Bank Annual Report

Sampath Bank PLC ǀ Annual Report 2020
Millions of lives impacted.

Millions of rupees invested.
Millions achieved year on year.
A million million ways to grow.
Here at Sampath Bank, as we come to the close of an eventful year

characterised by momentous change and uncertainty, we are proud
to celebrate yet another notable milestone in our history with our
stakeholders; as we became the youngest bank to surpass an asset
base of one trillion rupees.
As we look back on all we have achieved thus far, this report pays
tribute to the many millions that came together to bring about
the results we showcase today - the millions of partnerships, the
millions of livelihoods, the millions of projects and the immeasurable
contribution of each and every stakeholder we serve.
Today, we move forward with a clear vision. We are energised with

a purpose and geared to face the future - built on a solid foundation
of unmatched skill, talent and strategy to push us further along a
trajectory of national growth and progress. We strive to reach new
heights as we seek out a million million new ways to grow.
2 I SAMPATH BANK PLC I Annual Report 2020
CONTENTS
About the Report...................................4

Material Topics.......................................6
Financial Highlights............................ 10
Non-Financial Highlights................... 12
INTRODUCTORY MANAGING OUR MANAGEMENT

INFORMATION BUSINESS DISCUSSION & ANALYSIS
01
Our Vision and Values............................. 16
02
Chairman’s Message................................ 30
03
Operating Environment.......................... 54
About the Bank........................................ 17 Managing Director’s Review.................. 36
Product Portfolio...................................... 18 Our Value Creating Business Model..... 42 CAPITAL MANAGEMENT REPORTS
Board of Directors................................... 20 Strategic Sustainability Framework....... 44 Financial Capital....................................... 59
Corporate Management......................... 26 Connecting with Our Stakeholders....... 47 Manufactured Capital............................. 64
Intellectual Capital................................... 67
Human Capital.......................................... 70
Social and Relationship Capital............. 73
Natural Capital.......................................... 77
BUSINESS REPORTS
Consumer Banking................................... 82
Corporate Banking................................... 86
SME Banking............................................. 89
Global Banking......................................... 90
Nostro Accounts Maintained Banks,
Correspondent Banks and Exchange
Companies............................................ 92
Treasury..................................................... 93
Operational Support................................ 94
Performance of Subsidiaries.................. 95
Investor Information................................ 96
SAMPATH BANK PLC I Annual Report 2020 I 3
RISK & GOVERNANCE FINANCIAL INFORMATION SUPPLEMENTARY

INFORMATION
04
Risk Management Report....................... 108
05
Financial Calendar................................... 184
06
Statement of Profit or Loss in US$....... 346
Compliance Report.................................. 117 Annual Report of the Board of Directors Statement of Comprehensive
Corporate Governance........................... 119 on the Affairs of the Company.......... 185 Income in US$...................................... 347
Board Audit Committee Report............. 170 Directors’ Interest in Contracts Statement of Financial
with the Bank....................................... 196 Position in US$..................................... 348
Board Human Resources and
Remuneration Committee Report..... 173 Directors’ Statement on Internal Control Economic Value Addition........................ 349
Over Financial Reporting.................... 197 Ten Years at a Glance.............................. 350
Board Nomination Committee Report..175
Independent Assurance Report to the Quarterly Statistics.................................. 351
Board Integrated Risk Management
Board of Directors of
Committee Report............................... 177 Capital Adequacy..................................... 353
Sampath Bank PLC.............................. 199
Board Related Party Transactions Review . Basel III Disclosure Requirements..... 354
Managing Director’s and Group Chief
Committee Report............................... 180 GRI Content Index................................... 364
Financial Officer’s Responsibility
Statement.............................................. 200 Independent Assurance Report to the
Statement of Directors’ Responsibility for Shareholders of Sampath Bank PLC. 372
Financial Reporting.............................. 201 Glossary of Financial and
Independent Auditor’s Report to the Banking Terms...................................... 373
Shareholders of Sampath Bank PLC. 203 Notice of Annual General Meeting....... 377
Statement of Profit or Loss.................... 208 Notes.......................................................... 378
Statement of Comprehensive Income.. 209 Stakeholder Feedback Form................... 379
Statement of Financial Position............. 210 Corporate Information............................ IBC
Statement of Cash Flows....................... 212
Statement of Changes in Equity............ 214
Notes to the Financial Statements....... 216
ABOUT THE REPORT
Report Profile GRI - 102-50,52
Each year Sampath Bank prepares and

Changes to this year’s report
publishes its Annual Report with the In keeping with environmentally-
intention of providing its stakeholders friendly best practices, a number of
with a clear understanding of the Bank’s key areas of Sampath Bank’s 2020
performance and prospects for a given Annual Integrated Report have been
financial year. moved online. Accordingly, the Capital
Management Reports, Material Topics
The current report which covers the and their Management Approaches are
financial year 1st January 2020 to 31st shown as online content, with only a
December 2020 is the 7th Integrated summary of these areas being included
Report released by Sampath Bank PLC, in the 2020 printed Annual Report.
since the Bank began its integrated
reporting journey in 2014. All previous
integrated reports including the most Reporting Frameworks GRI - 102-12,54
recent report for the financial year 2019 The content of this report is based on the Six Capitals Model introduced by the
are available for viewing and downloading International <IR> Framework. By adopting the Six Capitals Model, we are looking to
on our corporate website - www.sampath.lk demonstrate how we use integrated thinking to transform our capital resources (Inputs)
in order to deliver financial results and create value (Outcomes) for our stakeholders. To
Scope and Boundary GRI - 102-46
illustrate how this takes place, the report narrative has been structured based on Material
The report covers the operations of Sampath Topics that influence our business model, strategy, performance and future prospects. The
Bank PLC in its entirety and includes all process of determining Materiality is described in detail on page 6 of this Annual Report.
business and operational activities as well as
administrative support functions of the Bank Other applicable reporting frameworks include;
during the reporting period.
 Sri Lanka Accounting Standards issued by the Institute of
The report showcases both financial Chartered Accountants of Sri Lanka
and non-financial aspects of the Bank’s  Companies Act No. 07 of 2007
performance, essentially providing a clear
 Banking Act No. 30 of 1988 and amendments thereto
and concise account of the steps we are Financial
taking to achieve our strategic vision  Listing Rules of the Colombo Stock Exchange Reporting
while balancing the expectations of all
 Code of Best Practice for Corporate Governance issued by the
stakeholders.
Institute of Chartered Accountants of Sri Lanka
Also included in the report is a brief  Banking Act Direction No. 11 of 2007 on Corporate
summary of the performance of all four Governance for Licensed Commercial Banks in Sri Lanka, issued
subsidiaries under the Sampath Bank Group. by the Central Bank of Sri Lanka and any amendments thereto
 Banking Act Direction No. 01 of 2016 on Capital Requirements
In this manner, the report caters to under Basel III and amendments thereto Governance,
the information needs of not only our  Banking Act No. 30 of 1988 and amendments thereto Compliance and
shareholders but a diverse audience across Risk Reporting
 Companies Act No. 07 of 2007
our value chain.
 Listing Rules of the Colombo Stock Exchange
 Global Reporting Initiative (GRI) Standards - “In Accordance

Comprehensive” issued by Global Sustainability Standards Board
 Guidelines on ESG Reporting issued by the Colombo Stock
Exchange
Sustainability
 United Nations Sustainable Development Goals (SDGs) Reporting
Since Sampath Bank sustainability indicators. Page 372 of this be reasonably assumed that incidents
report contains a copy of the independent that occur in the future may cause actual
commenced its assurance statement issued by Messrs results or outcomes to differ materially
integrated reporting Ernst and Young, with regard to Sampath from what was expressed or implied by
Bank’s adherence to the GRI Standards. forward-looking statements.
journey in 2014, this
is the 7th Integrated Forward-Looking Statements Therefore, all forward-looking statements
are deemed to be applicable only on the
Annual Report This report contains certain forward-
looking statements with regard to date of publication of this Annual Report.
released. Sampath Bank’s financial position, results, As such, Sampath Bank does not accept
operations and business activities. These any obligation to revise or in any way
statements involve risk and uncertainty update at a later date, the information
Combined Assurance GRI - 102-56
as they relate to and depend on events expressed in these forward-looking
We have adopted the principles of combined
that occur in the future. Therefore, it can statements.
assurance where inputs from both internal
and external sources are used to review and
verify the accuracy and authenticity of the Matters of Interest to Where to Find it in this Report Page
content included in this report. Stakeholders Reference
(starting from)
Internally, the Bank’s Management How we bring our vision to life Strategy and Business Model 42
provides assurances regarding the Our leaders’ views Chairman’s Message 30
validity of information, data and statistics
Managing Director’s Review 36
contained in the report. Messrs Ernst
Delivering on our strategy Capital Management Reports 58
and Young, Chartered Accountants
provide external assurance for the Bank’s Business Reports 81
Financial Statements and also provide How our business is governed Risk Management Report 108
an independent assurance on selected and managed Compliance Report 117
Corporate Governance Report 119
Measuring our success Financial Information 182
Our Progress in Sustainability Reporting GRI - 102-51
2011 2012 2013 2014 - 2016 2017 - 2020
Stand-alone Report Incorporated in Stand-alone Report Integrated Report Integrated Report

GRI 3.1 Level B Annual Report GRI G4 - GRI G4 - Comprehensive GRI Standards - Comprehensive
External Assurance GRI 3.1 Level B Comprehensive External Assurance External Assurance
Provided External Assurance External Assurance Provided Provided
Provided Provided
Feedback and Queries GRI - 102-53
While taking this opportunity to appreciate the feedback received regarding our 2019 Annual Report, readers are urged to use the
Feedback Form on pages 379 and 380 of this report, to submit their insights on Sampath Bank’s latest Integrated Annual Report for 2020.
MATERIAL TOPICS
A comprehensive Our Materiality Monitoring Process GRI - 102-46,47/103-1,2
broad-based
stakeholder Identification
Identify Material Topics that have
the potential to impact our earnings
engagement survey of Material sustainability and ability to create value
conducted in 2020 Topics for our stakeholders
helped to verify and

validate the relevance Prepare Cluster potential Material Topics to
of our Material Topics Clustering and
Categorisation
categorise and map them with the
capitals
against economic, social
and environmental
parameters.
Analyse and identify organisation’s
Management objectives, risks and impact on
Material Topics are determined by their
Discussions stakeholders
significance, probability of occurrence and
the impact on the Bank’s ability to create
stakeholder value over the short, medium
and long term. In this way, materiality
serves as a valuable tool to guide our Plan Understanding the stakeholders’
Materiality
strategy development and resource perceptions on what is important to the
Assessment
allocation processes to enable the Bank to Bank
Survey
meet stakeholder deliverables.
A comprehensive broad-based stakeholder

survey conducted in 2020 helped to verify
Prioritising Material Topics to indicate
and validate the relevance of our Material Materiality its significance to the Bank and
Topics against economic, social and Matrix stakeholders
environmental parameters.
Materiality Matrix
Engage
1 2 3 4 5 Validation of the Materiality Matrix by
Validation
High
6 7 8 9 10
Sampath Bank’s leadership
Level of Materiality to the Bank
11 12 13 14 15
16 17 18 19 20
21
Medium
Integration into the Bank’s Business

Integration Strategy to achieve stakeholder
deliverables
Low
Analyse &
Low Medium High Continuous and ongoing monitoring to
Embed
Level of Materiality to Stakeholders Monitor and take account of changes in the operating
Track Records environment and respond by realigning
the Bank’s strategy to drive and sustain
business and find new and innovative
ways of doing businesses
GRI - 102-49
Material Topics Level of Materiality Level of Materiality

to the Bank to Stakeholders
1 Profitability & financial stability High High
2 COVID-19 pandemic and its impact High High
3 Physical channels High High
4 Digitalisation agenda High High
5 Business continuity planning High High
6 Corporate brand image/goodwill building High High
7 Information security High High
8 Talent acquisition and management High High
9 Learning and development High High
10 Employee relations High High
11 Employee engagement High High
12 Anti-corruption practices High High
13 Customer convenience High High
14 Customer health and safety High High
15 Sales promotions, marketing communication and High High
information availability on Bank’s products and services
16 Customer privacy High High
17 Complaint management High High
18 Research and development High High
19 Financial inclusion agenda High High
20 Community development High High
21 Environment protection and conservation High High
Out of the 21 Material Topics for 2020, 20 remained unchanged from the previous year. The only new topic that became relevant
in 2020 was the "COVID-19 pandemic and its impact", a topic that was rated at a higher level of materiality by the Bank and its
stakeholders. Hence it is discussed as a separate topic below.
COVID-19 pandemic and its impact

Since first emerging in Sri Lanka in March Adopting a proactive approach to stay We initiated strategic action on multiple
2020, the COVID-19 pandemic has had ahead of the challenges, our efforts were levels by realigning our risk fundamentals,
an impact on several key aspects of our pivoted on; strengthening governance frameworks,
business model, albeit in varying degrees expanding the use of digital platforms
of severity. Our core lending business  Safeguarding our business in the and reforming certain aspects of our
was affected by weak credit demand, short term while ensuring long term business model to enhance the Bank’s
which was the result of the economic continuity notwithstanding future overall responsiveness to challenges.
downturn and disruptions to global trade, challenges.
while our day-to-day operations were  Assuring the safety of our The measures taken throughout 2020 in
challenged by the lockdown and other employees. response to the COVID-19 challenges
pandemic related restrictions imposed by and their outcomes are described in
 Continuing to provide customers
the authorities. Amidst this backdrop, the detail in the Capital Management Reports
with an uninterrupted service.
safety of our employees too became a from pages 58 to 80.
key concern.
MATERIAL TOPICS
GRI - 102-49
Material Topics Reason for Materiality Topic Linked to Strategy Page Reference
Boundary through to Management
Approach
Economic Topics
Profitability and Profitability and financial stability are seen as the Internal/ Financial Capital Page 3 of
financial stability key enablers in creating value for our stakeholders External Supplementary
and also for growing our business over the short, Disclosures Report
medium and long term. published in Sampath
Bank's website
COVID-19 The COVID-19 pandemic has impacted several Internal/ All Six Capitals Page 3 to 52 of
pandemic and its key aspects of our business model in varying External Supplementary
impact degrees of severity. The greatest impact was on Disclosures Report
our core lending business and branch operations. published in Sampath
Bank's website
Physical channels Physical channels such as our branches, ATMs and Internal/ Manufactured
Page 10 of
Cash Deposit Machines are the main sources that External Capital
Supplementary
connect customers and the Bank.
Disclosures Report
Digitalisation Digitalisation agenda supports the Bank’s efforts Internal/ Manufactured
published in Sampath
agenda to transform into a world-class digital financial External Capital
Bank's website
institution.
Business Provides a framework for building resilience and Internal/ Intellectual Capital
continuity planning the capability to safeguard the interests of key External
stakeholders, the Bank’s reputation, and business
activities, in the event of unforeseen disruptions. Page 15 of
Corporate brand One of the most valuable indicators of Sampath Internal/ Intellectual Capital Supplementary
image/goodwill Bank’s success as it determines our status quo External Disclosures Report
building in the local banking sector based on our ability published in Sampath
to consistently honour our promises to our Bank's website
stakeholders.
Information A solid information security framework helps to Internal/ Intellectual Capital
security build trust and safeguard the Bank’s reputation. External
Social Topics
Talent acquisition Safeguards Sampath Bank’s competitive edge over Internal Human Capital
and management peers and helps to realise the Bank’s strategy and
long term vision.
Learning and Our competitive position, our success as a bank Internal Human Capital
development and the continuity of our business, all depend
on our people having the required knowledge,
skills and capabilities, which can be achieved Page 20 of
through continuous and ongoing learning and Supplementary
development. Disclosures Report
Employee Strong employee relations is the key to securing Internal Human Capital
Bank's website
relations the commitment of our employees towards the
Bank’s current and future prospects.
Employee Ensures employees stay motivated, thereby Internal Human Capital
engagement increasing overall employee productivity.
Anti-corruption Protects the Bank’s reputation and the legitimacy Internal/ Human Capital
practices of the business. External
Material Topics Reason for Materiality Topic Linked to Strategy Page Reference
Boundary through to Management
Approach
Customer One of the most important ways in which Internal/ Social and
convenience differentiation can be achieved in the banking External Relationship Capital
business.
Customer health Making certain that our products and services Internal/ Social and
and safety are not used in the furtherance of financial crime, External Relationship Capital
such as money laundering, financing of terrorism,
fraud and corruption.
Sales promotions, An important part of how we connect with our Internal/ Social and
marketing customers and differentiate our value proposition External Relationship Capital
communication from that of peers.
and information
availability on
Bank’s products Page 32 of
and services Supplementary
Customer privacy Vital in gaining customer trust. Internal/ Social and Disclosures Report
External Relationship Capital published in Sampath
Complaint Effective complaint resolution is a key Internal/ Social and Bank's website
management measurement of customer satisfaction. External Relationship Capital
Research and Provides the opportunity to identify new and Internal/ Social and
development more innovative ways to serve our customers by External Relationship Capital
catering to their diverse needs in a more holistic
manner.
Financial inclusion Use our expertise as a Bank to offer banking and Internal/ Social and
agenda financial services to individuals thereby reducing External Relationship Capital
poverty and increasing prosperity across the
nation.
Community Contributes towards uplifting the lives of socially Internal/ Social and
development and economically disadvantaged communities External Relationship Capital
across Sri Lanka.
Environmental Topics
Environment The steps we as an organisation are taking Internal/ Natural Capital Page 47 of
protection and towards the protection and conservation of the External Supplementary
conservation natural environment. Disclosures Report
Bank's website
FINANCIAL HIGHLIGHTS
Bank
Total Deposits Total Operating Net Asset Value Cost of Risk

Expenses Per Share
Rs 887 Bn Rs 20.1 Bn Rs 281.94 1.36%

2019 2019 2019 2019
Rs 718 Bn Rs 20.4 Bn Rs 275.27 1.74%
+23.5% -1.3% +2.4% -38bps

Total Assets & Gross Income Total Advances & Total Deposits Composition of Total Operating Income 2020
Rs Bn Rs Bn Rs Bn % %
118.9
1,200 115.3 102.3 120 1,000 120 8.5
92.6 100.2
1,000 100 96.0 100
800 90.7 85.6
800 80 80 73.2
600 18.3
600 60 60
400
400 40 40
200 20 200 20
1,110
795
914
962
572
630
670
698
720
718
759
887
0 0 0 0
2017 2018 2019 2020 2017 2018 2019 2020
Total Assets Total Advances - Gross Net Interest Income

Gross Income (RHS) Total Deposits Net Fee & Commission Income
Loan to Deposit Ratio (RHS) Trading, Investment & Other Operating Income
Composition of Total Expenses 2020 Operating Expenses & Cost to Income Total Tier I Capital & Total Capital
% Rs Bn % %
8.2
40 60 20
8.3
42.3 43.5
30 45 15
52.6 35.9 36.9
20 30 10
30.9
10 15 5
10.26
14.41
12.08
15.73
14.22
18.12
13.44
16.41
16.9
19.3
20.4
20.1
0 0 0
2017 2018 2019 2020 2017 2018 2019 2020
Operating Expenses Taxes on Financial Services Operating Expenses Total Tier I Capital Ratio
Impairment Charge Income Tax Expense Cost to Income (RHS) Total Capital Ratio
GRI - 102-7
Bank Group
2020 2019 Change % 2020 2019 Change %
Profitability (Rs Mn)
Gross income 102,339 118,855 (13.9) 109,208 125,921 (13.3)
Total operating income 46,213 55,177 (16.2) 50,066 59,141 (15.3)
Operating expenses & impairment charge 31,878 32,939 (3.2) 34,783 35,651 (2.4)
Operating profit before taxes on financial services 14,335 22,238 (35.5) 15,284 23,490 (34.9)
Taxes on financial services 3,163 6,740 (53.1) 3,394 7,152 (52.5)
Profit before income tax 11,172 15,498 (27.9) 11,890 16,338 (27.2)
Income tax expense 3,147 4,347 (27.6) 3,447 4,670 (26.2)
Profit for the year 8,025 11,151 (28.0) 8,443 11,668 (27.6)
Assets & Liabilities (Rs Mn)
Due to banks & due to depositors 886,873 718,301 23.5 903,647 731,240 23.6
Gross loans & advances 758,942 719,624 5.5 794,080 751,078 5.7
Total equity 107,549 105,006 2.4 114,415 111,457 2.7
Total liabilities 1,002,722 857,345 17.0 1,035,271 887,866 16.6
Total assets 1,110,271 962,350 15.4 1,149,685 999,323 15.0
Investor Information
Net asset value per share (Rs) 281.94 275.27 2.4 299.94 292.19 2.7
Market value per share (Rs) 135.60 162.40 (16.5)
Earnings per share - Basic/Diluted (Rs) 21.04 32.84 (35.9) 22.13 34.36 (35.6)
Total dividend per share (Rs) 8.25* 11.75 (29.8)
Cash dividend per share (Rs) 8.25* 11.75 (29.8)
Dividend cover (Times) 2.55 2.49 2.4
Dividend payout ratio (%) 39.21 40.19 (2.4)
Gross dividend (Rs Mn) 3,147 4,482 (29.8)
Market capitalisation (Rs Mn) 51,726 61,949 (16.5)
Other Ratios
Dividend yield (%) 6.08 7.24 (16.0)
Earnings yield (%) 15.51 20.22 (23.3) 16.32 21.16 (22.9)
Price earning ratio (Times) 6.45 4.95 30.3 6.13 4.73 29.6
Price to book value (Times) 0.48 0.59 (18.6) 0.45 0.56 (19.6)
Total impairment on loans as a %
of gross loans and advances 5.10 4.20 21.4 5.24 4.26 23.0
Cost of risk (%) 1.36 1.74 (21.8) 1.48 1.82 (18.7)
Non-performing loan ratio (%) 6.30 6.37 (1.1)
Liquid assets ratio
- Domestic Banking Unit (%) 34.98 21.51 62.6
- Off-Shore Banking Unit (%) 37.60 26.88 39.9
Liquidity coverage ratio
- Rupee (%) 424.90 177.29 139.7
- All currency (%) 293.37 149.17 96.7
Net stable funding ratio (%) 144.00 126.80 13.6
Fitch Rating AA- (lka) A+ (lka)
(Stable) (Stable)
Key Performance Indicators - Bank

2020 2019 2018 2017 2016
Return on average assets (before tax) (%) 1.09 1.66 2.13 2.29 2.14
Return on average assets (after tax) (%) 0.78 1.20 1.41 1.67 1.55
Return on average equity (after tax) (%) 7.58 11.78 16.02 23.35 23.47
Growth in profit (%) (28.03) (8.17) 0.32 32.65 48.76
Growth in total assets (%) 15.37 5.26 14.98 20.74 25.36
Cost to income ratio (excluding taxes on financial services) (%) 43.48 36.91 35.92 42.32 47.83
Capital adequacy ratios Basel III Basel III Basel III Basel III Basel II
- Common equity Tier I (%) 13.44 14.22 12.08 10.26 n/a
- Total Tier I (%) 13.44 14.22 12.08 10.26 8.31
- Total capital (Tier I+Tier II) (%) 16.41 18.12 15.73 14.41 12.87
Leverage ratio 6.94 8.12 n/a n/a n/a
n/a - not applicable
* Based on proposed dividend which is to be approved at the Annual General Meeting and the number of shares in issue
as at 15th February 2021.
NON-FINANCIAL HIGHLIGHTS
Value Creation through Triple Bottom-line Approach

481
Internship opportunities provided
1,640
Beneficiaries from “Wewata
Jeewayak” programme
People
20,316
Persons benefited from "Hope
For a Life" Programme
672
Persons trained under
"Sampath Saviya" programme
Over 9,000
Trees planted through Environmental
CSR programmes
885
Trees saved through paper recycling
427
Trees saved through transactions
done via Cash Deposit Machines Planet
and Slip-less Banking
Rs 0.76 Mn
Contribution to the Wildlife & Nature
Protection Society
Rs 1,358 Mn
Financed to renewable energy
projects
Rs 7,408 Mn
Value distributed to providers of
capital
Rs 50,544 Mn
Value distributed to depositors
and lenders
Profit
Rs 15 Mn
Value distributed to the
community
Rs 6,909 Mn
Value distributed to the Government
GRI - 102-7
Key Indicator Measurement 2020 2019

Manufactured Capital
Investment in building, plant and equipment Rs Mn 478 864
ATMs Number 445 423
Cash Deposit Machines Number 465 429
Intellectual Capital Key Indicator Measurement 2020 2019
Investment in IT software development Rs Mn 199 248

Brand value Rs Mn 28,645 25,847

Human Capital
Total employees Number 4,048 4,134
Total training hours Hours 172,900 138,849
Average training hours per employee Hours 42.7 33.6
Internal staff promotions Number 154 336
Staff retention ratio % 99 98
Return to work after maternity leave % 100 99
Industrial disputes Number Nil Nil
Percentage of employees receiving performance appraisals % 100 100
Female representation in corporate management % 21 16
Gender diversity ratio (Male : Female) Ratio 66:34 65:35
Revenue per employee Rs Mn 25.3 28.8

Social & Relationship
Capital Persons trained under "Sampath Saviya" programme Number 672 1,134
Interest on customer deposits Rs Bn 47.4 52.9
Intern and industrial placements intake Number 481 1,351
Total taxes paid Rs Bn 10.5 19.0

Natural Capital
Carbon footprint of the Bank tCO2e 9,138 11,057
Electricity saving through solar power generation kWh 251,908 181,936
Electricity consumption in Head Office kWh 3,170,946 3,269,475
Loans disbursed under green lending schemes Rs Mn 555 732
01
INTRODUCTORY INFORMATION
Our Vision and Values 16 | About the Bank 17 | Product Portfolio 18 |

Board of Directors 20 | Corporate Management 26
A
Million
People
A million endeavours through the years, Sampath Bank has greatly impacted the
development of the nation's people. Today, as we celebrate and support millions of
endeavours, we are making Sri Lanka's prosperous future a reality.
OUR VISION AND VALUES
Our Vision GRI - 102-16
The Growing Force in Sri Lankan

Financial Services
Create a learning culture

that promotes individual and
organisational development as
well as promoting innovation
and value for customers.
Uncompromising
ethical and Treat all internal and
professional external customers
standards of the way we would like
behaviour. to be treated.
Our
Values
Monitor and
Encourage and
demonstrate an
promote teamwork
impressive commitment
in all aspects of
to results.
behaviour.
Open to feedback
and demonstrate an
eagerness for personal
development.
ABOUT THE BANK
GRI - 102-1,2
Incorporated in 1986 as a licensed
commercial bank and listed on the 2011 - 2020: Blazing Trails
Colombo Stock Exchange a year later, 2020 - Sampath Bank sets a spectacular industry record by exceeding 1 Trillion
Sampath Bank has built a reputation Rupees worth of Asset base in just 33 years.
as one of the most trusted and stable
Sampath Bank PLC is rated among the top 1000 World Banks by the UK’s
financial institutions not only in Sri Lanka,
"The Banker" magazine in its 50th anniversary edition.
but also across the wider South Asian
region. Today, Sampath Bank is among 2019 - Recognition for ICT excellence at the National ICT Awards and the LankaPay
the largest private banks in the country, Technovation Awards.
backed by an asset base in excess of 2018 - Launch of "Slip-less Banking" for the first time in Sri Lanka.
Rs 1.1 Tn and a solid National Long Term
2017 - Launch of the drive-thru ATM.
Rating of ‘AA- (lka) with Stable outlook’
assigned by Fitch Ratings. 2016 - First bank in Sri Lanka to launch Visa PayWave enabled cards.
2015 - Reclaimed the prestigious title of “Sri Lanka’s Bank of the Year” for 2015 and
Our legacy is built on the explicit won the globally recognised “The Banker Award” conferred by the UK’s "The
commitment to bring high quality banking Banker" magazine owned by the prestigious “Financial Times Group”.
solutions within reach of every Sri Lankan. 2014 - Selected as the “Best Bank in Sri Lanka - 2014” by the prestigious, global
Over the past three decades, we have Business Magazine “The Euromoney”, for the second consecutive year.
been working to make banking a simple
2013 - Pioneered the launch of the “Cardless Cash ATM” in Sri Lanka.
and effective process for our customers by
providing them with ever more dynamic 2012 - Awarded the "Best Banking Group in Sri Lanka 2012", by the prestigious
banking solutions that are also more World Finance Magazine.
affordable. 2011 - Introduced the Super Branch concept offering 365-day banking.
What we offer 2001 - 2010: Striding Ahead

2009 - Became the third largest private sector commercial bank in
Sri Lanka in terms of total assets.
Consumer Banking 2004 - Awarded A+ (sri) National Rating by Fitch Rating (Lanka)
Limited.
Banking and other financial
services to individual 2003 - Became the first Bank in Sri Lanka to introduce "one day
customers and small-to clearing" for all cheques drawn on any Sampath Bank branch.
medium-sized enterprises.
2020 1991 - 2000: Making Waves

2000 - Launched the "Sampathnet" internet
Corporate Banking 2011 banking facility.
Advanced Banking solutions 1999 - Sampath Bank was listed under the 300
and corporate advisory Best Small Companies in the world by the
services to large corporates,
financial institutions and
2010 Forbes Global Magazine.
1997 - The DEBIT CARD was introduced in
multinational companies.
2001 association with CIRRUS and MAESTRO,
the first in South Asia.
Treasury Services 2000 1986 - 1990: The Early Years

Innovative products and 1991 1989 - Uni-banking system was introduced
services in foreign exchange,
money and fixed income
1990 to Sri Lanka.
markets to clients. 1986 1988 - The first bank in Sri Lanka to operate
a multi-point network of ATMs.
PRODUCT PORTFOLIO
Consumer Banking GRI - 102-2
Current Accounts  Sampath General Current Account

 Sampath Supreme Current Account  Sampath Double S
 Sampath Payment Guaranteed  Sampath Hit Saver
Cheques
 Sampath Pubudu & Sapiri
Savings  Regular Savings  X-SET

 Children's Savings
 Teenage Savings  Ladies 1st
 Ladies Savings
 Senior Citizens' Savings  Sampath Sanhinda Saver
 Money Market Accounts
 Sampath Dream Planner
 Regular Deposits  Fixed Deposits

Term Deposit Accounts
 Flexible Deposits  Certificate of Deposits
 Senior Citizens' Deposits
 Sampath Kalin Cash
 Easy FD
 Personal Foreign Currency Accounts
Foreign Currency Accounts (PFCA)
 Sampath Sanhinda FD
 Business Foreign Currency Accounts
(BFCA)
 Inward Investment Accounts (IIA)
 Outward Investment Accounts (OIA)
 Diplomatic Foreign Currency
Accounts (DFA) and Diplomatic
Rupee Accounts (DRA)
 Resident Guest Scheme – Special
Accounts
 Senior Foreign Nationals – Special
Accounts
 Sevana Housing Loan
 Sampath FC Prime Account
 Sevana Dayada Housing Loan
 Foreign Currency Housing Loan
 Housing Loans
Loans
 Business Loans  Factoring Facility
 Personal Loans  Sampath BIZCASH
 Sampath Saviliya
 Sampath Soorya Loan Facility
Leasing  Sampath Leasing
 Sampath Samachara Loan
 Special Loans for Government
Accounts for Professionals  Sampath Professional Account Medical Officers
 ODFD
 Sampath Soorya Loan Facility
 Sampath Randiriya
Pawning
 Gold Loan
Agent Banking  MYBANK
Gift Vouchers  Sampath Thilina
 Sampath Visa Credit Cards

 Sampath Credit Cards  Sampath Mastercard Credit Cards
SampathCards  Sampath Bank American Express®
 Sampath Debit Cards
Credit Cards
 Sampath Web Card
Foreign Remittances  e-Remittance

 Sampath Vishwa Retail
 PayEasy
Relationship Banking  Platinum Plus  Ustocktrade
 Chatbot
 Sampath WePay
 Sampath Bank App
 Sampath Slipless Banking
Digital/Electronic Banking  Internet Banking
 Sampath igift
 Mobile Banking
 Sampath Missed Call Banking
 ATM Banking
 Telebanking
 SMS Alertz
 SMS Banking
 Mobile Cash
Safety Lockers  Sampath Safe Deposit Lockers  Banking Robot

 Sampath Cardless Cash
 Off-site ATMs
Clubs & Societies Accounts  Sampath Samaja  Interbank ATM Network
 Cash Deposit ATMs
 Cheque Deposit ATMs
Entrepreneur Development  Sampath Saviya  Cash Deposit Kiosks
Corporate Banking
 Corporate Credit
Financing  Corporate Finance
 Foreign Currency Banking Unit (FCBU)
 Trade Services
International Trade  Correspondent Banks
 Sampath Vishwa Corporate

 Payment Gateway Services
 E-commerce enabled through Evolve
 Open Banking
Digital Banking
 QR Merchant
 Biller Sharing
 Listing as a Biller in Sampath Vishwa,
WePay and Payeasy.lk
Cash Management  Corporate Cash Management Solution
Corporate Investments  Money Market Account
Treasury
Spot Contracts Treasury Bills
Forward Exchange Contracts Treasury Bonds
Repo & Reverse Repo
New Offering
Sampath Soorya (Solar Loan Facility)

The "Sampath Soorya" is a special low interest rate
loan scheme which aims to promote solar energy
generation for domestic and commercial purposes.
By adding value to customers, the economy and
the environment, the "Sampath Soorya" loan
scheme is designed to support the Sri Lankan
government’s efforts to increase the use of solar
power across the country as part of its long term
sustainable energy initiative.
BOARD OF DIRECTORS
Mr Harsha Amarasekera, PC Mr Nanda Fernando Mr Rushanka Silva Mr Deshal de Mel

Chairman Managing Director Deputy Chairman Senior Independent Director
Ms Annika Senanayake Mr Ranil Pathirana Mr Dilip de S Wijeyeratne Ms Aroshi Nanayakkara

Director Director Director Director
Dr Sanjiva Weerawarana Mr Vajira Kulatilaka Mrs Keshini Jayawardena Mr Ajantha de Vas Gunasekara
Director Director Director Executive Director/
Group Chief Financial Officer
Mr Lasantha Senaratne Mr Muditha Walpola

Company Secretary Assistant Company Secretary
BOARD OF DIRECTORS
GRI - 102-22,23
Mr Harsha Amarasekera, President’s Counsel Former Appointments: Former Appointments:

Chairman Chairman of Asia Capital PLC, Asian Chairman of Bankers’ Technical Advisory
Non-Independent, Non-Executive Director Alliance PLC, Chemanex PLC, Bensons Committee, which functions under
(Pvt) Ltd and Director of Keells Food the purview of the Sri Lanka Bankers’
Qualifications, Skills & Experience: Production PLC, Delmege (Pvt) Ltd and Association, a past District Commissioner
Mr Amarasekera, President's Counsel is an Amana Bank PLC. of the Sri Lanka Scout Association,
eminent legal practitioner in Sri Lanka with Director of SC Securities (Pvt) Ltd and
a wide practice in both the Commercial Mr Nanda Fernando Lanka Clear (Pvt) Ltd.
Courts as well as the Appellate Courts. Managing Director
His areas of expertise include Commercial Executive Director Mr Rushanka Silva
Law, Business Law, Securities Law, Deputy Chairman
Banking Law and Intellectual Property Qualifications, Skills & Experience: Non-Independent, Non-Executive Director
Law. Mr Amarasekera also has significant Possess 38 years of experience in Banking
experience in arbitration and cross- and Finance, driving multiple aspects of Qualifications, Skills & Experience:
national disputes. Banking business, Transactional Banking Dedicated professional with a solid
in Retail and Corporate Banking, among background in Management Accounting,
Mr Amarasekera, was admitted to the Bar many other key growth areas. He is an Marketing and Sales. An Associate
in November 1987 and took oaths as a Associate member and a Senior Fellow Member of the Chartered Institute of
President’s Counsel in November 2012. member of the Institute of Bankers of Sri Management Accountants UK (ACMA).
Lanka and holds a Masters of Business Strategic and creative thinker who has
Appointed to the Board: Administration specialised in Marketing proven his ability to develop strong
18th August 2020 as a Non-Independent, from Sikkim Manipal University, India. He client relationships quickly and promote
Non-Executive Director and appointed as is also a qualified Four Bead Leader Trainer teamwork efficiently and a leader with a
Chairman on 30th August 2020. and functions as the Group Advisor to the rich mixture of experience and successes
Scouts Group Committee of S. Thomas’ in the business world, having completed
Membership in Board Sub Committees: College, Mount Lavinia. He serves as The his secondary education at Trinity College,
Chairman of Board Strategic Planning National Training Commissioner of the Sri Kandy. Holds a Masters of Business
Committee. Member of Board Nomination Lanka Scout Association currently. Administration from University of Western
Committee, Board Marketing Committee Sydney, Australia. An alumnus of Harvard
and Board Capital Planning Committee. Appointed to the Board: Business School (USA).
13th September 2016 as an Executive
Current Appointments: Director. Appointed to the Board:
Chairman of Sampath Bank PLC, CIC 1st September 2017 as a Non-
Holdings PLC, Swisstek (Ceylon) PLC, Membership in Board Sub Committees: Independent, Non-Executive Director and
CIC Agri Business (Private) Limited and Member of Board Integrated Risk appointed as Deputy Chairman on 24th
Swisstek Aluminum Limited. Deputy Management Committee, Board Credit September 2020.
Chairman of Vallibel Power Erathna Committee, Board Shareholder Relations
PLC and a Director of Vallibel One Committee, Board Strategic Planning Membership in Board Sub Committees:
PLC, Expolanka Holdings PLC, Chevron Committee, Board IT Committee, Board Chairman of Board Shareholder Relations
Lubricants Lanka PLC, Royal Ceramics Treasury Committee, Board Marketing Committee and Board Capital Planning
Lanka PLC, Ambeon Capital PLC, Amaya Committee and Board Capital Planning Committee. Member of Board Credit
Leisure PLC, Galle Face Management Committee. Committee, Board Nomination Committee,
Company (Pvt) Ltd, Link Natural Products Board Treasury Committee, Board Strategic
(Pvt) Ltd, The Hill Club Company Limited, Current Appointments: Planning Committee, Board Marketing
Millennium Airlines (Pvt) Ltd, Millennium Managing Director of Sampath Bank Committee and Board IT Committee.
Investments Lanka (Pvt) Ltd, Ceylon Hotels PLC, Director of Lanka Financial Services
Holdings (Pvt) Ltd, Handhuvaru Ocean Bureau Ltd, Lanka Bangla Finance Limited Current Appointments:
Holiday Private Limited and Silver Aisle and a Governing Board Director of the Deputy Chairman of Sampath Bank PLC
(Pvt) Ltd. Institute of Bankers of Sri Lanka. and Siyapatha Finance PLC. Chairman
of Braybrooke Residential Properties
(Pvt) Ltd, Braybrooke Residential Towers
(Pvt) Ltd and Indra Hotels and Resorts Former Appointments: Mr Ranil Pathirana
Kandy (Pvt) Ltd. Managing Director of Commission Member of the Securities Non-Independent, Non-Executive Director
Indra Traders (Pvt) Ltd, a Director of Indra & Exchange Commission of Sri Lanka, (*Retired w.e.f. 01.01.2021)
Motor Spares (Pvt) Ltd, Indra Property Director of Sri Lankan Airlines, Research
Development (Pvt) Ltd and Sampath Economist of Institute of Policy Studies of Qualifications, Skills & Experience:
Centre Limited. Sri Lanka, Chairman and Board Member of Extensive experience in finance and
SC Securities (Pvt) Ltd, Board Member of management in financial, apparel and
Mr Deshal de Mel Centre for Poverty Analysis (CEPA), Senior energy sectors. Fellow member of the
Senior Independent Director Economist of Hayleys Group and Economic Chartered Institute of Management
Non-Executive Director Advisor - Ministry of Finance. Accountants, UK (FCMA) and holds a
Bachelor of Commerce degree from the
Qualifications, Skills & Experience: Ms Annika Senanayake University of Sri Jayewardenepura.
An eminent Economist, earned a degree Independent, Non-Executive Director
in Philosophy, Political Science and (*Retired w.e.f. 01.01.2021) Appointed to the Board:
Economics from the University of Oxford 1st January 2012 as a Non-Executive
and Masters in International Political Qualifications, Skills & Experience: Director and became an Independent,
Economy from the London School of Bachelor of Arts in Management Studies Non-Executive Director on 31st January
Economics. His publications can be found from the University of Nottingham. 2015. Became a Non-Independent, Non-
in a number of books and journals and also Heads Corporate Planning for the IWS Executive Director on 18th August 2020.
recognised by the World Economic Forum Holdings Group, in diversified business
as a ‘Young Global Leader’ in 2019. interests in telecommunications, logistics, Membership in Board Sub Committees:
media and broadcast, automobiles, Member of Board Audit Committee, Board
Appointed to the Board: aviation, warehousing, food and beverage Strategic Planning Committee and Board
Previously served on the Board of processing and packaging. Ms Senanayake Capital Planning Committee.
Directors of Sampath Bank PLC as a is CNN’s official business representative
Non-Executive Director (2012 - 2017) for Sri Lanka. Current Appointments:
and re-joined on 26th September 2019 as
Non-Independent, Non-Executive Director
an Independent, Non-Executive Director. Appointed to the Board:
of Sampath Bank PLC*, Managing Director
Became Senior Independent Director (SID) 1st January 2012 as an Independent, Non- of Hirdaramani International Exports
on 24th September 2020. Executive Director. (Pvt) Ltd. Director of Hirdaramani Apparel
Holdings (Pvt) Ltd, Hirdaramani Investment
Membership in Board Sub Committees: Membership in Board Sub Committees: Holdings (Pvt) Ltd, Hirdaramani Leisure
Chairman of Board Integrated Risk Chairperson of the Board Nomination Holdings (Pvt) Ltd, Rosewood (Pvt) Ltd,
Management Committee and appointed as Committee. Member of Board Human Hirdaramani Industries (Pvt) Ltd, Ceylon
Chairman of Board Nomination Committee Resources & Remuneration Committee, Knit Trend (Pvt) Ltd, Hirdaramani (Pvt) Ltd,
w.e.f. 01.01.2021. Member of Board Board Strategic Planning Committee, HI Fashion Holdings (Pvt) Ltd and Union
Audit Committee, Board Shareholder Board IT Committee and Board Marketing Residencies (Pvt) Ltd. Non-Executive
Relations Committee, Board Strategic Committee. Director of Windforce (Pvt) Ltd, Renewgen
Planning Committee, Board Marketing (Pvt) Ltd, Star Packaging (Pvt) Ltd, Beira
Committee, Board Human Resources & Current Appointments: Brush (Pvt) Ltd, Alumex (Pvt) Ltd, BPPL
Remuneration Committee, Board Related Holdings PLC, ODEL PLC, Ambeon Capital
Independent, Non-Executive Director
Party Transaction Review Committee and PLC and Ceylon Hotels Corporation PLC.
of Sampath Bank PLC*, Director of IWS
Board Treasury Committee.
Holdings (Pvt) Limited and IWS Leisure
(Pvt) Limited, Director of RAD Productions Former Appointments:
Current Appointments:
(Private) Limited, Scan Furniture (Private) Chief Executive Officer of Vanik
Senior Independent Director of Sampath Limited, Trustee - Youth Business Sri Bangladesh Securities, Assistant Vice
Bank PLC, Non-Executive Director of Lanka, Ceylon Chamber of Commerce and President of Vanik Incorporation, Director
Capital Alliance Investments (Pvt) Ltd and Ray Wijewardena Charitable Trust. of Hayleys MGT Knitting PLC, Hayleys PLC
Research Director at Verite Research (Pvt) and Nirmalapura Windpower (Pvt) Ltd.
Ltd.
BOARD OF DIRECTORS
Mr Dilip de S Wijeyeratne Ms Aroshi Nanayakkara & Board Director of Sri Lanka Institute of
Independent, Non-Executive Director Independent, Non-Executive Director Directors, Chair of the Women Directors
Forum of the Sri Lanka Institute of
Qualifications, Skills & Experience: Qualifications, Skills & Experience: Directors, President Elect 2021/2022
An Associate Member of the Institute of Holds a BSc. in Management from the of the Rotary Club of Colombo, Non-
Chartered Accountants of Sri Lanka (ACA), Massachusetts Institute of Technology Executive Director of Hela Apparel
Fellow Member of the Chartered Institute (MIT) USA and a MSc. in Management Holdings (Pvt) Ltd, Hela Clothing (Pvt) Ltd,
of Management Accountants, UK (FCMA) from the London School of Economics Foundation Garments (Pvt) Ltd and FDN
and a Graduate Member of the Australian (LSE) UK. Holds the ACMA and CGMA Sourcing (Pvt) Ltd.
Institute of Company Directors (GAICD). A qualifications from the Chartered Institute
senior finance/banking professional and a of Management Accountants (CIMA) UK Dr Sanjiva Weerawarana
principal consultant who provides advisory and featured as a ‘Game Changer’ of Independent, Non-Executive Director
services to companies globally to expand CIMA.
operations within Middle East, Sri Lanka Qualifications, Skills & Experience:
and Australia. A dynamic leader in the fields of Strategic Holds a Ph.D. in Computer Science and
Planning, HR and Risk Management having currently a Director of WSO2 Lanka (Pvt)
Appointed to the Board: gathered extensive experience through her Ltd and Lanka Software Foundation.
13th November 2018 as a Non- 20 plus years in prominent companies.
Independent, Non-Executive Director and Founder of WSO2 and served as CEO and
became an Independent Director with Commenced her career as a Corporate Chairman respectively.
effect from 8th August 2019. Banker, first at ABN AMRO Bank NV
and later at Deutsche Bank AG Sri Worked in IBM Research and focused on
Membership of Board Sub-Committees: Lanka. Moved from banking into the HR innovations in middleware and emerging
sphere by joining Eagle Insurance and industry standards. At IBM, he was one of
Chairman of Board Audit Committee
the Delmege Group of Companies. She the founders of the Web services platform
and Board Treasury Committee. Member
was Group Director Human Resource and he co-authored many Web services
of Board Integrated Risk Management
Development at Delmege while also specifications, including WSDL, BPEL4WS,
Committee, Board Human Resources &
serving on the Board of Delmege Interior WS-Addressing, WS-RF and WS-Eventing.
Remuneration Committee, Board Related
Décor (Pvt) Ltd. Later joined the Brandix
Party Transactions Review Committee,
Group as Chief Risk Officer overlooking Committed to open source software
Board Strategic Planning Committee and
the functions of internal audit and development for many years. An elected
Board Capital Planning Committee.
compliance and finally, as CEO of Brandix member of the Apache Software
Hangers (Pvt) Ltd. Foundation, the original creator of Apache
SOAP and has contributed to Apache
Independent, Non-Executive Director Appointed to the Board: Axis, Apache Axis2 and most Apache Web
of Sampath Bank PLC, Non-Executive services projects.
30th May 2019 as a Non-Independent,
Director of Singer (Sri Lanka) PLC, Regnis
Non-Executive Director and became an
(Lanka) PLC, Singer Industries (Ceylon) In 2003, founded the Lanka Software
Independent Director with effect from
PLC, Hayleys Fibre PLC and CEO/MD of Foundation (LSF), a non-profit organisation
27th June 2019.
Third Wave International W.L.L. Bahrain. formed with the objective of promoting
Membership of Board Sub-Committees: open source development.
Former Appointments:
Chairperson of Board Marketing
Head of Finance and Global Market Appointed to the Board:
Committee and Board Human Resources
Operations of HSBC Group Bahrain offices 1st June 2019 as an Independent, Non-
& Remuneration Committee. Member of
and Board member of the Bahrain Asian Executive Director.
Board Credit Committee, Board Strategic
Traders' Committee of Bahrain Chamber of
Planning Committee, Board IT Committee,
Commerce. Membership of Board Sub-Committees:
Board Treasury Committee and Board
Shareholder Relations Committee. Chairman of Board IT Committee.
Member of Board Audit Committee, Board
Current Appointments: Integrated Risk Management Committee,
Board Related Party Transactions Review
Independent, Non-Executive Director of
Committee and Board Strategic Planning
Sampath Bank PLC, CEO of the Global
Committee.
Consulting Company, Vice Chairperson
Current Appointments: also as a Council Member of the University Mr Ajantha de Vas Gunasekara
Independent, Non-Executive Director of Moratuwa. Director of Resus Energy Executive Director
of Sampath Bank PLC, CEO/Director of PLC, Director/CEO of the NDB Capital Group Chief Financial Officer
WSO2 and Director of Lanka Software Holdings Ltd and Executive Director of
Foundation. NDB Zephyr Partners (Pvt) Ltd, NDB Qualifications, Skills & Experience:
Zephyr Partners (Pvt) Ltd - Mauritius, NDB Mr Gunasekara is a Fellow Member of the
Mr Vajira Kulatilaka Wealth Management Ltd, NDB Securities Institute of Chartered Accountants of
Independent, Non-Executive Director (Pvt) Ltd, NDB Capital Ltd - Bangladesh Sri Lanka and a Fellow Member of
and NDB Investment Bank. Certified Management Accountants of
Qualifications, Skills & Experience: Sri Lanka. He counts over 27 years of
Mrs Keshini Jayawardena post-qualifying experience which includes
Mr Vajira Kulatilaka holds a BSc. in Civil
Independent, Non-Executive Director 20 years at senior corporate management
Engineering with First Class Honours from
the University of Moratuwa and a MSc. in level in Insurance & Banking sectors. He is
Qualifications, Skills & Experience: working at Sampath Bank PLC since July
Industrial Engineering and Management
from the Asian Institute of Technology, Mrs Keshini Jayawardena holds a BSc. 2013 and currently holds the position of
Thailand. He is also a Chartered Financial (Econ) in International Relations from Group Chief Financial Officer.
Analyst (CFA) and has obtained Fellow the London School of Economics and
Membership of the Chartered Institute of Political Science and is a Solicitor of the Appointed to the Board:
Management Accountants, UK. Supreme Court of England and Wales. 29th October 2020 as an Executive
She counts over 29 years of experience Director.
He counts over 36 years of experience in in Banking with local and foreign bank
Banking and Finance and Capital Market exposure. Mrs Jayawardena has a strong Membership of Board Sub-Committees:
operations in Sri Lanka. Mr Kulatilaka understanding of the drivers and enablers
Member of Board Strategic Planning
served as the Director/CEO of the NDB for an operational excellence culture in
Committee.
Investment Banking Cluster, where he was organisations. She presently works as a
adjudged the Best Investment Banking facilitator in the learning and development
CEO Sri Lanka in 2014 and 2015 by field specialising in leadership,
management skills, diversity and inclusion. Executive Director and Group Chief
Global Banking and Finance Review in
Financial Officer of Sampath Bank PLC.
recognition of his contribution to the
investment banking field in Sri Lanka. Appointed to the Board:
1st October 2020 as an Independent,
Appointed to the Board: Non-Executive Director. Director of Sri Lanka Accounting and
Auditing Standard Monitoring Board
25th June 2020 as an Independent, Non-
Membership of Board Sub-Committees: (SLAASMB), Chief Financial Officer of
Executive Director.
Hatton National Bank PLC, General
Member of Board Strategic Planning
Manager Finance & Corporate Services
Membership of Board Sub-Committees: Committee, Board IT Committee, Board
of HNB Assurance PLC, Finance Manager
Chairman of Board Related Party Credit Committee and Board Shareholder
of Asian Alliance Insurance PLC and
Transactions Review Committee and Relations Committee. Appointed as a
Accountant of James Finlay & Company
Board Credit Committee. Member of Member of Board Nomination Committee
(Colombo) Ltd.
Board Human Resources & Remuneration w.e.f. 27.01.2021.
Committee, Board Strategic Planning
Committee, Board IT Committee, Board Current Appointments:
Treasury Committee and Board Capital Independent, Non-Executive Director of
Planning Committee. Sampath Bank PLC. Associate Consultant
at Bridge Partnership, The Centre for
Current Appointments: Inclusive Leadership and Kinetik Solutions
Independent, Non-Executive Director of (UK based consultancies).
Sampath Bank PLC and Printcare PLC.
Former Appointments: DGM Leasing, DGM Retail and SME
Chairman of the Colombo Stock Exchange, Banking, Chief Operations Officer
Central Depository System (Pvt) Ltd, South of Nations Trust Bank and Head of
Asian Federation of Exchanges (SAFE) and Operations of HSBC Sri Lanka.
CORPORATE MANAGEMENT
Mr Nanda Fernando Mr Ajantha de Vas Gunasekara Mr Tharaka Ranwala Mrs Shashi Kandambi Jassim
Managing Director Executive Director/ Senior Deputy General Manager - Senior Deputy General Manager -
Group Chief Financial Officer Operations/Group Chief Corporate Credit/Corporate
Marketing Officer Digitalisation
Mr Ajith Salgado Mr Manoj Akmeemana Mrs Ayodhya Iddawela Perera Mr Thusitha Nakandala
Group Chief Information Officer Senior Deputy General Manager - Senior Deputy General Manager - Group Chief Human Resource
FCBU/Corporate Finance International Trade & Officer
Credit Control
Mr Sanath Abhayaratne Mr Amal Kirihene Mr Sanjaya Gunawardena Mrs Charitha Jayawickrama

Deputy General Manager - Deputy General Manager - Group Chief Strategy Officer Group Chief Internal Auditor
Deposit Mobilisation Credit Administration & Legal
Mrs Achala Wickremaratne Mr Deepal De Silva Mr Rajendra Ranasinghe Mr Prasantha De Silva

Group Chief Risk Officer Deputy General Manager - Assistant General Manager - Assistant General Manager -
Branch Banking Inward Remittance/KPO/BNO Treasury
Mr Sisira Dabare Ms Dulsiri Jayasinghe Mr Ananda Wijitha Mr Pasan Manukith

Group Chief Compliance Officer Assistant General Manager - Assistant General Manager - Assistant General Manager -
FCBU/Corporate Finance Chief Information Security Officer Information Technology
Mr Lasantha Senaratne Mr Senaka Hewavitharana Mr Shiran Kossinna Mr Kusal De Silva

Company Secretary Chief Legal Officer Assistant General Manager - Assistant General Manager -
Recoveries Operations & Card Centre
Scan this QR code to view our entire leadership team

including Chief Managers and Senior Managers
www.sampath.lk
02
MANAGING OUR BUSINESS
Chairman’s Message 30 | Managing Director’s Review 36 | Our Value Creating Business Model 42 |
Strategic Sustainability Framework 44 | Connecting with Our Stakeholders 47
A
Million
Ideas
A million ideas Sampath Bank is determined to grow and expand upon its capabilities
year on year. Today, we are realigning our business plan with a million ideas designed to
withstand unprecedented challenges.
CHAIRMAN’S MESSAGE
GRI - 102-14,23
"The year 2020 compelled us to re-examine

our businesses, as we focused on establishing
an equilibrium vis-à-vis ensuring employee
safety, while ensuring the seamless delivery
of services required by our customers."
While we were Dear Valued Stakeholders

As we embark on the financial year gamut of challenges which all institutions
fortunate to have 2021, we find ourselves at a historic including your Bank had to face. Thus,
emerged relatively juncture which is likely to define the way 2020 was, in essence, a litmus test, not
unscathed from the banking and business is conducted, which

undoubtedly would have an impact not
just for your Bank but for the entire
corporate eco-system, as we were forced
unexpected turmoil only on Sampath Bank but will also have to re-evaluate our capabilities in order to
of 2020 due to a significant impact the world over. While

we were fortunate to have emerged
meet the expectations of customers and
stakeholders. The situation compelled us
prudent financial and relatively unscathed from the unexpected to re-examine our businesses and analyse
management discipline, turmoil of 2020 due to prudent financial what we were doing, and how we were
and management discipline, we must be doing it as we focused on establishing an
we must be aware aware that we face a long road ahead in equilibrium vis-à-vis ensuring employee
that we face a long order to maintain the kind of momentum safety, while also delivering the services
we have achieved in the recent past, in the required by our customers.
road ahead in order to coming year.
maintain the kind of Banking today is not urban-centric. With
FY 2020 was a hitherto ‘unknown branches across the country, our services
momentum we have quantity’ for the banking community, as it extend to those around the country
achieved in the recent was for most industries around the world. thus making even the most remote
past, in the coming year. The country was in the midst of recovering
from the instability of the Easter Sunday
areas banking-accessible. Difficulties
experienced in many rural areas are
bombings and the resultant slowdown not appreciated or comprehended by
of the economy. The banking sector was the urban citizen. Our advanced digital
anticipating a year of growth during the platform, which has been Sampath Bank’s
financial year under review, particularly defining feature for years, was therefore,
given the political stability that emerged in large part, instrumental in making this
following the presidential and thereafter service accessible, smooth and effective
the parliamentary elections. Regrettably, during this time of turbulence.
the COVID-19 pandemic generated a
The pandemic will not Economies in Distress However, the backdrop of lockdowns
and restrictions on economic activities
Although the final position yet remains
hinder us from keeping uncertain, all analyses predict that and the pressure on Net Interest Margins
our promise to you, our COVID-19 will be the trigger to the had an inevitable negative impact on the
Bank’s financial results for 2020. Our
shareholder and it is deepest global recession in decades and
will, in the near future, cause contractions Profit Before Tax (PBT) declined by 27.9%
with a sense of pride across most emerging markets and to Rs 11.2 Bn and the Profit After Tax
(PAT) declined by 28.0% to Rs 8.0 Bn for
I report that Sampath developing economies. As estimated
the year ended 31st December 2020.
by the IMF’s World Economic Outlook,
Bank did not forego global economic growth in 2020 fell to a Similarly, the Bank’s Return on Average
any obligations to any negative 4.4% from +2.8% in 2019 and Equity (ROE) (after tax) declined from
11.78% as at 31st December 2019 to
+3.5% in 2018. Thus in many countries,
stakeholder, least of all, the immediate priority is to alleviate 7.58% as at 31st December 2020, while
our valued customers human costs and attenuate the near-term our Return on Average Assets (ROA) (before
tax) declined to 1.09% during the same
and the Sampath Team, economic losses.
period, from 1.66% as at the end of 2019.
who are the lifeblood of As reported by the Central Bank of Sri
Notwithstanding the above, the Board is
the Bank. Lanka, GDP growth of the country plunged
to a negative 1.7% in the first quarter of satisfied with the financial performance of
2020 from +2.3% in 2019. The Banking your Bank in light of the many challenges
Industry's Non-performing loan ratio grew faced. Further details on our financial status
up to 4.9% by end December 2020 from are provided in the Financial Capital chapter
Total Assets (pages 59 to 63) of this Annual Report.
4.7% as at end December 2019.
Rs Bn
1,200 Against the Odds We Keep Our Promises
Due to the prevailing situation, Sampath Regardless of the challenges encountered

1,000
Bank had to curtail many projects and difficulties faced, we at Sampath have
800
envisaged by reason of the lockdown always upheld our responsibilities to our
600 as well as to the restricted work mode, shareholders. This year, a dividend of
400 thereafter coupled with an attempt Rs 11.75 per share was paid out for the
to contain costs during this period of year 2019. This had been declared prior
200
1,110
uncertainty. The Bank also followed to the COVID-19 pandemic and by reason
962
795
914
0
prudent policies in respect of non- of that, did not attract the restrictions on
2017 2018 2019 2020
performing loans in order to safeguard dividends as was imposed by the Central
asset quality. All these measures resulted Bank. The dramatic change in the business
in our year end performance being below environment arising from the pandemic
the originally envisaged target. However, will not hinder us from keeping our
it is encouraging that our actual results promise to you, our shareholder and it is
achieved for the financial year are in with a sense of pride I report that Sampath
excess of the revised forecast as was Bank did not forego any obligations to
projected by the Management during the any stakeholder, least of all, our valued
early days of curfew and lockdowns. customers and the Sampath Team, who are
the lifeblood of the Bank.
It is noteworthy that, even under the
extraordinary conditions we operated, Based on the reactions and feedback
Sampath Bank made history as the received from our customers - corporates,
youngest bank in Sri Lanka to accumulate SMEs and individuals - we are confident
a Rs 1 Tn asset base. Our total asset base that Sampath Bank responded effectively
grew by 15.4% to exceed the trillion mark and promptly to customer needs during
(Rs 1.1 Tn) as at 31st December 2020, from this time of crisis. Despite being compelled
Rs 962 Bn as at 31st December 2019. to continue operations under extremely
We at Sampath wear Profit before Tax & Profit after Tax I was inducted to the Board on 18th
August 2020 and was appointed Chairman
our title as a corporate
Rs Bn
of your Bank on the retirement of Prof
steward with pride
20
Malik Ranasinghe on the 30th of August
2020. In September, Rushanka Silva was
and honour and have 15
appointed Deputy Chairman, on the
always deemed it 10
retirement of Deputy Chairperson Dhara
Wijeyatilake, who also retired on the 30th
our responsibility to of August 2020, while Deshal de Mel was
continue our social 5
appointed Senior Independent Director in
16.6
12.1
18.3
12.1
15.5
11.2
11.2
and environmental September. Vajira Kulatilaka and Keshini
8.0
0
2017 2018 2019 2020 Jayawardena were appointed Independent
obligations. Profit before Tax
Non-Executive Directors in June and
Profit after Tax October respectively, while Group CFO
trying circumstances, we were compelled Ajantha de Vas Gunasekara joined the
to think out of the box in order to fulfil Board as an Executive Director in October.
our customers’ needs. Being harbingers of We also continued our annual internship I am confident that this honour roll of
change is not unusual for us as is evinced programme to augment knowledge gaining expert luminaries will augment Sampath’s
by the partnership we inked with PickMe opportunities for young people and the known tenacity to march with strength,
to deliver cash to customer homes. This Hope for Life initiative in collaboration stability and prescience to the very
service was particularly availed of by with Ceylon Biscuits Limited and WSO2, pinnacle of banking in Sri Lanka.
customers who were senior citizens and where we presented a fully equipped
those most vulnerable to the pandemic. PCR laboratory to the Army Hospital in In essence, Sampath Bank’s objective is
We are ever grateful to our Team who Colombo. This state of the art laboratory to be the best at what we do, in every
worked around the clock despite curfews, valued at Rs 32 Mn, enhances the aspect of banking - be it customer
lockdowns and working from home, to country’s testing capacity by adding a services, consumer and corporate banking,
ensure the Bank’s seamless operations. testing capacity of 600 samples daily. treasury or digital transformation. We are
confident that other benefits will accrue
We at Sampath wear our title as a As in the past 26 years, our contribution to and permeate as a natural outcome of our
corporate steward with pride and the Wildlife and Nature Protection Society focused continuous improvement, as we
honour and have always deemed it our (WNPS) continued, adding momentum to strive towards this outcome of being the
responsibility to continue our social and our environmental focus. We allocate best among the best in the country.
environmental obligations. Rs 5/- from every new Sampath Bank
debit card issued, to the WNPS. Outlook and Way Forward
Signifying our corporate citizenship during Sampath Bank also continues its long As I pen this message, the true economic
2020, our “Wewata Jeewayak” tank term undertaking of lending support to effect of COVID-19 is yet ambiguous,
restoration project ensured the restoration Biodiversity Sri Lanka’s efforts to restore particularly with regard to non-performing
of the Kindagalla Tank in Bibile and the ten hectares of degraded forest land in assets, as the moratorium continues to
Nalawagama Tank in Nochchiyagama, all the Halgahawala forest reserve in Opatha remain in force. At Sampath, we continue
of which are essential for the provision located in the Galle district. to actively engage with our customers
of water to farming communities. Due in order to ensure the uninterrupted
to restrictions of physical movement Ready to Face the Future operation of their businesses, once the
and community gatherings, we used There have been significant changes to moratorium is terminated. The economic
our technological prowess to migrate the Board during the year, in compliance growth in the year 2021, and perhaps
the Sampath Saviya Entrepreneurship with the Banking Act Direction No. 11 of even in 2022, will depend on the evolution
Development Programme online, where 2007 on Corporate Governance, which of the pandemic in Sri Lanka and the rest
webinars reached out to Rajarata specifies that the service of a Director of the world. The future outlook for the
University undergraduates and SMEs, excluding Executive Directors be limited to banking industry will also be determined
offering a series of workshops on nine years or until the seventieth birthday, by the same.
operating during a crisis. whichever is earlier.
A key takeaway from among the numerous

lessons the banking industry as a whole
In essence, Sampath
learned during the pandemic is that Bank’s objective is to
banking as we know it, may not be the be the best at what we
norm for the foreseeable future. Many
of our customers’ businesses will be do, in every aspect of
6.08% under pressure once the moratorium
is lifted. Particular industries are also
more vulnerable and therefore likely to
banking - be it customer
services, consumer
Dividend Yield feel a more significant impact. However, and corporate banking,
we are encouraged by the fact that the
Government is focused on generating
treasury or digital
growth and has announced a business- transformation. We are
friendly budget. The Central Bank of
confident that other
Sri Lanka, in its roadmap for 2021 has
pledged to hold interest rates at a single benefits will accrue
and permeate as a
39.2%
digit and is hopeful of credit growth in the
range of 14%.
natural outcome of our
Dividend Payout
A large part of our strategy moving focused continuous
forward, will focus on the lessons learned
during 2020 and will be formulated with improvement, as we
particular emphasis on growth, costs strive towards this
and risks. With the vaccines slated for
distribution and Sri Lankan borders
outcome of being the
ROE & ROA
% %
opening for tourism and international best among the best in
25 5
business, growth industries are expected
to rebound, albeit with caution. We will
the country.
naturally posit an extensive scrutiny of our
20 4
operations, examining costs, evaluating digital banking transformation and stock
15 3 risks and re-focusing on astute lending. broking subsidiary, SC Securities. Digital
2.29
2.13 Our Board Integrated Risk Management transformation will continue to be a key
10 2
Committee, which had hitherto adopted a component of our strategic journey and
1.66
5 1.09 1 fairly prudent approach towards exposure our online banking platforms, Vishwa
23.35
16.02
11.78
to different risk groups, will continue to Retail and Vishwa Corporate plus the
7.58
0 0 Sampath Bank mobile app and WePay

2017 2018 2019 2020 monitor exposure levels with regard to
different industries in order to mitigate any app will gain renewed vigour. We have
ROE (after income tax) potential risks. Thus far however, we have always encouraged our tenet of ‘banking
ROA (before income tax) (RHS)
not observed any significant deviation at your fingertips’ and with digital banking
in risk profiles during the time of the transformation driving our future, we do
pandemic. believe that customer experiences will
improve across multi-dimensional genres,
Process optimisation across the full while cost optimisation through process
range of our activities is vital and has optimisation will add value to our forward
prompted us to develop strategies to journey.
harness and leverage on group synergies
within the Sampath Group, including our Despite working through some of the
leasing and finance subsidiary Siyapatha, most challenging times in history, Sampath
IT subsidiary Sampath Information has proved that our strong persona of
Technology Solutions which focuses on resilience, robustness and agility is the
formula for always being a step ahead instrumental in driving the growth as
in meeting customer aspirations. The well as the profitability of the Bank,
pandemic made it very clear that our in order for Sampath to be what it is
strategy of digitalisation and innovation today. In particular, I wish to record
was the right direction for the Bank. As we the Board’s appreciation of Prof Malik
face yet another year of uncertainly, I do Ranasinghe who led the Bank during
Rs 107.5 Bn
have immense confidence that your Bank the turbulence surrounding the Easter
will continue being a steadfast beacon of Sunday attacks in 2019, as well as dealt
strength for our country and its people. with many of the challenges posed by
Shareholders' Fund the COVID-19 pandemic and the first
Appreciations lockdown. His contribution to the Bank
As stated elsewhere in my report, your has been immeasurable. Their departure
Board now consists of several new is a loss not just felt by the Board, but the
members who were inducted during the Management too in the years to come.
current financial year. Sanjiva Senanayake
Total Capital (Tier I + Tier II) However, as also adverted elsewhere in
who served the Bank for eight years, first
Rs Bn as an Independent Director and then as the report, we have been fortunate to
a Senior Director, retired in April 2020 induct onto the Board, Directors of the
150
having reached his Seventieth birthday. calibre of Vajira Kulatilake, formerly the
120
Saumya Amarasekera PC, the first female Director/CEO of the NDB Investment
Deputy Chairperson of the Bank, retired Banking cluster and Keshini Jayawardena
90
in June 2020. Dhara Wijayatilake, who a banker of repute from HSBC Sri Lanka
60 succeeded Saumya Amarasekera as the and former COO of Nations Trust Bank.
Deputy Chairperson, also retired in August We also welcome our Group CFO,
30
2020. Chairman Prof Malik Ranasinghe Ajantha de Vas Gunasekara to the Board.
103.2
123.4
117.2
80.9
0 retired on the 30th of August 2020 and I am confident that, together with the
2017 2018 2019 2020 other members of the Board, those who
Ranil Pathirana and Annika Senanayake
retired on the 31st of December 2020. were inducted during the year 2020 will
All of these retirements, except that of augment the diverse spheres of knowledge
Gross Dividend & Dividend Payout Ratio
Saumya Amarasekera, were on account and expertise imperative for a Bank of this
Rs Mn % calibre and together with the Management,
of these Directors reaching the nine-year
5,000 50 threshold of serving on the Board of the will take your Bank forward to meet the
Bank or having reached their Seventieth aspirations of our stakeholders.
4,000 38.0 40.2 39.2 40
37.6 birthday.
During my short stint as Chairman of
3,000 30
It is with immense gratitude that I record the Bank, I am truly grateful to my
2,000 20
the invaluable contribution made by the Board of Directors for their timely and
Directors who retired during this year. judicious counsel in navigating this year
1,000 10
4,598
4,565
4,482
3,147
They have had and displayed a deep of extraordinary uncertainties and the
0 0 and abiding interest in every aspect Managing Director and the Corporate
2017 2018 2019 2020
of Sampath Bank’s activities during Management for their unwavering
Gross Dividend their time on the Board and have been dedication towards meeting our goals.
Dividend Payout Ratio (RHS)
Team Sampath deserves praise for their

efforts in 2020, without which we could
Thank you to each
not have made it through the year. As of our stakeholders,
always, I am grateful to our shareholders especially our
for their understanding and continued
confidence in us. customers for being
a true partner in this
Thank you to each of our stakeholders,
especially our customers for being a true journey. The Sampath
partner in this journey. The Sampath Bank Bank Team and I
Team and I will do our utmost to support
you in every way possible as we move
will do our utmost
forward together. to support you in
I would also like to express my
every way possible
appreciation to the Central Bank of Sri as we move forward
Lanka, the Monetary Board, Securities and
Exchange Commission, Colombo Stock
together.
Exchange, and the Ministry of Finance
for their support during this time of
uncertainty.
HARSHA AMARASEKERA
Chairman
Colombo, Sri Lanka

15th February 2021
MANAGING DIRECTOR’S REVIEW
GRI - 102-10
"The Bank’s asset base reached Rs 1.1 Tn as at

31st December 2020, thus making Sampath
Bank the first bank in Sri Lanka to achieve
the historical One Trillion Rupee asset base
milestone in just over three decades."
I must commend the After leaving behind what was perhaps

the most challenging year in the country’s
While I do acknowledge that the
COVID-19 first wave was relatively
swift action taken post-war history, 2020 was expected well managed in Sri Lanka thanks to the
by the CBSL during to be the year in which Sri Lanka would 2-month island-wide lockdown, I believe
overcome its economic woes and bounce this was the turning point for the country's
this unprecedented back firmly to stake its claim as one of the economy. With the progress made earlier
disruption. In particular, fastest emerging economies of South Asia. in the year negated by the distressing lull
It was with this sense of positivity and in economic activity in the second quarter
the Saubhagya optimism that I, like countless other Sri and the lack of visible improvement
COVID-19 Renaissance Lankans embraced the dawn of 2020. thereafter, Sri Lanka’s economy is expected
Facility and the Debt Regrettably however, this enthusiasm was

to have contracted by 4% in 2020. That
being said, I must commend the swift
Moratorium Scheme, short-lived as Sri Lanka together with the action taken by the CBSL during this
which I believe went a rest of the world began grappling with the
complexities brought on by the COVID-19
unprecedented disruption. In particular,
the Saubhagya COVID-19 Renaissance
long way in easing the pandemic. Needless to say, the social Facility and the Debt Moratorium
burden of COVID-19 and economic impact of COVID-19 was Scheme, which I believe went a long
catastrophic and unlike anything else we way in easing the burden of COVID-19
affected businesses and have seen before. In addition to the toll on affected businesses and individuals. Other
individuals. human life and livelihoods, the pandemic measures including the announcement
which came in waves throughout 2020 has of import restrictions, policy interest rate
been responsible for causing widespread cuts and steps taken to lower the SRR for
chaos across industry, commerce, global licensed commercial banks as well as the
trade and equity markets, ultimately CBSL’s involvement in the domestic foreign
leading to what is now feared to be the exchange market were all intended to give
deepest recession the world has seen in the local economy a much needed boost.
over a century.
Caught in the crosshairs of the pandemic- account of the debt moratorium phase I,
induced economic slowdown, the against the interest income for the year, in
local banking industry experienced an line with accounting standards.
exceptionally tough year, marked by
sluggish credit demand from the private Our ability to generate fee-based income
sector, elevated credit risk and declining too was impacted by the weak economic
Rs 1,110 Bn profitability.
Sampath Bank too was in no way immune

environment, especially fees earned
through credit and operations related
activities. To add to this, certain regulatory
Total Assets to the challenges arising from the measures along with the Bank's own
pandemic, but I must admit we were able decisions to suspend or refund certain
to manage the implications quite well charges also adversely affected the Bank’s
thanks to the Triple Transformation 2020 fee income for 2020. However, I am happy
(TT2020) agenda. You may recall in my to report that fees generated through
2019 review, I mentioned the work we electronic channels and digital platforms
were putting in at the time with the help recorded a robust increase in 2020, as a
11.2 Bn
of a specialist consultant to develop the majority of our customers began migrating
Rs TT2020 agenda as part of a long term
strategy to transform three core areas:
to digital channels during the lockdown
period. More importantly, this trend appears
Profit Before Tax Business, Technology and People. If I am to have continued even after the lockdown
to elaborate, I would say the TT2020 is was lifted as evinced by the month-on-
all about establishing detailed strategies month increase in transaction volumes that
for all 50+ critical business units and are being reported even to date.
operational functions in order to build
NII & NIM overall resilience and create a platform for It is also encouraging to see that, operating
the Bank to scale up over the next 3 - 5 expenses decreased by 1.3% year-on-
Rs Bn %
years. Having begun implementing the year, thanks to strict cost management
50 6 measures implemented at the onset of
TT2020 agenda from the start of the year,
we were well into the first phase when the the pandemic itself in March 2020. The
40 5
4.41
4.46 pandemic hit the country in March 2020. removal of Nations Building Tax (NBT)
30
3.91
4 During these early months of the TT2020 and Debt Repayment Levy (DRL) with
3.30 roll out, our priority was to augment our effect from December 2019 and January
20 3
digital capability. This systematic approach 2020 respectively, proved to be another
10 2 served us well later in the year, for it is positive which helped to reduce the taxes
28.4
38.1
41.6
33.8
without a doubt the most critical tool that on financial services by 53.1% compared
0 1
2017 2018 2019 2020 helped Sampath Bank to overcome the to 2019.
challenges encountered throughout 2020.
Net Interest Income (NII) Nonetheless, the fact that the Bank’s NIM
Net Interest Margin (NIM) (RHS)
Reaffirming Our Financial Position remained under strain for much of the
Sampath Bank recorded a profit before year, owing to interest rate caps and other
tax (PBT) of Rs 11.2 Bn and a profit after regulatory measures, and the modification
tax (PAT) of Rs 8.0 Bn for the year ended loss on account of COVID -19 debt
31st December 2020. These are notable moratorium phase I mentioned above,
achievements given the government-led had a bearing on the Bank’s overall
economic stimulus packages bringing performance in 2020.
the pressure on the Bank’s Net Interest
In a year fraught with many challenges,
Margins (NIM), saw the Bank’s net interest
I am indeed proud to announce that
income slip to Rs 33.8 Bn in the year
Sampath Bank’s asset base crossed the
under review, a decline of 18.6% from the
landmark Rs 1 Tn during 2020. Growing
figure tabled in the previous financial year.
by 15.4%, from Rs 962 Bn as at end
The drop is also partly due to offsetting
December 2019, the Bank’s asset base
the “Modification loss” of Rs 3.1 Bn on
Helping Customers to Tide Over we also launched “Evolve”, an e-commerce

Difficult Times platform for small and medium sized
With the pandemic seemingly affecting businesses.
almost all sectors of the economy, we saw
many of our corporate and SME customers Looking for other ways to support our
facing undue pressure. Global supply chain customers, we acted in an advisory
39.3%
disruptions due to border closures and capacity to help them manage their day-
restrictions on global freight and cargo to-day cash flows and plan out future
movements affected the supply of raw strategy. Enabling our clients to carry
out their business operations during the
CASA material which had a bearing on exporters,
particularly the apparel manufacturing lockdown period was another one of our
sector. It goes without saying that the priorities, which led to selected branches
trading and retail businesses were left being kept open for a limited number of
to bear the brunt of the government hours in order to accommodate supplier
sanctioned import restrictions, while the payments and customs duty settlements
reached Rs 1.1 Tn as at 31st December etc. For our retail customers, we began
closure of the country’s airport in March
2020, thus making Sampath Bank the first offering a new three-month Gold Loan
2020 along with global travel restrictions
bank in Sri Lanka to achieve the historical product at a significantly low interest
were behind the collapse of Sri Lanka's
One Trillion Rupees asset base milestone rate to enable them to meet their urgent
tourism sector businesses. Despite the
in just over three decades. cash requirements, while both SMEs and
relief measures taken by the government
to ease the cash flow pressure on the self-employed individuals were granted
On the asset quality side, we did limited time relief on the repayments of
construction sector, many construction
experience a marginal improvement in leasing facilities. In light of the contentious
sector businesses remained under stress as
the Bank’s NPL ratio from 6.37% in 2019 economic climate, we extended a series
key income sources dried up.
to 6.30% in 2020. It is important to note of temporary relief measures to credit
that a significant amount of impairment card customers as well during the months
To prevent our customers from caving
provision has been recognised in 2020 of April and May 2020 and also waived
under the strain of these economic woes,
as an allowance for overlay to capture off late payment charges until 30th
we initiated proactive efforts to support
expected credit losses. September 2020.
eligible corporates and SMEs to access
the government-led relief measures such
The Bank's total deposit base reached In parallel, we made a conscious effort to
as the Saubhagya COVID-19 Renaissance
Rs 886.9 Bn as at the reporting date, encourage both corporate clients and retail
Facility offered at a concessionary rate of
reflecting an increase of 23.5% over the customers to migrate to digital platforms
4% and the debt moratorium scheme.
previous year, while our CASA ratio which to enable them to manage their banking
stood at 35.2% as at 31st December 2019 needs without any disruptions.
Keen to play its part in supporting Sri
increased to 39.3% by 31st December
Lanka’s post-pandemic economic recovery,
2020. The fact that term deposits and Asset Base - Bank & Industry
Sampath Bank went beyond the regulatory
savings have both grown significantly Rs Bn Rs Tn
mandated relief measures and mapped
despite the low rate environment, I believe 14.7
out our own relief efforts under the 1,200 15
speaks volumes about the public trust and 12.5
theme "Revive Sri Lanka". Our focus with 1,000 11.8
confidence in the Sampath brand. 12
this initiative was to give the SME sector 10.3
800
the opportunity to reignite the country’s 9
I am also pleased to report that the Bank
economic recovery. The "Revive Sri Lanka" 600
remained well capitalised and sufficiently 6
initiative was kicked off in mid-2020 400
liquid throughout 2020. While the SRR
with the launch of the "Sampath Diriya'', 3
reduction early on in the year did give rise 200
1,110
a Bank-funded special loan scheme to

795
914
962
to a temporary excess liquidity situation,

enable manufacturing and export related 0 0
this was well managed and effectively 2017 2018 2019 2020
SMEs to access funding at a concessionary
brought under control by mid-2020.
interest rate. To complement these efforts, Bank
Industry (RHS)
We made some giant deposit accounts without having to visit a

branch. At the same time, we made several
Measures to build overall resilience
and help the Bank to manage the long
strides in our digital of our key products accessible digitally, term impacts of COVID-19, saw Risk
journey in 2020, as starting with the “Samachara” senior Management Systems being further
citizens loan scheme. We also proceeded strengthened with the implementation
we took the first steps to augment the transactional capability of sophisticated Early Warning Systems
towards creating of Sampath Vishwa (Retail and Corporate) along with a series of machine learning
platforms to allow customers to perform tools for the detection of potential non-
an Omni-channel their banking needs at anytime from performing advances. BCP controls were
environment that anywhere. also tightened to take cognisance of the
would provide seamless The fact that we were able to convert

varying risk profiles of different branches
based on isolation orders and mobility
connectivity across over 96% of the routine transactions to restrictions imposed by the government
multiple platforms. digital channels during the initial lockdown

period, I believe is a proof of the versatility
to control the spread of the virus. In
addition, after a comprehensive Bank-wide
of our digital initiatives in meeting the vulnerability assessment, it was decided
Creating a Digital Avenue to Help customers’ expectations. It is even more to further strengthen the independent
Customers to Adapt to the New Normal heartening to see the trend continuing Disaster Recovery (DR) site framework
even today with majority of routine currently in place.
As COVID-19 began affecting life as
transactions still being done digitally.
we know it, it became abundantly clear
Meanwhile, using the insights gained
that digital technology will play a vital
Reorienting Business Fundamentals in from our digital conversion process,
role in adapting to the new normal. It
Response to COVID-19 Challenges we undertook a broad-based study to
fills me with a deep sense of pride to
Facing a situation where there were so determine how best we could streamline
note that Sampath Bank has a head start
many unknown variables, we turned our our product development process in order
in this arena. Having embarked on this
attention towards reorienting our business to fast track the release of timely and
digital journey well before many of its
fundamentals and took action on multiple relevant products to meet the needs of the
peers, Sampath Bank has time and again
fronts. market.
proven itself as an agent of change at the
forefront of the digital banking revolution
Seeing more and more Sampath Bank Compelled to abide by pandemic-related
in Sri Lanka.
customers migrating to digital channels restrictions, we were thrust into a scenario
amidst the COVID-19 pandemic, where a majority of our workforce was
We made some giant strides in our digital
highlighted the importance of ensuring a working from home. For the first time
journey in 2020, as we took the first
safe and secure online banking experience. in the Bank’s 33+ year history, we were
steps towards creating an Omni-channel
In response, we introduced the mandatory required to rethink our standard work
environment that would provide seamless
OTP (one-time-password) for the safety of practices. This meant making drastic
connectivity across multiple platforms. The
Sampath Vishwa (internet banking) users. changes to ensure our teams can continue
main goal here was to give customers an
Moreover, to minimise the downtime to perform their assigned job roles. We
even better banking experience than that
across all digital banking platforms granted selected employees access to the
they would otherwise have experienced
especially given the high transaction Bank’s main servers and implemented the
through our physical channels. Notable
load during the COVID-19 lockdown, Microsoft 365 suite to give all employees
initiatives for the year included the
we invested in a load balancing software the ability to manage their work streams.
launch of the “Cash-in-a-flash” delivery
solution and made arrangements to shift Our learning and development activities
service in partnership with the PickMe
our second Data Center to a SLT’s tier 3 too were fully digitised. We invested
delivery service and the Mobile ATM
Data Center, which operates as per the in Vidvan - a new advanced Learning
service, both launched in the midst of the
international standards and global best Management System (LMS) to support the
2-month island-wide lockdown. With the
practices for end to end redundancy Sampath Learning Academy to move all
government issuing stay-at-home orders
protocols. learning tools to an online platform.
for the general public, the “Doorstep
Banking” facility was rolled out enabling
customers to place savings and fixed
Undeterred by the In hindsight, I realise that the

comprehensive action we took at the
building staff capacity in four core areas:
Credit Competency, Digital Channels,
current challenges, onset of the global outbreak in early Leadership Development and Customer
we continued with 2020 was the key to ensuring that Service. Making some notable headway in
none of our employees were adversely enhancing our HR policy framework, the
ongoing human capital affected by COVID-19 either directly scope of the existing grievance handling
development activities. or indirectly. The COVID-19 Action policy was expanded to include a formal
Committee serving as the main liaison methodology to address grievances that
Several of our employee between the Bank management and the may arise as a result of the breach of
engagement activities health authorities was instrumental in the the principle of equality. In doing so, it
were conducted dissemination and timely communication

of COVID-19 related information to Team
is hoped that the updated Grievance
Handling Policy will pave the way for a
virtually and our Sampath. Moreover, the implementation more inclusive corporate culture that
training activities of stringent safety precautions, detailed will enhance employee motivation and
work schedules drawn up for branch strengthen employee relations.
were moved to digital teams and corporate management, special
platforms as well. transport arrangement and the COVID-19 Demonstrating Our Commitment to the
monitoring systems that were introduced Wider Community
during the course of the year have proven Admittedly this has been a tough year for
to be highly effective in helping staff to us all, but more so for the rural farmers
cope with the situation. whose livelihoods were threatened by
district-wise mobility limitations and other
Might I add that we were fully committed COVID-19 related restrictions. It is why
to safeguarding our employees’ financial we felt, it was vital that we continue with
wellbeing as well. Therefore, despite the the “Wewata Jeewayak” tank restoration
Rs 21.04 challenges on the business front, no pay

cuts or retrenchments were made during
2020. In fact, all confirmed employees
programme, our flagship community
initiative. We undertook two major
tank restoration projects in 2020 - the
Earnings Per Share of Sampath Bank were granted a salary Kindagalla tank, located in the Kokunnewa
increment in 2020. We also made area of Bibile in the Monaragala district
arrangements to grant the full entitlements and the Nalawagama tank located in
earned under the Performance-based Nalawa village, Nochchiyagama in the
bonus scheme for the year 2019. Anuradhapura district. Including the two
Yet another example of how we managed Moreover, it was decided to refrain from latest projects, the “Wewata Jeewayak”
to overcome the current limitations, was deducting staff loan installments (capital + tank restoration programme has to date
the virtual Annual General Meeting (AGM). interest) in the month of April 2020, while been responsible for the restoration of a
Making history as the first organisation permanent team members in the grades of total of 9 tanks since first being launched
in Sri Lanka to host a fully virtual AGM, Junior Executives and below were granted in 2001.
the Sampath Bank AGM for the FY 2019 a salary advance to support them in
was held on 2nd June 2020, which saw meeting any unexpected expenses during While we were unable to conduct
shareholders connecting virtually to the initial lockdown. the “Sampath Saviya” Entrepreneur
participate in the AGM proceedings.
Development workshops in the usual
Undeterred by the current challenges, manner, we did however change the
Protecting Our Employees at All Times we continued with ongoing human format in line with the current limitations
With the pandemic progressively capital development activities. Several and conducted several webinars for
worsening and bringing fresh worries of our employee engagement activities selected groups including university
regarding its health risks, the safety of our were conducted virtually and our undergraduates and SMEs.
employees took on a whole new meaning. training activities were moved to digital
To add to this, banking operations were platforms as well. Following the launch Meanwhile in an effort to boost the
declared an essential service as per the of our new LMS, a new training plan - country’s COVID-19 testing capacity,
COVID-19 emergency laws, and our “Stride 2020” was rolled out to focus on Sampath Bank tied up with the CBL
employees deemed essential workers.
Group and WSO2 to jointly donate a fully Appreciations Finally, to our loyal shareholders, thank
equipped PCR laboratory to the Army I would like to express my sincere gratitude you for your staying on this journey with
Hospital in Colombo. The donation was to every single of our customers for their Sampath Bank. I trust you will remain
made under the “Hope for Life” project, a patronage. The trust and confidence you committed to our success and my team
Sampath Bank initiative dedicated towards have placed in Sampath Bank over the and I look forward to adding value to your
uplifting public healthcare standards in years and especially in these difficult times investment in the years ahead.
Sri Lanka. has inspired us to aim for bigger and better
things in the future.
Outlook and Prospects
While economists and analysts suggest To Team Sampath, I am profoundly NANDA FERNANDO
that the global recession hit its peak in grateful for your commitment towards Managing Director
2020, there is no denying that turbulent Sampath Bank in what has been one of
times lie ahead. However, there are some the most challenging periods in our 33+ Colombo, Sri Lanka
positives in the horizon for it appears year history. I am humbled by the sheer 15th February 2021
that medium term prospects for the dedication and tenacity with which you
global economy will be predicted on how continued to work despite the numerous
advanced economies manage the vaccine pandemic-related constraints.
roll out over the coming months.
I wish to place on record my appreciation
From a country standpoint, it is imperative of our corporate management team for
that Sri Lanka does not dwell on missed going above and beyond to mitigate the
opportunities and instead moves swiftly COVID-19 impact on the Bank, all while
to catch up for lost momentum. I believe executing our strategy and honouring the
the lessons learned from the setbacks Bank’s commitments to stakeholders. I am
in 2020 will prove to be a good starting indeed proud to serve alongside you.
point from which the country can begin
adjusting to the new normal, while greater I thank the Chairman and my colleagues
political stability and the growth-conducive on the Board, including both retired and
policy framework promulgated by the new Directors who joined the Board
government will provide the impetus for during the year, for their wisdom and
key sectors of the economy to grow. oversight that was instrumental in helping
Sampath Bank to navigate the storm that
It is an irrefutable fact that the banking was COVID-19.
sector will be one of the main architects
responsible for the country’s economic Many thanks also to the officials at the
resurgence. I wish to reiterate that Central Bank of Sri Lanka, The Colombo
Sampath Bank is fully geared to take Stock Exchange, The Securities and
on the challenge. We will leverage on Exchange Commission and the Ministry of
our solid foundations, our long standing Finance for the support provided over the
reputation as one of the nation's leading years.
Banks, our strong island-wide footprint,
our leadership in the digital banking A special word of thanks to the Ministry
sphere, the knowledge and skills of our of Health, the tri-forces and PHIs for the
people, as well as group synergies in advice and guidance to Sampath Bank as
seeking out ever more dynamic solutions well as their tireless efforts to ensure the
to help our customers tackle the safety of all citizens of the country.
challenges that lie ahead. I am confident
that the strategies we have set out for To our suppliers and service providers -
this purpose will be a harbinger of good thank you for working with us to overcome
fortune for all Sri Lankans and herald a the challenges we faced in 2020. I also
new era of growth and prosperity for the wish to take this opportunity to thank MTI
country as a whole in the years ahead. Consulting for the assistance provided in
developing the “TT2020” agenda.
OUR VALUE CREATING BUSINESS MODEL
Capitals Inputs Value Creation Process
Internal Environment
Financial Capital
 Market Capitalisation: Rs 51.7 Bn Vision - "The Growing Force in Sri Lankan

The financial resources obtained from
 Equity Capital: Rs 107.5 Bn Financial Services"
external sources (equity and debt
capital) as well as retained profits that  Deposit Base: Rs 886.9 Bn
together create a foundation to grow Embedded Values of the Corporate Culture
and sustain the business
Strategy Strategic Objectives

 229 Branches
 445 ATMs and 465 CDMs Business Technology
 203 MYBANK Agents Sustainable Growth
The physical and digital  Digital Banking Solutions
infrastructure that enables the  IT Infrastructure Development
Bank to carry out its core business Initiatives Digital Leadership
activities  Correspondent Banks and Triple
Exchange Companies Transformation Support National
Development
Intellectual Capital  Brand Building Activities Promote Financial

 BCP Framework Upgrade Inclusion
 ISO 27001 Certified Information
The unique characteristics, systems Security System People
and processes that safeguard  Investment in IT
Sampath Bank’s reputation and  Brand Health Study
competitive position
Governance
 4,048 Employees Framework
Human Capital  Strengthening HR Policy Framework
 Employee Engagement Activities Business Lines Support Functions
 Work-life Balance Interventions  Corporate  Operational
The skills, expertise and
 Investment on Online Learning Banking Support
commitment of Team Sampath that
Platform  Consumer  Legal,
enables the Bank to implement
 Work From Home Model as a Banking Key Administrative
its strategy and achieve corporate and HR Support
Safety Measure  SME Banking Enablers
objectives of Value
 Global Banking  IT and Data
Creation Support
 Expanding the Digital Banking Suite Process  Other Business
Social and Relationship  Market Research Units
Capital  Product Rationalisation  Customer Care
 “Wewata Jeewayak” Programme Centre
The strength of the relationships
 “Hope for a Life” Programme
with key stakeholders that
 “Sampath Saviya” Programme
enable the Bank to maintain its  Sponsoring National Level Events Compliance and
competitive edge  Career Guidance Programmes for Risk Management
Undergraduates
Natural Capital  Green Financing and Green

Products
 Expanding Paperless
Opportunities
The contribution made by the External Environment

Challenges
Bank to reduce the deterioration Operations

of natural resources  Environmental CSR Economic Socio-Cultural Demographic
Programmes
Political/Legal Natural Global
GRI - 102-7
Outputs for Capitals Value We Create
For Our Bank

Financial Capital  Higher Business Volumes  Reputation as an
 Strong Competitive Employer of Choice
Positioning  Long Term Business
 PAT: Rs 8.0 Bn Partnerships
 Increased Customer
 ROE: 7.58% Loyalty
 EPS: Rs 21.04  Higher Customer
Satisfaction
 Enhanced Brand Value
 Greater Employee
Manufactured Capital Satisfaction
For Our Investors and Shareholders

 New ATMs: 22
 Net Asset Value per Share: Rs 281.94
 New Cash Deposit Machines: 36
 Gross Dividend: Rs 3.15 Bn
 Dividend per Share: Rs 8.25
 Dividend Yield: 6.08%
For Our People

Intellectual Capital
 Learning and Development Opportunities
 Brand Value: Rs 28,645 Mn  Career Progression
 World Finance Award – Best Retail & Commercial Bank  Recognition Schemes
 Most Loved Bank (LMD’s Brands Annual)  Work-life Balance Initiatives
 Most Respected Entities – 6th Place (LMD & Nielsen)
 Most Valuable Consumer Brand – 5th Place (LMD’s Brands Annual)  Competitive Benefits Structure
 Ranked Amongst the Top 1000 World Banks 2020 (UK’s Banker
Magazine)
For Our Customers
 Debt Moratorium for COVID-19 Affected Businesses
Human Capital
 Product Developments to Suit the New Normal
Conditions
 Revenue per Employee: Rs 25.3 Mn  24 x 7 Customer Care Centre and Chatbot – Virtual
 Employee Retention: 99% Banking Assistant
 Online Learning Hours: 110,500
(Learn with Vidvan - Learning Management System) For Our Local Communities
 Groom Young Business Leaders
 Facilitate Farmers to Cultivate both Yala and Maha
Social and Relationship Capital Seasons
 Provide Internship Opportunities
 New Products Launched: 01

 Persons Benefitted under “Wewata Jeewayak” Programme: 1,640 For Our Environment
 Persons Trained under “Sampath Saviya” Programme: 672  Over 96% Transactions Performed Digitally
 Intern and Industrial Placements Intake: 481  427 Trees Saved through Slip-less Banking and Cash
Deposit Machines
 Over 9,000 Trees Planted through Environmental CSR
Programmes
Natural Capital
 Solar Power Generation through Branch Network: 251,908 kWh For the Government
 Finance on Renewable Energy Projects: Rs 1,358 Mn  Taxes Paid: Rs 10.5 Bn
 Carbon Footprint of the Bank: 9,138 tCO2e
STRATEGIC SUSTAINABILITY FRAMEWORK
GRI - 102-31,32
At Sampath Bank we define our success not only by financial excellence, but also by measuring our triple-bottom-line results to assess
if the Bank can be considered an economically, socially and environmentally sustainable organisation.
Sustainability Challenges and

Opportunities for the Our Response Sustainability Priorities for 2020
Banking Sector in 2020
Challenges arising due to the  Empower the SME sector by  Engage in capacity building
COVID-19 pandemic: helping them to build resilience initiatives to enable SMEs to focus
 Global & local economic slowdown against unforeseen economic on emergency preparedness and
resulting in weaker business challenges. business continuity.
prospects for the SME sector.
 Support the national socio-  Invest in impactful livelihood
 Change in typical spending patterns economic development development projects that have
due to lower disposable income programme to assist in bridging the ability to provide long term
among individuals due to job losses. the poverty gap and increase benefits to grass root level
 Socio-economic issues (widening mainstream access to good communities.
of the poverty gap, inability to education.
 Facilitate increased access to
access education etc.) attributed
 Contribute towards the clean financial assistance for renewable
to lower disposable income.
energy sector. energy.
Opportunities due to climate change:  Develop a fully-fledged digital  Strengthen the Bank’s information
 Heightened demand for ecosystem to holistically address security management architecture
sustainable financing (clean energy the customers’ banking needs. to create a solid foundation for the
technology projects). expansion of the digital banking
concept.
 The need for digital banking
solutions to address the
customers' banking needs.
Principles that Drive Our Commitment to Sustainable Development
Complying with all applicable Working continuously to protect Integrating sustainability into the
(Economic, Social and the environment, respect human core business strategy in order to
Environmental) laws and rights and uphold labour standards. avoid causing or contributing to
regulations. adverse social and environmental
impacts at any level across the
business.
Updating on an ongoing basis, Support and encourage customers Refrain from lending to industries
the range of offerings to promote to enable them strike a balance that are against our Environmental
mainly products and services that between financial gain and their and Social Management criteria.
contribute positively towards responsibility to society and the
sustainable development of people, environment.
the environment and the economy.
GRI - 102-18,19,20,21,26,29,33/103-2
Sustainability Governance
Bank-wide sustainability concerns are managed via a two-tier Governance Structure made up of the Corporate Sustainability
Committee and the Corporate Sustainability Department.
The Corporate Sustainability Committee is the main body authorised to provide direction and exercise control over all sustainability
related matters, while the Corporate Sustainability Department is tasked with planning and implementation of programmes that
demonstrate Sampath Bank’s commitment to the Sustainable Development Goals.
Sustainability Governance Structure
Board of Directors Managing Director
Executive Director/Group Group Chief Human Resource

Group Learning Officer Chief Manager - Marketing
Chief Financial Officer Officer
Corporate Sustainability Department
To continuously transform our business The Stakeholder Engagement Process adds Meanwhile global standards such as
and enhance the Bank’s contribution to further value to our efforts. As described the UN Sustainable Development Goals
sustainable development, we conduct a in the Stakeholder Engagement section (SDGs) provide greater clarity on how,
3600 horizon scan. This helps to determine on pages 47 to 51, we regularly engage Sampath Bank as a leading service
the risks and opportunities that could with our stakeholders for the purpose of organisation in Sri Lanka, can undertake
influence our sustainability performance obtaining feedback, knowledge sharing and initiatives to assist the country's efforts
in the current context as well as in the to raise awareness regarding sustainability to address sustainability challenges such
future. themes. as poverty, cleaner energy and climate
change among others. In recent years,
we have been redirecting our focus to
broaden our coverage of the SDGs.
STRATEGIC SUSTAINABILITY FRAMEWORK
Our Contribution to the Sustainable Development Goals in 2020 GRI - 413-1
 Livelihood development through “Sampath

Saviya” entrepreneurship development
programme
 “Wewata Jeewayak” tank restoration
programme to facilitate farmers to cultivate
 "Hope for a Life’" programme to improve the both Yala and Maha seasons
standards of the national healthcare system
 Free medical vouchers to senior citizens through
“Sanhinda Saver” account  Internship programme for school leavers and
undergraduates
 21% female representation in Corporate Management  "Pahe Shishyathwa" - Grade 5 scholarship
 24% female representation in Senior Management support programme
(excluding Corporate Management)
 “Sampath Saviliya” - business loan exclusively for  “Wewata Jeewayak” tank restoration
women programme to restore water related
ecosystems
 A leading contributor to the country’s renewable
energy sector through financing on various clean
energy projects
 Internship programme: 481 school leavers
 Launch of “Sampath Soorya” loan campaign to
and undergraduates were provided internship
promote solar energy
opportunities
 Continued investment on developing customer-  Career Guidance Sessions for undergraduates

centric digital solutions  Average training hours per employee: 42.7
 New product development to suit the new  Provide equal opportunities for all employees
normal condition
 Zero tolerance of any form of unfair discrimination
on the basis of race, gender or disability
 Provide structured housing loan solutions  Ratio of basic salary at the entry level for males
 Empower farming communities through “Wewata and females is 1:1
Jeewayak” tank restoration programme
 Wide range of products and services including
advanced digital platforms that support
customers to perform a range of banking
needs at their convenience at affordable price
 Invest in emission management and energy
management projects at head office and
branches  Biodiversity conservation project in
collaboration with Biodiversity Sri Lanka, to
restore degraded forest patch of ten hectares
 Zero tolerance for bribery and corruption by any in Halgahawala, Opatha
employee or Director
 Vigilance to ensure that Bank’s products are not
used in the furtherance of financial crime such as  Strategic partnerships to address the issues
money laundering, financing of terrorism, fraud on climate change, water, education and
and corruption entrepreneurship development
CONNECTING WITH OUR STAKEHOLDERS
GRI - 102-33,40,42,43,44
We have developed a Being in the business of banking for

the past 33+ years, we have long since
products and services. Stakeholders
are then broadly categorised based on
specific management understood that our stakeholders are the degree of influence and the level of
philosophy for each an integral part of our success story so impact.
far and will continue to be vital to our
stakeholder category future journey as well. We have developed a specific
to help systematically management philosophy for each
Identifying Stakeholders stakeholder category to help systematically
manage each group. The Using an internal and external manage each group. The philosophy
philosophy demonstrates environmental analysis, we have demonstrates the Bank’s conviction to
the Bank’s conviction to identified our stakeholders to be those separately address the needs of each
respective stakeholder category and thus
individuals and groups who either
separately address the influence or are influenced by Sampath serves as the overarching principle for
needs of each respective Bank’s operations, activities, decisions, maximising stakeholder value creation.
stakeholder category
and thus serves as the
overarching principle for
maximising stakeholder
value creation.
Shareholders and External Customers

Cu
Other Investors sto
a nd m
o rs
Inv rs
st
er
Management Philosophy
lde
Management Philosophy

Internal
e
eho
Ensuring long-term Uphold the customers’

er
Sh a r
shareholder value and right to demand a stable

Ot h
Regulatory
upholding the rights of the and progressive banking

Bo d i e s
Our
shareholder and supporting Stakeholders environment which provides
ity
a broader shareholder a superior service platform

mun

constituency to ensure their and promotes customer

m

choice/convenience

wealth maximisation Employees
o
Supp
li e rs a n d

Se r v
ice Providers

Regulatory
Community
Bodies
Management Philosophy Suppliers and Management Philosophy

Employees
Service Providers
Working in tandem with Ensure compliance with
global and local mandates all legal and regulatory
Management Philosophy Management Philosophy
which safeguard the requirements
environment and promote Striking the right balance Commitment to create a
community empowerment between cost and quality conducive environment for
and promoting ethical the employees to develop
and transparent sourcing and reach their potential,
practices both professionally and
personally
Managing Stakeholder Expectations

We connect regularly with our stakeholders to identify and address their needs. The
insight and feedback we receive through these interactions have proven to be a key
source in identifying Material Topics that can impact on our strategy and decision
making processes, and drive innovation for the purpose of long-term value creation.
Evaluate the material matters

and stakeholder feedback
Identify and prioritise risks
and opportunities Design and implement
initiatives in line with the
Identify and prioritise nt Management Philosophy for
material matters e me
g ag each stakeholder group
3
En
Engage and communicate

Action Plan & Measure effectiveness of the
with stakeholders Po initiatives and monitor feedback
st
4 Monitor deficiencies and get
Re
corrective action
vie
Stakeholder
w
Engagement
Process
De s
2
i gn
g
in
En
ppin
g
g a ge
ment Model 1
Ma
Identification of stakeholders
Identify levels of engagements through environmental analysis
ol d
er
e h
Evaluate and review channels of engagement Stak
Segmentation of stakeholder
Design the engagement model categories
Formulate policies and procedures if
necessary Determine the underpinning
Management Philosophy for
each stakeholder group
Stakeholder Engagement Mechanism
Shareholders and Other Investors
Matters Relevant to the Our Strategic Response to Engagement Engagement

Stakeholder Stakeholder Mechanism Frequency
 Shareholder satisfaction  Maintaining a consistent Shareholder relations Periodically

regarding the Bank’s financial bottom line forums
position  Ensuring sustainable return on General meetings Annually/
 Shareholder views on key investment Periodically
governance and policy matters  Engaging in greater Annual Report Annually
 Development of shareholder transparency according to the Interim Financial Quarterly
communication channels corporate governance code Statements
Disclosures and Periodically
 Return on equity and interest  Maintaining the Bank’s
announcements on CSE
gains reputation and credibility
Corporate website 24 hours 7 days
 Strategy and continuity  Safeguarding asset quality General Regularly
 Financial performance correspondence
CSR projects Regularly
Employees
Matters Relevant to the Our Strategic Response to the Engagement Engagement

 Ethical employment practices  Competitive rewards and benefits to Open-door policy Regularly
attract and retain best talent in the Employee forums Regularly
 Career development opportunities
market Employee suggestions Regularly
 Employee communication and
 Promote greater diversity and schemes
feedback
inclusion Grievance-handling Regularly
 Rewards/recognition procedure
 Develop from within through training
 Employee well-being and development Employee social Regularly
committees
 Work-life balance  Encourage greater engagement
Feedback forms Annually
 Performance-based incentives Business unit level Regularly
 Effective handling of grievances meetings
Intranet 24 hours 7 days
 Maintain high standards of
Memorandums/Directives Regularly
occupational health and safety
Newsletters Quarterly
 Ensure employees’ welfare Training Regularly
 Foster a sense of belongingness Get-togethers/Events Regularly
Sampath Employee 24 hours 7 days
Notification System
(SENS) & HR Hotline
Online groups Regularly
Suppliers and Service Providers

 Developing strategic partnerships  Engaging in fair and equitable Interactions through the Regularly
procurement purchasing policy
 Promoting transparent and ethically
responsible business practices  Supplier risk assessment mechanism Feedback evaluations As and when
 Continuous communication with  Contractual agreements to promote required
suppliers and service providers sustainable procurement Meetings As and when
required
 Regular reviews on quality of goods  Local sourcing
and services Visits to supplier Periodically
 Registration of multiple suppliers
workshops/offices
and service providers as a BCP
measure Written communications Regularly
(letters and e-mails)
 Maintenance of suppliers and
service providers register Reviews and Periodically
assessments
 Developing SME entrepreneurs
whilst purchasing goods which meet
the Bank's standards at a reasonable
cost thus enjoying a win-win
situation for both the Bank and the
supplier
Community

 Community capacity building  Socially-responsive CSR model Ground-level interactions Regularly

 Community empowerment  Transparency and governance with community leaders
by staff
 Social welfare of communities  Community engagement Interactions with social Regularly
 Environmental degradation  Employee volunteerism groups and volunteer
organisations
 Preservation of local culture  Become a catalyst for change
Environment grievance Regularly
handling mechanism
Discussions with Regularly
government organisations
Discussion with other Regularly
organisations, community
and opinion leaders on
community development
efforts
Digital media-based Regularly
forums
Customers

 Customer service  Effective complaint resolution One-on-one feedback Regularly

 Customer security  Maintain service excellence from customers who visit
the Bank
 Satisfaction on existing products  Deliver technology-driven banking
Customer surveys Periodically
solutions
 Brand perception and reputation conducted via traditional
 Continuous introduction of or non-traditional research
 Customer convenience
innovative products which promote techniques
 Need for innovations and customised greater customer convenience Social media interactions 24 hours 7 days
solutions Customer complaint 24 hours 7 days
 Effective marketing and
 Communication methods communication handling mechanism
ATL, BTL and digital Regularly
 Special promotions  Maintaining data security and
communications
 Timely and relevant information on customer privacy
Correspondence Regularly
products and services  Promoting island-wide customer
SMS Alerts 24 hours 7 days
 Customer touch-points inclusiveness
Corporate website 24 hours 7 days
 Customer benefits and rewards  Better market share
Sampath Vishwa (internet 24 hours 7 days
 Loyalty recognition banking) portal
Customer Care Centre 24 hours 7 days
Feedback forms - paper Regularly
based/electronic mediums
Regulatory Bodies

 Proper and prompt action on  Compliance with regulations Policy directives/ Regularly
regulatory requirements introduced  Rectification actions on supervisory circulars, guidelines and
from time to time concerns operating instructions
 Formulate the Bank's policies in  On-time submission of statutory Meetings and forums Periodically
line with the broad objectives of returns and statutory payments Press releases Regularly
the Central Bank of Sri Lanka and  Response and contribution at Periodic and one-off Periodically/
Monetary Board meetings/forums and to initiatives of returns As and when
the regulators required
On-site and off-site Periodically/
 Micro, small and medium
entrepreneurs lending and supervision As and when
entrepreneurship development required
Training programmes Regularly
 Supporting the non-conventional
renewable energy sector
 Support to maintain stability in
money and foreign exchange markets
 Help investors to make better
investment decisions
Memberships of Associations GRI - 102-13

Stakeholder Survey 2020
Sampath Bank PLC held membership of the following industry based associations and national and
In 2020, we conducted a international advocacy organisations with the motive of maintaining sustainable relationships with
comprehensive stakeholder
stakeholders and contributing to betterment of the industry and nation as a whole.
survey covering Sampath
Bank’s key stakeholder groups Name of the Association Membership Status
- shareholders, customers,
The American Chamber of Commerce in Sri Lanka Member
employees, suppliers and Association of Compliance Officers of Banks, Sri Lanka Member
members of the community.
Association of Primary Dealers (APD) Member
Stakeholders from around the Clearing Association of Bankers Member
country responded to the survey CSR Lanka (Guarantee) Limited Member
which was conducted by way of Exporters’ Association of Sri Lanka Member
an online questionnaire and a International Chamber of Commerce – ICC Sri Lanka Member
series of telephone interviews. Italian Business Council Member
Lanka Clear (Pvt.) Ltd Member
Based on the feedback received Lanka Financial Services Bureau Ltd. (LFSB) Member
through the survey, we were able Lanka SWIFT User Group (LSUG) Treasurer & Assistant
to validate the 20 Material Topics Treasurer
considered in the previous year Leasing Council of Bankers of Sri Lanka Member
and reconfirm their relevance for National Chamber of Exporters of Sri Lanka Member
the current financial year as well. Payment Card Industry Association of Sri Lanka Member & Treasurer
At the same time, the survey Society for Worldwide Interbank Financial Telecommunication Member
(SWIFT)
also revealed a new Material
Sri Lanka Bank's Association (Guarantee) Ltd Member
Topic; COVID-19 pandemic and
Sri Lanka Business & Bio Diversity Platform of Ceylon Chamber of Patron Member
its impact on the economy, an Commerce
aspect that has been a key focal Sri Lanka Forex Association (SLFA) Member
point in our strategic decision The Association of Banking Sector Risk Professionals - Sri Lanka Member
making in 2020. The Ceylon Chamber of Commerce Patron Member
The Employers’ Federation of Ceylon Member
The Financial Ombudsman Sri Lanka (Guarantee) Ltd Member
The National Chamber of Commerce of Sri Lanka Member
03
MANAGEMENT DISCUSSION & ANALYSIS
Operating Environment 54 | Capital Management Reports 58 | Business Reports 81

A
Million
Partnerships
The progress and betterment of our relationships is at the core of all our achievements.
At Sampath Bank we are nurturing millions of partnerships and value drivers built upon
decades of trust.
OPERATING ENVIRONMENT
Global economic The decline in global investment also

appears to have been quite substantial.
United Kingdom
In addition to dealing with prolonged
activity in 2020 was In all, the global economy was thrust into worries regarding BREXIT, the UK
defined entirely by the what is now thought to be its worst ever economy took a massive hit due to the
recessionary period in the past 150 years,
COVID-19 pandemic even surpassing the impact of the world
pandemic. Weighed down by soaring
infection rates, ad-hoc lockdown
and the decisions taken wars and the great depression of 1929. restrictions and uncertainties regarding
by nations to respond Amidst this backdrop, the global economy
the outbreak of a new variant of the virus
towards end-2020, economic activity in
to the crisis. Therefore, is estimated to have contracted by 4.4%
the UK suffered throughout 2020.
the global economy in 2020. While the initial contraction
in advanced economies was seemingly Euro Area
which appeared to be less severe in the first half of 2020, the
All major Eurozone economies weakened
gradually strengthening situation deteriorated fast as economic
activity in the latter part of the year was
substantially in 2020 as several key sectors
at the start of 2020 again disrupted as more aggressive second

that support the area’s economic growth,
in particular tourism were badly affected
after years of sluggish and third waves of the pandemic began
by the pandemic. The fact that three of the
emerging in the US and across Europe.
growth, found itself Most emerging economies too were
major economies in the region - Germany,
France and Italy were plagued by a fresh
completely derailed as severely impacted by the pandemic, given
surge of the virus in the final months of
their reliance on advanced economies
most countries began as key markets. Emerging economies
the year meant the recessionary conditions
in the area worsened towards the end of
announcing stringent with higher COVID-19 caseloads were
2020.
lockdown measures particularly badly hit and were left to deal
with rapidly falling per capita incomes Japan
and social distancing and the prospect of millions being pushed
Japan’s economy performed reasonably
protocols at the very to the brink of poverty, which saw many
of these nations slipping into a deeper
well in the first half of 2020, thanks to
onset of the pandemic. recessionary state.
early action to control the pandemic
impact coupled with strong fiscal support.
Global Economy - Overview United States However, a resurgence of the virus in the
third quarter dealt a significant blow to
Global economic activity in 2020 was Recording the highest number of
the economic progress made earlier in the
defined entirely by the COVID-19 infections from the outset itself and the
year.
pandemic and the decisions taken by most number of COVID-19 deaths to
nations to respond to the crisis. Therefore, date, the United States will go down in China
the global economy which appeared to history as the country worst affected by
Following early action to curb the spread
be gradually strengthening at the start the pandemic. It is therefore no surprise to
of the virus, China’s economy bounced
of 2020 after years of sluggish growth, note that the US economy slipped into a
back strongly by mid-2020. Backed by
found itself completely derailed as most pandemic-induced recession as economic
higher industrial output and increased
countries began announcing stringent activity in the first half of 2020 declined
spending on infrastructure investments,
lockdown measures and social distancing sharply, by as much as three times more
the Chinese economy grew at a much
protocols at the very onset of the than the decline seen at the peak of
faster pace than was expected.
pandemic. Lockdown related restrictions the financial crisis in 2009. Interestingly
including, border closures and supply chain through strong fiscal support to boost
disruptions were responsible for a collapse household incomes, more than what was
in global trade in 2020. The ramifications extended during the financial crisis, helped
for industry and commerce too have been trigger a visible uptick in economic activity
sizable while the effect on travel and in the third quarter of 2020. However,
tourism has been devastating. Meanwhile this pick up was abruptly cut short by the
oil prices reached unprecedented lows widespread resurgence of the virus ahead
amid escalating concerns over the of the winter months.
pandemic’s lasting impact over oil demand.
Given the weak economic performance External Sector

Outlook and Prospects for the Global during the year and other concerns The external sector which showed signs
Economy regarding the country’s mounting debt of heightened vulnerability at the onset
With the pandemic situation still burden, major rating agencies such as of the COVID-19 outbreak in 1Q2020,
evolving, it can be reasonably S&P Global, Fitch Ratings and Moody’s, all made a strong recovery from Q2 onwards
assumed that global economic activity downgraded Sri Lanka’s sovereign rating thanks to timely policy measures taken by
will not return to pre-pandemic in 2020. the government and the CBSL to manage
levels for a prolonged period in the the pandemic impact on the economy.
future. Even if the vaccine roll out is Unemployment Of particular note is the decision to
expedited and the spread of the virus The 2-month island-wide lockdown impose import controls with effect from
is more or less brought under control imposed by the government from March April 2020 which helped to drastically
by mid-2021, the pandemic-impact on to May 2020 in a bid to control the cut expenditure on imports for the five-
trade, supply chains, labour markets COVID-19 first wave, had a sizable month period ended 31st August 2020.
and human productivity, will likely impact on the country’s labour market. And with export income outpacing import
continue to affect the global growth Consequently, 1H2020 was characterised expenditure by a wide margin, a sizable
by unusually low labour force participation contraction in the trade deficit was also
prospects for some time to come. This
as well as high unemployment recorded during this period.
calls for governments to be proactive
levels. Available data suggests that
in their efforts to fuel economic
unemployment levels in the first half of Exchange Rate
recovery in the near term, along with
2020 shot up to 5.6% from only 4.8% in The Rupee demonstrated greater stability
long term policy action to safeguard
the corresponding period of 2019. in 2020, except for a sharp depreciation
their respective economies from the
far reaching consequences of the in the immediate aftermath of the
Inflation pandemic in March/April 2020. The Rupee
pandemic.
Weaker domestic demand for much of the depreciated significantly during this time
year, along with well anchored inflation and hit its highest level of Rs 199.75 per
Sri Lanka’s Economy - Overview
expectations ensured that inflation US Dollar on 9th April 2020, denoting a
Sri Lanka, which had been recording sub- levels stayed broadly within the 4% - 6% depreciation of 9.07% from end-December
par growth in recent years, faced fresh bandwidth throughout 2020. While 2019. The import controls introduced
challenges amidst the COVID-19 outbreak year-on-year headline inflation based by the government as well as the CBSL’s
which erupted in the country in March on the Colombo Consumer Price Index intervention in the domestic foreign
2020. As per the provisional estimates (CCPI 2013 = 100) increased to 6.2% in exchange market in 2Q2020 helped to
available, Sri Lanka’s economy appears to February 2020 due to an escalation in ease the pressure to a large extent and
have contracted by 1.7% in 1Q2020, the food prices, a gradual moderation was stabilise the exchange rate, thus restricting
result of the combined impact of supply seen in the months that followed, causing further depreciation of the Rupee.
chain disruptions caused by COVID-19 headline inflation to settle at 4.2% by
related lockdowns, subdued demand December 2020.
from key export markets attributed to
the pandemic as well as the adverse local Headline Inflation (CCPI) Annual GDP Growth - Sri Lanka
weather conditions. % %
8 4 3.6
Key sectors such as agriculture and 3.3
7.1 3 2.3
industry deteriorated significantly,
2
91
91
recording degrowth of 5.6% and 7.8% 6

