Sampath Bank PLC ǀ Annual Report 2020 - CSE

1 Sampath Bank PLC Annual Report 2020 Millions of lives of rupees achieved year on million million ways to at Sampath Bank, as we come to the close of an eventful year characterised by momentous change and uncertainty, we are proud to celebrate yet another notable milestone in our history with our stakeholders; as we became the youngest bank to surpass an asset base of one trillion we look back on all we have achieved thus far, this Report pays tribute to the many millions that came together to bring about the results we showcase today - the millions of partnerships, the millions of livelihoods, the millions of projects and the immeasurable contribution of each and every stakeholder we , we move forward with a clear vision. We are energised with a purpose and geared to face the future - built on a solid foundation of unmatched skill, talent and strategy to push us further along a trajectory of national growth and progress. We strive to reach new heights as we seek out a million million new ways to Sampath BANK PLC I Annual Report 2020 Our Vision and Values.

2 16 About the Bank ..17 Product Portfolio ..18 Board of Directors ..20 Corporate Management ..26 About the Report ..4 Material Topics ..6 Financial Highlights ..12 INTRODUCTORY INFORMATIONO perating Environment ..54 CAPITAL MANAGEMENT REPORTSF inancial Capital ..59 Manufactured Capital ..64 Intellectual Capital ..67 Human Capital ..70 Social and Relationship Capital ..73 Natural Capital ..77 BUSINESS REPORTSC onsumer Banking ..82 Corporate Banking ..86 SME Banking ..89 Global Banking ..90 Nostro Accounts Maintained Banks, Correspondent Banks and Exchange Companies ..92 Treasury ..93 Operational Support ..94 Performance of Subsidiaries ..95 Investor Information ..96 MANAGEMENTDISCUSSION & ANALYSISC hairman s Message ..30 Managing Director s Review ..36 Our Value Creating Business Model ..42 Strategic Sustainability Framework ..44 Connecting with Our Stakeholders ..47 MANAGING OURBUSINESS020301 CONTENTS3 Sampath BANK PLC I Annual Report 2020 IRisk Management Report ..108 Compliance Report .

3 117 Corporate Governance ..119 Board Audit Committee Report ..170 Board Human Resources and Remuneration Committee Report ..173 Board Nomination Committee Report . 175 Board Integrated Risk Management Committee Report ..177 Board Related Party Transactions Review Committee Report ..180 RISK & GOVERNANCEF inancial Report of the Board of Directors on the Affairs of the Company ..185 Directors Interest in Contracts with the Bank ..196 Directors Statement on Internal Control Over Financial Reporting ..197 Independent Assurance Report to the Board of Directors of Sampath Bank PLC ..199 Managing Director s and Group Chief Financial Officer s Responsibility Statement ..200 Statement of Directors Responsibility for Financial Reporting ..201 Independent Auditor s Report to the Shareholders of Sampath Bank PLC. 203 Statement of Profit or Loss ..208 Statement of Comprehensive Income .209 Statement of Financial Position ..210 Statement of Cash Flows ..212 Statement of Changes in Equity.

4 214 Notes to the Financial Statements ..216 FINANCIAL INFORMATIONS tatement of Profit or Loss in US$ ..346 Statement of Comprehensive Income in US$ ..347 Statement of Financial Position in US$ ..348 Economic Value Addition ..349 Ten Years at a Glance ..350 Quarterly Statistics ..351 Capital Adequacy ..353 Basel III Disclosure Requirements ..354 GRI Content Index ..364 Independent Assurance Report to the Shareholders of Sampath Bank PLC. 372 Glossary of Financial and Banking Terms ..373 Notice of Annual General Meeting ..377 Notes ..378 Stakeholder Feedback Form ..379 Corporate Information ..IBCSUPPLEMENTARY INFORMATION0405064I Sampath BANK PLC I Annual Report 2020 ABOUT THE REPORTR eport ProfileEach year Sampath Bank prepares and publishes its Annual Report with the intention of providing its stakeholders with a clear understanding of the Bank s performance and prospects for a given financial year. The current Report which covers the financial year 1st January 2020 to 31st December 2020 is the 7th Integrated Report released by Sampath Bank PLC, since the Bank began its integrated reporting journey in 2014 .

5 All previous integrated reports including the most recent Report for the financial year 2019 are available for viewing and downloading on our corporate website - and BoundaryThe Report covers the operations of Sampath Bank PLC in its entirety and includes all business and operational activities as well as administrative support functions of the Bank during the reporting Report showcases both financial and non-financial aspects of the Bank s performance, essentially providing a clear and concise account of the steps we are taking to achieve our strategic vision while balancing the expectations of all stakeholders. Also included in the Report is a brief summary of the performance of all four subsidiaries under the Sampath Bank Group. In this manner, the Report caters to the information needs of not only our shareholders but a diverse audience across our value to this year s reportIn keeping with environmentally-friendly best practices, a number of key areas of Sampath Bank s 2020 Annual Integrated Report have been moved online.

