SAMPATH BANK PLCANNUAL REPORT 2016
Sampath Bank has long been recognized as a driver of innovation in the local banking industry. For over 30
years, we have delivered the finest in customer-friendly products and services designed to enable speed,
access and convenience. Our focus is always to serve our stakeholders with better value than anyone else.
That’s why we have developed world class digital banking technologies, the My Bank franchise supporting our
islandwide branch network and our creative and talented team. These are the synergies that power the inspired
financial solutions we deliver online and in real time, every single day.
A COMPELLING THOUGHT. A STUBBORN BELIEF. A PERSISTENT DREAM THAT WON’T GO AWAY.
THINK ABOUT WHAT YOU CAN ACHIEVE WHEN YOU BELIEVE THAT NOTHING IS IMPOSSIBLE. YOUR BOUNDARIES FALL AWAY. YOUR LIMITATIONS DISAPPEAR. EVERYTHING YOU THOUGHT WAS BEYOND YOUR REACH IS NOW IN THE PALM OF YOUR HAND. 30 YEARS AGO WE BELIEVED WE COULD IMAGINSPIRE OUR DREAMS THROUGH THE POWER OF OUR WILL.
TODAY WE KNOW WE WERE RIGHT.
SAMPATH BANKImaginspired
IMAGINSPIRED
2 SAMPATH BANK PLC
ANNUAL REPORT 2016
CONTENTSReport Profile ...........................................4
Financial Highlights .................................6
Non-Financial Highlights .........................9
INTRODUCTORY INFORMATION Our Vision and Our Values ....................12
About The Company .............................13
Product Portfolio ....................................14
Board of Directors .................................16
Corporate Management ........................22
Chief Managers .....................................25
Senior Managers ...................................28
MANAGING OUR BUSINESSChairman’s Message .............................32
Managing Director’s Review ..................38
Green Recognition ................................44
Sustainability Framework .......................45
Stakeholder Engagement ......................46
Business Model .....................................50
Materiality Assessment ..........................52
MANAGEMENT DISCUSSION & ANALYSISOperating Environment .........................56
CAPITAL MANAGEMENT REPORTS
Financial Capital ....................................60
Manufactured Capital ............................64
Intellectual Capital .................................70
Human Capital .......................................73
Social and Relationship Capital
Customer ...........................................82
Supplier ..............................................86
Community .........................................87
Natural Capital .......................................94
BUSINESS REPORTS
Personal and Branch Banking
Deposits .............................................99
Loans and Advances .......................100
Cards ...............................................101
Corporate Banking
Corporate Finance ...........................103
Corporate Credit ..............................104
Commercial Credit ...........................105
FCBU ...............................................106
Development Banking
MSME Development ........................107
Project Finance ................................108
Global Business
International Operations ..................109
Bank Notes Operations ....................110
Remittances .....................................111
Trade Services .................................112
Nostro Accounts, Correspondent
Banks and Exchange Companies ...113
Treasury ...............................................114
Operational Support
NSC and CCD ..................................115
Recoveries .......................................117
Performance of Subsidiaries
Siyapatha Finance ...........................118
SC Securities ...................................119
Sampath Centre ...............................120
SITS ..................................................121
Investor Information .............................123
Future Outlook .....................................134
RISK & GOVERNANCERisk Management Report ....................136
Compliance Review .............................151
Corporate Governance .......................153
Board Audit Committee Report ...........198
Board Human Resources and
Remuneration Committee Report ....202
Board Nomination Committee Report .204
Board Integrated Risk Management
Committee Report ............................206
Board Related Party Transactions
Review Committee Report ...............209
Board Credit Committee Report ..........210
Board Strategic Planning
Committee Report ............................212
Board Shareholder Relations
Committee Report ............................214
Board Treasury Committee Report ......216
Board Marketing Committee
Report ..............................................217
3
Read this Report Online
www.sampath.lk
FINANCIAL INFORMATIONFinancial Calendar ..............................220
Annual Report of the Board of
Directors on the Affairs of the
Company .........................................221
Directors’ Interest in Contracts
with the Bank ...................................230
Directors’ Statement on Internal
Control Over Financial Reporting ....231
Independent Assurance Report
to the Board of Directors of
Sampath Bank PLC ..........................233
Managing Director’s and
Chief Financial Officer’s
Responsibility Statement .................234
Statement of Directors’
Responsibility for Financial
Reporting .........................................235
Independent Auditors’ Report
to the Shareholders of
Sampath Bank PLC ..........................237
Statement of Profit or Loss ..................238
Statement of Comprehensive Income .239
Statement of Financial Position ...........240
Statement of Cash Flows .....................242
Statement of Changes in Equity ..........244
Notes to the Financial Statements .......246
SUPPLEMENTARY INFORMATIONStatement of Profit or Loss in US$ .......378
Statement of Comprehensive Income
in US$ ..............................................379
Statement of Financial Position
in US$ ..............................................380
Economic Value Addition ....................381
Ten Years at a Glance .........................382
Quarterly Statistics ..............................383
Capital Adequacy ................................385
GRI G4 Content Index .........................390
Other Sustainability Disclosures ..........398
Independent Assurance Report
to the Shareholders of Sampath
Bank PLC .........................................409
Glossary of Financial and
Banking Terms .................................410
Abbreviations ......................................416
Notice of Annual General Meeting ......418
Stakeholder Feedback Form ...............419
Corporate Information ........................IBC
4
REPORT PROFILE
SCOPE AND BOUNDARY
Covering the period 1st January 2016
to 31st December 2016, this annual
report marks the 3rd milestone on
our integrated reporting journey. The
report comprehensively covers the
performance of Sampath Bank PLC
for the reporting period and includes
among other matters; an analysis of
the operational results, a review of the
financial performance and an overview
of the Bank’s corporate governance,
risk management and compliance
frameworks, in accordance with the
Code of Best Practice on Corporate
Governance issued jointly by the
Institute of Chartered Accountants of
Sri Lanka and the Securities and
Exchange Commission of Sri Lanka,
the listing rules of the CSE and the
Banking Act Direction No. 11 of 2007
on Corporate Governance for Licensed
Commercial Banks in Sri Lanka, issued
by the Central Bank of Sri Lanka.
Further, in the interest of completeness,
an overview of the performance of
the Group’s subsidiary companies for
the same period is also provided in a
separate section of the report.
REPORTING FRAMEWORKS
This integrated annual report remains
the primary source of communication
with stakeholders and its main objective
is to show how we are working to
improve every aspect of our business
for the benefit of our stakeholders.
Accordingly, this report has been
prepared in accordance with the
IIRC’s <IR> Framework “Six Capitals”,
Reporting Framework, and the Capital
Management Report on pages 59
through 97 details the work we are
putting in to strengthen each of the
“Six Capitals” for the benefit of our
stakeholders.
The report also references the
Global Reporting Initiatives (GRI), G4
guidelines for sustainability reporting
where a comprehensive GRI content
index on pages 390 to 397 provides a
qualitative and quantitative assessment
of our progress on key sustainability
indicators.
MATERIAL ISSUES
We view the process of determining
material issues as a business tool
that facilitates integrated thinking. As
illustrated in the Materiality Assessment
Mechanism on pages 52 to 54, we
focused on 32 material issues in
2016 and throughout this report we
demonstrate the symbiotic relationship
between these material issues
and our business model, strategy,
risk framework and governance
mechanisms.
Material issues are reviewed on an
ongoing basis to ensure they remain
relevant to the overall vision of Sampath
Bank.
FORWARD-LOOKING
STATEMENTS
The Report includes forward-looking
statements, which relate to the
possible future financial position and
results of the Sampath Bank PLC’s
operations. These statements by their
nature involve an element of risk and
uncertainty, as they relate to events and
depend on circumstances that may or
may not occur in the future. However,
we do not undertake to update or
revise any of these forward-looking
statements publicly, whether to reflect
new information or future events or
otherwise.
ASSURANCE
We use a combination of internal
controls, management assurance and
compliance and internal audit reviews
to ensure the accuracy of our reporting.
Further, we continue to hire
independent service providers to
assess and assure various aspects
of the business operations, including
elements of external reporting,
including;
Auditing of the financial
statements by external auditors,
Messrs Ernst & Young, Chartered
Accountants. Please refer
page 237.
An independent audit conducted
by Messrs Ernst & Young,
Chartered Accountants, to
verify compliance of GRI G4
sustainability indicators, in
conformity with “In accordance
- Comprehensive” disclosure
requirements. Please refer
page 409.
FEEDBACK
Any feedback or comments regarding
this report can be directed through the
stakeholder feedback form on
page 419 of this report.
SAMPATH BANK PLC
ANNUAL REPORT 2016
G4 - 15,28,29,30,32,33
5OUR PROGRESS TOWARDS SUSTAINABILITY REPORTING
Year Report Profile GRI Application Level Declaration Status External Assurance
Provided
2011 Stand-alone Report GRI 3.1 Level B Self-declared YES
2012 Incorporated in Annual Report GRI 3.1 Level B Self-declared YES
2013 Stand-alone Report GRI G4 Comprehensive - YES
2014 Integrated Report GRI G4 Comprehensive - YES
2015 Integrated Report GRI G4 Comprehensive - YES
2016 Integrated Report GRI G4 Comprehensive - YES
MEMBERSHIP OF ASSOCIATIONS
Sampath Bank PLC is a member of several national and international associations.
Name of the Association Membership Status
American Chamber of Commerce in Sri Lanka Member
Association of Compliance Officers of Banks, Sri Lanka Member
Association of Primary Dealers (APD) Member
Biodiversity Sri Lanka, Ceylon Chamber of Commerce Patron Member
Clearing Association of Bankers Member
CSR Lanka (Guarantee) Ltd Member
International Chamber of Commerce - ICC Sri Lanka Member
Lanka Clear (Pvt) Ltd Member
Lanka Financial Services Bureau (LFSB) Member
Lanka SWIFT User Group (LSUG) Member / Deputy Chairman
Leasing Council of Bankers Member
Payment Card Association of Sri Lanka Member
Society for Worldwide Interbank Financial Telecommunication (SWIFT) Member
Sri Lanka Association of Software & Service Companies (SLASSCOM) Member
Sri Lanka Bank’s Association (Guarantee) Ltd Member
Sri Lanka Italy Business Council Member
Steering Committee on Economic Policy – The Ceylon Chamber of Commerce Member
The Association of Banking Sector Risk Professionals - Sri Lanka Member
The Ceylon Chamber of Commerce Patron Member
The European Chamber of Commerce of Sri Lanka Member
The Financial Ombudsman Sri Lanka (Guarantee) Ltd Member
G4 - 16
6
FINANCIAL HIGHLIGHTS
BANK GROUP
2016 2015 Change
%
2016 2015 Change
%
Profitability (Rs Mn)
Gross income 67,585 47,032 43.7 70,445 49,102 43.5 Total operating income 32,344 25,288 27.9 33,957 26,742 27.0 Operating expenses, impairment losses &
VAT & NBT on financial services 19,744 16,187 22.0 20,743 16,953 22.4 Profit before income tax 12,600 9,101 38.4 13,214 9,790 35.0 Income tax expense 3,475 2,967 17.1 3,712 3,161 17.4 Profit for the year 9,125 6,134 48.8 9,501 6,628 43.3
Assets & Liabilities (Rs Mn)Due to banks & other customers (Deposits only) 516,273 409,411 26.1 519,140 410,252 26.5 Loans to & receivables from banks & other
customers after impairment provisions 458,831 377,348 21.6 475,397 387,929 22.5 Total equity 44,489 35,125 26.7 49,742 39,203 26.9 Total liabilities 614,023 490,152 25.3 630,357 499,444 26.2Total assets 658,512 525,277 25.4 680,099 538,647 26.3
Investor InformationNet asset value per share (Rs) 251.38 198.47 26.7 281.06 220.98 27.2 Market value per share at the year end (Rs) 260.40 248.00 5.0 Earnings per share - Basic / Diluted (Rs) 51.56 34.66 48.8 53.66 37.42 43.4 Dividend per share (Rs) 18.75 13.00 44.2 Dividend cover (Times) 2.75 2.67 3.0 Gross dividend (Rs Mn) 3,362 2,240 50.1 Market capitalisation (Rs Mn) 46,086 42,734 7.8
Other RatiosDividend yield (%) 7.20 5.24 37.4 Price earning ratio (Times) 5.05 7.16 (29.5)Impairment allowance on loans to &
receivables from other customers (%) 1.67 1.83 (8.7) 1.70 1.87 (9.1)Non-performing loan (NPL) (%) 1.61 1.64 (1.8)Liquid assets ratio (%) 21.84 22.05 (1.0)
Fitch ratingA+ (lka)
(Negative)
A+ (lka)
(Stable)
Moody’s ratingB1
(Negative)
FINANCIAL GOALS AND ACHIEVEMENTS - BANK
Goal 2016 2015 2014 2013 2012
Financial IndicatorsReturn on average assets (after tax) (%) Over 1% 1.55 1.28 1.23 0.98 1.88Return on average equity (after tax) (%) Over 16% 23.47 18.42 16.35 12.88 22.26Growth in profit (%) Over 15% 48.76 24.83 43.27 (34.43) 54.40Growth in total assets (%) Over 15% 25.36 21.58 13.08 23.47 24.93Cost to income ratio (excluding VAT
& NBT) (%) Below 50% 47.83 52.75 54.82 51.20 51.70Capital adequacy ratios (%) - Core capital (Tier I) Over 7.5% 8.31 7.90 8.83 10.08 11.80 - Total capital (Tier I + II) Over 12% 12.87 12.26 13.62 14.22 13.61
Comparative information for the year 2015 has been reclassified wherever necessary to conform to the current year’s
presentation.
SAMPATH BANK PLC
ANNUAL REPORT 2016
7
Net Asset Value per Share grew by
26.7%to Rs 251.38
EACH YEAR, WE CONTINUE TO IMPLEMENT FINANCIAL STRATEGIES THAT ENHANCE OUR FINANCIAL CAPITAL TO ENABLE US TO CARRY OUT THE DAY-TO-DAY BUSINESS ACTIVITIES OF THE BANK...
Total Deposits grew by
26.1%to Rs 516.3 Bn
Gross Advances grew by
21.3%to Rs 468.5 Bn
Interest Income grew by
49.0%to Rs 56.5 Bn
Gross Income grew by
43.7%to Rs 67.6 Bn
TOTAL OPERATING INCOME
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2014
2013
2015
2016
20,7
57
21,3
94
25,2
88
32,3
44
(Rs Mn)
COMPOSITION OF TOTAL OPERATING INCOME 2016
Net Interest IncomeNet Fee & Commission IncomeTrading, Investment &
Other Operating Income
70.3
20.4
9.3
(%)
INTEREST EXPENSE
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2014
2013
2015
2016
26,5
56
22,3
35
20,5
42
33,7
76
(Rs Mn)
NET FEE & COMMISSION INCOME
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014
2013
2015
2016
2,5
43
4,1
87
5,2
87
6,5
85
(Rs Mn)
8
FINANCIAL HIGHLIGHTS
DRIVEN BY STRONG REVENUE GROWTH AND COMPARATIVELY LOWER COSTS, THE BANK’S BOTTOM LINE GREW BY 48.8%, COMPARED TO THE PREVIOUS YEAR
PROFIT BEFORE TAX & PROFIT AFTER TAX
0
3
6
9
12
15
2014
2013
2015
2016
Profit Before Tax
Profit After Tax
4.9
9.1
6.1
12.6
9.1
6.7
3.4
4.5
(Rs Bn)
ROE & ROA
(%) (%)
0
5
10
15
20
25
2014
2013
2015
2016
23.4
7
18.4
2
16.3
5
12.8
8
ROEROA
0.0
0.5
1.0
1.5
2.0
0.98
1.23
1.28
1.55
SAMPATH BANK PLC
ANNUAL REPORT 2016
NET ASSET VALUE PER SHARE & DIVIDEND PER SHARE(Rs) (Rs)
0
50
100
150
200
250
300
2014
2013
2015
2016
251.3
8
198.4
7
179.3
9
169.3
7
Net Asset Value per Share
Dividend per Share
0
5
10
15
20
8.00
11.00
13.00
18.75
TOTAL ASSETS & GROSS INCOME
(Rs Bn) (Rs Bn)
0
100
200
300
400
500
600
700
800
2014
2013
2015
2016
659
525
432
382
Total AssetsGross Income
0
10
20
30
40
50
60
70
80
47.5 44.6
47.0
67.6
30%
COMPOSITION OF TOTAL EXPENSES 2016
Operating ExpensesIncome Tax ExpenseVAT & NBT on Financial Services
Net Impairment Charge
66.6
15.0
6.3
12.1
(%)
TOTAL ADVANCES & TOTAL DEPOSITS
0
100
200
300
400
500
600
2014
2013
2015
2016
Total Advances - Gross
Total Deposits
342
386
409
469
516
311
302
272
(Rs Bn) (%)
0
20
40
60
80
100
Loan to Deposit Ratio
89.8 91.194.3
90.7
9
NON-FINANCIAL HIGHLIGHTS
Indicator 2016 2015
Employees
Total number of employees by gender
- Male 2,586 2,595
- Female 1,374 1,398
Total number of training hours 136,271 141,182
Average training hours per employee per annum 34.4 35.4
Number of industrial disputes Nil Nil
Employee retention ratio 96.5% 97.0%
Profit per employee (Rs Mn) 2.3 1.5
Environment
Savings from paper recycling
Number of fully grown trees 763 1,204
Electricity (kWh) 179,452 283,200
Landfill (Cubic Meter) 135 212
Oil (Litres) 78,735 124,254
Water (Litres) 1,425,746 2,250,024
Reduction of green house gas (Kg) 44,863 70,804
Carbon footprint calculation (tCO2e) - Head Office - 3,753
- Entire Bank 11,613 -
Customers
Growth in deposits 26.10% 19.73%
Growth in advances 21.39% 24.07%
Number of ATMs 381 370
Number of off-site ATMs 83 78
Number of cash deposit kiosks 108 48
Number of branches 229 225
Growth in Sampath App downloaded 87.00% 80.00%
Corporate Citizenship
Number of CSR projects 121 60
Employee volunteerism for CSR (Man Hours) 24,431 7,284
Total investment from CSR fund (Rs Mn) 20.30 15.26
MSME Development
Number of beneficiaries of the Sampath Saviya programme 293 162
Contribution to the Government
Taxes paid to the Government (Rs Bn) 6.27 3.02
Taxes collected on behalf of the Government (Rs Bn) 1.43 1.40
G4 - EN 19
10
NON-FINANCIAL HIGHLIGHTS
SAMPATH BANK PLC
ANNUAL REPORT 2016
WE BELIEVE THAT THE PROSPERITY OF OUR STAKEHOLDERS TRULY DEFINES HOW SUCCESSFUL WE ARE AS A BANK
PROFIT PER EMPLOYEE
0.0
0.5
1.0
1.5
2.0
2.5
2014
2013
2015
2016
0.9
1.2
1.5
2.3
(Rs Mn)
0
500
1,000
1,500
2,000
2,500
3,000
2014
2013
2015
2016
1,3
69
2,5
95
1,3
98
2,5
86
1,3
74
2,6
31
1,3
54
2,3
34
STAFF STRENGTH
Male
Female
0
50
100
150
200
250
2014
2013
2015
2016
243
242
60
121
NUMBER OF CSR PROJECTS
Employee Volunteerism on CSR grew by
235%to 24,431 Man Hours
Total Investment from CSR Fund grew by
33%to Rs 20.3 Mn
Beneficiaries of Sampath Saviya grew by
81%to 293 Beneficiaries
Profit per Employee grew by
53%to Rs 2.3 Mn
Number of CSR Projects grew by
102%to 121 Projects
CUSTOMER TOUCH POINTS
0
50
100
150
200
250
300
350
400
2014
2013
2015
2016
No. of Branches
No. of ATMs
326
225
370
229
381
220
326
212
[ INTRODUCTORY INFORMATION ]A quick profile of the Bank, together with an introduction to our Board and
Senior Management Team
IMAGINCLUSIVE
Our Vision and Our Values 12
About the Company 13
Product Portfolio 14
Board of Directors 16
Corporate Management 22
Chief Managers 25
Senior Managers 28
12 SAMPATH BANK PLC
ANNUAL REPORT 2016
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.
“THE GROWING FORCE IN SRI LANKAN FINANCIAL SERVICES”
OUR VISION
OUR VALUES
INTRODUCTORY INFORMATION
13
ABOUT THE COMPANY
Sampath Bank PLC is one of
Sri Lanka’s premier commercial Banks
and is ranked as one of the top private
banks in the country in terms of total
assets, total equity, customer accounts
and loan portfolio.
Incorporated in 1986 and listed
on the main board of the Colombo
Stock Exchange, Sampath Bank
has functioned as a fully-fledged
commercial bank for the past three
decades. The Bank has successfully
combined both conventional brick and
mortar banking concepts with the latest
developments in digital banking to
deliver a superior banking experience
to all customers.
The Bank serves a full spectrum of
customer segments, including retail,
large corporates, middle market and
Small and Medium Enterprises (SMEs).
In recent years, the Bank’s customer
base has grown exponentially and
as at 31st December 2016 stands at
3,659,737 customers.
SAMPATH BANK’S CONTINUED GROWTH AND SUCCESS IS FOUNDED ON A HIGHLY DIVERSIFIED AND WELL-BALANCED BUSINESS MODEL AND A ROBUST MULTI-CHANNEL ENVIRONMENT
Sampath Bank’s continued growth
and success is founded on a highly
diversified and well-balanced business
model and a robust multi-channel
environment.
Thanks to a strategy based on
innovation and service differentiation,
Sampath Bank continues to enjoy a
position of leadership in the market,
while the core values that underpin
our desire to serve the nation and its
citizens have catapulted the “Sampath”
brand to iconic status.
Maintaining its record of excellence,
Sampath Bank was recognized as
the “Best Bank in Sri Lanka 2016” -
awarded by the prestigious Business
Magazine “Euromoney”, at the
“Euromoney Awards for Excellence
2016”. This was in addition to the
awards for the ‘Best Commercial Bank
2016’ and ‘Best Retail Bank 2016’ in
Sri Lanka awarded by the UK based
World Finance Magazine, for the third
consecutive year.
ATMs
381Total Assets
Rs 659 BnBank’s Market Capitalisation
Rs 46 BnNo. ofShareholders
17,456
Branches
229
14 SAMPATH BANK PLC
ANNUAL REPORT 2016
PRODUCT PORTFOLIO
PERSONAL BANKING
> Sampath General Current Account
> Sampath Supreme Current Account
> Sampath Payment Guaranteed Cheques
> Sampath Double S
> Sampath Hit Saver
> Sampath Kalin Cash
> Easy FD
> Factoring Facility
> Sampath BIZCASH
> Sampath Samachara Loan
> Special loans for Government medical officers
> Fixed Deposits
> Certificate of Deposits
> Sevana Housing Loan
> Sevana Dayada Housing Loan
> Foreign Currency Housing Loan
> Sampath Credit Cards
> Sampath Debit Cards
> Sampath Web Card
> Sampath Bank American Express ® Platinum Ultramiles Credit Card
> Sampath Bank American Express ® Everyday Credit Card
> Sampath Bank American Express ® Travel Lite Card
> Sampath Instant Loan
> Sampath Vishwa
> Pay Easy
> Sampath Missed Call Banking
> Sampath Z-Reload
> Sampath M-POS
> Mobile Cash
> SMS Banking
> SMS Alertz
> Sampath Bank App
> Telebanking
> Sampath Cardless Cash
> Off-site ATMs
> Interbank ATM Network
> Cash Deposit ATMs
> Cheque Deposit ATMs
> Foreign Currency Exchange ATMs
> Cash Deposit Kiosk
> Sampath Pubudu & Sapiri
> Sampath Sanhinda FD
> X-SET
> Ladies 1st
> Sampath Sanhinda Saver
LOANS
LEASING
ACCOUNTS FOR PROFESSIONALS
PAWNING
GIFT VOUCHERS
CARDS
FOREIGN REMITTANCES
SAFETY LOCKERS
RELATIONSHIP BANKING
CLUBS & SOCIETIES ACCOUNT
ELECTRONIC BANKING
ENTREPRENEUR DEVELOPMENT
CURRENT ACCOUNTS
SAVINGS
FOREIGN CURRENCY ACCOUNTS
TERM DEPOSIT ACCOUNTS
> Regular Savings
> Children's Savings
> Teenage Savings
> Ladies Savings
> Senior Citizen’s Savings
> Regular Deposits
> Flexible Deposits
> Senior Citizens Deposits
> Housing Loans
> Business Loans
> Personal Loans
> Internet Banking
> Mobile Banking
> ATM Banking
> Sampath Cards
> American Express ® Card
> Sampath Leasing
> Sampath Safe Deposit Lockers
> Sampath Professional Account
> Sampath Samaja
> Sampath Randiriya
> Sampath Saviya
> e-Remittance
> Sampath Thilina
> Platinum Plus
> Non Resident Foreign Currency Accounts (NRFCA)
> Resident Foreign Currency Accounts (RFCA)
> Resident Non-National Foreign Currency Accounts (RNNFCA)
> Non Resident Non-National Foreign Currency Accounts (NRNNFCA)
> Special Foreign Investment Deposit Account (SFIDA)
> Foreign Exchange Earners Accounts (FEEA)
> Diplomatic Foreign Currency Account (DFA) and Diplomatic Rupee Account (DRA) Schemes
> Inward Remittance Distribution Account (IRDA)
> Outward Investment Accounts (OIA)
> Securities Investment Account (SIA)
G4 - 04
INTRODUCTORY INFORMATION
15
FORWARD EXCHANGE CONTRACT
CORPORATE BANKING
NEW OFFERINGS
TREASURY
> Corporate Credit > Commercial Credit > Corporate Finance > Development Banking > Foreign Currency Banking Unit (FCBU)
FINANCING SPOT CONTRACT
INTERNATIONAL TRADE
ELECTRONIC BANKING
REPO & REVERSE REPO
TREASURY BILLS
TREASURY BONDS
> Trade Services > Correspondent Banks
> Export House
> Sampath Vishwa Corporate > Sampath Payment Gateway > Sampath Corporate Payment System (SCPS)
Ladies 1st by Sampath
Bank, an account for women
promising more freedom,
convenience and advantages.
“My Bank” was introduced to provide
a convenient banking solution in rural
and suburban areas. This unique
system redefines convenience in
banking and inculcates the habit
of saving, by integrating the basic
principles of banking into their
lifestyles, in their familiar territories.
1st Bank in Sri Lanka to launch
Visa payWave enabled Credit &
Debit Cards and the merchant
network.
16 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD OF DIRECTORS
1. MR CHANNA PALANSURIYA Chairman
2. MR NANDA FERNANDO Managing Director
3. PROF MALIK RANASINGHE Deputy Chairman
4. MR SANJIVA SENANAYAKE Senior Director /
Non Executive Director
5. MR DEEPAL SOORIYAARACHCHI Non Executive Director
6. MRS DHARA WIJAYATILAKE Non Executive Director
1
3 4
5 6
2
INTRODUCTORY INFORMATION
17
7. MISS ANNIKA SENANAYAKE Non Executive Director
8. MR DESHAL DE MEL Non Executive Director
9. MR RANIL PATHIRANA Non Executive Director
10. MRS SAUMYA AMARASEKERA Non Executive Director
11. MR RANJITH SAMARANAYAKE Group Finance Director
12. MRS ANUJA GOONETILLEKE Company Secretary
11
10
87
9
12
18 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD OF DIRECTORS
MR CHANNA PALANSURIYA
Chairman
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Earned Masters of Business
Administration from Open University
of Malaysia and has gained over thirty
years of extensive experience in the
Apparel sector by heading the Orit
Group of companies and through
continuous leadership given to other
companies in the Apparel Industry.
Further, being a Board member of
the BOI for ten years, he gained
wide experience in Government
Administration. He has won awards
such as Asia Pacific Outstanding
Entrepreneurship Award in 2013,
Sri Lankan Entrepreneur of the Year
in 2002 and the Silver Award of the
National Chamber of Exporters of
Sri Lanka for the Garment Extra Large
category in 2004.
APPOINTED TO THE BOARD:
1st January 2012 as a Non Independent
Non Executive Director. Appointed as
Deputy Chairman on 26th January 2012,
and held office as a Board member until
12th November 2015. Re-appointed
to the Board on 28th April 2016 and
appointed as Chairman on 1st August
2016.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Strategic Planning
Committee. Member of Human
Resources and Remuneration
Committee, Board Nomination
Committee, Board Credit Committee
and Board Marketing Committee.
CURRENT APPOINTMENTS:
Chairman of Sampath Bank PLC,
Chairman of Style Kraft Sportware
(Pvt) Ltd, Deputy Chairman of National
Livestock Development Board, Director
of Siyapatha Finance PLC, Director
of Orit Apparels Lanka (Pvt) Ltd and
Orit Trading Lanka (Pvt) Ltd, Executive
Committee Member of Joint Apparel
Association Forum (JAAF), Executive
Committee Member of Sri Lanka Apparel
Exporters’ Association, Executive
Committee Member of Sri Lanka Apparel
Sourcing Association (SLASA).
FORMER APPOINTMENTS:
Chairman of Orit Apparels Lanka (Pvt)
Ltd, Chairman of Orit Trading (Pvt)
Ltd, Deputy Chairman of Sampath
Bank PLC, Chairman of Siyapatha
Finance PLC, Board Member of Sri
Lanka Institute of Textile and Apparel,
Chairman of Apparel Exporter’s
Association 200gfp during 2006-2008,
Chairman of CG Lanka Clothing (Pvt)
Ltd till 2013 and Board Member of
Board of Investment of Sri Lanka from
2005 to January 2015.
MR NANDA FERNANDO
Managing Director
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Over 35 years of experience in banking
and finance, driving multiple aspects
of banking business, Transactional
Banking in Retail and Corporate
Banking, among many other key growth
areas. He is an Associate member and
a Senior Fellow member of Institute
of Bankers of Sri Lanka and holds a
Masters of Business Administration
specialized in Marketing from Sikkim
Manipal University, India. He is also
a qualified Four Bead Leader Trainer
and functions as the Group Advisor to
the Group Committee of S. Thomas’
College, Mount Lavinia.
APPOINTED TO THE BOARD:
13th September 2016 as an Executive
Director.
MEMBERSHIP IN BOARD SUB
COMMITTEES:
Member of Board Integrated Risk
Management Committee, Board
Credit Committee, Board Shareholder
Relations Committee, Board Strategic
Planning Committee and Board
Treasury Committee.
CURRENT APPOINTMENTS:
Managing Director of Sampath Bank
PLC, Director of SC Securities (Pvt) Ltd,
Lanka Financial Services Bureau Ltd,
and a Governing Board Director of the
Institute of Bankers of Sri Lanka.
FORMER APPOINTMENTS:
Chairman of Bankers‘ Technical
Advisory Committee, which functions
under the purview of Sri Lanka
Banks’ Association and a past District
Commissioner of the Sri Lanka Scout
Association.
PROF MALIK RANASINGHE
Deputy Chairman
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Extensive governance experience
as a former Vice-Chancellor and
Non Executive Director on Corporate
Boards. A Fellow Member, Chartered
Engineer and International Professional
Engineer of the Institution of Engineers
Sri Lanka, Fellow of the National
Academy of Sciences Sri Lanka and
the Institute of Project Managers, Sri
Lanka, PhD from University of British
Columbia, Vancouver, Canada in Civil
Engineering Economics as a Canadian
Commonwealth Scholar; recipient of
accolades and awards including the
1999 General Research Committee
Award for outstanding Contribution
to Sri Lankan Science from the Sri
Lanka Association for Advancement
of Science, the Committee of Vice-
Chancellors and Directors (CVCD)
Excellence Award for 2012 for the
G4 -38,39
INTRODUCTORY INFORMATION
19Most Outstanding Senior Researcher
in Technology and related Sciences,
the Award for Outstanding Contribution
to Education 2012 at World Education
Congress and the Education
Leadership Award 2013 in Singapore.
APPOINTED TO THE BOARD:
30th August 2011 as an Independent
Non Executive Director. Appointed as
Deputy Chairman on 1st August 2016.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Credit Committee
and Board Shareholder Relations
Committee. Member of Board Audit
Committee, Board Related Party
Transactions Review Committee, Board
Strategic Planning Committee and
Board Treasury Committee.
CURRENT APPOINTMENTS:
Deputy Chairman of Sampath
Bank PLC, Senior Professor in Civil
Engineering, University of Moratuwa,
Member of University Grants
Commission, Independent Non
Executive Director of Textured Jersey
Lanka PLC, Access Engineering PLC,
United Motors Lanka PLC and Resus
Energy PLC.
FORMER APPOINTMENTS:
Vice Chancellor of the University of
Moratuwa, Chairman of the Committee
of Vice Chancellors and Directors
of Sri Lanka, Council Member of
the Association of Commonwealth
Universities, Fellow of the National
University of Singapore, Independent
Non Executive Director of the Colombo
Stock Exchange, Lanka IOC PLC,
Hemas Power PLC.
MR SANJIVA SENANAYAKE
Senior Director
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Extensive local and overseas
experience in the financial services
sector having served in the senior
management capacities at premier
financial institutions and as an
independent consultant. Holds Master
of Science and Bachelor of Science
Degrees in Engineering from University
of London.
APPOINTED TO THE BOARD:
1st January 2012 as an Independent
Non Executive Director and appointed
as Senior Director on 26th January
2012.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Integrated Risk
Management Committee and Board
Treasury Committee. Member of Board
Nomination Committee and Board
Related Party Transactions Review
Committee.
CURRENT APPOINTMENTS:
Senior Director of Sampath Bank
PLC, Non Executive Director of Asian
Hotels & Properties PLC, Hemas
Pharmaceuticals (Pvt) Ltd.
FORMER APPOINTMENTS:
Group Resident Representative for Sri
Lanka and Maldives of International
Finance Corporation (IFC) – The private
sector investment arm of World Bank,
Senior Investment Officer - Global
Financial Markets (West Africa),
Assistant General Manager (Treasury
and Investment Banking) of National
Development Bank PLC, Consultant
(Treasury and Business Development)
of Commercial Bank of Ceylon PLC,
Citibank: Senior Risk Manager -
Sydney, Australia, Head of Treasury
and Investment Banking Brunei, various
positions including Treasurer and Head
of Public Sector Business at Citibank
Colombo.
MR DEEPAL
SOORIYAARACHCHI
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Counts over 30 years’ experience in
Sales, Advertising, Marketing, Human
Resources Development & Strategy
with extensive experience in the field
of insurance. Fellow member of the
Chartered Institute of Marketing UK and
a Chartered Marketer. Holds a Masters
of Business Administration from the
University of Sri Jayewardenepura.
Pioneer in disseminating Management
knowledge in Sinhala Language.
A Leading management development
consultant and author.
APPOINTED TO THE BOARD:
5th August 2010 as an Independent
Non Executive Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Human Resources
& Remuneration Committee. Member
of Board Audit Committee, Board
Integrated Risk Management
Committee, Board Related Party
Transaction Review Committee, Board
Shareholder Relations Committee and
Board Marketing Committee.
CURRENT APPOINTMENTS:
Independent Non Executive Director
of Sampath Bank PLC, Independent
Non Executive Director of AIA
Insurance Lanka PLC, Pan Asian Power
PLC, Singer Sri Lanka PLC, Hemas
Manufacturing (Pvt) Ltd.
FORMER APPOINTMENTS:
Past President of Sri Lanka Institute of
Marketing, Managing Director Aviva
NDB Insurance PLC, Commissioner -
Sri Lanka Inventors’ Commission,
Consulting Partner - RBL Group USA.
20 SAMPATH BANK PLC
ANNUAL REPORT 2016
MRS DHARA WIJAYATILAKE
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Attorney-at-Law, LLB (Cey), Retired
from the Public Service of Sri Lanka in
August 2015, after 41 years of service.
The first lady in Sri Lanka to hold
the post of a Secretary to a Cabinet
Ministry.
APPOINTED TO THE BOARD:
30th August 2011 as an Independent
Non Executive Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairperson of Board Related Party
Transactions Review Committee.
Member of Board Audit Committee,
Board Nomination Committee, Board
Human Resource and Remuneration
Committee, Board Strategic Planning
Committee and Board Credit
Committee.
CURRENT APPOINTMENTS:
Independent Non Executive Director
of Sampath Bank PLC, Member of the
Public Service Commission, CEO of
The Ceylon Chamber of Commerce,
Member of the Sri Lanka Law
Commission.
FORMER APPOINTMENTS:
Secretary to the Ministry of Justice,
Secretary to the Ministry of Plan
Implementation, Secretary to the
Ministry of Technology and Research,
Advisor to Minister of Higher Education
and Research.
MISS ANNIKA SENANAYAKE
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Bachelor of Arts in Management
Studies from the University of
Nottingham. Heads Corporate
Planning for the IWS Holdings Group,
in diversified business interests in
telecommunication, shipping, media
& broadcast, automobiles, aviation,
warehousing, food & beverage
processing and packaging.
APPOINTED TO THE BOARD:
1st January 2012 as an Independent
Non Executive Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairperson of the Board Nomination
Committee, Member of Board Human
Resources & Remuneration Committee,
Board Integrated Risk Management
Committee, Board Strategic Planning
Committee, Board Marketing
Committee and Board Treasury
Committee.
CURRENT APPOINTMENTS:
Independent Non Executive Director
of Sampath Bank PLC, Director of IWS
Holdings (Pvt) Limited and IWS Leisure
(Pvt) Limited, Director of APL Lanka
(Private) Limited, RAD Productions
(Private) Limited. Trustee - Youth
Business Sri Lanka, Ceylon Chamber of
Commerce.
MR DESHAL DE MEL
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Master of Science Degree in
International Political Economics from
the London School of Economics,
Bachelor of Arts Degree with Honours
in Philosophy, Political Science and
Economics from University of Oxford.
APPOINTED TO THE BOARD:
1st January 2012 as a Non
Independent Non Executive Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Marketing
Committee, Member of Board Human
Resources & Remuneration Committee,
Board Credit Committee, Board
Strategic Planning Committee, Board
Shareholder Relations Committee and
Board Treasury Committee.
CURRENT APPOINTMENTS:
Non Executive Director of Sampath
Bank PLC, Senior Economist, Hayleys
PLC, Member of the Board of Directors
of Centre for Poverty Analysis, Member
of Economic Policy Committee of the
Ceylon Chamber of Commerce and
Director of SC Securities (Pvt) Ltd.
FORMER APPOINTMENTS:
Economist, Institute of Policy Studies,
Sri Lanka.
BOARD OF DIRECTORS
INTRODUCTORY INFORMATION
21MR RANIL PATHIRANA
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Extensive experience in finance and
management in financial, apparel and
energy sectors. Fellow member of the
Chartered Institute of Management
Accountants, UK (FCMA) and holds a
Bachelor of Commerce degree from the
University of Sri Jayewardenepura.
APPOINTED TO THE BOARD:
1st January 2012 as a Non Executive
Director. Became an Independent Non
Executive Director on 31st January
2015.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Chairman of Board Audit Committee,
Member of Board Integrated Risk
Management Committee and Board
Strategic Planning Committee.
CURRENT APPOINTMENTS:
Independent Non Executive Director
of Sampath Bank PLC, Group Finance
Director - Hirdaramani Group of
Companies, Non Executive Director
of Windforce (Pvt) Ltd, Esna Power
(Pvt) Ltd, Star Packaging (Pvt) Ltd,
Alumex (Pvt) Ltd, Odel PLC, Taprobane
Holdings PLC and Ceylon Hotels
Corporation Ltd.
FORMER APPOINTMENTS:
Chief Executive Officer of Vanik
Bangladesh Securities; AVP of Vanik
Incorporation, Director of Hayleys
MGT Knitting PLC, Hayleys PLC and
Nirmalapura Windpower (Pvt) Ltd.
MRS SAUMYA
AMARASEKERA
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Counts over 29 years in active legal
practice in Civil Law, practicing in the
Original, Appellate & Supreme Courts
as an Attorney-at-Law. Holds a Masters
degree in Law from the University of
Pennsylvania with particular emphasis
on Insurance Law, Privacy and
Defamation Law. Has experience in
areas relating to Property, Testamentary,
Condominium Disputes, Trusts, Family
Law, and Money Recovery. Also
litigates on behalf of financial services
sector clients and has specialised in
local and international arbitrations.
APPOINTED TO THE BOARD:
1st June 2012 as a Non Independent
Non Executive Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Member of Board Nomination
Committee, Board Human Resource
and Remuneration Committee,
Board Integrated Risk Management
Committee and Board Marketing
Committee.
CURRENT APPOINTMENTS:
Non Executive Director of Sampath
Bank PLC, Legal practitioner, Member
of the Bar Association of Sri Lanka.
Director of Manson Investments (Pvt)
Ltd.
MR RANJITH
SAMARANAYAKE
Group Finance Director
QUALIFICATIONS, SKILLS &
EXPERIENCE:
Extensive experience as Head of
Finance & Planning at National Savings
Bank, Commercial Bank of Ceylon
PLC and Sampath Bank PLC. Counts
over 40 years’ experience of managing
finance in the financial services sector.
Holds a Bachelor of Commerce
(Accountancy Special) Degree from the
University of Peradeniya.
APPOINTED TO THE BOARD:
1st January 2009 as an Executive
Director.
MEMBERSHIP OF BOARD SUB
COMMITTEES:
Member of Board Integrated Risk
Management Committee, Board
Related Party Transactions Review
Committee, Board Credit Committee,
Board Strategic Planning Committee
and Board Treasury Committee.
CURRENT APPOINTMENTS:
Executive Director/Group Finance
Director of Sampath Bank PLC,
Director Siyapatha Finance PLC and
Sampath Information Technology
Solutions Ltd.
FORMER APPOINTMENTS:
Senior Deputy General Manager,
Finance & Planning at Commercial
Bank PLC, Group Chief Financial
Officer at Sampath Bank PLC.
22 SAMPATH BANK PLC
ANNUAL REPORT 2016
CORPORATE MANAGEMENT
31 2
64 5
97 8
1. MR NANDA FERNANDO Managing Director
2. MR RANJITH SAMARANAYAKE Group Finance Director
3. MR THARAKA RANWALA Senior Deputy General Manager -
Consumer Banking
4. MRS SHASHI JASSIM Senior Deputy General Manager -
Corporate Banking
5. MR ARUNA JAYASEKERA Group Chief Human Resource Officer
6. MR AJANTHA DE VAS GUNASEKARA Chief Financial Officer
7. MR DINUSHA IHALALANDA Deputy General Manager -
Operations
8. MR PRADEEP PERERA Head of Internal Audit
9. MR MANOJ AKMEEMANA Deputy General Manager -
Branch Banking
INTRODUCTORY INFORMATION
23
1210 11
1816 17
1513 14
10. MR AJITH SALGADO Head of Information Technology
11. MRS AYODHYA IDDAWELA PERERA Deputy General Manager -
Corporate Banking
12. MRS ANUJA GOONETILLEKE Company Secretary
13. MR RAJENDRA RANASINGHE Assistant General Manager -
New IT Business Development
14. MR PUNUNUWAN WICKREMASEKERA Chief Legal Officer
15. MR SANATH ABHAYARATNE Assistant General Manager - Global
Business
16. MR SANJAYA GUNAWARDENA Assistant General Manager -
Strategic Planning & Research
17. MR MAHEEL KURAGAMA Assistant General Manager -
Operations
18. MR H B KEERTHIRATHNA Assistant General Manager -
Finance
24 SAMPATH BANK PLC
ANNUAL REPORT 2016
19 20
21 22
19. MR AMAL KIRIHENE Assistant General Manager -
Branch Banking
20. MR THUSITHA NAKANDALA Assistant General Manager -
Branch Banking
21. MR PRASANTHA DE SILVA Assistant General Manager -
Treasury
22. MS NADI B DHARMASIRI Head of Marketing
CORPORATE MANAGEMENT
INTRODUCTORY INFORMATION
25
31 2
97 8
64 5
1. MR DUSHYANTHA DASSANAYAKA Chief Manager -
Electronic Delivery Channels
2. MR ASOKA MANIKGODA Chief Manager -
Recoveries
3. MR ANANDA WIJITHA Chief Manager -
IT (EDP)
4. MR SISIRA DABARE Chief Manager -
Branch Banking
5. MR SAMAN DE SILVA Chief Manager -
Branch Banking
6. MRS ACHALA WICKRAMARATNE Chief Manager -
Card Centre
7. MR HEMANTHA MARASINGHE Chief Manager -
Administration
8. MR LALITH WERAGODA Chief Manager -
Human Resources
9. MR PRIAM KASTURIRATNA Group Risk Officer
CHIEF MANAGERS
26 SAMPATH BANK PLC
ANNUAL REPORT 2016
CHIEF MANAGERS
1210 11
1513 14
1816 17
10. MR CHATURA RUDESH Chief Manager - Trade Services &
International Operations
11. MR NALAKA GUNAWARDENA Chief Manager - System Audit
12. MR PRASANNA MULLEGAMA Chief Manager - Branch Banking
13. MR JANAKA JAYASURIYA Chief Manager -
City & Commercial Credit
14. MRS KUMARI JAYASURIYA Chief Manager - Branch Banking
15. MR PASAN MANUKITH Chief Manager - IT Systems
Development
16. MR DEEPAL DE SILVA Chief Manager - Branch Banking
17. MR HALIN HETTIGODA Chief Manager - Network Service
Centre
18. MS DULSIRI JAYASINGHE Chief Manager - Corporate Finance
INTRODUCTORY INFORMATION
27
2119 20
2725 26
2422 23
19. MR LASANTHA SENARATNE Group Compliance Officer
20. MRS ALOKA EKANAYAKE Chief Manager - FCBU
21. MR SUMIE MITHRAPALA Chief Manager -
Branch Banking
22. MR SENAKA HEWAVITHARANA Chief Manager - Legal
23. MRS CHAMPIKA NANAYAKKARA Chief Manager -
Corporate Credit
24. MR SHIRAN KOSSINNA Chief Manager -
Branch Banking
25. MR KASUN FERNANDO Chief Manager -
Branch Banking
26. MR UDARA SURAWEERA Chief Manager - Operations & Business
Process Re-engineering
27. MR KUSAL DE SILVA Chief Manager -
E-Remittance & Bank Notes Operations
28 SAMPATH BANK PLC
ANNUAL REPORT 2016
SENIOR MANAGERS
31 2
64 5
97 8
1. MR PRASADA GOONERATNE Senior Manager -
Database Administration
2. MR LAKMAL MUNASINGHE Senior Regional Manager
3. MR KASUN RATNAYAKE Senior Regional Manager
4. MR JANAKA KARUNARATNE Senior Regional Manager
5. MR THUSHANTHA SUMITHRAARACHCHI Senior Manager -
Systems & Procedures
6. MR CHINTHAKE DE SILVA Senior Regional Manager
7. MR KESHAN DABARE Senior Manager -
Lending Products
8. MR MADHUPRIYA DISSANAYAKE Senior Regional Manager
9. MR PRABODHA COORAY Senior Regional Manager
INTRODUCTORY INFORMATION
29
1210 11
1816
1513 14
10. MRS NAYANA JAYASENA Senior Manager -
IT System Development
11. MR BHARANA JAYAWARDENA Senior Regional Manager
12. MRS MANOJI HETTIGODA Senior Manager -
Trade Services
13. MR SUDATH ILLEPERUMA Senior Regional Manager
14. MR AMILA THEWARAPPERUMA Senior Manager -
Special Projects
15. MR MANJULA SENEVIRATNE Senior Manager -
Bancassurance
16. MR PRIYANKA DE SILVA Senior Manager -
Borella Branch
17. MRS PIYAMI COORAY Senior Manager -
Corporate Credit
18. MR CHAMINDA JAYASINGHE Senior Manager -
Card Centre Operations
17
30 SAMPATH BANK PLC
ANNUAL REPORT 2016
2119 20
2422 23
2725 26
19. MRS MUDITHA LIYANAPATHIRANA Senior Regional Manager
20. MR MANJULA ABEYSUNDARA Senior Manager -
Old Moor Street Branch
21. MR ANURA JAYAKODY Senior Manager -
Network Service Centre
22. MR ASANTHA PUNCHIHEWA Senior Manager -
Development Banking
23. MR ROHANA ALUTHGEDARA Senior Manager -
Central Processing Unit
24. MR VIPULA KURUPPUARACHCHI Senior Regional Manager
25. MR KITHSIRI DODAMGODA Senior Regional Manager
26. MR JANAKA MOHOTTY Senior Regional Manager
27. MR DARSHIN PATHINAYAKE Senior Manager -
Card Centre Marketing
SENIOR MANAGERS
INTRODUCTORY INFORMATION
[ MANAGING OUR BUSINESS ]Read the Executive Reports, analyse our Business Model and learn
how we assess our performance against several key indicators.
IMAGINSIGHT
Chairman’s Message 32
Managing Director’s Review 38
Green Recognition 44
Sustainability Framework 45
Stakeholder Engagement 46
Business Model 50
Materiality Assessment 52
32 SAMPATH BANK PLC
ANNUAL REPORT 2016
CHANNA PALANSURIYA Chairman
A COMPELLING THOUGHT, A STUBBORN BELIEFCHAIRMAN’S MESSAGE
ANSURIYA
S MESSAGE
MANAGING OUR BUSINESS
33Having taken over as Chairman of
Sampath Bank PLC in 01st August
2016, it gives me great pleasure to
announce that the Bank once again
exceeded all expectations, delivering
exceptional results for the year under
review. I believe this was also the result
of our ongoing commitment to position
Sampath Bank as a future-friendly
bank, a stance we adopted in the
previous year.
Before I touch on our efforts for 2016,
I would like to take this opportunity to
welcome Mr Nanda Fernando, who took
over as Managing Director of Sampath
Bank with effect from 13th September
2016. I look forward to working together
with Mr Fernando, who as a seasoned
banker with a vast knowledge and
years of experience has the drive to
steer the Bank towards its next big
growth phase in the years ahead.
Moving on to our performance for the
year, our topline reached Rs 67.6 Bn, up
by 43.7% from the Rs 47.0 Bn registered
in 2015. The bottom line rose by 48.8%,
from Rs 6.1 Bn in 2015 to Rs 9.1 Bn for
2016. While this speaks volumes for
our well-articulated strategies, it also
points to the visionary leadership of my
predecessor Mr Dhammika Perera, our
outgoing Managing Director
Mr Aravinda Perera, the commitment of
the Board of Directors and corporate
management and the passion of our
3,960 strong team of employees, who
continually drive the Bank’s success.
MOVING ON TO OUR PERFORMANCE FOR THE YEAR, OUR TOPLINE REACHED RS 67.6 BN, UP BY 43.7% FROM THE RS 47.0 BN REGISTERED IN 2015. THE BOTTOM LINE ROSE BY 48.8%, FROM RS 6.1 BN IN 2015 TO RS 9.1 BN FOR 2016
Total Assets grew by
25.4%to Rs 659 Bn
Dividend per Share grew by
44.2%to Rs 18.75
Earnings per Share grew by
48.8%to Rs 51.56
GROSS INCOME (Rs Mn)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2014
2013
2015
2016
67
,58
5
47
,03
2
44
,59
7
47
,50
9
PROFIT AFTER TAX(Rs Mn)
0
2,000
4,000
6,000
8,000
10,000
2014
2013
2015
2016
9,1
25
6,1
34
4,9
14
3,4
30
G4 -01,02
34 SAMPATH BANK PLC
ANNUAL REPORT 2016
The Bank acquired the remaining
2.86% of Sampath Centre Ltd, making
all Group companies fully owned
subsidiaries as at 31st December 2016.
There is also much more to be proud
of; our business is based on strong
fundamentals which, for the past
three decades have helped Sampath
Bank to serve the people of Sri Lanka.
Today we are ranked as one of the top
three private commercial banks in the
country, despite stiff competition. We
remain a strong, well-capitalized bank
built on a foundation of integrity, trust,
and ethical behaviour across all our
business activities, and thanks to our
iconic brand and unique footprint, we
have earned a reputation as agents of
change for a more progressive nation.
MACRO-ECONOMIC
OUTLOOK
From a macro-economic perspective,
I am happy to note that Sri Lanka
remains well positioned as an emerging
economy, ahead of many of its peers in
the South Asian region. Although initial
signs appeared to suggest a slowdown
in 2016, the country’s economy
tabled a resilient performance,
having weathered the negative global
headwinds that took a toll on the
economy causing a drop in exports and
remittances in the wake of falling oil
prices.
Despite a contraction in exports, GDP
growth is expected to reach 4.5%
by end 2016, buttressed by a strong
expansion in both manufacturing and
service sectors together with a steady
increase in tourist arrivals throughout
the year. Inflation is predicted to remain
intact at mid-single digit levels for the
fourth consecutive year, while
per-capita income reached USD 3,870
all clear signs that Sri Lanka is on track
to reach its goal of becoming a middle
income economy by 2020.
is the marrying of our corporate goals
with the aspirations of our stakeholders,
which prompted us to leverage on four
key pivots; strengthen topline, enhance
digital capability, boost core capital and
expand bottom line.
To grow the topline in 2016, we
continued to orient ourselves more
consistently toward both retail and
corporate customers in all core
markets.
At the same time, to strengthen our
roots as a commercial bank, we
adopted a two-pronged approach;
firstly to increase our penetration and
capture market share in selected retail
segments. And secondly to be the
first-mover to promote unique, as well
as structured solutions to capture the
corporate segment. At the same time,
we looked to grow our outreach beyond
Sri Lanka by expanding our offshore
operations across the region, as part of
our medium term growth objectives.
CHAIRMAN’S MESSAGE
Further, I remain optimistic about the
wider implications of the tight monetary
controls and ongoing key policy
reforms imposed by the Government.
I believe, these will pave the way for
much needed fiscal consolidation and
greater economic stability in the years
to come.
STRATEGIC IMPERATIVES
FOR 2016
As a top-tier bank in Sri Lanka, we
have always taken a proactive stance
towards improving our strategic
alignment to drive stronger growth
and deliver the greatest impact on
stakeholder value.
In the year under review, we embraced
a broader performance-driven strategy
to transform all key business pillars and
support services, and to sharpen their
alignment with our vision to “be the
growing force in Sri Lankan financial
services”. At the heart of our strategy
GDP GROWTH (%)
0
1
2
3
4
5
62014
2013
2015
2016
3.4
4.9
4.84.5
MARKET SHARE OF THE BANK (%)
6.0
6.5
7.0
7.5
8.0
8.5
9.0
2014
2013
2015
2016
Market Share - DepositsMarket Share - Loans
7.9
8.0
8.28.4
7.3 7.3
7.6
8.0
MANAGING OUR BUSINESS
35Hand-in-hand with this volume-
driven strategy we enhanced
digital capabilities, for which our IT
transformation programme became
the key enabler. Underpinning our
capacity to continuously develop
competitive digital products, services
and channels, our IT transformation
programme also spearheads our
efforts to differentiate ourselves from
peers. Further, investments in digital
technology were aimed at enhancing
customer service, augmenting the risk
management framework and improving
employee productivity.
Equally important to our long-term
success is our cost structure. Ongoing
cost control efforts in 2016 were aimed
at reducing our cost-to-income ratio,
which, combined with topline growth,
were instrumental in meeting bottom
line targets for the year.
strengthens the Bank’s Tier II capital by
1.21% as at 31st December 2016.
EMBRACING INNOVATION
Innovation has, is and will always be
the cornerstone of our success. It
supports our efforts to build tangible
and intangible infrastructure and to
integrate relevant economic, social and
environmental issues into our strategic
planning process and articulate them
through our day-to-day operations.
In doing so, we have leveraged on
innovation to build a fully integrated
multi-channel banking system
that combines traditional and
digital channels, giving rise to an
unprecedented level of customer
convenience.
Innovation has helped us to simplify
our procedures, reduce organizational
layers and delegate more decision-
making powers to our branches,
enabling us to respond to customers’
needs faster than ever before.
Meanwhile, amidst the growing risk
of cyber security threats, we have
begun to rely on innovation to preserve
customer privacy and data security as
well.
Furthermore, our desire to innovate has
led us to explore new ways in which
to promote greater financial inclusion
in Sri Lanka, prompting the launch of
the “My Bank” mechanism in January
2016. A first for Sri Lanka, “My Bank”
is a revolutionary new agent-assisted
banking concept geared to reach
the vast numbers of unbanked and
under-banked rural masses across the
country.
Innovation also drives our efforts to
make Sampath Bank an inspiring place
to work and develop a talent pipeline
that will drive future corporate ambition.
Thanks to innovation our employees
now have a deeper understanding of
the Bank’s strategy. This has paved
the way for a more productive work
culture, that relies on delegated
authority, effective decision-making
and greater accountability at all levels
of the business. The new team-based
performance incentive scheme
implemented in 2016 is just one
example of how innovation is improving
the sustainability of our workforce.
BECOMING A MORE
SUSTAINABLE BANK
While presenting ourselves as a
future-friendly bank is a key priority,
our reputation as a sustainable bank
is also important to us. In positioning
ourselves as such, we strive to
demonstrate beyond question that
we are conducting our business in
a sustainable way and generating
greater prosperity for our customers,
employees and the communities in
which we live and work.
For us, this means contributing to real
economic growth by making financial
services accessible to individuals
and businesses, helping communities
to grow together with the Bank and
finding solutions to address the socio-
economic challenges of our country.
We have always understood that
supporting our ambitious plans will
most certainly depend how well we
manage our capital requirements
now and in the future. Based on
this premise, we raised Rs 6 Bn
through an unsecured, subordinated
and redeemable debenture, which
WE HAVE ALWAYS UNDERSTOOD THAT SUPPORTING OUR AMBITIOUS PLANS WILL MOST CERTAINLY DEPEND HOW WELL WE MANAGE OUR CAPITAL REQUIREMENTS NOW AND IN THE FUTURE
DIVIDEND PAYOUT RATIO(%)
20
25
30
35
40
45
50
2014
2013
2015
2016
39.1
37.6
36.5
36.8
36 SAMPATH BANK PLC
ANNUAL REPORT 2016
We remain firm in our commitment to
control our impact on the environment
and sharpen our community investment
goals to address socio-economic
issues raised at a national level.
Demonstrating our commitment to
the concept of shared growth we
have integrated such concerns into
our business model. Our citizenship
activities focus specifically on health,
education, community infrastructure
and livelihood development; all areas
that have been featured in the UNDP’s
Millennium Development Goals and
the 2030 agenda for Sustainable
Development for Sri Lanka. In 2016
we invested over Rs 29 Mn centred on
three key themes – empowerment of the
community, education for development
and entrepreneur development.
STRONG GOVERNANCE
Our Corporate Governance framework
is central to our efforts to build a 21st
century bank. Effective corporate
governance remains fundamental to our
success and provides proper oversight
and accountability, strengthens internal
and external relationships, builds trust
and safeguards the long-term interests
of all our stakeholders, thus enabling
us to live our values through everything
we do.
Further, we continue to make every
effort to subscribe to global best
practices for Corporate Governance.
For example, we have not restricted
ourselves to the number of sub
committees stipulated by the Central
Bank of Sri Lanka (CBSL) and the
Colombo Stock Exchange (CSE), but
exercise considerable flexibility in
establishing additional sub committees
to provide oversight for new concerns
that may arise as our business grows.
This places Sampath Bank on par with
governance practices followed by
many international banks around the
world.
PROGRESSIVE VALUE
Following through on our promise of
shared growth, a cash dividend of
Rs 4.75 per share has been proposed
for 2016, subject to the approval of the
shareholders at the upcoming AGM
on 31st March 2017. The Board also
declared an interim scrip dividend of
Rs 14.00 per share, which is subject to
the approval of shareholders at the EGM
to be held on 28th February 2017.Thus,
the total dividend per share declared for
the year 2016 amounted to Rs 18.75 as
compared to Rs 13.00 in 2015.
By using the dividend-pay-out ratio
as our yardstick to determine annual
dividend, we have been tabling a year-
on-year increase in dividend per share
for the past 3 consecutive years.
RECOGNITION FOR OUR
ACHIEVEMENTS
In 2016, Sampath Bank received
several accolades too numerous
to mention here. However, I wish to
name a few that showcase how we
are excelling in every aspect of our
business.
“Best Bank in Sri Lanka 2016”
- awarded to Sampath Bank
by the prestigious Business
Magazine “The Euromoney”,
at the “Euromoney Awards for
Excellence 2016”. This award
recognizes the top performing
Award for the “Best Bank in Sri Lanka
- 2016” from the prestigious Business
Magazine “The Euromoney”
Best Corporate Citizen Sustainability
Award from the Ceylon Chamber of
Commerce
CHAIRMAN’S MESSAGE
MANAGING OUR BUSINESS
37financial institutions in the world,
based on stringent selection
criteria to evaluate both
quantitative and qualitative
aspects of the business.
National HR Excellence Awards
2016 - Sampath Bank received
the Gold award.
Sampath Bank was recognized
among the Ten Best Corporate
Citizens at the Best Corporate
Citizen Sustainability Awards
Ceremony 2016, organized
by the Ceylon Chamber of
Commerce.
FUTURE OUTLOOK
Moving forward, we have mapped out
our strategies to catalyze our growth
for the next 3 years. We will however,
continue maintaining a degree of
flexibility that will allow us to re-orient
our strategic focus in response to
the changes in the macro-economic
climate in the medium term.
Regardless, the overarching emphasis
would be to maintain our growth
momentum, both in terms of the top
line as well as the bottom line and to
become an even stronger financial
entity in the future. Cognizant of this
goal, the Bank will also actively pursue
organic growth opportunities both
locally as well as in the region.
From a sustainability perspective, I
firmly believe that a combination of
our focused strategy and diversified
business model will spearhead long-
term value for our stakeholders. Having
set ambitious goals for the future,
we will strive to become the best-
rated bank for quality of service. This
would require as a priority, substantial
investments in developing our people
to enhance their capacity as agents of
change for the Bank’s future.
Further, we also intend to lead our
industry in multichannel offerings
– particularly in digital banking. To
achieve this, we will continue to invest
in new technology over the next
three years to further develop our
digital platform, even as our digital
transformation journey continues to
build capabilities and enhance the
sustainability of our business in the
years ahead.
APPRECIATIONS
On behalf of Sampath Bank PLC, I
wish to extend our gratitude to our
customers, who have made us what we
are today. Your support has inspired us
to strive for even greater heights in the
years ahead.
I also take this opportunity to express
my sincere appreciation to the outgoing
Chairman, Mr Dhammika Perera, for
his invaluable contribution to Sampath
Bank during his tenure as Chairman
for the past 5 years. His wisdom and
business acumen set the Bank on its
accelerated growth path, which will
no doubt pave the way for exponential
growth in the coming years.
I would also like to extend a special
word of thanks to Mr Aravinda Perera,
who retired from his post as Managing
Director in September 2016. Mr Perera’s
retirement comes after 29 years of loyal
service to the Bank, including 5 years
as Managing Director, where he led
from the front to steer the Bank to new
heights of corporate success.
At the same time, I also wish to thank
my colleagues on the Board for their
enthusiastic participation and inputs in
all Board matters.
I wish to thank Team Sampath,
unquestionably our most valuable
asset. The Board joins me in
applauding the efforts of the corporate
management, senior management and
all our employees for their unwavering
commitment to fulfill our strategic
purpose and deliver value to our
stakeholders.
I would also like to acknowledge the
Central Bank of Sri Lanka for their
support and guidance throughout 2016.
Finally, I wish to thank our shareholders
for their patronage, as well as for the
trust and confidence placed in us. I rely
on your continued support to help us
realise our vision as “The growing force
in Sri Lankan financial services”.
CHANNA PALANSURIYA
Chairman
Colombo, Sri Lanka
13th February 2017
38 SAMPATH BANK PLC
ANNUAL REPORT 2016
NANDA FERNANDO Managing Director
ANOTHER GOOD YEAR WHERE WE MADE STEADY PROGRESS IN ACHIEVING OUR GOALS BUOYED BY ROBUST PERFORMANCE IN THE BANKING INDUSTRY
MANAGING OUR BUSINESS
39
Profit After Tax grew by
48.8%to Rs 9.1 Bn
Cost to Income Ratio reduced by
9.3%to 47.8%
ROA grew by
21.1%to 1.6%
Setting out to rewrite the annals of Sri
Lanka’s banking industry, Sampath
Bank has, for nearly three decades
been breaking new grounds and
challenging stereotypes in the local
banking industry.
As I look back to the early years, a time
when the local industry was stagnating
under the burden of archaic banking
practices, I note with much satisfaction
that Sampath Bank’s legacy of firsts has
played a pivotal role in bringing forth a
new banking paradigm in the country.
To name a few; in 1987 we were the
first to announce daily banking hours
until 3.00 pm, when competitors were
closing their doors by 1.30 pm each
day. We also revolutionized the industry
by doing away with the traditional
banking model and pioneering in
its place, the uni-banking concept,
which facilitates seamless connectivity
between branches, allowing the
customer to bank at any branch across
the country. Continuing to break new
frontiers in technology and innovation,
Sampath Bank was the first local bank
to change the cash access platform
with the roll out of a round-the-clock
ATM network in 1988.
While these milestones have given us
reasons to be proud, more importantly
A DREAM THAT WON’T GO AWAYMANAGING DIRECTOR’S REVIEW
they have fuelled in us the desire to
always be a cut above the rest. To
strengthen our legacy and build our
capabilities, over the years we have
pursued a clear strategy, differentiating
ourselves from our peers. We have
ensured that our business model is well
anchored to our growth agenda. And
thanks to our steadfast commitment
to our core values, Sampath Bank is
now stronger, and better positioned
to deliver long-term value to all
stakeholders.
RESULTS FOR 2016
2016 was another good year where we
made steady progress in achieving our
goals, buoyed by robust performance
in the banking industry. In fact 2016
marked the second consecutive year
in which we were able to exceed our
targets, notwithstanding the macro-
economic uncertainty and increasing
regulatory pressures.
Swift action on our part to seize market
opportunities helped us to capitalise on
a heightened credit demand and grow
our advances portfolio, which tabled
a healthy growth of 21.3% in 2016,
well ahead of the industry average of
17.5%. At the same time, we continued
to maintain good credit quality, with the
40 SAMPATH BANK PLC
ANNUAL REPORT 2016
NPL ratio settling at 1.61%, well below
the industry average of 2.6% for the
year.
up by 26.1% from a year ago. Much of
this growth came from term deposits,
with a notable drop in current accounts
and savings accounts (CASA) bringing
pressure on Net Interest Margins (NIMs).
adopted by the Bank’s “Asset & Liability
Management Committee” (ALCO),
helped boost NIMs to above that of the
previous year.
Net Interest Income (NII), the Bank’s
primary source of income registered
growth, driven by higher NIMs and
steady portfolio growth. Net fee-based
income too recorded a solid 24.6%
increase spearheaded by aggressive
efforts to promote credit cards, trade
services and electronic channels.
Meanwhile, pivoted on our prudent
cost management strategies, we were
able to bring down the cost-to-income
ratio to below 50% for the first time in 6
years.
Our deposit mobilisation strategies also
yielded good results with the deposit
portfolio crossing the historical
Rs 500 Bn milestone, to reach
Rs 516 Bn as at 31st December 2016,
Nonetheless, automatic re-pricing of
term loans in line with PLR together with
effective fund management strategies
Driven by strong revenue growth and
comparatively lower costs, the Bank’s
bottom line grew by 48.8%, compared
to the previous year. As a result our
return on equity increased to 23.5%, its
highest level since 2011, and return on
assets increased to 1.6%.
The Bank declared an interim scrip
dividend amounting to Rs 2.5 Bn
MANAGING DIRECTOR’S REVIEW
CREDIT GROWTH - INDUSTRY VS BANK (%)
0
6
12
18
24
30
2014
2013
2015
2016
21.3
24.0
14.6
25.0
BankIndustry
8.813.7
21.1
17.5
NPL - INDUSTRY VS BANK (%)
0
1
2
3
4
5
6
2014
2013
2015
2016
1.6
1.6
1.9
2.7
NPL - BankNPL - Industry
5.6
4.2
3.2
2.6
TOTAL DEPOSITS(Rs Bn)
0
100
200
300
400
500
600
2014
2013
2015
2016
516
409
342
302 NET INTEREST INCOME
(Rs Bn)
0
5
10
15
20
25
2014
2013
2015
2016
22.8
17.4
15.7
15.3
MANAGING OUR BUSINESS
DEMAND & SAVING DEPOSITS
0
50
100
150
200
2014
2013
2015
2016
Demand Deposits
Saving Deposits
131.5
32.8
160.7
34.9
163.32
5.5
83.21
7.1
(Rs Bn)
41
(DPS Rs 14.00) on 2nd February 2017
and further proposed a final cash
dividend of Rs 0.9 Bn (DPS Rs 4.75 ) on
13th February 2017.The total dividend
declared out of 2016 profits, therefore
stands at Rs 3.4 Bn.
We ended the year with a healthy
balance sheet, with our core capital
ratios meeting expected limits. During
the year, we strengthened our Tier II
capital by raising Rs 6 Bn through an
unsecured redeemable debenture
issue. Further, USD 100 Mn was raised
by way of a three-year syndicated loan.
These measures will go on to support
our medium term objectives.
A GROWTH-FOCUSED
APPROACH
We began 2016 with a growth-focused
approach that would set the pace
for the rest of the year. Our priority
was to reinforce core fundamentals
in a manner that would translate into
better business value. The crux of
our strategy was to leverage on our
key competencies and consolidate
activities in order to fuel growth.
This meant getting the basics right – a
well-anchored business model that is
both innovative and dynamic enough
to sustain growth, build resilience and
produce consistent returns that will add
value to the Sampath brand.
In meeting these core growth
objectives for the current financial
year, we focused on fortifying our
capabilities across our value chain and
strengthening operations at all levels of
the business.
PRODUCTS, SERVICES AND
DELIVERY CHANNELS
We believe that the growth of our
business is directly linked to the
way we respond to the needs of our
customers. Hence, our number1 priority
is to improve the customer experience
by giving them the opportunity to
choose from a range of options best
suited to their individual lifestyles.
From a business perspective, our
goal is to grow market share vis-à-vis
relevant affordable products, services
and innovative delivery channels that
are designed to give to all customer
segments across Sri Lanka, easier
access to financial services.
In keeping with our track record of
industry-firsts, in 2016 we pioneered a
series of initiatives, key among them;
“Missed Call Banking” and the “Instant
Loan Facility”. These unique offerings
underpin our efforts to broaden our
products, services and delivery channels
to deliver an exceptional client experience.
Meanwhile, in line with our strategy to
consolidate our branch model, branch
expansion was moderated, with only 4
branches being added to the network
in 2016.
More importantly, in response to the
speed at which client demands are
changing, we felt the need to enhance
our client interfaces and expand our
digital suite. As the emphasis shifted
towards electronic delivery channels,
we accelerated efforts to strengthen
our digital platform, making sizable
investments to expand the scope of
activities of the Sampath Vishwa online
banking portal, thus enabling both retail
and corporate segments to benefit from
24/7, 365 connectivity in an always-on,
always-connected world.
IT INFRASTRUCTURE
We are aware that our IT infrastructure
is the backbone of our business. It is
what enables us to build resilience and
stay competitive in the long term.
COST TO INCOME(%)
30
35
40
45
50
55
60
2014
2013
2015
2016
47
.8
52
.7
54
.8
51
.2
EPS & DPS(Rs)
0
10
20
30
40
50
60
2014
2013
2015
2016
Earnings per ShareDividend per Share
20.45
28.52 34.66
51.56
8.0011.00
13.00
18.75
NET ASSET VALUE PER SHARE (Rs)
100
140
180
220
260
300
2014
2013
2015
2016
169.37
179.39198.47
251.38
42 SAMPATH BANK PLC
ANNUAL REPORT 2016
In the year under review, we made
steady progress in the implementation
of our ongoing IT infrastructure
transformation programmes, where
investments were twofold; to streamline
business processes and improve
productivity. We continued automating
manual processes, while at the same
time updating many of the legacy
systems currently in use, replacing
them with more sophisticated, less
complex software architecture.
With our reputation as the most
innovative bank, also hinging on our
IT infrastructure, we then turned to our
IT framework to support our strategic
objectives and uphold brand equity.
Key initiatives for 2016 include;
The launch of the “My Bank”
concept, a revolutionary new
mechanism to promote greater
financial inclusion by expanding
our island-wide reach.
Implementation of a broad
ranging new cyber security
strategy to ensure data security
and safeguard customer privacy.
WE UNDERSTAND THAT WORKING IN A FAST-PACED AND HIGHLY COMPETITIVE INDUSTRY PLACES NUMEROUS DEMANDS ON OUR PEOPLE
PEOPLE AND PROCESSES
Team Sampath remains our most
valuable asset. It is their commitment
and expertise that delivers our brand
proposition to our customers each and
every day. It is also their individual and
collective contribution that drives our
strategy.
We understand that working in a
fast-paced and highly competitive
industry places numerous demands
on our people. It is why retaining and
developing a talented, diverse and
inclusive workforce remains a strategic
imperative for Sampath Bank. Without
exception, we give all our employees
the support they need to build a career,
achieve their goals, and help them to
improve their lives and the lives of their
families.
Having labelled HR as a strategic
business partner in the previous year,
we continued to reinforce this concept
in 2016, by implementing a number
of follow up initiatives to encourage
outstanding performance. Central to
this was the roll out of the team-based
performance incentive scheme, which
we hope will inspire a new breed of
employees. I am indeed happy to
note that following the introduction
of the scheme, a notable increase in
employee morale was also observed.
Furthermore, we invested
Rs 69.1 Mn on training and selected
261 employees for our talent
development programme, which seeks
to build the next generation of Sampath
brand ambassadors.
CA Sri Lanka Annual Report
Awards 2016
Award for the ‘Best Commercial Bank
2016’ and ‘Best Retail Bank 2016’ in
Sri Lanka for the third consecutive year
by the World Finance Magazine, UK
MANAGING DIRECTOR’S REVIEW
MANAGING OUR BUSINESS
43RISK AND GOVERNANCE
Digitalisation and the increasing
sophistication of financial services
has no doubt made our operations
more complex and in recent years has
brought to the fore potential new risks
that we have to face as a business.
The need to understand and mitigate
such risks has prompted us to
expand our risk culture in order to
ensure we maintain a strong risk
management discipline. We continue
to invest heavily to improve our risk
management practices, emphasizing
our commitment to develop strong risk
management capabilities across the
business.
As part of this commitment, in 2016
several initiatives were taken to embed
risk skills deeper into our business
units and operational functions
across the Bank. I am confident
that this integration will sharpen our
decision-making capabilities, ensure
accountability and enforce better
governance practices throughout our
operations.
From a governance perspective,
the Board remains the apex body
responsible for all activities of the
Bank. As always, the Board provides
continuous oversight, playing an active
role in reviewing strategy, operating
environment and the progress made
towards achieving our goals.
OFFSHORE INVESTMENTS
Offshore expansion forms part of a
road map to broad base the business
through inorganic growth. Thus far,
our focus has been to establish a
presence in South Asia, where we
continue to proceed with caution, first
testing market potential before making
strategic investments.
In the year under review, we
consolidated functions of the
Representative Office in Myanmar,
which for now will act as a conduit
for bi-lateral trade between the two
countries.
FUTURE OUTLOOK
The year ahead is likely to present an
uncertain operating environment. We
are also likely to experience strong
competitive pressures, not only from
peers in the banking industry, but also
from telcos that appear to be intruding
into our territory. Nonetheless, we stand
firm in our determination to maintain
our growth momentum, both in terms
of the top line as well as the bottom
line. Additionally, cost management
and the promotion of electronic delivery
channels will continue to be absolute
priorities in our medium term growth
agenda.
The Bank will also actively look at
in-organic growth opportunities, both
locally as well as in the region.
Further we will continue to strengthen
our foundation of integrity, trust and
ethical behaviour that will underpin
success at all levels of our business.
To achieve this, we remain deeply
committed to invest in IT infrastructure
and focus on supporting our people
in order to serve our clients better and
grow our business in the coming years.
We are confident that our strategy
is sound. By executing our strategy
well, and making meaningful progress
against our focus priorities, I believe,
Sampath Bank is well positioned to
achieve medium term performance
objectives and sustain even greater
value for all stakeholders in the long
term.
APPRECIATIONS
In closing, I would like to take
this opportunity to recognise the
contributions made by my predecessor,
Mr Aravinda Perera. I am honoured
to have succeeded Mr Perera, who
retired this year after 29 years of loyal
service to the Bank, including 5 years
as Managing Director, during which
time he put Sampath Bank on an
accelerated growth path. I would like
to thank him for his leadership and
distinguished service to the Bank.
I also wish to thank our former
Chairman, Mr Dhammika Perera for his
foresight and exemplary leadership that
steered the Bank towards new heights.
While thanking my colleagues on
the Board, for their wise counsel and
unstinted support given to me at all
times, I would like to extend a special
word of thanks to Team Sampath for
their exceptional commitment and
loyalty towards the Bank and for
delivering the Sampath promise to our
stakeholders.
My sincere appreciation also to all
our shareholders for the trust and
confidence placed in Sampath Bank
PLC. I seek your continued patronage
in the coming years as we work towards
realising the Bank’s vision for the future.
NANDA FERNANDO
Managing Director
Colombo, Sri Lanka
13th February 2017
44 SAMPATH BANK PLC
ANNUAL REPORT 2016
GREEN RECOGNITION
As part of the ongoing commitment to achieve a Net Zero Carbon Footprint,
the Sampath Bank Annual Report 2016 was declared a Carbon Neutral Product,
following an independent verification by the Sri Lanka Climate Fund Private Limited.
This is the second consecutive year in which the Annual Report has been
declared as a Carbon Neutral Product.
MANAGING OUR BUSINESS
SAMPATH BANK PLC ANNUAL REPORT 2016- A CARBON NEUTRAL PRODUCT
45
SUSTAINABILITY FRAMEWORK
At Sampath Bank we consider
ourselves agents of change for our
country and all its citizens. We want to
be a trusted and reliable catalyst to our
customers, shareholders, employees
and society at large. We believe that
the prosperity of our stakeholders truly
defines how successful we are as a
bank.
That is why we are striving to reinvent
ourselves as a more sustainable
business and sharpen our competitive
edge in the market. Therefore, we have
begun gauging the consequences of
our actions and taking responsibility for
how our business decisions affect our
shareholders, regulators, customers,
employees, suppliers and service
providers, society and the environment.
Our ultimate goal is to be able to
derive and sustain economic, social
and environmental value, long into the
future.
To bridge the gap between where we
are now and where we want to be, we
have adopted a 3600 sustainability
matrix that begins with our stakeholder
engagement mechanism where we
identify key sustainability trends and
determine the opportunities and threats
arising therefrom. These are embedded
into our corporate objectives via our
strategic planning process and then
carried out on a day-to-day basis under
the purview of our governance, risk
management and product stewardship
pillars.
OUR SUSTAINABILITY VISION - 3600 APPROACH TO SUSTAINABILITY
Sustainability
Trends
Stakeholder
Engagement
Opportunities
and Threats
Corporate
Objectives
Strategic
Planning
Process
Governance
Risk
Management
Product
Stewardship
3600
APPROACH TO
SUSTAINABILITY
STRATEGIC FOCUS ON TRIPLE BOTTOM LINE
People
Pla
net
VISION:
Work to create a
healthier planet
by supporting the
environment that
supports us. In
doing so, we strive
to challenge the
way people think
about the role of
banks in building
a greener planet
VISION:
Focus on providing
real solutions that
enrich the lives
of our customers,
shareholders,
employees,
suppliers,
business partners
and communities
connected to our
work
VISION:
Use our financial prowess to trigger
sustainable nation-wide development so as
to raise Sri Lanka’s socio-economic position
in the long term
Profit
Profit
46 SAMPATH BANK PLC
ANNUAL REPORT 2016
STAKEHOLDER ENGAGEMENT
We believe all our stakeholders are
key partners in our journey towards
attaining our vision to “Be the Growing
Force in Sri Lankan Financial Services”.
Effective stakeholder management is
therefore paramount to our success
and crucial in ensuring we remain
a sustainable business in the years
ahead.
Bearing in mind, the management
thinking for each stakeholder
category, we engage openly with our
stakeholders in an effort to develop
co-operative and mutually supportive
relationships that will help us
understand and proactively respond to
their expectations at all times.
PLANETPEOPLE PROFIT
Stage 1 - Classify
Stage 2 - Respond
Stage 3 - Assess
Identify - Stakeholders
Project Planning - CSR and Sustainability Committee *
(Please refer page 88)
Continuous monitoring and control of project parameters
Engage with Stakeholders to determine matters of
relevance (Please refer pages 47 to 49)
Integrate Project - into Sustainability Framework
Reporting Actual vs. Targets
Rank - Material issues
(Please refer page 53)
Execution of Project - Respective CSR Pillar
Database for future reference
TRIPLE BOTTOM-LINE IMPACT ASSESSMENT
STAKEHOLDER MANAGEMENT PROCESS
* CSR AND SUSTAINABILITY
COMMITTEE
Senior DGM - Consumer
Banking - Pillar Head,
Entrepreneurship Development/
Overall Management
Group Chief Human Resource
Officer - Pillar Head, Education
for Development
AGM - Branch Banking - Pillar
Head, Empowerment of the
Community
Chief Manager - Branch Banking
- Pillar Head, Ethics & Values
Chief Manager - Human
Resource - Pillar Head,
Environment Protection &
Conservation
Senior Executive - CSR &
Sustainability
Officer - CSR & Sustainability
Junior Executive - Assistant CSR
& Sustainability
CSR & Sustainability Committee of the
Bank review of all sustainability aspects
to verify the accuracy of sustainability
parameters that are included in the
annual report.
G4 - 36,42,47,48
MANAGING OUR BUSINESS
47STAKEHOLDER ENGAGEMENT MECHANISM
Engagement Mechanism Frequency of
Engagement
Matters Relevant to
Stakeholders
Our Strategic Response Page
EM
PL
OY
EE
Managem
ent
Philo
sophy: C
om
mitm
en
t to
cre
ate
an
enviro
nm
en
t
conduciv
e for
em
plo
yees to d
eve
lop
an
d r
ea
ch
th
eir p
ote
ntia
l, b
oth
pro
fessio
nally
an
d p
ers
on
ally
Open door policy R Ethical employment
practices
Career
development
Employee
communications
Rewards /
recognition
Employee well
being
Work-life balance
Competitive rewards
and benefits to attract
the best talent in the
market
Promoting greater
diversity and inclusion
Develop from within
through training &
development
Encourage greater
engagement
Performance-based
incentives
Effective handling of
grievances
Maintain high
standards of
occupational health &
safety
Ensure employee
welfare
Foster a sense of
belongingness
73 to 81
Employee forums P
Employee suggestions
schemes
R
Grievance handling
procedure
R
Employee social
committees
R
Feedback forms A
Business unit level
meetings
R
Intranet 24/7
Memorandums / Circulars R
News letters Q
Training R
Get-together / Events R
Sampath Employee
Notification System (SENS)
24/7
CSR projects R
CU
ST
OM
ER
Managem
ent P
hilo
sophy: U
phold
the c
usto
mers
rig
ht
to d
em
and a
sta
ble
an
d p
rogre
ssiv
e b
ankin
g e
nvironm
ent
whic
h p
rovid
es a
superi
or
serv
ice p
latform
and p
rom
ote
s c
usto
mer
choic
e /
conve
nie
nce
One-to-one feedback from
customers who visit the
Bank
R Customer service
Satisfaction with
existing products
Brand perception
and reputation
Customer
convenience
Need for innovation
and customized
solutions
Communication
methods
Special promotions
Timely and relevant
information on
products and
services
Customer touch-
points
Customer benefits
and rewards
Loyalty recognition
Effective complaint
resolution
Maintain service
excellence
Deliver technology-
driven banking
solutions
Continuous
introduction of
innovative products
that promote greater
customer convenience
Effective marketing
communication
Maintaining data
security and customer
privacy
Promoting island-wide
customer inclusiveness
Better market share
82 to 85
Customer surveys
conducted via traditional
or non traditional research
techniques
P
Social media interactions 24/7
Customer complaint
handling mechanism
24/7
ATL, BTL & digital
communications
R
Feedback forms-paper
based / electronic
mediums
R
Correspondence R
SMS alerts 24/7
Corporate website 24/7
Sampath Vishwa (Internet
Banking) portal
24/7
Customer call centre 24/7
CSR projects R
A - Annually P - Periodically Q - Quarterly R - Regularly 24/7 - 24 hours 7 days
G4 - 24,25,26,27
48 SAMPATH BANK PLC
ANNUAL REPORT 2016
Engagement Mechanism Frequency of
Engagement
Matters Relevant to
Stakeholders
Our Strategic Response Page
SH
AR
EH
OL
DE
RS
& O
TH
ER
IN
VE
ST
OR
S
Managem
ent
Philo
sophy: E
nsuri
ng
lo
ng
te
rm s
ha
reh
old
er
valu
e a
nd
uphold
ing t
he r
ights
of
the s
hare
ho
lde
r a
nd
su
pp
ort
ing
a b
roa
de
r
share
hold
er
constitu
ency to e
nsu
re t
he
ir w
ea
lth
ma
xim
iza
tio
n
Shareholder relation
forums
P Shareholder
satisfaction
regarding the
Bank’s financial
position
Shareholder views
on key governance
and policy matters
Development
of shareholder
communication
channels
Return on equity &
interest gains
Strategy and
continuity
Financial
performance
Maintaining a
consistent bottom line
Ensuring sustainable
return on investment
Engaging in greater
transparency
and responsible
stewardship
Maintaining the
Bank’s reputation and
credibility
Safeguarding asset
quality
123 to
133
General meetings A/P
Annual report A
Interim financial
statements
Q
Disclosures and
announcements on CSE
P
Corporate website 24/7
General correspondence R
CSR projects R
SU
PP
LIE
RS
& S
ER
VIC
E P
RO
VID
ER
S
Managem
ent P
hilo
sophy: S
trik
ing t
he r
ight
bala
nce b
etw
een
cost and q
ualit
y a
nd p
rom
oting e
thic
al and t
ranspare
nt
sourc
ing p
ractices
Interactions through the
purchasing policy
R Developing
strategic
partnerships
Promoting
transparent
and ethically
responsible
business practices
Continuous
communication with
suppliers & service
providers
Engaging in fair and
equitable procurement
Supplier risk
assessment
mechanism
Contractual
agreements to
promote sustainable
procurement
Local sourcing
Registration of multiple
suppliers and service
providers as a BCP
measure
Maintenance of a
supplier, service
provider registry
86
Feedback forms As and when
required
Meetings R
Visits to supplier
workshops / offices
P
STAKEHOLDER ENGAGEMENT
A - Annually P - Periodically Q - Quarterly R - Regularly 24/7 - 24 hours 7 days
MANAGING OUR BUSINESS
49Engagement Mechanism Frequency of
Engagement
Matters Relevant to
Stakeholders
Our Strategic Response Page
CO
MM
UN
ITY
AN
D E
NV
IRO
NM
EN
T
Managem
ent P
hilo
so
phy: W
ork
ing
in
ta
nd
em
with
glo
ba
l a
nd
local m
andate
s t
ha
t sa
feg
ua
rd t
he
enviro
nm
en
t a
nd
pro
mo
te
co
mm
un
ity e
mp
ow
erm
en
t
Ground-level interactions
with community leaders
by staff
R Community
capacity building
Community
empowerment
Social welfare of
communities
Environmental
projects
Preservation of
local culture
Socially responsive
transformative CSR
model
Transparency and
governance
Community
engagement
Employee volunteerism
Become a catalyst for
change
87 to 93
Interactions with social
groups and volunteer
organisations
R
Feedback forms /
environment grievance
handling mechanism
R
Discussions
with government
representatives
R
Discussion with other
organisations, community
and opinion leaders on
community development
efforts
R
Media based forums R
CSR projects R
CB
SL
& O
TH
ER
GO
VE
RN
ME
NT
IN
ST
ITU
TIO
NS
Managem
ent
Philo
sophy:
Ensure
com
plia
nce w
ith a
ll le
gal and r
egula
tory
requirem
ents
Policy directives /
circulars, guidelines and
operating instructions
R Policy decisions
affecting the
financial sector
Fiscal consolidation
laws
Submission of
returns
Taxes paid to the
government
Compliance with
regulations
Rectification actions on
supervisory concerns
On-time submission of
statutory returns and
statutory payments
Response and
contribution at
meetings / forums and
to initiatives of the
regulators
MSME lending &
entrepreneurship
development
Supporting the NCRE
sector
Support to maintain
stability in money and
foreign exchange
markets
Help investors to make
better investment
decisions
Meetings and forums P
Press releases R
Periodic and one-off
returns
P / As and
when
required
On-site and off-site
supervision
A / As
and when
required
Training programmes R
A - Annually P - Periodically Q - Quarterly R - Regularly 24/7 - 24 hours 7 days
50 SAMPATH BANK PLC
ANNUAL REPORT 2016
FINANCIAL CAPITAL
Pages 60 to 63
INTELLECTUAL CAPITAL
Pages 70 to 72
SOCIAL & RELATIONSHIP
CAPITAL
Pages 82 to 93
MANUFACTURED CAPITAL
Pages 64 to 69
HUMAN CAPITAL
Pages 73 to 81
NATURAL CAPITAL
Pages 94 to 97
Review & Reporting
FU
ND
AM
EN
TA
L IN
PU
TS
TO
TH
E B
US
INE
SS
PR
OC
ES
S
REWORK ON CAPITAL
VALUE CREATION PROCESS
INTERNAL ENVIRONMENT
Pages 39 to 43
CHALLENGES & OPPORTUNITIES
Page 51
VISION
Page 12
VALUES
Page 12
RISK MANAGEMENT GOVERNANCE
STAKEHOLDER
ENGAGEMENT
Page 46 to 49
STRATEGIC
FOCUS
Page 51
OUTCOMEINPUT
EXTERNAL ENVIRONMENT
Pages 56 to 58
IMPACT
ASSESSMENT
NE
GA
TIV
E IM
PA
CT
P
OS
ITIV
E I
MP
AC
T
KEY BUSINESS PILLARS
Personal Banking
Corporate Banking
Development Banking
Global Business
Treasury
Pages 99 to 114
SUBSIDIARIES
Siyapatha Finance PLC
SC Securities (Pvt) Ltd
Sampath Centre Ltd
Sampath Information
Technology Solutions Ltd
Pages 118 to 122
BUSINESS MODEL
SUPPORTING SERVICES
Human Resources and
Training
Operations
Marketing
Administration and
Engineering
Research and Development
IT System Development
Legal
Recoveries
Finance
Internal Audit
Risk
Compliance
Network Service Centre
Central Cash Department
Pages 115 to 117
G4 - 17
MANAGING OUR BUSINESS
51
KEY RISKS
Key Risks Management Focus for 2016
Credit Risk Strengthening credit
evaluation and borrower
rating processes
Market Risk Combined stress testing
scenarios and limit
framework
Foreign Enhanced limit
Exchange Risk monitoring
Interest Rate Risk Re-structured monitoring
mechanisms
Operational Risk Improved internal
process
Compliance Risk Monitoring and
reporting framework
CHALLENGES AND OPPORTUNITIES
Challenges Opportunities
Macro-economic Technology and
changes innovation
Regulatory Customer expectations
changes
Competition from Sustainability trends
peers
Cyber security
threats
Workforce
management
STRATEGY AND FOCUS
Become a more resilient and
adaptable business
Effective management of regulatory
changes
Become more customer-centric
Embrace innovation
Invest in information technology and
digitalization
Develop human capital
Exemplify Sampath Bank values
through corporate citizenship
VALUE CREATED FOR STAKEHOLDERS – HIGHLIGHTS
2016 2015
Shareholders
Return on Assets (ROA) 1.55% 1.28%
Earning per Share (EPS) 51.56 34.66
Return on Equity (ROE) 23.47% 18.42%
Dividend per Share (DPS) (Rs) 18.75 13.00
Market capitalisation (Rs Mn) 46,086 42,734
Direct economic value generated (Rs Mn) 67,553 47,202
EmployeesTraining investment (Rs Mn) 69 47
Employee salaries and benefits (Rs Mn) 7,333 6,141
Customers
Growth in deposits 26.10% 19.73%
Growth in advances 21.39% 24.07%
Number of branches 229 225
Number of ATMs 381 370
Community & Environment
Total investment from CSR fund (Rs Mn) 20 15
Number of CSR projects 121 60
Employee volunteerism for CSR (man hours) 24,431 7,284
Carbon footprint indicator (tCO2e) - Head Office - 3,753
Carbon footprint indicator (tCO2e) - Entire Bank 11,613 -
Green house gas reduction from paper recycling (Kg) 44,863 70,804
RegulatorsTaxes paid to the Government (Rs Bn) 6.27 3.02
Taxes collected on behalf of the Government (Rs Bn) 1.43 1.40
FINANCIAL CAPITAL
Ensure adequate financial resources are available to support our business activities and execute our strategies Retained earnings -
Rs 4.4 Bn Debenture issued in
2016 – Rs 6.0 Bn Syndicated Loan -
USD 100 Mn General Reserve -
Rs 27.7 Bn
MANUFACTURED CAPITAL
Strengthen tangible and intangible infrastructure that we use to conduct our business activities, including our branch and ATM network, and digital channels 04 new branch
openings Installation of 06
new off-site ATM’s Enhancements
to retail banking portfolio
Improvements to the corporate banking suite
Facilitating e-commerce & m-commerce
INTELLECTUAL CAPITAL
Uphold innovativeness Rs 105 Mn invested
in IT to streamline business processes to improve productivity of employees
HUMAN CAPITAL
Develop competencies of our people and their level of commitment to ensure execution of the corporate strategies Rs 69.1 Mn invested
in training and development
261 team members included in the Executive Talent Development Programme
Planned activities to promote greater employee engagement and commitment
SOCIAL & RELATIONSHIP CAPITAL
Connect with external stakeholders as a basis for sustainable growth Corporate
citizenship activities that demonstrate the commitment towards customers, suppliers and the community
121 CSR initiatives
NATURAL CAPITAL
Minimize the destruction of natural resources resulting from business activities Invest in energy-
saving technology Adopt best practices
for paperless banking
Green lending Encourage all
stakeholders to subscribe to the green movement
Sustainable lending on NCRE
VALUE CREATION THROUGH OUR BUSINESS MODEL
52 SAMPATH BANK PLC
ANNUAL REPORT 2016
MATERIALITY ASSESSMENT
IDENTIFY
RANK
Material matters are identified through
an external and internal assessment
mechanism, which takes into account
the issues raised by our stakeholders
as a result of the interactions we
have with each stakeholder category.
A matter is deemed to be material
when it has the ability to influence our
financial performance, our reputation,
or impact on the sustainability of our
business. The process for identifying
Materiality is given below.
Degree of materiality is gauged and
issues are assigned a rank, taking
cognizance of the opportunities and
threats in the operating environment,
strategy, business model, risk,
governance and compliance
frameworks.
INTEGRATE
Material issues are integrated into our
strategic agenda through our 3600
Sustainability Matrix that connects
stakeholder expectations to our
strategic objectives. Please refer
page 45.
INTERNAL ASSESSMENT EXTERNAL ASSESSMENT
BUSINESS UNITS
TEST 01
TIER 01 - IDENTIFY TIER 02 - RANK TIER 03 - INTEGRATE
TEST 02 TEST 03 TEST 04
STAKEHOLDERS
Primary engagement
mechanism
Identifying the stakeholdersDeveloping and ranking strategies
relevant to the stakeholdersEstablish sustainable goals
Frequency of
engagementRelevance of matters
Prioritize the relevant material
aspects
Reporting & record keeping
G4 - 18
MANAGING OUR BUSINESS
53
Improve social relevance and
enhance corporate citizenship
Community Socially responsible CSR
model
Social & Relationship
Capital
Transparency and
governance
Community engagement
Employee volunteerism
Customer Product responsibility
Marketing communication
Customer privacy and data
security
Customer service
Customer centricity
Supplier Fair and equitable
procurement
Supplier risk assessment
Contractual agreements
Local sourcing
Material Matters Identified Material Aspect Supporting Capital
Withstanding tough economic
headwinds
Economic performance
Financial Capital
Indirect economic impact
Minimizing the direct and indirect
impact on the environment
Energy saving
Natural Capital
Reduction of paper waste
Carbon footprint calculation
Employee engagement
Sustainable lending
Customer engagement
Environmental CSR
Securing the commitment of
employees to meet corporate
objectives and deliver stakeholder
value
Salary, benefits, rewards and recognition
Human Capital
Training and development
Leadership development
Employee engagment
Diversity and inclusion
Safety and wellness
Leverage on innovation to achieve
market leadership
IT systems
Intellectual Capital
Develop tangible and intangible
infrastructure to support business
goals
Digital channels
Manufactured Capital
Customer touch-points
Periodic internal surveys
54 SAMPATH BANK PLC
ANNUAL REPORT 2016
H
M
M
L
L H
15
1117
22
27
1220
38
1323
410
1625
614
1829
915
21
30
31
H
M
L
High
Medium
Low24 26 27 28
3219
MATERIALITY ASSESSMENT
MA
TE
RIA
L L
EV
EL
WIT
HIN
TH
E O
RG
AN
ISA
TIO
N
MATERIAL LEVEL OUTSIDE THE ORGANISATION
1 Economic performance
2 Indirect economic impact
3 Energy saving
4 Reduction of paper waste
5 Carbon footprint calculation
6 Employee engagement -
environment
7 Sustainable lending
8 Customers engagement -
environment
9 Environmental CSR
10 Salary, benefits, rewards and
recognition
11 Training and development
12 Leadership development
13 Employee engagement - CSR
14 Diversity and inclusion
15 Safety and wellness
16 IT systems
17 Digital channels
18 Customer touch-points
19 Periodic internal surveys
20 Socially responsible CSR model
21 Transparency and governance
22 Community engagement
23 Employee volunteerism
24 Product responsibility
25 Marketing communication
26 Customer privacy and data security
27 Customer service
28 Customer - centricity
29 Fair and equitable procurement
30 Supplier risk assessment
31 Contractual agreements
32 Local sourcing
Financial Capital Natural Capital Human Capital Intellectual Capital Manufactured Capital Social & Relationship Capital
Please refer page 408 for Comprehensive Materiality Assessment
MANAGING OUR BUSINESS
IMAGINFINITE
[ MANAGEMENT DISCUSSION & ANALYSIS ]This section describes the Bank’s extensive operations and includes the Capital
Management and Business Reports as well as information about our stakeholders.
Operating Environment 56
Capital Management Reports 59
Business Reports 98
56 SAMPATH BANK PLC
ANNUAL REPORT 2016
OPERATING ENVIRONMENT
COUNTRY REVIEW
2016 was a very challenging year for
Sri Lanka, with the country’s GDP for
the year expected to reach only 4.5%
down from the 4.8% recorded in 2015.
The decline can be attributed to severe
external headwinds that put pressure
on many key sectors in the economy.
remittances recorded a modest YoY
growth rate of 3.7% by December
2016, despite the sluggish economic
conditions in the Middle Eastern region.
investment goods such as machinery
and building materials. Nonetheless
total import expenditure for 2016 was
less than 2015, which helped stabilize
the balance-of-payments and reduce
the volatility of the rupee in the first
three quarters of the year. However, a
sharper than expected depreciation
in the rupee was seen in the 4th
quarter, partly due to large scale
capital outflows triggered by the highly
anticipated rate hike by the Federal
Reserve. Despite this however, the
rupee depreciated by a moderate 4.0%
in 2016, compared with 9.9% the year
before.
Figures available at present appear
to suggest that the services sector
and Industry sectors tabled growth in
2016, while the Agriculture sector, hit
by long dry spells and flood conditions
throughout the year, recorded de-growth.
The performance of the External sector,
mainly exports and inward remittances,
also fell below expectations for 2016.
The downward spiral of the traditional
export sectors (Tea & Rubber / Rubber
products) continued, as weak oil prices,
unfavourable currency movements, and
growing political instability continued
to diminish demand in key markets in
the Middle East, Europe and Russia.
On a positive note, however inward
The Apparel industry, the 2nd largest
foreign exchange earner, was another
segment that came under pressure in
2016, amidst increased uncertainty
across key European markets following
the unexpected outcome of the
Brexit vote in June 2016. However,
here too, signs of optimism and slow
improvement were visible in the latter
part of the year, buoyed by the growing
anticipation of the GSP+ concessions
being reinstated in 2017.
Total imports witnessed a decline
during the first nine months of 2016,
largely due to the high import duties
imposed by the Government to curb
vehicle imports. A further decline
in oil prices during the first half of
the year also proved to be another
contributing factor in curbing import
expenditure. On the other hand, total
non-oil imports increased slightly
during the period driven by demand for
Inflation remained in mid-to-low single
digit territory, recording 4.2% YoY
(NCPI) by end - December 2016.
Amidst declining external reserves,
the Government successfully
negotiated with the IMF, and entered
into an Extended Fund Facility (EFF)
arrangement to receive USD 1,450Mn
over a period of three years. The
arrangement, which was approved in
June 2016, facilitates the Government’s
IMPORT EXPENDITURE & EXPORT EARNINGS
0
5
10
15
202014
2013
2015
2016*
Import Expenditure
Export Earnings
11.1
18.9
10.5
19.2
10.3
19.4
10.4
18.0
(USD Bn)
*Estimated
USD / LKR MOVEMENT (Rs)
100
112
124
136
148
1602014
2013
2015
2016
130.75
131.20
144.20
150.00
WORKERS' REMITTANCES(USD Mn)
3,000
4,000
5,000
6,000
7,000
8,000
2014
2013
2015
2016
7,2
42
6,9
80
7,0
18
6,4
07
MANAGEMENT DISCUSSION & ANALYSIS
57
reform program that aims to reduce
the fiscal deficit, rebuild foreign
exchange reserves, and introduce a
simpler, more equitable tax system to
restore macroeconomic stability and
promote inclusive growth. In November
2016, the IMF completed its first
review of the arrangement, enabling
the disbursement of second tranche
of USD 162.6 Mn, bringing the total
disbursements under the arrangement
to USD 325.1 Mn.
REVIEW OF THE
PERFORMANCE OF THE
BANKING INDUSTRY
Sri Lanka’s banking industry, one of
the fastest growing segments of the
economy, made steady progress in
2016 as well. Industry-wide liquidity
levels reduced during the year as
a result of stricter liquidity control
measures imposed by the CBSL, such
as increasing the Statutory Reserve
Ratio by 1.5% to 7.5%, a decision that
came into effect from 16th January
2016. The Statutory Liquid Asset Ratio
as at the end 2016 was 30.0%, slightly
below the 33.9% recorded at the end of
2015, signalling the continuing stability
of the banking industry.
The key highlight for 2016 was however
the buoyant credit growth seen across
the industry. Industry-wide credit growth
for 2016 reached a robust 17.5% YoY
by December 2016, compared to 21.1%
YoY growth tabled in the previous
year. A strong demand for credit from
the private sector came mainly from
the Industry (Construction and SME
subsectors) and Services (Tourism and
Non Conventional Renewable Energy
subsectors). A substantial growth in
personal loans and advances was also
responsible for driving credit expansion
for the year.
Remarkably, despite this rapid growth,
credit quality in the banking industry
also appeared to improve in 2016,
compared to 2015. The sector-wide
NPL ratio declined to 2.6% by 2016
from 3.2% recorded by the end of
2015, pointing to more effective credit
management strategies and better
financial discipline being practiced
across the industry.
Given the high growth in private sector
credit demand, deposit mobilization
remained the key source of funding for
the industry, with term deposits being
the favoured choice and CASA taking a
back seat.
As the decision by the Monetary Board
to increase the Standing Deposit
Facility Rate (SDFR) by 50 basis points,
in February 2016, and a further 50
basis points hike in July 2016 came
into effect, the AWDR shot up to 8.17%
by end-December 2016, an increase
of 197bps compared to the previous
year end rate of 6.20%. Alongside the
upward adjustment in deposit rates,
industry-wide CASA segment came
under pressure as higher deposit rates
continued to attract a steady flow of
term deposits. Further, a higher AWDR
meant the industry had to contend with
sharp increase in the cost of funds, in
turn putting pressure on profitability.
Additionally, changes to the tax
structure alongside the increase of the
Financial Services Value Added Tax
(FSVAT) from 11% to 15% also had
an adverse impact on industry-wide
profitability in 2016.
INFLATION (BASED ON CCPI) (%)
0
1
2
3
4
5
6
2014
2013
2015
2016
4.7
2.1
2.8
4.1
INDUSTRY SLAR & SRR(%)
0
5
10
15
20
25
30
35
40
45
2014
2013
2015
2016
Statutory Liquid Asset
Requirement (SLAR) - DBU
Statutory Reserve Requirement (SRR)
37.7
39.5
33.930.0
8.0
6.0
6.0
7.5
CASA - INDUSTRY VS BANK (%)
20
25
30
35
40
45
50
2014
2013
2015
2016
IndustryBank
45.947.3
40.3
38.4
33.2
39.3
37.133.9
58 SAMPATH BANK PLC
ANNUAL REPORT 2016
OPERATING ENVIRONMENT
OUTLOOK FOR 2017
Moving forward, 2017 looks to be
another challenging year, with both
domestic and external factors expected
to have a negative impact on banking
sector growth.
Domestically, the Central Bank would
likely take prudential measures
to control credit growth and fiscal
consolidation will likely contain excess
demand. While, both policies will
certainly help Sri Lanka achieve and
sustain above average growth in the
long run, it will nevertheless lead to a
slower growth in the short term.
On the global front, Brexit discussions,
US economic and trade policies,
China’s growth and debt worries and
the direction of oil prices would remain
the chief concerns for the country in
2017.
With Britain expected to take the final
steps to formally exit from the EU and
commence negotiation on the terms
of exit, speculation is likely to have a
negative impact on Euro area growth,
again putting Sri Lanka’s export sector
at risk. Meanwhile, as the US economy
continues to pick up after years of
stagnation, growth is likely to remain
fragile amidst brewing uncertainty
regarding new economic and trade
policies introduced by the Trump
administration. These would likely affect
not only the US economy but also
have a cascading effect on the global
economy as well.
To some extent, global growth in 2017
would also be contingent on the growth
trajectory of China, where the economic
slowdown of the past two years and
the resultant drop in investments and
demand for commodities continue to
bring fresh worries for many countries
across the globe.
Meanwhile, although oil prices have
picked up in recent months, the
oversupply situation in the market
remains a major concern. In addition,
regional uncertainties are also likely to
have a major impact on the direction of
oil prices in 2017.
Nevertheless, opportunities for growth
would likely materialize. And as Sri
Lanka achieves greater political and
economic stability, the island would be
perceived as an attractive destination
for foreign direct investments, amidst
growing uncertainty across other
emerging economies across the
world. Moreover, Sri Lanka, being
in the middle of the fastest growing
region in the world has many unique
characteristics that are likely to appeal
to foreign investors who would be
considering potential destinations
for capital investments in the coming
years.
ON THE GLOBAL FRONT, BREXIT DISCUSSIONS, US ECONOMIC AND TRADE POLICIES, CHINA’S GROWTH AND DEBT WORRIES AND DIRECTION OF OIL PRICES WOULD REMAIN THE CHIEF CONCERNS FOR THE COUNTRY IN 2017
INTEREST RATES(%)
Feb
-16
Jan-1
6
Dec-1
5
Mar-
16
Ap
r-16
May-1
6
Jun-1
6
Jul-16
Aug
-16
Sep
-16
Oct-
16
Nov-1
6
Dec-1
6
0
5
10
15
Standing Deposit Facility Rate (SDFR)
Average Weighted Prime Lending Rate (AWPLR)
Standing Lending Facility Rate (SLFR)
Average Weighted Fixed Deposit Rate (AWFDR)
MANAGEMENT DISCUSSION & ANALYSIS
SAMPATH BANK REPORTS ON HOW WE CREATE VALUE BY ANALYSING THE SIX CAPITALS: FINANCIAL, MANUFACTURED, INTELLECTUAL, HUMAN, SOCIAL AND RELATIONSHIP AND NATURAL
IMAGINCREASE[CAPITAL MANAGEMENT REPORTS]Financial Capital 60
Manufactured Capital 64
Intellectual Capital 70
Human Capital 73
Social and Relationship Capital 82
Natural Capital 94
60 SAMPATH BANK PLC
ANNUAL REPORT 2016
FINANCIAL CAPITAL
What we consider Financial Capital is,
essentially the pool of funds available
to Sampath Bank. This includes, the
capital raised through financing (equity,
debt), operations and investments.
Each year, we continue to implement
financial strategies that enhance our
financial capital to enable us to carry
out the day-to-day business activities of
the Bank and strengthen our ability to
create value for all the stakeholders of
our business.
Doing so requires us to effectively
manage our risks, assess the wider
economic impacts of our activities
on society and maintain a balance
between good corporate governance,
while at the same time staying true to
the values on which our business is
built.
Given below are some key financial
indicators that demonstrate our
ongoing efforts to enhance our financial
capital.
KEY FINANCIAL INDICATORS
TOTAL ASSETS
Sampath Bank’s total asset base
surpassed the Rs 600 Bn mark, to
reach Rs 659 Bn as at 31st December
2016, a growth of 25.4% compared to
industry-wide asset growth of 12%.
This was the result of swift action
to leverage on the strong credit
momentum seen across the industry,
which helped the Bank record a 21.3%
growth in credit for 2016, well in excess
of the industry average of 17.5%. All
loan products except hire-purchase
contributed to this achievement by
posting healthy growth rates compared
to the previous year.
NON-PERFORMING LOANS (NPLs)
Despite the expansion in the loan book,
the Bank was successful in maintaining
and even marginally improving credit
quality, as evidenced by the Non
Performing Loan (NPL) ratio of 1.61%,
compared to the industry average of
2.6% as at 31st December 2016.
IMPAIRMENT LOSSES
Provision for impairment on loans to
and receivables from other customers
increased by 52.0% partially due
to an increase in portfolio size and
partially due to improvements made
to the impairment calculation models.
During the year, the Bank revisited the
assumptions used in its impairment
models in order to ensure they are
up-to-date vis-à-vis the changes taking
place in the business environment.
DEPOSITS
In yet another landmark achievement,
Sampath Bank’s deposit base crossed
the Rs 500 Bn mark for the first time
in the Bank’s history. At 26.1%, the
Bank’s deposit growth for the year
under review, once again surpassed
the industry growth rate of 16.5% for
the same period. Higher growth in the
deposit base was mainly triggered
by an increase in term deposits.
Meanwhile, the CASA ratio declined
TOTAL ASSETS
0
100
200
300
400
500
600
700
2014
2013
2015
2016
9.2
37
7.4
9.1
45
8.8
10.8
30
2.4
9.6 2
60
.0
13
8.8 1
88
.9
12
0.4
11
2.4
Loans & ReceivablesOther Financial Assets
Non Financial Assets
(Rs Bn)
LOAN IMPAIRMENT (Rs Mn) (Rs Mn)
0
1,000
2,000
3,000
4,000
5,000
2014
2013
2015
2016
1,4
30
941
1,3
72
4,1
81
Impairment Charge for the Year
Impairment Provision as
at 31st December
0
2,000
4,000
6,000
8,000
10,0009,980
7,008 6,997
7,726
ADVANCE MIX
Term LoansOverdraftsImport LoansHousing LoansExport LoansLeasing
Pawning Money Market LoansCredit CardsRefinance LoansStaff Loans Others
44
11
5
18
22
4
43322
(%)
MANAGEMENT DISCUSSION & ANALYSIS
61
from 47.3% in 2015 to 38.4% this year
due to higher market rates offered for
fixed deposits. Nonetheless, Sampath
Bank’s CASA ratio was slightly above
the industry average of 37.1%.
REVENUE
Net Interest Income (NII), the main
source of income representing more than
70% of the total operating income of the
Bank, recorded an increase of Rs 5.4 Bn
(30.8%) during the period under review.
Accordingly, the Bank managed to record
an NII of Rs 22.8 Bn in 2016, compared
to Rs 17.4 Bn recorded in 2015.
Net Interest Margin (NIM) also
improved from 3.64% in 2015 to 3.87%
in 2016 notwithstanding the drop in
the CASA balances. This was made
possible by the strong growth recorded
in advances, coupled with timely
re-pricing of asset and liability products
and effective fund management
strategies adopted by the ALCO.
Moreover, the contribution from net fee
based income increased by
Rs 1.3 Bn to Rs 6.6 Bn in 2016 from
Rs 5.3 Bn in 2015. Net trading income
also contributed positively to the topline.
However, Other Operating Income
decreased marginally due to a decline
in exchange income, being the result of
a greater stability achieved by the rupee
in 2016, in comparison to 2015.
EQUITY AND BORROWINGS
Shareholders’ funds, which stood at
Rs 35.1 Bn as at 31st December 2015,
recorded a 26.7% increase during
the year, to reach Rs 44.5 Bn by 31st
December 2016.
The Bank’s funding requirements for the
year were met by a combination of term
deposits and long-term borrowings,
consisting of a syndication loan of USD
100 Mn and Rs 6 Bn raised by way
of an unsecured, subordinated and
redeemable debenture.
NET INTEREST MARGIN (NIM) ALSO IMPROVED FROM 3.64% IN 2015 TO 3.87% IN 2016 NOTWITHSTANDING THE DROP IN THE CASA BALANCES
DEPOSIT GROWTH - INDUSTRY VS BANK(%)
0
5
10
15
20
25
30
2014
2013
2015
2016
IndustryBank
24.2
13.1
19.7
26.1
15.0
12.4
15.316.5
SHAREHOLDERS' FUND
0
10,000
20,000
30,000
40,000
50,000
2014
2013
2015
2016
44,4
89
35,1
25
30,9
12
28,4
18
(Rs Mn)
NII & NIM(Rs Bn) (%)
0
5
10
15
20
25
2014
2013
2015
2016
22.8
17.4
15.7
15.3
Net Interest Income (NII)
Net Interest Margin (NIM)
0
1
2
3
4
5
4.393.95
3.643.87
PROFIT BEFORE TAX AS A % OF GROSS INCOME (%)
0
5
10
15
20
25
2014
2013
2015
2016
9.5
15.1
19.4
18.6
62 SAMPATH BANK PLC
ANNUAL REPORT 2016
OPERATING EXPENSES
The Bank’s Operating expenses grew
by 16%, from Rs 13.3 Bn in 2015
to Rs 15.5 Bn in 2016, mainly due
to the higher personnel expenses
triggered by salary increments and
the introduction of the team-based
performance bonus scheme and
general price hikes.
