2. CONTENTS
BANKING & FINANCE
Commercial Bank Bangladesh redefines online banking with omni-channel ‘CBC
Digital’
Activation in a flash: ComBank innovates with Digital KYC procedure for ‘Flash’
accounts
ComBank wins Gold as Best ATM Enabler at LankaPay Technnovation Awards
ComBank Digital wins AFTA award for ‘Best Frictionless Credit Evaluation
Initiative’
ECONOMY, BUSINESS & DEVELOPMENT
Central Bank of Sri Lanka hikes policy rates – Steepest increase in the history
Inflation : NCPI-March 2022
Sri Lanka credit rating cuts
Tourist Arrivals – Jan-Mar 2022
Crises spur over 40% holiday booking cancellations
“Free up over USD 11bn in State-owned assets to ease reserves crisis”: Experts
Sri Lanka and IMF
ECONOMY, BUSINESS & DEVELOPMENT (Cont.)
Sri Lanka Unemployment rate drops to 4.6% in 4Q; but could shoot up this year as
recession risks loom
BOI says inked USD 765mn investment agreements in first quarter of 2022
News Snippets
GLOBAL UPDATE
IMF Cuts Growth Outlook on Russia Invasion, China Lockdowns
Nepali Liquidity Crisis
French Presidential Election
China’s latest COVID Wave
Russia-Ukraine conflict: latest situation (third week of April 2022)
4. Research & Development Unit
Commercial Bank Bangladesh redefines online banking
with omni-channel ‘CBC Digital’
Source : Fitch, S&P, Moody’s
Commercial Bank Bangladesh, Commercial
Bank of Ceylon’s largest overseas operation,
has transformed the online banking
experience it offers customers with the
launch of ‘CBC Digital’ – the Bank’s
singleomni-channel online banking platform.
range of digital banking services from basic account inquiries, payments and transfers, bill payment
options for business users, multiple payments options via file uploads, group payments, and other
functionalities.
Akin to ‘ComBank Digital’ implemented in Sri Lanka
in 2020, ‘CBC Digital’ represents a synergy of the
Bank’s web and mobile applications to offer a
5. Research & Development Unit
Activation in a flash: ComBank innovates with Digital KYC
procedure for ‘Flash’ accounts
An innovative video call identity verification
feature has been introduced by the Commercial
Bank of Ceylon to its ground-breaking digital
bank account ‘Flash,’ making it possible for an
account to be opened, activated and operated
without ever visiting a bank branch.
The unique Digital KYC (Know Your Customer) process
allows the Bank to remotely complete the customer
verification requirements and provide the Flash
account holder full access to all the functions of the
activated app. Among these is the linking of other
bank accounts, enabling the account holder to transfer
money from an account in another bank to top-up the
Flash account with funds, the Bank said.
6. Research & Development Unit
ComBank wins Gold as Best ATM Enabler at LankaPay
Technnovation Awards
The Commercial Bank of Ceylon won the
Gold award as the ‘Best Common ATM
Enabler of the Year’ at the 2022 LankaPay
Technnovation Awards that recognize
frontrunners of payment technology
innovation in the country.
The Gold award was presented to Commercial
Bank in recognition of the Bank’s achievement of
being the ATM acquirer with the highest of growth
volume per ATM compared to the previous year,
facilitating the highest ATM transactions as the
card issuer and recording the least scheduled and unscheduled bin downtime. The Bank’s entire ATM
network is equipped to accept LankaPay cards and is connected to the common ATM switch (CAS).
7. Research & Development Unit
ComBank Digital wins AFTA award for ‘Best Frictionless
Credit Evaluation Initiative’
A facility provided by the Commercial Bank of
Ceylon for personal loans to be applied for
online, has been adjudged the ‘Best Frictionless
Credit Evaluation Initiative’ in Sri Lanka by the
Asian FinTech Academy (AFTA).
The award was presented to the Bank at the ‘Asian
Digital Finance Forum and Awards’, in recognition
of the strides made by ComBank Digital, the Bank’s
single omni-channel digital banking platform, to
improve the digital banking experience for customers with enhanced functionality,
convenience and security.
9. Research & Development Unit
Central Bank of Sri Lanka hikes policy rates – Steepest increase in
the history
The Monetary Board of the Central Bank of Sri Lanka,
at its meeting held on 08 April 2022, decided to
increase the *Standing Deposit Facility Rate (SDFR) and
the *Standing Lending Facility Rate (SLFR) of the
Central Bank by 700 basis points (7%) to 13.50% and
14.50%, respectively, effective from the close of
business on 08 April 2022.
