Last year, our sustainability focus was on 'Reaching Out'. Reaching out, to the customers- the most important stakeholder segment- the community, country's periphery, our team, the national economy , the environment and the future.
One year after, we are now focusing on 'Growing Together'. The premier national Bank- Bankers to The Nation- is growing together, with its customer base, the community at large, particularly the less developed periphery, our team of achievers, the national economy and of course the environment in which we operate. The essence in this report is our togetherness with our stakeholders and the playing field in all its diversity.
Growing together means a lot to us. We are growing together with our customers. We mean their asset base, capacities, skills, entrepreneurship, bottom line and sustainability focus. The lowest rung on the social ladder are growing in to Micro-Finance (MF) clients. Dedicated, upwardly mobile MF customers are moving in to the SME sector. SMEs are progressing along as large-scale businesses, creating assets, value and a vast network of employment avenues and at the same time falling in line with environmental guidelines and decent labour practices. It is the same scenario with the community. We are empowering the community by providing financial services at the periphery, both urban and rural; through our MF platform; our commitment to the nation's future; and our CSR activities.
The economy grows with us. We are a robust contributor to the national economy, increasing our share with each passing year.
Not forgetting our team, who are growing with us. Their skills and attitudes, commitment and dedication, knowledge and expertise keeps on growing.
Growing together means a lot to us. We are growing together with our customers, by which we mean their asset base, capacities, skills, entrepreneurship, bottom line and sustainability focus.
The selected topics grouped under the five dimensions and indicators reflect our significant footprints in economic, environmental and social performance and addresses stakeholder concerns and expectations. The report content is prioritised by the following key elements which in our belief, is crucial in our quest for sustainable development.
Quantitative information in the report has been extracted from several sources.
The margin of error in the quantitative data as a whole does not exceed 5% and substantially influences reported results/performance.
In presenting comparative data on labour practices this year we have considered gender-wise break-down across the board whereas previously it was confined only to the extent of specifically gender sensitive information.
A team profile chart was introduced to display all mandatory disclosures/ indicators on labour practices in one reader-friendly table.
This year there are clear cut demarcations in reporting under different stakeholder segments and reported topics. Whenever a topic traverses across two or more segments (e.g: outreach expansion) it is reported under the segment where the impact is mostly felt.
BoC itself declares a reporting level of 'B' on this report which is checked and assured 'B+' by BDO Partners, Chartered Accountants and a member of BDO International Limited.
Identifying our stakeholders and their relationship
The Government of Sri Lanka (GoSL) is the sole shareholder-owner on behalf of the general public. GoSL appoints the Board of Directors which in turn is guided by the Ministry of Finance. GoSL expects the Bank to appropriate adequate returns for its investment commensurate with the Bank's bottom line, through periodical dividends.
On a broader context, GoSL also expects that its national economic development initiatives would be supported by the Bank through provision of financial services to the target communities/ customers.
The expectation level of this stakeholder segment is a rewarding relationship based on speed of service delivery, confidentiality and service excellence. As this is a highly diverse stakeholder segment, it calls for compartmentalised delivery methodologies.
The team expects equal opportunity, career path development, competitive remuneration policy and work-life balance plans that would in the end ensure more than just a work place environment.
Supply line expectations revolve around quality, transparent sourcing mechanism and capacity building.
Central Bank of Sri Lanka (CBSL), Securities and Exchange Commission and other regulators are concerned with risk management, opportunities and controls.
External fund providers and debenture holders expect prudent use, adherence to covenants, best business practices, transparent transaction process and pay- back timelines.
The Sri Lankan community's perception of the Bank is larger than life. The expectation level is therefore high and corners around a dominant role not only as a service provider but extends to cover social responsibility initiatives on health-care, education, national heritage, environmental activism, cultural and religious diversity and social harmony.
We are living and carrying out business in a turbulent world. Issues that challenge us are in a never ending cycle with rapid population growth and steady urbanisation, global warming and ice-cap meltdown, dwindling forest cover and expanding built-up lands, erratic climatic changes and threatened eco-systems. In a separate dimension, social discrimination in terms of ethnicity, gender, financial strength and hierarchical status negates the notion of balanced economic development and social harmony.
The effect of globalisation has reached our doorstep. In today's world, no one is immune from it. There are no isolated communities, enclaves or societies that can defy and ignore globalisation. Countries, societies and systems are inter- connected in a myriad pattern where a minor hiccup would cause a ripple effect.
This backdrop invites us to think afresh. How are we to get on with our lifestyles and businesses. And for how long ? Where should we draw the line ?
The only viable answer we have is sustainable development. It is the future and it should be the present. No other arguments. Period.
Sustainability is: a capacity, a potential, an ability rather than a given fact; the capacity of the organization to fulfill its mission and reach its vision; more than survival: growth, development, impact; two fundamental issues: the problem of environment degradation that so commonly accompanies economic growth and the need for such growth to alleviate poverty.
Sustainable development is a two-way street, that involves two interconnected dimensions, ie. sustainability and development. The development part of it covers the people in terms of education, health-care and equal opportunity, economy in terms of wealth creation, productivity and consumption and society in terms of social capital, states and regions. Simultaneous with the development, there are three dimensions that should be sustained, namely, nature (earth, bio-diversity and eco-systems), life support (eco-system services, resources and environment) and community (cultures, groups, and places)
Our Bank has formulated its corporate goals, mid-term strategy and operational policy to align with the sustainable development frame-work, meeting the needs of the present without compromising the ability of future generations to meet their needs. In this quest the Bank is answerable to its stakeholders, a diverse lot consisting of the shareholder-owner, customer base, employees, suppliers, regulators and service providers and the Sri Lankan community. Yes. It is more so considering the fact that we are the biggest and the most wide-spread financial service provider in the country.
We believe in sustainable development not only along its three major dimensions, i.e, society, economy and the environment - also called the triple bottom line- but the cultural dimension espoused by indigenous populations, ethnicities and age-old wisdom and traditions as well.
Our quest on sustainable development runs along seven major drive lines.