However, the Cost to Income ratio
excluding VAT and NBT on financial
services improved by about 500 bps
to 47.8% during the period from 52.7%
recorded in 2015, testifying to the
efficient use of the cost base during the
year under review. Recording a Cost to
Income ratio below 50% is considered to
be a major achievement, particularly in
view of the fact that Sampath Bank has
one of the youngest branch networks
compared to its closest competitors.
PROFITABILITY
The Bank registered Rs 12.6 Bn in Profit
before Tax (PBT), a growth of 38.4%,
as against Rs 9.1 Bn earned in 2015.
Meanwhile, post tax profit grew by an
impressive 48.8% from Rs 6.1 Bn in 2015
to Rs 9.1 Bn in 2016. The main reason for
higher PAT growth compared to the PBT
growth is the reversal of excess income
tax provisions made in previous years.
LIQUIDITY
Despite the pressure on the Bank’s
statutory liquid assets ratio caused by
tight liquidity controls imposed by the
CBSL, prudent strategies enabled the
Bank to maintain the liquid asset ratio
well above the regulatory minimum
level of 20% throughout the year.
CAPITAL ADEQUACY
Despite growth in the lending book
which resulted in increase of risk
weighted assets during the year, both
Core Capital (Tier 1) & Total Capital
(Tier 1 & Tier 2) adequacy ratios were
maintained at 8.31% and 12.87%
respectively as at 31st December 2016,
a slight improvement from 7.90% and
12.26% reported a year ago. Retention
of a portion of the dividends declared
in 2015 by way of a scrip dividend and
profits earned during the year could
be cited as the main reason behind
this improvement. Moreover, the Rs 6
Bn debenture issue that concluded in
June 2016, also contributed towards
strengthening the Total Capital
Adequacy ratio for the year.
TAXATION
VAT and NBT on financial services
expenses increased by 47.8% to Rs 2.8
Bn in 2016 due to increases in both the
income base and FSVAT rates during the
year under review.
OPERATING EXPENSES & COST TO INCOME(Rs Mn) (%)
0
5,000
10,000
15,000
20,000
2014
2013
2015
2016
15,4
71
13,3
39
11,7
29
10,6
34
Operating ExpensesCost to Income
0
10
20
30
40
50
60
51.2
54.852.7
47.8
RETURN ON EQUITY (%)
0
5
10
15
20
25
2014
2013
2015
2016
12.88
16.35
18.42
23.47
RETURN ON ASSETS(%)
0.0
0.5
1.0
1.5
2.0
2014
2013
2015
2016
0.98
1.231.28
1.55
FINANCIAL CAPITAL
DEPOSITS & LIQUID ASSET RATIO(Rs Bn) (%)
0
100
200
300
400
500
600
2014
2013
2015
2016
516
409
342
302
Total Deposits Liquid Asset Ratio
0
5
10
15
20
25
3027.6
24.5
22.121.8
MANAGEMENT DISCUSSION & ANALYSIS
63
DIVIDEND
The Bank proposed an interim scrip
dividend of Rs 14.00 per share on 2nd
February 2017 subject to the approval
of the shareholders at the EGM to be
held on 28th February 2017. Further,
the Directors have recommended a
final cash dividend of Rs 4.75 per share
(Effective Rs 5.00 per share) for the
year 2016, subject to the approval of
shareholders at the Annual General
Meeting to be held on 31st March 2017.
FOREIGN BORROWINGS & LOCAL BORROWINGS
0
5
10
15
20
25
30
35
40
2014
2013
2015
2016
Foreign Borrowings
Local Borrowings
20.7
24.2
32.8
35.4
36.8
15.6
16.5
22.3
(Rs Bn)
TOTAL CAPITAL (TIER I + TIER II) (Rs Mn)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2014
2013
2015
2016
61,3
32
48,4
90
40,8
97
32,3
21
PROFIT AFTER TAX & DIVIDEND PER SHARE(Rs Mn) (Rs)
0
2,000
4,000
6,000
8,000
10,000
2014
2013
2015
2016
9,1
25
6,1
34
4,9
14
3,4
30
Profit After Tax
Dividend per Share
0
5
10
15
20
8.00
11.00
13.00
18.75
EARNINGS PER SHARE & NET ASSET VALUE PER SHARE
0
50
100
150
200
250
300
2014
2013
2015
2016
Earnings per Share
Net Asset Value per Share
179.3
9
34.6
6198.4
7 51
.56
251.3
8
28.5
2
169.3
720.4
5
(Rs)
THE BANK REGISTERED RS 12.6 BN IN PROFIT BEFORE TAX (PBT), A GROWTH OF 38.4%, AS AGAINST RS 9.1 BN EARNED IN 2015 Notably, the Core Capital & Total
Capital ratios for 2016 are also well
above the statutory required levels of
5% and 10% respectively.
PERFORMANCE OF THE SHARE
The market price of a Sampath Bank
share as at 31st December 2016 stood
at Rs 260.40, compared to the last
traded price of Rs 248.00 at the end
of 2015.
Earnings per share for 2016 stood at
Rs 51.56, 48.8% higher than the
Rs 34.66 recorded in the previous
year, while Net Asset Value per share
as at 31st December 2016 recorded
a growth of 26.7% from Rs 198.47 per
share in 2015 to Rs 251.38 per share as
at end 2016.
64 SAMPATH BANK PLC
ANNUAL REPORT 2016
MANUFACTURED CAPITAL
We define Manufactured Capital as the
physical infrastructure that supports our
day-to-day business activities, namely,
our head office, branch network, ATMs
and other delivery channels, including
digital channels.
BRANCH NETWORK
With the network reaching a stage of
consolidation, the Bank continued its
restrained approach towards branch
expansion, with only 4 new branches
being opened during the year. This
brings the branch count to 229 as at
end-December 2016.
The key focus for the year therefore
was branch location, which saw a
concerted effort being made to ensure
that all new branches would be situated
in areas with a higher population
density. Accordingly, four new
branches were opened in Ratnapura
(2nd branch), Kelaniya, Polgahawela,
and Hikkaduwa. These were selected
mainly for their potential to reach out to
a wider geographical populace in their
respective areas.
Kandy District
Nuwara Eliya
District
Badulla
District
Puttalam
District
Kurunegala
District
Kalutara
District
Hambantota
District
Anuradhapura
District
Trincomalee
District
Polonnaruwa
District
Ratnapura
District
Mullaitivu
District
Matale
District
Mannar
District
Ampara
DistrictGampaha
District
Galle
District
Matara
District
Batticaloa
District
Colombo
District
Moneragala
District
Jaffna
District
Kegalle
District
Vavuniya
District
229Branches
381ATMs
Scan this QR code for a more comprehensive
view of our Branch and ATM network
www.sampath.lk
8 10
1 1
1 1
1 12 2
6 7
3 4
4 4
3 3
6 7
7 7
4 5
5 7
4 5
15 22
6 7
62 150
8 11
8 10
6 728 45
13 18
10 20
10 15
8 11
Kilinochchi District
GEOGRAPHICAL DISTRIBUTION OF THE BRANCH NETWORK
WesternSouthernCentral UvaNorth WesternEasternSabaragamuwa
NorthernNorth Central
100
22
21
24
9
9
17
14
13
G4 -08,13
MANAGEMENT DISCUSSION & ANALYSIS
65
NO. OF BRANCHES
200
206
212
218
224
230
2014
2013
2015
2016
229
225
220
212
Given the emphasis on location, a
number of existing branches were also
relocated, a move aimed at promoting
greater uniformity across the network,
while strengthening brand visibility in
the selected areas.
Having built a strong branch presence
that reaches millions of Sri Lankans
across the island every day, the
main priority for the network then
shifted towards enhancing the value
proposition offered by the branch.
Appended to this goal, a series of
investments were made to strengthen
branch infrastructure, including a
new initiative to install digital display
screens at branches, to present key
financial information and data, which
was completed during the year. As
HAVING BUILT A STRONG BRANCH PRESENCE THAT REACHES MILLIONS OF SRI LANKANS ACROSS THE ISLAND EVERY DAY, THE MAIN PRIORITY FOR THE NETWORK THEN SHIFTED TOWARDS ENHANCING THE VALUE PROPOSITION OFFERED BY THE BRANCH
part of the ongoing investments, new
Cash Deposit kiosks were installed at
66 branches, while new safety lockers
were installed at 5 branches in 2016,
bringing the total Cash Deposit kiosks
and safety lockers to 108 and 5,623
respectively as at the year end.
The Super Branch concept continues to
be a phenomenal success, with all 12
super branches tabling unprecedented
results for 2016.
ATM NETWORK
In recent years the Bank has come to
rely heavily on the ATM network as a
key driver in expanding the number
of touch points across the island.
Accordingly, 6 new off-site ATMs were
commissioned during the year, bringing
the total network to 381 as at end-
December 2016.
Underpinning the Bank’s strategic
objective that each ATM should reach
the widest possible target audience,
the new installations were done in
Katuwawela - Werahera, Elapitiwela
Junction (Ragama), Cancer Hospital
Junction (Maharagama), Habarakada
Homagama, Arcade Independence
Square, Mona Plastics premises at
Attidiya and Maligawatte, all areas
with a comparatively high level of
foot traffic, which demonstrates the
Bank’s commitment to deliver greater
convenience to all customer segments.
Additionally, the alliance with Lanka Pay
Common ATM Switch (CAS) provides
customers a further 3,700+ access
points across Sri Lanka.
Super Branches
12
Opening of the Kelaniya Branch
66 SAMPATH BANK PLC
ANNUAL REPORT 2016
Meanwhile the Bank has also invested
in 11 ATMs, and 1 foreign currency
exchange ATM in 2016, aimed at
enhancing the value proposition of the
ATM model.
Moreover a new 24 hour CCTV
monitoring system was approved
for installation at all off-site ATMs.
The first phase of the project, which
commenced in December 2016 saw
15% of the network being covered by
end-December 2016, with the balance
due to be completed by mid-2017.
MANUFACTURED CAPITAL
Digital Bank of Distinction award by the
Global Finance Magazine
ON-SITE & OFF-SITE ATMS
0
50
100
150
200
250
300
350
400
2014
2013
2015
2016
41
293
77
298
83
285
11
315
Off-Site ATMsOn-Site ATMs
Opening of the Maharagama Off-Site ATM
MEANWHILE THE BANK HAS ALSO INVESTED IN 11 ATMS, AND 1 FOREIGN CURRENCY EXCHANGE ATM IN 2016, AIMED ENHANCING THE VALUE PROPOSITION OF THE ATM MODEL
DIGITAL BANKING
Widely regarded as a pioneer of Sri
Lanka’s Digital Banking transformation,
Sampath Bank continues to be
a trailblazer in the industry, with
innovative offerings and dynamic tools
that allow for an unparalleled banking
experience. As testimony to this fact,
Sampath Bank was recognized by
The Global Finance Magazine, as
the “Digital Bank of Distinction” in the
Consumer Banking category for 2016.
Despite these achievements,
maintaining a clear advantage
remains a key priority. Accordingly
the Bank continues to look beyond
the conventional brick and mortar
banking structure to strengthen its
digital banking model vis-à-vis the use
of the latest cutting-edge technology
architecture that will deliver increasingly
convenient banking products and
customer service.
MANAGEMENT DISCUSSION & ANALYSIS
67RETAIL INTERNET BANKING
Underpinning the main strategic
thrust is the need to create a “Retail
Lifestyle Brand” that offers the greatest
possible convenience to the customer.
Developing a superior online banking
proposition by combining recent
developments in both Internet and
Mobile Banking was therefore the
main strategic thrust for the year under
review.
Consequently, many of the initiatives
taken in 2016 were aimed at expanding
the scope of activities offered by the
Sampath Vishwa Internet Banking
model, mainly to encourage customers
to migrate to paperless bill payments in
cognizance with the national initiative to
promote cashless banking. As a result,
the number of billers in the list of bill
payments increased by 36%, making
Sampath Vishwa the No. 1 bill payment
facilitator in the country in 2016. At
the same time, transaction limits for
fund transfers and bill payments were
revised in keeping with the market
demand, while additional security
protocols were introduced to safeguard
against the threat of cybercrime.
Following these new developments,
a substantial increase in the volume
of online financial and non-financial
transactions was observed, with
volumes for 2016 being 78% higher
than those recorded in the previous
year. Moreover, a notably higher
number of customers were found
registering for the online banking
services, particularly from all provinces
across the country, further testament to
the versatility of the Sampath Vishwa
online banking model.
To complement these efforts, the
‘Sampath Instant Loan Facility’ was
introduced, a revolutionary new self-
service banking concept that allows
Sampath Missed Call Banking Facility
Sampath Pay Easy
customers to obtain a loan instantly
without ever visiting a branch. This
is the first time in Sri Lanka that all
documentation was done electronically
when disbursing a bank loan.
The Bank also stepped up efforts to
popularize the SMS Alertz service by
encouraging clients to embrace its
advanced security features.
The launch of “Missed Call Banking”
tool, another first in the market,
added a new dimension to customer
convenience where a mere missed
call would fetch bank balances of all
operative accounts. The cost saving
and convenience to the customer was
evident by the exponential growth of
the product in the few months of its
existence.
68 SAMPATH BANK PLC
ANNUAL REPORT 2016
THE LAUNCH OF “MISSED CALL BANKING” TOOL, ANOTHER FIRST IN THE MARKET, ADDED A NEW DIMENSION TO CUSTOMER CONVENIENCE WHERE A MERE MISSED CALL WOULD FETCH BANK BALANCES OF ALL OPERATIVE ACCOUNTS
Sampath Bank Secure Payment Gateway
ensure greater customization and quick
deployment have now become the
hallmark of Sampath Vishwa Corporate,
giving it a leading edge over other
offerings in the market.
Additional efforts to enhance general
functionality saw Sampath Vishwa
being promoted as a payment channel
to give users the option to pay directly
without the use of a credit card. While
allowing corporates to broad base
their offerings and appeal to a wider
market, the initiative also ties in with
the national endeavour to promote a
cashless society. Meanwhile, to expand
the B2G (Business to Government)
business model, the BOI was added to
the existing list of Government payment
options under Sampath Vishwa, making
it easier for companies who have to
make payments to BOI to perform such
MANUFACTURED CAPITAL
NEW CUSTOMERS FOR SMS ALERTZ SERVICE
0
50,000
100,000
150,000
200,000
250,000
300,000
2014
2013
2015
2016
To cater to the rising number of online
bill payments, the PayEasy bill payment
portal was re-launched. The new and
improved web portal includes modern
architecture and responsive design
elements, making it accessible by
any device. The unique feature of the
payeasy.lk portal is that Sampath Bank
customers as well as non-account
holders can use a Credit or Debit card
issued by any other bank to make a
payment through the portal.
CORPORATE INTERNET BANKING
For Corporate clients, the main focus
was the customization of the Sampath
Vishwa Corporate as a total financial
supply management system to cater to
the highly specific needs of the client.
In fact, steps taken over the years to
MANAGEMENT DISCUSSION & ANALYSIS
69
Cocktail party hosted by Sampath Bank for Vishwa Customers
payments online and benefit from real
time convenience.
FACILITATION OF E-COMMERCE
Efforts to facilitate e-commerce in
Sri Lanka saw the Bank focus on
enhancing the functionality of the
Internet Payment Gateway. Among the
key developments was the launch of
new payment platform where customers
can perform e-commerce transactions
using their Sampath Vishwa credentials
and using CASA as the source of funds
for payments. Meanwhile continuing
with efforts to propagate e-Commerce,
customized operational models
were developed to cater to startups
identified as a high potential area in the
e-commerce marketplace.
70 SAMPATH BANK PLC
ANNUAL REPORT 2016
INTELLECTUAL CAPITAL
STRENGTHENING ALL ASPECTS OF OUR INTELLECTUAL CAPITAL REMAINS A STRATEGIC IMPERATIVE, WHICH CALLS FOR BROAD RANGING INVESTMENTS, ESPECIALLY IN IT
Our Intellectual Capital comprises of
the intangible factors that are unique to
Sampath Bank: Our values, our culture,
knowledge of our people, our processes
and the specific way we conduct
our business, all of which cannot be
easily quantified, but go a long way in
determining our competitive position
and sustainability in the long term.
Therefore, strengthening all aspects
of our Intellectual Capital remains a
strategic imperative, which calls for
broad ranging investments, especially
in IT.
In a world where access to critical
information and the ability to act
National Best Quality Software Awards 2016
quickly and effectively are becoming
the key differentiators, the main priority
for Sampath Bank’s IT Division is to
sharpen the technology focus and
transform the business today, in a
way that would reshape the Bank of
tomorrow.
This means leveraging on
groundbreaking new technologies in
cloud, security, service architecture,
systems management and business
analytics, to tap into new opportunities
and create new bases of competition
that would provide a leading edge in
the market. All activities carried out in
2016 were twofold and aimed at;
STREAMLINING BUSINESS
PROCESSES TO IMPROVE
EMPLOYEE PRODUCTIVITY
The following projects were completed
in 2016;
Launch of the “e-Mandate”,
a new user-friendly online
tool allowing the customer to
complete all account-opening
forms, thus relieving the branch
staff from the need to perform a
manual task. This electronic data
entry and storage mechanism
also reduces errors that are likely
to occur due to manual data
entry, thereby saving time and
leading to service efficiency. The
operations currently covered
under the e-Mandate mechanism
are: Application for opening
of Current Accounts, Savings
Accounts and FDs, Debit
Card application, SMS Alertz
application and the Telebanking
application
Introduction of the Online
transaction upload system, which
gives the Electronic Banking Unit
(EBU) the ability to automate
the responses coming from the
biller’s applications and easily
handle reversals
Measures introduced with the
assistance of specialist third party
vendors include;
e-Operational Guide, an online
tool that enables employees
to search for Operational
Guidelines, Circulars, Directives
etc. to improve their knowledge
and perform their job functions
accurately and effectively
MANAGEMENT DISCUSSION & ANALYSIS
71 e-Library System, an online
data base of books and other
reference materials, to encourage
employees to embrace a
continuous learning approach
The following projects were initiated
during the year and are scheduled to
be completed in 2017;
Trade CAS (Credit Approval
System), a workflow process
management system to expedite
the approval process for LCs
(Letter of Credit), import bill
settlements and other trade
related credits in the Foreign
Currency Banking Unit and
the Trade Services, Corporate
Credit and Commercial Credit
Departments
Digitalization projects
Digitalization of the
LC issuance process,
Accounts Opening
process, Personal Loan
disbursement process
and integration of these
processes with the
core banking system
to enable seamless
data transmission. The
digitalization process
also includes automation
of data scrutiny and
approval systems for these
processes
OCR (Optical Character
Recognition) and ICR
(Intelligent Character
Recognition) to convert
data from handwritten
forms, which will result in
significant time savings as
opposed to manual data
entry
Improvements to the
Bancassurance Mechanism
to reduce manipulations and
malpractices and minimize
delays through continuous
monitoring and proper control
Improvements to the Katunayake
Pay Office (KPO) workflow
management system to automate
key processes, improve data
recording and integrate the KPO
operations into the core banking
system
Automating the transaction
unlock feature for e-Remittances
in order to replace the
cumbersome and time-
consuming manual process
FACILITATING SUPPORT
SYSTEMS THAT WILL ENABLE
THE BANK TO FULFILL ITS
STRATEGIC OBJECTIVES
Activities for the year were driven by
the following strategic objectives;
PROMOTING FINANCIAL INCLUSION
IN SRI LANKA
The involvement of the IT Department
was mainly to facilitate the necessary
framework and develop software that
would support the “MyBank” concept,
an agent assisted banking mechanism
launched in 2016 with the aim of
reaching out to the vast numbers of
rural unbanked people.
IMPROVING CUSTOMER
CONVENIENCE
The Visa Pay Wave card, which
for the first time in Sri Lanka,
uses NFC technology to enable
faster processing of payments,
enabling faster check out at
merchant points
Sampath Missed Call Banking,
another unique mobile banking
feature, which uses the latest
mobile technology to allow
existing customers to receive
information on their bank
balances via their mobile
phones.
Sampath Instant Loan - an
online real-time lending facility
implemented using the latest
technology. Introduced to Sri
Lanka’s financial sector for the
first time, this unique facility
allows Sampath Vishwa online
banking users to obtain loans
against their fixed deposits by
simply submitting the Instant
Loan application through the
Bank’s secure online platform
STRENGTHENING CUSTOMER
CONNECTIVITY
Working closely with Lanka Clear
(Pvt) Ltd., steps were taken to fully
integrate the CEFTS platform (Common
Electronic Fund Transfer Switch), which
led to Sampath Bank being appointed
as one of the facilitators of this inter-
bank fund transfer system. Moreover,
as per the direction issued by the
CBSL, Sampath Bank joined Lanka
Clear CAS (Common ATM Switch)
enabling interbank ATM transactions to
be carried out through Lanka Clear
National Best Quality
Software Awards (NBQSA)
– 2016 - Silver Award for
“Sampath Missed call Banking
Application” in the In-house
Application category
Finacle Client Innovation
Awards 2016 - Two accolades
at the recently concluded
Finacle Client Innovation
Awards 2016 hosted by the
Finacle Forum 2016 in India.
Winner of the Innovative
Customer Component category
for the Automated Teller Safe
(ATS) machine
Runner-up award in the
Customer Service Innovation
category for the ‘Instant Loan
Application’ developed in-
house.
72 SAMPATH BANK PLC
ANNUAL REPORT 2016
BUSINESS CONTINUITY PLANNING
Ongoing monitoring and compliance
of the Business Continuity Plan (BCP)
continued throughout the year, with
regular testing being done to ensure
proper maintenance of the back up
and disaster recovery mechanism. In
addition:
Subscribing to international
best practices; ISO
27001:2013 certification
This process which commenced in the
previous year was completed in the
year under review, making Sampath
Bank one of the few banks in Sri Lanka
to have obtained ISO certification for
information security management for
bank-wide IT systems
Preventing Cyber Security
Threats
To overcome increased cyber security
threats, an Intrusion Prevention System
was implemented covering the entire
network, making Sampath Bank the first
Sri Lankan bank to implement such a
secure environment.
Sampath My Doc (Digital Health App) Payment Gateway
INTELLECTUAL CAPITAL
MANAGEMENT DISCUSSION & ANALYSIS
73
HUMAN CAPITAL
We understand that realizing our vision
to be “the growing force in Sri Lankan
financial services” depends largely on
our human capital. It is why we strive
to develop and nurture a healthy and
inclusive culture that can inspire our
people to learn and grow. Therefore,
our talent management strategies are
geared to ensure that the right people,
with the right skills and capabilities, are
in the right roles and are engaged and
focused on the right activities.
We are committed to driving a culture
where our people feel valued, have a
clear sense of belonging, know what is
expected of them and are recognized
and rewarded for their contribution.
However, creating such an environment
is not without its challenges,
particularly in today’s context where
digitalization and the growing threat
of telecommunication operators have
begun to influence the way we work.
Our response to such challenges has
always been to ensure that our people
management strategies evolve in
tandem with such change.
We continue to work with a clear
purpose and are driven by one
overarching goal; to make Sampath
Bank an employer of choice. In doing
so, we focus on the following key
pivots;
REWARDS AND
RECOGNITION
Sampath Bank’s benefit structure
provides market competitive pay and
rewards, in order to retain the best
talent. At the same time we continue to
work towards improving benefit plans
offered to our employees to ensure that
they are properly recompensed and to
secure their commitment towards the
Bank’s success.
In 2016, a 10.5% salary increment
was implemented across the board,
while the roll out of a “Team Based
Performance Bonus Scheme”
was introduced to emphasize a
performance-based culture that
would lead to improved productivity
at all levels of the business. Under
the scheme, the SBUs (Strategic
Business Units) are assigned with
SMART objectives along with KPIs (Key
Performance Indicators) that serve
as the collective deliverables for the
year. Mid-year reviews are conducted
to ensure alignment with set targets,
followed by the annual reviews, the
results of which determine the annual
bonus entitlement for members of a
particular unit or team.
Efforts to further refine the benefit
structure prompted the introduction of a
number of monetary and non monetary
benefits including;
Sampath Bank Benefit Structure
Permanent
Employees
Contract
Employees
Differently-abled
Employees
MO
NE
TA
RY
BE
NE
FIT
S
Profit bonus √ √ √
Salary increments √On renewal of
agreement√
Allowances (as applicable) for professional examinations /
postgraduate studies√ √ √
Reimbursement of course fees / examination fees √ - √
Medical facilities (staff & family) √ - √
Insurance facilities (24 hour) √ √ √
NO
N-M
ON
ETA
RY
BE
NE
FIT
S
Holiday bungalow facilities √ √ √
Special non-technical training on meditation, yoga, first aid,
life skills, etc√ √ √
Special programs for children of team Sampath (i.e. Daru
Daskam, Rewards for Children and the Yong Leadership
Development Program, etc.)
√ √ √
G4 - LA 02
74 SAMPATH BANK PLC
ANNUAL REPORT 2016
TRAINING AND
DEVELOPMENT
Our training and development
agenda is designed to support our
employees starting from their first day
of employment at the Bank and from
thereon to provide continuous training
and development vis-à-vis a range of
technical and non-technical areas.
Our strategy is to provide timely and
focused training and development
that will help our employees sharpen
their skills and fulfill their personal and
professional development goals. A
Training Needs Analysis is conducted
annually, based on competency
assessments, customer expectations
and developments in the Bank and the
financial sector. This process facilitates
the annual training plan, which
ensures that timely and appropriate
training received by Team Sampath.
The training plan features technical
and non-technical training, which are
deployed through a combination of;
In-house Training - In-house
training includes induction
training, certification level
training, experience sharing
sessions, panel discussions etc.
In designing and conducting
the internal training, the Bank
make use of the experience and
expertise of the team members of
the faculty of internal trainers as
well as external trainers as and
when needed.
External Training Programs -
External training programmes
conducted by accredited
professional institutions to
expose participants to best
practices and innovations and to
promote interaction with expert
trainers, competitors and market
leaders.
Regional Training - catering
to the cluster of branches
(approximately 10) coming under
the same geographical location
and thus target regionally
specific training needs. Regional
managers, regional training
coordinators or other officers
from the respective regions
conduct programmes, which
allow the learner to share local
experiences and find solutions
for local issues. Effective
2016, all course material for
these programmes have been
designed centrally, a move
aimed at enhancing training
standards and creating greater
uniformity across modules.
Overseas Training - In order
to expose our team members
to global practices in Banking
and Finance and to ensure
competitiveness in the market
by capitalising on knowledge
gathered during training.
Identified team members
undergo training in recognized
institutions and internationally
acclaimed universities. These
institutions provide a varied
number of programmes through,
corporate training, conferences,
workshops, seminars and
customized programmes.
OUR TRAINING AND DEVELOPMENT AGENDA IS DESIGNED TO SUPPORT OUR EMPLOYEES STARTING FROM THEIR FIRST DAY OF EMPLOYMENT AT THE BANK
“Sampath Tharu - 2016” - Talent show of our own team members
HUMAN CAPITAL G4 - LA 10
MANAGEMENT DISCUSSION & ANALYSIS
75
e-Learning - interactive animated
e-learning modules are made
available, covering both
technical and non-technical
aspects to allow team members
to learn at their own pace. These
modules are especially designed
and developed internally and
take the form of an interesting
narrative that uses animation to
illustrate key areas. Cloud based
technology provides employees
access to e-learning modules
through their mobile phones from
anywhere and at any time.
Online Learning - an online
version of the English Proficiency
Programme is available to all
our team members to enhance
their English language skills
in collaboration with a market
leader – “Ingrisi.com”.
The “Ingrisi.com” initiative is
especially designed for Sinhala
speaking team members while
the Tamil version “Angilam.com”,
is also made available for Tamil
speaking team members.
Both online versions have been
coupled with a special speech
craft programme conducted
by our internal Toastmasters
Club in order to develop the
conversational skills of the
participants.
Library Facilities -
a comprehensive reference
Library is maintained at the Head
Office along with peripheral
libraries at Regional Offices/
Branches. “Online” library
facilities were introduced with
access to the main library
located at the Head Office.
Central Database of Case
Studies - An initiative that captures
and retains the tacit knowledge
of employees who are leaving or
retiring. It is intended to serve as
a reference portal accessible to
senior managers and corporate
management in the future.
In 2016, a sum of Rs 69.13 Mn was
invested in all training, 47% more than
in the previous year.
LEADERSHIP DEVELOPMENT
With our business reaching a certain
stage in the growth cycle, we are now
facing the challenges associated with
business consolidation as opposed
to expansion, and one of the key
concerns is adequate succession
planning for our employees. Hence,
for the past few years we have
begun to employ a robust leadership
management framework to assist
leadership development from executive
level to senior management and
corporate management positions
underscoring our belief in developing
leaders at all levels.
In line with our “Develop from within”
rationale, we give every member of
the workforce access to leadership
development opportunities that will
pave the way for career progression
within the Bank.
The Executive Talent
Development Programme
(ETDP) - the key facilitator of
the Bank’s leadership pipeline
seeks to create a pool of talented
Senior Executives / Senior
Managers capable of supporting
the Bank’s long-term business
requirements. The programme
targets candidates who are
currently serving within the senior
executive to senior manager
grades (both inclusive). The
chosen candidates are then
developed through a strategic
career mapping process.
Sampath Service Awards - 2016
Sampath Bank Quiz Competition - 2016
76 SAMPATH BANK PLC
ANNUAL REPORT 2016
The Harvard Business School,
USA, Scholarship Programme -
provides additional development
opportunities for employees to
gain an extra edge.
The Harvard Business School
e-Learning Module - seeks to
foster a continuous learning
environment and cultivate
the concept of continuous
professional development among
senior managers.
Professional Development -
employees are encouraged to
pursue their education goals
and the Bank fully supports
their efforts by reimbursing
course fees and professional
memberships for accredited
courses relevant to their field.
EMPLOYEE ENGAGEMENT
We realize that maintaining good
employee relations helps to reduce
workplace conflict, raises staff morale
and increases overall productivity.
Therefore, to stay connected to all our
employees, we encourage two-way
communication across all levels. In
order to foster healthy relationships
the Bank has in place a broad-ranging
employee engagement mechanism,
which include;
Meetings with representatives
of Sampath Bank Employees’
Association (SBEA) - The SBEA
comprises of approximately 98%
of our team and although no
formal agreement exists between
the two parties, the relationship
between the Bank and the SBEA
remains excellent
Mentoring Programme for Junior
Executives
“Helping Hands” Counselling
Cell to address the issues faced
by employees and to provide
psychological support
Employee Grievance Handling
Procedure
Regular meetings with SBU
heads eg: planning meetings,
budget meetings etc
Regional HR coordinator
programmes
Performance appraisal meetings
Sampath Sandeshaya - quarterly
employee in-house news
magazine
Sampath Employee Notification
System (SENS)
“Sampath Chinthana”, a channel
introduced to receive employee
suggestions and feedback
Our employee engagement
programmes extend to the families of
our employees as well through;
Sampath “Daru Daskam” -
A competitive event organized
by Sampath Bank and held every
two years to recognize special
talents of children of Team
Members
“Rewards For Children” -
A special award scheme to
recognize achievements of
children of team members who
have excelled in competitive
examinations and / or sports,
in a given year. In 2016 a total
of 29 children were felicitated,
being those who excelled in
the 2015 year-05 Scholarship
examination, 2015 Advanced
Level candidates accepted to
local Universities and Sports,
achievers for 2015.
“Yong Leadership Development
Program” - A leadership
development program conducted
for children of Sampath team
members with the assistance
of Sampath Bank in-house
Toastmasters Club. Children
between the ages of 13 and 16
were participated in this, special
programme.
HUMAN CAPITAL
Rewards for children - 2016
MANAGEMENT DISCUSSION & ANALYSIS
77DIVERSITY AND INCLUSION
As part of our strategy to ensure a more
inclusive work environment, we remain
committed to uphold the fundamental
human rights of all our employees and
therefore have aligned ourselves to
the universal principles and norms that
protect human rights in employment.
We have adopted a non-discriminatory
approach where we will not
discriminate against any employee
or potential employee. Further, as an
equal opportunity employer, we will
ensure that all qualified applicants
receive fair consideration regardless
of race, colour, religion or gender.
Our commitment to maintain equal
opportunity and greater diversity
extends to all levels of our business,
where our priorities are;
Gender Equality - to promote
greater gender equality we
have put in place an equal
remuneration policy to ensure
that men and women who
perform the same job are
compensated and recognized in
the same way
Local Hiring - our recruitment
policies are structured to
promote local hiring from all
regions across the country. In this
regard, we strive to ensure that
as many employees as possible,
travel from home
Differently - abled Employees - all
differently-abled employees at
Sampath Bank are considered
on par with other employees
and entitled to all remuneration
and benefits applicable to the
positions they hold. They are
afforded equal opportunities
throughout their employment
lifecycle.
SAFETY AND WELLNESS
Providing our employees with safe
working conditions are at the core of
our human capital value proposition.
As such, we continue investing in
programmes to ensure the safety
and wellbeing of team Sampath while
at work. In 2016 we carried out the
following activities;
Annual fire drill with the
participation of approximately
960 employees
First aid-training programme, for
44 employees
Meanwhile, through our Employee
Welfare Policy we remain committed to
provide an environment that enriches
the wellbeing of the team members
thereby improving their quality of life.
These strategies are deemed to be a
key motivating factor that would likely
secure employee commitment, improve
productivity and result in a higher-level
of employee retention in the long term.
In addition to the non-monetary benefits
listed on page 73 above, the following
initiatives were carried out in 2016
to improve the wellbeing of Team
Sampath;
Annual Health Conference under
the theme “Unleash the Vigour in
You”, which saw the participation
of more than 200 employees
Launch of a quarterly e-Health
Bulletin - “ Health And You”
Launch of the “MyDoc” platform
- A revolutionary new medical
consultation solution that gives
corporate employees online
real-time access to medical
specialists across the country at
zero cost
FOSTERING A SENSE OF
COMMUNITY
Our robust event calendar provides
a range of social and sports activities
through which we build team spirit and
camaraderie among employees at all
levels. These include;
Annual Inter Department / Branch
Six-A-Side Cricket and Netball
tournament
Annual inter Branch / Department
quiz competition
“Sampath Night” - Annual Dinner
Dance
Sampath Service Awards - In
2016, 56 employees who
completed 25 years of service
were felicitated at the “Sampath
Service Awards - 2016”
Annual Health Conference 2016
78 SAMPATH BANK PLC
ANNUAL REPORT 2016
HUMAN CAPITAL
NEW RECRUITS 2016
NEW RECRUITS - AGE GROUP AND GENDER
Age Group Male Female Total
Above 55 - - -
51-55 - - -
41-50 1 1 2
31-40 6 2 8
21-30 111 54 165
18-20 6 4 10
Total 124 61 185
Percentage 67 33 100
NEW RECRUITS - REGION AND GENDER
Province Male Female Total
Central 2 4 6
Eastern 9 1 10
North Central 4 2 6
North Western 2 2 4
Northern 6 2 8
Sabaragamuwa 5 2 7
Southern 8 6 14
Uva 6 - 6
Western 82 42 124
Total 124 61 185
Percentage 67 33 100
TURNOVER 2016
TURNOVER - AGE AND GENDER
Age Group Male Female Total
Above 55 1 - 1
51-55 8 11 19
41-50 5 1 6
31-40 39 29 68
21-30 76 41 117
18-20 2 1 3
Total 131 83 214
Percentage 61 39 100
TURNOVER - REGION AND GENDER
Province Male Female Total
Central 5 3 8
Eastern 8 - 8
North Central 5 2 7
North Western 5 2 7
Northern 7 2 9
Sabaragamuwa 1 3 4
Southern 9 5 14
Uva 3 - 3
Western 88 66 154
Total 131 83 214
Percentage 61 39 100
G4 - LA 01
MANAGEMENT DISCUSSION & ANALYSIS
79REASON FOR TURNOVER
REASON FOR TURNOVER VS GENDER
Reason for Turnover Male Female Total
To join other competitor organizations 25 5 30
To join other organizations 33 11 44
Migration 23 17 40
Higher studies 13 5 18
Personal reasons 13 26 39
Retirement 8 11 19
Other 16 8 24
Total 131 83 214
Percentage 61 39 100
RETURN TO WORK AND RETENTION RATES AFTER PARENTAL LEAVE
Description 2016 2015
Employees entitled to maternity leave 1,374 1,398
Employees taking maternity leave 109 121
Employees returning to work after maternity leave 108 121
Employees still employed 12 months after taking maternity leave 106 107
Return to work rate 99% 100%
Retention rate 97% 89%
LOST DAYS AND ABSENTEEISM DUE TO HEALTH AND SAFETY ISSUES - NONE
Average Hours of Training per Year per Employee by Gender and by Employee Category
No.
Participants Training Hours Grade
Co
mp
ete
ncy
Are
a
Ma
le
Fe
ma
le
Ma
le
Fe
ma
le
Co
rpo
rate
Ma
na
ge
me
nt
Se
nio
r
Ma
na
ge
me
nt
Exe
cu
tive
Ma
na
ge
me
nt
Mid
dle
Ma
na
ge
me
nt
Ju
nio
r
Ma
na
ge
me
nt
Op
era
tio
na
l
Sta
ff
Oth
er
Gra
de
s
Tota
l
1 Human Rights 37 20 330 178 80 48 48 312 16 4 - 508
2 Branch Banking 20,836 11,219 46,526 25,053 126 1,857 3,173 8,631 11,427 46,028 337 71,579
3 Legal & Good Governance 132 71 421 227 41 118 102 261 62 61 3 648
4 Risk & Compliance 1,437 774 1,472 793 43 161 287 514 546 706 8 2,265
5 Audit, Finance &
Accounting Procedures 210 113 1,147 618 81 217 347 445 427 248 - 1,765
6 Customer Service, Selling
Skills & Marketing 4,433 2,387 25,171 13,554 - 141 626 1,838 1,632 33,802 686 38,725
7 Knowledge on
Development of
Managerial & Leadership 4,828 2,600 6,718 3,617 186 4,593 1,254 1,832 972 1,324 174 10,335
8 IT Skills 71 38 3,538 1,905 96 660 1,321 2,348 499 508 11 5,443
9 Other Areas 2,057 1,108 3,252 1,751 259 1,048 907 1,229 507 1,003 50 5,003
Total 34,041 18,330 88,575 47,696 912 8,843 8,065 17,410 16,088 83,684 1,269 136,271
Percentage 65 35 65 35 1 6 6 13 12 61 1 100
G4 - LA 03
G4 - LA 06
G4 - LA 09 HR 02
80 SAMPATH BANK PLC
ANNUAL REPORT 2016
HUMAN CAPITAL
COMPETENCY AREA-WISE SUMMARY
No. Competency Area Participants
Total
Training Hours
Total
1 Corporate Banking 1 80 2 Business Continuity 6 136 3 Procedural Aspects on Risk Management and Compliance 203 1,743 4 Banking Internal Systems, Processes and Related Procedures 135 814 5 Credit Card Operations 94 230 6 Critical Skills Development 855 8,793 7 Procedural Aspects in Branch Operations 1,077 16,377 8 Procedural Aspects in Local and Foreign Currency Management 29 272 9 Advance Information Communication Technology Systems 85 5,183
10 Basic IT Skills 24 260 11 Buildings and Maintenance 7 60 12 Logistics Management 6 48 13 Accounting and Audit Procedures 188 1,126 14 Advance Human Resource Management 50 372 15 Advance Marketing Skills 4 3116 Financial Budgeting and Forecasting 135 639 17 Legal and Good Corporate Governance 203 648 18 Customer Service Excellence 1,201 6,304 19 Selling Skills & CRM 761 4,114 20 Development of Managerial & Leadership 955 6,474 21 Familiarization on Banking and Other Environments 393 10,920 22 Import and Export Operations 246 1,923 23 Investments and Treasury Operations 26 538 24 Procedural Aspects on Credit / Recovery Operations 525 4,026 25 Seminars and Conferences 397 3,410 26 e-Learning & Other Distance Learning 44,765 61,751
Total 52,371 136,271
All Employees receive regular feedback on performance and career development and their level of performance is assessed
on annual basis.
Composition of Governance Bodies and Breakdown of Employees per Employee Category According to Gender, Age Group,
Minority Group Membership, and Other Indicators of Diversity.
Range
Corp
ora
te
Managem
ent
Senio
r
Managem
ent
Exe
cutive
Managem
ent
Mid
dle
Managem
ent
Junio
r
Managem
ent
Opera
tional
Sta
ff
Oth
er
Gra
nd
To
tal
Male
Fem
ale
Male
Fem
ale
Male
Fem
ale
Male
Fem
ale
Male
Fem
ale
Male
Fem
ale
Male
Fem
ale
18 - 20 6 4 10
21 - 30 2 17 5 114 74 1,201 427 4 14 1,858
31 - 40 2 2 29 5 281 101 349 204 216 260 12 38 1,499
41 - 50 10 3 72 16 95 38 102 64 13 33 1 3 15 45 510
51 - 55 7 1 9 4 7 7 7 2 1 9 24 78
Above 55 1 2 2 5
Total 18 4 85 22 133 50 407 172 477 311 1424 694 42 121 3,960
Percentage 82 18 79 21 73 27 70 30 61 39 67 33 26 74
G4 - LA 11
G4 - 09 LA 12
MANAGEMENT DISCUSSION & ANALYSIS
81
Type of Employment 2016
Male Female Total
Fixed Term Contract 12 12 24
Permanent 2,424 1,270 3,694
Probationers 13 30 43
Trainees 137 62 199
Total 2,586 1,374 3,960
Region 2016
No. of Branches /
Units
No. of Employees Total
Male Female
Central 24 175 92 267
Eastern 19 123 27 150
North Central 10 89 17 106
North Western 22 158 81 239
Northern 15 85 27 112
Sabaragamuwa 15 110 36 146
Southern 27 191 90 281
Uva 10 79 14 93
Western 157 1,575 990 2,565
Overseas Operations 1 1 - 1
Total 300 2,586 1,374 3,960
BASIC SALARY & REMUNERATION RATIO BY GENDER & EMPLOYEE CATEGORY
Level Female Male
Corporate Management 1 1.12
Senior Management 1 1.05
Executive Management 1 0.93
Middle Management 1 0.98
Junior Management 1 0.99
Operational Staff 1 0.92
The Bank has given an equal opportunity for all employees and does not tolerate any form of unfair discrimination on the basis
of race, gender or disability. The ratio of basic salary at the entry level for male and female is 1:1. However, this ratio may
change due to different service period of employees in the Bank and at a particular salary grade.
Average training hours per employee 34.41
Average training hours per female 34.71
Average training hours per male 34.25
AVERAGE TRAINING HOURS PER EMPLOYEE - CATEGORY WISE
Corporate Management 41.45
Senior Management 82.65
Executive Management 44.07
Middle Management 30.07
Junior Management 20.42
Operational Staff 39.51
Other Grades 7.79
G4 - 10
G4 - LA 13
82 SAMPATH BANK PLC
ANNUAL REPORT 2016
SOCIAL AND RELATIONSHIP CAPITAL - CUSTOMER
We aspire to be the bank that can
fully support our nation by helping all
citizens who want to make a difference.
Our goal is essentially to go beyond
providing traditional banking facilities
and create real value for individuals
and businesses that bank with us. This
requires us above all, to become a
sustainable bank capable of serving
today’s customers, as well as paving
the way for future generations of
Sri Lankans to succeed in an ever-
changing world.
As we continue to realign, strategise
and make changes in the way we
do business, our intention is to
keep pace with the growing needs
of all our customers; retail and
corporate. Underpinned by our
customer philosophy: “To uphold the
customers’ right to demand a stable
and progressive banking environment
based on enhanced customer choice /
convenience and superior service”, we
focus on the following key priorities;
PRODUCT RESPONSIBILITY
We accept that in order to retain
existing customers and acquire new
ones, it is imperative that we stay
relevant by offering appropriate,
innovative, products and services at the
right cost and at the right time.
To determine how effective our
products and services are to our
customers, we rely on our Product
Policy, which sets out guidelines for
the introduction, maintenance and
discontinuation of our offerings. Further,
by continuous monitoring of each and
every product or service at varying
stage of its life cycle in addition to
ongoing investments in research and
development, we make sure that all
our products and services continue to
remain beneficial to the target market,
at all times.
RETAIL SEGMENT
(INITIATIVES FOR 2016)
Launch of the Ladies 1st Account
- A unique savings account for
the modern Sri Lankan woman,
offering the promise of more
financial freedom, convenience,
and advantages, including;
premium interest rates, structured
investment plans, discounted
rates for housing loans, personal
loans, etc. along with a host of
other value added benefits.
Launch of Missed Call Banking -
Introduced for the first time in Sri
Lanka, the Missed Call Banking
facility gives the customer the
opportunity to simply dial 011
2303080, automatically triggering
a Missed Call after three rings.
The customer will then receive an
instantaneous response via text
message to his/her mobile phone
giving their account balance for
all active accounts.
Introduction of the Instant Online
Loan Facility - A first for Sri Lanka,
the Sampath Bank Instant Loan
facility is an instant cash margin
loan facility that can be obtained
against an existing rupee fixed
deposit (excluding Kalin Cash
and Easy FD), through Sampath
Vishwa Online Banking.
Re-launch of the
www.payeasy.lk Portal - where
Sampath Bank customers as well
as non-customers can now use
Visa & Mastercards issued by
another bank to make a payment
through this portal.
The Sampath Visa payWave
Card - Launched at a grand gala
ceremony hosted on the 9th &
10th July at the newly opened,
Shangri-La Hotel, Hambantota,
the Visa payWave, provides
customers and merchants a
range of unprecedented benefits.
Visa payWave, accepted both
locally and internationally, is a
contactless card transaction
technology that does not need
Sampath Instant Loan Facility
MANAGEMENT DISCUSSION & ANALYSIS
83
the card to ever leave the hands
of the cardholder, thus ensuring
complete security, minimizing
fraud and reducing the risks
associated with credit card
skimming. Being a tap-and-go
option, it also reduces customer
queuing time, as it is a faster
way to pay. For transactions up
to Rs 5,000/-, Visa payWave
cardholders can use their
contactless cards without
having to enter the pin or sign
transaction receipts.
Introduction of the My Bank
Mechanism - The goal of the
My Bank mechanism is to reach
the un-banked population of the
country, and expand the Bank’s
accessibility to the general
public, through a network of
agents. My Bank delivers basic
financial services (deposits &
withdrawals) through agent-
assisted banking with the use
of POS machines to support
Stored Value Card Accounts
for non-account holders. In this
way, My Bank strives to integrate
basic banking principles into the
lifestyle of the unbanked masses
and bring about greater financial
inclusion across a broader
cross-section of both rural and
suburban markets.
Strategic Alliances with Mobitel
M-Cash, Sri Lankan Airlines,
Dialog ez Cash, Prime Lands,
wow.lk, Air Asia to expand
e-commerce.
CORPORATE SEGMENT
(INITIATIVES FOR 2016)
Export Bonanza - A special
concession scheme offered to
both existing and potential export
customers from 1st March 2016
to 31st December 2016. Under
this scheme, existing export
customers who have recorded
higher volumes of export bills
and export related TTs for a
month or more became eligible
for a 100% commission waive-off
during the promotional period.
The waiver was applicable
for any increased turnover
throughout the same period
last year. New customers were
offered an attractive 50% waive-
off on commission for their new
export business routed through
the Bank.
Export Direct – Enabling
customers to route their Export
Bills direct to their buyer’s
bank on behalf of Sampath
Bank, thus eliminating the
need to visit the Bank. It is also
structured to allow customers
to dispatch documents even
on a non-banking day at their
convenience.
Export House – A dedicated
unit to assist our branch network
to serve exporters in the SME
sector. The scope of the unit also
extends to helping exporters to
find markets, supporting product
development, financing and
providing consultation to assist in
their supply chain management
activities.
MARKETING
COMMUNICATION
All customer communication activities
are governed by the Board approved
Communication Policy, which defines
the protocol applicable for all external
communications including marketing
and promotional advertising activities.
In this regard, the policy dictates
that the customer is provided with
comprehensive information on each
product or service, so that they are
able to fully understand each value
proposition and be able to make an
informed decision. It also states that
in conveying this message, the Bank
may employ a suitable mix of both ATL
and BTL channels, based on the nature
of product / service and the target
audience.
AS WE CONTINUE TO REALIGN, STRATEGIZE AND MAKE CHANGES IN THE WAY WE DO BUSINESS, OUR INTENTION IS TO KEEP PACE WITH THE GROWING NEEDS OF ALL OUR CUSTOMERS
The Sampath Visa payWave Card
G4 - EC 08
84 SAMPATH BANK PLC
ANNUAL REPORT 2016
Category
Advertising Campaigns (2016)
CampaignMedium
Press TV Radio Social
Media
BTL Digital PR
Deposits
Sanhinda Saver communication (re-launch) √ √ √ √ √ √ √
Launch of Ladies 1st account √ √ √ √ √ √ √
Avurudu gift promotion √ √ √ √ √ √ √
Thrift month gift promotion √ √ √ √ √ √ √
Year 5 scholarship rewards scheme √ √ √ √ √ √ √
Year 5 scholarship seminar series √ √ √ √ √
Sanhinda Saver rate revision √ √ √ √ √
Hit Saver rate revision √ √ √ √ √ √
Advances
Leasing quarter campaign √ √ √ √ √ √ √
Condominium campaign √ √ √ √ √ √ √
Pawning communication with a new concept √ √ √ √ √ √ √
Cards
Seasonal campaign √ √ √ √ √ √ √
Town on Sale √ √ √ √ √ √
Visa PayWave launch √ √ √ √ √ √
Debit card re-launch as a Smart Shopper debit card √ √ √ √ √ √ √
Channels
e-Remittance Cash Wasi √ √ √ √ √ √ √
Z-Reload thematic campaign √ √ √ √ √ √
Missed Call Banking launch √ √ √ √ √ √
Online loan application √ √ √ √ √ √
Trade Export Bonanza √ √ √ √ √ √
CUSTOMER PRIVACY AND
DATA SECURITY
As a bank we are in possession of
large volumes of information relating to
our customers, most of which are of a
highly sensitive nature. Safeguarding
such personal information and
providing our customers with a safe
and secure banking environment
amidst growing cyber security threats,
is therefore one of our fundamental
responsibilities. Accordingly,
maintaining customer privacy and
digital data security are issues that
Sampath Bank takes very seriously.
To reaffirm our commitment, we
have established a Board approved
Online Privacy Policy, which seeks to
reassure our customers and help them
understand the terms and conditions
surrounding the capture and use of
personal information. The policy is
made available through our corporate
website and explains how Sampath
Bank collects, uses and shares
information about those who use or
access our digital platforms, including
the corporate website and any other
online interface maintained by Sampath
Bank.
We remain fully compliant with all
applicable data protection and privacy
laws, and in order to ensure complete
data security, we have integrated
among other processes the following in
to our day-to-day operations; Terminal
Line Encrypted (TLE) POS machines,
chip-enabled credit cards, SMS Alertz
and a direct callout system to verify the
authenticity of high-value transactions
with the customer.
At the same time, we continue to invest
in transforming our IT systems with the
latest technology that will strengthen
our client interfaces and enhance our
data security platforms to prevent cyber
security threats.
SOCIAL AND RELATIONSHIP CAPITAL - CUSTOMER
MANAGEMENT DISCUSSION & ANALYSIS
85Key initiatives for 2016:
Introduction of the ACS (Access
Control Server) security
application to facilitate an
additional security layer for
e-commerce transactions for
credit cards.
Signing up for the Visa Risk
Module, an online monitoring
mechanism linked with Visa
International to minimize the risk
of fraud.
Strengthening the compliance
framework to minimize the
security issues associated with
the SWIFT Telegraphic Transfer
process.
Introduction of a new sanction
screening mechanism for SWIFT
transfers, aimed at preventing
the use of TTs being used for
illegal financial activities.
CUSTOMER SERVICE
Customer service is central to our long-
term growth strategy. And as products
and service offered by banks become
increasingly generic, exceptional
customer service is fast becoming the
single most important differentiator that
sets us apart from our peers. That is
why we strive to delight our customers
with the next level of customer service
at all time.
We remain focused on augmenting
the customer experience by investing
in new technology that will simplify
and rationalize our internal processes
and transform the way we serve our
customers, today, tomorrow and into
the future.
Key initiatives for 2016:
Installation of 60 new Deposit
Kiosks at branches across the
country.
Upgraded system connectivity
with service partners through
an online real time interface
supported by a web service
platform to expedite Inward
Remittances.
Initial groundwork to introduce
a New Workflow solution – to
minimize procedural complexity,
reduce the paperwork and
expedite the end-to-end LC
opening process.
Initial groundwork to introduce
a new Workflow Management
System and a new core banking
solution, which together will
improve the efficiency of the TT
processing mechanism and allow
faster turnaround times.
Relocating the Customer Call
Center, in order to expand the
operational framework.
Introduction of an electronic
data submission mechanism
to support the cheque clearing
process.
Launch of e- mandate - A
mechanism to eliminate the
need for manual form filling,
minimising the duplication of
information and possible data
entry errors. Made available in
the trilingual format, e-mandate
represents the ultimate in
customer convenience, where
the customer is required only
to place his/her signature to
complete the process.
Commenced installation of 24
hour CCTV monitoring systems at
all off site ATMs.
CUSTOMER HEALTH AND
SAFETY
Being a bank, we are unable to clearly
assess how our products, services and
channels impact the health and safety
of the customer. Nevertheless, effective
management of health and safety
is deemed to be a sound business
principle that makes a significant
contribution to our profitability. As such,
we continue to work towards improving
the safety profile of our offerings in
order to ensure the wellbeing of our
customers at all times.
Key Initiatives for 2016:
Signing up with GT Nexus, the
world’s largest cloud based
business network and execution
platform for global trade. A
common platform that provides
a secure link that connects
suppliers, buyers, financiers and
other stakeholders of a particular
trade transaction, assisting the
customer to attract working
capital financing on time by
eliminating the risks associated
with “open account” trading, to a
great extent.
86 SAMPATH BANK PLC
ANNUAL REPORT 2016
SOCIAL AND RELATIONSHIP CAPITAL - SUPPLIER
Being a bank, our offerings are largely
developed in-house and unlike in
a manufacturing organization, our
products and services do not require
the sourcing of external components.
However for practical reasons, we
do work with suppliers and service
providers for certain day-to-day
operations.
We follow an inclusive procurement
strategy where we look to strike the
right balance between cost and quality,
while at the same time giving suppliers
the opportunity to increase their own
wealth creation capacity. Our goal
is to develop sustainable business
partnerships and ensure our suppliers
and business partners work in a way
that is consistent with our expectations.
Our procurement framework is based
on following principles;
FAIR AND EQUITABLE
PROCUREMENT
To ensure fair and equitable purchasing
practices, our procurement policy is
based on a Tender procedure that
creates a healthy level of competition,
where all applicants are considered on
an equal basis. We maintain a registry
of suppliers / service providers who
have made submissions through our
Tender process. The registry contains a
minimum of three potential candidates
for a designated activity and assigns
clearly defined approval limits for each
supplier / service provider based on
their track record with the Bank. At
three year intervals, the Bank publishes
newspaper advertisements in all three
languages inviting suppliers and
service providers to register with the
Bank in order to give a fair opportunity
to new suppliers and service providers.
SUPPLIER RISK
ASSESSMENT
The Bank’s Procurement Committee
is responsible for the screening and
selection of suitable suppliers / service
providers, a process that allows us to
assess the risks involved in purchasing
from different sources. This helps us
identify and work with those who are
deemed to be the most sustainable
and have the greatest positive impact
on our value chain. As a BCP measure,
for all critically important supplies and
services, the Bank has registered more
than one supplier or service provider
in order to obtain services without
interruption.
CONTRACTUAL
AGREEMENTS
Depending on the product or service
being procured, Sampath Bank may
enter into contractual agreements
with the supplier or service provider,
for a stipulated period of time. Such
contracts are reviewed prior to
expiration and renewed only if the
relationship is deemed sustainable and
financially viable for the foreseeable
future.
LOCAL SOURCING
Local sourcing is a key driver of our
inclusive sourcing strategy. Whenever
possible and practical, we engage
in local sourcing to procure services
mainly required at branch level.
Services such as re-painting and
general repairs to branch buildings, the
purchase of miscellaneous stationery
items, household equipment and
furniture required on urgent basis for
managers’ and staff quarters etc. are
purchased locally, upon approval from
the central purchasing unit.
Frequent inspections of suppliers are carried out by the Logistics Department
MANAGEMENT DISCUSSION & ANALYSIS
87
SOCIAL AND RELATIONSHIP CAPITAL - COMMUNITY
As a bank, our fundamental purpose
is to be socially relevant in every
possible way and to make a
meaningful difference in the lives of the
communities we serve. It is why in our
core business operations, we focus
on simplifying our products, services
and delivery channels in order to give
communities access to much needed
financial assistance. Moreover, as
a responsible corporate citizen, we
understand our duty to do more to
address the challenges that hinder the
progress of our people by working to
help them grow and prosper.
SOCIALLY RESPONSIVE CSR
MODEL
Inspired by our transformational CSR
strategy, we seek to further address the
broader systemic issues and socio-
economic challenges that affect our
communities. In deciding what areas
we should focus on, and in formulating
our broader CSR vision, we are guided
by the Millennium Development Goals
and the 2030 Agenda for Sustainable
Development, both part of the UNDP’s
development road map for Sri Lanka.
Simply put, our aim is to bring positive
change across a broader community
demographic through our socially
responsive CSR model.
SOCIALLY
RESPONSIVE CSR
MODEL
TRANSPARENCY
&
GOVERNANCE
COMMUNITY
ENGAGEMENTEMPLOYEE
VOLUNTEERISM
KEY CSR
ACTIVATIONS
SAMPATH BANK PLC CORPORATE SOCIAL RESPONSIBILITY FRAMEWORK
SOCIALLY RESPONSIVE CSR MODEL
Education for
Development
Dissemination of
knowledge and
information at a grass
root level in order to
reduce social and
economic inequalities
and bridge the
poverty gap.
Empowerment of
Community
Address grass
root level issues
by providing basic
infrastructure or
necessities to enable
the community to
improve its lifespan
Entrepreneurship
Development
Educate entrepreneurs
to facilitate their
development and
pave the way for
wealth creation
rather than increase
dependency on
borrowings
Ethics & Values
Accomplishment of
prospective principles,
values, integrity,
ethical behaviour
and professional
advancement
Environment
Protection &
Conservation
Minimize environmental
issues based on social
priorities, extend the
message to a large
captive audience of
stakeholders and thereby
create knowledge
about environment
conservation
THE 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT
88 SAMPATH BANK PLC
ANNUAL REPORT 2016
TRANSPARENCY AND
GOVERNANCE
Specific CSR activities are carried
out by the Sampath Bank CSR fund,
which receives an allocation of 1%
of the annual post-tax profits. The
stewardship of the fund is listed under
the CSR steering committee led by the
Managing Director. In accordance with
our top-down approach, all projects
are evaluated and implemented by
the CSR committee, following a highly
transparent Project Management
Process.
COMMUNITY ENGAGEMENT
Community engagement is fundamental
to the success of our socially
responsible CSR model. It allows us
to establish a connection with the
communities we are trying to reach
while understanding their grievances
and to determine how best we can
intervene to improve their lives. In fact,
most of our CSR projects originate
at Department / Branch level mainly
due to the close interactions between
branch staff and the communities they
serve, while large scale projects that
address issues of national importance
are brought to our attention through
various stakeholder groups and
interested parties within the community.
EMPLOYEE VOLUNTEERISM
At Sampath Bank, we see employee
participation and volunteering as
yet another way in which we can
reach out and positively impact the
communities in which we operate. We
offer a range of CSR initiatives to give
our people the opportunity to actively
participate in making a difference in the
Achieving the desired objectives of our socially responsible CSR model is contingent on the following;
Education
for
Development
Ethics and
Values
Empowerment
of CommunityEntrepreneurship
Development
Project Evaluation, Implementation, Monitoring & Stakeholder Engagement
CSR and Sustainability Committee (please refer page 46)
Assigning a Unit Level CSR Committee, comprising of Sampath team
members, Community leaders and Customers / Social (non-political)
interested parties representing the area
Preparation of a priority list based on our study findings / observations
and community members' views
Assigning project objectives, key actions, resource requirements, time
frame and involvement of Sampath team members
Assessment of the project against corporate CSR guidelines, resource
requirements and team involvement
Implementing the project in line with a detailed action plan and timeline
Continuous monitoring and evaluation of project credentials
Grievance Solved?Impact Assessment
Reporting and Record Keeping
NO
YES
Environment
Protection and
Conservation
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
IDENTIFICATION AND CATEGORIZATION OF COMMUNITY GRIEVANCES / ISSUES(CRITICAL CONCERNS / BURDEN ISSUES)
PROJECT MANAGEMENT PROCESS
communities in which they work and
live. In 2016, 1,352 employees (34% of
our permanent workforce) volunteered
24,431 hours of their time in supporting
their chosen community projects.
SOCIAL AND RELATIONSHIP CAPITAL - COMMUNITY
G4 - 35,36,37,42,49,50
MANAGEMENT DISCUSSION & ANALYSIS
89
“HOPE FOR A LIFE” - ASSISTANCE
FOR THE NATIONAL HOSPITAL,
ANURADHAPURA
INVESTMENT:
Rs 1.480 Mn
OBJECTIVES:
Assist patients suffering from Chronic Kidney
Disease (CKD) to receive necessary treatment.
Implementing an early-detection and prevention
mechanism for CKD.
ACTIVATIONS:
Endowment of essential medical testing equipment to
facilitate early detection of CKD and creating widespread
awareness regarding the prevention of CKD.
“HOPE FOR A LIFE” – RECONSTRUCTION
OF THE MADUELLA BRIDGE
INVESTMENT:
Rs 0.327 Mn
OBJECTIVE:
Providing access to the main Badulla road for over 125
farming families living in the villages of “Agathewela”
“Ellekumbura” and “Kirioruwa, in the Badulla district.
ACTIVATIONS:
Construction of a 63 foot bridge with the support of
villagers.
KEY CSR ACTIVATIONS
In 2016, we focused our efforts mainly on three of our five key pillars – empowerment of community, education for development
and entrepreneur development. The key highlights are as follows.
Total Investment in CSR Number of CSR Projects
121
Community Engagement
566,000Beneficiaries
68Partners
Employee Volunteerism
24,431Man Hours
20.3Rs Mn
27.3Rs Mn
From CSR
Fund
From Bank’s
Other Funds More than
G4 - SO 1 EC 07,08
90 SAMPATH BANK PLC
ANNUAL REPORT 2016
“HELPING HANDS” PROJECT - DISASTER
RELIEF
INVESTMENT:
Rs 1.885 Mn
OBJECTIVE:
Supporting over 3,000 families who were affected by
floods and landslide in Aranayaka.
ACTIVATIONS:
28 “Helping Hands” projects were initiated in affected
areas by volunteer staff to distribute food, dry rations,
clothing, medicine, essential goods, services etc.
“SAMPATH PASALA” - UPGRADING THE
FACILITIES OF WELIWEWA KANISHTA
VIDYALAYA, SOORIYAWEWA
INVESTMENT:
Rs 0.675 Mn
OBJECTIVE:
Uplifting the educational standards of underprivileged
schools in Sri Lanka.
ACTIVATIONS:
Providing drinking water facilities and upgrading
sanitary facilities
Securing the structures of school buildings and
colour washing the school premises
Constructing gabion walls to prevent soil erosion
Repairing the desks and chairs of higher grade
classes
Providing library facilities
MY BOOK CLUB
INVESTMENT:
Rs 0.457 Mn
OBJECTIVES:
Form a readers’ club in Sri Lanka
Enhance the reading habit among Sri Lankans
ACTIVATIONS:
Launch of the “My Book Club” loyalty card at the Colombo
International Book Fair 2016 with the collaboration of Sri
Lanka Book Publishers’ Association and Independent
Television Network (ITN), as a platform to engage book
lovers who are regular visitors to this annual event.
SOCIAL AND RELATIONSHIP CAPITAL - COMMUNITY
MANAGEMENT DISCUSSION & ANALYSIS
91“ACCESS FOR SUCCESS” - ISLANDWIDE
SEMINAR SERIES FOR O/L STUDENTS
INVESTMENT:
Rs 2.3 Mn
OBJECTIVES:
Improving the pass rate of O/L mathematics and
science subjects
Increasing the percentage of students qualifying
to sit for the A/L examination each year
Motivating students through positive reinforcement
Knowledge expansion among youth
ACTIVATIONS:
Conducted 13 seminars in collaboration with Rupavahini
Corporation and more than 8,000 students actively
participated in the programme.
“PAHE SHISHSHATHWA” - GRADE 5
SCHOLARSHIP SUPPORT PROGRAMME
INVESTMENT:
Rs 9.6 Mn
OBJECTIVE:
Improve the standard of primary education at provincial
and rural level by providing exam support for students
sitting for the annual grade 5 scholarship exam.
ACTIVATIONS:
A total of 7 programmes were conducted in collaboration
with Neth FM and more than 9,000 students participated
in the programme.
“ESPERANZA 2016” - ALL ISLAND INTER-
SCHOOL COMMERCE QUIZ COMPETITION
INVESTMENT:
Rs 0.4 Mn
OBJECTIVES:
Promote commerce education among A/L
students
Develop competencies of A/L students
Cultivate academic and soft skills of
undergraduates
Encourage greater knowledge sharing
ACTIVATIONS:
Conducted a quiz programme in partnership with the
Accounting and Financial Management Association of
the University of Sri Jayewardenepura. This programme
was held over a period of 8 weeks and saw the
participation of 700 schools across the country.
92 SAMPATH BANK PLC
ANNUAL REPORT 2016
“SOAR ABOVE THE REST” – SAMPATH
BANK INTERNSHIP PROGRAMME FOR
SCHOOL LEAVERS
INVESTMENT:
Rs 8.2 Mn
OBJECTIVE:
Enhance the future employability of school leavers by
providing on-the-job training and appropriate skills
development opportunities.
ACTIVATIONS:
Deployment of school–leavers in order to provide
successful training related to banking/non- banking
functions. 304 school leavers were trained during the
year.
“DEVELOPING LEADERS OF TOMORROW”
– SAMPATH BANK INTERNSHIP
PROGRAMME FOR UNDERGRADUATES
INVESTMENT:
Rs 7.0 Mn
OBJECTIVE:
Improve future employment prospects of undergraduates
by providing suitable on-the-job training and developing
leadership skills.
ACTIVATIONS:
Deployment of undergraduates and provision of training
on the functions of the Bank including banking/non-
banking functions so as to fulfill the objectives of their
degree programme.173 undergraduates were trained
during the year.
SOCIAL AND RELATIONSHIP CAPITAL - COMMUNITY
INVESTMENT ON CSR INITIATIVES (FROM CSR FUND)
CSR Pillar Investment
Rs Mn
Education for development 7.84
Empowerment of community 7.08
Entrepreneurship development 1.98
Ethics and values 0.39
Environment protection and conservation 3.05
G4 - EN 31 EC 07
MANAGEMENT DISCUSSION & ANALYSIS
93“SAMPATH SAVIYA” – ENTREPRENEURSHIP
DEVELOPMENT PROGRAMME
INVESTMENT:
Rs 1.8 Mn
OBJECTIVES:
Strengthening the MSME sector in order to enhance
inclusive economic development and thus facilitate
employment and higher income generation
Promoting high potential, viable and promising
sectors
Motivate and encourage export oriented or import
substitution enterprises and industries
Assistance in achieving regionally balanced growth
across Sri Lanka
ACTIVATIONS:
Launched in 2013, “Sampath Saviya” provided training to
293 number of MSMEs & business initiators in 2016 with
the support of CEFE Net Sri Lanka and other like-minded
organizations, including community groups, government
bodies and private institutions. Using the globally accepted
“CEFE” (Competency-based Economies through Formation
of Enterprise) training methodology, the programme scope
covers key aspects such as business planning tools, basic
financial planning & record keeping, eco-friendly business
practices and good labour management practices, while
continuous counselling for project beneficiaries ensure they
remain on track to achieve their commercial aspirations.
Further, during the year credit facilities to the value of
Rs 4.93 Mn were granted to 51 MSMEs under the
“Saubaghya Credit Scheme”.
PROJECT: “SAMPATH DAHAM THILINA
PROGRAMME”
Sampath Bank was honoured by the Ministry
of Buddha Sasana and Samastha Lanka
Shasanarakshaka Mandalaya, for its longstanding
contributions made to Buddhist affairs through
its “Sampath Daham Thilina” programme. The
appreciation award was presented at a ceremony
held on 27th December 2016 at the Town Hall, Galle.
“Sampath Daham Thilina” gives recognition to winners
of the annual All Island Dhamma School Competition.
The programme has been conducted at a circuit level
for the past 16 years and this is the 7th consecutive
year which Sampath Bank contributed towards the All
Island Dhamma School Competition.
94 SAMPATH BANK PLC
ANNUAL REPORT 2016
NATURAL CAPITAL
Due to the nature of our products and
services, Sampath Bank makes only
a limited impact on the environment
and is therefore considered to be a low
contributor to overall GHG emissions.
We do realize however that this does
not in any way reduce our responsibility
towards the environment. It is why we
strive to assess the impact our actions
may have on the environment and
based on the results of these findings
we then look for ways to improve the
way we operate.
Spearheading the entire effort is a
broad-ranging environmental strategy
aimed at reducing the Bank’s carbon
footprint. Focusing on what we
consider to be material environmental
aspects relevant to our business,
the strategy seeks to ensure that our
impact on environment is minimal.
This is not only to help the Bank to
lighten its environmental footprint, but
also to create a strong social impact
that will convey a positive benefit for
stakeholders of our business.
THE MAIN PILLARS OF OUR
ENVIRONMENTAL STRATEGY
ENERGY SAVING
Commitment
Electricity is one of the largest
contributors to the Bank’s carbon
footprint, and in striving to control the
environmental impact resulting from the
consumption of electricity the Bank will
adopt appropriate measures to reduce
energy consumption levels, set annual
targets and take necessary action to
achieve these targets. This may include
strategies to explore energy efficient
lighting solutions and alternative energy
sources.
Key Drivers
1. Installation of LED lighting
solutions
2. Upgrading of air conditioning
units at branches
3. Installation of energy-control
equipment to optimize energy
utilization at branches
REDUCE PAPER WASTE
Commitment
Paper usage forms a significant part
of Sampath Bank’s environmental
footprint, given the large volumes
used for internal and external
communication. The Bank calls upon all
business units and branches to reduce
paper consumption by reorganizing
internal procedures, engaging in
suitable paper procurement practices
and promoting recycling whenever
possible and practical in order to
minimise usage of paper.
Key Drivers
1. Carbon Neutral Annual Report
2015 and 2016
2. E-statements and combined
statements for customers in order
to reduce paper usage
3. e-vault book instead of paper
based vault book
4. Just-in-time printing policy at
branches which eliminate the
wastage of printed mandates/
applications/forms by 25%
5. Expanding the e-learning
framework to cover technical &
non-technical areas and enabling
all team members 24/7 access
6. Usage of cloud technology to
convert paper based storage to
digital storage with live access
7. Increase the number of self
service cash deposit kiosks and
thereby reduce paper usage in
printing deposit slips by 75%
8. Enhance usage of social media
to replace traditional printed
advertisements
9. Enhance usage of digital
informative hoardings instead of
flex hoardings
10. Increase the use of web banners
instead of cloth and flex banners
CARBON FOOTPRINT CALCULATION
Commitment
We believe it is our duty to act
responsibly to monitor, manage and
review the impact our business has
on nature and its resources. Therefore
since 2013 we have adopted the
Carbon Footprint Calculation process.
In 2016, we have expanded Carbon
Footprint calculation process to all
branches.
SAMPATH BANK MAKES ONLY A LIMITED IMPACT ON THE ENVIRONMENT AND IS THEREFORE CONSIDERED TO BE A LOW CONTRIBUTOR TO OVERALL GHG EMISSIONS
MANAGEMENT DISCUSSION & ANALYSIS
95
ENGAGING EMPLOYEES
Commitment
Introducing an environmentally
conscious mindset among employees
to ensure that the team is aligned to the
Bank’s environmental goals
Key Drivers
1. The Sampath Bank
“Environmental Pledge”, which all
new employees are encouraged
to subscribe to
2. The “Six eco guidelines”, which
all employees are requested to
embed into their day-to-day work
ethics
3. Launch of “Sampath Energy Star”
– a competition to encourage
team members (and their
families) to cultivate the habit of
energy saving at domestic level
4. Providing training to educate
employees regarding
environmental issues
5. The Sampath Bank Nature
Protection Club (SNaPC), the
environmental arm of the Bank,
which encourages employees to
become “Green” champions
6. Promoting employee participation
in the Bank’s CSR initiatives
in Environment protection and
conservation
SUSTAINABLE LENDING
Commitment
Structured financing solutions for large-
scale renewable energy generation
projects as well as funding of energy
efficiency initiatives undertaken by
small and medium enterprises (SMEs).
Key Drivers
1. Lending to the NCRE (non-
conventional renewable energy)
sector
2. Green energy loan scheme for
individuals
3. Solar Rooftop Power Generation
Project, an ADB funded project
carried out in partnership with
the Sri Lanka Sustainable Energy
Authority (SLSEA)
ENGAGING CUSTOMERS
Commitment
To enable customers to migrate towards
more eco-friendly business practices,
giving them the opportunity to mitigate
their emissions, save energy and
minimize waste along with the added
advantage of lowering cost in the long
term
Key Drivers
1. Verifying the environmental
credentials of clients submitting
applications for clean energy
projects. These include;
environmental impact reports,
Renewable Energy permits
issued by the Sri Lanka
Sustainable Energy Authority,
and where relevant, the
necessary approvals from other
authorities, including; Forest
Dept., Wild Life Conservation
Dept., Department of Agrarian
Services, Irrigation Dept.,
National Building Research
Organization etc.
2. Improvements to the “Sampath
Vishwa” corporate portal where
an inbuilt transfer facility allows
corporates to make direct
transfers to their clients via the
mobile cash facility, a move that
allows them to cut their volume of
paper cheques by almost 70%
3. Expanding the e-commerce
platform through Sampath
Internet Payment Gateway
(SIPG) and Sampath Payeasy
to encourage customers to
engage in cashless banking and
e-commerce.
4. Improvements to Sampath
Vishwa online banking portal
5. Sampath Mobile App
6. Sampath Mobile Cash
7. Introduction of the Sampath
Instant loan scheme through
Sampath Vishwa which reduce
documentation and paper usage
8. The “Carbon-Neutral Hotel
Stay” programme, where the
Bank undertakes to completely
Launch of “Sampath Energy Star” - A competition to encourage team members (and their
families) to cultivate the habit of energy saving at domestic level
96 SAMPATH BANK PLC
ANNUAL REPORT 2016
NATURAL CAPITAL
The first-ever Carbon Neutral Hotel stay programme in Sri Lanka
offset the carbon emissions of
any hotel stay made through
Sampath credit cards, allowing
users a truly guilt-free holiday
experience. A hotel stay
carbon footprint consists of
emissions associated with
energy consumption in terms
of fuel and electricity usage
and waste generation, during
an overnight stay of a guest
in a paid accommodation
in the Hospitality & Tourism
Industry. Teaming up with The
Carbon Consulting Company, a
leading provider of Corporate
Sustainability Solutions, the
average CO2 emissions per
different types of accommodation
were assessed based on a study
done by the United Nations
Environment Programme (UNEP)
and World Tourism Organization
(UNWTO). Using this research
and providing for a significant
buffer, Sampath Bank will commit
to bringing the carbon emissions
of their customers’ hotel stay to
“Net Zero” status by investing
in local and international green
energy projects through the
internationally recognized
mechanism of Carbon Credits.
All what Sampath Credit Card
customers have to do, is to pay
for their hotel stay using the
credit card and Sampath Bank
will retire the necessary amount
of carbon credits corresponding
to that stay through the Carbon
Consulting Company.
ENVIRONMENTAL CSR
Commitment
To identify and address critical
ecological challenges that are likely
to cause destruction to the natural
composition of air, water or the earth.
Key Drivers
1. “Surakimu Sundara Polhena”, an
ongoing initiative to restore the
damaged coral reef along a
2 Km stretch of the Polhena
beach in Matara
Members of Sampath team involved in a Tree Planting programme
MANAGEMENT DISCUSSION & ANALYSIS
97
2. Supporting the Bird Trail, a
programme carried out by the
University of Ruhuna to create
an awareness with regard to bird
species in Sri Lanka
3. Commemoration of World
Environment Day 2016, in
partnership with Bio Diversity Sri
Lanka and the Ceylon Chamber
of Commerce
4. Support extended to the Field
Ornithology Group of Sri Lanka
(FOGSL) to host the Birdlife
International Global Council,
which comprised of a series of
events held to mark the 40th
anniversary of the FOGSL
5. Hosting the “Butterfly, Dragonfly
Race 2016”, in collaboration
with the Butterfly Conservation
Society of Sri Lanka to create
awareness and interest regarding
various Butterfly and Dragonfly
species in the country
6. “Our Wetlands – Our Future”
– an ongoing conservation
programme to safeguard the
Bolgoda Wetland Complex by
creating awareness among
community stakeholders
7. Banner re-use programme
(Please refer page 400)
Coral restoration project “Surakimu Sundhara Polhena”
HOSTING THE “BUTTERFLY, DRAGONFLY RACE 2016”, IN COLLABORATION WITH THE BUTTERFLY CONSERVATION SOCIETY OF SRI LANKA TO CREATE AWARENESS AND INTEREST REGARDING VARIOUS BUTTERFLY AND DRAGONFLY SPECIES IN THE COUNTRY
THE BUSINESS REPORT ANALYSES THE PERFORMANCE OF EVERY FINANCIAL PRODUCT AND SERVICE WE PROVIDE
IMAGINNOVATE[BUSINESS REPORTS]Personal and Branch Banking 99
Corporate Banking 103
Development Banking 107
Global Business 109
Treasury 114
Operational Support 115
Performance of Subsidiaries 118
Investor Information 123
Future Outlook 134
99
PERSONAL AND BRANCH BANKING - DEPOSITS
A good year for Deposits, where rising
interest rates created a supportive
environment through which to grow
the Bank’s Deposit book. Bolstered by
a consistently high AWDR, Sampath
Bank’s Deposit portfolio grew by 26.1%
compared to the previous year. While
outpacing the industry average of
13.7% for 2016, this performance was
well ahead of the target for the twelve
months ended 31st December 2016.
A further analysis of the results reveals
that much of the growth came from term
deposits, driven by a robust growth in
almost all deposit products.
From a CASA perspective the main
thrust for the year was to grow savings
and an aggressive branch-led drive
to promote all savings products was
initiated, underpinned by a series of
targeted campaigns. The move led to
a healthy increase in volumes, in turn
allowing the Bank to maintain one of the
highest CASA ratios.
Meanwhile, having found that over 50%
of the saver population are female, the
‘Ladies First” product, a new savings
proposition geared for young and
financially active women in the country,
was also launched during the year.
Well received by the target market, the
product continues to show signs of
strong growth.
Efforts to inculcate the savings culture
among a wider audience saw the
unveiling of the “My Bank” concept as
a pilot project in the Western Province.
Targeting mainly the BOP (Bottom of
the Pyramid) and under banked market
segments, “My Bank” is a revolutionary
new savings proposition distributed
to the masses through a network of
appointed agents who are equipped
to provide basic banking services.
Coinciding with the introduction of “My
Bank”, the “My Book Club” loyalty card
was also launched at the Colombo
Book Fair in October 2016. Acting as a
virtual saving tool, the “My Book Club”
card is yet another initiative to stimulate
savings among the masses. In this
context, both “My Bank” and “My Book
Club” concepts are expected to be
the main catalysts in carrying out the
Bank’s financial inclusion strategy in the
years ahead.
EFFORTS TO INCULCATE THE SAVINGS CULTURE AMONG A WIDER AUDIENCE SAW THE UNVEILING OF THE “MY BANK” CONCEPT AS A PILOT PROJECT IN THE WESTERN PROVINCE
Ladies 1st savings account for the modern
Sri Lankan woman
TOTAL DEPOSITS VS CASA(Rs Bn) (%)
0
100
200
300
400
500
600
2014
2013
2015
2016
516
409
342
302
Total DepositsCASA
0
10
20
30
40
50
33.2
45.9 47.3
38.4
DEPOSIT MIX
Fixed DepositsSaving DepositsDemand DepositsCertificates of DepositsCall Deposits
57
32
7 3
1
(%)
100 SAMPATH BANK PLC
ANNUAL REPORT 2016
PERSONAL AND BRANCH BANKING - LOANS AND ADVANCES
It was a rewarding year for the Loans
and Advances book, despite the
challenges that came with the rising
PLR throughout 2016. Responding
to these challenges, the Bank took
proactive steps to re-price a number
of loan products in order to secure a
competitive advantage. The strategy
delivered good results with the overall
portfolio growing by 21.3% year-on-year,
driven entirely by the branch network.
partnerships with developers, that would
simplify the housing loan process for
the customer. To spearhead the effort,
an aggressive mass media promotional
campaign was carried out in the second
half of 2016, to increase awareness
among target customer segments.
Growth in the Leasing portfolio
meanwhile was affected by the
Government’s decision to curtail the
import of vehicles, where the spill over
effects of the 70% loan-to-value ratio
An analysis of each loan book however
shows that while all segments did grow in
2016, some did so at a faster pace than
others. Of particular note is the growth
in the SME lending book, where both
long-term loans and short term advances
demonstrated robust growth of 51.2%
and 52.1% respectively for the year.
The Housing loan portfolio too registered
strong year-on-year growth of 25.7%,
supported by targeted strategies
aimed at capturing emerging trends
in the country’s housing and real
estate market. The main focus in this
regard was to tap into the fast-growing
condominium market through strategic
and the import duty hike introduced
in late 2015 along with the new import
duty tariff revision that came into effect
in May 2016, all had a bearing on the
leasing portfolio. Measures taken by
the Bank to curb this negative impact
included a number of Above the
Line (ATL) and Below the Line (BTL)
activities, particularly to promote the
concept of structured leasing. These
activities helped boost volumes leading
to a year-on-year growth of 2.9% in the
leasing portfolio as at 31st December
2016, still only a fraction of the 124.6%
growth recorded in the previous year.
The Bank also managed to increase its
pawning book by 14.9% from
Rs 13.5 Bn as at 31st December 2015
to Rs 15.5 Bn as at year end.
Sampath Instant Loan is another first for Sri Lanka-providing an online real-time lending facility
GROSS ADVANCES VS NPL RATIO(Rs Bn) (%)
0
100
200
300
400
500
2014
2013
2015
2016
469
386
311
272
Gross AdvancesNPL
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2.68
1.93
1.64
1.61
PAWNING ADVANCES (Rs Bn) (%)
0
10
20
30
40
50
60
2014
2013
2015
2016
15
13
25
53
Pawning Advances Pawning as a % of Total Advances
0
5
10
15
20 19.7
7.9
3.5
3.3
MANAGEMENT DISCUSSION & ANALYSIS
101
PERSONAL AND BRANCH BANKING - CARDS
SampathCards continued to maintain
its strong position as one of the
most accepted cards in the market.
Meanwhile, in response to the rising
competition from peer banks, an
aggressive drive was initiated to
grow volumes and the Card portfolio
registered a healthy YoY increase
of 20.6% in 2016. Notably, while the
removal of the stamp duty of 1.5%
on local transactions with effect from
1st January 2016 did help to boost
the number of local transactions, the
impact of the imposition of stamp duty
on overseas transactions is yet to be
seen.
Another factor contributing to the higher
transaction volumes was the sharp
increase in e-commerce transactions,
bolstered by the aggressive
promotional efforts initiated in the
current year.
The ensuing result of higher transaction
volumes throughout the year was a
strong year-on-year topline growth.
However, with the regulatory 24%
interest rate cap still in place, the rising
cost of borrowings did apply some
stress on the bottom line, especially in
the second half of the year, prompting
the Card Center to deploy a series of
highly focused issuance strategies
to grow the card base in 2016. As
always, the key strategic thrust in this
regard continued to be; to improve the
value proposition of SampathCards
vis-à-vis the release of new products
complemented by timely and relevant
promotional activities.
Among the key efforts was the launch of
the Sampath Bank Visa payWave Card
in July 2016. The first-ever contactless
card to be launched in Sri Lanka, where
cardholders can simply tap their Visa
payWave card at a payWave enabled
POS terminal to pay for their purchases,
with the transaction being completed
in mere seconds. Initially this was
presented only to the Visa Infinite
segment. Meanwhile, concurrent to the
launch, steps were taken to expand
the number of merchants offering the
Visa payWave facility. Accordingly, over
200 merchants were equipped with
payWave POS terminals as at end-
December 2016, a figure that is likely to
rise in the forthcoming year.
levels among existing users. Targeted
activities for the year included; the
2016 “Town-on-sale” campaign held
in Ampara (23rd and 24th October
2016) and the seasonal (April and
December) discount offers under the
theme of “Big Celebrations, Bigger
Discounts, Biggest Offers” for Clothing,
Shoes, Jewellery, Watches, Bedding,
Electronics, Furniture, Online Shopping,
Travel, and Hotels. As part of this
targeted strategy, SampathCards
also signed up for sponsorships at
Consumer Week 2016, the Colombo
International Book Fair 2016, the Future
Minds Forum, the Colombo Shopping
Festival 2016 and the Singer Lifestyle
Fiesta.
This was in addition to the year-round
hotel offers, 0% installment plans
with selected lifestyle stores, the
ongoing promotional offers for daily
essentials with Cargills FoodCity and
special promotional offers on selected
e-commerce sites including www.
findmyfare.com, www.mydeal.lk, www.
mystore.lk, www.4n.lk, www.wow.lk,
www.retailgenius.com, www.takas.lk.
PROMOTIONAL OFFERS
Seasonal “Big Celebrations,
Bigger Discounts, Biggest
Offers” Campaign with over 100
brands – April and December.
Year-round great hotel offers
with individual properties and
chain hotels (Uga Escape Hotels,
Amaya Resorts & Spas, Theme
Resorts, Anilana Hotels, Colombo
Fort Hotels, The Blue Water
Hotel, Suriya Resort etc.).
Offer for all Apple products at
Abans, Dialog etc.
Partnership / Sponsorship to the
Consumer Affairs Authority for
the Consumer Week 2016.
CREDIT CARD ADVANCE PORTFOLIO(Rs Mn)
0
2,000
4,000
6,000
8,000
10,000
2014
2013
2015
2016
The Association of Medical Specialists
(AMS) Visa Signature Affinity Credit
Card, a product exclusively for medical
specialists in Sri Lanka was yet another
new offering presented to the target
market at a soft launch event held
in March 2016. A niche product that
caters to the specific needs of medical
professionals was initially offered
to existing customers and was well
received, prompting efforts to extend
the offering to potential customers
across the island.
At the same time, key promotional
activities continued throughout the year
and were aimed at boosting usage
102 SAMPATH BANK PLC
ANNUAL REPORT 2016
Partnerships with exhibitions
(Colombo International Book Fair,
Future Minds, Colombo Shopping
Festival, Singer Lifestyle Fiesta).
Cargills FoodCity discount offers.
Year-round online partner
promotions with www.findmyfare.
com,www.mydeal.lk, www.
mystore.lk, www.4n.lk, www.wow.
lk, www.retailgenious.com, www.
takas.lk.
Offers at World Duty Free - May,
June, November and December.
Town on Sale at Ampara -
discounts at 10 merchant
categories (supermarket/home
appliances/furniture/clothing/
footwear/hardware/ optical wear/
automobile/bookshops/hotels).
Offers at Lifestyle product
partners – Singer, Abans, Damro.
SampathCards Town-on-Sale Promotion
NO. OF CREDIT CARDS
0
50,000
100,000
150,000
200,000
250,000
2014
2013
2015
2016
PERSONAL AND BRANCH BANKING - CARDS
MANAGEMENT DISCUSSION & ANALYSIS
103
CORPORATE BANKING - CORPORATE FINANCE
The performance of the Corporate
Finance Division for the year was
as expected, with all main activities
meeting relevant KPIs set for 2016.
From a lending perspective, it was a
combination of growth and profitability
focused approach that prompted the
Corporate Finance Division to capitalize
on fast growing sectors in the economy
and aggressively pursue direct lending
opportunities albeit selectively, to
ensure a satisfactory return. The
Corporate Finance loan book continued
to grow with much of this new lending
being driven by three sectors; Leisure,
Education and Healthcare.
The emphasis on fee based income
continued in this year with a concerted
effort being made to strengthen
the custodian services segment. In
this context, the Corporate Finance
Division leveraged on the Sampath
Bank IT platform to provide clients with
integrated solutions which enhanced
the value proposition of the custodian
services model. These measures
culminated in a YoY growth of 20% in
the Custodian Services portfolio.
Meanwhile, as rising interest rates
made investments in fixed income
instruments less attractive, the demand
for structured debt instruments
continued to be moderate. This had
a cascading effect on the growth of
the Bank’s investment portfolio and
the resulting fee-income generated
was lower than in the previous year.
However, a notable new addition to
the Corporate Advisory services suite;
structured securitisations helped
bolster fee-income in the latter part of
the year, as the new concept gained
traction in certain sectors within Sri
Lanka’s corporate space.
Aside from servicing the Corporate
Sector, the Sampath Bank Corporate
Finance Division continues to be the
key facilitator of the Bank’s funding
requirements both in terms of short
and long term including Tier II Capital.
In line with this mandate Rs 6 Bn was
raised by way of a Debenture issue
in June 2016. This forms part of the
base for Bank’s long term growth
strategy and the funds raised by way
of this debenture have strengthened
the Bank’s Tier II Capital and provide
financing for future asset growth.
The division facilitated the Bank’s
first offshore Syndicated Term Loan
working with Standard Chartered
Bank, Colombo as Lead Arranger.
The deal raised USD 100 Mn for the
Bank. Subscribers to the loan included
11 offshore financial institutions from
the Middle East and India as well as
a Swiss fund. The funds obtained on
a three-year tenure are expected to
underpin both domestic lending as well
as to accelerate medium term growth
targets for FCBU.
Leveraging on the strength of the Bank
and its global trade operations, another
funding line was negotiated through
the IFC by way of a bi-lateral revolving
borrowing agreement that secured an
amount of USD 20 Mn which boosted
its export business and other short term
trade related asset growth.
As is the case with local corporate
clients, the Corporate Finance Division
continued to provide Corporate
Advisory services to clients on offshore
investments and operations. These
services, which are extended to local
clients undertaking offshore projects
as well as overseas clientele, are
structured to assist the client to improve
and safeguard their financial position
as well as their business operations,
which finally help the Bank to manage
the clients’ overall risk profile.
USD 100 Mn Syndicated Off-Shore Term loan raised by Sampath Bank
SECTOR-WISE CORPORATE FINANCE LOAN PORTFOLIO
Tourism & HotelsFinancial & Business Construction HealthTelecommunication & ITInfrastructure
ManufacturingOther Services
28
15
11
23
2
1
11
9
(%)
104 SAMPATH BANK PLC
ANNUAL REPORT 2016
CORPORATE BANKING - CORPORATE CREDIT
Despite the prevalent uncertainty
and volatility in the market in 2016,
Corporate Credit was able to maintain
expected performance targets for
the year, in almost all segments. A
moderate growth in Advances was
agreed upon at the outset in respect
of corporate lending, with greater
emphasis on high-margin retail lending.
The overall lending portfolio recorded the
desired increase. Despite recording only
moderate growth in volumes, stringent
management and tighter controls
ensured that margins were maintained,
exceeding expectations for the year.
The sector-wise lending mix however
registered a notable change compared
to the previous year. This was mainly
the result of the ongoing slowdown
in the construction sector and its
cascading effect on many other
industries. Nevertheless the large
contractors were seen rearranging/
enhancing their limits in anticipation of
upcoming Government infrastructure
projects, which augurs well for the year
ahead. Further efforts to grow the loan
book saw the Corporate Credit Division
enter into selective partnerships with
Real Estate Development projects
in Colombo and suburbs, a move
aimed at tapping into the fast-growing
condominium market. Demand
from the Financial Services sector,
which occupies a large chunk of
the corporate loan book, remained
steady throughout the year, indicative
of the greater stability of the sector.
Meanwhile, demand for credit from
the leisure sector continued to grow,
bolstered by new hotel construction
(both large and small scale) as well as
renovation projects of existing hotels.
From a CASA perspective it was a
challenging year, where prompted by
uncertainty caused by rising interest
rates and low market liquidity levels,
many leading corporates were opted
for a wait-and-see approach.
The focus on Trade Financing in both
imports and exports, continued this
year as well, in a bid to grow volumes
in the aftermath of the (70%) loan-to-
value ratio and the vehicle import duty
hike that came into effect in the latter
part of 2015, causing a sharp drop in
the demand for vehicle leasing facilities
and also leading to lower imports by
the large vehicle importers.
At the same time, the April 2016
decision by the Government calling
for the repatriation of export proceeds
back to the country within 90 days
from the date of exports, gave rise
to further tensions among exporters
and lowered the demand for export
financing facilities. In response to
these challenges, the Corporate Credit
Division initiated short term financing
Capital Seven Condominium Housing Complex by Sanken Constructions (Pvt) Ltd
SECTOR-WISE CORPORATE CREDIT LOAN PORTFOLIO
Financial & Business TradersOther Services Telecommunication
& ITAgricultureManufacturing
Tourism & HotelsConstructionInfrastructure
32
13
12
17
3
2
8
8
5
(%)
strategies jointly with the Corporate
Finance Division to assist exporters in
their export financing requirements.
This, coupled with the Bank wide export
drive led by the “Export Bonanza”
enabled a 22% growth in exports for
2016, and also facilitated a significant
growth of the ‘exporter’ clientele base
compared to the previous year.
Amidst this environment, the strategic
thrust shifted from aggressive volume-
driven strategy to a more margin-
focused approach. To complement
this goal the Corporate Credit
Division continued to strengthen
relationships with existing customers,
while simultaneously enhancing the
functionality of the Sampath Vishwa
corporate solutions portal to allow the
client the flexibility of customizing their
requirements. The Bancassurance
model was also introduced as a
value-added feature to fulfill the client’s
insurance requirements, while a
number of service enhancements were
brought in to improve the quality of
the services offered to Margin Trading
clients, in order to retain existing
customers as well as to capture a
larger chunk of business volumes from
existing customers.
MANAGEMENT DISCUSSION & ANALYSIS
105
Given the impact of changing duty
tariffs, interest rates etc. the mid sized
corporates served by this division were
thrust into a challenging environment
and overall credit growth for this
segment in 2016 was somewhat slow.
Nevertheless having identified potential
growth opportunities in the market, the
foresighted strategies deployed by
the Commercial Credit Division helped
meet expected volume targets for the
year.
Consumer durables was one such
area that continued to grow despite
the import tariffs, which in turn created
potential business opportunities for
the mid sized corporates in this sector.
This proved to be an opportunity for
commercial credit to boost import trade
volumes and related lending.
Meanwhile, tapping into the thriving
housing & condominium market to
grow housing loan volumes and
lending to new areas such as software
development, helped to counteract the
slow growth in the leasing portfolio.
Further, by leveraging on its tried and
tested Relationship Management model
the Commercial Credit Division stepped
up efforts to provide client advisory
services, mainly to advise clients on how
to continue to grow in challenging times.
This was also coupled with efforts to
CORPORATE BANKING - COMMERCIAL CREDIT
‘cross-sell’ personal banking products
etc. to nurture a stronger relationship
with employees of these companies,
which will translate into sustainable long-
term growth for the Bank.
NEVERTHELESS HAVING IDENTIFIED POTENTIAL GROWTH OPPORTUNITIES IN THE MARKET, FORESIGHTED STRATEGIES DEPLOYED BY THE COMMERCIAL CREDIT DIVISION HELPED MEET EXPECTED VOLUME TARGETS FOR THE YEAR
SECTOR-WISE COMMERCIAL CREDIT LOAN PORTFOLIO
Traders ManufacturingConstruction
Transport Telecommunication
& IT
Health
Other ServicesFinancial &
BusinessAgriculture
28
11
9
19
5
3
9
8
8
(%)
106 SAMPATH BANK PLC
ANNUAL REPORT 2016
CORPORATE BANKING - FCBU
Contributing almost 13.7% to the Bank’s
overall bottom line, the FCBU Division
continued to maintain a steady pace
of growth throughout 2016. It was a
busy year where the focus was twofold;
broadening the scope of local lending
activities mainly to the BOI qualified
export sector, and reaching regional
markets for lending opportunities in
other geographical locations.
From the local market perspective,
the main strategic thrust for the FCBU
Division was to widen its reach through
the branch network and penetrate
untapped customer segments across
the island.
The overarching emphasis in this
regard was to grow volumes from the
export sector. Stemming from this, the
Division kicked off a highly focused
Export Drive, which was launched at
a special event attended by leading
exporters in the country. The Export
Drive features benefits schemes
and concessionary offers aimed at
supporting the country’s export sector
comprising both eligible ‘FCBU’ clients
as well as non - FCBU exporters who
were supported and financed by the
Bank’s Domestic Banking Unit.
The year saw a series of support
activities, including the establishment
of the Export Drive team tasked with
training branch staff to sharpen their
skills to assist clients with their export
requirements and advisory services
to up and coming SME exporters.
Setting up an “Export House” to cater
to potential exporters, assisting them
to find potential foreign markets and
advising them on mitigating risks
through SLECIC etc were some of the
unique initiatives of the focused export
growth drive – a need of the hour for
both the country and the Bank.
These initiatives were well timed, and
came amidst other favourable macro-
economic factors such as the lifting of
the EU fishing ban on Sri Lanka, which
helped boost business activities in the
second half of 2016, with year-on-year
growth in export volumes, well ahead of
the industry average.
Meanwhile, given the limited
opportunities for asset growth for
offshore banking within Sri Lanka, the
Division actively focused on growing
its asset book in other regional markets
mainly in the Maldives, Myanmar,
Cambodia and Bangladesh. This
strategy also helped Sri Lankan
corporates who ventured into these
markets to tap into the potential of fast
growing sectors in such countries.
Accordingly during the year, the Bank
took up exposures in the lucrative
and fast growing leisure sector in the
Maldives and the micro finance sector
in Cambodia. The plan is to venture
into other identified locations in the
near future i.e. Myanmar to explore the
possibilities in leisure and agriculture,
both of which are considered to be fast-
growing sectors in that country.
Sampath Bank PLC partners with GT Nexus to deliver financial services for exporters
SECTOR-WISE FCBU LOAN PORTFOLIO
Manufacturing AgricultureTourism & HotelsOther Services
InfrastructureTelecommunication
& ITTransport
45
25
17
31
5
4
(%)
MANAGEMENT DISCUSSION & ANALYSIS
107
“Sampath Saviya” Programme
DEVELOPMENT BANKING - MSME DEVELOPMENT
In 2016, the Bank made steady
progress in achieving its MSME
Development goals, supported by
two existing credit lines; the SMILE 3
(Revolving Fund) mainly for MSMEs
and the Saubaghya schemes.
In the year under review, the Bank
also participated in two new credit
lines; the CBSL’s SEPI Scheme and
the ADB-SME credit line, both part
of the Government’s medium term
development plan to accelerate
MSME sector growth. All credit lines
collectively added approximately
Rs 936 Mn to the Bank’s funding base.
Following the enhancement to its fund
base, steps were taken to sharpen
the alignment of the lending model
as a targeted response to the needs
of specific groups within the MSME
segment. Stemming from this, a more
focused lending model was adopted,
and a number of structured lending
schemes were rolled out during the
year. This also meant expanding
the scope of “Sampath Saviya” and
other Entrepreneur Development
Programmes, in order to facilitate
the needs of MSME start-ups from
underserved communities, developing
women entrepreneurs and supporting
existing MSMEs who were looking to
expand their business.
These strategies accompanied an
aggressive lending push driven by the
island-wide branch network, which
put the Bank within reach of its goal to
assist a minimum of 500 entrepreneurs
annually under the “Sampath Saviya”
scheme. All support activities and
training workshops that go hand-
in-hand with the “Sampath Saviya”
programme continued to provide
entrepreneurial support throughout the
year, with 293 participants attending
the 10 workshops held during the
course of 2016.
IN THE YEAR UNDER REVIEW, THE BANK ALSO PARTICIPATED IN TWO NEW CREDIT LINES; THE CBSL’S SEPI SCHEME AND THE ADB-SME CREDIT LINE, BOTH PART OF THE GOVERNMENT’S MEDIUM TERM DEVELOPMENT PLAN TO ACCELERATE MSME SECTOR GROWTH
SECTOR-WISE MSME LOANS GRANTED IN 2016
InfrastructureManufacturingTraders Tourism & Hotels
Other ServicesAgricultureTelecommunication
& IT
26
17
14
51
12
(%)
25
G4 - EC 08
108 SAMPATH BANK PLC
ANNUAL REPORT 2016
DEVELOPMENT BANKING - PROJECT FINANCE
Registering a solid 22% increase in the
portfolio, the Project Finance Division
tabled a healthy performance for the
year ended 31st December 2016.
Widely known in the market as the
leading financier for renewable
energy projects, the key focus for
Sampath Bank’s Project Finance
continues to be; the development
of the Non-conventional Renewable
Energy (NCRE) sector in the country.
Working closely with key stakeholders
in the NCRE sector, in 2016 the
Project Finance Division financed 9
hydropower projects to generate and
supply electricity to the national grid
with a total capacity of 17.73 Mw.
ASIDE FROM THE INVESTMENTS IN HYDROPOWER GENERATION, THE DIVISION ALSO LOOKED TO ENHANCE ITS POSITION IN OTHER ALTERNATIVE ENERGY PROJECTS, WHICH LED TO THE FINANCING OF A LARGE SOLAR POWER PROJECT...
Aside from the investments in
hydropower generation, the division also
looked to enhance its position in other
alternative energy projects, which led
to the financing of a large solar power
project at Welikanda and the Dendro
power project in the Rathnapura District.
Both projects generate power with a
total capacity of 12 Mw.
Moreover, utilizing the ADB funded
clean energy credit line, the Division
disbursed Rs 45.7 Mn for 8 projects,
as part of the Solar Rooftop Power
Generation Pilot Project carried out
in partnership with the Sri Lanka
Sustainable Energy Authority (SLSEA).
While consolidating its position in the
NCRE sector, the Division leveraged
on its expertise in an effort to penetrate
other emerging sectors in the economy.
The strategy proved successful,
leading to investments in mass
media communication, real estate,
infrastructure and mixed development
projects, in the second half of the year.
The first Solar Power Project in Sri Lanka with Single Axis Tilting Facility at Welikanda,
Polonnaruwa
SECTOR-WISE PROJECT FINANCE LOANS GRANTED IN 2016
InfrastructureManufacturingTelecommunication & IT
ConstructionOther ServicesAgricultureTraders
59
16
8
32
7
5
(%)
MANAGEMENT DISCUSSION & ANALYSIS
109
GLOBAL BUSINESS - INTERNATIONAL OPERATIONS
CAPITALISING ON THE GLOBAL TREND FAVOURING OPEN ACCOUNT PAYMENT TERMS, THE DIVISION RECORDED A YEAR-ON-YEAR GROWTH OF 33.0% IN IMPORT-RELATED TT VOLUMES...
In tandem with the growth in trade
volumes, the International Operations
Division also received a boost, with
both inward and outward Telegraphic
Transfers (TT) seeing steady growth
throughout 2016.
Capitalising on the global trend
favouring open account payment terms,
the division recorded a year-on-year
growth of 33.0% in import-related TT
volumes, while non-trade related Inward
TTs also rose by 68.5% compared to
the previous year.
Meanwhile, export related TT volumes
shot up by 16.4%, compared to the
previous year, spearheaded by the
launch of the “Export Bonanza” offer
launched as part of the Bank’s export
drive.
Non-trade related outward TT volumes
also grew by 21.4% year-on-year.
This was partly due to the easing of
exchange control regulations allowing
individuals and local corporate bodies
to make offshore investments using the
funds in their foreign currency accounts
maintained in Sri Lanka, a move that
saw many opting to use TTs as the
preferred mode of transferring funds.
The cumulative result of this volume
growth was a 20.6% increase in
fee-based income compared to the
previous year.
TRADE & NON-TRADE RELATED TT VOLUMES
0
50
100
150
200
2014
2013
2015
2016
Turnover - Trade
Turnover - Non Trade
85
119
113
142
162
93
79
77
(Rs Bn)
110 SAMPATH BANK PLC
ANNUAL REPORT 2016
Sampath Bank’s Bank Notes Operation
(BNO) continues to be the market
leader in the currency import and
repatriation business. However, in 2016
stiff competition and other unforeseen
challenges had an impact on the BNO’s
business of import and repatriation of
currencies.
BNO’s Currency Import segment had
to contend with a drop in the demand
for currencies in the local market, which
was largely the result of lower retail
sales, corporate sales (Cash to Master)
and also lack of demand from other
banks for currencies. Consequently,
no foreign currency imports were
needed in the first nine months of the
year. However, a pick-up in demand in
the final quarter did help boost import
volumes leading to a marginal increase
in total volumes for 2016, compared to
the previous year.
The performance of the Katunayake
Pay Office (KPO) also took a hit in
2016, where despite the higher volumes
achieved, the BNO had to contend with
lower margins.
Currency export volumes on the other
hand jumped by 73.1% compared to
the previous year. Despite the increase
in volumes however, the drop in the
value of the Euro following the Brexit
A PICK-UP IN DEMAND IN THE FINAL QUARTER DID HELP BOOST IMPORT VOLUMES LEADING TO A MARGINAL INCREASE IN TOTAL VOLUMES FOR 2016, COMPARED TO THE PREVIOUS YEAR
vote in June 2016 followed by US
election results, put a squeeze on
margins in the second half of the year.
Meanwhile, the division introduced
new, less volatile currencies such as
South Korean Won, Indonesian Rupiahs
and the Philippine Peso. in an effort to
safeguard the bottom line against such
unexpected shocks.
GLOBAL BUSINESS - BANK NOTES OPERATIONS
MANAGEMENT DISCUSSION & ANALYSIS
111
GLOBAL BUSINESS - REMITTANCES
In 2016 Sampath Bank’s inward
remittances business tabled growth
of 7.2% in absolute terms. Although
this was lower than the 11.9% growth
recorded in 2015, it was nevertheless a
commendable feat, amidst competitive
Meanwhile, transaction volumes
registered only a marginal increase, in
effect the result of two key factors; firstly
the economic instability in the oil-rich
Middle East, which continued to affect
the earning capacity of migrant workers
in GCC (Gulf Corporation Council)
countries which in turn led to less
frequent remittances being made to Sri
Lanka. Secondly the drop in the volume
of remittances from Italy, another key
source market for Sampath Bank.
This was mainly due to the unrealistic
pricing tactics deployed by other local
competitor banks seeking to gain a
foothold in the Italian market, a course
of action deemed unsustainable for
Sampath Bank to follow.
To make up for the loss in transaction
volumes, the Bank took steps to
strengthen relationships with existing
partners in the GCC region as well as
stepping to new Asian territories as part
of the strategy to bolster remittance
volumes for 2016 and beyond.
Sampath e-Remittances “Cash Wasi”
TRANSACTION VOLUMES REGISTERED ONLY A MARGINAL INCREASE, IN EFFECT THE RESULT OF TWO KEY FACTORS; FIRSTLY THE ECONOMIC INSTABILITY IN THE OIL-RICH MIDDLE EAST COUNTRIES, AND SECONDLY THE DROP IN THE VOLUME OF REMITTANCES FROM ITALY...
threats from Telcos and smaller
banks in the market, who have been
found resorting to copycat marketing
strategies and price wars in a bid to
penetrate Sampath Bank’s traditional
source markets.
112 SAMPATH BANK PLC
ANNUAL REPORT 2016
NET FEE & COMMISSION INCOME - TRADE SERVICES & INTERNATIONAL OPERATIONS
0
300
600
900
1,200
1,500
2014
2013
2015
2016
1,4
61
1,4
54
1,1
56
632
(Rs Mn)
GLOBAL BUSINESS - TRADE SERVICES
Seemingly unaffected by the ongoing
decline in Sri Lanka’s import and export
earnings, the Trade Services Division
registered an impressive performance
in 2016. However, a notable shift in the
import-export mix was observed during
the year.
Recording a healthy year-on-year
growth of 21.9%, the Export segment
was on par with growth targets set for
2016. This was the result of a series
of initiatives aimed at doubling export
volumes over the next three years, a
move that would help bridge the gap
between import outflows and export
inflows and reduce the Bank’s net open
position.
The main thrust for the year was the
launch of the “Export Bonanza”, a
special concession scheme offered
to both existing as well as potential
export customers, which was launched
at a special event held in March 2016.
The scheme proved to be immensely
popular, becoming a major volume
driver in the second half of the year.
Another initiative was the “Export
Direct” scheme introduced in
September 2016, to enable Customers
to route their Export bills direct to their
buyer’s bank on behalf of Sampath
Bank. Further, the “Export House”
which was set up in 2016 underpins
efforts to broad base the offerings by
assisting the branch network to serve
exporters in SME sector.
Meanwhile, imports tabled growth of
only 11.3% compared to the 24.8%
recorded in the previous year. This was
mainly due to the increase in vehicle
import duties that came into effect
as part of the 2015 budget, followed
by a further hike in May 2016. This,
coupled with the higher interest rates
and the depreciation of the rupee,
had a cascading effect resulting in a
substantial reduction in the volume of
imports compared to the previous year.
With the branch network responsible
for over 54% of the annual volumes, a
number of branch-led initiatives were
deployed to stimulate the demand
for imports in specific sectors, while
special concessions and value
added services were offered to those
importing vehicles using government
permits.
Moreover, further value added features
were brought in to the warehouse
financing product in an effort to
promote imports in the industrial sector.
ANOTHER INITIATIVE WAS THE “EXPORT DIRECT” SCHEME INTRODUCED IN SEPTEMBER 2016, TO ENABLE CUSTOMERS TO ROUTE THEIR EXPORT BILLS DIRECT TO THEIR BUYER’S BANK ON BEHALF OF SAMPATH BANK
Forum on “Emerging Trends in International Trade”
MANAGEMENT DISCUSSION & ANALYSIS
113
NOSTRO ACCOUNTS, CORRESPONDENT BANKS AND EXCHANGE COMPANIES
215Correspondent
Banks
109Exchange Companies
34NostroAccounts
15 5 1
7 1
8 2 18
125 14 78
57 12 12
3
G4 - 06
Scan this QR code for a more comprehensive
view of our Nostro Accounts, Correspondent
Banks and Exchange Companies
www.sampath.lk
114 SAMPATH BANK PLC
ANNUAL REPORT 2016
TREASURY
It was a challenging year, where the main
focus for the Bank’s Treasury Department
was maintaining the bottom line, as
tighter monetary controls and stricter
fiscal consolidation programmes initiated
by the Government began to take effect.
Among the key concerns in this regard,
was the decision by the Monetary
Board to increase both the Standing
Deposit Facility Rate (SDFR) and the
Standing Lending Facility Rate (SLFR)
of the Central Bank by 50 basis points
each, in February 2016, followed by a
further 50 basis points hike each in July
2016. As an immediate response, the
Prime Lending Rate shot up and with it
some degree of volatility occurred in the
market, which put a squeeze on liquidity
levels. However, prudent liquidity
management strategies deployed by the
Treasury Department ensured the Bank’s
liquidity parameters were maintained
throughout the year.
Another concern was the Government’s
decision to not raise funds through
external sources such as Sri Lanka
Development Bonds during the latter
part of the year, which left the Treasury
Department looking for alternative
investment opportunities to supplement
the interest income. Consequently, the
main strategic thrust shifted towards
investments in T-Bills/T-Bonds, a move
that yielded good results for the Bank’s
interest income.
Meanwhile, the exchange rate having
reached an all time high following its free
float late last year, saw the rupee settle at
Rs150.00 per USD as at 30th December
2016, a mere 4.02% lower than the a year
ago. In direct correlation to this, forward
premiums also remained volatile with
an upward trend throughout the year,
enabling the Treasury Department to
realize a net revaluation gain through its
foreign currency transactions.
In 2016, a key challenge on the global
front arose as a result of the negative
impact from Brexit, the uncertainties
surrounding the US election, the Italian
referendum and the highly anticipated
rate hike by the US Federal Reserve.
The accompanying geo political
undercurrents left global markets
traversing uncertain territory and caused
widespread confusion across all key
markets in the world. The interest rate
cuts by the Bank of England and The
Reserve Bank of India, were a few of the
other major concerns for the year. In the
Sri Lankan context the budget proposal
on notional taxes on fixed income
securities still remains unresolved which
will have significant impact on interest
income to the treasury.
As continued uncertainties began
to affect the Bank’s foreign currency
trading prospects in the second half
of the year, the Treasury Department
accelerated efforts to expand the forex
business, mainly through inter-bank
trading, in order to meet assigned
targets for the year. Moreover, a series
of cautious capital market strategies
were also initiated to safeguard against
volatile market movements and to soften
the blow from unexpected shocks that
could occur as a ripple effect of the
aforementioned challenges.
In the Bank Notes Operation (BNO) a
competitive pricing strategy was adopted
to drive volumes and stem the weakening
prospects of the import and repatriation
of bank notes, amidst negative market
sentiments on the back of global
uncertainty, growing competition and
unforeseen regulatory changes.
Notably however, despite tough market
conditions, the Treasury department
remained proactive throughout the year.
Prudent strategies to seize all available
market opportunities yielded good
results, allowing the Treasury unit to
achieve all KPIs and make a significant
contribution to the Bank’s bottom line in
2016.
LIQUID ASSETS & LIQUID ASSET RATIO(Rs Mn) (%)
0
30,000
60,000
90,000
120,000
150,000
2014
2013
2015
2016
126,5
94
99,8
42
88,7
36
88,6
99
Liquid AssetsLiquid Asset Ratio
0
5
10
15
20
25
3027.6
24.5
22.1 21.8
USD / LKR MOVEMENT IN 2016 (Rs)
130
135
140
145
150
155
146.75
146.05148.05
146.10
146.05
145.55146.55
148.10
148.95
150.00
144.24
143.97
144.20
Feb
-16
Jan-1
6
Dec-1
5
Mar-
16
Ap
r-1
6
May-1
6
Jun-1
6
Jul-1
6
Aug
-16
Sep
-16
Oct-
16
Nov-1
6
Dec
-16
MANAGEMENT DISCUSSION & ANALYSIS
115
OPERATIONAL SUPPORT - NSC AND CCD
NETWORK SERVICES
CENTRE (NSC)
The NSC provides critical operational
support for day-to-day core banking
and non-core functions of the Bank.
