Banking Sector Report Q u a r t e r : D e c

Banking Sector Report Q u a r t e r : D e c 2 0 1 5 by BoJay F r o n t i e r I n s i g h t s

Performance Summary Credit growth accelerated in the December quarter Growth in Net Loans and Advances in Private banks accelerated to 8% Quarter on Quarter (QoQ) (: + 6.6% QoQ). This amounts to a total addition of Rs 161.6 bn during the quarter to the loan book (: + Rs 126.2 bn). (Bank wise: Figure 4). Term loans continued to remain the most significant contributor towards loan growth and added Rs 101.6 bn during the quarter ( : Rs 67.9 bn) while overdrafts and trade finance increased by Rs 18 bn and Rs 16 bn respectively. Growth in the leasing segment eased off to 6.1% QoQ (: 14.4%), an increase of Rs 10bn in absolute terms (: Rs 21.5 bn). (loan composition: Figure 7) Accelerated credit growth in the December quarter pushed Year on Year (YoY) net loan growth to 25%, the highest since 2011, listed private banks added approx. Rs 437.9 bn during the year, with Term loans (+Rs 281.9 bn YoY) and leasing contributing the most. The leasing book expanded by Rs 59.4 bn during the year, with more than one third of it from the Sep15 quarter. The leasing segment also reported the highest growth rate of 49% for the year. BOC had significant reduction in trade finance of Rs 25 bn (mostly denominated in foreign currency) and overdrafts (-Rs 15bn) resulting in a contraction of the loan book by 1%/ Rs 8.5 bn QoQ (: 5.2%), Term loans (-Rs 8.5bn) and pawning (-Rs 6.6 bn) also contributed to the negative impact. However, personal loans increased by a significant Rs 21 bn during the quarter increasing its share of the loan book to 1 from 7% in the Sep15 quarter. Despite the negative loan growth, assets grew by 5.6% QoQ, largely due to financial Investment in loans and advances (which includes development bonds) increasing by Rs 41bn. Loan book grew by 11% on a YoY basis. PAT improved with higher net income and lower impairments. PBT improved overall by 15% QoQ, Improving ROA and ROE. Despite interest margins remaining low, banks managed to improve Net interest income(nii) on absolute terms by approx. 7%. Higher other income and improved fee income further boosted Net income by 8% QoQ. Lower impairment costs during the quarter too boosted the bottom line. Thereby pretax ROA improved to 2.6% from 2.4%. Post tax ROA improved to 1.5% from 1.4% in. As higher effective corporate taxes which increased to 33% from 31% in limited PAT growth to 11% QoQ. (figure 15) Higher net income and lower impairments at COMB, HNB, NDB and SEYB boosted their bottom line in comparison to the September quarter. Despite lower NIMs and higher personnel costs in the sector PAT improved 7% yoy for the financial year supported by lower impairments, higher absolute NII and higher other income. Continued 2

Performance Summary (cont..) Net Interest Margins(NIMs) fall marginally overall NIMs fell marginally overall due to faster rise in cost of funds. However the larger banks, namely COMB and HNB manage to sustain NIMs at levels, NDB too was able to sustain margins. Meanwhile most banks were able to improve absolute Net Interest Income on a quarterly basis on the back of volume growth. (Bank wise: Figure 21) Impairment costs fall further. Impairment costs on average among private banks fell to 0.2% of Avg loans (: 0.5%); a stark improvement from the previous few years (FY14: 0.7%). Bank wise, HNB had a significant collective impairment reversal of Rs 1 bn during the quarter. (Bank wise: Figure 13) Improvement in Asset quality maintained at most banks during the quarter NPL ratios further consolidated the improvements recorded during the year and consequently improved to levels below that recorded in December 2014. Gross NPL improved to 2.7% (Sep15: 3.2%) and Net NPL improved to 1.3% (Sep15; 1.6%). Gross NPL s recorded a Rs 4.7 bn absolute reduction over the period (QoQ). HNB and SEYB both had over Rs 1.5 bn reduction in absolute gross NPLs each, while NTB was able to improve asset quality in its leasing portfolio. (Figure 8) Operating costs increase Operating costs increased by 11% during the quarter. Notable increase in personnel costs of 11% qoq was observed. While on a year on year basis operating costs increased by 12% that too due to increase in personnel costs. DFCC had a notable increase in operating costs which stemmed from merger costs DFCC and DVB Deposit growth increases Deposit growth further improved to 7.1% QoQ (: +5.2%). This was primarily on the back of an increase in time deposits during the quarter while growth in CASA deposits were limited. CASA ratio declined at most banks. (Bank wise Figure 10-11) Banks have mostly been dependent on deposits this quarter to fund the rapid loan growth. With borrowings increasing by a mere 0.5% QoQ (: +14.8%). On a year on year basis deposits in the private listed banks grew by 20.8% (FY14: 13.6%). Borrowings grew by 17.3% YoY in comparison 56.8% during FY14, indicating a shift in funding sources. Loans to deposit ratio increased to 94% as at Dec 15 from 91% in Dec 14. 3

