After facing a run on deposits and staring at a possible collapse at the beginning of the year, Seylan Bank PLC has made an impressive recovery during the financial year of 2009, exceeding statutory ratios, recording a 250 percent growth in net profits and having its public offering oversubscribed.

Releasing its annual report for 2009 last Tuesday, Seylan Bank’s Executive Chairman Eastman Narangoda said thanks to prompt action taken by the Central Bank and the new Board of Directors to halt the run on deposits after the Golden Key scandal of 2008 (an unregulated finance company in the Ceylinco Group), public confidence is restored.

The bank made a net profit (after tax) of Rs. 910 million, a 249.97 percent growth from 2008 while the profit before tax increased by 474.96 percent to Rs. 892 million from Rs. 155 million in 2008.

Incomes suffered an 8.29 percent decline to reach Rs. 23 billion while taxation increased by 274.69 percent to Rs. 910 million.

Operating expenses declined by 21.05 percent to Rs. 1.7 billion. Provision on non-performing loans decreased by 11.51 percent to Rs. 284 million. Net operating income declined by 11.77 percent to Rs. 1.2 billion.

Seylan Bank made a public issue to bolster its capital base by Rs. 1.9 billion during the year. This issue was oversubscribed. During the year, the bank’s market capitalisation increased from Rs. 1.2 billion to Rs. 4.8 billion.

The bank’s core capital adequacy ratio is 9.69 percent, higher than the statutory 5 percent. The total capital adequacy ratio is also above the statutory 10 percent requirement of 10 percent at 11.74 percent.

Net non-performing loans have increased during the year from 15 billion or 14.30 percent of assets, to Rs 25 billion, or 29 percent. Narangoda said monthly recoveries targets have been set to contain non-performing loans.

Seylan Bank’s deposit base contracted by 2.89 percent to Rs. 104 billion while its loan book contracted by 13.81 percent to Rs. 132 billion.

The bank recently opened three branches in Jaffna and plans to expand its network of branches. New banking products and services are also being formulated.

Central Bank Governor Ajith Nivard Cabraal said the management of Seylan Bank had been able to transform the bank from near collapse to growth in a relatively short period of time but "but there is a lot to be done," he said.