ANNUAL REPORT 2020 ANNUAL REPORT BANK OF CEYLON Bank of Ceylon, No. 01, BOC Square, Bank of Ceylon Mawatha, Colombo 01 Sri Lanka BANK OF CEYLON ANNUAL REPORT 2020 As we traversed a new terrain in 2020 engulfed by unprecedented challenges, we at BoC demonstrated resilience and strength across many dimensions. As the world stood still during the pandemic, we ensured that we reach out to our customers through digital platforms. Our efforts to harness the power of new technology over the years allowed us to adapt and pivot seamlessly to the new normal. Leading the way, we have powered the economy through many development projects of national interest which will stimulate prosperity and development across the Island. As the unequivocal leader in the banking sphere we inspired the way by helping the state navigate through a challenging era. We set the pace for economic resurgence by granting financial support to industries affected by the pandemic creating a strong bedrock to help the Nation chart its way in the new economy. Standing tall as a pillar of support to the Nation and its people with unwavering support we are truly Leading to inspire. BANK OF CEYLON ANNUAL REPORT 2020 Contents 3 - 4 74 - 83 320 - 365 Our Integrated Delivering Value Compliance Annexes Annual Report Integrated value creation through our Compliance with Code of Best Practice on strategy\ 74 Corporate Governance 2017 issued by CA 6 - 29 Chief Financial Officer’s Review\ 75 Sri Lanka\ 320 Business Line Reviews\ 79 Compliance Requirements as per Banking Act Direction No. 11 of 2007\ 325 2020 in Review Retail Banking\ 79 Compliance Requirements Enforced by Performance Highlights\ 6 Corporate and Offshore Banking\ 80 Colombo Stock Exchange\ 346 Non-financial Highlights\ 7 International, Treasury, Investment and Compliance Requirements Enforced by the Implications and Response Overseas Operations\ 81 Central Bank of Sri Lanka\ 348 to COVID-19\ 8 Stakeholder Engagement\ 82 Capital Adequacy\ 352 Chairman’s Message\ 10 Stakeholder Value Creation in 2020\ 83 General Manager’s Review\ 12 Board of Directors\ 16 85 - 113 367 - 399 Corporate Management\ 20 Preserving Value Supplementary Information Executive Management\ 26 Corporate Governance\ 85 GRI Index\ 367 Board Subcommittee Reports Independent Assurance 31 - 41 Report - Sustainability\ 370 Audit Committee Report\ 94 Statement of Profit or Loss in USD\ 372 BoC at a Glance Integrated Risk Management Committee Overview of BoC\ 31 Report\ 95 Statement of Comprehensive Income in USD\ 373 Market Position\ 32 Human Resources and Remuneration Statement of Financial Position in USD\ 374 Integrated thinking at BoC\ 33 Committee Report\ 97 Quarterly Performance\ 375 Value Creation Model\ 34 Nomination and Corporate Governance Committee Report\ 98 Share and Debenture Information\ 378 Value Added Statement\ 36 Information and Communication Ten Year Statistical Summary – Bank\ 380 Material Matters\ 37 Technology Committee Report\ 99 Subsidiaries and Associates\ 382 Operating Environment, Opportunities and Risk Management\ 100 Risks\ 38 Correspondent Banks By Country\ 385 Exchange Companies By Country\ 391 43 - 72 115 - 318 Glossary of Financial/ Banking Terms\ 392 Strategic Reports Financial Reports Corporate Offices and Overseas Branches\ 397 Strategy and Resource Allocation\ 43 Annual Report of the Directors on the State of Affairs of Bank of Ceylon\ 115 Corporate Information\ 399 Where we are now\ 44 Directors’ Interest in Contracts\ 120 Where we want to be\ 44 Directors’ Statement on Internal Control How we plan to get there\ 45 Over Financial Reporting\ 122 Customer Centricity\ 46 Independent Assurance Report\ 124 Digital Excellence\ 50 Directors’ Responsibility for Financial Rewarding Credit Culture and Healthy Reporting\ 125 Credit Portfolio\ 54 Report of the Auditor General\ 126 Building a High-Performing Team\ 57 Statement of Profit or Loss\ 130 Stability, Governance and Sustainable Statement of Comprehensive Income\ 131 Growth\ 63 Statement of Financial Position\ 132 Statement of Changes In Equity\ 134 Statement of Cash Flows\ 138 Notes to the Financial Statements\ 140 Our Integrated Annual Report / 2020 in Review / BoC at a Glance / Strategic Report / Delivering Value / BANK OF CEYLON Preserving Value / Financial Reports / Compliance Annexes / Supplementary Information ANNUAL REPORT 2020 / 3 Our Integrated Annual Report ANNUAL REPORT 2020 ANNUAL REPORT BANK OF CEYLON Bank of Ceylon Annual Report 2020 BANK OF CEYLON ANNUAL REPORT 2020 Integrated Reporting Financial Reporting This Integrated Annual Report Non-Financial Reporting aims to report on the progress made in delivering the Bank’s triple bottom line priorities in relation to its strategic agenda. As the Bank’s eighth Integrated