An exclusive Interview with the Deputy General Manager of Treasury at Pan Asia Bank Mr Richie DiasStrengthened by its brand positioning as ‘The Truly Sri Lankan Bank’ and boosted by its prudent financial management, Pan Asia Banking Corporation PLC (PABC) recorded its best-ever financial results in the year 2020 despite the adverse impact of COVID-19 on the economy and the banking industry at large.
At the centre of this impressive performance is the Treasury function – truly the heart of the Bank’s operations, which has helped steer Pan Asia Bank to profitability.Richie Dias, Deputy General Manager – Treasury at Pan Asia Bank explains, “The Treasury Department was one of the main contributors to the Bank’s overall profitability. Over the last three to four years, the treasury function has been responsible for sustaining reasonable interest rates to attract deposits, usually a challenge for a medium-sized bank like us.
We looked at niche markets and non-traditional ways to meet budgeted profitability during 2020 and reduced cost of funds by raising foreign funding lines. Pan Asia Bank’s return on equity and net interest margins are one of the highest in the industry today.”He believes the wealth of expertise in treasury operations reposed within Pan Asia Bank has successfully help fund the Bank’s balance sheet on current and forward basis. As a, smaller bank, one of the challenges faced was deposit mobilisation since larger banks were in a position to offer more attractive rates. “In order to be competitive in lending and to increase profit margins, we sourced funds from overseas. As of now, Pan Asia Bank has close to USD 100 million worth of funding lines from reputed Development Financial Institutions (DFIs) for long and medium term tenure,” Dias explains.
Dias reveals that PABC gained the confidence of DFIs because of its green financing aspirations – since the Bank has always been keen to fund renewable and energy efficient projects, it had already embarked on its green journey which was recognized with the prestigious ‘Global Climate Partnership Award’ 2019 by The Global Climate Partnership Fund (GCPF), one of the world’s largest climate funds. Pan Asia Bank is the first Bank in Sri Lanka to be recognised by The Global Climate Partnership Awards.
With its green journey gaining further traction, Pan Asia Bank became the first Sri Lankan bank to partner with the Switzerland-based Symbiotics for its first green bond issuance for USD 7.75 Million in 2020. These initiatives led PABC to be awarded the ‘Best Green Bank’ accolade by the prestigious Global Banking and Finance Review Awards 2020 for demonstrating expertise and excellence within the global financial community.“With over USD 100 million in funding lines in hand, we are further negotiating more funding lines, which will materialise within a short period of time. Despite the downgrade in sovereign ratings and the adverse impact of the pandemic, DFIs have singled out Pan Asia Bank because of the professional way in which it is managed.
Our campaigns and road shows have ushered in USD125 million worth of investments in fixed deposits and government securities, namely treasury bills and bonds. Over last year, we have managed to reduce the overall cost of funds by almost 300 basis points, which is a tremendous achievement which benefits customers by way of attractive rates.”
He credits the strength of the balance sheet also to the Bank’s Treasury’s quick thinking to lock in its liquid asset base amounting to Rs. 30 billion under its management at higher yields, when they foresaw a drop in interest rates early in the presiding years . Subsequently, the regulator lowered interest rates steeply.Further, the Bank introduced a unique gold loans product in partnership with an international banking partner, which offers price risk hedge notwithstanding fluctuations in world gold prices which safeguards bank’s pawning portfolios.
Looking ahead, Dias believes the strong financial and operational performance delivered by Pan Asia Bank in the 2020 financial year bodes well for the Bank’s prospects in the year ahead and provides a robust springboard for dynamic growth and profitability.