This whole exercise calls for a dedicated, skilled and motivated team. Over the years, we have built and nurtured this team- the best team of achievers. They are not confined to the cozy cocoons in their offices but move on to interact with present and future customers, call over at community doorsteps in the process putting up voluntary man hours in the effort, for which they are rewarded. BoC has one of the best work-life balance plans in the local banking industry.
When we look back at what we have done, it fills us with pride. Some of the micro businesses assisted by us have now come of age, graduating into the SME sector while SMEs are moving further up. Some of them have become house-hold names. Along the way, a whole chain of market linkages have been created with our guidance.
Our operations throughout the country do not affect the environment. Yet, operations of our customers, particularly in the agricultural sector, livestock farming and manufacturing industries do affect the fragile environment. In this context, we have set in place a mechanism for them to fall in line with environmental guidelines and regulations even to the extent of providing financial assistance for process revamping, waste disposal and worker training.
We have several initiatives to be implemented in 2013. We would have our first green building this year. Future constructions by the Bank will incorporate water recycling and sewerage treatment.
When we call ourselves the bankers to the nation it does not imply only the people. The nation is a broad term and encompasses the people, their cultural diversity and the social fabric and of course the environment. Our goal is to protect and nurture all three in our journey towards sustainable development.
Dr Gamini Wickramasinghe,
Chairman
7th January 2013
Bank of Ceylon, operating in one of the cornerstone industries, understands the significant role that it has to play with regard to sustainability. Therefore we at BoC combine sustainable finance/ economic activities with our nation's values, culture and trust that Corporate Social Responsibility (CSR) can be achieved through implanting social responsibility in profitability.
The core business strategy has been formulated with due consideration of sustainability related risk and opportunities. Accordingly the Bank, when developing its sustainability strategy focuses on three main dimensions of sustainability: economic, environmental and social.
The economic dimension of the sustainability policy of the Bank is designed to achieve the national economic priorities of the country through the effective implementation of Bank of Ceylon business strategy. While maintaining this long term objective, the Bank drives its strategies to enhance sustainable financial performance and growth of the Bank and creates wealth to the nation.
The economic dimension of sustainability concerns the influence that the organisation can make on the financial development of its stakeholders. Therefore, under the broad dimension of economic sustainability set out above, the management of the Bank look forward to "contribute to sustainable economic development" and to "promote community investment". In this process the activities of the Bank are focused on tenure based economic gains, segregated into short to medium-term and long-term in order to avoid a negative impact in the socio economic order. The products and services of the Bank are also aligned accordingly to meet the evolving needs of the society, thereby contributing to a sustainable socio-economic environment.
Further, the Bank is committed to provide financial access and services to all socio demographic groups through its customer segmentation. BoC focuses on "sustainable banking" by lending responsibly following strict evaluation procedures and considering the needs of the nation while providing basic banking facilities to the less well-off to reduce financial exclusion.
BoC's policy on environmental dimension of sustainability concerns the influence the organisation can make on natural resources including eco system, land, air and water. We incorporate sustainability in our day to day banking activities by making every effort to consume resources as a responsible corporate citizen. Therefore the Bank ensures minimising or eliminating any negative impact the Bank may have on the environment and contributing to define the others' impact through,
The social dimension of the sustainability policy of the Bank is concerned with the influence the Bank can make on the social system within which it operates. BoC adopts a comprehensive policy towards the society encompassing the human resources of the Bank, human rights, and other general societal aspects.
True to our mission statement, Bank of Ceylon always strives to 'give all our staff to reach their full potential and give the recognition and rewards to be the best team of achievers in service excellence'.
BoC has aligned its HR practices to discharge its responsibilities to establishing decent labour practices setting out clear HR policies, monitoring and follow up. Our commitment includes training and awareness of our staff members establishing transparent labour practices and disciplinary procedures, cordial atmosphere for employee trade union affairs, empowering them for collective bargaining.
The Bank advocates equal opportunity and adopts the principle of justice and fairness in our human resource management and strictly avoids child labour in every form by not promoting businesses or entrepreneurship of its customers that engage in employment of child labour and not accepting any outsourced and service providing parties if it is indicated they have employed child labour.
It is the policy of BoC to observe high standards of integrity and fair dealing in the conduct of its business and to act with due skill, care and diligence.
The Bank will issue a report on sustainability on an annual basis that will present the Bank's performance in the wide context of sustainability, providing an insight into the Bank's contribution towards the enhancement of economic, environment and social conditions within which it operates.
We have set up a sustainability committee at corporate management level to introduce and implement GRI guidelines within the Bank. The committee will co-ordinate sustainability initiatives, create suitable methodologies, provide logistical support and constantly monitor the progress.
The Board of Directors regularly oversee and monitor the sustainability policy framework as implemented by the Bank through the Bank's sustainability committee. Members of the committee monitor specific impact areas that have been assigned to them.
We, BoC is a licensed commercial bank fully owned by the Government of Sri Lanka- the biggest commercial bank in the country in terms of the asset base, outreach and capitalisation. In addition, our ever increasing customer base and net revenues YoY are formidable.
Our corporate information and family ties (subsidiaries and associates) are indicated on the inner back cover and page 92.
Our core business functions are illustrated on page 244.
Our headquarters is at Bank of Ceylon Head Office, "BOC Square", No. 01, Bank of Ceylon Mawatha, Colombo 01. More details are given under Management Discussion and Analysis and Service Points on page 384.
Our outreach extends well beyond Sri Lankan shores. We have two overseas branches (Male and Chennai) a fully owned subsidiary in London operating its own branch, internally appointed representatives in nine middle eastern countries, business promotion officers stationed in Italy, Japan and South Korea that solidifies our presence in virtually all strategically important global locations.
BoC does not confine itself to a particular market/customer segment. As bankers to the nation, we serve the entire social spectrum, from corporate clients and high net worth customers to the marginalised poor with several layers - SMEs, middle market, retail banking, personal banking in between.
Core business operations are handled by permanent and contracted staff. We do outsource certain support services (janitorial services, part of security provision and dispatch of customer communications etc).
