CHAIRMAN’S

MESSAGE

Ronald C Perera PC
Chairman

In a year marked by many challenges,
Bank of Ceylon stood steadfast in
its commitment to driving economic
growth, fostering financial inclusion, and
supporting sustainable development
in our nation. Despite the numerous
trials in the operating landscape, the
Bank delivered a strong performance,
reinforcing its market leadership position
and supporting economic activity
across the island. Thus, it is with great
pleasure that I present to you the Bank’s
Annual Report of 2023 which stands as
a declaration of our collective resolve,
steadfast commitment and the unyielding
spirit that characterises our esteemed
organisation.

THE OPERATING LANDSCAPE

The year 2023 presented a complex
global economic landscape, marked
by a gradual yet uneven recovery from
the deep scars left by the COVID-19
pandemic, further complicated
by geopolitical tensions. These
developments have had far-reaching
implications, from disrupting global
supply chains to introducing significant
uncertainties in international markets.
In the face of these global challenges,
Bank of Ceylon's strategic initiatives
were carefully crafted, drawing upon
an in-depth analysis of the international
economic environment. Our aim was
to proactively anticipate and mitigate
potential adverse impacts on our
operations and strategic goals, ensuring
we remained agile and responsive to
global economic dynamics.

On the domestic front, Sri Lanka's
economic landscape was fraught
with many challenges. The economy
experienced a notable contraction,
with key sectors including construction,
tourism, manufacturing, real estate
and financial services facing severe
headwinds. These sectors, vital to our
national economy, suffered due to a
contraction in private credit, shortages of
essential inputs and widespread supply
chain disruptions.

In response, the Bank undertook a series
of strategic measures designed not only
to navigate these challenges but also
to bolster our clients and the broader
economy. Our efforts were aimed at
providing a stabilising force, offering
support and solutions to businesses and
individuals affected by these economic
conditions.

A FORCE OF STRENGTH

Throughout the year, Bank of Ceylon
meticulously aligned its operations with
the Central Bank's strategic monetary
policy adjustments. High interest rates
which prevailed during the first half of the
year were reduced by 550 basis points
in June 2023 and the Standing Deposit
Facility rate and Standing Lending
Facility rate were reduced to 9% and
10% respectively in November 2023.
Our proactive response to these changes
enabled us to recalibrate our lending and
deposit products, thereby offering more
competitive rates to our customers. This
strategic adaptation not only facilitated
the easing of inflationary pressures
but also invigorated economic activity
by making credit more accessible and
affordable for businesses and individuals
alike.

In response to the pressing foreign
exchange liquidity challenges, the
Bank implemented robust strategies,
including export financing and promoting
remittance inflows, and significantly
contributed to the stabilisation of the
country's foreign exchange situation.
This effort was underscored by the
achievement of accumulating usable
foreign reserves, thereby easing liquidity
pressures and supporting the national
economy in a critical period.

The Bank also played a pivotal role
in the Government’s Domestic Debt
Optimisation (DDO).Our exposure to
Government debts through investments
in Sri Lanka Development Bonds
(SLDBs), foreign currency loans to

the Government and International
Sovereign Bonds necessitated a strategic
and constructive approach to debt
restructuring. Our involvement in these
initiatives was aimed at enhancing debt
sustainability of the Government fiscal
stability and contributing to a sustainable
economic environment, showcasing
our commitment to national economic
resilience.

A RESILIENT FINANCIAL

PERFORMANCE

In a year marked by significant
challenges, both globally and locally,
the Bank’s financial performance stands
as a symbol of resilience and strategic
foresight. I am proud to report a
remarkable Profit Before Tax (PBT) of
LKR 40.3 billion for the year 2023
marking a growth of 30% over the
previous year. This achievement is
particularly noteworthy, considering the
economic headwinds we navigated.

The Bank’s asset base grew by 2%
this year, a testament to our prudent
management and strategic investments.
This growth, though modest, is significant
against the backdrop of the economic
contractions faced by the country. Our
strategic provisioning, a precautionary
approach adopted from 2020, played
a crucial role in this achievement,
ensuring that our assets' growth was
both sustainable and resilient to potential
economic shocks.

This strategic provisioning not only
fortified our financial position but also
positioned us well to capitalise on future
growth opportunities. Our approach
was calibrated to balance risk and
reward, ensuring that we remain on a
stable footing while pursuing our growth
ambitions.

DIGITAL TRANSFORMATION AS

A STRATEGIC PRIORITY

The Bank's strategic focus on digital
transformation and financial inclusion was
more pronounced than ever in 2023. We
accelerated our digital banking initiatives,
significantly enhancing our online and
mobile banking platforms to cater to
the evolving needs of our customers.
An example of this commitment was the
continuous enhancement of our digital
presence, aiming to provide seamless
and secure banking experiences.
These efforts were not just about
adopting new technologies but also
about democratising access to financial
services, ensuring that more people,
especially in underserved regions, could
benefit from digital banking solutions.

