GENERAL 

MANAGER’S

REVIEW

I am proud to 
report that the 
Bank demonstrated 
resilience, 
adaptability, and 
commitment to 
its mission of 
serving customers, 
communities and 
the entire nation 
during their time of 
need.

W P Russel Fonseka 
General Manager/ 
Chief Executive Officer

" 

" 

In the annals of our nation's history, 
there are crucial moments when the 
strength and resilience of our financial 
institutions have been tested, and 
it is during these times that the true 
spirit of Bank of Ceylon has shone 
the brightest. Despite the challenges 
stemming from the economic crisis which 
erupted the year before, I am proud 
to report that the Bank demonstrated 
resilience, adaptability, and commitment 
to its mission of serving customers, 
communities and the entire nation during 
their time of need. Through prudent 
risk management practices, diversified 
revenue streams, and cost efficient 
measures, we positioned ourselves to 
navigate through challenging times and 
capitalise on emerging opportunities, 
reaffirming our position as the leading 
bank in Sri Lanka. Thus, it is with 
pleasure that I share with you the annual 
review of the Bank’s performance and 
accomplishments over the past year and 
the way forward of the Bank.

DELIVERING HOLISTIC VALUE

While we experienced unparalleled 
challenges over the years, we have 
always stayed true to our ethos of being 
the Bankers to the nation; our purpose of 
advancing the lives of people across all 
walks of life; our belief that each person 
has the power to change and to effect 
meaningful change in their community 
and in society; and our commitment to 
working towards a sustainable future.

Having faced the most unprecedented 
economic crisis the year before with 
skyrocketing inflation, high interest rates, 
volatile exchange rates, a severe liquidity 
shortage, disruptions to the supply of 
essential goods and services and social 
and political instability, our main priority 
during 2023 was economic revitalisation. 
BoC acknowledged the critical role it 
plays as a driver of economic activities 
and stood committed to taking proactive 
measures to navigate through challenges 
and contribute towards economic revival.

In this process, we did not look at 
industries on a stand-alone basis but 
instead adopted a more holistic view, 
identifying critical economic sectors. 

As the first step, we worked towards 
establishing energy security in the 
country. Energy security is a crucial 
determinant in driving economic 
activities and as the country struggled 
to import fuel for power generation and 
to keep its transport system running 
amid dwindling foreign exchange 
reserves, BoC rose to the occasion and 
implemented various strategic initiatives 
to maintain energy stability. Looking 
beyond short-term profitability, the 
Bank prioritised the release of foreign 
exchange for fuel shipments and other 
essential sectors of the economy, which 
helped ease hardships which might 
otherwise have continued for a longer 
period of time. By promoting inward 
remittances and encouraging the flow of 
export proceeds to the country, we were 
able to generate a significant amount of 
foreign exchange to facilitate the import 
of these essential goods and serve our 
nation at a critical time.   

Secondly, we identified the vulnerable 
sectors of the economy and put in 
our best effort to protect businesses 
that were in troubled waters. Tailored 
financial support including financing, 
advisory services, risk management 
solutions and cash flow management 
was provided to identified customers 
and businesses through the Business 
Revival and Rehabilitation Unit (BRRU) of 
the Bank. Through careful management 
and intensive care, we identified the 
bottlenecks faced by our customers and 
instead of resorting to recovery action, 
we focused on managing their liquidity 
and overall financial performance. We 
were able to revive 174 businesses 
during 2023 and I am incredibly proud of 
the commitment displayed by our team 
towards this initiative.  

We recognised the need to ensure the 
well-being of our people and focused 
on supporting the pharmaceutical sector 
with the import of medicines and medical 
equipment. 

Within an intricate and volatile economic 
landscape, the Bank’s financial strength 
and capability served as bedrock 
pillars supporting the entire nation and 
enhancing resilience against unforeseen 
challenges. BoC's resilience and 
contribution to the Sri Lankan economy 
were recognised globally and locally, 
with the Bank being ranked among the 
world's top 1000 banks and "The Bank 
of the year 2023 – Sri Lanka", by The 
Banker magazine - UK, while also being 
named as the No.1 Banking Brand in  
Sri Lanka for the 15th consecutive year  
by Brand Finance Lanka. 

FINANCIAL PERFORMANCE 

AND STABILITY

We concluded the year on a positive 
note, and our financial performance is a 
testament to the strength and stability 
displayed in a challenging economic 
context. The Bank's Profit Before Tax 
stood at LKR 40.3 billion, supported 
by a 15% increase in interest income. 

