

4.21

9.38

%

2.24

Manufacturing New Economy

133

Alternate Energy A key venture funded during the year at a total cost

of a Dendro bio-mass power generating plant.

this massive undertaking is also deemed to be the more environmentally preferable alternative to the conventional thermal energy source.

FUTURE OUTLOOK:

been earmarked to further develop the country’s energy sector.

Meanwhile the emerging demands from proposed large scale integrated property development projects would likely to culminate in a host of lucrative opportunities for growth in the property development and construction sectors in the years ahead. Being key medium term opportunities, serving these emerging markets would

deploy a gamut of dynamic solutions to cater to the needs of medium and large scale ventures which will fuel economic growth in the coming years.


Mr Suren Fernando

years, due to the lack of proper management skills,

knowledge and skills needed to turn my business around and make it a success.

Corporate Banking: Development Banking - MSME Development

During the year, greater prominence was also allocated towards promoting

development and women’s empowerment platforms.

OPERATIONAL FOCUS FOR THE YEAR:Having embraced the millennium development goals

development continues to mirror the national priority to promote inclusive banking. Underpinned by these inclusive banking goals, the core activities of the Development Banking department aim to reach out to the vast unbanked population in the country.

intended to motivate low-income and marginalised communities to grow vis-à-vis access formal banking

“Credit Plus Culture” of this form is deemed to be an essential pre-requisite that would support a sustainable society for the future.

Formulated in cognisance of the national MSME development agenda, the key focus area for the Development Banking in 2014 was to nurture the rural MSME sector. While organic business growth undoubtedly remains the long term objective of this endeavour, widespread regional MSME sector development was at

year, greater prominence was also allocated towards

women’s empowerment platforms, while special emphasis was placed on developing individuals possessing recognised technical and vocational

Sampath "Saviya" training programme conducted by

135

"SAMPATH SAVIYA” ENTREPRENEUR DEVELOPMENT WORKSHOPS FOR 2014 Aligned to the national goal of nurturing a vibrant MSME sector in the country, Sampath

aimed at supporting budding entrepreneurs in the country, particularly at the rural level.

The programme entitled “Sampath Saviya” strives to inculcate key entrepreneurial skills among the rural population, many of whom lack the required business knowledge to conduct a sustainable enterprise that would secure their livelihoods in the long term. Following an integrated project framework, the workshops are conducted in

of the programme.

Saviya” entrepreneur development workshops also facilitate the needs of existing entrepreneurs who wish to diversify or expand

day programme covering key aspects such as personal entrepreneurial competencies, business environment, business planning tools, record keeping, eco-friendly business practices and good labour management practices aim to develop the overall business skills and introduce the participants to much needed

existing businesses

tools to develop an appropriate business plan

keeping skills

and labour laws

RegionNo of

WorkshopsNo of

Participants

No of Successful Business

Conversions

Matale 01 25 22

01 28 22

Kegalle 01 24 23

Kandy 02 45 35

Kurunegala 01 38 27

01 27 25

Batticaloa 01 32 25

Matara 01 27 10

Monaragala 01 27 22

Galle 01 27 17

Vavuniya 01 25 20

Kalutara 01 46 32

Students01 29 25

01 23 18

01 26 17

Total 16 449 340

The empowerment of women and youth are also ancillary goals that the “Sampath Saviya” workshops seek to accomplish vis-à-vis the criterion for selection of programme

Entrepreneur Development Workshop was

Matale, in May 2014. Following the success of the initial workshop, the “Sampath Saviya” programme was extended to other districts as well, with a total of 16 programmes accounting for over 449 participants in 2014.


International Division: Trade Services

OPERATIONAL FOCUS FOR THE YEAR:The highly competitive buyer-driven global marketplace of today has fuelled the growing popularity for the “Open Account” payment method, due in large part to the relative lack of procedural complexity involved with

in favour of Open Account payments. To counter

Having rolled out the campaign to regionalise the Trade Services

forthcoming year, the division will focus on extending the number of touch points across the country.

these challenges resulting from the movement in the conventional product mix and stimulate growth of the traditional import / export business, the Trade Services Division initiated a highly focused campaign to enhance the delivery channels and derive a new customer service model. Underpinned by the principles of relationship

customers more dynamic, solution-based alternatives

deployed also sought to grow the Bank’s present market share in the business with the aim of becoming the “Most

Consequently, a strategic decision was taken to regionalise the import and export business by extending the Trade Services function to empower

so, the Division sought to establish import counters at selected branches, thereby extending the Trade Service

9 such counters established in 2014, more have been earmarked for development in the forthcoming year. Further, to complement the goals of relationship banking, the Division continued to emphasise the importance of

regular skills and competency training.

Meanwhile, as a means of tapping into new markets and diversifying the product suite, the Trade Services Division

partnerships with foreign correspondent banks as well.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR:

service

KEY OPERATIONAL TARGET FOR THE YEAR: To increase the market share with a Volume Growth

PERFORMANCE REVIEW:Well supported by the Governments’ heightened

demonstrated a robust YoY growth of 7.5% with imports growing by 7.1% to reach USD 10.1 Bn and USD 17.6 Bn respectively, for 2014. Aligned to this ascending growth

operations.

137

showed signs of healthy growth of 14% for the year. Although the country’s imports grew only marginally, the Bank’s imports demonstrated sizeable growth of 37% YoY which led to a consequential increase in market

NEW PRODUCTS: Sampath Bank pioneered the introduction of an

online payment system to facilitate both importers and exporters to settle their payments to the Sri

island-wide network of 220 branches including 12 super branches open 365 days from 8.00am till 8.00pm.

permit holders to import a vehicle with a special vehicle loan/leasing facility.

funding by leveraging on their consignments stored at warehouses.

Mr Dayantha De Silva B.sc, M.sc

Having commenced operations in 1998, with

a small scale industrial solutions provider. Since then we have expanded our scope considerably and established ourselves as a leading engineering company in the country, with an enviable portfolio of local and international clients. From the inception,

unstinted support and invaluable guidance which has empowered us to accomplish our corporate goals.

FUTURE OUTLOOK:The propensity for the buyers’ market is likely to continue in the foreseeable future, with clients increasingly

in this emerging market thus remains a key priority for the Trade Services Division. Having rolled out the

2014, in the forthcoming year, the Division will focus on extending the number of touch points across the country.

digital platforms are seen as the key to conveying an even greater degree of convenience to the customer, in the years ahead.


International Division: International Operations


and Advance payment methods, Telegraphic Transfers

alternatives available in the market. As the centralised

for TTs in 2014.

To further harness this thriving demand for TTs, the

to tap into the island-wide branch network during the year, particularly as a means of boosting the import volumes. Moreover, enhancements were also made to the

message data is now directly transferred to the Core Banking System on a real-time basis, thereby enabling a

outward TT customers, saw the preliminary steps taken for commissioning of a fully automated user friendly

completion of necessary paperwork relating to outward TTs.

and skills development agenda continues to be featured prominently in the day-to-day operational focus of the unit. Moreover, ongoing process improvements were

would help deliver a timely service to the client.


Grow Outward TT volumes

KEY OPERATIONAL TARGETS FOR THE YEAR: To increase the market share

PERFORMANCE REVIEW:Having wisely leveraged on the thriving demand for TTs,

phenomenal 18% YoY growth in the number of Outward TT volumes. However, the notable increase in volumes did not translate equally into the bottom line, with the

resultant fee based income falling short of expectations

the year grew by 23% comparative to the previous year.

on a three year contract commencing June 2014, a commendable achievement for the Bank and indeed a testament to the capabilities and professionalism of the

Yet another accolade was added during the year with

year, the “Awards of Excellence” awarded by Citi Bank

Outward TT handling procedure.

FUTURE OUTLOOK:

and Outward TT business, particularly with the change of payment terms from other payment terms to

global trends. However, with intensifying competition,

growing volumes would be the level of service quality

improvements and service enhancements would play a pivotal role in securing a larger share of the market.

Exchange Companies are given on pages 160 & 161 and pages 162 to 167 respectively.

139

International Division: Bank Notes Operation (BNO)

OPERATIONAL FOCUS FOR THE YEAR:Characterised by a relatively stable currency framework the business of importing and repatriation of foreign currency continued to attract new players into an already saturated market. As competition continued to intensify in this manner, the market dynamics also continued to

retain its commanding position in this space by building volumes vis-à-vis a well-articulated pricing strategy geared to represent market movements.

technological superiority, the Bank continued to systematically expand infrastructure that would not only

greater solution based convenience to help caption the progressive needs of the customer. Of particular note, is the addition of two new foreign currency ATMs during the year in Kingsbury and Galle Super to add to the

Supported by the relatively stable currency framework,

continued to maintain its clear leadership position as the single largest repatriator of foreign currency notes out of the country,

market share in 2014.

The year also saw the conclusion of the carrier

the requirement in the coming years.

PERFORMANCE REVIEW:Supported by the relatively stable currency framework,

maintain its clear leadership position as the single largest repatriator of foreign currency notes out of the country,

despite the stability that characterised the currency markets throughout the year, margins remained notably slim, as competition continued to intensify amid an ever growing number of players entering the market.

revenue growth in excess of 29% YoY . While the main

realising this growth, the second bank notes collection

contribution to the overall performance of the unit.

foreign currency to meet the demands of the local market.

FUTURE OUTLOOK:

appended to the country’s ability to sustain a stable core

determine the required volumes needed to deliver a consistent performance in the years ahead. Meanwhile, dynamic value additions are deemed to be the key to achieving a competitive edge that would help secure a larger market share in the future.


FCBU’s deposit portfolio recorded a 71.4% YoY growth from USD 55.6 Mn in 2013 to USD 95.3 Mn as at the year end.

OPERATIONAL FOCUS FOR THE YEAR: As strong market forces continued to underscore

much emphasis on augmenting service parametres in order to further boost the performance of the division. Consequently, a series of structural changes were implemented, which saw the revamping of the FCBU unit in favour of a more service oriented operational platform vis-à-vis the introduction of a more dynamic front-end function. A key part of this new customer-centric

Moreover, throughout the year continuous training and knowledge sharing workshops were conducted to further

their service capabilities to ensure the longer term sustainability both from a clients’ perspective as well as a departmental angle.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Secure the quality of the Asset portfolio Maintain the most viable, low-cost base

KEY OPERATIONAL TARGETS FOR THE YEAR: 20% growth in Assets, Deposits and Advances

PERFORMANCE REVIEW:The demand for deposits saw a dramatic increase in 2014, due to the large volume of excess market liquidity

trend, the FCBU’s deposit portfolio recorded a 71.4% YoY growth from USD 55.6 Mn in 2013 to USD 95.3 Mn as at 31st December 2014, supported by a robust volume growth throughout the year.

The import turnover recorded a 37% growth far exceeding the budgeted target of 25% whilst the export turnover recorded a growth of 21.3%. However the resultant fee based income growth was moderate due

line of the division, made a healthy contribution of 29.8%

The industry-wide lending environment in 2014 was underpinned by the aggressive competition between local banks, heightened by the declining market interest rates scenario. Compounding matters further, foreign banks

infrastructure projects across the country. Meanwhile, large global funding institutions continued to actively

from the conventional state-based lending model of the past. Culminating in these factors, in 2014, the FCBU’s advances portfolio was able to record a notable growth of

the customary sector-wise lending mix, the rubber and apparel sectors continued to dominate the exposure of the FCBU unit. A notable new entrant to the conventional

sector, widely seen as an emerging prospect for the future.

overseas lending portfolio, the FCBU continued to focus on strengthening partnerships with foreign correspondent banks in a bid to support existing low cost credit lines and maintain the established liquidity base of the Bank. Securing these low cost funding alternatives remained a key priority area for the FCBU, particularly as competition continued to intensify among local banks in 2014.

FUTURE OUTLOOK:

increase in exposure to these sectors, in the years ahead.

Moreover, as competition within the local banking milieu continues to intensify, the FCBU would seek to strengthen the overseas lending portfolio in the medium term, through a calculated exposure to regional markets in the Maldives and Bangladesh.

Foreign Currency Banking Unit (FCBU)

141

Corporate Finance

OPERATIONAL FOCUS FOR THE YEAR:On the back of renewed stock market activity and the consequent demand for custodian services, the Corporate Finance division was prompted to further

clientele a more timely and relevant product. Adopting a more client-driven approach the newly revamped corporate website also spotlighted the dynamic new

Meanwhile, capitalising on the dual role as arrangers and participants in the syndicate market, the division also sought to strengthen the investment portfolio during the year, particularly with large scale investments on the rise,

this regard, having observed an emerging trend where large corporates were seen moving away from mainstream debt sources and seeking newer funding alternatives, the

corporate debt portfolio during the year.

OPERATIONAL GOALS AND OBJECTIVES FOR THE YEAR: Grow the overall investment portfolio

KEY OPERATIONAL TARGETS FOR THE YEAR: Asset growth inclusive of investments - 24%

PERFORMANCE REVIEW:

experiencing a 75% YoY growth.

Meanwhile, the market enthusiasm for listed debentures continued to pan out well, following the 2013 budget announcement regarding WHT exemptions for interest

Corporate Finance Division doubled its corporate debt

deployed to strengthen the custodial services

rewarded.

The securitisation portfolio also made a healthy contribution to the division’s performance for the year, where the increased interest on securitised debt instruments added a sizeable boost to the division’s

quarter, the leasing sector continued to dominate the securitisation portfolio in 2014, alongside the growing exposure to the rapidly expanding property development and real estate market.

Moreover, in tandem with the growing number of foreign investors entering the country, the Corporate Finance division successfully concluded two escrow deals during the year to facilitate such investments.

The division was also responsible for arranging a large syndicated deal amounting to USD 30 Mn for a

conventional wisdom prevailed to ensure much of the same sectorial distribution as in the past, the division ventured to selectively increase the exposure in the leisure sector in 2014.

FUTURE OUTLOOK:

growth in terms of national investments and large scale

to conceptualise structured hybrid instruments to meet

to supporting mainstream industries, by leveraging on these emerging prospects, the Corporate Finance division expects to service in particular, the needs of integrated development projects and mixed- commercial development undertakings, in the years ahead.


The Treasury division

create a more future-ready operational platform that would help

core competencies for the years ahead.

OPERATIONAL FOCUS FOR THE YEAR:Given the market sensitive nature of the Treasury

largely mirrored the mixed market signals seen in the operating environment for much of 2014.

On the currency side, regardless of the extraordinarily volatile global currency markets, local currency markets

of the least volatile periods in the recent history of the

were static for much of the year. The one year forward

With this relative calm currency platform, the Bank sought to boost the bottom line vis-à-vis an aggressive volume driven strategy. However, growing volumes amid increasing competition in the market proved to be a

caption the needs of the increasingly price-sensitive customer.

Meanwhile, the declining market interest rates seen throughout the year culminated in high level of market liquidity in 2014. Denoted by lowest ever benchmark for Government Treasury Bill rates, the One Year Treasury Bill rate for January 2014 was 8.29%, lower

year. Moves by the regulator to stimulate the credit momentum in the country saw the rate slip to 5.89% in September 2014. Admittedly, the wave of incentives failed to ignite the desired credit appetite and credit growth fell well below expectations for the year. Consequently banks were forced to hold out large amounts of liquid funds amid dwindling investment options in Government backed securities and the Standard Deposit Facility at Central Bank.

more future-ready operational platform that would help

ahead. Among the key initiatives taken in this regard was to reinforce the compliance framework, which saw the Treasury Division updating all operational and counterparty limits as per the requirements stipulated

USD / LKR MOVEMENT IN 2014

Rs

130.75

130.78

130.80

130.75

130.65 130.38

130.35130.23

130.20

130.44130.77

131.30

131.20

130.0

130.4

130.8

131.2

131.6

132.0

Dec

-13

Jan

-14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun

-14

Jul

-14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

ONE YEAR TREASURY BILL RATE MOVEMENT IN 2014

%

8.3

7.1

7.1

7.1

7.0

7.0

7.06.3

5.9

6.0

6.0

6.0

0

2

4

6

8

10

Dec

-13

Jan

-14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun

-14

Jul

-14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

6.7

Treasury

143

international counterparties, the Bank adopted the Dodd Frank Act in Oct 2014.

From an operational perspective, the Treasury Division

PERFORMANCE REVIEW:

the Treasury Division continued to perform consistently throughout the year. Denoted by notable growth in trading volumes, the Division made healthy contributions

Meanwhile, corresponding to the linear movement in the stock market, the Treasury Division continued to feature a low-key approach towards Equity Market dealings. However, continuous monitoring of market movements led to some notable gains in 2014, in particular, the

decision taken by the Bank to divest its entire stake of

the supervision of the Treasury continued to maintain its dominance in the market. Well supported by the price competitive strategy and specialised value added

competitiveness grew with new players making an entry to an already congested market with a renewed interest induced by a conducive currency framework. The Bank’s bank notes operations, geared with a price competitive strategy and specialised value added

channels, continued its market dominance amidst a challenging market environment.

FUTURE OUTLOOK:With the country’s growth trajectory likely to see a sizeable uptick in the years ahead, market perceptions

moving away from mainstream Treasury instruments in favour of more dynamic new tools. Corresponding to these challenges, in the coming years, activities of the Treasury Division would culminate to ensure a greater degree innovation that conveys the intricacies of changing market forces.



credit quality continued to be applied to safeguard the quality of the lending portfolio. However, the key

the recoveries unit stepped up monitoring and collection

footprint, stringent monitoring and follow up of this nature was seen as a timely, if not an essential move.

A series of new guidelines were thus introduced during the year to restrict the number of new entrants to the

department portfolios starting from those that are two months in arrears as opposed to the customary three

attached to the recoveries unit are then deployed to physically visit these customers and undertake the responsibility for follow-up, rescheduling and recovery up to the point of full settlement. This exercise is now

the existence of legal/court proceedings.

However, in the event all such borrower rehabilitation

limit the number of referrals to the legal channels and overcome the practical challenges encountered with such alternatives.

legal action in courts in order to compel and pressurise borrowers to agree on settlements subject to court settlements.

The recoveries team also continued to play a proactive role in expediting action on non-performing facilities and foreclosed properties , not only as a means of cutting losses for the Bank but also with the aim of preventing defaulters from escalating to the next tier. Further, wherever possible and practical, the unit also

concluding it within the shortest possible time frame.

To further streamline the recovery process, during the

fully integrated “Delinquency Management System”. By connecting the entire branch network to the central recoveries division, the new system, which would be fully commissioned by March 2015 is expected to enhance the

As a key component of the recovery process, the competency levels required by recovery personnel continued to be strengthened throughout 2014, with extensive training accompanied by proactive knowledge sharing sessions conducted by senior management to

country.


FUTURE OUTLOOK:Cognisant of the growth the volume of advances since

past few years. With this trend likely to continue into the foreseeable future, the ensuing challenges are bound

compel a holistic approach that would encompass the entire advances process.

Having always strived to maintain a consistently low

years ahead.

strategies pertaining to credit quality continued to be applied to safeguard the quality of the lending portfolio.

Recoveries

145

The Bank has always sought to strengthen every aspect of the

a greater degree of quality assurance to the customer at all times.

Information Technology

leading role in ratifying the competitive edge enjoyed

banking milieu. Following an inclusive approach, the Bank

platform to convey a greater degree of quality assurance to the customer at all times.

platform, the Bank was honoured with the following awards;

Applications category for "Sampath Corporate

Developed Applications category for "e-Teller System"

Innovations and Improvements Deposit Kiosk Sampath Bank introduced a Cash Deposit Kiosk

coming to counters and improves the operational

customer convenience allowing round the clock

of 24 hour kiosks were installed at the “Colombo Super” and “World Trade Centre” branches.

Sampath z-Reload System

product that facilitates convenient reloading for mobile prepaid connections.

Automated Teller Safe Yet another innovation geared to improve

by eliminating the time spent by tellers in handling cash, including the counting and sorting process.

Sampath Vishwa Corporate

clients ranging from micro to large scale corporates.

Sampath Vishwa Retail System

Options; enabling the customer multiple

e-Remittance Services

through Mobile Cash and ATMs; without restricting customers to branch banking hours. The Mobile Cash system was enhanced to allow integration with diverse corporates.

to the Mobile Cash platform to enable

ATMs.

Cash Deposit Kiosk Machine


Combined Statements

single statement of his / her accounts as an alternative to individual statements for each account, thus allowing customers the ease of reconciliation.

Cardless Cash A breakthrough innovation which was

introduced in 2013, which allows customers to withdraw cash through the ATMs without the need for a Card. The commercial launch

further value additions and enhancements.

through various electronic channels; supporting the entire supply chain of the

Improvements to the Internal IT Processes and Technologies

Development within the Financial Services Sector, the following initiatives were taken during 2014 to

strengthened by a Service Oriented

Adopting Change Management concepts that demand continuous monitoring of each stage of the development process, while relaying feedback to all stakeholders involved in a development project

various tasks, all relevant documentation was

online Q&A portal was also setup to provide

that may arise as part of the day-to-day operations.

Information Technology

develop the skills and competency levels of

Other Key Enhancements

Upgrade of the core banking system in January 2014, including new services such

to faster processing of foreign currency transactions. Moreover, by removing a number of manual back-end processes, the upgrade

with a greater degree of consistency that

uninterrupted service to customers

System

System

Feedback Collection tool that provides online customer feedback which would trigger a real-time complaint resolution mechanism

147

As a key driver of overall business objectives,

into all aspects of the day-to-day business of the Bank and provide a template for various

and monitor their operational procedures. The Bank’s centrally maintained, well secured Enterprise Data Warehouse also functions as an important risk management tool. Moreover, leveraging on these vast data resources has helped the Bank to interpret strategic opportunities and address underlying business challenges in the modern fast paced digital age.

the pulse of the customer and formulate more

central point which enables Sampath Bank

compliance imposed by the Central Bank of Sri

Deemed to be a catalyst of growth in the

the aspirations of its multiple stakeholders in the future.

A number of initiatives were taken to improve the quality of master customer data received by the Bank. Enhancing the quality of the customer data in this manner is deemed to support better Business

analytic capabilities leading to timely,

levels of the business


Call Centre Operation

CURRENT LEVEL: > 95% CONTACTABLE

GOAL: 100% CONTACTABLE

Aligned to the goal of being 100% contactable, the Call Centre function was reorganised during the year, with the accompanying changes resulting in a number of

the infrastructure of the Call Centre, the changes also saw improvements being made to the complaint recording and handling processes. Following this new call management mechanism initiated in July 2014, a sharp decline has been observed in the number of major complaints received for the year.

StandardNumber

Indicator Our Standards

01 Maximum of 3 rings

02 Greeting Ayubowan / Vanakkam Sampath Bank,

03 3 transfers per 10 calls

04 Total holding time 30 seconds per call

05

06 Within 30 minutes / Customer’s convenient time

07 Call back as promised Always

being a high priority area, we remain committed

solutions that help build sustainable relationships for the future.

telephone etiquette mechanism to respond to the customer in an ethical manner also helps to ensure standardised customer service.

were imposed and strict monitoring processes are carried out to prevent those issues.

With customer feedback playing a pivotal role in our ongoing strategic realignment process, our forthright attitude to resolving customer complaints has given us an undeniable advantage over our competitors. As keen proponents of customer satisfaction, Sampath

solution rate of 100% at all times.

Customer complaints received 207

Customer complaints solved 207

Success rate % 100

help build sustainable relationships for the future.

149

Central Cash and Network Settlement Function

the Bank continued to focus on minimising the annual average return ratio for cheque payments, in 2014.

compared to the banking sector average of 4.0%.

central cash sorting and network settlement mechanism. As such the following value additions were introduced during the year to supplement the services already available to both personal and corporate banking customers:

Cash management solutions for personal banking customers

Corporate payroll payment system Online pension payment system

2013 2014

10 9

Finance companies 2 5

Central Cash Operations

Moves were also made

the central cash sorting and network settlement mechanism.


OVERALL SCOPE OF BUSINESS:

operating under the Sampath Group umbrella. Having previously operated as a specialised leasing company,

2011 and is now licensed to carry out all authorised

mobilisation, lending, leasing, hire purchase, pawning / gold loans and factoring among others.

REVIEW OF PERFORMANCE DURING THE YEAR:

in the current year too, the company’s business focus

supporting existing high performance business lines, a

business avenues as well, in a bid to boost the bottom line.

Meanwhile, by leveraging on the growing popularity of hire purchase schemes in the SME and Micro market segments across the country, the company was able to secure a 15.9% asset growth, well ahead of the industry average. As in the past, the company’s well-established

well, making satisfactory contributions to the bottom line.

The company was

second consecutive year.

Given this consistent performance registered by

second consecutive year.

2013Rs Mn

2014Rs Mn

Total operating income

835 1,198

350 467

221 260

Total assets 8,986 10,418

continued its steady progress, with new locations being added to the existing network during the year. These

as well, with measured steps being taken to expand the company’s presence at key strategic locations across the island.

Furthermore, in 2015, the company would also look into the possibility of divesting a portion of its shareholding by way of a listing on the CSE. While further supporting the expansion plans of the company, this move is expected to spearhead the company’s aspirations to be ranked within

Subsidiary: Siyapatha Finance PLC

151

Amidst this slow growth environment, the company stepped up

operations by implementing stringent cost control and prudent

in a bid to derive a more resilient business model.

OVERALL SCOPE OF BUSINESS:The stock broking arm of the Sampath Group, SC

company is governed by the regulatory framework of the

the branches located in Kandy and Matara, which carry out the promotion of share trading activities in those areas.

REVIEW OF PERFORMANCE DURING THE YEAR:The average performance of the local stock market yet again marked the performance of the company, which

streamline operations by implementing stringent cost

derive a more resilient business model.

However, a slight turnaround was observed in the

in favour of the equity markets was seen particularly among retail investors, as low interest rates continued to diminish the appeal of interest bearing instruments.

role in encouraging this trend vis-à-vis strengthening of the regulatory compliance and the discipline framework. Moreover, a series of regional road shows conducted by SEC added a considerable boost to the level of interest shown by foreign investors.

2013Rs Mn

2014Rs Mn

25.2 42.8

Total assets 362.4 282.7

The renewed interest in the stock market is seen as an encouraging sign for the prospects of the company

investors and high-net worth individuals too would rally towards investing in the stock market in the years

operation which would see the commissioning of a fully

operations for share market transactions. With vendor negotiations already complete, the process is expected to get underway in early 2015.

Subsidiary: SC Securities (Pvt) Ltd



All regulations pertaining to occupational health and safety also comes under the purview of the Sampath

REVIEW OF ACTIVITIES FOR THE YEAR:

2014, a YoY increase of 46.7%. Due mainly to routine maintenance of basic infrastructure and amenities, costs

2013Rs Mn

2014Rs Mn

102.9 160.4

94.8 151.2

Sampath Centre

space being rented out during the year, rental income grew by

YoY increase of 46.7%.

Subsidiary: Sampath Centre Ltd

From an operational perspective, led by the Monitoring Committee of Safety all employees were encouraged to participate in regular training sessions and safety

procedures. Moreover, as part of the contingency

2014 to gauge the Bank’s readiness to switch to the remote operational platform when required.

153


which began operations in 2006, is mainly focused on

Development. The domain knowledge gained over the

added services to hardware maintenance, document management services, system hosting facilities, hardware and print management services.

REVIEW OF PERFORMANCE DURING THE YEAR: As of now, having focused primarily on servicing the

made to extend the business focus to service a broader range of corporate clientele, with a greater emphasis

strength of its business partnerships, the company continued to enrich the existing portfolio of offerings.

and testing, hardware provisioning, infrastructure maintenance and document management solutions to secure a number of key corporate clients during the year. Consequently, the resultant 46.7% volume growth was

due to mainly changes in the accounting estimates on property, plant and equipment and the higher costs involved in servicing this broader market. Meanwhile, ongoing process improvements and stringent cost control measures were deployed, in a bid to curb further escalation of costs.

2013Rs Mn

2014Rs Mn

101.7 149.2

25.2 19.8

26.0 7.8

Total assets 132.1 234.2

development space, in 2014, the Company also kick

development, with the commencement of the project life-

the parent company. Deemed to be a pilot project that

customisation options.

faceted banking module.