Among the key core banking functions
performed by NSC is the cheque
clearing process. As the key facilitator
for the daily cheque clearing process,
the main focus for NSC is to improve
the efficiency of the process. Efforts
for the year included the introduction
of a new electronic data submission
mechanism, which enables cheque
images to be scanned and submitted
to Lanka Clear (Pvt) Ltd, online
through a dedicated portal, replacing
the previous practice of manually
submitting data at the end of each
day. Aside from expediting the cheque
clearing process, the new online
submissions now allow branches to be
more flexible about their cut-off time for
accepting cheques from customers.
The NSC was also instrumental in
facilitating the CEFTS (Common
Electronic Fund Transfer System) and
CAS (Common ATM Switch) platforms,
both of which are major breakthrough
products that have significantly
enhanced customer accessibility.
Further efforts to strengthen the NSC’s
services model and improve the
efficiency of the payment process saw
the commissioning of a new remote
Disaster Recovery Center (DRC).
Located at the Main Street branch, all
testing of the DRC was completed with
the system going live with effect from
12th May 2016, enabling the NSC to
provide uninterrupted service even
during possible emergencies.
The NSC also handles a number of
non-core functions, including among
other things; a Bank-wide document
management mechanism. With the
volume of documents generated across
the Bank increasing each year, in 2016
the NSC invested in a new electronic
document storage system to streamline
the inflow and outflow of documents
and improve the overall efficiency of the
document storage mechanism.
THE NSC WAS ALSO INSTRUMENTAL IN FACILITATING THE CEFTS (COMMON ELECTRONIC FUND TRANSFER SYSTEM) AND CAS (COMMON ATM SWITCH) PLATFORMS, BOTH OF WHICH ARE MAJOR BREAKTHROUGH PRODUCTS THAT HAVE SIGNIFICANTLY ENHANCED CUSTOMER ACCESSIBILITY
CHEQUE RETURN RATIO - INDUSTRY VS BANK(%)
0
1
2
3
4
5
2014
2013
2015
2016
2.9
2.8
3.5
4.5
Cheque Return Ratio - BankCheque Return Ratio - Industry
4.8
4.0
3.33.5
Network Services Centre (NSC)
116 SAMPATH BANK PLC
ANNUAL REPORT 2016
OPERATIONAL SUPPORT - NSC AND CCD
CENTRAL CASH
DEPARTMENT (CCD)
The CCD is responsible for sorting of
all currency notes that come through
the Bank. A highly time consuming
and tedious process, the sorting of
currency notes has become more and
more cumbersome as the volumes
continue to increase every year. The
main priority for the CCD is therefore to
look for ways in which the efficiency of
the sorting process can be enhanced.
This prompted the decision in 2016,
to outsource the sorting of especially
smaller denominations to specialized
third parties.
Cash sorting at the Central Cash Department
Cash loading of off-site ATMs, another
function of the CCD was also fully
outsourced in 2016.
In both cases a visible improvement in
overall efficiency was seen, while both
measures proved to be cost effective
alternatives to retaining dedicated staff
for this purpose.
MANAGEMENT DISCUSSION & ANALYSIS
117
OPERATIONAL SUPPORT - RECOVERIES
The Bank’s Recoveries Department
is tasked with maintaining the quality
of the loan portfolio and ensuring that
NPAs are within acceptable levels at all
times. Working towards these goals, the
strategic thrust for 2016 was twofold;
Firstly, strengthen the early warning
mechanism to be able to spot potential
defaulters and then initiate immediate
efforts to rehabilitate such clients.
Secondly, strengthen the recovery
process of default clients. Stemming
from this, the following measures were
implemented to reduce NPA’s;
1. Reorganized the Credit Control
Unit to monitor defaulters and
identify clients who reach
the “two months in arrears”
position enabling the Branches/
Credit departments to begin
immediate rehabilitation efforts
for reschedulments.
2. Special focus to rehabilitate
clients from ailing sectors
which were affected by global
economies.
3. Strict monitoring of the DMS
(Delinquency Management
System) to ensure branch
managers remain proactive in
using MIS to follow up on the
credit portfolio.
4. A dynamic process to route
default clients to a centralized
recovery department to institute
immediate recovery action by
specialists in that area.
A culmination of these efforts resulted
in NPA of 1.61% as at 31st December
2016 compared to the industry average
of 2.6% for the same period.
A DYNAMIC PROCESS TO ROUTE DEFAULT CLIENTS TO A CENTRALIZED RECOVERY DEPARTMENT TO INSTITUTE IMMEDIATE RECOVERY ACTION BY SPECIALISTS IN THAT AREA
ADVANCES - PERFORMING VS NON - PERFORMING(Rs Bn) (Rs Bn)
0
100
200
300
400
500
2014
2013
2015
2016
461.1
379.2
304.5
264.4
PerformingNon-Performing
0
1
2
3
4
5
6
7
87.6
6.56.8
7.9
118 SAMPATH BANK PLC
ANNUAL REPORT 2016
PERFORMANCE OF SUBSIDIARIES - SIYAPATHA FINANCE
As passive market sentiments,
economic uncertainty and rising
interest rates brought with them a
number of challenges for all in Sri
Lanka’s NBFI sector, the key worry for
Siyapatha Finance PLC was the higher
cost of funds, mainly due to upward
revision in AWPLR. The company, which
relies on Bank Borrowings as the main
source of funds, had to contend with
a higher cost of funds, which drove up
interest expenses by 96.5% compared
to the previous year.
Meanwhile, the Loan-to-value ratio,
the duty hike and the free float of the
exchange rate, which came into effect
in the latter part of 2015, together with
the new changes to the vehicle import
duty structure introduced in May 2016,
all had a bearing on the company’s
leasing portfolio. With a significant
portion of the company’s business
coming from leasing, interest income
registered a growth of 43.8% compared
to the previous year. However, the
increase in the cost of funds due to
the upward revision in AWPLR, led to
a sizable erosion of the net interest
margins for the year.
Efforts to relieve the stress on the
bottom line were thus focused
mainly on minimizing the funding
mismatch, prompting the launch of a
rated unsecured senior redeemable
debenture in September 2016. With 3
and 5 year tenures, the Debenture was
initially aimed at raising only
Rs 2 Bn, but was subsequently
increased to Rs 2.5 Bn owing to the
level of oversubscription.
Meanwhile, steps taken to broad base
the lending model and reduce the
dependence on leasing saw a number
of new loan products being introduced
targeting SMEs, including Personal
Loans and Business Loans. Among the
key developments in this regard was
the “Gold Dream” product, which unlike
the traditional pawning concept, allows
the customer to obtain a direct loan to
purchase gold items.
In tandem with these changes; the
company also made steady progress
in its branch expansion strategy,
opening 4 new branches in Gampaha,
Trincomalee, Kalutara and Wellawatte
bringing the total branch footprint to
24 as at 31st December 2016. Further,
the company procured a property in
Colombo 8, the proposed site for the
corporate office, due to be completed
by 2018.
With the widening business focus
and expanding network, the main
operational thrust was to improve
efficiency and reduce costs.
Steps taken in this regard saw
the establishment of a centralized
Credit Administration function to
improve overall efficiency and
reinforce document security. Further,
the automation of key operational
procedures, including the loan process
and the lease application procedure
aims to minimize waste and reduce
duplication of resources, while
outsourcing of the recovery function is
expected to deliver considerable cost
savings and improve efficiency in the
longer term.
PERFORMANCE - SIYAPATHA FINANCE
2016 (Rs Mn) 2015 (Rs Mn) Variance (%)
Total Operating Income 1,531.0 1,381.5 10.8%
Profit Before Tax 643.7 652.5 -1.3%
Profit After Tax 327.3 384.5 -14.9%
Asset Base 20,790.7 14,639.3 42.0%
NPL Ratio 2.7% (Industry 5.7%) 1.3% (Industry 6.4%)
TOTAL ASSETS - SIYAPATHA FINANCE PLC (Rs Bn)
0
5
10
15
20
25
2014
2013
2015
2016
20.8
14.6
10.4
9.0
MANAGEMENT DISCUSSION & ANALYSIS
119
PERFORMANCE OF SUBSIDIARIES - SC SECURITIES
It was a difficult year for SC Securities
(Pvt) Ltd, the stock broking arm of
the Sampath Group, as weak trading
conditions at the Colombo Stock
Exchange continued for the second
consecutive year.
Share trading activity remained
subdued as the CBSL’s decision to
raise benchmark interest rates led
many local investors to reconsider
investing in the share market. The lack
of IPOs in 2016 also contributed to
market inactivity.
SHARE TRADING ACTIVITY REMAINED SUBDUED AS THE CBSL’S DECISION TO RAISE BENCHMARK INTEREST RATES LED MANY LOCAL INVESTORS TO RECONSIDER INVESTING IN THE SHARE MARKET
Meanwhile, foreign participation in
the market also showed a significant
decline in 2016. While no new entrants
were seen coming into the market,
many were found pulling out ahead of
the rate hike by the US Federal Reserve
in December 2016, which began
attracting large chunks of foreign
investor capital. However, the Colombo
Stock Exchange recorded net foreign
inflow of Rs 2.5 Bn in 2016 compared to
a foreign outflow of Rs 5.4 Bn in 2015.
PERFORMANCE - SC SECURITIES
2016 (Rs Mn) 2015 (Rs Mn) Variance (%)
Turnover 22.1 40.1 -44.9%
Profit After Tax (61.5) (17.4) -253.4%
Asset Base 206.8 275.3 -24.9%
The cumulative effect of these factors
saw the All Share Price Index (ASPI)
and the S&P SL20 index ending 2016 at
6,228 and 3,496 respectively, signalling
a drop of 9.3% and 2.9% respectively
compared to the previous year.
In this environment, SC Securities
tabled a turnover of Rs 22.1 Mn for the
year, a year-on-year drop of 44.9%,
while the loss grew from Rs 17.4 Mn in
the previous year to Rs 61.5 Mn as at
31st December 2016.
120 SAMPATH BANK PLC
ANNUAL REPORT 2016
PERFORMANCE OF SUBSIDIARIES - SAMPATH CENTRE
Sampath Centre Ltd owns and
manages the building at No. 110, Sir
James Peiris Mawatha, Colombo 02.
Sampath Bank occupies all 8 floors of
the building, which houses the Bank’s
Head Office and Corporate branch.
The main source of income for Sampath
Centre is the rental income generated
by renting out this space to the Bank
and a 10.5% increase in rental, which
came into effect from January 2016
added a considerable boost to the
company’s topline in the year under
review.
Among other key developments for
2016 was the decision taken by the
Board of Directors to extend the floor
area of the building by a further 77,120
square feet. At an estimated cost of
Rs 1,190 Mn the project would see the
construction of five additional floors,
including a new auditorium and training
centre with a seating capacity of 250.
The project also includes efforts to
reduce the carbon footprint of the
entire building by commissioning a new
energy efficient air conditioning system,
upgrading the backup generators,
installing new capacitor banks to
optimize energy usage and renovating
the external façade to minimize the
heat load generated by solar rays. It is
hoped that these changes would pave
the way for the structure to be certified
as a “Green Building”, upon completion
of the project in 2018.
Following another Board decision,
the scope of business undertaken
by Sampath Center Ltd was also
extended. Accordingly, moving forward
the company would undertake the
construction of buildings on a turnkey
basis, to meet the requirements of the
Sampath Group.
Meanwhile, the following operational
initiatives were carried out in 2016,
as part of the ongoing maintenance
framework;
Investments to commission a
new CCTV security system to
replace the existing system.
Ongoing upgrades to the Visitor
Pass mechanism.
Annual Fire Drill conducted on
21st September 2016.
PERFORMANCE - SAMPATH CENTRE
2016 (Rs Mn) 2015 (Rs Mn) Variance (%)
Profit Before Tax 197.8 180.8 9.4%
Profit After Tax 181.0 169.6 6.8%
Asset Base 4,447.8 3,398.3 30.9%
Operational support services by Sampath Centre
MANAGEMENT DISCUSSION & ANALYSIS
121
PERFORMANCE OF SUBSIDIARIES - SITS
Celebrating its 10th year in operation,
Sampath Information Technology
Solutions Limited (SITS) Member
Company of Sampath Bank Group,
the ICT related service provider tabled
strong growth, which propelled the
company to achieve all KPIs for the
year.
Underpinning this performance were
the aggressive client acquisition
strategies aimed at growing the client
portfolio and ultimately the top line, and
also the emphasis on client retention,
which pushed up revenue-per-client.
To support these strategies, a number
of new solutions were launched, key
among them being the MyDoc pilot
project roll out at Sampath Bank. A
revolutionary new concept, MyDoc is
a medical consultation solution that
enables corporates to provide their
employees with online real-time access
to renowned medical specialists across
the country, at a fraction of the cost.
Parallel to the launch of these solutions,
a series of new programme updates
including snail mail tracking, inventory
solutions, gold loan solution etc. were
also introduced in order to facilitate
the needs of broader cross section of
sectors and industries.
RECOGNITIONS IN 2016
Underscoring the uniqueness of SITS
Hardware Infrastructure Management
solutions, SITS was recognized both
locally and internationally and won the
following awards in 2016;
SITS was recognized as the Best
Business ICT Provider of the Year
by the South Asian Partnership
Summit and Business
Awards at a ceremony held in
Colombo 2016. Celebrating
IT achievements from around
the region, the prestigious
award recognizes outstanding
companies, organizations and
leaders in the South Asian
business world.
SITS was also recognized at
the NBQSA awards 2016 for
the internally developed “FIN
Bank Leasing & Hire Purchase
Solution”.
SITS was recognized at the HP
yearly awards ceremony for
Significant Performance in the
PC category.
From an operational perspective,
the ISO certification process was
successfully completed, bringing SITS
on par with the ISO 9001: 2008, Quality
Management Standards.
Meanwhile, in an effort to provide
clients with a fully-fledged value
proposition, the corporate office was
shifted to more convenient and easily
accessible location at No. 292, R A De
Mel Mawatha, Colombo 3.
Recognitions in 2016
REVENUE - SAMPATH INFORMATION TECHNOLOGY SOLUTIONS LIMITED(Rs Mn)
0
100
200
300
400
500
2014
2013
2015
2016
412
267
149
102
122 SAMPATH BANK PLC
ANNUAL REPORT 2016
PERFORMANCE OF SUBSIDIARIES - SITS
SITS - CSR PROJECTS:
SITS donated computers as a CSR
project in 2016 as following;
Computers to the Sri Lanka
Council for the Blind.
A computer to an under
privileged student to enhance his
ICT skills.
PERFORMANCE - SITS
2016 (Rs Mn) 2015 (Rs Mn) Variance (%)
Revenue 411.7 266.9 54.3%
Profit After Tax 17.5 23.1 -24.1%
Asset Base 892.6 416.0 114.6%
SITS donated computers as a CSR project
MANAGEMENT DISCUSSION & ANALYSIS
123
VALUE CREATION FOR SHAREHOLDERS
2016 2015 Change %
Net asset value per share (Rs) 251.38 198.47 26.66
Group earnings per share - Basic (Rs) 53.66 37.42 43.37
Dividend per share (Rs) 18.75 13.00 44.23
Market price per share as at 31st December (Rs) 260.40 248.00 5.00
BANK’S MARKET CAPITALISATION IN COMPARISON TO CSE - AS AT 31ST DECEMBER
2016 2015 2014 2013 2012 2011
Sampath Bank’s market capitalisation (Rs Mn) 46,086 42,734 39,677 28,843 32,628 30,587
Increase / (decrease) % in market capitalisation 8% 8% 38% (12%) 7% (26%)
CSE market capitalisation (Rs Mn) 2,745,410 2,938,000 3,104,860 2,459,900 2,167,581 2,213,873
As a % of CSE market capitalisation 1.68% 1.45% 1.28% 1.17% 1.50% 1.38%
Market capitalisation rank 12 15 17 16 13 16
INVESTOR INFORMATION
BANK’S MARKET CAPITALISATION RANK
0
5
10
15
20
2014
2013
2015
2016
16
17
15
12
DIVIDEND PER SHARE
0
5
10
15
20
2014
2013
2015
2016
8.00
11.00
13.00
18.75
(Rs) (Rs)
0
10
20
30
40
50
60
2014
2013
2015
2016
53.7
37.4
30.6
21.7
Earnings per Share - Group Highest Market Price per Share - Bank
EARNINGS & HIGHEST MARKET PRICE PER SHARE (Rs)
0
50
100
150
200
250
300
242.00
252.00
279.90268.70
G4 - 09,13
124 SAMPATH BANK PLC
ANNUAL REPORT 2016
ANALYSIS OF SHAREHOLDERS
RESIDENT / NON RESIDENT
31st December 2016 31st December 2015
No. of
Shareholders
No. of
Shares
% No. of
Shareholders
No. of
Shares
%
Resident shareholders 17,107 147,341,639 83.25 17,177 141,053,133 81.86
Non resident shareholders 349 29,639,430 16.75 338 31,259,522 18.14
17,456 176,981,069 100.00 17,515 172,312,655 100.00
INDIVIDUALS / INSTITUTIONS
31st December 2016 31st December 2015
No. of
Shareholders
No. of
Shares
% No. of
Shareholders
No. of
Shares
%
Individuals 16,887 59,556,386 33.65 16,933 58,173,217 33.76
Institutions 569 117,424,683 66.35 582 114,139,438 66.24
17,456 176,981,069 100.00 17,515 172,312,655 100.00
SHAREHOLDERS' FUND
(Rs Mn)
0
10,000
20,000
30,000
40,000
50,000
2014
2013
2015
2016
28
,41
8
30
,91
2
35
,12
5
44
,48
9
COMPOSITION OF SHARE OWNERSHIP - 2016(NO. OF SHAREHOLDERS)
Shares 500 & LessShares 501 - 5,000Shares 5,001 - 10,000
More than 10,000 Shares
52.2
38.3
5.0
4.5
(%)
BANK’S ROE & MARKET INTEREST RATES
0
5
10
15
20
25
2014
2013
2015
2016
Average of 12 Months AWFDR
Average of 12 Months T.B. Rate
6.6
7.2
6.6
8.9
10
.0
9.1
10
.513
.1
(%)
ROE
12.9
16.4 18.4
23.47
INVESTOR INFORMATION
MANAGEMENT DISCUSSION & ANALYSIS
125COMPOSITION OF SHARE OWNERSHIP
31st December 2016 31st December 2015
No. of
Shareholders
% No. of
Shares
% No. of
Shareholders
% No. of
Shares
%
Shares 500 & less 9,117 52.23 1,719,768 0.97 8,947 51.08 1,701,151 0.98
Shares 501 - 5,000 6,693 38.34 10,828,407 6.12 6,861 39.17 11,125,275 6.46
Shares 5,001 - 10,000 787 4.51 5,533,116 3.13 820 4.68 5,755,486 3.34
More than 10,000 shares 859 4.92 158,899,778 89.78 887 5.07 153,730,743 89.22
17,456 100.00 176,981,069 100.00 17,515 100.00 172,312,655 100.00
SHARE TRADING
MARKET
2016 2015 2014 2013 2012
No. of transactions 1,056,849 1,506,790 1,982,709 1,421,303 1,857,384
No. of shares traded 7,195,805,445 9,414,661,048 16,721,524,209 9,054,193,822 9,691,236,634
Value of shares traded (Rs Mn) 176,935 253,251 340,917 200,468 213,827
BANK’S MARKET CAPITALISATION
(Rs Mn)
0
10,000
20,000
30,000
40,000
50,000
2014
2013
2015
2016
28,8
43
39,6
77
42,7
34
46,0
86
SHARE TRADING - SAMPATH BANK PLCNO. OF SHARES TRADED
0
10
20
30
40
50
2014
2013
2015
2016
48
28
27
19
(Mn)
COMPOSITION OF SHARE OWNERSHIP - 2016(NO. OF SHARES)
Shares 500 & LessShares 501 - 5,000Shares 5,001 - 10,000
More than 10,000 Shares
1.0
89.86.1
3.1
(%)
126 SAMPATH BANK PLC
ANNUAL REPORT 2016
BANK
2016 2015 2014 2013 2012
No. of transactions 10,698 14,460 18,403 19,212 13,473
No. of shares traded 18,830,195 26,898,512 27,712,319 47,891,453 28,871,254
As a % of total shares in issue 10.64 15.61 16.50 28.54 17.74
Average daily turnover (Rs Mn) 18.77 29.22 24.34 39.75 22.55
Value of shares traded (Rs Mn) 4,484.95 6,982.39 5,866.37 9,620.18 5,457.94
SAMPATH BANK'S SHARE PRICE FLUCTUATION
2016 2015 2014 2013 2012
Lowest market price (Rs) 210.00 235.20 164.20 161.60 148.50
Highest market price (Rs) 268.70 279.90 252.00 242.00 216.00
Closing price as at 31st
December (Rs) 260.40 248.00 236.30 171.90 200.50
GROSS DIVIDEND
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2014
2013
2015
2016
1,3
43
1,8
47
2,2
40
3,3
62
(Rs Mn)
SHAREHOLDING OF INDIVIDUALS & INSTITUTIONS
0
20
40
60
80
100
2014
2013
2015
2016
33.8
33.7
35.5
35.4
66.2
66.3
64.5
64.6
IndividualsInstitutions
(%)
INVESTOR INFORMATION
PRICE EARNING RATIO
0
50
100
150
200
250
300
2014
2013
2015
2016
Market Price per Share - Bank
Earnings per Share - Bank
28.5
2
248.0
034.6
6
260.4
0 51.5
6
236.3
0
20.4
5171.9
0(Rs)
0
2
4
6
8
10
12
Price Earning Ratio (Times) - Bank
8.4 8.3
7.2
5.1
MANAGEMENT DISCUSSION & ANALYSIS
127
SAMPATH BANK PLC - ORDINARY SHARES
Frequency Distribution of Shareholders as at 31st December 2016
Share Range Resident Non Resident Total
No. of
Share
hold
ers
% No. of
Share
s
% No. of
Share
hold
ers
% No. of
Share
s
% No. of
Share
hold
ers
% No. of
Share
s
%
1-250 4,934 28.27 359,743 0.20 76 0.43 6,469 0.00 5,010 28.70 366,212 0.21
251-500 4,053 23.22 1,334,649 0.75 54 0.31 18,907 0.01 4,107 23.53 1,353,556 0.76
501-1,000 2,697 15.45 1,874,014 1.06 47 0.27 34,798 0.02 2,744 15.72 1,908,812 1.08
1,001-2,000 2,079 11.91 3,000,195 1.70 46 0.26 66,089 0.04 2,125 12.17 3,066,284 1.73
2,001-5,000 1,776 10.17 5,690,164 3.22 48 0.27 163,147 0.09 1,824 10.45 5,853,311 3.31
5,001-10,000 767 4.39 5,405,678 3.05 20 0.11 127,438 0.07 787 4.51 5,533,116 3.13
10,001-20,000 410 2.35 5,694,151 3.22 16 0.09 224,528 0.13 426 2.44 5,918,679 3.34
20,001-30,000 143 0.82 3,450,805 1.95 8 0.05 204,411 0.12 151 0.87 3,655,216 2.07
30,001-40,000 65 0.37 2,259,088 1.28 4 0.02 145,392 0.08 69 0.40 2,404,480 1.36
40,001-50,000 23 0.13 1,028,826 0.58 5 0.03 222,212 0.13 28 0.16 1,251,038 0.71
50,001-100,000 75 0.43 5,032,545 2.84 4 0.02 279,597 0.16 79 0.45 5,312,142 3.00
100,001-1,000,000 71 0.41 21,670,197 12.24 15 0.09 6,920,091 3.91 86 0.49 28,590,288 16.15
1,000,001-Over 14 0.08 90,541,584 51.16 6 0.03 21,226,351 11.99 20 0.11 111,767,935 63.15
Total 17,107 98.01 147,341,639 83.25 349 1.99 29,639,430 16.75 17,456 100.00 176,981,069 100.00
BANK'S SHARE PRICE FLUCTUATION
0
50
100
150
200
250
300
2014
2013
2015
2016
242.00252.00
279.90268.70
161.60 164.20
235.20
210.00
(Rs)
Lowest Market Price Closing Price as at 31st December
Highest Market Price
SHARE TRADING - SAMPATH BANK PLC
0
1
2
3
4
5
6
7
8
Dec 1
4
Dec 1
3
Dec 1
2
Dec 1
5
Dec 1
6
Turnover (Rs Mn)
Volume Traded (No. of Shares Mn)
0
200
400
600
800
1,000
1,200
PRICE TO BOOK VALUE
0
50
100
150
200
250
300
2014
2013
2015
2016
Market Price per Share - Bank
Net Asset Value per Share - Bank
17
9.3
9
24
8.0
01
98
.47
26
0.4
02
51
.38
23
6.3
0
16
9.3
7 1
71
.90
(Rs)
0.0
0.5
1.0
1.5
Price to Book Value Ratio (Times) - Bank
1.01
1.321.25
1.04
128 SAMPATH BANK PLC
ANNUAL REPORT 2016
SAMPATH BANK PLC (ORDINARY SHARES)
Top 20 Shareholders as at 31st December 2016
No. Shareholder name 31st December 2016 31st December 2015*
No. of Shares Ratio (%) No. of Shares Ratio (%)
1 VALLIBEL ONE PLC 26,463,803 14.95 25,765,740 14.95
2 MR Y S H I SILVA 17,660,616 9.98 17,194,764 9.98
3 EMPLOYEES PROVIDENT FUND 17,649,607 9.97 17,184,045 9.97
4 ROSEWOOD (PVT) LIMITED-ACCOUNT NO.1 11,756,360 6.64 11,697,866 6.79
5 HSBC INTL NOM LTD-BBH-MATTHEWS INTERNATIONAL
FUNDS-MATTHEWS ASIA GROWTH FUND 8,111,192 4.58 7,897,235 4.58
6 HSBC INTL NOM LTD-STATE STREET LUXEMBOURG
C/O SSBT -ABN AMRO MULTI -MANAGER FUNDS 4,611,931 2.61 4,490,278 2.61
7 HSBC INTL NOM LTD-BBH-MATTHEWS EMERGING
ASIA FUND 3,087,719 1.74 2,483,749 1.44
8 SAMPATH BANK PLC ACCOUNT NO. 04 (SAMPATH
BANK PENSION FUND) 2,882,902 1.63 2,806,857 1.63
9 AKBAR BROTHERS PVT LTD A/C NO. 1 2,681,122 1.51 2,166,038 1.26
10 CITIBANK NEW YORK S/A NORGES BANK ACCOUNT 2 2,600,052 1.47 1,039,481 0.60
11 EMPLOYEES TRUST FUND BOARD 1,967,514 1.11 1,595,032 0.93
12 JINADASA BROTHERS (PVT) LTD 1,683,422 0.95
13 MR B A MAHIPALA 1,553,468 0.88 1,707,215 0.99
14 KEYSTONE (PRIVATE) LIMITED 1,513,665 0.86 1,473,738 0.86
15 MELLON BANK N.A.-UPS GROUP TRUST 1,433,309 0.81 1,395,502 0.81
16 BNYMSANV RE-BUTTERFIELD TRUST ( BERMUDA )
LIMITED 1,382,148 0.78 1,345,690 0.78
17 UNION ASSURANCE PLC/NO-01A/C 1,264,695 0.71
18 NATIONAL SAVINGS BANK 1,230,988 0.70 1,153,517 0.67
19 J B COCOSHELL (PVT) LTD 1,146,488 0.65
20 THE CEYLON INVESTMENT PLC A/C NO. 02 1,086,934 0.61
111,767,935 63.15 101,396,747 58.84
Total No. of shares registered 176,981,069 172,312,655 100.00
Total No. of shares unregistered - - - -
Total No. of shares issued 176,981,069 - 172,312,655 100.00
Shares held by Directors 33,643 0.02 105,250 0.06
Shares held by Institutions 117,424,683 66.35 114,139,438 66.24
Balance held by Public 59,522,743 33.63 58,067,967 33.70
Total No. of shares issued 176,981,069 100.00 172,312,655 100.00
% Shares held by Public 83.36 83.33
% Shares held by Directors and Related Parties 16.64 16.67
* Shareholding as at 31st December 2015 of the top twenty shareholders as at 31st December 2016.
INVESTOR INFORMATION
MANAGEMENT DISCUSSION & ANALYSIS
129DIVIDEND PAYMENT DETAILS
Year Total Dividend
Paid
Rs Mn
Dividend per
Share
Rs
Profit for the
Period
Rs Mn
Dividend
Payout 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%
2003 (Interim) 59.78 2.00 561 14.58%
2003 (Final) 21.99
2004 (Interim) 65.98 2.00 621 16.15%
2004 (Final) 34.30
2005 (Interim) 87.14 2.00 821 14.54%
2005 (Final) 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 1,342.63 8.00 3,430 39.13%
2014 1,847.01 11.00 4,914 37.59%
2015 2,240.06 13.00 6,134 36.52%
2016 (Proposed Interim) 2,477.73 18.75 9,125 36.85%
2016 (Proposed Final) 884.41
RECORD OF SCRIP ISSUES
Capitalised Year Issue Basis New No.
of Shares
Stated Capital
(Rs Mn)
Reason for Issue
2010 Interim Scrip Dividend for 2010 1 for 120.74 627,596 1,786.25 Increase stated capital
2011 Final Scrip Dividend for 2010 1 for 43.39 3,521,294 2,701.79 Increase stated capital
2012 Final Scrip Dividend for 2011 1 for 43.06 3,682,039 3,523.87 Increase stated capital
2013 Final Scrip Dividend for 2012 1 for 33.12 4,916,007 4,457.89 Increase stated capital
2015 Final Scrip Dividend for 2014 1 for 38.14 4,402,402 5,381.40 Increase stated capital
2016 Final Scrip Dividend for 2015 1 for 36.91 4,668,414 6,471.19 Increase stated capital
2017 (Proposed) Interim Scrip Dividend for 2016 1 for 19.22 9,209,419 8,704.94 Increase stated capital
RECORD OF SUBDIVISIONS
Year Issue Basis New No.
of Shares
Stated Capital
(Rs Mn)
Reason for Issue
2010 Consolidation and subdivision 11 for 10 6,888,762 1,581.65 Increase in liquidity
2010 Subdivision 1 for 1 76,403,986 1,786.25 Gift benefit to
shareholders
130 SAMPATH BANK PLC
ANNUAL REPORT 2016
EMPLOYEE SHARE OPTION PLAN 2010
Year Issue Basis New No.
of Shares
Stated Capital
(Rs Mn)
Reason for Issue
2011 ESOP 2% of issued shares 524,924 2,743.78 Benefit for staff members
2012 ESOP 2% of issued shares 2,200,436 3,564.17 Benefit for staff members
2013 ESOP 2% of issued shares 134,933 4,460.34 Benefit for staff members
2014 ESOP 2% of issued shares 122,648 4,470.15 Benefit for staff members
RELATED PARTY TRANSACTIONS EXCEEDING 10% OF THE EQUITY OR 5% OF THE TOTAL ASSETS OF THE BANK
(THIS DISCLOSURE IS AS PER SECTION 9 OF THE CSE LISTING RULES)
None of the transactions carried out by the Bank with the Related Parties have exceeded the aggregate monetary value of
10% of the shareholders’ equity of the Bank or 5% of the total assets of the Bank as at 31st December 2016.
DEBENTURE INFORMATION
(A) MARKET VALUES
Debentures - 2012/2017 Highest (Rs) Lowest (Rs) Year End (Rs)
2016 2015 2016 2015 2016 2015
Fixed - 16.5% 106.60 110.00 101.50 100.00 102.00 107.00
Fixed - 15.0% 101.00 121.00 98.00 106.00 98.00 106.00
Floating NT NT NT NT NT NT
NT - Not Traded
Debentures - 2013/2018 Highest (Rs) Lowest (Rs) Year End (Rs)
2016 2015 2016 2015 2016 2015
Fixed - 13.4% 98.50 NT 98.50 NT 98.50 NT
Fixed - 13.0% 105.25 107.85 105.25 107.85 105.25 107.85
NT - Not Traded
Debentures - 2014/2019 Highest (Rs) Lowest (Rs) Year End (Rs)
2016 2015 2016 2015 2016 2015
Fixed - 8.25% 90.00 100.95 87.00 94.66 87.00 94.66
Fixed - 8.10% 85.00 94.08 85.00 94.08 85.00 94.08
Debentures - 2015/2020 Highest (Rs) Lowest (Rs) Year End (Rs)
2016 2015 2016 2015 2016 2015
Fixed - 9.90% NT 99.87 NT 99.87 NT 99.87
Floating NT NT NT NT NT NT
NT - Not Traded
INVESTOR INFORMATION
MANAGEMENT DISCUSSION & ANALYSIS
131Debentures - 2016/2021 Highest (Rs) Lowest (Rs) Year End (Rs)
2016 2015 2016 2015 2016 2015
Fixed - 12.75% 99.94 NA 99.94 NA 99.94 NA
Floating NT NA NT NA NT NA
NA - Not Applicable NT - Not Traded
(B) INTEREST RATES
Debentures - 2012/2017 2016 2015
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed - 16.5% 16.50% 16.50% 16.50% 16.50%
Fixed - 15.0% 15.00% 16.08% 15.00% 16.08%
Floating rate * * * *
*Floating rate is equivalent to the six month treasury bill rate (gross) plus 2.0% p.a. payable half yearly
Debentures - 2013/2018 2016 2015
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed - 13.4% 13.40% 13.40% 13.40% 13.40%
Fixed - 13.0% 13.00% 13.42% 13.00% 13.42%
Debentures - 2014/2019 2016 2015
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed - 8.25% 8.25% 8.25% 8.25% 8.25%
Fixed - 8.10% 8.10% 8.26% 8.10% 8.26%
Debentures - 2015/2020 2016 2015
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed - 9.90% 9.90% 10.15% 9.90% 10.15%
Floating * * * *
*Floating rate is equivalent to the six month treasury bill rate (net) plus 1.25% p.a. payable half yearly
Debentures - 2016/2021 2016 2015
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed -12.75% 12.75% 12.75% NA NA
Floating * * NA NA
NA - Not Applicable
*Floating rate is equivalent to the six month treasury bill rate (gross) plus 1.0% p.a. payable half yearly
132 SAMPATH BANK PLC
ANNUAL REPORT 2016
(C) INTEREST RATE OF COMPARABLE GOVERNMENT SECURITIES - GROSS RATES
2016 2015
3 Month Treasury Bill 9.69% 7.09%
6 Month Treasury Bill 10.70% 7.43%
(D) CURRENT YIELD AND YIELD TO MATURITY
Debentures - 2012/2017 Fixed
16.50%
Fixed
15.00%
Floating
2016 2015 2016 2015 2016 2015
Current yield 16.18% 15.57% 16.41% 15.03% NT NT
Yield to maturity of last trade 14.27% 12.53% 18.36% 11.87% NT NT
NT - Not Traded
Debentures - 2013/2018
Fixed
13.40%
Fixed
13.00%
2016 2015 2016 2015
Current yield 13.60% NT 12.75% 12.44%
Yield to maturity of last trade 14.17% NT 10.84% 9.91%
NT - Not Traded
Debentures - 2014/2019
Fixed
8.25%
Fixed
8.10%
2016 2015 2016 2015
Current yield 9.17% 8.72% 9.72% 9.78%
Yield to maturity of last trade 11.55% 9.92% 13.23% 9.92%
Debentures - 2015/2020 Fixed
9.90%
Floating
2016 2015 2016 2015
Current yield NT 10.16% NT NT
Yield to maturity of last trade NT 9.93% NT NT
NT - Not Traded
INVESTOR INFORMATION
MANAGEMENT DISCUSSION & ANALYSIS
133Debentures - 2016/2021 Fixed
12.75%
Floating
2016 2015 2016 2015
Current yield 12.76% NA NT NA
Yield to maturity of last trade 12.75% NA NT NA
NA - Not Applicable NT - Not Traded
(E ) RATIOS - BANK
2016 2015
Debt to equity ratio (%) 80.86 88.80
Interest cover (Times) 6.31 6.02
Quick asset ratio (%) 81.10 78.64
134 SAMPATH BANK PLC
ANNUAL REPORT 2016
FUTURE OUTLOOK
FOR THE
BUSINESS
GOAL:
Lay the foundation for solid growth
Key priorities;
Revenue growth and continued cost management to improve our cost-to-income ratio.
Invest in innovative new financial solutions that will drive key growth objectives and
maintain brand equity
Modernize IT platforms and network infrastructure to improve efficiency and build resilience
Use customer insights identified through data analytics to initiate process improvements to
reduce costs
Strengthen the risk management and governance frameworks
FOR THE
CUSTOMER
GOAL:
Evolve as a multi-channel bank that would reinforce the uniqueness of the Sampath brand and
set us apart from our peers.
Key priorities;
Develop long-term banking relationships with customers by providing products and
services that meet their needs at different stages of their lives
Expand digital channels, including online platforms, ATMs and mobile solutions to enhance
the customer experience
Encourage a greater number of corporate clients to embrace electronic channels
Improve customer-centricity of the branch model
Set the industry-wide standard for customer service
Safeguard customer privacy
FOR EMPLOYEES GOAL:
Drive a high-performance culture, where talented and committed people can build fulfilling
careers.
Key priorities;
Strengthen our training agenda to improve employee productivity
Build our leadership pipeline
Continue to enhance HR systems capabilities and process effectiveness
Enhance employee engagement in order to support a robust feedback culture
FOR THE
SHAREHOLDER
GOAL:
Produce consistent returns that would build confidence and secure the long-term commitment
of the shareholder
Key priorities;
Strong capital ratios to ensure the health of the balance sheet
Improve ROE and ROA
Maintain Dividend-payout-ratio
MANAGEMENT DISCUSSION & ANALYSIS
IMAGINTEGRITY
[ RISK & GOVERNANCE ]This section looks at how we ensure that good
governance, risk management and long term sustainability
are prioritised in all of the Bank’s activities.
Risk Management Report 136
Compliance Review 151
Corporate Governance 153
Board Audit Committee Report 198
Board Human Resources and Remuneration Committee Report 202
Board Nomination Committee Report 204
Board Integrated Risk Management Committee Report 206
Board Related Party Transactions Review Committee Report 209
Board Credit Committee Report 210
Board Strategic Planning Committee Report 212
Board Shareholder Relations Committee Report 214
Board Treasury Committee Report 216
Board Marketing Committee Report 217
136 SAMPATH BANK PLC
ANNUAL REPORT 2016
RISK MANAGEMENT REPORT
INTEGRATED RISK
MANAGEMENT FRAMEWORK
The Integrated Risk Management
(IRM) Framework at Sampath Bank,
and the Group is viewed as a
means of ensuring that sustainable
value is created for stakeholders
in a responsible manner through
effectively monitoring, managing and
controlling the risks faced by the Bank/
Group. The IRM process advocates a
structured and disciplined approach
to risk management by aligning
strategy, policies, processes, people,
technology and knowledge vis-à-vis the
opportunities, threats and uncertainties
faced by Sampath Bank. The primary
objectives of the framework are:
Protecting the Bank / Group
against possible losses;
Integrating risk management at
all levels of decision-making;
Anticipating and mitigating risk
events before they become a
reality;
Ensuring earnings stability
Optimising use of capital
These goals are cascaded down into
framework, policies, methodologies,
allocation of responsibilities,
governance and reporting structures
that have been developed in line with
all applicable regulatory requirements
and international best practices,
including the Basel II and III Accords.
The Integrated Risk Management Unit
(IRMU), under the supervision of the
Group Risk Officer is responsible for
driving the IRM framework across the
Bank as well as the Group.
FUNCTIONAL STRUCTURE OF THE RISK MANAGEMENT FRAMEWORK OF THE BANK/GROUP
Head of Risk & Compliance -
Siyapatha Finance PLC
Chief Accountant
SC Securities (Pvt) Ltd
CEO - Sampath Information
Technology Solutions Ltd
Manager -
Sampath Centre Ltd
Managing Director
Group Compliance Officer Group Risk Officer
AML and Compliance Unit Integrated Risk Management Unit
Credit Risk Management Unit Market Risk Management Unit Operational Risk Management Unit
Credit Risk Management Function Credit Risk Review Function
Board Integrated Risk Management
Committee (BIRMC)
BOARD OF DIRECTORS
G4 - 46
RISK & GOVERNANCE
137RISK CULTURE
A sound risk culture is a core element of
the IRM framework and is deemed to be
vital in building resilience and creating
a scalable platform for future growth for
Sampath Bank and the Group.
Risk Management is seen as the
responsibility of every employee. In this
regard, the IRMU seeks to promote a
culture where employees are aware of
potential threats related to their actions
and work towards minimizing them by
exercising the right controls at the right
time.
RISK GOVERNANCE
The responsibility for ensuring that
risks are adequately identified,
measured, managed and monitored
and maintaining the good governance
ultimately lies with the Board of
Directors. The Board discharges its
duties through policies and procedures
enacted by several Board Committees,
with the Board Integrated Risk
Management Committee (BIRMC)
being the apex body for all risk related
matters.
Moreover, a number of subcommittees
have also been appointed and a
comprehensive internal control
mechanism established to guide
Corporate Management in the day-to-
day management of the business.
These measures seek to promote
an awareness of risk and good
governance in every area of the
business, and reinforce a culture of
compliance among all employees
across the Bank and the Group.
SAMPATH BANK
Credit Policy, Risk and Portfolio
Review Committee
Executive Advances Committee
Advances Committee
Asset & Liability Management
Committee (ALCO)
Investment Committee
IT Steering Committee
Internal Capital Adequacy Assessment
Process (ICAAP) Committee
Outsourcing Committee
Procurement Committee
Sri Lanka Financial Reporting
Standards (SLFRS) Committee
Management Committee
RISK GOVERNANCE COMMITTEES
Board Integrated Risk
Management Committee
Board Audit Committee
Board Treasury Committee
Board Credit Committee
Board Related Party
Transactions Review Committee
Board Strategic Planning
Committee
Board Human Resources &
Remuneration Committee
Board Nomination
Committee
Board Shareholder
Relations Committee
Board Marketing Committee
BO
AR
D L
EV
EL
CO
MM
ITT
EE
SE
XE
CU
TIV
E L
EV
EL
CO
MM
ITT
EE
S
138 SAMPATH BANK PLC
ANNUAL REPORT 2016
RISK MANAGEMENT
RESPONSIBILITIES
The foundation of our Risk Management
framework is built on the ‘Three Lines
of Defence’ model, which promotes
transparency, accountability and
consistency, the building blocks for a
strong relationship with stakeholders.
Identification, management and
reporting of both current and potential
risks at business are managed effectively
as close as possible to the source of risk.
Key Risk Management responsibilities
for the business units include;
Self-assessment and reporting of risks
and control effectiveness
Compliance with all policies and
procedures
Promoting a strong risk culture and
awareness of risk elements through
effective communication and training.
Identifying and implementing both
proactive and reactive risk evaluation,
monitoring, and controls , coordinating
with Business Heads and Risk
Management
Centralised supervision by the Risk
/ Compliance functions to ensure
the implementation of governance
standards, frameworks and policies for
each type of risk that the Bank / Group is
exposed to, while ensuring consistency
in Risk Management across all areas.
This is done through;
Ongoing Formulation and
implementation of the IRM framework
Review of Key Risk Indicators of the
business units, products, processes,
systems and reporting to the business
units, management committees and
BIRMC, as required.
Challenging the Risk & Control Self
Assessments, inherent risks of business
units
Independently identifying and assessing
the risks the Bank is exposed to, also
considering the Board approved Risk
Appetite and recommending action to
maintain risks within appetite levels
Overseeing the development of a risk-
culture and its links with the anti-fraud
framework
Issuing an independent ‘Risk Opinion’
for all Credit Appraisals, Operational
Processes, Legal Agreements and New
Products/ Systems
Conducting post disbursement reviews
on loan and other credit facilities to
ascertain compliance to covenants and
ensuring maintenance of credit quality
Providing independent verification on
the process and level of impairment
carried out by the business units for
individually significant borrowers
Independent monitoring of Treasury
operations, adherence to Treasury limits,
exposure to Liquidity, Foreign Exchange
Rate, Interest Rate, Equity Price Risks
and implementing or recommending
appropriate actions to mitigate Market /
Liquidity Risks within Risk Appetite
Group-wide oversight of Risk
Management, reporting and providing
recommendations to BIRMC
Internal Compliance, regulatory
compliance, regulatory reporting, and
Anti-Money Laundering measures
Monitoring Compliance with the Bank’s
overall Risk Management framework
Internal Audit providing independent
and objective assurance on the Risk
Management /Compliance processes
and practices in place. Audit has
the authority to communicate with
the External Auditors, Board Audit
Committee and BIRMC. Assurance is
provided through;
Internal Audit
Anti-Fraud and monitoring
Assessment of the robustness of the
Risk Management and Compliance
tools and techniques in place.
1ST LINE OF DEFENCE 2ND LINE OF DEFENCE 3RD LINE OF DEFENCE
RISK MANAGEMENT REPORT
RISK & GOVERNANCE
139RISK APPETITE
An integral component of the overall
strategy formulation process, the Bank’s
Risk Appetite provides measurable
targets and tolerance thresholds across
all material risk categories. This creates
a framework where optimal growth
options can be evaluated alongside
the risks involved in order to drive
sustainable performance.
The main aim of setting a Risk Appetite
is to ensure that risks are proactively
managed as per the Board approved
tolerance limits for each material risk
category. Risk Appetite tolerance levels
are set at different trigger levels, with
clearly defined escalation requirements,
which enable appropriate actions to be
defined and implemented as required.
In cases where the tolerance levels
are breached, it is the responsibility of
the Group Risk Officer to bring them to
the attention of the Management and
respective Board Sub Committees, and
the Board for necessary action.
The Board is tasked with reviewing
and approving the Risk Appetite
annually, to ensure alignment with the
Group strategy, business environment
and stakeholder requirements.
Any amendments to Risk Appetite
are arrived at through discussions
between Business Line Heads, the
relevant Board Sub Committees and
Group Risk Officer and are thereafter
recommended for approval by the
Board.
Risk Appetite-Criteria Limit/Range
CREDIT RISK
Credit Quality and Concentration
Single Borrower Exposure (Individual) 25% of the Capital Base of the Bank
Single Borrower Exposure (Group) 35% of the Capital Base of the Bank
Aggregate Exposure (funded +non funded) to Large
Borrowers / Total Exposure (funded +non funded) (%)
(Large Borrowers are defined as having a credit
exposure of more than 15% of Bank’s Capital Base)
55% Maximum
Lending to Agriculture (%) – mandatory requirement 10% 10% - 12%
Exposure Against Shares / Credit Portfolio (%) <= 7.5%
Sector-wise Concentration (HHI Score *) Below 1,400
Product-wise Concentration (HHI Score *) Below 1,400
Market Risk
Net Open Position USD 11 Mn as per CBSL regulations
Liquid Assets Ratio 21% minimum
Net Loans to Total Assets Less than 75%
Total Loans to Customer Deposits 85% - 95%
Liquid Assets to Short Term Liabilities 30% - 35%
Bulk Deposits to Total Deposits Less than 15%
Purchased Funds to Total Assets Less than 12%
Commitments to Total Loans Less than 45%
Operational Risk
Internal Fraud Rs 10 Mn Maximum**
External Fraud Rs 25 Mn Maximum**
Employment Practices and Workplace Safety Rs 5 Mn Maximum**
Clients, Products & Business Practices Rs 5 Mn Maximum**
Damage to Physical Assets Rs 5 Mn Maximum**
Business Disruption and System Failures Rs 5 Mn Maximum**
Execution, Delivery & Process Management Rs 10 Mn Maximum**
* Herfindahl- Hirschman Index – HHI scores range from 0 to 1. We multiply the scores by 10,000 for easy readability. Scores below 1,000 are
considered un-concentrated while over 1,800 is considered highly concentrated. Our computations have been carried-out on lending products
and sectors
** All limits are annual limits based on Basel categories. Overall cumulative Operational Risk Appetite Limit is Rs 50 Mn a year.
140 SAMPATH BANK PLC
ANNUAL REPORT 2016
RISK MEASUREMENT
THROUGH STRESS TESTING
Stress testing is used as a primary
means to assess the Bank’s vulnerability
to potential but plausible events and
to determine how potential adverse
developments may impact the Capital
Adequacy Ratio (CAR). In addition,
stress tests also act as conduits from
which the Bank assesses changes in
the Risk Profile and determines Risk
Appetite tolerance levels.
Stress testing is conducted regularly
for all major Risk categories, while
portfolio-specific stress testing is
conducted quarterly for highly sensitive
portfolios; mainly, lending, foreign
exchange, interest sensitive asset/
liability and liquidity while for all other
areas, stress tests are conducted as
and when it is deemed necessary.
Impact
Assessm
ent
CAPITAL ADEQUACY RATIO
Default
Risk
Concentration
Risk
Security
Value
Risk
Liquidity
Risk
Interest
Rate
Risk
Equity
Risk
Foreign
Exchange
Risk
Operational
Risk
Low
, M
ediu
m a
nd H
igh
Str
essed S
cenari
os
Large
exposure
default
Increase in
HHI score
Fall in
Forced Sale
Value of
Mortgaged
Collateral
Large
Deposit
withdrawals
prior to
Maturity
Interest
Rate shocks
on interest
sensitive
assets
Price shock
on equity
portfolio
Exchange
Rate shock
on net open
position
Increase in
Operational
Losses
Asset quality
downgrade
Loan roll-
overs
Interest
Rate shocks
on interest
sensitive
liabilities
IMPROVING RISK
PERFORMANCE
As a part of the ongoing efforts to
improve the Bank’s risk performance
and strengthen the overall Risk
Management Framework, a number of
new initiatives were undertaken in 2016.
CREDIT RISK MANAGEMENT
Credit Risk refers to the potential loss
that may result owing to the failure by a
counterparty or customer to meet their
obligations to the Bank in accordance
with agreed terms.
The policy guidelines are used to
manage the incidence of Credit Risk,
which are spelt out in the Credit
Risk Management Policy, which
ensures stringent pre/post Credit
Risk Management in line with the Risk
Appetite of the Bank, the Regulations of
Central Bank of Sri Lanka and globally
accepted Basel guidelines.
Steps taken in 2016 to strengthen the
Credit Risk Management framework,
were three-fold;
1. Strengthening the Pre-credit
evaluation process
Recommendations of an independent
consultant, provided after validating
effectiveness of our Internal Rating
Models were implemented during
the year. A highly focused effort to
reinforce the rating mechanism led
to the implementation of an improved
Risk Rating system to assess the Credit
Risk of all borrowers. The initiative,
which commenced in 2015, was fully
completed by end 2016. To strengthen
the credentials of the Cash Margin and
Staff Loans processes, two specific
Credit Rating models were introduced.
RISK MANAGEMENT REPORT
RISK & GOVERNANCE
141Moreover, efforts to benchmark against
internationally accepted best practices
led to the IRBF (Internal Rating Based
Foundation) Approach being used for
test computing Credit Risk Weighted
Assets, with a 5 year data analysis
which has also been presented to both
Internal and External auditors for their
review.
Meanwhile, in a bid to assess how
different sectors are impacted by
adverse market conditions and other
macro-economic implications, a series
of improvements were made to the
Stress Testing mechanism.
Steps were taken to improve the back-
end operations which ensured that the
impairment process was integrated into
the core banking system as well as the
Credit Risk Management system. At
the same time, post-mortem analysis
was conducted on selected high-value
NPA customers, as part of the learning
exercise to help identify critical factors
that cause customers to default, and
what type of follow-up actions are best
suited for handling such situations.
The process of managing Market
Risk is underpinned by; the Market
Risk Management Policy, the Asset
and Liability Management Policy, the
Investment Policy and the Treasury
Policy.
In 2016, several stress tests were done
in order to understand the impact that
potential stress events could have on
various portfolios. This included new
combined Stress Testing Scenarios for
Market Risk and Operational Risk.
LIQUIDITY RISK
MANAGEMENT
Liquidity risk is the potential risk arising
from the inability to meet obligations
in a timely manner as and when they
become due, mainly on account of
mismatches between the maturities of
the Bank’s assets and liabilities.
Therefore managing Liquidity Risk is a
crucial part of the day-to-day activities
of the Bank. The ALCO is the main
Executive Level committee mandated
to oversee the Bank’s liquidity position
and to ensure it is in line with the internal
targets. Board Approved Liquidity
Gap Limits are also used to ensure
compliance with Central Bank regulatory
requirements, and the Bank’s Risk
Appetite.
FOREIGN EXCHANGE RATE
RISK MANAGEMENT
Classified as the loss arising as a result
of mismatches in assets and liabilities
in specific foreign currencies, Foreign
Exchange Rate Risk is managed
through a Board approved Policy and
Limit Framework.
To improve the monitoring and
control aspects and to enhance the
standards of Treasury Limit monitoring
mechanisms, a new project was
commenced in 2016 to upgrade the
Treasury operations system. The
imitative, which was launched in the
early part of the year is expected to
be fully completed by early 2017.
2. Improving the post-credit
evaluation process
Among the key activities carried out
during the year was the alternative
scenario analysis to asses/forecast the
impact on service of loans from Gearing
levels in the event of a hike in average
interest rates.
Portfolio-specific initiatives included
a special stress test to evaluate
the Bank’s risk exposure to the
Condominium and Housing markets,
while general industry analysis helped
to determine the adequacy of risk
appetite thresholds.
3. Compliance with BASEL
regulations
A series of awareness sessions were
conducted to educate Risk Governance
Committees and Corporate
Management regarding international
best practices and applicable
standards.
MARKET RISK MANAGEMENT
Market Risk is the likelihood of loss
in earnings that could arise from the
possible fall in value of investment
or trading portfolios, as a direct
consequence of changes in market
variables such as interest rates, equity
prices and foreign exchange rates.
RISK GRADE WISE DISTRIBUTION OF BORROWERS
A+ to AA- to B+B to C+
Below C+Unrated
21
3638
2
3
(%)
SECTORWISE DISTRIBUTION OF POST CREDIT EVALUATION DURING 2016
Financial & Business
Construction
Traders
Agriculture
Manufacturing
Infrastructure
Tourism
Other Customers
Other Services
New Economy
Transport
20
19
17
11
7
4
2
3
5
5
7
(%)
142 SAMPATH BANK PLC
ANNUAL REPORT 2016
In addition, a new rate scan report
was also introduced, to validate the
Exchange Rates quoted by Dealers
against market rate movements on a
given day.
INTEREST RATE RISK
MANAGEMENT
Interest Rate Risk is the potential
for loss resulting from the Bank’s
assets and liabilities having different
re-pricing characteristics. The Bank is
exposed to interest rate risk through its
lending assets, deposit liabilities and
trading securities. Given this broad
scope, Interest Rate Risk which is
pivoted on the changes in the macro
environment is managed through a
Board approved Policy Framework.
Being a highly sensitive area,
strengthening the monitoring process
remained a priority for 2016, which saw
the Yield Curve Risk and Re-pricing
Risk monitoring mechanisms being
adopted as a part of the regular Interest
Rate Risk monitoring mechanism, and
the introduction of an improved limit
based monitoring framework for Interest
Rate Risk.
EQUITY RISK MANAGEMENT
From the Bank’s perspective, Equity
Risk refers to the potential losses that
may arise in the investment portfolio
owing to adverse movements in value
of equity investments. The Board
approved Investment Policy offers
a comprehensive guideline of the
management of Equity Risk within
appetite levels.
OPERATIONAL RISK
MANAGEMENT
Operational Risk is the potential Risk
arising from the inadequacy of internal
processes, controls, IT systems, people
or even external events that may impact
the Bank.
The Operational Risk Management
Framework and processes are
conducted in accordance with the
Banks’ Operational Risk Management
Policy, other related Policies approved
by the Board and applicable
regulations.
Among the steps taken in 2016 to
widen the scope of the Operational Risk
Management Framework was the new
RISK MANAGEMENT REPORT
RISK MANAGEMENT IS SEEN AS THE RESPONSIBILITY OF EVERY EMPLOYEE. WE STRIVE TO PROMOTE A CULTURE WHERE EMPLOYEES ARE AWARE OF POTENTIAL THREATS ARISING FROM THEIR ACTIONS AND WORK TOWARDS MINIMIZING THEM BY EXERCISING THE RIGHT CONTROLS AT THE RIGHT TIME
combined Stress Testing mechanism
for Market Risk and Operational Risk.
The Internal Loss Event Data Reporting
(ILEDR) mechanism, a key source of
information in managing Operational
Risks, was further improved, while
Board approval for KRI’s (Key Risk
Indicators) and RCSA (Risk and Control
Self-Assessments) were reviewed as
part of the continuous development
of our Operational Risk Management
Framework.
Meanwhile, regulatory approval
from the CBSL was sought to adopt
advanced approaches for the
computation of Capital Adequacy
as per the Basel II Operational Risk
Capital Calculation approaches.
OPERATIONAL RISK REVIEWS IN 2016
Service Level Agreements / MOU / NDAPolicies, Procedures, DirectivesSign Off for Products / Concept PapersSystem Requirement Specifications / RFPProduct / Customer Applications
38
34
14
13
1
(%)
RISK & GOVERNANCE
143
KEY RISK INDICATOR LIMIT FRAMEWORK
Area Indicator Threshold (Quarterly)
Retail Banking: Adequacy of HR staffing
levels to meet work load/plans
Staff turnover in executive grades. Warning : 0.875%
Critical : 1.00%
Retail Banking: Compliance and Legal -
Staff breaches of code of conduct
including ethical standards, integrity
and confidentiality
Number of internal frauds per business/
functional unit
Total fraud value reported during the
quarter, per business/functional unit
Warning : 0.009
Critical : 0.012
Warning : Rs 7,500
Critical : Rs 9,000
Retail Banking: Technology Total number of breakdowns per ATM Branches
Cause Warning Critical
Hardware 0.652 0.685
Software 0.035 0.050
Cash low 0.019 0.020
Communication 0.021 0.030
Power 0.050 0.060
Off-site
Cause Warning Critical
Hardware 1.500 2.000
Software 0.075 0.090
Cash low 0.356 0.392
Communication 0.241 0.266
Power 1.345 1.480
The risks associated with the
ownership, use, operation,
involvement and adoption of
IT systems within the Bank.
This includes breakdowns
and failures in IT systems,
technological obsolescence,
and inadequate infrastructure
to support business volumes,
among others. The Bank’s IT
framework is governed by its
IT policies and procedures,
which are reviewed and
monitored by the IT Steering
Committee and IT Department
The result of improper management of human resources, failure to comply with related
regulations, inappropriate actions, non adherence to formal procedures, lack of competencies
and any other conduct of employees that may pose a threat to the Bank.
To minimize People Risk the Bank relies on its integrated HR framework
The Risks arising from inadequate or failed internal processes, and controls. Process risk is managed through the
Operational Risk Management Policy and the other related policies, procedures and internal directives in line with the
three lines of defence framework.
The risks arising from non-
compliance with regulatory/
statutory provisions,
uncertainty due to legal
actions or uncertainty in the
applicability or interpretation
of relevant laws applicable to
the Bank.
Legal Risk Management
is implemented in line with
Legal Risk Management
Policy, through its
comprehensive framework
of internal procedures and
directives
Process Risk
Technology
Risk
People Risk
Legal Risk
G4 - SO 03
144 SAMPATH BANK PLC
ANNUAL REPORT 2016
Area Indicator Threshold (Quarterly)
Retail Banking: Credit Operations
including Pawning
Value of Dud and Stolen Pawned
articles reported
Value of Dud and Stolen articles
reported compared to total Pawning
Advances
Number of credit defaults handed over
to recoveries for recovery and legal
action, per Branch/Credit Department
Value of the credit defaults handed over
to recoveries for recovery and legal
action compared to Advance Portfolio
Warning : Rs 1.0 Mn
Critical : Rs 1.5 Mn
Warning : 0.005%
Critical : 0.010%
Warning : 0.72
Critical : 0.90
Warning : 0.175%
Critical : 0.35%
Retail Banking: Credit Card Operations Reported total number of credit cards
lost/stolen compared to total number of
credit cards
Value of counterfeit and CNP (card not
presented) credit card frauds compared
to total Credit Card advances.
Reported total number of counterfeit
credit cards compared to total credit
card base
Total number of credit cards used for
CNP frauds compared to total Credit
Card Base.
Warning : 0.009%
Critical : 0.010%
Warning : 0.04%
Critical : 0.05%
Warning : 0.043%
Critical : 0.058%
Warning : 0.045%
Critical : 0.054%
KEY RISK INDICATOR LIMIT FRAMEWORK CONTD.
COMPLIANCE RISK
MANAGEMENT
Compliance Risk is managed by the
Compliance Unit of the Bank, headed
by the Group Compliance Officer.
The Compliance Review on pages 151
& 152 of this report is designed to offer
a more detailed view.
STRATEGIC AND
REPUTATIONAL RISK
MANAGEMENT
Strategic risks are the potential losses
arising from the possibility of the Bank’s
future business plans and strategies
being inadequate, inappropriate, or not
based on sound assumptions. Strategic
risks can also arise from not responding
promptly to external events likely to
impact our strategies, or due to weak
implementation of strategies.
Commencing this year, we have
enhanced the assessment and
monitoring of Strategic Risk through a
detailed analysis of the Bank’s strategic
plan and by providing our feedback
and recommendations to the Board, so
that future strategies are adopted with
full understanding of potential risks.
Reputational risks impact the Bank’s
current or prospective earnings
capacity, resulting from damage
or breakdown in relationships with
transactional stakeholders.
The Strategic Risk Management Policy
outlines the structures and processes
to manage the strategic risks faced
by the Bank, while the Banks’ code of
ethics and value culture along with the
Reputational Risk Management Policy
play crucial roles in managing
Reputational Risks.
GROUP RISK MANAGEMENT
The objective of the Group Risk
Management function is to ensure that
the risk and control mechanisms of
RISK MANAGEMENT REPORT
RISK & GOVERNANCE
145 The BIRMC periodically
reviews the Risk Profile of each
subsidiary, the Quarterly Group
Risk Reports submitted by the
Group Risk Officer and makes
recommendations to the main
Board
The Bank’s Board of Directors
have access to the Board
Minutes of all subsidiaries
each subsidiary remain aligned to the
core Risk Management Framework of
Sampath Bank at all times. To support
this goal the following practices are in
place;
The Bank nominates Directors
to the Boards of each of the
group entities depending on the
required level of oversight
A Group Risk Officer is appointed
as the main coordinator of risk
management mechanisms with
the subsidiaries (Siyapatha
Finance PLC, being the largest
subsidiary in the Group has its
own Integrated Risk Management
Committee, where the Group Risk
Officer is invited to meetings)
Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
CREDIT RISK
Risk of borrower
default
High 1. Key Committees: BIRMC,
Credit Committees, Credit &
Policy Review Committees
2. Credit Risk Management Unit
(CRMU)
3. Structured & standardised
credit sanction process.
4. Internal Risk Rating
5. Pre-Credit Risk Evaluation
by specialised staff at Credit
Departments & Regional
Offices.
6. Post-Credit monitoring and
Loan Review Mechanism
1. Board approved credit policies/
procedures, framework, annual
review
2. Delegated authority levels,
Segregation of duties between loan
origination, Administration & Risk.
3. Key input from the Risk Department
for pre/post credit risk
4. Independent Pre-credit Risk
evaluation by CRMU for over Rs
100 Mn
5. Watch listing, Early Warning
Signals (EWS)
6. Portfolio Risk Management and
Reporting
Medium
CREDIT CONCENTRATION RISK
Credit
exposure being
concentrated
on one or few
lending sectors,
groups, insufficient
diversification
High 1. Review the Bank’s
concentration in a number of
areas, such as Top 20 exposure
as a % of total portfolio,
product-wise, sector-wise
region-wise, collateral-wise etc.
2. Identify principal Risk factors
which affect the portfolio and
required to be stressed.
3. Concentration risk assessed
based on Herfindahl - Hirshman
Index (HHI)
1. Board approved limits on
maximum exposure guidelines
2. Setting of prudential limits, on
maximum exposure, reviewed
annually.
3. CBSL guidelines - single borrower/
related party
4. Classification of borrower – sector/
subsector
5. Monitoring of exposure against
the limits and NPAs on MoM & YoY
basis.
6. Trend analysis reported to BIRMC.
7. Stress testing/Sensitivity analysis
results reported to Management
/ BIRMC on quarterly basis for
necessary action.
Low
RISK PROFILE / RISK REGISTER
The Bank’s overall Risk Profile could be summarised as follows.
146 SAMPATH BANK PLC
ANNUAL REPORT 2016
Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
COUNTRY RISK
A collection of
risks associated
with investing in
or lending to a
foreign country.
These risks
include political
risk, exchange
rate risk, economic
risk, sovereign risk
and transfer risk.
Low 1. Sovereign Risk rating
2. Monitoring of specific sanctions
on countries
3. Assessment of political and
economic situations
1. Limitations on lending/caps on
lending.
2. Monitoring of country-wise
exposure
Low
MARKET RISKS
LIQUIDITY RISK
Inability to meet
obligations as and
when they fall due
High 1. Board Approved Policies
2. Measurement through key ratios
such as Net Loans to Assets,
Loans to Customer Deposits,
Liquid Assets to Short Term
Liabilities etc.
3. Preparation of maturities of
assets and liabilities statement
into time bands
4. Measurement of liquidity in all
major currencies
5. Assessment of Liquidity Risk
during Economic Capital
Calculation under Internal
Capital Adequacy Assessment
Process (ICAAP)
1. Monitoring of Board Approved
Liquidity Risk Appetite Limits
2. Measurement of liquidity in all
major currencies reported to ALCO,
analysed and decisions taken at
ALCO.
3. Stress Testing results on Liquidity
Risk are reported to BIRMC and
appropriate risk mitigation decisions
made.
4. Board approved Liquidity
Contingency plan.
5. Planning and readiness for Basel III
liquidity requirements.
Medium
INTEREST RATE RISK
Potential loss
resulting from the
Bank’s Assets and
Liabilities having
different re-pricing
characteristics
Medium 1. Board approved Policies
2. Prudential limits i.e. maximum
maturity, duration etc.
3. Assessment of Interest Rate
Risk during Economic Capital
Calculation under Internal
Capital Adequacy Assessment
Process (ICAAP)
1 Maturity gap analysis (various time
bands) – residual term maturity
(Fixed Rate) / or next re-pricing
(floating rate)
2. Interest rate risk related reporting,
Limit monitoring and analysis at
ALCO and BIRMC
3. Stress Testing and Scenario Analysis,
and the results are reported to
BIRMC and appropriate decisions
are made to mitigate risks.
4. VAR calculations on Treasury
Bill/Bond portfolios and related
monitoring against BOD approved
Limits
Medium
RISK MANAGEMENT REPORT
RISK & GOVERNANCE
147Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
EQUITY RISK
Impact to the
value of the Bank’s
Equity Portfolio
(investments in
Share Market)
due to adverse
movements in
stock market
prices
Medium 1. Board Approved Policies
2. Equity Portfolio Performance
Review
3. Investment Committee
4. Mark to market of the
investment portfolio
5. Assessment of Equity Risk
during Economic Capital
Calculation under Internal
Capital Adequacy Assessment
Process (ICAAP)
1. Return of equity portfolio /
movements in stock market
monitored by Investment
Committee and risk mitigation
decisions made
2. Stress Testing on a regular basis,
and reported/decisions made at
BIRMC
Low
FOREIGN EXCHANGE RATE RISK
Risk arising from
mismatches
in assets and
liabilities in
specific foreign
currencies, where
the value of such
net exposures
will fluctuate due
to exchange rate
movements.
High 1. Board Approved Policies
2. Assessment of Foreign
Exchange Rate Risk
considered in setting Treasury
Limits and Products
3. Regular revaluation of open
positions
4. Assessment of Foreign
Exchange Rate Risk during
Economic Capital Calculation
under Internal Capital
Adequacy Assessment Process
(ICAAP)
5. Value at Risk (VAR) calculation
on Foreign Exchange Rate
Sensitive portfolios through IT
Systems.
1. Continuous Monitoring of Board
approved limit framework as per
CBSL requirements depending on
the capital requirements & Risk
Management capability.
2. Regular stress testing for key
variables, reporting to BIRMC, and
appropriate decisions made.
3. Segregation of responsibilities
between Front Office, Middle Office
& Back Office
4. IT System in place enables tracking
and monitoring of exposures
5. Monitoring exposures including
monitoring of forex exposures with
preparation of maturity of assets &
liabilities
6. Monitoring of Risk Appetite Limits
for Foreign Exchange Rate Risk
and BOD approved VAR limits
Medium
CAPITAL RISK
Risk of insufficient
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
(Finance & Planning Department)
2. Capital augmentation measures
are put in place depending on the
outcome of monitoring (Finance &
Planning Department / ALCO)
3. Regular Economic Capital
Calculation under Internal Capital
Adequacy Assessment Process
(ICAAP) as per CBSL Guidelines
4. Planning and readiness for
improved capital requirements
under Basel III commencing from
1st July 2017
Medium
148 SAMPATH BANK PLC
ANNUAL REPORT 2016
Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
OPERATIONAL RISK
The risk of loss
resulting from
inadequate or
failed internal
processes, people
and systems or
from external
events. This
definition includes
legal risk, but
excludes strategic
and reputational
risk
High 1. Adequacy & effectiveness of
Operational Risk Policies are
regularly assessed by IRMU
and at BIRMC meetings
2. Operational Risk is managed
by business units in
accordance with internal control
requirements
3. Risk and Control Self
Assessments (RCSA) provided
by the respective business
units, and Key Risk Indicators
(KRI)
1. Operational Risk Policies reviewed
annually or more frequently based
on the need.
2. Risk Management monitoring
through Operational Risk
IT System. Comprehensive
operational loss database is
maintained in the System to track
losses by Event Type and Business
Line as per Basel II
3. Material losses regularly analysed
by cause, and action taken to
improve system and controls to
prevent future recurrence
4. Risk review on new products,
processes, external suppliers/
outsourced service providers.
5. Monitoring and Reporting of
Operational Risk Appetite Limits
and Key Risk Indicator Limits
Medium
PEOPLE RISK
Lack of
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
qualifications and skill levels
3. Recognition of specialised skills
4. Bi-annual reviews/ assessment
of performance
5 Performance management
systems in place to recognise
and reward performance and
identify training needs
6. Succession and development
plans
1. Robust HR policies, governance
structures, programmes and
processes in place and policies are
applied in a consistent manner.
2. Recruitment, Pre employment
screening, Employer feedback/Exit
interviews
3. Proactive HR programmes to
engage and receive feedback from
staff throughout the Bank
4. Strong staff development
programmes in place combining
e-learning, classroom training and
on the job training. Programmes
cover both general and specialised
areas and soft skills
5. Maintaining a low staff turnover
ratio
6. Consistently applied disciplinary
procedures
Medium
RISK MANAGEMENT REPORT G4 - 02
RISK & GOVERNANCE
149Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
TECHNOLOGY RISK
Risk arising from
non-availability
of IT systems,
systems break
downs 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
2. Performing systems audits for
every system before deploying
into production environment
3. External/Internal vulnerability
assessment with Risk
Management process of
identifying and assessing risk.
4. IT and Systems Audit
continuously reviews and
analyses new cost efficient
delivery channels
5. IT Steering Committee
6. Risk reviews on new / amended
systems during requirement
specification or procurement
stage
1. Technology planning as a part of
annual strategic planning process
which covers a 3 year period
2. Systems audits are performed for
every system before deploying into
production environment
3. Bank’s IT Department/ IT Steering
Committee together with the
business lines, continuously review
and analyse new cost efficient
delivery channels
4. Based on the outcome of the
systems audit, necessary controls
are implemented before live
implementation
5. External vulnerability assessment
carried out by external consultants
based on the need
6. IT Policies/ procedures investment
in latest technology, IT systems, in
line with ISO standards to ensure
competitive advantage.
7. Back up & Disaster Recovery
Planning & testing in place. (BCP)
Medium
LEGAL RISK
Risk arising from
litigation against
the Bank, faulty
documentation or
business not being
conducted as per
the applicable
laws
High 1. Independent Legal Department
2. Specialist legal advice obtained
from external consultants on a
need basis.
3. Adequacy and effectiveness
of the controls reviewed by the
Legal Department.
1. Board Approved Legal Risk
Management Policy being applied
in all legal matters
2. Adequacy and effectiveness of
the controls reviewed by the Legal
Department
3. Policies and procedures in place
to ensure that business activities
with legal impact are properly risk
assessed and executed.
4 All legal documents/ Service
Level Agreements are specifically
approved by the respective
Business Line Heads and the Chief
Legal Officer, and also signed off
by Risk & Compliance Departments
5. Company Secretary function/
compliance to ensure compliance
with specific regulatory
requirements
Low
150 SAMPATH BANK PLC
ANNUAL REPORT 2016
Risk Factor Impact Risk Management / Assessment Risk Mitigating Factors Risk
Rating
STRATEGIC RISK
Failure to manage
medium / long
term strategic
goals of the
business
High 1. Bank’s 2-3 year strategic
plan approved by the Board
covering all business units.
1. Board approved Strategic Risk
Management Policy
2. Strategic Risk Assessment in
ICAAP and provisions under
Economic Capital
3. Regular monitoring by business
line heads/ Planning Division
4. Accuracy of Financial reporting
ensured by internal controls
and the adoption of Sri Lanka
Accounting Standards
5. Monthly / quarterly reporting on
the progress of the Strategic Plan
achievements are submitted to the
Board of Directors.
6. Strategic Plans are independently
reviewed by Risk Management
Function, and comments/
recommendations are provided
to the Board Strategic Planning
Committee/Board.
7. Periodic review actions/plans
depending on the assessment
of progress and any external,
economic environment changes.
Low
REPUTATIONAL RISK
Negative effects
of public opinion,
customer opinion
and market
reputation and the
damage caused 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
CBSL guidelines.
2. Procedure for receiving
customer complaints and
resolution mechanism is in
place.
3. Complaints and process of
resolution relating to operational
risk / compliance if significant,
is escalated to Corporate
Management / BIRMC.
1. Timely & efficient communications
among all stakeholders.
2. Corporate Governance practices
3. Reputational Risk Management
Policy, and Procedure for receiving
customer complaints and resolution
mechanism is in place.
4. Reputational Risk Assessment
in ICAAP and provisions under
Economic Capital
5. Business Continuity Planning
6. Training and capacity building.
7. Code of conduct for the Board and
all staff members
Low
RISK MANAGEMENT REPORT
RISK & GOVERNANCE
151
KEY FOCUS AREAS OF COMPLIANCE FUNCTION
Compliance
monitoring and
testing
Putting the required
policies procedures
and controls in
place
Regular interaction
and coordination
with regulators
Compliance
reviews
Compliance
training
Reporting and
communication KEY FOCUS
AREAS
COMPLIANCE REVIEW
OVERVIEW
Compliance is a fundamental building
block in the Bank’s governance model.
The Compliance Unit plays a vital
role in mitigating the compliance risk
arising out of day-to-day operations,
thereby preserving the integrity and
reputation of the Bank in the eyes of
its stakeholders. AML (Anti-Money
Laundering) Compliance, Exchange
Control Compliance, Regulatory
Compliance, FATCA reporting, CRIB
Compliance and Financial Ombudsman
Compliance are the key functions of the
Department.
In carrying out its duties, the
Compliance Department is guided by
the Bank’s Compliance procedures
and guidelines, clearly set out in the
Board approved Compliance Policy,
which is reviewed periodically, and
updated as and when necessary. The
Policy spells out roles, responsibilities,
structure, processes, reporting lines,
risk identification and methods for risk
mitigation, among others. A Group
Compliance Policy is also in place,
which outlines Group-wide compliance
principles that all subsidiaries are
required to adopt.
Operating independently of all
business lines, the Compliance Unit
is headed by a Group Compliance
Officer (GCO) who reports directly to
the Board Integrated Risk Management
Committee. The compliance function
forms the 2nd line of defence, in the
Bank’s Risk Management Framework
outlined on page 136 of this report and
remains independent and distinct from
the Internal Audit Function, which acts
as the 3rd line of defence.
APPROACH
CREATING AN UBIQUITOUS
COMPLIANCE CULTURE
In striving to promote a Bank-wide
compliance culture, Sampath Bank
PLC advocates greater accountability
and demands that all team members
perform their duties honestly and with
integrity at all times. In this regard, the
Bank follows a top-down approach
towards compliance, where the Board
of Directors and Senior Management
lead by example in maintaining the
highest standards of ethical conduct
in relation to matters pertaining to
the Bank or the Group. Training
and knowledge sharing are also
seen as key elements in nurturing a
compliance-driven culture.
OPERATING INDEPENDENTLY OF ALL BUSINESS LINES, THE COMPLIANCE UNIT IS HEADED BY A GROUP COMPLIANCE OFFICER (GCO) WHO REPORTS DIRECTLY TO THE BOARD INTEGRATED RISK MANAGEMENT COMMITTEE
152 SAMPATH BANK PLC
ANNUAL REPORT 2016
MONITORING AND REVIEW
A number of new compliance-related
projects were put in place in 2016, to
ensure the ongoing review of regulatory
requirements and to identify potential
gaps and the rectification of such gaps.
Among the key initiatives was the
setting up of a structured review
mechanism, which includes a periodic
reporting process that paves the way
for continuous oversight of the status
of statutory payments and mandatory
reporting requirements pertaining to the
Bank and the Group.
The staff cadre of the Compliance
Department was also strengthened,
particularly in the areas of Legal and
IT. The move is expected to strengthen
the team’s business scope regarding
regulatory compliance and to improve
the system processes related to
compliance function to ensure that the
Bank is adequately equipped to carry
out its responsibilities by monitoring
and testing compliance of the business
lines more effectively.
A routine review process was
initiated under the supervision of the
Compliance Department to measure
branch compliance levels through
branch visits and to determine possible
gaps. A comprehensive process that
among others includes; interviews
with those handling transactions and
with their supervisors to determine
their knowledge of the legislative
requirements and the Bank’s policies
COMPLIANCE REVIEW
and procedures. These efforts were
focused mainly on areas where there
is a greater risk of non-compliance
and where failure to comply could
have significant impact on the ability to
detect money laundering and terrorist
financing.
OUTCOMES
These steps proved successful with all
statutory and regulatory compliance
requirements for 2016 being fulfilled.
Furthermore, the diligent efforts of the
Compliance Department ensured that a
high level of compliance was observed
across the Bank, yielding real results
that would protect stakeholders now
and in the future.
Moving forward, the Compliance
Department would focus on Micro-
level compliance requirements, which
are emerging as key challenges in
the fast-changing world of Risk Based
Compliance.
RISK & GOVERNANCE
153
CORPORATE GOVERNANCE
THE BANK’S BOARD COMPRISES OF PROFESSIONAL AND QUALIFIED INDIVIDUALS WHO CHALLENGE, MOTIVATE AND GUIDE THE BUSINESS ALIGNED WITH THE BANK’S VISIONDear Stakeholders,
At Sampath Bank, we believe that
good Governance is crucial to the
soundness and long term sustainability
of our business. Driven by this belief,
we continue to work towards building
a robust and meaningful corporate
governance framework that would
spearhead progress across all aspects
of our business.
In this section of the Annual Report
I wish to touch on our governance
principles and highlights of our
activities during 2016, which
demonstrate our ongoing commitment
to uphold best practices in Corporate
Governance at all times.
THE ROLE OF THE BOARD
The Bank’s Board comprises of
professional and qualified individuals
who challenge, motivate and guide
the business aligned with the Bank’s
vision. The Board is collectively
responsible to all stakeholders for the
sustainable achievement of the Bank’s
strategic objectives. In this context, the
Board remains committed to maintain
the highest standards of corporate
governance and most importantly, to
embed these standards consistently at
all levels of the business.
In doing so, the Board provides
necessary guidance to Corporate
Management to ensure the efficient
use of resources, effective internal
control procedures and a proactive
risk management mechanism in line
with the Bank’s strategic priorities. The
Board is also accountable for promoting
a transparent reporting framework
that will present a fair, balanced and
understandable assessment of the
Bank’s position and prospects.
As part of this overall commitment,
the Board has appointed several Sub
Committees to assist the Board in the
discharge of its duties, with roles and
responsibilities for all Sub Committees
clearly defined and a Chairperson of
each Sub Committee assigned with
the duty of providing feedback to the
Board. The Board and Sub Committees
convene regular meetings to discuss
matters of relevance, including the
Bank’s performance, credit quality,
asset and liability management, risk
management, strategy and compliance.
To achieve the desired objectives,
clearly defined structures have
been established for the allocation
of responsibilities relating to diverse
aspects of the banking business. The
Board requires all employees of the
Bank to adhere to high standards of
ethics and business integrity in the
discharge of their duties, acting within
the said structures and framework.
Moreover, the Board agrees that
stakeholder engagement plays
a crucial role in ensuring that the
business remains sustainable in
the long term. As such, the Bank
engages in regular dialogue with
its stakeholders. These interactions
provide valuable insights into
stakeholder concerns and enable
the Bank to be more proactive in
responding to the concerns raised by
them.
KEY PRIORITIES FOR 2016
In the year under review, the Bank
renewed its focus on Corporate
Governance and the Board spent
a significant proportion of its time
streamlining and strengthening
processes, to further support good
governance.
During the year, the Bank continued
with efforts to create more structured
reporting lines and embrace a risk-
based approach in the compliance
function as part of the day-to-day
operations of the business. This
was both a top-down and bottom-
up exercise to ensure that the right
people are making the right decisions
at the right time. I am happy to report
that these initiatives have given our
employees a better understanding of
their duties and responsibilities, leading
to greater transparency within the Bank.
STATUTORY COMPLIANCE
The Bank has complied with the
requirements imposed by all regulatory
authorities concerning matters relevant
to the Bank’s business and no penalties
were imposed on the Bank by the
regulators during the reporting period.
DECLARATION
I Channa Probodha Palansuriya,
Chairman of Sampath Bank PLC,
hereby declare that all the members
of the Board of Directors and all Bank
personnel have acted in compliance
with the applicable regulatory and
statutory requirements and have
discharged their duties in accordance
with the polices, procedures and
standards embodied in the Bank’s
internal Code of Conduct.
CHANNA PALANSURIYA
Chairman
Colombo, Sri Lanka
13th February 2017
G4 - 45
154 SAMPATH BANK PLC
ANNUAL REPORT 2016
GOVERNANCE STRUCTURE
Group Finance Director
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Recoveries
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asury
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inance
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reasury
Board of Directors - Subsidiaries
Board of Directors - Bank Board Committees
Shareholders External Auditors
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Securities (
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of
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f
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er
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of
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ud
it
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pm
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Managing Director
CORPORATE GOVERNANCE
G4 - 34,35,36
RISK & GOVERNANCE
155GOVERNANCE FRAMEWORK
Sampath Bank PLC’s strong
governance culture and framework
underpins effective decision making,
facilitates greater transparency and
promotes accountability across all
aspects of the business. In essence,
it embodies the commitment to
uphold stakeholder rights and create
sustainable value for all stakeholders,
while maintaining best practices in
business and professional ethics at all
times.
STAKEHOLDERS’ RIGHTS
FRAMEWORK
The 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 its
stakeholders. The commitment of the
Bank in this regard, is as follows:
Shareholders
Customers
Employees
Community
The Bank is committed to enhance long term shareholder value and facilitate the exercise
of shareholders’ rights.
The Bank is committed to maintain and enhance its public image as a sound, high quality,
progressive, friendly place to conduct banking business.
The Bank is committed to build a work environment where people can make a difference
both as individuals and as part of a team.
The 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.
KEY GOVERNANCE PILLARS:
Compliance Standards and Principles
STANDARDS AND PRINCIPLES
Internal External
Vision and Values Companies Act No. 7 of 2007
Articles of Association Banking Act No. 30 of 1988 and amendments thereto, Anti Money
Laundering Laws and Regulations
Code of Conduct Banking Act Direction No. 11 of 2007 on Corporate Governance for
Licensed Commercial Banks
Code of Ethics Listing Rules of the Colombo Stock Exchange
Board Procedures and Board Sub Committee Terms
of Reference
Code of Best Practice on Corporate Governance issued by the
ICASL and the SEC
Policies
Procedures
Directives
Integrated Reporting Framework issued by the International
Integrating Reporting Council (IIRC)
G4 Standards for Sustainability reporting issued by the Global
Reporting Initiative
BANK’S COMMITMENTSTAKEHOLDER
The Bank is committed to enhance long term shareholder value and to facilitate the
exercise of shareholders’ rights.
The Bank is committed to maintain and enhance its public image as a sound, high quality,
progressive, friendly place to conduct banking business.
The Bank is committed to build a work environment where people can make a difference
both as individuals and as part of a team.
The 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.
156 SAMPATH BANK PLC
ANNUAL REPORT 2016
STRATEGIC PLANNING PROCESS
The Strategic Planning Process aims
to sharpen the strategic alignment with
the Bank’s overall mission. conducted
annually, the process is driven by an
interactive bottom-up approach that
encourages the active participation of
employees at all levels.
Strategic Sponsors (who are
also members of the Corporate
Management in charge of strategically
important segments of the Bank’s
business model) are expected to
translate the strategic direction
outlined by the Board, and set clear,
measurable goals and targets for each
team under their purview.
Implementation and achievement of the
sectional strategies are monitored by
the Planning Department, with quarterly
reviews being carried out to assess the
effectiveness of the strategic plan.
INTEGRATED RISK MANAGEMENT
FRAMEWORK
The Integrated Risk Management
Framework advocates a structured
and disciplined approach to risk
management by aligning strategy,
processes, people, technology and
knowledge vis-à-vis the opportunities,
threats and uncertainties faced by the
Bank. More details are given on pages
136 to 150 of this report.
IT GOVERNANCE MECHANISM
The IT Governance Mechanism
subscribes to internationally accepted
best practices to effectively manage the
Bank’s IT framework in a way that would
support the Bank’s strategic objectives
and secure a definitive competitive
advantage in the market.
CODE OF CONDUCT FOR
EMPLOYEES
All employees including the Executive
Directors are bound to abide by the
ethics, values and expectations set out
in the Employee Code of Conduct. A
formal document, the Code is made
available to all employees to ensure
that the highest standards of integrity
and conduct are maintained in dealings
and interactions with all stakeholders.
The Code of Conduct addresses a
range of fair dealing and compliance
matters, among others.
WHISTLE BLOWING POLICY
The policy serves as an early warning
mechanism to identify corporate
fraud or risk by encouraging
employees to report their genuine
concerns in relation to activities, which
they feel are wrongful or illegal or
otherwise harmful to the interests of the
Bank, its employees, customers or any
other stakeholders.
ANTI-MONEY LAUNDERING POLICY
The main aim of the policy is to prevent
the Bank’s business channels / products
/services from being used as channels
for money laundering and to protect
the Bank’s reputation. Accordingly, the
Bank’s Anti-money Laundering Policy
spells out a comprehensive set of
procedures and controls to manage
the day-to-day operations of the Bank
and to ensure strict compliance with the
applicable laws and regulations in force
from time to time.
ANTI-FRAUD POLICY
The purpose of this policy is to
establish Management and Board
oversight to enforce controls and to
aid in the prevention and detection of
frauds and corrupt practices against
the Bank. The policy applies to any
fraudulent and corrupt practice
involving an employee, consultant,
vendor, contractor, or any outside
agency or person including outsourced
service providers doing business with
the Bank or in any other relationship
with the Bank.
CUSTOMER CHARTER
The Customer Charter sets key
standards of fair banking practices
envisaged by customers when they
engage in transactions with the Bank
and provides guidance to them with
regard to matters relating to customer
protection.
PRODUCT POLICY
The main aim of the Product Policy
is to ensure that the Bank’s products
remain timely and relevant in response
to the needs of the market. Hence the
Product Policy provides a guideline
for the introduction, maintenance and
discontinuation of all banking products
and services of the Bank.
COMMUNICATION POLICY
The Bank strives at all times to maintain
its corporate credibility and instill
investor confidence in the Group by
practicing a structured approach to the
communication of material information.
Bank’s Communication Policy spells
out the process through which timely,
transparent, consistent and credible
information on corporate strategies,
trends, operational performance and
financial data to the investing public is
communicated.
Currently, the Bank communicates with
its stakeholders through the following
mechanisms;
The quarterly results published
in the Newspapers in all three
languages and released to the
Colombo Stock Exchange (CSE)
CORPORATE GOVERNANCE
RISK & GOVERNANCE
157 Financial results displayed on
www.sampath.lk in an area of
the website devoted to Investor
Relations
Financial results and business
strategies of the Bank are
explained to investors, business
leaders and media personnel
through Investor Forums and
press releases
Management Discussion and
Analysis (Pages 55 to 134 of this
Annual Report)
Shareholder Relations Forums
The governance framework and the
effectiveness of all its key pillars are
thoroughly and comprehensively
reviewed annually, with any changes
being made subject to approval of the
Board of Directors.
GOVERNANCE STRUCTURE
BOARD OF DIRECTORS
The Board of Directors is the apex body
responsible for the execution of Bank’s
Corporate Governance Framework.
Moreover, the Board is responsible for
setting out strategic and management
guidelines for the Bank and the
Group and for monitoring general
performance, as well as defining and
applying the Corporate Governance
rules and examining internal audit
procedures. The Board is tasked with
approving strategic plans, governance
structures, risk appetite limits, policies
and procedures, delegation of authority
and providing a framework for decision
making amongst others.
The Board has full ordinary and
extraordinary administrative powers
to manage the activities of the
Bank in a way that would achieve
its corporate purpose. Further, as
the highest governance body of the
Bank, the Board is expected to use
its skills and expertise to determine
the wider social, environmental and
economic implications that may arise
of all business decisions. The Board
is therefore, the principal authority
providing oversight to the Corporate
Management team that directs and
executes all functions within the Bank.
BOARD AND BOARD SUB COMMITTEE ATTENDANCE BY DIRECTORS
Directo
rs
Cla
ssific
ation
Board
Meetings
Board
Audit
Com
mitt
ee
Board
HR
&
Rem
unera
tion
Com
mitt
ee
Board
Nom
ination
Com
mitt
ee
Board
Inte
gra
ted
Ris
k M
anagem
ent
Com
mitt
ee
Board
Rela
ted P
art
y
Tra
nsaction R
evie
w
Com
mitt
ee
Board
Cre
dit
Com
mitt
ee
Board
Str
ate
gic
Pla
nnin
g C
om
mitt
ee
Board
Share
hold
er
Rela
tions
Com
mitt
ee
Board
Tre
asury
Com
mitt
ee
Board
Mark
eting
Com
mitt
ee
Mr Dhammika Perera1 NED/NID 11/11 01/05 00/01
Mr Channa Palansuriya2 NED/NID 13/13 04/08 06/07 11/12 03/03 02/02
Prof Malik Ranasinghe3 NED/IND 17/17 08/08 02/03 04/04 17/17 04/04 02/02 06/06
Mr Sanjiva Senanayake4 NED/IND 17/17 01/01 07/07 10/10 04/04 03/04 01/01 06/06
Mr Deepal Sooriyaarachchi NED/IND 16/17 08/08 10/10 07/07 03/03 01/01 02/03
Mrs Dhara Wijayatilake NED/IND 15/17 07/08 08/08 11/11 03/03 04/04 10/12 03/04
Miss Annika Senanayake NED/IND 17/17 10/10 11/11 05/07 02/05 04/04 02/03 03/03
Mr Deshal De Mel NED/NID 17/17 09/10 14/17 04/04 02/02 06/06 03/03
Mr Ranil Pathirana NED/IND 12/17 08/08 03/07 02/04 00/01
Mrs Saumya Amarasekera NED/NID 16/17 08/08 08/11 05/07 02/03
Mr Aravinda Perera5 ED 13/13 02/02 06/07 10/10 02/02 01/01 05/05
Mr. Nanda Fernando6 ED 04/04 02/03 04/06 02/02 01/01
Mr Ranjith Samaranayake ED 17/17 09/10 04/04 17/17 04/04 06/06
Total No. of Meetings 17 08 10 11 10 04 17 04 02 06 03
BOARD MEETINGS
The Board of Directors held 17 Board
meetings during the period 01st January
2016 to 31st December 2016, with Retail
Growth, Digitalization and Performance
Optimization being some of the key
topics of discussion. Meanwhile, the
Board Sub Committees held a total of 75
meetings during the same period.
BOARD SUB COMMITTEES
To assist the Board in its supervisory
role, a number of Sub Committees
have been appointed by the Board.
An integral component of the Bank’s
Corporate Governance Framework,
each Sub Committee is required
to report to the Board with detailed
information on its activities.
Sub Committee members are selected
from a mix of Board members except
in the instance of the Board Integrated
Risk Management Committee.
Members of each Sub Committee are
held collectively responsible for their
designated area of activity. Currently,
the Board has established a total of
1. Chairman until 31.07.2016
2. Chairman since 01.08.2016
3. Deputy Chairman since 01.08.2016
4. Senior Independent Director
5. Managing Director until 12.09.2016
6. Managing Director since 13.09.2016
158 SAMPATH BANK PLC
ANNUAL REPORT 2016
10 Board Sub Committees to carry
out specific functions, with each Sub
Committee being headed by a Non
Executive Director.
The following changes took place in the
membership of the Board and its Sub
Committees during the year:
BOARD
Mr Dhammika Perera
served until 31.07.2016
Mr Channa Palansuriya
appointed on 28.04.2016 and
appointed as Chairman on 01.08.2016
Mr Aravinda Perera
served until 12.09.2016
Mr Nanda Fernando
appointed on 13.09.2016
BOARD AUDIT COMMITTEE
Mr Sanjiva Senanayake
served until 31.03.2016
BOARD HR & REMUNERATION
COMMITTEE
Mr Channa Palansuriya
appointed on 09.05.2016
Mrs Dhara Wijayatilake
appointed on 09.05.2016
Mrs Saumya Amarasekera
appointed on 09.05.2016
Mr Aravinda Perera
served until 09.05.2016
BOARD NOMINATION
COMMITTEE
Mr Dhammika Perera
served until 31.07.2016
Mr Channa Palansuriya
appointed on 25.08.2016
Mr Sanjiva Senanayake
appointed on 09.05.2016
CORPORATE GOVERNANCE
BOARD INTEGRATED RISK
MANAGEMENT COMMITTEE
Mr Sanjiva Senanayake
appointed as Chairman on 09.05.2016
Prof Malik Ranasinghe
served until 09.05.2016
Mr Deepal Sooriyaarachchi
appointed on 09.05.2016
Mrs Dhara Wijayatilake
served until 09.05.2016
Miss Annika Senanayake
appointed on 09.05.2016
Mr Ranil Pathirana
appointed on 09.05.2016
Mrs Saumya Amarasekera
appointed on 09.05.2016
Mr Aravinda Perera
served until 12.09.2016
Mr Nanda Fernando
appointed on 30.09.2016
BOARD RELATED PARTY
TRANSACTIONS REVIEW
COMMITTEE
Mr Channa Palansuriya
appointed on 09.05.2016 and served
until 07.07.2016
Mr Deepal Sooriyaarachchi
appointed on 09.05.2016
BOARD CREDIT COMMITTEE
Mr Channa Palansuriya
appointed on 09.05.2016
Mr Sanjiva Senanayake
served until 31.03.2016
Mrs Dhara Wijayatilake
appointed on 09.05.2016
Miss Annika Senanayake
served until 09.05.2016
Mr Aravinda Perera
served until 12.09.2016
Mr Nanda Fernando
appointed on 30.09.2016
BOARD STRATEGIC
PLANNING COMMITTEE
Mr Dhammika Perera
served until 31.07.2016
Mr Channa Palansuriya
appointed on 09.05.2016 and
appointed as Chairman on 08.09.2016
Mr Sanjiva Senanayake
served until 31.03.2016
Mr Aravinda Perera
served until 12.09.2016
Mr Nanda Fernando
appointed on 30.09.2016
BOARD SHAREHOLDER
RELATIONS COMMITTEE
Mr Deepal Sooriyaarachchi
appointed on 09.05.2016
Mr Aravinda Perera
appointed on 09.05.2016 and served
until 12.09.2016
Mr Nanda Fernando
appointed on 30.09.2016
BOARD TREASURY
COMMITTEE
Mr Ranil Pathirana
appointed on 09.05.2016 and served
until 07.07.2016
Miss Annika Senanayake
appointed on 07.07.2016
Mr Aravinda Perera
served until 12.09.2016
Mr Nanda Fernando
appointed on 30.09.2016
BOARD MARKETING
COMMITTEE
Mr Deshal de Mel
appointed as Chairman on 09.05.2016
Mr Channa Palansuriya
appointed on 09.05.2016
RISK & GOVERNANCE
159The above Sub Committees come
under the purview of the Board.
Most Board Sub Committees function
in a supervisory capacity, overseeing
the Key Management Personnel in
charge of the day-to-day operational
and functional aspects of the business.
In this context, the Board Audit
Committee oversees the functions of
the Head of Internal Audit, whilst the
Board Integrated Risk Management
Committee supervises the functions of
the Group Risk Officer and the Group
Compliance Officer.
COMPANY SECRETARY
The Company Secretary is an
independent party who acts as a
conduit between the Board and the
Bank. The Company Secretary is
responsible for Board administration,
liaison with the Registrar of Companies
and other relevant regulators and
facilitating Board members with access
to legal and other expertise, as and
when required.
The Company Secretary, Mrs Anuja
Goonetilleke, also acts as the Secretary
to all the Board Sub Committees
and the Minutes of meetings are
retained in her custody. Written Terms
of Reference that comply with the
Corporate Governance requirements
of the Central Bank of Sri Lanka are
available for the Sub Committees with
the Company Secretary.
NANDA FERNANDO
Managing Director
Colombo, Sri Lanka
13th February 2017
160 SAMPATH BANK PLC
ANNUAL REPORT 2016
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 & Implementation Status
A. DIRECTORS
A.1 THE BOARD
(1) Effective Board A.1 The Board of Directors comprises 11 Directors of whom 9 are Non
Executive Directors including the Chairman. The two Executive Directors
are the Managing Director and the Group Finance Director who are also
part of the Corporate Management to whom the day to day running of
the organisation has been delegated. The Board has appointed Board
Sub Committees to assist in discharge of their collective duties and also
approves policies, governance structures and the delegation of authority
to provide a conducive business environment for effective performance of
the Bank. The Board is closely involved in developing strategy and setting
the short, medium and long term goals of the Bank and regularly monitors
performance against pre-determined Key Performance Indicators which
include both quantitative and qualitative measures on a regular basis.
Complied
CORPORATE GOVERNANCE
ATTENDANCE PERCENTAGE AT BOARD MEETING DURING 2016(%)
1 2 3 4 5 6 7 8 9 10 11 12 13
Meetings Attended Meetings Not Attended
1. Mr Dhammika Perera (Director until 31.07.2016)2. Mr Channa Palansuriya (Director since 28.04.2016)3. Mr Sanjiva Senanayake 4. Mr Deepal Sooriyaarachchi 5. Prof Malik Ranasinghe 6. Mrs Dhara Wijayatilake 7. Miss Annika Senanayake 8. Mr Deshal De Mel 9. Mr Ranil Pathirana 10. Mrs Saumya Amarasekera 11. Mr Aravinda Perera (Director until 12.09.2016)12. Mr Nanda Fernando (Director since 13.09.2016)13. Mr Ranjith Samaranayake
0
20
40
60
80
100
G4 - 44
RISK & GOVERNANCE
161
Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
(2) Regular
meetings
A.1.1 Board meetings are held monthly whilst special Board meetings are
convened as the need arises. During 2016 the Board held 17 scheduled
meetings and 04 strategic planning committee meetings. The following
Board Sub Committees met regularly:
Board Audit Committee
Board Human Resources & Remuneration Committee
Board Nomination Committee
Board Integrated Risk Management Committee
Board Related Party Transactions Review Committee
Board Credit Committee
Board Strategic Planning Committee
Board Shareholder Relations Committee
Board Treasury Committee
Board Marketing Committee
The Board members use iPads to access Board papers via secure
connections and are able to join meetings even through remote access.
Details of Board Meetings, Sub Committee Meetings and attendance are
given on page 157 of this report.
Complied
Board’s Responsibilities: The following procedures are carried out to strengthen the safety and soundness of the Bank
(3) Ensure the
formulation and
implementation of
sound business
strategy
A.1.2 The Board is responsible for setting strategy, policies and for monitoring
performance against agreed goals and KPIs. During the year, the Board
had 04 strategic planning sessions, where they reviewed the progress
of the Strategic Plan 2016 - 2018 and proposals of the Corporate
Management and re-aligned strategy and formulated and approved the
medium term strategy for the period 2017 to 2019 and long term strategy
up to 2020.
Complied
(4) Ensure that the
Chief Executive
Officer (CEO) /
Managing
Director (MD) and
Management team
possess the skills,
experience and
knowledge to
implement the
strategy
A.1.2 The Board Nomination Committee ensures that the Board Members and
Key Management Personnel have the required skills, experience and
knowledge to implement strategy.
Complied
(5) Ensure effective
CEO/MD and Senior
Management
succession strategy
A.1.2 A Board approved Procedure on Selection and Appointment of CEO and
Key Management Personnel is in place.
Complied
G4 - 40,44,45
162 SAMPATH BANK PLC
ANNUAL REPORT 2016
Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
A. DIRECTORS
(6) Ensure effective
systems to
secure integrity of
information, internal
controls and risk
management
A.1.2 Board Audit Committee reviews Internal Audit reports submitted by the
Internal Audit Department and monitors follow up action. Further, based
on the assessment of Internal Control Over Financial Reporting (ICOFR),
Directors concluded that the Bank’s Internal Control Over Financial
Reporting is effective. A descriptive account of the measures taken in this
regard is contained in the Board Integrated Risk Management Committee
Report given on pages 206 to 208.
Complied
(7) Ensure
compliance with
laws, regulations
and ethical
standards
A.1.2 An independent Compliance function headed by the Group Compliance
Officer reporting directly to the Board Integrated Risk Management
Committee, which has responsibility for compliance, has been
established.
Complied
(8) Ensure all
stakeholder
interests are
considered in
corporate decisions
A.1.2 The Articles of Association of the Bank require the Directors to take
decisions, taking into account the interests of customers, shareholders,
employees and the community. Additionally, a Customer Charter, the
Board Shareholder Relations Committee, HR Policy, a Policy on Managing
Conflicts of Interest as well as the Board Related Party Transactions
Review Committee are in place in order to uphold the interests of these
key stakeholders.
Complied
(9) Ensure that the
company’s values
and standards are
set with emphasis
on adopting
appropriate
accounting policies
and fostering
compliance
with financial
regulations
A.1.2 The Board Audit Committee and the Board review accounting policies
annually or as and when required to ensure that they are in line with
the business model of the Bank and evolving international and local
accounting standards and industry best practices.
Complied
(10) Fulfill such
other Board
functions as are
vital, given the
scale, nature
and complexity
of the business
concerned
A.1.2 The Board is committed to fulfill its functions in line with the laws,
regulations and good governance practices adopted by the Bank.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
163Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
(11) Act in
accordance with
laws
relevant to the
organisation and
procedure
for Directors to
obtain independent
professional
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 laws, CBSL
guidelines and international best practices with regard to the operations
of the Bank. The Board obtains independent professional advice as
and when necessary in accordance with the Board approved policy on
Obtaining Independent Professional Advice and these functions are
co-ordinated through the Company Secretary. Independent professional
advisory services were sought on matters including the implementation
of SLFRS 9 and SLFRS 15, review of Related Party Transactions and
projected economic conditions during the year in accordance with the
above provision.
Complied.
(12) Access to
and appointment
or removal of
Company Secretary
A.1.4 All Directors have the opportunity to obtain the advice and services of
the Company Secretary, Mrs Anuja Goonetilleke, who is an Attorney at
Law. She is responsible for ensuring follow up of Board procedures,
compliance with relevant rules and regulations, directions and statutes,
keeping and maintaining Minutes and relevant records of the Bank.
The Articles of Association of the Bank specify that the appointment and
removal of the Company Secretary should be by resolution involving the
entire Board.
Complied
(13) Independent
judgement
A.1.5 The Directors of the Bank have no vested interests and take decisions on
matters before them using independent judgement.
Complied
(14) Dedicate
adequate time and
effort to matters of
the
Board and the
Company,
A.1.6 Dates of regular Board meetings and regular 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.
It is estimated that Non Executive Directors dedicated not less than 91
hours per annum for the affairs of the Bank and those Directors who
are also on Sub Committees dedicate not less than 164 hours for the
affairs of the Bank. The attendance at meetings for the Board and its Sub
Committees is given in page 157.
Complied
(15) Training for
Directors
A.1.7 The Company Secretary in consultation with the Chairman recommends
Directors to attend training sessions/seminars. During 2016 the following
areas were covered
Directors’ Responsibilities with regard to Related Party Transactions
State of the economy and future outlook
Familiarisation and gap analysis on key new accounting standards to
be implemented in the near future, SLFRS 9 and SLFRS 15
Additionally, the Board encourages knowledge sharing amongst the
Directors. They also participate in the sessions organised by professional
bodies and Sri Lanka Institute of Directors. One Director participated in
the Annual Corporate Governance & Directors’ Duties Excellence 2016
held in Malaysia .The annual self-assessment by Directors also covers
aspects on training to identify training needs.
Complied
164 SAMPATH BANK PLC
ANNUAL REPORT 2016
Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
A. DIRECTORS
A.2 DIVISION OF RESPONSIBILITIES BETWEEN CHAIRMAN AND MD
(16) Conducting
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 MD have been separated in line
with best practices in order to maintain a balance of power and authority.
The Chairman is a Non Executive Director whilst the MD is an Executive
Director.
Complied
A.3 CHAIRMAN’S ROLE
(17) Chairman’s
role in preserving
good corporate
governance
A.3 The Chairman’s Functions and Responsibilities which include all aspects
specified in the Code, the continuing listing requirements of the CSE and
the Banking Act Direction No. 11 of 2007 on Corporate Governance for
Licensed Commercial Banks in Sri Lanka have been documented and
duly approved by the Board.
Complied
(18) Conduct Board
proceedings in a
proper manner
A.3 Board proceedings are conducted according to the Agenda. The papers
for discussion and the Agenda are circulated Seven (07) days prior to the
meeting.
Complied
A.4 FINANCIAL ACUMEN
(19) Availability of
financial acumen
and knowledge to
offer guidance on
matters of finance
A.4 Financial acumen has been a key attribute of the successful careers
of the following Directors who have held senior management positions
related to finance in other leading financial institutions:
1. Mr Sanjiva Senanayake
2. Mr Deepal Sooriyaarachchi
3. Mr Ranil Pathirana
4. Mr Aravinda Perera (who served on the Board until 12th
September 2016)
5. Mr Ranjith Samaranayake
Additionally Mr Dhammika Perera, who served as Chairman until 31st July
2016 has served on the Boards of two Banks. Mr Sanjiva Senanayake
has served in key managerial positions in several local and foreign banks
including the International Finance Corporation. Three Directors, including
the MD, hold MBAs, one Director is a Fellow Member of the Chartered
Institute of Management Accountants - UK and another Director
possesses a Bachelor’s Degree in Commerce (Accounting Special)
Complied
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A.5 BOARD BALANCE
(20) Non Executive
Directors of
sufficient calibre
and number
A.5.1 &
A.5.2
The Board comprises the 9 Non Executive Directors including the
Chairman and 2 Executive Directors who are the CEO/MD and the
Group Finance Director. The Non Executive Directors are professionals/
academics/business leaders, holding senior positions in their respective
fields and are therefore deemed to be of sufficient calibre. As the majority
of the Board comprises Non Executive Directors, their opinions and views
carry significant weight in the Board decisions.
Complied
(21) Independence
of Non Executive
Directors
A.5.3 6 of the Non Executive Directors are independent of management and
free 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.
Complied
EXECUTIVE DIRECTORS & NON EXECUTIVE DIRECTORS
Executive DirectorsNon Executive Directors
9
2
INDEPENDENT DIRECTORS & NON INDEPENDENT DIRECTORS
Independent DirectorsNon Independent Directors
6
5
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A. DIRECTORS
(22) Annual
declarations of
independence from
Directors
A.5.4 Annual declarations of independence or non-independence have been
obtained from the Independent Directors for 2016.
Complied
(23) Annual
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
Prof Malik Ranasinghe
Mrs Dhara Wijayatilake
Miss Annika Senanayake
Mr Ranil Pathirana
There were no Directors deemed Independent where all criteria were
not met.
Complied
(24) Senior
Independent
Director
A.5.6
&
A.5.7
Mr Sanjiva Senanayake has been appointed as Senior Independent
Director (SID) in view of the requirements of the Banking Act Direction No.
11 of 2007.
Complied
(25) Senior
Independent
Director (SID)
meeting with other
Directors
A.5.8 The Directors met SID during the year. Complied
(26) Chairman to
hold meetings with
Non
Executive Directors,
without Executive
Directors being
present
A.5.9 Chairman met Non Executive Directors without the Executive Directors
being present, on a need basis. The Non Executive Directors met the
Chairman once without the Executive Directors being present during the
year 2016.
Complied
(27) Recording of
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.
If a Director resigns over an unresolved issue, the Chairman will bring the
issue to the attention of the Board. The Director concerned is also required
to provide a written statement to the Chairman for circulation to the Board.
During the year 2016, there was no occasions to take such steps.
Complied
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A.6 SUPPLY OF RELEVANT INFORMATION
(28) Provision of
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.
Complied
(29) Chairman to
ensure all Directors
are properly
briefed 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 further
clarifications as may be required by Directors or will make 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 the previous meetings.
This is taken up immediately after confirmation of Minutes.
Archived Minutes and Board papers are accessible electronically at
the convenience of the Directors.
Non Executive Directors have an open invitation to attend the meetings
of the Management Committees and have the opportunity to interact with
senior management after Board Meetings.
Complied
(30) Board papers
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.
Complied
A.7 APPOINTMENTS TO THE BOARD
(31) Formal
and transparent
procedure for new
Appointments
through an
established
Nomination
Committee
A.7.1 The Board has established a Board Nomination Committee whose Terms
of Reference comply with the Specimen given in the Code and the
Banking Act Direction on Corporate Governance. Membership of this
important Board Sub Committee is given on pages 204 & 205 of the
Annual Report. Accordingly, new Directors including Executive and Non
Executive Directors are appointed by the Board upon consideration of
recommendations by the Board Nomination Committee. To support this
process a Board approved Policy on Selection, Nomination, Appointment
and Election of Directors is in place.
Complied
(32) Annually
assess Board
composition
A.7.2 The Board annually assesses its composition to ascertain whether the
combined knowledge and experience of the Board match the strategic
demands facing the Bank and is satisfied that it complies with the criteria.
Complied
G4 - 40
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A. DIRECTORS
(33) Disclosure
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 in the English language. The profiles of the
current Directors are given on pages 16 to 21 in this report which has also
been translated into Sinhala as well, in keeping with the tradition of the
Bank.
Complied
A.8 RE-ELECTION
(34) All Directors
should submit
themselves for re-
election at regular
intervals
A.8 As per the Articles of Association of the Bank, 1/3rd of the Directors should
retire at each Annual General Meeting and be subject to re-election. Such
Directors who retire are those who held office for the longest time period
since the election / re-appointment. In accordance with this provision, the
following Directors retire and offer themselves for re-election:
Mr Ranil Pathirana
Mr Deepal Sooriyaarachchi
Prof Malik Ranasinghe
Mrs Dhara Wijayatilake
In addition, Mr Channa Palansuriya having been appointed to the Board
to fill up a casual vacancy, offers himself for election by shareholders in
accordance with Article 93 of the Articles of Association of the Company.
A brief resume of Directors standing for re-election is provided in English
and Sinhala to enable shareholders to make an informed decision.
The Board and the Board Nomination Committee are actively engaged
in succession planning for both Executive and Non Executive roles to
ensure that Board composition is periodically renewed and that the Board
retains its effectiveness at all times.
Complied
Complied
Complied
Complied
(35) Non Executive
Directors are
appointed for
specified terms
subject to re-
election
A.8.1 Non Executive Directors are appointed with approval of the Central
Bank of Sri Lanka (CBSL) and stands for re-election at Annual General
Meetings in terms of Articles of Association.
Complied
(36) All Directors
including Chairman
to be subject to
re-election at first
opportunity after
appointment and
re-election at least
every 3 years
thereafter
A.8.2 All Non-Executive Directors stand for re-election at Annual General
Meetings as described in response to A.8 above.
Complied
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A.9 APPRAISAL OF BOARD PERFORMANCE
(37) Appraisal of
Board Performance
A.9.1 The Board annually appraises their own performance to ensure that they
are discharging their responsibilities satisfactorily. This process requires
each Director to fill a Board Performance Evaluation Form in line with the
provisions of this section of the Code. The responses are reviewed by the
Company Secretary who compiles a report which is discussed at a Board
Meeting.
Complied
(38) Appraisal
of Board Sub
Committees
A.9.2 The Board Sub Committees follow the same process and the reports are
retained by the respective Committee Chairpersons.
Complied
(39) Disclosure
of the method of
appraisal of the
Board and Board
Sub Committee
performance
A.9.3 As explained in A.9.1 & A.9.2 above Complied
A.10 DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS
(40) Annual Report
to disclose specified
information
regarding Directors
A.10.1 Information specified in the Code with regard to Directors are disclosed
within this Annual Report as follows:
Name, qualifications, expertise, material business interests and brief
profiles are given on pages 16 to 21
Details of whether a Director is Executive, Non Executive / or
Independent, Non Independent are given on pages 16 to 21
Related Party Transactions are given on pages 326 to 330
Membership of Board Sub Committees is given on pages 198 to
217 and attendance at Board Meetings and Board Sub Committee
meetings are given on page 157
Complied
Complied
Complied
Complied
A.11 APPRAISAL OF CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR
(41) Set reasonable
financial and non-
financial targets to
be met by the
CEO / MD
A.11.1 The Board discussed and set financial and non-financial targets to be
achieved during the year by the MD with reference to the short, medium
and long term objectives of the Bank at the beginning of 2016. The
targets for 2017 have also been set at the end of 2016.
Complied
(42) Evaluate
performance of
the CEO/MD with
reference to targets
A.11.2 The performance evaluation of the Managing Director who was in
office until 12th September 2016 was carried out by the Board HR &
Remuneration Committee with reference to targets and goals achieved by
the Bank which was reported to the Board. The performance evaluation
of the Managing Director in office since 13th September 2016 will be
done after completion of an appropriate period in office.
