Sampath Bank will take receipt of $ 100 million later this week to boost its capital via a syndicated loan drawing strength from its Balance Sheet as well as encouragement from the Government for private sector to tap foreign sources of funding.
Freshr offshore funding boost was revealed at Sampath Bank’s Investor Forum on Tuesday.
Managing Director Aravinda Perera said the fresh financing wasn’t being sourced to settle the $ 62.5 million loan taken last year. For the latter internally generated funds will be used instead.
Financing portfolio growth through increased foreign borrowing was a strategy Sampath Bank has pursued with the benefits of lower pricing and easing liquidity constraints.
The $ 62.5 million raised early last year through a syndicated loan was originally opened for $ 30 million and was oversubscribed by more than two fold. The syndicate was arranged by Bank Muscat S.A.O.G., Citigroup Global Markets Asia Limited and Emirates NBD Bank PJSC. This was Sampath’s second venture to raise funds off shore, having obtained $ 45 million in 2007 through a similar syndication, which was settled as scheduled.
Sampath Bank said the confidence of the foreign investors in the Bank’s performance to date and the ability to sustain and grow was amply evidenced by the interest shown in the current syndication by the foreign markets.
A strong balance sheet and related financials coupled with its tremendous growth resulted in the overwhelming response to the syndicate participation amidst the prevailing global economic issues.
This same confidence and success has been achieved in the fresh fund raiser of $ 100 million.
In 2012, Sampath also signed agreements to raise $ 20 million funds from Proparco Group in France for renewable energy projects and raised $ 45 million from China Development Bank for trade with China.
This has enabled Sampath to reduce cost of funds and to ease the pressure on Net Interest Margin.
This strategy changes the Bank’s risk profile but Sampath is confident that it has the mechanisms in place to monitor and manage the risk and also the resilience to absorb a normal degree of stress.
CFO Ranjith Samaranayake said Sampath Bank was strong with an asset base of Rs. 308 billion and the foreign loan exposure was minimal.
Sampath Bank said in 2012 it enjoyed a well-rounded performance in almost all areas.
“2012 was a period of consolidation for Branch expansion and rapid business growth for Sampath Bank set within the country’s monetary policy framework designed to moderate credit expansion and improve stability in the Banking sector. Our performance reflects the success of this strategy with Rs.5.1 billion Profit after tax, an increase of 51.6% over 2011,” Sampath said.
Capital adequacy also improved during the year with Core Capital moving up from 10.24% in 2011 to 11.80 % in 2012 and Total Capital (Tier I + Tier II) moving in a similar manner from 11.45% to 13.61%.
“Over the next few years, I believe we have the capacity to become the number one bank in Sri Lanka,” said Sampath Bank Chairman Dhammika Perera who said in 2013 further steps will be taken to realize this potential.