HATTON NATIONAL BANK

Q: How has HNB performed under the challenging macroeconomic conditions experienced over the past year or so?

A: It has been a year of historic challenges and unprecedented economic uncertainty, locally and globally. In response to extreme inflationary pressure, the Central Bank of Sri Lanka took the prudent decision to raise interest rates aggressively.

While this approach helped to curb inflation, it also discouraged borrowing and placed a greater strain on the repayment of existing liabilities by retail, SME and institutional customers. These conditions naturally placed constraints on the performance of the banking sector.

However, we are proud to report that despite such significant obstacles, HNB continued to deliver a resilient overall performance.

Supported by a systemic redesigning and centralisation of core banking capabilities, and a transformative approach to tech empowered, people-centric banking, we continued growing our income while optimising cost, efficiency and productivity at scale and driving digital adoption – both among customers and across our organisation.

As a result, HNB recorded asset quality and capital levels above industry averages while maintaining strong liquidity levels and CASA growth. Especially given the severity of the macroeconomic challenges we faced, this is a remarkable achievement.

Q: What is the role of corporates in supporting Sri Lanka’s economic revival?

A: Sri Lanka’s current economic challenges are complex and rooted to a great extent in the fact that politics has always been allowed to supersede policy. Hence, economic revival without any significant reform of governance systems is unlikely to succeed.

If we can establish a level playing field, and fair opportunities for local and global entrepreneurs to invest in Sri Lanka with an emphasis on catering to global markets, then we believe that economic revival can be secured at a much faster rate than most are expecting.

A key focus for the private sector in that regard has to be in expanding and uncovering new avenues for foreign currency income to Sri Lanka, primarily through value added exports and strategic import substitution. To succeed, it will also be essential for corporates to improve governance structures and ensure that their business models are sustainable in the medium to long terms.

Q:  How important is the SME sector to an economic revival and what steps is HNB taking to support such enterprises?

A: SMEs are critical to economic revival. They are the backbone of our economy, and account for the majority of employment and GDP. Yet the past two years of crisis have hit SMEs the hardest. One crucial point to note however, is that Sri Lanka’s SMEs have in the past primarily been restricted to catering to domestic and provincial markets.

But this is where technology and targeted financial, technical, and logistical support and training can help to mobilise the latent potential of Sri Lanka’s SMEs.

Working with specialised partners such as Cord360, WEBXPAY and appiGo, HNB has supported SMEs to pivot into e-commerce, and connect them to finance, logistics and packaging solutions, to help them secure a wider reach in domestic markets; and most importantly, securing invaluable new export opportunities.

This transition into e-commerce was further supported by our efforts to provide SMEs with access to innovative digital payments acceptance solutions like HNB MOMO – a low-cost mobile Bluetooth POS machine; and registering them on SOLO, our increasingly popular digital payments app; and even providing select SMEs with access to internet payment gateway (IPG) facilities.

Jonathan Alles
Managing Director
CEO

The collective impact of these enhancements will undoubtedly play an essential role in powering Sri Lanka’s economic revival.

This is an area in which HNB has maintained an active engagement for many decades. With COVID-19, we took extraordinary measures to provide moratoriums and emergency working capital loans, for sectors and SMEs most impacted by the pandemic and subsequent economic crisis.

Similarly, we have brought in reputable partners to channel specialised support to SMEs. This includes the disbursement of a component of the US$ 13.5 million in funds allocated by the Asian Development Bank (ADB) as an emergency line of credit for SMEs. Similarly, HNB partnered with USAID and Keells to provide supply chain financing for MSMEs in the food and agribusiness sectors to channel greater opportunities to the grassroots.

Q: How is the growing use of digital products and fintech impacting the banking sector?

A: Sri Lanka’s increasing use of digital technologies broadly – and specifically, in the banking sector – is definitely a positive development. While internet penetration in Sri Lanka is quite high, we are still in the early stages when it comes to the adoption of digital banking solutions.

However, the pandemic has served as a major catalyst for adoption, and we are seeing the highest uptake and frequency of transactions through digital channels, and the use of robust mobile payment solutions such as HNB SOLO.

Moving forward, we anticipate exponential increases in adoption and usage. This, in turn, will provide customers with unprecedented control and flexibility over their bank accounts, and radically increase the speed at which transactions happen. The emergence of fintechs is another promising development that will further accelerate the pace of disruption, leading to novel innovations in products and services.

Through collaboration and partnership, we see immense opportunities to scale up these innovations to benefit the entire economy and accelerate Sri Lanka’s digital evolution.

To succeed, it will also be essential for corporates to improve governance structures and ensure that their business models are sustainable in the medium to long terms

Telephone 2462462 | Email cto@hnb.lk | Website www.hnb.net