Sanasa Development Bank proves its prowess

Posts Rs. 161 m pre-tax profit, Deposits and advances up 36% and 50% in 2007

SANASA Development Bank performed well in 2007, recording a pre-tax profit of Rs.161 million compared to Rs.155 million last year. Post – tax profit was Rs. 94.9 million as against Rs.75.6 million in 2006. Provision of VAT on financial services for 2007 was Rs.35.3 million as against Rs.30.5million in 2006 and the income tax provision for 2007 was Rs.31.1 million against Rs.49.0 million in 2006 resulting in the after tax profit of Rs.94.9 million, according to SDBL General Manager/CEO, Nimal J. B. Mamaduwa.

Speaking to the “The Bottom Line” Mamaduwa said that year 2007 performance has been very impressive with net interest income has continued to be the key contributor towards the bottom line, accounting for 43% of total income. 50% growth in advances and efficient management of funding costs enabled SDBL to maintain a healthy spread despite the rising trend in interest rates.

Deposits grew by a healthy 36% notwithstanding the adverse impact of the security and economic situation, market conditions and high interest regime. Encouragingly, the Bank was able to attain this growth mainly due to increased customer confidence and the attractiveness of our products to all customer segments. Severe competition and high interest rates compelled us to offer higher rates to important customers. Increased presence, due to opening of new branches, also supported the deposit drive.

Advances grew by an impressive 50% despite the prevailing constraints and uncertainties. A strategic shift towards micro-finance, small projects and group lending to SANASA Societies helped us reap the desired results. Lending to a carefully selected segment in the corporate sector also contributed to sustainable growth in profitability and volume.

The Bank continued to maintain a very healthy portfolio in 2007. Our NPA rate was 3.9% (as against 4.3% in 2006), well below industry standard. This was due to our having maintained a high standard of evaluation and diligent, ongoing risk management, along with effective post-credit management and follow – up, Mamaduwa said.

During 2007, the bank opened eleven new customer centres (6 branches and 5 extension centres). Three existing extension offices were upgraded to full-fledged branches. The total number of customer service centres stood at thirty-six on 31st December 2007. This expansion is reflected in the increase in expenditure recorded in the year’s results. However, the long – term benefit to the bank will exceed these initial costs.

A unique feature of the year was the opening of three branches in the Eastern Province, at Trincomalee, Batticaloa and Kalmunai.

Another milestone for the bank during 2007 was the SDBL was chosen amongst 641 microfinance providers by the Forbes magazine and we were ranked within the top 50 microfinance Institutions (The only MFI provider in Sri Lanka ranked within the first 50 is SDBL)

Bank will obtain regulatory approval to open 14 new branches in 2008 and in view of the satisfactory performance and the stability. Presence in more rural locations will be the focus of branch activity in 2008.

SANASA Development Bank’s core capital (Tier I) increased steadily during the year due to retained profits and an equity infusion by Orient Global, Singapore, which contributed up to Rs. 71 million (plus assurances of a further invest of up to 15% of issued capital, or Rs.225million)

Tier I & Tier II capital shows an improved position registering 13.40% and 13.48% respectively as against 11.9% and 11.4% in Tier I and Tier II as at 31st December 2006. Shareholder’s fund has shown a steady growth of 29% whilst the balance sheet has registered a healthy 44.5% growth.

Several of the international Co-operative organisations that rallied round us after the tsunami disaster continued to provide us with valuable support during 2007. Among these were the Canadian Co-operative Association (CCA), Canadian International Development Agency (CIDA), Development International Desjardins (DID) and the World Council of Credit Unions (WOCCU).

Supporting the community continues to be our key CSR objective. SANASA Development Bank, with its strong links to the co-operative movement, has identified the development of this concept as a priority, in 2007, a programme for assisting six thousand young men and women under a national programme was conducted by the Bank at the Sugathadasa Stadium under the leadership of Dr. P. A. Kiriwandeniya, Leader of SANASA Movement.

“Our strategies for the future will be derived, as always, from our vision, mission and values. SANASA Development Bank will continue to be a leader and active partner in the development of the nation and its rural economy. Our strengths as a Group will provide support and encouragement for everyone engaged in these activities. Our broader network will extend financial services to a bankable community not presently served by other banks,” Mamaduwa concluded.