A year of stability, resurgence, and transformation

As we reflect on the year 2024, it is evident that this has been a defining period for Commercial Bank of Ceylon PLC – a year of resilience, resurgence, and transformation that has positioned us for long-term sustainable growth. We successfully navigated an evolving financial landscape, balancing the challenges of a complex operating environment while reinforcing our position as Sri Lanka’s most stable, strongest, and trusted financial institution.

For nearly 105 years, Commercial Bank has remained a steadfast pillar of strength, adapting to economic cycles, political shifts, and global disruptions with agility and foresight. The past few years have been among the most challenging in our history, with macroeconomic volatility, sovereign debt restructuring, and global uncertainties testing our resilience. Yet, through it all, we remained unwavering in our mission – placing the needs of our customers, shareholders, employees, and communities at the center of our strategy.

Our journey through 2024 has been aptly captured by the tagline of this report, “In Context – From Turbulence Towards Tranquillity.” Having weathered multiple storms, we are now navigating a period of relative stability with renewed confidence, stronger fundamentals, and a clear vision for the future.

Economic environment: a foundation for growth

The global economy in 2024 was defined by the interplay of geopolitical tensions, monetary policy shifts, and persistent inflationary pressures. While major economies demonstrated resilience, tightening financial conditions and supply chain disruptions continued to shape global trade and investment flows. Emerging markets, including Sri Lanka, Bangladesh, and the Maldives, faced their own unique challenges, requiring us to remain adaptable, forward-thinking, and disciplined in risk management.

In Sri Lanka, the successful completion of sovereign debt restructuring provided much-needed clarity to financial markets, improving liquidity and restoring investor confidence. Inflation moderated, interest rates declined, and foreign exchange markets stabilized, creating a more conducive environment for businesses and financial institutions. However, the restructuring also resulted in financial losses for banks, reinforcing the need for strong capital buffers and prudent financial management.

Bangladesh, meanwhile, faced political and economic turbulence, with mass protests leading to the formation of a transitional government. Inflation surged into double digits, foreign exchange reserves were strained, and GDP growth slowed. Similarly, the Maldives grappled with fiscal imbalances, declining reserves, and a widening trade deficit, exacerbated by growing external debt concerns. Despite these macroeconomic challenges, the Bank remained unwavering in its commitment to supporting businesses and individuals across all our markets, ensuring continued credit availability, financial inclusion, and economic stability.

A record-breaking year of financial performance

Despite the volatile external environment, 2024 was a landmark year for Commercial Bank, delivering record-breaking financial results and further reinforcing our market leadership. A significant milestone was the successful equity capital infusion of Rs. 22.54 Bn., through a rights issue and the raising of Rs. 20 Bn., in Tier II capital via a debenture issue. These initiatives significantly enhanced our capital adequacy, strengthened our financial stability, and created room for future expansion.

The Bank effectively mitigated the impact of the Rs. 45.11 Bn., net loss resulting from the restructuring of Sri Lanka International Sovereign Bonds (SLISBs) through the net reversal of Rs. 63.22 Bn., in impairment provisions, demonstrating its resilience, strategic foresight, and prudent risk management. Lending reached record levels, with the loan book expanding by Rs. 221.34 Bn., reflecting the Bank’s commitment to economic growth. Group Net interest income surged by 36.71% to Rs. 118.13 Bn., driven by effective balance sheet management and a strong CASA base. The total tax contribution tripled to Rs. 61.83 Bn., underscoring our commitment to national fiscal stability. Profit before taxes rose to Rs. 97.81 Bn., while profit after taxes reached Rs. 55.69 Bn., marking a year of remarkable financial strength and strategic growth. In terms of profitability, Return on Assets and Return on Equity significantly improved to 2.01% and 22.20% respectively for 2024 compared to 0.85% and 10.20% in 2023.