Meanwhile, leveraging on the strength of its business partnerships, the company continued to enrich the

in partnership with Spectra Technologies of Hong Kong.From a long term perspective, such partnerships are also widely seen as the catalyst in penetrating both

Subsidiary: Sampath Information Technology Solutions Ltd


Branch Network

KandyDistrict14

Branches

Kurunegala District12

Branches

KalutaraDistrict

10Branches

Hambantota District06

Branches

Anuradhapura District06

Branches

Vavuniya District

02Branches

03Branches

Nuwara Eliya District

04Branches

Trincomalee District

03Branches

Polonnaruwa District

06Branches

Ratnapura District

05Branches

BadullaDistrict

01Branch

Mullaitivu District

Matale District

03Branches

Puttalam District

08Branches

Mannar District

01Branch

Ampara District

07Branches

Gampaha District

26Branches

Galle District

09Branches

Matara District

08Branches

Batticaloa District

06Branches

Colombo District

Moneragala District

04Branches

District

08Branches

Kilinochchi District01

Branch

61Branches

Kegalle District

06Branches

220326

Branches

ATMs

Having substantially increased the branch footprint in the past four years following the 2010 strategic expansion drive, growth in the network did continue during the year, albeit at a more moderate pace than that seen in the past few years.

G4-8

155

Branch name Address E-mail Branch Code

CENTRAL PROVINCEDambulla [email protected] 90

Digana [email protected] 85

Galewela [email protected] 190

Gampola [email protected] 101

Hatton [email protected] 80

HeerassagalaKandy

[email protected] 220

Kandy - Super2233838

[email protected] 7

Kandy City CentreBuilding, Dalada Veediya, Kandy


Kandy - Metro [email protected] 100

Katugastota [email protected] 32

Kundasale [email protected] 133

Matale [email protected] 25

Menikhinna [email protected] 184







Wattegama [email protected] 105

EASTERN PROVINCE

AkkaraipattuAkkaraipattu


Ampara [email protected] 62

Batticaloa [email protected] 107

Batticaloa 02

065-2228242 [email protected] 139

Chenkalady [email protected] 121

Dehiattakandiya [email protected] 167

Kalmunai [email protected] 112

Kaluwanchikudy2250807


Kantale [email protected] 172

Kattankudy [email protected] 115

Kinniya [email protected] 177

Muttur [email protected] 208


Oddamavady2258210



Sainthamaruthu Main Street, Sainthamaruthu - 16 [email protected] 126

Trincomalee [email protected] 66

NORTHERN PROVINCEChankanai Main Street, Chankanai [email protected] 164

Chavakachcheri [email protected] 169

Chunnakam [email protected] 128

120

Kayts [email protected] 171

Kilinochchi Unit 1-4, Antonipillai Building, Kilinochchi [email protected] 148

Manipay [email protected] 147

Mallavi [email protected] 174

Mannar [email protected] 119


Thirunelveli [email protected] 186

Vavuniya [email protected] 55

Vavuniya Super [email protected] 170

NORTH CENTRAL PROVINCE

Anuradhapura Super 268, Maithripala Senanayake Mw, Anuradhapura




NORTH CENTRAL PROVINCE CONTD.

Town, [email protected] 168

Aralaganwila [email protected] 154

Hingurakgoda [email protected] 110

KaduruwelaKaduruwela


Kahatagasdigiliya [email protected] 203

Kekirawa [email protected] 149


Thambuththegama2275072


NORTH WESTERN PROVINCE

Alawwa2279463


Anamaduwa [email protected] 143

Chilaw [email protected] 108

Dankotuwa [email protected] 196

Giriulla [email protected] 95

Hettipola [email protected] 187

Kuliyapitiya2281866


Kurunegala Metro [email protected] 215

Kurunegala Super [email protected] 6

Madampe [email protected] 189

Maho [email protected] 197

Marawila [email protected] 194

Mawathagama2296288







Wariyapola [email protected] 44

Wennappuwa [email protected] 30

SABARAGAMUWA PROVINCEBalangoda [email protected] 97

Deraniyagala [email protected] 49

Eheliyagoda [email protected] 20

Embilipitiya [email protected] 43

Kalawana [email protected] 41

Kegalle [email protected] 64

Mawanella [email protected] 160





Warakapola [email protected] 205

SOUTHERN PROVINCEAhangama [email protected] 182

Akuressa [email protected] 179

Ambalangoda [email protected] 72

Branch Network

157


Ambalantota [email protected] 104

Baddegama


Beliatta [email protected] 180

Deniyaya2273255


Dickwella [email protected] 216

Elpitiya [email protected] 204

Galle Super [email protected] 35

Galle Bazaar [email protected] 159

HabaraduwaHabaraduwa


Kamburupitiya [email protected] 206

Karapitiya [email protected] 141

Matara Super [email protected] 10

Matara Bazaar [email protected] 153

Middeniya [email protected] 158

MorawakaMorawaka



Sooriyawewa [email protected] 157

Tangalle [email protected] 116

Tissamaharama2237058


Weligama2254002


UVA PROVINCEBadulla [email protected] 93

Bandarawela [email protected] 46

Bibile [email protected] 161

ButtalaButtala


Mahiyangana [email protected] 56

Monaragala [email protected] 74


Welimada [email protected] 81

Wellawaya470


WESTERN PROVINCEAluthgama [email protected] 79

Athurugiriya2156081


Attidiya [email protected] 89

Avissawella [email protected] 22

BambalapitiyaColombo 04 2501829


Bandaragama [email protected] 59

Battaramulla [email protected] 61

Boralesgamuwa [email protected] 142

Borella

Colombo 08 [email protected] 4

Borella Super [email protected] 218

City

Colombo 10 [email protected] 1

Colombo Super [email protected] 175

Dehiwala2738422


Delgoda [email protected] 202

Divulapitiya [email protected] 198

Embuldeniya [email protected] 114

Fort2327379, 2436889


Gampaha2222396




WESTERN PROVINCE CONTD.

Gampaha Super


Ganemulla [email protected] 78

Gangodawila [email protected] 135


Grandpass [email protected] 127


Harbour View [email protected] 58

Hanwella [email protected] 137

Corporate Branch2358358


Hendala2931021


Homagama [email protected] 69

Horana [email protected] 57


Ja-ela [email protected] 98

Kadawatha [email protected] 60

Kalutara [email protected] 50

Kandana [email protected] 76

Kaduwela [email protected] 162

Karagampitiya


Keselwatta2299566


Kiribathgoda2910514

[email protected] 5

Kiribathgoda Super [email protected] 200

Kirindiwela [email protected] 83

Kirulapone [email protected] 117

Kochchikade [email protected] 165

Kohuwala [email protected] 94

KollupitiyaColombo 03


Kotahena [email protected] 37

Kottawa



Maharagama [email protected] 13

Maharagama Super [email protected] 92

Main Street [email protected] 42

Makola [email protected] 207

Malabe [email protected] 39

Maligawatte [email protected] 191

MaradanaColombo 10


Marandagahamula [email protected] 183

Mattegoda [email protected] 176

Matugama [email protected] 106

Minuwangoda [email protected] 65

Mirigama [email protected] 86

Moratumulla [email protected] 155

Moratuwa [email protected] 31


Mutwal [email protected] 193

Branch Network

159




[email protected] 9




[email protected] 3

Old Moor Street2424075


Orugodawatte 760 B, Dr. Danister de Silva Mawatha, Colombo 9 011-2682698 [email protected] 214






[email protected] 2








Seeduwa [email protected] 213

Talahena


Thalawathugoda [email protected] 178

Thimbirigasyaya [email protected] 34

Veyangoda [email protected] 77

Wadduwa2285132


Wattala2941526/7

[email protected] 8

Wellampitiya [email protected] 45

Wellawatta Super [email protected] 36

World Trade CentreCentre, Echelon Square, Colombo 01


Yakkala2234230



Nostro Accounts

Bank & AddressCCY

Australia

800 Bourke Street, Docklands, Melbourne,

AUD

Bangladesh

Bangladesh

ACU-

Canada

Toronto, M4G 4K1 Canada,

BOFMCAT2 CAD

China

Citigroup Tower,

Shanghai 200120,China

Denmark

Holmens Kanal 2-12, 1092 Copenhagen, Hovedstaden, Denmark

DABADKKK DKK

Germany

60262 Frankfurt am Main, Germany

DEUTDEFF

60261 Frankfurt am Main, Germany

COBADEFF

80311 Munich, Germany

HYVEDEMM

Hongkong

Standard Chartered Bank Building, 4-4A Des Voeux

Hong Kong

HKD

Bank & AddressCCY

India

ACU-

ACU-

Mumbai Main -23/25,

ACU-

Italy

Japan

2-7-1 Marunouchi, Chiyoda-ku, Tokyo 100-8388, Tokyo, Japan

Tokyo 100-6155 Japan

1-1-2 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Tokyo, Japan

New Zealand

Norway

Dronning Eufemias gate 30, 0191 Oslo, Oslo,

161

Bank & AddressCCY

Pakistan

Karachi 74000, Sindh

ACU-

South Africa

3rd St, Alexandra, Johannesburg South Africa

Singapore

UOVBSGSG SGD

65 Chulia Street, # 26-00, OCBC Centre, Singapore 049513, Singapore

OCBCSGSG SGD

Sweden

Kungsträdgårdsgatan 8, 10640 Stockholm, Sweden

ESSESESS SEK

Switzerland

Bahnhofstrasse 9, 8010 Zürich, Switzerland

ZKBKCHZZ80A CHF

United Arab Emirates

Omer Bin Al Khattab Street, Deira, Dubai City, UAE

AED

Dubai City, UAE

AED

United Kingdom

1 Devonshire Square,

UK

UK

Bank & AddressCCY

United States of America

60 Wall St,

USA

USD

10005 USA

USD

USD

USA

CHASUS33 USD

50, Broadway, Suite 1500, MSHQUS33 USD

USD

G4-6


Correspondent Banks and Exchange Companies

Country

1. Australia

Citigroup pty ltd Sydney

2. Austria

Unicredit Bank Austria AG BKAUATWW

3. Bahrain

Mashreq Bank

4. Bangladesh

Standard Chartered Bank

5. Belgium

Commerzbank AG

6. Brazil

Deutsche Bank SA

7. Bulgaria

UnicreditBulbank AD

Country

8. Canada

The Bank of Montreal BOFMCAT2

HSBC Bank Canada HKBCCATT

9. Chile

Banco del Estado de Chile

Banco De Chile

10. China

Bank of China

Bank of China

Commerzbank AG


11. Cyprus

G4 - 6

163

Country

12. Czech Republic

Commerzbank AG

13. Denmark

Danske Bank A/S DABADKKK

14. Egypt

Mashreq Bank MSHQEGCA

15. Finland

Danske Bank

Skandinevinska EnskildaBanken

16. France

Union de BanquesArabes et

Deutsche Bank AG

Commerze Bank AG

17. Germany

HYVEDEMM

Commerzbank AG COBADEFF

Deutsche Bank AG DEUTDEMM

18. Greece

19. Hong Kong

Commerzbank AG

Deutsche Bank AG DEUTHKHH

Hongkong& Shanghai Banking HSBCHKHH

CHASHKHH

Shinhan Bank

Woori Bank Hong Kong HVBKHKHH

20. Hungary

21. India

Bank of Ceylon

Country

Deutsche Bank AG

The Hongkong& Shanghai Banking

Mashreq Bank


AxisbankTradeFinance Ctr

22. Indonesia

Deutsche Bank AG

The Hongkong and Shanghai Banking


23. Ireland

24. Israel

Commerzbank AG

UnicreditSpA

26. Japan

Commerzbank AG, Tokyo

Deutsche Bank AG

The Hongkong and Shanghai Banking


Sumitomo Mitsui Banking Corporation


Country

Okazaki Shinkin Bank

Sumitomo Mitsui Banking Corp, Osaka

Yokohama Shinkin Bank

27. Korea

Deutsche Bank AG

Kookmin Bank

Korea Exchange Bank

Shinhan Bank

UbafUnion De Banques Arabes

Woori Bank

28. Kuwait

29. Malaysia

Citibank Berhad

HSBC Bank Malaysia Berhad

Standard Chartered Bank Malaysia Bhd

Malayan Banking Berhad

30. Mauritius

Banco Santander Mexicano

31. Maldives

Bank of Ceylon BCEYMVMV

32. Nepal

33. Netherlands

Commerzbank AG

Deutsche Bank AG

34. New Zealand

Country


35. Norway

Scandinevinska Enskilda Banken

36. Oman

HSBC Bank Oman S.A.O.G


37. Pakistan

38. Philippines

Deutsche Bank AG

The Hongkong & Shanghai Banking

39. Poland

Bank Handlowy w Warszawie SA

40. Portugal

41. Qatar

Mashreq Bank MSHQQAQA

42. Romania

43. Saudi Arabia

Saudi Hollandi Bank

The Saudi British Bank

Alinma Bank

44. Singapore

The Bank of Tokyo- Mitsubishi

Commerzbank AG

DBSSSGSG

Deutsche Bank AG DEUTSGSG

The Hongkong & Shanghai Banking HSBCSGSG

CHASSGSG

MHCBSGSG


165

Country

Oversea-Chinese Banking OCBCSGSG



UOVBSGSG

45. South Africa

ABSAZAJJ

46. South Korea

Deutsche Bank AG



47. Spain

Banco Bilbao VizcayaArgentaria SA BBVAESMM

Banco Santander SA BSCHESMM

Commerzbank AG

48. Sweden

Danske Bank A/S

Skandinaviska Enskilda Banken ESSESESG

Svenska Handelsbanken

49. Switzerland

Credit Suisse AG

50. Taiwan

Deutsche Bank AG


51. Thailand

Deutsche Bank AG DEUTTHBK

The Hongkong & Shanghai Banking HSBCTHBK

BHOBTHBK

AYUDTHBK

Country

Siam Commercial Bank

52. Turkey

HSBC Bank AS

Turk EkonomiBankasi AS

Asya Katilim Bankasi

53. United Arab Emirates

BBMEAEAD


Habib Bank AG Zurich HBZUAEAD

54. United Kingdom



55. United States of America

Deutsche Bank AG DEUTUS33

Deutsche Bank Trust Company Americas

CHASUS33

MSHQUS33


Bank of America BOFAUS3M

56. Vietnam


Country Name of Exchange Company

Australia

Colombo Money Transfer

HCH Holdings

Kingdom of Bahrain

Turbo Cash

Canada H S Communication

Cyprus Sigue Money Transfer

UAE

Wall Street Exchange

Habib Exchange

UAE Exchange

Sharaf Exchange

Delma Exchange

Al Hamed Exchange

Mawrid Exchange

Alfalah Exchange

Joalukkas-UAE


Jordan

Al Falah Exchange

Al Awneh Exchange

Kuwait

Al Mulla Exchange

Dollarco Exchange

Joalukkas -Kuwait

Malaysia

Zealand

Oman

Oman & UAE Exchange Centre

Travelex Oman

Al Jadeed Exchange

Qatar

Doha Bank

Al Fardan Exchange

City Exchange

Al Zaman Exchange

Gulf Exchange

Al Dar For Exchange Works

Habib Qatar

Doha Exchange

Travelex Qatar

Al Mirqab

Al Jazeera Exchange Qatar

Saudi Arabia

Tahweel KSA

Alinma Bank

Enjaz Bank Al Bilad


167


Spain Money Exchange S A

United Kingdom

H S Communication

SAMPATH BANK PLC ALSO ACTS AS AN AGENT OF FOLLOWING GLOBAL COMPANIES.

Sigue Money Transfer


VALUE CREATION FOR SHAREHOLDERS

2014 2013 Change %

184.10 169.37 8.70

31.35 21.67 44.67

11.00 8.00 37.50

Market price per share as at 31st December 236.30 171.90 37.46

Investor Relations

2014 2013 2012 2011 2010

39,677 28,843 32,628 30,587 41,548

38 7 195

3,104,860 2,459,900 2,167,581 2,213,873 2,210,452

As a % of CSE market capitalisation 1.28 1.17 1.50 1.38 1.88

Market capitalisation rank 17 16 13 16 15

SAMPATH BANK’S MARKET CAPITALISATION RANK

2011 2012 2013 2014

0

5

10

15

20

16

13

1617

DIVIDEND PER SHAREDPS

Rs

2011 2012 2013 2014

0

2

4

6

8

10

12

14

9

8

11

12

EARNINGS AND HIGHEST MARKET PRICE PER SHARE

Rs Rs

2011 2012 2013 2014Earnings per Share - Group

Highest Market Price per Share

0

10

20

30

40

23

.0

32

.6

31

.4

21

.7

307

216 242 252

0

150

300

450

600

2011 2012 2013 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

21

,34

4

25

,64

5

28

,41

8

30

,91

2

SHAREHOLDERS’ FUND

Rs Mn

COMPOSITION OF SHARE OWNERSHIP -2014 (NO OF SHAREHOLDERS)

Shares 500 & Less

Shares 501-5,000

Shares 5,001-10,000

More than 10,000 shares

5 5 49

41

%

SAMPATH BANK’S ROE & MARKET INTEREST RATES

%

2011 2012 2013 2014

0

5

10

15

20

25

30

Average of 12 Months AWFDR

Average of 12 Months T.B. Rate

ROE

8.2

7.5

11

.1

12

.0

13

.1

10

.6

9.1

6.7

16.2

22.3

12.9

16.4

169

31st December 2014 31st December 2013

No of Shareholders

No of Shares %No of

ShareholdersNo of Shares %

17,364 138,232,554 82.33 17,595 142,649,505 85.02

324 29,677,699 17.67 305 25,138,100 14.98

17,688 167,910,253 100.00 17,900 167,787,605 100.00


No of Shareholders

No of Shares %No of

ShareholdersNo of Shares %

17,152 59,630,792 35.51 17,331 59,392,666 35.40

536 108,279,461 64.49 569 108,394,939 64.60

17,688 167,910,253 100.00 17,900 167,787,605 100.00


No of Shareholders

% No of Shares %No of

Shareholders% No of Shares %

8,725 49.33 1,697,166 1.01 8,916 49.81 1,738,236 1.04

Shares 501-5,000 7,198 40.69 12,253,292 7.30 7,113 39.74 10,986,610 6.55

Shares 5,001-10,000 878 4.96 6,154,091 3.66 864 4.83 6,197,624 3.69

More than 10,000 shares 887 5.02 147,805,704 88.03 1,007 5.62 148,865,135 88.72

17,688 100.00 167,910,253 100.00 17,900 100.00 167,787,605 100.00

ANALYSIS OF SHAREHOLDERSResident / Non Resident

Individuals / Institutions

Composition of Share Ownership

SAMPATH BANK’S MARKET CAPITALISATION

Rs Mn

2011 2012 2013 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

30

,58

7

32

,62

8

28

,84

3

39

,67

7

COMPOSITION OF SHARE OWNERSHIP - 2014 (NO OF SHARES)

Shares 500 & Less

Shares 501-5,000

Shares 5,001-10,000

More than 10,000 shares

1 7

4

88

%

SHARE TRADING - SAMPATH BANK PLCNO OF SHARES TRADED

Mn

2011 2012 2013 2014

0

10

20

30

40

50

2729

48

28


SHARE TRADINGMarket

2014 2013 2012 2011 2010

1,982,709 1,421,303 1,857,384 4,579,352 3,355,126

16,721,524,209 9,054,193,822 9,691,236,634 24,543,700,782 18,489,195,424

Value of shares 340,917 200,468 213,827 546,255 570,326

Investor Relations

Bank

2014 2013 2012 2011 2010

18,403 19,212 13,473 15,335 20,154

27,712,319 47,891,453 28,871,254 26,951,903 67,672,164

As a % of total shares in issue 16.50 28.54 17.74 17.18 44.20

24.34 39.75 22.55 30.23 90.78

5,866.37 9,620.18 5,457.94 7,225.70 20,427.00

Sampath Bank's Share Price Fluctuation

2014 2013 2012 2011 2010

164.20 161.60 148.50 191.00 201.00

252.00 242.00 216.00 307.00 550.00

236.30 171.90 200.50 195.00 271.90

GROSS DIVIDEND

Rs Mn

2011 2012 2013 2014

0

500

1,000

1,500

2,000

1,4

27

.0

1,9

54

.1

1,3

42

.3

1,8

47

.0

SHAREHOLDING OF INDIVIDUALS & INSTITUTIONS

%

2011 2012 2013 2014

0

20

40

60

80

100

Individuals Institutions

9 7

35 36

91 93 65 64

171

Frequency Distribution of Shareholders as at 31st December 2014

Share Range Resident Non Resident Total

No

of S

hare

hold

ers

%

No

of S

hare

s

%

No

of S

hare

hold

ers

%

No

of S

hare

s

%

No

of S

hare

hold

ers

%

No

of S

hare

s

%

1 - 250 4,409 24.93 335,956 0.2001 61 0.34 5,653 0.0034 4,470 25.27 341,609 0.2035

251 - 500 4,210 23.80 1,340,191 0.7982 45 0.25 15,366 0.0092 4,255 24.05 1,355,557 0.8074

501 - 1,000 2,796 15.81 1,909,249 1.1370 56 0.32 39,998 0.0238 2,852 16.13 1,949,247 1.1608

1,001 - 2,000 2,114 11.95 3,041,888 1.8116 40 0.23 56,607 0.0337 2,154 12.18 3,098,495 1.8453

2,001 - 5,000 2,147 12.14 7,059,995 4.2046 45 0.25 145,555 0.0867 2,192 12.39 7,205,550 4.2913

5,001 - 10,000 858 4.85 6,021,760 3.5863 20 0.11 132,331 0.0788 878 4.96 6,154,091 3.6651

10,001 - 20,000 457 2.58 6,334,706 3.7727 18 0.10 252,884 0.1506 475 2.68 6,587,590 3.9233

20,001 - 30,000 142 0.80 3,450,851 2.0552 7 0.04 169,904 0.1012 149 0.84 3,620,755 2.1564

30,001 - 40,000 68 0.38 2,347,155 1.3979 4 0.02 140,259 0.0835 72 0.40 2,487,414 1.4814

40,001 - 50,000 27 0.15 1,223,035 0.7284 4 0.02 174,639 0.1040 31 0.17 1,397,674 0.8324

50,001 - 100,000 60 0.34 4,177,414 2.4879 1 0.01 58,076 0.0346 61 0.35 4,235,490 2.5225

100,001 - 1,000,000 67 0.39 18,939,101 11.2793 16 0.10 5,726,223 3.4102 83 0.49 24,665,324 14.6895

1,000,001 - Over 9 0.05 82,051,253 48.8661 7 0.04 22,760,204 13.5550 16 0.09 104,811,457 62.4211

Total 17,364 98.17 138,232,554 82.3253 324 1.83 29,677,699 17.6747 17,688 100.00 167,910,253 100.0000

SAMPATH BANK’S SHARE PRICE FLUCTUATIONRs

2011 2012 2013 2014

0

50

100

150

200

250

300

350

Minimum Market Price (Rs)Maximum Market Price (Rs)Price as at 31st December Closing Price

SHARE TRADING SAMPATH BANK PLC

0

5,000

10,000

15,000

20,000

25,000

30,000

Dec

-11

Dec

-12

Dec

-13

Dec

-14

Volume Traded (No 000)Turnover (Rs 000)


Top 20 Shareholders as at 31st December 2014

No Shareholder Name31st December 2014 31st December 2013*

No of Shares % No of Shares %

1 25,107,454 14.95 25,107,454 14.96

2 16,750,207 9.98 16,738,207 9.98

3 16,745,012 9.97 16,745,012 9.98

4 11,789,746 7.02 11,496,342 6.85

5 7,166,493 4.27 7,050,493 4.20

6 5,536,155 3.30 4,706,155 2.80

7 4,375,557 2.60 4,375,557 2.60

8 4,268,091 2.54 4,468,022 2.66

9 2,735,145 1.63 2,735,145 1.63

10 1,938,144 1.15 816,155 0.49

11 1,663,598 0.99 1,663,598 0.99

12 1,555,914 0.93 606,548 0.36

13 1,436,086 0.86 1,388,010 0.83

14 1,359,849 0.81 1,359,849 0.81

15 1,311,310 0.78 656,037 0.39

16 1,072,696 0.64 - -

17 794,701 0.47 - -

18 770,500 0.46 - -

19 767,238 0.46 667,238 0.40

20 764,978 0.46 1,064,987 0.63

107,908,874 64.27 101,644,809 60.56

167,910,253 100.00 167,787,605 100.00

- - - -

167,910,253 100.00 167,787,605 100.00

Shares held by Directors 0.06 0.06

108,279,461 64.49 108,394,939 64.60

59,528,229 35.45 59,293,098 35.34

167,910,253 100.00 167,787,605 100.00

- 83.31 - 84.98

- 16.69 - 15.02

Investor Relations

173

Year Issue Basis New Shares Stated Capital (Rs Mn) Reason for Issue

2010 Scrip dividend 1 for 120.74 627,596 1,786.25

2010 Scrip dividend 1 for 43.39 3,521,294 2,701.79





2011 2% of issued shares 524,924 2,743.78

2012 2% of issued shares 2,200,436 3,564.17

2013 2% of issued shares 134,933 4,460.34

2014 2% of issued shares 122,648 4,470.15


2010Consolidation and subdivision

11 for 10 6,888,762 1,581.65

2010 Subdivision 1 for 1 76,403,986 1,786.25shareholders

DIVIDEND PAYMENT DETAILS

Year Total Dividend Paid Rs Mn

Dividend Per Share Rs Rs Mn

Dividend Pay Out Ratio

2000 58.70 1.75 402 14.60%

2001 52.14 1.75 322 16.19%

2002 88.57 2.00 441 20.08%

59.78 2.00 561 14.58%

21.99

65.98 2.00 621 16.15%

34.30

87.14 2.00 821 14.54%

32.21

2006 155.47 2.50 1,028 15.12%

2007 206.66 3.00 1,052 19.64%

2008 256.65 4.00 1,414 18.15%

2009 436.19 6.25 2,098 20.79%

2010 1,235.86 8.09 3,303 37.42%

2011 1,426.98 9.00 3,819 37.37%

2012 1,954.10 12.00 5,230 37.36%

2013 1,342.30 8.00 3,430 39.13%

1,847.01 11.00 4,914 37.59%

RECORD OF SCRIP ISSUES

RECORD OF SUBDIVISIONS

EMPLOYEE SHARE OPTION PLAN 2010


Debentures - 2012/2017Highest (Rs) Lowest (Rs) Year End (Rs)

2014 2013 2014 2013 2014 2013

Fixed - 16.50% 114.32 107.00 100.00 95.00 114.32 107.00

Fixed - 15.00% 108.13 103.00 100.10 90.00 107.00 100.00

Floating rate 100.00 100.00 100.00


2014 2013 2014 2013 2014 2013

Fixed - 13.40% 110.02 101.21 102.80 101.21 110.02 101.21

Fixed - 13.00% 118.84 101.00 118.84


2014 2013 2014 2013 2014 2013

Fixed - 8.25% 100.40 100.40 100.40

Fixed - 8.10% 100.00 100.00 100.00

Investor Relations

Debentures - 2012/20172014 2013

Coupon Rate Coupon Rate

Fixed - 16.50% 16.50% 16.50% 16.50% 16.50%

Fixed - 15.00% 15.00% 16.08% 15.00% 16.08%

Floating rate - - - -

Debentures - 2013/20182014 2013


Fixed - 13.40% 13.40% 13.40% 13.40% 13.40%

Fixed - 13.00% 13.00% 13.42% 13.00% 13.42%

Debentures - 2014/20192014 2013


Fixed - 8.25% 8.25% 8.25%

Fixed - 8.10% 8.10% 8.26%

175

Debentures - 2013/2018

Fixed Fixed

13.40% 13.00%

2014 2013 2014 2013

Current yield 12.17% 13.24% 10.94%

Yield to maturity of last trade 11.72% 13.04% 7.51%


Fixed Fixed

8.25% 8.10%

2014 2013 2014 2013

Current yield 8.25% 8.10%

Yield to maturity of last trade 8.25% 8.10%


Fixed Fixed Floating

16.50% 15.00%

2014 2013 2014 2013 2014 2013

Current yield 14.43% 15.42% 14.01% 15.00% 8.49%

Yield to maturity of last trade 10.52% 13.98% 11.89% 16.01% 8.49%

2014 2013

3 Month Treasury Bill 6.38% 9.21%

6 Month Treasury Bill 6.49% 9.59%

2014 2013

76.52 58.04

6.60 7.09

84.54 87.58

STEWARDSHIP

principled business practices

Content178204

Corporate Governance 206252

256257259262264265267268


Risk Management

RISK MANAGEMENTSampath Bank continues to make headway in its

where the responsibility was vested in an individual

is institutionalised, permeating all units and individuals.

