Thus far... Amãna Bank PLC 480 Galle Road, Colombo 3 Sri Lanka www.amanabank.lk ...still further Our Vision To be an admired leader in providing equitable financial solutions, not limited to numerics, but also in earning the trust of our customers, employees, shareholders and country Our Mission To adopt a unique and people friendly approach with a passion for continuous improvement, enabling growth and enriching lives of our customers We believe We believe that you have a right to be treated fairly We believe that one should not gain at the expense of another We believe that being responsible and ethical is as important as making profits and gains We believe that entrepreneurship should be encouraged and given a fair opportunity to succeed We believe that the best of actions are the ones which create true happiness in people We believe that you feel the same way we do We have a unique approach to banking which is in sync with our beliefs Our financial solutions are responsible, ethical and fair We are Amãna Bank. It’s Your Bank From the beginning… …we were driven by a clear vision of what we wanted Amãna Bank to be. In retrospect, one can now see how closely we have stayed true to our overarching strategy of building an enterprise underpinned by a strong foundation of values and ethics, making the ‘customer’ our highest priority. The early foundational years are now behind us. We have emerged into an exciting new era of steady performance and sustained profit, characterised by our ethos ‘performance through service’. The journey thus far is evolving…and has further to go… Contents 03 Financial Highlights 04 Other Highlights 06 Chairman’s Message 08 iNdm;s;=udf.a mKsjqvh 10 jiytupd; nra;jp 12 Chief Executive Officer’s Review 16 Board of Directors 20 Independent Sharia Supervisory Council 22 Management Committee 24 Profiles of Strategic Shareholders 25 Business and Operations Review 38 Report on Sharia Supervision 41 Corporate Social Responsibility 43 Risk Management 59 Corporate Governance 79 Bank’s Compliance with Prudential Requirements 81 Directors’ Statement on Internal Control Over Financial Reporting 83 Independent Assurance Report on Directors’ Statement on Internal Control Over Financial Reporting 84 Annual Report of the Board of Directors on the Affairs of the Bank 88 Directors’ Interest in Contracts 90 Board Audit Committee Report 92 Board Integrated Risk Management Committee Report 94 Board Human Resources and Remuneration Committee Report 95 Board Nomination Committee Report 96 Statement of Directors’ Responsibility 98 Independent Sharia Supervisory Council Report 99 Sharia Governance Financial Reports Financial Reports are 102 Independent Auditors’ Report marked on the page 103 Statement of Profit or Loss edge, with a coloured bar, for ease of 104 Statement of Comprehensive Income navigation 105 Statement of Financial Position 106 Statement of Changes in Equity 107 Statement of Cash Flows 108 Notes to the Financial Statements 150 Compliance with Other Disclosure Requirements Specified by the Central Bank of Sri Lanka 153 Capital Adequacy Computation 156 Financial Summary 157 Investor Relations 161 Correspondent Banks 162 Branch Network 164 Glossary of Banking and Financial Terms 167 Notice of Annual General Meeting Form of Proxy Enclosed Corporate Information Inner Back Cover Financial Highlights TOTAL ASSETS 2015 2014 Change LKR Billion Profitability (LKR Million) 60 Financing Income 2,886 2,408 478 Financing Expenses 1,405 1,198 207 48 Operating Expenses 1,693 1,575 118 Profit/(Loss) Before Tax 219 (80) 299 36 Profit/(Loss) After Tax 159 (80) 239 24 Position at the Year End (LKR Million) Shareholders’ Funds 5,723 5,026 697 Deposits 38,608 29,224 9,384 12 Advances 33,074 25,427 7,647 Total Assets 47,882 34,898 12,985 0 ’11 ’12 ’13’14 ’15 Information per Share (LKR) Earnings 0.13 (0.06) 0.19 Net Assets Value 4.58 4.02 0.56 Market Value 5.60 5.20 0.40 DEPOSITS LKR Billion 2015 2014 % % 50 Ratios 40 Growth in Income 19.9 36.2 Growth in Deposits 32.1 62.5 30 Growth in Advances 30.1 69.3 Growth in Total Assets 37.2 49.1 20 Growth in Shareholders’ Funds 13.9 (0.7) Advances to Deposits 85.7 87.0 Return on Average Shareholders’ Funds 3.0 (3.2) 10 Return on Average Assets 0.4 (0.5) 0 Others ’11 ’12 ’13’14 ’15 Gross Non-Performing Advances Ratio 0.92 1.49 ADVANCES VS NPA ADVANCES TO DEPOSITS RATIO ADVANCES Advances (LKR Billion) (%) LKR Billion NPA (%) LKR Billion % 35 2.0 90 35 28 1.6 80 28 21 1.2 70 21 14 0.8 60 14 7 0.4 50 7 0 0 40 0 ’11 ’12 ’13’14 ’15 ’11 ’12 ’13’14 ’15 ’11 ’12 ’13’14 ’15 3 Other Highlights Number Number of Customers of Own ATMs 179,889 27 Number External of Branches Rating BB(lka) 24 Stable Outlook 4 