- Deliver a Return on Equity (ROE) exceeding 5% to shareholders in 2024.
- Boost active client turnover by 10% YoY basis.
- Increase new client acquisition by 10% YoY.
- Technology upgrades: Invest to enhance digital infrastructure, automate processes, and secure data through system upgrades like a backup server and real-time integrations.
- Human resource development: Recruit key personnel and implement performance appraisals and motivation programmes to retain talent and improve service quality.
Management Discussion And Analysis
Subsidiary Performance
Sampath Bank currently has four wholly owned subsidiaries. These subsidiaries include, Sampath Centre Limited, SC Securities (Private) Limited, Siyapatha Finance PLC and Sampath Information Technology Solutions Limited. Each of these entities operates in different sectors, contributing to the overall growth and diversification of the Group. Their individual performances, including key achievements and challenges, will be discussed in the following section to provide an overview.
SAMPATH CENTRE LIMITED
Sampath Centre Limited established in 1996 as the first subsidiary of Sampath Bank. The company owns and manages the building located at No. 110, Sir James Peiris Mawatha, Colombo 02, which houses the Bank’s head office. In line with its core business of renting commercial property, the company's strategy focuses on maintaining its properties in excellent condition to ensure maximum tenant satisfaction. This is achieved through regular property inspections, prompt attention to maintenance issues, and timely repairs or upgrades. Additionally, Sampath Centre is dedicated to meeting the targets set for ongoing construction and renovation projects, ensuring that all facilities are modern, well-maintained, and meet the evolving needs of its tenants.
A new mechanical parking solution has been introduced, providing an increased number of parking slots for the tenant and customers. 78 parking slots now available both in Puzzle Parking and Stack Parking.
Key Opportunities and Challenges
The property is in the heart of Colombo, an area that has experienced rapid development, with numerous reputable condominium properties surrounding the site. This has led to an appreciation in the value of both the land and the building. As a subsidiary of Sampath Bank, it is positioned to offer facility management to the Bank by diversifying its service offerings.
However, there are several challenges in the current business environment. The property management industry is becoming increasingly competitive, especially with rise of high-rise commercial buildings that offer superior and modern amenities. Moreover, the ongoing construction and renovation project must be completed within the established time frame and approximate budget of Rs 1.95 Bn, without the disruption to current tenants. Furthermore, the building’s limited parking facilities may be inadequate to meet the needs of both employees and customers. Despite these challenges, Sampath Centre is committed to taking proactive measures to address these issues and ensuring that the property continues to satisfy the changing demands of its tenant.
Sustainability Initiatives
- The company launched a tank restoration programme alongside its parent company’s CSR initiative, aimed at ensuring a reliable, year-round water supply for farmers in the dry zone.
- Implemented measures to improve its waste management process, including the introduction of a PET bottle collection point for recycling, and segregation of waste.
OUTLOOK
In the short term, the key focus is on enhancing the quality of the existing building to provide better services to the tenant once the construction and renovation project is completed, while increasing rental income and effectively managing operational cost. As a medium-term plan, the focus is to provide facilities management services to the branches and other properties owned by the parent company subject to proper evaluation and approval. Looking forward, construction of a new building/establishing branch locations is another potential option for short, medium and long term.
SC SECURITIES (PRIVATE) LIMITED
SC Securities (Private) Limited has been a key player in Sri Lanka’s capital market since 1992. A wholly owned subsidiary of Sampath Bank, providing stock broking services to both local and international investors. As of 31st December 2024, SC Securities holds the 6th position in the market for stock broking services.
SC Securities is proud to have a team of 30 registered investment advisors, the majority of whom bring over 15 years of industry experience and hold bachelor’s degrees. Enhancing this expertise, the company is supported by highly skilled and experienced technical and fundamental analysts. Through participation in local and international events, road shows, strategic marketing campaigns and conducting investor forums, SC Securities has established a strong reputation among both local and international investors.
Strategic Priorities
Key Highlights
- Obtained ISO 9001:2015 QMS certification.
- Return on Equity (ROE) of 12.7% to shareholders in 2024.
- Achieved a Profit after Tax (PAT) of Rs 92 Mn in FY 2024 surpassing the budgeted PAT by 186%.