The Bank has been successful in nurturing a risk culture that aptly balances growth and risk, supported by a well-

tools and techniques to measure and manage risk. Consequently, risk considerations form a critical input in all business decisions and are aligned with the Bank’s organisational structure and business strategy.

RISK HIGHLIGHTS IN 2014

Total impairment/ Total Advances: 2.27%

exposure to pawning advances

Interest rate risk:

Liquidity risk:

Exchange rate risk:

during the year.

onwards.

System.

Sampath Bank has been rated by the rating agencies as

Fitch Rating:

Lanka Rating Agency:

Awards Won by the Bank in 2014

awarded at the World Finance Banking Awards.

Business Magazine “The Euromoney” for the second consecutive year

Gold award - Banking Sector Category for 2013 Annual

Competition Best Corporate Citizen Sustainability Award - Top Ten

MARKET RISK

STRATEGIC & REPUTATIONAL RISKOPERATIONAL RISK

CREDIT RISK

G4-2

179

The Bank has been successful in nurturing a risk culture that aptly balances growth and risk, supported

appetite, comprehensive policy framework,

structures and appropriate tools and techniques to measure and manage risk.

Gold Award for Commercial Applications and a Bronze

2014.

at the Sumathi Awards 2014 for Television Commercial on Sampath Sevana

for “Outstanding Eco Teams”.

RISK GOVERNANCE

committees, at both Board and Executive levels which

responsibilities and a Board-approved policy framework. The latter details the standards, tools and techniques

monitoring, management and mitigation of risks in all key aspects of the Bank’s operations. Approved policies

among others.


Credit Policy, Risk and Portfolio Review Committee

Executive Advances Committee

Advances Committee

Asset & Liability Management Committee

Investment Committee

IT Steering Committee

ICAAP Committee

Outsourcing Committee

Procurement Committee

SLFRS Committee


Board Integrated Risk Management Committee

Board Audit Committee


Board Credit Committee

SAMPATH BANK

BO

AR

D L

EVEL

CO

MM

ITTE

ES

EXEC

UTI

VE

LEV

EL C

OM

MIT

TEES

RISK GOVERNANCE COMMITTEES

Risk Management

G4 - 45, 46, EC2

181

Committee Composition Role and responsibilities

Board Level CommitteesBoard Integrated Risk Management Committee

Management within the Bank, and set up in compliance with

11 of 2007.

Managing DirectorGroup CFO/Executive Director

Management personnel representing the functions

and Compliance are also invited to the committee meetings as necessary

manner Develop/recommend policies and

procedures; verify models that are used for

advanced approaches

Appetite Examine risk scenarios to measure the

impact of unusual market conditions Monitor compliance of various risk

parametres by business lines

the Bank.


regulated by the Banking Act

on Corporate Governance as

Colombo Stock Exchange and

Corporate Governance issued

Chartered Accountants of Sri

supported by, Managing Director

Group CFO/Executive Director

Audit, Senior Manager-Systems Audit, External Auditors

systems

Group CFO/Executive Director, and all DGMs/

minimise control weaknesses, procedure violations, frauds and errors.

appropriate changes Assessing the independence and monitoring

the performance and functions of the

Appointment/discontinuation of External Auditor

raised under Whistle-blowing

Board Treasury Committeeand two Executive Directors

Management personnel representing the functions of

also invited to the committee meetings as necessary.

carrying out its functions and to monitor its performance

Monitor the liquidity position, Foreign

the Bank

Board Credit Committeeand two Executive Directors.

Management personnel representing the functions of

are invited for the committee meetings

Approve credit facilities as delegated by the Board of Directors

limits of exposure to each major sector of the economy.

Board.



Executive Level CommitteesCredit Policy, Risk and Portfolio Review Committee

Chair - Managing Director

Heads of Credit Departments,

DGM Treasury are also invited for the meetings

procedures and performance of the Bank. Monitors indicators such as delinquent

exposure, cross border exposure etc. Deciding prudential limits on lending and

providing suggestions for capital allocation in

Executive Advances Committee

Chair - Managing Director,

Corporate Banking

Approval of credit facilities as delegated by the Board Credit Committee

Advances Committee Senior DGM, Senior DGM-

Assistant General Manager / Chief Manager of Credit.

Approval of credit facilities as delegated by the Board Credit Committee

Asset and Liability Management Committee

Chair-Managing Director, GCFO,

DGM-Treasury, DGM Finance, AGM-Corporate Credit, DGM-Marketing and Business Development, AGM - Corporate Finance & FCBU, Chief Dealer, Chief Manager Finance, Head of Deposits

Overall responsibility for managing the Bank’s Balance Sheet within the performance and risk

Investment Committee Chair-Managing Director, Executive Director/GCFO,

Treasury, Senior DGM, Senior

Overall responsibility pertaining to decisions on investment activities such as investments in stocks, debt instruments etc.

IT Steering Committee Chair-Managing DirectorSenior management

Systems Audit and Finance

information technology infrastructure including automation, security, and procurement.

Internal Capital Adequacy Assessment Process (ICAAP) Committee

Chair-Group CFO / Executive Director,Senior management representatives from Finance, manner.

Outsourcing Committee Chair-Managing DirectorKey decision makers from

and Systems Audit

The committee is responsible for the supervision of all the Bank’s outsourced activities including setting the criteria for selection, approving the selection of service providers and other related decisions.

Risk Management

183


Procurement Committee Chair-Managing DirectorGroup CFO / Executive Director,

the relevant business/functional area

SLFRS Committee Chair-Managing DirectorGroup CFO / Executive Director,,

Heads of key departments in planning/execution and reporting functions.

Management Committee Chair-Managing DirectorGroup CFO, all DGMs and AGMS

execute strategic and operational plans

performance against set targets and take steps to correct any deviations

requirements of the Bank are duly met. Make operational decisions Decide and assume responsibility on action

set targets, managing the Bank’s reputation, and ensuring regulatory/legal compliance and any other area related to the Bank coming under its purview.

Ensure customer service standards of the Bank are maintained at high levels and customer grievances are duly addressed.

and set terms of reference

THREE LINES OF DEFENCE MODEL

widely accepted governance model has enabled the Bank to manage its risks through a transparent and consistent framework.

First Line of Defence

risks at business unit level. Decentralised primary

units include;

Self-assessment of risk and control Compliance with all policies and procedures

training.

applicable

Second Line of Defence: This line of defence consists

unit and includes the implementation of governance standards, frameworks and policies for each type of risk that the Bank is exposed to. This ensures consistency in

Bank’s business lines. Centralised oversight is provided through;

framework

units, products, processes and systems to the relevant business units, management committees


Challenging the self-assessments, inherent risks

the Bank is exposed to, also considering the Board

action to mitigate risks Overseeing the development of a risk-culture and

its links with the anti-fraud framework.

Conducting reviews on loan facilities to ascertain the compliance to covenants and ensuring the maintenance of credit quality.

and level of impairment carried out by the business

adherence to Treasury operating limits, exposure to

appropriate actions to mitigate risks in this area.

Third Line of Defence: This comprise of the audit/compliance functions which provide independent and

and practices in place. These functions have the authority to communicate with the External Auditors and the Board Audit Committee. Assurance is provided through;

and compliance with anti-money laundering measures

Management framework

Risk Management

FUNCTIONAL RESPONSIBILITY STRUCTURE

Managing Director

AML and Compliance Unit Integrated Risk Management Unit

Operational Risk Management Unit

Market Risk Management UnitCredit Risk Management Unit

Credit Risk Management Function

Credit Risk Review Function

BIRMC

BOARD OF DIRECTORS

185

tools and techniques in place.

formulates the overall policy framework for measuring, monitoring and mitigating the risk exposures of the Bank. Three separate units have been established within the

RISK APPETITE

Directors, and is expressed in the form of tolerance limits and risk appetite triggers across a range of variables

risk appetite is also a crucial element in the formulation of the Bank’s strategies and policy framework. The risk

the risk appetite on a consistent basis, through regular reviews, reporting and related controls.

Risk Appetite-Criteria Limit / Range

Credit Risk - (Credit Quality and Concentration)

30% of Capital Base of the Bank

40% of Capital Base of the Bank

Capital Base

55% maximum

10% - 15%

7.5% maximum

Below 1600

Below 1600

More than 80%

Market Risk

21 % minimum

85% - 95 %

30% - 35%

Operational Risk

External Fraud

Business Disruption and System Failures

considered un-concentrated while over 1,800 is considered highly concentrated. Our computations have been carried-out on lending products and sectors


Risk Management

STRESS TESTINGThe Bank’s stress testing policy framework is approved by the Board and clearly sets out procedures and

calculates the potential impact on the Capital Adequacy

testing outcomes including major assumptions that underpin them. The outputs from the Bank’s stress

testing activities support multiple risk related processes

appetite and tolerance levels as well as establishing contingency plans. Stress testing is carried out on all major risks the Bank is exposed to, with multiple variables being sensitised in order to gauge the impact

conducted quarterly, or earlier, as required.

CREDIT RISK

a customer or a counterparty to meet their obligations to pay in accordance with agreed terms and conditions.

counterparties, business sectors or geographical regions and country risk.

How We Manage Our Credit RiskCredit Risk Governance

functions as the steering committee with overall

Management framework of the Bank. Meanwhile, the

Policy Framework:The Bank’s credit risk policy framework is approved by the Board of Directors, and is reviewed and updated on

licensed commercial / specialised banks, Directives on

Default Concentration Foreign

Low

, Med

ium

and

Hig

h St

ress

ed S

cena

rios default score

Deposit withdrawals on interest

sensitive assetsequity portfolio on net open

position

Asset quality downgrade on interest

sensitive liabilities

Impa

ct

Ass

essm

ent

G4 - 2

187

Establishing an appropriate credit risk environment Operating under a sound credit granting process Maintain an appropriate credit administration,

measuring and monitoring process Ensuring adequate controls over credit risk based

on the Bank’s risk appetite.

Credit Risk Environment

Credit Granting Process

Maintaining Adequate Credit Administration, Measurement and Monitoring Process

Credit Risk Mitigation and Control

risk awareness

comprehensive training programmes

Segregation of duties in credit approval/ risk management/credit administration

governance structures

Delegated approval authority at multiple

Committee, Executive Advances Committee, Managing Director

credit criteria

set in line with risk appetite

sector, geographical

Structured and comprehensive credit appraisal

credit review by

responsibility for monitoring with emphasis on internal and external early warning signals

conducts stress tests and scenario analyses to assess the possible impact of multiple internal and external variables.

Comprehensive interim reviews of selected large exposures

of concentration risk through analytical tools

and periodic reporting

Credit risk mitigation policies and procedures are used in a consistent manner.

Collateral is valued appropriately and updated regularly.

Other risk mitigants

are evaluated carefully taking into consideration the counterparty risks, and legal implications

Management,

and Board Credit Committee.

Focus Areas in Credit Risk Management 2014During the year under review, the Bank focused on

processes.

Enhanced systems for the collection and processing of data relating to risk ratings and defaults with the objective of determining the portfolio’s probability

guidelines.

automatic computation of capital charge for credit risk.

arising from changes in macroeconomic variables.

During the year under review, the Bank focused on further strengthening


Risk Management

Meanwhile, post-credit monitoring was strengthened by :

Unit. This function oversees post-credit risk management throughout the Bank, and ensures

by the branches and credit departments on an ongoing basis.

which now includes frequent branch/department visits to gauge inadequacies and take corrective action if required.

Comprehensive portfolio evaluation on a monthly basis; this is carried out at Bank level for the

Departmental level. Conducting independent assessments on

and recommending improvements if necessary.

Credit Portfolio Characteristics in 2014The Bank’s credit growth slowed to 14.6% during 2014

sector credit expansion witnessed across the industry. The measures initiated last year to reduce exposure to pawning facilities continued in 2014, with total outstanding pawning facilities accounting for a reduced 7% of the Bank’s total loans and advances, compared to 18% in 2013.

The portfolio performance improved during the year,

Default RiskDefault risk is the key component of credit risk and comprises of potential losses arising from the default of a borrower or counterparty. Default risk can arise

exposure. Stringent pre-credit evaluation and post credit monitoring have enabled the Bank to maintain a healthy credit quality in its loan portfolio.

Concentration RiskConcentration risk stems from high lending exposure to a particular customer/group, sector, product or region. The Bank consistently monitors multiple indicators related to concentration, such as name concentration, sector breakdowns, product and regional exposures.

regularly and reviewed annually. The Bank’s lending

spread across multiple sectors, geographical regions and customer segments.

SECTOR-WISE BREAKDOWN OF LOAN PORTFOLIO (2013)

Traders Pawning Manufacturing

Staff Financial and Business Services

Tourism

Other Services(Education/Health/Media ,Other)New Economy

Transport

Credit Card

Construction Infrastructure

23

33

5

4

2

18

18

1310

1

11

%

7

Agriculture and Fishing Other Customers

SECTOR-WISE BREAKDOWN OF LOAN PORTFOLIO (2014)

Traders Manufacturing Other Customers

Pawning

Financial and Business Services Tourism

Other Services (Education/Health/Media, Other)New Economy

Transport

Credit Card

Construction Infrastructure

233

55

2

21

14

12

2

7

7

11

%

6

Staff Agriculture and Fishing

G4 - 2

189

Large exposures% of total portfolio

(Cumulative)

Top 5 7.34%

Top 10 12.83%

Top 20 19.88%

for name concentration was 86, which is considered low concentration.

Collateral ManagementCollateral obtained by the Bank is utilised as a secondary

Collateral accepted by the Bank include cash, property,

tradable securities, guarantees, bills and standby letters of credit. The Bank adopts a cautious and stringent approach towards collateral valuation, and frequently reviews and updates such values in order to ensure that

Stress Testing: Credit Risk Stress testing was carried out during the year to gauge the potential impact of the following scenarios;

as determined by a decline in quality of lending assets, assuming further delay in repayments by borrowers

the level of concentration

Stress Testing Scenario Low Medium High

borrower

borrowers borrowers

Concentration risk 10% 20% 30%

Asset downgrade

2% 5% 10%

Special Mention to Substandard 5% 10% 15%

Substandard to Doubtful 10% 15%

10% 15%

Stress Testing Scenario Low Medium High

2014

12.95% 12.36% 11.91%

13.61% 13.60% 13.60%

13.36% 12.88% 12.11%

Further details on the Stress Testing scenario assumptions are given in the table below.

Stess Testing Results: Credit Risk

COLLATERAL - WISE 2014

Imm. Property, Plant & Mech. Other securities

Tractors & motor vehicles

Hire purchase agreements

Documentary bills

RFC, NRFC & RNNFC accountsTrust receiptsGovt. Securities

Person.Guarant. and pronotesClean

0.160.04

1.04 0.41

3.141.16

3.523.25

7.60

30.76

20.108.21

4.49

12.34

%

3.78

Stock in trade FDs, CDs and other deposits

Shares, bonds, life policy Unsecured loans

Gold


Risk Management

all Stress Testing scenarios. This is expected to improve during, 2015 with the retention of earnings.

prices

MARKET RISKMarket risk is the potential loss that could arise from the possible fall in value of a portfolio, either investment or trading due to changes in market variables such as interest rates, equity prices and foreign exchange rates.

The key market risks that the Bank is exposed to are

How We Manage Our Market RiskMarket Risk GovernanceThe primary governance committee overseeing market

operates with the overall responsibility for monitoring the Bank’s interest rate, exchange rate, liquidity and equity

risks, the Treasury management framework is monitored

as open position limits, counterparty limits, dealer limits etc. which are periodically reviewed and updated.

Policy FrameworkThe policy framework governing the Bank’s market risk

on the procedures, tools and techniques for assessing, managing, monitoring and reporting all aspects related

and industry best practise and provides guidance on the management of all key types of market risks the Bank is exposed to.

LIQUIDITY RISK

or erosion of capital arising from the inability to meet the Bank’s obligations in a timely manner as and when they are due. Given the inherent mismatch between the maturity of the Bank’s assets and liabilities and the resultant liquidity risk exposure, the management of such risks is a crucial element of the Bank’s daily operations.

Managing Our Liquidity RiskThe main governance committee overseeing liquidity

the event of unforeseen eventualities. The Committee consistently monitors the Bank’s liquidity position in order to ensure that it is in line with the Bank’s internal targets as well as Central Bank regulatory requirements and determines necessary actions to prevent non-compliance. Measurement of all major currencies is also

relevant decisions.

Liquidity Measurement

terms of key ratios which demonstrate the liquid asset stored at the Balance Sheet date. These ratios include,

assets and liabilities.

Funding Sources

liquidity from multiple sources. Key considerations when determining sources of funding include the competitive environment, market conditions and regulatory

funding source. Within its deposit portfolio, depositor concentration is relatively low.

191

Contingency Funding PlanThe Bank has in place a contingency funding plan to protect stakeholder interests and maintain market

sources to access liquidity in the event of a liquidity shortfall.

Stress testing is carried out regularly to evaluate the impact of factors such as unexpected high value withdrawals and loan rollovers on the asset liability

mismatch is observed in the 3 months bucket the liquid contingency plan is executed.

INTEREST RATE RISK

Bank’s exposure to assets and liabilities of which the

The Bank is exposed to interest rate risk through its lending activities, deposit liabilities, trading securities

and can be further categorised into the following sub-risk types :

of the Bank’s assets and liabilities which results

in line with the price of the hedged position

curve that have a negative impact on the Bank’s earnings/asset values.

Managing Our Interest Rate Risk

maturity periods and duration. Decisions pertaining to the re-pricing of the Bank’s portfolio are made by the

in the market interest rates together with the Bank’s asset liability maturity mismatches as well as results of periodic stress testing and scenario analysis.

The techniques used to measure the Bank’s interest rate risk consist of both earnings and valuation based tools.

and liabilities are mapped into time buckets based on their maturity period, in order to gauge the duration gap of equity. This approach is also used to assess the capital charge applicable for interest rate risk arising from interest rate sensitive assets and liabilities.

Low Medium High

2014

months and loans due within 3 months

13.6231% 13.6231% 13.5522%

Stress Testing: Liquidity Risk

Utilisation of Excess SLA

Utilisation of SLA at a Penalty

CONTINGENCY FUNDING PLAN


Risk Management

Low Medium High

2014

interest rates on rate sensitive assets / liabilities

13.2980% 12.9868% 12.6886%

Interest Rate Gap Analysis (Rs ’000)

Stress Testing: Interest Rate Risk

Asset or Liability0 to 1 Month

0 to 3 Months

0 to 6 Months

0 to 12 Months

Over 12 Months

Interest Earning Assets 163,647,779 216,802,671 260,544,458 280,960,476 391,998,397

2,719,304 2,719,304 3,799,911 3,799,911 3,799,911

Treasury Bills and Bonds 29,537,279 29,537,279 29,537,279 29,537,279 29,537,279

33,463,028 35,404,050 37,504,496 39,934,165 56,291,629

97,928,168 149,142,038 189,702,772 207,689,121 302,369,578

Others - - - - -

Interest Bearing Liabilities 182,527,251 245,732,704 281,228,323 331,703,439 362,802,905

Deposits 166,936,421 225,386,537 257,976,110 307,611,902 313,466,321

Borrowings 15,590,830 20,346,167 23,252,213 24,091,537 49,336,584

Others - - - - -

Net Rate Sensitive Assets (Liabilities) 29,195,492

of interest rate changes on accrued or reported earnings, particularly on net interest income.

more interest earning assets are maturing within the respective time bucket compared to interest bearing liabilities, and negative gaps indicate vice versa

EQUITY RISKThis is the risk of loss arising from the adverse movement in the value of any equity investment held by the Bank. Stock market prices can decline due to multiple reasons, including deterioration in performance or net asset value of the particular company.

Managing Our Equity Risk

for the management and monitoring of the Bank’s

the Board approved policies which detail internal limits based on the guidelines issued by the Central Bank as well as the Bank’s risk appetite. The return on the equity portfolio, movements in stock market prices as well as broader economic conditions which could potentially have an impact on share prices are monitored on a

the equity portfolio is carried out on a regular basis and

size of the Bank.

193

Foreign Exchange Rate Risk

risk through its holding of assets denominated in foreign

rate movements.

is guided by its Board approved policy framework. The limits set in the framework are persistently monitored and updated as required, in line with market

order to ensure the adequacy of internal controls in treasury management, there is a clear segregation of responsibilities between the Front, Middle and Back

asset liability maturities and forex exposures are

well as stress testing are carried out regularly on the portfolios subject to foreign exchange rate risk.

Focus Areas in Market Risk Management in 2014 During the year, the Bank placed emphasis on

further enhancing the mechanisms in place to assess, measure and monitor Foreign Exchange

Treasury Bill portfolio which was introduced last year was further expanded to cover the entire portfolio during the current year. The Bank is also making preparations to obtain the services of

systems.

Low Medium High

2014

13.6192% 13.6133% 13.6034%

Low Medium High

2014

13.6208% 13.6186% 13.6163%

scenarios.

Stress Testing: Equity Risk

Stress Testing: Foreign Exchange Rate Risk

EXCHANGE RATE MOVEMENT 2014

YEN RATE

USD RATE 130.75 to131.20

1.25 to1.10


Risk Management

The stress testing framework was further extended during the year to include all areas of market and liquidity risks

The year under review also saw the Bank commencing preliminary work on a Treasury System upgrade project which would enable treasury related functions to be performed more

OPERATIONAL RISKOperational risk is the direct or indirect loss resulting from inadequate or failed internal processes, people, systems or from external events. According to Basel

How We Manage Our Operational RiskGovernanceThe business/functional units within the Bank hold overall

policies and processes in place to manage operational risk as well as mitigation strategies. A comprehensive

of Directors, and the internal procedures which are in

managing the risks associated with people, processes and technology while achieving organisational objectives.

which are carried out by all key business units at least on an annual basis. The assessments entail the evaluation

parametres set out in the assessment procedures, for

engages with employees in business units through periodic workshops in order to assess the residual risks and determine appropriate corrective action and

actual internal loss experience, and relevant external operational loss experiences if available.

the Bank is exposed to in a non-technical manner. The

they will be reviewed annually in line with the actual

Bank.

Monitoring

enables the accurate monitoring of operational risks. The system includes a comprehensive operational loss database which allows losses to be tracked on a consistent basis. All branches and departments report internal loss events on a continuous basis and the events are collected in the database. Each operational loss is monitored with an analysis of each occurrence and description of the nature and cause of loss, and

Management Unit evaluates operational performance measures such as volume, turnover, settlement facts, delays and errors and takes necessary action to integrate the required internal controls into the Bank’s operations.

decisions / actions are taken with regard to loss events above the agreed threshold levels.

Control and MitigationThe Bank’s mitigants and response plans are in line with industry best practise and are in compliance with

duties, clear management reporting lines, robust internal controls together with a policy and procedure framework

195

Internal Loss Event Reports

per Basel requirements. Many of the events reported are being recovered during the year, and they are being

People Risk

from human resource related aspects such as lack of appropriate human resources, inappropriate employee activity and failure to comply with employee related requirements. The Bank manages risks attached to

management programmes and investment in training

are carried out, in order to ensure an open dialog and

manpower requirements for the year are aligned with the Bank’s strategic plan in order to ensure the adequacy of human resources for the Bank’s expansion plans.

Legal RiskThis is the risk arising from non-compliance with regulatory/statutory provisions, uncertainty due to legal actions or uncertainty in the applicability or

Key Risk Indicators Framework

Area Indicator Threshold (Quarterly)

Retail Banking: Adequacy of

work load/plans

Warning - 1.0%Critical - 2.0%

Retail Banking: Compliance

code of conduct including ethical standards, integrity

functional unit

Total fraud value reported during the quarter, per business / functional unit

Warning - 0.009Critical - 0.012

Retail Banking: Technology Total number of breakdowns per ATM Warning - 0.6Critical - 0.8

Retail Banking: Credit Operations

Value of Dud and Stolen articles reported

Value of Dud and Stolen articles compared to total pawning Advances as a percentage

recovery and legal action per Branch / Credit Department

Value of the credit defaults handed over to recoveries for


Warning - 0.5Critical - 0.75


Retail Banking: Credit Card Operations to total credit card base,

frauds compared to total advances

to total credit card base

Warning - 0.009% Critical - 0.010%

Warning - 0.04% Critical - 0.05 %

Warning - 0.043% Critical - 0.058%

interpretation of relevant laws or regulations applicable to the Bank.

through its comprehensive framework of internal

responsible for ensuring that the exposure to legal risk is minimised; all legally binding agreements are approved

of the Bank and internal procedures are in place to duly discharge responsibilities under such contracts. Furthermore, independent risk reviews are carried out

assessed and mitigated.

Technology Risk

the ownership, use, operation, involvement and adoption

inadequate infrastructure to support business volumes among others.

The Banking sector continues to focus on the use of innovative technology in the delivery of products and services. Technology has thus emerged as a key source


Risk Management

of competitive edge, with increased emphasis placed on internet/mobile connectivity based services. This has led to a heavy reliance on technology to support complex processes as well as the handling of a large amount of critical information, thus underscoring the importance of

and procedures, which is reviewed and monitored by

Determining the required upgrades in technology is

for each system, based on which adequate controls are

and delivery of the Bank’s key operations by utilising advances in technology.

Key Focus Areas in Operational Risk Management in 2014

the internal loss events dating back to 2007.

Development of a data warehouse enabling the collection, storing and utilising of statistics in a

with regular testing and upgrades. Business Continuity Management- A systems drill

was carried out on a working day covering Finacle, Common Database Applications, Finacle Treasury, i-switch Applications and Card Centre operations among others.

COMPLIANCE RISK

information on Compliance aspects are elaborated in pages 204 and 205.

STRATEGIC AND REPUTATIONAL RISKStrategic risks are the potential losses arising from the possibility of the Bank’s future business plans and strategies being inadequate or inappropriate.

current or prospective earnings capacity due to damage

of relationships with transactional stakeholders.

How We Manage Our Strategic and Reputational RisksThe Bank’s approach towards managing its strategic and reputation risk is a cohesive one, encapsulating all business units and employees. The Bank’s strategies, together with the business plans are discussed extensively and approved by the Board and the Corporate Management. Actual performance is monitored against the strategic objectives on a continuous basis. Meanwhile, the Bank’s code of ethics, a culture which upholds values of honesty and integrity, as well as the Bank’s well-articulated policy framework play a crucial role in the

Policy Framework

approved by the Board, which outlines the structures and processes to manage the strategic risks faced by the

enables customers to communicate their complaints to the Bank, facilitated by a 24-hour hotline. All grievances are attended to and followed up in line with clearly

to Corporate Management for appropriate action and

who has a legitimate concern on an existing or potential “wrong doing”, by any person within the Bank, to come forward voluntarily, and bring such concern to the notice of the Board Audit Committee Chairman through Group Company Secretary.

Measuring Strategic and Reputational RisksWe adopt comprehensive scorecards to measure the

into consideration the size, sophistication, nature and complexity of the Bank’s operations. The scorecard is administered at least annually.

The scorecard takes into consideration a comprehensive

image and reputation

197

GROUP RISK MANAGEMENTGiven the varying business lines of the Bank’s

also aligned to the risk framework of the parent entity.

Management framework of the group entities through the following;

Management and compliance mechanisms with the subsidiaries.

