The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of May 27, 1998 were as follows:

The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on May 27,1998 were as follows:

Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on May 27, 1998 were as follows:

Average Weighted Prime Lending Rate (AWRP) and Lowest Prime Rate (LPR)
The Average Weighted Prime Lending Rate (AWPR) during the week ended May 22nd 1998 was 14.7 per cent for all banks. The Lowest Prime Rate among banks during this week was 12.0 per cent.

Average Weighted Deposit Rate of Commercial Banks (AWDR)
The Average Weighted Deposit Rate (AWDR) of Commercial Banks for the month ended April 30th 1998 was 9.6 percent.

Banks under pressure to reduce margins...

DINESH WEERAKKODY talks to SHAN SHANMUGANATHAN, Managing Director

Q: Traditionally, Banks have been accustomed to broad spreads however, since lately Banks have been under pressure to reduce these margins. How has Union Bank coped with this trend?

A: Being a relatively new player in this competitive environment, we have from day one recognised the fact that margins will become narrower in time to come and have projected our growth based on that assumption. The fact that we compete on product and service superiority rather than pricing will ensure that margins do not need to go below certain minimum. Coupled with our ability to focus on fee based income, we were able to maintain adequate earnings. The fact that 47% of our 1997 earnings are non interest income based, confirm our success in this regard.

Q: In general, how has your Bank fared in 1997?
A: In 1997 the bank performed significantly well. The gross income was Rs. 466 million as against 1996 figures of Rs. 215 million an increase of 10%, and the net profit before tax was Rs. 40 million against 1996 figures of Rs. 5 million and the after tax figure was Rs. 35 million ('96 no taxes payable). This represents 14% return on average shareholder funds, and 1.4% on average assets, and indicate our superior performance within a short time. 1997 was also a year of consolidation to have re-look at ourselves and be equipped with necessary resources to support future expansion.

Q: What about deposits growth, was it above the industry average?

A: The deposit base increased from Rs. 1.5 billion to Rs. 2.7 billion an increase of 80% where as the industry average was around 17% to 18%.

Q: Then what about new banking products?

A: As I stated earlier 1997 was devoted to consolidating ourselves, hence we refrained from introducing new products. However the, full benefits of products introduced earlier, the Screen Phone and the Super Savings gave us a fair edge in 1997. In addition we added value by introducing key features to client services, thus cementing our relationship with our clients.

Q: Union Bank according to newspapers have invested heavily in technology. Can it be said that information technology and good management information systems play a vital role for a bank to remain competitive in the market place?

A: I would not agree that we have invested heavily in technology. Technology is a major driver in our business and we have invested in appropriate technology and bulk of the software enhancements and new products are home grown thus avoiding a major capital outlay. There is no doubt in my mind that banks with technological advancements will have a competitive edge in this environment where customers are becoming more sophisticated and look for convenience as a major criteria for choice of banking.

Q: Also, can it be argued that technology reduces the degree of human error on the part of the staff and the customer, resulting in a reduction of costs and an increase in productivity?

A: The answer is yes and no. Banking is still a people's direct interactive business and most of the front-line activities are yet handled by people. If they make a mistake what ever technology one may have it may not be a full proof operation. Technology will minimise errors in the processing of a transaction, however if the initial human input is incorrect, I doubt technology could change it. Certainly it reduces processing time thus enabling a greater convenience to the customers and possibly the ability to handle a large operation with a limited number of staff thus reducing your cost. For instance thanks to advanced technology we have standardised our staff strength in each customer service center to only 7; yet providing quality customer service. tTechnology also empowers customers to do what they want to do, at any time and at various locations.

Q: Talking about our rural economy to get our agricultural, fisheries and farming industries up and running this sector needs a lot of support from the banking sector. What has Union Bank done in this respect?

A: It has been our strategy to focus on trade finance during the first five years of operation before we could develop expertise to handle areas such as agriculture and fishing. However, it does not mean that we have totally kept away from these areas. For instance we support related areas such as fertilizer for agriculture and supply of boats for fishing.

Q: Then to increase our savings habit in this country, what should our banks do in general?

A: There need to be more products on need based savings rather than general Savings. One strategy we adopt is to identify the need of the customer before we could sell the appropriate products. In fact one such product we introduced was the super savings account, to reward regular Savers.

