Ms Ayodhya Iddawela Perera, Managing Director of Sampath Bank PLC, recently shared insights with Global CEO Magazine on the bank’s strategies for “Banking Beyond Borders: Navigating Economic Growth and Stability.”

Sampath Bank plays a pivotal role in driving economic resilience by fostering entrepreneurship and supporting Small and Medium-sized Enterprises (SMEs), catalysing both domestic and international economic growth. With a multifaceted approach encompassing financial innovation, dedicated support programmes, and strategic partnerships, the bank has successfully navigated challenges and opportunities in the increasingly interconnected global economy.

Amidst economic crises, Sampath Bank collaborated closely with the Central Bank and financial institutions, ensuring uninterrupted financial services, supporting SMEs, and facilitating the country’s return to economic growth. Leveraging digital technology and fintech innovations, the bank enhances banking services, improves financial inclusion, and contributes to economic development locally and globally.

Furthermore, Sampath Bank integrates sustainability principles into its operations, investment decisions, and corporate strategy, promoting long-term economic resilience and responsible banking practices. Looking ahead, the bank remains committed to enhancing performance and competitiveness, with a focus on regional expansion and continued delivery of exceptional service.

SAMPATH BANK HAS ALWAYS WORKED VERY CLOSELY WITH THE CENTRAL BANK AS THE
REGULATOR, AND ALL THE OTHER MAJOR FINANCIAL INSTITUTIONS TO SUPPORT THE GROWTH OF SRI LANKA. THIS CLOSE COLLABORATION BECAME EVEN MORE IMPORTANT SINCE 2019, WHEN THE COUNTRY HAD TO FACE POLY-CRISES.

Q: How does your bank collaborate with the Central Bank and other financial institutions to support economic growth and stability within the country, and what initiatives have been particularly successful in driving this collaboration?

Sampath Bank has always worked very closely with the Central Bank as the regulator, and all the other major financial institutions to support the growth of Sri Lanka. This close collaboration became even more important since 2019, when the country had to face poly-crises. During the period, Sampath Bank worked lockstep with other banks and the Central Bank to provide uninterrupted financial services to the public, support and revive the SMEs, soften the blow by the economic crisis on the public by supporting growth sectors, to name a few.

Almost all the initiatives have been successful. There were minimal issues to the public during the pandemic and the economic crisis in terms of access to their funds and banking services. Vast majority of the SMEs survived the crises during the past 4 years supported by the moratoriums and the restructuring. Country’s economy has returned to the growth path much faster than initially expected, recording positive growth in the 3rd quarter of 2023.

Q: In an increasingly interconnected global economy, how does your bank navigate challenges and opportunities arising from international markets and cross-border transactions, and what strategies do you employ to ensure resilience and sustainability in the face of external economic factors?

During the economic crisis period, there were some challenges initially in terms of facilitating trade transactions and raising funds. But we overcame that challenge very quickly by building up our remittance and export inflows that gave more confidence to our banking partners outside to facilitate payments.

Q: With the rapid advancement of digital technology and fintech innovations, how is your bank leveraging digitalisation and technological advancements to enhance banking services, improve financial inclusion, and contribute to economic development both locally and globally?

Sampath Bank has been in the forefront of deploying technology and innovation since its inception. We put our customer needs at the heart of all innovation and technological developments. The objective is not to deploy technology for the sake of it, but to deploy it effectively to add value to our customers and employees. As a result, the customers today have 24/7, 365-day banking from anywhere in the world and this has improved financial inclusion, with more than 80% of people in Sri Lanka having a bank account. We have enabled digital account opening and with analytics gaining traction in the financial services industry, we aim to leverage on that to improve our customer experience.
Q: What strategies does your bank employ for provisioning Stage III non-performing loans, and how does this contribute to maintaining financial stability and regulatory compliance?
The Bank diligently adheres to regulatory and accounting standards by categorising its customers into Stage 3. Embracing a proactive stance, the Bank actively identifies customers posing potential risks and assigns them to Stage 3. Notably, Individually Significant Customers undergo meticulous evaluation to determine the necessary provisions. Moreover, the Bank implements a prudent provisioning policy to ensure the adequacy of provisions reflected in its financial statements. Collateral values are discounted, and realisation periods extended as needed to accommodate unique circumstances and prevailing market conditions.