Lending Rates 18 16 14 12 10 8 6 4 AWPLR AWLR AWDR T Bill (1 year) Spread - RHS 7 6.5 6 5.5 5 4.5 4 2nd March 2015 The Central Bank removed the restriction placed on the access to its Standing Deposit Facility (SDF) by OMO participants and the 5 per cent SDF rate was withdrawn. This was due to the signs of sustained increase in credit flows to the private sector Net Injection(+)/Absorption(-) (Rs.bn.) 50 0-50 -100-150 -200 Figure 1. 25th September 2015 Central Bank decided to impose a maximum Loan to Value (LTV) ratio of 70 per cent in respect of loans and advances granted for the purpose of purchase or utilization of motor vehicles by banks and financial institutions. 19 February 2016 Central Bank increased Standing Deposit Facility (SDF) and Standing Lending Facility (SLF) rates to 6.5% & 8% respectively. Figure 2. Interest rate chart compiled from data from CBSL www.cbsl.gov.lk 4

Net Loan Growth QoQ 1 8% 6% 4% 2% -2% -4% Net Loan growth- QoQ 2 15% 1 5% -5% * Beginning from 4Q14, Pvt. Banks figure excludes securities purchased under resale agreements and other investments of COMB from the loans to customers as it is reported separately from Sep 2015 onwards 5.4% 8. Pvt. Banks 9.3% 8.9% 7.6% 8.9% 12.3% State Banks 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 5.8% 5.3% -1. Figure 3. COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC PB Foreign Banks Figure 4. Click to go back Credit Demand accelerated in the fourth quarter. Private Banks reported impressive growth during the quarter, all above 5% QoQ. SEYB recorded the highest growth rate adding Rs 21 bn for the quarter, largely due to increase in terms loans. In absolute terms HNB had the largest increase in net loans of Rs 36.7 bn followed by SAMP (+ Rs 32bn) and COMB (+Rs 26bn) followed suite. PABC and UB slowed down in Dec15 albeit still at a healthy growth rate. Slow down in the expansion of term loans was the attributing factor. While PABC also had a reduction in Securities Purchased under Resale Agreements of Rs 1.5 bn. On a YoY basis COMB, HNB, SAMP and SEYB grew the loan book by around 25% while PABC and UB grew by 4 and 55% respectively. 5

Funding Composition Private banks Total Deposits Total Borrowings Rs. Bn. 3,500,000 3,000,000 2,500,000 608,053 604,758 521,358 2,000,000 329,456 1,500,000 239,251 1,000,000 1,447,803 1,680,356 1,914,205 2,167,310 2,330,311 500,000-4Q2012 4Q2013 4Q2014 3Q2015 4Q2015 Figure 5. Financial Investment Private Banks Lending Portfolio Financial Investments 10 8 16% 23% 26% 27% 25% 6 4 69% 67% 62% 64% 66% 2 4Q2012 4Q2013 4Q2014 3Q2015 4Q2015 Debt Raising COMB raised USD 200 mn foreign loans while HNB raised USD 185 mn in foreign loans during the year. SAMP issued a debentures worth Rs 7 bn in Nov 15. COMB had a Rs 7 bn debenture in Feb16. DFCC has proposed a Rs 7 bn debenture issue in Mar 16. Financial Investments decrease With the increase in loan growth investment in financial instruments decreased. COMB shed Rs 32 bn in financial investments held for sale. While SAMP had a Rs 9.5 bn decrease in trading investments. However HNB had a Rs 15 bn increase in Financial investment-loans and receivables which includes development bonds. (Bank wise: Figure 20) Figure 6. Source: Frontier Research, CSE 6

