Our corporate customers rely on us to be a trusted partner for their success and we always strive to fulfil this obligation as we strongly believe in being an integral part of our customer’s growth. Living up to their expectations and continuing their loyalty is the key to our success and we do so by using our global and local networks, insights, and experience to enable them to reach their full potential in the industries and communities within which they operate. In addition, our team brings a vast range of expertise coupled with an unmatched experience in corporate lending, international trade, project financing, investment banking and Islamic Banking.
The Bank managed to maintain balance between growth and asset quality despite the challenging environment faced by our customers. We have managed to keep the NPA level below the industry average. The Bank has focused on strengthening the monitoring mechanisms and taking proactive measures to mitigate the impact on NPLs in the years to come.
This year, we partnered with a reputed logistics company to re-launch Pledge Loans. Previously this product line was inactive due to the excessive manpower and resources needed on the part of the Bank to keep a track of pledged stock. However, with the logistics company now taking on the role of gatekeepers on behalf of the Bank, the Bank is ready to serve this customer segment once again.
Credit card securitisation
During the second half of the year, we launched credit card securitisation which offers all our credit card merchants the chance to borrow against their credit card proceeds. This product is also open to non customers who route their proceeds through our accounts, ensuring that we strengthen the flow to our CASA funding as well.
Current regulations in Sri Lanka require a company credit card to be issued in the name of an employee who is accountable for the payment of funds despite it being settled by the company. Plans are under way to re-launch a corporate card in early 2019 improving customer convenience.
In supporting our corporate customer, the Bank has invested resources in strengthening the trade finance arm by the end of 2018, and was able to grow the Bank’s share of the country’s exports up to 19.49% (November 2018) from 18.58% in 2017, while our share of the country’s imports (including crude oil) decreased marginally to 10.20% from 10.56% in 2017. The increase in transaction volumes of our trade financing arm has contributed to the increase in fee-based income by 17.89% in 2018. Our focus in 2019 is to achieve a further growth in our share of the country’s exports and imports business.
During the year, we entered into a collaborative alliance with Asia Securities Holdings (Private) Limited in order to provide customers of both institutions with investment banking services. The Memorandum of Understanding (MOU) signed between the two parties will facilitate our corporate customers experience a wide range of investment banking services, including equity and debt capital raising through listed and unlisted instruments, mergers and acquisitions (M&A) advisory, shareholder value maximisation advisory as well as corporate financial restructuring advisory services.
The Bank’s Investment Banking arm helped finance several large-scale renewable energy generation projects during the year, as well as projects in waste management, and pollution control systems through dedicated loan products ( refer Spreading green banking for more details).
Offshore Banking Unit
Our Offshore Banking Unit (OBU) maintains retail and other accounts of non-resident Sri Lankan customers and the corporate accounts of BOI companies registered under section 17 of the BOI Act.
The OBU has aided many local corporates to conduct their banking activities in overseas markets with ease and familiarity. The unit continues to canvass existing customers with off-shore interests while approaching non-resident customers for deposits with the support of our BPOs and overseas representatives offering attractive rates.
The OBU’s trade and current transaction volumes remained robust during the year, resulting in total commission and fee-based income recording a substantial growth over the previous year.
Commercial Bank’s Islamic Banking Window – Al Adalah – has been in operation since June 2011 offering Sharia-compliant products to customers based on the concept of “profit and loss sharing” as an alternative to conventional interest-based financial transactions.
One of the clear strengths for Commercial Bank is its increasing experience and knowledge in Islamic banking backed by the overall quality of other services on offer.
The Bank continued to focus on marketing Islamic Banking offerings through the branch network. The Islamic Banking Unit also continued to provide financing through Offshore Banking and International Trade and Finance facilities.
The Islamic Banking Unit intends to conduct a review of processes to enhance service efficiency and customer convenience.