Branch banking which covers middle market/retail and micro-finance market is administered under a provincial network of 10 provinces. (Western Province is split into two administrative units and the balance eight provinces are similar to the Government's provincial administrative setup.)
Islamic banking is by a centralised unit linked with banking windows across the delivery point network.
We have grouped our customer base by economic sector engagement. Apart from the Government of Sri Lanka and state-owned enterprises (statutory boards, corporations and authorities set up by parliamentary legislation) our customers operate across eight broadly defined sectors.
There were no changes in our corporate structure other than the growth in delivery points and accumulated shareholder funds displayed in financial statements.
Best branch competition was held this year too under the revamped selection criteria. They were selected on quantitative (business volume and bottom line) and qualitative customer service excellence and internal control efficiency standards.
Ayagama in Sabaragamuwa Province, Padiyatalawa in rural Uva and Minuwangoda in Gampaha district were selected as the best three branches island wide with a paid holiday package to Malaysia for the entire branch team.
The highest governance body of the Bank, the Board of Directors is appointed by the Minister of Finance, on behalf of the shareholder, the Government of Sri Lanka. The Board is comprised of professionals with proven expertise and credentials from a wide background which include business administration, commercial and international law, economic research, public finance, human rights, built environment, agricultural science and plantation management. Composition of the Board is explained in pages 34 to 37.
The Board of Directors is responsible to the stakeholders for creating and delivering sustainable value through the management of the Bank's businesses. As the policy making body it formulates strategy, reviews internal structures for policy implementation and ensures clear lines of accountability.
Composition of the Sub-committees of the Board of Directors and their mandate and responsibilities are explained on page 138.
Employee concerns/recommendation during the period centred on labour practices, equal opportunity, career path avenues, savings mobilisation and worker facilities in the periphery.
Members of the Board self declare their conflict of interests and abstain from deliberations and decision making processes when conflict of interest is apparent. This aspect is explained in detail under Corporate Governance on page 108.
These two statements are indicated on pages 10 and 11.
The Bank has set in motion a streamlined procedure to receive and settle stakeholder complaints involving, questionable accounting practices, weakness in internal control, bribery and corruption, record falsifying, insider dealing, money laundering, theft and fraud, asset misuse, misrepresentation of records and other acts that would compromise good governance, financial health, integrity and the image of the Bank.
Even anonymous complaints and allegations are accepted and the identity of the complainant is withheld if requested. Complaints can be made on sufficient grounds for concern, not necessarily with proven evidence.
The Chief Internal Auditor performs the overseer function and reports to the Board of Directors. Complaints are inquired into and resolved within a period of three months.
We emphasise on eliminating corruption within the institution at all levels. Focusing on this, employee training was carried out throughout the year. As at the year end 77.5% of the team was trained in the Bank's anti-corruption policy and procedures.
94 such investigations were completed during the year.
We accept principle 15 in the Rio declaration of 1992 and are using this principle, as the situation demands, in finding the balance between sustainability and development.
The perfect journey is never finished. The goal is just across the next river bend; round the shoulder of the next mountain. There is always one more track to follow, one more mirage to explore.Rosita Forbes
English travel writer and explorer
We are in a constant search for geographies and locations which are still not reached by formal financial services. In the back drop of our expanding presence across the island covering virtually all townships, bigger villages and economically active out posts, this task has now become a gap-filling exercise.
Yet, we believe that in certain selected regions, particularly in the North-East, where network expansion is not only possible but sustainable.
A case in point is the Northern Province where 11 new extension offices were established on a single day, i.e, 04th June 2012. The province now has 95 service points (22 fully fledged branches, 45 extension offices, 28 ATM points and 01 mobile service arrangement) to serve a population of circa 400,000.
During the year six extension offices were upgraded as fully fledged branches, while 28 new extension offices were set-up throughout the country. They represent the small townships and villages where economic activities, opportunities and challenges are there to be met, harnessed and developed. As this table amply demonstrates, we are in the process of moving into the social and demographic interior- the periphery where ordinary people go on with their life cycle activities.
Now, the focus is on upgrading present extension offices to full branch status, along the way offering the present and future customer base a well streamlined service delivery. This would be a constant routine exercise in coming years as our customer base and business volumes, transactions and assets are steadily growing.
Micro-finance recognises that poor people are remarkable reservoirs of energy and knowledge. Where the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them tools with which to help themselves.
Kofi Annan
One time UN Secretary General
The poor is a vulnerable social segment. They are scattered across the country from urban slums and tenements to the rural periphery. They may be classified as manual labourers and tenant farmers, unemployed and under-employed, women headed families and domestic migrants etc.
A lot of people, organisations and social movements across the globe have focused on this issue; how to empower and uplift the poor. Socio-economic experiments have been launched in various countries. Grameen Bank, ASA models and smaller initiatives like Safe Save in Bangladesh, Unit Desa system in Indonesia, savings clubs spread throughout Africa and developed but controversial Micro-finance banks in Latin America are some examples.
Their cash flows are irregular and do not follow a set pattern. The crux of the problem is that despite their small income, they are faced with needs which are large in relation to the cash flow. Apart from meeting day to day expenditure such as food, they need money for life cycle needs, emergencies and yes, opportunities.
It is the opportunities we are concerned with. Opportunities for the poor are starting and running businesses, acquiring productive assets and possessing life enhancing consumer durables. If these opportunities can be harnessed, life cycle needs and emergencies can be taken care of.
Our solidarity group platform is based on this very same assumption. The poor can be mobilised. They can be organised in to a social network where financial discipline would be the key element. As organised groups and not as mere individuals they can be made strong. We want them to harness the opportunities available.
You need a committed group of people to drive this initiative. This is why we selected a pool of Community Development Assistants to work with the people at their door steps, fields, work-shops and tenements. These animators, provided by the CBSL are in reality, barefoot bankers mingling with the people and mobilising them into solidarity groups.