The Monetary Board also decided to remove caps
imposed on lending interest rates applicable to credit
cards, pre-arranged temporary overdrafts, and
pawning facilities to facilitate the effective
transmission of the policy adjustment.
These decisions were taken with a view of curbing the inflationary pressures that could further intensify in the
period ahead, driven by the build-up of aggregate demand, domestic supply disruptions, exchange rate
depreciation and the elevated prices of commodities globally.
*SDFR - SDFR provides the floor rate for the absorption of overnight excess liquidity from the banking system by the Central Bank.
*SLFR – SLFR provides the ceiling rate for the injection of overnight liquidity to the banking system by the central bank Source : CBSL
10. Research & Development Unit
Inflation : NCPI-March 2022
The National Consumer Price Index
(NCPI base: 2013=100) for the month of
March was seen spiking to a high of
21.50% at its latest announcement,
exceeding 20.00% for the first time in
its history and in comparison, to its
previous month of 17.5%. The core
inflation also increased to 17.3% from
14.1%.
Food inflation (Y-o-Y) increased to 29.5% in March 2022 from 24.7% in February 2022.
Non-food inflation (Y-o-Y) increased to 14.5% in March,2022 from 11.0% in February
2022. Source : DCS
11. Research & Development Unit
Sri Lanka credit rating cuts
CC
C
S&P Global Ratings lowered its long-term
foreign currency sovereign rating on Sri Lanka
to CC from CCC on 13th April 2022 while
affirming the outlook on the long-term ratings
as negative.
Fitch Ratings, on 13th April 2022 downgraded
Sri Lanka's Long-Term Foreign-Currency Issuer
Default Rating (IDR) to C from CC. (no
outlook.)
Moody’s Investors Service, on 18th April 2022
downgraded Sri Lanka’s credit rating from
Caa2 to Ca stating that the country is barreling
toward a “series of defaults” as it stops paying
its foreign debts. (Outlook affirmed – Stable)
18th Apr
13th Apr 13h Apr
SD,
RD,
D
12. Research & Development Unit
Sri Lanka credit rating cuts (cont.)
“The downgrade of Sri Lanka's Long-Term Foreign-Currency IDR reflects Fitch's view that a
sovereign default process has begun.
This reflects the announcement by the Ministry of Finance on 12 April 2022 that it has
suspended normal debt servicing of several categories of its external debts, including
bonds issued in the international capital markets and foreign currency-denominated loan
agreements or credit facilities with commercial banks or institutional lenders.”
“We are likely to lower Sri Lanka's foreign currency ratings to ‘SD’-(Selective Default)
upon confirmation of non-payment of interest or principal on any of its commercial
foreign currency obligations, including coupon payments on its International Sovereign
Bonds due 18 April.”
“It’s an assessment that “reflects governance weaknesses in the ability of the country’s
institutions to take measures that decisively address the very low adequacy of foreign
exchange reserves and very weak debt affordability”.
Source : Fitch, S&P, Moody’s
13. Tourist Arrivals – Jan-Mar 2022
Research & Development Unit
As per the data shared by Sri Lanka Tourism, the
country has welcomed 285,334 tourists during the first
three months despite the multiple internal and
external challenges.
The March tourist arrivals topped 106,500 compared
to 96,507 arrivals of February.
Top ten tourism markets – March 2022
Source : SLTDA
14. Crises spur over 40% holiday booking cancellations
Research & Development Unit
The tourism industry is starting to suffer the fallout of economic and political crises at
a time when the sector was just starting to recover from post-pandemic, as
uncertainty prompts cancellations by both business and leisure visitors.
Although the bookings and cancellations were taking place at a very low pace at the
beginning of the month, it has now escalated up to over 40% just within the past
week.
Australia, the US, Canada, the UK, and New Zealand have issued advisories already,
whilst China and Singapore have urged their citizens to exercise caution in Sri Lanka.
Sri Lanka Association of Inbound Tour Operators (SLAITO) Past President Maahen
Kariyawasan said they fear losing all summer bookings, as they too have noticed
cancellations of 35% to 40% currently.
15. “Free up over USD 11bn in State-owned assets to ease
reserves crisis”: Experts
Research & Development Unit
The reserves-strapped Government can free up State-owned commercial assets worth over USD11bn to
tide with the current and future cash flow crisis, experts said.
“Sri Lanka has USD
52bn of debt and
assets of USD520bn -
so the country’s loan to
value ratio is 10%.
To bring solvency back
what Sri Lanka can do
is to free up some
capital tied up in state-
owned assets,” experts
pointed out, stressing
that the country is not
bankrupt but only
insolvent.