82
82
1
respectively in 1Q2020 compared to 4.8 0
growth of 5.0% and 3.9% registered in 4.2
-1
the first quarter of 2019. The Service 4
-2
sector on the other hand, demonstrated
2.8 -3
greater resilience to the immediate impact
20
25
33
37
20
25
33
37
(4.0)
2 -4
of the pandemic, growing marginally by Dec-17 Dec-18 Dec-19 Dec-20 2017 2018 2019 2020
(Projected)
3.1% in 1Q2020, almost on par with the
growth figure of 3.7% reported for the
corresponding period in the previous year.
OPERATING ENVIRONMENT
Asset Base It should however be noted that arrears

Outlook and Prospects for the position of the customers eligible for
An improvement was seen in the banking
Sri Lankan Economy moratorium has been frozen during the
sector’s asset base, where total assets
Going by the swift resumption of expanded by 17.1% during the year 2020, first and the second phases of the debt
economic activity following the compared to only 6.2% growth recorded moratorium.
relaxation of lockdown restrictions in in 2019. The increase in the asset base
May 2020, the Sri Lankan economy is Capital and Liquidity
was driven by a 11.9% growth in loans &
expected to make a strong recovery advances. Of the loans granted, over 75% The banking sector remained adequately
in 2021. While the emergence of the was attributed to State Owned Enterprises capitalised in order to absorb adverse
COVID-19 second wave in October (SOEs). Meanwhile credit granted to shocks. By end September 2020, the
2020 and the subsequent downgrade the private sector, especially to financial sector operated with a Total Tier I ratio of
of Sri Lanka’s sovereign rating by all services, trading and tourism industries 13.0% and a total capital ratio of 16.5%,
major rating agencies, are both likely declined sharply in 2020. both well above the BASEL III minimum
to dampen the pace of recovery, it requirements.
is hoped that the government-led Asset Base - Banking Industry
relief efforts would facilitate a faster Throughout 2020, the banking sector
Rs Tn
recovery in the near term and the continued to operate with adequate
growth oriented policy framework 15 liquidity buffers over and above the
being put in place by the government regulatory minimum requirement. Action
12
would accelerate the pace of recovery by the CBSL to lower the Statutory
over the longer term. 9 Reserve Ratio (SRR) and simultaneously
revise the definition of liquid assets,
6 further enhanced the ability of banks to
Equity Market comply with the minimum Statutory Liquid
3
The high degree of volatility seen in the Asset Ratio (SLAR). Consequently, the
10.3
11.8
12.5
14.7
country’s equity markets throughout 0 SLAR of the banking sector's Domestic

2017 2018 2019 2020
2020 can be attributed primarily to the Banking Units (DBU) stood at 37.3% as
uncertainties caused by the COVID-19 at end December 2020, well above the
Funding minimum statutory requirement of 20%.
pandemic. The CSE remained hyper
sensitive to adverse news regarding the Deposits remained the primary funding
source for the banking sector. The banking Legal Reforms Affecting the
pandemic, which led to a high degree of
sector deposit base reported growth of Banking Sector
volatility in both the ASPI and S&P SL 20
indices from Q2 onwards. It should 21.6% during the year 2020 backed by In 2020, the government initiated several
however be noted that similar trends were good growth in both term deposits as well legal reforms aimed at strengthening the
observed across global equity markets, as current and savings deposits (CASA). local banking sector. Most notably the
The sector-wide CASA ratio increased to action by the CBSL regarding the proposed
especially in other emerging market
34.5% by end December 2020, up from new Banking Act to be introduced in
economies.
31.4% at the end of December 2019. 2021. The proposed new act, which
carries a wider scope will replace the
Banking Sector Update
Asset Quality existing Banking Act No. 30 of 1988. It is
The year 2020 was a challenging one expected that the new Banking Act will
for the local banking sector. Amidst the Sector-wide asset quality deteriorated,
cover the licensing, supervisory, regulatory
backdrop of depressed global and local as the overall non-performing loans ratio
and resolution framework of banks and
economic conditions, the performance of for the banking sector edged up to 4.9%
transform the regulatory and supervisory
the banking sector fell below expectations by end December 2020 from 4.7% as at
landscape of the banking sector, whilst
in 2020 as asset quality and profitability 31st December 2019. Statistics as at 31st strengthening the resilience and efficiency
were both compromised due to the higher December 2020 indicate that all main of licensed banks in the medium to long
credit risk. Despite the elevated credit sectors reported NPLs above the average. term.
risk however, the banking sector did The manufacturing sector reported the
continue to operate with adequate capital highest NPL ratio of 8.7% followed by
and liquidity buffers and coverage ratios trade at 7.4%, agriculture at 6.9%, tourism
throughout the twelve-month period at 6.8% and construction at 6.4%.
ended 31st December 2020.
Monetary Policy Measures 2020

Outlook and Prospects for the Local
Date Measure Banking Sector
30 Jan 2020 SDFR and SLFR reduced by 50 basis points to 6.50% and 7.50%, The prospects for the sector in 2021
respectively. will depend largely on the broad-
17 Mar 2020 SDFR and SLFR reduced by 25 basis points to 6.25% and 7.25%, based revival of economic activity
respectively. across all key sectors. In this regard,
it is hoped that credit growth would
17 Mar 2020 SRR reduced by 1.00 percentage point to 4.00% to be effective from the
pick up in the short to medium term
reserve period commencing 16 Mar 2020.
supported by the government-led
27 Mar 2020 Introduced a concessional loan scheme, the Saubhagya COVID-19 initiatives aimed at enhancing credit
Renaissance Facility (Phase I - Refinance Scheme), up to Rs 50 Bn at an flows to the economy. Meanwhile
interest rate of 4.00% to support the COVID-19 hit businesses. with the true impact of the COVID-19
debt moratorium on the banking
03 Apr 2020 SDFR and SLFR reduced by 25 basis points to 6.00% and 7.00%,
sector yet to be ascertained, it is
respectively, to be effective from the close of business on 03 Apr 2020.
imperative that banks to remain hyper
16 Apr 2020 Bank rate reduced by 500 basis points to 10.00% and allowed to vigilant about rising NPLs until the
automatically adjust in line with the SLFR, with a margin of +300 basis COVID-19 crisis is resolved globally
points. and locally.
06 May 2020 SDFR and SLFR reduced by 50 basis points to 5.50% and 6.50%,
respectively, to be effective from the close of business on 06 May 2020.
Bank Rate automatically reduced to 9.50%.
16 Jun 2020 SRR reduced by 2.00 percentage points to 2.00% to be effective from
the reserve period commencing 16 June 2020.
16 Jun 2020 Extended the concessional loan scheme introduced on 27 Mar 2020 up
to Rs 150 Bn at an interest rate of 4.00% to support the COVID-19 hit
businesses (the Saubhagya COVID-19 Renaissance Facility - Phase II).
09 Jul 2020 SDFR and SLFR reduced by 100 basis points to 4.50% and 5.50%,
respectively. Bank Rate automatically reduced to 8.50%.
Note: The Central Bank imposed interest rate caps on pawning advances of
licensed banks on 27 April 2020 and tightened interest rate caps on
selected lending products on 24 August 2020.
A
Million
Resources
CAPITAL MANAGEMENT REPORTS
Sampath Bank believes in responsibly managing its vast pool of resources to

ensure sustainable growth. Our far-sighted, prudent strategies ensure our
longevity in the years to come.
Financial Capital 59
Manufactured Capital 64
Intellectual Capital 67
Human Capital 70
Social and Relationship Capital 73
Natural Capital 77
FINANCIAL CAPITAL
Despite the challenging conditions, Sampath

Bank continued to prioritise the needs of all
stakeholders. Backed by its solid fundamentals
and strong operational capacity, the Bank took
prompt action to implement government-led relief
Rs 1,110 Bn measures aimed at combating the impacts of
Asset Base COVID-19.
962 Bn (2019)
Financial Capital refers to the financial Financial Capital Profile - Deposits &
Rs resources obtained from external sources Debt Capital
+15% Rs Bn Rs Bn
(Equity and Debt Capital) as well as
900 886.9 100
internally generated funds (Reserves) that
together create a foundation to grow and 800 80
Material Aspects that Drive sustain the business over time. 698.1 718.3
700 60
Sampath Bank’s Financial 630.4
53.3 55.7
Financial Capital Profile 49.1
Capital Development Strategy 600 42.4 40
36.6 37.6
Financial Capital Profile - Equity Capital 33.7 30.8
 Profitability and Financial 500 20
Stability Rs Bn 4.4 13.7 16.4 3.4
70 400 0
59.9 2017 2018 2019 2020
60 57.4
51.6
50 47.3 Total Deposits
Scan this QR code for a more
47.6 Due to Other Borrowers (RHS)
comprehensive view of our 40 47.6
Due to Debt Securities Holders (RHS)
Financial Capital
30 Securities Sold Under Repurchase Agreements (RHS)
32.8
www.sampath.lk
20 Value Additions for 2020
10 16.3
Overview of Global and Domestic Fronts
0
2017 2018 2019 2020 The year 2020 will go down in history
as one of the most challenging years
Reserves
in the 21st century as the outbreak of
Stated Capital
COVID-19, which started in late 2019,
began to spread worldwide from January
2020. In a bid to curb the spread of
disease most of the affected countries
Support National were seen implementing nation-wide
Development lockdowns and other control measures
in turn bringing certain economies to a
complete standstill.
In Sri Lanka, COVID-19 emerged just as

the country's economy was seemingly
Financial Capital
Promote Financial recovering from the spillover effects of the
Sustainable Growth and its relevance
to the Bank’s Inclusion April 2019 Easter Sunday terror attacks.
Strategy Therefore, the outbreak of COVID-19 was
a massive blow that further weakened
the country's economy which was under
stress. To ease the burden on the general
public and revive economic activity during
Digital this unprecedented disruption, the Central
Leadership
FINANCIAL CAPITAL
Bank of Sri Lanka (CBSL) introduced a Net Interest Income (NII) Non-Fund Based Income (NFBI)
broad-based economic stimulus package With the government-led economic Sampath Bank reported a net fee and
that included the Saubhagya COVID-19 stimulus package and interest caps commission income of Rs 8.5 Bn in 2020,
Renaissance Facility and the Debt introduced by the regulator bringing a decline of 15.7% against the previous
Moratorium scheme to offer support pressure on the Bank’s Net Interest year. The Bank's ability to generate fee
to COVID-19 affected businesses and Margins (NIM), in 2020 the Bank based income was adversely affected by
individuals. Other policy measures by the registered a NIM of 3.3% which was the 2-month long island-wide lockdown
CBSL such as the restriction on imports, 116 basis points lower than the year 2019. as well as due to region-wise mobility
policy interest rate cuts, lowering of the Total Interest Income for the year 2020 restrictions imposed by the authorities
SRR for licensed commercial banks and decreased by Rs 15.0 Bn to Rs 88.6 Bn from time to time in order to control the
the involvement in the domestic foreign compared to Rs 103.6 Bn registered in the spread of COVID-19. The resulting low
exchange market were all aimed triggering previous year, reflecting a dip of 14.4%. level of economic activity and restricted
economic activities as well as preserving Total Interest Expenses too declined by hours of business operations, had a
the stability of the country’s financial 11.6% to Rs 54.8 Bn in 2020 from sizable impact on the volume of fee based
system. Rs 62.0 Bn recorded in 2019. transactions carried out by the Bank
during the year. Further, suspending or
Measures Taken by Sampath Bank
Interest Income & AWPLR refunding of certain charges by the Bank,
Despite the challenging conditions, Rs Bn % considering the current difficulties faced
Sampath Bank continued to prioritise by customers due to the COVID-19
120 11.6 11.6 12
the needs of all stakeholders. Backed 11.2 pandemic also negatively impacted the
by its solid fundamentals and strong 100 11 Bank’s fee based income.
operational capacity, the Bank took 80 10
prompt action to implement government- Net Fee & Commission Income
60 9
led relief measures aimed at combating Rs Mn
the impacts of COVID-19. Accordingly, 40 7.9 8
12,000
the Bank was able to grant the debt 20 7
103.6
79.6
97.9
88.6
moratorium phase I to approximately 50% 10,000

0 6
of customers on its loan book, while phase 2017 2018 2019 2020 8,000
II of the debt moratorium was extended
Interest Income 6,000
to approximately 30% of its loan book. Average of 12 Months AWPLR (RHS)
Sampath Bank also actively participated 4,000
in disbursing loans under the Saubhagya
10,033
Meanwhile as per the “Modification 2,000

8,156
9,919
8,455
Renaissance scheme to eligible customers. method” prescribed in the Sri Lanka 0

Where necessary, the Bank also took Accounting Standards (SLFRS - 9), the 2017 2018 2019 2020
its own initiatives to assist customers to Bank recognised a “Modification loss” of
overcome this difficult time. Rs 3.1 Bn against the interest income, on
However, on a positive note, fees
account of the debt moratorium phase I.
Analysis of the Statement of Profit or generated through electronic channels
Loss and digital platforms recorded a robust
The combined impact of the lower interest
Gross Income increase in 2020, as majority of the
regime and the concessionary interest
customers began migrating to digital
Sampath Bank's gross income declined rates charged during debt moratorium
channels during the lockdown period
by Rs 16.5 Bn or 13.9% to Rs 102.3 Bn phase I, drove down the Bank’s NII by
and thereafter. Despite the reduction
in 2020, due to contractions reported 18.6% from Rs 41.6 Bn in the previous
in trade related activities, the trade
in all key income sources. Interest year to Rs 33.8 Bn in 2020. The Bank
related commission income also recorded
income, which accounts for 86.6% of the continued to closely monitor all variables
a marginal growth. This growth was
Bank's gross income, dropped by 14.4% affecting the NII, supported by necessary
attributed to the government directive
compared to the previous year while fee follow up action to prudently manage the
mandating the conversion of sight LCs to
and commission income which contributes same throughout the year.
term LCs. Meanwhile, aggressive efforts
9.6% to the gross income also dipped by
to capture limited business opportunities
16.6% from the figure reported in 2019.
helped to bolster the commission income.
Given the sluggish 2020 compared to the Rs 2.2 Bn recorded

in 2019. The total exchange income
impairment provisions against the Stage 3
loans in that year. However, the Bank did
movement in the meanwhile reported only a marginal not require higher impairment provisions
overall advance decrease of Rs 1 Mn in the year under against Stage 3 loans in 2020 as it did in
portfolio and the debt review in comparison to the previous year. 2019 owing to the fact that the
Stage 3 loan growth was only Rs 6 Bn
moratoriums extended Moreover, the Net Gain on De-recognition during the year under review.
during the year 2020 of Financial Assets registered Rs 423.8 Mn Consequently, impairment charges against
in 2020 as opposed to the Rs 113.7 Mn
and also considering reported in 2019, a year-on-year (YoY)
Stage 3 loans in 2020 decreased by 33.1%
compared to the previous year.
the potential impact increase of 272.8%.
that could arise once Impairment Charge

On the other hand, the impairment
provision against the investment in Sri
the debt moratorium The Bank remains committed to Lanka Development Bonds (SLDBs) and
phase II lapses in March continuously assess the credit quality of Sri Lanka International Sovereign Bonds
2021, it was decided its advances portfolio in order to ensure

that adequate provisions are recognised in
(SLISBs) increased significantly during the
year, owing to the downgrading of the
to recognise a material the financial statements. In the year under country’s sovereign rating.
impairment provision review, the credit quality of the Individually
Significant Loans was discretely evaluated Operating Expenses
as an allowance for and appropriate provisions were made, Operating Expenses, which stood at
overlay in 2020. regardless of the fact that those customers Rs 20.4 Bn in 2019, decreased to
Additionally, the Bank were within the debt moratorium.
Adequate provisions were also made
Rs 20.1 Bn in the year under review,
downgraded the under the Collective Impairment category

reflecting a YoY drop of 1.3%. The
stringent cost optimisation strategies
customers operating in to capture the impact of weak economic implemented by the Bank in response to
elevated risk industries conditions prevalent for much of 2020.
Moreover, given the sluggish movement in
the challenging macroeconomic conditions
were instrumental in lowering costs.
on prudential basis from the overall advance portfolio and the debt
Stage 1 to Stage 2 and moratoriums extended during the year Nevertheless, the Bank’s Cost-to-Income
2020 and also considering the potential
recognised a substantial impact that could arise once the debt
ratio (excluding taxes on financial services)
increased to 43.5% in 2020, from 36.9% in
provision to account the moratorium phase II lapses in March 2021, 2019. This was primarily due to the 16.2%
potential risk. it was decided to recognise a material
impairment provision as an allowance for
decline in total operating income for 2020
which outweighed the positive impact
overlay in 2020. Additionally, the Bank
created by the 1.3% drop in total operating
Net Other Operating income recorded a downgraded the customers operating in
expenses.
substantial growth of 179.2% in 2020, elevated risk industries on prudential basis
primarily due to higher realised exchange from Stage 1 to Stage 2 and recognised a Taxation
income and the FCY reserve revaluation substantial provision to account the
The total tax expense of the Bank stood
gains. These exchange gains are attributed potential risk. Further, provisions were
at Rs 6.3 Bn for the year 2020, compared
to the 2% depreciation of LKR against the made by increasing the probability
to the Rs 11.1 Bn in 2019, reflecting a
US Dollar. On the other hand, the same weightage on the worst-case
decrease of 43.1%. The removal of Nation
reason was behind the exchange losses macro-economic scenario to capture the
on the revaluation of forward exchange Building Tax (NBT) and Debt Repayment
expected credit losses. Due to all these
contracts, which was responsible for Levy (DRL) with effect from December
prudential measures taken by Sampath
the 98.9% decline in the Net Gain from 2019 and January 2020 respectively, was
Bank, impairment charge against Stage 1
Trading compared to the previous year. responsible for reducing a considerable
and Stage 2 loans for the year 2020
Therefore, while the Bank’s Net Other increased by 15.8% compared to 2019. portion of the tax outflow in 2020.
Operating income increased to Accordingly, the 44.0% effective tax rate
Rs 3.5 Bn in 2020 compared to the Owing to the significant increase in (total) registered for the year was below the
Rs 1.2 Bn reported in 2019, the Net Gain Stage 3 loans (Rs 10.7 Bn) during the last year’s effective tax rate (total) of 49.9%.
from Trading declined to Rs 24.8 Mn for year 2019, the Bank had to make higher
FINANCIAL CAPITAL
Profitability The growth in financial assets recognised 39.3% as at the reporting date, vis-à-
Due to the aforementioned reasons, at amortised cost by Rs 149.6 Bn, which vis the 35.2% recorded as at the end of
Profit before Tax (PBT) for the year 2020 mainly includes the loans and advances the previous year end. Despite the low
dropped to Rs 11.2 Bn from Rs 15.5 Bn and the investments made in debt and interest rate environment that prevailed
reported in the previous year, denoting a other instruments is the main contributor throughout the year, the Bank’s Term
decline of 27.9%. Profit after Tax (PAT) too to the aforementioned total assets growth Deposit portfolio too grew by 15.8% in
fell by 28.0% from Rs 11.2 Bn in 2019 to reported in the year under review. Cash 2020.
Rs 8.0 Bn in 2020. and cash equivalents and the financial
assets recognised at fair value through Total Deposits & CASA
Bank's Performance 2020 other comprehensive income also Rs Bn %
contributed positively to the asset growth
Rs Bn 1,000 60
60 by Rs 11.3 Bn and Rs 6.9 Bn, respectively.
On the other hand, the balances with 800 50
50 3.9 11.8
8.5 the Central Bank of Sri Lanka declined
40 600 39.3 40
33.8 20.1 by Rs 17.7 Bn, owing to the reduction in 33.4
30 Statutory Reserve Ratio (SRR) from 5% in 34.9 35.2
400 30
20
2019 to 2% in 2020.
6.3 200 20
10 8.0
Loans & Advances and Debt & Other
630
698
718
887
0 10
0 Instruments 2017 2018 2019 2020
The main contributor to the Bank’s asset

Commission Income
Total Deposits
growth during this year was not the CASA (RHS)
Taxes on FS &
Profit for the

Net Interest
Impairment
Income Tax
Loans and Advances, the reason being

Net Fee &
Operating
Expenses
Income
Income
Charge
Other
the sluggish credit demand from the On the other hand, due to the net
Year
private sector and the selective lending settlement of repo borrowings obtained
approach adopted by the Bank amid the from CBSL, the year end balance
Return on Equity (ROE) and Return on elevated credit risk prevalent in the market decreased by Rs 13.0 Bn compared
Assets (ROA) throughout the year. As a result, the net to the balances maintained as at 31st
Return on Average Equity (ROE) (after tax) loan book of the Bank, which stood at December 2019. Owing to the maturity
declined from 11.78% in 2019 to 7.58% Rs 689.4 Bn as at 31st December 2019 of 2015/2020 Debenture in November
in 2020, in direct correlation to the lower expanded marginally by 4.5%, to reach 2020, Debt Securities issued too declined
PAT. Return on Average Assets (ROA) Rs 720.2 Bn as at 31st December 2020. by Rs 6.9 Bn compared to the yearend
(before tax) also declined to 1.09% for the On the other hand, Debt and Other 2019. “Due to other borrowers” also
year, from 1.66% reported in the previous Instruments such as Treasury Bills, Treasury contracted by Rs 6.6 Bn in the year under
year. Bonds, SLDBs and SLISBs etc., became the review, primarily due to the settlement
most attractive investment opportunity of foreign currency borrowings and call
Analysis of the Statement of Financial to divert the Bank’s funds. Thus, the Debt borrowings.
Position and Other Instruments portfolio recorded
Total Assets a considerable growth of 76% or Capital Adequacy and Liquidity
Despite the extraordinarily challenging Rs 118.8 Bn in the year under review. The Bank remained well capitalised
environment, Sampath Bank continued to during 2020 with low leverage and high
grow in 2020, as reflected by the 15.4% Liabilities levels of loss absorbing capacity, with all
growth in the total asset base from Sampath Bank’s deposit base expanded by capital metrics maintained well above the
Rs 962 Bn as at the end of 2019 to Rs 168.6 Bn or 23.5% during the year, to regulatory thresholds right throughout the
Rs 1.1 Tn as at 31st December 2020. reach Rs 886.9 Bn as at 31st December year. The Bank’s Common Equity Tier I,
Passing the One Trillion mark in total 2020, compared to the Rs 718.3 Bn Total Tier I and Total Capital ratios stood at
assets in just 33+ years marks a significant reported as at 31st December 2019. This 13.44%, 13.44% and 16.41%, respectively
milestone for Sampath Bank, and also growth was largely backed by the Current as at 31st December 2020, notably above
creates a new record in the Sri Lankan and Savings Accounts (CASA). The Bank’s the Basel III prescribed minimum capital
banking sector as the youngest bank to CASA ratio increased by triple digit basis requirements, while the Leverage ratio
surpass this remarkable landmark. points (410) during the year and stood at of 6.94% too was well in excess of the
minimum requirement of 3%.
Meanwhile, the Bank continued to Earnings per Share for the reporting period number of shares (i.e. 1,144,373,955
maintain all Liquidity ratios above the dropped to Rs 21.04 from Rs 32.84 shares). Consequently, each share will be
minimum requirements all through the reported in 2019, by Rs 11.80 entitled to a cash dividend of Rs 2.75.
year under review. predominantly due to lower PAT in 2020.
However, the Net Asset Value per Share The Dividend Payout Ratio for the year
Group Performance increased from Rs 275.27 reported as at ended 31st December 2020 stood over
Sampath Group consists of four fully end 2019 to Rs 281.94 as at end 2020 by 39%.
owned subsidiaries; Siyapatha Finance Rs 6.67.
PLC, Sampath Centre Limited, Debenture Issue 2021
SC Securities (Private) Limited and Dividend The Board of Directors of the Bank
Sampath Information Technology Solutions The Directors have recommended a final decided to issue 50,000,000 Basel III
Limited. All the companies have reported cash dividend of Rs 8.25 per share for Compliant - Tier II, Listed, Rated,
a resilient performance during these the financial year ended 31st December Unsecured, Subordinated, Redeemable
challenging times. A brief review of their 2020, based on the 381,457,985 shares 7 year debentures (2021/2028) with a
performance is given in the section on in issue as at 15th February 2021. The Non-Viability Conversion at a pre-specified
“Performance of Subsidiaries” in page 95 said dividend is subject to approval of trigger point, at the par value of Rs 100
of the Annual Report. the shareholders at the Annual General each to raise Rs 5,000,000,000 with an
Meeting to be held on 30th March 2021. option to issue up to a further 10,000,000
Performance of the Share of said debentures to increase the said
The Colombo Stock Exchange (CSE) However, if the shareholders approve the sum by up to a further Rs 1,000,000,000
operations were also interrupted in resolution for the proposed sub-division at the discretion of the Bank in the event
2020 due to the pandemic containment of shares in the proportion of 01:03 at of an over subscription of the initial issue.
measures. This together with the weak the Extra-ordinary General Meeting to be The above issue is subject to the approval
economic conditions had a significant held on 17th March 2021, the final cash of the shareholders at an Extra-ordinary
impact on the ASPI. As a result, the ASPI dividend will be based on the increased General Meeting.
fluctuated significantly in 2020, between
a low of 4,248 and a high of 6,774, before
finally ending the year at this peak point.
In line with the fluctuation in ASPI, the
Bank’s share price too fluctuated between
a low of Rs 96.00 and a high of Rs 170.00 Manufactured Capital Intellectual Capital
during the year and settled at Rs 135.60 Strategic allocation of financial Consistent improvement in
as at the end of trading on the 31st resources to develop delivery financial performance over time
December 2020, registering a 16.5% price channels in line with the Bank’s serves to enhance the Bank’s
drop compared to the closing share price expansion strategy will help credibility and reputation in the
traded for the year 2019. However, the strengthen market reach. industry.
market price of Sampath share has been
increased by Rs 32.15 in 2021 to date,
since the year end 2020.
The Board of Directors of Sampath Bank Linkages to

PLC at its Board Meeting held 27th other capitals
January 2021 recommended that the
number of ordinary shares of the Bank in
issue be increased by way of a sub-division
Human Capital
of shares; whereby one (01) ordinary share Social and Relationship Capital
will be subdivided into three (03) ordinary Better financial results allows the
Bank to increase wealth created Strong financial results will enable
shares. As a result, the number of ordinary
for employees by way of above the Bank to consistently allocate
shares will be increased from 381,457,985
average salaries and benefits, thereby resources to meet the needs of all
to 1,144,373,955.
increasing motivation and employee key stakeholders.
satisfaction, and lowering employee
turnover.
MANUFACTURED CAPITAL
Our strategy is based on adding value to the

key areas of our Manufactured Capital in order
to expand Sampath Bank’s island-wide reach,
enhance our ability to service all segments
of the market and augment the Bank’s value
910 creation capacity.
GRI - 102-6
Number of
Our Manufactured Capital comprises the Manufactured Capital Profile
ATMs and CDMs physical and digital assets that confirm the  Sampath Bank Head Office
legitimacy of Sampath Bank's business and
852 (2019) allows us to carry out our core business of
 229 Branches
 348 On-site ATMs
+7% banking. In this manner, our Manufactured
Capital serves as a conduit in delivering  97 Off-site ATMs
Material Topics that Drive our value proposition to customers.  465 CDMs
Sampath Bank’s Manufactured  13 Cheque Deposit Machines
We believe that by developing our
Capital Development Strategy Manufactured Capital, we are able to
 203 MYBANK Agents
 Physical Channels expand our reach to enable more and  5 Digital Banking Centres
 Digitalisation Agenda more Sri Lankans to benefit from the full  Sampath Bank Customer Care Centre
gamut of banking products and services  Sampath Vishwa Online Banking
offered by Sampath Bank. It is this premise
 Sampath Bank App
Scan this QR code for a more that has led us to undertake regular,
comprehensive view of our ongoing investments to strengthen our  Sampath WePay Wallet
physical and digital ecosystems as well  Sampath Bank’s Core IT Infrastructure
www.sampath.lk as the Bank’s core IT infrastructure. Our
strategy is based on adding value to the Value Scorecard for 2020
key areas of our Manufactured Capital in
Branch Network
order to expand Sampath Bank’s island-
wide reach, enhance our ability to service  Under the branch upgrade
all segments of the market and augment programme, a total of 25 recycler
the Bank’s value creation capacity. CDMs were installed.
 Branches were kept open in order to

facilitate regular branch operations
throughout the 2-month island-wide
Support National lockdown during the COVID-19 first
Development wave.
 Expanded the number of hybrid

branches by setting up new digital
centers at Panadura Wekada, Makola
and Oddamavadi branches enabling
Manufactured
them to be converted into hybrid
Capital and its Promote Financial
Sustainable Growth branches.
relevance to the Inclusion
Bank’s Strategy
Digital
Leadership
ATM Network IT Infrastructure Development  Risk Management Systems

 A total of 22 new ATMs were The Bank priorities were two-fold; including Early Warning Systems
commissioned in key towns and cities were further strengthened.
1. Building system capabilities:
around the island.  A Predictive Analytics tool was
 Second data centre was shifted introduced to assist the Risk
 The first off-site digital centre was
to SLT’s tier 3 data centre in Management Department to
established in Katugastota in January
Pitipana, which operates as per detect possible Non-Performing
2020.
the international standards and Advances.
global best practices for end to
Recalibrating in response to  Microsoft 365 was implemented
end redundancy protocols.
COVID-19 challenges to enable employees to manage
2. Strengthening overall resilience to their work streams remotely via
The mobile ATM was introduced as
manage the impacts of COVID-19: business communication systems.
a temporary measure in the Western
Province during the COVID-19  To accommodate the high  “Vidvan” - a new advanced
lockdown from March to May 2020. transaction volumes during Learning Management System
Recycler ATMs were deployed to offer the COVID-19 lockdown, (LMS) was rolled out to support
cash deposits, withdrawals and utility load balancing software was the Sampath Learning Academy
bill payment facilities. implemented to minimise the to move all learning tools to an
downtime across all digital online platform.
Agency Channel banking platforms.
 203 MYBANK agents were

onboarded to cover geographical
pockets that are not adequately
covered by the branch network.
Digital Banking Solutions Financial Capital Intellectual Capital

Broadened the spectrum of Multiple banking channels will Consistently high system uptime
Digital Banking Solutions by; boost the Bank’s revenue and and high resilience of core
profits. systems create a positive impact
 Extending the Digital Loan scheme to
on the Bank’s reputation and
different loan categories including the
enhance brand equity.
Samachara loan for pensioners.
 Introducing “Evolve”, an e-commerce

platform for small and medium sized
businesses. Linkages to
other capitals
 Enhancing the Sampath Vishwa (Retail
and Corporate) platforms with a host
of additional features.
Natural Capital Social and Relationship Capital

Greater focus on digital banking Wider choice of channels helps
solutions will result in lowering to gain the trust of among
the use of paper and thereby diverse customer segments.
lessen the Bank’s environmental
impact.
MANUFACTURED CAPITAL
We believe that
Proposed Action for 2021
by developing our
Installing cheque deposit machines at selected branches. Manufactured Capital,
we are able to expand
Increase the number of hybrid branches to cover 48% of the total branch our reach to enable
network.
more and more Sri
Expand the network of Cash Recycler Machines to enable customers to
Lankans to benefit
perform all routine transactions including cash deposits, cash withdrawals, bill from the full gamut of
payments etc. all through one single machine.
banking products and
A version upgrade of the existing software systems to facilitate the expansion
services offered by
of the MYBANK agency network and to improve the overall operational Sampath Bank.
efficiency of the agency channel.
Develop a simplified new on-boarding platform to allow the end-to-end on-

boarding process to be completed digitally.
Implementation of the fully-fledged Security Operating Center (SOC) to

facilitate continuous and ongoing monitoring of all online transactions in real
time, including remote access by operational teams.
INTELLECTUAL CAPITAL
We operate on the premise that investing in

our intellectual capital will give Sampath Bank
a definite competitive advantage over its peers
in the local banking sector.
Intellectual Capital refers to the unique
28.6
 Ranked among the top 5
Rs Bn intangible resources that strengthen
‘Most Valuable Consumer
our business foundations to facilitate
Brand Value Brands’.
the smooth functioning of day to day
operations as well as to safeguard the The LMD Annual Brand
Rs 25.8 Bn (2019) Bank’s long term sustainability. Awards are based on the
+11% annual index published
We operate on the premise that investing by Media services. The
in our intellectual capital will give Sampath index is derived following
Bank a definite competitive advantage a comprehensive analysis
Material Topics that Drive
over its peers in the local banking sector. conducted by Brand Finance
Sampath Bank’s Intellectual
Sri Lanka to profile the
Capital Development Strategy country's leading brands
Intellectual Capital Profile
 Corporate Brand Image/ vis-à-vis performance and
 Strong brand reputation
Goodwill Building achievements for a particular
 Business Continuity Planning Brand Accolades for 2020 year.
 Information Security
 Sampath Bank was bestowed the  Sampath Bank PLC was rated
following accolades at the LMD amongst the Top 1000 Banks in
Scan this QR code for a more Annual Brand Awards 2020; the World in 2020 by the UK’s
comprehensive view of our Banker magazine in its 50th
Intellectual Capital  10th place in the overall
anniversary issue in 2020.
www.sampath.lk ‘Most Loved Brands’ category
becoming the most loved  Sampath Bank was recognised as
Banking Brand in the country Sri Lanka’s ‘Best Retail Bank’ and
and the only bank to be ‘Best Commercial Bank’ for the 7th
ranked among the top 10 consecutive year, at the prestigious
brands for 2020. World Finance Banking Awards
by the UK based World Finance
magazine.
 Sampath Bank was among the

Top 10 “Most Respected Entities
in Sri Lanka” for the year 2020,
in a survey and publication
commissioned and conceptualised
by LMD and conducted by Nielsen.
Intellectual
Capital and its Digital Leadership
Sustainable Growth  ISO 27001 certified information
relevance to the
security system
Bank’s Strategy
 Business Continuity Planning
framework benchmarked against
global best practices
INTELLECTUAL CAPITAL
Improving the BCP Framework Strengthening Information

What customers say about the Security Systems
 Realigned BCP controls to
Sampath Brand
take into account the varying  Introduction of the mandatory
The results of the Brand Health Study risk profiles of different branches due OTP (one-time-password) for the
conducted in 2020 revealed that to the COVID-19 restrictions. safety of Sampath Vishwa (internet
customers overwhelmingly felt that: banking) users.
 Strengthened the existing
 Sampath Bank is an all-inclusive independent DR site framework.  Started the PCI-DSS certification
national bank, catering to diverse process to safeguard against the
 Continued with live drills to test the
needs of all Sri Lankans. possible loss of payment card data.
effectiveness of the BCP in meeting
 Sampath is known to be at the its targeted recovery time objectives.  With a major portion of the workforce
forefront of technology offering required to work from home during
innovative and affordable financial the year, several new control
solutions for the masses. measures were introduced to minimise
the risk of security breaches.
 Warm and friendly service of Team
Sampath reinforces the Sampath  Made significant progress on the
Brand as a truly Sri Lankan bank. ongoing data classification project.
Value Scorecard for 2020

Reinforcing Brand Reputation
Projecting Sampath Bank’s
Financial Capital Manufactured Capital
commitment and responsibility to the
country and its people at a time of national Strong competitive positioning Provides the required system
crisis by; enables the Bank to support to improve the
consistently improve its financial effectiveness of all delivery
 Enabling customers to access the debt performance. channels.
moratorium and other relief schemes
announced by the government to
assist COVID-19 affected businesses
and individuals.
Linkages to
 Began promoting Sampath Bank’s
other capitals
range of digital banking solutions
to provide customers with an
uninterrupted service even amidst
the restrictions imposed due to the
Human Capital Social and Relationship Capital
COVID-19 pandemic.
Creates a solid foundation for Builds trust among customers,
 Expanded the flagship CSR effort employees to carry out their business partners and the
- the “Wewata Jeewayak” initiative duties efficiently and effectively. community.
to uplift the livelihoods of rural
communities and help to lessen the
economic shocks they are likely to
face due to the COVID-19 pandemic.
We continue with
strategic sustainability
Develop and roll out DR sites for identified business functions. initiatives focused
on community
Introduce web based BCP guidelines. development,
environmental
Invest in advanced Data Leakage Prevention (DLP) software.
protection and
Complete the PCI-DSS certification by mid-2021.
supporting SMEs in
order to holistically
Implementation of Comprehensive Security Operations Center (SOC). strengthen Sampath
Bank’s Brand image
Continuous customer and staff awareness programmes. as a responsible
corporate steward.
Continue with strategic sustainability initiatives focused on community
development, environmental protection and supporting SMEs in order to
holistically strengthen Sampath Bank’s Brand image as a responsible corporate
steward.
HUMAN CAPITAL
We have a planned approach focused on building

strong connections with our team members both
individually and collectively as Team Sampath, to
ensure every team member is deeply committed to
the Bank’s core values and purpose.
42.7
Average Training We continue to invest Human Capital Profile
Hours Per Employee considerable resources each  4,048 employees
year to provide our team  32.5% of employees serve outside the
33.6 (2019) members with an unparalleled Western Province
+27% range of engagement
 49% of employees have been with the
opportunities. Bank for over 10 years
 66 : 34 (male : female) overall gender
Sampath Bank’s Human
At Sampath Bank, we consider Human ratio
Capital Development Strategy Capital to be one of the most important
 24% female representation in Senior
 Talent Acquisition and elements of our Bank’s success. That is
Management
Management why we believe that developing human
 Learning and Development capital requires a broad-based approach to Value Scorecard for 2020
 Anti-corruption Practices create an environment where employees
Recalibrating to Adapt to
 Employee Relations feel empowered to learn and develop the
COVID-19 Challenges
 Employee Engagement required skills, behaviours and attitudes,
Safety Preparedness
and apply innovative ideas to give Sampath
Bank a definite edge that would accelerate  Set up a COVID-19 Prevention
our onward journey. Committee to serve as the main
comprehensive view of our
Human Capital liaison between the Bank and the
health authorities and advise the
www.sampath.lk
Bank’s management regarding specific
actionable initiatives.
 Proactive steps were taken to ensure

employee safety; mask wearing was
made mandatory, installed physical
barriers at counters and arranged
Support National sanitising facilities at the entrance
Development to each branch. Branches were
disinfected as and when needed.
Awareness Campaigns
 Launched an e-flyer campaign to raise
Human Capital awareness among team members with
and its relevance Promote Financial
Sustainable Growth regard to Best Health Practices.
to the Bank’s Inclusion
Strategy  The Bank’s senior leadership began
visiting branches affected by
uncertainty in order to assess the
ground situation.
Digital
Leadership
Work Arrangements
 Declared that expectant mothers
would not be exposed to front office Regular
operations and instead they were Communications
granted special leave.
to enhance awareness
 Branch operating hours were curtailed of best health practices
as per the guidelines issued by the and focus on motivational
government. aspects
 New work arrangements, including

the work-from-home model was Administrative Internal Guidelines for
introduced for staff and Corporate Support Team Sampath
Management. to provide assistance in Interventions for to ensure the health
COVID-19 related issues the Prevention of and safety of team
 Initiated the Shared Transport Scheme
faced by business units and COVID-19 members in line with the
(STS) to facilitate the transport
individual team members via recommendations of the
requirements of team members during
central monitoring desk of Epidemiology Unit of the
the pandemic.
HR Department Ministry of Health
 The Bank’s traditional dress code was
relaxed for staff.
Special Work and Other
 A pool of team members from the
Arrangements
head office was earmarked to be
to ensure optimum
deployed at branches in case of an
convenience and smooth
emergency situation.
business operations
COVID-19 Monitoring
 A central “COVID-19 Monitoring
Desk” was set up under the purview
of the HR Department to manage
communication between all internal  Rolled out our learning master plan support of employees in meeting
and external stakeholders. "Stride 2020" broadly focusing on: the business objectives despite
the challenges presented by the
 Strengthening credit competency
Financial Relief COVID-19 pandemic.
of branch managers and other
 Decided to refrain from deducting credit decision makers.
Updates to the Benefit Structure
staff loan installments (capital and
 Building awareness on digital  All confirmed employees
interest) in the month of April 2020.
channels among branch staff. were granted an 8% salary
 Permanent team members in the increment.
 Supporting leadership
grades of Junior Executive and below
development.  Arrangements were made to grant
were granted a “salary advance”.
 Customer service development. the full entitlements earned under the
Migration to Online Learning performance-based bonus scheme for
 Conducted several webinars covering the year 2019.
 “Vidvan” - a new learning management various operational aspects, including
system to enable almost 100% of productivity improvement and  The following revisions were made to
training activities to be carried out operational lapses. the current benefit scheme:
online.
 Launched a special webinar series -  The staff housing loan
“Sailing Through Rough Seas” where entitlement was increased.
the initial session was conducted by  A rate reduction for special staff
the Managing Director to gain the loans obtained by employees.
HUMAN CAPITAL
Strengthening the Overall

HR Policy Framework
 The Grievance Handling Policy
was updated to reflect the Bank’s Financial Capital Manufactured Capital
commitment to an inclusive
Performance driven culture Learning and development
environment.
supports the business strategy interventions help employees to
 A new Policy on Overseas Travel to achieve higher financial become more productive through
was introduced to standardise performance. better use of resources.
the overseas travel procedure, for
members of team Sampath who are
required to travel overseas for both
official and personal purposes.
Linkages to
Employee Engagement other capitals
Activities
Key employee engagement
activities for 2020 included;
Social and Relationship Capital Intellectual Capital
 Presentation of Long Service awards
to 76 team members who completed Empowered employees are A highly talented and motivated
25 years of service. better equipped to deliver the team enhances the Bank’s
Bank’s value proposition to its competitiveness and bring in the
 Launch of the “We beyond I” customers. competitive edge.
campaign to emphasise the
importance of teamwork and
comradeship at the workplace.
 Launch of the “Save for Tomorrow”

campaign, a competition to inspire
employees to promote the usage of
digital channels among customers.
Focus on the change management process where we will seek increased
 Release of a personalised appreciation automation and digitalisation, thus releasing team members who perform
card to children of employees in mundane tasks for reskilling and subsequent redeployment to more value
allowing their parents to serve during adding tasks.
the pandemic.
Develop alternative work arrangement solutions that allow employees to be

Health and Wellness
more productive to maintain a better work-life balance.
Interventions
 Continuing with our regular
health and wellness initiatives, we Enhance the “Vidvan” learning platform through the integration of augmented
participated in a Healthiest workplace reality and other advanced learning tools.
self-assessment survey. Based on the
outcome, the Bank was nominated as Accelerate the career progression programme to strengthen the 1:1 backup
a “Healthiest Workplace 2020”. ratio for all key managerial positions.
 Continued to publish our quarterly
e-health magazine to provide
Review and revamp the Bank’s HR function in order to ensure a future-ready
information with regard to health and
HR Department capable of driving the Bank to the next level.
safety.
 Partnered with a leading private

hospital chain to provide employees
with free health screening facilities.
SOCIAL AND RELATIONSHIP CAPITAL
We want to build strong relationships with our

customers, suppliers and the wider community
based on trust and mutual respect. The relationships
we have built with stakeholders across our value
chain are vital to the continuity and long-term
Rs 15 Mn sustainability of our business as a bank.
Value Distributed to the Social and Relationship Capital refers to Value Scorecard for 2020
Community the relationships with key stakeholders Customer Scorecard
across Sampath Bank’s value chain, in
Rs 10 Mn (2019) +50%
particular the connections we have with
Recalibrating to Adapt to COVID-19
Challenges
our customers, suppliers and ties to the
 Launched the “Cash-in-a-flash” delivery
community.
Material Topics that Drive service in partnership with PickMe.
Sampath Bank’s Social We believe that developing and  Introduced the mobile ATM service
& Relationship Capital
strengthening these bonds creates a firm at selected locations as a temporary
Development Strategy
foundation for Sampath Bank to pursue measure from March to May 2020 to
Customer innovation and differentiation to stay give customers the ability to make cash
 Customer Convenience ahead of peers. deposits, withdrawals and utility bill
 Customer Health and Safety payments during lock-down.
 Sales Promotions, Marketing Social and Relationship Capital Profile  Activated the “Social Share” feature on
Communication and the Sampath WePay App to facilitate
 Solid customer base consisting of
Information Availability on “Avurudu Ganu Denu” transactions
individuals, SMEs and corporate
Bank’s Products and Services during the April 2020 New Year period.
customers across the island.
 Customer Privacy
 Research and Development  Strong ties to grass root level  Rolled out the “Doorstep Banking”
 Complaint Management communities in all districts. facility enabling customers to remotely
open savings and fixed deposit
Community and Supplier  Diverse network of suppliers around
accounts.
 Community Development the country.
 Financial Inclusion Agenda  Granted digital access to the
"Samachara" senior citizens loan scheme.
 Launched “Evolve”, an e-commerce
comprehensive view of our
Social & Relationship Capital platform for small and medium sized
businesses.
www.sampath.lk
 Aggressively promoted the “Missed
Support National Call” alert facility to receive updates
Development regarding the bank balances.
 Partnered with the Central Bank of

Sri Lanka (CBSL) to begin promoting
“LANKAQR“, as a comprehensive
Social and e-payment solution to replace physical
Relationship cash transactions.
Sustainable Capital and its Promote Financial
Growth relevance to the Inclusion  Expanded the MYBANK agency
Bank’s network by 19% to encourage
Strategy customers in rural areas to fulfill their
day-to-day banking needs through the
nearest MYBANK agents.
 Began educating customers on the safe

Digital
use of digital channels.
Leadership
Streamlining Complaint Handling

"Wewata Jeewayak" Wewa, located in the Kokunnewa area
of Bibile in the Monaragala district and
 A separate operational team was
appointed from within the Customer contributes to the the second the restoration of sluice gate
Care Centre to track web-based Bank’s triple bottom of the Nalawagama Wewa located in
Nalawa village, Nochchiyagama in the
feedback.
line approach, as it Anuradhapura district.
 Began installing a comprehensive
new AI-based data analytics system enriches the lives of
to deepen the complaint analysis the community in the
mechanism at the Customer Care
Centre. area, improves the
 Resolved the issue of recurring surrounding eco-system
complaints regarding statement and empowers agri-
delays, owing to postal delays by 2017
encouraging our customers to accept entrepreneurs by making Ambagaswewa
e-statements. them financially inclusive. 2018

Dhanyawa Wewa
GRI - 413-1/203-1,2 2020
Measuring Customer Satisfaction 2017 Nalawagama Wewa
Community Scorecard Halmillakulama Wewa
In 2020, we conducted a Brand
“Wewata Jeewayak” - Tank 2014
Health Study, which also enabled
Restoration Programme Dematawa Wewa
us to gain some insights regarding
2020
customer satisfaction levels among The “Wewata Jeewayak” programme Kindagalla Wewa
our customers. The study which was is Sampath Bank’s flagship community
2002
conducted in 2020 was strategically development initiative which aims to Ilukpelassa Wewa
done to cover all parts of the country restore the traditional irrigation networks
2001
while also targeting a broader cross in order to provide a dependable supply Udamatthala Wewa
section of customer segments as well. of water for dry zone farmers to irrigate 2002
their paddy lands in order to harvest Konkatiara Wewa
both the Yala and Maha paddy seasons,

Improving Product Relevance
annually. In 2020, we undertook two Restored tanks during past two decades by
Embarked on two parallel projects to tank restoration projects - the first the Bank.
ensure our products remain relevant and being the restoration of the Kindagalla
continue to effectively meet its stated
objectives at all times. Kindagalla Wewa – Profile
Surface Extent: 15 Acres
1. A product mapping exercise to
Pre-Restoration Post-Restoration
establish the product profile for each
of our products by taking into account Capacity to Irrigate 62 Acres of Paddy Land 262 Acres of Paddy Land
its relevance to the customer, stage of Direct Beneficiaries 60 Farmer Families 260 Farmer Families
the product life cycle, contribution to
the Bank’s bottom-line etc. In the first
phase, we undertook to evaluate our
deposit products series.
2. A special initiative to revamp our

“New Product Development (NPD)”
process to introduce decentralised
approaches for idea screening and
concept approval along with clearly
defined roles and responsibilities to
speed up approvals at each stage.
"Wewata Jeewayak" - Inauguration Ceremony of Restoration of Kindagalla Wewa, Bibile.

"Sampath Saviya" Entrepreneurship Development Programme "Hope For a Life" GRI - 413-1/203-1,2
 Held a special “Sampath Saviya” programme through a webinar for 3rd year and final Programme
year undergraduates of the Rajarata University of Sri Lanka.  Sampath Bank together with the CBL
Group and WSO2 jointly donated a
 Conducted a special Youth Entrepreneurship Development Programme for students
fully equipped PCR laboratory to the
of Technical College, Polonnaruwa.
Army Hospital in Colombo. Costing
 Conducted a special Entrepreneurship Development Workshop for Career Guidance Rs 32 Mn, this state-of-the-art lab has
Counsellors at Technical Colleges under the Department of Technical Education and a testing capacity of 600 samples per
Training. day.
Emergency Response Measures

Education for Development
 Conducted a special 3-part online
 Sampath Bank participated in an initiative aimed at realigning the degree curriculum
workshop series on strengthening
offered by state universities to reflect the current demands of the financial services
business resilience was held in May,
industry. Accordingly officers from the Bank were invited to participate to the
June and December 2020. The three
University Curriculum Review Committees to provide inputs regarding industry
webinars were conducted under
standards and advice the university academic panel on knowledge and competency
the “Sampath Saviya” banner for the
requirements to be developed. The universities covered under the project are benefit of SMEs affected by economic
University of Sri Jayawardenepura, Sabaragamuwa University of Sri Lanka, General Sir fallout from the COVID-19 pandemic.
John Kotelawala Defense University and Rajarata University of Sri Lanka. The topics covered at the webinars
 Career Guidance Sessions for Undergraduates included:
First Webinar (May 2020)
Title of the Session Universities
“Business Resilience for COVID-19
“Start Your Career as a Banker - a  Faculty of Management Studies and Commerce, Affected Businesses”
Guidance for Your Interview” University of Sri Jayawardenepura  Creating positive business mind-
 Faculty of Science, University of Ruhuna set
 Planning for business re-building
 Faculty of Business Studies & Finance, Wayamba
 Cash flow management
University of Sri Lanka
Second Webinar (June 2020)
"Getting Ready for the Business  Faculty of Management Studies, Sabaragamuwa
“Business Resilience for COVID-19
World" University of Sri Lanka
Affected Businesses ”
"How to Groom Yourself to Face  Faculty of Management Studies, Rajarata  Creating positive business mind-
the Challenges of Tomorrow" University of Sri Lanka set
"Personal Branding"  Department of Human Resource Management,  Psychological development to
Faculty of Commerce and Management Studies, defeat challenges
University of Kelaniya  Sales tactics and enhance sales
 Key practical approaches to re-
 The Bank facilitated the Annual Career Fairs held by the University of Sri build the business and drive the
Jayawardenepura, the Sabaragamuwa University of Sri Lanka and the University of business successfully
Moratuwa. Third Webinar (December 2020)
 The Bank’s long standing Grade 5 Scholarship Support Programme however could “Progressive Savings”
not be held as planned due to the COVID-19 outbreak and only one programme was  Mind setting towards wealth
conducted in early March 2020 in partnership with Wijaya Newspapers. development
 Understanding the wealth
Clean Drinking Water Project development focused savings
formula
 The staff of Sampath Bank’s Strategic Planning Department together with the
Lions Club of Gothatuwa New Century Leo, District 306C1 commissioned a Water  Personal cash management
Purification Plant for the benefit of school children in Vidhu Aruna Maha Vidyalaya,  Personal balance sheet – present
Mahawilachchiya, in the Anuradhapura District. 300 students of the school are and future
receiving benefits of the project.  Personal income increasing
strategies and expenditure
reduction approaches
GRI - 102-9
Supplier Scorecard
In our efforts to promote financial

inclusion, we engage with all
local suppliers and service providers Financial Capital Manufactured Capital
to help them derive the benefits of Enhancing the overall customer Insights gained from customers
formal banking. The Bank’s Procurement experience provides the help to prioritise the Bank’s
Committee is responsible for the screening opportunity for the Bank to investments across physical and
and selection of suitable suppliers/service grow revenue streams. digital channels.
providers, a process that allows us to
assess the risks involved in purchasing
from different sources.
Number of Registered Suppliers & Linkages to

Service Providers in 2020 other capitals
Department Number
Engineering Department 341
Logistics Department 240
IT Electronic Data Processing 158 Human Capital Intellectual Capital
Department Feedback from customers helps Building strong ties with
Marketing Department 58 to build employee capacity customers and the community
Total 797 by improving the relevance of enhances Sampath Bank’s brand
training activities. reputation over peers.
Expand market research activities to understand evolving customer

demographics and map rapidly changing customer behaviour patterns.
Prioritise the introduction of new digital solutions that have the ability to
transform the local banking landscape.
Support the development of agri-entrepreneurs through the "Wewata

Jeewayak" tank restoration programme and thereby create a foundation to
promote financial inclusion at a grass root level.
Expand the "Sampath Saviya" Entrepreneurship Development Programmes for

undergraduates.
Expand the "Sampath Saviya" Entrepreneurship Development Programmes for

students of Technical Colleges.
NATURAL CAPITAL
We consider Environmental Protection and

Conservation to be one of the fundamental
responsibilities as a leading bank in Sri Lanka. We
aim to be a responsible environmental steward and
strive to minimise the impact that our business may
1,919 tCO e 2
have on the environment.
GHG Emission Reduction
Natural Capital Profile  Launched solar energy loan campaign,
204 tCO e (2019)2
+841%
 17% Reduction in Greenhouse Gas “Sampath Soorya'' aimed at promoting
individuals and businesses to invest in
Emissions of Sampath Bank.
rooftop solar installations.
 3% Reduction in Electricity
Consumption of Sampath Bank Head  Significantly expanded our green
Office. product range and thereby lowering
Sampath Bank’s Natural paper usage.
 38% Increase in Solar Power
Capital Development Strategy
Electricity Generation of Sampath
Environmental Protection
 Bank. New Renewable Energy Projects
and Conservation Financed in 2020
 21% Reduction in Water Usage of
Sampath Bank Head Office. Number of Projects 13
Scan this QR code for a more Capacity (MW) 12.7
comprehensive view of our Loan Value (Rs Mn) 1,358
Natural Capital Value Scorecard for 2020
www.sampath.lk Focus on Green Financing and
Green Products
 Continued to focus on financing
of large scale renewable and clean
energy technology projects.
Natural Capital Support

and its relevance
Sustainable Growth National
to the Bank’s
Development
Strategy
Marketing communication campaign on solar

energy loan scheme.
Despite the fact that our business activities have very little impact on the environment, we
believe that pledging support to minimise the loss of the earth's natural capital can help to
strengthen Sampath Bank's position as a sustainable bank.
NATURAL CAPITAL
GRI - 306-2
Expanding Paperless Operations Savings From

 Launched Sampath Green HR
initiative which saw a number
Waste Paper Digital Products
of key HR processes being digitised.
 Rolled out the “Vidvan” e-learning Paper Recycling Slip-less Banking Cash Deposit Machines
management platform as well as 362 Trees

885 Trees 65 Trees
the Microsoft 365 suite, which
together have been responsible for a Oil 91,321 Litres Oil 6,701 Litres Oil 37,336 Litres
substantial reduction in the average
annual paper usage recorded by the Electricity 208,140 kWh Electricity 15,272 kWh Electricity 85,096 kWh
Bank.
Water 1,653,672 Litres Water 121,336 Litres Water 676,088 Litres
 Implementing a digital archiving
system to record and store customer/
Landfill 156 m3 Landfill 11 m3 Landfill 64 m3
office data.
Reduce GHG emission by Reduce GHG emission by Reduce GHG emission by
 Streamlining internal communications
52,035 kg of carbon equivalent 3,818 kg of carbon equivalent 21,274 kg of carbon equivalent
with E-mediums (E-circulars, E-forms,
E-board papers).
Note: Figures confirmed by Neptune Papers (Pvt) Limited.
 Launch of Sampath Document GRI - 302-1,2,3,4
Approval System (SDAS).
Energy Consumption
Sources: Renewable & Non-Renewable
Promoting Resource Efficiency
Electricity Heating Cooling Steam Solar Power
Energy Reduction Initiatives; Consumption 3,170,946 kWh No No No No
In Branches (Head Office)
 Invested Rs 12.2 Mn in new rooftop Sold No No No No No
solar installations at Piliyandala, Reductions/ 98,529 kWh - - - 251,908 kWh
Tissamaharama and Anuradhapura Savings (Head Office)
Super branches.
 Continued with the programme to Using any standards/methodology and assumptions used : No
install LED lighting solutions and Using any conversion rates : No
commission inverter air conditioning Energy used outside of the organisation : No
units across the branch network.
 Commissioned reflective exterior glass Water Management GRI - 306-1
Solar Power Generation at Branches
panelling at branches.
2020 Being a service organisation, water is
In Head Office Branch System Saving not a material topic to Sampath Bank.
 Commissioned ‘Smart Technology Capacity Water is used primarily for the utility
Magnetic Bearing Chiller’ to replace (kW) (kWh) and sanitisation requirements of our
conventional air conditioning systems. Colombo Super 35.0 41,039.8 employees. Continuous awareness
Kalutara 32.0 44,554.0 programmes are carried out to encourage
 Installed motion sensors in the employees to conserve water.
Negombo Super 42.2 63,286.0
washrooms and motion detectors in
Narahenpita 28.0 39,780.3
corridors. Water Discharged and Saving
Wellawatte Super 30.5 36,141.9
(Head Office)
Piliyandala 39.4 11,930.0
2020 2019
2,678 kWh Energy Intensity Tissamaharama 20.0 5,100.0
Water 30,748 m3 38,844 m3
Ratio (Head Office) Anuradhapura Super 36.5 10,076.1
discharged
2020 - Electricity Water source: National Water Supply and
consumption Drainage Board
per employee per
Reduction of water usage: 8,096 m3 (2020)
annum
Measuring GHG Emissions GRI - 305-1,2,3,4,5,7 Ongoing Improvements to

Undertook to prepare Sampath Bank’s annual Greenhouse Gas (GHG) emissions Strengthen the Environmental
inventory report for the 7th consecutive year. Covering all Bank operations and Social Management System
including Head Office and all 229 branches, the GHG calculation for 2020 was conducted
(ESMS)
in accordance with ISO 14064-1:2006 and was carried out by RR Associates (Private)  Conducted an online webinar
Limited, a leading environmental service provider in Sri Lanka. session to educate branch managers,
relationship managers, regional
managers, zonal managers and heads
of lending units on the importance
of conducting an environmental due
Carbon Footprint Calculation
diligence on loan proposals.
Assessment Type : Organisational Greenhouse Gas Assessment
Applied Standards : ISO 14064 - 1:2006 Fifth assessment report
Special Projects
(5AR) of IPCC,2006  Contribution to the Wildlife
and Nature Protection
The Greenhouse Gas Protocol : A Corporate Accounting and Reporting Standard
Society of Sri Lanka:
(revised edition), WRI/WBCSD
An ongoing effort that reflects the
Reporting Period : 01.01.2020 – 31.12.2020
Bank’s commitment to support
Base Year : 2019 national environmental protection and
conservation initiatives.
Scope GHG Emissions (tCO2e) in 2020  Biodiversity Conservation Project:
Total CO2 N 2O CH4 A long term project to lend support
to Biodiversity Sri Lanka’s efforts to
Emissions
restore ten hectares of degraded
Direct GHG Emissions (Scope 1) 354 352 2 0.1 forest land in the Halgahawala forest
Indirect GHG Emissions (Scope 2) 5,350 5,350 - - reserve in Opatha in the Galle district.
Other Indirect GHG Emissions (Scope 3) 3,434 3,401 26 7  White Sandalwood Tree Planting
Total GHG Emissions 9,138 9,103 28 7 Project:
GHG Emission per Employee 2.3 A project to plant and maintain 360
White Sandalwood plants at the Sri
2020 2019 Reduction
Lanka Air Force station, Weerawila in
Total GHG Emissions (tCO2e) 9,138 11,057 1,919 order to increase the forest cover in
Note: Figures confirmed by RR Associates (Pvt) Limited. the area.
White Sandalwood Tree Planting Project. Environment Pledge of Sampath Bank.

NATURAL CAPITAL
Financial Capital Manufactured Capital

Higher market share in the Provides the opportunity to
green financing area will help to introduce innovative new
drive revenue and profit targets. solutions to update/replace
traditional banking models.
Linkages to
other capitals
Intellectual Capital
Enhances Sampath Bank’s reputation as a bank that prioritises
sustainable operations.
As a Signatory Bank of Sustainable Banking Initiative (SL-SBI), Sampath Bank will

continue to focus on:
Promoting Green Financing to minimise and mitigate our environmental

impact.
Responsible consumption of resources to reduce our carbon footprint.
Environmental CSR Initiatives:
Tree planting programme for school children.

A
Million
Promises
BUSINESS REPORTS
Since inception, Sampath Bank has delivered a wide range of products and
services to cater to a nation's needs. Our ever-evolving portfolio promises
a future of value for Sri Lankans across the island.
Consumer Banking 82
Corporate Banking 86
SME Banking 89
Global Banking 90
Nostro Accounts Maintained Banks,
Correspondent Banks and Exchange
Companies 92
Treasury 93
Operational Support 94
Performance of Subsidiaries 95
Investor Information 96
CONSUMER BANKING
During 2020, Sampath The CBSL also cut policy interest rates
several times in quick succession over the
Performance Outcomes
During 2020, Sampath Bank raised Rs 71 Bn
Bank raised Rs 71 Bn period, which saw the Standing Deposit in term deposits and as at 31st December
in term deposits and Facility Rate (SDFR) drop a total of 250 basis 2020, the term deposit portfolio accounted
points to 4.50% as at 31st December 2020
as at 31st December from 7.00% a year ago.
for 59% of the total deposit portfolio. This
points to the success of the Bank’s strategy
2020, the term deposit to focus on mobilising term deposits with a
Strategic Responses
portfolio accounted for As was the case across the industry,
long term tenure.
59% of the total deposit Sampath Bank too was placed in a difficult The Bank’s CASA ratio too recorded a
portfolio. This points position due to excess liquidity, which led to
a complete rethink of the planned deposit
year on year improvement of 410 basis
points which pushed up Sampath Bank’s
to the success of the mobilisation strategy. Stemming from this, year end CASA ratio to 39.3%, well above
Bank’s strategy to focus it was decided against aggressive deposit the industry average of 34.5%. Among
taking activities from the second quarter. the various savings propositions, general
on mobilising term savings reported a notable growth, which
deposits with a long Nonetheless, Sampath Bank does continue no doubt is thanks to the value additions
to attract a fair share of deposits each
term tenure. month and this was the case even
offered to customers in response to the
COVID-19 lockdown.
amidst the persistently low interest
Deposits rate environment in 2020. As a risk Deposit Mix
Operating Context management measure, it was felt that %
Despite having started off on a positive these inflows too should be streamlined in 2
order to reduce the liquidity gap between 6
note, the year 2020 proved to be one of
the most challenging times in Sri Lanka’s deposit funding and the Bank’s typical
recent past as the COVID-19 pandemic long term lending model. With the focus
33 59
started to define the local business then shifting towards mobilising long term
environment from March 2020. funds, existing term deposit rate structures
were revamped in a bid to increase the
With major disruptions to the normal skew towards longer tenure term deposits.
course of business and the demand for
credit at an all-time low, the banking Furthermore having observed that
sector was left dealing with a severe customers were less inclined to tie up Term Deposits Demand Deposits
funds in term deposits and more likely to Saving Deposits Others
excess liquidity throughout much of
2020. Also contributing to the excess retain funds in easily accessible savings
liquidity situation was the CBSL’s decision especially during uncertain times, the Total Deposits
to reduce the SRR to 4% in March 2020 Bank seized the opportunity to boost Rs Bn
followed by a further 2% reduction in June CASA volumes and thereby support its
1,000
2020. While the decision to reduce the long standing objective to source low
SRR was done with the expectation that cost funds. In this regard, the mobile ATM 800
banks would lend to COVID-19 affected service was launched to allow customers
600
businesses, this did not materialise as to receive cash during the lockdown
expected with many Bank’s adopting a period along with the doorstep banking 400
more prudent lending approach amidst model that was initiated in partnership
with the ‘PickMe’, enabling cash withdrawn 200
rising NPL pressure.
630
698
718
887
from the ATM to be delivered to the

0
The CBSL’s decision to relax exchange doorstep of a customer. 2017 2018 2019 2020
control regulations to encourage foreign

currency inflows through the banking A series of specialised cash management
system was another contributory factor solutions were also initiated for the benefit
for the excess liquidity in the market from of corporate customers and high net worth
April 2020 onwards. individuals.
Way Forward respect of locally assembled motor cars, 4% for COVID-19 affected businesses and
Given that it is quite likely that the excess SUVs and vans to 70% from 50%, with individuals, a strong uptick in the demand
liquidity scenario will continue for some effect from May 2020 was a welcome for personal loans was evident. While
time to come, Sampath Bank’s deposit change. taking necessary action to assist eligible
mobilisation strategies for the next 12 - customers to access the Saubhagya
Strategic Responses scheme, in parallel the Bank also began
18 months will remain largely unchanged.
CASA growth would therefore be the main All key elements of Sampath Bank’s promoting other refinance schemes
priority. Encouraging customers to move retail lending model were challenged by available under SMILE III, e-friends III etc.
their term deposits into the longer tenure the pressures arising from the external
environment during the course of 2020. Moreover, seeing a strong demand for
format will also remain an important item
The leasing business which had shown signs instant funding options immediately after
on the future agenda.
of picking up in the early part of the year the COVID-19 lockdown restrictions were
Loans and Advances was dealt a massive blow by the restrictions lifted in May 2020, the Bank stepped up
on vehicle imports announced as part of efforts to deepen the penetration into
Operating Context
the COVID-19 monetary policy control the pawning segment. Leveraging on the
With signs of a gradual economic rebound
measures. Amidst these limitations, Sampath government mandated lower interest
evident towards the end of 2019, it
Bank was quick to take advantage of the LTV rate for pawning advances, the Bank
was widely expected that 2020 would
upswing in order to stimulate the demand accelerated efforts to grow island-wide
bring the long awaited boost for local
for locally assembled motor vehicles. To volumes. At the same time mindful of the
businesses. However, market conditions
deepen the penetration into the registered market risk, a new three-month gold loan
changed abruptly following the COVID-19
vehicle market, it was decided that the product was introduced to take advantage
outbreak in March 2020 causing
Bank should begin offering more structured of the gold prices in the international
widespread uncertainty about business
leasing solutions designed to match the cash market. The new product which offers a
prospects. Furthermore, with the survival
flows of individual customers rather than the significantly higher advance quantum was
of certain sectors of the economy coming
standard rate grid offered in the past. rolled out in mid-2020. A fully fledged
into question, the resulting credit slump
Pawning and Gold Loan Management
was only to be expected. With the credit
The demand for housing loans meanwhile, system was launched in June 2020 to
appetite on the decline, it was no surprise
which had been on the rise in the first streamline processing requirements and
to see stiff competition among banks to
few months of 2020, fell sharply as improve service delivery times. Additional
capture what limited lending opportunities
organisations across various sectors system developments were also done to
were available in the market.
announced salary cuts and furlough give pawning customers ATM access.
schemes in a bid to cope with disruptions
The year 2020 was a difficult one for the Performance Outcomes
caused by the COVID-19 lockdown.
local banking sector as its retail lending
However, as the CBSL’s accommodative Pawning & Gold Loans
model came under additional pressure
monetary policy measures appeared to Rs Bn %
due to the special policy measures
reignite the demand for housing loans
adopted and concessions granted by the 40 6
from mid-2020, Sampath Bank began to
government to bring relief to COVID-19
aggressively promote its “Flexible Housing 4.8 5
affected businesses and individuals, such 30 4.6
Loan Scheme” in an effort to grow market
91
4
82
as the decision to halt non-essential 3.5

3.7
share in the housing loan segment.
imports and the rate caps imposed on 20 3
pawning advances.
While the COVID-19 relief measures 2
10
including the debt moratorium granted 1
Ongoing revisions to the loan-to-value
by the government proved to be a major
20
25
33
37
ratio (LTV) have long been a cause for 0 0

challenge for the Bank; it did also present 2017 2018 2019 2020
concern, given its inevitable impact on
some notable opportunities as well.
the banking sector’s leasing business. Pawning & Gold Loans
Following the government’s announcement Pawning & Gold Loans as a % of
However, as per the Banking Act Direction
of the Saubhagya COVID-19 Renaissance Total Advances (RHS)
No. 04 of 2020, pushing up the LTV in
facility offered at a concessionary rate of
CONSUMER BANKING
Leasing Advances Strategic Responses

Going forward, the
Sampath Bank’s Credit Card operation too
Rs Bn %
came under pressure as new acquisitions
Bank expects to follow
40
4.4
4.7 5
came to a standstill during the COVID-19 a bold approach to
30
3.7 3.6
4 lockdown in March, April and May and then
again in the fourth quarter. Meanwhile
position Sampath Cards
20
3
settlement delays due to the restrictions as an independent
2 imposed by the CBSL directives brought
Credit Card Brand that
fresh worries in the form of higher NPAs.
10
1 Amidst this backdrop, the Card Centre can capture a larger
offered a series of special relief measures as share of the market.
21
24
32
35
0 0
2017 2018 2019 2020 part of a broad-based strategy to minimise
the default risk to the Bank. Accordingly, Performance Outcomes
Gross Leasing Advances
Leasing as a % of Total Advances (RHS) Sampath Bank Credit Card customers were
Credit Card Advance Portfolio
given an extension on the settlement date
Rs Bn
Way Forward well beyond the government mandated
30th April deadline, along with flexible 20
With the government further extending
repayment plans being offered to those
the vehicle import ban until March 2021,
who requested for additional relief in 15
it is quite likely that Sampath Bank’s loans
settling their card outstanding balances in
and advances model will remain under
these difficult times. 10
pressure for some time to come. However
there are some visible opportunities that
Meanwhile in a bid to boost transaction 5
the Bank will look to capitalise on, going
volumes during the lockdown period,
11.0
14.4
16.4
15.8
forward. These include the pawning and
special emphasis was placed on promoting 0
housing loan segments which have proven 2017 2018 2019 2020
e-commerce transactions. In this regard,
to be significantly more resilient than other
steps were taken to encourage customers
lending models.
to make use of the SABS (Sampath Cards Related Commission Income
Automated Bill Settlement) mechanism
Cards Rs Mn
to settle their monthly utility bills. These
Operating Context 3,500
activities were coupled with strict internal
With the typical consumer spending patterns cost containment measures aimed at 3,000
disrupted as a result of the COVID-19 reducing the pressure on the bottom line. 2,500
pandemic, Credit Card usage in the country 2,000
remained unpredictable throughout With the gradual revival of spending 1,500
2020. To add to this, frequent regulatory activity post-lockdown, the Card Centre 1,000
directives issued by the CBSL as part of its quickly capitalised on the opportunity
500
2,152
3,040
3,309
2,776
COVID-19 relief package, also hampered to grow new acquisition volumes from
the normal course of Credit Card activity. 0
May 2020 onwards. Several back to back 2017 2018 2019 2020
The first such directive issued in March promotional campaigns including a range
2020 caused some major challenges for of direct discount offers, 0% instalments
credit card operators; a maximum 15% plans, easy payment schemes, extended Way Forward
interest was imposed on all local credit card settlement plans and cashback offers Going forward, the Bank expects to follow
transactions up to Rs 50,000/-, while the were run from May 2020 as part of an a bold approach to position Sampath Cards
minimum monthly payment was halved aggressive effort to grow transaction as an independent Credit Card Brand that
and the repayment period for outstanding volumes. To complement these efforts, the can capture a larger share of the market.
amounts was extended until 30th April partner network was further expanded Leveraging on the Bank’s legacy of 33+
2020. Furthermore, the late fee charge was with the addition of education and years and digital superiority, the Card
waived-off until 30th September 2020. On insurance segments, while efforts to grow Centre expects to develop a dynamic new
the other hand, the CBSL’s decision to revise e-commerce transaction volumes were card proposition that can be supported on
credit card interest rates by capping at 18% also further intensified. multiple digital platforms to offer the user
with effect from 1st September 2020, was
a choice of convenient payment solutions.
meant to stimulate consumer spending.
Bancassurance However, the most severe impact was

due to the regulatory directive preventing
A concerted effort was
The 2020 was unusually challenging for
the Bancassurance operation especially Banks and financial institutions from made to expand the
given its reliance on the Bank’s vehicle changing agent codes without express network of insurance
written consent of the original agent.
leasing business. The weak appetite for
unregistered vehicle leasing meant the The directive which came into effect in partnerships in a bid to
demand for Bancassurance deteriorated September 2020, saw the Bancassurance increase the number of
Department’s average conversion drop
significantly in the year under review.
drastically in the last quarter of the year.
direct referrals. Some
The demand for new insurance was
further affected by the Bank’s decision definite steps were also
to aggressively pursue leaseback
In light of the above challenges, a
concerted effort was made to expand
taken to enhance the
arrangements. Under the leaseback
arrangement, the Bank takes over an
the network of insurance partnerships Bancassurance value
existing leasing facility from another
in a bid to increase the number of direct
referrals. Some definite steps were also
proposition offered to
institution which invariably has an
insurance cover in place and therefore
taken to enhance the Bancassurance value the customer.
proposition offered to the customer.
bears no insurance opportunity for
Bancassurance.
As a result of the prompt and decisive
action taken in the face of unprecedented
To add to this, the directives issued by
challenges, Sampath Bank’s Bancassurance
the Insurance Regulatory Commission
operation registered a solid performance
as part of its COVID-19 relief measures,
well above the budgeted expectations for
also had a bearing on the prospects of
2020.
the Bancassurance business in 2020.
The income flow of the Bancassurance
operation was severely affected following
the special announcement made by the
regulator in April 2020 giving general
insurance policyholders a three months
extension period for the payment of
premiums if their payment date falls within
the period between 1st March 2020 to
30th June 2020.
CORPORATE BANKING
Following the Saubhagya COVID-19 Renaissance Facility

which was offered at a concessionary
website including added functionality
such as inventory management, property
COVID-19 relief rate of 4%. Also immediately after the management and payments. Evolve also
measures announced announcement of the debt moratorium, supports the deployment and positioning
the Bank began working to accommodate of these newly developed e-commerce
by the government, clients’ requests for debt relief under the websites on the World Wide Web.
Sampath Bank was moratorium scheme. With strong emphasis
placed on supporting existing customers to Performance Outcomes
quick to extend its ride out the difficult times, all Relationship Sector-wise Corporate Credit Loan Portfolio
support to customers Managers continued to engage with their %
eligible for the client base in an advisory capacity to

ascertain their cash flow positions and
2 2
Saubhagya COVID-19 2 1
assist COVID-19 affected businesses 2
2
Renaissance Facility. to manage their day-to-day cash flows. 3
5
24
Moreover, taking advantage of the high
liquidity levels, the Bank continued to offer 10
Corporate Credit low cost funding solutions, often providing
Operating Context clients with special structured solutions 20
The strong economic rebound in the over and above the government’s debt 12
latter part of 2019, after the devastating relief package. 15

effects of Easter Sunday attacks earlier
Traders Health Care
in that year, set the stage for robust Special measures were also taken to
Manufacturing IT & Communication
growth prospects in 2020. Greater support client requirements during the Construction Services
lockdown period; selected branches were Tourism Infrastructure
political stability after the November 2019
Agriculture Development
presidential election which contributed kept open for a limited number of hours in Financial Services Transportation &
towards improved business confidence, order to accommodate supplier payments, Professional, Storage
customs duty settlements etc. Having Scientific & Consumption
also put the country on track to accelerate Technical Activities Others
its growth trajectory in 2020. However, a strong, capable team proved to be an
the first wave of COVID-19 which erupted invaluable resource in these challenging
in Sri Lanka in March 2020 proved to be times. Notwithstanding the disruptions
an unexpected challenge in achieving the caused by COVID-19, the staff worked
country’s growth objectives. tirelessly to support clients in overcoming
their difficulties. This can be attributed to
Strategic Responses the consistent investments made over the
With a clear economic revival evident right years to build team capacity.
from the start of the year, Sampath Bank
entered 2020 on an optimistic note and in
In parallel, strong emphasis was placed on 12.8%
readiness to support industries recovering
encouraging clients to migrate to digital Loan Growth -
from the setbacks of the previous year.
platforms to enable them to manage their Corporate Credit
business needs without any disruptions.
The excess liquidity situation created by
the SRR reduction in March 2020 provided
To support this, the transaction capability
of the Sampath Vishwa Corporate 4.8% (2019)
an opportunity for the Bank to lower its +800 bps
platform was further enhanced through
lending rates and pass on the benefit to
the integration of SLPA vessel payments,
the customers, thereby helping them to
SAGT and BOI payments etc. In addition, Way Forward
substantially reduce their finance cost
Sampath “Evolve” was launched specifically With the country’s growth forecasts
during the period under review.
to enable clients to align their business to for the forthcoming year above 3.0%,
In addition, following the COVID-19 relief the emerging e-commerce marketplace. the agriculture, exports, manufacturing,
measures announced by the government, Evolve is designed to provide a set of tools education, IT and construction sectors
Sampath Bank was quick to extend its that a prospective businesses can use to have been earmarked as key growth
support to customers eligible for the easily create a fully functional e-commerce drivers in the year ahead.
As a leading commercial bank in Sri Lanka, Given the economic uncertainty, the Foreign Currency Banking Unit (FCBU)
Sampath Bank remains fully committed demand for Corporate Advisory services Strategic Responses
to align with the national development was also very limited throughout 2020.
It was a promising start to the year for
agenda by supporting these industries that The demand for custodian services, which
Sampath Bank’s Foreign Currency Banking
are expected to drive the country’s GDP after showing some positive signs amidst an Unit (FCBU), as Sri Lanka accelerated its
growth in FY 2021. The Bank will leverage uptick in the local equities at the start of the trading activities after recovering from
on its expertise and proven capabilities to year, gradually diminished thereafter once the backlash of the 2019 Easter Sunday
expand its range of offerings and deliver the pandemic hit in March 2020. However, attacks. Regrettably however, any progress
robust solutions that cater to diverse the onset of the low interest rate regime made in 1Q2020 quickly evaporated
needs of businesses within these sectors appeared to nudge the equity market in in the face of the COVID-19 pandemic
and their sub sectors. the direction of a recovery as fixed income that caused unprecedented disruptions
investors began turning to equities for better in overseas markets and across global
Corporate Finance returns, in turn offering some hope of revival supply chains, all of which had a bearing
Strategic Responses for the Custodian Services model towards on local importers and exporters as well
the latter part of the year. as off-shore entities. Prolonged economic
With several aspects of the economy such
lockdowns and transport restrictions
as infrastructure development as well
Performance Outcomes announced by many countries had an
as financial services, manufacturing and
adverse impact on the global economy
construction sectors taking a hit due to Sector-wise Corporate Finance
Loan Portfolio and in turn severely affected local business
the COVID-19 pandemic, the main priority
% entities. The import ban declared by
for Sampath Bank’s Corporate Finance 1 the government further added to the
Department was to safeguard the quality 2
2 burdens of these local businesses, leading
of its portfolio. Hence it was mandated 3
many to scale down their operations in
that a prudent lending approach be a bid to cope with the consequences.
adopted to manage direct lending activities 34 Amidst this backdrop, the main priority
in these market segments. 58 for the Bank’s FCBU was to manage
such exposures, which were categorised
On the other hand, seeing as the as highly vulnerable risks. Under these
renewable energy sector was relatively circumstances, it was decided that rather
unaffected by the current scenario, the than adding to the clients’ burdens
Corporate Finance Department redoubled through new lending, the FCBU should
Infrastructure Development
its efforts to pursue direct lending in this Financial Services play an advisory role to assist existing
area. One of the pioneers in renewable Professional, Scientific & Technical Activities clients in managing their cash flows during
Construction
energy financing, Sampath Bank has Manufacturing
these trying times. Ongoing engagement
remained steadfast in its commitment to Others with customers through the extensive use
support the sector and thereby earned of digital platforms enabled the FCBU to
a reputation as the foremost expert in Way Forward continuously monitor these exposures
solar energy financing. This proved to be and support business continuity of these
Going forward, the Corporate Finance
a significant advantage for the Bank as entities.
Department will look to leverage on the
it took decisive action during 2020 to country’s renewable energy programme
Nonetheless, staying vigilant the Bank did
capitalise on new opportunities generated to expand its direct lending activities. This
benefit from possible low risk financing
as a result of recent government-led will be driven by an aggressive campaign
opportunities arising out of the COVID-19
initiatives to advance the development to promote the “Sampath Soorya” Loan
crisis. Taking quick action to capitalise on
of sustainable energy. Simultaneously, scheme, a fully-fledged solar energy
these opportunities, the FCBU was able
Corporate Finance also undertook to solution that includes financing as well as
to make some notable inroads across
develop a structured corporate debt a range of specialised advisory services
for SMEs and corporates looking to the Personal Protective Equipment (PPE)
instrument for a prominent renewable
invest either in roof top or ground solar value chain. Leveraging on the Bank’s
energy investing company.
installations. digital superiority, all new FCBU clients
were onboarded using the Sampath
Vishwa Corporate platform, while existing
customers too were encouraged to migrate
to the platform in order to access the
FCBU’s services in real time 24/7, 365.
CORPORATE BANKING
As part of the Bank’s overall risk

diversification strategy, the offshore
Way Forward
As part of the
Needless to say the coming months would
lending focus was shifted to trade be quite challenging for the FCBU, as the
Bank’s overall risk
financing as opposed to CAPEX funding economic impact of COVID-19 is likely diversification strategy,
as it was felt that given the current
uncertainties in the market, there were a
to continue for the foreseeable future.
There are however a few positives that
the offshore lending
fewer opportunities for low risk offshore could work in favour of the FCBU business focus was shifted to
CAPEX funding. Consequently, a new
trade financing facility was launched
model. These include diversification of
trade financing as
global supply chains, which will likely occur
in mid-2020, a move that continues to as the dependence on traditional suppliers opposed to CAPEX
deliver good results. gradually reduces. It is reasonable to funding as it was felt
assume that such a scenario will open
up considerable opportunities for Sri that given the current
Sector-wise FCBU Loan Portfolio Lanka’s export sector. However in order uncertainties in the
% to properly harness these opportunities, it
is vital that Sampath Bank’s FCBU adopts
market, there were a
2 1
3 1 a multi-pronged approach to secure first fewer opportunities
3
4 33
mover advantage among these emerging
market segments. Furthermore, as the
for low risk offshore
gap between rupee and US Dollar interest CAPEX funding.
21 rates continues to narrow, it is expected
that this will present an opportunity for
the FCBU to revisit its offshore lending
strategy in due course.
32
Lending to Overseas Construction

Entities Financial Services
Manufacturing Transportation
Agriculture Others
Tourism
Infrastructure
Development
5.7%
Loan Growth - FCBU
4.2% (2019)
+150 bps
SME BANKING
Operating Context Strategic Responses management, fulfillment as well as multiple

Despite an onslaught of challenges in It was a busy year for Sampath Bank’s online payment options.
the recent past, the SME sector has Business Support Centre (BSC), which is
charged with managing the SME portfolio. As always the Bank remained committed
remained resilient and has continued to
In light of the mixed fortunes in the SME to continue with its “Sampath Saviya''
make an incremental contribution to the
sector, the BSC adopted a two-pronged Entrepreneurship Programme aimed at
country’s GDP over the past five years.
strategy, firstly to assist stressed clients improving financial literacy and business
The SME sector also plays an important
to manage their liquidity constraints and knowledge of SMEs. Regrettably however,
role in the provision of direct and indirect
working capital issues and secondly to many of the scheduled events could not
employment across the country, further be held due to COVID-19 restrictions.
capitalise on the opportunity to support
proof that it is a key engine of growth However, to suit with the new normal
new and emerging SMEs in the agriculture,
fuelling Sri Lanka’s economic progress. conditions and to facilitate the SME
online retailing and IT services.
sector, the Bank successfully conducted
The year 2020 was yet another three special webinar programmes on
Aside from providing assistance through
challenging year for the SME sector, “Business Resilience” targeting the SMEs
the “Saubhagya COVID-19 Renaissance
with many segments severely affected whose businesses were affected by the
loan scheme” introduced by CBSL for
by the repercussions of the COVID-19 COVID-19 outbreak.
the purpose of providing credit facilities
outbreak. The restrictions imposed on
to COVID-19 affected businesses
international travel and the closure of the and individuals, Sampath Bank further Performance Outcomes
main international airport of the country reinforced its commitment to support Sector-wise SME Loan Portfolio
proved to be a massive blow for SMEs customers at this critical time, by taking %
engaged in travel, tourism, leisure and the initiative to launch the “Sampath 2 2
2
transport businesses who were only just Diriya'' loan scheme. “Sampath Diriya” 2
2
recovering from the effects of the Easter is a dedicated loan scheme to enable 5 23
Sunday terror attacks in April 2019. Across new startups and existing SMEs involved 7
the tourism value chain, businesses such in manufacturing and export related
9
as handicraft trade, gems, jewellery and businesses to access funding at a
17
souvenir shops, and laundries etc. were concessionary interest rate. The loan
12
also very badly hit. scheme forms part of the Bank’s “Revive
Sri Lanka'' initiative which is aimed at 17
Meanwhile the biggest challenges for supporting Sri Lanka’s post-pandemic
SMEs catering to the local market, was economic recovery. Accordingly, the
Manufacturing Health Care
their inability to achieve planned sales for “Sampath Diriya'' scheme offers capital Tourism IT & Communication
the April New Year season owing to the loans and working capital loans to SMEs to Traders Services
Agriculture Professional, Scientific
2-month island-wide lockdown. SMEs meet their business requirements as they
Construction & Technical Activities
operating in the manufacturing, trading strive to get over this period of economic Infrastructure Education
and FMCG industries were also severely uncertainty. Development Others
Consumption
hampered by the government ban on non-
Taking steps to strengthen its digital
essential imports that came into effect
platforms to cater to the growing needs Way Forward
from April with the outbreak of COVID-19.
of the SME segment, the Sampath Given the clear expectation by the
Corporate Payment System (SCPS) was government that the SME sector will be
On the other hand, the current situation
further improved and positioned to give a key stakeholder in the country’s post
appears to have paved the way for the
SME customers direct connectivity for COVID-19 economic recovery, Sampath
emergence of a new breed of SMEs
salary payments thus eliminating the Bank will look to significantly expand
engaged in online retailing, online
delays associated with manual processing. its bandwidth in the SME sector in the
marketing and home-based online “Evolve” an e-commerce platform was years ahead. In doing so, the Bank will
operations. This in turn has heightened also launched in mid-2020 to enable likely to focus on firming up its position
the demand for specialised IT and web SMEs, to expand their businesses into in established SME segments such
development services. Interestingly the online e-commerce model from traditional as agriculture in the near term, while
agriculture sector SMEs whose businesses business models. “Evolve” enables these cautiously widening its reach over time
appeared to be relatively unaffected by the entities to develop and manage their own to support the development of new
COVID-19 challenges, also continued to e-commerce enabled websites and further and emerging segments such as IT and
thrive throughout 2020. enhance their businesses with inventory E-commerce.
GLOBAL BANKING
For Sampath Bank’s such as Letters of Credit (LC) opening,

Telegraphic Transfer (TT) requests etc.
In this regard, the main priority will be to
develop more robust digital products and
International Trade services to allow clients to easily manage
Services business, In parallel, a conscious effort was made their import and export trade services
to capitalise on available opportunities to needs online and in real time.
the main priority grow import and export trade volumes.
was to help clients With the government’s decision to Bank Notes Operation (BNO)
allow 180-day credit terms for selected
manage their business commodity imports proving to be a
Strategic Responses
Sampath Bank’s Bank Notes Operation
requirements amidst bottleneck especially for small timers to
(BNO) started the year on a positive
these unprecedented negotiate with the suppliers for longer
credit terms, the Trade team took swift
note. However the BNO’s prospects
challenges. In addition action to assist long standing import

weakened considerably thereafter due to
the impact of the COVID-19 pandemic.
to providing customised clients. Leveraging on established
relationships with the Bank’s network of
However, leveraging on its well laid down
trade solutions, the Bank global correspondent banks, it was decided

business continuity plan, the Bank was
able to provide an uninterrupted service to
took on an advisory role that Sampath Bank would underwrite the
customers.
credit risk of selected import clients in
to assist clients. order to help them minimise supply chain
At the same time, with COVID-19
disruptions and maintain the continuity of
pandemic pressurising the authorities
International Trade Services their business operations.
into curtailing airport operations, the flow
Operating Context of foreign currency into the country was
To capture potential opportunities
With global trade activities thrown into restricted, while the demand for currency
emerging due to the COVID-19 crisis,
chaos due to COVID-19 pandemic, the in the market was further dampened by
the Trade team also initiated a focused
demand for import and export trade the government’s decision to reduce
campaign to tap into the Personal
services deviated significantly from their the currency carrying limit for outbound
Protective Equipment (PPE) manufacturers
usual patterns in 2020. travellers, all of which saw the BNO’s
and exporters.
focus turn towards cost management. In
The import ban introduced by the this regard, several internal processes were
government was another major factor automated.
Inward & Outward TT Volumes
that influenced the demand for trade
services in the year under review. While Rs Bn Way Forward
an immediate slump in demand was noted 350 The BNO’s near term strategy will depend
after the complete ban on all non-essential 300 largely on how the COVID-19 situation
imports was announced in mid-April 2020, pans out over the next 6 - 12 months.
250
a slight improvement was seen on the back In particular, it is hoped that the highly
200
of the gradual easing of import restrictions anticipated opening of the Jaffna and
150
over the months that followed. Mattala airports will help to boost currency
100 flows into the country and enable the
Strategic Responses 50 BNO to record a strong improvement in
220
119
216
127
247
158
327
139
For Sampath Bank’s International Trade 0 repatriation volumes. In the meantime

2017 2018 2019 2020
Services business, the main priority was however, the BNO will look to further
to help clients manage their business Inward improve its internal systems by integrating
Outward the work streams of the main BNO
requirements amidst these unprecedented
challenges. In addition to providing Department at head office, the Chatham
Way Forward Street and Negombo collection centers
customised trade solutions, the Bank took
on an advisory role to assist clients. Strong Over the coming months, the Bank to create a single platform that will offer
emphasis was also placed on promoting will continue in its advisory capacity to greater visibility to branches and promote
digital channels to enable clients to meet support clients adjust to the new normal transparency among money exchange
their routine trade services requirements expectations in the post COVID-19 era. partners.
Despite restrictions Strategic Responses The Bank also continued with its long
standing capacity building initiatives
In light of the unprecedented challenges
caused by the COVID-19 arising out of the COVID-19 situation, conducted in partnership with the Bureau
pandemic, Sampath Sampath Bank’s main priority was to take of Foreign Employment. These initiatives
aim to reach out to migrant workers
Bank was able to advantage of available opportunities in the
market, which saw the Bank promoting before they leave to take up overseas
maintain its Remittance digital remittance solutions for those under employment opportunities.
operation without lockdown restrictions as an alternative to

traditional channels. Digital remittance
any interruption, solutions offer some notable benefits for Despite restrictions caused by the
thanks to the Bank’s the recipients as well; for example it is an COVID-19 pandemic, Sampath Bank
was able to maintain its Remittance
entirely more convenient option as the
IT capabilities and direct account credit eliminates the need operation without any interruption, thanks
timely implementation to visit the Bank counter. to the Bank’s IT capabilities and timely
implementation of strategies adopted for
of strategies adopted Apart from the benefits to the sender and seamless business continuation.
for seamless business the receiver, digital remittance solutions
These factors helped the Bank to achieve
continuation. enhance the Bank’s ability to elevate its
own service standards. It also boosts a significant growth in the remittance
Sampath Bank's efforts to contribute to business volumes which resulted in a
Remittance the national initiative to reduce the volume sizable improvement in the Bank’s market
Operating Context of counter payments and thereby promote share for 2020.
As was the case for many sectors of the the savings culture among grass root level
communities who are often the recipients Way Forward
Sri Lankan economy, growth in inward
of these inward remittances. With the strategy to focus on digital
remittances too registered a steady
solutions delivering better than expected
uptick in the first quarter of 2020 before
With most global economies beginning to results during 2020, it appears that this
plummeting into negative territory after
lift lockdown restrictions, the Bank also will be the way forward for Sampath
the COVID-19 pandemic hit. The sharpest
renewed its focus on traditional channels Bank’s remittance model. While building
decline was seen in April 2020 as the
from mid-2020 onwards. To complement on the success achieved thus far, the Bank
world began adjusting to salary cuts and
these efforts, the Bank initiated to develop will look to further enhance its digital
job losses in the immediate aftermath
a dynamic new online tool allowing remittance value proposition in keeping
of the COVID-19 crisis. To add to this,
senders to access a range of information with the evolving needs of customers in
countries were announcing lockdowns and
regarding the Bank's remittance service the years ahead.
curtailing economic activities, which meant
and agent network in a particular region.
people were unable to access traditional
Once the new online tool is rolled out
remittances channels. Consequently
in 2021, it is hoped that by the use of it
FinTechs with their digital solutions, were
customers would over time be encouraged
seen stepping in to bridge the gap.
to migrate from traditional channels to
A culmination of these factors led to a more efficient and cost effective digital
sizable drop in the remittance flows to remittance solutions.
Sri Lanka in the first half of 2020. While
Meanwhile in an effort to make the
the country’s total remittance inflows for
remittance service a more mainstream
April 2020 was 32% lower than what was
offering for migrant workers, the bill
reported in 2019, a notable rebound was
payment solution was rolled out in
evident during the latter part of 2020.
selected corridors.
NOSTRO ACCOUNTS MAINTAINED BANKS,

CORRESPONDENT BANKS AND EXCHANGE
COMPANIES
GRI - 102-4
511
Correspondent
35
Nostro
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Banks Accounts Companies
Maintained
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TREASURY
Operating Context Strategic Responses to strengthen emergency preparedness,

The Sri Lankan economy which appeared On the back of large capital outflows among them the decision to relocate the
to be reaching some stability at the start from the local capital market in the first Treasury DR site to a remote site to ensure
of the year, quickly reversed direction few months of the year, Sampath Bank’s business continuity.
after the COVID-19 pandemic hit the Treasury seized the opportunity to
country in March 2020. To mitigate the augment its treasury bill portfolio in the Performance Outcomes
economic fallout from the pandemic, first quarter of 2020, a timely move that With the COVID-19 pandemic dictating
the CBSL reduced the Statutory Reserve enabled the Bank to benefit from mark- the course of business in 2020, Sampath
Ratio and lowered monetary policy rates to-market gains and record some notable Bank’s Treasury portfolios reported mixed
in quick succession, all in an effort to capital gains later on in the year. results. The Fixed Income securities
encourage banks to lend. However with portfolio registered a strong performance
limited lending opportunities in the midst At the same time, seeing the volatility in thanks to timely action by the Treasury
of the pandemic, liquidity levels across the interbank FX markets and anticipating the to grow the Sri Lanka Sovereign Bond
banking sector shot up instead. drop in forward premiums in the first six portfolio which helped boost the NIM.
months of the year, the Treasury focused Moreover, with interest rates on the
At the same time, the interest rate caps on improving both exchange income and declining trend, the Treasury seized the
imposed on the subscription of treasury capital gains to boost the prospects of opportunity to record significant capital
bills and bonds altered the demand and the forex business in the third and fourth gains and mark-to-market gains in the
supply dynamics of the local money quarters of 2020. Government Securities portfolio. On
market. the other hand, the negative USD/LKR
The BNO operation meanwhile, remained premiums, which was an unprecedented
Some notable volatility was observed under severe pressure due to the low occurrence, had a material impact on the
in the interbank FX market as well, level of currency circulation in the country forex profits in 2020.
especially in the first two quarters of following the government’s decision to
restrict airport operations with effect from Way Forward
2020. This was primarily due to large
mid-March 2020. Moving forward, the downward trend in
outflows from the local bond and equity
markets during the early months of 2020. interest rates will likely to have a bearing
On the liquidity front, the Treasury on the Government Securities' yields in
Stemming from this, forward premiums
adopted a proactive approach to overcome 2021. Sri Lanka’s rating downgrade too is
declined to its lowest levels in over a
excess liquidity witnessed at the onset sure to have a significant impact as it will
decade and on occasion even reached
of the CBSL’s monetary policy measures mean the Forex money market will present
negative territory. Volatility in the forex
in March/April 2020 and regularised the limited borrowing opportunities. At the
market continued into mid-2020 as
Bank’s overall liquidity position in line with same time, the continuation of import
capital outflows began moving out at a
statutory requirements. restrictions currently in force will further
faster pace amidst concerns regarding the
COVID-19 impact on emerging markets. In curtail activity in the FX markets. However,
And with the COVID-19 situation it is hoped that higher currency inflows
a proactive response to curb the situation,
affecting the daily workflow systems, from exports and remittances will help
the CBSL commenced carrying out forex
several important steps were also taken ease the pressure over the medium term.
operations, while simultaneously declaring
import controls in a bid to stabilise the USD/LKR Movement in 2020
currency trading activities which were Rs
severely affected due to the loss in
200
tourism earnings. These measures proved
189.25 190.50
successful in containing the depreciation 190 186.25 185.85 184.25 185.50
181.35 181.90
of the Rupee. And with the government 180
186.25 185.65 184.95 186.00
181.40
deciding to extend the import restrictions
for a further 6-month period to support 170
the exchange rate until at least the end of 160

1Q2021, the LKR recorded only a slight
150
2.3% depreciation during the year from
Rs 181.35 at the start of January 2020 to 140
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Nov-20
Oct-20
Dec-20
Rs 185.50 by 31st December 2020.

OPERATIONAL SUPPORT
Network Services Centre (NSC) Meanwhile the central night safe register 2. Increasing supervisory control over
The NSC provides mission critical support and the vault movement register were recoveries:
for the Bank’s cheque clearing process converted to digital formats. With the The departmental structure was
as well as for managing the Sampath implementation of this new system, broad-based to improve the Bank’s
corporate payment system. There are branches are now only required to enter preparedness to support clients
several other functional support activities the denominations that they send to the facing difficulties due to the economic
that also come under the purview of the head office to enable automatic updating downturn. Accordingly, the existing
NSC, including daily reconciliations of of the core banking system. supervisory structure was changed
electronic payments, ATMs, e-statements and Zonal Recovery Heads were
etc. as well as the printing of customer
Recoveries appointed to tighten ground level
cheque books and customer statements. The Recoveries Department continues to recovery oversight and to facilitate
play a vital role in safeguarding the Bank’s proactive decision making. The
With the COVID-19 situation presenting bottom line and long term profitability. primary objective here was to provide
some unusual challenges, the NSC was With the NPA monitoring programme special attention and offer appropriate
compelled to rethink its traditional work initiated in the previous year delivering timely solutions to borrowers
methods and take proactive measures to the expected results in terms of a operating under stress conditions.
maintain the smooth flow of day to day sizable NPA reduction, the Bank moved Meanwhile additional resources were
operations especially during the lockdown swiftly to roll out the next phase of its provided to strengthen the Bank’s
period. Most notable among them were NPA Management Plan targeting NPA legal team including the appointment
the NSC’s efforts to accommodate cheque prevention. of a separate dedicated Deputy
clearing activities to be done at selected General Manager.
branches, which would otherwise have However, amidst the complications arising
been done centrally. from the COVID-19 pandemic, it was felt 3. Investing in digital tools to enhance
that a new broad-based strategy would be monitoring:
The NSC’s functional support role was also appropriate in order to address the issue Building on the efforts initiated in the
further expanded in 2020. Consequently, of NPA more holistically in the current previous year, the predictive analysis
the individual product reconciliations context. Accordingly, measures undertaken mechanism was further expanded
which were previously handled by the during the year were based on four in 2020, while work also began on
respective business lines were brought strategic themes; developing a new more robust early
under the NSC’s control, a move that has warning signals identification system.
helped to greatly improve the efficiency 1. Supporting customers through the
Further, a good progress was made in
with which such reconciliations are debt moratorium:
digitising of the Bank’s entire recovery
performed. The Recoveries Department model, with phase 1 of the software
continued to play an active role in the upgrade successfully completed and
Central Cash Department (CCD) interpretation and implementation the live roll out activated in the latter
The CCD continues to play a vital role of the “Credit Support Scheme part of 2020.
in balancing the cash position across the to Accelerate Economic Growth”
Bank’s branch network as well as ensuring especially designed to assist SMEs in 4. Outsourcing non-core aspects of the
that the Bank’s ATMs function at optimal difficulties and the debt moratorium recovery process:
efficiency and minimise downtime due scheme, declared by the government In a bid to allow the Recoveries
to the non-availability of cash. Thanks to as part of its COVID-19 relief Department to prioritise its activities,
the cash forecasting tool implemented measures. While no aggressive it was decided to outsource certain
in the previous year, the CCD was able recovery action was pursued during non-core aspects of the Bank’s
to maintain maximum loading efficiency the moratorium period, the Recoveries recovery model. As such the daily
across the ATM network resulting in Department began working closely patrolling of foreclosed assets was
an average of 98.2% machine uptime with clients to develop customised outsourced to an independent third
throughout the year, including during settlement plans that will allow them party, while the assistance of land
lockdown periods. to meet their obligations during and sales companies was sought to
after the end of moratoriums. manage the sale of foreclosed assets.
PERFORMANCE OF SUBSIDIARIES
GRI - 102-45
Amidst these challenging Sampath Centre Limited to market capitalisation ratio improved
to 13.4% in 2020 from 6.0% in 2019.
Sampath Centre Limited was established
conditions, Siyapatha in 1996 as the first subsidiary of the The expansionary monetary policy
demonstrated its Bank. The Company owns and manages adopted by the Central Bank, political
stability, policy consistency and revival
resilience by recording the building at No. 110, Sir James Peiris
Mawatha, Colombo 02, which houses the of local manufacturing industries were
a pre-tax and post-tax Bank’s head office. Rental income earned the driving forces behind this exceptional
performance.
profit of Rs 678 Mn by leasing out the building space is the
main source of income of the Company. At
and Rs 409 Mn present Sampath Bank occupies all eight
SC Securities too recorded a significantly
respectively for 2020. floors of the building.

improved performance in 2020. Brokerage
income increased to Rs 217.6 Mn in 2020
The Company made a pre-tax profit of from Rs 46.5 Mn reported in 2019, while
Siyapatha Finance PLC Rs 226 Mn for the year 2020 compared post-tax profit for the year rose to
Siyapatha Finance PLC (Siyapatha), is a to Rs 352 Mn in 2019, a year on year Rs 109.3 Mn from Rs 7.5 Mn reported in
fully owned subsidiary of Sampath Bank decline of 36%. This decline is mainly the previous year. These achievements
PLC. First established in March 2005 as attributed to the 91% decrease in fair are due to combination of the strategic
Sampath Leasing & Factoring Limited, value gain and a 77% reduction in other decisions taken by the management, as
the Company’s brand presence was operating income. Post-tax profit for the well as the proven track record of the
rejuvenated in 2013 as a new entrant to year declined to Rs 211 Mn in 2020 from Company's investment advisors and
the licensed finance company regime. Rs 296 Mn reported in the previous year. research teams which attracted many new
Total asset base of the Company increased potential investors.
The year 2020 was a challenging one for
by 8.6% from Rs 6.7 Bn as at end 2019
the country’s financial services sector, Sampath Information Technology
to Rs 7.2 Bn by the reporting date. The
which came under pressure due to the Solutions Limited
main asset of the Company is the property
economic slowdown triggered by the
situated in Colombo 02 which is currently Sampath Information Technology
COVID-19 pandemic. The downturn in
under construction of six additional floors, Solutions Limited (SITS) is another fully
economic activity threatened credit growth
proposed to be completed in 2021 with owned subsidiary of Sampath Bank
and overall credit quality, leaving the
improvements to the existing 8 floors as PLC. Specialising in Systems Integration,
sector to navigate its way through various
well. SITS provides end-to-end integration
government relief measures aimed at
supporting COVID-19 affected businesses services and consultancy for business
and individuals. These measures coupled SC Securities (Private) Limited transformation. Managed Services,
with a low interest rate environment, slow SC Securities (Private) Limited is a fully Software Solutions, and Enterprise
credit growth and risk of higher non- owned subsidiary of Sampath Bank. The Solutions are the key pillars of the
performing loans exerted further pressure Company is a licensed member of the business. Backed by a track record of over
on the net interest margins of financial Colombo Stock Exchange and has been thirteen years, SITS has proven itself as
institutions. Amidst these challenging operating in Sri Lanka's capital market one of the best in the industry with the
conditions, Siyapatha demonstrated its since 1992. right set of skills and the knowledge base
resilience by recording a pre-tax and post- to deliver and maintain ICT infrastructure.
tax profit of Rs 678 Mn and Rs 409 Mn Despite the economic and health
respectively for 2020. The Company’s challenges caused by the COVID-19 The Company recorded impressive growth
gross lending portfolio recorded a marginal pandemic and the Colombo Stock in 2020 which translated into pre-tax
growth of 1.8% to reach Rs 38.6 Bn by Exchange (CSE) being closed for several profits of Rs 112 Mn for the twelve
the year end. However, due to the reasons months ended 31st December 2020. This
weeks during the initial lockdown period,
mentioned above, the impairment charge reflects year on year growth of 62% from
the CSE recorded its best performance
on financial assets increased by Rs 305 Mn pre-tax profit of Rs 69 Mn reported in
since 2015. The All Share Price Index
(29%) compared to the previous year. 2019. Post-tax profit also grew by 31%
(ASPI) improved by 10.52%. Total market
turnover increased to Rs 397 Bn year on year to reach Rs 74 Mn in 2020,
In December 2020, Sampath Bank made
in 2020 from Rs 171 Bn reported in the highest ever profit recorded by the
a capital infusion of Rs 700 Mn to the
2019, reflecting a year on year growth of Company in its thirteen-year history.
Company to strengthen their capital
base and to meet the capital adequacy 132%, while total market capitalisation
requirements. reached Rs 2,961 Bn and the turnover
INVESTOR INFORMATION
Value Creation for Shareholders

2020 2019 Change %
Net asset value per share (Rs) 281.94 275.27 2.42
Group earnings per share - Basic (Rs) 22.13 34.36 (35.59)
Dividend per share (Rs) 8.25* 11.75 (29.79)
Market price per share as at 31st December (Rs) 135.60 162.40 (16.50)
Dividend payout ratio (%) 39.21 40.19 (2.44)
Earnings & Highest Market Price per Share Price Earnings Ratio as at 31st December Price to Book Value as at 31st December
Rs Rs Rs Rs
70 700 350 7 350 1.4

6.4
60 600 300 6 300 1.08 1.2
5.6 5.4
50 500 250 4.9 5 250 0.78 1.0
40 352.2 400 200 4 200 0.8

335.5 0.59
30 300 150 3 150 0.48 0.6
245.0
56.06
20 200 100 2 100 0.4

43.18
32.84
21.04
170.0
315.70
235.00
162.40
135.60
315.70
293.02
235.00
300.42
162.40
275.27
135.60
281.94
10 100 50 1 50 0.2
58.7
44.8
34.4
22.1
0 0 0 0 0 0.0
2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020
Earnings per Share - Group Market Price per Share - Bank Market Price per Share - Bank
Highest Market Price per Share - Bank (RHS) Earnings per Share - Bank Net Asset Value per Share - Bank
Price Earnings Ratio (Times) - Bank (RHS) Price to Book Value Ratio (Times) - Bank (RHS)
Dividend per Share & Dividend Payout Ratio Gross Dividend Bank’s ROE & Market Interest Rates
Rs % Rs Mn %
20 50 5,000 25 23.35
4,000 20
15 45
16.02
3,000 15
40.19 39.21 11.78
10 40
2,000 10
38.00 37.59 7.58
5 35
1,000 5
4,598
4,565
4,482
3,147
17.20
16.25
11.75
8.25
11.5
10.1
11.1
10.8
9.8
9.1
8.7
6.2
0 30 0 0
2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020
Dividend per Share Average of 12 Months AWFDR

Dividend Payout Ratio (RHS) Average of 12 Months T.B. Rate
ROE (after income tax)
Bank's Market Capitalisation in Comparison to CSE - as at 31st December

2020 2019 2018 2017 2016 2015
Sampath Bank's market capitalisation (Rs Mn) 51,726 61,949 66,012 68,577 46,086 42,734
Increase/(decrease) % in market capitalisation (17%) (6%) (4%) 49% 8% 8%
CSE market capitalisation (Rs Mn) 2,960,648 2,851,313 2,839,445 2,899,291 2,745,410 2,938,000
As a % of CSE market capitalisation 1.75% 2.17% 2.32% 2.37% 1.68% 1.45%
Market capitalisation rank 17 10 9 12 12 15
Bank’s Market Capitalisation Bank’s Market Capitalisation Rank Shareholders' Fund

Rs Mn Rs Mn
80,000 20 120,000
100,000
60,000 17
91
15 80,000
82
40,000 60,000
12
10 40,000
20,000 10
105,006
107,549
61,949
68,577
66,012
51,726
63,650
84,389
9 20,000
20
25
33
37
0 5 0
2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020
Analysis of Shareholders
Resident/Non-Resident
31st December 2020 31st December 2019
No. of No. of % No. of No. of %
Shareholders Shares Shareholders Shares
Resident shareholders 25,918 321,301,143 84.23 21,561 303,952,514 79.68
Non-resident shareholders 245 60,156,842 15.77 352 77,505,471 20.32
Total 26,163 381,457,985 100.00 21,913 381,457,985 100.00
Individuals/Institutions
No. of No.of % No. of No. of %
Individuals 25,409 115,161,228 30.19 21,166 103,351,611 27.09
Institutions 754 266,296,757 69.81 747 278,106,374 72.91
Total 26,163 381,457,985 100.00 21,913 381,457,985 100.00
Composition of Share Ownership

No. of % No. of % No. of % No. of %
1 - 1,000 shares 17,111 65.40 5,111,846 1.34 14,510 66.22 4,136,654 1.08
1,001 - 10,000 shares 7,416 28.35 23,632,370 6.20 6,013 27.44 18,730,063 4.91
10,001 - 100,000 shares 1,463 5.59 36,982,200 9.69 1,202 5.49 30,369,477 7.97
100,001 - 1,000,000 shares 140 0.54 40,821,820 10.70 153 0.70 46,746,699 12.25
Over 1,000,000 shares 33 0.12 274,909,749 72.07 35 0.15 281,475,092 73.79
Total 26,163 100.00 381,457,985 100.00 21,913 100.00 381,457,985 100.00
Composition of Share Ownership - 2020 Composition of Share Ownership - 2020

Shareholding of Individuals & Institutions (No. of Shareholders) (No. of Shares)
% % %
100 0.12 1.34

0.54 6.20
65.7
68.8
72.9
69.8
80 5.59
9.69
60
10.70
28.35 72.07
40 65.40
20
31.2
27.1
30.2
34.3
0
2017 2018 2019 2020
Individuals 1 - 1,000 Shares 1 - 1,000 Shares

Institutions 1,001 - 10,000 Shares 1,001 - 10,000 Shares
10,001 - 100,000 Shares 10,001 - 100,000 Shares
100,001 - 1,000,000 Shares 100,001 - 1,000,000 Shares
Over 1,000,000 Shares Over 1,000,000 Shares
Share Trading
Market
2020 2019 2018 2017 2016
No. of transactions 3,070,021 1,197,205 885,657 981,977 1,056,849
No. of shares traded 21,348,728,655 9,855,016,003 6,000,737,306 8,468,273,611 7,195,805,445
Value of shares traded (Rs Mn) 396,882 171,408 200,068 220,591 176,935
Bank
2020 2019 2018 2017 2016
No. of transactions 89,358 44,188 29,623 17,547 10,698
No. of shares traded 120,322,546 57,548,812 48,444,177 37,726,071 18,830,195
As a % of total shares in issue 31.54 15.09 17.25 17.37 10.64
Average daily turnover (Rs Mn) 73.79 40.32 56.75 48.94 18.77
Value of shares traded (Rs Mn) 15,423.04 9,757.84 13,621.11 11,793.39 4,484.95
Sampath Bank's Share Price Fluctuation

2020 2019 2018 2017 2016
Lowest market price (Rs) 96.00 136.00 218.00 253.50 210.00
Highest market price (Rs) 170.00 245.00 335.50 352.20 268.70
Closing price as at 31st December (Rs) 135.60 162.40 235.00 315.70 260.40
Share Trading - Sampath Bank PLC Share Trading - Sampath Bank PLC
(No. of Shares Traded) (Volume Traded & Turnover) Bank's Share Price Fluctuation
Mn Mn Rs Mn Rs
140 20 5,000 400

120 352.20
120 350 335.50
4,000
100 15 300
91
91
82
82
80 3,000 245.00
250
58 253.50
10
60 200
48 2,000 218.00 170.00
38
40 150
5
20 1,000 136.00
100
161
263
382
473
96.00
20
25
33
37
0 0 0 50
2017 2018 2019 2020 2017 2018 2019 2020
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Volume Traded (No. of Shares) Lowest Market Price
Turnover (RHS) Highest Market Price
Closing Price as at 31st December
Sampath Bank PLC - Ordinary Shares

Frequency Distribution of Shareholders as at 31st December 2020
Share Range Resident Non-Resident Total
Shareholders
Shareholders
Shareholders
Shares
Shares
Shares
No. of
No. of
No. of
No. of
No. of
No. of
%
%
1-250 8,609 32.90 650,842 0.17 46 0.18 4,091 0.00 8,655 33.08 654,933 0.17
251-500 4,962 18.97 1,833,919 0.48 22 0.08 7,902 0.00 4,984 19.05 1,841,821 0.48
501-1,000 3,452 13.19 2,600,187 0.68 20 0.08 14,905 0.00 3,472 13.27 2,615,092 0.69
1,001-2,000 2,958 11.31 4,266,491 1.12 25 0.10 36,074 0.01 2,983 11.41 4,302,565 1.13
2,001-5,000 3,083 11.78 9,878,022 2.59 40 0.15 132,140 0.03 3,123 11.93 10,010,162 2.62
5,001-10,000 1,281 4.90 9,125,366 2.39 29 0.11 194,277 0.05 1,310 5.01 9,319,643 2.44
10,001-20,000 800 3.06 11,208,953 2.94 20 0.08 287,153 0.08 820 3.14 11,496,106 3.01
20,001-30,000 261 1.00 6,303,884 1.65 8 0.03 211,352 0.06 269 1.03 6,515,236 1.71
30,001-40,000 144 0.54 4,974,106 1.30 2 0.01 67,915 0.02 146 0.55 5,042,021 1.32
40,001-50,000 79 0.30 3,520,071 0.92 4 0.02 191,294 0.05 83 0.32 3,711,365 0.97
50,001-100,000 137 0.52 9,646,264 2.54 8 0.03 571,208 0.15 145 0.55 10,217,472 2.69
100,001-1,000,000 132 0.51 38,686,404 10.14 8 0.03 2,135,416 0.56 140 0.54 40,821,820 10.70
Over 1,000,000 20 0.07 218,606,634 57.31 13 0.05 56,303,115 14.76 33 0.12 274,909,749 72.07
Total 25,918 99.05 321,301,143 84.23 245 0.95 60,156,842 15.77 26,163 100.00 381,457,985 100.00
Sampath Bank PLC - Ordinary Shares

Top 20 Shareholders
No. Shareholder Name 31st December 2020 31st December 2019*
No. of Ratio No. of Ratio
Shares (%) Shares (%)
1 VALLIBEL ONE PLC 57,039,028 14.95 57,039,028 14.95
2 EMPLOYEES' PROVIDENT FUND 38,041,260 9.97 38,041,260 9.97
3 MR Y S H I SILVA ** 31,266,429 8.20 31,266,429 8.20
4 AYENKA HOLDINGS PRIVATE LIMITED 20,492,896 5.37 17,787,054 4.66
5 ROSEWOOD (PVT) LIMITED-ACCOUNT NO.1 17,068,459 4.47 16,862,162 4.42
6 CITIBANK NEWYORK S/A NORGES BANK ACCOUNT 2 13,647,677 3.58 11,404,089 2.99
7 BBH-MATTHEWS INTERNATIONAL FUNDS-MATTHEWS ASIA 13,125,953 3.44 21,899,216 5.74
GROWTH FUND
8 PHOENIX VENTURES PRIVATE LIMITED 10,238,263 2.68 8,303,325 2.18
9 SRI LANKA INSURANCE CORPORATION LTD-LIFE FUND 8,943,521 2.34 2,546,249 0.67
10 AKBAR BROTHERS PVT LTD A/C NO 1 8,439,541 2.21 8,052,041 2.11
11 BBH-MATTHEWS EMERGING ASIA FUND 6,539,310 1.71 12,474,412 3.27
12 EMPLOYEES' TRUST FUND BOARD 6,508,033 1.71 5,054,604 1.33
13 SEB AB-TUNDRA SUSTAINABLE FRONTIER FUND 5,200,000 1.36 1,994,530 0.52
14 PEMBERTON ASIAN OPPORTUNITIES FUND 4,246,166 1.11 4,246,166 1.11
15 SAMPATH BANK PLC ACCOUNT NO 04 3,848,882 1.01 3,848,882 1.01
(SAMPATH BANK PENSION FUND)
16 COMMERCIAL BANK OF CEYLON PLC/P.SUBASINGHE 3,108,000 0.81 2,310,000 0.61
17 JINADASA BROTHERS (PVT) LTD 2,703,261 0.71 2,839,629 0.74
18 SSBT-AL MEHWAR COMMERCIAL INVESTMENTS L.L.C. 2,432,466 0.64 2,432,466 0.64
19 MELLON BANK N A-ACADIAN FRONTIER MARKETS EQUITY FUND 2,406,250 0.63 221,784 0.06
20 MORGAN STANLEY AND CO.LLC-RWC FRONTIER MARKETS EQUITY 2,364,569 0.62 2,664,471 0.70
MASTER FUND
257,659,964 67.55 251,287,797 65.88
Total No. of shares registered 381,457,985 100.00 381,457,985 100.00

Total No. of shares unregistered - - - -
Total No. of shares issued 381,457,985 100.00 381,457,985 100.00
Shares held by Directors 597,452 0.16 612,587 0.16

Shares held by Institutions 266,296,757 69.81 278,106,374 72.91
Balance held by Others 114,563,776 30.03 102,739,024 26.93
Total No. of shares issued 381,457,985 100.00 381,457,985 100.00
No. of Public shareholders 26,157 21,902

% Shares held by Public 90.64 90.62
% Shares held by Directors and Related Parties 9.36 9.38
* Shareholding as at 31st December 2019 of the top twenty shareholders as at 31st December 2020.
** Mr Rushanka Silva, the Managing Director of Indra Traders (Pvt) Ltd, was appointed as a Non-Executive, Non-Independent Director
of the Bank with effect from 1st September 2017. Accordingly, the shareholding of Mr Y S H I Silva, who is the main shareholder of
Indra Traders (Pvt) Ltd, has been excluded from the public shareholding of the Bank.
As at 31st December 2020 2019

No. of public shareholders 26,157 21,902
Percentage of public holding 90.64% 90.62%
Float Adjusted Market Capitalisation Rs 47 Bn Rs 56 Bn
Bank complies with the minimum public holding requirement under option 1 of the Listing Rules Section 7.13.1(a).
Dividend Payment Details

Year Total Dividend Cash Dividend Scrip Dividend Profit for Dividend
Dividend Paid per Share per Share per Share the Year Payout Ratio
(Rs Mn) (Rs) (Rs) (Rs) (Rs Mn)
1988 8.80 0.50 0.50 n/a 27 32.59%
1989 13.10 0.75 0.75 n/a 20 65.50%
1990 8.90 0.50 0.50 n/a 10 89.00%
1991 17.70 0.50 0.50 n/a 41 43.17%
1992 35.40 1.00 1.00 n/a 71 49.86%
1993 35.40 1.00 1.00 n/a 122 29.02%
1994 44.30 1.25 1.25 n/a 172 25.76%
1995 53.10 1.50 1.50 n/a 241 22.03%
1996 53.10 1.50 1.50 n/a 282 18.83%
1997 53.10 1.50 1.50 n/a 322 16.49%
1998 53.10 1.50 1.50 n/a 372 14.27%
1999 (Interim) 116.90 3.30 n/a
4.00 261 54.29%
1999 (Final) 24.80 0.70 n/a
2000 58.70 1.75 1.75 n/a 402 14.60%
2001 52.14 1.75 1.75 n/a 322 16.19%
2002 88.57 2.00 2.00 n/a 441 20.08%
2003 (Interim) 59.78
2.00 2.00 n/a 561 14.58%
2003 (Final) 21.99
2004 (Interim) 65.98
2.00 2.00 n/a 621 16.15%
2004 (Final) 34.30
2005 (Interim) 87.14
2.00 2.00 n/a 821 14.54%
2005 (Final) 32.21
2006 155.47 2.50 2.50 n/a 1,028 15.12%
2007 206.66 3.00 3.00 n/a 1,052 19.64%
2008 256.65 4.00 4.00 n/a 1,414 18.15%
2009 436.19 6.25 6.25 n/a 2,098 20.79%
2010 1,235.86 8.09 n/a 8.09 3,303 37.42%
2011 1,426.98 9.00 4.50 4.50 3,819 37.37%
2012 1,954.10 12.00 6.00 6.00 5,230 37.36%
2013 1,342.63 8.00 8.00 n/a 3,430 39.13%
2014 1,847.01 11.00 5.00 6.00 4,914 37.59%
2015 2,240.06 13.00 6.00 7.00 6,134 36.52%
2016 (Interim) 2,477.73 n/a 14.00
18.75 9,125 36.85%
2016 (Final) 884.41 4.75 n/a
2017 4,598.43 17.20 n/a 17.20 12,104 38.00%
2018 4,564.66 16.25 5.00 11.25 12,143 37.59%
2019 4,482.13 11.75 11.75 n/a 11,151 40.19%
2020 (Proposed) 3,147.03 8.25 8.25 n/a 8,025 39.21%
Record of Scrip Issues

Year Issue Basis/ No. of Consideration Contribution to Reason for Issue
Proportion Shares Issued per Share Stated Capital
(Rs) (Rs Mn)
2010 Interim Scrip Dividend for 2010 1 for 120.74 627,596 326.00 204.6 Increase stated capital
2011 Final Scrip Dividend for 2010 1 for 43.39 3,521,294 260.00 915.5 Increase stated capital
2016 Final Scrip Dividend for 2015 1 for 36.91 4,668,414 233.44 1,089.8 Increase stated capital
2017 Interim Scrip Dividend for 2016 1 for 19.22 9,209,419 242.55 2,233.7 Increase stated capital
GRI - 102-25
Record of Bonus Issues and Subdivisions
Year Issue Basis/Proportion No. of Shares Reason for Issue
Issued/to be Issued
2004 Bonus Issue 1 for 6 7,380,817 Benefit to shareholders
2010 Consolidation and Subdivision 11 for 10 6,888,762 Benefit to shareholders
2010 Subdivision 1 for 1 76,403,986 Benefit to shareholders
2021 (Proposed) Subdivision 3 for 1 762,915,970 Benefit to shareholders
Record of Rights Issues

Year Issue Basis/Proportion No. of Price Contribution to
Shares Issued per Share Stated Capital
(Rs) (Rs Mn)
2005 Rights Issue 2005 1 for 3 held 17,221,907 60.00 1,033.3
Employee Share Option Plan

Capitalised Issue No. of Price Contribution to Reason for Issue
Year Shares Issued per Share Stated Capital
(Rs) (Rs Mn)
2011 ESOP 2010 524,924 80.00 42.0 Benefit for staff members
2012 ESOP 2010 2,200,436 80.00 176.0 Benefit for staff members
Disclosure of Related Party Transactions as per Section 9 of the CSE Listing Rules
Aggregate monetary values of the transactions carried out by the Bank with the Related Parties did not exceed the following thresholds
given in Section 9 of the CSE Listing Rules.
 Non-recurrent related party transactions - 10% of the equity or 5% of the total assets as at 31st December 2020, whichever is lower.
 Recurrent related party transactions - 10% of the gross revenue/income for the year ended 31st December 2020.
Debenture Information
(A) Market Values
Debentures - 2015/2020 Highest (Rs) Lowest (Rs) Last Traded (Rs)
2020 2019 2020 2019 2020 2019
Fixed: 9.90% 98.50 98.94 97.70 97.70 97.70 98.85
Floating n/t n/t n/t n/t n/t n/t
n/t - not traded
Debentures - 2015/2020 were redeemed on 18th November 2020.

