Sampath Bank in earnest discussions to launch green bonds
Sampath Bank, now steered by a new managing director, will be leveraging its strength in Renewable Energy financing and is discussing with institutional investors to launch green bonds.
Sampath Bank started discussions with a few development financial institutions on green bond issuance and green credit lines a few months ago, Ayodhya Iddawela Perera, Managing Director, Sampath Bank said.
“Sampath Bank has partnered in all large renewable energy projects in wind, solar, hydro etc. We have initiated discussions with a few institutions and hope to be there in the market at the right time,” she told the Business Times in an interview recently.
Last year, the stock market regulator introduced the listing and trading of green bonds, unlocking a new era of financing for sustainable projects in the country. Now there is a US$1 billion dedicated to renewable energy projects currently underway and numerous other projects ranging from $20 million to $30 million in addition to the $500 million Adani project.
In terms of expansion overseas, Sampath Bank has always been open to inorganic growth, Ms. Perera said. “This year there is no difference. However, any opportunity should be the right one, in sync with our vision and, purpose.” She noted that the bank will carefully evaluate the opportunities that come its way regionally. “We are looking at opportunities. But an opportunity should come at the right time with the right investment, the appropriate return, and the increase in shareholder value.”
Commenting on the recent value-added tax, which was increased to 18 per cent, the increase hurt consumer spending, which resulted in less demand for goods and services, she said. “Understandably, discretionary income has been impacted. However, it is encouraging to hear about the stimulating factors at present, such as positive economic growth and a boost in tourism. Additionally, the rise in private credit demand is an optimistic sign. It will be interesting to see how the industry performs throughout the year considering these positives, although it is important to acknowledge the potential impact of the VAT increase.”
Commenting on the income from government securities declining due to the lowinterest rates, she said that the banking business is not about expanding markets, but more about expanding credit to grow the potential sectors in the economy. “We have not been able to do that during the last two to three years. Banks made money when the margins were thin, and the economy expanded at that time. It is not about countering the margins contracted. It's about driving our economy to reach its full potential in the shortest possible time.”
The prediction for the economic growth this year is somewhere around 1.5 per cent of positive growth and the clients’ approaches are different from what it was last year, Ms. Perera said. “If you talk to a client last year, it was all negatives but now we see the positives coming up – especially in the tourism sector. This is not that that sector alone is picking up. It is that all allied sectors relating to tourism, starting vegetable and meat suppliers, transport providers etc are waking up.”
Sampath Bank does not expect increases in Stage 3 loan advancements, Ms. Perera noted. “If you look at 2023 and before some of our customers did not have a plan, but now they have approached us and requested to give them an acceptable settlement plan for their non-performing loans.” Ms. Perera credits this positive sentiment in the market and the consistent decline in interest rates for the change in customers' approach.
Noting that the banking industry is too fragmented, Mrs. Perera noted that the consolidation after industry is a good thing. “For a bank to exploit opportunities like the Port City, to expand regionally, needs to be bigger and stronger. However, it is a very time-consuming, complicated, and risky process.