Sri Lanka’s fastest growing commercial bank, Pan Asia Banking Corporation PLC, building on its forte of understanding the customers’ financial requirements better, recently launched its corporate campaign positioning the bank as ‘The Most Understanding Bank’ in the country.
The corporate campaign could not have come at a better time as the bank celebrates 20 years of excellence in banking and also achieved many a milestone by recording over Rs. 750 million post tax profits and surpassed a key milestone, a Rs. 100 billion asset base by end of the first nine months of 2015.
At this crucial juncture, the bank’s Director/CEO Dimantha Seneviratne sat for an interview to explain the rationale behind the new corporate campaign, the phenomenal growth the bank saw during the recent past and his plans for the future.
As an experienced banker, Seneviratne also offered his insights on the areas that will drive the future of banking in Sri Lanka while adding a word of caution on potential risks the industry might encounter.
Following are the excerpts:
Q: Why did you think of positioning Pan Asia Bank as the ‘The Most Understanding Bank’?
A: Throughout the past, Pan Asia Bank has been known in the market for our one-of-a kind product range as we have continuously been at the forefront of innovation. This was possible because we have been very close to our customers and our ability to understand their needs.
There could be many players in the market who serve a mass market but attending to each and every customer and consistently delivering a personalised service is critical.
We at Pan Asia Bank can understand our customers better because our staff goes the extra mile to understand each customer’s specific requirement. In addition, as a dynamic bank we have always been offering a speedy and a personalised service which has been a forte of ours.
This is why we thought of positioning our bank as ‘The Most Understanding Bank’, because we have been successful in identifying customer requirements and meeting them with innovative products and faster service consistently. So what we have done is effectively bringing the focus on to a brand promise which we are quite capable of delivering.
Q: Promising is easy but delivery is challenging. How confident are you that the bank will be able to deliver its brand promise on a sustainable basis? Does it not require many ingredients such as leadership, people, culture and technology?
A: If you look at our technological advancements made in this year; during the first quarter this year, we migrated to a sophisticated core-banking system. This was followed by the Treasury system implemented in the second quarter. So, technologically we are now well placed to deliver enhanced service to our customers, and our staff is now more familiar with the new system capabilities. Besides, we are working on re-launching a state-of-the-art internet banking solution very soon for our retail, corporate and private banking clientele.
Second, we have a young and dynamic staff force which is being continuously trained to deliver a superior service to customers. For example entire staff of the bank including customer servicing as well as support services is now undergoing a comprehensive service quality training which helps us inculcate the ‘customer driven culture’ at all levels in the bank.
In line with that, we also started a train-the-trainer campaign where we train 100 internal trainers who will in turn bridge service quality gaps identified through customer surveys carried out on an ongoing basis.
Furthermore, in a bid to create a value driven culture, earlier this year, we took steps to introduce six core values which are now inbuilt in to the corporate DNA of the bank.
Simultaneously, our product portfolio has also taken a reshaping and there are a number of innovative products in the pipeline that will be launched in the near future. Apart from that, we will have a customised solution for every financial requirement of the customer.
As such, we are very confident of being able to deliver our brand promise on a sustainable basis.
Q: Do you think that the rural masses are aware of Pan Asia Bank and do you think this corporate campaign will enable you to take Pan Asia Bank to rural areas of Sri Lanka?
A: Our main focus is on uplifting the Small & Medium Enterprise sector and getting in to Micro sector which is scattered across the country. Our brand campaign targets all these people and is strong enough to reinforce Pan Asia Bank in the minds of all these people.
These customers need a financial partner who would stay with them irrespective of their ups and downs and a partner who can understand their pulse better. So, I am sure this corporate campaign reinforces the role we have played in holding their hands at the entrepreneurial stage till the time they grow into larger enterprises and conglomerates.
SMEs consist of 60% of our economy and 70% of our exports, and a vast majority of these enterprises are operating from outside the Western Province. This is why we have taken steps to strengthen our regional network. We are currently operating within seven major regions which cover the entire country.
If you look at our recent financial performance, the growth has come from all these regions and through this campaign we will continue to take Pan Asia Bank to these regions as we strongly believe in financial inclusion.
For instance our ground breaking product, ‘Sammana’ has already reached all corners of the country and as a result we command a leading market share in the pensioners’ loans market. Besides, our educational loan portfolio has grown mainly from the demand for such loans from other regions.
Q: Interestingly, your branding campaign coincides with the bank’s 20th anniversary. How do you plan to celebrate this landmark?
A: We plan to commemorate our 20 years in business, along with the communities that we serve.
As a part of our Corporate Social Responsibility initiatives, we have already built a water purification plant in Thantirimale, a village located in Mahavilachchiya divisional secretariat in Anuradhapura which has been severely affected by a chronic kidney disease due to lack of pure drinking water.
This initiative, we believe, will provide a lasting solution to the drinking water problems faced by the people in the area. Apart from this, our staff has contributed in many ways to uplift facilities in the village school which will be handed over to them soon.
Back home, we performed religious functions under all four major religions during the last week in October to commemorate 20 years of banking excellence and to bless our institution, past and present staff to achieve many more decades of success.
Besides, we also felicitated our long serving staff members and recognised their contribution for the progress of the bank.
Q. Pan Asia Bank has also achieved a significant improvement in financial performance in the recent past. What are your reflections on this quantum leap in performance and how did you achieve it?