Report, it has been prepared in accordance with the Integrated Reporting <IR> Framework Subsidiaries Associates of the International Integrated Reporting Council and takes into considerations the revisions to the Internal and external stakeholders, Operating landscape, Risks and Opportunities Framework published in January 2021. The Report presents concise and relevant information on the Bank’s operating environment, strategy, performance and value creation, governance, risk management and outlook. Financial Manufactured Human Intellectual Social and Natural Capital Capital Capital Capital Relationship Capital Capital Reporting Scope and Boundary: The Report covers the domestic and overseas operations of the Bank of Ceylon LKR (“BoC” or “the Bank”) and its subsidiaries (collectively referred to as “the Group”) for Customer Digital Rewarding Credit Building a Stability, Governance Navigation Icons Centricity Excellence Culture and High and Sustainable the period from 1 January 2020 to Healthy Credit Performing Growth Strategic Priorities Portfolio Team 31 December 2020. This Report has been prepared in accordance with the GRI Information available Information standards; core option. in other parts of this Report available online Financial and non-financial information: The financial information presented in this Report represents consolidated Adoption of new revisions of the <IR> Framework information while the non-financial information is limited to that of the parent Adoption of new GRI Standard- Tax entity, given its dominance within the Increased use of connected performance drivers Group. The scope of the Integrated Report Connectivity to strategic priorities through icons extends beyond the Bank’s operations to Reporting Disclosures on the implications of COVID-19 to strategy, include external stakeholders, trends in Improvements operations and performance the operating landscape and the Bank’s broader impacts. BANK OF CEYLON Our Integrated Annual Report / 2020 in Review / BoC at a Glance / Strategic Report / Delivering Value / 4 / ANNUAL REPORT 2020 Preserving Value / Financial Reports / Compliance Annexes / Supplementary Information Our Integrated Annual Report Frameworks and Assurance Reporting framework/ Integrated Sustainability Financial Corporate regulation Reporting Reporting Statements Governance Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka √ (CA Sri Lanka) <IR> Framework √ √ GRI Standards-In Accordance ‘Core’ Criteria √ ESG Reporting Framework of the Colombo Stock Exchange (CSE) √ √ Gender Parity Reporting Framework of CA Sri Lanka √ √ Bank of Ceylon Ordinance No. 53 of 1938 and amendments √ Banking Act No. 30 of 1988 and subsequent amendments √ Code of Best Practice on Corporate Governance issued by CA Sri Lanka (2017) √ Listing Rules of the Colombo Stock Exchange √ Guidelines issued by the Central Bank of Sri Lanka (CBSL) and CSE listing requirements on Financial Statements and other disclosures for Licensed √ Commercial Banks Assurance of information and reporting Certain information GRI Reporting National National extracted from the disclosures audited Audit Audit External Assurance audited financial by Messrs. Ernst & Office Office statements Young Chartered Accountants Reporting Changes We adopt an annual reporting cycle and Feedback the Bank’s previous report for the year ending 31 December 2019 is available for download at www.boc.lk. During the year, there were no significant changes to the Bank’s size, structure or supply chain We are committed to consistently nor were there any material restatements enhancing the readability and of financial and non-financial information relevance of our reporting and we presented. welcome your suggestions and comments on our Annual Report. Please direct your feedback to, [email protected] Scan the QR Code with your smart www.boc.lk BANK OF CEYLON device to view this ANNUAL REPORT 2020 report online. Our Integrated Annual Report / 2020 in Review / BoC at a Glance / Strategic Report / Delivering Value / BANK OF CEYLON Preserving Value / Financial Reports / Compliance Annexes / Supplementary Information ANNUAL REPORT 2020 / 5 SUPPORTING STRESSED SECTORS FOR BUSINESS REVIVAL Moratoriums during the year (Based on CBSL directions) Bank’s own moratorium Moratorium Moratorium Tourism Credit Extension Moratorium for businesses for businesses sector support of Easter scheme for BoC affected by affected by moratorium for SME Sunday customers who are COVID-19 COVID-19 Sector moratorium not covered under 1st wave 2nd wave CBSL directed moratoriums Largest lender under the Quantum of moratorium “Saubagya” Renaissance granted facility Facilities rescheduled Bank’s own moratorium LKR 589.4 billion LKR 39.1 billion LKR 9.9 billion LKR 3.6 billion