Complied
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B. DIRECTORS’ REMUNERATION
B.1 REMUNERATION PROCEDURE
(43) Appointment
of a Remuneration
Committee
B.1.1 The Board has established a Board HR & Remuneration Committee to
develop policies and determine remuneration for the Directors and Key
Management Personnel respectively. No Director is involved in deciding
his own remuneration. The Terms of Reference of this committee
complies with Schedule C of the Code and other investor guidelines.
In support of this requirement, a Board approved Reward Management
Policy for Key Management Personnel is in place.
Further information regarding the Board HR & Remuneration Committee is
given in the Board HR & Remuneration Committee Report on pages 202 &
203.
Complied
Complied
(44) Remuneration
Committee
to comprise
exclusively Non
Executive Directors
B.1.2 &
B.1.3
The Board HR & Remuneration Committee comprises the following
Directors who are all Non Executive Directors.
Mr Deepal Sooriyaarachchi (Chairman)
Mr Channa Palansuriya
Miss Annika Senanayake
Mr Deshal De Mel
Mrs Saumya Amarasekera
Mrs Dhara Wijayatilake
Complied
(45) Remuneration
for Non Executive
Directors
B.1.4 Remuneration of Non Executive Directors is recommended by the Board
HR & Remuneration Committee for approval of the Board in line with market
practice. A Board approved Policy on Directors’ Remuneration is in place.
Complied
(46) Remuneration
of Executive
Directors
B.1.5 Remuneration of Executive Directors is determined by the Board HR &
Remuneration Committee who has access to professional advice from
within or outside the company in formulating their proposals which are
then discussed with the Chairman. A Reward Management Policy for Key
Management Personnel approved by the Board is in place.
Complied
B.2 THE LEVEL AND MAKE UP OF REMUNERATION
(47) Remuneration
for Executive
Directors should
attract, retain and
motivate
B.2.1 &
B.2.2
Remuneration for Executive Directors is designed to attract, retain and
motivate the Executive Directors as determined by the Board HR &
Remuneration Committee. Their remuneration comprises a fixed salary
component, which includes perquisites and allowances, The Board
HR & Remuneration Committee takes into account market practices
and seeks professional advice when required in order to discharge its
responsibilities.
Complied
(48) Positioning
company
remuneration levels
relative to other
companies
B.2.3 The Board HR & Remuneration Committee reviews the Bank’s
remuneration levels in relation to other banks in the country annually. A
salary survey followed by determination of salary bands for senior grades
was done in the year under review.
Complied
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(49) Performance
related elements of
remuneration for
Executive Directors
B.2.4 A performance related element of remuneration for Executive Directors
has been implemented.
Complied
(50) Share option
schemes
B.2.5 There was no share option scheme during 2016 Complied
(51) Designing
schemes of
performance
related
remuneration
B.2.6 A scheme of team based performance related remuneration has been
implemented by the Bank during 2016.
Complied
(52) Early
termination of
Directors
B.2.7 Not applicable to the Board except for the MD and the Group Finance
Director who are employees of the Bank and their terms of employment
are governed by the respective contracts of service.
Complied
(53) Dealing with
early termination
B.2.8 Refer to B.2.7 above Complied
(54) Levels of
remuneration for
Non Executive
Directors
B.2.9 The Board HR & Remuneration Committee determines the levels of
remuneration for Non Executive Directors taking into account the time
commitment and responsibilities of their role and market practices.
Remuneration for Non Executive Directors does not include share options.
A Board approved policy on Directors’ Remuneration is in place.
Complied
B.3 DISCLOSURE OF REMUNERATION
(55) Composition
of Board HR &
Remuneration
Committee,
Remuneration Policy
and disclosure
of aggregate
remuneration paid
to Directors
B.3.1 The composition of the Board HR & Remuneration Committee and its
report is given on pages 202 & 203.
The aggregate remuneration to Executive and Non Executive Directors
are given in Note No. 49.3.1 to the Financial Statements on page 326.
Names of the Directors of the Board HR & Remuneration Committee are
disclosed on pages 202 & 203 the Annual Report.
Complied
Complied
Complied
C. RELATIONS WITH SHAREHOLDERS
C.1 CONSTRUCTIVE USE OF THE ANNUAL GENERAL MEETING (AGM) AND CONDUCT OF GENERAL MEETINGS
(56) Constructive
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 the
Board, Board Shareholder Relations Committee has been set up for the
purpose of building up relations with the shareholders and addressing
their concerns. This Committee conducts an open session with the
shareholders immediately after the AGM each year. In addition, the
Committee met twice in order to follow up on the proposals submitted by
the shareholders at the Shareholders’ forum in 2016.
The Annual Report is circulated to all shareholders 15 working days 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 MD’s messages are translated into Tamil each year.
Complied
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C. RELATIONS WITH SHAREHOLDERS
(57) Count of all
proxy votes lodged
C.1.1 All proxy votes lodged, together with the votes of shareholders present at
the AGM are considered for each resolution.
Complied
(58) Separate
resolutions for each
substantially
separate 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.
Complied
(59) Availability
of Board Sub
Committee
Chairperson 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.
Complied
(60) Circulation of
Notice of AGM and
related
documents to
shareholders
C.1.4 Notice of the AGM and related papers are sent to shareholders at least 15
working days prior to the meeting in accordance with the regulations.
Complied
(61) Summary
of procedures
governing voting
at the AGM
C.1.5 A summary of the procedures governing voting at the AGM is provided in
the Proxy Form, which is circulated to shareholders 15 working days prior
to the AGM.
Complied
C.2 COMMUNICATION WITH SHAREHOLDERS
(62) Channel
to reach all
shareholders of the
Bank
C.2.1 The Board has appointed a Sub Committee on Shareholder Relations
tasked with identifying and addressing the shareholders concerns. It
is the first listed company in Sri Lanka to have such a Committee. This
Committee conducts an annual Shareholder Relations Forum to identify
shareholder concerns. Additionally, the 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 active role in exercising their
rights. The Annual Report is translated into Sinhala and the Chairman’s
and MD’s messages are translated into Tamil as well to facilitate greater
communication with shareholders.
The Bank posts on its website (www.sampath.lk) copies of annual
reports, interim reports etc. These are posted on the website as soon as
practicable after they have been released to the Stock Exchange.
Complied
(63) Policy and
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. A Board
approved Policy on Communication is in place, in which provisions for
communication with shareholders are contained.
Complied
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(64) Implementation
of the Policy and
methodology for
communication with
shareholders
C.2.3 Shareholders are consulted on their preference to receive the Annual
Report from the Bank either by means of a Compact Disk or in printed
form. Shareholders may elect to receive Annual Report from the Bank in
printed form free of charge at any time.
Interim Reports are published in all three languages (English, Sinhala and
Tamil) in leading newspapers within 60 days of the quarter end.
Complied
Complied
(65) Contact
person in relation to
shareholder matters
C.2.4 &
C.2.6
Shareholders may, at any time, direct questions to and request for
publicly available information from the Directors or management of the
Bank. They may also provide their comments and suggestions to the
Directors or management through the Company Secretary.
Complied
(66) Process
to make all
Directors aware
of major issues
and concerns of
shareholders
C.2.5 The Company Secretary maintains a record of all correspondences
received. She directs as soon as practicable such correspondences to
the Board, individual Directors or the relevant officers as applicable.
Complied
(67) Process of
responding to
shareholder matters
C.2.7 Please refer C.2.5 above. Complied
C.3 MAJOR AND MATERIAL TRANSACTIONS
(68) Disclosure of
major transactions
C.3.1 During the year 2016, the Bank did not engage in or commit any “Major
Related Party Transaction” which materially affected the Bank’s net asset
base.
Complied
D. ACCOUNTABILITY AND AUDIT
(69) Presence of
a balanced and
understandable
assessment of the
Bank’s financial
position,
performance and
prospects
D.1 The Bank’s position and prospects have been discussed in detail in the
following sections of this Annual Report.
Chairman’s Message is given on pages 32 to 37.
Managing Director’s Review is given on pages 38 to 43.
Management Discussion and Analysis are given on pages 55 to 134.
Complied
(70) Interim reports,
price-sensitive
public reports,
regulatory reports
and statutory
information
requirements
D.1.1 Interim reports were published within 45 days of each quarter end which
included information to assist shareholders gain an understanding of the
state of affairs of the Bank.
Price sensitive information was disclosed in a comprehensive but concise
manner to the Colombo Stock Exchange on a timely basis.
Reports required by the regulators including Central Bank, Inland
Revenue, Registrar of Companies, Colombo Stock Exchange were
all filed in a timely manner in compliance with their requirements and
these provided sufficient information for the user to obtain a balanced
assessment of the Bank`s operations.
Complied
Complied
Complied
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D. ACCOUNTABILITY AND AUDIT
(71) Declaration in
Annual Report of the
Board of Directors
on the Affairs of the
Company
D.1.2 The Annual Report of the Board of Directors on the Affairs of the Company
on pages 221 to 230 contains the declarations as required by the Code.
Complied
(72) Responsibilities
of the Board for the
preparation and
presentation of
Financial
Statements and
statement by the
Auditors about their
reporting
responsibilities
D.1.3 The Statement of Directors’ Responsibility for Financial Reporting and
Report of the Auditors which includes a statement about their reporting
responsibilities are provided on pages 235 & 236 and 237 respectively.
Complied
(73) Include a
Management
Discussion &
Analysis
D.1.4 The Management Discussion and Analysis contained in pages 55 to 134
and covers the information specified in the Code 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
Financial performance
Material developments in human resource/industrial relations and
prospects for the future.
Complied
(74) Declaration of
the Directors that
the business is in
going concern
D.1.5 This information is provided in the Annual Report of the Board of Directors
on the affairs of the Company given on pages 221 to 230.
Complied
(75) Notify
shareholders in
case net assets of
the Bank fall below
50%
D.1.6 This situation has not risen. Complied
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(76) Related Party
Transactions
D.1.7 There is an approved documented process identifying related parties,
type of related party transaction and the mechanism to ensure that
no favourable treatment is granted to said parties in order for related
parties to avoid any conflict of interest in this regard. An effective and
comprehensive system of Internal Control for identifying, recording and
disclosing related party transactions too is in place.
A directive has been issued, explaining the procedure to be followed in
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 condition that it will be
secured by such security as may from time to time be determined by the
Monetary Board as well.
Directors and KMPs submit declarations declaring their transactions to
the Bank on a quarterly and annual basis.
All related party transactions as defined in Sri Lanka Accounting
Standards - LKAS 24 (Related Party Transactions) are disclosed in Note
No. 49 to the Financial Statements on pages 326 to 330.
Complied
Complied
Complied
Complied
D.2 INTERNAL CONTROL
(77) Maintain a
sound system of
internal control to
safeguard
shareholders’
investments and the
Bank’s assets
(78) Review need
for Internal Audit
Function
D.2.1
D.2.2
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 system of internal controls is
sufficient and effective.
The Bank has established an Internal Audit function over which Board
Audit Committee has oversight.
Complied
Complied
D.3 AUDIT COMMITTEE
(79) Establish
arrangements
for selection and
application of
accounting policies,
financial
reporting and
internal control
principles
D.3 The Bank has established its Board Audit Committee in keeping with
good governance since 1997. The principal responsibilities of the Board
Audit Committee include oversight over financial reporting, internal
controls and monitoring auditor independence. Its duties include gaining
assurance on control over financial processes, integrity of the Bank’s
financial reports, monitoring performance, objectivity and independence
of the External Auditor and reviewing work of the internal Auditor. The
Board Audit Committee Report is given on pages 198 to 201 in the Annual
Report.
Complied
G4 - 41
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D. ACCOUNTABILITY AND AUDIT
(80) Composition
and Terms of
Reference for Board
Audit Committee
D.3.1 The Board Audit Committee consists of Non Executive Directors and
is chaired by an Independent Non Executive Director. Members are
selected to provide a broad set of financial, commercial and other
relevant experience to meet the Committee’s objectives. The MD, Group
Finance Director, CFO, Head of Internal Audit, Chief Manager - Systems
Audit and representatives of the External Auditors are invited to attend
the meetings. The Board Audit Committee has appointed an external
consultant during the year to advice the Committee.
Complied
(81) Review of
External Audit
function and
relationship with
External Auditors
D.3.2 The Committee has a key oversight role in relation to the External Auditor
Messrs Ernst & Young, whose primary relationship is with the Committee.
The Bank’s Auditor Independence Policy ensures that 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 which also assesses the effectiveness and the
independence of the External Auditors.
Complied
(82) Terms of
Reference
D.3.3 The Terms of Reference of the Board Audit Committee complies with the
Code of Best Practice on Corporate Governance issued by the SEC and
ICASL. Terms of Reference also complies with the Banking Act Direction
No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks
issued by CBSL and relevant Colombo Stock Exchange Regulations.
These documents are available with the Company Secretary.
Complied
(83) Disclosures
regarding Board
Audit Committee
D.3.4 The Annual Report of the Board of Directors on the Affairs of the Company
given on pages 221 to 230 provides the following disclosures:
The composition of the Board Audit Committee
A statement regarding the independence of the Auditors
Complied
D.4 CODE OF BUSINESS CONDUCT AND ETHICS
(84) Code of
business conduct
and ethics for
Directors and staff
D.4.1 Codes of Conduct and Ethics are in place for the Directors and
employees.
Complied
D.5 CORPORATE GOVERNANCE DISCLOSURES
(85) Corporate
Governance Report
D.5.1 The Corporate Governance Report given on pages 153 to 197 provides
information regarding Corporate Governance practices in the Bank which
are in compliance with:
The Code of Best Practice on Corporate Governance issued jointly by
the Securities Exchange Commission of Sri Lanka and the Institute of
Chartered Accountants of Sri Lanka
The Banking Act Direction No. 11 of 2007 on Corporate Governance
for Licensed Commercial Banks issued by the CBSL
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
177Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
E. SHAREHOLDERS – INSTITUTIONAL INVESTORS
E.1 SHAREHOLDER VOTING
(86) Encourage
voting at AGM
E.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.
Complied
(87) Regular
structured dialogues
with institutional
investors
E.1.1 The MD has regular structured meetings with institutional shareholders.
Board members are briefed about the matters discussed at such
meetings.
Complied
E.2 EVALUATION OF GOVERNANCE DISCLOSURES
(88) Encourage
institutional
investors to
give due weight to
relevant governance
arrangements
E.2 Institutional investors are kept apprised of the Bank’s governance
practices through the Annual Report and any new initiatives are
highlighted at regular meetings to ensure that due weightage is given to
good corporate governance.
Complied
F. SHAREHOLDER RELATIONS – INDIVIDUAL SHAREHOLDERS
F.1 INVESTING / DIVESTING DECISION
(89) Individual
shareholders are
encouraged to do
their own analysis or
seek independent
advice
F.1 The Annual Report contains sufficient information for a potential investor
to carry out their own analysis. The Annual Report is published in both
English and Sinhala to facilitate better comprehension of retail investors.
This, together with the interim financial statements provided each quarter,
provide sufficient information to enable retail investors to make informed
judgements regarding the performance of the Bank.
Additionally, there is a separate part of the company website dedicated
to Investor Relations which provides this information online to all investors.
Shareholders can contact, the Company Secretary for further information
if required.
Complied
F.2 SHAREHOLDER VOTING
(90) Encourage
shareholders to
participate and vote
at the AGM
F.2 It is a tradition at Sampath Bank to encourage retail investors to
participate and vote at the AGM. Additionally, they are encouraged to
participate in the Bank’s affairs by way of submitting proposals through
Stakeholder Feedback Forms, and Shareholder Relation Forums.
Complied
G. SUSTAINABILITY REPORTING
G.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.
(91) Economic
Sustainability
G.1.1 Please refer pages 238 to 376. Complied
178 SAMPATH BANK PLC
ANNUAL REPORT 2016
Principle SEC & CA
Sri Lanka
Code
Reference
Compliance & Implementation Status
G. SUSTAINABILITY REPORTING
(92) The
Environment
G.1.2 Please refer pages 94 to 97. Complied
(93) Labour Practice G.1.3 Please refer pages 73 to 81. Complied
(94) Society G.1.4 Please refer pages 87 to 93. Complied
(95) Product
& Service
Responsibility
G.1.5 Please refer pages 82 to 85. Complied
(96) Stakeholder
identification,
engagement
& effective
communication
G.1.6 Please refer pages 46 to 49. Complied
(97) Sustainable
reporting &
disclosure
G.1.7 Please refer pages 390 to 408. Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
179
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
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(1) Responsibilities of the Board
(1) Strategic objectives
and corporate values
3(1)(i)(a) The Bank’s strategic objectives and corporate values are
determined by the Board and are given on pages 50 & 51 and 12
in the Annual Report. These are communicated to all levels of staff
through regular briefing sessions and reinforced by the Corporate
Management Team.
Complied
(2) Overall Business
Strategy including Risk
Policy and Management
3(1)(i)(b) The Bank’s strategy is set by the Board in consultation with the
Corporate Management and the Strategic Plan for the period
2017 -2019 has been approved by the Board. Risk 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 on a monthly basis.
Complied
(3) Risk Management 3(1)(i)(c) The Board has appointed a Board Integrated Risk Management
Committee tasked with approving the Bank’s Risk Policy, defining
the risk appetite, 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.
Risk Management Report on pages 136 to 150.
Board Integrated Risk Management Committee Report on
pages 206 to 208.
A mechanism/process to identify and mitigate the risks arising out
of new strategies are in place at Board level.
Complied
(4) Communication with all
stakeholders
3(1)(i)(d) There is a Board approved Communication Policy in place with all
stakeholders, including depositors, creditors, shareholders and
borrowers.
The Board has approved and implemented the following
communication channels:
Shareholders - The Board has appointed a Sub Committee on
Shareholder Relations tasked with identifying and addressing
the shareholders’ concerns. It is the first listed company in Sri
Lanka to have such a Committee. This Committee conducts
an annual Shareholder Relations Forum to identify shareholder
concerns. Additionally, the AGM is also a key forum to contact
shareholders and the Bank has a proud history of well attended
AGMs where shareholders take an active role in exercising their
rights. The Annual Report is translated into Sinhala and the
Chairman’s and CEO/MD’s messages are translated into Tamil
as well to facilitate greater communication with shareholders.
Complied
G4 - 49
180 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(1) Responsibilities of the Board
(4) Communication with all
stakeholders Contd.
Customers - Customers include depositors, creditors and
borrowers. The Bank has a Customer Complaint Handling
Policy. The customer complaint handling procedure which has
been printed 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 for
this purpose and reports are reviewed by the Board Integrated
Risk Management Committee. Additionally, a customer
satisfaction survey is carried out by External consultants to
evaluate service levels provided by the Bank.
Staff - Staff members are given access to the management to
voice their concerns through the Whistle Blower Policy and the
Grievance Handling Procedure.
(5) (a) Internal Control
System
3(1)(i)(e) The Board is tasked with reviewing the adequacy and the integrity
of the Bank’s internal control systems and management information
systems. Accordingly the Board Audit Committee reviews Internal
Audit reports submitted by the Internal Audit Department and
monitors follow up action further based on the assessment of Internal
Control Over Financial Reporting (ICOFR). Directors concluded that
the Bank’s Internal Control Over Financial Reporting is effective.
Complied
(5) (b) Management
Information Systems
3(1)(i)(e) The Bank has established a valid process to review the adequacy
and accuracy of all financial and non-financial information. This
process will be further improved during 2017.
Complied
(6) Key Management
Personnel
3(1)(i)(f) The Board has identified members of the Corporate Management,
Group Risk Officer & Group Compliance Officer and the Exchange
Control Compliance Officer as Key Management Personnel being
Officers Performing Executive Functions of Licensed Commercial
Banks (LCB) as required by CBSL Guideline dated 2nd December
2015 and the letter dated 17th June 2013 issued by the Controller
of Exchange - CBSL respectively. All appointments of designated
Key Management Personnel are recommended by the Board
Nomination Committee and approved by the Board.
Complied
(7) Define areas of
authority and Key
Responsibilities for
Directors and Key
Management Personnel
3(1)(i)(g) Areas of authority and key responsibilities have been defined for
Directors and Key Management Personnel.
Complied
(8) Oversight of affairs
of the Bank by Key
Management Personnel
3(1)(i)(h) Key Management Personnel make regular presentations to the Board
on matters under their purview and are regularly called in by the
Board to explain matters relating to their areas when need arises.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
181
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(9) Assesses effectiveness
of own Governance
practices including
selection and nomination
of Directors and KMPs,
Management of conflict of
interest and determination
of weaknesses
3(1)(i)(i) Selection, nomination and election of Directors are made by the
Board Nomination Committee based on their field of expertise in
accordance with the Board approved Procedure. Directors’ interests
are disclosed to the Board at the commencement 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.
A Policy on Managing Conflicts of Interest is in place.
The Board appraises its own performance by filling the Self
Evaluation Form by each Director in relation to business strategy and
contributions of the members based on their field of expertise. The
responses are collated by the Company Secretary and submitted to
the Board Nomination Committee for their review. Matters of concern
are brought to the attention of the Board by the Committee.
Complied
Complied
Complied
(10) Succession plan
for Key Management
Personnel
3(1)(i)(j) The structure of the Bank which was recommended by the Board
Nomination Committee has been approved by the Board in
principle. A succession plan is being implemented based on the
Board approved Procedure for same.
Complied
(11) Regular meetings
with Key Management
Personnel
3(1)(i)(k) Key Management Personnel are called on need basis for
discussions at the meetings of the Board and its Sub Committees
to review policy and other matters relating to their areas. Progress
towards corporate objectives is a regular agenda item in the Board
and the Key Management Personnel are regularly involved in the
Board level discussions on the same.
Complied
(12) Regulatory
environment and
maintaining an effective
relationship with regulator
3(1)(i)(l) Directors are briefed about developments in the regulatory
environment at Board Meetings to ensure that their knowledge
is updated regularly to facilitate the effective discharge of their
responsibilities.
Compliance Reports submitted to the CBSL which include all
returns to regulators are presented to the Board quarterly and
monitored closely by the Board.
The CEO/MD attended all CEO/MD forums on Governance
organized by CBSL and briefed the Board.
Complied
Complied
Complied
(13) Hiring External
Auditors
3(1)(i)(m) The Board Audit Committee carries out 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
(BAC) and the Board is briefed of any concerns in this regard if a
necessity arises. To ensure greater independence of the BAC, an
independent consultant too has been appointed to the BAC.
Complied
(14) Appointment of
Chairman and CEO
and their functions and
responsibilities
(3)(1)(ii) The Board has appointed the Chairman and the Chief Executive
Officer / MD and has approved their functions and responsibilities,
maintaining the balance of power between the two roles.
Complied
G4 - 40,41
182 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(1) Responsibilities of the Board
(15) Board Meetings (3)(1)(iii) Regular Board Meetings are held and special meetings are
scheduled if the need arises. The Board met 17 times during 2016.
The Bank has minimized obtaining approval via circular resolutions
and it is done only on an exceptional basis and such resolutions
are ratified by the Board at the subsequent meeting.
Complied
(16) Arrangements for
Directors to include
proposals in the agenda
(3)(1)(iv) A 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.
Complied
Complied
(17) Notice of Meetings (3)(1)(v) Notice of Meetings and the agenda for the Board Meetings are
circulated amongst the Directors 7 days prior to the meeting,
giving Directors time to attend and submit any urgent proposals.
Additionally, Notices, Agenda and all related Board papers are
loaded through a secure line onto iPads for Directors to access.
Complied
(18) Directors Attendance (3)(1)(vi) The Directors are apprised of their attendance in accordance with
the Articles of Association of the Company and the Corporate
Governance Code. Details of the Directors’ attendance is set out
on page 157.
All Directors have attended at least 2/3rds of the total number of
Board meetings during the preceding year.
Complied
Complied
(19) Company Secretary (3)(1)(vii) The Board has appointed the Company Secretary of the Bank, who is
an Attorney-at-Law of the Supreme Court of Sri Lanka, who satisfies
the provisions of Section 43 of the Banking Act No. 30 of 1988. The
Company Secretary’s primary responsibilities shall be to handle the
secretarial services to the Board and Shareholders and carry out
other functions specified in the statutes and other regulations.
Complied
(20) Directors access to
advice and services of
Company Secretary
(3)(1)(viii) All members of the Board have the opportunity to obtain the
advice and services of the Company Secretary who is an Attorney-
at-Law and who is responsible to the Board for follow up of Board
Procedures, Compliance with relevant Rules and Regulations,
Directions and Statutes and keeping and maintaining Minutes and
relevant records of the Bank.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
183
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(21) Maintenance of Board
Minutes
(3)(1)(ix) The Company Secretary maintains the Minutes of the Board
Meetings and circulates the same amongst all Board Members.
Additionally, the Directors have access to the past Board papers
and Minutes through a secure electronic link.
Complied
(22) Minutes to be of
sufficient detail and
serve as a reference for
regulators and supervisory
authorities
(3)(1)(x) The detailed Minutes of the meetings include:
A summary of data and information used by the Board in its
deliberations
The matters considered by the Board
The fact-finding discussions and the issues of contention or
dissent
The testimonies and confirmations of relevant executives with
regard to the Board’s strategies and policies and adherence to
relevant laws and regulations
Matters regarding the risks to which the Bank is exposed and
an overview of the risk management measures including reports
of the Board Integrated Risk Management Committee
The decisions and Board resolutions including reports of all
Board Sub Committees.
Complied
(23) Directors’ ability
to seek independent
professional advice
(3)(1)(xi) The Bank has adopted a Board approved Policy for “Directors’
Access to Independent Professional Advise” and the Board resorts
to such advice when deemed necessary.
The Board Sub Committees and various professionals in
Corporate and Senior Management advise the Board on various
matters relevant to them. In addition, Directors are able to obtain
independent professional advice, as and when necessary, in
discharging their responsibilities. These meetings are coordinated
by the Company Secretary.
Complied
Complied
(24) Dealing with Conflicts
of Interest
(3)(1)(xii) The Directors are conscious of their obligation to deal with situations
where there is a conflict of interest in accordance with the Articles
of Association of the Bank and the Banking Act Direction No.
11 of 2007. The Bank maintains a register of Directors’ and Key
Management Personnel’s Interests which is regularly updated and
includes interests of the spouse, dependent children under 18
years of age and their business concerns. Directors abstain from
participating in the discussions, voicing their opinion or approving in
situations where there is a conflict of interest. Additionally he/she is
not counted in the quorum in such instances.
Complied
(25) Schedule of matters
reserved for Board
decision
(3)(1)(xiii) The Board has a schedule of matters specifically reserved for its
decision to ensure that the direction and control of the Bank is
within its authority in line with regulatory codes, guidelines and
international best practice.
Complied
(26) Inform Central Bank if
there are solvency issues
(3)(1)(xiv) 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 2016.
Complied
G4 - 41
184 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(27) Compliance with
Capital Adequacy
(3)(1)(xv) The Board monitors capital adequacy and other prudential
measures viz-a-viz regulatory requirement, the Bank’s defined risk
appetite and industry benchmarks on a quarterly basis. At present
the Bank is in compliance with the minimum capital requirements.
Complied
3(1) Responsibilities
(28) Publish Corporate
Governance Report in
Annual Report
(3)(1)(xvi) The Board publishes the Corporate Governance Report in the
Bank’s Annual Report. This report is given on pages 153 to 197.
Complied
(29) Self-assessment of
Directors
(3)(1)(xvii) The Board has adopted a scheme of self-assessment to be
undertaken by each Director annually and records of these
assessments are maintained with the Company Secretary. The
Chairman discusses these with the Directors at Board level.
Complied
3(2) The Boards’ Composition
(30) Number of Directors 3(2)(i) As per CBSL Corporate Governance Direction, the number of
Directors should not be less than 7 or more than 13. The Bank’s Board
comprised 12 Directors up to end July 2016 and 11 thereafter.
Complied
(31) Period of service of a
Director
3(2)(ii) The period of service of a Director excluding the Managing
Director and Executive Directors is limited to 9 years as per the
Direction on Corporate Governance. On 31st July 2016, one
Director completed his tenure of office and stepped down from
directorship, There are no other Directors whose tenure of service
has exceeded 9 years on the Board. Details of their tenures of
service are given on pages 16 to 21.
Complied
(32) Board Balance 3(2)(iii) There are 2 Executive Directors and 9 Non Executive Directors
which is well within the requirement to limit the number of
Executive Directors to 1/3rd of the total.
Complied
(33) Independent Non
Executive Directors
3(2)(iv) The Board has 6 Independent Non Executive Directors which
complies with the requirement.
Complied
(34) Alternate Directors 3(2)(v) There were no alternate Directors appointed during the year 2016. Complied
(35) Criteria for Non
Executive Directors
3(2)(vi) Non Executive Directors are persons with credible track
records who have necessary skills and experience to bring an
independent judgment to bear on issues of strategy, performance
and resources. The profiles of the Non Executive Directors are
detailed on pages 16 to 21.
The Board has approved a procedure to appoint Directors
including Independent Directors.
Complied
Complied
(36) Quorum for the Board
meeting is more than 50%
of Directors and more
than half the quorum to
comprise Non Executive
Directors
3(2)(vii) This requirement is strictly observed and the attendance of the
Board members at the meetings for the year 2016 evidence
compliance with the requirement.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
185Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(37) Identify Independent
Non Executive Directors
in communications and
disclose the categories of
Directors in Annual Report
3(2)(viii) The Independent Non Executive Directors are expressly identified
as such in all corporate communications that disclose the
names of Directors of the Bank. The composition of the Board,
by category of Directors, including the names of the Chairman,
Executive Directors, Non Executive Directors and Independent
Non Executive Directors are given on page 157 of the Corporate
Governance Report.
Complied
(38) Succession planning
and appointments to the
Board
3(2)(ix) The Board has established a Board Nomination Committee whose
Terms of Reference comply with the Code of Best Practice on
Corporate Governance. Accordingly, new Directors including the
CEO/MD and Group Finance Director are appointed by the Board
upon consideration of recommendations by the Board Nomination
Committee.
Complied
(39) Re-election of
Directors filling casual
vacancies
3(2)(x) Directors appointed to the Board since the AGM will stand for
election at the first AGM in accordance with the provisions in the
Articles of Association and CBSL Direction.
Complied
(40) Communication of
reasons for removal or
resignation of Director
3(2)(xi) Resignations of Directors and the reasons for same are informed
to the regulatory authorities and shareholders as per CSE
requirements together with a statement confirming whether or not
there are any matters that need to be brought to the attention of
shareholders.
Complied
(41) Prohibition of
Directors or Employees
of a bank becoming a
Director at another bank
3(2)(xii) The Board and the Board Nomination Committee take into
account this requirement in their deliberations when considering
appointments of Directors. The Employee Code of Conduct (Blue
Book) prohibits employees to be elected/nominated as a director
of another bank.
Complied
3(3) Criteria to Assess Fitness and Propriety of Directors
(42) Age of Director
should not exceed 70
3(3)(i) There were no Directors who are over 70 years of age. Complied
(43) Directors should not
hold Directorships of more
than 20 companies
3(3)(ii) None of the Directors hold office as a director in more than 20
companies.
Complied
3(4) Management Functions Delegated by the Board
(44) Understand and
study delegation
arrangements
(45) Extent of delegation
should not hinder Board
ability to discharge its
functions
(46) Review delegation
arrangements periodically
to ensure relevance to
operations of the Bank
3(4)(i)
3(4)(ii)
3(4)(iii)
The Board periodically reviews and approves the delegation
arrangements in place and ensures that the extent of delegation
addresses the needs of the Bank whilst enabling the Board to
discharge their functions effectively.
Complied
186 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(5) The Chairman and Chief Executive Officer/Managing Director
(47) Separation of roles 3(5)(i) The roles of the Chairman and CEO/MD are separate. Complied
(48) Non Executive
Chairman and
appointment of a Senior
Independent Director
3(5)(ii) The Chairman is a Non Executive Director but not an Independent
Director as he is also a Director of a fully owned subsidiary of the
Bank. The Board has appointed Mr Sanjiva Senanayake as Senior
Independent Director with suitable Terms of Reference to ensure
the independent element which has been disclosed in the Annual
Report.
Complied
(49) Disclosure of the
identity of the Chairman
and CEO / MD and any
relationships with the
Board members
3(5)(iii) The identity of the Chairman and CEO/MD are disclosed in the
Annual Report on pages 16 to 21 and there are many references to
these roles throughout.
There is no material financial, business or family relationships
between the Chairman, CEO/MD and other members of the Board
other than those disclosed on pages 16 to 21 and in Note No.
49 to the Financial Statements given on pages 326 to 330 as per
annual declarations and the register of Directors Interests which is
updated regularly.
Complied
Complied
(50) Chairman to:
a) Provide leadership to
the Board;
b) Ensure that the Board
works effectively
and discharges its
responsibilities;
c) Ensure that all key and
appropriate issues are
discussed by the Board
in a timely manner.
3(5)(iv) The Board approved the key responsibilities of the Chairman and
this document includes the matters identified in relevant guidelines
and codes. The self-evaluation process ensures that the Chairman
provides leadership to the Board. The Board works effectively and
discharges its responsibilities and all key and appropriate issues
are discussed by the Board in a timely manner.
Complied
(51) Responsibility for
agenda lies with Chairman
but may
be delegated to the
Company Secretary
3(5)(v) The Company Secretary draws up the agenda for the meetings in
consultation with the Chairman.
Complied
(52) Ensure that Directors
are properly briefed and
provided with adequate
information
3(5)(vi) The Chairman ensures that the Board is adequately briefed and
informed regarding the matters arising at Board meetings. The
following procedures are in place to ensure this:
Agenda and Board papers are circulated 7 days prior to Board
Meetings.
Relevant members of the Management team are available for
explanations and clarifications if required.
Management information is provided in agreed formats on a
regular basis to enable Directors to assess the performance
and stability of the Bank.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
187Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(53) Encourage active
participation by all
Directors and lead in
acting in the interests of
the Bank.
3(5)(vii) The Board has a self-evaluation process that encourages all
Directors to make a full and active contribution. This is evident in
the self-evaluation forms submitted by each Director at the year
end.
Complied
(54) Encourage
participation of Non
Executive Directors and
relationships between Non
Executive and Executive
Directors
3(5)(viii) 9 of the 11 members of the Board are Non Executive Directors
which creates a conducive environment for active participation
by the Non Executive Directors. All Non Executive Directors
participate in Sub Committees of the Board providing further
opportunity for active participation. The Bank has also appointed
Senior Independent Director which supports the participation of
the Non Executive Directors.
Complied
(55) Refrain from direct
supervision of Key
Management Personnel
and executive duties
3(5)(ix) The Chairman does not get involved in the supervision of Key
Management Personnel or any other executive duties.
Complied
(56) Ensure effective
communication with
shareholders
3(5)(x) The Bank historically has active shareholder participation at
the AGM and at the Shareholder Relations Meeting which is
held immediately after the AGM where shareholder issues are
discussed. A Board Sub Committee has been appointed to ensure
that there is effective communication with shareholders.
Complied
(57) CEO/MD functions
as the apex executive in
charge of the day to day
operations
3(5)(xi) The day to day operations of the Bank have been delegated to the
CEO/MD.
Complied
3(6) Board Appointed Committees
(58) Establishing Board
Sub Committees, their
functions and reporting
3(6)(i) Ten Sub Committees have been established by the Board with
written terms of reference for each. The 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 in the Annual Report
Board Audit Committee on pages 198 to 201.
Board Human Resources & Remuneration Committee on pages
202 & 203.
Board Nomination Committee on pages 204 & 205.
Board Integrated Risk Management Committee on pages 206
to 208.
Board Related Party Transaction Review Committee on
page 209.
Board Credit Committee on pages 210 & 211.
Board Strategic Planning Committee on pages 212 & 213.
Board Shareholder Relations Committee on pages 214 & 215.
Board Treasury Committee on page 216.
Board Marketing Committee on page 217.
The Chairpersons of the Sub Committees are present at the
AGM to clarify any matters that may be referred to them by the
Chairman.
Complied
188 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(6) Board Appointed Committees
3(6)(ii) Board Audit Committee
(59) Chairman to be
an Independent Non
Executive Director
with qualifications
and experience in
accountancy and/or audit
3(6)(ii)(a) The Chairman of the Board Audit Committee is an Independent
Non Executive Director who is a fellow member of the Chartered
Institute of Management Accountants, UK.
Complied
(60) Committee to
comprise solely of Non
Executive Directors
3(6)(ii)(b) All members of the Board Audit Committee are Non Executive
Independent Directors.
Complied
(61) Audit Committee
functions
3(6)(ii)(c) In accordance with the Terms of Reference, the Board Audit
Committee has made the following recommendations on matters
In connection with:
The appointment of the External Auditor for audit services to be
provided in compliance with the relevant statutes;
The implementation of the Central Bank guidelines issued to
Auditors from time to time;
The application of the relevant accounting standards; and
The service period, audit fee and any resignation or dismissal of
the Auditor
The Board Audit Committee ensures that the service period of
the engagement of the External Audit partner shall not exceed
five years, and that 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.
Complied
(62) Review and monitor
External Auditor’s
independence and
objectivity and the
effectiveness of the audit
processes
3(6)(ii)(d) The Board Audit Committee (BAC) obtains representations from
the External Auditor on their independence and that the audit
is carried out in accordance with the Sri Lanka Accounting
Standards.
Complied
(63) Provision of non-
audit services by External
Auditor
3(6)(ii)(e) There is a policy in place approved by the Board in this regard.
When such services are obtained from External Auditors
prior approval is obtained from the Board Audit Committee in
accordance with regulations.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
189Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(64) Determines scope of
audit
3(6)(ii)(f) The Committee discussed and finalized with the External Auditors
the nature and scope of the audit to ensure that it includes:
An assessment of the Bank’s compliance with the relevant
Directions in relation to Corporate Governance and Internal
Controls Over Financial Reporting;
The preparation of financial statements for External purposes in
accordance with relevant accounting principles and reporting
obligations;
As all audits within the group are carried out by the same External
Auditor, there was no requirement to discuss arrangements for
coordinating activities with other auditors.
Complied
(65) Review financial
information of the Bank
3(6)(ii)(g) The Board Audit Committee reviews the financial information of the
Bank, in order to monitor the integrity of the Financial Statements
of the Bank, its Annual Report, accounts and quarterly reports
prepared for disclosure, and the significant financial reporting
judgments contained therein. The review focuses on the following:
Major judgemental areas
Any changes in accounting policies and practices
Significant adjustments arising from the audit
The going concern assumption
The compliance with relevant accounting standards and other
legal requirements.
The Board Audit Committee makes recommendations to the
Board on the above on a quarterly basis.
Complied
(66) Discussions
with External Auditor
without the executive
management on interim
and final audits
3(6)(ii)(h) The Board Audit Committee discusses issues, problems and
reservations (If any) arising from the interim and final audits with
the External Auditor. The Committee met the External Auditors
in the absence of executive management of the Bank on three
occasions.
Complied
(67) Review of
Management Letter and
Bank’s response
3(6)(ii)(i) The Board Audit Committee has reviewed the External Auditor’s
management letter and the managements’ responses thereto.
Complied
190 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(6) Board Appointed Committees
(68) Review of Internal
Audit function
3(6)(ii)(j) The Board Audit Committee has oversight of the Internal Audit
function and has the following responsibilities with regard to the same:
Reviews the adequacy of the scope, functions and resources
of the Internal Audit Department, and ensures that the
Department has the necessary authority to carry out its work;
Reviews the Internal Audit programme and results of the
audits and ensures that appropriate actions are taken on the
recommendations of the Internal Audit Department;
Reviews appraisals of the performance of the head and senior
staff members of the Internal Audit Department;
Recommends any appointment or termination of the head,
senior staff members
Ensures that the Committee is apprised of resignations of senior
staff members of the Internal Audit Department including the
Head of Internal Audit, and provides an opportunity to the
resigning senior staff members to submit reasons for resigning;
Ensures that the Internal Audit function is independent of the
activities, it audits and that it is performed with impartiality,
proficiency and due professional care.
Complied
(69) Internal Investigations 3(6)(ii)(k) The Board Audit Committee has reviewed the major findings
of internal investigations during the year and management’s
responses thereto. It has also ensured that the recommendations
of such investigations are implemented.
Complied
(70) Attendees at Audit
Committee Meetings
3(6)(ii)(l) The CEO/MD, Group Finance Director, CFO, Head of Internal Audit,
Chief Manager - Systems Audit and a 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.
Complied
(71) Explicit authority,
resources and access to
information
3(6)(ii)(m) The Board Audit Committee has:
Explicit authority to investigate into any matter within its terms of
reference;
The resources which it needs to do so;
Full access to information; and
Authority to obtain External professional advice and to invite
outsiders with relevant experience to attend, if necessary
Complied
(72) Regular meetings 3(6)(ii)(n) 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 Company Secretary.
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
191Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(73) Disclosure in Annual
Report
3(6)(ii)(o) The Report of the Board Audit Committee on pages 198 to 201
includes the 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
meeting is given on page 157
Complied
(74) Maintain Minutes of
meetings
3(6)(ii)(p) The Company Secretary and, in her absence the Head of Internal
Audit serves as the Secretary to the Board Audit Committee and
maintains Minutes of the Committee meetings.
Complied
(75) Whistle Blowing
Policy and relationship
with External Auditor
3(6)(ii)(q) The Bank has a Board approved Whistle Blowing Policy whereby
an employee of the Bank may, in confidence, raise concerns
about possible improprieties in financial reporting, internal
control or other matters. The Company Secretary forwards all
communications received in this regard, including anonymous
communications, to the Chairman of the Board Audit Committee
who addresses the issue in an appropriate manner. This policy is
annually reviewed by the Board Audit 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.
Complied
3(6)(iii) Board Human Resources and Remuneration Committee (BHR & RC)
(76) (a) Policy to
determine
the remuneration of
Directors.
3(6)(iii) (a) A Board approved Policy to determine the remuneration (salaries,
allowances and other financial payments) relating to Directors is in
place.
Complied
(76) (b) Policy to determine
the remuneration for CEO
and KMPs.
3(6)(iii) (a) A Board approved Policy to determine the remuneration (salaries,
allowances and other financial payments) of CEO and KMPs is in
place.
Complied
(77) Goals and targets
for the Directors, MD and
KMPs
3(6)(iii) (b) Goals and targets for the CEO/MD and the KMPs for the year
2016 are documented under the performance objective setting
for the year approved by the committee. There are no targets set
for the Non Executive Directors since they are not expected to get
involved in executive functions.
Complied
(78) Evaluation of the
performance of the MD/
CEO and KMPs against
the set targets and goals.
3(6)(iii) (c) Performance evaluation of the CEO/MD who held office until 12th
September 2016 was done by the Committee and KMPs for the year
ended 31st December 2016 will be reviewed by the Committee. The
performance evaluation of the incumbent CEO/MD will be done by
the Committee upon completing an appropriate period in office.
The performance evaluation of the KMP’s for the year ended
2015 was done within the first quarter of 2016. Their performance
evaluation for the year ended 31st December 2016 will be done
within the first quarter of 2017.
Complied
Complied
(79) “Terms of Reference”
provides that the MD is not
present at meetings when
matters relating to the MD
are being discussed
3(6)(iii) (d) Terms of Reference of the Committee provides that the CEO/MD
should not be present at meetings of the Committee, when matters
relating to him are being discussed. CEO/MD was not present
when matters relating to him were discussed during the year.
Complied
192 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(6)(iv) Board Nomination Committee
(80)(a) Procedure to
appoint Directors
3(6)(iv)(a) The Board Nomination Committee has developed and implemented
a Board approved procedure to appoint new Directors.
Complied
(80)(b) Procedure to
appoint CEO and Key
Management Personnel.
3(6)(iv)(a) A Board approved procedure to select CEO/ MD and Key
Management Personnel is in place.
Complied
(81) Re-election of
Directors
3(6)(iv)(b) The 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.
Complied
(82) Eligibility criteria
for appointments to key
managerial positions
including the CEO
3(6)(iv)(c) The Committee sets the eligibility criteria to be considered,
including qualifications, experience and key attributes, for
appointment or promotion to key managerial positions and the
CEO/MD. The Committee considers the applicable statutes and
guidelines in setting the criteria.
These have been documented and included in the job
descriptions completed for the CEO/MD and Key Management
Personnel.
Complied
(83) Fit & Proper criteria
for Directors, CEO and
KMPs
3(6)(iv)(d) The Committee obtains annual declarations from Directors,
CEO/ MD and HR Department obtains declarations from Key
Management Personnel to ensure that they are fit and proper
persons to hold office as specified in the criteria given in Banking
Act Direction No. 11 of 2007, Section 3(3) and as set out in the
statutes.
Complied
(84) Succession Plan for
retiring Directors, CEO/MD
and KMPs
3(6)(iv)(e) Structural changes of the Bank recommended by the Board
Nomination Committee has been approved by the Board. Board
approved procedures covering Succession Planning for retiring
Directors, CEO/MD and KMPs are in place.
Complied
(85) Committee
Chairperson and other
members
3(6)(iv)(f) The Committee is chaired by an Independent Director. Among the
other members, 2 members are Independent and other 2 members
are not Independent. The MD attends meetings by invitation.
Complied
3(6)(v) Board Integrated Risk Management Committee (BIRMC)
(86) Composition of Risk
Management Committee
3(6)(v)(a) The Board Integrated Risk Management Committee comprises 5
Non Executive Directors, 2 Executive Directors, Group Risk Officer
and Group Compliance Officer. The Committee works closely with
Key Management Personnel within the framework of authority and
responsibility assigned to the Committee.
Complied
(87) Risk Assessment
of the Bank, subsidiary
companies and associate
companies
3(6)(v)(b) Credit Risk, Market Risk, Liquidity and the Operational Risks are
assessed and the reports submitted to the BIRMC through the
Group Risk Officer. Risks are assessed at the BIRMC and the
relevant reports are submitted by the Risk Management Unit to the
Committee.
Complied
CORPORATE GOVERNANCE
G4 - 40
RISK & GOVERNANCE
193Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(87) Risk Assessment
of the Bank, subsidiary
companies and associate
companies contd.
The Committee has approved the policies on Credit Risk
Management, Market Risk Management and Operational Risk
Management which provides a framework for management and
assessment of risks. Accordingly, quarterly information on pre-
established risk indicators are reviewed by the Committee.
The Committee has a process to assess and evaluate all risks of
the Bank and the findings and issues are submitted to the Board
for their review and action if any. The Committee evaluates the risk
management of Subsidiary companies both at the Bank level and
Group level.
(88) Review the adequacy
and effectiveness of
management level
committees
3(6)(v)(c) The Committee reviews the adequacy and the effectiveness of
all management level committees including the Credit Policy
Risk and Portfolio Review Committee and the ALCO to address
specific risks and to manage those risks within the laid down limits
specified by the Committee as required by the Direction.
Not
Complied
(89) Corrective action to
mitigate risks exceeding
prudential levels
3(6)(v)(d) The Committee takes prompt corrective action to mitigate the
effects of specific risks in the case such risks are at levels beyond
the prudent 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.
Complied
(90) Frequency of
meetings
3(6)(v)(e) The 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.
Complied
(91) Officers responsible
for failure to identify
specific risks or implement
corrective action
3(6)(v)(f) Since all decisions on risk identification are taken collectively,
taking action against individual officers does not arise.
Complied
(92) Risk assessment
report to Board
3(6)(v)(g) A detailed report of the meeting is submitted to the Board after
each Committee meeting by the Secretary of the Committee for
their information, views, concurrence or specific directions.
Complied
(93) Compliance function 3(6)(v)(h) The Compliance Unit established, assesses the Bank’s compliance
with laws, regulations, and regulatory guidelines. The 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 Compliance Officer
who reports to the Board Integrated Risk Management Committee
(BIRMC) and is responsible for providing the following:
A detailed quarterly report on statutory and mandatory reporting
requirements indicating the status of compliance to the Board;
A monthly compliance certificate with sign-off from all business
unit heads to the Committee
Complied
194 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
3(7) Related Party Transactions
(94) Categories of related
parties and avoid conflict
of interest
3(7)(i) A Board approved, documented process is in place on categories
of related parties in order for the Bank to avoid any conflicts of
interest that may arise 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.
Complied
(95) Related Party
Transactions covered by
direction
3(7)(ii) Related Party Transactions covered for the purpose of the above
process with Directors and Key Management Personnel include:
The grant of any type of accommodation, as defined in
the Monetary Board’s Directions on maximum amount of
accommodation.
The creation of any liabilities of the Bank in the form of deposits,
borrowings and investments.
The provision of any services of a financial or non-financial
nature provided to the Bank or received from the Bank.
The creation or maintenance of reporting lines and information
flows between the Bank and any related parties which may lead
to the sharing of potentially proprietary, confidential or otherwise
sensitive information that may give benefits to such related parties
Complied
(96) Monitoring of Related
Party Transactions defined
as more favourable
treatment
3(7)(iii) The Bank has to implement either a preventive or a detective
system to ensure that no favourable treatment is offered to related
parties noted in 3(7)(i) above.
Not
Complied
(97) Granting
accommodation to a
Director or close relation
to a Director
3(7)(iv) 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 provision that it will be
secured by such security as may from time to time be determined
by the Monetary Board as well.
Complied
(98) (a) Accommodation
granted to persons, or
concerns of persons, or
close relations of persons,
who subsequently are
appointed as Directors of
the Bank
3(7)(v) The Company Secretary obtains declarations/affidavits from all
Directors prior to their appointment and they are requested to
declare any future transactions.
Employees of the Bank are aware of the requirement to obtain
necessary security as defined by the Monetary Board if the need
arises.
Complied
Complied
CORPORATE GOVERNANCE
G4 - 41
RISK & GOVERNANCE
195Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(98) (b) Accommodation
granted to persons, or
concerns of persons, or
close relations of persons,
who subsequently are
appointed as Directors of
the Bank contd.
A process to monitor compliance with this regulation by the
Compliance Unit has to be established.
Not
Complied
(99) Favourable treatment
or accommodation to
Bank employees or their
close relations
3(7)(vi) No favourable treatment / accommodation are provided to Bank
employees other than staff benefits. Employees of the Bank are
informed through 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.
Complied
3(7) Related Party Transactions
(100) Remission of
accommodation subject to
Monetary Board approval
3(7)(vii) The situation has not arisen in the Bank to date Complied
3(8)(i) Disclosures
(101) Publish annual
and quarterly Financial
Statements
3(8)(i) 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.
Complied
3(8)(ii) Disclosures in Annual Report
(102) A statement
to the effect that the
annual audited financial
statements have been
prepared in line with
applicable accounting
standards and regulatory
requirements, inclusive of
specific disclosures.
3(8)(ii)(a) A statement to this effect is included in the following:
Statement of Directors Responsibility for Financial Reporting
given on pages 235 & 236.
Annual Report of the Board of Directors on the Affairs of the
Company given on pages 221 to 230.
Managing Director’s and Chief Financial Officer’s Responsibility
Statement given on page 234.
Complied
(103) Report by the Board
on the Bank’s internal
control mechanism
3(8)(ii)(b) The Annual Report includes the following reports where the Board
confirms that the financial reporting system has been designed to
provide reasonable assurance regarding the reliability of financial
reporting, and that the preparation of financial statements for
external purposes has been done in accordance with relevant
accounting principles and regulatory requirements:
Statement of Directors’ Responsibility on Financial Reporting
given on pages 235 & 236.
Annual Report of the Board of Directors on the Affairs of the
Company given on pages 221 to 230.
Complied
(104) Assurance Report
issued by the Auditors
under ‘Sri Lanka
Standard on Assurance
Engagements SLSAE 3050
3(8)(ii)(c) The Board has obtained an assurance report on the effectiveness
of Internal Controls Over Financial Reporting which is published on
page 233.
Complied
196 SAMPATH BANK PLC
ANNUAL REPORT 2016
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(105) Details of Directors 3(8)(ii)(d) Details of Directors are given on pages 16 to 21.
Directors’ interests in contracts with the company are given
below; (Including Executive - Directors)
Category Amount
Rs 000
Loans 1,770
Deposits 172,482
Credit cards 588
Interest income 111
Interest expense 14,815
Share based payments
Cash dividend 632
Scrip dividend (Number of shares) 2,849
Aggregate value of remuneration / fees
paid by the Bank
111,229
Post employment benefits paid 16,799
Complied
(106) Total
accommodation granted
to each category of
related parties and as a
percentage of the Bank’s
regulatory capital
3(8)(ii)(e) Related Party Transactions are given in Note No. 49 to the
Financial Statement on Pages 326 to 330.
Net accommodation granted to related parties are given below;
Category of related party
transaction
As a % of regulatory
capital of the Bank
Rs 000
Directors and Close
Family Members
0.02 13,620
KMPs & Close Relations 0.22 133,607
Subsidiaries 6.95 4,264,906
Shareholders owning
material interest in the
Bank - -
Concern in which any of
the Bank’s Directors or
a close relation of any
of the Bank’s Directors
or any of its material
shareholders has a
substantial interest. 3.19 1,953,993
Complied
CORPORATE GOVERNANCE
RISK & GOVERNANCE
197
Corporate Governance
Principle
CBSL
Direction
Reference
Compliance and Implementation Status
(107) Aggregate values
of remuneration paid to,
and transactions with Key
Management Personnel
3(8)(ii)(f) Nature of transaction Rs 000
Short term employment benefits 245,145
Post-employment benefits 29,677
Loan & advance including credit cards 71,794
Deposits & investments 168,764
Cash dividend paid 1,689
Scrip dividend paid (Number of shares) 53,194
Interest expense 11,437
Interest income 3,798
The remuneration paid to, and transactions with Executive
Directors are included in 3(8)(ii)(d) above.
Complied
(108) Confirmation by
the Board on the annual
Corporate Governance
report
3(8)(ii)(g) The Bank has obtained certification from the External Auditors of
compliance with Corporate Governance Directions.
Complied
(109) Report confirming
compliance with
prudential requirements,
regulations, laws and
internal controls
3(8)(ii)(h) The Statement of Directors’ Responsibility on Financial Reporting
given on pages 235 & 236 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.
Complied
(110) Measures taken
to rectify non-compliant
issues
3(8)(ii)(i) There were no supervisory concern lapses in the Bank’s Risk
Management System or non-compliance with these directions that
have been pointed out by the Director-Bank Supervision required
to be disclosed by the Bank, during the year.
Complied
G4 - 44
CHANNA PALANSURIYA NANDA FERNANDO
Chairman Managing Director
Colombo, Sri Lanka
13th February 2017
198 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD AUDIT COMMITTEE REPORT
The Board Audit Committee (The
Committee) which was established on
10th April 1997, is appointed by and
responsible to the Board of Directors
(The Board). The Committee comprises
4 Non Executive Independent Directors,
who conduct Committee proceedings
in accordance with the Terms of
Reference approved by the Board. The
Committee’s composition as at 31st
December 2016 is:
Mr Ranil Pathirana
(Chairman) (IND/NED)
Prof Malik Ranasinghe
(IND/NED)
Mr Sanjiva Senanayake
(IND/NED) - served on the
Committee until 31st March 2016
Mr Deepal Sooriyaarachchi
(IND/NED)
Mrs Dhara Wijayatilake
(IND/NED)
(IND - Independent Director, NED - Non
Executive Director)
Mrs Ranjani Joseph, representing
Messrs KPMG Chartered Accountants,
was appointed as a consultant to the
Committee w.e.f. 1st September 2016.
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary and
in her absence the Head of Internal
Audit functions as the Secretary to the
Committee.
The Chairman of the Committee,
Mr Ranil Pathirana who is an
Independent Non Executive Director,
is a Fellow Member of the Chartered
Institute of Management Accountants,
UK and counts many years of
experience in the Financial Services
industry.
MEETINGS
The Committee met on 8 occasions
during the year. Attendance by the
Committee members at these meetings
is given in the table on page 157 of
the Annual Report. The Managing
Director, Group Finance Director, Chief
Financial Officer, Head of Internal Audit,
Chief Manager - Systems Audit and
the External Auditors also attended
these meetings by invitation. 4 of these
meetings were held to consider and
recommend to the Board of Directors,
the Bank’s quarterly and Annual
Financial Statements.
TERMS OF REFERENCE
The establishment, role and functions
of the Board Audit Committee are
regulated by the Banking Act Direction
No. 11 of 2007, the Mandatory Code
of Corporate Governance for Licensed
Commercial Banks issued by the
Central Bank of Sri Lanka, the Rules
on Corporate Governance as per section
7.10 of Listing Rules issued by the
Colombo Stock Exchange and the Code
of Best Practice on Corporate Governance
issued jointly by the Securities and
Exchange Commission of Sri Lanka (SEC)
and the Institute of Chartered Accountants
of Sri Lanka (ICASL). The Committee
reports on its activities to the Board
regularly. Committee also assists
the Board in its general oversight of
financial reporting, internal controls
and functions relating to internal and
external audits.
ROLE AND
RESPONSIBILITIES
The Committee is responsible for:
1. Reviewing financial information
of the Bank, in order to monitor
the integrity of the Financial
Statements of the Bank, its
Annual Report, accounts and
quarterly reports prepared for
disclosure.
2. Reporting to the Board on the
quality and acceptability of the
Bank’s accounting policies and
practices.
3. Assessing the reasonableness
of the underlying assumptions
for estimates and judgments
made in preparing the Financial
Statements.
4. Reviewing accounting and
financial reporting, risk
management processes and
regulatory compliance.
5. Reviewing of the Financial
Statements (including quarterly
interim statements) prior to
publication to ensure compliance
with statutory provisions,
accounting standards and
accounting policies which are
consistently applied.
6. Reviewing internal audit
reports and liaising with
Corporate Management of the
Bank in taking precautionary
measures to minimize and
control weaknesses, procedure
violations, frauds and errors.
7. Assessing the independence
and monitoring the performance
and functions of Internal Audit,
including overseeing the
appointment of the Head of
Internal Audit.
8. Overseeing the appointment,
compensation, resignation and
dismissal of the External Auditor,
including review of the external
audit function, its cost and
effectiveness and monitoring
of the External Auditor’s
independence.
9. Reviewing the effectiveness of
the Bank’s system of Internal
Control Over Financial Reporting
to provide reasonable assurance
G4 - 14
RISK & GOVERNANCE
199regarding the reliability of
financial reporting and that
the preparation of Financial
Statements for external purposes
have been done in accordance
with applicable accounting
standards and regulatory
requirements.
10. Engaging independent advisors
for specialized functions where it
deems necessary.
FINANCIAL REPORTING
The Committee, as part of its
responsibility to oversee the Bank’s
financial reporting process on behalf
of the 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 disclosures and the extent
of compliance with financial reporting
standards, the Companies Act No. 7 of
2007, the Banking Act No. 30 of 1988
and amendments thereto and other
relevant financial and governance
reporting requirements. To facilitate
the review, the Committee considered
reports from the Group Finance Director
and Chief Financial Officer and also
reports from the External Auditors on
the outcome of the half-year review and
annual audit.
CASL has issued the Sri Lanka
Accounting Standard - SLFRS 9
(Financial Instruments) which would be
effective from 1st January 2018. The
Bank commenced working towards
this goal during the year with the help
of an external consultant. The Bank
has disclosed the relevant details on
potential implications in the Financial
Statements for the year ended 31st
December 2016 as required by the
reporting framework.
PERFORMANCE
INTERNAL CONTROL OVER
FINANCIAL REPORTING (ICOFR)
The Bank is required to comply with
Section 3(8)(ii)(b) of the said Banking
Act Direction No. 11 of 2007 and
assess the effectiveness of Internal
Control Over Financial Reporting as of
31st December 2016.
The Bank assessed the effectiveness
of its Internal Control Over Financial
Reporting as of 31st December 2016
based on the criteria set out in the
Guidance for Directors of Banks on
“The Directors’ Statement of Internal
Control”, issued by the Institute of
Chartered Accountants of Sri Lanka
(ICASL) in 2010.
The Bank’s assessment was based
on processes documented by the
respective process owners. For the
successful implementation of this
task, a steering committee (Internal
Control Over Financial Reporting
Steering Committee) headed by the
Group Finance Director comprising
of Corporate Management and other
relevant Department Heads was
formulated in 2010 with the guidance
of the Bank’s External Auditor (Ernst
& Young). At present, Group Finance
Director, Chief Financial Officer,
Head of Internal Audit, Group Risk
Officer, Group Compliance Officer
and Company Secretary serve in
the Internal Control Over Financial
Reporting Steering Committee. The
Internal Audit Department carried out
walk through tests on the documented
processes to establish their adequacy
and commented where necessary.
Based on Internal Auditors’ and
External Auditors’ assessments, the
Board has concluded that, as of 31st
December 2016, the Bank’s Internal
Control Over Financial Reporting is
effective. Directors’ Report on the
Bank’s Internal Control Over Financial
Reporting is provided on pages 231
& 232. The Bank’s External Auditors
have audited the effectiveness of the
Bank’s Internal Control Over Financial
Reporting and have reported to
the Board that nothing has come to
their attention that causes them to
believe that the financial reporting is
inconsistent with their understanding
of the processes adopted by the
Board in the review of the design and
effectiveness of the internal control
system of the Bank. The External
Auditor’s Report on the Bank’s Internal
Control Over Financial Reporting is
provided on page 233.
ANNUAL CORPORATE
GOVERNANCE REPORT
As required by Section 3(8)(ii)(g) of
the Banking Act Direction No. 11 of
2007, on Corporate Governance for
Licensed Commercial Banks issued
by the Central Bank of Sri Lanka, the
Annual Corporate Governance Report
for 2016 is provided on pages 179
to 197. The External Auditors of the
Bank have performed procedures
set out in Sri Lanka Related Services
Practice Statement 4750 issued by
the Institute of Chartered Accountants
of Sri Lanka (SLRSPS 4750), to meet
the compliance requirement of the
said Corporate Governance directive.
Their findings presented in their report
dated 13th February 2017 addressed
to the Board are consistent with the
matters disclosed above and any
inconsistencies to those reported by
the Board on pages 179 to 197 have
not been identified.
INTERNAL AUDIT
The Board Audit Committee monitored
and reviewed the scope, extent and
effectiveness of the activity of the
Bank’s Internal Audit Department.
This included reviewing of updates
on audit activities and achievements
against the Bank’s audit plan, advising
Corporate Management to take
precautionary measures on significant
audit findings and assessment of
resource requirements of the Internal
200 SAMPATH BANK PLC
ANNUAL REPORT 2016
Audit Department. The Committee had
necessary interactions with the Head of
Internal Audit throughout 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.
The Internal Audit Department
comprises four broad areas namely:
1. System Audits
2. Branch, Regional office Audits
3. Departments including Trade
Finance and Treasury Audits and
4. Forensic and Fraud
Investigations.
In 2016, the Committee reviewed
internal audit reports of 115 Branches,
44 Departments and 04 Subsidiaries.
Audit findings presented in the reports
are prioritised based on the level of
risk. The Committee followed up on
Internal Audit recommendations with
the Corporate Management. Internal
Audit reports are made available to
External Auditors as well.
The Internal Audit Department has
maintained an average audit cycle
of approximately one audit every 12
months.
Trade Finance and Treasury Audits
are assigned with equal importance
and emphasis considering their
complexities and importance in
the context of current economic
environment.
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 Auditor
and the effectiveness of the audit
process.
2. Met with the External Auditor to
discuss their audit approach and
procedure, including matters
relating to the scope of the audit
and Auditors’ independence.
3. Reviewed the audited Financial
Statements with the External
Auditor who is responsible for
expressing an opinion on its
conformity with the Sri Lanka
Accounting Standards.
4. Reviewed the Management
Letters issued by the
External Auditor together with
management responses thereto.
5. Met the External Auditors on
2 occasions during the year
without the Executive Directors
and the Corporate Management
being present 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
had a negative impact on the
effectiveness of the external
audit. It was concluded that there
was no cause for concern.
6. Reviewed the Non-Audit Services
provided by the External Auditor
and was of the view that such
services were not within the
category of services identified as
prohibited under:
The guidelines issued by the
Central Bank of Sri Lanka for
External Auditor relating to
their statutory duties in terms of
Section 39 of the Banking Act
No. 30 of 1988 and amendments
thereto.
The Guideline for Listed
Companies on Audit and
Audit Committees issued by
the Securities and Exchange
Commission of Sri Lanka.
7. Reviewed the Letter of
Representation issued to the
External Auditors by the Board.
8. Reviewed the Letter of
Independence Confirmation
issued by the External Auditor as
required by the Companies Act
No. 7 of 2007, confirming that
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 Conduct
and Ethics of the Institute of
Chartered Accountants of Sri
Lanka.
The Committee has recommended
to the Board that Messrs Ernst and
Young, Chartered Accountants, be
reappointed for the financial year
ending 31st December 2017, subject to
the approval of shareholders at the next
Annual General Meeting.
WHISTLE BLOWING
The Bank’s Whistle Blowing Policy
continued to be implemented as a
component of the corporate fraud risk
management framework. The Policy
allows any team member 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
the Company Secretary. Concerns
raised are investigated and the identity
of the person raising the concern is
kept confidential, as even anonymous
complaints are investigated. This
procedure is monitored by the Board
Audit Committee.
BOARD AUDIT COMMITTEE REPORT
RISK & GOVERNANCE
201REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters within its purview and from time
to time during the year consultations
were held with various parties.
BOARD AUDIT COMMITTEE
EVALUATION
The annual evaluation of the Committee
was conducted by the Board Audit
Committee during the year and
concluded that its performance was
effective.
APPRECIATION
The Committee wishes to thank
Mr Sanjiva Senanayake who served
the Committee for his valuable
contributions over the years.
On behalf of the Board Audit Committee
RANIL PATHIRANA
Chairman - Board Audit Committee
Colombo, Sri Lanka
13th February 2017
202 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD HUMAN RESOURCES AND REMUNERATION COMMITTEE REPORT
The Board Salary Revision Committee
was formed on 18th May 1988 and was
re-titled as Board Human Resources
and Remuneration Committee (the
Committee) on 12th December 2002.
Mr Deepal Sooriyaarachchi chairs
the Committee as at this date. This
Committee comprises 6 Non Executive
Directors. The Committee’s composition
during the period ended 31st
December 2016 is:
Mr Deepal Sooriyaarachchi
(Chairman) (IND/NED)
Mr Channa Palansuriya
(NID/NED) - serves on the
Committee from 9th May 2016
Mrs Dhara Wijayatilake
(IND/NED) - serves on the
Committee from 9th May 2016
Miss Annika Senanayake
(IND/NED)
Mr Deshal De Mel
(NID/NED)
Mrs Saumya Amarasekera
(NID/NED) - serves on the
Committee from 9th May 2016
Mr Aravinda Perera
(ED) - served on the Committee
until 9th May 2016
(NID - Non Independent Director, IND -
Independent Director, NED - Non Executive
Director and ED - Executive Director)
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary of the
Bank functions as the Secretary to the
Committee.
MEETINGS
During the financial year ended 31st
December 2016, 10 meetings were
held. The attendance of the members
of these meetings is given on page 157
of the Annual Report. The Managing
Director (MD), the Group Finance
Director and the Group Chief Human
Resource Officer as well as other
executive staff attend meetings by
invitation on a need basis and assist 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.
TERMS OF REFERENCE
The role and functions of the
Committee are regulated by the
Banking Act Direction No. 11 of 2007,
the mandatory Code of Corporate
Governance for Licensed Commercial
Banks issued by the Central Bank
of Sri Lanka, under Section 46(1) of
the Banking Act No. 30 of 1988 as
amended.
ROLE AND
RESPONSIBILITIES
The overall scope of the Committee is
to provide strategic direction to build an
effective and efficient Human Resource
background for the Bank. Based on
the said Direction No. 11 of 2007, the
Committee at its meeting held on 9th
August 2011 adopted the following
scope and responsibilities:
SCOPE
1. The Committee shall determine
the remuneration policies
(salaries, allowances and other
financial payments) relating
to Directors, Chief Executive
Officer (CEO) / MD and Key
Management Personnel of the
Bank.
2. The Committee shall set goals
and targets for CEO / MD and
Key Management Personnel.
3. The Committee shall evaluate
the performance of the CEO and
Key Management Personnel
against set targets and goals
periodically and determine the
basis for revising remuneration,
benefits and other payments of
performance based incentives.
4. The Committee reviews
recommendations by the
Management with regard to
remuneration and other benefits
afforded to the staff and present
same for approval of the Board
as well as providing guidance
to the Management on required
changes to salaries and other
benefits, having considered the
strategic priorities and direction
of the Bank.
5. The Committee shall take on any
other areas and enlarge its scope
in cases where, in its view or in
the Board’s view it is appropriate
if it were to be handled by the
Committee.
RISK & GOVERNANCE
203PERFORMANCE
ORGANIZATION STRUCTURE
Brought in a dynamic process to ensure
the organization structure and identified
a talent pool which is aligned to the
strategies envisaged by the Bank.
CAREER AND SUCCESSION
PLANNING
Continued the Executive Talent
Development Program to ensure at
least 1:1 back up ratio for the key
managerial positions of the Bank.
ENHANCED COMPETENCY
DEVELOPMENT
A vast array of initiatives were taken to
enhance overall capabilities (technical
and non-technical) of team Sampath
in order to drive business objectives
successfully. Focus was on the
“Develop Within” Concept.
REWARDS FOR INNOVATION AND
PERFORMANCE
Introduced a comprehensive reward
mechanism (Sampath Special
Thanks and Recognition Scheme) to
motivate and drive team Sampath to
achieve higher levels of performance,
progressing beyond set targets and
to recognize team members who
undertake special projects on cost
reduction/income generation.
PERFORMANCE MANAGEMENT
SYSTEM
Steps were taken to determine
leadership competencies of the Senior
and Corporate Management of the
Bank by introducing a 360 degree
feedback evaluation system. The
Bank launched a unique Team Based
Performance Based Reward scheme
for the team, having successfully
introduced such a scheme for the
Corporate Management.
SPECIAL RECOGNITIONS/
ACHIEVEMENTS
1 Award for Talent Management
at Chief Marketing Officer Asia
Awards 2016
2. National HR Excellence Gold
Award 2016
3. Best Employer Brand Award Sri
Lanka at South Asian Partnership
Summit & Business Excellence
Awards 2016
REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters within its purview.
APPRECIATION
The Committee wishes to thank
Mr Aravinda Perera who served
on the Committee for his valuable
contributions over the years.
On behalf of the Board Human
Resources and Remuneration
Committee
DEEPAL SOORIYAARACHCHI
Chairman – Board Human Resources
and Remuneration Committee
Colombo, Sri Lanka
13th February 2017
204 SAMPATH BANK PLC
ANNUAL REPORT 2016
The Board Nomination Committee
(the Committee) was formed on 10th
January 2002 which comprises 5 Non-
Executive Directors. The composition
of the Committee as at 31st December
2016 is:
Miss Annika Senanayake
(Chairperson) (IND/NED)
Mr Dhammika Perera
(NID/NED) - served on the
Committee until 31st July 2016
Mr Channa Palansuriya
(NID/NED) - serves on the
Committee from 25th August
2016
Mr Sanjiva Senanayake
(IND/NED) - serves on the
Committee from 9th May 2016
Mrs Dhara Wijayatilake
(IND/NED)
Mrs Saumya Amarasekera
(NID/NED)
(NID - Non Independent Director, IND
- Independent Director and NED - Non
Executive Director)
The Managing Director (MD) attends
meetings by invitation.
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary of the
Bank functions as the Secretary to the
Committee.
MEETINGS
During 2016 the Committee held
11 meetings. Attendance by the
Committee members at each of these
meetings is given in the table on page
157 of the Annual Report.
BOARD NOMINATION COMMITTEE REPORT
TERMS OF REFERENCE
The role and functions of the Committee
are regulated by the Banking Act
Direction No. 11 of 2007, the mandatory
Code of Corporate Governance for
Licensed Commercial Banks issued by
the Central Bank of Sri Lanka (CBSL).
ROLE AND
RESPONSIBILITIES
1. Continuously reviews the
structure and composition of
the Board. The Committee also
reviews the skills, knowledge,
expertise and experience of the
Board of Directors (the Board)
required in comparison to the
current banking environment.
The Committee also makes
recommendations to the Board
with regard to any changes it
considers appropriate for the
progress and success of the
Bank.
2. Recommends suitable persons
after careful consideration based
on the competencies required for
a particular job and the Bank’s
business need.
3. Considers and recommends the
requirements of additional/new
expertise of existing Directors
and recommends succession
planning for Directors resigning
or relinquishing their positions.
4. Carefully reviews management
progression and succession
planning for the Key
Management Personnel.
The Committee ensures that
management personnel of high
calibre are appointed to guide
the Bank to achieve greater
heights.
5. The Committee sets criteria
including qualifications,
experience and key attributes
required for eligibility to be
considered for appointment or
promotion to the post of MD
and other Key Management
Personnel (“KMPs”).
6. The Committee is also
responsible for selecting
Directors, MD and KMPs as and
when a vacancy occurs. It is
mandatory for the Committee to
evaluate the balance of skills,
knowledge and experience
on the Board before such
appointment. The Committee
is accountable for making a
description of the role / position
that is vacated; it should clearly
analyse the capabilities and
skills required for a particular
appointment.
7. The Committee is accountable
for making recommendations
after review to re-appoint
Non-Executive Directors annually
as recommended by CBSL
guidelines and when they are
due for re-appointment as per
the Articles of Association of the
Bank.
8. The Committee is responsible for
ensuring that Directors, MD and
KMPs are fit and proper persons
to hold office in compliance
with the regulatory and statutory
provisions.
9. The Committee is responsible
for ensuring that it is chaired by
an Independent Director and
be constituted with a majority of
Independent Directors.
10. To make recommendations on
any other matter delegated by
the Board of Directors.
RISK & GOVERNANCE
205PERFORMANCE
The members of the Committee work
closely with the Board, 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 to
ensure that it is operating effectively,
and if required recommends necessary
changes.
During the year under review, the
Committee has continued focusing
on a progressive organisational plan
in keeping with the forward and
evolutionary momentum of the Sri
Lankan Banking industry.
REPORTING TO THE BOARD
The Minutes of the Board Nomination
Committee meetings are tabled at
Board meetings enabling all Board
members to have access to them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview.
APPRECIATION
The Committee wishes to thank
Mr Dhammika Perera who served
on the Committee for his valuable
contributions over the years.
On behalf of the Board Nomination
Committee
ANNIKA SENANAYAKE
Chairperson - Board Nomination
Committee
Colombo, Sri Lanka
13th February 2017
206 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD INTEGRATED RISK MANAGEMENT COMMITTEE REPORT
The Board Integrated Risk Management
Committee (the Committee) was
established on 27th March 2008
as a sub-committee of the Board of
Directors (the Board) in compliance
with the Banking Act Direction No. 11
of 2007 on Corporate Governance for
Licensed Commercial Banks in Sri
Lanka. A review of the Integrated Risk
Management process of the Bank has
been detailed in pages 136 to 150 of
the Annual Report.
MEMBERS:
The Committee comprises 5
Non-Executive Directors, 2 Executive
Directors and 2 members from the
Management as given below.
BOARD REPRESENTATIVES:
Mr Sanjiva Senanayake
(IND/NED) (Chairman - w.e.f. 9th
May 2016)
Prof Malik Ranasinghe
(IND/NED) (Served on the
committee until 9th May 2016)
Mr Deepal Sooriyaarachchi
(IND/NED) - serves on the
Committee from 9th May 2016
Mrs Dhara Wijayatilake
(IND/NED) - served on the
Committee until 9th May 2016 as
the Chairperson
Miss Annika Senanayake
(IND/NED) - serves on the
Committee from 9th May 2016
Mr Ranil Pathirana
(IND/NED) - serves on the
Committee from 9th May 2016
Mrs Saumya Amarasekera
(NID/NED) - serves on the
Committee from 9th May 2016
Mr Aravinda Perera
(ED) - served on the Committee
until 12th September 2016
Mr Nanda Fernando
(ED) - serves on the Committee
from 30th September 2016
Mr Ranjith Samaranayake
(ED)
MANAGEMENT REPRESENTATIVES:
Mr Priam Kasturiratna
(Group Risk Officer)
Mr Lasantha Senaratne
(Group Compliance Officer)
(NID - Non Independent Director, IND - Independent Director ,NED - Non Executive
Director and ED - Executive Director)
Key Management Personnel supervising
Credit, Market, Liquidity, Operational,
Strategic and Reputational Risks also
attended meetings of the Committee, by
invitation.
Brief profiles of the Directors
representing the Committee are given
on pages 16 to 21 of the Annual Report.
The Company Secretary functions as
the Secretary to the Committee.
MEETINGS
The Committee held 10 meetings
during the year 2016. The attendance
of the Committee members at each of
these meetings is given in the table on
page 157 of the Annual Report.
TERMS OF REFERENCE
The responsibilities of the Committee as
mandated by the Board include:
1. To assess all risks including
credit, market, liquidity,
operational and strategic
risks to the Bank on a monthly
basis through appropriate risk
indicators and management
information and in the instance of
subsidiary/associate companies,
on Bank and Group basis.
2. To review the adequacy and
effectiveness of all management
level committees such as Credit
Policy, Risk and Portfolio Review
Committee, ALCO etc. to
address specific risks and
manage those risks within
quantitative and qualitative
risk limits specified by the
Committee.
3. To take or recommend prompt
corrective action to mitigate the
effects of specific risks and when
such risks are at levels beyond
the prudent levels decided by
the Committee on the basis of
the Bank’s policies, at such levels
in compliance with regulatory,
supervisory and corporate
governance requirements.
4. To assess all aspects of Risk
Management and Compliance in
the Bank including the updated
Business Continuity Plan.
5. To review and recommend
to the Board, to update Risk
Management policies of the
Bank pertaining to Credit,
Market, Liquidity Operational,
Reputational and Compliance
Risks, Business Continuity Plan
and Disaster Recovery plan.
6. To ensure effective design
and implementation of a Risk
Management Framework with
respect to Integrated Risk
Management, Risk Appetite,
Internal Capital Adequacy
Assessment Process (ICAAP)
and Stress Testing.
7. To review migration to the
advanced approaches under
Basel II and Basel III, Risk Return
profile of the Bank, outsourcing
activities, compliance with CBSL
guidelines pertaining to Credit,
Market and Operational Risk
Management Systems.
8. To review the level and direction
of major Risks pertaining
to Credit, Market, Liquidity,
Operational, Compliance and
Capital at Risk as part of Risk
profile templates.
G4 - 46
RISK & GOVERNANCE
207 9. To cultivate a proactive risk
management culture within the
Bank
10. Ensure compliance with all
relevant laws and regulations.
GOVERNANCE
The governance structure for the
management of Risk at the Bank is set
out on page 137.
ROLE AND RESPONSIBILITIES
The Committee receives periodic
reports on the Bank’s performance
against Key Risk Indicators from
the Risk and Compliance Units. The
reports and the relevant background
information have been reviewed in
depth and necessary Risk Mitigation
measures have been initiated where
necessary, in order to maintain the
Bank’s exposure to Risk within its Risk
Appetite and to facilitate compliance
with regulatory requirements, while
facilitating the achievement of sound
business results.
The Committee is supported by the
Integrated Risk Management Unit and
Compliance Unit of the Bank, headed
by the Group Risk Officer and the
Group Compliance Officer respectively,
in discharging its responsibilities.
RESPONSIBILITIES OF INTEGRATED
RISK MANAGEMENT UNIT:
1. Formulate the policy framework
addressing multiple and
interdependent risks and
recommend such policies to the
Committee.
2. Measure and monitor risks
faced by the Bank/Group as an
ongoing activity.
3. Ensure that Risk Management
within the Bank is adequate and
duly report any areas requiring
attention of the Management and
the Committee / Board along with
recommendations.
4. Ensure benchmarking with
international best practices.
RESPONSIBILITIES OF THE
COMPLIANCE UNIT:
1. Formulate compliance
related policy framework
and recommend same to the
Committee.
2. Ensure compliance with
regulatory and supervisory
requirements.
3. Ensure benchmarking with
international best practices.
RISK APPETITE
The Risk Appetite of the Bank in all
key risk areas, namely, Credit Risk,
Market Risk and Operational Risk have
been defined and approved by the
Board on the recommendation of the
Committee. Regular reports have been
provided to the Committee on the actual
performance of identified risk areas.
PERFORMANCE
The Committee undertook the
following activities in discharging its
responsibilities during the year.
1. RISK APPETITE:
Risk Appetite limits and Key Risk
Indicators for all key risk areas were set
and periodically monitored.
2. RISK MANAGEMENT
POLICIES:
Policies related to Risk Management
and Compliance areas were reviewed
during the year and amended
as appropriate and have been
incorporated.
3. STRESS TESTING:
The overall Stress Testing Framework
was reviewed during the year and the
results of the tests were monitored.
Necessary recommendations
to improve the Bank’s Stress
tolerance levels were discussed and
implemented as required.
4. PROGRESS ON BASEL II/
BASEL III COMPLIANCE:
Progress on the implementation of key
components of Basel II/Basel III against
targets set was reviewed and monitored
to ensure that the Bank is able to meet
the timelines set by the Central Bank of
Sri Lanka (CBSL).
5. IT SYSTEMS SUPPORT:
Recommendations were made to
enhance efficiency of monitoring and to
reduce/avoid risks through the use of IT
Systems of Credit and Operational Risk
Management in the Bank.
6. INTERNAL CAPITAL
ADEQUACY ASSESSMENT
PROCESS (ICAAP):
ICAAP document for both the Bank and
the Group was developed for 2015 year
end position, and was reviewed and
approved by the Committee and the
Board. This document was forwarded
to the Regulator in 2016 well before the
regulatory timeline.
7. COMPLIANCE:
The Committee received compliance
reports from the Group Compliance
Officer and reviewed same to assess
the extent of compliance with the
regulatory requirements.
8. INTERNAL CONTROLS:
Internal loss event reports and
the adequacy of internal control
and procedures (except Internal
Controls Over Financial Reporting
which is handled by Board
Audit Committee) were reviewed
regularly and recommendations for
improvements were made. Progress on
implementation of recommendations
was also monitored.
9. CUSTOMER COMPLAINTS:
The implementation of the Customer
Complaints Policy was monitored.
208 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD INTEGRATED RISK MANAGEMENT COMMITTEE REPORT
10. OUTSOURCED ACTIVITIES:
The implementation of the Outsourcing
Policy was monitored to ensure
compliance with CBSL directives and
guidelines.
REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview.
APPRECIATION
The Committee wishes to thank
Mrs Dhara Wijayatilake, Prof Malik
Ranasinghe and Mr Aravinda Perera
for their valuable contributions over the
years.
On behalf of the Board Integrated Risk
Management Committee
SANJIVA SENANAYAKE
Chairman - Board Integrated Risk
Management Committee
Colombo, Sri Lanka
13th February 2017
RISK & GOVERNANCE
209
The Board Related Party Transactions
Review Committee (the Committee)
was formed on 30th July 2015 in
terms of the Code of Best Practice on
Related Party Transactions issued by
the Securities & Exchange Commission
of Sri Lanka (the “Code”) and Section
9 of the Listing Rules of the Colombo
Stock Exchange (the “Rules”). The
Committee comprises 4 Non Executive
Directors and 1 Executive Director. The
Committee’s composition as at 31st
December 2016 is:
Mrs Dhara Wijayatilake
(Chairperson) (IND/NED)
Mr Channa Palansuriya
(NID/NED) (Served on the
Committee from 9th May 2016 to
7th July 2016)
Prof Malik Ranasinghe
(IND/NED)
Mr Sanjiva Senanayake
(IND/NED)
Mr Deepal Sooriyaarachchi
(IND/NED) - serves on the
Committee from 9th May 2016
Mr Ranjith Samaranayake
(ED)
(IND - Independent Director, NID - Non
Independent Director, NED - Non Executive
Director and ED - Executive Director)
The above composition is in
compliance with the provisions of the
Code and the Rules regarding the
composition of the Committee. Brief
profiles of the members are given on
pages 16 to 21 of the Annual Report.
The Company Secretary functions as
the Secretary to the Committee.
MEETINGS
During 2016 the Committee held
4 meetings. Attendance by the
Committee members at each of these
meetings is given in the table on page
157 of the Annual Report.
TERMS OF REFERENCE
The role and functions of the Committee
are regulated by the Code and the
Rules.
ROLE AND
RESPONSIBILITIES
The mandate of the Committee is
derived from the Code and the Rules
and includes mainly the following:
1. Developing and maintaining a
Related Party Transactions Policy
consistent with the provisions
of the Code and the Rules
for adoption by the Board of
Directors of the Bank (the Board)
and its listed subsidiaries.
2. Reviewing all proposed Related
Party Transactions (“RPTs”) in
compliance with the provisions of
the Code and the Rules.
3. Advising the Board on making
immediate Market Disclosures
and Disclosures in the Annual
Report where necessary, in
respect of RPTs, in compliance
with the provisions of the Code
and the Rules, Procedures and
Directives/ Guidelines Adopted
by the Committee for reviewing
RPTs.
4. Ensuring that Procedures /
Directives/Guidelines are issued
to compel all RPTs to be referred
to the Committee for review.
REVIEW FUNCTION OF THE
COMMITTEE
Review of the relevant RPTs by the
Committee takes place quarterly.
The Committee has communicated
its observations to the Board RPTs
published in the Note 49 to the
Financial Statements.
REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
same.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice
on matters under its purview. The
Committee consulted and sought
advice with regard to the identification
of RPTs and Reporting Requirements
from Head of Listings and Corporate
Affairs of the Colombo Stock Exchange
and Bank’s External Auditors, Messrs
Ernst & Young.
On behalf of the Board Related Party
Transactions Review Committee
DHARA WIJAYATILAKE
Chairperson – Board Related Party
Transactions Review Committee
Colombo, Sri Lanka
13th February 2017
BOARD RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT
210 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD CREDIT COMMITTEE REPORT
In pursuance of a Board decision,
the Credit Committee was formed
on 9th December 1987 which was
subsequently re-titled as the Board
Credit Committee (the Committee)
on 22nd October 2008. Prof Malik
Ranasinghe who was appointed as the
Chairman of the Committee on 30th
January 2012 continues as Chairman
thereof. The Committee comprises
4 Non Executive Directors and 2
Executive Directors. The Committee’s
composition during the period ended
31st December 2016 is as follows:
Prof Malik Ranasinghe
(Chairman) (IND/NED)
Mr Channa Palansuriya
(NID/NED) (Serves on the
Committee from 9th May 2016)
Mr Sanjiva Senanayake
(IND/NED) - served on the
Committee until 31st March 2016
Mrs Dhara Wijayatilake
(IND/NED) - serves on the
Committee from 9th May 2016
Miss Annika Senanayake
(IND/NED) - served on the
Committee until 9th May 2016
Mr Deshal De Mel
(NID/NED)
Mr Aravinda Perera
(ED) - served on the Committee
until 12th September 2016
Mr Nanda Fernando
(ED) - Serves on the Committee
from 30th September 2016
Mr Ranjith Samaranayake
(ED)
(NID-Non Independent Director, IND-
Independent Director, NED-Non Executive
Director and ED-Executive Director)
Mr Aravinda Perera has been
appointed as a consultant to the
Committee w.e.f. 13th September 2016.
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary of the
Bank functions as the Secretary to the
Committee
MEETINGS
During the year, the Committee met on
17 occasions. The attendance of the
Committee members is stated in the
Corporate Governance Report on page
157 of the Annual Report. Members of
the Senior and Corporate Management
of the Bank are invited to participate at
the meetings as and when required.
TERMS OF REFERENCE
The Credit Policy of the Bank sets
out the Terms of Reference of the
Committee. The Board periodically
reviews the Credit Policy. The
Committee is responsible to the Board
of Directors (the Board) and reports on
its activities regularly. The Committee
also assists the Board in its general
oversight of recommending Credit
Policy of the Bank and any changes to
the Policy, reviewing Single Borrower
and Delegated Authority Limits of the
Bank.
ROLE AND
RESPONSIBILITIES
The main function of the Committee
is to oversee the credit and lending
strategies and objectives of the Bank.
This includes:
1. Overseeing the credit
management of the Bank,
including review of internal credit
policies and establishing portfolio
limits.
2. Reviewing the quality and
performance of the Bank’s credit
portfolio.
In addition, the Committee is
responsible for any other matters
delegated to it by the Board. Hence, it
is the responsibility of the Committee to:
1. Operate a sound credit granting
process
Review and approve or
recommend for Board approval,
as the case may be, credit
proposals in accordance with
Board approved policies and
standards.
Review of credit policy changes
initiated by the management of
the Bank and recommend them
with or without modifications to
the Board for approval.
Ensure compliance of the Bank’s
credit policy with the statutory
requirements prescribed by
the regulatory/supervisory
authorities.
Request rapid portfolio reviews
or sector/industry reviews, where
deemed appropriate.
2. Maintain adequate controls over
credit risk
Monitor capital allocation and
define limits in line with the
approved risk appetite limits.
Ensure that credit risk exposure
is kept within acceptable limits
to maximize the Bank’s risk
adjusted rate of return.
Ensure that stress tests are
conducted, where deemed
appropriate.
3. Maintain appropriate credit
administration, measuring and
monitoring process.
Review credit approval
framework and assign credit
delegated limits and Single
Borrower Limits in line with the
Bank’s policy.
RISK & GOVERNANCE
211 Review and recommend to the
Board, facilities that it believes
should have Board approval.
4. Identification and administration
of problem credits
Monitor on an ongoing basis,
the Bank’s credit quality,
review periodic credit portfolio
reports and assess portfolio
performance.
Ensure that post-credit
monitoring and postmortem
reviews are performed, where
deemed appropriate.
5. Understanding the cyclical
aspects of the economy (both
internal and external)
Monitor the resulting shifts in the
composition and quality of the
loan portfolio.
6. Proper evaluation of new
business opportunities
Ensure all new credit risk
related products are reviewed
from a credit risk management
perspective.
REPORTING TO THE BOARD
The minutes of the meetings of the
Committee are tabled at Board
Meetings enabling all Board members
to have access to same.
REVIEW OF THE COMMITTEE
Members 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 effectively.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters within its purview.
APPRECIATION
The Committee wishes to thank
Mr Sanjiva Senanayake, Miss Annika
Senanayake and Mr Aravinda Perera
who served on the Committee during
the year for their valuable contributions
over the years.
On behalf of the Board Credit
Committee
PROF MALIK RANASINGHE
Chairman – Board Credit Committee
Colombo, Sri Lanka
13th February 2017
212 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD STRATEGIC PLANNING COMMITTEE REPORT
Pursuant to a decision at the Board
meeting held on 30th January 1997, the
Board Strategic Planning Committee
(the Committee) was formed. The
Committee comprises 6 Non-Executive
Directors and 2 Executive Directors.
The composition of the Committee as at
31st December 2016 is:
Mr Channa Palansuriya
(Chairman) (NID/NED) - serves
on the Committee from 9th
May 2016; Chairman since 8th
September 2016
Mr Dhammika Perera
(NID/NED) - served on the
Committee until 31st July 2016
Prof Malik Ranasinghe
(IND/NED)
Mr Sanjiva Senanayake
(IND/NED) - served on the
Committee until 31st March 2016
Mrs Dhara Wijayatilake
(IND/NED)
Miss Annika Senanayake
(IND/NED)
Mr Deshal De Mel
(NID/NED)
Mr Ranil Pathirana
(IND/NED)
Mr Aravinda Perera
(ED) - served on the Committee
until 12th September 2016
Mr Nanda Fernando
(ED) - serves on the Committee
from 30th September 2016
Mr Ranjith Samaranayake
(ED)
(NID - Non Independent Director, IND -
Independent Director, NED - Non Executive
Director and ED - Executive Director)
Mr Aravinda Perera was appointed as a
Consultant to the Committee w.e.f. 13th
September 2016.
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary of the
Bank functions as the Secretary to the
Committee.
MEETINGS
During the year the Committee met on
four occasions and the attendance of
the Committee members is stated in the
Corporate Governance Report on page
157 of the Annual Report.
TERMS OF REFERENCE
The Committee is responsible to the
Board of Directors and reports on its
activities regularly. The Committee
also assists the Board in its general
oversight of setting Strategic Direction,
Budgeting and Monitoring.
ROLE AND
RESPONSIBILITIES
1. Evaluate both local and
international developments,
trends, opportunities and threats,
impacting the macro economic
conditions and the banking
industry in general and examine
periodically, the current strategic
direction and market positioning
with the vision and mission of the
Bank.
2. In the light of the above, formulate
future strategy of the Bank and
the Group for the long, medium
and short term and advise the
Board accordingly, facilitating the
Board to finalize same.
3. Guide the Corporate Management
on the preparation of the Strategic
Plan and the Annual Budget of the
Bank, within the agreed strategic
framework.
4. Monitor and assess periodically
the implementation of these
strategic initiatives of the
Strategic Plan and evaluate
their effectiveness in the light of
achievements.
5. Monitor and assess achievement
of the financial goals & targets of
the Annual Budget.
6. Review adequacy and
composition of the Bank’s capital
structure in the context of the
growth targets and developments
in the regulatory framework and
where necessary, recommend
capital augmentation plans for
approval of the Board.
7. Review and evaluate the
strategic investment decisions
and overseas expansion projects
of the Bank and advise the Board
accordingly.
PERFORMANCE
The Committee engaged in discussions
with the Corporate Management and
Strategic Planning Team to determine
the strategic direction of the Bank
for the period 2017 to 2019 and this
formed the basis for the development
of the Strategic Plan for this period. The
Committee reviewed the performance
of the Bank during the year against
the three year rolling plan and annual
budget for 2017 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 2017 which was developed
in line with the strategy document.
RISK & GOVERNANCE
213REPORTING TO THE BOARD
Minutes of the Committee meetings are
circulated to the Committee members
by the Secretary and the confirmed
Minutes are reported to the Board of
Directors regularly for concurrence.
The confirmed Minutes are available
for review by any regulatory authority
having jurisdiction over the affairs of the
Bank.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview. This year
too, the Committee engaged Frontier
Research for an analytical discussion
on the current economic trends in the
country.
APPRECIATION
The Committee wishes to thank
Mr Dhammika Perera, Mr Sanjiva
Senanayake and Mr Aravinda Perera
for their valuable contribution over the
years.
On behalf of the Board Strategic
Planning Committee
CHANNA PALANSURIYA
Chairman – Board Strategic Planning
Committee
Colombo, Sri Lanka
13th February 2017
214 SAMPATH BANK PLC
ANNUAL REPORT 2016
BOARD SHAREHOLDER RELATIONS COMMITTEE REPORT
The Bank, being the first listed
Company in Sri Lanka to setup a Board
Shareholder Relations Committee
(the Committee) to acknowledge and
address shareholders’ concerns and
suggestions, formed the Committee
on 28th August 2008. The Committee
comprises 3 Non Executive Directors
and 1 Executive Director. The
Committee’s composition as at 31st
December 2016 is:
Prof Malik Ranasinghe
(Chairman) (IND/NED)
Mr Deepal Sooriyaarachchi
(IND/NED) - serves on the
Committee from 9th May 2016
Mr Deshal De Mel
(NID/NED)
Mr Aravinda Perera
(ED) - served on the Committee
from 09th May 2016 until 12th
September 2016
Mr Nanda Fernando
(ED) - serves on the Committee
from 30th September 2016
(NID - Non Independent Director, IND -
Independent Director, NED - Non Executive
Director and ED - Executive Director)
Brief profiles of the members are given
on pages 16 to 21 of the Annual Report.
The Company Secretary functions as
the Secretary to the Committee.
MEETINGS
The Committee met on two occasions.
Meetings are held when deemed
appropriate. The attendance of the
Committee members is stated in the
Corporate Governance Report on page
157 of the Annual Report.
TERMS OF REFERENCE
Providing suggestions to the Board
to improve Shareholders / Investor
relations of the Bank. Organising
forums that encourage dialogue
between the Board of Directors and
Shareholders / Investors. Providing
guidance to the Board on matters of
investor relations. Perform such other
functions as expressly delegated to it
from time to time by the Board relating
to shareholder relations matters.
ROLE AND
RESPONSIBILITIES
The Committee being an advisory and
consultative Committee, considers
proposals of shareholders on
improvement of the Bank’s corporate
governance as well as requirements
and needs of shareholders
whenever necessary. It provides
recommendations to the Board
on enforcement and protection of
rights and legitimate interests of the
Bank’s shareholders. The Committee
contributes to clarify the Bank’s
policy and development strategy on
shareholder relations matters.
The Committee ensures that the
Bank’s latest information and financial
results are swiftly communicated to
the shareholders through Interim and
Annual Reports, notifications to the
Colombo Stock Exchange and timely
press releases. In addition to these
avenues of information, shareholders
have easy access through the Bank’s
corporate website, www.sampath.lk
to all relevant information, which also
gives the shareholders access to the
Bank for any query. Shareholders have
the liberty to raise any questions to
the Board, either at the Shareholder
Relations Forums or through written
communication. These forums also
encourage the shareholders to openly
voice concerns and make suggestions
and requests.
The Committee supports shareholders
to enhance their investment
attractiveness. The Committee’s
activities aim at protecting the Bank’s
shareholders’ rights and interests.
Two-way dialogue between the
shareholders and the Board has taken
place this year too. The Company
Secretary has kept the Board informed
of shareholder outlook through regular
reports.
PERFORMANCE
The Committee meets as and when
necessary and reports on its activities
to the Board. The Shareholders’ Forum
was held soon after the Annual General
Meeting on 31st March 2016.
The following concessions are
available on banking transactions to
shareholders:
1. All commissions to be on actual
cost basis, waiving off all internal
commission and charges.
However, in the case of foreign
bank charges and other local
bank charges, the actual cost
will be collected. This excludes
cheque return commissions and
postage charges.
2. 50% on the annual fee charged
for VISA credit cards will be
waived off.
3. On opening of current accounts,
the initial deposit will be 50%
of the usual initial deposit
requirement.
4. SET cards are issued free of
charge. However, this does not
include the per transaction fee.
RISK & GOVERNANCE
215REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview.
APPRECIATION
The Committee wishes to thank
Mr Aravinda Perera who served on the
Committee during the year for their
valuable contributions over the years.
On behalf of the Shareholder Relations
Committee
PROF MALIK RANASINGHE
Chairman - Board Shareholder
Relations Committee
Colombo, Sri Lanka
13th February 2017
216 SAMPATH BANK PLC
ANNUAL REPORT 2016
with most banks. In addition, the
decline of the Sri Lankan Rupee and
illiquidity in the Foreign Exchange
market during the latter part of the
year posed challenges in meeting the
requirements of customers and the
Bank. Volatile market conditions, further
exacerbated by increasing economic
and policy uncertainties arising local
political events as well as external
developments were experienced during
the year. Much headway was made
in refining a comprehensive model
for analysis of the Bank’s revenue by
products and customers, which will be
used to guide future asset growth.
REPORTING TO THE BOARD
Minutes of the Committee are regularly
reported to the Board and approval
sought for policies recommended and
for other relevant matters.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview.
APPRECIATION
The Committee wishes to thank
Mr Aravinda Perera, who served on
the Committee until his retirement
in September, for his valuable
contributions over the years.
On behalf of the Board Treasury
Committee
SANJIVA SENANAYAKE
Chairman – Board Treasury Committee
Colombo, Sri Lanka
13th February 2017
The Board Treasury Committee (the
Committee) which was formed on 31st
May 2012 comprises 4 Non Executive
Directors and 2 Executive Directors.
The Committee’s composition as at 31st
December 2016 is:
Mr Sanjiva Senanayake
(Chairman) (IND/NED)
Prof Malik Ranasinghe
(IND/NED)
Miss Annika Senanayake
(IND/NED) - serves on the
Committee from 7th July 2016
Mr Deshal De Mel
(NID/NED)
Mr Ranil Pathirana
(IND/NED) served on the
Committee from 9th May 2016
until 7th July 2016
Mr Aravinda Perera
(ED) - served on the Committee
until 12th September 2016
Mr Nanda Fernando
(ED) - serves on the Committee
from 30th September 2016
Mr Ranjith Samaranayake
(ED)
(NID - Non Independent Director, IND -
Independent Director, NED - Non Executive
Director and ED - Executive Director)
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary serves
as the Secretary to the Board Treasury
Committee.
MEETINGS
During the year, the Committee met on
six occasions. The attendance of the
Committee members is stated in the
Corporate Governance Report on page
157 of the Annual Report. Other officials
of the Bank too were invited to attend
as deemed necessary.
TERMS OF REFERENCE
The Board Treasury Committee will
review the Bank’s Treasury Policy
BOARD TREASURY COMMITTEE REPORT
and recommend amendments to
the Board of Directors. It will also
review management of all treasure
related matters, especially liquidity
management and asset liability
management.
ROLE AND RESPONSIBILITIES
The Committee is instituted to provide
guidance to the Bank’s Treasury
in carrying out its functions and to
monitor its performance with a view
of optimizing earnings, stability and
growth of the Bank.
The main responsibilities of the
Committee are:
1. Establish Treasury Management
policies on behalf of the Board.
2. Monitor Treasury Dealing
Room operations and review
whether they are carried out in
accordance with such policies.
3. Monitor the liquidity position of
the Bank and advise the 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 ratio, statutory reserve
ratio and statutory liquid assets
ratio.
6. Provide guidance to the Asset
and Liability Management
Committee (ALCO), consisting
of Corporate Management, to
optimize performance.
7. Review internal pricing of funds
to provide desired incentive
internally and better evaluate
performance of business units.
During 2016, efforts were focused
on responses the Treasury had to
implement to adjust to the lower Sri
Lankan Rupee Interest rate environment
and managing the excess liquidity
that the Bank experienced along
RISK & GOVERNANCE
217
BOARD MARKETING COMMITTEE REPORT
The Board Marketing Committee (the
Committee) was formed on 28th June
2012. The Committee comprises 5 Non
Executive Directors. The Committee’s
composition as at 31st December 2016
is:
Mr Deshal de Mel
(NID /NED) - Chairman
w.e.f 09th May 2016
Mr Channa Palansuriya
(NID/NED) - serves on the
Committee from 9th May 2016
Mr Deepal Sooriyaarachchi
(IND /NED) - Chairman
until 08th May 2016
Miss Annika Senanayake
(IND/NED)
Mrs Saumya Amarasekera
(NID/NED)
(NID - Non Independent Director, IND -
Independent Director, NED - Non Executive
Director)
The Managing Director (MD) attends
meetings on invitation.
Brief profiles of the members are
given on pages 16 to 21 of the Annual
Report. The Company Secretary of the
Bank functions as the Secretary to the
Committee.
MEETINGS
The Committee met on three occasions
during the year. Attendance by the
Committee members at each of these
meetings is given in the table on page
157 of the Annual Report.
TERMS OF REFERENCE
Review the customer strategy and
performance against set objectives.
Review Brand strategy and its
performance. Monitor customer service
and customer service strategies in
line with the customer charter. Provide
oversight to marketing expenditure.
Review market research pertaining
to the brand, customer, products and
competition.
ROLE AND
RESPONSIBILITIES
The Committee functions as a
facilitating and a guiding body to the
management in an effort to strongly
align the activities of the marketing
function towards the strategic focus
of the Bank, following best practices.
The Committee acts 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:
1. Establishment of a regular brand
equity tracking process.
2. Commencement of a
comprehensive brand identity
management process.
3. Establishing marketing
expenditure justification process.
REPORTING TO THE BOARD
The Minutes of the Committee meetings
are tabled at Board meetings enabling
all Board members to have access to
them.
PROFESSIONAL ADVICE
The Committee has the authority to
seek external professional advice on
matters under its purview.
APPRECIATION
The Committee wishes to thank
Mr Deepal Sooriyaarachchi who
chaired the Committee until 09th May
2016 for his guidance and contribution
over the years.
On behalf of the Board Marketing
Committee
DESHAL DE MEL
Chairman - Board Marketing Committee
Colombo, Sri Lanka
13th February 2017
[ FINANCIAL INFORMATION ]We are proud to see that yet again the Bank has exceeded all
expectations, delivering exceptional results for the year under
review.
Financial Calendar 220
Annual Report of the Board of Directors on
the Affairs of the Company 221
Directors’ Interest in Contracts with the Bank 230
Directors’ Statement on Internal Control Over Financial Reporting 231
Independent Assurance Report to the Board of Directors of
Sampath Bank PLC 233
Managing Director’s and Chief Financial Officer’s
Responsibility Statement 234
Statement of Directors’ Responsibility for Financial Reporting 235
Independent Auditors’ Report to the Shareholders of
Sampath Bank PLC 237
Statement of Profit or Loss 238
Statement of Comprehensive Income 239
Statement of Financial Position 240
Statement of Cash Flows 242
Statement of Changes in Equity 244
Notes to the Financial Statements 246
220 SAMPATH BANK PLC
ANNUAL REPORT 2016
FINANCIAL CALENDAR
Financial Calendar - 2016
2015 Annual Report and Audited Financial Statements signed on 16th February 2016
30th Annual General Meeting held on 31st March 2016
Rs 6.00 per share Cash Dividend for 2015 distributed on 31st March 2016
Rs 7.00 per share Scrip Dividend for 2015 distributed on 31st March 2016
2016 Annual Report and Audited Financial Statements signed on 13th February 2017
Extra Ordinary General Meeting to be held on 28th February 2017
31st Annual General Meeting to be held on 31st March 2017
Rs 14.00 per share Interim Scrip Dividend for 2016 distributable on 28th February 2017*
Rs 4.75 per share Final Cash Dividend for 2016 distributable on 31st March 2017*
Interim Financial Statements published in terms of Rule 7.4 of the Colombo Stock Exchange (CSE) and as per the requirements of the Central Bank of Sri Lanka:
Colombo StockExchange
News Papers (as required by CBSL)
English Sinhala Tamil
2015 4th Quarter interim results released on 17th February 2016 29th February 2016 29th February 2016 29th February 2016
2016 1st Quarter interim results released on 06th May 2016 10th May 2016 12th May 2016 12th May 2016
2016 2nd Quarter interim results released on 02nd August 2016 05th August 2016 08th August 2016 08th August 2016
2016 3rd Quarter interim results released on 04th November 2016 09th November 2016 11th November 2016 11th November 2016
Proposed Financial Calendar - 2017
2017 Annual Report and Audited Financial Statements to be signed in February 2018
32nd Annual General Meeting to be held in March 2018
Dividend for 2017 to be payable in April 2018**
Interim Financial Statements to be published in terms of Rule 7.4 of the Colombo Stock Exchange and as per the requirements of the Central Bank of Sri Lanka:
Colombo StockExchange
News Papers (as required by CBSL)
English Sinhala Tamil
2016 4th Quarter interim results to be released on or before
28th February 2017 31st March 2017 31st March 2017 31st March 2017
2017 1st Quarter interim results to be released on or before
15th May 2017 31st May 2017 31st May 2017 31st May 2017
2017 2nd Quarter interim results to be released on or before
15th August 2017 31st August 2017 31st August 2017 31st August 2017
2017 3rd Quarter interim results to be released on or before
15th November 2017 30th November 2017 30th November 2017 30th November 2017
2017 4th Quarter interim results to be released on or before
28th February 2018 31st March 2018 31st March 2018 31st March 2018
FINANCIAL INFORMATION
221
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
1. GENERAL
The Board of Directors of Sampath Bank PLC has pleasure in presenting its Annual
Company to the members of Sampath
31st December 2016, together with the audited Financial Statements of the Bank, Consolidated Financial Statements of the Group for that year and the Auditors’ Report on those Financial Statements, conforming to the requirements of the Companies Act No. 7 of 2007 and the Banking Act No. 30 of 1988. The Financial Statements were reviewed and approved by the Board of Directors on 13th February 2017.
This report includes the information required by the Companies Act No. 7 of 2007, Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks and subsequent amendments thereto, Listing Rules of the Colombo Stock Exchange and is also guided by the recommended best practices on Corporate Governance.
This Report was approved by the Board of Directors on 13th February 2017. The appropriate number of copies of the Annual Report will be submitted to the Colombo Stock Exchange, Registrar of Companies and to the Sri Lanka Accounting and Auditing Standard Monitoring Board within the statutory deadlines.
Sampath Bank PLC (“the Bank”) is a Licensed Commercial Bank registered under the Banking Act No. 30 of 1988 (“Banking Act”) and was incorporated as a public limited liability company in Sri Lanka on 10th March 1986 under the Companies Act No. 17 of 1982. The Company was re-registered as per the requirements of the Companies Act No. 7 of 2007 (“Companies Act”) on 28th April 2008 under the name Sampath Bank PLC with the Registrar General of Companies. The re-registration number of the Bank is PQ 144.
The ordinary shares of the Bank are listed on the main board of the Colombo Stock Exchange in Sri Lanka. The Bank’s unsecured subordinated redeemable debentures are also listed on the Colombo Stock Exchange.
Bank’s National Long Term Rating of A+ (lka) with negative outlook and subordinated debentures at ‘A(lka)’. Moody’s Investors Service (“Moody’s”) has assigned an Issuer and Long Term Local Currency Deposit Rating of B1 with negative outlook.
James Peiris Mawatha, Colombo 02, Sri Lanka.
2. VISION, VALUES AND CORPORATE CONDUCT
The Bank’s Vision and Values are given in page 12 of the Annual Report. The business activities of the Bank are conducted at a high level of ethical standards in achieving its Vision.
3. PRINCIPAL BUSINESS ACTIVITIES
The principal business activities of the Bank and the Group during the year are given below as required by the Section 168 (1) (a) of the Companies Act.
3.1 BankThe principal activities of the Bank include accepting deposits, corporate and retail
treasury and investment services, issuing of local and international credit and debit cards,
foreign currency operations, electronic banking services: such as telephone banking, internet banking, mobile banking, payment gateway, money remittance facilities, pawning, leasing, factoring, hire purchase, travel related services and dealing in government securities etc.
3.2 SubsidiariesThe Bank has four Subsidiaries as at 31st December 2016. Names of the Subsidiaries and their principal business activities are as tabulated below:
Entity Principal Business Activities
Siyapatha Finance PLC Granting leasing, factoring, hire purchase and other loan facilities
& accepting deposits
Sampath Centre Ltd Renting of commercial property
S C Securities (Pvt) Ltd Stock broking
Sampath Information Technology Solutions Ltd Developing software solutions and maintenance of hardware
4. CHANGES TO THE GROUP STRUCTURE
The Bank purchased the balance 2.86% of shares of Sampath Centre Ltd on 30th December 2016. With the purchase of these shares Sampath Centre Ltd became a fully owned subsidiary of the Bank. There were no other changes made to the Group structure during the year under review.
5. REVIEW OF OPERATIONS
performance of the Bank and the Group together with important events that took place during the year 2016 as required by the Section 168 (1) (a) of the Companies Act are contained in the Chairman’s Message (pages 32 to 37), the Managing Director’s Review (pages 38 to 43), and Management Discussion and Analysis
(pages 55 to 134). These reports form an integral part of the Annual Report of the Board of Directors.
6. FUTURE DEVELOPMENTS
The Bank focuses on a business expansion drive through the existing Branch Network, concentrating mainly on its core banking operations to increase its market share
222 SAMPATH BANK PLC
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supplemented by a more vigorous drive on innovative product development, process
customer needs in the challenging market conditions and maximizing the value that we create for all the stakeholders. 4 new branches were opened during the year. Further as required under Section 168 (1) (a) of the Companies Act, an overview of the future development of the Bank and the Group is given in the Chairman’s Message (pages 32 to 37), the Managing Director’s Review (pages 38 to 43), and Management Discussion and Analysis (pages 55 to 134). These reports form an integral part of the Annual Report of the Board of Directors.
7. FINANCIAL STATEMENTS
The Financial Statements of the Group and the Bank have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs & LKASs) laid down by the Institute of Chartered Accountants of Sri Lanka, and comply with the requirements of the Companies Act No. 7 of 2007 and the Banking Act No. 30 of 1988. The aforementioned Financial Statements for the year ended 31st December 2016 duly
Directors of the Bank and the Company Secretary are given on pages 238 to 376 which form an integral part of this Annual Report of the Board of Directors (as per the Section 168 (1) (b) of the Companies Act).
8. DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING
The Directors are responsible for the preparation of Financial Statements of the
are of the view that these Financial Statements appearing on pages 238 to 376 have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act, Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, the Banking Act and amendments thereto, the Listing Rules of the Colombo Stock Exchange and the Corporate Governance Code for Licensed Commercial Banks issued by the Central Bank of Sri Lanka (CBSL). The Statement of Directors’ Responsibility for Financial Reporting is given on pages 235 & 236 and forms an integral part of the Annual Report of the Board of Directors.
9. AUDITORS’ REPORT
The Auditors of the Bank are Messrs Ernst & Young, Chartered Accountants. Messrs Ernst & Young carried out the audit on the Financial Statements of the Group and the Bank for the year ended 31st December 2016 and their report on those Financial Statements, as required by Section 168 (1) (c) of the Companies Act is given on page 237.
10. SIGNIFICANT ACCOUNTING POLICIES
adopted in the preparation of the Financial Statements are given on pages 246 to 376 which comply with Section 168 (1) (d) of the Companies Act.
11. FINANCIAL RESULTS AND APPROPRIATIONS
11.1 IncomeThe gross income of the Group for 2016 was Rs 70,445,341,000/- (2015: Rs 49,101,837,000/-) while the Bank’s gross income was Rs 67,584,689,000/- (2015: Rs 47,031,516,000/-). An analysis of the gross income is given in Note 6 to the Financial Statements.
43.3% respectively in 2016. The Bank’s
year too recorded a growth of 38.4% and 48.8% respectively over 2015. Group’s Total Comprehensive Income (net of tax) for the year is Rs 11,760,912,000/- (2015: Rs 6,319,668,000/-), while the Bank has recorded a total comprehensive income (net of tax) of Rs 10,484,794,000/- (2015: Rs 5,825,708,000/-). A detailed breakup of the
below:
2016
Rs 000
2015
Rs 000
Profit for the year after payment of all operating expenses and provision for
depreciation and contingencies
12,599,858 9,100,873
Less: Income tax expense 3,475,188 2,966,932
Net profit after taxation 9,124,670 6,133,941
Other comprehensive income (OCI)
Actuarial gain on defined benefit plans 564,648 115,940
Deferred tax effect on above (158,102) (32,463)
9,531,216 6,217,418
Unappropriated balance brought forward from previous year 3,066,297 3,182,746
Less: Super Gain Tax - (676,765)
Balance available before appropriation / adjustments 12,597,513 8,723,399
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12. TAXATION
Income tax rate applicable on the Bank’s
Centre is 28% (2015: 28%). The Bank is
services at 15% (2015: 11%) and 2% (2015: 2%) respectively.
The Group has also provided deferred
under the liability method, as permitted by the Sri Lanka Accounting Standard - LKAS 12 (Income Taxes).
