SANASA Development Bank posts impressive 3Q results

SANASA Development Bank Ltd (SDBL) has registered an after tax profit of Rs. 231 million for the third quarter ending 30 September 2011 as against Rs. 205 million during the corresponding period in 2010, which is an increase of 13%.

The bank’s deposit base has increased to Rs. 14.7 billion from Rs. 12.6 billion in December 2010, a growth of 17% whilst the advances has increased to Rs. 15.2 billion from Rs. 12.1 billion recording a growth of 25% according to SDBL General Manager/CEO Nimal Mamaduwa.

As the apex financial institution of the SANASA Movement, i.e. the largest cooperative network in Sri Lanka, the bank concentrates on small-ticket micro-financing, leasing, project financing and housing loans for the rural masses, which generally lies beyond the risk appetites of most financial institutions.

SDBL focuses mainly on promoting the entrepreneurial initiatives of the rural population, thereby contributing to their economic progress.

Accordingly, the bank’s loan book mainly comprises micro-financing facilities, which constitutes around 65% of its entire portfolio.

SDBL predominantly provided credit facilities through its primary societies, which in turn lend to their members.

Lending through this channel keeps the bank’s gross NPLs in check as the primary societies conducts close monitoring.

The bank’s funding structure remains dominated by deposits which has shown a growth of 17% and the bank has recently introduced a special investments savings account namely “SDB Ayojana ginuma”, in bid to encourage saving among fixed income earners as well as to support SDBL’s maturity mismatches.

In addition, the bank engages in daily deposit collections that predominantly target retailers. All these efforts are expected to support the bank’s goal of increasing volumes while reducing margins in a bid to be in line with other commercial banks in a bid to adhere with the CBSL’s guidelines.

This product which was introduced in September 2011 appears to be very attractive and the bank was able to collect deposits nearly Rs. 50 million within two months.

The bank’s gross NPL ratio eased to 5.43% as at 30 September 2011 as against 5.84% in December 2010 – better than its LSB peers and at the par with the level of larger LCBs. The net NPL ratio was 3.62% as against 3.73% in the 2010.

This was mainly due to bank’s good management of its loan portfolio despite its inherently risky target markets. Furthermore, the group-lending approach has assisted the bank to rein in its NPLs against the backdrop of social pressure and stigma associated with loan defaults in rural communities.   

The SDBL’s asset base increased to Rs. 19.8 billion as at 30 September 2011 as against Rs. 17.5 billion – an increase of 13%.

This had been driven by its expanding loan book and the bank’s rapid expansion of customer service points.

During the nine months of 2011 the bank opened six customer service centres in Buttala, Hatharaliyadda, Hingurana, Narammala, Kaduwela and Aluthgama thereby increasing its total Customer Centres to 79.

Two more customer centres will be opened in Maharagama and Gampaha during the last quarter of 2011.

The bank has maintained its Statutory Liquid Asset Ratio (SLAR) well above the regulatory requirement and the Core Capital Adequacy Ratio (Tier I) stands at 13.7% and the total Capital Adequacy Ratio at 14.2% as at  30 September as against the regulatory requirement of 5% and 10% respectively.

The ownership of the bank is mainly with the SANASA Movement founded by visionary leader, Dr. P. A. Kiriwandeniya.

Undoubtedly, his visionary leadership, dedication and the intimate knowledge which paved the way for the unprecedented growth and the impeccable image the bank now enjoys. In keeping with the directions issued by the Central Bank of Sri Lanka under the Corporate Governance for LSBs under Section Three (3) (i), Dr. Kiriwandeniya has retired from the Board of Directors with effect from 14 November. Meanwhile, Samadani Kiriwandeniya has been appointed as new Chairperson of the bank.