The parent entity nominates Directors to the Boards of the group entities depending on the required level of oversight

the group entities and makes recommendations to the Board

The Bank’s Board of Directors have access to the Board and Board Sub Committee minutes of the group companies

Compliance with the Basel FrameworkThe Bank has complied with the regulatory requirements

updated version of the framework and implementation is expected to commence over the next few years. The Bank remains fully committed to complying with the

Map for the banking industry prepared by the Central

documentation was submitted to the Central Bank for both Bank and Group levels within the stipulated time frame.

RISK REGISTERCredit Risk

Risk Factor

Impact Risk Management / Assessment Risk Mitigating FactorsRisk

Rating

Credit Risk

borrower default

High

3. Structured and standardised credit sanction process.

1. Board approved credit policies/procedures, framework, annual review

2. Delegated authority levels, reviewed regulations, Segregation of duties between loan originator,

Department for pre/post credit risk

100 M. 5. Watch listing, Early Warning

management

Medium

Concentration RiskCredit exposure being concentrated on one or few lending sectors, groups,

Highin a number of areas, such as Top 20 exposure as a % of total portfolio, product-wise /sector wise, region-wise, collateral - wise etc.

required to be stressed. 3. Concentration risk assessed

1. Board approved limits on maximum exposure guidelines

2. Setting of prudential limits, on maximum exposure, reviewed annually.

borrower/related party

sector/subsector 5. Monitoring of exposure against

the limits and thresholds on a periodic basis.


Risk Factor


Rating

Concentration Risk Contd.6. Trends analysis reported to

7. Stress testing / Sensitivity analysis results reported to

quarterly basis for necessary action.

Country RiskA collection of risks associated with exposure to a foreign country. These risks include political risk, exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk of capital being locked up or frozen by government action

on countries 3. Assessment of the political and

economical situations

lending.2. Monitoring of country-wise

exposure

Risk Management

199

Market Risk

Risk Factor


Rating

Liquidity Risk

to meet obligations as and when they fall due

High2. Measurement through key ratios

assets and liabilities statement into time bands

4. Measurement of liquidity in all major currencies.

during Economic Capital

Capital Adequacy Assessment

1. Monitoring of Board Approved

2. Measurement of liquidity in all major currencies reported to

and appropriate risk mitigation decisions made.

Contingency plan.

Medium

Interest Rate Risk

Economic Value of

and Earnings

interest rate movement on

Medium

maturity, duration etc.

Capital Adequacy Assessment 3. Stress Testing and Scenario

Analysis, and the results

appropriate decisions are made to mitigate risks.

Equity Risk

value of the Bank’s Equity

in Share

to adverse movements in stock market prices

Medium

4. Mark to market of the investment portfolio

Economic Capital Calculation

movements in stock market

Committee and risk mitigation decisions made.

2. Stress Testing on a regular basis, and reported / decisions made by


Risk Management

Risk Factor


Rating

Foreign Exchange Rate Risk

from closing out a long or a short position in a foreign currency at a loss due to an adverse movement in exchange rates.

High2. Assessment of Foreign Exchange

positions 4. Assessment of Foreign Exchange

Capital Calculation under

Systems.

1. Continuous Monitoring of Board approved limit framework as per

Management capability.

and appropriate decisions made. 3. Segregation of responsibilities

tracking and monitoring of exposures

5. Monitoring exposures including monitoring of forex exposures with preparation of maturity of assets and liabilities

Medium

Capital Risk

capital resources, to ensure the Bank is well capitalised relative to the minimum regulatory requirements

High 1. Capital adequacy ratios computed regularly.

2. Stress testing under various adverse scenarios

1. Fluctuation in capital Adequacy ratios are monitored regularly

2. Capital augmentation measures are put in place depending on the

Medium

201

Operational Risk Register

Risk Factor


Rating

Operational RiskThe risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This

includes legal risk, but excludes strategic and reputational risks.

High

by business units in accordance with internal control requirements.

Assessments provided by the respective business units, and

reviewed annually or more frequently based on the need.

through newly installed

Comprehensive operational loss database is maintained in the System to track losses by Event

3. Material losses regularly analysed by cause, and action taken to improve systems and controls to prevent future recurrence

processes, external suppliers / outsourced service providers.

against actual losses.

Medium

People Risk

appropriate human resources, failure to manage performance and reward link, unauthorised or inappropriate employee activity and failure to comply with employment related requirements

High 1. Manpower planning in line with expansion and changes in business requirements.

2. Upgrading of minimum

4. Quarterly reviews / assessment of performance

systems in place to recognise and reward performance and identify training needs

6. Development and succession plans

structures, programmes and processes in place and policies are applied in a consistent manner.

screening, Employer feedback / Exit interviews

engage and receive feedback

programmes in place combining e-learning, classroom training and on the job training.

skills.

ratio 6. Consistently applied disciplinary

procedures

Medium


Risk Factor


Rating

Technology Risk

from non -availability

systems break downs, errors, intrusions and disruptions, or not keeping in line with the trends in technology and delivery channels.

High 1. Technology planning is conducted during the annual strategic planning.

each and every system before deploying into production environment

identifying and assessing risk.

continuously review and analyse

delivery channels.

1. Technology planning as a part of annual strategic planning process which covers a 3 year period

2. Systems audits are performed for each and every system before deploying into production environment

identifying and assessing risk.

Committee together with the business lines, continuously review

delivery channels. 5. Based on the outcome of the

systems audit, necessary controls are implemented before live implementation.

6. External vulnerability assessment carried out by external consultants based on the need.

ensure competitive advantage. 8. Backup and disaster recovery,

Medium

Legal Risk

from litigation against the Bank, faulty documentation or business not being conducted as per the applicable laws

High2. Specialist legal advice obtained

from external consultants on a need basis.

Department.

in all legal matters

to ensure that business activities with legal impact are properly risk assessed and executed.

4. All legal documents / Service

Compliance departments. 5. Company Secretary function /

compliance to ensure compliance

requirements

Risk Management

203

Strategic and Reputational Risk Register

Risk Factor


Rating

Strategic RiskFailure to manage medium / long term strategic goals of the business

High Bank’s 2-3 year strategic plan covering all business units approved by the Board.

Economic Capital

4. Accuracy of Financial reporting ensured by internal controls

standards 5. Monthly / quarterly reporting

of assessment of the stages achieved , submitted to the Board of Directors for review.

on the outcome and any external, economic environment changes.

Reputational Risk

public opinion, customer opinion and market reputation and the damage caused due to brands by failure to manage public relations.

High 1. Complaint handling policy / procedure is in place in terms of the customer charter as per

customer complaints and resolution mechanism is in place.

3. Complaints and process of resolution relating to operational risk / compliance,

communications among all stakeholders.

2. Corporate Governance practices

complaints and resolution mechanism in place.

Economic Capital

6. Training and capacity building. 7. Code of conduct for Board and all


Compliance risk is the risk arising out of non compliance

loss, or loss to the Bank’s reputation as a result of the Bank’s failure to comply with applicable laws, regulations, codes of conduct and standards of good practice. The relevant compliance laws could arise from multiple sources including primary legislation, rules and standards issued by regulators and legislators, market conventions, codes of practice promoted by industry associations and

of the Bank. At Sampath Bank, we strive to achieve a

standard of compliance which exceeds the mere legal requirements and embrace higher standards of integrity and ethical conduct.

THE COMPLIANCE STRUCTUREThe Bank’s three lines of defence structure facilitate the

risk. At the apex level, the Board of Directors monitor the Bank’s compliance through the Board Audit Committee

Department which are crucial elements of the Bank’s

Unit are responsible for providing overall assurance to the Board on the Bank’s level of compliance with the relevant laws, regulations and other applicable standards, procedures and practices.

THE COMPLIANCE UNIT

governance advocated by the Banking Act Direction

Commercial Banks, the Bank has established a Compliance Unit which holds the responsibility for monitoring the Bank’s overall compliance risks. The

Compliance Review

COMPLIANCE FRAMEWORK

Monitoring

Status of Compliance

Formulating Compliance

Compliance Targets

Creating Compliance Facilitating

Compliance

Communication, Training and Awareness

The Compliance Unit strives to instil an organisation-wide compliance culture emphasising standards of honesty and integrity.

205

Unit consistently assesses the Bank’s compliance with laws, regulations, statutory guidelines as well as internal controls and policies. The Compliance Unit functions

cadre was further strengthened with the addition of

unit monitoring regulatory compliance, the Unit is also

through a separate sub-unit.

The primary responsibilities of the Compliance Unit are;

of non-compliance Dissemination of information to business units

regarding regulatory requirements and guidelines Ensuring that operational procedures are aligned

with the regulatory requirements Ensuring compliance with the Financial

monitoring and reporting suspicious transactions .


COMPLIANCE REPORTINGThe Compliance Unit’s periodic reporting is two-fold. A

business units on statutory and mandatory reporting requirements and the Bank’s level of compliance is provided to the Board of Directors on a quarterly

Compliance on statutory / regulatory reporting requirements

the regulators Events of non-compliance

function Monitoring of compliance on regulatory /

anti-money laundering

POLICY FRAMEWORKThe Bank’s Compliance procedures and guidelines are

responsibilities, structure and processes, reporting lines

is reviewed by the Board periodically, and updated as and when necessary. Meanwhile, the Group Compliance

encapsulating the overall compliance principles adopted by the Bank and its subsidiaries.

COMPLIANCE CULTUREThe Compliance Unit strives to instil an organisation-wide compliance culture emphasising standards of honesty and integrity. Training and awareness programmes

all employees are adequately aware of the Bank’s compliance requirements, structures and procedures.

introduced to the Bank’s audit and compliance processes

documented. The Compliance Unit takes a proactive approach in promoting a culture of compliance, and operates as a strategic partner to all business units.

FOCUS AREAS IN 2014 The Group compliance framework was further

formalised and strengthened during the year. The Compliance Unit’s responsibilities were

broadened to include Exchange Control related matters. The Compliance Unit now serves as an intermediary function between the branches, departments and the Exchange Control

carried out for compliance unit employees as well as to other team members of the Bank through,

site depicting Authorised Signatories of Exchange Control Dept. expediting the approval process,

relevant specimen formats readily available for users have been made available.

Direct access to Exchange Control web site for all team members

Action was taken towards strengthening the Bank’s

G4 - 38, 39


Corporate Governance

CHAIRMAN’S STATEMENT

Dear Stakeholder,

Good corporate governance provides a solid foundation for the sustainable growth of business, promoting ethical business conduct and transparency as we strive to create value for our stakeholders. The corporate values and a comprehensive policy framework approved by the Board serve to communicate to employees at all levels how business should be conducted. The organisation structure put in place by the Board serves to ensure that authority and responsibility are delegated in a manner that facilitates accountability at all levels of the organisation. The Board is committed to maintaining the highest standards of Corporate Governance in compliance with the regulatory requirements of the

on Corporate Governance issued jointly by the Securities

While governance structures, policy frameworks and processes are important, we are conscious that the implementation and actual functioning of these must be

The Board and its Sub Committees receive reports from senior executives, of the Bank’s performance in this regard on a regular basis and provide guidance and direction to management on enhancing performance while ensuring compliance.

BOARD COMPOSITIONThe Board Composition remains unchanged from the

Board as there is greater understanding of the issues at hand collectively. There is a diverse mix of skills and experience among the Board members as they bring professional, academic and entrepreneur perspectives

in terms of gender and age with three eminent female professionals on the Board and two Directors below 35 years of age. Their collective experience and varied perspectives have generated discussion and debate on

STAKEHOLDER ENGAGEMENTWe are committed to balancing stakeholder interests to ensure there is responsible and sustainable growth. To achieve this, we ensure that there is

to understand their needs and formulate appropriate responses while balancing their interests. This process continues to drive strategy at the Bank and forms the foundation for many of the innovations which have

team, long standing supplier relationships and our support of the e-governance initiatives and alignment with the country strategy in many aspects of our business.

DRIVING PERFORMANCEAs the environment was challenging for the entire

focussed considerable attention to driving performance

of strategic initiatives were implemented to enhance performance in the long term and we are encouraged by

with the corporate management team has enabled

short term and long term goals are met.

RISK MANAGEMENT

and continues to pay considerable attention to the risk management processes of the Bank. The Sub Committee tasked with oversight of the risk management function meets bi-monthly to monitor the performance of the risk management function and reports to the Board on a regular basis on matters concerned.

GOVERNANCE

on Corporate Governance 2013 jointly issued by the

207

The Board continues to set the learning culture for the organisation by investing time to update themselves on matters relevant to their assigned roles through participation at various workshops and seminars. We have also had guest presentations from experts to obtain a greater understanding of areas of common interest and relevance to the Board to provide an independent perspective.

Succession planning, talent management and leadership development have continued as a key Board agenda item

previous year.

The Board sanctioned donations to the value of

scheduled Annual General Meeting.

As governance practices within the country continue to shape corporate culture, the Board is committed to reviewing and revising our policies and governance structures with the objective of upholding the high standards in governance and stakeholder engagement which have been a tradition carefully nurtured within Sampath Bank.

Dhammika PereraChairman

19th February 2015



Subsidiaries

Board of Directors - Subsidiaries


Board HR & Remuneration Committee

Board Nomination Committee

Board Integrated Risk Management Committee


Board Strategic Planning Committee


Board Shareholder Relations Committee

Board Marketing Committee

External Auditors

Board Committees

Shareholders

Board of Directors - Bank

Managing Director

Executive Director / Group Chief

DGM - Finance

Strategic Planning & Reserch

Legal

New IT System Development Recoveries

Human Resources & Training

Operations

Branch Network

Finance Department

Corporate Credit/Corporate Branch

Corporate Finance

Remittances

Trade Services

IT

Treasury

FCBU

Planning & Budgeting

Commercial Credit/

City Branch

Merchant Banking

Administration & Engineering

DGM - Operations DGM - HRDGM -

Corporate Credit

SDGM - Operations & Branch Credit

SDGM

Sampath Centre Ltd - Renting of Commercial Property

SC Securities (Pvt) Ltd - Stock Broking

Siyapatha Finance PLC Leasing and Factoring

Sampath Information Technology

Solutions & Maintenance of Hardware

(1) Asset & Liability Committee(2) Deposit Mobilisation Committee(3) Investments Committee(4) IT Steering Committee (5) Credit Policy Committee(6) Procurement Committee(7) IFRS Steering Committee(8) Internal Control Steering Committee(9) Corporate Management Committee

Management Committees

Group Risk

Senior Manager

System Audit

Risk Management

Treasury

Department / Unit

System Audit

AGM

- Ad

min

istr

atio

n

AGM

- St

rate

gic

Plan

ning

&Re

sear

ch

AGM

- Co

rpor

ate

Cred

it

AGM

- Br

anch

Ban

king

1

AGM

- Co

rpor

ate

Fina

nce

&

FCBU

Group Company Secretary's

Grou

p Co

mpa

ny

Secr

etar

y

AGM

- Br

anch

Ban

king

2

AGM

- Gl

obal

Bus

ines

s

Grou

p

AGM

- Ne

w IT

Bus

ines

s D

evel

opm

ent

Head

of I

T

Internal Audit

Head

of I

nter

nal

Audi

t

DGM - Treasury

DGM - Marketing and Business Development

Card Centre

Marketing

Development Banking

Treasury

Treasury Investment

Business Development

Deposit Mobilisation

AGM

- Ca

rd C

entr

e

Chie

f Leg

al

AGM

- Re

cove

ries

Compliance

GOVERNANCE STRUCTURE

209

GOVERNANCE OF THE BANK

are governed by the Board of Directors in accordance with the following:

thereto

amendments thereto

of 1995

The Board has also voluntarily adopted the following standards and codes to ensure that the Bank conforms to the highest standards of governance in managing its

include the following:

2013 issued jointly by the Securities & Exchange

GOVERNANCE STRUCTUREDirectors are elected by shareholders at the Annual General Meeting except for casual vacancies which are

in accordance with the Articles of Association. The Board determines the strategic direction of the Bank and provides guidance to the Corporate Management Team in delivering sustainable value to our shareholders over the short, medium and long term. Sub Committees

focus on matters that are of continuing importance to the Bank. The Corporate Management Team lead by the Managing Director is responsible for implementation of strategy and managing the performance of the Bank on a day to day basis. The Board approves strategic plans, governance structures, risk appetite, policies, procedures and delegation of authority providing a framework for decision making. Stakeholder engagement processes

stakeholders are embedded in to the organisation policy frameworks to ensure that there is long term value created for all stakeholders.

Board Committees Key Responsibilities Composition

Board Audit Committee Corporate Governance External Audit

5 members of whom 4 are

CommitteeComprises 5 Directors of whom 4

Directors including the Chairman

Board composition

Committees Appointment and performance of

Directors of whom the Chairperson

CommitteeComprises 6 members of whom

Executive. Three Directors including


Credit Controls Credit Administration

Directors and 2 Executive Directors. Three members including the

Directors.

G4-34, 35, 36, 37, 49, 51


COMPOSITIONThe Board comprises 12 Directors of whom 10 are

who combine knowledge, skills and experience from

and business. The Chairman and Deputy Chairman are

and Managing Director have been segregated and

Board Committees Key Responsibilities Composition

weaknesses

strategies

Comprises 8 Directors of whom

the Chairman who is also the

CommitteeShareholder /investor relations

Directors

Board Treasury CommitteeTreasury Management processesMonitor risk arising from Treasury

functionsTreasury performance

Comprises 5 Directors of whom 3

and one other Director are

Board Marketing Committee Customer strategyBrand strategyCustomer service

Directors of whom 2 are


CORPORATE GOVERNANCE HIGHLIGHTS FOR 2014

Mr Deshal De Mel Miss Annika Senanayake

The Board appointed Alternate Directors to facilitate the smooth operation of business and minimise the bottlenecks that may arise due to temporary physical unavailability of Directors in the country due to overseas travel commitments.

who are both employees of the Bank and part of the

in terms of gender and experience with 3 females on the Board and ages of Board members ranging from 67

less than 48 hours per annum on matters of the Bank and members of the Board Audit Committee and Board

12 hours per annum at a minimum on subject areas allocated to the two Committees.

211

COMPLIANCE WITH CODES ON CORPORATE GOVERNANCE

11 of 2007 and subsequent amendments thereto on

pages 236 to 251. Our External Auditors, Messrs Ernst

of compliance on the requirements of the Banking Act

jointly by the Securities & Exchange Commission of Sri

of this report. The compliance with CSE listing rules on

Banks are exempted from complying with the said rules from 2010 onwards. This is because such a requirement has been adequately covered in the Banking Act Direction

ROLE OF CHAIRMAN & MANAGING DIRECTORThe roles of the Chairman and the Managing Director have been segregated to maintain a balance of power

the CEO / MD is an Executive Director. The Bank has formal terms of reference for the Chairman which

listing requirements of the CSE and the Banking Act

provides leadership to the Board and ensures its

briefed and make an active contribution in the best interests of the Bank. He is also responsible for ensuring compliance with statutory requirements and ensuring that shareholder views are addressed by the Board.

HOW WE OPERATEThe Board is responsible for determining the strategic direction, the risk appetite of the Bank, its governance structures and an appropriate policy framework to

performance of the Bank is discharged by reviewing regular reports on progress in implementing strategic plans, risk management, key performance indicators and

strategic plans, risk appetite and internal controls of the Bank to ensure that an appropriate governance structure and policy framework is in place to ensure that day to day activities are conducted within an approved framework. Chairpersons of the Board Committees provide feedback to the Board on the activities of the Committees. The Board receives regular reports and presentations on strategy and developments in the operating environment

for key business areas from the Managing Director and

also provided to the Board and Board Committees on

exposures and the Group’s loan portfolio, asset and liability management, liquidity, litigation, compliance and reputational issues. The agenda and supporting papers are distributed in advance of all Board and Committee meetings to allow time for appropriate review and to facilitate full discussion at the meetings. All Directors have full and timely access to all relevant information and may take independent professional advice if necessary at the Company’s expense. Directors have free and open contact with management at all levels and Key

the Board on matters relating to their work.

and attend external seminars including Central Bank Director Forums to ensure that they are regularly updated on matters that impact the Bank from a regulatory perspective. They also keep themselves updated on matters that impact the Bank which include regulatory changes, economic factors, demographic changes, social trends and other matters that impact the

conferences and seminars which provide them with insights in to developing trends in business and banking.

The Bank’s values, ethics and code of conduct are set

is made available to all employees to ensure that high standards of conduct are maintained throughout the Bank in conduct of business and our interactions with

ensure that high standards of conduct are upheld and

fraud or risk management. This policy facilitates voluntary escalation of legitimate concerns on any potential “wrong doing” occurring within the Bank by

Audit Committee. The procedure is clearly set out in the

the procedure.

SETTING STRATEGIC DIRECTIONThe Board is responsible for setting the strategic direction of the Bank and is assisted in this by the

which has been in force since 2009 which is revised every quarter with a comprehensive review done annually. An assessment of the Bank’s competitive strengths together with a review of the operating environment with emphasis on emerging trends in the local market and global industry trends forms the basis for the planning

G4-13, 39


process. Areas for improvement and strategic priorities are set with the overall objective of delivering sustainable stakeholder value through earnings, growth, stability and

and the Budget for 2014 during the year using the Key

the Board along with the Budget for 2015 using the same model.

The Bank’s values, ethics and code of conduct are set out in the Employee Code of Conduct which is made available to all employees to ensure that high standards of conduct are maintained throughout the Bank.

FIN

AN

CIA

L K

PIS

Business Growth Earnings Growth Credit Quality

Deposits Growth > 26%

Credit Growth > 23%

Assets Growth > 23%Minimum Dividend per

NO

N F

INA

NCI

AL

KP

IS

Risk Management Human Resource Development Infrastructure Growth

Assessment for Strategic Business Units% Core areas of expertise to be covered in training

Enhance online banking services

% of credit facilities risk ratings/

granting% training objectives met

Enhance mobile banking services

through partnerships with other banks


213

STRATEGIC RISK MANAGEMENT

and value creation to stakeholders over the short, medium and long term and a separate Board Committee has oversight responsibility for this. The risk appetite for the

regular meetings of the Board as it is a standing item on the agenda. All Directors are briefed on developments in this regard. The risk management framework and

261 Additionally, the Board has noted and complied with

The Board also reviewed the appointment of the present

INTERNAL CONTROLThe Board of Directors is responsible for the

that supports business operations, ensures compliance with regulations, internal policies and procedures, and ensures reliable reporting. Accordingly, the Board Audit Committee has been tasked with the oversight responsibility for this key function in line with the requirements of the Central Bank Directions, the Code of Corporate Governance and international best practice.

Department and has communications with the External Auditors to ensure that their concerns are addressed

the policies and processes for identifying, assessing and managing business models.

The Directors’ undertake an annual assessment of the

the Bank has obtained reports from the Bank’s External

December 2014.

OTHER ASPECTS OF CORPORATE GOVERNANCEThe Board has approved a governance framework which maps out the internal approvals processes and those matters which may be delegated. These matters principally relate to the operational management of the Bank’s operation and include predetermined authority limits delegated by the Board to the Bank’s Managing Director for further delegation by him in respect

day-to-day Operations. Additionally, Management Committees have been established as principal standing Committees with written terms of reference which are regularly reviewed by the Board. These Committees are key elements of the Bank’s Operational Governance Framework.

ADDITIONAL GOVERNANCE COMMITTEES

Additional Governance Committees

Purpose and Tasks

Formulates, monitors and reviews all asset and liability management strategies and their implementation. These include decisions on advances and liabilities pricing, maintaining the appropriate mix of assets and liabilities, introduction of new asset

the magnitude of the interest rate and liquidity risks, buying and selling of securities, foreign exchange exposures and regulatory compliance.

Deposit Mobilisation Committee

Mobilises adequate deposits to support credit expansions at a reasonable cost.

investment proposals received by the Committee, if within their limits, or else, submits recommendations to the Board, where the Board is the approving authority.

Other special investments such as Securitisations, private equity and venture capital investments



Additional Governance Committees

Purpose and Tasks

Takes responsibility for the feasibility, business case and the achievement of outcomes of operations, infrastructure, automation, development, procurement and

the strategic vision and long term goals as stipulated by the Board of Directors. The

oversight of the deliverables and rollout of such strategies.

as well as to establish personal limits and client limits in accordance with its powers.

Evaluates and make recommendations to the Board with the concurrence of the CEO/MD, on the capital expenditure proposals, where the Board is the approving authority.

The Committee also acts as the approving authority on capital expenditure projects and purchases within certain delegated limits.

IT GOVERNANCEAs an innovative Bank we rely on information and communication technologies for facilitating, originating and recording transactions and for producing information used for regulatory reporting and decision making.

investments made by the Bank and are directly linked to

the role of information, business processes, applications

investments are aligned and delivered in accordance with corporate objectives and strategies. The following

implemented by the Bank:

processes, roles and responsibilities, information requirements and organisational structures

procedures, and overall objectives.

embedded in the responsibilities of the Bank,

department, enables the Board and senior

implementation to ensure that expected value has been delivered.

project reports to senior management, provides a thorough review of the progress being made

215

The Group Company Secretary Mr S Sudarshan is the Secretary for all the Board Sub Committees and the minutes of meetings are available in his custody. Written

are available for the Sub Committees with the Group Company Secretary.

BOARD MEETINGSThe Board of Directors held 20 Board meetings during the year and its Sub Committees held a total of 68 meetings. Their main focus areas and attendance at meetings are given below.

MEMBERSHIP OF SUB COMMITTEES OF THE BOARD

DirectorBoard Audit

Committee

Board HR and Remuneration

Committee


Board Integrated

Risk Management Committee

Board Credit

Committee

Board Strategic Planning

Committee

Board Shareholder

Relations Committee

Board Treasury

Committee


Chairman

Chairman

Mr Sanjiva Senanayake Chairman

Mr Deepal Sooriyaarachchi Chairman Chairman

Chairman

Mrs Dhara Wijayatilake Chairperson

Miss Annika Senanayake Chairperson

Mr Deshal De Mel

Chairman


Available Available Available Available Available Available Available Available Available

Quarterly Once in two months

Bi-Annual Bi-Annual Once in two

months

Once in two

months

10 5 12 8 15 8 1 6 3

Circulation of agenda and papers 7 days prior

7 days prior 7 days prior 7 days prior 7 days prior

7 days prior

7 days prior 7 days prior

7 days prior

Focus Area %

Main Banking Operations 28

10

Strategy and Budget 20

12

Governance 10

16

Shareholder Matters 2

Others 2

G4 -39, 42, 43, 49, 50



Joined the Committee on 29th May 2014

DirectorBoard

Meetings

Board Audit

Committee

Board HR and Remuneration

Committee


Board Integrated

Risk Management Committee

Board Credit

Committee

Board Strategic Planning

Committee

Board Shareholder

Relations Committee

Board Treasury

Committee


Mr Dhammika 16 04 05

Mr Channa 19 04 10 05 11 07 01

Mr Sanjiva Senanayake

20 10 08 15 08 06


2010 05 03

20 10 08 15 07 05

Mrs Dhara Wijayatilake

19 10 08

Miss Annika Senanayake

18 05 12 11 02

Mr Deshal De Mel 19 03 13 07 01 06 02

17 09 06


19 10 03

20 05 07 14 08 06

Samaranayake20 08 15 08 06

Meetings20 10 05 12 08 15 08 01 06 03

STAKEHOLDERS’ RIGHTS FRAMEWORKThe Board recognises the rights of all stakeholders, established by law or through mutual agreements and has in place a Corporate Governance framework which

encourages active co-operation between the Bank and stakeholders. The commitment of the Bank towards this aspect, are as follows:

Stakeholder Bank’s Commitment

ShareholdersThe Bank is committed to enhance long term shareholder value and facilitate the exercise of shareholders’ rights

CustomersThe Bank is committed to maintain and enhance its public image as a sound, high quality, progressive, friendly place to conduct banking.

Employeesboth as individuals and as part of a team.

CommunityThe Bank is committed to meet its corporate responsibility and decisions on social and economic issues concerning activities of the Bank are developed and adopted by its governance bodies with the participation of Bank personnel.

217

Special Resolutions Passed at the Last Annual General Meeting (AGM)There were no matters that required passing of special resolutions at the AGM held on 31st March 2014.

