ECONOMYNEXT – Sri Lanka’s Sanasa Development Bank (SDB) plans to set up dedicated centres and branches to handle small business lending as part of a renewed focus on the sector.
SDB aims to transition from a largely micro finance focus to a broader SME (small and medium enterprise) corporate focus, its General Manager and chief executive Nimal C. Hapuarachchi said.
Planned small and medium enterprise (SME) lending activities include setting up three dedicated SME centres to handle small businesses of all nine regions, the bank’s 2016 annual report said.
It will also set up dedicated SME branches in areas where small and medium enterprises have strong potential.
SDB said it has realigned the allocation of resources to three main segments, SMEs, retail and its founder base of co-operatives.
Retail-related positions now account for larger shares of SDB’s balance sheet, and it helps the bank to grow its asset base at a rate well above industry averages, the bank’s annual report said.
SDB’s net profit for 2016 fell by 44% to Rs 404 million from the year before.
This was partly because of a deliberate effort to slow down growth of assets, which had doubled in 2014 and 2015 creating severe pressure on the capital base and causing an urgent need to infuse new capital.
“The bank deliberately slowed down assets growth until such time the right investors are identified, to ensure that the bank’s Statutory Capital Ratios are maintained to sustain stability,” Hapuarachchi said.
“This deliberate slowing down of the asset growth has resulted in the inevitable negative impact on the financial performance in 2016.
”Moreover, rising interest rates on deposits in a highly illiquid market in which all financial institutions were competing, had an impact on the cost of borrowings. The inevitable outcome was a drop in the income in a scenario where asset growth has been deliberately slowed down,” Hapuarachchi said.
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SDB has signed deals with FMO (the Netherlands Development Finance Company), the Dutch development bank and the SBI-FMO Emerging Asia Financial Sector Fund to strengthen its capital base and lending portfolio.
SDB aims to transition from a largely micro finance focus to a broader SME (small and medium enterprise) corporate focus, its General Manager and chief executive Nimal C. Hapuarachchi said.
Planned small and medium enterprise (SME) lending activities include setting up three dedicated SME centres to handle small businesses of all nine regions, the bank’s 2016 annual report said.
It will also set up dedicated SME branches in areas where small and medium enterprises have strong potential.
SDB said it has realigned the allocation of resources to three main segments, SMEs, retail and its founder base of co-operatives.
Retail-related positions now account for larger shares of SDB’s balance sheet, and it helps the bank to grow its asset base at a rate well above industry averages, the bank’s annual report said.
SDB’s net profit for 2016 fell by 44% to Rs 404 million from the year before.
This was partly because of a deliberate effort to slow down growth of assets, which had doubled in 2014 and 2015 creating severe pressure on the capital base and causing an urgent need to infuse new capital.
“The bank deliberately slowed down assets growth until such time the right investors are identified, to ensure that the bank’s Statutory Capital Ratios are maintained to sustain stability,” Hapuarachchi said.
“This deliberate slowing down of the asset growth has resulted in the inevitable negative impact on the financial performance in 2016.
”Moreover, rising interest rates on deposits in a highly illiquid market in which all financial institutions were competing, had an impact on the cost of borrowings. The inevitable outcome was a drop in the income in a scenario where asset growth has been deliberately slowed down,” Hapuarachchi said.
.
SDB has signed deals with FMO (the Netherlands Development Finance Company), the Dutch development bank and the SBI-FMO Emerging Asia Financial Sector Fund to strengthen its capital base and lending portfolio.
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