Click to go back Lending Composition Private Banks Dec-15 51% 17% 1 8% Term Loans (Incl Short Term) Overdraft Pawning Sep-15 5 17% 1 8% Trade Finance Lease receivables Credit Card/Personal Dec-14 47% 18% 12% 7% Housing loans Other Refinance 2 4 6 8 10 Figure 7(a). Lending Composition - BOC Dec-15 41% 16% 4% 1 Sep-15 42% 18% 7% 8% Dec-14 4 18% 8% 8% 2 4 6 8 10 Term Loans (Incl Short Term) Overdraft Pawning Trade Finance Lease receivables Credit Card/Personal Housing loans Other *Other includes Staff and Other loans, excludes investment in Govt and Corporate Debt Securities Figure 7 (b). Term Loans drives loan growth while leasing growth eases up Term loans remained the most significant contributor to loan growth adding Rs 101.6 bn during the quarter (Sep15: Rs 67.9 bn). HNB had the most significant increase of Rs 30.4 bn (: Rs 20.5 bn) followed by COMB (Rs 16.6 bn), SAMP (Rs 15.5 bn), NDB (Rs 13.3 bn) and SEYB (Rs 10.7 bn). Growth in the leasing segment eased off in the December quarter but still grew at a respectable 6% QoQ (: +14%). SAMP which added Rs 4 bn during the Sept 14 quarter added a mere Rs 0.3 bn in Dec 14. NTB which had 25% of its total loans in leasing in Sep 15 reduced it to 23% by Dec15. HNB which has the largest leasing portfolio of Rs 40 bn added Rs 1.8 bn during the quarter. COMB and DFCC were the only banks in which leasing grew above Rs 2 bn QoQ. Pawning now accounts for a mere 2% of the loan book, a sharp drop from the 9% witnessed in Dec 2013. At BOC term loans, overdraft, pawning and trade finance contracted in absolute terms during the quarter, with trade finance significantly falling by Rs 25bn QoQ. Personal loans increased by Rs 21 bn, while housing and leasing increased by Rs 4.9 bn and Rs 3.8 bn respectively. 7

2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 2Q2015 3Q2015 4Q2015 Gross & Net NPL Ratios 8% UnProvided Component Asset Quality improves Click to go back 6% 4% 2% COMB HNB SAMP NDB NTB SEYB PABC UB BOC PB Asset quality improved across the board due to both an increase in the asset base and lower non performing loans. Gross NPL s recorded a Rs 4.7 bn absolute reduction over the period (QoQ). HNB had a significant drop in net NPL, Rs 1.77 bn drop in absolute terms during the quarter. the bank noted Gross NPA Ratio of 2.43% is the lowest in its history. Net NPL to Equity Ratio Figure 8. 7 6 5 48% 4 3 24% 18% 2 1 6% 9% 8% 1 5% 6% COMB HNB SAMP NDB NTB SEYB PABC UB BOC PB Figure 9. SEYB too had a absolute reduction in net NPL s of Rs 1.2 bn during the quarter dramatically improving asset quality. NTB too was able to improve its asset quality, due to absolute reduction in Net NPL of Rs 0.5 bn. the bank has been able to improve gross NPL s of leasing from 8.5% in Dec 14 to 4.7% in Dec 15. Almost a quarter of NTB s loan book is in leasing. Source: Frontier Research & Investor forums 8

Deposit Growth Click to go back 15% 12.5% 12.5% 9.2% 8.6% 9.6% 1 6. 6.1% 6.4% 8.5% 5% 0.3% -5% COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC HSBC CASA Base Figure 10. 6 5 48% 5 46% 41% 4 36% 32% 26% 28% 3 24% 19% 2 1 COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC Figure 11. Deposit Growth increases With the exception of PABC, most banks recorded high deposit growth. The larger banks maintained deposit growth around 6% to 6.4%, SEYB and UBC managed to improve deposits by 12.5% QoQ. On a YoY basis HNB had the highest deposit growth rate, reported at 36.8%, achieved through consistent deposit growth during the year. While UB also increased deposits by 35.4% YoY. While CASA ratios fell at most banks with the exception of DFCC, PABC and BOC in comparison to Sep 15, due to deposit expansion which mostly stemmed from term deposits. SEYB had the most significant reduction due to a Rs 23 bn increase in term deposits. 9

