Sampath Bank PLC ǀ Annual Report 2020 Millions of lives impacted. Millions of rupees invested. Millions achieved year on year. A million million ways to grow. Here at Sampath Bank, as we come to the close of an eventful year characterised by momentous change and uncertainty, we are proud to celebrate yet another notable milestone in our history with our stakeholders; as we became the youngest bank to surpass an asset base of one trillion rupees. As we look back on all we have achieved thus far, this report pays tribute to the many millions that came together to bring about the results we showcase today - the millions of partnerships, the millions of livelihoods, the millions of projects and the immeasurable contribution of each and every stakeholder we serve. Today, we move forward with a clear vision. We are energised with a purpose and geared to face the future - built on a solid foundation of unmatched skill, talent and strategy to push us further along a trajectory of national growth and progress. We strive to reach new heights as we seek out a million million new ways to grow. 2 I SAMPATH BANK PLC I Annual Report 2020 CONTENTS About the Report ..................................4 Material Topics ......................................6 Financial Highlights............................ 10 Non-Financial Highlights .................. 12 INTRODUCTORY MANAGING OUR MANAGEMENT INFORMATION BUSINESS DISCUSSION & ANALYSIS 01 02 03 Our Vision and Values ............................ 16 Chairman’s Message ............................... 30 Operating Environment ......................... 54 About the Bank ....................................... 17 Managing Director’s Review .................36 Product Portfolio ..................................... 18 Our Value Creating Business Model ....42 CAPITAL MANAGEMENT REPORTS Board of Directors .................................. 20 Strategic Sustainability Framework ......44 Financial Capital ...................................... 59 Corporate Management ........................ 26 Connecting with Our Stakeholders ......47 Manufactured Capital ............................ 64 Intellectual Capital .................................. 67 Human Capital ......................................... 70 Social and Relationship Capital ............73 Natural Capital ......................................... 77 BUSINESS REPORTS Consumer Banking .................................. 82 Corporate Banking .................................. 86 SME Banking ............................................ 89 Global Banking ........................................ 90 Nostro Accounts Maintained Banks, Correspondent Banks and Exchange Companies ........................................... 92 Treasury .................................................... 93 Operational Support ............................... 94 Performance of Subsidiaries ................. 95 Investor Information ............................... 96 SAMPATH BANK PLC I Annual Report 2020 I 3 RISK & GOVERNANCE FINANCIAL INFORMATION SUPPLEMENTARY INFORMATION 04 05 06 Risk Management Report ...................... 108 Financial Calendar................................... 184 Statement of Profit or Loss in US$ ......346 Compliance Report ................................. 117 Annual Report of the Board of Directors Statement of Comprehensive Corporate Governance ..........................119 on the Affairs of the Company .........185 Income in US$ ..................................... 347 Board Audit Committee Report ............170 Directors’ Interest in Contracts Statement of Financial with the Bank ...................................... 196 Position in US$ .................................... 348 Board Human Resources and Remuneration Committee Report ....173 Directors’ Statement on Internal Control Economic Value Addition ....................... 349 Over Financial Reporting ................... 197 Board Nomination Committee Report. 175 Ten Years at a Glance ............................. 350 Independent Assurance Report to the Board Integrated Risk Management Quarterly Statistics ................................. 351 Board of Directors of Committee Report .............................. 177 Capital Adequacy .................................... 353 Sampath Bank PLC ............................. 199 Board Related Party Transactions Review Basel III Disclosure Requirements ....354 Managing Director’s and Group Chief Committee Report .............................. 180 Financial Officer’s Responsibility GRI Content Index .................................. 364 Statement ............................................. 200 Independent Assurance Report to the Statement of Directors’ Responsibility for Shareholders of Sampath Bank PLC. 372 Financial Reporting ............................. 