Means of CommunicationWe communicate with our stakeholders through the following mechanisms:

The quarterly results are published in the

www.sampath.lk in an area of the website devoted

Financial results and business strategies of the Bank are explained to investors,

Business leaders and media personnel through

STATUTORY COMPLIANCE & PENALTIESThe Company has complied with the requirements of the Colombo Stock Exchange on all matters related to capital

on the Company by the authorities.

DECLARATION

of Directors and the Senior Management personnel have

to them as laid down by the Board of Directors in terms

2007, for the year ended 31st December 2014.

Managing Director

19th February 2015



THE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA

Principle

SEC & CA Sri Lanka

Code Reference

Compliance and ImplementationAdoption

Status

A. DIRECTORSA.1 THE BOARD

A.1Executive including the Chairman. The two Executive Directors are

are also part of the Corporate Management to whom the day to day operations of the organisation have been delegated. The Board has appointed Board Sub Committees to assist in the discharge of their collective duties and also approves policies, governance structures and the delegation of authority to provide a conducive

Board is closely involved in developing strategy and setting the short, medium and long term goals of the Bank and regularly

on a regular basis.

Adopted

meetingsA.1.1 Board meetings are held monthly while special Board meetings

are convened as the need arises. During 2014 the Board held 20 scheduled meetings and 8 strategic meetings. The following Board Sub Committees met regularly:



Board Treasury Committee Board Marketing Committee

The Board uses ipad to access Board papers via secure connections and Directors are able to join meetings even remotely. Details of Board meetings, Sub Committee Meetings and attendance are given on page 216 of this report.

Adopted

BOARD’S RESPONSIBILITIES: THE FOLLOWING PROCEDURES ARE CARRIED OUT TO STRENGTHEN THE SAFETY AND SOUNDNESS OF THE BANK

formulation and implementation of sound business strategy

A.1.2 The Board is responsible for setting strategy, policies and for

year, the Board had 8 strategic planning sessions which reviewed the proposals of the Corporate Management and re-aligned strategy and approved the medium term strategy for the period 2014 to 2016.

Adopted

219

Principle

SEC & CA Sri Lanka

Code Reference


Status

that the Chief

management teampossess the skills, experience and knowledge to implement the strategy

A.1.2

experience and knowledge to implement strategy.

Adopted

CEO/MD and senior managementsuccession strategy

A.1.2 A succession plan has been recommended by the Board

the Board.

Adopted

systems to secure integrity of information, internalcontrols and risk management

A.1.2 Adopted

compliance with laws, regulations and ethical standards

A.1.2 There is a separate Compliance function reporting directly to Adopted

stakeholder interests are considered in corporate decisions

A.1.2 The Articles of the Bank require the Directors to take decisions taking into account the interests of the customers, shareholders, employees and the community. Additionally there is a Customer

order to uphold the interests of these key stakeholders.

Adopted

company’s values and standards are set with emphasison adopting appropriate accounting policies and fostering compliance

regulations

A.1.2 The Board Audit Committee and Board review accounting policies annually to ensure that they are in line with the business model of the Bank and evolving international and local accounting standards and industry best practice.

Adopted

other Board functions as are vital, given the scale, natureand complexity of the business concerned

A.1.2law, regulations and good governance practices adopted by the Bank.

Adopted




Principle

SEC & CA Sri Lanka

Code Reference


Status

A. DIRECTORSA.1 THE BOARD

accordance with laws relevant to the organisation and procedurefor Directors to obtain independentprofessional advice at company expense

A.1.3 The Board has put in place a framework of policies, procedures and a risk management framework to ensure compliance with relevant

to the operations of the Bank. The Board obtains independent professional advice as and when necessary in accordance with the Board approved policy on independent professional advice and these functions are co-ordinated through the Group Company

matters during the year in accordance with the above provision in 2014.

Adopted

appointment or removal of Company Secretary

A.1.4 All Directors have the opportunity to obtain the advice and services of the Group Company Secretary, Mr S Sudarshan, who is a

ensuring follow up of Board procedures, compliance with rules and regulations, directions and statutes, keeping and maintaining minutes and relevant records of the Bank.

The Articles of the company specify that the appointment and removal of the Company Secretary should be by resolution involving the whole Board.

Adopted

judgementA.1.5 The Directors of the Bank have no vested interests and take

decisions on matters before them using independent judgement.Adopted

adequate time and

the Board and the Company

A.1.6 Dates of regular Board meetings and Board Sub Committee meetings are scheduled well in advance and the relevant papers are circulated a week prior to the meeting. There is provision to circulate papers closer to the meeting on an exceptional basis.

who are also on Sub Committees dedicate not less than 136 hours

Board and its Sub Committees are given in page 216.

Adopted

221

Principle

SEC & CA Sri Lanka

Code Reference


Status

DirectorsA.1.7 The Group Company Secretary in consultation with the Chairman

recommends Directors to attend training sessions/seminars.

an outside expert views on matters relevant to the Bank. During 2014 the following areas were covered

Directors’ responsibilities State of the economy and future outlook

Additionally, the Board encourages knowledge sharing among the Directors. They also participate in the sessions organised by

self-assessment by Directors also covers aspects on training to identify training needs.

Adopted

A.2 DIVISION OF RESPONSIBILITIES BETWEEN CHAIRMAN AND CEO / MD

the business of the Board separately; to the executive responsibilities of the management of the Company

A.2 The positions of the Chairman and the CEO/MD have been separated in line with best practice in order to maintain a balance

while the CEO/MD is an Executive Director.

Adopted

A.3 CHAIRMAN’S ROLE

role in preserving good corporate governance

A.3 The Bank has developed a formal terms of reference for the

continuing listing requirements of the CSE and the Banking Act

Adopted

proceedings in a proper manner

A.4 FINANCIAL ACUMEN

and knowledge to

A.4 Financial acumen has been a key attribute of successful careers of the following Directors who have held senior management

Mr Sanjiva SenanayakeMr Deepal Sooriyaarachchi

Two Directors, including the CEO/MD, have MBAs and two Directors

Accountants, UK.

Adopted




Principle

SEC & CA Sri Lanka

Code Reference


Status

A. DIRECTORSA.5 BOARD BALANCE

Directors of

number

A.5.1 &A.5.2 Chairman and 2 Executive Directors who are the CEO/MD and the

Adopted

Directors

A.5.3free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement.

Adopted

EXECUTIVE DIRECTORS VS NON EXECUTIVE DIRECTORS

Executive Directors

Non Executive Directors

2

10

INDEPENDENT DIRECTORS VS NON INDEPENDENT DIRECTORS

Independent Directors

Non Independent Directors

5

7

223

Principle

SEC & CA Sri Lanka

Code Reference


Status

declarations of independence from Directors

A.5.4 Annual declarations of independence or non-independence have been obtained from the Directors for 2014.

Adopted

evaluation of independence

A.5.5 The Board makes an annual evaluation of independence of the Directors based on the submission of the annual declarations. Based on these, the following Directors are deemed to be independent:

Mr Sanjiva Senanayake Mr Deepal Sooriyaarachchi

Ms Dhara Wijayatilake Miss Annika Senanayake

were not met.

Adopted

Director

A.5.6 &A.5.7

Director in view of the requirements of the Banking Act Direction Adopted

meeting with other Directors

A.5.8 Adopted

hold meetings with

Executive Directors, without ExecutiveDirectors being present

A.5.9

Directors met once without the presence of the Executive Directors during the year 2014.

Adopted

Directors’ concerns in Board Minutes

A.5.10 Board minutes are prepared in order to record any concerns of the Board as a whole or those of individual Directors regarding matters placed for their approval/guidance/action. These minutes are circulated and formally approved at the subsequent Board meeting, Additionally, Directors have access to the past Board papers and minutes in case of need at all times.

bring the issue to the attention of the Board. The Directorconcerned is also required to provide a written statement to the Chairman for circulation to the Board.

Adopted

A.6 SUPPLY OF RELEVANT INFORMATION

appropriate and timely information

A.6.1 The management provides comprehensive information including both quantitative and qualitative information for the monthly Board Meetings generally 7 days prior to the Board/Sub Committee meetings. The Directors also have free and open access to Management at all levels to obtain further information or clarify any concerns they may have. As described above, they also have the right to seek independent professional advice at the Company’s expense and copies of advice obtained in this manner are circulated to other Directors who request it.

Adopted



Principle

SEC & CA Sri Lanka

Code Reference


Status

A. DIRECTORSA.6 SUPPLY OF RELEVANT INFORMATION

ensure all Directors are properlybriefed on issues arising at Board meetings

A.6.1 All Directors are adequately briefed on matters arising at Board meetings through comprehensive Board papers. Additionally, the relevant members of the Management Team are on standby for

presentations at Board meetings.

Any Director who does not attend a meeting is updated on proceedings prior to the next meeting through:

Formally documented minutes of meetings A separate Board paper is prepared highlighting the items

which need to be completed and need follow-up action of

Archived minutes and Board papers accessible electronically at the convenience of the Directors.

the meetings of the Management Committees and have the

Meetings.

Adopted

and agenda to be circulated 7 days prior to meetings.

A.6.2 As described above, Board papers are generally circulated 7 days before the meeting. There is provision for circulation of urgent papers within a shorter time frame and also for approval of matters by circulation but such instances are the exception and not the rule.

Adopted

A.7 APPOINTMENTS TO THE BOARD

transparent procedure for newappointments through an established

Committee

A.7.1

this important Board Sub Committee is given on page 215 of the

Committee.

Adopted

Board compositionA.7.2 The Board annually assesses its composition to ascertain whether

the combined knowledge and experience of the Board match the

complies with the criteria.

Adopted


G4-40, 44

225

Principle

SEC & CA Sri Lanka

Code Reference


Status

of information to shareholders upon appointment of new Directors

A.7.3 All new appointments are communicated to the shareholders via the Colombo Stock Exchange both in English and Sinhala languages

current Directors are given on pages 10 to 15 in this report which have also been translated in to Sinhala.

Adopted

A.8 RE-ELECTION

should submit themselves for re-election at regular intervals

A.8 As per the Articles, 1/3rd of the Directors should retire at each Annual General Meeting and be subject to re-election. Such

re-election:


Mrs Dharani Wijayatilake Mr Sanjiva Senanayake

A brief resume of Directors standing for re-election is provided in English and Sinhala to enable shareholders to make an informed decision.

Executive roles to ensure that Board composition is periodically

Adopted

Directors are appointed for

subject to re-election

A.8.1

General Meetings in terms of Articles of Association.

Adopted

including Chairman to be subject to

appointment and re-election at least every 3 years

A.8.2 Described in response to A8 above. Adopted

A.9 APPRAISAL OF BOARD PERFORMANCE

A.9.1 The Board annually appraises its own performance to ensure that it is discharging its responsibilities satisfactorily. This process

in line with the provisions of this section of the Code. The responses are reviewed by the Group Company Secretary who compiles a report which is discussed at a Board Meeting.

Adopted

of Board Sub Committees

A.9.2 The Board Sub Committees follow the same process and the reports are retained by the respective Committee Chairperson.

Adopted



Principle

SEC & CA Sri Lanka

Code Reference


Status

A. DIRECTORSA.9 APPRAISAL OF BOARD PERFORMANCE

of the method of appraisal of the Board and Board Sub Committee performance

A.9.3 Adopted

A.10 DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS

information regarding Directors

A.10.1

Membership of Board Sub Committees and attendance at Board Meetings and Board Sub Committee meetings are given on pages 215 & 216.

Adopted

A.11 APPRAISAL OF CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR

be met by the CEO/MD

A.11.1to be achieved during the year by the CEO / MD with reference to the short, medium and long term objectives of the Bank at the beginning of 2014. The targets for 2015 have also been set at the end of 2014.

Adopted

performance of the CEO/MD with reference to targets

A.11.2 The Managing Directors’ performance is evaluated by the Board

achieved by the Bank. This is reported to the Board.

Adopted


G4 - 51, 52, 53

227

Principle

SEC & CA Sri Lanka

Code Reference


Status

B. DIRECTORS’ REMUNERATION B.1 REMUNERATION PROCEDURE

Committee

B.1.1to develop policy and determine remuneration for the Directors,

Schedule C of the Code, other investor guidelines and requires the Committee to ensure that the Company adopts a remuneration policy which rewards Executive Directors, Management and

enhancing shareholder value.

Adopted

Committee to comprise exclusively

Directors

B.1.2 & B.1.3

Managing Director:

Miss Annika Senanayake Mr Deshal De Mel

Adopted

Executive Directors

B.1.4

line with market practice.

Adopted

of Executive Directors

B.1.5

advice from within or outside the company in formulating their proposals which then are discussed with the Chairman.

Adopted

B.2 THE LEVEL AND MAKE UP OF REMUNERATION

for Executive Directors should attract, retain and motivate

B.2.1 & B.2.2 and motivate the Executive Directors as determined by the Board

and seeks professional advice when required in order to discharge its responsibilities.

Adopted

company remuneration levelsrelative to other companies

B.2.3remuneration levels in relation to other Banks in the country annually.

Adopted

related elements ofremuneration for Executive Directors

B.2.4 There were no performance related elements of remuneration for Executive Directors.

Adopted

schemesB.2.5 The employees had a uniform employee share option scheme

based on grade and salary of the employee. This scheme expired on 30th June 2014.

Adopted



Principle

SEC & CA Sri Lanka

Code Reference


Status

B. DIRECTORS’ REMUNERATIONB.2 THE LEVEL AND MAKE UP OF REMUNERATION

schemes of performancerelated remuneration

B.2.6implemented by the Bank during 2014.

Adopted

commitments in the eventof early termination

B.2.7 There are no provisions for compensation for early termination in the letters of contract/appointment. However, the Directors would determine this on a case by case basis.

Adopted

early terminationB.2.8 Directors determine this on a case by case basis. Adopted

remuneration for

Directors

B.2.9

the time commitment and responsibilities of their role and market

include share options.

Adopted

B.3 DISCLOSURE OF REMUNERATION

Committee,

and disclosure of aggregate remuneration paid to Directors

B.3.1and its policy is given on page 256.

on page 371.

Adopted


229

Principle

SEC & CA Sri Lanka

Code Reference


Status

C. RELATIONS WITH SHAREHOLDERSC.1 CONSTRUCTIVE USE OF THE ANNUAL GENERAL MEETING (AGM) AND CONDUCT OF GENERAL MEETINGS

use of the AGM & Other General Meetings

C.1 The Annual General Meeting is the main forum of contact between small shareholders and the Board. A separate Sub Committee of

up for the purpose of building up relations with the shareholders and addressing their concerns. This Committee conducts an open

year.

prior to the AGM and a Sinhala version is published each year to meet the needs of a diverse group of shareholders. Additionally, the Chairman’s and CEO/MD’s messages are translated in to Tamil each year.

the major shareholders and the Chairman also participates if needed in such meetings.

Adopted

proxy votes lodgedC.1.1 All proxy votes lodged, together with the votes of shareholders

present at the AGM are considered for each resolution.Adopted

resolutions for each substantiallyseparate issue

C.1.2 A separate resolution is proposed at the AGM for each substantially separate issue. The adoption of the report and accounts is proposed as a separate resolution.

Adopted

of Board Sub Committee Chairpersons at AGM

C.1.3 All Board Sub Committee Chairpersons are present at the AGM to answer any questions raised at the AGM and will respond when requested to do so by the Chairman.

Adopted

relateddocuments to shareholders

C.1.4least 15 working days prior to the meeting in accordance with the regulations.

Adopted

of procedures governing votingat the AGM

C.1.5 A summary of the procedures governing voting at the AGM is provided in the proxyform, which is circulated to shareholders 15 working days prior to the AGM.

Adopted



Principle

SEC & CA Sri Lanka

Code Reference


Status

C. RELATIONS WITH SHAREHOLDERSC.2 COMMUNICATION WITH SHAREHOLDERS

to reach all shareholders of the company

C.2.1 The Board has appointed a Sub Committee on Shareholder

a Committee. This Committee conducts an annual Shareholder

AGM is also a key forum for contact with shareholders and the Bank has a proud history of well attended AGMs where shareholders

translated in to Sinhala language and the Chairman’s and CEO/MD’s messages are translated in to Tamil language as well to facilitate greater communication with shareholders.

reports, interim reports etc. These are posted on the website as

Exchange.

Adopted

methodology for communication with shareholders

C.2.2 The Bank provides fair disclosure with emphasis on the integrity, accuracy, timeliness and relevance of the information provided.

Adopted

methodology for communication with shareholders

C.2.3 Shareholders are consulted on their preference to receive the

or in printed form. Shareholders may at anytime elect to receive

quarter end.

Adopted

in relation to shareholder matters

C.2.4 &C.2.6

Shareholders may, at anytime, direct questions and request for publicly available information to the Directors or Management of the Bank. They may also provide their comments and suggestions to the Directors or Management. Such questions, requests and suggestions should be addressed to the Group Company Secretary.

Adopted

make all Directors aware of major issues and concerns of shareholders

C.2.5 The Group Company Secretary maintains a record of all correspondences received. He directs as soon as practicable such correspondences to the Board, individual Directors or the relevant

Adopted


231

Principle

SEC & CA Sri Lanka

Code Reference


Status

responding to shareholder matters

C.2.7 Adopted

C.3 MAJOR AND MATERIAL TRANSACTIONS

major transactionsC.3.1 During the year 2014, the Bank had not engaged in or committed

the Bank’s net asset base.

Adopted

D. ACCOUNTABILITY AND AUDITD.1

balanced and understandable assessment of theCompany’s

performance and prospects

D.1 The Bank’s position and prospects have been discussed in detail in

pages 48 to 175.

Adopted

price-sensitive public reports, regulatory reports andstatutory information requirements

D.1.1which includes information to assist shareholders gain an

concise manner to the Colombo Stock Exchange on a timely basis.

balanced assessment of the Bank`s operations.

Adopted

D.1.2the Company on pages 272 to 282 contains the declarations as required by the Code.

Adopted

of the Board for the preparation and presentation of FinancialStatements and statement by the Auditors about their reportingresponsibilities

D.1.3

reporting responsibilities are provided on pages 287 & 288 and on page 289 respectively.

Adopted


Principle

SEC & CA Sri Lanka

Code Reference


Status

D. ACCOUNTABILITY AND AUDITD.1

Management Discussion and Analysis

D.1.4

as given below

industry structure and developments opportunities and threats risks and concerns internal control systems and their adequacy social and environmental protection activities carried out by

the Company

material developments in human resource/industrial relations and

prospects for the future.

Adopted

the Directors that the business is a going concern

D.1.5

pages 272 to 282.

Adopted

shareholders in case net assets of the company fall below 50%

D.1.6 This situation has not arisen. Adopted

TransactionsD.1.7 There is a documented process approved by the Board identifying

related parties, type of related party transactions and favourable treatment granted to said parties in order for Board members

identifying, recording and disclosure of related party transactions.

A procedure is in place for granting accommodation to Directors or to close relations of Directors. Such accommodation requires approval at a meeting of the Board of Directors, by not less than 2/3rds of the number of Directors other than the Director concerned, voting in favour of such accommodation. The terms and conditions of the facility include a proviso that it will be secured by such security as may from time to time be determined by the Monetary Board as well.



G4 - 41

233

Principle

SEC & CA Sri Lanka

Code Reference


Status

TransactionsD.1.7

transactions to the Bank on a quarterly and annual basis. Adopted

D.2 INTERNAL CONTROL

sound system of internal control to safeguardshareholders’ investments and the Company’s assets

D.2.1 The Board is responsible for formulating and implementing appropriate and adequate internal control systems. The Board Audit Committee has responsibility to the Board to ensure that the

regular basis to the Board Audit Committee.

Adopted

Function

D.2.2 Adopted

D.3 AUDIT COMMITTEE

arrangements for selection and application of accounting policies,

reporting and internal control principles

D.3 The Bank has established Board Audit Committee in keeping with good governance since 1997. The principle responsibility

reporting, internal controls and monitoring auditor independence.

monitoring the performance, objectivity and independence of the External Auditor and reviewing work of the internal Auditor. The

Adopted

and Terms of

Audit Committee

D.3.1

experience to meet the Committee’s objectives. The CEO/MD,

Systems Audit and representatives of the External Auditors are invited to attend the meetings.

External Audit function and relationship with External Auditors

D.3.2 The Committee has a key oversight role in relation to the External Auditor Ernst & Young, whose primary relationship is with the

the independence and objectivity of the Auditor is not impaired. The Committee has responsibility for recommending to the Board the appointment/re-appointment of the External Auditors and reviewing the nature, scope and results of the annual External Audit. The audit fee is determined by the Board Audit Committee

External Auditors.

Adopted

D.3.3

are available with the Group Company Secretary.

Adopted


Principle

SEC & CA Sri Lanka

Code Reference


Status

D. ACCOUNTABILITY AND AUDITD.3 AUDIT COMMITTEE

regarding Board Audit Committee

D.3.4the Company given on pages 272 to 282 provides the following disclosures:

The composition of the Board Audit Committee A statement regarding the independence of the Auditors

Adopted

D.4 CODE OF BUSINESS CONDUCT AND ETHICS

business conductand ethics

D.4.1 Codes of Conduct and Ethics are in place as per the Employee Hand Book.

Adopted

D.5 CORPORATE GOVERNANCE DISCLOSURES

D.5.1

the Bank which are in compliance with:

Adopted

E. SHAREHOLDERS – INSTITUTIONAL INVESTORS E.1 SHAREHOLDER VOTING

voting at AGME.1 The Bank has a history of active shareholder involvement at

General Meetings and all shareholders are regularly encouraged to state their intentions to vote and translate it into practice.

Adopted

structured dialogues with institutional investors

E.1.1 The CEO/MD has regular structured meetings with institutional

meetings. Board members are briefed about the matters discussed at such meetings.

Adopted

E.2 EVALUATION OF GOVERNANCE DISCLOSURES

institutional investors togive due weight to relevant governancearrangements

E.2

highlighted at regular meetings to ensure that due weightage is given to good Corporate Governance.

Adopted



235

Principle

SEC & CA Sri Lanka

Code Reference


Status

F. SHAREHOLDER RELATIONS – INDIVIDUAL SHAREHOLDERSF.1 INVESTING / DIVESTING DECISION

shareholders are encouraged to do their own analysis or seek independent advice

F.1

is published in both Sinhala and English to facilitate better understanding by retail investors. This, together with the interim

information to enable retail investors make informed judgements regarding the performance of the Bank.

Additionally, there is a separate part of the company website

online to all investors.

Shareholders can contact, the Group Company Secretary for further information.

Adopted

F.2 SHAREHOLDER VOTING

shareholders to participate and vote at the AGM

F.2participate and vote at the AGM. Additionally, they are encouraged

Adopted

G. SUSTAINABILITY REPORTINGG.1 PRINCIPLES OF SUSTAINABILITY

Sustainability is a business approach that creates long term stakeholder value by embracing opportunities and managing risks derived from economic, environmental and social developments and their potential implications and impacts on the business activities of the entity.

Sustainability reporting is the practice of recognising, measuring, disclosing and being accountable to internal and external stakeholders for organisational performance towards the goals of sustainable development in the context of the overall business activities and strategy of the entity and be directed to the target stakeholders, usually shareholders, employees, consumers, society and government.

SustainabilityG.1.1 Adopted

EnvironmentG.1.2 Adopted

G.1.3 Adopted

G.1.4 Adopted

and Service G.1.5 Adopted

engagement

communication

G.1.6 Adopted

reporting & disclosure

G.1.7 Adopted



Corporate Governance Principle

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Compliance and Implementation

3(1) RESPONSIBILITIES OF THE BOARD

and corporate valuesThe Bank’s strategic objectives and corporate values are determined by the Board and are given on page 28. These are communicated to all levels

Management Team. Additionally the values are included in the Employee Code

The Bank strategy is set by the Board in consultation with the Corporate

approved by the Board. The risk appetite, policy, management framework and mechanisms have also been approved by the Board in line with the strategic plan. Measurable goals for the Bank as a whole have been set and performance is measured in line with these goals regularly at monthly Board Meetings.

identifying principal risks, setting governance structures and implementing systems to measure, monitor and manage the principal risks. The following reports provide further insights in this regard:

all stakeholdersThere is a Board approved communication policy with all stakeholders, including depositors, creditors, shareholders and borrowers in place.

The Board has approved and implemented the following communication policies:

such a Committee. This Committee conducts an annual Shareholder

AGM is also a key forum for contact with shareholders and the Bank has a proud history of well attended AGMs where shareholders take an

in to Sinhala language and the Chairman’s and CEO/MD’s messages are translated in to Tamil language as well to facilitate greater communication with shareholders.

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

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all stakeholdersprinted in all three languages and disseminated to all customer contact points of the Bank. This document outlines the complaints handling policy of the Bank, provides contact numbers of the Bank for this purpose and also of the Financial Ombudsman. There is a 24 hour trilingual customer hotline set up for this purpose and reports

Additionally, a customer satisfaction survey is carried out by External consultants to evaluate service levels provided by the Bank.

their concerns.

Control System and Management

The Board is tasked with reviewing the adequacy and the integrity of the Bank’s internal control systems and management information systems.

activities and exercise control over business activities, operations and risk

Board.

authority and Key

Directors and Key

of the Bank by Key matters under their purview and are also called in by the Board to explain matters relating to their areas.

of own Governance practices

Selection, nomination and election of Directors are made by the Board

are disclosed to the Board at the start of every meeting. A Director who has a particular interest abstains from voting in such a situation and he/she is not counted in the quorum.

responses are collated by the Group Company Secretary and submitted to the

for Key Management which has been principally approved by the Board.

A succession plan is being implemented based on the said structural plan.




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with Key Management discussions at the meetings of the Board and its Sub Committees on policy

objectives is a regular agenda item for the Board and the Key Management

environment and

relationship with regulator

Directors are briefed about developments in the regulatory environment at Board Meetings to ensure that their knowledge is updated regularly to

regulators are presented to the Board quarterly and monitored closely by the Board.

and briefed the Board.

AuditorsThe Board Audit Committee carries out the necessary due diligence regarding the hiring of the External Auditor and makes recommendations to the Board. The appointment of the External Auditor is made at the Annual General Meeting. Oversight of the External Auditor is carried out by the Board Audit Committee and the Board is briefed of any concerns in this regard if the necessity arises.

Chairman and CEO and

their functions and responsibilities

Managing Director and also approved their functions and responsibilities maintaining the balance of power between the two roles.

Meetings as and when the need arises. The Board met 20 times during 2014.We have minimised obtaining approval via circular resolutions and it is done only on

meeting.

Directors to include proposals in the agenda

Board approved procedure is in place to enable all Directors to include matters and proposals in the agenda.

Monthly meetings are scheduled and informed to the Board at the beginning of each calendar year to enable submission of proposals in the agenda for regular meetings where such matters and proposals relate to the promotion of business and the management of risk of the Bank.

circulated to the Directors 7 days prior to the meeting giving Directors time to attend and submit any urgent proposals.

secure line to the ipad for Directors to access.


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AttendanceThe Directors are apprised of their attendance in accordance with the Articles of the Company and the Corporate Governance Code. Details of the

3 consecutive meetings and all Directors have attended at least 2/3 of the meetings during the year.

Secretaryto handle the secretariat services to the Board and Shareholder meeting and

advice and services of Company Secretary

All members of the Board have opportunity to obtain advice and services of the Group Company Secretary who is a Chartered Corporate Secretary

and maintaining Minutes and relevant records of the Bank.

Board MinutesGroup Company Secretary maintains the minutes of the Board Meetings and circulates same to all Board Members. The minutes are approved at the subsequent Board Meeting. Additionally, the Directors have access to the past Board papers and Minutes through a secure electronic link.

serve as a reference for regulators and supervisory authorities

The detailed Minutes of the meetings include:

deliberations

the Board’s strategies and policies and adherence to relevant laws and regulations

overview of the risk management measures including reports of the

Committees

to seek independent professional advice deem necessary.

The Board Sub Committees and various professionals in Corporate and

addition, Directors are able to obtain independent professional advice, as and when necessary, in discharging their responsibilities. These functions are co-ordinated by the Group Company Secretary.