Adjusted Pre and Post Impairment ROA- Pvt. Banks as a % of Av. Assets Pre Impairment ROA Pre tax ROA 4% 3% 2% 1% *1Q13 Excludes the 5.75bn non recurring gain by NDB & 2Q13 Excluded HNB s ESBT provision reversal. Trend in Impairment Charges 2% 1% -1% Impairment/Avg Loans 0.7% 0.2% 0.4% 0.6% 0.9% *2Q14 Excludes the 889 mn non recurring gain by HNB & 4Q14 Excludes Rs 829 mn capital gain from sale of NTB shares for DFCC 0.3% 0.4% 2.7% 2.7% 2.4% 2.6% 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Figure 12. -0.1% -0.7% -0.6% COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC PB HSBC Figure 13. Click to go back Low impairment costs support bottom line While pre impairment ROA remains in the range reported last quarter, lower impairment costs in improve Pre tax profits. Impairments maintained at moderate levels Impairment costs continued to be contained below 1% of loans. HNB and SEYB had reversals in collective impairments during the quarter. HNB had a significant reversal of Rs 1 bn from collective impairments. Source: Frontier Research & CSE 10

ROE vs ROA Pvt. Banks 2 15% 1 5% 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 *1Q13 Excludes the 5.75bn non recurring gain by NDB ROA Composition Pvt. Banks 8% 6% 4% 2% -2% -4% -6% ROE (LHS) ROA (RHS) 1.4% 1.5% 14.4% Figure 14. 1.5% 1.5% 1.6% 4. 3.8% 3.8% -2.6% -2.6% -2.7% -1. -1. -1.1% -0.5% -0.3% -0.1% 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Net Interest Income Non Interest Income Operating Expenses Tax Expense Impairment charges ExtraOrdinary Item 15.8% Figure 15. 2. 1.5% 1. 0.5% 0. Shareholder Returns PBT improved overall by 15% QoQ. Improving ROA and ROE. Despite interest margins remaining low banks managed to improve Net interest income on absolute terms by approx. 7%. While higher other income and improved fee income also boosted Net income by 8% QoQ. Further, lower impairment costs during the quarter boosted the bottom line. Thereby pretax ROA improved to 2.6% from 2.4%. While post tax ROA improved to 1.5% from 1.4%. Higher effective corporate taxes which increased to 33% from 31% in limited PAT growth to 11% QoQ. DFCC had a significant spike in taxes due to differences in tax accounting with change in their financial year to ending December. (Bankwise : Refer figure 18-19) Click to go back Source: Frontier Research 11

Tier 1 Capital 35% 3 24% 25% 2 15% 12% 13% 12% 11% 8% 9% 1 8% 8% 5% COMB HNB SAMP NDB NTB SEYB PABC UB BOC PB Figure 16. Tier 2 Capital 4 3 24. 2 14.3% 15.5% 12.7% 12.3% 12.6% 12.9% 12.3% 11.8% 1 COMB HNB SAMP NDB NTB SEYB PABC UB BOC PB Figure 17. Capital healthy at most Click to go back SAMP who was derated by Fitch last year due to lower capitalization amidst high loan growth witnessed a improvement in CAR. SAMP proposed a scrip dividend in addition to the issued Rs 7bn subordinate debt which further improved Tier 2 capital. They noted the following in their annual Report. Our test computations indicate that the Bank s Capital Adequacy can be improved through migrating to The Standardised Approach (TSA) or Alternative Standardised Approach (ASA) under Operational Risk, and therefore we are currently looking into the avenues of obtaining the regulatory approval to move on to such advanced approaches under Basel II Operational Risk Capital Calculation Source:Frontier, Fitch and CSE