- In FY 2024, the company achieved a notable 12% increase in active clients' brokerage income, compared to FY 2023.
- Market share of SC Securities being 5% in 2024, while positioning the rank as 6th in the market based on the turnover for 2024.
- Finance costs has dropped by 60% compared to 2023, driven by strong debt recovery and efficient working capital management.
Key Opportunities and Challenges
SC Securities is well-positioned to leverage the consistent growth and performance of Sri Lanka's corporate sector. There is significant potential for diversification into other areas of capital market solutions, such as wealth management and investment banking, which could expand the company's service offerings and customer base. Vertical integration, particularly through expanding into investment banking, would allow the company to better serve clients with a comprehensive suite of financial services. Moreover, a positive outcome from external debt restructuring enhanced investors’ confidence, leading to higher turnover, and greater revenue for brokerage firms. Along with the decrease of interest rates, high net-worth investors can be attracted to invest in capital market. Economic recovery and fiscal reforms, including International Monetary Fund (IMF) programmes, are rebuilding investor confidence which in turn create potential for growth in capital market.
Furthermore, the political stability of the country boosted investor confidence, leading to a sustained market uptrend in the latter part of 2024. This drove the ASPI to reach 13,188 at the end of 2024, marking a significant recovery after the 2022 market peak.
However, the company faces several challenges in the current business environment. The company faces stiff competition from 15 member firms, including 9 trading members and 4 trading members specialising in debts. Despite the growth in market, the percentage of the population actively investing in the stock market remains low. Limited financial literacy and risk aversion among potential investors hinder market expansion. Policy inconsistencies from regulators also create an uncertain environment, making it difficult to plan for long-term growth.
Sustainability Initiatives
Participated in the sustainability disclosure standard training conducted by Ernst & Young with the parent company with the view to comply with the same.
OUTLOOK
In the short term, the company's focus is on achieving its budget targets, ensuring efficient operations and meeting financial goals. By increasing market share, improving service offerings, and using technology improvements to draw in more customers and boost trading volume, the long-term goal is to rank among Sri Lanka's top three stockbrokers in terms of turnover.
SIYAPATHA FINANCE PLC
Siyapatha Finance PLC, established in March 2005, is a licensed finance company and a wholly owned subsidiary of Sampath Bank PLC. Over the past 19 years, it has grown to become the largest subsidiary of the Bank. The company offers a wide range of financial services, including leasing, fast draft, gold loans factoring, and other loan facilities, along with accepting deposits. In terms of market positioning, Siyapatha Finance focuses on two key unique selling propositions, Trust & Reliability and Convenience. These attributes are central to the company’s strategy, as they help differentiate its products and services in a competitive market.
Strategic Priorities
- Portfolio diversification through the change of asset mix
- Portfolio quality management through focusing on infection and Non-Performing Assets (NPA) ratios
- Market development through channel expansion
- Market penetration through capacity enhancement of front line staff
- Differentiation through the unique selling proposition of customer convenience
Key Highlights
- The company's total assets surpassed Rs 50 Bn in 2024
- The branch network expanded to 53 during the year
- A quality lending portfolio was built with the Fast Draft Revolving Loan without any NPAs
Key Opportunities and Challenges
The stabilisation of the market and an increase in customer repayment capacity offer a favourable environment for growth, particularly in loan recovery and new customer acquisition. The growing penetration of digital communication and service platforms also provides an opportunity to enhance customer experience, streamline operations, and expand outreach through convenient online channels. Furthermore, the market value of the vehicle stock is increasing because of increasing vehicle prices, which boosts the value of current assets for leasing. The declining market interest rates are another opportunity, as they improve the company's yield and Net Interest Margin (NIM), contributing to better profitability. Moreover, the expansion of the gold loan market offers new avenues for growth.
However, the company faces several challenges that could impact its operations. The restriction on new vehicle importation has limited the availability of vehicles for financing, hindering growth in the vehicle leasing and hire purchase segments. The spike in vehicle prices has also led to reduced affordability for customers, affecting sales and loan services. The changes in the Non- Performing Asset (NPA) and impairment recognition framework have led to stricter regulatory requirements, affecting financial stability of the market.
