2012 was an excellent year of delivery for the Bank as its assets crossed LKR one trillion reaching LKR 1.048 trillion whilst the profit before tax reached LKR 19.8 billion surpassing the planned profit by 5% for the year. I am proud to announce that we fully achieved the Bank's corporate slogan "One10Twelve" set in 2009 to reach rupees one trillion assets and rupees ten billion profit by 2012.
The 2012 results were achieved against challenging economic and market climatic conditions. The Bank outperformed its own targets by posting a profit of LKR 19.8 billion before tax for the year under review with an increase of 20% over previous year. It is the highest ever profit in the history of Bank of Ceylon and in the industry. The BoC's total assets reached LKR 1.048 trillion growing by 25% compared to previous year. Gross loans and advances of the Bank showed a growth rate of 27% and increased by LKR 153 billion. The deposits reached LKR 693 billion in 2012, an increase of 16% over previous year which was on par with the industry rate. Even though the assets quality remained stressed, Non Performing Loans ratio growing to 2.8% from 2.1% of previous year, our assets quality is still within the industry norms. Our remarkable financial position during the year reflects strong and well balanced performance from all core banking business lines across the all provinces.
We continued our expansion of the branch network in order to consolidate and fortify our national footprint. Today our network includes 324 branches, 276 extension offices, 10 SME Centres, and 451 ATMs, exceeding total customer touch points more than 1,000. On the international front, we expanded our presence by increasing our overseas representatives to 859 with a view to further consolidate our foreign remittances and NRFC deposits.
For the first time, we obtained international ratings from Moody's and Fitch Ratings who recognised the Bank's strength and steadfastness to rate us equivalent to Sri Lanka's sovereign rating while we retained our domestic rating AA+ stable by Fitch Rating (lka). We continued to be within the best 1,000 world banks ranked by the prestigious International Magazine, The Banker.
Our excellence in doing business was well recognised by the National Chamber of Commerce of Sri Lanka by awarding us the Gold medal for Banking Sector, Silver medal for Extra Large category and Bronze medal for the overall category in its annual award ceremony. These awards are done on ten point assessment criteria among which include financial performance, global reach, investment in technology, capacity building, governance and corporate social responsibility.
Our funding strategy envisaged by our corporate plan was executed and as a result, debut internationally listed bond was launched to raise USD 500 million which was more than 7.7 times over- subscribed by the international investors. Oversubscription to this magnitude to the bond is a testimony to our global acceptance and global reach. Through this issuance, we have now opened the gateway for any future issuer from Sri Lanka aspiring to reach global investors, to raise medium to large ticket size funding. We are proud of the diversity of the investors in our balance sheet. The proceed of the bond also assisted the banking system to maintain its interest rates at stable levels as it provided sufficient liquidity to the Bank as well as to the banking industry. A special campaign was launched towards the year-end namely "BOC Mega Wasi" to sustain the low cost deposit base. In addition, several campaigns promoting NRFC deposits were launched throughout the year.
In order to discharge our duties as a state bank in economic development activities, many loan schemes were introduced during the year under review. A special loan scheme was made available namely "Siriliya Saviya" at low interest rates to enabling the small women entrepreneurs particularly targeting war affected women including war widows to rise up with social pride. This scheme was a great success as the Bank granted LKR 474 million among 3,282 entrepreneurs. In addition, the country's agricultural production was severely affected and as a result, cash flow of the agriculture value chain was hindered resulting in further pressure on loan recovery and asset quality. The loans that were affected by the flood and the drought were re-scheduled and further financing assistance was awarded to the affected farmers to ensure they recover from that situation. A sum of LKR 913 million was granted under "Diyawara Diriya" and "Diyawara Saviya" loan schemes for fisheries sector. On various other schemes such as estate sector employment credit scheme, Awakening North, Nagenahira Nawodaya, Horticulture loan scheme, self employment schemes to buy three wheelers and small transport vehicles etc, the Bank disbursed a sum of LKR 6,194 million among 67,233 recipients. In view of the Government policy of improving infrastructure facilities of this country, the Bank commenced financing to infrastructural development projects particularly to the Road Development sector. Few projects are in progress and the Bank will continue its support to this sector. Considerable numbers of large facilities have already been sanctioned to Hotel Development projects in Colombo, outstations, Eastern Province and in Kalpitiya to help the booming tourism industry in Sri Lanka.
The movements in the current interest rates and the exchange rates also put pressure on the domestic liquidity thereby reducing the margins. This was well evident within the industry where every player's gross interest margin was reduced. Nevertheless the country's monetary and fiscal management policies were sound enough to cope up with the challenging environment in the year 2012.
On Human Resources front, we were able to sign the collective agreement with the main employee trade union that will be in force for three years. We recognized 418 employees who completed 25 years in services in the Bank. Further, the entire recruitment process was concluded towards a large intake into the Bank. Our Holiday homes were upgraded in Nuwara Eliya and Anuradhapura by adding more capacity to provide further welfare benefits to the staff.
The Bank successfully converted its financial statements to the new accounting standard regime for which we set up a permanent Accounting Standards Compliance Unit as we appreciate the complexities that will be faced by the Bank in future financial reporting. Conversion of the Bank's financial statements was a herculean task due to the size and complexity of our arrangement. Our financial results published are therefore under new accounting regime.
The business operations and growth in reporting profits of Maldives & Chennai were satisfactory while Male operations experienced a moderate credit recovery problem as the tourism industry in Male was responsive to its political situation. UK operations still have to break-even in times to come and arrangements have already been made to improve the situation.
Our subsidiaries and associates also performed well during the year paying dividend to the Bank. The Bank conducted performance reviews of subsidiaries and associates with their Boards as part of regular review process during the year.
We also involved in our corporate social responsibilities that are more fully described in the sustainability report of this annual report.
For the Bank's next step, a fresh Corporate Plan was developed in November 2012 for a three year period from 2013 to 2015. The new plan primarily focuses on the stability of the Bank's balance sheet through moderate and steady growth with industry competitive performance ratios. The Bank will also review its organizational structure towards achieving better results, focusing diversification of activities, improvements to the customer service and overseas presence. I will be retiring on 8th January and wish to handover the baton to the next General Manager who was substantially instrumental in developing the new plan and will implement it taking the Bank to its next height. I congratulate him and wish him success in his endeavours.
I appreciate the support rendered by our loyal customers and placing their trust and confidence with us, and I am grateful for them for being with us to make our corporate dream a reality.
I am grateful to the support rendered to us by the Secretary to the Treasury, the Governor of the Central Bank of Sri Lanka, the Auditor General, the Attorney General and all officials of these institutions. I also take this opportunity to thank the consultants and such other accounting advisors who assisted us to make our balance sheet compliant with the new accounting standards.
Our stellar performance reflects the support and guidance rendered to us by our Chairman and the Directors. I take this opportunity to thank them.
I am very grateful to my predecessor Ms. W A Nalini who contributed tremendously towards the performance of the Bank in the year 2012, our corporate and executive management team, dedicated staff members and trade unions who gave their unstinted support to translate our corporate vision into reality whilst helping to uphold our corporate values and ethos by delivering a quality service. I extend my warmest appreciations and thank them profusely.
K Dharmasiri
General Manager
7th January 2013
Colombo