2020 2019 2020 2019 2020 2019
Fixed: 12.75% 102.12 100.00 100.00 100.00 100.00 100.00
Floating n/t 100.00 n/t 97.50 n/t 100.00
n/t - not traded

2020 2019 2020 2019 2020 2019
Fixed: 12.50% 110.75 n/t 106.86 n/t 110.75 n/t
n/t - not traded

2020 2019 2020 2019 2020 2019
Fixed: 12.50% n/t 101.52 n/t 99.51 n/t 101.52
n/t - not traded

2020 2019 2020 2019 2020 2019
Fixed: 13.90% 114.32 104.85 114.32 100.28 114.32 104.85
(B) Interest Rates

Debentures - 2015/2020 2020 2019
Coupon Rate Effective Rate Coupon Rate Effective Rate
Fixed: 9.90% 9.90% 10.15% 9.90% 10.15%
Floating Note 1
Debentures - 2016/2021 2020 2019

Fixed: 12.75% 12.75% 12.75% 12.75% 12.75%
Floating Note 1
Debentures - 2017/2022 2020 2019

Fixed: 12.50% 12.50% 12.89% 12.50% 12.89%
Debentures - 2018/2023 2020 2019

Fixed: 12.50% 12.50% 12.89% 12.50% 12.89%
Debentures - 2019/2024 2020 2019

Fixed: 13.90% 13.90% 13.90% 13.90% 13.90%
Note 1
Debentures - 2015/2020
Floating rate is equivalent to the six month net Treasury Bill rate plus 1.25% p.a. payable semi-annually.

Debentures - 2016/2021
Floating rate is equivalent to the six month gross Treasury Bill rate plus 1.00% p.a. payable semi-annually.
(C) Interest Rates of Comparable Government Securities

3 Months Treasury Bill 4.69% 7.51%
6 Months Treasury Bill 4.80% 8.02%
5 Years Treasury Bond 6.63% 9.94%
(D) Current Yield and Yield to Maturity

Debentures - 2015/2020 Fixed
Floating
9.90%
2020 2019 2020 2019
Current yield 10.39% 10.27% n/t n/t
Yield to maturity of last trade 12.97% 11.19% n/t n/t
n/t - not traded

Floating
12.75%
2020 2019 2020 2019
Current yield 12.75% 12.75% n/t 9.86%
Yield to maturity of last trade 12.44% 12.60% n/t 9.63%
n/t - not traded

12.50%
2020 2019
Current yield 11.29% n/t
Yield to maturity of last trade 7.02% n/t
n/t - not traded

12.50%
2020 2019
Current yield n/t 12.31%
Yield to maturity of last trade n/t 11.96%
n/t - not traded

13.90%
2020 2019
Current yield 12.16% 13.26%
Yield to maturity of last trade 9.13% 12.35%
(E) Ratios - Bank

2020 2019
Debt to equity ratio (%) 37.0 61.5
Interest cover (Times) 4.0 4.9
Quick asset ratio (%) 73.6 71.3
Utilisation of Funds Raised via Capital Markets

Funds Raised in Previous Years
The funds raised via capital markets in the previous years were fully utilised for the objectives stated in the relevant Prospectuses.
04
RISK & GOVERNANCE
Risk Management Report 108 | Compliance Report 117 | Corporate Governance 119 |
Board Audit Committee Report 170 | Board Human Resources and Remuneration
Committee Report 173 | Board Nomination Committee Report 175 |
Board Integrated Risk Management Committee Report 177 |
Board Related Party Transactions Review Committee Report 180
A
Million
Defenses
Your Bank is strengthened by millions of defenses and reinforced by decades of trust and
security. Our expertise and governance mechanisms continue to hold us steadfast even
amid times of uncertainty.
RISK MANAGEMENT REPORT
GRI - 102-15,30
Sampath Bank’s reputation and the The Bank’s risk universe represents the accessibility via Bank’s digital channels.
achievement of its corporate objectives risks that in principle apply to the business The impact of the COVID-19 lock down
depend on the ability to identify, assess of banking. The IRM sets standardised and moratorium measures on the Bank’s
and manage risks at all levels. The Bank’s practices to promote accountability and NPA levels was assessed using a range
Risk Management strategy is therefore necessary oversight for the effective of additional stress tests. In addition, the
fundamentally based on maintaining management of all these risk types. Bank reviewed the risk elevated industries
adequate capital, liquidity and operational in the context of COVID-19 pandemic.
control at all times in order to safeguard In the year under review, the Bank took Notable action was also taken to mitigate
the interest of depositors, borrowers, several measures in response to the Cyber risk by introducing several security
shareholders and other stakeholders. COVID-19 pandemic including, work measures.
from home arrangements for staff, strict
Approach to Risk Management adherence to safety instructions issued Risk Appetite
The Bank has adopted an Integrated Risk by Health Authorities to ensure staff Risk appetite is an expression of the
Management (IRM) approach to ensure health and safety, and strengthening the amount of risk the Bank is willing to take
risk exposures within the Bank’s risk Disaster Recovery sites as part of the under all main risk types, in pursuit of its
universe are managed consistently in line Business Continuity Plan. Further, the financial and strategic objectives while
with the Board-approved risk appetite that Bank continued to provide uninterrupted continuing to meet obligations as they
supports the Bank’s strategy. customer service through ATMs and fall due, under both normal and stressed
CDMs at branches which were closed due conditions.
to the lock-down and also ensured 24/7
Main Risk Appetite Boundaries

Risk Categories Appetite Boundary
Credit Risk Credit Quality To ensure a healthy advances portfolio is maintained at all times, the Bank has
introduced appetite limits for products, NPA, borrower caps etc.
Credit Concentration To ensure the lending portfolio is well diversified, the Bank has introduced several
limits to manage the concentration towards specific sectors.
Market Risk Liquidity Risk Ensure adequate liquidity resources are held to meet Bank’s obligations in a timely
manner as and when they fall due.
Foreign Exchange Rate Ensure adequate controls are in place to manage the net open positions of specific
Risk foreign currencies, where the value of such net open positions are likely to fluctuate
due to exchange rate movements.
Interest Rate Risk Ensure adequate controls of the Bank’s trading book are maintained in order
to minimise the negative impact that may arise due to their different repricing
characteristics.
Operational Risk Internal Frauds Ensure adequate internal procedures/directives and mechanisms are in place to
minimise losses due to internal frauds.
External Frauds Ensure adequate system restrictions, staff awareness and other mechanisms are in
place to minimise losses from external frauds.
Business Disruption and Ensure adequate system restrictions, customer awareness and other mechanisms are
System Failures in place to minimise losses from business disruptions and system failures.
Execution Delivery & Ensure adequate internal procedures/directives, training and mechanisms are in place
Process Management to manage the losses arising as a result of the failure to follow the correct processes.
Damage to Physical Ensure adequate internal procedures/directives, insurance covers and other security
Assets measures are in place to manage the losses arising from damages to physical assets.
The Bank undertakes to review the The Bank’s Risk Management Unit Risk Governance
aforementioned limits periodically in conducts stress testing for all major risk The Bank's Board of Directors is
concurrence with the Board of Directors. types. A combination of stress testing responsible for developing the overall
At the end of 2019, all risk appetite techniques are used including, scenario risk strategy including; the risk appetite,
boundaries were re-examined as part of analysis and sensitivity analysis to ensure supervision of the risk management
the ICAAP (Internal Capital Adequacy appropriate coverage of each different risk framework, approval of the risk
Assessment Process) review process. The category. The chosen stress scenarios vary management policy for each material risk
risk appetite limits were also reviewed and in severity from mild to very severe but and overseeing and challenging the risk
changed to suit the Bank’s risk profile in plausible shocks to measure the impact levels to which the Bank is exposed, while
2020. against the Bank’s Capital Adequacy Ratio. ensuring conformity with the established
risk appetite and in compliance with the
Stress Testing To further strengthen the Bank's stress
law and regulations.
Stress testing is a key management testing framework, macroeconomic stress
tool used by the Bank to evaluate testing covering a range of economic The Board committees and executive
the sensitivity of current and forward scenarios was introduced in 2020. This level committees also form a key part of
scenarios to determine their relevance to was done with the intention of measuring the Bank’s risk management governance
Board approved risk appetite parameters. the impact to the Bank due to fluctuations structure.
in macroeconomic factors.
Functional Structure of the Integrated Risk Management Framework of the Bank/Group
Board of Directors
Board Integrated Risk Management

Managing Director
Committee (BIRMC)
Group Chief Compliance Officer Chief Information Security Officer Group Chief Risk Officer
AML and Regulatory Information Security

Integrated Risk Management Unit
Compliance Unit Department
Credit Risk Management Unit Market Risk Management Unit Operational Risk Management Unit
Credit Risk Management Function Credit Risk Review Function
Sampath Information Technology

Siyapatha Finance PLC SC Securities (Pvt) Ltd Sampath Centre Ltd
Solutions Ltd
Risk Governance Committees
Board Strategic Planning

Board Audit Committee
Committee
Board Human Resources & Board Shareholder
Remuneration Committee Relations Committee
Board Nomination Committee Board Treasury Committee

Board Level
Board Integrated Risk Committees
Board Marketing Committee
Management Committee
Board Related Party
Board IT Committee
Transactions Review Committee
Board Credit Committee Board Capital Planning Committee

SAMPATH
Corporate Management Committee BANK Executive Advances Committee
Asset & Liability Management

Risk & Compliance Committee
Committee (ALCO)
Internal Control Over Financial Reporting
Investment Committee
(ICOFR) Committee
Executive
Credit Policy, Risk and Portfolio Review Committee Advances Committee
Level
Committees
IT Steering Committee Group Management Committee
Internal Capital Adequacy Assessment

Information Security Committee
Process (ICAAP) Working Committee
Sri Lanka Financial Reporting Standards
Outsourcing Committee
(SLFRS) Committee
Procurement Committee Potential NPA Identification Committee
Risk Culture defense mechanism which serves as the As part of their duties, the Risk
The Bank recognises the importance of key catalyst in building and maintaining Management Unit also undertakes ongoing
having a strong risk culture to support its a robust Bank-wide risk culture and training to reinforce the risk culture at an
efforts to create value for stakeholders and promoting a high level of risk awareness at operational level.
continue to live up to its reputation as one all levels of the business.
of the largest and most stable institutions
in the local banking sector. In this regard,
First Line of Defense Second Line of Defense Third Line of Defense
the Bank focuses on multiple drivers to
enhance the risk culture and emphasise
the principle of best business practices in Business Lines/Corporate Risk Management
Assurance
order to empower the employees and give Functions & Controls
them the confidence to act responsibly
and transparently in executing their day to Ownership for the day-to- Direction for Risk Management Providing independent
day job functions. day management of risk. and Compliance, facilitating and objective assurance
high level of risk awareness on the Risk Management
The Bank’s Risk Management Unit Ensure that risks accepted throughout the organisation. processes and practices
takes the lead in the development and are within the Bank’s in place.
implementation of necessary policies risk appetite and risk Independent monitoring of the
and procedures to ensure the principles management policies. effective implementation of
of risk management are incorporated Risk Management Framework.
into the day-to-day business activities.
This is supported by the three-lines-of- Business Heads/ Risk Management Unit (RMU) Internal/External
Branch Managers Compliance Department Audit Function
Risk Monitoring and Reporting Managing Material Risks

An Integrated Risk Management (IRM) Credit Risk
Framework backed by a strong risk Credit Risk is associated with the retail and corporate lending aspects of the Bank’s
culture is in place at the Bank to identify, business model. It arises due to the failure of borrowers to meet their financial or
assess, monitor and control risks within contractual obligations when due. Credit Risk consists of two major components; Default
Sampath Bank’s established risk appetite. Risk and Credit Concentration (Business) Risk, which together represent the most material
Risk monitoring and reporting are crucial risk for a Bank.
elements in this IRM framework.
The management of Default Risk and Credit Concentration (Business) Risk is undertaken
All material risks are monitored centrally in line with established Credit Risk Appetite Limits.
by the Risk Management Unit, with
Credit Risk Appetite Parameters
any significant irregularities promptly
escalated to the Corporate Management Credit Quality Parameters Lending Parameters
and the Board of Directors for review and  Credit quality related ratios  Single borrower exposure
necessary action.  Product-wise NPA  Aggregate exposure
 Provision covers  Top 20 advances
The Risk Management Unit also conducts  Security covers  Sector-wise lending caps
regular environmental scans to monitor  Rating grades as a percentage of  Sector-wise concentration score (based
existing risks under both normal and the total portfolio on the HHI methodology)
stressed conditions and inform the Board  Product-wise concentration score (based
of Directors (BOD) to take appropriate on the HHI methodology)
action in the event of severe risks being  Related party exposure limits
detected. Environmental scans also raise
Key Control Systems
awareness regarding emerging risks that
may affect the Bank’s performance and  Credit Policy that serves as the foundation for prudent lending
long term strategy.  Comprehensive due diligence and customer screening procedures at the pre-credit
evaluation stage, including borrower rating for all obligors
Based on the findings from the risk  Independent review by the Risk Management Unit for individual/group exposures
in excess of Rs 100 Mn
monitoring programme, Sampath Bank’s
 A clear segregation of duties between loan origination, pre-credit evaluation
top risks for 2020 were identified
administration and post-credit monitoring
depending on the likelihood of occurrence
 Proactive post-credit monitoring and follow up by the Business Units, Risk
and the severity of impact. These Management Unit and Recoveries Department
were tabulated on a Risk Matrix and
 Effective identification of Early Warning Signals and Watch Listing procedure
presented to BIRMC and BOD. In the year
under review, the Bank’s risk reporting Standard Monitoring Protocols
framework was further strengthened with  Top 30 borrower analysis report (Semi-Annually)
the addition of 10 new Key Risk Indicators  Analysis of risk elevated industries (Quarterly)
(KRIs) covering several business functions  Analysis of sector-wise and product-wise exposures (Monthly)
including; the Card Centre, International  Stress testing to determine the impact on the Bank’s Balance Sheet (Quarterly)
Operations Department, Central Cash  Advance portfolio analysis (Semi-Annually)
Department, Compliance, Recoveries,  Post mortem analysis (Quarterly)
Internal Audit and Logistics Department.
 Condominium sector analysis (Quarterly)
Additionally the Risk and Control Self- Governance and Oversight

Assessment (RCSA) process was also  Branch Managers  Board Credit Committee
reviewed in 2020.  Business Heads Corporate and  Risk Management Unit
Consumer Lending  Board Integrated Risk Management
Meanwhile, the reviewing of the ICAAP  Head of Recoveries Committee
which was initiated in 2019 was finalised  Advances Committee  Internal Audit Function
by end 2020 with the changes due to  Executive Advances Committee  Board of Directors
be operationalised in the submission of  Credit Policy, Risk and Portfolio
ICAAP 2020. Review Committee
Sector-wise Distribution of Post Credit

Credit Risk Stress Tests Parameters
Evaluation in 2020
1 Credit Risk - Asset Quality Percentage of advance portfolio under each asset class (based on the sample selected by RMU)
Downgrade will be transferred to next inferior asset class under 3 %
scenarios 3.2 1.1
0.9
2 Credit Concentration Risk - Default of the Largest Borrowers by classifying the 3.6
5.2
Large Borrowers Default credit granted to them as non-performing (Substandard 25.0
8.0
asset class)
3 Credit Concentration Risk % increase in concentration under stress, measured as 8.4

- HHI per HHI (Herfindahl Hirschman Index) 16.0
12.6
4 Decrease in Collateral % decrease in total security value of the entire portfolio
Value (Total Security Value) 16.0
5 Decrease in Collateral % decrease in security value (property) of the entire Financial Services Professional, Scientific &
Value (Property Value) portfolio Infrastructure Technical Activities
Wholesale & Lending to Overseas
Retail Trade Entities
Manufacturing Consumption
Tourism Information Technology
Construction
Agriculture, Forestry & Fishing
Focus for 2020 - Credit Risk
Amidst the weak economic climate  Initiated the process of obtaining  A range of additional stress tests
and muted credit demand in 2020, consultancy services from an were carried out to assess the
Sampath Bank’s focus on credit quality external party for guidance in impact of the COVID-19 lockdown
management was further intensified. relation to the transition of rating- and moratorium measures on the
With special emphasis placed on based approach when determining Bank’s NPA levels over the next 12
strengthening, monitoring and reporting the Expected Credit Loss (ECL) months.
frameworks, the following changes were model in line with SLFRS 9: Financial
 Intensified credit training activities
implemented; Instruments. This enhanced ECL
for frontline staff.
model based on IRB approach is
 Validated the Credit Rating Models
expected to further streamline and  Establishment of a Board approved
to assess the discriminatory power
reorient the existing strategies of criteria on upgrading of the stage of
of the models in determining the
the Bank’s risk measurement and impairment, related to restructured
credit quality of the borrowers.
reporting of financial instruments in facilities.
Further, action was taken to
an efficient, forward-looking manner.
enhance the rating models based  Commenced developing of a
on the validation results and  Began developing an Early Warning behavioural scorecard to track the
recommendations provided by the System to enable business units behaviour of personal borrowers
consultants. This process which to access information regarding and support decision making
began in 2019 was completed in potential default customers through predictive analysis. With
mid-2020 following the conclusion under their purview. The system development work of the new
of the independent model development process was almost scorecard nearing completion by
validation process. The process of 90% completed and implementation end-December 2020, it is expected
implementing the amended Credit is scheduled for the first quarter of that implementation would take
Rating Models with validation 2021. place starting from first quarter of
recommendations was nearing 2021.
 Tightened monitoring of top 30
completion in the latter part of
exposures as well as for selected
2020.
high risk sectors. Based on the
 The Bank’s Credit Risk appetite findings, detailed sector-wise and
limits were reviewed. borrower-wise portfolio analyses
were prepared and presented for
Board review.
Market Risk
Sampath Bank’s
Market risk is defined as the likelihood of loss in earnings that could arise from the
possible fall in value of investment or trading portfolios, as a direct consequence of approach to Market
changes in market variables such as interest rates, equity prices and foreign exchange
rates.
Risk Management
Sampath Bank’s approach to Market Risk Management is framed by the regulatory
is framed by the
guidelines for Corporate Governance, the Integrated Risk Management Framework for regulatory guidelines
Licensed Commercial Banks and the BASEL III recommendations. In the current business
context, the Bank’s Market Risk appetite parameters focus mainly on managing Foreign for Corporate
Exchange, Liquidity and Interest Rate Risks.
Governance, the
Market Risk Appetite Parameters Integrated Risk
Foreign Exchange Rate
Risk
Liquidity Risk Interest Rate Risk
Management
 Statutory Liquid Assets  Tolerance limit for
 Overnight Ratio Mark to Market Framework for
Aggregate Net
Open Position
 Net Loans to Total Assets (MTM) losses from
"Fair Value Through
Licensed Commercial
 Total Loans to Customer
Limit for the Bank
Deposits
Profit or Loss - Banks and the
Portfolio FVTPL” and "Fair
 Liquid Assets to Short Term Value Through Other BASEL III
Liabilities
 Bulk Deposits to Total
Comprehensive
Income - FVOCI”
recommendations.
Deposits portfolios
 Purchased Funds to Total
Assets
 Commitments to Total Loans
Key Control Systems
 Market Risk Management Policy
 ALCO Policy
 Investment Policy
 Liquidity Management Policy including Liquidity Contingency Funding Plan
 Treasury Policy and procedure guideline for Treasury Operation
Standard Monitoring Protocols
 Monitoring of Board approved limit framework for Market Risk Management and
escalating all exceptions to the approving authorities (Continuous and Ongoing)
 Assessment of Foreign Exchange Risk, Liquidity Risk, Interest Rate Risk and Equity
Risk (Continuous and Ongoing)
 Conducting stress testing and scenario analysis for Market Risk exposures
(Continuous and Ongoing)
Governance and Oversight
 Asset and Liability Management Committee
 Investment Committee
 Board Treasury Committee
 Risk Management Unit
 Board Integrated Risk Management Committee
 Board of Directors
Statutory Liquid Assets Ratio - 2020 Operational Risk

% Operational Risk arises due to the
60 disruptions, breakdown of systems, failed
or incomplete processes, people related
46.21 issues and external events that could have
45
38.95 39.58 37.60 an impact on the Bank’s performance and
35.82 36.40
33.88 33.17 future prospects.
31.05 28.38
27.98 33.52 33.51 34.51 34.98
30 26.27 30.86
21.88 21.94 22.18 23.42 26.36
28.12 28.34 Operational Risk Appetite Parameters
20 20 20 20 20 20 20 20 20 20 20 20  Internal Frauds
15
 External Frauds
Jan-2020
Feb-2020
Mar-2020
Apr-2020
May-2020
Jun-2020
Jul-2020
Aug-2020
Sep-2020
Oct-2020
Nov-2020
Dec-2020
 Employment Practice and Work
Place Safety
SLAR (Average) - FCBU SLAR (Average) - DBU Regulatory Requirement  Clients, Products and Business
Practices
Stress Testing Parameters for Market Risk
 Damages to Physical Assets
Market Risk Stress Tests Parameters
 Business Disruption and System
1 Interest Rate Risk in Three most severe impact scenarios to the Bank’s Economic Failures
Banking Book - EAR Value of Equity (EVE) and the Bank’s Earnings (EAR) due to
 Execution Delivery and Process
and EVE changes in interest rates from -3.0% to +3.0%
Management
2 Foreign Exchange Impact of 5%, 10% and 15% of adverse LKR exchange rate
Rate Risk movements, against all Foreign Currencies Key Control Systems
3 Equity Risk 10%, 25% and 50% impact (fall in market value) of Equity  Operational Risk Management
Portfolio held by the Bank Policy
4 Interest Rate Risk in Impact of 1%, 1.5% and 2% increase in Market Rates on  Internal Policies, Procedures,
the Trading Book the Mark to Market (MTM) gain/loss of the Government Directives, and System
Securities Trading Portfolio (in LKR) Specifications along with MOUs,
5 Liquidity Risk Stress Service Level Agreements and
Tests Non-Disclosure Agreements to
5.1 Liquidity Risk Impact of 10%, 15% and 20% of shocks applied to deposits effectively manage relationships
maturing beyond 3 months and loans due within 3 months with external service providers
5.2 Liquidity Crisis Impact of 2%, 6% and 10% fall in Liquid Liabilities on Liquid  Internal IT controls and global best
Scenario Assets Ratio practices for information security

Focus for 2020 - Market Risk
 Branch Managers
In light of the challenging operating environment that the Bank faced in 2020, the Market  Business/Department Heads
Risk Management activities for the year were focused mainly on strengthening systems
 IT Department
and control processes through the following efforts:
 Risk Management Unit
 Reviewing of existing appetite limit framework and introduction of new appetite limits
for Interest Rate Risk and Equity Risk.  Information Security Department
 Introduction of VaR limits for Foreign Exchange Rate Risk and Interest Rate Risk.  Board Integrated Risk Management
Committee
 Introduction of a Code of Conduct for Treasury operations along with Treasury Front
Office and Treasury Back Office.  Internal Audit Function
 Conducting of continuous and ongoing stress testing based on the scenarios relating  Board of Directors
to COVID-19 pandemic to understand the effect to the Bank’s Market Risk exposures.
 Meanwhile, a series of measures were also taken from the Business Continuity Plan
point of view. Among them the commissioning of a fully-fledged Disaster Recovery
(DR) site is vital, enabling the Bank to carry out its treasury functions from a remote
location which is away from the head office.
Stress Testing Parameters of Operational Risk Strategic Risk

Operational Parameters Strategic Risks can be defined as risks
Risk Stress that affect or are created by the Bank’s
Tests business strategy and strategic objectives.
Strategic Risks are created internally as
Operational Risk Testing is performed Total actual loss value CAR (Stress CAR)
well as externally. The failure to take
- Scenario 1 based on top four reported under various is recalculated
action where needed to address challenges
highest reported Basel business lines are under different
or make timely changes in response to
actual internal and increased under different scenarios as low,
macroeconomic trends also constitute
external event values stress scenarios to assess medium and high
strategic risk.
under Basel business the impact to the P&L and (10%, 20% and
lines in the Bank. the Bank’s capital base. 30%).
Key Control Systems
Operational Risk Testing is performed Total actual loss and near CAR (Stress CAR)
 Budgeting Process
- Scenario 2 based on top four miss loss event value is recalculated
highest reported reported under various under different  Strategic Planning Process
actual and near miss Basel business lines are scenarios as low,  Environmental Scan through a
internal and external increased under different medium and high PESTLE Analysis
event values under stress scenarios to assess (10%, 20% and
 SWOT Analysis
Basel business lines the impact to the P&L and 30%).
in the Bank. the Bank’s capital base. Standard Monitoring Protocols
 Employee Performance
Operational Risk Review 2020 Management Mechanism
Focus for 2020 - Operational Risk (Continuous and Ongoing + Annual
%
With a majority of the Bank’s employees Performance Appraisal)
5.5 working remotely or from home during  Monitoring of branch and
the COVID-19 lockdown and thereafter, departmental KPIs to determine the
8.5
39.5 a range of new procedural changes were achievement of overall performance
rolled out as discussed under the Human objectives (Continuous and
10.8
Capital Report. Ongoing)
11.8  Introduction of 10 new KRIs to  Performance review of Strategic
enhance the Bank’s Key Risk Plan (Quarterly)
Indicator Framework.
23.9 Governance and Oversight
 Reviewing existing RCSA
 Branch Managers and Business
Service Level Directives questionnaires of all departments
Agreements Policies/MOU/NPD/ Heads
to establish heat maps for Board
Procedures NDA
System Requirement Sign-offs submission.  Strategic Planning Department
Specifications/NDA
 Allowing team members to work  Board Strategic Planning Committee
from home through a secured VPN  Risk Management Unit
connection.
 Board Integrated Risk Management
 Process enhancement of monitoring Committee
of Internal Loss Event Data
 Board of Directors
Reporting.
 Team member development through

internal training with a view of
strengthening the risk culture and
process development across the
Bank.

Focus for 2020 - Strategic Risk Focus for 2020 - Cyber/
 Incident Response Team Information Security Risk
As required by the Terms of Reference of  Chief Information Security Officer
the Board Integrated Risk Management With the Bank’s activities increasingly
 Information Security Committee
Committee, a risk review was carried moving to digital platforms amidst
out by the Risk Management Unit to  Managing Director the COVID-19 lockdown, control
determine the effectiveness of the Bank's  Risk Management Unit procedures for the management of
three-year Strategic Plan for the period Cyber Security Risk were tightened as
 Board Integrated Risk Management
of 2021 to 2023. This was done with described in the Information Security
Committee
the aim of taking proactive measures to Topic under the Intellectual Capital
manage and mitigate potential risks.  Board of Directors Report.
The Board approved strategic plan for

2020, was continuously reviewed to take
into account the rapid changes in the Priorities Going Forward
environment mainly due to the COVID-19
pandemic. Strengthen credit monitoring protocols to manage Credit Risk amidst the
1 backdrop of weak economic activity and debt moratoriums, both caused by
the COVID-19 pandemic.
Cyber/Information Security Risk
Cyber/Information Security Risk arises
due to the probability of exposure or loss Stronger emphasis on liquidity risk management owing to the limited lending
resulting from a cyber-attack or through an 2
opportunities due to economic stress caused by the COVID-19 pandemic.
internal or external data breach. A strict policy
framework on par with global standards
coupled with continuous and ongoing
improvements enable Sampath Bank to Implementing the new proposals under the ICAAP methodology to further
3 strengthen the Bank’s overall risk management framework.
proactively manage Cyber Security Risks.
Key Control Systems

 Information Security Management Strengthening Cyber Security Management in light of the increased use of
Policy Framework 4
digital platforms owing to the COVID-19 pandemic.
Standard Monitoring Protocols
 Monitoring user login activity
on the PAM (Privileged Access Strengthening the Integrated Risk Framework by developing a comprehensive
Management) platform and across 5 risk register and deriving the risk matrix based on the outcome.
all critical databases (Continuous
and Ongoing)
 Vulnerability assessments
Further strengthening the monitoring of operational risk by reinforcing the
(Quarterly) 6
operational environment within the Bank.
 External Penetration Test (Annually)
 Information security risk assessment
(Annually)
 Incident reports generated by the 7 Calculation of impairment using Internal Rating Based Models.
Incident Response Team (as needed)
 ISO 27001:2013 Information
Security Systems Surveillance Audit
(Annually)
COMPLIANCE REPORT
We aim to inculcate an Priorities for 2020 Instructions, the Compliance Department

was tasked with communicating regulatory
The activities of the Compliance
effective and strong Department in 2020 were largely directed instructions issued during the COVID-19
compliance culture. towards supporting the Bank to manage period in a timely manner to keep business
the impact of COVID-19 on various units apprised of necessary changes.
aspects of the business. Consequently, five Meanwhile, given the complex provisions
As an integral part of the Bank’s ethical associated with the debt moratorium, a
areas were prioritised;
and professional business conduct, dedicated compliance team was assigned
Sampath Bank's Compliance Department to assist the lending and recovery units as
Regulatory Interaction and
is responsible for ensuring Bank-wide well as the IT Department to translate the
Coordination
compliance with all legal and regulatory conditions of the moratorium for practical
requirements and industry best practices. Faced with frequent and often ad-hoc
applications.
regulatory changes due to the
As an independent unit within the Bank, government-led debt moratorium
The Compliance Department was also
the Compliance Department also serves programme granted to COVID-19
involved in interpreting the statutory and
as the second line of defense in mitigating affected businesses and individuals,
regulatory landscape with regard to the
regulatory and money laundering risk as the Compliance Department was called
new digital solutions deployed in response
well as terrorist financing risk across the upon to proactively interpret and
to the COVID-19 challenges.
Bank. dynamically support the application
of these changes in practice. Working
Policies, Procedures and Related
The Compliance Department’s eight-point closely with the internal Committee
Controls
model broadly demonstrates the key focus for the Dissemination of Regulatory
Supporting the HR Department to
areas under its purview.
formulate a new Anti-Bribery and
Corruption (ABC) policy was another
project undertaken by the Compliance
Department in 2020. This is the first time
that there would be a formal policy at the
Bank to comprehensively cover all bribery
and corruption related matters, which were
Regulatory
previously covered only as a subsection of
interaction and
the Employee Code of Conduct and Anti-
Compliance coordination
fraud Policy.
technology
Compliance Monitoring and Testing

Risk In line with the strategic plan of the Bank,
assessment the Compliance Department went ahead
programme Governance
with the scheduled compliance testing and
SAMPATH BANK monitoring process. However, in view of
COMPLIANCE the COVID-19 work disruptions, branch
MODEL
Compliance compliance risk assessments were carried
monitoring and Compliance out mainly through off site surveillance
testing training with site visits done only where possible
and practical.
Policies,
Reporting and procedures and A comprehensive Directive on carrying
communication related controls out compliance testing on departments
and branches, statutory payments and
mandatory reporting requirements was
formulated and implemented by the
Compliance Department in 2020. This was
done with the intention of streamlining the
overall compliance testing and monitoring
framework.
COMPLIANCE REPORT
Meanwhile, in an effort to strengthen The Board of Directors participated in

Group Compliance, a special initiative was a special awareness session on AML
launched to assist subsidiaries to formalise matters likely to arise due to emerging
their policies to mirror the Bank’s own drug trafficking activities. This session was
compliance frameworks. conducted by the Financial Intelligence
Unit of CBSL in collaboration with law
Compliance Technology enforcement authorities.
The Bank’s AML monitoring architecture
was further enhanced with the existing Training activities for the year were not
alert parameters strengthened in order limited only to the Bank, with a specially
to widen the average detection range of designed training programme on
suspicious transactions. “AML/CFT Compliance” rolled out for
employees of Siyapatha Finance PLC
Notable progress was made on the and SC Securities (Pvt) Ltd as well.
Financial Intelligence Unit (FIU) project
to develop and implement a new online Future Focus
transaction reporting system (goAML), Continue to focus on inculcating the
which began in 2019. As one of the compliance culture at all levels across the
major Banks involved in this pilot project, Bank and the group.
the special team from the Compliance
Department continued carrying out
required system developments to ensure
the project can be completed on schedule
by the second quarter of 2021.
Compliance Training
All compliance training activities in 2020
were moved to online platforms owing to
COVID-19 restrictions. Employees were
given the opportunity to participate in a
series of webinars focusing on AML/CTF
and KYC requirements along with several
online programmes on Foreign Exchange
Business.
CORPORATE GOVERNANCE
Dear Stakeholders placed on seeking out potential candidates

who can contribute through diverse
As a Board, we
As a Board, we believe that a strong
governance framework is fundamental
perspectives that will enhance the overall believe that a strong
for the effective management of the
decision making process at the Board level governance framework
in the years ahead.
day to day business and for the delivery is fundamental for the
of Sampath Bank’s strategy. The Board
of Directors of Sampath Bank PLC is
Strengthening stakeholder relations was effective management
another key area that received the Board’s
committed to ensuring a strong Bank-wide
attention in the current financial year. of the day to day
Governance framework that provides
an essential foundation to improve
The Board approved, plans to conduct business and for the
transparency and build trust with all our
a broad-based stakeholder engagement
survey to learn and understand the views
delivery of Sampath
stakeholders in order to ensure the future
success of the Bank.
of the Bank’s key stakeholder groups Bank’s strategy. The
and determine where necessary the
calibration of our strategy to reflect these
Board of Directors of
This section of the Annual Report
describes Sampath Bank’s approach to
evolving needs. The details and findings Sampath Bank PLC is
corporate governance, including the
of this study are shown in the stakeholder
committed to ensuring
engagement section on pages 47 to 51 of
principal activities of the Board and
this report. a strong Bank-wide
its Committees and how the Bank has
complied with the principles of good governance framework
Board Declaration
governance in accordance with all
As Chairman of the Board, I wish to
that provides an
regulatory and mandatory frameworks
applicable to licensed commercial banks in declare that the Bank and Team Sampath, essential foundation to
Sri Lanka for the financial year ended 31st including the Board of Directors and
Corporate Management have complied in
improve transparency
December 2020.
full with the principles of good governance and build trust with
Board Priorities for 2020 as set out by the regulatory frameworks all our stakeholders
applicable for licensed commercial banks,
The financial year (FY) 2020 was a
including the Banking Act Direction No. in order to ensure the
stressful one for all businesses due to the
unprecedented challenges arising out of
11 of 2007 on Corporate Governance for future success of the
Licensed Commercial Banks issued by the
the COVID-19 pandemic. Sampath Bank’s
Central Bank of Sri Lanka (CBSL) and its
Bank.
business model too was put to the test
amendments, the Code of Best Practice
like never before. However, I believe our
on Corporate Governance 2017 issued by
solid governance framework and strong
the Institute of Chartered Accountants of
culture of good governance, held us in
Sri Lanka (CA Sri Lanka) as well as Sampath
good stead during these trying times.
Bank’s own internal policy guidelines,
In fact I am proud to say that it was the
best practices and all other applicable
soundness of our governance mechanism
regulations.
that created the foundation to enable the
Bank to respond proactively and efficiently
to safeguard the interests of stakeholders
particularly during the lockdown periods.
HARSHA AMARASEKERA
While tackling these immediate challenges, Chairman
the Board also redirected its attention to
focus on improving the Board balance Colombo, Sri Lanka
in 2021. Seeing that almost half of the
15th February 2021
current Board would retire by the end
of the FY 2020, strong emphasis was
Corporate Governance Framework  The Shop and Office Employees Act frameworks, policies and systems are in
Sampath Bank PLC recognises that the No. 19 of 1954 and its amendments place to identify and manage business
achievement of its long-term strategic risks.
 The Sri Lanka Accounting and Auditing
objectives depends to a large extent Standards Act No. 15 of 1995
To serve the interests of shareholders and
on the soundness of its Corporate
 The Foreign Exchange Act No. 12 of all other stakeholders and to promote the
Governance Framework. Firmly anchored
2017 and its regulations highest standards of risk management
to the principles of good governance,
at every level, the Bank’s Corporate
accountability and transparency, Sampath  All other applicable regulations
Governance Framework is subject to
Bank’s robust Corporate Governance
Governance Structure ongoing review by the Board. The Board
Framework aims to align the interests of
works proactively to strengthen and
the Board and management with those of The Bank’s governance structure
improve governance policies and practices
shareholders. establishes the fundamental relationships
in line with the latest legal and regulatory
between the Board, its committees,
Regulatory Compliance and Best developments applicable to the local
management, shareholders and other
Practices banking industry as well as global best
stakeholders. The Bank’s Governance
practices for good corporate governance.
As a licensed commercial bank and a Structure is given in pages 124 and 125 of
public entity listed on the Colombo Stock this report.
Meanwhile, to enhance its ability to
Exchange, regulatory compliance has
safeguard the interests of stakeholders,
a sizable impact in contextualising the The Board
the Board remains committed to clear and
Bank’s Corporate Governance Framework. As the apex body of the Bank’s Corporate comprehensive financial reporting and
The main regulatory and statutory Governance Framework, the Board of disclosure as well as to continuous and
requirements applicable to Sampath Bank Directors are responsible for the overall ongoing stakeholder engagement.
are: management and oversight of the
Bank and its activities. While providing Board Sub-Committees
 The Companies Act No. 7 of 2007 entrepreneurial leadership, the Board is Assisting the Board in carrying out
 The Banking Act No. 30 of 1988 and required to exercise independent judgment its duties and responsibilities are the
its amendments in overseeing the management and following Board Sub-Committees;
performance of the Bank to ensure the
 The Banking Act Direction No. 11 of
delivery of stakeholder value over the long  Board Audit Committee
2007 on Corporate Governance for
term.
Licensed Commercial Banks issued by  Board Human Resources and
the Central Bank of Sri Lanka and its In fulfilling its stewardship role, the Board Remuneration Committee
amendments plays an advisory role in providing strategic  Board Nomination Committee
 The Code of Best Practice on direction to the management to support
the Bank’s growth objectives in line with  Board Integrated Risk Management
Corporate Governance 2017
the Bank’s risk appetite. At the same time, Committee
issued by the Institute of Chartered
Accountants of Sri Lanka the Board actively monitors the Bank’s  Board Related Party Transactions
risk profile relative to the risk appetite Review Committee
 The Anti-Money Laundering Laws and
limits, to ensure that management remains
Regulations and Financial Transaction  Board Credit Committee
focused on generating shareholder value
Reporting Act No. 6 of 2006 and its
by maintaining the appropriate risk/return  Board Strategic Planning Committee
amendments
balance.
 Board Shareholder Relations
 The Listing Rules of the Colombo
Committee
Stock Exchange In carrying out this oversight role, the
Board sets long term strategic goals,  Board Treasury Committee
 The Securities and Exchange
while reviewing and approving business
Commission of Sri Lanka Act No. 36  Board Marketing Committee
strategies and ensuring that the necessary
of 1987 and its amendments  Board IT Committee
financial and human resources are made
 The Inland Revenue Act No. 24 of available to meet those objectives. In
 Board Capital Planning Committee
2017 and its amendments this context, the Board also assumes
the responsibility for ensuring adequate
GRI - 102-17,22,24
All committees work in accordance with The Board has delegated the authority and management processes, governance
the Board approved Terms of References responsibility for day-to-day management framework and internal control systems.
(TOR) detailing their responsibilities of the Bank to the Managing Director and
and outlining the eligibility criteria for the Corporate Management. Accordingly, The Board is responsible for monitoring
committee membership as per applicable the Managing Director and the Corporate the performance of the Managing
laws and regulations. Attendance at Management provide oversight for the Director and the Corporate Management
committee meetings is mandatory for all implementation of the Board’s decisions at to determine the effectiveness with
committee members. It is the responsibility an operational level. which they have met the Bank’s strategic
of Committee Chairpersons to report objectives.
to the Board after every meeting to The Board holds the Managing Director
keep the Board apprised of any relevant responsible for the achievement of the Culture and Conduct
developments. Bank’s strategic objectives in line with As part of its duties, the Board sets
Board approved risk appetite limits. The the tone from the top to promote the
The Role of the Management Managing Director has the authority to principles of ethics and integrity as
A clear demarcation of roles and delegate the responsibilities for oversight the basis of good governance. Board
responsibilities between the Board of for key functions, to ensure Bank-wide approved policies and procedures create
Directors and the senior management operational oversight. a framework to foster a culture of ethics
has been established in order to build an and good governance across the Bank.
environment of transparency, confidence The Internal Audit function meanwhile These include the Code of Conduct
and mutual trust to allow the Board to is responsible for providing independent which applies to the Board of Directors,
be able to constructively challenge and assurance to the Board Audit Committee Corporate Management and to all
provide guidance to management. and to the senior management on employees separately and establishes
the effectiveness of the Bank’s risk standards of desired behaviours including
Directors' Attendance at Board and Mandatory Board Sub Committee Meetings
Director Classification Board Board Audit Board HR & Board Board Board
Meetings Committee Remuneration Nomination Integrated Related Party
Committee Committee Risk Transactions
Management Review
Committee Committee
Mr Harsha Amarasekera 1 NID/NED 06/06 - - 02/02 - -
Prof Malik Ranasinghe 2 IND/NED 11/11 - - 09/09 - 03/03
Mr Sanjiva Senanayake 3 IND/NED 04/04 - 02/02 04/04 01/01 01/01
Mrs Saumya Amarasekera 4 NID/NED 07/07 - 01/03 04/05 02/03 -
Mrs Dhara Wijayatilake 5 IND/NED 11/11 - 06/06 09/09 - 03/03
Mr Rushanka Silva NID/NED 16/16 - - 07/07 - -
Mr Deshal de Mel IND/NED 15/16 14/15 10/10 11/12 09/09 04/05
Mr Ranil Pathirana 6 NID/NED 16/16 15/15 - - -
Ms Annika Senanayake 7 IND/NED 16/16 - 10/10 12/12 - -
Mr Dilip de S Wijeyeratne IND/NED 16/16 15/15 10/10 - 09/09 03/03
Ms Aroshi Nanayakkara IND/NED 16/16 - 10/10 - - -
Dr Sanjiva Weerawarana IND/NED 16/16 12/15 - - 09/09 03/04
Mr Vajira Kulatilaka 8 IND/NED 09/09 - 05/05 - - 04/04
Mrs Keshini Jayawardena 9 IND/NED 04/04 - - - - -
Mr Nanda Fernando ED 16/16 - - - 09/09 -
Mr Ajantha de Vas Gunasekara 10 ED 04/04 - - - - -
Total Meetings 16 15 10 12 09 05
1 - Appointed w.e.f. 18.08.2020 2 - Retired w.e.f. 30.08.2020 3 - Retired w.e.f. 12.04.2020 4 - Ceased to be a Director w.e.f. 02.06.2020
5 - Retired w.e.f. 30.08.2020 6 - Retired w.e.f. 01.01.2021 7 - Retired w.e.f. 01.01.2021 8 - Appointed w.e.f. 25.06.2020
9 - Appointed w.e.f. 01.10.2020 10 - Appointed w.e.f. 29.10.2020
GRI - 102-22,24
the responsibility to be truthful, respect Board Balance that the Bank’s obligations to shareholders
others, and comply with laws, regulations The composition of the Board is governed are understood and appropriately met.
and the Bank’s internal policies. Moreover, by Sampath Bank’s Articles of Association, Accordingly, new appointments are made
the Customer Charter, the Whistle Blowing the requirements of the Banking Act No. on merit, taking account of the specific
Policy and the Procedure for Dealing with 30 of 1988 and its amendments as well as skills and experience, independence and
Related Party Transactions, the Policy on the Code of Best Practice on Corporate knowledge as well as the diversity benefits
Managing Conflict of Interest, the Policy Governance 2017 issued by the Institute each candidate offers to strengthen the
on Communication, the Policy on Fitness of Chartered Accountants of Sri Lanka robustness of decision making at Board
and Propriety of Directors and Other and all other regulations applicable for the level.
Relevant Officers offer guidance to ensure Director Boards of Licensed Commercial
Directors and employees to carry out their Banks.
duties in accordance with the highest
standards of integrity and fairness at all Beyond these stipulated requirements,
times. Sampath Bank strives to maintain an
optimal Board balance that will ensure
Board Composition as at 31.12.2020
Senior Independent
Director
Chairman - Board
Integrated Risk Chairperson -
Managing Management Chairman - Board Board Nomination
Director Committee Audit Committee Committee
Chairman Deputy Chairperson - Board Chairman - Board

Chairman Human Resources Related Party
and Remuneration Transactions Review
Committee Committee
Executive Director (ED) Non-Independent Director (NID) Independent Director (IND)
Age Group-wise Composition Board Gender Representation Board of Directors’ Industry/Background Experience
Experience No. of
Directors*
Engineering 1
Information Technology 1
Banking & Finance 10
Law 2
Marketing 2
3 4 5 HR Management 2
35-45 46-55 56-65 Insurance 1
Business Administration & Management 6
9 3
* An individual Director may represent more than one discipline.
Board Focus for 2020
In light of the unprecedented situation  Strengthen BCP controls  Strengthening Board Diversity
that arose due to the COVID-19 The existing Crisis Management Plan, As a strong advocate of female
pandemic, much of the Board focus for which comes under the purview representation at Board level,
2020 was centered on managing the of the BCP control procedure was Sampath Bank has for the past
Bank’s activities during the lockdown reviewed and updated to improve decade maintained a 70:30 diversity
period and its immediate aftermath. To the Bank's emergency preparedness. ratio. And with a majority of the
prioritise the effective management of The key development in this regard current Board due to retire by 31st
stakeholder outcomes during this time, was the establishment of alternative December 2020, it was decided to
the Board made the following strategic remote work sites to enable several take appropriate measures to further
decisions; key departments such as Finance expand the degree of Board diversity
and Treasury to continue to work not only in terms of gender, but also
 Conduct the Annual General away from the head office. As part with skills especially in the disciplines
Meeting on a virtual platform of the overall crisis management of Finance, Risk, Banking, Strategic
In a bid to ensure the health and approach, the current framework for Planning, Marketing, Information
safety of its shareholders while the delegation of authority was also Technology, Human Resources and
also staying in line with Guidelines revisited with the Managing Director Legal was also considered a key
issued by the Ministry of Health to being granted additional powers priority for the selection of new
prevent the spread of COVID-19, under the strict Board oversight. Board members in 2020.
Sampath Bank became the first At the same time, due diligence
local corporate entity to host a procedures were tightened with  Reinforcing the governance culture
fully-fledged virtual AGM. The 34th the involvement of the Board Audit A new e-learning module was
AGM was live streamed from the Committee and the Board Integrated launched to focus on promoting
Bank’s Head Office to shareholders Risk Management Committee. good governance practices at an
without any disruptions, via “Zoom” operational level. The first phase
video communications app. The A series of protocols were also of the initiative aimed at raising
Bank also leveraged technology to implemented under the supervision awareness on Corporate Governance
allow shareholders to interact with of the HR Department to ensure the requirements, was rolled out for
the proceedings of the meeting and safety of team members reporting to credit related departments in 2020.
vote on resolutions on each agenda work during the lockdown period. This was coupled with the launch
item remotely via “eBallot”, a leading of a dedicated knowledge sharing
global online voting platform, in order  Introduce Virtual Board Meetings and communication portal known
to ensure the shareholder interest. Board Meetings were migrated to as “Towards a Governance Culture”
a virtual platform with effect from to keep the Board apprised of
 Payment of the final dividend to March 2020 enabling the smooth key developments of Corporate
shareholders functioning of the Board functions in Governance including movements in
Reiterating its commitment to view of COVID-19 pandemic. the Bank’s share price.
shareholders in times of crisis, the
Board expedited the payment of the In addition to the COVID-19
final cash dividend of Rs 11.75 per management strategies, the Board
ordinary share approved at the AGM. also focused on the following aspects
The total dividend amounting to to further strengthen the Bank’s
Rs 4.5 Bn was paid in June 2020. overall governance framework.
NANDA FERNANDO
Managing Director
Colombo, Sri Lanka

15th February 2021
Marketing Dept. 124
Siyapatha Finance PLC

Deposit Mobilisation
Dept.
Mobilisation
DGM Deposit
Sampath Centre Ltd
Chief Marketing Officer

Treasury Back Office
Snr DGM Operations/Group

Operations & BPR Dept. AGM Operations
and Card Centre SC Securities (Pvt) Ltd
Branch Support Unit
Board of Directors - Subsidiaries

Network Services Centre Sampath Information
Technology Solutions Ltd
Central Cash Dept.
Card Centre
I SAMPATH BANK PLC I Annual Report 2020
IT Electronic Data
Processing Dept.
IT Systems
Development Dept.
AGM IT
Data Warehouse
Group Chief
Information Officer
Data Governance Unit
Remittances Dept.
AGM Inward Remittance/
Bank Notes Operations Dept. KPO/BNO
& Katunayake Pay Office
Governance Structure
Customer Care Centre

Shareholders
Managing Director
Board of Directors - Bank
Finance Dept.
Treasury Front Office

AGM Treasury
Treasury Investments &
PDU Dept.
Executive Director/
Investor Relations Dept.

Group Chief Financial Officer
Corporate Credit Dept.

External Auditors
Corporate Digitalisation
Board Sub Committees
Corporate Finance Dept.

AGM FCBU/Corporate
Finance
Foreign Currency
GRI - 102-18,19,20
Banking Unit
Snr DGM Corporate Credit/ Snr DGM FCBU/
Corporate Finance
Trade Services Dept.
International Operations
Dept.
Recoveries Dept. Board Audit Committee

AGM Recoveries
Credit Control Unit
Trade & Credit Control

Snr DGM International
Board HR & Remuneration
Committee
Human Resources Dept.
& Sampath Learning Board Nomination Committee
Academy
HR Officer
Group Chief
Corporate
Sustainability Dept. Board Integrated Risk
Management Committee
Credit Administration Dept. Board Related Party

Legal Dept. Chief Legal Officer

Board Credit Committee
DGM Credit
Loan
Disbursement Unit
Administration & Legal

Board Strategic Planning
Committee
Board Shareholder
Relations Committee
Strategic Planning Dept.
Board Treasury Committee
Group Chief
Strategy Officer
Bancassurance Dept.
Branch Network Board Marketing Committee
Credit Processing Unit Board IT Committee
Banking
DGM Branch
Lending Products Dept. Board Capital Planning
Committee
Governance Structure
Business Support Centre
Logistics, Premises &

Engineering Depts.
Myanmar Representative
Office
Group Chief
Compliance Dept. Compliance Officer
Risk Management Dept. &

Treasury Middle Office
Risk Officer
Group Chief
Systems Audit Dept.
Internal Audit Dept. Auditor

Internal
Group Chief
Company Secretary’s
Company Secretary
Office
SAMPATH BANK PLC I Annual Report 2020 I
Chief Information
Information Security Dept.
Security Officer
125
The Code of Best Practice on Corporate Governance 2017 issued by the Institute of Chartered Accountants of Sri Lanka
(ICASL CODE - "the Code")
ICASL Principle, Compliance and Implementation Complied

Code
Reference
SECTION 1 - THE COMPANY (THE BANK)
A DIRECTORS
A.1 THE BOARD
(1) A.1 Effective Board
The Board of Directors as at 31.12.2020, comprised Twelve (12) Directors, of whom Ten (10) 
including the Chairman, functioned in a Non-Executive capacity. The Managing Director and the
Group Chief Financial Officer (GCFO), who are members of the Corporate Management, are the
only Two (02) Executive Directors of the Bank. The day-to-day running of the organisation has been
delegated to the Managing Director. The Board has appointed Board Sub Committees to assist
in discharging its collective duties and to provide a conducive business environment for effective
performance of the Bank. The Board is closely involved in developing strategy and setting the short-,
medium- and long-term goals of the Bank and regularly monitors performance against pre-determined
Key Performance Indicators (KPIs), which include both quantitative and qualitative measures, on a
regular basis.
In line with the Code, the Board met 16 times during the year 2020, to ensure the effectiveness of
discharging its duties.
Attendance as a Percentage at Board Meetings During 2020

%
1 Mr Harsha Amarasekeraa 06/06
100 2 Prof Malik Ranasingheb 11/11
3 Mr Sanjiva Senanayakec 04/04
4 Mrs Saumya Amarasekerad 07/07
80 5 Mrs Dhara Wijayatilakee 11/11
6 Mr Rushanka Silva 16/16
7 Mr Deshal de Mel 15/16
60
8 Mr Ranil Pathiranaf 16/16
9 Ms Annika Senanayakeg 16/16
40 10 Mr Dilip de S Wijeyeratne 16/16
11 Ms Aroshi Nanayakkara 16/16
12 Dr Sanjiva Weerawarana 16/16
20 13 Mr Vajira Kulatilakah 09/09
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
94
14 Mrs Keshini Jayawardenai 04/04

0 15 Mr Nanda Fernando 16/16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 16 Mr Ajantha de Vas Gunasekaraj 04/04
Meetings Attended a - Appointed w.e.f. 18.08.2020 f - Retired w.e.f. 01.01.2021

Meetings Not Attended b - Retired w.e.f. 30.08.2020 g - Retired w.e.f. 01.01.2021
c - Retired w.e.f. 12.04.2020 h - Appointed w.e.f. 25.06.2020
d - Ceased to be a Director w.e.f. 02.06.2020 i - Appointed w.e.f. 01.10.2020
e - Retired w.e.f. 30.08.2020 j - Appointed w.e.f. 29.10.2020
(2) A.1.1 Regular Meetings

Board meetings are held monthly whilst special Board meetings are convened as and when required. 
During 2020 the Board held 16 scheduled meetings. In addition, the following Board Sub Committees
met regularly during the year:
1. Board Audit Committee 7. Board Strategic Planning Committee
2. Board Human Resources & Remuneration Committee 8. Board Shareholder Relations Committee
3. Board Nomination Committee 9. Board Treasury Committee
4. Board Integrated Risk Management Committee 10. Board Marketing Committee
5. Board Related Party Transactions Review Committee 11. Board IT Committee
6. Board Credit Committee 12. Board Capital Planning Committee
The meeting calendar detailing all Board and Board Sub Committee meetings for the ensuing year, is
prepared well in advance and circulated to all Board Members.
The Board members use iPads to access Board Papers via secure connections and are able to
join meetings even through remote access, such as video conference. Details of Board Meetings,
Mandatory Board Sub Committee Meetings and attendance are given on page 121 of this report.
In 2020, majority of the Board and Board Sub Committee Meetings were conducted virtually enabling
the smooth functioning of the Board functions in view of COVID-19 pandemic.

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Reference
BOARD’S RESPONSIBILITIES: TO PROVIDE ENTREPRENEURIAL LEADERSHIP WITHIN A
FRAMEWORK OF EFFECTIVE CONTROLS, STRENGTHENING THE SAFETY AND SOUNDNESS OF
THE BANK
(3) A.1.2 Ensure the Formulation and Implementation of Sound Business Strategy
The Board is responsible for setting up the strategic plan, policies and for monitoring performance 
against agreed goals and KPIs. During the year, the Board held 08 Strategic Planning meetings, where
the Board reviewed the progress of the Strategic Plan 2020-2022 and re-aligned strategies based on
proposals of the Corporate Management where necessary and formulated and approved the strategic
plan for the period 2021 to 2023.
(4) A.1.2 The Board has appointed a Chairman who is a Non-Independent Non-Executive Director and has 
also appointed a Senior Independent Director
(5) A.1.2 The Board is responsible to ensure that the Chief Executive Officer (CEO)/Managing Director (MD)
and the Management Team possess Skills, Experience and Knowledge to Implement the Strategy
The Managing Director and the Corporate Management team possess the necessary skills, knowledge 
and experience required to implement the strategy of the Bank.
(6) A.1.2 Succession Strategy for CEO and KMPs
The Board Nomination Committee is responsible for adopting an effective succession strategy 
with regard to the MD and KMPs, in support of which, a Board-approved Procedure for Selection,
Nomination and Appointment of MD and KMPs is in place.
(7) A.1.2 Approval of Budgets and Major Capital Expenditure
The Board is responsible for reviewing and approving major capital expenditure budgets based on a 
formal procedure.
The budgets for the ensuing year are approved by the Board along with the revolving Strategic Plan
for the ensuing year. At the quarterly review of the Strategic and Budget Plan for 2020-2022, the
compliance with the cost budgets was also reviewed.
(8) A.1.2 Determining the Matters Expressly Reserved to the Board and those Delegated to the Management
A Board-approved formal schedule of matters specifically reserved to the Board for decision is in 
place. Further, Board has a process of delegating authority to the management in line with the
provisions Bank’s Memorandum and Articles of Association, where necessary.
(9) A.1.2 Ensure Effective Systems to Secure Integrity of Information, Internal Controls, Business Continuity
and Risk Management
The Board Audit Committee reviews Internal Audit reports submitted by the Internal Audit 
Department and monitors follow up action. Based on the assessment of Internal Control Over
Financial Reporting (ICOFR) for 2020, the Directors confirmed that the Bank's ICOFR procedure is
effective. A descriptive account of the measures taken in this regard is contained in the Board Audit
Committee Report given on pages 170 to 172.
A Board-approved, annually-reviewed Business Continuity Plan is in place. Disaster Recovery (DR) 
Drill was carried out pertaining to the year 2020 in compliance with the requirements of such
Business Continuity Plan. The Bank established a Task Force in order to implement proper BCP
arrangements with the COVID-19 pandemic situation in the country. The situation of the country was
reviewed regularly and BCP strategies were implemented accordingly.

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Reference
An independent Risk Management Unit has been established, headed by the Group Chief Risk Officer 
who functionally reports to the Board Integrated Risk Management Committee. The Risk Management
Unit is tasked with the responsibility of assessing and mitigating various risks encountered by the Bank
and the Group in carrying out their respective businesses.
Apart from the implementation of several Tiers of Firewalls and other systems to secure Databases
and Applications, the Bank has enforced conducting of Vulnerability Assessments and Code Reviews
to the Software Development Life Cycle to ensure the integrity of Information. Also, the Bank gets the
services of an external party to conduct quarterly Vulnerability Assessments and Annual Penetration
Tests to identify vulnerabilities so that possible threats could be identified and fixed in advance.
Currently the Bank is conducting Privilege Access review using Privilege Access Management (PAM)
reports. Initiated Risk Assessments to cover all departments and Branches to identify their related
information security risks and formulate risk treatment plans. The Bank has formed an "Incident
Response Team (IRT)" to take immediate actions in the event of a security breach to ensure business
continuity and Information Security.
(10) A.1.2 Ensure Compliance with Laws, Regulations and Ethical Standards
An independent Compliance function too has been established, which is headed by the Group Chief 
Compliance Officer who functionally reports to the Board Integrated Risk Management Committee,
which is tasked with ensuring the Bank’s compliance with laws and regulations.
In order to ensure that ethical standards are followed, the Board-approved Policy on Managing 
Conflicts of Interest, the Whistle Blowing Policy, the Procedure on Dealing with Related Party
Transactions, the Customer Charter, the Codes of Conduct for Employees, the Key Management
Personnel, and the Code of Conduct and Governance Requirements for Directors have been
implemented Bank-wide and as appropriate.
(11) A.1.2 Ensure all Stakeholder Interests are Considered in Corporate Decisions
The Articles of Association of the Bank requires the Directors to make decisions, taking into account 
the interest of all stakeholders including customers, shareholders, employees and the community.
Additionally, the Customer Charter, the Board Shareholder Relations Committee, Bank’s HR Policy,
the Policy on Managing Conflicts of Interest as well as the Board Related Party Transactions Review
Committee are in place in order to uphold the interests of these key stakeholders.
GRI - 102-21,27,29,32

Code
Reference
(12) A.1.2 Recognising Sustainable Business Development and Consider the Need for Adopting “Integrated
Reporting”
The Board of Directors, both individually and collectively comply with best practices on economic,
environmental, and social topics whilst ensuring that the interest of all shareholder groups are
considered when taking decisions.
Economic Sustainability 
Please refer pages 208 to 343
The Environment 
Labour Practice 
Society 
Product and Service Responsibility 

Stakeholder Identification, Engagement and Effective Communication 

Sustainable Reporting and Disclosure 

(13) A.1.2 Ensure that the Company’s Values and Standards are set with Emphasis on Adopting Appropriate
Accounting Policies and Fostering Compliance with Financial Regulations
The Board Audit Committee and the Board respectively review and approve the Bank’s accounting 
policies annually or sooner if required, to ensure that they are in line with the business model of the
Bank and evolving international and local accounting standards and industry best practices.
(14) A.1.2 Establish a Process of Monitoring and Evaluation on Strategy Implementation, Budgets, Plans and
Related Risks
The Board Strategic Planning Committee ensures that the Revolving Strategic Plan relevant for the 
current year is reviewed on a periodic basis, in order to facilitate strategic realignment wherever and
whenever deemed necessary or appropriate. The 2020 - 2022 Strategic Plan was duly reviewed by
this Committee quarterly, in this manner.
The Terms of Reference of the Board Integrated Risk Management Committee requires the Risk 
Management Unit to analyse and submit to the Board for the Board’s information, consideration and
appropriate action, the Risks arising out of strategies, prior to the Board granting approval for the
revolving Strategic Plan. The Board considered the risks highlighted by the Risk Management Unit as
risks arising out of strategies prior to approving the Revolving Strategic Plan for 2021-2023.
(15) A.1.2 Ensuring that a Process is Established for Corporate Reporting on Annual and Quarterly Basis
Annual Audited Financial Statements and Quarterly Financial Statements are prepared and published 
in accordance with the formats prescribed by the supervisory and regulatory authorities and
applicable Accounting Standards.

Code
Reference
(16) A.1.2 Fulfil such other Board Functions as are Vital, given the Scale, Nature and Complexity of the
Business Concerned
The Board is committed to fulfil its functions in line with the laws, regulations and good governance 
practices adopted by the Bank.
(17) A.1.3 Procedure for Directors to obtain Independent Professional Advice at the Bank’s Expense
A Board-approved Policy is in place, enabling Directors to seek and obtain Independent Professional 
Advice.
(18) A.1.4.A Directors' Access to Advice and Services of the Company Secretary and the Appointment and
Removal of the Company Secretary
As per the Board-approved Policy providing Directors access to Advice and Services of the Company 
Secretary, all Directors have the opportunity to obtain the advice and services of the Company
Secretary who is a KMP responsible for ensuring follow-up of Board procedures, compliance with
relevant rules and regulations, directions and statutes. Under this procedure, during the year under
review, the Company Secretary provided advice to the Board where necessary.
The Articles of Association of the Bank specify that the appointment and removal of the Company 
Secretary shall be by way of a Board resolution.
(19) A.1.4.B Insurance Cover for Board of Directors and KMPs
An insurance policy is in place to cover the Board of Directors and KMPs of the Bank. 
(20) A.1.5 Independent Judgement
Directors exercise independent judgement in the effective discharge of duties, engaging in 
constructive Board deliberations and objective evaluation of matters set before them.
(21) A.1.6 Dedicate Adequate Time and Effort to Matters of the Board and the Company
Dates of regular Board meetings and regular Board Sub Committee meetings are scheduled well in 
advance and the relevant papers are circulated generally seven days prior to the meeting. There is
provision to circulate papers closer to the meeting on an exceptional basis.
Every Director dedicated adequate time and effort to matters pertaining to the Board and the Bank.
These Directors who are also members of Board Sub Committees have satisfactorily discharged their
duties and responsibilities towards the affairs of the Bank. The attendance at meetings of the Board
and its mandatory Sub Committees is given on page 121.
(22) A.1.7 One-Third of the Directors can call for a Resolution to be Presented to the Board where they feel it
is in the Best Interest of the Company to do so
A Board-approved Procedure is in place enabling all Directors to include proposals in the Agenda. 
GRI - 102-22,23,27

Code
Reference
(23) A.1.8 Training for Directors
The Company Secretary, in consultation with the Chairman, recommends Directors to attend training 
sessions/seminars. During the year 2020, the Directors attended the following training programmes
focused on the following areas:
 Impact of the COVID-19 to the Banking Business conducted by Boston Consulting Group
 Workshop on AML/CFT Obligations for Board of Directors of the Licensed Banks conducted by
the Financial Intelligence Unit of CBSL
 Non-Executive Director Masterclass in collaboration with London Stock Exchange Group
Academy
 "In the new normal, how will Audit Committees in Banks prepare for the financial year end?"
conducted by E&Y
 "How BIRMC can respond to Credit Risk Management during pandemic" conducted by E&Y
 Sri Lanka Economic Summit 2020 conducted by the Ceylon Chamber of Commerce
 Budget 2021 conducted by Frontier Research
Additionally, the Board encourages knowledge sharing amongst the Directors. The Board being
the highest governance body identifies the significance of developing and enhancing its collective
knowledge on economic, environmental and social topics. The annual self-assessment by Directors
also covers aspects on training to identify training needs for Directors.
A dedicated knowledge sharing and communication portal known as “Towards a Governance Culture”
was introduced to keep the Board apprised of key developments of Corporate Governance including
movements in the Bank’s share price.
In addition, a formal Induction Programme is conducted for the newly appointed Directors.
A.2 DIVISION OF RESPONSIBILITIES BETWEEN CHAIRMAN AND MANAGING DIRECTOR (MD)
(24) A.2 Conducting the Business of the Board Separately to the Executive Responsibilities of the
Management of the Company
The positions of the Chairman and the CEO/MD have been separated in line with best practices in 
order to maintain a balance of power and authority. The Chairman is a Non-Executive Director while
the CEO/MD is an Executive Director.
A.3 CHAIRMAN’S ROLE
(25) A.3 Chairman’s Role in Preserving Good Corporate Governance
The Chairman’s functions and responsibilities which include all aspects specified in the Code, the 
Continuing Listing Requirements of the CSE and the Banking Act Direction No. 11 of 2007 on
Corporate Governance for Licensed Commercial Banks in Sri Lanka have been documented and duly
approved by the Board.
(26) A.3.1 Conduct Board Proceedings in a Proper Manner
The routine Agenda for Board Meetings has been developed by the Chairman in consultation with all 
other Directors including the CEO/MD and the Company Secretary. These items include discussions
on strategy, the Bank’s performance, Industry Performance, Financials, status of Human Resources,
Risk Management and Compliance, Treasury update, update on Bank’s status on Cyber Security and
Information on exercising authorities delegated by the Board upon Management.
Board proceedings are conducted according to the Agenda. The papers for discussion and the Agenda 
are generally circulated seven days prior to the meeting by uploading the same via a secure link. All
Directors have been provided with iPads to enable them to access the current as well as the past
Board papers via this secure link.
GRI - 102-22

Code
Reference
The Code of Conduct and Governance Requirements for Directors and the Terms of Reference of 
each Board Sub Committee spell out the Directors’ duties and responsibilities and the standard of care
expected of them. These documents too have been uploaded as “Shared Documents” providing easy
and prompt access via the said secure link to Directors.
All Directors make effective contributions at meetings for the benefit of the Bank, offering their views, 
concerns and advice based on their respective field of expertise and their professional experience.
All Directors have access to Management to seek Information for discussions at Board Meetings. 
Board papers are quite informative and any further information required by Directors are provided
by the Management, upon request. All Directors have the liberty to request inclusion of matters of
concern in the Agenda, which is supported by the Board-approved Procedure to enable Directors to
include matters and proposals in the Agenda.
The Board as at 31.12.2020, comprised of Ten Non-Executive Directors and Two Executive Directors, 
ensuring the required balance and independence was maintained.
The Minutes of Board Meetings and Board Sub Committee Meetings carry various concerns raised 
and views expressed by Directors individually in the deliberations as precisely as possible.
The Board is aware of its responsibility towards all stakeholders of the Bank and are in control of the 
affairs of the Bank.
A.4 FINANCIAL ACUMEN
(27) A.4 Availability of Financial Acumen and Knowledge to offer Guidance on Matters of Finance
Financial acumen has been a key attribute in the careers of the following Directors who have held 
senior positions related to finance in other leading financial institutions:
 Mr Ranil Pathirana  Mr Rushanka Silva  Mr Dilip de S Wijeyeratne

 Ms Aroshi Nanayakkara  Mr Deshal de Mel  Mr Vajira Kulatilaka
 Mr Harsha Amarasekera  Mrs Keshini Jayawardena  Mr Ajantha de Vas Gunasekara
A.5 BOARD BALANCE

(28) A.5.1 Non-Executive Directors of Sufficient Calibre and Number
The Board, as at 31.12.2020, comprised Ten Non-Executive Directors including the Chairman and 
Two Executive Directors who are the CEO/MD and the GCFO; the majority being Non-Executive
Directors as prescribed by the Code.
The Non-Executive Directors are professionals/academics/business leaders, holding/having held 

senior positions in their respective fields who are deemed to be of sufficient and appropriate calibre.
As the majority of the Board comprises Non-Executive Directors, their opinions and views carry
significant weight in the Board decisions.
The Chairman is a President’s Counsel, and is an eminent legal practitioner in Sri Lanka with a wide 
practice in both the Commercial Courts as well as the Appellate Courts. MD is a Senior Fellow
Member of the Institute of Bankers of Sri Lanka (IBSL). One Director holds a PhD in Computer
Science. Five Directors, including the MD, hold a Masters’ Degrees in Business Administration,
International Political Economy, Industrial Engineering and Management. Six Directors hold
Bachelor’s degrees in Commerce, Arts, Civil Engineering, Management, Philosophy, Political Science
and Economics. Three Directors are Fellow Members and Two Directors are Associate Members of
the Chartered Institute of Management Accountants, UK. One Director is a Fellow Member of the
Institute of Chartered Accountants of Sri Lanka as well as a Fellow Member of Certified Management
Accountants of Sri Lanka, whilst one Director is an Associate Member of the Institute of Chartered
Accountants of Sri Lanka and another Director is a Chartered Financial Analyst.

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Executive Directors & Non-Executive Directors
10
Non-Executive Directors
Executive Directors
(29) A.5.2 Two-Thirds of the Non-Executive Directors should be Independent

As at 31.12.2020, Seven (07) out of the Ten (10) Non-Executive Directors of the Bank were 
Independent of management and free of any business or other relationship that could materially
interfere with or could reasonably be perceived to materially interfere with the exercise of their
unfettered and independent judgement, thereby meeting the criteria of both, the Code as well as of
the Banking Act Direction No. 11 of 2007 Corporate Governance for Licensed Commercial Banks
issued by the Central Bank of Sri Lanka (CBSL), and complying with the regulatory requirement.
Independence of Non-Executive Directors
Independent, Non-Executive Directors

Non-Independent, Non-Executive Directors
(30) A.5.3 Independence of Non-Executive Directors

As at 31.12.2020, Seven (07) of the Non-Executive Directors were independent of management and 
free of any business or other relationship that could materially interfere with or could reasonably be
perceived to materially interfere with the exercise of their unfettered and independent judgement.

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(31) A.5.4 Annual Declarations have been obtained from each Non-Executive Director as to the status of 
Independence/Non-Independence for the year 2020
(32) A.5.5 Annual Evaluation of Independence
The Board carried out the annual evaluation of independence of the Directors based on the 
submission of the annual declarations. Based on these declarations, the following Directors were
deemed to be independent as at 31.12.2020:
 Ms Annika Senanayake  Mr Dilip de S Wijeyeratne  Ms Aroshi Nanayakkara

 Mr Deshal de Mel  Dr Sanjiva Weerawarana  Mr Vajira Kulatilaka
 Mrs Keshini Jayawardena
(33) A.5.6 Alternate Directors
As per the Board-approved policy, the appointment of Alternate Directors to represent Directors at 
meetings can be done where necessary subject to regulatory requirements/approvals.
However, an executive of the Company should not be appointed as an Alternate Director of the
Company. There were no alternate Directors appointed during the year 2020.
(34) A 5.7 (a) Appointment of Senior Independent Director (SID)
The requirement of a Senior Independent Director (SID) arose following the retirement of the 
Independent, Non-Executive Chairman, Prof Malik Ranasinghe w.e.f 30.08.2020.
Accordingly, Mr Harsha Amarasekera, who is a Non-Independent, Non-Executive Director was

appointed as the Chairman w.e.f. 30.08.2020, and the Board appointed Mr Deshal de Mel as the SID
of the Board, to ensure the independent element in decision making.
(35) A 5.7 (b) Meetings with the Senior Independent Director
The SID, upon his appointment in September 2020, held adequate number of meetings with the Non- 
Executive Directors and the Executive Directors during the year 2020.
(36) A.5.8 The SID is available for the Non-Executive Directors for Confidential Discussions and Represents all 
Stakeholder Groups at Meetings
(37) A.5.9 Chairman to hold Meetings with Non-Executive Directors, without Executive Directors being
Present
One meeting was held between the Chairman and the Non-Executive Directors without the Executive 
Directors being present during the year 2020.
(38) A.5.10 Recording of Directors’ Concerns in Board Minutes
Board Minutes are prepared in order to record any concerns of the Board as a whole or those of 
individual Directors regarding matters placed for their approval/guidance/action. These Minutes are
circulated and formally approved at Board meetings. In the process of minuting the proceedings of a
meeting, the concerns raised by each Director are clearly recorded together with the responses of the
others.
A.6 SUPPLY OF RELEVANT INFORMATION
(39) A.6.1 Provision of Appropriate and Timely Information
The management provides comprehensive information including both quantitative and qualitative 
information for the monthly Board Meetings. The Directors also have free and open access to
Management at all levels to obtain further information or clarify any concerns they may have. As
described above, they also have the right to seek independent professional advice at the Company’s
expense, in support of which a Board-approved Policy is in place.
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(40) A.6.1 Chairman to Ensure all Directors are Properly Briefed on Issues Arising at Board Meetings
All Directors are promptly and adequately briefed on matters arising at Board meetings through 
comprehensive Board Papers. Additionally, the relevant members of the Management team are on
standby for further clarifications as may be required by Directors or will make presentations at Board
meetings where necessary.
Any Director who was unable to attend a meeting is updated on proceedings prior to the next
meeting through:
 Formally documented minutes of meetings.

 A separate document on matters arising out of minutes highlighting the items which need to be
completed and need follow-up action of the previous meetings. (This is taken up immediately
after confirmation of minutes)
 Archived minutes and Board papers accessible electronically at the convenience of the Directors.
(41) A.6.2 Board Papers and Agenda to be Circulated Seven Days Prior to Meetings
As described above, Board papers are generally circulated seven days before the meeting. There is 
provision for circulation of urgent papers and/or papers on highly sensitive matters with a shorter
notice and also for approval of matters by circulation, but such instances are the exception and not
the rule.
Minutes of Board meetings are generally provided within the stipulated period. 
A.7 APPOINTMENTS TO THE BOARD
(42) A.7.1 Formal and Transparent Procedure for New Appointments through an Established Nomination
Committee
The Board has established a Board Nomination Committee whose Terms of Reference complies with 
the specimen given in the Code and with the Banking Act Direction No. 11 of 2007 on Corporate
Governance for Licensed Commercial Banks. Membership of the Board Nomination Committee is
given on page 175 of the Annual Report. New Directors (both Executive and Non-Executive) are
appointed by the Board upon consideration of recommendations by the Board Nomination Committee
in terms of the Board-approved Policy on Selection, Nomination, Appointment and Election of
Directors which is in place, in support of this process.
(43) A.7.2 Annually Assess Board Composition
The Board annually assesses its composition to ascertain whether the combined knowledge, skill 
and experience matches the strategic demands facing the Bank and is satisfied that it matches the
requirements demanded.
The Board Nomination Committee considers the outcome of such assessments when appointments to
the Board are proposed.

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(44) A.7.3 Disclosure of Information to Shareholders upon Appointment of New Directors
All new appointments to the Board are communicated to the shareholders via the Colombo 
Stock Exchange in the English language, together with brief resumes of such Directors. Such
announcements set out the fields of the respective Director’s expertise, his/her directorships in
other companies, the number of shares he/she holds in the Bank, whether he/she is appointed as an
Executive Director or a Non-Executive Director, and whether as an Independent Director or as a Non-
Independent Director.
The appointment of the following Directors were announced to the public in this manner during the
year under review.
 Mr Vajira Kulatilaka  Mr Harsha Amarasekera  Mrs Keshini Jayawardena

 Mr Ajantha de Vas Gunasekara
Further, the profiles of the current Directors are given on pages 20 to 25 in this Annual Report.
A.8 RE-ELECTION
(45) A.8 All Directors should Submit Themselves for Re-Election at Regular Intervals
As per the Articles of Association of the Bank, one-third of the Directors retire at each Annual General 
Meeting and offer themselves for re-election. Such Directors who retire are those who held office
for the longest period since their election/re-appointment. In accordance with this provision, the
following Directors retire and offer themselves for re-election at the 35th Annual General Meeting:
 Ms Aroshi Nanayakkara  Dr Sanjiva Weerawarana  Mr Deshal de Mel
Following Directors were re-elected at the 34th Annual General Meeting:
 Ms Annika Senanayake  Mr Rushanka Silva  Mr Dilip de S Wijeyeratne

 Mr Ranil Pathirana
A brief resume of each Director standing for re-election is given on pages 20 to 25 in this Annual
Report to enable shareholders to make an informed decision.
The Board and the Board Nomination Committee are actively engaged in succession planning for both
Executive and Non-Executive Directors to ensure that Board composition is periodically reviewed to
ensure that the Board retains its effectiveness at all times.
(46) A.8.1 Non-Executive Directors are Appointed for Specified Terms Subject to Re-Election
Non-Executive Directors are appointed with approval of the Central Bank of Sri Lanka (CBSL) and 
stand for election at the immediately succeeding Annual General Meetings in terms of Articles of
Association of the Bank. This is in compliance with the requirements of the Code as well as the said
CBSL Direction No. 11 of 2007.
Mr Vajira Kulatilaka, Mr Harsha Amarasekera and Mrs Keshini Jayawardena who were the Non-
Executive Directors appointed to the Board, during the year under review, w.e.f. 25.06.2020,
18.08.2020 and 01.10.2020 respectively will be subject to election by the shareholders at the Annual
General Meeting to be held on 30.03.2021.
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(47) A.8.2 All Directors including Chairman to be Subject to Election at First Opportunity after Appointment
and Re-Election in line with the requirements of the Articles of Association
All Directors stand for election by shareholders at Annual General Meetings immediately following 
their appointment. Ms Aroshi Nanayakkara, Dr Sanjiva Weerawarana and Mr Deshal de Mel who
were appointed to the Board w.e.f. 30.05.2019, 01.06.2019 and 26.09.2019, were elected by the
shareholders at the 34th Annual General Meeting held on 02.06.2020.
During the year under review, Mr Vajira Kulatilaka, Mr Harsha Amarasekera, Mrs Keshini Jayawardena
and Mr Ajantha de Vas Gunasekara who were appointed to the Board w.e.f. 25.06.2020, 18.08.2020,
01.10.2020 and 29.10.2020 respectively to fill up casual vacancies in the Board, will come up for
election by the shareholders at the Annual General Meeting to be held on 30.03.2021.
As per the Articles of Association of the Bank, one-third of the total Directors retire at each Annual 
General Meeting and offer themselves for re-election.
(48) A.8.3 Resignation of a Director
In the event that a Director wishes to resign from his/her position as a Director, he/she is expected 
to provide a written communication to the Board formally tabling his/her resignation along with
reasons for such resignation. Such requests would be duly tabled at the immediately succeeding Board
Meeting.
During the year under review, Mrs Saumya Amarasekera did not offer herself to be re-elected as a
Director of Bank at the 34th Annual General Meeting, and ceased to be a Director w.e.f. 02.06.2020.
A.9 APPRAISAL OF BOARD PERFORMANCE
(49) A.9.1 Appraisal of Board Performance
Each Director of the Board annually appraises the Board’s own performance to ensure that the Board 
is discharging its responsibilities satisfactorily. This process requires each Director to fill a Board
Performance Evaluation Form in line with the provisions of the relevant Section of the Code. The
responses are reviewed by the Company Secretary who compiles a report which is submitted for
discussion at a Board Meeting.
(50) A.9.2 Appraisal of Board Sub Committees
The annual self-assessment of the Board Sub Committees too follows a similar process and the 
reports are retained by the Company Secretary.
(51) A.9.3 Process to Review Directors’ Performance at the Time of Re-Election
A Self Review process to ascertain the extent of the contribution participation and engagement of 
each Director is followed simultaneously with the Board Performance Evaluation by the Directors.
(52) A.9.4 Disclosure of the Method of Appraisal of the Board and Board Sub Committee Performance
As explained in A.9.1, A.9.2 and A.9.3 above 
A.10 DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS
Shareholders should be kept advised of relevant details in respect of Directors
(53) A.10.1 Annual Report Discloses the Following Information Relating to Directors:
 Name, qualifications, expertise in relevant functional areas, material business interests and a brief 
profile of each Director is given on pages 20 to 25.
 Each Director’s Executive/Non-Executive and Independent/Non-Independent status is given on 
pages 20 to 25.
 Related Party Transactions are given on pages 298 to 301. 
 Names of companies and other entities in which each Director concerned serves as a Board 
member are given on pages 20 to 25.
 Membership of Directors in Board Mandatory Sub Committees are given on pages 170 to 181 
and their attendance at Board Meetings and Board Sub Committee meetings are given on page
121.
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A.11 APPRAISAL OF CHIEF EXECUTIVE OFFICER (CEO)/MANAGING DIRECTOR (MD)
The Board should, at least annually, assess the performance of the CEO
(54) A.11.1 Set Reasonable Financial and Non-Financial Targets to be Met by the CEO/MD
The Board discussed and set financial and non-financial targets to be achieved during the year by the 
MD with reference to the short-, medium- and long-term objectives of the Bank at the beginning of
2020.
(55) A.11.2 Evaluate Performance of the CEO/MD with Reference to Targets
The performance evaluation of the MD for 2019 was carried out by the Board HR & Remuneration 
Committee with reference to targets and goals achieved by the Bank which were reported to the
Board. The Board expressed its satisfaction at the MD’s level of performance during 2019.
B DIRECTORS’ REMUNERATION
B.1 REMUNERATION PROCEDURE
(56) B.1.1 Appointment of a Remuneration Committee
The Board has established a Board Human Resources & Remuneration Committee (Board HR & 
Remuneration Committee) to develop policies and recommend remuneration for the Directors
and KMPs respectively for approval by the Board. No Director is involved in deciding his/her own
remuneration. The Terms of Reference of this Committee is substantially in compliance with Schedule
C of the Code and other regulatory guidelines and the Committee held 10 meetings during the year
under review.
The Board follows the Board-approved Reward Management Policy for Key Management Personnel,
as well as the Board-approved Directors’ Remuneration Policy in recommending remuneration for the
KMPs and Directors for approval by the Board.
Further information regarding the Board HR & Remuneration Committee is given in the Board HR & 
Remuneration Committee Report on pages 173 and 174.
(57) B.1.2 & Remuneration Committee to Comprise Exclusively of Non-Executive Directors, of whom the
B.1.3 Majority should be Independent whilst the Chairperson of the Committee should be an Independent
Director
The Board HR & Remuneration Committee’s composition as at 31st December 2020 is: 
 Ms Aroshi Nanayakkara (Chairperson) (IND/NED)
 Ms Annika Senanayake (IND/NED)
 Mr Dilip de S Wijeyeratne (IND/NED)
 Mr Deshal de Mel (IND/NED)
 Mr Vajira Kulatilaka (IND/NED)
(IND - Independent Director, NED - Non-Executive Director)
(58) B.1.4 Remuneration for Non-Executive Directors
Remuneration of Non-Executive Directors is determined by the Board as a whole, in accordance with 
the Board-approved Policy on Directors’ Remuneration, which is in line with the Articles of Association
of the Bank.
(59) B.1.5 Remuneration of Executive Directors
The Board-approved Reward Management Policy for KMPs which is in place governs the 
remuneration of the Executive Directors as well, as the Executive Directors being KMPs.
B.2 THE LEVEL AND MAKEUP OF REMUNERATION
(60) B.2.1 & Remuneration for Executive Directors should Attract, Retain and Motivate
B.2.2
Remuneration for Executive Directors designed to attract, retain and motivate them as determined by 
the Board HR & Remuneration Committee.

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(61) B.2.3 Positioning Company Remuneration Levels Relative to Other Companies
The Board HR & Remuneration Committee, where necessary, reviews the Bank’s remuneration levels 
in relation to the industry standards of the country.
(62) B.2.4 Sensitivity of the Remuneration Committee to Remuneration and Employment Conditions
When considering employee incentives, the Board HR & Remuneration Committee is mindful of the 
comparative employment conditions and considers the nature and extent of responsibility, the work
volume and the level of performance against the targets set.
(63) B.2.5 Performance Related Elements of Remuneration for Executive Directors
Considering the recommendations made by the Board HR and Remuneration Committee, the Board 
approved an extremely challenging, but transparent set of targets for the Executive Directors. These
targets are intended to earn the highest value additions to all stakeholders.
(64) B.2.6 Share Option Schemes
No share option scheme was implemented or introduced during 2020. 
(65) B.2.7 Designing Schemes of Performance Related Remuneration
A scheme of team based performance related remuneration has been in force in the Bank since 2016. 
However, under this scheme, no performance related remuneration is granted with effect in the
retrospect.
(66) B.2.8 Early Termination of Employment of Directors
No Contract for Services has been entered into by the Bank with its Non-Executive Directors. The 
term of a Director (whether Executive or Non-Executive) would come to an end in the circumstances
set out in the Board-approved Procedure for Selection, Nomination and Appointment of Directors. No
compensation is payable by the Bank to its Non-Executive Directors on “early termination” of term
for any reason whatsoever. This is supported by the Board-approved Directors’ Remuneration Policy
which is in place.
The terms of employment of the Executive Directors including MD, who are employees of the Bank
are governed by their respective Contracts of Employment.
(67) B.2.9 Dealing with Early Termination
As stated in B 2.8 above, the Bank has not adopted a Policy or a practice to grant compensation to 
Non-Executive Directors whose term is prematurely determined for any reason whatsoever.
(68) B.2.10 Levels of Remuneration for Non-Executive Directors
The Board as a whole determines the levels of remuneration for Non-Executive Directors taking into 
account, the time, commitment and responsibilities of their role and market practices. Remuneration
for Non-Executive Directors does not include share option schemes. A Board-approved policy
on Directors’ Remuneration is in place, setting out the Bank’s policy and principles with regard to
remuneration for the Non-Executive Directors.
B.3 DISCLOSURE OF REMUNERATION
(69) B.3.1 Composition of Board HR & Remuneration Committee, Remuneration Policy and Disclosure of
Aggregate Remuneration Paid to Directors
The composition of the Board HR & Remuneration Committee and its report is given on pages 173 
and 174.
The aggregate remuneration to Executive and Non-Executive Directors is given in Note 46.3.1 to the 
Financial Statements on page 298.
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C RELATIONS WITH SHAREHOLDERS
C.1 CONSTRUCTIVE USE OF THE ANNUAL GENERAL MEETING (AGM) AND CONDUCT OF
GENERAL MEETINGS
(70) C.1.1 Constructive Use of the AGM & other General Meetings
The Annual General Meeting is the main forum for contact between shareholders and the Board. 
Sampath Bank became the first local corporate entity to host a fully-fledged virtual AGM. The 34th
AGM was live streamed from the Bank’s Head Office to shareholders without any disruptions, via
“Zoom” video communications app, in line with the guidelines issued by the Ministry of Health.
The Annual Report, together with the Notice of the AGM and the other papers related thereto, are 
duly circulated to all shareholders, 15 working days prior to the AGM.
(71) C.1.2 Adoption of Separate Resolution and Count of all Proxy Votes Lodged
A separate resolution is proposed on each substantially separate issue and particularly relating to the 
adoption of the Annual Report of the Board of Directors (the Report) and the Accounts.
In 2020, a separate resolution was proposed and adopted on each substantially separate issue. The
Report and the Accounts were adopted by separate resolutions.
All proxy votes lodged, together with the votes of shareholders who participated at the AGM are 
considered for each resolution. Any votes withheld were not considered in determining the number of
votes for and against each resolution.
(72) C.1.3 To Ensure that all Valid Proxy Appointments Received for General Meetings are Properly Recorded
and Counted
The Bank duly maintains a register where the Proxies received are registered. The register is closed 
after the deadline for Proxies to be lodged as per the Notice of Meeting and the number of votes
received for and against each resolution is announced at the relevant General Meeting.
At the meeting, for adoption of each resolution, the Chairman, in addition to the details of the Proxies 
registered, calls for a vote in line with the established practices followed by the announcement as to
whether the resolution is carried or not.
(73) C.1.4 Availability of Board Sub Committee Chairperson at AGM
Board Sub Committee Chairpersons are available at the AGM, to answer any questions raised at the 
AGM.
At the first ever fully Virtual AGM held on 02nd June 2020, the following Chairpersons were present:
 Mr Dilip de S Wijeyeratne (Chairman - Board Audit Committee & Board Treasury Committee)
 Mrs Dhara Wijayatilake (Chairperson - Board Human Resources & Remuneration Committee
& Board Related Party Transactions Review Committee)
 Ms Annika Senanayake (Chairperson - Board Nomination Committee)
 Mr Deshal de Mel (Chairman - Board Integrated Risk Management Committee)
 Prof Malik Ranasinghe (Chairman - Board Credit Committee, Board Strategic Planning
Committee & Board Capital Planning Committee)
 Mr Rushanka Silva (Chairman - Board Shareholder Relations Committee)
 Dr Sanjiva Weerawarana (Chairman - Board IT Committee)
 Ms Aroshi Nanayakkara (Chairperson - Board Marketing Committee)
(74) C.1.5 Circulation of Notice of AGM and Related Documents to Shareholders
Notice of the AGM and related papers are circulated to shareholders at least 15 working days prior to 
the meeting in accordance with the regulations.
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(75) C.1.5 Summary of Procedures Governing Voting at the AGM
A summary of the procedure governing voting at the AGM is provided in the Proxy Form, which is 
circulated to shareholders 15 working days prior to the AGM.
C.2 COMMUNICATION WITH SHAREHOLDERS
To implement effective communication with shareholders
(76) C.2.1 A Channel to be Available to Reach all Shareholders of the Company for Timely Dissemination of
Information
The Bank posts on its website (www.sampath.lk) copies of Annual Reports, Interim Reports and all 
other material information relating to the Bank. These are posted on the website as soon as possible
and practical after they have been released to the Colombo Stock Exchange.
All public disclosures of the Bank (immediate or otherwise) promptly reach the shareholders through
the Market Announcements made by the Company. The Bank aims to provide fair and transparent
disclosures with emphasis on the integrity, accuracy, timeliness and relevance of the information
provided.
In addition, the Board has appointed a Sub Committee on Shareholder Relations tasked with
identifying and addressing the shareholders’ concerns. Sampath Bank is the first listed entity in Sri
Lanka to form such a Committee. Additionally, the AGM also serves as a platform for the Bank to
engage with shareholders and Sampath Bank has a proud history of well attended AGMs where
shareholders take an active role in exercising their rights.
(77) C.2.2 Policy and Methodology for Communication with Shareholders
A Board-approved Policy on Communication is in place, in which the provisions for communicating 
with shareholders are specifically addressed.
(78) C.2.3 Implementation of the Policy and Methodology for Communication with Shareholders
The mechanism to Implement the said Policy on Communication is clearly stated under the “Policy 
Implementation Mechanism” which spells out the responsibilities of different officers/categories of
officers, with regard to communication with different categories of stakeholders.
(79) C.2.4 & Contact Person in Relation to Shareholder Matters
C.2.6 The Company should disclose the contact person or such communication
Shareholders have been duly notified that any communication/correspondence with the Bank should 
be through the Company Secretary, though they are at liberty even to communicate directly with any
of the Board Members. The contact numbers of the Company Secretary are provided in the Annual
Report on Inner Back Cover.
Additionally, shareholders may, at any time, direct questions to and request for publicly available
information from the Directors or management of the Bank. They may also provide their comments
and suggestions to the Directors or Management through the Company Secretary.
(80) C.2.5 Process to Make all Directors Aware of Major Issues and Concerns of Shareholders
The Company Secretary takes appropriate actions based on the concerns/requests received by the 
shareholders.
(81) C.2.7 Process of Responding to Shareholder Matters
As stated in C.2.5. 

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C.3 MAJOR AND MATERIAL TRANSACTIONS
Disclosures to shareholders in terms of the Companies Act and Regulations issued under the
Securities and Exchange Commission of Sri Lanka Act.
(82) C.3.1 & Disclosure of Major Transactions
C.3.2
The Bank’s procedure on dealing with Related Party Transactions provides for mandatory public 
disclosure of any major Related Party Transaction or a series of such transactions the Bank is about
to engage in, of which the value is greater than One Third of the assets of the Bank, requiring the
approval of the shareholders by an Ordinary Resolution therefore.
Further, in terms of Section 185 of the Companies Act, any major transaction proposed to be entered
into by the Bank too requires approval of the shareholders by virtue of a special resolution, when the
due notice to the public would be given through market announcements.
During the year under review, the Bank did not engage in or commit any “Major Transaction” which
materially affected the Bank’s net asset base, warranting neither such disclosure nor such approval by
the shareholders.
D ACCOUNTABILITY AND AUDIT
(83) D.1 FINANCIAL AND BUSINESS REPORTING (THE ANNUAL REPORT)
The Bank's Annual Report aims to present a balanced and an understandable assessment of it's
financial position, performance, business model, governance structure, risk management, internal
controls as well as the challenges, opportunities and future prospectus.
The Bank’s position and prospects have been discussed in detail in the following sections of this 
Annual Report.
 Chairman’s Message is given on pages 30 to 35.

 Managing Director’s Review is given on pages 36 to 41.
 Management Discussion and Analysis are given on pages 52 to 105.
(84) D.1.1 Board’s Responsibility in Financial Reporting
A true and fair, balanced and understandable Financial Statements prepared in accordance with the 
relevant accounting standards, laws and regulations are given on pages 208 to 343 in this Annual
Report.
(85) D.1.2 Interim Reports, Price-Sensitive Public Reports, Regulatory Reports and Statutory Information
Requirements
Interim reports were published within 45 days of each quarter end which included information to 
enable shareholders to gain an understanding of the state of affairs of the Bank. The Bank adhered to
these requirements even during the lockdown period without utilising the extensions granted by the
Colombo Stock Exchange (CSE).
The key market disclosures pertaining to the payment of cash dividends for the financial year 2019,
the date of Annual General Meeting, changes in Directorships, appointment of the Chairman, Deputy
Chairman and Senior Independent Director and dealing of shares by Directors were made on a timely
manner as prescribed by the Listing Rules of the CSE and the directions and guidelines issued by the
CSE, during the year under review.
Reports required by the regulators including the Central Bank of Sri Lanka, the Department of 
Inland Revenue, the Registrar of Companies and the Colombo Stock Exchange were all filed in a
timely manner in compliance with the relevant statutory requirements and these provided sufficient
information for the user to obtain a balanced assessment of the Bank`s operations.
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(86) D.1.3 Declaration made by the Managing Director and Chief Financial Officer in Maintaining Accurate
Financial Records in Compliance with the Appropriate Accounting Standards
The Managing Director’s and the Group Chief Financial Officer’s Responsibility Statement is given on 
page 200 of this Annual Report.
(87) D.1.4 Declaration in Annual Report of the Board of Directors on the Affairs of the Company
The Annual Report of the Board of Directors on the Affairs of the Company on pages 185 to 196 
contains the declarations as required by the Code.
(88) D.1.5 Responsibilities of the Board for the Preparation and Presentation of Financial Statements and
Statement by the Auditors about their Reporting Responsibilities
The Statement of Directors’ Responsibility for Financial Reporting and Report of the Auditors which 
includes a statement about their reporting responsibilities are provided on pages 201 to 202 and 203
to 207 respectively.
(89) D.1.6 Inclusion of a Management Discussion & Analysis
The Management Discussion and Analysis contained in pages 52 to 105 covers the information 
specified in the Code which include the following:
 Business model
 Industry structure and developments
 Opportunities and threats
 Risk Management
 Internal Control Systems and their adequacy
 Governance
 Stakeholder Relationships
 Social and environmental protection activities carried out by the Company
 Financial performance
 Investment in Physical and Intellectual Capital
 Material developments in Human Resources, Industrial Relations and prospects for the future.
(90) D.1.7 Notify Shareholders in case Net Assets of the Bank Fall Below 50%
This situation did not arise during the year under review. However, in the event the need arises the 
Bank would have duly notified the shareholders in line with applicable laws.
(91) D.1.8 Related Party Transactions
There is a Board-approved and formally documented process for identifying and dealing with Related 
Party Transactions, identifying related parties and such transactions and includes a mechanism to
ensure that no favourable treatment is granted to said parties in order to prevent the Bank from
granting favourable treatment to Related Parties. Further, to prevent any conflict of interest in
this regard, a Board approved Policy on Managing Conflicts of Interest is in place. An effective and
comprehensive system of Internal Control for identifying, recording and disclosing related party
transactions too is in place.
In addition, a procedure has been issued explaining the procedure to be followed in granting
accommodation to Directors or to close relations of Directors, or to concerns in which Directors may
have substantial interest.
Directors and KMPs are required to submit declarations declaring their transactions with the Bank and
the Group as and when required.
All Related Party Transactions as defined in Sri Lanka Accounting Standards - LKAS 24 (Related Party
Transactions) are disclosed in Note 46 to the Financial Statements on pages 298 to 301.
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D.2 RISK MANAGEMENT AND INTERNAL CONTROL
(92) D.2.1 Board’s Responsibility to Monitor the Company’s Risk Management and Internal Control System
The Board of Directors is responsible for the adequacy and effectiveness of the internal control 
mechanism in place at the Bank. In considering such adequacy and effectiveness, the Board
recognises that the business of banking requires reward to be balanced with risk on a managed
basis and as such the internal control systems are primarily designed with a view to highlighting any
deviations from the limits and indicators which comprise the risk appetite of the Bank.
(93) D.2.2 Confirmation by the Directors on Carrying out a Robust Assessment of the Principle Risks faced by
the Bank
The Board Integrated Risk Management Committee is responsible for assessing all risks including 
credit, market, liquidity, operational and strategic risks to the Bank on a regular basis through
appropriate risk indicators and management information. The Board Integrated Risk Management
Committee Report is given on pages 177 and 179.
(94) D.2.3 Need for an Internal Audit Function
The Bank has established an Internal Audit function headed by the Group Chief Internal Auditor 
who is independent and reports directly to the Board Audit Committee. The Board Audit Committee
exercises oversight over the same.
The Board Audit Committee reviews the Internal Audit function at regular intervals.
(95) D.2.4 Review of the Process and Effectiveness of Risk Management and Internal Control by the Audit
Committee
The Board is responsible for formulating and implementing appropriate and adequate Internal Control 
Systems. The Board Audit Committee has responsibility to the Board to ensure that the system of
Internal Controls is sufficient and effective. A Separate Risk Committee is in place to monitor the
overall risk of the Bank.
(96) D.2.5 The Statement of Internal Control
Directors’ Statement on Internal Control over Financial Reporting is given on pages 197 and 198. 
D.3 AUDIT COMMITTEE (the Committee)
(97) D.3 BOARD AUDIT COMMITTEE (the Committee)
Arrangements for Selection and Application of Accounting Policies, Financial Reporting and Internal
Control Principles
The Bank has established its Board Audit Committee in keeping with practices of good governance 
since 1997. The principal responsibilities of the Board Audit Committee include oversight over
Financial Reporting, Internal Controls and monitoring Auditor Independence. The duties of the Board
Audit Committee also includes gaining assurance on control over financial processes, integrity of
the Bank’s financial reports, monitoring performance, objectivity and independence of the External
Auditors and reviewing the work of the Internal Audit function. The Board Audit Committee Report is
given on pages 170 to 172 in the Annual Report.
(98) D.3.1 Composition of the Board Audit Committee
The Board Audit Committee, as at 31.12.2020, comprised of four Non-Executive Directors of which 
majority were independent Directors. The Committee is chaired by an Independent Non-Executive
Director who has current and relevant experience in financial reporting and control. Members are
selected to provide a broad set of financial, commercial and other relevant experience to meet the
Committee’s objectives.
The Group Chief Internal Auditor attends the meeting regularly and the Managing Director, the
Executive Director/Group Chief Financial Officer, consultant to the Board Audit Committee and the
External Auditor also attend these meeting by invitation.
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(99) D.3.2 Terms of Reference
The Terms of Reference of the Board Audit Committee complies with the Code of Best Practice on 
Corporate Governance issued by the ICASL as well as the Banking Act Direction No. 11 of 2007 on
Corporate Governance for Licensed Commercial Banks issued by CBSL and relevant Colombo Stock
Exchange Regulations.
A Board-approved Audit Committee Charter and a Group Internal Audit Activity Charter are in place.
(100) Review of External Audit Function and Relationship with External Auditors
The Board Audit Committee has a key oversight role in relation to the External Auditors, Messrs. 
Ernst & Young, whose primary relationship is with the Committee. The Bank’s Auditor Independence
Policy aims to ensures that the independence and objectivity of the External Auditors is not impaired.
The Board Audit Committee is responsible for recommending to the Board, the appointment/re-
appointment of the External Auditors and reviewing the nature, scope and results of the annual
External Audit. The audit fee is also determined by the Board Audit Committee based on their
assessment of the effectiveness and the independence of the External Auditors.
(101) D.3.3 Disclosures
The Annual Report of the Board of Directors on the Affairs of the Company given on pages 185 to 
196 provides the following disclosures:
 The composition of the Board Audit Committee

 A statement regarding the independence of the Internal Audit Function
The Board Audit Committee Report given on pages 170 to 172 includes, the following information: 
 The names of the members of the Board Audit Committee

 The number of meetings held and the members’ attendance (page 121)
 The scope and how its responsibilities are discharged
D.4 RELATED PARTY TRANSACTIONS REVIEW COMMITTEE (the Committee)
The Board has Established the Board Related Party Transactions Review Committee in Compliance
with the Listing Rules issued by the Colombo Stock Exchange
(102) D.4.1 The Bank identifies “Related Parties” and “Related Party Transactions” as defined in LKAS 24 and as 
per the Banking Act Direction No. 11 of 2007 issued by CBSL.
(103) D.4.2 Composition of the Board Related Party Transactions Review Committee
As at 31.12.2020, the Board Related Party Transactions Review Committee comprised four 
Independent, Non-Executive Directors, including the Committee Chairman.
(104) D.4.3 Duties of the Board Related Party Transactions Review Committee
The Board-approved written Terms of Reference of the Committee are mainly based on the Code of 
Best Practice on Corporate Governance 2017, Banking Act Direction No. 11 of 2007 on Corporate
Governance for Licensed Commercial Banks and the Listing Rules of the Colombo Stock Exchange
and its role and responsibilities are given on pages 180 and 181.
A procedure is in place to monitor the Related Party transactions of the Bank, which is in line with the
Terms of Reference of the Committee.
GRI - 102-16,26

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D.5 CODE OF BUSINESS CONDUCT AND ETHICS
(105) D.5.1 Code of Business Conduct and Ethics for Directors and Staff
Code of Conduct and Governance Requirements for Directors, Code of Conduct for Key Management 
Personnel and Code of Conduct for other employees are in place to ensure compliance with the
provisions of the Code of Conduct and Ethics.
The Board is not aware of any material violations of any of the provisions of the Code of Conduct and
Ethics/Standard of Conduct by any Director or KMP of the Bank.
(106) D.5.2 Ensure that Material and Price Sensitive Information are Promptly Identified and Reported
A process is in place for the prompt disclosure of price sensitive and material information by the 
Company Secretary in terms of the relevant regulatory requirements. As per the Board-approved
Policy on Communication, the responsibility of making market announcements of price sensitive
information lies with the Company Secretary.
(107) D.5.3 Policy and Process for Monitoring and Disclosure of Share Purchase
As per Section 7.8 (c) of the CSE Listing Rules, Directors engaged in financial reporting have been 
directed to inform and disclose to the Company Secretary, details of any purchases by them of shares
of the Bank within 05 market days in the Colombo Stock Exchange. Further share transactions are
being monitored by the Company Secretary on a timely manner.
Dealings of shares by the Directors on 13th March 2020 were duly disclosed in compliance with
Section 7.8 (c) of the CSE Listing Rules.
(108) D.5.4 Chairman’s Affirmation in the Bank’s Annual Report with Regard to Introduction of a Bank-wide
Code of Conduct and Ethics, the Status of Compliance with same and his Awareness of any
Violations thereof
Chairman’s affirmation on Corporate Governance is given on page 119 of this Annual Report. 
D.6 CORPORATE GOVERNANCE DISCLOSURES
The Corporate Governance Report given on pages 119 to 169 provides information regarding
Corporate Governance practices in the Bank which are in compliance with:
(109) D.6.1  The Code of Best Practice on Corporate Governance 2017 issued by the Institute of Chartered 
Accountants of Sri Lanka
 The Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial
Banks issued by the CBSL
 Requirements of Section 7.6 of the Listing rules of the Colombo Stock Exchange
SECTION 2 - SHAREHOLDERS
E INSTITUTIONAL INVESTORS
(110) E.1 SHAREHOLDER VOTING
The Bank’s responsibility to encourage the institutional investors to use their vote.
The Bank’s Institutional Investors as well as other Investors have throughout exercised their votes 
enthusiastically, expressing their candid preferences and are encouraged to express their views freely.
The Bank has a history of active shareholder involvement and participation at general meetings.
(111) E.1.1 Regular Structured Dialogue with Shareholders
The Bank prides itself of being the only listed company which has taken the initiative to form a 
Board Sub Committee on Shareholder Relations, with the objective of maintaining a solid and fruitful
dialogue with shareholders.
This Committee considers proposals submitted by shareholders and has implemented several benefits
and privileges to shareholders. The Committee met 02 times during the year under review.

