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Connected The prevailing pandemic created a paradox... staying close whilst socially distancing. Within this paradox, SDB bank found opportunities to grow its “connections” with all stakeholders. Our relationships were maintained undiminished with small scale shareholders at grass root levels as well as with large institutional investors and international funding lines. In this the Bank enjoys the advantage of a strong foundational structure and ethos that always promotes the values of empathy and purpose in every aspect of enterprise. As passionately involved as we are with the advancement of stakeholder interests, the opportunities arising out of the “new order” of things make us passionately optimistic for the years ahead. 2 SANASA Development Bank PLC | Integrated Annual Report 2020 > Connected Contents 1 About this Report – 04 This is SDB bank Banking on Us – 06 2020 at a Glance – 10 2 Leadership to Chairman’s Message – 14 Bank on Chief Executive Officer’s Review – 16 Board of Directors – 20 Corporate Management– 24 3 Senior Management– 26 Our Business Creating Value – 33 Model Operating Environment – 36 Strategic Direction – 39 4 Stakeholder Engagement – 40 Banking on The Achievement of Financial Goals – 44 Materiality – 41 Value Creation The Strength of the Institution – 48 The Quality of Manufactured Resources – 49 The Customer as Ambassador – 51 The Passion of our People – 57 5 The Confidence of Investors – 61 The Power of our Partnerships – 70 Managing our Risks – 75 Managing our The Commitment to Society and Environment – 72 Risks 7 6 Financial Financial Calendar – 120 Corporate Message from the Chairman on Reports Annual Report of the Board of Directors Governance Corporate Governance – 80 on the Affairs of the Bank – 121 Governance and Compliance – 81 Directors’ Statement on Internal Control Compliance Status – 85 over Financial Reporting – 130 Report of the Board Integrated Independent Assurance Report – 132 Risk Management Committee – 110 Chief Executive Officers’ and Chief Financial Report of the Board Audit Committee – 111 Officers’ Responsibility Statement – 133 Report of the Board Human Resources Statement of Directors’ Responsibility for and Remuneration Committee – 114 Financial Reporting – 134 Report of the Board Selection and Independent Auditors’ Report – 135 Nomination Committee – 115 Statement of Comprehensive Income – 138 Report of the Board Related Party Statement of Financial Position – 139 Transactions Review Committee – 116 Statement of Changes in Equity – 140 Report of the Board Strategic Planning Statement of Cash Flows – 141 and Plan Implementation Committee – 117 Notes to the Financial Statements – 142 Report of the Board Credit Committee – 118 8 Enclosures Inner Back Cover – Supplementary Ten Years at a Glance – 196 Corporate Information Information Disclosures as per Schedule III of Banking Act No. 1 of 2016, Capital Requirements under Basel III – 199 Sources and Utilisation of Income – 207 Quarterly Performance of the Bank – 208 Abbreviations – 209 Glossary of Terms – 211 24th Annual General Meeting – 215 Online GRI Content Index | Online Branch Network | Online Ratio Formulas | Online Event Calendar About this Report REPORTING PERIOD AND BOUNDARY This Integrated Report covers material information of SDB bank’s performance for the financial year beginning 1 January 2020 to 31 December 2020. Our most recent report, which is also available on our website, is for the year ended 31 December 2019. We have adopted annual reporting cycle in respect of both financial and sustainability reporting. We report no restatements of information provided in previous reports, or any significant changes from previous reporting periods in the scope and aspect boundaries, other than those stated in the disclosure provided in the Financial Statements. REMAINING IN COMPLIANCE Following good governance practices, the Board of Directors of SDB bank accepts responsibility for the contents of this Integrated Annual Report. We have complied with the Sri Lanka Financial Reporting Standards, the Banking Act No. 30 of 1988 and the requirements of the Companies Act No. 07 of 2007 in preparing the Financial Statements for 2020 which are presented on pages 135 to 194. Our seventh Integrated Annual Report provides readers with a clear understanding of how we create sustainable value over the short, In producing this Integrated Annual Report we have drawn on medium, and long term. Our value creation story discusses our strategy, concepts, principles, and guidance from the following: business model, governance and risk management processes, financial 1. The International Integrated Reporting Framework; performance, and the future outlook for SANASA Development Bank 2. GRI Standards – “In accordance: core option”; and PLC (“SDB bank” or “the Bank”). 