People’s Bank Ranked Sri Lanka’s Best Bank
STATE-OWNED PEOPLE’S BANK BECAME SRI LANKA’S BEST PERFORMING BANK, ACCORDING TO A BANKING SECTOR RANKING BY AN INDEPENDENT FINANCIAL ADVISORY FIRM.
People’s Bank ranked 1st among the country’s four Domestic Systemically Important Banks which includes another state-owned Bank and two listed private commercial banks, according to rankings published in K Seed Investments’ ‘Sri Lanka Banking Sector Report’. K Seeds Investments ranked each bank based on nine key financial indicators for 2019 published in their annual reports.
The indicators are Cost to Income Ratio, Return on Equity, Return on Assets, Credit to Deposits Ratio, Net Interest Margin, Gross Non-Performing Loans (NPLs), Impairment to Interest Earnings Assets, CASA Ratio (current accounts and savings accounts as a percentage of total deposits including fixed deposits), and Loan Growth.
The ranking intends to give depositors and investors insight into the country’s best-performing banks in terms of profitability, sustainability, and balance sheet health.
“Our deep relationship with customers is the primary reason why the bank’s financial indicators around profitability and balance sheet strength are among the best in the industry,” said People’s Bank Chairman Sujeewa Rajapakse, commenting on the bank’s number one rating. For instance, the bank has the best CASA ratios for any of the four Domestic Systemically Important Banks, which means the bank enjoys peerless access to low cost-funding because the bank has nurtured a base of loyal customers.
“We have a highly motivated team of over seven thousand staff and 740 branches island-wide serving around 14 million customers,” Rajapakse explains. “That’s more than half of Sri Lanka’s population with a People’s Bank account!”
The bank recorded the lowest NPL ratio among its peers in 2019 which contributed to its number one ranking, even as it expanded its loan book that year.
“We are very prudent in lending. Our evaluation processes are stringent, and we diligently follow up on borrowers to minimise default. But this is a small part of our success,” said Ranjith Kodituwakku, Chief Executive and General Manager at People’s Bank.
The bank lends mostly to small and medium businesses where the average loan is around Rs6-10 million. While this means the bank’s single-borrower exposure is among the lowest in the industry, it points to the bank’s ability to build relationships.
“SMEs are a wider, broader customer segment spanning the entire country and it speaks volumes about our ability to maintain low NPLs. This is possible because we work closely with entrepreneurs, helping them build their businesses from ground-up,” Kodituwakku said.
“Some of Sri Lanka’s largest corporations were startups this bank supported during its 60-year history”. Twenty years ago, the bank pioneered an opendoor policy to become more approachable to their customer base. “We tore down the counters that separated our staff and customers and introduced an open office concept where anyone can visit any bank official unhindered,” Kodituwakku said, and this has helped the bank reap the rewards in terms of low-cost funding and low NPLs. Today, around 70% of the bank’s 14 million customers live outside the Western Province.
The bank’s deposit base was Rs1.7 trillion as at end-March 2020 and its loan book was Rs1.6 trillion. The bank now aims to be the most digitalised in the industry and investing heavily in this regard.
“This is the next natural step in our mission to be a bank for the people and uplift livelihoods and the rural economy through greater financial inclusivity,” Kodituwakku said. People’s Bank has a real-time customer onboarding platform called People’s Wiz, the first for any bank in Southeast Asia, Africa, and the Middle East. Since launching in 2017, People’s Wiz has onboarded over 785,000 customers.
People’s Wave, its mobile banking app, allows a customer to carry out over 50 different banking transactions in the comfort of their homes. It is Sri Lanka’s most downloaded finance app with over 770,000 downloads since launching in 2018. It has an impressive 4.3 rating on Google Play Store. Over 70% of registered People’s Wave users live outside the Western Province.
Customer acceptance of People’s Bank’s digital offerings is encouraging. The total value of digital transactions doubled in 2019 to Rs80 billion while the monthly average transaction value at its Self Banking Units was Rs83 billion. For its efforts, the bank won the crown of ‘Best Digital Bank in Sri Lanka’ at the prestigious Asiamoney Best Bank Awards 2020.
“We are continuing to invest even during these difficult times to give our best to our customers,” Rajapakse explains. “Even during this covid19 crisis, we are ensuring that our customers are well taken care of”. During the lockdown, over 70% of branches and all self-banking units remained operational. Its mobile banking units covered over 400 locations islandwide, including some of the hardest to access areas in the country, dispensing cash withdrawals totalling Rs200 billion during the lockdown. The bank extended debt moratoriums worth Rs300 billion and provided working capital loans to over 5,000 businesses totalling Rs6 billion from the Central Bank refinance scheme with a further Rs15 billion allocated from the bank’s funds. It also provided credit relief to 400,000 retail customers. “The next 12 to 18 months will be difficult ones for the economy but we will play our part to uplift the economy,” Rajapakse said.
In July 2020, amidst the worst economic crisis in recent history, investors resoundingly acknowledged People’s Bank’s status as Sri Lanka’s best performing bank. The bank’s Rs20 billion debenture issue oversubscribed within four hours despite the debilitating COVID-19 impact on the economy. “While we all must make adjustments during this crisis, People’s Bank included, we are continuing to pursue our growth strategy to become Sri Lanka’s largest and best bank,” he said.