Commercial Bank keen on local, overseas opportunities
The Commercial Bank which completed its centenary year is evaluating potential local and overseas opportunities in terms of strategic investments, officials say.
"" We evaluated about 20 such opportunities last year. We continue to do so this year as well,” S. Renganathan, Managing Director / CEO Commercial Bank told the Business Times in an interview on Friday. He said last year the bank increased its stake from 20 per cent to 60 per cent in Commercial Insurance Brokers PLC. “This was one of the discussions of a strategic stake that came into fruition last year," he explained noting that this year too, something will see through.
He explained further that strategic opportunities in finance and banking are their focus point.
The bank has seen its contribution from the Bangladesh operation increase to 20 per cent from the 13 per cent to 15 per cent levels duri ng l ast ye a r. Mr. Renganathan also said that Commercial‘s subsidiaries, Serendib Finance and Commercial Development (which owns the bank‘s head office building) have done well during last year. Also the bank‘s Myanmar micro finance operation is expected to do well this year and make profits. Mr. Renganathan added that
CBC Tech Solutions which does IT solutions for the bank is also active. “As such we expect the group to do better in the year to come," he added.
The Commercial Bank share has dropped to Rs. 85 as at Friday, from around Rs.113 in January 2019. Mr. Renganathan noted that the share has seen a lot of foreign selling which is owing to the US capital markets gaining traction. “The US dollar returns are better now. When global markets dry up the foreign funds look at emerging markets,” he noted. When asked whether the bank is looking for a capital call, Mr. Renganathan replied that they’re working on an initiative which will definitely not dilute the current share price of the bank.
He added that there are two limiting factors for growth in the banking sector. The primary factor being lower level of economic activity which in turn leads to the second factor which is higher impairment costs due to the increase in non-performing loans. But he is positive. “Growth in the economy is expected after the upcoming elections," he said.
He said that the coronavirus has also impacted business. “Not only tourism but trading that is done in China is curtailed do an extent. Also exports are affected. That is why we see slow trading which takes place through the bank,” he said.
Mr. Renganathan added that the small and medium enterprise relief package which was introduced by the government will assist those entrepreneurs who are really affected. “It will be a bit of a breather for them." The bank also has corporate social responsibility and sustainability programmes. This year the bank hopes to set up 100 STEM Schools under their CSR programme.