Key Performance Indicators COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BoC PB HSBC SCB FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 9M 9M 9M 9M FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY14 FY14 FY15 FY15 FY15 FY15 ROE (%) 17 16.9 16 16.6 16.6 18.6 16.3 15.6 19.8 18 10 4.7 13.5 15.6 9.5 19.8 0.5 1.1 20.7 20.6 35.5 25.7 16.4 4.4 18.4 12.3 ROA (%) 1.6 1.4 1.7 1.6 1.2 1.3 1.6 1.2 1.7 1.6 2.3 1 1.3 1.4 0.6 1.1 0.1 0.3 1.1 1.1 1.5 1.1 2 0.5 3.9 2.5 NIM (%) 4.6 4.2 5.2 4.5 4.8 4.4 3.7 2.9 7.7 6.4 5.1 5.6 5.6 4.9 4.6 4.7 5.9 4.8 3.4 3.7 3.7 4.8 5.4 4.8 5.6 4.9 Op Cost/ Av Assets (%) Cost/Net Income (%) Imp. Charges/ Avg Assets (%) Net NPL/Equity (%) Gross NPL Ratio (%) Total CAR (%) Equity/ Assets 2.2 2.1 2.8 2.5 2.9 2.8 2.3 2.1 4.2 4.1 2.2 2.7 3.5 3.2 3.4 3.2 3.9 3.9 2 1.9 2.2 2.5 2.5 2.4 2.6 2.8 42 42 47 46 55 53 46 50 53 55 40 55 50 53 61 53 72 92 45 43 54 50 41 44 28 41 0.5 0.5 0.5 0.1 0.3 0.2 0.2 0.2 0.8 0.5 0.1 0.5 0.9 0.2 0.9 0.8 1.3 0.3 0.6 0.5-0.1 0.6 0.1-0.1 0.1 0.1 10.7 10.2 9.3 6.4 5.2 5.7 9.8 9.3 19.3 8.5 4.5 5.1 34.3 23.6 48.2 47.5 11.5 6.4 16.1 18 7.2 13.7 0.7 1.2 0.7 0.6 3.5 2.7 3.2 2.4 1.9 1.9 2.5 2.4 4.1 2.8 4.2 3.7 7.7 4.7 5.7 4.8 8.3 3.6 3.8 4.3 3.2 3.5 1.5 1.2 0.3 0.3 16 14.3 14.8 12.7 13.6 12.3 14.7 12.6 18.3 15.5 16.6 15.3 14.7 12.9 14.2 12.3 41.5 24 12.5 11.8 14.3 12 23.1 21.8 23.8 19.4 8.9 8 10.6 9 7.2 6.7 8.5 7.3 8.7 8.6 22.9 17.8 9.6 8.5 5.9 5.4 34.2 23.8 5.7 5.2 4.2 4.3 11.9 12.5 19.2 21.5 Figures are annualized where appropriate. DFCC 9M ending Dec15 PB, HSBC & SCB 9M ending Sep15 Table 1 13

Supplementary 14

Returns on Equity Back to Performance summary Back to Sector ROA and ROE 3 25% 2 15% 1 5% -5% -1 2 22.5% 16% 15% 18% Pre and Post Impairment ROA- bank wise 5% 4% 4. COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC PB Foreign Banks Pre Tax ROA 18% 21% 1.8% Impairment charge/ (Reversal) 12% Figure 18 Shareholder Returns COMB and HNB improved returns on Quarter on Quarter basis due to higher net income and lower impairment costs. HNB had a notable collective impairment reversal. SAMP had a decline in profits of 21.5% on a QoQ basis due to lower non interest income and higher operating costs. However on a yearly basis profits improved by 33% due to higher commission and fee based income while currency devaluation resulted in foreign exchange gains. 3% 2% 1% -1% COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BoC PB Figure 19 NDB managed to improve profits with lower impairments and higher NII. However on a yoy basis group profits fell largely due to increase in personnel costs. BOC despite impairment reversals recorded a decline in profits due to higher operating expenses. 15

Bank-wise Composition of Earning Assets- Back to Performance summary Back to Financial Investments As a % of Assets Net Loans and Advances Financial Investment 10 8 6 4 2 Net Interest Margins 8% 7% 6% 5% 4% 3% 2% 1% COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BoC PB 4. 4.4% 3.9% 3. 6.1% 5. 4.7% 4.4% *Net Interest Margins are calculate in relation to average interest earning assets 3.6% 3.5% 4.5% Figure 20 COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC PB HSBC Figure 21 Financial Investments COMB which had one of the lowest loans to asset ratios increased its loans component while financial Investmentsavailable for sale decreased by Rs 32bn. BOC had a increase in financial investments-loans and receivables by Rs 41bn which may include development bonds, NIMs contract marginally COMB, HNB and NDB were able to sustain margins at levels. The smaller banks witnessed a fall in yields amidst rise in cost of funds, SAMP also demonstrated a similar trend DFCC may be incomparable with previous quarters due to merger of DFCC and DVB and the change in financial year to dec which distorted some p&l figures. 16