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E.2 EVALUATION OF GOVERNANCE DISCLOSURES
(112) E.2 Encourage Institutional Investors to give Due Weight to Relevant Governance Arrangements
Institutional investors are kept apprised of the Bank’s governance practices through the Annual Report 
and any new initiatives are highlighted at general meetings to ensure that due weightage is given to
good corporate governance.
F OTHER INVESTORS
(113) F.1 INVESTING/DIVESTING DECISION
F.1 Individual Shareholders are Encouraged to do their own Analysis or Seek Independent Advice
The Annual Report contains sufficient information for individual shareholders as well as all potential 
investors to carry out their own analysis. This, together with the interim financial statements published
each quarter, provide sufficient information to enable individual shareholders to make informed
judgements regarding the performance of the Bank.
Additionally, a separate part of the Bank’s website is dedicated to Investor Relations which provides
relevant information online to all investors.
Shareholders can contact the Company Secretary for further information if required. Apart from
the above, Circulars to Shareholders issued from time to time too point out to the shareholders the
importance of seeking independent advice prior to making any particular investment.
F.2 SHAREHOLDER VOTING
(114) F.2 Encourage Shareholders to Participate and Vote at the General Meetings
It is a tradition at the Bank to encourage individual shareholders to participate and vote at any 
General Meeting of the Bank. Additionally, they are encouraged to participate in the Bank’s affairs
through submitting proposals through Stakeholder Feedback Forms.
The 34th AGM was live streamed from the Bank’s Head Office to shareholders without any
disruptions, via “Zoom” video communications app. The Bank also leveraged technology to allow
shareholders to interact with the proceedings of the meeting and vote on resolutions on each agenda
item remotely via “eBallot”, a leading global online voting platform, in order to ensure the shareholder
interest.
G INTERNET OF THINGS AND CYBER SECURITY
(115) G.1 Process to Identify How the External IT Devices could Connect to the Organisation’s Network
Authorised Officers perform risk assessments to determine whether information processing systems
require equipment identification, (e.g. attaching identifiers that indicate which networks the device is
allowed to access). Additional physical access controls are also implemented to maintain the security
of the identifier.
All the devices connected/attached to the Bank’s infrastructure are authorised by Network Access 
Controller (NAC). Any device which is not authorised by NAC will not be able to access the network.
Only legitimate devices are authorised by network administrators.
Access points into the organisation’s environment must be assessed and formally approved. The use
of non-authorised modems or any other remote access solutions are strictly prohibited unless written
approval has been obtained.
Remote access is granted to users with a justifiable business requirement for remote access.
(116) G.2 Appointment of a Chief Information Security Officer (CISO)
The Bank has appointed a Chief Information Security Officer (CISO), who reports directly to the 
Managing Director, is tasked with determining the Bank’s sensitivity and risk appetite towards
information security threats at any given time.
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(117) G.3 Allocation of Adequate Time on the Board Meeting Agenda for Discussion on Cyber Risk
Management
The Board IT Committee has been formed to review and recommend the IT strategic plan, policies, 
expenditure and budgets and IT security requirements of the Bank.
Based on the requirement, adequate time is allocated during the Board Meetings to discuss “Cyber
Risk” in detail.
The Information Security Committee (ISC), is a management level cross functional committee that
has been formed and reports to the Board Integrated Risk Management Committee (BIRMC) on a
quarterly basis, to discuss on both strategic and operational aspects of Information Security.
(118) G.4 Independent Periodic Review on the Effectiveness of the Cyber Security Risk Management and the
Scope and the Frequency of the Review
The Bank has obtained the certification of ISO 27001:2013 for the period from 2019 - 2022 with 
one annual internal audit and an annual surveillance audit conducted by an independent third-party.
The Systems Audit Department is tasked with auditing the system changes prior to live deployment of
applications and branch/department audits to ensure Information Security and Controls.
The Bank conducts periodic Cyber Security Drills to build Information Security Awareness among the
staff members.
Bank wide Information Security Risk Assessment was conducted with the support of an independent
third-party.
(119) G.5 Disclosure of the Process to Identify and Manage Cyber Security Risks
The required disclosure is made on pages 108 to 116 in this Annual Report. 
H ENVIRONMENT, SOCIETY AND GOVERNANCE (ESG)
H.1 ESG REPORTING
(120) H.1.1 Provision of Information in Relation to ESG Factors, Effects of ESG Issues to the Business and How
Risks and Opportunities Pertaining to ESG are Recognised, Managed, Measured and Reported
Environmental and Social Risk Management System (ESMS) is aimed at reducing the Bank’s 
environmental footprint. The Corporate Sustainability Department is tasked with conducting
environmental impact assessments to comply with ESMS in order to manage the environmental
risks associated with the Bank’s business. Further, with the motive of managing the environmental
footprint, the Bank is of the view that it can be achieved only if the staff have adequate knowledge
to understand the purpose, application and intended objectives. In this context all employees are
encouraged to adopt the Environmental Pledge. Strategic Sustainability Framework is given on pages
44 to 46.
The members of the Board, in Board Sub Committees, with the view of identifying and managing the
social, economic, environmental topics and their impacts, call for comprehensive analysis reports over
the respective fields from both external and internal resource persons to be in line with the adequate
due diligence, as and when required.
(121) H.1.2 Environment Factors
Natural Capital report is given on pages 77 to 80. 
(122) H.1.3 Social Factors
Social and Relationship Capital report is given on pages 73 to 76. 
(123) H.1.4 Governance
Corporate Governance Report is given on pages 119 to 169. 
(124) H.1.5 Board’s Role on ESG Factors
The Board reviews the ESG factors where necessary to enhance the ESG related areas. 
GRI - 102-16,21,33
The Banking Act Direction No. 11 of 2007 and Subsequent Amendments thereto on Corporate Governance for Licensed Commercial
Banks in Sri Lanka issued by the Central Bank of Sri Lanka (CBSL)
CBSL Principle, Compliance and Implementation Complied

Section
3(1) Responsibilities of the Board
The Board has strengthened the safety and the soundness of the Bank in the following manner.
(1) 3(1)(i)(a) Setting Strategic Objectives and Corporate Values
The Bank’s strategic objectives and corporate values are determined by the Board and are given on 
page 16 of the Annual Report. These are communicated to all levels of staff through regular briefing
sessions and reinforced by the Corporate Management Team.
(2) 3(1)(i)(b) Overall Business Strategy including Risk Policy and Management
The Bank’s strategy is set by the Board in consultation with the Corporate Management and the 
Revolving Strategic Plan for the period 2020-2022 was approved by the Board and was successfully
implemented with regular reviews. The Revolving Strategic Plan for the period 2021-2023 too has
been duly approved by the Board. In addition, Risk Management framework and mechanisms have
also been approved by the Board in line with the Strategic Plan. Measurable goals for the Bank
as a whole have been set and performance is measured in line with these goals on a monthly and
quarterly basis.
(3) 3(1)(i)(c) Risk Management
The Board has appointed a Board Integrated Risk Management Committee tasked with recommending 
the Bank’s Risk Policies, defining the risk appetite, identifying principal risks, setting governance
structures and implementing systems to measure, monitor and manage the principal risks. The
following reports provide further insights in this regard.
 Risk Management Report on pages 108 to 116.
 Board Integrated Risk Management Committee Report on pages 177 to 179.
A mechanism/process to identify and mitigate the risks arising out of new strategies is in place at
Board level.
(4) 3(1)(i)(d) Communication with all Stakeholders
A Board-approved Communication Policy is in place as the basis for communicating with all 
stakeholders, including depositors, creditors, shareholders and borrowers.
The Board has approved and implemented the following communication channels:
 Shareholders - The Board has appointed a Sub Committee on Shareholder Relations tasked with
identifying and addressing the shareholders’ concerns. Sampath Bank is the first listed entity
in Sri Lanka to have initiated in forming such a Committee. Additionally, the AGM is also a key
forum to contact shareholders and the Bank has a proud history of well attended AGMs where
shareholders take an active role in exercising their rights.
 Customers - Customers include depositors, creditors and borrowers. A Board-approved

Customer Complaints Handling Policy has been implemented. The Customer Complaint Handling
Procedure is in place and the Customer Charter has been printed in all three languages and
disseminated to all customer contact points across the Bank. This document outlines the
Customer Complaints Handling Procedure and also provides relevant information on contact
details of the Bank for this purpose and also of the Financial Ombudsman, a 24-hour trilingual
customer hotline to support customer queries has been established and the reports of
complaints are reviewed by the relevant Board Sub Committees.
 Staff - Staff members are given access to the management to voice their concerns through the
Whistle Blowing Policy and the Grievance Handling Procedure.
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Section
(5) 3(1)(i)(e) Internal Control System
The Board is tasked with reviewing the adequacy and the integrity of the Bank’s internal control 
systems and management information systems. Accordingly, the Board Audit Committee reviews
Internal Audit reports submitted by the Internal Audit Department and monitors follow up action
based on the assessment of Internal Control Over Financial Reporting (ICOFR). Directors concluded
that the Bank’s Internal Control Over Financial Reporting is effective.
(6) 3(1)(i)(e) Management Information Systems
The Bank has established a valid process to review the adequacy, integrity and accuracy of all financial 
and non-financial information. This process is continuously being improved.
(7) 3(1)(i)(f) Key Management Personnel
The Board has identified members of the Corporate Management, the Assistant Company Secretary 
and the Senior Manager Compliance as Key Management Personnel being “Officers Performing
Executive Functions of Licensed Commercial Banks (LCB)” as required by Banking Act Determination
No. 01 of 2019 which was effective from 1st January 2020, CBSL Guideline dated 2nd December
2015, subsequent amendments and the letter dated 17th June 2013 issued by the Controller of
Exchange - CBSL respectively. All appointments of designated Key Management Personnel (KMPs) are
recommended by the Board Nomination Committee and approved by the Board.
(8) 3(1)(i)(g) Define Areas of Authority and Key Responsibilities for Directors and Key Management Personnel
Areas of authority and key responsibilities have been defined for Directors and KMPs through the 
Code of Conduct and Governance Requirement for Directors and the relevant Position Description of
the KMPs respectively.
(9) 3(1)(i)(h) Oversight of Affairs of the Bank by Key Management Personnel
KMPs make regular presentations to the Board on matters under their respective purviews and are 
regularly called in by the Board to explain matters relating to their areas when need arises.
(10) 3(1)(i)(i) Assesses Effectiveness of own Governance Practices including Selection and Nomination of
Directors and KMPs, Management of Conflict of Interest and Determination of Weaknesses
The effectiveness of the Board’s own governance practices, including the Policy on Selection, 
Nomination and Election of Directors and the Policy on Managing Conflicts of Interest are reviewed
by the Board on a periodic basis. Implementation of changes required are discussed and determined
by the Board following the submission of annual Self-Evaluations.
(11) 3(1)(i)(j) Succession Plan for Key Management Personnel
The Bank has an appropriate succession plan for Key Management Personnel aligned to the Bank’s 
strategic objectives.
(12) 3(1)(i)(k) Regular Meetings with Key Management Personnel
KMPs are called on need basis for discussions at the meetings of the Board and its Sub Committees 
to review policy and other matters relating to their areas. Progress towards corporate objectives
is a regular agenda item at the Board Meetings and the KMPs are regularly involved in Board level
discussions on the same.
(13) 3(1)(i)(l) Regulatory Environment and Maintaining an Effective Relationship with Regulator
Directors are briefed on developments in the regulatory environment at Board Meetings to ensure 
that their knowledge is updated regularly to facilitate the effective discharge of their responsibilities.
The Bank has always maintained an effective relationship with the regulators. Further, the MD or his 
nominee attended the CEO/MD forums on Governance organised by CBSL during the year 2020.

Section
(14) 3(1)(i)(m) Hiring External Auditors
The Board Audit Committee carries out necessary due diligence regarding the hiring of the External 
Auditors and makes recommendations to the Board. The appointment of the External Auditor is
made at the AGM. Oversight of the External Auditors is carried out by the Board Audit Committee
(BAC) and the Board is briefed of any concerns in this regard if a necessity arises. To ensure greater
independence of the Board Audit Committee the independent consultant appointed to the BAC,
continues to provide advice and services to this Committee.
(15) 3(1)(ii) Appointment of Chairman and CEO/MD and their Functions and Responsibilities
The Board has appointed the Chairman and the Chief Executive Officer/MD and has approved their 
respective functions and responsibilities, in order to maintain the balance of power between the two
roles.
(16) 3(1)(iii) Board Meetings
Regular Board Meetings are held and special meetings are scheduled if the need arises. The Board 
met 16 times during 2020. The Bank has minimised obtaining approval via circular resolutions and it
is done only on an exceptional basis.
(17) 3(1)(iv) Arrangements for Directors to include Proposals in the Agenda
A Board-approved procedure is in place to enable all Directors to include matters and proposals in the 
agenda.
Monthly meetings are scheduled and informed to the Board at the beginning of each calendar year to 
enable submission of proposals in the agenda for regular meetings where such matters and proposals
relate to the promotion of business and the management of risk of the Bank.
(18) 3(1)(v) Notice of Meetings
Notice of Meetings and the agenda for the Board Meetings are circulated among the Directors 
generally seven days prior to the meeting, giving Directors adequate time to attend and submit any
urgent proposals.
Additionally, Notices, Agenda and all related Board papers are uploaded through a secure link onto 
iPads for Directors to access.
(19) 3(1)(vi) Directors’ Attendance
The Directors are informed of their attendance requirements in accordance with the Banking Act 
Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks. Details of the
Directors’ attendance is set out on page 121.
All Directors have attended at least two-thirds of the total number of Board meetings during the year 
under review.
(20) 3(1)(vii) Company Secretary
The Board has appointed the Company Secretary, who is an Attorney-at-Law of the Supreme Court 
of Sri Lanka, who satisfies the provisions of Section 43 of the Banking Act No. 30 of 1988. The
Company Secretary’s primary responsibilities are to provide the secretarial services to the Board and
Shareholders and carry out other functions specified in the statutes and other regulations.
(21) 3(1)(viii) Directors’ Access to Advice and Services of Company Secretary
All members of the Board have the opportunity to obtain the advice and services of the Company 
Secretary with regard to the compliance with relevant Rules, Regulations, Directions and Statutes.
Further, a Board-approved policy is in place to facilitate this requirement.

GRI - 102-25

Section
(22) 3(1)(ix) Maintenance of Board Minutes
The Company Secretary maintains the Minutes of the Board Meetings and circulates the same 
amongst all Board Members. Additionally, the Directors have access to the past Board papers and
Minutes through the secure electronic link via iPads.
(23) 3(1)(x) Minutes to be in Sufficient Detail and Accessible as a Reference for Regulators and Supervisory
Authorities
The detailed minutes of the meetings include: 
 A summary of data and information used by the Board in its deliberations.
 The matters considered by the Board Members.
 The fact-finding discussions and the issues of contention or dissent.
 The testimonies and confirmations of relevant executives which indicates compliance with the
Board’s strategies and policies and adherence to relevant laws and regulations.
 Matters regarding the risks to which the Bank is exposed and an overview of the risk
management measures adopted.
 The decisions of Board/Board Sub Committees and Board resolutions.
(24) 3(1)(xi) Directors’ Ability to Seek Independent Professional Advice
In addition to the Board-approved Policy on Enabling Directors to Seek Advice and Services of 
Company Secretary, the Bank has adopted a Board-approved Policy for “Directors’ Access to
Independent Professional Advice” and the Board resorts to such advice when deemed necessary.
(25) 3(1)(xii) Dealing with Conflicts of Interest
The Directors are conscious of their obligation to deal with situations where there is a conflict of 
interest in accordance with the Articles of Association of the Bank, the Bank’s Policy on Managing
Conflicts of Interest and the Banking Act Direction No. 11 of 2007. The Bank maintains registers of
Directors’ and KMPs’ Interests which are regularly updated in line with the regulatory requirements.
Where there is deemed to be a conflict of interest, the respective Directors refrain from participating
in the discussions, voicing their opinion and approving the same. Additionally, the Director concerned
is not counted in the quorum in such instances.
(26) 3(1)(xiii) Formal Schedule of Matters Reserved for Board’s Decision
The Board has an approved schedule of matters specifically reserved for its decision to ensure that 
the direction and control of the Bank is within its authority in line with regulatory codes, guidelines
and international best practices.
(27) 3(1)(xiv) Inform Central Bank if there are Solvency Issues Prior to Taking any Decision or Action
If such a situation arises, the Bank will duly inform the Director of Bank Supervision of the CBSL. 
However, such a situation did not arise during the year 2020.
As per the Bank's Code of Conduct and Governance Requirements for Directors, the Directors are
compelled to inform the Director of Bank Supervision of the CBSL and make necessary public and
other disclosures upon the occurrence of such an event.
(28) 3(1)(xv) Compliance with Capital Adequacy
The Board monitors capital adequacy and other prudential measures vis-à-vis regulatory requirement 
on a quarterly basis. The Bank has defined risk appetite and industry benchmarks. As at 31st
December 2020 the Bank was in compliance with the minimum capital requirements.
(29) 3(1)(xvi) Publish Corporate Governance Report in Annual Report
The Board publishes the Corporate Governance Report in the Bank’s Annual Report. This report is 
given on pages 119 to 169.

Section
(30) 3(1)(xvii) Self-Assessment of Directors
The Board has adopted a scheme of self-assessment to be undertaken by each Director annually, the 
records of which are maintained with the Company Secretary. The assessments are compiled by the
Company Secretary and submitted to the Board of Directors for discussion.
3(2) Board Composition
(31) 3(2)(i) Number of Directors
As per the CBSL Direction on Corporate Governance for Licensed Commercial Banks, the number of 
Directors should not be less than 7 or more than 13. As at 31.12.2020, the Bank’s Board comprised
of 12 Directors, complying with this provision.
(32) 3(2)(ii) Period of Service of a Director
As per the Banking Act Direction No. 11 of 2007 on Corporate Governance, the period of service 
of a Director excluding the CEO is limited to 9 years. Accordingly, Prof Malik Ranasinghe and Mrs
Dhara Wijayatilake, retired w.e.f. 30.08.2020 and Ms Annika Senanayake and Mr Ranil Pathirana,
retired w.e.f. 01.01.2021, having completed the tenure of service of nine years on the Board. As at
31.12.2020, there were no other Directors, whose tenure of service has exceeded nine years on the
Board.
(33) 3(2)(iii) Board Balance
As at 31.12.2020, there were Ten (10) Non-Executive Directors and Two (02) Executive Directors, 
being well within the requirement of the prescribed ratio.
(34) 3(2)(iv) Independent Non-Executive Directors
As at 31.12.2020, the Board comprised of Seven (07) Independent Non-Executive Directors which 
complies with the prescribed requirement.
(35) 3(2)(v) Alternate Directors
Alternate Directors are appointed based on the Board-approved policy. However, there were no 
alternate Directors appointed during the year 2020.
(36) 3(2)(vi) Criteria for Non-Executive Directors
Non-Executive Directors are persons with credible track record who have necessary skills and 
experience to bring an independent judgment to bear on issues of strategy, performance and
resources. The profiles of the Non-Executive Directors are detailed on pages 20 to 25.
The Board has approved a procedure to appoint Directors which includes the appointment of 
Independent Directors.
(37) 3(2)(vii) Quorum for the Board Meeting is more than 50% of Directors and more than half the Quorum to
Comprise Non-Executive Directors
This requirement is strictly observed and the attendance of the Board members at the meetings for 
the year 2020 evidencing compliance with the requirement.
(38) 3(2)(viii) Identify Independent Non-Executive Directors in Communications and Disclose the Categories of
Directors in Annual Report
The Independent Non-Executive Directors are expressly identified as such in all corporate 
communications that disclose the names of Directors of the Bank. The composition of the Board,
by category of Directors, including the names of the Chairman, Executive/Non- Executive Directors
and Independent/Non-Independent Directors are given on page 121 of the Corporate Governance
Report.

Section
(39) 3(2)(ix) Appointments to the Board
The Board has established a Board Nomination Committee. Accordingly, new Directors including 
the Executive Directors are appointed by the Board upon consideration of recommendations by the
Board Nomination Committee, following a formal, considered and transparent procedure.
(40) 3(2)(x) Election of Directors Filling Casual Vacancies
In accordance with the provisions in the Articles of Association and the CBSL Direction, Directors 
appointed to the Board after the last AGM will stand for election by the shareholders at the
subsequent AGM.
During the year under review, Mr Vajira Kulatilaka, Mr Harsha Amarasekera, Mrs Keshini Jayawardena
and Mr Ajantha de Vas Gunasekara who were appointed to the Board w.e.f. 25.06.2020, 18.08.2020,
01.10.2020 and 29.10.2020 respectively will stand for election by shareholders at the AGM to be
held on 30.03.2021.
(41) 3(2)(xi) Communication of Reasons for Removal or Resignation of Director
Resignations of Directors and the reasons for same are informed to the regulatory authorities as 
per CSE requirements and the requirements of the Companies Act No. 07 of 2007 together with a
statement confirming whether or not there are any matters that need to be brought to the attention
of shareholders.
During the year under review, Mrs Saumya Amarasekera did not offer herself to be re-elected as
a Director of Bank at the 34th Annual General Meeting, hence she ceased to be a Director w.e.f.
02.06.2020.
(42) 3(2)(xii) Prohibition of Directors or Employees of a Bank becoming a Director at another Bank
The Board and the Board Nomination Committee take into account this requirement in their 
deliberations when considering appointments of Directors. The Employee Code of Conduct prohibits
employees to be elected/nominated as a Director of another bank.
3(3) Criteria to Assess Fitness and Propriety of Directors
(43) 3(3)(i) Age of Director should not Exceed 70 years
Mr Sanjiva Senanayake, having reached his seventieth birthday, retired w.e.f. 12.04.2020. As at 
31.12.2020, there were no other Directors who reached seventy years of age during the year under
review.
(44) 3(3)(ii) Directors should not hold Directorships of more than 20 Companies
None of the Directors held office as a director in more than 20 companies during the year 2020. 
(45) 3(3)(iii) Director or a CEO shall not be Appointed as a Director or a CEO of another Licensed Bank
Operating in Sri Lanka Prior to Expiry of 6 Months Cooling-off Period from the Date of Cessation of
his/her Office at a Licensed Bank.
None of the Directors were appointed to the Board during the period under review, as detailed in the 
provisions of the cooling-off period of the direction.
3(4) Management Functions Delegated by the Board
(46) 3(4)(i) All Directors to Understand and Study Delegation Arrangements
The Board consciously delegates authority to perform different functions as it deems fit to 
appropriate officers.

Section
(47) 3(4)(ii) Extent of Delegation should not Hinder Board’s Ability to Discharge its Functions
The Board delegates authority to the Management to carry out certain duties from time to time, to an 
extent that such delegation does not hinder the Board's ability to discharge its functions, within the
provisions of the Bank’s Memorandum and Articles of Association. The management, who carries out
duties on behalf of the Board under the authorities delegated to them, report to the Board regularly
on such matters attended by them.
(48) 3(4)(iii) Review Delegation Arrangements Periodically to Ensure Relevance to Operations of the Bank
The Board reviews and approves the delegation arrangements in place, as and when required, and 
ensures that the extent of delegation addresses the needs of the Bank whilst enabling the Board to
discharge its functions effectively.
3(5) The Chairman and Chief Executive Officer/Managing Director
(49) 3(5)(i) Separation of Roles
The roles of the Chairman and CEO/MD are separate and their respective duties are documented, 
and approved by the Board.
(50) 3(5)(ii) Non-Executive Chairman and Appointment of a Senior Independent Director
The Chairman is a Non-Executive, Non-Independent Director, hence the Board has appointed 
Mr Deshal de Mel as Senior Independent Director, which has been disclosed in the Annual Report,
and a Board-approved Terms of Reference is in place to ensure the independent element in decision
making of the Senior Independent Director.
(51) 3(5)(iii) Disclosure of the Identity of the Chairman and CEO/MD and any Relationships, (if any) among the
Board Members
The identity of the Chairman and CEO/MD are disclosed in the Annual Report on pages 20 to 25. 
There is no material financial, business or family relationships between the Chairman, CEO/MD 
and other members of the Board as disclosed on pages 20 to 25 and in Note 46 to the Financial
Statements given on pages 298 to 301 as per annual declarations and the register of Directors’
Interests which is updated regularly.
(52) 3(5)(iv) Chairman to: (a) Provide Leadership to the Board; (b) Ensure that the Board Works Effectively and
Discharges its Responsibilities; (c) Ensure that all Key and Appropriate Issues are Discussed by the
Board in a Timely Manner
The Chairman leads the Board ensuring that it works effectively, and discharges his responsibility. All 
key and appropriate issues are discussed by the Board in a timely manner.
These are assessed annually by Board, through the Performance Evaluation of the Board of Directors.
(53) 3(5)(v) Chairman’s Responsibility for Agenda
The Company Secretary draws up the agenda for the meetings in consultation with the Chairman. 
(54) 3(5)(vi) Ensure that Directors are Properly Briefed and Provided with Adequate Information
The Chairman ensures that the Board is adequately briefed and informed regarding the matters 
arising at Board meetings. The following procedures are in place to ensure this:
 Agenda and Board papers are circulated with adequate time for the Directors to go through the
same.
 Relevant members of the Management team are available for explanations and clarifications if
required.
 Management information is provided in agreed formats on a regular basis to enable Directors to
assess the performance and stability of the Bank.

Section
(55) 3(5)(vii) Encourage Active Participation by all Directors and Lead in Acting in the Interests of the Bank
The Chairman encourages all Directors to make a full and active contribution in the best interest of 
the Bank. This is evident from the responses in the self-evaluation forms submitted by each Director
at the year end.
(56) 3(5)(viii) Encourage Participation of Non-Executive Directors and Relationships between Non-Executive and
Executive Directors
The Chairman facilitates the effective contribution of Non-Executive Directors in particular and 
ensure constructive relations between Executive and Non-Executive Directors.
As at 31.12.2020, 10 out of the 12 members of the Board were Non-Executive Directors, creating
a conducive environment for active participation by the Non-Executive Directors. All Non-Executive
Directors participate in Sub Committees of the Board, ensuring further opportunity for active
participation. The Bank has also appointed a Senior Independent Director which further supports
the participation and strengthens views of the Non-Executive Directors. The Executive and Non-
Executive Directors actively participate at Board Meetings.
(57) 3(5)(ix) Refrain from Direct Supervision of Key Management Personnel and Executive Duties
The Chairman does not get involved in the supervision of KMPs or any other executive duties. 
(58) 3(5)(x) Ensure Effective Communication with Shareholders
The Chairman ensures that appropriate steps are taken to maintain effective communication with 
shareholders and that the views of shareholders are communicated to the Board.
The Bank historically has active shareholder participation at its General Meetings. A Board Sub
Committee has been appointed to ensure that there is effective communication with shareholders.
(59) 3(5)(xi) CEO/MD Functions as the Apex Executive in Charge of the Day-to-Day Operations
The responsibility of day-to-day operations of the Bank have been delegated to the CEO/MD. 
3(6) Board-Appointed Committees (the Committee)
(60) 3(6)(i) Establishing Board Sub Committees, their Functions and Reporting
12 Board Sub Committees have been established by the Board with oversight by the respective 
Chairpersons and written Terms of Reference for each. The Company Secretary or his nominee
serves as the Secretary to all Sub Committees and maintains Minutes and records. The reports of the
following Mandatory Sub Committees are included in the Annual Report:
 Board Audit Committee on pages 170 to 172

 Board Human Resources & Remuneration Committee on pages 173 to 174
 Board Nomination Committee on pages 175 to 176
 Board Integrated Risk Management Committee on pages 177 to 179
 Board Related Party Transactions Review Committee on pages 180 to 181
The Chairpersons of the Sub Committees are present at the AGM to clarify any matters that may be
referred to them by the Chairman.

Section
3(6)(ii) Board Audit Committee (BAC)
(61) 3(6)(ii)(a) Chairman to be an Independent Non-Executive Director with Qualifications and Experience in
Accountancy and/or Audit
The Chairman of the Board Audit Committee is an Independent Non-Executive Director who is an 
Associate Member of the Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the
Chartered Institute of Management Accountants, UK.
(62) 3(6)(ii)(b) Committee to Comprise Solely of Non-Executive Directors
All the members of the Board Audit Committee are Non-Executive Directors. 
(63) 3(6)(ii)(c) Functions of the Board Audit Committee
In accordance with the Terms of Reference, the Board Audit Committee has made the following 
recommendations on matters in connection with:
 The appointment of the External Auditor for audit services to be provided in compliance with the
relevant statutes;
 The implementation of the Central Bank guidelines issued to Auditors from time to time;
 The application of the relevant accounting standards;
 The service period, audit fee and any resignation or dismissal of the Auditors.
The Board Audit Committee ensures that the service period of the engagement of the External Audit
partner shall not exceed five years, and that the particular Audit partner is not re-engaged for the
audit before the expiry of three years from the date of the completion of the previous term.
(64) 3(6)(ii)(d) Review and Monitor External Auditors’ Independence and Objectivity and the Effectiveness of the
Audit Processes
The Board Audit Committee obtains representations from the External Auditors on their 
independence to ensure that the audit is carried out in accordance with the applicable standards and
best practices.
(65) 3(6)(ii)(e) Provision of Non-Audit Services by External Auditors
A Board-approved policy on “Engagement of External Auditors for Non-Audit Services” is in place. 
When such services are intended to be obtained from External Auditors, prior approval is sought from
the Board Audit Committee in accordance with regulations.
(66) 3(6)(ii)(f) Determines Scope of Audit with the External Auditors
The Board Audit Committee discussed and finalised with the External Auditors, the nature and scope 
of the audit to ensure that it includes:
 An assessment of the Bank’s compliance with the relevant Directions in relation to Corporate
Governance and Internal Controls Over Financial Reporting;
 The preparation of financial statements for external purposes in accordance with relevant
accounting principles and reporting obligations;
As all audits within the group are carried out by the same External Auditor, there was no requirement
to discuss arrangements for coordinating activities with other auditors.

Section
(67) 3(6)(ii)(g) Review Financial Information of the Bank
The Board Audit Committee reviews the financial information of the Bank, in order to monitor the 
integrity of its Financial Statements, Annual Report, Accounts and Quarterly Reports prepared for
disclosure, and the significant financial reporting judgments contained therein. The review focuses on
the following:
 Major judgemental areas

 Any changes in accounting policies and practices
 Significant adjustments arising from the audit
 The going concern assumption
 The compliance with relevant accounting standards and other legal requirements
The Board Audit Committee makes recommendations to the Board on the above on a quarterly basis.
(68) 3(6)(ii)(h) Discussions with External Auditor without the Executive Management on Interim and Final Audits
The Board Audit Committee discusses issues, problems and reservations (if any) arising from the 
interim and final audits with the External Auditors. This Committee met the External Auditors in the
absence of executive management of the Bank on 02 occasions during the year 2020.
(69) 3(6)(ii)(i) Review of Management Letter and Bank’s Response
The Board Audit Committee has reviewed the External Auditors’ Management Letter and the 
Management’s responses thereto.
(70) 3(6)(ii)(j) Review of Internal Audit Function
The Board Audit Committee has oversight of the Internal Audit function and has the following 
responsibilities with regard to the same:
 Review of the adequacy of the scope, functions and resources of the Internal Audit Department,
and ensuring that the Department has the necessary authority to carry out its work;
 Reviewing the Internal Audit programme and results of the audits ensuring that appropriate
actions are taken on the recommendations of the Internal Audit Department;
 Reviewing appraisals of the performance of the Head and senior staff members of the Internal
Audit Department;
 Recommending any appointment or termination of the Head and senior staff members of the
Internal Audit Department;
 Ensuring that the Board Audit Committee is apprised of resignations of senior staff members
of the Internal Audit Department including the Group Chief Internal Auditor, and providing an
opportunity to the resigning senior staff members to submit reasons for resigning;
 Ensuring that the Internal Audit function is independent of other activities it audits and that it is
performed with impartiality, proficiency and due professional care.
(71) 3(6)(ii)(k) Internal Investigations
The Board Audit Committee has reviewed the major findings of internal investigations during the 
year and management’s responses thereto. It has also ensured that the recommendations of such
investigations have been implemented.

Section
(72) 3(6)(ii)(l) Attendees at Meetings of the Board Audit Committee
The Group Chief Internal Auditor attends Board Audit Committee meetings regularly. The Managing 
Director, the Executive Director/Group Chief Financial Officer, consultant to the Board Audit
Committee and the External Auditor also attend these meetings by invitation.
Other Board members may also attend meetings upon the invitation of the Board Audit Committee.
The Board Audit Committee met the External Auditors without the Executive Management being
present in terms of the Corporate Governance Code.
(73) 3(6)(ii)(m) Explicit Authority, Resources and Access to Information
The Board Audit Committee has: 
 Explicit authority to investigate into any matter within its terms of reference;
 the resources which it needs to do so;
 full access to information; and
 authority to obtain external professional advice and to invite outsiders with relevant experience
to attend, if necessary.
(74) 3(6)(ii)(n) Regular Meetings
The Board Audit Committee has regular meetings in compliance with its Terms of Reference and 
schedules additional meetings when required. Accordingly, the Board Audit Committee met 15 times
during the year under review. This includes the meetings of the Board Audit Committee with the
External Auditors and the meetings of the Committee with the Internal Auditors. Members of the
Board Audit Committee are served with due notice of issues to be discussed. The conclusions of the
Board Audit Committee deliberations are recorded in the Minutes of the meetings maintained by the
Company Secretary or his nominee.
(75) 3(6)(ii)(o) Disclosures
The Report of the Board Audit Committee is given on pages 170 to 172. The report includes the 
following:
 Explicit of the activities of the Board Audit Committee
 The number of Board Audit Committee meetings held in the year
Details of attendance of each individual Director at such meetings is given on page 121.
(76) 3(6)(ii)(p) Maintain Minutes of Meetings
The Company Secretary shall be the Secretary to the Committee and in the absence of the Company 
Secretary, his nominee or the Group Chief Internal Auditor shall act as the Secretary to the
Committee and maintain minutes of the Board Audit Committee meetings.
(77) 3(6)(ii)(q) Whistle Blowing Policy and Relationship with External Auditor
The Bank has a Board-approved Whistle Blowing Policy where-under an employee of the Bank may, 
in confidence, raise concerns about possible improprieties in financial reporting, internal control or
other matters. The Company Secretary and the Group Chief Internal Auditor takes appropriate actions
for all communications received in his/her office in this regard, including anonymous communications,
to the Chairman of the Board Audit Committee who addresses the issue in an appropriate manner.
The Board Audit Committee is the key representative body for overseeing the Bank’s relations with 
the External Auditors and meets the External Auditors on a regular basis to discharge this function.
GRI - 102-35,36

Section
3(6)(iii) Board Human Resources and Remuneration Committee (BHR & RC)
(78) 3(6)(iii)(a) Policy to Determine the Remuneration of Directors
A Board-approved Policy to determine the Directors’ remuneration is in place. 
(79) 3(6)(iii)(a) Policy to Determine the Remuneration for CEO/MD and KMPs
A Board-approved Policy on Reward Management for KMPs is in place. The term “Reward 
Management” includes salaries and other staff benefits offered by the Bank and the CEO is
considered a KMP.
(80) 3(6)(iii)(b) Goals and Targets for the Directors, MD (the CEO) and KMPs
Goals and targets of the CEO/MD and KMPs for the year 2020 were documented and approved by 
the Committee under the Objective Settings for year under review. The Board approved Terms of
Reference of each Board Sub Committee elaborate the collective goals and targets of the Directors
whereas the Duties and responsibilities of Directors are included in the Bank’s Code of Conduct and
the Governance Requirements for Directors.
(81) 3(6)(iii)(c) Evaluation of the Performance of the CEO/MD and KMPs against the Set Targets and Goals and
Determine the Basis for Revising Remuneration
Performance evaluations of the CEO/MD and KMPs for the year ended 31st December 2020 will be 
reviewed by the Committee during the year 2021.
The performance evaluations of the CEO/MD and KMPs for the year ended 2019 were carried out 
during the year 2020.
(82) 3(6)(iii)(d) MD shall be Present at Meetings, except when Matters Relating to the MD are being Discussed
MD attends BHR & RC meetings by invitation. However, he was not present at meetings when 
matters relating to him were discussed during the year.
3(6)(iv) Board Nomination Committee (BNC)
(83) 3(6)(iv)(a) Implement a Procedure to Appoint Directors
The BNC has developed and implemented a Board-approved procedure to appoint new Directors. 
(84) 3(6)(iv)(a) Implement a Procedure to Appoint CEO and Key Management Personnel
A Board-approved policy to select, nominate and appoint CEO/MD and KMPs is in place, and is being 
followed.
(85) 3(6)(iv)(b) Recommend the Re-election of Directors
The BNC makes recommendations regarding the re-election of current Directors who retire by 
rotation in terms of Article 87 of the Bank’s Articles of Association taking into account, inter-alia, the
performance and contribution made by the Director concerned towards the overall discharge of the
Board’s responsibilities.
(86) 3(6)(iv)(c) Eligibility Criteria for Appointments to Key Managerial Positions Including the CEO
The BNC sets the eligibility criteria to be considered, including qualifications, experience and key 
attributes, for the appointment or promotion to key managerial positions as well as the position of
CEO/MD. The BNC considers the applicable statutes and guidelines in setting the relevant criteria.
(87) 3(6)(iv)(d) Fit and Proper Criteria for Directors, CEO and KMPs
The Bank obtains declarations and affidavits from Directors, CEO/MD and KMPs, as and when 
required, and these are submitted to CBSL to determine if they are fit and proper persons to hold
office as specified in the criteria given in Banking Act Direction No. 11 of 2007 and as set out in the
statutes.
GRI - 102-30

Section
(88) 3(6)(iv)(e) Succession Plan for Retiring Directors, CEO/MD and KMPs
Board-approved policy covering Succession Planning for retiring Directors and CEO/MD is in place. In 
addition, Succession Plan for the KMPs is in place in line with the requirements.
(89) 3(6)(iv)(f) Committee Chairperson and Other Members
The BNC is chaired by an Independent Non-Executive Director. As at 31.12.2020, the Committee 
comprised of 04 members out of which 02 members were Independent, Non-Executive Directors.
The MD attends meetings by invitation where necessary.
3(6)(v) Board Integrated Risk Management Committee (BIRMC)
(90) 3(6)(v)(a) Composition of BIRMC
As at 31.12.2020, BIRMC comprised of 03 Non-Executive Directors, the Managing Director, Group 
Chief Risk Officer and Group Chief Compliance Officer. The BIRMC works closely with KMPs within
the framework of authority and responsibility assigned to the BIRMC.
(91) 3(6)(v)(b) Risk Assessment of the Bank, Subsidiary Companies and Associate Companies
All major risks such as Credit Risk, Market Risk, Liquidity Risk, Compliance Risk and Operational Risk 
are assessed by the Risk Management Unit and the reports are submitted to the BIRMC for review
and action if any, through the Group Chief Risk Officer.
Monthly risk assessments covering all major risks of subsidiary companies are submitted to the
BIRMC by the Risk Management Unit to facilitate monthly risk reviews.
The Board has approved on the recommendations of the BIRMC, the policies on Credit Risk
Management, Market Risk Management and Operational Risk Management which provide a
framework for management and assessment of risks. Accordingly, quarterly information on pre-
established risk indicators are reviewed by the BIRMC.
The BIRMC has a process to assess and evaluate all risks of the Bank and the findings and issues
are submitted to the Board’s review and action, if any. BIRMC evaluates the risk management of
Subsidiary companies both at the Bank level and Group level.
(92) 3(6)(v)(c) Review the Adequacy and Effectiveness of Management Level Committees
BIRMC reviews the adequacy and the effectiveness of all management level committees including 
the Credit Policy Risk and Portfolio Review Committee and the ALCO to address specific risks and to
manage those risks within the laid down limits specified by the BIRMC as required by the Direction.
(93) 3(6)(v)(d) Corrective Action to Mitigate Specific Risks Exceeding Prudential Levels
BIRMC takes prompt corrective action to mitigate the effects of specific risks in case such risks are at 
levels beyond the prudent risk levels decided by BIRMC based on the Bank’s policies and regulatory
and supervisory requirements. The Key Risk Indicators of the Bank are approved by the BIRMC and
the Board on a regular basis.
(94) 3(6)(v)(e) Frequency of Meetings
The BIRMC has regular meetings in compliance with its Terms of Reference and schedules additional 
meetings when required. The agenda covers matters pertaining to all aspects of risk management
including updated Business Continuity Plans. The BIRMC met 09 times during the year.
(95) 3(6)(v)(f) Officers Responsible for Failure to Identify Specific Risks or Implement Corrective Action
BIRMC refers such instances, if any, to the Human Resource department in order to take prompt 
corrective actions as directed by the Director of Bank Supervision in respect of officers identified to
be responsible for failure to identify specific risks.
GRI - 102-25

Section
(96) 3(6)(v)(g) Risk Assessment Report to Board
The Company Secretary submits summarised report of the high priority risks to the Board on a 
monthly basis, upon the confirmations of the respective departments, i.e. Risk, Compliance and the
Information Security Department.
(97) 3(6)(v)(h) Compliance Function
The Independent Compliance Department has been established to assess the Bank’s compliance with 
laws, regulations, and regulatory guidelines. In addition, the Compliance Department assesses the
Bank’s compliance with internal controls and approved policies on all areas of business operations.
This function is headed by a dedicated Group Chief Compliance Officer who functionally reports
to the Board Integrated Risk Management Committee (BIRMC) and is responsible for providing,
summary of Non Complied Incidents with regard to Statutory Payments and Mandatory Reporting
Requirements, which includes;
 Monthly compliance report
 Quarterly Report on Compliance Risk Assessment based on Key Performance Indicators (KPI)
 Related Party Transactions Review Report.
In addition to the above, following Anti-Money Laundering (AML) and Combating the Financing of
Terrorism (CFT) reports are submitted to the Board.
 Annual report on Overall Money Laundering and Terrorist Financing risk assessment of the Bank
 Report on exposure of Politically Exposed Persons (PEPs)
 Quarterly Report on Money Laundering and Terrorist Financing Risk Assessment

3(7) Related Party Transactions
(98) 3(7)(i) Categories of Related Parties and Avoidance of Conflict of Interest
A duly approved documented process is in place for the identification of and dealing with categories 
of Related Parties and their transactions in order for the Bank to avoid any conflicts of interest that
may arise from any transaction with the relevant parties.
Further, Directors and the KMPs are individually requested to declare their transactions with the Bank
on a quarterly and annual basis. The avoidance of Conflict of Interest is further supported by the
Board-approved policy on Managing Conflicts of Interest.
(99) 3(7)(ii) Related Party Transactions Covered by Direction
Related Party Transactions covered for the purpose of the above process with Directors and Key 
Management Personnel include:
 The grant of any type of accommodation, as defined in the Monetary Board’s Directions on
maximum amount of accommodation pursuant to Section 47 of the Banking Act No. 30 of 1988.
 The creation of any liabilities of the Bank in the form of deposits, borrowings and investments.
 The provision of any services of a financial or non-financial nature provided to the Bank or
received from the Bank.
 The creation or maintenance of reporting lines and information flows between the Bank and any
Related Parties which may lead to the sharing of potentially proprietary, confidential or otherwise
sensitive information that may give benefits to such Related Parties.

Section
(100) 3(7)(iii) Monitoring of Related Party Transactions Defined as More Favourable Treatment
The Bank has implemented a proactive system to ensure that no favourable treatment is offered to 
Related Parties in line with the requirement.
(101) 3(7)(iv) Granting Accommodation to a Director or Close Relation of a Director
Principles of the Direction are followed when granting accommodations to Directors or close relations 
of a Director.
(102) 3(7)(v) Accommodation Granted to Persons, or Concerns of Persons, or Close Relations of Persons, who
Subsequently are Appointed as Directors of the Bank
A procedure on monitoring grant of such accommodation to Directors and their related parties is in 
place. The said operational procedure sets out the different situations that may arise when granting
accommodation to Directors or to their close relatives or concerns in which the Directors may
have substantial Interest and the steps to be taken when an individual already have been granted
accommodation subsequently becomes a Director.
The Company Secretary obtains Related Party Disclosures from all Directors as and when required. 
The operational instructions issued and the Procedure on Dealing with Related Party Transactions
too require any team member engaged in relevant areas of business to act in compliance with the
regulatory framework set out in the said Procedure and Statutes.
Employees of the Bank are aware of the requirement to obtain necessary security as defined by the 
Monetary Board in the relevant circumstances.
A process to monitor compliance with this regulation has been established. 
(103) 3(7)(vi) Favourable Treatment (Waiver of Fees and/or Commissions) or Accommodation to Bank Employees
or their Close Relations
No favourable treatment/accommodation is provided to Bank employees other than those provided 
under the scheme of staff benefits in terms of the operating instructions issued by the Bank from
time to time as per the Board-approved Policy on Reward Management for Key Management
Personnel. Employees of the Bank are informed through operational circulars to refrain from granting
favourable treatment to employees or their close relations or to any concern in which an employee or
close relation has a substantial interest except as provided in the Bank’s Operational Guidelines and
Directives.
(104) 3(7)(vii) Remission of Accommodation Granted to Directors Subject to Monetary Board Approval
The situation has not arisen in the Bank to date and operating instructions as stated above have been 
issued to prevent non-compliance with this requirement.
3(8) Disclosures
(105) 3(8)(i) Publish Annual and Quarterly Financial Statements
Annual audited Financial Statements and quarterly Financial Statements are prepared and published 
in accordance with the formats prescribed by the supervisory and regulatory authorities and
applicable Accounting Standards.
3(8)(ii) Disclosures in Annual Report
(106) 3(8)(ii)(a) A Statement to the Effect that the Annual Audited Financial Statements have been Prepared in
line with Applicable Accounting Standards and Regulatory Requirements, Inclusive of Specific
Disclosures
A statement to this effect is included in the following: 
 Annual Report of the Board of Directors on the Affairs of the Company given on pages 185 to
196.
GRI - 102-25,35

Section
(107) 3(8)(ii)(b) Report by the Board on the Bank’s Internal Control Mechanism
The Annual Report includes the following reports where the Board confirms that the financial 
reporting system has been designed to provide reasonable assurance regarding the reliability of
financial reporting, and that the preparation of financial statements for external purposes has been
done in accordance with relevant accounting principles and regulatory requirements:
 Directors’ Statement on Internal Control over Financial Reporting given on pages 197 to 198.
(108) 3(8)(ii)(c) External Auditor’s Certification on Effectiveness of the Internal Control Mechanism Referred in 3(8)
(ii)(b)
The Board has obtained an assurance report issued by the Auditors under ‘Sri Lanka Standard on 
Assurance Engagements SLSAE 3050’ on the effectiveness of Internal Controls Over Financial
Reporting which is published on page 199.
(109) 3(8)(ii)(d) Details of Directors
Details of Directors are given on pages 20 to 25. 
Directors' interests in contracts with the Company are given below; (Including Executive
Directors)
Category Amount
Rs 000
Loans 31,226
Deposits 141,854
Credit cards 4,048
Debentures 22,000
Interest & other income 3,245
Interest expense 12,729
Share based payments
Cash dividend 7,821
Aggregate value of remuneration/fee paid by the Bank 155,199

Post employment benefits paid 5,745
(110) 3(8)(ii)(e) Net Accommodation Granted to Each Category of Related Parties and as a Percentage of the Bank's
Regulatory Capital
Related Party Transactions are given in Note 46 to the Financial Statements on pages 298 to 301 
Net accommodation granted to Related Parties are given below;

Category of related party transaction As a % of Amount
regulatory capital
of the Bank Rs 000
Directors and close family members 0.03 39,147
KMP & close family members 0.15 180,784
Subsidiaries 7.96 9,325,945
Shareholders owning material interest in the
Bank - -
Concerns in which any of the Bank's Directors
or a close relation of any of the Bank's
Directors or any of its material shareholders
has a substantial interest 11.58 13,577,414

Section
(111) 3(8)(ii)(f) Aggregate Values of Remuneration Paid to, and Transactions with Key Management Personnel
Nature of transaction Amount 

Rs 000
Short-term employment benefits 438,641
Post-employment benefits 27,891
Loans & advances including credit cards 182,397
Deposit & investments 268,077
Interest income 12,699
Interest expense 20,721
Share based payments
Cash dividend paid 5,787
The remuneration paid to, and transactions with Executive Directors are included in 3(8)(ii)(d) above.
(112) 3(8)(ii)(g) External Auditor’s Certification of Compliance
The findings presented in the Factual Findings Report of External Auditors, addressed to the Board 
are consistent with the matters disclosed above and did not identify any inconsistencies to those
reported by the Board. The recommendations made by the Auditors where relevant will be taken into
consideration.
(113) 3(8)(ii)(h) Report Confirming Compliance with Prudential Requirements, Regulations, Laws and Internal
Controls
The Statement of Directors’ Responsibility for Financial Reporting given on pages 201 and 202 clearly 
sets out details regarding compliance with prudential requirements, regulations, laws and internal
controls. There were no instances of material non-compliance to report on corrective action taken
during the year.
(114) 3(8)(ii)(i) Measures Taken to Rectify Non-Compliant Issues
There were no lapses inviting supervisory concerns in the Bank’s Risk Management System or non- 
compliance with these directions that have been pointed out by the Director of Bank Supervision
required to be disclosed by the Bank during the year.
HARSHA AMARASEKERA NANDA FERNANDO

Chairman Managing Director
Colombo, Sri Lanka

15th February 2021
GRI - 102-34
Section 7.6 of the Listing Rules of the Colombo Stock Exchange
Listing Disclosure Requirement Section/Reference

Rule
Reference
7.6 (i) Names of persons who during the financial year were Directors of List of Directors who served during the year under
the Bank. review is given on page 121 of the Corporate
Governance Framework and profiles of the present
Directors of the Bank are given on pages 20 to 25.
7.6 (ii) Principal activities of the Bank and its Subsidiaries during the year The Annual Report of the Board of Directors on
and any changes therein. the Affairs of the Company on pages 185 to 196
contains the Principle Business Activities of the
Bank and its Subsidiaries.
7.6 (iii) The names and the number of shares held by the 20 largest holders Investor Information on pages 96 to 105 contains
of voting shares and the percentage of such shares held. the List of Top 20 Shareholders of the Bank as at
31st December 2020.
7.6 (iv) The float adjusted market capitalisation Details of the Public Shareholding and the Float
Adjusted Market Capitalisation is included in the
Public holding percentage (%), number of public shareholders and Investor Information on page 100.
under which option the Listed Entity complies with the Minimum
Public Holding requirement.
7.6 (v) A statement of each Director’s holding and Chief Executive The Annual Report of the Board of Directors on
Officer’s holding in shares of the Bank at the beginning and end of the Affairs of the Company on pages 185 to 196
each financial year. contains the Director’s holding and Chief Executive
Officer’s (CEO/MD) holding in shares of the Bank.
7.6 (vi) Information pertaining to material foreseeable risk factors of the The Risk Management Report on pages 108 to
Bank. 116 contains the information pertaining to material
foreseeable risk factors of the Bank.
7.6 (vii) Details of material issues pertaining to employees and industrial During the year under review, there were no
relations of the Bank. material issues relating to employees and industrial
relations pertaining to the Bank. However, the
Board-approved Whistle Blowing Policy and the
Communication Policy is in place to help identify
the material issues pertaining to employees and
industrial relations.
7.6 (viii) Extents, locations, valuations and the number of buildings of the Note 29 to the Financial Statements on pages 265
Entity’s land holdings and investment properties. to 272 contains the details of the Property, Plant
and Equipment of the Bank.
7.6 (ix) Number of shares representing the Bank’s Stated Capital. Note 41 to the Financial Statements on page 292
contains the details of the Stated Capital of the
Bank.
7.6 (x) A distribution schedule of the number of holders in each class of Investor Information on pages 96 to 105 contains
equity securities, and the percentage of their total holdings. the Frequency Distribution of Shareholders.

Rule
Reference
7.6 (xi) Ratios and market price information: Investor Information on pages 96 to 105 contains
Equity: Dividend per share, Dividend pay out, Net asset value per the required information which are relevant to the
share, Market value per share. Bank.
Debt: Interest rate of comparable government security, Debt/ Investor Information on pages 96 to 105 contains
equity ratio, Interest cover, Quick asset ratio, Market prices & yield the required information which are relevant to the
during the year, any changes in credit rating. Bank. The Annual Report of the Board of Directors
on the Affairs of the Company on pages 185 to
196 contains the credit rating assigned for the
Bank as well as for the subordinated debentures
issued by the Bank.
7.6 (xii) Significant changes in the Entity’s or its Subsidiaries’ fixed assets Note 29 to the Financial Statements on pages 265
and the market value of land, if the value differs substantially from to 272 contains the details of the Property, Plant
the book value. and Equipment of the Bank.
7.6 (xiii) Details of funds raised through Public Issues, Rights Issues, and Investor Information on pages 96 to 105 contains
Private Placements during the year. the details of Rights Issues of the Bank.
There were no Public Issues and Private Placements

during the year.
7.6 (xiv) (a) Information in respect of Employee Share Option Schemes Not applicable as the Bank does not have
(ESOS) Employee Share Option Schemes at present.
 The number of options granted to each category of employees

Further, details disclosed in Investor Information
during the financial year.
on pages 96 to 105 contains the details of the
 Total number of options vested but not exercised by each previous Employee Share Option Schemes of the
category of employees during the financial year. Bank.
 Total number of options exercised by each category of
employees and the total number of shares arising therefrom
 Options cancelled during the financial year and the reasons for
such cancellation.
 The exercise price.
 A declaration by the Directors of the Entity confirming that the
Entity or any of its Subsidiaries has not, directly or indirectly,
provided funds for the ESOS.
(b) Information in respect of Employee Share Purchase Schemes Not applicable as the Bank does not have
(ESPS) Employee Share Purchase Schemes.
 The total number of shares issued under the ESPS during the
financial year.
 The number of shares issued to each category of employees
 The price at which the shares were issued to the employees.
 A declaration by the Directors of the Entity confirming that the
entity or any of its Subsidiaries has not, directly or indirectly,
provided funds for the ESPS.

Rule
Reference
7.6 (xv) Disclosures pertaining to Corporate Governance practices in terms
of Rules 7.10.3, 7.10.5 c. and 7.10.6 c. of Section 7 of the Rules.
7.10.3 Disclosures Relating to Directors

a. The Board shall make a determination annually as to the Disclosures relating to Directors are included in
independence or non-independence of each Non-Executive the Annual Report of the Board of Directors on the
Director based on such declaration and other information Affairs of the Company on pages 185 to 196.
available to the Board and shall set out in the annual report
the names of Directors determined to be ‘Independent’. Profiles of Directors of the Bank are given on pages
20 to 25.
b. In the event a Director does not qualify as ‘Independent’
against any of the criteria set out below but if the Board,
taking account all the circumstances, is of the opinion that the
Director is nevertheless ‘Independent’, the Board shall specify
the criteria not met and the basis for its determination in the
annual report.
c. In addition to disclosures relating to the independence of a
Director set out above, the Board shall publish in its annual
report a brief resume of each Director on its Board which
includes information on the nature of his/her expertise in
relevant functional areas.
d. Upon appointment of a new Director to its Board, the Bank Market Disclosures were made to the Colombo
shall forthwith provide to the Exchange a brief resume of such Stock Exchange upon appointment of New
Director for dissemination to the public. Such resume shall Directors during the year.
include information on the matters itemised in paragraphs (a),
(b) and (c) above.
7.10.5 Remuneration Committee
7.10.5.c Disclosure in the Annual Report
 The annual report should set out the names of Directors (or The composition of the Board Human Resources
persons in the Parent Company’s committee in the case of and Remuneration Committee is given on pages
a group company) comprising the Remuneration Committee, 173 and 174.
contain a statement of the remuneration policy and set out the
aggregate remuneration paid to Executive and Non-Executive The aggregate remuneration to Executive and Non-
Directors. Executive Directors are given on Note 46.3.1 to
the Financial Statements on page 298.
The Term “remuneration” shall make reference to cash and
all non-cash benefits whatsoever received in consideration
of employment with the Listed Entity (excluding statutory
entitlements such as Employees Provident Fund and
Employees Trust Fund).

Rule
Reference
7.10.6 Audit Committee
7.10.6.c Disclosure in the Annual Report
 The names of the Directors (or persons in the Parent The composition of the Board Audit Committee is
Company’s committee in the case of a group company) given on pages 170 to 172.
comprising the Audit Committee should be disclosed in the
annual report. The committee shall make a determination of
the independence of the auditors and shall disclose the basis
for such determination in the annual report.
The annual report shall contain a report by the Audit The Committee through their annual evaluation
Committee, setting out the manner of compliance by the Entity assessed the level of independence of the External
in relation to the above, during the period to which the annual Auditors.
report relates.
7.6 (xvi) Related Party Transactions exceeding 10% of the Equity or 5% of None of the transactions carried out by the Bank
the Total Assets of the Entity as per Audited Financial Statements, with Related parties have exceeded the aggregate
whichever is lower. monetary value of 10% of the shareholders’ Equity
of the Bank or 5% of the Total Assets of the Bank
Details of investments in a Related Party and/or amounts due from as at 31st December 2020.
a Related Party to be set out separately.
The same has been disclosed in the Investor
The details shall include, as a minimum: the date of the transaction, Information on pages 96 to 105.
the name of the Related Party, the relationship between the Entity
and the Related Party, the amount of the transaction and terms of
the transaction, the rationale for entering into the transaction.
BOARD AUDIT COMMITTEE REPORT
The Board Audit Committee (the TERMS OF REFERENCE 3. Assessing the reasonableness of the
Committee), which was established on The establishment, role and functions of underlying assumptions for estimates
10th April 1997, is appointed by and the Board Audit Committee are regulated and judgments made in preparing the
responsible to the Board of Directors (the by the Banking Act Direction No. 11 Financial Statements.
Board). The Committee comprises Three of 2007 on Corporate Governance for 4. Reviewing accounting and financial
(03) Non-Executive Directors, and is Licensed Commercial Banks issued by the reporting, risk management processes
chaired by an Independent Non-Executive Central Bank of Sri Lanka, the Rules on and regulatory compliance.
Director, who conducts Committee Corporate Governance as per Section 7.10
proceedings in accordance with the of Listing Rules issued by the Colombo 5. Reviewing the Financial Statements
Committee's Terms of Reference approved Stock Exchange and the Code of Best (including quarterly interim
by the Board. Practice on Corporate Governance 2017 statements) prior to publication to
issued by the Institute of Chartered ensure constant and continuous
The Committee’s composition during the Accountants of Sri Lanka (CA Sri Lanka). compliance with statutory provisions,
year under review was as follows: accounting standards and accounting
The Committee submits its minutes and policies.
Mr Dilip de S Wijeyeratne reports on its activities to the Board 6. Reviewing Internal Audit reports and
Chairman (IND/NED) (w.e.f. 01.04.2020) regularly and also assists the Board in its liaising with the Bank’s Corporate
general oversight of financial reporting, Management to ensure that
Dr Sanjiva Weerawarana
internal controls and functions relating to precautionary measures are taken to
(IND/NED)
internal and external audits. minimise and control weaknesses,
Mr Deshal de Mel procedure violations, frauds and
(IND/NED) MEETINGS errors.
The Committee met on Fifteen (15)
Mr Ranil Pathirana 7. Assessing the independence and
occasions during the year 2020.
(NID/NED) (up to 31.12.2020) reviewing the adequacy of the scope,
Attendance by the Committee members
functions and resources of the
(IND - Independent Director, NID - Non- at these meetings is given in the table
Internal Audit Department, including
Independent Director and NED - Non- on page 121 of the Annual Report. The
the appointment of the Group Chief
Executive Director) Group Chief Internal Auditor attends the
Internal Auditor and the performance
meetings regularly and the Managing
(w.e.f. - with effect from) of the Head and senior staff members
Director, Executive Director/Group Chief
of the Internal Audit Department.
Financial Officer, the Consultant to the
Mrs Ranjani Joseph, a senior practicing
Board Audit Committee and the External 8. Overseeing the appointment,
Chartered Accountant at KPMG, serves
Auditors also attended these meetings by compensation, resignation and
the Committee in the capacity of
invitation. Four of these meetings were dismissal of the External Auditors,
Consultant and is invited to attend the
held to consider and recommend to the including review of the External Audit
meetings.
Board of Directors, the Bank’s Quarterly function, its cost and effectiveness
and Annual Financial Statements. The and monitoring of the External
Brief profiles of the members of the
Committee held two meetings with Auditors’ independence and to ensure
Committee are given on pages 20 to
the External Auditor; Ernst & Young that the engagement of the Audit
25 of the Annual Report. The Company
independently, without the presence of Partner shall not exceed five years and
Secretary functioned as the Secretary
executive management, to discuss the that the particular Audit Partner is not
to the Committee, in the absence of
progress and conclusion of the Audit. re-engaged for the audit before the
the Company Secretary, his nominee or
expiry of three years from the date of
the Group Chief Internal Auditor (GCIA)
ROLE AND RESPONSIBILITIES the completion of the previous term.
functioned as the Secretary to the
Committee during the year under review. The Committee is responsible for: 9. Reviewing the effectiveness of the
1. Reviewing financial information, in Bank’s system of Internal Control
The Chairman of the Committee, Mr Dilip order to monitor the integrity of the Over Financial Reporting to provide
de S Wijeyeratne, is an Associate Member Financial Statements of the Bank, its reasonable assurance regarding the
of the Institute of Chartered Accountants annual report, accounts and quarterly reliability of financial reporting and the
of Sri Lanka and a Fellow Member of reports prepared for disclosure. preparation of Financial Statements
the Chartered Institute of Management for external purposes have been
Accountants, UK and counts many years 2. Reporting to the Board on the quality, done in accordance with applicable
of experience in the Financial Services appropriateness and acceptability of accounting standards and regulatory
industry. the Bank’s accounting policies and requirements.
practices.
10. Engaging Independent Advisors for Financial Statements prior to their limitation of scope and the Management
specialised functions where it deems release. The review included the quality, has fully provided all information and
necessary. appropriateness and acceptability of explanations requested by the Auditors.
accounting policies and practices, the
ACTIVITIES IN 2020 clarity of the disclosures and the extent Financial Statements were reviewed with
COVID-19 Outbreak of compliance with financial reporting the External Auditor, who is responsible
standards, in terms of the Companies for expressing an opinion on its conformity
The global outbreak and spread of
Act No. 7 of 2007, Banking Act No. 30 with the Sri Lanka Accounting Standards.
COVID-19 from January 2020 has caused
of 1988 and other relevant financial and The Committee also met the Auditors to
disruption to business and economic
governance reporting requirements. review the Management Letter with the
activities, and widespread uncertainty
responses from the Management.
among all countries around the world.
To facilitate the review, the Committee
Locally, containment measures taken
considered reports from the Executive The Committee approved the policy in
by the government in response to
Director/Group Chief Financial Officer and place on Non-Audit Services provided by
the COVID-19 pandemic also caused
reports from the External Auditors on the the External Auditors in 2020 in line with
temporary disruption to the Bank and its
outcome of the Annual Audit. the regulatory requirement.
customers.
The Committee also closely monitored The committee reviewed the Letter of
The Bank has complied with all the
the training and awareness sessions Representation issued to the External
requirements prescribed by the CA Sri
on SLFRS 9 (Financial Instruments) Auditors by the Board.
Lanka, the Central Bank of Sri Lanka and
conducted by the Management to all
the Colombo Stock Exchange during the
stakeholders including the Board and The Committee has recommended to
year under review.
Senior Management during 2020. It will the Board that Messrs Ernst and Young,
continuously strengthen the processes and Chartered Accountants, be reappointed
The Bank further strengthened its internal
controls around management information for the financial year ending 31st
controls over financial reporting process
systems and reports required for validation December 2021, subject to the approval
to ensure that the impact on COVID-19
and compliance in line with SLFRS 9 and of shareholders at the next Annual General
moratorium on interest income and
financial statement disclosures related to Meeting.
impairment provisions were accurately
risk management.
captured. The Bank has recognised
Internal Control Over Financial
additional impairment provisions as
External Auditors Reporting (ICOFR)
management overlay to ensure that
the potential impact to its loan book The Committee reviewed and monitored The Bank is required to comply with
is adequately covered in the financial the External Auditors’ independence and Section 3(8)(ii)(b) of the Banking Act
statements. objectivity and the effectiveness of the Direction No. 11 of 2007 and assess
audit process, taking into consideration the effectiveness of Internal Control
Necessary steps were also taken during relevant professional and regulatory Over Financial Reporting as of 31st
this period to further strengthen the cyber requirements. December 2020. The Bank assessed the
security processes. effectiveness of its Internal Control Over
The Committee ensured that the lead audit Financial Reporting as of 31st December
The Board Audit Committee reviewed partner was rotated every five years in 2020 based on the criteria set out in the
the new and changed risks, changes accordance with the Banking Act Direction Guidance for Directors of Banks on “The
to the internal control systems, crisis No. 11 of 2007 on Corporate Governance Directors’ Statement of Internal Control”,
management system of the Bank and for Licensed Commercial Banks in Sri issued by the CA Sri Lanka in 2010.
the agility of the Internal Audit function Lanka. The Committee discussed with the
through working remotely on reshaped Auditors their audit plan, scope and the The Bank’s assessment was based on
audit plans etc. methodology they propose to adopt in processes documented by the respective
conducting the annual audit prior to its process owners. For the successful
Financial Reporting commencement. The Auditors were also implementation of this task, a steering
provided with the opportunities to meet committee (Internal Control Over
The Committee, as part of its responsibility
the Audit Committee separately, without Financial Reporting Steering Committee)
to oversee the Bank’s financial reporting
the presence of executive management, headed by the Executive Director/Group
process on behalf of the Board of
to ensure that the Auditors had the Chief Financial Officer and comprising
Directors, has reviewed and discussed
independence to discuss and express their of relevant members of the Corporate
with the Management and the External
opinions on any matter. There was no Management and other relevant
Auditors, the Quarterly and the Annual
BOARD AUDIT COMMITTEE REPORT
GRI - 102-33,34
Department Heads was formulated in The Committee also reviewed the major Whistle Blowing
2010 with the guidance of the Bank’s findings of Investigations and potential The Bank’s Whistle Blowing Policy
External Auditors (Ernst & Young). At fraud monitoring activities carried out continued to be implemented as a
present, the Group Chief Internal Auditor during the year. component of the Corporate Fraud Risk
(Chairperson), Executive Director/Group Management Framework. The Policy allows
Chief Financial Officer, Group Chief Risk All Internal Audit reports were made any team member who has a legitimate
Officer and Group Chief Compliance available to External Auditors as well. concern on an existing or potential “wrong
Officer serves in the Internal Control Over doing” by any person within the Bank to
Financial Reporting Steering Committee. The Committee reviewed the resource
come forward voluntarily and bring such
The Internal Audit Department carries out requirements of the Internal Audit
concern to the notice of the Chairman of
a series of walk-through tests to establish Department and appraised the retirement
the Board Audit Committee through the
their adequacy of documented processes of the previous Chief Internal Auditor (CIA)
Company Secretary or GCIA. Concerns
and make appropriate recommendations and the recruitment of the new GCIA. The
raised are investigated and the identity
where necessary. performance evaluation of the GCIA and
of the person raising the concern is kept
the senior staff members of the Internal
confidential. Even anonymous complaints,
Based on Internal Auditors’ and External Audit Department for the year 2020 will
which are covered under whistle blowing,
Auditors’ assessments, the Board has be carried out by the Committee during
are investigated under the said Policy.
concluded that, as of 31st December the first quarter of 2021.
The Whistle Blowing Policy was reviewed
2020, the Bank’s Internal Control Over and recommended by the Committee
Financial Reporting is effective. Directors’ COVID-19 pandemic has caused a shift in
during the year 2020 in order to further
Statement on the Bank’s Internal Control how the Internal Audit function operates
strengthen the policy as a communication
Over Financial Reporting is provided on within the business. The Internal Audit
channel to raise any genuine concerns.
pages 197 and 198. The Bank’s External had to revisit its role within the business
Auditors have audited the effectiveness continuity efforts. The initial Internal Audit
REPORTING TO THE BOARD
of the Bank’s Internal Control Over Plan was reshaped through agile auditing
The Minutes of the Committee meetings
Financial Reporting and have reported to and dynamic risk assessment. Normal on-
are tabled at the Board meetings enabling
the Board that nothing has come to their site audits were limited, remote work and
all Board members to have access to them.
attention that causes them to believe that continuous monitoring were carried out
the financial reporting was inconsistent and areas with potential risks were more
PROFESSIONAL ADVICE
with their understanding of the processes focused.
adopted by the Board in the review of the The Committee has the authority to seek
design and effectiveness of the internal Annual Corporate Governance Report external professional advice from time to
control system of the Bank. The External time on matters within its purview. During
As required by Section 3(8)(ii)(g) of the
Auditors’ Report on the Bank’s Internal the year, consultations were held with
Banking Act Direction No. 11 of 2007,
Control Over Financial Reporting is various professionals, on matters under the
on Corporate Governance for Licensed
provided on page 199. Committee’s purview.
Commercial Banks issued by the Central
Bank of Sri Lanka, the Annual Corporate
Internal Audit BOARD AUDIT COMMITTEE
Governance Report for 2020 is provided
EVALUATION
During the year, the Board Audit on pages 149 to 165. The External
Committee continued to fulfil its mandate Auditors of the Bank have performed The annual self-evaluation of the
to monitor and review the scope, extent procedures set out in Sri Lanka Related Committee was conducted by the
and effectiveness of the activities of Services Practice Statement 4750 issued members of the Board Audit Committee
the Bank’s Internal Audit Department, by the CA Sri Lanka (SLRSPS 4750), to during the year and concluded that its
including review of the progress made on meet the compliance requirement of the performance was effective.
Audit activities and achievements against said Corporate Governance directive.
Their findings presented in their report On behalf of the Board Audit Committee,
the Bank’s Audit Plan. The Committee
reviewed the Internal Audit Plan and dated 15th February 2021 addressed to
monitored its implementation through the Board are consistent with the matters
regular communication with the Group disclosed above and any inconsistencies to
Chief Internal Auditor. those reported by the Board on pages 149 DILIP DE S WIJEYERATNE
to 165 have not been identified. Chairman - Board Audit Committee
15th February 2021

BOARD HUMAN RESOURCES AND

REMUNERATION COMMITTEE REPORT
GRI - 102-35,36
The Board Human Resources and The Company Secretary functioned as 4. Recommending to the Board such
Remuneration Committee (the Committee) the Secretary to the Committee and in amendments to its scope as may, in
comprises Four (04) Non-Executive his absence, a nominee appointed by the its view be desired, to achieve better
Directors. Company Secretary functioned as the corporate governance objectives.
Secretary to the Committee during the
5. Advising the KMP heading the
The Committee’s composition during the year under review.
Human Resources Department of
year under review was as follows:
the Bank with regard to revision of
REGULATIONS/RULES RELEVANT
salaries of Bank staff and of any major
Ms Aroshi Nanayakkara TO THE FUNCTIONS OF THE
organisational changes needed for the
Chairperson (IND/NED) COMMITTEE
Bank’s purpose.
(w.e.f. 30.08.2020) The role and functions of the Committee
are defined by the provisions of Direction 6. Recommending and keeping under
Mr Dilip de S Wijeyeratne review, the Human Resources
No. 11 of 2007 made under the Banking
(IND/NED) Strategy including key HR Objectives,
Act by the Central Bank of Sri Lanka
(the Directive), the Mandatory Code Plans and workforce requirements in
Mr Deshal de Mel line with the overall annual/medium
of Corporate Governance for Licensed
(IND/NED) term strategic objectives of the Bank
Commercial Banks and the Code of Best
Practice on Corporate Governance 2017 and monitoring implementation of the
Mr Vajira Kulatilaka
issued by the Institute of Chartered same.
(IND/NED) (w.e.f. 31.07.2020)
Accountants of Sri Lanka. 7. Reviewing, commenting and reporting
Mrs Dhara Wijayatilake to the Board on the HR related
DUTIES OF THE COMMITTEE
Chairperson (IND/NED) development plans, talent retention
(up to 29.08.2020) The Committee focuses on the and career development for potential
following key activities in discharging its successors.
Ms Annika Senanayake responsibilities.
8. Monitoring and making all necessary
(IND/NED) (up to 31.12.2020)
1. Formulating remuneration policies recommendations to the Board on
(salaries, allowances and other ethical standards to be adopted
Mrs Saumya Amarasekera
financial payments) relating to with regard to human capital and
(NID/NED) (up to 02.06.2020)
Directors, CEO/MD and Key ensuring that the management has
Management Personnel (KMP) of the institutionalised a process to ensure
Mr Sanjiva Senanayake
Bank and submitting the same for the compliance with these standards.
(IND/NED) (up to 11.04.2020)
approval of the Board. (Vide Direction 9. Keeping the provisions of the Bank's
(IND - Independent Director, NID - Non- 3(6)(iii)(a) of the Directive). Pension Plan under review.
Independent Director and NED - Non-
2. Identifying goals and targets for 10. Reviewing the Terms of Reference
Executive Director)
the Directors, CEO/MD and Key (TOR) of the Committee periodically,
Management Personnel (KMP) and and ensuring that it reflects the best
(w.e.f. - with effect from)
submitting the same for the approval practices of the industry at all times.
of the Board. (Vide clause 3(6)(iii)(b) of
Brief profiles of the Members are given on 11. Assessing the performance of
the Directive).
pages 20 to 25 of the Annual Report. the Committee based on the
3. Evaluating the performance of the requirements.
MEETINGS CEO/MD and Key Management
During the year under review, Ten (10) Personnel against set targets and PERFORMANCE
meetings were held. The attendance of goals periodically and submitting the The Committee discharged its
the members at these meetings is given same to the Board, together with responsibilities in compliance with its
on page 121 of this Report. The Managing recommendations for the revision TOR, for which purpose the Human
Director (MD) and the Group Chief Human of remuneration, benefits and other Resources related policies, the staff
Resource Officer as well as other executive performance-based incentives. (Vide structure, the training programmes and
staff also attended meetings by invitation, clause 3(6)(iii)(c) of the Directive). disciplinary procedures were reviewed and
to assist in the Committee’s deliberations. revisions were made as appropriate. The
performance appraisal of the MD and Key
BOARD HUMAN RESOURCES AND

REMUNERATION COMMITTEE REPORT
Management Personnel were completed REPORTING TO THE BOARD

after reviewing the targets in compliance The Minutes of the Committee meetings
with the Plan of Action of the Bank. were tabled at Board meetings thereby
providing the Board members with access
Remuneration and salary structures were
to the deliberations of the Committee.
reviewed and finalised.
PERFORMANCE EVALUATION OF
The Committee periodically reviewed the
THE COMMITTEE
organisation structure and recommended
The annual evaluation of the Committee
changes that were identified, including
was conducted by the members of the
those necessary to respond to the specific
Committee at the end of the year and
challenges faced by the industry during
concluded that its performance was
the year under review.
effective.
The Committee reviewed and revised the
On behalf of the Board Human Resources
Disciplinary Procedure of the Bank to
and Remuneration Committee,
ensure that principles of good governance
were complied with while also ensuring
that the disciplinary regime provided a fair
process to deal with indiscipline.
The Committee also reviewed existing AROSHI NANAYAKKARA

policies to ensure that the Bank endorses Chairperson - Board Human Resources
a culture that respects equality among all and Remuneration Committee
as articulated in the Constitution of Sri
Lanka, including gender equality. Colombo, Sri Lanka
15th February 2021
With regard to capacity building of
staff, the Committee monitored the
implementation of new initiatives
introduced in respect of learning and
development activities, including the
online Learning Management System that
replaced the e-learning platform.
The Committee also kept under review

the effectiveness of the Bank’s training
programmes and monitored the outcome
of such programmes to ensure that
the programmes were relevant and of
value. The focus was on enhancing the
performance of the staff to deliver an
efficient service to the clients.
The Committee reviewed and updated

the Grievances Handling Policy to foster a
supportive, fair and pleasant workplace for
everyone.
The Code of Conduct & Letter of

Appointment of KMPs was reviewed and
updated to maintain the industry standards
of the area in concern.
BOARD NOMINATION COMMITTEE REPORT
GRI - 102-24
The Board Nomination Committee (the MEETINGS 3. Set the criteria such as qualifications,
Committee) comprises Four (04) Non- During the year under review, Twelve experience and key attributes required
Executive Directors. (12) Committee meetings were held. for eligibility to be considered for
The attendance of the members at these appointment or promotion for the
The Committee’s composition during the positions of CEO/MD and the
meetings is given on page 121 of this
year under review was as follows: key management positions. (Vide
Report. The Managing Director (MD)
attends meetings by invitation, to assist Direction 3(6)(iv)(c) of the Directive).
Mr Deshal de Mel
the Committee’s deliberations.
Chairman (IND/NED) (w.e.f. 01.01.2021) 4. Ensuring that Directors, CEO/MD
The Company Secretary functioned as and Key Management Personnel are
Mr Rushanka Silva fit and proper persons to hold office
the Secretary to the Committee and in
(NID/NED) (w.e.f 01.05.2020) as specified in the criteria specified
his absence, a nominee appointed by the
Company Secretary functioned as the under Statutory and Regulatory
Mr Harsha Amarasekera requirements (Vide Direction 3(6)(iv)(d)
Secretary to the Committee during the
(NID/NED) (w.e.f 24.09.2020) of the Directive).
year under review.
Mrs Keshini Jayawardena* 5. Consider and recommend from

REGULATIONS/RULES RELEVANT TO
(IND/NED) time to time, the requirements of
THE COMMITTEE
additional/new expertise and the
Ms Annika Senanayake The role and functions of the Committee
succession arrangements for retiring
Chairperson (IND/NED) as defined by the provisions of Direction
Directors and Key Management
(up to 31.12.2020) No. 11 of 2007 made under the Banking
Personnel. (Vide Direction 3(6)(iv)(e) of
Act by the Central Bank of Sri Lanka
the Directive).
Prof Malik Ranasinghe (the Directive), the Mandatory Code
(IND/NED) (up to 29.08.2020) of Corporate Governance for Licensed
6. Review the Terms of Reference
Commercial Banks and the Code of Best
(TOR) of the Committee periodically,
Mrs Dhara Wijayatilake Practice on Corporate Governance 2017
to ensure that it reflects the best
(IND/NED) (up to 29.08.2020) issued by the Institute of Chartered
practices of the industry at all times.
Accountants of Sri Lanka.
7. Assess the performance of the
(NID/NED) (up to 02.06.2020) DUTIES OF THE COMMITTEE
Committee annually.
The Committee focuses on the
following key activities in discharging its PERFORMANCE
(IND/NED) (up to 11.04.2020)
responsibilities. The Committee discharged its
*Mrs Keshini Jayawardena was appointed to responsibilities in compliance with its TOR,
1. Implementing a procedure to select/
the Committee w.e.f. 27.01.2021. for which purpose the members of the
appoint new Directors, CEO/MD and
Committee continued to work closely with
Key Management Personnel. (Vide
(IND - Independent Director, NID - Non- the Board and Board HR & Remuneration
Direction 3(6)(iv)(a) of the Directive).
Independent Director and NED - Non- Committee, in reviewing the structure and
Executive Director) skills needed for a steadfast, strong and
2. Consider and recommend the
successful Bank. Further, the Committee
re-election of current Directors,
(w.e.f. - with effect from) also reviewed its own performance,
taking into account the performance
constitution and Terms of Reference to
and contribution made by the
Brief profiles of the Members are given on ensure that it is operating effectively and
Director concerned towards the
pages 20 to 25 of the Annual Report. recommend necessary changes as needed.
overall discharge of the Board’s
responsibilities. (Vide Direction
3(6)(iv)(b) of the Directive).
BOARD NOMINATION COMMITTEE REPORT
During the year under review, the

Committee continued to focus on a
progressive organisational plan in keeping
with the forward and evolutionary
momentum of the Sri Lankan banking
industry. The Committee, having
considered the skills, knowledge,
expertise and experience, made the
recommendations to the Board in respect
of the following appointments:
Mr Harsha Amarasekera
Chairman of the Board (NID/NED)
(IND/NED)
Mrs Keshini Jayawardena

(IND/NED)
Mr Ajantha de Vas Gunasekara

(Executive Director/
Group Chief Financial Officer)

were tabled at Board meetings thereby
THE COMMITTEE
Committee at the year end and concluded
that its performance was effective.
On behalf of the Board Nomination

Committee,
DESHAL DE MEL
Chairman - Board Nomination Committee
Colombo, Sri Lanka

15th February 2021
BOARD INTEGRATED RISK MANAGEMENT

COMMITTEE REPORT
GRI - 102-30
The Board Integrated Risk Management Key Management Personnel (KMP) in quantitative and qualitative risk limits
Committee (the Committee) comprises charge of Information Security, Credit, as specified by the Committee. (Vide
Three (03) Non-Executive Directors, One Market, Liquidity, Operational, Strategic clause 3(6)(v)(c) of the Directive).
(01) Executive Director and Two (02) Risks and Anti-Money Laundering also
3. Taking prompt corrective action to
members from the Management. attended meetings of the Committee, by
mitigate the effects of specific risks in
invitation to assist in the Committee’s
case such risks are at levels beyond
The Committee’s composition during the deliberations.
the prudent levels decided by the
year under review was as follows:
Committee on the basis of the Bank’s
The Company Secretary functioned as
policies and regulatory, supervisory
Board representatives: the Secretary to the Committee and in
requirements. (Vide clause 3(6)(v)(d) of
Mr Deshal de Mel his absence, a nominee appointed by the
the Directive).
(Chairman) (IND/NED) (w.e.f. 12.04.2020) Company Secretary functioned as the
Secretary to the Committee during the 4. Assessing all aspects of Risk
Mr Dilip de S Wijeyeratne year under review. Management and Compliance across
(IND/NED) the Bank including updated Business
REGULATIONS/RULES RELEVANT Continuity Plans. (Vide clause 3(6)(v)(e)
Dr Sanjiva Weerawarana TO THE FUNCTIONS OF THE of the Directive).
(IND/NED) COMMITTEE
5. Referring to Bank’s Disciplinary
The role and functions of the Committee Committee regarding the officers
Mr Nanda Fernando are defined by the provisions of Direction responsible for failure to identify
(ED) No. 11 of 2007 made under the Banking specific risks and taking prompt
Act by the Central Bank of Sri Lanka corrective action as recommended
(the Directive), the Mandatory Code by the Committee and/or as directed
(Chairman) (IND/NED) (up to 11.04.2020)
of Corporate Governance for Licensed by the Director of Bank Supervision,
Commercial Banks issued by the Central for the purpose of implementing
Bank of Sri Lanka. corrective measures against such
(NID/NED) (up to 02.06.2020)
officer in compliance with clause
DUTIES OF THE COMMITTEE
(NID - Non-Independent Director, IND - 3(6)(v)(f) of the Directive.
Independent Director, NED - Non-Executive The Committee focuses on the
6. Submitting a report on high priority
Director and ED - Executive Director) following key activities in discharging its
risks to the Main Board on a monthly
responsibilities.
basis, in compliance with clause
(w.e.f. - with effect from)
1. Assessing all risks faced by the Bank 3(6)(v)(g) of the Directive.
Management representatives: including as Credit, Market, Liquidity, 7. Establishing a compliance function

Operational and Strategic Risks on a and appointing a dedicated
Mrs Achala Wickremaratne
monthly basis through appropriate Compliance Officer selected from
(Group Chief Risk Officer)
risk indicators and management Key Management Personnel who
information. In case of subsidiary functionally reports to the Committee
Mr Sisira Dabare
companies, risk management is done periodically to assess the Bank’s
(Group Chief Compliance Officer)
both on a Bank basis and Group compliance with the laws, regulations,
Brief profiles of the Members are given on basis. (Vide clause 3(6)(v)(b) of the regulatory guidelines, internal controls
pages 20 to 25 of the Annual Report. Directive). and approved policies on all areas of
2. Reviewing the adequacy and business operations. (Vide clause
MEETINGS effectiveness of all management level 3(6)(v)(h) of the Directive).
During the year under review, Nine (09) committees such as the Credit Policy, 8. Recommending all policies relating to
Committee meetings were held. The Risk & Portfolio Review Committee, Risk Management for Board approval.
attendance of the members at each of ALCO (Asset & Liability Management
these meetings is given on page 121 of 9. Setting-up risk appetite/tolerance
Committee) and Risk & Compliance
this Report. limits of the Bank at enterprise and
Committee to address specific risks
strategic business unit levels.
and to manage those risks within
BOARD INTEGRATED RISK MANAGEMENT

COMMITTEE REPORT
10. Maintaining continued awareness of 20. Reviewing the Terms of Reference The Committee actively encouraged all the
any changes in the Bank’s risk profile. (TOR) of the Committee periodically, participants in the Committee meetings to
to ensure that it reflects the best comprehensively review all risks as well as
11. Ensuring the existence of clear
practices of the industry at all times. to undertake analyses going beyond the
and independent reporting lines,
requirements of the regulations. This year,
responsibilities for the overall business 21. Annually assess the performance of
the Bank’s operations were subject to a
activities and risk management the Committee.
unique risk environment in the context
functions.
of the COVID-19 pandemic. Accordingly,
PERFORMANCE
12. Cultivating a proactive risk risk models were re-visited and the risk
management culture within the Bank. The Committee discharged its
outlook had to be considered through an
responsibilities in compliance with its
unconventional framework.
13. Periodically reviewing the risk TOR, and to enable this, the Committee
exposures of the Bank to be in line received periodic reports on the Bank’s The Committee undertook the following
with the Bank’s objectives, business performance against Key Risk Indicators specific activities during the year:
strategies and risk appetite. (KRIs) from the Risk Management
14. Reviewing and formulating the Department and Key Performance 1. The Committee along with Risk
strategy and methodology for Indicators from the Compliance Management Department took
allocation of risk/economic capital, Department. The reports and the relevant several measures in responding to
including Internal Capital Adequacy background information have been the COVID-19 pandemic including
Assessment Process (ICAAP) and reviewed in depth and necessary risk Work From Home arrangements
recommending the same for Board mitigation measures have been initiated for staff, strengthening of Disaster
approval. where necessary, in order to maintain Recovery sites under Business
the Bank’s exposure to risk within its risk Continuity Planning, adherence to
15. Ensuring the adequacy of tools, appetite limits and to facilitate compliance safety instructions issues by Health
systems and resources for the with regulatory requirements, while Authorities to ensure staff health
successful management of risk and facilitating the achievement of sound and safety, providing uninterrupted
compliance functions within the business results. customer service through ATMs,
Bank and recommending the financial
Cash and Cheque Deposit Machines
budget for the provision of adequate The work of the Committee was supported in branches closed due to lockdown
tools and systems to support the risk by the Risk Management Department, and strengthening of Bank’s digital
management functions. Compliance Department and Information channels.
16. Reviewing and approving risk related Security Department of the Bank, headed
by the Group Chief Risk Officer, the Group 2. Reviewed the Risk elevated industries
public disclosures to be made under
Chief Compliance Officer and the Chief in the context of the COVID-19
CBSL directives.
Information Security Officer respectively, pandemic.
17. Engaging with external and in discharging its responsibilities. The 3. Assessed the impact of the COVID-19
independent reviewers for validation governance structure for the management lockdown and moratorium measures
of risk measurement methodologies of risk of the Bank is set out in the Risk on the Bank’s NPA levels by using a
and outputs as and when required. Management Report given on pages 108 range of additional stress tests.
18. Monitoring controls relating to to 116 of the Annual Report.
4. Actions were taken to mitigate Cyber
“Information Security” and reviewing
The Risk Appetite of the Bank in all key Risk, i.e. conduct periodic internal and
the progress of the “Information
risk areas, namely, Credit Risk, Market Risk, external vulnerability assessments,
Security Committee” (ISC) on a
Liquidity Risk and Operational Risk have timely patch upgrades/update
quarterly basis.
been defined and approved by the Board database, application, middleware &
19. Performing any other activity within on the recommendation of the Committee. operating systems, strengthen the
the scope of risk related functions Regular reports have been provided to the security measures by introducing
that is deemed by the Committee Committee on the actual performance of an OTP/mandatory use of strong
to be required, which will serve to the identified risk areas. passwords.
enhance its or the risk function’s
efficiency and effectiveness.
5. Validated the Credit Rating Models 14. Reviewed the existing Market Risk REPORTING TO THE BOARD
to assess the discriminatory power of Appetite limits framework and The Minutes of the Committee meetings
the models in determining the credit introduced new appetite limits for were tabled at Board meetings thereby
quality of the borrowers. Further Interest Rate Risk and Equity Risk. providing the Board members with access
action was taken to enhance the to the deliberations of the Committee. The
15. Introduction of a Code of Conduct
rating models based on the validation risk assessments were typically submitted
for Treasury operations along with
results/recommendations provided by to the Board within an adequate time
Treasury Front Office and Treasury
the consultants. period from each Board Integrated Risk
Back Office.
6. The Bank’s Credit Risk appetite limits Management Committee meeting.
16. Measures were taken to implement
were reviewed.
the VaR model for Finacle Treasury BOARD INTEGRATED RISK
7. Supported the Bank's transition from and introduce VaR limits for Foreign MANAGEMENT COMMITTEE
the delinquency based ECL model to Exchange Risk and Interest Rate Risk. EVALUATION
rating based ECL model.
17. Enhancements were made to the The annual evaluation of the Committee
8. Involvement in the development of Bank’s liquidity contingency plan. was conducted by the members of the
an Early Warning System to enable Committee at the year end and it was
18. The Bank’s operational risk framework
branches to access information determined that its performance was
was further strengthened with the
regarding potential default customers effective.
addition of 10 new KRIs covering
under their purview.
several business functions.
On behalf of the Board Integrated Risk
9. Tightened monitoring of top 30
19. The Risk and Control Self-Assessment Management Committee,
exposures for selected high risk
(RCSA) process was reviewed in the
sectors. The findings of detailed
year 2020.
sector-wise and borrower-wise
portfolio analysis were assessed and 20. Increased risk awareness levels of the
mitigative actions were prescribed by Committee members by arranging a DESHAL DE MEL
the committee. session on “How BIRMC Can Lead Chairman - Board Integrated Risk
Risk Management Functions Amidst Management Committee
10. Establishment of a Board approved
COVID-19” conducted by EY Sri
criteria on upgrading of the stage of Colombo, Sri Lanka
Lanka.
impairment, related to restructured 15th February 2021
facilities. 21. Organised an awareness session by
VISA International on “Risk Associated
11. Developed a Behavioural Scorecard
with Digital Transformation of Banks”
to track the behaviour of personal
to face challenges of the new normal.
borrowers and support decision
making through predictive analysis. 22. Information Security Status reports
The new system is due to be submitted by the Information Security
implemented during the year 2021. Department/IT Department were
reviewed and acknowledged. Steps
12. The Internal Capital Adequacy
were taken to enhance the efficiency
Assessment Process (ICAAP) was
of monitoring and to mitigate/avoid
reviewed and further strengthened
possible risks arising from the IT
with the assistance of external
systems in respect of Credit, Market,
consultants.
Liquidity, Operational and Strategic
13. A Risk Matrix was developed based on Risks of the Bank by the Committee.
the significant risk factors identified
for the Bank with the guidance of the
Committee.
BOARD RELATED PARTY TRANSACTIONS REVIEW

COMMITTEE REPORT
The Board Related Party Transactions Company Secretary functioned as the 4. Ensuring that the Bank shall not
Review Committee (the Committee) Secretary to the Committee during the grant any accommodation to any of
comprises Four (04) Non-Executive year under review. its Directors or to a close relation of
Directors. such Director or to any concern in
REGULATIONS/RULES RELEVANT TO which the person has a substantial
The Committee’s composition during the THE COMMITTEE interest unless such accommodation
year under review was as follows: The role, functions and the composition is sanctioned at a meeting of its
of the Committee as defined by the Board of Directors, with not less
Mr Vajira Kulatilaka provisions of Code of Best Practices issued than two-thirds of the number of
Chairman (IND/NED) (w.e.f 30.08.2020) by the Securities & Exchange Commission Directors other than the Director
of Sri Lanka (the “SEC Code”), Section 9 concerned, voting in favour of such
Mr Deshal de Mel accommodation. And to ensure
of the Listing Rules of the Colombo Stock
(IND/NED) all regulations pertaining to such
Exchange (the “CSE Rules”), Code of Best
Practice on Corporate Governance issued accommodations are followed. (Vide
by the Institute of Chartered Accountants clause 3(7)(iv)(v)(vi) and (vii) of the
(IND/NED) (w.e.f 25.06.2020)
of Sri Lanka and the Direction No. 11 of Directive).
2007 (the “Directive”) made under the 5. Ensuring that there is an adequately
Mr Dilip de S Wijeyeratne
Banking Act by the Central Bank of Sri effective and efficient system in
(IND/NED) (w.e.f 31.07.2020)
Lanka, the Mandatory Code of Corporate place to capture information which is
Mrs Dhara Wijayatilake Governance for Licensed Commercial relevant to its review function.
Chairperson (IND/NED) Banks.
6. Obtaining professional and expert
(up to 29.08.2020)
DUTIES OF THE COMMITTEE advice from qualified persons, where
such advice is necessary for the
Prof Malik Ranasinghe The Committee focuses on the
performance of the review function.
(IND/NED) (up to 29.08.2020) following key activities in discharging its
responsibilities. 7. Reviewing the Terms of Reference
Mr Sanjiva Senanayake (TOR) of the Committee periodically
(IND/NED) (up to 11.04.2020) 1. Taking all necessary steps to avoid to ensure that it reflects the best
any conflicts of interest that may arise practices of the industry at all times.
(IND - Independent Director, NED - Non- from any transaction conducted by
8. Assessing the performance of the
Executive Director) the Bank with any category deemed
Committee annually.
as “Related Parties” as authorised by
(w.e.f. - with effect from) the Board. (Vide clause 2(7) (i) and 9. Recommending to the Board such
3(7)(i) of the Directive). amendments to its scope as may,
Brief profiles of the Members are given on in its view be applicable, to achieve
2. Ensuring that the transactions with
pages 20 to 25 of the Annual Report. better compliance with regulatory
related parties are identified by the
requirements.
MEETINGS respective authorities in line with the
regulatory requirements. (Vide clause
During the year under review, Five (05) PERFORMANCE
3(7)(ii) of the Directive).
Committee meetings were held. The The Committee discharged its
attendance of the members at these 3. Maintaining the Board approved responsibilities in compliance with its
meetings is given on page 121 of this standard to ensure that the Bank TOR, for which purpose the Committee
Report. The Managing Director (MD) and does not engage in transactions with reviewed the relevant Related Party
other Key Management Personnel (KMP) related parties in a manner that would Transactions quarterly or as and
attended meetings by invitation, to assist grant such parties a “More Favourable when required and communicated its
the Committee’s deliberations. Treatment” than that accorded to observations to the Board. These are
other constituents of the Bank published in the Note 46 to the Financial
The Company Secretary functioned as carrying on the same business. (Vide Statements.
the Secretary to the Committee and in clause 3(7)(iii) of the Directive).
his absence, a nominee appointed by the
While understanding the business

exigencies of the Bank, the Committee
also took steps to expedite its decision
making process in respect of the Related
Party Transactions of the Bank.
The Committee introduced further

improvements to the existing procedure in
handling Related Party Transactions of the
Bank based on the expert advice received
from qualified persons.
The process of capturing Related Parties

of the Bank was reviewed during the year
and strengthened further to maintain the
industry standards with the assistance of
technological advancement of the Bank.

were tabled at Board meetings thereby
THE COMMITTEE
Committee at the end of the year and
concluded that its performance was
effective.
On behalf of the Board Related Party

Transactions Review Committee,
VAJIRA KULATILAKA
Chairman - Board Related Party
Colombo, Sri Lanka

15th February 2021
05
FINANCIAL INFORMATION
Financial Calendar 184 | Annual Report of the Board of Directors on the Affairs of the Company 185 |
Directors’ Interest in Contracts with the Bank 196 |
Directors’ Statement on Internal Control Over Financial Reporting 197 |
Independent Assurance Report to the Board of Directors of Sampath Bank PLC 199 |
Managing Director’s and Group Chief Financial Officer’s Responsibility Statement 200 |
Statement of Directors’ Responsibility for Financial Reporting 201 |
Independent Auditor’s Report to the Shareholders of Sampath Bank PLC 203 | Statement of Profit or Loss 208 |
Statement of Comprehensive Income 209 | Statement of Financial Position 210 | Statement of Cash Flows 212 |
Statement of Changes in Equity 214 | Notes to the Financial Statements 216
A
Million
Transactions
Sampath Bank is deeply invested in delivering consistent performance across the board.
We're designing a future built on a million more transactions to ensure long-term value
creation and growth.
FINANCIAL CALENDAR
Financial Calendar - 2020
2019 Annual Report and Audited Financial Statements signed on 13th February 2020
34th Annual General Meeting held on 02nd June 2020
Rs 11.75 per share Final Cash Dividend for 2019 distributed on 12th June 2020
2020 Annual Report and Audited Financial Statements signed on 15th February 2021
35th Annual General Meeting to be held on 30th March 2021
Rs 8.25 per share Final Cash Dividend for 2020 distributable on 23rd April 2021*
Interim Financial Statements published in terms of Rule 7.4 of the Colombo Stock Exchange (CSE) and as per the requirements of the Central
Bank of Sri Lanka:
Colombo Stock Newspapers (as required by CBSL)

Exchange English Sinhala Tamil
2019 4th Quarter interim results released on 14th February 2020 28th February 2020 05th March 2020 05th March 2020
2020 1st Quarter interim results released on 13th May 2020 29th May 2020 01st June 2020 01st June 2020
2020 2nd Quarter interim results released on 13th August 2020 24th August 2020 25th August 2020 25th August 2020
2020 3rd Quarter interim results released on 12th November 2020 25th November 2020 26th November 2020 26th November 2020
Proposed Financial Calendar - 2021
2021 Annual Report and Audited Financial Statements to be signed in February 2022
36th Annual General Meeting to be held in March 2022
Final dividend for 2021 payable in April 2022**
Interim Financial Statements to be published in terms of Rule 7.4 of the Colombo Stock Exchange and as per the requirements of the Central
Bank of Sri Lanka:
Colombo Stock Newspapers (as required by CBSL)

Exchange English Sinhala Tamil
2020 4th Quarter interim results to be 16th February 2021 31st March 2021 31st March 2021 31st March 2021
released on or before
2021 1st Quarter interim results to be 14th May 2021 31st May 2021 31st May 2021 31st May 2021
2021 2nd Quarter interim results to be 13th August 2021 31st August 2021 31st August 2021 31st August 2021
2021 3rd Quarter interim results to be 15th November 2021 30th November 2021 30th November 2021 30th November 2021
2021 4th Quarter interim results to be 28th February 2022 31st March 2022 31st March 2022 31st March 2022
* Subject to approval of Shareholders and based on the number of shares in issue as at 15th February 2021.
** Subject to recommendation by Board of Directors and approval of Shareholders.

ANNUAL REPORT OF THE BOARD OF DIRECTORS

ON THE AFFAIRS OF THE COMPANY
1 GENERAL of Sri Lanka and to the Sri Lanka 2 VISION, VALUES AND CORPORATE
The Board of Directors of Sampath Accounting and Auditing Standards CONDUCT
Bank PLC have pleasure in presenting Monitoring Board within the statutory The Bank’s Vision and Values are given
its Annual Report on the State of Affairs deadlines. in page 16 of the Annual Report. The
of the Company to the members of business activities of the Bank are
Sampath Bank PLC ("the Bank") for the The Bank is a Licensed Commercial conducted at a high level of ethical
financial year ended 31st December Bank registered under the Banking Act standards in achieving its Vision.
2020, together with the audited No. 30 of 1988 (“Banking Act”) and
Financial Statements of the Bank, was incorporated as a Public Limited 3 PRINCIPAL BUSINESS ACTIVITIES
Consolidated Financial Statements of Liability Company in Sri Lanka on 10th
The principal business activities of the
the Group for that year and the Auditors’ March 1986 under the Companies Act
Bank and the Group during the year are
Report on those Financial Statements, No. 17 of 1982 initially as “Investment
given below as required by the Section
conforming to the requirements of the and Credit Bank Limited”, which was
168 (1)(a) of the Companies Act.
Companies Act No. 7 of 2007 and the subsequently changed to Sampath
Banking Act No. 30 of 1988 and its Bank Limited. The Company was
3.1 The Bank
amendments. The Financial Statements re-registered as per the requirements
of the Companies Act No. 7 of 2007 The principal activities of the Bank
reviewed and recommended by the
(“Companies Act”) on 28th April include accepting deposits, corporate
Board Audit Committee were approved
2008 under the name “Sampath Bank and retail banking, project financing,
by the Board of Directors on 15th
PLC” with the Registrar General of trade financing, treasury and investment
February 2021.
Companies. The re-registration number services, issuance of local and
of the Bank is PQ 144. international credit and debit cards, off-
This report includes the information
shore banking, resident and non-resident
required by the Companies Act No. 7
The ordinary shares of the Bank are foreign currency operations, electronic
of 2007, Banking Act Direction No.
listed on the main board of the Colombo banking services such as telephone
11 of 2007 on Corporate Governance
Stock Exchange. The Bank’s unsecured banking, internet banking, mobile
for Licensed Commercial Banks and
subordinated redeemable debentures banking, payment gateway, money
subsequent amendments thereto, Listing
including the Basel III compliant remittance facilities, pawning, gold
Rules of the Colombo Stock Exchange
debentures are also listed on the loans, leasing, factoring, hire purchase,
and is also guided by the recommended
Colombo Stock Exchange. travel related services and dealing in
best practices on Corporate
Government Securities etc.
Governance.
The Bank has been assigned a National
Long-Term Rating of 'AA- (lka) with 3.2 Subsidiaries
This report was approved by the Board
Stable outlook' by Fitch Ratings Lanka The Bank owned four subsidiaries as
of Directors on 15th February 2021.
Limited. The subordinated debentures at 31st December 2020. Names of the
The appropriate number of copies of
have been assigned a rating of 'A (lka)'. subsidiaries and their principal business
the Annual Report will be submitted to
activities are as tabulated below:
the Central Bank of Sri Lanka, Colombo
The Registered Office as well as the
Stock Exchange, Registrar of Companies,
Head Office of the Bank is located at
Securities and Exchange Commission
No. 110, Sir James Peiris Mawatha,
Colombo 02, Sri Lanka.
Entity Principal Business Activities

Siyapatha Finance PLC Granting leasing, hire purchase, factoring, other loan facilities and accepting deposits
Sampath Centre Limited Renting of commercial property
SC Securities (Pvt) Ltd Stock broking
Sampath Information Technology Solutions Software development, renting of IT equipment, IT resource outsourcing & consultancy
Limited

4 CHANGES TO THE GROUP Chartered Accountants of Sri Lanka, 10 SIGNIFICANT ACCOUNTING

STRUCTURE and comply with the requirements of POLICIES
There were no changes made to the the Companies Act No. 7 of 2007, The significant accounting policies
Group structure during the year under the Banking Act No. 30 of 1988 and adopted in the preparation of the
review. regulatory requirements inclusive of Financial Statements are given on pages
specific disclosures. As required by 216 to 343 as required by Section
5 REVIEW OF OPERATIONS Section 168(1)(b) of the Companies 168(1)(d) of the Companies Act.
Act, the aforementioned Financial
A review of the financial and operational
Statements for the year ended 31st 11 FINANCIAL RESULTS AND
performance of the Bank and the Group
December 2020 duly signed by the APPROPRIATIONS
together with important events that
Executive Director/Group Chief
took place during the year 2020 as 11.1 Income
Financial Officer, three more Directors
required by the Section 168(1)(a) of the The gross income of the Group for 2020
of the Bank and the Company Secretary
Companies Act are contained in the was Rs 109,207,964,000/-
are given on pages 208 to 343. These
Chairman’s Message (pages 30 to 35), (2019: Rs 125,920,522,000/-) whilst
Financial Statements form an integral
the Managing Director’s Review (pages the Bank’s gross income was
part of this Annual Report of the Board
36 to 41), and Management Discussion Rs 102,338,976,000/-
of Directors.
and Analysis (pages 52 to 105). These (2019: Rs 118,854,549,000/-). An
reports form an integral part of the analysis of the gross income is given in
8 DIRECTORS’ RESPONSIBILITY FOR
Annual Report of the Board of Directors. Note 6 to the Financial Statements.
FINANCIAL REPORTING
No new branches were opened during
the year. The Directors are responsible for the
11.2 Profit and Appropriations
preparation of Financial Statements of
the Group and the Bank to reflect a The Group’s profit before tax and profit
6 FUTURE DEVELOPMENTS
true and fair view of its state of affairs. after tax have decreased by 27.2% and
The Bank will focus on a business 27.6% respectively in 2020 compared to
The Directors are of the view that these
expansion drive through the existing 2019. The Bank’s profit before tax and
Financial Statements appearing on
Branch Network, concentrating profit after tax for the year too recorded
pages 208 to 343 have been prepared
mainly on its core banking operations a negative growth of 27.9% and 28.0%
in conformity with the requirements
to increase its market share and respectively over 2019. Group’s Total
of the Sri Lanka Accounting Standards,
profitability. This will be further Comprehensive Income (net of tax) for
Companies Act, Sri Lanka Accounting
supplemented by more vigorous efforts the year was Rs 7,419,543,000/-
and Auditing Standards Act No. 15 of
on innovative product development, (2019: Rs 11,118,823,000/-) whilst
1995, the Banking Act and amendments
process improvements and staff the Bank has recorded a Total
thereto, the Listing Rules of the
development, all aimed at fulfilling the Comprehensive Income (net of tax)
Colombo Stock Exchange and the
rapidly changing customer needs in of Rs 7,004,536,000/-
Banking Act Direction No. 11 of 2007
the challenging market conditions and (2019: Rs 10,329,324,000/-).
on Corporate Governance for Licensed
maximising the value created for all the A detailed breakdown of the profits
Commercial Banks issued by the Central
stakeholders. As required under Section and appropriations of the Bank is given
Bank of Sri Lanka (CBSL). The Statement
168(1)(a) of the Companies Act, an below:
of Directors’ Responsibility for Financial
overview of the future development of
Reporting is given on pages 201 and
the Bank and the Group is given in the
202 which forms an integral part of the
Chairman’s Message (pages 30 to 35),
Annual Report of the Board of Directors.
the Managing Director’s Review (pages
36 to 41), and Management Discussion
9 AUDITORS’ REPORT
and Analysis (pages 52 to 105). These
reports form an integral part of the The Auditors of the Bank are Messrs
Annual Report of the Board of Directors. Ernst & Young, Chartered Accountants.
Messrs Ernst & Young carried out the
7 FINANCIAL STATEMENTS audit on the Financial Statements of
the Group and the Bank for the year
The Financial Statements of the Group
ended 31st December 2020 and their
and the Bank have been prepared
report on those Financial Statements,
in accordance with the Sri Lanka
as required by Section 168(1)(c) of the
Accounting Standards (SLFRSs and
Companies Act is given on pages 203 to
LKASs) laid down by the Institute of
207.
For the year ended 31st December 2020 2019

Rs 000 Rs 000
Profit for the year after payment of all operating expenses and provision for depreciation and contingencies 11,171,887 15,498,230
Less: Income tax expense 3,146,740 4,347,343
Net profit after taxation 8,025,147 11,150,887
Other comprehensive income (OCI)

Actuarial (losses)/gains on defined benefit plans (2,848,521) (1,462,814)
Deferred tax effect on above 797,586 409,588
5,974,212 10,097,661
Unappropriated balance brought forward from previous year 6,106,642 5,643,642
12,080,854 15,741,303
Appropriations
Transfer to Statutory Reserve Fund (410,000) (570,000)
Transfer to General Reserve (3,000,000) (4,500,000)
Dividend
Final scrip dividend - 2018 (Rs 11.25 per share) - (3,160,150)
Final cash dividend - 2018 (Rs 5.00 per share) - (1,404,511)
Final cash dividend - 2019 (Rs 11.75 per share) (4,482,131) -
Unappropriated balance carried forward 4,188,723 6,106,642
Proposed dividend
Final cash dividend - 2019 (Rs 11.75 per share) - 4,482,131
Final cash dividend - 2020 (Rs 8.25 per share) 3,147,028 -
12 TAXATION to 31st December 2019. However with However, if the resolution on the
Income tax rate applicable on the Bank’s both NBT and the DRL abolished with proposed sub-division of shares (01:03)
domestic operations and off-shore effective from 1st December 2019 and is approved by the shareholders at the
operations of the off-shore Banking 1st January 2020 respectively, the Bank Extra-ordinary General Meeting to be
Centre is 28% (2019: 28%). As per the was not liable for either one in 2020. held on 17th March 2021 prior to the
announcement dated 12th February adoption of the final dividend resolution
2020, income tax rate applicable for The Group has provided deferred at the AGM, such final cash dividend
the Banking sector has been reduced to taxation on all known temporary shall be based on the new number of
24% with effect from 1st January 2020. differences under the liability method, as shares (1,144,373,955 shares) and
However, the said amendment is yet to permitted by the Sri Lanka Accounting would amount to Rs 2.75 per share.
be enacted. As such, the Bank continued Standard - LKAS 12 (Income Taxes). The total dividend will however remain
using 28% in calculating both income tax at Rs 3,147,028,376.25.
13 DIVIDEND
and deferred tax liabilities/assets as at
31st December 2020 as this amendment The Directors have recommended a The Board of Directors was satisfied
was not substantially enacted by the end final Cash Dividend of Rs 8.25 per that the Bank would meet the solvency
of the reporting period. share for the financial year ended 31st test immediately after the payment of
December 2020, based on the number final dividend proposed, in terms of the
The Bank is also liable for VAT on of shares in issue as at 15th February Section 31(3) of the Companies Act.
financial services at 15% (2019: 15%). 2021 (381,457,985 shares) to be paid at The Board provided the Statement of
a total cost of Rs 3,147,028,376.25. The Solvency to the Auditors and obtained
The Bank paid NBT at 2% up to 30th said dividend is subject to approval of Certificate of Solvency from the Auditors
November 2019 and was also liable for the shareholders at the Annual General in respect of the dividend payment
Debt Repayment Levy (DRL) at 7% up Meeting to be held on 30th March 2021. conforming to the statutory provision.
Further details are given in Note 18 to

the Financial Statements.

14 RESERVES 19 STATED CAPITAL, DEBENTURES

A summary of the Group’s reserves is given below. AND BONDS
19.1 Stated Capital - Bank
The Stated Capital of the Bank as at
Rs 000 Rs 000
31st December 2020 amounted to
Rs 47,622,493,065.44 consisting of
Statutory Reserve Fund 4,635,000 4,204,000
381,457,985 ordinary voting shares
Revaluation Reserve 5,962,392 5,962,392
(2019: Rs 47,622,493,065.44 consisting
FVOCI Reserve 1,838,203 807,879
of 381,457,985 ordinary shares).
General Reserve 46,455,786 43,435,171
Retained Earnings 7,900,780 9,424,692 The details of the shares issued are
Non-controlling Interest - - given in Note 41.1 to the Financial
Total 66,792,161 63,834,134 Statements.
15 CAPITAL EXPENDITURE 19.2 Debt Capital - Bank

The total capital expenditure on acquisition of property, plant and equipment and The Bank has issued rated, unsecured,
intangible assets of the Group and the Bank amounted to Rs 1,643,024,000/- and subordinated, redeemable debentures to
Rs 677,694,000/- respectively (2019 Group: Rs 2,416,215,000/- and Bank: the value of Rs 26,500,000,000/- as at
Rs 1,111,557,000/-). Details are given in Notes 29 and 30 to the Financial Statements. 31st December 2020 (2019:
Rs 33,500,000,000/-), which are listed
16 CAPITAL COMMITMENTS
on the Colombo Stock Exchange. Out
The capital expenditure approved and contracted for, as at the reporting date is given in of the above, the debentures issued in
Note 45.3 to the Financial Statements. 2017, 2018 and 2019 to the value of
Rs 20,500,000,000/- have an option
17 PROPERTY, PLANT AND EQUIPMENT (PPE) for conversion to ordinary voting shares
Details of property, plant and equipment are given on Note 29 to the Financial of the Bank, solely if instructed by the
Statements. Central Bank of Sri Lanka to do so in
compliance with Basel III requirements.
18 MARKET VALUE OF FREEHOLD PROPERTIES
The Group applies Revaluation model given in Sri Lanka Accounting Standard - LKAS 16 The details of the debentures
(Property, Plant and Equipment) to the entire class of freehold lands and buildings. outstanding as at 31st December 2020
Such properties are revalued every three years or more frequently if the fair values are given in Note 37.1 to the Financial
are substantially different from the carrying values. Accordingly, all freehold lands and Statements. These debentures are
buildings of the Group were revalued as at the end of 2019 by professionally qualified eligible for the Tier II Capital of the
independent valuers. The results of the revaluation were brought into the Financial Bank.
Statements to ensure that the carrying amount of such properties reflects the market
prices prevailed at that time. On the basis that changes in property prices were not The Bank has issued a deep discounted
significant compared to the previous year due to the prevailing market situation in the zero coupon bond with a maturity value
country, the Group did not revalue its freehold lands and buildings during this year for of Rs 3,458,108,968/- for 20 years.
consolidated accounting purposes. The Directors are of the view that the previous year The present paid up value of this
prices reflect the current market values of such properties as at 31st December 2020. bond is Rs 2,758,032,000/-
(2019: Rs 2,526,759,000/-) and this
However, Sampath Centre Limited (a fully owned subsidiary of the Bank) which owns forms part of the Tier II Capital. The
the property occupied by the Bank as its head office, carried out a revaluation on their above Bond was issued in August 2003
property with the market values being taken in to their standalone financial statements and will mature in August 2023. The
prepared as at 31st December 2020, on the basis that such property is recognised as an details are given in Note 37.2 to the
Investment Property accounted under Fair Value model. There is no significant change Financial Statements.
between the previous year valuation and the current year valuation pertaining to this
property.
19.3 Issue of Shares and Debt Capital - 20 SHARE INFORMATION 24 CHANGES IN DIRECTORATE
Subsidiaries Information relating to earnings, In terms of Section 168 (1) (h) of the
The Subsidiaries of the Bank did not dividend, net assets and market value Companies Act, the Bank has disclosed
make any share or debenture issues per share is given in the Financial the names of the persons holding office
during the year other than those Highlights on pages 10 and 11. as Directors of the Bank as at the end of
mentioned below. Siyapatha Finance Information on the trading of the shares the accounting period and the names of
PLC issued 2,899,663 ordinary voting and movement in the number of shares any persons who were appointed to hold
shares by way of a scrip dividend during of the Bank is given in the Investor office as Directors of the Bank during the
the year (2019: 625,111). As a result, Information section on pages 96 to 105. accounting period. Mr Vajira Kulatilaka,
its stated capital increased by Mr Harsha Amarasekara, Mrs Keshini
Rs 142,959,197/- (2019: 21 SHAREHOLDING Jayawardena and Mr Ajantha de Vas
Rs 31,255,538/-) from There were 26,163 registered ordinary Gunasekara were appointed to the
Rs 1,379,921,654/- as at 31st shareholders as at 31st December Board in 2020. Mr Sanjiva Senanayake,
December 2019 to Rs 1,522,880,851/- 2020 (2019: 21,913). Information on Mrs Saumya Amarasekara, Prof Malik
as at 31st December 2020. In December the distribution of shareholding and the Ranasinghe and Mrs Dhara Wijayatilake
2020, Sampath Bank made a capital respective percentages are given on ceased to hold office as Directors of the
infusion of Rs 700,000,000/- (2019: nil) pages 97 to 99 of the Annual Report. Bank during the accounting period.
to Siyapatha Finance PLC and as at the Details of top twenty shareholders,
year end, it was pending for allotment. percentages of their holdings and 25 RETIREMENT AND RE-ELECTION/
Accordingly, Siyapatha Finance PLC percentage holding of the public too are RE-APPOINTMENT OF DIRECTORS
would allot 13,725,490 shares at the given in the Investor Information section In terms of Articles No. 86 and 87 of the
rate of Rs 51.00 per share against the on page 100. Articles of Association of the Company,
aforementioned investment. Further, Ms Aroshi Nanayakkara, Dr Sanjiva
Siyapatha Finance PLC has issued 22 EQUITABLE TREATMENT TO Weerawarana and Mr Deshal de Mel,
Rs 2,000,000,000/- (2019: SHAREHOLDERS retire by rotation and being eligible,
Rs 1,500,000,000/-) worth of The Bank has at all times ensured that offer themselves for re-election on
debentures during the year under all shareholders are treated equitably. the unanimous recommendation of
review. Sampath Centre Ltd too issued the Board Nomination Committee and
283,767 ordinary voting shares by 23 THE BOARD OF DIRECTORS approval of the Board of Directors.
way of a scrip dividend during the year
The Board of Directors of the Bank as at
(2019: 310,686). As a result, its stated During the year under review, Mr Vajira
31st December 2020 comprises twelve
capital increased by Rs 35,391,402/- Kulatilaka, Mr Harsha Amarasekara,
(2019: twelve) with wide financial and
(2019: Rs 36,797,659/-) from Mrs Keshini Jayawardena and
commercial knowledge and experience.
Rs 418,833,159/- as at 31st December Mr Ajantha de Vas Gunasekara having
The names of the Directors of the Bank
2019 to Rs 454,224,561/- as at 31st been appointed with effect from
during the period of 1st January 2020 to
December 2020. Sampath Information 25th June 2020, 18th August 2020,
31st December 2020 are given below as
Technology Solutions (Pvt) Ltd also 1st October 2020 and 29th October
per Section 168 (1) (h) of the Companies
issued 589,381 ordinary voting shares 2020 respectively to fill-up the casual
Act. Their profiles in brief are given on
by way of a scrip dividend during the vacancies in the Board, offer themselves
pages 20 to 25 of the Annual Report.
year (2019: nil). As a result, its stated for election by the shareholders in
In accordance with the Listing Rules
capital increased by Rs 18,747,121/- terms of Article 93 of the Articles
and Corporate Governance Rules of
(2019: nil) from Rs 279,000,000/- of Association of the Bank with the
Colombo Stock Exchange and Banking
as at 31st December 2019 unanimous recommendation of the
Act Direction No. 11 of 2007 issued by
to Rs 297,747,121/- as at Board Nomination Committee and
the Central Bank of Sri Lanka (CBSL), the
31st December 2020. approval of the Board.
classification of Directors into Executive
(ED), Non-Executive (NED) and
Sections 210 and 211 of the Companies
Independent (IND), Non-Independent
Act do not apply to the Bank, in view of
(NID) are stated against the names.
the more stringent provision contained
in Section 3(3)(i) of Banking Act
Direction No. 11 of 2007 on Corporate
Governance for Licensed Commercial
Banks, which restricts the age of a
Director of a Licensed Commercial Bank
to 70 years.

