Cargills Bank gath­ers mo­men­tum in 2017; records Rs. 621mn PBT

Daily Mirror (Sri Lanka) - - FINANCE -

In its third year of op­er­a­tions, Cargills Bank achieved a sat­is­fac­tory profit be­fore tax (PBT) of Rs. 621 mil­lion, which in­cluded a sub­stan­tial one-off gain of Rs. 410 mil­lion.

The bank’s net in­ter­est in­come grew 55 per­cent to reach Rs.1.48 bil­lion, whilst net fee and com­mis­sion in­come in­creased by 43 per­cent to Rs. 114 mil­lion dur­ing the year, with other sources of in­come (ex­clud­ing the gain from dis­posal of its sub­sidiary) grow­ing by 109 per­cent to Rs. 121 mil­lion at year-end.

These rev­enue in­creases saw the bank’s to­tal op­er­at­ing in­come grow­ing sub­stan­tially from its pre­vi­ous level to Rs.2.2 bil­lion for the year, en­abling it to achieve a PBT of Rs.211 mil­lion (when the net gain of Rs. 410 mil­lion from dis­posal of its sub­sidiary is ex­cluded).

The bank said it is heartening that the con­tri­bu­tion to this per­for­mance came from growth in ac­tiv­ity across all core seg­ments of the bank sup­ported by syn­er­gies from its strong as­so­ci­a­tion with the Cargills Group.

To­tal loans and ad­vances of the bank grew by 55 per­cent to reach Rs. 20.8 bil­lion whilst de­posit port­fo­lio dou­bled from Rs. 9.4 bil­lion to Rs. 18.8 bil­lion dur­ing the year. The CASA mix stood at 22 per­cent at year end. To­tal as­set base of the Bank stood at Rs. 32.5 bil­lion as at end of 2017.

The bank opened 3 new in store branches in Wat­tala, Rat­na­pura and Kadu­ruwela, bring­ing the to­tal num­ber of stand-alone branches to 17 whilst the to­tal num­ber of con­tact points stood at over 350.

The year under re­view saw progress with ‘Cargills Cash’, en­abling cus­tomers to ‘Ex­pe­ri­ence the New Way to Bank’. This unique value propo­si­tion of­fers cus­tomers the op­por­tu­nity to de­posit, re­mit or with­draw cash from over 350 Cargills Food City (CFC) Out­lets with the use of their mo­bile bank­ing app. The re­mit­tance fa­cil­ity al­lows cash remit­tances even to non-ac­count hold­ers of Cargills Bank, of­fer­ing them the con­ve­nience to col­lect cash from their Bank or from over 350 CFC out­lets. It is en­cour­ag­ing that, in line with the Bank’s strate­gic fo­cus, trans­ac­tions at the CFC coun­ters dur­ing the year ex­ceeded Rs. 4 bil­lion in value.

The mo­bile bank­ing app which is one of the USPS of the bank en­ables cus­tomers to make util­ity bill pay­ments, CEFT / SLIPS trans­fers, stand­ing or­ders, open ac­counts and fixed de­posits. Be­yond this, the bank launched Sri Lanka’s first con­tact­less Master­card branded Debit card with EMV com­pli­ant chip and PIN tech­nol­ogy which en­ables cus­tomer con­ve­nience with en­hanced se­cu­rity.

In a world in which dig­i­tal bank­ing is be­com­ing the pre­ferred chan­nel for bank­ing, an or­ga­ni­za­tion’s web site is the most im­por­tant touch point. We are en­cour­aged by the recog­ni­tion re­ceived for our new life style bank­ing web­site from The Fi­nan­cial Brand as one of the ‘Top 20 visu­ally stun­ning web­site de­signs’ among banks & credit unions in the world.

The Cargills Bank’s model is one which of­fers a unique value propo­si­tion in reach­ing to­wards its Vi­sion “to be the most in­clu­sive bank, har­ness­ing the spirit of progress in ev­ery Sri Lankan”. A key strate­gic pri­or­ity to­wards this is ac­ces­si­bil­ity for the ru­ral pop­u­la­tion and oth­ers who have hith­erto been ex­cluded from the coun­try’s for­mal bank­ing sys­tem. The Cargills Food City Model of­fers a win-win value propo­si­tion to both con­sumer and farmer, with a reach to the farmer that fa­cil­i­tates greater in­come gen­er­a­tion for him and bet­ter prices for the con­sumer.

In the same man­ner Cargills Bank aims to re­lieve the hith­erto un­banked from the bur­den of bor­row­ing from the in­for­mal sec­tor whilst sup­port­ing the small and medium scale sec­tors in their en­trepreneur­ship. Be­ing in­te­grated into lo­cal com­mu­ni­ties will hence be a key el­e­ment of how we en­gage with our so­cial cap­i­tal.

As a re­tail cen­tric bank, Cargills Bank of­fers a unique value propo­si­tion and har­nesses syn­er­gies from the Cargills Group – its brand her­itage and its re­tail strength, en­com­pass­ing 350 Food City out­lets spread across the length and breadth of the coun­try.

The Man­ag­ing Di­rec­tor/ceo, R. The­gara­jah stated: “whilst we look to the fu­ture with op­ti­mism, we are mind­ful of the pos­si­ble chal­lenges of nar­rower mar­gins and the en­try of non­bank play­ers such as Telco’s into the bank­ing space and of mar­ket volatil­ity caused by global events, in­ter­na­tional con­flicts, global ter­ror­ism, cy­ber threats and en­vi­ron­men­tal chal­lenges. Cargills Bank re­mains rel­a­tively in­su­lated from di­rect im­pacts of global po­lit­i­cal events due to its busi­ness model be­ing pri­mar­ily do­mes­tic mar­ket fo­cused”.

The­gara­jah also added “Our unique re­tail and SME- fo­cused and tech­nol­ogy- led model, with the aim of of­fer­ing cus­tomers new par­a­digms in con­ve­nience and speed of ser­vice, is based on an ‘Op­er­a­tional Ex­pen­di­ture model’ rather than a cap­i­tal ex­pen­di­ture based one. This ap­proach places us on a firmer foun­da­tion of lower costs with greater agility and nim­ble­ness to adapt to rapidly evolv­ing tech­nol­ogy”.

The Chair­man Louis Page stated “A pro­gres­sive, sus­tain­able ap­proach is in­trin­sic to Cargills Bank’s busi­ness model and we con­sider our busi­ness an av­enue for wealth cre­ation and fi­nan­cial in­clu­sion for the yet un­banked, but bank­able – a vi­tal seg­ment in the long term progress of Sri Lanka. Cargills Bank was es­tab­lished en­vis­ag­ing a unique model of inclusivity and reach­ing the grass­roots, with a key com­pet­i­tive ad­van­tage cen­tered on the re­tail net­work of over 350 Cargills Food City out­lets spread across the length and breadth of the coun­try. The Cargills out­lets of­fer bank­ing cus­tomers con­ve­nience with low over­head for the Bank.”

The Chair­man also added: “The bank is op­ti­mistic about the many op­por­tu­ni­ties it sees to part­ner SME’S in the coun­try lev­er­ag­ing the syn­er­gies of its strong as­so­ci­a­tion with the Cargills Group, and looks to­wards in­creas­ing ex­ports and large scale rev­enue gen­er­at­ing in­fras­truc­ture projects to cre­ate new sup­ply chains and em­ploy­ment op­por­tu­ni­ties”.

The bank is work­ing to­wards list­ing its shares in the Colombo Stock Ex­change in 2020.

Ra­jen­dra Thea­gara­jah Man­ag­ing Di­rec­tor / CEO

Louis Page -Chair­man

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