13. DIVIDEND
The Board of Directors of the Bank has recommended an interim scrip dividend of Rs 14.00 per share to be paid for the
Further, in compliance with the Bank’s Articles of Association this dividend is to be approved by the shareholders at the Extraordinary General Meeting to be held on 28th February 2017.
The Board of Directors of the Bank has
dividend of Rs 4.75 per share as well to
December 2016. This dividend is to be approved by the shareholders at the Annual General Meeting to be held on 31st March 2017. (2015: Rs 6.00 in the form of cash
dividend and balance Rs 7.00 in the form of scrip dividend).
that the Bank would meet the solvency test immediately after the interim and
paid in February 2017and March 2017 respectively in terms of the Section 31 (3) of the Companies Act. The Board provided the Statements of Solvency to the Auditors
the Auditors in respect of the dividend payments conforming to the statutory provision. With these dividend payments,
dividend requirement according to the provisions of Inland Revenue Act. Further details are given in Note 18 to the Financial Statements.
2016
Rs 000
2015
Rs 000
Appropriations
Transfer to Statutory Reserve Fund (460,000) (310,000)
Transfer to General Reserve (5,500,000) (3,500,090)
Dividend
Final cash dividend - 2014 (Rs 5.00 per share) - (839,551)
Final scrip dividend - 2014 (Rs 6.00 per share) - (1,007,461)
Final cash dividend - 2015 (Rs 6.00 per share) (1,033,876) -
Final scrip dividend - 2015 (Rs 7.00 per share) (1,206,188) -
Unappropriated balance carried forward 4,397,449 3,066,297
Proposed dividend
Final cash dividend - 2015 (Rs 6.00 per share) 1,033,876
Final scrip dividend - 2015 (Rs 7.00 per share) 1,206,188
Interim scrip dividend - 2016 (Rs 14.00 per share) 2,477,735
Final cash dividend - 2016 (Rs 4.75 per share) 884,405
14. RESERVES
A summary of the Group’s Reserves is given below:
2016
Rs 000
2015
Rs 000
Statutory Reserve Fund 2,336,422 1,860,058
Revaluation Reserve 5,653,471 4,202,261
Available for Sale Reserve 1,271,319 875,723
General Reserve 27,694,236 22,165,001
Retained Profit 6,315,429 4,624,088
Total 43,270,877 33,727,131
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15. CAPITAL EXPENDITURE
The total capital expenditure on acquisition of property, plant and equipment and intangible assets of the Group and the Bank amounted to Rs 1,469,514,000/- and Rs 762,508,000/- respectively (2015 Group: Rs 1,190,589,000/- and Bank: Rs 884,374,000/-). Details are given in Notes 33 and 34 to the Financial Statements.
16. CAPITAL COMMITMENTS
The capital expenditure approved and contracted for, as at the reporting date is given in Note 48.3 to the Financial Statements.
17. PROPERTY, PLANT AND EQUIPMENT (PPE)
Details of property, plant and equipment are given on Note 33 to the Financial Statements.
18. MARKET VALUE OF FREEHOLD PROPERTIES
All freehold lands and buildings of the Group and the Bank were revalued in November /
independent valuers, and brought into the Financial Statements. The Directors are of the opinion that the revalued amounts are not in excess of the current market values of such properties. The details of freehold properties owned by the Bank are given in Note 33.4 to the Financial Statements.
19. STATED CAPITAL, DEBENTURES AND BONDS
19.1 Stated Capital - BankThe Stated Capital of the Bank as at 31st December 2016 amounted to Rs 6,471,200,000/- consisting of 176,981,069 ordinary shares (2015: Rs 5,381,405,000/- consisting of 172,312,655 ordinary shares). The number of shares in issue of the Bank increased from 172,312,655 ordinary shares to 176,981,069 ordinary shares as a result
2015.
The details of the shares issued are given in Note 43.1 to the Financial Statements.
19.2 Debt Capital - BankThe Bank had issued rated, unsecured, subordinated, redeemable debentures to the value of Rs 26,500,000,000/- as at 31st December 2016 (2015: Rs 20,500,000,000/-), which are listed in the Colombo Stock Exchange.
The details of the debentures outstanding as at 31st December 2016 are given in Note 39.1 to the Financial Statements. These debentures are eligible for the Tier II Capital of the Bank.
The Bank had issued a deep discounted zero coupon bond with a maturity value of Rs 3,458,108,968/- for 20 years. The present paid up value of this bond is Rs 1,942,931,000/- (2015: Rs 1,780,008,000/) and this forms part of the Tier II Capital. The above Bond was issued in August 2003 and will mature in August 2023. The details are given in Note 39.2 to the Financial Statements.
19.3 Issue of Shares and Debt Capital – Subsidiaries
The Subsidiaries of the Bank did not make any share or debenture issues during the year other than those mentioned below. Siyapatha Finance PLC issued 1,624,726 Ordinary Shares by way of a scrip dividend during the year. As a result their stated capital increased by Rs 51,975,000 from Rs 525,000,000 as at 31st December 2015 to Rs 576,975,000 as at 31st December 2016. Siyapatha Finance PLC had issued unsecured, senior, redeemable debentures to the value of Rs 2,500,000,000 during the year, which are listed on the Colombo Stock Exchange.
20. SHARE INFORMATION
Information relating to earnings, dividend, net assets and market value per share is
6. Information on the trading of the shares and movement in the number of shares of the Bank is given in the Investor Information section on pages 123 to 133.
21. SHAREHOLDING
There were 17,456 registered ordinary shareholders as at 31st December 2016 (2015: 17,515). Information on
the distribution of shareholding and the respective percentages are given on pages 124, 125 and 127 of the Annual Report. Details of top twenty shareholders, percentages of their holdings and percentage holding of the public too are given in the Investor Information section on page 128.
22. EQUITABLE TREATMENT TO SHAREHOLDERS
The Bank has at all times ensured that all shareholders are treated equitably.
23. THE BOARD OF DIRECTORS
The Board of Directors of the Bank comprises eleven (2015: eleven) Directors
knowledge and experience. The names of the Directors of the Bank during the period 1st January 2016 to 31st December 2016 are given below as per Section 168 (1) (h)
are given on pages 16 to 21 of the Annual
into Executive (ED), Non-Executive (NED) and Independent (IND), Non-Independent Directors (NID) is given against the names as per Listing Rules and Corporate Governance Rules of Colombo Stock Exchange and Banking Act Direction No. 11 of 2007 issued by the Central Bank of Sri Lanka.
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Name of the Director Remarks
Mr Dhammika Perera NED/NID Director from 01.08.2007; Chairman from 01.01.2012. Retired on 31.07.2016
Mr Channa Palansuriya NED/NID Director from 01.01.2012; Deputy Chairman from 26.01.2012 up to 12.11.2015. Re-appointed as a Director on 28.04.2016 and Chairman since 01.08.2016
Prof Malik Ranasinghe NED/IND Director since 30.08.2011. Deputy Chairman since 01.08.2016
Mr Sanjiva Senanayake NED/IND Director since 01.01.2012; Senior Director since 26.01.2012
Mr Deepal Sooriyaarachchi NED/IND Director since 05.08.2010
Mrs Dhara Wijayatilake NED/IND Director since 30.08.2011
Miss Annika Senanayake NED/IND Director since 01.01.2012
Mr Deshal De Mel NED/NID Director since 01.01.2012
Mr Ranil Pathirana NED/IND Director since 01.01.2012, Independent Director since 31.01.2015
Mrs Saumya Amarasekera NED/NID Director since 01.06.2012
Mr Aravinda Perera ED Executive Director from 25.11.2008; Managing Director from 01.01.2012; Retired on 12.09.2016
Mr Nanda Fernando ED Managing Director since 13.09.2016
Mr Ranjith Samaranayake ED Executive Director since 01.01.2009
24. CHANGES IN DIRECTORATE
The Bank has disclosed the names of the
Bank as at the end of the accounting period and the names of any persons who ceased
during the accounting period in terms of Section 168 (1) (h) of the Companies Act.
Mr Channa Probodha Palansuriya (Deputy Chairman) was appointed to the Board
casual vacancy that occurred in the Board and Mr Nanda Fernando (Managing Director)
from 13th September 2016. Mr Dhammika Perera (Chairman) and Mr Aravinda Perera (Managing Director) retired from the Board
September 2016 respectively. Mr Channa Probodha Palansuriya was appointed as the Chairman and Prof Malik Ranasinghe was appointed as the Deputy Chairman with
25. RETIREMENT AND RE-ELECTION / RE-APPOINTMENT OF DIRECTORS
In terms of Article No. 86 and 87 of the Articles of Association of the Company, Mr Ranil Pathirana, Mr Deepal Sooriyaarachchi, Prof Malik Ranasinghe and Mrs Dhara
Wijayatilake retire by rotation and being
on the unanimous recommendation of the Board Nomination Committee and the Board of Directors.
Mr Channa Probodha Palansuriya (Deputy Chairman) having been appointed to the
shareholders in terms of Article 93 of the Articles of Association of the Company.
Sections 210 and 211 of the Companies Act do not apply to the company, in view of the more stringent provision contained in Section 3 (3) (i) of Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Bank, which restricts the age of a Director of a Licensed Commercial Bank to 70 years.
26. LIST OF DIRECTORS OF THE SUBSIDIARIES OF THE BANK
Names of the Directors of Subsidiary companies are as follows:
26.1 Siyapatha Finance PLCMr Aravinda Perera (Chairman)Mr M A Abeynaike (Deputy Chairman)Mr S G Wijesinha
Mr Channa Palansuriya
Mr P M A Sirimane
Mr W M P L De AlwisMr Ranjith SamaranayakeMr Tharaka Ranwala
26.2 Sampath Centre LtdMr I W Senanayake (Chairman) Mr S G WijesinhaMr S P KannangaraMr D Ihalalanda Mr R Silva
26.3 S C Securities (Pvt) LtdMr D J Gunaratne (Chairman)
CEO)Dr S KelegamaMr Deshal De Mel Mr Aravinda Perera Mr M N R Fernando
26.4 Sampath Information Technology Solutions Ltd
Mr D J GunaratneMr M V IndrasomaMr M A SalgadoMr Ranjith Samaranayake (appointed w.e.f. 31.08.2016)
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27. REGISTER OF DIRECTORS AND SECRETARIES
As required under Section 223 (1) of the Companies Act, the Bank maintains a Register of Directors and Secretaries which contain the name, surname, former name (if any), residential address, business, occupation, dates of appointment and dates of resignation (if applicable) of each Director and the Secretary.
28. BOARD SUB COMMITTEES
The Board, while assuming the overall responsibility and accountability for the management oversight of the Bank, has also appointed Board Sub Committees to ensure that the activities of the Bank at all times are conducted with the highest ethical standards and the best interests of all its stakeholders. The Board formed many Sub Committees including the following four mandatory Board Sub Committees as required by the Banking Act Direction No. 11 of 2007. The compositions of these four Sub Committees as at 31st December 2016 were as follows:
28.1 Board Audit Committee Mr Ranil Pathirana (Chairman) Prof Malik RanasingheMr Sanjiva Senanayake (until 31.03.2016)Mr Deepal SooriyaarachchiMrs Dhara Wijayatilake
The Report of the Board Audit Committee is given on pages 198 to 201 which forms an integral part of the Annual Report of the Board of Directors.
28.2 Board Human Resources and Remuneration Committee
Mr Deepal Sooriyaarachchi (Chairman) Mr Channa Palansuriya (w.e.f. 09.05.2016)Mrs Dhara Wijayatilake (w.e.f. 09.05.2016)Miss Annika SenanayakeMr Deshal De MelMrs Saumya Amarasekera (w.e.f. 09.05.2016)Mr Aravinda Perera (until 09.05.2016)
and Remuneration Committee is given on pages 202 & 203 which forms an integral part of the Annual Report of the Board of Directors.
28.3 Board Nomination Committee Miss Annika Senanayake (Chairperson) Mr Dhammika Perera (until 31.07.2016)Mr Channa Palansuriya (w.e.f. 02.08.2016) Mr Sanjiva Senanayake (w.e.f. 09.05.2016)Mrs Dhara WijayatilakeMrs Saumya Amarasekera
The Report of the Board Nominations Committee is given on pages 204 & 205 which forms an integral part of the Annual Report of the Board of Directors.
28.4 Board Integrated Risk Management Committee
Mr Sanjiva Senanayake (Chairman w.e.f. 09.05.2016)Prof Malik Ranasinghe (until 09.05.2016) Mr Deepal Sooriyaarachchi (w.e.f. 09.05.2016)Mrs Dhara Wijayatilake (Chairperson until 09.05.2016) Miss Annika Senanayake (w.e.f. 09.05.2016)Mr Ranil Pathirana (w.e.f. 09.05.2016)Mrs Saumya Amarasekera (w.e.f. 09.05.2016)Mr Aravinda Perera (until 12.09.2016)Mr Nanda Fernando (w.e.f. 30.09.2016)Mr Ranjith Samaranayake
The Report of the Board Integrated Risk Management Committee is given on pages 206 to 208 which forms an integral part of the Annual Report of the Board of Directors.
Further, in order to comply with the Section 9 of the Colombo Stock Exchange Listing Rules, Board Related Party Transactions Review Committee was formed on 30th July 2015.
28.5 Board Related Party Transactions Review Committee
Mrs Dhara Wijayatilake (Chairperson) Mr Channa Palansuriya (appointed
07.07.2016)Prof Malik RanasingheMr Sanjiva SenanayakeMr Deepal Sooriyaarachchi (w.e.f. 09.05.2016)Mr Ranjith Samaranayake
The Report of the Board Related Party Transactions Review Committee is given on page 209 which forms an integral part of the Annual Report of the Board of Directors.
Sub Committees, the Board has also
Board Sub Committees:
28.6 Board Credit Committee Prof Malik Ranasinghe (Chairman) Mr Channa Palansuriya (w.e.f. 09.05.2016) Mr Sanjiva Senanayake (until 31.03.2016)Mrs Dhara Wijayatilake (w.e.f. 09.05.2016) Miss Annika Senanayake (until 09.05.2016)Mr Deshal De MelMr Aravinda Perera (until 12.09.2016)Mr Nanda Fernando (w.e.f. 30.09.2016) Mr Ranjith Samaranayake The Report of the Board Credit Committee is given on pages 210 & 211 which forms an integral part of the Annual Report of the Board of Directors.
28.7 Board Strategic Planning Committee
Mr Channa Palansuriya (w.e.f. 09.05.2016
Mr Dhammika Perera (Chairman until 31.07.2016) Prof Malik Ranasinghe Mr Sanjiva Senanayake (until 31.03.2016)Mrs Dhara Wijayatilake Miss Annika Senanayake Mr Deshal De MelMr Ranil PathiranaMr Aravinda Perera (until 12.09.2016)Mr Nanda Fernando (w.e.f. 30.09.2016)Mr Ranjith Samaranayake
The Report of the Board Strategic Planning Committee is given on pages 212 and 213 which forms an integral part of the Annual Report of the Board of Directors.
28.8 Board Shareholder Relations Committee
Prof Malik Ranasinghe (Chairman) Mr Deepal Sooriyaarachchi (w.e.f. 09.05.2016)Mr Deshal De MelMr Aravinda Perera (w.e.f. 09.05.2016 until 12.09.2016)Mr Nanda Fernando (w.e.f. 30.09.2016)
The Report of the Board Shareholder Relations Committee is given on pages 214 & 215 which forms an integral part of the Annual Report of the Board of Directors.
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28.9 Board Treasury Committee Mr Sanjiva Senanayake (Chairman) Prof Malik RanasingheMiss Annika Senanayake (w.e.f. 07.07.2016)Mr Deshal De MelMr Ranil Pathirana (w.e.f. 09.05.2016 until 07.07.2016)Mr Aravinda Perera (until 12.09.2016)Mr Nanda Fernando (w.e.f 30.09.2016)Mr Ranjith Samaranayake
The Report of the Board Treasury Committee is given on page 216 and forms an integral part of the Annual Report of the Board of Directors.
28.10 Board Marketing Committee Mr Deshal de Mel (Chairman
Mr Channa Palansuriya (w.e.f. 09.05.2016)Mr Deepal Sooriyaarachchi (Chairman until 09.05.2016)Miss Annika SenanayakeMrs Saumya Amarasekera
The Report of the Board Marketing Committee is given on page 217 which forms an integral part of the Annual Report of the Board of Directors.
The duties, responsibilities and performance of the above Board Sub Committees are discussed in the respective Board Sub Committee reports.
29. DIRECTORS’ MEETINGS
The details of Directors meetings which comprise Board meetings and the Board Sub Committee meetings and the attendance of Directors at these meetings are given in the Corporate Governance Report on page 157 of the Annual Report.
30. DIRECTORS’ INTEREST REGISTER AND DIRECTORS’ INTEREST IN CONTRACTS OR PROPOSED CONTRACTS
The Bank maintains the Directors’ Interest Register as required under the provisions of Section 168 (1) (e) of the Companies Act. Directors of the Bank have made necessary declarations of their interest in contracts or proposed contracts, in terms of the Sections 192 (1) and 192 (2) of the Companies Act. These interests have been recorded in the Interest Register which is available for inspection in terms of the Act.
The particulars of the Directors’ Interest in Contracts are given on page 230 of the Annual Report and form an integral part of the Annual Report of the Board of Directors. As a practice and in terms of Corporate Governance, Directors have refrained from voting on matters in which they were materially interested. The Directors have no direct or indirect interest in a contract or a proposed contract with the Bank other than those disclosed.
31. RELATED PARTY TRANSACTIONS
Directors have also disclosed transactions
party transactions in terms of Sri Lanka Accounting Standard - LKAS 24 (Related Party Disclosure) which is adopted in preparation of the Financial Statements. Those transactions disclosed by the Directors are given in Note 49 to the Financial Statements which form an integral part of the Annual Report of the Board of Directors.
32. DIRECTORS’ INTEREST IN ORDINARY SHARES AND DEBENTURES
The shareholdings of Directors as at 31st December 2016 were as follows:
No. of Shares as at 31stDecember 2016
No. of Shares as at 31stDecember 2015
Mr Channa Palansuriya - -
Prof Malik Ranasinghe - -
Mr Sanjiva Senanayake - -
Mr Deepal Sooriyaarachchi - -
Mrs Dhara Wijayatilake - -
Miss Annika Senanayake - -
Mr Deshal De Mel - -
Mr Ranil Pathirana 9,929 9,668
Mrs Saumya Amarasekera - -
Mr Nanda Fernando 1,250 N/A
Mr Ranjith Samaranayake 22,464 21,872
N/A – Not ApplicableNone of the Directors directly hold any debentures issued by the Bank.
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33. DIRECTORS’ INTEREST IN SHARES AND DEBENTURES OF SUBSIDIARIES
Mr Aravinda Perera who retired on 12.09.2016 and Mr Ranjith Samaranayake hold one share each in Siyapatha Finance PLC and one share each in Sampath Information Technology Solutions Ltd, as subscribers. These shares are held in trust for Sampath Bank. Mr Aravinda Perera who was a Director until 12.09.2016 also holds one share each in S C Securities (Pvt) Ltd and Sampath Centre Ltd for and on behalf of the Bank.
34. DIRECTORS’ REMUNERATION
As required under the Section 168 (1) (f), details of Directors’ emoluments and other
review are given in Note 49.3.1 to the Financial Statements.
35. OUR TEAM MEMBERS
The Bank believes that its real potential rests on the strength and capabilities of its team members in a rapidly changing
having a motivated and competent team in order to grow and achieve results as projected in the Strategic Plan and the Budget. As at 31st December 2016, the number of employees on the payroll of the Bank was 3,960 (2015: 3,993).
36. ESOPS
The Bank did not have any Employee Share Ownership / Option Plans during the year.
37. ENVIRONMENTAL PROTECTION
To the best knowledge of the Board, the Bank has not engaged in any activity that is harmful or hazardous to the environment.
of their knowledge and belief the Bank has complied with the relevant environmental laws and regulations.
38. STATUTORY PAYMENTS
The Directors, to the best of their knowledge
payments due to the Government, other regulatory bodies and related to the employees have been paid on a timely basis.
39. OUTSTANDING LITIGATION
In the opinion of the Directors and in consultation with the Bank’s lawyers, litigation currently pending against the Bank will not have a material impact on
operations of the Bank. Details of litigation pending against the Bank are given in Note 48.2 to the Financial Statements.
40. EVENTS AFTER THE REPORTING PERIOD
No circumstances have arisen since the Statement of Financial Position date which would require adjustments to, or disclosure in, the accounts, except those disclosed in Note 51 to the Financial Statements.
41. GOING CONCERN
The Directors after making necessary inquiries and reviews including reviews of the budget for the ensuing year, capital expenditure requirements, future prospects
matters required to be addressed in the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka and the Direction on Corporate Governance issued by the CBSL are
resources to continue operations into the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Financial Statements.
42. DONATIONS
As required by the Section 168 (1) (g) of the Companies Act, information pertaining to donations made by the Bank during the year is given below. During the year the Bank made donations to the value of Rs 2,589,000/- (2015: Rs 2,487,000/-) in terms of the resolution passed at the last Annual General Meeting. Out of the aforementioned sum, the donations made
by the Bank to Government approved charities amounted to Rs Nil (2015: Rs Nil). The Bank does not make donations for political purposes.
43. SIGNIFICANT SHAREHOLDINGS IN OTHER ORGANIZATIONS
The Bank continues to hold 9.47% shareholding in LankaBangla Finance Limited in Bangladesh. Details are given in Note 29.3 to the Financial Statements.
44. RISK MANAGEMENT AND INTERNAL CONTROL
44.1 Material Foreseeable Risk Factors
The Bank has an ongoing process in place to identify, evaluate and manage the risks that are faced by the Bank. This process is detailed in the Risk Management Report on pages 136 to 150. The Directors, on a regular basis review the above mentioned process through the Board Integrated Risk Management Committee.
44.2 Internal ControlsThe Directors of the Bank have taken reasonable steps open to them to safeguard the assets of the Group and the Bank and to prevent and detect frauds and any other irregularities. For this purpose
comprehensive systems of internal controls for identifying, recording, evaluating and
Bank / Group throughout the year and it is being regularly reviewed by the Board of Directors.
This comprises internal reviews, internal
and other controls required to carry on the operations in an orderly manner, safeguard the assets, prevent and detect frauds and other irregularities and secure, as far as practicable, the accuracy and reliability of the records.
45. CORPORATE GOVERNANCE
The Directors of the Bank are committed
Governance Framework and implementing processes required to ensure that the
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Bank is compliant with the Code of Best Practices on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka and the Direction on Corporate Governance issued by the CBSL. Details are given on Corporate Governance Report on pages 153 to 197 of this Annual Report.
As required by Section 3(8) (ii) (g) of the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks, issued by the CBSL,
of auditors issued under “Sri Lanka Related Services Practice Statement 4750” have been incorporated in the annual Corporate Governance Report on pages 179 to 197 of this Annual Report.
46. AUDITORS
The Auditors of the Bank during the year were Messrs Ernst & Young, Chartered Accountants. They also function as the Auditors for the Bank’s Subsidiary companies namely, Sampath Centre Ltd, SC Securities (Pvt) Ltd, Siyapatha Finance PLC and Sampath Information Technology
Solutions Ltd. Audit fees paid to Messrs Ernst & Young for the year ended 31st December 2016 by the Group and the Bank amounted to Rs 15,152,000/- (2015: Rs 14,798,000/-) and Rs 12,495,000/- (2015: Rs 11,299,000/-) respectively.
Further the Group and the Bank paid Rs 6,293,000/- (2015: Rs 5,379,000/-) and Rs 5,122,000/- (2015: Rs 4,997,000/-) respectively to Messrs Ernst & Young as Audit related fees and expenses. In addition, they were paid Rs 5,975,000/- (2015: Rs 8,113,000/-) and Rs 4,617,000/- (2015: Rs 4,969,000/-) by the Group and the Bank respectively for permitted non-audit related services including tax consultancy services. Details of the Audit fees paid are given on Note 14.1 to the Financial Statements.
Based on the declaration provided by Messrs Ernst & Young, and as far as the Directors are aware, the Auditors do not have any relationship with or interest with the Bank that in their judgments, may reasonably be thought to have a bearing on their independence within the meaning of the Code of Professional Conduct and Ethics issued by the Institute of Chartered Accountants of Sri Lanka, applicable on the date of this report.
The retiring Auditors, Messrs Ernst & Young, have expressed their willingness
election at the Annual General Meeting, with the recommendation of the Board Audit Committee and the Board of Directors. In accordance with the Companies Act, a resolution proposing the re-appointment of Messrs Ernst & Young, Chartered Accountants, as Auditors is being proposed at the Annual General Meeting.
47. NOTICE OF MEETING
The 31st Annual General Meeting of the
Kingsbury, No. 48, Janadhipathi Mawatha, Colombo 1 on 31st March 2017. The Notice of Meeting is given on page 418 of the Annual Report.
As required by Section 168 (1) (k) of the Companies Act the Board of Directors hereby acknowledge the contents of this report.
For and on behalf of the Board of Directors
CHANNA PALANSURIYA PROF MALIK RANASINGHE NANDA FERNANDO ANUJA GOONETILLEKEChairman Deputy Chairman Managing Director Company Secretary
Colombo, Sri Lanka13th February 2017
230 SAMPATH BANK PLC
ANNUAL REPORT 2016
DIRECTORS’ INTEREST IN CONTRACTS WITH THE BANK
Related party disclosures as required by the Sri Lanka Accounting Standard - LKAS 24 (Related Party Disclosures) are detailed in Note 49 to the Financial Statements. In Addition, the Bank carries out transactions in the ordinary course of business in an arm’s length basis with entities where the Chairman or Director of the Bank is the Chairman or a Director of such entities as detailed below.
Company Relationship Nature of the Facility Current Limit Balance Outstanding
as at 31.12.2016
Balance Outstanding
as at 31.12.2015
Rs 000 Rs 000 Rs 000
Prof Malik Ranasinghe
Access Engineering PLC Independent Non- executiveDirector
Indirect Facilities 3,100,000 527,603 1,132,962 Investment in Debentures 303,707 303,707 Debentures issued by the Bank 100,000 100,000 Deposits 41,681 619,946
Resus Energy PLC Independent Non- executiveDirector
Loan & Receivables 100,000 - -
Deposits 4,495 -
United Motors Lanka PLC Independent Non- executive Director Deposits 177 -
Mr Ranil PathiranaCeylon Knit Trend (Pvt) Ltd Director Deposits 123 156 CKT Apparel (Pvt) Ltd Director Deposits 4 12 Esna Power (Pvt) Ltd Non- executive Director Deposits 4,940 5,005
Director Deposits 491 497 Director Deposits 9 17
Exports (Pvt) Ltd Director Deposits 1,790 73,281 Rosewood (Pvt) Ltd Director Deposits 2,725 396 Star Packaging (Pvt) Ltd Non- executive Director Loan & Receivables 102,521 55,785 105,247
Deposits 2,312 198 Windforce (Pvt) Ltd Non- executive Director Deposits 563 1,417
Odel PLC Non- executive Director Loan & Receivables 75,000 30,402 -Deposits 4,964 2,123
Non- executive Director Deposits 172 -
Mr Deepal SooriyaarachchiPan Asia Power PLC Independent Non- executive
DirectorLoan & Receivables 700,000 700,000 635,000 Deposits 2,536 25,483
Singer (Sri Lanka) PLC Independent Non- executive Director
Loan & Receivables 500,000 83,013 988,991 Investment in Debentures 754,621 758,672 Indirect Facilities 300,000 226,675 15,332
AIA Insurance Lanka PLC Independent Non- executive Director
Debentures issued by the Bank 1,246,720 1,246,720
Mr Channa PalansuriyaOrit Trading Lanka (Pvt) Limited Non- executive Director Loan & Receivables 1,050,000 645,693 *
Deposits 227,051 * Orit Apparel Lanka (Pvt) Limited Non- executive Director Deposits 247 *
Mr Nanda FernandoInstitute of Bankers of Sri Lanka Governing Board Director Deposits 1,659 -
Repo 16,664 -Lanka Financial Services Bureau Ltd Director Deposits 5,214 -
Investment in Shares 2,250 -
*Included under Note 49 to the Financial Statements, “Related Party Disclosures”.
FINANCIAL INFORMATION
231
DIRECTORS’ STATEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
RESPONSIBILITY
In line with the Banking Act Direction No. 11 of 2007, section 3 (8)(ii)(b), the Board of Directors presents this report on Internal Control Over Financial Reporting.
The Board of Directors (“the Board”) is responsible for the adequacy and
mechanism in place at Sampath Bank PLC, (“the Bank”). In considering such
recognises that the business of banking requires reward to be balanced with risk on a managed basis and as such the internal control systems are primarily designed with a view to highlighting any deviations from the limits and indicators which comprise the risk appetite of the Bank. In this light, the system of internal controls can only provide reasonable, but not absolute assurance,
losses or fraud.
The Board has established an ongoing process for identifying, evaluating and
Bank and this process includes enhancing the system of Internal Control Over Financial Reporting as and when there are changes to business environment or regulatory guidelines. The process is regularly reviewed by the Board and accords with the “Guidance for Directors of Banks on the Directors’ Statement on Internal Control” issued by the Institute of Chartered Accountants of Sri Lanka. The Board has assessed the Internal Control Over Financial Reporting taking into account principles for the assessment of internal control system as given in that guidance.
The Board is of the view that the system of Internal Controls Over Financial Reporting in place is sound and adequate to provide reasonable assurance regarding the
for external purposes is in accordance with relevant accounting principles and regulatory requirements.
The Management assists the Board in the implementation of the Board’s policies and procedures on risk and control by identifying and assessing the risks faced,
and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks.
KEY FEATURES OF THE PROCESS ADOPTED IN APPLYING AND REVIEWING THE DESIGN AND EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEM OVER FINANCIAL REPORTING
The key processes that have been established in reviewing the adequacy and integrity of the system of internal controls
the following: Various Committees are established
by the Board to assist the Board in
daily operations and that the Bank’s operations are in accordance with the corporate objectives, strategies and the annual budget as well as the policies and business directions that have been approved.
The Internal Audit Division of the Bank checks for compliance with policies and procedures and the
systems on an ongoing basis using samples and rotational procedures
in respect of any non-compliance. Audits are carried out on all units and branches, the frequency of which is determined by the level of risk assessed, to provide an independent and objective report. The annual audit plan is reviewed and approved by the Board Audit Committee. Findings of the Internal Audit Department are submitted to the Board Audit Committee for review at their periodic meetings.
The Board Audit Committee of the Bank reviews internal control
Audit Department, the External Auditors, regulatory authorities and the Management; and evaluates
the risk management and internal control systems. They also review the internal audit functions with particular emphasis on the scope of audits and quality of the same.
The minutes of the Board Audit Committee meetings are forwarded to the Board on a periodic basis. Further details of the activities undertaken by the Board Audit Committee of the Bank are set out in the Board Audit Committee Report on pages 198 to 201.
In assessing the internal control
collated all procedures and controls
accounts and disclosures of the
These in turn were observed and checked by the internal audit department for suitability of
ongoing basis. The Internal Audit
issues (if any) to the “Internal Control Over Financial Reporting Steering Committee” before submitting their
Financial Reporting to the Board Audit Committee & the External Auditors. The Bank adopted the new Sri Lanka Accounting Standards comprising LKAS and SLFRS in 2012. The processes and procedures initially applied to adopt the aforementioned Accounting Standards were further strengthened during the years 2013, 2014, 2015 and 2016 based on the feedback received from the external auditors, internal audit department, regulators and the Board Audit Committee. The Bank has documented procedures pertaining to these new requirements and updates the relevant procedure manuals as and when necessary. The Board has also recognised the need to introduce an automated
to comply with the requirements of recognition, measurement,
currently reviewing various options
reporting process. The assessment did not include subsidiary companies of the Bank.
232 SAMPATH BANK PLC
ANNUAL REPORT 2016
DIRECTORS’ STATEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The comments made by the External Auditors in connection with internal control system over
years were reviewed during the year and appropriate steps have been taken to rectify them. The recommendations made by the External Auditors in 2016 in connection with the internal control
be dealt with in the future.
CONFIRMATION
Based on the above processes, the Board
of the Bank has been designed to provide a reasonable assurance regarding the
external purposes and has been done in accordance with Sri Lanka Accounting Standards and regulatory requirements of the Central Bank of Sri Lanka.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
The External Auditors, Messrs Ernst & Young, have reviewed the above Directors Statement on Internal Control over Financial Reporting included in the Annual Report of the Bank for the year ended 31st December 2016 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of
the process adopted by the Board in the
of the Bank. Their Report on the Statement of Internal Control over Financial Reporting is given on page 233 of this Annual Report.
By order of the Board,
RANIL PATHIRANA CHANNA PALANSURIYA SANJIVA SENANAYAKEChairman - Board Audit Committee Chairman Senior Director
NANDA FERNANDO ANUJA GOONETILLEKEManaging Director Company Secretary
Colombo, Sri Lanka13th February 2017
FINANCIAL INFORMATION
233
the Board of Directors has adopted in the
the Bank.
Ernst & YoungChartered Accountants
13 February 2017Colombo
INDEPENDENT ASSURANCE REPORT TO THE BOARD OF DIRECTORS OF SAMPATH BANK PLC
INTRODUCTION
We were engaged by the Board of Directors of Sampath Bank PLC (the “Bank”) to provide assurance on the Directors’ Statement on Internal Control over Financial Reporting (the “Statement”) included in the annual report for the year ended 31 December 2016.
MANAGEMENT’S RESPONSIBILITY
Management is responsible for the preparation and presentation of the Statement in accordance with the “Guidance for Directors of Banks on the Directors’ Statement on Internal Control” issued in compliance with section 3(8)(ii)(b) of the Banking Act Direction No. 11 of 2007, by the Institute of Chartered Accountants of Sri Lanka.
OUR RESPONSIBILITIES AND COMPLIANCE WITH SLSAE 3050
Our responsibility is to issue a report to the Board on the Statement based on the work performed. We conducted our engagement in accordance with Sri Lanka Standard on Assurance Engagements SLSAE 3050 – Assurance Report for Banks on Directors’ Statement on Internal Control issued by the Institute of Chartered Accountants of Sri Lanka.
SUMMARY OF WORK PERFORMED
We conducted our engagement to assess whether the Statement is supported by the documentation prepared by or for Directors;
the Directors have adopted in reviewing
reporting of the Bank.
The procedures performed were limited primarily to inquiries of Bank personnel and the existence of documentation on a sample basis that supported the process adopted by the Board of Directors.
SLSAE 3050 does not require us to consider whether the Statement covers all risks and controls or to form an opinion
control procedures. SLSAE 3050 also does not require us to consider whether the processes described to deal with material
problems disclosed in the annual report will, in fact, remedy the problems.
OUR CONCLUSION
Based on the procedures performed, nothing has come to our attention that causes us to believe that the Statement included in the annual report is inconsistent with our understanding of the process
234 SAMPATH BANK PLC
ANNUAL REPORT 2016
MANAGING DIRECTOR’S AND CHIEF FINANCIAL OFFICER’S RESPONSIBILITY STATEMENT
The Financial Statements of Sampath Bank PLC (“the Bank”) and the Consolidated Financial Statements of the Bank and its Subsidiaries (“the Group”) as at 31st December 2016 are prepared in compliance with the requirements of the following:
Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka;
Companies Act No. 7 of 2007 (Companies Act);
Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995;
Banking Act No. 30 of 1988 and amendments thereto;
The Listing Rules of the Colombo Stock Exchange;
The Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka, the Securities and Exchange Commission of Sri Lanka; and Section 3(8)(ii)(g) of the Banking Act Direction No. 11 of 2007 on Corporate Governance issued by the Central Bank of Sri Lanka.
The formats used in the preparation of the Financial Statements and disclosures made comply with the formats prescribed by the Central Bank of Sri Lanka, which is also in compliance with the disclosure requirements of the Sri Lanka Accounting Standard - LKAS 1 (Presentation of Financial Statements).
The Accounting Policies used in the preparation of the Financial Statements are appropriate and are consistently
accounting policies and estimates that involve a high degree of judgment and complexity were discussed with the Board Audit Committee and External Auditors. Comparative information has been restated wherever necessary to comply with the current presentation and material departures, if any, have been disclosed and explained in the note 55 to
to the best of our knowledge, the Financial Statements give a true and fair view of the
Group. We have reasonable grounds to believe that the Bank and its Subsidiaries have adequate resources to continue in operational existence for the foreseeable future. Accordingly, we continue to adopt the going concern basis in preparing the Financial Statements.
The estimates and judgments relating to the Financial Statements were made on a prudent and reasonable basis; in order that
and fair manner, the form and substance of transactions and that the Bank’s state of
this, the Bank and all of its Subsidiaries
installing a system of internal controls and procedures for safeguarding assets, preventing and detecting frauds and / or errors as well as other irregularities which are reviewed, evaluated and updated on an ongoing basis. Our Internal Auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures were consistently
limitations that should be recognised in weighing the assurances provided by any system of internal controls and accounting.
(ii)(b) of the Banking Act Direction No. 11 of 2007 on Corporate Governance (Internal Control Over Financial Reporting - ICOFR) issued by the Central Bank of Sri Lanka as of 31st December 2016 and that the Bank’s Internal Controls Over Financial
Annual Report of the Directors on pages
Internal Control Over Financial Reporting. In addition, Directors’ Statement on Internal Control Over Financial Reporting is provided on pages 231 & 232. The Bank’s External Auditors, Messrs Ernst & Young, have
Internal Controls Over Financial Reporting
page 233 of this Annual Report.
The Financial Statements of the Group were audited by Messrs Ernst & Young, Chartered Accountants, the independent External Auditors. Their report is given on page 237 of this Annual Report.
The Board Audit Committee of the Bank meets periodically with the Internal Auditors and the independent External Auditors to review the manner in which these auditors are performing their responsibilities and to discuss issues relating to auditing, internal
To ensure complete independence, the External Auditors and the Internal Auditors have full and free access to the members of the Board Audit Committee to discuss any matter of substance. The Board Audit Committee report is given on pages 198 to 201.
The Board Audit Committee approves the audit and non-audit services provided by Messrs Ernst & Young, in order to ensure that the provision of such services does not impair Messrs Ernst & Young’s independence.
knowledge: The Group has complied with all
applicable laws, regulations and prudential requirements;
There are no material non compliances; and
There are no material litigations that are pending against the Group other than those disclosed in Note 48.2 to the Financial Statements in the Annual Report.
NANDA FERNANDOManaging Director
AJANTHA DE VAS GUNASEKARA
Colombo, Sri Lanka 13th February 2017
FINANCIAL INFORMATION
235
STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING
The responsibilities of the Directors in relation to the Financial Statements of Sampath Bank PLC (“the Bank”) and the Consolidated Financial Statements of the Bank and its Subsidiaries (“the Group”) are set out in the following Statement. The responsibility of the Auditors in relation to the Financial Statements is set out in the Report of the Auditors given on page 237.
As per the provisions of the Companies Act No. 7 of 2007 (Companies Act), the Directors of the Bank are responsible for ensuring that the Bank and the Group keep proper books of account of all the transactions and they are required to prepare Financial Statements that give a
of the Bank and the Group as at end of
general meeting. The Financial Statements comprise of the Statement of Financial
Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity for
The Financial Statements are prepared under the supervision of the Chief Financial
that the Financial Statements of the Bank and the Group give a true and fair view of:
the Group as at 31st December 2016: and
year ended 31st December 2016
The Financial Statements of the Bank and
for their preparation, as required by the Companies Act. The accounts have been circulated and reviewed by the Board Audit Committee and Board of Directors. Further, the Financial Statements of the Bank and the Group have been signed by three Directors and the Company Secretary in conformity with the requirements of the Companies Act.
In preparing these Financial Statements, the Directors are required to ensure that:
The appropriate accounting policies have been selected and applied in a consistent manner and material departures, if any, have been disclosed and explained;
The Financial Statements are presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) and are consistent with the underlying books of account;
Reasonable and prudent judgments and estimates have been made so that the form and substance of
The Financial Statements provide the information required by the Companies Act, Banking Act No. 30 of 1988 (Banking Act) and the Listing Rules of the Colombo Stock Exchange.
The companies within the Group
position of the Group with reasonable accuracy.
The Directors are also required to ensure that the Bank and the Group have adequate resources to continue in operation and to justify applying the going concern basis in preparing these Financial Statements.
Financial Statements for the year 2016, prepared and presented in this Annual Report are consistent with the underlying books of account and are in conformity with the requirements of Sri Lanka Accounting Standards, Companies Act, Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, Banking Act and amendments thereto, the continuing Listing Rules of the Colombo Stock Exchange (CSE) and the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka (ICASL) & the Securities and Exchange Commission of Sri Lanka (SEC). Further these Financial Statements comply with the prescribed format issued by the Central Bank of Sri Lanka (CBSL) for the preparation of annual Financial Statements of licensed commercial banks. The Directors accept
responsibility for the integrity and objectivity of the Financial Statements published in this
preparing the Financial Statements given on pages 238 to 376, appropriate accounting policies have been selected and applied
framework on a consistent basis, while reasonable and prudent judgments have been made so that the form and substance
The Directors have taken appropriate steps to ensure that the Bank and the Group maintain proper books of account and
by them at their regular meetings and also through the Board Audit Committee. The Report of the Board Audit Committee is given on pages 198 to 201. The Board of Directors also approves the Interim Financial Statements prior to their release, following a review and recommendation by the Board Audit Committee.
The Directors have taken all reasonable steps open to them to safeguard the assets of the Bank and the Group and to prevent and detect frauds and any other irregularities. For this purpose the Directors
systems of internal controls for identifying, recording, evaluating and managing
throughout the year and it is being under regular review of the Board of Directors. This comprises internal reviews, internal
and other controls required to carry on the operations in an orderly manner, safeguard the assets, prevent and detect frauds and other irregularities and secure as far as practicable the accuracy and reliability of the records.
Based on their assessment of Internal Control Over Financial Reporting (ICOFR), in compliance with section 3(8)(ii)(b) of the Banking Act Direction No. 11 of 2007 on Corporate Governance, the Directors have concluded that, as of 31st December 2016, the Group’s internal controls over
Directors’ Statement on Internal Control Over Financial Reporting and Annual Report
236 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING
the Company are provided on pages 231 & 232 and pages 221 to 230 respectively of this Annual Report. The External Auditors’ Independent Assurance Report on the “Directors’ Statement on Internal Control Over Financial Reporting” is given on page 233 of this Annual Report.
As required by section 56(2) of the Companies Act, the Directors have made an assessment of the Solvency of the Bank, immediately after the proposed interim and
Section 57 of Companies Act. The Directors
Solvency from the External Auditors of the Bank, Messrs Ernst & Young.
Messrs Ernst & Young, Chartered Accountants, the External Auditors of the Bank were provided with every opportunity to undertake the inspections they considered appropriate. They have examined the Financial Statements made available to them by the Directors
data, minutes of the Shareholders’ meetings, Directors’ meetings, Board Audit Committee meetings and other Board Sub Committee meetings and expressed their opinion as reported by them in the Annual Report on page 237.
COMPLIANCE REPORT
their knowledge, all taxes, duties and levies payable by the Bank and its Subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Bank and its Subsidiaries and all other known statutory dues as were due and payable by the Bank and its Subsidiaries as at reporting date have been paid or, where
in Note 48 to the Financial Statements covering contingent liabilities. The Directors
the accounting controls are adequate
and nothing has come to their attention to indicate that any breakdown in the functioning of these controls, resulting in material loss to the Bank. The Directors also
resources to continue in operational existence and as a going concern for the foreseeable future.
The Directors are of the view that they have discharged their responsibilities as set out in the above statement.
By order of the Board,
ANUJA GOONETILLEKECompany Secretary
Colombo, Sri Lanka13th February 2017
FINANCIAL INFORMATION
237
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS As required by Section 163(2) of the Companies Act No. 7 of 2007, we state the following: a) The basis of opinion, scope and
limitations of the audit are as stated above.
b) In our opinion : we have obtained all the information
and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Bank,
Bank give a true and fair view
year then ended in accordance with Sri Lanka Accounting Standards, and
and the Group, comply with the requirements of Section 151 and 153 of the Companies Act No. 7 of 2007.
Ernst & YoungChartered Accountants
13 February 2017Colombo
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF SAMPATH BANK PLC
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying
PLC, (the “Bank”), and the consolidated
subsidiaries (the “Group”), which comprise
31 December 2016, and the statement of
income, statement of changes in equity
accounting policies and other explanatory information set out on pages 238 to 376.
BOARD’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Board of Directors (the “Board”) is responsible for the preparation of these
fair view in accordance with Sri Lanka Accounting Standards, and for such internal controls as Board determines is necessary
statements that are free from material misstatement, whether due to fraud or error.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion
on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the
misstatement.
An audit involves performing procedures to obtain audit evidence about the
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of
statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board, as well as evaluating the overall presentation of the
We believe that the audit evidence we have
provide a basis for our audit opinion.
OPINION
statements give a true and fair view of
then ended in accordance with Sri Lanka Accounting Standards.
238 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF PROFIT OR LOSS
Note Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Gross income 6 67,584,689 47,031,516 70,445,341 49,101,837
Interest income 56,529,281 37,943,691 58,976,384 39,706,286Less: Interest expense 33,775,753 20,541,894 35,021,019 21,155,900Net interest income 7 22,753,528 17,401,797 23,955,365 18,550,386
Fee & commission income 8,049,148 6,487,873 8,202,842 6,620,894Less: Fee & commission expense 1,464,601 1,201,320 1,467,464 1,203,683Net fee & commission income 8 6,584,547 5,286,553 6,735,378 5,417,211
Net trading gain / (loss) 9 233,850 (341,316) 233,850 (341,316)10 129,306 98,468 129,371 98,528
Other operating income 11 2,643,104 2,842,800 2,902,894 3,017,445
Total operating income 32,344,335 25,288,302 33,956,858 26,742,254
Less: Net impairment charge for loans & other losses 12 1,459,825 943,569 1,535,014 992,844Net operating income 30,884,510 24,344,733 32,421,844 25,749,410
Less: Operating expensesPersonnel expenses 13 7,332,627 6,141,259 7,834,670 6,524,403Other operating expenses 14 8,138,002 7,198,177 8,431,122 7,437,635Total operating expenses 15,470,629 13,339,436 16,265,792 13,962,038
15,413,881 11,005,297 16,156,052 11,787,372
15 2,814,023 1,904,424 2,942,523 1,997,72912,599,858 9,100,873 13,213,529 9,789,643
Less: Income tax expense 16 3,475,188 2,966,932 3,712,283 3,161,4539,124,670 6,133,941 9,501,246 6,628,190
Attributable to:Equity holders of the Bank 9,124,670 6,133,941 9,496,073 6,623,346Non - controlling interest 5,173 4,844
9,124,670 6,133,941 9,501,246 6,628,190
Earnings per share : Basic / Diluted (Rs) 17 51.56 34.66 53.66 37.42
Dividend per share 18
Dividend per share: Gross (Rs) 18.75* 13.00 Dividend per share: Net (Rs) 16.90* 11.75
28th February 2017) and the Annual General Meeting (to be held on 31st March 2017) respectively.
The Notes to the Financial Statements from pages 246 to 376 form an integral part of these Financial Statements.
FINANCIAL INFORMATION
239
STATEMENT OF COMPREHENSIVE INCOME
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
9,124,670 6,133,941 9,501,246 6,628,190
Other comprehensive income
382,982 (423,771) 382,982 (423,771)
(3,376) - (3,376) -
15,990 32,061 15,990 32,061
395,596 (391,710) 395,596 (391,710)
564,648 115,940 565,971 115,215
(158,102) (32,463) (158,460) (32,027)
406,546 83,477 407,511 83,188
Surplus from revaluation of property, plant & equipment 602,205 - 1,500,782 -
(44,223) - (44,223) -
557,982 - 1,456,559 -
964,528 83,477 1,864,070 83,188
Other comprehensive income net of tax 1,360,124 (308,233) 2,259,666 (308,522)
Total comprehensive income for the year net of tax 10,484,794 5,825,708 11,760,912 6,319,668
Attributable to:
Equity holders of the Bank 10,484,794 5,825,708 11,730,064 6,314,800
Non - controlling interest - - 30,848 4,868
10,484,794 5,825,708 11,760,912 6,319,668 The Notes to the Financial Statements from pages 246 to 376 form an integral part of these Financial Statements.
240 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF FINANCIAL POSITION
Note Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
ASSETS
Cash & cash equivalents 20 17,064,013 13,588,075 17,221,809 13,713,456
Balances with Central Bank of Sri Lanka 21 33,724,856 21,341,882 33,724,856 21,341,882
Placements with banks 22 8,749,763 5,193,369 8,749,763 5,193,369
Reverse repurchase agreements 33,860,083 - 34,629,422 -
23 109,872 319,461 109,872 319,461
Financial assets - held for trading 24 28,109,193 1,889,058 28,117,789 1,898,074
Financial assets - held for trading pledged as collaterals 25 10,380,213 2,702,785 10,371,617 2,693,769
Loans to & receivables from banks 26 2,641,733 1,651,205 2,641,733 1,651,205
Loans to & receivables from other customers 27 456,189,052 375,696,530 472,754,947 386,277,744
Other loans & receivables 28 38,708,440 33,368,274 38,708,440 33,368,274
Financial assets - available for sale 29 14,270,190 51,250,411 14,329,468 51,941,479
Financial assets - available for sale pledged as collaterals 30 657,903 7,210,585 598,681 6,519,573
Financial assets - held to maturity 31 - - 16,933 63,121
Investment in subsidiaries 32 1,227,896 1,079,921 - -
Property, plant & equipment 33 5,971,517 5,313,491 10,709,207 8,696,577
Intangible assets 34 337,348 342,193 356,131 368,369
Current tax receivables 40 - - 10,365 2,249
Deferred tax assets 35 - - 857 23,368
Other assets 36 6,510,214 4,329,933 7,046,611 4,575,482
Total Assets 658,512,286 525,277,173 680,098,501 538,647,452
LIABILITIES
Due to banks 37 6,023,932 3,418,499 6,071,196 3,418,499
23 63,611 457,058 63,611 457,058
Securities sold under repurchase agreements 10,159,225 9,316,122 10,095,117 8,662,930
Due to other customers 38 510,566,655 406,323,019 513,433,826 407,163,665
Debt issued & other borrowed funds 39 72,128,237 57,016,284 84,179,232 65,170,977
Dividend payable 84,860 90,969 84,860 90,969
Current tax liabilities 40 4,316,297 4,939,539 4,386,251 5,021,362
Deferred tax liabilities 35 872,794 313,181 1,077,674 433,175
Other liabilities 41 9,059,401 7,216,643 10,182,582 7,932,992
Other provisions 42 748,440 1,060,785 782,075 1,092,626
Total Liabilities 614,023,452 490,152,099 630,356,424 499,444,253
FINANCIAL INFORMATION
241
Note Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
EQUITY
Stated capital 43 6,471,200 5,381,405 6,471,200 5,381,405
Reserves
Statutory reserve 44 2,250,000 1,790,000 2,336,422 1,860,058
Other reserves 45 31,370,185 24,887,372 34,619,026 27,242,985
Retained earnings 46 4,397,449 3,066,297 6,315,429 4,624,088
Total equity attributable to equity holders of the Bank 44,488,834 35,125,074 49,742,077 39,108,536
Non - controlling interest 47 - 94,663
Total Equity 44,488,834 35,125,074 49,742,077 39,203,199
Total Liabilities & Equity 658,512,286 525,277,173 680,098,501 538,647,452
Commitments & contingencies 48 343,980,307 313,112,257 345,115,627 312,277,002
Net asset value per share (Rs) 251.38 198.47 281.06 220.98
The Notes to the Financial Statements from pages 246 to 376 form an integral part of these Financial Statements. I certify that these Financial Statements are presented in compliance with the requirements of the Companies Act No. 07 of 2007. AJANTHA DE VAS GUNASEKARA
The Board of Directors is responsible for the preparation & presentation of these Financial Statements. Approved and signed for and on behalf of the Board,
CHANNA PALANSURIYA NANDA FERNANDO RANJITH SAMARANAYAKE ANUJA GOONETILLEKEChairman Managing Director Group Finance Director Company Secretary Colombo, Sri Lanka 13th February 2017
242 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF CASH FLOWS
Note Bank GroupFor the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Interest receipts 54,848,251 37,700,779 57,238,318 39,476,071Net commission receipts 6,674,692 5,393,014 6,825,523 5,523,670Interest payments (28,423,817) (18,487,346) (29,473,406) (19,054,339)Receipts from other operating activities 2,560,571 2,796,738 2,902,596 3,030,137Cash payments to employees (6,042,617) (5,193,685) (6,535,276) (5,569,494)Cash payments to other operating activities (7,360,131) (6,274,449) (7,286,587) (6,344,200)
(2,458,537) (1,818,804) (2,576,492) (1,912,109)
liabilities (Note a) 19,798,412 14,116,247 21,094,676 15,149,736
Increase in operating assetsBalances with Central Bank of Sri Lanka (12,382,974) (3,734,631) (12,382,974) (3,734,631)Loans to & receivables from banks (988,151) (716,229) (988,151) (716,229)Loans to & receivables from other customers (80,775,123) (75,306,945) (86,797,280) (77,815,363)Other assets (1,979,038) (1,044,839) (2,241,175) (991,178)
(96,125,286) (80,802,644) (102,409,580) (83,257,401)
Increase / (decrease) in operating liabilitiesDue to banks 2,573,796 1,111,503 2,573,796 1,111,503 Re-purchase agreements 843,683 (3,697,910) 1,432,767 (3,850,060)Due to other customers 99,745,295 64,698,283 101,696,500 65,802,936 Other liabilities 386,357 1,170,695 646,217 1,541,506
103,549,131 63,282,571 106,349,280 64,605,885
Net cash generated from / (used in) operating activities before income tax 27,222,257 (3,403,826) 25,034,376 (3,501,780)Income tax & super gain tax paid (3,741,142) (1,136,662) (3,891,183) (1,434,121)Net cash generated from / (used in) operating activities 23,481,115 (4,540,488) 21,143,193 (4,935,901)
Net investments in placements with banks (Maturity more than three months) (976,185) - (976,185) -
(33,837,000) 31,045,000 (34,599,901) 31,045,000(33,849,866) 25,545,069 (33,849,865) 25,545,008
- 971,817 46,189 912,895(5,066,087) (8,965,690) (5,066,087) (8,965,690)
43,902,279 (57,026,686) 43,902,279 (57,026,687)61,919 56,413 61,984 56,473
Dividend received from subsidiaries 30,600 58,950 - -Investment in subsidiary 47 (100,000) (20,000) (100,000) -Purchase of property, plant & equipment 33 (657,344) (815,127) (1,361,503) (1,113,213)Purchase of intangible assets 34 (105,164) (69,247) (108,011) (77,376)Proceeds from disposal of property plant & equipment 4,258 14,322 6,640 14,747 Net cash used in investing activities (30,592,590) (9,205,179) (32,044,460) (9,608,843)
Dividend paid to non - controlling interest 47 - - (1,000) (1,000)Decrease in commercial papers - - (206) (648,116)Increase in debentures 39.1 6,000,000 7,000,000 8,500,000 6,732,670Increase in other borrowed funds 8,328,324 13,294,302 9,604,473 15,068,622Dividend paid (1,150,269) (935,758) (1,150,269) (935,758)
13,178,055 19,358,544 16,952,998 20,216,418
Net cash generated / (used) during the year 6,066,580 5,612,877 6,051,731 5,671,674Cash & cash equivalents at the beginning of the year 18,450,837 12,837,960 18,576,218 12,904,544Cash & cash equivalents at the end of the year (Note b) 24,517,417 18,450,837 24,627,949 18,576,218 The Notes to the Financial Statements from pages 246 to 376 form an integral part of these Financial Statements.
FINANCIAL INFORMATION
243
NOTE (a) - RECONCILIATION OF OPERATING PROFIT BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES
Note Bank GroupFor the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
12,599,858 9,100,873 13,213,529 9,789,643 Interest income accrued on impaired loans & receivables 7.1 (261,567) (212,711) (261,580) (212,873)Net trading gain / (loss) 9 Forward exchange contract revaluation (gain) / loss (183,858) 262,642 (183,858) 262,642 Capital gain (16,942) (76,249) (16,942) (76,249) Dividend income (2,295) (15,505) (2,295) (15,505) Net mark to market (gain) / loss (30,755) 170,428 (30,755) 170,428
10 (125,052) (81,049) (125,117) (81,109)
(3,376) (17,419) (3,376) (17,419) Capital gain - other loans & receivables (878) - (878) - Other operating income 11 Dividend income from Subsidiaries (82,575) (58,950) - -
42 (4,531) (298) (4,787)Net impairment charge for loans & other losses 12 1,459,825 943,569 1,535,014 992,844 Other operating expenses 14 Depreciation of property, plant & equipment 599,081 604,945 845,172 766,527 Amortisation of intangible assets 110,009 95,216 120,249 103,339 Accrual for interest and commission income (1,329,318) 76,258 (1,386,341) 89,117 Accrual for interest expense 5,351,936 2,054,548 5,547,613 2,101,622 Accrual and non - cash expenses for personnel and other expenses 1,714,277 1,274,182 1,844,539 1,281,516
liabilities 19,798,412 14,116,247 21,094,676 15,149,736
NOTE (b) - RECONCILIATION OF CASH AND CASH EQUIVALENTS
Note Bank GroupAs at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Local currency in hand 20 6,822,773 7,499,502 6,971,898 7,582,388 Foreign currency in hand 20 594,551 1,454,651 594,551 1,454,651 Balances with local banks 20 458,375 61,267 467,046 103,762 Balances with foreign banks 20 2,709,271 1,642,172 2,709,271 1,642,172 Money at call & short notice 20 6,479,043 2,930,483 6,479,043 2,930,483 Placements less than three months 22 7,770,904 5,193,369 7,770,904 5,193,369 Unfavourable balances with local & foreign banks 37 (317,500) (330,607) (364,764) (330,607)Cash & cash equivalents at the end of the year 24,517,417 18,450,837 24,627,949 18,576,218
The Notes to the Financial Statements from pages 246 to 376 form an integral part of these Financial Statements.
244 SAMPATH BANK PLC
ANNUAL REPORT 2016B
ank
Sta
ted
Cap
ital
(N
ote
43)
Sta
tuto
ry R
eser
ve
Fund
(N
ote
44)
Oth
er R
eser
ves
Ret
aine
d E
arni
ngs
(No
te 4
6)
Tota
l E
qui
tyR
eval
uati
on
Res
erve
(No
te 4
5.1)
Ava
ilab
le f
or
Sal
e R
eser
ve(N
ote
45.
2)
Gen
eral
Res
erve
(N
ote
45.
3)
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Bal
ance
as
at 1
st J
anua
ry 2
015
4,4
70,1
51
1,4
80,0
00
1,8
46,6
49
1,2
67,4
33
18,
665,
000
3,1
82,7
46
30,
911,
979
Sup
er g
ain
tax
-
-
-
-
-
(676
,765
) (6
76,7
65)
Bal
ance
aft
er s
uper
gai
n ta
x 4
,470
,151
1
,480
,000
1
,846
,649
1
,267
,433
1
8,66
5,00
0 2
,505
,981
3
0,23
5,21
4 To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
5 -
-
-
-
-
6
,133
,941
6
,133
,941
O
ther
com
preh
ensi
ve in
com
e -
-
-
(3
91,7
10)
-
83,
477
(308
,233
)To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
5 -
-
-
(3
91,7
10)
-
6,2
17,4
18
5,8
25,7
08
Tran
sact
ions
wit
h eq
uity
ho
lder
s, r
eco
gni
sed
dir
ectl
y in
eq
uity
, co
ntri
but
ions
by
and
dis
trib
utio
ns t
o
eq
uity
ho
lder
s
Fina
l div
iden
d fo
r 20
14 :
Cas
h -
-
-
-
-
(8
39,5
51)
(839
,551
)Fi
nal d
ivid
end
for
2014
: S
crip
911
,254
-
-
-
-
(1
,007
,461
) (9
6,20
7)U
ncla
imed
div
iden
d ad
just
men
ts -
-
-
-
(9
0) -
(9
0)To
tal c
ont
rib
utio
ns b
y an
d d
istr
ibut
ions
to
eq
uity
ho
lder
s 9
11,2
54
-
-
-
(90)
(1,8
47,0
12)
(935
,848
)Tr
ansf
er to
rese
rves
dur
ing
the
year
-
310
,000
-
-
3
,500
,090
(3
,810
,090
) -
B
alan
ce a
s at
31s
t D
ecem
ber
201
5 5
,381
,405
1
,790
,000
1
,846
,649
8
75,7
23
22,
165,
000
3,0
66,2
97
35,
125,
074
Bal
ance
as
at 1
st J
anua
ry 2
016
5,3
81,4
05
1,7
90,0
00
1,8
46,6
49
875
,723
2
2,16
5,00
0 3
,066
,297
3
5,12
5,07
4 To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
6 -
-
-
-
-
9
,124
,670
9
,124
,670
O
ther
com
preh
ensi
ve in
com
e -
-
5
57,9
82
395
,596
-
4
06,5
46
1,3
60,1
24
Tota
l co
mp
rehe
nsiv
e in
com
e fo
r th
e ye
ar 2
016
-
-
557
,982
3
95,5
96
-
9,5
31,2
16
10,
484,
794
Tran
sact
ions
wit
h eq
uity
ho
lder
s, r
eco
gni
sed
dir
ectl
y in
eq
uity
, co
ntri
but
ions
by
and
dis
trib
utio
ns t
o
e
qui
ty h
old
ers
Fina
l div
iden
d fo
r 20
15 :
Cas
h -
-
-
-
-
(1
,033
,876
) (1
,033
,876
)Fi
nal d
ivid
end
for
2015
: S
crip
1,0
89,7
95
-
-
-
-
(1,2
06,1
88)
(116
,393
)U
ncla
imed
div
iden
d ad
just
men
ts -
-
-
-
2
9,23
5 -
2
9,23
5 To
tal c
ont
rib
utio
ns b
y an
d d
istr
ibut
ions
to
eq
uity
ho
lder
s 1
,089
,795
-
-
-
2
9,23
5 (2
,240
,064
) (1
,121
,034
)Tr
ansf
er to
rese
rves
dur
ing
the
year
-
460
,000
-
-
5
,500
,000
(5
,960
,000
) -
B
alan
ce a
s at
31s
t D
ecem
ber
201
6 6
,471
,200
2
,250
,000
2
,404
,631
1
,271
,319
2
7,69
4,23
5 4
,397
,449
4
4,48
8,83
4
The
Not
es to
the
Fina
ncia
l Sta
tem
ents
from
pag
es 2
46 to
376
form
an
inte
gral
par
t of t
hese
Fin
anci
al S
tate
men
ts.
STATEMENT OF CHANGES IN EQUITY
FINANCIAL INFORMATION
245G
roup
Sta
ted
C
apit
al
(No
te 4
3)
Sta
tuto
ry R
eser
ve
Fund
(N
ote
44)
Oth
er R
eser
ves
Ret
aine
d E
arni
ngs
(No
te 4
6)
Sha
reho
lder
s’
Fund
No
n -
Co
ntro
lling
In
tere
st
(No
te 4
7)
Tota
l E
qui
tyR
eval
uati
on
Res
erve
(N
ote
45.
1)
Ava
ilab
le f
or
Sal
e R
eser
ve (N
ote
45.
2)
Gen
eral
R
eser
ve
(No
te 4
5.3)
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
anua
ry 2
015
4,4
70,1
51
1,5
30,8
31
4,2
02,2
61
1,2
67,4
33
18,
665,
001
4,3
75,6
67
34,
511,
344
92,
285
34,
603,
629
Sup
er g
ain
tax
-
-
-
-
-
(781
,760
) (7
81,7
60)
(1,4
90)
(783
,250
)B
alan
ce a
fter
sup
er g
ain
tax
4,4
70,1
51
1,5
30,8
31
4,2
02,2
61
1,2
67,4
33
18,
665,
001
3,5
93,9
07
33,
729,
584
90,
795
33,
820,
379
Tota
l co
mp
rehe
nsiv
e in
com
e fo
r th
e ye
ar 2
015
-
-
-
-
-
6,6
23,3
46
6,6
23,3
46
4,8
44
6,6
28,1
90
Oth
er c
ompr
ehen
sive
inco
me
-
-
-
(391
,710
) -
8
3,16
4 (3
08,5
46)
24
(308
,522
)To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
5 -
-
-
(3
91,7
10)
-
6,7
06,5
10
6,3
14,8
00
4,8
68
6,3
19,6
68
Tran
sact
ions
wit
h eq
uity
ho
lder
s, r
eco
gni
sed
dir
ectl
y in
eq
uity
, co
ntri
but
ions
by
and
dis
trib
utio
ns t
o e
qui
ty h
old
ers
Fina
l div
iden
d fo
r 20
14 :
Cas
h -
-
-
-
-
(8
39,5
51)
(839
,551
) (1
,000
) (8
40,5
51)
Fina
l div
iden
d fo
r 20
14 :
Scr
ip 9
11,2
54
-
-
-
-
(1,0
07,4
61)
(96,
207)
-
(96,
207)
Unc
laim
ed d
ivid
end
adju
stm
ents
-
-
-
-
(90)
-
(90)
-
(90)
Tota
l co
ntri
but
ions
by
and
dis
trib
utio
ns t
o
e
qui
ty h
old
ers
911
,254
-
-
-
(9
0) (1
,847
,012
) (9
35,8
48)
(1,0
00)
(936
,848
)Tr
ansf
er to
rese
rves
dur
ing
the
year
-
329
,227
-
-
3
,500
,090
(3
,829
,317
) -
-
-
B
alan
ce a
s at
31s
t D
ecem
ber
201
5 5
,381
,405
1
,860
,058
4
,202
,261
8
75,7
23
22,
165,
001
4,6
24,0
88
39,
108,
536
94,
663
39,
203,
199
Bal
ance
as
at 1
st J
anua
ry 2
016
5,3
81,4
05
1,8
60,0
58
4,2
02,2
61
875
,723
2
2,16
5,00
1 4
,624
,088
3
9,10
8,53
6 9
4,66
3 3
9,20
3,19
9 To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
6 -
-
-
-
-
9
,496
,073
9
,496
,073
5
,173
9
,501
,246
O
ther
com
preh
ensi
ve in
com
e -
-
1
,430
,885
3
95,5
96
-
407
,510
2
,233
,991
2
5,67
5 2
,259
,666
To
tal c
om
pre
hens
ive
inco
me
for
the
year
201
6 -
-
1
,430
,885
3
95,5
96
-
9,9
03,5
83
11,
730,
064
30,
848
11,
760,
912
Tran
sact
ions
wit
h eq
uity
ho
lder
s, r
eco
gni
sed
dir
ectl
y in
eq
uity
, co
ntri
but
ions
by
and
dis
trib
utio
ns t
o e
qui
ty h
old
ers
Fina
l div
iden
d fo
r 20
15 :
Cas
h -
-
-
-
-
(1
,033
,876
) (1
,033
,876
) (1
,000
) (1
,034
,876
)Fi
nal d
ivid
end
for
2015
: S
crip
1,0
89,7
95
-
-
-
-
(1,2
06,1
88)
(116
,393
) -
(1
16,3
93)
Unc
laim
ed d
ivid
end
adju
stm
ents
-
-
-
-
29,
235
-
29,
235
-
29,
235
Tota
l co
ntri
but
ions
by
and
dis
trib
utio
ns t
o
e
qui
ty h
old
ers
1,0
89,7
95
-
-
-
29,
235
(2,2
40,0
64)
(1,1
21,0
34)
(1,0
00)
(1,1
22,0
34)
Tran
sfer
of r
emai
ning
non
- c
ontr
ollin
g in
tere
st to
par
ent’s
equ
ity -
-
2
0,32
5 -
-
4
,186
2
4,51
1 (1
24,5
11)
(100
,000
)
Tran
sfer
to re
serv
es d
urin
g th
e ye
ar -
4
76,3
64
-
-
5,5
00,0
00
(5,9
76,3
64)
-
-
-
Bal
ance
as
at 3
1st
Dec
emb
er 2
016
6,4
71,2
00
2,3
36,4
22
5,6
53,4
71
1,2
71,3
19
27,
694,
236
6,3
15,4
29
49,
742,
077
-
49,
742,
077
The
Not
es to
the
Fina
ncia
l Sta
tem
ents
from
pag
es 2
46 to
376
form
an
inte
gral
par
t of t
hese
Fin
anci
al S
tate
men
ts.
246 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
1 REPORTING ENTITY
1.1 GeneralSampath Bank PLC (‘The Bank’), is a domiciled, public limited liability company incorporated in Sri Lanka on 10th March 1986 under the Companies Act No. 17 of 1982. It is a Licensed Commercial Bank registered under the Banking Act No. 30 of 1988 (Banking Act) and amendments thereto. The Bank was re-registered with the Registrar General of Companies as per the requirements of the Companies Act No. 7 of 2007 (Companies Act) on 28th April 2008 under the name of Sampath Bank
is located at No. 110, Sir James Peiris Mawatha, Colombo 02. The shares of the Bank have a primary listing on the Colombo
Bank as at 31st December 2016 was 3,960 (2015: 3,993).
1.2 Consolidated Financial Statements
The Consolidated Financial Statements of the Bank as at and for the year ended 31st December 2016 comprise the Bank (Parent Company) and its Subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Subsidiaries of the Bank as at 31st December 2016 were Sampath Centre Ltd, S C Securities (Pvt) Ltd, Siyapatha Finance PLC and Sampath Information Technology Solutions Ltd.
Sampath Bank PLC is the ultimate parent of the Group.
The Financial Statements of all companies
which ends on 31st December.
1.3 Principal Activities and Nature of Operations
1.3.1 BankThe Bank provides a comprehensive
accepting deposits, corporate and retail
treasury and investment services, issuing
banking, resident and non-resident foreign currency operations, electronic banking services such as: telephone banking, internet banking, mobile banking and money remittance facilities, pawning, leasing, factoring, hire purchase, travel related services and dealing in government securities etc.
1.3.2 SubsidiariesOwnership of Subsidiaries as of 31st December 2016 and 31st December 2015 is given in Note 32 to the Financial
changes in the nature of the principal
year under review.
2 BASIS OF PREPARATION
2.1 Statement of Compliance The Consolidated Financial Statements of the Group and the Separate Financial Statements of the Bank, which comprise the Statement of Financial Position,
of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Financial Statements have been prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRSs and LKASs) laid down by the Institute of Chartered Accountants of Sri Lanka and in compliance with the requirements of the Companies Act No. 7 of 2007. The presentation of the Financial Statements is also in compliance with the requirements of the Banking Act No. 30 of 1988 and amendments thereto.
2.2 Responsibility for Financial Statements
The Board of Directors is responsible for the preparation and presentation of Financial Statements of the Group and the Bank as per Sri Lanka Accounting Standards and the provisions of the Companies Act No. 7 of 2007.
2.3 Approval of Financial Statements by Directors
The Financial Statements of the Group as at and for the year ended 31st December 2016 were authorized for issue by the Board of Directors in accordance with the resolution of the Directors on 13th February 2017.
2.4 Basis of MeasurementThe Financial Statements of the Group have been prepared on the historical cost basis, except for the following material items in the Statement of Financial Position:
measured at fair value (Note 23) Available for sale investments are
measured at fair value (Note 29 & Note 30)
measured at fair value (Note 24 & Note 25)
Land and buildings which are measured at cost at the time of acquisition subsequently measured at revalued amounts, which are the fair values at the date of revaluation (Note 33)
obligations are recognised at the
obligation less the fair value of the plan assets (Note 42)
2.5 Functional and Presentation Currency
The Financial Statements of the Group are presented in Sri Lankan Rupees (Rs), which is the currency of the primary economic environment in which Sampath Bank PLC operates. Financial information presented in Sri Lankan Rupees has been rounded to the nearest thousand unless indicated otherwise. There was no change in the Group’s presentation and functional currency during the year under review.
2.6 Presentation of Financial Statements
The assets and liabilities of the Group presented in the Statement of Financial Position are grouped by nature and listed in
and maturity pattern. No adjustments have
the Financial Statements. An analysis on recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current) is presented in the Note 54.
2.7 Materiality and AggregationIn compliance with Sri Lanka Accounting Standard - LKAS 01 (Presentation of Financial Statements), each material class of similar items is presented separately in the Financial Statements. Items of dissimilar nature or functions too are presented separately unless they are immaterial.
the Statement of Financial Position only when there is a legally enforceable right to
is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously. Income and expenses
FINANCIAL INFORMATION
247
Loss unless required or permitted by an Accounting Standard.
2.8 Comparative Information
wherever necessary to conform to the current year’s presentation the details of which are given in Note 55 to the Financial Statements.
2.9 Statement of Cash Flow
prepared by using the direct method in accordance with the Sri Lanka Accounting Standard - LKAS 7 (Statement of Cash Flows), whereby gross cash receipts and gross cash payments of operating
activities have been recognised. Cash and cash equivalents comprise short term, highly liquid investments that are readily convertible to known amounts of cash
changes in value.
Cash and cash equivalents include cash in hand, balances with banks, placements with banks (less than 3 months), money at call and short notice net of unfavourable local & foreign bank balances.
Judgments, Estimates and Assumptions
The preparation of Financial Statements of the Group in conformity with Sri Lanka Accounting Standards requires the management to make judgments, estimates
of accounting policies and the reported amounts of assets, liabilities, income and
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and
uncertainty and critical judgments in applying accounting policies that have
recognised in the Financial Statements of the Group are as follows:
2.10.1 Going ConcernThe Directors have made an assessment of the Group’s ability to continue as a going
resources to continue in business for the foreseeable future. Furthermore, Board is not aware of any material uncertainties
Group’s ability to continue as a going concern and they do not intend either to liquidate or to cease operations of the Group. Therefore, the Financial Statements continue to be prepared on the going concern basis.
2.10.2 Impairment Losses on Loans and Advances
loans and advances at each reporting date to assess whether an impairment loss should be recorded in the Statement of
judgment is required in the estimation of
when determining the impairment loss.
These estimates are based on assumptions about a number of factors and actual
changes to the impairment allowance made.
Loans and advances that have been assessed individually and found to be not
loans and advances are then assessed collectively, by categorising them into groups of assets with similar risk characteristics, to determine whether a provision should be made due to incurred loss events for which there is
which are not yet evident. The collective assessment takes account of data from the loan portfolio such as credit quality, portfolio size, concentration etc. as well as judgments based on current economic conditions. Impairment of loans and advances is discussed in detail under Note 3.3.8 to the Financial Statements.
2.10.3 Impairment of Available for Sale Investments
The Group reviews its debt securities
reporting date to assess whether they are impaired. Objective evidence that an available for sale debt security is impaired
contract such as a default or delinquency in interest or principal payments etc. The Group also records impairment charges on available for sale equity investments
decline in fair value below their cost. The
‘prolonged’ requires judgment. The Group
more and ‘prolonged’ as greater than six months. In addition, the Group evaluates, among other factors, historical share price movements, duration and extent up to which the fair value of an investment is less than its cost.
2.10.4 Fair Value of Financial Instruments
on the Statement of Financial Position for which there is no observable market price are determined using a variety of valuation techniques that include the use of mathematical models. The valuation of
detail in Note 52.
The Group measures fair value using the fair
of input used in making measurements. The fair value hierarchy is given in Note 52.4.
2.10.5 Financial Assets and Liabilities
The Group’s accounting policies provide scope for assets and liabilities to be
19, ‘Analysis of Financial Instruments by Measurement Basis’.
2.10.6 TaxationThe Group is subject to income tax and judgment is required to determine the total provision for current, deferred and other taxes due to the uncertainties that exist with respect to the interpretation of the applicable tax laws, at the time of preparation of these Financial Statements.
the present value of their obligations are determined using actuarial valuations.
248 SAMPATH BANK PLC
ANNUAL REPORT 2016
The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and possible future pension increases if any. Due to the long term nature of these plans,
uncertainty. All assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management considers the interest rates of Sri Lanka government bonds with maturities corresponding to the expected
The mortality rate is based on publicly available mortality tables. Future salary increases and pension increases are
expected future salary increase rates of the Group.
2.10.8 Fair Value of Property, Plant and Equipment
The freehold land and buildings of the
date of revaluation less any accumulated depreciation and impairment losses. The Group engages independent valuation specialists to determine fair value of freehold lands and buildings in terms of the Sri Lanka Accounting Standard -SLFRS 13, (Fair Value Measurement). The details of freehold land and buildings including methods of valuation are given in Note 33.3 to the Financial Statements.
2.10.9 Useful Life-time of the Property, Plant and Equipment
The Group reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting date. Judgment of the management is exercised in the estimation of these values, rates, methods and hence they are subject to uncertainty.
2.10.10 Commitments and Contingencies
All discernible risks are accounted for in determining the amount of all known liabilities. Contingent liabilities are possible obligations whose existence will be
or present obligations where the transfer of
be reliably measured. Contingent liabilities are not recognised in the Statement of Financial Position but are disclosed unless they are remote. Details of commitments and contingencies are given in Note 48.
PropertiesManagement requires using its judgment
as an investment property. The Group has developed criteria so it can exercise its judgment consistently. A property that is held to earn rentals or for capital appreciation or both and which generates
the other assets held by the Group are accounted for as investment properties. On the other hand, a property that is used for operations or in the process of providing services or for administrative purposes and which do not directly generate cash
for as property, plant and equipment. The Group assesses on an annual basis the
taking into consideration the current use of such properties. Currently the Group does not have any investment property.
3 GENERAL ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these Financial Statements, unless otherwise indicated.
3.1 Basis of ConsolidationThe Group’s Financial Statements comprise consolidation of the Financial Statements of the Bank and its Subsidiaries in terms of the Sri Lanka Accounting Standard - SLFRS 10 (Consolidated Financial Statements). The Bank’s Financial Statements comprise the amalgamation of the Financial Statements of the Domestic Banking Unit and the
3.1.1 Business Combinations and Goodwill
Business combinations are accounted for using the acquisition method as per the requirements of Sri Lanka Accounting Standard - SLFRS 03 (Business Combinations).
The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair
and liabilities assumed, all measured as of the acquisition date. When the excess
is negative, a bargain purchase gain is
controlling power is acquired.
The changes in Parent’s ownership interest in a Subsidiary that do not result in the Parent losing control of the Subsidiary are equity transactions
The Group elects on a transaction-by- transaction basis whether to measure non-controlling interest at its fair value, or at its proportionate share of the recognised
the acquisition date. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
3.2 Foreign Currency Transactions and Balances
All foreign currency transactions are translated into the functional currency, which is Sri Lankan Rupees, using the exchange rates prevailing at the dates of
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Sri Lanka Rupees using the spot foreign exchange rate ruling at
non-trading activities are taken to ‘Other operating income’ in the Statement of
between amortised cost in the functional currency at the beginning of the period,
during the period, and the amortised cost in foreign currency translated at the rates of exchange prevailing at the end of the reporting period.
Non - monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rates as at the dates of the initial transactions. Non - monetary items in foreign currency measured at fair value are translated using the exchange rates at the date when the fair value was determined.
settlement or reporting of monetary items at
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
249
recorded are dealt with in the Statement of
designated as a hedge of a net investment in a foreign operation, or qualifying cash
comprehensive income.
Forward exchange contracts are valued at the forward market rates ruling on the reporting date. Resulting net unrealised gains or losses are dealt within the
trading gain / loss’.
3.3 Financial Instruments - Initial
and Subsequent Measurement
3.3.1 Date of Recognition
recognised on the trade date, i.e. the date that the Group becomes a party to the contractual provisions of the instrument. This includes ‘regular way trades’. Regular way trade means purchases or sales of
assets within the time frame generally established by regulation or convention in the market place.
3.3.2 Recognition and Initial Measurement of Financial Instruments
at the initial recognition depends on their purpose and characteristics and the management’s intention in acquiring
are given under Note 3.3.3 & Note 3.3.4
are measured initially at their fair value plus transaction costs that are directly attributable to acquisition or issue of such
Sri Lanka Accounting Standard - LKAS 39 (Financial Instruments: Recognition and Measurement). Transaction cost in relation
the fair value of other observable current
market transactions in the same instrument, or based on a valuation technique whose variables include only data from observable markets, the Group recognises the
interest rate method. In cases where fair value is determined using data which is
transaction price and model value is only
Loss when the inputs become observable, or when the instrument is derecognised.
Measurement of Financial Assets
a. Financial assets at fair value through
i. Financial assets held for trading
ii. Financial assets designated
loss
c. Loans and receivablesd. Financial assets available for sale
or loss.
trading if they are acquired principally for the purpose of selling or repurchasing in the near term or holds as a part of a portfolio that is managed together for
instruments entered into by the Group that are not designated as hedging instruments
Lanka Accounting Standard - LKAS 39 (Financial Instruments: Recognition and Measurement).
Financial assets held for trading are recorded in the Statement of Financial Position at fair value. Changes in fair value are recognised in ‘Net trading gain / loss’. Dividend income is recorded in ‘Net trading gain / loss’ when the right to receive the payment has been established. Interest
trading is recorded under ‘Interest income: Financial assets held for trading’ using the
The Group evaluates its held for trading asset portfolio, other than derivatives, to determine whether the intention to sell them in the near future is still appropriate. When the Group is unable to trade these
management’s intention to sell them in the
assets.
Financial assets held for trading include instruments such as government securities and equity instruments that have been acquired principally for the purpose of selling or repurchasing in the near term and derivatives, including separated embedded derivatives unless they are designated as
are given in Notes 24 & 25 to the Financial Statements.
following circumstances: Such designation eliminates or
or recognition inconsistency that would otherwise arise from measuring the assets
The assets are part of a group of
or both, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy
The asset contains one or more embedded derivatives that
that would otherwise have been required under the contract
250 SAMPATH BANK PLC
ANNUAL REPORT 2016
Financial assets designated at fair value
Statement of Financial Position at fair value. Changes in fair value are recorded
Interest earned is accrued under ‘Interest
method, while dividend income is recorded under ‘Other operating income’ when the right to receive the payment has been established.
The Group has not designated any
loss.
maturities, which the Group has the intention and ability to hold to maturity. After the initial recognition, held to maturity
measured at amortised cost using the
The amortization is included in ‘Interest
The losses arising from impairment of such investments are recognised in the
Details of ‘Financial investments - held to maturity’ are given in Note 31 to the Financial Statements.
Loans and receivables include non
determinable payments that are not quoted in an active market, other than: Those that the Group intends to sell
immediately or in the near term and those that the Group, upon initial recognition, designates as fair value
Those that the Group, upon initial recognition, designates as available for sale
Those for which the Group may not recover substantially all of its initial investment through contractual cash
deterioration
After initial measurement, loans and receivables are subsequently measured
interest rate, less allowance for impairment. The amortisation is included in ‘Interest
The losses arising from impairment are recognised in ‘Impairment charge / reversal for loans and other losses’ in the Statement
Loans and receivables include cash & cash equivalents, balances with Central Bank, placement with banks, reverse repurchase agreements, loans to & receivables from banks and other customers etc.
equity and debt securities. Equity
in this category are intended to be held
be sold in response to needs for liquidity or in response to changes in the market conditions. The Group has not designated any loans or receivables as available for sale.
After initial measurement, available for sale
measured at fair value. Unrealised gains and losses are recognised directly in equity through ‘Other comprehensive income / expense’ in the ‘Available for sale reserve’. When the investment is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the
Group holds more than one investment in the same security, they are deemed to
Interest earned whilst holding ‘Available
interest rate. Dividend earned whilst holding
are recognised in the Statement of
investments’ when the right to receive the payment has been established. The losses arising from impairment of such investments
Loss under ‘Impairment charge for loans and other losses’ and removed from the ‘Available for sale reserve’.
Details of ‘Financial assets - available for sale’ are given in Note 29 & Note 30 to the Financial Statements.
Measurement of Financial Liabilities
At the inception, the Group determines
as:
a. Financial liabilities at fair value
i. Financial liabilities held for trading
ii. Financial liabilities designated
lossb. Financial liabilities at amortised cost
upon initial recognition as fair value
value and changes there in are recognised
trading if they are acquired principally for the purpose of selling or repurchasing in the near term or holds as a part of a portfolio that is managed together for short-term
entered into by the Group that are not designated as hedging instruments in
Lanka Accounting Standard - LKAS 39 (Financial Instruments: Recognition and Measurement).
following circumstances: Such designation eliminates or
or recognition inconsistency that would otherwise arise from measuring the liabilities
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
251
The liabilities are part of a group of
or both, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy
The liability contains one or more embedded derivatives that
that would otherwise have been required under the contract
liabilities upon initial recognition as fair value
Financial instruments issued by the Group
liabilities at amortised cost under ‘Due to banks, ‘Due to other customers’, ‘Securities sold under repurchase agreements’ and ‘Debt issued and other borrowed funds’ as appropriate, where the substance of the contractual arrangement results in the Group having an obligation either to deliver
conditions that are potentially unfavourable to the entity or settling the obligation by delivering variable number of entity’s own equity instruments.
liabilities are subsequently measured at
rate method. Amortisation is included in ‘Interest expenses’ in the Statement
Loss when the liabilities are derecognised.
at amortised cost are shown in Note 37 (Due to banks), Note 38 (Due to other customers) and Note 39 (Debt issued and other borrowed funds) to the Financial Statements.
Instruments
The Group does not reclassify derivative
held or issued.
or loss upon initial recognition are not
The Group may, in rare circumstances,
such instruments are no longer held for the purpose of selling or repurchasing in the near term notwithstanding that
been acquired principally for the purpose of selling or repurchasing in the near
recognition which would have also met the
Group has the intention and ability to hold such asset for the foreseeable future or until maturity.
or loss already recognised in respect of the
the Group subsequently increases its estimates of future cash receipts as a result of increased recoverability of those
is recognised as an adjustment to the
the change in estimate rather than an adjustment to the carrying amount of the asset at the date of change in estimate.
or loss’ category after initial recognition.
out of available for sale category as a result of change in intention or ability or in rare circumstances that a reliable measure of fair value is no longer available.
of loans and receivables at the initial
available for sale category to the loans and receivables category if the Group has the intention and ability to hold such asset for the foreseeable future or until maturity.
between the new amortised cost and the maturity value is amortised over the
interest rate. Any gain or loss already recognised in Other Comprehensive Income
is accounted as follows.
maturity: Gain or loss recognised
the remaining life of the investment
impaired, any previous gain or loss that has been recognised in other
maturity: Gain or loss recognised
asset is subsequently impaired, any previous gain or loss that has been recognised in other comprehensive
the Group subsequently increases its estimates of future cash receipts as a result of increased recoverability of those
252 SAMPATH BANK PLC
ANNUAL REPORT 2016
is recognised as an adjustment to the
the change in estimate rather than an adjustment to the carrying amount of the asset at the date of change in estimate.
As a result of a change in intention or ability, if it is no longer appropriate to classify an investment as held to maturity, Group may
for sale and re- measured at fair value. Any
fair value is recognised in equity through other comprehensive income.
amount of held to maturity investments before maturity [other than in certain
Sri Lanka Accounting Standard - LKAS 39 (Financial Instruments: Recognition and Measurement)], the entire category would
as ‘Available for sale’. Furthermore, the Group would be prohibited from classifying
during the following two years.
of management and determined on an instrument by instrument basis. The Group
during the year.
3.3.6 Derecognition of Financial Assets and Liabilities
assets) when:
the asset have expired; or the Group has transferred its rights to
has assumed an obligation to
without material delay to a third party under a ‘pass-through’ arrangement and either the Group has transferred substantially all the risks and rewards of the asset or the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised
When the Group has transferred its rights
entered into a pass-through arrangement and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability
rights and obligations that the Group has retained.
When the Group’s continuing involvement that takes the form of guaranteeing the transferred asset, the extent of the continuing involvement is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received by the Group that the Group could be required to repay.
obligation under the liability is discharged or cancelled or expired. Where an existing
terms or the terms of an existing liability are
the original liability and the recognition of a new liability.
loss.
Securities sold under agreement to
not derecognised from the Statement of Financial Position as the Group retains substantially all of the risks and rewards of ownership. The corresponding cash received is recognised in the Statement of Financial Position as a liability with a corresponding obligation to return it, including accrued interest under ‘Securities sold under repurchase agreements’,
between the sale and repurchase prices is treated as interest expense and is accrued over the life of the agreement using the
the right to sell or repledge the securities,
Statement of Financial Position as ‘Financial assets held for trading pledged as collateral (Note 25)’ or ‘Financial assets available for sale pledged as collateral (Note 30)’, as appropriate.
Conversely, securities purchased under
date are not recognised in the Statement of Financial Position. The consideration paid, including accrued interest, is recorded in the Statement of Financial Position, under
the transaction’s economic substance to
purchase and resale prices is recorded as ‘Interest income’ and is accrued over the
interest rate. If securities purchased under agreement to resell are subsequently sold to third parties, the obligation to return the securities is recorded as a short sale within ‘Financial liabilities held for trading’ and measured at fair value with any gains or losses included in ‘Net trading gain / loss’.
Instruments
the Statement of Financial Position when and only when the Group has a legal right
intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under LKASs / SLFRSs or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity.
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
253
3.3.8 Impairment of Financial AssetsThe Group assesses at each reporting date, whether there is any objective evidence
assets not carried at fair value through
be impaired if and only if there is objective evidence of impairment as a result of one or more events, that have occurred after the initial recognition of the asset (an ‘incurred loss event’) and that loss event (or events) has an impact on the estimated future cash
estimated.
cost, such as amounts due from banks, loans and advances taken by customers, held to maturity investments etc., the
objective evidence of impairment exists
In the event the Group determines that no objective evidence of impairment exists for
assets with similar credit risk characteristics and collectively assesses them for
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
The criteria used to determine whether there is objective evidence of impairment include and not limited to:
experienced by the borrower; Past due contractual payments of
either principal or interest; Breach of loan covenants or
conditions; The probability that the borrower will
reorganisation; and
rating by an external credit rating agency.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured by
interest rate and comparing the resultant
current carrying amount. The impairment
accounts are reviewed more regularly when circumstances require. This normally encompasses re-assessment of the enforceability of any collateral held and the timing and amount of actual and anticipated receipts. Individually assessed impairment allowances are only released when there is reasonable and objective evidence of a reduction in the established loss estimate. Interest on impaired assets continues to be recognised through the unwinding of the discount.
When impairment losses are determined
evidence of impairment exists, the following factors are considered: Bank’s aggregate exposure to the
customer; The viability of the customer’s
business model and their capacity
The amount and timing of expected receipts and recoveries;
The extent of other creditors’ commitments ranking ahead of, or pari-passu with the Bank and the likelihood of other creditors continuing to support the company;
The complexity of determining the aggregate amount and ranking of all creditor claims and the extent to which legal and insurance uncertainties are evident;
The realisable value of security (or other credit mitigants) and likelihood of successful repossession;
The likely deduction of any costs involved in recovery of amounts outstanding;
The ability of the borrower to obtain and make payments in the currency of the loan if not denominated in local currency; and
The likely dividend available on liquidation or bankruptcy
Impairment is assessed on a collective basis in two circumstances: To cover losses which have been
incurred but have not yet been
individual assessment; and For homogeneous groups of loans
that are not considered individually
for which no evidence of loss has been
are grouped together according to their credit risk characteristics for the purpose of calculating an estimated collective loss. This
has incurred as a result of events occurring before the reporting date, which the Group is not able to identify on an individual loan basis and that can be reliably estimated.
These losses will only be individually
information becomes available which
assets are removed from the group and assessed on an individual basis for impairment.
The collective impairment allowance is determined after taking into account:
portfolios of similar credit risk; and Management’s experienced
judgment as to whether current economic and credit conditions are such that the actual level of inherent losses at the reporting date is like to be greater or less than that suggested by historical experience.
Statistical methods are used to determine impairment losses on a collective basis for
are recorded on an individual basis when
at which point they are removed from the group.
254 SAMPATH BANK PLC
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Two alternative methods are used to calculate historical loss experience on a collective basis:
by nature long term, the Group uses migration analysis method. Under this methodology the movements in number of customers into bad categories over the periods are used
assets that will eventually be written
before the reporting date which the Group is not able to identify on an
that can be reliably estimated.
When the group of loan by nature short term, the Group uses net
methodology the movement in the outstanding balance of customers into bad categories over the periods are used to estimate the amount of
occurring before the reporting date which the Group is not able to identify on an individual loan basis and that can be reliably estimated.
Under both methodologies, loans are grouped into ranges according to the number of days in arrears and statistical analysis is used to estimate the likelihood that loans in each range will progress through the various stages of delinquency and ultimately prove irrecoverable.
Current economic conditions and portfolio risk factors are also evaluated when calculating the appropriate level of allowance required to cover inherent loss. These additional macro and portfolio risk factors may include:
Recent loan portfolio growth and product mix
Unemployment rates Gross Domestic Production (GDP)
growth Exchange rates Interest rates Changes in government laws and
regulations
If the amount of an impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was
recognised, the excess is written back by
allowance account accordingly. The write- back is recognised in the Statement of
Financial assets (and the related impairment allowance accounts) are normally written
no realistic prospect of recovery. Where
after receipt of any proceeds from the realisation of security.
Where possible, the Group seeks to rescheduled loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the
the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subjected to individual or collective impairment assessment, calculated using
The Group seeks to use collateral, where
assets. The collateral comes in various forms such as cash, gold, securities, letters of credit/guarantees, real estate,
assets and credit enhancements such as netting agreements. The fair value of collateral is generally assessed, at a minimum, at inception and based on the guidelines issued by the Central Bank of Sri Lanka.
To the extent possible, the Group uses
assets which do not have readily determinable market value are valued
such as real estate, is valued based on data provided by third parties such as independent valuers, Audited Financial Statements and other independent sources.
The Group’s policy is to determine whether a repossessed asset is best used for its internal operations or should be sold. Assets determined to be useful for the internal operations are transferred to the relevant asset category at the lower of the repossessed value or the carrying value of the original secured asset.
the Group assesses at each reporting date whether there is objective evidence that an investment is impaired. In the case of debt
the Group assesses individually whether there is objective evidence of impairment
the amount recorded for impairment is the
between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the
income is based on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash
impairment loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to a credit event occurring after the impairment loss was recognised, the impairment loss is reversed through the
as available for sale, objective evidence
‘prolonged’ decline in the fair value of the investment below its cost. The
‘prolonged’ is explained in Note 2.10.3. Where there is evidence of impairment, the
between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in
in the fair value of an impaired available for sale equity security is recognised in other comprehensive income.
determined to be uncollectible.
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
255
3.3.9 Hedge AccountingThe Group designates certain derivatives as either:
commitments (fair value hedge);
recognised asset or liability, or a
hedge); or
foreign operation (net investment hedges)
designated in this way provided certain criteria are met. The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly
The Group did not designate any derivate as a hedging instrument during the year ended 31st December 2016.
3.3.10 Amortised Cost Measurement
asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation
recognised and the maturity amount, minus any reduction for impairment.
3.3.11 Fair Value Measurement‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at
its non-performance risk. When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument (Level 01 valuation). A market is regarded as active if transactions for the asset or liability
volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
The best evidence of the fair value of a
normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value at
price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability (Level 01 valuation) nor based on a valuation technique that uses only data from observable markets
instrument is initially measured at fair value,
the fair value at initial recognition and the transaction price. Subsequently, that
on an appropriate basis over the life of the instrument but not later than when the valuation is wholly supported by observable market data or the transaction is closed out.
instrument and include adjustments to take account of the credit risk of the Group entity and the counterparty where appropriate. Fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties; to the extent that the Group believes a third-party market participant would take them into account in pricing a transaction.
The fair value of a demand deposit is not less than the amount payable on demand,
amount could be required to be paid.
A fair value measurement of a non-
participant’s ability to generate economic
and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.
3.4 Finance and Operating Leases
The determination of whether an arrangement is a lease, or it contains a lease, is based on the substance of the arrangement and requires an assessment of
assets and the arrangement conveys a right to use the asset.
3.4.1 Finance LeaseAgreements which transfer to counterparties substantially all the risks and rewards incidental to the ownership of assets, but not necessarily legal title,
the amounts due under the leases, after deduction of unearned interest income, are included in Note 26, ‘Loans to & receivables from banks and Note 27, ‘Loans to & receivables from other customers’, as appropriate. Interest income receivable is recognised in ‘Net interest income’ over the periods of the leases so as to give a constant rate of return on the net investment in the leases.
leases, the leased assets are capitalised and included in ‘Property, plant and equipment’ and the corresponding liability to the lessor is included in ‘Other liabilities’.
liability are recognised initially at the fair value of the asset or if lower, the present value of the minimum lease payments. Finance charges payable are recognised in ‘Interest expenses’ over the period of the lease based on the interest rate implicit in the lease so as to give a constant rate of interest on the remaining balance of the liability.
3.4.2 Operating Lease
leases. When acting as lessor, the Group includes the assets subject to operating leases in ‘Property, plant and equipment’ and accounts for them accordingly. Impairment losses are recognised to the extent that residual values are not fully recoverable and the carrying value of the assets is thereby impaired.
256 SAMPATH BANK PLC
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When the Group is the lessee, leased assets are not recognised on the Statement of Financial Position.
Rentals payable and receivable under operating leases are accounted for on a straight-line basis over the periods of the leases and are included in ‘Other operating expenses’ and ‘Other operating income’, respectively.
3.5 Fiduciary Assets
result in the holding of assets on behalf
capacity are not reported in the Financial Statements, as they are not assets of the Group.
3.6 ProvisionsA provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable
be required to settle the obligation. The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking in to account the risks and uncertainties surrounding the obligation at that date. Where a provision is measured
present obligation, its carrying amount is determined based on the present value of
contracts is recognised when the expected
a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured as the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract. The expense relating to any provision is
net of any reimbursement.
3.7 Operational Risk EventsProvisions for operational risk events are recognised for losses incurred by the Bank which do not relate directly to amounts of principal outstanding for loans and advances. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation as at the reporting date, taking
into account the risks and uncertainties that surround the events and circumstances that
3.8 Recognition of Income Revenue is recognised to the extent that
criteria that must be met before revenue is recognised is discussed under Note 07 -Net Interest Income, Note 08 - Net Fee and Commission Income, Note 09 - Net Trading Gain / Loss’ and Note 10 - Net Gain from Financial Investments.
3.9 Other Taxes3.9.1 Withholding Tax (WHT) on
Dividend
deducted at source, on the dividends distributed by the Subsidiaries is charged
Loss as a consolidation adjustment.
dividend by the Bank are recognised at the same time as the liability to pay the related dividend is recognised.
3.9.2 Economic Service Charge (ESC)
As per provisions of the Economic Service Charge (ESC) Act No. 13 of 2006 and subsequent amendments thereto, ESC is payable on aggregate turnover of the Bank at 0.5% and is deductible from income tax payable.
3.10 Regulatory Provisions3.10.1 Deposit Insurance and
Liquidity Support SchemeIn terms of the Banking Act Direction No. 5 of 2010 “Insurance of Deposit Liabilities” issued on 27th September 2010 and subsequent amendments there to, all Licensed Commercial Banks are required to insure their deposit liabilities in the Deposit Insurance Scheme operated by the Monetary Board in terms of Sri Lanka Deposit Insurance Scheme Regulations No. 1 of 2010 issued under Sections 32A
from 1st October 2010. The said scheme was renamed as the “Sri Lanka Deposit Insurance and Liquidity Support Scheme” as per the Sri Lanka Deposit Insurance and Liquidity Support Scheme Regulation No. 1 of 2013.
Deposits to be insured include demand, time and savings deposit liabilities and exclude the following;
a) deposit liabilities to member institutions
b) deposit liabilities to government of Sri Lanka
c) deposit liabilities to Directors, key management personnel and other
Act Direction No. 11 of 2007 on Corporate Governance of Licensed Commercial Banks
d) deposit liabilities held as collateral against any accommodation granted
e) deposit liabilities falling within the meaning of abandoned property in terms of the Banking Act and dormant deposits in terms of the Finance Business Act, funds of which have been transferred to Central Bank of Sri Lanka.
Licensed Commercial Banks are required to pay a premium of 0.10% on eligible deposit liabilities if the Bank maintains a capital adequacy ratio of 14% or above as at the
year and a premium of 0.125% on eligible deposit liabilities for all other Licensed Commercial Banks calculated on the total amount of eligible deposits as at the end of the quarter within a period of 15 days from the end of the quarter.
3.10.2 Crop Insurance LevyIn terms of the Finance Act No. 12 of 2013, all institutions under the purview of Banking Act No. 30 of 1988, Finance Business Act No. 42 of 2011 and Regulation of Insurance Industry Act No. 43 of 2000 are required
Insurance Levy to the National Insurance
2013.
4 STANDARDS ISSUED BUT NOT YET EFFECTIVE AS AT 31ST DECEMBER 2016
The following Sri Lanka Accounting Standards have been issued by the Institute of Chartered Accountants of Sri
31st December 2016. Accordingly these accounting standards have not been applied in the preparation of the Financial Statements for the year ended 31st December 2016.
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
257
4.1 SLFRS 15 - Revenue from Contracts with Customers
The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of Financial Statements about the nature, amount, timing and uncertainty of revenue
customers.
for revenue recognition from contracts with customers and replaces all other currently applicable revenue Standards and related interpretations.
January 2018. The Bank carried out an impact analysis with the assistance of an external consultant during the year ended 31st December 2016. The analysis basically focused on the material fee & commission income categories such as credit cards, operation related, e-remittance, electronic banking and Bancassurance. The relevant agreements were analysed and compared the current accounting treatment with the requirements of SLFRS 15. According to the above analysis the Bank does not have any material impact from the adoption of SLFRS 15 in the year 2018.
4.2 SLFRS 9 - Financial Instruments
This standard will replace Sri Lanka Accounting Standard - LKAS 39 (Financial Instruments: Recognition and Measurement). The improvements introduced by SLFRS 9 includes a logical
a single, forward-looking ‘expected loss’ impairment model and a substantially - reformed approach to hedge accounting which are detailed below.
January 2018.
Measurement
for in the Financial Statements and, in particular, how they are measured on an ongoing basis. SLFRS 9 introduces
characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements that are complex
assets are measured at amortised cost, fair value through other comprehensive income
(‘FVPL’).
measurement outcomes will be similar to LKAS 39 in many instances, the
the business model and the contractual
cost or fair value compared to LKAS 39.
/ Group is not expected to have a material
measurement principles introduced by SLFRS 09.
4.2.2 ImpairmentSLFRS 9 introduces a new, expected loss impairment model that will require more timely recognition of expected credit losses.
entities to account for expected credit
assets measured at amortised cost and FVOCI, lease receivables and certain loan
contracts.
At initial recognition, allowance (or provision in the case of commitments and guarantees) is required for expected credit losses (‘ECL’) resulting from default events that are possible within the next 12 months
which impairment requirement is applied. In
risk, allowance (or provision) is required for ECL resulting from all possible default
instrument (‘lifetime ECL’).
The assessment of whether credit risk
recognition is performed for each reporting period by considering the change in the risk of default occurring over the remaining life
The assessment of credit risk and the estimation of ECL are required to be unbiased and probability-weighted, and should incorporate all available information which is relevant to the assessment including information about past events,
current conditions and reasonable and supportable forecasts of economic conditions at the reporting date. In addition, the estimation of ECL should take into account the time value of money. As a result, the recognition and measurement of impairment is intended to be more forward-looking than under LAKS 39 and the resulting impairment charge will tend to be more volatile. It will also tend to result in an increase in the total level of impairment
be assessed for at least 12-month ECL
which lifetime ECL applies is likely to be larger than the population for which there is objective evidence of impairment in accordance with LKAS 39.
Given the complexities andtechnical expertise required in the process of convergence with SLFRS 09, an initial impact analysis is being carried out with the assistance of an external consultant based on 2016 December balances.
The Bank has set up a multidisciplinary implementation team during the year ended 31st December 2016 with members
operation departments in order to drive the SLFRS 9 implementation project. The
individual work streams within two sub-
and impairment. The initial assessment and analysis stage was completed in 2016.
already started the process of developing models / solutions based on the diagnostic
impairment calculation models and quantify the impairment provision for 2016 based on SLFRS 9 by the end of September 2017.
4.2.3 Hedge accounting SLFRS 9 introduces a substantially- reformed model for hedge accounting with enhanced disclosures about risk management activity. The new model represents a substantial overhaul of hedge accounting that aligns the accounting treatment with risk management activities,
activities in their Financial Statements. In addition, as a result of these changes, users of the Financial Statements will be provided with better information about
accounting on the Financial Statements.
258 SAMPATH BANK PLC
ANNUAL REPORT 2016
The Bank is not presently following hedge accounting for its derivatives portfolio and hence implementation of SLFRS 09 is not expected to have a material impact on the Consolidated / Separate Financial Statements of the Group / Bank respectively.
4.3 SLFRS 16 – LeasesSLFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). SLFRS 16 will replace Sri Lanka Accounting Standard – LKAS 17 (Leases) and related interpretations. SLFRS 16 introduces a single accounting model for the lessee, eliminating the present
The new Standard requires a lessee to: recognise assets and liabilities for all
leases with a term of more than 12 months, unless the underlying asset is of low value.
present depreciation of lease assets separately, from interest on lease liabilities in the income statement.
SLFRS – 16 substantially carries forward the lessor accounting requirement in LKAS – 17. Accordingly, a lessor continue to classify its leases as operating leases or
1st January 2019. The impact on the implementation of the above Standard has
In addition to the above, Institute of Chartered Accountants of Sri Lanka has introduced following amendments to the
from 01st January 2017.
4.4 LKAS 7 - Statement of Cash Flows
The amendment requires an entity to disclose information that enables users of
including both changes arising from cash
Accordingly, an entity shall disclose the following changes in liabilities arising from
(b) changes arising from obtaining or losing control of subsidiaries or other businesses
exchange rates(d) changes in fair values and (e) other changes
4.5 LKAS 12 - Income TaxesWhen an entity assesses whether taxable
the entity shall consider whether tax law
against which it may make deductions on the reversal of that deductible temporary
If tax law imposes no such restrictions, entity may assess the deductible temporary
if tax law restricts the utilisation of losses
assessed in combination only with other
appropriate type.
Further the amendment requires an entity to compare the deductible temporary
excludes tax deductions resulting from the reversal of those deductible temporary
future periods. This comparison shows the
amounts resulting from the reversal of those
According to the amendment introduced, the estimate of probable future taxable
of an entity’s assets for more than their
evidence that it is probable that the entity will achieve this. For example, when an asset is measured at fair value, the entity
evidence to conclude that it is probable that the entity will recover the asset for more than its carrying amount.
The Bank is not expected to have a material
as at 31st December 2016.
NOTES TO THE FINANCIAL STATEMENTS
5 NEW ACCOUNTING STANDARDS / AMENDMENTS TO EXISTING ACCOUNTING STANDARDS EFFECTIVE FROM 1ST JANUARY 2016
5.1 New Accounting Standards
2016
5.1.1 SLFRS 14 – Regulatory Deferral Accounts
The objective of this Standard is to specify
regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation.
2016. This Standard did not have any impact on the Consolidated / Separate Financial Statements of the Group / Bank.
5.2 Amendments to Existing Accounting Standards
2016Amendments to existing Accounting
2016 as published by the Institute of Chartered Accountants of Sri Lanka did not have any impact on the Consolidated / Separate Financial Statements of the Group / Bank.
FINANCIAL INFORMATION
259
6 GROSS INCOME
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Interest income (Note 7.1) 56,529,281 37,943,691 58,976,384 39,706,286
Fee & commission income (Note 8.1) 8,049,148 6,487,873 8,202,842 6,620,894
Net trading gain / (loss) (Note 9) 233,850 (341,316) 233,850 (341,316)
129,306 98,468 129,371 98,528
Other operating income (Note 11) 2,643,104 2,842,800 2,902,894 3,017,445
67,584,689 47,031,516 70,445,341 49,101,837
7 NET INTEREST INCOME
Accounting Policy
Recognition of Interest Income and Interest Expense
interest rate, but not future credit losses.
7.1 Interest Income
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Placements with other banks 341,160 298,022 341,160 298,202
Financial assets - held for trading 1,722,065 1,276,853 1,722,065 1,276,853
Loans to & receivables from other customers 47,926,907 31,997,675 50,351,904 33,755,908
Other loans & receivables 2,476,058 1,785,920 2,476,058 1,785,920
Interest income accrued on impaired loans & receivables (Note 27.2.1) 261,567 212,711 261,580 212,873
Reverse repurchase agreements 419,358 483,244 439,965 483,643
Financial assets - held to maturity - 19,835 1,486 23,456
Financial assets - available for sale 3,382,166 1,869,431 3,382,166 1,869,431
56,529,281 37,943,691 58,976,384 39,706,286
260 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
7 NET INTEREST INCOME CONTD.
7.2 Interest Expense
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Due to other customers 28,716,506 17,255,719 28,929,791 17,274,714
Term borrowings 1,618,890 963,425 2,525,166 1,477,324
273,722 243,598 273,722 243,598
Securities sold under repurchase agreements 574,016 532,334 514,130 491,426
Redeemable debentures (Note 39.1) 2,592,619 1,546,818 2,778,210 1,668,838
33,775,753 20,541,894 35,021,019 21,155,900
Net interest income 22,753,528 17,401,797 23,955,365 18,550,386
7.3 Net Interest Income from Sri Lanka Government Securities
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Interest income 6,903,853 4,512,112 6,925,946 4,516,132
Less: Interest expense 574,016 532,334 514,130 491,426
Net interest income 6,329,837 3,979,778 6,411,816 4,024,706
7.4 Notional Tax Credit for Withholding Tax on Government Securities on Secondary Market Transactions Section 137 of the Inland Revenue Act No. 10 of 2006 provides that a company which derives interest income from the secondary market transactions in government securities be entitled to a notional tax credit (being one ninth of the net interest income) provided such interest income forms part of the statutory income of the company for that year of assessment.
Accordingly, net interest income earned from secondary market transactions in government securities for the year by the Bank and it’s subsidiaries has been grossed up in the Financial Statements and the resulting notional tax credit amounted to Rs 110.88 Mn (2015: Rs 25.70 Mn) and Rs 119.08 Mn (2015: Rs 30.16 Mn) for the Bank and the Group respectively.
FINANCIAL INFORMATION
261
8 NET FEE AND COMMISSION INCOME
Accounting Policy
Fee Income Earned from Services that are Provided over a Certain Period of Time Fees earned for the provision of services over a period of time are accrued over that period. These fees include professional fees, trade service fees, commission income and asset management fees etc. Loan commitment fees for loans that are likely to be drawn down and
of the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognised over the commitment period on a straight line basis.
Fee Income from Providing Transaction ServicesFees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of an acquisition of shares or other securities or the purchase or sale of businesses, are recognised on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are recognised as the related services are performed.
Expenses on Account of Customer Loyalty Programmes
are granted. The fair value of the consideration received in respect of the initial sale is allocated between the award credits and the other components of the sale. Expense incurred for customer loyalty programmes is accounted under ‘Fee and commission expense’.
Other Fee and Commission ExpenseOther Fee and commission expense relate mainly to transactions and services fees which are expensed as the services are received. Fee and commission expense are recognised on an accrual basis.
8.1 Fee and Commission Income
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Trade related services 1,461,386 1,454,404 1,461,386 1,454,404
Foreign remittance related services 247,399 227,707 247,399 227,707
Credit & debit card services 3,017,176 2,448,267 3,017,176 2,448,267
3,323,187 2,357,495 3,476,881 2,490,516
8,049,148 6,487,873 8,202,842 6,620,894
8.2 Fee and Commission Expense
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Credit & debit card services 1,316,476 1,115,552 1,316,476 1,115,552
148,125 85,768 150,988 88,131
1,464,601 1,201,320 1,467,464 1,203,683
Net fee & commission income 6,584,547 5,286,553 6,735,378 5,417,211
262 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
9 NET TRADING GAIN / (LOSS)
Accounting Policy
Bank & Group
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Forward exchange contract revaluation gain / (loss) 183,858 (262,642)Capital gain 16,942 76,249 Dividend income 2,295 15,505 Net mark to market gain / (loss) 30,755 (170,428)
233,850 (341,316)
10 NET GAIN FROM FINANCIAL INVESTMENTS
Accounting Policy
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
125,052 81,049 125,117 81,109
3,376 17,419 3,376 17,419
- Other loans & receivables 878 - 878 -
129,306 98,468 129,371 98,528
11 OTHER OPERATING INCOME
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Exchange income 2,405,127 2,728,553 2,405,127 2,728,553 Dividend income from subsidiaries 82,575 58,950 - -
(42) 4,531 298 4,787 Rental & other income 155,444 50,766 497,469 284,105
2,643,104 2,842,800 2,902,894 3,017,445
11.1 Exchange income represents both revaluation gain / (loss) on the Bank’s net open position and realised exchange gain / (loss) on foreign exchange contracts including the Bank’s currency notes operation. Gain on forward exchange contracts amounting to Rs 183.9 Mn (2015 : loss of Rs 262.6 Mn) is reported under Note 9, ‘Net trading gain / (loss)’ as required by the Sri Lanka Accounting Standard LKAS 39 (Financial Instruments - Recognition and Measurement). Accordingly total exchange income of the Bank / Group for the year ended 31st December 2016 amounted to Rs 2,589.0 Mn (2015 : Rs 2,465.9 Mn).
FINANCIAL INFORMATION
263
12 NET IMPAIRMENT CHARGE / (REVERSAL) FOR LOANS AND OTHER LOSSES
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Banks - - - -
Other customers
930,035 513,348 949,745 551,237
Collective loan impairment (Note 27.2.2) 500,311 427,832 559,790 439,218
Property plant & equipment (Note 33.3) (2,036) - (2,036) -
Investment in subsidiary (Note 32.1) 4,000 - - -
Financial assets - available for sale (Note 29.4) 27,515 2,389 27,515 2,389
1,459,825 943,569 1,535,014 992,844
13 PERSONNEL EXPENSES
Accounting Policy
legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
employees and is recorded as an expense under ‘Personnel expenses’ as and when they become due. Unpaid contributions are recorded as a liability under ‘Other liabilities’ in Note 41. The Group contributes 3% of the salary of each employee to the Employees’ Trust Fund. Further, the Subsidiary companies contribute
264 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
13 PERSONNEL EXPENSES CONTD.
Pension Fund The Bank has a pension fund for all members who joined the Bank for permanent employment before 1st June 2003. A member is eligible for a monthly pension after attainment of 55 years of age and completion of 10 years uninterrupted service. The Bank measures the present
An actuarial valuation is carried out at every year end to ascertain the full liability under the Fund.
deducting the fair value of any plan assets to determine the net amount to be shown in the Statement of Financial Position. The value of any
plan, or on settlement of the plan liabilities.
annual period. The discount rate is the yield at the reporting date on government bonds (20 years) that have maturity dates approximating to the terms of the Bank’s obligations.