Operating Cost/Avg Assets 5% 4.4% 4.2% 4% 3% 3.7% 3.1% 2.9% 3.1% 2.2% 2.1% 2.1% 2.1% 2% 1% COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC PB Figure 22. Cost/ Net Income Ratio 10 82% 8 64% 6 58% 57% 6 52% 5 42% 39% 4 46% 2 COMB HNB SAMP NDB NTB DFCC SEYB PABC UB BOC Foreign Banks Figure 23. Click to go back Personnel costs increase during the quarter Operating costs increased during the December quarter, few banks reported increases in personnel costs. The hike in operating costs at DFCC were attributed to costs incurred due to the merger of DVB and DFCC. NDB on a group level had higher personnel costs which is not reflected in figure 22. Unlike peers HNB had a decrease in personnel costs during the quarter. Even on a yoy basis increase in operating costs were limited to 4% yoy, this is in contrast to SAMP and COMB which had a 14% and 1 yoy increase in operating costs. HNB has limited its growth in staff carder centralizing processes such as trade processing unit, retail credit processing and underwriting

Operating Cost per Branch (Rs. Mn) 100 80 60 40 71 64 60 2013 2014 2015 69 76 55 38 37 48 20 0 COMB HNB SAMP NDB NTB SEYB PABC UB BOC Figure 24. PAT per branch (Rs. Mn) 60 50 40 30 20 10 0 2013 2014 2015 49 42 40 28 29 28 24 13 3 COMB HNB SAMP NDB NTB SEYB PABC UB BOC Figure 25. 18

Lending Volume per branch* (Rs Mn.) 2013 2014 2015 2,500 2,000 1,500 1,000 2,057 2,001 1,670 2,254 1,317 1,214 1,066 626 1,430 500 0 COMB HNB SAMP NDB NTB SEYB PABC UB BOC *Branches include Service Centers Figure 26. 19

Index COMB: Commercial Bank Of Ceylon PLC HNB: Hatton National Bank PLC SAMP: Sampath Bank PLC NDB: National Development Bank PLC NTB: Nations Trust Bank PLC PABC: Pan Asia Banking Corporation PLC UB: Union Bank Of Colombo PLC SEYB: Seylan Bank PLC DFCC: DFCC Bank PLC DVB:DFCC Vardhana Bank PLC BoC: Bank Of Ceylon PB: Peoples Bank Private Banks comprised of all listed local commercial banks( with the exception of Amana Bank) and DFCC. State banks include BoC and PB Foreign Banks include Standard Chartered Bank (Sri Lanka Branch) and HSBC Sri Lanka Branch Financials for all banks have been taken on a solo basis with the exceptions of DFCC and NTB which have been analyzed at the group level. Numbers are based on quarterly financial publications of the banks 20

Glossary Net Interest Margin: Net interest income/ Average Interest Earning Assets ROA: PAT/ Average Assets Financial Investments(FI) include FI Held for Trading, FI Held to Maturity, FI Available for Sale and FI in Loans and Receivables Credit growth is accounted as Net Loans and Advances Growth Loans and Advances exclude Financial Investment in Loans and Receivables 21

This report is a quarterly publication. For further details or clarifications please contact: FI.research@frontiergroup.info Disclaimer: Information collected/ analyzed is from sources believed to be reliable and from the Central Bank/ Government. Frontier Research Private Limited however does not warrant its completeness or accuracy. Opinions and estimates given constitute our judgment as of the date of the material and are subject to change without notice. The reports and presentations given are not intended as an offer or solicitation for the purchase or sale of any financial instrument. The recipient of this report must make their own independent decision regarding any securities or financial instruments mentioned herein. Securities or financial instruments mentioned may not be suitable to all investors. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited. 22