Sustainability Initiatives
- Established a dedicated sustainability unit to manage sustainability related initiatives.
- Implemented a sustainability road map for the company.
- 37 environmental cleaning projects and over 12,000 planting of trees undertaken during the year under the “Siyapathen Mihi Kathata” initiative.
AWARDS
Best Employer Brand Award 2024 awarded by the Employer Branding Institute in India and UK
Top Most HR Leaders Award Sri Lanka awarded to CHRO of Siyapatha Finance by World HRD Congress
Top HR Icon Award Asia Pacific awarded by Asia Pacific HRM Congress
OUTLOOK
Siyapatha Finance PLC plans to prioritise digitalisation and automation across its operations, aiming to enhance efficiency, streamline processes, and provide more convenient services to its customers. Moreover, a shift towards adopting a data- driven marketing and sales approach is intended to leverage customer insights and analytics to optimise targeting, improve customer acquisition, and drive growth.
SAMPATH INFORMATION TECHNOLOGY SOLUTIONS LIMITED
Sampath Information Technology Solutions Limited (SITS) is a fully owned subsidiary of Sampath Bank, specialising in developing innovative software solutions and providing maintenance services for hardware. The company is committed to improving governance, ensuring that its operations adhere to the highest standards of transparency and accountability. It also aims to recruit and retain competent professionals with the necessary skills to drive technological advancements and enhance service delivery. The company intends to increase its presence in both current and new areas, with a clear focus on growing market share and increasing profitability of the business.
Products and services offered include,
| Department | Products |
|---|---|
| Software Solutions | EMMA, PRIME, RPA Practice, White Board, Credit Approval System, Fuel Card, Learning Management Solution |
| Managed Services | Smart Security Solutions, Smart Banking Solutions, Boardroom Solutions, POS Solutions, End User Devices |
| Enterprise Department | SIEM, PAM, FIM, Servers, Storages, Service operation centre, SD-WAN |
Key Opportunities and Challenges
The company is positioned to capitalise on several key opportunities in the market. The government’s digital transformation programmes present significant potential for growth, as there is increasing demand for technology solutions to modernise public services and enhance digital infrastructure. The lower interest rate also provides a favourable environment for businesses to invest in IT solutions. Additionally, the expansion of outsourcing and BPO services in Sri Lanka offers opportunities for SITS to tap into a growing global market, providing IT services to international clients. Moreover, the increasing demand for emerging technologies such as Robotic Process Automation (RPA), Artificial Intelligence (AI), and Blockchain enhance company’s growth prospects.
However, there are several key challenges which impact the growth. The ongoing brain drain in the country poses a risk as the company struggles to retain skilled employees. The high price competitions in the IT service sectors also impose pressure on the profit margins, as customers demand for more cost-effective solutions. Despite these challenges, the company remains focused on leveraging its expertise and capitalise on emerging opportunities.
Sustainability Initiatives
- Reduce paper-based workflows and move to digital platforms.
- Replaced all old air conditioning units with new energy efficient inverter ACs.
- Implementation of remote work arrangements and virtual meetings.
- Donated a fully equipped IT lab with infrastructure to a rural school in Bulathkohupitiya and Kapugollewa.
- Focused on implementing sustainable products such as the EMMA Meeting Management Solution and Credit Approval System.
AWARDS
ESG award for Credit Approval System by Asian-Oceanian Computing Industry Organisation
Silver award for Redefining, Re-energising and Recognising Digital Business Initiatives at the International Conference on Sustainable & Digital Business 2024, organised by SLIIT Business School
Gold award for Best Managed Project in Technology and IT Sector by Project Management Institute.
OUTLOOK
SITS outlook will focus on leveraging the emerging digital transformation trends including Artificial Intelligence (AI), Blockchain and the Internet of Things (IoT). With the Sri Lankan government's national digital economy strategy and the expansion of e-government initiatives, there is a clear path for SITS to capitalise on the demand for advanced IT solutions. Furthermore, Sri Lanka's standing as a competitive location for Business Process Outsourcing (BPO) and IT outsourcing continues to attract clients from around the world. The move to remote work arrangements also opens new avenues for collaborations with multinational teams, which will support in drawing in top talent from around the world and expand the company’s market reach.