We identified the 
vulnerable sectors 
of the economy 
and put in our best 
effort to protect 
businesses that 
were in troubled 
waters.

" 

" 

However, interest expenses outweighed 
growth, leading to a 28% decline in net 
interest income, reflecting the Bank's 
commitment to not to transfer the 
full impact of interest rate hikes to its 
customers, in an effort to prioritise their 
business revival.

Net fee and commission income grew by 
8%, mainly due to increased card-related 
transactions and retail banking services. 
However, income from trading and other 
operating income were impacted by 
exchange losses associated with the  
LKR appreciation.

The Bank proactively managed credit 
risk in advance by applying management 
overlays to identify risk elevated 
industries and reassessing exposures to 
high-risk borrowers.  Prudent provisions 
were made during the prior years for 
expected losses with a sharp focus on 
strengthening the Balance Sheet of the 
Bank. These actions resulted in a net 
reversal of impairment provisions during 
the year, due to business revival activities, 
stringent credit monitoring, and currency 
appreciation.

Despite the reducing interest rates,  
the Bank's deposit base grew by  
16% to LKR 3.9 trillion, demonstrating  
strong customer trust and confidence.  
The Bank's asset base reached 
LKR 4.4 trillion, with loans and advances 
amounting to LKR 2.5 trillion and 
investments to LKR 1.7 trillion.

Proactive and timely measures were 
adopted to manage the Bank’s foreign 
currency and Rupee liquidity levels 
given the volatile market conditions 
that prevailed, which resulted in a 
Statutory Liquid Asset Ratio of 45%, 
well above the regulatory minimum of 
20%. Capitalisation levels also remained 
relatively healthy with Tier 1 and Total 
Capital Adequacy ratios standing at 
12.8% and 15.8% respectively, by  
31 December 2023.

STRENGTHENING OUR ESG 

COMMITMENT

With the view of strengthening  
our ESG framework, we appointed  
an ESG consultant to support us  
over a three-year period to develop a 
sustainability roadmap for the Bank. We 
have also aligned our operations with the 
Central Bank’s Roadmap for Sustainability 
as well as the United Nations Sustainable 
Development Goals. By adopting 
a holistic approach to develop ESG 
practices, we aim to contribute to 
positive outcomes for our stakeholders 
and society as a whole. 

Our employees have been a force of 
strength during these challenging times, 
and thus, our commitment to supporting 
our team remained unwavering. We 
prioritised open communication, 
professional development, work-life 
balance, recognition, diversity and 
inclusion, to create an environment 
where our employees can thrive and 
succeed. While turnover levels remained 
elevated due to the economic downturn, 
we put in our best effort to keep our staff 
motivated and engaged. 

We also intensified our efforts to uplift 
the micro, small and medium scale 
enterprises and launched the SME 
Energizer loan scheme, LKR 5.0 billion 
from the bank's fund was allocated 
during the year in this regard. 

Our "BoC Gammana" programme aimed 
at empowering and strengthening the 
rural areas of the country continued 
throughout 2023, demonstrating 
our deep-seated commitment to 
corporate social responsibility. Apart 
from stimulating rural economies, 
this programme also aims to enhance 
financial literacy among people and 
protect them from predatory lending 
practices or financial exploitation.

The Bank takes its commitment to 
environmental stewardship very seriously 
and took concrete actions to reduce 
the carbon footprint, conserve natural 
resources, and protect the environment. 
As the leader in our industry, our 
commitment to environmental 
sustainability goes beyond just reducing 
our own impact and we leverage our 
influence to drive positive changes across 
our value chain. We expanded our green 
lending portfolio by LKR 530.9 million 
during the year and adopted more 
stringent screening of loans through the 
ESMS Unit with the belief that significant 
sustainability impacts can be delivered 
through our lending portfolio. We also 
introduced two new sustainable deposit 
schemes, Haritha Kekulu and e-Thuru 
with the objective of encouraging 
our nation to think green and be 
eco-friendly. Our efforts to drive positive 
environmental change were rewarded 
with the achievement of Green Business 
Leadership Award 2023 as well as Green 
Commitment Excellence of the Year 2023 
award by the Green Building Council. 

