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1. Economic Capsule
December 2019
276th Issue
Research & Development Unit
Economic Capsule
February 2020
278th Issue

2. C O N T E N T S
BANKING & FINANCE
 ComBank Group revenue passes milestone Rs 150 bn in ‘difficult’ 2019
 ComBank wins ‘Decade of Excellence’ award for Retail Banking from top UK magazine
 ComBank Maldives honoured for Excellence in Finance at Maldives Business Awards
ECONOMY & BUSINESS
 External Sector : Jan-Dec 2019
 Govt. rolls out new measures to fast-track FDIs
 Port City’s first overseas launch in Singapore this July
 Ceylon Graphene Technologies creates new vistas for local graphene industry
 Luxury brands, Ritz Carlton and JW Marriott to open hotels
INTERNATIONAL
 India is now the world’s 5th largest economy
 Australia, South Korea, Brazil are the major economies most exposed to China trade
 Corona Impact

3. Banking &
Finance

4. Research & Development Unit
ComBank Group revenue passes
milestone Rs 150 bn in ‘difficult’ 2019
• The Commercial Bank Group ended 2019 with the performance milestone of gross income surpassing Rs 150bn
for the first time, but substantially higher impairment charges and the impact of a full year of Debt Repayment
Levy (DRL) in a year the Bank describes as “difficult for the Bank and the country,” saw declines in profit
indicators.
• Comprising of Commercial Bank of Ceylon PLC, its subsidiaries and associates, the Group reported top line
growth of 7.94% to Rs 150.741bn for the 12 months ending 31st December 2019, with interest income, the main
source of fund-based operations, up by Rs 10.763bn or 9.06% to Rs 129.288 bn.
• Total operating income improved by 4.35% to Rs 67.687bn before impairment charges and Impairment charges
increased by Rs 2.498 bn or 28.28% to Rs 11.332bn, and DRL by Rs 1.819bn to Rs 2.469bn in the 12 months,
exerting pressure on profit before tax (PBT), which eventually declined by 11.93% to Rs 22.984 bn.
• Profit after tax (PAT) at Rs 17.420bn for the year reflected a decline of 2.48% due to income tax for the period
reducing by 32.45% largely due to gains from a Government decision, announced by the Department of Inland
Revenue to exempt interest income on Sri Lanka Development Bonds from income tax.

5. Research & Development Unit
ComBank wins ‘Decade of Excellence’
award for Retail Banking from top UK
magazine
Commercial Bank has won the ‘Decade of Excellence’ Award
for Retail Banking in Sri Lanka at the 10th edition of the
annual awards of the prestigious UK publication Global
Banking & Finance Review.
The magazine honoured Commercial Bank with this award in acknowledgment
of the Bank’s performance over the past ten years and its winning streak of the
past four years, when it won the title of ‘Best Internet Bank – Sri Lanka’ from
the same awarding body.

6. Research & Development Unit
ComBank Maldives honoured for
Excellence in Finance at Maldives
Business Awards
The Commercial Bank of Maldives (CBM), a
subsidiary of the Commercial Bank of Ceylon PLC,
has been honoured with the award for ‘Excellence
in Finance’ in the Banking and Finance category at
the 2019 Maldives Business Awards in just its
third year of operation.
The awards recognize business excellence and the introduction of revolutionary and innovative
services and reward local corporations and individuals for maintaining
industry best practices.
The awards programme is organised by Blazon Inc., a full-suite Public Relations, Marketing and
Business Development agency in the Maldives.

7. Economy &
Business

8. Research & Development Unit
External Sector : Jan-Dec 2019
Category
Jan- Dec 2018
(USD Mn)
Jan-Dec 2019
(USD Mn)
Change
(%)
Exports 11,889.6 11,940 0.4
Textile & apparel 5,317.7 5,596.5 5.2
Tea 1,428.5 1,346.4 -5.7
Imports 22,232.7 19,937.1 -10.3
Fuel 4,151.9 3,891.6 -6.3
Personal vehicles 1,573.5 815.7 -48.2
Gold 438.7 2.6 -99.4
Trade balance (net) -10,343 -7,997 22.7
Earnings from tourism 4,381 3,592 -18.0
Workers’ remittances 7,015 6,717 -4.3
Source: CBSL
Cont.

9. Research & Development Unit
Major Contributory Factors for the Contraction in theTrade Deficit:
Jan-Dec 2019 (USD Mn)
Source: CBSL
External Sector : Jan-Dec 2019 (cont)

10. Govt. rolls out new measures to fast-track
FDIs
Research & Development Unit
• The Government has rolled out new measures to fast-track Foreign
Direct Investments (FDIs), aiming to fully realize a USD 2.5bn target.
• Among the new measures is the appointment of two special
committees within the Board of Investment (BOI) to speed up the
approval process to start FDI projects without delays. They are the BOI
Project Inspection Committee and the Land Allocation Committee.
- According to an official, some Investors have to obtain over 20 approvals and licences from a
number of agencies for an investment. Due to the lack of coordination between these institutions,
the investment approval process takes considerable time.
- The Project Monitoring Committee has taken immediate steps to approve all investment
applications in collaboration with the relevant departments of the Board. The Land Allocation
Committee will evaluate the BOI land in accordance with technical and financial criteria and
properly transfer the land. A taskforce has been set up to facilitate single-window investments
while online investment facilities have been improved.

