Bank of Ceylon Annual Report 2013 was recognized among ARC 100 Top Annual Reports 2014

372 Pages·2015·4.17 MB·English

Truly
Everybody’s
Bank
BANK OF CEYLO N
Annual Report 2014
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report, visit www.boc.lk
Contents
Our Vision and Mission / 4 Financial Reports
How We Fulfilled Our Mission / 5 Annual Report of the Directors
Financial Highlights / 6 on the State of Affairs of Bank of Ceylon / 162
Awards / 7 Directors’ Interests in Contracts / 167
About This Report / 8 Directors’ Statement on Internal Control
over Financial Reporting / 171
Infrastructure Growth / 9
Independent Assurance Report / 173
Reaching Out to Everybody / 10
Directors’ Responsibility for Financial Reporting / 174
From Grassroots to Giants / 12
Report of the Auditor General / 175
From Then to Now… / 16
Income Statement / 176
The Stature of Our Leadership / 18
Statement of Other Comprehensive Income / 177
Outgoing Chairman’s Review / 22
Statement of Financial Position / 178
New Chairman’s Message / 26
Statement of Changes in Equity / 179
Shaping the Future / 29
Statement of Cash Flows / 180
General Manager’s Review / 30
Notes to the Financial Statements / 182
Board of Directors / 36
New Board of Directors / 40
Supplementary Information
Stakeholder Engagement / 42
Determining Material Issues / 44 Capital Adequacy / 326
Corporate Management / 46 Compliance Requirements Enforced by
Colombo Stock Exchange (CSE) / 332
Executive Management / 56
Compliance Requirements Enforced by
Management Discussion
Central Bank of Sri Lanka (CBSL) / 334
and Analysis / 62
Income Statement in USD / 338
Financial Review / 70
Statement of Other Comprehensive Income
Operational Review
in USD / 339
- Retail Banking / 76
Statement of Financial Position in USD / 340
- Corporate and Offshore Banking / 82
Quarterly Performance / 341
- International, Treasury, Investment
Share and Debenture Information / 344
and Overseas Branches / 86
Ten Year Statistical Summary - Bank / 346
Information Technology / 91
Subsidiaries and Associates / 349
Employee Report / 93
BoC Correspondent Banks by Country / 352
Social Report / 102
Exchange Companies by Country / 359
Value Addition Statement / 104
Glossary of Financial/Banking Terms / 360
Environment Report / 105
Corporate and Overseas Offices / 366
Snapshots of Social and
Environment Reports / 106 Corporate Information / Inner Back Cover
Independent Assurance Report / 107
GRI Index / 109
Corporate Governance / 114
Board Subcommittee Reports / 138
Risk Management / 147
Truly
Everybody’s
Bank
The Bank of Ceylon is now Sri Lanka’s largest bank and we are proud to
celebrate our 75th year in a long and distinguished history marked by many
milestones of national and international signiicance. For many years we have
been ranked among the top 1,000 banks in the world and as Sri Lanka’s number
one brand, while our list of awards and achievements simply gets longer with
every passing year.
Our primary purpose has always been to create value for every one of our
thousands of stakeholders; our investors, business partners, regulators,
communities... and of course, our customers. Our stakeholders’ ambitions remain
our priority as we shape livelihoods, broaden horizons and make real people’s
dreams - wherever and whoever they are.
Today it is our heritage, size and strength that makes us one of the most powerful
leaders in the local banking industry - a position we intend to evolve further in
the years that lie ahead. Because that’s what it means to be best, beyond. And
that’s what it means to be truly everybody’s bank.
Bank of Ceylon
Truly Everybody’s Bank
BANK OF CEYLON . Annual Report 2014
‘Best Beyond’ is our theme in
our 75th anniversary, as we
reinforce our claim to be the
best, in inancial strength,
technology, customer service,
good governance and business
excellence.
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Truly Everybody’s Bank
‘Best
Beyond’
B usiness Excellence
E xceeding customer expectations
S peedy delivery
T echnologically driven
* First local bank that has over LKR 1 trillion asset base
* Ranked by Brand Finance Lanka as the No.1 Brand in Sri Lanka for the last six consecutive years
* Fitch Rating Lanka AA+ (lka) - a highest rating awarded to a local commercial bank
* Ranked one of the top 1,000 banks in the world by The Banker Magazine, UK in 2012, 2013 and 2014
* Listed as one of Asia’s Best Brands 2013 by the CMO Council India
* Gold Award winner under many categories at the National Business Excellence Awards in 2011, 2012, 2013 and 2014
* The irst Sri Lankan Bank to issue an international bond (USD 500 million ive year tenure bond issue)
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BANK OF CEYLON . Annual Report 2014
Our Vision
Bankers
to the
Nation
Our Mission
Customers
Foster mutually rewarding customer relationships
with all our customers, exceeding their expectations.