201 Glossary of Financial and Independent Auditor’s Report to the Banking Terms ..................................... 373 Shareholders of Sampath Bank PLC. 203 Notice of Annual General Meeting ......377 Statement of Profit or Loss ...................208 Notes ......................................................... 378 Statement of Comprehensive Income .209 Stakeholder Feedback Form ..................379 Statement of Financial Position ............210 Corporate Information ........................... IBC Statement of Cash Flows ......................212 Statement of Changes in Equity ...........214 Notes to the Financial Statements ......216 4 I SAMPATH BANK PLC I Annual Report 2020 ABOUT THE REPORT Report Profile GRI - 102-50,52 Each year Sampath Bank prepares and Changes to this year’s report publishes its Annual Report with the In keeping with environmentally- intention of providing its stakeholders friendly best practices, a number of with a clear understanding of the Bank’s key areas of Sampath Bank’s 2020 performance and prospects for a given Annual Integrated Report have been financial year. moved online. Accordingly, the Capital Management Reports, Material Topics The current report which covers the and their Management Approaches are financial year 1st January 2020 to 31st shown as online content, with only a December 2020 is the 7th Integrated summary of these areas being included Report released by Sampath Bank PLC, in the 2020 printed Annual Report. since the Bank began its integrated reporting journey in 2014. All previous integrated reports including the most Reporting Frameworks GRI - 102-12,54 recent report for the financial year 2019 The content of this report is based on the Six Capitals Model introduced by the are available for viewing and downloading International <IR> Framework. By adopting the Six Capitals Model, we are looking to on our corporate website - www.sampath.lk demonstrate how we use integrated thinking to transform our capital resources (Inputs) in order to deliver financial results and create value (Outcomes) for our stakeholders. To Scope and Boundary GRI - 102-46 illustrate how this takes place, the report narrative has been structured based on Material The report covers the operations of Sampath Topics that influence our business model, strategy, performance and future prospects. The Bank PLC in its entirety and includes all process of determining Materiality is described in detail on page 6 of this Annual Report. business and operational activities as well as administrative support functions of the Bank Other applicable reporting frameworks include; during the reporting period. Sri Lanka Accounting Standards issued by the Institute of The report showcases both financial Chartered Accountants of Sri Lanka and non-financial aspects of the Bank’s Companies Act No. 07 of 2007 performance, essentially providing a clear Banking Act No. 30 of 1988 and amendments thereto and concise account of the steps we are Financial taking to achieve our strategic vision Listing ulesR of the Colombo Stock Exchange Reporting while balancing the expectations of all Code of Best Practice for Corporate Governance issued by the stakeholders. Institute of Chartered Accountants of Sri Lanka Also included in the report is a brief Banking Act Direction No. 11 of 2007 on Corporate summary of the performance of all four Governance for Licensed Commercial Banks in Sri Lanka, issued subsidiaries under the Sampath Bank Group. by the Central Bank of Sri Lanka and any amendments thereto Banking Act Direction No. 01 of 2016 on Capital Requirements In this manner, the report caters to under Basel III and amendments thereto Governance, the information needs of not only our Banking Act No. 30 of 1988 and amendments thereto Compliance and shareholders but a diverse audience across Risk Reporting Companies Act No. 07 of 2007 our value chain. Listing ulesR of the Colombo Stock Exchange Global Reporting Initiative (GRI) Standards - “In Accordance Comprehensive” issued by Global Sustainability Standards Board Guidelines on ESG Reporting issued by the Colombo Stock Exchange Sustainability United Nations Sustainable Development Goals (SDGs) Reporting SAMPATH BANK PLC I Annual Report 2020 I 5 Since Sampath Bank sustainability indicators. Page 372 of this be reasonably assumed that incidents report contains a copy of the independent that occur in the future may cause actual commenced its assurance statement issued by Messrs results or outcomes to differ materially integrated reporting Ernst and Young, with regard to Sampath from what was expressed or implied by journey in 2014, this Bank’s adherence to the GRI Standards. forward-looking statements. is the 7th Integrated Forward-Looking