Proposed Assets to free up capital (Yet to be finalized) USD Mn
Bandaranaike International airport long lease sale 2,000
Colombo Port North Development two terminal long lease of rights sale for 600
Port City Land divestment 2,000
Sri Lanka Telecom 51% share sale 500
Ratmalana Airport long lease sale 400
Sri Lanka Insurance Corporation long lease sale 300
Hambantota Airport long lease sale 300
Highways long lease sale 2,000
Post office – Assets to be disposed 200
Petroleum Refinery – (USD 2,000Mn capital infusion for reinvestment + sale of shares USD
500mn)
2,500
Litro gas – 100% disposal of shares 500
Kerawalapitiya Power plant sale 250
Total 11,550
16. Research & Development Unit
Sri Lanka and IMF
The government has already started negotiating
with the IMF on a possible debt restructuring
programme.
Sri Lanka has so far benefited from 16 IMF
programmes since Independence.
The latest IMF programme was the 36 month
Extended Fund Facility (EFF) of USD 1.5Bn obtained
in 2016.
Sri Lanka’s Finance Minister, on 19th Apr 2022 met
with International Monetary Fund (IMF) Managing
Director Kristalina Georgieva in Washington DC.
Minister at the meeting made a request for a Rapid Financing Instrument (RFI) with the IMF and the latter
subsequently confirming that India had also made representations on behalf of Sri Lanka for an RFI. It had
been communicated that the IMF would consider the special request made despite it being outside of the
standard circumstances for the issuance of an RFI, the Finance Ministry said.
IMF Lending programmes with Sri Lanka
17. Sri Lanka Unemployment rate drops to 4.6% in 4Q; but
could shoot up this year as recession risks loom
Research & Development Unit
Sri Lanka’s unemployment rate fell to 4.6% in the
fourth quarter in 2021, down from 5.2% in the third
quarter and the same level which stood a year ago.
While Sri Lanka’s Unemployment rate is at 4.6%, what
really matters most is the very low Labour Force
Participation Rate (LFPR).
Sri Lanka’s LFPR, which measures the number of people who are both employed and unemployed but are looking
for work as a percentage of the working age population, was at 49.5% , unchanged from the third quarter but
shrinking from 50.1% in 4Q of 2020.
In the United States and Australia, the LFPR is at 63% and 66%, respectively. The woefully low LFPR should send
shivers through policymakers and other economic participants who are genuinely interested in a truly durable and
sustainable economy with high incomes.
Source: DCS
18. BOI says inked USD 765mn investment agreements in
first quarter of 2022
Research & Development Unit
The state-run investment promotions agency, the
Board of Investment (BOI), yesterday said it inked
investment agreements worth of USD 765mn in the
first quarter of this year, with several leading investors
doubling the number of agreements signed for new
investments during the first quarter of 2022.
It also said it received 33 investment proposals worth
USD 1,412mn within the first three months of the year.
“This value includes investments of 22 new projects into diverse sectors in energy projects, including
fuel and renewable sources (solar and wind), heavy industry, logistic and IT infrastructure sectors as well
as investments into 11 project expansions,” a BOI statement said. It also said the number of new
investment proposals received in the first quarter 2022 showed an 80% increase over the corresponding
period of the year 2021.
Source : BOI
19. Research & Development Unit
News Snippets
SriLankan Airlines records first ever profit in 4Q since 2006
SriLankan Airlines said yesterday it recorded its first profitable fourth
quarter (Q4) since 2006 for the financial year that ended on 31 March
with a group net profit of USD 1.7mn despite pandemic challenges.
Government back in Development Bond market to raise dollar debt
The Government is back in the debt market with the issuance of US dollar denominated Development Bonds (SLDBs) at high
interest rates as it desperately seeks more dollars, Finance Ministry sources confirmed.
The Central Bank has already announced the latest Development Bond issue notifying investors’, exporters of goods and
services, expat workers and US dollar holders and these notices will be applicable till the auction of such securities. It has
introduced various measures to encourage investments in SLDBs.
The expected amount to be raised by issuing these SLDB’s has not been stipulated as all those securities will be short term
bonds with maturity periods of 7, 10, 13, 22, 25, 34, 46, 52 and 57 months
Summary of External Sector performance
Jan 2021
USD mn
Jan 2022
USD mn
Change
(%)
Merchandise
Exports
937 1,101 17.5
Merchandise
Imports
1,592 1,959 23.1
Trade balance -655 -859
Source : CBSL
21. IMF Cuts Growth Outlook on Russia Invasion, China
Lockdowns
The International Monetary Fund slashed its world
growth forecast by the most since the early
months of the Covid-19 pandemic, and projected
even faster inflation, after Russia invaded Ukraine
and China renewed virus lockdowns.