The increase in the pension fund liabilities attributable to the services provided by employees, who are members of the Fund, during the
together with the net interest income / expense.
The Bank recognises the total actuarial gain and loss that arise in calculating the Bank’s obligation in respect of a plan in other comprehensive income during the period in which it occurs.
The demographic assumptions underlying the valuation are retirement age (55 yrs), early withdrawals from service and retirement on medical grounds, death before and after retirement etc.
The assets of the fund are held separately from those of the Bank’s assets and are administered independently.
The Subsidiaries do not operate pension funds.
Gratuity
employees who joined the Bank on or after 1st June 2003, as they are not in pensionable service of the Bank.
pension resign before retirement age, the Bank is liable to pay gratuity to such employees.
An actuarial valuation is carried out at every year end to ascertain the full liability under gratuity.
The gratuity liability is not externally funded. All Subsidiary companies too carry out actuarial valuations to ascertain their respective gratuity liabilities.
yield at the reporting date on government bonds (10 years) that have maturity dates approximating to the terms of the Group’s obligations.
FINANCIAL INFORMATION
265
The increase in gratuity liabilities attributable to the services provided by employees during the year ended 31st December 2016 (current
The Group recognises the total actuarial gain and loss that arise in calculating the Group’s obligation in respect of gratuity in other comprehensive income during the period in which it occurs.
The demographic assumptions underlying the valuation are retirement age (55 yrs), early withdrawals from service and retirement on medical grounds etc.
Employees’ Provident Fund - Bank Employees’ Provident Fund is an approved private provident fund which has been set up to meet the provident fund liabilities of the Bank to which the Bank and employees contribute 12% and 8% respectively on the salary of each employee. Employees who are members of the
liability and an actuarial valuation was conducted to value the Bank’s obligation on the same.
Unutilised Accumulated Leave The Bank’s liability towards the accumulated leave which is expected to be utilised beyond one year from the end of the reporting period is
the terms of the Bank’s obligation. The calculation is performed using the Projected Unit Credit method. Net change in liability for unutilised
period in which they arise.
The Group’s net obligation to gratuity, EPF interest guarantee and unutilised accumulated annual leave is disclosed under Note 42 to the Financial Statements. Net amount recoverable from the pension fund as at 31st December 2016 is reported under Note 36 to the Financial Statements.
Share Based Payment Transactions The Bank does not have any share based payment transactions in force as at 31st December 2016.
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Salaries & bonus 5,779,461 4,761,458 6,188,418 5,076,036
Contributions to EPF & ETF 557,806 505,189 595,256 533,466
Provision for gratuity & pension 372,602 354,986 382,082 362,298
Others 622,758 519,626 668,914 552,603
7,332,627 6,141,259 7,834,670 6,524,403
266 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
14 OTHER OPERATING EXPENSES
Accounting Policy
Depreciation of Property, Plant and Equipment The Group provides depreciation from the date the assets are available for use up to the date of disposal, at the following rates on a straight
expected to be consumed by the Group.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
Freehold lands are not depreciated.
derecognised. Depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.
Depreciation Rate per Annum (%)
Asset Category 2016 2015
Freehold buildings 2.00 - 2.50 2.00 - 2.50
Improvements to leasehold properties 20.00 - 25.00 20.00 - 25.00
Computer equipment 15.00 - 25.00 15.00 - 25.00
Motor vehicles 12.50 - 20.00 12.50
2.50 - 25.00 2.50 - 25.00
12.50 - 20.00 12.50 - 20.00
Amortisation of Intangible Assets
consumed by the Group. The Group assumes that there is no residual value for its intangible assets.
Depreciation Rate per Annum (%)
Asset Category 2016 2015
Computer software 10.00 - 25.00 10.00 - 25.00
Licenses 5.00 - 20.00 5.00 - 20.00
Changes in EstimatesDepreciation / amortisation methods, useful lives and residual values are reassessed at each reporting date and adjusted if appropriate.
FINANCIAL INFORMATION
267
Bank GroupFor the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Directors' fees & expenses 52,697 53,935 77,073 69,950 Auditors' remuneration (Note 14.1) 22,234 21,265 27,420 28,290 Professional & legal expenses 75,373 75,940 90,697 92,757 Depreciation of property, plant & equipment (Note 33) 599,081 604,945 845,172 766,527 Amortisation of intangible assets (Note 34) 110,009 95,216 120,249 103,339 Deposit insurance premium 533,919 428,670 537,376 429,373 Donations 2,589 2,487 2,589 2,487 Operating lease expenses 1,053,242 893,184 853,533 693,200
2,753,527 2,316,169 2,811,701 2,404,008 Other expenses (Note 14.2) 2,935,331 2,706,366 3,065,312 2,847,704
8,138,002 7,198,177 8,431,122 7,437,635
14.1 Auditors’ Remuneration
Bank GroupFor the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Audit fees 12,495 11,299 15,152 14,798 Audit related fees & expenses 5,122 4,997 6,293 5,379 Non - audit expenses 4,617 4,969 5,975 8,113
22,234 21,265 27,420 28,290
14.2 Other expensesOther expenses include advertising and business promotion expenses, credit card related expenses and other overhead expenses incurred on day to day operations of the Bank / Group.
15 VALUE ADDED TAX (VAT) AND NATION BUILDING TAX (NBT) ON FINANCIAL SERVICES
Accounting Policy
Value Added TaxVAT on Financial Services is calculated in accordance with Value Added Tax (VAT) Act No. 14 of 2002 and subsequent amendments thereto.
Nation Building Tax
Bank GroupFor the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
2,425,799 1,611,436 2,534,832 1,689,303
388,224 292,988 407,691 308,426
2,814,023 1,904,424 2,942,523 1,997,729
268 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
16 INCOME TAX EXPENSE
Accounting Policy
except to the extent it relates to items recognised directly in equity or other comprehensive income in which case it is recognised in equity or in other comprehensive income.
Current TaxationCurrent tax assets and liabilities consist of amounts expected to be recovered from or paid to the Commissioner General of Inland Revenue in respect of the current year, using the tax rates and tax laws enacted or substantively enacted on the reporting date and any adjustment to tax payable in respect of prior years.
Deferred Taxation
except:
Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a
forward unused tax credits and unused tax losses can be utilised except:
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
authority, there is a legal right and intentions to settle on a net basis and it is allowed under the tax law of the relevant jurisdiction. Details of current tax liabilities / (receivables) and deferred tax liabilities / (assets) are given in Note 40 and Note 35 to the Financial Statements respectively.
FINANCIAL INFORMATION
269
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Current tax expense
3,691,014 2,829,791 3,825,441 2,980,191
(Over) / under provision in respect of previous years (573,114) - (577,485) 3,759
Current tax expense (Note 16.1) 3,117,900 2,829,791 3,247,956 2,983,950
Deferred tax expense
Transfer to deferred taxation (Note 35.1) 357,288 137,141 464,327 177,503
Income tax expense 3,475,188 2,966,932 3,712,283 3,161,453
27.6% 32.6% 28.1% 32.3%
24.7% 31.1% 24.6% 30.5%
Bank Group
For the year ended 31st December 2016 2015 2016 2015
% Rs 000 % Rs 000 % Rs 000 % Rs 000
12,599,858 9,100,873 13,213,529 9,789,643
28.0 3,527,960 28.0 2,548,244 28.0 3,699,788 28.0 2,741,100
- - - - 5,622 - 5,192
Disallowable expenses 11.8 1,484,362 13.0 1,185,408 12.0 1,580,894 12.8 1,255,056
Tax deductible expenses (5.0) (628,249) (4.3) (395,695) (5.5) (723,789) (4.8) (468,605)
Exempt income (5.5) (693,059) (5.6) (508,166) (5.2) (693,059) (5.1) (508,166)
Income from other sources - - - - - 362 - 273
- - - - (0.3) (44,256) (0.4) (44,568)
Tax losses - - - - - (121) - (91)
29.3 3,691,014 31.1 2,829,791 29.0 3,825,441 30.5 2,980,191
(Over) / under provision in respect of previous years (4.6) (573,114) - - (4.4) (577,485) - 3,759
24.7 3,117,900 31.1 2,829,791 24.6 3,247,956 30.5 2,983,950
16.1.1 Applicable Income Tax Rates
2016 2015
Sampath Bank PLC 28% 28%
Siyapatha Finance PLC 28% 28%
S C Securities (Pvt) Ltd 28% 28%
Sampath Information Technology Solutions Ltd 28% 28%
270 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
16 INCOME TAX EXPENSE CONTD.
16.1.2 Income Tax on Sampath Centre LtdSampath Centre Ltd is a company approved under BOI Law and the company was exempted from income tax for a period of seven years
whichever is earlier. Accordingly, Sampath Centre Ltd is liable for income tax at the rate of 2.0% of the rental income commencing from the year of assessment 2006 / 2007. Income other than rental income is liable for tax at the rate of 28%.
17 EARNINGS PER SHARE
Accounting Policy
loss attributable to ordinary equity holders of the Bank by the weighted average number of ordinary shares outstanding during the period.
17.1 Earnings per Share: Basic / Diluted
Bank Group
2016 2015 2016 2015
Amount used as the numerator
9,124,670,243 6,133,941,288 9,496,073,323 6,623,345,841
No. of ordinary shares used as the denominator
Weighted average number of ordinary shares (Note 17.1.1) 176,981,069 176,981,069 176,981,069 176,981,069
Basic / diluted earnings per ordinary share (Rs) 51.56 34.66 53.66 37.42
17.1.1 Weighted Average Number of Ordinary Shares for Basic / Diluted EPSBank & Group
2016Outstanding /
Weighted Average
2015Outstanding/
Weighted Average
Number of shares held as at 1st January 172,312,655 167,910,253
2014 (Note 43.1) - 4,402,402
172,312,655 172,312,655
2015 (Note 43.1) 4,668,414 4,668,414
Number of shares held as at 31st December 176,981,069 176,981,069
There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of the
FINANCIAL INFORMATION
271
18 DIVIDEND PAID AND PROPOSED
Accounting Policy
accordance with Companies Act No. 07 of 2007.
2016 2015
GrossDividend
DividendTax
Net Dividend
Gross Dividend
Dividend Tax
Net Dividend
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Final dividend paid for the years 2015 & 2014 respectively
Out of dividend received - free of tax 78,465 - 78,465 83,194 - 83,194
2,161,599 214,472 1,947,127 1,763,818 176,382 1,587,436
Scrip / cash dividend paid 2,240,064 214,472 2,025,592 1,847,012 176,382 1,670,630
Dividend per Ordinary Share (Rs) 13.00 11.75 11.00 9.95
Interim dividend proposed for the year 2016 (Note 18.1)
Out of dividend received - free of tax 37,832 - 37,832 - - -
2,439,903 243,990 2,195,913 - - -
Scrip dividend payable 2,477,735 243,990 2,233,745 - - -
Dividend per Ordinary Share (Rs) 14.00 12.62 - - -
2016 (Note 18.2) & 2015 respectively
Out of dividend received - free of tax - - - 78,465 - 78,465
884,405 88,441 795,964 2,161,599 214,472 1,947,127
Scrip / cash dividend payable 884,405 88,441 795,964 2,240,064 214,472 2,025,592
Dividend per Ordinary Share (Rs) 4.75 4.28 13.00 11.75
Total dividend per Ordinary Share (Rs) 18.75 16.90 13.00 11.75
Note 18.1The Board of Directors of the Bank has recommended the payment of an interim scrip dividend of Rs 14.00 per share for the year ended 31st December 2016, a distribution of Rs 2,477.7 Mn.
Under the Inland Revenue Act No. 10 of 2006, a Withholding Tax of 10% has been imposed on interim dividend declared.
Note 18.2
year ended 31st December 2016, a distribution of approximately Rs 884.4 Mn.
Note 18.3
dividends have not been recognised as a liability as at the year end. Necessary disclosures have been made under Note 51 to the Financial Statements, “Events after reporting period” as required by the said Standard.
272 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
19 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS
Financial instruments are measured on an ongoing basis either at fair value or at amortised cost. The Accounting Policies describe how
LKAS 39 (Financial Instruments: Recognition & Measurement) under headings of the Statement of Financial Position.
19.1 Analysis of Financial Instruments by Measurement Basis - Bank
As at 31st December 2016
Note Held for Trading
Amortised Cost
Held to Maturity
Available for Sale
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 - 17,064,013 - - 17,064,013
Balances with Central Bank of Sri Lanka 21 - 33,724,856 - - 33,724,856
Placements with banks 22 - 8,749,763 - - 8,749,763
Reverse repurchase agreements - 33,860,083 - - 33,860,083
23 109,872 - - - 109,872
Financial assets - held for trading 24 28,109,193 - - - 28,109,193
Financial assets - held for trading pledged as collaterals 25 10,380,213 - - - 10,380,213
Loans to & receivables from banks 26 - 2,641,733 - - 2,641,733
Loans to & receivables from other customers 27 - 456,189,052 - - 456,189,052
Other loans & receivables 28 - 38,708,440 - - 38,708,440
Financial assets - available for sale 29 - - - 14,270,190 14,270,190
Financial assets - available for sale pledged as collaterals 30 - - - 657,903 657,903
Financial assets - held to maturity 31 - - - - -
Other assets - 3,257,948 - - 3,257,948
Total Financial Assets 38,599,278 594,195,888 - 14,928,093 647,723,259
Financial Liabilities
Due to banks 37 - 6,023,932 6,023,932
23 63,611 - 63,611
Securities sold under repurchase agreements - 10,159,225 10,159,225
Due to other customers 38 - 510,566,655 510,566,655
Debt issued & other borrowed funds 39 - 72,128,237 72,128,237
Dividend payable - 84,860 84,860
Other liabilities - 5,817,157 5,817,157
Total Financial Liabilities 63,611 604,780,066 604,843,677
FINANCIAL INFORMATION
273
19.2 Analysis of Financial Instruments by Measurement Basis - Bank
As at 31st December 2015
Note Held for Trading
Amortised Cost
Held to Maturity
Available for Sale
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 - 13,588,075 - - 13,588,075
Balances with Central Bank of Sri Lanka 21 - 21,341,882 - - 21,341,882
Placements with banks 22 - 5,193,369 - - 5,193,369
Reverse repurchase agreements - - - - -
23 319,461 - - - 319,461
Financial assets - held for trading 24 1,889,058 - - - 1,889,058
Financial assets - held for trading pledged as collaterals 25 2,702,785 - - - 2,702,785
Loans to & receivables from banks 26 - 1,651,205 - - 1,651,205
Loans to & receivables from other customers 27 - 375,696,530 - - 375,696,530
Other loans & receivables 28 - 33,368,274 - - 33,368,274
Financial assets - available for sale 29 - - - 51,250,411 51,250,411
Financial assets - available for sale pledged as collaterals 30 - - - 7,210,585 7,210,585
Financial assets - held to maturity 31 - - - - -
Other assets - 1,964,787 - - 1,964,787
Total Financial Assets 4,911,304 452,804,122 - 58,460,996 516,176,422
Financial Liabilities
Due to banks 37 - 3,418,499 3,418,499
23 457,058 - 457,058
Securities sold under repurchase agreements - 9,316,122 9,316,122
Due to other customers 38 - 406,323,019 406,323,019
Debt issued & other borrowed funds 39 - 57,016,284 57,016,284
Dividend payable - 90,969 90,969
Other liabilities - 5,083,897 5,083,897
Total Financial Liabilities 457,058 481,248,790 481,705,848
274 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
19 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS CONTD.
19.3 Analysis of Financial Instruments by Measurement Basis - Group
As at 31st December 2016
Note Held for Trading
Amortised Cost
Held to Maturity
Available for Sale
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 - 17,221,809 - - 17,221,809 Balances with Central Bank of Sri Lanka 21 - 33,724,856 - - 33,724,856
Placements with banks 22 - 8,749,763 - - 8,749,763 Reverse repurchase agreements - 34,629,422 - - 34,629,422
23 109,872 - - - 109,872 Financial assets - held for trading 24 28,117,789 - - - 28,117,789 Financial assets - held for trading pledged as collaterals 25 10,371,617 - - - 10,371,617 Loans to & receivables from banks 26 - 2,641,733 - - 2,641,733 Loans to & receivables from other customers 27 - 472,754,947 - - 472,754,947 Other loans & receivables 28 - 38,708,440 - - 38,708,440 Financial assets - available for sale 29 - - - 14,329,468 14,329,468 Financial assets - available for sale pledged as collaterals 30 - - - 598,681 598,681 Financial assets - held to maturity 31 - - 16,933 - 16,933 Other assets - 3,507,676 - - 3,507,676 Total Financial Assets 38,599,278 611,938,646 16,933 14,928,149 665,483,006
Financial Liabilities
Due to banks 37 - 6,071,196 6,071,196 23 63,611 - 63,611
Securities sold under repurchase agreements - 10,095,117 10,095,117 Due to other customers 38 - 513,433,826 513,433,826 Debt issued & other borrowed funds 39 - 84,179,232 84,179,232 Dividend payable - 84,860 84,860 Other liabilities - 6,681,111 6,681,111 Total Financial Liabilities 63,611 620,545,342 620,608,953
FINANCIAL INFORMATION
275
19.4 Analysis of Financial Instruments by Measurement Basis - Group
As at 31st December 2015
Note Held for Trading
Amortised Cost
Held to Maturity
Available for Sale
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 - 13,713,456 - - 13,713,456
Balances with Central Bank of Sri Lanka 21 - 21,341,882 - - 21,341,882
Placements with banks 22 - 5,193,369 - - 5,193,369
Reverse repurchase agreements - - - - -
23 319,461 - - - 319,461
Financial assets - held for trading 24 1,898,074 - - - 1,898,074
Financial assets - held for trading pledged as collaterals 25 2,693,769 - - - 2,693,769
Loans to & receivables from banks 26 - 1,651,205 - - 1,651,205
Loans to & receivables from other customers 27 - 386,277,744 - - 386,277,744
Other loans & receivables 28 - 33,368,274 - - 33,368,274
Financial assets - available for sale 29 - - - 51,941,479 51,941,479
Financial assets - available for sale pledged as collaterals 30 - - - 6,519,573 6,519,573
Financial assets - held to maturity 31 - - 63,121 - 63,121
Other assets - 2,099,327 - - 2,099,327
Total Financial Assets 4,911,304 463,645,257 63,121 58,461,052 527,080,734
Financial Liabilities
Due to banks 37 - 3,418,499 3,418,499
23 457,058 - 457,058
Securities sold under repurchase agreements - 8,662,930 8,662,930
Due to other customers 38 - 407,163,665 407,163,665
Debt issued & other borrowed funds 39 - 65,170,977 65,170,977
Dividend payable - 90,969 90,969
Other liabilities - 5,391,243 5,391,243
Total Financial Liabilities 457,058 489,898,283 490,355,341
276 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
20 CASH AND CASH EQUIVALENTS
Accounting Policy
risk of changes in their value. Cash and cash equivalents are carried at amortised cost in the Statement of Financial Position.
placements with banks (less than 3 months), net of unfavourable balances with local & foreign banks.
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Local currency in hand 6,822,773 7,499,502 6,971,898 7,582,388
Foreign currency in hand 594,551 1,454,651 594,551 1,454,651
Balances with local banks 458,375 61,267 467,046 103,762
Balances with foreign banks 2,709,271 1,642,172 2,709,271 1,642,172
Money at call & short notice 6,479,043 2,930,483 6,479,043 2,930,483
17,064,013 13,588,075 17,221,809 13,713,456
21 BALANCES WITH CENTRAL BANK OF SRI LANKA
Accounting Policy
As required by the provisions of Section 93 of the Monetary Law Act, a cash balance is maintained with the Central Bank of Sri Lanka. As at 31st December 2016, the minimum cash reserve requirement was 7.5% (2015: 6%) of the rupee deposit liabilities. There is no reserve requirement for foreign currency deposit liabilities of the Domestic Banking Unit (DBU) and the deposit liabilities of the Foreign Currency Banking Unit (FCBU).
Balances with Central Bank of Sri Lanka are carried at amortised cost in the Statement of Financial Position.
Bank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Statutory reserve requirement 33,724,856 21,341,882
33,724,856 21,341,882
FINANCIAL INFORMATION
277
22 PLACEMENTS WITH BANKS
Bank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Maturity less than three months
Placements - in Sri Lanka 2,251,564 -
Placements - out side Sri Lanka 5,519,340 5,193,369
7,770,904 5,193,369
Maturity more than three months
Placements - in Sri Lanka - -
Placements - out side Sri Lanka 978,859 -
978,859 -
8,749,763 5,193,369
23 DERIVATIVE FINANCIAL INSTRUMENTS
Accounting Policy
foreign exchange rates, credit risk and indices. Derivatives are categorised as trading unless they are designated as hedging instruments.
is recognised within other comprehensive income). Fair values may be obtained from quoted market prices in active markets, recent market
recognised fair value of a derivative contract is based on a valuation model that uses inputs that are not observable in the market, it follows
is positive and as liabilities when fair value is negative.
separate derivatives when their economic characteristics and risks are not closely related to those of the host contract and the host
disclosed or included within derivatives. The Group did not have separated embedded derivatives as at 31st December 2016.
their notional amounts. The notional amounts indicate the volume of transactions outstanding at the year end and are indicative of neither the market risk nor the credit risk.
Bank & Group
As at 31st December 2016 2015Assets Liabilities Notional
AmountAssets Liabilities Notional
Amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Forward foreign exchange contracts Sales 27,007 19,386 7,896,836 17,137 196,952 11,466,029 Purchases 5,617 15,389 3,351,723 103,876 20,537 4,391,390 Currency SWAPS Sales 12,781 27,882 9,985,909 358 239,256 14,967,515 Purchases 64,467 954 9,444,636 198,090 313 13,421,768
109,872 63,611 30,679,104 319,461 457,058 44,246,702
278 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
24 FINANCIAL ASSETS - HELD FOR TRADING
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Government securities - treasury bills (Note 24.1) 28,011,024 1,767,317 28,019,620 1,776,333
Quoted equity securities (Note 24.2) 98,169 121,741 98,169 121,741
28,109,193 1,889,058 28,117,789 1,898,074
24.1 Government Securities - Treasury Bills
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Amortised cost 27,971,916 1,767,522 27,980,501 1,776,536
(Loss) / gain from mark to market valuation as at 1st January (205) 12,696 (203) 12,696
Movement during the year 39,313 (12,901) 39,322 (12,899)
Gain / (loss) from mark to market valuation as at 31st December 39,108 (205) 39,119 (203)
Market value 28,011,024 1,767,317 28,019,620 1,776,333
24.2 Quoted Equity SecuritiesBank & Group
As at 31st December 2016 2015
No. of Ordinary
Shares
Cost of Investment
Market Value
No. of Ordinary
Shares
Cost of Investment
Market Value
Rs 000 Rs 000 Rs 000 Rs 000
Name of the Company
Banks, Finance & Insurance
National Development Bank PLC 600,000 107,943 93,600 600,000 107,943 116,460
107,943 93,600 107,943 116,460
Vallibel One PLC 245,600 6,140 4,569 245,600 6,140 5,281
6,140 4,569 6,140 5,281
Total 114,083 98,169 114,083 121,741
Gain from mark to market valuation as at 1st January 7,658 157,923
Movement during the year (23,572) (150,265)
(Loss) / gain from mark to market valuation as at 31st December (15,914) 7,658
Market value 98,169 121,741
FINANCIAL INFORMATION
279
25 FINANCIAL ASSETS - HELD FOR TRADING PLEDGED AS COLLATERALS
The Bank pledges assets that are in its Statement of Financial Position in day to day transaction which are conducted under the usual terms and conditions applying such agreements. The Bank has pledged the investments in government securities held for trading purposes against securities hold under repurchase agreements. Market value of the pledged securities are given below;
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Amortised cost 10,364,749 2,702,335 10,356,164 2,693,321
Gain from mark to market valuation as at 1st January 450 7,712 448 7,712
Movement during the year 15,014 (7,262) 15,005 (7,264)
Gain from mark to market valuation as at 31st December 15,464 450 15,453 448
Market value 10,380,213 2,702,785 10,371,617 2,693,769
26 LOANS TO AND RECEIVABLES FROM BANKS
Bank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Gross loans & receivables (Note 26.1) 2,641,733 1,651,205
Provision for impairment losses - -
2,641,733 1,651,205
26.1 At Amortised Cost
As at 31st December 2016 2015
Rs 000 Rs 000
Leasing 11,134 8,265
Term loans 2,283,124 1,543,325
Overdraft 47,229 99,615
Money market loans 300,246 -
2,641,733 1,651,205
280 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
27 LOANS TO AND RECEIVABLES FROM OTHER CUSTOMERS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Gross loans & receivables 465,875,708 384,605,379 482,883,380 395,565,780
(1,960,290) (1,911,559) (1,966,756) (1,911,559)
463,915,418 382,693,820 480,916,624 393,654,221
(3,385,046) (3,019,615) (3,473,520) (3,095,730)
Collective loan impairment (Note 27.2.2) (4,341,320) (3,977,675) (4,688,157) (4,280,747)
Total impairment (Note 27.2) (7,726,366) (6,997,290) (8,161,677) (7,376,477)
Net loans & receivables 456,189,052 375,696,530 472,754,947 386,277,744
27.1 At Amortised Cost
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 % Rs 000 % Rs 000 % Rs 000 %
Bills of exchange 3,630,345 0.78 3,380,096 0.88 3,630,345 0.75 3,380,096 0.85
Leasing (Note 27.4) 19,214,862 4.12 18,674,969 4.86 33,314,624 6.90 27,984,868 7.07
25,374,582 5.45 20,181,623 5.25 25,374,582 5.25 20,181,623 5.10
Export loans 19,809,405 4.25 16,851,433 4.38 19,809,405 4.10 16,851,433 4.26
Import loans 50,853,973 10.92 44,276,694 11.51 50,839,778 10.53 44,276,694 11.19
9,016,678 1.94 7,897,118 2.05 9,016,678 1.87 7,897,118 2.00
Term loans 205,751,571 44.16 156,978,522 40.82 205,841,301 42.63 154,054,403 38.95
499,323 0.11 818,160 0.21 1,408,369 0.29 2,955,576 0.75
Loans against investment fund account (IFA) 742,281 0.16 1,240,321 0.32 744,922 0.15 1,252,356 0.32
Overdraft 85,032,667 18.26 66,577,001 17.31 84,700,187 17.54 66,403,013 16.78
7,140,851 1.53 6,573,733 1.71 7,222,750 1.50 6,645,599 1.68
Pawning 15,479,487 3.32 13,471,959 3.50 15,479,487 3.21 14,262,043 3.61
Credit cards 9,468,068 2.03 7,852,432 2.04 9,468,068 1.96 7,852,432 1.99
Money market loans 11,042,976 2.37 18,211,645 4.74 11,042,976 2.29 18,211,645 4.60
Factoring 2,564,273 0.55 1,382,810 0.36 4,635,379 0.96 2,619,645 0.66
Others 254,366 0.05 236,863 0.06 354,529 0.07 737,236 0.19
465,875,708 100.00 384,605,379 100.00 482,883,380 100.00 395,565,780 100.00
(1,960,290) (1,911,559) (1,966,756) (1,911,559)
463,915,418 382,693,820 480,916,624 393,654,221
Provision for impairment losses (Note 27.2) (7,726,366) (6,997,290) (8,161,677) (7,376,477)
456,189,052 375,696,530 472,754,947 386,277,744
FINANCIAL INFORMATION
281
27.2 Provision for Impairment Losses
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
3,385,046 3,019,615 3,473,520 3,095,730
Collective loan impairment (Note 27.2.2) 4,341,320 3,977,675 4,688,157 4,280,747
Total impairment (Note 27.3) 7,726,366 6,997,290 8,161,677 7,376,477
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 3,019,615 2,878,898 3,095,730 2,913,195
930,035 513,348 949,745 551,237
(467,113) (260,357) (467,113) (260,357)
Interest income accrued on impaired loans & receivables (Note 7.1) (261,567) (212,711) (261,580) (212,873)
Other movements 164,076 100,437 156,738 104,528
Balance as at 31st December 3,385,046 3,019,615 3,473,520 3,095,730
Gross amount of loans individually determined to be impaired, before deducting the individually assessed impairment provision
7,541,722 4,919,097 7,958,764 5,506,819
27.2.2 Collective Loan Impairment
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 3,977,675 4,128,681 4,280,747 4,420,202
500,311 427,832 559,790 439,218
(142,155) (590,252) (156,930) (590,252)
Other movements 5,489 11,414 4,550 11,579
Balance as at 31st December 4,341,320 3,977,675 4,688,157 4,280,747
282 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
27 LOANS TO AND RECEIVABLES FROM OTHER CUSTOMERS CONTD.
27.3 Movement in Provision for Impairment Losses - by Product
Bank Leasing &Hire purchase
Loans & Receivables
2016Total
2015Total
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 140,678 6,856,612 6,997,290 7,007,579
247,002 1,183,344 1,430,346 941,180
- (609,268) (609,268) (850,609)
Interest income accrued on impaired loans & receivables (Note 7.1) - (261,567) (261,567) (212,711)
Other movements - 169,565 169,565 111,851
Balance as at 31st December 387,680 7,338,686 7,726,366 6,997,290
Group Leasing &Hire purchase
Loans & Receivables
2016Total
2015Total
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 286,681 7,089,796 7,376,477 7,333,397
292,222 1,217,313 1,509,535 990,455
- (624,043) (624,043) (850,609)
Interest accrued on impaired loans & receivables (Note 7.1) - (261,580) (261,580) (212,873)
Other movements (938) 162,226 161,288 116,107
Balance as at 31st December 577,965 7,583,712 8,161,677 7,376,477
27.4 Leasing
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable 22,975,713 22,443,211 41,502,703 34,436,790
Unearned lease interest income (3,760,851) (3,768,242) (8,188,079) (6,451,922)
Gross lease receivable 19,214,862 18,674,969 33,314,624 27,984,868
Impairment allowance for lease receivable (378,137) (134,998) (528,119) (227,155)
Net lease receivable 18,836,725 18,539,971 32,786,505 27,757,713
Gross lease receivable within one year (Note 27.4.1) 6,506,345 5,398,278 10,493,297 7,969,809
Gross lease receivable after one year (Note 27.4.2) 12,708,517 13,276,691 22,821,327 20,015,059
19,214,862 18,674,969 33,314,624 27,984,868
FINANCIAL INFORMATION
283
27.4.1 Gross Lease Receivable within One Year
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable within one year from reporting date 8,363,553 7,081,283 14,333,611 10,831,195
Unearned lease interest income (1,857,208) (1,683,005) (3,840,314) (2,861,386)
Gross lease receivable within one year (Note 27.4) 6,506,345 5,398,278 10,493,297 7,969,809
Impairment allowance for lease receivable (128,041) (39,023) (171,680) (67,770)
Net lease receivable within one year 6,378,304 5,359,255 10,321,617 7,902,039
27.4.2 Gross Lease Receivable after One Year
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable after one year from reporting date 14,612,160 15,361,928 27,169,092 23,605,595
Unearned lease interest income (1,903,643) (2,085,237) (4,347,765) (3,590,536)
Gross lease receivable after one year (Note 27.4) 12,708,517 13,276,691 22,821,327 20,015,059
Impairment allowance for lease receivable (250,096) (95,975) (356,439) (159,385)
Net lease receivable after one year 12,458,421 13,180,716 22,464,888 19,855,674
27.5 Hire Purchase
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total hire purchase rentals receivable 580,808 1,000,204 1,629,819 3,642,230
Unearned hire purchase interest income (81,485) (182,044) (221,450) (686,654)
Gross hire purchase receivable 499,323 818,160 1,408,369 2,955,576
Impairment allowance for hire purchase receivable (9,543) (5,680) (49,846) (59,526)
Net hire purchase receivable 489,780 812,480 1,358,523 2,896,050
Gross hire purchase receivable within one year (Note 27.5.1) 235,539 260,619 721,919 1,191,985
Gross hire purchase receivable after one year (Note 27.5.2) 263,784 557,541 686,450 1,763,591
499,323 818,160 1,408,369 2,955,576
284 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
27 LOANS TO AND RECEIVABLES FROM OTHER CUSTOMERS CONTD.
27.5.1 Gross Hire Purchase Receivable within One Year
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total hire purchase rentals receivable within one year from reporting date 286,958 351,504 873,880 1,597,529
Unearned hire purchase interest income (51,419) (90,885) (151,961) (405,544)
Gross hire purchase receivable within one year (Note 27.5) 235,539 260,619 721,919 1,191,985
Impairment allowance for hire purchase receivable (4,502) (1,810) (26,880) (27,036)
Net hire purchase receivable within one year 231,037 258,809 695,039 1,164,949
27.5.2 Gross Hire Purchase Receivable after One Year
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Total hire purchase rentals receivable after one year from reporting date 293,850 648,700 755,939 2,044,701
Unearned hire purchase interest income (30,066) (91,159) (69,489) (281,110)
Gross hire purchase receivable after one year (Note 27.5) 263,784 557,541 686,450 1,763,591
Impairment allowance for hire purchase receivable (5,041) (3,870) (22,966) (32,490)
Net hire purchase receivable after one year 258,743 553,671 663,484 1,731,101
27.6 Loans to and Receivables from Other Customers - by Currency
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Sri Lankan Rupee 407,416,379 336,021,611 424,424,051 346,982,012
United States Dollar 53,937,502 46,393,449 53,937,502 46,393,449
Euro 1,999,707 1,431,338 1,999,707 1,431,338
Great Britain Pounds 2,229,461 725,310 2,229,461 725,310
Australian Dollar 277,491 33,627 277,491 33,627
United Arab Emirates Dirham 15,168 - 15,168 -
Swiss Franc - 44 - 44
465,875,708 384,605,379 482,883,380 395,565,780
FINANCIAL INFORMATION
285
27.7 Loans to and Receivables from Other Customers - by Product
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 % Rs 000 % Rs 000 % Rs 000 %
By Product - LKR
Bills of exchange 910,851 0.20 602,014 0.16 910,851 0.19 602,014 0.15
Leasing 19,214,862 4.12 18,674,969 4.86 33,314,624 6.90 27,984,868 7.07
25,071,539 5.38 19,998,739 5.20 25,071,539 5.19 19,998,739 5.05
Export loans 994,794 0.21 929,341 0.24 994,794 0.20 929,341 0.23
Import loans 47,175,388 10.13 40,114,922 10.43 47,161,193 9.77 40,114,922 10.14
9,016,678 1.94 7,897,118 2.05 9,016,678 1.87 7,897,118 2.00
Term loans 175,744,276 37.72 133,581,764 34.74 175,834,006 36.42 130,657,645 33.04
499,323 0.11 818,160 0.21 1,408,369 0.29 2,955,576 0.75
Loans against investment fund account (IFA) 742,281 0.16 1,240,321 0.32 744,922 0.15 1,252,356 0.32
Overdraft 82,285,004 17.67 64,580,408 16.79 81,952,524 16.97 64,406,420 16.28
7,140,851 1.53 6,573,733 1.71 7,222,750 1.50 6,645,599 1.68
Pawning 15,479,487 3.32 13,471,959 3.50 15,479,487 3.21 14,262,043 3.61
Credit cards 9,468,068 2.03 7,852,432 2.04 9,468,068 1.96 7,852,432 1.99
Money market loans 11,042,976 2.37 18,211,645 4.74 11,042,976 2.29 18,211,645 4.60
Factoring 2,564,273 0.55 1,382,810 0.36 4,635,379 0.96 2,619,645 0.66
Others 65,728 0.01 91,276 0.02 165,891 0.03 591,649 0.15
Sub total 407,416,379 87.45 336,021,611 87.37 424,424,051 87.90 346,982,012 87.72
By Product - Foreign Currency
Bills of exchange 2,719,494 0.58 2,778,082 0.72 2,719,494 0.56 2,778,082 0.70
303,043 0.07 182,884 0.05 303,043 0.06 182,884 0.05
Export loans 18,814,611 4.04 15,922,092 4.14 18,814,611 3.90 15,922,092 4.03
Import loans 3,678,585 0.79 4,161,772 1.08 3,678,585 0.76 4,161,772 1.05
Term loans 30,007,295 6.44 23,396,758 6.08 30,007,295 6.21 23,396,758 5.91
Overdraft 2,747,663 0.59 1,996,593 0.52 2,747,663 0.57 1,996,593 0.50
Others 188,638 0.04 145,587 0.04 188,638 0.04 145,587 0.04
Sub total 58,459,329 12.55 48,583,768 12.63 58,459,329 12.10 48,583,768 12.28
Total 465,875,708 100.00 384,605,379 100.00 482,883,380 100.00 395,565,780 100.00
286 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
27 LOANS TO AND RECEIVABLES FROM OTHER CUSTOMERS CONTD.
27.8 Loans to and Receivables from Other Customers - By Industry
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 % Rs 000 % Rs 000 % Rs 000 %
Agriculture & related 43,832,852 9.41 39,028,789 10.15 45,202,464 9.36 39,806,376 10.06
Manufacturing 68,034,295 14.60 56,131,661 14.59 69,391,132 14.37 56,692,291 14.33
Tourism 36,269,354 7.79 23,906,626 6.22 36,628,630 7.59 24,026,527 6.07
Transport 6,099,152 1.31 9,333,403 2.43 6,121,094 1.27 9,582,623 2.42
Construction 72,751,253 15.62 53,484,404 13.91 73,621,495 15.25 53,823,140 13.61
Traders 113,974,071 24.46 95,369,936 24.80 117,633,201 24.36 97,410,518 24.63
Financial and business services 35,245,615 7.57 27,068,203 7.04 32,991,815 6.83 24,235,514 6.13
Government 617,236 0.13 495,801 0.13 617,236 0.13 495,801 0.13
Infrastructure 18,853,554 4.05 13,542,815 3.52 19,702,294 4.08 13,542,815 3.42
Other services 19,465,960 4.17 15,459,626 4.01 28,460,268 5.88 25,166,060 6.36
Consumers 50,732,366 10.89 50,784,115 13.20 52,513,751 10.88 50,784,115 12.84
465,875,708 100.00 384,605,379 100.00 482,883,380 100.00 395,565,780 100.00
28 OTHER LOANS AND RECEIVABLES
Bank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Debentures - quoted (Note 28.1) 7,171,286 7,182,407
Preference shares (Note 28.2) - -
Sri Lanka Development Bonds (SLDBs) 28,389,925 22,642,983
2,629,514 3,542,884
Commercial papers (Note 28.4) 517,715 -
38,708,440 33,368,274
FINANCIAL INFORMATION
287
28.1 Debentures - Quoted
Bank & Group
As at 31st December 2016 2015
Amortised Cost
Amortised Cost
Rs 000 Rs 000
Name of the Company
Banks, Finance & Insurance
Alliance Finance PLC 146,666 254,447
Central Finance Company PLC 303,052 347,876
Commercial Leasing & Finance PLC 495,280 470,935
DFCC Vardhana Bank 224,916 224,863
318,694 347,061
Lanka Orix Leasing Company PLC 511,311 511,342
Orient Finance PLC 400,595 418,745
Pan Asia Banking Corporation PLC 50,147 49,790
People’s Leasing & Finance PLC 742,482 742,520
Senkadagala Finance PLC 20,121 41,052
Singer Finance PLC 247,449 237,083
Softlogic Finance PLC 426,340 425,248
Vanik Incorporation Ltd (Note 28.1.1) - 750
3,887,053 4,071,712
Constructions & Engineering
Access Engineering PLC 303,707 303,707
MTD Walkers PLC 512,421 512,421
816,128 816,128
Abans PLC 604,886 731,072
507,911 204,872
12,662 12,662
Singer Sri Lanka PLC 754,621 758,672
1,880,080 1,707,278
Others
Kotagala Plantations PLC 78,131 78,146
Lion Brewery Ceylon PLC 509,894 509,893
588,025 588,039
Total 7,171,286 7,183,157
Provision for impairment - (750)
7,171,286 7,182,407
28.1.1
288 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
28 OTHER LOANS AND RECEIVABLES CONTD.
28.2 Preference SharesBank & Group
As at 31st December 2016 2015
Amortised Cost
Amortised Cost
Rs 000 Rs 000
Texpro Industries Ltd - 12,604
(15% non - cumulative redeemable preference shares of Rs 10/- each redeemable over a period of 6 years commencing from 30th June 2003)
- 12,604
Provision for impairment - (12,604)
- -
Bank & Group
As at 31st December 2016 2015
Amortised Cost
Amortised Cost
Rs 000 Rs 000
Citizens Development Business Finance PLC - 206,090
People's Leasing & Finance PLC 2,167,427 2,834,301
Associated Motor Finance Company PLC 114,532 226,893
Commercial Credit & Finance PLC 179,197 -
UB Finance Co Ltd 168,358 275,600
2,629,514 3,542,884
Provision for impairment - -
2,629,514 3,542,884
28.4 Commercial PapersBank & Group
As at 31st December 2016 2015
Amortised Cost
Amortised Cost
Rs 000 Rs 000
517,715 -
517,715 -
Provision for impairment - -
517,715 -
FINANCIAL INFORMATION
289
29 FINANCIAL ASSETS - AVAILABLE FOR SALE
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Government securities - treasury bills (Note 29.1) 7,723,232 44,649,558 7,782,454 45,340,570
Government securities - treasury bonds (Note 29.2) 4,786,690 5,327,185 4,786,690 5,327,185
Quoted equity securities (Note 29.3) 1,729,560 1,217,611 1,729,560 1,217,611
Unquoted equity securities (Note 29.4) 30,708 56,057 30,764 56,113
14,270,190 51,250,411 14,329,468 51,941,479
29.1 Government Securities - Treasury Bills
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Amortised cost 7,710,836 44,653,195 7,769,928 45,344,754
Loss from mark to market valuation as at 1st January (3,637) - (4,184) -
Movement during the year 18,237 (3,637) 18,914 (4,184)
(2,204) - (2,204) -
Gain / (loss) from mark to market valuation as at 31st December 12,396 (3,637) 12,526 (4,184)
Market value 7,723,232 44,649,558 7,782,454 45,340,570
29.2 Government Securities - Treasury BondsBank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Amortised cost 4,894,918 5,328,569
Loss from mark to market valuation as at 1st January (1,384) -
Movement during the year (105,672) (1,384)
(1,172) -
Loss from mark to market valuation as at 31st December (108,228) (1,384)
Market value 4,786,690 5,327,185
290 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
29 FINANCIAL ASSETS AVAILABLE FOR SALE CONTD.
29.3 Quoted Equity SecuritiesQuoted equity securities include the investment in ordinary shares of LankaBangla Finance Ltd in Bangladesh.
Bank & Group
As at 31st December 2016 2015
No. of Ordinary
Shares Rs 000
No. of Ordinary
Shares Rs 000
Cost of the investment as at 1st January 22,792,770 355,544 20,720,700 289,628
Exchange gain 15,990 32,061
Scrip dividend received during the year 3,418,915 63,281 2,072,070 33,855
Cost of the investment as at 31st December 26,211,685 434,815 22,792,770 355,544
Gain from mark to market valuation as at 1st January 862,067 1,244,235
Movement during the year 432,678 (382,168)
Gain from mark to market valuation as at 31st December 1,294,745 862,067
Market Value 1,729,560 1,217,611
FINANCIAL INFORMATION
291
29.4 Unquoted Equity Securities
As at 31st December 2016 2015
No. of Ordinary
Shares
Cost of Investment
Market Value
No. of Ordinary
Shares
Cost of Investment
Market Value
Rs 000 Rs 000 Rs 000 Rs 000
Bank
Name of the Company
LankaBangla Securities Ltd 266,805 44,600 1,107 242,550 42,434 10,940
Credit Information Bureau 1,700 170 170 1,700 170 170
SWIFT 26 6,556 6,556 26 6,556 6,556
Fitch Ratings Lanka Ltd 62,500 625 625 62,500 625 625
Lanka Clear (Pvt) Ltd 2,000,000 20,000 20,000 2,000,000 20,000 20,000
Lanka Financial Services Bureau Ltd 225,000 2,250 2,250 225,000 2,250 2,250
Lanka Rating Agency Ltd 1,241,263 15,516 - 1,241,263 15,516 15,516
Total 89,717 30,708 87,551 56,057
Impairment provision as at 1st January (31,494) (29,105)
Movement during the year (Note 12) (27,515) (2,389)
Impairment provision as at 31st December (59,009) (31,494)
Market value 30,708 56,057
Group
Name of the Company
LankaBangla Securities Ltd 266,805 44,600 1,107 242,550 42,434 10,940
Credit Information Bureau 1,800 226 226 1,800 226 226
SWIFT 26 6,556 6,556 26 6,556 6,556
Fitch Ratings Lanka Ltd 62,500 625 625 62,500 625 625
Lanka Clear (Pvt) Ltd 2,000,000 20,000 20,000 2,000,000 20,000 20,000
Lanka Financial Services Bureau Ltd 225,000 2,250 2,250 225,000 2,250 2,250
Lanka Rating Agency Ltd 1,241,263 15,516 - 1,241,263 15,516 15,516
Total 89,773 30,764 87,607 56,113
Impairment provision as at 1st January (31,494) (29,105)
Movement during the year (Note 12) (27,515) (2,389)
Impairment provision as at 31st December (59,009) (31,494)
Market value 30,764 56,113
Directors of the Bank carried out an impairment assessment of the unquoted share investments held by the Bank and concluded that a further impairment of Rs 27.5 Mn (Note 12) to be made against the investment in LankaBangla Securities Ltd (Rs 12 Mn) and Lanka Rating Agency Ltd (Rs 15.5 Mn) since there is a permanent decline in value of the investment. Other unquoted available for sale equity securities are recorded at cost since it is the most reasonable value available to represent the market value of these investments as at the reporting date.
292 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
30 FINANCIAL ASSETS - AVAILABLE FOR SALE PLEDGED AS COLLATERALS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Government securities - treasury bills (Note 30.1) 657,903 2,758,241 598,681 2,067,229
Government securities - treasury bonds (Note 30.2) - 4,452,344 - 4,452,344
657,903 7,210,585 598,681 6,519,573
30.1 Government Securities - Treasury Bills
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Amortised cost 656,746 2,759,110 597,654 2,067,551
Loss from mark to market valuation as at 1st January (869) - (322) -
Movement during the year 2,026 (869) 1,349 (322)
Gain / (loss) from mark to market valuation as at 31st December 1,157 (869) 1,027 (322)
Market value 657,903 2,758,241 598,681 2,067,229
30.2 Government Securities - Treasury BondsBank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Amortised cost - 4,488,057
Loss from mark to market valuation as at 1st January (35,713) -
Movement during the year 35,713 (35,713)
Loss from mark to market valuation as at 31st December - (35,713)
Market value - 4,452,344
31 FINANCIAL ASSETS - HELD TO MATURITY
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Government securities - treasury bills & bonds - - 16,933 63,121
- - 16,933 63,121
FINANCIAL INFORMATION
293
32 INVESTMENT IN SUBSIDIARIES
Accounting Policy
Subsidiaries are entities that are controlled by the Bank. The Bank is presumed to control an investee when it is exposed or has rights to
reporting date the Bank reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one ormore elements of control mentioned above.
The Financial Statements of Subsidiaries are fully consolidated from the date on which control is transferred to the Bank and continue to be consolidated until the date when such control ceases. The Financial Statements of the Bank’s Subsidiaries are prepared for the same reporting year as per the Bank, using consistent accounting policies.
The cost of acquisition of a Subsidiary is measured as the fair value of the consideration, including contingent consideration, given on the
acquisition. Subsequent to the initial measurement, the Bank continues to recognise the investments in Subsidiaries at cost.
The total assets and liabilities of the Subsidiaries as at the reporting date are included in the Consolidated Statement of Financial Position.
interest is presented in the Consolidated Statement of Financial Position within equity, separately from the equity attributable to the equity
Income. Total comprehensive income is allocated to the owners of the parent and to the non-controlling interests even if this results in non-
Intra-group balances and any income and expenses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements. Unrealised losses are eliminated in the same way as unrealised gains, except that they are only eliminated to the extent that there is no evidence of impairment. When a Subsidiary is acquired or sold during the year, operating results of such Subsidiary is included from the date of acquisition or to the date of disposal. Upon the loss of control, the Group derecognises the assets and liabilities of
the loss of control is recognised in the Statement of Changes in Equity.
If the Group retains any interest in the previous Subsidiary, then such interest is measured at fair value at the date that control is lost.
The Bank acquired the total non-controlling interest (2.86%) of the Subsidiary, Sampath Centre Ltd for a consideration of Rs 100 Mn on 30th December 2016. Accordingly the carrying value of the non-controlling interest as at 30th December 2016 in excess of the consideration paid was transferred to shareholders’ funds.
Apart from the above the Group did not acquire / dispose any Subsidiary during the years ended 31st December 2016 and 31st December 2015.
of loans and advances.
All Subsidiaries of the Bank have been incorporated in Sri Lanka.
294 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
32 INVESTMENT IN SUBSIDIARIES CONTD.
32.1 Bank
As at 31st December 2016 2015
Subsidiary Principal Activities Ownership Cost Directors' Valuation
Ownership Cost Directors' Valuation
Rs 000 Rs 000 Rs 000 Rs 000
Siyapatha Finance PLC Granting leasing, factoring, hire purchase & other loan facilities & accepting deposits 100.00% 576,975 1,930,355 100.00% 525,000 1,548,750
Sampath Centre Ltd Renting of commercial property 100.00% 547,000 4,357,835 97.14% 447,000 3,231,700
S C Securities (Pvt) Ltd Stock broking 100.00% 78,921 75,154 100.00% 78,921 145,928
Sampath Information Technology Solutions Ltd
Developing software solutions & maintenance of hardware 100.00% 29,000 105,068 100.00% 29,000 85,028
1,231,896 6,468,412 1,079,921 5,011,406
Impairment provision as at 1st January - -
Movement during the year (Note 12) (4,000) -
Impairment provision as at 31st December (4,000) -
Net investment in Subsidiaries 1,227,896 1,079,921
Subsidiaries are not quoted in the Colombo Stock Exchange except Siyapatha Finance PLC. The Directors’ valuation of investments in Subsidiaries has been carried out on net asset basis as at 31st December 2016 (2015 : as at 30th September) and accordingly the Bank has recognised an impairment charge of Rs 4 Mn against the investment in SC Securities (Pvt) Ltd.
Summarised Financial Statements of Subsidiaries within the Group are given in Note 32.2.
FINANCIAL INFORMATION
295
32.2 Summarised Financial Information of Subsidiaries
Siyapatha Finance PLC Sampath Centre Ltd S C Securities (Pvt) Ltd Sampath Information Technology Solutions Ltd
For the year ended 31st December 2016 2015 2016 2015 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Net operating income 1,451,798 1,332,263 320,821 281,244 16,559 35,559 233,471 155,214
Less : Operating expenses 808,111 679,804 123,022 100,442 56,206 52,792 205,392 123,666
643,687 652,459 197,799 180,802 (39,647) (17,233) 28,079 31,548
Less: Taxes 316,404 267,934 16,750 11,249 21,869 171 10,571 8,473
327,283 384,525 181,049 169,553 (61,516) (17,404) 17,508 23,075
Other comprehensive income (net of tax) (2,279) (1,980) 898,623 834 2,242 609 956 248
Total comprehensive income 325,004 382,545 1,079,672 170,387 (59,274) (16,795) 18,464 23,323
Siyapatha Finance PLC Sampath Centre Ltd S C Securities (Pvt) Ltd Sampath Information Technology Solutions Ltd
As at 31st December 2016 2015 2016 2015 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Loans to & receivables from other customers 19,353,684 13,680,275 - - - - - -
PPE & intangible assets 366,620 139,586 3,798,734 2,942,204 9,627 12,031 581,491 315,442
Other assets 1,070,436 819,465 649,026 456,076 197,164 263,222 311,157 100,516
Total assets 20,790,740 14,639,326 4,447,760 3,398,280 206,791 275,253 892,648 415,958
Debt issued & other borrowed funds 14,187,266 10,925,421 1,324 1,064 53,772 71,210 521,571 271,840
Other liabilities 4,673,121 2,102,773 88,601 84,053 77,865 56,888 266,009 57,515
Total liabilities 18,860,387 13,028,194 89,925 85,117 131,637 128,098 787,580 329,355
Total equity 1,930,355 1,611,132 4,357,835 3,313,163 75,154 147,155 105,068 86,603
Total liabilities & equity 20,790,740 14,639,326 4,447,760 3,398,280 206,791 275,253 892,648 415,958
33 PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
RecognitionProperty, plant and equipment are tangible items that are held for use in the production or supply of services, for rental to others or for administrative purposes and are expected to be used during more than one period. The Group applies the requirements of the Sri Lanka Accounting Standard - LKAS 16 (Property, Plant and Equipment) in accounting for these assets. Property, plant and equipment are
reliably measured. Measurement
that is directly attributable to the acquisition of the asset and cost incurred subsequently to add to, replace part of an item of property, plant & equipment. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of computer
components) of property, plant and equipment.
296 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
33 PROPERTY, PLANT AND EQUIPMENT CONTD.
Cost ModelThe Group applies cost model to property, plant and equipment except for freehold land and buildings and records at cost of purchase or construction together with any incidental expenses thereon less accumulated depreciation and any accumulated impairment losses.
Revaluation ModelThe Group applies the revaluation model to the entire class of freehold land and buildings. Such properties are carried at a revalued amount, being their fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment
from the fair values at the reporting date. The Group has revalued its freehold land & building during the year 2016 and details of the revaluation are given in Note 33.3.
On revaluation of an asset, any increase in the carrying amount is recognised in ‘Other comprehensive income’ and accumulated in equity, under revaluation reserve or used to reverse a previous revaluation decrease relating to the same asset, which was charged to
income to the extent of any credit balance existing in the capital reserve in respect of that asset.
The decrease recognised in other comprehensive income reduces the amount accumulated in equity under capital reserves. Any balance remaining in the revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.
Subsequent CostThe subsequent cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item
Derecognition
expected from its use. The gain or loss arising from de-recognition of an item of property, plant and equipment is included in the Statement
plant and equipment, the remaining carrying amount of the replaced part is derecognised. Major inspection costs are capitalised. At each such capitalisation, the remaining carrying amount of the previous cost of inspections is derecognised.
Capital Work in ProgressThese are expenses of capital nature directly incurred in the construction of buildings, major plant, machinery and system development, awaiting capitalisation. Capital work-in-progress would be transferred to the relevant asset when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Capital work-in-progress is stated at cost less any accumulated impairment losses.
Borrowing CostsBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset have been capitalised as part of the cost of the asset in accordance with Sri Lanka Accounting Standard - LKAS 23 (Borrowing Costs). A qualifying asset is an asset which takes substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing costs ceases when substantially
or loss in the period in which they are incurred.
There were no capitalized borrowing costs related to the acquisition of property, plant and equipment during the year.
Rates of depreciation for each category of property, plant and equipment is given in Note 14, ‘Other operating expenses’.
FINANCIAL INFORMATION
297
33.1 Bank
Freehold Land &
Improvementsto Leasehold
Computer Equipment Equipment
Fixtures &Fittings
Motor Vehicles
Capital Work-in
2016Total
2015Total
Buildings properties ProgressRs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Cost / ValuationBalance as at 1st January 3,529,953 1,050,787 2,320,558 1,830,125 178,393 209,706 - 9,119,522 8,492,096 Additions & improvements 50,044 69,997 251,341 166,876 32,665 49,018 37,403 657,344 815,127 Disposals during the year - (5,862) (2,442) (9,537) (906) (8,837) - (27,584) (68,798)
- - (732) (815) - - - (1,547) (118,651)Revaluation adjustment on accumulated depreciation (75,015) - - - - - - (75,015) - Revaluation surplus 604,243 - - - - - - 604,243 - Transfers / adjustments - (19) (93) 247 143 - - 278 (252)Cost / valuation as at 31st December 4,109,225 1,114,903 2,568,632 1,986,896 210,295 249,887 37,403 10,277,241 9,119,522
Accumulated DepreciationBalance as at 1st January 49,923 816,430 1,573,626 1,132,902 121,568 111,582 - 3,806,031 3,350,248 Charge for the year 28,097 97,473 223,949 202,564 21,997 25,001 - 599,081 604,945 Disposals during the year - (5,813) (2,341) (8,721) (862) (5,547) - (23,284) (54,878)
- - (732) (752) - - - (1,484) (94,284)Revaluation adjustment on accumulated depreciation (75,015) - - - - - - (75,015) - Transfers / adjustments - - 14 247 134 - - 395 - Accumulated depreciation as at 31st December 3,005 908,090 1,794,516 1,326,240 142,837 131,036 - 4,305,724 3,806,031 Net book value as at 31st December 2016 4,106,220 206,813 774,116 660,656 67,458 118,851 37,403 5,971,517 Net book value as at 31st December 2015 3,480,030 234,357 746,932 697,223 56,825 98,124 - 5,313,491
revaluation surplus amounting to Rs 602 Mn had been credited to the revaluation reserve account in 2016. Net impairment reversal of
33.1 (a) The carrying amount of Bank’s revalued freehold land and buildings, if they were carried at cost less accumulated depreciation, would be as follows:
As at 31st December 2016 2015
Cost Accumulated Carrying Cost Accumulated Carrying
Depreciation Value Depreciation Value
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Freehold lands 855,934 - 855,934 855,934 - 855,934
Freehold buildings 1,003,126 172,349 830,777 953,082 147,879 805,203
Total 1,859,060 172,349 1,686,711 1,809,016 147,879 1,661,137
298 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
33 PROPERTY, PLANT AND EQUIPMENT CONTD.
33.2 Group
Freehold Land &
Improvementsto Leasehold
Computer Equipment Equipment
Fixtures &Fittings
Motor Vehicles
Capital Work-in
2016Total
2015Total
Buildings properties ProgressRs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Cost / ValuationBalance as at 1st January 6,518,451 1,050,787 2,840,495 1,973,054 249,975 244,594 - 12,877,356 11,959,039 Additions & improvements 262,578 69,997 683,676 183,292 75,539 49,018 37,403 1,361,503 1,113,213 Disposals during the year - (5,862) (2,442) (9,562) (906) (13,147) - (31,919) (70,274)
- - (732) (815) - - - (1,547) (124,370)Revaluation adjustment on accumulated depreciation (216,936) - - - - - - (216,936) -Revaluation surplus 1,502,820 - - - - - - 1,502,820 -Transfers / adjustments - (19) (93) 247 143 - - 278 (252)Cost / valuation as at 31st December 8,066,913 1,114,903 3,520,904 2,146,216 324,751 280,465 37,403 15,491,555 12,877,356
Accumulated DepreciationBalance as at 1st January 148,304 816,430 1,771,209 1,173,620 143,324 127,892 - 4,180,779 3,570,441 Charge for the year 80,107 97,473 378,371 216,776 41,171 31,274 - 845,172 766,527 Disposals during the year - (5,813) (2,341) (8,747) (862) (7,815) - (25,578) (56,186)
- - (732) (752) - - - (1,484) (100,003)Revaluation adjustment on accumulated depreciation (216,936) - - - - - - (216,936) -Transfers / adjustments - - 14 247 134 - - 395 - Accumulated depreciation as at 31st December 11,475 908,090 2,146,521 1,381,144 183,767 151,351 - 4,782,348 4,180,779 Net book value as at 31st December 2016 8,055,438 206,813 1,374,383 765,072 140,984 129,114 37,403 10,709,207 Net book value as at 31st December 2015 6,370,147 234,357 1,069,286 799,434 106,651 116,702 - 8,696,577
revaluation surplus amounting to Rs 1,500.8 Mn had been credited to the revaluation reserve account in 2016. Net impairment reversal of
33.2 (a) The carrying amount of Group’s revalued freehold land and buildings, if they were carried at cost less accumulated depreciation, would be as follows:
As at 31st December 2016 2015
Cost Accumulated Carrying Cost Accumulated Carrying
Depreciation Value Depreciation Value
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Freehold lands 1,195,013 - 1,195,013 990,934 - 990,934
Freehold buildings 1,743,495 345,464 1,398,031 1,684,997 306,186 1,378,811
Total 2,938,508 345,464 2,593,044 2,675,931 306,186 2,369,745
FINANCIAL INFORMATION
299
33.3 Details of Bank’s / Group’s Land and Buildings Stated at Valuation
Location Date of Valuation
Method of Valuation Net Book Value Before Revaluation
Revaluation Amount
Revaluation Gain / (Loss)
Revaluation Gain / (Loss)
Recognised inLand Building Land Building Land Building Total
LossOCI
Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn
BankValuer - P B KalugalagedaraNo. 261, Galle Road, Ratmalana 30.11.2016 Market Comparable Method 22.00 20.05 30.00 23.00 8.00 2.95 10.95 - 10.95
Valuer - C WellappiliNo.1022, Maradana Road, Borella 29.11.2016 Market Comparable Method 140.25 65.44 255.00 100.11 114.75 34.67 149.42 - 149.42 No.05, Wakwella Road, Galle 01.12.2016 Market Comparable Method 78.66 20.42 104.88 29.84 26.22 9.42 35.64 - 35.64
12.11.2016 Market Comparable Method 31.00 - 41.50 - 10.50 - 10.50 - 10.50
Maharagama 29.11.2016 Market Comparable Method 46.35 24.65 67.30 35.89 20.95 11.24 32.19 - 32.19
Valuer - E M Wimalasena“Nuwarawewakele”, Maithreepala Senanayake Mw, Anuradhapura 30.11.2016 Market Comparable Method 123.85 69.21 165.00 69.00 41.15 (0.21) 40.94 (0.21) 41.15
Valuer - G M GamageNo. 69, Main Street, Deniyaya 01.12.2016 Market Comparable Method 16.64 26.74 21.90 25.78 5.26 (0.96) 4.29 (0.96) 5.26
Ihalagama Road, Deniyaya 01.12.2016 Market Comparable Method 6.00 - 0.60 - (5.40) - (5.40) (0.33) (5.07) 01.12.2016 Market Comparable Method 131.15 29.00 166.92 37.59 35.77 8.59 44.35 - 44.35
No. 25-27, Main Street, Thissamaharama. 01.12.2016 Market Comparable Method 14.43 26.93 17.76 33.49 3.33 6.56 9.89 - 9.89
Valuer - Sarath FernandoNo. 7/5, Giriulla Road, Alawwa 21.11.2016 Market Comparable Method 16.52 20.06 20.50 26.50 3.98 6.44 10.42 - 10.42 No. 103, Dharmapala Mawatha,
02.12.2016 Market Comparable Method 645.40 67.37 700.00 68.00 54.60 0.63 55.23 - 55.23 No. 150, Colombo Road, Gampaha 02.12.2016 Market Comparable Method 49.80 40.14 62.00 41.00 12.20 0.86 13.06 - 13.06 No. 312/A, Galle Road, Kalutara 21.11.2016 Market Comparable Method 67.50 61.00 75.00 68.00 7.50 7.00 14.50 - 14.50 No. 29, Cross Street, Kandy 21.11.2016 Market Comparable Method 228.50 87.53 240.00 97.50 11.50 9.97 21.47 - 21.47 No. 187, Madawala Road, Katugastota 21.11.2016 Market Comparable Method 63.80 61.24 69.60 66.70 5.80 5.46 11.26 - 11.26 No. 31 & 33, Negombo Road, Kurunegala 03.12.2016 Market Comparable Method 121.80 89.68 130.50 91.00 8.71 1.32 10.03 - 10.03 No. 475, Elvitigala Mawatha, Narahenpita 21.11.2016 Market Comparable Method 85.00 56.00 94.00 63.00 9.00 7.00 16.00 - 16.00 No. 408, Main Street, Negombo 21.11.2016 Market Comparable Method 72.63 - 103.75 - 31.13 - 31.13 - 31.13 No. 371, Old Moor St, Masangasweediya, Colombo 12 21.11.2016 Market Comparable Method 126.00 24.07 132.00 28.00 6.00 3.93 9.93 - 9.93 No. 373 A, Galle Road, Panadura 21.11.2016 Market Comparable Method 54.00 47.16 61.50 52.50 7.50 5.34 12.84 1.42 11.42 No. 85/87, Panchikawatta Road, Colombo 10 03.12.2016 Market Comparable Method 65.00 12.31 66.00 31.94 1.00 19.63 20.63 - 20.63 No. 180(part), Bodiraja Mawatha, Pettah 21.11.2016 Income Basis - 58.28 - 69.89 - 11.62 11.62 - 11.62 No. 61A, Moratuwa Road, Piliyandala 21.11.2016 Market Comparable Method 56.00 30.97 65.00 34.00 9.00 3.03 12.03 - 12.03 No. 1/87, Victoria Range, Digana, Kandy 21.11.2016 Market Comparable Method 5.50 9.65 7.00 10.80 1.50 1.15 2.65 - 2.65 No. 256/1, Negombo Road, Wattala 03.12.2016 Market Comparable Method 80.00 38.87 89.00 41.00 9.00 2.13 11.13 2.13 9.00 No. 591, Galle Road, Wellawatta 21.11.2016 Market Comparable Method 113.00 57.43 118.00 60.00 5.00 2.57 7.57 - 7.57 Total - Bank 2,460.78 1,044.20 2,904.71 1,204.53 443.94 160.34 604.27 2.05 602.23
SubsidiariesValuer - P B KalugalagedaraSampath Centre Ltd. - No. 110, Sir James Peiris Mawatha, Colombo 2 31.12.2016 Income basis 1,265.00 1,532.42 1,972.00 1,724.00 707.00 191.58 898.58 - 898.58
Valuer - C WellappiliSiyapatha Finance PLC - No. 534, Bauddhaloka Mawatha, Colombo 8 31.12.2016 Market Comparable Method 204.08 - 204.08 - - - - - -Total - Group 3,929.86 2,576.62 5,080.79 2,928.53 1,150.94 351.92 1,502.85 2.05 1,500.81
300 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
33 PROPERTY, PLANT AND EQUIPMENT CONTD.
33.4 Freehold Land and Buildings
Location Land Buildings Cost / Cost / Total Accumulated 2016 As a % 2015
Extent Revaluation Revaluation Value Depreciation Net Book of Total Net Book
of Land of Buildings Value NBV Value
Perches Sq.ft Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Bank
1 Pettah - 5,124 - 69,892 69,892 237 69,655 0.9% 59,152
No. 180 (part), Bodiraja Mawatha,
Pettah
2 Borella 25.5 16,245 255,000 100,113 355,113 243 354,870 4.4% 207,317
No. 1022, Maradana Road, Borella
3 Kurunegala 37.4 16,202 130,500 91,000 221,500 221 221,279 2.7% 198,107
No. 31 & 33, Negombo Road,
Kurunegala
4 Wattala 42.5 5,314 89,000 41,000 130,000 87 129,913 1.6% 119,838
No. 256/1, Negombo Road, Wattala
5 Matara 47.7 11,141 166,915 37,585 204,500 80 204,420 2.5% 160,153
6 Maharagama 13.5 6,310 67,300 35,888 103,188 87 103,101 1.3% 71,613
Maharagama
7 Deniyaya 17.5 5,325 21,900 25,780 47,680 55 47,625 0.6% 44,051
No. 69, Main Street, Deniyaya
8 Deniyaya 40.0 Bare Land 600 - 600 - 600 0.0% 6,000
Ihalagama Road, Deniyaya
9 Ratmalana 10.9 5,520 30,000 23,000 53,000 51 52,949 0.7% 42,381
No. 261, Galle Road, Ratmalana
10 Piliyandala 37.5 8,138 65,000 34,000 99,000 83 98,917 1.2% 87,238
No. 61A, Moratuwa Road, Piliyandala
11 Anuradhapura 41.3 8,982 165,000 69,000 234,000 147 233,853 2.9% 194,748
“Nuwarawewakele”, Maithreepala
Senanayake Mw, Anuradhapura
12 Panadura 27.3 6,020 61,500 52,500 114,000 127 113,873 1.4% 102,081
No. 373 A, Galle Road, Panadura
13 Old Moor Street 24.0 10,180 132,000 28,000 160,000 159 159,841 2.0% 150,647
No. 371, Old Moor St,
Masangasweediya, Colombo 12
14 Tissamaharama 22.2 10,815 17,760 33,485 51,245 71 51,174 0.6% 42,027
No. 25-27, Main Street,
Tissamaharama
15 Katugastota 23.2 7,811 69,600 66,700 136,300 142 136,158 1.7% 126,554
No. 187, Madawala Road, Katugastota
16 Galle 17.5 5,400 104,880 29,835 134,715 72 134,643 1.7% 98,663
No. 05, Wakwella Road, Galle
17 Wellawatte 21.5 7,776 118,000 60,000 178,000 134 177,866 2.2% 171,853
No. 591, Galle Road, Wellawatta
FINANCIAL INFORMATION
301
Location Land Buildings Cost / Cost / Total Accumulated 2016 As a % 2015
Extent Revaluation Revaluation Value Depreciation Net Book of Total Net Book
of Land of Buildings Value NBV Value
Perches Sq.ft Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
18 Narahenpita 18.9 9,600 94,000 63,000 157,000 141 156,859 1.9% 142,359
No. 475, Elvitigala Mawatha,
Narahenpita
19 Kalutara 30.0 8,715 75,000 68,000 143,000 152 142,848 1.8% 110,713
No. 312/A, Galle Road, Kalutara
20 Alawwa 20.7 8,190 20,500 26,500 47,000 113 46,887 0.6% 37,080
No. 7/5, Giriulla Road, Alawwa
21 Horana 20.8 Bare Land 41,500 - 41,500 - 41,500 0.5% 31,000
22 Kandy Metro 25.4 15,026 240,000 97,500 337,500 237 337,263 4.2% 318,081
No. 29, Cross Street, Kandy
23 Colombo 7 119.4 6,620 700,000 68,000 768,000 144 767,856 9.5% 714,426
No. 103, Dharmapala Mawatha,
24 Gampaha 25.0 5,680 62,000 41,000 103,000 87 102,913 1.3% 90,932
No. 150, Colombo Road, Gampaha
25 Victoria Range 20.1 2,320 7,000 10,800 17,800 26 17,774 0.2% 15,391
No. 1/87, Victoria Range, Digana,
Kandy
26 Panchikawatta 9.8 7,020 66,000 31,942 97,942 109 97,833 1.2% 65,000
No. 85/87, Panchikawatta Road,
Colombo 10
27 Negombo 41.5 WIP 103,750 - 103,750 - 103,750 1.3% 72,625
No. 408, Main Street, Negombo
Total - Bank 781.1 199,474 2,904,705 1,204,520 4,109,225 3,005 4,106,220 51.0% 3,480,030
Subsidiaries
Sampath Centre Ltd
28 Colombo 2
No. 110, Sir James Peiris Mawatha,
Colombo 2
157.8 220,301 1,972,000 1,781,609 3,753,609 8,470 3,745,139 46.5% 2,890,117
Siyapatha Finance PLC
29 Borella 29.1 Bare Land 204,079 - 204,079 - 204,079 2.5% -
No. 534, Bauddhaloka Mawatha,
Colombo 8
Total - Group 968.0 419,775 5,080,784 2,986,129 8,066,913 11,475 8,055,438 100.0% 6,370,147
302 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
33 PROPERTY, PLANT AND EQUIPMENT CONTD.
33.5 (a) Improvements to Leasehold Properties
Bank & Group
As at 31st December Cost of Accumulated 2016 2015
Buildings Depreciation Net Book Net Book
Value Value
Rs 000 Rs 000 Rs 000 Rs 000
01 - 05 years 229,320 197,703 31,617 42,295
06 - 10 years 587,083 499,042 88,041 172,464
Above 10 years 298,500 211,345 87,155 19,598
Total 1,114,903 908,090 206,813 234,357
33.5 (b) Fully Depreciated Property, Plant and Equipment A class-wise analysis of the initial cost of fully depreciated property, plant and equipment of the Bank which are still in use as at reporting date is as follows.
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Asset class
Improvements to leasehold properties 672,383 514,857 672,383 514,857
Computer equipment & software 1,842,189 1,611,528 1,882,420 1,650,977
541,405 409,502 551,869 415,513
92,333 72,632 95,856 77,872
Motor vehicles 44,592 11,307 53,034 13,383
Total 3,192,902 2,619,826 3,255,562 2,672,602
33.5 (c) Temporarily Idle Property, Plant and Equipment - Bank / Group
to construct a branch in Deniyaya land as it was severely earth slipped. Any future construction on this land is subjected to NBRO (National
33.5 (d) Property, Plant and Equipment Retired from Active Use - Bank / Group There were no property, plant and equipment retired from active use as at the reporting date (2015: NIL)
33.5 (e) Title Restriction on Property, Plant and Equipment - Bank / Group There were no restriction on the title of property, plant and equipment as at 31st December 2016.
33.5 (f) Property, Plant and Equipment Pledged as Security for Liabilities - Bank / Group There were no items of property, plant and equipment pledged as securities for liabilities.
33.5 (g) Compensation from Third Parties for Items of Property, Plant and Equipment - Bank / Group There were no compensation received during the year from third parties for items of property, plant and equipment that were impaired, lost or given up (2015: Nil).
FINANCIAL INFORMATION
303
34 INTANGIBLE ASSETS
Accounting Policy
Recognition
or services, for rental to others or for administrative purposes. An intangible asset is recognised if it is probable that the future economic
initially measured at cost. Expenditure incurred on an intangible item that was initially recognised as an expense by the Group in previous annual Financial Statements or interim Financial Statements are not recognised as part of the cost of an intangible asset at a later date.
Computer SoftwareCost of purchased licenses and all computer software costs incurred, licensed for use by the Group, which are not integrally related to
included in the Statement of Financial Position under the category ‘Intangible assets’ and carried at cost less accumulated amortisation and any accumulated impairment losses.
GoodwillGoodwill, if any that arises upon the acquisition of Subsidiaries is included in intangible assets. Goodwill is measured at initial recognition in accordance with Note 3.1.1.
Subsequent ExpenditureExpenditure incurred on software is capitalised only when it is probable that this expenditure will enable the asset to generate future
asset reliably. All other expenditure is expensed as incurred.
Goodwill is measured at cost less accumulated impairment losses.
Derecognition of Intangible Assets
is derecognised.
There were no restrictions on the title of the intangible assets as at the reporting date. Further, there were no items pledged as securities for liabilities.
Intangible assets reported below only include computer software and cost of licenses. Rates of amortisation for computer software and licenses are given in Note 14, ‘Other operating expenses’.
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Cost
Balance as at 1st January 1,189,795 1,120,548 1,251,289 1,173,913
Additions & improvements 105,164 69,247 108,011 77,376
Cost as at 31st December 1,294,959 1,189,795 1,359,300 1,251,289
Accumulated amortisation
Balance as at 1st January 847,602 752,386 882,920 779,581
Charge for the year 110,009 95,216 120,249 103,339
Accumulated amortisation as at 31st December 957,611 847,602 1,003,169 882,920
Net book value as at 31st December 337,348 342,193 356,131 368,369
304 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
35 DEFERRED TAX LIABILITIES / (ASSETS)
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Recognised under assets - - (857) (23,368)
Recognised under liabilities 872,794 313,181 1,077,674 433,175
872,794 313,181 1,076,817 409,807
Financial Position.
35.1 Movement in Deferred Tax Liabilities / (Assets)
Bank Accelerated Depreciation for Tax
Purpose
Revaluation on
Buildings
Retirement
Obligation
Tax Losses on
Leasing Operation
Others Total
Property, Plant &
Equipment
Leased Assets
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 01st January 2015 325,887 446,706 74,410 (313,404) (114,034) (275,988) 143,577
(25,810) 371,231 - (16,080) (283,150) 90,950 137,141
Other comprehensive income - - - 32,463 - - 32,463
Balance as at 31st December 2015 300,077 817,937 74,410 (297,021) (397,184) (185,038) 313,181
Balance as at 01st January 2016 300,077 817,937 74,410 (297,021) (397,184) (185,038) 313,181
40,721 89,497 - (31,861) 89,165 169,766 357,288
Other comprehensive income - - 44,223 158,102 - - 202,325
Balance as at 31st December 2016 340,798 907,434 118,633 (170,780) (308,019) (15,272) 872,794
FINANCIAL INFORMATION
305
Group Accelerated Depreciation for Tax
Purpose
Revaluation on
Buildings
Retirement
Obligation
Tax Losses on
Leasing Operation
Others Total
Property, Plant &
Equipment
Leased Assets
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 01st January 2015 325,887 622,954 74,410 (328,836) (171,074) (323,064) 200,277
(25,810) 596,988 - 2,528 (474,882) 78,679 177,503
Other comprehensive income - - - 32,027 - - 32,027
Balance as at 31st December 2015 300,077 1,219,942 74,410 (294,281) (645,956) (244,385) 409,807
Balance as at 01st January 2016 300,077 1,219,942 74,410 (294,281) (645,956) (244,385) 409,807
77,021 349,770 - (43,768) (109,867) 191,171 464,327
Other comprehensive income - - 44,223 158,460 - - 202,683
Balance as at 31st December 2016 377,098 1,569,712 118,633 (179,589) (755,823) (53,214) 1,076,817
36 OTHER ASSETS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Pre-paid expenses 480,434 246,869 530,250 274,441
Reimbursement receivable under special senior citizen deposit scheme 2,045,253 790,178 2,045,253 790,178
Other debtors 1,686,734 1,178,419 2,211,133 1,453,518
Net assets of pension fund (Note 42.4.1) 138,511 - 138,511 -
1,960,290 1,911,559 1,966,756 1,911,559
Refundable deposit at fair value 80,902 75,884 36,618 18,762
Pre-paid cost on refundable deposit 2,720 2,915 2,720 2,915
115,370 124,109 115,370 124,109
6,510,214 4,329,933 7,046,611 4,575,482
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 1,911,559 2,043,632 1,911,559 2,043,632
Add : Adjustment for new grants (net of settlements) 289,247 115,709 298,130 115,709
Charge to personnel expenses (240,516) (247,782) (242,933) (247,782)
Balance as at 31st December (Note 27) 1,960,290 1,911,559 1,966,756 1,911,559
306 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
36 OTHER ASSETS CONTD.
36.2 Commission Receivable on Financial GuaranteesBank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 124,109 131,479
Interest income 10,212 10,852
Commission received (18,951) (18,222)
Balance as at 31st December 115,370 124,109
37 DUE TO BANKS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Call & time deposits 5,706,432 3,087,892 5,706,432 3,087,892
Unfavourable balances with local & foreign banks 317,500 330,607 364,764 330,607
6,023,932 3,418,499 6,071,196 3,418,499
38 DUE TO OTHER CUSTOMERS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Local Currency Deposits
Demand deposits 30,561,191 29,511,406 30,557,062 29,409,394
Saving deposits 147,256,035 146,551,907 147,127,848 146,539,292
Call deposits 272,092 674,388 272,092 674,388
Fixed deposits 269,073,258 178,534,080 272,074,535 179,490,003
14,842,324 13,025,445 14,842,324 13,025,445
Margin deposits 1,201,267 1,382,811 1,199,517 1,382,811
Total local currency deposits 463,206,167 369,680,037 466,073,378 370,521,333
Foreign Currency Deposits
Demand deposits 4,306,679 3,289,832 4,306,679 3,289,832
Saving deposits 16,087,604 14,139,760 16,087,564 14,139,110
Call deposits 659,389 60,565 659,389 60,565
Fixed deposits 26,291,326 19,076,628 26,291,326 19,076,628
Margin deposits 15,490 76,197 15,490 76,197
Total foreign currency deposits 47,360,488 36,642,982 47,360,448 36,642,332
Total deposits 510,566,655 406,323,019 513,433,826 407,163,665
FINANCIAL INFORMATION
307
38.1 Current Accounts and Savings Accounts (CASA)
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
CASA
Local currency deposits 177,817,226 176,063,313 177,684,910 175,948,686
Foreign currency deposits 20,394,283 17,429,592 20,394,243 17,428,942
198,211,509 193,492,905 198,079,153 193,377,628
Total Deposits
Due to other customers 510,566,655 406,323,019 513,433,826 407,163,665
Due to banks - Call & time deposits (Note 37) 5,706,432 3,087,892 5,706,432 3,087,892
516,273,087 409,410,911 519,140,258 410,251,557
CASA as a percentage (%) of total deposits 38.4 47.3 38.2 47.1
39 DEBT ISSUED AND OTHER BORROWED FUNDS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Commercial papers - - - 206
Redeemable debentures (Note 39.1) 27,009,027 20,581,099 30,624,287 21,601,700
Long term bond (Note 39.2) 1,942,931 1,780,008 1,942,931 1,780,008
Call borrowings 552,712 3,200,561 552,712 3,200,561
Term borrowings 3,176,712 3,081,384 11,612,447 10,215,270
Foreign currency borrowings 35,363,132 24,179,687 35,363,132 24,179,687
4,083,723 4,193,545 4,083,723 4,193,545
72,128,237 57,016,284 84,179,232 65,170,977
The Group / Bank has not had any default of principal, interest or other breaches with regard to any liability during 2015 and 2016.
308 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
39 DEBT ISSUED AND OTHER BORROWED FUNDS CONTD.
39.1 Redeemable Debentures
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 20,581,099 13,500,000 21,601,700 14,767,330
Debentures issued 6,000,000 7,000,000 8,500,000 7,000,000
Debentures redeemed - - - (267,330)
26,581,099 20,500,000 30,101,700 21,500,000
Interest accrued during the year (Note 7.2) 2,592,619 1,546,818 2,778,210 1,668,838
Interest paid (2,164,691) (1,465,719) (2,255,623) (1,567,138)
Balance as at 31st December 27,009,027 20,581,099 30,624,287 21,601,700
Details of debenture issued
Amortised Cost
Note No. of Debentures
Face ValueRs 000
2016Rs 000
2015Rs 000
Debentures issued in 2012 39.1.1 15,000,000 1,500,000 1,500,000 1,500,000
Debentures issued in 2013 39.1.2 50,000,000 5,000,000 5,000,000 5,000,000
Debentures issued in 2014 39.1.3 70,000,000 7,000,000 7,000,000 7,000,000
Debentures issued in 2015 39.1.4 70,000,000 7,000,000 7,083,594 7,081,099
Debentures issued in 2016 39.1.5 60,000,000 6,000,000 6,425,433 -
Total debentures issued by the Bank 26,500,000 27,009,027 20,581,099
Debentures issued by the Subsidiary, Siyapatha Finance PLC
Debentures issued in 2014 39.1.6 10,000,000 1,000,000 1,022,027 1,020,601
Debentures issued in 2016 39.1.7 25,000,000 2,500,000 2,593,233 -
Total debentures issued by the Subsidiary 3,500,000 3,615,260 1,020,601
Total debentures issued by the Group 30,000,000 30,624,287 21,601,700
FINANCIAL INFORMATION
309
Debentures Issued by the Bank:39.1.1 Debentures Issued in 2012Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2012. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
10,776,800 1,077,680 1,077,680 1,077,680 12-Oct-12 11-Oct-17 Fixed - 16.5 % per annum payable annually
2,477,900 247,790 247,790 247,790 12-Oct-12 11-Oct-17 Fixed - 15.0 % per annum payable monthly
1,745,300 174,530 174,530 174,530 12-Oct-12 11-Oct-17 Floating rate is equivalent to the six months treasury bill rate (gross) plus 2.0 % per annum payable semi-annually
15,000,000 1,500,000 1,500,000 1,500,000
39.1.2 Debentures Issued in 2013Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2013. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
15,541,900 1,554,190 1,554,190 1,554,190 04-Dec-13 04-Dec-18 Fixed - 13.00 % per annum payable semi-annually
34,458,100 3,445,810 3,445,810 3,445,810 04-Dec-13 04-Dec-18 Fixed - 13.40 % per annum payable annually
50,000,000 5,000,000 5,000,000 5,000,000
39.1.3 Debentures Issued in 2014Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2014. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
31,765,500 3,176,550 3,176,550 3,176,550 15-Dec-14 14-Dec-19 Fixed - 8.25% per annum payable annually
38,234,500 3,823,450 3,823,450 3,823,450 15-Dec-14 14-Dec-19 Fixed - 8.10% per annum payable semi annually
70,000,000 7,000,000 7,000,000 7,000,000
310 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
39 DEBT ISSUED AND OTHER BORROWED FUNDS CONTD.
39.1.4 Debentures Issued in 2015Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2015. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
67,412,700 6,741,270 6,821,502 6,819,894 18-Nov-15 17-Nov-20 Fixed - 9.90% per annum payable semi annually
2,587,300 258,730 262,092 261,205 18-Nov-15 17-Nov-20 Floating rate is equivalent to the six months treasury bill rate (net) plus 1.25 % per annum payable semi-annually
70,000,000 7,000,000 7,083,594 7,081,099
39.1.5 Debentures Issued in 2016Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2016. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
59,526,500 5,952,650 6,377,752 - 10-Jun-16 09-Jun-21 Fixed - 12.75% per annum payable annually
473,500 47,350 47,681 - 10-Jun-16 09-Jun-21 Floating rate is equivalent to the six months treasury bill rate (gross) plus 1% per annum payable semi-annually
60,000,000 6,000,000 6,425,433 -
Debentures Issued by the Subsidiary, Siyapatha Finance PLC:
39.1.6 Debentures Issued in 2014Rated unsecured subordinated redeemable 5-year debentures of Rs 100/- each issued in 2014. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
10,000,000 1,000,000 1,022,027 1,020,601 24-Dec-14 24-Dec-19 Fixed - 8.90% per annum payable annually
10,000,000 1,000,000 1,022,027 1,020,601
FINANCIAL INFORMATION
311
39.1.7 Debentures Issued in 2016Rated unsecured senior transferable fully paid redeemable 5 year & 3 year debentures of Rs 100/- each issued in 2016. The debentures are quoted on the Colombo Stock Exchange.
No. of Face Amortised Cost Allotment Maturity Rate of Interest
Debentures ValueRs 000
2016Rs 000
2015Rs 000
Date Date
14,219,900 1,421,990 1,474,156 - 20-Sep-16 19-Sep-19 Fixed - 13.00% per annum payable annually
10,780,100 1,078,010 1,119,077 - 20-Sep-16 19-Sep-21 Fixed - 13.50% per annum payable annually
25,000,000 2,500,000 2,593,233 -
39.2 Long Term Bond The Bank has issued a redeemable zero coupon bond in 2003 with a redemption value of Rs 3,458 Mn which will be matured on 1st August 2023.
Bank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 1,780,008 1,630,747
Interest accrued 162,923 149,261
Balance as at 31st December 1,942,931 1,780,008
40 CURRENT TAX LIABILITIES / (RECEIVABLES)
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Current tax liabilities 4,316,297 4,939,539 4,386,251 5,021,362
Current tax receivables - - (10,365) (2,249)
Net current tax liability (Note 40.1) 4,316,297 4,939,539 4,375,886 5,019,113
40.1 Current Tax Liabilities / (Receivables)
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 4,939,539 2,319,645 5,019,113 2,436,034
- 250,000 - 250,000
3,691,014 2,829,791 3,825,441 2,980,191
(Over) / under provision in respect of previous years (Note 16) (573,114) - (577,485) 3,759
Payment of tax (3,741,142) (459,897) (3,891,183) (650,871)
Balance as at 31st December 4,316,297 4,939,539 4,375,886 5,019,113
312 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
41 OTHER LIABILITIES
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Deposit insurance premium 143,654 115,822 144,035 115,973 Deferred guarantee income 364,726 293,525 364,773 293,525 Accrued expenses 2,827,915 1,738,123 3,654,849 2,289,189 Bills payable 1,947,686 1,718,205 1,947,686 1,718,205 Items in transit 790,531 470,254 790,531 470,254 Other payable 2,984,889 2,880,714 3,280,708 3,045,846
9,059,401 7,216,643 10,182,582 7,932,992
42 OTHER PROVISIONS
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Provision for gratuity (Note 42.1) 497,993 414,373 531,628 446,214 Leave accrual plan (Note 42.2) 167,503 140,186 167,503 140,186 EPF interest guarantee plan (Note 42.3) 82,944 78,992 82,944 78,992 Liability for pension fund (Note 42.4) - 427,234 - 427,234
748,440 1,060,785 782,075 1,092,626
42.1 Provision for Gratuity
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 414,373 322,384 446,214 346,893Provision made during the year (Note 42.1.1) 133,678 132,502 141,835 140,539
548,051 454,886 588,049 487,432 (50,058) (40,513) (56,421) (41,218)
Balance as at 31st December (Note 42.1.2) 497,993 414,373 531,628 446,214
42.1.1 Provision made during the year
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Current service cost 48,856 41,742 55,046 46,692 40,609 29,820 43,899 32,182 89,465 71,562 98,945 78,874
FINANCIAL INFORMATION
313
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Actuarial loss / (gain) due to changes in assumptions*
- Financial assumptions 18,600 (109) 14,318 (3,786)
- Demographic assumptions 5,203 - 4,974 -
Actuarial experience loss arising during the year 20,410 61,049 23,598 65,451
Total actuarial loss recognised in OCI 44,213 60,940 42,890 61,665
Provision made during the year 133,678 132,502 141,835 140,539
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 414,373 322,384 446,214 346,893
Current service cost 48,856 41,742 55,046 46,692
Interest cost 40,609 29,820 43,899 32,182
(50,058) (40,513) (56,421) (41,218)
Actuarial loss / (gain) due to changes in assumptions
- Financial assumptions 18,600 (109) 14,318 (3,786)
- Demographic assumptions 5,203 - 4,974 -
Actuarial experience loss 20,410 61,049 23,598 65,451
Balance as at 31st December 497,993 414,373 531,628 446,214
An actuarial valuation of the gratuity fund of the Bank was carried out as at 31st December 2016 by Mr. Piyal S Goonetilleke (Fellow of Society
42.1.3 Actuarial Assumptions - Bank
As at 31st December 2016 2015
Financial assumptions
Discount rate 11.90% 9.80%
Future salary increment rate 11.30% 8.80%
Demographic assumptions
Mortality RP 2000 Mortality Table GA 1983 Mortality Table
Retirement age 55 years 55 years
Expected average future working life of the active participants is 11.1 years.
314 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
42 OTHER PROVISIONS CONTD.
42.1.4 Sensitivity of assumptions employed in gratuity valuation - Bank
Increase /(Decrease) inDiscount rate
Increase / (Decrease) in
Salary IncrementRate
2016 2015
on Comprehensive Income Statement
Increase / (Decrease) in
Comprehensive Income for the Year
on Gratuity Liability Increase /
(Decrease) in Liability
on Comprehensive Income Statement
Increase / (Decrease) in
Comprehensive Income for the Year
on Gratuity Liability Increase /
(Decrease) in Liability
Rs Mn Rs Mn Rs Mn Rs Mn
1% - 52.0 (52.0) 39.6 (39.6)
(1%) - (62.5) 62.5 (47.7) 47.7
- 1% (61.2) 61.2 (47.0) 47.0
- (1%) 52.0 (52.0) 39.8 (39.8)
sensitivity of the assumptions have been given only for the gratuity fund of the Bank since Subsidiary gratuity liabilities do not have a material impact on the Group Financial Statements.
42.2 Leave Accrual Plan42.2.1 Net Liability Recognised in the Statement of Financial Position
Bank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 140,186 126,239
Provision made during the year 27,317 13,947
Balance as at 31st December 167,503 140,186
42.3 EPF Interest Guarantee Plan Employees’ Provident Fund (EPF) is an approved private provident fund which has been set up to meet the provident fund liabilities of the Bank to which the Bank and employees contribute 12% and 8% respectively on the salary of each employee. Employees who are members
shall contribute any shortfall in the revenue account of the fund, after payment of interest at the said rate and other cost of administering the fund. Thus the Bank’s obligation to EPF is not limited to the 12% contribution referred to above and accordingly the fund was treated as a
value the Bank’s additional obligation arising from Section 8 of the EPF constitution as at 31st December 2016.
FINANCIAL INFORMATION
315
42.3.1 Net Liability Recognised in the Statement of Financial PositionBank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
Fund obligation 9,048,799 8,143,400
Fair value of plan assets (8,965,855) (8,064,408)
Net liability recognised in the Statement of Financial Position 82,944 78,992
Bank & Group
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Current service cost 6,190 5,185
7,741 6,022
13,931 11,207
42.3.3 Amounts Recognised in Other Comprehensive IncomeBank & Group
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Actuarial (gain) / loss due to changes in assumptions*
- Financial assumptions (4,509) 5,544
- Demographic assumptions 93 -
Actuarial gain due to experience adjustments (5,563) (2,862)
Total (gain) / loss recognised in OCI (9,979) 2,682
42.3.4 Movement of the Net Liability Recognised in the Statement of Financial PositionBank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 78,992 65,103
Current service cost and interest cost 13,931 11,207
Actuarial (gain) / loss (9,979) 2,682
Balance as at 31st December 82,944 78,992
316 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
42 OTHER PROVISIONS CONTD.
42.3.5 Actuarial Assumptions - Bank
As at 31st December 2016 2015
Financial assumptions
Discount rate 11.90% 9.80%
Future salary increment rate 11.30% 8.80%
Return from EPF investments 10.75% 8.21%
Long term guaranteed EPF interest rate (net of tax) 11.00% 8.46%
Demographic assumptions
Mortality RP 2000 Mortality Table GA 1983 Mortality Table
Expected average future working life of the active participants is 11.1 years.
42.3.6 Sensitivity of Assumptions Employed in EPF Interest Guarantee Plan Valuation
Increase / (Decrease) in
Discount rate
Increase / (Decrease) in
Salary Increment Rate
2016 2015
on Comprehensive Income Statement
Increase / (Decrease) in
Comprehensive Income for the Year
on Employment
Increase / (Decrease) in
Liability
on Comprehensive Income Statement
Increase / (Decrease) in
Comprehensive Income for the Year
on Gratuity Liability
Increase / (Decrease) in
Liability
Rs Mn Rs Mn Rs Mn Rs Mn
1% - 8.2 (8.2) 8.1 (8.1)
(1%) - (9.5) 9.5 (9.4) 9.4
- 1% (1.5) 1.5 (1.4) 1.4
- (1%) 1.4 (1.4) 1.3 (1.3)
42.4 Pension Fund42.4.1 Net Liability Recognised in the Statement of Financial PositionBank & Group
As at 31st December 2016 2015
Rs 000 Rs 000
5,587,056 5,597,014
Fair value of plan assets as at 31st December (Note 42.4.5) (5,725,567) (5,169,780)
Funded status (138,511) 427,234
- -
Net (asset) / liability recognised in the Statement of Financial Position (138,511) 427,234
The Bank is expecting to recover the above surplus by way of reduced future contributions to the pension fund and accordingly the Bank recognised a net receivable of Rs 138.5 Mn from the pension fund as the present value of the reduction in future contributions.
FINANCIAL INFORMATION
317
Bank & Group
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Current service cost 234,606 225,925
48,531 57,499
283,137 283,424
42.4.3 Amounts Recognised in Other Comprehensive IncomeBank & Group
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Actuarial (gain) / loss due to changes in assumptions*
- Financial assumptions (929,552) (213,954)
- Demographic assumptions 82,300 -
Actuarial loss due to experience adjustments 178,743 16,802
Actuarial loss from plan assets 69,627 17,590
Total amount recognised in OCI (598,882) (179,562)
Bank & Group
2016 2015
Rs 000 Rs 000
5,597,014 5,184,821
Current service cost 234,606 225,925
Interest cost 548,507 479,596
(124,562) (96,176)
Actuarial (gain) / loss due to changes in assumptions
- Financial assumptions (929,552) (213,954)
- Demographic assumptions 82,300 -
Actuarial loss due to experience adjustments 178,743 16,802
5,587,056 5,597,014
318 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
42 OTHER PROVISIONS CONTD.
42.4.5 Fair Value of Plan Assets ReconciliationBank & Group
2016 2015
Rs 000 Rs 000
Fair value of plan assets as at 1st January 5,169,780 4,661,449
Income on plan assets 499,976 422,097
Actual employer contributions 250,000 200,000
(124,562) (96,176)
Actuarial loss from plan assets (69,627) (17,590)
Fair value of plan assets as at 31st December 5,725,567 5,169,780
An actuarial valuation of the Pension Fund was carried out as at 31st December 2016 by Mr. Piyal S Goonetilleke (Fellow of Society of
42.4.6 Actuarial Assumptions
As at 31st December 2016 2015
Financial assumptions
Discount rate 12.30% 9.80%
Future salary increment rate 11.30% 8.80%
Expected return on assets 12.30% 9.80%
Demographic assumptions
Mortality RP 2000 Mortality Table GA 1983 Mortality Table
Retirement age Normal retirement age or age on valuation date, if greater
Normal retirement age or age on valuation date, if greater
The plan assets consists of term deposits, repurchase agreements , investments in listed debentures and listed equity.
Expected average future working life of the active participants is 10.9 years.
FINANCIAL INFORMATION
319
42.4.7 Sensitivity of Assumptions Employed in Pension Fund Valuation
Increase / (Decrease) in
Discount Rate
Increase / (Decrease) in
Salary Increment Rate
2016 2015
on Statement of Comprehensive
Income Increase /
(Decrease) in Comprehensive Income for the
Year
on Employment
Increase / (Decrease) in Net Pension Liability
on Statement of Comprehensive
Income Increase /
(Decrease) in Comprehensive Income for the
Year
on Employment
Increase / (Decrease) in Net Pension Liability
Rs Mn Rs Mn Rs Mn Rs Mn
1% - 583.8 (583.8) 663.7 (663.7)
(1%) - (692.2) 692.2 (804.5) 804.5
- 1% (335.5) 335.5 (372.1) 372.1
- (1%) 308.2 (308.2) 339.0 (339.0)
43 STATED CAPITALBank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 5,381,405 4,470,151
Scrip dividend 1,089,795 911,254
Balance as at 31st December 6,471,200 5,381,405
Rights, preferences and restrictions of classes of capital The holders of ordinary shares have the right to receive dividend as declared from time to time and are entitled to one vote per share at the Annual General Meeting of the Bank.
43.1 Reconciliation of Number of SharesBank & Group
2016 2015
Ordinary shares as at 1st January 172,312,655 167,910,253
4,668,414 4,402,402
Ordinary shares as at 31st December 176,981,069 172,312,655
320 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
44 STATUTORY RESERVE FUND
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 1,790,000 1,480,000 1,860,058 1,530,831
Transfer during the year 460,000 310,000 476,364 329,227
Balance as at 31st December 2,250,000 1,790,000 2,336,422 1,860,058
The statutory reserve fund is maintained as required by the section 20 (1) of the Banking Act No. 30 of 1988. A sum equivalent to not less
transferred to the statutory reserve until the amount of the said reserve fund is equal to the stated capital of the Bank.
45 OTHER RESERVES
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Revaluation reserve (Note 45.1) 2,404,631 1,846,649 5,653,471 4,202,261
Available for sale reserve (Note 45.2) 1,271,319 875,723 1,271,319 875,723
General reserve (Note 45.3) 27,694,235 22,165,000 27,694,236 22,165,001
31,370,185 24,887,372 34,619,026 27,242,985
45.1 Revaluation Reserve
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 1,846,649 1,846,649 4,202,261 4,202,261
Revaluation surplus (Net of tax) 557,982 - 1,430,885 -
Transfer of non - controlling interest - - 20,325 -
Balance as at 31st December 2,404,631 1,846,649 5,653,471 4,202,261
45.2 Available for Sale Reserve Bank & Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 875,723 1,267,433
382,982 (423,771)
(3,376) -
15,990 32,061
Balance as at 31st December 1,271,319 875,723
FINANCIAL INFORMATION
321
45.3 General ReserveThe Board of Directors decides the amount to be transferred to general reserve from retained earnings after retaining a substantial amount to pay proposed dividend. The purpose of setting up the general reserve is to meet the potential future unknown commitments.
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 22,165,000 18,665,000 22,165,001 18,665,001
Unclaimed dividend adjustments 29,235 (90) 29,235 (90)
Transfer during the year 5,500,000 3,500,090 5,500,000 3,500,090
Balance as at 31st December 27,694,235 22,165,000 27,694,236 22,165,001
46 RETAINED EARNINGS
Bank Group
2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 3,066,297 3,182,746 4,624,088 4,375,667
Super gain tax - (676,765) - (781,760)
Balance after super gain tax 3,066,297 2,505,981 4,624,088 3,593,907
9,124,670 6,133,941 9,496,073 6,623,346
564,648 115,940 565,970 115,191
(158,102) (32,463) (158,460) (32,027)
Final dividend for 2014 : Cash - (839,551) - (839,551)
Final dividend for 2014 : Scrip - (1,007,461) - (1,007,461)
Final dividend for 2015 : Cash (1,033,876) - (1,033,876) -
Final dividend for 2015 : Scrip (1,206,188) - (1,206,188) -
Transfer of non - controlling interest - - 4,186 -
Transfers during the year (5,960,000) (3,810,090) (5,976,364) (3,829,317)
Balance as at 31st December 4,397,449 3,066,297 6,315,429 4,624,088
322 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
47 NON - CONTROLLING INTEREST
Non-controlling interest represented 2.86% of the net assets of the subsidiary, Sampath Centre Ltd. On 30th December 2016, the Bank has acquired this non-controlling interest and Sampath Centre Ltd became a fully owned Subsidiary of the Bank.
Group
2016 2015
Rs 000 Rs 000
Balance as at 1st January 94,663 92,285
Super gain tax - (1,490)
Balance after super gain tax 94,663 90,795
5,173 4,844
Other comprehensive income for the year 25,675 24
Dividend paid (1,000) (1,000)
Total consideration paid to acquire non - controlling interest (100,000) -
Transfer of remaining non - controlling interest to shareholders’ funds (24,511) -
Balance as at 31st December - 94,663
48 COMMITMENTS AND CONTINGENCIES
Accounting Policy
37 (Provisions, Contingent Liabilities and Contingent Assets).
carry a similar credit risk to loans. Operating lease commitments of the Bank (as a lessor and as a lessee) and pending legal claims against the Bank too form part of commitments of the Bank. Contingent liabilities are not recognised in the Statement of Financial Position but are disclosed unless they are remote. But these contingent liabilities do contain credit risk and are therefore form part of the overall risk of the Bank.
Financial guarantees are initially recognised in the Statement of Financial Position (within ‘other liabilities’) at fair value, being the premium received. Subsequent to initial recognition, the Bank’s liability under each guarantee is measured at the higher of the amount initially
line basis over the life of the guarantee.
FINANCIAL INFORMATION
323
48.1 Commitments and Contingencies
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Commitments
Commitment for unutilised facilities - Direct credit facilities 170,943,636 144,034,435 171,144,119 143,749,506
- Indirect credit facilities 54,074,330 48,473,733 54,074,330 48,473,733
Capital commitments (Note 48.3) 391,732 177,752 1,591,962 184,775
Operating lease commitments - as lessee (Note 48.4) 3,447,346 3,595,566 3,148,053 3,038,217
228,857,044 196,281,486 229,958,464 195,446,231
Contingent Liabilities
Acceptances 16,092,406 15,858,037 16,092,406 15,858,037
Documentary credit 21,855,180 17,049,372 21,855,180 17,049,372
Guarantees 46,496,574 39,676,660 46,530,474 39,676,660
84,444,160 72,584,069 84,478,060 72,584,069
Forward exchange contracts 11,248,558 15,857,419 11,248,558 15,857,419
Currency SWAPs 19,430,545 28,389,283 19,430,545 28,389,283
30,679,103 44,246,702 30,679,103 44,246,702
Total commitment & contingencies 343,980,307 313,112,257 345,115,627 312,277,002
48.2 Other Contingent Liabilities48.2.1 Litigation against the BankLitigation is a common occurrence in the banking industry due to the nature of the business undertaken. The Bank has formal controls and policies for managing legal claims. Once professional advice has been obtained and the amount of loss reasonably estimated, the
several unresolved legal claims. i. Commercial High Court Case No. HC (Civil) 11 / 2004 (1)
Case No. SC 06 / 2013 (f) and the hearing will be on 13th March 2017. ii. Following Cases are Filed against the Bank in Order to Recover Damages.
to the Civil Apellate Courts. Appeal is pending.
the spouse and the consent letter given by the spouse is challenging in Courts.
that the Bank has the right to increase the rate of interest.
324 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
48 COMMITMENTS AND CONTINGENCIES CONTD.
namely Jagath Robotics (Pvt) Ltd has been reported to the CRIB, under an irrelevant reference due to negligence of the Bank. The Bank is
acted all the time as per the provisions of law.
of Rs 40 Mn on the basis that the Bank illegally suspended his credit balance of Rs 299,209.43 and as a result, two cheques issued by him got returned. Over Rs 3 Mn is due to the Bank from the said customer on a charge back created through the payment gateway, which was utilized by the
Rs 250 Mn, on the basis that the Bank has illegally suspended operation of his current account and the payment gateway facility provided to him by the Bank. Over Rs 3 Mn is due to the Bank from the said customer on a charge back created through the payment gateway, which was utilized by
declaring that he is the owner of the land and property acquired by the Bank under Parate Execution. Further he claims that the Bank has
recover its dues:
2008 SC, SC 234 / 16.
153 / 11 MR, 427 / 15 / MR, 169 / 16 / MR, 270 / 16 / MR, 269 / 16 / MR, 278 / 16 / MR, 305 / 16 / MR, 477 / 16 / MR.
FINANCIAL INFORMATION
325
84 / 14 / DSP, 146 / 15 DSP, 721 / 15 MR, 11 / 15 DSP, 151 / 16 / DLM, 127 / 16 / DSP, 9 / 16 / Claim, 189 / 16 DLM, One in District Court of Kurunegala in Case No. 8660 / SP, Three in District Court of Marawila in Case Nos. 1613 / L, 1070 / S, 1747 / L, Four in District Court of Kandy in Case Nos. 228 / 10 DPA, 36599 / MR, 401 / 14 DMR, 1365 / 16 / MR, One in District Court of Monaragala in Case No. 1691 / SPL, One in District Court of Minuwangoda in Case No. 12 / SPL, One in District Court of Chilaw in Case No. 4127 / 11 / L, One in District Court of Kalutara in Case No. 4369 / SPL, One in District Court of Ratnapura in Case No. 30132 / M, Two in District Court of Matale in Case Nos. 6257 / L, 6048 / L, Two in District Court of Galle in Case No. 3480 / SP, 3589 / SP, Three in District Court of Gampaha in Case Nos. 1885 / L, 735 / L, 3066 / L, One in District Court of Batticaloa in Case No. 5487 / L / 11, One in District Court of Bandarawela in Case No. 302 / SPL, Two in District Court of Kegalle in Case Nos. 8031 / SPL, 8067 / SPL, One in District Court of Nikaweratiya in Case No. 37 / SPL, Two in the District Court of Ruwanwella in Case Nos. 168 / P, 262 / P, One in the District court of Wariyapola in Case No. 16 / L, One in the District court of Nawalapitiya in Case No. 62 / 14 / P, One in the District
of Attanagalla in Case Nos. 1093 / L, 1204 / L, One in the District Court of Kalmunai in Case No. 3053 / L, One in the District Court of Walasmulla in Case No. 193 / S, Two in the District Court of Mount Lavinia in Case Nos. 390 / 16 / Claim, 392 / 16 / Claim, One in the District Court of Kesbewa in Case No. 90 / SP, Two in the District Court of Dambulla in Case Nos. 170 / L, 172 / L.
48.2.2 Litigation against the Group
Group.
48.3 Capital CommitmentsCapital expenditure approved by the Board of Directors, for which provisions have not been made in the accounts are detailed below.
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Approved & contracted for 227,339 69,224 1,419,619 76,247
Approved but not contracted for 164,393 108,528 172,343 108,528
391,732 177,752 1,591,962 184,775
48.4 Operating Lease Commitments - As the Lessee
Bank Group
As at 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Less than 1 year 993,139 866,936 730,510 608,880
1 - 5 years 2,011,278 2,320,934 1,913,636 1,921,464
More than 5 years 442,929 407,696 503,907 507,873
3,447,346 3,595,566 3,148,053 3,038,217
326 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
49 RELATED PARTY DISCLOSURES
Sri Lanka Accounting Standards - LKAS 24 (Related Party Disclosures), the details of which are reported below.
49.1 Terms and Conditions The pricing applicable to such transactions is based on the assessment of risk and pricing model of the Bank and is comparable with what is applied to transactions between the Bank / Group and its unrelated customers with similar credit standing.
49.2 Parent and Ultimate Controlling Party
49.3 Transactions with Key Management Personnel (KMP) As per Sri Lanka Accounting Standard - LKAS 24 (Related Party Disclosures), Key Management Personnel (KMP) are those having authority
considered as a KMP unless such person has both the authority and responsibility to carry out all the three activities mentioned in the above
Accordingly the Board of Directors of the Bank are considered as KMP of the Bank and the Group.
49.3.1 Compensation to KMP
Bank Group
For the year ended 31st December 2016 2015 2016 2015
Rs 000 Rs 000 Rs 000 Rs 000
Directors’ fees & expenses 52,697 53,935 55,132 55,095
58,532 40,665 58,532 40,665
16,799 3,372 16,799 3,372
Total 128,028 97,972 130,463 99,132
FINANCIAL INFORMATION
327
49.3.2 Transactions with KMP and their Close Family Members (CFM)
entity. They may include KMP’s domestic partner, children of the KMP’s domestic partner and dependents of the KMP. Aggregate value of the transactions with KMP and their CFMs are disclosed below.
As at 31st December 2016 2015
Limit Average Balance
Closing Balance
Limit Average Balance
Closing Balance
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Other loans & receivables 5,770 2,030 1,770 4,000 - -
Credit cards 7,850 1,202 806 7,740 1,267 1,039
Deposits 278,192 222,877 254,253 269,158
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Interest income 180 1
Interest expenses 18,513 14,500
Cash dividend paid 775 631
Scrip dividend paid (Number of shares) 3,494 3,303
No losses have been recorded against loan balances outstanding with KMP during the period and no provisions have been made for impairment losses against such balances as at the reporting date.
328 SAMPATH BANK PLC
ANNUAL REPORT 2016
49 RELATED PARTY DISCLOSURES CONTD.
49.4 Transactions with SubsidiariesDetails of the Subsidiaries are given in Note 32. Aggregate value of the transactions with Subsidiaries are disclosed below.
2016 2015Subsidiary Company Nature of Facility / Transaction Average
Balance31st
DecemberAverageBalance
31stDecember
Rs 000 Rs 000 Rs 000 Rs 000
Siyapatha Finance PLC As atLoans & receivables 2,785,509 2,538,010 2,170,254 2,770,729 Deposits 17,288 11,577 - - Other liabilities 436,827 8,824 631,308 703,677 Commitment & contingencies 107,500 110,000 - - For the year endedDividend income (Gross) 57,750 31,500 Expenses & fees paid 57,722 39,335 Income & fees received 282,568 192,289
Sampath Centre Ltd As atLoans & receivables 1,271 1,324 5,093 - Other assets 62,754 62,754 62,754 63,172 Deposits 420,189 490,036 384,385 341,256 Other liabilities 111,954 133,074 48,282 39,961 For the year endedDividend income (Gross) 34,000 34,000 Income & fees received 29 - Expenses & fees paid 319,116 373,067
S C Securities (Pvt) Ltd As atLoans & receivables 56,886 53,772 58,358 61,007 Deposits 463 1,775 - 7 Commitment & contingencies 1,750 1,750 1,750 1,750 For the year endedIncome & fees received 7,029 7,564 Expenses & fees paid - 2,990
Sampath Information As atTechnology Solutions Ltd Loans & receivables 415,248 526,170 185,765 266,372
Deposits 476 40 426 650 Other liabilities 40,136 32,966 43,120 28,590 Commitment & contingencies 44,815 173,671 - - For the year endedIncome & fees received 55,134 19,851 Expenses & fees paid 172,055 114,973 Purchase of computer hardware & software 21,585 20,252
The Directors’ valuation of investments in Subsidiaries has been carried out on net asset basis as at 31st December 2016 and accordingly the Bank has recognised an impairment charge of Rs 4 Mn against the investment in SC Securities (Pvt) Ltd. Apart from the above, no losses have been recorded against balances due from Subsidiaries, during the year ended 31st December 2016 and no provisions have been made for impairment losses against balances with Subsidiaries as at the reporting date.
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
329
49.5 Transactions with Other Related Parties 49.5.1 Transactions with Entities Controlled and / or Jointly Controlled by KMP or their CFMs
As at 31st December 2016 2015
Average Balance
Closing Balance
Average Balance
Closing Balance
Rs 000 Rs 000 Rs 000 Rs 000
Credit cards facilities 858 - 615 428
Other loans & receivables 3,666,766 - 3,176,441 2,633,870
Documentary credits 410,307 - 458,410 396,270
Bills of acceptance 599,084 - 401,958 634,144
Guarantees 475,884 - 491,080 682,452
Deposits 175,564 1,651 188,966 204,843
Siyapatha Finance PLC has not granted any facilities to entities which are controlled / jointly controlled by KMP / CFMs of KMP as at 31st December 2016 (2015 - Rs 0.9 Mn).
For the year ended 31st December 2016 2015
Rs 000 Rs 000
Interest income 209,888 197,747
Interest expense 8,630 3,400
Cash dividend paid 154,594 125,537
Payment for credit card promotional activities 309 33,157
Expenses on goods & services purchased 44,023 37,596
Scrip dividend paid (Number of shares) 698,063 658,286
Siyapatha Finance PLC and Sampath Centre Limited have paid Rs 18.1 Mn ( 2015 - Rs 22 Mn ) to entities which are controlled / jointly controlled by KMP / CFMs of KMP as expenses on goods and services purchased. Sampath Information Technology Solutions Ltd has received Rs 17.43 Mn (2015 : Rs 17.73 Mn) from entities which are controlled / jointly controlled by KMP / CFMs of KMP as income on goods and services sold. No losses have been recorded against loan balances outstanding with the entities controlled / jointly controlled by KMP / CFMs of KMP during the period and no provisions have been made for impairment losses against such balances as at the reporting date.
