Global CEO Magazine recently had the privilege of interviewing Mr Azzam A. Ahamat, the Chief Financial Officer and Head of Finance at People’s Bank. With an impressive portfolio of qualifications, including FCMA (UK), FCCA (UK), FCMA, CPA (Aust), ACA, SIRM (UK), and MCICM (UK), Mr Ahamat brings over 22 years of extensive experience in strategy, financial management, investments, and risk management. As a results-oriented leader with a diverse skill set, he is dedicated to institutional value creation through transformational thinking.

During this insightful conversation, Mr Ahamat shared his perspectives on navigating financial challenges amidst economic disruptions, the importance of innovation in financial management, and the evolving role of CFOs in Sri Lanka’s dynamic business environment. His strategic approach and commitment to driving growth through innovation have been instrumental in steering People’s Bank towards success, even in the face of unprecedented challenges.

In this article, Mr Ahamat offers a detailed look at the financial strategies, risk management frameworks, and future trends that he believes will shape the banking sector and broader business landscape in the years to come.

Q: What financial strategies have you implemented to help the Bank navigate the challenges brought about by the recent economic or market disruptions?

Needless to say, the challenges we’ve faced over the last several years have been unprecedented. To provide some context, in its seventy-five-year history post-independence, Sri Lanka’s economy has experienced five instances of economic contraction, with four occurring between 2019 and 2023. For the banking sector, which serves as the backbone of any economy, the pressures were immense. For a State bank like ours, those pressures were even higher. Therefore, this period has been the ultimate test of our skills, capabilities, and care, with the bank’s ability to remain a going concern hinging on these factors. In summary, we undertook the following key actions during this period:

1. Precautionary Approach to Asset & Liability Management:
• We focused on driving deposit growth in both rupee and foreign currencies to ease pressure and improve liquidity buffers. As the saying goes, in times of distress, “liquidity is king.”
• We adopted a more cautious approach to lending, recognising that during periods of economic contraction, balance sheets must naturally readjust.

2. Strengthening Financial Risk Management Frameworks:
• Our focus was on comprehensive risk assessments to pre-emptively identify credit, market, and operational risks, using stress testing and scenario analysis to detect potential vulnerabilities and take corrective action.

3. Focus on Collections and Non-Performing Loan Recoveries:
• This remains core to the institution’s sustainability over the long term.

4. Intensifying Digital Initiatives:
• We focused on migrating customers to our digital platforms and offering digital-centric solutions. This was crucial for customer retention, new customer acquisition, and improving institutional productivity and efficiency.

5. Cost Control and Efficiency Improvements:
• This was key in a highly inflationary context.

6. Open and Transparent Communication with Stakeholders:
• We maintained open communication with employees, regulators, the line ministry, trade unions, customers, financiers, and the general public to ensure trust and confidence in the institution during these extraordinary times.

Looking back, these strategies helped the bank emerge from a point of near insolvency to a position of unprecedented strength in terms of liquidity, solvency, and profitability on a normalised basis. We have also laid the groundwork to ensure the bank is better equipped to handle similar challenges in the future.

Q: Innovation in Financial Management: Can you highlight any financial innovations or adaptations that have played a crucial role in maintaining business continuity and driving growth during rapidly changing market conditions?

Certainly. To name a few:

1. Digital Transformation:
• This has revolutionised the way we interact with customers at the front end and process transactions at the back end, acting as a catalyst for productivity and efficiency improvements.

2. Data Analytics:
• The use of data analytics has allowed us to track market trends, customer behaviours, and operational performance. This has enabled us to make informed strategic decisions quickly and tailor our offerings to meet our customers’ evolving needs.

3. Agility Through Technology Integration:
• Agility is essential in today’s dynamic market. Integrating technology at all levels of the organisation is key to long-term sustainability.

4. Enhanced Risk Management Frameworks:
• The deployment of integrated tools has improved our ability to identify, assess, and mitigate risks across the organisation. This holistic approach enables us to detect potential vulnerabilities and facilitates quicker decision-making during uncertain times.

5. Technology-Enabled Customer Engagement:
• These strategies have brought us closer to our customers.

By prioritising technology, agility, and customer-centricity, People’s Bank is now better equipped to navigate the complexities of an ever-evolving market environment, driving long-term value for all stakeholders.

Q: Risk Management and Uncertainty: During periods of uncertainty, how do you approach financial risk management? What qualities are important for maintaining financial stability in your organisation?

Financial risk management is not just a science but also an art, especially in times of distress. It must be approached with a cautious mindset at every turn. There are no substitutes for doing the basics right. Regardless of the circumstances, be they challenging or otherwise, one must first fully understand the context—whether from a macroeconomic, market, or organisation-specific perspective. The details matter.

Once the context is understood, an all-inclusive plan must be drawn up with the support of all stakeholders, setting out actionable items with clear timelines and milestones. Results are only attainable when executed in concert with the team. The process should also include regular monitoring and reporting to enable corrective measures when necessary.
Ultimately, mindset dictates results. Commitment and discipline are crucial to staying the course. I’m proud to say that’s exactly what People’s Bank has done, especially during the most difficult circumstances and against overwhelming odds. We achieved the impossible because we worked together as a team.

Q: The Future of Financial Management in Sri Lanka: How do you envision the role of CFOs evolving in Sri Lanka over the next five years?

Driven by technological advancements, changing regulatory landscapes, and constantly evolving market dynamics, the role of CFOs has already begun to evolve. CFOs are no longer just financial overseers—they are strategic partners who enable both the preservation of organisational value and the driving of growth. In the Sri Lankan context, this is even more pronounced, especially given the country’s recent experiences. The role of CFOs now encompasses the following:

1. Providing Strategic Leadership:
• CFOs are increasingly involved in shaping corporate strategy, leveraging financial insights to facilitate more informed and timely decision-making.

2. Enhancing Risk Management:
• In volatile economic environments, CFOs have taken on the role of enabling real-time monitoring and decision-making to proactively mitigate financial and operational risks.

3. Championing Technology Adoption:
• CFOs are increasingly spearheading conversations about integrating advanced technologies such as AI, machine learning, and data analytics into various aspects of operations.

4. Sustainability and ESG Focus:
• With the growing importance of Environmental, Social, and Governance (ESG) aspects, CFOs are responsible for integrating sustainability practices into the organisation’s operations and culture.

5. Stakeholder Engagement:
• CFOs are now engaging more deeply with stakeholders, including investors, regulators, and the community. Effective communication of financial performance and strategic vision is crucial for building trust and ensuring organisational alignment.

Q: What key financial trends or developments do you think will shape the future of businesses?

From a banking sector perspective, the following three trends are at the forefront:

1. Digital is the Present and Future:
• With customer convenience and ease of access being central to business growth, the continuous integration of digital solutions, both at the front and back end, is crucial for long-term sustainability.

2. Data-Driven Decision-Making:
• This area has already received significant investment and attention, and it will continue to play a vital role in driving growth in the future.

3. Increased Focus on Agility:
• In a highly dynamic market environment, a business’s ability to adapt quickly to changes will ultimately determine its ability to remain relevant over the long term.