Name of the Director Classification Remarks

Mr Harsha Amarasekera NID/NED Director since 18.08.2020, Chairman since 30.08.2020
Mr Rushanka Silva NID/NED Director since 01.09.2017, Deputy Chairman since 24.09.2020
Mr Deshal de Mel IND/NED Independent Director from 01.01.2012 to 30.06.2017 and re-appointed since 26.09.2019.
Senior Independent Director since 24.09.2020
Mr Dilip de S Wijeyeratne IND/NED Director since 13.11.2018, Independent Director since 08.08.2019
Ms Aroshi Nanayakkara IND/NED Director since 30.05.2019, Independent Director since 27.06.2019
Dr Sanjiva Weerawarana IND/NED Independent Director since 01.06.2019
Mr Vajira Kulatilaka IND/NED Independent Director since 25.06.2020
Mrs Keshini Jayawardena IND/NED Independent Director since 01.10.2020
Mr Nanda Fernando ED Managing Director since 13.09.2016
Mr Ajantha de Vas Gunasekara ED Executive Director since 29.10.2020
Ms Annika Senanayake IND/NED Independent Director since 01.01.2012. Retired w.e.f. 01.01.2021, having completed the
term of nine (09) years as a Non-Executive Director.
Mr Ranil Pathirana NID/NED Director since 01.01.2012, Independent Director since 31.01.2015 and became a Non-
Independent Director on 18.08.2020. Retired w.e.f. 01.01.2021, having completed the
Prof Malik Ranasinghe IND/NED Independent Director since 30.08.2011, Deputy Chairman from 01.08.2016 to
01.04.2019, Chairman since 02.04.2019. Retired w.e.f. 30.08.2020, having completed the
Mrs Dhara Wijayatilake IND/NED Independent Director since 30.08.2011. Retired w.e.f. 30.08.2020, having completed the
Mrs Saumya Amarasekera NID/NED Director since 01.06.2012, Deputy Chairperson since 15.05.2019. Ceased to be a Director
w.e.f. 02.06.2020 due to not offering herself to be re-elected as a Director of Bank at the
34th Annual General Meeting.
Mr Sanjiva Senanayake IND/NED Independent Director since 01.01.2012, Senior Director since 26.01.2012. Retired w.e.f.
12.04.2020, having reached his Seventieth (70th) birthday.
26 LIST OF DIRECTORS OF THE 26.2 Sampath Centre Limited 26.4 Sampath Information Technology
SUBSIDIARIES OF THE BANK Mr I W Senanayake (Chairman) Solutions Limited
Names of the Directors of Subsidiary Mr S G Wijesinha Mr R Samaranayake (Chairman)
companies as at 31st December 2020 are Mr M V Indrasoma
Mr R Samaranayake
as follows:
Mr S P Kannangara Mr M A Salgado
26.1 Siyapatha Finance PLC Mr R Silva Mr W S C Perera
Mr P S Cumaranatunga (Chairman) Mr Prasanna De Silva

27 REGISTER OF DIRECTORS AND
Mr R Silva (Deputy Chairman) SECRETARIES
26.3 SC Securities (Private) Limited
Mr H M A Seneviratne (Managing As required under Section 223 (1) of
Director) Mr S G Wijesinha (Chairman)
the Companies Act, the Bank maintains
Mr J Selvaratnam Mr R Samaranayake a Register of Directors and Secretaries
Mr J H Gunawardena Mr S N Kulatilake which contains the name, surname, former
Mr W M P L De Alwis name (if any), residential address, business,
Mr D Sooriyaarachchi
occupation, dates of appointment and
Mr W S C Perera dates of resignation (if applicable) of each
Ms H S R Ranatunga Director and the Company Secretary.
Mr M D B Boyagoda
28 BOARD SUB COMMITTEES 28.4 Board Integrated Risk Management Mrs Keshini Jayawardena
The Board, while assuming the overall Committee (w.e.f. 01.10.2020)
responsibility and accountability for the Mr Deshal de Mel Mr Nanda Fernando
management oversight of the Bank, has (Chairman w.e.f. 12.04.2020) Mr Ajantha de Vas Gunasekara
also appointed Board Sub Committees to Mr Dilip de S Wijeyeratne (w.e.f. 11.11.2020)
ensure that the activities of the Bank at
all times are conducted with the highest 28.8 Board Shareholder Relations
ethical standards and the best interests of Mr Nanda Fernando
Committee
all its stakeholders. The Board has formed
Mr Rushanka Silva (Chairman)
twelve Board Sub Committees including 28.5 Board Related Party Transactions
Review Committee Ms Aroshi Nanayakkara
four mandatory Board Sub Committees
as required by the Banking Act Direction Mr Vajira Kulatilaka Mr Deshal de Mel
No. 11 of 2007 and one mandatory Board (Chairman w.e.f. 30.08.2020) (w.e.f. 25.06.2020)
Sub Committee as required by Section 9 Mrs Keshini Jayawardena
Mr Deshal de Mel
of the Listing Rules of the Colombo Stock (w.e.f. 01.10.2020)
Exchange. The composition of these five Mr Nanda Fernando
(w.e.f. 25.06.2020)
mandatory Board Sub Committees as at
31st December 2020 were as follows: Mr Dilip de S Wijeyeratne 28.9 Board Treasury Committee
(w.e.f. 31.07.2020)
28.1 Board Audit Committee (Chairman w.e.f. 01.05.2020)
Apart from the above five mandatory
Mr Dilip de S Wijeyeratne Mr Rushanka Silva
Board Sub Committees, the Board has
(Chairman w.e.f. 01.04.2020)
also appointed the following seven non- Ms Aroshi Nanayakkara
Mr Ranil Pathirana
mandatory Board Sub Committees. Mr Deshal de Mel
(until 31.12.2020)
(w.e.f. 01.05.2020)
28.6 Board Credit Committee Mr Vajira Kulatilaka
Mr Deshal de Mel (w.e.f. 25.06.2020)
Mrs Ranjani Joseph (Chairman w.e.f. 30.08.2020) Mr Nanda Fernando
(Consultant to the Committee)
Mr Rushanka Silva
28.10 Board Marketing Committee
28.2 Board Human Resources and Ms Aroshi Nanayakkara
Ms Aroshi Nanayakkara
Remuneration Committee Mrs Keshini Jayawardena
(Chairperson w.e.f. 01.05.2020)
Ms Aroshi Nanayakkara (w.e.f. 01.10.2020)
Ms Annika Senanayake
(Chairperson w.e.f. 30.08.2020) Mr Nanda Fernando
(until 31.12.2020)
Ms Annika Senanayake Mr Janakan Selvaratnam
Mr Rushanka Silva
(until 31.12.2020) (Consultant to the Committee)
Mr Deshal de Mel
28.7 Board Strategic Planning Mr Harsha Amarasekara
Mr Deshal de Mel
Committee (w.e.f. 24.09.2020)
Mr Harsha Amarasekara Mr Nanda Fernando
(w.e.f. 31.07.2020)
(Chairman w.e.f. 30.08.2020)
28.11 Board IT Committee
28.3 Board Nomination Committee Ms Annika Senanayake
(until 31.12.2020) Dr Sanjiva Weerawarana (Chairman)
Mr Deshal de Mel
(Chairman w.e.f. 01.01.2021) Mr Ranil Pathirana Ms Annika Senanayake
(until 31.12.2020) (until 31.12.2020)
(Chairperson until 31.12.2020) Mr Rushanka Silva Mr Rushanka Silva
Mr Rushanka Silva Mr Dilip de S Wijeyeratne Ms Aroshi Nanayakkara

(w.e.f. 01.05.2020) Mr Vajira Kulatilaka
Mr Harsha Amarasekara (w.e.f. 31.07.2020)
(w.e.f. 24.09.2020) Mrs Keshini Jayawardena
Mr Deshal de Mel
(w.e.f. 01.10.2020)
(Mrs Keshini Jayawardena was appointed to
the Committee w.e.f. 27.01.2021) Mr Nanda Fernando
(w.e.f. 25.06.2020)

28.12 Board Capital Planning Committee 31 RELATED PARTY TRANSACTIONS

Mr Rushanka Silva Directors have also disclosed transactions if any, that could be classified as Related
(Chairman w.e.f. 30.08.2020) Party Transactions in terms of Sri Lanka Accounting Standards - LKAS 24 (Related
Mr Ranil Pathirana Party Disclosure) which is adopted in preparation of the Financial Statements. Those
(until 31.12.2020) transactions disclosed by the Directors are given in Note 46 to the Financial Statements
which form an integral part of the Annual Report of the Board of Directors.
Mr Vajira Kulatilaka The Bank has complied with the requirement of the Code of Best Practice 2017 issued
(w.e.f. 25.06.2020) by the Institute of Chartered Accountants of Sri Lanka, Listing Rules of Colombo Stock
Mr Harsha Amarasekara Exchange (CSE) and with all disclosure requirements stipulated thereunder.
(w.e.f. 24.09.2020)
Mr Nanda Fernando 32 DIRECTORS’ INTEREST IN ORDINARY SHARES AND DEBENTURES
The shareholdings of Directors as at 31st December 2020 are as follows:
29 DIRECTORS’ MEETINGS
Name of Director No. of Shares No. of Shares
The details of Directors’ meetings which as at 31st as at 31st
comprise Board meetings and the December 2020 December 2019
Board Sub Committee meetings and the
Mr Harsha Amarasekera - n/a
attendance of Directors at these meetings
Mr Rushanka Silva - -
are given in the Corporate Governance
Report on page 121 of the Annual Report. Mr Deshal de Mel - -
Mr Ranil Pathirana 24,456 24,456
30 DIRECTORS’ INTEREST REGISTER
Ms Annika Senanayake - -
AND DIRECTORS’ INTEREST IN
Mr Dilip de S Wijeyeratne - -
CONTRACTS OR PROPOSED
CONTRACTS Ms Aroshi Nanayakkara - -
The Bank maintains the Directors’ Dr Sanjiva Weerawarana - -

Interest Register as required under the Mr Vajira Kulatilaka - n/a
provisions of Section 168(1)(e) of the
Mrs Keshini Jayawardena - n/a
Companies Act. Directors of the Bank
Mr Nanda Fernando 572,996 572,996
have made necessary declarations of
their respective interests in contracts Mr Ajantha de Vas Gunasekara - n/a
or proposed contracts, in terms of n/a - not applicable
the Sections 192(1) and 192(2) of the
Companies Act. These interests have Mr Vajira Kulatilaka holds 220,000 of Listed Rated Unsecured Subordinated Redeemable
been recorded in the Interest Register Debentures (2016/2021) issued by the Bank.
which is available for inspection in terms
of the Companies Act. The particulars 33 DIRECTORS’ INTEREST IN SHARES AND DEBENTURES OF SUBSIDIARIES
of the Directors’ Interest in Contracts Mr Rushanka Silva holds one share at Siyapatha Finance PLC.
are given on page 196 of the Annual
Report and form an integral part of the
Annual Report of the Board of Directors.
As a practice and in terms of Corporate
Governance. Directors have refrained
from voting on matters in which they
were materially interested. The Directors
have no direct or indirect interest in
contracts or proposed contracts with the
Bank other than those disclosed.
34 DIRECTORS’ REMUNERATION 39 OUTSTANDING LITIGATION the Bank made donations to the value
As required under the Section 168 In the opinion of the Directors who in of Rs 9,702,000/- (2019: Rs 466,000/-)
(1) (f) of the Companies Act, details consultation with the Bank’s lawyers in terms of the resolution passed at the
of Directors’ emoluments and other have established that litigation currently last Annual General Meeting. Out of the
benefits paid in respect of the Group pending against the Bank will not have a aforementioned sum, the donations made
and the Bank during the financial year material impact on the reported financial by the Bank to the Government amounted
under review are given in Note 46.3.1 to results or the future operations of to Rs 9,402,000/- (2019: nil). The Bank
the Financial Statements. the Bank. Details of litigation pending does not make donations for political
against the Bank are given in Note 45.5 purposes.
35 OUR TEAM MEMBERS to the Financial Statements.
43 SIGNIFICANT SHAREHOLDINGS IN
The Bank believes that its real potential
40 EVENTS AFTER THE REPORTING OTHER ORGANISATIONS
rests on the strength and capabilities of
its team members in a rapidly changing PERIOD The Bank continues to hold 9.47%
environment. All efforts are directed at No circumstances have arisen since the shareholding in LankaBangla Finance
having a motivated and competent team Statement of Financial Position date, Limited in Bangladesh. Details are
in order to grow and achieve results as which would require adjustments to, or given in Note 27.3 to the Financial
projected in the Strategic Plan and the disclosure in, the accounts, except those Statements.
Budget. As at 31st December 2020, the disclosed in Note 48 to the Financial
number of employees on the payroll of Statements. 44 RISK MANAGEMENT AND
the Bank was 4,048 (2019: 4,134). INTERNAL CONTROL
41 GOING CONCERN 44.1 Material Foreseeable Risk Factors
36 ESOPs The Directors, after making necessary The Bank has an ongoing process in place
The Bank did not initiate or establish inquiries and reviews including reviews to identify, evaluate and manage the risks
any Employee Share Ownership/Option of the budget for the ensuing year, that are faced by the Bank. This process is
Plans during the year. capital expenditure requirements, detailed in the Risk Management Report
future prospects and risks, cash flows on pages 108 to 116. The Directors, on a
37 ENVIRONMENTAL PROTECTION and such other matters required to be regular basis review the above mentioned
To the best knowledge of the Board, the addressed in the Code of Best Practice process through the Board Integrated Risk
Bank has not engaged in any activity on Corporate Governance issued by the Management Committee.
that is harmful or hazardous to the Institute of Chartered Accountants of Sri
environment. The Directors also confirm Lanka and the Banking Act Direction No. 44.2 Internal Controls
that to the best of their knowledge 11 of 2007 on Corporate Governance The Directors of the Bank have taken
and belief the Bank has complied with for Licensed Commercial Banks issued reasonable steps to safeguard the
the relevant environmental laws and by the CBSL, are satisfied that the Bank assets of the Group and the Bank
regulations. has adequate resources to continue and to prevent and detect frauds
operations into the foreseeable future. and any other irregularities. For this
38 STATUTORY PAYMENTS Accordingly, they continue to adopt the purpose, the Directors have instituted
going concern basis in preparing the effective and comprehensive systems
The Directors, to the best of their
Financial Statements. of internal controls for identifying,
knowledge and belief, are satisfied
that all statutory payments due to the recording, evaluating and managing
42 DONATIONS the significant risks faced by the Bank/
Government, other regulatory bodies
and related to the employees have been As required by the Section 168 (1) (g) of Group throughout the year and it is
paid on a timely basis. the Companies Act, information pertaining being regularly reviewed by the Board of
to donations made by the Bank during Directors.
the year are given below. During the year,

This comprises internal reviews, internal Governance for Licensed Commercial Based on the declaration provided by
audit and the whole system of financial Banks, issued by the CBSL, the Board Messrs Ernst & Young, and as far as the
and other controls required to carry on of Directors confirm that the Bank is Directors are aware, the Auditors do not
the operations in an orderly manner, compliant with prudential requirements, have any relationship with or interest
safeguard the assets, prevent and regulations, laws and internal controls and with the Bank that in our judgment,
detect frauds and other irregularities measures have been taken to rectify any may reasonably be thought to have a
and secure, as far as practicable, the material non-compliances. bearing on their independence within
accuracy and reliability of the records. the meaning of the Code of Professional
46 AUDITORS Conduct and Ethics issued by the
45 CORPORATE GOVERNANCE The Auditors of the Bank during the year Institute of Chartered Accountants of
The Directors of the Bank are committed were Messrs Ernst & Young, Chartered Sri Lanka, applicable on the date of this
towards maintaining an effective Accountants. They also function as report.
Corporate Governance Framework and the Auditors for the Bank’s Subsidiary
implementing processes required to companies namely, Siyapatha Finance The retiring Auditors, Messrs Ernst &
ensure that the Bank is compliant with PLC, Sampath Centre Limited, SC Young, have expressed their willingness
the Code of Best Practice on Corporate Securities (Private) Limited and Sampath to continue in office. They come up
Governance issued by the Institute of Information Technology Solutions for re-election at the Annual General
Chartered Accountants of Sri Lanka in Limited. Audit fees paid to Messrs Meeting, with the recommendation
2017, the Banking Act Direction No. 11 Ernst & Young for the year ended 31st of the Board Audit Committee and
of 2007 on Corporate Governance for December 2020 by the Group and the the Board of Directors. In accordance
Licensed Commercial Banks issued by the Bank amounted to Rs 14,513,000/- with the Companies Act, a resolution
CBSL and Requirements of Section 7.6 (2019: Rs 14,513,000/-) and proposing the re-appointment of Messrs
of the Listing rules of the Colombo Stock Rs 11,660,000/- (2019: Ernst & Young, Chartered Accountants,
Exchange. Details are given on Corporate Rs 11,660,000/-) respectively. as Auditors is being proposed at the
Governance Report on pages 119 to 169 Annual General Meeting.
of this Annual Report. Further, the Group and the Bank paid
Rs 4,825,000/- (2019: Rs 8,614,000/-) 47 POSTPONEMENT OF THE 34TH
As required by Section 3(8)(ii)(g) of the and Rs 3,152,000/- (2019: ANNUAL GENERAL MEETING
Banking Act Direction No. 11 of 2007 Rs 7,215,000/-) respectively to Messrs Due to the impact of COVID-19
on Corporate Governance for Licensed Ernst & Young as audit related fees and pandemic, the Board of Directors of
Commercial Banks, issued by the CBSL, expenses. In addition, they were paid the Bank decided to postpone the 34th
the Board of Directors confirm that all the Rs 16,754,000/- (2019: Annual General Meeting (AGM) which
findings of the “Factual Findings Report” Rs 18,632,000/-) and Rs 12,648,000/- was scheduled to be held on 30th
of auditors issued under “Sri Lanka Related (2019: Rs 17,212,000/-) by the Group March 2020. Accordingly, the 34th
Services Practice Statement 4750” have and the Bank respectively for permitted AGM was held on the 02nd June 2020
been incorporated in the annual Corporate non-audit related services including tax at the Board Room of the Bank’s Head
Governance Report on pages 149 to 165 consultancy services. Details of the audit Office premises, in accordance with the
of this Annual Report. Further, as required fees paid are given on Note 15.1 to the guidelines issued by the Colombo Stock
by Section 3(8)(ii)(h) of the Banking Act Financial Statements. Exchange on convening of virtual AGMs
Direction No. 11 of 2007 on Corporate as well as the guidelines issued by the
Ministry of Health to prevent the spread
of COVID-19.
Sampath Bank became the first local 48 NOTICE OF MEETING

corporate entity to host a fully-fledged The 35th Annual General Meeting of
virtual AGM. The 34th AGM was live Sampath Bank PLC will be held at the
streamed from the Bank’s Head Office "Board Room" of the Bank on 4th Floor,
to shareholders without any disruptions, Sampath Bank PLC, at No. 110, Sir
via the “Zoom” video communications James Peiris Mawatha, Colombo 02 to
platform. To encourage shareholder be convened through an "online virtual"
participation in the virtual AGM, the platform by using "audio-visual" tools on
Bank also leveraged technology to 30th March 2021.
allow shareholders to interact with the
proceedings of the meeting and vote As required by Section 168(1)(k) of the
on resolutions on each agenda item Companies Act, the Board of Directors
remotely via “eBallot”, a leading global hereby acknowledge the contents of this
online voting platform. Reiterating the report.
Bank’s commitment to its shareholders
in times of crisis, the Board expedited
the payment of the final cash dividend
of Rs 11.75 per ordinary share which
was also approved at the AGM. The total
dividend amounting to Rs 4.5 Bn was
paid in June 2020.
For and on behalf of the Board of Directors,
HARSHA AMARASEKERA DESHAL DE MEL NANDA FERNANDO LASANTHA SENARATNE

Chairman Senior Independent Director Managing Director Company Secretary
Colombo, Sri Lanka

15th February 2021
DIRECTORS’ INTEREST IN
CONTRACTS WITH THE BANK
Related party disclosures as required by the Sri Lanka Accounting Standard – LKAS 24 (Related Party Disclosures) are detailed in Note 46 to the
Financial Statements. In addition, the Bank carries out transactions in the ordinary course of business in an arm’s length basis with entities where
the Chairman or Director of the Bank is the Chairman or a Director of such entities as detailed below.
Company Relationship Nature of the Facility Current Balance Balance
Limit Outstanding Outstanding
as at 31st as at 31st
December December
2020 2019
Rs 000 Rs 000 Rs 000
Mr Nanda Fernando
Institute of Bankers of Sri Lanka Director Deposits 339,319 481
Mr Harsha Amarasekera
Vallibel One PLC Non Executive Director Deposits 332 n/a
Loans & advances 500,000 1,328 n/a
CIC Agri Business (Pvt) Ltd Non Executive Chairman Deposits 3,254 n/a
Loans & advances 660,000 n/a
2,520,000
Indirect facilities 185,763 n/a
CIC Holdings PLC Non Executive Chairman Deposits 43,617 n/a
Loans & advances 1,000,000 n/a
1,500,000
Indirect facilities - n/a
Link Natural Products (Pvt) Ltd Non Executive Director Deposits 951 n/a
Millennium Airlines (Pvt) Ltd Non Executive Director Deposits 106 n/a
IWS Aviation (Pvt) Ltd Alternate Director Deposits 61 5,025
Mr Ranil Pathirana
Windforce (Pvt) Ltd Non Executive Director Deposits 53,767 51,508
Indirect facilities 30,000 30,000 105,000
Star Packaging (Pvt) Ltd Non Executive Director Loans & advances 584,000 114,408 21,669
Deposits 72 87
Alumex PLC Non Executive Director Loans & advances 72,000 22,000 36,734
Deposits 8,181 8,370
ODEL PLC Non Executive Director Loans & advances 150,000 126,431 133,846
Deposits 204 2,324
Rosewood (Pvt) Ltd Non Executive Director Deposits 21 889
Ceylon Knit Trend (Pvt) Ltd Director Deposits 18,177 226,206
HI Fashion Holdings (Pvt) Ltd Director Deposits 535 523
Loans & advances 20,675 20,675 12,728
Indirect facilities 57,758 - -
Renewgen (Pvt) Ltd Non Executive Director Deposits 875 2,945
Loans & advances 9,200 3,701 5,529
Beira Brush (Pvt) Ltd Non Executive Director Deposits 1,673 n/a
Loans & advances 278,250 92,750 n/a
BPPL Holdings PLC Non Executive Director Deposits 16 n/a
Mr Rushanka Silva
Indra Motor Spares (Pvt) Ltd Director Deposits 11 15
Indra Property Development (Pvt) Ltd Director Deposits 157 158
Singer (Sri Lanka) PLC Independent Non Executive Director Loans & advances 3,300,000 2,576,133 4,670,499
Indirect facilities 1,600,000 1,104,963 729,381
Regnis (Lanka) PLC Independent Non Executive Director Loans & advances 142,094 4,285
350,000
Indirect facilities 161,728 13,402
Foundation Garments (Pvt) Ltd Non Executive Director Deposits 46,812 19,508
Loans & advances 1,364,310 1,307,049 1,333,633
Hela Apparel Holdings (Pvt) Ltd Non Executive Director Deposits 790 7,059
Hela Clothing (Pvt) Ltd Non Executive Director Deposits 54,714 4,016
Loans & advances 371,000 294,945 317,362
FDN Sourcing (Pvt) Ltd Non Executive Director Deposits 3,378 2,731
Lanka Software Foundation Director Deposits 2,960 829
Mr Deshal de Mel
Verite Research Research Director Deposits 1,902 14,176
Printcare PLC Independent Non Executive Director Deposits 85 n/a
DIRECTORS’ STATEMENT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING
RESPONSIBILITY the reliability of financial reporting, and that  The Board Audit Committee reviews
The report on Internal Control Over Financial the preparation of financial statements for internal control issues identified by the
Reporting is presented by the Board of external purposes is in accordance with Internal Audit Department, the External
Directors of Sampath Bank PLC in line with relevant accounting principles and regulatory Auditors, Regulatory Authorities and
section 3(8)(ii)(b) of Banking Act Direction No. requirements. the Management; and evaluates the
11 of 2007. adequacy and effectiveness of the
KEY FEATURES OF THE PROCESS risk management and internal control
The Board of Directors ("the Board") is ADOPTED IN APPLYING AND systems. It is also the responsibility
responsible for the implementation of an REVIEWING THE DESIGN AND of the Board Audit Committee to
adequate and effective internal control EFFECTIVENESS OF THE INTERNAL review the internal audit function with
mechanism at Sampath Bank PLC ("the CONTROL SYSTEM OVER FINANCIAL regard to the scope of audits and the
Bank"). In doing so, the Board has ensured REPORTING quality of the same. The minutes of
that the system in place is designed to The key mechanisms that have been the Board Audit Committee meetings
manage the Bank’s key areas of risk within established to review the adequacy and are forwarded to the Board on a
an acceptable risk profile, to achieve the integrity of the system of internal controls periodic basis. Further details of the
business objectives of the Bank. with respect to financial reporting include the activities undertaken by the Board Audit
following: Committee are set out in the Board
In the light of the foregoing, the system of Audit Committee Report on pages 170
internal controls can only provide reasonable,  Establishment of Board Sub Committees to 172.
and not absolute assurance, against material to assist the Board in ensuring the
 In assessing the Internal Control Over
misstatement of financial information and effectiveness of Bank’s day-to-day
Financial Reporting, identified officers
records or against financial losses or fraud. operations and to ensure that all such
of the Bank were assigned to collate
operations are carried out in accordance
all procedures and controls that are
The Board has established an ongoing with the corporate objectives, strategies
connected with significant accounts and
process for identifying, evaluating and and the annual budget as well as the
disclosures of the financial statements
managing the significant risks faced by the policies and the business direction
of the Bank. These in turn, are checked
Bank and this process includes enhancing approved by the Board.
and verified by the Internal Audit
the system of Internal Control Over
 The Bank's Internal Audit Department Department for suitability of design and
Financial Reporting, in line with regulatory
is tasked with verifying compliance effectiveness on an ongoing basis. The
guidelines and to capture changes in the
with policies and procedures and the Internal Audit Department also refers
business environment as and when needed.
effectiveness of the internal control significant issues (if any) to the "Internal
The Management assists the Board in the
systems on an ongoing basis using Control Over Financial Reporting
implementation of the Board’s policies and
samples and rotational procedures. This Steering Committee" before submitting
procedures on risk and control by identifying
helps to highlight significant findings their final report on Internal Control
and assessing the risks faced, and in the
of non-compliance. Audits are carried Over Financial Reporting to the Board
design, operation and monitoring of suitable
out according to the annual audit plan Audit Committee and the External
internal controls to mitigate and control these
which is reviewed and approved by Auditors. Sampath Bank adopted the
risks.
the Board Audit Committee. Audits are new Sri Lanka Accounting Standards
carried out on all units and branches, to comprising LKAS and SLFRS in 2012.
The process is regularly reviewed by
provide an independent and objective The processes and procedures initially
the Board and is in accordance with the
report. The frequency of these audits applied to adopt the aforementioned
“Guidance for Directors of Banks on the
are determined by the level of risk Accounting Standards were further
Directors’ Statement on Internal Control”
assessed. The Internal Audit Department strengthened during the years 2013 to
issued by CA Sri Lanka.
also conducts data analysis on certain 2020 based on the feedback received
selected processes of the Bank using from the External Auditors, Internal
In 2020, the Board has assessed the Internal
Computer Aided Audit Techniques/ Audit Department, Regulators and the
Control Over Financial Reporting, taking into
Tools (CAAT) covering the entire Branch Board Audit Committee. The Bank has
account, principles for the assessment of
Network. Through this initiative, all documented procedures pertaining
the internal control system as given in the
controls were tested on an ongoing to these new requirements in order
said guidance. Based on this assessment,
basis. All significant findings identified to update the relevant procedure
the Board is of the view that the system of
by the Internal Audit Department are manuals as and when necessary. The
submitted to the Board Audit Committee Board has also recognised the need
currently in place, is sound and adequate
for review at their periodic meetings. to introduce an automated financial
to provide reasonable assurance regarding
DIRECTORS’ STATEMENT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING
reporting process in order to comply Management also ensured that all critical CONFIRMATION
with the requirements of recognition, reconciliations were performed without Based on the above processes, the Board
measurement, classification and interruption during the lockdown confirms that the financial reporting system
disclosure of the financial instruments periods. of the Bank is competent to provide a
more effectively and efficiently. The reasonable assurance regarding the reliability
Bank successfully implemented Robotic  To ensure business continuity, protect of financial reporting and the preparation of
Process Automation (RPA) in 2019 which workers and continue to serve financial statements for external purposes
has eliminated manual intervention customers during the COVID-19 and confirm that it is in accordance with
in calculating impairment provisions pandemic, the Bank had to move relevant accounting principles and regulatory
to a great extent. Further, the Credit certain areas of its operations online. requirements of the Central Bank of Sri
Risk Management Unit independently However, this was done with all required Lanka.
reviews the Individually Significant loan safeguards in place to protect the Bank
impairment process at each reporting and its customers. REVIEW OF THE STATEMENT BY
date. The Management continues to EXTERNAL AUDITORS
review various options available to  The comments made by the External
The External Auditors, Messrs Ernst & Young,
increase the degree of automation in Auditors in connection with Internal
after reviewing the Directors’ Statement on
the financial reporting process. The Control System Over Financial Reporting
assessment does not include subsidiary in previous years, were reviewed during
included in the Annual Report of the Bank
companies of the Bank. the year and appropriate steps were
for the year ended 31st December 2020,
taken in 2020 to address any matters
 In 2020, the Bank further strengthened have confirmed to the Board that nothing
raised. The recommendations made
its internal control processes to ensure has come to their attention that causes them
by the External Auditors in 2020 in
that the impact of the COVID-19 debt to believe that the statement is inconsistent
connection with the Internal Control
moratorium on interest income and with their understanding of the process
System Over Financial Reporting will be
impairment provisions were accurately adopted by the Board in the review of the
dealt with in the future.
captured in the financial reporting. The design and effectiveness of the Internal
Control Over Financial Reporting. Their
Report on the Statement of Internal Control
Over Financial Reporting is given on page
199 of this Annual Report.
By order of the Board,
DILIP DE S WIJEYERATNE HARSHA AMARASEKERA DESHAL DE MEL

Chairman - Board Audit Committee Chairman Senior Independent Director
NANDA FERNANDO LASANTHA SENARATNE

Managing Director Company Secretary
15th February 2021

INDEPENDENT ASSURANCE REPORT TO THE

BOARD OF DIRECTORS OF SAMPATH BANK PLC
REPORT ON THE DIRECTORS' OUR RESPONSIBILITIES AND The procedures performed were limited
STATEMENT ON INTERNAL CONTROL COMPLIANCE WITH SLSAE 3050 primarily to inquiries of bank personnel and
We were engaged by the Board of Directors (REVISED) the existence of documentation on a sample
of Sampath Bank PLC (“Bank”) to provide Our responsibility is to assess whether basis that supported the process adopted by
assurance on the Directors’ Statement on the Statement is both supported by the the Board of Directors.
Internal Control over Financial Reporting documentation prepared by or for directors
(“Statement”) included in the annual report and appropriately reflects the process the SLSAE 3050 (Revised) does not require us
for the year ended 31 December 2020. directors have adopted in reviewing the to consider whether the Statement covers
design and effectiveness of the internal all risks and controls or to form an opinion
MANAGEMENT’S RESPONSIBILITY control of the Bank. on the effectiveness of the Bank’s risk and
control procedures. SLSAE 3050 (Revised)
Management is responsible for the
We conducted our engagement in also does not require us to consider whether
preparation and presentation of the
accordance with Sri Lanka Standard on the processes described to deal with material
Statement in accordance with the “Guidance
Assurance Engagements (SLSAE) 3050 internal control aspects of any significant
for Directors of Banks on the Directors’
(Revised), Assurance Report for Banks on problems disclosed in the annual report will,
Statement on Internal Control” issued in
Directors’ Statement on Internal Control, in fact, remedy the problems.
compliance with section 3(8)(ii)(b) of the
Banking Act Direction No. 11 of 2007, by issued by the Institute of Chartered
Accountants of Sri Lanka. The procedures selected depend on
the Institute of Chartered Accountants of Sri
our judgement, having regard to our
Lanka.
This Standard required that we plan and understanding of the nature of the Bank, the
perform procedures to obtain limited event or transaction in respect of which the
OUR INDEPENDENCE AND QUALITY
assurance about whether management Statement has been prepared.
CONTROL
has prepared, in all material respects, the
We have complied with the independence We believe that the evidence we have
Statement on Internal Control.
and other ethical requirement of the Code obtained is sufficient and appropriate to
of Ethics for Professional Accountants issued provide a basis for our conclusion.
For the purpose of this engagement, we are
by the Institute of Chartered Accountants of
not responsible for updating or reissuing any
Sri Lanka, which is founded on fundamental OUR CONCLUSION
reports, nor have we, in the course of this
principles of integrity, objectivity, professional
engagement, performed an audit or review of Based on the procedures performed, nothing
competence and due care, confidentiality and
the financial information. has come to our attention that causes us
professional behavior.
to believe that the Statement included in
SUMMARY OF WORK PERFORMED the annual report is inconsistent with our
The firm applies Sri Lanka Standard on
We conducted our engagement to assess understanding of the process the Board of
Quality Control 1 and accordingly maintains
whether the Statement is supported by the Directors has adopted in the review of the
a comprehensive system of quality control
documentation prepared by or for directors; design and effectiveness of internal control
including documented policies and
and appropriately reflected the process the over financial reporting of the Bank.
procedures regarding compliance with ethical
requirements, professional standards and directors have adopted in reviewing the
applicable legal and regulatory requirements. system of internal control over financial
reporting of the Bank.
15 February 2021
Colombo
MANAGING DIRECTOR’S AND GROUP CHIEF

FINANCIAL OFFICER’S RESPONSIBILITY STATEMENT
The Financial Statements of Sampath Bank operational existence for the foreseeable and the independent External Auditors to
PLC (“the Bank”) and the Consolidated future. Accordingly, we continue to adopt review the manner in which these auditors
Financial Statements of the Bank and the Going Concern basis in preparing the are performing their responsibilities and to
its Subsidiaries (“the Group”) as at 31st Financial Statements. discuss issues relating to auditing, internal
December 2020 are prepared in compliance controls and financial reporting issues. To
with the requirements of the following: The estimates and judgments relating to ensure complete independence, the External
the Financial Statements were made on a Auditors and the Internal Auditors have
 Sri Lanka Accounting Standards prudent and reasonable basis; in order that full and free access to the members of the
issued by the Institute of Chartered the Financial Statements reflect in a true Board Audit Committee to discuss any matter
Accountants of Sri Lanka, and fair manner, the form and substance of substance. The Board Audit Committee
of transactions and that the Bank’s state of report is given on pages 170 to 172.
 Companies Act No. 7 of 2007
affairs is reasonably presented. To ensure
(Companies Act),
this, the Bank and all of its Subsidiaries have The Board Audit Committee approves the
 Sri Lanka Accounting and Auditing taken proper and sufficient care in installing audit and non-audit services provided by
Standards Act No. 15 of 1995, a system of internal controls and procedures Messrs Ernst & Young, in order to ensure that
for safeguarding assets, preventing and the provision of such services does not impair
 Banking Act No. 30 of 1988 and
detecting frauds and/or errors as well as Messrs Ernst & Young’s independence.
amendments thereto and Directions,
other irregularities which are reviewed,
Determinations, Orders and Guidelines
evaluated and updated on an ongoing We confirm that to the best of our
issued by the Central Bank of Sri Lanka
basis. Our Internal Auditors have conducted knowledge:
(CBSL),
periodic audits to provide reasonable
 The Listing Rules of the Colombo Stock assurance that the established policies and  The Group has complied with all
Exchange (CSE) and procedures were consistently followed. applicable laws, regulations and
However, there are inherent limitations prudential requirements;
 The Code of Best Practice on Corporate
that should be recognised in weighing
Governance 2017 issued by the Institute  There are no material non compliances;
the assurances provided by any system of
of Chartered Accountants of Sri Lanka; and
internal controls and accounting.
and Section 3(8)(ii)(b) of the Banking Act
 There are no material litigation that
Direction No. 11 of 2007 on Corporate
We confirm compliance with section 3(8)(ii)(b) are pending against the Group other
Governance issued by the CBSL.
of the Banking Act Direction No. 11 of than those disclosed in Note 45.5 to
2007 on Corporate Governance (Internal the Financial Statements in the Annual
The formats used in the preparation of the
Control Over Financial Reporting - ICOFR) Report.
Financial Statements and disclosures made
issued by the Central Bank of Sri Lanka as
comply with the formats prescribed by the
of 31st December 2020 and that the Bank’s
Central Bank of Sri Lanka, which are also in
Internal Controls Over Financial Reporting is
compliance with the disclosure requirements
adequate and effective. The Annual Report of
of the Sri Lanka Accounting Standard - LKAS 1
the Directors on pages 185 to 196 has briefly NANDA FERNANDO
(Presentation of Financial Statements). The
covered the Group’s Internal Control Over Managing Director
Accounting Policies used in the preparation
Financial Reporting. In addition, Directors’
of the Financial Statements are appropriate
Statement on Internal Control Over Financial
and are consistently applied by the Group.
Reporting is provided on pages 197 and 198.
The significant accounting policies and
The Bank’s External Auditors, Messrs Ernst
estimates that involve a high degree of
& Young, have audited the effectiveness of
judgment and complexity were discussed AJANTHA DE VAS GUNASEKARA
the Bank’s Internal Controls Over Financial
with the Board Audit Committee and External Executive Director/
Reporting and have given an unqualified
Auditors. Comparative information has been Group Chief Financial Officer
opinion on page 199 of this Annual Report.
restated wherever necessary to comply with
the current presentation. We confirm that Colombo, Sri Lanka
The Financial Statements of the Group
to the best of our knowledge, the Financial 15th February 2021
were audited by Messrs Ernst & Young,
Statements give a true and fair view of the
Chartered Accountants, the independent
assets, liabilities, financial position, results
External Auditors. Their report is given on
of the operations and the cash flows of
pages 203 to 207 of this Annual Report.
the Group. We have reasonable grounds
The Board Audit Committee of the Bank
to believe that the Bank and the Group
meets periodically with the Internal Auditors
have adequate resources to continue in
STATEMENT OF DIRECTORS’ RESPONSIBILITY

FOR FINANCIAL REPORTING
The responsibilities of the Directors in the requirements of the Companies Act. In confirm that the financial reporting system
relation to the Financial Statements of preparing these Financial Statements, the has been designed to provide reasonable
Sampath Bank PLC (“the Bank”) and the Directors ensure that: assurance regarding the reliability of
Consolidated Financial Statements of the financial reporting and the Directors accept
Bank and its Subsidiaries (“the Group”) are 1. The appropriate accounting policies responsibility for the integrity and objectivity
set out in the following Statement. The have been selected and applied in of the Financial Statements published in
responsibility of the Auditors in relation to a consistent manner and material this Annual Report. The Directors confirm
the Financial Statements is set out in the departures, if any, have been disclosed that in preparing the Financial Statements
Report of the Auditors given on pages 203 and explained; given on pages 208 to 343, appropriate
to 207. accounting policies have been selected and
2. The Financial Statements are presented
applied based on the new financial reporting
in accordance with Sri Lanka Accounting
As per the provisions of the Companies Act framework on a consistent basis, while
Standards (SLFRS/LKAS) and are
No. 7 of 2007 (Companies Act), the Directors reasonable and prudent judgments have
consistent with the underlying books of
of the Bank are responsible for ensuring that been made so that the form and substance of
account;
the Bank and the Group keep proper books transactions are properly reflected.
of account of all the transactions and they 3. Reasonable and prudent judgments and
are required to prepare Financial Statements estimates have been made so that the The Directors have taken appropriate steps
that give a true and fair view of the financial form and substance of transactions are to ensure that the Bank and the Group
position of the Bank and the Group as at end properly reflected; maintain proper books of account and review
of each financial year and place them before the financial reporting system directly at
4. The Financial Statements provide the
a general meeting. The Financial Statements their regular meetings and also through the
information required by the Companies
comprise of the Statement of Financial Board Audit Committee. The Report of the
Act, Banking Act No. 30 of 1988
Position as at end of the financial year, the Board Audit Committee is given on pages
(Banking Act) and the Listing Rules of
Statement of Profit or Loss, Statement of 170 to 172. The Board of Directors also
the Colombo Stock Exchange.
Comprehensive Income, Statement of Cash approves the Interim Financial Statements
Flows, Statement of Changes in Equity for 5. The companies within the Group prior to their release, following a review
the financial year ended and notes thereto. maintain sufficient accounting records and recommendation by the Board Audit
to disclose the financial position of the Committee.
The Financial Statements are prepared under Group with reasonable accuracy.
the supervision of the Executive Director/ The Directors have taken all reasonable steps
Group Chief Financial Officer who is a senior The Directors ensure that the Bank and the open to them to safeguard the assets of
member of the Corporate Management as Group have adequate resources to continue the Bank and the Group and to prevent and
well as an Executive Director of the Bank. in operation and to justify applying the Going detect frauds and any other irregularities. For
The Directors confirm that the Financial Concern basis in preparing these Financial this purpose, the Directors have instituted
Statements of the Bank and the Group give a Statements. effective and comprehensive systems of
true and fair view of: internal controls for identifying, recording,
Financial Statements for the year 2020, evaluating and managing the significant
1. The state of affairs of the Bank and the prepared and presented in this Annual risks faced by the Bank throughout the year
Group as at 31st December 2020 and Report are consistent with the underlying and is under regular review of the Board of
books of account and are in conformity with Directors. This comprises internal reviews,
2. The financial performance of the Bank
the requirements of Sri Lanka Accounting Internal Audit and the whole system of
and the Group for the financial year
Standards, Companies Act, Sri Lanka financial and other controls required to carry
ended 31st December 2020.
Accounting and Auditing Standards Act on the operations in an orderly manner,
No. 15 of 1995, Banking Act together with safeguard the assets, prevent and detect
The Financial Statements of the Bank
its amendments, the Listing Rules of the frauds and other irregularities and secure as
and the Group have been certified by
Colombo Stock Exchange (CSE) and the Code far as practicable, the accuracy and reliability
Executive Director/Group Chief Financial
of Best Practice on Corporate Governance of the records.
Officer, the officer responsible for their
2017 issued by the Institute of Chartered
preparation, as required by the Companies
Accountants of Sri Lanka (CA Sri Lanka). Based on their assessment of Internal
Act. The accounts have been circulated and
Further, these Financial Statements comply Control Over Financial Reporting (ICOFR),
reviewed by the Board Audit Committee and
with the prescribed format issued by the in compliance with Section 3(8)(ii)(b) of the
Board of Directors. Further, the Financial
Central Bank of Sri Lanka (CBSL) for the Banking Act Direction No. 11 of 2007 on
Statements of the Bank and the Group
preparation of annual Financial Statements Corporate Governance for the Licensed
have been signed by three Directors and
of Licensed Commercial Banks. Directors Commercial Banks, the Directors have
the Company Secretary in conformity with
STATEMENT OF DIRECTORS’ RESPONSIBILITY

FOR FINANCIAL REPORTING
concluded that, as of 31st December 2020, COMPLIANCE REPORT

the Group’s Internal Controls Over Financial The Directors confirm that to the best of
Reporting are effective. The Directors’ their knowledge, all taxes, duties and levies
Statement on Internal Control Over Financial payable by the Bank and the Group, all
Reporting and Annual Report of the Board contributions, levies and taxes payable on
of Directors on the Affairs of the Company behalf of and in respect of the employees of
are provided on pages 197 and 198 and the Bank and the Group and all other known
pages 185 to 196 respectively of this Annual statutory dues as were due and payable by
Report. The External Auditors’ Independent the Bank and the Group as at reporting date
Assurance Report on the “Directors’ have been paid or, where relevant, provided
Statement on Internal Control Over Financial for, except as specified in Note 45 to the
Reporting” is given on page 199 of this Financial Statements covering contingent
Annual Report. liabilities. The Directors confirm that based
on their assessment, the accounting controls
As required by Section 56(2) of the
are adequate and nothing has come to their
Companies Act, the Directors have made
attention to indicate any breakdown in the
an assessment of the Solvency of the
functioning of these controls, resulting in
Bank, immediately after the payment of the
material loss to the Bank. The Directors also
proposed final dividend and confirm that the
confirm that the Bank will have adequate
Bank satisfies the Solvency Test as required
resources to continue in operational
by Section 57 of the Companies Act. The
existence and as a Going Concern for the
Directors have also obtained the Certificates
foreseeable future.
of Solvency from the External Auditors of the
Bank, Messrs Ernst & Young. The Directors are of the view that they have
discharged their responsibilities as set out in
Messrs Ernst & Young, Chartered
the above statement.
Accountants, the External Auditors of the
Bank were provided with every opportunity By order of the Board,
to undertake the inspections they considered
appropriate. They have examined the
Financial Statements made available to
them by the Directors together with all
financial records, related data, minutes of the LASANTHA SENARATNE
Shareholders’ Meetings, Directors’ Meetings, Company Secretary
Board Audit Committee Meetings and
other Board Sub Committee Meetings and Colombo, Sri Lanka
expressed their opinion as reported by them 15th February 2021
in the Annual Report on pages 203 to 207.
INDEPENDENT AUDITOR’S REPORT TO THE

SHAREHOLDERS OF SAMPATH BANK PLC
REPORT ON THE AUDIT OF THE Basis for opinion the audit of the financial statements as a
FINANCIAL STATEMENTS We conducted our audit in accordance whole, and in forming our opinion thereon,
Opinion with Sri Lanka Auditing Standards (SLAuSs). and we do not provide a separate opinion on
Our responsibilities under those standards these matters. For each matter below, our
We have audited the financial statements
are further described in the Auditor’s description of how our audit addressed the
of Sampath Bank PLC (“the Bank”) and the
responsibilities for the audit of the financial matter is provided in that context.
consolidated financial statements of the
Bank and its subsidiaries (“the Group”), statements section of our report. We are
independent of the Group in accordance with We have fulfilled the responsibilities
which comprise the statement of financial
the Code of Ethics issued by CA Sri Lanka described in the Auditor’s responsibilities
position as at 31 December 2020, and the
(Code of Ethics) and we have fulfilled our for the audit of the financial statements
statement of profit or loss, the statement of
other ethical responsibilities in accordance section of our report, including in relation
comprehensive income, statement of changes
with the Code of Ethics. We believe that the to these matters. Accordingly, our audit
in equity and statement of cash flows for
audit evidence we have obtained is sufficient included the performance of procedures
the year then ended, and notes to the
and appropriate to provide a basis for our designed to respond to our assessment of
financial statements, including a summary of
opinion. the risks of material misstatement of the
significant accounting policies.
financial statements. The results of our
Key audit matters audit procedures, including the procedures
In our opinion, the accompanying financial
performed to address the matters below,
statements of the Bank and the Group Key audit matters are those matters that,
provide the basis for our audit opinion on the
gives a true and fair view of the financial in our professional judgment, were of most
accompanying financial statements.
position of the Bank and the Group as at significance in the audit of the financial
31 December 2020, and of its financial statements of the current period. These
performance and its cash flows for the year matters were addressed in the context of
then ended in accordance with Sri Lanka
Accounting Standards.
Key audit matter How our audit addressed the key audit matter
Impairment allowance for Loans and Advances We assessed the alignment of the Group’s impairment computations and underlying
carried at amortised cost methodology with the requirements of SLFRS 9 with consideration of COVID-19 impacts
Loans and advances amounting to LKR 794,080 and related industry responses based on the best available information up to the date of
Million (Note 25), net of impairment allowance our report. Our audit procedures included amongst others the following:
of LKR 41,642 Million (Note 25) and represents
• We evaluated the design, implementation and operating effectiveness of controls where
65.4% of total assets of the Group as at 31
relevant over estimation of impairment of loans and advances, which included assessing
December 2020.
the level of oversight, review and approval of impairment policies by the Board Audit
As described in Note 3.4.6, impairment allowance Committee and management.
on such financial assets carried at amortised • We checked the completeness and accuracy of the underlying data used in the
cost is determined in accordance with Sri Lanka computations by agreeing significant details to source documents and accounting
Accounting Standard – SLFRS 9 Financial
records.
Instruments (SLFRS 9).
• We test–checked the underlying calculations.
• In addition to the above, the following focused procedures were performed:


This was a key audit matter due to: For a sample of loans and advances individually assessed for impairment:
• materiality of the reported provision for credit - Assessing the appropriateness of the criteria used by the management to
impairment which involved complex calculations; determine whether there are any indicators of impairment; and
and
- Evaluating the reasonableness of the provisions made with particular focus on
• the degree of assumptions, judgements and the impact of COVID-19 on elevated risk industries, strategic responsive actions
estimation uncertainty associated with the taken, collateral values, and the value and timing of future cashflows.
calculations.
Key areas of significant judgements, estimates and For loans and advances collectively assessed for impairment:
assumptions used by management in the assessment - Assessing the reasonableness of assumptions and estimates used by
of the impairment allowance included the following: management including the reasonableness of forward-looking information and
scenarios;
• the probable impacts of COVID-19 and related
industry responses (e.g. government stimulus - As relevant, assessing the basis for and data used by management to determine
packages and debt moratorium relief measures overlays in consideration of the probable effects of the COVID-19 pandemic;
granted by the Group); and
• the determination on whether or not customer - Involving our internal IT specialists to assist us in assessing the design and
contracts have been substantially modified due operating effectiveness of relevant controls relating to automated Impairment
to such COVID–19 related stimulus and relief calculations.
measures granted and related effects on the
For loans and advances affected by government stimulus and debt moratorium
amount of interest income recognised on affected
relief measures granted:
loans and advances; and
- Assessing the appropriateness of judgements, reasonableness of calculations
• forward-looking macroeconomic factors, including
and data used to determine whether customer contracts have been substantially
developing and incorporating macroeconomic
modified or not and to determine the resulting accounting implications; and
scenarios, given the wide range of potential
economic outcomes and probable impacts from - Evaluating the reasonableness of the interest income recognized on such
COVID-19 that may impact future expected credit affected loans and advances.
losses.
• We assessed the adequacy of the related financial statement disclosures as set out
in Note 25.
Bank’s financial reporting process and related IT Our audit procedures included the following, amongst others:
systems and controls
• Understanding the security monitoring procedures over IT systems relevant to
The Bank uses multiple IT systems in its operations. financial reporting, given the increase in remote access;
The COVID-19 pandemic necessitated the Bank to
adapt various operating processes and procedures • Understanding and evaluating the design and operating effectiveness of key
including modification of relevant controls to mitigate automated, IT dependent and manual controls implemented by management over
the resulting risks. generation of multiple system reports and collation of required information in
calculating the significant information for financial statements disclosures;
IT systems and controls relevant to financial reporting • Checking the source data of the reports used to generate significant disclosures for
was a key audit matter due to: accuracy and completeness;
• A changed working environment of increased • Checking the underlying calculations and the reasonableness of classifications made
remote access; by management; and
• The Bank’s financial reporting process being • Evaluating the management’s general ledger reconciliation procedures which
heavily dependent on information derived from its includes cross checking to system reports and source data where relevant.
IT systems; and
• Key financial statement disclosures involving

the use of multiple system – generated reports,
collation and spreadsheet – based calculations.
Other information included in the 2020 In connection with our audit of the financial Responsibilities of management and those
Annual Report statements, our responsibility is to read the charged with governance for the financial
Other information consists of the information other information and, in doing so, consider statements
included in the Annual Report, other than the whether the other information is materially Management is responsible for the preparation
financial statements and our auditor’s report inconsistent with the financial statements of financial statements that give a true and fair
thereon. Management is responsible for the or our knowledge obtained in the audit or view in accordance with Sri Lanka Accounting
other information. otherwise appears to be materially misstated. Standards, and for such internal control as
If, based on the work we have performed, we management determines is necessary to
Our opinion on the financial statements does conclude that there is a material misstatement enable the preparation of financial statements
not cover the other information and we do of this other information, we are required to that are free from material misstatement,
not express any form of assurance conclusion report that fact. We have nothing to report in whether due to fraud or error.
thereon. this regard.

In preparing the financial statements, those risks, and obtain audit evidence • Evaluate the overall presentation, structure
management is responsible for assessing the that is sufficient and appropriate to and content of the financial statements,
Group’s ability to continue as a going concern, provide a basis for our opinion. The risk including the disclosures, and whether
disclosing, as applicable, matters related to of not detecting a material misstatement the financial statements represent the
going concern and using the going concern resulting from fraud is higher than for one underlying transactions and events in a
basis of accounting unless management either resulting from error, as fraud may involve manner that achieves fair presentation.
intends to liquidate the Group or to cease collusion, forgery, intentional omissions,
operations, or has no realistic alternative but misrepresentations, or the override of • Obtain sufficient appropriate audit
to do so. internal control. evidence regarding the financial
information of the entities or business
• Obtain an understanding of internal control activities within the Group to express
Those charged with governance are
relevant to the audit in order to design an opinion on the consolidated financial
responsible for overseeing the Bank’s and the
audit procedures that are appropriate statements. We are responsible for the
Group’s financial reporting process.
in the circumstances, but not for the direction, supervision and performance
purpose of expressing an opinion on the of the group audit. We remain solely
Auditor’s responsibilities for the audit of the
effectiveness of the internal controls of the responsible for our audit opinion.
financial statements
Bank and the Group.
Our objectives are to obtain reasonable
• Evaluate the appropriateness of accounting We communicate with those charged with
assurance about whether the financial
policies used and the reasonableness governance regarding, among other matters,
statements as a whole are free from material
of accounting estimates and related the planned scope and timing of the audit
misstatement, whether due to fraud or error,
disclosures made by management. and significant audit findings, including any
and to issue an auditor’s report that includes
significant deficiencies in internal control that
our opinion. Reasonable assurance is a high • Conclude on the appropriateness of we identify during our audit.
level of assurance, but is not a guarantee that management’s use of the going concern
an audit conducted in accordance with SLAuSs basis of accounting and, based on the audit We also provide those charged with
will always detect a material misstatement evidence obtained, whether a material governance with a statement that we have
when it exists. Misstatements can arise from uncertainty exists related to events or complied with ethical requirements in
fraud or error and are considered material if, conditions that may cast significant accordance with the Code of Ethics regarding
individually or in the aggregate, they could doubt on the Group’s ability to continue independence, and to communicate with
reasonably be expected to influence the as a going concern. If we conclude that them all relationships and other matters that
economic decisions of users taken on the a material uncertainty exists, we are may reasonably be thought to bear on our
basis of these financial statements. required to draw attention in our auditor’s independence, and where applicable, related
report to the related disclosures in the safeguards.
As part of an audit in accordance with SLAuSs,
financial statements or, if such disclosures
we exercise professional judgment and
are inadequate, to modify our opinion. From the matters communicated with those
maintain professional skepticism throughout
Our conclusions are based on the audit charged with governance, we determine those
the audit. We also:
evidence obtained up to the date of our matters that were of most significance in the
auditor’s report. However, future events or audit of the financial statements of the current
• Identify and assess the risks of material
conditions may cause the Group to cease period and are therefore the key audit matters.
misstatement of the financial statements,
to continue as a going concern. We describe these matters in our auditor’s
whether due to fraud or error, design and
report unless law or regulation precludes
perform audit procedures responsive to
public disclosure about the matter or when, in

extremely rare circumstances, we determine
that a matter should not be communicated in
our report because the adverse consequences
of doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory

Requirements
As required by section 163 (2) of the
Companies Act No. 07 of 2007, we have
obtained all the information and explanations
that were required for the audit and, as far
as appears from our examination, proper
accounting records have been kept by the
Bank.
CA Sri Lanka membership number of the

engagement partner responsible for signing
this independent auditor’s report is 1884.
15 February 2021
Colombo
STATEMENT OF PROFIT OR LOSS
Bank Group
For the year ended 31st December Note 2020 2019 Change 2020 2019 Change
Rs 000 Rs 000 % Rs 000 Rs 000 %
Gross income 6 102,338,976 118,854,549 (13.9) 109,207,964 125,920,522 (13.3)
Interest income 88,628,336 103,566,877 (14.4) 94,647,361 109,855,396 (13.8)

Less: Interest expense 54,804,918 61,991,672 (11.6) 57,820,028 65,091,626 (11.2)
Net interest income 7 33,823,418 41,575,205 (18.6) 36,827,333 44,763,770 (17.7)
Fee & commission income 9,775,379 11,719,108 (16.6) 10,270,563 12,076,208 (15.0)
Less: Fee & commission expense 1,320,583 1,686,195 (21.7) 1,321,437 1,687,526 (21.7)
Net fee & commission income 8 8,454,796 10,032,913 (15.7) 8,949,126 10,388,682 (13.9)
Net gain from trading 9 24,787 2,205,878 (98.9) 24,787 2,205,878 (98.9)
Net gain on derecognition of financial assets 10 423,814 113,670 272.8 423,814 113,670 272.8
Net other operating income 11 3,486,660 1,249,016 179.2 3,841,439 1,669,370 130.1
Total operating income 46,213,475 55,176,682 (16.2) 50,066,499 59,141,370 (15.3)
Less: Impairment charge 12 11,782,701 12,573,025 (6.3) 13,200,926 13,750,577 (4.0)

Net operating income 34,430,774 42,603,657 (19.2) 36,865,573 45,390,793 (18.8)
Less: Operating expenses

Personnel expenses 13 10,233,008 9,718,692 5.3 11,227,349 10,584,800 6.1
Depreciation & amortisation expenses 14 2,454,105 2,434,058 0.8 2,518,453 2,525,505 (0.3)
Other operating expenses 15 7,408,346 8,213,018 (9.8) 7,835,911 8,790,259 (10.9)
Total operating expenses 20,095,459 20,365,768 (1.3) 21,581,713 21,900,564 (1.5)
Operating profit before taxes on financial

services 14,335,315 22,237,889 (35.5) 15,283,860 23,490,229 (34.9)
Less: Taxes on financial services

Value added tax 3,163,428 4,042,368 (21.7) 3,394,281 4,280,529 (20.7)
Nation building tax - 493,352 (100.0) - 527,494 (100.0)
Debt repayment levy - 2,203,939 (100.0) - 2,343,821 (100.0)
Profit before income tax 11,171,887 15,498,230 (27.9) 11,889,579 16,338,385 (27.2)
Less: Income tax expense 16 3,146,740 4,347,343 (27.6) 3,447,063 4,670,195 (26.2)
Profit for the year 8,025,147 11,150,887 (28.0) 8,442,516 11,668,190 (27.6)
Attributable to:
Equity holders of the Bank 8,025,147 11,150,887 (28.0) 8,442,516 11,668,190 (27.6)
Non-controlling interest - - -
8,025,147 11,150,887 (28.0) 8,442,516 11,668,190 (27.6)
Earnings per share: Basic/Diluted (Rs) 17 21.04 32.84 (35.9) 22.13 34.36 (35.6)
Dividend per share 18

Dividend per share: Gross (Rs) 8.25* 11.75
The Notes to the Financial Statements from pages 216 to 343 form an integral part of these Financial Statements.

STATEMENT OF COMPREHENSIVE INCOME
Bank Group
For the year ended 31st December 2020 2019 Change 2020 2019 Change
Rs 000 Rs 000 % Rs 000 Rs 000 %
Profit for the year 8,025,147 11,150,887 (28.0) 8,442,516 11,668,190 (27.6)
Other comprehensive income

Items that will be reclassified to profit or loss:
Debt instruments at fair value through other
comprehensive income:
(Loss)/gain arising on re-measurement (8,030) 87,713 (109.2) (8,030) 87,713 (109.2)
Reclassification to profit or loss (179,418) (16,842) (965.3) (179,418) (16,842) (965.3)
Changes in impairment for expected credit losses 19,527 - 100.0 19,527 - 100.0
Deferred tax effect on the above 47,018 (19,844) 336.9 47,018 (19,844) 336.9
Net other comprehensive income to be reclassified to
profit or loss (120,903) 51,027 (336.9) (120,903) 51,027 (336.9)
Items that will not be reclassified to profit or loss:

Equity instruments at fair value through other
comprehensive income:
Gain/(loss) arising on re-measurement 1,555,933 (552,306) 381.7 1,555,933 (552,306) 381.7
Exchange difference in translation 42,994 (8,685) 595.0 42,994 (8,685) 595.0
Deferred tax effect on the above (447,700) 157,078 (385.0) (447,700) 157,078 (385.0)
1,151,227 (403,913) 385.0 1,151,227 (403,913) 385.0
Actuarial loss on defined benefit plans (2,848,521) (1,462,814) (94.7) (2,851,802) (1,480,165) (92.7)
Deferred tax effect on the above 797,586 409,588 94.7 798,505 414,447 92.7
(2,050,935) (1,053,226) (94.7) (2,053,297) (1,065,718) (92.7)
Surplus from revaluation of property, plant &

equipment - 811,874 (100.0) - 1,207,274 (100.0)
Deferred tax effect on the above - (227,325) 100.0 - (338,037) 100.0
- 584,549 (100.0) - 869,237 (100.0)
Net other comprehensive income not to be reclassified

to profit or loss (899,708) (872,590) (3.1) (902,070) (600,394) (50.2)
Other comprehensive income net of tax (1,020,611) (821,563) (24.2) (1,022,973) (549,367) (86.2)
Total comprehensive income for the year net of tax 7,004,536 10,329,324 (32.2) 7,419,543 11,118,823 (33.3)
Attributable to:
Equity holders of the Bank 7,004,536 10,329,324 (32.2) 7,419,543 11,118,823 (33.3)
Non - controlling interest - - -
7,004,536 10,329,324 (32.2) 7,419,543 11,118,823 (33.3)

STATEMENT OF FINANCIAL POSITION
Bank Group
As at 31st December Note 2020 2019 Change 2020 2019 Change
Rs 000 Rs 000 % Rs 000 Rs 000 %
ASSETS
Cash & cash equivalents 20 29,053,585 17,789,176 63.3 29,218,921 17,977,598 62.5
Balances with Central Bank of Sri Lanka 21 13,335,178 31,028,270 (57.0) 13,335,178 31,028,270 (57.0)
Placements with banks 22 3,228,166 7,251,305 (55.5) 3,228,166 7,251,305 (55.5)
Reverse repurchase agreements 4,450,557 - 100.0 6,231,719 2,304,392 170.4
Derivative financial instruments 23 2,186,515 862,754 153.4 2,186,515 862,754 153.4
Financial assets recognised through
profit or loss - measured at fair value 24 9,313,628 11,130,230 (16.3) 9,313,628 11,130,230 (16.3)
Financial assets at amortised cost
- loans & advances 25 720,215,247 689,377,504 4.5 752,437,782 719,046,634 4.6
- debt & other instruments 26 275,091,572 156,293,495 76.0 275,125,717 156,308,796 76.0
Financial assets - fair value through other
comprehensive income 27 24,237,803 17,331,724 39.8 24,237,859 17,331,780 39.8
Investment in subsidiaries 28 3,350,774 2,394,701 39.9 - - -
Property, plant & equipment 29 8,126,285 8,466,366 (4.0) 15,891,415 15,702,051 1.2
Intangible assets 30 753,615 995,137 (24.3) 791,689 1,055,341 (25.0)
Right-of-use assets 31 3,280,166 4,059,219 (19.2) 2,905,661 3,208,266 (9.4)
Current tax receivables 39 - - - 42,883 46,246 (7.3)
Deferred tax assets 32 4,634,040 3,737,512 24.0 4,653,496 3,738,064 24.5
Other assets 33 9,013,993 11,633,105 (22.5) 10,084,799 12,331,379 (18.2)
Total Assets 1,110,271,124 962,350,498 15.4 1,149,685,428 999,323,106 15.0
LIABILITIES
Due to banks 34 1,522,402 1,511,665 0.7 1,523,333 1,567,974 (2.8)
Derivative financial instruments 23 2,030,947 604,069 236.2 2,030,947 604,069 236.2
Securities sold under repurchase agreements 3,399,896 16,398,511 (79.3) 2,306,896 16,384,511 (85.9)
Financial liabilities at amortised cost
- due to depositors 35 885,724,901 717,250,492 23.5 902,498,739 730,189,642 23.6
- due to other borrowers 36 49,052,595 55,661,729 (11.9) 56,871,506 67,311,166 (15.5)
- due to debt securities holders 37 30,790,007 37,642,049 (18.2) 37,078,483 41,371,586 (10.4)
Retirement benefit obligation 38 6,871,592 3,651,642 88.2 6,988,658 3,741,781 86.8
Dividend payable 121,270 88,898 36.4 121,270 88,898 36.4
Current tax liabilities 39 4,674,756 7,427,315 (37.1) 4,792,904 7,835,445 (38.8)
Deferred tax liabilities 32 - - - 1,485,302 1,405,568 5.7
Other liabilities 40 18,533,954 17,108,344 8.3 19,572,736 17,365,839 12.7
Total Liabilities 1,002,722,320 857,344,714 17.0 1,035,270,774 887,866,479 16.6
Bank Group
As at 31st December Note 2020 2019 Change 2020 2019 Change
Rs 000 Rs 000 % Rs 000 Rs 000 %
EQUITY
Stated capital 41 47,622,493 47,622,493 - 47,622,493 47,622,493 -
Reserves
Statutory reserve fund 42 4,450,000 4,040,000 10.1 4,635,000 4,204,000 10.3
Other reserves 43 51,287,588 47,236,649 8.6 54,256,381 50,205,442 8.1
Retained earnings 44 4,188,723 6,106,642 (31.4) 7,900,780 9,424,692 (16.2)
Total equity attributable to equity holders of
the Bank 107,548,804 105,005,784 2.4 114,414,654 111,456,627 2.7
Non - controlling interest - - -
Total Equity 107,548,804 105,005,784 2.4 114,414,654 111,456,627 2.7
Total Liabilities & Equity 1,110,271,124 962,350,498 15.4 1,149,685,428 999,323,106 15.0
Commitments & contingencies 45 482,405,749 391,416,500 23.2 477,967,519 388,639,429 23.0

Net asset value per share (Rs) 281.94 275.27 2.4 299.94 292.19 2.7
I certify that these Financial Statements are presented in compliance with the requirements of the Companies Act No. 07 of 2007.
AJANTHA DE VAS GUNASEKARA

Executive Director/Group Chief Financial Officer
The Board of Directors is responsible for these Financial Statements.

Approved and signed for and on behalf of the Board,
HARSHA AMARASEKERA NANDA FERNANDO RUSHANKA SILVA LASANTHA SENARATNE

Chairman Managing Director Deputy Chairman Company Secretary
15th February 2021

Colombo, Sri Lanka
STATEMENT OF CASH FLOWS
Bank Group
For the year ended 31st December Note 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Cash flows from operating activities

Interest receipts 74,588,809 99,816,346 80,545,049 105,903,621
Interest payments (55,753,681) (59,679,503) (58,652,321) (62,469,606)
Net commission receipts 8,393,149 10,016,609 8,887,479 10,372,378
Cash payments to employees (8,798,333) (9,062,204) (9,764,068) (9,906,835)
Taxes on financial services (3,335,901) (5,906,572) (3,566,754) (6,298,903)
Receipts from other operating activities 3,167,486 1,043,986 3,722,591 1,531,652
Cash payments to other operating activities (7,290,842) (8,093,014) (7,451,105) (7,658,963)
Operating profit before changes in operating assets & liabilities (Note A) 10,970,687 28,135,648 13,720,871 31,473,344
(Increase)/decrease in operating assets

Balances with Central Bank of Sri Lanka 17,693,092 5,529,506 17,693,092 5,529,506
Financial assets at amortised cost - loans & advances (27,967,061) (49,261,408) (31,806,939) (52,355,440)
Other assets (2,787,091) (1,648,853) (3,184,906) (1,668,901)
(13,061,060) (45,380,755) (17,298,753) (48,494,835)
Increase/(decrease) in operating liabilities

Due to banks 98,077 (6,627,063) 98,077 (6,627,063)
Re-purchase agreements (12,987,979) 2,630,836 (14,066,979) 2,639,569
Financial liabilities at amortised cost - due to depositors 169,317,597 25,514,388 173,112,538 28,839,461
Financial liabilities at amortised cost - due to other borrowers (6,360,854) 2,404,454 (10,156,274) 2,302,019
Other liabilities 1,385,374 (564,551) 1,503,883 (1,196,379)
151,452,215 23,358,064 150,491,245 25,957,607
Net cash generated from operating activities before income tax 149,361,842 6,112,957 146,913,363 8,936,116
Income tax paid 39.1 (6,398,923) (8,889,568) (6,924,116) (9,206,326)
Net cash generated from/(used in) operating activities 142,962,919 (2,776,611) 139,989,247 (270,210)
Cash flows from investing activities

Purchase of property, plant & equipment (478,387) (864,047) (1,441,076) (2,167,541)
Proceeds from disposal of property plant & equipment 3,465 3,349 5,110 11,174
Net cash flow from reverse repurchase agreements (4,450,000) 500,000 (3,926,770) (45,664)
Net cash flow from financial assets - FVPL 2,187,141 16,849,090 2,187,141 16,849,090
Net cash flow from debt instruments at amortised cost (114,313,448) (34,574,683) (114,332,293) (34,585,665)
Net cash flow from financial assets - FVOCI (5,185,084) 9,720,054 (5,185,084) 9,720,054
Purchase of intangible assets 30 (199,307) (247,510) (201,948) (248,674)
Dividend received from financial assets 66,529 140,150 66,849 140,391
Dividend received from subsidiaries 4,828 - - -
Investment in subsidiaries (700,000) - - -
Net cash used in from investing activities (123,064,263) (8,473,597) (122,828,071) (10,326,835)
Cash flows from financing activities

Proceeds from the issue of debentures 37.1 - 7,000,000 2,000,000 8,500,000
Redemption of debentures 37.1 (7,000,000) (7,000,000) (7,000,000) (9,421,990)
Proceeds from securitisation - - 447,110 -
Rights issue 41 - 12,104,933 - 12,104,933
Dividend paid (4,482,131) (1,843,053) (4,482,131) (1,843,053)
Repayment of principal portion of lease liabilities (1,065,454) (1,042,649) (742,788) (744,606)
Net cash (used in)/generated from financing activities (12,547,585) 9,219,231 (9,777,809) 8,595,284
Net cash generated/(used) during the year 7,351,071 (2,030,977) 7,383,367 (2,001,761)
Cash & cash equivalents at the beginning of the year 24,593,341 26,624,318 24,725,465 26,727,226
Cash & cash equivalents at the end of the year (Note B) 31,944,412 24,593,341 32,108,832 24,725,465
NOTE (A) RECONCILIATION OF OPERATING PROFIT BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Profit before income tax 11,171,887 15,498,230 11,889,579 16,338,385

Interest income accrued on impaired loans & advances 7.1 (3,333,638) (2,809,924) (3,348,278) (2,894,134)
Net (gain)/loss from trading 9
Forward exchange contract revaluation loss/(gain) 103,117 (2,039,967) 103,117 (2,039,967)
Net mark to market gain - government & equity securities (123,145) (161,217) (123,145) (161,217)
Dividend income (4,759) (4,694) (4,759) (4,694)
Net gain on derecognition of financial assets 10
Financial assets FVPL (243,977) (94,130) (243,977) (94,130)
Financial assets FVOCI (179,418) (16,842) (179,418) (16,842)
Debt & other instruments (419) (2,698) (419) (2,698)
Net other operating income 11
Dividend income from financial assets FVOCI (118,497) (139,183) (118,817) (139,424)
Dividend income from subsidiaries (201,926) (68,053) - -
Loss/(profit) on disposal of property, plant & equipment 1,249 2,206 (31) 1,706
Net impairment charge 12 11,782,701 12,573,025 13,200,926 13,750,577
Personnel expenses
Provision for gratuity & pension 13 827,262 696,214 855,867 717,692
Other non-cash personnel expenses 312,296 324,712 312,297 333,868
Depreciation & amortisation expenses 14
Depreciation of property, plant & equipment 812,854 779,064 1,245,729 1,237,155
Amortisation of intangible assets 440,811 389,795 465,582 414,287
Amortisation of right-of-use assets 1,200,440 1,265,199 807,142 874,063
Accrual for interest & commission income (12,749,960) (1,813,561) (12,798,105) (1,930,595)
Accrual for interest expense (948,763) 2,312,170 (832,293) 2,622,019
Other accruals & non-cash income/expense 2,222,572 1,445,302 2,489,874 2,467,293
Operating profit before changes in operating assets/liabilities 10,970,687 28,135,648 13,720,871 31,473,344
NOTE (B) RECONCILIATION OF CASH & CASH EQUIVALENTS
Bank Group
As at 31st December Note 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Local currency in hand 20 17,787,093 12,502,601 17,906,374 12,652,560

Foreign currency in hand 20 208,750 2,742,448 208,750 2,742,448
Balances with local banks 20 60,670 132,167 106,740 170,641
Balances with foreign banks 20 8,250,032 2,425,699 8,250,032 2,425,699
Money at call & short notice 20 2,783,404 - 2,783,404 -
Placements less than three months 22 3,228,613 7,251,916 3,228,613 7,251,916
Unfavourable balances with local & foreign banks 34 (374,150) (461,490) (375,081) (517,799)
Cash & cash equivalents at the end of the year 31,944,412 24,593,341 32,108,832 24,725,465
214
Bank Stated Statutory Other Reserves Retained Total Equity
Capital Reserve Fund Revaluation FVOCI General Earnings
Reserve Reserve Reserve
(Note 41) (Note 42) (Note 43.1) (Note 43.2) (Note 43.3) (Note 44)
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 2019 32,795,952 3,470,000 2,409,050 1,160,765 38,909,901 5,643,642 84,389,310
Total comprehensive income for the year 2019
Profit for the year - - - - - 11,150,887 11,150,887
Other comprehensive income - - 584,549 (352,886) - (1,053,226) (821,563)
Total comprehensive income for the year 2019 - - 584,549 (352,886) - 10,097,661 10,329,324
Transactions with equity holders, recognised directly in equity,
contributions by and distributions to equity holders
Rights issue 12,104,933 - - - - - 12,104,933
Final dividend for 2018: scrip 2,721,608 - - - - (3,160,150) (438,542)
Final dividend for 2018: cash - - - - - (1,404,511) (1,404,511)

Unclaimed dividend adjustments - - - - 25,270 - 25,270
Total contributions by and distributions to equity holders 14,826,541 - - - 25,270 (4,564,661) 10,287,150
Transfer to reserves during the year - 570,000 - - 4,500,000 (5,070,000) -
Balance as at 31st December 2019 47,622,493 4,040,000 2,993,599 807,879 43,435,171 6,106,642 105,005,784
Balance as at 1st January 2020 47,622,493 4,040,000 2,993,599 807,879 43,435,171 6,106,642 105,005,784
Profit for the year - - - - - 8,025,147 8,025,147
Other comprehensive income - - - 1,030,324 - (2,050,935) (1,020,611)
Total comprehensive income for the year 2020 - - - 1,030,324 - 5,974,212 7,004,536
Final dividend for 2019: cash - - - - - (4,482,131) (4,482,131)
STATEMENT OF CHANGES IN EQUITY
Unclaimed dividend adjustments - - - - 20,615 - 20,615

Total contributions by and distributions to equity holders - - - - 20,615 (4,482,131) (4,461,516)
Transfer to reserves during the year - 410,000 - - 3,000,000 (3,410,000) -
Balance as at 31st December 2020 47,622,493 4,450,000 2,993,599 1,838,203 46,455,786 4,188,723 107,548,804
Group Stated Statutory Other Reserves Retained Total Equity Non - Total Equity
Capital Reserve Revaluation FVOCI General Earnings Attributable Controlling
Fund Reserve Reserve Reserve to Equity Interest
Holders of
(Note 41) (Note 42) (Note 43.1) (Note 43.2) (Note 43.3) (Note 44) the Bank
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 2019 32,795,952 3,609,000 5,093,155 1,160,765 38,909,901 8,481,881 90,050,654 - 90,050,654
Profit for the year - - - - - 11,668,190 11,668,190 - 11,668,190
Other comprehensive income - - 869,237 (352,886) - (1,065,718) (549,367) - (549,367)
Total comprehensive income for the year 2019 - - 869,237 (352,886) - 10,602,472 11,118,823 - 11,118,823
Rights issue 12,104,933 - - - - - 12,104,933 - 12,104,933
Final dividend for 2018: scrip 2,721,608 - - - - (3,160,150) (438,542) - (438,542)
Final dividend for 2018: cash - - - - - (1,404,511) (1,404,511) - (1,404,511)
Unclaimed dividend adjustments - - - - 25,270 - 25,270 - 25,270
Total contributions by and distributions to equity holders 14,826,541 - - - 25,270 (4,564,661) 10,287,150 - 10,287,150
Transfer to reserves during the year - 595,000 - - 4,500,000 (5,095,000) - - -
Balance as at 31st December 2019 47,622,493 4,204,000 5,962,392 807,879 43,435,171 9,424,692 111,456,627 - 111,456,627
Balance as at 1st January 2020 47,622,493 4,204,000 5,962,392 807,879 43,435,171 9,424,692 111,456,627 - 111,456,627
Profit for the year - - - - - 8,442,516 8,442,516 - 8,442,516
Other comprehensive income - - - 1,030,324 - (2,053,297) (1,022,973) - (1,022,973)
Total comprehensive income for the year 2020 - - - 1,030,324 - 6,389,219 7,419,543 - 7,419,543
Final dividend for 2019: cash - - - - - (4,482,131) (4,482,131) - (4,482,131)
Unclaimed dividend adjustments - - - - 20,615 - 20,615 - 20,615
Total contributions by and distributions to equity holders - - - - 20,615 (4,482,131) (4,461,516) - (4,461,516)
Transfer to reserves during the year - 431,000 - - 3,000,000 (3,431,000) - - -
Balance as at 31st December 2020 47,622,493 4,635,000 5,962,392 1,838,203 46,455,786 7,900,780 114,414,654 - 114,414,654
215
NOTES TO THE FINANCIAL STATEMENTS
1. REPORTING ENTITY off-shore banking, resident and non-resident 2.4 Basis of Measurement
1.1 General foreign currency operations, electronic The Financial Statements of the Group have
banking services such as: telephone banking, been prepared on the historical cost basis,
Sampath Bank PLC ('The Bank'), is a
internet banking, mobile banking and money except for the following material items in the
domiciled, public limited liability company
remittance facilities, pawning, leasing, Statement of Financial Position:
incorporated in Sri Lanka on 10th March
factoring, travel related services and dealing
1986 under the Companies Act No. 17 of
in government securities etc.  Derivative financial instruments are
1982. It is a Licensed Commercial Bank
measured at fair value (Note 23)
registered under the Banking Act No. 30
1.3.2 Subsidiaries
of 1988 (Banking Act) and amendments  Financial assets held at fair value
Ownership of subsidiaries as of 31st
thereto. The Bank was re-registered with through other comprehensive income
December 2020 and 31st December 2019 is
the Registrar General of Companies as per (FVOCI) are measured at fair value
given in Note 28 to the Financial Statements.
the requirements of the Companies Act (Note 27)
There were no significant changes in the
No. 7 of 2007 (Companies Act) on 28th
nature of the principal activities of the Group  Financial assets recognised through
April 2008 under the name of Sampath
during the financial year under review. profit or loss (FVPL) are measured at fair
Bank PLC. The registered office of the
value (Note 24)
Bank is located at No. 110, Sir James
2. BASIS OF PREPARATION
Peiris Mawatha, Colombo 02. The shares  Land and buildings which are measured
of the Bank have a primary listing on 2.1 Statement of Compliance at cost at the time of acquisition
the Colombo Stock Exchange. The staff The Consolidated Financial Statements subsequently measured at revalued
strength of the Bank as at 31st December of the Group and the Separate Financial amounts, which are the fair values at the
2020 was 4,048 (2019: 4,134). Statements of the Bank, which comprise the date of revaluation (Note 29)
Statement of Financial Position, Statement of
 Liabilities for defined benefit obligations
1.2 Consolidated Financial Profit or Loss, Statement of Comprehensive
are recognised at the present value of
Statements Income, Statement of Changes in Equity,
the defined benefit obligation less the
The Consolidated Financial Statements Statement of Cash Flows and Notes to the
fair value of the plan assets (Note 38)
of the Bank as at and for the year ended Financial Statements have been prepared
31st December 2020 comprise the Bank and presented in accordance with Sri Lanka
2.5 Functional and Presentation
(Parent Company) and its Subsidiaries Accounting Standards (SLFRSs and LKASs)
Currency
(together referred to as the "Group" laid down by the Institute of Chartered
The Financial Statements of the Group are
and individually as "Group entities"). Accountants of Sri Lanka and in compliance
presented in Sri Lankan Rupees (Rs), which
The subsidiaries of the Bank as at 31st with the requirements of the Companies
is the currency of the primary economic
December 2020 were Sampath Centre Act No. 7 of 2007. The presentation of the
environment in which Sampath Bank PLC
Ltd, SC Securities (Pvt) Ltd, Siyapatha Financial Statements is also in compliance
operates. Financial information presented in
Finance PLC and Sampath Information with the requirements of the Banking Act No.
Sri Lankan Rupees has been rounded to the
Technology Solutions Ltd. 30 of 1988 and amendments thereto.
nearest thousand unless indicated otherwise.
2.2 Responsibility for Financial There was no change in the Group's
Sampath Bank PLC is the ultimate parent
Statements presentation and functional currency during
of the Group.
the year under review.
The Board of Directors is responsible for the
The Financial Statements of all companies Financial Statements of the Group and the
2.6 Presentation of Financial Statements
in the Group have a common financial year Bank as per Sri Lanka Accounting Standards
which ends on 31st December. The assets and liabilities of the Group
and the provisions of the Companies Act No.
presented in the Statement of Financial
7 of 2007.
1.3 Principal Activities and Nature of Position are grouped by nature and listed in
Operations 2.3 Approval of Financial Statements by an order that reflects their relative liquidity
Directors and maturity pattern. No adjustments have
1.3.1 Bank
been made for inflationary factors affecting
The Bank provides a comprehensive The Financial Statements of the Group as at
the Financial Statements.
range of financial services encompassing and for the year ended 31st December 2020
accepting deposits, corporate and retail were authorised for issue by the Board of
An analysis on recovery or settlement within
banking, project financing, trade finance, Directors in accordance with the resolution
12 months after the reporting date (current)
treasury and investment services, issuing of the Board of Directors on 15th February
and more than 12 months after the reporting
of credit cards and debit cards, 2021.
date (non-current) is presented in the Note
51 to the financial statements.
2.7 Materiality and Aggregation of accounting policies and the reported found to be not impaired and all individually
In compliance with Sri Lanka Accounting amounts of assets, liabilities, income and insignificant loans and advances are then
Standard - LKAS 1 (Presentation of Financial expenses. Actual results may differ from assessed collectively, by categorising them
Statements), each material class of similar these estimates. into groups of assets with similar risk
items is presented separately in the Financial characteristics, to determine the expected
Statements. Items of dissimilar nature or Estimates and underlying assumptions are credit loss on such loans and advances.
functions too are presented separately reviewed on an ongoing basis. Revisions to
unless they are immaterial. Financial assets accounting estimates are recognised in the The expected credit loss (ECL) calculation
and financial liabilities are offset and the period in which the estimate is revised and under SLFRS 9 requires management to make
net amount reported in the Statement of in any future periods affected. The most judgments and estimates with regard to the
Financial Position only when there is a legally significant areas of estimation, uncertainty following.
enforceable right to offset the recognised and critical judgments in applying accounting
policies that have most significant effect  The Group's criteria for assessing if there
amounts and there is an intention to settle
on the amounts recognised in the Financial has been a significant increase in credit
on a net basis, or to realise the assets and
Statements of the Group are as follows: risk and so impairment for financial
settle the liability simultaneously. Income and
assets should be measured on a lifetime
expenses are not offset in the Statement of
2.10.1 Going Concern ECL basis
Profit or Loss unless required or permitted by
an Accounting Standard. The Directors have made an assessment of  Development of ECL models, including
the Group's ability to continue as a going various formulas and the choice of
2.8 Comparative Information concern and are satisfied that it has the inputs
The comparative information is re-classified resources to continue in business for the
foreseeable future. Furthermore, Board is  Selection of forward-looking
wherever necessary to conform to the
not aware of any material uncertainties that macroeconomic scenarios and their
current year's classification in order to
may cast significant doubt upon the Group's probability weightings, to derive the
provide a better presentation.
ability to continue as a going concern and economic inputs into the ECL model
2.9 Statement of Cash Flows they do not intend either to liquidate or to

It has been the Group's policy to regularly
cease operations of the Group. The Directors
The Statement of Cash Flows has been review its models in the context of actual
have considered the potential downsides that
prepared by using the direct method in loss experience and adjust when necessary.
the COVID-19 pandemic could bring to the
accordance with the Sri Lanka Accounting The above assumptions and judgments are
business operations of the Group, in making
Standard - LKAS 7 (Statement of Cash discussed in detail under Note 3.4.6 to the
this assessment. Therefore, the Financial
Flows), whereby gross cash receipts and Financial Statements.
Statements continue to be prepared on the
gross cash payments of operating activities,
going concern basis.
financing activities and investing activities In response to COVID-19 and the Group’s
have been recognised. Cash and cash expectations of economic impacts,
2.10.2 Impairment Losses on Loans and
equivalents comprise short term, highly liquid key assumptions used in the Group’s
Advances
investments that are readily convertible to calculation of ECL have been revised. The
known amounts of cash and are subject to an The measurement of impairment losses under
economic scenarios and forward-looking
insignificant risk of changes in value. Sri Lanka Accounting Standards - SLFRS 9
macroeconomic assumptions underpinning
(Financial Instruments) across all categories
the collective provision calculation are
Cash and cash equivalents include cash in of financial assets requires judgement. These
outlined in Note 3.4.6.7, while the impact on
hand, balances with banks, placements with estimates are driven by a number of factors,
changing the weightages of different macro-
banks (less than 3 months), money at call changes in which can result in different levels
economic scenarios during the year are given
and short notice, net of unfavourable local & of allowances.
in Note 50.2.1 (e). As at the reporting date,
foreign bank balances. the expected impacts of COVID-19 have
The Group reviews its individually significant
been captured via the modelled outcome
2.10 Significant Accounting Judgments, loans and advances at each reporting date
as well as a separate management overlay
Estimates and Assumptions to assess whether an impairment loss should
reflecting the considerable uncertainty
be recorded in the Statement of Profit or
The preparation of Financial Statements remaining in the modelled outcome given
Loss. In particular, management's judgment is
of the Group in conformity with Sri the unprecedented impacts of COVID-19.
required in the estimation of the amount and
Lanka Accounting Standards requires the Although the credit model inputs and
timing of future cash flows when determining
management to make judgments, estimates assumptions, including forward-looking
the impairment loss. Loans and advances
and assumptions that affect the application macroeconomic assumptions, were revised
that have been assessed individually and
in response to the COVID-19 pandemic, Equity instruments classified as FVOCI are 2.10.7 Defined Benefit Plans
the fundamental credit model mechanics not subjective for impairment assessment. The cost of the defined benefit plans and
and methodology underpinning the Group’s the present value of their obligations are
calculation of ECL have remained consistent 2.10.4 Fair Value of Financial Instruments determined using actuarial valuations.
with prior periods. The determination of fair values of financial The actuarial valuation involves making
assets and financial liabilities recorded assumptions about discount rates, future
The Group is focused on supporting on the Statement of Financial Position salary increases, mortality rates and
customers who are experiencing financial for which there is no observable market possible future pension increases if any.
difficulties because of the COVID-19 price are determined using a variety of Due to the long term nature of these plans,
pandemic and has offered a range of valuation techniques that include the use such estimates are subject to significant
industry-wide financial assistance measures of mathematical models. The valuation of uncertainty. All assumptions are reviewed at
including the debt moratorium initiated by financial instruments is described in more each reporting date.
the Central Bank of Sri Lanka. As per industry detail in Note 3.4.10.
guidance given by the Central Bank and the In determining the appropriate discount rate,
Institute of Chartered Accountants of Sri The Group measures fair value using the fair management considers the interest rates of
Lanka, eligibility for the debt moratorium value hierarchy that reflects the significance Sri Lanka government bonds with maturities
does not automatically result in a significant of input used in making measurements. The corresponding to the expected duration of
increase in credit risk (SICR) which moves an fair value hierarchy is given in Note 49.4 the defined benefit obligation. The mortality
exposure from stage 1 (12-month ECL) to and 49.6. Determination of the fair value rate is based on publicly available mortality
stage 2 (lifetime ECL). A case-by-case analysis of financial instruments of the Group were tables. Future salary increases and pension
has been conducted on the most significant not materially affected by the significant increases are based on expected future
exposures and only those exposures with volatility in financial markets created by the inflation rate and expected future salary
increased credit risk has been moved to COVID–19 pandemic. increase rates of the Group.
stage 2 and stage 3. Further, the exposures
which are not individually significant has been 2.10.5 Financial Assets and Liabilities 2.10.8 Fair Value of Property, Plant and
moved to stage 2 based on the industry risk Classification Equipment
of the underlying borrowers. This approach The Group's accounting policies provide The freehold land and buildings of the
ensures the volume of exposures in stage scope for assets and liabilities to be classified, Group are reflected at fair value at the
2 reflects a forward-looking view of the at inception into different accounting date of revaluation less any accumulated
economy and not just what is observable as categories. The classification of financial depreciation and impairment losses. The
at the reporting date. instruments is given in Note 19, 'Analysis Group engages independent valuation
of Financial Instruments by Measurement specialists to determine fair value of freehold
A breakdown of the loans and advances of
Basis'. COVID-19 pandemic has resulted in lands and buildings in terms of the Sri Lanka
the Bank/Group classified under stage 2 is
significant volatility in the financial markets. Accounting Standard-SLFRS 13, (Fair Value
given in Note 50.2.1 (f) while an analysis
However, the Group did not require to Measurement). The details of freehold
of loans under phase II of the COVID-19
reclassify any of its financial assets as a result land and buildings, including methods of
debt moratorium is given in Note 50.2.1(h).
of the significant volatility created by the valuation are given in Note 29.3 and 29.4
Sensitivity of the individually significant loan
pandemic. to the Financial Statements. The Group has
impairment to recovery cash flows is given in
not revalued its freehold lands and buildings
Note 50.2.1 (c) while sensitivity of collective 2.10.6 Taxation during this year for consolidated accounting
impairment provision to the staging of the
The Group is subject to income tax and purposes, on the basis that changes in
loans and advances is disclosed in
judgment is required to determine the total property prices were not significant compared
Note 50.2.1 (d).
provision for current, deferred and other to the previous year.
taxes due to the uncertainties that exist with
2.10.3 Impairment of Other Financial Assets
respect to the interpretation of the applicable 2.10.9 Useful Lifetime of the Property, Plant
The Group reviews its debt securities classified and Equipment
tax laws, at the time of preparation of these
as FVOCI/amortised cost, at each reporting
Financial Statements. The Group reviews the residual values,
date to assess whether they are impaired.
useful lives and methods of depreciation
Objective evidence that a debt security held The details of deferred tax computation is of property, plant and equipment at each
at FVOCI/amortised cost is impaired includes given in Note 32 to the Financial Statements. reporting date. Judgment of the management
among other things significant financial
is exercised in the estimation of these values,
difficulty of the issuer, a breach of contract
rates, methods and hence they are subject to
such as a default or delinquency in interest or
uncertainty.
principal payments etc.
2.10.10 Commitments and Contingencies 3.2 Business Combinations and amortised cost in the functional currency
All discernible risks are accounted for Goodwill at the beginning of the period, adjusted for
in determining the amount of all known Business combinations are accounted for effective interest and payments during the
liabilities. Contingent liabilities are possible using the acquisition method as per the period, and the amortised cost in foreign
obligations whose existence will be confirmed requirements of Sri Lanka Accounting currency translated at the rate of exchange
only by uncertain future events or present Standard-SLFRS 3 (Business Combinations). prevailing at the end of the reporting period.
obligations where the transfer of economic

The Group measures goodwill as the fair Non-monetary items in a foreign currency
benefit is not probable or cannot be reliably
value of the consideration transferred that are measured in terms of historical cost
measured. Contingent liabilities are not
including the recognised amount of any are translated using the exchange rates as at
recognised in the Statement of Financial
non-controlling interest in the acquiree, less the dates of the initial transactions. Non-
Position but are disclosed unless they
the net recognised amount (generally fair monetary items in foreign currency measured
are remote. Details of commitments and
value) of the identifiable assets acquired at fair value are translated using the exchange
contingencies are given in Note 45.
and liabilities assumed, all measured as of rates at the date when the fair value was
the acquisition date. The consideration determined.
2.10.11 Classification of Investment
Properties transferred does not include amounts
related to the settlement of pre-existing Foreign exchange differences arising on the
Management requires using its judgment settlement or reporting of monetary items at
relationships. Such amounts are generally
to determine whether a property qualifies rates different from those which were initially
recognised in profit or loss. When excess
as an investment property. The Group has recorded are dealt with in the Statement of
is negative, a bargain purchase gain is
developed criteria so it can exercise its Profit or Loss. However, foreign currency
recognised immediately in profit or loss, if
judgment consistently. A property that is held differences arising on equity instruments
controlling power is acquired.
to earn rentals or for capital appreciation classified as fair value through other
or both and which generates cash flows comprehensive income, financial liabilities
The changes in parent's ownership interest
largely independently of the other assets designated as a hedge of a net investment
in a subsidiary that do not result in the
held by the Group are accounted for as parent losing control of the subsidiary are in a foreign operation, or qualifying cash
investment properties. On the other hand, equity transactions. The Group elects on a flow hedges are recognised in other
a property that is used for operations or transaction-by-transaction basis whether to comprehensive income.
in the process of providing services or for measure non-controlling interest at its fair
administrative purposes and which do not value, or at its proportionate share of the Forward exchange contracts are valued at the
directly generate cash flows as a standalone recognised amount of the identifiable net forward market rates ruling on the reporting
asset are accounted for as property, plant assets, at the acquisition date. Transaction date. Resulting net unrealised gains or losses
and equipment. The Group assesses on an costs, other than those associated with the are dealt within the Statement of Profit or
annual basis, the accounting classification of issue of debt or equity securities, that the Loss under 'Net gain/loss from trading'.
its properties taking into consideration the Group incurs in connection with a business
current use of such properties. Currently 3.4 Financial Instruments - Initial
combination are expensed as incurred.
the Group does not have any investment Recognition, Classification and
property. 3.3 Foreign Currency Transactions and Subsequent Measurement
Balances 3.4.1 Date of Recognition
3. GENERAL ACCOUNTING All foreign currency transactions are Financial assets and liabilities, with the
POLICIES translated into the functional currency, exception of loans and advances to
3.1 Basis of Consolidation which is Sri Lankan Rupees, using the customers and balances due to customers,
The Group's Financial Statements comprise exchange rates prevailing at the dates of the are initially recognised on the trade date, i.e.,
consolidation of the Financial Statements transactions were affected. the date that the Group becomes a party to
of the Bank and its subsidiaries in terms of the contractual provisions of the instrument.
the Sri Lanka Accounting Standard - SLFRS Monetary assets and liabilities denominated This includes regular way trades: purchases or
10 (Consolidated Financial Statements). The in foreign currencies at the reporting date sales of financial assets that require delivery
Bank's Financial Statements comprise the are translated to Sri Lankan Rupees using of assets within the time frame generally
the spot foreign exchange rate ruling at established by regulation or convention in
amalgamation of the Financial Statements of
that date and all differences arising on the market place. Loans and advances to
the Domestic Banking Unit and the Off-Shore
non-trading activities are taken to 'Other customers are recognised when funds are
Banking Unit.
operating income' in the Statement of Profit transferred to the customers' accounts. The
or Loss. The foreign currency gain or loss on Group recognises balances due to depositors
monetary items is the difference between when funds are transferred to the Group.
3.4.2 Initial Measurement of Financial The Group classifies and measures its  The risks that affect the performance
Instruments derivative and trading portfolio at FVPL as of the business model (and the financial
The classification of financial instruments explained in Notes 3.4.3.2 and 3.4.3.3. The assets held within that business model)
at initial recognition depends on their Group may designate financial instruments at and, in particular, the way those risks are
contractual terms and the business model FVPL, if so doing eliminates or significantly managed
for managing the instruments, as described reduces measurement or recognition
 How managers of the business are
in Notes 3.4.3.1 (a) and 3.4.3.1 (b). Financial inconsistencies, as explained in Note 3.4.3.4.
compensated (for example, whether
instruments are initially measured at their fair the compensation is based on the fair
value. Financial liabilities, other than loan
value of the assets managed or on the
commitments and financial guarantees,
contractual cash flows collected)
Except in the case of financial assets are measured at amortised cost or at FVPL
and financial liabilities recorded at FVPL, when they are held for trading, derivative The expected frequency, value and timing
transaction costs are added to, or subtracted instruments or the fair value designation of sales are also important aspects of the
from, this amount. Trade receivables are is applied, as explained in Notes 3.4.3.2, Group's assessment.
measured at the transaction price. When the 3.4.3.3, 3.4.3.4, 3.4.3.7.
fair value of financial instruments at initial The business model assessment is based on
recognition differs from the transaction price, 3.4.3.1 Loans and advances to customers, reasonably expected scenarios without taking
the Group accounts for the Day 1 profit or debt and other securities, reverse 'worst case' or 'stress case' scenarios into
loss, as described below. repurchase agreements account. If cash flows after initial recognition
The Group only measures loans and advances are realised in a way that is different from the
3.4.2.1 ‘Day 1' Profit or Loss to customers, debt and other securities and Group's original expectations, the Group does
reverse repurchase agreements at amortised not change the classification of the remaining
When the transaction price differs from
cost if both of the following conditions are financial assets held in that business
the fair value of other observable current
met: model, but incorporates such information
market transactions in the same instrument,
when assessing newly originated or newly
or based on a valuation technique whose
 The financial asset is held within a purchased financial assets going forward.
variables include only data from observable
markets, the Group recognises the difference business model with the objective of
collecting contractual cash flows 3.4.3.1(b) The SPPI test
between the transaction price and fair value
('Day 1' profit or loss) in the Statement As a second step of its classification process
 The contractual terms of the financial
of Profit or Loss over the tenor of the the Group assesses the contractual terms of
asset give rise, on specified dates, to
financial instrument using the effective financial instruments to identify whether they
cash flows that are solely payments
interest rate method. In cases where fair meet the SPPI test. 'Principal' for the purpose
of principal and interest (SPPI) on the
value is determined using data which is not of this test is defined as the fair value of the
principal amount outstanding.
observable, the difference between the financial asset at initial recognition and may
The details of these conditions are outlined change over the life of the financial asset (for
transaction price and model value is only
below. example, if there are repayments of principal
recognised in the Statement of Profit or Loss
when the inputs become observable, or when or amortisation of the premium/discount).
3.4.3.1(a) Business model assessment
the instrument is derecognised.
The Group determines its business model at The most significant elements of interest
3.4.3 Measurement Categories of Financial the level that best reflects how it manages within a lending arrangement are typically the
Assets and Liabilities groups of financial assets to achieve its consideration for the time value of money
business objective. and credit risk. To make the SPPI assessment,
The Group classifies all of its financial assets
the Group applies judgment and considers
based on the business model for managing
The Group's business model is not assessed relevant factors such as the currency in
the assets and the asset's contractual terms,
on an instrument-by instrument basis, but at which the financial asset is denominated and
measured at either:
a higher level of aggregated portfolios and is the period for which the interest rate is set.
based on observable factors such as: In contrast, contractual terms that introduce
 Amortised cost, as explained in Note
a more than de minimis exposure to risks or
3.4.3.1
 How the performance of the business volatility in the contractual cash flows that
 FVOCI as explained in Notes 3.4.3.5 and model and the financial assets held are unrelated to a basic lending arrangement,
3.4.3.6 within that business model are evaluated do not give rise to contractual cash flows that
and reported to the entity's key
 FVPL
management personnel
are solely payments of principal and interest An embedded derivative causes some or income. Interest income from financial
on the amount outstanding. In such cases, all of the cash flows that otherwise would assets held for trading is recorded under
the financial asset is required to be measured be required by the contract to be modified net interest income while dividend income
at FVPL. according to a specified interest rate, is recorded in net trading income when
financial instrument price, commodity price, the right to payment has been established.
3.4.3.2 Derivatives recorded at fair value foreign exchange rate, index of prices or Included in this classification are debt
through profit or loss rates, credit rating or credit index, or other securities and equity investments that have
A derivative is a financial instrument or variable, provided that, in the case of a been acquired principally for the purpose of
other contract with all three of the following non-financial variable, it is not specific to selling or repurchasing in the near term. The
characteristics: a party to the contract. A derivative that is Group does not have any financial liabilities
attached to a financial instrument, but is classified as held for trading as at 31st
 Its value changes in response to the contractually transferable independently December 2020.
change in a specified interest rate, of that instrument, or has a different
financial instrument price, commodity counterparty from that instrument, is not an 3.4.3.4 Financial assets and financial liabilities
price, foreign exchange rate, index of embedded derivative, but a separate financial designated at fair value through profit
prices or rates, credit rating or credit instrument. or loss
index or other variable, provided that, Financial assets and financial liabilities in
in the case of a non-financial variable, it Derivatives embedded in liabilities and this category are those that are not held for
is not specific to a party to the contract non-financial host contacts, are treated trading and have been either designated
(i.e. the 'underlying'). as separate derivatives and recorded at by management upon initial recognition or
fair value if they met the definition of a are mandatorily required to be measured at
 It requires no initial net investment or
derivative (as defined above), their economic fair value under SLFRS 9. Management only
an initial net investment that is smaller
characteristics and risks are not closely designates an instrument at FVPL upon initial
than would be required for other types
related to those of the host contract, and recognition when one of the following criteria
of contracts expected to have a similar
the host contract is not itself held for trading are met. Such designation is determined on
response to changes in market factors.
or designated at FVPL. The embedded an instrument-by-instrument basis:
 It is settled at a future date. derivatives separated from the host were
carried at fair value in the trading portfolio  The designation eliminates, or
The Group enters into derivative transactions
with changes in fair value recognised in the significantly reduces, the inconsistent
with various counterparties. These include
income statement. Derivatives embedded treatment that would otherwise arise
interest rate swaps, cross-currency swaps,
in financial assets are no longer separated. from measuring the assets or liabilities
forward exchange contracts etc. Derivatives
Instead, they are classified based on the or recognising gains or losses on them
are recorded at fair value and carried as
business model and SPPI assessments as on a different basis
assets when their fair value is positive and
outlined in Notes 3.4.3.1 (a) and 3.4.3.1 (b).
as liabilities when their fair value is negative. Or
The notional amount and fair value of such
3.4.3.3 Financial assets or financial liabilities  The liabilities are part of a group of
derivatives are disclosed separately in Note
held for trading financial liabilities which are managed
23. Changes in the fair value of derivatives
The Group classifies financial assets or and their performance evaluated on
are included in net gain/(loss) from trading
financial liabilities as held for trading when a fair value basis, in accordance with
unless hedge accounting is applied. The
they have been purchased or issued primarily a documented risk management or
Group has not applied hedge accounting for
for short-term profit making through investment strategy
any of its derivatives during the years ended
trading activities or form part of a portfolio
31st December 2020 and 2019. Or
of financial instruments that are managed
together, for which there is evidence of a  The liabilities containing one or more
3.4.3.2(a) Embedded derivatives
recent pattern of short-term profit taking. embedded derivatives, unless they do
An embedded derivative is a component not significantly modify the cash flows
Held-for-trading assets and liabilities are
of a hybrid instrument that also includes a that would otherwise be required by
recorded and measured in the statement
non-derivative host contract with the effect the contract, or it is clear with little or
of financial position at fair value. Changes
that some of the cash flows of the combined no analysis when a similar instrument is
in fair value are recognised in net trading
instrument vary in a way, similar to a stand- first considered that separation of the
alone derivative. embedded derivative(s) is prohibited
Financial assets and financial liabilities at 3.4.3.6 Equity instruments at FVOCI The premium received is recognised in
FVPL are recorded in the statement of Upon initial recognition, the Group the income statement under net fees and
financial position at fair value. Changes in occasionally elects to classify irrevocably commission income on a straight line basis
fair value are recorded in profit or loss with some of its equity investments at FVOCI over the life of the guarantee.
the exception of movements in fair value of when they meet the definition of equity
liabilities designated at FVPL due to changes under Sri Lanka Accounting Standard - LKAS Undrawn loan commitments and letters of
in the Group's own credit risk. Such changes 32 (Financial Instruments: Presentation) and credits are commitments under which, over
in fair value are recorded in the "Own credit are not held for trading. Such classification is the duration of the commitment, the Group is
reserve" through OCI and do not get recycled determined on an instrument-by instrument required to provide a loan with pre-specified
to the profit or loss. Interest earned or basis. terms to the customer. Similar to financial
incurred on instruments designated at FVPL guarantee contracts, these contracts are
is accrued in interest income or interest Gains and losses on these equity instruments within the scope of the ECL requirements.
expense, respectively, using the EIR, taking are never recycled to profit. Dividends are
into account any discount/premium and recognised in profit or loss as other operating The nominal contractual value of financial
qualifying transaction costs being integral income when the right of the payment has guarantees, letters of credit and undrawn
parts of the instrument. been established, except when the Group loan commitments, where the loan agreed
benefits from such proceeds as a recovery of to be provided is on market terms, are
3.4.3.5 Debt instruments at FVOCI part of the cost of the instrument, in which not recorded in the statement of financial
The Group applies this category for debt case, such gains are recorded in OCI. Equity position. The nominal values of these
instruments when both of the following instruments at FVOCI are not subject to an instruments are disclosed in Note 45, while
conditions are met: impairment assessment. the corresponding ECL is disclosed under
Note 40, "Other liabilities".
 The instrument is held within a business 3.4.3.7 Securities sold under repurchase
model, the objective of which is agreements, due to depositors, other 3.4.4 Reclassification of Financial Assets
achieved by both collecting contractual borrowers and debt securities holders and Liabilities
cash flows and selling financial assets After initial measurement, securities sold The Group does not reclassify its financial
under repurchase agreements, due to assets subsequent to their initial recognition,
 The contractual terms of the financial
depositors, due to other borrowers and due apart from the exceptional circumstances in
asset meet the SPPI test
to debt securities holders are subsequently which the Group may acquire, dispose of, or
These instruments largely comprise measured at amortised cost. Amortised terminates a business line (change in business
government securities. cost is calculated by taking into account any model). When the Group reclassifies its
discount or premium on issue of funds and financial assets it applies the reclassification
FVOCI debt instruments are subsequently prospectively from the reclassification date
costs that are an integral part of the EIR. The
measured at fair value with gains and without restating any previously recognised
Group does not have compound financial
losses arising due to changes in fair value gains, losses (including impairment gains or
instruments which contains both liability and
recognised in OCI. Interest income and losses) or interest. Financial liabilities are
equity components and require separation as
foreign exchange gains and losses are never reclassified.
at the date of the issue.
recognised in profit or loss in the same
manner as for financial assets measured at 3.4.3.8 Financial guarantees, letters of credit When a financial asset is reclassified out of
amortised cost. and undrawn loan commitments the amortised cost measurement category
and into the fair value through profit or
The Group issues financial guarantees, letters
The ECL calculation for debt instruments at loss measurement category, its fair value
of credit and loan commitments. Financial
FVOCI is explained in Note 3.4.6.5. Where is measured at the reclassification date.
guarantees are initially recognised in the
the Group holds more than one investment Any gain or loss arising from the difference
financial statements at fair value, being the
in the same security, they are deemed to be between the previous amortised cost of the
premium received. Subsequent to initial
disposed of on a first-in first-out basis. On financial asset and fair value is recognised in
recognition, the Group's liability under each
derecognition, cumulative gains or losses profit or loss.
guarantee is measured at the higher of the
previously recognised in OCI are reclassified
amount initially recognised less cumulative
from OCI to profit or loss. When a financial asset is reclassified
amortisation recognised in the income
out of the fair value through profit or
statement and the ECL provision.
loss measurement category and into the
amortised cost measurement category, its fair
value at the reclassification date becomes its
new gross carrying amount.
When a financial asset is reclassified 3.4.5 Derecognition of Financial Assets and 3.4.5.2 Derecognition other than for
out of the amortised cost measurement Liabilities substantial modification
category and into the fair value through 3.4.5.1 Derecognition due to substantial 3.4.5.2(a) Financial assets
other comprehensive income measurement modification of terms and conditions A financial asset (or, where applicable, a
category, its fair value is measured at the
The Group derecognises a financial asset, part of a financial asset or part of a group
reclassification date. Any gain or loss arising
such as a loan to a customer, when the terms of similar financial assets) is derecognised
from the difference between the previous
and conditions have been renegotiated to when the rights to receive cash flows from
amortised cost of the financial asset and fair
the extent that, substantially, it becomes a the financial asset have expired. The Group
value is recognised in other comprehensive
new loan, with the difference recognised as also derecognises the financial asset if it has
income. The effective interest rate and the
a derecognition gain or loss, to the extent both transferred the financial asset and the
measurement of expected credit losses are
that an impairment loss has not already been transfer qualifies for derecognition.
not adjusted as a result of the reclassification.
recorded. The newly recognised loans are
classified as Stage 1 for ECL measurement The Group has transferred the financial asset
When a financial asset is reclassified out of
purposes, unless the new loan is deemed to if, and only if, either:
the fair value through other comprehensive
be credit impaired at the date of inception.
income measurement category and into
 The Group has transferred its
the amortised cost measurement category,
When assessing whether or not to contractual rights to receive cash flows
the financial asset is reclassified at its fair
derecognise a loan to a customer, amongst from the financial asset
value at the reclassification date. However,
others, the Group considers the following
the cumulative gain or loss previously Or
factors:
recognised in other comprehensive income  It retains the rights to the cash flows,
is removed from equity and adjusted against but has assumed an obligation to pay
 Change in currency of the loan
the fair value of the financial asset at the the received cash flows in full without
reclassification date. As a result, the financial  Introduction of an equity feature
material delay to a third party under a
asset is measured at the reclassification  Change in counterparty 'pass-through' arrangement
date as if it had always been measured at
amortised cost. The effective interest rate  If the modification is such that the
Pass-through arrangements are transactions
and the measurement of expected credit instrument would no longer meet the
whereby the Group retains the contractual
losses are not adjusted as a result of the SPPI criterion
rights to receive the cash flows of a financial
reclassification. If the modification does not result in cash asset (the 'original asset'), but assumes a
flows that are substantially different, the contractual obligation to pay those cash
When a financial asset is reclassified out modification does not result in derecognition. flows to one or more entities (the 'eventual
of the fair value through profit or loss Based on the change in cash flows recipients'), when all of the following three
measurement category and into the fair discounted at the original EIR, the Group conditions are met:
value through other comprehensive income records a modification gain or loss, to the
measurement category, the financial asset extent that an impairment loss has not  The Group has no obligation to pay
continues to be measured at fair value. already been recorded. amounts to the eventual recipients
unless it has collected equivalent
When a financial asset is reclassified out of As explained in Note 3.4.6.12 (a), amounts from the original asset,
the fair value through other comprehensive modifications to the original terms and excluding short term advances with the
income measurement category and into the conditions of the loans due to COVID-19 right to full recovery of the amount lent
fair value through profit or loss measurement moratorium did not result in a derecognition plus accrued interest at market rates
category, the financial asset continues to of the original loans as the Group concluded
be measured at fair value. The cumulative  The Group cannot sell or pledge the
that the modifications were not substantial.
gain or loss previously recognised in other original asset other than as security to
Accordingly, a modification loss has been
comprehensive income is reclassified from the eventual recipients
recognised during the year ended 31st
equity to profit or loss as a reclassification December 2020 under net interest income  The Group has to remit any cash flows
adjustment at the reclassification date. in Note 7, representing the difference it collects on behalf of the eventual
between the original carrying value of the recipients without material delay. In
The Group did not reclassify any of its
loan (before modification) and the discounted
financial assets in 2020.
present value of the revised cash flows (at
the Original EIR) at the date of the loan
modification.
addition, the Group is not entitled to substantially modified, such an exchange or in Note 3.4.6.1 (b). Based on the above
reinvest such cash flows, except for modification is treated as a derecognition of process, the Group categorises its loans into
investments in cash or cash equivalents the original liability and the recognition of 'Stage 1', 'Stage 2', 'Stage 3' and 'originated
including interest earned, during the a new liability. The difference between the credit impaired', as described below:
period between the collection date and carrying value of the original financial liability
the date of required remittance to the and the consideration paid is recognised in  Stage 1: When loans are first recognised,
eventual recipients profit or loss. the Group recognises an impairment
based on 12mECLs. Stage 1 loans also
A transfer only qualifies for derecognition if
3.4.6 Impairment Allowance for Financial include facilities where the credit risk
either:
Assets has improved and the loan has been
 The Group has transferred substantially 3.4.6.1 Overview of the ECL principles reclassified from Stage 2.
all the risks and rewards of the asset
The Group has been recording impairment  Stage 2: When a loan has shown a
Or (expected credit losses) for all loans, debt & significant increase in credit risk since
other financial instruments not held at FVPL, origination, the Group records an
 The Group has neither transferred nor
together with loan commitments, financial impairment for the LTECLs. Stage 2
retained substantially all the risks and
guarantee contracts, letter of credit and loans also include facilities, where the
rewards of the asset, but has transferred
acceptances. Equity instruments are not credit risk has improved and the loan has
control of the asset
subject to impairment under SLFRS 9. been reclassified from Stage 3.
The Group considers control to be
 Stage 3: Loans considered credit-
transferred if and only if, the transferee has The ECL impairment is based on the credit
impaired [as outlined in Note 3.4.6.1 (a)].
the practical ability to sell the asset in its losses expected to arise over the life of the
The Group records an impairment for
entirety to an unrelated third party and is asset [the lifetime expected credit loss or
the LTECLs.
able to exercise that ability unilaterally and (LTECL)], unless there has been no significant
without imposing additional restrictions on increase in credit risk since origination, in  Originated credit impaired: Originated
the transfer. which case, the impairment is based on the credit impaired assets are financial
12 months' expected credit loss (12mECL). assets that are credit impaired on initial
When the Group has neither transferred The Group's policies for determining if there recognition. They are recorded at fair
nor retained substantially all the risks and has been a significant increase in credit risk value at original recognition and interest
rewards and has retained control of the are set out in Note 3.4.6.1 (b). income is subsequently recognised
asset, the asset continues to be recognised based on a credit-adjusted EIR. ECLs
only to the extent of the Group's continuing The 12mECL is the portion of LTECLs that are only recognised or released to the
involvement, in which case, the Group represent the ECLs that result from default extent that there is a subsequent change
also recognises an associated liability. The events on a financial instrument that are in the expected credit losses.
transferred asset and the associated liability possible within the 12 months after the
For financial assets for which the Group has
are measured on a basis that reflects the reporting date.
no reasonable expectations of recovering
rights and obligations that the Group has
either the entire outstanding amount, or
retained. Both LTECLs and 12mECLs are calculated on
a proportion thereof, the gross carrying
either an individual basis or a collective basis,
amount of the financial asset is reduced. This
Continuing involvement that takes the form depending on the nature of the underlying
is considered a (partial) derecognition of the
of a guarantee over the transferred asset is portfolio of financial instruments. The policy
financial asset.
measured at the lower of the original carrying for grouping financial assets measured on a
amount of the asset and the maximum collective basis is explained in Note 3.4.6.4.
3.4.6.1(a) Definition of default and cure
amount of consideration the Group could be The details of individual assessment of ECLs
required to pay. are given in Note 3.4.6.3. The Group considers a financial instrument
as defaulted and therefore Stage 3 (credit-
3.4.5.2(b) Financial liabilities The Group has established a policy to impaired) for ECL calculations in all cases
perform an assessment, at the end of each when the borrower becomes 90 days past
A financial liability is derecognised when the
reporting period, of whether a financial due on its contractual payments.
obligation under the liability is discharged,
cancelled or expired. Where an existing instrument's credit risk has increased
significantly since initial recognition, by As a part of a qualitative assessment of
financial liability is replaced by another from
considering the change in the risk of default whether an individually significant customer
the same lender on substantially different
occurring over the remaining life of the is in default, the Group also considers
terms, or the terms of an existing liability are
financial instrument. This is further explained a variety of instances that may indicate
unlikeliness to pay. When such events occur, of the cure. The corresponding reduction moved to stage 2. Further the exposures
the Group carefully considers whether the in ECL is recognised under "Impairment which are not individually significant has been
event should result in treating the customer charge/reversal" in Note 12 to the financial moved to stage 2 based on the industry risk
as defaulted and therefore assessed as Stage 3 statements. of the underlying borrowers. The Group has
for ECL calculations or whether Stage 2 is identified industries such as tourism, apparel,
appropriate. The Group's criterion for 'cure' for vehicle imports, construction (including
rescheduled/restructured loans is more condominiums), lending to overseas entities
Such events include: stringent than ordinary loans and is explained affected by COVID-19, agriculture, etc. as
 Internal rating of the borrower indicating in Note 3.4.6.11. industries carrying an increased credit risk.
default or near default Accordingly, exposures outstanding from
3.4.6.1(b) Significant increase in credit risk the borrowers operating in these industries
 The borrower requesting emergency
The Group continuously monitors all assets have been classified as stage 2 unless such
funding
subject to ECLs. In order to determine exposures are individually significant and has
 The borrower having past due liabilities whether an instrument or a portfolio of specifically identified as stage 1.
to public creditors or employees instruments is subject to 12mECL or LTECL,
the Group assesses whether there has been This approach ensures the volume of
 The borrower is deceased
a significant increase in credit risk since exposures in stage 2 reflects a forward-
 The borrower operates in an elevated initial recognition. The Group considers an looking view of the economy and not just
risk industry and the negative outlook of exposure to have a significantly increased what is observable as at the reporting date.
the industry has adversely affected the credit risk when it is past due for more than
loan repayment 30 days. 3.4.6.2 The calculation of ECL
The Group calculates ECL based on three
 The borrower is unable to revive the
The Group also applies secondary qualitative probability-weighted scenarios to measure
business and generate sufficient cash
methods for triggering a significant increase the expected cash shortfall (the base case,
flows to repay the outstanding after the
in credit risk, such as restructuring of an asset best case and the worst case), discounted at
end of the moratorium period
while the asset is less than 30 days past due. an approximation to the EIR. Each of these
 A material decrease in the underlying Further, rescheduled loans will remain in is associated with different loss rates. The
collateral value where the recovery of stage 2 for at least one year from the date of assessment of multiple scenarios incorporates
the loan is expected from the sale of the reschedulement even if such loans become how defaulted loans are expected to be
collateral less than 30 days past due. In certain cases, recovered, including the probability that the
the Group may also consider that events loans will cure and the value of collateral or
 A material decrease in the borrower's
explained in Note 3.4.6.1 (a) are significant the amount that might be received for selling
turnover or the loss of a major customer
increase in credit risk as opposed to a the asset.
 A covenant breach not waived by the default, for customers who are considered as
Group individually significant. Key elements of the ECL calculations are
 The debtor (or any legal entity within outlined below:

The Group is focused on supporting
the debtor's group) filing for bankruptcy  PD - The Probability of Default is an
customers who are experiencing financial
application/protection estimate of the likelihood of default
difficulties because of the COVID-19
 Debtor's listed debt or equity suspended over a given time horizon. A default may
pandemic and has offered a range of
at the primary exchange because only happen at a certain time over the
industry-wide financial assistance measures
of rumours or facts about financial assessed period, if the facility has not
including the debt moratorium initiated by
difficulties been previously derecognised and is still
the Central Bank of Sri Lanka. As per industry
in the portfolio. The concept of PD is
It is the Group's policy to consider a financial guidance given by the Central Bank and the
further explained in Note 3.4.6.4 (a).
instrument as 'cured' and therefore re- Institute of Chartered Accountants of Sri
classified out of Stage 3 when none of the Lanka, eligibility for the debt moratorium  EAD - The Exposure at Default is an
material default criteria have been present does not automatically result in a significant estimate of the exposure at a future
and the borrower is no longer considered increase in credit risk (SICR) which moves default date, taking into account
as non-performing in accordance with the an exposure from stage 1 (12-month ECL) expected changes in the exposure after
Directives of the Central Bank. to stage 2 (lifetime ECL). Accordingly, as the reporting date, including repayments
explained in Note 3.4.6.12, a case-by- of principal and interest, whether
Once cured, the decision whether to classify case analysis has been conducted on the scheduled by contract or otherwise,
an asset as Stage 2 or Stage 1 largely most significant exposures and only those expected drawdowns on committed
depends on the days past due, at the time exposures with increased credit risk has been facilities, and accrued interest from
missed payments. The EAD is further require. This normally encompasses re- 3.4.6.4 Grouping financial assets measured on
explained in Note 3.4.6.4 (b). assessment of the enforceability of any a collective basis
collateral held and the timing and amount of The Group calculates ECLs either on a
 LGD - The Loss Given Default is an
actual and anticipated receipts. Individually collective or an individual basis. Asset classes
estimate of the loss arising in the case
assessed impairment is only released when where the Group calculates ECL on an
where a default occurs at a given time. It
there is reasonable and objective evidence of individual basis include:
is based on the difference between the
a reduction in the established loss estimate.
contractual cash flows due and those
Interest on impaired assets continues to be  All customers whose exposure is more
that the lender would expect to receive,
recognised through the unwinding of the than or equal to the internal threshold
including the realisation of any collateral.
discount. for classifying them as individually
It is usually expressed as a percentage of
the EAD. The LGD is further explained significant. However, if the customer
When ECLs are determined for individually is determined to be not impaired such
in Note 3.4.6.4 (c).
significant financial assets, following factors customers are moved back to collective
With the exception of credit cards and other are considered: ECL calculation.
revolving facilities, for which the treatment
is separately set out in Note 3.4.6.6, the  Aggregate exposure to the customer  The treasury, trading and interbank
maximum period for which the credit losses including any undrawn exposures; relationships (such as Due from banks,
are determined is the contractual life of a debt and other instruments at amortised
 The viability of the customer's business cost/FVOCI)
financial instrument unless the Group has the
model and their capacity to trade
legal right to call it earlier. For all other asset classes, the Group
successfully out of financial difficulties
and generate sufficient cash flows to calculates ECL on a collective basis. The
3.4.6.3 Calculation of ECLs for individually Group categorises these exposures into
service debt obligations;
significant loans smaller homogeneous portfolios, based
The Group first assesses ECLs individually  The amount and timing of expected on a combination of internal and external
for financial assets that are individually receipts and recoveries; characteristics of the loans, as described
significant to the Group. In the event  The extent of other creditors' below:
the Group determines that such assets commitments ranking ahead of, or pari-
are not impaired, moves in to a group passu with the Bank and the likelihood  Product type
of financial assets with similar credit risk of other creditors continuing to support  Type of collateral
characteristics and collectively assesses them the company;
for impairment. However, assets that are  Industry of the borrower
 The complexity of determining the
individually assessed for impairment and for  Whether the loan is restructured/
aggregate amount and ranking of all
which an impairment loss is or continues to rescheduled
creditor claims and the extent to which
be recognised are not included in a collective
legal and insurance uncertainties are 3.4.6.4 (a) The internal rating and PD
assessment of impairment. The criteria used
evident; estimation process
to determine whether individually significant
customer is in default is discussed in Note  The realisable value of security (or The Bank and its' subsidiary, Siyapatha
3.4.6.1 (a). other credit mitigants) and likelihood of Finance PLC have their own internal rating
successful repossession; models. These models incorporate both
If the asset is impaired, the amount of the qualitative and quantitative information
 The likely deduction of any costs
loss is measured by discounting the expected and, in addition to information specific to
involved in recovery of amounts
future cash flows of a financial asset at its the borrower, utilise supplemental external
outstanding;
original effective interest rate and comparing information that could affect the borrower's
the resultant present value with the  The ability of the borrower to obtain behaviour. Although these PDs are used for
financial asset's current carrying amount. In and make payments in the currency regulatory purposes, the same is not used for
determining the expected future cash flows, of the loan if not denominated in local PD estimation under SLFRS 9.
the Group takes in to account the base case, currency; and
the best case and the worst case scenarios PD estimation for loans and advances
 The likely dividend available on
considering various modes of settlement of under SLFRS 9 is largely based on the Days
liquidation or bankruptcy
the impaired credit facilities. The impairment Past Due (DPD) of the customers which is
on individually significant accounts are common for most banks in the country at
reviewed more regularly when circumstances present.
Accordingly, exposures are categorised in time, corresponding the multiple scenarios. is recycled to the profit and loss upon
among 5 groups based on the DPD as The SLFRS 9 PDs are then assigned to each derecognition of the assets.
follows. economic scenario based on the outcome of
Group's models. 3.4.6.6 Credit cards and other revolving
 Zero days past due facilities
3.4.6.4(c) Loss given default The Bank's product offering includes credit
 1 - 30 days past due
LGD values are assessed at least annually card facilities and other revolving products, in
 31 - 60 days past due for each material collateral type. The Group which the Bank has the right to cancel and/or
 61 - 90 days past due segregates its customer loan book based on reduce the facilities with a very short notice.
following major types of collaterals when The Bank does not limit its exposure to credit
 Above 90 days past due
calculating the LGD. losses to the contractual notice period, but,
instead calculates ECL over a period of 12
The Bank is in the process of developing  Secured against cash/deposits held
months to reflect the Bank's expectations
its internal risk rating system to suit the within the bank
of the customer behaviour, its likelihood of
requirements of SLFRS 9.
 Secured against immovable property default and the Bank's future risk mitigation
procedures, which could include reducing or
The movement of the customers into  Secured against motor vehicles and
cancelling the facilities.
bad DPD categories are tracked at each other movable properties
account level over the periods and it is used
 Secured against gold 3.4.6.7 Forward looking information
to estimate the amount of loans that will
eventually be written off.  Secured against listed shares The COVID-19 pandemic has significantly
impacted the local economy. The economic
 Secured against lease receivables
However, for loans granted to banks, debt environment remains uncertain and future
& other financial instruments classified as These LGD rates consider the expected EAD impairment charges may be subject to
amortised cost/FVOCI, the Group relies in comparison to the amount expected to further volatility depending on the longevity
on external credit ratings in determining be recovered or realised from any collateral of the COVID-19 pandemic and related
their respective PDs. Due to limited held. Historically collected loss data is used containment measures. To reflect these
stage movements in loan portfolios under for LGD calculation and involves a wider set uncertainties in the calculation of expected
moratorium schemes, the Group has used of transaction characteristics (e.g. product credit losses, the Group has changed the
additional assessments of SICR as explained type, collateral type) as well as borrower weightages assigned for multiple economic
in Note 3.4.6.1 (b) to build an allowance characteristics. Further, recent data and scenarios during the year. Weightages
of overlay to better reflect the portfolio forward-looking economic scenarios are assigned for each scenario is given below
position. used in order to determine the LGD for along with the weightages used in 2019.
each collateral type. The LGD rates, where
2020 2019
3.4.6.4(b) Exposure at default possible, are calibrated through back testing
The exposure at default (EAD) represents against recent recoveries. Base Case 50% 60%
the gross carrying amount of the financial Best Case 5% 15%
For financial investments other than loans Worst Case 45% 25%
instruments subject to the impairment
and advances, the Group uses the LGD rates
calculation, addressing both the client's ability
specified by the regulator in the Basel III In its ECL models, the Group relies on a broad
to increase its exposure while approaching
guidelines when calculating the ECL as per range of forward-looking information as
default and potential early repayments too.
SLFRS 9. economic inputs. These inputs are tabulated
To calculate the EAD for a Stage 1 loan, the below along with their respective values for
3.4.6.5 Debt instruments measured at FVOCI 2021 under the base case scenario.
Group assesses the possible default events
within 12 months. However, if a Stage 1 loan The ECLs for debt instruments measured at
Base Case
that is expected to default within the 12 FVOCI do not reduce the carrying amount
(2021)
months from the balance sheet date is also of these financial assets in the statement of
expected to cure and subsequently default financial position, which remains at fair value. GDP growth % 1.3
again, then all linked default events are Instead, an amount equal to the impairment Unemployment rate % 5.4
considered. For Stage 2 and Stage 3 financial that would arise if the assets were measured Interest rate % (AWPLR) 7.9
assets and credit impaired financial assets at amortised cost is recognised in OCI as USD exchange rate (Rs) 196.7
at origination, events over the lifetime of an accumulated impairment amount, with Inflation rate % (Annual average) 5.0
the instruments are considered. The Group a corresponding charge to profit or loss. World GDP growth % 5.1
determines EADs by modelling the range of The accumulated loss recognised in OCI
possible exposure outcomes at various points
The inputs and models used for calculating property, plant and equipment during the 3.4.6.12 Relief Measures to Assist COVID-19
ECLs may not always capture all years ended 31st December 2020 and 2019. Affected Businesses and Individuals
characteristics of the market as at the date by CBSL
of the financial statements. To reflect this, 3.4.6.10 Write-offs The COVID-19 pandemic has significantly
qualitative adjustments or overlays are Financial assets are written off either partially impacted the local economy as the
occasionally made as temporary adjustments or in their entirety only when the Group government had to impose travel bans and
when such differences are significantly has stopped pursuing the recovery. If the lockdowns on millions of people. Many
material. amount to be written off is greater than the people in many locations are still subjected
accumulated impairment, the difference is to quarantine measures. Businesses are
To ensure completeness and accuracy, the first treated as an addition to the impairment dealing with lost revenue and disrupted
Group obtains the above data primarily from that is then applied against the gross carrying supply chains. As a result of the disruption
Central Bank. Other third party sources such amount. Any subsequent recoveries are to businesses, some people lost their jobs
as World Bank and International Monetary credited to the statement of profit or loss. and many businesses have been adversely
Fund etc is also used when CBSL data is not affected. Central Bank of Sri Lanka has
available. The Bank's internal Research Unit 3.4.6.11 Rescheduled and restructured loans provided financial assistance to disrupted
reviews the inputs used and the weights industry sectors and the affected businesses/
The Group sometimes makes concessions
attributed to multiple scenarios. individuals in the form of a debt moratorium
or modifications to the original terms of
loans in response to the borrower's financial through licensed banks/financial institutions
3.4.6.8 Collateral valuation
difficulties, rather than taking possession of in the country.
To mitigate its credit risks on financial assets, the collateral. The Group considers a loan
the Group seeks to use collateral, where as rescheduled/restructured, when such 3.4.6.12 (a) COVID-19 Moratorium (First
possible. concessions or modifications are provided Wave): Circular No. 4 of 2020
as a result of the borrower's present or CBSL issued Circular No. 4 of 2020 on
The collateral comes in various forms, such as expected financial difficulties and the 24th March 2020 instructing banks to offer
cash, securities, letter of credit/guarantees, Group would not have agreed to them if a debt moratorium to COVID-19 affected
real estate, receivables, inventories, other the borrower had been financially healthy. segments of the economy. According to the
non-financial assets and credit enhancements Indicators of financial difficulties include above circular, banks were required to offer
such as netting agreements. The fair value defaults on covenants, or significant concerns moratoriums of 2 months, 3 months &
of collateral affects the calculation of ECLs. raised by the Credit Risk Department. 6 months for eligible borrowers under
It is generally assessed, at a minimum, at Reschedulement/restructure may involve different qualifying criteria.
inception and to fall in line with the CBSL extending the payment arrangements and
directives. the agreement of new loan conditions. Once Instalments (both capital and interest) fallen
the terms have been renegotiated, any due during the moratorium period have
To the extent possible, the Group uses active
impairment is measured using the original been converted to a new loan account which
market data for valuing financial assets held
EIR as calculated before the modification can be repaid by the borrowers after the
as collateral. Other financial assets which
of terms. It is the Group's policy to monitor moratorium period. Repayment period of
do not have readily determinable market
rescheduled/restructured loans to ensure the new loan varies based on the repayment
values are valued using models. Non-financial
that future payments are likely to occur. capacity of each borrower and the terms
collateral, such as real estate, is valued based
When the Group reschedule/restructure a and conditions of the loan agreement with
on data provided by third parties such as
loan facility of a customer, the entire portfolio the Bank. When initially recognised, the new
independent valuation specialists.
of the customer is classified as minimum loans were recorded at their nominal value as
Stage 2 at the modification date. The Group the Group considers that it is representative
3.4.6.9 Collateral repossessed
also considers whether such assets should be of the fair value.
The Group's policy is to determine whether classified as Stage 3. Rescheduled customers
a repossessed asset can be best used for will remain in stage 3/stage 2 for at least As per the Circular No. 4 of 2020 and the
its internal operations or should be sold. one year even the rescheduled loan facility subsequent communications issued by the
Assets determined to be useful for the becomes a performing loan in terms of CBSL in this regard, banks were required
internal operations are transferred to the CBSL Directives. Details of restructured/ to charge interest at a reduced rate of 7%
relevant asset category at the lower of the rescheduled loans are disclosed in Note per annum during the moratorium period
repossessed value or the carrying value of 50.2.1 (g). If modifications are substantial, the for equated monthly instalments (EMI)
the original secured asset. The Bank did loan is derecognised, as explained in Note loans. Non – EMI loans were not eligible
not transfer any repossessed assets to its 3.4.5.1. for any interest rate concession during the
moratorium period.
As explained in Note 3.4.5.1, the Group moratorium. An analysis of the loans eligible at the inception of the transaction, the
derecognises a financial asset, such as a for the second phase of the COVID-19 relationship between hedging instruments
loan to a customer, when the terms and moratorium is presented in Note 50.2.1(h) to and hedged items, as well as its risk
conditions have been renegotiated to the the Financial Statements. management objective and strategy for
extent that, substantially, it becomes a new undertaking various hedge transactions. The
loan. However, the Group concluded that the The granting of the moratorium is directly Group also documents its assessment, both
COVID-19 moratorium did not give rise to a related to the cash flow difficulties generated at hedge inception and on an ongoing basis,
substantial modification to the original terms by the occurrence of the COVID-19 of whether the derivatives that are used in
and conditions of the moratorium eligible pandemic. However, it did not led to an hedging transactions are highly effective in
loans. Accordingly, the Group continued to automatic transfer of these credit facilities offsetting changes in fair values or cash flows
recognise the moratorium eligible loans at into stage 2 or stage 3. A case-by-case of hedged items.
the original EIR of the loans while recognise analysis has been conducted on the most
a modification loss by discounting the revised significant exposures and only those The Group did not designate any derivative
cashflows of the loan at the original EIR. exposures with increased credit risk has as a hedging instrument during the years
been moved to stage 2 and stage 3. Further ended 31st December 2020 and 2019.
Total modification loss recognise during the exposures which are not individually
the year ended 31st December 2020 on significant has been moved to stage 2 3.4.9 Amortised Cost Measurement
account of COVID–19 moratorium eligible based on the industry risk of the underlying The amortised cost of a financial asset or
loans amounted to Rs 3,087 Mn. All loans borrowers. liability is the amount at which the financial
eligible for the COVID-19 moratorium (first asset or liability is measured at initial
wave) completed the moratorium period on 3.4.7 Offsetting of Financial Instruments recognition, minus principal repayments,
or before 30th September 2020. The total Financial assets and financial liabilities are plus or minus the cumulative amortisation
modification loss has been recognised under offset and the net amount presented in the using the effective interest method of
interest income in Note 7 to the financial Statement of Financial Position only when any difference between the initial amount
statements. the Group has a legal right to set-off the recognised and the maturity amount, minus
recognised amounts and it intends either to any reduction for impairment.
3.4.6.12 (b) COVID-19 Moratorium (Second settle on a net basis or to realise the asset
Wave): CBSL Circular No. 8 of 2020/ and settle the liability simultaneously. Income 3.4.10 Fair Value Measurement
No. 10 of 2020 and expenses are presented on a net basis 'Fair value' is the price that would be received
Second wave of the COVID-19 outbreak in only when permitted under LKASs/SLFRSs to sell an asset or paid to transfer a liability
the country resulted in reimposing the travel or for gains and losses arising from a group (exit price) in an orderly transaction between
restrictions, leading to disruption of economic of similar transactions such as in the Group's market participants at the measurement date
activities. Giving due consideration on the trading activity. in the principal or, in its absence, the most
requests received from affected individuals advantageous market to which the Group
and businesses, CBSL advised licensed banks 3.4.8 Hedge Accounting has access at that date. The fair value of a
to extend the debt moratorium for a further The Group designates certain derivatives as liability reflects its non-performance risk.
period of six months commencing from 1st either: When available, the Group measures the fair
October 2020 to 31st March 2021. Licensed value of an instrument using the quoted price
banks shall convert the capital and interest  Hedges of fair value of recognised in an active market for that instrument (Level
falling due during the moratorium period assets, liabilities or firm commitments 01 valuation). A market is regarded as active
commencing from 1st October 2020 to (fair value hedge); if transactions for the asset or liability take
31st March 2021 into a term loan of which place with sufficient frequency and volume
 Hedges of highly probable future cash
repayment shall commence from July 2021. to provide pricing information on an ongoing
flows attributable to a recognised asset
Repayment period of the new loan shall basis.
or liability, or a forecast transaction (cash
be two years in general, however may vary
flow hedge); or
based on the terms and conditions agreed If there is no quoted price in an active
with the borrower. The banks were allowed  Hedges of net investments in foreign market, then the Group uses valuation
to recover interest at the original EIR during operations (net investment hedges) techniques that maximise the use of relevant
the moratorium period and therefore did not observable inputs and minimise the use of
recognise any modification loss on account Hedge accounting is used for derivatives unobservable inputs. The chosen valuation
of the second phase of the COVID-19 designated in this way provided certain technique incorporates all of the factors that
criteria are met. The Group documents,
market participants would take into account 3.5 Leases dismantle and remove the underlying assets
in pricing a transaction. At inception of a contract, the Group or to restore the underlying asset or the
assesses whether the contract is, or contains site on which it is located, less any lease
The best evidence of the fair value of a a lease. A contract is, or contains a lease, incentives received.
financial instrument at initial recognition is if the contract conveys the right to control
normally the transaction price - i.e. the fair the use of an identified asset for a period The right of use asset is subsequently
value of the consideration given or received. of time in exchange for a consideration. To depreciated using straight line method from
If the Group determines that the fair value at assess whether a contract conveys the right the commencement date to the earlier of
initial recognition differs from the transaction to control the use of an identified asset, the the end of the useful life of the right of
price and the fair value is evidenced neither Group considers whether: use asset or the end of the lease term. The
by a quoted price in an active market for an estimated useful lives of right of use assets
identical asset or liability (Level 01 valuation)  The contract involves the use of an are determined on the same basis as those of
nor based on a valuation technique that uses identified asset. This may be specified property plant and equipment and are in the
only data from observable markets (Level 02 explicitly or implicitly and should range of 2 to 14 years.
valuation), then the financial instrument is be physically distinct or represent
initially measured at fair value, adjusted to substantially all of the capacity of a In addition, the right of use asset is
defer the difference between the fair value at physically distinct asset. If the supplier periodically reduced by impairment
initial recognition and the transaction price. has a substantive substitution right, then losses, if any, and adjusted for certain re-
Subsequently, that difference is recognised the asset is not identified; measurements of the lease liability.
in profit or loss on an appropriate basis over
the life of the instrument but not later than  The Group has right to obtain The lease liability is initially measured at
when the valuation is wholly supported by substantially all of the economic benefits the present value of the lease payments
observable market data or the transaction is from use of asset throughout the period that are not paid at the commencement
closed out. of use; and date, discounted using the interest rate
 The Group has right to direct the use of implicit in the lease or, if that rate cannot be
Fair values reflect the credit risk of the the asset. The Group has this right when readily determined, the Groups’ incremental
instrument and include adjustments to take it has the decision-making rights that are borrowing rate. Generally, the Group uses its
account of the credit risk of the Group entity most relevant to changing how and for incremental borrowing rate as the discount
and the counterparty where appropriate. what purpose the asset is used. In rare rate.
Fair value estimates obtained from models cases where the decision about how and
are adjusted for any other factors, such as The lease liability is subsequently measured
for what purpose the asset is used is
liquidity risk or model uncertainties; to the at amortised cost using the effective interest
predetermined, the Group has the right
extent that the Group believes a third-party method. It is re-measured when there is a
to direct the use of the asset if either;
market participant would take them into change in future lease payments such as
account in pricing a transaction.  The Group has the right to operate the Group changes its assessment of whether
asset; or it will exercise a purchase, extension or
The fair value of a demand deposit is not  The Group designed the asset in a way termination option. When the lease liability
less than the amount payable on demand, that predetermines how and for what is re-measured in this way, a corresponding
discounted from the first date on which the purpose it will be used. adjustment is made to the carrying amount of
amount could be required to be paid. the right of use asset, or is recorded in profit
3.5.1 Group as the Lessee or loss if the carrying amount of the right of
A fair value measurement of a non-financial use asset has been reduced to zero.
The Group recognises a right of use asset and
asset considers a market participant's ability
a lease liability at the lease commencement
to generate economic benefits by using the The Group presents right of use assets under
date. The right of use asset is initially
asset in its highest and best use or by selling Note 31 to the financial statements while the
measured at cost, which comprises the initial
it to another market participant that would corresponding lease liability is presented in
amount of the lease liability adjusted for
use the asset in its highest and best use. Note 40, ‘Other Liabilities’.
any lease payments made on or before the
commencement date, plus any initial direct
The Group recognises transfers between
costs incurred and an estimate of costs to
levels of the fair value hierarchy as of the
end of the reporting period during which the
change has occurred.
3.5.1(a) Short term leases and leases of low reliably, and it is probable that an outflow of asset is required, the Group estimates the
value assets economic benefits will be required to settle asset’s recoverable amount. An impairment
The Group has elected not to recognise the obligation. loss is recognised if the carrying amount of
right-of-use assets and lease liabilities for an asset exceeds its estimated recoverable
short term leases (that have a lease term of The amount recognised is the best estimate amount. The recoverable amount of an asset
12 months or less) and leases of low value of the consideration required to settle is the greater of its value in use and its fair
assets. The Group recognises lease payments the present obligation at the reporting value less costs to sell. In assessing value
associated with these leases as an expense date, taking in to account the risks and in use, the estimated future cash flows are
on a straight line basis over the lease term. uncertainties surrounding the obligation at discounted to their present value using a pre-
that date. Where a provision is measured tax discount rate that reflects current market
3.5.2 Group as the Lessor using cash flows estimated to settle the assessments of the time value of money and
present obligation, its carrying amount is the risks specific to the asset.
When the Group acts as a lessor, it
determined based on the present value of
determines at least inception whether each 3.10 Recognition of Income
those cash flows.
lease is a finance lease or an operating lease.
Revenue is recognised to the extent that it is
To classify each lease, the Group makes an
A provision for onerous contracts is probable that the economic benefits will flow
overall assessment of whether the lease
recognised when the expected benefits to to the Group and the revenue can be reliably
transfers substantially all of the risks and
be derived by the Group from a contract are measured. Specific recognition criteria that
rewards incidental to ownership of the
lower than the unavoidable cost of meeting must be met before revenue is recognised
underlying asset. If this is the case, then
its obligations under the contract. The is discussed under Note 7 - Net Interest
the lease is a finance lease. If not it is an
provision is measured as the present value of Income, Note 8 - Net Fee and Commission
operating lease. As part of this assessment,
the lower of the expected cost of terminating Income, Note 9 - Net Gain/Loss from Trading
the Group considers certain indicators such
the contract and the expected net cost of and Note 10 - Net Gain on Derecognition of
as whether the lease is for the major part of
continuing with the contract. Financial Assets.
the economic life of the assets.
Before a provision is established, the Group 3.11 Other Taxes

When the Group is the lessor under a finance
recognises any impairment loss on the assets 3.11.1 Value Added Tax (VAT)
lease contract, the amounts due under the
associated with that contract. The expense
leases, after deduction of unearned interest VAT on financial services is calculated in
relating to any provision is presented in
income, are included in Note 25, 'Loans accordance with Value Added Tax (VAT) Act
the Statement of Profit or Loss net of any
and advances’. Interest income receivable is No. 14 of 2002 and subsequent amendments
reimbursement.
recognised in 'Net interest income' over the thereto. The base for the computation of
periods of the leases so as to give a constant value added tax on financial services is the
3.8 Operational Risk Events
rate of return on the net investment in the accounting profit before VAT and income tax
Provisions for operational risk events
leases. adjusted for the economic depreciation and
are recognised for losses incurred by the
emoluments payable to employees including
The Group recognises lease payments Group which do not relate directly to the
cash benefits, non-cash benefits & provisions
received under operating leases as income amounts of principal outstanding for loans
relating to terminal benefits.
on a straight line basis over the lease term as and advances. The amount recognised
part of other income. as a provision is the best estimate of the 3.11.2 Nation Building Tax (NBT)
expenditure required to settle the present
NBT on financial services was calculated
3.6 Fiduciary Assets obligation as at the reporting date, taking
based on the same value addition used for
into account the risks and uncertainties that
The Group provides fiduciary services that the purpose of VAT on financial services,
surround the events and circumstances that
result in the holding of assets on behalf of its in accordance with Nation Building Tax
affect the provision.
customers. Assets held in fiduciary capacity (NBT) Act No. 9 of 2009 and subsequent
are not reported in the Financial Statements, amendments thereto. This tax was abolished
3.9 Impairment of Non-Financial Assets
as they are not assets of the Group. by the government with effect from 1st
The carrying amounts of the Group’s non-
December 2019.
3.7 Provisions financial assets, other than deferred tax
assets, are reviewed at each reporting date
A provision is recognised if, as a result of a
to determine whether there is any indication
past event, the Group has a present legal or
of impairment. If any such indication exists
constructive obligation that can be estimated
or when annual impairment testing for an
3.11.3 Debt Repayment Levy (DRL) The Bank's total capital ratio as at 31st 5. STANDARDS ISSUED BUT NOT
According to the Finance Act No. 35 of 2018, December 2019 exceeded 14% and YET EFFECTIVE AS AT 31ST
every financial institution paid 7% on the accordingly the Bank paid a premium of DECEMBER 2020
value addition attributable to the supply of 0.10% during the year ended 31st December The following new Sri Lanka Accounting
financial services by such institution as DRL, 2020. Standards/amendments which have
with effect from 1st October 2018. DRL was been issued by the Institute of Chartered
calculated based on the value addition used 3.12.2 Crop Insurance Levy
Accountants of Sri Lanka is effective for
for the purpose of VAT on financial services. In terms of the Finance Act No. 12 of 2013, annual periods beginning on or after 1st
This tax was abolished by the government all institutions under the purview of Banking January 2021.
with effect from 1st January 2020. Act No. 30 of 1988, Finance Business Act
No. 42 of 2011 and Regulation of Insurance  Sri Lanka Accounting Standard – SLFRS
3.12 Regulatory Provisions Industry Act No. 43 of 2000 are required 17 (Insurance Contracts)
3.12.1 Deposit Insurance and Liquidity to pay 1% of the profit after tax as Crop Consolidated/Separate Financial
Support Scheme Insurance Levy to the National Insurance Statements of the Group/Bank is not
Trust Fund effective from 1st April 2013. expected to have a material impact from
In terms of the Banking Act Direction No.
5 of 2010 "Insurance of Deposit Liabilities" SLFRS -17 (Insurance Contracts).
4. NEW ACCOUNTING STANDARDS
issued on 27th September 2010 and
ISSUED DURING THE  Interest Rate Benchmark Reform -
subsequent amendments there to, all
YEAR/CHANGES TO ALREADY Amendments to SLFRS 9, LKAS 39,
Licensed Commercial Banks are required to
EXISTING ACCOUNTING SLFRS 4 & SLFRS 16
insure their deposit liabilities in the "Sri Lanka
STANDARDS The Bank/Group is in the process of
Deposit Insurance and Liquidity Support
Scheme". There were no new accounting standards evaluating the impact of this amendment
issued by the Institute of Chartered on Consolidated/Separate Financial
Deposits to be insured include demand, time Accountants of Sri Lanka during the Statements.
and savings deposit liabilities and exclude the year ended 31st December 2020. The
following; amendments to the following existing Sri
Lanka Accounting Standards which were
 deposit liabilities to member institutions effective from 1st January 2020 did not
have a material impact on the Consolidated/
 deposit liabilities to government of Sri
Separate Financial Statements of the Group/
Lanka
Bank.
 deposit liabilities to Directors, key
management personnel and other  Sri Lanka Accounting Standard - SLFRS
related parties as defined in Banking Act 16 (Leases): COVID-19 Related Rent
Direction No. 11 of 2007 on Corporate Concessions
Governance of Licensed Commercial  Sri Lanka Accounting Standard - SLFRS 3
Banks (Business Combinations)
 deposit liabilities held as collateral  Sri Lanka Accounting Standard - LKAS 1
against any accommodation granted (Presentation of Financial Statements)
 deposit liabilities falling within the  Sri Lanka Accounting Standard - LKAS 8
meaning of abandoned property in terms (Accounting Policies, Changes in
of the Banking Act and dormant deposits Accounting Estimates and Errors)
in terms of the Finance Business Act,
funds of which have been transferred to
Central Bank of Sri Lanka.
6 GROSS INCOME
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Interest income 7.1 88,628,336 103,566,877 94,647,361 109,855,396

Fee & commission income 8 9,775,379 11,719,108 10,270,563 12,076,208
Net gain from trading 9 24,787 2,205,878 24,787 2,205,878
Net gain on derecognition of financial assets 10 423,814 113,670 423,814 113,670
Net other operating income 11 3,486,660 1,249,016 3,841,439 1,669,370
102,338,976 118,854,549 109,207,964 125,920,522
7 NET INTEREST INCOME
ACCOUNTING POLICY
Recognition of Interest Income
The Group recognises interest income for all financial instruments measured at amortised cost, financial instruments designated at
FVPL and interest-bearing financial assets measured at FVOCI using the effective interest rate (EIR) method. The EIR is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter
period, to the net carrying amount of the financial asset.
The EIR (and therefore, the amortised cost of the asset) is calculated by taking into account any discount or premium on acquisition,
fees and costs that are an integral part of the EIR. The Group recognises interest income using a rate of return that represents the
best estimate of a constant rate of return over the expected life of the loan. Hence, it recognises the effect of potentially different
interest rates charged at various stages, and other characteristics of the product life cycle (including prepayments, penalty interest
and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is booked
as a positive or negative adjustment to the carrying amount of the asset in the statement of financial position with an increase or
reduction in interest income. The adjustment is subsequently amortised through interest and similar income in the income statement.
When a financial asset becomes credit-impaired (as set out in Note 3.4.6.1 (a)) and is, therefore, regarded as ‘Stage 3’, the Group
calculates interest income by applying the effective interest rate to the net amortised cost of the financial asset. If the financial asset
cures and is no longer credit-impaired, the Group reverts to calculating interest income on a gross basis. Interest income on all trading
assets and financial assets mandatorily required to be measured at FVPL is recognised using the contractual interest rate under net
interest income.
7.1 Interest Income
Bank Group
For the year ended 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Placements with banks 512,843 410,315 512,843 410,315

Financial assets recognised through profit or loss - measured at fair value 928,897 1,422,689 928,897 1,422,689
Reverse repurchase agreements 227,168 114,039 410,752 327,568
- loans & advances 69,397,299 85,592,680 75,216,599 91,583,056
- debt & other instruments 13,062,057 11,741,559 13,063,558 11,741,963
Interest income accrued on impaired loans & advances (Note 25.2) 3,333,638 2,809,924 3,348,278 2,894,134
Financial assets - fair value through other comprehensive income 1,166,434 1,475,671 1,166,434 1,475,671
88,628,336 103,566,877 94,647,361 109,855,396
As explained in Note 3.4.6.12(a), modifications to the original terms and conditions of the loans due to COVID-19 moratorium did
not result in a derecognition of the original loans as the Group concluded that the modifications were not substantial. Accordingly,
modification loss of Rs 3,087 Mn has been recognised by the Bank/Group during the year ended 31st December 2020 under interest
income, representing the difference between the original carrying value of the loan (before modification) and the discounted present
value of the revised cash flows (at the Original EIR) at the date of the loan modification.
7 NET INTEREST INCOME CONTD.

7.2 Interest Expense
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Securities sold under repurchase agreements (Note 7.3) 299,910 608,660 297,874 606,674
-due to depositors 47,433,811 52,936,752 49,077,536 54,423,648
-due to other borrowers 2,339,787 3,102,978 3,303,016 4,395,508
-due to debt securities holders 4,260,675 4,722,542 4,845,661 5,296,899
Finance leases (Notes 31.1) 470,735 620,740 295,941 368,897
54,804,918 61,991,672 57,820,028 65,091,626
Net interest income 33,823,418 41,575,205 36,827,333 44,763,770
7.3 Net Interest Income from Sri Lanka Government Securities
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Interest income 14,676,961 13,634,919 14,862,046 13,848,852

Interest expense (Note 7.2) (299,910) (608,660) (297,874) (606,674)
Net interest income from government securities 14,377,051 13,026,259 14,564,172 13,242,178
8 NET FEE AND COMMISSION INCOME
ACCOUNTING POLICY
Fee Income Earned from Services that are Provided over a Certain Period of Time
Fees earned for the provision of services over a period of time are accrued over that period. These fees include professional fees,
trade service fees, commission income and asset management fees etc. Loan commitment fees for loans that are likely to be drawn
down and other credit related fees are deferred (together with any incremental costs) and recognised as an adjustment to the
effective interest rate of the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognised over
the commitment period on a straight-line basis.
Fee Income from Providing Transaction Services

Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of an
acquisition of shares or other securities or the purchase or sale of businesses, are recognised on completion of the underlying
transaction. Fees or components of fees that are linked to a certain performance are recognised as the related services are
performed.
Expenses on Account of Customer Loyalty Program

Award credits under customer loyalty program are accounted for as a separately identifiable component of the transaction in which
they are granted. The fair value of the consideration received in respect of the initial sale is allocated between the award credits and
the other components of the sale. Expense incurred for customer loyalty program is accounted under fee and commission expense.
Other Fee and Commission Expense

Other fee and commission expense relate mainly to transactions and services fees which are expensed as the services are received.
Fee and commission expenses are recognised on an accrual basis.
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Fee & commission income 9,775,379 11,719,108 10,270,563 12,076,208

Fee & commission expense (1,320,583) (1,686,195) (1,321,437) (1,687,526)
Net fee & commission income 8,454,796 10,032,913 8,949,126 10,388,682
Comprising:
Loans & advances 1,170,019 1,679,009 1,446,944 1,990,507
Credit & debit cards 2,776,083 3,308,854 2,776,083 3,308,854
Trade & remittances 2,046,731 1,971,031 2,046,731 1,971,031
Deposits 441,057 922,598 441,139 922,598
Guarantees 560,999 580,266 561,044 580,336
Other banking & financial services 1,459,907 1,571,155 1,677,185 1,615,356
Net fee & commission income 8,454,796 10,032,913 8,949,126 10,388,682
9 NET GAIN/(LOSS) FROM TRADING
ACCOUNTING POLICY
Net gain/(loss) from trading includes all the gains and losses from changes in fair value and dividend from financial assets measured
at fair value through profit or loss. Dividend income is recognised when the Group’s right to receive the payment is established.
This category also includes foreign exchange differences arising from derivative contracts which are not designated as hedging
instruments.
Bank & Group

Rs 000 Rs 000
Forward exchange contract revaluation (loss)/gain

- Inter bank (1,716,544) 1,933,121
- Others 1,613,427 106,846
Net mark to market gain - government securities & equity securities 123,145 161,217
Dividend income 4,759 4,694
24,787 2,205,878
10 NET GAIN ON DERECOGNITION OF FINANCIAL ASSETS
ACCOUNTING POLICY
Net gain/(loss) on derecognition of financial assets include realised gain/(loss) related to financial assets measured at fair value
through profit or loss, debt instruments measured at FVOCI and financial instruments measured at amortised cost.
Bank & Group

Rs 000 Rs 000
Recognised at:
- fair value through profit or loss 243,977 94,130
- fair value through other comprehensive income 179,418 16,842
- amortised cost 419 2,698
423,814 113,670
11 NET OTHER OPERATING INCOME
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Exchange income
- Inter bank 889,973 202,818 889,973 202,818
- Others 2,005,125 549,970 2,005,125 549,970
Dividend income from financial assets at FVOCI 118,497 139,183 118,817 139,424
Dividend income from subsidiaries 201,926 68,053 - -
(Loss)/profit on disposal of property, plant & equipment (1,249) (2,206) 31 (1,706)
Rental & other income 272,388 291,198 827,493 778,864
3,486,660 1,249,016 3,841,439 1,669,370
11.1 Exchange income represents both revaluation gain/(loss) on the Bank's net open position and realised exchange gain/(loss) on foreign
exchange contracts including the Bank's currency notes operation. Loss on forward exchange contracts amounting to Rs 103 Mn (2019:
profit Rs 2,040 Mn) is reported under Note 9, 'Net gain/(loss) from trading' as required by the Sri Lanka Accounting Standard SLFRS 9
(Financial Instruments). Accordingly total exchange income of the Bank & the Group for the year ended 31st December 2020 amounted
to Rs 2,792 Mn (2019: Rs 2,793 Mn).
12 IMPAIRMENT CHARGE/(REVERSAL)
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Cash & cash equivalents (Note 20.2)

Stage 1 22,625 (4,461) 22,629 (4,453)
Stage 2 - - - -
Stage 3 - - - -
22,625 (4,461) 22,629 (4,453)
Placements with banks (Note 22.2)
Stage 1 (164) (1,584) (164) (1,584)
Stage 2 - - - -
Stage 3 - - - -
(164) (1,584) (164) (1,584)
Financial assets at amortised cost - loans & advances (Note 25.2)
Stage 1 (158,801) 935,090 (130,139) 961,567
Stage 2 5,190,768 3,411,479 5,364,773 3,427,962
Stage 3 5,128,048 7,667,983 6,276,614 8,781,281
10,160,015 12,014,552 11,511,248 13,170,810
Financial assets at amortised cost - debt & other instruments (Note 26.4)
Stage 1 1,335,000 87,444 1,335,000 87,444
Stage 2 - - - -
Stage 3 36,095 254,784 36,095 254,784
1,371,095 342,228 1,371,095 342,228
Financial assets at fair value through other comprehensive income (Note 43.2)
Stage 1 19,527 - 19,527 -
Stage 2 - - - -
Stage 3 - - - -
19,527 - 19,527 -
Credit related commitments & contingencies (Note 45.2)
Stage 1 379,587 117,338 380,587 117,455
Stage 2 51,000 65,906 50,841 66,065
Stage 3 (162,009) 49,897 (162,009) 49,897
268,578 233,141 269,419 233,417
Investment in subsidiaries (Note 28) (58,975) (6,219) - -
Property, plant & equipment (Note 29.3) - (4,632) - (4,632)
Others - - 7,172 14,791
11,782,701 12,573,025 13,200,926 13,750,577
13 PERSONNEL EXPENSES
ACCOUNTING POLICY
Short Term Employee Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans if the Group has a
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.
Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
(a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay
all employee benefits relating to employee services in the current and prior periods, as defined in the Sri Lanka Accounting Standard -
LKAS 19 (Employee Benefits).
The contribution payable by the employer to a defined contribution plan is in proportion to the services rendered to the Group by
the employees and is recorded as an expense under ‘Personnel expenses’ as and when they become due. Unpaid contributions are
recorded as a liability under ‘Other liabilities’ in Note 40.
The Group contributes 3% of the salary of each employee to the Employees’ Trust Fund. Further, the subsidiary companies contribute
12% on the salary of each employee to the Employees’ Provident Fund. The above expenses are identified as contributions to
“Defined Contribution Plans” as defined in the Sri Lanka Accounting Standard - LKAS 19 (Employee Benefits).
Defined Benefit Plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Accordingly, the pension fund,
staff gratuity and the Employees’ Provident Fund of the Bank were considered as defined benefit plans as per Sri Lanka Accounting
Standard - LKAS 19 (Employee Benefits).
Pension Fund
The Bank has a pension fund for all members who joined the Bank for permanent employment before 1st June 2003. A member
is eligible for a monthly pension after attainment of 55 years of age and completion of 10 years uninterrupted service. The Bank
measures the present value of the pension obligation, which is a defined benefit plan with the advice of an independent professional
actuary using the Projected Unit Credit (PUC) method as required by Sri Lanka Accounting Standard - LKAS 19 (Employee Benefits).
An actuarial valuation is carried out at every year end to ascertain the full liability under the Fund.
The Bank’s obligation in respect of defined benefit pension plan is calculated by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods and discounting that benefit to determine its
present value, then deducting the fair value of any plan assets to determine the net amount to be shown in the Statement of
Financial Position. The value of any defined benefit asset is restricted to the present value of any economic benefits available in
the form of refunds from the plan or reductions in the future contributions to the plan. In order to calculate the present value of
economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Bank. An economic
benefit is available to the Bank if it is realisable during the life of the plan, or on settlement of the plan liabilities.
The Bank determines the net interest expense/(income) on the net defined benefit liability/(asset) by applying the discount rate
used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset) at
the beginning of the annual period. The discount rate is the yield at the reporting date on government bonds (30 years) that have
maturity dates approximating to the terms of the Bank’s obligations.
13 PERSONNEL EXPENSES CONTD.

The increase in the pension fund liabilities attributable to the services provided by employees, who are members of the Fund, during
the year ended 31st December 2020 (current service cost) has been recognised in the Statement of Profit or Loss under ‘Personnel
expenses’ together with the net interest income/expense. The Bank recognises the total actuarial gain/loss that arise in calculating
the Bank’s obligation in respect of a plan in other comprehensive income during the period in which it occurs. There were no plan
amendments or curtailments affecting the Bank’s pension liabilities during the year ended 31st December 2020.
The demographic assumptions underlying the valuation are retirement age (55 years), early withdrawals from service and retirement
on medical grounds, death before and after retirement etc.
The assets of the fund are held separately from those of the Bank’s assets and are administered independently.
The subsidiaries do not operate pension funds.
Gratuity
In compliance with the Gratuity Act No. 12 of 1983, provision is made in the accounts from the first year of service, for gratuity
payable to employees who joined the Bank on or after 1st June 2003, as they are not in pensionable service of the Bank. Provision
is not made in the accounts for gratuity payable to employees who joined prior to 1st June 2003 and completed five or more years
of continuous service, as the Bank has its own non-contributory pension scheme in force. However, if employees who are eligible for
pension resign before retirement age, the Bank is liable to pay gratuity to such employees.
An actuarial valuation is carried out at every year end to ascertain the full liability under gratuity.
The gratuity liability is not externally funded. All subsidiary companies too carry out actuarial valuations to ascertain their respective
gratuity liabilities.
The Group determines the interest expense on this defined benefit liability by applying the discount rate used to measure the
defined benefit liability at the beginning of the annual period to the defined benefit liability at the beginning of the annual period. The
discount rate is the yield at the reporting date on government bonds (10 years) that have maturity dates approximating to the terms
of the Group’s obligations.
The increase in gratuity liabilities attributable to the services provided by employees during the year ended 31st December 2020
(current service cost) has been recognised in the Statement of Profit or Loss under ‘Personnel expenses’ together with the net interest
expense. The Group recognises the total actuarial gain/loss that arise in calculating the Group’s obligation in respect of gratuity in
other comprehensive income during the period in which it occurs. There were no plan amendments or curtailments affecting the
Group’s gratuity liabilities during the year ended 31st December 2020.
The demographic assumptions underlying the valuation are retirement age (55 years), early withdrawals from service and retirement
on medical grounds etc.
Employees’ Provident Fund - Bank

Employees’ Provident Fund is an approved private provident fund which has been set up to meet the provident fund liabilities of the
Bank to which the Bank and employees contribute 12% and 8% respectively on the salary of each employee. Employees who are
members of the fund, entitle to receive interest at a guaranteed rate of National Savings Bank one-year fixed deposit rate (net of income
tax) on their balance even if the fund earns a lower return from its investment in a given financial year. Accordingly, this obligation was
treated as a defined benefit liability and an actuarial valuation was conducted to value the Bank’s obligation on the same.
Unutilised Accumulated Leave

The Bank’s liability towards the accumulated leave which is expected to be utilised beyond one year from the end of the reporting
period is treated as other long-term employee benefits. The Bank’s net obligation towards unutilised accumulated leave is calculated
by discounting the amount of future benefit that employees have earned in return for their service in the current and prior periods
to determine the present value of such benefits. The discount rate is the yield at the reporting date on government bonds that have
maturity dates approximating to the terms of the Bank’s obligation. The calculation is performed using the Projected Unit Credit
method. Net change in liability for unutilised accumulated leave including any actuarial gain/(loss) is recognised in the Statement of
Profit or Loss under ‘Personnel expenses’ in the period in which they arise.
The Group’s net obligation to pension fund, gratuity, EPF interest guarantee and unutilised accumulated annual leave is disclosed
under Note 38 to the Financial Statements.
Share Based Payment Transactions

The Group does not have any share-based payment transactions in force as at 31st December 2020.
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Salaries & bonus 7,970,662 7,584,040 8,777,917 8,278,648

Contributions to EPF & ETF 776,074 749,836 855,372 816,081
Provision for gratuity & pension 827,262 696,214 855,867 717,692
Others 659,010 688,602 738,193 772,379
10,233,008 9,718,692 11,227,349 10,584,800
14 DEPRECIATION AND AMORTISATION EXPENSES
ACCOUNTING POLICY
Depreciation of Property, Plant and Equipment
The Group provides depreciation from the date the assets are available for use up to the date of disposal, at the following rates,
on a straight-line basis, over the periods appropriate to the estimated useful lives, based on the pattern in which the asset’s future
economic benefits are expected to be consumed by the Group.
Improvements to leasehold properties are depreciated over the shorter of the lease term and their useful lives unless it is reasonably
certain that the Group will obtain ownership by the end of the lease term. Freehold lands are not depreciated.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale or the date that the asset is
derecognised. Depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully
depreciated.
Depreciation Rate per Annum (%)

Asset Category 2020 2019
Freehold buildings 2.50 2.50

Improvements to leasehold properties 20.00 20.00
Computer equipment - Freehold 15.00 - 25.00 15.00 - 25.00
Motor vehicles 12.50 - 20.00 12.50 - 20.00
Office equipment 10.00 - 25.00 10.00 - 25.00
Fixtures & fittings 12.50 - 20.00 12.50 - 20.00
14 DEPRECIATION AND AMORTISATION EXPENSES CONTD.
Amortisation of Intangible Assets

Intangible assets, except for goodwill, are amortised on a straight-line basis in the Statement of Profit or Loss from the date when the
asset is available for use, over the best estimate of its useful economic life, based on a pattern in which the asset’s economic benefits
are consumed by the Group. The Group assumes that there is no residual value for its intangible assets.
Amortisation Rate per Annum (%)

Asset Category 2020 2019
Computer software 25.00 25.00

Licenses 5.00 - 33.33 5.00 - 33.33
Amortisation of Right-of-Use Assets

The right of use assets are depreciated using a straight-line method from the commencement date to the earlier of the end of the
useful life of the right of use assets or the end of the lease term. The estimated useful lives of right of use assets are determined on
the same basis as those of property plant and equipment and are in the range of 2 to 14 years.
Changes in Estimates
Depreciation/amortisation methods, useful lives and residual values are reassessed at each reporting date and adjusted if appropriate.
During the year ended 31st December 2020, the Group conducted an operational efficiency review and estimates were revised
accordingly.
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Depreciation of property, plant & equipment (Note 29) 812,854 779,064 1,245,729 1,237,155
Amortisation of intangible assets (Note 30) 440,811 389,795 465,582 414,287
Amortisation of right-of-use assets (Note 31) 1,200,440 1,265,199 807,142 874,063
2,454,105 2,434,058 2,518,453 2,525,505
15 OTHER OPERATING EXPENSES
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Directors' fees & expenses 85,774 82,852 137,321 148,634

Auditors' remuneration (Note 15.1) 27,460 36,087 36,092 41,759
Professional & legal expenses 111,679 148,702 145,534 176,551
Deposit insurance premium 755,730 640,145 777,845 657,536
Donations 9,702 466 9,702 466
Operating lease expenses 89,792 61,219 101,447 106,079
Office administration & establishment expenses 3,472,000 3,578,849 3,623,735 3,773,389
Other expenses (Note 15.2) 2,856,209 3,664,698 3,004,235 3,885,845
7,408,346 8,213,018 7,835,911 8,790,259
15.1 Auditors' Remuneration
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Audit fees 11,660 11,660 14,513 14,513

Audit related fees & expenses 3,152 7,215 4,825 8,614
Non - audit expenses 12,648 17,212 16,754 18,632
27,460 36,087 36,092 41,759
15.2 Other expenses include advertising and business promotion expenses, credit card related expenses and other overhead expenses
incurred on day to day operations of the Bank/Group.
16 INCOME TAX EXPENSE
ACCOUNTING POLICY
As per Sri Lanka Accounting Standard - LKAS 12 (Income Taxes), tax expense is the aggregate amount included in determination
of profit or loss for the period in respect of current and deferred taxation. Income tax expense is recognised in the Statement of
Profit or Loss, except to the extent it relates to items recognised directly in equity or other comprehensive income in which case
it is recognised in equity or in other comprehensive income. The Group applied IFRIC Interpretation 23 “Uncertainty over Income
Tax Treatment” in the determination of taxable profit, tax bases, unused tax losses, unused tax credits and tax rates, when there is
uncertainty over the income tax treatment. However, the application of IFRIC 23 did not have any significant impact on the financial
statements of the Group to provide additional disclosures in the financial statements.
Current Taxation
Current tax assets and liabilities consist of amounts expected to be recovered from or paid to the Commissioner General of Inland
Revenue in respect of the current year, using the tax rates and tax laws enacted or substantively enacted on the reporting date and
any adjustment to tax payable in respect of prior years. Accordingly, provision for taxation is based on the profit for the year adjusted
for taxation purposes in accordance with the provisions of the Inland Revenue Act No. 24 of 2017 and the amendments thereto at
the rates specified in Note 16.1.1 and 16.1.2 to the Financial Statements.
Deferred Taxation
Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes for all Group entities. Deferred tax liabilities are recognised for all taxable temporary
differences, except:
 Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
 In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred tax assets are recognised for all deductible temporary differences, carried forward unused tax credits and unused tax losses
(if any), to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried
forward unused tax credits and unused tax losses can be utilised except:
 Where the deferred tax asset relating to the deductible temporary differences arising from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.
 In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised
only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.
16 INCOME TAX EXPENSE CONTD.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is probable that
sufficient taxable profit will be available to allow the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed
at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current and deferred tax assets and liabilities are offset only to the extent that they relate to income taxes imposed by the same
taxation authority, there is a legal right and intentions to settle on a net basis and it is allowed under the tax law of the relevant
jurisdiction. Details of current tax liabilities/(receivables) and deferred tax liabilities/(assets) are given in Note 39 and Note 32 to the
Financial Statements respectively.
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Current tax expense

Current tax based on profit for the year (Note 39.1) 4,137,004 7,578,543 4,485,988 8,138,931
Over provision in respect of previous years (Note 39.1) (490,640) (802,528) (601,050) (802,528)
Current tax expense 3,646,364 6,776,015 3,884,938 7,336,403
Deferred tax expense
Deferred tax reversal (Note 32.1) (499,624) (2,428,672) (437,875) (2,666,208)
Income tax expense (Note 16.1) 3,146,740 4,347,343 3,447,063 4,670,195
Effective tax rate 28.2% 28.1% 29.0% 28.6%
16.1 Reconciliation of the Accounting Profit to Current Tax Expense
Bank Group
% Rs 000 % Rs 000 % Rs 000 % Rs 000
Profit before tax 11,171,887 15,498,230 11,889,579 16,338,385
Tax effect on accounting profit before tax 28.0 3,128,128 28.0 4,339,504 28.0 3,329,082 28.0 4,574,748
Tax effect on turnover liable for income tax - - - - - 6,330 - 6,355
Tax effect on
Disallowable expenses 18.9 2,111,638 28.3 4,383,835 26.2 3,112,064 30.0 4,904,616
Tax deductible expenses (5.0) (555,118) (3.0) (458,897) (11.9) (1,410,572) (3.6) (588,414)
Exempt income (4.9) (547,644) (4.4) (685,899) (4.6) (547,644) (4.2) (685,899)
Income from other sources - - - - - 654 - 1,373
Elimination of loss/(profit) liable for
turnover based tax - - - - - 1,038 - (5,275)
Tax losses - - - - - (4,964) (0.4) (68,573)
Current tax based on profit for the year
(Note 39.1) 37.0 4,137,004 48.9 7,578,543 37.7 4,485,988 49.8 8,138,931
Over provision in respect of previous years
(Note 39.1) (4.4) (490,640) (5.1) (802,528) (5.0) (601,050) (4.9) (802,528)
Deferred tax reversal (Note 32.1) (4.4) (499,624) (15.7) (2,428,672) (3.7) (437,875) (16.3) (2,666,208)
28.2 3,146,740 28.1 4,347,343 29.0 3,447,063 28.6 4,670,195
16.1.1 Applicable Income Tax Rates
Company 2020 2019
Sampath Bank PLC 28% 28%

Siyapatha Finance PLC 28% 28%
SC Securities (Pvt) Ltd 28% 28%
Sampath Information Technology Solutions Ltd 28% 28%
16.1.2 Income Tax on Sampath Centre Ltd

Sampath Centre Ltd is a company approved under BOI Law and the company was exempted from income tax for a period of seven
years commencing from the first year of assessment. The first year of assessment is the year in which the company commenced making
profits in relation to its transactions in that year, or any year of assessment not later than five years from the date of its first commercial
operations, whichever is earlier. After the initial exemption, rental income of the company is liable for income tax at the rate of 2% for a
further period of 15 years. During this period, income generated from other sources is taxed at the normal rate of 28%.
Accordingly, company's rental income is liable for income tax at the rate 2% up to the year of assessment 2020/2021 and thereafter
company is liable to pay tax at the rate of 28% on its taxable income. Deferred tax has been booked in the Group financial statements for
the taxable temporary differences as at 31st December 2020, at the rate of 28%.
16.1.3 Amendments to Income Tax Law Announced by the Government

As per the announcement dated 12th February 2020, income tax rate applicable for the Banking sector has been reduced to 24% with
effect from 01st January 2020. However, as the said amendment is yet to be enacted, both income tax and deferred tax provisions were
calculated at the rate of 28% for the year ended 31st December 2020.
Had the Bank considered the revised rate of 24% and the other proposals announced by the government in the computation of current
and deferred tax, the tax expense recognised in the profit or loss for the year ended 31st December 2020 would have decreased by
Rs 93 Mn. This includes a reversal of Rs 818 Mn against current tax expense and an additional charge of Rs 725 Mn against deferred tax.
In addition, the deferred tax charge to other comprehensive income would have reduced by Rs 63 Mn.
17 EARNINGS PER SHARE
ACCOUNTING POLICY
The Group presents basic and diluted Earnings per Share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary equity shareholders of the Bank by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting both the profit attributable to the ordinary equity shareholders and the
weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares, if any.
17.1 Earnings per Share: Basic/Diluted
Bank Group
2020 2019 2020 2019
Amount used as the numerator

Profit after tax for the year attributable to equity holders (Rs) 8,025,147,152 11,150,887,227 8,442,516,452 11,668,189,861
No. of ordinary shares used as the denominator

Weighted average number of ordinary shares (Note 17.1.1) 381,457,985 339,541,131 381,457,985 339,541,131
Basic/diluted earnings per ordinary share (Rs) 21.04 32.84 22.13 34.36
17 EARNINGS PER SHARE CONTD.

17.1.1 Weighted Average Number of Ordinary Shares for Basic/Diluted EPS
Bank & Group
Outstanding No. of Shares Weighted Average No. of Shares

2020 2019 2020 2019
Number of shares in issue as at 1st January 381,457,985 280,902,248 381,457,985 280,902,248

Add:
Number of shares issued due to final scrip dividend 2018 - 11,548,874 - 11,548,874
Number of shares issued under rights issue 2019 - 89,006,863 - 47,090,009
Number of shares in issue/weighted average number of
shares as at 31st December 381,457,985 381,457,985 381,457,985 339,541,131
The Board of Directors of the Bank at its meeting held on 27th January 2021 has approved that the number of ordinary shares of
the Bank in issue be increased by way of a sub-division of shares; where by one (01) ordinary share will be subdivided in to three (03)
ordinary shares. The basic/diluted Earnings per Share (EPS) of the Bank and Group for the year ended 31st December 2020 have not
been adjusted for the said sub-division of shares as it is subject to the approval of shareholders at the Extra-ordinary General Meeting
to be held on 17th March 2021. Except for the above, there have been no transactions involving ordinary shares or potential ordinary
shares between the reporting date and the date of the completion of these financial statements which would require the restatement of EPS.
18 DIVIDEND PAID AND PROPOSED
ACCOUNTING POLICY
Provision for final dividend and interim dividend (scrip) are recognised at the time the dividend is recommended and declared by the
Board of Directors, and approved by the shareholders. However, interim cash dividend is recognised when the Board approves such
dividend in accordance with Companies Act No. 7 of 2007.
2020 2019
Gross Advance Net Gross Dividend Net
Dividend Income Tax Dividend Dividend Tax/ Dividend
Advance
Income Tax
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Final dividend paid for the years 2019 & 2018

respectively
Out of dividend received 13,574 - 13,574 40,016 - 40,016
Out of normal profit 4,468,557 - 4,468,557 4,524,645 633,450 3,891,195
Scrip/cash dividend paid 4,482,131 - 4,482,131 4,564,661 633,450 3,931,211
Dividend per Ordinary Share (Rs) 11.75 11.75 16.25 13.99
Final dividend proposed for the years 2020

(Note 18.1) & 2019 respectively
Out of dividend received 11,628 - 11,628 13,574 - 13,574
Out of normal profit 3,135,400 - 3,135,400 4,468,557 - 4,468,557
Cash dividend payable 3,147,028 - 3,147,028 4,482,131 - 4,482,131
Dividend per Ordinary Share (Rs) 8.25 8.25 11.75 11.75
Note 18.1
The Directors have recommended a final cash dividend of Rs 8.25 per share for the financial year ended 31st December 2020, based on
the 381,457,985 shares in issue as at 15th February 2021. The said dividend is subject to approval of the shareholders at the Annual
General Meeting to be held on 30th March 2021.
However, if the shareholders approve the resolution for the proposed sub-division of shares in the proportion of 01:03 at the
Extra-ordinary General Meeting to be held on 17th March 2021, the final dividend will be based on the increased number of shares
(i.e. 1,144,373,955 shares). Consequently, each share will be entitled to a final cash dividend of Rs 2.75.
Note 18.2
In accordance with Sri Lanka Accounting Standard - LKAS 10 (Events after the Reporting Period), above proposed final dividend has not
been recognised as a liability as at the year end. Necessary disclosures have been made under Note 48 to the Financial Statements,
"Events after reporting period" as required by the said standard.
19 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS

Financial instruments are measured on an ongoing basis either at fair value or at amortised cost. The Accounting Policies describe how
each category of financial instruments is measured and how income and expenses, including fair value gains and losses, are recognised.
The following table analyses the carrying amounts of the financial instruments by category as defined in Sri Lanka Accounting Standard -
SLFRS 9 (Financial Instruments) under headings of the Statement of Financial Position.
19.1 Analysis of Financial Instruments by Measurement Basis - Bank
As at 31st December 2020

Note Fair Value Amortised Fair Value Total
through Profit or Cost through Other
Loss Comprehensive
Income
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 - 29,053,585 - 29,053,585
Balances with Central Bank of Sri Lanka 21 - 13,335,178 - 13,335,178
Placements with banks 22 - 3,228,166 - 3,228,166
Reverse repurchase agreements - 4,450,557 - 4,450,557
Derivative financial instruments 23 2,186,515 - - 2,186,515
Financial assets recognised through profit or loss
- measured at fair value 24 9,313,628 - - 9,313,628
- loans & advances 25 - 720,215,247 - 720,215,247
- debt & other instruments 26 - 275,091,572 - 275,091,572
comprehensive income 27 - - 24,237,803 24,237,803
Other assets - 4,772,493 - 4,772,493
Total Financial Assets 11,500,143 1,050,146,798 24,237,803 1,085,884,744
Financial Liabilities
Due to banks 34 - 1,522,402 1,522,402
Derivative financial instruments 23 2,030,947 - 2,030,947
Securities sold under repurchase agreements - 3,399,896 3,399,896
- due to depositors 35 - 885,724,901 885,724,901
- due to other borrowers 36 - 49,052,595 49,052,595
- due to debt securities holders 37 - 30,790,007 30,790,007
Dividend payable - 121,270 121,270
Other liabilities - 14,457,170 14,457,170
Total Financial Liabilities 2,030,947 985,068,241 987,099,188
19 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS CONTD.

19.2 Analysis of Financial Instruments by Measurement Basis - Bank

Loss Comprehensive
Income
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Derivative financial instruments 23 862,754 - - 862,754
- loans & advances 25 - 689,377,504 - 689,377,504
Other assets - 7,152,067 - 7,152,067
Total Financial Assets 11,992,984 908,891,817 17,331,724 938,216,525
Due to banks 34 - 1,511,665 1,511,665
Derivative financial instruments 23 604,069 - 604,069
Total Financial Liabilities 604,069 840,873,734 841,477,803
19.3 Analysis of Financial Instruments by Measurement Basis - Group

Loss Comprehensive
Income
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Derivative financial instruments 23 2,186,515 - - 2,186,515
- loans & advances 25 - 752,437,782 - 752,437,782
Other assets - 5,383,794 - 5,383,794
Total Financial Assets 11,500,143 1,084,961,277 24,237,859 1,120,699,279
Due to banks 34 - 1,523,333 1,523,333
Derivative financial instruments 23 2,030,947 - 2,030,947
Total Financial Liabilities 2,030,947 1,015,079,051 1,017,109,998
19 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS CONTD.

19.4 Analysis of Financial Instruments by Measurement Basis - Group

Loss Comprehensive
Income
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Derivative financial instruments 23 862,754 - - 862,754
- loans & advances 25 - 719,046,634 - 719,046,634
Other assets - 7,522,839 - 7,522,839
Total Financial Assets 11,992,984 941,439,834 17,331,780 970,764,598
Due to banks 34 - 1,567,974 1,567,974
Derivative financial instruments 23 604,069 - 604,069
Total Financial Liabilities 604,069 869,190,096 869,794,165
20 CASH AND CASH EQUIVALENTS
ACCOUNTING POLICY
Cash and cash equivalents comprise cash in hand, balances with banks, money at call and short notice that are subject to an
insignificant risk of changes in their value. Cash and cash equivalents are carried at amortised cost in the Statement of Financial
Position.
For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and short term deposits as defined above,
placements with banks (less than 3 months) (Note 22), net of unfavourable balances with local & foreign banks (Note 34).
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Local currency in hand 17,787,093 12,502,601 17,906,374 12,652,560

Foreign currency in hand 208,750 2,742,448 208,750 2,742,448
Balances with local banks 60,670 132,167 106,740 170,641
Balances with foreign banks 8,250,032 2,425,699 8,250,032 2,425,699
Money at call & short notice 2,783,404 - 2,783,404 -
Gross cash & cash equivalents 29,089,949 17,802,915 29,255,300 17,991,348
Impairment for expected credit losses (Note 20.2) (36,364) (13,739) (36,379) (13,750)
Net cash & cash equivalents 29,053,585 17,789,176 29,218,921 17,977,598
20.1 Analysis of Cash and Cash Equivalents based on Exposure to Credit Risk
Bank

Stage 1 Stage 2 Stage 3 Total Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balances with local banks 60,670 - - 60,670 132,167

Balances with foreign banks 8,250,032 - - 8,250,032 2,425,699
Money at call & short notice 2,783,404 - - 2,783,404 -
11,094,106 - - 11,094,106 2,557,866
Impairment for expected credit losses (36,364) - - (36,364) (13,739)
11,057,742 - - 11,057,742 2,544,127
Group

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balances with local banks 106,740 - - 106,740 170,641

Balances with foreign banks 8,250,032 - - 8,250,032 2,425,699
Money at call & short notice 2,783,404 - - 2,783,404 -
11,140,176 - - 11,140,176 2,596,340
Impairment for expected credit losses (36,379) - - (36,379) (13,750)
11,103,797 - - 11,103,797 2,582,590
20 CASH AND CASH EQUIVALENTS CONTD.

20.2 Impairment for Expected Credit Losses - Cash and Cash Equivalents
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Stage 1
Balance as at 1st January 13,739 18,200 13,750 18,203
Net charge/(reversal) for the year (Note 12) 22,625 (4,461) 22,629 (4,453)
Amounts written off during the year - - - -
Other adjustments - - - -
Balance as at 31st December 36,364 13,739 36,379 13,750
Total
Net charge/(reversal) for the year (Note 12) 22,625 (4,461) 22,629 (4,453)
21 BALANCES WITH CENTRAL BANK OF SRI LANKA
ACCOUNTING POLICY
As required by the provisions of Section 93 of the Monetary Law Act, a cash balance is maintained with the Central Bank of
Sri Lanka. As at 31st December 2020, the minimum cash reserve requirement was 2% (2019: 5%) of the rupee deposit liabilities.
There is no reserve requirement for foreign currency deposit liabilities of the Domestic Banking Unit (DBU) and the deposit liabilities
of the Foreign Currency Banking Unit (FCBU).
Balances with Central Bank of Sri Lanka are carried at amortised cost in the Statement of Financial Position.
Bank & Group

Rs 000 Rs 000
Statutory reserve requirement 13,335,178 31,028,270

13,335,178 31,028,270
22 PLACEMENTS WITH BANKS

Bank & Group

Rs 000 Rs 000
Maturity less than three months

Placements - in Sri Lanka - 181,364
Placements - out side Sri Lanka 3,228,613 7,070,552
Gross placements with banks 3,228,613 7,251,916
Impairment for expected credit losses (Note 22.2) (447) (611)
Net placements with banks 3,228,166 7,251,305
22.1 Analysis of Placements with Banks based on Exposure to Credit Risk

Bank & Group

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Placements - in Sri Lanka - - - - 181,364

Placements - out side Sri Lanka 3,228,613 - - 3,228,613 7,070,552
3,228,613 - - 3,228,613 7,251,916
Impairment for expected credit losses (447) - - (447) (611)
3,228,166 - - 3,228,166 7,251,305
22.2 Impairment for Expected Credit Losses - Placements with Banks

Bank & Group
2020 2019
Rs 000 Rs 000
Stage 1
Balance as at 1st January 611 2,195
Net reversal for the year (Note 12) (164) (1,584)
Amounts written off during the year - -
Other adjustments - -
Balance as at 31st December 447 611
Total
Balance as at 1st January 611 2,195
Net reversal for the year (Note 12) (164) (1,584)
Balance as at 31st December 447 611
23 DERIVATIVE FINANCIAL INSTRUMENTS
ACCOUNTING POLICY
Derivatives are financial instruments that derive their value in response to changes in interest rates, financial instrument prices,
commodity prices, foreign exchange rates etc. Derivatives are categorised as trading unless they are designated as hedging
instruments.
The table below shows the fair values of derivative financial instruments of the Bank/Group, recorded as assets or liabilities, together
with their notional amounts. The notional amounts indicate the volume of transactions outstanding at the year end and are indicative of
neither the market risk nor the credit risk.
Bank & Group

Assets Liabilities Notional Assets Liabilities Notional
Amount Amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Forward exchange contracts

Sales 1,821,263 13,971 62,881,292 15,687 21,766 8,682,734
Purchases 10,785 38,785 4,912,359 4,712 7,730 4,535,733
Currency SWAPS
Sales 214,256 57,962 35,520,725 725,589 51,357 63,074,414
Purchases 140,211 1,920,229 55,098,550 116,766 523,216 39,755,944
2,186,515 2,030,947 158,412,926 862,754 604,069 116,048,825
24 FINANCIAL ASSETS RECOGNISED THROUGH PROFIT OR LOSS - MEASURED AT FAIR VALUE

Bank & Group

Rs 000 Rs 000
Government securities - treasury bills (Note 24.1) 5,216,543 9,039,033

Government securities - treasury bonds (Note 24.2) 4,035,014 2,018,920
Quoted equity securities (Note 24.3) 62,071 72,277
9,313,628 11,130,230
24.1 Government of Sri Lanka - Treasury Bills

Bank & Group

Rs 000 Rs 000
Amortised cost 5,214,932 9,031,504
Gain/(loss) from mark to market valuation as at 1st January 7,529 (113,231)

Movement during the year (5,918) 120,760
Gain from mark to market valuation as at 31st December 1,611 7,529
Market value 5,216,543 9,039,033
24.2 Government of Sri Lanka - Treasury Bonds

Bank & Group

Rs 000 Rs 000
Amortised cost 3,847,421 1,973,995
Gain from mark to market valuation as at 1st January 44,925 -

Movement during the year 142,668 44,925
Market value 4,035,014 2,018,920
24.3 Quoted Equity Securities

Bank & Group

No. of Cost of Market No. of Cost of Market
Ordinary Investment Value Ordinary Investment Value
Shares Rs 000 Rs 000 Shares Rs 000 Rs 000
Name of the company

Banks, Finance & Insurance
National Development Bank PLC 713,002 121,509 55,685 679,787 118,110 67,979
121,509 55,685 118,110 67,979
Diversified Holdings
Vallibel One PLC 245,600 6,140 6,386 245,600 6,140 4,298
6,140 6,386 6,140 4,298
Total 127,649 62,071 124,250 72,277
Loss from mark to market valuation as at 1st

January (51,973) (47,505)
Movement during the year (13,605) (4,468)
Loss from mark to market valuation as at 31st
December (65,578) (51,973)
Market value 62,071 72,277
24.4 Analysis of Financial Assets Recognised through Profit or Loss - Measured at Fair Value
Bank & Group

Rs 000 Rs 000
By collateralisation
Pledged as collateral - -
Unencumbered 9,313,628 11,130,230
Gross total 9,313,628 11,130,230
By currency
Sri Lankan Rupee 9,313,628 11,130,230
Other currency - -
Gross total 9,313,628 11,130,230
25 LOANS AND ADVANCES
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Gross loans & advances (Note 25.1)

Stage 1 533,294,217 532,475,516 544,454,372 548,550,945
Stage 2 165,663,708 133,212,160 178,402,956 142,613,843
Stage 3 59,984,365 53,936,018 71,222,291 59,913,117
758,942,290 719,623,694 794,079,619 751,077,905
Impairment for expected credit losses (Note 25.2)

Stage 1 (3,679,288) (3,838,089) (3,800,247) (3,930,386)
Stage 2 (10,707,506) (5,516,738) (11,007,341) (5,642,568)
Stage 3 (24,340,249) (20,891,363) (26,834,249) (22,458,317)
(38,727,043) (30,246,190) (41,641,837) (32,031,271)
Net loans & advances 720,215,247 689,377,504 752,437,782 719,046,634
25.1 Analysis of Loans & Advances

25.1.1 By Product
Bank Group
As at 31st December 2020 2019 2020 2019
Mix Mix Growth Mix Mix Growth
Rs 000 % Rs 000 % % Rs 000 % Rs 000 % %
Bills of exchange 2,749,078 0.36 2,587,844 0.36 6.23 2,749,078 0.35 2,587,844 0.34 6.23
Leasing (Note 25.3) 35,467,037 4.67 31,898,575 4.43 11.19 66,155,491 8.33 61,738,905 8.22 7.15
Housing loans 46,871,439 6.17 44,356,362 6.16 5.67 46,871,439 5.91 44,356,362 5.91 5.67
Export loans 28,260,577 3.73 27,413,937 3.81 3.09 28,260,577 3.55 27,413,937 3.65 3.09
Import loans 53,175,396 7.01 69,536,981 9.66 (23.53) 53,175,396 6.70 68,334,574 9.10 (22.18)
Refinance loans 22,065,236 2.91 12,100,433 1.68 82.35 22,065,236 2.78 12,100,433 1.61 82.35
Term loans 383,292,833 50.51 366,018,701 50.87 4.72 381,952,204 48.10 362,468,370 48.27 5.38
Hire purchases 7,259 - 13,217 - (45.08) 16,274 - 24,328 - (33.11)
Loans against investment
fund account (IFA) 92,623 0.01 109,523 0.02 (15.43) 92,623 0.01 109,523 0.01 (15.43)
Overdraft 87,324,339 11.50 94,788,231 13.17 (7.87) 87,086,765 10.96 94,645,220 12.60 (7.99)
Staff loans 9,272,970 1.22 8,301,356 1.15 11.70 9,416,997 1.19 8,486,523 1.13 10.96
Pawning & gold loans 36,524,159 4.81 33,170,643 4.61 10.11 41,304,635 5.20 38,191,423 5.08 8.15
Credit cards 15,799,837 2.08 16,390,482 2.28 (3.60) 15,799,837 1.99 16,390,482 2.18 (3.60)
Money market loans 35,733,782 4.71 8,987,078 1.25 297.61 35,733,782 4.50 8,987,078 1.20 297.61
Factoring 2,242,061 0.30 3,856,292 0.54 (41.86) 2,847,402 0.36 4,857,674 0.65 (41.38)
Others 63,664 0.01 94,039 0.01 (32.30) 551,883 0.07 385,229 0.05 43.26
Gross loans & advances 758,942,290 100.00 719,623,694 100.00 5.46 794,079,619 100.00 751,077,905 100.00 5.73
25.1.2 By Currency
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Sri Lankan Rupee 662,138,698 627,675,910 697,276,027 659,130,121

United States Dollar 87,550,225 86,364,970 87,550,225 86,364,970
Euro 7,640,801 3,881,152 7,640,801 3,881,152
Great Britain Pounds 1,511,990 1,554,603 1,511,990 1,554,603
Australian Dollar 93,768 138,621 93,768 138,621
Japanese Yen 3,922 5,001 3,922 5,001
New Zealand Dollar 2,886 3,437 2,886 3,437
Gross loans & advances 758,942,290 719,623,694 794,079,619 751,077,905
25.1.3 By Product and Currency
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 % Rs 000 % Rs 000 % Rs 000 %
Local currency
Bills of exchange 368,850 0.05 463,168 0.06 368,850 0.05 463,168 0.06
Leasing 35,467,037 4.67 31,898,575 4.43 66,155,491 8.33 61,738,905 8.22
Housing loans 45,860,707 6.04 43,280,931 6.01 45,860,707 5.78 43,280,931 5.76
Export loans 3,612,790 0.48 1,738,969 0.24 3,612,790 0.45 1,738,969 0.23
Import loans 45,157,585 5.95 65,293,369 9.07 45,157,585 5.69 64,090,962 8.53
Refinance loans 22,065,236 2.91 12,100,433 1.68 22,065,236 2.78 12,100,433 1.61
Term loans 329,064,664 43.36 311,781,833 43.33 327,724,035 41.27 308,231,502 41.05
Hire purchase 7,259 - 13,217 - 16,274 - 24,328 -
Loans against investment fund
account (IFA) 92,623 0.01 109,523 0.02 92,623 0.01 109,523 0.01
Overdraft 80,856,724 10.65 90,231,915 12.54 80,619,150 10.15 90,088,904 11.99
Staff loans 9,272,970 1.22 8,301,356 1.15 9,416,997 1.19 8,486,523 1.13
Pawning & gold loans 36,524,159 4.81 33,170,643 4.61 41,304,635 5.20 38,191,423 5.09
Credit cards 15,799,837 2.08 16,390,482 2.28 15,799,837 1.99 16,390,482 2.18
Money market loans 35,733,782 4.71 8,987,078 1.25 35,733,782 4.50 8,987,078 1.20
Factoring 2,242,061 0.30 3,856,292 0.54 2,847,402 0.36 4,857,674 0.65
Others 12,414 - 58,126 0.01 500,633 0.06 349,316 0.05
Sub total 662,138,698 87.24 627,675,910 87.22 697,276,027 87.81 659,130,121 87.76
Foreign currency
Bills of exchange 2,380,228 0.31 2,124,676 0.30 2,380,228 0.30 2,124,676 0.28
Housing loans 1,010,732 0.13 1,075,431 0.15 1,010,732 0.13 1,075,431 0.14
Export loans 24,647,787 3.25 25,674,968 3.57 24,647,787 3.10 25,674,968 3.42
Import loans 8,017,811 1.06 4,243,612 0.59 8,017,811 1.01 4,243,612 0.57
Term loans 54,228,169 7.15 54,236,868 7.54 54,228,169 6.83 54,236,868 7.22
Overdraft 6,467,615 0.85 4,556,316 0.63 6,467,615 0.81 4,556,316 0.61
Others 51,250 0.01 35,913 - 51,250 0.01 35,913 -
Sub total 96,803,592 12.76 91,947,784 12.78 96,803,592 12.19 91,947,784 12.24
Gross loans & advances 758,942,290 100.00 719,623,694 100.00 794,079,619 100.00 751,077,905 100.00
25 LOANS AND ADVANCES CONTD.

25.1.4 By Industry
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 % Rs 000 % Rs 000 % Rs 000 %
Agriculture & related

(Note 25.1.4.1) 62,563,669 8.24 61,140,943 8.50 65,928,176 8.30 64,196,198 8.55
Manufacturing 104,251,199 13.74 92,308,099 12.83 107,616,842 13.55 95,485,661 12.71
Tourism 63,164,745 8.32 58,573,450 8.14 64,717,506 8.15 60,290,894 8.03
Transport 10,044,870 1.32 8,472,789 1.18 13,111,306 1.65 11,114,740 1.48
Construction 124,482,635 16.40 117,881,443 16.38 124,884,085 15.73 119,081,439 15.85
Infrastructure 55,207,272 7.27 52,639,116 7.31 56,470,540 7.11 53,354,359 7.11
Traders 124,026,523 16.34 135,069,714 18.77 130,526,441 16.44 141,292,970 18.81
Financial & business services 53,978,652 7.11 48,461,689 6.73 52,530,755 6.62 44,714,367 5.95
Other services 57,342,712 7.56 55,188,622 7.67 67,401,789 8.49 64,505,476 8.59
Consumers 103,880,013 13.70 89,887,829 12.49 110,892,179 13.96 97,041,801 12.92
Gross loans & advances 758,942,290 100.00 719,623,694 100.00 794,079,619 100.00 751,077,905 100.00
25.1.4.1 As per the requirement of Central Bank of Sri Lanka (CBSL), a minimum of 10% of the loans and advances shall be granted to the
agriculture sector. The Bank has complied with the said requirement as at 31st December 2020 and 31st December 2019. The
computation method used to derive the industry-wise exposure in Note 25.1.4 above is different from the method used for CBSL
minimum lending requirement calculation to agriculture sector.
25.2 Impairment for Expected Credit Losses - Loans and Advances
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Stage 1
Balance as at 1st January 3,838,089 2,902,999 3,930,386 2,968,819
Net (reversal)/charge for the year (Note 12) (158,801) 935,090 (130,139) 961,567
Write-off during the year - - - -
Interest income accrued on impaired loans & advances - - - -
Other movements - - - -
Balance as at 31st December 3,679,288 3,838,089 3,800,247 3,930,386
Stage 2
Net charge for the year (Note 12) 5,190,768 3,411,479 5,364,773 3,427,962
Write-off during the year - - - -
Interest income accrued on impaired loans & advances - - - -
Other movements - - - -
Stage 3
Write-off during the year (439,226) (881,047) (655,989) (1,802,407)
Interest income accrued on impaired loans & advances (Note 7.1) (3,333,638) (2,809,924) (3,348,278) (2,894,134)
Other movements 2,093,702 1,627,764 2,103,585 1,669,764
Total
Write-off during the year (439,226) (881,047) (655,989) (1,802,407)
Interest income accrued on impaired loans & advances (Note 7.1) (3,333,638) (2,809,924) (3,348,278) (2,894,134)
Other movements 2,093,702 1,627,764 2,103,585 1,669,764
25.3 Leasing
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable 42,689,814 39,231,807 82,331,172 78,692,348

Unearned lease interest income (7,222,777) (7,333,232) (16,175,681) (16,953,443)
Gross lease receivable 35,467,037 31,898,575 66,155,491 61,738,905
Impairment for expected credit losses (1,102,784) (921,589) (2,775,751) (1,671,160)
Net lease receivable 34,364,253 30,976,986 63,379,740 60,067,745
Gross lease receivable within one year (Note 25.3.1) 12,297,167 11,887,996 24,391,671 23,871,937
Gross lease receivable after one year (Note 25.3.2) 23,169,870 20,010,579 41,763,820 37,866,968
35,467,037 31,898,575 66,155,491 61,738,905
25.3.1 Lease Receivable within One Year
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable within one year from reporting date 16,140,832 15,547,658 32,392,956 31,845,061
Gross lease receivable within one year (Note 25.3) 12,297,167 11,887,996 24,391,671 23,871,937
Impairment for expected credit losses (438,130) (343,459) (1,195,256) (692,996)
Net lease receivable within one year 11,859,037 11,544,537 23,196,415 23,178,941
25.3.2 Lease Receivable after One Year
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Total lease rentals receivable after one year from reporting date 26,548,982 23,684,149 49,938,216 46,847,287
Gross lease receivable after one year (Note 25.3) 23,169,870 20,010,579 41,763,820 37,866,968
Impairment for expected credit losses (664,654) (578,130) (1,580,495) (978,164)
Net lease receivable after one year 22,505,216 19,432,449 40,183,325 36,888,804
25.4 Impact of COVID-19 Pandemic on the Staging of Loans and Advances and the Measurement of Impairment for Expected Credit Losses
As explained in Notes 3.4.6.1 and 3.4.6.7, the Group has assessed SICR, exposures to risk elevated sectors, and the need for
adjustments to PDs and LGDs by changing the forward looking information. Accordingly, Group has appropriately used allowance
for overlays to address uncertainties relating to and potential implications of COVID-19 to better address credit risk and reflect the
adequacy of provision for impairment.
The impact of changing the weightages of different macro-economic scenarios during the year is given in Note 50.2.1 (e) along with
sensitivity of the weightages to the collective impairment calculation. A breakdown of the loans and advances of the Bank/Group
classified under stage 2 is given in Note 50.2.1 (f). An analysis of loans under phase II of the COVID-19 debt moratorium is given in Note
50.2.1(h) along with the impairment for expected credit losses.
26 DEBT AND OTHER INSTRUMENTS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Debentures - quoted (Note 26.1) 911,485 1,817,149 911,485 1,817,149

Sri Lanka Development Bonds 73,521,629 67,297,568 73,521,629 67,297,568
Sri Lanka International Sovereign Bonds 19,361,131 - 19,361,131 -
Leased backed trust certificates (Note 26.2) 5,353,735 6,230,535 5,353,735 6,230,535
Government debt securities - treasury bills 122,060,109 59,931,849 122,060,109 59,942,620
Government debt securities - treasury bonds 56,147,950 21,909,766 56,182,095 21,914,296
Gross debt & other instruments 277,356,039 157,186,867 277,390,184 157,202,168
Impairment for expected credit losses (Note 26.4) (2,264,467) (893,372) (2,264,467) (893,372)
Net debt & other instruments 275,091,572 156,293,495 275,125,717 156,308,796
26.1 Debentures - Quoted

Bank & Group

Amortised Amortised
Cost Cost
Rs 000 Rs 000
Name of the company

Banks, Finance & Insurance
Central Finance Company PLC - 49,284
Commercial Leasing & Finance PLC 512,022 495,159
DFCC Bank PLC - 224,916
Housing Development Finance Corporation Bank of Sri Lanka - 202,793
Singer Finance PLC 108,584 247,387
620,606 1,219,539
Construction & Engineering

Access Engineering PLC - 303,707
MTD Walkers PLC 254,784 254,784
254,784 558,491
Others
Kotagala Plantations PLC 36,095 39,119
36,095 39,119
911,485 1,817,149
26.2 Lease Backed Trust Certificates

Bank & Group

Amortised Amortised
Cost Cost
Rs 000 Rs 000
Associated Motor Finance Company PLC 400,899 521,667

Senkadagala Finance PLC 28,439 493,903
LB Finance PLC 2,775,385 3,331,668
Trade Finance & Investment PLC 478,678 912,446
Richard Pieris Finance Ltd 276,534 478,528
Singer Finance PLC 392,179 492,323
Commercial Credit & Finance PLC 1,001,621 -
5,353,735 6,230,535
26.3 Analysis of Debt and Other Instruments based on Exposure to Credit Risk
Bank

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Debentures - quoted 620,606 - 290,879 911,485 1,817,149

Sri Lanka Development Bonds 73,521,629 - - 73,521,629 67,297,568
Sri Lanka International Sovereign Bonds 19,361,131 - - 19,361,131 -
Leased backed trust certificates 5,353,735 - - 5,353,735 6,230,535
Government debt securities - treasury bills 122,060,109 - - 122,060,109 59,931,849
Government debt securities - treasury bonds 56,147,950 - - 56,147,950 21,909,766
277,065,160 - 290,879 277,356,039 157,186,867
Impairment for expected credit losses (1,973,588) - (290,879) (2,264,467) (893,372)
275,091,572 - - 275,091,572 156,293,495
Group

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Debentures - quoted 620,606 - 290,879 911,485 1,817,149

Sri Lanka Development Bonds 73,521,629 - - 73,521,629 67,297,568
Sri Lanka International Sovereign Bonds 19,361,131 - - 19,361,131 -
Leased backed trust certificates 5,353,735 - - 5,353,735 6,230,535
Government debt securities - treasury bills 122,060,109 - - 122,060,109 59,942,620
Government debt securities - treasury bonds 56,182,095 - - 56,182,095 21,914,296
277,099,305 - 290,879 277,390,184 157,202,168
Impairment for expected credit losses (1,973,588) - (290,879) (2,264,467) (893,372)
275,125,717 - - 275,125,717 156,308,796
26 DEBT AND OTHER INSTRUMENTS CONTD.

26.4 Impairment for Expected Credit Losses - Debt and Other Instruments at Amortised Cost
Bank & Group
2020 2019
Rs 000 Rs 000
Stage 1
Balance as at 1st January 638,588 551,144
Net charge for the year (Note 12) 1,335,000 87,444
Balance as at 31st December 1,973,588 638,588
Stage 3
Balance as at 1st January 254,784 -
Net charge for the year (Note 12) 36,095 254,784
Balance as at 31st December 290,879 254,784
Total
Net charge for the year (Note 12) 1,371,095 342,228
Amounts written off during the year -
Other adjustments -
26.5 Analysis of Debt and Other Instruments
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Pledged as collateral 3,670,810 17,267,796 2,521,756 17,239,524
Unencumbered 271,420,762 139,025,699 272,603,961 139,069,272
275,091,572 156,293,495 275,125,717 156,308,796
By currency
Sri Lankan Rupee 184,167,473 89,598,922 184,201,618 89,614,223
Other currency 90,924,099 66,694,573 90,924,099 66,694,573
275,091,572 156,293,495 275,125,717 156,308,796
27 FINANCIAL ASSETS - FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Government securities - treasury bills (Note 27.1) 15,572,080 14,906,551 15,572,080 14,906,551
Government securities - treasury bonds (Note 27.2) 4,176,392 513,973 4,176,392 513,973
Quoted equity security (Note 27.3) 3,528,974 1,871,878 3,528,974 1,871,878
Unquoted equity securities (Note 27.4) 34,349 39,322 34,405 39,378
Sri Lanka International Sovereign Bonds (Note 27.5) 926,008 - 926,008 -
24,237,803 17,331,724 24,237,859 17,331,780
27.1 Government Securities - Treasury Bills

Bank & Group

Rs 000 Rs 000
Amortised cost 15,565,806 14,877,322
Gain/(loss) from mark to market valuation as at 1st January 29,229 (40,512)

Reclassification to profit or loss (70,809) (13,295)
Market value 15,572,080 14,906,551
27.2 Government Securities - Treasury Bonds

Bank & Group

Rs 000 Rs 000
Amortised cost 4,161,722 512,893
Gain/(loss) from mark to market valuation as at 1st January 1,080 (50)

Reclassification to profit or loss (108,609) (3,547)
Market value 4,176,392 513,973
27.3 Quoted Equity Security

Quoted equity security represents the investment in ordinary shares of LankaBangla Finance Ltd in Bangladesh.
Bank & Group
2020 2019
No. of No. of
Ordinary Ordinary
Shares Rs 000 Shares Rs 000
Cost of the investment as at 1st January 48,606,291 1,016,121 48,606,291 1,024,806

Exchange gain/(loss) 23,385 (8,685)
Scrip dividend received during the year 2,430,314 53,196 - -
Cost of the investment as at 31st December 51,036,605 1,092,702 48,606,291 1,016,121
Gain from mark to market valuation as at 1st January 855,757 1,408,063

Movement during the year 1,560,933 (552,306)
Exchange gain 19,582 -
Gain from mark to market valuation as at 31st December 2,436,272 855,757
Market value 3,528,974 1,871,878
27 FINANCIAL ASSETS - FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME CONTD.

27.4 Unquoted Equity Securities

No. of Cost of the Market No. of Cost of the Market
Ordinary Investment Value Ordinary Investment Value
Shares Shares
Rs 000 Rs 000 Rs 000 Rs 000
Bank
Name of the company
LankaBangla Securities Ltd 293,485 55,155 1,216 293,485 53,921 1,189
Credit Information Bureau 1,700 170 170 1,700 170 170
SWIFT 33 12,963 12,963 33 12,963 12,963
Lanka Clear (Pvt) Ltd 2,000,000 20,000 20,000 2,000,000 20,000 20,000
Lanka Financial Services Bureau Ltd 500,000 5,000 - 500,000 5,000 5,000
Lanka Rating Agency Ltd 1,241,263 15,516 - 1,241,263 15,516 -
108,804 34,349 107,570 39,322
Loss from mark to market valuation as at

1st January (68,248) (68,699)
Movement during the year (5,000) -
Exchange rate differences (1,207) 451
31st December (74,455) (68,248)
Group
Name of the company
LankaBangla Securities Ltd 293,485 55,155 1,216 293,485 53,921 1,189
Credit Information Bureau 1,800 226 226 1,800 226 226
SWIFT 33 12,963 12,963 33 12,963 12,963
Lanka Clear (Pvt) Ltd 2,000,000 20,000 20,000 2,000,000 20,000 20,000
Lanka Financial Services Bureau Ltd 500,000 5,000 - 500,000 5,000 5,000
Lanka Rating Agency Ltd 1,241,263 15,516 - 1,241,263 15,516 -
108,860 34,405 107,626 39,378

1st January (68,248) (68,699)
Movement during the year (5,000) -
Exchange rate differences (1,207) 451
31st December (74,455) (68,248)
Directors of the Bank carried out an impairment assessment of the unquoted share investments held by the Bank as at 31st December
2020 and concluded that the carrying value as at that date is a reasonable approximation of the fair value.
27.5 Sri Lanka International Sovereign Bonds

Bank & Group

Rs 000 Rs 000
Amortised cost 1,104,091 -
Gain/(loss) from mark to market valuation as at 1st January - -

Movement during the year - -
Gross change in market value (197,610) -
Impairment for expected credit losses 19,527 -
Loss from mark to market valuation as at 31st December (178,083) -
Market value 926,008 -
27.6 Analysis of Financial Assets - Fair Value through Other Comprehensive Income
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Pledged as collateral - - - -
Unencumbered 24,237,803 17,331,724 24,237,859 17,331,780
24,237,803 17,331,724 24,237,859 17,331,780
By currency
Sri Lankan Rupee 19,768,642 15,445,694 19,768,698 15,445,750
Other currency 4,469,161 1,886,030 4,469,161 1,886,030
24,237,803 17,331,724 24,237,859 17,331,780
28 INVESTMENT IN SUBSIDIARIES
ACCOUNTING POLICY
Subsidiaries are entities that are controlled by the Bank. The Bank is presumed to control an investee when it is exposed or has
rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. At each reporting date, the Bank reassesses whether it controls an investee, if facts and circumstances indicate that there
are changes to one or more elements of control mentioned above.
The Financial Statements of subsidiaries are fully consolidated from the date on which control is transferred to the Bank and continue
to be consolidated until the date when such control ceases. The Financial Statements of the Bank’s subsidiaries are prepared for the
same reporting year as per the Bank, using consistent accounting policies.
The cost of acquisition of a subsidiary is measured as the fair value of the consideration, including contingent consideration, given on
the date of transfer of title. The acquired identifiable assets, liabilities and contingent liabilities are measured at their fair values at the
date of acquisition. Subsequent to the initial measurement, the Bank continues to recognise the investments in subsidiaries at cost.
The total assets and liabilities of the subsidiaries as at the reporting date are included in the Consolidated Statement of Financial
Position. The total profit or loss for the year of the subsidiaries is included in the Consolidated Statement of Profit or Loss. The
non-controlling interest is presented in the Consolidated Statement of Financial Position within equity, separately from the
equity attributable to the equity holders of the Bank. Non-controlling interest in the profit or loss of the Group is disclosed in the
Consolidated Statement of Comprehensive Income. Total comprehensive income is allocated to the owners of the parent and to the
non-controlling interest even if this results in non- controlling interest having a deficit balance.
Intra-group balances and any income and expenses arising from intra-group transactions are eliminated when preparing the
Consolidated Financial Statements. Unrealised losses are eliminated in the same way as unrealised gains, except that they are only
eliminated to the extent that there is no evidence of impairment.
28 INVESTMENT IN SUBSIDIARIES CONTD.
When a subsidiary is acquired or sold during the year, operating results of such subsidiary is included from the date of acquisition
or to the date of disposal. Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-
controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control
is recognised in the Statement of Changes in Equity.
If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date the control is lost.
Subsequently it is accounted for as an equity-accounted investee or in accordance with the Group’s accounting policy for financial
instruments depending on the level of influence retained.
The Group did not acquire/dispose any subsidiaries during the year ended 31st December 2020.
There are no significant restrictions on the ability of the subsidiaries to transfer funds to the Bank in the form of cash dividends or
repayment of loans and advances.
All subsidiaries of the Bank have been incorporated in Sri Lanka.
28.1 Details of Subsidiaries

Bank

Subsidiary Principal Activities Ownership Cost Directors' Ownership Cost Directors'
Valuation Valuation
Rs 000 Rs 000 Rs 000 Rs 000
Siyapatha Finance PLC Granting leasing, hire

purchase, factoring &
other loan facilities &
accepting deposits 100% 2,222,881 5,125,964 100% 1,379,922 4,015,824
Sampath Centre Ltd Renting of commercial
property 100% 651,225 5,141,550 100% 615,833 4,929,701
SC Securities (Pvt) Ltd Stock broking 100% 178,921 228,093 100% 178,921 119,946
Sampath Information Software
Technology Solutions Ltd development, renting
of IT equipment & IT
resource outsourcing
& consultancy 100% 297,747 408,415 100% 279,000 341,293
3,350,774 2,453,676
Impairment provision as at
1st January (58,975) (65,194)
Movement during the year
(Note 12) 58,975 6,219
Impairment provision as at
31st December - (58,975)
Net investment in
subsidiaries 3,350,774 2,394,701
Subsidiaries are not quoted in the Colombo Stock Exchange except Siyapatha Finance PLC.
The Directors' valuation of investments in subsidiaries has been carried out on net asset basis as at 31st December 2020. The Bank's
subsidiary company, SC Securities (Pvt) Ltd has reported profits for the last two consecutive years and it reported a positive net asset
position as at 31st December 2020. Accordingly, the Bank reversed the total impairment provision of Rs 59 Mn booked as at 31st
December 2019 against the investment in SC Securities (Pvt) Ltd during the year.

29 PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING POLICY
Recognition
Property, plant and equipment are tangible items that are held for use in the production or supply of services, for rental to others or
for administrative purposes and are expected to be used during more than one period. The Group applies the requirements of the Sri
Lanka Accounting Standard - LKAS 16 (Property, Plant and Equipment) in accounting for these assets. Property, plant and equipment
are recognised if it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the
asset can be reliably measured.
Measurement
An item of property, plant and equipment that qualifies for recognition as an asset is initially measured at its cost. Cost includes
expenditure that is directly attributable to the acquisition of the asset and cost incurred subsequently to add to, replace part of an
item of property, plant & equipment. The cost of self-constructed assets includes the cost of materials and direct labour, any other
costs directly attributable for bringing the asset to a working condition for its intended use and the costs of dismantling and removing
the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related
equipment is capitalised as a part of computer equipment. When parts of an item of property or equipment have different useful
lives, they are accounted as separate items (major components) of property, plant and equipment.
Cost Model
The Group applies cost model to property, plant and equipment except for freehold land and buildings and records at cost of
purchase or construction together with any incidental expenses thereon less accumulated depreciation and any accumulated
impairment losses.
Revaluation Model
The Group applies the revaluation model to the entire class of freehold land and buildings. Such properties are carried at a revalued
amount, being their fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated
impairment losses. Freehold land and buildings of the Group are revalued by independent professional valuers every three years or
more frequently if the fair values are substantially different from carrying amounts, to ensure that the carrying amounts do not differ
from the fair values as at the reporting date. The Group revalued its freehold land and buildings as at 31st December 2019, the
details of which are given in Note 29.3.
On revaluation of an asset, any increase in the carrying amount is recognised in ‘Other comprehensive income’ and accumulated in
equity, under revaluation reserve or used to reverse a previous revaluation decrease relating to the same asset, which was charged
to the Statement of Profit or Loss. In this circumstance, the increase is recognised as income to the extent of the previous write
down. Any decrease in the carrying amount is recognised as an expense in the Statement of Profit or Loss or debited to the other
comprehensive income to the extent of any credit balance existing in the revaluation reserve in respect of that asset. The decrease
recognised in other comprehensive income reduces the amount accumulated in equity under revaluation reserves. Any balance
remaining in the revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the
asset.
Subsequent Cost
The subsequent cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be
reliably measured. The costs of day to day servicing of property, plant and equipment are charged to the Statement of Profit or Loss
as incurred.
29 PROPERTY, PLANT AND EQUIPMENT CONTD.
Derecognition
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits
are expected from its use. The gain or loss arising from de-recognition of an item of property, plant and equipment is included in the
Statement of Profit or Loss when the item is derecognised. When replacement costs are recognised in the carrying amount of an item
of property, plant and equipment, the remaining carrying amount of the replaced part is derecognised. Major inspection costs are
capitalised. At each such capitalisation, the remaining carrying amount of the previous cost of inspection is derecognised.
Capital Work in Progress

These are expenses of capital nature directly incurred in the construction of buildings, major plant, machinery and system
development, awaiting capitalisation. Capital work-in-progress would be transferred to the relevant asset when it is available for
use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Capital work-in-progress is stated at cost less any accumulated impairment losses.
Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset have been capitalised
as part of the cost of the asset in accordance with Sri Lanka Accounting Standard - LKAS 23 (Borrowing Costs). A qualifying asset
is an asset which takes substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing costs ceases
when substantially all the activities necessary to prepare the qualifying asset for its intended use are completed. Other borrowing
costs are recognised in profit or loss in the period in which they are incurred. There were no capitalised borrowing costs related to the
acquisition of property plant & equipment during the year.
Rates of depreciation for each category of property, plant and equipment are given in Note 14, 'Depreciation and Amortisation
Expenses'.
29.1 Bank
Freehold Improvements Computer Office Fixtures & Motor 2020 2019

Land to Lease Hold Equipment Equipment Fittings Vehicles Total Total
& Buildings Properties
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Cost/Valuation
Balance as at 1st January 5,870,275 1,213,163 4,268,038 2,299,089 354,311 214,151 14,219,027 13,301,270
Additions & improvements 16,502 25,849 286,071 123,586 25,038 1,341 478,387 864,047
Disposals during the year - (12,256) (228,994) (109,468) (13,338) - (364,056) (60,170)
Written off during the year - - (1,469) (2,256) (1,236) - (4,961) -
Revaluation adjustment on accumulated
depreciation - - - - - - - (107,297)
Revaluation surplus - - - - - - - 816,506
Transfers/adjustments - - - - - - - (595,329)
Cost/valuation as at 31st December 5,886,777 1,226,756 4,323,646 2,310,951 364,775 215,492 14,328,397 14,219,027
Accumulated Depreciation
Balance as at 1st January - 1,112,004 2,497,996 1,753,540 227,950 161,171 5,752,661 5,383,277
Charge for the year (Note 14) 45,813 46,635 487,493 173,326 45,609 13,978 812,854 779,064
Disposals during the year - (12,256) (225,421) (108,327) (13,338) - (359,342) (54,613)
Written off during the year - - (1,093) (2,048) (920) - (4,061) -
Revaluation adjustment on accumulated
depreciation - - - - - - - (107,297)
Transfers/adjustments - - - - - - - (247,770)
Accumulated depreciation as at 31st December 45,813 1,146,383 2,758,975 1,816,491 259,301 175,149 6,202,112 5,752,661
Net book value as at 31st December 2020 5,840,964 80,373 1,564,671 494,460 105,474 40,343 8,126,285
Net book value as at 31st December 2019 5,870,275 101,159 1,770,042 545,549 126,361 52,980 8,466,366
29.1(a) The carrying amount of Bank's revalued freehold land and buildings, if they were carried at cost less accumulated depreciation, would be
as follows:

Cost Accumulated Cost Less Cost Accumulated Cost Less
Depreciation Accumulated Depreciation Accumulated
Depreciation Depreciation
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Freehold lands 906,309 - 906,309 906,309 - 906,309

Freehold buildings 1,207,861 282,207 925,654 1,191,359 252,083 939,276
Total 2,114,170 282,207 1,831,963 2,097,668 252,083 1,845,585
29.2 Group
Freehold Improvements Computer Office Fixtures & Motor Capital 2020 2019
Land to Lease Hold Equipment Equipment Fittings Vehicles Work-in Total Total
& Buildings Properties Progress
Cost/Valuation
Balance as at 1st January 10,424,624 1,213,163 5,893,417 2,529,706 579,635 222,679 1,956,428 22,819,652 19,850,225
Additions & improvements 16,502 25,849 433,107 257,424 92,115 1,340 614,739 1,441,076 2,167,541
Disposals during the year - (12,256) (274,718) (111,227) (13,470) (2,743) - (414,414) (96,724)
Written off during the year - - (1,480) (2,846) (1,236) - - (5,562) (38,341)
Revaluation adjustment on
accumulated depreciation - - - - - - - - (274,955)
Revaluation surplus - - - - - - - - 1,211,906
Cost/valuation as at 31st
December 10,441,126 1,226,756 6,050,326 2,673,057 657,044 221,276 2,571,167 23,840,752 22,819,652
Accumulated Depreciation
Balance as at 1st January - 1,112,004 3,616,743 1,857,375 362,525 168,954 - 7,117,601 6,248,427
Charge for the year
(Note 14) 129,643 46,635 773,939 202,266 79,076 14,170 - 1,245,729 1,237,155
Disposals during the year - (12,256) (271,078) (109,838) (13,422) (2,741) - (409,335) (88,409)
Written off during the year - - (1,100) (2,638) (920) - - (4,658) (4,617)
Revaluation adjustment on
accumulated depreciation - - - - - - - - (274,955)
Accumulated depreciation
as at 31st December 129,643 1,146,383 4,118,504 1,947,165 427,259 180,383 - 7,949,337 7,117,601
Net book value as at 31st
December 2020 10,311,483 80,373 1,931,822 725,892 229,785 40,893 2,571,167 15,891,415 -
Net book value as at 31st
December 2019 10,424,624 101,159 2,276,674 672,331 217,110 53,725 1,956,428 15,702,051
29.2(a) The carrying amount of Group's revalued freehold land and buildings, if they were carried at cost less accumulated depreciation, would be
as follows:

Cost Accumulated Cost Less Cost Accumulated Cost Less
Depreciation Accumulated Depreciation Accumulated
Depreciation Depreciation
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Freehold lands 1,245,388 - 1,245,388 1,245,388 - 1,245,388

Freehold buildings 1,891,160 511,476 1,379,684 1,874,658 464,270 1,410,388
Total 3,136,548 511,476 2,625,072 3,120,046 464,270 2,655,776

29.3 Details of Bank's & Group's Land and Buildings Stated at Valuation
Valuer/Location Date of Method of Net Book Value Revaluation Revaluation Revaluation

Valuation* Valuation before Revaluation Amount Gain/(Loss) Gain/(Loss)
Recognised in 2019
Land Building Land Building Land Building Total Profit or OCI
Loss
Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn
Bank
Valuer - Mr P B Kalugalagedara
No. 261, Galle Road, Ratmalana 31.12.2019 Market Comparable Method 30.00 21.14 49.00 21.00 19.00 (0.14) 18.86 - 18.86
Valuer - Mr C Wellappili
No. 05, Wakwella Road, Galle 31.12.2019 Market Comparable Method 104.88 31.36 104.88 33.41 - 2.05 2.05 - 2.05
No. 42, Anguruwatota Road, Horana 31.12.2019 Market Comparable Method 41.50 - 51.87 - 10.37 - 10.37 - 10.37
No. 81 & 81 A, High Level Road,
Maharagama 31.12.2019 Market Comparable Method 67.30 32.91 80.76 40.23 13.46 7.32 20.78 - 20.78
Valuer - Mr G M Gamage
No. 69, Main Street, Deniyaya 31.12.2019 Market Comparable Method 21.90 23.79 35.04 27.15 13.14 3.36 16.50 3.36 13.14
No. 117, Hapugahawalawatta,
Ihalagama Road, Deniyaya 31.12.2019 Market Comparable Method 0.60 - 1.50 - 0.90 - 0.90 0.33 0.57
No. 25-27, Main Street,
Tissamaharama 31.12.2019 Market Comparable Method 17.76 31.09 27.75 41.25 9.99 10.16 20.15 - 20.15
Valuer - Mr Sarath Fernando

No. 7/5, Giriulla Road, Alawwa 31.12.2019 Market Comparable Method 20.50 22.42 24.70 25.80 4.20 3.38 7.58 - 7.58
No. 150, Colombo Road, Gampaha 31.12.2019 Market Comparable Method 62.00 37.84 68.00 42.00 6.00 4.16 10.16 - 10.16
No. 312/A, Galle Road, Kalutara 31.12.2019 Market Comparable Method 75.00 63.22 82.00 71.00 7.00 7.78 14.78 - 14.78
No. 187, Madawala Road,
Katugastota 31.12.2019 Market Comparable Method 69.60 61.56 81.00 65.00 11.40 3.44 14.84 - 14.84
No. 31 & 33, Negombo Road,
Kurunegala 31.12.2019 Market Comparable Method 130.50 89.07 187.00 102.00 56.50 12.93 69.43 - 69.43
No. 475, Elvitigala Mawatha,
Narahenpita 31.12.2019 Market Comparable Method 94.00 60.22 104.00 65.00 10.00 4.78 14.78 - 14.78
No. 408, Main Street, Negombo 31.12.2019 Market Comparable Method 103.75 126.71 124.00 128.00 20.25 1.29 21.54 - 21.54
No. 371, Old Moor St,
Masangasweediya, Colombo 12 31.12.2019 Market Comparable Method 132.00 22.25 192.00 25.00 60.00 2.75 62.75 - 62.75
No. 373 A, Galle Road, Panadura 31.12.2019 Market Comparable Method 61.50 47.87 75.00 51.00 13.50 3.13 16.63 - 16.63
No. 85/87, Panchikawatta Road,
Colombo 10 31.12.2019 Market Comparable Method 66.00 38.06 78.00 74.00 12.00 35.94 47.94 - 47.94
No. 180(part), Bodiraja Mawatha,
Pettah 31.12.2019 Income Basis - 61.27 - 103.00 - 41.73 41.73 - 41.73
No. 61A, Moratuwa Road, Piliyandala 31.12.2019 Market Comparable Method 65.00 32.28 75.00 42.00 10.00 9.72 19.72 - 19.72
No. 1/87, Victoria Range, Digana,
Kandy 31.12.2019 Market Comparable Method 7.00 9.85 10.00 11.80 3.00 1.95 4.95 - 4.95
No. 256/1, Negombo Road, Wattala 31.12.2019 Market Comparable Method 89.00 37.84 106.00 43.00 17.00 5.16 22.16 1.74 20.42
No. 591, Galle Road, Wellawatta 31.12.2019 Market Comparable Method 118.00 55.14 139.00 57.00 21.00 1.86 22.86 - 22.86
Valuer - Messrs Prathap Chartered

Valuation & Consultancy (Pvt) Ltd
No. 1022, Maradana Road, Borella 31.12.2019 Market Comparable Method 246.80 89.49 296.16 91.29 49.36 1.80 51.16 - 51.16
"Nuwarawewakele", Maithreepala
Senanayake Mw, Anuradhapura 31.12.2019 Market Comparable Method 171.70 65.54 175.74 64.74 4.04 (0.80) 3.24 (0.80) 4.04
No. 29, Cross Street, Kandy 31.12.2019 Market Comparable Method 257.00 92.11 282.70 94.33 25.70 2.22 27.92 - 27.92
No. 05, Hakmana Road, Matara 31.12.2019 Market Comparable Method 173.74 37.96 185.64 37.99 11.90 0.03 11.93 - 11.93
Valuer/Location Date of Method of Net Book Value Revaluation Revaluation Revaluation

Valuation* Valuation before Revaluation Amount Gain/(Loss) Gain/(Loss)
Recognised in 2019
Land Building Land Building Land Building Total Profit or OCI
Loss
Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn
Valuer - Mr G W G
Abeygunawaradana
No. 103, Dharmapala Mawatha,
Hunupitiya, Colombo 7 31.12.2019 Market Comparable Method 1,492.50 65.80 1,731.30 67.20 238.80 1.40 240.20 - 240.20
Valuer - Mr A A M Fathihu
No. 202, Main Road, Attidiya 31.12.2019 Market Comparable Method 50.38 27.08 50.76 27.29 0.38 0.21 0.59 - 0.59
Total - Bank 3,769.91 1,283.87 4,418.80 1,451.48 648.89 167.61 816.50 4.63 811.87
Subsidiaries
Valuer - Mr P B Kalugalagedara
Sampath Centre Ltd - No. 110, Sir
James Peiris Mawatha, Colombo 2 31.12.2019 Income Basis 2,367.00 1,508.95 2,677.50 1,508.95 310.50 - 310.50 - 310.50
Valuer - Mr C Wellappili
** Siyapatha Finance PLC - No. 534,
Bauddhaloka Mawatha,
Colombo 08 31.12.2019 Market Comparable Method 283.00 - 367.90 - 84.90 - 84.90 - 84.90
Total - Group 6,419.91 2,792.82 7,464.20 2,960.43 1,044.29 167.61 1,211.90 4.63 1,207.27
* The Group has not revalued its freehold lands and buildings during this year for consolidated accounting purposes, on the basis that
changes in property prices were not significant compared to the previous year.
** Siyapatha building is under work-in-progress as at 31st December 2020. Cost incurred up to the reporting date on the building is
included under capital work-in-progress of the Group.

29.4 Freehold Land and Buildings
Land Buildings No. of Cost/ Cost/ Total Accumulated 2020 As a % 2019

Location Extent Buildings Revaluation Revaluation Value Depreciation Net Book of Total Net Book
in the of Land of Building Value NBV Value
Location
Perches Sq.ft Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Bank
1 Alawwa 20.7 8,190 1 24,700 26,089 50,789 1,440 49,349 0.5% 50,500
No. 7/5, Giriulla Road, Alawwa
2 Anuradhapura 40.4 8,929 1 175,740 64,735 240,475 2,097 238,378 2.3% 240,475
"Nuwarawewakele",
Maithreepala Senanayake Mw,
Anuradhapura
3 Attidiya 12.7 6,064 1 50,760 27,288 78,048 579 77,469 0.8% 78,048
No. 202, Main Road, Attidiya
4 Borella 24.7 15,876 1 296,160 91,287 387,447 2,956 384,491 3.7% 387,447
No. 1022, Maradana Road,
Borella
5 Deniyaya 17.5 5,325 1 35,040 27,155 62,195 595 61,600 0.6% 62,195
No. 69, Main Street, Deniyaya
6 Deniyaya 40.0 Bare Land - 1,500 - 1,500 - 1,500 0.0% 1,500
No. 117, Hapugahawalawatta,
Ihalagama Road, Deniyaya
7 Dharmapala Mawatha 119.4 7,300 1 1,731,300 67,902 1,799,202 1,880 1,797,322 17.4% 1,798,500
No. 103, Dharmapala
Mawatha, Hunupitya,
Colombo 7
8 Galle 17.5 5,400 1 104,880 33,412 138,292 1,045 137,247 1.3% 138,292
No. 05, Wakwella Road, Galle
9 Gampaha 25.0 5,680 1 68,000 42,000 110,000 1,053 108,947 1.1% 110,000
No. 150, Colombo Road,
Gampaha
10 Horana 20.8 Bare Land - 51,875 - 51,875 - 51,875 0.5% 51,875
No. 42, Anguruwatota Road,
Horana
11 Kalutara 30.0 8,715 1 82,000 71,562 153,562 1,881 151,681 1.5% 153,000
No. 312/A, Galle Road,
Kalutara
12 Kandy Metro 25.7 17,398 1 282,700 94,331 377,031 3,377 373,654 3.6% 377,031
No. 29, Cross Street, Kandy
13 Katugastota 23.2 7,811 1 81,000 65,000 146,000 1,714 144,286 1.4% 146,000
No. 187, Madawala Road,
Katugastota
14 Kurunegala 37.4 16,202 1 187,000 102,000 289,000 2,925 286,075 2.8% 289,000
No. 31 & 33, Negombo Road,
Kurunegala
15 Maharagama 13.5 6,310 1 80,760 40,226 120,986 1,258 119,728 1.2% 120,986
No. 81 & 81 A, High Level
Road, Maharagama
16 Matara 47.6 11,431 2 185,640 37,986 223,626 1,360 222,266 2.2% 223,626
No. 05, Hakmana Road, Matara
17 Narahenpita 18.9 9,600 1 104,000 65,000 169,000 1,812 167,188 1.6% 169,000
No. 475, Elvitigala Mawatha,
Narahenpita
Land Buildings No. of Cost/ Cost/ Total Accumulated 2020 As a % 2019

Location Extent Buildings Revaluation Revaluation Value Depreciation Net Book of Total Net Book
in the of Land of Building Value NBV Value
Location
Perches Sq.ft Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
18 Negombo 41.5 15,088 1 124,000 140,500 264,500 3,499 261,001 2.5% 252,000
No. 408, Main Street,
Negombo
19 Old Moor Street 24.0 10,180 1 192,000 25,000 217,000 2,505 214,495 2.1% 217,000
No. 371, Old Moor St,
Masangasweediya,
Colombo 12
20 Panadura 27.3 6,020 1 75,000 51,000 126,000 1,463 124,537 1.2% 126,000
No. 373 A, Galle Road,
Panadura
21 Panchikawatta 9.8 14,680 1 78,000 74,000 152,000 2,469 149,531 1.5% 152,000
No. 85/87, Panchikawatta
Road, Colombo 10
22 Pettah - 5,124 1 - 104,655 104,655 4,143 100,512 1.0% 103,000
No. 180 (part), Bodiraja
Mawatha, Pettah
23 Piliyandala 37.5 8,138 1 75,000 42,575 117,575 1,215 116,360 1.1% 117,000
No. 61A, Moratuwa Road,
Piliyandala
24 Ratmalana 10.9 5,520 1 49,000 21,000 70,000 602 69,398 0.7% 70,000
No. 261, Galle Road, Ratmalana
25 Tissamaharama 22.2 10,815 1 27,750 41,250 69,000 945 68,055 0.7% 69,000
No. 25-27, Main Street,
Tissamaharama
26 Victoria Range 20.1 2,320 1 10,000 11,800 21,800 358 21,442 0.2% 21,800
No. 1/87, Victoria Range,
Digana, Kandy
27 Wattala 42.5 5,314 1 106,000 43,000 149,000 1,134 147,866 1.4% 149,000
No. 256/1, Negombo Road,
Wattala
28 Wellawatte 21.5 7,776 1 139,000 57,219 196,219 1,508 194,711 1.9% 196,000
No. 591, Galle Road,
Wellawatta
Total - Bank 792.3 231,206 27 4,418,805 1,467,972 5,886,777 45,813 5,840,964 56.6% 5,870,275
Subsidiaries
Sampath Centre Ltd
29 Slave Island * 153.6 216,174 1 2,677,500 1,508,948 4,186,448 83,830 4,102,618 39.8% 4,186,448
No. 110, Sir James Peiris
Mawatha, Colombo 02
Siyapatha Finance PLC

30 Borella 29.1 WIP - 367,901 - 367,901 - 367,901 3.6% 367,901
No. 534, Bauddhaloka
Mawatha, Colombo 08
Total - Group 975.0 447,380 28 7,464,206 2,976,920 10,441,126 129,643 10,311,483 100.0% 10,424,624
* Additional 6 floors are under work-in-progress as at 31st December 2020.