330 SAMPATH BANK PLC
ANNUAL REPORT 2016
49 RELATED PARTY DISCLOSURES CONTD.
2016 2015Name of the Post Nature of Transaction Average
Balance31st
DecemberAverageBalance
31stDecember
Rs 000 Rs 000 Rs 000 Rs 000
Sampath Bank As at Employees’ Provident Deposits 2,817,684 2,919,006 894,657 3,226,994 Fund Investment in repo 130,069 60,253 553,563 1,431,300
Debentures 784,193 809,277 518,694 749,077 Interest payable 105,537 122,722 85,084 88,351 Other liabilities 1,653 2,417 745 -
For the year endedInterest expenses 413,281 149,012
Sampath Bank As atEmployees’ Pension Deposits 1,665,495 1,930,788 1,313,225 1,309,237 Fund Debentures 577,349 610,682 773,140 530,682
Investment in Sampath Bank shares - market value
695,140 749,555 718,646 696,101
Investment in repo 2,041,159 1,480,481 1,583,061 2,337,639 Interest payable 95,694 105,881 72,751 85,508 Net liability /(asset) in the Bank's Financial Statements (Note 42.4.1) 282,872 (138,511) 475,303 427,234
For the year endedDividend paid - Cash (Gross) 16,841 13,676 Interest expense 386,272 246,813
Dividend paid - Scrip (Number of shares) 76,045 71,712
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
331
50 SEGMENT INFORMATION
Accounting Policy
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components, whose operating results are reviewed regularly by the chief operating decision maker to make decisions about resources allocated to each segment and assess its performance,
Banking Leasing, hire purchase & factoring Dealing / Investment Others
activities of its Subsidiary, Siyapatha Finance PLC. Dealing / Investment involves activities such as stock broking, securities dealing, investment banking, venture capital businesses and foreign currency related services.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation
and are not allocated to operating segments.
Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
Revenue from transactions with a single external customer or counterparty did not exceed 10% or more of the Bank’s total revenue in 2016 or 2015.
50
SE
GM
EN
T IN
FOR
MAT
ION
CO
NT
D.
Ban
king
Leas
ing
, Hir
e P
urch
ase
&
Fac
tori
ngD
ealin
g /
Inve
stm
ent
Oth
erE
limin
atio
ns /
U
nallo
cate
dTo
tal
For
the
year
end
ed 3
1st
Dec
emb
er20
1620
1520
1620
1520
1620
1520
1620
1520
1620
1520
1620
15R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0R
s 00
0
Net
inte
rest
inco
me
18,6
43,5
4014
,169
,375
2,11
2,60
61,
894,
203
3,21
2,94
62,
485,
890
(13,
727)
918
--
23,9
55,3
6518
,550
,386
Div
iden
d In
com
e-
--
-12
7,41
296
,614
--
--
127,
412
96,6
14N
et fe
e &
com
mis
sion
inco
me
6,48
5,13
65,
211,
283
234,
862
173,
978
16,4
1636
,004
(1,0
36)
(673
)-
-6,
735,
378
5,41
7,21
176
8,46
01,
038,
173
--
1,82
0,52
51,
427,
738
--
--
2,58
8,98
52,
465,
911
Oth
er in
com
e15
3,64
948
,217
175,
406
133,
547
51,4
43(7
5,65
4)16
9,22
010
2,64
1-
-54
9,71
821
2,13
2To
tal r
even
ue fr
om e
xter
nal c
usto
mer
s26
,050
,785
20,4
67,0
482,
522,
874
2,20
1,72
85,
228,
742
3,97
0,59
215
4,45
710
2,88
6-
-33
,956
,858
26,7
42,2
54In
ter
segm
ent r
even
ue3,
604
7,08
0-
-85
,875
58,9
5040
1,68
933
3,57
2(4
91,1
68)
(399
,602
)-
-To
tal o
pera
ting
inco
me
26,0
54,3
8920
,474
,128
2,52
2,87
42,
201,
728
5,31
4,61
74,
029,
542
556,
146
436,
458
(491
,168
)(3
99,6
02)
33,9
56,8
5826
,742
,254
Less
: Im
pairm
ent c
harg
e fo
r lo
ans
&
ot
her
loss
es1,
185,
307
916,
848
326,
192
73,6
0723
,515
2,38
9-
--
-1,
535,
014
992,
844
Net
ope
ratin
g In
com
e24
,869
,082
19,5
57,2
802,
196,
682
2,12
8,12
15,
291,
102
4,02
7,15
355
6,14
643
6,45
8(4
91,1
68)
(399
,602
)32
,421
,844
25,7
49,4
10
Less
: To
tal o
pera
ting
expe
nses
12,6
88,7
9910
,797
,442
1,16
9,16
01,
238,
622
2,48
0,98
32,
035,
967
330,
268
224,
109
(403
,418
)(3
34,1
02)
16,2
65,7
9213
,962
,038
Seg
men
t re
sult
12,1
80,2
838,
759,
838
1,02
7,52
288
9,49
92,
810,
119
1,99
1,18
622
5,87
821
2,34
9(8
7,75
0)(6
5,50
0)16
,156
,052
11,7
87,3
72
2,94
2,52
31,
997,
729
Less
: Inc
ome
tax
expe
nse
3,71
2,28
33,
161,
453
9,50
1,24
66,
628,
190
Non
- c
ontr
ollin
g in
tere
st(5
,173
)(4
,844
)
of
the
Ban
k9,
496,
073
6,62
3,34
6
As
at 3
1st
Dec
emb
er
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Seg
men
t ass
ets
489,
717,
010
389,
623,
046
40,1
17,2
4433
,229
,202
126,
302,
687
97,0
15,8
275,
340,
408
3,81
4,23
8(4
,751
,726
)(5
,358
,540
)65
6,72
5,62
351
8,32
3,77
3U
nallo
cate
d as
sets
--
--
--
-23
,372
,878
20,3
23,6
7923
,372
,878
20,3
23,6
79To
tal a
sset
s48
9,71
7,01
038
9,62
3,04
640
,117
,244
33,2
29,2
0212
6,30
2,68
797
,015
,827
5,34
0,40
83,
814,
238
18,6
21,1
5214
,965
,139
680,
098,
501
538,
647,
452
Seg
men
t lia
bilit
ies
412,
906,
102
333,
980,
396
46,0
52,3
6238
,469
,399
174,
044,
283
130,
858,
604
877,
507
414,
473
(3,5
23,8
30)
(4,2
78,6
19)
630,
356,
424
499,
444,
253
Una
lloca
ted
liabi
litie
s-
--
--
--
--
--
-To
tal l
iab
iliti
es41
2,90
6,10
233
3,98
0,39
646
,052
,362
38,4
69,3
9917
4,04
4,28
313
0,85
8,60
487
7,50
741
4,47
3(3
,523
,830
)(4
,278
,619
)63
0,35
6,42
449
9,44
4,25
3
For
the
year
end
ed 3
1st
Dec
emb
er
2016
Rs
000
2015
Rs
000
2016
Rs
000
2015
Rs
000
2016
Rs
000
2015
Rs
000
2016
Rs
000
2015
Rs
000
2016
Rs
000
2015
Rs
000
2016
Rs
000
2015
Rs
000
23,
481,
115
(4,5
40,4
86)
(5,0
00,6
66)
(3,4
15,3
47)
(18,
473)
(19,
632)
367
,910
2
44,3
28
2,3
13,3
07
2,7
95,2
36
21,
143,
193
(4,9
35,9
01)
(1,8
34,4
35)
(890
,051
) (2
77,0
13)
(57,
289)
(2
8,75
6,27
9) (8
,321
,901
) (4
27,6
55)
(242
,228
) (7
49,0
78)
(97,
374)
(3
2,04
4,46
0) (9
,608
,843
) 1
3,17
8,05
5 1
9,35
8,54
4 5
,195
,790
3
,546
,384
-
-
(204
,379
) 2
,754
(1
,216
,468
) (2
,691
,264
) 1
6,95
2,99
8 2
0,21
6,41
8 C
apita
l exp
endi
ture
762
,508
8
84,3
74
279
,002
5
7,21
3 3
49
6,7
72
427
,655
2
42,2
30
- -
1
,469
,514
1
,190
,589
332 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
333
51 EVENTS AFTER THE REPORTING PERIOD
Accounting Policy
Events after the reporting period are those events, favourable and unfavourable, that occur between the reporting date and the date when the Financial Statements are authorised for issue.
than those disclosed below.
51.1 Bank 51.1.1 Proposed Dividend - Interim
year ended 31st December 2016. Further in compliance with the Bank’s Articles of Association this dividend is to be approved by the shareholders at the Extra Ordinary General Meeting to be held on 28th February 2017.
Under the Inland Revenue Act No. 10 of 2006, a Withholding Tax of 10% has been imposed on interim dividend declared.
51.1.2 Proposed Dividend – Second and Final
year ended 31st December 2016. This dividend is to be approved by the shareholders at the Annual General Meeting to be held on 31st March 2017.
Under the Inland Revenue Act No. 10 of 2006, a Withholding Tax of 10% has been imposed on dividend declared.
have not been recognised as a liability as at 31st December 2016. As required by section 56 (2) of the Companies Act No. 7 of 2007, the
52 FAIR VALUE OF ASSETS AND LIABILITIES
52.1 Assets and Liabilities Recorded at Fair ValueThe following is a description of how fair values are determined for assets and liabilities that are recorded at fair value. These incorporate the Bank’s estimate of assumptions that a market participant would make when valuing assets and liabilities.
Derivatives - Assets and LiabilitiesDerivative products which consist of SWAPs, forward foreign exchange contracts and hedges are valued using a valuation technique with market-observable inputs. The most frequently applied valuation techniques include forward foreign exchange spot and forward premiums.
Financial Assets - Available for Sale
are valued using the yield curve published by the Central Bank of Sri Lanka. Quoted equity securities are valued using quoted market prices in the active markets as at the reporting date.
Unquoted equity securities are carried at cost less accumulated impairment losses since it is the most reasonable value available to represent the price of such securities.
Trading Assets and Other Assets Measured at Fair ValueTrading assets and other assets measured at fair value are the government securities and quoted equity securities. Government securities are valued using yield curve published by the Central Bank of Sri Lanka. For quoted equity securities, the Bank uses quoted market prices in the active market as at the reporting date.
Property, Plant and EquipmentFreehold land and buildings are carried at revalued amount, being their fair value at the revaluation date less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
334 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
52 FAIR VALUE OF ASSETS AND LIABILITIES CONTD.
52.2 Valuation Model
independent price determination or validation is obtained. In an inactive market, direct observation of a traded price may not be possible. In
to information that is considered to be more relevant and reliable.
Fair value of freehold land and buildings was determined by using Market Comparable Method or Income Basis. These valuations
Standard - SLFRS 13 (Fair Value Measurement), based on the nature, characteristics and risks of the property.
Fair values are determined according to the following hierarchy: Level 1 – Quoted market price (unadjusted): quoted prices for identical assets and liabilities in active markets.Level 2 – Valuation technique using observable inputs: quoted prices for similar assets and liabilities in active markets or quoted prices
observable.
52.3 Valuation FrameworkThe Bank has an established control framework with respect to the measurement of fair values of trading and investment operations and all
changes to existing judgments, assumptions and models.
Periodic (at least quarterly) reviewing of fair value measurements against observable market data.
and assumptions.
Use of sophisticated software for fair value measurements of trading and investment securities and derivatives.
52.4 Assets and Liabilities Measured at Fair Value - Fair Value HierarchyThe following table shows an analysis of assets and liabilities recorded at fair value by level of the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the value recognised in the Statement of Financial Position.
FINANCIAL INFORMATION
33552
.4.1
B
ank
As
at 3
1st
Dec
emb
erD
ate
of
2016
2015
Val
uati
on
Fair
Val
ue M
easu
rem
ent
Usi
ngFa
ir V
alue
Mea
sure
men
t U
sing
Quo
ted
Pri
ces
in A
ctiv
e M
arke
tsO
bse
rvab
le
Inp
uts
Uno
bse
rvab
le
Inp
uts
Tota
l Q
uote
d P
rice
s in
Act
ive
Mar
kets
Ob
serv
able
In
put
sU
nob
serv
able
In
put
s
Tota
l
(Lev
el 1
) R
s 00
0(L
evel
2)
Rs
000
(Lev
el 3
)
R
s 00
0
Rs
000
(Lev
el 1
) R
s 00
0(L
evel
2)
Rs
000
(Lev
el 3
) R
s 00
0
R
s 00
0
Fina
ncia
l ass
ets
mea
sure
d a
t fa
ir v
alue
31st
Dec
embe
r
Cur
renc
y S
WA
Ps
-
77,
248
-
77,
248
-
198
,448
-
1
98,4
48
Forw
ard
fore
ign
exch
ange
con
trac
ts -
3
2,62
4 -
3
2,62
4 -
1
21,0
13
-
121
,013
S
ub T
otal
-
109
,872
-
1
09,8
72
-
319
,461
-
3
19,4
61
Fina
ncia
l ass
ets-
hel
d f
or
trad
ing
31st
Dec
embe
rG
over
nmen
t sec
uriti
es 2
8,01
1,02
4 -
-
2
8,01
1,02
4 1
,767
,317
-
-
1
,767
,317
Q
uote
d eq
uity
sec
uriti
es 9
8,16
9 -
-
9
8,16
9 1
21,7
41
-
-
121
,741
S
ub T
otal
28,
109,
193
-
-
28,
109,
193
1,8
89,0
58
-
-
1,8
89,0
58
Fina
ncia
l ass
ets-
hel
d f
or
trad
ing
ple
dg
ed
a
s co
llate
rals
31st
Dec
embe
r
Gov
ernm
ent s
ecur
ities
10,
380,
213
-
-
10,
380,
213
2,7
02,7
85
-
-
2,7
02,7
85
Sub
Tot
al 1
0,38
0,21
3 -
-
1
0,38
0,21
3 2
,702
,785
-
-
2
,702
,785
Fina
ncia
l ass
ets-
ava
ilab
le f
or
sale
31st
Dec
embe
rG
over
nmen
t sec
uriti
es 1
2,50
9,92
2 -
-
1
2,50
9,92
2 4
9,97
6,74
3 -
-
4
9,97
6,74
3 Q
uote
d eq
uity
sec
uriti
es 1
,729
,560
-
-
1
,729
,560
1
,217
,611
-
-
1
,217
,611
U
nquo
ted
equi
ty s
ecur
ities
-
-
30,
708
30,
708
-
-
56,
057
56,
057
Sub
Tot
al 1
4,23
9,48
2 -
3
0,70
8 1
4,27
0,19
0 5
1,19
4,35
4 -
5
6,05
7 5
1,25
0,41
1
Fina
ncia
l ass
ets-
ava
ilab
le f
or
sale
ple
dg
ed a
s co
llate
rals
31st
Dec
embe
r
Gov
ernm
ent s
ecur
ities
657
,903
-
-
6
57,9
03
7,2
10,5
85
-
-
7,2
10,5
85
Sub
Tot
al 6
57,9
03
-
-
657
,903
7
,210
,585
-
-
7
,210
,585
fa
ir v
alue
53,
386,
791
109
,872
3
0,70
8 5
3,52
7,37
1 6
2,99
6,78
2 3
19,4
61
56,
057
63,
372,
300
31st
Dec
embe
rFr
eeho
ld la
nd &
bui
ldin
gs (i
nclu
ded
unde
r
pro
pert
y, p
lant
& e
quip
men
t)*
-
-
4,10
6,22
04,
106,
220
-
-
3,4
80,0
30
3,4
80,0
30
fair
val
ue -
-
4,
106,
220
4,10
6,22
0 -
-
3
,480
,030
3
,480
,030
Fina
ncia
l lia
bili
ties
mea
sure
d a
t fa
ir v
alue
31st
Dec
embe
r
Cur
renc
y S
WA
Ps
-
28,
836
-
28,
836
-
239
,569
-
2
39,5
69
Forw
ard
fore
ign
exch
ange
con
trac
ts -
3
4,77
5 -
3
4,77
5 -
2
17,4
89
-
217
,489
fa
ir v
alue
-
63,
611
-
63,
611
-
457
,058
-
4
57,0
58
Th
ere
wer
e no
mat
eria
l tra
nsfe
rs b
etw
een
leve
ls o
f fai
r va
lue
hier
arch
y du
ring
2015
and
201
6.
* Th
e in
depe
nden
t val
uers
pro
vide
the
fair
valu
e of
land
and
bui
ldin
gs o
nce
in th
ree
year
s ac
cord
ing
to th
e B
ank’
s po
licy.
Acc
ordi
ngly,
in
2016
val
uatio
ns w
ere
carr
ied
out b
y
rece
nt v
alua
tion
less
sub
sequ
ent a
ccum
ulat
ed d
epre
ciat
ion
and
impa
irmen
t los
ses
is c
onsi
dere
d as
the
fair
valu
e ex
ists
as
at th
e re
port
ing
date
(31s
t Dec
embe
r 20
16).
336 SAMPATH BANK PLC
ANNUAL REPORT 201652
FA
IR V
ALU
E O
F A
SS
ET
S A
ND
LIA
BIL
ITIE
S C
ON
TD
.52
.4.2
G
roup
As
at 3
1st
Dec
emb
erD
ate
of
2016
2015
Val
uati
on
Fair
Val
ue M
easu
rem
ent
Usi
ngFa
ir V
alue
Mea
sure
men
t U
sing
Quo
ted
Pri
ces
in A
ctiv
e M
arke
tsO
bse
rvab
le
Inp
uts
Uno
bse
rvab
le
Inp
uts
Tota
l Q
uote
d P
rice
s in
Act
ive
Mar
kets
Ob
serv
able
In
put
sU
nob
serv
able
In
put
s
Tota
l
(Lev
el 1
) R
s 00
0(L
evel
2)
Rs
000
(Lev
el 3
)
R
s 00
0
Rs
000
(Lev
el 1
) R
s 00
0(L
evel
2)
Rs
000
(Lev
el 3
) R
s 00
0
R
s 00
0
Fina
ncia
l ass
ets
mea
sure
d a
t fa
ir v
alue
31st
Dec
embe
r
Cur
renc
y S
WA
Ps
-
77,
248
-
77,
248
-
198
,448
-
1
98,4
48
Forw
ard
fore
ign
exch
ange
con
trac
ts -
3
2,62
4 -
3
2,62
4 -
1
21,0
13
-
121
,013
S
ub T
otal
-
109
,872
-
1
09,8
72
-
319
,461
-
3
19,4
61
Fina
ncia
l ass
ets-
hel
d f
or
trad
ing
31st
Dec
embe
rG
over
nmen
t sec
uriti
es 2
8,01
9,62
0 -
-
2
8,01
9,62
0 1
,776
,333
-
-
1
,776
,333
Q
uote
d eq
uity
sec
uriti
es 9
8,16
9 -
-
9
8,16
9 1
21,7
41
-
-
121
,741
S
ub T
otal
28,
117,
789
-
-
28,
117,
789
1,8
98,0
74
-
-
1,8
98,0
74
Fina
ncia
l ass
ets-
hel
d f
or
trad
ing
ple
dg
ed
a
s co
llate
rals
31st
Dec
embe
r
Gov
ernm
ent s
ecur
ities
10,
371,
617
-
-
10,
371,
617
2,6
93,7
69
-
-
2,6
93,7
69
Sub
Tot
al 1
0,37
1,61
7 -
-
1
0,37
1,61
7 2
,693
,769
-
-
2
,693
,769
Fina
ncia
l ass
ets-
ava
ilab
le f
or
sale
31st
Dec
embe
rG
over
nmen
t sec
uriti
es 1
2,56
9,14
4 -
-
1
2,56
9,14
4 5
0,66
7,75
5 -
-
5
0,66
7,75
5 Q
uote
d eq
uity
sec
uriti
es 1
,729
,560
-
-
1
,729
,560
1
,217
,611
-
-
1
,217
,611
U
nquo
ted
equi
ty s
ecur
ities
-
-
30,
764
30,
764
-
-
56,
113
56,
113
Sub
Tot
al 1
4,29
8,70
4 -
3
0,76
4 1
4,32
9,46
8 5
1,88
5,36
6 -
5
6,11
3 5
1,94
1,47
9
Fina
ncia
l ass
ets-
ava
ilab
le f
or
sale
ple
dg
ed a
s co
llate
rals
31st
Dec
embe
r
Gov
ernm
ent s
ecur
ities
598
,681
-
-
5
98,6
81
6,5
19,5
73
-
-
6,5
19,5
73
Sub
Tot
al 5
98,6
81
-
-
598
,681
6
,519
,573
-
-
6
,519
,573
fa
ir v
alue
53,
386,
791
109
,872
3
0,76
4 5
3,52
7,42
7 6
2,99
6,78
2 3
19,4
61
56,
113
63,
372,
356
31st
Dec
embe
rFr
eeho
ld la
nd &
bui
ldin
gs (i
nclu
ded
unde
r
pr
oper
ty, p
lant
& e
quip
men
t)* -
-
8,
055,
438
8,05
5,43
8 -
-
6
,370
,147
6
,370
,147
fa
ir v
alue
-
-
8,05
5,43
88,
055,
438
-
-
6,3
70,1
47
6,3
70,1
47
Fina
ncia
l lia
bili
ties
mea
sure
d a
t fa
ir v
alue
31st
Dec
embe
r
Cur
renc
y S
WA
Ps
-
28,
836
- 2
8,83
6 -
2
39,5
69
-
239
,569
Fo
rwar
d fo
reig
n ex
chan
ge c
ontr
acts
-
34,
775
- 3
4,77
5 -
2
17,4
89
-
217
,489
fa
ir v
alue
-
63,
611
-
63,
611
-
457
,058
-
4
57,0
58
Th
ere
wer
e no
mat
eria
l tra
nsfe
rs b
etw
een
leve
ls o
f fai
r va
lue
hier
arch
y du
ring
2015
and
201
6.
* Th
e in
depe
nden
t val
uers
pro
vide
the
fair
valu
e of
land
and
bui
ldin
gs o
nce
in th
ree
year
s ac
cord
ing
to th
e G
roup
’s p
olic
y. A
ccor
ding
ly, i
n 20
16 v
alua
tions
wer
e ca
rrie
d ou
t
rece
nt v
alua
tion
less
sub
sequ
ent a
ccum
ulat
ed d
epre
ciat
ion
and
impa
irmen
t los
ses
is c
onsi
dere
d as
the
fair
valu
e ex
ists
as
at th
e re
port
ing
date
(31s
t Dec
embe
r 20
16).
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
337
52.5 Level 3 Fair Value Measurement52.5.1 Reconciliation The following table shows a reconciliation from the beginning balances to the ending balances of fair value measurements in Level 3 of the fair value hierarchy.
Bank Group
Assets Measured at Level 3 Assets Measured at Level 3
Unquoted Equity
Securities
Freehold Land and Buildings
Unquoted Equity
Securities
Freehold Land and Buildings
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 2015 47,759 3,286,161 47,815 6,196,504
Additions 10,687 218,972 10,687 241,936
Disposals / deductions - - - -
Impairment charge for the year (Note 12) (2,389) - (2,389) -
Depreciation of buildings - (25,103) - (68,293)
Balance as at 31st December 2015 56,057 3,480,030 56,113 6,370,147
Additions 2,166 50,044 2,166 262,578
Revaluation surplus credited to revaluation reserve - 602,207 - 1,500,784
Disposals / deductions - - - -
Impairment (charge) / reversal for the year (Note 12) (27,515) 2,036 (27,515) 2,036
Depreciation of buildings - (28,097) - (80,107)
Balance as at 31st December 2016 30,708 4,106,220 30,764 8,055,438
338 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
52 FAIR VALUE OF ASSETS AND LIABILITIES CONTD.
52.5.2 Unobservable Inputs Used In Measuring Fair Value
Level 3 of the fair value hierarchy.
Type of Asset BankFair Value as at 31st
December 2016
Rs 000
GroupFair Value as at 31st
December 2016
Rs 000
Valuation Technique Unobservable
Inputs
Weighted Average Range of Estimates
for Unobservable Inputs
Fair Value Measurement Sensitivity to
Unobservable Inputs
Property, plant & equipment - Freehold land 2,904,705 5,080,784 Market comparable
methodEstimated price per perch
Rs 15,000 - 10,000,000 *
- Freehold buildings 1,201,515 2,974,654 Market comparable method
Estimated price per sq.ft
Rs 2,750 - 13,640 *
Income basis Estimated rental value per sq.ftBank Rs 100 -175 *Subsidiary Rs 107 *
Expected market rental growthBank 1% *Subsidiary 0% - 5% *
Discount rateBank 6.50% **
Subsidiary 5.75% **
52.6 Fair Value of Financial Assets and Liabilities Carried at Amortised Cost
already recorded at fair value in the Financial Statements.
Assets of which Fair Value Approximates Carrying Value
Fixed Rate Financial Instruments
Variable Rate Financial Instruments
instruments.
FINANCIAL INFORMATION
33952
.6
Fair
Val
ue o
f Fi
nanc
ial A
sset
s an
d L
iab
iliti
es C
arri
ed a
t A
mo
rtis
ed C
ost
As
at 3
1st
Dec
emb
er 2
016
Ban
kG
roup
Fair
Val
ueC
arry
ing
Va
lue
Rs
000
Fair
Val
ueC
arry
ing
Va
lue
Rs
000
Leve
l 1
Rs
000
Leve
l 2
Rs
000
Leve
l 3R
s 00
0To
tal
Rs
000
Leve
l 1R
s 00
0Le
vel 2
Rs
000
Leve
l 3R
s 00
0To
tal
Rs
000
Fina
ncia
l Ass
ets
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
2,6
41,0
50
-
2,6
41,0
50
2,6
41,7
33
-
2,6
41,0
50
-
2,6
41,0
50
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cu
stom
ers
-
453
,175
,076
-
4
53,1
75,0
76
456
,189
,052
-
4
69,4
72,8
93
-
469
,472
,893
4
72,7
54,9
47
Oth
er lo
ans
& re
ceiv
able
s -
3
8,15
0,12
0 -
3
8,15
0,12
0 3
8,70
8,44
0 -
3
8,15
0,12
0 -
3
8,15
0,12
0 3
8,70
8,44
0
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
16,
502
-
-
16,
502
16,
933
-
493
,966
,246
-
4
93,9
66,2
46
497
,539
,225
1
6,50
2 51
0,26
4,06
3 -
51
0,28
0,56
5 5
14,1
22,0
53
Fina
ncia
l Lia
bili
ties
Due
to o
ther
cus
tom
ers
- C
all,
-
3
11,0
92,1
71
-
311
,092
,171
3
11,1
38,3
89
-
314
,187
,722
-
3
14,1
87,7
22
314
,139
,666
Deb
t iss
ued
& o
ther
bor
row
ed
fu
nds
-
70,
293,
075
-
70,
293,
075
72,
128,
237
-
82,
329,
431
-
82,
329,
431
84,
179,
232
-
381
,385
,246
-
3
81,3
85,2
46
383
,266
,626
-
3
96,5
17,1
53
-
396
,517
,153
3
98,3
18,8
98
natu
re o
r re
-pric
ed to
cur
rent
mar
ket r
ates
freq
uent
ly.
Ass
ets
Liab
iliti
es
Cas
h &
cas
h eq
uiva
lent
sD
ue to
ban
ks
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
Sec
uriti
es s
old
unde
r re
purc
hase
agr
eem
ents
Pla
cem
ents
with
ban
ksS
avin
gs, d
eman
d &
mar
gin
depo
sits
in “
Due
to
othe
r cu
stom
ers”
Rev
erse
repu
rcha
se a
gree
men
tsD
ivid
end
paya
ble
340 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
52
FAIR
VA
LUE
OF
AS
SE
TS
& L
IAB
ILIT
IES
CO
NT
D.
As
at 3
1st
Dec
emb
er 2
015
Ban
kG
roup
Fair
Val
ueC
arry
ing
Va
lue
Rs
000
Fair
Val
ueC
arry
ing
Va
lue
Rs
000
Leve
l 1
Rs
000
Leve
l 2
Rs
000
Leve
l 3R
s 00
0To
tal
Rs
000
Leve
l 1R
s 00
0Le
vel 2
Rs
000
Leve
l 3R
s 00
0To
tal
Rs
000
Fina
ncia
l Ass
ets
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
1,6
50,8
81
-
1,6
50,8
81
1,6
51,2
05
-
1,6
50,8
81
-
1,6
50,8
81
1,6
51,2
05
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s -
3
75,8
22,0
35
-
375
,822
,035
3
75,6
96,5
30
-
386
,523
,879
-
3
86,5
23,8
79
386
,277
,744
Oth
er lo
ans
& re
ceiv
able
s -
3
3,42
6,85
7 -
3
3,42
6,85
7 3
3,36
8,27
4 -
3
3,42
6,85
7 -
3
3,42
6,85
7 3
3,36
8,27
4
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
63,
658
-
-
63,
658
63,
121
-
410
,899
,773
-
4
10,8
99,7
73
410
,716
,009
6
3,65
8 4
21,6
01,6
17
-
421
,665
,275
4
21,3
60,3
44
Fina
ncia
l Lia
bili
ties
Due
to o
ther
cus
tom
ers
- C
all,
-
2
11,4
42,5
57
-
211
,442
,557
2
11,3
71,1
06
-
212
,401
,734
-
2
12,4
01,7
34
212
,327
,029
Deb
t iss
ued
& o
ther
bor
row
ed
fu
nds
-
57,
243,
238
-
57,
243,
238
57,
016,
284
-
65,
412,
377
-
65,
412,
377
65,
170,
977
-
268
,685
,795
-
2
68,6
85,7
95
268
,387
,390
-
2
77,8
14,1
11
-
277
,814
,111
2
77,4
98,0
06
natu
re o
r re
-pric
ed to
cur
rent
mar
ket r
ates
freq
uent
ly.
Ass
ets
Liab
iliti
es
Cas
h &
cas
h eq
uiva
lent
sD
ue to
ban
ks
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
Sec
uriti
es s
old
unde
r re
purc
hase
agr
eem
ents
Pla
cem
ents
with
ban
ksS
avin
gs, d
eman
d &
mar
gin
depo
sits
in “
Due
to
othe
r cu
stom
ers”
Rev
erse
repu
rcha
se a
gree
men
tsD
ivid
end
paya
ble
FINANCIAL INFORMATION
341
53 RISK MANAGEMENT
53.1 Introduction
Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is mainly exposed to Credit Risk, Liquidity Risk, Market Risk and Operational Risk which has disclosed in this note as summarised below.
Page No.
53.2 Credit Risk 34253.2.1 Impairment Assessment 34253.2.2 Credit–related Commitments Risks 34253.2.3 Collateral and Other Credit Enhancements 34253.2.4 Credit Quality by Class of Financial Assets 34553.2.5 Credit Risk Exposure for Each Internal Credit Risk Rating 34953.2.6 Analysis of Risk Concentration 35053.2.6.1 Country Risk - Geographical Analysis 35053.2.6.2 Industry Analysis 35453.2.7 Commitments and Contingencies 358
53.3 Liquidity Risk and Fund Management 35853.3.1 Statutory Liquid Assets Ratio (SLAR) 35853.3.2 Loans to & receivables from banks and other customers (Advances) to Due to banks and other customers (Deposits) Ratio 35853.3.3 Analysis of Financial Assets and Liabilities by Remaining Contractual Maturities 35953.3.4 Remaining Contractual Maturities of Commitments and Contingencies 36353.4 Market Risk 36753.4.1 Interest Rate Risk 36753.4.2 Currency Risk 37253.4.3 Equity Price Risk 37353.5 Operational Risk 37353.6 Capital Management 373
Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management framework. The Board has delegated its authority to Board Integrated Risk Management Committee (BIRMC) which is responsible for developing and monitoring Bank’s risk management policies. The Committee comprises of Executive and Non - Executive Directors. Meetings of BIRMC are held regularly, and the Board of Directors are duly updated of its activities.
The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and
updates and maintains a disciplined and constructive control environment, in which all employees are assigned and made to understand their respective roles and responsibilities.
Integrated Risk Management Unit
Asset / Liability Management Committee (ALCO) ALCO is chaired by the Managing Director and has representatives from Treasury Department, Credit Departments, Marketing Department,
the ALCO. The Committee meets regularly to monitor and manage the assets & liabilities of the Bank and overall liquidity position to keep the Bank’s liquidity at healthy levels, whilst satisfying regulatory requirements.
342 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
Risk Measurement and Reporting The Bank’s risks are measured using appropriate techniques based on the type of risk and industry best practices. The Bank also carries
reported to Board Integrated Risk Management Committee (BIRMC) on a periodic basis.
the business strategy and market environment of the Bank as well as the level of risk that the Bank is willing to accept (Risk Appetite).
Risk Mitigation As part of its overall risk management, the Bank obtains various types of collaterals to mitigate the risk. Details such as nature of the
source of repayment.
53.2 Credit Risk
obligations, and arises principally from the Bank’s loans and advances to customers/other banks and investments in debt securities. In addition to the credit risk from direct funding exposures, the Bank would also be exposed to indirect liabilities such as Letters of Credit, guarantees etc, which would carry credit risk.
The Bank considers and consolidates all elements of credit risk exposure (such as individual obligor default risk, country and sector concentration risks) to ensure stringent Credit Risk Management.
53.2.1 Impairment Assessment The methodology of the impairment assessment has explained in the Note No. 3.3.8 under Accounting Policies.
of Financial Position. With gross–settled derivatives, the Bank is also exposed to a settlement risk, being the risk that the Bank honours its obligation, but the counterparty fails to deliver the counter value.
53.2.2 Credit–related Commitments Risks The Bank makes available to its customers guarantees that may require that the Bank makes payments on their behalf and enters into commitments to extend credit lines to secure their liquidity needs. Letters of Credit and guarantees (including standby Letters of Credit)
Such commitments expose the Bank to risks similar to loans and are mitigated by the same control processes and policies.
53.2.3 Collateral and Other Credit Enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral. The main types of collateral obtained are as follows:
For commercial lending: charges over real estate properties, inventory and trade receivablesFor retail lending: mortgages over residential properties
The Bank also obtains guarantees from parent companies as securities against loans guaranteed to their subsidiaries.
Management monitors the market value of collateral and will request additional collateral in accordance with the underlying agreement. It is the Bank’s policy to dispose repossessed properties in an orderly manner. The proceeds are used to recover the outstanding claim.
FINANCIAL INFORMATION
343
The following table shows the maximum exposure and net exposure (Net of fair value of any collaterals held) to credit risk by class of
Bank
As at 31st December 2016 2015
Note Maximum exposure to
credit risk
Net exposure
Maximum exposure to
credit risk
Net exposure
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 17,064,013 9,646,689 13,588,075 4,633,922
Placements with banks 22 8,749,763 8,749,763 5,193,369 5,193,369
Reverse repurchase agreements 33,860,083 - - -
23 109,872 109,872 319,461 319,461
Financial assets - held for trading 24 28,109,193 28,109,193 1,889,058 1,889,058
Financial assets - held for trading pledged as collaterals 25 10,380,213 10,380,213 2,702,785 2,702,785
Loans to & receivables from banks 26 2,641,733 1,819,516 1,651,205 1,345,728
Loans to & receivables from other customers 27 456,189,052 202,415,036 375,696,530 182,191,627
Other loans & receivables 28 38,708,440 34,722,921 33,368,274 28,272,762
Financial assets - available for sale 29 14,270,190 14,270,190 51,250,411 51,250,411
Financial assets - available for sale pledged as collaterals 30 657,903 657,903 7,210,585 7,210,585
Other assets 3,257,948 3,257,948 1,964,787 1,964,787
Total 613,998,403 314,139,244 494,834,540 286,974,495
Group
As at 31st December 2016 2015
Note Maximum exposure to
credit risk
Net exposure
Maximum exposure to
credit risk
Net exposure
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 17,221,809 9,655,360 13,713,456 4,676,417
Placements with banks 22 8,749,763 8,749,763 5,193,369 5,193,369
Reverse repurchase agreements 34,629,422 - - -
23 109,872 109,872 319,461 319,461
Financial assets held for trading 24 28,117,789 28,117,789 1,898,074 1,898,074
Financial assets held for trading pledged as collaterals 25 10,371,617 10,371,617 2,693,769 2,693,769
Loans to & receivables from banks 26 2,641,733 1,819,516 1,651,205 1,345,728
Loans to & receivables from other customers 27 472,754,947 203,806,278 386,277,744 183,395,985
Other loans & receivables 28 38,708,440 34,722,921 33,368,274 28,272,762
Financial assets - available for sale 29 14,329,468 14,329,468 51,941,479 51,941,479
Financial assets - available for sale pledged as collaterals 30 598,681 598,681 6,519,573 6,519,573
Financial assets - held to maturity 31 16,933 16,933 63,121 63,121
Other assets 3,507,676 3,507,676 2,099,327 2,099,327
Total 631,758,150 315,805,874 505,738,852 288,419,065
344 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
simultaneously.
arrangements and other similar secured lending and borrowing arrangements.
below.
Bank
As at 31st December 2016 2015
Gross amount
Amount subject to
netting but do not qualify for
Net amount
Gross amount
Amount subject to
netting but do not qualify for
Net amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Loans to & receivables from other customers 51,850,212 34,472,696 17,377,516 36,503,175 24,780,279 11,722,896
Financial Liabilities
Securities sold under repurchase agreements 10,159,225 10,159,225 - 9,316,122 9,316,122 -
Group
As at 31st December 2016 2015
Gross amount
Amount subject to
netting but do not qualify for
Net amount
Gross amount
Amount subject to
netting but do not qualify for
Net amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Loans to & receivables from other customers 51,850,212 34,472,696 17,377,516 36,503,175 24,780,279 11,722,896
Financial Liabilities
Securities sold under repurchase agreements 10,095,117 10,095,117 - 8,662,930 8,662,930 -
FINANCIAL INFORMATION
34553
.2.4
Cre
dit
Qua
lity
by
Cla
ss o
f Fi
nanc
ial A
sset
s
expo
sed
to c
redi
t ris
k, b
ased
on
the
Ban
k’s
inte
rnal
cre
dit r
atin
g sy
stem
. The
am
ount
s pr
esen
ted
are
gros
s of
impa
irmen
t allo
wan
ces.
The
Ban
k co
nsid
ers
that
any
am
ount
unc
olle
cted
one
day
or
mor
e be
yond
thei
r co
ntra
ctua
l due
dat
e as
‘pas
t due
’.
Nei
ther
Pas
t D
ue n
or
Imp
aire
d
Pas
t D
ue b
ut N
ot
Imp
aire
d
Ind
ivid
ually
Im
pai
red
T
ota
l
Hig
h G
rad
e S
tand
ard
Gra
de
Sub
S
tand
ard
G
rad
e
Unr
ated
E
xpo
sure
s N
ot
Sub
ject
to
Rat
ing
s 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
Cas
h &
cas
h eq
uiva
lent
s 1
6,79
1,06
3 2
1,59
4 -
2
51,3
56
-
-
-
17,
064,
013
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
33,
724,
856
-
-
-
-
-
-
33,
724,
856
Pla
cem
ents
with
ban
ks 7
,248
,965
1
,500
,798
-
-
-
-
-
8
,749
,763
R
ever
se re
purc
hase
agr
eem
ents
33,
860,
083
-
-
-
-
-
-
33,
860,
083
101
,100
1
,281
-
7
,491
-
-
-
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g 2
8,10
4,62
4 -
-
4
,569
-
-
-
2
8,10
9,19
3 Fi
nanc
ial a
sset
s -
held
for
trad
ing
pled
ged
as c
olla
tera
ls 1
0,38
0,21
3 -
-
-
-
-
-
1
0,38
0,21
3 Lo
ans
to &
rece
ivab
les
from
ban
ks 1
1,13
4 2
,630
,599
-
-
-
-
-
2
,641
,733
Lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s 1
86,5
47,9
21
118
,331
,582
5
,040
,996
5
,477
,607
2
8,24
8,87
3 1
12,7
26,7
17
7,5
41,7
22
463
,915
,418
O
ther
loan
s &
rece
ivab
les
36,
065,
910
2,6
42,5
30
-
-
-
-
-
38,
708,
440
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es
12,
509,
922
-
-
-
-
-
-
12,
509,
922
Q
uote
d eq
uity
sec
uriti
es 1
,729
,560
-
-
-
-
-
-
1
,729
,560
Unq
uote
d eq
uity
sec
uriti
es -
-
-
-
29
,601
-
60,1
16 8
9,71
7
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls 6
57,9
03
-
-
-
-
-
-
657
,903
Fi
nanc
ial a
sset
s -
held
to m
atur
ity
Gov
ernm
ent s
ecur
ities
-
-
-
-
-
-
-
-
Oth
er a
sset
s 2
,055
,749
8
9,93
8 -
1
9,56
6 1
,092
,695
-
-
3
,257
,948
To
tal
369
,789
,003
1
25,2
18,3
22
5,0
40,9
96
5,7
60,5
89
29,3
71,1
69 1
12,7
26,7
17
7,60
1,83
8 6
55,5
08,6
34
Pas
t D
ue b
ut N
ot
Imp
aire
d1
- 30
D
ays
31 t
o 6
0 D
ays
61 t
o 9
0 D
ays
Mo
re t
han
90 D
ays
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
88,
161,
094
18,
881,
064
2,2
67,3
37
3,4
17,2
22
112
,726
,717
O
ther
ass
ets
-
-
-
-
-
Tota
l 8
8,16
1,09
4 1
8,88
1,06
4 2
,267
,337
3
,417
,222
1
12,7
26,7
17
346 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Nei
ther
Pas
t D
ue n
or
Imp
aire
d
Pas
t D
ue b
ut N
ot
Imp
aire
d
Ind
ivid
ually
Im
pai
red
T
ota
l
Hig
h G
rad
e S
tand
ard
Gra
de
Sub
S
tand
ard
G
rad
e
Unr
ated
E
xpo
sure
s N
ot
Sub
ject
to
Rat
ing
s 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
Cas
h &
cas
h eq
uiva
lent
s13
,547
,331
40,7
44-
--
--
13,5
88,0
75B
alan
ces
with
Cen
tral
Ban
k of
Sri
Lank
a21
,341
,882
--
--
--
21,3
41,8
82P
lace
men
ts w
ith b
anks
3,97
4,51
51,
218,
854
--
--
-5,
193,
369
Rev
erse
repu
rcha
se a
gree
men
ts-
--
--
--
-28
6,65
58,
595
-24
,211
--
-31
9,46
1Fi
nanc
ial a
sset
s -
held
for
trad
ing
1,88
3,77
8-
-5,
280
--
-1,
889,
058
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d as
col
late
rals
2,70
2,78
5-
--
--
-2,
702,
785
Loan
s to
& re
ceiv
able
s fro
m b
anks
-1,
651,
190
--
-15
-1,
651,
205
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
141,
467,
937
87,9
61,9
603,
224,
972
20,6
77,2
5724
,088
,151
100,
354,
446
4,91
9,09
738
2,69
3,82
0O
ther
loan
s &
rece
ivab
les
31,2
67,9
171,
597,
865
-50
2,49
2-
-75
033
,369
,024
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es
49,9
76,7
43-
--
--
-49
,976
,743
Q
uote
d eq
uity
sec
uriti
es1,
217,
611
--
--
--
1,21
7,61
1
Unq
uote
d eq
uity
sec
uriti
es-
--
-45
,117
-42
,434
87,5
51
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls7,
210,
585
--
--
--
7,21
0,58
5Fi
nanc
ial a
sset
s -
held
to m
atur
ity
Gov
ernm
ent s
ecur
ities
--
--
--
--
Oth
er a
sset
s82
3,80
596
,256
-27
,255
1,01
7,47
1-
-1,
964,
787
Tota
l27
5,70
1,54
492
,575
,464
3,22
4,97
221
,236
,495
25,1
50,7
3910
0,35
4,46
14,
962,
281
523,
205,
956
Pas
t D
ue b
ut N
ot
Imp
aire
d1
- 30
D
ays
31 t
o 6
0 D
ays
61 t
o 9
0 D
ays
Mo
re t
han
90 D
ays
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Loan
s to
& re
ceiv
able
s fro
m b
anks
1
14
-
-
15
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
76,
160,
901
15,
365,
168
4,5
37,6
91
4,2
90,6
86
100
,354
,446
O
ther
ass
ets
-
-
-
-
-
Tota
l 7
6,16
0,90
2 1
5,36
5,18
2 4
,537
,691
4
,290
,686
1
00,3
54,4
61
FINANCIAL INFORMATION
347 N
eith
er P
ast
Due
no
r Im
pai
red
P
ast
Due
but
No
t Im
pai
red
Ind
ivid
ually
Im
pai
red
T
ota
l
Hig
h G
rad
e S
tand
ard
Gra
de
Sub
S
tand
ard
G
rad
e
Unr
ated
E
xpo
sure
s N
ot
Sub
ject
to
Rat
ing
s 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
Cas
h &
cas
h eq
uiva
lent
s 1
6,94
8,85
9 2
1,59
4 -
2
51,3
56
-
-
-
17,
221,
809
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
33,
724,
856
-
-
-
-
-
-
33,
724,
856
Pla
cem
ents
with
ban
ks 7
,248
,965
1
,500
,798
-
-
-
-
-
8
,749
,763
R
ever
se re
purc
hase
agr
eem
ents
34,
629,
422
-
-
-
-
-
-
34,
629,
422
101
,100
1
,282
-
7
,490
-
-
-
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g 2
8,11
3,22
0 -
-
4
,569
-
-
-
2
8,11
7,78
9 Fi
nanc
ial a
sset
s -
held
for
trad
ing
pled
ged
as c
olla
tera
ls 1
0,37
1,61
7 -
-
-
-
-
-
1
0,37
1,61
7 Lo
ans
to &
rece
ivab
les
from
ban
ks 1
1,13
4 2
,630
,599
-
-
-
-
-
2
,641
,733
Lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s 1
85,1
61,3
02
118
,331
,582
5
,040
,996
1
7,37
4,91
4 2
8,32
4,30
7 1
18,8
76,1
74
7,8
07,3
49
480
,916
,624
O
ther
loan
s &
rece
ivab
les
36,
065,
910
2,6
42,5
30
-
-
-
-
-
38,
708,
440
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es
12,
569,
144
-
-
-
-
-
-
12,
569,
144
Q
uote
d eq
uity
sec
uriti
es 1
,729
,560
-
-
-
-
-
-
1
,729
,560
Unq
uote
d eq
uity
sec
uriti
es -
-
-
-
29
,657
-
60,1
16 8
9,77
3
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls 5
98,6
81
-
-
-
-
-
-
598
,681
Fi
nanc
ial a
sset
s -
held
to m
atur
ity
G
over
nmen
t sec
uriti
es 1
6,93
3 -
-
-
-
-
-
1
6,93
3 O
ther
ass
ets
2,0
57,6
18
89,
938
-
52,
729
1,1
31,3
75
124
,098
5
1,91
8 3
,507
,676
To
tal
369
,348
,321
1
25,2
18,3
23
5,0
40,9
96
17,
691,
058
29,4
85,3
39 1
19,0
00,2
72
7,91
9,38
3 6
73,7
03,6
92
Pas
t D
ue b
ut N
ot
Imp
aire
d1
- 30
D
ays
31 t
o 6
0 D
ays
61 t
o 9
0 D
ays
Mo
re t
han
90 D
ays
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
91,
071,
291
20,
998,
046
3,0
25,4
86
3,7
81,3
51
118
,876
,174
O
ther
ass
ets
8,4
25
45,
121
48,
427
22,
125
124
,098
To
tal
91,
079,
716
21,
043,
167
3,0
73,9
13
3,8
03,4
76
119
,000
,272
348 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Nei
ther
Pas
t D
ue n
or
Imp
aire
d
Pas
t D
ue b
ut N
ot
Imp
aire
d
Ind
ivid
ually
Im
pai
red
T
ota
l
Hig
h G
rad
e S
tand
ard
Gra
de
Sub
S
tand
ard
G
rad
e
Unr
ated
E
xpo
sure
s N
ot
Sub
ject
to
Rat
ing
s 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
Cas
h &
cas
h eq
uiva
lent
s 1
3,67
2,70
2 4
0,74
4 -
1
0 -
-
-
1
3,71
3,45
6 B
alan
ces
with
Cen
tral
Ban
k of
Sri
Lank
a 2
1,34
1,88
2 -
-
-
-
-
-
2
1,34
1,88
2 P
lace
men
ts w
ith b
anks
3,9
74,5
15
1,2
18,8
54
-
-
-
-
-
5,1
93,3
69
Rev
erse
repu
rcha
se a
gree
men
ts -
-
-
-
-
-
-
-
2
86,6
55
8,5
95
-
24,
211
-
-
-
319
,461
Fi
nanc
ial a
sset
s -
held
for
trad
ing
1,8
92,7
94
-
-
5,2
80
-
-
-
1,8
98,0
74
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d as
col
late
rals
2,6
93,7
69
-
-
-
-
-
-
2,6
93,7
69
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
1,6
51,1
90
-
-
-
15
-
1,6
51,2
05
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
138
,492
,626
8
7,96
1,96
0 3
,224
,972
2
9,19
3,76
6 2
4,16
0,01
8 1
05,1
14,0
60
5,5
06,8
19
393
,654
,221
O
ther
loan
s &
rece
ivab
les
31,
267,
917
1,5
97,8
65
-
502
,492
-
-
7
50
33,
369,
024
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es
50,
667,
755
-
-
-
-
-
-
50,
667,
755
Q
uote
d eq
uity
sec
uriti
es 1
,217
,611
-
-
-
-
-
-
1
,217
,611
Unq
uote
d eq
uity
sec
uriti
es -
-
-
-
4
5,17
3 -
4
2,43
4 8
7,60
7
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls 6
,519
,573
-
-
-
-
-
-
6
,519
,573
Fi
nanc
ial a
sset
s -
held
to m
atur
ity
Gov
ernm
ent s
ecur
ities
63,
121
-
-
-
-
-
-
63,
121
Oth
er a
sset
s 8
27,4
25
96,
256
-
70,
051
907
,989
1
41,4
12
109
,492
2
,152
,625
To
tal
272
,918
,345
9
2,57
5,46
4 3
,224
,972
2
9,79
5,81
0 2
5,11
3,18
0 1
05,2
55,4
87
5,6
59,4
95
534
,542
,753
Pas
t D
ue b
ut N
ot
Imp
aire
d1
- 30
D
ays
31 t
o 6
0 D
ays
61 t
o 9
0 D
ays
Mo
re t
han
90 D
ays
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Loan
s to
& re
ceiv
able
s fro
m b
anks
1
14
-
-
15
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
78,
717,
526
16,
619,
800
5,1
16,3
31
4,6
60,4
03
105
,114
,060
O
ther
Ass
ets
10,
706
65,
213
50,
280
15,
213
141
,412
To
tal
78,
728,
233
16,
685,
027
5,1
66,6
11
4,6
75,6
16
105
,255
,487
FINANCIAL INFORMATION
34953
.2.5
Cre
dit
Ris
k E
xpo
sure
fo
r E
ach
Inte
rnal
Cre
dit
Ris
k R
atin
gIt
is th
e B
ank’
s po
licy
to m
aint
ain
accu
rate
and
con
sist
ent r
isk
ratin
gs a
cros
s th
e cr
edit
port
folio
. Thi
s fa
cilit
ates
focu
sed
man
agem
ent o
f the
app
licab
le r
isks
and
the
com
paris
on o
f cre
dit e
xpos
ures
acr
oss
all l
ines
of b
usin
ess,
geo
grap
hic
regi
ons
and
prod
ucts
. The
rat
ing
syst
em is
sup
port
ed b
y a
varie
ty o
f qua
litat
ive
as w
ell a
s qu
antit
ativ
e va
riabl
es fo
r th
e m
easu
rem
ent o
f cou
nter
part
y ris
k. A
ll in
tern
al r
isk
ratin
gs a
re ta
ilore
d to
var
ious
cat
egor
ies
and
are
deriv
ed in
acc
orda
nce
with
the
Ban
k’s
Rat
ing
Pol
icy.
The
ris
k ra
tings
of t
he b
usin
ess
borr
ower
s ar
e up
date
d at
leas
t ann
ually
or
earli
er if
requ
ired.
The
tabl
e be
low
sho
ws
the
Ban
k’s
inte
rnal
cre
dit r
atin
g of
the
loan
s to
& re
ceiv
able
s fro
m b
anks
and
loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers.
Ban
k’s
Inte
rnal
Cre
dit
Rat
ing
Ban
k R
atin
gFi
tch
Rat
ing
His
tori
cal
Def
ault
Rat
eTo
tal
His
tori
cal
Def
ault
Rat
eTo
tal
As
at 3
1st
Dec
emb
er20
1620
1620
1520
15
%R
s 00
0%
Rs
000
Hig
h G
rad
e
Ris
k R
atin
g C
lass
1A
+A
AA
to A
A+
0.5
6 2
1,37
8,46
3 0
.27
13,
995,
620
Ris
k R
atin
g C
lass
2A
AA
to A
A-
0.4
5 6
7,84
6,61
8 0
.37
45,
917,
402
Ris
k R
atin
g C
lass
3A
-A
+ to
A 0
.43
63,
250,
945
0.4
6 5
9,07
0,61
8
Ris
k R
atin
g C
lass
4B
+A
- to
BB
B+
0.5
8 9
3,29
0,29
6 0
.63
60,
344,
556
Sta
ndar
d G
rad
e
Ris
k R
atin
g C
lass
5B
BB
B to
BB
B-
0.6
3 8
6,05
6,39
0 0
.72
72,
681,
236
Ris
k R
atin
g C
lass
6B
-B
B+
to B
B 1
.12
55,
711,
204
0.9
9 3
9,91
6,56
4
Ris
k R
atin
g C
lass
7C
+B
B-
to B
+ 1
.17
26,
050,
669
1.1
3 2
4,74
1,90
2
Sub
Sta
ndar
d G
rad
e
Ris
k R
atin
g C
lass
8C
B to
B-
1.8
3 4
,111
,017
1
.90
4,0
54,6
66
Ris
k R
atin
g C
lass
9C
-C
CC
to C
C 0
.64
1,1
58,4
60
0.9
0 1
,606
,637
Unr
ated
0.6
9 7
,297
,773
0
.71
31,
261,
353
Imp
aire
d
Ris
k R
atin
g C
lass
10
DC
to D
4.9
6 8
,962
,277
3
.45
3,8
83,1
60
Exp
osu
res
No
t S
ubje
ct f
or
Rat
ing
s
Paw
ning
1
5,47
9,48
8 1
3,47
1,95
9
Oth
ers
15,
963,
551
13,
399,
352
Tota
l 4
66,5
57,1
51
384
,345
,025
350 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
53.2
.6 A
naly
sis
of
Ris
k C
onc
entr
atio
n R
isk
conc
entr
atio
ns: m
axim
um e
xpos
ure
to c
redi
t ris
k w
ithou
t tak
ing
acco
unt o
f any
col
late
ral a
nd o
ther
cre
dit e
nhan
cem
ents
.
The
Con
cent
ratio
n ris
k is
mon
itore
d /
man
aged
thro
ugh
borr
ower
/ g
roup
, sec
tor,
prod
uct e
tc. M
axim
um e
xpos
ure
of b
oth
fund
ed a
nd n
on fu
nded
faci
litie
s to
a c
ompa
ny
and
a g
roup
as
at th
e re
port
ing
date
was
Rs
8,38
7 M
n an
d R
s 15
,105
Mn
resp
ectiv
ely.
The
follo
win
g ta
bles
sho
w th
e m
axim
um e
xpos
ure
to c
redi
t ris
k fo
r th
e co
mpo
nent
s of
the
Sta
tem
ent o
f Fin
anci
al P
ositi
on, i
nclu
ding
geo
grap
hy o
f cou
nter
part
y an
d se
ctor
.
Sri
Lan
kaE
uro
pe
Am
eric
aS
out
h A
sia
Asi
a M
idd
le E
ast
& A
fric
aTo
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s 1
4,35
4,73
2 2
57,8
65
1,2
83,0
08
350
,377
4
86,3
74
331
,657
1
7,06
4,01
3 B
alan
ces
with
Cen
tral
Ban
k of
Sri
Lank
a 3
3,72
4,85
6 -
-
-
-
-
3
3,72
4,85
6 P
lace
men
ts w
ith b
anks
2,2
51,5
64
1,1
12,4
36
1,7
85,0
62
-
544
3
,600
,157
8
,749
,763
R
ever
se re
purc
hase
agr
eem
ents
33,
860,
083
-
-
-
-
-
33,
860,
083
90,
921
18,
928
-
-
23
-
109
,872
Fi
nanc
ial a
sset
s -
held
for
trad
ing
28,
109,
193
-
-
-
-
-
28,
109,
193
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d as
col
late
rals
10,
380,
213
-
-
-
-
-
10,
380,
213
Loan
s to
& re
ceiv
able
s fro
m b
anks
2,6
41,7
33
-
-
-
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers*
*44
8,26
8,80
717
2,50
7 4
72,5
09
6,6
13,3
41
244,
321
417
,567
4
56,1
89,0
52
Oth
er lo
ans
& re
ceiv
able
s 3
8,70
8,44
0 -
-
-
-
-
3
8,70
8,44
0 Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le 1
2,53
9,52
3 -
-
1
,730
,667
-
-
1
4,27
0,19
0 Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le p
ledg
ed a
s co
llate
rals
657
,903
-
-
-
-
-
6
57,9
03
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity -
-
-
-
-
-
-
O
ther
ass
ets
3,1
37,0
60
19,
566
89,
938
2,2
70
9,1
14
-
3,2
57,9
48
Tota
l62
8,72
5,02
81,
581,
302
3,6
30,5
17
8,6
96,6
55
740,
376
4,3
49,3
81
647
,723
,259
**
Pro
vinc
ial b
reak
dow
n fo
r lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s w
ithin
Sri
Lank
a
Pro
vinc
e R
s 00
0 C
entr
al 2
7,33
6,44
7 E
aste
rn 8
,423
,743
N
orth
Cen
tral
11,
880,
457
Nor
th W
este
rn 1
8,99
7,84
6 N
orth
ern
6,9
00,4
37
Sab
arag
amuw
a 9
,344
,517
S
outh
ern
21,
988,
342
Uva
8,5
63,0
24
Wes
tern
334,
833,
994
Tota
l44
8,26
8,80
7
FINANCIAL INFORMATION
351
Sri
Lan
kaE
uro
pe
Am
eric
aS
out
h A
sia
Asi
a M
idd
le E
ast
& A
fric
aTo
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s11
,945
,903
229,
852
943,
234
148,
283
304,
499
16,3
0413
,588
,075
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
21,3
41,8
82-
--
--
21,3
41,8
82P
lace
men
ts w
ith b
anks
-3,
110,
333
747,
297
-1,
335,
739
-5,
193,
369
Rev
erse
repu
rcha
se a
gree
men
ts-
--
--
--
282,
998
33,8
76-
1,40
11,
168
1831
9,46
1Fi
nanc
ial a
sset
s -
held
for
trad
ing
1,88
9,05
8-
--
--
1,88
9,05
8Fi
nanc
ial a
sset
s -
held
for
trad
ing
pled
ged
as c
olla
tera
ls2,
702,
785
--
--
-2,
702,
785
Loan
s to
& re
ceiv
able
s fro
m b
anks
1,65
1,20
5-
--
--
1,65
1,20
5Lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s**
372,
538,
253
-44
1,51
82,
460,
432
-25
6,32
737
5,69
6,53
0O
ther
loan
s &
rece
ivab
les
33,3
68,2
74-
--
--
33,3
68,2
74Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le50
,021
,859
--
1,22
8,55
2-
-51
,250
,411
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls7,
210,
585
--
--
-7,
210,
585
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity-
--
--
--
Oth
er a
sset
s1,
806,
760
27,2
5596
,256
33,6
0091
24
1,96
4,78
7To
tal
504,
759,
562
3,40
1,31
62,
228,
305
3,87
2,26
81,
642,
318
272,
653
516,
176,
422
** P
rovi
ncia
l bre
akdo
wn
for
loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
with
in S
ri La
nka
Pro
vinc
e R
s 00
0 C
entr
al19
,987
,109
Eas
tern
6,24
9,03
0N
orth
Cen
tral
9,69
3,92
6N
orth
Wes
tern
14,9
15,6
48N
orth
ern
5,56
6,65
1S
abar
agam
uwa
7,49
2,79
4S
outh
ern
17,6
30,8
12U
va6,
608,
062
Wes
tern
284,
394,
221
Tota
l37
2,53
8,25
3
352 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Sri
Lan
kaE
uro
pe
Am
eric
aS
out
h A
sia
Asi
a M
idd
le E
ast
& A
fric
aTo
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s 1
4,51
2,52
8 2
57,8
65
1,2
83,0
08
350
,377
4
86,3
74
331
,657
1
7,22
1,80
9 B
alan
ces
with
Cen
tral
Ban
k of
Sri
Lank
a 3
3,72
4,85
6 -
-
-
-
-
3
3,72
4,85
6 P
lace
men
ts w
ith b
anks
2,2
51,5
64
1,1
12,4
36
1,7
85,0
62
-
544
3
,600
,157
8
,749
,763
R
ever
se re
purc
hase
agr
eem
ents
34,
629,
422
-
-
-
-
-
34,
629,
422
90,
921
18,
928
-
-
23
-
109
,872
Fi
nanc
ial a
sset
s -
held
for
trad
ing
28,
117,
789
-
-
-
-
-
28,
117,
789
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d as
col
late
rals
10,
371,
617
-
-
-
-
-
10,
371,
617
Loan
s to
& re
ceiv
able
s fro
m b
anks
2,6
41,7
33
-
-
-
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers*
*46
4,83
4,70
217
2,50
7 4
72,5
09
6,6
13,3
41
244,
321
417
,567
4
72,7
54,9
47
Oth
er lo
ans
& re
ceiv
able
s 3
8,70
8,44
0 -
-
-
-
-
3
8,70
8,44
0 Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le 1
2,59
8,80
1 -
-
1
,730
,667
-
-
1
4,32
9,46
8 Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le p
ledg
ed a
s co
llate
rals
598
,681
-
-
-
-
-
5
98,6
81
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity 1
6,93
3 -
-
-
-
-
1
6,93
3 O
ther
ass
ets
3,3
86,7
88
19,
566
89,
938
2,2
70
9,1
14
-
3,5
07,6
76
Tota
l64
6,48
4,77
51,
581,
302
3,6
30,5
17
8,6
96,6
55
740,
376
4,3
49,3
81
665
,483
,006
**
Pro
vinc
ial b
reak
dow
n fo
r lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s w
ithin
Sri
Lank
a
Pro
vinc
e R
s 00
0 C
entr
al 2
9,67
4,96
5 E
aste
rn 9
,986
,819
N
orth
Cen
tral
12,
604,
130
Nor
th W
este
rn 2
1,18
7,60
0 N
orth
ern
7,0
93,7
10
Sab
arag
amuw
a 1
0,32
4,74
2 S
outh
ern
23,
052,
378
Uva
8,7
64,4
63
Wes
tern
342,
145,
895
Tota
l46
4,83
4,70
2
FINANCIAL INFORMATION
353
Sri
Lan
kaE
uro
pe
Am
eric
aS
out
h A
sia
Asi
a M
idd
le E
ast
& A
fric
aTo
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s12
,071
,284
229,
852
943,
234
148,
283
304,
499
16,3
0413
,713
,456
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
21,3
41,8
82-
--
--
21,3
41,8
82P
lace
men
ts w
ith b
anks
-3,
110,
333
747,
297
-1,
335,
739
-5,
193,
369
Rev
erse
repu
rcha
se a
gree
men
ts-
--
--
--
282,
998
33,8
76-
1,40
11,
168
1831
9,46
1Fi
nanc
ial a
sset
s -
held
for
trad
ing
1,89
8,07
4-
--
--
1,89
8,07
4Fi
nanc
ial a
sset
s -
held
for
trad
ing
pled
ged
as c
olla
tera
ls2,
693,
769
--
--
-2,
693,
769
Loan
s to
& re
ceiv
able
s fro
m b
anks
1,65
1,20
5-
--
--
1,65
1,20
5Lo
ans
to &
rece
ivab
les
from
oth
er c
usto
mer
s**
383,
119,
467
-44
1,51
82,
460,
432
-25
6,32
738
6,27
7,74
4O
ther
loan
s &
rece
ivab
les
33,3
68,2
74-
--
--
33,3
68,2
74Fi
nanc
ial a
sset
s -
avai
labl
e fo
r sa
le50
,712
,927
--
1,22
8,55
2-
-51
,941
,479
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls6,
519,
573
--
--
-6,
519,
573
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity63
,121
--
--
-63
,121
Oth
er a
sset
s1,
941,
300
27,2
5596
,256
33,6
0091
24
2,09
9,32
7To
tal
515,
663,
874
3,40
1,31
62,
228,
305
3,87
2,26
81,
642,
318
272,
653
527,
080,
734
** P
rovi
ncia
l bre
akdo
wn
for
loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
with
in S
ri La
nka
Pro
vinc
e R
s 00
0 C
entr
al21
,662
,872
Eas
tern
7,22
8,44
0N
orth
Cen
tral
10,1
65,6
10N
orth
Wes
tern
16,4
81,2
62N
orth
ern
5,61
7,88
3S
abar
agam
uwa
8,17
9,75
3S
outh
ern
18,4
74,9
48U
va7,
015,
061
Wes
tern
288,
293,
638
Tota
l38
3,11
9,46
7
354 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
The
follo
win
g ta
bles
sho
w th
e ris
k co
ncen
trat
ion
by in
dust
ry fo
r th
e co
mpo
nent
s of
the
Sta
tem
ent o
f Fin
anci
al P
ositi
on.
Ag
ricu
ltur
e a
nd
Rel
ated
Man
ufac
-tu
ring
T
our
ism
T
rans
po
rt
Co
nstr
uc-
tio
n T
rad
ers
Ban
ks,
Fina
ncia
l an
d
Bus
ines
s S
ervi
ces
Go
vt.
Infr
a-st
ruct
ure
Oth
er
Ser
vice
s C
ons
umer
s To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s -
-
-
-
-
-
1
4,66
3,09
0 2
,400
,923
-
-
-
1
7,06
4,01
3
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
-
-
33,
724,
856
-
-
-
33,
724,
856
Pla
cem
ents
with
ban
ks -
-
-
-
-
-
8
,749
,763
-
-
-
-
8
,749
,763
Rev
erse
repu
rcha
se a
gree
men
ts -
-
-
-
-
-
2
0,85
4,76
8 1
3,00
5,31
5 -
-
-
3
3,86
0,08
3
-
-
-
-
-
7,4
91
102
,381
-
-
-
-
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
2
8,01
1,02
4 -
-
-
2
8,01
1,02
4
Q
uote
d eq
uitie
s -
-
-
-
-
4
,569
9
3,60
0 -
-
-
-
9
8,16
9
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as
col
late
rals
-
-
-
-
-
-
-
10,
380,
213
-
-
-
10,
380,
213
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
-
2,6
41,7
33
-
-
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 4
2,76
7,07
8 6
6,90
5,33
8 3
5,71
1,49
7 6
,018
,945
7
0,31
2,52
3 1
11,4
63,4
91
34,
878,
742
608
,225
1
8,41
4,72
2 1
9,26
0,71
4 4
9,84
7,77
7 4
56,1
89,0
52
Oth
er lo
ans
& re
ceiv
able
s 7
8,13
1 5
09,8
94
-
-
816
,128
1
,880
,080
7
,034
,282
2
8,38
9,92
5 -
-
-
3
8,70
8,44
0
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
1
2,50
9,92
3 -
-
-
1
2,50
9,92
3
O
ther
equ
ity s
ecur
ities
-
-
-
-
-
-
1,7
30,6
66
-
-
29,
601
-
1,7
60,2
67
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
pled
ged
as c
olla
tera
ls -
-
-
-
-
-
-
6
57,9
03
-
-
-
657
,903
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
-
-
-
-
-
-
-
Oth
er a
sset
s -
-
-
-
-
-
1
0,49
5 -
-
3
,247
,453
-
3
,257
,948
Tota
l 4
2,84
5,20
9 6
7,41
5,23
2 3
5,71
1,49
7 6
,018
,945
7
1,12
8,65
1 1
13,3
55,6
31
90,
759,
520
129
,688
,307
1
8,41
4,72
2 2
2,53
7,76
8 4
9,84
7,77
7 6
47,7
23,2
59
FINANCIAL INFORMATION
355 A
gri
cult
ure
and
R
elat
ed
Man
ufac
-tu
ring
T
our
ism
T
rans
po
rt
Co
nstr
uc-
tio
n T
rad
ers
Ban
ks,
Fina
ncia
l an
d
Bus
ines
s S
ervi
ces
Go
vt.
Infr
a-st
ruct
ure
Oth
er
Ser
vice
s C
ons
umer
s To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s -
-
-
-
-
-
1
0,65
7,59
2 2
,930
,483
-
-
-
1
3,58
8,07
5
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
-
-
21,
341,
882
-
-
-
21,
341,
882
Pla
cem
ents
with
ban
ks -
-
-
-
-
-
5
,193
,369
-
-
-
-
5
,193
,369
Rev
erse
repu
rcha
se a
gree
men
ts -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,
836
296
,625
-
-
-
-
3
19,4
61
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
1
,767
,317
-
-
-
1
,767
,317
Q
uote
d eq
uitie
s -
-
-
-
-
5
,280
1
16,4
61
-
-
-
-
121
,741
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as c
olla
tera
ls -
-
-
-
-
-
-
2
,702
,785
-
-
-
2
,702
,785
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
-
1,6
51,2
05
-
-
-
-
1,6
51,2
05
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 3
7,96
4,42
6 5
5,10
9,06
0 2
3,61
5,59
1 9
,227
,359
5
1,26
4,07
2 9
2,80
3,86
6 2
6,91
1,12
7 4
90,9
23
13,
235,
134
15,
270,
515
49,
804,
457
375
,696
,530
Oth
er lo
ans
& re
ceiv
able
s 7
8,14
6 5
09,8
93
-
-
816
,128
1
,707
,279
7
,613
,845
2
2,64
2,98
3 -
-
-
3
3,36
8,27
4
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
4
9,97
6,74
3 -
-
-
4
9,97
6,74
3
O
ther
equ
ity s
ecur
ities
-
-
-
-
-
-
1,2
28,5
52
-
-
45,
116
-
1,2
73,6
68
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as
colla
tera
ls -
-
-
-
-
-
-
7
,210
,585
-
-
-
7
,210
,585
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
-
-
-
-
-
-
-
Oth
er a
sset
s -
-
-
-
-
-
1
,084
-
-
1
,963
,703
-
1
,964
,787
Tota
l 3
8,04
2,57
2 5
5,61
8,95
3 2
3,61
5,59
1 9
,227
,359
5
2,08
0,20
0 9
4,53
9,26
1 5
3,66
9,86
0 1
09,0
63,7
01
13,
235,
134
17,
279,
334
49,
804,
457
516
,176
,422
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Ag
ricu
ltur
e a
nd
Rel
ated
Man
ufac
-tu
ring
T
our
ism
T
rans
po
rt
Co
nstr
uc-
tio
n T
rad
ers
Ban
ks,
Fina
ncia
l an
d
Bus
ines
s S
ervi
ces
Go
vt.
Infr
a-st
ruct
ure
Oth
er
Ser
vice
s C
ons
umer
s To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s -
-
-
-
-
-
1
4,82
0,88
6 2
,400
,923
-
-
-
1
7,22
1,80
9
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
-
-
33,
724,
856
-
-
-
33,
724,
856
Pla
cem
ents
with
ban
ks -
-
-
-
-
-
8
,749
,763
-
-
-
-
8
,749
,763
Rev
erse
repu
rcha
se a
gree
men
ts -
-
-
-
-
-
2
1,62
4,10
7 1
3,00
5,31
5 -
-
-
3
4,62
9,42
2
-
-
-
-
-
7,4
91
102
,381
-
-
-
-
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
2
8,01
9,62
0 -
-
-
2
8,01
9,62
0
Q
uote
d eq
uitie
s -
-
-
-
-
4
,569
9
3,60
0 -
-
-
-
9
8,16
9
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as
col
late
rals
-
-
-
-
-
-
-
10,
371,
617
-
-
-
10,
371,
617
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
-
2,6
41,7
33
-
-
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 4
4,04
9,08
0 6
8,23
3,09
5 3
6,03
7,08
9 6
,040
,887
7
1,09
5,47
0 1
15,0
18,1
22
32,
624,
943
608
,225
1
9,25
7,12
1 2
8,17
4,21
6 5
1,61
6,69
9 4
72,7
54,9
47
Oth
er lo
ans
& re
ceiv
able
s 7
8,13
1 5
09,8
94
-
-
816
,128
1
,880
,080
7
,034
,282
2
8,38
9,92
5 -
-
-
3
8,70
8,44
0
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
5
6 1
2,56
9,14
5 -
-
-
1
2,56
9,20
1
O
ther
equ
ity s
ecur
ities
-
-
-
-
-
-
1,7
30,6
66
-
-
29,
601
-
1,7
60,2
67
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
pled
ged
as c
olla
tera
ls -
-
-
-
-
-
-
5
98,6
81
-
-
-
598
,681
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
-
4,2
88
12,
645
-
-
-
16,
933
Oth
er a
sset
s -
-
-
-
-
-
1
22,6
74
-
-
3,2
04,4
71
180
,531
3
,507
,676
Tota
l 4
4,12
7,21
1 6
8,74
2,98
9 3
6,03
7,08
9 6
,040
,887
7
1,91
1,59
8 1
16,9
10,2
62
89,
549,
379
129
,700
,952
1
9,25
7,12
1 3
1,40
8,28
8 5
1,79
7,23
0 6
65,4
83,0
06
356 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
Ag
ricu
ltur
e a
nd
Rel
ated
Man
ufac
-tu
ring
T
our
ism
T
rans
po
rt
Co
nstr
uc-
tio
n T
rad
ers
Ban
ks,
Fina
ncia
l an
d
Bus
ines
s S
ervi
ces
Go
vt.
Infr
a-st
ruct
ure
Oth
er
Ser
vice
s C
ons
umer
s To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s -
-
-
-
-
-
1
0,78
2,97
3 2
,930
,483
-
-
-
1
3,71
3,45
6
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
-
-
21,
341,
882
-
-
-
21,
341,
882
Pla
cem
ents
with
ban
ks -
-
-
-
-
-
5
,193
,369
-
-
-
-
5
,193
,369
Rev
erse
repu
rcha
se a
gree
men
ts -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,
836
296
,625
-
-
-
-
3
19,4
61
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
1
,776
,333
-
-
-
1
,776
,333
Q
uote
d eq
uitie
s -
-
-
-
-
5
,280
1
16,4
61
-
-
-
-
121
,741
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as
col
late
rals
-
-
-
-
-
-
-
2,6
93,7
69
-
-
-
2,6
93,7
69
Loan
s to
& re
ceiv
able
s fro
m b
anks
-
-
-
-
-
-
1,6
51,2
05
-
-
-
-
1,6
51,2
05
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 3
8,65
4,09
7 5
5,66
8,36
6 2
3,73
4,74
9 9
,463
,003
5
1,59
5,85
2 9
4,75
7,06
0 2
4,07
8,43
8 4
90,9
23
13,
235,
134
24,
795,
665
49,
804,
457
386
,277
,744
Oth
er lo
ans
& re
ceiv
able
s 7
8,14
6 5
09,8
93
-
-
816
,128
1
,707
,279
7
,613
,845
2
2,64
2,98
3 -
-
-
3
3,36
8,27
4
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
G
over
nmen
t sec
uriti
es -
-
-
-
-
-
-
5
0,66
7,81
1 -
-
-
5
0,66
7,81
1
O
ther
equ
ity s
ecur
ities
-
-
-
-
-
-
1,2
28,5
52
-
-
45,
116
-
1,2
73,6
68
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
pled
ged
as c
olla
tera
ls -
-
-
-
-
-
-
6
,519
,573
-
-
-
6
,519
,573
Fina
ncia
l ass
ets-
hel
d to
mat
urity
-
-
-
-
-
-
-
63,
121
-
-
-
63,
121
Oth
er a
sset
s -
-
-
-
-
-
6
9,42
6 -
-
1
,803
,374
2
26,5
27
2,0
99,3
27
Tota
l 3
8,73
2,24
3 5
6,17
8,25
9 2
3,73
4,74
9 9
,463
,003
5
2,41
1,98
0 9
6,49
2,45
5 5
1,03
0,89
4 1
09,1
26,8
78
13,
235,
134
26,
644,
155
50,
030,
984
527
,080
,734
357
358 SAMPATH BANK PLC
ANNUAL REPORT 2016
53 RISK MANAGEMENT CONTD.
53.2.7 Commitments and Contingencies
obligations may not be recognised in the Statement of Financial Position, they do contain credit risk and are, therefore, part of the overall risk of the Bank.
is called upon. The maximum exposure to credit risk relating to a loan commitment is the full amount of the commitment. In both cases, the
maximum credit risk exposure for commitments and contingencies are disclosed in the Note 48.1.
53.3 Liquidity Risk and Fund Management
developed internal control processes and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash
The Bank maintains a portfolio of highly marketable and diverse assets assumed to be easily liquidated in the event of an unforeseen
Bank maintained a statutory deposit with the Central Bank of Sri Lanka equal to 7.5% of customer deposits. In accordance with the Bank’s policy, the liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to
to meet the regulatory requirement (20%). Liquid assets consist of cash, short–term bank deposits and liquid debt securities available for immediate sale. Further the Statutory Liquid Assets Ratio of the Bank for the month of December 2016 is as follows. 53.3.1 Statutory Liquid Assets Ratio (SLAR) For the month of December 2016: 21.84% (2015: 22.05%) 53.3.2 Loans to & receivables from banks and other customers (Advances) to Due to banks and other customers
(Deposits) Ratio The Bank is aware of the importance of due to banks & other customers as a source of funds for its lending operations. This is monitored using the following ratio, which compares loans to & receivables from banks and other customers (Advances) as a percentage of due to banks & due to other customers (Deposits).
As at 31st December 2016: 90.37% (2015: 93.89%)
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
359
53.3.3 Analysis of Financial Assets and Liabilities by Remaining Contractual Maturities
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 17,067,680 - - - - 17,067,680
Balances with Central Bank of Sri Lanka 22,470,630 10,050,488 706,833 162,270 334,635 33,724,856
Placements with banks 7,772,998 984,483 - - - 8,757,481
Reverse repurchase agreements 33,883,972 - - - - 33,883,972
53,743 56,129 - - - 109,872
Financial assets - held for trading 28,109,193 - - - - 28,109,193
Financial assets - held for trading pledged as collaterals 10,380,213 - - - - 10,380,213
Loans to & receivables from banks 592,899 657,832 1,410,373 617,378 - 3,278,482
Loans to & receivables from other customers 210,717,964 88,772,585 127,265,408 60,703,416 59,282,407 546,741,780
Other loans & receivables 12,686,789 15,058,902 12,572,383 2,071,751 - 42,389,825
Financial assets - available for sale 14,270,190 - - - - 14,270,190
Financial assets - available for sale pledged as collaterals 657,903 - - - - 657,903
Financial assets - held to maturity - - - - - -
Other assets 2,185,254 580,812 43,388 45,247 446,715 3,301,416
Total Financial Assets 360,849,428 116,161,231 141,998,385 63,600,062 60,063,757 742,672,863
Financial Liabilities
Due to banks 5,626,562 565,000 - - - 6,191,562
47,399 16,212 - - - 63,611
Securities sold under repurchase agreements 9,223,433 1,000,953 - - - 10,224,386
Due to other customers 341,514,977 156,379,351 11,156,190 2,451,057 4,686,795 516,188,370
Debt issued & other borrowed funds 11,127,711 23,018,505 30,234,315 16,969,308 3,699,328 85,049,167
Dividend payable 84,860 - - - - 84,860
Other liabilities 2,662,221 2,217,986 309,359 - 253,015 5,442,581
Total Financial Liabilities 370,287,163 183,198,007 41,699,864 19,420,365 8,639,138 623,244,537
Total Net Financial Assets / (Liabilities) (9,437,735) (67,036,776) 100,298,521 44,179,697 51,424,619 119,428,326
360 SAMPATH BANK PLC
ANNUAL REPORT 2016
53 RISK MANAGEMENT CONTD.
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 13,588,075 - - - - 13,588,075
Balances with Central Bank of Sri Lanka 14,885,289 5,127,411 556,303 445,854 327,025 21,341,882
Placements with banks 3,974,566 1,228,966 - - - 5,203,532
Reverse repurchase agreements - - - - - -
177,969 141,492 - - - 319,461
Financial assets - held for trading 1,889,058 - - - - 1,889,058
Financial assets - held for trading pledged as collaterals 2,702,785 - - - - 2,702,785
Loans to & receivables from banks 262,742 414,058 812,204 447,918 - 1,936,922
Loans to & receivables from other customers 149,519,859 72,870,391 94,557,772 48,371,124 38,088,688 403,407,834
Other loans & receivables 5,002,111 4,067,153 22,371,438 5,567,624 20,685 37,029,011
Financial assets - available for sale 51,250,411 - - - - 51,250,411
Financial assets - available for sale pledged as collaterals 7,210,585 - - - - 7,210,585
Financial assets - held to maturity - - - - - -
Other assets 741,515 679,128 44,562 43,487 509,914 2,018,606
Total Financial Assets 251,204,965 84,528,599 118,342,279 54,876,007 38,946,312 547,898,162
Financial Liabilities
Due to banks 2,918,371 520,942 - - - 3,439,313
179,982 277,076 - - - 457,058
Securities sold under repurchase agreements 8,834,839 531,967 - - - 9,366,806
Due to other customers 283,689,067 100,047,099 11,149,194 8,437,783 5,683,617 409,006,760
Debt issued & other borrowed funds 19,047,924 7,707,129 19,170,343 17,951,498 4,702,562 68,579,456
Dividend payable 90,969 - - - - 90,969
Other liabilities 2,331,761 2,051,568 211,095 - 199,786 4,794,210
Total Financial Liabilities 317,092,913 111,135,781 30,530,632 26,389,281 10,585,965 495,734,572
Total Net Financial Assets / (Liabilities) (65,887,948) (26,607,182) 87,811,647 28,486,726 28,360,347 52,163,590
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
361
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 17,225,477 - - - - 17,225,477
Balances with Central Bank of Sri Lanka 22,470,630 10,050,488 706,833 162,270 334,635 33,724,856
Placements with banks 8,542,336 984,483 - - - 9,526,819
Reverse repurchase agreements 33,883,972 - - - - 33,883,972
53,743 56,129 - - - 109,872
Financial assets - held for trading 28,117,789 - - - - 28,117,789
Financial assets - held for trading pledged as collaterals 10,371,617 - - - - 10,371,617
Loans to & receivables from banks 592,899 657,832 1,410,373 617,378 - 3,278,482
Loans to & receivables from other customers 215,679,567 93,499,179 135,233,452 64,085,539 59,354,480 567,852,217
Other loans & receivables 12,686,789 15,058,902 12,572,383 2,071,751 - 42,389,825
Financial assets - available for sale 14,329,412 - - - 56 14,329,468
Financial assets - available for sale pledged as collaterals 598,681 - - - - 598,681
Financial assets - held to maturity 2,400 10,245 - 4,288 - 16,933
Other assets 2,287,116 584,087 227,001 49,885 383,960 3,532,049
Total Financial Assets 366,842,428 120,901,345 150,150,042 66,991,111 60,073,131 764,958,057
Financial Liabilities
Due to banks 5,927,990 565,000 - - - 6,492,990
47,399 16,212 - - - 63,611
Securities sold under repurchase agreements 9,223,433 934,055 - - - 10,157,488
Due to other customers 343,212,203 157,767,267 11,373,146 2,718,067 4,686,795 519,757,478
Debt issued & other borrowed funds 13,423,126 25,779,460 37,462,085 19,180,658 3,699,328 99,544,657
Dividend payable 84,860 - - - - 84,860
Other liabilities 3,603,789 2,143,002 309,359 - 253,371 6,309,521
Total Financial Liabilities 375,522,800 187,204,996 49,144,590 21,898,725 8,639,494 642,410,605
Total Net Financial Assets / (Liabilities) (8,680,372) (66,303,651) 101,005,452 45,092,386 51,433,637 122,547,452
362 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 13,713,456 - - - - 13,713,456
Balances with Central Bank of Sri Lanka 14,885,289 5,127,411 556,303 445,854 327,025 21,341,882
Placements with banks 3,974,566 1,228,966 - - - 5,203,532
Reverse repurchase agreements - - - - - -
177,969 141,492 - - - 319,461
Financial assets - held for trading 1,898,074 - - - - 1,898,074
Financial assets - held for trading pledged as collaterals 2,693,769 - - - - 2,693,769
Loans to & receivables from banks 262,742 414,058 812,204 447,918 - 1,936,922
Loans to & receivables from other customers 152,703,049 75,791,847 99,817,251 50,310,584 38,183,627 416,806,358
Other loans & receivables 5,002,111 4,067,153 22,371,438 5,567,624 20,685 37,029,011
Financial assets - available for sale 51,941,479 - - - - 51,941,479
Financial assets - available for sale pledged as collaterals 6,519,573 - - - - 6,519,573
Financial assets - held to maturity 2,400 56,447 - - 4,274 63,121
Other assets 835,770 627,522 67,274 73,739 699,475 2,303,780
Total Financial Assets 254,610,247 87,454,896 123,624,470 56,845,719 39,235,086 561,770,418
Financial Liabilities
Due to banks 2,918,371 520,942 - - - 3,439,313
179,982 277,076 - - - 457,058
Securities sold under repurchase agreements 8,226,745 478,897 - - - 8,705,642
Due to other customers 283,474,695 101,095,042 11,219,297 8,442,873 5,683,617 409,915,524
Debt issued & other borrowed funds 20,991,599 9,495,273 22,653,909 20,119,532 4,702,562 77,962,875
Dividend payable 90,969 - - - - 90,969
Other liabilities 2,898,177 2,051,568 211,097 - 247,436 5,408,278
Total Financial Liabilities 318,780,538 113,918,798 34,084,303 28,562,405 10,633,615 505,979,659
Total Net Financial Assets / (Liabilities) (64,170,291) (26,463,902) 89,540,167 28,283,314 28,601,471 55,790,759
FINANCIAL INFORMATION
363
53.3.4 Remaining Contractual Maturities of Commitments and ContingenciesThe tables below show the contractual expiry by remaining maturity of the Bank’s contingent liabilities and commitments. Each undrawn
the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.
On Demand
Less than 3 Months
3 to 12 Months
1 to 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Contingencies
Guarantees 2,985,664 13,327,547 16,664,462 10,752,667 2,766,234 46,496,574
Acceptance 33,065 9,277,247 6,767,694 14,400 - 16,092,406
Forward contracts 10,119 20,101,293 10,567,691 - - 30,679,103
Documentary credit 2,688,732 15,129,792 3,840,939 195,717 - 21,855,180
Total Contingencies 5,717,580 57,835,879 37,840,786 10,962,784 2,766,234 115,123,263
Commitments
Undrawn overdrafts 38,499,451 - - - - 38,499,451
Undrawn loans 115,612,450 - - - - 115,612,450
Undisbursed cash loans 11,231 - - - - 11,231
Undrawn credit card limits 16,820,504 - - - - 16,820,504
Undrawn indirect credit facilities 54,074,330 - - - - 54,074,330
Capital Commitments 391,732 - - - - 391,732
Operating lease commitments - Bank as lessee - 253,622 739,517 1,840,183 614,024 3,447,346
Total Commitments 225,409,698 253,622 739,517 1,840,183 614,024 228,857,044
Total Commitments & Contingencies 231,127,278 58,089,501 38,580,303 12,802,967 3,380,258 343,980,307
364 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
On Demand
Less than 3 Months
3 to 12 Months
1 to 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Contingencies
Guarantees 3,806,464 12,568,497 12,529,043 4,941,850 5,830,806 39,676,660
Acceptance 25,608 11,249,117 4,566,008 17,304 - 15,858,037
Forward contracts 365,467 16,397,635 27,483,600 - - 44,246,702
Documentary credit 1,129,271 13,410,939 1,875,857 633,305 - 17,049,372
Total Contingencies 5,326,810 53,626,188 46,454,508 5,592,459 5,830,806 116,830,771
Commitments
Undrawn overdrafts 34,782,721 - - - - 34,782,721
Undrawn loans 94,489,627 - - - - 94,489,627
Undisbursed cash loans - - - - - -
Undrawn credit card limits 14,762,087 - - - - 14,762,087
Undrawn indirect credit facilities 48,473,733 - - - - 48,473,733
Capital Commitments 177,752 - - - - 177,752
Operating lease commitments - Bank as lessee - 222,095 644,840 2,146,432 582,199 3,595,566
Total Commitments 192,685,920 222,095 644,840 2,146,432 582,199 196,281,486
Total Commitments & Contingencies 198,012,730 53,848,283 47,099,348 7,738,891 6,413,005 313,112,257
FINANCIAL INFORMATION
365
On Demand
Less than 3 Months
3 to 12 Months
1 to 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Contingencies
Guarantees 2,985,664 13,327,547 16,698,362 10,752,667 2,766,234 46,530,474
Acceptance 33,065 9,277,247 6,767,694 14,400 - 16,092,406
Forward contracts 10,119 20,101,293 10,567,691 - - 30,679,103
Documentary credit 2,688,732 15,129,792 3,840,939 195,717 - 21,855,180
Total Contingencies 5,717,580 57,835,879 37,874,686 10,962,784 2,766,234 115,157,163
Commitments
Undrawn overdrafts 38,499,451 - - - - 38,499,451
Undrawn loans 115,018,730 - - - - 115,018,730
Undisbursed cash loans 11,231 - - - - 11,231
Undrawn credit card limits 16,820,504 - - - - 16,820,504
Undrawn commitments factoring 794,203 - - - - 794,203
Undrawn indirect credit facilities 54,074,330 - - - - 54,074,330
Capital Commitments 1,591,962 - - - - 1,591,962
Operating lease commitments - Bank as lessee - 188,041 542,469 1,742,542 675,001 3,148,053
Total Commitments 226,810,411 188,041 542,469 1,742,542 675,001 229,958,464
Total Commitments & Contingencies 232,527,991 58,023,920 38,417,155 12,705,326 3,441,235 345,115,627
366 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
On Demand
Less than 3 Months
3 to 12 Months
1 to 5 Years
Over 5 Years
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Contingencies
Guarantees 3,806,464 12,568,497 12,529,043 4,941,850 5,830,806 39,676,660
Acceptance 25,608 11,249,117 4,566,008 17,304 - 15,858,037
Forward contracts 365,466 16,397,635 27,483,601 - - 44,246,702
Documentary credit 1,129,271 13,410,939 1,875,857 633,305 - 17,049,372
Total Contingencies 5,326,809 53,626,188 46,454,509 5,592,459 5,830,806 116,830,771
Commitments
Undrawn overdrafts 34,682,721 - - - - 34,682,721
Undrawn loans 93,989,627 - - - - 93,989,627
Undisbursed cash loans - - - - - -
Undrawn credit card limits 14,762,087 - - - - 14,762,087
Undrawn Commitments Factoring 315,071 - - - - 315,071
Undrawn indirect credit facilities 48,473,733 - - - - 48,473,733
Capital Commitments 184,775 - - - - 184,775
Operating lease commitments - Bank as lessee - 158,622 450,258 1,746,962 682,375 3,038,217
Total Commitments 192,408,014 158,622 450,258 1,746,962 682,375 195,446,231
Total Commitments & Contingencies 197,734,823 53,784,810 46,904,767 7,339,421 6,513,181 312,277,002
FINANCIAL INFORMATION
367
53.4 Market Risk
or non–trading portfolios and manages each of those portfolios separately.
53.4.1 Interest Rate Risk
The Bank’s policy is to continuously monitor positions on a daily basis and hedging strategies are used to ensure positions are maintained within prudential levels.
December 2015 to a reasonable possible change in interest rates, with all other variables held constant.
Rate Sensitive Assets (RSA) & Rate Sensitive Liabilities (RSL) as at 31st December 2016 2015
Rs 000 Rs 000
Rate Sensitive Assets (RSA)* 499,005,155 388,781,320
Rate Sensitive Liabilities (RSL)* 522,878,258 408,244,998
GAP (RSA - RSL) (23,873,103) (19,463,678)
2016 2015
Rs 000 Rs 000
Interest Rate Shock
0.50% 147,706 46,103
1.00% 295,411 92,206
(0.50%) (147,706) (46,103)
(1.00%) (295,411) (92,206)
* The above computation is based on the rate sensitive assets and liabilities which are matured or repriced within one year.
included at carrying amount and categorised by the earlier of contractual re–pricing or maturity dates.
368 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Up
to
3
Mo
nths
3
- 1
2 M
ont
hs
1-3
Ye
ars
3 -
5
Year
s O
ver
5 Ye
ars
No
n In
tere
st
Bea
ring
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s 6
,479
,043
-
-
-
-
1
0,58
4,97
0 1
7,06
4,01
3
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
33,
724,
856
33,
724,
856
Pla
cem
ents
with
ban
ks 7
,770
,903
9
78,8
60
-
-
-
-
8,7
49,7
63
Rev
erse
repu
rcha
se a
gree
men
ts 3
3,86
0,08
3 -
-
-
-
-
3
3,86
0,08
3
-
-
-
-
-
109
,872
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g 2
8,01
1,02
4 -
-
-
-
9
8,16
9 2
8,10
9,19
3
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as c
olla
tera
ls 1
0,38
0,21
3 -
-
-
-
-
1
0,38
0,21
3
Loan
s to
& re
ceiv
able
s fro
m b
anks
2,6
31,2
40
2,0
67
5,7
36
2,6
90
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 3
18,8
14,4
35
44,
347,
290
45,
928,
516
19,
269,
996
27,
562,
855
265
,960
4
56,1
89,0
52
Oth
er lo
ans
& re
ceiv
able
s 1
7,63
3,23
8 1
4,92
8,93
3 4
,960
,729
1
,185
,540
-
-
3
8,70
8,44
0
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
12,
509,
923
-
-
-
-
1,7
60,2
67
14,
270,
190
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as c
olla
tera
ls 6
57,9
03
-
-
-
-
-
657
,903
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity -
-
-
-
-
-
-
Oth
er a
sset
s -
-
-
-
-
3
,257
,948
3
,257
,948
Tota
l Fin
anci
al A
sset
s 4
38,7
48,0
05
60,
257,
150
50,
894,
981
20,
458,
226
27,
562,
855
49,
802,
042
647
,723
,259
Fina
ncia
l Lia
bili
ties
Due
to b
anks
5,1
59,0
68
525
,644
-
-
-
3
39,2
20
6,0
23,9
32
-
-
-
-
-
63,
611
63,
611
Sec
uriti
es s
old
unde
r re
purc
hase
agre
emen
ts
9,1
96,0
78
963
,147
-
-
-
-
1
0,15
9,22
5
Due
to o
ther
cus
tom
ers
314
,975
,085
1
50,0
25,5
90
8,6
95,4
29
760
,917
2
5,00
9 3
6,08
4,62
5 5
10,5
66,6
55
Deb
t iss
ued
& o
ther
bor
row
ed fu
nds
32,
729,
428
9,3
04,2
18
13,
970,
131
13,
850,
623
2,2
73,8
37
-
72,
128,
237
Div
iden
d pa
yabl
e -
-
-
-
-
8
4,86
0 8
4,86
0
Oth
er li
abilit
ies
-
-
-
-
-
5,8
17,1
57
5,8
17,1
57
Tota
l Fin
anci
al L
iab
iliti
es 3
62,0
59,6
59
160
,818
,599
2
2,66
5,56
0 1
4,61
1,54
0 2
,298
,846
4
2,38
9,47
3 6
04,8
43,6
77
Inte
rest
Rat
e S
ensi
tivi
ty G
ap
76,
688,
346
(100
,561
,449
) 2
8,22
9,42
1 5
,846
,686
2
5,26
4,00
9 7
,412
,569
4
2,87
9,58
2
FINANCIAL INFORMATION
369 U
p t
o 3
M
ont
hs
3 -
12
Mo
nths
1
-3
Year
s 3
- 5
Ye
ars
Ove
r 5
Year
s N
on
Inte
rest
B
eari
ng T
ota
l
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s2,
930,
483
--
--
10,6
57,5
9213
,588
,075
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
--
--
-21
,341
,882
21,3
41,8
82
Pla
cem
ents
with
ban
ks3,
974,
515
1,21
8,85
4-
--
-5,
193,
369
Rev
erse
repu
rcha
se a
gree
men
ts-
--
--
--
--
--
-31
9,46
131
9,46
1
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g1,
767,
317
--
--
121,
741
1,88
9,05
8
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as
colla
tera
ls2,
702,
785
--
--
-2,
702,
785
Loan
s to
& re
ceiv
able
s fro
m b
anks
1,64
3,86
81,
321
2,92
53,
091
--
1,65
1,20
5
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s25
0,22
9,79
042
,078
,447
41,3
58,2
2319
,837
,287
21,9
44,8
8924
7,89
437
5,69
6,53
0
Oth
er lo
ans
& re
ceiv
able
s5,
679,
504
19,3
67,1
084,
613,
790
3,68
9,67
718
,195
-33
,368
,274
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
49,9
76,7
43-
--
-1,
273,
668
51,2
50,4
11
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as c
olla
tera
ls7,
210,
585
--
--
-7,
210,
585
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity-
--
--
--
Oth
er a
sset
s-
--
--
1,96
4,78
71,
964,
787
Tota
l Fin
anci
al A
sset
s 32
6,11
5,59
062
,665
,730
45,9
74,9
3823
,530
,055
21,9
63,0
8435
,927
,025
516,
176,
422
Fina
ncia
l Lia
bili
ties
Due
to b
anks
1,02
2,61
750
6,55
9-
--
1,88
9,32
33,
418,
499
--
--
-45
7,05
845
7,05
8
Sec
uriti
es s
old
unde
r re
purc
hase
agre
emen
ts
8,79
9,57
051
6,55
2-
--
-9,
316,
122
Due
to o
ther
cus
tom
ers
263,
474,
883
102,
508,
929
4,79
4,85
61,
263,
591
20,5
1434
,260
,246
406,
323,
019
Deb
t iss
ued
& o
ther
bor
row
ed fu
nds
20,5
53,0
0310
,862
,885
8,32
1,78
614
,921
,128
2,35
7,48
2-
57,0
16,2
84
Div
iden
d pa
yabl
e-
--
--
90,9
6990
,969
Oth
er li
abilit
ies
--
--
-5,
083,
897
5,08
3,89
7
Tota
l Fin
anci
al L
iab
iliti
es29
3,85
0,07
311
4,39
4,92
513
,116
,642
16,1
84,7
192,
377,
996
41,7
81,4
9348
1,70
5,84
8
Inte
rest
Rat
e S
ensi
tivi
ty G
ap
32,2
65,5
17(5
1,72
9,19
5)32
,858
,296
7,34
5,33
619
,585
,088
(5,8
54,4
68)
34,4
70,5
74
370 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53
RIS
K M
AN
AG
EM
EN
T C
ON
TD
.
Up
to
3
Mo
nths
3
- 1
2 M
ont
hs
1-3
Ye
ars
3 -
5
Year
s O
ver
5 Ye
ars
No
n In
tere
st
Bea
ring
To
tal
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s 6
,479
,043
-
-
-
-
1
0,74
2,76
6 1
7,22
1,80
9
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
-
-
-
-
-
33,
724,
856
33,
724,
856
Pla
cem
ents
with
ban
ks 7
,770
,903
9
78,8
60
-
-
-
-
8,7
49,7
63
Rev
erse
repu
rcha
se a
gree
men
ts 3
4,62
9,42
2 -
-
-
-
-
3
4,62
9,42
2
-
-
-
-
-
109
,872
1
09,8
72
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g 2
8,01
9,62
0 -
-
-
-
9
8,16
9 2
8,11
7,78
9
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g
pl
edge
d as
col
late
rals
10,
371,
617
-
-
-
-
-
10,
371,
617
Loan
s to
& re
ceiv
able
s fro
m b
anks
2,6
31,2
40
2,0
67
5,7
36
2,6
90
-
-
2,6
41,7
33
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s 3
22,6
27,2
44
47,
866,
966
52,
135,
148
22,
227,
357
27,
632,
272
265
,960
4
72,7
54,9
47
Oth
er lo
ans
& re
ceiv
able
s 1
7,63
3,23
8 1
4,92
8,93
3 4
,960
,729
1
,185
,540
-
-
3
8,70
8,44
0
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
12,
569,
145
-
-
-
56
1,7
60,2
67
14,
329,
468
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
pled
ged
as c
olla
tera
ls 5
98,6
81
-
-
-
-
-
598
,681
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity 2
,400
1
0,24
5 -
4
,288
-
-
1
6,93
3
Oth
er a
sset
s -
-
-
-
-
3
,507
,676
3
,507
,676
Tota
l Fin
anci
al A
sset
s 4
43,3
32,5
53
63,
787,
071
57,
101,
613
23,
419,
875
27,
632,
328
50,
209,
566
665
,483
,006
Fina
ncia
l Lia
bili
ties
Due
to b
anks
5,2
06,3
33
525
,643
-
-
-
3
39,2
20
6,0
71,1
96
-
-
-
-
-
63,
611
63,
611
Sec
uriti
es s
old
unde
r re
purc
hase
agre
emen
ts
9,1
96,0
78
899
,039
-
-
-
-
1
0,09
5,11
7
Due
to o
ther
cus
tom
ers
316
,256
,315
1
51,2
79,0
46
8,8
68,4
74
926
,225
2
5,00
9 3
6,07
8,75
7 5
13,4
33,8
26
Deb
t iss
ued
& o
ther
bor
row
ed fu
nds
40,
626,
413
9,5
69,3
28
16,
791,
721
14,
917,
933
2,2
73,8
37
-
84,
179,
232
Div
iden
d pa
yabl
e -
-
-
-
-
8
4,86
0 8
4,86
0
Oth
er li
abilit
ies
-
-
-
-
-
6,6
81,1
11
6,6
81,1
11
Tota
l Fin
anci
al L
iab
iliti
es 3
71,2
85,1
39
162
,273
,056
2
5,66
0,19
5 1
5,84
4,15
8 2
,298
,846
4
3,24
7,55
9 6
20,6
08,9
53
Inte
rest
Rat
e S
ensi
tivi
ty G
ap
72,
047,
414
(98,
485,
985)
31,
441,
418
7,5
75,7
17
25,
333,
482
6,9
62,0
07
44,
874,
053
FINANCIAL INFORMATION
371 U
p t
o 3
M
ont
hs
3 -
12
Mo
nths
1
-3
Year
s 3
- 5
Ye
ars
Ove
r 5
Year
s N
on
Inte
rest
B
eari
ng T
ota
l
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Rs
000
Fina
ncia
l Ass
ets
Cas
h &
cas
h eq
uiva
lent
s2,
930,
483
--
--
10,7
82,9
7313
,713
,456
Bal
ance
s w
ith C
entr
al B
ank
of S
ri La
nka
--
--
-21
,341
,882
21,3
41,8
82
Pla
cem
ents
with
ban
ks3,
974,
515
1,21
8,85
4-
--
-5,
193,
369
Rev
erse
repu
rcha
se a
gree
men
ts-
--
--
--
--
--
-31
9,46
131
9,46
1
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g1,
776,
333
--
--
121,
741
1,89
8,07
4
Fina
ncia
l ass
ets
- he
ld fo
r tr
adin
g pl
edge
d
as
colla
tera
ls2,
693,
769
--
--
-2,
693,
769
Loan
s to
& re
ceiv
able
s fro
m b
anks
1,64
3,86
81,
321
2,92
53,
091
--
1,65
1,20
5
Loan
s to
& re
ceiv
able
s fro
m o
ther
cust
omer
s25
2,17
7,92
444
,286
,641
45,8
05,6
7021
,573
,561
22,1
86,0
5424
7,89
438
6,27
7,74
4
Oth
er lo
ans
& re
ceiv
able
s5,
679,
504
19,3
67,1
084,
613,
790
3,68
9,67
718
,195
-33
,368
,274
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
50,6
67,8
11-
--
-1,
273,
668
51,9
41,4
79
Fina
ncia
l ass
ets
- av
aila
ble
for
sale
ple
dged
as c
olla
tera
ls6,
519,
573
--
--
-6,
519,
573
Fina
ncia
l ass
ets
- he
ld t
o m
atur
ity2,
400
56,4
47-
-4,
274
-63
,121
Oth
er a
sset
s-
--
--
2,09
9,32
72,
099,
327
Tota
l Fin
anci
al A
sset
s 32
8,06
6,18
064
,930
,371
50,4
22,3
8525
,266
,329
22,2
08,5
2336
,186
,946
527,
080,
734
Fina
ncia
l Lia
bili
ties
Due
to b
anks
1,02
2,61
750
6,55
9-
--
1,88
9,32
33,
418,
499
--
--
-45
7,05
845
7,05
8
Sec
uriti
es s
old
unde
r re
purc
hase
agre
emen
ts
8,19
7,89
246
5,03
8-
--
-8,
662,
930
Due
to o
ther
cus
tom
ers
263,
256,
007
103,
505,
488
4,85
4,40
71,
267,
003
20,5
1434
,260
,246
407,
163,
665
Deb
t iss
ued
& o
ther
bor
row
ed fu
nds
27,5
48,8
4910
,899
,722
8,41
3,81
314
,930
,510
3,37
8,08
3-
65,1
70,9
77
Div
iden
d pa
yabl
e-
--
--
90,9
6990
,969
Oth
er li
abilit
ies
--
--
-5,
391,
243
5,39
1,24
3
Tota
l Fin
anci
al L
iab
iliti
es30
0,02
5,36
511
5,37
6,80
713
,268
,220
16,1
97,5
133,
398,
597
42,0
88,8
3949
0,35
5,34
1
Inte
rest
Rat
e S
ensi
tivi
ty G
ap
28,0
40,8
15(5
0,44
6,43
6)37
,154
,165
9,06
8,81
618
,809
,926
(5,9
01,8
93)
36,7
25,3
93
372 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
53 RISK MANAGEMENT CONTD.
53.4.2 Currency Risk
Board has set limits on positions by currency. In accordance with the Bank’s policy, positions are monitored on a daily basis and hedging strategies are used to ensure positions are maintained within established limits.
potential increase.
2016 2015
Foreign Exchange Position as at 31st December Net Overall Long
Net Overall Short
Net Overall Long
Net Overall Short
Rs 000 Rs 000 Rs 000 Rs 000
Currency
USD 1,186,602 - 536,238 -
GBP 11,892 - 24,897 -
EUR 33,192 - 82,446 -
JPY 7,917 - 7,764 -
AUD 15,048 - 21,051 -
CAD 22,601 - 29,355 -
24,779 - 40,761 -
SGD 4,066 - 17,188 -
7,245 - 3,545 -
Sub Total 1,313,342 - 763,245 -
Other Currencies 78,338 - 112,621 -
Grand Total 1,391,680 - 875,866 -
Higher of Long or Short 1,391,680 - 875,866 -
2016 2015
Exchange Rate Shocks Net Open Position
(after Rate Shocks)
Impact on Statement of
for the Period ended 31st December
Net Open Position
(after Rate Shocks)
Impact on Statement of
for the Period ended 31st December
Rs 000 Rs 000 Rs 000 Rs 000
5% 1,461,264 69,584 919,659 43,793
10% 1,530,848 139,168 963,452 87,587
-5% 1,322,096 (69,584) 832,072 (43,793)
-10% 1,252,512 (139,168) 788,279 (87,587)
FINANCIAL INFORMATION
373
53.4.3 Equity Price Risk Equity price risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices and individual stocks. Investment Committee reviews and approves all equity investment decisions. Further the market value of the Bank’s equity portfolio as of 31st December 2016 is Rs. 98,168,160/- (2015: Rs 121,740,400/-). 53.5 Operational Risk Operational risk is the risk of losses arising from failed internal processes, systems failure, human error, fraud or external events. When
Strategic and Reputational Risks are not covered in Operational Risk.
Operational Risks of the Bank are mitigated and managed through a Board approved Operational Risk Management Policy control framework which consists of monitoring and responding to potential risks such as segregation of duties, access, authorisation and
managing Operational Risks of the Bank.
53.6 Capital ManagementThe Bank’s capital management objectives can be summarised as follows:
Provide additional capital to business segments of the Bank to achieve the overall strategic objectives
Regulatory CapitalThe Bank manages its capital considering the regulatory capital requirements. The Central Bank of Sri Lanka (CBSL) sets and monitors capital requirements for licensed commercial banks in Sri Lanka based on the Basel framework. Accordingly commercial banks in Sri Lanka need to maintain a minimum total capital adequacy ratio of 10% and a minimum core capital adequacy ratio (Tier I) of 5%. The Bank has always maintained the Capital Adequacy Ratio above the minimum regulatory requirements.
374 SAMPATH BANK PLC
ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
54 MATURITY ANALYSIS
Bank Group
Within 12 Months
After 12 Months
Total Within 12 Months
After 12 Months
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Assets
Cash & cash equivalents 17,064,013 - 17,064,013 17,221,809 - 17,221,809
Balances with Central Bank of Sri Lanka 32,521,118 1,203,738 33,724,856 32,521,118 1,203,738 33,724,856
Placements with banks 8,749,763 - 8,749,763 8,749,763 - 8,749,763
Reverse repurchase agreements 33,860,083 - 33,860,083 34,629,422 - 34,629,422
109,872 - 109,872 109,872 - 109,872
Financial assets - held for trading 28,109,193 - 28,109,193 28,117,789 - 28,117,789
Financial assets - held for trading pledged as collaterals 10,380,213 - 10,380,213 10,371,617 - 10,371,617
Loans to & receivables from banks 979,426 1,662,307 2,641,733 979,426 1,662,307 2,641,733
Loans to & receivables from other customers 269,373,694 186,815,358 456,189,052 276,977,913 195,777,034 472,754,947
Other loans & receivables 27,047,545 11,660,895 38,708,440 27,047,545 11,660,895 38,708,440
Financial assets - available for sale 14,270,190 - 14,270,190 14,329,468 - 14,329,468
Financial assets - available for sale pledged as collaterals 657,903 - 657,903 598,681 - 598,681
Financial assets - held to maturity - - - 12,645 4,288 16,933
Investment in subsidiaries - 1,227,896 1,227,896 - - -
Property, plant & equipment - 5,971,517 5,971,517 - 10,709,207 10,709,207
Intangible assets - 337,348 337,348 - 356,131 356,131
Current tax receivables - - - 10,365 - 10,365
Deferred tax assets - - - - 857 857
Other assets 3,880,939 2,629,275 6,510,214 4,278,320 2,768,291 7,046,611
Total Assets 447,003,952 211,508,334 658,512,286 455,955,753 224,142,748 680,098,501
Liabilities
Due to banks 6,023,932 - 6,023,932 6,071,196 - 6,071,196
63,611 - 63,611 63,611 - 63,611
Securities sold under repurchase agreements 10,159,225 - 10,159,225 10,095,117 - 10,095,117
Due to other customers 493,534,120 17,032,535 510,566,655 496,062,938 17,370,888 513,433,826
Debt issued & other borrowed funds 29,014,627 43,113,610 72,128,237 33,355,561 50,823,671 84,179,232
Dividend payable 84,860 - 84,860 84,860 - 84,860
Current tax liabilities 4,316,297 - 4,316,297 4,386,251 - 4,386,251
Deferred tax liabilities - 872,794 872,794 - 1,077,674 1,077,674
Other liabilities 7,995,942 1,063,459 9,059,401 9,119,124 1,063,458 10,182,582
Other provisions - 748,440 748,440 - 782,075 782,075
Total Liabilities 551,192,614 62,830,838 614,023,452 559,238,658 71,117,766 630,356,424
Maturity Gap (104,188,662) 148,677,496 44,488,834 (103,282,905) 153,024,982 49,742,077
Cumulative Gap (104,188,662) 44,488,834 - (103,282,905) 49,742,077 -
FINANCIAL INFORMATION
375
54 MATURITY ANALYSIS CONTD.
Bank Group
Within 12 Months
After 12 Months
Total Within 12 Months
After 12 Months
Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Assets
Cash & cash equivalents 13,588,075 - 13,588,075 13,713,456 - 13,713,456
Balances with Central Bank of Sri Lanka 20,012,700 1,329,182 21,341,882 20,012,700 1,329,182 21,341,882
Placements with banks 5,193,369 - 5,193,369 5,193,369 - 5,193,369
Reverse repurchase agreements - - - - - -
319,461 - 319,461 319,461 - 319,461
Financial assets - held for trading 1,889,058 - 1,889,058 1,898,074 - 1,898,074
Financial assets - held for trading pledged as collaterals 2,702,785 - 2,702,785 2,693,769 - 2,693,769
Loans to & receivables from banks 554,045 1,097,160 1,651,205 554,045 1,097,160 1,651,205
Loans to & receivables from other customers 224,927,132 150,769,398 375,696,530 229,458,847 156,818,897 386,277,744
Other loans & receivables 8,699,601 24,668,673 33,368,274 8,699,601 24,668,673 33,368,274
Financial assets - available for sale 51,250,411 - 51,250,411 51,941,479 - 51,941,479
Financial assets - available for sale pledged as collaterals 7,210,585 - 7,210,585 6,519,573 - 6,519,573
Financial assets - held to maturity - - - 58,847 4,274 63,121
Investment in subsidiaries - 1,079,921 1,079,921 - - -
Property, plant & equipment - 5,313,491 5,313,491 - 8,696,577 8,696,577
Intangible assets - 342,193 342,193 - 368,369 368,369
Current tax receivables - - - 2,249 - 2,249
Deferred tax assets - - - - 23,368 23,368
Other assets 1,782,343 2,547,590 4,329,933 1,933,215 2,642,267 4,575,482
Total Assets 338,129,565 187,147,608 525,277,173 342,998,685 195,648,767 538,647,452
Liabilities
Due to banks 3,418,499 - 3,418,499 3,418,499 - 3,418,499
457,058 - 457,058 457,058 - 457,058
Securities sold under repurchase agreements 9,316,122 - 9,316,122 8,662,930 - 8,662,930
Due to other customers 382,311,407 24,011,612 406,323,019 383,089,090 24,074,575 407,163,665
Debt issued & other borrowed funds 24,217,241 32,799,043 57,016,284 30,912,047 34,258,930 65,170,977
Dividend payable 90,969 - 90,969 90,969 - 90,969
Current tax liabilities 3,691,556 1,247,983 4,939,539 3,773,379 1,247,983 5,021,362
Deferred tax liabilities - 313,181 313,181 - 433,175 433,175
Other liabilities 6,445,350 771,293 7,216,643 7,141,806 791,186 7,932,992
Other provisions - 1,060,785 1,060,785 - 1,092,626 1,092,626
Total Liabilities 429,948,202 60,203,897 490,152,099 437,545,778 61,898,475 499,444,253
Maturity Gap (91,818,637) 126,943,711 35,125,074 (94,547,093) 133,750,292 39,203,199
Cumulative Gap (91,818,637) 35,125,074 - (94,547,093) 39,203,199 -
376 SAMPATH BANK PLC
ANNUAL REPORT 2016
55 COMPARATIVE INFORMATION
Note Bank Group
As disclosed in
2015
Adjustment As disclosed in
2015
Adjustment
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Other operating income 55.1.1 2,842,800 2,941,268 (98,468) 3,017,445 3,115,973 (98,528)
investment 98,468 - 98,468 98,528 - 98,528 55.1.1
investment.