11. Research & Development Unit
Port City’s first overseas launch in
Singapore
• Colombo Port City is to be launched overseas at World Cities
Summit 2020 at Marina Bay Sands
• Project company has signed over 200 MOUs with potential
investors, mainly from India, Middle East, South East Asia
(predominantly Singapore) and China
• 50 hectares of land now ready for construction
• Construction of yacht marina and USD 400mn mixed development
project to begin this year
• Colombo Port City would be similar to China’s Shenzhen and South
Korea’s Incheon
The project company of Colombo Port City (CPC), CHEC Port City
Colombo, is set to kick off the global launch of the Colombo
Port City project for investors at World Cities Summit 2020 in
Singapore this July with first few developments of the project
scheduled to break ground within the year.
The Colombo Port City is expected to contribute
USD 11.8 bn to Sri Lanka’s economy per annum
upon completion, according to an independent
study carried out by PricewaterhouseCoopers
(PwC).
The projected USD 11.8 Bn contribution would
amount up to over 13 % of the current GDP.

12. Ceylon GrapheneTechnologies creates
new vistas for local graphene industry
Research & Development Unit
Ceylon Graphene Technologies (CGT) has taken a
big step in Sri Lanka by converting graphite into
graphene to cater to export markets with value
additions.
CGT, a joint venture between the LOLC Group and the
Sri Lanka Institute of Nanotechnology (SLINTEC) is Sri Lanka’s
first graphene and advanced material company.
The main objective of the graphene advancement project is to enhance the efficiency of graphite-based products
and encourage their export with improved value addition by relevant industries. At present Sri Lanka exports
graphene in a low value-added form.
With new technology SLINTEC and CGT have developed a unique, advanced and sustainable graphite refining
process which can produce graphene from locally mined graphite at a fairly a low cost, they pointed out.
Vein graphite is sold at around USD 1.2 to USD 1.8 a kilogram, while graphene can be sold at around USD 3,000 per
kilogram. Accordingly, three metric tons (MTs) of graphene per year are currently being produced by GCT.
It was noted that the new graphene manufacturing plant commissioning is in progress and will be completed by
May 2020, which will increase the production capacity to six MTs per year.

13. Luxury brands, Ritz Carlton and JW
Marriott to open hotels in SL
Research & Development Unit
The luxurious 500 roomed five star JW Marriott located in Negombo is billed for launch in the
4Q of 2021, while the Ritz Carlton with its 228 keys will open its doors in Mirissa in the 3Q 2022
detailing its unparalleled signature of defined luxury .
Chairman of Greener Water Limited
Dhammika Perera (a fully owned
subsidiary of Vallibel One PLC) and
Chairman of Summer Season Ltd Mohan
Pandithage recently signed two MOUs to
establish global luxury brands JW
Marriott and Ritz Carlton in Sri Lanka.

14. International

15. India is now the world’s 5th largest
economy
Research & Development Unit
India became the world’s fifth largest economy last
year (USD Bn 2,935.57), according to data from
the IMF’s October World Economic Outlook. When
ranked by nominal GDP, the country leapfrogged
France and the UK.
The country's GDP growth has been among the
highest in the world in the past decade – regularly
achieving annual growth of between 6-7%.
This rapid rise has been fueled by a number of
factors, according to a 2016 McKinsey Global
Institute report, including urbanization and
technologies that have improved efficiency and
productivity.
Source: IMF

16. Australia, South Korea, Brazil are the
major economies most exposed to
China trade
Research & Development Unit
China’s first-quarter GDP growth could
slow to 4.5% year-on-year, a record low
because of the coronavirus, according
to Bloomberg Economics’ scenario
analysis.
If that happens, a period of weaker
imports will transmit the shock to trade
partners.
Looking at exports to China as a share of
total exports, the major economies with
the highest exposure are Australia, South
Korea and Brazil.

17. Corona Impact
The coronavirus epidemic creates new risks to the prospects of an incipient
stabilisation of global growth this year resulting from a truce in the US-China
trade war and emerging signs of a pickup in the industrial sector.
• If the disruptions from the virus end quickly,
IMF expect the Chinese economy to bounce
back soon.
• The result would be a sharp drop in GDP
growth in China in the first quarter of 2020,
but only a small reduction for the entire year.
• Spillovers to other countries would remain
relatively minor and short-lived, mostly
through temporary supply chain disruptions,
tourism, and travel restrictions.
• A long-lasting and more severe outbreak would result
in a sharper and more protracted growth slowdown in
China.
• Its global impact would be amplified through more
substantial supply chain disruptions and a more
persistent drop in investor confidence, especially if
the epidemic spreads beyond China.
There are a number of scenarios, depending on how quickly the spread of the virus is contained.
Apart from China , Moody’s has also reduced the growth
forecasts of Korea, Japan and Australia on account of the
coronavirus outbreak.
Research & Development Unit

18. 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.
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