Staf
Give all our staf the recognition and rewards to be the
best team of achievers in service excellence.
Owners
Be a proitable catalyst for equitable development
covering urban and rural areas.
Society
Provide world-class banking services across the nation
as a beacon for progress and growth.
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Truly Everybody’s Bank
How We Fulilled Our Mission
Customers Staff
LKR Bn Nos LKR Mn Nos
920 Promotions
9,321 10,179 10,576 1,048 10,944 1,194 11,496 1,32934 8,204 8,115 0196 8,883 236 8,577245
8 2 9 9
38272053056283596715 693755 84778 79.6146 93.6156 1047,7 95 83.5 1,340
Training programmes
covering all employees
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Loans and Advances Welfare
Total Assets Training
Deposits Headcount
Number of Customers ('000)
Society Owners
Number of Customer Value Addition ROAE
Touch Points
0
9 6
9 970 1,051 1,13 1,1 LKR Bn 58 56 59 % 33.5 31.2
7
8
0
4. 2
2 22. 5
0.
2
2
4
4
3
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
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BANK OF CEYLON . Annual Report 2014
Financial Highlights
Bank Group
2014 2013 Change % 2014 2013 Change %
Results of Operations (LKR million)
Total income 126,546 127,464 (0.7) 133,023 134,230 (0.9)
Net interest income 38,450 37,143 3.5 40,754 39,342 3.6
Profit before financial VAT, NBT and taxation 24,343 18,420 32.2 25,074 18,632 34.6
Profit before taxation 20,291 15,709 29.2 21,431 16,105 33.1
Profit after taxation 13,574 12,087 12.3 14,372 12,148 18.3
Value to Government 17,615 11,679 50.8 18,010 12,059 49.3
Financial Position (LKR million)
Total assets 1,329,020 1,193,581 11.3 1,365,404 1,225,762 11.4
Gross loans and advances 777,505 755,385 2.9 801,584 777,927 3.0
Loans and advances net of
provisioning for impairment 741,348 725,332 2.2 763,772 746,572 2.3
Deposits due to customers 933,966 842,070 10.9 943,934 850,768 11.0
Total liabilities 1,254,214 1,135,881 10.4 1,279,823 1,158,850 10.4
Total equity 74,806 57,700 29.6 85,581 66,912 27.9
Per Share Data (LKR)
Earnings per share 2,715 2,417 12.3 2,885 2,447 17.9
Net assets per share 14,961 11,540 29.6 16,879 13,123 28.6
Performance Ratios (%)
Return on average assets 1.6 1.4 0.2 1.7 1.4 0.3
Return on average equity 20.5 22.2 (1.7) 18.8 19.4 (0.6)
Interest margin 3.0 3.3 (0.3) 3.1 3.4 (0.3)
Cost to income 44.0 49.1 (5.1) 46.6 52.0 (5.4)
Loans to deposit 83.2 89.6 (6.4) 84.9 91.4 (6.5)
Debt to equity (Times) 293.1 336.3 (43.2) - - -
Impairment provision as a percentage of
gross loans and advances 4.7 4.0 0.7 4.7 4.0 0.7
Statutory Ratio (%)
Liquid assets ratio (Domestic)
(minimum requirement 20%) 30.8 27.7 3.1 - - -
Capital Adequacy Ratios (%)
Core capital adequacy ratio
(minimum requirement 5%) 9.5 8.4 1.1 9.8 8.9 1.6
Capital adequacy ratio
(minimum requirement 10%) 13.6 12.1 1.5 14.0 12.9 1.7
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Truly Everybody’s Bank
Awards
International ARC Awards 2014
Traditional Annual Report: Financial Data: (International Banks) - Written Text: (International Banks) -
(International Banks) - SILVER GOLD SILVER
Bank of Ceylon Annual
Global Ratings Local Ratings
Report 2013 was Fitch Ratings: reaffirmed as Fitch Ratings Lanka Ltd: reaffirmed as
BB- AA+ (lka)
recognized among with stable outlook with stable outlook
ARC 100 Top Annual Moody’s : reaffirmed as ICRA Lanka Limited:
B1 (SL) AAA
with stable outlook with stable outlook
Reports 2014
Bank of Ceylon was
presented with the
SAFA Awards 2012 (Conducted in 2014)
Global Commerce
Public Sector Banking Institutions : 1st
Excellence Award
Runner –up
in recognition of
SAFA Awards 2013 (Conducted in 2014)
supporting the Sri
Public Sector Banking Institutions : Winner
Lankan economy
National Business Excellence Awards 2014 by the National Chamber of Commerce of Sri Lanka
Winner of the Excellence in Local Runner-up of the Banking Sector Runner-up of the Excellence in Compliance award was
Market Reach Category Corporate Social Responsibility received for the banking
sector at Annual Report
Award Ceremony
No.1 brand in the country for sixth consecutive year ranked by
2014 conducted by the
“Brand Finance Lanka”, a subsidiary of Brand Finance network (UK)
Institute of Chartered
Brand Value - LKR 30.83 billion Accountants of Sri Lanka
Ranked above all Sri Lankan banks by “The Banker“ in the top 1,000 banks
in the world for two consecutive years
Ranked 994 position in the world
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BANK OF CEYLON . Annual Report 2014
About This Report
Scope and Boundary The materiality principal has been applied Social and relationship capital - This
in accessing the areas to be covered in this captures corporate relationships with the
This Annual Integrated Report covers the
integrated report. stakeholders and the Bank’s image as a
period 1 January 2014 to 31 December 2014.