Q: Sustainability and Environmental, Social, and Governance (ESG) considerations are becoming increasingly important in the banking sector. How does your bank integrate sustainability principles into its operations, investment decisions, and corporate strategy to promote long-term economic resilience and responsible banking practices?

One of the key trends that will shape the landscape of the banking industry over the next few years is the Environment, Social and Governance aspects. ESG is not new to the industry and no longer it is the right thing to do but it has become a business imperative. We believe merely reporting on ESG will not be sufficient. Banks must move to embed ESG as part of their business strategy and create the necessary structural changes in their operating models to pursue ESG related strategies.

We no longer consider ourselves as a conventional bank. Instead, we are a responsible bank contributing to address environmental and social impacts arising from the global issues such as Climate Change whilst striving to create value to our stakeholders.
The Bank’s sustainability strategy ensures that the achievements of profits is not done at the expense of environment or wider society. Furthermore, the Bank’s sustainability strategy sets out our commitment to showcase Bank’s progressive measures towards driving the transition towards a low-carbon economy. Bank’s sustainability principles seek to align the banking operations in keeping with proven environmental, social & governance standards and international best practices.

Sampath Bank strives to integrate ESG into the Bank’s overall operations; strengthening Bank’s sustainable financing objectives by introducing an Environmental & Social Management System (ESMS) to manage the ESG Risk of the lending portfolio, furthering the Bank’s readiness to develop a strong green lending portfolio and Bank’s commitment to low carbon transition within the objectives of reducing the climate risks and impacts. We consider innovative green lending products as a key, to cater to the emerging trends in the sustainable finance sphere and we are making a deliberate effort to introduce new products with a host of benefits to encourage more investments to sustainable activities. Bank is also committed to safeguard the interests of the stakeholders including the employees whilst ensuring timely reporting on Bank’s sustainability commitments.

Q: As a leader in the banking industry, what role do you see your bank playing in driving innovation, fostering entrepreneurship, and supporting Small and Medium-sized Enterprises (SMEs) to stimulate economic growth and create employment opportunities within the country and beyond borders?

SMEs are the lifeblood of any economy and Sri Lanka is no different. However, our SME sector underwent some severe stress due to the poly-crises that I mentioned before. The banks had to play a very special role to keep the SME sector alive, and thereby to keep the general economy alive. At Sampath Bank, we set up a credit nursing unit very early and started working very closely with the SMEs to pro-actively restructure their portfolios. The Bank advised our clients on how best to manage their business under such conditions and how to plan their cash flows. We are happy to say that most of the SMEs survived those tough times and are now in good business. As credit growth recommences with the recovery of the economy, we as banks stand ready to support the growth of SME sector, particularly those that export products and services.

Q: Over the last few years, what key initiatives has your bank implemented to enhance its performance and competitiveness in the global market? Looking ahead, what are your expectations for your bank’s performance and growth in the coming years, particularly in the context of expanding operations beyond borders?

Sampath Bank is mostly focused on the domestic market at the moment. Though we have ambitious plans for regional expansion, we will be carefully considering those with the developments in the domestic and overseas markets. However, being more domestic focused doesn’t mean that we are safe from global competition. Sri Lanka is blessed with the presence of many global banks and even the local banks here are at comparative global standards when it comes to product and service offerings. Thus, Sampath Bank has always benchmarked its performance to such high standards, and we have a proven track record of effective delivery. The performance of the bank during the difficult period of 2019 to 2023 is a testament to our successful strategies and effective implementation. During the period, we mainly focused on customer service, digitalisation, sustainability, and employee satisfaction, and strategised accordingly.