55.2 Statement of Financial Position
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL INFORMATION
377
[ SUPPLEMENTARY INFORMATION ]This section contains additional but important information, including
US$ statements, the GRI G4 Index and other reports. The Notice of
Meeting and Stakeholder Feedback Form are also included here.
IMAGINFLUENCE
Statement of Profit or Loss In US$ 378
Statement of Comprehensive Income in US$ 379
Statement of Financial Position in US$ 380
Economic Value Addition 381
Ten Years at a Glance 382
Quarterly Statistics 383
Capital Adequacy 385
GRI G4 Content Index 390
Other Sustainability Disclosures 398
Independent Assurance Report to the Shareholders
of Sampath Bank PLC 409
Glossary of Financial and Banking Terms 410
Abbreviations 416
378 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF PROFIT OR LOSS IN US$
Bank Group
For the year ended 31st December 2016 2015 2016 2015
US$ 000 US$ 000 US$ 000 US$ 000
Gross income 450,565 326,154 469,636 340,513
Interest income 376,862 263,132 393,176 275,356Less: Interest expense 225,172 142,454 233,474 146,712Net interest income 151,690 120,678 159,702 128,643
Fee & commission income 53,661 44,992 54,686 45,915 Less: Fee & commission expense 9,764 8,331 9,783 8,348 Net fee & commission income 43,897 36,661 44,903 37,567
Net trading gain / (loss) 1,559 (2,367) 1,559 (2,367)862 683 862 684
Other operating income 17,621 19,714 19,353 20,925 Total operating income 215,629 175,370 226,379 185,453
Less: Net impairment charge for loans & other losses 9,732 6,544 10,233 6,886 Net operating income 205,897 168,826 216,146 178,567
Less: Operating expensesPersonnel expenses 48,885 42,588 52,231 45,246 Other operating expenses 54,253 49,918 56,208 51,578 Total operating expenses 103,138 92,506 108,439 96,824
102,759 76,320 107,707 81,743
18,760 13,207 19,617 13,854 83,999 63,113 88,090 67,889
Less: Income tax expense 23,168 20,575 24,748 21,924 60,831 42,538 63,342 45,965
Attributable to:Equity holders of the Bank 60,831 42,538 63,308 45,932 Non - controlling interest 34 33
60,831 42,538 63,342 45,965
Earnings per share : Basic / Diluted (US$) 0.34 0.24 0.36 0.26
Dividend per share Dividend per share: Gross (US$) 0.12* 0.09Dividend per share: Net (US$) 0.11* 0.08
Exchange rate of US$ was Rs 150.00 as at 31st December 2016 (Rs 144.20 as at 31st December 2015)
28th February 2017) and the Annual General Meeting (to be held on 31st March 2017) respectively.
SUPPLEMENTARY INFORMATION
379
STATEMENT OF COMPREHENSIVE INCOME IN US$
Bank Group
For the year ended 31st December 2016 2015 2016 2015
US$ 000 US$ 000 US$ 000 US$ 000
60,831 42,538 63,342 45,965
Other comprehensive income
2,553 (2,939) 2,553 (2,939)
(23) - (23) -
107 223 107 223
2,637 (2,716) 2,637 (2,716)
3,764 804 3,773 799
(1,054) (225) (1,056) (222)
2,710 579 2,717 577
Surplus from revaluation of property, plant & equipment 4,015 - 10,005 -
(295) - (295) -
3,720 - 9,710 -
6,430 579 12,427 577
Other comprehensive income net of tax 9,067 (2,137) 15,064 (2,139)
Total comprehensive income for the year net of tax 69,898 40,401 78,406 43,826
Attributable to:
Equity holders of the Bank 69,898 40,401 78,200 43,792
Non - controlling interest 206 34
69,898 40,401 78,406 43,826
Exchange rate of US$ was Rs 150.00 as at 31st December 2016 (Rs 144.20 as at 31st December 2015)
380 SAMPATH BANK PLC
ANNUAL REPORT 2016
STATEMENT OF FINANCIAL POSITION IN US$
Bank Group
As at 31st December 2016 2015 2016 2015
US$ 000 US$ 000 US$ 000 US$ 000
ASSETSCash & cash equivalents 113,760 94,231 114,812 95,100 Balances with Central Bank of Sri Lanka 224,832 148,002 224,832 148,002 Placements with banks 58,332 36,015 58,332 36,015 Reverse repurchase agreements 225,734 - 230,863 -
732 2,215 732 2,215 Financial assets - held for trading 187,395 13,100 187,452 13,163 Financial assets - held for trading pledged as collaterals 69,201 18,743 69,144 18,681 Loans to & receivables from banks 17,612 11,451 17,612 11,451 Loans to & receivables from other customers 3,041,260 2,605,385 3,151,700 2,678,764 Other loans & receivables 258,056 231,403 258,056 231,403 Financial assets - available for sale 95,135 355,412 95,530 360,204 Financial assets - available for sale pledged as collaterals 4,386 50,004 3,991 45,212 Financial assets - held to maturity - - 113 438 Investment in subsidiaries 8,186 7,489 - - Property, plant & equipment 39,810 36,848 71,395 60,309 Intangible assets 2,249 2,373 2,374 2,555 Current tax receivables - - 69 16 Deferred tax assets - - 6 162 Other assets 43,403 30,028 46,978 31,729 Total Assets 4,390,083 3,642,699 4,533,991 3,735,419
LIABILITIESDue to banks 40,160 23,707 40,475 23,707
424 3,170 424 3,170 Securities sold under repurchase agreements 67,728 64,606 67,301 60,076 Due to other customers 3,403,778 2,817,774 3,422,892 2,823,604 Debt issued & other borrowed funds 480,855 395,397 561,195 451,949 Dividend payable 566 631 566 631 Current tax liabilities 28,775 34,255 29,242 34,822 Deferred tax liabilities 5,819 2,172 7,184 3,004 Other liabilities 60,396 50,045 67,884 55,012 Other provisions 4,990 7,356 5,214 7,577 Total Liabilities 4,093,491 3,399,113 4,202,377 3,463,552
EQUITYStated capital 43,141 37,319 43,141 37,319 Reserves Statutory reserve 15,000 12,413 15,576 12,899 Other reserves 209,135 172,589 230,794 188,925 Retained earnings 29,316 21,265 42,103 32,067 Total equity attributable to equity holders of the Bank 296,592 243,586 331,614 271,210Non - controlling interest - 657 Total Equity 296,592 243,586 331,614 271,867Total Liabilities & Equity 4,390,083 3,642,699 4,533,991 3,735,419
Commitments & contingencies 2,293,202 2,171,375 2,300,771 2,165,583Net asset value per share (US$) 1.68 1.38 1.87 1.53
Exchange rate of US$ was Rs 150.00 as at 31st December 2016 (Rs 144.20 as at 31st December 2015)
SUPPLEMENTARY INFORMATION
381
ECONOMIC VALUE ADDITION
ECONOMIC VALUE ADDITION - BANK
For the year ended 31st December 2016 2015
Rs Mn Rs Mn
Average shareholders' funds 39,807 33,019 Provision for impairment losses 7,726 6,997
47,533 40,016
9,125 6,134 Net impairment charge for loans & other losses 1,460 944
(609) (851) 9,976 6,227
Economic cost (12 months average Treasury Bill rate plus 2% risk premium) 11.9% 8.6%Economic cost 5,669 3,441 Economic value addition 4,307 2,786
DIRECT ECONOMIC VALUE GENERATED & DISTRIBUTED - BANK
Information on the creation and distribution of economic value provides a basic indication of how the bank has created wealth for stakeholders.
For the year ended 31st December 2016 2015
Rs Mn Rs Mn
Direct Economic Value Generated Interest income 56,529 37,944 Foreign exchange income 2,589 2,466 Commission income 8,049 6,488 Investment income 231 249 Other income 155 55
67,553 47,202
Economic Value DistributedTo Depositors and LendersInterest expense 31,183 18,995
31,183 18,995
Operating CostsDepreciation & amortisation set aside 709 700 Fee & commission expense 1,465 1,201 Other operating expense 7,312 6,418
9,486 8,319
To EmployeesSalaries 4,599 4,133
2,734 2,008 7,333 6,141
Payments to GovernmentIncome tax expense 3,118 2,830
2,814 1,904 Crop insurance levy 95 61
6,027 4,795
To CommunitySocial responsibility projects 19 16 Donations 3 2
22 18
Payments to Providers of CapitalInterest to debenture holders 2,593 1,547 Dividend to shareholders 3,362 2,240
5,955 3,787
Economic Value Distributed 60,006 42,055 Economic Value Retained (after payment of dividend to shareholders) 7,547 5,147
67,553 47,202
382 SAMPATH BANK PLC
ANNUAL REPORT 2016
SLAS SLFRSFor the year ended 31st December 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Operating results (Rs Mn)Gross income 17,400 22,243 25,213 24,333 27,577 38,796 47,509 44,597 47,032 67,585 Interest income 14,950 19,451 20,970 18,477 21,111 31,882 41,892 38,059 37,944 56,529 Interest expenses 9,947 12,801 13,165 9,953 12,168 20,269 26,556 22,335 20,542 33,776 Net interest income 5,003 6,650 7,805 8,525 8,943 11,613 15,336 15,724 17,402 22,754 Exchange income 505 647 774 498 837 2,154 520 1,283 2,466 2,589 Other income 1,944 2,144 3,469 5,357 4,792 4,105 4,901 4,387 5,421 7,002 Total operating income 7,452 9,441 12,048 14,380 14,572 17,872 20,757 21,394 25,288 32,344 Operating expenses 3,614 4,662 5,484 6,320 8,059 9,248 10,634 11,729 13,339 15,471 Impairment losses 1,003 1,252 1,203 1,944 618 65 4,736 1,401 944 1,460
2,218 2,564 3,976 4,502 4,994 7,401 4,491 6,727 9,101 12,600 Income tax expense 1,167 1,150 1,878 1,199 1,606 2,170 1,061 1,813 2,967 3,475
1,051 1,414 2,098 3,303 3,388 5,231 3,430 4,914 6,134 9,125
SLAS SLFRS
As at 31st December 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Assets (Rs Mn)Cash & cash equivalents including placements 9,108 6,923 5,868 6,048 16,073 19,220 10,094 13,348 18,781 25,814 Loans & Advances 93,430 95,655 98,685 - - - - - - - Loans to & receivables from banks - - - - 442 816 638 935 1,651 2,642 Loans to & receivables from other customers - - - 124,067 169,681 208,184 259,402 301,435 375,697 456,189 Investment in associates & subsidiaries 970 970 992 992 1,055 1,060 1,060 1,060 1,080 1,228 Property, plant & equipment 3,080 3,289 3,420 4,278 4,528 4,560 5,135 5,142 5,313 5,972 Other assets 26,608 31,702 47,197 55,929 55,879 75,570 105,713 110,106 122,755 166,667 Total assets 133,196 138,539 156,162 191,314 247,658 309,410 382,042 432,026 525,277 658,512
Liabilities (Rs Mn)Due to banks & other customers (Deposits Only) 99,419 107,380 126,091 153,310 195,900 243,575 302,429 341,946 409,411 516,273
4,157 4,592 4,819 - - - - - - - Other liabilities evidenced by paper 4,433 4,514 3,102 - - - - - - - Borrowings from banks & debt issued and other borrowed funds
- - - 8,702 20,225 29,206 39,194 36,846 57,347 72,446
Other liabilities 16,618 12,276 10,304 8,311 10,189 10,985 12,000 22,322 23,394 25,304 Total liabilities 124,627 128,762 144,316 170,323 226,314 283,766 353,623 401,114 490,152 614,023
Shareholders’ Fund (Rs Mn)Stated capital 1,582 1,582 1,582 1,786 2,744 3,564 4,460 4,470 5,381 6,471 Reserves 6,987 8,195 10,265 19,204 18,600 22,080 23,958 26,442 29,744 38,018
Investor InformationDividend paid / proposed (Rs Mn) 206.7 275.6 473.6 1,235.8 1,427.0 1,954.1 1,342.6 1,847.0 2,240.0 3,362.1Dividend cover (times) 5.1 5.1 4.4 2.7 2.4 2.6 2.6 2.6 2.7 2.7Net assets per share (Rs) 124.39 141.92 77.52 131.18 129.00 152.96 169.37 179.39 198.47 251.38
135.00 120.00 205.00 550.00 307.00 216.00 242.00 252.00 279.90 268.70 Market price per share (Rs) - Low 100.00 65.00 65.00 201.00 191.00 148.50 161.60 164.20 235.20 210.00 Market price as at 31st December (Rs) 120.00 68.00 204.25 271.90 195.00 200.50 171.90 236.30 248.00 260.40
Other InformationExchange rate (US $) 108.65 113.00 114.47 110.95 113.90 127.65 130.75 131.20 144.20 150.00
2,213 2,364 2,388 2,688 3,230 3,455 3,688 4,000 3,993 3,960 Number of branches as at 31st December 105 112 131 171 206 209 212 220 225 229
RatiosGrowth of income (%) 41.0 27.8 13.4 (3.5) 13.3 40.7 22.5 (6.1) 5.5 43.70Cost to income ratio with VAT and NBT on 56.8 59.6 57.0 55.8 61.5 58.2 55.5 62.0 60.3 56.5
Cost to income ratio without VAT and NBT on 48.5 49.4 45.5 44.0 55.3 51.7 51.2 54.8 52.7 47.8
Growth of deposits (%) 22.4 8.1 17.5 19.4 27.8 24.3 24.2 13.1 19.7 26.1Growth of advances (%) 23.0 2.4 3.2 30.3 37.1 22.9 24.4 16.3 24.8 21.6Dividend per share (Rs) 3.00 4.00 6.25 8.09 9.00 12.00 8.00 11.00 13.00 18.75 Return on average assets (after tax) (%) 0.87 1.04 1.42 1.94 1.55 1.88 0.98 1.23 1.28 1.55 Return on average equity (after tax) (%) 13.84 15.41 19.41 24.59 16.17 22.26 12.88 16.35 18.42 23.47 Property plant & equipment to shareholders’ fund (%) 35.9 33.6 28.9 20.4 21.2 17.8 18.1 16.6 15.1 13.4 Total assets to shareholders’ fund (Times) 15.5 14.2 13.2 9.1 11.6 12.1 13.4 14.0 15.0 14.8
Liquid assets ratio (%) 29.0 29.5 30.5 26.3 25.0 22.4 27.6 24.5 22.1 21.8
Capital adequacy ratios (%) - TIER I 7.58 8.10 10.40 10.71 10.24 11.80 10.08 8.83 7.90 8.31 - TIER I+II 11.58 11.95 13.45 12.91 11.45 13.61 14.22 13.62 12.26 12.87
TEN YEARS AT A GLANCE
SUPPLEMENTARY INFORMATION
383
QUARTERLY STATISTICS
2016
2015
As
at31
st D
ecem
ber
30th
Sep
tem
ber
30th
Ju
ne31
st
Mar
ch31
st
Dec
emb
er30
th S
epte
mb
er30
th
June
31st
M
arch
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Sta
tem
ent
of
Fina
ncia
l Po
siti
on
Tota
l ass
ets
658
,512
61
7,38
358
3,58
155
5,83
6 5
25,2
77
489
,344
4
61,0
04
438
,703
Loan
s to
& re
ceiv
able
s fro
m b
anks
2,6
42
1,45
31,
329
1,42
6 1
,651
1
,682
1
,292
8
68
Loan
s to
& re
ceiv
able
s fro
m o
ther
cus
tom
ers
456
,189
43
1,39
441
3,68
639
5,11
4 3
75,6
97
343
,660
3
29,5
12
308
,704
Due
to o
ther
cus
tom
ers
510
,567
48
8,89
245
0,81
643
3,55
9 4
06,3
23
381
,986
3
62,3
91
348
,511
Tota
l equ
ity 4
4,48
9 41
,056
38,1
7535
,581
35,
125
34,
500
32,
513
31,
070
2016
2015
For
the
thre
e m
ont
hs e
nded
31st
Dec
emb
er30
th S
epte
mb
er30
th
June
31st
M
arch
31st
D
ecem
ber
30th
Sep
tem
ber
30th
Ju
ne31
st
Mar
ch
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Net
inte
rest
inco
me
6,6
34
5,92
45,
539
4,65
7 4
,416
4
,506
4
,433
4
,047
Net
fee
& c
omm
issi
on in
com
e 1
,880
1,
702
1,53
91,
464
1,4
53
1,3
95
1,2
20 1
,219
Net
trad
ing
inco
me
(59)
148
285
(140
) 4
0 (2
46)
115
(2
50)
23
3568
3
14
7
11
66
Oth
er o
pera
ting
inco
me
908
56
544
572
5 6
19
1,0
86
549
5
89
Tota
l ope
ratin
g in
com
e 9
,386
8,
374
7,87
66,
709
6,5
42
6,7
48
6,3
28
5,6
71
Less
: Im
pairm
ent c
harg
e /
(reve
rsal
) for
loan
s &
oth
er lo
sses
553
34
634
521
6 1
78
400
3
37
29
Net
ope
ratin
g in
com
e 8
,833
8,
028
7,53
16,
493
6,36
46,
348
5,99
05,
642
Less
: To
tal o
pera
ting
expe
nses
4,2
06
4,08
03,
777
3,40
8 3
,895
3
,202
3
,222
3
,021
999
67
761
352
5 3
69
550
5
07
478
In
com
e ta
x ex
pens
e 1
,208
79
065
782
0 7
13
844
6
98
712
2,4
20
2,48
12,
484
1,74
01,
387
1,75
21,
564
1,43
1
Oth
er c
ompr
ehen
sive
inco
me
for
the
perio
d 1
,013
38
010
3 (1
36)
(85)
235
(1
20)
(338
)
Tota
l com
preh
ensi
ve in
com
e fo
r th
e pe
riod
3,4
33
2,86
12,
587
1,60
41,
302
1,98
71,
444
1,09
3
384 SAMPATH BANK PLC
ANNUAL REPORT 201620
1620
15
For
the
thre
e m
ont
hs e
nded
31st
Dec
emb
er30
th S
epte
mb
er30
th
June
31st
M
arch
31st
D
ecem
ber
30th
Sep
tem
ber
30th
Ju
ne31
st
Mar
ch
Mar
ket
pri
ce p
er s
hare
(Rs)
268
.70
266.
9024
0.00
253.
00 2
61.9
0 2
79.9
0 2
72.0
0 2
75.0
0
Lo
wes
t 2
53.0
0 22
7.60
217.
5021
0.00
246
.00
248
.10
240
.00
235
.20
C
losi
ng 2
60.4
0 26
6.30
228.
0022
6.00
248
.00
258
.20
259
.30
252
.10
As
at31
st D
ecem
ber
30th
Sep
tem
ber
30th
Ju
ne31
st
Mar
ch31
st
Dec
emb
er30
th S
epte
mb
er30
th
June
31st
M
arch
Net
Inte
rest
mar
gin
( % )
3.87
3.77
3.69
3.47
3.6
4 3
.75
3.8
0 3
.77
Ret
urn
on a
sset
s (b
efor
e ta
x) (
% )
2.14
2.10
2.07
1.90
1.9
0 2
.02
1.9
7 2
.00
Ret
urn
on e
quity
(afte
r ta
x) (
% )
23.4
723
.89
23.4
019
.78
18.
42
19.
41
19.
00
18.
73
Cap
ital
Ad
equa
cy R
atio
Tier
I ( %
)8.
317.
687.
977.
36 7
.90
7.9
5 8
.47
8.2
7
Tier
I +
II (
% )
12.8
711
.92
12.3
511
.46
12.
26
12.
12
12.
87
12.
78
Ass
ets
Qua
lity
Gro
ss N
PA r
atio
( %
)1.
611.
671.
801.
671.
641.
701.
711.
84
Net
NPA
rat
io (
% )
0.62
0.62
0.69
0.51
0.46
0.50
0.47
0.55
Reg
ulat
ory
Liq
uid
ity
Ban
k ( %
)21
.84
22.3
520
.71
21.1
422
.05
21.3
921
.06
22.8
3
Dom
estic
ban
king
uni
t ( %
)21
.19
21.7
220
.50
20.7
721
.84
21.1
420
.89
22.7
2
33.4
529
.16
23.1
327
.65
27.2
425
.98
26.3
726
.68
QUARTERLY STATISTICS
SUPPLEMENTARY INFORMATION
385
CAPITAL ADEQUACY
indicators which illustrates the soundness and the stability of a bank by measuring the adequacy of its capital to meet unexpected losses arising from various risks, associated with business of banking, such as credit risk, market risk, operational risk etc. The capital of a bank acts as a “cushion” or
from these risks and safeguarding the depositors’ funds.
Capital Adequacy Ratio (CAR) is a measure of the amount of a bank’s capital expressed as a percentage of its Risk-Weighted Assets (RWA).
TIER I CAPITAL
The Tier I Capital mainly consists of stated capital, non-redeemable and non-cumulative preference shares, other capital and revenue reserves after deducting the total value of intangible assets, 50% of the investments made in shares and
companies and unconsolidated banking
TIER II CAPITAL
Tier II Capital includes revaluation reserves approved by CBSL, general loan loss provisions, and subordinated term debts approved by CBSL, after deducting 50% of the investments made in shares and
companies and unconsolidated banking
Risk Weighted Assets (RWA)Risk Weighted Assets are a measure of the amount of the bank’s assets and
associated with them.
At present, Capital Adequacy computation is prepared as per the “BASEL Accord” which is a universally accepted framework put forward by the “Basel Committee on Bank Supervision (BCBS)” of the Bank for International Settlements (BIS).
BASEL I
In 1988, the BCBS published the 1988 Basel Accord for minimum capital requirement. This was enforced by law in the Group of Ten (G-10) countries in 1992. The Basel Accord also known as “Basel I” was adopted by Sri Lankan banks to compute the Capital Adequacy Ratios up to 31st December 2007.
Basel I accord was criticised mainly for taking a too simplistic approach to setting credit risk weights and for ignoring other types of risks.
These criticisms have led to the creation of a new Basel Capital Accord, known as “Basel II”, which added operational risk and
This new set of rules known as Basel II was later developed to replace the Basel I accord by the Basel Committee.
BASEL II
The Basel Committee on Bank Supervision (BCBS) published the International Convergence of Capital Measurement and Capital Standards, a revised framework (Basel II), in June 2004. Certain amendments to the above were introduced in June 2006. This is the basis currently used by Sri Lankan banks for the computation of Capital Adequacy Ratio
Basel II comprises three mutually reinforcing pillars, Pillar I - Minimum Capital
Requirement Pillar II - Supervisory Review process Pillar III - Market Discipline
Pillar I – Minimum Capital RequirementPillar-I deals with maintenance of regulatory capital calculated for three major components of risks that a bank faces: credit risk, operational risk, and market risk. Other risks are not considered fully at this stage.
The credit risk component can be
varying degrees of sophistication, namely Standardised Approach, Foundation IRB (Internal Rating-Based) Approach and Advanced IRB (Internal Rating-Based)
Approach. In accordance with the current regulatory framework in the country the Bank has adopted the Standardised Approach for calculating credit and market risk while the Basic Indicator Approach has been used in calculating operational risk.
Pillar II – Supervisory Review ProcessPillar - II sets forth the framework for the Supervisory Review Process (SRP) and the framework for Internal Capital Adequacy Assessment Process (ICAAP) of banks. Pillar - II recognises risks in a wider sense including risks not captured and accounted by Pillar - I. (e.g. credit concentration risk, liquidity risk, business and strategic risk etc.). It also covers the Stress Tests which are used to measure the impact on possible
scenarios.
Pillar III – Market Discipline Pillar - III presents a number of disclosure requirements. The objective is to raise the level of market discipline by giving external stakeholders a better understanding of capital adequacy calculations and the procedures involved in a bank. This Pillar is seen as particularly important because under the advanced approaches of Basel II, banks are allowed to rely more heavily on internal methods for determining risk, giving them greater discretion in determining their capital needs.
BASEL III
crisis, the BCBS agreed on reforms to “strengthen global capital and liquidity rules with the goal of promoting a more resilient banking sector”, which is being referred
of Basel III is to minimize the possibility of
IMPLEMENTATION OF BASEL III FRAMEWORK IN SRI LANKA
Commencing from 1st July 2017 capital ratios of licensed banks will be computed based on the Banking Act Direction No. 1 of 2016.
Tier I Capital + Tier II CapitalRisk Weighted Assets
CAR =
386 SAMPATH BANK PLC
ANNUAL REPORT 2016
CAPITAL ADEQUACY
CO
MP
UTA
TIO
N O
F C
AP
ITA
L A
DE
QU
AC
Y R
ATIO
S -
BA
SE
L II
Ban
k G
roup
2016
20
15
2016
20
15
Risk
Wei
ghte
d As
sets
For
Cre
dit R
isk
Ass
ets
Ris
k W
eig
hted
Ass
ets
Ass
ets
Ris
k W
eig
hted
Ass
ets
Ass
ets
Ris
k W
eig
hted
Ass
ets
Ass
ets
Ris
k W
eig
hted
Ass
ets
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Cla
ims
on c
entr
al g
over
nmen
t & C
entr
al B
ank
of
S
ri La
nka
98,
559
-
47,
189
-
99,
345
-
47,
252
-
Cla
ims
on p
ublic
sec
tor
entit
ies
1,1
00
1,1
00
336
3
36
1,1
00
1,1
00
336
3
36
Cla
ims
on b
anks
exp
osur
es 1
9,18
8 7
,442
8
,189
2
,679
1
9,19
7 7
,448
8
,232
2
,692
31,
512
19,
935
25,
469
14,
539
29,
279
18,
818
22,
302
12,
956
Cla
ims
on c
orpo
rate
s 2
67,3
48
259
,910
2
39,5
21
227
,337
2
82,8
28
275
,390
2
50,9
29
238
,745
Ret
ail c
laim
s 1
28,8
65
109
,018
9
4,85
7 8
0,66
6 1
28,8
65
109
,018
9
4,85
7 8
0,66
6
Cla
ims
secu
red
by re
side
ntia
l pro
pert
y 2
9,71
3 1
7,74
5 2
3,72
1 1
8,27
2 2
9,71
3 1
7,74
5 2
3,72
1 1
8,27
2
Non
-per
form
ing
asse
ts 4
,705
6
,826
3
,281
4
,654
5
,550
7
,671
3
,275
4
,648
Non
-per
form
ing
asse
ts s
ecur
ed b
y re
side
ntia
l
prop
erty
209
2
01
250
2
40
209
2
01
250
2
40
Cas
h /
gold
aga
inst
loan
s 6
5,52
1 2
8 5
5,11
9 4
0 6
5,67
0 2
8 5
5,20
2 4
0
Oth
er a
sset
s 1
1,11
1 1
1,11
1 8
,225
8
,225
1
8,77
7 1
8,77
7 1
3,26
9 1
3,26
9
Tota
l 6
57,8
31
433
,316
5
06,1
57
356
,988
6
80,5
33
456
,196
5
19,6
25
371
,864
SUPPLEMENTARY INFORMATION
387
Ban
k G
roup
20
16
201
520
16
2015
Cre
dit
Con
vers
ion
Fac
tor
(%)
Pri
ncip
al A
mo
unt
Bal
ance
S
heet
Item
s
Cre
dit
Eq
uiva
lent
Bal
ance
She
et It
ems
Pri
ncip
al A
mo
unt
Bal
ance
S
heet
It
ems
Cre
dit
Eq
uiva
lent
Bal
ance
S
heet
It
ems
Pri
ncip
al A
mo
unt
Bal
ance
S
heet
Item
s
Cre
dit
E
qui
vale
nt
Bal
ance
S
heet
It
ems
Pri
ncip
al A
mo
unt
Bal
ance
She
et It
ems
Cre
dit
Eq
uiva
lent
Bal
ance
S
heet
Item
s
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Rs
Mn
Dir
ect
cred
it s
ubst
itut
es 2
5,85
4 2
5,85
4 2
3,02
3 2
3,02
3 2
5,85
4 2
5,85
4 2
2,62
4 2
2,62
4
Gen
eral
gua
rant
ees
of in
debt
edne
ss 1
00.0
2
5,85
4 2
5,85
4 2
3,02
3 2
3,02
3 2
5,85
4 2
5,85
4 2
2,62
4 2
2,62
4
Tran
sact
ion-
rela
ted
co
ntin
gen
cies
14,
184
7,9
46
10,
417
5,9
67
14,
184
7,9
46
10,
417
5,9
67
Per
form
ance
bon
ds, b
id b
onds
& w
arra
ntie
s 5
0.0
11,
556
5,7
78
7,8
91
3,9
45
11,
556
5,7
78
7,8
91
3,9
45
Oth
ers
82.
5 /
80
2,6
28
2,1
68
2,5
26
2,0
22
2,6
28
2,1
68
2,5
26
2,0
22
Sho
rt-t
erm
sel
f-liq
uid
atin
g t
rad
e-re
late
d
co
ntin
gen
cies
40,
100
8,0
20
34,
988
6,9
98
40,
100
8,0
20
34,
988
6,9
98
Shi
ppin
g gu
aran
tees
20.
0 2
,153
4
31
2,0
80
416
2
,153
4
31
2,0
80
416
Doc
umen
tary
lett
ers
of c
redi
t 2
0.0
21,
855
4,3
71
17,
050
3,4
10
21,
855
4,3
71
17,
050
3,4
10
Trad
e re
late
d ac
cept
ance
s 2
0.0
16,
092
3,2
18
15,
858
3,1
72
16,
092
3,2
18
15,
858
3,1
72
Oth
er c
om
mit
men
ts w
ith
an o
rig
inal
mat
urit
y o
f
up
to
one
yea
r o
r w
hich
can
be
unco
ndit
iona
lly
ca
ncel
led
at
any
tim
e 5
5,33
6 -
50
,579
-
55,
336
-
50,5
79 -
Und
raw
n ov
erdr
aft f
acilit
ies
/ un
used
cre
dit c
ard
lines
0.0
55,
336
-
50,5
79 -
5
5,33
6 -
50
,579
-
Oth
er c
om
mit
men
ts w
ith
an o
rig
inal
mat
urit
y
o
f o
ver
one
yea
r 1
7,74
1 8
,871
1
3,30
6 6
,653
1
7,74
1 8
,871
1
3,30
6 6
,653
Und
raw
n te
rm L
oans
50.
0 1
7,74
1 8
,871
1
3,30
6 6
,653
1
7,74
1 8
,871
1
3,30
6 6
,653
Fore
ign
exch
ang
e co
ntra
cts
30,
679
614
4
5,01
6 9
00
30,
679
614
4
5,01
6 9
00
Orig
inal
mat
urity
-less
than
one
yea
r 2
.0
30,
679
614
4
5,01
6 9
00
30,
679
614
4
5,01
6 9
00
Tota
l 1
83,8
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51,
305
177,
329
43,
541
183
,894
5
1,30
5 17
6,93
0 4
3,14
2
388 SAMPATH BANK PLC
ANNUAL REPORT 2016
CAPITAL ADEQUACY
Bank Group
Risk-weighted amount for Market Risk 2016 2015 2016 2015
Rs Mn Rs Mn Rs Mn Rs Mn
Interest rate risk 234 396 234 396
General risk 234 396 234 396
- - - -
Equity risk 2 2 2 2
General risk 1 1 1 1
1 1 1 1
Foreign exchange & gold risk 147 120 147 120
Total capital charge for market risk 383 518 383 518
Total risk-weighted amount for market risk (total capital charge X 10 ) 3,833 5,178 3,833 5,178
Bank Group
Risk-weighted amount for Operational Risk 2016 2015 2016 2015
Rs Mn Rs Mn Rs Mn Rs Mn
26,342 22,480 27,768 23,652
Deductions: - - - -
134 139 134 139
Extraordinary / irregular item of income 4 5 4 5
Gross income 26,204 22,336 27,630 23,508
Total capital charge for operational risk (Gross income X 15%) 3,931 3,350 4,144 3,526
Total risk-weighted amount for operational risk (Total capital charge for operational risk X 10) 39,306 33,504 41,445 35,262
Computation of total risk-weighted amount
Risk-weighted amounts for credit risk 433,316 356,988 456,196 371,864
Risk-weighted amounts for market risk 3,833 5,178 3,833 5,178
Risk-weighted amounts for operational risk 39,306 33,504 41,445 35,262
Total risk-weighted amount 476,455 395,670 501,474 412,304
SUPPLEMENTARY INFORMATION
389
Bank Group
Computation of Capital Base 2016 2015 2016 2015
Rs Mn Rs Mn Rs Mn Rs Mn
Core capital (Tier I)
Stated capital 6,471 5,381 6,471 5,381
Statutory reserve fund 2,250 1,790 2,336 1,860
4,082 2,751 6,395 4,261
General and other reserves 27,694 22,165 27,694 22,165
Minority interests (consistent with the above capital constituents) - - - 95
Deductions / Adjustments-Tier I - - Goodwill - - - -
Net deferred tax assets - - - -
Other intangible assets 337 342 356 368
subsidiary companies 288 263 - -
264 236 264 236
Total Core Capital 39,608 31,246 42,276 33,158
Supplementary capital (Tier II)
Revaluation reserves (as approved by CBSL) 427 427 427 427
General provisions 2,045 1,693 2,045 1,693
Approved subordinated term debt 19,804 15,623 20,043 16,579
Deductions-Tier II - -
subsidiary companies 288 263 - -
264 236 264 236
Eligible Tier II capital 21,724 17,244 22,251 18,463
Total capital ( Tier I + Tier II ) 61,332 48,490 64,527 51,621
Limits:(i) Approved subordinated term debt is limited to 50% of Total Tier I Capital.(ii) The total of Tier II supplementary elements should not exceed a maximum of 100% of Tier I elements.(iii) General provision should not exceed 1.25% of risk weighted assets.
Bank Group
Computation of Capital Adequacy Ratios 2016 2015 2016 2015
Core Capital Ratio (minimum ratio - 5%)
Core Capital (Tier I) x 100 39,608 x 100 31,246 x 100 42,276 x 100 33,158 x 100
Total Risk-weighted Assets 476,455 395,670 501,474 412,304
Total Capital Ratio (minimum ratio - 10%)
Total Capital x 100 61,332 x 100 48,490 x 100 64,527 x 100 51,621 x 100
Total Risk-weighted Assets 476,455 395,670 501,474 412,304
Core Capital (Tier I) Ratio (%) 8.31 7.90 8.43 8.04
Total Capital Ratio (%) 12.87 12.26 12.87 12.52
390 SAMPATH BANK PLC
ANNUAL REPORT 2016
GRI G4 CONTENT INDEX
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
G4 GENERAL STANDARD DISCLOSURES
STRATEGY AND ANALYSIS
G4-1 Statement from the highest governance body Yes 33-37
G4-2 A description of key impacts, risks, and opportunities Yes 33-37,148 -150
ORGANIZATIONAL PROFILE
G4-3 Name of the organization Yes Inner Back Cover
G4-4 Primary brands, products and services Yes 14-15
G4-5 Location of the organization’s headquarters Yes Inner Back Cover
G4-6 Number of countries where the organization operates Yes 113
G4-7 Nature of ownership and legal form Yes Inner Back Cover
G4-8 Markets served Yes 64
G4-9 Scale of the organization Yes 80,123,238
G4-10 Workforce
UNGC Principle 06 – The elimination of discrimination in respect of
employment and occupation
Yes 81
76,402
G4-11 Total employees covered by collective bargaining agreements
OECD – Employment and industrial relations
UNGC Principle 03 – Businesses should uphold the freedom of
association and the effective recognition of the right to collective
bargaining
Yes 402
76,402
76,402
G4-12 Organization’s supply management procedures Yes 400
G4-13 Significant changes during the reporting period Yes 64,123
G4-14 Application of the precautionary principle Yes 198
G4-15 Details of externally developed economic, environmental and social
charters, principles, or other initiatives
Yes 4
G4-16 Memberships of associations Yes 5
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
G4-17 Entities representing the consolidated performance of Sampath Bank
PLC
Yes 50
G4-18 Process for defining report content and aspect boundaries Yes 52,408
G4-19 Material aspects Yes 408
G4-20 Aspect boundaries within the Bank Yes 408
G4-21 Aspect boundaries outside the Bank Yes 408
G4-22 Effects of any restatements Yes 405
G4-23 Significant changes from previous reporting period Yes 408
STAKEHOLDER ENGAGEMENT
G4-24 Stakeholder groups who engage by the organization Yes 47-49
G4-25 Basis for identification and selection of stakeholders Yes 47-49
G4-26 Organization’s approach to stakeholder engagement Yes 47-49
GLOBAL REPORTING INITIATIVE - GRI G4 : “IN ACCORDANCE - COMPREHENSIVE”
SUPPLEMENTARY INFORMATION
G4 - 32
391
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
G4-27 Key topics and concerns raised by stakeholders and the Bank's
response to these key topics and concerns
Yes 47-49
REPORT PROFILE
G4-28 Reporting period Yes 4
G4-29 Date of most recent previous report Yes 5
G4-30 Reporting cycle Yes 4
G4-31 Contact point for questions regarding the report or its content Yes Inner Back Cover
G4-32 “In Accordance” option selected Yes 390-397,4
G4-33 Assurance Yes 4,409
GOVERNANCE
G4-34 Governance structure including committees responsible for decision
making on economic, environmental and social impacts
Yes 154
G4-35 Process for delegating authority for economic, environmental and
social topics
Yes 88,154
G4-36 Executive-level positions responsible for economic, environmental
and social topics
Yes 46,88,154
G4-37 Processes for consultation between stakeholders and the highest
governance body
Yes 88
G4-38 Composition of the highest governance body and its committees Yes 18-21
G4-39 Chair and executive officer positions Yes 18
G4-40 Nomination and selection processes for Sampath Bank PLC’s Board
and its committees
Yes 161,167,
181,192
G4-41 Process to ensure conflicts of interest are avoided at Board level Yes 175,181,183,
194
G4-42 Development, approval and updating of matters related to economic,
environmental and social impacts
Yes 46,88
G4-43 Measures taken to develop and enhance the collective knowledge of
the Board on economic, environmental and social topics
Yes 405
G4-44 Processes for evaluation of the performance of the Board with regard
to economic, environmental and social topics and the actions taken
in response to the evaluation
Yes 160,161,197
G4-45 Highest governance body’s role in the identification and
management of economic, environmental and social impacts, risks,
and opportunities
Yes 153,161
G4-46 Highest governance body’s role in reviewing the effectiveness of the
organization’s risk management processes
Yes 136,206-207
G4-47 Frequency of the highest governance body’s review of economic,
environmental and social impacts, risks, and opportunities
Yes 46
G4-48 The committee that formally reviews and approves the sustainability
report to ensure that all material aspects are covered
Yes 46
G4-49 Process for communicating critical concerns to the Board Yes 88,179
G4-50 Scope and total number of critical concerns that were communicated
to the Board
Yes 88 (Partially)
392 SAMPATH BANK PLC
ANNUAL REPORT 2016
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
G4-51 Remuneration policies applicable for the Board of Directors and
senior management
Yes **
G4-52 Process for determining remuneration Yes **
G4-53 Process of obtaining stakeholders’ views regarding remuneration Yes **
G4-54 Ratio of the annual total compensation for the highest-paid individual
as a percentage of the median annual total compensation for all
employees (excluding the highest-paid individual)
No **
G4-55 Ratio of the increase in annual total compensation for the highest-
paid individual as a percentage of the median increase in annual total
compensation for all employees (excluding the highest-paid individual)
No **
ETHICS AND INTEGRITY
G4-56 Values, principles, standards and norms of behaviour such as codes
of conduct
Yes 403,405
G4-57 Internal and external mechanisms for seeking advice on ethical and
lawful behaviour and matters related to the Bank's integrity
Yes 403,405
G4-58 Internal and external mechanisms for reporting concerns regarding
unethical or unlawful behaviour and matters related to the Bank's
integrity
Yes 403,405
G4 SPECIFIC STANDARD DISCLOSURES
CATEGORY: ECONOMIC
OECD – Taxation 267-270
DMA Disclosures on management approach
ASPECT: ECONOMIC PERFORMANCE
G4-EC1 Direct economic value generated and distributed Yes 381
G4-EC2 Risks and opportunities posed by climate change Yes 404
G4-EC3 Coverage of the Bank's defined benefit plan obligations Yes 247,317
G4-EC4 Financial assistance received from Government Yes 404
ASPECT: MARKET PRESENCE
G4-EC5 Standard entry level wage by gender Yes 405
G4-EC6 Senior management who hired from local community Yes 405
ASPECT: INDIRECT ECONOMIC IMPACTS
G4-EC7 Development and impact of infrastructure investments and services
supported
Yes 89-90,92
G4-EC8 Identified indirect economic impacts Yes 83,89 - 93,
107
ASPECT: PROCUREMENT PRACTICES
G4-EC9 Spending on local suppliers Yes 401
CATEGORY: ENVIRONMENTAL
OECD VI – Environment
UNGC Principle 07 – Precautionary approach to environmental challenges
UNGC Principle 08 – Initiatives to promote greater environmental responsibility
UNGC Principle 09 – Developments and diffusion of environmentally
friendly technologies
94-97
96-97
96-97
94,95
GRI G4 CONTENT INDEX
SUPPLEMENTARY INFORMATION
393
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
DMA Disclosures on management approach
ASPECT: MATERIALS
G4-EN1 Materials use to produce primary products Yes 398
G4-EN2 Recycling mechanisms Yes 398
ASPECT: ENERGY
G4-EN3 Direct energy consumption Yes 399
G4-EN4 Indirect energy consumption Yes 399
G4-EN5 Energy intensity Yes 399
G4-EN6 Reduction of energy consumption statistics Yes 399
G4-EN7 Reduction in energy requirement of products & services Yes 398
ASPECT: WATER
G4-EN8 Total water withdrawal by source Yes 399
G4-EN9 Water sources are significantly affected from withdrawal of water Yes 399
G4-EN10 Percentage and total volume of water recycled and reused Yes 398
ASPECT: BIODIVERSITY
G4-EN11 Owned operational sites owned, leased, managed in, or adjacent
to protected areas and areas of high Biodiversity value outside
protected areas
Yes 399
G4-EN12 Significant impacts of activities, products, and services on
biodiversity in protected areas and areas of high biodiversity value
outside protected areas
Yes 399
G4-EN13 Habitats protected or restored Yes 399
G4-EN14 IUCN red list species and national conservation list species with
habitats in areas affected by operations
Yes 399
ASPECT: EMISSIONS
G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) Yes 406
G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) Yes 406
G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) Yes 406
G4-EN18 Greenhouse gas (GHG) emissions intensity Yes 406 - 407
G4-EN19 Reduction of greenhouse gas (GHG) emissions Yes 9
G4-EN20 Emissions of ozone-depleting substances (ODS) Yes 405
G4-EN21 NOX, SO
X, and other significant air emissions Yes 406 - 407
ASPECT: EFFLUENTS AND WASTE
G4-EN22 Total water discharge by quality and destination Yes 398
G4-EN23 Total weight of waste by type and disposal method Yes 398,400
G4-EN24 Total number and volume of significant spills Yes 398
G4-EN25 Weight of transported, imported, exported, or treated waste deemed
hazardous under the terms of the Basel convention 2
Yes 398
G4-EN26 Identity, size, protected status, and biodiversity value of water bodies
and related habitats significantly affected by the organization’s
discharges of water and runoff
Yes 398
ASPECT: PRODUCTS AND SERVICES
G4-EN27 Mitigation of environmental impacts of products and services Yes 398
G4-EN28 Product packaging Yes 398
394 SAMPATH BANK PLC
ANNUAL REPORT 2016
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
ASPECT: COMPLIANCE
G4-EN29 Compliance Yes 398
ASPECT: TRANSPORT
G4-EN30 Environmental impact of transport Yes 398
ASPECT: OVERALL
G4-EN31 Expenditure incurred on environmental protection Yes 92
ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENT
G4-EN32 Environment screening of suppliers Yes 401
G4-EN33 Assessment of significant actual and potential negative
environmental impacts in the supply chain and actions taken
Yes 401
ASPECT: ENVIRONMENTAL GRIEVANCE MECHANISMS
G4-EN34 Environmental grievances Yes 400
CATEGORY: SOCIAL
SUB CATEGORY : LABOUR PRACTICES AND DECENT WORK
OECD – Employment and industrial relations
UNGC Principle 06 - The elimination of discrimination in respect of
employment and occupation
74-81,402
402
DMA Disclosures on management approach
ASPECT: EMPLOYMENT
G4-LA1 New employee hires and employee turnover Yes 78
G4-LA2 Benefits provided to full time employees Yes 73
G4-LA3 Parental leave Yes 79
ASPECT: LABOUR/MANAGEMENT RELATIONS
UNGC Principle 03 – Businesses should uphold the freedom of association
and the effective recognition of the right to collective bargaining
76,400
G4-LA4 Notice periods on operational changes specified in collective
agreements
Yes 402
ASPECT: OCCUPATIONAL HEALTH AND SAFETY
OECD – Environment 94-97
G4-LA5 Health and safety committees Yes 402
G4-LA6 Occupational diseases, lost days and absenteeism Yes 79
G4-LA7 Workers with high incidence or high risk of diseases related to their
occupation
Yes 402
G4-LA8 Health and safety topics covered in formal agreements with trade
unions
Yes 402
ASPECT: TRAINING AND EDUCATION
OECD – Environment 74,79,81
G4-LA9
-11
Training and education for employees Yes 74-75,79,80
ASPECT: DIVERSITY AND EQUAL OPPORTUNITY
UNGC – Women empowerment principles 93,107
G4-LA12 Diversity and equality of committees Yes 80
ASPECT: EQUAL REMUNERATION FOR WOMEN AND MEN
G4-LA13 Remuneration for women and men Yes 81
GRI G4 CONTENT INDEX
SUPPLEMENTARY INFORMATION
395
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
ASPECT: SUPPLIER ASSESSMENT FOR LABOUR PRACTICES
G4-LA14 Labour screening practices for suppliers Yes 401
G4-LA15 Assessment of potential negative impacts for labour practices in the
supply chain and actions taken
Yes 401
ASPECT: LABOUR PRACTICES GRIEVANCE MECHANISMS
G4-LA16 Number of grievances about labour practices filed, addressed and
resolved through formal grievance mechanisms
OECD – Bribe solicitation and extortion
Yes 402
-
SUB CATEGORY: HUMAN RIGHTS
OECD – Human rights
UNGC Principle 01 – Business support and respect towards the protection of
proclaimed human rights
UNGC Principle 02 – Ensure the non-complicit in human right abuses
79,400
79,400
400
ASPECT: INVESTMENT
G4-HR1 Significant investment agreements on human rights clauses Yes 402
G4-HR2 Training on human rights Yes 79,402
ASPECT: NON-DISCRIMINATION
OECD – Employment and industrial relations
UNGC Principle 06 - The elimination of discrimination in respect of
employment and occupation
76,402
76,402
G4-HR3 Incidents of discrimination Yes 402
ASPECT: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
OECD – Employment and industrial relations
UNGC Principle 03 – Businesses should uphold the freedom of association
and the effective recognition of the right to collective bargaining
76,402
76,402
G4-HR4 Operations and suppliers identified in which the right to exercise
freedom of association
Yes 401
ASPECT: CHILD LABOUR
OECD – Employment and industrial relations
UNGC Principle 05 – Effective abolition of child labour
76,402
403
G4-HR5 Measures taken to the effective abolition of child labour in operations
and suppliers
Yes 401,405
ASPECT: FORCED OR COMPULSORY LABOUR
OECD – Employment and industrial relations
UNGC Principle 04 – Elimination of all forms of forced and compulsory labour
76,405
403
G4-HR6 Measures taken to the elimination of all forms of forced or
compulsory labour
Yes 401,405
ASPECT: SECURITY PRACTICES
G4-HR7 Training of security personnel in relation to human rights policies or
procedures that are relevant to operations
Yes 402
ASPECT: INDIGENOUS RIGHTS
G4-HR8 Total number of incidents of violations involving rights of indigenous
people and actions taken
Yes 402
396 SAMPATH BANK PLC
ANNUAL REPORT 2016
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
ASPECT: ASSESSMENT
UNGC principles and principles for responsible investment 400
G4-HR9 Total number and percentage of operations that have been subject
to human rights reviews or impact assessments
Yes 402
ASPECT: SUPPLIER HUMAN RIGHTS ASSESSMENT
UNGC principles and principles for responsible investment 400
G4-HR10 Supplier screening Yes 401
G4-HR11 Negative human rights impacts in the supply chain Yes 401
ASPECT: HUMAN RIGHTS GRIEVANCE MECHANISMS
G4-HR12 Human rights grievances Yes 402
SUB CATEGORY: SOCIETY
DMA Disclosures on management approach
ASPECT: LOCAL COMMUNITIES
UNGC Principle 01 - Business support and respect towards the protection of
proclaimed human rights
400,401
G4-SO1 Local community engagement, impact assessments and
development programs
Yes 89-93
G4-SO2 Operations with significant actual and potential negative impacts on
local communities
Yes 405
ASPECT: ANTI-CORRUPTION
OECD – Bribe solicitation and extortion
UNGC Principle 10 – Business works against all forms of corruption, including
extortion and bribery
-
401
G4-SO3 Operations assessed for risks related to corruption and the
significant risks identified
Yes 143
G4-SO4 Communication and training on anti-corruption policies and
procedures
Yes 402
G4-SO5 Confirmed incidents of corruption and actions taken Yes 403
ASPECT: PUBLIC POLICY
OECD – Bribe solicitation and extortion
UNGC Principle 10 – Business works against all forms of corruption including
extortion and bribery
-
401
G4-SO6 Political contributions by country and recipient/beneficiary Yes 405
ASPECT: ANTI-COMPETITIVE BEHAVIOUR
OECD – Competition 401
G4-SO7 Legal actions for anti-competitive behaviour, anti-trust and monopoly
practices and their outcomes
Yes 403
ASPECT: COMPLIANCE
OECD – Competition 401
G4-SO8 Monetary value of significant fines and total number of non-monetary
sanctions for non-compliance with laws and regulations
Yes 398,403
GRI G4 CONTENT INDEX
SUPPLEMENTARY INFORMATION
397
GRI
IndicatorGRI Disclosure Description
External
Assurance
Provided*
Page Reference
GRIOECD/UNGC
Principles
ASPECT: SUPPLIER ASSESSMENT FOR IMPACTS ON SOCIETY
OECD - Human rights
OECD - Environment
OECD - Bribe solicitation and extortion
OECD - Competition
397-401
397-401
-
397-401
G4-SO9 Suppliers screened using criteria for impacts on society Yes 401
G4-SO10 Assessment of significant actual and potential negative impacts on
society in the supply chain and actions taken
Yes 401
ASPECT: GRIEVANCE MECHANISMS FOR IMPACTS ON SOCIETY
OECD - Human rights
OECD - Environment
OECD - Bribe solicitation and extortion
OECD - Competition
398,401
398
-
401
G4-SO11 Grievances about impacts on society filed, addressed and resolved
through formal grievance mechanisms
Yes 400
SUB CATEGORY: PRODUCT RESPONSIBILITY
OECD - Consumer interests 82-85,401
DMA Disclosures on management approach
ASPECT: CUSTOMER HEALTH AND SAFETY
OECD - Environment 82-85,401
G4-PR1 Safety of products and services Yes 403
G4-PR2 Health and safety compliance Yes 404
ASPECT: PRODUCT AND SERVICE LABELLING
G4-PR3 Product information and labelling Yes 403
G4-PR4 Compliance Yes 404
G4-PR5 Results of surveys measuring customer satisfaction Yes 404
ASPECT: MARKETING COMMUNICATIONS
G4-PR6 Banned or disputed products Yes 403
G4-PR7 Compliance Yes 404
ASPECT: CUSTOMER PRIVACY
G4-PR8 Customer complaints on customer privacy Yes 398,404
ASPECT: COMPLIANCE
G4-PR9 Overall compliance of all aspects pertaining to product responsibility Yes 404
* All the standard disclosure and specific standard disclosure items in accordance to GRI-G4 have been assured by external
auditors, Ernst and Young. Please refer the page number 409 for the External Assurance Statement on sustainability in this
regard.
** Information cannot be disclosed.
SAMPATH BANK PLC
ANNUAL REPORT 2016398
OTHER SUSTAINABILITY DISCLOSURES
As a bank, we have adopted the GRI
G4 guidelines to disclose only areas
that we consider as material to our
business. However, in the interest of
greater transparency, other aspects
covered under the G4 guidelines but
are not material to our business, are
listed below.
Aspect Sampath Bank Context
Material used by weight or volume & recycled materials used
for the production of primary product & services
Being a service organization, Sampath Bank does not report
on weight or volume of materials & recycled materials which
are used to production & packaging
Reduction of energy used in the provision of products &
services
Cannot be accurately calculated or measured in relation to
specific products or services
Percentage of total volume of water recycled, reused,
reduced
Treatment method used for the discharged water
Impact on bio-diversity and habitat resulting from operational
activities
Impact on bio-diversity and habitat resulting from
discharged water
No action taken in this regard during the reporting period
Being a service organization, water used by Sampath Bank
is for sanitation purposes only. Hence no action was taken in
this regard in 2016
None
None
Significant impact of business activities on biodiversity in
protected area
Sampath Bank does not operate in such areas and there
have been no reported incidents in 2016
Waste management Apart from recycling of paper and e-waste, all other waste
management activities are carried out directly by local
authorities
Information recorded on significant spills Not relevant to the business of banking
Reporting on hazardous waste (transport/ import/ exported
or treated)
Not relevant to the business of banking
Product responsibility through mitigation of environmental
impact
Aside from our ongoing efforts to expand paperless
processes and the green lending portfolio (please refer page
number 94 and 108 for more information), we are unable to
accurately quantify the mitigating impact of our products &
services on the environment
Environmental impact on products and services (transport /
packaging)
Not relevant to the business of banking
Compliance - environment / local communities / customer
privacy
No reported incidents of non-compliance with laws &
regulations of the country.
No fines or non-monetary sanctions have been imposed
against the Bank during the reporting period
G4 - EN 01,02,07,10,22,23,24,25,26,27,28,29,30 SO 08 PR 08
ENVIRONMENT
SUPPLEMENTARY INFORMATION
399ENERGY MANAGEMENT
ENERGY CONSUMPTION
Source – Renewable Non Renewable
Electricity Heating Cooling Steam Solar Power
Consumption 3,646,851 kWh
(Head Office)
No No No 51,430 kWh
Sold No No No No No
Reduction / Savings
(per employee
per annum in Head
Office)
67 kWh No No No Rs 1.12Mn
Using any standards / methodology and assumption used: No
Using any conversion factors: No
Energy used outside of the organization: No
2016 2015 Reduction
Energy Intensive Ratio (Electricity consumption per employee per annum):
[Total electricity consumption (Head Office) /
Total number of employees (Head Office)]
Base - Energy consumption per employee
Source - Electricity using within the organization
3,340 kWh 3,407 kWh 1.96%
WATER
Total volume of water withdrawn (consumption - Head Office) - 42,241 m3
Source - Municipal water supply
Water source significantly affected due to withdrawn water - No
Using any standards / methodology and assumption used - No
BIODIVERSITY
Sampath Bank does not have any operational sites and does not conduct business operations (owned, leased, managed),
adjacent to any protected restored high biodiversity/ habitats. Further the business activities carried by Sampath Bank does
not have any direct or indirect impact on IUCN red listed species. However, as a responsible corporate citizen, the Bank
remains committed to protect designated high biodiversity areas, through its environmental CSR programme. One such
initiative is the Bolgoda Wetland Conservation Project.
"OUR WETLANDS – OUR FUTURE” - BOLGODA WETLAND CONSERVATION PROJECT
Objective: To assist in restoring the degraded areas of the Bolgoda Wetland Complex in order to conserve biodiversity,
maintain watershed services and increase its resilience to climate change.
Description: The Bolgoda Wetland Complex (BWC) is the largest natural freshwater lake in the country. The lake, which
covers 400 Km2, comprises of two vast fresh water bodies, namely, the Bolgoda North Lake and the Bolgoda South Lake,
which are connected by the river Weras.
Strategic Partner: Ceylon Chamber of Commerce
Outcome: Habitat conservation (endogenous & critically endangers), reduction of pollution, support for community
agriculture and local industries eg: eco-tourism
G4 - EN 03,04,05,06
G4 - EN 08,09
G4 - EN 11,12,13,14
SAMPATH BANK PLC
ANNUAL REPORT 2016400
WASTE MANAGEMENT
Recycle – Non Hazardous Paper - 44,863 Kg Neptune Recyclers
Recycle – Hazardous Computers & other electric items 180 Kg Think Green Pvt Ltd
Type of grievance Number of grievance received Number of grievances
addressed
Number of grievances
resolved
Environmental 10 10 10
Social 136 136 111
ENVIRONMENTAL / SOCIAL GRIEVANCES
Having identified certain material aspects and their significance, our environmental / social policy spells out fundamental
guidelines not only to help control and mitigate the environmental / social impact caused by our business, but also to address
underlying environmental / social grievances.
SUPPLIERS & SERVICE PROVIDERS
SUPPLY CHAIN MANAGEMENT
The Sampath Bank procurement policy sets high standards that ensure fair and equitable procurement and promote
sustainable supply chain management practices.
2016
Total number of registered suppliers / service providers 608
Type of suppliers / service providers Stationery/fixed assets/ outsourced services/IT &
telecommunication equipment/other utility services
Location of suppliers / service providers Sri Lanka
REUSE – HAZARDOUS WASTE
We launched another green initiative to reduce polythene waste
by re-using discarded flex materials of the Bank in a sustainable
manner.
For this purpose, the used flex materials such as flex banners,
x- pennants and backdrops will be reused to produce some
useful products like hand bags, purses etc. This task is entrusted
to an entrepreneur developed by Sampath Bank under “Sampath
Saviya” Entrepreneurship Development Programme.
G4 - EN 23
G4 - EN 34 SO 11
G4 - 12
SUPPLEMENTARY INFORMATION
OTHER SUSTAINABILITY DISCLOSURES
401SAMPATH BANK SUPPLIER EVALUATION MODEL
Industrial Safety
and Environmental
Protection
Schedule / Volume
Effectiveness
Technical Handling
Packing
On Time Delivery
After Sales Services and
Availability of
Qualified Technical Staff
Documentation
Co-operation
Quality Management
Price
Quotation Behaviour
Contract
Processes
Co-operation
Resources
Product / Know-how
Innovative Power
Co-operation
Ris
k A
ssess
ment
Industrial
Safety
Quality
Logis
tics
Mechanis
m
Commercial
Viability
Innovation
CATEGORIES
AND
CRITERIA
Supply Chain Management
Supplier Quality
Management
Sup
plie
r
Per
form
ance
Man
agem
ent
Supply
Chain R
isk
Managem
ent
Financial Stability
Market / Dependability
Availability / Delivery
Capability
Human Resources
Supplier
Registry
Since many of our suppliers are
reputed companies, we work with the
assumption that they conduct their
business in an ethical manner. Hence
we do not cover the following areas
under our screening processes.
Significant risk for incident of
child labour / forced labour /
compulsory labour in suppliers
organizations
Human right / labour practice/
labour practice in the supply
chain / social / environmental
criteria / environmental aspect in
the supply chain
DECLARATION FOR 2016:
Results from our supplier risk
assessment mechanism indicate no
significant actual & potential negative
impact on society through our supply
chain. (for more details please refer
supplier section page 86).
No complaints were made against the
Bank with regard to breach of conduct.
There was no record of any collective
bargaining action initiated against the
Bank, by operations or suppliers.
PROCUREMENT PRACTICE
Whenever possible and practical
we engage in local sourcing to
procure based on the emergency of
requirement at branch level.
G4 - EN 32,33, LA 14,15 HR 04,05,06,10,11 SO 09,10 EC 09
SAMPATH BANK PLC
ANNUAL REPORT 2016402
EMPLOYEE
SAMPATH BANK EMPLOYEES
ASSOCIATION
Sampath Bank Employees Association
(SBEA), comprising of approximately
98% of our team is regarded as a
key stakeholder of the business, and
as such is held equally accountable
for the Bank’s overall performance.
Although no collective agreement exists
between the two parties, the mutual
understanding between the Bank and
the SBEA has always been a productive
one. We continue to leverage on the
strength of this relationship to achieve
our corporate goals and broader
strategic vision.
Key Area Remarks
Minimum notice period regarding operational changes,
including collective agreements
No collective agreement in force, operational changes are
informed in advance
Workers with high incidence diseases related to the
occupation
No reported incidents in the reporting period
Health and safety topics covered in the formal agreement No collective agreement in force. Health and safety topics
covered from the employee relations policy & employee
welfare policy
Number of grievances regarding labour practices and human
rights practices addressed and resolved through formal
grievances mechanism
No reported incidents in the reporting period
Security personnel trained in the organization’s human right
policies
None. The Bank outsources the security services. Therefore
training is conducted by the respective service provider
Total number and percentage of operation that have been
subjected to human rights review or impact assessment
Human rights compliance is a key priority in our business.
We comply with the labour regulations of the country. We do
not conduct a review or impact assessment
OCCUPATIONAL HEALTH & SAFETY
Being a bank, there is a very low risk
of accidents arising directly from our
operations. Nevertheless, creating a
hazard free environment has always
been a key priority for Sampath Bank
PLC. Even though we do not have
an occupational health and safety
committee, we have set-out clear
guidelines to ensure the safety of all
those within our premises at any given
time.
Any injuries (office accidents,
occupational disease, work related
fatalities) relating to Sampath Bank
employees and/ or third party
contractors working on bank premises,
have not been reported in the reporting
period.
TRAINING ON HUMAN RIGHTS &
ANTI-CORRUPTION
During the year the Bank conducted
508 training and awareness
programmes for Senior Management
and other staff members on these
topics. Although these programmes
did not cover the Bank’s suppliers and
service providers, we intend to extend
such awareness campaigns to other
stakeholders, including suppliers &
service providers in future.
Human Rights clauses are incorporated
as appropriate in agreements prepared
by the Bank. However, there is no
mechanism in place to quantify
the degree or extent of the human
right clauses incorporate in these
agreements.
NON DISCRIMINATION
Given the strict code of ethics, during
the reporting period, there have been
no reported incidents of discrimination
or violation of human rights of any
member of our team or any person or
group in society including, the rights of
indigenous people.
G4 - 11 LA 04,07,08,16 HR 07,09,12
G4 - LA 05 HR 01,02,03,08 SO 04
SUPPLEMENTARY INFORMATION
OTHER SUSTAINABILITY DISCLOSURES
403
ANTI – CORRUPTION
The Bank faces no significant risk
related to corruption since all the
employees perform their work efficiently
and act in accordance with the code
of conduct stipulated by the Bank.
Meanwhile, adherence to laws and
regulations of the country including
anti-corruption regulations, are seen as
an unconditional priority. Compliance
to these laws, rules and regulations
are well monitored and no incidents of
corruption were reported in 2016.
ANTI-COMPETITIVE BEHAVIOUR
Sampath Bank PLC does not engage in
or promote any kind of anti-competitive
behaviour, antitrust or monopolistic
practices. Therefore we have not been
subjected to any litigation in this regard,
during the reporting period.
CUSTOMER
PRODUCT & RESPONSIBILITY
Being a service organization, our
product responsibility initiatives are
intangible in nature. A health and safety
assessment of our products & services
was not carried out during the reporting
period (read more in customer section
pages 82 to 85).
Declaration for 2016:
The Bank has not been subjected to
any legal action during the reporting
period with regard to the breach of
customer privacy. Further no products
or services were banned in the market
as a result of violation of product
responsibility parameters.
PRODUCT & SERVICE LABELLING
Type of Information Yes No
The sourcing of components of the product or service
Content, particulars with regard to substance that might produce an environment or social impact N/A
Safe use of product or service
Disposal of the product and environment / social impact N/A
OUR GOAL IS ESSENTIALLY TO GO BEYOND PROVIDING TRADITIONAL BANKING FACILITIES AND CREATE REAL VALUE FOR INDIVIDUALS AND BUSINESSES THAT BANK WITH US.
IMPLEMENTING ETHICS AND INTEGRITY
Responsibility assigned to : Human Resources Department
Responsible person : Group Chief Human Resource Officer
Aspect Status
Providing all employees with the necessary training to enable
them to understand the corporate value culture, business
principles, standards and norms of behaviour unique to
Sampath Bank.
Yes
Ensure that all employees sign the official Employee Code
of Conduct, which confirms that employees have read and
understood the importance of upholding core values, business
principles, standards and norms of behaviour practiced by
Sampath Bank.
Yes
The Sampath Bank Annual Report
is published in Sinhala as well, in
order to create greater visibility
and give all stakeholders the
opportunity to read and understand
the contents of the report.
G4 - SO 05,07,08 PR 01,06
G4 - PR 03
G4 - 56,57,58
SAMPATH BANK PLC
ANNUAL REPORT 2016404
COMPLIANCE
Compliance remains a key corporate
priority in safeguarding the health of our
business operations. It also reassures
customers of our commitment to adhere
to laws and regulations prevailing in the
country
BUSINESS CONTINUITY PLAN (BCP)
Sampath Bank’s BCP includes the
following activities;
Identify all business processes
within each business unit
Determine the financial,
customer, operational, legal and/
or regulatory impacts of each
process
Define key internal and external
relationships and ascertain
inter-dependencies between
processes
Establish a time frame to recover
business and technology
processes at a disaster
Assign necessary resources
required for the recovery of each
process within the predetermined
recovery time frame
Provide a foundation for the Risk
Assessment and Control Process
Carryout regular disaster
recovery drills to ensure the
business continuity in case of a
disaster
ECONOMIC
Being in the business of banking,
climate change does not have a
significant impact on our business.
Accordingly during the reporting
period, no records were maintained to
catalogue the effect of climate change
on our business.
FINANCIAL ASSISTANT RECEIVED
FROM THE GOVERNMENT
As we are a private sector organization,
there is no direct or indirect financial
assistance received from the
government. The Board is the apex
body that provides oversight for the
business.
Incentive Scheme Status
Tax relief No
Subsidies No
Investment grants /
research & development
grants
No
Royalty holiday No
Financial incentives No
BRAND EQUITY STUDY
PR 05
Research Agency - Quantum Consumer Solution (Pvt) Ltd
Period of Research - January to December 2016
Type of Research - Qualitative
Sample Size - 27 units (core Sampath users & lapsed users)
Coverage - Colombo, Galle, Batticaloa (urban / semi urban
& rural)
Criteria Fine or
Penalty
Charge
Warning
Issued
Voluntary
Codes
Violation
Non-
compliance of
Regulations
Monetary
Fine or
Penalty
Due to health & safety of the product & services
(please refer page 85)
No No No No No
Due to product and service information & labelling No No No No No
Due to marketing communication (please refer page 83) No No No No No
Due to breaching customer privacy (please refer page 403) No No No No No
G4 - PR 02,04,07,08,09
G4 - PR 05 EC 02,04
SUPPLEMENTARY INFORMATION
OTHER SUSTAINABILITY DISCLOSURES
405MARKET PRESENCE
Term Used Relevance to Sampath Bank
Local Operation Sampath Bank operates within the boundary, the local term used to define the operation within the
Sri Lanka.
Significant Operation In the Sri Lankan market, this means every corner of the island through their branch network. (for
more details on the locations of operation, please refer page 64).
Senior Management At Sampath Bank, this refers to a designated authority in charge of a key business unit/function. All
senior managers of the Bank are local hires.
Entry Level Wage Remuneration paid to Sampath Bank new entrants joining the Bank as a Trainee Staff Assistant /
Junior Executive 1. The Bank does not distinguish between gender and both males and females in
this positions are entitled to the same entry level wage.
Note: Sampath Bank’s entry-level wage is higher than the minimum wage rate imposed by the
relevant regulatory bodies of Sri Lanka
OTHER DISCLOSURES
Key Area Remarks
Child labour or forced labour We do not engage child labour or forced labour in our
business operation
Actual & potential negative impact of local community
due to operational activities
No significant incidents report for the year
Monitory or non-monitory contribution made to
political parties
None
Changes or restatement in accounting policies and methods There are no changes to the accounting policies and
methods of computation since the publication of the annual
accounts for the year 2015.
Ozone depleting substances Emissions of Ozone Depleting Substances (ODS) are
insignificant, considering the nature of our business.
Ethics and integrity We have in place a strict ethics & integrity control
mechanism, which includes the employee Code of Conduct,
Whistle blowing policy etc., that ensures the highest level
of ethical behaviour is practiced across the business. As
such, there have been no reported incidents either internal or
external, regarding the breach of ethics or unlawful behaviour
by any of our employees, in a way that would bring into
question the integrity of the Bank.
GOVERNANCE
MEASURES TAKEN TO DEVELOP
AND ENHANCE THE KNOWLEDGE
OF HIGHEST GOVERNANCE BODY
Members of the highest governance
body are qualified professionals, who
are committed to further enhancing
their knowledge and skills through
continuous professional development
activities, including engaging with
professional bodies and industry
experts. They also participate in both
G4 - EC 05,06
G4 - 43
G4 - 22,56,57,58 SO 02,06 EN 20 HR 05,06
National / International conferences
which help to maximize their
knowledge on the economic, social
and environmental topics and enable
these aspects to be integrated into the
business in a fruitful manner.
SAMPATH BANK PLC
ANNUAL REPORT 2016406
CARBON FOOTPRINT CALCULATION
ASSESSMENT PROFILE
Site Location Sampath Bank PLC
Assessment Type Organizational Greenhouse Gas Assessment
Applied Standards WBCSD/WRI GHG Protocol, ISO 14064-1
Consolidation Approach Operational control
Assessment Scope Purchased electricity, waste disposal, on site energy, employee commuting, third-party
deliveries, fugitive emissions, electricity transmission and distribution losses
Reporting Period 01-01-2016 to 31-12-2016
Intended User Management and stakeholders of Sampath Bank
Base Year 2016
GHG Protocol Scope Emission Source Data Quality
Scope 1 - Direct emissions Company owned vehicles Complete
On site energy - generators, LP gas Complete
Fugitive emissions - refrigerants, fire
extinguishers Complete
Leased vehicles Complete
Scope 2 - Purchased Energy Purchased electricity Complete
Scope 3 - Indirect Emissions Electricity transmission and distribution losses Complete
Hired vehicles Complete
Air travel Complete
Third-party deliveries Complete
Employee commuting Complete
Waste disposal Complete
Source Emissions (tonnes CO2 e)
CO2
CH4
N2O Total
Scope 1
Total: Onsite energy 226.53 0.009 0.004 227.18
Total: Company owned vehicle 996.51 0.055 0.067 1,016.83
Total: Leased vehicles 0.53 - - 0.53
Scope 2
Purchased electricity 7,634.175 - - 7,634.175
Scope 3
Total: Electricity transmission & distribution loss 954.272 - - 954.272
Total: Hired vehicles - - - -
Total: Third-party deliveries 136.40 - - 136.40
Total: Air travel 47.32 - - 47.32
Total: Employee commuting 1,468.487 3.17 0.1069 1,585.78
Total Waste disposal 10.43 - - 10.43
SPECIFIC KEY PERFORMANCE INDICATOR FOR SAMPATH BANK:
Emissions per employee - 2.93 tCO2e
Total Carbon Footprint for the year - 11,613 tCO2e
G4 - EN 15,16,17,18,21
SUPPLEMENTARY INFORMATION
OTHER SUSTAINABILITY DISCLOSURES
407
SAMPATH BANK PLC
ANNUAL REPORT 2016408
MATERIALITY ASSESSMENT
Material Aspect Boundary Material level within
the organization
Material level outside
the organization
1 Economic performance Sampath Bank High High
2 Indirect economic impact Sampath Bank/ Community High High
3 Energy saving Sampath Bank High High
4 Reduction of paper waste Sampath Bank High High
5 Carbon footprint calculation Sampath Bank High Medium
6 Employee engagement -
environment
Sampath Bank / Employee High High
7 Sustainable lending Sampath Bank / Community High Medium
8 Customers engagement -
environment
Sampath Bank / Community High Medium
9 Environmental CSR Sampath Bank / Community High High
10 Salary, benefits, rewards and
recognition
Sampath Bank / Employee High Medium
11 Training and development Sampath Bank / Employee High High
12 Leadership development Sampath Bank / Employee High High
13 Employee engagement - CSR Sampath Bank / Employee High High
14 Diversity and inclusion Sampath Bank / Employee High Medium
15 Safety and wellness Sampath Bank / Employee High Medium
16 IT systems Sampath Bank High High
17 Digital channels Sampath Bank / Customer High Medium
18 Customer touch-points Sampath Bank / Customer High High
19 Periodic internal surveys Sampath Bank / Customer Medium Medium
20 Socially responsible CSR model Sampath Bank / Community High Medium
21 Transparency and governance Sampath Bank / Community High High
22 Community engagement Sampath Bank / Community High High
23 Employee volunteerism Sampath Bank / Community High Medium
24 Product responsibility Sampath Bank / Customer High High
25 Marketing communication Sampath Bank / Customer High Medium
26 Customer privacy and data
security Sampath Bank / Customer High High
27 Customer service Sampath Bank / Customer High High
28 Customer-centricity Sampath Bank / Customer High High
29 Fair and equitable procurement Sampath Bank / Suppliers High Medium
30 Supplier risk assessment Sampath Bank / Suppliers High High
31 Contractual agreements Sampath Bank / Suppliers High Medium
32 Local sourcing Sampath Bank / Suppliers Medium High
To expand our sustainability parameters, we carried out and develop sustainability parameters which are relating to the bank.
Notably this exercise has led to a slight change in our materiality levels of the reporting period.
G4 - 18,19,20,21,23
SUPPLEMENTARY INFORMATION
OTHER SUSTAINABILITY DISCLOSURES
409
Checking the calculations performed by the bank on a sample basis through recalculation.
Reconciling and agreeing the data on financial performance are properly derived from the bank’s audited financial statements for the year ended 31 December 2016.
Comparison of the content of the Report against the criteria for a Global Reporting Initiative G4 ‘In accordance’ - Comprehensive guidelines.
Our procedures did not include testing electronic systems used to collect and aggregate the information.
LIMITATIONS AND CONSIDERATIONSEnvironmental and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.
CONCLUSIONBased on the procedures performed, as described above, we conclude that; The information on financial
performance as specified on page 381 of the Report are properly derived from the audited financial statements of the Bank for the year ended 31 December 2016.
Nothing has come to our attention that causes us to believe that other information presented in the Report are not fairly presented, in all material respects, in accordance with the Bank’s sustainability practices and policies some of which are derived from GRI-G4-‘In accordance’ Comprehensive Sustainability Reporting Guidelines.
Ernst & YoungChartered Accountants
13 February 2017Colombo
INDEPENDENT ASSURANCE REPORT TO THE SHAREHOLDERS OF SAMPATH BANK PLC
INDEPENDENT ASSURANCE REPORT TO SAMPATH BANK PLC ON THE SUSTAINABILITY REPORTING CRITERIA PRESENTED IN THE INTEGRATED ANNUAL REPORT- 2016
INTRODUCTION AND SCOPE OF THE ENGAGEMENTThe management of Sampath Bank PLC (“the Bank”) engaged us to provide an independent assurance on the following elements of the sustainability reporting criteria presented in the annual report- 2016 (“the Report”). Reasonable assurance on the
information on financial performance as specified on page 381 of the Report.
Limited assurance on other information presented in the Report, prepared in accordance with the requirements of the Global Reporting Initiative G4 ‘In accordance’ - Comprehensive guidelines.
BASIS OF OUR WORK AND LEVEL OF ASSURANCE We performed our procedures to provide limited assurance in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE 3000): ‘Assurance Engagements Other than Audits or Reviews of Historical Financial Information’, issued by the Institute of Chartered Accountants of Sri Lanka (“CASL”).
The evaluation criteria used for this limited assurance engagement are based on the Sustainability Reporting Guidelines (“GRI Guidelines”) and related information in particular, the requirements to achieve GRI G4 ‘In accordance’ - Comprehensive guideline publication, publicly available at GRI’s global website at “www.globalreporting.org”.
Our engagement provides limited assurance as well as reasonable assurance. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement conducted in accordance with SLSAE-3000
and consequently does not enable to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express an opinion providing reasonable assurance.
MANAGEMENT OF THE BANK’S RESPONSIBILITY FOR THE REPORTThe management of the bank is responsible for the preparation of the self-declaration, the information and statements contained within the Report, and for maintaining adequate records and internal controls that are designed to support the sustaining reporting process in line with the GRI Sustainability Reporting Guidelines.
ERNST & YOUNG’S RESPONSIBILITYOur responsibility is to express a conclusion as to whether we have become aware of any matter that causes us to believe that the Report is not prepared in accordance with the requirements of the Global Reporting Initiative G4 ‘In accordance’ - Comprehensive guidelines. This report is made solely to the Bank in accordance with our engagement letter dated 15 July 2016. We disclaim any assumption of responsibility for any reliance on this report to any person other than the bank or for any purpose other than that for which it was prepared. In conducting our engagement, we have complied with the independence requirements of the Code for Ethics for Professional Accountants issued by the CASL.
KEY ASSURANCE PROCEDURES We planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusions. Key assurance procedures included:
Interviewing relevant the bank’s personnel to understand the process for collection, analysis, aggregation and presentation of data.
Reviewing and validation of the information contained in the Report.
SAMPATH BANK PLC
ANNUAL REPORT 2016410
GLOSSARY OF FINANCIAL AND BANKING TERMS
A
ACCEPTANCES
The signature on a Bill of Exchange
indicates that the person on whom it
is drawn accepts the conditions of the
Bill. In other words a Bill of Exchange
that has been accepted.
ACCOUNTING POLICIES
The specific principles, bases,
conventions, rules and practices
adopted by an entity in preparing and
presenting Financial Statements.
ACCRUAL BASIS
Recognition of the effects of
transactions and other events when
they occur without waiting for receipt or
payment of cash or its equivalents.
ACTUARIAL ASSUMPTIONS
An entity’s unbiased and mutually
compatible best estimates of the
demographic and financial variable
that will determine the ultimate cost of
providing post-employment benefits.
AMORTISATION
The systematic allocation of the
depreciable amount of an intangible
asset over its useful life.
AMORTISED COST
The amortised cost of a financial asset
or financial liability is the amount at
which the financial asset or financial
liability is measured at initial recognition
minus principal repayments, plus or
minus the cumulative amortisation
using the effective interest method
of any difference between that initial
amount and the maturity amount, and
minus any reduction (directly or through
the use of an allowance account) for
impairment or uncollectability.
ASSET AND LIABILITY COMMITTEE
(ALCO)
A risk-management committee in a
bank that generally comprises the
senior-management levels of the
institution. The ALCO’s primary goal
is to evaluate, monitor and approve
practices relating to risk due to
imbalances in the capital structure.
Among the factors considered
are liquidity risk, interest rate risk,
operational risk and external events
that may affect the bank’s forecast and
strategic balance-sheet allocations.
ASSOCIATE COMPANY
An associate is an entity, including
an unincorporated entity such as a
partnership, over which the investor has
significant influence and that is neither
a subsidiary nor an interest in a joint
venture.
AVAILABLE FOR SALE (AFS)
FINANCIAL ASSETS
Non derivative financial assets that
are designated as available for sale
or are not classified as (a) loans
and receivables, (b) held-to-maturity
investments or (c) financial assets at
fair value through profit or loss.
AVERAGE WEIGHTED DEPOSIT
RATE (AWDR)
AWDR is calculated by the Central
Bank monthly based on the weighted
average of all outstanding interest
bearing deposits of commercial banks
and the corresponding interest rates.
AVERAGE WEIGHTED PRIME
LENDING RATE (AWPLR)
AWPLR is calculated by the Central
Bank weekly based on commercial
banks’ lending rates offered to their
prime customers during the week.
B
BASEL II
The capital adequacy framework
issued by the Basel Committee on
Banking Supervision (BCBS) in the
form of the ‘International Convergence
of Capital Measurement and Capital
Standards’.
BASEL III
The BCBS issued the Basel III rules
text, which presents the details
of strengthened global regulatory
standards on bank capital adequacy
and liquidity.
BILLS SENT FOR COLLECTION
A bill of exchange drawn by an
exporter usually at a term, on an
importer overseas and brought by the
exporter to his bank with a request to
collect the proceeds.
C
CAPITAL ADEQUACY RATIO
The percentage of risk-adjusted assets
supported by capital as defined under
the framework of risk-based capital
standards developed by the Bank for
International Settlement (BIS) and as
modified to suit local requirements by
the Central Bank of Sri Lanka.
CASH EQUIVALENTS
Cash equivalents are short-term,
highly liquid investments that are
readily convertible to known amounts
of cash and which are subject to an
insignificant risk of changes in value.
CASH FLOWS
Cash flows are inflows and outflows of
cash and cash equivalents.
COLLECTIVELY ASSESSED LOAN
IMPAIRMENT PROVISIONS
Also known as portfolio impairment
provisions. Impairment assessment on
a collective basis for homogeneous
groups of loans that are not considered
individually significant and to cover
losses that has been incurred but has
not yet been identified at the reporting
date. Typically assets within the
consumer banking business (housing,
personal, vehicle loans, credit cards
etc) are assessed on a portfolio basis.
SUPPLEMENTARY INFORMATION
411COMMERCIAL PAPER (CP)
An unsecured, short-term debt
instrument issued by a corporation,
typically for the financing of accounts
receivable, inventories and meeting
short-term liabilities. The debt is
usually issued at a discount, reflecting
prevailing market interest rates.
COMMITMENTS
Credit facilities approved but not yet
utilized by the clients as at the reporting
date.
CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated financial statements are
the financial statements of a group
in which the assets, liabilities, equity,
income, expenses and cash flows
of the parent and its subsidiaries
are presented as those of a single
economic entity.
CONTINGENCIES
A condition or situation, the ultimate
outcome of which (gain or loss) will
be confirmed only on the occurrence
or non-occurrence of one or more
uncertain future events.
CONTRACT
An agreement between two or more
parties that creates enforceable rights
and obligations.
CONTROL
An investor controls an investee when
the investor is exposed, or has rights,
to variable returns from its involvement
with the investee and has the ability to
affect those returns through its power
over the investee.
CORPORATE GOVERNANCE
The process by which corporate entities
are governed. It is concerned with the
way in which power is exercised over
the management and direction of entity,
the supervision of executive actions
and accountability to owners and
others.
CORRESPONDENT BANK
A bank in a foreign country that offers
banking facilities to the customers of a
bank in another country.
COST METHOD
A method of accounting whereby the
investment is recorded at cost. The
Income Statement reflects income from
the investment only to the extent that
the investor receives distributions from
accumulated net profits of the investee
arising subsequent to the date of
acquisition.
COST-PUSH INFLATION
A continuous increase in average price
levels due to an increase in production
costs.
COST TO INCOME RATIO
Operating expenses excluding
impairment charge for loans and
other losses as a percentage of total
operating income.
COUNTRY RISK
The risk that a foreign government will
not fulfil its obligations or obstructs the
remittance of funds by debtors, either
for financial reasons (transfer risk) or for
other reasons (political risk).
CREDIT RATING
An evaluation of a corporate’s ability
to repay its obligations or likelihood
of not defaulting, carried out by an
independent rating agency.
CREDIT RISK
Credit risk is the risk of financial loss to
the Bank if a customer or counter party
to a financial instrument fails to meet
its contractual obligations, and arises
principally from the loans and advances
to customers and other banks and
investment debt securities.
CREDIT RISK MITIGATION
A technique to reduce the credit
risk associated with an exposure by
application of credit risk mitigants such
as collateral, guarantee and credit
protection.
CURRENCY RISK
The risk that the fair value or future
cash flows of a financial instrument will
fluctuate because of changes in foreign
exchange rates.
CURRENCY SWAPS
The simultaneous purchase of
an amount of a currency for spot
settlement and the sale of the same
amount of the same currency for
forward settlement.
CUSTOMER DEPOSITS
Money deposited by account holders.
Such funds are recorded as liabilities.
D
DEFERRED TAX
Sum set aside in the financial
statements for taxation that may
become payable/receivable in a
financial year other than the current
financial year. It arises because of
temporary differences between tax
rules and accounting conventions.
DELINQUENCY
A debt or other financial obligation
is considered to be in a state of
delinquency when payments are
overdue. Loans and advances are
considered to be delinquent when
consecutive payments are missed. Also
known as ‘Arrears’.
DEPRECIATION
The systematic allocation of the
depreciable amount of an asset over its
useful life.
DERECOGNITION
Derecognition is the removal of a
previously recognised financial asset
or financial liability from an entity’s
statement of financial position.
DERIVATIVES
A derivative is a financial instrument
or other contract, the value of which
changes in response to some
underlying variable (e.g. an interest
rate), that has an initial net investment
smaller than would be required for
other instruments that have a similar
SAMPATH BANK PLC
ANNUAL REPORT 2016412
response to the variable, and that will
be settled at a future date.
DISCOUNT RATE
A rate used to place a current value on
future cash flows. It is needed to reflect
the fact that money has a time value.
DIVIDEND COVER
Profit after tax divided by gross
dividend. This ratio measures the
number of times dividend is covered by
the current year’s distributable profits.
DIVIDEND YIELD
Dividend earned per share as a
percentage of its market value.
DOCUMENTARY LETTERS OF
CREDIT (LCS)
Written undertakings by a bank on
behalf of its customers, authorising a
third party to draw on the Bank up to a
stipulated amount under specific terms
and conditions. Such undertakings
are established for the purpose of
facilitating international trade.
E
EARNINGS PER SHARE (EPS)
The profit attributable to each ordinary
share in the Bank, based on the
profit for the period after tax and
after deducting minority interest and
preference share Dividend.
ECONOMIC VALUE ADDED (EVA)
A measure of productivity which takes
into consideration cost of total invested
equity.
EFFECTIVE INTEREST RATE (EIR)
Rate that exactly discounts
estimated future cash payments or
receipts through the expected life
of the financial instruments or, when
appropriate, a shorter period to the net
carrying amount of the financial asset
or financial liability.
EFFECTIVE TAX RATE (ETR)
Provision for taxation excluding
deferred tax divided by the profit before
taxation.
EQUITY INSTRUMENT
An equity instrument is any contract
that evidences a residual interest in the
assets of an entity after deducting all of
its liabilities.
EQUITY METHOD
The equity method is a method of
accounting whereby the investment is
initially recognised at cost and adjusted
thereafter for the post-acquisition
change in the investor’s share of net
assets of the investee. The profit or loss
of the investor includes the investor’s
share of the profit or loss of the
investee.
ESOP (EMPLOYEE SHARE
OWNERSHIP PLAN)
A method of giving employees shares
in the business for which they work.
EVENTS AFTER THE REPORTING
PERIOD
Events after the reporting period
are those events, favourable and
unfavourable, that occur between the
end of the reporting period and the
date when the financial statements are
authorised for issue.
EXPECTED CREDIT LOSSES
The weighted average of credit losses
with the respective risks of a default
occurring as the weights.
EXPECTED LOSS (EL)
A regulatory calculation of the amount
expected to be lost on an exposure
using a 12 month time horizon and
downturn loss estimates. EL is
calculated by multiplying the Probability
of Default (a percentage) by the
Exposure at Default (an amount) and
Loss Given Default (a percentage).
EXPOSURE
A claim, contingent claim or position
which carries a risk of financial loss.
F
FAIR VALUE
Fair Value is the price that would
be received to sell an asset or
paid to transfer a liability in an
orderly transaction between market
participants at the measurement date.
FINANCE LEASE
A finance lease is a lease that transfers
substantially all the risks and rewards
incidental to ownership of an asset.
Title may or may not eventually be
transferred.
FINANCIAL GUARANTEE CONTRACT
A financial guarantee contract is a
contract that requires the issuer to
make specified payments to reimburse
the holder for a loss it incurs because a
specified debtor fails to make payment
when due in accordance with the
original or modified terms of a debt
instrument.
FINANCIAL INSTRUMENT
Financial instrument is any contract that
gives rise to a financial asset of one
entity and a financial liability or equity
instrument of another entity.
FIRM COMMITMENT
A firm commitment is a binding
agreement for the exchange of a
specified quantity of resources at a
specified price on a specified future
date or dates.
FOREIGN EXCHANGE INCOME
The realised gain recorded when
assets or liabilities denominated in
foreign currencies are translated into Sri
Lankan Rupees on the reporting date
at prevailing rates which differ from
those rates in force at inception or on
SUPPLEMENTARY INFORMATION
GLOSSARY OF FINANCIAL AND BANKING TERMS
413the previous reporting date. Foreign
exchange income also arises from
trading in foreign currencies.
FORWARD EXCHANGE CONTRACT
Agreement between two parties to
exchange one currency for another at a
future date at a rate agreed upon today.
G
GLOBAL REPORTING INITIATIVE
(GRI)
GRI is a leading organization in the
sustainability field. GRI promotes
the use of sustainability reporting as
a way for organizations to become
more sustainable and contribute to
sustainable development.
GOING CONCERN
The financial statements are normally
prepared on the assumption that
an entity is a going concern and
will continue in operation for the
foreseeable future. Hence, it is
assumed that the entity has neither
the intention nor the need to liquidate
or curtail materially the scale of its
operations.
GROSS DIVIDEND
The portion of profits distributed to the
shareholders including the tax withheld.
GROUP
A group is a parent and its subsidiaries.
GUARANTEES
A promise made by a third party
(guarantor), who is not a party to a
contract between two others, that the
guarantor will be liable if the guarantee
fails to fulfil the contractual obligations.
H
HEDGING
A strategy under which transactions
are effected with the aim of providing
cover against the risk of unfavourable
price movements (interest rate, foreign
exchange rate, commodity prices, etc)
HELD TO MATURITY (HTM)
FINANCIAL ASSETS
Held-to-maturity investments are non-
derivative financial assets with fixed
or determinable payments and a fixed
maturity that an entity has the positive
intention and ability to hold to maturity.
HIGH QUALITY LIQUID ASSETS
(HQLA)
HQLA are assets that can be easily
and immediately converted into cash
at little or no loss of value, that can
be readily sold or used as collateral
to obtain funds in a range of stress
scenarios and are unencumbered, i.e.,
without legal, regulatory or operational
impediments.
I
IMPAIRED LOANS
Impaired loans are loans where the
Group does not expect to collect all
the contractual cash flows or expects
to collect them later than they are
contractually due.
IMPAIRMENT
This occurs when recoverable amount
of an asset is less than its carrying
amount.
IMPAIRMENT PROVISIONS
Impairment provisions are provisions
held on the Statement of Financial
Position as a result of the raising of a
charge against profit for the incurred
loss.
INDIVIDUALLY SIGNIFICANT LOAN
IMPAIRMENT PROVISION (SPECIFIC
IMPAIRMENT PROVISION)
Impairment is measured individually for
assets that are individually significant to
the Group.
INTANGIBLE ASSET
An intangible asset is an identifiable
non-monetary asset without physical
substance.
INTEREST COVER
A ratio showing the number of times
interest charges is covered by earnings
before interest and tax.
INTEREST MARGIN
Net interest income expressed as a
percentage of average interest earning
assets.
INTEREST RATE RISK
The risk that the fair value or future
cash flows of a financial instrument will
fluctuate because of changes in market
interest rates.
INTEREST RATE SWAP
An agreement between two parties
where one stream of future interest
payments is exchanged for another
stream of future interest payments
based on a specified principal amount.
INTEREST SPREAD
This represents the difference between
the average interest rate earned and
the average interest rate paid on funds.
INVESTMENT PROPERTIES
Investment property is property (land
or a building - or part of a building - or
both) held (by the owner or by the
lessee under a finance lease) to earn
rentals or for capital appreciation
or both, rather than for use in the
production or supply of goods or
services or for administrative services;
or sale in the ordinary course of
business.
K
KEY MANAGEMENT PERSONNEL
Key management personnel are
those persons having authority and
responsibility for planning, directing
and controlling the activities of the
entity.
L
LIFETIME EXPECTED CREDIT
LOSSES
The expected credit losses that result
from all possible default events over the
expected life of a financial instrument.
LIQUIDITY COVERAGE RATIO (LCR)
Banks are required to maintain an
adequate level of unencumbered High
Quality Liquid Assets (HQLA) that
can be converted into cash to meet
SAMPATH BANK PLC
ANNUAL REPORT 2016414
their liquidity needs for a 30 calendar
day time horizon under a significantly
severe liquidity stress scenario. LCR
is computed by dividing the stock of
HQLA by the total net cash outflows
over the next 30 calendar days.
LIQUID ASSETS
Assets that are held in cash or in a form
that can be converted to cash readily,
such as deposits with other banks,
bills of exchange and treasury bills and
bonds.
LIQUIDITY RISK
The risk that an entity will encounter
difficulty in meeting obligations
associated with financial liabilities.
LOANS AND RECEIVABLES
Non derivative financial assets with
fixed or determinable payments that
are not quoted in an active market other
than those intends to sell immediately
or in the near term and designated
as fair value through profit or loss or
available sale on initial recognition.
LOSS GIVEN DEFAULT (LGD)
LGD is the percentage of an exposure
that a lender expects to lose in the
event of obligor default.
M
MARKET CAPITALISATION
The value of a company obtained by
multiplying the number of ordinary
shares in issue by its market value as
at a date.
MARKET RISK
Market risk is the risk that changes in
market prices, such as interest rates,
equity prices, foreign exchange rates
and credit spreads (not relating to
changes in the obligor’s/issuer’s credit
standing) will affect the Bank’s income
or the value of its holdings of financial
instruments.
MATERIALITY
The relative significance of a
transaction or an event, the omission or
misstatement of which could influence
the decisions of users of financial
statements.
N
NET ASSET VALUE PER SHARE
Shareholders’ funds divided by the
number of ordinary shares in issue.
NET-INTEREST INCOME (NII)
The difference between what a bank
earns on assets such as loans and
securities and what it pays on liabilities
such as deposits, refinance funds and
inter-bank borrowings.
NOSTRO ACCOUNT
A bank account held in foreign country
by a domestic bank, denominated in
the currency of that country. Nostro
accounts are used to facilitate the
settlement of foreign exchange trade
transactions.
NON-CONTROLLING INTEREST
Non controlling interest is the equity in
a subsidiary not attributable, directly or
indirectly to a parent.
O
OPERATIONAL RISK
Operational risk refers to the losses
arising from fraud, negligence,
oversight, human error, process errors,
system failures, external events, etc.
P
PARENT
A parent is an entity that controls one or
more entities.
POWER
The Power is the existing rights that
give the current ability to direct the
relevant activities.
PRICE EARNINGS RATIO (P/E RATIO)
The current market price of the share
is divided by the earnings per share of
the Bank.
PROBABILITY OF DEFAULT (PD)
The probability that an obligor will
default within a one-year time horizon.
PROJECTED UNIT CREDIT METHOD
(PUC)
An actuarial valuation method that sees
each period of service as giving rise to
an additional unit of benefit entitlement
and measures each unit separately to
build up the final obligation.(sometimes
known as the accrued benefit method
pro-rated on service or as the benefit/
years of service method). Prudence
Inclusion of a degree of caution in the
exercise of judgment needed in making
the estimates required under conditions
of uncertainty, such that assets or
income are not overstated and liabilities
or expenses are not understated.
R
RELEVANT ACTIVITIES
Relevant activities are activities of the
investee that significantly affect the
investee’s returns.
REPURCHASE AGREEMENT
This is a contract to sell and
subsequently repurchase government
securities at a given price on a
specified future date.
RETURN ON AVERAGE ASSETS
(ROA)
Profit after tax expressed as a
percentage of average total assets,
used along with ROE, as a measure of
profitability and as a basis of intra-
industry performance comparison.
SUPPLEMENTARY INFORMATION
GLOSSARY OF FINANCIAL AND BANKING TERMS
415RETURN ON AVERAGE EQUITY
(ROE)
Profit after tax less preferred share
dividends if any, expressed as a
percentage of average ordinary
shareholders’ equity.
REVENUE RESERVES
Reserves set aside for future
distribution and investment.
REVERSE REPURCHASE
AGREEMENT
Transaction involving the purchase of
government securities by a bank or
dealer and resale back to the seller at a
given price on a specific future date.
RIGHTS ISSUE
Issue of shares to the existing
shareholders at an agreed price,
generally lower than market price.
RISK-WEIGHTED ASSETS
Used in the calculation of risk-based
capital ratios. The face amount of lower
risk assets is discounted using risk
weighting factors in order to reflect a
comparable risk per rupee among all
types of assets. The risk inherent in
commitment & contingencies is also
recognised, first by adjusting notional
values to Statement of Financial
Position (or credit) equivalents and then
by applying appropriate risk weighting
factors.
S
SEGMENTAL ANALYSIS
Analysis of financial information by
segments of an enterprise specifically,
the different industries and the
different geographical areas in which it
operates.
SHAREHOLDERS’ FUNDS
Total of issued and fully paid share
capital and capital and revenue
reserves.
SINGLE BORROWER LIMIT
30% of capital base.
STATUTORY RESERVE FUND
A capital reserve created as per the
provisions of the Banking Act No. 30 of
1988.
SUBSIDIARY
A Subsidiary is an entity that is
controlled by another entity.
SUBSTANCE OVER FORM
The consideration that the accounting
treatment and the presentation in
financial statements of transactions and
events should be governed by their
substance and financial reality and not
merely by legal form.
T
TIER I CAPITAL (CORE CAPITAL)
Consists of the sum total of paid up
ordinary shares, non cumulative & non
redeemable preference shares, share
premium, statutory reserve funds,
published retained profits, general &
other reserves less goodwill.
TIER II CAPITAL (SUPPLEMENTARY
CAPITAL)
Supplementary capital includes,
approved revaluation reserves, general
provisions, hybrid (debt/equity) capital
items and approved subordinated term
debts.
TOTAL CAPITAL (CAPITAL BASE)
Capital base is summation of the core
capital (Tier I) and the supplementary
capital (Tier II).
TWELVE MONTH EXPECTED CREDIT
LOSSES
The portion of lifetime expected credit
losses that represent the expected
credit losses that result from default
events on a financial instrument that are
possible within the 12 months after the
reporting date.
U
UNIT TRUST
An undertaking formed to invest in
securities under the terms of a trust
deed.
USEFUL LIFE
Useful life is the period over which
an asset is expected to be available
for use by an entity or the number of
production or similar units expected to
be obtained from the asset by an entity.
V
VALUE ADDED
Wealth created by providing banking
and other services less the cost
of providing such services. The
value added is allocated among the
employees, the providers of capital,
to government by way of taxes and
retained for expansion and growth.
VOSTRO ACCOUNT
A local currency account maintained
by a local bank for a foreign
(correspondent) bank. For the foreign
bank, it is a Nostro account. The
domestic bank acts as custodian or
manages the account of a foreign
counterpart.
Y
YIELD TO MATURITY
Discount rate at which the present
value of future payments would equal
the security’s current price.
SAMPATH BANK PLC
ANNUAL REPORT 2016416
ABBREVIATIONS
24/7,365 At any time, all year round
ACS Advanced Card System / Access Control Server
ADB Asian Development Bank
ADB – SME
Asian Development Bank - Small and Medium Enterprises
AFS Available for Sale
AGM Assistant General Manager/Annual General Meeting (as appropriate)
AL Advance Level
ALCO Asset & Liability Management Committee
AML Anti Money Laundering
APP A self-contained program or piece of software designed
an application, especially as downloaded by a user to a mobile device.
ASPI All Share Price Index
ATL Above the Line
ATM Automated Teller Machine
AWDR Average Weighted Deposit Rate
AWPLR Average Weighted Prime Lending Rate
B2G Business to Government
BAC Board Audit Committee
BCBS Basel Committee on Bank Supervision
BCP Business Continuity Plan
BIRMC Board Integrated Risk Management Committee
BIS Bank for International Settlements
Bn Billions
BNO Bank Note Operation
BOD Board of Directors
BOP Bottom of the Pyramid
BPR Business Process Re-engineering
bps Basis Point
BRPTRC Board Related Party Transaction Review Committee
BTL Below the Line
CEFÉ Competency-based Economies through Formation of Enterprise
CAR Capital Adequacy Ratio
CAS Common ATM Switch
CASA Current Accounts and Savings Accounts
CASL Chartered Accountants of Sri Lanka (ICASL)
CBSL Central Bank of Sri Lanka
CCD Central Cash Department
CCTV Closed-circuit-television
CEA Central Environmental Authority
CEFTS Common Electronic Fund Transfer System
CEOCFMs Close Family Members
CFOCH4 Methane
CKD Chronic Kidney Disease
CO2 Carbon Dioxide
CO2e Carbon Dioxide equivalent, is a standard unit for measuring carbon footprints
CPU Central Processing Unit
CRIB Credit Information Bureau of Sri Lanka
CRMU Credit Risk Management Unit
CSE Colombo Stock Exchange
CSR Corporate Social Responsibility
DBU Domestic Banking Unit
Dept. Department
DGM Deputy General Manager
DMS Delinquency Management System
DPS Dividend per Share
DRC Disaster Recovery Centre
EAR Earnings at Risk
EBU Electronic Banking Unit
ECL Expected Credit Loss
ED Executive Director
EDP Electroinc Data Processing
EPF Employee Provident Fund
EPS Earnings per Share
ESC Economic Service Charges
ESG Economic Service Charges
ESOP Employee Share Option Plan
ETDP Executive Talent Development Programme
ETF Employee Trust Fund
EU European Union
EVE Economic Value of Equity
EWS Early Warning Signals
FATCA Foreign Account Tax Compliant Act
FCBU Foreign Currency Banking Unit
FD Fixed Deposit
FOGSL Field Ornithology Group of Sri Lanka
FSVAT Financial Services Value Added Tax
FVOCI Fair Value through Other Comprehensive Income
FVPLLoss
GCC Gulf Cooperation Council
GCOGDP Gross Domestic Production
GFD Group Finance Director
GHGGRI Global Reporting Initiative
GROHHIHRHTMIBC Inner Back Cover
i.e. That is
ICAAP Internal Capital Adequacy Assessment Process
ICASL The Institute of Chartered Accountants of Sri Lanka (CASL)
ICOFR Internal Control Over Financial Reporting
ICR Intelligent Character Recognition
ICT Information and communications technology
IFA Investment Fund Account
IIRC International Integrated Reporting Council
ILEDR Internal Loss Event Data Reporting
ILO International Labor Organization
IMF International Monetary fund
IND Independent Director
IRB Internal Rating - Based
IRBF Internal Rating Based Foundation
SUPPLEMENTARY INFORMATION
417IRMU Integrated Risk
Management Unit
ISO International Standards Organization
IT Information Technology
IUCN International Union for Conservation of Nature
Kg Kilogram
Km Kilometer
Km2 Square kilometer
KMP Key Management Personnel
KPI Key Performance Indicator
KPOKRI Key Risk Indicator
KWh Kilowatt-hour
KYC Know Your Customer
LC Letter of Credit
LCB Licensed Commercial Bank
LGD Loss Given Default
LKAS Sri Lanka Accounting Standard
LTV Ratio Loan to Value Ratio
m3 Cubic meter
MD Managing Director
Mn Millions
MoM Month on Month
mPOS Mobile Point of Sale
MSME Micro, Small and Medium Scale Entrepreneur
Mw Megawatt
N2O Nitrous Oxide
NBFI Non-Bank Financial Institution
NBSQA National Best Quality Software Awards
NBT Nations Building Tax
NCRE Non-Conventional Renewable Energy
NED Non Executive Director
NID Non Independent Director
NII Net Interest Income
NIM Net Interest Margin
NPA Non Performing Advances
NPL Non Performing Loans
NOx Nitrogen Oxides
NSC Network Service Centre
OCI Other Comprehensive Income
OCR Optical Character Recognition
ODS Ozone Depleting Substances
OECD Organization for Economic Co-operation and Development
OL Ordinary Level
p a Per Annum
P/E Ratio Price Earnings Ratio
PATPBTPD Probability of Default
PLC Public Limited Company
PLR Prime Lending Rate
POS Point of Sale
PPE Property, Plant & Equipment
Prof Professor
PUC Projected Unit Credit
RCSA Risk and Control Self Assessments
RO Plant Reverse Osmosis Drinking Water Plant
ROA Return on Average Assets
ROCE Return on Capital Employed
ROE Return on Equity
RPT Related Party Transaction/(s)
Rs Rupees
RSA Rate Sensitive Assets
RSL Rate Sensitive Liabilities
RWA Risk- Weighted Assets
S&P SL20 Standard & Poor’s Sri Lanka 20
SBEA Sampath Bank Employee Association
SBU Strategic Business Unit
SCEREmission Reductions
SDFR Standing Deposit Facility Rate
SEC Securities and Exchange Commission of Sri Lanka
SENS Sampath Employee
SEPI Self - Employment Promotion Initiative - a Loan Scheme
SID Senior Independent Director
SIPG Sampath Internet Payment Gateway
SITS Sampath Information Technology Solutions Ltd
SLAR Statutory Liquid Asset Ratio
SLAS Sri Lanka Accounting Standard
SLCF Sri Lanka Climate Fund
SLDB Sri Lanka Development Bonds
SLECIC Sri Lanka Export Credit Insurance Corporation
SLFR Standing Lending Facility Rate
SLFRS Sri Lanka Accounting Standard
SLIPS Sri Lanka Interbank Payments System
SLSAE Sri Lankan Standard on Assurance Engagements
SLSEA Sri Lanka Sustainable Energy Authority
SMARTAchievable, Realistic and Time bound
SME Small & Medium Enterprises
SMILE III Revolving Fund Loan Scheme For small & medium enterprises and micro enterprises
SMS Short Message Service
SNaPC Sampath Nature Protection Club
Snr Senior
SOx Sulfur Oxides
SRP Supervisory Review Process
SWIFT Society for Worldwide Interbank Financial Telecommunication
T. B, Treasury Bill
tCO2e Tonnes of carbon dioxide equivalent
TLE Terminal Line Encryption
Tn Trillion
TT Telegraphic Transfer
UNDP United Nations Development Programme
UNEP United Nations Environment Programme
UNGC United Nations Global Compact
UNWTO World Tourism Organization
US United States of America
USD / US$
United States Dollar
VAR Value at Risk
VAT Value Added Tax
Vis-à-vis in relation to, counterpart
WBCSD World Business Council on Sustainable Development
WHT Withholding Tax
WRI World Resources Institute
YoY Year on Year
SAMPATH BANK PLC
ANNUAL REPORT 2016418
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the
31st Annual General Meeting of
Sampath Bank PLC will be held at the
“Balmoral” Hall, The Kingsbury, No. 48,
Janadhipathi Mawatha, Colombo 01,
on 31st March 2017 at 9.30 a.m. for the
following purposes:
1. To receive and consider the
Annual Report of the Board of
Directors on the affairs of the
Company and the Statement of
Audited Accounts for the year
ended 31st December 2016
with the Report of the Auditors
thereon.
2. To approve the recommended
Cash dividend of Rs. 4.75 per
share as the second and final
dividend for the financial year
2016.
3. To elect Mr Channa Probodha
Palansuriya who was appointed
to the Board to fill up a casual
vacancy in the Board in terms of
Article No. 93 of the Articles of
Association of the Company.
4. To re-elect Mr Ranil Prasad
Pathirana who retires at the
Annual General Meeting as a
Director in terms of Article No. 87
of the Articles of Association of
the Company.
5. To re-elect Mr Deepal
Sooriyaarachchi who retires at
the Annual General Meeting as a
Director in terms of Article No. 87
of the Articles of Association of
the Company.
6. To re-elect Professor Kulatilleke
Arthanayake Malik Kumar
Ranasinghe who retires at the
Annual General Meeting as a
Director in terms of Article No. 87
of the Articles of Association of
the Company.
7. To re-elect Mrs Dharani Shirantha
Wijayatilake who retires at the
Annual General Meeting as a
Director in terms of Article No. 87
of the Articles of Association of
the Company.
8. To approve the Donations and
Contributions made by the
Directors during the year under
review.
9. To re-appoint Messrs Ernst &
Young, Chartered Accountants
as Auditors of the Company for
the ensuing year and to authorize
the Directors to determine their
remuneration.
SPECIAL BUSINESS
10. To consider and approve an ex-
gratia payment of upto Rupees
Ten Million (Rs 10,000,000.00) for
the former Managing Director
Mr Mahawaduge Yasalal
Aravinda Perera, who retired
on 12th September 2016. [This
payment is made in terms of a
policy decision of the Company
and is in line with the Direction
issued by the Central Bank of Sri
Lanka].
11. To consider and approve the
sale of Mercedes Benz vehicle
used by the former Managing
Director Mr Mahawaduge
Yasalal Aravinda Perera to him
at 50% of the Net Book Value
of such vehicle, 50% of the Net
Book Value of the said vehicle
as at 12th September 2016
being Rupees Three Million
Three Hundred and Fifty Seven
Thousand Seven Hundred and
Thirty Nine and Cents Seventy
Three (Rs 3,357,739.73) [This
payment is made in terms of a
policy decision of the Company
and is in line with the Direction
issued by the Central Bank of Sri
Lanka].
12. To consider and approve an
ex-gratia payment of upto
Rupees Seven Million
(Rs 7,000,000.00) for the
Group Finance Director /
Executive Director Mr Ranjith
Samaranayake, who will be
retiring on 08th August 2017
upon reaching the age of 70
years. [This payment is made in
terms of a policy decision of the
Company and is in line with the
Direction issued by the Central
Bank of Sri Lanka].
13. To consider and approve the
sale of Mercedes Benz vehicle
used by the Group Finance
Director/ Executive Director Mr
Ranjith Samaranayake to him
at 50% of the Net Book Value
of such vehicle, 50% of the Net
Book Value of the said vehicle
as at 08th August 2017 being
Rupees One Million Six Hundred
and Eighty Four Thousand Eight
Hundred and Fifty Five and Cents
Thirty One (Rs 1,684,855.31)
[This payment is made in terms
of a policy decision of the
Company and is in line with the
Direction issued by the Central
Bank of Sri Lanka].
By Order of the Board
ANUJA GOONETILLEKE
Company Secretary
Colombo, Sri Lanka
13th February 2017
NOTE:-
A member is entitled to appoint a Proxy to attend and vote on his/her behalf and a Proxy need not be a member of the Company. A Form of
Proxy is enclosed for this purpose. The instrument appointing a Proxy must be deposited at the Registered Office of the Company at No. 110,
Sir James Peiris Mawatha, Colombo 02, not less than forty eight (48) hours before the time fixed for holding of the Meeting.
You are kindly requested to bring with you, your National Identity Card or any valid source of identification. (eg. Driving license, Passport)
419
STAKEHOLDER FEEDBACK FORM
To request information or submit a comment / query to the Bank, please complete the following and return this page to:
Company Secretary,
Sampath Bank PLC,
No. 110, Sir James Peiris Mawatha,
Colombo 02, Sri Lanka.
e-mail: [email protected]
Tel: +94 11 4730418 / 420 / 548
We also appreciate your comments on this Annual Report.
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DESIGN AND LAYOUT
SAMPATH BANK PLC
ANNUAL REPORT 2016420
COMMENTS / QUERIES
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YOUR DETAILS
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CONTACT NUMBERS
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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 OFFICENo.110, 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
WEB PAGEwww.sampath.lk
AUDITORSMessrs Ernst & Young
Chartered Accountants
LAWYERSMessrs Nithya Partners
Attorneys-at-Law
COMPANY SECRETARYMrs Anuja Goonetilleke
Attorney-at-Law
CORPORATE INFORMATION
STOCK EXCHANGE LISTINGS176,981,069 Ordinary Shares
15,000,000 Listed Unsecured
Subordinated Redeemable Debentures
of Rs 100/- each - 2012/2017
50,000,000 Listed Unsecured
Subordinated Redeemable Debentures
of Rs 100/- each - 2013/2018
70,000,000 Listed Unsecured
Subordinated Redeemable Debentures
of Rs 100/- each - 2014/2019
70,000,000 Listed Unsecured
Subordinated Redeemable Debentures
of Rs 100/- each - 2015/2020
60,000,000 Listed Unsecured
Subordinated Redeemable Debentures
of Rs 100/- each - 2016/2021
VAT REGISTRATION NUMBER134001194 - 7000
CREDIT RATINGFitch Rating: Fitch Rating Lanka Limited
has affirmed National Long Term Rating
of A+ (lka) negative outlook to Sampath
Bank PLC
Moody’s Rating: Moody’s Investors
Services has issued Long Term Local
Currency Deposit Rating of B1 with
negative outlook.
BOARD OF DIRECTORSMr Channa Palansuriya
- Chairman / Non Executive Director
Prof Malik Ranasinghe
- Deputy Chairman / Non Executive,
Independent Director
Mr Sanjiva Senanayake
- Senior Director / Non Executive,
Independent Director
Mr Deepal Sooriyaarachchi
- Non Executive, Independent Director
Mrs Dhara Wijayatilake
- Non Executive, Independent Director
Miss Annika Senanayake
- Non Executive, Independent Director
Mr Deshal De Mel
- Non Executive Director
Mr Ranil Pathirana
- Non Executive, Independent Director
Mrs Saumya Amarasekera
- Non Executive Director
Mr Nanda Fernando
- Managing Director (Executive
Director)
Mr Ranjith Samaranayake
- Group Finance Director (Executive
Director)
SUBSIDIARY COMPANIES
Name of the
Company
Holding
%
Nature of
Business
Sampath
Centre Ltd
100.00 Renting of
commercial
property
SC
Securities
(Pvt) Ltd
100.00 Stock broking
Siyapatha
Finance
PLC
100.00 Granting
leasing,
factoring, hire
purchase &
other loan
facilities &
accepting
deposits
Sampath
Information
Technology
Solutions
Ltd
100.00 Developing
software
solutions &
maintenance
of hardware
FOR INVESTOR RELATIONS AND CLARIFICATIONS ON THE REPORT, PLEASE CONTACT: The Company Secretary,
Sampath Bank PLC,
No. 110, Sir James Peiris Mawatha,
Colombo 02, Sri Lanka
E-mail: [email protected]
Tel: +94 (011) 4730418/420/548
www.sampath.lk