Q: Also, talking about the rupee devaluation are you anticipating a 10% depreciation of the rupee, by the year end?

A: It's a difficult question. Going by the past 10 years the rupee has depreciated by around 8 to 9% every year and based on that one could assume that it may repeat this year too.

Q: What major changes are you anticipating in our banking sector as we approach the next millennium?

A: As I said earlier customers are becoming sophisticated, and banks need to provide more convenience to their clients, especially empowerment. Technology will certainly play a major role in this area. With Sri Lanka hoping to play the role of financial hub for the region there is more scope to handle cross border transactions and that should expand the market.

Asia Siyaka brings new life to tea broking

Access to the top talent available has been the success of Asia Siyaka Commodities (Pvt.) Ltd. In the few months this newest tea broking company has been in operation. It's reach has extended to ten per cent of the total tea market in the country, thereby getting the right to claim to be the fourth largest broker dealing in the Colombo sales.

Nine such industry experts formerly of Forbes teamed up with Asia Capital to start Asia Siyaka, when Forbes was sold to Vanik. It became a veritable joint venture between the team and Asia Capital a major operator in the financial markets of Sri Lanka.

Vice President and CEO Ravi Kumararatna says: 'We have big ideas for the growth of the industry'. To consider the stage they have reached in such a short time would indeed give proof to the statement. While they have become the eight tea broking company in the country they have refrained from joining the Colombo Brokers' Association which consists of seven members.

There are several reasons why they have not joined the association. On the one hand they would be fettered by the rules and on the other they would not be able to provide the best services to the industry.

As they came into operation Asia Siyaka brought down the interest rates for advances and loans given to producers. Earlier it was between 27 to 29 per cent. But they made it 21 per cent for advances and 23 per cent for loans. And the rest of the industry had to follow. This became a boon to the smaller producer.

Asia Siyaka in March had sold in excess of two million kilos of tea while they had another two million awaiting sales. The directors say they are strong in the sale of low grown teas. Asia Siyaka's strong point has been their dedication to the improvement of the product. They provide advice to producers on all angles. Market intelligence and advice on demand types and maintenance of quality provided by them help the industry's growth and the maintenance of high prices.

For instance in this season of 'rush crops' used to increase production, they have advised producers to maintain standards so that prices will not fall at the auctions. A lowering of quality they have told producers would become disastrous particularly in view of Russian buyers in Colombo.

Asia Siyaka has broken away from tradition. Even its offices have been designed to suit a modern day business rather than a traditional tea broker. The nine men who hold the reins are Ravi Kumararatna, Anil Cooke, Rohan Iddawela, Bernard Fonseka, Lal Alawattegama, Ananda Sirisekera, Dhammika Wedauda, Nissanka de Mel and Marcel Pieris. They are all industry experts.

Getting the best price and bettering the lives of tea small holders have become Asia Siyaka's credo.

Sony Video CD - sight and sound at your command

The Video Sony CD is yet another development of the electronic giant which created a sensation in the audio' video industry. It is a disc as small as your compact disc (12 cm dia) but packs upto 74 minutes of full colour moving images and sound. Additionally, it contains highly advanced digital technology which is not available in the conventional VHS cassettes or Laser disc. A significant feature in this version 2.0 discs (apart from its size) is the clarity and sharpness of the still picture with a high resolution. One small disc holds as many as 200 high resolution still images.

The Sony Video CD Player comes with the 2.0 version Playback Control Capability (PBC) which enables you interact with on-screen menus giving you access to quick, easy search and selection of programmes. In fact, it gives you complete control of the set up. In other words, if you need to choose a disc or search for a song in a movie or a particular scene in a movie, the 'Digit Play' feature enables you find them effortlessly.

The Sony Video CD is available either independently or complete with Hi-Fi set up of CD, Tuner, Tape, Video/MD, Karaoke and a host of other functions. Both versions may be seen at the Sony Showroom at No: 12, Daisy Villa Avenue, Colombo 4.

