Wealth Insights Series: Banks – An Evolving Story of Elephants and Cheetahs

Asia Securities, Sri Lanka’s leading independent stockbroking and research firm, hosted its second “Wealth Insights” series of investor events on Monday 12th June 2015. The event, titled “Banks: an evolving story of elephants and cheetahs” focused on the outlook for the Banking sector and brought together industry leaders with institutional and high net worth investors. The session’s discussion focused on unearthing deeper insights into sector dynamics that should better inform investment decisions.

The event kicked off with key note address by Dr. Nishan De Mel, Executive Director, Verite Research on “Political Analysis for Economic Forecasting in Sri Lanka”. Dr. De Mel concluded that political stances and resulted policy changes are a significant factor to be considered when building up an outlook for the economy.

The key note address was followed by Asia Securities’ Banking sector analyst, Mr. Srimal Liyanage, presenting highlights from the sector report and Asia Securities’ positive outlook for the industry. Mr. Liyanage’s presentation concluded that the SMEs will be the main driver behind banking sector growth.

The presentation was followed by a panel discussion consisting of bank CEOs; Mr. Jonathan Alles, Managing Director/CEO, Hatton National Bank PLC; Mr. Rajendra Theagarajah, Director/CEO, National Development Bank PLC; Mr. Jim McCabe, CEO, Standard Chartered Bank, Sri Lanka.

Mr. Alles stated that technology is coming to the fore in driving growth for banks in a shift away from the traditional model. Speaking on growth sectors he said that housing is one of the sectors which will grow but, developing the market is held back by the lack of a proper framework as well as some regulatory issues. Furthermore, there is a lot happening in the micro finance but, is risky business. However, there is a good growth opportunity from the SMEs.

Mr. McCabe started off by saying that Sri Lanka’s banking industry development is at a good stage and the participation of the Central Bank will be a crucial factor in driving towards the next stage. Consolidation is a natural phenomenon that comes to every market but, in some developing markets requires a push from the government. The key item that the country needs to do as a whole is to get policy right and government in place and have all come together so people can assess and analyze and anticipate where things are going to go which is important for building an outlook for the medium to long term to drive growth.

Mr. Theagarajah said that innovation is an important aspect in driving growth. Looking towards the housing market he sees lending to build gated communities for corporates with a large number of employees is one such item. Looking back at what was perceived as a weakness of the banking sector, lending to the government, Mr. Theagarajah stated that it had been done with sovereign guarantees and has not resulted in any past dues. He went on to say that the industry should consolidate and shrink but, needs an occasional nudge from the government to get things moving.

About Asia Securities

Asia Securities, Sri Lanka’s leading independent stock brokerage firm, offers best-in-class research across macroeconomics and multiple sectors listed on the Colombo Stock Exchange. The “Wealth Insights” series which has garnered significant investor interest, focuses on investment ideas and outlook for key sectors. Asia Securities provides the broadest reach among investors including domestic institutional, high net worth and retail, as well as foreign institutional and high net worth clients.