Need for convergence between banks
View(s):The results of Sri Lankan banks reveal that 2013 has been a very, very difficult year. Many of them have had one of the most difficult years with non-performing loans having a field day. Gold loans have messed up all the banks. It would be interesting to see how the two state banks have fared in 2013 given their big exposure to gold (results are not known as they are unlisted on the stock market).
Commercial Bank among the private banks has shown the way by demonstrating its resilience and stability which it is known for. In terms of the 2013 net profit figures, the top three banks sh0w:
1. Commercial Bank Rs. 10.5 billion ( up 5 per cent only): Chairman Dinesh Weerakkody, CEO Ravi Dias
2. HNB Rs. 7.1 billion (down over 10 per cent from last year): Chairperson Dr Ranee Jayamaha, CEO Jonathan Alles
3. Sampath Bank Rs. 3.7 billion (down over 15 per cent from last year):
Chairman Dhammika Perera, CEO Arvinda Perera
Middle Level
DFCC, NDB and NTB were above Rs. 1 billion but below Rs 3 billion (NDB had an exceptional gain which I have discounted).
Insignificant group
Pan Asia and Union Bank below Rs. 1 billion
The Central Bank now plans to bring some of the banks together. This should happen to create a stable and vibrant banking sector; in total four banks is sufficient. In the meantime these banks should be left to do their own banking business and be strengthened with competent directors to lead them professionally. With many of the banks undergoing serious change there is a requirement to have competent people to manage these banks; the 2013 results clearly demonstrates the challenges bank’s will face in the future.
Devinda (via email)