A: We achieved a phenomenal growth in our balance sheet, particularly during the last 18 months, which expanded by as much as Rs. 37 billion to cross Rs. 100 billion key milestone.
Growth in our assets during the first nine months of 2015 alone is Rs. 23.5 billion and if you put this in to perspective, this is a five-fold growth in just six years as the bank’s asset base by the end of FY 2009 was just under Rs. 22 billion
Our first nine months after tax profit increased by 171% year-on-year to a record Rs. 751 million.
This growth is sustainable and coming from all fronts and is coupled with improvements in other key performance indicators such as reduction in NPAs, improvement to Cost Income Ratio and the improvement in ROE to around 20%.
Reflecting on how we did it – it all boils down to maximising the existing resources. If you really look at it, we did not blindly invest in physical infrastructure such as branches; instead we took drastic measures to control unnecessary costs, consolidate on our investments already made, manage our asset portfolio in a better way and drive our deposit and asset growth, to name a few measures.
All our successes were driven by our people. We identified the hidden talents in our staff and took measures to increase their engagement and made them believe in themselves. Also, through skills identification, we placed the right people in the right places which enabled us to drive this growth. The bank continuously invests in staff training and development.
Hence, I am certain we can deliver far better results in the times to come and enable the Bank to sustain this performance.
Besides, our growth came from all sectors – retail, SME, corporate, treasury, trading, leasing and cards. Despite the above industry average growth in our loan book, we never compromised on our asset quality and we improved our asset quality as our gross and net non-performing loan ratios declined to 5.36% and 3.64% respectively from 5.73% and 3.78% in December 2014.
So, I attribute this performance to team effort and the direction the bank received from the Board of Directors.
Q: Looking at the economic landscape of the country, as a veteran banker, from where do you see the growth for the banking sector would come from going forward?
A: Going forward, the growth would mainly stem from the various sectors in the economy, mainly the export related industries, tourism, logistics and IT/BPO as these sectors have been identified as the thrust sectors.
With the resumption of the GSP +, there will be renewed growth in our garment and textile industry and the related supply chain industries. Further there are new bi-lateral trade pacts are also in the offing and trade will be a key force driving the economy.
Export led growth model has now become the top most national economic priority and therefore I believe financial services sector will have opportunities to channel funds in to these areas.
Apart from that, due to the renewed focus by the Central Bank on uplifting of the regional economies and improved road infrastructure, the growth will be spread across all provinces. Our regional managers have already taken steps to liaise with these regional centres of the Central Bank to identify and fund the needy sectors of the economy.
Further, the growth will also come from the emerging upper middle income class and the aspirational society that will require financial solutions to meet their growing investment and consumption needs.
Q: What kind of challenges do you foresee for the industry?
A: The recent free floating of the rupee, I believe, is a move in the right direction as it allows the demand and supply forces to determine the exchange rate. This provides opportunities for banks to manage our positions in more rationale ways. At the same time, an error could prove to be costly; hence proper controls and risk management are required.
The thriving industries provide lucrative opportunities for banks to grow their lending book. However, we need to ensure that proper controls such as industry exposure limits and proper credit evaluation processes are in place to prevent an over exposure and consequent losses.
An example is the current housing market. Financial institutions need to take a cautious approach in financing these projects and assess the risks involved, whilst there are ample opportunities in the offering.
Secondly, we also observe over lending in to certain segments – particularly to micro-financing in some areas of the country – which might lead to overheating as we have seen one household borrowing from several financial institutions. And to make the matters worse, these funds, which are intended for self-employment, can be utilised for consumption, leading to possible defaults.
Credit cards are an attractive source of credit for many customers and provide good offers and deals for customers. However, banks need to be responsible in their lending. At Pan Asia Bank, we charge only 19.75% on the outstanding balance on credit cards and facilitate balance transfers at rates as low as 15.75% which are among the lowest in the industry.
We encourage customers to make use of this low rate of interest, invest responsibly and manage their finances better.
Q: Finally, what plans do you have for Pan Asia and where do you want to see your bank in five years?
A: With all fundamentals now remaining strong, we will continue this growth momentum with much vigour playing a significant role in the financial services sector and the national economy.
Our growth in gross loans and advances during the first nine months of this year was 29% or Rs. 18.5 billion which accounted for nearly 5% of the total private sector credit extended during the period.
This shows the contribution and the impact we have made towards the economic growth of the country and we will continue to play a significant role.
Going forward, we need to raise fresh capital to fund this growth. We have more than doubled our Return on Equity during the nine months to around 20% – and now remain among the highest in the industry. Our share price doubled during the last 18 months demonstrating the investor confidence in our bank.
Further we will continue to challenge costs and eliminate non-value adding activities in our processes to continue to drive for higher efficiency. We have just begun a bank-wide Business Process Re-engineering program to further increase our turnaround times.
We will continue to increase our reach through both brick-and-mortar branches and will leverage on digital banking platforms as we consider IT as a great enabler in building reach and creating financial inclusion.
With the latest achievements, Pan Asia is now poised to compete with the giants in the sector and we will strive for further excellence in all aspects.
All in all, we will continue to invest in our people to develop their talents and groom them to take future leadership roles as we consider our people to be the most valuable asset and they are the key to delivering our brand promise, ‘The Most Understanding Bank’.