Amãna Bank PLC Annual Report 2015 OTHER HIGHLIGHTS Number Number of Correspondent of Industry Awards Banks won in 2015 55 6 Sri Lankan Number Brand Ranking 2015 of Staff 83rd 644 5 Chairman’s Message If 2014 was seen as a year where the Bank achieved a break even level of performance, 2015 was a year where the Bank leaped ahead with some well crafted strategies to surpass anticipated growth in profitability… In the Name of Allah the Most Gracious the Having done so, Your Bank today steps into record low. Other factors such as, contraction Most Merciful! a new era focused on steady performance, of global trade and low investor confidence, coupled with superior service leading to stifled global economic growth. I am truly honoured to welcome you all to the sustainable profits. In the local economic context, 2015 proved Seventh Annual General Meeting of Amãna Bank to be a tough year with exports and remittances PLC. We have completed a very significant year dwindling, resulting in GDP growing at 4.8%, EconoMIc LandScaPE at the Bank. marginally below the revised rate of 4.9% for The year under review was much looked The global economic performance remained 2014. Appropriate strategies are required to be forward to! The Bank, after having achieved subdued, with growth being restricted to 2.4% developed to improve the nation’s GDP growth a break even level of performance in August in 2015, lower compared to 2014, when it grew rate by promoting an investor friendly climate 2014 – which was exactly three years since by 2.6%. Emerging and developing economies and attracting Foreign Direct Investment into commencing banking operations – envisaged experienced economic slowdown, the impact the country. The Government of Sri Lanka recording its first year of core business profit. of which was felt in many countries world free floated the exchange rate in September, Achieve it did: and quite impressively too. over. Low oil prices hurt the economies which while inflation and market rates edged upwards depend on crude oil exports, as prices fell to a during the latter part of the year. 6 Amãna Bank PLC Annual Report 2015 CHAIRMAN’S MESSAGE YouR BanK coMPLEtES a anticipated core business profits for the first MoMEntouS 2015 “the Bank time in its short history. I would like to offer If 2014 was seen as a year where the Bank my sincere appreciation to the staff for all the achieved a break even level of performance, outperformed sacrifices that they have made, the positive 2015 was a year where the Bank leaped ahead business attitude that was maintained and the with some well crafted strategies to surpass the industry in desire to strive for service excellence, all of anticipated growth in profitability, which which, has moved the Bank to a new level in resulted in the Bank recording a net profit all key facets of terms of performance. after tax of LKR 158.6 Million for the year Officials at the Central Bank of Sri Lanka under review. This compared to the post-tax have always provided guidance when required loss of LKR 80.2 Million recorded in 2014 Balance Sheet and I will fail in my duties if I do not convey translates to a commendable growth of 297.6%. my appreciation to them. Thank you for all the The Bank outperformed the industry in all growth” assistance provided throughout the year. key facets of Balance Sheet growth; namely total Our customers have grown in number and assets (37.2%), customer financing (30.1%) and they have been an important stakeholder in our customer deposits (32.1%), which is indeed a FutuRE – oPtIMIStIc – journey to success. The Bank is continuously chaLLEngIng noteworthy achievement. The Bank, with a looking out for the latest methods in serving its ratio of 0.92%, probably recorded the lowest With encouraging results in 2015, the Board customers and I am sure the Bank will adopt non-performing advances percentage in of Directors, members of the Management every possible approach to provide a delightful the industry for 2015. It’s a noteworthy Committee and the entire staff are optimistic experience for every customer who walks achievement to maintain such a low ratio, of the future by acknowledging the task at into Amãna Bank. Stability is key to any bank with growth and gradual seasoning of the hand to achieve the challenging targets and customers in a bank provide that strength advances portfolio. outlined in the Bank’s Strategic Plan. In addition, to carry on business and achieve satisfactory In line with the Code of Best Practice by 1 January 2017, the Bank is required to raise results, which we have been able to deliver this on Related Party Transactions issued by its current capital funds to a minimum of year.