The initial task was to inculcate the notion of savings among them. In micro finance, savings has three dimensions. Savings up(saving over a period of time), savings down( Loan up-front to be paid back through a series of future savings) and savings through(a combination of both). Our solidarity groups follow all three. Initially, they practice savings up by regularly contributing an agreed sum to be saved in group/individual savings accounts. When group members show apparent social mobilization and commitment, savings down (loans) follow.
It is the group that decides on who amongst them should receive credit and for what. Peer pressure and follow up plays an active role at each step, this means that loan recovery does not require outside pressure.
We have now entered the consolidation phase. Although, we carry on with group formation on an ongoing basis, now the emphasis is on capacity building and institutional strengthening. This covers clustering 5-10 groups into village level centres and thereafter societies, ultimately bestowing a legal status for the societies. Capacity building among individual group members and elected officials in groups and societies focused on training. Throughout the year we conducted a series of training work-shops on financial literacy, leadership and motivation, elementary book keeping and technical knowledge. In another perspective, selected groups were taken to other areas in the country facilitating experience sharing and interaction.
We played a pioneering role in bringing ex-LTTE combatants back in to the mainstream. This being an avowed Government policy, credit facilities for their livelihood improvement was considered across North-Eastern branches. They had been provided vocational training while incarcerated. This social segment have started a string of self-employment ventures in the former battlegrounds in Jaffna, Vanni, and the East. One of them, Mr. V Uthayasuthan of Neeravipiddy East in Mulaithivu district has put up a barber salon at Mulliyawalai, just opposite the SL Army camp where soldiers have become a substantial part of his clientele.
During the year, we increased our representation in strategically important foreign destinations to 26. These representatives interact with migrant workers at their work places and offer speedy and safe remittances/ investment solutions. The focused destinations are the Middle East, Korea and Italy. In addition, the Bank's active participation at a number of functions and ceremonies organized by Sri Lankan missions abroad and cultural and welfare societies strengthened our relationships with this segment.
Ranorawa, a small township North- East of Anuradhapura has become an important outpost in this harsh surrounding, primarily because of its rural hospital which provides health services to a rural population of around 5,000. This year, we undertook a major CSR initiative by constructing an outpatient treatment unit (OPD) complete with medical officer consultation rooms, clinic, dispensary, drug stores, toilet facilities and a spacious patient lobby at a cost of over LKR Six million. It was bestowed to the public in February 2012.
A Pediatric Oncology unit constructed and donated by the Bank on its 50th anniversary in 1989 is maintained by us. A Board of Trustees, which includes team representatives at various levels oversees this task. Maintenance costs are met by funds collected through the disposal of old newspapers at branches/ head office units.
Our Galnewa branch has taken an innovative step in assisting rural health care.
Galnewa MOH office serves a population of around 15,000, a predominantly farming community in Mahaweli System H. Expectant mothers in Handungama, Bulnewa, Kalankuttiya, Namalgamuwa,
Halmillewa, Musnawa, Kandegama, Kallanchiya, Siyambalewa, Aukana, Negampaha and surrounding villages and settler colonies turn out for periodic clinics held at the MOH office or other designated locations. The Bank, with the help of local health authorities prepared a four page booklet to be distributed among the young rural mothers to be. This booklet dwelt on pre-natal preparation by expectant mothers, child care after birth, vaccination time lines, breast feeding instructions and other related information which is a thoughtful exercise in the back drop of low education levels and health awareness in this rural back water.
We believe that rapid expansion in private-sector owned fee-levying health facilities would ease the burden on the free state health care sector, which is patronised by the ordinary folk. With this in mind, we ventured out to fund several health care projects during the year.
The Bank ventured in to multi-faceted health care investment by financing a state-of-the-art teaching hospital at SAITM, Malabe, the first private sector medical faculty in the island. This modern hospital would conduct teaching programmes on behalf of SAITM medical faculty and venture into medical research, a long-felt need in this part of the world. We have committed LKR one billion for this ground-breaking project.
As usual, the Kandy Dalada Perahera, the Sri Lankan cultural show-case was part sponsored by us. This pageant, captures the age old rituals and traditions connected with the sacred tooth relic and mesmerises the faithful and onlookers with dance rhythms handed down from generation to generation, folk music and majestic spectacle of a large contingent of pachyderm in gaily decorated costumes. A major tourist draw in itself.
In addition to sponsoring the perahera, we supported the Dalada Maligawa newsletter and connected CSR activities including computer literacy training facilities.
A venerated pilgrim congregation in the south-east, the Kataragama temple, draws thousands of devotees in a diversity of faith throughout the year, more so in the month of August when the annual procession is held. Aptly dubbed Surinduni Kataragama, the colourful pageant is a perfect blend of Buddhist and Hindu religious traditions.
As it is customary, BoC was a major sponsor at this cultural event.
A historic site dating back to 110 B.C, Deegawapi in the Ampara district has been declared a landmark archeological restoration project by the Ministry of National Heritage. Restoration is managed by the Archeological Department with labour offered by the Civil Defense Force (CDF). The restoration work which consists of excavation within an identified area, renovating the present day museum, putting up pilgrim facilities and landscaping is in progress. The Bank has so far met the accommodation costs of the CDF personnel, excavation implements and identified infrastructure facilities.
Unichchai is a remote village in the Batticaloa district, which was severely affected by the 30 year long war. The villagers who abandoned the village during the turbulent past have trickled back. The returnees faced a whole gamut of pressing issues in the face of disrupted infrastructure, dilapidated abodes, inadequate health services and sanitation, educational needs of their children.
Initiated by the CBSL, BoC joined with Peoples bank and carried out a baseline survey among the villagers aimed at need assessment. The immediate needs centred around house reconstruction, sanitary facilities, livelihood development and education based logistics. The two banks funded the crash program focusing on the immediate requirements identified.
Having completed a base line survey and based on the need assessment, we have successfully mobilised villagers in to solidarity groups, disbursing loan facilities for livelihood development.
The Divimansala community centre which would focus on the integrated development of this village nestled in the harsh dry-zone north-east of Anuradhapura was set up during the year. Located in the village temple premises, it houses the Bank branch, an agricultural information and advisory centre and a vocational training facility. Doramandalawa residents, virtually all of them farmers, are now receiving crop loan facilities at regular timelines.