PAVING THE WAY FOR A 

DIGITALLY ENABLED FUTURE

As the banking landscape evolves, 
BoC has continually embraced digital 
transformation and innovation to 
enhance customer experience, improve 
operational efficiency, and drive financial 
inclusion. Our investments in digital 
banking platforms, mobile payment 
solutions, and FinTech partnerships have 
empowered customers with convenient, 
secure, and accessible banking services.

Pioneering in a range of cutting-edge 
digital solutions, the Bank aims to 
transform the country’s financial services 
industry, taking on initiatives which 
are set to enable the Bank to unleash 
futuristic solutions ahead of others. 

GENERAL MANAGER’S REVIEW

We were honoured with three gold 
awards and two silver awards for our 
outstanding digital initiatives at the 
LankaPay Technnovation Awards 2023, 
which underscores our commitment 
to innovation, customer-centricity, 
and leadership in the digital banking 
landscape.

With a heightened focus on data security 
enhancements, driven by evolving 
cyber threats, regulatory requirements, 
and customer expectations for robust 
privacy protections, BoC embarked 
on the process of aligning its IT 
governance processes with the COBIT 
2019 framework. As the first bank in Sri 
Lanka to adopt this framework, we are 
committed towards streamlining and 
optimising our IT resources to improve 
our overall performance, while gearing 
towards an environment of emerging 
technologies, including AI, Cloud 
Computing, Open Banking, Big-data and 
Blockchain.  

CLOSING THOUGHTS AND 

APPRECIATIONS

Following two consecutive years of 
contraction, we are finally beginning to 
see the economy gradually recovering. 
However, we are still not out of the 
woods and continuous efforts will be 
required to improve sustainable foreign 
currency inflows to prevent external 
sector imbalances, along with prudent 
measures towards risk mitigation by 
the financial sector. Continued effective 
coordination and collaboration with 
market participants, regulators and 
policymakers will also be essential to 
enhance the overall stability of the 
financial sector. 

With the debt restructuring and  
State-Owned Enterprise (SOE) reforms, 
we may be able to witness better 
financial discipline, contributing  
to the overall health of the economy.  

Clear demarcation between monetary 
and fiscal policies can also be envisaged, 
signalling a faster than expected recovery 
of the economy. While the rebound in 
tourism and related sectors indicates 
a favourable foreign currency reserve 
position, large-scale and foreign direct 
investments may not fully take flight 
under the looming uncertainties.

In this backdrop, BoC has planned 
to revamp its business model, with a 
greater focus on private sector lending. 
Consequent to the SOE reforms, the 
burden of underperforming SOEs will 
be alleviated and credit evaluation and 
monitoring process will be applied in 
uniformity across SOEs and the private 
sector. 

The Bank will continue to play a key 
role in providing concerted support 
and lending to SMEs, funding key 
infrastructure development projects and 
industrial ventures and driving economic 
progress across all sectors of the nation. 
We also hope to expand our overseas 
presence and introduce new green/blue 
lending products across these regions. 

Looking ahead, we remain committed to 
drive digital excellence and innovation 
to better serve our customers by 
capitalising on synergies and existing 
capacity for growth in volumes and 
sharing the benefits of technological 
development with our customers through 
competitive pricing. We will continue to 
invest in cutting-edge technologies, data 
analytics, and cybersecurity measures 
to ensure the security, reliability, 
and integrity of our digital banking 
ecosystem.  

In conclusion, I wish to express my 
sincere thanks to our Chairman and all 
Board Members for their stewardship 
during these challenging times. My 
sincere gratitude to the Corporate and 
Executive Management Team and all 
staff, who worked around the clock to 
prioritise the needs of our stakeholders, 
and all aspects of national economic 
revival in 2023. 

I also take this opportunity to thank the 
officials at the Ministry of Finance, the 
National Audit Office and the Central 
Bank of Sri Lanka for their guidance 
and direction during a testing year and 
look forward to their support in the year 
ahead. 

Finally, to our valued customers, 
business partners, trade unions and the 
other stakeholders – thank you for your 
continued support, trust and confidence 
over the years. 

As I reflect on this chapter in our nation’s 
history, I am proud of the pivotal role 
played by BoC, as a catalyst for progress, 
and a beacon of trust in times of 
adversity. In the face of challenges, the 
indomitable spirit of our Bank continues 
to illuminate the path forward, guiding us 
towards a brighter future.

W P Russel Fonseka 
General Manager/ 
Chief Executive Officer

27 February 2024
Colombo