EMPOWERING

BUSINESSES

In 2023, the Bank took significant strides
in addressing the socio-economic
challenges faced by our nation,
particularly through the establishment
and operations of the Business Revival
and Rehabilitation Unit (BRRU). This
initiative was born out of a recognition
of the critical need to support
businesses struggling in the aftermath
of the pandemic and the compounded
economic pressures. Our approach
through this unit was not merely
transactional; it was deeply rooted in
a commitment to fostering economic
recovery and sustainability.

Recognising the pivotal role of Small and
Medium Enterprises (SMEs) in driving
economic growth and employment,
the Bank further intensified its support
through the SME Circle initiative. In a
year marked by supply chain disruptions
and import restrictions, the SME Circle
played a critical role in filling the market
gaps, enabling SMEs to leverage
new opportunities and enhance their
competitiveness.

Our targeted support for SMEs
went beyond financial assistance; it
included capacity-building workshops,
mentoring programmes, and networking
opportunities, all aimed at strengthening
the foundations of these enterprises.
By assisting SMEs in adapting to
the changing market dynamics and
overcoming operational challenges,
we contributed to the revitalisation of
this crucial sector, fostering innovation,
and promoting sustainable economic
development.

COMMITMENT TO

SUSTAINABILITY

During the year, the Bank deepened
its commitment to integrating
Environmental, Social, and Governance
(ESG) considerations into the very fabric
of its operations and embarked on a
strategic initiative to align business
practices with ESG best practices. A
pivotal step in our ESG integration
journey was a move designed to harness
specialised expertise in developing
and refining our ESG strategy. This
collaboration enabled us to draw upon
global best practices and insights,
ensuring that our approach to ESG was
both comprehensive and aligned with
international standards.

Another significant milestone was the
expansion of the Environmental and
Social Management System (ESMS)
unit within the Bank which became a
central component of our sustainable
decision-making. We remain dedicated
towards implementing innovative
solutions that minimise waste, promote
renewable energy, and safeguard
ecosystems as we believe in leaving a
positive legacy for future generations.

CLOSING THOUGHTS

The Bank is poised to accelerate its
journey towards becoming a digitally
sophisticated institution, expand business
operations beyond boundaries and gear
up to cater to the expected growth.
Our vision encompasses a holistic
approach to digital transformation, with
a particular emphasis on enhancing
customer engagement. We understand
that the future of banking lies in our
ability to provide a seamless, intuitive,
and personalised banking experience to
our customers, leveraging the latest in
digital technology. Our aim is to make
banking more accessible, convenient,
and secure for everyone, anywhere and
at any time.

A significant focus will also be placed on
enhancing staff training and development
programmes. Our goal is to equip our
team with the skills and knowledge
needed to thrive in a rapidly evolving
digital banking environment. This
includes specialised training in digital
technologies, cybersecurity, customer
service excellence, and innovative
problem-solving techniques. By investing
in our people, we aim to foster a culture
of continuous learning and innovation,
ensuring that our staff are not only
proficient in their current roles but are
also well-prepared to embrace future
challenges and opportunities.

APPRECIATIONS

I take this opportunity to extend my
gratitude to my colleagues on the
Board for their continued guidance and
support in providing strategic direction
to the Bank. My sincere appreciation
goes out to Mr Manilka Fernando and Mr
Harsha Wijayawardhana, who departed
from our Board in 2023 and I warmly
welcome Mr Naresh Abeyesekera and
Prof. Kithsiri M Liyanage to our Board.

CHAIRMAN’S MESSAGE

I also, wish to appreciate the unrelenting
commitment of the General Manager/
CEO Mr Russel Fonseka, the members of
the management and the BoC team, for
their efforts in navigating the challenges
to deliver our strategic aspirations.

Our sole shareholder, the Government of
Sri Lanka has been a guiding force and
I wish to place on record my gratitude
to the Hon. Minister of Finance and the
officials of the Ministry of Finance for
their continued support.

I would also like to take this opportunity
to extend my gratitude and appreciation
to the Governor and officials of the
Central Bank of Sri Lanka, the Auditor
General and his staff, our valuable
customers, business partners and all
other stakeholders who have been an
integral part of the Bank’s journey thus
far.

I also take this opportunity to welcome
on board Mr Jayamin Pelpola and
Mr Jehaan Ismail who joined the Board
recently. I wish to extend my best wishes
to the incoming Chairman Mr Kavan
Ratnayaka, who takes on the baton of
leadership to propel the Bank towards
greater heights of success.

Looking ahead, the Bank remains
steadfast in its commitment to
contributing to Sri Lanka's economic
resilience and growth. We are dedicated
to leveraging our strengths, embracing
innovation, and fostering sustainability to
ensure that we not only meet, but exceed
the expectations of our customers,
employees, and all other stakeholders.

Ronald C Perera PC
Chairman

13 March 2024
Colombo