We were a major sponsor for the 15th Asian Junior Athletics championship held at the Sugathadasa Stadium from 09th -12th June, 2012. This championship organized by the Asian Athletics Association, witnessed the participation of over 5,000 young athletes from 34 Asian countries.
we have successfully mobilised villagers in to solidarity groups, disbursing loan facilities for livelihood development.
Many of the following CSR initiatives were organised and participated in by our provincial staff
Hapana programme is a series of educational seminars focusing on the year five scholarship examination aspirants. We are collaborating with the Hapana educational publication who provide the resource persons-well known educationists- for the seminars held across the country with emphasis on less developed rural and urban schools. A separate work-shop is conducted side by side the programme proper, focusing on parental guidance. This is for the benefit of the parents who accompany their children.
Throughout the year, we facilitated 75 programmes with a participation of 37,000 would be scholars and 32,000 parents.
Advances in technology, ever changing customer needs, expectation levels and perceptions combined with the fierce competition in the financial services industry has made banking services a challenging business in terms of sustainability.
Competition, yes-ethical competition are pullers and pushers towards service excellence. Surviving in the present context requires the making of an achiever.
This year, we initiated a customer service excellence programme aimed at creating a super achiever outlook among our team. They would be the achievers of customer service excellence.
This programme conceptualized, formulated and conducted by the HR specialist and his team was an inter- active session conducted at operational level i.e branches, extension offices, business units and operational support units at head office. The programme covered customer service tips, handling telephone conversations, managing customer complaints and difficult customers.
This was a three hour work shop with power point presentations, lectures and role-plays enacted by the participants themselves ending with a feedback session on lessons learnt and critical issues.
Programme stretched through out the year and covered 110 branches, extension offices and business/support units with a participation of 1,876 team members representing 24% of the team strength in the Bank.
Evaluation ratings and enthusiasm showed by the team members were very high. 68% of the participants rated the programme as excellent and 22% rated it as good. Yet, the most impressive outcome through this whole exercise was the feedback from the team members. During the lively feed back sessions held after each work shop, they brought in a substantial number of critical issues that should be addressed.
The programme would continue in 2013 in the remaining branches/units, incorporating fresh ideas collected through feedback.
Small and medium scale customers, funded by us under SMEDeF line of credit, a World Bank funded development initiative, have been brought in to a Social Management Frame-work.
In this programme, entrepreneur- borrowers are encouraged to fall in line with a comprehensive social management frame-work which encompasses human rights, maximum working hours, trade union representation, defined benefit plan minimum wages, maternity benefits that includes paid leave, work place accidental coverage etc.
In a broader context, SMF would not only usher industrial peace and optimum work life balance at our customer businesses, but also facilitate easy access to certain decent labour practice focused niche markets like the EU. In the end, customer businesses would convert in to multiple stakeholder entities, which is a basic sustainability perception.
The Bank has accepted 5 S concept for implementation across the branch net work.
At the end of the year, 18 branches had completed 5 S implementation while 71 more were on various stages of implementation.This programme is implemented with awareness work-shops/seminars for team members at branch level. The training sessions create the environment and mind set for successful implementation. During the year 34 work shops were held facilitating planned implementation time lines.
Implementation of this concept would create a customer-friendly environment in the bank's business units.
The model branch concept brings an integrated lay out at front line business units doing away with front and back office compartmentalization which limited and restricted customer access to the back office of the branch.
Under the model branch concept, the entire branch is accessible to customers. They can now reach any service point within the branch. The spacious customer lobby can accommodate an ever increasing flow of customers.
With most of the routine back office functions relegated to the Central Back Office housed at the head office building, more team members have been released for customer care and customer service follow-up at field level.
During the implementation of the project, in addition to lay out changes, job descriptions of the team, authority levels, formats and mandates too were re-designed/re-vamped.
In 2012, 14 branches were converted as model branches bringing the total number of model branches to 266.
BoC pay mate, our mobile banking solution facilitates utility bill payments, fund transfers and insurance premia payments. It is virtual round the clock banking and supports the go-green concept eliminating paper usage in the process. The best queue management option available.
A series of specially designed credit packages are in operation for country's professionals, medical officers, engineers, academics, IT professionals, HR professionals, financial managers and accountants and technologists. These packages have been designed with flexible and simple security cover, concessionary interest rates and extended repayment time lines and structured approval procedures.
We believe in the inherent strengths of women- more so the Asian women- their capabilities and determination. Irrespective of who the breadwinner is, they in effect manage the family treasury. This makes them prime contenders for reciprocative action. Our deposit product focused towards women- Kantha Ran Ginum is a unique one where we couple the investment with a free life insurance cover .
The latest endeavour is the Siriliya Loan programme which transforms self- employed women in to entrepreneurs. There are hundreds of women entrepreneurs assisted by us who are growing with the Bank.
We have financed LKR 9.1 billion for 7,559 home-builders to put up dwelling- houses throughout the country. In addition, the bulk of our personal loan portfolio of LKR 27 billion too has gone in to housing construction and renovations. This means that around LKR 20 billion has been invested in sheltering the nation.
Customised housing loan programmes were introduced for the benefit of staff attached to selected government and quazi-government institutions including the Sri Lanka Institute of Information Technology, Road Development Authority, Geological Survey and Mines Bureau, National Insurance Trust Fund and the National University system.
Post-war, the North-East faces many challenges, ranging from destroyed infrastructure to tattered livelihoods and large-scale displacement. The government and funding agencies have re-built the infrastructure to a large extent. The displaced population has been re-settled in their villages and homesteads. Yet, there are livelihoods that need to be re-started, repaired and made sustainable over time.
We were in the forefront in re-creating and re-building livelihoods in the North-East. It had been the story from the Jaffna peninsula to the Vanni, Trincomalee to Batticaloa, farming belt to fishing communities, urban centres to the hinterland. We extended financial assistance to a large number of displaced people- The Bank with the biggest largesse in its kitty.