The Directors are conscious of their obligation to deal with situations where

which is regularly updated and includes interests of the spouse, children under 18 years of age and their business concerns. Directors abstain from participating in the discussions, voicing their opinion or approving in situations

quorum in such instances.



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matters reserved for Board decision

ensure that the direction and control of the Bank is within its authority in line with regulatory codes, guidelines and international best practice.

Bank if there are solvency issues

The Board is aware of the need to inform the Director of Banking Supervision prior to taking any decision or action if the Bank is about to become insolvent or about to suspend payments to its depositors and other creditors and such a situation has not arisen during the year.

The Board monitors capital adequacy and other prudential measures viz a

benchmarks on a monthly basis. The Bank is in compliance with the minimum capital requirements.

DirectorsThe Board has adopted a scheme of self-assessment to be undertaken by each Director annually and records of these assessments are maintained with the Group Company Secretary. The Chairman discusses these with the Directors individually.

3(2) THE BOARDS’ COMPOSITION

Directors than 07 nor more than 13. The Bank’s Board comprises 12 Directors as at 31st December 2014.

a Director The period of services of a Director excluding the Managing Director/Chief

Governance. There are no Directors whose tenure of service has exceeded 09 years on the Board. Details of their tenures of service are given on pages 10 to 15.

within the requirement to limit the number of Executive Directors to 1/3rd of the total.

Executive Directors

4 Directors have been appointed as alternative Directors for the existing Directors during the year.

Executive Directors necessary skills and experience to bring an independent judgement to bear

Executive Directors are detailed on pages 10 to 15



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Executive DirectorsDirectors nominate names of eminent professionals or academics from

Board meeting is more than 50% of Directors and more than half the quorum to comprise

This requirement is strictly observed and it is noteworthy that the majority

Executive Directors in communications disclose categories of Directors in Annual

all corporate communications that disclose the names of Directors of the Bank. The composition of the Board, by category of Directors, including the

planning and appointments to the Board

Corporate Governance. Accordingly, new Directors including the CEO/MD and GCFO are appointed by the Board upon consideration of recommendations

vacancies

Directors appointed to the Board since the AGM will stand for election at the

situation has not arisen during the year.

reasons for removal or resignation of Director

authorities and shareholders as per CSE requirements together with a

brought to the attention of shareholders.

Directors or Employees of a bank becoming a Director at another bank

requirement in their deliberations when considering appointments of

be elected/nominated as a director of another bank.

3(3) CRITERIA TO ASSESS FITNESS AND PROPRIETY OF DIRECTORS

should not exceed 70There are no Directors who are over 70 years of age.

not be Directors of more than 20 companies



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3(4) MANAGEMENT FUNCTIONS DELEGATED BY THE BOARD

study delegation arrangements

The Board periodically reviews and approves the delegation arrangements in place and ensures that the extent of the delegation addresses the needs of

delegation should not hinder Board ability to discharge its functions

arrangements periodically to ensure relevance to operations of the Bank

3(5) THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR

The roles of the Chairman and CEO/MD are separate.

Chairman and appointment of a

Director

as he holds more than 1% of the share capital. The Board has appointed

ensure the independent element.

identity of Chairman and CEO/ MD and any relationships with the Board members

on pages 10 to 15 and there are many references to these roles throughout.

the Chairman, CEO/MD and other members of the Board other than those

given on pages 371 to 376 as per annual declarations and the register of

to the Board;

and discharges its responsibilities;

key and appropriate issues are discussed by the Board in a timely manner.

The Board approved the key responsibilities of the Chairman and this

Self-evaluation process ensures that the Chairman provides leadership to the

and appropriate issues are discussed by the Board in a timely manner.

for agenda lies with Chairman but may be delegated to Company Secretary

The Group Company Secretary draws up the agenda for the meetings in consultation with the Chairman.



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Directors are properly briefed and provided adequate information

The Chairman ensures that the Board is adequately briefed and informed regarding the matters arising at Board. The following procedures are in place to ensure this:

Board papers are circulated 7 days prior to the Board meetings

Management information is provided in agreed formats on a regular basis to enable Directors to assess the performance and stability of the Bank

Directors are able to seek independent professional advice on a needs basis at the Bank’s expense

participation by all Directors and lead in acting in the interests of the Bank

The Board has a self-evaluation process that encourages all Directors to make a full and active contribution. This is evident by the self-evaluation forms submitted by each Director at the year end.

Executive Directors and relationships between

Executive Directors

Board providing further opportunity for active participation. The Bank has also

supervision of Key

and executive duties

The Chairman does not get involved in the supervision of Key Management

communication with shareholders

The Bank historically has active shareholder participation at the Annual

communication with shareholders.

as the apex executive in charge of the day to day operations

The day-to-day operations of the Bank has been delegated to the CEO/MD.

3(6) BOARD APPOINTED COMMITTEES

Sub Committees, their functions and reporting

of reference for each. The Group Company Secretary serves as the Secretary for all Sub Committees and maintains minutes and records with oversight by the respective Chairpersons. The reports of the Sub Committees are included

Board Audit Committee on pages 252 to 255.

Board Credit Committee on pages 262 & 263.

Board Treasury Committee on pages 267. Board Marketing Committee on pages 268.

The Chairpersons of the Sub Committees are available at the AGM to clarify any matters that may be referred to them by the Chairman.



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3(6)(II) BOARD AUDIT COMMITTEE

Executive Director

and experience in accountancy and/or audit

Management Accountants, UK.

Executive Directors

functions made the following recommendations:

provided in compliance with the relevant statutes;

from time to time;

the service period, audit fee and any resignation or dismissal of the Auditor

The Board Audit Committee ensures that the service period of the

the particular Audit partner is not re-engaged for the audit before the expiry of three years from the date of the completion of the previous term.

monitor External Auditor’s independence and objectivity and the

audit processes

The Board Audit Committee obtains representations from the External Auditor on its independence and that the audit is carried out in accordance with the

non-audit services by External Auditor

When such services are obtained from External Auditors prior approval is obtained from the Board Audit Committee in accordance with regulations. Further, there is a policy in place approved by the Board in this regard.

of audit and scope of the audit to ensure that it includes:

accordance with relevant accounting principles and reporting obligations;



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of auditAs all audits within the group are carried out by the same External Auditor, there was no requirement to discuss arrangements for co-ordinating activities with other auditors.

information of the Bank in order to monitor the integrity of the Financial Statements of the Bank, its

focuses on the following:

requirements.

The Board Audit Committee makes its recommendations to the Board on the above on a quarterly basis.

External Auditor on The Board Audit Committee discusses issues, problems and reservations

Bank.

and Bank’s response

The Board Audit Committee has reviewed the External Auditor’s management letter and the management’s response thereto.

Audit function carries out the following duties with regard to the same:

necessary authority to carry out its work;

ensures that appropriate actions are taken on the recommendations of

members

members to submit reasons for resigning;

professional care

in this regard are not applicable.

the recommendations of such investigations are implemented.



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3(6)(II) BOARD AUDIT COMMITTEE

Committee Meetings representative of the External Auditors normally attend meetings. Other Board members may also attend meetings upon the invitation of the Committee. The Committee met the External Auditors without the Executive Directors being present in terms of the Corporate Governance Code.

resources and access to information

The Board Audit Committee has:

reference;

with relevant experience to attend, if necessary.

The Board Audit Committee has scheduled regular quarterly meetings and additional meetings are scheduled when required. Accordingly, the Committee met 8 times during the year. Members of the Board Audit Committee are served with due notice of issues to be discussed and the conclusions in discharging its duties and responsibilities are recorded in the Minutes of the meetings maintained by the Group Company Secretary.

following:details of the activities of the Board Audit Committee; the number of Board Audit Committee meetings held in the year; and details of attendance of each individual Director at such meetings.

of meetingsThe Group Company Secretary serves as the Secretary for the Board Audit Committee and maintains minutes of the Committee meetings.

policy and relationship with External Auditor

The Bank has a Board approved whistle blowing policy whereby an employee

Secretary forwards all communications received in this regard, including anonymous communications, to the Chairman of the Board Audit Committee who takes up the issues and addresses them in an appropriate manner. This

Committee.

The Board Audit Committee is the key representative body for overseeing the Bank’s relations with the External Auditor and meets the Auditor on a regular basis to discharge this function.



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3(6)(III) BOARD HUMAN RESOURCES AND REMUNERATION COMMITTEE

the remuneration of

fees and monthly emoluments during the year 2014.

for the Directors, MD

expected to get involved in executive functions.

performance of the MD

set targets and goals

MD is not present at meetings when matters relating to the MD are being discussed

Terms of reference of the Committee provides that the MD/CEO should not be present at meetings of the Committee, when matters relating to him are being discussed. MD/CEO was not present when matters relating to him were discussed during the year.

3(6)(iv) BOARD NOMINATION COMMITTEE

Directors, CEO and Key procedure to appoint new Directors. A procedure is being implemented to

DirectorsThe Committee makes recommendations regarding the re-election of current Directors, taking into account the performance and contribution made by the Director concerned towards the overall discharge of the Board’s responsibilities.

for appointments to key managerial positions including CEO

The Committee sets the eligibility criteria to be considered, including

to key managerial positions including the position of the CEO/MD. The Committee considers the applicable statutes and guidelines in setting the criteria.

Job descriptions have been documented for the CEO/MD and Key

persons

and new expertiseThe Committee has developed a succession plan for the Directors. The need

structure of the Bank which was principally approved by the Board.The succession plan will be implemented based on the approved structure.



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3(6)(iv) BOARD NOMINATION COMMITTEE

Chairman and other members CEO/MD is present at meetings by invitation.

3(6)(v) BOARD INTEGRATED RISK MANAGEMENT COMMITTEE

Committeeand strategic risk. The Committee works closely with Key Management

Committee

a framework for management and assessment of risks. Accordingly, monthly information on pre-established risk indicators is reviewed by the Committee in

The Committee has a process to assess and evaluate all risks of the Bank and

if any. The Committee will initiate action to evaluate the risk management of Subsidiary companies both on a Bank basis and Group basis.

management level Committees on risk

The Committee reviews the reports of the management level Credit

qualitative risk limits set by the Committee.

to mitigate risks exceeding prudential levels

decided by the Committee on the basis of the Bank’s policies and regulatory and supervisory requirements. The key risk indicators designed by the Committee will be approved by the Committee and the Board.

meetingsThe Committee has regular meetings and schedules additional meetings when required. The agenda covers matters assessing all aspects of risk management including updated business continuity plans.

for failure to identify

implement corrective action

decisions are taken collectively.

report to Board Committee meeting by the Secretary of the Committee for their information,



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functionA compliance function has been established to assess the Bank’s compliance with laws, regulations, and regulatory guidelines. Compliance unit will have to assess the Bank’s compliance with internal controls and approved policies on all areas of business operations. This function is headed by a dedicated Group

A detailed quarterly report on statutory and mandatory reporting requirements indicating the status of compliance to the Board

the Committee.

3(7) RELATED PARTY TRANSACTIONS

related parties and

interest

A Board approved documented process is in place on categories of related

from any transaction with the relevant parties.Further, Directors are individually requested to declare their transactions with the Bank on a quarterly and annual basis and the Bank’s Corporate web is updated with the information obtained.

transactions covered by direction

Board’s Directions on maximum amount of accommodation,

borrowings and investments,

provided to the Bank or received from the Bank,

between the Bank and any related parties which may lead to the

of related party

as more favourable treatment

The Bank has implemented a process to monitor related party transactions

other constituents of the bank carrying on the same business.

accommodation to a Director or close relation to a Director

A procedure is in place for granting accommodation to Directors or to close relations of Directors. Such accommodation requires approval at a meeting of the Board of Directors, by not less than 2/3rds of the number of Directors other than the Director concerned, voting in favour of such accommodation. The terms and conditions of the facility include a proviso that it will be secured by such security as may from time to time be determined by the Monetary Board as well.

granted to persons, or concerns of persons, or close relations of persons, who subsequently are appointed as Directors of the Bank

Directors prior to their appointment and they are requested to declare any further transactions.

Employees of the Bank are aware of the requirement to obtain necessary

Compliance Unit.

This situation has not arisen in the Bank to date.



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3(7) RELATED PARTY TRANSACTIONS

treatment or accommodation to Bank employees or their close relations

operational circulars to refrain from granting favourable treatment to other employees or their close relations or to any concern in which an employee or close relation has a substantial interest.

of accommodations subject to Monetary Board approval

The situation has not arisen in the Bank to date.

3(8) DISCLOSURES

and quarterly Financial Statements

Annual audited Financial Statements and quarterly Financial Statements are prepared and published in accordance with the formats prescribed by the supervisory and regulatory authorities and applicable Accounting Standards.

3(8)(II) DISCLOSURES IN ANNUAL REPORT

the annual audited

have been prepared in line with applicable accounting standards and regulatory requirements, inclusive

pages 287 & 288.

given on pages 272 to 282.

Statement given on page 286.

Board on the Bank’s internal control mechanism

accordance with relevant accounting principles and regulatory requirements:

pages 287 & 288.

given on pages 272 to 282.

issued by the Auditors

Standard on Assurance

3050

Directors Details of Directors are given on pages 10 to 15. Directors interests in contracts with the Company on page 282.

Financial Statements on page 371.



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accommodations granted to each category of related parties and as a percentage of the Bank’s regulatory capital

on pages 371 to 376.

parties are given below

Category of Related Party Transactions

Amount %

71.3 0.2

Subsidiaries 1,520.3 3.7

their close family members5,355.9 13.1

of remuneration paid to, and transactions with Key Management

by the Board on the Annual Corporate Governance report

with Corporate Governance Directions

with prudential requirements, regulations, laws and internal controls

on pages 287 & 288 clearly sets out details regarding compliance with prudential requirements, regulations, laws and internal controls. There were no instances of material non-compliance to report on corrective action taken during the year.

taken to rectify non- Systems or non-compliance with these directions that have been pointed

therefore there is no disclosure in this regard.

3(9) TRANSITIONAL AND OTHER GENERAL PROVISIONS

and other general provisions

The Bank has complied with the transitional and other general provisions

Dhammika Perera Aravinda PereraChairman Managing Director

19th February 2015


Board Audit Committee Report

COMPOSITION OF THE BOARD AUDIT COMMITTEE

by and responsible to the Board of Directors comprises

approved by the Board. The following members serve in the Committee:

functions as the Secretary of the Board Audit Committee.

industry.

TERMS OF REFERENCE

periodically reviews the Committee Charter as and when required. The Committee is responsible to the Board of Directors and reports on its activities regularly. The Board Audit Committee also assists the Board in its

and functions relating to internal and external audits.

REGULATORY COMPLIANCE The roles and functions of the Committee are regulated

Corporate Governance issued jointly by the Securities

DUTIES AND ROLE OF THE BOARD AUDIT COMMITTEE The Committee is responsible for:

order to monitor the integrity of the Financial

accounts and quarterly reports prepared for disclosure;

acceptability of the Bank’s accounting policies and practices;

risk management processes and regulatory compliance;

to ensure compliance with statutory provisions, accounting standards and accounting policies which are consistently applied;

Corporate Management in taking precautionary measures to minimise control weaknesses, procedure violations, frauds, and errors;

6. Assessing the independence and monitoring the

including overseeing the appointment of the Head

7. Overseeing the appointment, compensation, resignation, dismissal of the External Auditor, including review of the external audit, its cost

Auditor’s independence;

reasonable assurance regarding the reliability of

Statements for external purposes have been done in accordance with applicable accounting standards and regulatory requirements; and

9. Engaging independent advisors on specialised functions where it is deemed necessary.

253

BOARD AUDIT COMMITTEE MEETINGS The Committee met 10 times during the year. Attendance by the Committee members of these meetings is given

Managing Director, Executive Director/Group Chief

and the External Auditors also attended these meetings by invitation. Four of these meetings were held to consider and recommend to the Board of Directors the Bank’s quarterly and annual Financial Statements. The

Auditors twice during the year without the presence of MD and the Corporate Management to ensure that there was no limitation of scope in relation to the Audit and to allow for full disclosure of any incident which could

external/internal audits, and concluded that there was no cause for concern.

FINANCIAL REPORTING The Committee, as part of its responsibility to oversee

Board of Directors, has reviewed and discussed with the Management and the External Auditors the quarterly and the annual Financial Statements prior to their release. The review included the quality and acceptability of accounting policies and practices, the clarity of the

requirements. To facilitate their review, the Board Audit Committee considered reports from the Executive

from the External Auditors on the outcome of their half-year review and annual audit.

INTERNAL CONTROL OVER FINANCIAL

December 2014.

2014 based on the criteria set out in the Guidance for

The Bank’s assessment was based on processes documented by the respective process owners. For the successful implementation of this task a steering committee headed by the Executive Director/Group Chief

and other relevant Department Heads was formulated in 2010 with the guidance of the Bank’s External Auditor

through tests on the documented processes to establish their adequacy and commented where necessary.

assessments, the Board has concluded that, as of 31st

on pages 283 & 284. The Bank’s External Auditors

the Board that nothing has come to their attention that

inconsistent with their understanding of the processes adopted by the Board in the review of the design and

ANNUAL CORPORATE GOVERNANCE REPORT

for 2014 is provided on pages 206 to 251. The External Auditors of the Bank have performed procedures set

requirement of the Corporate Governance directive. Their

19th February 2015 addressed to the Board are consistent with the matters disclosed above and did not identify any inconsistencies to those reported by the Board on pages 236 to 251.

INTERNAL AUDIT The Board Audit Committee monitored and reviewed

of updates on audit activities and achievements against the Bank’s audit plan, advising corporate management to

Audit Department. The Committee had necessary

the year.

During the year, the Committee reviewed the internal audit plan and monitored the implementation of it on a regular basis. The sections covered and the regularity of audits depends on the risk level of each section, with higher risk sections being audited more frequently.


areas namely:

2. Departments including Trade Finance and Treasury Audits; and

audit reports of 156 branches, 35 departments and 4

prioritised based on the level of risk. The Committee

available to External Auditors as well.

average audit cycle of approximately one audit every 19 months.

Trade Finance and Treasury Audits are assigned with equal prominence and emphasis considering its complexities and importance in the context of current economic environment.

Department has been engaged in sharing and providing

Department has also provided inputs to the Corporate

fraud, which are regularly addressed to stay on course.

EXTERNAL AUDITORS With regard to the external audit function of the Bank, the role played by the Committee is as follows:

1. Undertook the annual evaluation of the independence and objectivity of the External

2. Met with the External Auditors to discuss their audit approach and procedure, including matters relating to the scope of the audit and Auditor’s independence.

with the External Auditor who is responsible for expressing an opinion on its conformity with the Sri

the External Auditor together with management responses thereto.

5. Met the External Auditor twice during the year without the Executive Directors and the Corporate Management to ensure that there was no limitation of scope in relation to the Audit and to allow for full disclosure of any incidents which could have

cause for concern.

External Auditor and was of the view that such services were not within the category of services

the guidelines issued by the Central Bank

to their statutory duties in terms of Section

amendments thereto.

Audit and Audit Committees issued by the Securities and Exchange Commission of Sri

the External Auditors by the Board.

issued by the External Auditor as required by the

they do not have any relationship or interest in the company, which may have a bearing on their independence within the meaning of the Code of

The Committee has recommended to the Board of Directors that Messrs Ernst and Young, Chartered

ending 31st December 2015 subject to the approval of shareholders at the next Annual General Meeting.

Board Audit Committee Report

255

WHISTLE BLOWING

serve as a channel of corporate fraud risk management. The policy allows any Team Member who has a legitimate concern on an existing or potential “wrong doing”, done by any person within the Bank, to come forward voluntarily, and bring such concern to the notice of the Audit Committee Chairman through Group Company Secretary. Concerns raised are investigated and the identity of the person raising the concern is kept

at. This procedure is being monitored by the Board Audit Committee.

PROFESSIONAL ADVICEThe Committee has the authority to seek external professional advice on matters within its purview; and from time to time during the year consultations were done with various parties.

BOARD AUDIT COMMITTEE EVALUATION The annual evaluation of the Committee was conducted by the Board Audit Committee during the year and

On behalf of the Board Audit Committee

Ranil PathiranaChairman - Board Audit Committee

19th February 2015


THE COMPOSITION OF THE BOARD HUMAN RESOURCES AND REMUNERATION COMMITTEE

one Executive Director. The Directors who serve on the Committee are:

acts as the Secretary to the Committee.

MEETINGS

5 meetings were held. The attendance of the members of these meetings is given on page 216 of the Annual

in their deliberations by providing relevant information and participating in the analysis of information, except when their own compensation packages or other matters relating to them are reviewed.

DUTIES AND ROLESThe overall scope of the committee is to provide strategic

for the Bank. Based on the Direction issued by the

the Committee at its meeting held on 9th August 2011 decided on the following scope and responsibility:

SCOPE AND RESPONSIBILITY The committee shall determine the remuneration

The committee shall set goals and targets for Directors, CEO / MD and Key Management

The Committee shall evaluate the performance of

set targets and goals periodically and determine

other payments of performance based incentives.

Board Human Resources and Remuneration Committee Report

The Committee shall take on any other areas and enlarge its scope which in its view or in the Board’s view is desirable if it were handled by the Committee.

The Committee shall advise the Deputy General

any major organisational changes needed for the Bank’s purpose.

PERFORMANCE DURING THE YEAR/ KEY HR INITIATIVESOrganisation StructureBrought in a dynamic process to ensure the organisation structure and talent pool is aligned to the strategies envisaged by the bank.

Leadership Development

initiated to identify and develop a leadership pool for the organization which include overseas programme such as

Management.

Employee EngagementConducted the Annual Employee Engagement Survey. Going forward the Employee Engagement Survey related

Training and Development

the strategic needs of the Bank.

SPECIAL RECOGNITIONS

Management and Merit Award for Employee

2. Won a Merit Award for employee engagement initiative: outstanding Eco teams at the Corporate

Ceylon Chamber of Commerce

Deepal Sooriyaarachchi

Committee

19th February 2015

257

COMPOSITION OF THE BOARD NOMINATION COMMITTEE

Executive Directors as at 31st December 2014. The

Committee:

The Managing Director attends meetings by invitation.

The Group Company Secretary acts as the Secretary to

SCOPE OF WORK

Committee are regulated by the Banking Act Direction

Committee has the power and authority to seek any

connection with matters coming under its purview. The Committee also has the authority to seek external professional advice on matters within its purview.

THE FUNCTIONS OF THE COMMITTEE Continuously reviews the structure and

composition of the Board. The Committee also reviews the skills, knowledge, expertise and experience of the Board of Directors require in comparison to the current position of the banking environment. The committee also makes recommendations to the Board with regard to any changes they consider appropriate for the progress and success of the Bank.

consideration and proposing of required based on the competency required for a particular job.

Board Nomination Committee Report

Considers and recommends the requirements of additional/new expertise of existing Directors and to create succession plans for Directors resigning or relinquishing their positions.

Carefully reviews management progression and succession planning for the top management. The committee ensures that management personnel of high calibre are appointed to guide the Bank to achieve greater heights.

experience and key attributes required for eligibility to be considered for appointment or promotion to the post of Managing Director and other Key

The Committee is also responsible for nominating members to the Board for Board approval when

for the Board to evaluate the balance of skill, knowledge and experience on the Board before any such appointment. The Committee is accountable to make a description of the role that is vacated, it should clearly analyse the capabilities and skill set required for a particular appointment.

The Committee is accountable to make

Executive Directors at the expiry of their term in

The Committee must report to the Board of Directors on the activities of the Committee meetings and such minutes should be available to the main Board Members.

The Committee must determine the independence of the Directors of the Board, the independence must be based on standards and norms set out

Exchange regulations and other relevant Statues.

To make recommendation on any other matter delegated by the Board of Directors.

COMMITTEE MEETINGS During 2014 the committee held 12 meetings. Attendance by the Committee members at each of these meetings is given in the table on page 216 of the Annual


REPORTING TO THE BOARD

tabled at Board meetings enabling all Board members to have access to them.

PERFORMANCE

with the Board of Directors, in reviewing the structure and skills needed for a steadfast, strong and successful organisation. Further, the committee also reviews its own performance, constitution and terms of reference

recommends necessary changes.

focused on a progressive organisational plan in keeping with the forward and evolutionary momentum of the Sri

Annika Senanayake

19th February 2015

Board Nomination Committee Report

259

Board Integrated Risk Management Committee Report

the Board of Directors in compliance with the Banking

responsibilities vested upon the Board of Directors.

The Board of Directors has the oversight for the

been constituted to facilitate focused oversight of the

TERMS OF REFERENCE

Management Committee as mandated by the Board of Directors are as follows:

guidelines pertaining to Credit, Market and

Ensure compliance with all laws and regulations.

GOVERNANCE

the Bank is set out bellow:

Authority Membership

Board of Directors All members of the Board Determine risk appetite

managedMrs Dhara Wijayatilake

Mr Channa Palansuriya

Mr Sanjiva Senanayake

Professor Malik Ranasinghe

Mr Aravinda Perera (MD)Executive Director

Mr Ranjith SamaranayakeExecutive Director

Formulate risk policies and recommends to Board for adoption

Advise the Board and make recommendations on:

risk appetite and alignment with strategy

systems of risk management and internal

Monitor compliance



RISK REPORTING AND MONITORINGThe Committee received periodic reports on the Bank’s

and Compliance Units. The reports and the relevant background information have been reviewed in depth,

initiated where necessary, in order to maintain the

facilitate compliance with regulatory requirements, while

The Committee also receives updates from the Assets

discharging its responsibilities.

Authority Membership

Mrs Anoja Karunaratne

Mrs Anuja Goonetilleke

Continuity plans

Oversee the maintenance and development of a supportive culture in relation to the

Management Unit Formulate the policy framework addressing

multiple and inter-dependent risks and

Measure and monitor risk Ensure benchmarking with international best

practices

Compliance Unit Formulate compliance related policy

Ensure compliance with regulatory and supervisory requirements

Ensure benchmarking with international best practices.

RISK APPETITE

risk, the Bank is willing and able to accept in executing its

risk areas.

COMMITTEE ACTIVITIES

discharging its responsibilities during the year.

Risk Appetite:

key risk areas were set and periodically monitored.

areas were reviewed during the year, and amendments as appropriate have been incorporated.

Board Integrated Risk Management Committee Report

261

The overall Stress Testing Framework was reviewed during the year, and the results of the tests were

the Bank’s Stress tolerance levels were discussed and implemented as required.

to ensure that the Bank is able to meet the timelines set

monitored, and recommendations were made to enhance

Process (ICAAP):

was developed for 2013 year end position, and was

The Committee received compliance reports from

assess the extent of compliance with the regulatory requirements.

recommendations for improvements were made.

also monitored.

was monitored.

guidelines.

MEETINGS OF THE BIRMC

attendance of the Committee members at each of these

Company Secretary and circulated among the members of the Committee. Minutes were submitted to the Board

its proceedings.

the Bank has been detailed in pages 178 to 205 of this

Committee

Dhara Wijayatilake

Committee

19th February 2015


COMPOSITION OF THE BOARD CREDIT COMMITTEE

appointed as the Chairman of the Committee w.e.f.

Directors and two Executive Directors is the quorum for a Committee meeting. The following Directors serve on the Committee.

The Group Company Secretary acts as the Secretary to the Board Credit Committee.

MEETINGSDuring the year the Committee met on 15 occasions. The attendance of the Committee members is stated in the

are invited to participate at the meetings as and when required.

ROLE AND RESPONSIBILITIESThe purpose of the Committee is to oversee the credit and lending strategies and objectives of the Bank.

the Bank, including reviewing internal credit policies

quality and performance of the Bank’s credit portfolio.

matters delegated to it by the Board. Hence, it is the responsibility of the Committee to:

1. Operate a sound credit granting process

accordance with Board approved credit policies and standards. Where required, submit credit requests beyond the Committee’s scope to the Board for a decision.

management of the Bank and recommend

Board of Directors for its approval. Ensure compliance by the Bank’s credit

policies with the statutory requirements prescribed by the regulatory/supervisory authorities.

industry reviews, where deemed appropriate.

2. Maintain adequate controls over credit risk.

line with the risk appetite. Ensure credit risk exposure is kept within

acceptable limits to maximise the Bank’s risk adjusted rate of return.