concerned corporate citizen.
Material events after this date up to the sign
off by the Board of Directors on 18 March Materiality
Natural capital - As a financial services
2015 are also included. The report presents The focus of the report provides financial
provider the Bank ensures deploying
a balanced and comprehensive but concise and non-financial information on material
the operations in a way that promotes
analysis of the Bank’s strategy, performance developments and issues that shaped our
preservation of natural capital.
and outlook for the future. performance during the reporting period and
are likely to impact our future performance.
The report covers the Group’s operations A material development or issue is defined Assurance
in Sri Lanka, India, Maldives, Seychelles as one that substantively affects our ability Assurance on the Financial Statements
and United Kingdom through branch to create value in the short, medium or long and the Directors’ Statement on Internal
offices and subsidiaries. A large proportion term to our stakeholders. Ability to manage Control is provided by the Auditor General’s
of the information in this report relates to these developments affects the performance Department who was assisted by a firm of
the holding company, Bank of Ceylon, the and seeks proactive engagement of the Chartered Accountants in public practice.
highest contributor to the Group’s profits. stakeholders to stay informed about likely The Bank has voluntarily obtained
Information relating to the Group or its developments in order to mitigate risks that independent external assurance on the
subsidiaries is clearly indicated to differentiate may arise and to evaluate opportunities for sustainability aspect which includes social
from the Bank’s operations. The data used in growth and enhance performance. and environmental performance indicators
the narratives refers to the Bank of Ceylon from M/s BDO Partners.
unless otherwise indicated due to its relative
Fundamentals
size within the Group.
Forward Looking Statements
Understanding the ability to create value over
time depends on resources and relationships This report contains certain forward looking
This integrated report conforms to the
used and affected by the Bank (collectively statements that relate to plans, objectives,
requirements of the Bank of Ceylon
known as capital). The Bank has adopted the goals, strategies, future operations and
Ordinance No. 53 of 1938, the Banking Act
categorization of the IIR Framework issued performance of the Bank and its subsidiaries.
No. 30 of 1988 and subsequent amendments
by the IIRC in identifying the capital types Forward looking statements can be generally
thereto, the Continuing Listing Requirements
and this report aims to provide an insight identified as those containing words such
of the Colombo Stock Exchange, the Code
into how this capital is used and affected. as “anticipates”, “assumes”, “believes”,
of Best Practice on Corporate Governance
“estimates”, “expects”, “should”, “will”,
jointly issued by the Institute of Chartered
Financial capital - Financial capital includes “will likely result”, “forecast”, “outlook”,
Accountants of Sri Lanka and the Securities
reserves generated through share capital, “projects”, “may” or similar expressions. By
and Exchange Commission of Sri Lanka,
other equity-related funding and retained their nature, forward looking statements
the International Integrated Reporting (IIR)
profits generated from operations that are involve risk and uncertainty because they
Framework issued by the International
used to fund the business activities. relate to future events and circumstances
Integrated Reporting Council (IIRC) and the
and there are many factors that could cause
G4 Guidelines issued by the Global Reporting
Manufactured capital - The Bank’s actual results and developments to differ
Initiative (GRI). The Financial Statements
manufactured capital is in the form of materially from those expressed or implied
have been prepared in accordance with
tangible and intangible infrastructure. by these forward looking statements.
the Sri Lanka Accounting Standards which
comprises the latest International Accounting
Intellectual capital - Intellectual capital Therefore there is no representation or
Standards.
includes brand and reputation and the warranty, that such forward looking
collective expedient knowledge of the staff. statements will be achieved. BoC undertakes
Reporting to Stakeholders
no obligation to update the historical
Bank has a diverse range of stakeholders Human capital - The Bank has an information or forward looking statements in
with varied information needs. Our primary employee base with skills, capabilities, this report.
report is the integrated report and is aimed knowledge and experience to deliver value to
principally at the capital providers. the customers.
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