Innovations that are guided by small- holder farmers, adapted to local conditions and sustainable to the economy and the environment will be necessary to ensure
food security in the future.Bill Gates
Co-founder and
Chairman of Microsoft
Short term crops, both food crops and cash crops are a key element in the country's agricultural landscape. Although the Plantation sector earns foreign exchange for the country. Yet, it is the small holder farmers engaged in paddy cultivation, other cereals , pulses and tubers, vegetables and fruits who keep on feeding the nation.
In this back drop, we have continually assisted the small-holder farmers in meeting their cost of cultivation. Today, we are the major provider of short term crop finance in the country, accounting for 38% of the total loan disbursement. The bulk of this funding has come through the New Comprehensive Rural Credit Scheme.
Post-conflict the North-East has shown an enormous appetite for short term crop finance. Five years back, it was the Mahaweli zone branches (Aralaganwila, Dehiattakandiya and Girandurukotte etc) that disbursed crop finance on a large scale. Now, it is the turn of the North-East branches like Kilinochchi in fertile Vanni and Achchuvely in the Jaffna peninsula.
The fisheries sector contributes 1.2% to the GDP, accounts for 70% of the protein consumption in the country, provides direct/indirect employment to circa 650,000 people and amounts to 2.5% of export earnings.
In addition to coastal fishing which represents 53% of the total catch and the off-shore/deep sea, the country has a huge potential in inland waters, lagoons and estuaries, brackish water bodies, fresh waterways, inland reservoirs, mangroves, mud flats and salt pans.
We have assisted this sector in all its diversity from deep-sea fishing (multi day boats and navigational equipment) coastal fishing (traditional craft, beach seining) inland fishery, aquaculture. Various credit programmes have been initiated to suit its diversity even to the extent of providing assistance for land- based fishery activities (dry fish/maldive fish and fermented fish).
We are aware that capture fishing has its limits. Worldwide, over fishing is a serious concern which has raised issues on long term sustainability of marine life. This inevitably calls for the culture of fish farming. It is apparent that the future belongs to cultured fish.
We have rightly moved on to this direction.
Dairy farming, a sector that has still not reached its vast potential, has been identified by the government for speedy development. This sector encompasses a whole value chain from domestic dairy units to large scale semi-mechanised farms, breeding and transit farms, feed suppliers, veterinary services, milk collectors, milk and value added processors and retailers. We have financed the sector in all these sub-components. Funding has enabled sustainable, home -based, scientific dairy farming as against free grazing practiced by conventional dairy farmers, hand in hand with herd upgrading through artificial insemination, quality fodder management by way of high nutrient grass species, on-site veterinary services and market linkages with milk processors.
Our funding has enabled 1,500 domestic dairy units to become sustainable livestock ventures that produce quality fresh milk. Credit delivery was through multiple credit programmes at concessionary interest rates.
Market linkage is an area of concern that received our attention. This year too, we funded setting up milk processing units across the island. The Bank's own milk processing plant planned to be set up in the Vanni, a joint venture between one of our subsidiaries and an established milk processor is in the formative stage.
We have been a willing participant in SME revival in this country with a history going back to the 1970s when funding for SMEs was in an embryonic stage. A pioneer in Asian Development Bank funded ADB line of credit, followed by SMI credit lines running into four credit programmes and thereafter under World Bank funded SMAP and SMILE schemes, we were one of the most active participating financial institutions in providing SME funding to a large number of industrial projects across the country. Some of these entities have today become household names.
This sector plays a pivotal role in the country's economic development not only through value addition and exports but also through employment generation, both direct and indirect and also forward and backward market linkages created.
During the year we funded 635 SME ventures bringing the total loan disbursement to this sector to a staggering LKR 6.1 billion. The bulk of this funding has gone into food processing(24%) hotels and restaurants (16%), services sector (15%), health care (6%) and construction material (5%).
Assistance to the SME sector does not stop at provision of credit. Going beyond, on a credit plus mode, we are into capacity development in this customer segment. Hand in hand with this exercise, skill development of credit and relationship officers engaged in SME lending was undertaken.
The resilience of our SME customers is legendary and remarkable. This is why we reproduce the business life-stories of four of our entrepreneur-borrowers who faced challenges head on and still succeeded. They represent and portray the foremost driving factor - sheer determination - of the sector, which sets it apart from other customer segments.
Expanding crop harvest (paddy, maize, onions and vegetables) entail marketing issues at the time of harvest where there is a glut in supply and rising prices during the off-season.
As a result of sheer volumes in harvest, funding for crop purchase has become a necessity towards a workable and viable market mechanism that would be mutually rewarding for producer-farmers and processor-buyers both.
BoC is the pioneer in facilitating market linkage funding in paddy/maize.
Volume of credit released for processors (rice millers and maize processors) during the year totaled LKR six billion.
Part of this volume was backed up by forward sales contracts between the producers and processors. This mechanism ensures a stable price for the producers and an uninterrupted supply line for the processors.
Central Bank of Sri Lanka has recognised our footprints in development credit. We are the market leader in,
When we say that our team is our most valuable asset, it means more, more than the financials. They are committed, focused and the driving force in our sustainability framework and we want them to constantly improve on their performance levels. It is not only about customer service excellence but extends further, revolving around sincerity, caring for the needy and being emotionally attached with the society, community, customers and the environment.
Team BOC is now 7,790 strong, evenly spread in gender with a slight tilt towards females and half of it under 35 years. This means that with each passing year, our team is getting younger, which is a welcome sign.
BoC is an equal opportunity employer. We do not practice gender-based compensation.
New hires are made at four levels.
Entry level wage is competitive vis-à-vis, rest of the domestic banking industry.
New staff are assured of a streamlined career path development plan focused on capacity and skill development. Starting with customer care and support functions, they are encouraged and assisted to merge with general banking or various specialisations in banking. A job-related testing system is in place up to the grade of senior manager.
