DFCC Bank is in discussion with several European and Asian entities in a bid to secure international credit, officials said.
“We are in discussion with a few parties relating to funding lines. Last year DFCC got a line of US$ 30 million from Deutsche Investitions- und Entwicklungsgesellschaft or DEG (which translates into German Investment Corporation). Half of it was drawn lat year and the balance half was drawn this year,” Nihal Fonseka, CEO DFCC told the Business Times.
“We also had a partly drawn line from the European Investment Bank and this year we drew down the balance EUR 25 million from this credit line,” he said, adding that DFCC’s funding requirements in 2012 may not be as high as what was projected at the beginning of this year owing to the slowing credit demand seen so far.
He said the banking sector is affected by the slow credit growth.
He added that synergies with Vardhana are happening as planned. “We will forge ahead with retail banking products through this arm and this is the main reason we maintain almost full ownership with a stake in Vardhana at 99.1% – so that we can fully control it,” he said. He said that the two entities currently do a lot of things centrally. “We have about 20 common branches,” he said, explaining that most managerial functions are shared.
The two entities’ risk management, human resources, IT, credit committee, etc are all shared, while Vardhana does personal financial services, credit cards, consumer type loans, trade finance and remittances etc that can only be undertaken by a commercial bank.
On the macro situation in the country, Mr. Fonseka noted that with the shocks in the global situation, Sri Lanka had to make certain adjustments to its monetary policy. “The fact that we did this was a good thing. There’s some pain, because the 8 per cent GDP growth target has come down. But the adjustments that were done to the monetary policy stance were inevitable, “ he explained.
He said that the share market has seen foreigners as net buyers but the foreign direct investment has been slow.
“We haven’t seen landmark projects except Shangri-La although there have been a few other property and smaller tourism related investments as well. This may be partly because earlier in the year investment sentiment towards India has become negative, which shifted the capital flows from the sub continent to East Asia and elsewhere. When this sentiment improves, which should happen with the recent investment policies adopted by India then we can expect a positive knock on effect,” he said.
DFCC Group posted a consolidated profit after tax of Rs 2,973 million for 2011/12, which is an increase of 37% over the Rs 2,170 million recorded in the previous year (excluding the exceptional profit relating to the reduction of DFCC’s shareholding in Commercial Bank in 2010/11).