Ensure stress tests are conducted, where deemed appropriate.

3. Maintain appropriate credit administration, measuring and monitoring process

credit delegated limits in line with the Bank’s policy.

facilities that they believe should have Board approval.

Monitor on an ongoing basis the Bank’s credit quality, review periodic credit portfolio reports and assess portfolio performance.

Ensure post-credit monitoring and postmortem reviews are performed, where deemed appropriate

Board Credit Committee Report

263

composition and quality of the loan portfolio

Ensure all new credit risk related products are reviewed from a credit risk management perspective

REPORTING TO THE BOARDThe minutes of the meetings of the Committee are circulated to the members by the Secretary and the

review by any regulatory agency having jurisdiction over

REVIEW OF THE COMMITTEEMembers of the Committee work closely with the Board of Directors to maintain proper credit standards for the Bank. The Board undertakes a review of the Committee’s performance, objectives and responsibilities according to its terms of reference to ensure that it is operating

On behalf of the Board Credit Committee

Prof. Malik Ranasinghe

19th February 2015


monitoring the Bank’s progress and for helping the Bank to attain the goals expected by its stakeholders. We have

with the changes in the regulatory landscape, experience

strategic planning is the core foundation for the future

includes action plans and tools for implementation of the plan.

COMPOSITION OF THE BOARD STRATEGIC PLANNING COMMITTEEThe main Board meeting held on 31st May 2012, decided

Executive Directors. The Chairman of the Committee is a


MEETINGSDuring the year the Committee met on 8 occasions and the Committee members worked with dedication to

ROLE AND RESPONSIBILITIES1. Strategic Vision and Mission of the Bank: Examine

the Bank’s current mission, strategic positioning and the strategic vision and provide guidelines to

Examine the external challenges and opportunities relevant to the strategic vision and key goals of the Bank.

the Bank and give guidelines to the Management. 4. Oversee and monitor the planning process that

achieving the goals and objectives.

context of achieving its strategic objectives.

capital structure in the context of the growth targets.

8. Make recommendations to the Board on key strategic decisions and investments.

REPORTING TO THE BOARDMinutes of the Committee meetings are circulated to the

minutes are reported to the Board of Directors for concurrence.

PERFORMANCEThe Committee engaged in discussions with the

to determine the strategic direction of the Bank for the period 2015 to 2017 which formed the basis for the

Committee reviewed performance of the Bank during the year against the three year rolling plan and annual budget for 2015 to identify areas of concern which needed changes in strategic direction. The three year rolling plan was submitted to the Board of Directors for its information and approval was obtained for the Annual Budget for 2015 which was developed in line with the strategy document.

The Committee reviews its own performance, constitution and scope of work to ensure that it is

to making recommendations to the Board when the need arises.

Dhammika Perera

19th February 2015

Board Strategic Planning Committee Report

265

Board Shareholder Relations Committee Report

Our shareholders have always been a monumental strength to us and it is their continued patronage that has been the basis on which we have built our banking

means so much more than the more obligatory response, indeed it is a non-negotiable item on the business agenda.

Committee to identify and address shareholders’ concerns as deemed appropriate through dialogue with shareholders/investors.

COMPOSITION OF THE BOARD SHAREHOLDER RELATIONS COMMITTEE The main Board meeting held on 28th August 2008,

Directors join the meetings when necessary. The following Directors serve on the Board Shareholder

Committee.

FREQUENCY OF MEETINGSMeetings are held when deemed appropriate. By

the Managing Director and Executive Director/Group

the Annual General Meeting providing a much awaited opportunity for shareholders to voice their opinions and suggestions to improve relations between stakeholders and the Bank.

ROLE PLAYED BY THE BOARD SHAREHOLDER RELATIONS COMMITTEE

2. Organising forums that encourage dialogue between

delegated to it from time to time by the Board relating to shareholder relations matters.

investor relations.

ACTIVITIES OF THE COMMITTEEThis is an advisory and consultative Committee that, if necessary, considers proposals of shareholders on

recommendations to the Bank’s Board on enforcement and protection of rights and legitimate interests of

strategy on shareholder relations matters.

Board Committee established to facilitate a smooth and continuous dialogue between the Board and shareholders to address their concerns, if any. The Committee concentrates on developing and preserving a good rapport with the Shareholders.

The Committee ensures that the Bank’s latest

to these avenues of information, our shareholders have easy access through our corporate website, www.sampath.lk to all relevant information, which also gives our shareholders access to the Bank for any query. Shareholders can freely raise any questions to the

Forums. These forums also encourage our shareholders to openly voice concerns and make suggestions and requests.

On the other hand Committee supports shareholders to enhance their investment attractiveness. The

This year has seen regular two-way dialogue between the shareholders and the Board of Directors. The Group Company Secretary has played a vital role in the accomplishment of many goals of the Board Shareholder

informed of shareholder outlook through regular reports.


Shareholders can also write to the Chairman or any Director of Sampath Bank, they can express any concern or view regarding the Bank which gives another avenue to the shareholders to express their opinion in person.

PERFORMANCEThe main objective is to facilitate better shareholder relations. The Committee meets as and when necessary and reports on the activities to the Board. The following activities were initiated by the Committee during the year.

Annual General Meeting on 31st March 2014. As discussed during the meeting the Shareholder

2. The following concessions are given to shareholders on banking transactions.

All commissions to be on actual cost basis, entailing all internal commission charges

foreign bank charges and other local bank charges, the actual cost will be collected. This excludes cheque return commissions and postal charges.

On opening of current accounts, the initial deposit will be 50% of the normal initial deposit requirement.

SET cards are issued free of charge. However, this does not include per transaction fee.

Channa Palansuriya

19th February 2015

Board Shareholder Relations Committee Report

267

Board Treasury Committee Report

COMPOSITION OF THE BOARD TREASURY COMMITTEE

Executive Directors and two Executive Directors. The following Directors serve in the Board Treasury Committee.

Bank’s Treasury Department serves as the Secretary.

MEETINGSDuring the year the Committee met on 6 occasions. The attendance of the Committee members is stated

invited to attend as deemed necessary. Minutes of the Board Treasury Committee were regularly reported to the Board of Directors and approval sought for policies recommended and other matters.

ROLE AND RESPONSIBILITIESThe Board Treasury Committee is instituted to provide guidance to the Treasury in carrying out its functions and to monitor its performance with a view to optimising earnings, stability and growth of the Bank.

The main responsibilities of the committee are: 1. Establish Treasury Management policies on behalf

of the Board of Directors

carried out in accordance with those policies.

3. Monitor the liquidity position of the Bank and advise Treasury accordingly

4. Monitor the management of foreign exchange and interest rate risks by the Bank

5. Monitor compliance with Central Bank regulations managed by the Treasury including capital adequacy, statutory reserve ratios, and statutory liquid assets.

Corporate Management, to optimise performance

7. Establish internal pricing of funds to provide desired incentives internally and better evaluate performance of business units. Development of new products

excess liquidity that the Bank experienced along with

comprehensive model for analysis of the Bank’s revenue by products and customers, which will be used to guide future asset growth. The Treasury also engaged in

external market conditions, with increasing economic and policy uncertainties.

On behalf of the Board Treasury Committee

Sanjiva Senanayake Chairman - Board Treasury Committee

19th February 2015


The Board Marketing Committee was set up to have a closer focus on the Marketing Strategies of the Bank and

COMPOSITION OF THE BOARD MARKETING COMMITTEE

Executive Directors. The members of the Committee are given below.

acts as the Secretary of the Board Marketing Committee.

MEETINGSThe Committee met 3 times during the year. Attendance by the Committee members at each of these meetings is

against set objectives

Monitor customer service and customer service

strategies in line with the customer charter

same.

The committee functions more as a facilitating and a

align the activities of the marketing function towards the strategic focus of the Bank, following best practices. The Board Marketing Committee acts also as a conduit to the main Board in providing updates on various consumer behaviour trends and their implications to the Bank.

During the year Committee provided oversight for the following: Establishment of a regular brand equity tracking

process Commencement of a comprehensive brand identity

management process Formulation of an e commerce strategy

On behalf of the Board Marketing Committee

Deepal SooriyaarachchiChairman - Board Marketing Committee

19th February 2015

Board Marketing Committee Report

the many ways we create value

FINANCIAL INFORMATION

ContentFinancial Calendar 271

272283285286287289290291292293295297

271

Colombo Stock News Papers (as required by CBSL)

Exchange English Sinhala Tamil

Colombo Stock News Papers (as required by CBSL)

Exchange English Sinhala Tamil

Financial Calendar


Annual Report of the Board of Directors on the Affairs of the Company

1. GENERAL

2. VISION, VALUES AND CORPORATE CONDUCT

3. PRINCIPAL BUSINESS ACTIVITIES

Entity Principal business activities

5. REVIEW OF OPERATIONS

273

7. FINANCIAL STATEMENTS

8. DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING

9. AUDITORS’ REPORT

10. SIGNIFICANT ACCOUNTING POLICIES

11. FINANCIAL RESULTS AND

APPROPRIATIONS

2014 2013 Rs 000 Rs 000

Other comprehensive income (OCI)

SAMPATH BANK PLCANNUAL REPORT 2014Financial, Social and Environmental Performance

12. TAXATION

13. DIVIDEND

2014 2013 Rs 000 Rs 000

Total

15. CAPITAL EXPENDITURE

16. CAPITAL COMMITMENTS


2014 2013 Rs 000 Rs 000 Appropriations

Dividend

Proposed dividend

17. PROPERTY, PLANT AND EQUIPMENT

PROPERTIES

19. STATED CAPITAL, DEBENTURES AND BONDS

22. EQUITABLE TREATMENT TO


RESIGNATION OF DIRECTORS

APPOINTMENT OF DIRECTORS

Mr Deshal De Mel

Mr M N R Fernando

Name of Director Remarks

Mr Deshal De Mel

Alternate Directors


277

retired

27. REGISTER OF DIRECTORS AND SECRETARIES

28. BOARD SUB COMMITTEES

Mr Deshal De Mel

Mr Deshal De Mel

Mr Deshal De Mel


Mr Deshal De Mel

Mr Deshal De Mel

Mr Deshal De Mel

29. DIRECTORS’ MEETINGS

30. DIRECTORS’ INTEREST REGISTER AND DIRECTORS’ INTEREST IN CONTRACTS OR PROPOSED CONTRACTS

declarations of their interest in contracts or proposed

31. RELATED PARTY TRANSACTIONS

32. DIRECTORS’ INTEREST IN ORDINARY

No of Shares No of Shares as at 31st as at 31st December December 2014 2013

DEBENTURES OF SUBSIDIARIES


35. OUR TEAM MEMBERS

36. ESOPS

2000

37. ENVIRONMENTAL PROTECTION

38. STATUTORY PAYMENTS

39. OUTSTANDING LITIGATION

31st Dec 31st Dec 31st Dec 31st Dec 2014 2013 2012 2011


PERIOD

CONTROL


Dhammika Perera Channa Palansuriya Aravinda Perera S Sudarshan


Company Relationship Nature of the transaction

Limit

Rs 000

Balance Outstanding

as at 31.12.2014

Rs 000

Balance Outstanding

as at 31.12.2013

Rs 000

Prof Malik Ranasinghe

Director Deposits

Mr Ranil Pathirana

Director Deposits 73

Director Deposits 7

Director

Deposits


Director Deposits

Director

Deposits

Director Deposits

Director

Deposits 132

DirectorDeposits 321

Mr Aravinda Perera

Deposits



DirectorDeposits

Director Deposits


Directors’ Statement on Internal Control Over Financial Reporting

RESPONSIBILITY

CONTROL SYSTEM OVER FINANCIAL REPORTING


CONFIRMATION

AUDITORS

Ranil Pathirana Dhammika Perera Channa Palansuriya

Aravinda Perera S Sudarshan

Directors’ Statement on Internal Control Over Financial Reporting

Independent Assurance Reportto the Board of Directors of Sampath Bank PLC

INTRODUCTION

MANAGEMENT’S RESPONSIBILITY

OUR RESPONSIBILITIES AND COMPLIANCE

SUMMARY OF WORK PERFORMED

OUR CONCLUSION

Ernst & YoungChartered Accountants


Managing Director’s and Group Chief Financial Officer’s Responsibility Statement

Aravinda Perera Ranjith Samaranayake

Statement of Directors’ Responsibility for Financial Reporting


COMPLIANCE REPORT

S Sudarshan

Statement of Directors’ Responsibility for Financial Reporting

Independent Auditors’ Reportto the Shareholders of Sampath Bank PLC

FINANCIAL STATEMENTS

AUDITORS' RESPONSIBILITY

OPINION

REGULATORY REQUIREMENTS



Bank Group

For the year ended 31st December Note 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 Gross income

Net interest income

Net fee & commission income


Net operating income

Less: Operating expenses

Total operating expenses

Attributable to:

Earnings per share (Rs) 16

Dividend per share (Rs) 17

Statement of Profit or Loss

Bank Group

For the year ended 31st December 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000


Net other comprehensive income to be

Net other comprehensive income not to be

Other comprehensive income net of taxTotal comprehensive income for the year net of tax

Attributable to:

Statement of Comprehensive Income


Statement of Financial Position

Bank Group

As at 31st December Note 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 ASSETS

Total Assets

LIABILITIES

Total Liabilities

EQUITY

Total EquityTotal Liabilities & Equity

Ranjith Samaranayake

Dhammika Perera Channa Palansuriya Aravinda Perera S Sudarshan

Statement of Cash Flow

Bank Group


activities before income tax

Cash & cash equivalents at the beginning of the yearCash & cash equivalents at the end of the year (Note b)


Statement of Cash Flow

RECONCILIATION STATEMENT

Bank Group


operating assets and liabilities

Reconciliation of cash & cash equivalents

Cash & cash equivalents at the end of the year

Statement of Changes in Equity

Ban

k

St

ated

St

atut

ory

Res

erve

s O

ther

Res

erve

s R

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Tota

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Res

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Fu

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Res

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fo

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Res

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R

eser

ve

Fu

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Fund

Ac

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t

Res

erve

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Bal

ance

as

at 1

st J

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ry 2

013

Tota

l com

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ve in

com

e fo

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013

Tota

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com

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013

Cont

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s by

and

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ns t

o eq

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hol

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Tota

l con

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utio

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y an

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ons

to

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hol

ders

Bal

ance

as

at 3

1st

Dec

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r 20

13 Co

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buti

ons

by a

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ibut

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to

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Tota

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utio

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y an

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ons

to

eq

uity

hol

ders


Statement of Changes in Equity

Gro

up

St

ated

St

atut

ory

Res

erve

s O

ther

Res

erve

s R

etai

ned

Shar

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ders

' N

on

Tota

l

R

eser

ve

Res

erve

Fu

nd

Res

erve

fo

r Sa

le

Res

erve

R

eser

ve

Inte

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Fu

nd

Fund

Ac

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t

Res

erve

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

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0 R

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0 B

alan

ce a

s at

1st

Jan

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201

3To

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the

year

201

3

Tota

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013

Cont

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tions

by

and

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to

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Tota

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hol

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Bal

ance

as

at 3

1st D

ecem

ber

2013

Cont

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by

and

dist

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Tota

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Notes to the Financial Statements

1. REPORTING ENTITY

2. BASIS OF PREPARATION

Directors

Subsidiary Principal Activities 31st December 31st December 2014 2013


STATEMENT OF FINANCIAL POSITION


301

Balances

Financial Assets


loss

deterioration


303

contract


the asset


307

Sale


the host contract and the host contract is not carried at fair



Depreciation of an asset ceases at the earlier of the date

Asset Category Depreciation Rate per annum %

2014 2013


311

Asset Category Useful life (Years)

2014 2013


Acceptances

EXPENSES


TAX EXPENSE

317

than Rs 600 Mn

education

construction of a house for residential purposes

houses for residential purposes

measurement

Phase 2: Impairment

Phase 3:


7 GROSS INCOME

Bank Group


8 NET INTEREST INCOME

Bank Group


Bank Group



321

Bank Group


9 NET FEE AND COMMISSION INCOME

Bank Group


10 NET TRADING INCOME

Bank Group



Bank Group


Bank Group


13 PERSONNEL EXPENSES

Bank Group



323

Bank Group


Bank Group


15 INCOME TAX EXPENSE

Bank Group


Income taxation

Deferred taxation


15 INCOME TAX EXPENSE CONTD.

Bank Group


Assessable income

2014 2013


Bank Group


Deferred tax liabilities

Deferred tax assets

Deferred tax expense for the year

2014 2013

Amount used as the numerator

No of ordinary shares used as the denominator

Basic earnings per ordinary share (Rs)

2014 2013 Outstanding Weighted Outstanding Weighted Average Average


2014 2013

Amount used as the numerator

No of ordinary shares used as the denominator

Diluted earnings per ordinary share (Rs)

2014 2013

17 DIVIDEND PAID AND PROPOSED

2014 2013 Gross Dividend Net Gross Dividend Net Dividend Tax Dividend Dividend Tax Dividend Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Final dividend paid for the years 2013 & 2012 respectively

Final dividend proposed for the years


327

18 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS

As at 31st December 2014 Held for Amortised Held to Available Total Trading Cost Maturity for Sale Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets

Total Financial Assets

Financial Liabilities

Total Financial Liabilities


18 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS CONTD.

As at 31st December 2013

Trading Cost Maturity for Sale Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets





As at 31st December 2014 Held for Amortised Held to Available Total Trading Cost Maturity for Sale Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial Assets





18 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS CONTD.

As at 31st December 2013

Trading Cost Maturity for Sale Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial Assets




Bank Group

As at 31st December 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000


331

Bank Group


Bank Group


22 DERIVATIVE FINANCIAL INSTRUMENTS

As at 31st December 2014 2013 Assets Liabilities Notional Assets Liabilities Notional Amount Amount Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


Bank Group


As at 31st December 2014 2013 Cost Market Cost Market Value Value Rs 000 Rs 000 Rs 000 Rs 000


333

As at 31st December 2014 2013 No of Cost of Market No of Cost of Market Ordinary Investment Value Ordinary Investment Value Shares Shares Rs 000 Rs 000 Rs 000 Rs 000

Name of the company

Manufacturing

Total

Market value



25 LOANS TO & RECEIVABLES FROM BANKS

Bank Group


Bank Group


Bank Group Rs 000 Rs 000

Bank Group



Bank Group


Bank Group


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Balance as at 31st December


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000


2014 2013

Purchase Receivables Total Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


2014 2013

Purchase Receivables Total Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000



337

Bank Group


Bank Group


Bank Group


Bank Group



Bank Group


Bank Group


Bank Group



Bank Group


By product - LKR

Sub total

By product - Foreign Currency

Sub totalTotal

Bank Group


B

ank

Subs

idia

ry

Gro

up

Inte

rest

Te

nure

N

umbe

r of

Am

orti

sed

Inte

rest

Te

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umbe

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Am

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sed

Num

ber

of

Amor

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d

R

ates

Ye

ars

Loan

s Co

st

Rat

es

Year

s Lo

ans

Cost

Lo

ans

Cost

G

rant

ed

G

rant

ed

G

rant

ed

Sect

or

%

Rs

000

%

Rs

000

R

s 00

0


Bank Group


As at 31st December 2014 2013 Amortised Amortised Cost Cost Rs 000 Rs 000

Vanik Incorporation Ltd

Urban Development Authority

Singer Sri Lanka PLC

Central Finance Company PLC

Abans PLC



Alliance Finance PLC

Senkadagala Finance PLC

People's Leasing & Finance PLC

Kotagala Plantations PLC

Lanka Orix Leasing Company PLC

Orient Finance PLC

Lion Brewery (Ceylon) PLC



Texpro Industries Ltd


Bank Group




As at 31st December 2014 2013 No of Cost Market No of Cost Market Ordinary Value Ordinary Value Shares Shares Rs 000 Rs 000 Rs 000 Rs 000


As at 31st December 2014 2013 No of Cost of Market No of Cost of Market Ordinary Investment Value Ordinary Investment Value Shares Shares Rs 000 Rs 000 Rs 000 Rs 000

BankName of the company

GroupName of the company


Bank Group


30 INVESTMENT IN SUBSIDIARIES

As at 31st December 2014 2013Subsidiary Principal Cost Directors' Cost Directors' Activities Valuation Valuation Rs 000 Rs 000 Rs 000 Rs 000

Siyapatha Sampath S C Securities Sampath Information Finance PLC Centre Ltd (Pvt) Ltd Technology Solutions Ltd

For the year ended 31st December 2014 2013 2014 2013 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

As at 31st December 2014 2013 2014 2013 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Total assets

Total liabilities

Total equity

Total liabilities & equity


31

PR

OP

ERTY

, PLA

NT

& E

QU

IPM

ENT

2

01

4

2013

& B

uild

ings

P

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rtie

s &

Eq

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t Fi

ttin

gs

Veh

icle

s W

ork-

in

Tota

l To

tal

Impr

ovem

ents

P

rogr

ess

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 0

00

R

s 00

0

Acc

umul

ated

Dep

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atio

n

Acc

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dep

reci

atio

n as

at

31st

Dec

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r

Net

boo

k va

lue

as a

t 31

st D

ecem

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2013


As at 31st December 2014 2013 Cost Accumulated Carrying Cost Accumulated Carrying Depreciation Value Depreciation Value Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Total


31

PR

OP

ERTY

, PLA

NT

& E

QU

IPM

ENT

CON

TD.

2

01

4

2013

& B

uild

ings

P

rope

rtie

s &

Eq

uipm

ent

Equi

pmen

t Fi

ttin

gs

Veh

icle

s W

ork-

in

Tota

l To

tal

Impr

ovem

ents

P

rogr

ess

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 0

00

R

s 00

0

Acc

umul

ated

Dep

reci

atio

n

Acc

umul

ated

dep

reci

atio

n as

at

31st

Dec

embe

r

Net

boo

k va

lue

as a

t 31

st D

ecem

ber

2013


As at 31st December 2014 2013 Cost Accumulated Carrying Cost Accumulated Carrying Depreciation Value Depreciation Value Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Total

Location Date of Method of Cost 2013 2010 Valuation Valuation Revaluation Revaluation Rs Mn Rs Mn Rs Mn

Valuer - P B Kalugalagedara

Valuer - C Wellappili

Valuer - E M Wimalasena

Valuer - G M Gamage

Valuer - K T D Tissera

Valuer - Sarath Fernando


31

PR

OP

ERTY

, PLA

NT

& E

QU

IPM

ENT

CON

TD.

2

01

4

As

a %

20

13

Exte

nt

R

eval

uati

on

Rev

alua

tion

Va

lue

Dep

reci

atio

n N

et B

ook

of T

otal

N

et B

ook

of L

and

of B

uild

ings

Va

lue

NB

V

Valu

e

R

s 0

00

Rs

000

1 Pe

ttah

2 B

orel

la

3 K

urun

egal

a

5 M

atar

a

6 M

ahar

agam

a

7 D

eniy

aya

8 D

eniy

aya

9 R

atm

alan

a

10

Pili

yand

ala

11

Anu

radh

apur

a

12

Pana

dura

13

Old

Moo

r St

reet

15

Kat

ugas

tota

16

Gal

le


2

01

4

As

a %

20

13

Exte

nt

R

eval

uati

on

Rev

alua

tion

Va

lue

Dep

reci

atio

n N

et B

ook

of T

otal

N

et B

ook

of L

and

of B

uild

ings

Va

lue

NB

V

Valu

e

R

s 0

00

Rs

000

17

Wel

law

atte

18

Nar

ahen

pita

19

Kal

utar

a

20

Ala

ww

a

22

Kan

dy C

orpo

rate

23

Dha

rmap

ala

Maw

atha

25

Vic

tori

a R

ang

Tota

l


31 PROPERTY, PLANT & EQUIPMENT CONTD.

As at 31st December Cost of Accumulated 2014 2013 Buildings Depreciation Net Book Net Book Value Value Rs 000 Rs 000 Rs 000 Rs 000

As at 31st December 2014 2013 Rs 000 Rs 000

Asset class


32 INTANGIBLE ASSETS

Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Cost

Cost as at 31st December

Accumulated Amortisation

Accumulated amortisation as at 31st DecemberNet book value as at 31st December

Bank Group

As at 31st December 2014 2013 2014 2013 2014 2013 2014 2013

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


Deferred tax assets


2014 2013 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


Deferred tax assets

2014 2013 2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


Deferred tax assets


Bank Group


2014 2013 Rs 000 Rs 000

2014 2013 Rs 000 Rs 000

35 DUE TO BANKS

Bank Group



Bank Group


Local Currency Deposits

Foreign Currency Deposits

Bank Group



Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Amortised Cost

No of Debentures Face 2014 2013 Allotment Maturity Rate of Value Date Date interest Rs 000 Rs 000 Rs 000

Amortised Cost



Amortised Cost


Amortised Cost


Amortised Cost



361

Amortised Cost

No of Debentures Face 2014 2013 Allotment Maturity Rate of Value Date Date Interest Rs 000 Rs 000 Rs 000

Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

38 CURRENT TAX LIABILITIES

Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Bank Group



Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Bank Group


Bank Group


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000


363

2014 2013

(Decrease) in Discount

Rate

(Decrease) in Salary

Increment Rate

2014 2013

on Comprehensive Income Statement

Increase / (Decrease) in Total

Comprehensive Income for the Year

(Rs Mn)

Gratuity Liability Increase /

(Decrease) in the Liability

(Rs Mn)

on Comprehensive Income Statement

(Decrease) in Total Comprehensive

Income for the Year (Rs Mn)

Gratuity Liability

in the Liability

(Rs Mn)

Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000



Bank Group


Bank Group


Bank Group


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

2014 2013

Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Bank Group


Bank Group


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

2014 2013

(Decrease) in Discount

Rate

(Decrease) in Salary

Increment Rate

2014 2013

on Statement of Comprehensive

Income Increase / (Decrease)

in Comprehensive Income for the Year

(Rs Mn)

on Employment

Increase / (Decrease)

in Net Pension Liability

(Rs Mn)

on Statement of Comprehensive

Income

in Comprehensive Income for the Year

(Rs Mn)

Obligation

in Net Pension Liability

(Rs Mn)


367

Bank Group


Bank Group

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

2014 2013 Number of Number of Shares Shares

As at 31st December 2014 2013 ESOP position Number of Number of Shares Shares


Bank Group


Commitments

Contingent Liabilities



Bank Group


Bank Group

Note As Adjustment As Adjustment disclosed disclosed in 2013 in 2013 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000


371

Bank Group



2014 2013

Limit Closing Average Limit Closing Average Balance Balance Balance Balance Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

2014 2013


2014 2013


2014 2013


2014 2013

Closing Average Closing Average Balance Balance Balance Balance Rs 000 Rs 000 Rs 000 Rs 000


373

2014 2013

Closing Average Closing Average Balance Balance Balance Balance Rs 000 Rs 000 Rs 000 Rs 000

Bank Group


Bank Group

For the year ended 31st December 2014 2013 2014 2013

Bank Closing Balance Average Balance

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

Group Closing Balance Average Balance

2014 2013 2014 2013 Rs 000 Rs 000 Rs 000 Rs 000

2014 2013



Rs 000

2014 2013


Bank Group


Bank Group

For the year ended 31st December 2014 2013 2014 2013

Bank Group


For the year ended 31st December 2014 2013 Rs 000 Rs 000


Bank Group


31st 31st December December

2014 2013 Rs 000 Rs 000

As at

For the year ended

As at

For the year ended

As at

For the year ended

As at

For the year ended



As at 31st December 2014 2013 Nature of Transaction Rs 000 Rs 000

377

20

14

2013

20

14

2013

20

14

2013

20

14

2013

20

14

2013

20

14

2013

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Segm

ent

Res

ult

Tota

l Ass

ets

Tota

l Lia

bilit

ies


As

at 3

1st

Dec

embe

r 2

01

4

2013

Fair

Val

ue M

easu

rem

ent

Usi

ng

Fair

Val

ue M

easu

rem

ent

Usi

ng

To

tal

Pr

ices

O

bser

vabl

e U

nobs

erva

ble

Pr

ices

O

bser

vabl

e U

nobs

erva

ble

in A

ctiv

e In

puts

In

puts

in A

ctiv

e In

puts

In

puts

D

ate

of

Mar

kets

Mar

kets

Valu

atio

n (L

evel

1)