We encourage team members to become professionally qualified bankers. Team members who succeed at professional banking examinations conducted by the Institute of Bankers of Sri Lanka and Chartered Institute of Bankers, UK are paid a honorarium. A sum of LKR 14 million was paid on honorariums during the near 2012.
A defined promotion policy, with a laid out marking system, regulates internal promotions. They are regularly done on the basis of cadre requirement and the Bank's business plan necessities.
Performance appraisal methodology which measures performance was revamped during the year with the introduction of a simple four page format that would evaluate performance across corporate goals/objectives and competencies at a ratio of 70:30.
An employee record booklet was introduced which documents goals agreed, leave plan, job-rotation, special contribution beyond normal duty, skill development milestones. This facilitates performance review at the year end.
BoC team is offered a range of benefits under a contributory provident fund and a widows and orphans' pension fund. The BoC pension fund which is non-contributory, assures a post- retirement financial umbrella. All three funds are managed by Boards of trustees which include team member/ pensioner representatives. Trustees ensure that funds are prudently invested yielding value over time. At the annual meetings of the funds, members can raise questions on fund feasibility and investment practices and also vote on policy decisions.
Annual actuarial valuations are done so as to determine funding gaps and remedial action.
As at end 2012, 5,616 pensioners and 1,281 widows and orphans' fund beneficiaries enjoyed superannuation benefits under the BoC pension fund, including 600 newly retired members. The fund balance in the BoC pension trust fund stood at LKR 49 Billion.
This benefit is two-fold.
The health and well being of our team is one of our major concerns. A medical assistance scheme, which is nominally contributory covers health related costs of team members, spouses, parents if in case of unmarried members and unmarried children under 18 years. The scheme reimburses actual costs under multiple layers such as routine medical expenses, treatment by specialists, hospitalisation, surgery, corrective treatment, maternity and designated critical illnesses that require major surgery.
We offer our team members a comprehensive package of financial assistance at subsidised interest rates for ;
In addition, they are also eligible to obtain facilities against their provident fund balances with top off option every six months.
Changing perspectives in banking industry, paced up technological advances and intense competition in the financial services sector has not only opened up new vistas but also pushed us towards service excellence,
speedier delivery modes and widespread need for knowledge update and skill development. It is only natural that training and development should play a major role in team performance in the long term.
We are focused in this dimension. Our Training arm, headed by an Assistant General Manager reporting to Deputy General Manager(Human Resources) is a committed participant in this initiative.
In addition to the spacious Central Training Institute at Maharagama, which is a fully equipped residential facility, mobility of participants and resource personnel alike has led us to open up training facilities in the head office building as well.
For the second successive year, one of the three teams fielded by the Bank won the first place and a coveted trophy at the inter-bank quiz competition conducted by the Institute of Bankers of Sri Lanka.
Team BoC is provided with diverse leisure facilities at relatively economical tariff at hotel type rest- inns at Kataragama, Nuwara-Eliya and Anuradhapura and eight holiday homes /bungalows in central hills, Uva and Jaffna peninsula. Rest-inns have restaurant facilities while holiday homes are staffed with caretaker-cooks. These facilities have become very popular among the team.
Our resorts at Kataragama, Anuradhapura and Nuwara-Eliya have been officially recognised and recommended by Sri Lanka Tourist Board. During the year, 4,033 team members and their families availed accommodation at our rest-inns/holiday homes.
During the year, a 20 roomed new wing styled "Pinnacle view" was opened at Anuradapura Ceybank rest, bringing its full capacity to 92 guests.
Ongoing construction at Nuwara-Eliya Rest would add a further 26 rooms. Expanding Dickoya holiday bungalow with six rooms and an auditorium has been planned.
Land for a resort at Jaffna was acquired by the Bank this year. Plans are afoot to construct a multi-dimensional building complex on this land which would have a resort accommodation, conference hall and a training centre.
With the outreach expansion that is taking place, staff accommodation at distant locations has become an issue. The Bank has a practice of providing subsidised lodging facilities at selected peripheral locations. At present, we maintain 26 staff quarters across the periphery in places like Anuradhapura, Kebitigollewa, Nuwara-Eliya, Ampara, Hatton, Aralaganwila, Dehiattakandiya, Vavuniya etc. These facilities have been provided with caretaker- cooks supplied by our fully-owned subsidiary, Ceybank Holiday Homes (Private) Limited. Around 300 team members had used this facility during the year.
There is a very high diversity in terms of ethnicity and religion in our team. Associations espousing all four major religious faiths have organised themselves and engage in multiple religious observances. These groupings receive financial assistance for their activities.
The team has organised themselves into savings societies, benevolent associations. These associations, funded by member subscriptions and pay-outs, extends financial assistance for life cycle needs, emergencies and at termination from service. The Bank provides office space and communication facilities for these associations.
Two literary associations (Sinhala/ English) engage in creating cultural literacy among the team. They also provide reading room facilities and conduct various literary competitions annually for team members/their children.
In as much we respect and uphold human rights, there were instances of grievances by team members alleging discrimination. There is an established mechanism for them to air their grievances and seek redress. Human Resources Division receives and addresses complaints on human rights violations.
With each passing year, we have been constantly improving our economic performance. This has been a regular feature so much so the country is expecting us to create milestones in our journey. During the year, the Bank created a significant milestone, reaching an asset base of LKR one trillion.
An ever increasing trend in economic performance ensures that all our stakeholders get their share of the pie. The growth in shareholder funds raises capital adequacy. Increase in the deposit base expands our lending capacity. The team gets its share in enhanced compensation packages. Fund providers receive adequate returns for invested funds. The owner shareholder too gets their due share, by way of dividends and taxes that go into treasury coffers.
BoC maintains a customer-focused interest rate regime. It has not only assured a steady income for depositor –stakeholders but also spurred growth across all sectors in the economy
The total return on invested capital increased by 35% YoY. Net economic value addition of LKR 10.1 billion reflects a yield of 25%.