6 Accordingly, the Capital Management Reports, Material Topics and their Management Approaches are shown as online content, with only a summary of these areas being included in the 2020 printed Annual FrameworksThe content of this Report is based on the Six Capitals Model introduced by the International <IR> Framework. By adopting the Six Capitals Model, we are looking to demonstrate how we use integrated thinking to transform our capital resources (Inputs) in order to deliver financial results and create value (Outcomes) for our stakeholders. To illustrate how this takes place, the Report narrative has been structured based on Material Topics that influence our business model, strategy, performance and future prospects. The process of determining Materiality is described in detail on page 6 of this Annual applicable reporting frameworks include; S ri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka Companies Act No. 07 of 2007 Banking Act No.

7 30 of 1988 and amendments thereto Listing Rules of the Colombo Stock Exchange Code of Best Practice for Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka, issued by the Central Bank of Sri Lanka and any amendments thereto Banking Act Direction No. 01 of 2016 on Capital Requirements under Basel III and amendments thereto Banking Act No. 30 of 1988 and amendments thereto Companies Act No. 07 of 2007 Listing Rules of the Colombo Stock Exchange Global Reporting Initiative (GRI) Standards - In Accordance Comprehensive issued by Global Sustainability Standards Board Guidelines on ESG Reporting issued by the Colombo Stock Exchange United Nations Sustainable Development Goals (SDGs)FinancialReportingGovernance, Compliance and Risk ReportingSustainability ReportingGRI - 102-50,52 GRI - 102-46 GRI - 102-12,545 Sampath BANK PLC I Annual Report 2020 IMatters of Interest to Stakeholders Where to Find it in this ReportPage Reference (starting from)

8 How we bring our vision to life Strategy and Business Model42 Our leaders viewsChairman s MessageManaging Director s Review3036 Delivering on our strategyCapital Management Reports Business Reports5881 How our business is governed and managedRisk Management ReportCompliance ReportCorporate Governance Report108117119 Measuring our successFinancial Information182 Combined AssuranceWe have adopted the principles of combined assurance where inputs from both internal and external sources are used to review and verify the accuracy and authenticity of the content included in this , the Bank s Management provides assurances regarding the validity of information, data and statistics contained in the Report . Messrs Ernst and Young, Chartered Accountants provide external assurance for the Bank s Financial Statements and also provide an independent assurance on selected 201120122017 - 20202014 - 20162013 Stand-alone ReportGRI Level BExternal Assurance ProvidedIntegrated ReportGRI G4 - Comprehensive External Assurance ProvidedIncorporated in Annual ReportGRI Level BExternal Assurance ProvidedIntegrated ReportGRI Standards - Comprehensive External Assurance ProvidedStand-alone ReportGRI G4 - Comprehensive External Assurance ProvidedOur Progress in Sustainability Reportingsustainability indicators.

9 Page 372 of this Report contains a copy of the independent assurance statement issued by Messrs Ernst and Young, with regard to Sampath Bank s adherence to the GRI StatementsThis Report contains certain forward-looking statements with regard to Sampath Bank s financial position, results, operations and business activities. These statements involve risk and uncertainty as they relate to and depend on events that occur in the future. Therefore, it can be reasonably assumed that incidents that occur in the future may cause actual results or outcomes to differ materially from what was expressed or implied by forward-looking statements. Therefore, all forward-looking statements are deemed to be applicable only on the date of publication of this Annual Report . As such, Sampath Bank does not accept any obligation to revise or in any way update at a later date, the information expressed in these forward-looking and QueriesWhile taking this opportunity to appreciate the feedback received regarding our 2019 Annual Report , readers are urged to use the Feedback Form on pages 379 and 380 of this Report , to submit their insights on Sampath Bank s latest Integrated Annual Report for Sampath Bank commenced its integrated reporting journey in 2014 , this is the 7th Integrated Annual Report - 102-56 GRI - 102-53 GRI - 102-516I Sampath BANK PLC I Annual Report 2020 MATERIAL TOPICSM aterial Topics are determined by their significance, probability of occurrence and the impact on the Bank s ability to create stakeholder value over the short, medium and long term.

10 In this way, materiality serves as a valuable tool to guide our strategy development and resource allocation processes to enable the Bank to meet stakeholder comprehensive broad-based stakeholder survey conducted in 2020 helped to verify and validate the relevance of our Material Topics against economic, social and environmental parameters. Our Materiality Monitoring ProcessIdentification of Material TopicsClustering and CategorisationManagement DiscussionsMateriality Assessment SurveyMaterialityMatrixValidationIntegra tionMonitor and Track RecordsIdentify Material Topics that have the potential to impact our earnings sustainability and ability to create value for our stakeholdersCluster potential Material Topics to categorise and map them with the capitalsAnalyse and identify organisation s objectives, risks and impact on stakeholders Understanding the stakeholders perceptions on what is important to the BankPrioritising Material Topics to indicate its significance to the Bank and stakeholdersValidation of the Materiality Matrix by Sampath Bank s leadershipIntegration into the Bank s Business Strategy to achieve stakeholder deliverables Continuous and ongoing monitoring to take account of changes in the operating environment and respond by realigning the Bank s strategy to drive and sustain business and find new and innovative ways of doing businessesPreparePlanEngageAnalyse & EmbedA comprehensive broad-based stakeholder engagement survey conducted in 2020 helped to verify and validate the relevance of our Material Topics against economic, social and environmental of Materiality to StakeholdersLevel of Materiality to the BankMateriality Matrix1917614251371531018122141119 20816 GRI - 102-46,47/103-1.