Global expansion will slow to 3.6% in 2022, down
from a forecast of 4.4% in January before the war,
the IMF said in an update to its World Economic
Outlook. That compares with 6.1% growth in 2021.
The institution also lowered its projection for 2023
to 3.6% from a prior 3.8%.
The fund sees inflation for this year at 5.7% in
advanced economies and 8.7% in emerging and
developing countries, significantly higher than just
a few months ago.
Source : Bloomberg
22. Nepali Liquidity Crisis
What happened to Nepal?
The hope of a post-pandemic economic recovery in Nepal has been met with a
roadblock of *liquidity crunch within the Banks and Financial Institutions (BFIs).
The current liquidity crisis has emerged in the wake of increased credit
disbursements to encourage economic activity in the country and foster economic
recovery. An increase in credit disbursement has not been met with a comparable
increase in deposits. BFIs have run out of loanable funds and the decision to raise
internal loans by the government for development activities is pending
*A liquidity crunch is a financial situation characterized by a lack of cash or easily-convertible-to-cash assets on hand across many businesses or financial institutions
simultaneously.
Source : Nepali Economic Forum
23. Nepali Liquidity Crisis (cont.)
Factors contributed to the Nepalese liquidity crisis
•Increased credit
To revive the economy after a prolonged lockdown enacted to contain the pandemic, the new
monetary policy for the fiscal year 2021/22 increased the Credit-Deposit (CD) Ratio to be maintained
by Banks and Financial Institutions (BFIs). This led BFIs to lend excessively to both individuals and
corporations.
•Low deposits
The monetary policy for the fiscal year 2021/22 extended loan repayment and interest payment
deadlines by one year to mid-January 2023 for sectors that are hard hit by COVID-19. This extension of
loan repayment and interest payment deadlines could have resulted in slow growth in deposits.
•Declining foreign reserves
According to a Nepal Rastra Bank’s - NRB (Central Bank of Nepal) report, the foreign reserves of NRB
have declined by 17% in November 2021 compared to November 2020. The declining foreign reserves
can be attributed to an increase in imports and a decrease in remittance inflow to the country.
24. French Presidential Election
Emmanuel Macron won France's
presidential election, fending off a
historic challenge from far-right
candidate Marine Le Pen during
Sunday's (24) runoff vote.
First round of the election was held
on 10th April. Current president
Marine Le Pen advanced to the final
round of the election from twelve
candidates with percentages of
27.8% & 23.1%.
58.6% 18,779,809
No of votes
41.4% 13,298,728
%
Source : CNN
25. China’s latest COVIDWave
China is grappling with its largest surge of
Covid-19 infections since the coronavirus
first emerged more than two years ago in
central China.
Since March, China has battled its biggest
Covid wave yet, with Shanghai now the
largest hotspot. All 25 million residents
are under lockdown, with national health
care workers and the Chinese military
dispatched to boost the city's response.
A worker stands in the middle of empty streets, in locked-down Shanghai on April 4
On Wednesday 06th Apr 2022, the country recorded close to 20,000 new cases -- far past the peak of
Wuhan in 2020, at the onset of the pandemic.
Though this number is still far lower than in many other countries, it's a dramatic spike for China, which
has adhered to a strict zero-Covid strategy that aims to stamp out all outbreaks and chains of
transmission using border controls, mass testing, quarantines and stringent lockdowns.
Source : BBC
26. Russia-Ukraine conflict: latest situation (third week of April 2022)
The Russian defence ministry claims to have struck 1,260
targets in Ukraine on 18thApr 2022.
1. Lviv - Strikes hit three military targets and a car service
station killing multiple civilians on Monday (17)
2. Kreminna - Russian troops have reportedly captured
the town
3. Donbas - Russian forces continue build up with newly-
deployed units and units withdrawn from the north-
east
4. Azovstal steel plant, Mariupol - Ukrainian defenders
continue to hold out against heavy Russian artillery and
air bombardment. 1,000 civilians are reportedly
sheltering within the plant.
Meanwhile Russian troops have been withdrawn from the
capital Kyiv according to international media. Russian
troops have transferred the control of Chernobyl plant to
the Ukrainian armed forces.
After failing to capture the capital Kyiv, Russian troops are now
targeting Eastern Ukrainian areas especially in the Donbas region.
Source : The Guardian
27. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain
accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the
information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose.
< Research & Development Unit >