(Lev

el 2

) (L

evel

3)

(L

evel

1)

(Lev

el 2

) (L

evel

3)

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Fina

ncia

l ass

ets

mea

sure

d at

fai

r va

lue

Fina

ncia

l ass

ets

held

for

trad

ing

Fina

ncia

l ass

ets

held

for

trad

ing

pled

ged

as c

olla

tera

ls

Fina

ncia

l inv

estm

ents

ava

ilabl

e fo

r sa

le

mea

sure

d at

fai

r va

lue

Fina

ncia

l lia

bilit

ies

mea

sure

d at

fai

r va

lue

Der

ivat

ive

Fina

ncia

l Ins

trum

ents


As

at 3

1st

Dec

embe

r 2

01

4

2013

Fair

Val

ue M

easu

rem

ent

Usi

ng

Fair

Val

ue M

easu

rem

ent

Usi

ng

To

tal

Pr

ices

O

bser

vabl

e U

nobs

erva

ble

Pr

ices

O

bser

vabl

e U

nobs

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ble

in A

ctiv

e In

puts

In

puts

in A

ctiv

e In

puts

In

puts

D

ate

of

Mar

kets

Mar

kets

Valu

atio

n (L

evel

1)

(Lev

el 2

) (L

evel

3)

(L

evel

1)

(Lev

el 2

) (L

evel

3)

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Fina

ncia

l ass

ets

mea

sure

d at

fai

r va

lue

Fina

ncia

l ass

ets

held

for

trad

ing

Fina

ncia

l ass

ets

held

for

trad

ing

pled

ged

as c

olla

tera

ls

Fina

ncia

l inv

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ents

ava

ilabl

e fo

r sa

le

Fina

ncia

l lia

bilit

ies

mea

sure

d at

fai

r va

lue


Bank Group Assets Measured at Level 3 Assets Measured at Level 3

Unquoted Freehold Unquoted Freehold Equity Land and Equity Land and Securities Buildings Securities Buildings Rs 000 Rs 000 Rs 000 Rs 000

Type of Asset Fair Value as at 31st Technique Unobservable Range of Estimates Measurement December Inputs for Unobservable Sensitivity to 2014 Inputs Unobservable Rs 000 Inputs


Type of Asset Fair Value as at 31st Technique Unobservable Range of Estimates Measurement December Inputs for Unobservable Sensitivity to 2014 Inputs Unobservable Rs 000 Inputs

B

ank

G

roup

Fair

Val

ue

Car

ryin

g Fa

ir V

alue

C

arry

ing

Le

vel 1

Le

vel 2

Le

vel 3

To

tal

Valu

e Le

vel 1

Le

vel 2

Le

vel 3

To

tal

Valu

e

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

Fina

ncia

l ass

ets

Fina

ncia

l lia

bilit

ies

Secu

riti

es s

old

unde

r

Ass

ets

Liab

iliti

es


B

ank

G

roup

Fair

Val

ue

Carr

ying

Fa

ir V

alue

Ca

rryi

ng

Le

vel 1

Le

vel 2

Le

vel 3

To

tal

Valu

e Le

vel 1

Le

vel 2

Le

vel 3

To

tal

Valu

e

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0

Fina

ncia

l ass

ets

Fina

ncia

l lia

bilit

ies

Secu

riti

es s

old

unde

r

Ass

ets

Liab

iliti

es


Maximum Net Exposure to Exposure Credit Risk Rs 000 Rs 000

Total


Total



Total


Total


As at 31st December 2014 2013

Gross Amount Net Gross Amount Net Amount Subject Amount Amount Subject to Amount to Netting Netting but do Not but do Not Qualify for Qualify for Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets

Financial Liabilities Securities sold under

As at 31st December 2014 2013

Gross Amount Net Gross Amount Net Amount Subject Amount Amount Subject to Amount to Netting Netting but do Not but do Not Qualify for Qualify for Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets

Financial Liabilities Securities sold under


N

eith

er P

ast

Due

nor

Impa

ired

Pa

st D

ue

Indi

vidu

ally

To

tal

H

igh

St

anda

rd

Sub

Unr

ated

Ex

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res

but

Not

Im

pair

ed

Gra

de

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de

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dard

Not

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to R

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Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Fina

ncia

l Ass

ets

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l

Pa

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Less

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n

31

to

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1 t

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0

Mor

e th

an

Tota

l

30

Day

s D

ays

Day

s 9

0 D

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Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0


N

eith

er P

ast

Due

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Impa

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Past

Due

In

divi

dual

ly

Tota

l

Gra

de

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de

N

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ct

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to R

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Rs

000

Rs

000

Rs

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Rs

000

Rs

000

Rs

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Rs

000

Rs

000

Fina

ncia

l Ass

ets

Tota

l

Pa

st D

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ut N

ot Im

pair

ed

Le

ss t

han

31

to

60

61 t

o 90

M

ore

than

To

tal

30

Day

s D

ays

Day

s 90

Day

s

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0


N

eith

er P

ast

Due

nor

Impa

ired

Pa

st D

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Indi

vidu

ally

To

tal

H

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St

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Unr

ated

Ex

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but

Not

Im

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de

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Not

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ject

Im

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rade

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Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0

Fina

ncia

l Ass

ets

Tota

l

Pa

st D

ue b

ut N

ot Im

pair

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Less

tha

n

31

to

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6

1 t

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0

Mor

e th

an

Tota

l

30

Day

s D

ays

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s 9

0 D

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Rs

00

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Rs

00

0

Rs

00

0

Rs

00

0

Rs

00

0


N

eith

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ast

Due

nor

Impa

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Past

Due

In

divi

dual

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Tota

l

Gra

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to R

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Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Fina

ncia

l Ass

ets

Tota

l

Pa

st D

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ut N

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Less

tha

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31 t

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61

to

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Mor

e th

an

Tota

l

30 D

ays

Day

s D

ays

90 D

ays

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000


Bank's Internal Credit Rating Bank Fitch Historical Total Rating Rating Default Rate Default Rate As at 31st December 2014 2014 2013 2013 % Rs 000 % Rs 000

Standard Grade

Sub Standard Grade

Unrated

Impaired

Exposures Not Subject for Rating

Grand Total


& Africa Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets

Total

Province Rs 000

Total



Financial Assets

Total

Province Rs 000

Total


Ag

ricu

ltur

e M

anuf

actu

ring

To

uris

m

Tran

spor

t Co

nstr

ucti

on

Trad

ers

Ban

ks,

Gov

ernm

ent

Infr

astr

uctu

re

Oth

er

Cons

umer

s To

tal

& F

ishi

ng

Fi

nanc

ial &

Se

rvic

es

B

usin

ess

Serv

ices

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Fina

ncia

l Ass

ets

Tota

l


Ag

ricu

ltur

e

Man

ufac

turi

ng

Tour

ism

Tr

ansp

ort

Cons

truc

tion

Trad

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Ban

ks,

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ent

Infr

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re

Oth

er

Cons

umer

s To

tal

&

Fis

hing

Fina

ncia

l &

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ices

B

usin

ess

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rvic

es

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0

Fina

ncia

l Ass

ets

Tota

l


Ag

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e M

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ial &

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ess

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ices

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Rs 0

00

Fina

ncia

l Ass

ets

Tota

l


Ag

ricu

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Man

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Tour

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ess

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es

R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0 R

s 00

0

Fina

ncia

l Ass

ets

Tota

l


Bank Group


Commitments

Contingent Liabilities

Total Commitments & Contingencies


Up to 3 3 - 12 1 - 3 3 - 5 Over 5 Total Months Months Years Years Years Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets



Securities sold under




Financial Assets






On Less than 3 to 12 1 to 5 Over 5 Total Demand 3 Months Months Years Years Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Contingencies

Total Contingencies

Commitments

Total CommitmentsTotal Commitments & Contingencies


Contingencies

Total Contingencies

Commitments




Contingencies

Total Contingencies

Commitments



Contingencies

Total Contingencies

Commitments



Rate Sensitive Assets (RSA) & Rate Sensitive Liabilities (RSL) as at 31st December 2014 2013 Rs 000 Rs 000

2014 2013 Rs 000 Rs 000

Interest Rate Shock


Up to 3 3 - 12 1-3 3 - 5 Over 5 Non Total Months Months Years Years Years Interest Bearing Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets





Interest Rate Sensitivity Gap


Up to 3 3 - 12 1-3 3 - 5 Over 5 Non Total

Months Months Years Years Years Interest

Bearing

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets







Up to 3 3 - 12 1-3 3 - 5 Over 5 Non Total Months Months Years Years Years Interest Bearing Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets







Up to 3 3 - 12 1-3 3 - 5 Over 5 Non Total

Months Months Years Years Years Interest

Bearing

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Financial Assets







Foreign Exchange Position as at 31st December 2014 2013 Net Overall Net Overall Net Overall Net Overall Long Short Long Short Rs 000 Rs 000 Rs 000 Rs 000

Currency

Sub Total

Grand Total295,731 718,039

2014 2013Exchange Rate Shocks Net Open Impact on Net Open Impact on Position Statement Position Statement Shocks) or Loss Shocks) or Loss as at 31st as at 31st December December 2014 2013 Exchange Rate Shocks Rs 000 Rs 000 Rs 000 Rs 000


B

ank

Gro

up

Mon

ths

Mon

ths

M

onth

s M

onth

s

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

R

s 0

00

Ass

ets

Tota

l Ass

ets

Liab

iliti

es

Tota

l Lia

bilit

ies

Mat

urit

y G

ap

Cum

ulat

ive

Gap


B

ank

Gro

up

M

onth

s M

onth

s

Mon

ths

Mon

ths

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Rs

000

Ass

ets

Tota

l Ass

ets

Liab

iliti

es

Tota

l Lia

bilit

ies

Mat

urit

y G

ap

Cum

ulat

ive

Gap

SUPPLEMENTARY INFORMATION

prudent and far-sighted strategies

Content


Bank Group

For the year ended 31st December 2014 2013 2014 2013 (US$ 000) (US$ 000) (US$ 000) (US$ 000)

Gross income

Net interest income

Net fee & commission income


Net operating income

Less: Operating expenses

Total operating expenses

Attributable to:

Earnings per share (US$)

Dividend per share (US$)

Statement of Profit or Loss in US$

Statement of Comprehensive Income in US$

Bank Group

For the year ended 31st December 2014 2013 2014 2013 (US$ 000) (US$ 000) (US$ 000) (US$ 000)


Net other comprehensive income to be

Net other comprehensive income not to be

Other comprehensive income net of taxTotal comprehensive income for the year net of tax

Attributable to:


Statement of Financial Position in US$

Bank Group

As at 31st December 2014 2013 2014 2013 (US$ 000) (US$ 000) (US$ 000) (US$ 000)

ASSETS

Total Assets

LIABILITIES

Total Liabilities

EQUITY

Total EquityTotal Liabilities & Equity

Net asset value per share ( US $)Commitments & contingencies

Sources & Distribution of Income

For the year ended 31st December 2014 2013 Rs Mn Rs Mn

Sources of income

Distribution of income

To employees

To government

To shareholders

DISTRIBUTION OF INCOME 2013

Depositors/Borrowers/Debenture holders

7 56

9

%

23

Employees Suppliers Government

Shareholders

5

DISTRIBUTION OF INCOME 2014

Depositors/Borrowers/Debenture holders

7

11 50

11

%

21

Employees Suppliers Government

Shareholders


ECONOMIC VALUE ADDITION

For the year ended 31st December 2014 2013 Rs Mn Rs Mn

Economic value addition

FINANCIAL VALUE ADDITION

2014 % 2013 % Rs Mn Rs Mn

Value added

Value allocated

Value Addition

Rs Mn SLAS SLFRS

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

SLAS SLFRS

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Assets

Total assets

Liabilities

Total liabilities

Shareholders' Fund

Investor Information

Other Information

Ratios

Capital adequacy ratios (%)

Ten Years at a Glance


2

01

4

2013

3

1st

3

0th

3

0th

3

1st

31

st

30th

30

th

31st

Fo

r th

e th

ree

mon

ths

ende

d D

ecem

ber

Sept

embe

r Ju

ne

Mar

ch

Dec

embe

r Se

ptem

ber

June

M

arch

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Stat

emen

t of

Fin

anci

al P

osit

ion

Quarterly Statistics

2

01

4

2013

3

1st

3

0th

3

0th

3

1st

31

st

30th

30

th

31st

Fo

r th

e th

ree

mon

ths

ende

d D

ecem

ber

Sept

embe

r Ju

ne

Mar

ch

Dec

embe

r Se

ptem

ber

June

M

arch

Mar

ket

Pri

ce P

er S

hare

(Rs)

Capi

tal A

dequ

acy

Rat

io

Ass

et Q

ualit

y

Reg

ulat

ory

Liqu

idit

y

Not

e


Capital Adequacy

TIER I CAPITAL

TIER II CAPITAL

BASEL I

Tier I Capital + Tier II Capital Risk Weighted Assets

BASEL II

REQUIREMENT

PROCESS

BASEL III

MAIN AREAS OF REFORM IN BASEL III

Capital Reform Liquidity Standards Systematic Risk and Interconnectedness

Capital Base

IMPLEMENTATION OF BASEL III IN SRI LANKA


B

ank

Gro

up

2

01

4

2013

2

01

4

2013

Ris

k W

eigh

ted

Ass

ets

for

Cred

it R

isk

A

sset

s R

isk

A

sset

s R

isk

Ass

ets

Ris

k A

sset

s R

isk

Wei

ghte

d

W

eigh

ted

W

eigh

ted

Wei

ghte

d

A

sset

s

Ass

ets

A

sset

s

Ass

ets

R

s M

n R

s M

n R

s M

n R

s M

n R

s M

n R

s M

n R

s M

n R

s M

n

Tota

l

Capital Adequacy

B

ank

Gro

up

2

01

4

2013

2

01

4

2013

P

rinc

ipal

C

redi

t P

rinc

ipal

Cr

edit

P

rinc

ipal

C

redi

t P

rinc

ipal

Cr

edit

Conv

ersi

on

Am

ount

Eq

uiva

lent

A

mou

nt o

f Eq

uiva

lent

A

mou

nt

Equi

vale

nt

Am

ount

Eq

uiva

lent

Fact

or (%

)

Bal

ance

B

alan

ce

Bal

ance

B

alan

ce

Bal

ance

B

alan

ce

Bal

ance

B

alan

ce

Shee

t

Shee

t Sh

eet

Sh

eet

Shee

t Sh

eet

Shee

t Sh

eet

Item

s It

ems

Item

s It

ems

Item

s It

ems

Item

s It

ems

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Rs

Mn

Dir

ect

cred

it s

ubst

itut

es

Tran

sact

ion-

rela

ted

cont

inge

ncie

s

Shor

t-te

rm s

elf-

liqui

dati

ng t

rade

-rel

ated

cont

inge

ncie

s

Oth

er c

omm

itm

ents

wit

h an

ori

gina

l mat

urit

y

of

up

to o

ne y

ear

or w

hich

can

be

unco

ndit

iona

lly c

ance

lled

at a

ny t

ime

Oth

er c

omm

itm

ents

wit

h an

ori

gina

l

mat

urit

y of

ove

r on

e ye

ar

Fore

ign

exch

ange

con

trac

ts

Tota

l


Bank Group

2014 2013 2014 2013 Risk-weighted amount for Market Risk Rs Mn Rs Mn Rs Mn Rs Mn

Interest rate risk

Equity risk

Foreign exchange & gold riskTotal capital charge for market riskTotal risk-weighted amount for market risk (total capital charge x 10)

Bank Group

2014 2013 2014 2013 Risk-weighted Amount for Operational Risk Rs Mn Rs Mn Rs Mn Rs Mn

Deductions:

Gross incomeTotal capital charge for operational risk (Gross income x 15%) Total risk-weighted amount for operational risk(Total capital charge for operational risk x 10)

Computation of total risk-weighted amount

Total risk-weighted assets

Capital Adequacy

Bank Group

2014 2013 2014 2013 Computation of Capital Base Rs Mn Rs Mn Rs Mn Rs Mn

Core capital (Tier I)

Total core capital

Supplementary capital (Tier II)

Deductions-Tier II

Eligible Tier II capitalBase capital (Tier I + Tier II)

LIMITS:

Bank Group

2014 2013 2014 2013

Core capital ratio (minimum ratio - 5%)

Total capital ratio (minimum ratio - 10%)

Core capital (Tier I) ratio (%)Total capital ratio (%)


GRI Index

GRI Indicator

GRI Disclosure DescriptionPage

No Reference Principle

STRATEGY AND ANALYSIS

ORGANIZATIONAL PROFILE

77

211

3

3

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

Material aspects

GRI Indicator



REPORT PROFILE

3

6

3

3

Assurance 6

GOVERNANCE

topics

social topics

232

60

the Board


GRI Indicator



conduct

CATEGORY: ECONOMIC

ASPECT: ECONOMIC PERFORMANCE - DMA

362

ASPECT: MARKET PRESENCE

76

ASPECT: INDIRECT ECONOMIC IMPACTS

ASPECT: PROCUREMENT PRACTICES

CATEGORY: ENVIRONMENTAL - DMA

100

GRI Index

GRI Indicator



ASPECT: MATERIALS

107

ASPECT: ENERGY

103

103

103

ASPECT: WATER

ASPECT: BIODIVERSITY

areas

areas

ASPECT: EMISSIONS

106

106

106

107

ASPECT: EFFLUENTS AND WASTE

107

ASPECT: PRODUCTS AND SERVICES - DMA 62

102

ASPECT: COMPLIANCE

107

ASPECT: TRANSPORT


GRI Indicator



ASPECT: OVERALL

ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENT

CATEGORY: SOCIAL

SUB CATEGORY : LABOUR PRACTICES AND DECENT WORK

and occupation

73

ASPECT: EMPLOYMENT - DMA 70

ASPECT: TRAINING AND EDUCATION

ASPECT: DIVERSITY AND EQUAL OPPORTUNITY

73

ASPECT: EQUAL REMUNERATION FOR WOMEN AND MEN

ASPECT: SUPPLIER ASSESSMENT FOR LABOUR PRACTICES

GRI Index

GRI Indicator



ASPECT: INVESTMENT

and occupation

ASPECT: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING

ASPECT: FORCED OR COMPULSORY LABOUR

ASPECT: Security Practices

ASPECT: Indigenous Rights

ASPECT: ASSESSMENT

SUB CATEGORY: SOCIETY

ASPECT: LOCAL COMMUNITIES - DMA 85


GRI Indicator



ASPECT: ANTI-CORRUPTION

ASPECT: PUBLIC POLICY

ASPECT: COMPLIANCE

ASPECT: SUPPLIER ASSESSMENT FOR IMPACTS ON SOCIETY

GRI Index

GRI Indicator



SUB CATEGORY: PRODUCT RESPONSIBILITY - DMA66

ASPECT: PRODUCT AND SERVICE LABELLING

67

ASPECT: MARKETING COMMUNICATIONS

Banned or disputed products

ASPECT: CUSTOMER PRIVACY

ASPECT: COMPLIANCE


GRI Index

GRI Reference Indicator Status

No

No

No

No

No

No

No

No

NoNoNoNo

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

GRI FINANCIAL SERVICES SECTOR DISCLOSURES

No

CATEGORY: ECONOMIC

CATEGORY: ENVIRONMENTAL106106106107

FS13

FS16

FS1FS2FS3

FS6

FS7

CATEGORY: SOCIALSUB CATEGORY: Labour Practices and Decent Work

SUB CATEGORY: SocietyLocal Communities

SUB CATEGORY: Product ResponsibilityProduct and Service Labelling

Product Portfolio

Audit

No67

No

101

No

No

No

No

No

No

No

FS12

FS10

FS11

Active OwnershipNo

No

No


IFC SUSTAINABILITY FRAMEWORK INDEX

No Performance Standard Disclosure Page No Reference

1

2

3

No

6

7

INTERNATIONAL INTEGRATED REPORTING FRAMEWORK: SIX CAPITAL INDEX

Capitals DescriptionPage No

References

Financial capital

Manufactured capital

Social and Relationship Capital

Natural capital

Supplementary Sustainability Indices

KEY ASSURANCE PROCEDURES

LIMITATIONS AND CONSIDERATIONS

CONCLUSION


Independent Assurance Report

REPORT


Glossary of Financial and Banking Terms

AAcceptances

Accounting Policies

Accrual Basis

Amortisation

Amortised Cost

Associate Company

Available For Sale (AFS) Financial Assets

BBills sent for Collection

CCapital Adequacy Ratio

Cash

Cash Equivalents

Cash Flows

Collectively Assessed Loan Impairment Provisions

Commercial Paper (‘CP’)

Commitments

Consolidated Financial Statements

Contingencies

Control of an Investee


Correspondent Bank

Cost Method

Cost to Income Ratio

Country Risk

Credit Rating

Credit Risk

Credit Risk Mitigation

Currency Risk

Currency SWAPs

Customer Deposits

DDeferred Tax

Delinquency

Depreciation



Derecognition

Derivatives

Discount Rate

Dividend Cover

Dividend Yield

Documentary Letters of Credit (LCs)

EEarnings Per Share (EPS)

Economic Value Added (EVA)

Equity Instrument

Equity Method

ESOP (Employee Share Ownership Plan)

Expected Loss (EL)

Exposure

FFair Value

Finance Lease

Financial Guarantee Contract

Financial Instrument

Firm Commitment

Foreign Exchange Income

Forward Exchange Contract

GGross Dividend

Group

Guarantees

IImpaired Loans

Impairment

Impairment Provisions

Intangible Asset

Interest Cover

Interest Margin

Interest Rate Risk

Interest Rate SWAP


Interest Spread

Investment Properties

JJoint Arrangement

Joint Control

Joint Venture

K Key Management Personnel

LLiquid Assets

Liquidity Risk

Loans and Receivables

Loss Given Default (‘LGD’)

MMarket Capitalisation

Market Risk

Materiality

NNet Asset Value Per Share

Net-Interest Income (NII)


Non Controlling Interest

OOperational Risk

PParent

Power

Probability of Default (‘PD’)

Prudence

R Relevant Activities

Repurchase Agreement

Return on Average Assets (ROA)

Return on Average Equity (ROE)

Revenue Reserves

Reverse Repurchase Agreement

Rights Issue

Risk Weighted Assets

S Segmental Analysis

Shareholders’ Funds

Single Borrower Limit

Statutory Reserve Fund

Subsidiary

Substance Over Form

SWAPS (Currency)



TTier I Capital (Core Capital)

Tier II Capital (Supplementary Capital)

Total Capital

UUnit Trust

Useful Life

VValue Added

YYield to Maturity

Abbreviations

& And

ACUAEDAFSAGMALCOAMLAPP

ATMAUD Australian DollarAWDRAWPLRB2B Business to BusinessBCBSBCPBDTBIRMC

Bn BillionsBNOCAD Canadian Dollar CARCASACBSLCCCCCP

CCU Credit Control UnitCCYCEACEAFENET

CEOCFMsCFO

CMRPCNYCRIBCRMUCRRFCSECSRDBUDGMDKKDPS

EAREDEIEIIEIRELEMVEPFEPLEPSESBESCESOPETDPETFETREUREVEEWSExecFCBUFSVATGBPGCCGCFOGDP

GRIGRO

ICAAP

ICASL

ICCICOFRIFAINDIRBIRMUITJEIJEIIJPYKMPKRIkWhKYC


LCRLFSBLGDLKASLRALSUBLTV RatioM3MDMgrMn MillionsmPOSMSME

MWNAITA

NBTNCRENEDNEDA

NIINIMNOKNPANPLNSFRNZDOCIORMUp a

RatioPDPOSPUCQ&AR & DRCSA

ROAROCEROERSARSLRWASDGMSecSEC

SEISEII

SEKSENSSGDSIDSITS

SLASLARSLASSLDBsSLFRSSLICSLPASMESMSSNaPCSnr SeniorSOASRPSWIFT

tCO2eTTUNGCUS$ US Dollar USD US Dollar VARVATVis-à-visVR

YoYZAR South African Rand

Abbreviations

Index

Board of Directors 10


Index

Financial calendar 271


Index

Nostro accounts 160


Index

Notice of Annual General Meeting


Notice of Annual General Meeting

S Sudarshan

Form of Proxy

FOR AGAINST


Form of Proxy

INSTRUCTIONS AS TO COMPLETION

Name of Shareholder

N I C No of Shareholder

No of shares

Name of Proxy holder

N I C No of Proxy holder

Group Company Secretary,

Employee Public Authority

Shareholder Regulatory Body

Investor Student

Customer Journalist

Supplier NGO

Service Provider Special Interest Group

Community Other

Excellent Good Fair Poor

Content and Scope

Informative

Transparent

Trustworthy

Comprehensive

User Friendly

Design and Layout

Stakeholder Feedback Form


YOUR DETAILS

Name

Address

Contact Numbers

Residence

Mobile

Fax

E-mail

Stakeholder Feedback Form

NAME OF COMPANYSampath Bank PLC

LEGAL FORMA Public Limited Liability Company incorporated in Sri Lanka on 10th March 1986 under the Companies Act No 17 of 1982 and listed in the Colombo Stock Exchange. A licensed Commercial Bank under the Banking Act No 30 of 1988. Re-registered on 28th April 2008 under the Companies Act No 7 of 2007.

COMPANY REGISTRATION NUMBERPQ 144

HEAD OFFICE & REGISTERED OFFICE110, Sir James Peiris Mawatha, Colombo 02, Sri Lanka

TELEPHONE+94 (011) 2300260, +94 (011) 2358358, +94 (011) 4730630, +94 (011) 5331441, +94 (011) 5600600

FAX+94 (011) 2303085

SWIFT CODEBSAMLKLX

[email protected]@sampath.lk

WEB PAGEwww.sampath.lk

AUDITORSErnst & YoungChartered Accountants

LAWYERSNithya PartnersAttorneys-at-Law

GROUP COMPANY SECRETARYS SudarshanACIS (UK), MBA (Lincoln-UK), ACCS (SL)

STOCK EXCHANGE LISTINGS167,910,253 Ordinary Shares

15,000,000 Listed Unsecured Subordinated Redeemable Debentures of Rs 100/- each - 2012/2017



VAT REGISTRATION NUMBER134001194 – 7000

Corporate Information

CREDIT RATINGFitch Rating:National Long Term Rating of AA-(lka) stable to Sampath Bank.

Lanka Rating Agency Limited: AA (stable) (Formally known as RAM Ratings (Lanka) Ltd.)

BOARD OF DIRECTORSMr Dhammika Perera - ChairmanMr Channa Palansuriya - Deputy ChairmanMr Sanjiva Senanayake - Senior DirectorMr Deepal Sooriyaarachchi - Non Executive DirectorProf Malik Ranasinghe - Non Executive DirectorMrs Dhara Wijayatilake - Non Executive DirectorMiss Annika Senanayake - Non Executive DirectorMr Deshal De Mel - Non Executive DirectorMr Ranil Pathirana - Non Executive Director Mrs Saumya Amarasekera - Non Executive DirectorMr Aravinda Perera - Managing DirectorMr Ranjith Samaranayake - Group Chief Financial

SUBSIDIARY COMPANIES

Name of the Company

Holding %

Nature of Business

Sampath Centre Ltd

97.14Renting of Commercial Property

SC Securities (Pvt) Ltd

100.00 Stock Broking

Siyapatha Finance PLC

100.00 Leasing and Factoring

Sampath Information Technology Solutions Ltd

100.00 Solutions and Maintenance of Hardware

FOR INVESTOR RELATIONS AND CLARIFICATIONS ON THE REPORT, PLEASE CONTACT: Group Company Secretary, Sampath Bank PLC, No 110, Sir James Peiris Mawatha, Colombo 02, Sri Lanka E-mail: [email protected]: +94 (011) 4730418/420/548

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OUR STAKEHOLDERS - Sampath Bank PLC

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Transcript of OUR STAKEHOLDERS - Sampath Bank PLC