Union Bank, with its years of innovations, is all geared to embrace a bright and successful future riding on the economic wave of the country. Now a public quoted company, the bank saw results that were deemed as “very encouraging” in Q1 of the year where Profit After Tax was recorded as Rs. 60 million – a 40% of total profits made in 2010.
CEO Anil Amarasuriya stated that with in the backdrop of a fantastic performance in the first three months of the year, the bank is expecting substantial growth at the end of the current financial year compared to 2010.
Bright-eyed about development, Amarasuriya stated that the bank, which grew from 19 branches in 2010 to 26 at present, is likely to open up in seven to eight more locations before the end of the year.
“The bank has already identified Anuradhapura, Kadawatha, Ratnapura and Horana as locations for prospective branches. More locations are now under study to be approved as prospective branch openings,” Amarasuriya said.
“With the Central Bank encouraging banks to open at least two braches outside Colombo, our branch penetration is likely to be based on the outskirts. This, I believe, will help the small and medium entrepreneurs of the areas.”
He also asserted that the bank saw significant growth in advances and deposits in line with industry growth in Q1.
“With the local economy growing at 8%, much more business is expected this year than what the bank received the year before. We are confident that we will be able to increase our market share as well, by the end of the financial year.”
He commented that with the economy poised to grow, the banking sector will be the first to benefit. “Demand for credit will also increase and deposits will see growth. The industry on the whole will do well due to the country’s rising economic conditions.”
With such good times expected, the bank will face competition in the market, which comes in two key forms, Amarasuriya said. “Competition will come in the face of quality of service and competitive rates for both borrower and depositor,” he noted.
Union Bank has its eyes on improving quality of services, with ‘best in class’ being its goal. The bank is also recognised for the highly competitive interest rate it offers.
The bank has identified the SME sector as a fast-growing sector and plans are in the pipeline to enhance lending in the area. The bank is cash rich, Amarasuriya observed, a result of which going into project lending and micro finance is on top of their ‘must-do’ list.
The bank will in the future go into areas such as project lending, working capital, micro finance, bank assurance, trade finance and leasing and factoring for the SME sector. “We are also looking at giving personalised solutions for the SME sector. We see substantial growth from north and east and with the peace dividends, growth potential has increased and we have opened up seven branches in the area.”
“We want to grow both organically and inorganically in the financial sector. We are looking at the profitability areas of potential growth. We are now taking an in-depth look at our inorganic business.” He stated that the bank was also looking at the retail side aggressively with rapid growth and branch expansion.
“We have deposit products such as premium savings accounts, which hold the highest interest rate for savings in the industry. There is ‘Piyawara,’ a minor savings account, which has a 10% interest rate – again the highest in the industry for minor savings accounts; ‘Ruwaththi,’ a total financial solution for women is also one of our innovations.”
The bank’s leasing activities will also be aggressively marketed in the future, with Union Bank finalising lease facilities in just two days. The ‘wipe-out’ offer in the pawning sector, where the entire quanta or interest amount of the pawned object is paid in full to winners every month, is also a highly successful promotion the bank has introduced. “We are the only bank that has launched a current account which does not have a minimum charge,” Amarasuriya pointed out.
The bank, which acquired the oldest fund management company in Sri Lanka – National Asset Management Ltd. (NAMAL) – at the end of the quarter, hopes to use its broad-based product to reach the retail market islandwide.
The IPO gaining will be structured in to increase productivity. “We will be leveraging on tier one capital to have a better margin other than from net interest margin,” revealed Amarasuriya. The bank will also move forward with a ‘lean and mean’ attitude and is looking at making its operation more effective through IT and communication.
On building new products, Amarasuriya stated that the bank was increasingly looking at technology to support its growth. It has already introduced a range of technology-driven innovations including mobile banking, launched as ‘Serisara,’ which promotes what he calls ‘barefoot banking’.
“We want to go to the customers and not wait for them to come to us. e-cheques is another unique product launched by the bank, where a cheque can be simply transmitted to a mobile phone,” he concluded.