29.5(a) Improvements to Leasehold Properties
Bank & Group

Cost of Accumulated Net Book Net Book
Buildings Depreciation Value Value
Rs 000 Rs 000 Rs 000 Rs 000
01 - 05 years 235,176 225,908 9,268 8,979

06 - 10 years 662,935 608,090 54,845 66,631
Above 10 years 328,645 312,385 16,260 25,549
Total 1,226,756 1,146,383 80,373 101,159
29.5(b) Fully Depreciated Property, Plant and Equipment

A class-wise analysis of the initial cost of fully depreciated property, plant and equipment of the Bank which are still in use as at reporting
date is as follows.
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Asset class
Improvements to leasehold properties 1,045,581 948,282 1,045,581 948,282
Computer equipment & software 2,620,794 2,532,199 2,800,726 2,618,610
Office equipment 1,187,775 1,066,059 1,211,319 1,082,506
Fixtures & fittings 142,263 133,844 228,931 197,112
Motor vehicles 108,889 98,728 113,708 105,216
Total 5,105,302 4,779,112 5,400,265 4,951,726
29.5(c) Temporarily Idle Property, Plant and Equipment - Bank & Group
The Bank holds Horana land worth of Rs 51.9 Mn with the intention of constructing a branch. The Bank does not intend to construct a
branch in the bare land located in Deniyaya as it was severely earth slipped. Any future construction on this land is subjected to NBRO
(National Building Research Organisation) certification.
29.5(d) Property, Plant and Equipment Retired from Active Use - Bank & Group
There were Rs 8.6 Mn (net book value) worth of property, plant and equipment retired from active use as at 31st December 2020
pertaining to the Bank's subsidiary, Sampath Centre Limited (2019: NIL).
29.5(e) Title Restriction on Property, Plant and Equipment - Bank & Group
There were no restrictions on the title of property, plant and equipment as at 31st December 2020 (2019: NIL).
29.5(f) Property, Plant and Equipment Pledged as Security against Liabilities - Bank & Group
There were no items of property, plant and equipment pledged as securities against liabilities (2019: NIL).
29.5(g) Compensation from Third Parties for Items of Property, Plant and Equipment - Bank & Group
There were no compensations received during the year from third parties for items of property, plant and equipment that were impaired,
lost or given up (2019: NIL).
30 INTANGIBLE ASSETS
ACCOUNTING POLICY
Recognition
An intangible asset is an identifiable non-monetary asset without physical substance, held for use in the production or supply of
goods or services, for rental to others or for administrative purposes. An intangible asset is recognised if it is probable that the future
economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. An
intangible asset is initially measured at cost. Expenditure incurred on an intangible item that was initially recognised as an expense
by the Group in previous annual Financial Statements or interim Financial Statements are not recognised as part of the cost of an
intangible asset at a later date.
Computer Software
Cost of purchased licenses and all computer software costs incurred, licensed for use by the Group, which are not integrally
related to associated hardware, which can be clearly identified, reliably measured and it’s probable that they will lead to future
economic benefits, are included in the Statement of Financial Position under the category ‘Intangible assets’ and carried at cost less
accumulated amortisation and any accumulated impairment losses.
Goodwill
Goodwill, if any that arises upon the acquisition of subsidiaries is included in intangible assets. Goodwill is measured at initial
recognition in accordance with Note 3.2.
Subsequent Expenditure
Expenditure incurred on software is capitalised only when it is probable that this expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standard of performance and this expenditure can be measured and attributed
to the asset reliably. All other expenditure is expensed as incurred.
Goodwill is measured at cost less accumulated impairment losses.
Derecognition of Intangible Assets

The carrying amount of an item of intangible asset is derecognised on disposal or when no future economic benefits are expected
from its use. The gain or loss arising from de-recognition of an item of intangible asset is included in the Statement of Profit or Loss
when the item is derecognised.
There were no restrictions on the title of the intangible assets as at the reporting date. Further, there were no items pledged as
securities for liabilities.
Intangible assets of the Bank as at 31st December 2020 only include computer software and cost of licenses. Rates of amortisation
for computer software and licenses are given in Note 14, 'Depreciation and Amortisation Expenses'.
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Cost
Additions & improvements 199,307 247,510 201,948 248,674
Disposal/write off during the year (13,096) - (13,096) (12,400)
Cost as at 31st December 3,019,995 2,833,784 3,231,884 3,043,032
Accumulated Amortisation
Charge for the year (Note 14) 440,811 389,795 465,582 414,287
Disposal/write off during the year (13,078) - (13,078) (7,835)
Accumulated amortisation as at 31st December 2,266,380 1,838,647 2,440,195 1,987,691
Net book value as at 31st December 753,615 995,137 791,689 1,055,341
31 RIGHT-OF-USE ASSETS
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year.
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Cost
Balance as at 1st January 5,572,188 595,329 4,082,329 -
Effect of adoption of SLFRS 16 - 4,106,217 - 3,071,919
Restated balance as at 1st January 5,572,188 4,701,546 4,082,329 3,071,919
Additions & improvements 421,387 870,642 504,537 1,010,410
Cost as at 31st December 5,993,575 5,572,188 4,586,866 4,082,329
Accumulated Amortisation
Balance as at 1st January 1,512,969 247,770 874,063 -
Charge for the year (Note 14) 1,200,440 1,265,199 807,142 874,063
Accumulated amortisation as at 31st December 2,713,409 1,512,969 1,681,205 874,063
Net book value as at 31st December 3,280,166 4,059,219 2,905,661 3,208,266
31.1 Lease Liability

Set out below are the carrying amounts of lease liabilities (included under "other liabilities" in Note 40) and the movements during the
year.
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 4,423,702 439,988 3,449,043 -

Effect of adoption of SLFRS 16 as at 1st January - 4,155,721 - 3,183,239
Restated balance as at 1st January 4,423,702 4,595,709 3,449,043 3,183,239
Additions 421,387 870,642 504,537 1,010,410
Accretion of interest (Note 7.2) 470,735 620,740 295,941 368,897
Payments (1,536,189) (1,663,389) (1,038,729) (1,113,503)
Balance as at 31st December (Note 40) 3,779,635 4,423,702 3,210,792 3,449,043
31.1.1 Maturity Analysis of Lease Liability
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Less than 1 year 1,690,636 1,737,036 1,372,370 1,252,358

1 to 5 years 1,755,902 2,327,645 1,469,309 1,772,422
More than 5 years 333,097 359,021 369,113 424,263
3,779,635 4,423,702 3,210,792 3,449,043
31.2 Sensitivity of Right-of-Use Assets/Lease Liability to Key Assumptions

31.2.1 Sensitivity to Discount Rates
1% increase/(decrease) in discount rate as at 31st December 2020 would have (decreased)/increased the lease liability by approximately
Rs 69 Mn with a similar (decrease)/increase in the right-of-use asset. Had the Bank increased/(decreased) the discount rate by 1%, the
Bank's profit before tax for the year would have (decreased)/increased by approximately Rs 12 Mn.
31.2.2 Sensitivity to Lease Term

Had the lease term of all existing lease agreements been increased by further one year, lease liability of the Bank as at 31st December
2020 would have increased by Rs 1,149 Mn with a similar increase in the right-of-use assets. Further, this would reduce the profit before
tax of the Bank by Rs 93 Mn.
The above sensitivities are given only for the Bank since the subsidiary leases do not have a material impact on the Financial Statements
of the Group.
32 DEFERRED TAX (ASSETS)/LIABILITIES
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Recognised under assets (4,634,040) (3,737,512) (4,653,496) (3,738,064)

Recognised under liabilities - - 1,485,302 1,405,568
(4,634,040) (3,737,512) (3,168,194) (2,332,496)
Net deferred tax (assets)/liabilities of one entity cannot be set-off against another entity's liabilities/(assets) since there is no legally
enforceable right to set-off. Therefore, net deferred tax assets and liabilities of different entities are separately recognised in the
Statement of Financial Position.
32.1 Movement in Deferred Tax Liabilities/(Assets)

Bank
Accelerated Depreciation for Provision for Revaluation Retirement Tax Losses Gain/(Loss) Others Total
Tax Purposes Loan Losses on Land & Benefit on Leasing on FVOCI
Property, Leased Buildings Obligation Operation Assets
Plant & Assets
Equipment
Balance as at 1st January 2019 470,686 838,936 (3,079,358) 936,855 (528,031) - 451,407 (79,838) (989,343)
Profit or loss (Note 16) 29,102 (319,539) (2,018,064) - (84,841) - - (35,330) (2,428,672)
Other comprehensive income - - - 227,325 (409,588) - (137,234) - (319,497)
Balance as at 31st December 2019 499,788 519,397 (5,097,422) 1,164,180 (1,022,460) - 314,173 (115,168) (3,737,512)
Balance as at 1st January 2020 499,788 519,397 (5,097,422) 1,164,180 (1,022,460) - 314,173 (115,168) (3,737,512)
Profit or loss (Note 16) (9,731) (22,793) (352,277) - (104,001) - - (10,822) (499,624)
Other comprehensive income - - - - (797,586) - 400,682 - (396,904)
Balance as at 31st December 2020 490,057 496,604 (5,449,699) 1,164,180 (1,924,047) - 714,855 (125,990) (4,634,040)
Group
Accelerated Depreciation for Provision for Revaluation Retirement Tax Losses Gain/(Loss) Others Total
Tax Purposes Loan Losses on Land & Benefit on Leasing on FVOCI
Property, Leased Buildings Obligation Operation Assets
Plant & Assets
Equipment
Balance as at 1st January 2019 446,864 1,438,510 (3,081,578) 1,980,671 (543,141) (27,338) 451,407 (118,039) 547,356
Profit or loss (Note 16) (26,690) (526,233) (2,051,926) - (90,110) (9,074) - 37,825 (2,666,208)
Other comprehensive income - - - 338,037 (414,447) - (137,234) - (213,644)
Balance as at 31st December 2019 420,174 912,277 (5,133,504) 2,318,708 (1,047,698) (36,412) 314,173 (80,214) (2,332,496)
Balance as at 1st January 2020 420,174 912,277 (5,133,504) 2,318,708 (1,047,698) (36,412) 314,173 (80,214) (2,332,496)
Profit or loss (Note 16) 111,565 (211,750) (157,636) - (110,621) 18,486 - (87,919) (437,875)
Other comprehensive income - - - - (798,505) - 400,682 - (397,823)
Balance as at 31st December 2020 531,739 700,527 (5,291,140) 2,318,708 (1,956,824) (17,926) 714,855 (168,133) (3,168,194)
33 OTHER ASSETS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Pre-paid expenses 490,771 717,603 552,975 795,943

Reimbursement under special senior citizen deposit scheme 2,892,315 4,954,403 2,892,315 4,954,403
Other debtors 2,329,086 2,541,680 3,290,972 3,120,332
Pre-paid staff cost (Note 33.1) 3,227,200 3,328,078 3,243,617 3,346,470
Refundable deposits 11,575 12,270 41,874 35,160
Commission receivable on financial guarantees (Note 33.2) 63,046 79,071 63,046 79,071
9,013,993 11,633,105 10,084,799 12,331,379
33.1 The Movement in the Pre-Paid Staff Cost
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Add: Adjustment for new grants (net of settlements) 190,405 665,567 204,847 669,399
Charge to personnel expenses (291,283) (305,616) (307,700) (314,772)
33.2 Commission Receivable on Financial Guarantees

Bank & Group
2020 2019
Rs 000 Rs 000

Interest income 6,145 7,376
Commission received (22,170) (21,317)
34 DUE TO BANKS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Local Currency Deposits

Demand deposits 58,539 80,587 58,539 80,587
Savings deposits 583 568 583 568
Term deposits 25,777 - 25,777 -
Total local currency deposits 84,899 81,155 84,899 81,155
Foreign Currency Deposits

Demand deposits 1,063,353 969,020 1,063,353 969,020
Total foreign currency deposits 1,063,353 969,020 1,063,353 969,020
Total deposits 1,148,252 1,050,175 1,148,252 1,050,175
Unfavourable balances with local & foreign banks 374,150 461,490 375,081 517,799
1,522,402 1,511,665 1,523,333 1,567,974
35 DUE TO DEPOSITORS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Local Currency Deposits

Demand deposits 49,024,743 31,425,842 49,004,248 31,415,117
Saving deposits 265,552,863 193,430,471 265,158,008 193,430,628
Call deposits 148,798 65,370 148,798 65,370
Term deposits 452,056,465 404,651,874 469,245,653 417,601,592
Certificates of deposits 13,758,250 13,039,590 13,758,250 13,039,590
Margin deposits 1,625,527 1,037,075 1,625,527 1,037,075
Total local currency deposits 782,166,646 643,650,222 798,940,484 656,589,372
Foreign Currency Deposits

Demand deposits 4,940,470 3,611,703 4,940,470 3,611,703
Saving deposits 28,326,652 23,671,412 28,326,652 23,671,412
Term deposits 70,021,326 46,020,700 70,021,326 46,020,700
Margin deposits 269,807 296,455 269,807 296,455
Total foreign currency deposits 103,558,255 73,600,270 103,558,255 73,600,270
Total deposits 885,724,901 717,250,492 902,498,739 730,189,642
35.1 Analysis of Due to Depositors

35.1.1 By Product
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Demand deposits 53,965,213 35,037,545 53,944,718 35,026,820

Saving deposits 293,879,515 217,101,883 293,484,660 217,102,040
Call deposits 148,798 65,370 148,798 65,370
Term deposits 522,077,791 450,672,574 539,266,979 463,622,292
Certificates of deposits 13,758,250 13,039,590 13,758,250 13,039,590
Margin deposits 1,895,334 1,333,530 1,895,334 1,333,530
Total deposits 885,724,901 717,250,492 902,498,739 730,189,642
35.1.2 By Currency
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Sri Lankan Rupee 782,166,646 643,650,222 798,940,484 656,589,372

United States Dollar 94,474,411 67,289,186 94,474,411 67,289,186
Euro 2,194,242 1,401,722 2,194,242 1,401,722
Great Britain Pounds 2,430,053 2,123,935 2,430,053 2,123,935
Australian Dollar 2,568,032 1,726,061 2,568,032 1,726,061
Japanese Yen 862,037 229,896 862,037 229,896
New Zealand Dollar 474,983 398,037 474,983 398,037
Singapore Dollar 160,834 109,710 160,834 109,710
Others 393,663 321,723 393,663 321,723
Total deposits 885,724,901 717,250,492 902,498,739 730,189,642
35.1.3 Current Accounts and Savings Accounts (CASA)
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
CASA
Local currency deposits 314,636,728 224,937,468 314,221,378 224,926,900
Foreign currency deposits 34,330,475 28,252,135 34,330,475 28,252,135
348,967,203 253,189,603 348,551,853 253,179,035
Total Deposits
Due to other customers 885,724,901 717,250,492 902,498,739 730,189,642
Due to banks - Demand, savings & term deposits (Note 34) 1,148,252 1,050,175 1,148,252 1,050,175
886,873,153 718,300,667 903,646,991 731,239,817
CASA as a percentage (%) of total deposits 39.3 35.2 38.6 34.6
36 DUE TO OTHER BORROWERS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Call borrowings - 4,208,565 - 4,208,565

Term borrowings - - 7,818,911 11,649,437
Foreign currency borrowings 33,850,761 46,277,417 33,850,761 46,277,417
Refinance borrowings 15,201,834 5,175,747 15,201,834 5,175,747
49,052,595 55,661,729 56,871,506 67,311,166
The Bank/Group has not had any default of principal and interest with regard to any liability during 2019 and 2020.
37 DUE TO DEBT SECURITIES HOLDERS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Redeemable debentures (Note 37.1) 28,031,975 35,115,290 33,872,527 38,844,827

Long term bond (Note 37.2) 2,758,032 2,526,759 2,758,032 2,526,759
Securitisation - - 447,924 -
Total 30,790,007 37,642,049 37,078,483 41,371,586
Due within 1 year 7,531,975 8,615,290 8,960,451 8,766,817

Due after 1 year 23,258,032 29,026,759 28,118,032 32,604,769
Total 30,790,007 37,642,049 37,078,483 41,371,586
Senior debt - - 3,229,202 1,119,077

Subordinated debt 30,790,007 37,642,049 33,849,281 40,252,509
Total 30,790,007 37,642,049 37,078,483 41,371,586
37 DUE TO DEBT SECURITIES HOLDERS CONTD.

37.1 Redeemable Debentures
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Debentures issued - 7,000,000 2,000,000 8,500,000
Debentures redeemed (7,000,000) (7,000,000) (7,000,000) (9,421,990)
28,115,290 34,297,696 33,844,827 38,035,641
Interest accrued during the year 4,029,402 4,510,663 4,614,388 5,085,020
Interest paid (4,112,717) (3,693,069) (4,586,688) (4,275,834)
Amortised Cost
Details of Debentures Issued Note No. of Face Value 2020 2019
Debentures
Rs 000 Rs 000 Rs 000
Debentures issued by the Bank

Debentures issued in 2015 37.1.1 70,000,000 7,000,000 - 7,083,234
Debentures issued in 2016 37.1.2 60,000,000 6,000,000 6,426,431 6,426,512
Total debentures issued by the Bank 28,031,975 35,115,290
Debentures issued by the Subsidiary, Siyapatha

Finance PLC
Debentures issued in 2020 37.1.9 20,000,000 2,000,000 2,109,726 -
Total debenture issued by the Subsidiary 5,840,552 3,729,537
Total debentures issued by the Group 33,872,527 38,844,827

Debentures Issued by the Bank:

37.1.1 Debentures Issued in 2015
Rated unsecured subordinated redeemable 5 year debentures of Rs 100/- each issued in 2015. The debentures are quoted on the
Colombo Stock Exchange.
Amortised Cost
No. of Face Value 2020 2019 Allotment Maturity Rate of Interest
Debentures Date Date
Rs 000 Rs 000 Rs 000
67,412,700 6,741,270 - 6,821,722 18-Nov-15 18-Nov-20 Fixed - 9.90% per annum

payable semi annually
2,587,300 258,730 - 261,512 18-Nov-15 18-Nov-20 Floating rate is equivalent to
the six months treasury bill
rate (net) plus 1.25 % per
annum payable semi-annually
70,000,000 7,000,000 - 7,083,234
The Bank has redeemed the above debenture on 18th November 2020.

Amortised Cost
Rs 000 Rs 000 Rs 000
59,526,500 5,952,650 6,378,917 6,378,917 10-Jun-16 10-Jun-21 Fixed - 12.75% per annum
payable annually
473,500 47,350 47,514 47,595 10-Jun-16 10-Jun-21 Floating rate is equivalent
to the six months treasury
bill rate (gross) plus 1 % per
annum payable semi-annually
60,000,000 6,000,000 6,426,431 6,426,512

Basel III Compliant - Tier II listed rated unsecured subordinated redeemable 5 year debentures with a non - viability conversion, at a par
value of Rs 100/- each issued in 2017. The debentures are quoted on the Colombo Stock Exchange.
Amortised Cost
Rs 000 Rs 000 Rs 000
60,000,000 6,000,000 6,022,603 6,022,603 21-Dec-17 21-Dec-22 Fixed - 12.50% per annum
payable semi - annually
60,000,000 6,000,000 6,022,603 6,022,603

Amortised Cost
Rs 000 Rs 000 Rs 000
75,000,000 7,500,000 7,764,555 7,764,555 20-Mar-18 20-Mar-23 Fixed - 12.50% per annum payable
semi - annually
75,000,000 7,500,000 7,764,555 7,764,555

Amortised Cost
Rs 000 Rs 000 Rs 000
70,000,000 7,000,000 7,818,386 7,818,386 28-Feb-19 28-Feb-24 Fixed - 13.90% per annum
payable annually
70,000,000 7,000,000 7,818,386 7,818,386
Debentures Issued by the Subsidiary, Siyapatha Finance PLC:

Rated unsecured senior transferable fully paid redeemable in 5 year debentures of Rs 100/- each issued in 2016. The debentures are
quoted on the Colombo Stock Exchange.
Amortised Cost
Rs 000 Rs 000 Rs 000
10,780,100 1,078,010 1,119,476 1,119,077 20-Sep-16 20-Sep-21 Fixed - 13.50% per annum payable
annually
10,780,100 1,078,010 1,119,476 1,119,077

Rated unsecured subordinated transferable fully paid redeemable 5 year debentures of Rs 100/- each issued in 2017. The debentures
are quoted on the Colombo Stock Exchange.
Amortised Cost
Rs 000 Rs 000 Rs 000
10,000,000 1,000,000 1,030,822 1,030,479 04-Oct-17 04-Oct-22 Fixed - 12.50% per annum payable
annually
10,000,000 1,000,000 1,030,822 1,030,479

Amortised Cost
Rs 000 Rs 000 Rs 000
15,000,000 1,500,000 1,580,528 1,579,981 08-Aug-19 08-Aug-24 Fixed - 13.33% per annum payable
annually
15,000,000 1,500,000 1,580,528 1,579,981

Senior unsecured redeemable rated 3 year debentures of Rs 100/- each issued in 2020. The debentures are quoted on the Colombo
Stock Exchange.
Amortised Cost
Rs 000 Rs 000 Rs 000
20,000,000 2,000,000 2,109,726 - 07-Jul-20 07-Jul-23 Fixed - 11.25% per annum payable
annually
20,000,000 2,000,000 2,109,726 -

37.2 Long Term Bond
Bank & Group
The Bank has issued a redeemable zero coupon bond in 2003 with a redemption value of Rs 3,458 Mn which will be matured on 1st
August 2023.
2020 2019
Rs 000 Rs 000
Balance as at 1st January 2,526,759 2,314,880

Interest accrued 231,273 211,879
Balance as at 31st December 2,758,032 2,526,759
38 RETIREMENT BENEFIT OBLIGATION
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Provision for gratuity (Note 38.1) 1,522,464 1,199,928 1,639,530 1,290,067

Leave accrual plan (Note 38.2) 285,940 236,628 285,940 236,628
EPF interest guarantee plan (Note 38.3.1) 148,486 117,105 148,486 117,105
Liability for pension fund (38.4) 4,914,702 2,097,981 4,914,702 2,097,981
6,871,592 3,651,642 6,988,658 3,741,781
38.1 Provision for Gratuity

Liability Recognised in the Statement of Financial Position
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 1,199,928 734,664 1,290,067 792,920

Provision made during the year (Note 38.1.1) 360,658 515,163 392,544 553,992
1,560,586 1,249,827 1,682,611 1,346,912
Benefits paid from the plan (38,122) (49,899) (43,081) (56,845)
Balance as at 31st December (Note 38.1.2) 1,522,464 1,199,928 1,639,530 1,290,067
38.1.1 Provision made during the year

Amounts Recognised in Profit or Loss
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Current service cost 135,254 118,626 154,500 133,053

Interest expenses 122,393 89,556 131,752 96,607
Total amount recognised in profit or loss 257,647 208,182 286,252 229,660
Amounts Recognised in OCI
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Actuarial (gain)/loss due to changes in assumptions*

- Financial assumptions (8,883) 101,789 (4,216) 115,845
- Demographic assumptions - - - -
Actuarial experience loss arising during the year 111,894 205,192 110,508 208,487
Total actuarial loss recognised in OCI 103,011 306,981 106,292 324,332
Provision made during the year 360,658 515,163 392,544 553,992
*Significant assumptions used for the actuarial valuation are given in Note 38.1.3
38.1.2 Movement of Defined Benefit Obligation during the year
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 1,199,928 734,664 1,290,067 792,920

Current service cost 135,254 118,626 154,500 133,053
Interest expenses 122,393 89,556 131,752 96,607
Benefits paid from plan (38,122) (49,899) (43,081) (56,845)
Actuarial (gain)/loss due to changes in assumptions
- Financial assumptions (8,883) 101,789 (4,216) 115,845
- Demographic assumptions - - - -
Actuarial experience loss 111,894 205,192 110,508 208,487
An actuarial valuation of the gratuity fund of the Bank was carried out as at 31st December 2020 by Mr Piyal S Goonetilleke (Fellow
of Society of Actuaries - USA) of Messrs Piyal S Goonetilleke & Associates, a firm of professional actuaries. The valuation method used
by the actuary to value the Fund is the "Projected Unit Credit Method", recommended by Sri Lanka Accounting Standard - LKAS 19
(Employee Benefits).
38 RETIREMENT BENEFIT OBLIGATION CONTD.

38.1.3 Actuarial Assumptions - Bank
Financial assumptions*
Discount rate 7.3% 10.2%
Future salary increment rate 7.0% 10.0%
Demographic assumptions
RP 2000 RP 2000
Mortality Mortality Table Mortality Table
Retirement age 55 years 55 years
*Discount rate used for the actuarial valuation changed during the year due to changes in market interest rates. Future salary increment
rate too was revised to fall in line with the reduction in market interest rates.
Expected average future working life of the active participants is 11.1 years.
38.1.4 Sensitivity of Assumptions Employed in Gratuity Valuation - Bank

Reasonably possible changes at the reporting date to one of the significant actuarial assumptions, holding other assumptions constant,
would have affected the gratuity liability/Statement of Comprehensive Income by the amounts shown below.
Increase/(Decrease) Increase/(Decrease) 2020 2019

in Discount Rate in Salary Increment Sensitivity Effect Sensitivity Effect Sensitivity Effect Sensitivity Effect
Rate on Comprehensive on Gratuity Liability on Comprehensive on Gratuity Liability
Income Statement Increase/(Decrease) Income Statement Increase/(Decrease)
Increase/(Decrease) in Liability Increase/(Decrease) in Liability
in Comprehensive in Comprehensive
Income for the Year Income for the Year
Rs Mn Rs Mn Rs Mn Rs Mn
1% - 179.5 (179.5) 113.5 (113.5)

(1%) - (215.4) 215.4 (135.0) 135.0
- 1% (209.7) 209.7 (131.6) 131.6
- (1%) 178.5 (178.5) 113.0 (113.0)
All subsidiaries of the Group carry out actuarial valuations to ascertain their respective gratuity liabilities. However assumptions and the
sensitivity of the assumptions have been given only for the gratuity fund of the Bank since subsidiary gratuity liabilities do not have a
material impact on the Group Financial Statements.
38.2 Leave Accrual Plan

38.2.1 Liability Recognised in the Statement of Financial Position
Bank & Group
2020 2019
Rs 000 Rs 000

Provision made during the year 49,312 15,494
38.3 EPF Interest Guarantee Plan

Employees’ Provident Fund (EPF) is an approved private provident fund which has been set up to meet the provident fund liabilities of
the Bank to which the Bank and employees contribute 12% and 8% respectively on the salary of each employee. Employees who are
members of the fund are entitled to receive interest at a guaranteed rate of National Savings Bank's one year fixed deposit rate (net of
income tax) on their balance even if the fund earns a lower return from its investment in a given financial year. As per Section 8 of the
EPF Constitution, the Bank shall contribute any shortfall in the revenue account of the fund, after payment of interest at the said rate
and other cost of administering the fund. Thus the Bank's obligation to EPF is not limited to 12% contribution referred to above and
accordingly the fund was treated as a defined benefit liability as per Sri Lanka Accounting Standard - LKAS 19 (Employee Benefits). An
actuarial valuation was carried out by Mr Piyal S Goonetilleke (Fellow of Society of Actuaries - USA) of Messrs Piyal S Goonetilleke &
Associates, a firm of professional actuaries to value the Bank's additional obligation arising from Section 8 of the EPF constitution as at
31st December 2020.
38.3.1 Movement of the Liability Recognised in the Statement of Financial Position

Bank & Group
2020 2019
Rs 000 Rs 000

Current service cost and interest cost 20,977 19,096
Actuarial loss 10,404 5,755
38.3.2 Amounts Recognised in Profit or Loss

Bank & Group

Rs 000 Rs 000
Current service cost 9,069 7,850

Interest expense on defined benefit liability 11,908 11,246
Total amount recognised in profit or loss 20,977 19,096
38.3.3 Amounts Recognised in OCI

Bank & Group

Rs 000 Rs 000
Actuarial loss due to changes in assumptions*

Financial assumptions 10,776 15,951
Demographic assumptions - -
Actuarial gain due to experience adjustments (372) (10,196)
Total amount recognised in OCI 10,404 5,755
* Significant assumptions used for the actuarial valuation are given in Note 38.3.4.

38.3.4 Actuarial Assumptions - Bank
2020 2019
Return from EPF investments 4.5% 8.2%
Long term guaranteed EPF interest rate (net of tax) 4.7% 8.4%
Mortality RP 2000 RP 2000
Mortality Table Mortality Table
Expected average future working life of the active participants is 11.1 years.
*Discount rate, return from EPF investment and the long term guaranteed EPF interest rate (net of tax) used for the actuarial valuation
changed during the year due to changes in market interest rates. Future salary increment rate too was revised to fall in line with the
reduction in market interest rates.
38.3.5 Sensitivity of Assumptions Employed in EPF Interest Guarantee Plan Valuation

would have affected the EPF interest guarantee liability/Statement of Comprehensive Income by the amounts shown below.
Increase/(Decrease) Increase/(Decrease) 2020 2019

in Discount Rate in Salary Increment Sensitivity Effect Sensitivity Effect Sensitivity Effect Sensitivity Effect
Rate on Comprehensive on Employment on Comprehensive on Employment
Income Statement Benefit Obligation Income Statement Benefit Obligation
Increase/(Decrease) Increase/(Decrease) Increase/(Decrease) Increase/(Decrease)
in Comprehensive in Liability in Comprehensive in Liability
1% - 16.5 (16.5) 11.2 (11.2)

(1%) - (19.5) 19.5 (13.1) 13.1
- 1% (3.4) 3.4 (2.3) 2.3
- (1%) 3.1 (3.1) 2.2 (2.2)
38.4 Pension Fund

38.4.1 Net Liability Recognised in the Statement of Financial Position
Bank & Group

Rs 000 Rs 000
Present value of funded obligations as at 31st December (Note 38.4.4) 12,661,904 9,216,234
Fair value of plan assets as at 31st December (Note 38.4.5) (7,747,202) (7,118,253)
Funded status 4,914,702 2,097,981
Present value of unfunded benefit obligation - -
Net liability recognised in the Statement of Financial Position 4,914,702 2,097,981
38.4.2 Amounts Recognised in Profit or Loss

Bank & Group

Rs 000 Rs 000

Net interest expense on the net defined benefit liability 247,183 118,476
Past service cost - 89,173
Total amount recognised in profit or loss 569,615 488,032
38.4.3 Amounts Recognised in OCI

Bank & Group

Rs 000 Rs 000
Actuarial loss due to changes in assumptions*

- Financial assumptions 2,386,548 721,126
- Demographic assumptions - -
Actuarial gain due to experience adjustments (1,798) (48,687)
Actuarial loss from plan assets 350,356 477,639
Total amount recognised in OCI 2,735,106 1,150,078
* Significant assumptions used for the actuarial valuation are given in Note 38.4.6
38.4.4 Defined Benefit Obligation Reconciliation

Bank & Group
2020 2019
Rs 000 Rs 000
Defined benefit obligation as at 1st January 9,216,234 7,467,660

Interest cost 1,013,786 925,243
Past service cost - 89,173
Actual benefits paid from plan (275,298) (218,664)
Actuarial loss due to changes in assumptions
- Financial assumptions 2,386,548 721,126
- Demographic assumptions - -
Actuarial gain due to experience adjustments (1,798) (48,687)
Defined benefit obligation as at 31st December 12,661,904 9,216,234
38.4.5 Fair Value of Plan Assets Reconciliation

Bank & Group
2020 2019
Rs 000 Rs 000
Fair value of plan assets as at 1st January 7,118,253 6,629,888

Interest income on plan assets 766,603 806,767
Actual employer contributions 488,000 377,901
Actual benefits paid from plan (275,298) (218,664)
Actuarial loss from plan assets (350,356) (477,639)
Fair value of plan assets as at 31st December (Note 38.4.5 (a)) 7,747,202 7,118,253
An actuarial valuation of the Pension Fund was carried out as at 31st December 2020 by Mr Piyal S Goonetilleke (Fellow of Society
Actuaries - USA) of Messrs Piyal S Goonetilleke & Associates, a firm of professional actuaries. The valuation method used by the
actuary to value the Fund is the "Projected Unit Credit Method", recommended by Sri Lanka Accounting Standard - LKAS 19 (Employee
Benefits).

38.4.5(a) Fair Value of Plan Assets Consists of the Following

Rs 000 Rs 000
Equity securities & debentures 676,908 840,058

Term deposits 6,405,731 5,508,537
Others 664,563 769,658
Fair value of plan assets 7,747,202 7,118,253
38.4.6 Actuarial Assumptions

Bank & Group
Expected return on assets 8.0% 11.0%
Mortality RP 2000 RP 2000
Mortality Table Mortality Table
Retirement age Normal retirement age Normal retirement age
or age on valuation or age on valuation
date, if greater date, if greater
Expected average future life of the active and retired participants is 31.5 years.
* Discount rate used for the actuarial valuation changed during the year due to changes in market interest rates. Future salary
increment rate too was revised to fall in line with the reduction in market interest rates.
38.4.7 Sensitivity of Assumptions Employed in Pension Fund Valuation

would have affected the net pension liability/Statement of Comprehensive Income by the amounts shown below.
Increase/ Increase/ 2020 2019

(Decrease) in (Decrease) in Sensitivity Effect Sensitivity Effect on Sensitivity Effect Sensitivity Effect on
Discount Rate Salary Increment on Statement of Employment Benefit on Statement of Employment Benefit
Rate Comprehensive Obligation Comprehensive Obligation
Income Increase/(Decrease) in Income Increase/(Decrease)
Increase/(Decrease) Net Pension Liability Increase/(Decrease) in Net Pension
in Comprehensive in Comprehensive Liability
1% - 1,361.5 (1,361.5) 890.7 (890.7)

(1%) - (1,640.3) 1,640.3 (1,051.6) 1,051.6
- 1% (518.9) 518.9 (411.1) 411.1
- (1%) 483.4 (483.4) 383.1 (383.1)
.
39 CURRENT TAX LIABILITIES/(RECEIVABLES)
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Current tax liabilities 4,674,756 7,427,315 4,792,904 7,835,445

Current tax receivables - - (42,883) (46,246)
Net current tax liability (Note 39.1) 4,674,756 7,427,315 4,750,021 7,789,199
39.1 Current Tax Liabilities/(Receivables)
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Current tax based on profit for the year (Note 16) 4,137,004 7,578,543 4,485,988 8,138,931
Over provision in respect of previous years (Note 16) (490,640) (802,528) (601,050) (802,528)
Payment of tax (6,398,923) (8,889,568) (6,924,116) (9,206,326)
40 OTHER LIABILITIES
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Deposit insurance premium 206,184 163,636 208,191 165,149

Deferred income 488,814 572,978 488,814 572,978
Lease liability (Note 31.1) 3,779,635 4,423,702 3,210,792 3,449,043
Bills payable 1,678,585 1,431,144 1,678,585 1,431,144
Items in transit 3,987,671 2,700,432 3,987,671 2,700,432
Accrued expenses 3,709,857 3,256,959 3,823,710 3,277,486
Impairment provision for expected credit loss- credit related
commitments & contingencies (Note 45.2) 1,685,806 1,417,228 1,686,923 1,417,504
Other payable (Note 40.1) 2,997,402 3,142,265 4,488,050 4,352,103
18,533,954 17,108,344 19,572,736 17,365,839
40.1 Other payable includes amounts payable to credit/debit card merchants on account of point-of-sale transactions, amounts payable to
vendors on account of finance lease transactions, unclaimed balances and other miscellaneous payable balances that have arisen in the
ordinary course of business of the Bank/Group.
41 STATED CAPITAL
Bank & Group
2020 2019
Rs 000 Rs 000

Rights issue - 12,104,933
Scrip dividend - 2,721,608
Rights, preferences and restrictions of classes of capital

The holders of ordinary shares have the right to receive dividend as declared from time to time and are entitled to one vote per share at
the Annual General Meeting of the Bank.
41.1 Reconciliation of Number of Shares

Bank & Group
2020 2019
Ordinary shares as at 1st January 381,457,985 280,902,248

Number of shares issued under rights issue 2019 - 89,006,863
Number of shares issued due to final scrip dividend 2018 - 11,548,874
Ordinary shares as at 31st December 381,457,985 381,457,985
42 STATUTORY RESERVE FUND
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Transfer during the year 410,000 570,000 431,000 595,000
The statutory reserve fund is maintained as required by the section 20 (1) of the Banking Act No. 30 of 1988. A sum equivalent to not
less than 5% of the profit after tax before any dividend is declared or any profits are transferred to elsewhere, should be transferred to
above reserve until the reserve is equal to 50% of the Bank's stated capital. Thereafter, a further sum equivalent to 2% of such profits
should be transferred to the statutory reserve fund until the amount of the said reserve fund is equal to the stated capital of the Bank.
The Bank's subsidiary, Siyapatha Finance PLC too transfers 5% of its profit after tax, to the statutory reserve fund, as required by the
Finance Companies (Capital Funds) Direction No. 01 of 2003.
43 OTHER RESERVES
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Revaluation reserve (Note 43.1) 2,993,599 2,993,599 5,962,392 5,962,392

Fair value through other comprehensive income reserve (Note 43.2) 1,838,203 807,879 1,838,203 807,879
General reserve (Note 43.3) 46,455,786 43,435,171 46,455,786 43,435,171
51,287,588 47,236,649 54,256,381 50,205,442
43.1 Revaluation Reserve
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Revaluation surplus - 811,874 - 1,207,274
Deferred tax effect on revaluation surplus - (227,325) - (338,037)
43.2 Fair Value through Other Comprehensive Income Reserve

Bank & Group
2020 2019
Rs 000 Rs 000
Balance as at 1st January 807,879 1,160,765

(Loss)/gain on re-measurement - debt instrument at FVOCI (8,030) 87,713
Reclassification to profit or loss - debt instruments at FVOCI (179,418) (16,842)
Changes in impairment for expected credit losses - debt
instruments at FVOCI (Note 12) 19,527 -
Gain/(loss) on re-measurement - equity instrument at FVOCI 1,555,933 (552,306)
Exchange differences - equity instruments at FVOCI 42,994 (8,685)
Deferred tax effect on above (400,682) 137,234
43.3 General Reserve

The Board of Directors decides the amount to be transferred to general reserve from retained earnings after retaining a substantial
amount to pay proposed dividend. The purpose of setting up the general reserve is to meet the potential future unknown commitments.
Bank & Group
2020 2019
Rs 000 Rs 000

Unclaimed dividend adjustments 20,615 25,270
Transfer during the year 3,000,000 4,500,000
44 RETAINED EARNINGS
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Profit for the year 8,025,147 11,150,887 8,442,516 11,668,190
Actuarial loss on defined benefit plans (2,848,521) (1,462,814) (2,851,802) (1,480,165)
Deferred tax effect 797,586 409,588 798,505 414,447
Final dividend for 2018: Scrip - (3,160,150) - (3,160,150)
Final dividend for 2018: Cash - (1,404,511) - (1,404,511)
Final dividend for 2019: Cash (4,482,131) - (4,482,131) -
Transfers to reserves during the year (3,410,000) (5,070,000) (3,431,000) (5,095,000)
45 COMMITMENTS AND CONTINGENCIES
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Credit related commitments & contingencies

Undrawn-direct credit facilities 159,176,139 149,635,468 153,070,089 145,568,721
Undrawn-indirect credit facilities 54,713,490 45,464,712 54,713,490 45,464,712
Acceptances 31,898,963 14,169,804 31,898,963 14,169,804
Documentary credit 24,813,773 17,335,325 24,813,773 17,335,325
Guarantees 53,735,658 49,134,959 53,742,158 49,140,159
324,338,023 275,740,268 318,238,473 271,678,721
Other commitments & contingencies

Capital commitments (Note 45.3) 1,299,104 998,348 2,961,541 2,283,100
Operating lease commitments - as lessee (Note 45.4) 41,502 46,287 41,502 46,287
Forward exchange contracts 67,793,651 13,218,467 67,793,651 13,218,467
Currency SWAPs 90,619,275 102,830,358 90,619,275 102,830,358
159,753,532 117,093,460 161,415,969 118,378,212
Total gross commitments & contingencies 484,091,555 392,833,728 479,654,442 390,056,933

Impairment for expected credit losses-credit related
commitments & contingencies (Note 45.2) (1,685,806) (1,417,228) (1,686,923) (1,417,504)
Commitments & contingencies - net of impairment for expected
credit losses 482,405,749 391,416,500 477,967,519 388,639,429
45.1 Analysis of Credit Related Commitments and Contingencies based on the Exposure to Credit Risk
Bank
As at 31st December 2020 Stage 1 Stage 2 Stage 3 Total

Rs 000 Rs 000 Rs 000 Rs 000
Undrawn-direct credit facilities 150,889,460 7,675,919 610,760 159,176,139

Undrawn-indirect credit facilities 40,805,210 13,887,280 21,000 54,713,490
Acceptances 27,224,415 4,471,154 203,394 31,898,963
Documentary credit 19,387,522 5,374,061 52,190 24,813,773
Guarantees 40,056,611 12,555,693 1,123,354 53,735,658
Gross credit related commitments & contingencies 278,363,218 43,964,107 2,010,698 324,338,023
Impairment for expected credit losses (1,155,451) (348,123) (182,232) (1,685,806)
Net credit related commitments & contingencies 277,207,767 43,615,984 1,828,466 322,652,217

Rs 000 Rs 000 Rs 000 Rs 000
Undrawn-direct credit facilities 139,207,771 9,645,331 782,366 149,635,468

Undrawn-indirect credit facilities 38,762,823 6,564,389 137,500 45,464,712
Acceptances 10,903,440 3,266,364 - 14,169,804
Documentary credit 16,376,063 959,262 - 17,335,325
Guarantees 41,667,165 6,138,420 1,329,374 49,134,959
Impairment for expected credit losses (775,864) (297,123) (344,241) (1,417,228)
Group

Rs 000 Rs 000 Rs 000 Rs 000
Undrawn - Direct credit facilities 144,783,410 7,675,919 610,760 153,070,089

Undrawn - Indirect credit facilities 40,805,210 13,887,280 21,000 54,713,490
Acceptances 27,224,415 4,471,154 203,394 31,898,963
Documentary credit 19,387,522 5,374,061 52,190 24,813,773
Guarantees 40,063,111 12,555,693 1,123,354 53,742,158
Impairment for expected credit losses (1,156,568) (348,123) (182,232) (1,686,923)

Rs 000 Rs 000 Rs 000 Rs 000
Undrawn - Direct credit facilities 135,137,757 9,648,598 782,366 145,568,721

Undrawn - Indirect credit facilities 38,762,823 6,564,389 137,500 45,464,712
Acceptances 10,903,440 3,266,364 - 14,169,804
Documentary credit 16,376,063 959,262 - 17,335,325
Guarantees 41,672,365 6,138,420 1,329,374 49,140,159
Impairment for expected credit losses (775,981) (297,282) (344,241) (1,417,504)
45.2 Impairment for Expected Credit Losses- Credit Related Commitments and Contingencies
Bank Group
2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Stage 1
Net charge for the year (Note 12) 379,587 117,338 380,587 117,455
Balance as at 31st December 1,155,451 775,864 1,156,568 775,981
Stage 2
Stage 3
Net (reversal)/charge for the year (Note 12) (162,009) 49,897 (162,009) 49,897
Total
45 COMMITMENTS AND CONTINGENCIES CONTD.

45.3 Capital Commitments
Capital expenditure approved by the Board of Directors, for which provisions have not been made in the accounts are detailed below.
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Approved & contracted for 347,005 18,256 2,009,442 1,303,008

Approved but not contracted for 952,099 980,092 952,099 980,092
1,299,104 998,348 2,961,541 2,283,100
45.4 Operating Lease Commitments - As Lessee
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Less than 1 year 41,502 46,287 41,502 46,287

More than 1 year - - - -
41,502 46,287 41,502 46,287
45.5 Other Contingent Liabilities

45.5.1 Litigation against the Bank
Litigation is a common occurrence in the banking industry due to the nature of the business undertaken and in that light, the Bank has
formal controls and policies for managing and defending the legal actions instituted against it. Pursuant to obtaining professional advice
and estimating any loss likely to be incurred, adjustments are made to the accounts of the Bank in order to accommodate any adverse
effects that such claims may have on its financial standing.
i. The following Cases instituted against the Bank are currently being adjudicated before Court:
(a) Case No. - DMR 5787/10
The Plaintiff’s action against the Bank has been dismissed by the District Court. The appeal filed by the Plaintiff in this regard is currently
being adjudicated before the Civil Appellate Court.
(b) Case No. - DMR 1904/2012

The Plaintiff instituted this action against the Bank claiming a sum of Rs 2.5 Mn as damages on the purported basis that the Bank had
illegally handed over the Certificate of Registration pertaining to the vehicle leased under the Lease Agreement No. L/0/16/SBL/Kuli, to
the Plaintiff’s spouse. The consent letter given by the Plaintiff in respect of such transfer is being challenged by the Plaintiff. While the
District Court delivered judgment in favour of the Bank, the appeal preferred therefrom is currently pending before the Civil Appellate
Court.
(c) Case No. - 7058/DMR

The Plaintiff instituted this action against the Bank claiming a sum of Rs 20 Mn on the purported basis that the Bank has increased the
rate of interest in respect of the housing loan obtained by the Plaintiff thereby causing loss to the Plaintiff. While the case is currently
being adjudicated before the District Court, we note that the Letter of Offer confirms that the Bank has the right to increase the rate of
interest.
(d) Case No. - 58032/MR/Civil Appeal Court Case No. 259/17/F

The Plaintiff instituted this action against both the Bank and the CRIB, claiming Rs 100 Mn as damages, on the purported basis that his
company has been reported to the CRIB under an irrelevant reference due to the negligence of the Bank. The action was dismissed by
the District Court on the 8th of February 2017. However, an appeal filed by the Plaintiff is currently being adjudicated before the Civil
Appellate Court in Colombo.
(e) DC Colombo Case No. 891/13

The above case was instituted against the Bank claiming damages of Rs 143 Mn on the purported basis that the Bank has unlawfully
auctioned a property under the Provisions of Act No. 04 of 1990. The Bank has taken up the position that it has at all times acted in
strict conformity with the applicable law.
(f) CHC Colombo Case No. 29/13/MR

The Plaintiff has filed this action against the Bank claiming damages in a sum of Rs 40 Mn on the alleged basis that the Bank illegally
suspended his credit balance of Rs 299,209.43 resulting in two cheques issued by him being dishonoured. Over Rs 3 Mn is due to the
Bank from the said customer on a charge back created through the payment gateway, which was utilised by the customer. The Bank is
defending this action on the right of set off recognised by law relating to banking facilities. Judgment delivered in favour of the Bank.
Customer appealed against the judgment. Case has not yet commenced.
(g) CHC Colombo Case No. 299/13/MR

The Plaintiff instituted the above action against the Bank claiming damages in a sum of Rs 250 Mn on the purported basis that the Bank
unlawfully suspended the operation of his current account and the payment gateway facility provided to him by the Bank.
A sum in excess of Rs 3 Mn is due to the Bank from the Plaintiff on a charge back created through the payment gateway utilised by the
Plaintiff. The Bank is defending this action on the basis that it has the right, in law, to set off dues against other facilities granted to the
Plaintiff by the Bank. Judgement delivered in favour of the Bank.
The appeal preferred therefrom before the Civil Appellate Court yet to be commenced.
(h) CHC Colombo Case No. CHC/167/2020/MR and Case No. CHC/168/2020/MR
The Plaintiff instituted the above actions against the Bank claiming a sum of Rs 250 Mn and Rs 100 Mn respectively, from inter alia the
Bank on the purported basis that the Bank has erroneously uplifted deposits and transferred monies from the Plaintiff’s personal and
corporate accounts without his consent and knowledge. The Bank is of the view that it has acted as per the provisions of law.
ii. In addition to the above cases, the following cases have also been filed against the Bank in order to prevent the Bank from enforcing
the mortgages to recover its dues:
(a) Seven actions have been filed in Supreme Court.
(b) Four actions have been filed in Court of Appeal.
(c) Three actions have been filed in Civil Appeal Court.
(d) Eighty six actions have been filed in Commercial High Court.
(e) One hundred and ninety seven actions have been filed in District Courts.
45.5.2 Litigation on Employment and Industrial Relations

There are no material legal issues outstanding against the Bank and Group on employment and industrial relations as at 31st December
2020.
45.5.3 Litigation against the Group

Other than those disclosed above there are no cases filed against the Group which would have a material impact on the financial position
of the Group.
46 RELATED PARTY DISCLOSURES

The Bank and the Group carry out transactions in the ordinary course of business with the parties who are defined as related parties in
the Sri Lanka Accounting Standards - LKAS 24 (Related Party Disclosures), the details of which are reported below.
46.1 Terms and Conditions

The pricing applicable to such transactions is based on the assessment of risk and pricing model of the Bank and is comparable with what
is applied to transactions between the Bank/Group and its unrelated customers with similar credit standing.
46.2 Parent and Ultimate Controlling Party

The Bank does not have an identifiable parent of its own.
46.3 Transactions with Key Management Personnel (KMP)

As per Sri Lanka Accounting Standard - LKAS 24 (Related Party Disclosures), Key Management Personnel (KMP) are those having
authority and responsibility for planning, directing and controlling the activities of the entity. According to the above definition, a
person cannot be considered as a KMP unless such person has both the authority and responsibility to carry out all the three activities
mentioned in the above definition (i.e. planning, directing and controlling the activities of the entity).
Accordingly, the Board of Directors of the Bank are considered as KMP of the Bank and the Group.
46.3.1 Compensation to KMP
Bank Group
Rs 000 Rs 000 Rs 000 Rs 000
Short term employment benefits

Directors' fees & expenses 85,774 82,852 89,811 87,767
Short term benefits 69,425 43,331 69,425 43,331
Post-employment benefits 5,745 3,692 5,745 3,692
Total 160,944 129,875 164,981 134,790
46.3.2 Transactions with KMP and their Close Family Members (CFMs)
CFMs of the KMP are those family members who may be expected to influence the KMP or be influenced by that KMP in their dealings
with the entity. They may include KMP's spouse, children, domestic partner, children of the KMP's spouse/domestic partner and
dependents of the KMP, KMP's spouse/domestic partner. Aggregate value of the transactions with KMP and their CFMs are disclosed
below.

Limit Closing Average Limit Closing Average
Balance Balance Balance Balance
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Loans & advances 41,508 31,226 31,896 39,600 38,231 25,546

Credit cards 13,520 4,048 2,425 7,920 2,074 1,664
Deposits 141,854 214,936 147,277 247,963
Debentures 22,000 11,361 - -

Rs 000 Rs 000
Interest & other income 3,245 3,468

Interest expense 12,729 14,507
Cash dividend paid 7,821 263
Scrip dividend paid (Number of shares) - 2,150
No losses have been recorded against loan balances outstanding with KMP during the period and no specific provisions have been made
under impairment losses against such balances as at the reporting date.
46.4 Transactions with Subsidiaries

Details of the subsidiaries are given in Note 28. Aggregate value of transactions with subsidiaries are disclosed below.
2020 2019
Subsidiary Company Nature of Facility/Transaction Average 31st December Average 31st December
Rs 000 Rs 000 Rs 000 Rs 000
Siyapatha Finance PLC As at

Loans & advances 4,633,093 2,974,558 5,226,972 6,231,815
Deposits 531,148 136,425 10,050 6,247
Other liabilities 208,873 1,000,000 8,269 -
For the year ended
Dividend income (Gross) 142,959 36,344
Income & fees received 603,602 827,795
Expenses & fees paid 5,991 4,411
Sampath Centre Ltd As at
Loans & advances 840,689 902,066 480,967 601,381
Other assets 62,754 62,754 62,754 62,754
Deposits 302,035 284,408 301,128 156,077
Other liabilities 58,778 55,986 48,703 41,331
For the year ended
Dividend income (Gross) 35,391 42,788
46 RELATED PARTY DISCLOSURES CONTD.
2020 2019
Subsidiary Company Nature of Facility/Transaction Average 31st December Average 31st December
Rs 000 Rs 000 Rs 000 Rs 000
SC Securities (Pvt) Ltd As at

Loans & advances 106,130 247,028 28,829 38,619
Deposits 23,336 19,622 18,548 14,891
Other assets - - 40 -
Commitment & contingencies 1,750 1,750 1,750 1,750
For the year ended
Sampath Information As at
Technology Solutions Ltd Loans & advances 125,371 91,473 233,234 161,821
Deposits 37,840 65,321 15,546 112
Commitment & contingencies 3,496 6,840 22,941 2,781
For the year ended
Dividend income 23,575 -
Expenses & fees paid
excluding reimbursement
of expenses 310,392 315,195
Purchase of computer
hardware & software 23,887 78,873
The Directors' valuation of investments in subsidiaries has been carried out on net asset basis as at 31st December 2020. During
the year, the Bank reversed the total impairment provision of Rs 59 Mn made as at 31st December 2019 against the investment in
SC Securities (Pvt) Ltd. Accordingly, the Bank has not made any specific provisions under impairment losses against its investment in
subsidiary companies as at the reporting date.
46.5 Transactions with Other Related Parties

46.5.1 Transactions with Entities Controlled and/or Jointly Controlled by KMP or their CFMs

Limit Average Closing Limit Average Closing
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Loans & advances 1,500,700 100,335 300,985 259,200 6,367 5,529

Indirect facilities 100,000 821,958 - 1,287,500 666,250 887,500
Deposits 309,738 315,190 473,029 296,923

Rs 000 Rs 000
Interest & other income 4,410 755

Cash dividend - 2
Scrip dividend paid (Number of shares) - 13
No losses have been recorded against loan balances outstanding with the entities controlled/jointly controlled by KMP/CFMs of KMP
during the period and no specific provisions have been made under impairment losses against such balances as at the reporting date.
46.5.2 Transactions with Post Employment Benefit Plans of the Bank
2020 2019
Name of the Post Employment Nature of Transactions Average 31st December Average 31st December
Benefit Plan Balance Balance Balance Balance
Rs 000 Rs 000 Rs 000 Rs 000
Sampath Bank Employees' As at

Provident Fund Deposits 2,366,390 2,566,906 1,861,742 2,183,098
Debentures 376,200 376,200 911,796 376,200
Interest payable 81,728 93,336 113,087 84,638
For the year ended
Sampath Bank Employees' As at
Pension Fund Deposits 1,595,808 1,369,177 1,244,211 1,436,992
Debentures 155,000 155,000 615,700 155,000
Investment in Sampath Bank
Shares - market value 515,654 521,908 646,073 625,058
Investment in repo - - 8,917 -
Interest payable 63,241 64,475 90,028 51,291
Net liability in the Bank's
Financial Statements
(Note 38.4.1) 2,746,786 4,914,702 1,467,877 2,097,981
For the year ended
Dividend paid - Cash (Gross) 45,224 17,514
Scrip dividend (Number of
shares) - 144,015
47 SEGMENT INFORMATION
ACCOUNTING POLICY
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur
expenses, including revenue and expenses that relate to transactions with any of the Group’s other components, whose operating
results are reviewed regularly by the chief operating decision maker to make decisions about resources allocated to each segment and
assess its performance, and for which discrete financial information is available.
For management purposes, the Group has identified four operating segments based on products and services, as follows:
 Corporate Banking
 Retail and Personal Banking
 Dealing/Investment
 Others
Retail and personal banking includes the activities of Siyapatha Finance PLC in addition to the retail and personal banking business of
the Bank. Dealing/Investment involves activities such as stock broking, securities dealing, investment banking and foreign currency
related services.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on operating profits or losses, which in certain
respects, are measured differently from operating profits or losses in the Consolidated Financial Statements. Taxes are managed at an
entity level and are not allocated to operating segments.
Interest income is reported net as management primarily relies on net interest income as a performance measure, not the gross
income and expense. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions
with third parties.
Revenue from transactions with a single external customer or counterparty did not exceed 10% or more of the Bank’s total revenue in
2020 or 2019.
The following table presents income, profit, total assets, total liabilities & cash flows of the Group’s operating segments.
Corporate Banking Retail & Personal Banking Dealing/Investment Others (Eliminations)/ Total
Unallocated
For the year ended 31st December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Net interest income 8,356,218 11,121,927 22,088,041 27,556,780 6,383,074 6,085,063 - - - - 36,827,333 44,763,770
Net fee & commission income 1,762,666 2,309,472 6,969,821 8,033,147 216,639 46,063 - - - - 8,949,126 10,388,682
Net gain from trading - - - - 24,787 2,205,878 - - - - 24,787 2,205,878
Net gain on derecognition of financial assets - - - - 423,814 113,670 - - - - 423,814 113,670
Net other operating income 113,256 129,362 1,336,105 978,689 2,340,482 458,873 51,596 102,446 - - 3,841,439 1,669,370
Total revenue from external customers 10,232,140 13,560,761 30,393,967 36,568,616 9,388,796 8,909,547 51,596 102,446 - - 50,066,499 59,141,370
Inter segment (expenses)/income (323,784) (298,456) 663,500 488,720 - - 623,818 630,440 (963,534) (820,704) - -
Total operating income 9,908,356 13,262,305 31,057,467 37,057,336 9,388,796 8,909,547 675,414 732,886 (963,534) (820,704) 50,066,499 59,141,370
Less: Impairment charge 4,046,726 5,470,829 7,756,406 7,927,361 1,390,622 342,228 7,172 10,159 - - 13,200,926 13,750,577
Net operating income 5,861,630 7,791,476 23,301,061 29,129,975 7,998,174 8,567,319 668,242 722,727 (963,534) (820,704) 36,865,573 45,390,793
Less: Total operating expenses 409,923 407,418 10,021,866 9,565,167 2,677,704 3,107,927 534,696 603,387 7,937,524 8,216,665 21,581,713 21,900,564
Segment result 5,451,707 7,384,058 13,279,195 19,564,808 5,320,470 5,459,392 133,546 119,340 (8,901,058) (9,037,369) 15,283,860 23,490,229
Less: Taxes on financial services 3,394,281 7,151,844
Less: Income tax expense 3,447,063 4,670,195
Profit for the year 8,442,516 11,668,190
Non-controlling interest - -
Profit attributable to equity holders of the Bank 8,442,516 11,668,190
As at 31st December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Segment assets 361,314,925 327,573,017 432,410,763 453,347,702 321,008,498 195,454,617 7,425,740 7,103,347 (10,407,983) (11,406,256) 1,111,751,943 972,072,427
Unallocated assets - - - - - - - - 37,933,485 27,250,679 37,933,485 27,250,679
Total assets 361,314,925 327,573,017 432,410,763 453,347,702 321,008,498 195,454,617 7,425,740 7,103,347 27,525,502 15,844,423 1,149,685,428 999,323,106
Segment liabilities 59,107,227 57,968,821 855,016,829 681,952,424 15,567,353 24,658,367 2,744,594 2,500,092 (7,177,164) (9,055,000) 925,258,839 758,024,704
Unallocated liabilities - - - - - - - - 110,011,935 129,841,775 110,011,935 129,841,775
Total liabilities 59,107,227 57,968,821 855,016,829 681,952,424 15,567,353 24,658,367 2,744,594 2,500,092 102,834,771 120,786,775 1,035,270,774 887,866,479
For the year ended 31st December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Cash flows from operating activities (27,829,287) 5,302,061 169,260,426 (5,924,540) (93,780) (34,793) 565,383 501,407 (1,913,495) (114,345) 139,989,247 (270,210)
Cash flows from investing activities - - - - (121,184,599) (9,088,483) (459,675) (617,758) (1,183,797) (620,594) (122,828,071) (10,326,835)
Cash flows from financing activities - - 2,560,178 (921,990) - - 59,762 (43,061) (12,397,749) 9,560,335 (9,777,809) 8,595,284
Capital expenditure - - (404,402) (643,112) - - (572,948) (708,065) (665,674) (1,065,038) (1,643,024) (2,416,215)
303
48 EVENTS AFTER THE REPORTING PERIOD
ACCOUNTING POLICY
Events after the reporting period are those events, favourable and unfavourable, that occur between the reporting date and the date
when the Financial Statements are authorised for issue. No circumstances have arisen since the reporting date which would require
adjustments to, or disclosure in the financial statements, other than those disclosed below.
48.1 Bank
48.1.1 Retirement of Directors
Ms Annika Senanayake (Independent, Non-Executive Director) and Mr Ranil Pathirana (Non-Independent, Non-Executive Director) having
completed the term of nine (09) years as Non-Executive Directors of the Bank on 31st December 2020 retired from the Board of Directors
with effect from 1st January 2021.
48.1.2 Sub-division of Shares

The Board of Directors of the Bank at its meeting held on 27th January 2021 has approved that the number of ordinary shares of the Bank
in issue be increased by way of a sub-division of shares; where by one (01) ordinary share will be subdivided in to three (03) ordinary shares.
The resulting number of shares after the sub-division would be 1,144,373,955. There will be no change to the stated capital of the Bank
subsequent to the said sub-division of shares. The shares resulting from sub-division of shares would carry the same voting and distribution
rights of the holders of such shares. The increase of shares by way of the above sub-division is subject to shareholder approval to be
obtained at the Extra-ordinary General Meeting to be held on 17th March 2021.
The Basic/Diluted Earnings per Share (EPS) and the Net Assets Value per Share of the Bank/Group for the year ended/as at 31st December
2020 have not been adjusted for the said sub-division of shares as it is subject to the approval of the shareholders. If the sub-division of
shares is considered, the adjusted EPS and Net Asset Value per share would be as follows.
Bank Group
Basic/diluted Earnings per Share for the year ended 31st December 2020 (Rs) 7.01 7.38
Net Asset Value per share as at 31st December 2020 (Rs) 93.98 99.98
48.1.3 Debenture Issue 2021/2028

The Board of Directors of the Bank decided to issue 50,000,000 Basel III Compliant - Tier II, Listed, Rated, Unsecured, Subordinated,
Redeemable 7 year debentures (2021/2028) with a Non-Viability Conversion at a pre-specified trigger point, at the par value of Rs 100
each to raise Rs 5,000,000,000 with an option to issue up to a further 10,000,000 of said debentures to increase the said sum by up to a
further Rs 1,000,000,000 at the discretion of the Bank in the event of an over subscription of the initial issue. The Bank intends to have the
aforementioned Basel III Compliant Debentures listed on the Colombo Stock Exchange.
The above issue is subject to the approval of the shareholders at an Extra-ordinary General Meeting.
48.1.4 Proposed Dividend

The Directors have recommended a final cash dividend of Rs 8.25 per share for the financial year ended 31st December 2020, based on the
381,457,985 shares in issue as at 15th February 2021. The said dividend is subject to approval of the shareholders at the Annual General
Meeting to be held on 30th March 2021.
However, if the shareholders approve the resolution for the proposed sub-division of shares in the proportion of 01:03 at the Extra-ordinary
General Meeting to be held on 17th March 2021, the final dividend will be based on the increased number of shares
(i.e. 1,144,373,955 shares). Consequently, each share will be entitled to a final cash dividend of Rs 2.75.
In accordance with Sri Lanka Accounting Standard - LKAS 10 (Events after the Reporting Period), this proposed final dividend has not
been recognised as a liability as at 31st December 2020. As required by section 56 (2) of the Companies Act No. 7 of 2007, the Board of
Directors has confirmed that the Bank has satisfied the 'solvency test' in accordance with section 57 of the Companies Act No. 7 of 2007,
having obtained a certificate from the External Auditors, prior to recommending the final dividend for the year.
48.1.5 Appointment of a Director

The Board, at its meeting held on 15th February 2021, resolved to appoint Mr Vinod Kishore Hirdaramani as a member of the Bank’s Board
of Directors (Non-Executive, Independent Director), with effect from 16th February 2021.
48.2 Group
No circumstances have arisen since the reporting date which would require adjustments to, or disclosure in the financial statements of the
Group, other than those disclosed above.
49 FAIR VALUE OF ASSETS AND LIABILITIES

49.1 Assets & Liabilities Recorded at Fair Value
The following is a description of how fair values are determined for assets and liabilities that are recorded at fair value. These incorporate
the Bank’s estimate of assumptions that a market participant would make when valuing assets and liabilities.
Derivatives - Assets & Liabilities

Derivative products which consist of SWAPs, forward foreign exchange contracts and hedges are valued using a valuation technique
with market-observable inputs. The most frequently applied valuation technique include forward foreign exchange spot and forward
premiums.
Financial Assets - Fair Value through Other Comprehensive Income (FVOCI)

FVOCI financial assets primarily consist of quoted/unquoted equity securities and government securities. Treasury bills and bonds are
valued using the yield curve published by the Central Bank of Sri Lanka. Quoted equity securities and Sri Lanka International Sovereign
Bonds are valued using quoted market prices in the active markets as at the reporting date.
Trading Assets Measured at Fair Value

Trading assets and other assets measured at fair value are the government securities and quoted equity securities. Government securities
are valued using yield curve published by the Central Bank of Sri Lanka. For quoted equity securities, the Bank uses quoted market prices
in the active market as at the reporting date.
Property, Plant & Equipment

Freehold land and buildings are carried at revalued amount, being their fair value at the revaluation date less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
49.2 Valuation Model

For all financial instruments where fair values are determined by referring to externally quoted prices or observable pricing inputs to
models, independent price determination or validation is obtained. In an inactive market, direct observation of a traded price may not
be possible. In these circumstances, the Bank uses alternative market information to validate the financial instrument’s fair value, with
greater weight given to information that is considered to be more relevant and reliable.
Fair value of freehold land and buildings was determined by using Market Comparable Method or Income Basis. These valuations
performed by the valuers are based on active market prices, significantly adjusted for difference in the nature, location or condition of
the specific property. Management determined that freehold land and buildings constitute one class of asset under Sri Lanka Accounting
Standard - SLFRS 13 (Fair Value Measurement), based on the nature, characteristics and risks of the property.
Fair values are determined according to the following hierarchy:

Level 1 – Quoted market price (unadjusted): quoted prices for identical assets and liabilities in active markets.
Level 2 – Valuation technique using observable inputs: quoted prices for similar assets and liabilities in active markets or quoted prices
for identical or similar assets and liabilities in inactive markets and are valued using models where all significant inputs are observable.
Level 3 – Valuation technique with significant unobservable inputs: assets and liabilities valued using valuation techniques where one or
more significant inputs are unobservable.
49.3 Valuation Framework

The Bank has an established control framework with respect to the measurement of fair values of trading and investment operations and
all other significant assets and liabilities. Specific controls include:
 A review and approval process involving the Board Audit Committee for significant judgment and assumptions, new models, changes
to existing judgments, assumptions and models.
 Periodic (at least quarterly) reviewing of fair value measurements against observable market data.
 Periodic (at least annually) reviewing of fair value measurement models against changes in market conditions, significant judgments
and assumptions.
 Use of sophisticated software for fair value measurements of trading and investment securities and derivatives.
 Independent analysis and investigation of significant daily valuation movements in trading and investment securities and derivatives.
 A dual verification process for market data inputs to the fair value measurement software.
49.4 Assets & Liabilities Measured at Fair Value - Fair Value Hierarchy
The following table shows an analysis of assets and liabilities recorded at fair value by level of the fair value hierarchy into which the fair
value measurement is categorised. The amounts are based on the value recognised in the Statement of Financial Position.
49 FAIR VALUE OF ASSETS AND LIABILITIES CONTD.
306
49.4.1 Assets & Liabilities Measured at Fair Value - Fair Value Hierarchy
Bank

Fair Value Measurement Using Fair Value Measurement Using
Date of Quoted Prices Significant Significant Total Quoted Prices Significant Significant Total
Valuation in Active Observable Unobservable in Active Observable Unobservable
Markets Inputs Inputs Markets Inputs Inputs
(Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3)
Financial assets measured at fair value

Derivative financial instruments 31st December
Currency SWAPs - 354,467 - 354,467 - 842,355 - 842,355
Forward exchange contracts - 1,832,048 - 1,832,048 - 20,399 - 20,399
Sub Total - 2,186,515 - 2,186,515 - 862,754 - 862,754
Financial assets - fair value through profit or loss 31st December

Government securities -Treasury bills & bonds 9,251,557 - - 9,251,557 11,057,953 - - 11,057,953
Quoted equity securities 62,071 - - 62,071 72,277 - - 72,277
Sub Total 9,313,628 - - 9,313,628 11,130,230 - - 11,130,230

comprehensive income 31st December
Government securities -Treasury bills & bonds 19,748,472 - - 19,748,472 15,420,524 - - 15,420,524
Quoted equity security 3,528,974 - - 3,528,974 1,871,878 - - 1,871,878
Unquoted equity securities - - 34,349 34,349 - - 39,322 39,322
Sri Lanka International Sovereign Bonds 926,008 - - 926,008 - - - -

Sub Total 24,203,454 - 34,349 24,237,803 17,292,402 - 39,322 17,331,724
Total financial assets measured at fair value 33,517,082 2,186,515 34,349 35,737,946 28,422,632 862,754 39,322 29,324,708
Non-financial assets measured at fair value 31st December

Freehold land & buildings (included under property, plant
& equipment)* - - 5,840,964 5,840,964 - - 5,870,275 5,870,275
Total non - financial assets measured at fair value - - 5,840,964 5,840,964 - - 5,870,275 5,870,275
Financial liabilities measured at fair value

Currency SWAPs - 1,978,191 - 1,978,191 - 574,573 - 574,573
Forward exchange contracts - 52,756 - 52,756 - 29,496 - 29,496
Total financial liabilities measured at fair value - 2,030,947 - 2,030,947 - 604,069 - 604,069
There were no material transfers between levels of fair value hierarchy during 2020 and 2019.
* The fair value exists in the most recent valuation less subsequent accumulated depreciation and impairment losses is considered as the fair value as at 31st December 2020.

49.4.2 Assets & Liabilities Measured at Fair Value - Fair Value Hierarchy
Group

Fair Value Measurement Using Fair Value Measurement Using
Date of Quoted Prices Significant Significant Total Quoted Prices Significant Significant Total
Valuation in Active Observable Unobservable in Active Observable Unobservable
Markets Inputs Inputs Markets Inputs Inputs
(Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3)
Financial assets measured at fair value

Currency SWAPs - 354,467 - 354,467 - 842,355 - 842,355
Forward exchange contracts - 1,832,048 - 1,832,048 - 20,399 - 20,399
Sub Total - 2,186,515 - 2,186,515 - 862,754 - 862,754
Financial assets - fair value through profit or loss 31st December

Government securities - Treasury bills & bonds 9,251,557 - - 9,251,557 11,057,953 - - 11,057,953
Quoted equity securities 62,071 - - 62,071 72,277 - - 72,277
Sub Total 9,313,628 - - 9,313,628 11,130,230 - - 11,130,230

comprehensive income 31st December
Government securities - Treasury bills & bonds 19,748,472 - - 19,748,472 15,420,524 - - 15,420,524
Quoted equity security 3,528,974 - - 3,528,974 1,871,878 - - 1,871,878
Unquoted equity securities - - 34,405 34,405 - - 39,378 39,378
Sri Lanka International Sovereign Bonds 926,008 - - 926,008 - - - -
Sub Total 24,203,454 - 34,405 24,237,859 17,292,402 - 39,378 17,331,780
Total financial assets measured at fair value 33,517,082 2,186,515 34,405 35,738,002 28,422,632 862,754 39,378 29,324,764
Non - financial assets measured at fair value 31st December

Freehold land & buildings (included under property, plant
& equipment)* - - 10,311,483 10,311,483 - - 10,424,624 10,424,624
Total non - financial assets measured at fair
value - - 10,311,483 10,311,483 - - 10,424,624 10,424,624
Financial liabilities measured at fair value

Currency SWAPs - 1,978,191 - 1,978,191 - 574,573 - 574,573
Forward exchange contracts - 52,756 - 52,756 - 29,496 - 29,496
Total financial liabilities measured at fair value - 2,030,947 - 2,030,947 - 604,069 - 604,069
There were no material transfers between levels of fair value hierarchy during 2020 and 2019.
* The fair value exists in the most recent valuation less subsequent accumulated depreciation and impairment losses is considered as the fair value as at 31st December 2020.
307

49.5 Level 3 Fair Value Measurement
49.5.1 Reconciliation
The following table shows a reconciliation from the beginning balances to the ending balances of fair value measurements in Level 3 of
the fair value hierarchy.
Bank Group
Assets Measured at Level 3 Assets Measured at Level 3
Unquoted Freehold Land Unquoted Freehold Land
Equity and Buildings Equity and Buildings
Securities Securities
Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 2019 36,582 5,005,897 36,638 9,294,934

Additions 2,750 88,659 2,750 88,659
Revaluation surplus credited to revaluation reserve - 811,874 - 1,207,274
Written off during the year - - - (33,676)
Total gain/(loss) recognised in profit or loss:
Reversal of impairment charge for the year (Note 12) - 4,632 - 4,632
Depreciation of buildings - (40,787) - (126,057)
Transfers and other adjustments (10) - (10) (11,142)
Balance as at 31st December 2019 39,322 5,870,275 39,378 10,424,624
Additions - 16,502 - 16,502
Gains/losses recognised in other comprehensive income
Loss from mark to market valuation (Note 27.4) (5,000) - (5,000) -
Exchange rate differences 27 - 27 -
Gain/(loss) recognised in profit or loss:
Depreciation of buildings - (45,813) - (129,643)
Balance as at 31st December 2020 34,349 5,840,964 34,405 10,311,483
49.5.2 Unobservable Inputs Used In Measuring Fair Value

The table below sets out information about significant unobservable inputs used in measuring fair value of the assets categorised under
Level 3 of the fair value hierarchy.
Assets Measured at Level 3

Type of Asset Bank Group Valuation Significant Weighted Fair Value
Fair Value as at Fair Value as at Technique Unobservable Average Range Measurement
31st December 31st December Inputs of Estimates for Sensitivity to
2020 2020 Unobservable Unobservable
Inputs Inputs
Rs 000 Rs 000
Property, plant &

equipment
- Freehold lands 4,418,805 7,464,206 Market Estimated price Rs 37,500 - *
comparable per perch 17,000,000
method
- Freehold buildings 1,422,159 2,847,277 Market Estimated price Rs 2,455 - *

comparable per sq.ft 20,102
method
Income basis Estimated rental
value per sq.ft
Bank Rs 100 - 250
Subsidiary Rs 150 - 300
Expected market
rental growth
Bank 1.0% *
Subsidiary 5.0% *
Discount rate
Bank 6.5% **
Subsidiary 5.8% **
* Significant increases/(decreases) in any of these inputs in isolation would result in a significantly higher/(lower) fair value.
** Significant increases/(decreases) in this input in isolation would result in a significantly (lower)/higher fair value.

49.6 Fair Value of Financial Assets and Liabilities Carried at Amortised Cost
The following describes the methodologies and assumptions used to determine fair values of those financial instruments which are not
already recorded at fair value in the Financial Statements.
Assets of which Fair Value Approximates Carrying Value

For financial assets and liabilities that have a short term maturity, it is assumed that the carrying amounts approximate their fair values.
This assumption is also applied to demand deposits and savings deposits which do not have a specific maturity.
Fixed Rate Financial Instruments

The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates
when they were first recognised with current market rates for similar financial instruments. The estimated fair value of fixed interest
bearing deposits is based on discounted cash flows using prevailing market interest rates for debts with similar credit risk and maturity.
For quoted debt issued, the fair values are determined based on quoted market prices. For variable rate instruments with a fixed credit
spread, an adjustment is made to reflect the change in credit spread since the instrument was first recognised.
Variable Rate Financial Instruments

Variable rate is a fair measure which reflects market movements. Hence the carrying value represents the fair value of the variable rate
instruments.
Set out below is a comparison of the carrying amounts and fair values of the Bank’s financial instruments by classes that are not carried
at fair value in the Financial Statements. This table does not include the fair values of non-financial assets and non-financial liabilities.
Bank Group
Fair Value Carrying Fair Value Carrying
Value Value
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
- loans & advances - 723,772,058 - 723,772,058 720,215,247 - 759,987,497 - 759,987,497 752,437,782
- debt & other instruments 195,385,320 77,786,548 - 273,171,868 275,091,572 195,419,929 77,786,548 - 273,206,477 275,125,717
195,385,320 801,558,606 - 996,943,926 995,306,819 195,419,929 837,774,045 - 1,033,193,974 1,027,563,499
- due to depositors - fixed & certificate of deposits - 540,480,570 - 540,480,570 535,836,041 - 558,795,729 - 558,795,729 553,025,229
- due to other borrowers - 49,052,595 - 49,052,595 49,052,595 - 56,885,151 - 56,885,151 56,871,506
- due to debt securities holders - 32,810,449 - 32,810,449 30,790,007 - 39,551,242 - 39,551,242 37,078,483
- 622,343,614 - 622,343,614 615,678,643 - 655,232,122 - 655,232,122 646,975,218
The following table lists those financial instruments for which their carrying amounts are a reasonable approximation of fair values because, for example, they are short term in
nature or re-priced to current market rates frequently.
Assets Liabilities
Cash & cash equivalents Due to banks

Balances with Central Bank of Sri Lanka Securities sold under repurchase agreements
Placements with banks Savings, demand, call & margin deposits
Reverse repurchase agreements Dividend payable
Other financial assets Other financial liabilities
311
312
Bank Group
Fair Value Carrying Fair Value Carrying
Value Value
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
- loans & advances - 690,192,102 - 690,192,102 689,377,504 - 720,992,710 - 720,992,710 719,046,634
- debt & other instruments 82,709,987 74,485,914 - 157,195,901 156,293,495 82,724,927 74,485,914 - 157,210,841 156,308,796
82,709,987 764,678,016 - 847,388,003 845,670,999 82,724,927 795,478,624 - 878,203,551 875,355,430
- due to depositors - fixed & certificate of deposits - 464,406,797 - 464,406,797 463,712,164 - 477,384,710 - 477,384,710 476,661,882
- due to other borrowers - 55,664,651 - 55,664,651 55,661,729 - 67,322,809 - 67,322,809 67,311,166
- due to debt securities holders - 38,543,541 - 38,543,541 37,642,049 - 42,300,404 - 42,300,404 41,371,586
- 558,614,989 - 558,614,989 557,015,942 - 587,007,923 - 587,007,923 585,344,634
The following table lists those financial instruments for which their carrying amounts are a reasonable approximation of fair values because, for example, they are short term in
nature or re-priced to current market rates frequently.
Assets Liabilities
Cash & cash equivalents Due to banks

Balances with Central Bank of Sri Lanka Securities sold under repurchase agreements
Placements with banks Savings, demand, call & margin deposits
Reverse repurchase agreements Dividend payable
Other financial assets Other financial liabilities
49.7 Reclassification of Financial Assets & Liabilities

There were no reclassifications during 2020 & 2019.
50 RISK MANAGEMENT
50.1 Introduction
Risk is inherent in the Bank’s activities but is managed through a process of ongoing identification, measurement and monitoring subject
to risk limits and other controls. This process of risk management is critical to the Bank’s continuous profitability and each individual
within the Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is mainly exposed to Credit Risk,
Liquidity Risk, Market Risk and Operational Risk which has been disclosed in this note as summarised below.
Page No
50.2 Credit Risk 314

50.2.1 Assessment of Expected Credit Losses 315
50.2.2 Risks on Credit–related Commitments 318
50.2.3 Collateral and Other Credit Enhancements 318
50.2.4 Analysis of Risk Concentration 321
50.2.4.1 Geographical Distribution 321
50.2.4.2 Industry Analysis 323
50.2.5 Commitments and Contingencies 325
50.3 Liquidity Risk and Funding Management 325

50.3.1 Statutory Liquid Assets Ratio (SLAR) 325
50.3.2 Loans and Advances to Deposits (due to banks and due to depositors) Ratio 325
50.3.3 Analysis of Financial Assets and Liabilities by Remaining Contractual Maturities 326
50.3.4 Remaining Contractual Maturities of Commitments and Contingencies 330
50.4 Market Risk 332

50.4.1 Interest Rate Risk 332
50.4.2 Currency Risk 337
50.4.3 Equity Price Risk 338
50.5 Operational Risk 338

50.6 Capital Management 338
Risk Management Framework

The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management framework. The
Board has delegated its authority to Board Integrated Risk Management Committee (BIRMC) which is responsible for developing and
monitoring Bank’s risk management policies. The Committee comprises of Executive and Non - Executive Directors. Meetings of BIRMC
are held regularly, and the Board of Directors are duly updated of its activities.
The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits
and controls and to monitor adherence to established limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures,
continuously updates and maintains a disciplined and constructive control environment, in which all employees are assigned and made to
understand their respective roles and responsibilities.
Integrated Risk Management Unit

The business units (i.e. Credit Departments, Branches, Regional Offices, Treasury etc.) have primary responsibility for Risk Management.
The Integrated Risk Management Unit, which has no responsibility for profit or volume targets, acts as the 2nd line of defense and
reports to the Group Chief Risk Officer (GCRO) who in turn directly reports to the BIRMC.

50 RISK MANAGEMENT CONTD.
Asset/Liability Management Committee (ALCO)

ALCO is chaired by the Managing Director and has representatives from Treasury Department, Credit Departments, Marketing
Department, Finance Department, Strategic Planning Department and Deposit Mobilisation Department. The Executive Director/Group
Chief Financial Officer and the Group Chief Risk Officer are also members of the ALCO. The Committee meets regularly to monitor and
manage the assets & liabilities of the Bank and overall liquidity position to keep the Bank’s liquidity at healthy levels, whilst satisfying
regulatory requirements.
Risk Measurement and Reporting

The Bank’s risks are measured using appropriate techniques based on the type of risk and industry best practices. The Bank also carries
out Stress Testing to identify the effect of extreme events/worst case scenarios in most of the major types of risks and the results are
reported to Board Integrated Risk Management Committee (BIRMC) on a periodic basis. Monitoring and controlling risks are primarily
performed based on policies, limits and thresholds established by the Bank. These limits reflect the business strategy and market
environment of the Bank as well as the level of risk that the Bank is willing to accept (Risk Appetite).
The Group’s risk measurement and reporting functions were further strengthened during the year amidst the COVID-19 pandemic.
The credit risk of the Group’s loan book increased as the loan repayments were impacted by the lock downs and movement restrictions
imposed locally and globally. Similarly, market risk too increased due to significant volatility in financial markets locally as well as globally.
In particular, the Bank and the Group monitored the liquidity position with concern as it was under pressure due to the payment holidays
offered under moratoriums. The operational risks too increased owing to the work from home arrangements etc. during the lock down
periods.
In this back drop, the Bank took additional measures to ensure that the risks caused by the pandemic are adequately managed.
Continuous reviews of the limits, policies and performance were carried out during the period. Some of these include;
 Reviewed risk elevated industries in the context of COVID-19 pandemic.
 Assessed the impact of the COVID-19 lock downs and moratoriums (payment holidays) on the portfolio staging.
 Used of a range of additional stress tests to assess the impact on Group’s performance and capital.
 Strengthened Cyber Security Management in light of the increase in use of digital platforms.
 Ensured adequate liquidity resources were held to meet Group’s obligations, given the uncertainties caused by the pandemic.
Risk Mitigation
As part of its overall risk management, the Bank obtains various types of collaterals to mitigate the risk. Details such as nature of the
collateral that could be accepted, required security margin etc. are clearly defined in the Credit Policy of the Bank and any deviations
require specific approval. However, respective approving authorities would take into account the availability of security only as the
secondary source of repayment.
50.2 Credit Risk

Credit risk is the risk of financial loss to the Bank, if a borrower or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Bank’s loans and advances and investments in debt securities. In addition to the credit risk
from direct funding exposures, the Bank would also be exposed to indirect liabilities such as letters of credit, guarantees etc, which would
carry credit risk.
The Bank considers and consolidates all elements of credit risk exposure (such as individual obligor default risk, country and sector
concentration risks) to ensure stringent Credit Risk Management.
50.2.1 Assessment of Expected Credit Losses

50.2.1 (a) Analysis of the total impairment for expected credit losses is as follows.
Bank

Note Stage 1 Stage 2 Stage 3 Total Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Cash & cash equivalents 20.2 36,364 - - 36,364 13,739

Placements with banks 22.2 447 - - 447 611
- loans & advances 25.2 3,679,288 10,707,506 24,340,249 38,727,043 30,246,190
- debt & other instruments 26.4 1,973,588 - 290,879 2,264,467 893,372
Credit related commitments &
contingencies 45.2 1,155,451 348,123 182,232 1,685,806 1,417,228
Total allowance for expected credit
losses 6,845,138 11,055,629 24,813,360 42,714,127 32,571,140
Group

Note Stage 1 Stage 2 Stage 3 Total Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Cash & cash equivalents 20.2 36,379 - - 36,379 13,750

Placements with banks 22.2 447 - - 447 611
- loans & advances 25.2 3,800,247 11,007,341 26,834,249 41,641,837 32,031,271
- debt & other instruments 26.4 1,973,588 - 290,879 2,264,467 893,372
Credit related commitments &
contingencies 45.2 1,156,568 348,123 182,232 1,686,923 1,417,504
Total allowance for expected credit
losses 6,967,229 11,355,464 27,307,360 45,630,053 34,356,508
50.2.1 (b) Movement of the total allowance for expected credit losses during the period
Bank Group
Note 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Net charge for the year 11,822,149 12,583,876 13,174,227 13,740,418
Write-off during the year 25.2 (439,226) (881,047) (655,989) (1,802,407)
Interest income accrued on impaired loans & advances 7.1 (3,333,638) (2,809,924) (3,348,278) (2,894,134)
Other movements 25.2 2,093,702 1,627,764 2,103,585 1,669,764
The methodology used in the determination of expected credit losses is explained in Note 3.4.6 to financial statements. As explained
in the said Note, the Group has made allowances for overlays where required to address the uncertainties and potential implications of
COVID-19.

50.2.1 (c) Sensitivity Analysis: Impact of extending the recovery cash flows by further one year for individually significant impaired loans
Had the Bank further extended the recovery cash flows by one year, only for instances where cash flow is forecasted based on collateral
realisation, the cumulative impairment provision for individually significant impaired loans would have increased by Rs 1,732 Mn
(2019: Rs 1,599 Mn).
50.2.1 (d) Sensitivity Analysis: Impact of staging of loans on collective impairment

As explained in Note 3.4.6.1, the Bank/Group categorises its loans into stage 1, stage 2, stage 3 and originated credit impaired when
determining the collective impairment provision under SLFRS 9. The sensitivity of collective impairment provision to staging of the loans
is given below.
 If all loans and advances currently in stage 2, were moved to stage 1, the ECL provision of the Bank/Group as at 31st December
2020 would have reduced by approximately 14% (2019 - 12%). The total loans and advances in stage 2 as at 31st December 2020
amounts to Rs 166 Bn & Rs 178 Bn for the Bank & the Group respectively.
 If all loans and advances currently in stage 1, were moved to stage 2, the ECL provision of the Bank/Group as at 31st December
2020 would have further increased by approximately 44% (2019 - 42%). The total loans and advances in stage 1 as at 31st
December 2020 amounts to Rs 533 Bn & Rs 544 Bn for the Bank & the Group respectively. The management believes that a
movement of the entire stage 1 loan portfolio to stage 2 is highly unlikely.
50.2.1 (e) Sensitivity Analysis: Impact on collective impairment (loans & advances, credit related commitment & contingencies) due to changes in
forward looking information
The Bank/Group calculates expected credit losses based on three probability-weighted scenarios. The weightages used by the Bank as
at 31st December 2020 are disclosed in Note 3.4.6.7 along with the weightages used in 2019. During the year, due to the uncertainties
created by COVID-19 pandemic, the Bank increased the weightage assigned to the worst case scenario by 20%, decreasing the
weightage of the best case and base case scenarios by 10% each. Accordingly, the Bank's impairment provision increased by
approximately Rs 500 Mn during the year.
A further 20% increase in the worst case scenario with a similar decrease in the base case scenario would have increased the collective
impairment provision of the Bank/Group by approximately Rs 260 Mn as at 31st December 2020.
50.2.1 (f) Breakdown of loans classified under stage 2

Loans classified under the Stage 2 includes contractually past due loans and loans which have been pushed to Stage 2 based on the
criteria specified in the Note 3.4.6.1 (b).
Bank

Not Contractually Contractually Past due Total Total
Past due
0 - 30 Days 31 - 60 Days 61 - 90 Days
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Term loans 32,276,528 71,985,336 450,137 104,712,001 92,268,140

Overdrafts 8,568,455 7,204,156 710,380 16,482,991 11,742,501
Import loans 5,931,868 5,252,914 8,422 11,193,204 10,577,183
Others 15,517,122 17,346,775 411,615 33,275,512 18,624,336
62,293,973 101,789,181 1,580,554 165,663,708 133,212,160
Group

Not Contractually Contractually Past due Total Total
Past due
0 - 30 Days 31 - 60 Days 61 - 90 Days
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Term loans 32,397,452 72,531,734 680,690 105,609,876 93,692,087

Overdrafts 8,568,455 7,204,156 710,380 16,482,991 11,742,501
Import loans 5,931,868 5,252,914 8,422 11,193,204 10,577,183
Others 20,822,071 21,027,169 3,267,645 45,116,885 26,602,072
67,719,846 106,015,973 4,667,137 178,402,956 142,613,843
50.2.1 (g) Overview of rescheduled/restructured loans & advances

An analysis of rescheduled/restructured loans and advances of the Bank/Group which are in stage 2 and stage 3 is given below along
with the impairment for ECL. This does not include individually significant impaired loans and advances for which ECLs have been derived
by discounting future cash flows of such loans.
Amortised Cost Impairment for ECL Net Carrying

Stage 2 Stage 3 Total Stage 2 Stage 3 Total Value
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Bank 82,172,171 9,255,700 91,427,871 3,080,491 3,057,339 6,137,830 85,290,041
Group 82,436,054 10,499,338 92,935,392 3,085,665 3,255,872 6,341,537 86,593,855
Amortised Cost Impairment for ECL Net Carrying

Stage 2 Stage 3 Total Stage 2 Stage 3 Total Value
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Bank 65,927,802 12,552,441 78,480,243 2,316,132 4,073,140 6,389,272 72,090,971
Group 66,245,290 13,212,104 79,457,394 2,319,881 4,142,614 6,462,495 72,994,899
50.2.1 (h) Analysis of loans & advances eligible for COVID-19 debt moratorium - Phase 2
Following table shows the stage-wise analysis of loan and advances which are under COVID–19 debt moratorium phase – 2. The Group
Accounting Policy to determine the stage of these loans is given in Note 3.4.6.12.
Bank Group
As at 31st December 2020 Amortised Impairment for Amortised Impairment for
Cost ECL Cost ECL
Rs 000 Rs 000 Rs 000 Rs 000
Stage 1 113,283,925 1,324,715 114,373,578 1,351,844

Stage 2 110,055,224 8,441,536 111,811,258 8,482,372
Stage 3 5,407,695 1,925,999 7,806,580 2,190,416
228,746,844 11,692,250 233,991,416 12,024,632
Impairment for expected credit losses for loans and advances classified under stage 1 includes, an additional provision of approximately
Rs 750 Mn by way of an allowance for overlay, in anticipation that some of these loans would move into Stage 2 and Stage 3 after the
end of the 2nd phase of the COVID-19 moratorium.

50.2.2 Risks on Credit–related Commitments
The Bank makes available to its customers, guarantees that may require the Bank to make payments on behalf of customers and enters
into commitments to extend credit lines to secure their liquidity needs. Letters of credit and guarantees are commitments to make
payments on behalf of customers in the event of a specific act, generally related to the import or export of goods. Such commitments
expose the Bank to risks similar to loans and are mitigated by the same control processes and policies.
50.2.3 Collateral and Other Credit Enhancements

50.2.3 (a) Net exposure to credit risk
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are in place
covering the acceptability and valuation of each type of collateral. The main types of collateral obtained are as follows:
For commercial lending : charges over real estate properties, cash, inventory and trade receivables, shares etc.
For retail lending : mortgages over residential properties, motor vehicles, gold etc.
The Bank also obtains guarantees from parent companies as securities against loans granted to their subsidiaries.
Management monitors the market value of collateral and will request additional collateral if the market values are not sufficient in
accordance with the underlying agreement. It is the Bank’s policy to dispose repossessed properties in an orderly manner. The proceeds
are used to recover the outstanding claim.
The following table shows the maximum exposure and net exposure (net of fair value of any collaterals held) to credit risk by class of
financial asset, before netting off impairment for expected credit losses.
Bank

Note Maximum Net Maximum Net
Exposure to Exposure Exposure to Exposure
Credit Risk Credit Risk
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 29,089,949 11,094,106 17,802,915 2,557,866
Placements with banks 22 3,228,613 3,228,613 7,251,916 7,251,916
Reverse repurchase agreements 4,450,557 - - -
Derivative financial instruments 23 2,186,515 2,186,515 862,754 862,754
Financial assets recognised through profit or loss -
measured at fair value 24 9,313,628 9,313,628 11,130,230 11,130,230
- loans & advances * 25 758,942,290 297,408,763 719,623,694 266,096,658
- debt & other instruments 26 277,356,039 272,002,304 157,186,867 150,659,660
Financial assets - fair value through other comprehensive
income 27 24,237,803 24,237,803 17,331,724 17,331,724
Other assets 4,772,493 4,772,493 7,152,067 7,152,067
1,113,577,887 624,244,225 938,342,167 463,042,875
Group

Note Maximum Net Maximum Net
Exposure to Exposure Exposure to Exposure
Credit Risk Credit Risk
Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20 29,255,300 11,140,176 17,991,348 2,596,340
Placements with banks 22 3,228,613 3,228,613 7,251,916 7,251,916
Reverse repurchase agreements 6,231,719 - 2,304,392 -
Derivative financial instruments 23 2,186,515 2,186,515 862,754 862,754
Financial assets recognised through profit or loss -
measured at fair value 24 9,313,628 9,313,628 11,130,230 11,130,230
- loans & advances * 25 794,079,619 299,179,478 751,077,905 266,834,878
- debt & other instruments 26 277,390,184 272,036,449 157,202,168 150,674,961
Financial assets - fair value through other comprehensive
income 27 24,237,859 24,237,859 17,331,780 17,331,780
Other assets 5,383,794 5,383,794 7,522,839 7,522,839
1,151,307,231 626,706,512 972,675,332 464,205,698
* Approximately 40% and 7% of the total loans & advances of the Bank/Group are secured against immovable property and cash/
deposits held within the Bank/Group respectively. Further 13% of the loans & advances are secured against other securities
including movable property, gold, lease receivables, etc. Approximately 70% of stage 3 loans & advances of the Bank/Group are
secured against immovable property and cash/deposits held within the Bank/Group.

50.2.3 (b) Offsetting financial assets & liabilities
Financial assets and financial liabilities are offset and the net amount is presented in the Statement of Financial Position when the Group
has a legal right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
50.2.3 (c) Financial assets & liabilities not subject to offsetting

Amounts that do not qualify for offsetting include netting arrangements that only permit outstanding transactions with the same
counterparty to be offset in an event of default or occurrence of other predetermined events. Such netting arrangements include
repurchase arrangements and other similar secured lending and borrowing arrangements.
The amount of the financial collateral received or pledged subject to netting arrangements but not qualified for offsetting are disclosed
below.
Bank

Gross Amount Net Gross Amount Net
Amount Subject to Amount Amount Subject to Amount
Netting Netting
but do not but do not
Qualify for Qualify for
Offsetting Offsetting
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Loans & advances 49,402,863 36,979,848 12,423,015 52,485,553 39,834,185 12,651,368
Securities sold under repurchase
agreements 3,399,896 3,399,896 - 16,398,511 16,398,511 -
Group

Gross Amount Net Gross Amount Net
Amount Subject to Amount Amount Subject to Amount
Netting Netting
but do not but do not
Qualify for Qualify for
Offsetting Offsetting
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Loans & advances 49,668,663 37,217,521 12,451,142 52,933,868 40,057,681 12,876,187
agreements 2,306,896 2,306,896 - 16,384,511 16,384,511 -
50.2.4 Analysis of Risk Concentration

The Concentration risk is monitored/managed through borrower/group, sector, product etc. Maximum exposure of both funded and non
funded facilities to a company and a group as at the reporting date was Rs 14,500 Mn and Rs 27,482 Mn respectively. The following
tables show the exposure to credit risk for the components of the Statement of Financial Position, including geography of counterparty
and industry.
50.2.4.1 Geographical Distribution

(a) Bank

Sri Lanka Overseas Total Sri Lanka Overseas Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 20,837,545 8,216,040 29,053,585 15,377,204 2,411,972 17,789,176
Balances with Central Bank of Sri Lanka 13,335,178 - 13,335,178 31,028,270 - 31,028,270
Placements with banks - 3,228,166 3,228,166 181,020 7,070,285 7,251,305
Reverse repurchase agreements 4,450,557 - 4,450,557 - - -
Derivative financial instruments 2,032,294 154,221 2,186,515 799,506 63,248 862,754
profit or loss - measured at fair value 9,313,628 - 9,313,628 11,130,230 - 11,130,230
- loans & advances * 694,668,624 25,546,623 720,215,247 665,140,860 24,236,644 689,377,504
- debt & other instruments 275,091,572 - 275,091,572 156,293,495 - 156,293,495
Financial assets - fair value through
other comprehensive income 20,707,612 3,530,191 24,237,803 15,458,658 1,873,066 17,331,724
Other assets 4,029,958 742,535 4,772,493 6,238,357 913,710 7,152,067
Total 1,044,466,968 41,417,776 1,085,884,744 901,647,600 36,568,925 938,216,525
* Provincial breakdown for loans & advances within Sri Lanka
Province Bank
2020 2019
Rs 000 Rs 000
Central 44,519,112 44,213,075

Eastern 14,281,891 13,459,293
North Central 15,890,068 14,087,045
North Western 34,048,336 32,402,105
Northern 12,848,305 12,291,936
Sabaragamuwa 14,796,880 14,355,439
Southern 29,339,104 29,979,357
Uva 12,519,739 12,031,380
Western 516,425,189 492,321,230
Total 694,668,624 665,140,860

(b) Group

Sri Lanka Overseas Total Sri Lanka Overseas Total
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 21,002,881 8,216,040 29,218,921 15,565,626 2,411,972 17,977,598
Balances with Central Bank of Sri Lanka 13,335,178 - 13,335,178 31,028,270 - 31,028,270
Placements with banks - 3,228,166 3,228,166 181,020 7,070,285 7,251,305
Reverse repurchase agreements 6,231,719 - 6,231,719 2,304,392 - 2,304,392
Derivative financial instruments 2,032,294 154,221 2,186,515 799,506 63,248 862,754
profit or loss - measured at fair value 9,313,628 - 9,313,628 11,130,230 - 11,130,230
- loans & advances * 726,891,159 25,546,623 752,437,782 694,809,990 24,236,644 719,046,634
- debt & other instruments 275,125,717 - 275,125,717 156,308,796 - 156,308,796
other comprehensive income 20,707,668 3,530,191 24,237,859 15,458,714 1,873,066 17,331,780
Other assets 4,641,259 742,535 5,383,794 6,609,129 913,710 7,522,839
Total 1,079,281,503 41,417,776 1,120,699,279 934,195,673 36,568,925 970,764,598
* Provincial breakdown for loans & advances within Sri Lanka
Province Group
2020 2019
Rs 000 Rs 000
Central 49,104,471 48,891,794

Eastern 17,374,800 16,695,317
North Central 17,377,560 15,517,479
North Western 37,921,046 36,291,525
Northern 13,614,392 12,855,557
Sabaragamuwa 16,954,003 16,483,770
Southern 31,992,535 32,685,480
Uva 12,949,179 12,448,131
Western 529,603,173 502,940,937
Total 726,891,159 694,809,990
50.2.4.2 Industry Analysis
The following tables show the risk concentration by industry for the components of the Statement of Financial Position
(a) Bank - as at 31st December 2020
Agriculture Manufacturing Tourism Transport Construction Infrastructure Traders Banks, Other Consumers Total
& Related Financial Services
& Business
Services
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents - - - - - - - 29,053,585 - - 29,053,585
Balances with Central Bank of Sri Lanka - - - - - - - 13,335,178 - - 13,335,178
Placements with banks - - - - - - - 3,228,166 - - 3,228,166
Reverse repurchase agreements - - - - - - - 4,450,557 - - 4,450,557
Derivative financial instruments 1,319 - - - - - 164,372 2,011,926 8,898 - 2,186,515
profit or loss - measured at fair value - - - - - - - 9,307,242 6,386 - 9,313,628
- loans & advances 58,803,015 97,271,888 59,644,673 9,540,881 112,977,884 53,839,328 117,530,524 53,574,174 55,634,577 101,398,303 720,215,247
- debt & other instruments - - - - - - - 275,091,572 - - 275,091,572
other comprehensive income - - - - - - - 24,203,454 34,349 - 24,237,803
Other assets - - - - - - - 4,593,426 179,067 - 4,772,493
Total 58,804,334 97,271,888 59,644,673 9,540,881 112,977,884 53,839,328 117,694,896 418,849,280 55,863,277 101,398,303 1,085,884,744
(b) Bank - as at 31st December 2019
& Business
Services
Financial Assets
Derivative financial instruments 108 - - - - - 11,575 851,071 - - 862,754
- loans & advances 57,887,707 87,260,770 56,229,089 8,084,516 108,941,006 51,667,088 129,473,314 48,140,373 53,955,758 87,737,883 689,377,504
- debt & other instruments 24,258 - - - 303,678 - - 155,965,559 - - 156,293,495

Other assets - - 18,115 - - - - 6,480,548 653,404 - 7,152,067
323
Total 57,912,073 87,260,770 56,247,204 8,084,516 109,244,684 51,667,088 129,484,889 295,924,636 54,652,782 87,737,883 938,216,525
324
(c) Group - as at 31st December 2020
& Business
Services
Financial Assets
Derivative financial instruments 1,319 - - - - - 164,372 2,011,926 8,898 - 2,186,515

- loans & advances 61,910,737 100,215,150 61,093,176 12,381,118 113,154,634 55,102,596 123,168,115 52,044,181 65,184,492 108,183,583 752,437,782
- debt & other instruments - - - - - - - 275,125,717 - - 275,125,717
Other assets - - - - - - - 4,752,318 631,476 - 5,383,794
Total 61,912,056 100,215,150 61,093,176 12,381,118 113,154,634 55,102,596 123,332,487 419,458,822 65,865,657 108,183,583 1,120,699,279
(d) Group - as at 31st December 2019

& Business
Services
Financial Assets
Derivative financial instruments 108 - - - - - 11,575 851,071 - - 862,754
- loans & advances 60,743,922 90,194,990 57,899,871 10,524,834 110,016,617 52,315,798 135,104,664 43,904,886 63,273,468 95,067,584 719,046,634
- debt & other instruments 24,258 - - - 303,678 - - 155,980,860 - - 156,308,796
Other assets - - 18,115 - - - - 6,480,548 1,024,176 - 7,522,839
Total 60,768,288 90,194,990 57,917,986 10,524,834 110,320,295 52,315,798 135,116,239 294,197,264 64,341,320 95,067,584 970,764,598
50.2.5 Commitments and Contingencies

To meet the financial needs of customers, the Bank enters into various commitments and contingent liabilities. Even though these
obligations may not be recognised in the Statement of Financial Position, they do contain credit risk and are, therefore, part of the overall
risk of the Bank.
The maximum exposure to credit risk relating to a financial guarantee is the maximum amount the Bank should have to pay if the
guarantee is called upon. The maximum exposure to credit risk relating to a loan commitment is the full amount of the commitment. In
both cases, the maximum risk exposure is significantly greater than the amount recognised as a liability in the Statement of Financial
Position. The Bank's maximum credit risk exposure for commitments and contingencies are disclosed in the Note No. 45.
50.3 Liquidity Risk and Funding Management

Liquidity risk is the risk that the Bank will encounter difficulties in meeting its financial commitments that are settled by delivering cash or
another financial asset. Hence the Bank may be unable to meet its payment obligations when they fall due under both normal and stress
circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, and adopted a
policy of continuously managing assets with liquidity in mind and monitoring future cash flows and liquidity on a daily basis. The Bank has
developed internal control processes and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash
flows and the availability of high grade collateral which could be used to secure additional funding if required.
The Bank maintains a portfolio of highly marketable and diverse assets assumed to be easily liquidated in the event of an unforeseen
interruption of expected cash flow. The Bank also has committed lines of credit that could be utilised to meet liquidity needs. Further,
the Bank maintained a statutory deposit with the Central Bank of Sri Lanka equal to 2% (5% - 2019) of customer rupee deposits. In
accordance with the Bank’s policy, the liquidity position is assessed and managed under a variety of scenarios, giving due consideration
to stress factors relating to both the market in general and specific to the Bank. The most important of this is to maintain the required
ratio of liquid assets to liabilities, to meet the regulatory requirement (20%). Liquid assets consist of cash, short–term bank deposits and
liquid debt securities available for immediate sale. Further the Statutory Liquid Assets Ratio of the Bank for the month of December 2020
is as follows.
50.3.1 Statutory Liquid Assets Ratio (SLAR)
For the month of December 2020 2019

% %
Domestic Banking Unit (DBU) 34.98 21.51

Foreign Currency Banking Unit (FCBU) 37.60 26.88
50.3.2 Loans & Advances to Deposits (due to banks and due to depositors) Ratio
The Bank is aware of the importance of deposits as a source of funds for its lending operations. This is monitored using the following
ratio, which compares loans & advances to deposits.
Loans & advances to deposits ratio as at 31st December 2020: 85.58% (2019: 100.18%)
The ratio has increased during 2019 mainly due to two reasons. The Bank raised Tier I and Tier II capitals amounting to Rs 32.2 Bn
and Rs 20.5 Bn respectively from 2017 to 2019 to comply with Basel III enhanced capital requirements. In addition, the Statutory
Reserve Requirement (SRR) was decreased by 1.5% in November 2018 and subsequently 1% in March 2019 resulting a release of funds
amounting to Rs 15 Bn approximately. Due to both these reasons, raising deposits to fund new loan growth was curtailed during the year
2019.

