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HSBC expands, to recruit more staff in 2003 By Akhry
Ameer The bank recorded
an operating profit of Rs. 1,963 million in 2002, an increase of
26.9% from the previous year fuelled by an increase in net interest
income, lower operating expenses and improved credit quality. The expansion
includes recruitment of additional staff in areas such as direct
sales force and customer services. Mark Humble, Chief Executive
Officer Sri Lanka said, "2002 was very encouraging. Our performance
exceeded the plan. We are planning to expand all lines of businesses
particularly in credit cards and personal banking. As the market
develops and other banks offer similar products and services, to
remain competitive we will have to find the best staff." However, specific
details of the expansion are not known. Asked whether there will
be additional branches, Humble said HSBC was always looking for
new opportunities not just in the form of bricks and mortar, but
may involve other avenues such as off-site ATM's and enhanced systems. Reviewing the
performance, the bank's head attributed success to an improved economic
climate that picked up in the second half of 2002. "We are
lucky to have wide business lines; each had a successful performance,
and we are not overly reliant on any one of them," he added.
HSBC's credit cards topped performance growth with Rs. 299 million
in pre-tax profits, an 88% increase over 2001; followed by a 65%
increase in pre-tax profits from Rs. 441 million (2001) to Rs. 727
million (2002) in serving commercial customers. The growth in these
two areas were helped by lower bad debts and increased volumes.
HSBC also surpassed the 100,000 mark in credit cards emerging as
a clear leader with a 35% market share in a number of cardholders
and cardholder spending, while delinquency levels dropped owing
to an improved economy. HSBC also achieved
sustainable levels in other performance ratios in the industry.
Its return on total assets improved from 2.8% to 3.6%. "One
of the problems in the Sri Lankan banking industry is that costs
are high. Despite this we are happy to have maintained a cost-income
ratio of less than 40%", he added. The cost-income ratio for
2002 was 38.4% compared to 42.6% in 2001. Staff costs
at HSBC are also significant as it considers it a key contributing
factor to performance. More than 70 people, some 10% of its staff
strength, were sent on overseas training for conferences, personal
development and job skills. HSBC accounted
for Rs. 656 million in taxes proving to be an efficient tax collector
for the government, Humble said. This figure
is expected to increase in 2003 and also be a challenge for banks
as they will be additionally required to pay Value Added Tax (VAT)
on profits and staff costs based on the new budget. Having achieved
significant profits, keeping with its policy of corporate responsibility,
the bank as in previous years continues to plough a certain percentage
on social projects. These include training teachers at the School
for Deaf, clean-up of Horton Plains, Vesak-lantern competition for
orphanages, etc. In the outlook for 2003, Humble said while the year ahead remains positive it would also be a challenging year due to external factors, as Sri Lanka is heavily reliant on exports. "Catalyst
for Growth" is a documentary film produced by the BOI to commemorate
the Board's quarter century of existence. A BOI statement
said the board has been a major catalyst in the economic transformation
of Sri Lanka from an essentially agrarian to an increasingly industrialized
country. The history
of the BOI and its plans for the future are covered extensively
in this film which covers many aspects of the organization, focusing
on the setting up of industrial zones and also the men who headed
the organization and the industries that have been set up in Sri
Lanka. It was directed by well-known film director Vasantha Obeysekera using the in house talents of Jagath de Silva, Manager (Media), BOI, who wrote the script. New report suggests social protection strategy for poor Poor people
are more vulnerable than others to risks, and lack ways to cope
with them, according to a new World Bank report, 'Poverty and Vulnerability
in South Asia'. The report, quoted in a World Bank press statement
issued in Colombo, says that the high degree of vulnerability of
poor people perpetuates poverty in a vicious cycle, and notes that
government, non-governmental organizations (NGOs) and development
agencies, like the World Bank, can work together to improve poverty
reduction efforts by decreasing these risks. This can be done though
a range of innovative policies and programs, some already in place
in some South Asian countries. "It is
not enough to just give poor people opportunities to move up, "says
South Asia Vice President Mieko Nishimizu. "They also need
help insulating themselves against the everyday shocks to which
they are particularly vulnerable. We have to understand that poverty
and vulnerability are mutually reinforcing and that the World Bank
needs to assist South Asia's Governments in developing policies
to stop this devastating cycle." South Asia
is home to the largest number of the world's poor. According to
the report, because poor people are primarily located in rural areas
where social protection programs like insurance rarely exist, they
are more vulnerable to poverty and are exposed to a variety of risks,
like crippling illness and death, economic downturn, conflict, natural
disasters, unemployment, harvest failures, floods, drought, and
plagues. "Because
they lack the ability to insure against risks, poor people often
shape their behaviour and decision making to minimize exposure to
risks, even at the cost of economic efficiency and long-term interest,"
writes Tara Vishwanath, one of the authors of the report. "Poverty
and vulnerability are thus mutually reinforcing, each likely to
aggravate the other." The report
shows that directly transferring cash or food to poor people by
the government or an NGO is a type of assistance that can help poor
people at times of heightened vulnerability. The report illustrates
various social assistance programs, which are based on need, providing
old-age payments, child allowances, subsidies and waivers for basic
services, such as education and health care, as other examples.
Sri Lanka's, Samurdhi Program introduced in 1995, is the largest
welfare program in the country. It offers food stamps to eligible
households. These can be critical in cushioning the effect of a
shock experienced by a poor household. An explicit study on the
impact it has on vulnerability would be helpful to determine the
overall success of this program. The report
also shows how micro-finance, especially group-lending schemes,
can be effective in offering opportunities to cope with shocks to
poor people, by providing credit at reasonable interest rates. The
Grameen Bank and the Sri Lanka National Savings Bank (SLNSB) account
for approximately 89 percent of the value of all micro-lending in
the region. The report
states that savings can be a useful means for risk reduction. It
points to recent evidence which shows that even poor households
are eager to save as long as they are provided with safe, flexible,
and accessible accounts. Community-based efforts - such as Safe Save in Bangladesh, among others - have been effective in mobilizing savings of poor people in some areas of South Asia. It gives example of elements for a social protection strategy that could be relevant to the region as a whole. Recognizing that opportunities to expand coverage of formal insurance are limited at present in South Asia, the report says informal efforts, that build on community participation and local knowledge, offer more realistic hope for effective management of the risks faced by poor people in the short run. Nurturing such efforts and finding ways to replicate their success on a wider scale remain significant policy challenges. Social protection programs can also be enhanced through better targeting of the vulnerable and better alignment of the programs to specific risks.
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