3. The United Nations Sustainable Development Goals (SDGs) CUTTING THE CLUTTER We have categorised the capitals to best describe our value creation To ensure that we communicate relevant information concisely while process following paragraphs 2.10 and 2.17-2.19 of the International comprehensively meeting compliance requirements, our Integrated <IR> Framework, which provides that organisations preparing an Annual Report is available in the following formats in addition to the integrated report are not required to adopt the <IR> Framework printed report: categorisation of capitals. CONTACT FOR FEEDBACK We welcome your comments and suggestions on this Integrated Annual Report. For feedback and editorial information please contact: Chief Financial Officer SANASA Development Bank PLC No. 12, Edmonton Road, Kirulapone, Colombo 06 Phone : +94 11 283 2515 Fax : +94 11 251 4245 Email : [email protected] Website : www.sdb.lk 04 SANASA Development Bank PLC | Integrated Annual Report 2020 This is SDB bank 06 Banking on Us 10 2020 at a Glance This is SDB bank > About this Report SANASA Development Bank PLC | Integrated Annual Report 2020 05 Banking on Us WHO WE ARE We are a Licensed Specialised Bank registered by the Central Bank of Sri Lanka, under the Banking Act No. 30 of 1988 (as amended by the 1997 Banking Act of 1995). SANASA Development Bank Ltd. incorporated with capital of LKR 123 Mn., contributed largely by primary At SDB bank, our strength lies in the robust relationships we nurture SANASA Societies with rural and underbanked communities through an extensive network of co-operative societies and Government organisations. Our network comprises 94 branches manned by a workforce of 1,490 1998 dedicated employees across the island. 10th branch opened in Kandy We foster socio-economic progress by improving financial literacy and inculcating sound financial habits among grassroots communities, 1999 even if we will have to witness our customers eventually migrate to Total assets reached over LKR 100 Mn. mainstream financial institutions that had previously considered them unsuitable. 2006 Our customer base includes: 10-year development plan initiated ²² Retail customers ²² SME customers 2007 ²² Co-operative societies ²² Celebrated 10 years of excellence ²² Business banking customers ²² Branch network expanded to 25 Our varied product portfolio provides solutions that span areas such as development, personal banking and leasing, while our deposit products 2008 encourage these communities to invest and save. ²² Winner of the National Excellence Award ²² Total assets increased to LKR 10 Bn. SDB bank is listed on the Main Board of the Colombo Stock Exchange. ²² Employee cadre expanded to 500 The Bank has been assigned a National Long-term Rating of BB+(lka) with a stable outlook by Fitch Ratings Lanka Ltd., and the (SL)BBB- with stable outlook by ICRA Lanka Limited. 2009 ²² SANASA Group loan scheme introduced Our rural focus is reinforced by the direct links the Bank maintains ²² Share capital increased to LKR 1 Bn., from LKR 123 Mn. with over 8,500 co-operatives countrywide. Our rapid growth and ²² Branch network expanded to 50 SME-sector strength have allowed us to secure significant investment from some of the top global development finance institutions along with technical support, positioning us strongly to capitalise on these 2010 gains in the year 2020 and in the future. ²² Head Office relocated to new building which is located in Kirulapone OUR JOURNEY ²² Ranked as the second best micro finance institution in the World, by Mix Market Global – USA Since its inception, up to end 2020, SDB’s assets have grown from ²² Branch network expanded to 75 approximately LKR 100 Mn. to LKR 129 Bn. During this time, the Bank’s geographical footprint has also expanded through LankaPay we offer our customers access to nearly 5,000 ATM points covering grassroots 2012 communities across a large portion of the country in addition to our ²² Introduced debit cards and ATM facilities branch network. These achievements were not easily won. ²² Listed on the Main Board of Colombo Stock Exchange Through the many sociopolitical and economic challenges that dotted this period of time, including 30 years of ethnic strife, recession, and 2013 of course the 2004 tsunami and other natural disasters, as well as ²² Total assets increased to LKR 29.7 Bn. the COVID-19 pandemic, our services to this underserved segment of society have remained unfazed. In addition, we have focused on improving financial literacy and financial inclusion. Today we are one of the leading financial institutions for individuals, micro and SME businesses, and communities who have no other viable opportunity to realise their aspirations

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