Where technology and tradition meet The world may be spinning at a dizzying rate with technology setting a breathtaking pace. But Sampath Bank understands that technology without the wisdom of tradition can slow everything down. Our approach to business is a confluence. A healthy borrowing of the two worlds. A merger that ultimately enriches our world, our life. Where Technology & Tradition meet.. In 1932, Wilhelm Geiger, a German Indologist wrote thus: We have been trailblazers – spearheading a path of ‘It is a well known fact that for hardly any part of the pioneering banking technology to Sri Lanka, presenting continent of India is there such an uninterrupted historical the future while creating history. We are constantly tradition as for the island of Ceylon’. So it was then, as scouring the world, looking for innovative technologies recorded in the ancient literary works of the Mahavamsa that would give our people an edge in this competitive and Chulavamsa, that Sri Lanka has always been regarded world. But, we do not use technology as it is. No – we as the bulwark of civilisation, drawing from traditions and customize the technology of the world to suit our more history to create a race of people revered as technologically diverse needs. Being a local bank, we serve a genre of advanced from eras gone by. customers from the elite residing in the chic echelons of Colombo to the farmer who toils in the rural outback. We Stone working technologies impacted us as far back as transform and adapt technology so that this eclectic mix of 5,000 BC. A shell cave in Kitulgala points to a customers live and work in an IT enabled environment, technological revolution in early civilisation and modified to suit their own personal needs – a facet of our domestication of certain plants as early as 15,000 BC are heritage inculcated via the bank, ingratiating traditional all documented substantiations of Sri Lanka’s Sri Lankan hospitality, even in banking operations. technological prowess. Ancient civilisations emerged and flourished in dry zones, prompting an emergence of one of 16 years ago, we introduced the technological marvel of a the greatest irrigation civilisations of the ancient world, a network of real-time online ATMs and SET cards, highly advanced feat of technology and engineering. pioneered the wonders of virtual banking, promulgated Against this backdrop of technologies, the capitals the use of the Internet and web based portals, enabled Anuradhapura and Polonnaruwa became economic e-channeling for the consultation of medical specialists superpowers while the architectural achievements of from even the remotest parts of the island and publicized gigantic dagobas became the jewels in the crown of many the ease of 24 hour banking from home based comfort or kings. Akin to the Pyramids of Giza, Jetavanarama our custom built kiosks to make banking simpler, easier probably the largest Buddhist monument and one of the and faster. We have been in the forefront of cutting edge largest religious structures in the world and Abayagiri are technology, enhancing the knowledge of our pragmatic both taller than the third Pyramid of Giza, and they Team to ensure that this knowledge will permeate their celebrate these kings’ technological expertise. personal and professional lives. It is we who inculcated the aspect of total customer service within the nucleus of a Sri Lanka has ever since, enjoyed the exalted position of totally Sri Lankan bank that presents the future. being among the world’s technological masters of a bygone era, an intrinsic part of her people, growing up fusing the We have always been focused on excelling in customer values of tradition, history and culture into the plateau of service and fostering people friendly attitudes, coupled technology. with a constant upgrading of IT conveniences for our customers from any social or economic strata, enabling us It is this special brand that has given Sampath Bank the to be in the forefront of groundbreaking initiatives. While celebrated status of an indigenous bank that is global in attitudinal changes have transformed the industry from a thought and local indeed. From the very first time you product oriented one to being more customer-focused, our hear the greeting of “Ayubowan” which embodies the very philosophies have evolved on IT and service excellence. heredity of Sri Lanka, every customer at Sampath Bank has a unique experience – that of globally celebrated banking The strong semblances of tradition have become an innate technology imbibed into a traditional, culturally rich part of our culture - the cordial greeting, the welcoming conventional milieu. smile and the courteous service continues to build relationships in the friendly warmth permeating from Over the 16 years of its existence, Sampath Bank has within. Our total commitment is to give