DFCC Bank forging ahead with digital drive
DFCC Bank is forging ahead with a digital drive in a bid to harness competitive advantages based on technology, Ephesians said.
"DFCC is now focused on digitisation. We have also been taking fintech products through our 100 per cent-owned company, Synopsis to Cambodia, Myanmar and the Solomon Islands," Lakshman Silva, Director/CEO DFCC Bank told the Business Times in an interview. In this backdrop, he said the bank will not be setting up more branches unless it's at a unique location and will deploy digital technologies during expansion.
DFCC Bank has spearheaded the banking and financial services industry through rapid adoption of technology to deliver fintech solutions that provide speed and convenience, he added. DFCC Bank became the first bank in Sri Lanka to be certified for Visa’s QR Payment solution, which is a security solution that Visa offers. “It will empower consumers to use their mobiles with greater freedom. Consumers can simply scan the QR code with their smart- phones and make payments. DFCC Bank is proud to revolutionise the experience for its customers who have come to expect industry-leading solutions from us. DFCC Bank expects to derive benefits from this partnership such as to drive channel innovations, enable business growth and revenue, whilst delivering relevant, contextual and personalised customer experiences.”
This year, he acknowledged will be challenging. "Taxation has risen. Since last October we are paying transaction levy based on financial services tax. As a result taxes are going up rapidly," he noted. He explained that when a bank pays 60 per cent in taxes, there is the only little remaining in retained earnings. DFCC has managed to arrest this situation somewhat by going in for a rights issue off Rs.7.6 billion. The issue will be on the basis of two new shares for five held at Rs. 72 each and entail an offering of 106 million shares.
Mr. Silva noted that the bank is capital adequate. As at September 30, 2018, the DFCC Group’s Tier 1 capital adequacy ratio stood at 10.722 per cent while the total capital adequacy ratio stood at 16.067 per cent. "But For the growth of the bank, we need capital. We are raising capital after 12 years," Mr. Silva said. The Rights Issue is subject to the Colombo Stock Exchange approving in principle the issue and listing of shares and obtaining shareholder approval at an extraordinary general meeting on a date to be advised in due course.
Despite having significantly three to four large cases of non- performing loans ( NPL), DFCC was able to manage its NPL portfolio well. "We are below the industry average in non-performing loans." He said they had defaulting clients in construction, light hardware industry and garment exports sectors. “We had three to four clients defaulting. They had not managed their businesses well. But overall we are not exposed to any sector. We have strong credit criteria to evaluate which businesses we grant loans to."
DFCC has assisted businesses mainly in infrastructure. Mr. Silva said that they assist infrastructure projects that are into energy such as thermal, hydro, solar and wind. "We are also doing a couple of projects and garbage recycling." In addition, during the last two years, DFCC has been lending to the Micro, Small and Medium Enterprises ( MSME) sector. The businesses they lend to are in between Rs. 300,000 to Rs. 4 million and the businesses are conducted in a domestic setting. Mr. Silva noted that majority of the industries are female-led. “These industries range from light engineering, photography, horticulture, beauty culture, hair dressing and agro processing.”