Pan Asia poised for expansion
The Pan Asia Bank is gearing to strengthen its Return on Equity (ROE) levels in a bid to attract more investment, primarily for expansion, officials say.
“Now ROE is at 10 per cent and our targeted ROE is 15-16 per cent by 3Q this year. This we feel will be an appropriate time for us to tap the shareholders (for funding) mainly for our expansions,” Dimantha Seneviratne, Director/CEO Pan Asia told the Business Times, adding that this is in line with the regulatory direction for higher capital requirement.
Dimantha Seneviratne, Director/CEO Pan Asia
During the past 3-4 years, Pan Asia has added 35 branches to its total of 78 branches. “We’re eyeing more expansion, he added. “We’re having an asset target of Rs. 100 billion by year end.”
In the midst of the consolidation debate, the Rs. 80 billion balance sheet bank, Mr. Seneviratne said is gearing for organic growth. Mr. Seneviratne insists that Pan Asia is comfortable with retail and Small and Medium Enterprises (SME) driven organic growth. “When big banks are concentrating on large scale business, the scope for SME and retail become that much more. This is what we’re focusing on,” he added.
The year began on a low key as the bank’s lending portfolio, which had a significant exposure to pawning related products, had taken a hit in 2013, as did the rest of the industry with the drop in global gold prices, he said, adding that this saw muted profits and higher Non Performing Advances. “We evolved our risk management strategies including hedging arrangements to manage the down side risk which enabled us to curtail losses and systematically reduce this exposure. The diversification of lending and focus on Retail and SMEs enabled us to record a 34 per cent growth in advances, well above the industry average”.
The CEO who’s an year old in this job added that in this challenging backdrop, it was indeed an honour to be recognised as the ‘Fastest Growing Commercial Bank in Sri Lanka 2014′ by London based Global Banking and Finance Review and also with the award for the ‘Most Innovative Banking Product in Sri Lanka 2014′ for Pan Asia Bank’s ground breaking product ‘Sammana’ which is a loan product for pensioners.
The bank has large plans to enhance its corporate image. “We have an idea to reorganise our image – it’s still at a nascent stage,” he added.
Pan Asia’s net interest income rose from Rs. 2.095 billion to Rs. 2.740 billion last year, recording a growth of 31 per cent. As a result, net interest margin improved by 13 per cent to 3.82 per cent. “We were also successful in improving our Non Interest Income by 21 per cent to Rs. 1.392 billion, diversifying the revenue sources,” Mr. Seneviratne added.
By the end of 2014 the bank’s Core Capital Ratio (Tier 1) stood at 8.97 per cent as against the statutory minimum requirement of 5 per cent whilst the Total Capital Ratio strengthened to 14.19 per cent (from 11.91 per cent in 2013) against the statutory minimum requirement of 10 per cent.