BoC maintains a customer-focused interest rate regime. It has not only assured a steady income for depositor –stakeholders but also spurred growth across all sectors in the economy- SMEs, micro sector and larger businesses. There are other factors with considerable interest. The market stabilisation in paddy is one key area where we have made our presence and contribution felt. Market linkages we helped create and employment generation throughout the country with so many people starting up so many ventures, big and small, escapes the quantifying process.
We do not inherit the earth from our ancestors. We borrow it from our children.
American Indian Chief Seattle
As a service provider, our operations do not adversely affect the environment in which we operate. We have not set up business/operational units in areas of high bio-diversity, natural habitats and vulnerable eco-systems. Yet, we do consume a substantial quantity of water, paper , fuel and electrical power in maintaining our operations. We have focused and continue to focus on recycling and conservation of these scarce resources. The re-cycling processes and energy saving initiatives show that even a little bit of imagination can go a long way to make this planet a better place to live. As the first step, we have incorporated a water treatment and recycling facility at the newly constructed "Pinnacle view" wing of Ceybank Rest Anuradhapura.
On another perspective, we have accepted green building concept as a basis of our planned capital expenditure. The first green building of BoC would be a reality this year.
We have arranged to dispose of the entire waste paper at the head office and branch net-work to a recycler, a carbon certified company. 167,239 kg of waste paper was disposed of during the year. This was done on a regular basis with corrugated paper bins placed on each of the 30 floors at head office building/branches. This initiative has helped to save;
And reduce green house gas emission by 167,239 kg of carbon equivalent
This year we created history by switching over to in-house electronic communication. Under this arrangement, memoranda both credit and operational, are routed to the iPads of the Board of Directors/Corporate Management. This will substantially reduce paper usage in memoranda submission and also storage space would be freed.
Discarded electronic waste consisting of 100 nos each in computer monitors, central processing units and printers was disposed of to a recycler licensed by the Central Environmental Authority.
There is a healthy environmental lobby and an environment-friendly media in the country. We on our part have created an opportunity for a mutually rewarding relationship with both of them. Sri Lanka Rupavahini Corporation and the Green Forest Association are our trusted partners in the quest for environmental preservation and the go- green concept.
The highly popular Sunday morning feature programme- Rividina Arunella- is sponsored by the Bank.
A programme that has won many accolades, it focuses on creating public awareness on sustainable agriculture, organic farming, rain water harvest and eco-system preservation. The message that is incessantly driven is that farming is not a mere vocation confined to rural farmers, but a life-style in itself that can be practiced even in the urban concrete jungle. It does not stop at environment-friendly, toxic- free sustainable agricultural practices but goes beyond, venturing into health and nutrition, good food and food security, women empowerment and poverty alleviation, a whole array of innovative imaginations borne out of necessity , potted cultivations and hanging gardens, leafy vegetable cylinders and vegetable beds created out of discarded tyres.
Green Forest Association, a local voluntary organisation involved in environmental protection and social mobilisation aimed at environmental awareness has gone to the grass root level where they promote environmental initiatives at schools. The idea is to create a balanced and optimum learning environment. This award winning association conducts an annual competition among schools islandwide to select and reward the ones with best conservation and environment-focused innovation. The thrust of the programme is on waste management initiatives, home gardening, agricultural crops, forestry, creative structures that blend with the nature (ponds, mini- reservoirs and abodes) class room maintenance, foliage and flowering plants and special environmental programmes and awards won by the students.
The Bank sponsored the programme for the third year in succession funding national, provincial and district level awards.
A key stake-holder segment, our customers, impact the environmental balance through their business operations. This is more so in the case of customers engaged in agriculture, agri-business and industries. This is a sensitive issue, which thrusts environmental concerns alongside development and consumption of natural resources. While assisting our customers in their business cycle development we do consider the Bruntland Commission's definition on sustainability, precautionary approach in Rio principles and other sustainability concerns. It is indeed a tight-rope walk, yet as the premier national bank, we are accustomed to tight-rope walking.
We are gradually incorporating environmental guidelines in our lending operations.
SME projects and entrepreneurs have been brought under a comprehensive Environment Impact Management framework where both pre-approval (exclusionary list, Initial screening, classification in terms of impact level) and post-sanction (monitoring and follow-up) stages are covered.
A range of factors and measurements are used at project evaluation. These include;
The management of Bank of Ceylon ("Bank") engaged us to provide an independent assurance on the following elements of the Sustainability Report 2012 ("the Report").
The Management of the Bank is responsible for the preparation and presentation of the Report in accordance with the Bank's sustainability practices and policies which are derived from Global Reporting Initiatives (GRI-G3.1) Sustainability Reporting Guidelines. These responsibilities include among other things, identification of stakeholders and material issues, determining the sustainable performance criteria for reporting and establishing appropriate processes and internal control systems to measure and report the sustainability performance criteria.
Our responsibility is to perform a reasonable and limited assurance engagement and express conclusions based on the work performed in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE 3000): 'Assurance Engagements other than Audits or Reviews of Historical Financial Information', issued by the Institute of Chartered Accountants of Sri Lanka ('ICASL').
Reasonable assurance is a high level of assurance. However, reasonable assurance is not an absolute level of assurance because there are inherent limitations of assurance engagement.
A limited assurance engagement is substantially less in scope than a reasonable assurance engagement and consequently does not enable to obtain assurance that we would become aware of all significant
matters that might be identified in a reasonable assurance engagement.
This Report is made solely to the Bank in accordance with our engagement letter dated 4th March, 2013. We disclaim any assumption of responsibility for any reliance on this Report to any person other than the Bank or for any purpose other than that for which it was prepared. In conducting our engagement, we have complied with the independence requirements of the Code of Ethics for professional Accountants issued by the ICASL.We reconciled the information on financial performance as reported on pages 209 and 210 of the Report with the audited financial statements of the Bank for the years ended 31st December, 2011 and 2012.
We reviewed the reliability of the data/information on Key Performance Indicators for the year ended 31st December, 2012 based on reviews of:
We planned and performed following assurance procedures on other information presented in the Report:
Based on the procedures performed, as described above, we conclude that:
CHARTERED ACCOUNTANTS
8th April 2013
Colombo