any customer, understood that the rudiments of the virtual world without anywhere, big or small, the best in technological the wisdom of tradition would make for an imbalanced innovations and conveniences that will suit their lifestyles recipe. Therefore, business evolves on confluence, where a and needs. These are the deep rooted fundamentals we are healthy borrowing of the two worlds would bestow an imbued in. emergence of the ideal solutions for the ideal peoples living in this ideal nation. Sampath Bank – where technology and tradition meet 2 Contents OUR MISSION “To be the most innovative, trusted and best process-quality provider of financial services in the region.” Message form the Chairman 4 - 5 Managing Director's Report on Operations 6 - 9 Board of Directors 10 - 11 Solutions that worked in 2003 12 - 15 Capital Adequacy & Value Addition 16 - 17 Share Information 18 - 19 Corporate Management 20 Our Social Commitment 28 - 29 Managing Risk 21 - 22 Performance Highlights 30 Senior Management 23 Financial Goals and Achievements 31 Answers to our customer's needs 24 - 25 Report of the Directors 32 - 34 The Sampath Team 26 - 27 Directors' Responsibility for Financial Reporting 35 Report on Corporate Governance 36 - 37 Audit Committee Report 38 Auditors' Report 39 Income Statement 40 Balance Sheet 41 Cash Flow & Reconciliation Statement 42 Statement of Changes in Equity 43 Significant Accounting Policies 44 - 47 Notes to the Financial Statements 48 - 66 Income Statement in US $ 67 Balance Sheet in US $ 68 Events of the year 69 - 71 Branch Network 72 - 73 Internal Directory 74 Ten years at a glance 75 Global Presence 76 - 77 Milestones 78 Glossary of Financial and Banking Terms 79 Notice of Meeting 80 Form of Proxy 81 - 82 ANNUAL REPORT 2003 3 Message from the Chairman “You would be pleased to note, that the Bank has recorded commendable growth in all areas...” The Chief Executive’s Report together with the Operations During the period under review, your Bank, at the request and Financial Review, provide insight into your company’s of the Central Bank, with a view to assisting a bank that performance for the year 2003. You would be pleased to was experiencing financial and management problems, note, that the Bank has recorded commendable growth in formulated and put into place a restructuring programme. all areas. Deposits and Advances increased by 24.4% and By this, your Bank, together with seven names close to the 18.7% respectively. Post tax profit at Rs. 561.2 Mn was an Bank, invested Rs. 525 Mn in the troubled bank. Your increase of 27.2%. This achievement is noteworthy as it bank’s share in the investment was Rs. 150 Mn. was arrived at after very liberal provisions for doubtful This investment is in a new class of shares which has debts, and accounting for Rs. 116.2 Mn in respect of Value preference over the ordinary shares of the troubled bank. Added Tax (VAT). The restructuring task was unique and your Bank took pride in providing this service, which was the first of its kind in the local banking scene. Your Chairman, together Profitability with two other directors, sits in the Advisory Board of that 800 bank, and through it has a major say in the management 700 of the bank. The structure has been in place for four months and the bank has already shown progress. 600 500 Investment in subsidiaries and associate companies generated adequate returns. Investment of Rs. 30 Mn in Rs. Mn 400 Asian Alliance, which company is now four years of age, is 300 yet to show profits, but it has to be appreciated that a new 200 insurance company takes about five years to record profits. 100 Global Economic Scenario 0 1999 2000 2001 2002 2003 During the review period, the Bank operated in a growing Year Profit Before Tax Profit After Tax global economy which recorded a growth of 2%. This scenario facilitated the country to sustain the growth of its main exports namely Tea, Clothing and Manpower. This item of tax came into operation in 2003 and the However, in the third quarter with the start of the Iraqi commercial banks are required to pay 10% computed on conflict, the growth of exports was sluggish for a total gross emoluments payable to employees and the net temporary period. The anticipated oil price hike arising profit before tax. Hitherto, prevailing Business Turnover out of the conflict was avoided. Tax and National Security Levy were abolished in 2001 and 2002. However, these two items of indirect taxation Local Economic Scenario did not impact on the bank’s profits as they were mainly The cessation of hostilities between the LTTE in the North borne by customers, whereas the VAT now brought into and East and the Government, which has now lasted for force, has to be borne by the Bank. two years, continues to have a positive impact on the During 2003 the Bank added 10 branches (including 4 country’s economy.