To provide a clearer perspective on the Bank’s core financial performance, a detailed financial review based on a normalised income statement, which discounts the impact of the accounting treatment for SLISBs, is given in the Financial Review on page 152. This adjusted analysis offers stakeholders a comprehensive understanding of underlying business performance, enabling a more accurate evaluation of revenue generation, operational efficiencies, profitability, and long-term financial stability.

Strategic business expansion and market leadership

Throughout 2024, the Bank continued to reinforce its leadership across key business segments, making strategic moves that cemented its position as Sri Lanka’s most resilient and customer-centric financial institution. Our focus remained on expanding operations, deepening customer engagement, and creating financial solutions that drive inclusive growth.

In the SME and MSME segments, the Bank expanded its Agriculture and Microfinance Units, increasing operations from 19 to 35 units, and aiming to further increase to 100 units in the future. This expansion enabled greater financial accessibility for rural businesses, empowering entrepreneurs with tailored solutions. Recognising the crucial role of SMEs in national economic development, the Bank introduced a comprehensive business ecosystem initiative, fostering better connectivity between SMEs, suppliers, and broader market linkages. The Bank’s commitment to the SME sector was further demonstrated through its continued leadership as Sri Lanka’s largest SME lender for the fourth consecutive year.

In addition to financing, the Bank created opportunities for SMEs to expand their businesses through platforms such as the SME Trade Fair 2024, which connected small businesses with key industry players and investors. The Bank also hosted Ran Kethe Wap Magula, a cultural initiative celebrating the agricultural roots of Sri Lanka, reinforcing our deep commitment to rural economic empowerment. Our outstanding contributions to SME finance were internationally recognised, as we received 18 prestigious global awards, further strengthening our position as a leader in financial inclusion.

Both Corporate and Personal Banking segments witnessed significant expansion as well. Our Project Finance Unit doubled its exposure, providing funding for critical infrastructure and renewable energy projects that will shape Sri Lanka’s future. The Bank also introduced innovative solutions in supply chain financing and dealer financing, enabling businesses to streamline their cash flows efficiently. Moreover, the establishment of the Business Revival and Rehabilitation Unit underscored our proactive approach to supporting businesses undergoing financial distress, offering structured support for recovery in line with the Central Bank of Sri Lanka’s directives.

Adopting the “Battle Card” concept for competitive excellence

The introduction of the Battle Card Concept revolutionised our competitive approach, embedding a data-driven, proactive sales culture across the Bank. By analysing competitor movements, customer expectations, and industry trends, we empowered our teams with accurate market intelligence, enabling them to deliver tailored financial solutions with precision. This shift from a traditional banking model to a strategic, sales-oriented framework enhanced our customer engagement, product offerings, and market positioning. The initiative played a pivotal role in expanding our wallet share in corporate banking, SME financing, and personal lending, while strategic automation and operational centralisation streamlined service delivery, making it more efficient and customer-centric.

Transforming customer experience

With an unrelenting commitment to service excellence, the Bank focused on enhancing customer journeys, streamlining digital interfaces, and embedding a customer-first culture across all touchpoints. The Customer Experience Steering Committee was established to oversee service enhancements, ensuring that the Bank consistently delivers an unparalleled banking experience.

We introduced customer journey mapping initiatives, refining service interactions at branches, digital channels, and customer contact points. These improvements facilitated faster service resolution, with AI-powered engagement tools helping to predict customer needs and offer personalised financial solutions. The internal campaign “Service Beyond 100%” reinforced our commitment to customer excellence, creating a culture that prioritises customer satisfaction above all else.

By harnessing data analytics and AI-driven insights, the Bank was able to increase first-time resolution rates at contact center, providing seamless and efficient responses to customer inquiries. These advancements played a key role in improving our Net Promoter Score (NPS), reaffirming our leadership in customer experience.