50.3.3 Analysis of Financial Assets and Liabilities by Remaining Contractual Maturities
The tables below summarise the maturity profile of the undiscounted cash flows of the Bank’s financial assets and financial liabilities as at
31st December 2020. Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Bank
expects that many customers will not request repayment on the earliest date it could be required to pay and the tables do not reflect the
expected cash flows indicated by its deposit retention history.
Contractual Maturities of Undiscounted Cash Flows of Financial Assets and Financial Liabilities
Up to 3 3 - 12 Months 1 - 3 Years 3 - 5 Years Over 5 Years Total

Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 29,053,585 - - - - 29,053,585
Balances with Central Bank of Sri Lanka 7,640,147 3,868,434 1,268,863 392,591 165,143 13,335,178
Placements with banks 3,228,166 - - - - 3,228,166
Reverse repurchase agreements 4,450,557 - - - - 4,450,557
Derivative financial instruments 372,430 1,814,085 - - - 2,186,515
Financial assets recognised through profit or
loss - measured at fair value 9,313,628 - - - - 9,313,628
- loans & advances 247,267,925 155,631,025 195,174,542 112,566,283 135,614,586 846,254,361
- debt & other instruments 39,906,342 132,467,738 94,317,633 21,951,934 20,271,936 308,915,583
comprehensive income 108,124 16,456,959 3,081,910 492,287 4,098,523 24,237,803
Other assets 1,787,604 2,856,809 48,917 - 88,095 4,781,425
Total Financial Assets 343,128,508 313,095,050 293,891,865 135,403,095 160,238,283 1,245,756,801
Due to banks 1,496,626 26,500 - - - 1,523,126
Securities sold under repurchase agreements 3,318,754 90,740 - - - 3,409,494
- due to depositors 508,356,662 272,259,332 95,238,350 26,971,578 9,838,956 912,664,878
- due to other borrowers 9,201,130 22,838,602 15,654,481 720,085 2,960,455 51,374,753
- due to debt securities holders 1,440,466 7,985,013 21,058,717 7,973,000 - 38,457,196
Dividend payable 121,270 - - - - 121,270
Other liabilities 8,513,078 4,115,310 1,868,142 703,817 982,353 16,182,700
Total Financial Liabilities 532,689,788 309,104,642 133,819,690 36,368,480 13,781,764 1,025,764,364
Total Net Financial Assets/(Liabilities) (189,561,280) 3,990,408 160,072,175 99,034,615 146,456,519 219,992,437
Up to 3 3 - 12 1 - 3 Years 3 - 5 Years Over 5 Years Total

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Balances with Central Bank of Sri Lanka 17,217,351 10,978,151 1,180,284 1,245,035 407,449 31,028,270
Derivative financial instruments 673,590 189,164 - - - 862,754
- loans & advances 240,953,188 160,474,683 202,523,359 118,261,598 139,096,129 861,308,957
comprehensive income 939,779 14,476,827 - 3,918 1,911,200 17,331,724
Other assets 2,220,994 4,800,144 47,036 24,938 74,017 7,167,129
Due to banks 1,511,665 - - - - 1,511,665
- due to other borrowers 14,701,482 13,089,979 21,410,702 6,054,285 6,668,874 61,925,322
Other liabilities 5,859,297 3,415,754 2,735,603 871,128 1,190,900 14,072,682
Total Financial Liabilities 449,914,229 289,805,948 71,214,352 58,354,792 16,416,741 885,706,062
Total Net Financial Assets/(Liabilities) (118,502,596) (43,758,977) 184,445,796 90,828,881 132,981,462 245,994,566


Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Balances with Central Bank of Sri Lanka 7,640,147 3,868,434 1,268,863 392,591 165,143 13,335,178
Reverse repurchase agreements 5,225,483 1,058,498 - - - 6,283,981
- loans & advances 257,543,078 168,014,751 211,757,388 117,366,170 135,648,153 890,329,540
comprehensive income 108,125 16,456,959 3,081,910 492,287 4,098,578 24,237,859
Other assets 2,533,399 2,935,604 255,444 - 88,095 5,812,542
Due to banks 1,497,557 26,500 - - - 1,524,057
Total Financial Liabilities 539,957,437 322,163,856 144,307,107 39,489,436 13,819,540 1,059,737,376
Total Net Financial Assets/(Liabilities) (184,867,718) 4,485,678 166,374,131 100,713,546 146,452,365 233,158,002

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Balances with Central Bank of Sri Lanka 17,217,352 10,978,151 1,180,284 1,245,035 407,448 31,028,270
Reverse repurchase agreements 743,966 1,674,996 - - - 2,418,962
- loans & advances 250,434,108 171,494,607 217,959,316 122,492,685 139,175,266 901,555,982
comprehensive income 939,779 14,476,827 - 3,918 1,911,256 17,331,780
Other assets 2,600,814 4,846,241 47,089 24,938 74,017 7,593,099
Due to banks 1,567,974 - - - - 1,567,974
Total Financial Liabilities 461,391,467 302,309,124 81,648,685 63,433,543 16,482,540 925,265,359
Total Net Financial Assets/(Liabilities) (119,186,704) (43,509,629) 189,451,773 89,981,217 132,994,855 249,731,512

50.3.4 Remaining Contractual Maturities of Commitments and Contingencies
The tables below show the contractual expiry by remaining maturity of the Bank’s contingent liabilities and commitments. Each undrawn
loan commitment is included in the time band containing the earliest date it can be drawn down. For issued financial guarantee contracts,
the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.
On Demand Less than 3 3 to 12 1 to 5 Years Over 5 Years Total

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Undrawn-direct credit facilities 159,176,139 - - - - 159,176,139
Undrawn-indirect credit facilities 54,713,490 - - - - 54,713,490
Acceptances 181,279 22,828,749 8,804,294 84,641 - 31,898,963
Documentary credit 2,334,101 17,306,112 5,132,944 40,616 - 24,813,773
Guarantees 8,999,321 10,601,145 23,840,862 10,291,336 2,994 53,735,658
225,404,330 50,736,006 37,778,100 10,416,593 2,994 324,338,023

Capital Commitments 1,299,104 - - - - 1,299,104
Operating lease commitments - as lessee - 17,516 23,986 - - 41,502
Forward exchange contracts - 78,879,444 79,533,482 - - 158,412,926
1,299,104 78,896,960 79,557,468 - - 159,753,532
Total gross commitments & contingencies 226,703,434 129,632,966 117,335,568 10,416,593 2,994 484,091,555
Impairment for expected credit losses - credit
related commitments & contingencies (1,067,230) (317,223) (236,205) (65,129) (19) (1,685,806)
Commitments & contingencies net of
impairment for expected credit losses 225,636,204 129,315,743 117,099,363 10,351,464 2,975 482,405,749

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000

Acceptances 26,319 10,239,789 3,882,260 21,436 - 14,169,804
Documentary credit 867,865 10,906,606 5,379,313 181,541 - 17,335,325
Guarantees 2,507,284 10,478,464 23,702,507 12,431,444 15,260 49,134,959
198,501,648 31,624,859 32,964,080 12,634,421 15,260 275,740,268

Capital Commitments 998,348 - - - - 998,348
998,348 78,833,130 37,261,982 - - 117,093,460
related commitments & contingencies (941,864) (194,635) (202,877) (77,758) (94) (1,417,228)
Commitments & contingencies net of

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Credit related commitments and contingencies

Acceptances 181,279 22,828,749 8,804,294 84,641 - 31,898,963
Documentary credit 2,334,101 17,306,112 5,132,944 40,616 - 24,813,773
Guarantees 8,999,321 10,601,145 23,847,362 10,291,336 2,994 53,742,158
219,298,280 50,736,006 37,784,600 10,416,593 2,994 318,238,473
Other commitments and contingencies

Capital Commitments 1,299,104 348,755 1,313,682 - - 2,961,541
1,299,104 79,245,715 80,871,150 - - 161,415,969
related commitments and contingencies (1,068,348) (317,223) (236,205) (65,128) (19) (1,686,923)
Commitments and contingencies net of

Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Credit related commitments and contingencies

Acceptances 26,319 10,239,789 3,882,260 21,436 - 14,169,804
Documentary credit 867,865 10,906,606 5,379,313 181,541 - 17,335,325
Guarantees 2,507,284 10,478,464 23,707,707 12,431,444 15,260 49,140,159
194,434,901 31,624,859 32,969,280 12,634,421 15,260 271,678,721
Other commitments and contingencies

Capital Commitments 998,348 484,512 800,240 - - 2,283,100
998,348 79,317,642 38,062,222 - - 118,378,212
related commitments and contingencies (942,140) (194,635) (202,877) (77,758) (94) (1,417,504)
Commitments and contingencies net of

50.4 Market Risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables
such as interest rates, foreign exchange rates, commodity prices and equity prices. The Bank classifies exposures to market risk into
either trading or non–trading portfolios and manages each of those portfolios separately.
50.4.1 Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial
instruments. The Bank’s policy is to continuously monitor positions on a daily basis and periodic interest re-pricing strategies are used to
ensure positions are maintained within prudential levels.
The following tables demonstrate the sensitivity of the Bank's Statement of Profit or Loss for the year ended 31st December 2020 and
31st December 2019 to a reasonable possible change in interest rates, with all other variables held constant.
Rate Sensitive Assets (RSA) & Rate Sensitive Liabilities (RSL)

Rs 000 Rs 000
Rate Sensitive Assets (RSA)* 730,855,077 650,356,608

Rate Sensitive Liabilities (RSL)* 801,660,800 731,689,896
GAP (RSA - RSL) (70,805,723) (81,333,288)
Impact on Statement of Profit or Loss due to Interest Rate Shocks

Rs 000 Rs 000
Interest Rate Shock

0.50% (184,138) (31,834)
1.00% (368,276) (63,668)
(0.50%) 184,138 31,834
(1.00%) 368,276 63,668
* The above computation is based on the rate sensitive assets and liabilities which are matured or re-priced within one year.
Interest Rate Sensitivity Analysis

The tables below analyse the Bank’s interest rate risk exposure on financial assets and liabilities. The Bank’s assets and liabilities are
included at carrying amount and categorised by the earlier of contractual re–pricing or maturity dates.
Up to 3 3 - 12 1-3 Years 3 - 5 Years Over 5 Years Non Interest Total

Months Months Sensitive
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 2,781,418 - - - - 26,272,167 29,053,585
Balances with Central Bank of Sri Lanka - - - - - 13,335,178 13,335,178
Placements with banks 3,228,166 - - - - - 3,228,166
Reverse repurchase agreements 4,450,557 - - - - - 4,450,557
Derivative financial instruments - - - - - 2,186,515 2,186,515
Financial assets recognised through profit or loss - measured at fair value 9,251,557 - - - - 62,071 9,313,628
- loans & advances 389,856,980 104,471,276 90,361,699 52,451,242 83,008,764 65,286 720,215,247
- debt & other instruments 66,498,257 133,751,781 46,375,558 16,150,902 12,315,074 - 275,091,572
Financial assets - fair value through other comprehensive income 108,126 16,456,959 3,081,910 492,287 535,198 3,563,323 24,237,803
Other assets - - - - - 4,772,493 4,772,493
Total Financial Assets 476,175,061 254,680,016 139,819,167 69,094,431 95,859,036 50,257,033 1,085,884,744
Due to banks 583 25,777 - - - 1,496,042 1,522,402
Securities sold under repurchase agreements 3,311,755 88,141 - - - - 3,399,896
- due to depositors 474,154,226 275,459,858 73,492,591 6,742,068 - 55,876,158 885,724,901
- due to other borrowers 27,105,035 13,983,450 4,260,462 373,394 3,329,019 1,235 49,052,595
- due to debt securities holders 1,082,941 6,449,034 16,258,032 7,000,000 - - 30,790,007
Dividend payable - - - - - 121,270 121,270
Other liabilities - - - - - 14,457,170 14,457,170
Total Financial Liabilities 505,654,540 296,006,260 94,011,085 14,115,462 3,329,019 73,982,822 987,099,188
Interest Rate Sensitivity Gap (29,479,479) (41,326,244) 45,808,082 54,978,969 92,530,017 (23,725,789) 98,785,556
333
334

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents - - - - - 17,789,176 17,789,176
Derivative financial instruments - - - - - 862,754 862,754
- loans & advances 388,718,216 95,336,964 77,237,114 48,861,265 78,813,535 410,410 689,377,504
Financial assets - fair value through other comprehensive income 939,779 14,476,827 - 3,918 - 1,911,200 17,331,724
Other assets - - - - - 7,152,067 7,152,067
Total Financial Assets 469,221,123 181,135,485 85,446,181 60,578,155 82,609,427 59,226,154 938,216,525
Due to banks 568 - - - - 1,511,097 1,511,665
- due to depositors 393,460,641 261,926,202 14,514,623 10,966,070 - 36,382,956 717,250,492
- due to other borrowers 42,525,609 8,715,725 1,401,847 188,296 2,830,252 - 55,661,729

Interest Rate Sensitivity Gap 16,167,749 (97,501,037) 57,577,061 32,397,030 79,779,175 8,318,744 96,738,722

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents 2,781,418 - - - - 26,437,503 29,218,921
Reverse repurchase agreements 5,224,437 1,007,282 - - - - 6,231,719
- loans & advances 395,524,803 113,405,967 103,503,047 56,934,073 83,004,606 65,286 752,437,782
Financial assets - fair value through other comprehensive income 108,126 16,456,959 3,081,910 492,287 535,198 3,563,379 24,237,859
Other assets - - - - - 5,383,794 5,383,794
Total Financial Assets 482,616,763 264,656,134 152,960,516 73,577,262 95,854,878 51,033,726 1,120,699,279
Due to banks 1,515 25,777 - - - 1,496,041 1,523,333
- due to depositors 479,529,956 283,583,081 76,235,188 7,293,588 1,263 55,855,663 902,498,739
- due to other borrowers 35,186,488 13,720,908 4,260,462 373,394 3,329,019 1,235 56,871,506
Total Financial Liabilities 518,040,079 305,274,993 100,113,682 16,166,982 3,330,282 74,183,980 1,017,109,998
Interest Rate Sensitivity Gap (35,423,316) (40,618,859) 52,846,834 57,410,280 92,524,596 (23,150,254) 103,589,281
335
336

Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Financial Assets
Cash & cash equivalents - - - - - 17,977,598 17,977,598
Reverse repurchase agreements 742,787 1,561,605 - - - - 2,304,392
- loans & advances 394,249,514 102,782,185 89,256,722 53,464,090 78,883,713 410,410 719,046,634
Financial assets - fair value through other comprehensive income 939,779 14,476,827 - 3,918 - 1,911,256 17,331,780
Other assets - - - - - 7,522,839 7,522,839
Total Financial Assets 475,495,208 190,153,082 97,470,319 65,180,980 82,679,605 59,785,404 970,764,598
Due to banks 56,877 - - - - 1,511,097 1,567,974
- due to depositors 397,362,075 268,840,496 15,906,907 11,707,381 552 36,372,231 730,189,642

- due to other borrowers 53,635,534 9,150,818 1,506,266 188,296 2,830,252 - 67,311,166
Interest Rate Sensitivity Gap 7,388,166 (95,984,354) 66,026,486 34,758,544 79,848,801 8,932,790 100,970,433
50.4.2 Currency Risk

Currency risk arises as a result of fluctuations in the value of a financial instrument due to changes in foreign exchange rates. The Bank’s
Board has set limits on positions by currency. In accordance with the Bank’s policy, positions are monitored on a daily basis and hedging
strategies are used to ensure positions are maintained within established limits.
The tables below indicate the currencies to which the Bank had significant exposures as at 31st December 2020 and 31st December
2019 and the effect to the gains/losses in case of a market exchange rates increase/decrease by 5% and 10%. The analysis calculates the
effect of a reasonably possible movement of the currency rate against the LKR, with all other variables held constant, on the Statement
of Profit or Loss (due to the fair value of currency sensitive non trading financial assets and liabilities) and equity (due to change in fair
value of currency swaps and forward exchange contracts used as cash flow hedges). A negative amount in the "Impact on Statement
of Profit or Loss" column of the table reflects a potential net reduction in Statement of Profit or Loss or equity, while a positive amount
reflects a net potential increase.
Foreign Exchange Position as at 31st December 2020 2019

Net Overall Net Overall Net Overall Net Overall
Long Short Long Short
Rs 000 Rs 000 Rs 000 Rs 000
Currency
USD 1,025,405 - 586,259 -
GBP 10,101 - - 17,721
EUR 82,699 - - 14,772
JPY 1,022 - 2,671 -
AUD - 35,383 12,152 -
CAD 1,924 - 1,233 -
CHF 13,542 - - 1,000
SGD 5,106 - 11,478 -
HKD 6,237 - 1,882 -
Sub Total 1,146,036 35,383 615,675 33,493
Other Currencies 50,684 - 59,625 -
Grand Total 1,196,720 35,383 675,300 33,493
Higher of Long or Short 1,196,720 675,300
2020 2019
Impact on Statement of Profit or Loss due to Exchange Rate Net Open Impact on Net Open Impact on
Shocks Position Statement of Position Statement of
(after Rate Profit or Loss (after Rate Profit or Loss
Shocks) for the period Shocks) for the period
ended ended
31st 31st
December December
Rs 000 Rs 000 Rs 000 Rs 000
5% 1,256,556 59,836 709,065 33,765

10% 1,316,392 119,672 742,830 67,530
(5%) 1,136,884 (59,836) 641,535 (33,765)
(10%) 1,077,048 (119,672) 607,770 (67,530)

50.4.3 Equity Price Risk
Equity price risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices and individual
stocks. Investment Committee reviews and approves all equity investment decisions. Further the market value of the Bank's equity
portfolio as of 31st December 2020 is Rs 62,071,056/- (2019: Rs 72,276,700/-).
50.5 Operational Risk

Operational risk is the risk of losses arising from failed internal processes, systems failure, human error, fraud or external events. When
controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss.
Strategic and Reputational Risks are not covered in Operational Risk.
Operational Risks of the Bank are mitigated and managed through a Board approved Operational Risk Management Policy control
framework which consists of monitoring and responding to potential risks such as segregation of duties, access, authorisation and
reconciliation procedures, staff education and assessment processes, Business Continuity Planning etc. Operational Risk Management
Unit reports to Group Chief Risk Officer and the Board Integrated Risk Management Committee which maintains a high level overall
supervision of managing Operational Risks of the Bank.
50.6 Capital Management

The Bank's capital management objectives can be summarised as follows:
 Maintain sufficient capital to meet minimum regulatory capital requirements
 Hold sufficient capital to support the Bank's risk appetite
 Provide additional capital to business segments of the Bank to achieve the overall strategic objectives
 Provide a "cushion" or "buffer" in absorbing potential losses arising from various risks and safeguarding the depositors' funds
Regulatory Capital
The Bank manages its capital considering the regulatory capital requirements. The Central Bank of Sri Lanka (CBSL) sets and monitors
capital requirements for licensed commercial banks in Sri Lanka based on the Basel framework. Accordingly the Bank needs to maintain
minimum Total Tier I capital adequacy ratio (including capital buffers) of 8.0% and minimum total capital adequacy ratio of 12.0% as at
31st December 2020. The Bank has always maintained the Capital Adequacy Ratio above the minimum regulatory requirements.
51 MATURITY ANALYSIS
(a) Bank

Within 12 After 12 Total Within 12 After 12 Total
Months Months Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Assets
Cash & cash equivalents 29,053,585 - 29,053,585 17,789,176 - 17,789,176
Balances with Central Bank of Sri Lanka 11,508,580 1,826,598 13,335,178 28,195,503 2,832,767 31,028,270
Placements with banks 3,228,166 - 3,228,166 7,251,305 - 7,251,305
Reverse repurchase agreements 4,450,557 - 4,450,557 - - -
Derivative financial instruments 2,186,515 - 2,186,515 862,754 - 862,754
Financial assets recognised through profit
or loss - measured at fair value 9,313,628 - 9,313,628 11,130,230 - 11,130,230
- loans & advances 367,466,782 352,748,465 720,215,247 349,940,360 339,437,144 689,377,504
comprehensive income 16,565,084 7,672,719 24,237,803 15,416,605 1,915,119 17,331,724
Investment in subsidiaries - 3,350,774 3,350,774 - 2,394,701 2,394,701
Property, plant & equipment - 8,126,285 8,126,285 - 8,466,366 8,466,366
Intangible assets - 753,615 753,615 - 995,137 995,137
Right-of-use assets 1,308,500 1,971,666 3,280,166 1,300,324 2,758,895 4,059,219
Deferred tax assets - 4,634,040 4,634,040 - 3,737,512 3,737,512
Other assets 5,819,830 3,194,163 9,013,993 8,184,077 3,449,028 11,633,105
Total Assets 613,618,641 496,652,483 1,110,271,124 522,203,481 440,147,017 962,350,498
Liabilities
Due to banks 1,522,402 - 1,522,402 1,511,665 - 1,511,665
agreements 3,399,896 - 3,399,896 16,398,511 - 16,398,511
- due to debt securities holders 7,531,975 23,258,032 30,790,007 8,615,290 29,026,759 37,642,049
Retirement benefit obligation - 6,871,592 6,871,592 - 3,651,642 3,651,642
Dividend payable 121,270 - 121,270 88,898 - 88,898
Current tax liabilities 4,674,756 - 4,674,756 7,427,315 - 7,427,315
Other liabilities 16,156,739 2,377,215 18,533,954 13,972,756 3,135,588 17,108,344
Total Liabilities 833,549,462 169,172,858 1,002,722,320 731,623,195 125,721,519 857,344,714
Maturity Gap (219,930,821) 327,479,625 107,548,804 (209,419,714) 314,425,498 105,005,784
Cumulative Gap (219,930,821) 107,548,804 (209,419,714) 105,005,784

51 MATURITY ANALYSIS CONTD.

(b) Group

Within 12 After 12 Total Within 12 After 12 Total
Months Months Months Months
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Assets
Cash & cash equivalents 29,218,921 - 29,218,921 17,977,598 - 17,977,598
Balances with Central Bank of Sri Lanka 11,508,580 1,826,598 13,335,178 28,195,503 2,832,767 31,028,270
Placements with banks 3,228,166 - 3,228,166 7,251,305 - 7,251,305
Reverse repurchase agreements 6,231,719 - 6,231,719 2,304,392 - 2,304,392
Financial assets recognised through profit
or loss - measured at fair value 9,313,628 - 9,313,628 11,130,230 - 11,130,230
- loans & advances 383,946,424 368,491,358 752,437,782 365,305,506 353,741,128 719,046,634
comprehensive income 16,565,084 7,672,775 24,237,859 15,416,605 1,915,175 17,331,780
Investment in subsidiaries - - - - - -
Property, plant & equipment - 15,891,415 15,891,415 - 15,702,051 15,702,051
Intangible assets - 791,689 791,689 - 1,055,341 1,055,341
Right-of-use assets 1,077,298 1,828,363 2,905,661 915,970 2,292,296 3,208,266
Current tax receivables 42,883 - 42,883 46,246 - 46,246
Deferred tax assets - 4,653,496 4,653,496 - 3,738,064 3,738,064
Other assets 6,091,200 3,993,599 10,084,799 8,718,272 3,613,107 12,331,379
Total Assets 632,161,977 517,523,451 1,149,685,428 540,268,299 459,054,807 999,323,106
Liabilities
Due to banks 1,523,333 - 1,523,333 1,567,974 - 1,567,974
agreements 2,306,896 - 2,306,896 16,384,511 - 16,384,511
- due to debt securities holders 8,960,451 28,118,032 37,078,483 8,766,817 32,604,769 41,371,586
Retirement benefit obligation - 6,988,658 6,988,658 - 3,741,781 3,741,781
Dividend payable 121,270 - 121,270 88,898 - 88,898
Current tax liabilities 4,792,904 - 4,792,904 7,835,445 - 7,835,445
Deferred tax liabilities - 1,485,302 1,485,302 - 1,405,568 1,405,568
Other liabilities 16,978,733 2,594,003 19,572,736 14,656,052 2,709,787 17,365,839
Total Liabilities 852,463,993 182,806,781 1,035,270,774 750,508,590 137,357,889 887,866,479
Maturity Gap (220,302,016) 334,716,670 114,414,654 (210,240,291) 321,696,918 111,456,627
Cumulative Gap (220,302,016) 114,414,654 (210,240,291) 111,456,627

52 RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Bank Group
Debentures Finance Lease Debentures Finance Lease Securitisation
Liability Liability
(Note 37.1) (Note 31.1) (Note 37.1) (Note 31.1)
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Balance as at 1st January 2019 34,297,696 439,988 38,957,631 - -

Proceeds from the issue of debentures/
securitisation 7,000,000 - 8,500,000 - -
Redemption of debentures (7,000,000) - (9,421,990) - -
Repayment of principal portion of lease liabilities - (1,042,649) - (744,606) -
Non cash changes
Recognition of lease liabilities due to transition
to SLFRS 16 - 4,155,721 - 3,183,239 -
Additions during the year - 870,642 - 1,010,410 -
Net accrual for interest expense 817,594 - 809,186 - -
Balance as at 31st December 2019 35,115,290 4,423,702 38,844,827 3,449,043 -
Balance as at 1st January 2020 35,115,290 4,423,702 38,844,827 3,449,043 -

Proceeds from the issue of debentures/
securitisation - - 2,000,000 - 447,110
Redemption of debentures (7,000,000) - (7,000,000) - -
Repayment of principal portion of lease liabilities - (1,065,454) - (742,788) -
Non cash changes
Additions during the year - 421,387 - 504,537 -
Net accrual for interest expense (83,315) - 27,700 - 814
Balance as at 31st December 2020 28,031,975 3,779,635 33,872,527 3,210,792 447,924
53 REPURCHASE AND REVERSE REPURCHASE TRANSACTIONS IN SCRIPLESS TREASURY BONDS AND SCRIPLESS
TREASURY BILLS
Directive No. 1 of 2019, issued by the Central Bank of Sri Lanka, requires licensed banks/primary dealers to disclose following
additional information on repurchase and reverse repurchase transactions in scripless treasury bonds and bills.
53.1 Carrying Value of Securities Allocated for Repurchase Transactions
As at 31st December 2020 Bank Group

Note Amortised Fair Value Amortised Fair Value
Cost Cost
Rs 000 Rs 000 Rs 000 Rs 000
Financial assets at amortised cost -

debt & other instruments 26.5 3,670,810 3,721,909 2,521,756 2,572,855
As at 31st December 2019 Bank Group

Note Amortised Fair Value Amortised Fair Value
Cost Cost
Rs 000 Rs 000 Rs 000 Rs 000
Financial assets at amortised cost -

debt & other instruments 26.5 17,267,796 17,498,501 17,239,524 17,470,229
53.2 Market Value of Securities Received for Reverse Repurchase Transactions

Securities purchased under agreements to resell at a specified future date are not recognised in the statement of financial position.
The consideration paid, including accrued interest, is recorded in the statement of financial position, within “reverse repurchase
agreements”.
Bank Group
Amortised Fair Value of Amortised Fair Value of
Cost Securities Cost Securities
Received Received
Rs 000 Rs 000 Rs 000 Rs 000

Reverse repurchase agreements 4,450,557 5,102,293 6,231,719 7,238,098

Reverse repurchase agreements - - 2,304,392 2,716,069
53.3 Bank's Policy on Haircuts for Repurchase and Reverse Repurchase Transactions
According to the Bank's internal policies, minimum haircuts applicable for each maturity bucket as at 31st December 2020 is given
below. The haircuts applied meet the minimum haircut requirements imposed by the Directive No. 1 of 2019.
Remaining Term to Maturity of the Eligible Security Minimum Haircut (%)

Repurchase Reverse
Transactions Repurchase
Transactions
Up to 1 year 5.00 4.00

More than 1 year and up to 3 years 6.00 6.00
More than 3 years and up to 5 years 8.00 8.00
More than 5 years and up to 8 years 10.00 10.00
More than 8 years 12.00 12.00
53.4 Penalties Imposed on the Bank/Group for Non-Compliance

No penalties have been imposed on the Bank/Group for non compliance with the Directive No. 1 of 2019 during the years ended
31st December 2020 & 2019.
06
SUPPLEMENTARY INFORMATION
Statement of Profit or Loss in US$ 346 | Statement of Comprehensive Income in US$ 347 |
Statement of Financial Position in US$ 348 | Economic Value Addition 349 | Ten Years at a Glance 350 |
Quarterly Statistics 351 | Capital Adequacy 353 | Basel III Disclosure Requirements 354 | GRI Content Index 364 |
Independent Assurance Report to the Shareholders of Sampath Bank PLC 372 |
Glossary of Financial and Banking Terms 373 | Notice of Annual General Meeting 377 |
Notes 378 | Stakeholder Feedback Form 379 | Corporate Information IBC
A
Million
Aspirations
Over the years, we have measured our performance against globally acknowledged
standards of business excellence and sustainability - aspiring to reach immeasurable
heights in our journey towards industry leadership.
STATEMENT OF PROFIT OR LOSS IN US$
Bank Group
US$ 000 US$ 000 US$ 000 US$ 000
Gross income 551,693 655,387 588,723 694,352
Interest income 477,781 571,088 510,228 605,765

Less: Interest expense 295,444 341,834 311,698 358,928
Net interest income 182,337 229,254 198,530 246,837
Fee & commission income 52,697 64,621 55,367 66,591

Less: Fee & commission expense 7,119 9,298 7,124 9,305
Net fee & commission income 45,578 55,323 48,243 57,286
Net gain from trading 134 12,164 134 12,164

Net gain on derecognition of financial assets 2,285 627 2,285 627
Net other operating income 18,796 6,887 20,709 9,205
Total operating income 249,130 304,255 269,901 326,119
Less: Impairment charge 63,519 69,330 71,164 75,823

Net operating income 185,611 234,925 198,737 250,296
Less: Operating expenses

Personnel expenses 55,164 53,591 60,525 58,367
Depreciation & amortisation expenses 13,230 13,422 13,577 13,926
Other operating expenses 39,937 45,288 42,242 48,471
Total operating expenses 108,331 112,301 116,344 120,764
Operating profit before taxes on financial services 77,280 122,624 82,393 129,532
Less: Taxes on financial services

Value added tax 17,054 22,290 18,298 23,604
Nation building tax - 2,720 - 2,909
Debt repayment levy - 12,153 - 12,924
Profit before income tax 60,226 85,461 64,095 90,095
Less: Income tax expense 16,964 23,972 18,583 25,753

Profit for the year 43,262 61,489 45,512 64,342
Attributable to:
Equity holders of the Bank 43,262 61,489 45,512 64,342
43,262 61,489 45,512 64,342
Earnings per share: Basic/Diluted (US$) 0.11 0.18 0.12 0.19
Dividend per share

Dividend per share: Gross (US$) 0.04* 0.06
Exchange rate of US$ was Rs 185.50 as at 31st December 2020 (Rs 181.35 as at 31st December 2019)
STATEMENT OF COMPREHENSIVE INCOME IN US$
Bank Group
US$ 000 US$ 000 US$ 000 US$ 000
Profit for the year 43,262 61,489 45,512 64,342
Other comprehensive income

Items that will be reclassified to profit or loss:
Debt instruments at fair value through other comprehensive income:
(Loss)/gain arising on re-measurement (43) 484 (43) 484
Reclassification to profit or loss (967) (93) (967) (93)
Changes in impairment for expected credit losses 105 - 105 -
Deferred tax effect on the above 253 (109) 253 (109)
Net other comprehensive income to be reclassified to profit or loss (652) 282 (652) 282
Items that will not be reclassified to profit or loss:

Equity instruments at fair value through other comprehensive income:
Gain/(loss) arising on re-measurement 8,388 (3,046) 8,388 (3,046)
Exchange difference in translation 232 (48) 232 (48)
Deferred tax effect on the above (2,413) 866 (2,413) 866
6,207 (2,228) 6,207 (2,228)
Actuarial loss on defined benefit plans (15,356) (8,066) (15,373) (8,162)

Deferred tax effect on the above 4,300 2,259 4,304 2,285
(11,056) (5,807) (11,069) (5,877)
Surplus from revaluation of property, plant & equipment - 4,477 - 6,657

Deferred tax effect on the above - (1,254) - (1,864)
- 3,223 - 4,793
Net other comprehensive income not to be reclassified to profit or loss (4,849) (4,812) (4,862) (3,312)
Other comprehensive income net of tax (5,501) (4,530) (5,514) (3,030)

Total comprehensive income for the year net of tax 37,761 56,959 39,998 61,312
Attributable to:
Equity holders of the Bank 37,761 56,959 39,998 61,312
Non - controlling interest - -
37,761 56,959 39,998 61,312

STATEMENT OF FINANCIAL POSITION IN US$
Bank Group
As at 31st December 2020 2019 2020 2019
US$ 000 US$ 000 US$ 000 US$ 000
ASSETS
Cash & cash equivalents 156,623 98,093 157,514 99,132
Balances with Central Bank of Sri Lanka 71,888 171,096 71,888 171,096
Placements with banks 17,403 39,985 17,403 39,985
Reverse repurchase agreements 23,992 - 33,594 12,707
Derivative financial instruments 11,787 4,757 11,787 4,757
Financial assets recognised through profit or loss - measured at fair value 50,208 61,374 50,208 61,374
- loans & advances 3,882,562 3,801,365 4,056,269 3,964,966
- debt & other instruments 1,482,973 861,834 1,483,158 861,918
Financial assets - fair value through other comprehensive income 130,662 95,571 130,662 95,571
Investment in subsidiaries 18,063 13,205 - -
Property, plant & equipment 43,807 46,685 85,668 86,584
Intangible assets 4,063 5,487 4,268 5,819
Right-of-use assets 17,683 22,383 15,664 17,691
Current tax receivables - - 231 255
Deferred tax assets 24,981 20,609 25,086 20,613
Other assets 48,594 64,148 54,366 67,999
Total Assets 5,985,289 5,306,592 6,197,766 5,510,467
LIABILITIES
Due to banks 8,207 8,336 8,212 8,646
Derivative financial instruments 10,949 3,331 10,949 3,331
Securities sold under repurchase agreements 18,328 90,425 12,436 90,347
- due to depositors 4,774,797 3,955,062 4,865,222 4,026,411
- due to other borrowers 264,434 306,930 306,585 371,167
- due to debt securities holders 165,984 207,566 199,884 228,131
Retirement benefit obligation 37,044 20,136 37,675 20,633
Dividend payable 654 490 654 490
Current tax liabilities 25,201 40,956 25,838 43,208
Deferred tax liabilities - - 8,007 7,751
Total Liabilities 5,405,511 4,727,570 5,580,975 4,895,874
EQUITY
Stated capital 256,725 262,600 256,725 262,600
Reserves
Statutory reserve fund 23,989 22,277 24,987 23,182
Other reserves 276,483 260,472 292,487 276,843
Retained earnings 22,581 33,673 42,592 51,968
Total equity attributable to equity holders of the Bank 579,778 579,022 616,791 614,593
Total Equity 579,778 579,022 616,791 614,593
Total Liabilities & Equity 5,985,289 5,306,592 6,197,766 5,510,467
Commitments & contingencies 2,600,570 2,158,348 2,576,644 2,143,035

Net asset value per share (US$) 1.52 1.52 1.62 1.61
ECONOMIC VALUE ADDITION
ECONOMIC VALUE ADDITION - BANK

The economic value created by the Bank to its shareholders during the year is reflected in the below analysis.

Rs Mn Rs Mn
Average shareholders' funds 106,277 94,698

Impairment provision 42,714 32,571
148,991 127,269
Profit attributable to shareholders 8,025 11,151

Impairment charge 11,783 12,573
Amounts written off - loans & other losses (439) (881)
19,369 22,843
Economic cost (12 months average Treasury Bill rate plus 2% risk premium) 8.2% 11.1%
Economic cost 12,217 14,142
Economic value addition 7,152 8,701
DIRECT ECONOMIC VALUE GENERATED & DISTRIBUTED - BANK

Information on the creation and distribution of economic value provides a basic indication of how the Bank has created wealth for stakeholders.

Rs Mn Rs Mn
Direct Economic Value Generated

Interest income 88,628 103,567
Exchange income 2,792 2,793
Commission income 9,775 11,719
Investment income 749 326
Other income 271 289
102,215 118,694
Economic Value Distributed

To Depositors and Lenders
50,544 57,269
Operating Costs
Depreciation & amortisation 2,454 2,434
Fee & commission expense 1,321 1,686
Other operating expense 7,294 8,111
11,069 12,231
To Employees
Salaries 6,832 6,578
Other benefits 3,401 3,140
10,233 9,718
Payments to Government
Income tax expense 3,646 6,776
Taxes on financial services 3,163 6,740
Crop insurance levy 100 92
6,909 13,608
To Community
Social responsibility projects 5 9
Donations 10 1
15 10
Payments to Providers of Capital

Interest to debt securities holders 4,261 4,723
Dividend to shareholders 3,147 4,482
7,408 9,205
Economic value distributed 86,178 102,041

Economic value retained (after payment of dividend to shareholders) 16,037 16,653
102,215 118,694
TEN YEARS AT A GLANCE
For the year ended 31st December 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating Results (Rs Mn)

Gross income 27,577 38,796 47,509 44,597 47,032 67,585 92,590 115,310 118,855 102,339
Interest income 21,111 31,882 41,892 38,059 37,944 56,529 79,625 97,934 103,567 88,628
Interest expenses 12,168 20,269 26,556 22,335 20,542 33,776 51,261 59,880 61,992 54,805
Net interest income 8,943 11,613 15,336 15,724 17,402 22,754 28,363 38,054 41,575 33,823
Exchange income 837 2,154 520 1,283 2,466 2,589 3,132 5,491 2,793 2,792
Other income 4,792 4,105 4,901 4,387 5,421 7,002 8,484 10,198 10,809 9,598
Total operating income 14,572 17,872 20,757 21,394 25,288 32,344 39,979 53,743 55,177 46,213
Operating expenses 8,059 9,248 10,634 11,729 13,339 15,471 16,918 19,307 20,366 20,095
Impairment charge 618 65 4,736 1,401 944 1,460 2,376 11,223 12,573 11,783
Profit before income tax 4,994 7,401 4,491 6,727 9,101 12,600 16,606 18,350 15,498 11,172
Income tax expense 1,606 2,170 1,061 1,813 2,967 3,475 4,502 6,207 4,347 3,147
Profit after tax 3,388 5,231 3,430 4,914 6,134 9,125 12,104 12,143 11,151 8,025
As at 31st December 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Assets (Rs Mn)

Cash & cash equivalents including placements 16,073 19,220 10,094 13,348 18,781 25,814 25,494 27,799 25,040 32,282
Net loans & advances 170,123 209,000 260,040 302,370 377,348 458,831 562,884 650,014 689,378 720,215
Other interest earning assets 36,233 51,035 81,599 85,828 95,025 124,127 145,371 174,300 182,772 309,468
Investment in associates & subsidiaries 1,055 1,060 1,060 1,060 1,080 1,228 1,356 2,320 2,395 3,351
Property, plant & equipment 4,528 4,560 5,135 5,142 5,313 5,972 7,270 7,918 8,466 8,126
Other assets 19,646 24,535 24,114 24,278 27,730 42,540 52,727 51,874 54,299 36,829
Total assets 247,658 309,410 382,042 432,026 525,277 658,512 795,102 914,225 962,350 1,110,271
Liabilities (Rs Mn)

Due to banks & due to depositors 195,900 243,575 302,429 341,946 409,411 516,273 630,442 698,085 718,301 886,873
Debt securities holders, borrowings from banks and others 20,225 29,206 39,194 36,846 57,347 72,446 76,215 91,143 93,765 80,217
Other liabilities 10,189 10,985 12,000 22,322 23,394 25,304 24,795 40,608 45,279 35,632
Total liabilities 226,314 283,766 353,623 401,114 490,152 614,023 731,452 829,836 857,345 1,002,722
Shareholders' Fund (Rs Mn)

Stated capital 2,744 3,564 4,460 4,470 5,381 6,471 16,308 32,796 47,622 47,622
Reserves 18,600 22,080 23,958 26,442 29,744 38,018 47,342 51,593 57,384 59,927
Investor Information
Dividend paid/proposed (Rs Mn) 1,427.0 1,954.1 1,342.6 1,847.0 2,240.0 3,362.1 4,598.4 4,564.7 4,482.1 3,147.0
Dividend cover (times) 2.4 2.6 2.6 2.6 2.7 2.7 2.6 2.7 2.5 2.6
Net asset value per share (Rs) 129.00 152.96 169.37 179.39 198.47 238.94 293.02 300.42 275.27 281.94
Market price per share (Rs) - High 307.00 216.00 242.00 252.00 279.90 268.70 352.20 335.50 245.00 170.00
Market price per share (Rs) - Low 191.00 148.50 161.60 164.20 235.20 210.00 253.50 218.00 136.00 96.00
Market price as at 31st December (Rs) 195.00 200.50 171.90 236.30 248.00 260.40 315.70 235.00 162.40 135.60
Other Information
Exchange rate (USD) 113.90 127.65 130.75 131.20 144.20 150.00 153.50 182.90 181.35 185.50
Number of staff as at 31st December 3,230 3,455 3,688 4,000 3,993 3,960 4,011 4,189 4,134 4,048
Number of branches as at 31st December 206 209 212 220 225 229 229 229 229 229
Number of automated teller machines as at 31st December 255 264 274 326 370 381 391 419 423 445
Number of cash deposit machines as at 31st December nil nil nil 02 40 108 183 365 429 465
Number of MYBANK agents as at 31st December nil nil nil nil nil nil nil nil 170 203
Ratios
Growth in income (%) 13.3 40.7 22.5 (6.1) 5.5 43.7 37.0 24.5 3.1 (13.9)
Cost to income ratio with taxes on financial services (%) 61.5 58.2 55.5 62.0 60.3 56.5 52.5 45.0 49.1 50.3
Cost to income ratio without taxes on financial services (%) 55.3 51.7 51.2 54.8 52.7 47.8 42.3 35.9 36.9 43.5
Growth in deposits (%) 27.8 24.3 24.2 13.1 19.7 26.1 22.1 10.7 2.9 23.5
Growth in net loans and advances (%) 37.1 22.9 24.4 16.3 24.8 21.6 22.7 15.5 6.1 4.5
Dividend per share (Rs) 9.00 12.00 8.00 11.00 13.00 18.75 17.20 16.25 11.75 8.25*
Return on average assets (before tax) (%) 2.60 2.66 1.29 1.69 1.90 2.14 2.29 2.13 1.66 1.09
Return on average assets (after tax) (%) 1.55 1.88 0.98 1.23 1.28 1.55 1.67 1.41 1.20 0.78
Return on average equity (after tax) (%) 16.17 22.26 12.88 16.35 18.42 23.47 23.35 16.02 11.78 7.58
Property plant & equipment to shareholders' fund (%) 21.2 17.8 18.1 16.6 15.1 13.4 11.4 9.4 8.1 7.6
Total assets to shareholders' fund (Times) 11.6 12.1 13.4 14.0 15.0 14.8 12.5 10.8 9.2 10.3
Liquid Assets Ratios

- Domestic Banking Unit (%) 22.8 21.5 27.2 24.4 21.8 21.2 22.2 21.5 21.5 35.0
- Off-Shore Banking Unit (%) 58.4 23.7 30.4 23.8 27.2 33.4 24.9 25.8 26.9 37.6
(As specified in Banking Act No. 30 of 1988 & any
subsequent amendments thereto)
Capital Adequacy Ratios Basel II Basel II Basel II Basel II Basel II Basel II Basel III Basel III Basel III Basel III
- Common equity Tier I (%) n/a n/a n/a n/a n/a n/a 10.26 12.08 14.22 13.44
- Total Tier I (%) 10.24 11.80 10.08 8.83 7.90 8.31 10.26 12.08 14.22 13.44
- Total capital (Tier I + Tier II) (%) 11.45 13.61 14.22 13.62 12.26 12.87 14.41 15.73 18.12 16.41
* Based on proposed dividend which is to be approved at the Annual General Meeting and the number of shares in issue as at 15th February 2021.
2020 2019
As at 31st 30th 30th 31st 31st 30th 30th 31st
December September June March December September June March
Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn
Statement of Financial Position

Total assets 1,110,271 1,067,711 1,005,322 983,155 962,350 951,996 925,715 911,094
Financial assets at amortised cost - loans & advances 720,215 713,801 711,268 710,528 689,378 680,238 659,726 652,291
Financial liabilities at amortised cost - due to depositors 885,725 845,087 787,861 748,016 717,250 708,310 696,124 695,561
Total equity 107,549 105,321 104,285 107,367 105,006 100,489 98,609 84,634
2020 2019
For the quarter ended 31st 30th 30th 31st 31st 30th 30th 31st
Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn Rs Mn
Statement of Profit or Loss

Net interest income 7,827 8,548 7,470 9,978 10,793 10,980 9,578 10,224
QUARTERLY STATISTICS
Net fee & commission income 2,463 2,204 1,544 2,244 2,730 2,634 2,393 2,276
Net gain/(loss) from trading 367 (236) 558 (664) 494 (456) 671 1,496
Net gain on derecognition of financial assets 50 287 48 39 52 26 23 13
Net other operating income 385 474 331 2,297 207 1,685 394 (1,037)
Total operating income 11,092 11,277 9,951 13,894 14,276 14,869 13,059 12,972
Less: Impairment charge 678 3,669 2,582 4,854 2,244 3,087 3,767 3,475
Net operating income 10,414 7,608 7,369 9,040 12,032 11,782 9,292 9,497
Less: Total operating expenses 5,221 5,293 4,432 5,149 5,024 5,232 4,971 5,137
Taxes on financial services 1,007 653 665 839 1,945 1,901 1,402 1,493
Income tax expense 1,251 539 807 550 439 2,218 985 705
Profit for the period 2,935 1,123 1,465 2,502 4,624 2,431 1,934 2,162
Other comprehensive income for the period (708) (108) (65) (140) (120) (551) (64) (87)
Total comprehensive income for the period 2,227 1,015 1,400 2,362 4,504 1,880 1,870 2,075
351
352
2020 2019
For the quarter ended 31st 30th 30th 31st 31st 30th 30th 31st
Market price per share (Rs)

Highest 143.20 140.80 130.00 170.00 176.90 184.50 174.90 245.00
Lowest 117.00 109.20 96.00 117.70 152.30 140.00 136.00 174.50
Closing 135.60 132.00 126.40 119.00 162.40 153.00 139.20 180.10
2020 2019
As at 31st 30th 30th 31st 31st 30th 30th 31st
QUARTERLY STATISTICS
Profitability
Interest margin (%) 3.30 3.46 3.57 4.13 4.46 4.45 4.35 4.54
Return on assets (before tax) (%) 1.09 0.93 1.09 1.26 1.66 1.51 1.27 1.27
Return on equity (after tax) (%) 7.58 6.45 7.56 9.47 11.78 9.67 9.26 10.38
Regulatory Capital
Common Equity Tier 1 Capital Ratio (%) 13.44 13.07 13.30 13.65 14.22 13.57 14.00 11.72
Total Tier 1 Capital Ratio (%) 13.44 13.07 13.30 13.65 14.22 13.57 14.00 11.72
Total Capital Ratio (%) 16.41 16.03 16.77 17.16 18.12 17.73 18.10 16.19
Leverage Ratio (%) 6.94 6.81 7.42 8.30 8.12 7.91 8.32 7.04
Assets Quality
Gross NPA ratio (%) 6.30 6.87 7.03 6.72 6.37 6.03 5.66 4.87
Net NPA ratio (%) 3.45 4.04 4.43 4.81 4.53 4.32 4.01 3.42
Regulatory Liquidity
Statutory Liquid Assets Ratio
Domestic Banking Unit (%)
(Minimum Requirement: 2020 - 20%, 2019 - 20%) 34.98 33.52 28.12 22.18 21.51 22.32 22.94 22.82
Off-Shore Banking Unit (%)
Liquidity Coverage Ratio (%) - Rupee
Liquidity Coverage Ratio (%) - All Currency
Net Stable Funding Ratio (%)
CAPITAL ADEQUACY
INTRODUCTION TIER I CAPITAL PILLAR 1 – MINIMUM CAPITAL

Capital Adequacy is one of the key  Common Equity Tier I Capital (CET I) REQUIREMENT
financial indicators which illustrates - the element of capital which has the Pillar 1 deals with the maintenance of
the soundness and the stability of a highest quality and is therefore the regulatory capital needed to support the
bank. It acts as a “cushion” or “buffer” in most effective in absorbing losses. Bank's three major risk categories, namely:
safeguarding the depositors’ funds by CET I typically includes stated capital, credit risk, market risk and operational risk.
absorbing potential losses arising from other capital reserves and revenue
key risks faced by the Bank. The Capital reserves. Pillar 1 capital requirements shall be
Adequacy Ratio is a measure used to maintained as a percentage of Risk
 Additional Tier I Capital (AT I) -
determine whether the Bank has sufficient Weighted Assets (RWA) calculated based
a supplementary form of Total
capital to withstand unexpected losses on the following approaches:
Tier I Capital. AT I includes capital
arising from various risks during the course
instruments other than the  The Standardised Approach for Credit
of the business, such as credit risk, market
instruments included in CET I capital. Risk
risk, operational risk etc.
TIER II CAPITAL  The Standardised Measurement
At present, Capital Adequacy Ratios of the
Tier II capital consists of the revaluation Method for Market Risk
licensed banks in Sri Lanka are computed
reserve approved by CBSL, stage 1  The Basic Indicator Approach,
based on the Banking Act Direction
impairment provision, 50% of stage 2 the Standardised Approach or the
No. 1 of 2016 and subsequent
impairment provision as well as the Alternative Standardised Approach
amendments thereto issued by the Central
subordinated debt securities approved by (ASA) for Operational Risk
Bank of Sri Lanka (CBSL). The above
CBSL.
directions are based on the “Basel III
Accord”, a series of banking regulations LATEST DEVELOPMENTS
CAPITAL BUFFERS
set by the Basel Committee on Banking The minimum capital requirement of
Supervision (BCBS) of the Bank for All banks are required to hold additional the Bank was reduced by 0.5% with
International Settlement (BIS) in December capital buffers over & above the minimum effect from 27th March 2020 due to the
2010 (Revised in June 2011). CET I, Total Tier I & Total Capital Adequacy extraordinary measures taken by CBSL
levels. due to the COVID-19 outbreak. Therefore,
INTRODUCTION TO “BASEL III according to the latest regulatory
 Capital Conservation Buffer (CCB)
ACCORD” requirements enforced by CBSL, the Bank
In the aftermath of the 2008/2009  High Loss Absorbency (HLA) is required to maintain the capital in 3 tiers
financial crisis, the BCBS agreed on requirement for Domestic Systemically as mentioned below.
reforms to strengthen global capital and Important Banks (D-SIBs)
liquidity rules with the goal of promoting  Countercyclical Buffer Minimum
the resilience of the banking sector, which requirement
led to the formulation of the Basel III RISK WEIGHTED ASSETS (RWA)
accord. This Accord is in effect a regulatory i. Common Equity Tier I
Risk Weighted Assets are a measure of the
response to strengthen the resilience of (CET I) Capital Ratio 6.5%
value of the bank’s assets and off-balance
banks by minimizing the possibility of ii. Total Tier I Capital Ratio 8.0%
sheet exposures, weighted in order of
occurrence of a financial crisis. iii. Total Capital Ratio 12.0%
their risks, with each asset class assigned a
different risk weightage.
Under the Basel III framework, banks are
required to compute Capital Adequacy PILLAR 2 – SUPERVISORY REVIEW
THE THREE PILLARS UNDER THE BASEL
Ratios (CARs) in three tiers as mentioned PROCESS
III FRAMEWORK
below; Pillar 2 sets forth the framework for
The three pillars introduced under the
the Supervisory Review Process (SRP)
Basel II regime continue to be applied in
 Common Equity Tier I (CET I) Capital to assess the bank's capital adequacy
the Basel III regime as mentioned below.
Ratio and to determine whether the particular
Pillar 1 - Minimum Capital Requirement bank should hold additional capital to
 Total Tier I Capital Ratio
cover risks that are either not covered or
 Total Capital Ratio Pillar 2 - Supervisory Review Process
Pillar 3 - Market Discipline

CAPITAL ADEQUACY
inadequately covered by the minimum PILLAR 3 – MARKET DISCIPLINE Shown below are the Basel III disclosures
capital requirements under Pillar I. The Pillar 3 presents a number of disclosure with regard to regulatory capital, liquidity
process encourages banks to; requirements aimed at raising the level and risk management linkages with the
of market discipline by increasing the published financial statements along with
 Utilise better risk management level of transparency. Pillar 3 disclosures comparative information (individual and
techniques give external stakeholders a better consolidated).
 Enhance the risk-based supervision in understanding of capital adequacy
order to accurately assess the capital calculations by providing an insight into
adequacy the internal computation procedures
followed within the Bank. Disclosures
 Continuously evaluate their Internal
under these requirements broadly include;
Capital Adequacy Assessment Process
the regulatory capital requirements &
(ICAAP) to determine the level of
liquidity, risk weighted assets, linkages
capital to be maintained against all
between financial statements & regulatory
risks and ensure adequate capital is
exposures and information on assessment
available to support all risks.
of D-SIBs.
BASEL III DISCLOSURE REQUIREMENTS

TABLE - 1: KEY REGULATORY RATIOS - CAPITAL AND LIQUIDITY
Bank Group
As at 31st December 2020 2019 2020 2019
Regulatory Capital (Rs 000)

Common Equity Tier I Capital 96,001,662 96,794,652 101,544,273 101,088,754
Total Tier I Capital 96,001,662 96,794,652 101,544,273 101,088,754
Total Capital 117,233,143 123,364,882 123,249,506 127,814,196
Regulatory Capital Ratios (%)

Common Equity Tier I Capital Ratio
(minimum requirement - 2020: 6.50%, 2019: 7.00%) 13.44 14.22 13.40 14.05
Total Tier I Capital Ratio
Total Capital Ratio
Leverage Ratio (minimum requirement - 3%) 6.94 8.12 7.13 8.24
Regulatory Liquidity
Statutory Liquid Assets (Rs 000) - Bank 344,888,261 181,901,984 n/a n/a
Statutory Liquid Assets Ratio (minimum requirement - 20%)
Domestic Banking Unit (%) 34.98 21.51 n/a n/a
Off-Shore Banking Unit (%) 37.60 26.88 n/a n/a
Total Stock of High - Quality Liquid Assets (Rs 000) 240,115,531 106,699,495 n/a n/a
Liquidity Coverage Ratio (%) - Rupee
(minimum requirement - 2020: 90%, 2019: 100%) 424.90 177.29 n/a n/a
Liquidity Coverage Ratio (%) - All currency
Net Stable Funding Ratio (%)

TABLE - 2: BASEL III CAPITAL RATIOS
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000
Common Equity Tier I (CET I) Capital after adjustments 96,001,662 96,794,652 101,544,273 101,088,754
Common Equity Tier I (CET I) Capital 102,833,877 102,066,829 107,142,092 105,975,625
Stated capital 47,622,493 47,622,493 47,622,493 47,622,493
Statutory reserves 4,450,000 4,040,000 4,635,000 4,204,000
Published retained earnings/(Accumulated retained losses) 4,404,679 6,854,126 8,527,894 10,598,922
Published accumulated other comprehensive income (OCI) (99,081) 115,039 (99,081) 115,039
General and other disclosed reserves 46,455,786 43,435,171 46,455,786 43,435,171
Unpublished current year's profit/loss and gains reflected in OCI - - - -
Ordinary shares issued by consolidated banking and financial subsidiaries of
the Bank and held by third parties - - - -
Total adjustments to CET I Capital 6,832,215 5,272,177 5,597,819 4,886,871
Goodwill (net) - - - -
Intangible assets (net) 753,615 995,137 791,689 1,055,341
Deferred tax assets (net) 4,634,040 3,737,512 4,653,496 3,738,064
Others (Investments in the capital of banking & financial institutions) 1,444,560 539,528 152,634 93,466
Additional Tier I (AT I) Capital after adjustments - - - -
Additional Tier I (AT I) Capital - - - -
Qualifying Additional Tier I Capital instruments - - - -
Instruments issued by consolidated banking and financial subsidiaries of the
Bank and held by third parties - - - -
Total adjustments to AT I Capital - - - -
Investment in own shares - - - -
Others - - - -
Tier II Capital after adjustments 21,231,481 26,570,230 21,705,233 26,725,442
Tier II Capital 21,231,481 26,570,230 21,705,233 26,725,442
Qualifying Tier II Capital instruments 12,441,918 19,520,068 12,441,918 19,520,068
Revaluation gains 453,703 453,703 453,703 453,703
Stage 1 & 50% of stage 2 impairment provision 8,335,860 6,596,459 8,809,612 6,751,671
Instruments issued by consolidated banking and financial subsidiaries of the
Bank and held by third parties - - - -
Total adjustments to Tier II - - - -
Investment in own shares - - - -
Others - - - -
CET I Capital 96,001,662 96,794,652 101,544,273 101,088,754
Total Capital 117,233,143 123,364,882 123,249,506 127,814,196
Total Risk Weighted Assets (RWA) 714,371,274 680,832,728 757,923,933 719,621,652

RWAs for Credit Risk (refer table No. 3) 666,868,826 641,795,888 704,768,984 675,810,628
RWAs for Operational Risk (refer table No. 5) 41,251,256 35,042,008 46,903,757 39,816,192
RWAs for Market Risk (refer table No. 6) 6,251,192 3,994,832 6,251,192 3,994,832
CET I Capital Ratio (including Capital Conservation Buffer,
Countercyclical Capital Buffer & HLA requirement on D-SIBs) (%) 13.44 14.22 13.40 14.05
of which: Capital Conservation Buffer (%) 2.00 2.50 2.00 2.50
of which: Countercyclical Buffer (%) - - - -
of which: HLA requirement on D-SIBs (%) - - - -
Total Tier I Capital Ratio (%) 13.44 14.22 13.40 14.05
Total Capital Ratio (including Capital Conservation Buffer, Countercyclical
Capital Buffer & HLA requirement on D-SIBs) (%) 16.41 18.12 16.26 17.76
of which: Capital Conservation Buffer (%) 2.00 2.50 2.00 2.50
of which: Countercyclical Buffer (%) - - - -
of which: HLA requirement on D-SIBs (%) - - - -
TABLE - 3 (A) BANK: CREDIT RISK AS AT 31ST DECEMBER 2020 UNDER STANDARDISED APPROACH – CREDIT RISK EXPOSURES
AND CREDIT RISK MITIGATION (CRM) EFFECTS
Exposures before Credit Exposures post CCF and CRM RWA and RWA density
Conversion Factor (CCF) and
CRM
Asset Class On-balance Off-balance On-balance Off-balance RWA RWA density
sheet amount sheet amount sheet amount sheet amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 (%)
Claims on central government and CBSL 290,662,781 - 290,662,781 - 18,184,820 6

Claims on public sector entities 19,411,693 5,876,682 4,750,628 5,869,889 4,721,670 44
Claims on banks exposures 20,220,699 442,871 20,220,699 442,871 8,802,011 43
Claims on financial institutions 28,263,007 25,386 28,263,007 25,386 15,713,848 56
Claims on corporates 348,545,110 454,674,809 325,102,859 45,580,222 349,942,115 94
Retail claims 263,038,204 14,587,604 247,811,769 8,083,740 179,762,690 70
Claims secured by residential property 51,382,892 - 51,382,892 - 42,108,866 82
Non-performing assets 28,844,770 - 28,844,770 - 31,434,751 109
Higher-risk categories 974,462 - 974,462 - 2,436,155 250
Cash items and other assets 31,811,977 - 31,811,977 - 13,761,900 43
1,083,155,595 475,607,352 1,029,825,844 60,002,108 666,868,826 61
TABLE - 3 (B) GROUP: CREDIT RISK AS AT 31ST DECEMBER 2020 UNDER STANDARDISED APPROACH – CREDIT RISK
EXPOSURES AND CREDIT RISK MITIGATION (CRM) EFFECTS
Exposures before Credit Exposures post CCF and CRM RWA and RWA density
Conversion Factor (CCF) and
CRM
Asset Class On-balance Off-balance On-balance Off-balance RWA RWA density
sheet amount sheet amount sheet amount sheet amount
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 (%)
Claims on central government and CBSL 292,478,088 - 292,478,088 - 18,184,820 6

Claims on public sector entities 19,411,693 5,876,682 4,750,628 5,869,889 4,721,670 44
Claims on banks exposures 20,268,794 442,871 20,268,794 442,871 8,812,237 43
Claims on financial institutions 25,328,933 25,386 25,328,933 25,386 14,267,052 56
Claims on corporates 346,971,377 454,674,809 323,265,228 45,580,222 348,104,484 94
Retail claims 295,228,801 14,587,604 280,002,366 8,083,740 207,313,739 72
Claims secured by residential property 51,382,892 - 51,382,892 - 42,108,866 82
Non-performing assets 34,100,586 - 34,100,586 - 38,970,473 114
Higher-risk categories - - - - - 0
Cash items and other assets 40,455,001 - 40,455,001 - 22,285,643 55
1,125,626,165 475,607,352 1,072,032,516 60,002,108 704,768,984 62
TABLE - 4 (A) BANK: CREDIT RISK AS AT 31ST DECEMBER 2020 (POST CCF & CRM) UNDER STANDARDISED APPROACH: EXPOSURES BY ASSET CLASSES AND
RISK WEIGHTS
Risk Weight 0% 20% 50% 60% 75% 100% 150% >150% Total credit
exposures
Asset Class amount
Claims on central government and CBSL 199,738,683 90,924,098 - - - - - - 290,662,781

Claims on public sector entities - 7,373,559 - - - 3,246,958 - - 10,620,517
Claims on banks exposures - 11,802,884 5,040,167 - - 3,618,856 201,663 - 20,663,570
Claims on financial institutions - - 25,149,091 - - 3,139,302 - - 28,288,393
Claims on corporates - 17,178,747 14,446,187 - - 338,607,895 450,252 - 370,683,081
Retail claims 23,277,293 13,201,805 - 15,261,443 144,758,017 59,396,951 - - 255,895,509
Claims secured by residential property - - 18,548,053 - - 32,834,839 - - 51,382,892
Non-performing assets - - 1,200,528 - - 21,263,753 6,380,489 - 28,844,770
Higher-risk categories - - - - - - - 974,462 974,462
Cash items and other assets 17,995,843 67,792 - - - 13,748,342 - - 31,811,977
241,011,819 140,548,885 64,384,026 15,261,443 144,758,017 475,856,896 7,032,404 974,462 1,089,827,952
TABLE - 4 (B) GROUP: CREDIT RISK AS AT 31ST DECEMBER 2020 (POST CCF & CRM) UNDER STANDARDISED APPROACH: EXPOSURES BY ASSET CLASSES AND
RISK WEIGHTS
Risk Weight 0% 20% 50% 60% 75% 100% 150% >150% Total credit
exposures
Asset Class amount
Claims on central government and CBSL 201,553,990 90,924,098 - - - - - - 292,478,088

Claims on public sector entities - 7,373,559 - - - 3,246,958 - - 10,620,517
Claims on banks exposures - 11,848,955 5,042,191 - - 3,618,856 201,663 - 20,711,665
Claims on financial institutions - - 22,174,534 - - 3,179,785 - - 25,354,319
Claims on corporates - 17,178,747 14,446,187 - - 336,770,264 450,252 - 368,845,450
Retail claims 27,778,586 13,480,406 - 15,261,443 144,419,516 87,146,155 - - 288,086,106
Claims secured by residential property - - 18,548,053 - - 32,834,839 - - 51,382,892
Non-performing assets - - 1,200,528 - - 21,959,757 10,940,301 - 34,100,586
Higher-risk categories - - - - - - - - -
Cash items and other assets 18,115,124 67,792 - - - 22,272,085 - - 40,455,001
247,447,700 140,873,557 61,411,493 15,261,443 144,419,516 511,028,699 11,592,216 - 1,132,034,624
357
TABLE - 5: OPERATIONAL RISK FOR THE PERIOD ENDED 31ST DECEMBER 2020 UNDER THE ALTERNATIVE STANDARDISED APPROACH
358
Bank Group
Capital charge Fixed factor Gross income/Average loans & advances Capital charge Fixed factor Gross income/Average loans & advances
Business lines factor 1st Year 2nd Year 3rd Year factor 1st Year 2nd Year 3rd Year
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
The Alternative Standardised Approach

Corporate finance 18% 3,089,486 3,803,782 5,097,905 18% 3,089,486 3,803,782 5,097,905
Trading and sales 18% 5,350,074 5,622,259 5,250,359 18% 8,839,143 9,586,447 9,102,103
Payment and settlement 18% 4,602 6,979 5,764 18% 4,602 6,979 5,764
Agency services 15% 5,290 6,236 5,930 15% 5,290 6,236 5,930
Asset management 12% - - - 12% - - -
Retail brokerage 12% - - - 12% - - -
Retail banking 12% 3.50% 280,851,368 317,715,364 352,294,867 12% 3.50% 280,851,368 317,715,364 352,294,867
Commercial banking 15% 3.50% 251,660,060 303,191,434 338,241,315 15% 3.50% 251,660,060 303,191,434 338,241,315
Capital charge for Operational Risk (Rs 000) 4,950,151 5,628,451

Risk Weighted Amount for Operational Risk (Rs 000) 41,251,256 46,903,757
TABLE - 6: MARKET RISK AS AT 31ST DECEMBER 2020 UNDER STANDARDISED MEASUREMENT METHOD
Item Bank Group

Rs 000 Rs 000
(a) Capital charge for Interest Rate Risk 574,117 574,117

General interest rate risk 574,117 574,117
Net long or short position 574,117 574,117
Specific interest rate risk - -
(b) Capital charge for Equity 12,670 12,670
General equity risk 7,449 7,449
Specific equity risk 5,221 5,221
(c) Capital charge for foreign exchange & gold 163,356 163,356
(d) Capital charge for Market Risk (a) + (b) + (c) 750,143 750,143
Risk Weighted Amount for Market Risk (d) * 100/12 6,251,192 6,251,192
SUMMARY DISCUSSION ON a stringent framework for banks to Moving Forward

ADEQUACY/MEETING CURRENT AND enhance the quality, consistency and the The Bank will execute identified medium
FUTURE CAPITAL REQUIREMENTS transparency of their “Capital” through the term and long-term strategies to improve
Overview introduction of new capital buffers, new Capital Adequacy Ratios in line with
mandatory disclosure requirements and Basel III minimum regulatory requirements.
Having understood that proper “Capital
revised definitions for capital instruments.
Management” is vital in ensuring the
long-term stability of the business, The Bank has initiated to issue Basel III
Capital Management Process compliant – Tier II redeemable 7 year
Sampath Bank has continued to maintain
Capital Adequacy Ratios at healthy The timely implementation of the Capital (2021/2028) debenture during the 1st
levels by keeping a significant margin Management comes under the purview of Quarter 2021 which will amount to
over and above the regulatory minimum the “Board Capital Planning Committee” Rs 5 Bn with an option to issue up to a
requirements. (BCPC) which consists of the most senior further Rs 1 Bn. It will further strengthen
and experienced Directors of the Bank. the Tier II capital of the Bank.
Increasing competition and growing market The Capital Management Process is
complexity in recent times have called for reviewed periodically by the BCPC. In addition, necessary actions would be
stricter regulatory requirements to bring identified to optimise the Risk Weighted
greater focus on the Capital Management Assets for the purpose of improving the
function. The Basel III Capital Standards capital allocation of the Bank.
introduced by the CBSL has provided
TABLE - 7: BASEL III LIQUIDITY COVERAGE RATIO - ALL CURRENCY

Total Total Total Total
un-weighted weighted un-weighted weighted
value value value value
Rs 000 Rs 000 Rs 000 Rs 000
Total Stock of High-Quality Liquid Assets (HQLA) 240,118,724 240,115,531 106,851,644 106,699,495
Level 1 assets 240,112,338 240,112,338 106,547,346 106,547,346
Level 2A assets - - - -
Level 2B assets 6,386 3,193 304,298 152,149
Total Cash Outflows 1,147,076,441 200,814,094 932,849,280 166,899,495

Deposits 708,361,008 70,836,101 574,364,977 57,436,498
Unsecured wholesale funding 182,212,764 79,229,939 133,794,087 62,300,138
Secured funding transactions 2,761,807 - 15,918,686 -
Undrawn portion of committed (irrevocable) facilities and other
contingent funding obligations 210,536,842 7,544,034 167,941,799 6,333,128
Additional requirements 43,204,020 43,204,020 40,829,731 40,829,731
Total Cash Inflows 135,037,325 118,966,688 101,312,900 95,372,870

Maturing secured lending transactions
backed by collateral 62,253,419 57,556,614 42,578,990 42,283,120
Committed facilities - - - -
Other inflows by counterparty which are maturing within 30 days 21,177,370 18,053,570 15,722,343 12,498,293
Operational deposits 8,250,032 - 2,420,110 -
Other cash inflows 43,356,504 43,356,504 40,591,457 40,591,457
Total Net Cash Outflows 1,012,039,116 81,847,406 831,536,380 71,526,625

Liquidity Coverage Ratio (%) (Stock of High Quality Liquid Assets/Total
Net Cash Outflows) * 100 293.37 149.17
TABLE - 8: BASEL III LEVERAGE RATIO
Bank Group
As at 31st December 2020 2019 2020 2019
Rs 000 Rs 000 Rs 000 Rs 000

Total Exposure 1,384,264,728 1,192,517,789 1,424,913,428 1,227,340,871
On-balance sheet exposure (excluding derivatives and securities
financing transactions, but including collateral) 1,098,988,352 957,078,321 1,137,855,890 992,131,842
Derivative exposure 223,991,968 164,074,213 223,991,968 164,074,213
Securities financing transaction exposure 4,450,557 17,267,796 6,231,719 17,037,357
Other off-balance sheet exposure 56,833,851 54,097,459 56,833,851 54,097,459
Basel III Leverage Ratio (%) (Total Tier I Capital/Total Exposure) 6.94% 8.12% 7.13% 8.24%
TABLE - 9: MAIN FEATURES OF REGULATORY CAPITAL INSTRUMENTS
Capital instruments issued by the Bank
Description of the capital instrument 2016-2021 2017-2022 2018-2023 2019-2024

Listed Rated Unsecured Basel III Tier II compliant Listed Basel III Tier II compliant Listed Basel III Tier II compliant Listed
Subordinated Redeemable Rated Unsecured Subordinated Rated Unsecured Subordinated Rated Unsecured Subordinated
Debentures Redeemable Debentures Redeemable Debentures Redeemable Debentures
Issuer Sampath Bank PLC Sampath Bank PLC Sampath Bank PLC Sampath Bank PLC
Unique identifier D0389-LK0090D23521 D0426-LK0090D23893 D0427-LK0090D23901 D0452-LK0090D24156
D0390-LK0090D23539
Governing law(s) of the instrument Companies Act No. 07 of 2007/CSE listing rules/Banking Act No. 30 of 1988/Securities Exchange Commission Act
Original date of issuance 10th June 2016 21st December 2017 20th March 2018 28th February 2019
Par value of instrument (Per debenture) Rs 100/- Rs 100/- Rs 100/- Rs 100/-
Perpetual or dated Dated Dated Dated Dated
Original maturity date, if applicable 10th June 2021 21st December 2022 20th March 2023 28th February 2024
Amount recognised in regulatory capital
(in Rs 000 as at the reporting date) 600,000 2,400,000 3,375,000 4,550,000
Accounting classification (Equity/Liability) Liability Liability Liability Liability
Issuer call subject to prior supervisory approval
Optional call date, contingent call dates and redemption amount (Rs 000) n/a n/a n/a n/a
Subsequent call dates, if applicable n/a n/a n/a n/a
Coupon/Dividend
Fixed or floating dividend/coupon D0389-Fixed rate D0426-Fixed rate D0427-Fixed Rate D0452-Fixed Rate
D0390-Floating rate
Coupon rate and any related index D0389-12.75%p.a. D0426-12.50% p.a. D0427-12.50% p.a. D0452-13.90% p.a.
D0390-6 months gross
T Bill rate + 1.0%
Non-cumulative or cumulative Cumulative Cumulative Cumulative Cumulative
Convertible or Non-convertible Non-Convertible Convertible Convertible Convertible
If convertible, conversion trigger (s) n/a * * *
If convertible, fully or partially n/a * * *
If convertible, mandatory or optional n/a * * *
If convertible, conversion rate n/a ** ** **
* In the event of an occurrence of a trigger event as determined at the sole discretion of the Monetary Board of the Central Bank of Sri Lanka, there would be a conversion of debentures to ordinary voting
shares by the company without any requirement of approval by the debenture holders, in compliance with Basel III requirements. Upon the occurrence of a trigger event, the outstanding balance of the
debentures including the total par value of the debentures and debenture interest accrued and unpaid as at that date will be permanently converted to ordinary voting shares at the conversion price.
** The conversion rate will be based on the simple average of the daily Volume Weighted Average Price (VWAP) of an ordinary voting share as published by the Colombo Stock Exchange during the three
months (03) period, immediately preceding the date of the trigger event.

361
TABLE - 10 BANK: DIFFERENCES BETWEEN ACCOUNTING AND REGULATORY SCOPES AND MAPPING OF
FINANCIAL STATEMENT CATEGORIES WITH REGULATORY RISK CATEGORIES AS AT 31ST DECEMBER 2020
Item Carrying values Carrying values Subject to credit Subject to Not subject
as reported under scope risk framework market risk to capital
in published of regulatory framework requirements
financial reporting or subject to
statements deduction from
capital
Rs 000 Rs 000 Rs 000 Rs 000 Rs 000
Assets 1,110,271,124 1,120,062,566 1,086,382,497 29,771,739 15,752,540

Cash & cash equivalents 29,053,585 27,056,583 27,056,583 - -
Balances with Central Bank of Sri Lanka 13,335,178 13,335,178 13,335,178 - -
Placements with banks 3,228,166 3,228,613 3,228,613 - -
Reverse repurchase agreements 4,450,557 4,450,000 4,450,000 - -
Derivative financial instruments 2,186,515 - - - -
- measured at fair value 9,313,628 9,213,452 - 9,213,452 -
- loans & advances 720,215,247 736,097,566 738,503,241 - 8,920,325
- debt & other instruments 275,091,572 276,426,986 275,314,640 - -
comprehensive income 24,237,803 24,126,611 3,373,183 20,558,287 195,141
Investment in subsidiaries 3,350,774 2,894,853 1,645,434 - 1,249,419
Property, plant & equipment 8,126,285 8,126,285 8,126,285 - -
Intangible assets 753,615 753,615 - - 753,615
Right-of-use assets 3,280,166 3,280,166 3,280,166 - -
Deferred tax assets 4,634,040 3,003,484 - - 4,634,040
Other assets 9,013,993 8,069,174 8,069,174 - -
Liabilities 1,002,722,320 995,476,392 - - -

Due to banks 1,522,402 - - - -
Derivative financial instruments 2,030,947 - - - -
Securities sold under repurchase agreements 3,399,896 3,357,005 - - -
- due to depositors 885,724,901 868,470,845 - - -
- due to other borrowers 49,052,595 48,813,451 - - -
- due to debt securities holders 30,790,007 29,258,032 - - -
Retirement benefit obligation 6,871,592 4,072,563 - - -
Dividend payable 121,270 121,270 - - -
Current tax liabilities 4,674,756 6,576,654 - - -
Deferred tax liabilities - - - - -
Other liabilities 18,533,954 34,806,572 - - -
Total gross off-balance sheet liabilities 484,091,555 484,091,555 484,091,555 - -

Guarantees 53,735,658 53,735,658 53,735,658 - -
Documentary credit 24,813,773 24,813,773 24,813,773 - -
Acceptance 31,898,963 31,898,963 31,898,963 - -
Other contingent items 158,412,926 158,412,926 158,412,926 - -
Commitment for unutilised facilities 213,889,629 213,889,629 213,889,629 - -
Other commitments 1,340,606 1,340,606 1,340,606 - -
Shareholders' equity 107,548,804 124,586,174 - - -

Stated capital 47,622,493 47,622,493 - - -
of which Amount Eligible for CET I 47,622,493 47,622,493 - - -
of which amount eligible for AT I - - - -
Retained earnings 4,188,723 25,687,543 - - -
Accumulated other comprehensive income 1,838,203 - - - -
Other reserves 53,899,385 51,276,138 - - -
TABLE - 11 GROUP: ASSESSMENT OF DOMESTIC SYSTEMICALLY IMPORTANT BANKS (D-SIBS) AS AT 31ST DECEMBER 2020
Rs 000
Size Indicator
Section 1 - Total exposure
Total exposure measure 1,424,913,428
Interconnectedness Indicators
Section 2 - Intra-financial system assets
a. Funds deposited with or lent to other financial institutions 38,746,000
(i) Funds deposited 14,368,789
(ii) Lending 24,377,211
b. Holdings of securities issued by other financial institutions 9,593,405
c. Net positive current exposure of securities financing transactions (SFTs) with other financial institutions 161,614
d. Over the counter (OTC) derivatives with other financial institutions that have a net positive mark to market value 1,050,033
Intra-financial system assets 49,551,052
Section 3 - Intra-financial system liabilities

a. Funds deposited by or borrowed from other financial institutions 66,735,046
(i) Funds deposited 6,730,427
(ii) Borrowings 60,004,619
b. Net negative current exposure of securities financing transactions with other financial institutions 837,659
c. Over the counter derivatives with other financial institutions that have a net negative mark to market value 2,734,961
Intra-financial system liabilities 70,307,666
Section 4 - Securities outstanding

Securities outstanding 34,320,451
Substitutability/Financial Institution Infrastructure Indicators

Section 5 - Payments made in the reporting year (excluding intra-group payments)
Payments activity 5,521,458,659
Section 6 - Assets under custody

Assets under custody 4,545,657
Section 7 - Underwritten transactions in debt and equity markets

Underwriting activity -
Section 8 - Trading volume

a. Number of shares or securities -
b. Value of the transactions -
Complexity Indicators
Section 9 - Notional amount of over the counter (OTC) derivatives
OTC derivatives 158,412,925
Section 10 - Level 2 assets

Level 2 assets 6,386
Section 11 - Financial assets recognised through profit or loss - measured at fair value & financial assets -
fair value through other comprehensive income
a. Debt instruments 29,926,037
b. Equity instruments 3,625,450
c. Derivatives 2,186,515
Section 12 - Cross jurisdictional liabilities

Cross jurisdictional liabilities (excluding derivatives and intra-group liabilities) 27,136,722
Section 13 - Cross jurisdictional claims

Cross jurisdictional claims (excluding derivatives and intra-group claims) 41,568,837
GRI CONTENT INDEX
GLOBAL REPORTING INITIATIVE (GRI) CONTENT INDEX – ‘IN ACCORDANCE COMPREHENSIVE’

Scan this QR code to Key:
view the Supplementary
Disclosures of Annual Report PAR - Printed Annual Report
SDAR - Supplementary Disclosures of Annual Report
www.sampath.lk
GRI 102: General Disclosures

GRI General Disclosures Page number(s) Remarks
1. Organisational Profile
102-1 Name of the organisation PAR - 17, Inner Back Cover
102-2 Activities, brands, products and services PAR - 17-19
102-3 Location of headquarters Inner Back Cover
102-4 Location of operations PAR - 92
102-5 Ownership and legal form Inner Back Cover
102-6 Markets served PAR - 64 & SDAR - 11
102-7 Scale of the organisation PAR - 11,13,43
102-8 Information on other employees and other workers SDAR - 31
102-9 Supply chain (Financial Inclusion Agenda)
PAR - 76 & SDAR - 39
102-10 Significant changes to the organisation and its PAR - 36-41 There were no significant changes
supply chain to the supply chain during the
reporting period.
102-11 Precautionary principle or approach (Customer Convenience &
Environmental Protection and
Conservation) SDAR - 32,
47-49
102-12 External initiatives PAR - 4
102-13 Membership of associations PAR - 51
2. Strategy
102-14 Statement from senior decision-maker PAR - 30-35
102-15 Key impacts, risks and opportunities PAR - 108-116
3. Ethics and Integrity
102-16 Values, principles, standards and norms of PAR - 16,146,149
behaviour
102-17 Mechanisms for advice and concerns about ethics (Anti-Corruption Practices)
PAR - 121 & SDAR - 21
4. Governance
102-18 Governance structure PAR - 45,124-125
102-19 Delegating authority PAR - 45,124-125
102-20 Executive level responsibility for economics, PAR - 45,124-125
environmental and social topics
102-21 Consulting stakeholders on economic, PAR - 45,129,141,149
environmental and social topics
102-22 Composition of the highest governance body and PAR - 22-25,121-122,
its committees 131-132
102-23 Chair of the highest governance body PAR - 22,30-35,131
102-24 Nominating and selecting the highest governance PAR - 121-122,135,175-176
body
102-25 Conflicts of interest PAR - 102,143,145,150,152,
162,164
102-26 Role of highest governance body in setting PAR - 45,146
purpose, values and strategy

102-27 Measures taken to develop and enhance the PAR - 129,131,135,148 Regardless to the challenges and
collective knowledge of the highest governing body difficulties experienced by the
on economic, environmental and social topics organisation due to the COVID-19
102-28 Processes and actions taken in response to PAR - 135,137,148 pandemic, the awareness and
evaluation of the performance of the highest improvement of the Board on
governance body’s in respect to governance of socio-economic and environmental
performance economic, environmental and social aspects have been enhanced during
topics the period under review.
Adopting to the digital platforms

by reducing the carbon costs
associated to operate a physical
Board Room, while improving the
effectiveness of the meetings can
be prompted as a key development.
The trainings & presentations

conducted by both internal and
external resource personnel who
holds expertise in socio-economic
and environmental aspects
were significant to enhance the
knowledge and sense of the apex
body, to improve its knowledge on
the respective areas.
Structured Induction Programmes

followed by the newly appointed
Directors had fostered to enhance
the collective knowledge of the
Board on socio-economic and
environment related topics.
102-29 Identifying and managing economic, environmental, PAR - 45,129,148 &
and social impacts SDAR - 47-49
102-30 Effectiveness of risk management processes PAR - 108-116,144,148,
161-162,177-179
102-31 Review of economic, environmental, and social PAR - 44-46,148 & The economic, social and
topics SDAR - 47-49 environmental impacts to the
business had been considered when
taking decisions by the Board and
by its sub-committees.
102-32 Highest governance body’s role in sustainability PAR - 44-46,129,148
reporting
102-33 Communicating critical concerns PAR - 45,47,140,149,172 &
SDAR - 37
GRI CONTENT INDEX

102-34 Nature and total number of critical concerns PAR - 166,172 Two (02) concerns were reported
through Whistle Blowing. The
reported cases were addressed
in accordance with the Whistle
Blowing Policy and initiated Audit
Investigations. Findings and
recommendations were reported to
the Board Audit Committee, Board
of Directors. The recommendations
relating to process improvement/
internal controls were shared with
the management and the report
were sent to the disciplinary
committee to take appropriate
actions.
102-35 Remuneration policies PAR - 138-139,160,164,
173-174
102-36 Process for determining remuneration PAR - 138-139,160,173-174
102-37 Stakeholders’ involvement in remuneration *
102-38 Annual total compensation ratio of highest paid *
individual
102-39 Percentage increase in annual total compensation *
ratio of highest paid individual
5. Stakeholder engagement
102-40 List of stakeholder groups PAR - 47-51
102-41 Collective bargaining agreements There is no collective bargaining
agreement between the Bank &
SBEA. However, the relationship
between two parties remains
cordial.
102-42 Identifying and selecting stakeholders PAR - 47-51
102-43 Approach to stakeholder engagement PAR - 47-51
102-44 Key topics and concerns raised PAR - 47-51
6. Reporting practice
102-45 Entities included in the consolidated financial PAR - 95
statements
102-46 Defining report content and topic boundaries PAR - 4,6-9
102-47 List of material topics PAR - 6-9
102-48 Restatements of information There are no restatements in
sustainability reporting criteria.
102-49 Changes in reporting PAR - 7,8 Out of the 21 Material Topics for
2020, 20 remained unchanged from
the previous year. The only new
topic that became relevant in 2020
was the "COVID-19 pandemic and
its impact".
102-50 Reporting period PAR - 4
102-51 Date of most recent report PAR - 5
102-52 Reporting cycle PAR - 4
102-53 Contact point for questions regarding the report PAR - 5
* Information cannot be disclosed due to confidentiality reasons.


102-54 Claims of reporting in accordance with the GRI PAR - 4 This report has been prepared in
Standards accordance with the GRI Standards-
Comprehensive option.
102-55 GRI content index PAR - 364-371
102-56 External assurance PAR - 5,372
GRI Specific Disclosures

GRI Specific Disclosures Page number(s) Remarks
Economic Topics
GRI 201: Economic Performance
103-1 Explain the material topics & its boundary (Profitability and Financial
103-2 The Management Approach and its components Stability) PAR - 8 &
103-3 Evaluation of the Management Approach SDAR - 3-4
201-1 Direct Economic Value generated and distributed PAR - 349
201-2 Financial implications and other risks and Being in the business of Banking, climate
opportunities due to climate change change does not have a significant impact on
our business. Accordingly during the reporting
period, no records were maintained to
catalogue the effect of climate change on our
business.
201-3 Defined benefit plan obligations and other PAR - 218,237-238
retirement plans
201-4 Financial assistance received from government As we are a private sector organisation, there is
no direct or indirect financial assistance (grants)
received from the government.
GRI 202: Market Presence
202-1 Ratios of standard entry level wage by gender (Profitability and Financial There is no entry level wage rate imposed on
compared to local minimum wage Stability) SDAR - 3-4 banking sector. However, Sampath Bank’s entry
level wage is higher than the national minimum
wage rate.
202-2 Proportion of senior management hired from the All senior managers of the Bank are local hires
local community (Sri Lankans).
GRI 203: Indirect Economic Impacts
203-1 Infrastructure investments and services supported PAR - 74-76 & SDAR - 42-46
203-2 Significant indirect economic impacts PAR - 74-76 & SDAR - 42-46
GRI 205: Anti - Corruption
103-1 Explain the material topics & its boundary (Anti-Corruption Practices)
103-2 The Management Approach and its components PAR - 8 & SDAR - 21
103-3 Evaluation of the Management Approach
205-1 Operations assessed for risks related to corruption SDAR - 33 No fines were imposed by the regulators on
the Bank pertaining to incidents of corruption
in 2020.
GRI CONTENT INDEX

205-2 Communication and training about anti-corruption 85% of employees and 77% of Senior
policies and procedures Management have received training on anti-
corruption (inclusive of 3,443 e-learning user
attempts).
205-3 Confirmed incidents of corruption and actions No fines were imposed by the regulators on
taken the Bank pertaining to incidents of corruption
in 2020.
GRI 207: Tax
207-1 Approach to tax (Profitability and Financial
207-2 Tax governance, control, and risk management Stability) SDAR - 3-4
207-3 The approach to stakeholder engagement and
management of stakeholder concerns related to
tax
207-4 Country-by-country reporting: All tax jurisdictions PAR - 208-343
where the entities included in the organisation’s
audited consolidated financial statements, or in
the financial information filed on public record, are
resident for tax purposes
Environmental Topics
GRI 302: Energy
103-1 Explain the material topics & its boundary (Environmental Protection
103-2 The Management Approach and its components and Conservation) PAR - 9 &
302-1 Energy consumption within the organisation PAR - 78 & SDAR - 50
302-2 Energy consumption outside the organisation PAR - 78 & SDAR - 50
302-3 Energy intensity PAR - 78 & SDAR - 50
302-4 Reduction of energy consumption PAR - 78 & SDAR - 50
302-5 Reduction of energy requirements of products and This cannot be accurately calculated or
services measured in relation to specific products or
services of the Bank.
GRI 305: Emissions
305-1 Direct (Scope 1) GHG emissions PAR - 79 & SDAR - 51
305-2 Energy indirect (Scope 2) GHG emissions PAR - 79 & SDAR - 51
305-3 Other indirect (Scope 3) GHG emissions PAR - 79 & SDAR - 51
305-4 GHG emissions intensity PAR - 79 & SDAR - 51
305-5 Reduction of GHG emissions PAR - 79 & SDAR - 51
305-6 Emissions of ozone-depleting substances (ODS) Emissions of Ozone Depleting Substances
(ODS) are insignificant, considering the nature
of our business.
305-7 Nitrogen oxides (NOx), sulphur oxides (SOx) and PAR - 79 & SDAR - 51
other significant air emissions
GRI 306: Effluents and Waste

306-1 Water discharge by quality and destination PAR - 78 & SDAR - 51
306-2 Waste by type and disposal method PAR - 78 & SDAR - 50
306-3 Significant spills Not relevant to the business of Banking.
306-4 Transport of hazardous waste Not relevant to the business of Banking.
306-5 Water bodies affected by water discharges and/ No water bodies affected by water discharges
or runoff and/or runoff.
Social Topics
GRI 401: Employment
103-1 Explain the material topics & its boundary (Talent Acquisition and
103-2 The Management Approach and its components Management) PAR - 8 &
103-3 Evaluation of the Management Approach SDAR - 20
401-1 New employee hires and employee turnover SDAR - 28
401-2 Benefits provided to full-time employees that are SDAR - 30
not provided to temporary or part time employees
401-3 Parental leave SDAR - 28
GRI 402: Labour/Management Relations
103-1 Explain the material topics & its boundary (Employee Relations) PAR - 8
103-2 The Management Approach and its components & SDAR - 22
402-1 Minimum notice periods regarding operational No collective agreement is in force, operational
changes changes are informed in advance depending on
the requirement.
GRI 403: Occupational Health and Safety
103-1 Explain the material topics & its boundary (Employee Relations) PAR - 8
103-2 The Management Approach and its components & SDAR - 22
403-1 Occupational health and safety management Given the nature of our business as a Bank, our
system employees are not exposed to occupational
health risks. Hence Sampath Bank does
not have an occupational health and safety
management system. However, precautionary
measures have been taken by the Bank to
ensure the safety of all persons (Employees,
Customers, Suppliers and other visitors) within
the Bank premises.
The measures taken throughout 2020 in

response to the COVID-19 challenges are
described in detail in the Human Capital
section. PAR - 70-72 & SDAR - 20-31
403-2 Hazard identification risk assessment and incident Being a bank, work related hazards are not
investigation observed. Hence, risk assessment and incident
investigations on work-related hazards have
not been carried out during the reporting
period.
403-3 Occupational health services All personal information including health
related information is considered confidential.
All records are maintained under lock and key,
with access limited to authorised persons only.
GRI CONTENT INDEX

403-4 Worker participation, consultation, and Given the nature of our business as a Bank, our
communication on occupational health and safety employees are not exposed to occupational
management system or a dedicated committee
for this purpose.
However, precautionary measures have been

taken by the Bank to ensure the safety of all
persons (Employees, Customers, Suppliers
and other visitors) within the Bank premises.
At the same time, Management works with a
few cross-functional teams, including SBEA
(Sampath Bank Employees’ Association)
and exchange ideas for the improvement of
working conditions and the health & safety of
employees.
The measures taken throughout 2020 in

response to the COVID-19 challenges are
described in detail in the Human Capital
section. PAR - 70-72 & SDAR - 20-31
403-5 Worker training on occupational health and safety The Bank conducts Fire Safety and Emergency
Evacuation Drills and related trainings on a
planned basis as a safety measure.
However, during 2020, we have not conducted

such drills due to the outbreak of COVID-19.
E-magazines and e-flyers on Health and Safety

are published regularly.
403-6 Promotion of worker health To ensure the health and wellbeing of our
employees, all staff and their families are
covered by a comprehensive medical scheme.
Further, all employees are covered by a
personal accident insurance scheme. Annual
medical screening facilities are provided to
employees as a preventive measure.
403-7 Prevention and mitigation of occupational health Given the nature of our business, we do not
and safety impacts directly linked by business observe any health and safety impacts of
relationships our operations, products and services by its
business relationships.
403-8 Workers covered by an occupational health and Given the nature of our business, our
safety management system employees are not exposed to occupational
management system.
403-9 Work-related injuries No work-related injuries or incidents of work-
403-10 Work-related ill health related ill health were observed during the
reporting period.

GRI 404: Training and Education
103-1 Explain the material topics & its boundary (Learning and Development)
404-1 Average hours of training per year per employee SDAR - 30
404-2 Programmes for upgrading employee skills and SDAR - 29
transition assistance programmes
404-3 Percentage of employees receiving regular SDAR - 29
performance and career development reviews
GRI 405: Diversity and Equal Opportunity
103-1 Explain the material topics & its boundary (Talent Acquisition and
103-2 The Management Approach and its components Management) PAR - 8 &
103-3 Evaluation of the Management Approach SDAR - 20
405-1 Diversity of governance bodies and employees SDAR - 30
405-2 Ratio of basic salary and remuneration of women SDAR - 30
to men
GRI 413: Local Communities
103-1 Explain the material topics & its boundary (Community Development)
413-1 Operations with local community engagement, PAR - 46,74-76 &
impact assessments and development programmes SDAR - 38,42-46
413-2 Operations with significant actual and potential No incidents were reported during the
negative impacts on local communities reporting period.
GRI 416: Customer Health and Safety
103-1 Explain the material topics & its boundary (Customer Health and Safety)
416-1 Assessment of the health and safety impacts of As a service organisation, health and safety
product and service categories impacts of our products & service categories
416-2 Incidents of non-compliance concerning the cannot be assessed.
health and safety impacts of products and services
GRI 417: Marketing and Labelling
103-1 Explain the material topics & its boundary (Sales Promotions, Marketing
103-2 The Management Approach and its components Communication and
103-3 Evaluation of the Management Approach Information Availability on
Bank's Products and Services)
PAR - 9 & SDAR - 33
417-1 Requirements for product and service information SDAR - 33 Product and service information are published
and labelling in marketing communication material in all
three languages (S/T/E).
417-2 Incidents of non-compliance concerning product No incidents were reported during the
and service information and labelling reporting period in this regard.
417-3 Incidents of non-compliance concerning marketing No incidents were reported during the
communications reporting period in this regard.
GRI 418: Customer Privacy
103-1 Explain the material topics & its boundary (Customer Privacy &
103-2 The Management Approach and its components Complaint Management)
103-3 Evaluation of the Management Approach PAR - 9 & SDAR - 34,35
418-1 Substantiated complaints concerning breaches of Received 15 complaints and all these
customer privacy and losses of customer data complaints have been resolved during the
year 2020.
INDEPENDENT ASSURANCE REPORT TO THE

Independent Assurance Report to Sampath Management of the Bank’s responsibility  Reconciling and agreeing the data on
Bank PLC on the Sustainability Reporting for the Report financial performance are properly
Criteria Presented in the Integrated Annual The management of the Bank is responsible derived from the Bank’s audited financial
Report- 2020 for the preparation of the self-declaration, the statements for the year ended 31
information and statements contained within December 2020.
Introduction and scope of the engagement
the Report, and for maintaining adequate  Comparison of the content of the Report
The management of Sampath Bank PLC (“the records and internal controls that are designed against the criteria for a Global Reporting
Bank”) engaged us to provide an independent to support the sustainability reporting process Initiative, GRI Standards: ‘In accordance’ –
assurance on the following elements of the in line with the GRI Sustainability Reporting Comprehensive guidelines.
sustainability reporting criteria presented in Guidelines.
the annual report- 2020 (“the Report”).
Ernst & Young’s responsibility Our procedures did not include testing
 Reasonable assurance on the information electronic systems used to collect and
Our responsibility is to express a conclusion
on financial performance as specified on aggregate the information.
as to whether we have become aware of
page 349 of the Report.
any matter that causes us to believe that the Limitations and considerations
 Limited assurance on other information Report is not prepared in accordance with
presented in the Report, prepared in Environmental and social performance data
the requirements of the Global Reporting
accordance with the requirements of the are subject to inherent limitations given their
Initiative, GRI Standards: ‘In accordance’ -
Global Reporting Initiative GRI Standards: nature and the methods used for determining,
Comprehensive guidelines. This report is made
‘In accordance’ – Comprehensive calculating and estimating such data.
solely to the Bank in accordance with our
guidelines. engagement letter dated 03 December 2020. Conclusion
We disclaim any assumption of responsibility
Basis of our work and level of assurance for any reliance on this report to any person
Based on the procedures performed, as
We performed our procedures to provide described above, we conclude that;
other than the Bank or for any purpose
limited assurance in accordance with Sri Lanka other than that for which it was prepared.
Standard on Assurance Engagements (SLSAE In conducting our engagement, we have  The information on financial performance
3000): ‘Assurance Engagements Other than complied with the independence requirements as specified on page 349 of the Report
Audits or Reviews of Historical Financial of the Code for Ethics for Professional are properly derived from the audited
Information’, issued by the Institute of Accountants issued by the CASL. financial statements of the Bank for the
Chartered Accountants of Sri Lanka (“CASL”). year ended 31 December 2020.
Key assurance procedures
 Nothing has come to our attention
The evaluation criteria used for this limited
We planned and performed our procedures that causes us to believe that other
assurance engagement are based on the
to obtain the information and explanations information presented in the Report
Sustainability Reporting Guidelines (“GRI
considered necessary to provide sufficient are not fairly presented, in all material
Guidelines”) and related information in
evidence to support our limited assurance respects, in accordance with the Bank’s
particular, the requirements to achieve GRI
conclusions. Key assurance procedures sustainability practices and policies some
Standards ‘In accordance’ - Comprehensive
included: of which are derived from Sustainability
guideline publication, publicly available at
Reporting Guideline, GRI Standards- ‘In
GRI’s global website at “www.globalreporting.  Interviewing relevant the bank’s accordance’ Comprehensive.
org”. personnel to understand the process
for collection, analysis, aggregation and
Our engagement provides limited assurance
presentation of data.
as well as reasonable assurance. A limited
assurance engagement is substantially  Reviewing and validation of the
less in scope than a reasonable assurance information contained in the Report.
engagement conducted in accordance with  Checking the calculations performed Ernst & Young
SLSAE-3000 and consequently does not by the Bank on a sample basis through Chartered Accountants
enable to obtain assurance that we would recalculation.
become aware of all significant matters that 15 February 2021
might be identified in a reasonable assurance Colombo
engagement. Accordingly, we do not express
an opinion providing reasonable assurance.
GLOSSARY OF FINANCIAL AND BANKING TERMS
A Average Weighted Prime Lending Rate (AWPLR) Common Equity Tier I (CET I) Capital
Acceptances AWPLR is calculated by the Central Bank weekly Consists of stated capital, other capital and
The signature on a Bill of Exchange indicates based on commercial banks’ lending rates offered revenue reserves. CET I is the element of capital
that the person on whom it is drawn accepts to their prime customers during the week. which has the highest quality and the most
the conditions of the Bill. In other words a Bill of effective in absorbing losses.
B
Exchange that has been accepted. Commitments
Basel II
Accounting Policies The capital adequacy framework issued by the Credit facilities approved but not yet utilised by the
The specific principles, bases, conventions, rules Basel Committee on Banking Supervision (BCBS) clients as at the reporting date.
and practices adopted by an entity in preparing in the form of the ‘International Convergence of Consolidated Financial Statements
and presenting Financial Statements. Capital Measurement and Capital Standards’. Consolidated financial statements are the financial
Accrual Basis Basel III statements of a group in which the assets,
Recognition of the effects of transactions and The BCBS issued the Basel III rules, which presents liabilities, equity, income, expenses and cash flows
other events when they occur without waiting for the details of strengthened global regulatory of the parent and its subsidiaries are presented as
receipt or payment of cash or its equivalents. standards on bank capital adequacy and liquidity. those of a single economic entity.
Actuarial Assumptions Bills sent for Collection Contingencies

An entity’s unbiased and mutually compatible best A bill of exchange drawn by an exporter usually at A condition or situation, the ultimate outcome of
estimates of the demographic and financial variable a term, on an importer overseas and brought by which (gain or loss) will be confirmed only on the
that will determine the ultimate cost of providing the exporter to his bank with a request to collect occurrence or non-occurrence of one or more
post-employment benefits. the proceeds. uncertain future events.
Additional Tier I (AT I) Capital C Contract

It is a supplementary form of Tier I capital. An agreement between two or more parties that
Capital Adequacy Ratio
AT I includes capital instruments other than the creates enforceable rights and obligations.
The percentage of risk-adjusted assets supported
instruments included in CET I capital. by capital as defined under the framework of risk- Control
Amortisation based capital standards developed by the Bank for An investor controls an investee when the investor
The systematic allocation of the depreciable International Settlement (BIS) and as modified to is exposed, or has rights, to variable returns from
amount of an intangible asset over its useful life. suit local requirements by the Central Bank of Sri its involvement with the investee and has the
Lanka. ability to affect those returns through its power
Amortised Cost over the investee.
The amortised cost of a financial asset or financial Capital Conservation Buffer (CCB)
liability is the amount at which the financial asset It is designed to ensure that banks build up capital Corporate Governance
or financial liability is measured at initial recognition buffers outside periods of stress which can be The process by which corporate entities are
minus principal repayments, plus or minus the drawn down as losses are incurred. governed. It is concerned with the way in which
cumulative amortisation using the effective power is exercised over the management and
Cash Equivalents
interest method of any difference between that direction of entity, the supervision of executive
Cash equivalents are short-term, highly liquid
initial amount and the maturity amount, and actions and accountability to owners and others.
investments that are readily convertible to known
minus any reduction (directly or through the amounts of cash and which are subject to an Correspondent Bank
use of an allowance account) for impairment or insignificant risk of changes in value. A bank in a foreign country that offers banking
uncollectability. facilities to the customers of a bank in another
Cash Flows
Asset and Liability Committee (ALCO) country.
Cash flows are inflows and outflows of cash and
A risk-management committee in a bank that cash equivalents. Cost Method
generally comprises the senior-management levels A method of accounting whereby the investment
of the institution. The ALCO’s primary goal is to Collectively Assessed Loan Impairment Provisions
is recorded at cost. The Income Statement reflects
evaluate, monitor and approve practices relating Also known as portfolio impairment provisions.
income from the investment only to the extent
to risk due to imbalances in the capital structure. Impairment assessment on a collective basis
that the investor receives distributions from
Among the factors considered are liquidity risk, for homogeneous groups of loans that are not
accumulated net profits of the investee arising
interest rate risk, operational risk and external considered individually significant and to cover
subsequent to the date of acquisition.
events that may affect the bank’s forecast and losses that has been incurred but has not yet been
strategic balance sheet allocations. identified at the reporting date. Typically assets Cost-Push Inflation
within the consumer banking business (housing, A continuous increase in average price levels due
Associate Company personal, vehicle loans, credit cards etc) are to an increase in production costs.
An associate is an entity, including an assessed on a portfolio basis.
unincorporated entity such as a partnership, over Cost to Income Ratio
which the investor has significant influence and Commercial Paper (CP) Operating expenses excluding impairment charge
that is neither a subsidiary nor an interest in a joint An unsecured, short-term debt instrument issued for loans and other losses as a percentage of total
venture. by a corporation, typically for the financing of operating income.
accounts receivable, inventories and meeting
Average Weighted Deposit Rate (AWDR) Country Risk
short-term liabilities. The debt is usually issued at a
AWDR is calculated by the Central Bank monthly The risk that a foreign government will not fulfil its
discount, reflecting prevailing market interest rates.
based on the weighted average of all outstanding obligations or obstructs the remittance of funds by
interest bearing deposits of commercial banks and debtors, either for financial reasons (transfer risk)
the corresponding interest rates. or for other reasons (political risk).
Credit Rating Discount Rate Events after the Reporting Period

An evaluation of a corporate’s ability to repay its A rate used to place a current value on future cash Events after the reporting period are those events,
obligations or likelihood of not defaulting, carried flows. It is needed to reflect the fact that money favourable and unfavourable, that occur between
out by an independent rating agency. has a time value. the end of the reporting period and the date when
the financial statements are authorised for issue.
Credit Risk Dividend Cover
Credit risk is the risk of financial loss to the Bank Profit after tax divided by gross dividend. This ratio Expected Credit Losses (ECLs)
if a customer or counter party to a financial measures the number of times dividend is covered ECLs are probability-weighted estimate of the
instrument fails to meet its contractual obligations, by the current year’s distributable profits. present value of cash shortfalls (i.e. the weighted
and arises principally from the loans and advances average credit losses, with respective risks of
Dividend Yield
to customers and other banks and investment debt defaults occurring in a given time period used as
Dividend earned per share as a percentage of its
securities. the weights). ECL measurements are unbiased (i.e.
market value.
neutral, not conservative and not biased towards
Credit Risk Mitigation
Documentary Letters of Credit (LCs) optimism or pessimism) and are determined by
A technique to reduce the credit risk associated
Written undertakings by a bank on behalf of evaluating a range of possible outcomes.
with an exposure by application of credit risk
its customers, authorising a third party to draw
mitigants such as collateral, guarantee and credit Exposure at Default (EAD)
on the Bank up to a stipulated amount under
protection. This is an estimate of the exposure at a future
specific terms and conditions. Such undertakings
default date, taking into account expected changes
Currency Risk are established for the purpose of facilitating
in the exposure after the reporting date, including
The risk that the fair value or future cash flows international trade.
repayments of principal & interest and expected
of a financial instrument will fluctuate because of
Domestic Systemically Important Banks drawdowns of committed facilities.
changes in foreign exchange rates.
(D-SIBs)
Exposure
Currency SWAPs D-SIBs are defined by CBSL annually, according to
A claim, contingent claim or position which carries
The simultaneous purchase of an amount of a the Banking Act direction No. 10 of 2019.
a risk of financial loss.
currency for spot settlement and the sale of the
E
same amount of the same currency for forward F
settlement. Earnings per Share (EPS)
Fair Value
The profit attributable to each ordinary share in
Customer Deposits Fair Value is the price that would be received to
the Bank, based on the profit for the period after
Money deposited by account holders. Such funds sell an asset or paid to transfer a liability in an
tax and after deducting minority interest and
are recorded as liabilities. orderly transaction between market participants at
preference share Dividend.
the measurement date.
D Economic Value Added (EVA)
Finance Lease
Deferred Tax A measure of productivity which takes into
A finance lease is a lease that transfers
Sum set aside in the financial statements for consideration cost of total invested equity.
substantially all the risks and rewards incidental
taxation that may become payable/receivable in a
Effective Interest Rate (EIR) to ownership of an asset. Title may or may not
financial year other than the current financial year.
Rate that exactly discounts estimated future cash eventually be transferred.
It arises because of temporary differences between
payments or receipts through the expected life of
tax rules and accounting conventions. Financial Guarantee Contract
the financial instruments or, when appropriate, a
A financial guarantee contract is a contract that
Delinquency shorter period to the net carrying amount of the
requires the issuer to make specified payments to
A debt or other financial obligation is considered financial asset or financial liability.
reimburse the holder for a loss it incurs because a
to be in a state of delinquency when payments are
Effective Tax Rate (ETR) specified debtor fails to make payment when due
overdue. Loans and advances are considered to be
Provision for taxation excluding deferred tax in accordance with the original or modified terms
delinquent when consecutive payments are missed.
divided by the profit before taxation. of a debt instrument.
Also known as ‘Arrears’.
Equity Instrument Financial Instrument
Depreciation
An equity instrument is any contract that Financial instrument is any contract that gives rise
The systematic allocation of the depreciable
evidences a residual interest in the assets of an to a financial asset of one entity and a financial
amount of an asset over its useful life.
entity after deducting all of its liabilities. liability or equity instrument of another entity.
Derecognition
Equity Method Firm Commitment
Derecognition is the removal of a previously
The equity method is a method of accounting A firm commitment is a binding agreement for the
recognised financial asset or financial liability from
whereby the investment is initially recognised exchange of a specified quantity of resources at a
an entity’s statement of financial position.
at cost and adjusted thereafter for the post- specified price on a specified future date or dates.
Derivatives acquisition change in the investor’s share of net
Foreign Exchange Income
A derivative is a financial instrument or other assets of the investee. The profit or loss of the
The realised gain recorded when assets or liabilities
contract, the value of which changes in response to investor includes the investor’s share of the profit
denominated in foreign currencies are translated
some underlying variable (e.g. an interest rate), that or loss of the investee.
into Sri Lankan Rupees on the reporting date at
has an initial net investment smaller than would be
ESOP (Employee Share Ownership Plan) prevailing rates which differ from those rates in
required for other instruments that have a similar
A method of giving employees shares in the force at inception or on the previous reporting
response to the variable, and that will be settled at
business for which they work. date. Foreign exchange income also arises from
a future date.
trading in foreign currencies.
Forward Exchange Contract Individually Significant Loan Impairment Provision Liquidity Risk
Agreement between two parties to exchange one (Specific Impairment Provision) The risk that an entity will encounter difficulty
currency for another at a future date at a rate Impairment is measured individually for assets that in meeting obligations associated with financial
agreed upon today. are individually significant to the Group. liabilities.
G Intangible Asset Loss Given Default (LGD)

Global Reporting Initiative (GRI) An intangible asset is an identifiable non-monetary LGD is the percentage of an exposure that a lender
GRI is a leading organisation in the sustainability asset without physical substance. expects to lose in the event of obligor defaults. It
field. GRI promotes the use of sustainability is based on the difference between the contractual
Interest Cover
reporting as a way for organisations to become cash flows due and those that the lender would
A ratio showing the number of times interest
more sustainable and contribute to sustainable receive including any collateral.
charges is covered by earnings before interest and
development. tax. M
Going Concern Interest Margin Market Capitalisation
The financial statements are normally prepared on Net interest income expressed as a percentage of The value of a company obtained by multiplying
the assumption that an entity is a going concern average interest earning assets. the number of ordinary shares in issue by its
and will continue in operation for the foreseeable market value as at a date.
future. Hence, it is assumed that the entity has Interest Rate Risk
The risk that the fair value or future cash flows Market Risk
neither the intention nor the need to liquidate or
of a financial instrument will fluctuate because of Market risk is the risk that changes in market
curtail materially the scale of its operations.
changes in market interest rates. prices, such as interest rates, equity prices, foreign
Gross Dividend exchange rates and credit spreads (not relating to
The portion of profits distributed to the Interest Rate SWAP changes in the obligor’s/issuer’s credit standing)
shareholders including the tax withheld. An agreement between two parties where one will affect the Bank’s income or the value of its
stream of future interest payments is exchanged holdings of financial instruments.
Group for another stream of future interest payments
A group is a parent and its subsidiaries. based on a specified principal amount. Materiality
The relative significance of a transaction or an
Guarantees Interest Spread event, the omission or misstatement of which
A promise made by a third party (guarantor), who is This represents the difference between the could influence the decisions of users of financial
not a party to a contract between two others, that average interest rate earned and the average statements.
the guarantor will be liable if the guarantee fails to interest rate paid on funds.
fulfil the contractual obligations. N
Investment Properties
H Net Asset Value Per Share
Investment property is property (land or a building
Shareholders’ funds divided by the number of
Hedging - or part of a building - or both) held (by the owner
ordinary shares in issue.
A strategy under which transactions are effected or by the lessee under a finance lease) to earn
with the aim of providing cover against the risk rentals or for capital appreciation or both, rather Net-Interest Income (NII)
of unfavourable price movements (interest rate, than for use in the production or supply of goods The difference between what a bank earns on
foreign exchange rate, commodity prices, etc) or services or for administrative services; or sale in assets such as loans and securities and what it
the ordinary course of business. pays on liabilities such as deposits, refinance funds
High Loss Absorbency (HLA) Requirement
and inter-bank borrowings.
The additional capital buffer requirement for K
D-SIBs. Key Management Personnel Nostro Account
Key management personnel are those persons A bank account held in foreign country by a
High Quality Liquid Assets (HQLA)
having authority and responsibility for planning, domestic bank, denominated in the currency
HQLA are assets that can be easily and
directing and controlling the activities of the entity. of that country. Nostro accounts are used to
immediately converted into cash at little or no
facilitate the settlement of foreign exchange trade
loss of value, that can be readily sold or used L transactions.
as collateral to obtain funds in a range of stress
Lifetime Expected Credit Losses
scenarios and are unencumbered, i.e., without Non-Controlling Interest
The expected credit losses that result from all
legal, regulatory or operational impediments. Non-controlling interest is the equity in a subsidiary
possible default events over the expected life of a
not attributable, directly or indirectly to a parent.
I financial instrument.
Impaired Loans O
Liquidity Coverage Ratio (LCR)
Impaired loans are loans where the Group does Banks are required to maintain an adequate level Operational Risk
not expect to collect all the contractual cash flows of unencumbered High Quality Liquid Assets Operational risk refers to the losses arising from
or expects to collect them later than they are (HQLA) that can be converted into cash to meet fraud, negligence, oversight, human error, process
contractually due. their liquidity needs for a 30 calendar day time errors, system failures, external events, etc.
Impairment horizon under a significantly severe liquidity stress

This occurs when recoverable amount of an asset scenario. LCR is computed by dividing the stock of
is less than its carrying amount. HQLA by the total net cash outflows over the next
30 calendar days.
Impairment Provisions
Impairment provisions are provisions held on the Liquid Assets
Statement of Financial Position as a result of the Assets that are held in cash or in a form that can
raising of a charge against profit for the incurred be converted to cash readily, such as deposits with
loss. other banks, bills of exchange and treasury bills
and bonds.
P Right-of-use Asset (ROU) U

Parent ROU asset is a lessee’s right to use an asset over Unit Trust
A parent is an entity that controls one or more the life of a lease. The asset is calculated as the An undertaking formed to invest in securities
entities. initial amount of the lease liability, plus any lease under the terms of a trust deed.
payments made to the lessor before the lease
Power commencement date, plus any initial direct costs Useful Life
The Power is the existing rights that give the incurred, minus any lease incentives received. Useful life is the period over which an asset is
current ability to direct the relevant activities. expected to be available for use by an entity or the
Risk-weighted Assets number of production or similar units expected to
Price Earnings Ratio (P/E Ratio) Used in the calculation of risk-based capital be obtained from the asset by an entity.
The current market price of the share is divided by ratios. The face amount of lower risk assets is
the earnings per share of the Bank. discounted using risk weighting factors in order
V
to reflect a comparable risk per rupee among all
Probability of Default (PD) Value Added
types of assets. The risk inherent in commitment &
PD is an estimate of likelihood of default over a Wealth created by providing banking and other
contingencies is also recognised, first by adjusting
given time horizon. services less the cost of providing such services.
notional values to Statement of Financial Position
Projected Unit Credit Method (PUC) (or credit) equivalents and then by applying The value added is allocated among the employees,
An actuarial valuation method that sees each appropriate risk weighting factors. the providers of capital, to government by way of
period of service as giving rise to an additional taxes and retained for expansion and growth.
S
unit of benefit entitlement and measures each Vostro Account
unit separately to build up the final obligation. Segmental Analysis
A local currency account maintained by a local
(sometimes known as the accrued benefit method Analysis of financial information by segments of
bank for a foreign (correspondent) bank. For the
pro-rated on service or as the benefit/years of an enterprise specifically, the different industries
foreign bank, it is a Nostro account. The domestic
service method). and the different geographical areas in which it
bank acts as custodian or manages the account of
operates.
Prudence a foreign counterpart.
Inclusion of a degree of caution in the exercise of Shareholders’ Funds
judgment needed in making the estimates required Total of issued and fully paid share capital and Y
under conditions of uncertainty, such that assets capital and revenue reserves. Yield to Maturity
or income are not overstated and liabilities or Discount rate at which the present value of future
Single Borrower Limit
expenses are not understated. payments would equal the security’s current price.
30% of capital base.
R
Statutory Reserve Fund
Relevant Activities A capital reserve created as per the provisions of
Relevant activities are activities of the investee the Banking Act No. 30 of 1988.
that significantly affect the investee’s returns.
Subsidiary
Repurchase Agreement A Subsidiary is an entity that is controlled by
This is a contract to sell and subsequently another entity.
repurchase government securities at a given price
on a specified future date. Substance over Form
The consideration that the accounting treatment
Return on Average Assets (ROA) and the presentation in financial statements of
Profit after tax expressed as a percentage of transactions and events should be governed by
average total assets, used along with ROE, as a their substance and financial reality and not merely
measure of profitability and as a basis of intra- by legal form.
industry performance comparison.
T
Return on Average Equity (ROE)
Total Tier I Capital
Profit after tax less preferred share dividends if
Total Tier I Capital consists of Common Equity
any, expressed as a percentage of average ordinary
Tier I Capital (CET I) and Additional Tier I Capital
shareholders’ equity.
(AT I).
Revenue Reserves
Total Capital (Capital Base)
Reserves set aside for future distribution and
Capital base is summation of the core capital
investment.
(Tier I) and the supplementary capital (Tier II).
Reverse Repurchase Agreement
Twelve Month Expected Credit Losses
Transaction involving the purchase of government
The portion of lifetime expected credit losses that
securities by a bank or dealer and resale back to
represent the expected credit losses that result
the seller at a given price on a specific future date.
from default events on a financial instrument
Rights Issue that are possible within the 12 months after the
Issue of shares to the existing shareholders at an reporting date.
agreed price, generally lower than market price.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 35th adoption of the final dividend 9. To re-elect Mr Deshal de Mel who
Annual General Meeting of Sampath resolution at the AGM, such retires by rotation at the Annual
Bank PLC (the Company) will be held at final cash dividend shall be General Meeting as a Director in
the "Board Room" of the Bank on 4th based on the new number of terms of Article No. 87 of the Articles
Floor, Sampath Bank PLC, at No. 110, Sir shares (1,144,373,955 shares) of Association of the Company.
James Peiris Mawatha, Colombo 02 to and would amount to Rs 2.75
10. To re-elect Ms Aroshi Nanayakkara
be convened through an "online virtual" per share. The total dividend
who retires by rotation at the Annual
platform by using "audio-visual" tools on will however remain at
General Meeting as a Director in
30th March 2021 at 10.00 a.m. for the Rs 3,147,028,376.25.
terms of Article No. 87 of the Articles
following purposes:
4. To elect Mr Vajira Kulatilaka who was of Association of the Company.
appointed to the Board to fill up a
1. To receive and consider the Annual 11. To re-elect Dr Sanjiva Weerawarana
casual vacancy in the Board in terms
Report of the Board of Directors on who retires by rotation at the Annual
of Article No. 93 of the Articles of
the affairs of the Company. General Meeting as a Director in
Association of the Company.
terms of Article No. 87 of the Articles
2. To receive and consider the Statement
5. To elect Mr Harsha Amarasekera who of Association of the Company.
of Audited Accounts for the year
was appointed to the Board to fill up
ended 31st December 2020 with the 12. To approve the donations and
a casual vacancy in the Board in terms
Report of the Auditors thereon. contributions made by the Directors
during the year under review.
3. To approve the cash dividend Association of the Company.
recommended by the Board of 13. To re-appoint Messrs Ernst & Young,
6. To elect Mrs Keshini Jayawardena who
Directors as the first and final Chartered Accountants as Auditors
dividend for the financial year 2020 of the Company for the ensuing year
which will be payable as follows; and to authorise the Directors to
determine their remuneration.
 A Cash Dividend of Rs 8.25 per Association of the Company.
share, based on the number
7. To elect Mr Ajantha de Vas By order of the Board,
of shares in issue as at 15th
Gunasekara who was appointed to
February 2021 (381,457,985
the Board to fill up a casual vacancy in
shares) to be paid for the financial
the Board in terms of Article No. 93
year ended 31st December
of the Articles of Association of the LASANTHA SENARATNE
2020 at a total cost of
Company. Company Secretary
Rs 3,147,028,376.25.
8. To elect Mr Vinod Hirdaramani who
 However, if the resolution on Colombo, Sri Lanka
the proposed sub-division of 16th February 2021
shares (01:03) is approved by the
shareholders at the Extraordinary
Association of the Company.
General Meeting to be held on
17th March 2021 prior to the
Note: A member is entitled to appoint a Proxy to participate and vote on his/her/its behalf and a Proxy need not be a member of
the Company. A Form of Proxy is enclosed for this purpose. The instrument appointing a Proxy must be deposited at the
Registered Office of the Company at No. 110, Sir James Peiris Mawatha, Colombo 02, not less than forty eight (48) hours
before the time fixed for holding of the Meeting.
NOTES
STAKEHOLDER FEEDBACK FORM
To request information or submit a comment/query to the Bank, please complete the following and return this page to:
COMPANY SECRETARY,
Sampath Bank PLC,
No. 110, Sir James Peiris Mawatha,
Colombo 02, Sri Lanka.
e-mail: company_secretary@sampath.lk
Tel : +94 (011) 4730652/420/548
Fax : +94 (011) 2303070
We also appreciate your comments on this Annual Report.
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SAMPATH BANK PLC I Annual Report 2020
FORM OF PROXY
THIRTY FIFTH ANNUAL GENERAL MEETING

Sampath Bank PLC
110, Sir James Peiris Mawatha,
Colombo 02.
I/We,......................................................................................................................................................................................................................................................................
bearing NIC No. ..............................................................................................................of................................................................................................................................
being a member/members of Sampath Bank PLC (the Company) hereby appoint Mr/Mrs/Miss/Ven/Rev...................................................................................
.......................................................................................................................................................................................…......................................................................................
bearing NIC No. ................................................................................................of.............................................................................................................................................
......................................................................................................................................................................................................................................................whom failing:
1 Mr Harsha Amarasekera failing him 7 Mr Vajira Kulatilaka failing him

2 Mr Rushanka Silva failing him 8 Mrs Keshini Jayawardena failing her
3 Mr Deshal de Mel failing him 9 Mr Vinod Hirdaramani failing him
4 Mr Dilip de S Wijeyeratne failing him 10 Mr Nanda Fernando failing him
5 Ms Aroshi Nanayakkara failing her 11 Mr Ajantha de Vas Gunasekara
6 Dr Sanjiva Weerawarana failing him
as my/our proxy to participate and vote for me/us on my/our behalf at the Thirty Fifth Annual General Meeting of the Company to be held at the
"Board Room" of the Bank on 4th Floor, Sampath Bank PLC, at No. 110, Sir James Peiris Mawatha, Colombo 02, to be convened through an "online
virtual" platform by using "audio-visual" tools on 30th March 2021 at 10.00 a.m. and at any adjournment thereof.
Please mark your preference with “X”
FOR AGAINST
1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company.
2. To receive and consider the Statement of Audited Accounts for the year ended 31st December 2020 with the
Report of the Auditors thereon.
3. To approve the cash dividend recommended by the Board of Directors as the first and final dividend for the
financial year 2020 set out in the Notice convening the meeting.
4. To elect Mr Vajira Kulatilaka who was appointed to the Board to fill up a casual vacancy in the Board in terms of
Article No. 93 of the Articles of Association of the Company.
5. To elect Mr Harsha Amarasekera who was appointed to the Board to fill up a casual vacancy in the Board in
terms of Article No. 93 of the Articles of Association of the Company.
6. To elect Mrs Keshini Jayawardena who was appointed to the Board to fill up a casual vacancy in the Board in
terms of Article No. 93 of the Articles of Association of the Company.
7. To elect Mr Ajantha de Vas Gunasekara who was appointed to the Board to fill up a casual vacancy in the Board
in terms of Article No. 93 of the Articles of Association of the Company.
8. To elect Mr Vinod Hirdaramani who was appointed to the Board to fill up a casual vacancy in the Board in terms
of Article No. 93 of the Articles of Association of the Company.
9. To re-elect Mr Deshal de Mel who retires by rotation at the Annual General Meeting as a Director in terms of
Article No. 87 of the Articles of Association of the Company.
10. To re-elect Ms Aroshi Nanayakkara who retires by rotation at the Annual General Meeting as a Director in terms
11. To re-elect Dr Sanjiva Weerawarana who retires by rotation at the Annual General Meeting as a Director in terms
12. To approve the donations and contributions made by the Directors during the year under review.
13. To re-appoint Messrs Ernst & Young, Chartered Accountants as Auditors of the Company for the ensuing year
and to authorize the Directors to determine their remuneration.
Signed on this …………………………………day of …………………………………. 2021
Signature ……………………………………………………… NIC/PP/Co. Reg. No. of Shareholder/s ………………………… ………………………………………
Note: 1. Proxy need not be a member of the Company

2. Instructions regarding completion of Proxy are given in next page
SAMPATH BANK PLC I Annual Report 2020
INSTRUCTIONS AS TO COMPLETION
1. Kindly perfect the form of Proxy, after filling in legibly your full name and address and by signing in the space provided.
2. The completed form of Proxy should be deposited at the Registered Office (Secretariat Department) of the Company at No.
110, Sir James Peiris Mawatha, Colombo 02, not less than 48 hours before, the appointed time for holding the Annual General
Meeting and no registration of Proxies will be accommodated at the venue on the date of the Annual General Meeting.
3. If you wish to appoint a person other than Chairman, Deputy Chairman or a Director of the Company as your Proxy, please
insert the relevant details in the space provided before names of the Board of Directors on the Proxy Form.
4. Article No. 73 of the Articles of Association of Company provides that: “Any corporation which is a member of the Company
may, by resolution of its directors or other governing body, authorize such person as it thinks fit to act as its representative at
any meeting of the Company or of any class of members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of the
Company”.
5. Please indicate with an ‘X’ in the space provided, how your Proxy is to vote on each resolution. If no indication is given, the
Proxy, at his/her discretion, will vote as he/she thinks fit.
6. In the case of a Company/Corporation, the Proxy must be under its Common Seal which should be affixed and attested in the
manner prescribed by its Articles of Association.
7. In the case of a Proxy signed by an Attorney, the Power of Attorney must be deposited at the Registered Office of the Company
for registration.
Name of Shareholder : ………………………………………………………………………………………….…………………
NIC No./Passport No./Co. Reg No. of Shareholder : ………………………………………………………………………………………….…………………
Membership No./Share Certificate No. : ………………………………………………………………………………………….…………………
CDS A/C No. [if applicable] : ………………………………………………………………………………………….…………………
No. of Shares : ………………………………………………………………………………………….…………………
Name of Proxy holder : ………………………………………………………………………………………….…………………
NIC No./Passport No. of Proxy holder : ………………………………………………………………………………………….…………………

CORPORATE INFORMATION
NAME OF COMPANY STOCK EXCHANGE LISTINGS Mr Vajira Kulatilaka

Sampath Bank PLC (AS AT 31ST DECEMBER 2020) Independent, Non-Executive Director
381,457,985 Ordinary Shares
LEGAL FORM Mrs Keshini Jayawardena
A Public Limited Liability Company 60,000,000 Listed Rated Unsecured Independent, Non-Executive Director
incorporated in Sri Lanka on 10th March Subordinated Redeemable Debentures of
Mr Vinod Hirdaramani *
1986 under the Companies Act No. 17 Rs 100/- each - 2016/2021
of 1982 and listed on the Colombo Stock
Exchange, re-registered on 28th April 60,000,000 Basel III Compliant - Tier II
Mr Nanda Fernando
2008 under the Companies Act No. 7 of Listed Rated Unsecured Subordinated
Managing Director
2007. A Licensed Commercial Bank under Redeemable Debentures with a Non-
the Banking Act No. 30 of 1988. Viability Conversion of Rs 100/- each - Mr Ajantha de Vas Gunasekara
2017/2022 Executive Director/
COMPANY REGISTRATION NUMBER Group Chief Financial Officer
PQ 144 75,000,000 Basel III Compliant - Tier II
Listed Rated Unsecured Subordinated (*Mr Vinod Hirdaramani was appointed to the
HEAD OFFICE & REGISTERED OFFICE Redeemable Debentures with a Non- Board w.e.f. 16.02.2021)
No. 110, Sir James Peiris Mawatha, Viability Conversion of Rs 100/- each -
Colombo 02, Sri Lanka 2018/2023 SUBSIDIARY COMPANIES
70,000,000 Basel III Compliant - Tier II Name of the Holding Nature of

TELEPHONE
Listed Rated Unsecured Subordinated Company % Business
+94 11 2300260
Redeemable Debentures with a Non- Sampath 100.00 Renting of
+94 11 2358358
Viability Conversion of Rs 100/- each - Centre Ltd commercial
+94 11 4730630 2019/2024 property
+94 11 5331441
VAT REGISTRATION NUMBER SC Securities 100.00 Stock broking
+94 11 5600600
(Pvt) Ltd
134001194 - 7000
FAX Siyapatha 100.00 Granting leasing,
+94 11 2303085 CREDIT RATING Finance PLC hire purchase,
Fitch Rating: Fitch Ratings Lanka Limited factoring &
SWIFT CODE has assigned National Long Term Rating of other loan
BSAMLKLX 'AA- (lka) with Stable outlook' to Sampath facilities &
Bank PLC accepting
E-MAIL
BOARD OF DIRECTORS deposits
mgr@oper.sampath.lk
Sampath 100.00 Software
info@sampath.lk Mr Harsha Amarasekera
Chairman/Non-Independent, Information development,
WEB PAGE Non-Executive Director Technology renting of IT
www.sampath.lk Solutions Ltd equipment,
Mr Rushanka Silva IT resource
AUDITORS Deputy Chairman/Non-Independent, outsourcing &
Messrs Ernst & Young Non-Executive Director
consultancy
Chartered Accountants Mr Deshal de Mel
FOR INVESTOR RELATIONS AND
Senior Independent Director,
LAWYERS CLARIFICATIONS ON THE REPORT,
Non-Executive Director
Messrs Nithya Partners PLEASE CONTACT
Attorneys-at-Law Mr Dilip de S Wijeyeratne The Company Secretary,
Independent, Non-Executive Director Sampath Bank PLC,
COMPANY SECRETARY No. 110, Sir James Peiris Mawatha,
Mr Lasantha Senaratne Ms Aroshi Nanayakkara Colombo 02, Sri Lanka
Attorney-at-Law
E-mail : company_secretary@sampath.lk
ASSISTANT COMPANY SECRETARY Tel : +94 11 4730652/420/548
Mr Muditha Walpola
Attorney-at-Law
Designed & produced by
Printed by Printel (Pvt) Ltd

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Sampath Bank PLC ǀ Annual Report 2020

Millions of lives impacted.

A million million ways to grow.

Here at Sampath Bank, as we come to the close of an eventful year

Today, we move forward with a clear vision. We are energised with

About the Report...................................4

INTRODUCTORY MANAGING OUR MANAGEMENT

RISK & GOVERNANCE FINANCIAL INFORMATION SUPPLEMENTARY

ABOUT THE REPORT

Report Profile GRI - 102-50,52

Each year Sampath Bank prepares and

 Global Reporting Initiative (GRI) Standards - “In Accordance

Our Progress in Sustainability Reporting GRI - 102-51

2011 2012 2013 2014 - 2016 2017 - 2020

Stand-alone Report Incorporated in Stand-alone Report Integrated Report Integrated Report

Feedback and Queries GRI - 102-53

A comprehensive Our Materiality Monitoring Process GRI - 102-46,47/103-1,2

helped to verify and

A comprehensive broad-based stakeholder

Integration into the Bank’s Business

Material Topics Level of Materiality Level of Materiality

COVID-19 pandemic and its impact

Total Deposits Total Operating Net Asset Value Cost of Risk

Rs 887 Bn Rs 20.1 Bn Rs 281.94 1.36%

+23.5% -1.3% +2.4% -38bps

Total Assets Total Advances - Gross Net Interest Income

Key Performance Indicators - Bank

Value Creation through Triple Bottom-line Approach

Key Indicator Measurement 2020 2019

Intellectual Capital Key Indicator Measurement 2020 2019

Investment in IT software development Rs Mn 199 248

Key Indicator Measurement 2020 2019

Key Indicator Measurement 2020 2019

Key Indicator Measurement 2020 2019

Our Vision and Values 16 | About the Bank 17 | Product Portfolio 18 |

OUR VISION AND VALUES

Our Vision GRI - 102-16

The Growing Force in Sri Lankan

Create a learning culture

ABOUT THE BANK

What we offer 2001 - 2010: Striding Ahead

2020 1991 - 2000: Making Waves

Treasury Services 2000 1986 - 1990: The Early Years

Consumer Banking GRI - 102-2

Current Accounts  Sampath General Current Account

Savings  Regular Savings  X-SET

 Regular Deposits  Fixed Deposits

Agent Banking  MYBANK

Gift Vouchers  Sampath Thilina

 Sampath Visa Credit Cards

Foreign Remittances  e-Remittance

Safety Lockers  Sampath Safe Deposit Lockers  Banking Robot

 Sampath Vishwa Corporate

Cash Management  Corporate Cash Management Solution

Corporate Investments  Money Market Account

Spot Contracts Treasury Bills

Forward Exchange Contracts Treasury Bonds

Repo & Reverse Repo