Top Gulf Air executives view Sri Lanka with optimism

In Colombo recently to present the new Gulf Air philosophy to travel agents and tour operators were some senior management officials from Gulf Air headquarters in Bahrain. Robert L Prevost, Manager Customer Services, Jawad Abdul Ghany - Regional Sales Manager - Asia Pacific and Ms Khulood Al Jazaf, Asst. Manager Tours & Conventions were in Colombo to address the travel trade on 'The Dawn of a New Era' - Gulf Air's Resurgence to profitability and growth.

Mr. Ghany, familiar with Colombo and the tourist attractions of Sri Lanka, said many in the Gulf were not aware of the scenic beauty of Sri Lanka - he outlined plans to bring in tourists from the Gulf, offering them combined holidays with the Maldives. Commenting on the new 'Arabian Experience', a stop over holiday from Gulf Air for those with connecting flights to Europe and other long haul destinations, Ms. al Jasaf said that the stop over holiday was an ideal way to experience the many attractions of the Gulf;' Gulf Air arranges for transport and accommodation for this very affordable package' she said, adding that this would be an ideal opportunity for Sri Lankans with relatives in the Gulf -' they could visit them while waiting for transfer flights.'

According to Ms Al Jasaf, Arabian Experience provides the traveller with a choice of four star or five star hotels, access to shopping and other leisure facilities via visas and other amentities that go towards making a well worth stop over holiday. 'It would also serve as an interesting package for the recruitment agents' she adds, 'They could make use of the package to stretch their stay in the Gulf.'

'We are in a process of change at Gulf Air' says Mr. Mahfood Al Harthy, Gulf Air's Manager - Sri Lanka & Maldives.

'We are innovating, focusing on areas to be developed - customer care, in-flight service and many other aspects that round off a high quality airline.' Clearly, Gulf Air is focusing on innovation as a means to help the airline regain its position as a leading international carrier change as a priority that would earn the airline a top slot in international travel; Gulf Air's President & CEO Dr. Sheikh Ahmed Bin Saif Al Nehyan has designated 1998 as the Year of Customer Service, reflecting the airline's commitment to earning top ratings from the passengers. 'It's much more than a slogan' confirms Robert Provost, Gulf Air's Customer Service Manager.

'We have identified key areas for development in customer care - such as high levels of punctuality, in-flight service and ground handling. We have innovated little things that matter - like baby buggies for mothers with babies awaiting transfer flights, faster check ins, more uniformed Gulf Air staff at airports to attend to customer needs and newly designed children's kits. There are fast travel facilities, pre-flight dining, telephone/fax check ins and faster stop overs.' Our goal isn't just meeting customer expectations, we aim to go beyond what customers expect of us an airline' Gulf Air employs a multinational crew on all its flights - in flight service has become a key point marked for improvements, confirms Mr. Provost who says that the airline's safety and security record is highly rated. There are comprehensive training, motivational programmes and reward systems in place for staff; combined with customer feed back, staff reward schemes from what Mr. Provost calls a 'Service Enhancement Initiative'. Already, Abu Dhabiis designated a Model Airport and the Gulf to London route designated a Model Route;' if the new steps we have implemented on these two projects are well received by our customers, we will extend them to all routes.'

The Gulf Air team from Bahrain, together with their Sri Lankan counterparts, addressed the travel trade at a workshop entitled 'Dawn of a New Era' on 6th of May at the Colombo Hilton. The airline will expand operations in South Asia shortly, with Kathmandu becoming their newest destination in this region. Gulf Air is due to take delivery of six state-of-art Airbus A330-200, making its fleet one of the youngest in the world. In 1997, 4.9 million passengers flew Gulf Air. The airline, noting a healthy return based on a firm restructuring programme, posted a net profit of US $ 48 million for 1997, as against a net loss of US $ 87 million the previous year. An operating loss of US $ 135 million in 1995 and US $ 48 million in 1996 respectively was history with an operating profit of US $ 8 million reported for 1997 alone.

Seminar on GST - June 4

The Ceylon Chamber of Commerce will hold a seminar on the Practical Implications of the Goods and Services Tax on June 4, 1988 commencing 2 p.m. in the Ground Floor Auditorium of the Ceylon Chamber of Commerce.

Mr. P. Guruge, Deputy Commissioner - GST of the Department of Inland Revenue will address the participants on the Practical Implications of the GST.

A panel discussion will follow.