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Lalith Kotelawela slams bank rating criteria in Seylan`s annual report
Sunday, 9 July 2006 - 5:03 AM SL Time
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Seylan Bank Chairman Lalith Kotelawala has bitterly complained that his bank, despite all its efforts on behalf of the poor, ``we are constantly shunned and viewed as villains.``
Kotelawala has made this comment in the chairman`s statement of the bank`s annual report for the year ended December 31, 2005.
`I feel this is wrong because it is entrepreneurs like us who help grow the economy and to have had this much success, we must be having something more that we can contribute within the overall picture of development,`` he said.
Kotelawala complained that their way of thinking `did not fall into the accepted norms for a bank as designated by the Central Bank.``
`This I find ridiculous as the labeling and boxing of banks and financial institutions does not aid growth, but instead causes untold misery and hardship to the poor and destitute who are the very segment of society we should aim to improve, because they are the ones that will develop the rural economy and thus, the overall macro economy,`` he said.
Declaring that his vision was to take Seylan as far as possible to reach the downtrodden people of Sri Lanka, but unfortunately `the criteria for the success of a bank are its profitability, ROIs (return on investments) and NPLs (non performing loans).``
He said that ratings are based on criteria used in developed countries and not on the appropriateness of an emerging economy like Sri Lanka.
`These aspects only make the rich richer and poor, poorer. We need to look at things differently because we must develop the whole country and not just a segment,`` he said.
`Ratings should be based on facets like poverty alleviation and contribution to humanity.``
Kotelawala declared that for him the rationale for a bank`s very existence is social responsibility but this most important aspect is not even given one mark when it comes to ratings.
He revealed that in the last four years, Seylan had been restricted by the Central Bank in opening branches, student savings centres and even ATMs.
When he took the reins at Ceylinco in the 1960s, there were just three companies and 100 workers.
`Today, we are one of the biggest conglomerates in the country with 250 companies employing over 30,000,`` he said.
Seylan`s Director/General Manager/CEO Mr. Ajita M. Pasqual also complained that in the context of increasing regional competition especially from India, they needed an ``expansive branch presence`` but was hamstrung in their growth due to prevailing bureaucratic restrictions.
They have tried to overcome this handicap through a mobile fleet to reach out to people in areas where no bank is present.
The year under review had seen Seylan increasing its branch network by four to 116 branches/banking centres.
Welcoming some of the Central Bank`s moves to strengthen and improve the efficiency of the financial services sector, risk management, enhanced access to finance etc., Pasqual urged that the Central Bank should be a ``facilitator to economic growth rather than be heavily biased towards regulations and controls.``
The year under review had seen group turnover reach Rs.14.4 billion, up 31% from a year earlier and group net profit after-tax up 184% toRs.777.3 million. Earnings per share had reached Rs.8.20 against the previous year`s Rs.4.85.
The Seylan group has increased its loan loss provision for the year to Rs.2.05 billion from Rs.1.68 billion the previous year while the bank too had increased these provisions to Rs.2.1 billion from Rs.1.66 billion.
Seylan had an issued share capital ofRs.869.5 million, a statutory reserve fund of Rs.377.7 million and reserves of Rs.3.34 billion in its books as at December 31, 2005.
Several shareholders including private companies connected to the group and Dr. T. Senthilverl are the top five shareholders of the company with each owning 5% of its equity as permitted by the Banking Law. These shareholders are Dr. Senthiverl, Dollar Distributors (Pvt) Ltd., Seyfest (Private) Ltd., Seyshop (Private) Ltd., Sesot (Private) Ltd. and Esots (Private) Ltd.
Several other Ceylinco Seylan group companies are also among the top 20 shareholders. Outside this group`s interests, the National Savings Bank with 3.74%, Softlogic Holdings with 2.75% and Lanka Milk Foods with 1.77% are among the other shareholders in the top 20.
Seylan has over 8,000 shareholders in its register and the share traded during the year under review at a high of Rs.58.50 and a low of Rs.29.50 against a trading range of Rs.55 to Rs.29 the previous year.
Net assets per share had grown to Rs.55.36 from Rs.49.12 and the directors have recommended a first and final dividend of 20% payable in August.
The directors of the company are: Messrs Lalith Kotelawala (Chairman/MD), R. Renganathan (Jt. Deputy Chairman), Mrs. Sicille P.C. Kotelawala (Jt. Deputy Chairperson), A.M. Pasqual (Director/GM/CEO), A.D. Jegasothy, S.K.M. Perera, Ms. M. Sabaratnam, Dr. P.R. Anthonis, S.C.O. de Livera, J.E.P.A. de Silva, K.A.S. Jayatissa and P.T. Sirisena.
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