Financial Times

ADB help for People's Bank for capital adequacy needs
People's Bank recorded the highest profit after tax and before extra ordinary items reaching Rs. 2.2 billion for 2004, while crossing over from a negative networth on the balance sheet to a positive networth for the first time since 1998.

The Profit after taxation and all extraordinary items amounted to Rs. 1.4 billion. The extra ordinary items relate mainly to provisions for losses arising from the tsunami, amounting to Rs. 681 million.

A top official at the bank told reporters the government will inject funds, given in tranches by the Asian Development Bank (ADB) to recapitalise the bank, presently short of Rs. 11 billion in capital adequacy.

"The ADB is not giving us the money directly, we are getting it through the government in September," Chairman P. Amarasinghe, releasing the annual report last Wednesday, said.

The official said when the bank has sufficient funds in tier one capital, which accounts for share capital and retained profits, it will revalue the fixed assets.

"Together with the first ADB tranche of US$ 20 million and the asset revaluation we can reach Central Bank's minimum capital adequacy requirements," he said. He did not say when, but hinted this will be done in two years.

People's Bank, which launched a major shake-up streamlining its functions, in 2001 extending to 2003, has now started the second phase of restructuring, for 2004 to 2008.

"The bank has performed exceptionally to show consistent profit and balance sheet growth despite the many challenges faced last year and the affects of the tsunami on many of its customers," Amarasinghe said.

The annual report for 2004 has been designed to comply with the latest international standards of "Triple Bottom Line" Reporting, in itself a pioneering endeavour by a state owned enterprise.

Despite its huge scale of operations this is the third consecutive year that the bank has been able to produce the report within three months, producing it in three sections relating to Corporate Governance, Corporate Social Responsibility and Financial Performance.

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