Pioneering the future of banking: digital transformation and AI

The Bank has been a trailblazer in digital innovation, continuously introducing cutting-edge solutions to redefine the banking landscape in Sri Lanka. Throughout 2024, we made remarkable progress in AI-powered banking, automation, and digital inclusivity.

Our ComBank Digital platform surpassed 1.5 million users, processing over Rs. 4 Tn., in transactions, reflecting the rapid adoption of digital banking. We expanded AI-powered underwriting capabilities, allowing automated loan approvals for home loans, personal loans, and SME credit facilities, significantly reducing turnaround times. Additionally, we enhanced Host-to-Host (H2H) integration, streamlining bulk transactions for corporate clients and improving overall treasury management.

Our digital-first approach was further strengthened with the launch of Sri Lanka’s first trilingual digital banking service, making banking services more accessible to all segments of society. Cybersecurity remained a top priority, with continuous investments in fraud detection and risk mitigation technologies, ensuring a secure and seamless banking experience for customers.

Sustainability and ESG commitments

The Bank remained steadfast in its commitment to sustainability, financial inclusion, and responsible banking. Throughout 2024, we advanced our environmental, social, and governance (ESG) agenda by integrating sustainability into our core operations.

Our ongoing collaboration with the International Finance Corporation (IFC) is focused on developing a Climate Transition Plan, which will align the Bank with its Net Zero goals by 2050. This initiative remains a key priority as we continue to refine our sustainability strategy and integrate climate considerations into our core banking operations. Our 100,000 Tree Planting Initiative was completed, reinforcing our dedication to environmental conservation.

Financial literacy programs continued to be a priority of our social responsibility efforts, positively impacting over 16,000 entrepreneurs and farmers, equipping them with the knowledge and tools needed to manage their finances effectively. By embedding ESG principles into our business model, we continue to drive positive social and environmental impact while ensuring sustainable growth for all stakeholders.

Looking ahead: vision for 2025 and beyond

As we step into 2025 and beyond, our strategy remains anchored in regional expansion, digital banking leadership, and advancing sustainable finance. The Bank is actively exploring opportunities to expand its international presence, building on the success of our Bangladesh operations to enter new markets. Additionally, our focus on AI-powered financial solutions will continue to deepen as we enhance predictive analytics and introduce hyper-personalised banking services.

A key priority remains strengthening climate finance, with a strategic focus on green lending, renewable energy financing, and carbon-neutral banking solutions. In alignment with SLFRS S1 and S2, we are gearing ourselves to systematically identify, assess, manage and report climate-related risks and opportunities, ensuring that our sustainability initiatives are integrated into our financial decision-making processes. As we prepare to fully comply with global sustainability disclosure standards in 2025, we are enhancing our governance frameworks, data collection mechanisms, and risk assessment models to provide transparent, reliable, and decision-useful climate-related financial disclosures.

Acknowledgements

I extend my deepest appreciation to our loyal customers and shareholders, whose unwavering trust has been the foundation of our success. My heartfelt gratitude goes to our Corporate and Senior Management teams, and employees across Sri Lanka, Bangladesh, the Maldives, other overseas markets as well as our Sri Lankan subsidiaries. Your dedication and adaptability continue to inspire excellence.

To our Chairman and the other members of the Board of Directors, thank you for your strategic insight and unwavering support. I also wish to express my gratitude to the Governor, members of the Governing Board and the Monetary Policy Board, and officials of the Central Bank of Sri Lanka for their steadfast regulatory guidance, which has been instrumental in fostering financial stability. I express my gratitude to the external auditors, Messrs KPMG, for their professionalism and the timely execution of the audit.

As we embark on this new chapter, let us remain agile, innovative, and united in our vision. The road ahead holds immense promise, and together, we will shape the future of banking with resilience, innovation, and excellence.

Innovation and purpose define our journey. Together, we are building a future where banking empowers, enables, and inspires.

S C U Manatunge
Managing Director/Chief Executive Officer

February 28, 2025
Colombo